While the Genzyme acquisition has allowed
) to increase its presence in the biopharmaceutical market, we
note that Genzyme is currently operating under a consent decree
imposed by the U.S. Food and Drug Administration (FDA). Sanofi is
working on resuming normal supply of the products that were
affected by manufacturing issues. Non-compliance with the terms
of the consent decree could result in the company incurring
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Meanwhile, Sanofi is focusing on its manufacturing site in
Framingham, Mass. for Fabrazyme, which is marketed for the
treatment of Fabry disease. Sanofi plans to invest $80 million on
the Framingham facility to expand Fabrazyme's manufacturing
Expansion of the Framingham unit will enable Sanofi to meet the
worldwide growing demand for Fabrazyme. In the second quarter of
2013, Fabrazyme sales were €91 million, up 28.4% year over year.
Sales benefited from patients switching to Fabrazyme from
) Replagal in the Western European market.
.The Allston manufacturing facility was used to produce Genzyme's
key products - Cerezyme for patients suffering from Gaucher
disease and Fabrazyme for patients suffering from Fabry disease.
The production issues led to an acute shortage of Fabrazyme and
Cerezyme, which in turn affected Genzyme's top-line and overall
financial performance. In Apr 2011, the company submitted a
remediation plan to the FDA. According to the plan, the
remediation of the Allston plant is expected to continue till
The use of the Framingham manufacturing facility for the
production of Fabrazyme has helped the company to increase
Fabrazyme production and boost sales.
Sanofi carries a Zacks Rank #4 (Sell). We are concerned about
generic erosion confronting most of Sanofi's key drugs including
Lovenox, Aprovel, Taxotere, Eloxatin and Xatral. Generic
competition affected sales in the second quarter 2013 by €481
million. Additionally, the company is facing increased
genericization in Japan due to new policies. Generic competition
will continue to have a negative impact on revenues in the coming
quarters. Meanwhile, emerging markets, which accounted for 32% of
Sanofi's revenues, have been underperforming since the last four
Additionally, pipeline failures (oncology candidate -
iniparib and anticoagulant - otamixaban) have put immense
pressure on Sanofi's pipeline.
Currently, companies like
) look more attractive with a Zacks Rank #1 (Strong Buy).