The spin cycle

The spin cycle

As we predicted in the aftermath of the Boards decision to can Chris Viehbacher, both sides of the Sanofi (NYSE:SNY) soap opera have gone into full spin mode. This morning the Wall Street Journal is just one of many media outlets who have published stories on the subject. Also as expected the battle lines are becoming clear; for their part the Board is basically saying they had no choice as Viehbacher wasn’t executing the plan put in place back in 2008. The way the Viehbacher camp tells it is Sanofi made a major mistake as under his tenure the company became a global pharmaceutical conglomerate. The third story developing here is who will replace Viehbacher and when this will happen.

Lost in the soap opera, as juicy as all the tidbits may be, is the impact this will have on Sanofi and their struggling diabetes unit.  Simply put the way Diabetic Investor sees it the company has two choices with diabetes and it doesn’t matter who the CEO is; go big or go home. Given current market dynamics there really isn’t a middle option.  The honest truth is Sanofi cannot survive in diabetes as they stand today. They do not have nor will they have a product portfolio that can effectively compete with Novo Nordisk (NYSE:NVO), Lilly (NYSE:LLY) or AstraZeneca (NYSE:AZN).

Today’s comments from Novo on the status of Tresiba® at the FDA should dispel any myths that Tougeo® will be approved anytime soon and not face any obstacles from the agency. Even if everything went well with Tougeo, and that’s looking increasingly unlikely, the drug faces a tough task as no matter what the company says as it’s really not that much better than Lantus. The same can be said for Afrezza® even if one believes the manure the company has been spreading about their partnership with MannKind (NASDAQ:MNKD), nothing good is going to grow here and the more we learn about how this deal was put together the more it stinks.

Now looking at the two options the only way the company can go big is to acquire AstraZeneca entirely or at minimum their diabetes portfolio. The simple fact is Sanofi cannot wait around to see what Novo might do or how aggressive Lilly might be or whether Merck (NYSE:MRK) might make a play for Astra. The only way and we really mean the only way they can stay relevant in diabetes is by going big.

This is why if they can’t play in the playground it’s time to go home, sell off the diabetes franchise and move on.

The one thing they cannot do is be the Sanofi of old; the Sanofi who could not execute or make a decision. Time is not on their side and something needs to be done… like yesterday. Whoever takes the reins their first priority should be to make a decision on what do in diabetes and cleaning house is not the answer. While Diabetic Investor would not argue that the diabetes management team performed poorly however replacing this team will not solve the problem. A new management team will face the same problems as the existing team; the only way a new team makes any sense at all is if the company goes big, otherwise this is just window dressing.

Yes it will be somewhat amusing to watch the soap opera but at some point everyone has to wake up, smell the coffee and understand that as amusing as this may be, it’s time to start dealing with the problem at hand and stop rehashing the problems of the past.