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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 establishment of this structure began in the 1980s. It resulted in the creation of a French Group with a global dimension, whose holding company is Servier SAS, and in which:

  • The capital is 48% owned by French associations (the remaining 52% being self-governed)
  • The power belongs to the FIRS Foundation
  • No longer any natural person holds a share of the capital

The FIRS Foundation, which therefore provides governance, is statutorily made up of:

  • A Foundation Council (comprising the President of the Foundation, the Executive Committee and the other members of the Foundation Council, all employees of the Group)
  • A Supervisory Board (comprising the President of the Supervisory Board, independent members, and other members of the Supervisory Board)

The founder of the Group wanted the members of the Executive Committee of the FIRS Foundation and of the Executive Committee of Servier SAS to be the same people in order to ensure uniqueness in strategy as well as in day-to-day management.