10-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2004

Commission File No. 0-14680

GENZYME CORPORATION
(Exact name of registrant as specified in its charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	06-1047163 (I.R.S. Employer Identification No.)
500 Kendall Street Cambridge, Massachusetts (Address of principal executive office)	02142 (Zip Code)
(617) 252-7500 (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Genzyme Common Stock, $0.01 Par Value ("Genzyme Stock")
Genzyme Stock Purchase Rights

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ý    NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the Registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). YES ý    NO o

Aggregate market value of voting stock held by non-affiliates of the Registrant as of June 30, 2004: $10,686,891,407

Number of shares of Genzyme Stock outstanding as of March 1, 2005: 251,313,803

DOCUMENTS INCORPORATED BY REFERENCE

        Portions of the Registrant's 2004 Annual Report are incorporated by reference into Parts I, II and IV of this Form 10-K. Portions of the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be held on May 26, 2005 are incorporated by reference into Part III of this Form 10-K.

NOTE REGARDING REFERENCES TO GENZYME DIVISIONS AND SERIES OF STOCK

        Throughout this Form 10-K, the words "we," "us," "our" and "Genzyme" refer to Genzyme Corporation as a whole, and "our board of directors" refers to the board of directors of Genzyme Corporation.

        Through June 30, 2003, we had three operating divisions, which we refer to as follows:

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Genzyme General Division = "Genzyme General;"



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Genzyme Biosurgery Division = "Genzyme Biosurgery;" and



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Genzyme Molecular Oncology Division = "Genzyme Molecular Oncology."

        Through June 30, 2003, we also had three outstanding series of common stock. Each series was designed to reflect the value and track the performance of one of our divisions. We refer to each series of common stock as follows:

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Genzyme General Division Common Stock = "Genzyme General Stock;"



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Genzyme Biosurgery Division Common Stock = "Biosurgery Stock;" and



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Genzyme Molecular Oncology Division Common Stock = "Molecular Oncology Stock."

        Through June 30, 2003, we allocated earnings or losses to each series of tracking stock based on the net income or loss attributable to the corresponding division determined in accordance with accounting principles generally accepted in the United States of America, as adjusted for the allocation of tax benefits.

        Effective July 1, 2003, we eliminated our tracking stock capital structure by exchanging, in accordance with the provisions of our charter, each share of Biosurgery Stock for 0.04914 of a share of Genzyme General Stock and each share of Molecular Oncology Stock for 0.05653 of a share of Genzyme General Stock. Options and warrants to purchase shares of Biosurgery Stock and options to purchase shares of Molecular Oncology Stock were converted into options and warrants to purchase shares of Genzyme General Stock. Effective July 1, 2003, we have one outstanding series of common stock. From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of shareholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of common stock, which we now refer to as Genzyme Stock.

        Effective July 1, 2003, as a result of the elimination of our tracking stock capital structure, all of our earnings or losses are now allocated to Genzyme Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to that date remain allocated to those series of stock in the preparation of our consolidated financial statements and are not affected by the elimination of our tracking stock structure. Accordingly, earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock represent earnings allocated to those tracking stocks through June 30, 2003. Earnings or losses allocated to Genzyme Stock through June 30, 2003 represent the earnings or losses of Genzyme General, as adjusted for the allocation of tax benefits. Earnings or losses allocated to Genzyme Stock after June 30, 2003 represent the earnings or losses for the corporation as a whole.

        On July 1, 2003, we reclassified the Biosurgery Stock and Molecular Oncology Stock equity accounts into the Genzyme Stock equity accounts. The elimination of our tracking stock capital structure had no effect on our consolidated net income or loss. Because we now have only one series of common stock outstanding, we rescinded the management and accounting policies that governed the relationships between our former divisions. In this Annual Report on Form 10-K, and future Quarterly and Annual Reports, we will not provide separate financial statements and management's discussion

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and analysis for each of our former divisions, but will continue to provide our consolidated financial statements and management's discussion and analysis for the corporation as a whole.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This Form 10-K contains forward-looking statements, including statements regarding our:

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projected timetables for the preclinical and clinical development of, regulatory submissions and approvals for, and market introduction of, our products and services in various jurisdictions;



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timing of, and availability of data from, clinical trials;



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merger and acquisition activity, including final valuations of our acquisition of ILEX Oncology, Inc.;



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completion of a post-closing working capital assessment for our acquisition of substantially all of the pathology/oncology testing assets related to the Physician Services and Analytical Services business units of IMPATH Inc., or IMPATH;



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entries into new collaborations and licensing agreements;



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estimates of the potential markets for our products and services, including the anticipated drivers for future growth;



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sales and marketing plans;



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assessment of competitors and potential competitors and the anticipated impact of potentially competitive products on our revenues;



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estimates of the capacity of, and the projected timetable of approvals for, manufacturing and other facilities to support our products and services;



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expected future revenues, operations and expenditures;



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projected future earnings and earnings per share;



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assessment of the outcome and financial impact of litigation and other governmental proceedings and the potential impact of unasserted claims;



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projected cash needs;



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IRS audit, including our provision for liabilities and potential for reduction of future tax provisions;



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assessment of the impact of recent tax legislation and accounting pronouncements, including SFAS No. 123R; and



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expected future payments related to employee benefits and leased facilities acquired from ILEX, IMPATH, and SangStat Medical;

        These statements are subject to risks and uncertainties, and our actual results may differ materially from those that are described in this report. These risks and uncertainties include:

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our ability to successfully complete preclinical and clinical development of our products and services;



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our ability to manufacture sufficient amounts of our products for development and commercialization activities and to do so in a timely and cost-effective manner;



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our ability to obtain and maintain adequate patent and other proprietary rights protection of our products and services and successfully enforce our proprietary rights;

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the scope, validity and enforceability of patents and other proprietary rights held by third parties and their impact on our ability to commercialize our products and services;



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the accuracy of our estimates of the size and characteristics of the markets to be addressed by our products and services, including growth projections;



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market acceptance of our products and services;



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the use of cash in business combinations or other strategic initiatives;



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our ability to identify new patients for our products and services;



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our ability to satisfy the post-marketing commitments made as a condition of the marketing approvals of Fabrazyme and Aldurazyme;



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the accuracy of our information regarding the products and resources of our competitors and potential competitors;



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the content and timing of submissions to and decisions made by the United States Food and Drug Administration, commonly referred to as the FDA, the European Agency for the Evaluation of Medicinal Products, or EMEA, and other regulatory agencies;



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the availability of reimbursement for our products and services from third-party payors, the extent of such coverage and the accuracy of our estimates of the payor mix for our products;



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our ability to increase market penetration outside the United States for Fabrazyme, Thyrogen and Renagel;



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market acceptance of Thymoglobulin in expanded areas of use and new markets;



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our ability to optimize dosing and improve patient compliance with Renagel;



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our ability to effectively manage wholesaler inventories of our products and the levels of compliance with our inventory management programs;



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our ability to successfully launch Clolar;



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our ability to establish and maintain strategic license, collaboration and distribution arrangements and to manage our relationships with collaborators, distributors and partners;



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our reliance on third parties to provide us with materials and services in connection with the manufacture of our products;



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the continued funding and operation of our joint ventures by our partners;



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decisions made by the United States District Court, arbitrators for the American Arbitrators Association, the United Kingdom Competition Appeal Tribunal, the Federal Trade Commission, commonly referred to as the FTC, and other judicial bodies and regulatory and dispute resolution authorities;



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our ability to successfully increase market penetration for Synvisc as a treatment for osteoarthritis of the knee and to expand its use in other joints;



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the resolution of litigation related to the consolidation of our tracking stocks;



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the initiation of legal proceedings by or against us;



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the impact of changes in the exchange rate for the Euro and other currencies on our product and service revenues in future periods;



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our ability to successfully integrate ILEX and the businesses acquired from IMPATH;

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the number of diluted shares considered outstanding, which will depend on business combination activity, our stock price, and potential changes in accounting rules;



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the outcome of our IRS audit; and



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the possible disruption of our operations due to terrorist activities and armed conflict, including as a result of the disruption of operations of regulatory authorities, our subsidiaries, our manufacturing facilities and our customers, suppliers, distributors, couriers, collaborative partners, licensees and clinical trial sites.

        We have included more detailed descriptions of these and other risks and uncertainties in Item 2 of this report under the heading "Factors Affecting Future Operating Results." We encourage you to read those descriptions carefully. We caution investors not to place substantial reliance on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only as of the date of this report (unless another date is indicated) and we undertake no obligation to update or revise the statements.

NOTE REGARDING INCORPORATION BY REFERENCE

        The Securities and Exchange Commission allows us to disclose important information to you by referring you to other documents we have filed or will file with the SEC. The information that we refer you to is "incorporated by reference" into this Form 10-K. Please read that information.

NOTE REGARDING TRADEMARKS

        Genzyme®, Renagel®, Cerezyme®, Ceredase®, Fabrazyme®, Thyrogen®, Synvisc®, Hylaform®, Carticel®, Seprafilm®, Epicel®, IMPATH®, Myozyme®, Aldurazyme®, Thymoglobulin®, Lymphoglobuline®, Campath® and MACI® are registered trademarks of Genzyme or its subsidiaries, Sepra™, VERIGEN™ and Clolar™ are trademarks of Genzyme or its subsidiaries. AVONEX® is a registered trademark of Biogen IDEC, Inc. Thymoglobulin® and Lymphoglobuline® are registered trademarks of SangStat Medical Corporation. WelChol® is a registered trademark of Sankyo Pharma, Inc. Gengraf® is a registered trademark of Abbott Laboratories. All rights reserved.

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TABLE OF CONTENTS

		PAGE
PART I
ITEM 1.	BUSINESS	7
	Introduction	7
	Products and Development Programs	7
	Competition	12
	Patents, License Agreements and Trademarks	15
	Government Regulation	17
	Employees	21
	Financial Information Regarding Segment Reporting	21
	Research and Development Costs	21
	Sales by Geographic Area, Significant Customers and Products	21
	Available Information	21
ITEM 1A.	EXECUTIVE OFFICERS OF THE REGISTRANT	22
ITEM 2.	PROPERTIES	23
ITEM 3.	LEGAL PROCEEDINGS	25
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	26
PART II
ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	27
ITEM 6.	SELECTED FINANCIAL DATA	28
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	28
ITEM 9A.	CONTROLS AND PROCEDURES	29
ITEM 9B.	OTHER INFORMATION	29
PART III
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	30
ITEM 11.	EXECUTIVE COMPENSATION	30
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	30
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	30
ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	30
PART IV
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K	31
	15(a)(1) Financial Statements	31
	15(a)(2) Financial Statement Schedules	32
	15(a)(3) Exhibits	32
	15(b) Exhibits	32

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PART I

ITEM 1. BUSINESS

Introduction

        We are a global biotechnology company dedicated to making a major impact on the lives of people with serious diseases. Our broad product and service portfolio is focused on rare genetic disorders, renal disease, orthopaedics, organ transplant, and diagnostic and predictive testing. We were founded as a Delaware corporation in June 1981 and became a Massachusetts corporation in 1991. We are organized into five financial reporting units, which we also consider to be our reporting segments:

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Renal, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure. The unit derives substantially all of its revenue from sales of Renagel (including sales of bulk sevelamer);



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Therapeutics, which develops, manufactures and distributes therapeutic products, with a focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as lysosomal storage disorders, or LSDs, and other specialty therapeutics, such as Thyrogen. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme and Thyrogen;



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Transplant, which develops, manufactures and distributes therapeutic products that address pre-transplantation, prevention and treatment of acute rejection in organ transplantation, as well as other auto-immune disorders. The unit derives its revenue primarily from sales of Thymoglobulin and Lymphoglobuline;



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Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial products, with an emphasis on products that meet medical needs in orthopaedics and broader surgical areas. The unit derives its revenue primarily from sales of Synvisc and the Sepra line of products; and



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Diagnostics/Genetics, which develops, manufactures and distributes in vitro diagnostic products, and provides testing services for the oncology, and prenatal and reproductive markets.

        We report the activities of our oncology, bulk pharmaceuticals, cardiovascular and drug discovery and development business units under the caption "Other." We report our corporate, general and administrative operations, and corporate science activities that we do not allocate to our financial reporting units, under the caption "Corporate."

Products and Development Programs

Renal

Renagel (sevelamer hydrochloride).    Renagel is a non-absorbed, calcium-free, metal-free phosphate binder indicated for the control of serum phosphorus in patients with Chronic Kidney Disease (CKD) on hemodialysis. Three formulations of the product have been approved for sale in the United States—the 403 mg. capsules were launched in the fourth quarter of 1998, and the 400 and 800 mg. tablets were launched in September 2000. We ceased marketing the 403 mg. capsules in 2004. Renagel was approved for sale in Israel in 1999, the European Union and Canada in 2000, Brazil in 2002, and Japan in 2003. In the United States, there are an estimated 320,000 end-stage renal disease patients, approximately 95% of whom receive a phosphate control product. There are also an estimated 250,000 end-stage renal disease patients in Europe, 60,000 in Brazil, 20,000 in Canada and 200,000 in Japan. We are now marketing the product in a total of 45 countries. In 2005, we anticipate filing for marketing approval in Peru, Argentina and Mexico.

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        We market Renagel tablets in the United States, the European Union and Brazil directly to nephrologists through a dedicated sales force. Chugai Pharmaceutical Co., Ltd. and its partner, Kirin Brewery Co., Ltd., have rights to develop and market Renagel in Japan, China and other Pacific Rim countries. Our sales of Renagel (including sales of bulk sevelamer), totaled $363.7 million, or 18% of our consolidated product revenue in 2004, $281.7 million, or 18% of our consolidated product revenues, in 2003, and $156.9 million, or 13% of our consolidated product revenues, in 2002.

        In October 2003, the National Kidney Foundation (NKF) published clinical practice guidelines related to bone metabolism and disease in patients with chronic kidney disease. These guidelines, which are part of the NKF's Kidney Disease Outcomes Quality Initiative (K/DOQI), include Renagel among first-line options for reducing phosphorus in hemodialysis. Elevated phosphorus levels are associated with increased morbidity and mortality. The guidelines also define a broader set of patients for whom calcium-based phosphate binders are not appropriate. Renagel is the only marketed phosphate binder available to patients on hemodialysis that does not contain either calcium or metal, is not absorbed systemically and does not accumulate in the body.

        We are conducting a 2,100-patient post-marketing study of Renagel to evaluate the ability of the product to improve patient morbidity and mortality. The trial compares Renagel to calcium-based phosphate binders with respect to overall morbidity and mortality. We expect top-line data from this trial to be available in 2005. In early 2005, we initiated a clinical trial for sevelamer carbonate, a new formulation of Renagel, in patients with end-stage renal disease. We plan to initiate additional studies in 2005 that are directed at expanding the use of Renagel into larger populations, notably for patients who have CKD but have not progressed to kidney failure.

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Therapeutics

        Our Therapeutics segment currently has four therapeutic products on the market and several other therapeutic products in varying stages of development. The chart set forth below provides summary information on these four products and our most advanced product candidate as of March 10, 2005.

Product	Indication	Status
Cerezyme/Ceredase	Type 1 Gaucher disease; Type 3 Gaucher disease (Cerezyme/E.U. only)	Ceredase marketed since 1991; Cerezyme marketed since 1994; marketing approval received and commercial sales in 47 countries
Fabrazyme	Fabry disease	Marketed in the E.U. since 2001, the U.S. since 2003, and Japan since 2004; marketing approval received and commercial sales in 23 countries; post marketing phase 4 trial completed and patients enrolled in open label study; several post-marketing commitments ongoing
Thyrogen	Adjunctive diagnostic agent in the follow-up of patients with well- differentiated thyroid cancer;	Marketed in the U.S. since 1998, Brazil since 2000 and the E.U. since 2001; marketing approval received in 38 countries
	Combination therapy in ablation of remnant thyroid tissue	Approved for sale in the E.U. in March 2005
Aldurazyme	MPS I	Marketed in the U.S. and the E.U. in 2003; marketing approval received in 29 countries commercial sales in 26 countries; several post-marketing commitments on-going
Myozyme	Pompe disease	Two Phase 3 trials in patients younger than 3 years old on-going; submitted MAA for marketing approval in E.U. in late 2004; plan to submit BLA in U.S. in 2005; plan to initiate a pivotal study of late onset disease in 2005

Additional details on our Therapeutic products and our largest development program are set forth below.

Cerezyme (imiglucerase)/Ceredase (alglucerase).    Treatment with Cerezyme or Ceredase enzyme replacement therapy currently represents the only safe and effective enzyme replacement therapy approved for treatment of Type 1 Gaucher disease, a lysosomal storage disorder. We began marketing Ceredase for the treatment of Type 1 Gaucher disease in the United States in 1991 and in the European Union in 1994. Because production of Ceredase was subject to supply constraints, we developed Cerezyme, a recombinant form of human glucocerebrosidase, the enzyme that is deficient in Gaucher patients. Recombinant technology uses specially engineered cells to produce enzymes, or other substances, by inserting into cells of one organism the genetic material of a different species. In the case of Cerezyme, Chinese hamster ovary, or CHO, cells are engineered to produce human beta glucocerebrosidase. We stopped producing Ceredase, except for small quantities, in 1998 after we converted substantially all of the patients who previously used Ceredase to Cerezyme. In the E.U., Cerezyme is also approved for the treatment of patients who exhibit clinically significant, non-neurological manifestations of the disease (Type 3 Gaucher disease).

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        We market Cerezyme directly to physicians, hospitals and treatment centers worldwide through a highly trained sales force. Cerezyme, like all of our therapies developed for LSDs, is an ultra orphan drug, or one aimed at treating a patient population of less than 10,000 worldwide. Cerezyme has received marketing approval in 47 countries to treat symptoms that include anemia, spleen and liver enlargement and bone deterioration. Our results of operations are highly dependent on sales of this product, although our dependence is lessening as we diversify our product portfolio. Sales of Cerezyme and Ceredase totaled approximately $839.4 million, or 42% of our consolidated product revenues, in 2004, $733.8 million, or 47% of our consolidated product revenues, in 2003, and $619.2 million, or 52% of our consolidated product revenues, in 2002.

Fabrazyme (agalsidase beta).    We have developed Fabrazyme, a recombinant form of the human enzyme alpha-galactosidase, as a treatment for Fabry disease. Fabry disease is a LSD that is caused by a deficiency of the enzyme alpha-galactosidase A, which leads to the progressive accumulation of lipids within cells of the kidneys, heart, and other organs. It is estimated to affect less than 10,000 people worldwide. This ultra orphan drug received marketing approval in the European Union in 2001, in the United States in 2003 and in Japan in 2004. In the United States, we have agreed with the FDA on a number of post-marketing commitments, including the completion of a Phase 4, multi- national, multi-center, double-blind placebo-controlled study we initiated in 2001. During 2004, we completed that Phase 4 study and submitted a preliminary summary of the study to the FDA. We plan to submit the final study results to regulatory authorities in the United States, European Union and certain other regions during 2005 to fulfill post-approval commitments. We also expect to file the results for labeling purposes in 2005. We have now launched Fabrazyme in 23 countries. Because kidney failure is associated with Fabry disease, Fabrazyme is sold by our existing LSD and renal sales forces.

Thyrogen (thyrotropin alfa).    Thyrogen is an adjunctive diagnostic agent used in the follow-up of patients with well-differentiated thyroid cancer. We developed this product to allow patients to continue taking their thyroid hormone supplements while they are being screened for residual or recurring thyroid cancer. This helps patients avoid the debilitating effects of hypothyroidism, increasing the likelihood that they will seek follow-up treatment, and ultimately improve the likelihood of early detection of any recurrent disease. We began marketing Thyrogen in the United States in 1998, in Brazil in 2000 and in the European Union in 2001. In the United States and the European Union, physicians order over 200,000 thyroid cancer screening tests per year. Thyrogen, which is currently approved for commercial sale in 38 countries, is sold through distributors in the United States and by direct sales force and through distributors in Brazil and the European Union.

        We are currently pursuing additional indications for Thyrogen. In March 2005, we received European Union approval for use of Thyrogen in combination with radioiodine in ablation of thyroid tissue. We expect a decision on our U.S. submission for this same indication in the second half of 2005. Approximately 35,000 ablation procedures are performed annually in the United States and European Union combined, and we believe that Thyrogen has the potential to be used in up to 80% of these procedures. We also are conducting a Phase 1 trial of TSH, the active ingredient in Thyrogen, for use in patients with nontoxic multinodular goiter.

Aldurazyme (laronidase).    We formed a joint venture with BioMarin Pharmaceutical Inc. to develop and market Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, to treat a LSD known as mucopolysaccharidosis I, or MPS I. MPS I, which is estimated to affect less than 10,000 people worldwide, causes serious disabilities, pain and often death before adulthood. In 2003, the joint venture received marketing approval for Aldurazyme in both the United States and the European Union. We market Aldurazyme directly to physicians in the United States through our LSD sales force. European sales of Aldurazyme, which are undertaken by our European sales and marketing teams, are being launched on a country-by-country basis as pricing and reimbursement approvals are obtained. The joint venture's applications for marketing approval are currently pending in several countries,

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including Brazil, Mexico, South Korea and Switzerland. In total, Aldurazyme has received marketing approvals in 29 countries. We currently are conducting a post-marketing clinical study of MPS I patients under the age of 5 that we expect to complete in 2005. Aldurazyme revenues are recorded by the joint venture.

Myozyme (alglucosidase alfa).    We are developing a potential therapy for Pompe disease, which is a progressive and often fatal muscle disease resulting from an underlying LSD. Pompe disease ranges from a rapidly fatal infantile-onset form with severe cardiac and skeletal muscle involvement to a more slowly progressive late-onset form primarily affecting skeletal muscle. There is currently no therapeutic treatment available for the disease. Based on results from the two ongoing trials involving patients younger than 3 years old with the infantile-onset form of Pompe disease, and from previous studies of enzyme replacement therapy for Pompe disease, we submitted a marketing application for this ultra orphan drug in the European Union in late 2004. We plan to submit marketing applications in the United States and Japan during 2005. In anticipation of commercialization in 2006, we are scaling up our manufacturing capacity in the United States and Europe. During 2005, we also intend to begin enrollment in the first clinical trial of Myozyme in patients with the late-onset form of Pompe disease. We have created special access programs to increase Myozyme's availability to patients who are in need and are unable to participate in our trials.

Transplant

        This business segment includes two marketed products, as well as product candidates in the research and development stages that we acquired through our acquisition of SangStat Medical Corporation in the third quarter of 2003.

Thymoglobulin (anti-thymocyte globulin, rabbit).    Thymoglobulin is an immunosuppressive polyclonal antibody that suppresses certain types of immune cells responsible for acute organ rejection in transplant patients. It has been marketed in the United States since 1999 for the treatment, and in Canada since 2003 for the prevention and treatment, of acute rejection in patients with renal transplant. More kidney transplants are performed in the United States than any other organ transplant, with approximately 16,000 transplants performed each year. Of this number of renal transplants, we estimate that acute immunosuppressant therapies such as Thymoglobulin are used in approximately 70% of procedures. In the European Union, Thymoglobulin received approval for a broader label in the major European markets and is indicated for induction and treatment of rejection in solid organ transplants, for prevention and treatment of graft versus host disease, and for the treatment of aplastic anemia. This broader indication is also held in several Asian and Latin American countries. We have filed for marketing approval of Thymoglobulin in Japan, where we also market Lymphoglobuline for aplastic anemia. Thymoglobulin, which has received marketing approval and is sold in 56 countries, is sold through a direct sales force to transplant centers for end use by transplant surgeons and nephrologists. We currently are conducting studies of Thymoglobulin in living donor renal transplantation, liver transplantation and bone marrow transplantation.

Lymphoglobuline (anti-thymocyte-globuline, equine).    We market Lymphoglobuline, another immunosuppressive polyclonal antibody, in Latin America, the European Union, Japan and other Asia Pacific countries for the treatment of aplastic anemia and for the prevention and treatment of graft rejection. This product is sold through our sales force in Europe and through distributors elsewhere.

Biosurgery

Synvisc (hylan GF20).    Synvisc is a biomaterial derived from hyaluronan used to treat the pain associated with osteoarthritis of the knee. An estimated 8 to 9 million of the approximately 14 million people in the United States with osteoarthritis of the knee may be candidates for treatment with Synvisc. Synvisc is approved for sale and sold in over 60 countries, both directly and through marketing

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and distribution arrangements. At the beginning of 2005, we bought back from Wyeth the sales and marketing rights to the product in the United States and several European countries. We anticipate receiving approval to market Synvisc in Japan to treat pain associated with osteoarthritis in the knee within the next two years.

        Our current plans for Synvisc include expanding its indications to joints beyond the knee through new clinical trials. We are enrolling patients in a Phase 3 clinical trial in the United States for Synvisc in the hip, an indication that is already approved in the European Union and Canada. We also are enrolling patients in Phase 3 trials of the ankle and shoulder in the European Union. At the same time, we are continuing clinical development of a next-generation product that would require fewer injections.

Sepra Products.    The Sepra family of products is aimed primarily at preventing adhesions (internal scar tissue) following various surgical procedures in areas of the body such as the abdomen and pelvis. These products are biomaterials derived from hyaluronan. We market the Sepra products primarily through a direct sales force in the United States and the European Union, and primarily through distribution arrangements in Japan and the rest of the world.

        Seprafilm, the first marketed product and largest by sales volume of the Sepra family, is the only FDA-approved product clinically proven to reduce the incidence, extent and severity of postsurgical adhesions in the abdomen and pelvis. There are approximately 2,000,000 applicable abdominal and pelvic procedures performed annually in the United States.

Diagnostics/Genetics

Diagnostic Products.    We develop, market and distribute in vitro diagnostic products with an emphasis on point of care products for the in-hospital and out-of-hospital rapid test segment, and clinical chemistry reagents and raw materials focused on the clinical laboratory. Sales in Europe and the United States are made primarily to diagnostic reagent and equipment manufacturers who, in turn, distribute the products under their own brand. In Japan, sales are primarily made to distributors. We also maintain a manufacturing, research and development and sales subsidiary in Germany that sells diagnostic products directly to hospital laboratories.

Diagnostic Services.    We develop and provide high quality, sophisticated genetic and other complex testing and offer genetic counseling services focused on pre-natal and post-natal care, reproductive and fertility medicine and oncology in both the United States and Japan. We offer several types of testing—the most significant are cytogenetic testing, molecular genetic (DNA) testing, immunohistochemistry testing, flow cytometry testing and biochemical testing. These services are promoted through a direct sales force in the United States, with testing performed in our clinical laboratories located throughout the United States. We service the Japanese market through a direct sales force and distributors, with testing primarily performed in our clinical laboratory in Santa Fe, New Mexico. During 2004, we acquired substantially all of the oncology testing assets of the Physician Services and the Analytical Services business units of IMPATH. This acquisition brought to us an array of solid-tumor and blood-based oncology diagnostic tests and associated services, a team of board-certified anatomic and clinical pathologists, and clinical laboratories located in New York City, Phoenix and Los Angeles.

Competition

        We are engaged in segments of the human healthcare products and services industry that are extremely competitive. Our competitors in the United States and elsewhere include major pharmaceutical, biotechnology, diagnostic testing and device companies. Some of these competitors may have more extensive research and development, regulatory, manufacturing, production, and sales and marketing capabilities. Some competitors may have greater financial resources. These companies may succeed in developing products and services that are more effective than any that we have or may

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develop and may also prove to be more successful than we are in producing, marketing and selling products and services. In addition, technological advances or different approaches developed by one or more of our competitors may render our products and services obsolete, less effective or uneconomical. Each of our products and services faces different competitive challenges, and we describe many of them below.

Renal

        Renagel is a phosphate binder for the treatment of hyperphosphatemia. Phosphate binders, such as Renagel, are currently the only available treatment for hyperphosphatemia, or elevated serum phosphorus levels. There are several phosphate binders available or under development. PhosLo®, a prescription calcium acetate preparation sold by Nabi Biopharmaceuticals, and Fosrenol®, a prescription lanthanum carbonate sold by Shire Pharmaceuticals Group plc, are currently the only other products approved in the United States for the control of elevated phosphorus levels in patients with chronic kidney failure and on hemodialysis. Other products used as phosphate binders include over-the-counter calcium- and aluminum-based antacids and dietary calcium supplements. The doses necessary for calcium acetate and calcium carbonate, the most commonly used agents, to achieve adequate reductions in phosphate absorption can lead to constipation and patient noncompliance. In addition, calcium therapy requires frequent monitoring because its use can cause hypercalcemia and evidence suggests that increasing doses of calcium-based binders may lead to cardiac calcification. Aluminum hydroxide, another treatment option, is more effective at lower doses than calcium acetate or calcium carbonate, but it is infrequently used because aluminum absorbed from the intestinal tract accumulates in the tissues of patients with chronic kidney failure, causing aluminum-related osteomalacia, anemia and dementia. We are aware of several potential treatments under development for hyperphosphatemia in end stage renal disease. In addition, current competitors are looking to expand into new markets. Shire Pharmaceuticals has received marketing approval of Fosrenol in Sweden and has filed for approval in the European Union and Canada. Nabi Biopharmaceuticals has filed for marketing approval for PhosLo in the European Union.

Therapeutics

Cerezyme and Ceredase.    There is one marketed product as well as development efforts aimed at treating Gaucher disease. Zavesca®, a small molecule oral therapy developed by CellTech Group plc, which was acquired by UCB S.A. in 2004, and marketed by Teva and Actelion Ltd., has been approved in the United States, the European Union and Israel for use in patients with mild to moderate Type 1 Gaucher disease for whom enzyme replacement therapy is unsuitable. To date, virtually all Gaucher disease patients who have received enzyme therapy have experienced strong clinical benefits with few side effects, so we do not expect the competition from Zavesca to have a significant impact on our sales of Cerezyme. Transkaryotic Therapies Inc. (TKT) is conducting a Phase 1/2 clinical trial for its gene-activated human glucocerebrosidase (GA-GCB) product. TKT has reported that it expects to report top-line data from this study in the second half of 2005. Other competitors could develop competitive products based on protein replacement therapy, small molecule or gene therapy approaches. We believe that our proprietary production techniques give us a number of advantages over potential competitors using protein replacement therapy for the treatment of Gaucher disease. In addition, gene therapy approaches are still in experimental stages. We believe that the principal factors that will affect competition for Cerezyme and Ceredase enzymes will be clinical effectiveness and absence of adverse side effects.

Fabrazyme.    Replagal®, TKT's enzyme replacement therapy for Fabry disease, competes with Fabrazyme. Replagal has received marketing approval in 34 countries, including Canada, Australia and several countries in the European Union. TKT has publicly announced that it has abandoned its efforts

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to obtain marketing approval in the United States. We are also aware that Amicus Therapeutics is conducting a Phase 1 clinical trial of a small molecule treatment for Fabry disease.

Transplant

Thymoglobulin and Lymphoglobuline.    Several companies market products used for the prevention and treatment of acute rejection in renal transplant. These products include Novartis AG's Simulect®, Pfizer Inc.'s ATGAM®, Ortho Biotech's Orthoclone OKT®3, Fresenius Biotech GmbH's ATG-Fresenius S® and the Roche Group's Zenapax®. Competition in the acute transplant rejection market largely is driven by product efficacy due to the potential loss of transplanted organs as the result of an acute organ rejection episode.

Diagnostics/Genetics

Diagnostic Products.    We act as a primary supplier of enzymes and substrates, and generally do not compete with our customers in the sale of complete diagnostic kits. The market in the diagnostic products industry is mature and competition is based on service, quality, technical support, price, reliability of supply and the purity and specific activity of products. In the rapid test arena at the point of care, there are several competitors, among them Acon Laboratories, Inc., Inverness Medical Innovations, Inc., Becton Dickenson & Co., Beckman Coulter, Inc. and Quidel Corp. Market success is largely dependant on sales and technical support, product differentiation, breadth of menu, quality and price. We compete effectively based on support, our distribution mechanism where we focus on private label offerings, quality and an expanding product line.

Diagnostic Services.    The United States market for genetic and complex testing is divided among many laboratories, the largest of which are Quest Diagnostics and LabCorp. In addition, many hospitals provide some or all of these services through in-house laboratories. Competitive factors in the genetic and complex testing and diagnostic services business generally include reputation of the laboratory, range of services offered, pricing, convenience of sample collection and pick-up, quality of analysis and reporting and timeliness of delivery of completed reports. Our ability to develop and introduce new testing services, our experienced sales force, and the high quality of our testing and consulting services, have played significant roles in the growth of our genetic and complex testing and diagnostic services business.

Biosurgery

Synvisc.    Current competition for Synvisc includes Hyalgan®, produced by Fidia S.p.A. and marketed in the United States by Sanofi-Synthelabo; Orthovisc®, produced and marketed outside of the United States by Anika Therapeutics, Inc. and marketed in the United States by Ortho Biotech; Artz®, a product manufactured by Seikagaku Kogyo that is sold in Japan by Kaken Pharmaceutical Co. and in the United States by Smith & Nephew Orthopaedics under the name Supartz®; a product owned and manufactured by Savient Pharmaceuticals, Inc., which is marketed under the name Nuflexxa™ in the United States and Euflexxa™ in Europe; and Durolane®, manufactured by Q-Med AB. Durolane and Nuflexxa, the most recently approved products in Europe and the United States, respectively, are produced by bacterial fermentation, as opposed to Synvisc, which is avian sourced. In addition, the treatment protocol for Durolane is a single injection, as compared to Synvisc's three injection regimen. Production via bacterial fermentation and treatment with a reduced number of injections may represent competitive advantages for these products. We are aware of various other viscosupplementation products on the market or in development, but are unaware of any other products that have physical properties of viscosity, elasticity or molecular weight comparable to those of Synvisc.

Sepra Products.    The Sepra products face competition from other products based on hyaluronic acid as well as from other products and changes in surgical techniques. We believe that the principal factor

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that will affect competition in this area is acceptance of the product by surgeons, which depends, in large part, upon product efficacy and safety.

        Seprafilm does not have significant direct competition in the area of abdominal surgery in the United States, but does compete with other products in other indications. Gynecare markets Interceed®, an anti-adhesion barrier that has properties similar to Seprafilm, but is indicated only for selected gynecological indications. FzioMed, Inc.'s Oxiplex®/AP Gel, an adhesion barrier for abdominal/pelvic surgery, has received CE Mark approval in the European Union. Life Medical Sciences, Inc. is developing several adhesion prevention products, including REPEL™ for gynecologic surgery and REPEL-CV™ for cardiovascular surgery. Confluent Surgical, Inc.'s Spraygel™, an adhesion barrier used in abdominopelvic procedures, is approved for sale in certain European countries. MAST Biosurgery AG's bioresorbable film product, SurgiWrap™, is CE marked with an indication for abdominal and pelvic adhesion prevention, but holds an FDA clearance as a surgical mesh in the United States. In addition, FzioMed's Oxiplex®/SP Gel, an adhesion barrier for spine surgery, is approved for sale in the European Union and in other countries outside the United States.

Patents, License Agreements and Trademarks

        In general, we pursue a policy of obtaining patent protection both in the United States and in selected countries outside the United States for subject matter we consider patentable and important to our business. Patents owned by us that we consider material include the following:

Renal

        Renagel is protected by U.S. Patent No. 5,667,775, which expires on September 16, 2014; 5,496,545 and 6,509,013 which expire August 11, 2013; 6,733,780, which expires on October 18, 2020 and corresponding international counterparts.

Therapeutics

        Cerezyme is protected by U.S. Patent Nos. 5,236,838 which expires August 17, 2010; 5,549,892 which expires August 27, 2013; 6,451,600 which expires September 17, 2019; and corresponding international counterparts. Cerezyme is also protected by Canadian Patent No. 2,099,876, European Patent No. 568647, and Israeli Patent No. 100715 which expire January 17, 2012. Myozyme is protected by U.S. Patent No. 6,118,045 which expires July 31, 2016, and corresponding international counterparts.

Biosurgery

        Synvisc is protected by U.S. Patent Nos. 5,143,724 which expires July 9, 2010; 5,399,351 which expires March 21, 2012; and corresponding international counterparts. Seprafilm is protected by U.S. Patent Nos. 5,017,229 which expires May 21, 2008; 5,527,893 which expires June 18, 2013; 6,235,726 which expires September 18, 2007; and corresponding international counterparts.

Diagnostics/Genetics

        Diagnostic dipstick products are protected by U.S. Patent No. 5,712,172 which expires April 18, 2015; 6,194,221 which expires November 3, 2017; and corresponding international counterparts.

        Genetic testing services, e.g. for Cystic Fibrosis, are protected by U.S. Patent Nos. 5,585,330 and 5,834,181 which expire July 28, 2014; 5,849,483 which expires December 15, 2015; 5,882,856 which expires March 16, 2016; 6,207,372 which expires June 6, 2016; and corresponding international counterparts.

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        In addition, a portion of our proprietary position is based upon patents that we have licensed from others either through collaboration or traditional license agreements, including patents relating to:

•

Fabrazyme;



•

Thyrogen;



•

Aldurazyme;



•

Myozyme; and



•

genetic testing.

        These collaboration and license agreements generally require us to share profits with our collaborative partners or pay royalties to our licensors upon commercialization of products covered by the licensed technology.

        Generally, patents issued in the United States are effective for:

•

the longer of 17 years from the date of issue or 20 years from the earliest effective filing date of the corresponding patent application if filed prior to June 8, 1995; and



•

20 years from the earliest filing date for patent applications filed on or after June 8, 1995.

In some cases, the patent term can be extended to recapture a portion of the term lost during FDA regulatory review. The duration of foreign patents varies in accordance with local law.

        We also rely on trade secrets, proprietary know-how and continuing technological innovation to develop and maintain a competitive position in our product areas. We require our employees, consultants and corporate partners who have access to our proprietary information to sign confidentiality agreements.

        Our patent position and proprietary technology are subject to certain risks and uncertainties. We have included information about these risks and uncertainties under the subheading "Factors Affecting Future Operating Results" in "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations" below. We encourage you to read that discussion, which we are incorporating into this section by reference.

        Our products and services are sold around the world under brand-name trademarks and service marks. Trademark protection continues in some countries as long as the mark is used; in other countries, as long as it's registered. Registrations generally are for fixed, but renewable, terms. We consider our registered trademarks Genzyme®, Cerezyme®, Ceredase®, Fabrazyme®, Thyrogen®, Aldurazyme®, Myozyme®, Renagel®, Thymoglobulin®, Lymphoglobuline®, Campath®, Synvisc®, Carticel®, MACI®, Seprafilm®, Sepragel®, Hylaform®, Hylashield® and Epicel®, Contrast®, N-geneous®, GlyPro®, InSight®, AFP3®, AFP4®, together with our trademarks, Captique™, VERIGEN™, Cholestagel™, Clolar™, CF87™, Sepra™, Sepramesh™, Seprapack™, Hylashield Nite™, SAGE™, LongSAGE™ and SPHERE™, in the aggregate, to be of material importance to our business.

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Government Regulation

        Regulation by governmental authorities in the United States and other countries is a significant factor in the development, manufacture, commercialization and reimbursement of our products and services.

FDA Regulation

        We expect that most of our products and services will require approval from the FDA and corresponding agencies in other countries before they can be marketed. In the United States, we market products that the FDA classifies as either "drugs," "biologics" or "devices." The activities required before drugs or biologics may be marketed in the United States include:

•

preclinical laboratory tests, in vitro and in vivo preclinical studies and formulation and stability studies;



•

the submission to the FDA of an application for human clinical testing, which is known as an Investigational New Drug (IND) application;



•

adequate and well controlled human clinical trials to demonstrate the safety and effectiveness of the drug or biologic;



•

the submission of a New Drug Application (NDA) for a drug or a Biologic License Application (BLA) for a biologic; and



•

the approval by the FDA of the NDA or BLA.

As part of product approval, the manufacturer of the product must undergo a pre-approval Good Manufacturing Practices inspection (for a drug or biologic) from the FDA. Since any approval granted by the FDA is both site and process specific, any material change by a company in the manufacturing process, equipment or location may necessitate additional FDA review and approval.

        In addition, the FDA may grant accelerated approval for drugs and biologics on the basis of a surrogate endpoint reasonably likely to predict clinical benefit. In such cases, we are required to conduct post-approval clinical studies to confirm the clinical benefit of the surrogate endpoint that was the basis of the accelerated approval. These clinical studies require the collection of additional data before full approval will be given and can often be long-term commitments. Although the FDA has not historically invoked its authority to withdraw an accelerated approval, it may do so. We currently have a number of products approved under the accelerated approval mechanism.

        Products that are classified as devices also require some form of FDA approval prior to marketing. Devices are classified as Class I, II or III, depending upon the information available to assure their safety and effectiveness. In general, Class I and Class II devices are devices whose safety and effectiveness can reasonably be assured through general or specific controls, respectively. Class III devices are life sustaining, life supporting, are of substantial importance in preventing impairment to health or pose an unreasonable risk of adverse effect. They are implantable devices or new devices which have been found not to be substantially equivalent to legally marketed devices. The steps required for approval of a Class III device include:

•

preclinical laboratory tests and in vitro and in vivo preclinical studies;



•

the submission to the FDA and approval of an Investigational Device Exemption application to allow initiation of clinical testing;



•

human clinical studies to prove safety and effectiveness of the device;



•

the submission of a Pre-Marketing Approval application (PMA); and



•

the approval by the FDA of the PMA.

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        Typically, clinical testing of devices involves initial testing to evaluate safety and feasibility and expanded trials to collect sufficient data to prove safety and effectiveness. In addition, the procedures and the facilities used to manufacture the device are subject to review and approval by the FDA.

        A device (other than a Class III device) that is proven to be substantially equivalent to a device marketed prior to May 28, 1976, when government regulations for devices were first introduced, can be marketed after clearance of a 510(k) application rather than the filing of an Investigational Device Exemption application and a PMA. The 510(k) application must contain a description of the device, its methods of manufacture and quality control procedures and the results of testing to demonstrate that the device is substantially equivalent to the device already marketed.

        The time and expense required to perform the clinical testing necessary to obtain FDA approval for regulated products can frequently exceed the time and expense of the research and development initially required to create the product. Even after initial FDA approval has been obtained, we could be required to conduct further studies to provide additional data on safety or efficacy or, should we desire, to gain approval for the use of a product as a treatment for additional clinical indications. In addition, use of these products during testing and after marketing approval has been obtained could reveal side effects which, if serious, could limit uses, or in the most serious cases, result in a market withdrawal of the product or expose us to product liability claims.

Regulation Outside of the United States

        For marketing outside the United States, we are subject to foreign regulatory requirements governing human clinical testing and marketing approval for our products. These requirements vary by jurisdiction, differ from those in the United States and may require us to perform additional pre-clinical or clinical testing regardless of whether FDA approval has been obtained. The amount of time required to obtain necessary approvals may be longer or shorter than that required for FDA approval. In many foreign countries, coverage, pricing and reimbursement approvals are also required.

