What's the real fair price for Genzyme?

We're wondering whether Genzyme's new asking price of $89 per share is the real deal--or whether it's high-balling its price tag in hopes that Sanofi-Aventis would meet it in the middle of that number and its current offer of $69. Whatever company executives privately believe, the public announcement that it's worth $89, or something like $23 billion, astonished plenty of people, even those who agreed that $69 was far too low.

Sanofi itself called $89 a "totally unrealistic" figure. And it's true that Genzyme's own predictions for future sales of its potential multiple sclerosis drug Campath--$3 billion at peak--outstrip even the most optimistic analyst forecast by about $1 billion. Its forecast for 2011 earnings of $4.30 to $4.60 per share beat analyst predictions by 20 percent--and these are the numbers on which Genzyme built its $89 value estimate.

But Sanofi's Campath forecast is equally off analyst estimates, albeit in the other direction: The French drugmaker based its Genzyme offer on $700 million in peak Campath sales, with expert and analyst forecasts ranging from $1.6 billion to almost $2 billion.

Some pharma-watchers were skeptical of Genzyme's new forecast; the company doesn't have a stellar track record at forecasting sales and earnings. Others said the discrepancy between Genzyme's numbers and Sanofi's amount to an assessment of risk, given Genzyme's serious manufacturing troubles over the past year: "Sanofi is probably baking in too much risk and Genzyme may not be accounting for enough risk," One East Partners analyst Vivek Channamsetty tells Reuters. "The answer is probably somewhere in the middle."

- see the Reuters news
- get more from the Financial Times
- read the Boston Globe story
- check out the New York Times piece
- find the Bloomberg coverage

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