Last October, Sanofi stunned the healthcare industry by firing CEO Chris Viehbacher, who was best-known for spearheading the French pharma giant’s $20 billion acquisition of Genzyme three years earlier. Now Viehbacher has reemerged as managing partner of Gurnet Point Capital, a new $2 billion healthcare venture capital and private equity fund bankrolled by the Bertarelli family (founders of Serono, which was sold to Merck KGaA for $13.3 billion in 2007).
Cambridge, Mass.-based GPC has actually been around for more than a year, but to date has disclosed only one investment.
Coins2Day spent some time on the phone with Viehbacher, to better understand his plans. What follows is an edited transcript of our conversation:
FORTUNE: Why join an investment firm, rather than seek out another operating role?
Viehbacher: Because I spent pretty much the last 30 years in the operating space and, when I left Sanofi, I thought a lot about what it is I really like to do. What I realized is that I really enjoy building businesses and the drug development process of bringing medicines to market, but also wanted to do something a little more entrepreneurial. Plus, this isn’t quite your usual fund.
What exactly is the strategy, since GPC was formed in 2013 but seems to have made precious few investments to date?
This is the first time that the Bertarelli family had set up a fund in the U.S., so it spent the last 18 months getting the office opened and getting to know the area. I can kind of step into some existing infrastructure and then bring in a few more people. It’s really a hybrid between venture capital and private equity. Because we have just one investor, we also have the ability to be a long-term investor. The fund nominally has a 10-year time horizon, but the idea isn’t just to be passive and short-term. We’ll probably be funding companies a little further along than average startups, with one-third in the development of molecules, some consolidating of smaller companies and an awful lot toward new medical technologies. The tricky part is that, in some of these markets, valuations are pretty robust.
Could you also buy shares in publicly-traded companies?
Yes, we could have some public companies in there.
You mentioned ‘robust’ valuations. Are we in the midst of a biotech bubble?
I don’t think you can generalize like that. We’re seeing a whole bunch of companies that haven’t even launched a product yet and, until your product actually hits market, you don’t know the real value. There are probably some companies where it’s hard to find out where the value is going to be. I really do think that we’re seeing revolutionary new medicines and healthcare technologies coming along — more than we’ve seen in the last 15 to 20 years — to the point where some companies now are in the business of curing diseases, which hasn’t been done in a long, long time… I think there is an awful lot of substance here.
Today, would you buy an index of biotech stocks?
No. Not the index.
You mentioned hiring people. What types of people, and where will they be based?
The idea is to have everyone in Cambridge. And we’re looking for people who have banking backgrounds, investment management backgrounds, healthcare backgrounds and a proven track record of identifying good companies.
Is there a good market comp for your investment strategy?
Not really. We’re probably downstream of the Flagships and Third Rocks and, historically, private equity hasn’t mixed too much with therapeutics.
The basic media narrative on your exit from Sanofi was that you and the board communicated poorly and that, when you did communicate, it didn’t go well. Fair?
There has been a lot written and all I’d say is that I doubled the share price while I was there and Sanofi now has some interesting products based on my time. It gives me confidence to go out and invest this fund.
There’s an argument that this is a great time to invest in small biotech, because big pharma cupboards are fairly bare due to patent cliffs and prior in-house R&D cuts. Do you agree?
It is extremely difficult to do really disruptive science in a big organization and I always worried that, by buying something, you could lose the acquired company’s innovative spirit. That’s why, at Sanofi, I organized things more toward external collaborations. Overall, I think it’s an ecosystem where everybody needs everybody, rather than putting startups and big pharma in opposition to each other.
That said, the whole ecosystem, has really changed in the last 18 months, fueled largely by more capital. And that’s come as the science has been maturing in major ways, whether it by immunotherapy or micro RNA or people mapping kinases or even nanotech, which is now starting to play a role. All of these technologies feed off each other as the mature, and the extra capital means everyone has more strategic options than just an IPO or acquisition.
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