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Sanofi taking new approach to drug innovation, CEO says

Joanne Rathe/Globe Staff

Christopher Viehbacher, whose company bought Genzyme, spoke to the BC Chief Executives’ Club.

French pharmaceutical giant Sanofi SA is using its newly expanded presence in the Boston area to pioneer a research model that relies more on partnerships with outside innovators and less on its in-house efforts, the company’s chief executive said Tuesday.

Christopher A. Viehbacher, who negotiated Sanofi’s high-profile buyout of Cambridge-based Genzyme Corp. last year, said the area’s focus on innovation makes it a perfect location to collaborate on drug development with academic researchers and biotech start-ups.

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“The personal contact in innovation is still important,’’ he told 300 business leaders gathered for a Boston College Chief Executives’ Club luncheon at the Mandarin Oriental Hotel.

Sanofi, which has made the Boston area its top US research hub, recently shut down research and development campuses in Bridgewater, N.J., Hungary, Italy, and the United Kingdom, while downsizing a research site in the Netherlands.

Citing the dense cluster of universities, teaching hospitals, life sciences companies, and venture capital firms locally, Viehbacher said Sanofi has found that “the most fertile environment in the world today is right here in the Boston-Cambridge area.’’

But he warned that the risks to innovation have been mounting, including rising health care costs, cuts to the National Institutes of Health budget that funds medical research, and a reduction in the number of American students pursuing math and science.

“Yes, we have Harvard, we have MIT,’’ Viehbacher told the audience. “Do we have people in the United States who are going to go to Harvard and MIT?’’

Viehbacher also lamented the inability of big drug companies to embrace the “disruptive element’’ of innovation, searching for new disease targets and research approaches that are radically different from those pursued in the past. “This is extraordinarily difficult to achieve in big companies,’’ he said. “In fact, we do everything we can to eliminate disruption in big companies.’’

By acquiring Genzyme, which created a disruptive business model working with patients to develop treatments for rare disease, Viehbacher said Sanofi is trying to rethink its own way of doing business.

Another example of that new thinking is its co-investment with Boston venture capital firm Third Rock Ventures in Warp Drive Bio, a Cambridge start-up which is developing technology that will enable it to make drugs from microbes found in plant extracts.

Venture funding cuts have reduced the annual number of biotechnology start-ups in the Boston area from 40 to 45 in the past to 10 to 15 in the last two years, Viehbacher said. With the backing of Sanofi, “we’ve created a situation where venture capital is coming back to start-ups,’’ he said.

Sanofi paid $20.1 billion for Genzyme in a hostile-turned-friendly deal that was completed last April. Viehbacher temporarily installed himself as acting chief executive, working with former chief executive Henri A. Termeer to ensure a smooth transition before turning over the Genzyme reins to veteran executive David Meeker in October.

Since then, Viehbacher has launched a campaign to wring $170 million in cost savings out of Sanofi’s global operations, though the bulk of the cuts have been outside the Boston area. For example, Sanofi is moving some research from its New Jersey lab to Cambridge.

Last month, Genzyme began trimming an unspecified number of jobs from its own research operations. At the same time, the division has been hiring workers at Genzyme manufacturing sites, keeping its Massachusetts workforce stable at about 4,500 employees.

In a sign of progress in resolving longstanding production problems, Genzyme last week said it had started shipping its Fabrazyme drug from a new plant in Framingham after winning approval from regulators. Genzyme had been rationing the drug, which treats the rare enzyme deficiency Fabry disease, since it discovered a virus at its Allston plant in 2009.

Viehbacher told reporters Tuesday that Genzyme has largely overcome its manufacturing problems after completing a maintenance overhaul at the Allston plant last month.

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