Not looking promising

Not looking promising

Tomorrow will mark the two week anniversary for the Sanofi (NYSE:SNY) decision to fire CEO Chris Viehbacher. An event which has unleashed a fierce debate as to whether this was the right move or not;   an event which has disintegrated into lots of finger pointing and blame assignment but not much else.  While everyone anxiously waits to see who the next CEO will be, whether this person will bring the gravitas needed to turn things around other questions need to be answered.

The most pressing of which is whether the company will actually be able to launch Afrezza on time. Will they be able to get Afrezza onto formularies and if they can what tier will it be? Will the sales force which was publicly lambasted by Sanofi Chairman Serge Weinberg for their ineffectiveness, turn a deaf ear to these comments?  Can a team not known for producing successful diabetes product launches turn things around?

Early reports indicate this team still doesn’t get it. As we noted after our interview with MannKind (NASDAQ:MNKD) founder and CEO, Al Mann when he stated that the Sanofi team would be perfectly happy charging a higher price for Afrezza even if that meant it would be regulated to tier 3 formulary status. To fully grasp how stupid this decision would be think of it this way, tier 3 formulary status is like asking the Chicago Bears defense to actually stop Aaron Rodgers, simply put this ain’t happening anytime soon.  Yes its true tier 3 is better than not being on formulary but not by much.

What’s almost laughable here is that this product launch has become important. To Diabetic Investor this illustrates the extent of the problem with Sanofi and diabetes. We will not repeat the many mistakes that were made but will note that things are truly circling the bowl when what is basically a niche product becomes important.  Think of the embarrassment should they not launch on time.

But that’s just the beginning as let’s say by some miracle they can actually launch the product, can they then get into the hands of patients? This is why the pricing decision becomes critical and why a tier 3 formulary status would doom any chance the product has. Seriously that people at Sanofi would expect patients to pay more for this unproven product shows the depth to which they don’t understand the diabetes market. That is until one considers these are the same people who thought that patients would buy an adaptor so they could use the now dead iBGStar with newer versions of the way cool iPhone, after Apple changed the connector port.

Honestly the best thing the new CEO can do is kill this deal before things go from bad to worse. Pay MannKind the $250 million and move on. Better to waste $250 million than three or four times that amount.  We hate to state the obvious here but when a niche product like Afrezza becomes this important perhaps it’s time to rethink the entire diabetes strategy.