S&P revises Genzyme to 'positive' on strong finances

02 May 2003 17:30  [Source: ICIS news]

HOUSTON (CNI)--Standard & Poor's (S&P) revised its outlook Friday for biopharmaceutical firm Genzyme to "positive" from "stable" citing the company's strong financial performance and the promise of increased product diversification.

The New York City-based commercial credit ratings agency said it is affirming Genzyme's "BBB-" corporate credit rating and its "BB+" subordinated debt rating.

However, S&P cautioned about the company's heavy reliance on its flagship product Cerezyme, a treatment for Gaucher's disease.

Cambridge, Massachusetts-based Genzyme competes in drug development and is building a "solid record" of drug development success, targeting niche categories under-served by the pharmaceutical industry, S&P said.

The company's 2002 sales of Cerezyme were $619m (Euro552.7m), representing more than half of total sales.

Said S&P: "Though Cerezyme's market is considered mature and future sales growth will be minimal, Genzyme has several new products that will provide growth in the intermediate term."

Renagel, which treats hyperphosphatemia in patients suffering from renal disease generated more than $150m in sales in 2002 and is selling at a rate in excess of $200m for 2003, S&P said.

In addition, two other Genzyme drugs have recently been approved by the US Food and Drug Administration (FDA), S&P said: Fabrazyme, a treatment for Fabry's disease and Aldurazyme, a treatment for MPS I, which can cause organ dysfunction.

Both drugs have received US orphan drug status, which provides the company with seven years of market exclusivity.

Cautioned S&P: "Nevertheless, in the intermediate term Genzyme will remain highly reliant on Cerezyme. The product has lost its orphan drug status, so while its method of manufacturing patents is in effect until 2010, a competitor can now potentially enter this lucrative and unprotected market."

Strong sales of Cerezyme, continued growth in the sales of Renagel, the successful establishment of Fabrazyme and Aldurazyme in the market and continued moderate financial policies "may result in a ratings upgrade in the intermediate term," S&P added.

By: Mike Sheridan
+1 713 525 2653

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