US biotech company Genzyme Corporation, which has become a takeover target by Sanofi-Aventis, today said that it has reached an agreement to sell its genetic testing business to Laboratory Corporation of America Holdings (LabCorp) for $925 million in order to focus its resources on core growth areas.

Under the deal, LabCorp will purchase the entire business, including all testing services, technology, intellectual property rights, and its nine testing laboratories. LabCorp said that it is committed to offer employment to the 1900 employees of Genzyme Genetics.

Genzyme Genetics is a provider of reproductive and oncology testing in the US, specialising in esoteric testing, with nine laboratories performing more than a million tests a year.

The business, which also has the largest countrywide network of board-certified genetic counsellors, had revenues of $371 million in 2009.

North Carolina-based LabCorp is one of largest laboratory testing companies in the US specialising in routine testing, with 38 primary testing locations and more than 1,500 patient service centres.

The company offers a range of testing services used by the medical profession in routine testing, patient diagnosis, and in the monitoring and treatment of disease, as well as specialty testing services.

Its 220,000 clients include physician offices, hospitals, managed care organisations, and biotechnology and pharmaceutical companies. LabCorp employs 28,000 people worldwide and had revenues of $4.7 billion in 2009.

Genzyme, based in Cambridge, Massachusetts had put Genzyme Genetics and two other units for sale in May in order to increase shareholder value.

It said today that plans to divest the two other business units, Diagnostic Products and Pharmaceutical intermediates, remain on track. The company will use the money from these transactions to finance the second half of the company's $2-billion stock buyback.

''This transaction demonstrates the strategic value of Genzyme Genetics and the strong franchise we've built over a twenty year period,'' said Henri Termeer, chairman and chief executive officer of Genzyme Corporation.

''It also shows how our management team is uniquely positioned to unlock the underappreciated value of Genzyme's diverse businesses for shareholders. The completion of this sale allows us to focus our resources on core growth areas and create stronger returns on invested capital,'' he added.

"This acquisition will substantially expand our capabilities in reproductive, genetic, hematology-oncology and clinical trials central laboratory testing," said David King, chairman and chief executive of LabCorp.

Since its launch in 1981, Genzyme has grown from a small start-up to a diversified company with more than 12,000 employees in locations spanning the globe. In 2010, the company was named in the Fortune 500 list.

Its market capitalisation is around $14 billion and had sales of $4.5 billion in 2009. It's 2010 second-quarter revenue was $1.08 billion, compared with $1.23 billion in the same period last year.

The company's drugs are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant, and immune diseases. It also has a strong late-stage pipeline that is expected to help drive long-term growth.

Genzyme' experimental multiple sclerosis (MS) drug Campath, which is scheduled to hit the market in 2012, is expected to generate annual sales of over $3 billion from an estimated $13 billion global MS drug market, according to Genzyme.

But Genzyme is just about recovering from a series of problems related to manufacturing that had dragged its revenues and stock price down and helped its rivals gain market share at its expense. (See: Genzyme Corp shuts key facility to clean plant contamination)

Genzyme had to shut down its Allston Landing plant in Boston, a key production facility, to clean viral contamination, which reduced production of two of its key drugs, Cerezyme and Fabrazyme - used in the treatment of rare genetic disorders, and cost the company millions in revenue.

Last month, it rejected the French drug maker Sanofi-Aventis' $18.5-billion all-cash takeover offer, citing that the opportunistic takeover proposal does not reflect the true worth of the company. (See: Genzyme board rejects Sanofi-Aventis $18.5-billion takeover offer)