Genzyme Corp. agreed to pay $250 million in cash to purchase aprivately held surgical instruments company to help boostintroduction of its post-operative anti-adhesion devices, which theCambridge, Mass., firm has said could become its biggest sellingproduct line.
With fiscal 1995 annual net sales of $95 million, the Massachusetts-based Deknatel Snowden Pencer Inc. also is expected to giveGenzyme an estimated $50 million in added revenues this year,officials of the biotechnology company said. The acquisition is slatedto be complete by the end of June 1996.
Genzyme's stock (NASDAQ:GENZ) closed Tuesday at $58.50,down $2.75.
Deknatel Snowden, headquartered in Fall River, Mass., has 585employees and manufacturing plants in Tucker, Ga., and Coventry,Conn., in addition to Fall River.
Genzyme officials said they will retain all Deknatel Snowdenworkers, including its 70-person U.S. and European sales force.
Cheryl Greenhouse, Genzyme spokeswoman, said DeknatelSnowden's annual net sales increased 11.5 percent from fiscal 1994to fiscal 1995. The company's fiscal year ends Sept. 30.
Deknatel Snowden's two best known surgical products are Pleur-evacand Thor-Klex chest drainage devices. Founded in 1868, it also sellsspecialty needles, sutures and other instruments to cardiovascular,gynecological and general surgeons.
The company's new product research includes development ofinstruments for minimally invasive surgical techniques, such asendoscopic heart bypass operations.
The addition of Deknatel Snowden will create a new surgicalproducts division at Genzyme headed by William Dow, who isDeknatel Snowden's chairman, president and CEO.
In a prepared statement, Genzyme Chairman and CEO HenriTermeer, said "We will use [Deknatel Snowden's] professional 52-person U.S. sales force to accelerate the introduction of Seprafilmand Sepracoat to the U.S. surgical market."
Genzyme currently has 25 sales and marketing staffers in its surgicalproducts division.
Seprafilm and Sepracoat are hyaluronic-based products designed toprevent adhesions following surgery. Seprafilm, a bioresorbablemembrane, is under review by the FDA for use in abdominal andgynecological surgeries. An FDA advisory panel recommendedapproval of the device in March 1996.
Genzyme submitted a premarket approval application for Sepracoat,a coating solution, in January 1996. Another hyaluronic-basedproduct, Sepragel, has yet to enter clinical testing.
Seprafilm has been approved by all 15 European Union countries,Canada and Singapore. The product is on the market in TheNetherlands, U.K., France, Germany and Sweden.
Post-operative internal scarring can cause a variety of complications.In abdominal surgery one of the more serious is intestinal obstructionand in gynecological operations, adhesions can cause infertility.Corrective measures may involve additional surgery.
Termeer has said Genzyme's surgical devices could become thecompany's largest selling products, "possibly generating more than$300 million in annual sales within the next five years."
Genzyme's 1995 revenues totaled $379 million. Its best sellingproducts, Ceredase and Cerezyme, are drugs for treatment ofGaucher's disease, generating about $215 million in sales last year.
Greenhouse said Genzyme has not yet decided how it will finance theDeknatel Snowden acquisition. As of March 31, 1996, Genzyme had$302 million in cash.
Earlier this month Genzyme withdrew a $93 million stock offer tobuy back rights to the anti-adhesion products from the limitedpartnership formed to fund development of the devices. The changein plans left intact the existing contractual relationship with GenzymeDevelopment Partners L.P., which also is called Surgical AidsPartnership. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.