My letter to Serge Weinberg

My letter to Serge Weinberg

Dear Serge,

First I would like to thank you for the generous offer to become the next Sanofi CEO. It is however with great sadness that I cannot accept the position at this time. Please indulge me for a moment while I outlie the reasons I cannot accept such a generous and quite flattering offer.

At the moment the wacky world of diabetes is, if you can believe it, becoming even wackier. On the device side of the wacky world, the old guard – Johnson and Johnson, Roche, Bayer, Abbott and Medtronic are all struggling to adapt to a world were outcomes matters. A world where the future rests not with selling hardware but systems that help patients achieve better outcomes.

To make matters worse pricing pressure continues and new, very well-funded competitors loom on the horizon. Tech giants Apple, Google, Samsung and Facebook are just some of the heavyweights who are seeking to become part of the wacky world. Not only do these tech giants have the resources to compete, they bring with them a fresh approach and new perspective. This does not mean they won’t make some of the same mistakes made by the old guard, but unlike the old guard they might actually learn from these mistakes.

As you well aware the drug side of this wacky world is also changing and not necessarily for the better. Back in the day, actually not that many years ago, the drug side was all about innovation, bringing new therapies to market. While formulary position was important developing new and better therapy options was more important. This period brought us some truly outstanding therapy options, your own Lantus was one of the best of the bunch.

Today as you are also well aware with cost containment being the order of the day the diabetes drug market is becoming a commodity market with price being more important than performance. Drug companies such as Sanofi have stopped being innovative and most of your peers are developing me-too copycat drugs. Now I don’t necessarily blame them for this approach as given the equally wacky regulatory environment, one in which innovation is not encouraged, why a company such as Sanofi would spend billions on developing an innovative therapy option only to be blind-sided by the FDA remains a mystery to many including me.

But as you know that’s only the beginning let’s say by some miracle you can get this innovative therapy option all the way through the FDA, that’s just the beginning of the nightmare. Next you’ve got to go to payors, convince them that this therapy actually works hoping they will find it in their hearts not to regulate this new therapy option to formulary purgatory. Then you must suffer the additional indignity of listening to these people tell you what they are willing to pay for this new therapy and how much of rebate they except from your company. With the compassion of a Chicago mob boss, they basically tell you either take this deal or else.

Although I don’t know you that well I get the impression you’re not the type of guy who likes someone else telling you what they will pay for a product your company spent billions developing.  That you would like to offer Sanofi’s many stakeholders a return on their investment, that Sanofi should be entitled to make a profit.

Given this set of circumstances and the fact I’m not a big fan of French cuisine, nor wine drinker- I’ll take a cold Miller Lite or Grey Goose and tonic any day – I cannot take on such a responsible position. However if you would indulge me just a little longer allow me to offer you some free advice on what the goals should be for whoever takes this job – now keep mind this is free advice and remember what my mother always said – you get what you pay for.  Also please note my advice will deal directly with your diabetes franchise, as I do have experience with oncology just not the kind you are looking for.

First and foremost this person must be realistic about the current state of the franchise. The goose that lays your golden eggs, Lantus, will soon face generic competition and will never be the same. The product you’ve designated to replace Lantus, Toujeo while somewhat better than Lantus, won’t come anywhere near replacing the revenue that will be lost when a generic Lantus gets here and yes it will get here. Afrezza and your partnership with MannKind was a huge mistake and the company would be in much better place if you would just pay MannKind to go away. Not only will the Afrezza launch distract the company from more important matters, this is a niche product that is unlikely to ever yield significant revenue. The way I see it Afrezza is about to give one huge headache, even bigger than the $4 billion headache Exubera gave Pfizer.

Next this person must rebuild moral. While I have been critical of the company recently this does not mean Sanofi does not employee some truly outstanding and talented people. It’s understandable that moral is at an all-time low but the success of this franchise will not happen until it is restored. And don’t be afraid to challenge these people, to hold them accountable as that’s the funny thing about talented people they like a challenge and understand they need to be held accountable. You can also do yourself a huge favor by not blaming the sales team for the failures of management. As momma Kliff used to say if you don’t have something good to say keep your mouth shut.

Allow this person to be bold, let whoever it is make a run at AstraZeneca. This is almost a match made in heaven as they have the diabetes portfolio which when combined with your insulin portfolio will allow you to compete head on with Lilly and Novo Nordisk. As I noted earlier in this letter the diabetes drug market is changing and if Sanofi does adapt your company will no longer be relevant in diabetes.

Now if you really want to do this person a favor tell them to stay away from devices. Sanofi is a pharmaceutical company and not a device company. About the only device you need is a good insulin pen and that’s something you can easily outsource. But please stay away for glucose monitoring or insulin pumps, heck these two areas aren’t that great anyway and you would be wasting even more precious capital battling established players.

Finally and I know this will be very difficult tell the French government and unions that Sanofi is run for the benefit of your many stakeholders. You can appease them by hiring a Frenchmen or woman, but tell them in no uncertain terms to stay out of your business.

In closing I again want to thank you for considering me for such an important position. Honestly I am flattered that I even made the list of potential candidates. I wish you luck in your search and feel free to contact me at any time.

You’re Friend,

David Kliff