Alan E Smith Senior Vice President Chief Scientific Officer Genzyme

1. Alan E Smith Senior Vice President Chief Scientific Officer Genzyme MIT R&D Conference November 3rd 2005

2. Biotechnology - business appears to be great … • ~ 150 marketing approvals for biotech drugs and vaccines in last 5 years – more than all previous years combined • Many big revenue products: - Enbrel - Aranesp/Epogen - Cerezyme - Rituxin - Remicade - Neulasta/Neupogen - Synagis - Rebif - ReoPro - Avonex - Herceptin - Viread • 2004 R&D • approx 32 new - 1st indication “biotech” products approved • 350 products in clinical stage development • 2004 Financing • 37 Biotechs went public WW, 28 in US • $21B financing raised; 2nd best year ever

3. Lead Discovery 10,000 Safety & efficacy in animals ~$1B 250 Safety & efficacy in humans 10 Regulatory Approval 1 Post - Approval : 73% need additional studies 30% recoup development costs 0 2 4 6 8 10 12 14 15 Years . . . but the Biopharmaceutical World is tough Our business is time-consuming, expensive, & risky Center for Study of Drug Development, Tufts University, 2003 - 2005

4. 55NMEs $35B R&D Spending ($B) 33 50 31 45 29 27 40 25 35 23 21 30 NMEs approved 19 25 17 20 15 13 15 2003 1.6 1996 0.3 1997 0.5 1998 0.7 1999 0.7 2000 1.0 2001 1.4 2002 2.1 $B/NME The Productivity Conundrum Increased R&D investment hasn’t translated into more products PhRma 2002, Nature Drug Discovery 2005

5. 2.5 450 400 1st $Billion – 19 Years 2nd $Billion – 3 Years 2.0 350 300 1.5 250 R&D Spending ($M) Total Revenues ($B) 200 1.0 150 100 0.5 50 0 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 But in even this environment Genzyme is doing well Revenues & R&D Spending

6. Success demands continuous development of new opportunities Always a revenue gap in the out years Committed Growth Rate Revenue Gap Revenue New Product Revenue Existing Product Revenue Current +1 +2 +3 +4 +5 +6 +7 Year Where do opportunities that drive long term growth come from?

7. Internally Originated Discovery Programs Marketed Drugs Drugs in Clinic Preclinical Candidates Clinical Candidates Marketed Drugs Drugs in Clinic Clinical Research Preclinical Development Marketed Products Preclinical Research Pivotals Discovery Our Model Discover inside: Discover outside & partner or acquire: Discover more: We have to do all three

8. Why look outside? Estimated global health R&D funding 2000 $38.0B $53.0B $9.4B $2.5B $103B Public funding: advanced countries Private funding: Pharma, Biotech Private funding: not for profit Public Funding: developing countries TOTAL * Global Health Forum 2001, PMPRB 2002, Genzyme Est.

9. # Product Company Therapeutic Category ‘02$B Originator 1 Lipitor Pfizer Antihyperlipidaemics 7.9 Warner-Lambert 4 Procrit/Eprex Johnson & Johnson Antianaemics 4.2 Kirin-Amgen 5 Norvasc Pfizer Calcium antagonists 3.8 Pfizer/Sumitomo 7 Prevacid TAP Pharma Antiulcerants 3.1 Takeda 8 Seroxat/Paxil Glaxo SmithKline Anti-depressants 3.0 Ferrosan 9 Celebrex Pfizer NSAI 3.0 Monsanto Of the top 10 selling drugs in 2002 . . Success demands it

10. Marketed Drugs Drugs in Clinic Preclinical Candidates Cost of Deal Risk of Failure An investment balance required – early & late stage partnerships Every company strives hard to strike the correct portfolio balance between the risk of early stage and the growing cost of late stage partnerships

11. Genzyme has ongoing collaborations with all kinds of organizations • Public/Commercial • Pharmaceutical companies • Biotech companies • Startups • Venture Capital groups • Private/Non-Profit • University Investigators • Clinical / Hospital Investigators • Government Institutes • Private Research Institutes How do you do it?

12. Genzyme’s Unsolicited Partnering Opportunities Q1-Q3 ’04 Snapshot Total -538 submissions 89 (16.5%)Interesting 14 - Followed up by BD or Scientist 27 - Received more information; then no interest 11 - Pending with additional information 37(6.9%) - Initiated a Confidentiality Agreement 7- Pending review of information 1 (0.2%)-Received info = SRA 3 (0.5%)-Received info = MTA 25 - Received info: no interest 1 (0.2%)- Received info = LIC A 1% hit rate . . . about average

13. Renagel example - partnership and acquisition • Henri Termeer • Chairman, Genzyme Board of Directors • Member, Geltex Board of Directors • Bob Carpenter • Chairman, Geltex Board of Directors • Member, Genzyme Board of Directors • Joint venture with Geltex in 1997 before product approval • $27.5M for 50% of Renagel in US & Europe • Geltex acquired in 2001 after Renagel launch, • $1 Billion in cash and stock • 2005 revenues ~$400M (annualized Q2 2005) Later stage acquisition lowers risk . . .but at a price!

14. . . . but acquisitions have downsides too Cost of acquiring quality late stage products candidates is high, and getting higher – • Buying someone else’s innovation . . . • to reduce internal risk . . . • with steadily increasing competition – many in same game, many with deep pockets - all looking for the same thing Many, perhaps most, acquisitions fail to live up to expectations Outside collaborations and acquisitions must be carefully chosen and managed. How? …

15. What’s important: 1) a solid, compelling story A development checklist: Reproducible ‘proof of concept’ efficacy data in relevant disease model Preliminary animal safety data Stable prototype formulation Production plan for manufacturing product Commercial plan – including access to IP, competition, etc. Regulatory strategy Clinical development plan

16. What’s important: 2) a fit Needs & abilities on both sides of the table: • Financial – Upfront and ongoing commitment • Financial – Expected return on investment • Timing – Pipeline needs • Technical – Therapeutic area experience and expertise • Technical – Therapeutic platform • Capacity – People and facilities • Market – Call point • Strategic – Desired area of growth Initial partnering requirements: a compelling story AND a good fit:

17. What’s important: 3) people & organization • Personal • Connection - awareness of opportunity wherever it might be • Champion(s) - person(s) who are connected & truly believe • Initiative – turning belief into action • Persistence – there are always non-believers & setbacks • Dedication – it’s always more work than you think • Organizational • Flexibility – Partners have differing needs from relationship • Openness – Frequent face-to-face communication • Experience – Realistic expectations, well-founded decisions • Quality – Essential in all aspects of a collaborative After the ink is dry, success requires people who will are committed and organizations that – while recognizing and respect differences - are compatible

18. Summary • Biotech industry • Success is rare, time consuming, and very expensive • Committed to aggressive long-term growth • Seeks and commercializes innovation • An essential part of the equation is partnering & acquisition • Partnering • Must choose wisely • Need an extensive understanding of external landscape and a • Through understanding of internal needs that partnership will fill • Goal is to find a fit between the external opportunity and internal need • Dedicated people and receptive organizations make the relationship work