Genzyme: The Price of Success - Pharmaceutical Executive


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.

Pharmaceutical Executive

Seeing Green

When CEO Henri Termeer was recruited to join Genzyme, in 1983, the company was working from the 15th floor of an old Garment District building, in Boston's Combat Zone, the city's seedy red-light district.

New Ground
"You would park the car, and you would get propositioned three or four times before you got to the office," says Termeer. "It was all very romantic in a sense."

Termeer himself is romantic. His eyes are squinty, like he's getting a closer look. His stare suggests he knows something you don't. He speaks with a thick accent (he's Dutch), almost in a whisper.

"People would visit me in these modest digs," says Termeer of Genzyme's first office, "and they would say, 'What happened to you? Where is your sense?'"

Termeer left a well-paying executive-vice-president job with Baxter, where he'd been for 10 years, to go to the then two-year-old start-up. He'd been working in Southern California, which Termeer says always felt temporary: "Nobody deserved to live in such nice conditions."

Termeer finds himself in pretty nice conditions now. The company recently spent $140 million to build its new headquarters in Cambridge, Massachusetts. The day I arrive there, I stand among environmental groups, contractors, and students, who wait to tour what the Association of General Contractors called "one of the most environmentally responsible office buildings ever built in the United States." Today is no exception. Genzyme executives make a habit of mentioning the frequent tour groups that come to see their creation, where reflective pools and full-sized trees fill the entryway, and window blinds automatically adjust to absorb heat from the sun.

I ascend to Termeer's office suite in a glass elevator. His assistants greet me in a private foyer, and guide me to the CEO's adjoining personal meeting room. On this cool afternoon, the glass doors to the terrace are closed. A few minutes later, he joins me. Cool and collected, Termeer quickly gets into Genzyme's early days in less opulent quarters: "It's amazing how much confidence you can talk yourself into," he says. What initially comes off as arrogance in Termeer actually makes him likeable. The more he talks, his aloofness turns to shyness; his ego seems bold—admirable.

Adopting orphans It's this boldness that inspired Genzyme to capitalize on a new piece of legislation that addressed rare-disease drug development. The Orphan Drug Act, which was signed into law in 1983, grants seven-year exclusivity to companies that make drugs for "orphan" diseases (those that affect fewer than 200,000 people in the United States), and allows them to tax-deduct a portion of clinical trial costs. With this in mind, Genzyme launched clinical trials in 1984 for Ceredase (alglucerase injection), an enzyme replacement therapy for Type 1 Gaucher disease; the product won FDA approval in 1991. Three years later, Genzyme introduced Cerezyme (imiglucerase for injection), a second-generation recombinant product, which, over a decade later, remains the only drug of its kind, and Genzyme's biggest moneymaker.

Based on a strategy of developing therapies for astonishingly small patient populations and commanding some of the highest prices in the drug-making world, Genzyme has tripled its revenues in five years, from $900 million in 2000 to $2.7 billion in 2005.


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