Genzyme is selling its diagnostic products business to Sekisui Chemical for $265 million in cash. The deal is part of Genzyme’s plan to concentrate on drug R&D for rare diseases, advancing its product pipeline, and manufacturing.
Under the terms of the agreement, Sekisui will purchase all assets including diagnostic product lines and technologies. Sekisui has agreed to offer employment to the unit’s approximately 575 employees upon closing, including senior management, and plans to maintain operations in all of the business’ current locations.
Genzyme’s diagnostics business provides raw materials and enzymes, clinical chemistry reagents, tests, and infectious-disease products to manufacturers, clinical laboratories, distributors, and healthcare providers. The segment is focused on the cardiovascular, diabetes, renal, and infectious-disease areas. 2009 revenue was $167 million.
“Genzyme Diagnostics has worked with Sekisui as a valued partner for more than 15 years,” says Henri A. Termeer, chairman and CEO of Genzyme. “This history ensures a level of continuity that will greatly benefit employees and customers. I am confident that Sekisui is the right strategic partner for Genzyme Diagnostics, and that in Sekisui’s hands the business will continue to grow.”
The business will be operated as part of Sekisui Medical, which is a division of Sekisui Chemical based in Tokyo. Sekisui Medical has four businesses focused on diagnostic reagents, medical devices, pharmaceuticals and fine chemicals, and toxicology research.
The companies’ goal is to close the transaction by the end of the year. “With this transaction, we are continuing to execute on our plan to increase value for shareholders,” adds Termeer. “This sale is part of our strategy to sharpen the company’s focus and allocate our resources to key areas for our future growth such as manufacturing, our rare disease business, and our product pipeline.”
In May Genzyme announced that it would seek alternatives for three business units as part of a five-part plan to increase shareholder value. In September the company sold Genzyme Genetics to LabCorp for $925 million in cash. That leaves the pharmaceuticals business unit up for grabs.
Proceeds from these transactions may be used to finance the second half of the company’s $2 billion stock repurchase. The first $1 billion worth of shares was financed with debt. In 2009, the firm reported revenues of $4.5 billion.
Genzyme has been the spotlight after manufacturing quality violations were first spotted in its Allston Landing, MA, facility in June 2009. In May 2010, the firm said that it would have pay the federal government $175 million in unlawful profits from the sale of products that were made at the plant.
In the wake of all this, sanofi-aventis has offered to buy Genzyme for $18.5 billion, but Genzyme has repeatedly said that the deal undervalued the firm. The acquisition tussle has been ongoing since around June of this year.