Like Sands through an Hourglass

Like Sands through an Hourglass

Back in the day well before there were shows like Oprah or Dr. Oz daytime TV was dominated by soap operas. One of our favorites was Days of Our Lives which came with the tag line –  like sands through an hour glass so goes the days of our lives. Then for the next hour viewers would watch some truly wacky interpersonal situations. But as one of the show’s producers said when asked where they find all this wacky material he responded by stating; “What we do is nothing compared to real life. Real life is definitely stranger than fiction.”

Well it turns out real life is stranger as this morning we learned from our wine drinking friends in France that the Board of the soap opera we have come to know as Sanofi (NYSE:SNY) voted unanimously to fire CEO Chris Viehbacher, although some are claiming that Viehbacher resigned before he was officially fired. Yes we know this is childish and undignified behavior for someone who was a CEO but when a corporation turns into a daytime drama this is what we get.

Now before we leave the Viehbacher area and look at who or more correctly whom (more on this in a bit) will replace him let’s look at his legacy and final acts. Until recently he did a fine job and did bring Sanofi into the 20th Century. He helped shepard the company as it transitioned from a French drug firm into a global pharmaceutical conglomerate. However his many recent missteps including yesterday’s public acknowledgment of the disaster that’s going on with their diabetes franchise was proof that the “golden boy” had lost his touch.

Although 24 hours hasn’t gone by since this news brook Diabetic Investor has heard from several Sanofi sources who noted that it was Viehbacher who pushed for the MannKind (NASDAQ:MNKD) partnership against the recommendation from others in the company NOT to pursue this deal. It seems as if the company actually did perform some due diligence which basically said don’t walk but run away from this partnership. Yet in spite or perhaps because of this Viehbacher pressed ahead basically telling the team get the deal done due diligence be damned.

This one piece of information shows the Board did the right thing and should take the additional step of canning the person who runs the diabetes operations Pierre Chancel. There is no way the situation in diabetes would have gotten this bad had Mr. Chancel not been a coconspirator aligned with Mr. Viehbacher.

Now turning our attention to who, excuse us, whom will replace Viehbacher that’s where things get interesting.  According to a statement issued from the Board “Pending the decision on the appointment of a new Chief Executive Officer, the Board asked Serge Weinberg to fulfill jointly, as of today and on a temporary basis, the functions of Chairman and Chief Executive Officer. As soon as a new Chief executive Officer will be appointed, the Group’s governance will return to a Chairman and a separate Chief Executive Officer.”

Given that one of the reasons Viehbacher got canned was because he wasn’t “French” enough the first safe bet we can make is the new person will be … wait for it.. French. Given the Boards fondness for all things French we have a suggestion why not rename the positons as Red and White in honor for France’s wine country. The Red position should be someone who is big and bold and comes with a take no prisoner’s attitude. The white position should be someone who’s buttery from a reputable family i.e. Frank or maybe Talbot. Yes we are having a little fun here but honestly we’re curious how the Board will define or measure whether a candidate is “French” enough.

Although it’s highly unlikely the Board would ask Diabetic Investor what they should be looking for we’ve never been shy about offering our opinion so here goes. What the company really needs is a change agent who will hold everyone in the organization accountable. Someone who will provide structure and discipline to the organization so they don’t do dumb things like partner with MannKind. French or not this person should NOT come within the organization, bring in a respected outsider. Whoever takes this job should have more than an impressive resume and proven track record, they must also be someone who has a reputation for getting things done.

This has always been Sanofi’s biggest problem as no one in the organization is held accountable for their actions; there is no discipline to getting things done. A perfect example of this was their pursuit of Bayer’s glucose monitoring unit. First they wanted to buy, next they didn’t then they changed their minds and wanted in again only to step away again. While this provided some great copy for Diabetic Investor and some hearty laughs for folks watching from sidelines it demonstrates everything that is wrong at Sanofi.

The onus is now on the Board to select two strong candidates who will be forced to work together given the board is looking for both a Chairman and CEO.   We have no problem that they fired Viehbacher and his purist of MannKind shows this is the right decision, but they should diligent in their search. Given all this nonsense that Viehbacher wasn’t “French” enough Diabetic Investor is worried that the Board will be overly influenced by French media, the unions and national pride. That they will select someone not because they are the most qualified for the job and bring the skill set needed rather select someone who pacifies these vocal critics.

No matter what happens or how long it takes one thing is certain this soap opera isn’t over, not by a longshot. Looking over how this events unfolded it’s likely Viehbacher knew he was about to get canned and decided that since yesterday’s earnings call would be his last as CEO he left behind a little gift for the company and the Board that was about to can him. In rare bit of honesty for a CEO he told analysts the truth, that the diabetes franchise is in the crapper and the future doesn’t look so good. He told them the goose that lays the golden eggs, Lantus is running out eggs and will soon be a dead duck. Not used to hearing the truth analysts and investors were stunned sending Sanofi shares down almost 10%. (Just as an FYI shares are already down over 6% in early trading today.)

Nope this is not over as Viehbacher and his supporters will spread rumors and do whatever they can to salvage his reputation. This started when the Viehbacher letter to the Board was mysteriously leaked to French media yet written in English so it would be picked up by media outlets here in America. On the flip side the Board will be equally immature doing whatever they can to prove they made the right decision. The fact that insiders at Sanofi have already reached out to Diabetic Investor with the MannKind background shows this has started already as these insiders feel safe that they won’t be punished for spilling the beans.  Nothing like a nasty little turf war to get the juices going and lips a singing.

So stay tuned folks as like sands through an hourglass so goes that soap opera that we used to be known as Sanofi.