Sanofi SA (SNY.US) unexpectedly announced on February 12 that CEO Paul Hudson has been removed from his position, with Merck (MRK.US) executive Belén Garijo appointed as his successor. The French pharmaceutical giant had significantly increased research and development spending, but the lack of tangible results has exhausted the board's patience. As of the latest update, the stock was down more than 6% in pre-market trading.
Paul Hudson led Sanofi for over six years, during which he consistently sought a successor for the blockbuster drug Dupixent—a treatment for asthma and atopic dermatitis that is approaching a patent cliff, with revenue expected to decline sharply after its sales peak. However, key strategic initiatives have repeatedly fallen short: last year, three late-stage clinical trials produced mixed or failed results, leading to a surge in shareholder dissatisfaction.
"Investors have long lost patience with the repeated R&D failures," said AlphaValue analyst Abhishek Raval.
Garijo: A Familiar "External" Hire Garijo, whose tenure at Merck was coming to an end, previously spent 15 years at Sanofi, giving her deep familiarity with the company. In a statement, Sanofi noted that she will "advance Sanofi’s strategy with greater execution rigor," adding that her top priorities include improving the productivity, governance, and innovation capabilities of the R&D division.
In 2023, Paul Hudson introduced an aggressive plan to accelerate new drug development, but it has yet to yield meaningful returns. Last year, the experimental multiple sclerosis drug tolebrutinib failed a key Phase III trial, while U.S. regulators rejected its application for another indication. Amlitelimab, a candidate hoped to succeed Dupixent in treating atopic dermatitis, also delivered mixed clinical trial data.
"If you had asked me in 2020 whether Sanofi would need five to seven years, I would have said absolutely not," Paul Hudson admitted during an earnings call in late January. "We are smarter, stronger, and we should be faster—unfortunately, that hasn’t been the case."
Sanofi’s divestment of its controlling stake in the consumer health business last year means the company will now rely entirely on innovative prescription drugs for future growth. Analysts John Murphy and Mira Bankowska noted that Paul Hudson significantly reshaped Sanofi’s corporate culture—once criticized as "conservatively French"—enhancing its global presence and outlining a profit growth path through 2030.
However, due to persistent inefficiencies in R&D and the failure to secure a true successor to Dupixent, Sanofi’s valuation multiples have continued to lag behind peers, with its stock price expected to remain under pressure through 2025. Jefferies analyst Michael Leuchten pointed out in a report that further management adjustments at Sanofi are likely.
"Merck was once able to recruit strong R&D talent from AstraZeneca, and from what we know of Garijo—once a strategy is set, she executes without hesitation." During her previous tenure at Sanofi, Garijo oversaw European global operations and led integration efforts following the acquisition of Genzyme. After moving to Germany’s Merck Group, she headed the industrial giant—which spans pharmaceuticals and semiconductors—and spearheaded several key transactions, including efforts to secure raw materials for COVID-19 vaccines.
She had previously aimed to achieve €25 billion in revenue by 2025, but slowing post-pandemic demand hampered that goal, prompting stricter cost controls and acquisitions to counter the downturn. Paul Hudson’s final day at Sanofi is set for February 17.