A tutelary figure of French capitalism, administrator of Afep, the powerful employers’ lobby, former leader of PPR (now Kering) and Accor, Serge Weinberg, 72, today chairs the last general meeting of shareholders of Sanofi, of which he took the reins in 2010. For L’Express, he reviews the successes of the pharmaceutical giant (91,000 employees, present in 90 countries). On his major failure, at the height of the Covid pandemic, to release a vaccine in time. And on the ambitions of the new investment fund he has just launched, to support French nuggets in security and defence. With, as Ariadne’s thread, a concept dear to this Commander of the Legion of Honor: national sovereignty.
The Express : What is your assessment of these thirteen years spent as Chairman of the Board of Directors of Sanofi?
Serge Weinberg : When I arrived, the company was in fact still the result of an extraordinary series of acquisitions: in France, the United States, China, Russia… More than 300 takeovers since its creation in 1973, including two particularly salient ones: Synthélabo in 1999 and Aventis in 2004. What I see then, in 2010, is a tremendous construction of companies, but not really a group. The unity of the whole was expressed above all by the personality of its historical leader, Jean-François Dehecq, to whom I succeeded. But in fact, we weren’t a band yet.
The second point, which was even more worrying, because it is the very essence of the trade, is that our R&D apparatus was broken. Rimonabant, a product on which we placed great hopes, was quickly withdrawn from the market in 2008. On the occasion of this failure, we discovered that despite a profusion of research programs – 450 in all -, there is no is none substantial. Worse, there is no program in biotechnologies. The group had not believed so far in biotech, which is nevertheless the main axis of global research, that is to say the mixture of biological knowledge and technologies to work on living molecules. The takeover of Genzyme in 2011 has, fortunately, brought us fully into this field.
But a research pipeline is not built overnight…
Indeed, it takes about ten years. To go faster, we have reactivated an agreement with Regeneron, a major American biotech, which is a former partner of the group. It is this agreement that will allow the launch in 2015 of the first two molecules, including Praluent, against cholesterol. And, since 2017, Dupixent, which has become Sanofi’s flagship drug, and which has the particularity of being a pipeline on its own since it is prescribed against atopic dermatitis, asthma or nasal polyposis. We have also just announced, and this is a great victory, the success of a clinical trial of Dupixent in chronic obstruction of the lungs. There was no treatment for this pathology. This product, the profits of which we share with Regeneron, will represent more than 13 billion euros in sales per year. The lesson of all this is that there is no future for a pharma group without a solid R&D apparatus. Ours took time to rebuild but today it is much more productive. This year, we are launching two products: a vaccine against bronchiolitis, which will be available next fall, and a product for the treatment of hemophilia type A.
Finally, when I took over the presidency of Sanofi, the stock market was at 41 euros. It is now above 100 euros, with the annual payment of a dividend which represents approximately 3% per year of return. The doubts that may have existed for a time among investors about the group’s research capacity have begun to be lifted.
In February 2021, at the time of the first vaccinations against Covid, L’Express published a long dossier entitled “Sanofi, a French fiasco“. What industrial lessons have you learned from this inability to produce your own vaccine on time?
This delay was experienced very painfully within the group. There are few situations where the whole world expects a company, or a few, to solve a serious and immediate problem. We weren’t there. And naturally, the reasons for which we were not at the rendezvous were the subject of a very precise analysis, with the help of outside experts to be sure that we made the right diagnosis. These reasons are linked to a series of internal misunderstandings. We had no sign of the low effectiveness of our vaccine until the last moment.
A kind of veil, linked to poor coordination, prevented us from correcting the work done by our French and American teams in time. The vaccine that we finally released is very effective. But we arrived after the battle, and it is extremely damaging. Since then, we have brought the vaccine industrial unit closer to that of pharma, because a vaccine is biological. We have reviewed the way our teams, on both sides of the Atlantic, work. And we have created a team dedicated to messenger RNA, made up of 450 people, with the first interesting clinical trials which should arrive in 2024.
Sanofi is a French and European group. What do you think of Emmanuel Macron’s desire, expressed during the pandemic, to restore France’s health sovereignty?
