The French Revolution 2014

The French Revolution 2014

Thomas Jefferson, who had a fondness for all things French, once wrote; “I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” Well judging by how the rank and file is reacting to what’s been going on at Sanofi (NYSE:SNY) it looks like our wine drinking friends in France have another revolution on their hands.  According to Wikipedia the last time the French experienced a revolution; “The French Revolution (French: Révolution française) was a period of radical social and political upheaval in France from 1789 to 1799 that profoundly affected French and modern history, marking the decline of powerful monarchies and churches and the rise of democracy and nationalism. Popular resentment of the privileges enjoyed by the clergy and aristocracy grew amidst a financial crisis following two expensive wars and years of bad harvests, motivating demands for change.”

Based on what Diabetic Investor is hearing from inside the company we’d say that if the company isn’t careful another revolt is about to take hold as the seeds of discontent have been planted. Seeds that received some fertilizer the other day when Chairman Serge Weinberg blamed the sales force for the problems in the diabetes franchise. Now maybe we’re just too American but we’re not sure how you can blame the sales force for the failure of Apidra, the failure of the iBGStar or the failure with Lyxumia. Is it the sales force who decided against the advice of the company’s own due diligence team to do a partnership with MannKind (NASDAQ:MNKD)? Is it the sales force who believes that Toujeo® is the next blockbuster, when nothing could be further from the truth? Was it the sales force who thought special lunch bags would somehow lead the sale of more insulin?

Now that the board has fired Viehbacher the onus is on them to find a leader who can repair the damage and restore order in the ranks. Yet what no one seems to be asking here is why anyone would want this job. Yes we know it’s a big job along with a very fat paycheck but honestly given the dissension internally the task at hand is enormous.

The fact that the position has yet to be filled indicates to Diabetic Investor, the board may have overplayed their hand. While no is talking publicly the rumor mill seems to believe that the position was offered to current AstraZeneca (NYSE:AZN) CEO and Australian Pascal Soriot. Now either Mr. Soriot is holding out for more money, using this situation to extort more money from his current employer or has decided he doesn’t need the headache. This same rumor mill is also worried that given Mr. Soriot reluctance to commit the board will be forced to settle for a second tier executive.

Frankly the longer this search takes the worse the situation will become, right now Sanofi is a company with no leadership, no sense of direction and no purpose. We’d say that the inmates are running the asylum but this would be a knock against the rank and file who did not create the problem. The irony here is that it is the board who should be worried about their jobs if they don’t get this right. They acted boldly firing Viehbacher yet like all things Sanofi they have been unable to execute since. The question is should they not get this right will they be held accountable, as Viehbacher was, or will they remain in place. When Viehbacher failed, according to the board, it was off with his head; what happens if the board fails?

Jefferson also once noted; “He who knows nothing is closer to the truth than he whose mind is filed with falsehoods and errors.”  Based on how the Sanofi board has performed since this situation unfolded it looks like their minds are filed with falsehoods and errors.