        Our initial focus for obtaining marketing approval outside the United States is typically the European Union. European Union Regulations and Directives generally classify health care products either as medicinal products, medical devices or in vitro diagnostics. For medicinal products, marketing approval may be sought using either the centralized procedure of the European Agency for the Evaluation of Medicinal Products, or EMEA, or the decentralized, mutual recognition process. The centralized procedure, which is mandatory for biotechnology derived products, results in a recommendation in all member states, while the European Union mutual recognition process involves country by country approval. European Union regulations for products classified as medical devices have been implemented. Devices, such as our Sepra products, must receive market approval through a centralized procedure, in which the device receives a CE Mark allowing distribution to all member states of the European Union. The CE mark certification requires us to receive International Standards Organization certification for each facility involved in the manufacture or distribution of the device. This certification comes only after the development of an all inclusive quality system, which is reviewed for compliance to International Quality Standards by a licensed "Notified Body" working within the European Union. After certification is received a product dossier is reviewed which attests to the product's compliance with European Union directive 93/42/EEC for medical devices. Only after this point is a CE Mark granted.

Other Government Regulation

Good Manufacturing Practices.    All facilities and manufacturing techniques used for the manufacture of Genzyme's products must comply with applicable FDA regulations governing the production of pharmaceutical products known as "Good Manufacturing Practices."

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Orphan Drug Act.    The Orphan Drug Act provides incentives to manufacturers to develop and market drugs for rare diseases and conditions affecting fewer than 200,000 persons in the United States at the time of application for orphan drug designation. The first developer to receive FDA marketing approval for an orphan drug is entitled to a seven-year exclusive marketing period in the United States for that product. However, a drug that the FDA considers to be clinically superior to, or different from, another approved orphan drug, even though for the same indication, may also obtain approval in the United States during the seven year exclusive marketing period. We believe that the commercial success of our orphan drug products depend more significantly on the associated safety and efficacy profile and on the price relative to competitive or alternative treatments and other marketing characteristics of each product than on the exclusivity afforded by the Orphan Drug Act. Additionally, these products may be protected by patents and other means.

        Legislation similar to the Orphan Drug Act has been enacted in other countries outside of the United States, including the European Union. The orphan legislation in the European Union is available for therapies addressing conditions that affect fewer than five out of 10,000 persons. The market exclusivity period is for ten years, although that period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product is sufficiently profitable not to justify maintenance of market exclusivity.

Regulation of Diagnostic Testing Services.    The Clinical Laboratories Improvement Act of 1967, as amended in 1988 (CLIA) provides for the regulation of clinical laboratories by the United States Department of Health and Human Services (HHS). All of our clinical laboratories are CLIA approved, licensed by the College of American Pathologists and certified by the appropriate state agencies. CLIA regulates virtually all clinical laboratories by requiring they be certified by the federal government and comply with various operational, personnel and quality requirements intended to ensure that their clinical laboratory testing services are accurate, reliable and timely. CLIA does not preempt state laws that are more stringent than federal law. For example, state laws may require additional personnel qualifications, quality control, record maintenance and/or proficiency testing.

Regulation of Diagnostic Products.    The FDA has regulatory responsibility over instruments, test kits, reagents and other devices used to perform diagnostic testing by clinical laboratories. In the past, the FDA has claimed regulatory authority over laboratory-developed tests, but has exercised enforcement discretion in not regulating most laboratory-developed tests performed by high complexity CLIA-certified laboratories. In December 2000, the HHS's Secretary's Advisory Committee on Genetic Testing recommended that the FDA be the lead federal agency to regulate genetic testing. In late 2002, a new HHS Secretary's Advisory Committee on Genetics, Health and Society was appointed to replace the prior Advisory Committee, but it has not yet made any final recommendations. In the meantime, the FDA is considering revising its regulations on analyte specific reagents, which are used in laboratory-developed tests, including laboratory developed genetic testing. Increased FDA regulation of the reagents used in laboratory-developed testing could lead to increased costs and delays in introducing new tests, including genetic tests. In addition, the Medicare and Medicaid programs provide a substantial portion of reimbursement for our diagnostic products. Whether these programs pay for any particular test, and the amounts that they pay, may be unilaterally changed at any time.

Regulation of Gene Therapy Products.    In addition to FDA requirements, the National Institutes of Health have established guidelines providing that transfers of recombinant DNA into human subjects at NIH laboratories or with NIH funds must be approved by the NIH Director. The NIH has established the Recombinant DNA Advisory Committee to review gene therapy protocols. We expect that many of our gene therapy protocols will be subject to review by the Recombinant DNA Advisory Committee. In the United Kingdom, our gene therapy protocols will be subject to review by the Gene Therapy Advisory Committee and in Germany, these protocols will be subject to review by the Commission for Somatic Cell Therapy. Greater government regulation of gene therapy products may lead to regulatory

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delays, increased development costs, and negative public perception of the gene therapy products we are developing.

Other Laws and Regulations.    Our operations are or may be subject to various federal, state and local laws, regulations and recommendations relating to the marketing of products and relationships with treating physicians, data protection, safe working conditions, laboratory and manufacturing practices, the export of products to certain countries, and the purchase, storage, movement, use and disposal of hazardous or potentially hazardous substances used in connection with our research work and manufacturing operations, including radioactive compounds and infectious disease agents. Although we believe that our safety procedures comply with the standards prescribed by federal, state and local regulations, the risk of contamination, injury or other accidental harm cannot be eliminated completely. In the event of an accident, we could be held liable for any damages that result and any liabilities could exceed our resources.

Sales, Marketing and Product Pricing

        We are subject to various federal and state laws pertaining to health care "fraud and abuse," including anti-kickback and false claims statutes. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. The federal government has published regulations that identify "safe harbors" or exemptions for certain payment arrangements that do not violate the anti-kickback statutes. Genzyme seeks to comply with the safe harbors where possible. Due to the breadth of the statutory provisions, and the lack of guidance in the form of regulations or court decisions addressing some industry activities, it is possible that our practices might be challenged under anti-kickback or related laws.

        False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third-party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.

        Our activities relating to the sale and marketing of, and price reporting for, our products are subject to scrutiny under these laws. Violations of these laws may result in criminal and/or civil sanctions, including fines and civil monetary penalties, as well as possible exclusion from federal health care programs, including Medicare and Medicaid. Federal and state authorities are paying increased attention to the pharmaceutical and biotechnology industries in enforcement of these laws, and we have been named in several civil actions alleging violations.

        We participate in the Medicaid rebate program. Participation in this program has included extending comparable discounts under the Public Health Service (PHS) pharmaceutical pricing program. Under the Medicaid rebate program, we pay a rebate for each unit of drug product that is reimbursed by Medicaid. The amount of the rebate for each product is set by law as a minimum 15.1% of the average manufacturer price (AMP) of that product, or if it is greater, the difference between AMP and the best price available from Genzyme to any customer. The rebate amount also includes an inflation adjustment if AMP increases greater than inflation. The PHS pricing program extends discounts comparable to the Medicaid rebate to a variety of community health clinics and other entities that receive health services grants from the PHS, as well as hospitals that serve a disproportionate share of poor Medicare and Medicaid beneficiaries. The rebate amount is recomputed each quarter based on our reports of our current average manufacturer price and best price for each of our products. The terms of our participation in the Medicaid program impose an obligation to correct the prices reported in previous quarters, if necessary. Any such corrections could result in an overage or underage in our rebate liability for past quarters, depending on the nature of the correction. In addition to retroactive rebates (and interest, if any), if we were found to have knowingly submitted false information to the government, in addition to other penalties available to the government, the

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statute provides for civil monetary penalties in the amount of $10,000 for each claim containing false information.

        The Medicaid Prescription Drug, Improvement and Modernization Act of 2003 (the "MMA") has significantly changed how Medicare pays for certain of our products, most prominently Cerezyme, Fabrazyme and Synvisc. Beginning on January 1, 2005, Medicare will pay for products covered by the Part B benefit based on the average selling price (ASP) plus 6%. Medicare had previously paid for these products based on 95% of the average wholesale price (AWP). We do not anticipate the change from the AWP to the ASP system to have a material adverse impact on our ability to obtain adequate reimbursement for our products. The MMA also has made Medicare coverage available for the first time for a number of drugs, including Renagel.

Employees

        As of December 31, 2004, we (together with all of our consolidated subsidiaries) had approximately 7,100 employees. We consider our employee relations to be excellent.

Financial Information Regarding Segment Reporting

        We have provided the information required by Item 101(b) of Regulation S-K in Note R., "Segment Information," to our Consolidated Financial Statements in the 2004 Genzyme Corporation Annual Report set forth in Exhibit 13.1 to this Annual Report on Form 10-K. We are incorporating that information into this section by reference.

Research and Development Costs

        We have provided the information required by Item 101(c)(1)(xi) of Regulation S-K in Part II, Item 8, "Financial Statements and Supplementary Data," and specifically in the Genzyme Corporation and Subsidiaries Consolidated Statements of Operations and Comprehensive Income and in Note J., "Investments in Marketable Securities and Strategic Equity Investments" to our Consolidated Financial Statements in the 2004 Genzyme Corporation Annual Report set forth in Exhibit 13.1 to this Annual Report on Form 10-K. We are incorporating that information into this section by reference.

Sales by Geographic Area, Significant Customers and Products

        We have provided the information required by Items 101(c)(1)(i) and (vii) and 101(d) of Regulation S-K in the 2004 Genzyme Corporation Annual Report under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations" and in Note R., "Segment Information," to our Consolidated Financial Statements set forth in Exhibit 13.1 to this Annual Report on Form 10-K. We are incorporating that information into this section by reference.

Available Information

        We file electronically with the SEC our annual report on Form 10-K, our quarterly reports on Form 10-Q, and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. You may read or copy any materials we file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information about issuers that file reports electronically with the SEC. The address of that site is http://www.sec.gov.

        You may obtain a free copy of our annual report on Form 10-K, our quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports, as soon as reasonably

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practicable after we file them with the SEC, on our website at http://www.genzyme.com or by contacting our Investor Relations department at 1-617-252-7570. The reference to our website is not intended to incorporate information on our website into this document by reference.

ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT.

        Set forth below is a list of individuals that are currently serving as our executive officers, or who served in such capacity during the fiscal year ended December 31, 2004:

Name	Age	Title
Henri A. Termeer	59	Chairman of the Board of Directors; President and Chief Executive Officer
Earl M. Collier, Jr.	57	Executive Vice President, Cardiovascular and Oncology
Zoltan A. Csimma	63	Senior Vice President, Human Resources
Georges Gemayel	44	Executive Vice President, Therapeutics
Richard A. Moscicki, M.D.	53	Chief Medical Officer; Senior Vice President, Clinical, Medical and Regulatory Affairs
Alan E. Smith, Ph.D.	59	Chief Scientific Officer; Senior Vice President, Research
Jan van Heek	55	Former Executive Vice President, Genetics, Pharmaceuticals, Biosurgery & Operations
Peter Wirth	54	Chief Legal Officer; Executive Vice President, Legal, Corporate Development and Drug Discovery & Development; Secretary
Michael S. Wyzga	50	Chief Financial and Accounting Officer; Executive Vice President, Finance

Mr. Termeer has served as our President and a Director since October 1983, as Chief Executive Officer since December 1985 and as Chairman of the Board of Directors since May 1988. For ten years prior to joining us, Mr. Termeer worked for Baxter International Laboratories, Inc., a manufacturer of human health care products. Mr. Termeer is a director of ABIOMED, Inc. and a trustee of Hambrecht & Quist Healthcare Investors and Hambrecht & Quist Life Sciences Investors.

Mr. Collier has served as Executive Vice President since July 1997 and since August 2003, has had responsibility for our Oncology and Cardiovascular businesses. He joined us in January 1997 as Senior Vice President, Health Systems, and served as Executive Vice President, Surgical Products and Health Systems from July 1997 until June 1999. He served as President of Genzyme Surgical Products from June 1999 until December 2000. Mr. Collier was also responsible for Genzyme Tissue Repair from December 1999 to December 2000. From December 2000 until August 2003, Mr. Collier served as President of Genzyme Biosurgery. Prior to joining us, Mr. Collier was President of Vitas HealthCare Corporation (formerly Hospice Care Incorporated), a provider of health care services, from October 1991 until August 1995. Prior to that, Mr. Collier was a partner in the Washington, D.C. law firm of Hogan & Hartson, which he joined in 1981. Mr. Collier is a director of Covalent Group, Inc., a contract research organization which provides independent clinical trial and product development services to the pharmaceutical, biotechnology and medical devices industries.

Mr. Csimma joined us in July 2000 as Senior Vice President, Human Resources. Prior to joining us, he served as Vice President, Human Resources of Wyeth Ayerst Research, a pharmaceutical research organization, from August 1998 to July 2000. During that time, Mr. Csimma also served as Site Head, Genetics Institute, for Wyeth Ayerst. From May 1988 to August 1998, he served as Vice President, Human Resources and Operations of Genetics Institute, Inc., a biotechnology company, which was integrated into Wyeth Ayerst in March 1998.

Dr. Gemayel joined us in August 2003 as Executive Vice President with responsibility for our Renal, Therapeutics and Transplant business units. For sixteen years prior to joining us, Dr. Gemayel

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worked for Hoffmann-LaRoche, a leading healthcare company, where he served most recently from July 2000 until August 2003 as vice president of the United States Specialty Care unit, and from January 1998 until July 2000 as general manager of Hoffmann-LaRoche Portugal.

Dr. Moscicki joined us in March 1992 as Medical Director, became Vice President, Medical Affairs in early 1993 and was named Vice President, Clinical, Medical and Regulatory Affairs in December 1993. In September 1996 he became Senior Vice President, Clinical, Medical and Regulatory Affairs and Chief Medical Officer. Since 1979, he has also been a physician staff member at the Massachusetts General Hospital and a faculty member at the Harvard Medical School.

Dr. Smith joined us in August 1989 as Senior Vice President, Research and became Chief Scientific Officer in September 1996. Prior to joining us, he served as Vice President—Scientific Director of Integrated Genetics, Inc., from November 1984 until its acquisition by us in August 1989. From October 1980 to October 1984, Dr. Smith was head of the Biochemistry Division of the National Institute for Medical Research, Mill Hill, London, England and from 1972 to October 1980, he was a member of the scientific staff at the Imperial Cancer Research Fund in London, England.

Mr. van Heek joined us in September 1991, holding several positions of increasing responsibility. From January 2000 until August 2003 he served as Executive Vice President, Therapeutics and Genetics, with responsibility for our therapeutics and genetics business units and international operations. From August 2003 until April 2004 he had responsibility for our Biosurgery, Genetics and Pharmaceuticals business units and global manufacturing of all of our therapeutic and biosurgery products. Effective April 1, 2004, Mr. van Heek resigned his full-time position and is working part-time as an advisor to our Chief Executive Officer.

Mr. Wirth joined us in January 1996 and has served as Executive Vice President and Chief Legal Officer since September 1996, with responsibility for Genzyme's corporate development and legal activities. Since 2001, Mr. Wirth has had responsibility for our drug discovery and development business. In addition, from September 1996 until June 2003, Mr. Wirth was responsible for our Oncology business. Mr. Wirth was a partner of Palmer & Dodge LLP, a Boston, Massachusetts law firm, from 1982 through September 1996. Mr. Wirth remains of counsel to Palmer & Dodge LLP. Mr. Wirth is also a director of EPIX Pharmaceuticals, Inc., a developer of contrast agents for magnetic resonance imaging.

Mr. Wyzga has served as Executive Vice President, Finance since May 2003, as Chief Accounting Officer since January 1999 and as Chief Financial Officer since July 1999. He joined us in February 1998 as Vice President and Corporate Controller and served as Senior Vice President, Corporate Controller from January 1999 until July 1999. He served as Senior Vice President, Finance from July 1999 until May 2003. Prior to joining us, from February 1997 to February 1998, Mr. Wyzga served as Chief Financial Officer of Sovereign Hill Software, Inc., a software company, and from 1991 to 1997 held various senior management positions with CACHELINK Corporation and Lotus Development Corporation. Mr. Wyzga is also a director of Altus Pharmaceuticals Inc., a developer of protein therapeutics.

ITEM 2. PROPERTIES

        Our operations are conducted in manufacturing, warehousing, pilot plant, clinical laboratories, and research and office facilities that are located principally in:

•

the United States;



•

the United Kingdom;



•

Ireland;



•

The Netherlands;

23

•

Belgium;



•

France;



•

Canada;



•

Switzerland; and



•

Germany.

        We lease all of our facilities except for certain facilities in:

•

Geel, Belgium (land subject to 99 year leasehold);



•

Haverhill and Maidstone, England;



•

Boston, Massachusetts (land subject to 65 year leasehold);



•

Fall River, Massachusetts;



•

Framingham, Massachusetts;



•

Ridgefield, New Jersey;



•

Santa Fe, New Mexico; and



•

Waterford, Ireland (land subject to 999 year leasehold).

        Our principal manufacturing facilities are used for the large-scale production of therapeutic proteins and enzymes, including Cerezyme, Fabrazyme and Thyrogen, renal products and immunosuppressive agents, including Renagel, Thymoglobulin and Lymphoglobuline, biomaterials, including Synvisc and Sepra, cell processing services, including Carticel and Epicel, genetic testing services, and diagnostic test kits and reagents.

        Our administrative activities are concentrated at facilities we have leased in Cambridge and Framingham, Massachusetts; San Antonio, Texas; Naarden, The Netherlands; and Tokyo, Japan. Our sales and marketing activities are principally located in Cambridge, Massachusetts and in sales offices located in major cities throughout the world. We conduct our product research and development activities primarily at our laboratory facilities in the United States and, since 2004, at our Cambridge, U.K. facility. Leases for our facilities contain typical commercial lease provisions, including renewal options, rent escalators and tenant responsibility for operating expenses. We believe that we have, or are in the process of developing or acquiring, adequate manufacturing capacity to support our requirements for the next several years.

Renal

        We manufacture the majority of our supply requirements for sevelamer hydrochloride, the active ingredient in Renagel, at our facilities in Haverhill, England. In 2003, we expanded this facility to increase its capacity for producing sevelamer hydrochloride. In 2003, we also constructed a manufacturing facility in Waterford, Ireland for use in manufacturing the tablet formulation of Renagel. All of our Renagel manufacturing facilities are operational, and have received all European and U.S. approvals material to such operations.

Therapeutics

        We manufacture Cerezyme and Fabrazyme at our multi-product manufacturing facility in Allston, Massachusetts. This facility, which we own and which contains extensive sterile filling capacity, is built on land that we hold under a 65-year lease, which expires in May 2057. We manufacture Thyrogen and Fabrazyme in our small-scale manufacturing facility in Framingham, Massachusetts and final drug product at our Allston facility.

24

        At our Waterford, Ireland facility, we are installing new fill-finish capabilities for therapeutic proteins. We anticipate these improvements will be completed and operational in 2005, and that we will receive approval to supply commercial product in 2006.

Transplant

        As a result of our acquisition of SangStat Medical Corporation in September 2003, we lease and operate a manufacturing facility in Lyon, France. At this site we manufacture Thymoglobulin and Lymphoglobuline, and maintain administrative offices nearby.

Biosurgery

        We produce Synvisc and other hyaluronan-based products in a manufacturing facility located in Ridgefield, New Jersey. We produce bulk hyaluronic acid and Seprafilm at commercial scale in our manufacturing facility in Framingham, Massachusetts.

Diagnostics/Genetics

        Our diagnostic test kits and reagents are produced in manufacturing facilities in San Diego, California; Cambridge, Massachusetts and Russelsheim, Germany.

        We produce diagnostic enzymes and other fermentation products in a multi-purpose fermentation and purification facility that we own in Maidstone, England. We conduct research and development and support sales and marketing efforts at our leased facility in West Malling, England.

        Our genetic and oncology testing business primarily conducts operations in clinical laboratory and administrative facilities we own in Santa Fe, New Mexico and lease in Westborough, Massachusetts; New York City and Yonkers, New York; Tampa, Florida; and Los Angeles, Orange, and Pasadena California.

ITEM 3. LEGAL PROCEEDINGS

        We periodically become subject to legal proceedings and claims arising in connection with our business. We do not believe that there were any asserted claims against us as of December 31, 2004 that will have a material adverse effect on our results of operations, financial condition or liquidity.

        Four lawsuits have been filed against us regarding the exchange of all of the outstanding shares of Biosurgery Stock and Molecular Oncology Stock for shares of Genzyme Stock, each of which is a purported class action on behalf of holders of Biosurgery Stock. The first case, filed in Massachusetts Superior Court in May 2003, alleged a breach of the implied covenant of good faith and fair dealing in our charter and a breach of our board of directors' fiduciary duties. The plaintiff in this case sought an injunction to adjust the exchange ratio for the tracking stock exchange. The Court dismissed the complaint in November 2003, but the plaintiff in this case has appealed this dismissal. This appeal was argued before the Massachusetts Appeals Court in March 2005 and we are awaiting the Appeals Court's ruling. Two substantially similar cases were filed in Massachusetts Superior Court in August and October 2003. These cases were consolidated in January 2004, and in July 2004, the consolidated case was stayed pending disposition of a fourth case, which was filed in the U.S. District Court for the Southern District of New York in June 2003. This case alleges violations of federal securities laws, common law fraud, and a breach of the merger agreement with Biomatrix in addition to the state law claims contained in the other cases. The plaintiffs are seeking an adjustment to the exchange ratio, the rescission of the acquisition of Biomatrix, and unspecified compensatory damages. We believe each of these cases is without merit and continue to defend against them vigorously.

        On March 27, 2003, the OFT in the United Kingdom issued a decision against our wholly-owned subsidiary, Genzyme Limited, finding that Genzyme Limited held a dominant position and abused that dominant position with no objective justification by pricing Cerezyme in a way that excludes other

25

delivery/homecare service providers from the market for the supply of home delivery and homecare services to Gaucher patients being treated with Cerezyme. In conjunction with this decision, the OFT imposed a fine on Genzyme Limited and required modification to its list price for Cerezyme in the United Kingdom. Genzyme Limited appealed this decision to the Competition Appeal Tribunal. On May 6, 2003, the Tribunal issued an order that stayed the OFT's decision, but required Genzyme Limited to provide a homecare distributor a discount of 3% per unit during the appeal process. The Tribunal issued its judgment on Genzyme Limited's appeal on March 11, 2004, rejecting portions of the OFT's decision and upholding others. The Tribunal found that the list price of Cerezyme should not be reduced, but that Genzyme Limited must negotiate a price for Cerezyme that will allow homecare distributors an appropriate margin. Those negotiations are ongoing. The Tribunal also reduced the fine imposed by the OFT for violation of U.K. competition laws. In response to the Tribunal's decision, we recorded an initial liability of approximately $11 million in our 2003 financial statements and additional liabilities totaling approximately $3 million during 2004, all of which remain in accrued expenses in our consolidated balance sheet as of December 31, 2004. On April 13, 2004, Genzyme Limited filed an application with the Tribunal for permission to appeal to the High Court. That application is still pending.

        In June 2003, we filed suit in U.S. District Court for the District of Massachusetts, as co-plaintiff with Biogen IDEC and Abbott Laboratories against Columbia University seeking a declaration that Columbia's U.S. Patent 6,455,275 is invalid. The patent relates to the manufacture of recombinant proteins in Chinese hamster ovary, or CHO, cells, which are the cells we use to manufacture Cerezyme, Fabrazyme and Thyrogen, and which our joint venture partner BioMarin uses to manufacture Aldurazyme. This new patent was issued by the USPTO in September 2002 from a family of patents and patent applications originally filed in 1980. We are licensed under the patent family for a royalty of 1.5% of sales but, because we were confident that the new patent was mistakenly issued by the USPTO and is invalid, we did not pay the royalty pending the outcome of the litigation. We then received notice from Columbia that we were in breach of our license agreement. A hearing on motions for a summary judgment was scheduled for November 2004; however, Columbia recently rescinded the breach notification and filed with the Court a covenant not to enforce its patent 6,455,275 against any plaintiff in this litigation. In view of this covenant, the Court granted Columbia's motion to dismiss the plaintiff's main claim for lack of subject matter jurisdiction.

        We are not able to predict the outcome of these cases or estimate with certainty the amount or range of any possible loss we might incur if we do not prevail in the final, non-appealable determinations of these matters. Therefore, except for approximately $11 million in liabilities established in 2003 and approximately $3 million in additional liabilities arising during 2004 from the Tribunal's decision regarding Cerezyme pricing in the United Kingdom, we have not accrued any amounts in connection with these potential contingencies. We cannot provide you with assurance that the matters listed above, or other legal proceedings, will not have a material adverse impact on our financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None

26

PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

        Effective July 1, 2003, we eliminated our tracking stock capital structure by exchanging, in accordance with the provisions of our charter, each share of Biosurgery Stock for 0.04914 of a share of Genzyme General Stock and each share of Molecular Oncology Stock for 0.05653 of a share of Genzyme General Stock. Options and warrants to purchase shares of Biosurgery Stock and options to purchase shares of Molecular Oncology Stock were converted into options and warrants to purchase shares of Genzyme General Stock. Since July 1, 2003, we have one outstanding series of common stock. From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of stockholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of stock, which we now refer to as Genzyme Stock.

        The tracking stocks were intended to reflect the value and track the performance of our three former divisions. Through June 30, 2003, all three series of our common stock were traded on the over-the-counter market and prices were quoted on The NASDAQ® National Market system under the symbols "GENZ," "GZBX" and "GZMO." Since July 1, 2003, our only outstanding series of common stock has traded under the symbol "GENZ".

        As of March 1, 2005, there were 3,514 stockholders of record of Genzyme Stock.

        The following table sets forth, for the periods indicated, the high and low sale price for each series of our common stock as reported by NASDAQ.

			High		Low
Genzyme Stock
	2004
		First Quarter	$	58.08	$	44.73
		Second Quarter		49.30		40.67
		Third Quarter		57.13		44.14
		Fourth Quarter		59.14		49.25
	2003
		First Quarter	$	37.90	$	28.45
		Second Quarter		49.71		33.15
		Third Quarter		52.43		40.26
		Fourth Quarter		52.45		41.53
Biosurgery Stock
	2003
		First Quarter	$	2.65	$	1.13
		Second Quarter		5.35		1.07
Molecular Oncology Stock
	2003
		First Quarter	$	2.78	$	1.06
		Second Quarter		2.83		1.35

        We have never paid any cash dividends on any series of our common stock and we do not anticipate paying cash dividends in the foreseeable future.

27

        We incorporate information regarding securities authorized for issuance under our equity compensation plans into this section by reference to the section entitled "Equity Plans" in the proxy statement for our 2005 annual meeting of shareholders.

Issuer Purchases of Equity Securities

        We did not make any purchases of our common stock during the three months ended December 31, 2004, which is the fourth quarter of our fiscal year.

ITEM 6.    SELECTED FINANCIAL DATA

        We incorporate our Selected Financial Data into this section by reference from the 2004 Genzyme Corporation Annual Report under the heading "Genzyme Corporation—Consolidated Selected Financial Data", which is included in Exhibit 13.1 to this Annual Report on Form 10-K.

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        We incorporate our Management's Discussion and Analysis of Financial Condition and Results of Operations into this section by reference from the 2004 Genzyme Corporation Annual Report under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations", which is included in Exhibit 13.1 to this Annual Report on Form 10-K.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We incorporate by reference from the 2004 Genzyme Corporation Annual Report our disclosure related to market risk which is set forth under the headings "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Market Risk," "—Interest Rate Risk," "—Foreign Exchange Risk" and "—Equity Price Risk", which is included in Exhibit 13.1 to this Annual Report on Form 10-K.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        We incorporate the financial statements filed as part of this Annual Report on Form 10-K into this section by reference from the Consolidated Financial Statements of Genzyme Corporation and Subsidiaries and notes thereto from the 2004 Genzyme Corporation Annual Report, included in Exhibit 13.1 to this Annual Report on Form 10-K.

28

ITEM 9A.    CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

        Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (commonly referred to as the Exchange Act). Based on this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

Internal Control Over Financial Reporting

        We incorporate the following reports into this section by reference from the 2004 Genzyme Annual Report, which is included in Exhibit 13.1 to this Annual Report on Form 10-K:

•

our management's report on our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Securities Exchange Act of 1934), which is set forth under the heading "Management's Report on Internal Control Over Financial Reporting;" and



•

the related report of Pricewaterhouse Coopers LLP, our independent registered accounting firm, which is set forth under the heading "Report of Independent Registered Public Accounting Firm—Internal Control Over Financial Reporting."

Changes in Internal Control Over Financial Reporting

        There were no changes in our internal controls over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

ITEM 9B.    OTHER INFORMATION

        None.

29

PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        We have adopted a Corporate Code of Conduct, which applies to our directors and all of our employees, including our principal executive officer, principal financial officer and accounting officer, and controller. A copy is available to you, free of charge, upon written request to the legal department at our corporate offices located at Genzyme Center, 500 Kendall Street, Cambridge, Massachusetts 02142. We intend to make all required disclosures concerning amendments to, or waivers from, this code on the governance page of our website, www.genzyme.com. Information contained on our website is not part of this document or the documents incorporated by reference into this document.

        We incorporate information regarding our directors and executive officers into this section by reference from the section entitled "Executive Officers of the Registrant" in Part I, Item 1A of this Annual Report on Form 10-K and the sections entitled "Election of Directors," "Board Meetings and Committees" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the proxy statement for our 2005 annual meeting of shareholders.

ITEM 11.    EXECUTIVE COMPENSATION

        We incorporate information regarding the compensation of our directors and executive officers into this section by reference from the sections entitled "Election of Directors," "Director Compensation" and "Executive Compensation" in the proxy statement for our 2005 annual meeting of shareholders.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

        We incorporate information regarding the ownership of our securities by our directors, executive officers and 5% shareholders into this section by reference from the sections entitled "Stock Ownership" and "Equity Plans" in the proxy statement for our 2005 annual meeting of shareholders.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        We incorporate information regarding transactions with related parties into this section by reference from the section entitled "Certain Relationships and Related Transactions" in the proxy statement for our 2005 annual meeting of shareholders.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

        We incorporate information regarding our audit committee's pre-approval policies and procedures and the fees paid to our auditors from the section entitled "Independent Accountants" in the proxy statement for our 2005 annual meeting of shareholders.

30

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1). FINANCIAL STATEMENTS

        We are incorporating the following financial statements (and related notes) of Genzyme Corporation and Subsidiaries into this section by reference from the 2004 Genzyme Corporation Annual Report, which is included in Exhibit 13.1 to this Annual Report on Form 10-K:

	Page*
Report of Independent Registered Public Accounting Firm	F-72
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2004, 2003 and 2002	F-74
Consolidated Balance Sheets as of December 31, 2004 and 2003	F-76
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002	F-77
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2004, 2003 and 2002	F-79
Notes to Consolidated Financial Statements	F-82

*

References are to page numbers in the 2004 Genzyme Corporation Annual Report.

31

(a)(2). FINANCIAL STATEMENT SCHEDULES

        We are incorporating the following financial statement schedule of Genzyme Corporation and Subsidiaries into this section by reference from the 2004 Genzyme Corporation Annual Report, which is included in Exhibit 13.1 to this Annual Report on Form 10-K:

	Page*
Schedule II—Valuation and Qualifying Accounts	F-148

*

References are to page numbers in the 2004 Genzyme Corporation Annual Report.

        All other schedules are omitted as the information required is inapplicable or the information is presented in the Genzyme Corporation and Subsidiaries' Consolidated Financial Statements or notes thereto.

(a)(3). EXHIBITS

        The exhibits are listed below under Part IV, Item 15(b) of this Annual Report on Form 10-K.

(b). EXHIBITS

EXHIBIT NO.	DESCRIPTION
*3.1	Restated Articles of Organization of Genzyme, as amended. Filed as Exhibit 3.1 to Genzyme's Registration Statement on Form 8-A/A filed on May 28, 2004.
*3.2	By-laws of Genzyme, as amended. Filed as Exhibit 3.1 to Genzyme's Form 8-K filed July 7, 2004.
*4.1	Fourth Amended and Restated Renewed Rights Agreement dated May 28, 2004 between Genzyme and American Stock Transfer & Trust Company, as Rights Agent. Filed as Exhibit 4.1 to Genzyme's Registration Statement on Form 8-A/A filed on May 28, 2004.
*4.2	Securities Purchase Agreement, dated as of April 17, 2001 and amended on September 26, 2001, by and among Novazyme Pharmaceuticals, Inc. and several purchasers. Filed as Exhibit 4.2 to Genzyme's Form 10-Q for the quarter ended September 30, 2001.
*4.3	Indenture, dated December 9, 2003, between Genzyme and U.S. Bank National Association. Filed as Exhibit 4.1 to Genzyme's Form 8-K filed December 10, 2003.
*4.3.1	First Supplemental Indenture, dated as of May 28, 2004, to Indenture relating to our 1.25% Senior Convertible Notes, dated as of December 9, 2003, between Genzyme and U.S. Bank National Association, as Trustee. Filed as Exhibit 4.1 to Genzyme's Form 8-K filed June 18, 2004.
*4.4	Registration Rights Agreement, dated December 9, 2003, between Genzyme and UBS Securities LLC on behalf of itself and several other Initial Purchasers. Filed as Exhibit 10.1 to Genzyme's Form 8-K filed December 10, 2003.
*10.1	Lease, dated April 30, 1990, for 64 Sidney Street, Cambridge, Massachusetts between BioSurface Technology, Inc. and Forest City 64 Sidney Street, Inc. Filed as Exhibit 10.22 to BioSurface's Registration Statement on Form S-1 (File No. 33-55874).
*10.1.1	Amendment to Lease, dated September 11, 1995, to the Lease Agreement dated April 30, 1990 by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.1 to Genzyme's Form 10-K for 2003.
*10.1.2	Second Amendment to Lease, dated March 1, 1996, to the Lease Agreement dated April 30, 1990 by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.2 to Genzyme's Form 10-K for 2003.

32

*10.1.3	Letter Amendment, dated December 30, 1999, to the Lease Agreement dated April 30, 1990 by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.3 to Genzyme's Form 10-K for 2003.
*10.1.4	Fourth Amendment to Lease, dated March 23, 2001, to the Lease Agreement dated April 30, 1990 by and between Forest City 64 Sidney Street, Inc. and Genzyme. Filed as Exhibit 10.1.4 to Genzyme's Form 10-K for 2003.
*10.2	Lease, dated June 1, 1992, for land at Allston Landing, Allston, Massachusetts between Allston Landing Limited Partnership and the Massachusetts Turnpike Authority. Filed as Exhibit 10.9 to Genzyme's Form 10-K for 1993.
*10.3	Lease, dated October 21, 1998, between First Security Bank, N.A. and GelTex Pharmaceuticals, Inc. Filed as Exhibit 10.2 to GelTex's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (File No. 0-26872).
*10.3.1	First Amendment to Lease, dated March 1, 1999, to Lease dated as of October 21, 1998, by and between First Security Bank, N.A. and GelTex. Filed as Exhibit 10.3.1 to Genzyme's Form 10-K for 2003.
*10.3.2	Second Amendment to Lease, dated December 31, 2000, to Lease dated as of October 21, 1998, by and between First Security Bank, N.A. and GelTex. Filed as Exhibit 10.3.2 to Genzyme's Form 10-K for 2003.
*10.3.3	Third Amendment to Lease, dated January 14, 2004, to Lease dated as of October 21, 1998, by and between Wells Fargo Bank Northwest, N.A. (formerly known as First Security Bank, N.A.) and Genzyme. Filed as Exhibit 10.3.3 to Genzyme's Form 10-K for 2003.
*10.3.4	Fourth Amendment to Lease, dated June 30, 2004, to lease dated as of October 21, 1998, by and between Wells Fargo Bank Northwest and Genzyme. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended June 30, 2004.
*10.4	Commercial Lease, dated December 24, 1998, by and between Aventis Pasteur SA and Imtix-SangStat S.A.S. for Building C5 located at Marcy L'Etoile, Lyon, France. Filed as Exhibit 10.4 to Genzyme's Form 10-K for 2003.
*10.4.1	Amendment to Commercial Lease, dated September 30, 2000, to the Lease dated December 24, 1998, by and between Aventis Pasteur SA and Imtix SangStat S.A.S. Filed as Exhibit 10.4.1 to Genzyme's Form 10-K for 2003.
*10.5	Lease, dated August 28, 2000, for Building D, Cambridge Research Park, Cambridge, Massachusetts, between Genzyme and Kendall Square LLC. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2000.**
10.5.1	First Amendment to Lease, dated August 1, 2003, to lease dated as of August 28, 2000, by and between Genzyme and Kendall Square LLC. Filed herewith.
*10.6	Underlease for Block 13 building at Kings Hill Business Park West Malling Kent among Rouse and Associates Block 13 Limited, Genzyme (UK) Limited and Genzyme. Filed as Exhibit 10.11 to Genzyme's Registration Statement on Form 8-B dated December 31, 1991, filed on February 28, 1992.
*10.7	Lease, dated September 3, 1990, for the land located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4917 & 324IF County Waterford) by and between the Industrial Development Authority and Bausch & Lomb Ireland. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended September 30, 2001.
*10.8	Contract for Sale, dated June 25, 2001, for the premises located at the Industrial Development Authority Industrial Park, County Waterford, Ireland, (comprised in folio 4141L County Waterford) by and between Luxottica Ireland Limited and Genzyme Ireland Limited (f/n/a Gosfend Limited). Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended September 30, 2001.

33

*10.9	Deed of Transfer, dated July 2, 2001, between Luxottica Ireland Limited and Genzyme Ireland Limited, related to the Lease dated September 3, 1990 for the premises located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4141L County Waterford). Filed as Exhibit 10.3 to Genzyme's Form 10-Q for the quarter ended September 30, 2001.
*10.10	Contract for Sale, dated August 2, 2001, for the land located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4917 County of Waterford) by the Industrial Development Agency (Ireland) and Genzyme Ireland Limited. Filed as Exhibit 10.4 to Genzyme's Form 10-Q for the quarter ended September 30, 2001.
*10.11	Lease, dated August 24, 2001, for the land located at the Industrial Development Authority Industrial Park, County Waterford, Ireland (comprised in folio 4917 County of Waterford) by the Industrial Development Agency (Ireland) and Genzyme Ireland Limited. Filed as Exhibit 10.5 to Genzyme's Form 10-Q for the quarter ended September 30, 2001.
*10.12	Agency Agreement, dated October 21, 1998, between First Security Bank, N.A. and GelTex. Filed as Exhibit 10.1 to GelTex's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 (File No. 0-26872).
*10.13	Partnership Purchase Agreement, dated as of November 20, 2000, between Genzyme, Genzyme Development Corporation II, Genzyme Development Partners, L.P. ("GDP") and each Class A Limited Partner of GDP. Filed as Exhibit 10.24 to Genzyme's Form 10-K for 2000.
*10.14	Agreement and Plan of Merger, dated as of August 6, 2001, among Genzyme, Rodeo Merger Corp. and Novazyme Pharmaceuticals, Inc. Filed as Exhibit 2.1 to Genzyme's Form 8-K filed on August 22, 2001.
10.15	1997 Equity Incentive Plan, as amended. Filed herewith.
10.16	1998 Director Stock Option Plan, as amended. Filed herewith.
10.16.1	Form of Nonstatutory Stock Option for grants under Genzyme's 1998 Director Stock Option Plan. Filed herewith.
10.17	2001 Equity Incentive Plan, as amended. Filed herewith.
10.17.1	Form of Incentive Stock Option for grants to executive officers under Genzyme's 2001 Equity Incentive Plan. Filed herewith.
10.17.2	Form of Nonstatutory Stock Option for grants to executive officers under Genzyme's 2001 Equity Incentive Plan. Filed herewith.
10.18	2004 Equity Incentive Plan, as amended. Filed herewith.
10.18.1	Form of Incentive Stock Option for grants to executive officers under Genzyme's 2004 Equity Incentive Plan. Filed herewith.
10.18.2	Form of Nonstatutory Stock Option for grants to executive officers under Genzyme's 2004 Equity Incentive Plan. Filed herewith.
10.19	1999 Employee Stock Purchase Plan, as amended. Filed herewith.
10.20	1996 Directors' Deferred Compensation Plan, as amended. Filed herewith.
*10.21	Executive Employment Agreement, dated as of January 1, 1990, between Genzyme and Henri A. Termeer. Filed as Exhibit 10.32 to Genzyme's Form 10-K for 1990.
*10.22	Executive Employment Agreement, dated as of January 1, 1996, between Genzyme and Peter Wirth. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended March 31, 1996.
*10.23	Form of Indemnification Agreement between Genzyme and its executive officers. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended September 30, 2004.
*10.24	Form of Severance Agreement between Genzyme and its executive officers. Filed as Exhibit 10.2 to Genzyme's Form 10-Q for the quarter ended June 30, 2002.

34

10.25	Written description of cash compensation paid to directors of Genzyme. Filed herewith.
*10.26	Information regarding certain executive compensation matters, including 2004 salaries and incentive bonuses and 2005 salaries and incentive bonus targets for Genzyme's named executive officers. Filed with Genzyme's Form 8-K filed on March 7, 2005.
*10.27	Collaboration Agreement, dated September 4, 1998, among Genzyme, BioMarin Pharmaceutical Inc. ("BioMarin") and BioMarin/Genzyme LLC. Filed as Exhibit 10.24 to BioMarin's Registration Statement on Form S-1 (File No. 333-77701).**
*10.28	Supply Agreement, dated as of November 9, 1999, by and between Cambrex Charles City, Inc. (f/k/a Salsbury Chemicals, Inc.) and GelTex. Filed as Exhibit 10.32 to GelTex's Form 10-K for 1999 (File No. 0-26872).**
*10.29	Contract Manufacturing Agreement dated September 14, 2001, as amended on May 15, 2002, between GelTex and The Dow Chemical Company. Filed as Exhibit 10.35 to Genzyme's Form 10-K for 2002.**
*10.29.1	Second Amendment, dated October 9, 2002, to Contract Manufacturing Agreement dated September 14, 2001, between GelTex and The Dow Chemical Company. Filed as Exhibit 10.34.1 to Genzyme's Form 10-K for 2003.**
*10.29.2	Third Amendment, dated December 8, 2003, to Contract Manufacturing Agreement dated September 14, 2001, between Genzyme and The Dow Chemical Company. Filed as Exhibit 10.34.2 to Genzyme's Form 10-K for 2003.**
10.29.3	Fourth Amendment, dated as of July 1, 2004, to Contract Manufacturing Agreement dated September 14, 2001, between GelTex and The Dow Chemical Company. Filed herewith.†
*10.30	Credit Agreement, dated December 10, 2003, among Genzyme and those of its subsidiaries party thereto, the lenders listed therein, Fleet National Bank, as Administrative Agent, ABN AMRO Bank N.V. as Syndication Agent and The Bank of Nova Scotia, Citizens Bank of Bank Massachusetts and Wachovia Bank National Association as Co-Documentation Agents. Filed as Exhibit 10.36 to Genzyme's Form 10-K for 2003.
*10.30.1	First Amendment to Credit Agreement, dated as of June 30, 2004, to Credit Agreement dated December 10, 2003, among Genzyme, SangStat Medical Corporation, each of the financial institutions identified under the caption "Lenders" on the signature pages and Fleet National Bank as administrative agent for the Lenders. Filed as Exhibit 10.1 to Genzyme's Form 10-Q for the quarter ended June 30, 2004.
10.31	North American Termination and Transition Agreement, dated November 3, 2004, by and between Genzyme and Wyeth. Filed herewith.†
13.1	Portions of the 2004 Genzyme Corporation Annual Report incorporated by reference into Parts I, II and IV of this Form 10-K. Furnished herewith.
21	Subsidiaries of Genzyme. Filed herewith.
23	Consent of PricewaterhouseCoopers LLP. Filed herewith.
31.1	Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2	Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32.1	Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.
32.2	Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

35

99.0 Financial Statements and notes thereto of BioMarin/Genzyme LLC as of December 31, 2004 (unaudited) and 2003 and for the years ended December 31, 2004 (unaudited), 2003 and 2002. Filed herewith.

