Sanofi CEO Viehbacher on Stirring Innovation in the Era of R&D Cutbacks

1/17/12Follow @xconomy

Chris Viehbacher has seen plenty of ideas come and go from people trying to shake up the pharma R&D model. No matter how much people have tried to fix things, it still takes a notorious amount of time, money, and risk to create new drugs.

Now, as the CEO of Paris-based Sanofi (NYSE: SNY), Viehbacher is blowing up the traditional R&D model at a huge, 110,000-employee company. Last year’s big strategic move was the acquisition of Cambridge, MA-based Genzyme, which gave Sanofi a lot more biotech products and expertise. Since then, Sanofi has done what a lot of other pharma companies have done—made cutbacks on its own internal research. And now the company is setting aside an increasing percentage of its $6.5 billion-a-year R&D budget for bets on collaborators doing edgy scientific work in universities and at biotech companies.

I sat down to interview Viehbacher last week at the JP Morgan Healthcare Conference in San Francisco, where we talked about the Sanofi R&D plan, and how the company can help support biomedical innovation more broadly outside its corporate walls. Here are excerpts from the interview, edited for length and clarity.

On Sanofi’s outreach strategy with U.S. researchers, particularly in the Boston area following the Genzyme acquisition:

One of the main rationales for doing the Genzyme deal was to have a strong presence in research in the U.S., and clearly the first choice is Cambridge. Our vision for research is one of open collaboration. How companies do research is evolving, and certainly we are evolving. Traditionally, we’ve had big research centers, and we are trying to get a lot more balance between internal research and external research. Right now, it’s about a 70/30 ratio between internal to external. My objective is to bring that to about a 50/50 balance.

That fits with a number of trends in research. First, there’s a lot of funding for new ideas drying up as venture capital is leaving biotech. Second, is that as we look for innovation, we look for where people are doing basic science experiments that are defining causes of diseases. What you are seeing is that a number of people in the value chain of research are specializing. Not everybody is trying to do everything.

In Cambridge, you’ve got all those things. Being the No. 1 life sciences employer in Boston is great, but we didn’t want to just do the same thing we did everywhere else, having everybody inside our walls. So we created this concept of a hub. There’s a core, with a lot of competencies that a big organization can bring, but the idea of a hub is that we can manage the relationships we have with everybody from Dana-Farber Cancer Institute to Harvard to MIT to the Joslin Diabetes Center to some of the biotechs we work with. And we put our own oncology research team in Cambridge. There’s a whole ecosystem in Boston, and we feel integrated and at the center of it.

On joining Third Rock Ventures and Greylock Partners in a $125 million financing of a new startup called Warp Drive Bio:

The Warp Drive Bio project is interesting because it demonstrates where we want to go. It was certainly an unusual deal for Sanofi, because essentially what we’ve done is jointly fund a startup biotech company. It was very much on the basis of saying we want to work with (Harvard University chemical biologist) Greg Verdine. Someone like that isn’t going to come work for Big Pharma, but we liked the science he was doing. We have a strong interest and expertise in natural products, and he had a genomics screening tool.

We will contribute expertise. I don’t want to be a venture capitalist, or have a venture fund, like some other companies do. But I want to actually partner, where we bring some of what we know, and combine it with what Warp Drive has. The fact that we are trying to bring people from Sanofi into the collaboration, at such an early stage of research, is unusual. The single factor for success will be whether you can take a company like Warp Drive, with a handful of people, and make it work with an organization of 110,000 people without smothering it.

On how Sanofi hopes to change traditional university/industry collaboration templates:

We have some interesting partnerships with UCSF, in diabetes, brain trauma, and oncology. When you look at UCSF, we are trying to do true collaborations. Sometimes you look at academic collaborations and it’s essentially outsourcing a true piece of the research. That’s not … Next Page »

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