* Genzyme culture change at Sanofi
* Planned reshuffle had frosty reception in France
* Strategy vindicated by share price rise
By Elena Berton
PARIS, Nov 15 When Sanofi boss Chris
Viehbacher first met staff at Genzyme, the U.S. biotech he had
just acquired after a long takeover battle, he told them he did
not want "planeloads of people coming from Paris over here to
kind of Sanofize Genzyme".
More than one year later, the German-Canadian, who is
Sanofi's first non-French boss, has kept his promise: it is
Genzyme's free-spirited culture and innovative edge that is
holding sway at the French drug giant.
Genzyme executives now run the company's U.S. headquarters
near Boston, one of its international research hubs which
Viehbacher is betting on to revive Sanofi's lacklustre drug
Highlighting Genzyme's dominance, Sanofi's newly-appointed
deputy head of research and development operations, virologist
Gary Nabel, will be based at Genzyme's head office in Cambridge,
Nabel, a highly respected scientist at the U.S. National
Institute of Allergy and Infectious Diseases since 1999, is a
notable catch for Sanofi.
Even the group's new headquarters in central Paris has a
biotech feel, with open-plan offices and multiple meeting rooms
designed to encourage staff to share ideas.
"It's an approach Sanofi is adopting at a global level," one
analyst said on condition of anonymity. "It's a different
approach and it will take a bit more time to implement in
France, but the decisions that have been taken are being put
into practice anyway."
The Genzyming of Sanofi provides another example of how
mainstream pharmaceutical companies are increasingly turning to
the nimble, risk-hungry biotech sector - not only for new drugs
but also for new ways of doing business.
Pharmaceutical giants may have deep pockets to support
research, but their hierarchical and bureaucratic style is often
considered a hurdle to the innovation they badly need when many
of their existing drugs face competition from cheaper copies.
Sanofi's Genzyme deal followed Swiss rival Roche's,
takeover of Genentech, the San Francisco-based biotech now
driving the drug pipeline of the 116-year old Basel-based drug
The French company's track record on drug development has
been disappointing. Sanofi has tended to spend more than its
peers on drug research and get fewer products to the market,
according to Boston Consulting Group.
Sanofi's performance in research is partly a side effect of
the multiple acquisitions that have catapulted the company, once
a fledgling unit of oil group Elf Aquitaine, into the world's
These deals saddled Sanofi with a cluster of unconnected
research centres that relied on the Paris headquarters for
decision making, instead of sharing information with each other.
"The decision-making structure and strategy were centralised
in Paris," said Matt Gurin, who heads the life sciences team at
consulting firm Hay Group and advised on the integration of
Franco-German drugmaker Aventis into Sanofi in 2004.
"All of Sanofi's blockbusters were acquired through
acquisitions, not innovation," he said.
Now the French company is betting on Genzyme's
market-leading line-up of drugs for rare diseases and its
multiple sclerosis drug Lemtrada to help restore its pipeline
after losing several aging blockbusters to generic rivals.
In addition, to speed up the discovery of promising
treatments, Sanofi has strengthened cooperation with
universities, merged research centres and stepped up scouting
for new drugs outside the company.
Sanofi has also been cutting costs, wielding the axe to
boost productivity in research labs in the United States and
parts of Europe.
This year Viehbacher caused a stir when his cost-cutting
drive targeted France, where he said researchers had not come up
with a new product in 20 years.
This got a frosty reception from research staff and the
French government which eventually stepped in to force the
company to rein in its extensive layoff plan that unions had
predicted could affect 2,500 posts.
The company ended up scaling back its country-wide reshuffle
to around 900 voluntary layoffs.
Terry Hisey, head of the life sciences team at consultancy
Deloitte, said there was too much at stake for Sanofi to ignore
the government's requests.
France's national health service generates the majority of
Sanofi's 3.1 billion euros ($3.9 billion) in sales in the
country, while the group is one of the main beneficiaries of
government tax breaks on research costs, saving around 130
million every year.
"In these cases, you can't say one size fits all. Something
may make sense on a rational level, but it may be costly once
you deal with the practical point of view of labour laws and
regulation," he said.
Sanofi's cost-cutting strategy seems to have been vindicated
by a 20 percent hike in its share price this year, allowing it
to overtake former shareholder, oil major Total, as
France's biggest company by market capitalisation.
($1 = 0.7867 euros)
(Additional reporting by Noelle Mennella. Editing by Jane