Genzyme Corp. (GENZ) recently announced the sale of its pharmaceutical intermediates business to International Chemical Investors Group (ICIG). Financial details of the deal were not disclosed.
Genzyme had initially announced its intention to divest its genetic testing, diagnostic products and pharmaceutical intermediates businesses in May 2010. While the company sold its genetic testing business to Laboratory Corporation of America Holdings (LH) for $925 million, the diagnostic products business was sold to Japanese company, Sekisui Chemical Co., Ltd. for $265 million cash.
The divestment of these non-core businesses should allow Genzyme to focus on key areas of growth like pipeline development and rare diseases business.
Meanwhile, in February 2011, Genzyme entered into a definitive agreement with French pharma giant, Sanofi-Aventis (SNY), whereby Sanofi will acquire Genzyme.
Per the terms of the deal, Genzyme shareholders will receive $74 per share in cash (or $20.1 billion) in addition to a contingent value right (CVR) for each share. The CVR will allow each shareholder to receive additional payments related to Lemtrada (alemtuzumab for multiple sclerosis) and the achievement of specified production volumes in 2011 for Cerezymeand Fabrazyme.
With this acquisition, Sanofi is looking to create a new source of growth. Sanofi has a high exposure to generic risk on many of its leading franchises. The company suffered a blow with the entry of a generic version of its anti-coagulant Lovenox, which was a major contributor to the top-line.
In addition to Lovenox, we see generic risk to other products as well. In such a scenario, it is imperative for Sanofi to successfully develop and launch new products in order to make up for the loss of revenues once major products lose exclusivity and start facing generic competition. The acquisition of Genzyme will boost Sanofi’s revenues as well as its pipeline.
Sanofi will also get a chance to expand its presence in biotechnology. The deal is scheduled to close early in the second quarter of 2011.
GENZYME-GENERAL (GENZ): Free Stock Analysis Report
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