The drama continues

The drama continues

“The board was not happy with how Viehbacher had to go” this statement comes from Serge Weinberg who is now the acting CEO at the soap opera known as Sanofi (NYSE:SNY) and came during an interview with Fortune magazine. This statement comes after accusations that Viehbacher and other Sanofi executives took part in an illegal kickback scheme involving the company’s diabetes franchise.

What’s truly distributing here is not that the Serge Weinberg is doing his best to tell the Board’s side of the story, this as we have noted previously was expected. No the truly distributing part of this ongoing soap opera is the destruction of stakeholder value. Over the past three months shares have sunk more than 15% while the broader market is up nearly 5% over that time frame.

Yet this is just half the story as each time Weinberg opens his mouth it becomes harder and harder to find a new CEO. This is what Diabetic Investor does not understand as we just cannot fathom why the acting CEO would go so far out of his way to basically cover his and the boards backside. Now that the whistleblower suit has gone public there is really no reason for Weinberg to justify the board’s actions. Even without this suit, the decision to can Viehbacher has been made, so why not move on?

Still this is not the first time Weinberg has opened his mouth and fully inserted his foot. Keep in mind this is the acting CEO who basically threw the diabetes sales team under the bus blaming them for what really was the failures of management. A management team that is facing some very serious allegations. Even without these allegations Weinberg should have kept his mouth shut as his comments showed a complete lack of understanding of how the diabetes drug market operates.

So let’s think about this for a moment and think how these constant attempts by Weinberg to cover his and the boards backside are impacting the search for a new CEO. Is it any wonder the position has yet to be filled? Does it surprise anyone that all of the rumored replacements for Viehbacher have basically told the company thanks but no thanks? Does it not seem logical to ask how these attempts at CYA are doing more harm than good? Does Weinberg not realize that each time he opens his mouth his foot is soon to follow?

As we noted just the other day the longer this search goes on the greater negative impact it will have on the company. This is especially true with the diabetes franchise whose future success rest on the shoulders of two very unproven products, Afrezza® and Toujeo®.  Whether or not one believes in the future prospects of both products, and Diabetic Investor doesn’t, they are for all practical purposes what the company has. Any delay or misstep in either launch could effectively doom the slight chance the company had at becoming relevant in diabetes.

The simple fact is the diabetes franchise is reeling and based on what we’re seeing and hearing things will get worse, much worse, before they get better. With no CEO to provide direction or vision the franchise is left to wander aimlessly through the wilderness.

There was a time when Diabetic Investor felt the best way out of this mess was for the new CEO to go big and buy AstraZeneca (NYSE:AZN). Today we’re not sure even such a bold move would save the day. Yes from a portfolio perspective this deal makes perfect sense as it would put Sanofi in position to more effectively compete against Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO). However one could also argue that the last thing the Astra diabetes portfolio needs is yet another change in ownership. That such a deal if consummated would derail Astra just when they appear to be getting their act together.

This is why it’s time for Weinberg and his fellow board members to stop making public comments about a decision that has already been made. That, right or wrong, there is no turning back. It’s time to fill the CEO position and map out a strategy that will reverse the sad course the company now appears to be on. Sadly for Sanofi stakeholders we see little evidence that Weinberg and his fellow board members will stop justifying a decision they have already made. That they will continue to care more about how they are perceived than the pain there inaction is inflicting on stakeholders and employees. They are more concerned about their public image than doing what’s right for the company.