The deadline was part of a consent decree from the Food and Drug Administration. If Genzyme hadn't met the goal, the FDA could have imposed fines of 18.5% of revenue on the products. One would think putting a drug in a vial and slapping a label on it wouldn't be that hard, but Genzyme's machinery was leaving bits of rubber and metal in the drug vials. And that's in addition to the viral contamination Genzyme also experienced. A consent decree was certainly warranted.
The fill-and-finish activities were moved in part to Genzyme's plant in Ireland and in part to Hospira
Moving the manufacturing is an incremental step, but it's one that should give investors more confidence that a suitor might be willing to pay up for the drugmaker. sanofi-aventis
More importantly, getting back on track means that the company won't fall as far if Sanofi walks away and the other rumors dry up. Remember, Genzyme was a $54 stock back in July before the Sanofi rumors started. Now that Genzyme is almost back to full production and meeting its consent decree deadlines, the stock should be worth more than $54 even if a big pharma isn't willing to pay the whopping $89 Genzyme thinks it's worth.
I'm not ready to recommend buying the stock yet; buying with an acquisition as your main investment thesis never seems like a smart move to me. But the risk-reward profile certainly looks better than it did yesterday.
Matt Koppenheffer thinks dividend investing is a fad and investors will head back to high-growth stocks.
Pfizer is a Motley Fool Inside Value selection. The Fool owns shares of and has written covered calls on GlaxoSmithKline, which is a Motley Fool Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
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