Sanofi CEO Bets Outside U.S., Gears Up for Flu Pandemic, and Seeks To Learn From Biotech

6/19/09Follow @xconomy

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that allows us to sell on a basis that allows us to be profitable in those markets, but we’re not as dependent on the blockbuster patent cycle. One-third of our business is not in the U.S. and Europe. My objective is to develop a much more sustainable growth model, looking out towards 2013. That’s where we lose some of our own blockbuster products.

But it’s back to my vision of a global healthcare company. We started with a medicine and looked for customers. We typically looked for the wealthiest customers. Now, what we’re starting to do is say ‘let’s start with patients’ and say ‘what are their healthcare issues on a market-by-market basis?’ Where can we find a business opportunity to help them with their health care. It’s a much more patient-oriented, and customer-oriented approach than what we’ve had in the past.

X: I see you’ve made an effort to ramp up biotech expertise with the acquisition of BiPar Sciences and the partnership with Exelixis. Can you talk about your strategy to revitalize R&D?

CV: The traditional model of pharma was that we can do everything. From discovery through commercialization. The complete integrated pharma model. I think it’s clear we have a legitimacy in pieces of that value chain. Certainly in commercialization, the development side. We also have, because of our scale, we can have deep pools of competence in things like regulatory affairs, pharmaceutical development, high-throughput screening and the like. But in the 1990s, research changed, as translational research gained hold, and we saw more coming out of genomics. In research, there’s a piece around problem solving and process, but there’s also a piece around the true creative genius and innovative genius. That’s where I think the role of pharma is less clear. You clearly have a strong role within academic institutions, things like the NIH that are trying to find out things like the cause of a disease. Then there’s the translational piece. Then there’s a piece that says all these targets have arisen, which ones do we develop? There’s an entrepreneurial piece, before you even get into preclinical studies. So I think the front end of our business needs to be very close to the biotech and academic community, to capture some of that innovative genius and the translational research. We can try to replicate some of that within pharma. I can tell you it’s more than a size and structure issue. Just because you have the same size as a team, that’s the same size of a biotech, doesn’t mean you within pharma are like a biotech. I think when I sit with people from biotechs, there’s a different approach. Any CEO of a biotech will tell you about the horrendous battle they had to go through to get the first round of financing. And then you look for subsequent rounds of financing on the basis of progress. If you might, the ideas being developed by biotech have withstood a market test. A certain validation from outside experts. If you look at internal projects within pharma, we’ve typically had research and development centers. We usually talk about things like, ‘does your budget go up by 3 percent or 4 percent?’ There hasn’t been the same rigorous market test, or of peer review. That’s where we can learn from biotechs, in terms of the rigor it takes to get their ideas funded. If we do try to replicate a biotech, it’s to replicate elements of the culture, and create the working environments for people who like to work in biotech to also work in pharma.

Any big organization, once it gets to a certain size, has to have major control mechanisms because there are so many people at so many sites. The level of control we have to exert is not necessarily adapted to the stage of research, and doesn’t create the same environment that you have in a biotech. It makes things complex, and process-driven instead of innovation-driven.

But I don’t look at biotech simply as a source for new products. If you take the BiPar acquisition, for example, I had to step in personally to ensure that the company did not become integrated. This is a team of 18 people, a lot of them from Amgen and Genentech. It’s a spinoff from a university. If 18 people can bring a drug from zero to Phase II, and in a plenary session at the American Society of Clinical Oncology, these are 18 great people. You don’t want to lose them. I can tell you there was an immediate corporate reflex to “Sanofize” this company, and a lot of these people were about to leave on June 15. I said ‘No.’ So now we’re going through an interesting cultural exercise, in which we say, ‘how do we keep this company independent, but have it be able to plug into the pieces of Sanofi which are big, and which are good to be big in?’ So, BiPar already has relationships with the FDA. But as a Bay Area company, it didn’t have the resources to deal with European regulators. We can bring expertise in European regulatory affairs, to get this product approved globally. So I need to find a way so this company can stay independent, even while part of a big corporate group. Be plugged in where it needs to be, but not necessarily every part that wants to be, like finance and legal and all the other corporate functions. It’s an interesting corporate exercise.

Exelixis is a similar type of arrangement. They are extremely good … Next Page »

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