Genzyme Pushes Forward With New, Upgraded Facilities

May 13, 2010

By Brandon Butler (Worcester Business Journal)

While Cambridge-based biotechnology giant Genzyme is in the midst of a 10-year, $1 billion facilities upgrade, including $300 million of new construction in Framingham, industry analysts said the next few months could be some of the most important in the company's history.


Activist shareholders are attempting to gain control of the company's board of directors and the federal government is keeping a closer-than-ever eye on manufacturing practices after contamination problems forced the temporary closure of a company facility last year.


"Genzyme really needs to get through the next three months with some positive news," said Geoffrey Meacham, a Genzyme analyst with JP Morgan Chase in New York. "After the next quarter we could have a dramatically different taste about the company's future outlook. Things could look incrementally more positive, or they could look a lot worse."


But on Tuesday, company officials focused on the positives by touting expansion efforts and showing off construction projects during a tour of the company's 1million- square-foot complex in Framingham, which a host of state legislators attended.

There are two major issues Meacham is watching this quarter. 

First, investor Carl Icahn has expressed interest in appointing himself and three comrades to Genzyme's Board of Directors and a vote on the board's future makeup is expected next month.

Meacham said the result of that vote could signal shareholder's faith in CEO Henri Termeer, with whom some are frustrated for the handling of the contamination incident at the company's Allston facilities.

That contamination last year is the second major issue to watch. The U.S.Food and Drug Administration will likely be issuing orders for how closely Genzyme's operations will be monitored in the future as a result of the contamination, Meacham said.

Brian Abrahams, an analyst with Oppenheimer & Co. in New York said even if Icahn does get on Genzyme's board, there is a question as to how much influence he will have. With the government taking a closer eye to Genzyme, Abrahams said the FDA regulations could more dramatically change the company than Icahn's presence on the board. 

"This is a company that has a lot of important headwinds facing it," Abrahams said. "I think they've taken some of the right steps in terms of bringing in senior people to deal with the manufacturing issues, but this will certainly be a company to watch."

One of those people Genzyme brought in is Scott Canute, the company's new president for global manufacturing and corporate operations, who led Tuesday's tour. Canute oversaw manufacturing at drug company Eli Lilly & Co. before coming to Genzyme in March.

"This is a company that literally will do things that other companies will not do," Canute said.

Genzyme focuses on making drugs for small specialty markets. For example, Cerezyme, one of the products made in the company's Allston facility, is for patients with Gaucher disease, a rare genetic disorder that impacts fewer than 6,000 people in the world.

State Sen. Karen Spilka, D-Ashland, praised the company for its continued presence and investments in MetroWest during the tour.

"This company is a cornerstone of the growing life sciences sector in this region," she said.

On a tour of the new $170 million, 70,000 square-foot manufacturing facility in Framingham, workers were seen dressed up in full-body white clean suits behind glass walls that allow visitors to look in. Construction began on the project in 2008 and the company hopes to get FDA clearance to begin manufacturing Cerezyme and one of its other more popular drugs, Fabrazyme, there by 2011 and 2012, respectively.

Directly next door to the new manufacturing plant, contractors are in the midst of constructing a new 180,000 square-foot office building that will house manufacturing and research support offices. The goal of the office construction is to consolidate some of the company's 2,000 employees located in Framingham across 15 different buildings into a more centralized location. That construction is expected to be complete about a year from now.

The company is also finishing a $150 million office expansion at its Allston manufacturing plant, which is expected to be complete next month and the company has built a new manufacturing plant in Geel, Belgium.

Later this year the company hopes to bring online a new distribution and warehouse space in Northborough.

Worldwide the company has 12,000 employees and 19 products. In 2009 the company had revenues of $4.5 billion, but in the first quarter this year the company posted a $115 million loss after gaining a $195 million profit during the same time last year.

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