R&D slowdown compounded by Trump variable - Sanofi's new CEO Gary Ho faces a dual challenge.

French pharmaceutical giant Sanofi (SNY.US) CEO-elect, 65-year-old Beln Garijo, is facing a major task: winning investor support, accelerating the French company's stagnant drug development process, and dealing with vaccine skepticism during the presidency of Donald Trump. Sanofi announced on February 12 that CEO Paul Hudson will step down this month and will be replaced by Merck executive Beln Garijo in April. The French pharmaceutical giant had significantly increased its research and development investment, but has yet to see results, testing the board's patience. The company's stock price has fallen 25% in the past year, with a 4.51% drop on Thursday. Sources close to Garijo, including investors, analysts, and others, revealed that she is decisive, detail-oriented, and has strong execution skills. However, the performance of research and development has been inconsistent, and the company's stock price has noticeably declined during her tenure. It is worth noting that Garijo has been the CEO of German Merck Group since 2021. "The change in Sanofi's CEO indicates that the research and development transformation has failed or progressed too slowly," said Markus Manns, portfolio manager at Sanofi Investors United Corporation. "Beln's primary task at Sanofi will be to increase research and development productivity." Manns highly praised Garijo for successfully managing Merck's business spanning health and technology sectors, particularly acknowledging the critical pricing agreement she reached with former U.S. President Donald Trump last year. However, he also pointed out that the CEO urgently needs to accelerate innovation processes in response to challenges, as Merck Group has faced several setbacks in research and development. "She needs to improve her track record in research and development." Developing a replacement for the asthma blockbuster drug Dupixent is a major challenge Developing new drugs has always been Sanofi's biggest problem. Dupixent accounts for over 30% of the company's revenue, and Sanofi has yet to find a drug to replace it after its patent expires in the early 2030s, putting pressure on the company's stock price. "Replacing Dupixent is a key strategic challenge for Sanofi," said Nicolas Dumas, partner at Roland Berger consulting, who worked at Sanofi until 2018. The vaccine business accounts for nearly one-fifth of the company's revenue, another significant issue as sales have declined in recent years. Hudson had mentioned that this sector was weak, which was related to the U.S. health department's less friendly attitude towards vaccines. Sanofi stated that Garijo worked with the company for many years until she left in 2011, and she will bring "greater rigor" to the implementation of the company's strategy. Garijo did not immediately respond to requests for comment. She will become Sanofi's first female CEO Garijo will become Sanofi's first female CEO and the only female CEO of a large global pharmaceutical company after Emma Walmsley of GlaxoSmithKline plc Sponsored ADR (GSK.US) stepped down earlier this year. She was the first woman to lead a company listed on the German DAX index when she was the CEO of Merck Group. During her tenure as head of Merck's pharmaceutical business, Garijo led the group's supply chain through the COVID-19 pandemic. She oversaw multiple transactions, including the $3.9 billion acquisition of SpringWorks Therapeutics last year. However, during her tenure, Merck Group experienced setbacks in drug development, with only three new drugs successfully launched. An investor who worked with Garijo but requested anonymity said that the visible external results - in research and development and business expansion - were not good, but she improved Merck's internal structure and protected the company's profit margin. Roel Bulthuis, managing partner of London life science investment company Syncona Limited, said Garijo turned a "ruled and bureaucratic" company into a more daring and efficient entity. Bulthuis was responsible for Merck Group's corporate venture capital fund M-Ventures during Garijo's tenure. "She...encouraged executives to have the courage to stand by their decisions and really get things done," Bulthuis said. Another investor who worked with Garijo but requested anonymity said she is energetic, dynamic, and adept, with a deep understanding of Sanofi. "She knows the ins and outs of this company, and the importance of that should not be underestimated," the individual said. Clinical background, but how long will her tenure last? Garijo is a clinical pharmacology expert whose career began as an internal medicine doctor at Madrid's La Paz Hospital. She is known for her outstanding operational execution and attention to detail. "Garijo's operational experience outweighs her scientific background, so it will be interesting to see how she revitalizes Sanofi's R&D department," said Claus Henrik Johansen, CEO of Danish healthcare investment fund Global Health Invest, which holds shares in Sanofi. Some analysts and investors have stated that Garijo was not previously on most people's radars, which has made the market somewhat surprised, speculating on how long she will stay in the new position. "I think she is a transitional CEO. Her strength lies in being able to pressure organizations to drive change," said consultant Dumas. "She won't stay in this position forever."