The Enzyme Magician
Genzyme strategy by its creator: Henri
«We continue in the heart and spirit as like
the early days.»
An interview with
Henri Termeer, President, CEO and Chairman of Genzyme,
by Jorge Nascimento
Rodrigues, editor of www.gurusonline.tv, January
Henri A. Termeer, 58, a Dutch by origin with a French
flavour, leader of Genzyme for more than 20 years, received
us with a smile. He was celebrating good news in Europe.
On January 27, 2006, the Committee for Medical Products
for Human Use, of the European Medicines Agency, adopted
a positive opinion about Myozyme, a drug for long-term
enzyme replacement therapy in patients with Pompe disease.
Pompe disease is a rare one, but fatal for children
if not treated. The marketing authorization will follow
in two months.
This is an example of the historical strategy of this
U.S. biotech pioneer, an exception to every rule in
its sector, as the consultant Cynthia Robbins-Roth wrote
in "From Alchemy to IPO - The Business of Biotechnology"
(Perseus, 2000). Since Termeer took the lead of Genzyme
from the founder scientists in 1983, with the help of
the venture capitalists, the plan was simple: create
a broadly diversified business, a market product oriented
company, with a clear goal to get profitable as soon
as possible. Today, Genzyme is focused on six broad
medical areas. «We want Genzyme as a product
company and not a research one. We have our own technology
and the capabilities to develop, manufacture and distribute
medicines ourselves, we do not license it out to others»,
After a severe downtrend in mid of 2002, the close
stock price in Nasdaq went up from a low of $16.8 in
10 July 2002 to $71 in February 2006. The company today
has a market cap of $18.4b; it's third in market cap
in the TOP Biotech companies listed in NYSE and Nasdaq.
In 6 years jumped from 9th to 3rd.
Founded as a small start-up company in 1981 in Boston's
"Combat Zone" (downtown infamous district
of adult entertainment), Genzyme has evolved into a
diversified global business with annual revenues expecting
$3.1 billion by the end of 2006. With headquarters in
the heart of the Mass bio-cluster at Kendall Square,
in Cambridge, the other side of the River Charles, the
company is a true global firm, with facilities spanning
the globe in 33 countries.
Why did you decided, in 1983, to quit Baxter in
LA, left California, accept half of your salary at that
time, and move to a small office opposite to Boston's
infamous Combat Zone (the adult entertainment district
in downtown at that times) to lead as president a two-year
old start-up of scientists? What was the sex-appeal
Well, the early 1980's was the true beginning of biotech.
The field was virgin. The venture capital guys wanted
people like me to take care of these babies. We convinced
each other that was a good start. I must confess, I
always felt to start a company and built it from the
beginning. So I left Baxter's site in Los Angeles, to
move to the backstreets of Boston.
Cynthia Robbins-Roth in her famous book "From
Alchemy to IPO" wrote that Genzyme was an exception
to every rule in the bio-sector, because instead of
focusing on one technology or disease it has been a
model of diversified businesses. Why do you think this
portfolio strategy pays?
At that time we met every Saturday with the scientific
advisors to come up with the business strategy and we
developed the diversification strategy. We wanted a
diversified company that could use technology to make
a difference for people with serious deseases, and to
get profitable so we can continue to develop new medicines.
We wanted Genzyme as a product company and not a research
one. We have our own technology, we do not license it
out to others for development. Also we wanted to do
this globally. And not only represent the Boston biotech
cluster. Remember that we have a full integrated company
in Japan and we start to manufacture in Europe in 2000.
Looking ahead 10 years from now, what are the main
biotech trends you forecast?
One of the trends is related with the market in the
next 10 to 20 years. The possibility of bringing medicines
to a very large population of the world, due to emergent
countries, like China and India. This change will have
a big impact in our field. The research in stem cells
and gene therapies will have also a big role. It will
take more time, but it will play a big role. Also in
the field of the pandemic risks, biotech will have also
a significant role.
From your pipeline which drugs do you think will
be the next killer applications?
I will refer two. First, our non-antibiotic approach
to treat hospital diarrheas, a huge problem, very costly
and with an increase mortality rate. Physicians have
treated the first patients in a Phase 3 clinical study
to test the safety and efficacy of tolevamer, an investigational
polymer therapy for patients with Clostridium difficile
associated diarrhea, a form of infectious diarrhea caused
by the bacterium C. difficile. Second, we are studying
a new use for the marketed B-CLL treatment Campath®,
now for the treatment of multiple sclerosis. Results
from an interim analysis of the Phase 2 trial in MS
were highly encouraging, and the companies are working
with clinical investigators and regulatory authorities
to ensure that a comprehensive program is in place to
manage patient safety in both the ongoing Phase 2 and
planned Phase 3 studies. We will know by the middle
of the year the results. The total market for this area
is about $5 billions.
One of the greatest difficulties of the pharma industry
is the high cost of identifying new targets and compounds,
and bringing them to market as developed drugs. How
does Genzyme tackle this challenge?
