US FDA to take enforcement action regarding Genzyme's Allston plant, including financial penalties

In another setback for the troubled biotechnology firm, the US Food and Drug Administration has notified Genzyme that, while the agency recognizes the company's efforts, it intends to take enforcement action to ensure that products manufactured at its Allston (Boston area) plant are made in compliance with Good Manufacturing Practice regulations. The news pushed Genzyme's shares down 6.4% to $55.3 by late afternoon trading yesterday.

The catalog of problems over quality control at the firm's US production facilities started for Genzyme more than a year ago, and in June last year the Allston facility was closed after the discovery of infection by the Vesivirus 2117. This resulted in shortages - and plunging sales - of some of its most important drugs, notably the rare disease treatments Cerezyme (imiglucerase for injection), for Gauchr's, and Fabrazyme (agalsidase beta), for Fabry disease. Moreover, an FDA inspection completed last November detected more problems, including medicines mixed with steel fragments and non-latex rubber. Cerezyme turnover declined 66% to $105 million in the fourth quarter of 2009 and was down 36% to $793 million for the year, while Fabrazyme revenues decreased 54% to $58 million in the quarter and fell 13% to $430 million for the year, the company revealed in its financial results report for last year (The Pharma Letter February 18).

The FDA enforcement action will likely result in a consent decree, under which a third party would inspect and review the plant's operation for an extended period and certify compliance with FDA regulations. Under a consent decree, Genzyme would also be required to make payments to the government and could incur other costs. The likely amounts were not specified, but some observers suggest they could be substantial.