Genzyme Corp , trying to restore investor confidence, said on Thursday it will look into selling three non-core businesses -- genetic testing, diagnostic products and its pharmaceutical materials unit.

Bowing to calls from investors to unload the non-core assets, which are seen as not contributing enough to profits, Genzyme said it was looking at options including divestiture, spin-off or management buy-out.

Genzyme, which specializes in expensive drugs to treat serious, rare genetic conditions for which there are few other options, said it had already identified potential strategic partners for the businesses and had received unsolicited inquiries. It has retained the services of Credit Suisse and Goldman Sachs & Co to assist in the process.

The company said it expects the transactions to be completed this year.

Genzyme appears set to hold onto other non-core assets identified by analysts as potential divestiture targets, such as its biosurgery and renal businesses.

The company, saying that its shares are undervalued, also announced plans for a $2 billion stock repurchase and its shares rose nearly 2 percent. Under the plan, $1 billion worth of its shares would be bought in the near term with the remainder to be repurchased over the next 12 months.

Genzyme, one of the world's oldest and most successful biotechnology companies, has been under assault from U.S. regulators and activist investors following a costly plant contamination and repeated quality control failures that have led to serious shortages of two of its most profitable medicines.

Genzyme's long-time Chief Executive Henri Termeer said the company would not discuss its manufacturing woes in detail during Tuesday's analyst day program in Boston.

But he did say: We are making material progress every day, every week, every month in getting manufacturing under control.

The business disruptions and quality control failures have forced Genzyme to agree to a consent decree with government regulators that essentially places the problematic Boston plant under third-party control.

It has also sparked calls for management changes from unhappy investors.

Genzyme is bracing for a proxy fight in June with Carl Icahn, seeking to place himself and three associates on the board. Icahn, who controls nearly 5 percent of Genzyme shares, has specifically called for Termeer's ouster from the board.

In a move to fend off Icahn, Genzyme placed another critical activist investor, Ralph Whitworth, on its board in return for his support of Genzyme's slate of board nominees.

Termeer said newer drugs and some not yet approved, including alemtuzumab for multiple sclerosis, would be key future growth drivers for Genzyme.

He said he expects greater cash flow in next five years than we have had in the history of the company.

Genzyme shares were up 97 cents, or 1.8 percent, at $54.00 in afternoon trading on Nasdaq.

(Reporting by Bill Berkrot; Editing by Ted Kerr and Maureen Bavdek)

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