Fading away

One of the advantages of being on the West Coast isn’t just the sunshine and warm temperatures. A major advantage is we now have a great excuse for not listening to those early morning earnings calls. Listen it was bad enough when we were in Chicago and had to be up in the early morning to hear these calls but there is no way we’re getting up in the wee hours of the morning for this.

Such is the case for today when Sanofi announced fourth quarter and full year results which for diabetes were dismal. Looking over the results and reviewing the slides used with the presentation today it was just further confirmation of something we already knew. When it comes to diabetes and Sanofi they are slowly fading away. Diabetes has basically become an afterthought as the company transitions to other disease states.

We won’t go into all the gory details as the problems are well known. Rather we’ll speculate a little on where they could go from here.

1. Milk the cow

The company could throw in the towel, realize that they had their run and just let this franchise die a slow and profitable death. Sales may be declining but the company still makes money just not the obscene amount of money they were making before. This option allows them to run the franchise with the barest of resources.

2. Go Big

The polar opposite of milking the cow is to head out on the acquisition trail spend a few billion and buy their way back into diabetes. Something the company has done before so we cannot discount the possibility no matter how foolish it may be.

3. Go Home

In the hands of private equity this unit could be valuable serving as the foundation for a deeper dive into diabetes. As we noted the unit still makes money and private equity could leverage the purchase price to the hilt as they go about adding other products and/or devices. Sanofi could then use the proceeds from the sale to pursue other more profitable areas.

The reality is Sanofi can no longer be considered a major player in diabetes. They had their day in the sun, but that day is long gone. Basically, what the company has demonstrated is an uncanny ability to turn gold into sand. But there is no reason to pile on here what’s done is done and as Momma Kliff used to say pouring salt in the wound will only sting and not change a damn thing.

What we’re most curious about is what they’ll do with OnDuo, their much-ballyhooed partnership with Verily, which to date has produced nothing of real substance. Yes, as we have noted the company has signed some minor deals made a few splashes but has yet to deliver much of anything else. Like the boy who cried wolf we hear a lot about what’s coming but we never hear when it’s coming. Or as they say in Texas so far, it’s been all hat and no cattle.

Yet we do want to thank the company for providing some of the best copy in our history. To us Sanofi has been the gift that keeps on giving. Whether it was those way cool lunch bags that somehow would lead to greater sales of insulin or the way cool now way dead iBGStar or spending $30 million for a social media campaign yet not expecting a return on investment. Sanofi has produced some great moments.

How about the many deals that have gone south, MannKind, Medtronic and now Verily? When it comes to Sanofi and diabetes deals, they have demonstrated with incredible consistency they have the reverse Midas touch. So much so one would think that the geniuses who run the company would wake up to the fact that hey made the problem isn’t with the partners but in Paris.

So, let’s all raise a glass of Chardonnay and toast our friends in Paris, thanks for the great copy and the copy to come.