What will competition do to one of the world’s most expensive drugs?
Genzyme Corp., of Cambridge, will find out soon enough. Its Cerezyme treatment for the ultra-rare Gaucher disease, which can cost $200,000 or more annually for each patient, is in short supply due to manufacturing problems at the company’s Allston Landing plant.
So regulators will permit doctors to prescribe two other yet-to-be approved treatments for patients who would otherwise be stuck rationing Cerezyme until Genzyme can prove it has beaten the virus found in a bioreactor two months ago.
Hopefully, the situation will prompt people to ask another question: Why does it have to cost so much to treat Gaucher patients?
Genzyme became one of the state’s largest biotech companies thanks to an unusual strategy that depends on a stable of high-priced drugs to treat rare genetic disorders. None is more important than Cerezyme, which went on the market in the early 1990s and has generated about $10 billion in revenue since.
Cerezyme isn’t just expensive, it’s incredibly profitable. Stock analysts who follow Genzyme estimate the drug generates a gross profit margin of about 90 percent. The company scours the world for new patients and, until recently, faced no competition.
Genzyme reported Cerezyme sales of $1.2 billion in 2008 and estimates revenue will be reduced to between $750 million and $1 billion this year due to the manufacturing setback. Real competition could ultimately make an even bigger dent.
What does Genzyme think about that? “We will respond to new information as the marketplace evolves,’’ says David Meeker, executive vice president of therapeutics and corporate operations. Translation: Don’t count on prices tumbling just yet.
Meeker defends the price of Cerezyme as a necessity in the business of treating rare diseases. Costs of drugs vary, but the patient pool is always small, often tiny. “We have a portfolio of products,’’ he says. “Some are more profitable than others. Cerezyme may be on one end of the spectrum.’’ Or off the charts entirely.
Just 5,000 people around the world are treated with Cerezyme. Those Gaucher patients are missing an enzyme that breaks down a kind of fat molecule. Tiny bits of waste build in their bodies, acting as a poison. Cerezyme, which is produced in vats of genetically modified hamster cells, replaces the enzyme.
That’s some pretty impressive science, but the key early discoveries did not take place at Genzyme. The identification of the missing enzyme and the earliest tests on patients took place at the National Institutes of Health. NIH researchers later turned to the newly founded Genzyme to produce purified enzymes (originally derived from human placentas) on a larger scale.
The company eventually used the unpatented discoveries to develop and produce the commercial product that became Cerezyme. Genzyme did plenty of work and took big risks along the way. But it wasn’t starting from scratch.
The treatment - initially awarded special Orphan Drug Act protection from competition - and its big price tag were controversial from the start. Legislators in Washington howled, but Genzyme didn’t budge.
The original version of the treatment, called Ceredase, was expensive to make because it still depended on placentas for the enzyme. Besides, Genzyme chief Henry Termeer warned in the 1990s, competitors were eager to carve up the tiny Gaucher market.
The competition never surfaced and Genzyme’s new version of the drug, by then called Cerezyme, was much cheaper to produce. But the price didn’t go down.
Genzyme slowly built the drug’s patient base and revenues steadily grew, from $333 million in 1997 to $619 million in 2002 to $1.2 billion last year. Patients loved the drug because it worked. Whoever paid - often insurance companies or governments - gasped at the bill.
Competitors found it hard to test alternative treatments because there were so few identified Gaucher patients not already on Cerezyme. Eventually, an Israeli company and Shire PLC pushed their alternative treatments close to the clinical finish line and got an added boost from regulators responding to the recent Cerezyme shortage.
Shire runs a big operation in Lexington because it acquired the local Transkaryotic Therapies Inc. four years ago. That company, known as TKT, once raced Genzyme to develop another rare-disease treatment and win orphan drug status. Genzyme’s drug to treat patients suffering from Fabry disease won that intense competition.
A new round of competition is about to begin.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com. 
