Genzyme: The Price of Success

Genzyme put patients first, and grew to become a multi-billion-dollar company. But empires don't survive on altruism.
Mar 01, 2006

Rising profits
Two days before I went to visit Genzyme, Theo Epstein, general manager of the Boston Red Sox, announced his resignation. Epstein became an icon in October 2004, when his team won its first World Series since 1918. Sox fans or not, people everywhere were stunned by what he had accomplished at such a young age—Epstein was 30 when the Sox took home the pennant, and just 28 when he was named to the top post. But to Bostonians, Epstein was special not just because he climaxed professionally before most people get going, but also because of his willingness to do things his own way. The people of Boston loved Theo for his guts: About seven months into his tenure, in a defining moment, Epstein traded star shortstop Nomar Garciaparra for two comparatively unknown players, Orlando Cabrera and Doug Mientkiewicz. Fans squealed. Radio talk show hosts predicted the team's demise. Players feared they'd been doomed. But Epstein stood by his decision. And a few centerfield smacks by Cabrera later, he had the whole town standing beside him.

Reflecting Twenty-two-million dollars of the total building costs for Genzyme's new headquarters went toward making it "green," or environmentally responsible. Here, CEO Termeer looks up at the entryway's hanging prisms, which resemble falling graduation caps and reflect rainbows throughout the building.
Given the general sentiment toward Epstein, it's no surprise that several people I met with from Genzyme broke the ice by commenting on his decision to leave the team. All Boston-area residents, Genzyme executives were as susceptible as anyone to the citywide crush on this boy wonder—maybe even more so. Genzymers, perhaps, felt a kinship with Epstein.

Joint Effort
Like the Red Sox's general manager, Genzyme, against odds, combined instinct, passion, and market knowledge to grow an enterprise. Both ventures involved risks, but only calculated ones: Epstein didn't arbitrarily trade Garciaparra; he did it to improve the team's poor defense. Genzyme priced its drugs at jaw-dropping heights, but not without a plan for structured access programs. Both Epstein and Genzyme soared in the face of criticism: Epstein overcame age discrimination and disagreement over trading decisions to accomplish the unthinkable. Genzyme also has done the unthinkable—built a hugely profitable business by developing life-saving treatments for thousands (not millions) of rare-disease victims. Neither hero has ever said, "I'm sorry."

It is easy to see why Epstein's decision might strike a chord in Genzyme executives. After all, they are witnessing first hand the company's evolution from start-up to multi-billion-dollar machine. For 25 years, the spirit of Genzyme has been a matter of humble beginnings, market exclusivity, and putting patients first. The company still preaches these things, but in many ways—like Epstein, who is rumored to have stepped down to get out from under his mentor's wing—Genzyme has outgrown its foundation. Dwindling holds on monopolies, pressure to recoup international investments, and intense scrutiny of prices raise questions about whether the company's strategy for rising to the top can be sustained long term. When Theo Epstein announced he was leaving, Genzyme executives had one more reason to ask a scary question: Would newfound prosperity force them, like Epstein, to abandon a proven model of success? And an even scarier one: Where to go from here?


lorem ipsum