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Generation 21

The Enzyme Magician

Genzyme strategy by its creator: Henri Termeer
«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, January 2006

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», says Termeer.

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 of Genzyme?

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 the cluster.

Genzyme Profile

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 from placentas.

One of the historical companies of the Biotech Massachusetts cluster
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 biotech
cluster currently employs 30,000 people at approximately 300 biotech
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 (,
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 (11,7).

Part of the Nasdaq Biotech Index, consisting of 158 companies.

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 the globe.

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", says Termeer.

Wall of fame of HB case studies: In 1993, Genzyme entered the Harvard
Business case studies portfolio. "Genzyme: A financing history", by Timothy A. Luehrman and Andrew D. Regan.

President Profile

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 French flavour.

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