Wednesday, November 28, 2012

Genzyme: The Way Forward for Sanofi Aventis

Sanofi Aventis is a Paris based pharmaceutical giant and is the fourth largest pharmaceutical company (by prescription drug sales) in the world. Sanofi recently acquired Genzyme, a new-age biotech company that focuses its product development activities on niche under-served markets. In this blog I want to talk about what this acquisition means for Sanofi in terms of getting innovation back into the pharma-company and how the top leadership is trying to implement this strategy, seated at the helm of an old and rigid giant.  I think that this story is an embodiment of what is being told in the two articles: “Right leaders for growth strategies”, and “Going from Global trends to Corporate Strategy”.

When Sanofi’s CEO Chris Viehbacher first met the Genzye staff, he told them that he did not want planeloads of people from Paris to come and “Sanofize” them. More than a year later, the contrary seems to have happened. The company’s U.S headquarters are now run by Genzyme employees and Sanofi’s newly-appointed deputy R&D operations head, Gary Nabel is based at Genzyme’s head office in Cambridge. It is not only the U.S offices that can see these changes. Sanofi is witnessing a global change in its work culture. Even the company’s new global headquarters with open-plan offices and multiple meeting rooms in Paris have an edgy biotech feel to it that encourages open communication, and facilitates innovation.
It is not a surprise that Chris is not a French national. The German-Canadian has faced a good share of problems in Paris to see his strategy being implemented. Sanofi has had a history of strong acquisitions which brought it to the pedestal that it now stands on. Innovation however had never been a part of the Sanofi culture. The end result of this was a centralized system that had several research centers looking to Paris for decision making. In spite of spending more than its peers on drug development, Sanofi has not come up with a new product for 20 years. When Chris mentioned this in France, his comments were met with quite a stir.
As the aging pharma industry is threatened by generics, big companies like Sanofi have had to look to the risk-hungry, innovative and nimble biotech companies in order to boost productivity and learn new ways of doing business. For the time being, Sanofi can depend on Genzyme’s pipeline of drugs, targeted at rare diseases that have no cure. Meanwhile, Chris has had to design a strategy that revives the entire company. Sanofi has now strengthened cooperation with universities, the hubs of biotech innovation, merged its research centers and stepped up its search for new drugs outside the company.
 Sanofi also launched a cost cutting drive so that it could boost productivity in the U.S. and parts of Europe. This was met with quite a frosty welcome in France. The matters worsened enough for Government to step into the matter. However, after the launch of this drive, its share price has gone up by 20 percent, vindicating the strategy.
I believe that Chris is pursuing multiple growth strategies as described in the article “Do you have the right leaders for your growth strategies?”  Do you think implementing Chris’ strategy will pay off in the long, at the cost of alienating his staff? What would you do to encourage leadership, drive and open-communication amongst Sanofi’s reluctant Paris employees?   

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