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REVENUE AND CREDIT CONCENTRATIONS
12 Months Ended
Dec. 31, 2014
Risks And Uncertainties [Abstract]  
REVENUE AND CREDIT CONCENTRATIONS

(19) REVENUE AND CREDIT CONCENTRATIONS

Net Product Revenue—The Company considers there to be revenue concentration risks for regions where net product revenue exceeds ten percent of consolidated net product revenue. The concentration of the Company’s net product revenue within the regions below may have a material adverse effect on the Company’s revenue and results of operations if sales in the respective regions experience difficulties.

The table below summarizes consolidated net product revenue concentrations based on patient location for Vimizim, Naglazyme, Kuvan and Firdapse and the headquarters for Genzyme for Aldurazyme. Although Genzyme sells Aldurazyme worldwide, the royalties earned by the Company on Genzyme’s net sales are included in the U.S. region, as the transactions are with Genzyme whose headquarters are located in the U.S.

 

 

 

Years Ended December 31,

 

 

 

2014

 

 

2013

 

 

2012

 

Region:

 

 

 

 

 

 

 

 

 

 

 

 

United States

 

 

51

%

 

 

52

%

 

 

50

%

Europe

 

 

19

%

 

 

22

%

 

 

22

%

Latin America

 

 

16

%

 

 

13

%

 

 

15

%

Rest of world

 

 

14

%

 

 

13

%

 

 

13

%

Total net product revenue

 

 

100

%

 

 

100

%

 

 

100

%

 

The following table illustrates the percentage of the consolidated net product revenue attributed to the Company’s four largest customers.

 

 

 

For the Years Ended December 31,

 

 

 

2014

 

 

2013

 

 

2012

 

Customer A

 

 

15

%

 

 

15

%

 

 

15

%

Customer B (1)

 

 

14

%

 

 

16

%

 

 

16

%

Customer C

 

 

12

%

 

 

9

%

 

 

12

%

Customer D

 

 

11

%

 

 

11

%

 

 

9

%

Total

 

 

52

%

 

 

51

%

 

 

52

%

 

(1)

Genzyme is the Company’s sole customer for Aldurazyme and is responsible for marketing and selling Aldurazyme to third-parties. Net product revenues from Genzyme are comprised of royalties on worldwide net Aldurazyme sales and incremental product transfer revenue.

On a consolidated basis, the Company’s two largest customers accounted for 42% and 18% of the December 31, 2014 accounts receivable balance, respectively, compared to December 31, 2013 when the two largest customers accounted for 45% and 15% of the accounts receivable balance, respectively. As of December 31, 2014 and December 31, 2013, accounts receivable for the Company’s largest customer balance included $34.5 million and $26.3 million, respectively, of unbilled accounts receivable related to net incremental Aldurazyme product transfers to Genzyme. The Company does not require collateral from its customers, but does perform periodic credit evaluations of its customers’ financial condition and requires immediate payment in certain circumstances.

The Company is subject to credit risk from accounts receivable related to product sales. The majority of the Company’s trade accounts receivable arises from product sales in the U.S. and the European Union (the EU). The Company’s product sales to government-owned or government-funded customers in certain European countries, including Italy, Spain, Portugal, Greece and Russia, are subject to payment terms that are statutorily determined. Because these customers are government-owned or government-funded, the Company may be impacted by declines in sovereign credit ratings or sovereign defaults in these countries. A significant or further decline in sovereign credit ratings or a default in these countries may decrease the likelihood that the Company will collect accounts receivable or may increase the discount rates and the length of time until receivables are collected, which could result in a negative impact to the Company’s operating results. In the year ended December 31, 2014 the Company’s net product revenues for these countries was 4%. Additionally, approximately 8% of the Company’s outstanding accounts receivable at December 31, 2014 related to such countries.

As of December 31, 2014, the Company’s accounts receivable in certain European countries, specifically Greece, Italy, Portugal, Spain and Russia, totaled approximately $11.4 million, of which $0.4 million were greater than 90 days past due and $0.3 million were greater than 180 days past due and $18 was greater than 365 days past due.

The Company also sells its products in other countries that face economic crises and local currency devaluation. Although the Company has historically collected receivables from customers in those countries, sustained weakness or further deterioration of the local economies and currencies may cause customers in those countries to be unable to pay for the Company’s products. The Company has not historically experienced a significant level of uncollected receivables and has received continued payments from its more aged accounts. The Company believes that the allowances for doubtful accounts related to these countries is adequate based on its analysis of the specific business circumstances and expectations of collection for each of the underlying accounts in these countries.