*

Indicates exhibit previously filed with the Securities and Exchange Commission and incorporated herein by reference. Exhibits filed with Forms 10-K, 10-Q, 8-K, 8-A, 8-B or Schedule 14A of Genzyme Corporation were filed under Commission File No. 0-14680.

**

Confidential treatment has been granted for the deleted portions of Exhibits 10.5 and 10.27 through 10.29.2.

†

Confidential treatment has been requested for the deleted portions of Exhibits 10.29.3 and 10.31.

EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS

        Exhibits 10.16 through 10.26 above are management contracts or compensatory plans or arrangements in which our executive officers or directors participate.

36

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GENZYME CORPORATION
Dated: March 14, 2005	By:	/s/  MICHAEL S. WYZGA Michael S. Wyzga Executive Vice President, Finance, Chief Financial Officer, and Chief Accounting Officer

        Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Name	Title	Date
/s/  HENRI A. TERMEER Henri A. Termeer	Director and Principal Executive Officer	March 14, 2005
/s/  MICHAEL S. WYZGA Michael S. Wyzga	Principal Financial and Accounting Officer	March 14, 2005
/s/  CONSTANTINE E. ANAGNOSTOPOULOS Constantine E. Anagnostopoulos	Director	March 14, 2005
/s/  DOUGLAS A. BERTHIAUME Douglas A. Berthiaume	Director	March 14, 2005
/s/  HENRY E. BLAIR Henry E. Blair	Director	March 14, 2005
/s/  GAIL K. BOUDREAUX Gail K. Boudreaux	Director	March 14, 2005
/s/  ROBERT J. CARPENTER Robert J. Carpenter	Director	March 14, 2005
/s/  CHARLES L. COONEY Charles L. Cooney	Director	March 14, 2005
/s/  VICTOR J. DZAU Victor J. Dzau	Director	March 14, 2005
/s/  CONNIE MACK III Connie Mack III	Director	March 14, 2005

37

QuickLinks

TABLE OF CONTENTS
PART I

ITEM 1. BUSINESS

ITEM 1A. EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6. SELECTED FINANCIAL DATA
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1). FINANCIAL STATEMENTS

(a)(2). FINANCIAL STATEMENT SCHEDULES
(a)(3). EXHIBITS
(b) . EXHIBITS

SIGNATURES

EX-10.5.1

                                                                  Exhibit 10.5.1

                            FIRST AMENDMENT TO LEASE

     This FIRST AMENDMENT TO LEASE (this "First Amendment") is executed by and
between KS Parcel D, LLC (the "Landlord"), a Delaware limited liability company,
and Genzyme Corporation (the "Tenant").

     Reference is hereby made to that certain lease dated August 28, 2000 (the
"Lease"), by and between Kendall Square, LLC ("Kendall Square"), as landlord,
and Tenant, as tenant, with respect to a portion of the Building on the Lot (as
such terms are defined in the Lease) located in Cambridge, Massachusetts.

     WHEREAS, as contemplated by Section 9.1.6 of the Lease, on or about July
19, 2002, Kendall Square subdivided the Complex so as to, inter alia, establish
the Lot as a separate taxable parcel, and in connection with such Subdivision
(as defined in the Lease), Kendall Square conveyed the Lot together with Lot A
in the Complex and assigned the landlord's interest under the Lease to KS Parcel
A/D, LLC, an Affiliate of Kendall Square; and on or about December 3, 2002, KS
Parcel A/D, LLC, further conveyed the Lot, and further assigned the Landlord's
interest under the Lease, to Landlord, also an Affiliate of Kendall Square (such
conveyances of the Lot and assignments of the landlord's interest under the
Lease are referred to herein collectively as the "Transfer").

     WHEREAS, as contemplated by Section 2.3 of the Lease, Landlord and Tenant
have reached a mutually acceptable agreement regarding the Rentable Square
Footage of the Premises and Building.

     WHEREAS, Landlord and Tenant now desire to amend the Lease to reflect the
Subdivision and the boundaries of the Lot and the Transfer, to reflect the
agreed upon Rentable Square Footage to modify certain provisions of the Lease
and otherwise to ratify and confirm the terms of the Lease, as more particularly
set forth below.

     NOW, THEREFORE, in consideration of the mutual promises herein contained,
and other good and valuable consideration, the receipt and legal sufficiency of
which is hereby acknowledged, Landlord and Tenant agree as follows:

     1.     Each capitalized term which is used but not defined herein, or any
term which is defined in the Lease and used herein, shall have the meaning
ascribed thereto in the Lease.

     2.     The legal description of the Lot to be attached to the Lease as
Exhibit A-1 is attached to this First Amendment as Exhibit A-1 and the plan of
the Lot to be attached to the Lease as Exhibit A-2 is attached to this First
Amendment as Exhibit A-2.

     3.     Landlord and Tenant acknowledge that the actual process and
procedures followed in selecting Landlord's Design Team and Landlord's
Contractor and in designing and agreeing upon the Schematic Design Documents,
the Design Development Documents and the Final Design Documents differed, with
the consent and approval of both Landlord and Tenant, from the specific process
and procedures prescribed in Section 3.1.1 of the Lease. Landlord and



Tenant hereby confirm that, prior to the date of this First Amendment, they have
agreed as follows:

     (i)    Landlord has selected and Tenant has approved Behnisch, Behnisch &
            Partners as Landlord's Architect for the Building.

     (ii)   Landlord has selected and Tenant has approved Turner Construction
            Company as the Construction Cost Estimator and as the Construction
            Manager/General Contractor for the Building.

     (iii)  The Building Permit for the Building has been issued, the
            Substantial Completion Date occurred on April 30, 2003, and
            construction of the Tenant Work has commenced, and notwithstanding
            Section 1.1 or any other provision of the Lease to the contrary, the
            parties have agreed that the Term Commencement Date shall be deemed
            to have occurred on August 1, 2003.

     (iv)   The Environmental Remediation of the Lot commenced on June 26, 2000,
            and the Response Action Outcome Statement for the Lot required under
            the Massachusetts Contingency Plan was filed with the Massachusetts
            Department of Environmental Protection on April 19, 2003.

     (v)    The Certification of Landlord's LSP and Estoppel Certificates of
            COM/Energy (as required under Paragraphs 2(b) and 3 of the
            Environmental Agreement) were completed on December 12, 2002.

     (vi)   The Indemnity Expiration Date (as defined in the Release and
            Indemnity Agreement) with respect to the Lot occurred on or before
            December 12, 2002.

Landlord and Tenant hereby agree that as of the date of this First Amendment,
the only item remaining to be completed on the Progress Schedule is substantial
completion of those items of Base Building Improvements that constitute Post
Completion Items (as defined below in Paragraph 7 of this First Amendment).
Accordingly, Exhibit B to the Lease is hereby deleted in its entirety.

     4.     Anything herein or in the measurement standard set forth in Section
2.3 of the Lease to the contrary notwithstanding, Landlord and Tenant have
agreed that for purposes of the Lease the Rentable Square Footage of the
Building shall be deemed to be 349,325 square feet, the Rentable Square Footage
of the Premises shall be deemed to be 343,000 square feet and the Rentable
Square Footage of the Retail Space shall be deemed to be 6,325 square feet, and
the Rentable Square Footage of the Building, Premises and Retail Space as
agreed-upon above shall not be subject to remeasurement by Landlord or Tenant.
To reflect the foregoing agreement regarding the Rentable Square Footage of the
Building, Premises and Retail Space and certain other agreements between the
parties, Landlord and Tenant hereby agree to amend the definitions set forth
below as follows:

     (i)    The definition of "Initial Estimated Annual Additional Rent For
            Building" in Section 1.1 is amended to read $3,391,500.

                                      - 2 -


     (ii)   The definition of "Initial Estimated Annual Additional Rent for
            Complex" in Section 1.1 is amended to read $484,500.

     (iii)  The definition of "Tenant's Proportionate Fraction for Building" in
            Section 2.3 is amended to read 98.19%.

     (iv)   The definition of "Tenant's Proportionate Fraction for Complex" in
            Section 2.3 is amended to be the percentage equal to 94.17% of the
            ratio, expressed as a percentage, of the Rentable Square Footage of
            the Premises to the Rentable Square Footage of all buildings in the
            Complex (other than any garages in the Complex and any building or
            portion thereof which is not available for lease such as an
            information kiosk), including the Building, which Landlord is
            permitted to develop in the Complex pursuant to the PUD Approval. As
            of the date of this First Amendment, Tenant's Proportionate Fraction
            for Complex is 24.6%.

     (v)    The requirement in the definition of "Building" in Section 1.1 and
            in the second grammatical paragraph of Section 3.1.1 that the
            Building's ground floor retail space must contain at least 15,000
            r.s.f. is hereby waived.

     5.     In consideration of the agreed-upon Rentable Square Footage of the
Building, Landlord and Tenant have agreed that, anything herein or in the
definitions of the components of Project Cost set forth in Section 3.1.1 of the
Lease to the contrary notwithstanding, the definitions of the components of
Project Cost set forth in Section 3.1.1 are amended to be as follows:

     (i)    Tenant's pro rata share of Mitigation Expenses (shown on the
            attached Project Budget Form as the "Impact Fees" line item) shall
            be equal to (a) the actual amount of Mitigation Expenses allocated
            solely to the Building and the Lot plus (b) (1) the actual amount of
            Mitigation Expenses allocable to the entire Complex multiplied by
            (2) Tenant's Proportionate Fraction for Complex.

     (ii)   Tenant's pro-rata share of infrastructure and sitework costs (shown
            on the attached Project Budget Form as the "Sitework" line item)
            shall be equal to the actual amount of infrastructure and sitework
            costs allocable to the entire Complex multiplied by Tenant's
            Proportionate Fraction For Complex.

     (iii)  The broker's fee (shown on the attached Project Budget Form as the
            "Broker's Fee" line item) shall be the fixed amount of $2,137,500
            and shall be deemed to have been fully incurred as of the date(s) of
            payment thereof.

     (iv)   The Project Cost line item for Land and Environmental Remediation
            shall be subdivided into two components. The first component shall
            consist of the Land and Environmental Remediation charge (calculated
            at $60 per Rentable Square Foot) for the first 329,325 square feet
            of the Building's Rentable Square Footage; Interest on Landlord's
            Equity shall accrue on this first component of the Land and
            Remediation line item as of the execution date of the Lease. The
            second component shall consist of the Land and Environmental
            Remediation charge (calculated at $60 per Rentable Square Foot) for
            the remaining 20,000 square feet

                                      - 3 -


            of the Building's Rentable Square Footage and no Interest on
            Landlord's Equity shall accrue on this second component.

     (v)    The Developer's Fee (shown on the attached Project Budget form as
            the "Development Fee/Supervision" line item) shall be the fixed
            amount of $4,365,440.

The Project Budget Form attached as Exhibit B-1 to the Lease is hereby deleted
and the Project Budget Form attached to this First Amendment as Exhibit B-1 is
hereby inserted in place thereof. The Project Budget Form attached to this First
Amendment shall be the Final Project Budget contemplated by Section 3.1.1 of the
Lease. Landlord and Tenant acknowledge that such Final Project Budget is merely
a budget, and that the actual amount of Annual Fixed Rent payable by Tenant
under the Lease shall be determined in accordance with the formula set forth in
Section 4.1 of the Lease based upon the amount of Project Cost actually incurred
as of the date on which Annual Fixed Rent is calculated or is subsequently
adjusted as provided in the Lease and in this First Amendment.

     6.     Landlord and Tenant acknowledge that pursuant to certain Change
Orders requested by Landlord and approved by Tenant and described on the
attached Schedule CO, certain items of work were transferred from Tenant's Work
to Base Building Improvements to facilitate overall coordination of the
construction of the Building (the "TI Scope Transfer Work"). Landlord and Tenant
further acknowledge that the cost of the TI Scope Transfer Work has been billed
directly to and paid by Tenant prior to the date of this First Amendment.
Accordingly, the cost of the TI Scope Transfer Work is expressly excluded from
Project Cost but Landlord and Tenant specifically agree that Landlord is
entitled to receive a developer's fee of two and one-half percent (2 1/2%)
rather than five percent (5%) with respect to such TI Scope Transfer Work, and
that such 2 1/2% developer's fee has not been billed directly to Tenant but
rather has been included in the fixed Developer's Fee as set forth in Section
5(v) above.

     7.     Pursuant to Section 10.11(i) of the Lease, Tenant hereby exercises
its Early Occupancy Space right and option to lease both Expansion Spaces as of
the Commencement Date. Landlord hereby acknowledges that Tenant has duly
exercised its option to lease both Expansion Spaces as Early Occupancy Space
pursuant to Section 10.11(i) of the Lease and expressly waives the requirement
of Section 10.11(i) that Tenant was to have given notice of such exercise not
less than one year prior to the Scheduled Substantial Completion Date.
Accordingly, commencing on the Term Commencement Date (i) the Premises shall
consist of all of the Rentable Square Footage in the Building, other than the
Rentable Square Footage of the Retail Space and (ii) the Annual Fixed Rent for
the Premises (including both Expansion Spaces) shall be determined on the basis
of the Annual Fixed Rent Rate set forth in Section 1.1 of the Lease. In
addition, as a result of Tenant's exercise of its Early Occupancy Space right
with respect to both Expansion Spaces, Landlord and Tenant agree that a plan
showing the locations of the Expansion Spaces is no longer required to be
attached to the Lease as Exhibit A-4.

     8.     In order to facilitate Tenant's Work to be performed in connection
with Tenant's initial occupancy of the Premises and to coordinate and integrate
the simultaneous performance of Landlord's Work and such Tenant's Work, Landlord
and Tenant hereby agree that, anything herein or in the Lease to the contrary
notwithstanding, (i) those items of Base Building

                                      - 4 -


Improvements set forth on Schedule A attached to this First Amendment shall be
substantially completed by Landlord after the Substantial Completion Date (the
"Post Completion Items"), (ii) substantial completion of the Post Completion
Items shall not be a condition precedent to the occurrence of the Substantial
Completion Date, (iii) the Post Completion Items shall be substantially
completed with all due diligence by Landlord after the Substantial Completion
Date but during the performance of such Tenant's Work in accordance with the
Final Design Documents, as affected by Change Orders, without material deviation
therefrom, and (iv) all hard and soft costs incurred by Landlord in connection
with the construction of the Post Completion Items shall be included in the
Project Cost and (v) Landlord shall use reasonable and diligent efforts to
complete Punch List Items with respect to Landlord's Work and Post Completion
Items within thirty (30) days after completion of Tenant's Work. Promptly
following substantial completion of the Post Completion Items, Landlord shall
deliver to Tenant a certification by Landlord's Architect (confirmed by Tenant's
Architect) that the Post-Completion Items and all other Base Building
Improvements have been substantially completed in accordance with the Final
Design Documents, as affected by Change Orders, without material deviation
therefrom; the date by which the Post Completion Items have been substantially
completed is referred to herein as the "Final Completion Date".

     Since completion of the Post Completion Items will be deferred until after
the Substantial Completion Date as described above, Landlord and Tenant further
agree as follows:

     (i)    that clause (i) of the definition of Substantial Completion Date
            appearing in Section 3.2 of the Lease is hereby amended by deleting
            from such clause (i) the phrase "Base Building Improvements" and
            inserting in place thereof the phrase "Base Building Improvements
            exclusive of the Post Completion Items (which Post Completion Items
            shall be substantially completed after the Substantial Completion
            Date)"; and

     (ii)   Landlord shall be obligated to provide a full accounting of Project
            Cost within ninety (90) days after the Final Completion Date instead
            of within ninety (90) days after the Substantial Completion Date.
            Accordingly, the three grammatical sentences of Section 3.1.1 of the
            Lease appearing at the bottom of page 22 are revised to read as
            follows:

            "Within ninety (90) days after the Final Completion Date, Landlord
            shall deliver to Tenant a full accounting of the Project Cost
            incurred as of the Final Completion Date; Tenant, from the date
            hereof through the date which is twelve (12) months after receipt of
            such full accounting of Project Cost, may review all of Landlord's
            books and records relating to the incurrence and payment of the
            Project Cost in order to verify and confirm the accuracy thereof. If
            Landlord incurs any cost or expense properly includable in Project
            Cost after the Final Completion Date (including, without limitation,
            any Mitigation Expenses) which is not included in the full
            accounting, Landlord shall notify Tenant thereof and Landlord shall
            provide Tenant with such documentation with respect thereto as
            Tenant reasonably may request. Landlord and Tenant acknowledge and
            agree that the incurrence of additional costs and expenses by
            Landlord after the Final Completion Date which are properly
            includable in Project Cost will result in an

                                      - 5 -


            increase in the Annual Fixed Rent Rate, which increase shall be
            effective as of the date of incurrence thereof."

     9.     Landlord and Tenant agree the amount of Rent payable by Tenant as of
the Term Commencement Date shall be $15,151,962.00 per annum, payable in monthly
installments of $1,262,663.50 each. Such estimated amount of Annual Fixed Rent
is based upon the estimated amount of Project Cost incurred or to be incurred by
December 31, 2003, shown in the "Current Costs" column on the Final Project
Budget Form attached hereto as Exhibit B-1. Landlord and Tenant acknowledge and
agree that such estimated amount of Annual Fixed Rent shall be subject to
adjustment (i) after Tenant receives the full account of Project Cost required
by Section 3.1.1, (ii) upon the exercise by Tenant of its right under Section
3.1.1 to "review all of Landlord's books and records relating to the accuracy
and payment of the Project Cost in order to verify and confirm the accuracy
thereof" and (iii) upon the incurrence of additional costs and expenses by
Landlord after the Final Completion Date which are properly includable in
Project Cost. Upon any such adjustment any balance owed by Tenant or excess paid
by Tenant shall be paid to Landlord or credited to Tenant, as the case may be,
within twenty (20) days thereafter.

     As indicated on the Final Project Budget Form attached hereto as Exhibit
B-1, the full budgeted amount of several Project Cost line items, such as the
line items for Sitework and Impact Fees, as the case may be, are not expected to
be incurred until 2004 or later; the estimated amount of those costs is shown in
the "Deferred Costs" column on the Final Project Budget Form attached hereto as
Exhibit B-1. Upon the request of Tenant from time to time (but not more
frequently than semi-annually) Landlord shall provide Tenant with a status
report on the progress and estimated completion date of such items of deferred
work and an updated estimate of the projected or actual costs of completion of
such items of deferred work. Landlord and Tenant confirm and agree that, as
provided in Section 3.1.1 of the Lease, at such time after December 31, 2003, as
Landlord may incur any cost or expense (such as the budgeted items mentioned
above) properly includable in Project Cost, Landlord shall notify Tenant thereof
and Landlord shall provide Tenant with such documentation with respect thereto
as Tenant reasonably may request; Landlord and Tenant acknowledge and agree that
the incurrence of additional costs and expenses by Landlord after December 31,
2003 which are properly includable in Project Cost will result in an increase in
the Annual Fixed Rent Rate, which increase shall be effective as of the date of
incurrence of such additional costs and expenses.

     10.    Effective as of November 1, 2003, Sections 1.1 and 10.1 of the Lease
shall be amended by deleting the phrase "One Kendall Square , Building 1400,
Cambridge, Massachusetts 02139" wherever it appears in said Sections and by
inserting in place thereof the phrase "500 Kendall Street, Cambridge,
Massachusetts 02142."

     11.    The first sentence of Section 10.11(h) of the Lease, is hereby
amended by deleting the words "If upon commencement of the Term with respect to
the Second Expansion Space, and so long thereafter" and by inserting in place
thereof the words "As long".

     12.    Section 1.1 of the Lease is hereby amended by deleting the
definition of Lease Year and inserting the following in place thereof:

                                      - 6 -


            The first Lease Year shall commence on the Commencement Date and end
            on the last day of the month in which the first (1st) anniversary of
            the Commencement Date shall occur (unless the Commencement Date
            shall occur on the first day of a month, in which case the first
            Lease Year shall end on the day before the first (1st) anniversary
            of the Commencement Date). Subsequent Lease Years shall commence on
            the day after the last day of the first Lease Year or an anniversary
            thereof, and shall end on an anniversary of the last day of the
            first Lease Year.

     13.    Section 4.1(a) of the Lease is hereby amended by deleting the words
"from time to time direct in writing" appearing in the third line and the words
"by notice to Tenant from time to time direct" appearing in the sixth and
seventh lines and by inserting in place of each such deletion the words "from
time to time direct upon not less than fifteen (15) business days' prior written
notice to Tenant..."

     14.    Section 6.1 (c)(i) of the Lease is hereby amended by deleting the
third, fourth, fifth and sixth sentences thereof and inserting the following in
place thereof:

     Landlord, within one hundred twenty (120) days after the fire or other
     casualty, shall notify Tenant in writing of the period of time within
     which, in Landlord's reasonable judgment, the Building and the Premises can
     be restored to substantially their condition prior to such damage and
     Utility Services restored to the Utility Switching Points (the "Casualty
     Restoration Period"). If such notification shall state that such Casualty
     Restoration Period will extend more than twelve (12) months after the date
     of the casualty, then Tenant may terminate this Lease within thirty (30)
     days from Tenant's receipt of such notification. Furthermore, if Tenant
     does not so terminate this Lease and if such damage is not repaired,
     Utility Services are not restored and the Premises and the remainder of the
     Building are not restored to substantially the same condition as they were
     prior to such damage within the Casualty Restoration Period set forth in
     such notification, Tenant, within thirty (30) days after the expiration of
     the Casualty Restoration Period or from the expiration of any extension
     thereof by reason of Force Majeure Events as hereinafter set forth, may
     terminate this Lease by notice to Landlord, specifying a date not more than
     forty-five (45) days after the giving of such notice on which the term of
     this Lease shall terminate. The Casualty Restoration Period shall be
     extended by the number of days lost as a result of Force Majeure Events,
     provided however that the Casualty Restoration Period shall in no event be
     extended more than six (6) months due to Force Majeure Events (as so
     extended due to Force Majeure Events, the "Casualty Restoration Completion
     Date").

     15.    The first sentence of Section 10.12(b) is hereby amended to read
as follows:

            For purposes of this Section 10.12, "Fair Market Rent" shall mean
            the product of (a) the Rentable Square Footage of the Premises
            multiplied by (b) the average calculated on a rentable square foot
            basis, of (1) eighty-nine and one-half percent (89.5%) of the fair
            market rental rate for unfinished, shell office space in a
            comparable office building in the Kendall Square, Cambridge,
            Massachusetts

                                      - 7 -


            office market area (the "Relevant Market") and (2) eighty-nine and
            one-half percent (89.5%) of the fair market rental rate for the
            Premises, and shall take into account all other relevant factors in
            the Relevant Market, including the ten (10) year term of the
            applicable Extension Period.

     16.    Anything in the Lease to the contrary notwithstanding, as used in
the Lease, as amended hereby, the term "Tenant's Parking Spaces" shall mean 700
nonreserved parking spaces and the foregoing number of Tenant's Parking Spaces
shall not be subject to redetermination pursuant to Sections 2.1, 10.14 or any
other provisions of the Lease; in addition, Landlord and Tenant hereby agree
that Tenant shall have no Valet Parking spaces, and all provisions of the Lease
with respect to Valet Parking Spaces are hereby deleted.

     17.    Anything in the Lease to the contrary notwithstanding, Tenant shall
have no right to offer Tenant Financing.

     18.    Landlord and Tenant hereby agree that the Option to Lease Building B
has expired without the exercise by Tenant of its rights with respect thereto
and the Option to Lease Building B shall be of no further force or effect. Upon
the request of Landlord, Tenant shall execute and deliver to Landlord a notice
of termination of the Option to Lease Building B in recordable form.

     19.    The Lease, as amended hereby, is hereby ratified and confirmed in
all respects.

                                      - 8 -


     Executed under seal effective as of the 1st day of August, 2003.

                                     LANDLORD:

                                     KS PARCEL D, LLC

                                     By: Kendall Square, LLC, its Manager

                                         By: Lyme Properties, LLC, its Manager


                                         By:/s/ DAVID E. CLEM
                                            ------------------------------------
                                            David E. Clem, Member


                                     TENANT:

                                     GENZYME CORPORATION


                                     By: /s/ EVAN M. LEBSON
                                         ---------------------------------------
                                     Name: Evan M. Lebson
                                     Title: Vice President and Treasurer

                                      - 9 -


                                   EXHIBIT A-1

                            LEGAL DESCRIPTION OF LOT

A parcel of land in Cambridge, Middlesex County, Massachusetts, westerly of land
now or formerly of Mirant Kendall, L.L.C., shown as Parcel D on a plan of land
entitled, "Kendall Square, Subdivision Plan of Land in Cambridge, Massachusetts,
Middlesex County", Scale 1"=50', dated May 2002, prepared by Gunther
Engineering, Inc., Sheet 1 of 6, and recorded with the Middlesex South Registry
of Deeds as Instrument No. 975 of July 19, 2002 or as Plan No. 759 of 2002, and
more particularly described as follows:

Beginning at the northeasterly corner of said parcel, said corner being the
northwesterly corner of land now or formerly of said Mirant Kendall, L.L.C., as
shown on said plan and being the point of beginning; thence:

                       
S 19-57-30 W   106.39 feet   to an iron pipe set; thence
N 80-05-01 W   32.09 feet    to an iron pipe set; thence
S 09-54-59 W   101.62 feet   the last three courses running by the westerly property line of
                             said Mirant Kendall, L.L.C.; thence
N 73-17-11 W   160.73 feet   by the northerly sideline of Kendall Street; thence
N 09-54-59 E   187.36 feet   by the westerly sideline of the north-south portion of Kendall
                             Street; thence
S 80-05-01 E   210.24 feet   by the southerly sideline of Athenaeum Street to land now or
                             formerly of said Mirant Kendall, L.L.C., to the point of
                             beginning as shown on said plan.



Containing 35,754 square feet, or 0.821 acres, more or less, according to said
plan.

But excluding any interest in the fee of any of the private ways shown on said
Subdivision Plan.



                                   EXHIBIT A-2

                                PLAN SHOWING LOT

See Sheet 1 of 6 of a plan entitled "Kendall Square, Subdivision Plan of Land in
Cambridge, Massachusetts, Middlesex County", Scale 1"=50', dated May, 2002,
prepared by Gunther Engineering, Inc., recorded with the Middlesex South
Registry of Deeds as Instrument No. 975 of July 19, 2002 or as Plan No. 759 of
2002, a copy of which is attached hereto.



                                   EXHIBIT B-1

                                 (SEE ATTACHED)


                            KENDALL SQUARE BUILDING D
                                   EXHIBIT B-1
                          FIRST AMENDMENT TO THE LEASE
                               PROJECT BUDGET FORM



Lease Date: August 28, 2000                          CURRENT COSTS              DEFERRED COSTS             BUDGET TOTAL 09/12/03
- --------------------------------------------------------------------------------------------------------------------------------
                                                                  PER                        PER                         PER
            GENZYME HEADQUARTERS                                349,325                    349,325                     349,325
              LEASE EXHIBIT B-1                    AMOUNT         RSF          AMOUNT        RSF          AMOUNT         RSF
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                                    
Land and Remediation                           $   20,959,500  $    60.00  $           0  $     0.00  $   20,959,500  $    60.00
Hard Costs
   Base Building                                   65,086,505      186.32              0        0.00      65,086,505      186.32
   Tenant Improvement Allowance                     2,789,676        7.99              0        0.00       2,789,676        7.99
   Contingency                                        200,000        0.57              0        0.00         200,000        0.57
   Sitework                                         3,084,355        8.83      1,337,365        3.83       4,421,720       12.66
- --------------------------------------------------------------------------------------------------------------------------------
     Total Hard Costs                          $   71,160,536      203.71      1,337,365        3.83  $   72,497,901      207.54
- --------------------------------------------------------------------------------------------------------------------------------
Soft Costs
   Architecture and Engineering
     Civil Engineering                                 50,000        0.14              0        0.00          50,000        0.14
     Architectural Phase I                          6,555,333       18.77              0        0.00       6,555,333       18.77
     MEPFP Engineering Phase I                              0   (Included)             0   (Included)              0   (Included)
     Structural Engineering Phase I                         0   (Included)             0   (Included)              0   (Included)
     Testing and Construction Inspection              313,884        0.90              0        0.00         313,884        0.90
   Legal                                               59,750        0.17              0        0.00          59,750        0.17
   General and Administrative                               0        0.00              0        0.00               0        0.00
   Title Insurance and Recording                       18,099        0.05              0        0.00          18,099        0.05
   Permits and Fees                                   620,090        1.78              0        0.00         620,090        1.78
   Impact Fees                                      1,382,058        3.96        289,182        0.83       1,671,240        4.78
   Interest on Landlord's Equity                   19,270,446       55.16              0        0.00      19,270,446       55.16
   Construction Insurance and Taxes                 1,168,261        3.34              0        0.00       1,168,261        3.34
   Survey and Appraisal Fees                           33,833        0.10              0        0.00          33,833        0.10
   Financing Fees                                     400,000        1.15              0        0.00         400,000        1.15
   Contingency                                        100,000        0.29              0        0.00         100,000        0.29
   Development Fee/Supervision                      4,365,440       12.50              0        0.00       4,365,440       12.50
   Brokerage Fee                                    2,137,500        6.12              0        0.00       2,137,500        6.12
- --------------------------------------------------------------------------------------------------------------------------------
     Total Soft Costs                          $   36,474,694  $   104.41  $     289,182  $     0.83  $   36,763,876  $   105.24
- --------------------------------------------------------------------------------------------------------------------------------
Total Project Development Costs                $  128,594,730  $   368.12  $   1,626,547  $     4.66  $  130,221,278  $   372.78
- --------------------------------------------------------------------------------------------------------------------------------
Building Base Rent, per RSF                    $        44.17              $        0.56               $       44.73
Building Rentable Area, SF                            349,325                    349,325                     349,325
Genzyme Rentable Area, SF                             343,000                    343,000                     343,000
Projected Genzyme Annual Rent                  $   15,151,962              $     191,652               $  15,343,614
Projected Genzyme Monthly Rent                 $    1,262,663              $      15,971               $   1,278,634



                                   SCHEDULE A

                       Items of Base Building Improvements
                               to be completed by
                   LANDLORD AFTER SUBSTANTIAL COMPLETION DATE

       1.     Lobby Finishes: The 12-story scaffolding will still be in place
upon Substantial Completion until such time as the paint, light wall,
chandeliers and miscellaneous items can be finished without risk of damage. The
areas surrounding atrium construction will be required to be complete for that
reason. The affected work area further prevents the completion of the lobby
flooring, fountain, monumental stair paint, lighting and other miscellaneous
items.

       2.     Elevators and related Life Safety Systems.

       3.     Completed Punch list for the Atrium, Lobby, and Roof.

       4.     Final Cleaning.

       5.     Certificate of Occupancy and testing related thereto.

       6.     Final painting of stairwells.

       7.     Loading dock finish and access pathway to the freight elevator.

       8.     Sprinkler system.

       9.     Sitework including sidewalks and plantings.

       10.    Highpoint and related work impacted including roofing and "green"
aspects in the vicinity.

       11.    Work in the vicinity of and impacted by photovoltaic panels
including roofing and "green" aspects and rails at high penthouse roof for which
Tenant's design has just recently been completed.

       12.    Work in the vicinity of and impacted by rainwater collection
systems for which Tenant's design has just recently been completed including
roofing and "green" aspects.

       13.    Exterior soffits, metal and EIFS in the vicinity of the "Potato"
slab impacted by late Tenant's design revisions to shell and core lighting.

       14.    Perimeter floor closure at curtainwall on each floor impacted by
Tenant's acoustical upgrade.

       15.    Loggia ceiling finish impacted by Tenant's design support detail
for Lamella blinds.



       16.    Terrace pavers and railings on upper floors impacted by late
Tenant's design of terrace utility services recently completed.

       17.    Fire alarm work impacted by Tenant's work.

       18.    Signage design package.

       19.    Air balancing of shell and core ventilation systems to be deferred
until Tenant ductwork and terminal devices are completed downstream in order to
achieve "whole building" approach to balancing by specialist selected by Tenant.

       20.    Trash chute and loading bay to be left in place until Tenant's
debris is removed and garden trees are brought in to the 11th floor. This will
require a comeback after substantial completion to install curtainwall and
complete roofing in the localized areas impacted.

       21.    Installation of wood doors at stair towers and atrium and terrace
doors.

       22.    Wood treads on communicating stairs in atrium.

       23.    Finishes in four toilet rooms being used by trade workers of
Tenant's Contractor.

       24.    Loading dock permanent overhead door and scissor lifts.

       25.    Drinking fountains and fire extinguishers.

                                      - 2 -


                                   SCHEDULE CO

                                   (attached)



                     Scope Transfers from TI to Shell & Core



                        Description                          Amount
                                                       
Lecture Hall excavation and foundation                    $     44,639
Toilet room ceramic tile upgrades                               63,450
Loading dock scissor lifts                                      25,850
Light enhancement pads                                           4,113
TI fan coil units, water piping & ductwork                   1,117,501
Absorption chillers & service premium                          434,750
Stair #3, pressurization                                        36,989
Temp. heat for ground floor retail                              23,500
Power for TI fan coil units                                     79,577
HP & LP panelboards at 23 locations                             90,240
23 dry type transformers                                       118,675
Bus plugs at 22 locations                                       85,305
ATC for fan coil units & 3rd stair core                        565,175
Accessible terraces                                            294,925
Scope of Fire Protection Work                                  381,130

    Total Scope Transfers from TI to Shell & Core         $  3,365,819

EX-10.15

                                                                   Exhibit 10.15

                               GENZYME CORPORATION

                           1997 EQUITY INCENTIVE PLAN

1.   PURPOSE

          The purpose of the Genzyme Corporation 1997 Equity Incentive Plan (the
"Plan") is to attract and retain key employees and consultants of the Company
and its Affiliates, to provide an incentive for them to achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company by granting them Awards with respect to the Company's Common Stock.
Certain capitalized terms used herein are defined in section 9 below.

2.   ADMINISTRATION

          The Plan shall be administered by the Committee. The Committee shall
determine the terms and conditions of the Awards. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The Committee's
decisions shall be final and binding. To the extent permitted by applicable law,
the Committee may delegate to one or more executive officers of the Company the
power to make Awards to Participants and all determinations under the Plan with
respect thereto, provided that the Committee shall fix the maximum amount of
such Awards for all such Participants and a maximum for any one Participant.

3.   ELIGIBILITY

          All employees and consultants of the Company or any Affiliate capable
of contributing significantly to the successful performance of the Company are
eligible to be Participants in the Plan, other than persons deemed to be
officers or directors of the Company within the meaning of the corporate
governance rules for Nasdaq National Market companies. The Committee, in its
sole discretion, shall determine from the group of eligible persons whether an
individual shall be a Participant under the Plan."

4.   STOCK AVAILABLE FOR AWARDS

(a)  AMOUNT. Subject to adjustment under subsection (b), Awards may be made
under the Plan for up to 27,664,300 shares of Genzyme General Stock. If any
Award expires or is terminated unexercised or is forfeited or settled in a
manner that results in fewer shares outstanding than were awarded, the shares
subject to such Award, to the extent of such expiration, termination, forfeiture
or decrease, shall again be available for award under the Plan. Common Stock
issued through the assumption or substitution of outstanding grants from an
acquired company shall not reduce the shares available for Awards under the
Plan. Shares issued under the Plan may consist in whole or in part of authorized
but unissued shares or treasury shares.

(b)  ADJUSTMENT. In the event that the Committee determines that any stock
dividend, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares or other
transaction affects the Common Stock such that an adjustment is required in
order to preserve the benefits intended to be provided by the Plan, then the
Committee shall equitably adjust any or all of (i) the number and kind of shares
in respect of which Awards may be made under the Plan, (ii) the number and kind
of shares subject to outstanding Awards and (iii) the exercise price with
respect to any of the foregoing, provided that the number of shares subject to
any Award shall always be a whole number, and if considered appropriate, the
Committee may make provision for a cash payment with respect to an outstanding
Award. Notwithstanding the foregoing, unless otherwise determined by the
Committee, no adjustment will be made for dividends of one series of Common
Stock paid on another series of Common Stock.

                                        1


5.   STOCK OPTIONS

(a)  GRANT OF OPTIONS. Subject to the provisions of the Plan, the Committee may
grant Options to purchase shares of Common Stock. The Committee shall determine
the number of shares subject to each Option and the exercise price therefor,
which shall not be less than 100% of the Fair Market Value of the Common Stock
as of the Pricing Date. The Plan does not provide for the granting of incentive
stock options meeting the requirements of Section 422 of the Code.

(b)  TERMS AND CONDITIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may specify in the
applicable grant or thereafter. The Committee may impose such conditions with
respect to the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.

(c)  PAYMENT. No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the exercise price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the grant of the Option, by delivery of a note or
other commitment satisfactory to the Committee or shares of Common Stock owned
by the optionee, including Restricted Stock, or by retaining shares otherwise
issuable pursuant to the Option, in each case valued at their Fair Market Value
on the date of delivery or retention, or such other lawful consideration,
including a payment commitment of a financial or brokerage institution, as the
Committee may determine.

6.   STOCK EQUIVALENTS

(a)  GRANT OF STOCK EQUIVALENTS. Subject to the provisions of the Plan, the
Committee may grant rights to receive payment from the Company based in whole or
in part on the value of the Common Stock. The Committee shall determine at the
time of grant or thereafter whether Stock Equivalents are settled in cash,
Common Stock or other securities of the Company, Awards or other property.

(b)  STOCK APPRECIATION RIGHTS. Stock Equivalents may include rights to receive
any excess in value of shares of Common Stock over the exercise price ("Stock
Appreciation Rights" or "SARs") which may be granted in tandem with an Option
(at or after the award of the Option), or alone and unrelated to an Option. SARs
in tandem with an Option shall terminate to the extent that the related Option
is exercised, and the related Option shall terminate to the extent that the
tandem SARs are exercised. The Committee shall fix the exercise price of each
SAR or specify the manner in which the price shall be determined and may define
the manner of determining the excess in value of the shares of Common Stock. An
SAR granted in tandem with an Option shall have an exercise price not less than
the exercise price of the related Option. An SAR granted alone and unrelated to
an Option may not have an exercise price less than 100% of the Fair Market Value
of the Common Stock as of the Pricing Date.

7.   STOCK GRANTS

(a)  GRANT OF STOCK. Subject to the provisions of the Plan, the Committee may
grant shares of Common Stock upon such terms and conditions as the Committee
determines. Stock Grants may be issued for no cash consideration, such minimum
consideration as may be required by applicable law or such other consideration
as the Committee may determine.

(b)  RESTRICTED STOCK. Stock Grants may include shares subject to forfeiture
("Restricted Stock"). The Committee will determine the duration of the period
(the "Restricted Period") during which, and the conditions under which, the
shares may be forfeited to the Company and the other terms and conditions of
such Awards. Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank,

                                        2


with the Company. At the expiration of the Restricted Period, the Company shall
deliver such certificates to the Participant or if the Participant has died, to
the Participant's Designated Beneficiary.

8.   GENERAL PROVISIONS APPLICABLE TO AWARDS

(a)  DOCUMENTATION. Each Award under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Committee considers necessary or advisable to achieve the
purposes of the Plan or to comply with applicable tax and regulatory laws and
accounting principles.

(b)  COMMITTEE DISCRETION. Each type of Award may be made alone, in addition to
or in relation to any other Award. The terms of each type of Award need not be
identical, and the Committee need not treat Participants uniformly. Except as
otherwise provided by the Plan or a particular Award, any determination with
respect to an Award may be made by the Committee at the time of grant or at any
time thereafter.

(c)  DIVIDENDS AND CASH AWARDS. In the discretion of the Committee, any Award
under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable (in cash or in the form of Awards under the Plan) currently
or deferred with or without interest and (ii) cash payments in lieu of or in
addition to an Award.

(d)  TERMINATION OF EMPLOYMENT. The Committee shall determine the effect on an
Award of the disability, death, retirement or other termination of employment of
a Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
receive payment of an Award or exercise rights thereunder.

(e)  CHANGE IN CONTROL. In order to preserve a Participant's rights under an
Award in the event of a change in control of the Company (as defined by the
Committee), the Committee in its discretion may, at the time an Award is made or
at any time thereafter, take one or more of the following actions: (i) provide
for the acceleration of any time period relating to the exercise or payment of
the Award, (ii) provide for payment to the Participant of cash or other property
with a Fair Market Value equal to the amount that would have been received upon
the exercise or payment of the Award had the Award been exercised or paid upon
the change in control, (iii) adjust the terms of the Award in a manner
determined by the Committee to reflect the change in control, (iv) cause the
Award to be assumed, or new rights substituted therefor, by another entity, or
(v) make such other provision as the Committee may consider equitable to
Participants and in the best interests of the Company.

(f)  TRANSFERABILITY. In the discretion of the Committee, any Award may be made
transferable upon such terms and conditions and to such extent as the Committee
determines. The Committee may in its discretion waive any restriction on
transferability.

(g)  LOANS. The Committee may authorize the making of loans or cash payments to
Participants in connection with the grant or exercise of any Award under the
Plan, which loans may be secured by any security, including Common Stock,
underlying or related to such Award (provided that the loan shall not exceed the
Fair Market Value of the security subject to such Award), and which may be
forgiven upon such terms and conditions as the Committee may establish at the
time of such loan or at any time thereafter.

(h)  WITHHOLDING TAXES. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Awards under the Plan no later than the date of
the event creating the tax liability. The Company and its Affiliates may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant. In the Committee's discretion, such tax
obligations may be paid in whole or in part in shares of Common Stock, including
shares retained from the Award creating the tax obligation, valued at their Fair
Market Value on the date of delivery.

                                        3


(i)  FOREIGN NATIONALS. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or to comply with applicable
laws.

(j)  AMENDMENT OF AWARD. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization, provided that
the Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.

9.   CERTAIN DEFINITIONS

          "Affiliate" means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.

          "Award" means any Stock Option, Stock Equivalent or Stock Grant
granted under the Plan.

          "Board" means the Board of Directors of the Company.

          "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor law.

          "Committee" means one or more committees each comprised of not less
than two members of the Board appointed by the Board to administer the Plan or a
specified portion thereof.

          "Common Stock" or "Stock" means the common stock, $.01 par value, of
the Company.

          "Company" means Genzyme Corporation.

          "Designated Beneficiary" means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, "Designated
Beneficiary" means the Participant's estate.

          "Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.

          "Participant" means a person selected by the Committee to receive an
Award under the Plan.

          "Pricing Date" means the date on which the Award is granted, except
that the Committee may provide that the Pricing Date for an Award granted to a
new employee or consultant shall be the date on which the recipient is hired or
engaged if the grant of the Award occurs within 90 days of the date such
employment or engagement commences.

          "Stock Equivalent" means a right to receive payment from the Company
based in whole or in part on the value of the Common Stock awarded to a
Participant under Section 6.

          "Stock Grant" means shares of Common Stock awarded to a Participant
under Section 7.

          "Stock Option" or "Option" means an option to purchase shares of
Common Stock awarded to a Participant under Section 5.

