Biogen 'for sale' sign turns spotlight on Genzyme

By Toni Clarke - Analysis

BOSTON (Reuters) - Biogen Idec Inc's (BIIB.O: Quote, Profile, Research, Stock Buzz) decision to put itself up for sale has cast the spotlight on cross-town rival Genzyme Corp (GENZ.O: Quote, Profile, Research, Stock Buzz), whose shares rose as much as 7 percent on Monday amid speculation it will be the next to be acquired.

Genzyme is the world's fourth-biggest biotechnology company, whose drugs to treat rare genetic disorders are some of the most expensive ever made. Biogen is the fifth-largest biotech, and a dominant maker of drugs to treat multiple sclerosis.

Both companies are based in Cambridge, Massachusetts and have similar market values at close to $20 billion. Genzyme is expected to generate 2007 sales of $3.7 billion, Biogen is expected to draw in $3.1 billion.

Big drugmakers are desperate for new products to replace those that are losing patent protection, and they are looking to the more innovative biotechnology sector to replenish their pipeline.

"It's not surprising to me that investors are moving on to Genzyme because what seems to be the asset du jour for pharmaceuticals companies is biologic capability," said Phil Nadeau, an analyst at Cowen & Co.

But Genzyme and Biogen are two different animals.

Biogen's success has been built around a small number of products - the multiple sclerosis drug Avonex and the cancer drug Rituxan, which it shares with Genentech Inc (DNA.N: Quote, Profile, Research, Stock Buzz). Its big hope for the future is its multiple sclerosis drug Tysabri, which was temporarily withdrawn from the market after being linked with a potentially deadly brain infection.

Genzyme, by contrast, is diversified. Roughly 55 percent of its revenue comes from its biologics business, which include such drugs as Cerezyme for Gaucher disease, a condition that causes enlargement of certain organs.