Wednesday, January 12, 2011

One more reason why Genzyme might want to resist Sanofi's overtures

For weeks now, The Boston Globe has been running stories about Sanofi Aventi's hostile bid to acquire Genzyme, the Boston-based biotech giant. One recent story talked about how the CEOs of both companies attended the same conference in San Francisco without talking to each other. Genzyme has repeatedly rebuffed Sanofi's offer largely on the grounds that the share price being offered is inadequate.

But here's another reason why Genzyme might want to be wary of Sanofi's overtures: its new CEO, Christopher Viehbacher, comes from GlaxoSmithKline, where as head of its US operations, he presided over some less than savory business decisions. He was, for example, at the helm when top Glaxo officials ignored problems with a production plant in Puerto Rico, according to a former Glaxo employee turned whistleblower. (Glaxo recently agreed to pay a $750 million fine and plead guilty to a felony for manufacturing fraud that led to untold bottles of contaminated meds, mislabeled packaging and incorrect dosages at this plant, according to Pharmalot.)

Viehbacher also headed up the company's US operations during the tempest over news that its anti-diabetes drug, Avandia, increased the risk of heart disease in patients. Even though a meta-analysis done by Dr. Steven Nissen, a cardiologist at the Cleveland Clinic, reported the increased heart risks in a major journal article in 2007, Glaxo executives kept insisting on the safety of their top-selling drug. It wasn't until an FDA advisory panel this past year recommended that Avandia either be pulled from the market or see its sales severely restricted that the company agreed to put black box warnings on the drug; read about this here. And Viehbacher was in charge when the New York State Attorney General's office sued GlaxoSmithKline for not telling doctors and consumers the full story about the suicidal risks of its blockbuster antidepressant, Paxil, and its lack of effectiveness in children and adolescents (which is the subject of Side Effects).

Viehbacher, of course, was not in charge in the late 1990s when company officials first decided to suppress data about Avandia and Paxil's risks. But since he became head of US operations in early 2003, there's a good chance that he was briefed about the dangers of these drugs and chose to do nothing about them, until forced to do so by regulatory officials. Indeed, according to the New York Times, after Nissen's study was published, Glaxo officials conceded that they had known of the drug’s potential heart attack risks for a number of years. But instead of pulling Avandia off the market, they reacted by defending the drug and threatening lawyers who were advertising on TV for patients who might have been harmed by taking Avandia; read about this here.

I have no idea whether Viehbacher was passed over for the top job at GlaxoSmithKline because of the less than ethical corporate behavior that occurred on his watch. But it is one more reason why Henri Termeer, the CEO of Genzyme, might want to think twice before handing over his company to Sanofi-Aventis.


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