Genzyme's Triple Screwup: Factory Problem Ends Its Monopoly and Puts NDA on Hold

Is there a drug company on the planet more screwed up than Genzyme right now? (Possibly, but it's a tight contest.) Here's what's happening at the maker of Cerezyme, the only treatment for Gaucher disease, which gives Genzyme a $1.24 billion monopoly on the drug.

Genzyme's Massachussetts factory was shut down by the FDA in June, triggering a shortage of the only drug to treat the disease through year's end. The shut-down was triggered by a viral contamination.

Even though Genzyme has dominated the Gaucher's field, the drug shortage has infuriated the doctors who are its customers because all of Genzyme's Cerezyme eggs were in one basket, so to speak.

Meanwhile, Shire and Protalix Biotherapeutics have competing drugs in the pipeline, which they hope to see on the market in 2010. They can be used now under an FDA protocol. And Actelion is advancing from the sidelines with its related drug, Zavesca. In other words, Genzyme has managed to screw up a monopoly at the worst possible time.

Genzyme hasn't been ambushed by these events: It was warned by the FDA in February that the factory needed to pass inspection in May. That month, it didn't pass.

On top of all this, the February letter wasn't about Cerezyme, it was about Lumizyme, the company's proposed Pompe disease drug. So production for that drug can't start until the current problems are cleared up.

The Europeans are involved too, a regulatory team from the Old World visited the factory and found one undescribed "major" issue it wants rectified.

And finally(!), an FDA panel rejected Genzyme's app for Clolar, a leukemia drug, citing a need for more tests.

As Geoff McDonough, a Genzyme svp, told Dow Jones, the company probably ought to have built two factories, you know, just in case:

In retrospect, it would have been better to have started that project two years earlier ... We would indeed have been in a better position today had we done so.
Separately: You'd think that Teva vice chairman Philip Frost, who owns a large position in Protalix, would be happy about Genzyme's troubles. They only make Protalix's future look brighter ... but he's selling off his stock. I wonder why?