Under assault by Carl Icahn and facing stiff regulatory oversight following some embarrassing manufacturing blunders, Genzyme is getting back to basics. In a series of strategic moves the biotech company says it will buy back $2 billion dollars worth of its stock as it considers how to rid itself of three businesses that are not part of its core operation.
Genzyme's genetic testing, diagnostics and pharmaceutical intermediates businesses are all being put in the spotlight as Genzyme considers what to do with them, making them prime buyout targets for anyone interested. Genzyme says a sale, spin-out or management buyout are all possibilities for the three units.
"As we evaluated our company to create a mix of businesses that will deliver sustainable growth and stronger returns on invested capital, it became clear that these businesses do not fit within this strategy," said CEO Henri Termeer, who's fighting to keep his job at Genzyme's helm.
The strategic moves are all part of Termeer's grand strategy for repositioning the big biotech as it was forced to report a loss for the first quarter. Genzyme is being fined $175 million after the FDA found contamination at its Allston, MA facility and its continuing manufacturing setbacks have created a lingering shortage of Cerezyme at the same time competitors are ramping up alternative therapies.
Genzyme huddled with analysts yesterday to try and make the case that it can get back to basics, handle regulatory concerns and fend off Icahn. The company is also seeking regulatory approval to open a new manufacturing operation in Framingham, MA. But the company still has a long way to go before it can convince skeptics.