Genzyme Corp. Genzyme Corporation operates as a biotechnology company worldwide. It focuses on rare genetic disease disorders, renal diseases, orthopedics, cancers, transplant and immune diseases, and diagnostic and predictive testing areas. Its leading drugs are Cerezyme, Fabrazyme, Myozyme, Aldurazyme, Elaprase, Renagel and Renvela, and many others.
It has about 7,000 employees. The current Chairman, President, & CEO is Henri A. Termeer. The company was founded in 1981 and is based in Cambridge, Massachusetts.Currently, Sanofi-Aventis, another pharmaceutical company, has been trying to acquire Genzyme without much success.
Initially, the offer was $18. 5 billion ($69 a share) which was a 38% premium to what Genzyme was trading before the offer which happened in July. Genzyme rejected the offer as inadequate. The stock is currently trading at $72. 32 on Monday 10/25/10 close to reflect anticipation that some Sanofi may increase its offer or other suitors may emerge with better price. Genzyme has incentive to sell the company due to pressures from various factors. One is from institutional investors to increase shareholder values.Another one is recent Allston facility’s manufacturing problems regarding marketing or transportation of tainted drug products which dented Genzyme’s market share and the risks of recapturing lost market share in the orphaned drug market.
Another factor is to relieve top-level managers including CEO Termeer from personal liability should the marketing or transportation of any additional tainted drug products happen again. From 5-factor ROE Dupont analysis, the current 5-factor ROE for 2011 is 0. 088076 which is relatively ok for this biotech company. EVA is 181 which indicates Genzyme is a potential wealth creator.EVA momentum is . 459 which, again, indicates Genzyme is a good company to invest in. Positive Residual Income of 23 and positive MVA of 11720 also reinforce the indication.
On the scale of good vs. bad company from 1 to 5, Genzyme would earn a 3 given its average return and associated risks of investing in biotech companies. However, the market currently is in a wait and see mode to see if the take-over deal would go through.
The $69-a-share offer is set to expire on 12/10/10. Thus regardless of fundamentals, stock price would stay range bound till definitive action happens.Thus, even though prospective financial analysis says that this is an average company to invest in, investor should wait till the takeover drama is over before making investing decision. Any investing decision right now would be purely speculative. Biogen Idec Biogen Idec Inc. , a biotechnology company, develops, manufactures, and commercializes novel therapeutics in the areas of neurology, oncology, immunology, cardiopulmonary, and hemophilia in the United States and internationally.
The company’s leading drugs are Tysabri, Rituxan and Avonex. It has about 1830 employees. Current chairman is William Young.Current CEO is George Scango. The company was founded in 1985 and is based in Cambridge, Massachusetts. Biogen’s leading revenue generators, Tysabri and Avonex, are under pressures since other competitors’ drugs are soon to enter the market.
Without any potential emerging blockbuster drug development in the pipeline, the earning growth rate would likely slow down. From 5-factor ROE Dupont analysis, the current 5-factor ROE for 2011 is 0. 168896 which is very good for this biotech company. Biogen’s 5-factor ROE is almost double Genzyme’s number. EVA is 508 which indicates Biogen is a good potential wealth creator.Positive Residual Income of 487 and positive MVA of 7920 also reinforce the indication. However, Biogen’s EVA momentum is negative 0. 534 which indicates it is not a good company to invest in.
Given the mixed signals from these financial ratios, on the scale of good vs. bad company from 1 to 5, Biogen would earn a 3 given its return and associated risks of declining revenues from current leading drugs. There is a circulating rumor that if Sanofi failed to acquire Genzyme, it may turn to Biogen instead. This rumor may help inflating current Biogen stock price.