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Genzyme is reporting that continuing supply problems concerning two drugs for rare diseases erased all profits for the second quarter.
The Cambridge.-based the biotechnology company just about broke even for the second quarter, reporting net income of $23,000 for the most recent quarter, versus profits of $187.6 million for the corresponding time period last year. The company booked $1.08 billion in revenues for the quarter, down from $1.23 billion in the second quarter of 2009.
The earnings figures include a $21.9 million manufacturing write-off the company took primarily for drug materials it had to discard following a water system problem in March at its Allston facility. The plant there is at the root of Genzyme’s troubles, as viral contamination forced a closure there last summer, prompting shortages of Cerezyme for Gaucher disease and Fabrazyme for Fabry disease. Continuing manufacturing problems there, both before and after the shutdown, prompted the U.S. Food and Drug Administration to launch an enforcement action against the company, called a consent decree.
“This was a difficult quarter as reflected in our financial results, but based on the progress we’ve made with our recovery efforts, the outlook for the second half of 2010 is promising,” said Henri A. Termeer, Genzyme’s chairman and chief executive officer, in a statement. “We are encouraged by the improvements in Cerezyme and Fabrazyme manufacturing. We expect that increasing sales of these products combined with reductions in our operating costs will produce an increase in earnings during the second half of the year.”
Genzyme said it would begin increasing shipments of Cerezyme to existing patients in August, and may be able to provide medication to new patients in the fourth quarter. Shipments of Fabrazyme will not increase until the fourth quarter. Earlier this month, Genzyme said it was expanding a deal designed to transfer more so-called fill-finish manufacturing work to Hospira Worldwide Inc.
Genzyme adjusted its guidance, projecting 2010 revenue of $4.4 billion to $4.5 billion. That is well below Wall Street expectations of $4.95 billion, according to Thomson Reuters.
Company officials said Genzyme is on track to divest its genetics, diagnostics and pharmaceuticals businesses, as previously announced, by the end of the year.
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