It is possible to relocate certain products. A subcontractor, Sequens, recently decided to invest in a new factory to manufacture paracetamol in France. Sanofi participated financially, and through purchasing commitments, in setting up this unit. Now, it must be understood that due to continued pressure on prices, in order to limit the growth of health expenditure, the manufacture of the active ingredients of most general medicine drugs has been relocated to two countries, India and China. Imagining that, by a wave of a magic wand, we will be able to repatriate this production to Europe, with higher costs, without reviewing the pricing policy, seems difficult to me. Health sovereignty is not free.
In France, we discover each year in September, at the time of the Social Security financing bill, the conditions under which the pharmaceutical industry will be “stared down” to limit the increase in health expenditure. And for years, the pharmaceutical industry, which represents 15% of these expenses, has contributed about 50% to the savings efforts. We cannot say that it is extraordinarily stimulating for industrialists…
Especially since they encounter great difficulty in getting their innovations approved. Approval takes place at European level. Then, at the French level, the High Authority for Health decides on the intrinsic medical value. There is a systematic bias here since a medical service deemed moderate or low then determines the price level. Consequence: a number of labs no longer launch products in France because the prices are too low. The Ministry of Health often drags its feet on these innovation topics. As if, in the end, we were rationing the supply – in a hidden way, because all of this is not very visible – to limit health expenditure to the detriment, ultimately, of patients.
In general, France continues to be a land of welcome for foreign investment. Is this good for our economy?
It is indeed remarkable: despite the image that we have sent abroad lately, there are still significant amounts of foreign investment in France. We should be happy about it, because it creates jobs, dynamism and because we have to be open. We are not an island. However, let’s not be innocent. We suffer from a number of handicaps, particularly in terms of capital. We lack, for example, long-term investment structures, due in particular to the organization of our pension systems. The distribution system, which is subject to systematic reverence, has shown its limits.
Citizens’ pensions are based on the evolution of the current French payroll. However, they absolutely do not capture the growth of the world economy. The choice of distribution means that the profits of this growth are exclusively reserved for American, English, Dutch, etc. employees. and that the French are not entitled to it. I am convinced that a supplementary, general, compulsory and joint capitalization system would improve the development of pensions. This system would also make it possible to invest in the French economy while we are gradually seeing the shareholding of our large companies being recomposed, except in family companies, at the expense of French investors. With capitalization, a mass of money could be invested in our companies, in particular to finance their energy transition, that would make a lot of sense.
Was it to take part in this “battle of capital” that you created the Eiréné (peace, in Greek) fund, specializing in defense and armaments?
We launched this reflection in the second half of 2020, well before the war in Ukraine, because it was clear that conflictuality was increasing, defense budgets too. In France, there are a myriad of companies operating in this industry, around 4,000, and which are going to experience major changes. They are often small, family-run, with sometimes complicated successions, undersized R&D and little openness to export.
Moreover, the war economy has a specificity: stocks are needed, and therefore significant working capital requirements. We have identified 600 subcontractors who correspond to the field of intervention of our fund endowed with 140 million euros today, 200 million euros tomorrow. Our first objective is to invest in around ten of them, as soon as they are mature, equipped with proven technology, patents and development prospects.
With the idea, in the background, of working for the strategic autonomy of the country?
Eiréné is a fund, which first aims to make the investments of its donors profitable: mutual insurance companies, banks, insurers or natural persons. But we also think it is useful as an alternative to foreign investors, when certain French companies have critical know-how in military or nuclear equipment.
We too often see weapons under the offensive prism, which is why this sector is excluded, in the name of ESG criteria, from many investment portfolios. This is a mistake in my opinion. In France, we don’t manufacture weapons that are used haphazardly. We have rules, a Constitution, and defense is an integral part, in my view, of ESG, because it ensures our security and the sustainability of the rest of our economy. This may seem paradoxical as a speech, but I am firmly convinced of it. Those who dream of an ideal world, without conflicts, with green energies immediately substitutable for fossil fuels, have difficulty getting used to reality. The denial of reality does not lead very far, if not to weaken the competitiveness of French industry and the sovereignty of our country.