Predatory Icahn moves in on weakened Genzyme
pharmafile | February 23, 2010 | News story | Research and Development, Sales and Marketing | Gaucher, Genzyme, Icahn
Corporate raider Carl Icahn has made a bid to gain control of beleaguered Genzyme as it struggles to overcome major setbacks.
The US company has been mired in problems ever since a viral contamination halted the manufacture of its biologic treatments Cerezyme and Fabrazyme in June 2009.
After further setbacks in November, production is now returning to previous levels, but shortages of the drugs have dealt a major blow to Genzyme’s sales, and to wider public and investor confidence in the company’s board, including chief executive Henry Trameer.
The company has just reported a 73% in fall in fourth quarter profits based on an 8% shrinkage in revenue to $1.08 billion.
Now Carl Icahn, an activist investor famed for his aggressive tactics, has made a move to take control of the company. Icahn is seeking to have himself and three business associates elected to the board of the company.
Icahn has been slowly increasing his shareholding in the company since November when its share price had dipped, and now controls around 2% of its shares.
Genzyme is trying to head off a direct conflict by saying it would consider the nominations.
“Our actions demonstrate that we are open and responsive to shareholder input, and we welcome a constructive dialogue with Mr. Icahn,” said chief executive Henri Termeer in a statement.
The company’s management board has also made major changes to its structure in order to answer concerns about its oversight of manufacturing and quality control.
Scott Canute, a former head of manufacturing at Eli Lilly has now taken on a senior role to oversee all 17 of Genzyme’s production facilities worldwide.
Termeer added: “Genzyme is regaining its momentum and will return to delivering sustainable growth this year. We have made significant changes to strengthen the company by investing in existing businesses, bringing in new senior leadership and improving corporate governance. We are completely focused on generating short- and long-term value for shareholders.”
Icahn has launched several high profile proxy contests aimed at biotech companies in recent years. He acted as a broker for the sale of ImClone to Lilly for more than $6 billion after taking control of ImClone’s board. He made similar moves at Amylin and Biogen. Icahn already controls two seats on Biogen’s board, and has set his sights on two more in order to engineer its sale or break up.
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