10.  MISCELLANEOUS

                                        4


(a)  RIGHTS LIMITED. Any Award made under the Plan shall be made in the sole
discretion of the Committee, or its delegate as appointed in accordance with the
Plan, and no prior Award shall entitle a person to any future Award. In no event
shall the Plan, or any Award made under the Plan, form a part of an employee's
or consultant's contract of employment or service, if any. Neither the Plan, nor
any Award made under the Plan, shall confer upon any employee or consultant of
the Company or its Affiliate any right with respect to the continuance of his or
her employment by, or other service with, the Company or its Affiliate, nor
shall they limit the right of the Company or its Affiliate to terminate the
employee or consultant or otherwise change the terms of service. The loss of
existing or potential profit in an Award shall not constitute an element of
damages in the event of termination of employment or service for any reason,
even if the termination is in violation of an obligation of the Company or its
Affiliate to the Participant.

(b)  NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.

(c)  EFFECTIVE DATE. The Plan shall be effective on October 16, 1997.

(d)  AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time.

(e)  GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of Massachusetts.


                                        5

EX-10.16

                                                                   Exhibit 10.16

                               GENZYME CORPORATION

                         1998 DIRECTOR STOCK OPTION PLAN

1.   GENERAL; PURPOSE.

     This 1998 Director Stock Option Plan dated March 6, 1998 (the "Plan")
governs options to purchase common stock, $0.01 par value (the "Stock"), of
Genzyme Corporation (the "Company") granted on or after the date hereof by the
Company to members of the Board of Directors (each, a "Director") of the Company
(the "Board") who are not also officers or employees of the Company. The Plan
constitutes an amendment and restatement of the Company's 1988 Director Stock
Option Plan (the "Prior Plan") and supersedes the Prior Plan, the separate
existence of which shall terminate on the effective date of this Plan. The
rights and privileges of holders of options outstanding under the Prior Plan
shall not be adversely affected by the foregoing action.

     The purpose of the Plan is to attract and retain qualified persons to serve
as Directors of the Company and to encourage ownership of stock of the Company
by such Directors so as to provide additional incentives to promote the success
of the Company.

2.   ADMINISTRATION OF THE PLAN; GOVERNING LAW.

     Grants of stock options under the Plan shall be automatic as provided in
Section 7. However, all questions of interpretation with respect to the Plan and
options granted under it shall be determined by a committee consisting of all
Directors of the Company who are not eligible to participate in the Plan, and
such determination shall be final and binding upon all persons having an
interest in the Plan. This Plan shall be governed by and interpreted in
accordance with the laws of The Commonwealth of Massachusetts.

3.   PERSONS ELIGIBLE TO PARTICIPATE IN THE PLAN.

     Members of the Board who are not also officers or employees of the Company
shall be eligible to participate in the Plan.

4.   SHARES SUBJECT TO THE PLAN.

     (a) An aggregate of 1,162,491 shares of Stock may be issued upon exercise
of options granted under this Plan. In the event of a stock dividend, split-up,
combination or reclassification of shares, recapitalization or other similar
capital change relating to the Stock, the maximum aggregate number and kind of
shares or securities of the Company as to which options may be granted under
this Plan and as to which options then outstanding shall be exercisable, and the
option price of such options, shall be appropriately adjusted by the Board
(whose determination shall be conclusive) so as to preserve the value of the
option.

     (b) In the event of a consolidation or merger of the Company with another
corporation where the Company's stockholders do not own a majority in interest
of the surviving or resulting corporation, or the sale or exchange of all or
substantially all of the assets of the Company, or a reorganization or
liquidation of the Company, any deferred exercise period shall be automatically
accelerated and each holder of an outstanding option shall be entitled to
receive upon exercise and payment in accordance with the terms of the option the
same shares, securities or property as he or she would have been entitled to
receive upon the occurrence of such event if he or she had been, immediately
prior to such event, the holder of the number of shares of Stock purchasable
under his or her option or, if another corporation shall be the survivor, such
corporation shall substitute therefor substantially equivalent shares,
securities or property of such other corporation; provided, however, that in
lieu of the foregoing the Board may make such other provision as it may consider
equitable to holders and in the best interests of the Company.



     (c) Whenever options under this Plan (including options outstanding under
the Prior Plan as of the effective date of this Plan) lapse or terminate or
otherwise become unexercisable, the shares of Stock which were subject to such
options may again be subjected to options under this Plan. The Company shall at
all times while this Plan is in force reserve such number of shares of Stock as
will be sufficient to satisfy the requirements of this Plan.

5.   NONSTATUTORY STOCK OPTIONS.

     All options granted under this Plan shall be nonstatutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code").

6.   FORM OF OPTIONS.

     Options granted hereunder shall be in such form as the Board may from time
to time determine.

7.   GRANT OF OPTIONS AND OPTION TERMS.

     (a) AUTOMATIC GRANT OF OPTIONS. At each annual meeting of the stockholders
of the Company, those Directors who are eligible to receive options under this
Plan shall automatically be granted options to purchase 15,000 shares of Stock.
In addition, upon the election of an eligible Director under this Plan other
than at an annual meeting of stockholders (whether by the Board or the
stockholders and whether to fill a vacancy or otherwise), such Director shall
automatically be granted options to purchase the number of shares of Stock
described in the preceding sentence for each year or portion thereof of the term
of office to which he or she is elected. The "Date of Grant" for options granted
under this Plan shall be the date of the annual meeting of shareholders, or the
election as a Director, as the case may be. No options shall be granted
hereunder after ten years from the date on which this Plan was initially
approved and adopted by the Board. As used herein, "Fair Market Value" for the
Stock shall mean the closing sale price of the Stock as reported by the Nasdaq
National Market or the principal securities exchange or over-the-counter market
on which the Stock is listed or quoted on the Date of Grant of such options or,
if the Stock is not then listed on the Nasdaq National Market or any securities
exchange or quoted in the over-the-counter market, the fair market value of the
Stock as determined in good faith by the Board.

     (b) OPTION PRICE. The option price per share for each option granted under
this Plan shall be equal to the Fair Market Value of the Stock with respect to
which the option is exercisable.

     (c) TERM OF OPTION. The term of each option granted under this Plan shall
be ten years from the Date of Grant.

     (d) PERIOD OF EXERCISE. Options granted under this Plan shall become
exercisable on the date of the next annual meeting of shareholders following
their Date of Grant, if and only if the option holder is a member of the Board
at the opening of business on that date. Directors holding exercisable options
under this Plan who cease to serve as members of the Board may, during their
lifetime, exercise the rights they had under such options at the time they
ceased being a Director for the full unexpired term of such option. Upon the
death of a Director, those entitled to do so under the Director's will or the
laws of descent and distribution shall have the right, at any time within twelve
months after the date of death, to exercise in whole or in part any rights which
were available to the Director at the time of his or her death. Options granted
under this Plan shall terminate,



and no rights thereunder may be exercised, after the expiration of the
applicable exercise period. Notwithstanding the foregoing provisions of this
section, no rights under any options may be exercised after the expiration of
ten years from their Date of Grant.

     (e) METHOD OF EXERCISE AND PAYMENT. Options may be exercised only by
written notice to the Company at its head office accompanied by payment of the
full option price for the shares of Stock as to which they are exercised. The
option price shall be paid in cash or by check. Upon receipt of such notice and
payment, the Company shall promptly issue and deliver to the optionee (or other
person entitled to exercise the option) a certificate or certificates for the
number of shares as to which the exercise is made.

     (f) TRANSFERABILITY. Options granted under this Plan may be transferred
without consideration (or for such consideration as the committee may from time
to time deem appropriate) by the holder thereof to any Family Member of such
director; PROVIDED, HOWEVER, that no subsequent transfer of such option shall be
permitted except for transfers: (i) to a Family Member of such director; (ii)
back to the director; or (iii) pursuant to the applicable laws of descent and
distribution. For this purpose, "Family Member" shall mean (i) any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including any adoptive
relationships, and any other person sharing the transferor director's household
(other than as a tenant or employee); (ii) any trust in which any of the persons
described in clause (i) holds a greater than 50% beneficial interest; (iii) any
foundation in which any of the persons described in clause (i) or the transferor
director controls the management of assets; or (iv) any other entity in which
any of the persons described in clause (i) or the director holds more than 50%
of the voting interests.

     (g) AMENDMENT. In addition to the rights set forth in Section 4(b) of this
Plan, the Board may amend or modify any outstanding option in any respect,
provided that the optionee's consent to such action shall be required unless the
Board determines that the action, taking into account any related action, would
not materially and adversely affect the optionee.

8.   LIMITATION OF RIGHTS.

     (a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither this Plan, nor the granting
of an option or any other action taken pursuant to this Plan, shall constitute
an agreement or understanding, express or implied, that the Company will retain
an optionee as a Director for any period of time or at any particular rate of
compensation.

     (b) NO STOCKHOLDERS' RIGHTS FOR OPTIONS. Directors shall have no rights as
a stockholder with respect to the shares covered by their options until the date
they exercise such options and pay the option price to the Company, and no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such option is exercised and paid for.

9.   EFFECTIVE DATE; AMENDMENT OR TERMINATION.

     Subject to the approval of the stockholders of the Company, this Plan shall
be effective as of March 6, 1998. Prior to such approval, options may be granted
under this Plan expressly subject to such approval. The Board may amend or
terminate this Plan at any time, subject to any stockholder approval that the
Board determines to be necessary or advisable.



10.  STOCKHOLDER APPROVAL.

     This Plan is subject to approval by the stockholders of the Company by the
affirmative vote of the holders of a majority of the votes properly cast by
holders of the shares of Stock of the Company present, or represented and
entitled to vote, at a meeting duly held in accordance with the laws of The
Commonwealth of Massachusetts. In the event such approval is not obtained, all
options granted under this Plan shall be void and without effect.

EX-10.16.1

                                                                Exhibit 10.16.1



                                                 GENZYME CORPORATION

NOTICE OF GRANT OF STOCK OPTIONS                 ID: 06-1047163
AND OPTION AGREEMENT                             500 Kendall Street
                                                 Cambridge, MA 02142



OPTIONEE NAME                                    OPTION NUMBER:
OPTIONEE ADDRESS                                 PLAN:
                                                 ID:


Effective _________, you have been granted a(n) Non-Qualified Stock Option to
buy _____ shares of GENZYME CORPORATION (the Company) stock at $_______ per
share.

The total option price of the shares granted is $_________.

Shares in each period will become fully vested on the date shown.

   Shares               Vest Type              Full Vest           Expiration



                      MAINTAIN THIS COPY FOR YOUR RECORDS.



These options are granted under and governed by the terms and conditions of the
Company's Stock Option plan as amended and the Option Agreement, all of which
are attached and made a part of this document.


                                                                         Date:
                                                                         Time:




               Genzyme Corporation 1998 Director Stock Option Plan
                              Terms and Conditions

1. PLAN INCORPORATED BY REFERENCE. THIS OPTION IS ISSUED PURSUANT TO THE TERMS
OF THE PLAN AND MAY BE AMENDED AS PROVIDED IN THE PLAN. CAPITALIZED TERMS USED
AND NOT OTHERWISE DEFINED IN THIS CERTIFICATE HAVE THE MEANINGS GIVEN TO THEM IN
THE PLAN. THIS CERTIFICATE DOES NOT SET FORTH ALL THE TERMS AND CONDITIONS OF
THE PLAN, WHICH ARE INCORPORATED HEREIN BY REFERENCE. GRANTS OF OPTIONS UNDER
THE PLAN ARE AUTOMATIC AND ANY INTERPRETATION WITH RESPECT TO THE PLAN AND
OPTIONS GRANTED UNDER IT SHALL BE DETERMINED BY A COMMITTEE CONSISTING OF ALL
DIRECTORS OF THE COMPANY WHO ARE NOT ELIGIBLE TO PARTICIPATE IN THE PLAN AND
SUCH DETERMINATIONS ARE FINAL AND BINDING. COPIES OF THE PLAN MAY BE OBTAINED
UPON WRITTEN REQUEST WITHOUT CHARGE FROM THE SHAREHOLDER RELATIONS DEPARTMENT OF
THE COMPANY.

2. OPTION PRICE. THE PRICE TO BE PAID FOR EACH SHARE OF STOCK ISSUED UPON
EXERCISE OF THE WHOLE OR ANY PART OF THIS OPTION IS THE OPTION PRICE SET FORTH
ON THE FACE OF THIS CERTIFICATE AS DETERMINED IN ACCORDANCE WITH THE PLAN (THE
"OPTION PRICE").

3. PERIOD OF EXERCISE. THIS OPTION MAY BE EXERCISED FROM TIME TO TIME UP TO THE
NUMBER OF SHARES AND IN ACCORDANCE WITH THE EXERCISABILITY SCHEDULE SET FORTH ON
THE FACE OF THIS CERTIFICATE, BUT ONLY FOR THE PURCHASE OF WHOLE SHARES. A
DIRECTOR WHO CEASES TO SERVE AS A MEMBER OF THE BOARD MAY, DURING HIS OR HER
LIFETIME, EXERCISE THE RIGHTS HE OR SHE HAD UNDER THIS OPTION AT THE TIME HE OR
SHE CEASED BEING A DIRECTOR FOR THE FULL UNEXPIRED TERM OF SUCH OPTION. UPON THE
DEATH OF THE DIRECTOR, THOSE ENTITLED TO DO SO UNDER THE DIRECTOR'S WILL OR THE
LAWS OF DESCENT AND DISTRIBUTION SHALL HAVE THE RIGHT, AT ANY TIME WITHIN TWELVE
(12) MONTHS AFTER THE DEATH, TO EXERCISE IN WHOLE OR IN PART ANY RIGHTS WHICH
WERE AVAILABLE TO THE DIRECTOR AT THE TIME OF HIS OR HER DEATH. THIS OPTION MAY
NOT BE EXERCISED AS TO ANY SHARES AFTER THE EXPIRATION DATE, WHICH SHALL BE TEN
YEARS FROM THE DATE OF GRANT.

4. METHOD OF EXERCISE AND PAYMENT. THIS OPTION MAY BE EXERCISED ONLY BY WRITTEN
NOTICE TO THE COMPANY AT ITS HEAD OFFICE ACCOMPANIED BY PAYMENT OF THE FULL
OPTION PRICE FOR THE SHARES OF STOCK AS TO WHICH THEY ARE EXERCISED. THE OPTION
PRICE SHALL BE PAID IN CASH OR BY CHECK. PROMPTLY FOLLOWING NOTICE AND PAYMENT,
THE COMPANY WILL DELIVER TO THE DIRECTOR (OR OTHER PERSON ENTITLED TO EXERCISE
THE OPTION) A CERTIFICATE REPRESENTING THE NUMBER OF SHARES WITH RESPECT TO
WHICH THE OPTION IS BEING EXERCISED.

5. TRANSFERABILITY. THIS OPTION MAY BE TRANSFERRED WITHOUT CONSIDERATION (OR FOR
SUCH CONSIDERATION AS THE COMMITTEE MAY FROM TIME TO TIME DEEM APPROPRIATE) BY
THE HOLDER THEREOF TO ANY FAMILY MEMBER OF SUCH DIRECTOR; PROVIDED, HOWEVER,
THAT NO SUBSEQUENT TRANSFER OF THIS OPTION SHALL BE PERMITTED EXCEPT FOR
TRANSFERS: (i) TO A FAMILY MEMBER OF SUCH DIRECTOR; (ii) BACK TO THE DIRECTOR;
OR (iii) PURSUANT TO THE APPLICABLE LAWS OF DESCENT AND DISTRIBUTION. FOR THIS
PURPOSE, "FAMILY MEMBER" SHALL MEAN (i) ANY CHILD, STEPCHILD, GRANDCHILD,
PARENT, STEPPARENT, GRANDPARENT, SPOUSE, FORMER SPOUSE, SIBLING, NIECE, NEPHEW,
MOTHER-IN-LAW, FATHER-IN-LAW, SON-IN-LAW, DAUGHTER-IN-LAW, BROTHER-IN-LAW, OR
SISTER-IN-LAW, INCLUDING ANY ADOPTIVE RELATIONSHIPS, AND ANY OTHER PERSON
SHARING THE TRANSFEROR DIRECTOR'S HOUSEHOLD (OTHER THAN AS A TENANT OR
EMPLOYEE); (ii) ANY TRUST IN WHICH ANY OF THE PERSONS DESCRIBED IN CLAUSE (i)
HOLDS A GREATER THAN 50% BENEFICIAL INTEREST; (iii) ANY FOUNDATION IN WHICH ANY
OF THE PERSONS DESCRIBED IN CLAUSE (i) OR THE TRANSFEROR DIRECTOR CONTROLS THE
MANAGEMENT OF ASSETS; OR (iv) ANY OTHER ENTITY IN WHICH ANY OF THE PERSONS
DESCRIBED IN CLAUSE (i) OR THE DIRECTOR HOLDS MORE THAN 50% OF THE VOTING
INTERESTS.

6. RECAPITALIZATIONS, MERGERS, ETC. IN THE EVENT OF A CONSOLIDATION OR MERGER OF
THE COMPANY WITH ANOTHER CORPORATION WHERE THE COMPANY'S STOCKHOLDERS DO NOT OWN
A MAJORITY IN INTEREST OF THE SURVIVING OR RESULTING CORPORATION, OR THE SALE OR
EXCHANGE OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY, OR A
REORGANIZATION OR LIQUIDATION OF THE COMPANY, ANY DEFERRED EXERCISE PERIOD SHALL
BE AUTOMATICALLY ACCELERATED AND THE DIRECTOR SHALL BE ENTITLED TO RECEIVE UPON
EXERCISE AND PAYMENT IN ACCORDANCE WITH THE TERMS OF THE OPTION THE SAME SHARES,
SECURITIES OR PROPERTY AS HE OR SHE WOULD HAVE BEEN ENTITLED TO RECEIVE UPON THE
OCCURRENCE OF SUCH EVENT IF HE OR SHE HAD BEEN, IMMEDIATELY PRIOR TO SUCH EVENT,
THE HOLDER OF THE NUMBER OF SHARES OF STOCK PURCHASABLE UNDER THIS OPTION OR, IF
ANOTHER CORPORATION SHALL BE THE SURVIVOR, SUCH CORPORATION SHALL SUBSTITUTE
THEREFOR SUBSTANTIALLY EQUIVALENT SHARES, SECURITIES OR PROPERTY OF SUCH OTHER
CORPORATION; PROVIDED, HOWEVER, THAT IN LIEU OF THE FOREGOING THE BOARD MAY MAKE
SUCH OTHER PROVISION AS IT MAY CONSIDER EQUITABLE TO THE DIRECTOR AND IN THE
BEST INTERESTS OF THE COMPANY. NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A
CHANGE IN CONTROL OF THE COMPANY (AS DEFINED IN A VOTE OF THE COMPENSATION
COMMITTEE ADOPTED MAY 29, 2002), THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL
SHARES WITHOUT REGARD TO ANY DEFERRED EXERCISABILITY SCHEDULE OR DEFERRED
EXERCISE PERIOD.

7. LIMITATION OF RIGHTS. NEITHER THE PLAN, NOR THE GRANTING OF THIS OPTION OR
ANY OTHER ACTION TAKEN PURSUANT TO THE PLAN, SHALL CONSTITUTE AN AGREEMENT OR
UNDERSTANDING, EXPRESS OR IMPLIED, THAT THE COMPANY WILL RETAIN AN OPTIONEE AS A
DIRECTOR FOR ANY PERIOD OF TIME OR AT ANY PARTICULAR RATE OF COMPENSATION. A
DIRECTOR SHALL HAVE NO RIGHTS AS A STOCKHOLDER WITH RESPECT TO THE SHARES
COVERED BY THIS OPTION UNTIL THE DATE HE OR SHE EXERCISES SUCH OPTION AND PAYS
THE OPTION PRICE TO THE COMPANY.

8. COMPLIANCE WITH SECURITIES LAWS. IT SHALL BE A CONDITION TO THE DIRECTOR'S
RIGHT TO PURCHASE SHARES OF STOCK HEREUNDER THAT THE COMPANY MAY, IN ITS
DISCRETION, REQUIRE (a) THAT THE SHARES OF STOCK RESERVED FOR ISSUE UPON THE
EXERCISE OF THIS OPTION SHALL HAVE BEEN DULY LISTED, UPON OFFICIAL NOTICE OF
ISSUANCE, UPON ANY NATIONAL SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM ON
WHICH THE COMPANY'S STOCK MAY THEN BE LISTED OR QUOTED, (b) THAT EITHER (i) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO THE
SHARES SHALL BE IN EFFECT, OR (ii) IN THE OPINION OF COUNSEL FOR THE COMPANY,
THE PROPOSED PURCHASE SHALL BE EXEMPT FROM REGISTRATION UNDER THAT ACT AND THE
DIRECTOR SHALL HAVE MADE SUCH UNDERTAKINGS AND AGREEMENTS WITH THE COMPANY AS
THE COMPANY MAY REASONABLE REQUIRE, AND (c) THAT SUCH OTHER STEPS, IF ANY, AS
COUNSEL FOR THE COMPANY SHALL CONSIDER NECESSARY TO COMPLY WITH ANY LAW
APPLICABLE TO THE ISSUE OF SUCH SHARES BY THE COMPANY SHALL HAVE BEEN TAKEN BY
THE COMPANY OR THE DIRECTOR, OR BOTH. THE CERTIFICATES REPRESENTING THE SHARES
PURCHASED UNDER THIS OPTION MAY CONTAIN SUCH LEGENDS AS COUNSEL FOR THE COMPANY
SHALL CONSIDER NECESSARY TO COMPLY WITH ANY APPLICABLE LAW.

ACKNOWLEDGED AND AGREED:


- ------------------------------------
SIGNATURE


- ------------------------------------
NAME (PRINT)


- ------------------------------------
DATE

EX-10.17

                                                                   Exhibit 10.17

                               GENZYME CORPORATION

                           2001 EQUITY INCENTIVE PLAN

1.   PURPOSE.

     The purpose of the Genzyme Corporation 2001 Equity Incentive Plan (the
"Plan") is to attract and retain key employees and consultants of the Company
and its Affiliates, to provide an incentive for them to achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company by granting stock options ("Options") with respect to the Company's
Common Stock. Certain capitalized terms used herein are defined in Section 6
below.

     The Plan constitutes an amendment and restatement of the Company's 1990
Equity Incentive Plan (the "Prior Plan"), which is hereby merged with and into
the Plan, and the separate existence of the Prior Plan shall terminate on the
effective date of the Plan. The rights and privileges of holders of outstanding
options and rights under the Prior Plan shall not be adversely affected by the
foregoing action.

2.   ADMINISTRATION.

     The Plan shall be administered by the Committee; provided, that the Board
may in any instance perform any of the functions of the Committee hereunder. The
Committee shall determine the terms and conditions of the Options. The Committee
shall have authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, and to interpret the provisions of the Plan.
The Committee's decisions shall be final and binding. To the extent permitted by
applicable law, the Committee may delegate to one or more executive officers of
the Company the power to grant Options to Participants who are not Reporting
Persons or Covered Employees and all determinations under the Plan with respect
thereto, provided that the Committee shall fix the maximum amount of such
Options for all such Participants and a maximum for any one Participant.

3.   ELIGIBILITY.

     All employees and consultants of the Company or any Affiliate capable of
contributing significantly to the successful performance of the Company, other
than a person who has irrevocably elected not to be eligible, are eligible to be
Participants in the Plan. Incentive Stock Options may be granted only to persons
eligible to receive such Options under the Code. The Committee, in its sole
discretion, shall determine from the group of eligible persons whether an
individual shall be a Participant under the Plan.

4.   STOCK AVAILABLE FOR GRANT.

     (a)  AMOUNT. Subject to adjustment under subsection (b), Options may be
granted under the Plan for a maximum of 21,364,320 shares of Common Stock. If
any Options (including any Options under the Prior Plan) expire or are
terminated unexercised or are forfeited or settled in a manner that results in
fewer shares outstanding than were granted, the shares subject to such Options,
to the extent of such expiration, termination, forfeiture or decrease, shall
again be available for grant under the Plan. Common Stock issued through the
assumption or substitution of outstanding grants from an acquired company shall
not reduce the shares available for Option grants under the Plan. Shares issued
under the Plan may consist of authorized but unissued shares or treasury shares.

     (b)  ADJUSTMENT. In the event that the Committee determines that any stock
dividend, extraordinary cash dividend, re-capitalization, reorganization,
merger, consolidation,



split-up, spin-off, combination, exchange of shares or other transaction affects
the Common Stock such that an adjustment is required in order to preserve the
benefits intended to be provided by the Plan, then the Committee (subject in the
case of Incentive Stock Options to any limitation required under the Code) shall
equitably adjust any or all of (i) the number and kind of shares in respect of
which Option grants may be made under the Plan, (ii) the number and kind of
shares subject to outstanding Options and (iii) the exercise price with respect
to any of the foregoing, provided that the number of shares subject to any
Option grant shall always be a whole number, and if considered appropriate, the
Committee may make provision for a cash payment with respect to an outstanding
Option. No adjustment to decrease the exercise price of outstanding stock
options granted under the plan with respect to a re-pricing program will be made
without shareholder approval.

     (c)  LIMIT ON INDIVIDUAL GRANTS. Subject to adjustment under subsection
(b), the maximum number of shares subject to Options that may be granted to any
Participant in the aggregate in any calendar year shall not exceed 1,000,000
shares of Common Stock.

5.   GENERAL PROVISIONS.

     (a)  GRANT OF OPTIONS. Subject to the provisions of the Plan, the Committee
may grant Options to purchase shares of Common Stock (i) complying with the
requirements of Section 422 of the Code or any successor provision and any
regulations thereunder ("Incentive Stock Options") and (ii) not intended to
comply with such requirements ("Nonstatutory Stock Options"). The Committee
shall determine the number of shares subject to each Option and the exercise
price therefor, which shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of Grant, provided that a Nonstatutory Stock Option
granted to a new employee or consultant in connection with the hiring of such
person may have a lower exercise price so long as it is not less than 100% of
Fair Market Value on the date the person accepts the Company's offer of
employment or the date employment commences, whichever is lower. No Options may
be granted hereunder more than ten years after the effective date of the Plan.

     (b)  TERMS AND CONDITIONS. Each Option shall be exercisable at such times
and subject to terms and conditions as the Committee may specify in the
applicable grant or thereafter. The Committee may impose such conditions with
respect to the exercise of Options, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.

     (c)  PAYMENT. No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the exercise price therefor is received by the
Company. Such payment may be made in whole or in part in cash or, to the extent
permitted by the Committee at or after the grant of the Option, by delivery of a
note or other commitment satisfactory to the Committee or shares of Common Stock
owned by the optionee (which shares must be owned for at least six months)
valued at their Fair Market Value on the date of delivery, or such other lawful
consideration, including a payment commitment of a financial or brokerage
institution, as the Committee may determine.

     (d)  DOCUMENTATION. Options granted under the Plan shall be evidenced by a
writing delivered to the Participant or agreement executed by the Participant
specifying the terms and conditions thereof and containing such other terms and
conditions not inconsistent with the provisions of the Plan as the Committee
considers necessary or advisable to achieve the purposes of the Plan or to
comply with applicable tax and regulatory laws and accounting principles.

     (e)  COMMITTEE DISCRETION. Each Option grant may be made alone, in addition
to or in relation to any other Option grant. The terms of each Option grant need
not be identical, and the Committee need not treat Participants uniformly.
Except as otherwise provided by the Plan or



a particular Option grant, any determination with respect to an Option grant may
be made by the Committee at the time of grant or at any time thereafter.

     (f)  DIVIDENDS AND CASH AWARDS. In the discretion of the Committee, any
Option grant under the Plan may provide the Participant with (i) dividends or
dividend equivalents payable (in cash or in the form of Options under the Plan)
currently or deferred with or without interest and (ii) cash payments in lieu of
or in addition to an Option grant.

     (g)  TERMINATION OF SERVICE. The Committee shall determine the effect on an
Option of the disability, death, retirement or other termination of service of a
Participant and the extent to which, and the period during which, the
Participant's legal representative, guardian or Designated Beneficiary may
exercise rights thereunder.

     (h)  CHANGE IN CONTROL. In order to preserve a Participant's rights under
an Option in the event of a change in control of the Company (as defined by the
Committee), the Committee in its discretion may, at the time an Option is
granted or at any time thereafter, take one or more of the following actions:
(i) provide for the acceleration of any time period relating to the exercise of
the Options, (ii) provide for payment to the Participant of cash or other
property with a Fair Market Value equal to the amount that would have been
received upon the exercise of the Options had the Options been exercised upon
the change in control, (iii) adjust the terms of the Options in a manner
determined by the Committee to reflect the change in control, (iv) cause the
Options to be assumed, or new rights substituted therefor, by another entity, or
(v) make such other provision as the Committee may consider equitable to
Participants and in the best interests of the Company.

     (i)  TRANSFERABILITY. In the discretion of the Committee, any Options may
be made transferable upon such terms and conditions and to such extent as the
Committee determines, provided that Incentive Stock Options may be transferable
only to the extent permitted by the Code. The Committee may in its discretion
waive any restriction on transferability.

     (j)  WITHHOLDING TAXES. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Options under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind due to the Participant hereunder or otherwise. In the Committee's
discretion, the minimum tax obligations required by law to be withheld in
respect of Options may be paid in whole or in part in shares of Common Stock,
including shares retained from the Options creating the tax obligation, valued
at their Fair Market Value on the date of retention or delivery.

     (k)  FOREIGN NATIONALS. Options may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or to comply with
applicable laws.

     (l)  AMENDMENTS. The Committee may amend, modify or terminate any
outstanding Option, including substituting therefor another Option of the same
or a different type, changing the date of exercise or realization and converting
an Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required (a) if such action would
terminate, or reduce the number of shares issuable under an Option, unless any
time period relating to the exercise of such Option or the eliminated portion,
as the case may be, is accelerated before such termination or reduction, in
which case the Committee may provide for the Participant to receive cash or
other property equal to the net value that would be received upon exercise of
the terminated Option or the eliminated portion, as the case may be, and (b) in
any other case, unless the Committee determines that the action, taking into
account any related action, would not materially and adversely affect the
Participant. No adjustment to



decrease the exercise price of outstanding stock options granted under the plan
with respect to a re-pricing program will be made without shareholder approval.

6.   CERTAIN DEFINITIONS.

     "Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total voting power or has a significant financial
interest as determined by the Committee.

     "Board" means the Board of Directors of the Company.

     "Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor law.

     "Committee" means one or more committees each comprised of not less than
two members of the Board appointed by the Board to administer the Plan or a
specified portion thereof. Unless otherwise determined by the Board, if a
Committee is authorized to grant Options to a Reporting Person or a Covered
Employee, each member shall be a "non-employee director" within the meaning of
Rule 16b-3 under the Exchange Act or an "outside director" within the meaning of
Section 162(m) of the Code, respectively.

     "Common Stock" or "Stock" means the Common Stock, $.01 par value, of the
Company.

     "Company" means Genzyme Corporation.

     "Covered Employee" means a "covered employee" within the meaning of Section
162(m) of the code.

     "Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, "Designated Beneficiary"
means the Participant's estate.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, or any successor law.

     "Fair Market Value" means, with respect to Common Stock or any other
property, the Fair Market Value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.

     "Participant" means a person selected by the Committee to receive an Option
Grant under the Plan.

     "Reporting Person" means a person subject to Section 16 of the Exchange
Act.

7.   MISCELLANEOUS.

     (a)  RIGHTS LIMITED. Any Option grant made under the Plan shall be made in
the sole discretion of the Committee, or its delegate as appointed in accordance
with the Plan, and no prior Option grant shall entitle a person to any future
Option grant. In no event shall the Plan, or any Option grant made under the
Plan, form a part of an employee's or consultant's contract of employment or
service, if any. Neither the Plan, nor any Option grant made under the Plan,
shall confer upon any employee or consultant of the Company or its Affiliate any
right with respect to the continuance of his or her employment by, or other
service with, the Company or its Affiliate, nor shall they limit the rights of
the Company or its Affiliate to terminate the employee or consultant or
otherwise change the terms of service. The loss of existing or potential profit
in an



Option grant shall not constitute an element of damages in the event of
termination of employment or service for any reason, even if the termination is
in violation of an obligation of the Company or its Affiliate to the
Participant.

     (b)  NO RIGHTS AS SHAREHOLDER. Subject to the provisions of the applicable
Option grant, no Participant or Designated Beneficiary shall have any rights as
a shareholder with respect to any shares of Common Stock to be issued under the
Plan until he or she becomes the holder thereof.

     (c)  EFFECTIVE DATE. The Plan shall be effective on the date it is approved
by the shareholders.

     (d)  AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, subject to such shareholder approval as the
Board determines to be necessary or advisable to comply with any tax or
regulatory requirement.

     (e)  GOVERNING LAW. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.

EX-10.17.1

                                                                 Exhibit 10.17.1


                                                     GENZYME CORPORATION

NOTICE OF GRANT OF STOCK OPTIONS                     ID: 06-1047163
AND OPTION AGREEMENT                                 500 Kendall Street
                                                     Cambridge, MA 02142



 OPTIONEE NAME                                       OPTION NUMBER:
 OPTIONEE ADDRESS                                    PLAN:
                                                     ID:



Effective _________, you have been granted a(n) Incentive Stock Option to buy
_____ shares of GENZYME CORPORATION (the Company) stock at $_______ per share.

The total option price of the shares granted is $_________.

Shares in each period will become fully vested on the date shown.

    Shares               Vest Type              Full Vest           Expiration



                      MAINTAIN THIS COPY FOR YOUR RECORDS.



These options are granted under and governed by the terms and conditions of the
Company's Stock Option plan as amended and the Option Agreement, all of which
are attached and made a part of this document.


                                                                          Date:
                                                                          Time:




                 GENZYME CORPORATION 2001 EQUITY INCENTIVE PLAN
                               OFFICER (TIER I/II)
                   INCENTIVE STOCK OPTION TERMS AND CONDITIONS


         1. PLAN INCORPORATED BY REFERENCE. THIS OPTION IS ISSUED PURSUANT TO
THE TERMS OF THE PLAN AND MAY BE AMENDED AS PROVIDED IN THE PLAN. CAPITALIZED
TERMS USED AND NOT OTHERWISE DEFINED IN THIS CERTIFICATE HAVE THE MEANINGS GIVEN
TO THEM IN THE PLAN. THIS CERTIFICATE DOES NOT SET FORTH ALL OF THE TERMS AND
CONDITIONS OF THE PLAN, WHICH ARE INCORPORATED HEREIN BY REFERENCE. THE
COMMITTEE ADMINISTERS THE PLAN AND ITS DETERMINATIONS REGARDING THE OPERATION OF
THE PLAN ARE FINAL AND BINDING. COPIES OF THE PLAN MAY BE OBTAINED UPON WRITTEN
REQUEST WITHOUT CHARGE FROM THE SHAREHOLDER RELATIONS DEPARTMENT OF THE COMPANY.

         2. OPTION PRICE. THE PRICE TO BE PAID FOR EACH SHARE OF COMMON STOCK
ISSUED UPON EXERCISE OF THE WHOLE OR ANY PART OF THIS OPTION IS THE OPTION PRICE
SET FORTH ON THE FACE OF THIS CERTIFICATE (THE "OPTION PRICE").

         3. EXERCISABILITY SCHEDULE. THIS OPTION MAY BE EXERCISED AT ANY TIME
AND FROM TIME TO TIME UP TO THE NUMBER OF SHARES AND IN ACCORDANCE WITH THE
EXERCISABILITY SCHEDULE SET FORTH ON THE FACE OF THIS CERTIFICATE, BUT ONLY FOR
THE PURCHASE OF WHOLE SHARES. THIS OPTION MAY NOT BE EXERCISED AS TO ANY SHARES
AFTER THE DATE OF EXPIRATION SET FORTH ON THE FACE OF THIS CERTIFICATE (THE
"EXPIRATION DATE").

         4. METHOD OF EXERCISE. TO EXERCISE THIS OPTION, THE PARTICIPANT SHALL
DELIVER WRITTEN NOTICE OF EXERCISE TO THE COMPANY SPECIFYING THE NUMBER OF
SHARES WITH RESPECT TO WHICH THE OPTION IS BEING EXERCISED ACCOMPANIED BY
PAYMENT OF THE OPTION PRICE FOR SUCH SHARES IN CASH, BY CERTIFIED CHECK OR IN
SUCH OTHER FORM, INCLUDING SHARES OF COMMON STOCK OF THE COMPANY VALUED AT THEIR
FAIR MARKET VALUE ON THE DATE OF DELIVERY, AS THE COMMITTEE MAY APPROVE.
PROMPTLY FOLLOWING SUCH NOTICE, THE COMPANY WILL DELIVER TO THE PARTICIPANT A
CERTIFICATE REPRESENTING THE NUMBER OF SHARES WITH RESPECT TO WHICH THE OPTION
IS BEING EXERCISED.

         5. RECAPITALIZATION, MERGERS, ETC. IN THE EVENT OF A CONSOLIDATION OR
MERGER OF THE COMPANY WITH ANOTHER ENTITY, THE SALE OR EXCHANGE OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY OR A REORGANIZATION OR
LIQUIDATION OF THE COMPANY, THE COMMITTEE MAY UPON WRITTEN NOTICE TO THE
PARTICIPANT PROVIDE THAT THIS OPTION SHALL TERMINATE ON A DATE NOT LESS THAN 20
DAYS AFTER THE DATE OF SUCH NOTICE UNLESS THERETOFORE EXERCISED. IN CONNECTION
WITH SUCH NOTICE, THE COMMITTEE MAY IN ITS DISCRETION ACCELERATE OR WAIVE ANY
DEFERRED EXERCISE PERIOD. [ NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A
CHANGE IN CONTROL OF THE COMPANY (AS DEFINED IN A VOTE OF THE COMPENSATION
COMMITTEE ADOPTED MAY 29, 2002), THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL
SHARES WITHOUT REGARD TO ANY DEFERRED EXERCISABILITY SCHEDULE OR DEFERRED
EXERCISE PERIOD.](1)

         6. OPTION NOT TRANSFERABLE. THIS OPTION IS NOT TRANSFERABLE BY THE
PARTICIPANT OTHERWISE THAN BY WILL OR THE LAWS OF DESCENT AND DISTRIBUTION, AND
IS EXERCISABLE, DURING THE PARTICIPANT'S LIFETIME, ONLY BY THE PARTICIPANT. THE
NAMING OF A DESIGNATED BENEFICIARY DOES NOT CONSTITUTE A TRANSFER.

         7. EXERCISE OF OPTION AFTER TERMINATION OF EMPLOYMENT. IF THE
PARTICIPANT'S EMPLOYMENT WITH (a) THE COMPANY, (b) AN AFFILIATE, OR (c) A
CORPORATION (OR PARENT OR SUBSIDIARY CORPORATION OF SUCH CORPORATION) ISSUING OR
ASSUMING A STOCK OPTION IN A TRANSACTION TO WHICH SECTION 424(a) OF THE CODE
APPLIES, IS TERMINATED FOR ANY REASON OTHER THAN BY DISABILITY (WITHIN THE
MEANING OF SECTION 22(e)(3) OF THE CODE), DEATH OR RETIREMENT, THE PARTICIPANT
MAY EXERCISE THE RIGHTS WHICH WERE AVAILABLE TO THE PARTICIPANT AT THE TIME OF
SUCH TERMINATION ONLY WITHIN THREE MONTHS FROM THE DATE OF TERMINATION. IF
PARTICIPANT'S EMPLOYMENT IS TERMINATED AS A RESULT OF DISABILITY, THIS OPTION
SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO ANY DEFERRED
EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN TWELVE MONTHS FROM THE
DATE OF TERMINATION. IF PARTICIPANT'S EMPLOYMENT IS TERMINATED AS A RESULT OF
RETIREMENT (WHICH IS DEFINED AS A MINIMUM OF AGE 60 PLUS A MINIMUM OF FIVE YEARS
OF SERVICE), THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT
REGARD TO ANY DEFERRED EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN
THREE YEARS FROM THE DATE OF TERMINATION. UPON THE DEATH OF THE PARTICIPANT,
THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO ANY
DEFERRED EXERCISE PERIOD, AND HIS OR HER DESIGNATED BENEFICIARY SHALL HAVE THE
RIGHT, AT ANY TIME WITHIN TWELVE MONTHS AFTER THE DATE OF DEATH, TO EXERCISE IN
WHOLE OR IN PART ANY RIGHTS THAT WERE AVAILABLE TO THE PARTICIPANT AT THE TIME
OF DEATH. NOTWITHSTANDING THE FOREGOING, NO RIGHTS UNDER THIS OPTION MAY BE
EXERCISED AFTER THE EXPIRATION DATE.

         8. COMPLIANCE WITH SECURITIES LAWS. IT SHALL BE A CONDITION TO THE
PARTICIPANT'S RIGHT TO PURCHASE SHARES OF COMMON STOCK HEREUNDER THAT THE
COMPANY MAY, IN ITS DISCRETION, REQUIRE (a) THAT THE SHARES OF COMMON STOCK
RESERVED FOR ISSUE UPON THE EXERCISE OF THIS OPTION SHALL HAVE BEEN DULY LISTED,
UPON OFFICIAL NOTICE OF ISSUANCE, UPON ANY NATIONAL SECURITIES EXCHANGE OR
AUTOMATED QUOTATION SYSTEM ON WHICH THE COMPANY'S COMMON STOCK MAY THEN BE
LISTED OR QUOTED, (b) THAT EITHER (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 WITH RESPECT TO THE SHARES SHALL BE IN EFFECT, OR (ii) IN
THE OPINION OF COUNSEL FOR THE COMPANY, THE PROPOSED PURCHASE SHALL BE EXEMPT
FROM REGISTRATION UNDER THAT ACT AND THE PARTICIPANT SHALL HAVE MADE SUCH
UNDERTAKINGS AND AGREEMENTS WITH THE COMPANY AS THE COMPANY MAY REASONABLY
REQUIRE, AND (c) THAT SUCH OTHER STEPS, IF ANY, AS COUNSEL FOR THE COMPANY SHALL
CONSIDER NECESSARY TO COMPLY WITH ANY LAW APPLICABLE TO THE ISSUE OF SUCH SHARES
BY THE COMPANY SHALL HAVE BEEN TAKEN BY THE COMPANY OR THE PARTICIPANT, OR BOTH.
THE CERTIFICATES REPRESENTING THE SHARES PURCHASED UNDER THIS OPTION MAY CONTAIN
SUCH LEGENDS AS COUNSEL FOR THE COMPANY SHALL CONSIDER NECESSARY TO COMPLY WITH
ANY APPLICABLE LAW.

         9. PAYMENT OF TAXES. THE PARTICIPANT SHALL PAY TO THE COMPANY, OR MAKE
PROVISION SATISFACTORY TO THE COMPANY FOR PAYMENT OF ANY TAXES REQUIRED BY LAW
TO BE WITHHELD WITH RESPECT TO THE EXERCISE OF THIS OPTION. THE COMMITTEE MAY,
IN ITS DISCRETION, REQUIRE ANY OTHER FEDERAL OR STATE TAXES IMPOSED ON THE SALE
OF THE SHARES TO BE PAID BY THE PARTICIPANT. IN THE COMMITTEE'S DISCRETION, SUCH
TAX OBLIGATIONS MAY BE PAID IN WHOLE OR IN PART IN SHARES OF COMMON STOCK,
INCLUDING SHARES RETAINED FROM THE EXERCISE OF THIS OPTION, VALUED AT THEIR FAIR
MARKET VALUE ON THE DATE OF DELIVERY. THE COMPANY AND ITS AFFILIATES MAY, TO THE
EXTENT PERMITTED BY LAW, DEDUCT ANY SUCH TAX OBLIGATIONS FROM ANY PAYMENT OF ANY
KIND OTHERWISE DUE TO THE PARTICIPANT.

