Tough Gig

Tough Gig

According to several sources Christopher Kaplan who was running Sanofi (NYSE: SNY) diabetes franchise has already been reassigned. This marks the second major management shuffle at Sanofi diabetes following the recent beheading of Pascale Witz. Although we have yet to see any mention of this recent beheading sources indicate that Sanofi executives received this news via email.

The question now becomes what next? Or put another way who will be crazy enough to take this position.

Although Diabetic Investor does not have intimate knowledge of what Mr. Kaplan was trying to accomplish, the general consensus was his main focus was “right-sizing” the organization to reflect the new realities of this struggling franchise. Hence the reason Sanofi employees gave him the nickname Chainsaw Kaplan.

Now we have no idea what our wine drinking friends will do next and quite frankly we’re not sure it matters much. The reality is this franchise is in complete disarray, morale which we didn’t think could get worse has done just that. To say that this franchise has become a rudderless ship with no sense of direction is a vast understatement. Hey at least the Titanic had a captain at the helm after it hit the iceberg and unlike this franchise it did have a sense of direction – straight down to the bottom of the ocean.

The question isn’t so much when this franchise will completely implode rather how much capital will Sanofi waste before this happens. Olivier to his credit had the decency to end the MannKind (NASDAQ: MNKD) partnership before it became a capital sinkhole. Also to his credit he recognizes that the franchise must be “right-sized” to reflect current market dynamics.

On the flipside however Olivier has fallen into the same trap as his predecessor trying to buy/partner his way out of this mess. It would be one thing if these partnerships had the potential to deliver a blockbuster but that just isn’t the case. The reality is even if these offerings make it to the market they are nothing more than me-too copycat drugs which in Sanofi tradition will come late to the market.

What Olivier should do now is convince Serge that it’s time to sell this franchise while he still can. That soon Basaglar, the biosimilar version of Lantus from Lilly (NYSE: LLY) will be available in the US. Explain that Toujeo, which was supposed to replace Lantus, isn’t doing all that well. He should then apologize for spending millions so that LixiLan would get an expedited review, acknowledge that even if approved it will never live up to expectations.

Yet on the flipside he can assure Serge that given this is the wacky world of diabetes the greater fool theory is alive and very well. That yep, as bad as they have managed this franchise there is likely someone who believes they can do a better job. Even better they will pay handsomely for the privilege. Heck we’ll even allow Olivier to quote his favorite publication and mention to Serge that this is the wacky world of diabetes where anything can and usually does happen even when it makes no sense whatsoever.

We’ll even go a step further as we would recommend Olivier have this conversation along with a fine bottle, or two, perhaps three of wine. After consulting with our beautiful wine consultant we’re not sure exactly what type of wine goes with some humble pie. At first we thought we thought a nice buttery Chardonnay would do the trick. Then again given the bold nature of such a move we thought about a big and bold Cabernet. Yet even that may not work so just to be absolutely sure that Serge gets good and hammered we’d recommend some Makers Mark as a nightcap.

Take our word for it Olivier it’s well worth the hangover, something that will eventually pass with time. Unlike the continual hangover you would have by keeping this franchise.