Three years out, French drugmaker Sanofi ($SNY) continues to reap benefits from having opened a U.S. biologics plant that added capacity for some of the rare disease meds developed by its Genzyme unit.
The drugmaker last week reported that revenues in pharmaceuticals were up 4.4% last year, driven in large part by a 22% growth in sales at Boston-based Genzyme. The biotech's revenue leap was powered in part by sales of drugs like Fabrazyme. The treatment for the rare Fabry disease saw 2014 sales soar 23% to €460 million ($521.7 million).
CFO Jerome Contamine said Genzyme has been the key driver to improved margins for Sanofi in recent years after Sanofi was able to overcome problems at a plant in Massachusetts and get Fabrazyme and other drugs to market. "[T]he reason is basically that when you are able to fix your manufacturing issues in biologics, where the cost of goods is mainly a fixed cost, ... you clearly have a leverage," Contamine told analysts in a call last week, according to a transcript from Seeking Alpha.
The plant in Framingham, MA, came online in 2012, providing additional capacity. Genzyme had run into supply issues with Fabrazyme and some other products when a 2009 contamination problem at a plant in Allston, MA, brought that Boston-area facility to a standstill and led to a consent decree. Growing sales of Fabrazyme and Cerezyme, another rare disease drug affected by the plant problems, have helped boost the drugmaker's earnings and margins every year since the new plant opened.
"Genzyme had another outstanding year and quarter with over 20% growth in both periods, reflecting our sustained leadership position in the rare disease market, which is based on the continued success of Cerezyme, Fabrazyme and Myozyme," Chairman Serge Weinberg told investors.
- here's the earnings release
- here's the Seeking Alpha transcript