Sanofi (SAN) investors reacted with dismay to the dismissal of Chief Executive Officer Chris Viehbacher, saying he paid the price for trying too aggressively to internationalize the French drugmaker.

Sanofi’s board voted unanimously to fire Viehbacher today after almost six years as CEO during which he focused expansion outside of France and recently moved to the Boston area for personal reasons. His relocation came as French government officials voiced concern that corporate decision-making has been leaving the country. The stock set a record less than a month ago.

“It’s a setback and very unfortunate,” said Josep Aymami, chief investment officer of equities at Merchbanc in Barcelona, which holds Sanofi shares. “He’s done a good job as CEO, and you want stability and continuity in management.”

Before this week, Sanofi shares returned 153 percent since Viehbacher’s appointment in December 2008, more than double the gain in France’s CAC40 Index, including dividends. The Canadian-German dual citizen expanded the French drugmaker into biotechnology and rare diseases with the purchase of Cambridge, Massachusetts-based Genzyme Corp. for $20.1 billion and a stake in Boston-based Alnylam Pharmaceuticals Inc.

“He committed the mortal sins of being insufficiently conservatively French and a bit too entrepreneurial,” Erik Gordon, an assistant professor at the University of Michigan Ross School of Business, said by e-mail. “The board will have trouble attracting a world-class drug company CEO. It is unappealing to work for that board and to try to compete globally while being sure to stay French enough for their tastes.”

And from an earlier version of this article:

The move came after French government officials said they were concerned that corporate decision-making was leaving the country, illustrated most recently by General Electric Co.’s effort to buy Alstom SA.

Viehbacher’s plan to cut research jobs in Toulouse and Montpellier in 2012 drew condemnation from then-Industry Minister Arnaud Montebourg, who said it was “abusive” because Sanofi earned 8.8 billion euros in profit the previous year.

David Fuller's view

I am trying not to overreact in commenting on this but it is not easy.  Sanofi is, or was, an attractive multinational Autonomy, which Bloomberg describes as: … “a global pharmaceutical company that researches, develops and manufactures prescription pharmaceuticals and vaccines.  The Company develops cardiovascular, thrombosis, metabolic disorder, central nervous system, internal medicine and oncology drugs, and vaccines.” 

This site (FTM) is known for saying: Governance Is Everything.  Sanofi certainly appeared to have good governance, at least in terms of the CEO, judging from its earnings, international diversification and share performance.  It also has an estimated p/e of 13.74 and yields 3.93%, according to Bloomberg. 

However, Chris Viehbacher was looking after Sanofi and its shareholders.  The French Government and Sanofi’s Board appear to feel that the Company should be looking after France as its first priority.  A number of Sanofi’s international shareholders are clearly having second thoughts.