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Sanofi downsizing in France drags on


Government report to help decide fate of R&D center in Toulouse.

Sanofi CEO Chris Viehbacher has been openly critical of his research operation in Toulouse, France. He said the researchers are costing too much money and haven’t developed an important drug in 20 years. The company is building its main development brain trust in Boston around its Genzyme biotech operation. Despite all of that, he can’t seem to rid himself of the 600-person Toulouse operation.

By month’s end Sanofi ($SNY) expects to get the results of a government-sponsored report on whether there is a way to turn the facility into a local cancer-research center or perhaps close it, according to The Wall Street Journal. The center was targeted last year as part of a downsizing in the country that first was slated to eliminate up to 2,500 jobs but ended up with just 900 on the chopping block and uncertainty around the 600 in Toulouse.

French labor laws and the French resistance, so to speak, will make closing Toulouse extremely difficult, as Sanofi execs found out last fall when it first floated that idea. While drugmakers lay off workers by the thousands in the U.S. and elsewhere, closing a 600-person operation in France is something else. The company ran into a buzzsaw of employee protests, political arm twisting and public ridicule. «In France, the politics, the labor laws are extremely different than in other regions," Elias Zerhouni, an Algerian-born U.S. citizen who leads R&D for Sanofi, told the newspaper. «It means that for sites like Toulouse… anything you want to do differently gets to be a confrontational issue.»

French pride is at stake in the fight over the Toulouse site because the jobs there represent the kind of highly paid, high-technology positions that every country wants to provide its most educated citizens. But the company has found that its R&D costs run higher than its peers and it takes the company 20% more time to develop new drugs, WSJ said. More than half of Sanofi’s R&D staff is still in France, but Sanofi likes centers in Lyon and Montpellier for specific disciplines like infectious diseases and clinical testing.

While the future of the Toulouse facility remains up in the air, Sanofi is still negotiating with the 900 workers it does plan to let go in the restructuring, The Wall Street Journal reported. Last month, a court ruled that Sanofi violated labor laws by not spelling out to unions exactly how many jobs and which ones were to be eliminated, delaying the process again.


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