January 1, 1970 (Vol. , No. )
Michael S. Koeris
When GlaxoSmithKline’s Chris Viehbacher announced his plans to leave the company, everyone wondered where he would head next. Apparently it’s in the CEO spot at another company, the spot he was passed over for at GSK. And lo and behold it’s sanofi-aventis!
That’s right folks, a franco-centric drug maker that resulted as a combination of France’s Sanofi with Germany’s Aventis (formerly Hoechst).
GSK’s loss is sanofi-aventis’ gain. What does the company that is notorious for having a glass ceiling for foreigners say in it’s press release? The evolution of the worldwide pharmaceutical sector requires the key players to acutely redefine their strategy.
I don’t disagree at all, and the business climate is so difficult for the smaller ones of the big pharma players that apparently old habits have to go. Sanofi’s shareholders including oil giant Total and comestics group L’Oreal believe the change will invigorate the company, whose reputation and stocks have not been doing so well over the past few years. Sanofi shares shot up 7% on the news, after a 22% drop over the past year as a result of recent setbacks.
What next for Sanofi? Will Viehbacher continue to turn Sanofi into more of a biologics company as La Fur has done? Will he be able to cut costs and downsize if necessary?
I personally think he is in for a rude surprise regarding the French and German labor markets. If he wants to downsize, he’ll have to significantly sweeten the offers such that there will be a short-term negative impact on shares. I wouldn’t be surprised if the stock slid a little further before the bottom line impact is felt.