Why a Foundation?

 

In the 1970s, when founder Dr Jacques Servier started planning his succession, he investigated many different options for ensuring the group would survive well into the distant future.

His primary aim was to find a structure that would best enable the group — in an atmosphere of unity and harmony — to fulfil its objective: be freely and sustainably committed to discovering innovative medicines for the benefit of patients and making them available to the medical community.

 

The Servier group was to remain “a group of people, not a group of capital”.

This aim for the company could only be continued if Servier group were to:

  • Finance its own business and growth.
  • Preserve its scientific, legal, and financial independence and not permit this aspect to be called into question in any way whatsoever.

 

To do that, the presence of shareholders, whose main focus tends to be maximising the return on invested capital, was not the best option. In fact, it would have prevented the reinvestment of total profit into company growth, and endangered or even terminated the group’s independence and sustainability.

 

Doctor Servier’s main concern was not to retain the “family character” of the company, which would have posed complications to maintaining harmony and unity in group strategy as well as day-to-day management.

He also did not want to subject the group to an initial public offering (IPO), in whole or in part, because this scenario presented three major disadvantages:

  • First, financial markets favour short-term results rather than long-term value creation, which is the economic characteristic of the lengthy cycles inherent in the pharmaceutical industry.
  • Second, going public would have exposed the group to the risk of takeover bids and orientation instability – a common by-product of shareholder changes – all of which impede unity.
  • Finally, it would have been necessary to distribute dividends, whereas the company has always made it a priority to reinvest profits to further develop activities, especially to finance our very extensive R&D activities.

 

Therefore, to ensure independence and sustainability, and give priority to entrepreneurial choices on the development of assets, Dr Servier considered that power (i.e. governance) and capital (i.e. financial rights) should be separated.

With that in mind, he decided upon the following course of action:

  • After his death, power would be entrusted to FIRS, a non-profit foundation used solely for managerial purposes. It would be led by those he had chosen to succeed him. The FIRS foundation is domiciled in the Netherlands, a European nation with a liberal tradition (no such solution existed in France at the time these decisions were made).
  • Part of the capital would be held by French non-profit associations, governed by the law of 1901. The remainder of the capital would be held by the group itself (legal structure enabling a company to hold its own capital).

 

The ground was laid for this structure in the 1980s. It led to the creation of a French group with an international dimension, with Servier SAS as the holding company. Additionally:

  • 48% of the capital is owned by French associations (remaining 52% held by the group and self-regulated).
  • FIRS foundation holds the power.
  • No individual holds a share of the capital.

 

In accordance with statutes, the FIRS foundation ensures governance and is composed of the following bodies:

  • Foundation board (comprised of the foundation president, the executive committee and the other members of the foundation board, all group employees),
  • Supervisory board (comprised of the supervisory board chairman, independent members, and the other members of the supervisory board).

The group’s founder wanted the FIRS foundation executive committee members and the Servier SAS executive committee members to be the same people so as to ensure unified group strategy and day-to-day management.