Genzyme Faces Consent Decree
FDA is finally getting tough with Genzyme. The biotech will hold a conference call later today to discuss the likelihood that the agency will take serious action to address its repeated manufacturing issues at its Allston, Mass., facility. FDA will likely propose a consent decree, under which a third party inspects and assesses the plant’s operations over time to ensure it is up to good manufacturing practices.
FDA rarely goes this far unless a company has repeatedly failed to improve the quality of its manufacturing operations. Genzyme certainly fits that bill. In the past year, the biotech has had to stop and restart manufacturing at Allston and restrict shipments of Cerezyme and Fabrazyme. The delays have cost the company hundreds of millions of dollars, causing many investors to call for the ouster of CEO Henri Termeer.
Resolving a consent decree is not cheap. Many will recall that in 2002, after repeated issues at its plants in Puerto Rico and N.J., Schering-Plough paid $500 million to get itself back in the good graces of FDA, not to mention the investments it had to make to bring its manufacturing sites up to snuff. And Abbott forked over $100 million in 1999, and agreed to stop making a long list of diagnostic products, after failing to comply with good manufacturing practices.
Leerink Swann said in a note to investors that it was doubtful Genzyme would face a fine on the order of Schering-Plough’s, and noted that Genzyme has already put up the money to fix the problems at Allston.
While other companies have been forced to stop manufacturing altogether during the period of negotiation, Genzyme has a monopoly on the drugs it makes for rare disease. As such, the company expects shipments of Cerezyme, Fabrazyme, and Myozyme, all of which are either made or finished at the Allston plant, to continue. The production of Thyrogen, for thyroid cancer, may be affected by FDA’s action.