GENZ to Expand Production Capacity - Analyst Blog

Genzyme Corp. (GENZ) recently announced that it is expanding its manufacturing capacity for Myozyme and Lumizyme in Geel, Belgium. The company said that it is setting up an additional manufacturing plant at the Geel site.

The €250 million plant will have production capacity of 8,000 liters with scope for additional capacity expansion. Genzyme expects to receive approval for the plant in late 2014.

Expansion in-line with Genzyme's Long-Term Plans

The move to expand production capacity at Geel is in-line with the company's plan of increasing its overall biologics manufacturing capacity by four times.

Genzyme already has a manufacturing facility in Geel which is used for the production of Myozyme and Lumizyme. The company is currently working on increasing the capacity of this plant to 12,000 liters. The company has added a third bioreactor, which is expected to gain approval by year end.

Expansion to Support Growth of Pompe Disease Drugs

With the expansion of the production capacity, Genzyme is looking to support the long-term growth of its Pompe disease drugs – Myozyme and Lumizyme. Both drugs represent significant commercial opportunity for the company.

According to the company, about 10,000 people suffer from Pompe disease worldwide of which only 1,400 patients are receiving treatment with either Myozyme and Lumizyme. This represents significant opportunity for Genzyme to drive growth of Myozyme and Lumizyme.

Genzyme recently reported preliminary results and said that it expects full year 2010 revenues of Myozyme/Lumizyme to grow 27% to $412 million.

Neutral on Genzyme

We currently have a Neutral recommendation on Genzyme, which is supported by a Zacks #3 Rank (short-term “Hold” rating). We are pleased to see that Genzyme is taking steps to emerge from the impact of the temporary shutdown of the Allston plant. However, we believe that the company may have to face additional challenges before it is able to go back to a normal production and supply schedule.

French pharma giant, Sanofi-Aventis (SNY) has launched a bid to acquire Genzyme. The tender offer is scheduled to expire on January 21, 2011.