Sanofi plots more cuts at slow-footed French R&D shop

Sanofi CEO Chris Viehbacher

Long bedeviled by union protests and government chidings, Sanofi ($SNY) is again planning to pare down its French R&D operation, plotting 186 job cuts as worker groups mobilize for a fight.

Sanofi spelled out its plans in an internal memo, Reuters reports, looking to reduce staffing at its Toulouse R&D hub to 370 in the latest chapter of an ongoing struggle to slash its home-country footprint. The issue last flared up in May, when the French government successfully cowed Sanofi into scaling back its aim of firing thousands of workers, and the drugmaker agreed to keep its Toulouse operation open for another 5 years.

Now, as Sanofi plots another round of job cuts, lab workers are planning to walk off the job in protest, Reuters reports, and the company is bracing for another round of negotiations with employee groups that will likely spill out into the public. Further complicating matters, the drugmaker knows from experience that the French government isn't shy about getting involved in labor disputes.

The problem is and always has been one of productivity, Sanofi says. The Toulouse operation is anachronistic--a remote lab full of inward-focused scientists with none of the collaborative atmosphere that marks the world's biotech hubs. Sanofi brass is on record saying its R&D paradigm is in desperate need of modernization, and CEO Chris Viehbacher has said his company outspends its competitors but takes 20% longer to develop a new drug.

Sanofi needs look no further than its own company for an example of efficient development. Genzyme, the biotech it bought for $20 billion, is stationed in the entropic hub of Boston, looping in academics, hospitals and smaller firms in its R&D process. The Genzyme deal gave Sanofi what are now its highest-profile treatments, whereas Toulouse, as Viehbacher once said, hasn't produced a major new drug in 20 years.

Hence, Sanofi needs to follow its competitors' lead and reshape its approach to R&D, but France, with its aging population and dwindling tax base, is understandably unwilling to watch any high-paying jobs head elsewhere. And unlike Merck ($MRK), AstraZeneca ($AZN) and Pfizer ($PFE), which have cut thousands of jobs in R&D over the past year, Sanofi is hamstrung by the strict labor laws of its homeland.

- check out the Reuters story