R&D slowdown compounded by Trump variable, Sanofi (SNY.US) new CEO Gary Ho faces dual challenges

According to CnFinance APP, Belén Garijo, the 65-year-old incoming CEO of French pharmaceutical giant Sanofi (SNY.US), faces a significant challenge: winning investor support, accelerating the company’s stagnant drug development process, and addressing vaccine skepticism during the tenure of U.S. President Donald Trump.

It is understood that Sanofi abruptly announced on February 12 that CEO Paul Hudson would step down this month, with Belén Garijo, an executive at Merck Group, set to succeed him in April. The French pharmaceutical giant had previously increased R&D investments substantially but has yet to see results, and the board’s patience has run out. The company’s stock has fallen 25% over the past year, closing down 4.51% on Thursday.

Sources close to Garijo, including investors, analysts, and others, describe her as decisive, detail-oriented, and highly capable of execution, but her R&D results have been inconsistent, and the company’s stock price has notably declined during her tenure. Notably, Garijo has served as CEO of Merck Group in Germany since 2021.

“The leadership change at Sanofi indicates that the R&D transformation has failed or is progressing too slowly,” said Markus Manns, portfolio manager at Union Investment. “Belén’s primary task at Sanofi will be to improve R&D productivity.”

Manns highly praises Garijo for successfully managing Merck Group’s operations across health and technology sectors and specifically commends her for a key pricing agreement reached last year with U.S. President Donald Trump. However, he also notes that after several R&D setbacks at Merck, this CEO needs to accelerate innovation to meet challenges.

“She needs to improve her track record in R&D performance.”

Replacing Dupixent, a blockbuster asthma drug, is a major challenge

Developing new drugs has always been Sanofi’s biggest challenge. Dupixent accounts for over 30% of the company’s revenue, and Sanofi has yet to find a drug to replace it after patent expiration in the early 2030s, putting pressure on the stock.

“Replacing Dupixent is a critical strategic challenge for Sanofi,” said Nicolas Dumas, partner at Roland Berger Consulting, who worked at Sanofi until 2018.

The vaccine business, accounting for nearly one-fifth of revenue, is another major issue, as sales have declined in recent years. Hudson previously pointed out that this segment has been weak, partly due to the U.S. health authorities’ less favorable attitude toward vaccines.

Sanofi stated that Garijo worked at the company for many years until her departure in 2011 and will bring “greater rigor” to the implementation of the company’s strategy. Garijo did not immediately respond to requests for comment.

She will be Sanofi’s first female CEO

Garijo will become Sanofi’s first female CEO and, following Emma Walmsley’s resignation from GlaxoSmithKline (GSK.US) earlier this year, the only woman CEO among large global pharmaceutical companies. She was also the first woman to lead a German DAX-listed company, serving as CEO of Merck Group.

During her tenure leading Merck’s pharmaceutical division, Garijo guided the group’s supply chain through the COVID-19 pandemic. She oversaw several deals, including last year’s $3.9 billion acquisition of SpringWorks Therapeutics.

However, under her leadership, Merck faced setbacks in drug R&D, with only three new drugs successfully launched. An investor who worked with Garijo but requested anonymity said that visible results—R&D and business expansion—have been underwhelming, but she improved Merck’s internal structure and protected profit margins.

Roel Bulthuis, managing partner at London-based life sciences investment firm Syncona Limited, said Garijo transformed a “rule-bound and hierarchical” company into a more decisive and efficient entity. Bulthuis previously managed Merck’s corporate venture fund M-Ventures during her tenure.

“She… encouraged executives to have the courage to stand by their decisions and really get things done,” Bulthuis said.

Another former colleague, also anonymous, described her as energetic, vibrant, and adaptable, with a deep understanding of Sanofi. “She knows the ins and outs of this company—don’t underestimate how important that is,” the person said.

Clinical background, but how long can her tenure last?

Garijo is a clinical pharmacologist whose career began as an internist at Madrid’s La Paz Hospital, known for her operational execution and attention to detail.

“Garijo’s experience is more operational than scientific, so it will be interesting to see how she can revitalize Sanofi’s R&D,” said Claus Henrik Johansen, CEO of Denmark’s Global Health Invest, which holds Sanofi shares.

Some analysts and investors noted that Garijo was not on many people’s radar before, which was somewhat surprising, and they are also speculating on how long she will stay in the new role.

“I think she’s a transitional CEO. Her strength lies in applying pressure to push for change,” said consultant Dumas. “She won’t be in this position forever.”