Poste a pourvoir
Board mandates mean shoring up Lantus losses won't be easy for Sanofi CEO
Job one for Sanofi's next CEO will be to shore up revenues, a task that may be difficult since the board has taken major acquisitions off the table and all the products in the company's late-stage pipeline combined are unlikely to cover the €2 billion shortfall for 2015-16 that analysts expect after the API in Lantus insulin glargine goes off patent in February.
An unexpected slowdown in Lantus sales was one of the reasons Chairman Serge Weinberg gave for the board's unanimous decision to remove Christopher Viehbacher as CEO on Oct. 29. Viehbacher had held the position since Dec. 1, 2008.
According to Weinberg, the other reasons were Viehbacher's management style, several quarters of EPS misses and a rumored plan to off-load a portfolio of mature products that the board got wind of through reports in the media. Weinberg listed the board's other complaints on a conference call discussing the ouster on Oct. 29.
In 2013, Sanofi's EPS came in below guidance in three of four quarters, and the pharma's 2% annual EPS growth rate has lagged most of its peers during Viehbacher's tenure (see "Sanofi Comps," page 2).
Weinberg, who is now interim CEO, claimed Viehbacher had attempted to sell Sanofi's mature products business this year without getting buy-in from the board. Viehbacher never publicly acknowledged a plan to sell the business, but any notion along that line was scuttled after the board read about it in the media.
The commercial implosion on Lantus was the last nail in the coffin.
In 3Q14 earnings announced the day before Viehbacher was fired, Sanofi said Lantus sales growth had slowed in the U.S. The 3Q14 slowdown was a result of Lantus losing ground to Levemir insulin detemir from Novo Nordisk A/S.
Moreover, Sanofi guided to flat sales for its entire diabetes business in 2015 due to steep rebates needed to get Lantus onto U.S. formularies.
Lantus sales were €4.6 billion ($5.8 billion) in the first nine months of this year, or about 28% of Sanofi's €16.5 billion ($20.9 billion) in branded pharmaceutical sales.
It's unclear if a new leader will be able to right the ship where Lantus is concerned, given that many of the 2015 formulary deals have been done. Additionally, with more competition waiting in the wings from Novo as well as Eli Lilly and Co., the pricing situation for Lantus is only expected to deteriorate (see "Lantus Limbo," page 7).
Sanofi does plan to launch