Impact Of Genzyme Sale On MetroWest Unknown
FILE PHOTO
Genzyme may be based in Boston, but the company has more than 2,000 employees in MetroWest, including some at this building in Framingham. Genzyme has agreed to be purchased by the French drugmaker Sanofi-Aventis.
Local officials hope that Genzyme's sale to one of the world's leading pharmaceutical companies will mean new opportunities for the company, not cutbacks.
"We're hoping it's business as usual," said Alison Steinfeld, Framingham community development director.
Genzyme, the Cambridge-based drug maker, agreed to a $20.1-billion sale to French pharmaceutical giant Sanofi-Aventis yesterday.
Genzyme has been a strong member of the community, involved in various business groups and town events, and local officials like Steinfeld hope that will continue with the new owners.
But exactly what changes will be in store for Genzyme's local presence, which includes about 2,000 MetroWest employees, is unclear.
Fallout Unknown
Sanofi-Aventis is likely using Genzyme to establish a presence in the United States and enter into the biomedical field, according to Ian Somaiya, an investment analyst with Piper Jaffray in New York.
Genzyme specializes in rare diseases, whereas Sanofi focuses on larger-market drugs.
Part of the reason Sanofi has been interested in the Genzyme deal for more than half a year is because Sanofi has a number of drug patents expiring soon. When patents expire, drug companies often see their market share disappear thanks to competition from generics.
"This is not an acquisition based on massive cost-cutting measures or savings," Somaiya said. "This is an opportunity for Sanofi to compete in a new market and gives them a strong foothold in the competitive Boston biotechnology market."
Any synergies that are created from the sale, Somaiya predicts, would likely be at the corporate level or with Genzyme's international presence.
As the deal was announced, news also broke that company founder Henri Termeer will resign as chairman, president and CEO later this year.
Sanofi, Somaiya said, likely wants to see Genzyme's drugs continue to development to give the company solid revenues. To do that, the company will need its manufacturing and R&D facilities, some of which are in MetroWest.
In addition to a new $170-million, 70,000-square-foot manufacturing facility in the Framingham Technology Park, Genzyme also has a distribution center in Northborough.
MetroWest Chamber of Commerce President Bonnie Biocchi, who used to work in the state's business development office, said she's not nervous about the sale. While a merger, takeover or buyout can translate into cutbacks, she noted that such deals can also take companies "to the next level."
She called Sanofi-Aventis' plans to keep the Genzyme brand and not rename the company a good sign.
"The fact that they recognize that name as important for supporting the growth and innovation of the company, I think is especially good for folks in MetroWest," she said.
Having an international company come in to take over a local brand is not new to MetroWest, pointed out Paul Matthews, with the 495/MetroWest Partnership.
Last year, Dainippon Sumitomo Pharma, which is based in Japan, purchased Sepracor in Marlborough and changed the company's name to Sunovion Pharmaceuticals Inc.
Sunovion, in the meantime, recently announced that its drug for treating schizophrenia has begun selling in pharmacies.
"The only visible difference at Sunovion since it became Sunovion is they hung new signs up," Matthews said.
Whatever may come about from the Genzyme deal, the fact that it happened should come as no surprise.
Rumors that Sanofi was interested in Genzyme began in the summer of 2010. Genzyme rejected Sanofi's initial bid of $18.5 billion, or $69 per share, as too low.
Christopher Raymond, an analyst with Robert Baird & Co. in Chicago, said Genzyme got a "great deal" in the end. Given the company's struggles at its manufacturing plants during the past few years, anything above $70 per share, he said, is a successful deal for the company.
Genzyme had to shut down its Allston manufacturing plant and delay shipments of some drugs in late 2009 after government inspectors found contamination issues. Genzyme said it hoped to return to fully operational drug shipments and plant operations this year.
"Genzyme made out like bandits," Raymond said. "Shareholders should take this money and run."
As for the fallout from the deal, he agreed that workers should not be too worried.
"There doesn't seem to be a lot of crossover in the business," he said. "Typically a pharma merger can strike fear into the hearts of folks who work there, but I don't think that's the scenario here."
Meanwhile, in addition to announcing the $20.1-billion sale, which includes milestone payments in the future, the company also reported its year-end earnings Wednesday.
Genzyme made a $422-million profit on $4.05 billion in revenues in 2010.
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