The pharmaceutical business is known for its blockbusters. Pfizer
Hectorol is far from a blockbuster opportunity, given that Bone Care expects the medication's sales to reach between $82 million and $83 million. But the purchase makes sense for Genzyme, since Hectorol can be used in concert with Genzyme's Renagel, which is designed to control serum phosphorus levels in chronic kidney disease. Genzyme expects that by using its sales and marketing heft, and by introducing Hectorol to overseas markets, it can expand sales significantly.
So by all counts, the deal looks like another smart purchase for Genzyme. The only worry might be that with its recent string of acquisitions, the company is spreading itself too thin. However, with just 140 employees as of June 2004, Bone Care shouldn't present too much integration risk. As for financing, Genzyme indicated that it has access to $1.5 billion in cash and equivalents, although that amount includes undrawn credit. But based on current evidence, Genzyme's acquisition strategy still seems to make sense.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.