         10. NOTICE OF SALE OF SHARES REQUIRED. THE PARTICIPANT AGREES TO NOTIFY
THE COMPANY IN WRITING WITHIN 30 DAYS OF THE DISPOSITION OF ANY SHARES PURCHASED
UPON EXERCISE OF THIS OPTION IF SUCH DISPOSITION OCCURS WITHIN TWO YEARS OF THE
DATE OF THE GRANT OF THIS OPTION OR WITHIN ONE YEAR AFTER SUCH PURCHASE.

         11. RIGHTS LIMITED. THE COMMITTEE, IN ITS SOLE DISCRETION, SHALL
DETERMINE FROM THE GROUP OF ELIGIBLE PERSONS WHETHER AN INDIVIDUAL SHALL BE A
PARTICIPANT UNDER THE PLAN. ANY OPTION GRANT MADE UNDER THE PLAN SHALL BE MADE
IN THE SOLE DISCRETION OF THE COMMITTEE, OR ITS DELEGATE AS APPOINTED IN
ACCORDANCE WITH THE PLAN, AND NO PRIOR OPTION GRANT SHALL ENTITLE A PERSON TO
ANY FUTURE AWARD. IN NO EVENT SHALL THE PLAN, OR ANY OPTION GRANT MADE UNDER THE
PLAN, FORM A PART OF AN EMPLOYEE'S OR CONSULTANT'S CONTRACT OF EMPLOYMENT OR
SERVICE, IF ANY. NEITHER THE PLAN, NOR ANY OPTION GRANT MADE UNDER THE PLAN,
SHALL CONFER UPON ANY EMPLOYEE OR CONSULTANT OF THE COMPANY OR ITS AFFILIATE ANY
RIGHT WITH RESPECT TO THE CONTINUANCE OF HIS OR HER EMPLOYMENT BY, OR OTHER
SERVICE WITH, THE COMPANY OR ITS AFFILIATE, NOR SHALL THEY LIMIT THE RIGHTS OF
THE COMPANY OR ITS AFFILIATE TO TERMINATE THE EMPLOYEE OR CONSULTANT OR
OTHERWISE CHANGE THE TERMS OF SERVICE. NO PARTICIPANT OR DESIGNATED BENEFICIARY
SHALL HAVE ANY RIGHTS AS A SHAREHOLDER WITH RESPECT TO ANY SHARES OF COMMON
STOCK TO BE ISSUED UNDER THE PLAN OR ANY OPTION UNTIL HE OR SHE BECOMES THE
HOLDER THEREOF. THE LOSS OF EXISTING OR POTENTIAL PROFIT IN AN OPTION GRANT
SHALL NOT CONSTITUTE AN ELEMENT OF DAMAGES IN THE EVENT OF TERMINATION OF
EMPLOYMENT OR SERVICE FOR ANY REASON, EVEN IF THE TERMINATION IS IN VIOLATION OF
AN OBLIGATION OF THE COMPANY OR ITS AFFILIATE TO THE PARTICIPANT.

ACKNOWLEDGED AND AGREED:


- ------------------------------------
Participant Signature


- ------------------------------------
Participant Name (Print)


- ------------------------------------
Date



- ------------
(1) The exercisability of options held by Henri A. Termeer and Peter Wirth upon
a change in control of the Company is governed by the terms of their respective
Employment Agreements. This sentence therefore is not included in the form of
Terms and Conditions for stock option grants to Mr. Termeer and Mr. Wirth.

EX-10.17.2

                                                               Exhibit 10.17.2



                                                   GENZYME CORPORATION

NOTICE OF GRANT OF STOCK OPTIONS                   ID: 06-1047163
AND OPTION AGREEMENT                               500 Kendall Street
                                                   Cambridge, MA 02142


 OPTIONEE NAME                                     OPTION NUMBER:
 OPTIONEE ADDRESS                                  PLAN:
                                                   ID:


Effective _________, you have been granted a(n) Non-Qualified Stock Option to
buy _____ shares of GENZYME CORPORATION (the Company) stock at $_______ per
share.

The total option price of the shares granted is $_________.

Shares in each period will become fully vested on the date shown.

   Shares               Vest Type              Full Vest           Expiration



                      MAINTAIN THIS COPY FOR YOUR RECORDS.



These options are granted under and governed by the terms and conditions of the
Company's Stock Option plan as amended and the Option Agreement, all of which
are attached and made a part of this document.


                                                                          Date:
                                                                          Time:




                 GENZYME CORPORATION 2001 EQUITY INCENTIVE PLAN
                               OFFICER (TIER I/II)
                 NONSTATUTORY STOCK OPTION TERMS AND CONDITIONS

         1. PLAN INCORPORATED BY REFERENCE. THIS OPTION IS ISSUED PURSUANT TO
THE TERMS OF THE PLAN AND MAY BE AMENDED AS PROVIDED IN THE PLAN. CAPITALIZED
TERMS USED AND NOT OTHERWISE DEFINED IN THIS CERTIFICATE HAVE THE MEANINGS GIVEN
TO THEM IN THE PLAN. THIS CERTIFICATE DOES NOT SET FORTH ALL OF THE TERMS AND
CONDITIONS OF THE PLAN, WHICH ARE INCORPORATED HEREIN BY REFERENCE. THE
COMMITTEE ADMINISTERS THE PLAN AND ITS DETERMINATIONS REGARDING THE OPERATION OF
THE PLAN ARE FINAL AND BINDING. COPIES OF THE PLAN MAY BE OBTAINED UPON WRITTEN
REQUEST WITHOUT CHARGE FROM THE SHAREHOLDER RELATIONS DEPARTMENT OF THE COMPANY.

         2. OPTION PRICE. THE PRICE TO BE PAID FOR EACH SHARE OF COMMON STOCK
ISSUED UPON EXERCISE OF THE WHOLE OR ANY PART OF THIS OPTION IS THE OPTION PRICE
SET FORTH ON THE FACE OF THIS CERTIFICATE (THE "OPTION PRICE").

         3. EXERCISABILITY SCHEDULE. THIS OPTION MAY BE EXERCISED AT ANY TIME
AND FROM TIME TO TIME UP TO THE NUMBER OF SHARES AND IN ACCORDANCE WITH THE
EXERCISABILITY SCHEDULE SET FORTH ON THE FACE OF THIS CERTIFICATE, BUT ONLY FOR
THE PURCHASE OF WHOLE SHARES. THIS OPTION MAY NOT BE EXERCISED AS TO ANY SHARES
AFTER THE DATE OF EXPIRATION SET FORTH ON THE FACE OF THIS CERTIFICATE (THE
"EXPIRATION DATE").

         4. METHOD OF EXERCISE. TO EXERCISE THIS OPTION, THE PARTICIPANT SHALL
DELIVER WRITTEN NOTICE OF EXERCISE TO THE COMPANY SPECIFYING THE NUMBER OF
SHARES WITH RESPECT TO WHICH THE OPTION IS BEING EXERCISED ACCOMPANIED BY
PAYMENT OF THE OPTION PRICE FOR SUCH SHARES IN CASH, BY CERTIFIED CHECK OR IN
SUCH OTHER FORM, INCLUDING SHARES OF COMMON STOCK OF THE COMPANY VALUED AT THEIR
FAIR MARKET VALUE ON THE DATE OF DELIVERY, AS THE COMMITTEE MAY APPROVE.
PROMPTLY FOLLOWING SUCH NOTICE, THE COMPANY WILL DELIVER TO THE PARTICIPANT A
CERTIFICATE REPRESENTING THE NUMBER OF SHARES WITH RESPECT TO WHICH THE OPTION
IS BEING EXERCISED.

         5. RECAPITALIZATION, MERGERS, ETC. IN THE EVENT OF A CONSOLIDATION OR
MERGER OF THE COMPANY WITH ANOTHER ENTITY, THE SALE OR EXCHANGE OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF THE COMPANY OR A REORGANIZATION OR
LIQUIDATION OF THE COMPANY, THE COMMITTEE MAY UPON WRITTEN NOTICE TO THE
PARTICIPANT PROVIDE THAT THIS OPTION SHALL TERMINATE ON A DATE NOT LESS THAN 20
DAYS AFTER THE DATE OF SUCH NOTICE UNLESS THERETOFORE EXERCISED. IN CONNECTION
WITH SUCH NOTICE, THE COMMITTEE MAY IN ITS DISCRETION ACCELERATE OR WAIVE ANY
DEFERRED EXERCISE PERIOD. [NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A
CHANGE IN CONTROL OF THE COMPANY (AS DEFINED IN A VOTE OF THE COMPENSATION
COMMITTEE ADOPTED MAY 29, 2002), THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL
SHARES WITHOUT REGARD TO ANY DEFERRED EXERCISABILITY SCHEDULE OR DEFERRED
EXERCISE PERIOD.](1)

         6. TRANSFERABILITY. THIS OPTION MAY BE TRANSFERRED WITHOUT
CONSIDERATION (OR FOR SUCH CONSIDERATION AS THE COMMITTEE MAY FROM TIME TO TIME
DEEM APPROPRIATE) BY THE HOLDER THEREOF TO ANY FAMILY MEMBER; PROVIDED, HOWEVER,
THAT NO SUBSEQUENT TRANSFER OF SUCH OPTION SHALL BE PERMITTED EXCEPT FOR
TRANSFERS: (i) TO A FAMILY MEMBER; (ii) BACK TO THE PARTICIPANT; OR (iii)
PURSUANT TO THE APPLICABLE LAWS OF DESCENT AND DISTRIBUTION. FOR THIS PURPOSE,
"FAMILY MEMBER" SHALL MEAN (i) ANY CHILD, STEPCHILD, GRANDCHILD, PARENT,
STEPPARENT, GRANDPARENT, SPOUSE, FORMER SPOUSE, SIBLING, NIECE, NEPHEW,
MOTHER-IN-LAW, FATHER-IN-LAW, SON-IN-LAW, DAUGHTER-IN-LAW, BROTHER-IN-LAW OR
SISTER-IN-LAW, INCLUDING ANY ADOPTIVE RELATIONSHIPS, AND ANY OTHER PERSON
SHARING THE PARTICIPANT'S HOUSEHOLD (OTHER THAN AS A TENANT OR EMPLOYEE); (ii)
ANY TRUST IN WHICH ANY OF THE PERSONS DESCRIBED IN CLAUSE (i) HOLDS A GREATER
THAN 50% BENEFICIAL INTEREST; (iii) ANY FOUNDATION IN WHICH ANY OF THE PERSONS
DESCRIBED IN CLAUSE (i) OR THE PARTICIPANT CONTROLS THE MANAGEMENT OF ASSETS; OR
(iv) ANY OTHER ENTITY IN WHICH ANY OF THE PERSONS DESCRIBED IN CLAUSE (i) OR THE
PARTICIPANT HOLDS MORE THAN 50% OF THE VOTING INTERESTS.

         7. EXERCISE OF OPTION AFTER TERMINATION OF EMPLOYMENT. IF THE
PARTICIPANT'S STATUS AS AN EMPLOYEE OR CONSULTANT OF (a) THE COMPANY, (b) AN
AFFILIATE, OR (v) A CORPORATION (OR PARENT OR SUBSIDIARY CORPORATION OF SUCH
CORPORATION) ISSUING OR ASSUMING A STOCK OPTION IN A TRANSACTION TO WHICH
SECTION 424(a) OF THE CODE APPLIES, IS TERMINATED FOR ANY REASON OTHER THAN BY
DISABILITY (WITHIN THE MEANING OF SECTION 22(e)(3) OF THE CODE), DEATH OR
RETIREMENT, THE PARTICIPANT MAY EXERCISE THE RIGHTS WHICH WERE AVAILABLE TO THE
PARTICIPANT AT THE TIME OF SUCH TERMINATION ONLY WITHIN THREE MONTHS FROM THE
DATE OF TERMINATION. IF SUCH STATUS IS TERMINATED AS A RESULT OF DISABILITY,
THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO ANY
DEFERRED EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN TWELVE MONTHS
FROM THE DATE OF TERMINATION. IF SUCH STATUS IS TERMINATED AS A RESULT OF
RETIREMENT (WHICH IS DEFINED AS A MINIMUM OF AGE 60 PLUS A MINIMUM OF FIVE YEARS
OF SERVICE), THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT
REGARD TO ANY DEFERRED EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN
THREE YEARS FROM THE DATE OF TERMINATION. UPON THE DEATH OF THE PARTICIPANT,
THIS OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO ANY
DEFERRED EXERCISE PERIOD, AND HIS OR HER DESIGNATED BENEFICIARY SHALL HAVE THE
RIGHT, AT ANY TIME WITHIN TWELVE MONTHS AFTER THE DATE OF DEATH, TO EXERCISE IN
WHOLE OR IN PART ANY RIGHTS THAT WERE AVAILABLE TO THE PARTICIPANT AT THE TIME
OF DEATH. NOTWITHSTANDING THE FOREGOING, NO RIGHTS UNDER THIS OPTION MAY BE
EXERCISED AFTER THE EXPIRATION DATE.

         8. COMPLIANCE WITH SECURITIES LAWS. IT SHALL BE A CONDITION TO THE
PARTICIPANT'S RIGHT TO PURCHASE SHARES OF COMMON STOCK HEREUNDER THAT THE
COMPANY MAY, IN ITS DISCRETION, REQUIRE (A) THAT THE SHARES OF COMMON STOCK
RESERVED FOR ISSUE UPON THE EXERCISE OF THIS OPTION SHALL HAVE BEEN DULY LISTED,
UPON OFFICIAL NOTICE OF ISSUANCE, UPON ANY NATIONAL SECURITIES EXCHANGE OR
AUTOMATED QUOTATION SYSTEM ON WHICH THE COMPANY'S COMMON STOCK MAY THEN BE
LISTED OR QUOTED, (b) THAT EITHER (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 WITH RESPECT TO THE SHARES SHALL BE IN EFFECT, OR (ii) IN
THE OPINION OF COUNSEL FOR THE COMPANY, THE PROPOSED PURCHASE SHALL BE EXEMPT
FROM REGISTRATION UNDER THAT ACT AND THE PARTICIPANT SHALL HAVE MADE SUCH
UNDERTAKINGS AND AGREEMENTS WITH THE COMPANY AS THE COMPANY MAY REASONABLY
REQUIRE, AND (C) THAT SUCH OTHER STEPS, IF ANY, AS COUNSEL FOR THE COMPANY SHALL
CONSIDER NECESSARY TO COMPLY WITH ANY LAW APPLICABLE TO THE ISSUE OF SUCH SHARES
BY THE COMPANY SHALL HAVE BEEN TAKEN BY THE COMPANY OR THE PARTICIPANT, OR BOTH.
THE CERTIFICATES REPRESENTING THE SHARES PURCHASED UNDER THIS OPTION MAY CONTAIN
SUCH LEGENDS AS COUNSEL FOR THE COMPANY SHALL CONSIDER NECESSARY TO COMPLY WITH
ANY APPLICABLE LAW.

         9. PAYMENT OF TAXES. THE PARTICIPANT SHALL PAY TO THE COMPANY, OR MAKE
PROVISION SATISFACTORY TO THE COMPANY FOR PAYMENT OF ANY TAXES REQUIRED BY LAW
TO BE WITHHELD WITH RESPECT TO THE EXERCISE OF THIS OPTION. THE COMMITTEE MAY,
IN ITS DISCRETION, REQUIRE ANY OTHER FEDERAL OR STATE TAXES IMPOSED ON THE SALE
OF THE SHARES TO BE PAID BY THE PARTICIPANT. IN THE COMMITTEE'S DISCRETION, SUCH
TAX OBLIGATIONS MAY BE PAID IN WHOLE OR IN PART IN SHARES OF COMMON STOCK,
INCLUDING SHARES RETAINED FROM THE EXERCISE OF THIS OPTION, VALUED AT THEIR FAIR
MARKET VALUE ON THE DATE OF DELIVERY. THE COMPANY AND ITS AFFILIATES MAY, TO THE
EXTENT PERMITTED BY LAW, DEDUCT ANY SUCH TAX OBLIGATIONS FROM ANY PAYMENT OF ANY
KIND OTHERWISE DUE TO THE PARTICIPANT.

         10. RIGHTS LIMITED. THE COMMITTEE, IN ITS SOLE DISCRETION, SHALL
DETERMINE FROM THE GROUP OF ELIGIBLE PERSONS WHETHER AN INDIVIDUAL SHALL BE A
PARTICIPANT UNDER THE PLAN. ANY OPTION GRANT MADE UNDER THE PLAN SHALL BE MADE
IN THE SOLE DISCRETION OF THE COMMITTEE, OR ITS DELEGATE AS APPOINTED IN
ACCORDANCE WITH THE PLAN, AND NO PRIOR OPTION GRANT SHALL ENTITLE A PERSON TO
ANY FUTURE AWARD. IN NO EVENT SHALL THE PLAN, OR ANY OPTION GRANT MADE UNDER THE
PLAN, FORM A PART OF AN EMPLOYEE'S OR CONSULTANT'S CONTRACT OF EMPLOYMENT OR
SERVICE, IF ANY. NEITHER THE PLAN, NOR ANY OPTION GRANT MADE UNDER THE PLAN,
SHALL CONFER UPON ANY EMPLOYEE OR CONSULTANT OF THE COMPANY OR ITS AFFILIATE ANY
RIGHT WITH RESPECT TO THE CONTINUANCE OF HIS OR HER EMPLOYMENT BY, OR OTHER
SERVICE WITH, THE COMPANY OR ITS AFFILIATE, NOR SHALL THEY LIMIT THE RIGHTS OF
THE COMPANY OR ITS AFFILIATE TO TERMINATE THE EMPLOYEE OR CONSULTANT OR
OTHERWISE CHANGE THE TERMS OF SERVICE. NO PARTICIPANT OR DESIGNATED BENEFICIARY
SHALL HAVE ANY RIGHTS AS A SHAREHOLDER WITH RESPECT TO ANY SHARES OF COMMON
STOCK TO BE ISSUED UNDER THE PLAN OR ANY OPTION UNTIL HE OR SHE BECOMES THE
HOLDER THEREOF. THE LOSS OF EXISTING OR POTENTIAL PROFIT IN AN OPTION GRANT
SHALL NOT CONSTITUTE AN ELEMENT OF DAMAGES IN THE EVENT OF TERMINATION OF
EMPLOYMENT OR SERVICE FOR ANY REASON, EVEN IF THE TERMINATION IS IN VIOLATION OF
AN OBLIGATION OF THE COMPANY OR ITS AFFILIATE TO THE PARTICIPANT.

ACKNOWLEDGED AND AGREED:


- ------------------------------------
Participant Signature


- ------------------------------------
Participant Name (Print)


- ------------------------------------
Date



- ------------
(1) The exercisability of options held by Henri A. Termeer and Peter Wirth upon
a change in control of the Company is governed by the terms of their respective
Employment Agreements. This sentence therefore is not included in the form of
Terms and Conditions for stock option grants to Mr. Termeer and Mr. Wirth.

EX-10.18

                                                                   Exhibit 10.18

                               GENZYME CORPORATION
                           2004 EQUITY INCENTIVE PLAN

1.   PURPOSE

          The 2004 Equity Incentive Plan (the "Plan") has been established to
promote the interests of the Company and its shareholders by strengthening the
Company's ability to attract, motivate, and retain key employees and consultants
of the Company and its Affiliates upon whose judgment, initiative, and efforts
the financial success and growth of the business of the Company largely depend.
The Plan is intended to provide an additional incentive for such individuals
through stock ownership and other rights that promote and recognize the
financial success and growth of the Company and create value for shareholders.
Certain capitalized terms used herein and certain operating rules related
thereto are defined and set forth in Section 10 below.

          The Plan provides for the grant of Stock Options, including ISOs and
NSOs.

          The Plan shall become effective upon shareholder approval (the
"Effective Date") and unless sooner terminated, shall terminate ten years from
the Effective Date. After the Plan is terminated, no Stock Options may be
granted, but Stock Options previously granted shall remain outstanding in
accordance with their applicable terms and conditions and the Plan's terms and
conditions.

2.   ADMINISTRATION

          The Compensation Committee shall be the Administrator of the Plan
except as hereinafter provided. The Compensation Committee may delegate to one
or more of its members such of its duties, powers and responsibilities as it may
determine. To the extent determined by the Compensation Committee and permitted
by applicable law, the Compensation Committee may also delegate to one or more
executive officers of the Company the power to grant Stock Options to, or
allocate Stock Options among, Participants who are not Reporting Persons or
Covered Employees and to make such determinations under the Plan with respect
thereto as the Compensation Committee determines. The Compensation Committee may
also delegate to such Employees or other persons as it determines such
ministerial tasks as it deems appropriate. In the event of any delegation
described in this paragraph, the term "Administrator" shall include the person
or persons so delegated to the extent of such delegation.

          The Administrator has discretionary authority, subject only to the
express provisions of the Plan, to interpret the Plan; determine eligibility for
and grant Stock Options; select the Participants to receive Stock Options and
determine, modify or waive the terms and conditions of any Stock Option;
prescribe forms, rules and procedures; and otherwise do all things necessary to
carry out the purposes of the Plan. The terms of each Stock Option grant need
not be identical, and the Administrator need not treat Participants uniformly.
Except as otherwise provided by the Plan or a particular Stock Option, any
determination with respect to a Stock Option may be made by the Administrator at
the time of grant or at any time thereafter. In the case of any Stock Option
intended to be eligible for the performance-based compensation exception under
Section 162(m), the Administrator will exercise its discretion consistent with
qualifying the Stock Option for that exception. Determinations made by the
Administrator shall be final and binding upon Participants, the Company, and all
other interested parties.

     3.   STOCK AVAILABLE FOR GRANT; LIMITS

          (a) NUMBER OF SHARES. Subject to adjustment as provided under
Section 6, the maximum number of shares available for issuance to
Participants under the Plan shall be 6,800,000 shares of ISOs. Subject to
such overall maximum, up to 6,800,000 shares of Stock may be issued upon the
exercise of ISOs and up to 6,800,000 shares of Stock may be issued upon
exercise of NSOs. Stock delivered by the



Company under the Plan may be authorized but unissued Stock or previously issued
Stock acquired by the Company. No fractional shares of Stock will be delivered
under the Plan. To the extent consistent with the requirements of Section 422 of
the Code, and with other applicable legal requirements (including applicable
NASDAQ or stock exchange requirements), Stock issued under option grants of an
acquired company that are assumed in connection with the acquisition, or under
Stock Options issued in substitution for options of an acquired-company, shall
not reduce the number of shares available for issuance under the Plan.

          (b) SECTION 162(m) LIMITS. The maximum number of shares of Stock for
which Stock Options may be granted to any person in any calendar year will be
2,000,000. The foregoing provision will be construed in a manner consistent with
Section 162(m).

4.   ELIGIBILITY AND PARTICIPATION

          All employees and consultants of the Company or any Affiliate capable
of contributing significantly to the successful performance of the Company,
other than a person who has irrevocably elected not be eligible, are eligible to
be Participants in the Plan. Eligibility for ISOs is limited to employees of the
Company or of a "parent corporation" or "subsidiary corporation" of the Company
as those terms are defined in Section 424 of the Code. The Administrator, in its
sole discretion, shall determine from the group of eligible persons whether an
individual shall be a Participant under the Plan. Any grant made under the Plan
shall be made in the sole discretion of the Administrator and no prior grant
shall entitle a person to any future grant.

5.   RULES APPLICABLE TO STOCK OPTIONS

     (a) DOCUMENTATION. Each Stock Option granted under the Plan shall be
evidenced by a writing specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Administrator considers necessary or advisable to achieve the
purposes of the Plan or to comply with applicable tax and regulatory laws and
accounting principles.

     (b) TRANSFERABILITY. In the discretion of the Administrator, any Stock
Option may be made transferable upon such terms and conditions and to such
extent as the Administrator determines, provided that ISOs may not be
transferred other than by will or by the laws of descent and distribution. Any
non-transferable Stock Option requiring exercise, including any ISO, may be
exercised only by the Participant during the Participant's lifetime. The
Administrator may in its discretion, other than in the case of Stock Options
intended to continue to qualify as ISOs, waive any restriction on
transferability.

     (c) VESTING; EXERCISABILITY. The Administrator shall determine the time or
times at which a Stock Option will vest or become exercisable and the terms on
which a Stock Option will remain exercisable during or following termination of
Employment. Without limiting the foregoing, the Administrator may at any time
accelerate the vesting or exercisability of a Stock Option, regardless of any
adverse or potentially adverse tax consequences resulting from such
acceleration.

     (d) TAXES. The Participant shall pay to the Company, or make provision
satisfactory to the Administrator for payment of, any taxes required by law to
be withheld in respect of Stock Options granted under the Plan no later than the
date of the event creating the tax liability. The Company and its Affiliates
may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind due to the Participant hereunder or otherwise. In the
Administrator's discretion, the minimum tax obligations required by law to be
withheld in respect of Stock Options may be paid in whole or in part in shares
of Stock, including shares retained from the event creating the tax obligation,
valued at their Fair Market Value on the date of retention or delivery.



     (e) DIVIDEND EQUIVALENTS, ETC. The Administrator may provide for the
payment of amounts in lieu of cash dividends or other cash distributions with
respect to Stock subject to a Stock Option.

     (f) RIGHTS LIMITED. Nothing in the Plan will be construed as giving any
person the right to continued employment or service with the Company or its
Affiliates, or any rights as a shareholder except as to shares of Stock actually
issued under the Plan. In no event shall the Plan, or any grant made under the
Plan, form a part of an employee's or consultant's contract of employment or
service, if any. The loss of existing or potential profit in Stock Options will
not constitute an element of damages in the event of termination of employment
or service for any reason, even if the termination is in violation of an
obligation of the Company or Affiliate to the Participant.

     (g) NON-U.S. STOCK OPTIONS. Stock Options may be granted under the Plan to
any eligible person regardless of the jurisdiction in which he or she works or
resides. In order to comply with the laws in other countries in which the
Company operates, the Administrator, in its sole discretion, shall have the
power and authority to:

         (i) Establish one or more separate sub-plans or programs under the Plan
         for the grant of Stock Options to eligible persons in a specified
         jurisdiction or jurisdictions;

         (ii) Include in any such sub-plan or program such special rules as it
         determines to be necessary or advisable; and

         (iii) Take any action, before or after a Stock Option grant is made,
         that it deems advisable to obtain approval or comply with any necessary
         local government regulatory exemptions or approvals.

Notwithstanding the above, the Administrator may not take any actions hereunder,
and no Stock Options shall be granted, that would violate applicable law.

     (h) EXERCISE PRICE. The exercise price of a Stock Option will not be less
than 100% of the Fair Market Value of the Stock on the date of grant.
Notwithstanding the foregoing sentence, a NSO may be granted to a new employee
or consultant in connection with the hiring of such person at a lower exercise
price, provided that it is not less than the lower of (i) 100% of the Fair
Market Value on the date the person accepts the Company's offer of employment or
(ii) the date employment commences. Once granted, no Stock Option may be
repriced (as that term is used under applicable NASDAQ or stock exchange rules)
without shareholder approval.

     (i) TIME AND MANNER OF EXERCISE. Unless the Administrator expressly
provides otherwise, a Stock Option will not be deemed to have been exercised
until the Company receives a notice of exercise (in a form acceptable to the
Administrator) signed by the appropriate person and accompanied by payment of
the exercise price. If the Stock Option is exercised by any person other than
the Participant, the Administrator may require satisfactory evidence that the
person exercising the Stock Option has the right to do so. All Stock Options
granted pursuant to the Plan shall terminate if not exercised within ten years
of the date of grant, or such earlier date as the Administrator may determine.

     (j) PAYMENT. No shares shall be delivered pursuant to any exercise of a
Stock Option until payment in full of the exercise price therefore is received
by the Company. Such payment may be made in whole or in part in cash or, to the
extent permitted by the Administrator at or after the grant of the Stock Option,
in shares of Stock owned by the Participant (which shares must be owned for at
least six months) valued at their Fair Market Value on the date of delivery, or
such other lawful consideration, including use of a broker-assisted exercise
program or similar program, as the Administrator may determine. The delivery of
shares in payment of the exercise



price may be accomplished either by actual delivery or by constructive delivery
through attestation of ownership, subject to such rules as the Administrator may
prescribe.

6.   EFFECT OF CERTAIN TRANSACTIONS

   (a) COVERED TRANSACTIONS. Except as otherwise provided under the terms of a
Stock Option grant, in the event of a Covered Transaction in which there is an
acquiring or surviving entity, the Administrator may provide for the assumption
of some or all outstanding Stock Options, or for the grant of new Stock Options
in substitution therefor, by the acquiror or survivor or an affiliate of the
acquiror or survivor, in each case on such terms and subject to such conditions
as the Administrator determines. In the absence of such an assumption or if
there is no substitution, except as otherwise provided in the Stock Option, each
Stock Option will become fully exercisable, prior to the Covered Transaction so
as to give the holder of the Stock Option a reasonable opportunity, as
determined by the Administrator, following exercise of the Stock Option to
participate as a shareholder in the Covered Transaction, and the Stock Option
will terminate upon consummation of the Covered Transaction. Without limiting
the general scope of the Administrator's discretionary authority under the Plan,
the Administrator may provide, as to some or all Stock Options, if any, that in
the event of a Change in Control of the Company, whether or not such Change in
Control is also a Covered Transaction, the vesting and exercisability of, or the
payment of benefits under, any Stock Option will be accelerated on such terms as
the Administrator determines.

   (b) DISTRIBUTIONS; CHANGES IN CAPITAL STOCK. Basic Adjustment Provisions. In
the event of a stock dividend, stock split (including reverse stock split) or
combination of shares, recapitalization or other change in the Company's capital
structure, the Administrator will make appropriate adjustments to the maximum
number of shares specified in Section 3(a) that may be delivered under the Plan,
to the maximum number of shares specified in Section 3(a) that may be issued
upon the exercise of ISOs, to the maximum number of shares specified in Section
3(a) that may be issued upon exercise of NSOs, and to the maximum share limits
described in Section 3(b). The Administrator will also make appropriate
adjustments to the number and kind of shares of stock or securities subject to
Stock Options then outstanding or subsequently granted, any exercise prices
relating to Stock Options and any other provision of the Stock Options affected
by such change.

   (c) CERTAIN OTHER ADJUSTMENTS. To the extent consistent with qualification of
ISOs under Section 422 of the Code and with the performance-based compensation
rules of Section 162(m), where applicable, the Administrator may also make
adjustments of the type above to take into account distributions to shareholders
other than those provided for in Section 6(a), or any other event, if the
Administrator determines that adjustments are appropriate to avoid distortion in
the operation of the Plan and to preserve the value of Stock Option grants made
hereunder.

   (d) CONTINUING APPLICATION OF PLAN TERMS. References in the Plan to shares of
Stock will be construed to include any stock or securities resulting from an
adjustment pursuant to this Section 6.

7.   LEGAL CONDITIONS ON DELIVERY OF STOCK

          The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove any restriction from shares of Stock
previously delivered under the Plan until: (i) the Company is satisfied that all
legal matters in connection with the issuance and delivery of such shares have
been addressed and resolved; (ii) if the outstanding Stock is at the time of
delivery listed on any stock exchange or national market system, the shares to
be delivered have been listed or authorized to be listed on such exchange or
system upon official notice of issuance; and (iii) all conditions of the grant
have been satisfied or waived. If the sale of Stock has not been registered
under the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of the Stock Option, such representations or agreements as
counsel for the



Company may consider appropriate to avoid violation of such Act. The Company may
require that certificates evidencing Stock issued under the Plan bear an
appropriate legend reflecting any restriction on transfer applicable to such
Stock.

8.   AMENDMENT AND TERMINATION

          The Administrator may at any time or times amend the Plan or any
outstanding Stock Option for any purpose which may at the time be permitted by
law, and may at any time terminate the Plan as to any future grants of Stock
Options; PROVIDED, that except as otherwise expressly provided in the Plan the
Administrator may not, without the Participant's consent, alter the terms of a
Stock Option so as to affect adversely a Participant's rights under the Stock
Option, unless the Administrator expressly reserved the right to do so at the
time of grant. Amendments to the Plan shall be conditioned upon shareholder
approval only to the extent, if any, such approval is required by law (including
the Code and applicable NASDAQ or stock exchange requirements), as determined by
the Administrator. Notwithstanding the foregoing, the Company shall submit for
shareholder approval any amendment to the Plan (other than an amendment or
adjustment pursuant to Section 6) that would: (a) increase the maximum number of
shares for which options may be granted under the plan; (b) reduce the price at
which a Stock Option may be granted below the price provided for in Section
5(h); (c) reduce the exercise price of outstanding Stock Options; or (d)
increase the limits set forth in Section 3.

9.   OTHER COMPENSATION ARRANGEMENTS

          The existence of the Plan or the grant of any Stock Option will not in
any way affect the Company's right to award a person bonuses or other
compensation in addition to grants made under the Plan.

10.  DEFINITIONS

          The following terms, when used in the Plan, will have the meanings and
be subject to the provisions set forth below:

          "ADMINISTRATOR": has the meaning set forth in Section 2.

          "AFFILIATE": Any corporation or other entity owning, directly or
indirectly, 50% or more of the outstanding Stock of the Company, or in which the
Company or any such corporation or other entity owns, directly or indirectly,
50% of the outstanding capital stock (determined by aggregate voting rights) or
other voting interests.

          "BOARD": The Board of Directors of the Company.

          "CHANGE IN CONTROL": A change in ownership or control of the Company
or a change in the ownership of a substantial portion of the Company's assets,
determined in accordance with such rules, if any, as may be established by the
Administrator.

          "CODE": The U.S. Internal Revenue Code of 1986 as from time to time
amended and in effect, or any successor statute as from time to time in effect.

          "COMPENSATION COMMITTEE": The Compensation Committee of the Board.

          "COMPANY": Genzyme Corporation.

          "COVERED EMPLOYEES": A "covered employee" within the meaning of
Section 162(m).



          "COVERED TRANSACTION": Any of (i) a consolidation, merger, or similar
transaction or series of related transactions in which the Company is not the
surviving corporation or which results in the acquisition of all or
substantially all of the Company's then outstanding common stock by a single
person or entity or by a group of persons and/or entities acting in concert,
(ii) a sale or transfer of all or substantially all the Company's assets, or
(iii) a dissolution or liquidation of the Company. Where a Covered Transaction
involves a tender offer that is reasonably expected to be followed by a merger
described in clause (i) (as determined by the Administrator), the Covered
Transaction shall be deemed to have occurred upon consummation of the tender
offer.

          "EMPLOYEE": Any person who is employed by the Company or an Affiliate.

          "EMPLOYMENT": A Participant's employment or other service relationship
with the Company and its Affiliates. Employment will be deemed to continue,
unless the Administrator expressly provides otherwise, so long as the
Participant is employed by, or otherwise is providing services in a capacity
described in Section 4 to the Company or its Affiliates. If a Participant's
employment or other service relationship is with an Affiliate and that entity
ceases to be an Affiliate, the Participant's Employment will be deemed to have
terminated when the entity ceases to be an Affiliate unless the Participant
transfers Employment to the Company or its remaining Affiliates.

          "EXCHANGE ACT": The Securities Exchange Act of 1934, as amended, as
from time to time further amended and in effect, or any successor statute as
from time to time in effect.

          "FAIR MARKET VALUE": The fair market value as determined by the
Compensation Committee in good faith, or in the manner established by the
Compensation Committee in good faith, from time to time.

          "ISO": A Stock Option intended to be an "incentive stock option"
within the meaning of Section 422 of the Code. Each option granted pursuant to
the Plan will be treated as providing by its terms that it is to be a
non-incentive option unless, as of the date of grant, it is expressly designated
as an ISO.

          "NSO": A Stock Option that is not an ISO.

          "PARTICIPANT": A person who is granted a Stock Option under the Plan.

          "PLAN": The Genzyme Corporation 2004 Equity Incentive Plan as from
time to time amended and in effect.

          "REPORTING PERSON": A person subject to the reporting requirements of
Section 16 of the Exchange Act.

          "SECTION 162(m)": Section 162(m) of the Code.

          "STOCK": Common Stock of the Company, par value $.01 per share.

          "STOCK OPTIONS": Options entitling the recipient to acquire shares of
Stock upon payment of the exercise price.

EX-10.18.1

                                                               Exhibit 10.18.1


                                                  GENZYME CORPORATION

NOTICE OF GRANT OF STOCK OPTIONS                  ID: 06-1047163
AND OPTION AGREEMENT                              500 Kendall Street
                                                  Cambridge, MA 02142


OPTIONEE NAME                                     OPTION NUMBER:
OPTIONEE ADDRESS                                  PLAN:
                                                  ID:


Effective _________, you have been granted a(n) Incentive Stock Option to buy
_____ shares of GENZYME CORPORATION (the Company) stock at $_______ per share.

The total option price of the shares granted is $_________.

Shares in each period will become fully vested on the date shown.

     Shares               Vest Type              Full Vest           Expiration



                      MAINTAIN THIS COPY FOR YOUR RECORDS.



These options are granted under and governed by the terms and conditions of the
Company's Stock Option plan as amended and the Option Agreement, all of which
are attached and made a part of this document.


                                                                          Date:
                                                                          Time:




                 GENZYME CORPORATION 2004 EQUITY INCENTIVE PLAN
                               OFFICER (TIER I/II)
                   INCENTIVE STOCK OPTION TERMS AND CONDITIONS

         1. PLAN INCORPORATED BY REFERENCE. THIS STOCK OPTION IS ISSUED PURSUANT
TO THE TERMS OF THE PLAN AND MAY BE AMENDED AS PROVIDED IN THE PLAN. CAPITALIZED
TERMS USED AND NOT OTHERWISE DEFINED IN THIS CERTIFICATE HAVE THE MEANINGS GIVEN
TO THEM IN THE PLAN. THIS CERTIFICATE DOES NOT SET FORTH ALL OF THE TERMS AND
CONDITIONS OF THE PLAN, WHICH ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF
THE PLAN MAY BE OBTAINED UPON WRITTEN REQUEST WITHOUT CHARGE FROM THE
SHAREHOLDER RELATIONS DEPARTMENT OF THE COMPANY.

         2. OPTION PRICE. THE PRICE TO BE PAID FOR EACH SHARE OF STOCK ISSUED
UPON EXERCISE OF THE WHOLE OR ANY PART OF THIS STOCK OPTION IS THE OPTION PRICE
SET FORTH ON THE FACE OF THIS CERTIFICATE (THE "OPTION PRICE").

         3. EXERCISABILITY SCHEDULE. THIS STOCK OPTION MAY BE EXERCISED AT ANY
TIME AND FROM TIME TO TIME UP TO THE NUMBER OF SHARES AND IN ACCORDANCE WITH THE
EXERCISABILITY SCHEDULE SET FORTH ON THE FACE OF THIS CERTIFICATE, BUT ONLY FOR
THE PURCHASE OF WHOLE SHARES. THIS STOCK OPTION MAY NOT BE EXERCISED AS TO ANY
SHARES AFTER THE DATE OF EXPIRATION SET FORTH ON THE FACE OF THIS CERTIFICATE
(THE "EXPIRATION DATE").

         4. METHOD OF EXERCISE. TO EXERCISE THIS STOCK OPTION, THE PARTICIPANT
SHALL DELIVER WRITTEN NOTICE OF EXERCISE TO THE COMPANY SPECIFYING THE NUMBER OF
SHARES WITH RESPECT TO WHICH THE STOCK OPTION IS BEING EXERCISED ACCOMPANIED BY
PAYMENT OF THE OPTION PRICE FOR SUCH SHARES IN CASH, BY CERTIFIED CHECK OR IN
SUCH OTHER FORM, INCLUDING SHARES OF STOCK OF THE COMPANY VALUED AT THEIR FAIR
MARKET VALUE ON THE DATE OF DELIVERY, AS THE ADMINISTRATOR MAY APPROVE. PROMPTLY
FOLLOWING SUCH NOTICE, THE COMPANY WILL DELIVER TO THE PARTICIPANT A CERTIFICATE
REPRESENTING THE NUMBER OF SHARES WITH RESPECT TO WHICH THE STOCK OPTION IS
BEING EXERCISED.

         5. RECAPITALIZATION, MERGERS, ETC. IN THE EVENT OF A COVERED
TRANSACTION, THE ADMINISTRATOR MAY UPON WRITTEN NOTICE TO THE PARTICIPANT
PROVIDE THAT THIS STOCK OPTION SHALL TERMINATE ON A DATE NOT LESS THAN 20 DAYS
AFTER THE DATE OF SUCH NOTICE UNLESS THERETOFORE EXERCISED. IN CONNECTION WITH
SUCH NOTICE, THE ADMINISTRATOR MAY IN ITS DISCRETION ACCELERATE OR WAIVE ANY
DEFERRED EXERCISE PERIOD. [ NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A
CHANGE IN CONTROL OF THE COMPANY (AS DEFINED IN A VOTE OF THE COMPENSATION
COMMITTEE ADOPTED MAY 29, 2002), THIS STOCK OPTION SHALL BECOME EXERCISABLE
AS TO ALL SHARES WITHOUT REGARD TO ANY DEFERRED EXERCISABILITY SCHEDULE OR
DEFERRED EXERCISE PERIOD.](1)

         6. STOCK OPTION NOT TRANSFERABLE. THIS STOCK OPTION IS NOT TRANSFERABLE
BY THE PARTICIPANT OTHERWISE THAN BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION, AND IS EXERCISABLE, DURING THE PARTICIPANT'S LIFETIME, ONLY BY THE
PARTICIPANT. THE NAMING OF A DESIGNATED BENEFICIARY DOES NOT CONSTITUTE A
TRANSFER. A "DESIGNATED BENEFICIARY" MEANS THE BENEFICIARY DESIGNATED BY THE
PARTICIPANT, IN A MANNER DETERMINED BY THE ADMINISTRATOR, TO RECEIVE AMOUNTS DUE
OR EXERCISE RIGHTS OF THE PARTICIPANT IN THE EVENT OF THE PARTICIPANT'S DEATH.
IN THE ABSENCE OF AN EFFECTIVE DESIGNATION BY THE PARTICIPANT, "DESIGNATED
BENEFICIARY" MEANS THE PARTICIPANT'S ESTATE.

