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In pursuit of the future

Sanofi-Aventis’s CEO sees Genzyme as a crucial acquisition amid an innovation crisis

By Robert Weisman
Globe Staff / January 10, 2011

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BRIDGEWATER, N.J. — Wanted: new medicines.

Christopher A. Viehbacher, who became chief executive of the French drug maker Sanofi-Aventis SA two years ago, is on the hunt. His mission is to replenish and strengthen the company’s “pipeline’’ of products by sparking innovation at a time when drug discovery has stalled.

During an interview at Sanofi’s sprawling US headquarters campus, Viehbacher, 50, said his challenge is to reinvent the company’s global research and development for a new era. That means executing on a business model that links in-house research with collaboration. It also depends on building Sanofi’s biotechnology business, preferably by buying Genzyme Corp., the largest biotechnology company in Massachusetts.

“How do you solve the innovation crisis?’’ Viehbacher asked rhetorically. “At the core of innovation is some kind of disruption with the past. Most big companies have difficulty doing disruptive thinking.’’

Over the past month, Sanofi has made a series of aggressive moves that together signal its intent to be a disrupter — and a survivor — in an industry known more for caution and consolidation than for bold thinking and medical breakthroughs.

Sanofi struck research alliances with Merck KGaA in Germany, Avila Therapeutics Inc. in Waltham, and Ascendis Pharma, a California company.

It hired Dr. Elias Zerhouni, former director of the National Institutes of Health, to head global research and development.

And it extended its unsolicited bid to buy Genzyme, based in Cambridge, despite rebuffs of its $18.5 billion tender offer from Genzyme’s management, board, and shareholders.

The goal is to assemble a network of products, potential drugs, and partnerships that help Sanofi target new disease areas and produce treatments that can be marketed worldwide. Such networks are becoming increasingly important as blockbuster drugs produced by Sanofi and other pharmaceutical companies lose their patent protection and face new competition from cheaper generic versions.

“This model is not going to be easy,’’ Viehbacher said. “It’s very difficult to get people to work together productively, and that takes leadership. If anybody can make it work, I think our company can.’’

Sanofi, best known for its blood thinner Plavix and its anticlotting treatment Lovenox (whose patent expired in November), is the world’s fourth-largest drug company. It generated $35.5 billion in sales in 2009, the most recent year for which figures are available, according to the Pennsylvania research firm IMS Health Midas.

The company, based in Paris, has a lower profile in the United States than other big pharma firms, even though it has more than 10,000 US employees. Sanofi was formed through the 2004 purchase of Aventis by Sanofi-Synthelabo. Both were French companies with deep European roots.

In all, between 200 and 300 smaller businesses were rolled up into what is now Sanofi-Aventis. Even after incorporating all those companies, it still has a smaller footprint in North America than many of its competitors. But it is a much larger player in emerging markets from China and India to Africa, Russia, and Latin America.

“European companies very early had to become culturally sensitive and go into new markets,’’ said Viehbacher.

Pharmaceutical market-watchers consider Sanofi’s international reach a competitive advantage as developing nations get wealthier and demand the kinds of treatments available in the West.

“Their global presence is critical,’’ said Jonathan P. Gertler, senior partner at Back Bay Life Science Advisors, a Boston consulting firm. “The drug-development paths you see in the United States may differ from the hurdles for drug approvals in other countries. If you think about where innovation occurs, they have the infrastructure in place.’’

An increasingly important part of that infrastructure is Sanofi’s research and cancer operations in Cambridge, which employ more than 200 scientists and other workers.

Last summer, Sanofi unveiled plans for a $65 million expansion that will add 300 jobs in Cambridge, not far from the research base of another European pharmaceutical giant, Novartis AG of Switzerland.

Sanofi also has 170 employees at its vaccines division in Canton, which it acquired when it bought the British vaccine maker Acambis PLC in 2008.

“I made the personal decision that we were going to put our cancer research center’’ in Cambridge, Viehbacher said. “I just believed there was just a hotbed of scientific activity going on there. Cambridge more than any other place has figured out how to do oncology research.’’

The man who heads the Cambridge operation, Dr. Debasish F. Roychowdhury, came aboard in 2009 from the British drug maker GlaxoSmithKline PLC. He has spent much of the past year hiring dozens of high-paid researchers and scouting for potential research alliances.

“This is one of the best places to look for talented individuals, so we wanted to put our oncology footprint in Cambridge,’’ Roychowdhury said. “We’ve been welcomed in the area and we’re making a lot of progress here. . . . We’re looking for ways we can collaborate in this town.’’

Unlike rival Novartis, which has separated its early-stage drug-discovery work from marketing, Sanofi has created disease-based units — cancer is an important one — that include research, regulatory affairs, marketing, and sales.

Sanofi last month extended its tender offer for Genzyme to Jan. 21, but it has not sweetened the $69-a-share bid — at least not publicly. In a statement yesterday, Sanofi said executives of both companies are engaged in face-to-face talks but still remain far apart on a deal.

Genzyme matters to Sanofi because of its strong franchise in biotechnology drugs for rare diseases. Sanofi generates less than a third of its sales from biotechnology treatments, which are derived from living organisms. Viehbacher would like to boost that share of its business closer to 50 percent in coming years. “It would put us seriously on the map in Cambridge and in the United States,’’ Viehbacher said. “There’s a reasonable chance that we’ll get a deal done. But it’s not 100 percent.’’

Robert Weisman can be reached at weisman@globe.com.