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September 10, 2010
A Genzyme spokesman has confirmed that the company is in the midst of a round of layoffs that will be discussed with employees over the next few days.
A statement sent by Bo Piela to Boston Business Journal, via email, said,
"In May we announced a formal effort to find ways of operating more efficiently and cost effectively. This effort is part of a comprehensive plan to strengthen ourselves, ensure we are prepared for our next phase of growth and increase the value of the company for our shareholders.
We have completed the first phase of this initiative, which was to identify specific goals for reducing costs, including streamlining our organization. Now that we have established these goals, we are spending some time over the next few days talking with our employees about implementation steps. We feel it's the right thing to do to take the next couple of days to talk with employees before we make any public comments."
Piela would not specify the number of layoffs.
Analyst Simon Simeonidis of New York investment bank Rodman and Renshaw said that the move is likely to be welcomed by the investment community.
"The company is working hard at solving its problems. In the past, Genzyme has been looked at by some as being fat in many areas," Simeonidis said. He expects the share price to respond positively to the news, once it is more widely reported. He said that streamlining the organization could make the company more attractive to suitor Sanofi-Aventis, the french drugmaker whose offer of $69 per share to acquire Genzyme was rejected last month by CEO Henri Termeer. Genzyme is reportedly looking for a price closer to $80 per share. Simeonidis said the layoffs could also serve to attract a so-called "white knight" who could sweep in with a better offer.
"Either way, it's good news. It could help the M and A process, or if a sale doesn't go through, it will help Genzyme be a better-run company," Simeonidis said. Genzyme has been under increasing pressure from activists investors on its board, including Carl Icahn, to change the way it does business.
The company has been struggling to get its manufacturing operation back on track following ongoing drug shortages, and a far-reaching enforcement action by the U.S. Food and Drug Administration.
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