         7. EXERCISE OF STOCK OPTION AFTER TERMINATION OF EMPLOYMENT. IF THE
PARTICIPANT'S EMPLOYMENT WITH (a) THE COMPANY, (b) AN AFFILIATE, OR (c) A
CORPORATION (OR PARENT OR SUBSIDIARY CORPORATION OF SUCH CORPORATION) ISSUING OR
ASSUMING A STOCK OPTION IN A TRANSACTION TO WHICH SECTION 424(a) OF THE CODE
APPLIES, IS TERMINATED FOR ANY REASON OTHER THAN BY DISABILITY (WITHIN THE
MEANING OF SECTION 22(e)(3) OF THE CODE), DEATH OR RETIREMENT, THE PARTICIPANT
MAY EXERCISE THE RIGHTS WHICH WERE AVAILABLE TO THE PARTICIPANT AT THE TIME OF
SUCH TERMINATION ONLY WITHIN THREE MONTHS FROM THE DATE OF TERMINATION. IF
PARTICIPANT'S EMPLOYMENT IS TERMINATED AS A RESULT OF DISABILITY, THIS STOCK
OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO ANY DEFERRED
EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN TWELVE MONTHS FROM THE
DATE OF TERMINATION. IF PARTICIPANT'S EMPLOYMENT IS TERMINATED AS A RESULT OF
RETIREMENT (WHICH IS DEFINED AS A MINIMUM OF AGE 60 PLUS A MINIMUM OF FIVE YEARS
OF SERVICE), THIS STOCK OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT
REGARD TO ANY DEFERRED EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN
THREE YEARS FROM THE DATE OF TERMINATION. UPON THE DEATH OF THE PARTICIPANT,
THIS STOCK OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO
ANY DEFERRED EXERCISE PERIOD, AND HIS OR HER DESIGNATED BENEFICIARY SHALL HAVE
THE RIGHT, AT ANY TIME WITHIN TWELVE MONTHS AFTER THE DATE OF DEATH, TO EXERCISE
IN WHOLE OR IN PART ANY RIGHTS THAT WERE AVAILABLE TO THE PARTICIPANT AT THE
TIME OF DEATH. NOTWITHSTANDING THE FOREGOING, NO RIGHTS UNDER THIS STOCK OPTION
MAY BE EXERCISED AFTER THE EXPIRATION DATE.

         8. PAYMENT OF TAXES. THE PARTICIPANT SHALL PAY TO THE COMPANY, OR MAKE
PROVISION SATISFACTORY TO THE COMPANY FOR PAYMENT OF ANY TAXES REQUIRED BY LAW
TO BE WITHHELD WITH RESPECT TO THE EXERCISE OF THIS STOCK OPTION. THE
ADMINISTRATOR MAY, IN ITS DISCRETION, REQUIRE ANY OTHER FEDERAL OR STATE TAXES
IMPOSED ON THE SALE OF THE SHARES TO BE PAID BY THE PARTICIPANT. IN THE
ADMINISTRATOR'S DISCRETION, SUCH TAX OBLIGATIONS MAY BE PAID IN WHOLE OR IN PART
IN SHARES OF STOCK, INCLUDING SHARES RETAINED FROM THE EXERCISE OF THIS STOCK
OPTION, VALUED AT THEIR FAIR MARKET VALUE ON THE DATE OF DELIVERY. THE COMPANY
AND ITS AFFILIATES MAY, TO THE EXTENT PERMITTED BY LAW, DEDUCT ANY SUCH TAX
OBLIGATIONS FROM ANY PAYMENT OF ANY KIND OTHERWISE DUE TO THE PARTICIPANT.

         9. NOTICE OF SALE OF SHARES REQUIRED. THE PARTICIPANT AGREES TO NOTIFY
THE COMPANY IN WRITING WITHIN 30 DAYS OF THE DISPOSITION OF ANY SHARES PURCHASED
UPON EXERCISE OF THIS STOCK OPTION IF SUCH DISPOSITION OCCURS WITHIN TWO YEARS
OF THE DATE OF THE GRANT OF THIS STOCK OPTION OR WITHIN ONE YEAR AFTER SUCH
PURCHASE.

         10. RIGHTS LIMITED. THE ADMINISTRATOR, IN ITS SOLE DISCRETION, SHALL
DETERMINE FROM THE GROUP OF ELIGIBLE PERSONS WHETHER AN INDIVIDUAL SHALL BE A
PARTICIPANT UNDER THE PLAN. ANY GRANT MADE UNDER THE PLAN SHALL BE MADE IN THE
SOLE DISCRETION OF THE ADMINISTRATOR AND NO PRIOR GRANT SHALL ENTITLE A PERSON
TO ANY FUTURE GRANT. NOTHING IN THE PLAN OR ANY STOCK OPTION GRANT WILL BE
CONSTRUED AS GIVING ANY PERSON THE RIGHT TO CONTINUED EMPLOYMENT OR SERVICE WITH
THE COMPANY OR ITS AFFILIATES, OR ANY RIGHTS AS A SHAREHOLDER EXCEPT AS TO
SHARES OF STOCK ACTUALLY ISSUED UNDER THE PLAN. IN NO EVENT SHALL THE PLAN, OR
ANY GRANT MADE UNDER THE PLAN, FORM A PART OF AN EMPLOYEE'S OR CONSULTANT'S
CONTRACT OF EMPLOYMENT OR SERVICE, IF ANY. THE LOSS OF EXISTING OR POTENTIAL
PROFIT IN STOCK OPTIONS WILL NOT CONSTITUTE AN ELEMENT OF DAMAGES IN THE EVENT
OF TERMINATION OF EMPLOYMENT OR SERVICE FOR ANY REASON, EVEN IF THE TERMINATION
IS IN VIOLATION OF AN OBLIGATION OF THE COMPANY OR AFFILIATE TO THE PARTICIPANT.


ACKNOWLEDGED AND AGREED:


- ------------------------------------
Participant Signature


- ------------------------------------
Participant Name (Print)


- ------------------------------------
Date



- --------------
(1) The exercisability of options held by Henri A. Termeer and Peter Wirth upon
a change in control of the Company is governed by the terms of their respective
Employment Agreements. This sentence therefore is not included in the form of
Terms and Conditions for stock option grants to Mr. Termeer and Mr. Wirth.

EX-10.18.2

                                                               Exhibit 10.18.2



                                                   GENZYME CORPORATION

NOTICE OF GRANT OF STOCK OPTIONS                   ID: 06-1047163
AND OPTION AGREEMENT                               500 Kendall Street
                                                   Cambridge, MA 02142


 OPTIONEE NAME                                     OPTION NUMBER:
 OPTIONEE ADDRESS                                  PLAN:
                                                   ID:


Effective _________, you have been granted a(n) Non-Qualified Stock Option to
buy _____ shares of GENZYME CORPORATION (the Company) stock at $_______ per
share.

The total option price of the shares granted is $_________.

Shares in each period will become fully vested on the date shown.

   Shares               Vest Type              Full Vest           Expiration



                      MAINTAIN THIS COPY FOR YOUR RECORDS.



These options are granted under and governed by the terms and conditions of the
Company's Stock Option plan as amended and the Option Agreement, all of which
are attached and made a part of this document.


                                                                          Date:
                                                                          Time:




                 GENZYME CORPORATION 2004 EQUITY INCENTIVE PLAN
                               OFFICER (TIER I/II)
                 NONSTATUTORY STOCK OPTION TERMS AND CONDITIONS

         1. PLAN INCORPORATED BY REFERENCE. THIS STOCK OPTION IS ISSUED PURSUANT
TO THE TERMS OF THE PLAN AND MAY BE AMENDED AS PROVIDED IN THE PLAN. CAPITALIZED
TERMS USED AND NOT OTHERWISE DEFINED IN THIS CERTIFICATE HAVE THE MEANINGS GIVEN
TO THEM IN THE PLAN. THIS CERTIFICATE DOES NOT SET FORTH ALL OF THE TERMS AND
CONDITIONS OF THE PLAN, WHICH ARE INCORPORATED HEREIN BY REFERENCE. COPIES OF
THE PLAN MAY BE OBTAINED UPON WRITTEN REQUEST WITHOUT CHARGE FROM THE
SHAREHOLDER RELATIONS DEPARTMENT OF THE COMPANY.

         2. OPTION PRICE. THE PRICE TO BE PAID FOR EACH SHARE OF STOCK ISSUED
UPON EXERCISE OF THE WHOLE OR ANY PART OF THIS STOCK OPTION IS THE OPTION PRICE
SET FORTH ON THE FACE OF THIS CERTIFICATE (THE "OPTION PRICE").

         3. EXERCISABILITY SCHEDULE. THIS STOCK OPTION MAY BE EXERCISED AT ANY
TIME AND FROM TIME TO TIME UP TO THE NUMBER OF SHARES AND IN ACCORDANCE WITH THE
EXERCISABILITY SCHEDULE SET FORTH ON THE FACE OF THIS CERTIFICATE, BUT ONLY FOR
THE PURCHASE OF WHOLE SHARES. THIS STOCK OPTION MAY NOT BE EXERCISED AS TO ANY
SHARES AFTER THE DATE OF EXPIRATION SET FORTH ON THE FACE OF THIS CERTIFICATE
(THE "EXPIRATION DATE").

         4. METHOD OF EXERCISE. TO EXERCISE THIS STOCK OPTION, THE PARTICIPANT
SHALL DELIVER WRITTEN NOTICE OF EXERCISE TO THE COMPANY SPECIFYING THE NUMBER OF
SHARES WITH RESPECT TO WHICH THE STOCK OPTION IS BEING EXERCISED ACCOMPANIED BY
PAYMENT OF THE OPTION PRICE FOR SUCH SHARES IN CASH, BY CERTIFIED CHECK OR IN
SUCH OTHER FORM, INCLUDING SHARES OF STOCK OF THE COMPANY VALUED AT THEIR FAIR
MARKET VALUE ON THE DATE OF DELIVERY, AS THE ADMINISTRATOR MAY APPROVE. PROMPTLY
FOLLOWING SUCH NOTICE, THE COMPANY WILL DELIVER TO THE PARTICIPANT A CERTIFICATE
REPRESENTING THE NUMBER OF SHARES WITH RESPECT TO WHICH THE STOCK OPTION IS
BEING EXERCISED.

         5. RECAPITALIZATION, MERGERS, ETC. IN THE EVENT OF A COVERED
TRANSACTION, THE ADMINISTRATOR MAY UPON WRITTEN NOTICE TO THE PARTICIPANT
PROVIDE THAT THIS STOCK OPTION SHALL TERMINATE ON A DATE NOT LESS THAN 20 DAYS
AFTER THE DATE OF SUCH NOTICE UNLESS THERETOFORE EXERCISED. IN CONNECTION WITH
SUCH NOTICE, THE ADMINISTRATOR MAY IN ITS DISCRETION ACCELERATE OR WAIVE ANY
DEFERRED EXERCISE PERIOD. [NOTWITHSTANDING THE FOREGOING, IN THE EVENT OF A
CHANGE IN CONTROL OF THE COMPANY (AS DEFINED IN A VOTE OF THE COMPENSATION
COMMITTEE ADOPTED MAY 29, 2002), THIS STOCK OPTION SHALL BECOME EXERCISABLE
AS TO ALL SHARES WITHOUT REGARD TO ANY DEFERRED EXERCISABILITY SCHEDULE OR
DEFERRED EXERCISE PERIOD.](1)

         6. TRANSFERABILITY. THIS STOCK OPTION MAY BE TRANSFERRED WITHOUT
CONSIDERATION (OR FOR SUCH CONSIDERATION AS THE ADMINISTRATOR MAY FROM TIME TO
TIME DEEM APPROPRIATE) BY THE HOLDER THEREOF TO ANY FAMILY MEMBER; PROVIDED,
HOWEVER, THAT NO SUBSEQUENT TRANSFER OF SUCH OPTION SHALL BE PERMITTED EXCEPT
FOR TRANSFERS: (i) TO A FAMILY MEMBER; (ii) BACK TO THE PARTICIPANT; OR (iii)
PURSUANT TO THE APPLICABLE LAWS OF DESCENT AND DISTRIBUTION. FOR THIS PURPOSE,
"FAMILY MEMBER" SHALL MEAN (i) ANY CHILD, STEPCHILD, GRANDCHILD, PARENT,
STEPPARENT, GRANDPARENT, SPOUSE, FORMER SPOUSE, SIBLING, NIECE, NEPHEW,
MOTHER-IN-LAW, FATHER-IN-LAW, SON-IN-LAW, DAUGHTER-IN-LAW, BROTHER-IN-LAW OR
SISTER-IN-LAW, INCLUDING ANY ADOPTIVE RELATIONSHIPS, AND ANY OTHER PERSON
SHARING THE PARTICIPANT'S HOUSEHOLD (OTHER THAN AS A TENANT OR EMPLOYEE); (ii)
ANY TRUST IN WHICH ANY OF THE PERSONS DESCRIBED IN CLAUSE (i) HOLDS A GREATER
THAN 50% BENEFICIAL INTEREST; (iii) ANY FOUNDATION IN WHICH ANY OF THE PERSONS
DESCRIBED IN CLAUSE (i) OR THE PARTICIPANT CONTROLS THE MANAGEMENT OF ASSETS; OR
(iv) ANY OTHER ENTITY IN WHICH ANY OF THE PERSONS DESCRIBED IN CLAUSE (i) OR THE
PARTICIPANT HOLDS MORE THAN 50% OF THE VOTING INTERESTS.

         7. EXERCISE OF STOCK OPTION AFTER TERMINATION OF EMPLOYMENT. IF THE
PARTICIPANT'S STATUS AS AN EMPLOYEE OR CONSULTANT OF (a) THE COMPANY, (b) AN
AFFILIATE, OR (c) A CORPORATION (OR PARENT OR SUBSIDIARY CORPORATION OF SUCH
CORPORATION) ISSUING OR ASSUMING A STOCK OPTION IN A TRANSACTION TO WHICH
SECTION 424(a) OF THE CODE APPLIES, IS TERMINATED FOR ANY REASON OTHER THAN BY
DISABILITY (WITHIN THE MEANING OF SECTION 22(e)(3) OF THE CODE), DEATH OR
RETIREMENT, THE PARTICIPANT MAY EXERCISE THE RIGHTS WHICH WERE AVAILABLE TO THE
PARTICIPANT AT THE TIME OF SUCH TERMINATION ONLY WITHIN THREE MONTHS FROM THE
DATE OF TERMINATION. IF SUCH STATUS IS TERMINATED AS A RESULT OF DISABILITY,
THIS STOCK OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO
ANY DEFERRED EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN TWELVE
MONTHS FROM THE DATE OF TERMINATION. IF SUCH STATUS IS TERMINATED AS A RESULT OF
RETIREMENT (WHICH IS DEFINED AS A MINIMUM OF AGE 60 PLUS A MINIMUM OF FIVE YEARS
OF SERVICE), THIS STOCK OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT
REGARD TO ANY DEFERRED EXERCISE PERIOD, AND SUCH RIGHTS MAY BE EXERCISED WITHIN
THREE YEARS FROM THE DATE OF TERMINATION. UPON THE DEATH OF THE PARTICIPANT,
THIS STOCK OPTION SHALL BECOME EXERCISABLE AS TO ALL SHARES WITHOUT REGARD TO
ANY DEFERRED EXERCISE PERIOD, AND HIS OR HER DESIGNATED BENEFICIARY SHALL HAVE
THE RIGHT, AT ANY TIME WITHIN TWELVE MONTHS AFTER THE DATE OF DEATH, TO EXERCISE
IN WHOLE OR IN PART ANY RIGHTS THAT WERE AVAILABLE TO THE PARTICIPANT AT THE
TIME OF DEATH. NOTWITHSTANDING THE FOREGOING, NO RIGHTS UNDER THIS STOCK OPTION
MAY BE EXERCISED AFTER THE EXPIRATION DATE. A "DESIGNATED BENEFICIARY" MEANS THE
BENEFICIARY DESIGNATED BY THE PARTICIPANT, IN A MANNER DETERMINED BY THE
ADMINISTRATOR, TO RECEIVE AMOUNTS DUE OR EXERCISE RIGHTS OF THE PARTICIPANT IN
THE EVENT OF THE PARTICIPANT'S DEATH. IN THE ABSENCE OF AN EFFECTIVE DESIGNATION
BY THE PARTICIPANT, "DESIGNATED BENEFICIARY" MEANS THE PARTICIPANT'S ESTATE.

         8. PAYMENT OF TAXES. THE PARTICIPANT SHALL PAY TO THE COMPANY, OR MAKE
PROVISION SATISFACTORY TO THE COMPANY FOR PAYMENT OF ANY TAXES REQUIRED BY LAW
TO BE WITHHELD WITH RESPECT TO THE EXERCISE OF THIS STOCK OPTION. THE
ADMINISTRATOR MAY, IN ITS DISCRETION, REQUIRE ANY OTHER FEDERAL OR STATE TAXES
IMPOSED ON THE SALE OF THE SHARES TO BE PAID BY THE PARTICIPANT. IN THE
ADMINISTRATOR'S DISCRETION, SUCH TAX OBLIGATIONS MAY BE PAID IN WHOLE OR IN PART
IN SHARES OF STOCK, INCLUDING SHARES RETAINED FROM THE EXERCISE OF THIS STOCK
OPTION, VALUED AT THEIR FAIR MARKET VALUE ON THE DATE OF DELIVERY. THE COMPANY
AND ITS AFFILIATES MAY, TO THE EXTENT PERMITTED BY LAW, DEDUCT ANY SUCH TAX
OBLIGATIONS FROM ANY PAYMENT OF ANY KIND OTHERWISE DUE TO THE PARTICIPANT.

         9. RIGHTS LIMITED. THE ADMINISTRATOR, IN ITS SOLE DISCRETION, SHALL
DETERMINE FROM THE GROUP OF ELIGIBLE PERSONS WHETHER AN INDIVIDUAL SHALL BE A
PARTICIPANT UNDER THE PLAN. ANY GRANT MADE UNDER THE PLAN SHALL BE MADE IN THE
SOLE DISCRETION OF THE ADMINISTRATOR AND NO PRIOR GRANT SHALL ENTITLE A PERSON
TO ANY FUTURE GRANT. NOTHING IN THE PLAN OR ANY STOCK OPTION GRANT WILL BE
CONSTRUED AS GIVING ANY PERSON THE RIGHT TO CONTINUED EMPLOYMENT OR SERVICE WITH
THE COMPANY OR ITS AFFILIATES, OR ANY RIGHTS AS A SHAREHOLDER EXCEPT AS TO
SHARES OF STOCK ACTUALLY ISSUED UNDER THE PLAN. IN NO EVENT SHALL THE PLAN, OR
ANY GRANT MADE UNDER THE PLAN, FORM A PART OF AN EMPLOYEE'S OR CONSULTANT'S
CONTRACT OF EMPLOYMENT OR SERVICE, IF ANY. THE LOSS OF EXISTING OR POTENTIAL
PROFIT IN STOCK OPTIONS WILL NOT CONSTITUTE AN ELEMENT OF DAMAGES IN THE EVENT
OF TERMINATION OF EMPLOYMENT OR SERVICE FOR ANY REASON, EVEN IF THE TERMINATION
IS IN VIOLATION OF AN OBLIGATION OF THE COMPANY OR AFFILIATE TO THE PARTICIPANT.


ACKNOWLEDGED AND AGREED:


- ------------------------------------
Participant Signature


- ------------------------------------
Participant Name (Print)


- ------------------------------------
Date



- -----------
(1) The exercisability of options held by Henri A. Termeer and Peter Wirth upon
a change in control of the Company is governed by the terms of their respective
Employment Agreements. This sentence therefore is not included in the form of
Terms and Conditions for stock option grants to Mr. Termeer and Mr. Wirth.

EX-10.19

                                                                   Exhibit 10.19

                               GENZYME CORPORATION

                        1999 EMPLOYEE STOCK PURCHASE PLAN

1.   PURPOSE.

     The purpose of this 1999 Employee Stock Purchase Plan (the "Plan") is to
provide employees of Genzyme Corporation (the "Company") and its subsidiaries
who wish to become shareholders of the Company an opportunity to purchase shares
of the Company's common stock, $0.01 par value (the "Shares"). The Plan is
intended to qualify as an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").

     The Plan constitutes an amendment and restatement of the Company's 1990
Employee Stock Purchase Plan (the "1990 Plan"), which is hereby merged with and
into the Plan, and the separate existence of the 1990 Plan shall terminate on
the effective date of the Plan. The rights and privileges of the holders of
outstanding rights under the 1990 Plan shall not be adversely affected by the
foregoing action.

2.   ELIGIBLE EMPLOYEES.

     Subject to the provisions of Sections 7, 8 and 9 below, any individual who
is in the full-time employment (as defined below) of the Company, or any of its
subsidiaries (as defined in Section 425(f) of the Code), the employees of which
are designated by the Board of Directors as eligible to participate in the Plan,
is eligible to participate in any Offering of Shares (as defined in Section 3
below) made by the Company hereunder. Full-time employment shall include all
employees whose customary employment is:

     (a)  20 hours or more per week; and

     (b)  more than five months

in the calendar year during which said Offering Date (as defined in Section 3
below) occurs or in the calendar year immediately preceding such year.

3.   OFFERING DATES.

     From time to time, the Company, by action of the Board of Directors, will
grant rights to purchase the Shares to employees eligible to participate in the
Plan pursuant to one or more offerings (each of which is an "Offering") on a
date or series of dates (each of which is an "Offering Date") designated for
this purpose by the Board of Directors.

4.   PRICES.

     The price per share for each grant of rights hereunder shall be the lesser
of:

     (a)  eighty-five percent (85%) of the fair market value of a Share on the
Offering Date on which such right was granted; or

     (b)  eighty-five percent (85%) of the fair market value of a Share on the
date such right is exercised. At its discretion, the Board of Directors may
determine a higher price for a grant of rights.

                                        1


5.   EXERCISE OF RIGHTS AND METHOD OF PAYMENT.

     (a)  Rights granted under the Plan will be exercisable periodically on
specified dates as determined by the Board of Directors.

     (b)  The method of payment for Shares purchased upon exercise of rights
granted shall be through regular payroll deductions or by lump sum cash payment
or both, as determined by the Board of Directors. No interest shall be paid upon
payroll deductions unless specifically provided for by the Board of Directors.

     (c)  Any payments received by the Company from a participating employee and
not utilized for the purchase of Shares upon exercise of a right granted
hereunder shall be promptly returned to such employee by the Company after
termination of the right to which the payment relates.

6.   TERM OF RIGHTS.

     The total period from an Offering Date to the last date on which rights
granted on that Offering Date are exercisable (the "Offering Period") shall in
no event be longer than twenty-seven (27) months. The Board of Directors when it
authorizes an Offering may designate one or more exercise periods during the
Offering Period. Rights granted on an Offering Date shall be exercisable in full
on the Offering Date or in such proportion on the last day of each exercise
period as the Board of Directors determines.

7.   SHARES SUBJECT TO THE PLAN.

     The aggregate number of shares that may be issued upon exercise of options
granted under this Plan is 4,829,391. Appropriate adjustments in the number of
Shares subject to the Plan, in the number of Shares covered by outstanding
rights granted hereunder, in the exercise price of the rights and in the maximum
number of Shares which an employee may purchase (pursuant to Section 8 below)
shall be made to give effect to any mergers, consolidations, reorganizations,
recapitalizations, stock splits, stock dividends or other relevant changes in
the capitalization of the Company occurring after the effective date of the
Plan, provided that no fractional Shares shall be subject to a right and each
right shall be adjusted downward to the nearest full Share. Any agreement of
merger or consolidation shall include provisions for protection of the then
existing rights of participating employees under the Plan. Either authorized and
unissued Shares or issued Shares heretofore or hereafter reacquired by the
Company may be subject to rights under the Plan. If for any reason any right
under the Plan terminates in whole or in part, Shares subject to such terminated
right may be subject to a right under the Plan.

8.   LIMITATIONS ON GRANTS.

     (a)  No employee shall be granted a right hereunder if such employee,
immediately after the right is granted would own stock or rights to purchase
stock possessing five percent (5%) or more of the total combined voting power or
value of all series of common stock of the Company, or of any subsidiary,
computed in accordance with Section 423(b)(3) of the Code.

     (b)  No employee shall be granted a right which permits the employee's
rights to purchase shares under all employee stock purchase plans of the Company
and its subsidiaries to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) (or such other maximum as may be prescribed from time to time
by the Code) of the fair market value of such shares (determined at the time
such right is granted) for each calendar year in which such right is outstanding
at any time in accordance with the provisions of Section 423(b)(8) of the Code.

     (c)  No right granted to any participating employee under an Offering, when
aggregated with rights granted under any other Offering still exercisable by the
participating employee, shall cover more shares than may be purchased at an
exercise price not to exceed fifteen percent (15%) of the employee's

                                        2


annual rate of compensation on the date the employee elects to participate in
the Offering or such lesser percentage as the Board of Directors may determine.

9.   LIMIT ON PARTICIPATION.

     Participation in an Offering shall be limited to eligible employees who
elect to participate in such Offering in the manner, and within the time
limitations, established by the Board of Directors when it authorizes the
Offering.

10.  CANCELLATION OF ELECTION TO PARTICIPATE.

     An employee who has elected to participate in an Offering may cancel such
election as to all (but not part) of the unexercised rights granted under such
Offering by giving written notice of such cancellation to the Company before the
expiration of any exercise period. Any amounts paid by the employee for the
Shares or withheld for the purchase of Shares from the employee's compensation
through payroll deductions shall be paid to the employee, without interest
unless otherwise determined by the Board of Directors, upon such cancellation.

11.  TERMINATION OF EMPLOYMENT.

     Upon the termination of employment for any reason, including the death of
the employee, before the date on which any rights granted under the Plan are
exercisable, all such rights shall immediately terminate and amounts paid by the
employee for the Shares or withheld for the purchase of Shares from the
employee's compensation through payroll deductions shall be paid to the employee
or to the employee's estate, without interest unless otherwise determined by the
Board of Directors.

12.  EMPLOYEE'S RIGHTS AS SHAREHOLDER.

     No participating employee shall have any rights as a shareholder in the
Shares covered by a right granted hereunder until such right has been exercised,
full payment has been made for the corresponding Share and the Share certificate
is actually issued.

13.  RIGHTS NOT TRANSFERABLE.

     Rights under the Plan are not assignable or transferable by a participating
employee and are exercisable only by the employee.

14.  AMENDMENTS TO OR DISCONTINUATION OF THE PLAN.

     The Board of Directors of the Company shall have the right to amend, modify
or terminate the Plan at any time without notice; provided, however, that the
then existing rights of all participating employees shall not be adversely
affected thereby, and provided further that, subject to the provisions of
Section 7 above, no such amendment to the Plan shall, without the approval of
the shareholders of the Company, increase the total number of Shares which may
be offered under the Plan.

15.  EFFECTIVE DATE AND APPROVALS.

     Subject to the approval of the shareholders of the Company, this Plan shall
be effective on March 24, 1999, the date it was adopted by the Board of
Directors.

     The Company's obligation to offer, sell and deliver its Shares under the
Plan is subject to (i) the approval of any governmental authority required in
connection with the authorization, issuance or sale of such Shares, (ii)
satisfaction of the listing requirements of any national securities exchange on
which the

                                        3


Shares are then listed and (iii) compliance, in the opinion of the Company's
counsel, with all applicable federal and state securities and other laws.

16.  TERM OF PLAN.

     No rights shall be granted under the Plan after March 24, 2009.

17.  ADMINISTRATION OF THE PLAN.

     The Board of Directors or any committee or person(s) to whom it delegates
its authority (the "Administrator") shall administer, interpret and apply all
provisions of the Plan as it deems necessary. Nothing contained in this Section
shall be deemed to authorize the Administrator to alter or administer the
provisions of the Plan in a manner inconsistent with the provisions of Section
423 of the Code.

18.  RIGHTS LIMITED.

     In no event shall the Plan form a part of an employee's contract of
employment or service, if any. The Plan shall not confer upon any employee of
the Company or its subsidiaries any right with respect to the continuance of his
or her employment by, or other service with, the Company or its subsidiary, nor
shall it limit the right of the Company or its subsidiaries to terminate the
employee or otherwise change the terms of employment. The loss of existing or
potential profit in any Offering of Shares shall not constitute an element of
damages in the event of termination of employment for any reason, even if the
termination is in violation of an obligation of the Company or its subsidiary to
the employee.


                                        4

EX-10.20

                                                                 Exhibit 10.20


                     GENZYME CORPORATION DIRECTORS' DEFERRED
                                COMPENSATION PLAN

                                    ARTICLE I

                                     GENERAL

         1.1 ESTABLISHMENT OF PLAN. Genzyme Corporation ("Genzyme") hereby
establishes the Genzyme Directors' Deferred Compensation Plan (the "plan"),
effective as of May 16, 1996, to allow each member of the Genzyme Board of
Directors who is not also an officer or employee of Genzyme to defer receipt of
all or a portion of the cash compensation payable to him or her as a director of
Genzyme until his or her termination of service as a director or, subject to
requirements set forth in Section 3.1, such other date as may be specified by
him or her.

         1.2 NO RIGHT TO CORPORATE ASSETS. This plan is unfunded and Genzyme
will not be required to set aside, segregate, or deposit any funds or assets of
any kind to meet its obligations hereunder. Nothing in this plan will give a
participant, a participant's beneficiary or any other person any equity or other
interest in the assets of Genzyme, or create a trust of any kind or a fiduciary
relationship of any kind between Genzyme and any such person. Any rights that a
participant, beneficiary or other person may have under this plan will be solely
those of a general unsecured creditor of Genzyme.

         1.3 LIMITATION ON RIGHTS CREATED BY PLAN. Nothing in this plan will
give a participant any right to continue as a director of Genzyme.

         1.4 NONALIENATION OF BENEFITS. The rights and benefits of a participant
in this plan are personal to the participant. No interest, right or claim under
this plan and no distribution therefrom will be assignable, transferable or
subject to sale, mortgage, pledge, hypothecation, anticipation, garnishment,
attachment, execution or levy, except by designation of beneficiaries as
provided in Section 3.6.

         1.5 BINDING EFFECT OF PLAN. This plan will be binding upon and inure to
the benefit of participants and designated beneficiaries and their heirs,
executors and administrators, and to the benefit of Genzyme and its assigns and
successors in interest.

         1.6 ADMINISTRATION. This plan will be administered by the Clerk of
Genzyme who will have sole responsibility for its interpretation.

         1.7 INTERPRETATION. This plan will be construed, enforced and
administered according to the laws of the Commonwealth of Massachusetts.


                                   ARTICLE II

                            DEFERRAL OF COMPENSATION

         2.1 DEFERRAL AGREEMENT. Any active member of the Board of Directors of
Genzyme who is not an officer or employee of Genzyme or its subsidiaries (an
"outside director") is eligible to participate in this plan. An outside director
may participate in the plan by executing an agreement before the first day of
any calendar quarter in which such agreement will take effect authorizing
Genzyme to defer all or a portion of his or her compensation as director (the
"deferral agreement"). A deferral agreement will remain in effect for each
succeeding calendar quarter unless the participant files a written revocation or
superseding deferral agreement with the Clerk. A deferral agreement for any
particular quarter is irrevocable after the last day of the immediately
preceding calendar quarter.

         2.2 AMOUNT OF DEFERRAL. Each participant may elect in his or her
deferral agreement to defer 25 percent, 50 percent, 75 percent or 100 percent of
the total cash compensation paid to the participant as an outside director of
Genzyme.

         2.3 DEFERRAL ACCOUNT. For bookkeeping purposes only, the Clerk will
establish and maintain an account (the "deferral account") for each participant
which documents the compensation deferred by the participant, earnings credited
to the account and payments from the account. The deferral account will consist
of a subaccount for amounts earning interest, which will be denominated on a
dollar basis (the "cash account"), and a subaccount for amounts invested in
hypothetical shares of Genzyme Common Stock, $0.01 par value ("Genzyme Stock")
which will be denominated on a share basis (the "stock account"). Each
participant will indicate in his or her deferral agreement the percentage of
future deferrals to be invested in the cash account and the stock account.
Amounts may not be transferred between the cash account and the stock account.

         2.4 CASH ACCOUNT. As of the first day of each calendar quarter, the
Clerk will credit to the participant's cash account an amount equal to the
amount of compensation otherwise payable to the participant in the preceding
calendar quarter which the participant has elected to defer and invest in the
cash account. As of the last day of each calendar quarter, the Clerk will credit
interest on the balance in the cash account on that date at the rate paid on
90-day Treasury bills hypothetically purchased on the first day of such calendar
quarter. For a participant receiving installment payments, interest will be
credited on the balance from time to time remaining in the cash account until
the account has been completely paid.

         2.5 STOCK ACCOUNT. As of the first day of each calendar quarter, the
Clerk will credit to the participant's stock account a number of shares of
Genzyme Stock equal to the amount of compensation otherwise payable to the
participant in the preceding calendar quarter which the participant has elected
to defer and invest in Genzyme Stock divided by the stock price for Genzyme
Stock. The stock price shall mean the average of the closing price of Genzyme
Stock for all trading days during the applicable calendar quarter as reported by
the Nasdaq National Market. As of the date of payment of any cash dividend on
Genzyme Stock, the Clerk will credit to the stock account a number of shares of
Genzyme Stock upon which such dividend was declared equal to (i) the cash
dividend per share times the number of shares credited to the stock account as
of the dividend record date divided by (ii) the closing price for Genzyme Stock
on the date of payment of the dividend. As of the date of payment of any stock
dividend on Genzyme Stock, the Clerk will credit to the stock account a number
of shares equal to the stock dividend declared times the number of shares of
Genzyme Stock upon which such dividend was declared credited to the stock
account as of the dividend record date. In the event of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
exchange of shares or similar change affecting Genzyme Stock, appropriate
adjustment will be made in the number and/or kind of shares credited to the
stock account. The stock account is maintained for bookkeeping purposes only.
Prior to distribution to a participant under Section 3.3 or 3.4, shares credited
to the stock account are not considered actual shares of common stock of Genzyme
for any purpose and a participant will have no rights as a stockholder with
respect to such shares. Shares will include fractional shares computed to three
decimal places.


                                       2



         2.6 SHARES SUBJECT TO THE PLAN. The aggregate number of shares of
Common Stock which may be optioned under this plan is 105,962 shares of Genzyme
Stock. In the event of any stock dividend, split-up, combination or
reclassification of shares, recapitalization or similar capital change relating
to the common stock, the maximum aggregate number and kind of shares or
securities of Genzyme that may be issued under the plan shall be appropriately
adjusted by the Genzyme Board of Directors (whose determination shall be
conclusive).


                                   ARTICLE III

                        PAYMENT OF DEFERRED COMPENSATION

         3.1 COMMENCEMENT OF PAYMENT. Each participant will elect in his or her
deferral agreement to have payments commence in the calendar year following his
or her termination of service as a director or such other calendar year as may
be specified; provided, however, that if a participant elects to have payments
commence in a calendar year other than the calendar year following his or her
termination of service as a director, the earliest calendar year that a
participant may elect to have payments commence shall be the second calendar
year following the date of such election. For example, a deferral agreement
executed in 1996 may not specify a payment commencement date earlier than 1998.
Such election will be irrevocable.

         3.2 ELECTION OF FORM OF PAYMENT. Each participant will elect in his or
her deferral agreement to have his or her deferral account paid in either a lump
sum or in annual installments for a period specified by the participant, which
period may not exceed five years.

         3.3 LUMP SUM PAYMENTS. A participant who elects to have his or her
deferral account paid in a lump sum will receive the lump sum payment on or
before March 1 of the year specified in the deferral agreement for commencement
of payment. The lump sum payment will consist of (a) cash in the amount credited
to his or her cash account, and (b) subject to Section 3.5, the number of shares
of Genzyme Stock credited to his or her stock account; provided, however, that
no fractional shares will be issued under the plan and the number of shares
issued will be rounded down to the nearest full share.

         3.4 INSTALLMENT PAYMENTS. A participant who elects to have his or her
deferral account paid in annual installments will receive an installment payment
on or before March 1 of each year that installments are due commencing with the
year specified in his or her deferral agreement. Each installment payment will
consist of (a) cash in the amount credited to his or her cash account on the
date of payment divided by the number of annual installments remaining to be
paid, and (b) subject to Section 3.5, the number of shares of Genzyme Stock
credited to his or her stock account divided by the number of annual
installments remaining to be paid; provided, however, that no fractional shares
will be issued under the plan and the number of shares issued will be rounded
down to the nearest full share.

         3.5 LIMITATION ON STOCK DISTRIBUTIONS. If a participant would receive
any payment from his or her stock account before the end of the period during
which his or her transactions in Genzyme's equity securities are subject to
reporting under Section 16 of the Securities Act of 1933, such payments shall be
made in accordance with Section 3.3 or 3.4, as applicable, except that in lieu
of shares, the participant shall receive cash in an amount equal to the number
of shares of Genzyme Stock in his or her stock account times the closing price
for Genzyme Stock as of the trading day preceding the date of distribution.


                                       3



         3.6 BENEFICIARIES. A participant may designate in his or her deferral
agreement a beneficiary or beneficiaries (which may be an entity other than a
natural person) to receive any payments to be made upon his or her death. A
participant may elect to have payments to beneficiaries paid in a lump sum or in
annual installments for a period not to exceed five years. At any time, and from
time to time, a participant may change or revoke his or her designation of
beneficiary or form of payment without the consent of any beneficiary. Any such
designation, change or revocation must be made in writing and filed with the
Clerk. If the participant designates more than one beneficiary, any payments to
beneficiaries will be made in equal percentages unless the participant
designates otherwise. Any portion of a participant's deferral account that is
not disposed of by designation of beneficiary upon the participant's death will
be paid to his or her estate.

         3.7 PAYMENTS ON DEATH. If a participant dies before full payment of his
or her deferral account, Genzyme will make payments to the participant's
designated beneficiary or beneficiaries, or to his or her estate, of the amount
remaining in the deceased participant's deferral account. Such payments will be
in the form designated by the participant and will commence on the first day of
the calendar quarter following the death of the participant (or as soon
thereafter as practicable) and, in the case of annual installments, will be paid
on or before March 1 of each succeeding year.

         3.8 HARDSHIP DISTRIBUTIONS FROM ACCOUNTS. The Clerk may, in his
discretion, distribute a portion or all of a participant's cash account in case
of the participant's financial hardship. The Clerk will determine the date of
payment of the distribution. Hardship distributions are not permitted from a
participant's stock account.


                                       4



                                   ARTICLE IV

                            AMENDMENT AND TERMINATION

         4.1 AMENDMENT. Genzyme may, without the consent of any participant,
beneficiary or other person, amend the plan at any time and from time to time;
provided, however, that no amendment will reduce the amount credited to the
deferral account of any participant.

         4.2 TERMINATION. Genzyme may terminate the plan at any time. Upon
termination of the plan, payments from a participant's deferral account shall be
made in the manner and at the time prescribed in Article III; provided, however,
that Genzyme may, in its discretion, distribute a participant's deferral account
in a lump sum as soon as practicable after the date the plan is terminated.


                                       5

EX-10.25

                                                                   EXHIBIT 10.25


           CASH COMPENSATION PAID TO MEMBERS OF THE BOARD OF DIRECTORS
                             OF GENZYME CORPORATION


       Employee directors do not receive any additional compensation for their
service on the board of directors. Non-employee directors receive the following
cash compensation:

       o    an annual retainer of $25,000, paid quarterly;

       o    from $500 to $1,500 for each board meeting they attend, depending
            on the circumstances of the meeting and the manner of attendance;

       o    $1,000 for each committee meeting they attend in person or $500 if
            they participate by telephone;

       o    an annual retainer of $4,000 for service as a committee chair,
            paid quarterly; and

       o    $1,000 for each scientific review meeting, either in person or by
            telephone.

EX-10.29.3

                                                                Exhibit 10.29.3


                                FOURTH AMENDMENT
                        CONTRACT MANUFACTURING AGREEMENT

THIS Fourth Amendment to the Contract Manufacturing Agreement dated as of July
1, 2004 (the "4th Amendment") is made by and between The Dow Chemical Company, a
Delaware corporation ("DOW") and Genzyme Corporation., a Massachusetts
corporation ("GENZYME"). The parties wish to amend the Contract Manufacturing
Agreement they entered into effective September 4, 2001 ("Agreement") as
hereafter set forth. Capitalized terms not defined herein shall have the
respective meanings ascribed to them in the Agreement.

                                    RECITALS

WHEREAS, DOW and GENZYME entered into the Agreement and three amendments to the
Agreement, whereby DOW, under took an obligation to manufacture and supply
Product to GENZYME, and under the Agreement, as amended, GENZYME currently has a
commitment to purchase a minimum of [**] from DOW and DOW has agreed to supply
this quantity of Product at a price of $[** ]; and

WHEREAS, GENZYME and DOW now wish to extend the Agreement and revise the supply
and pricing structure.

NOW THEREFORE, in consideration of the premises and of the covenants herein
contained, DOW and GENZYME hereby agree as follows:

Article 1 of the Agreement shall be modified as follows:

"EFFECTIVE DATE" means the date stated above in this 4th Amendment.

"PRICE" means the charge for the contract manufacturing of the Product in United
States dollars as calculated in Article 6 as amended by this 4th Amendment.

"CONTRACT YEAR" means a period of twelve consecutive Months, beginning on July 1
and ending on June 30.

Article 3 of the Agreement shall be modified as follows:

         3.1 The pricing and supply terms set forth in this Amendment shall
remain in effect for 36 months, running from the Effective Date until June 30,
2007 (the "Initial Term"). GENZYME shall have the right to extend the Amendment
for an additional twelve (12) months until June 30, 2008, provided that GENZYME
shall provide written notice to DOW of its intention to extend the Amendment at
least nine months prior to June 30, 2007. Except as explicitly modified by this
Amendment, Section 3.1 of the Agreement shall remain in full force and effect.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.



         3.2 DOW shall have the right to terminate this Amendment by providing
written notice of its desire to do so to GENZYME. However, any such notice of
termination provided by DOW to GENZYME shall not have an effective date of
termination that is less than eighteen (18) months from the date such notice is
delivered to GENZYME. Except as explicitly modified by this Amendment, Section
3.2 of the Agreement shall remain in full force and effect.

         3.3 GENZYME shall have the right to terminate this Amendment by
providing written notice of its desire to do so to DOW. However, any such notice
of termination provided by GENZYME to DOW shall not have an effective date of
termination that is less than nine (9) months from the date such notice is
delivered to DOW. Except as explicitly modified by this Amendment, Section 3.3
of the Agreement shall remain in full force and effect.

Section 5.2 of the Agreement shall be deleted in its entirety and replaced in
full with the following:

         5.2 (a) During [**] of the Amendment, GENZYME shall be obligated to
purchase a minimum amount of [**] of Product from DOW and DOW shall be obligated
to manufacture and supply a maximum amount of [**] of Product to GENZYME. With
respect to GENZYME'S obligations under this Section 5.2(a), GENZYME shall have a
minimum take for [**] throughout the term of the agreement. The maximum take
(excluding any sale out of inventory such as the parties agree) would be [**]
throughout the term of the agreement.

         (b) Notwithstanding the above, should this Amendment terminate prior to
the end of the Initial Term for any reason, then the amount that GENZYME shall
be obligated to purchase pursuant to Section 5.2(a) above, shall be pro-rated
for the period of the Initial Term in which the Amendment was in effect.

Section 5.3 of the Agreement shall be deleted in its entirety and replaced in
full with the following:

         5.3 (a) At least five days prior to the beginning of each Month,
GENZYME shall provide a non-binding written forecast to DOW stating the amount
of Product GENZYME and its affiliates reasonably anticipate purchasing from DOW
for each of the next eighteen (18) Months, broken out by Month (the "18 Month
Forecast"). The parties agree that the first six Months of each such 18 Month
Forecast shall be firm (the "Firm Period"). GENZYME may seek to increase the
amount of Product ordered in the Firm Period until it issues a firm Purchase
Order for that Month pursuant to Section 5.3(b) hereof. DOW will make reasonable
business efforts to accommodate the production of such increases in Product
ordered by GENZYME. However, for the avoidance of doubt, DOW's sole obligation
with respect to firm Purchase Orders shall in no case be greater than the Firm
Period forecast. Notwithstanding the above, the parties agree that the


                                     Page 2


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.




forecast for the final nine months of the Amendment shall be firm and not
subject to any changes without the written consent of both parties.

