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Genzyme nears the end of an era

Posted by Scott Kirsner  February 7, 2011 03:33 PM

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termeer.jpgWell, that was a swell three-decade run.

It seems a foregone conclusion that French pharmaceutical-maker Sanofi-Aventis will buy Cambridge's Genzyme Corp. sometime soon for about $20 billion. That'll end Genzyme's thirty-year stretch as one of the most innovative (and at times, controversial) pioneers of the biotech industry. With about 12,000 employees and $4 billion in annual revenues, Genzyme is not only the biggest biotech company in Massachusetts, but it's one of the last of the first-generation biotech companies still standing as an independent business. (Two years ago, a Swiss company, Roche Holdings, paid $46 billion for the very first biotech firm, San Francisco-based Genentech, founded in 1976.)

Genzyme was one of those classic Massachusetts success stories — a company obsessed with figuring out how to do the impossible. The company's very first product treated a rare and previously untreatable malady called Gaucher's disease. Genzyme developed its first treatment by extracting and purifying an enzyme out of human placentas (yikes: it required 22,000 placentas to treat a single patient for one year), and later it pioneered a method of making a synthetic form of the enzyme using genetically engineered animal cells. In the years since, Genzyme has developed and acquired other products to treat rare diseases like Gaucher's, as well as kidney disease and arthritis. It has poured tens of millions into cultivating new drugs for cystic fibrosis and multiple sclerosis, too.

This morning, I was remembering when I first interviewed Genzyme CEO Henri Termeer, back in 2003. Sitting in the company's brand-new Kendall Square high-rise, he recalled how in the late 1970s and early 1980s, biotechnology was seen as a field of enormous promise, but companies were applying it in all sorts of ways that turned out to be economically unsustainable: developing perm treatments, dying fabric, unclogging drains. "People just had no idea how these technologies could be best leveraged," Termeer said. When he joined Genzyme, in 1983, the company had fewer than a dozen employees. A research collaboration with the National Institutes of Health led to the company's first product, even after a first clinical trial showed poor results.

Genzyme and other Boston biotech companies, like Biogen and Genetics Institute, grew here, Termeer told me, because of the presence of top-notch universities and venture capitalists with money to invest. One thing that wasn't here: big pharma companies. Their absence allowed Genzyme and others to hire the best scientists and product development people, and point them at audacious goals. "It was a magnificently pioneering time," Termeer said. The biggest pharmaceutical companies were focused on making "enormous money with small, incremental improvements on their products," and then hawking those improvements with their "enormous marketing power." That created a vacuum in which Genzyme and a handful of other big biotechs grew.

Boston has changed since then. Most major pharma companies have set up research outposts here to tap the talent coming out of local universities. And they regularly acquire both private and public biotech companies here to fill their product pipelines. In the life sciences industry, the odds of spawning independent, enduring, iconoclastic "tentpole" companies like Genzyme weren't high in 1981, but they're far lower now. The biggest players in pharma have fortified themselves with formidable sales forces and distribution channels — and there isn't much logic in challenging them. (Cambridge-based Biogen Idec, which has been narrowing its focus to neurological diseases, could be the next to get gobbled.)

It's interesting to wonder whether Genzyme would still be trucking along as an independent company if Termeer had groomed an obvious successor to lead the company once he retires...or if the company hadn't encountered a lengthy series of manufacturing problems that began in 2009.

Can Genzyme be anywhere near as innovative a company inside the corporate hull of Sanofi as it has been on its own? Will Termeer stick around in any kind of substantive way? Betting on either scenario is like betting that the sequel to a movie you loved will be better than the original.

I'm not excited, you may be able tell, about the prospect of another branch office in Kendall Square.

But I'm also not pessimistic about the likelihood that we will create other Genzymes here... as long as there are small teams of researchers in grubby office space who believe they see some glimmer of promise on the horizon, and leaders like Termeer to point them in the right direction.

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Innovation and technology news that matters, on a new website from the Boston Globe, featuring Scott Kirsner and other original reporting.

About Scott Kirsner

Scott Kirsner was part of the team that launched in 1995, and has been writing a column for the Globe since 2000. His work has also appeared in Wired, Fast Company, The New York Times, BusinessWeek, Newsweek, and Variety. Scott is also the author of the books "Fans, Friends & Followers" and "Inventing the Movies," was the editor of "The Convergence Guide: Life Sciences in New England," and was a contributor to "The Good City: Writers Explore 21st Century Boston." Scott also helps organize several local events on entrepreneurship, including the Nantucket Conference and Future Forward. Here's some background on how Scott decides what to cover, and how to pitch him a story idea.

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