For us the most important thing is to make a contribution
to the health care, particularly in rare diseases. We
want to understand the disease, and this takes a long
time. We do not work in the traditional way. We look
also to the outside, we are able to collaborate. We
think we must be open, not focused in a specific technology.
We use various technologies.
How does Genzyme identify the most promising biotech
firms to partner or to acquire?
We are very open, very friendly. We continue in the
heart and spirit as like the early days. The first criterion
is simple - many companies talk to us.
The emergent Asia is today in the breaking news
for every technology. You have offices in China, but
not in India. Why?
That's a good question. We have 3 or 4 teams studying
how to approach Indian subcontinent. It's a very big
world. For sure, we must be in India. I think before
the end of the year, we will have news about it.
What are the major criteria to attract a company
like Genzyme to build a plant or an R&D unit in
a particular country?
The country has to have particular capabilities and
we have to "feel" them. For example, Ireland
in manufacturing; Portugal in the clinical trials. Our
Research Centre in Cambridge, UK, is there because of
Started at 1981 by 8 MIT scientists. Henri A. Termeer
entered in 1983 to
lead the company, convinced by a group of venture capitalists.
The start-up had only 11 employees at that time.
The name comes from the begining of the company. The
scientists extract the enzyme that comprises the medicine
One of the historical companies of the Biotech Massachusetts
centered at Kendall Square, Cambridge, near Boston,
where we can find also Amgen, Biogen and the pharma
giant Novartis. A study conducted by the Massachusetts
Biotechnology Council (MBC) and The
Boston Consulting Group (BCG) concluded that the Massachusetts
cluster currently employs 30,000 people at approximately
companies plus 150 medical devices firms. Analysts estimates
an additional 100,000 jobs will be created by 2010.
This U.S. region is home to the largest concentration
of biotech companies in the world. According to "Mass
Biotech 2010" Report (http://www.massbiotech2010.org/),
during the last years, employment in the biotech industry
has grown 10
percent annually and has contributed roughly half of
the new industrial jobs in Massachusetts. Today, biotechnology
accounts for 18 percent of the state's venture-capital
investment, 27 percent of its R&D spending, one
sixth of its public companies, and approximately 10
percent of its market capitalization. What's more, the
fact that approximately 8 percent of the world's pipeline
of new medications (pharmaceuticals as well as biotech)
is now located in Massachusetts represents enormous
potential for growth and job creation. Most biotech
observers agree on the nine major U.S. biotech clusters:
Boston/Cambridge (Massachusetts), New York/New Jersey/Connecticut,
Philadelphia, Washington D.C./Baltimore, Raleigh/Durham,
Seattle, South San Francisco/Bay Área of San
Francisco, Los Angeles and San Diego. Colliers International's
Life Sciences Group pinpoints Chicago, Houston, Indianapolis,
Memphis, St. Louis and the state of Wisconsin to be
among the emerging U.S. bio-clusters.
Genzyme becomes a public company quoted at Nasdaq through
an IPO in 1986.
Stock Market Value at Nasdaq (2005): $18.4 billion
(4% of the total biotech market cap in 2005). Third
in market cap in the Top biotech quoted in Nasdaq and
NYSE. In 6 years jumped from the 9th place to the 3rd.
The TOP 5 in 2005 in market cap: Amgen (88.9b); Genentech
(88,4);Genzyme (18,09); Biogen Idec (15,1); Celegene
Part of the Nasdaq Biotech Index, consisting of 158
After a downtrend in mid of 2002, the close stock price
of GENZ went up from a low of $16.8 in 10 July 2002
to $71 in February 2006.
Growing revenues: $2.2 billion in 2004, $2.7b in 2005;
$3.1b expected for 2006.
R&D spending: 18.5 per cent of 2005 revenues.
8,000 employees in locations in 33 countries spanning
Genzyme ranked 51 among Fortune's 100 best companies
to work for.
Has been also selected as a member of the Dow Jones
Sustainable World Index, consisting of more than 300
leading sustainability-driver companies.
Therapeutic Portfolio: 25 marketed products in six
broad areas - LSDs (Lysosomal Storage Disorders) &
rare diseases, renal, orthopedics, transpant & immune
disorders, oncology/endocrinology, genetics and diagnostics.
Recent investments in Europe (2005): 400 million euros
in Belgium, Ireland and UK
M&A strategy: 10 acquisitions in UK and U.S. in
the last 15 years (one from 2005 is pending)
Novel financing methods: tracking-stocks method for
specific parts of the
portfolio in the 1980's and 1990's. "We segment
and give particular investors specific segments of the
business", explains Termeer. Since 2000, this strategy
was abandoned. "It is not doable anymore",
Wall of fame of HB case studies: In 1993, Genzyme entered
Business case studies portfolio. "Genzyme: A financing
history", by Timothy A. Luehrman and Andrew D.
Henri Termeer, 58, acepted the Genzyme challenge in
1983. The fledgling company only could pay him about
half his Baxter(previous employer in LA, California)
salary and gave him a small office.
He has been at the helm of the company since then.
He is now Chairman, President and CEO.
Dutchman by origin. Born in the Netherlands, with a