         (b) Firm Purchase Orders for Product shall be placed by GENZYME and/or
its Affiliates within ninety (90) days of the date on which GENZYME expects to
receive shipment of the Product (Purchase Order).

         (c) Each firm Purchase Order shall include (i) the quantity of Product
to be purchased; (ii) the requested delivery date(s) therefore; (iii) any
relevant shipping instructions; (iv) packaging instructions (including package
sizes) and (v) any other information dictated by the circumstances of the order.
DOW shall accept Purchase Orders issued to it by GENZYME that are within the
amounts allowed by the restrictions set forth in 5.2(c) and 5.3(b) above within
five (5) days after receipt of such purchase order, which acceptance shall be
conclusively presumed by GENZYME in the absence of receipt of written notice
from DOW to the contrary. DOW shall ship product to GENZYME in accordance with
the terms of each accepted Purchase Order.

Section 5.4 of the Agreement shall be deleted in its entirety.

Section 6.2 of the Agreement shall be deleted in its entirety and replaced in
full with the following:

         6.2 (a) The prices for Product purchased during [**] are based on the
cumulative volume purchased over [**] and are as follows:

                  VOLUME PURCHASED                   PURCHASE PRICE ($/KG)

                  [**]                                        [**]

         (b) The prices for Product purchased during [**], are based on the
cumulative volume purchased over [**] and are as follows:

                  VOLUME PURCHASED                   PURCHASE PRICE ($/KG)

                  [**]                                        [**]

         (c) The prices in Sections 6.2(a) and 6.2(b) are fixed for the entire
term of the Amendment and except as set forth in Sections 6.2(c), (d) and (e)
below are not subject to change. The Product will be invoiced by DOW at a price
set for each Contract Year as of July 1 of that year (the "Estimated Contract
Year Price"). The Estimated Contract Year Price for [**] shall be calculated
based on [**]. Thereafter, during [**], the Estimated Contract Year Price shall
be calculated based on [**]. During [**], the Estimated Contract Year Price
shall be calculated based on [**].


                                     Page 3


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.




         (d) When the final nine month forecast becomes firm pursuant to Section
5.3(a) above (whether during the Initial Term or an Extended Term), [**]

         (e) The Product pricing in Section 6.2(a) assumes a [**] purchase price
of [**]. Should the [**] price change during the term of the Amendment, then
Product price will be adjusted accordingly.


Schedule 1 shall be deleted in its entirety and replaced in full with the
following:

                             PRODUCT SPECIFICATIONS




TEST                                METHOD                        SPECIFICATION
- ----                                ------                        -------------
                                                            
[**]                                [**]                          [**]



         This 4th Amendment is intended to supplement the Agreement, as
previously amended and except as explicitly modified by the terms of this 4th
Amendment, the Agreement as previously amended, shall continue in full force and
effect. For the avoidance of doubt, each of the previous amendments to the
Agreement is superceded by this 4th Amendment insofar as it related to
purchase/supply volumes, pricing, term and termination. In addition, any notice
to terminate the Agreement is hereby made void and of no force and effect and
the Agreement as modified by this 4th Amendment (but not the previous
amendments) shall remain in full force and effect between the parties. The
Agreement, as previously modified and this 4th Amendment shall constitute the
entire Agreement between the parties on the subject matter hereof and shall not
be amended except as provided in Article 33 of the Agreement.

         IN WITNESS WHEREOF, the parties hereto have caused this 4th Amendment
to be executed by their duly authorized representatives effective as of the date
set forth above.

         THE DOW CHEMICAL COMPANY

         By: /s/ George Biltz
             -----------------------------

         Name:  George Biltz
         Title: VP Ventures
         Date:


                                     Page 4


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.




         GENZYME  CORPORATION.

         By: /s/ Henri A. Termeer
             -----------------------------

         Name:  Henri A. Termeer
         Title: Chief Executive Officer
         Date:



                                     Page 5


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

EX-10.31

                                                                  Exhibit 10.31


                                                                  EXECUTION COPY


               NORTH AMERICAN TERMINATION AND TRANSITION AGREEMENT

                                 BY AND BETWEEN

                               GENZYME CORPORATION

                                       AND

                                      WYETH

                               ACTING THROUGH ITS

                         WYETH PHARMACEUTICALS DIVISION


                                NOVEMBER 3, 2004


                                  CONFIDENTIAL



               NORTH AMERICAN TERMINATION AND TRANSITION AGREEMENT

THIS NORTH AMERICAN TERMINATION AND TRANSITION AGREEMENT (THE "AGREEMENT") is
entered into as of November 3, 2004 (the "SIGNING DATE") by and between Genzyme
Corporation, a Massachusetts corporation ("GENZYME"), and Wyeth, a Delaware
corporation, acting through its Wyeth Pharmaceuticals division ("WYETH"). Unless
the context clearly requires otherwise, all references to Genzyme and Wyeth
shall include any predecessor entity thereto that was a party to the Synvisc
Agreements (defined below), including Biomatrix, Inc. ("BIOMATRIX"), in the case
of Genzyme, and American Home Products Corporation, acting through its
Wyeth-Ayerst Laboratories Division ("AHP"), in the case of Wyeth. Genzyme and
Wyeth are referred to individually as a "Party" and collectively as the
"Parties."

                                    RECITALS

        WHEREAS, Genzyme and Wyeth are parties to the Synvisc Agreements
(defined below) regarding the development, supply and marketing of
intra-articular treatments of osteoarthritis by viscosupplementation;

        WHEREAS, the Parties now desire to terminate the Synvisc Agreements;

        WHEREAS, Wyeth desires to transfer or license to Genzyme, in some cases,
and revert back to Genzyme, in other cases, and Genzyme desires to acquire or
license from Wyeth, all of Wyeth's right, title and interest in and to certain
of Wyeth's assets relating to the Synvisc Products (defined below); and

        WHEREAS, Genzyme desires to obtain performance of specified transitional
services from Wyeth, and Wyeth is willing to perform such services for Genzyme.

        NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements contained in this Agreement, the Parties hereby
agree as follows:

                                    ARTICLE 1
                                   DEFINITIONS

        The following terms, when capitalized, shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined) as used in this Agreement:

        1.1     "AFFILIATE" means, with respect to any person, any person which,
directly or indirectly through the ownership of equity securities or through
other arrangements, either controls, or is controlled by or is under common
control with, such person. A person shall be deemed to be in control of another
entity if it owns or controls at least fifty percent (50%) of the equity
securities of the subject entity entitled to vote in the election of directors
(or, in the case of an entity that is not a corporation, for the election of the
corresponding managing authority); PROVIDED, HOWEVER, that a person shall not be
deemed to be in control of an entity in which a person owns a majority of the
ordinary voting power to elect a majority of the board of directors


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        1


or other governing board but is restricted from electing such majority by
contract or otherwise, until such time as such restrictions are no longer in
effect. As used in this Section 1.1, the term "person" shall mean any
individual, corporation, partnership, trust, unincorporated organization or a
government or any agency or political subdivision thereof.

        1.2     "BENEFIT ARRANGEMENT" means the arrangements referenced in
Section 6.1(b).

        1.3     "CAUSE" shall have the meaning set forth in Section 6.2(b)(ii).

        1.4     "CODE" means the Internal Revenue Code of 1986, as amended.

        1.5     "CUMULATIVE NET SALES" means the aggregate amount of Synvisc Net
Sales during the Term.

        1.6     "EMPLOYEES" means those individuals as set forth on
SCHEDULE 1.6.

        1.7     "EMPLOYEE PLANS" shall have the meaning set forth in Section
6.1(a).

        1.8     "ENCUMBRANCE" means any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, equitable interest, claim, preference,
right of possession, lease, license, encroachment, covenant, infringement,
interference, order, right of first refusal, defect, reservation, limitation,
impairment, imperfection of title, condition or restriction of any nature,
including any restriction on the transfer of any asset, any restriction on the
receipt of any income derived from any asset, any restriction on the use of any
asset and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset; except any of the foregoing or other
matters, individually and in the aggregate, that are not materially adverse to,
or materially interfere with, the use of the asset as they are currently or
contemplated to be used or their adequacy for such use. "Encumbered" has a
correlative meaning.

        1.9     "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

        1.10    "ERISA AFFILIATE" means, with respect to any entity, any other
entity which, together with such entity, would be treated as a single employer
under Section 414 of the Code.

        1.11    "FDA" means the United States Food and Drug Administration, or
any successor agency thereto.

        1.12    "GENZYME COLLABORATION IP" means any and all intellectual
property rights licensed to Wyeth pursuant to the terms of the Synvisc
Agreements.

        1.13    "GENZYME CONFIDENTIAL INFORMATION" means any (a) Information and
other information and materials furnished to Wyeth by Genzyme pursuant to the
Synvisc Agreements or this Agreement; (b) Information relating solely to the
Synvisc Products, which Information was developed by or on behalf of Wyeth in
the course of the collaboration under the Synvisc Agreements; and (c) provisions
of this Agreement that are the subject of an effective order of the


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        2


U.S. Securities and Exchange Commission granting confidential treatment pursuant
to the Securities Act of 1934, as amended.

        1.14    "GENZYME'S SAVINGS PLAN(S)" shall have the meaning set forth in
Section 6.3(c).

        1.15    "GENZYME'S SPENDING ACCOUNT PLAN" shall have the meaning set
forth in Section 6.3(h).

        1.16    "GENZYME'S WELFARE PLANS" shall have the meaning set forth in
Section 6.3(d).

        1.17    "GOVERNMENT CONTRACTS" means the contracts between Wyeth or its
Affiliates and governmental agencies with respect to Synvisc Products as set
forth on SCHEDULE 1.17.

        1.18    "HSR ACT" means the Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.

        1.19    "INFORMATION" means techniques, information, know-how and data
relating to commercialization of the Synvisc Products and including (but not
limited to) marketing, pricing, distribution, cost, sales and manufacturing data
or descriptions.

        1.20    "INVENTION" means any patentable invention or discovery relating
to the Synvisc Products.

        1.21    "KNOW-HOW" means any and all product specifications, processes,
product designs, plans, trade secrets, ideas, concepts, manufacturing,
engineering and other manuals and drawings, standard operating procedures, flow
diagrams, chemical, pharmacological, toxicological, pharmaceutical, physical and
analytical, safety, efficacy, stability, quality assurance, quality control and
clinical data, technical information, data, research records, compositions,
process validation reports, analytical method validation reports, specifications
for stability trending and process controls, testing and reference standards for
impurities and degradation products, customer and supplier lists and similar
data and information, formulation for administration and all other confidential
or proprietary technical and business information whether written or oral and in
whatever format kept.

        1.22    "PATENT" means patents, applications for patent, provisional
applications for patent, and any patents issuing therefrom, including any
divisions, continuations, continued prosecution applications and
continuations-in-part thereof, confirmations, and reexamination certificates,
renewals, reissue patents, patent extensions and patent term restorations, and
any foreign equivalents of the foregoing or corresponding patents or patent
applications, in each case filed anywhere in the Territory.

        1.23    "PENSION PLAN" means an employee pension benefit plan (as such
term is defined in Section 3(2) of ERISA) that is intended to qualify under
Section 401(a) of the Code, is subject to the funding requirements of Section
412 of the Code and is maintained by Sellers or an ERISA Affiliate.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        3


        1.24    "PRODUCT LIABILITY" means a breach of any product warranty
(whether express or implied), strict liability in tort, product recall, or any
other liability, claim or expense arising from the manufacturing, packaging,
labeling (including instructions for use), marketing, distribution or sale of
Synvisc Products (whether for clinical study purposes, commercial use or
otherwise).

        1.25    "SUPPLY AGREEMENT" means that certain Supply Agreement by and
between Biomatrix and AHP, dated as of February 7, 1997, as amended.

        1.26    "SYNVISC ADVERSE MEDICAL EXPERIENCE" means any medical complaint
from a user of the Synvisc Product without regard to whether the medical
complaint was related to Synvisc Product use.

        1.27    "SYNVISC AGREEMENTS" means the Supply Agreement, the Trademark
License Agreement and the U.S. License Agreement.

        1.28    "SYNVISC NET SALES" means the total gross invoice price received
from the sale of all Synvisc Products by Genzyme, its Affiliates and licensees
in the Territory during the Term to non-Affiliated distributors, wholesalers,
hospitals, retail pharmacies, patients, physicians, clinics and other Third
Party purchasers, less, provided that such items do not exceed reasonable and
customary amounts in the Territory, (i) trade, cash and quantity discounts
actually allowed and taken with respect to such sales or because of rebates or
retroactive price reductions and billing corrections with respect to sales; (ii)
tariffs, duties, excises, sales taxes, value added or other taxes imposed upon
and paid with respect to such sales (excluding national, state or local taxes
based on income); (iii) amounts repaid or credited to third party purchasers by
reason of rejections, defects, recalls or return; and (iv) reasonable freight,
transportation and insurance expenses actually paid. Such amounts shall be
determined from the books and records of Genzyme, its Affiliates and licensees
maintained in accordance with generally accepted accounting principles,
consistently applied.

In the case of any sale or other disposal of Synvisc Product between or among
Genzyme and its Affiliates or licensees, for resale, Net Sales shall be
calculated as above only on the amount received from the first arm's length sale
thereafter to a Third Party.

        1.29    "SYNVISC PRODUCT(s)" means (a) hylan gel-fluid 20
(hylan G-F 20), including the product currently known as "Synvisc", (b) all
extensions of label claims for such products, including new dosage and
presentation forms and packaging improvements therefor, and (c) the
bacterially-fermented HA (hylastan SGL-80) product currently under development
by Genzyme, sometimes referred to as AVS, in each case for all uses and
applications thereof so long as such products are approved for the treatment of
osteoarthritis. Synvisc Product does not include any product in which the
Synvisc Product described in the foregoing (a), (b) or (c) is used as a carrier
for local delivery of a therapeutic agent which is approved by the FDA in the
United States of America or the HPB in Canada and is proprietary to Genzyme.

        1.30    "TERM" means the period from the Closing Date to June 30, 2012.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        4


        1.31    "TERRITORY" means United States of America, Canada and, solely
to the extent Genzyme reacquires for itself rights to Synvisc Products from its
licensee in Mexico, Mexico, in each case at any time during the Term.

        1.32    "THIRD PARTY(-IES)" means any person or entity other than
Genzyme or Wyeth and their respective Affiliates.

        1.33    "TRADEMARK LICENSE AGREEMENT" means that certain Trademark
License Agreement by and between Biomatrix and AHP dated as of February 7, 1997,
as amended.

        1.34    "TRANSFERRED EMPLOYEES" shall have the meaning set forth in
Section 6.2(a).

        1.35    "U.S. LICENSE AGREEMENT" means that certain United States
License Agreement by and between Biomatrix and AHP, dated as of February 7,
1997.

        1.36    "VISCOSUPPLEMENT PRODUCT" means a locally delivered product
derived from Hyaluronan, sodium hyaluronate or any other polymeric biomaterial
that is intended to treat the pain associated with osteoarthritis.
Viscosupplement Product does not include any product in which Hyaluronan, sodium
hyaluronate or any other polymeric biomaterial is used as a carrier for local
delivery of a therapeutic agent which is approved by the FDA in the United
States of America or the HPB in Canada and is proprietary to Wyeth.

        1.37    "WYETH CONFIDENTIAL INFORMATION" means any provisions of this
Agreement that are the subject of an effective order of the U.S. Securities and
Exchange Commission granting confidential treatment pursuant to the Securities
Act of 1934, as amended.

        1.38    "WYETH'S PENSION PLAN" shall have the meaning set forth in
Section 6.3(b).

        1.39    "WYETH'S RETIREE WELFARE PLANS" shall have the meaning set forth
in Section 6.3(f).

        1.40    "WYETH'S SAVINGS PLAN" shall have the meaning set forth in
Section 6.1(e).

        1.41    "WYETH'S SESP" shall have the meaning set forth in Section
6.3(c).

        1.42    "WYETH'S SPENDING ACCOUNT PLANS" shall have the meaning set
forth in Section 6.3(h).

        1.43    "WYETH'S SUPPLEMENTAL PLANS" shall have the meaning set forth in
Section 6.3(b).

        1.44    "WYETH'S WELFARE PLANS" shall have the meaning set forth in
Section 6.3(d).

        1.45    OTHER DEFINED TERMS. The following terms are defined in the
specified sections of this Agreement:


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        5




                                    DEFINED TERM                     SECTION
                                    ------------                     -------
                                                                
                           Acquired Assets                         3.1
                           AHP                                     Preamble
                           Assigned Contracts                      3.1(g)
                           Associated Parties                      15.1(a)
                           Audit Disagreement                      7.8(b)
                           Base Pay                                6.2(b)(ii)
                           Biomatrix                               Preamble
                           Claims                                  15.1(a)
                           Closing                                 2.5
                           Closing Date                            2.5
                           Completed Transition                    8.1
                           Damages                                 13.1
                           Disabled Employee                       6.2(b)(iv)
                           Dispute                                 17.1
                           Domain Name                             3.1(d)
                           Excluded Assets                         3.2
                           Genzyme                                 Preamble
                           Genzyme HR Policies                     6.2(b)(ii)
                           Hiring Transition Period                6.2(b)(iv)
                           Indemnified Party                       13.3
                           Indemnifying Party                      13.3
                           Mandated Health Care Coverage           6.3(g)
                           Party/Parties                           Preamble
                           Payment Period                          7.4(b)
                           Pre-Closing Period                      11.1
                           Promotional Materials                   5.7
                           Released Claims                         15.1(a)
                           Salary Continuation Period              6.2(b)(iii)
                           Severance                               6.2(b)(ii)
                           Signing Date                            Preamble
                           Transition Services                     8.1
                           Workers' Compensation Employee          6.2(b)(v)
                           Wyeth                                   Preamble
                           Wyeth Copyrights                        3.1(a)
                           Wyeth House Marks                       3.1(b)
                           Wyeth Sales Force                       11.1(b)
                           Wyeth Trademarks                        3.1(b)


                                    ARTICLE 2
                     TERMINATION OF COLLABORATION AGREEMENTS

        2.1     COLLABORATION AGREEMENTS. Effective upon the Closing Date and
notwithstanding anything to the contrary contained in any of the Synvisc
Agreements, except as


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        6


otherwise set forth in this Section 2.1, each of the Synvisc Agreements and all
verbal understandings relating thereto shall be irrevocably terminated and of no
further force and effect, including without limitation, those provisions in the
Synvisc Agreements expressly stated to survive termination, and the Parties
shall be released from all obligations set forth in the Synvisc Agreements in
accordance with the terms of Article 15. Notwithstanding the foregoing to the
contrary, those terms of the Synvisc Agreements expressly stated in Sections
13.4 and 16.3 of this Agreement to survive termination (as well as any
definitions referenced by such terms) shall remain in full force and effect in
accordance with the terms and conditions of this Agreement.

        2.2     EFFECTS OF TERMINATION. Without limiting the generality of
Section 2.1, upon the Closing Date, all licenses and other rights granted by
Genzyme to Wyeth under the Synvisc Agreements will irrevocably terminate
immediately and all rights in and to the Genzyme Collaboration IP shall revert
immediately to Genzyme. Except as set forth in this Agreement and except for any
Transition Services to be provided by Wyeth, Wyeth will have no further right or
obligation to develop, manufacture, sell, distribute or otherwise commercialize
the Synvisc Products under the Synvisc Agreements from and after the Closing
Date, and Genzyme shall be solely responsible for the development, manufacture,
transportation, testing, sale, distribution and commercialization of Synvisc
Products from and after the Closing Date. Without limiting the generality of the
foregoing:

                (a)     CHARGEBACKS. Upon Closing, Genzyme shall be responsible
for all customer chargebacks under customer contracts for Synvisc Products sold
in the Territory. Genzyme shall be responsible for reimbursing Wyeth for all
qualified customer chargebacks received by Wyeth on or after the Closing Date
and processed by Wyeth, which chargebacks shall be for the account of Genzyme.

                (b)     RETURNS. Wyeth shall be financially responsible for all
qualified returns of Wyeth labeled Synvisc Product sold in the United States
prior to the Closing Date, up to a maximum of [**] cumulative credits or refunds
to customers for returns of such product. Genzyme shall be financially
responsible for all returns of Synvisc Product in excess of [**] of returns. For
the avoidance of doubt, all returns in excess of [**] of Wyeth labeled Synvisc
Product sold by Wyeth prior to the Closing Date shall be for the account of
Genzyme. Returns shall be processed as set forth below.

                        (i)     Within five (5) business days after the Closing
Date, Wyeth will notify all wholesalers, physicians, clinics, pharmacy chains
and pharmacy benefit management companies within Wyeth's customer database that
Genzyme has acquired the rights to the Synvisc Products. The notification to be
sent by Wyeth shall be reviewed and approved in advance by Genzyme, such
approval not to be unreasonably withheld. Such notice will specify that future
qualified returns of Synvisc Products after the Closing Date must be returned to
Genzyme's return goods processor for credit.

                        (ii)    In the event that after the Closing Date, Wyeth
(or Wyeth's designated third party processor) receives any qualified returns of
Synvisc Product (whether sold by Wyeth or Genzyme), Wyeth shall be responsible
for processing such qualified returns and


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        7


shall refund or credit the purchase price to the customer, subject to
subsections (iii) and (iv) below.

                        (iii)   In the event that after the Closing Date Genzyme
(or Genzyme's designated third party processor) receives any returns of Synvisc
Product (whether sold by Wyeth or Genzyme), then Genzyme shall be responsible
for processing all such qualified returns of Synvisc Product and for crediting
or refunding the purchase price to such customers, at Genzyme's expense;
provided, however, that Wyeth shall be financially responsible for qualified
returns of Wyeth-labeled Synvisc Product sold in the United States prior to the
Closing Date until the amount refunded or credited to customers for such returns
totals [**] in the aggregate (the "WYETH RETURN LIABILITY").

                        (iv)    Wyeth shall satisfy the Wyeth Return Liability
in the following manner: (A) Wyeth shall provide written documentation to
Genzyme of any credit or refund to any customer under subsection (ii) above and
the Wyeth Return Liability shall be reduced by the amount refunded to the
customer thereunder, and (B) Genzyme shall deduct from the payments due to Wyeth
under Section 7.4 the amount of any credit or refund to customers by Genzyme for
qualified returns of Wyeth labeled Synvisc Product sold in the United States
prior to the Closing Date until the Wyeth Return Liability (as may be adjusted
pursuant to (A)) has been met. After the Wyeth Return Liability has been met,
any return liability shall be for the account of Genzyme and Genzyme shall
reimburse Wyeth for the full amount of the credit or refund made by Wyeth to the
customer for qualified returns of Wyeth labeled Synvisc Product sold in the
United States by Wyeth prior to the Closing Date.

                (c)     REIMBURSEMENT. Wyeth shall provide Genzyme with an
invoice for amounts due under Sections 2.2 (a) and (b) not later than ten (10)
days after the end of each calendar quarter with the documentation required to
verify the same. Genzyme agrees to reimburse Wyeth in accordance with such
Sections within thirty (30) days after the receipt of the invoice and all
required documentation. In the event of a dispute over any amounts owed which
cannot be resolved between the Parties, the Parties agree to select a reputable
independent national accounting firm mutually acceptable to the Parties to
determine the actual amounts owed. Such amounts owed shall be no greater than
the higher amount nor lower than the lower amount asserted by the Parties. The
cost of such accounting firm shall be paid by the Party asserting the amount
farthest from the actual amount to be paid as determined by the accountant. The
accountant's determination shall be final and binding upon the Parties.

        2.3     RETURN OF CONFIDENTIAL INFORMATION AND COLLABORATION
INTELLECTUAL PROPERTY. Not later than sixty (60) days following the Closing
Date, Wyeth, at its expense, shall return and deliver to Genzyme: (a) all
Confidential Information of Genzyme (as defined under the Synvisc Agreements and
disclosed thereunder); (b) all tangible embodiments of Genzyme Collaboration IP;
and (c) any other Genzyme Confidential Information in the possession or control
of Wyeth and its Affiliates, except (i) in all cases, Genzyme Confidential
Information and Genzyme Collaboration IP to be used by Wyeth in performance of
the Transition Services (but which shall be returned within thirty (30) days
after completion of performance of the Transition Services), and (ii) one
archival copy of the Genzyme Confidential Information to be retained by legal
counsel to allow Wyeth to determine its confidentiality obligations and enforce
its rights under


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       8


this Agreement. If delivery of any of the foregoing materials is not practicable
within such sixty (60) day period, the Parties shall in good faith agree upon a
reasonable timetable for such delivery. The foregoing delivery will be at
Wyeth's expense and in a manner to be mutually agreed upon by the Parties.

        2.4     FINANCIAL RECONCILIATION. Within thirty (30) days following the
end of the calendar quarter in which the Closing Date occurs, Wyeth shall
provide to Genzyme the final accounting of all amounts due and not yet paid
under the provisions of the Supply Agreement and the U.S. License Agreement.
Simultaneously with the provision of such accounting, if a balance is due
Genzyme, Wyeth shall pay to Genzyme all such amounts that are due. If a balance
is due Wyeth, Wyeth shall promptly invoice Genzyme, and Genzyme shall pay to
Wyeth all such amounts that are due within thirty (30) days of receipt of
Wyeth's invoice.

        2.5     CLOSING. The closing of the transactions contemplated herein
(the "CLOSING") will take place at the offices of Wilmer Cutler Pickering Hale
and Dorr LLP, 60 State Street, Boston, Massachusetts 02109, at a time and on a
date to be determined by mutual agreement, which will be during the month of
January, 2005 or such later date that the Parties determine that is not more
than forty five (45) days prior to the date on which the Parties determine that
Wyeth's obligations under SCHEDULE 7.3 can be satisfied. For purposes of this
Agreement, "CLOSING DATE" means the date on which the Closing actually takes
place.

                                    ARTICLE 3
                           PURCHASE AND SALE OF ASSETS

        3.1     PURCHASE AND SALE OF ASSETS. Subject to the terms and conditions
set forth herein, Wyeth shall cause to be sold, assigned, transferred, and
conveyed to Genzyme, and Genzyme shall purchase and acquire from Wyeth, at the
Closing, good and valid title and all other rights and interests in and to the
Acquired Assets, free of any Encumbrances, on the terms and subject to the
conditions set forth in this Agreement.

For purposes of this Agreement, the "ACQUIRED ASSETS" shall mean and include:

                (a)     COPYRIGHTS. All copyrights, copyright registrations and
copyright applications to the extent owned by Wyeth and solely embodied in the
Acquired Assets (the "WYETH COPYRIGHTS"). Wyeth represents that there are no
copyright registrations or copyright applications.

                (b)     TRADEMARKS. All trademarks, design marks, service marks,
trade names, trade dress and product packaging, whether registered or not, as
well as all registrations and applications for the same that are owned by Wyeth
that relate to the Synvisc Products as set forth on SCHEDULE 3.1(b), or any
substantially similar variations thereof, and the goodwill of the business
symbolized thereby, excluding Wyeth House Marks (collectively the "WYETH
TRADEMARKS"). "WYETH HOUSE MARKS" are any trademarks or service marks, and
registrations and applications therefor, utilized by Wyeth or planned to be
utilized by Wyeth, in whole or in part, in connection with any product (other
than the Synvisc Products) or service of Wyeth or


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                        9


any of its Affiliates or that contain the name or any part of the name or logo
now or previously used by Wyeth or any of its Affiliates, and the goodwill of
the business symbolized thereby.

                (c)     CUSTOMER INFORMATION. The third party payor lists and
customer lists, billing records, and reimbursement records related to the
Synvisc Product which are listed in SCHEDULE 3.1(c).

                (d)     DOMAIN NAMES. The domain names listed in SCHEDULE 3.1(d)
(the "DOMAIN NAMES").

                (e)     CLINICAL DATA. The existing clinical data relating to
the Synvisc Product listed in SCHEDULE 3.1(e).

                (f)     MARKETING AND SALES ASSETS. The Synvisc Product
marketing materials, corporate communication materials and sales operations
materials listed in SCHEDULE 3.1(f).

                (g)     ASSIGNED CONTRACTS. All rights and obligations on or
after the Closing Date under the agreements with Third Parties listed in
SCHEDULE 3.1(g) hereof (the "ASSIGNED CONTRACTS").

                (h)     GENZYME COLLABORATION IP.

                (i)     INVENTORY. All right, title and interest in all
inventory of Synvisc Product repurchased by Genzyme pursuant to Section 5.6 of
this Agreement.

                (j)     OTHER. Any additional assets related solely to Synvisc
Product as the Parties may reasonably identify and agree upon during the
Pre-Closing Period.

        3.2     EXCLUDED ASSETS. Notwithstanding anything in Section 3.1 to the
contrary, the Acquired Assets do not include any assets, rights or interests of
Wyeth that are not specifically stated as Acquired Assets including, but not
limited to, the following assets, rights or interests of Wyeth (collectively,
the "EXCLUDED ASSETS"):

                (a)     contracts or agreements with any Third Party other than
the Assigned Contracts;

                (b)     real property and leasehold interests in real property;

                (c)     employment agreements or employees, subject to the
provisions of Article 6;

                (d)     any Patents, or Know-How controlled by Wyeth other than
the Genzyme Confidential Information and the Information; and

                (e)     accounts receivables for Wyeth labeled Synvisc Product
sold by Wyeth prior to the Closing Date.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       10


        3.3     DELIVERY OF ACQUIRED ASSETS. (a) Wyeth will deliver to Genzyme
the Acquired Assets (together with any tangible manifestations thereof) within
the following time periods. All costs associated with delivery and preparation
of the Acquired Assets shall be solely at Wyeth's expense and shall be delivered
in a manner mutually agreed by the Parties.



                   Acquired Assets                                 Delivery Date
- -------------------------------------------------------------------------------------------------
                                               
Trademarks under Section 3.1(b)                   Within thirty (30) days after the Closing Date

Customer Information under Section 3.1(c)         In accordance with SCHEDULE 3.1(c)

Domain Names under Section 3.1(d)                 Within thirty (30) days after the Closing Date

Clinical Data under Section 3.1(e)                Within thirty (30) days after the Closing Date

Marketing and Sales Assets under Section 3.1(f)   In accordance with SCHEDULE 3.1(f)

Assigned Contracts under Section 3.1(g)           On the Closing Date

Genzyme Collaboration IP                          On the Closing Date

Inventory under Section 3.1(i)                    In accordance with Section 5.6 and Attachment 1
                                                  to SCHEDULE 8.1


        (b)     In the event that Wyeth discovers any Acquired Assets in its
possession within two (2) years following the Closing Date, it shall promptly
notify Genzyme and deliver all such Acquired Assets to Genzyme. For the purposes
of clarity, it is agreed by the Parties that Wyeth shall have no duty to search
for Acquired Assets other than those set forth hereinabove and included in the
referenced schedules after the aforementioned delivery dates.

                                    ARTICLE 4
                                TRADEMARK RIGHTS

        4.1     PRODUCT TRADEMARKS. Wyeth agrees and acknowledges that from and
after the Closing Date, it has no right, title or interest in and to use the
trademark "Synvisc", or any mark consisting of the trademark "Synvisc" or the
Wyeth Trademarks, nor has it any right, title or interest in and to the goodwill
of the business symbolized thereby and any applications and registrations for
the same in the Territory. Wyeth shall not adopt, use or register any other
domain name, trademark or service mark confusingly similar to the trademark
"Synvisc" or the Wyeth Trademarks in the Territory.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       11


        4.2     USE OF WYETH HOUSE MARKS. Other than with respect to existing
Synvisc Product inventory purchased by Genzyme pursuant to Section 5.6, Genzyme
shall use commercially reasonable efforts to as expeditiously as practicable
(but in no event longer than ninety (90) days) revise product labeling and
literature, change packaging and stationery, and otherwise discontinue use of
the Wyeth House Marks. In no event shall Genzyme use any Wyeth House Marks after
the Closing Date in any manner or for any purpose different from the use of such
Wyeth House Marks during the ninety (90) day period preceding the Closing. After
the Closing Date, Genzyme may use the Wyeth House Marks for a period of six (6)
months to sell Synvisc Products included in existing Synvisc Product inventory
purchased by Genzyme pursuant to Section 5.6, and shall not be required to
sticker any such Synvisc Product inventory unless its is not sold during such
six (6) month time period.

                                    ARTICLE 5
                NON-COMPETITION; NOTIFICATION; CERTAIN COVENANTS

        5.1     WYETH COVENANT NOT TO COMPETE. [**]

        5.2     SYNVISC ADVERSE MEDICAL EXPERIENCES OBLIGATIONS. Wyeth shall
remain responsible for all adverse event follow up, appropriate due diligence,
and timely forwarding of adverse event related information to Genzyme
Pharmacovigilance in accordance with the Pharmacovigilance Procedures Addendum
effective October 29, 2003 for all adverse experiences (including adverse events
associated with literature review) received prior to the Closing Date.
Notwithstanding the foregoing, from and after the Closing Date, Genzyme shall be
solely responsible for all device vigilance activities, including but not
limited to: Synvisc Adverse Medical Experiences reporting, including literature
review and associated reporting; Synvisc Adverse Medical Experiences follow-up
reporting; preparation and submission of all Synvisc Adverse Medical Experiences
reports to the regulatory authorities as required by local laws and/or
regulations; maintaining the Synvisc Adverse Medical Experiences database for
such Synvisc Product; all interactions with health authorities regarding safety;
periodic submissions; labeling modifications; safety monitoring and detection;
and safety measures (e.g., Dear Doctor Letters, restriction on distribution,
etc.). After the Closing Date, to the extent Wyeth receives any information
regarding Synvisc Adverse Medical Experiences related to the use of the Synvisc
Product (regardless of where occurring), Wyeth shall promptly provide Genzyme
with such information within three (3) business days of receipt by Wyeth.

        5.3     MEDICAL INFORMATION SERVICES. Wyeth shall remain responsible for
responding to any and all medical inquiries received before the Closing Date.
Wyeth shall satisfy these requirements within thirty (30) days after the Closing
Date. From and after the Closing Date, Genzyme shall be solely responsible for
all medical information support related to all medical inquiries received from
and after the Closing Date, including but not limited to: provision of standard
medical responses, custom creation of medical responses, maintaining a medical
inquiry database which captures the nature of the inquiry and the response
provided, literature review for relevant Synvisc-related publications and
appropriate capture and forwarding of post-marketing adverse events and product
complaints. In the event that Wyeth receives any medical inquiry or request
related to Synvisc Product after the Closing Date, Wyeth shall promptly refer
such inquiry to an individual designated by Genzyme.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       12


        5.4     PRODUCT COMPLAINTS. Product quality complaints shall be handled
in accordance with the procedure set forth in Attachment 2 to SCHEDULE 8.1.

        5.5     RECALLS OF SYNVISC PRODUCT.

                (a)     With respect to Synvisc Product sold by Wyeth prior to
the Closing Date, if Genzyme in good faith determines that a recall of such
Synvisc Product in the United States is warranted for medical or safety
purposes, Genzyme shall immediately notify Wyeth in writing and shall advise
Wyeth of the reasons underlying its determination that a recall is warranted.
Genzyme shall be responsible for any recall of all Synvisc Products sold by
Wyeth prior to the Closing Date and Genzyme shall at its cost replace any
recalled Synvisc Product. Wyeth shall provide any information and assistance as
may be reasonably requested by Genzyme to effectuate such recall. Genzyme shall
reimburse Wyeth for all direct costs and expenses incurred by Wyeth as a result
of providing such information and assistance. Wyeth shall reimburse Genzyme for
all direct costs and expenses (including without limitation shipping, quality
control testing and notification costs) incurred by Genzyme and its Affiliates
as a result of a recall if such recall is the result of the failure of Wyeth to
comply with its obligations under the Synvisc Agreements.

                (b)     With respect to Synvisc Product sold by Genzyme on or
after the Closing Date, Genzyme shall be responsible for all recalls of such
Synvisc Product, at Genzyme's expense.

        5.6     INVENTORY REPURCHASE. On the Closing Date, Genzyme shall
repurchase from Wyeth all remaining inventory of Synvisc Products held by Wyeth
at any location at a price equal to Wyeth's acquisition cost for such inventory,
PROVIDED THAT (a) Genzyme shall not be obligated to purchase in excess of three
months' supply of such inventory based upon average monthly requirements for
sales to customers over the six (6) month period immediately preceding the
Closing Date, and (b) Genzyme shall not be obligated to purchase any inventory
with an expiration date less than eighteen (18) months from the Closing Date.

        5.7     PROMOTIONAL MATERIALS. The Parties agree that Wyeth will use
commercially reasonable efforts to delay the printing of sales visual aids,
leave items, formulary binders, reprints, direct mail, direct to consumer
advertising, Internet postings, and sales reminder aids (collectively, the
"PROMOTIONAL MATERIALS") for the Synvisc Product in the United States to permit
printing of Promotional Materials with Genzyme's approved trademark usage. Wyeth
shall be financially responsible for all costs related to Promotional Materials
produced with Genzyme's approved trademark usage, unless the Closing does not
occur in which case Genzyme shall be financially responsible for all such costs.

        5.8     FORECASTS.

                (a)     Not later than thirty (30) days after the Closing Date,
and on the first day of November of each calendar year thereafter during the
Term, Genzyme shall provide to Wyeth a non-binding good faith estimate of
Synvisc Net Sales by quarter in the Territory for the twelve (12) month period
starting on the first day of the following calendar year. Genzyme shall also


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       13


provide to Wyeth a non-binding revised good faith estimate of Synvisc Net Sales
by quarter in the Territory for the balance of the then-current calendar year
not later than the first day of February, May and August for each calendar year
during the Term.

                (b)     Simultaneously with the delivery of each forecast on
each of February 1, May 1, August 1, and November 1, Genzyme shall deliver to
Wyeth a report that provides data that Genzyme collects in the normal course of
business regarding the inventory of the amount of Synvisc Products held by each
of Genzyme, its Affiliates, licensees, distributors and wholesalers.

                (c)     Genzyme shall provide the forecasts and reports set
forth in (a) and (b) until the satisfaction of Genzyme's obligation to make
payments to Wyeth under Article 7 of this Agreement, and thereafter no further
forecasts or reports shall be required.

        5.9     FURTHER ASSURANCES. Wyeth agrees to execute, acknowledge and
deliver such further instruments, and to do all such other reasonable acts, as
may be necessary or appropriate in order to carry out the purposes and intent of
this Agreement.

        5.10    APPLICABLE LAWS. Wyeth shall comply (and cause its Affiliates to
comply) in all material respects with all applicable laws and regulations in
Wyeth's performance of the Transition Services. Genzyme shall comply (and cause
its Affiliates and use commercially reasonable efforts to require its licensees
to comply) in all material respects with all applicable laws and regulations in
Genzyme's development, manufacturing and commercialization of the Synvisc
Products and in the performance of Genzyme's obligations under this Agreement.

                                    ARTICLE 6
                         EMPLOYEES AND EMPLOYEE BENEFITS

        6.1     EMPLOYEE PLANS. Wyeth hereby represents and warrants to Genzyme
that:

                (a)     SCHEDULE 6.1(a) sets forth a list of each employee
benefit plan (including the retiree life and medical benefit plan), as such term
is defined in Section 3(3) of ERISA, which (i) is subject to any provision of
ERISA, (ii) is maintained by or contributed to by Wyeth, and (iii) covers
Employees (hereinafter referred to collectively as the "EMPLOYEE PLANS").

                (b)     SCHEDULE 6.1(b) sets forth a list of (x) each
management, employment, consulting, or other contract with any individual
providing for the retention of personal services involving the payment of [**]
, and (y) each plan or arrangement providing for vacation benefits,
supplemental nonqualified benefits, severance benefits, bonuses, stock
options, stock appreciation or other forms of incentive compensation,
compensation or benefits which (i) is not an Employee Plan, (ii) is entered
into, maintained or contributed to, as the case may be, by Wyeth, and (iii)
covers Employees, and dependents or beneficiaries thereof. Such contracts,
plans and arrangements as are described above, copies or descriptions of all
of which have been made available to Genzyme, are hereinafter referred to
collectively as the "BENEFIT ARRANGEMENTS."

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       14


                (c)     Except as set forth on SCHEDULE 6.1(c) neither Wyeth or
any of its ERISA Affiliates has incurred any liability under Title IV of ERISA
arising in connection with the termination of any Pension Plan which is subject
to Title IV of ERISA that could become, after the Closing Date, the liability of
Genzyme or any of its ERISA Affiliates.

                (d)     Except as disclosed on SCHEDULE 6.1(d), Wyeth (with
respect to the Employees) has not been required, and does not have any
obligation, to contribute to a multiemployer plan, as defined in Section 3(37)
of ERISA, or to a multiple employer plan (defined as a plan to which two or more
employers contribute, at least two of whom are not under common control within
the meaning of "common control" as used in Section 4063(a) of ERISA) and do not
have or expect to have any withdrawal liability assessed against them with
respect to any such multiemployer plan.

                (e)     The Wyeth Savings Plan ("WYETH'S SAVINGS PLAN") is
intended to satisfy Section 401(a) and 401(k) of the Code and has received a
favorable determination letter from the Internal Revenue Service, which letter
is currently in effect with respect to Wyeth's Savings Plan and all amendments
thereto through the Closing Date. To the knowledge of Wyeth, nothing has
occurred since the issuance of such letter which could reasonably affect its
qualification.

        6.2     GENZYME'S OBLIGATIONS TO EMPLOYEES.

                (a)     On the Closing Date, the Parties will execute an
"Employee Leasing Agreement" substantially in the form of SCHEDULE 6.2(a).
Subject to Sections 6.2(c), (d) and (e), Genzyme agrees to offer or to cause an
Affiliate of Genzyme to offer to hire each Employee on the Closing Date, in a
comparable position, at the same or greater base pay than that enjoyed by such
Employee immediately prior to the Closing Date. With respect to each Employee
who is not actively at work on the Closing Date due to short-term disability or
other authorized leave of absence, such offer shall be contingent upon the
Employee offering to return to active employment following the end of such
short-term disability or authorized leave of absence and within the [**] period
following the Closing Date as more fully set forth in Sections 6.2(c) and (d).
All offers to hire are subject to the Employees' completion and submission to
Genzyme of (i) Genzyme's agreement related to confidentiality, nonsolicitation,
noncompetition and intellectual property (which will be substantially in the
form attached hereto as SCHEDULE 6.2(a)(i)), (ii) Genzyme's employment
application (which will be substantially in the form attached hereto as SCHEDULE
6.2(a)(ii)), and (iii) Form I-9. Genzyme represents and warrants to Wyeth that
all employees of Genzyme must sign the foregoing documents as a pre-condition to
employment at Genzyme. Subject to Sections 6.2(c), (d) and (e), the employment
of such Employees shall be considered effective and their employment by Wyeth
shall terminate and transfer to Genzyme on the Closing Date. Employees who
accept employment with Genzyme effective as of the Closing Date, or upon
employment pursuant to Sections 6.2(c), (d) and (e), shall hereafter be referred
to as the "TRANSFERRED EMPLOYEES."

