Zacks_Analysts' Blog : BioMarin to Buy Pfizer Plant - Analyst Blog

BioMarin Pharmaceutical Inc. (BMRN) recently announced that it will acquire an integrated biologics manufacturing plant from pharma giant Pfizer Inc. (PFE) which will expand its manufacturing capacity to manage its proliferating product portfolio and its maturing pipeline.

The plant, for which BioMarin will pay $48.5 million, is located in Shanbally, Cork, Ireland and is spread across 133,000 square feet. The purchase price is almost five times less than the cost of building a new facility. BioMarin is expected to close the deal in the third quarter of 2011. Moreover, BioMarin will have to spend approximately $4 million annually to maintain the facility.

The current manufacturing facilities have the capacity to manufacture protein products worth roughly $1 billion in revenue. With a maturing pipeline, the company will need additional resources to carry out its production activities. The acquisition of the Shanbally facility not only expands manufacturing capacity for BioMarin, it also diversifies manufacturing risk for BioMarin over two production facilities located in separate geographical locations. The company’s other manufacturing facility located at Novato, California will continue to be used for producing its currently marketed drugs Naglazyme and Aldurazyme along with several clinical products.

The Shanbally manufacturing facility is expected to be used mainly for manufacturing BioMarin’s lead pipeline candidate GALNS being developed for the treatment of Mucopolysaccharidosis IVA (MPS IVA, also known as Morquio A Syndrome), if approved. BioMarin hopes to be able to get a license to use the facility to manufacture GALNS by 2015. GALNS is under late stage trials, data from which is expected to be presented in the second half of 2012. If the need arises, the new facility can also be used to manufacture other pipeline candidates such as PEG-PAL, BMN-701, and BMN-11, on approval.

Our Recommendation

Currently, we have a Neutral recommendation on BioMarin. The company carries a Zacks #3 Rank (‘Hold’ rating) in the short run.