Aug 7 Goldman Sachs added Genzyme Corp GENZ.O to its Americas conviction sell list, and said manufacturing setbacks at one of its plants may impair long-term growth at the company and near-term shortage of its drug Cerezyme may be more severe than expected.
In June, the biotechnology company halted production of two of its top-selling drugs, Cerezyme and Fabrazyme, after detecting a virus at a Boston plant that U.S. regulators had already cited for deficiencies.
By the end of July, the U.S. Food and Drug Administration notified Genzyme that it will re-inspect the plant because the company did not take sufficient action to correct equipment maintenance and process control problems.
Cerezyme, which was being manufactured in the plant, is approved for Gaucher disease -- a rare disorder in which patients are deficient in an enzyme that breaks down a type of fat molecule.
Genzyme may not be able to meet the demand for Cerezyme in 2009 and the shortage might have long lasting negative impact due to persistent dose reduction and possible share erosion to competitors such as Shire, Goldman Sachs said and reduced its price target on the stock by $8 to $44.
Earlier this month, rival Shire Plc (SHP.L) reported positive trial results of its Gaucher drug.
The risk of single source manufacturing until at least 2011 could pressure multiples, the brokerage added.
Genzyme shares closed at $48.81 Thursday on Nasdaq. (Reporting by Jennifer Robin Raj in Bangalore; Editing by Aradhana Aravindan)