                (b)     Genzyme shall make the following payments or provide the
following notification to Transferred Employees whom it terminates after the
Closing Date:


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       15


                        (i)     After the Closing Date, Genzyme will have sole
responsibility for any obligations or liabilities to Transferred Employees under
the Worker Adjustment and Retraining Notification Act or similar applicable laws
of any jurisdiction relating to any plant closing or mass layoff or as otherwise
required by any such applicable law. For the avoidance of doubt, Genzyme shall
have no obligation or liability under the Worker Adjustment and Retraining
Notification Act or similar applicable laws of any jurisdiction relating to any
plant closing or mass layoff or as otherwise required by any such applicable law
for any Employee terminated by Wyeth; and

                        (ii)    Genzyme shall provide severance payments
("SEVERANCE") to each Transferred Employee whose employment is terminated by
Genzyme because of a termination without Cause (as defined herein) or reduction
in the workforce or job elimination at any time within the [**] following the
Closing Date.

                                Except as set forth below, Severance shall be
                paid to such Transferred Employee in the form of bi-weekly
                salary continuation payments and will be calculated:

                                (A) for any such Transferred Employee employed
                by Genzyme in the position of Clinical Account Executive/MSM,
                except those certain Transferred Employees set forth in SCHEDULE
                6.2(b)(ii)(A), on the basis of [**], or

                                (B) for any such Transferred Employee in the
                position of Regional Sales Director/District Manager, except for
                those certain Transferred Employees set forth in SCHEDULE
                6.2(b)(ii)(B), and including those certain Transferred Employees
                set forth in SCHEDULE 6.2(b)(ii)(A), on the basis of [**], or

                                (C) for any such Transferred Employee in the
                position of Regional Sales Director/District Manager set forth
                in SCHEDULE 6.2(b)(ii)(B), on the basis of [**];

                provided that, in each case, in no event will the Severance
                exceed [**] of Base Pay. Any Transferred Employee who does not
                have a job title set forth above shall receive such Severance as
                shall be determined in good faith by the Parties.

                                For purposes of this Section 6.2, "BASE PAY"
                shall mean the base salary of the Transferred Employee on the
                date of termination of employment or the Closing Date, whichever
                is greater. No such Severance payments shall be made if a
                Transferred Employee is terminated for Cause. For purposes of
                this Section 6.2, "CAUSE" shall mean [**].

                                Genzyme may terminate any Transferred Employee
                who at the Signing Date or Closing Date (a) is on a Wyeth
                performance corrective action plan or (b) was given a Wyeth
                performance rating of [**] at his or her most current
                performance evaluation ("PLAN EMPLOYEE"), for Failure to Meet
                Job Expectations, as defined in the Genzyme HR Policies and as
                such Genzyme HR Policies are generally applied to all Genzyme
                employees. [**]


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       16


                                Genzyme shall also provide Severance payments if
                a Transferred Employee resigns from employment with Genzyme
                within [**] after the Closing Date because (a) there is a
                reduction in the aggregate cash compensation, including
                eligible targeted bonus, for which he or she is eligible
                (other than for Cause), (b) a condition of his or her
                continued employment is assignment to a new sales territory
                reasonably requiring relocation to a new principal work
                place/home office, (c) a material reduction in employee benefits
                offered to him/her compared to similarly situated Genzyme
                employees, or (d) a material reduction in the nature and extent
                of his/her job responsibilities after taking into account
                possible new titles and reporting structures at Genzyme.

                        (iii)   During the period during which bi-weekly
severance payments are being made pursuant to subsection (ii) above ("SALARY
CONTINUATION PERIOD"), Genzyme shall provide continued coverage under Genzyme's
medical, dental, and prescription drug plans at the same coverage and
contribution level as when the Transferred Employee was employed with Genzyme.
The Transferred Employees' rights under the COBRA statute shall attach at the
completion of the Salary Continuation Period. In addition, Genzyme shall provide
outplacement services to terminated Transferred Employees that are substantially
equivalent to those offered by Genzyme to similarly situated employees upon
termination.

                (c)     Any Employee who is, as of the Closing Date, disabled
within the meaning of the applicable short-term disability plan or policy or the
applicable long-term disability plan of Wyeth or its Affiliates ("DISABLED
EMPLOYEE") shall not be offered employment by Genzyme effective on the Closing
Date. Wyeth shall continue to pay the applicable disability benefits to such
Disabled Employee and provide such other benefits as are provided to
similarly-situated disabled employees of Wyeth or its Affiliates. If within a
period of [**] after the Closing Date (the "HIRING TRANSITION PERIOD") a
Disabled Employee provides written notice to Wyeth that such Disabled Employee
is no longer disabled within the meaning of both the applicable short-term
disability plan or policy and the long-term disability plan of Wyeth or its
Affiliates, (i) Wyeth shall notify Genzyme as soon practicable, and (ii) Genzyme
shall offer employment to such Disabled Employee in accordance with the
provisions of this Section 6.2 that apply to Transferred Employees (other than
Disabled Employees or Workers' Compensation Employees (as defined below)) as
soon as practicable following such notification and if during the Hiring
Transition Period any such Disabled Employee accepts employment with Genzyme he
or she shall be a Transferred Employee for all purposes; provided, that, if
during the Hiring Transition Period such disability coverage ceases due to
death, retirement or other termination of employment by the Disabled Employee,
Genzyme shall have no obligation to offer employment to such Disabled Employee.

                (d)     Any Employee who has, as of the Closing Date, incurred
an injury or illness which entitles such Employee to workers' compensation or a
similar workers' protection claim ("WORKERS' COMPENSATION EMPLOYEE") shall not
be offered employment by Genzyme on the Closing Date. Wyeth shall be obligated
to provide and liable for any workers' compensation or similar workers'
protection claim to such Workers' Compensation Employee. If within the Hiring
Transition Period a Workers' Compensation Employee ceases to be entitled to
workers' compensation or similar workers' protection benefits, (i) Wyeth shall
notify Genzyme as soon as


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       17


practicable, and (ii) Genzyme shall offer employment to such Workers'
Compensation Employee in accordance with the provisions of this Section 6.2 that
apply to Employees (other than Disabled Employees or Workers' Compensation
Employees) as soon as practicable following such notification and if during the
Hiring Transition Period any such Workers' Compensation Employee accepts
employment with Genzyme he or she shall be a Transferred Employee for all
purposes; provided, that, if during the Hiring Transition Period such workers'
compensation or similar workers' protection entitlement ceases due to death,
retirement or other termination of employment by the Workers' Compensation
Employee, Genzyme shall have no obligation to offer employment to such Workers'
Compensation Employee.

                (e)     Any Employee who is, as of the Closing Date, performing
services pursuant to the terms of the Employee Leasing Agreement (the "Leased
Employees") shall not be offered employment by Genzyme on the Closing Date. Such
Leased Employees shall be offered employment by Genzyme at the end of the
"Transition Period" (as defined in the Employee Leasing Agreement) with respect
to each such Leased Employee, and if the Leased Employee accepts employment with
Genzyme, he or she shall be a Transferred Employee for all purposes.

        6.3     TREATMENT OF WYETH'S AND GENZYME'S EMPLOYEE PLANS AND BENEFIT
ARRANGEMENTS.

                (a)     (i)     No assets of any defined benefit Pension Plan,
Employee Plan (except as may be otherwise provided in this Article 6) or Benefit
Arrangement shall be transferred to Genzyme or any of its Affiliates or to any
plan of Genzyme or any of its Affiliates and, except as set forth in this
Article 6, Genzyme and its Affiliates shall assume no liability or obligation of
Wyeth or any of their Affiliates under any of the Employee Plans, the Benefit
Arrangements or the Pension Plans except as set forth in this Article 6.

                        (ii)    After the Closing Date Genzyme shall offer
Transferred Employees the Employee Benefit Plans and Employee Benefit
Arrangements which are the same Employee Benefit Plans and Employee Benefit
Arrangements as those provided to similarly situated employees of Genzyme.

                        (iii)   Except for the liabilities as set forth on
SCHEDULE 6.3(a)(iii), Genzyme shall assume no liability for the Transferred
Employees' compensation and bonus relating to events which occurred on or prior
to the Closing Date or to actions taken by Wyeth or one of Wyeth's Affiliates,
or to consequences which are deemed to have occurred by operation of law as a
result of the transactions contemplated herein.

                        (iv)    Genzyme agrees to grant to Transferred Employees
prior service credit for purposes of sick leave, entitlements, and other
policies or arrangements which count service for eligibility or entitlement to
benefits.

                        (v)     Genzyme shall assume the vacation liability for
each Transferred Employee in accordance with Wyeth's vacation policy solely with
respect to vacation allocated on January 1, 2005. Immediately after the Closing
Date, Wyeth shall provide Genzyme with a


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       18


schedule reflecting the 2005 vacation allotment for each Transferred Employee
less any vacation days taken through the Closing Date ("EARNED WYETH VACATION").
In the event a Transferred Employee terminates employment during 2005 prior to
utilizing all of their Earned Wyeth Vacation, Genzyme shall provide pay for the
Earned Wyeth Vacation as well as any additional vacation time accrued under
Genzyme's 2005 vacation policy. To the extent that the payment to the
Transferred Employee for the unused vacation time attributable to the Earned
Wyeth Vacation and determined in accordance with the terms of the Wyeth 2005
vacation policy with respect to cash-out of unused vacation exceeds the payment
for unused vacation time that Genzyme would have paid to the Transferred
Employee under Genzyme's 2005 vacation policy, Wyeth shall reimburse Genzyme for
the excess cash-out of unused vacation. Genzyme shall provide Wyeth with a copy
of its 2005 vacation policy prior to the Closing Date. For calendar year 2005,
Genzyme agrees to provide any Transferred Employee with 20 or more years of
service credit to Wyeth with a vacation benefit of 5 weeks (including Earned
Wyeth Vacation, if any). Effective January 1, 2006, Genzyme shall accrue
vacation for all Transferred Employees under Genzyme's vacation policy giving
such Transferred Employees past service credit for their employment with Wyeth.

                (b)     Wyeth shall amend the Wyeth Retirement Plan - United
States ("WYETH'S PENSION PLAN") and Wyeth non-qualified supplemental retirement
plans ("WYETH'S SUPPLEMENTAL PLANS") to provide that all service completed by
the Transferred Employees for Genzyme or its Affiliates after the Closing Date
shall be recognized for purposes of vesting and satisfying any requirements for
early retirement subsidies for benefits accrued as of the Closing Date under
Wyeth's Pension Plan and Supplemental Plans, but Wyeth shall not be required to
take such service into account for benefit accrual purposes under Wyeth's
Pension Plan and Supplemental Plans. However, Transferred Employees shall not
commence receipt of retirement benefits under the Wyeth Pension Plan until he or
she terminates employment with Genzyme or its Affiliates.

                (c)     Wyeth shall amend the Wyeth's Savings Plan and Wyeth's
supplemental employee savings plan ("WYETH'S SESP") to provide that all
Transferred Employees are fully vested in their account balances under Wyeth's
Savings Plans and Wyeth's SESP as of the Closing Date. Genzyme maintains
qualified savings plan(s) for the benefit of its employees ("GENZYME'S SAVINGS
PLAN(s)"). Genzyme shall recognize Transferred Employees' service with Wyeth or
their Affiliates for purposes of determining eligibility to participate and
vesting of benefits in Genzyme's Savings Plan(s). Wyeth shall allow for
distribution from the Wyeth Savings Plan to the Transferred Employees as soon as
practicable after the Closing Date and Genzyme shall accept rollovers (including
loans outstanding under the Wyeth Savings Plan that are fully compliant with all
applicable legal requirements but excluding after-tax contributions) by
Transferred Employees of such distributions to Genzyme's Savings Plan(s) which
meet the requirements of Section 401(a) of the Code to the extent that any
Transferred Employee opts to roll over such distributions.

                (d)     With respect to the Transferred Employees, Wyeth shall
retain liability under any group life, accident, worker's compensation, medical,
hospitalization, prescription drug, dental, spending account or short-term or
long-term disability plan ("WYETH'S WELFARE


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       19


PLANS"), whether or not insured, for any claims incurred on or prior to the
Closing Date, and Genzyme shall assume all liability for any claims arising
after the Closing Date under its group life, accident, worker's compensation,
medical, hospitalization, prescription drug, dental, spending account or
short-term or long-term disability plans ("GENZYME'S WELFARE PLANS"). For
purposes of this Section 6.3(d), claims shall be deemed to have arisen:

                        (i)     With respect to all death or dismemberment
claims, on the actual date of death or dismemberment;

                        (ii)    With respect to disability or salary continuance
claims, on the day the claimant became disabled or otherwise entitled to salary
continuation;

                        (iii)   With respect to all hospital, medical, drug or
dental claims on the date the service or supply was purchased or received by the
claimant; and

                        (iv)    With respect to worker's compensation claims
that are single-accident specific, on the date of the occurrence, and with
respect to all other worker's compensation claims, on the date the claim is
made.

                (e)     After the Closing Date, all Transferred Employees shall
be eligible to participate in Genzyme's Welfare Plans in accordance with the
terms of such plans, and employment with Wyeth or their Affiliates will be taken
into account for purposes of determining eligibility to participate and benefits
under Genzyme's Welfare Plans; PROVIDED, HOWEVER, that

                        (i)     Transferred Employees shall participate under
Genzyme's Welfare Plans as of the day after the Closing Date without any waiting
periods, without evidence of insurability for such Genzyme's Welfare Plans that
are prohibited from discriminating on the basis of insurability under the Health
Insurance Portability and Accountability Act of 1996 as amended, and without
application of any pre-existing physical or mental condition limitations except
to the extent applicable under similar plans maintained by Wyeth; and

                        (ii)    Genzyme shall count claims arising during the
calendar year on or prior to the Closing Date for purposes of satisfying
deductibles, out-of-pocket maximums, and all other similar limitations under
Genzyme's Welfare Plans.

                (f)     Wyeth maintains a program of medical and life insurance
benefits for certain retired employees ("WYETH'S RETIREE'S WELFARE PLANS"). All
Transferred Employees who satisfy the eligibility criteria for benefits under
the Wyeth's Retiree Welfare Plans on or prior to the Closing Date shall receive
such benefits from the Wyeth's Retiree Welfare Plans following their termination
from Genzyme or its Affiliates or any successor thereto in accordance with the
terms of the Wyeth's Retiree Welfare Plans as in effect on the date of
termination of the Transferred Employee from Genzyme or its Affiliates or
successor thereto. However, Transferred Employees who are eligible for medical
coverage under Genzyme's medical plan shall receive coverage under Genzyme's
medical plan while employed by Genzyme.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       20


                (g)     Genzyme shall be responsible for any legally mandated
continuation of health care coverage ("MANDATED HEALTH CARE COVERAGE") for all
Transferred Employees and/or their covered dependents who have a loss of health
care coverage due to a qualifying event (as defined in Section 4980B of the
Code) (each, a "RECIPIENT") that occurs after the Closing Date and Wyeth shall
remain responsible for any Mandated Health Care Coverage for all Recipients who
have a loss of health care coverage due to a qualifying event (as defined in
Section 4980B of the Code) that occurs prior to the Closing Date.

                (h)     Wyeth maintains a dependent care spending account plan
and a medical spending account plan for the benefit of their employees ("WYETH'S
SPENDING ACCOUNT PLANS"). Transferred Employees who are participants in Wyeth's
Spending Account Plans shall be permitted to submit claims for expenses incurred
during the plan year on or prior to the Closing Date for a period of sixty (60)
days after the Closing. Wyeth shall treat the Transferred Employees for purposes
of Wyeth's Spending Account Plans the same as Wyeth treats any employee whose
employment is terminated by Wyeth. The Transferred Employees will be free to
enroll in the medical spending account plan of Genzyme ("GENZYME'S MEDICAL
SPENDING ACCOUNT PLAN"). Genzyme shall be responsible for all liabilities for
Transferred Employees under Genzyme's Medical Spending Account Plans following
the Closing Date.

        6.4     STOCK OPTIONS. Wyeth shall be responsible for and incur the
costs of stock option compensation for all Transferred Employees with stock
options from Wyeth. This includes payments, if any, to Transferred Employees
relating to non-exercisable stock options as of the Closing Date. Wyeth shall be
liable for any payments, withholding obligations and reporting obligations that
arise after the Closing Date under this Section 6.4 under any applicable stock
option or stock incentive plan of Wyeth in accordance with its terms.

        6.5     NO HIRING OF TRANSFERRED EMPLOYEES. For a period of [**] after
the Closing Date, neither Wyeth nor its Affiliates shall hire as an employee (or
retain as a consultant or contractor) any Transferred Employee; provided,
however, that Wyeth and its Affiliates may hire any Transferred Employee whose
employment has been terminated by Genzyme.

        6.6     NO THIRD PARTY BENEFICIARIES. No provision of this Agreement
shall create any third party beneficiary or other rights in any Employee
(including any beneficiary or dependent thereof) or any persons in respect of
continued employment with Wyeth, or with any of their Affiliates, and no
provision of this Agreement shall create any such rights in any such persons in
respect of any benefits that may be provided, directly or indirectly, under any
Benefit Plan or Benefit Arrangement, or any plan or arrangement which may be
maintained or established by Wyeth or any of their Affiliates. No provision of
this Agreement shall constitute a limitation on the right of Genzyme or any
Affiliates of Genzyme to terminate any Employee at will.

                                    ARTICLE 7
                                    PAYMENTS

        7.1     UP-FRONT PAYMENT. In addition to the repurchase of inventory of
Synvisc Product pursuant to Section 5.6 and the other payments hereunder,
Genzyme shall pay to Wyeth a non-refundable, one-time payment in the amount of
ninety-five million dollars ($95,000,000)


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       21


on the Closing Date as partial consideration for the termination of the Synvisc
Agreements, the transfer of the Acquired Assets and the other rights and
licenses granted to Genzyme hereunder.

        7.2     MILESTONE PAYMENT RELATING TO PRODUCT NET SALES. In addition to
the other payments hereunder, within thirty (30) days following the achievement
by Genzyme (taking into account all Synvisc Net Sales) of the following
milestone during the Term and in the Territory, Genzyme shall pay to Wyeth the
non-refundable, one-time payment below:



                 MILESTONE EVENT                       AMOUNT
                                                    
Achievement of Synvisc Net Sales during any            $  60,000,000
twelve (12) month period of at least $200,000,000


        For the avoidance of doubt, the milestone payment under this Section 7.2
shall be payable only once during the Term, irrespective of the number of
additional periods during which the milestone event may be achieved.

        7.3     POST-CLOSING PAYMENT. Upon performance of the "Wyeth's
Deliverables" in accordance with SCHEDULE 7.3, Genzyme shall pay to Wyeth a
one-time, non-refundable payment of twenty million dollars ($20,000,000).

        7.4     CONTINGENT PAYMENTS.

                (a)     PAYMENT RATE. With respect to Cumulative Net Sales:

                        (i)     thirty percent (30%) of Cumulative Net Sales for
that portion of Cumulative Net Sales that is less than or equal to $438,000,000;

                        (ii)    fifteen percent (15%) of Cumulative Net Sales
for that portion of the total amount of Cumulative Net Sales that is greater
than $438,000,000 but less than or equal to $1,100,000,000; and

                        (iii)   no payments shall be owed with respect to
Cumulative Net Sales that are greater than $1,100,000,000.

                (b)     CONTINGENT PAYMENT REPORTS AND PAYMENTS. Within fifteen
(15) days after the last day of each calendar month during the Term, Genzyme
shall deliver to Wyeth a true and accurate report of Synvisc Net Sales by
Genzyme, its Affiliates and licensees during the preceding calendar month period
(any such period, a "PAYMENT PERIOD"), with all contingent payments, if any, due
under Section 7.4(a) for the period covered by such report being due within
thirty (30) days of the end of the applicable calendar month. Such report shall
also include (i) a statement of Cumulative Net Sales as of the end of the
Payment Period and (ii) the information necessary for Wyeth to verify "Synvisc
Net Sales" during the applicable period on a country-by-country (or such other
territory as is reported by a Genzyme licensee) and Synvisc Product-by- Synvisc
Product basis. Genzyme shall continue to provide such reports for a period


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       22


of six (6) months following the satisfaction of Genzyme's obligation to make
payments to Wyeth under this Agreement, and thereafter no further reports shall
be required.

        7.5     PAYMENT METHOD. All payments due to Wyeth under this Agreement
shall be made by Genzyme in the United States in U.S. Dollars by wire transfer
to a bank account designated by Wyeth.

        7.6     EXCHANGE RATE. For any given Payment Period, if any portion of
Synvisc Net Sales would be otherwise determined in currency other than U.S.
Dollars then, for the purposes of calculating contingent payments due under
Section 7.4(a), that portion of Synvisc Net Sales attributable to each type of
such currency will be converted to U.S. Dollars in the following manner:

                (a)     Synvisc Net Sales will be determined in its original
currency for each of the three (3) months during the Payment Period; then

                (b)     the Synvisc Net Sales values for each month as
calculated under Section 7.6(a) will be separately converted into U.S. Dollars
based on the average rate of exchange for that month (based on the rates
published in the WALL STREET JOURNAL during such month); and then

                (c)     the portion of Synvisc Net Sales attributable to that
currency for that Payment Period will be the sum of the three (3) monthly values
calculated under Section 7.6(b).

        7.7     WITHHOLDINGS. All taxes, assessments and fees of any nature
levied or incurred on account of any payments accruing under this Agreement, by
national, state or local governments, will be assumed and paid by Genzyme,
except taxes levied thereon as income taxes to Wyeth, and if such taxes are
required to be withheld by Genzyme by the applicable national, state or local
governmental entity, then Genzyme shall deduct such taxes from such payments due
to Wyeth and shall pay such taxes on the account of Wyeth, and shall secure and
provide to Wyeth a receipt of such payment, together with copies of all
pertinent communications from or with such governmental entities with respect
thereto. Genzyme agrees to reasonably cooperate with Wyeth in any effort by
Wyeth in claiming any exemption from such deductions or withholdings under any
double taxation or similar agreement or treaty from time to time in force and in
minimizing the amount required to be so withheld or deducted, such cooperation
to consist of providing receipts of payment of such withheld tax or other
documents reasonably available to Genzyme.

        7.8     RECORDS; AUDIT.

                (a)     GENZYME RECORDS. Genzyme will maintain, and cause its
Affiliates, and licensees to maintain, complete and accurate records regarding
its activities relating to this Agreement (including, without limitation, the
means of calculating the amounts which are relevant to the calculation of
Synvisc Net Sales under this Agreement), and such records shall be retained and
open during reasonable business hours for a period of three (3) years from the
creation of individual records for examination or for a longer period of time,
if required by applicable law, and not more often than once each calendar year,
by an independent certified


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       23


public accountant that is selected by Wyeth and reasonably acceptable to Genzyme
for the sole purpose of verifying the correctness of calculations and
classifications of payments made by Genzyme, its Affiliates or licensees, under
this Agreement and that is subject to a binding confidentiality and non-use
agreement no less restrictive than the terms of Article 14. The auditing expense
shall be paid by Wyeth; PROVIDED, HOWEVER, that if the audit reveals an
underpayment by Genzyme of amounts due under this Agreement in excess of five
percent (5%), Genzyme shall bear and promptly reimburse Wyeth for the auditing
expense. In any case, Genzyme shall make any payments necessary to Wyeth to
correct any underpayment by Genzyme. Any records or accounting information
received from Genzyme, its Affiliates, or licensees shall be Confidential
Information for purposes of Article 14. Results of any such audit shall be
provided to both Parties, subject to Article 14.

                (b)     AUDIT. If there is a dispute between the Parties solely
with respect to the results of the audit performed pursuant to Section 7.8(a),
Wyeth may refer the issue (an "AUDIT DISAGREEMENT") to an independent certified
public accountant (selected in accordance with Section 7.8(b)(ii)) for
resolution. In the event Wyeth refers an Audit Disagreement for resolution, the
Parties shall comply with the following procedures:

                        (i)     Wyeth shall provide written notice to Genzyme
that it is invoking the procedures of this Section 7.8(b).

                        (ii)    Within thirty (30) business days of the giving
of such notice, the Parties shall jointly select a recognized international
accounting firm to act as an independent expert to resolve such Audit
Disagreement.

                        (iii)   The Audit Disagreement submitted for resolution
shall be described by the Parties to the independent expert in writing within
ten (10) business days of the selection of such independent expert.

                        (iv)    The independent expert shall render a decision
on the matter (including a determination with respect to the allocation of costs
as described in Section 7.8(c)) as soon as practicable.

                        (v)     The decision of the independent expert shall be
final and binding, unless such Audit Disagreement involves alleged fraud, breach
of this Agreement or construction or interpretation of any of the terms and
conditions hereof.

                (c)     COSTS. The cost of the independent expert shall be borne
equally by the two parties and the parties shall otherwise bear their own costs
associated with participating in the procedure called for in Section 7.8(b).

        7.9     LATE PAYMENTS. Genzyme shall pay interest to Wyeth on the
aggregate amount of any payments that are not paid on or before the date such
payments are due under this Agreement at a rate per annum equal to the lesser of
the prime interest rate as reported by Chase Manhattan Bank NA plus three
percent (3%), for the applicable period, or the highest rate


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       24


permitted by applicable law, calculated from such payment was due to the date
such payment is made.

                                    ARTICLE 8
                                    SERVICES

        8.1     TRANSITION SERVICES. Wyeth shall provide and deliver, and as
necessary shall cause its Affiliates or relevant Third Parties to provide and
deliver, the transition services and items specified on SCHEDULE 8.1
(collectively, the "TRANSITION SERVICES") in each case by the respective dates
described on such schedule and in accordance with the terms and conditions of
this Agreement.

        8.2     SERVICES. It is understood that the performance of the
Transition Services may be subject to disruption that may be a consequence of
the announcement of this Agreement, but such disruption does not release Wyeth
from its obligations to perform such Services in accordance with the terms of
this Agreement.

        8.3     TRANSITION COORDINATION. As of the Closing Date and for the
duration of the Transition Services, each Party shall designate one or more
employees to coordinate the management of the Transition Services. At least once
every two weeks, these coordinators (or their respective designees) shall meet
either in-person or by telephone to assess the progress towards completion of
the Transition Services and each will use his or her reasonable efforts to
facilitate completion of the Transition Services, including the review of the
costs and expenses incurred in connection with the performance of the Transition
Services.

        8.4     STANDARDS OF PERFORMANCE. Wyeth shall provide (and cause its
Affiliates to provide) the Transition Services with at least the same level of
skill, quality, care, timeliness, and cost effectiveness as such services,
functions, equipment and tasks existed or were performed prior to the Signing
Date, if applicable, but in no event with a standard less that commercial
reasonableness; and for such services not performed prior to the Signing Date
they shall be performed to a standard of no less than commercial reasonableness.
Genzyme will make its facilities, equipment, materials and employees available
to Wyeth as necessary and reasonably requested by Wyeth for the provision of the
Transition Services.

                                    ARTICLE 9
                     REPRESENTATIONS AND WARRANTIES OF WYETH

        Wyeth represents and warrants as of the Signing Date as follows:

        9.1     DUE ORGANIZATION. Wyeth is a corporation duly organized under
the laws of the State of Delaware and has all necessary power and authority to
conduct its business in the manner in which it is currently being conducted.

        9.2     THIRD PARTY AGREEMENTS. Neither Wyeth nor any of its Affiliates
has entered into any agreement with any Third Party pursuant to which such Third
Party has granted a


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       25


license, or covenant not to sue or to assert, under such Third Party's Patents,
which Patents relate to the research, development, manufacture, use, sale, offer
for sale of any Synvisc Products.

        9.3     INTELLECTUAL PROPERTY. Wyeth has not granted any sublicense in
or to or otherwise Encumbered any of the Genzyme Collaboration IP.

        9.4     PROCEEDINGS; ORDERS.

                (a)     There is no pending proceeding, and to the knowledge of
Wyeth, no Third Party has threatened by written communication to commence any
proceeding: (i) that involves Wyeth and that specifically relates to the
Acquired Assets or Wyeth's performance under the Synvisc Agreements; or (ii)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the execution of this Agreement and the
Closing. To the knowledge of Wyeth, no event has occurred, and no claim, dispute
or other condition or circumstance exists, that might give rise to or serve as a
basis for the commencement of any such proceeding;

                (b)     To the knowledge of Wyeth, there are no pending
proceedings that involve Wyeth and that specifically relate to the Synvisc
Products other than the product liability proceedings set forth in SCHEDULE
9.4(b); and

                (c)     To the knowledge of Wyeth, there is no judicial or
administrative order relating to any Synvisc Products to which Wyeth is subject.

        9.5     AUTHORITY; BINDING NATURE OF AGREEMENTS. Wyeth has the power and
authority to enter into and to perform its obligations under this Agreement. The
execution, delivery and performance by Wyeth of this Agreement have been duly
authorized by all necessary corporate action on the part of Wyeth. This
Agreement constitutes the legal, valid and binding obligation of Wyeth,
enforceable against Wyeth in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and (ii) rules of law governing specific performance, injunctive relief and
other equitable remedies.

        9.6     NON-CONTRAVENTION; CONSENTS.

                (a)     The consummation or performance of any of the
obligations under this Agreement by Wyeth will not (with or without notice or
lapse of time):

                        (i)     contravene, conflict with or result in a
violation of (A) any of the provisions of Wyeth's Certificate of Incorporation
or bylaws, or (B) any resolution adopted by Wyeth's Board of Directors (or any
committee thereof) or stockholders;

                        (ii)    to the knowledge of Wyeth, contravene, conflict
with or result in a violation of, any legal requirement or any judicial or
administrative order to which Wyeth, or any of the assets owned or used by
Wyeth, is subject; or

                        (iii)   result in the imposition or creation of any
Encumbrance upon or with respect to the Acquired Assets.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       26


                (b)     Other than filings under the HSR Act, Wyeth was not, is
not and will not be required to make any filing with or give any notice to, or
to obtain any consent from, any person prior to the consummation or performance
of this Agreement.

        9.7     BROKERS. Wyeth has not agreed or become obligated to pay, or has
taken any action that might result in any Third Party claiming to be entitled to
receive, any brokerage commission, finder's fee or similar commission or fee in
connection with this Agreement.

        9.8     ADDITIONAL REPRESENTATIONS.

                (a)     Wyeth and its Affiliates have no assets (including
without limitation any intellectual property rights, information or materials)
related solely to the Synvisc Products other than the Acquired Assets;

                (b)     To the knowledge of Wyeth, all schedules attached to
this Agreement are complete and accurate in all material respects;

                (c)     the Acquired Assets are acquired by Genzyme free of any
Encumbrances; and

                (d)     the inventory of Synvisc Product to be repurchased by
Genzyme pursuant to Section 5.6 has not been adulterated or misbranded by Wyeth
and has been stored in accordance with Synvisc Product labeling.

        9.9     DISCLAIMER. WYETH MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED (INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF INFRINGEMENT, TITLE, MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE) EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 9. WITHOUT
LIMITATION OF THE FOREGOING, AND EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE
9, NOTHING CONTAINED IN THIS AGREEMENT SHALL BE CONSTRUED AS EXTENDING ANY
REPRESENTATION OR WARRANTY WITH RESPECT TO THE ACQUIRED ASSETS, THE TRANSFERRED
INTELLECTUAL PROPERTY OR THE TRANSITION SERVICES.

        9.10    SURVIVAL. The representations and warranties set forth in this
Article 9 shall expire eighteen (18) months after the Closing Date, with the
exception of the representation and warranty set forth in Section 9.7 which
shall be perpetual. Any claims made with respect to such representations and
warranties (including, without limitation, any claim made under Section 13.1)
must be brought prior to the applicable expiration date (if any) for such
representation and warranty; PROVIDED, HOWEVER, that such expiration date shall
not affect the continued adjudication of such claim brought prior to such
applicable expiration date.

                                   ARTICLE 10
                    REPRESENTATIONS AND WARRANTIES OF GENZYME


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       27


        Genzyme represents and warrants as of the Signing Date as follows:

        10.1    DUE ORGANIZATION. Genzyme is a corporation duly organized under
the laws of the State of Massachusetts, and has all necessary power and
authority to conduct its business in the manner in which it is currently being
conducted.

        10.2    NON-CONTRAVENTION; CONSENTS.

                (a)     The consummation or performance of any of the
obligations under this Agreement by Genzyme will not (with or without notice or
lapse of time):

                        (i)     contravene, conflict with or result in a
violation of (A) any of the provisions of Genzyme's Certificate of Incorporation
or bylaws or (B) any resolution adopted by Genzyme's Board of Directors (or any
committee thereof) or stockholders; or

                        (ii)    to the knowledge of Genzyme, contravene,
conflict with or result in a violation of any legal requirement or any judicial
or administrative order to which Genzyme or any of the assets owned or used by
Genzyme is subject.

                (b)     Other than filings under the HSR Act, Genzyme was not,
is not and will not be required to make any filing with or give any notice to,
or to obtain any consent from, any person prior to the consummation or
performance of this Agreement.

        10.3    PROCEEDINGS; ORDERS. There is no pending proceeding, and to the
knowledge of Genzyme, Genzyme has not received written notice or other
communication threatening to commence any proceeding: (i) that involves Genzyme
and that relates to or might affect the Acquired Assets or the ability of
Genzyme to perform this Agreement; or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the execution of this Agreement and the Closing. To the knowledge of Genzyme, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that might give rise to or serve as a basis for the commencement of any
such proceeding.

        10.4    AUTHORITY; BINDING NATURE OF AGREEMENT. Genzyme has the right,
power and authority to enter into and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement by Genzyme
have been duly authorized by all necessary corporate action on the part of
Genzyme. This Agreement constitutes the legal, valid and binding obligation of
Genzyme, enforceable against Genzyme in accordance with its terms, subject to
(a) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies.

        10.5    BROKERS. Genzyme has not agreed or become obligated to pay, or
taken any action that might result in any person or entity claiming to be
entitled to receive, any brokerage commission, finder's fee or similar
commission or fee in connection with this Agreement.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       28


        10.6    ADDITIONAL REPRESENTATIONS. Genzyme is not engaged in, and has
no current plans to commence, a clinical study for the use of a Synvisc Product
for any use other than the treatment of osteoarthritis. As of the Signing Date,
other than Synvisc Product for use for the treatment of osteoarthritis, Genzyme
is not engaged in, and has no current plans to commence, a clinical study for
the use of a candidate Viscosupplement Product.

        10.7    DISCLAIMER. GENZYME MAKES NO REPRESENTATIONS AND EXTENDS NO
WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION,
ANY WARRANTIES OF INFRINGEMENT, TITLE, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE) EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 10.

        10.8    SURVIVAL. The representations and warranties set forth in this
Article 10 shall expire eighteen (18) months after the Closing Date, with the
exception of the representation and warranty set forth in Section 10.5 which
shall be perpetual. Any claims made with respect to such representations and
warranties (including, without limitation, any claim made under Section 13.2)
must be brought prior to the applicable expiration date (if any) for such
representation and warranty; PROVIDED, HOWEVER, that such expiration date shall
not affect the continued adjudication of any such claim brought prior to such
applicable expiration date.

                                   ARTICLE 11
                              PRE-CLOSING COVENANTS

        11.1    PRE-CLOSING COVENANTS OF WYETH.

                (a)     ACCESS. Subject to the provisions of the confidentiality
obligations below in Article 14, during the period from the Signing Date through
the Closing Date (the "PRE-CLOSING PERIOD"), Wyeth will, after receiving
reasonable advance notice from Genzyme, give Genzyme reasonable access (during
normal business hours) to Wyeth's facilities, to Wyeth's books and records
relating to the Acquired Assets and to the Transferred Employees and will
provide Genzyme with such information, data and materials regarding the Acquired
Assets and Transferred Employees and any other appropriate matters germane to
the subject matter of this Agreement as Genzyme may reasonably request. Such
access shall include but not be limited to Wyeth providing Genzyme with the
information, data and materials set forth in SCHEDULE 11.1(a) (the "PRE-CLOSING
INFORMATION") within a reasonable amount of time but in no event later than the
periods set forth in SCHEDULE 11.1(a). After the Closing Date and subject to the
confidentiality obligations below in Article 14, Genzyme shall have the right to
use the Pre-Closing Information for any purpose related to the Acquired Assets
and Transferred Employees. In addition, Wyeth will assist Genzyme in
communicating with the Transferred Employees so as to prepare for and facilitate
the transition of the Transferred Employees to Genzyme on the Closing Date. All
Genzyme employees and agents participating in such facility visits shall comply
with all Wyeth written policies and procedures while on Wyeth sites as
reasonably notified in advance by Wyeth.

                (b)     CONDUCT OF BUSINESS. Except as contemplated or permitted
by this Agreement, or as otherwise approved in writing by Genzyme, during the
Pre-Closing Period


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       29


Wyeth will (i) continue to sell, promote and distribute the Synvisc Product in
substantially the same manner as it has been doing so immediately prior to the
Signing Date, including maintaining current levels of sales and marketing
investment in the Synvisc Products; (ii) continue to share one-half of the
clinical study expenses for the hip trial and the Synvisc II pilot study
incurred as of the Closing Date; and (iii) use reasonable efforts to retain, and
maintain the integrity and value of, the Wyeth sales force and brand team
dedicated to the Synvisc Products (the "WYETH SALES FORCE"). [**] During the
Pre-Closing Period and after the Closing Date, Wyeth will not provide any
severance benefits to any Employee who declines a position with Genzyme which is
offered by Genzyme in accordance with Section 6.2(a). Wyeth shall ensure that
the transfer of the Acquired Assets and information under this Agreement
complies with all applicable privacy, data protection or data transfer laws and
regulations including without limitation the Health Insurance Portability and
Accountability Act (HIPAA), as amended, and, to the extent that such privacy
regulations restrict Wyeth's ability to transfer any Acquired Assets or
information to Genzyme hereunder, the Parties will cooperate and share equally
any reasonable Third Party costs, if any, in obtaining any required
authorizations or consents for such transfer. Wyeth shall use reasonable efforts
to obtain any required consents from any Third Party who is a party to the
Assigned Contracts for the assignment of the Assigned Contracts to Genzyme
effective on the Closing Date.

                (c)     INVENTORY REPORTS. During the Pre-Closing Period, Wyeth
shall provide Genzyme with a monthly report of its inventory levels, such report
to be substantially in the form attached hereto as SCHEDULE 11.1(c).

                (d)     NEGATIVE COVENANTS. Except as contemplated or permitted
by this Agreement or as otherwise approved in writing by Genzyme, during the
Pre-Closing Period Wyeth will not (i) license or dispose of any material
Acquired Assets, (ii) prematurely terminate or materially amend, grant a
sublicense under or assign any of the Assigned Contracts, or (iii) commit a
material breach of any Assigned Contract. If Wyeth requests Genzyme's approval
of a proposed action that would otherwise result in a breach by Wyeth of this
Section 11.1(d), Genzyme will respond promptly to Wyeth's request and will not
unreasonably withhold its approval of the proposed action.

                (e)     CONDITIONS. Wyeth will use commercially reasonable
efforts (i) to cause the conditions set forth in Section 12.1 to be satisfied on
a timely basis and (ii) otherwise to cause the Closing to take place as soon as
reasonably practicable.

                (f)     FINANCIAL STATEMENTS. If requested by Genzyme, Wyeth
will provide reasonable assistance, as appropriate, and at Genzyme's expense,
for Genzyme to produce any audited financial statements or other financial data
required by Genzyme to comply with the requirements of the securities laws with
respect to the transaction contemplated in this Agreement.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       30


        11.2    PRE-CLOSING COVENANTS OF GENZYME.

                (a)     PRE-CLOSING COMMITMENTS. Genzyme shall use commercially
reasonable efforts to minimize the extent and period of Transition Services
required by Genzyme, and to be as ready as permitted by applicable law to take
over conduct of the Synvisc Product business in the United States as of the
Closing Date.

                (b)     CONDITIONS. Genzyme will use commercially reasonable
efforts (i) to cause the conditions set forth in Section 12.2 to be satisfied on
a timely basis and (ii) otherwise to cause the Closing to take place as soon as
reasonably practicable.

        11.3    HSR ACT.

                (a)     Each of Genzyme and Wyeth shall, as promptly as
practicable after the date hereof, file or supply, or cause to be filed or
supplied, all notifications and information required to be filed or supplied
pursuant to the HSR Act in connection with the transactions contemplated by this
Agreement. Each of Genzyme and Wyeth shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission which is necessary under the
HSR Act. As promptly as practicable, Genzyme and Wyeth shall make, or cause to
be made, all such other filings and submissions under laws, rules and
regulations applicable to them, or to their Affiliates, as may be required for
them to consummate the transactions contemplated hereby in accordance with the
terms of this Agreement. Genzyme and Wyeth shall keep one another apprised of
the status of any communications with, and inquiries or requests for additional
information from, any governmental authority, including the United States
Federal Trade Commission and the Antitrust Division of the United States
Department of Justice, and shall comply promptly with any such inquiry or
request. Genzyme shall pay the costs of all filing fees under the HSR Act.

                (b)     Each of Genzyme and Wyeth shall use reasonable
commercial efforts to resolve any objections that may be asserted by the United
States Federal Trade Commission and the Antitrust Division of the United States
Department of Justice with respect to the transactions contemplated hereby, and
shall cooperate with each other to contest any challenges to the transactions
contemplated hereby by any such governmental entity. The Parties agree to
cooperate and to use their respective reasonable commercial efforts to obtain
any government clearances or approvals required for Closing under the HSR Act,
to respond to any government requests for information under the HSR Act, and to
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) that restricts, prevents or prohibits the consummation of the
transactions contemplated by this Agreement under the HSR Act or which is
otherwise required to consummate the transactions contemplated by this
Agreement.

                                   ARTICLE 12
                         CONDITIONS PRECEDENT TO CLOSING


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       31


        12.1    CONDITIONS PRECEDENT TO GENZYME'S OBLIGATION TO CLOSE. Genzyme's
obligation to purchase the Acquired Assets and to take the other actions
required to be taken by Genzyme at the Closing and thereafter is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Genzyme, in whole or in part, in writing):

                (a)     ACCURACY OF REPRESENTATIONS. Those representations and
warranties of Wyeth set forth in Article 9 shall be accurate in all material
respects as of the Closing Date as if made on and as of the Closing Date.

                (b)     PERFORMANCE OF COVENANTS. Wyeth shall have performed, in
all material respects, all covenants required by this Agreement to be performed
by Wyeth on or before the Closing Date.

                (c)     HSR ACT. The waiting period (and any extension thereof)
applicable to the consummation of the Agreement under the HSR Act applicable to
the transactions contemplated hereby shall have expired or been terminated.

                (d)     ADDITIONAL DOCUMENTS. Wyeth shall have executed and
delivered such bills of sale, assignments and other instruments as Genzyme may
reasonably require as necessary to evidence and effectuate the transfer of the
Acquired Assets to Genzyme.

                (e)     NO RESTRAINTS. No injunction or other order preventing
the consummation of the transactions contemplated by this Agreement shall have
been issued since the Signing Date by any foreign, United States federal or
state court of competent jurisdiction and shall remain in effect; and no
foreign, United States federal or state law, rule or regulation that makes
consummation of the transactions contemplated by this Agreement illegal shall
have been enacted or adopted since the Signing Date and shall remain in effect.

        12.2    CONDITIONS PRECEDENT TO WYETH'S OBLIGATION TO CLOSE. Wyeth's
obligation to sell and transfer the Acquired Assets to Genzyme and to take the
other actions required to be taken by Wyeth at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Wyeth, in whole or in part, in writing):

                (a)     ACCURACY OF REPRESENTATIONS. The representations and
warranties of Genzyme set forth in Article 10 shall be accurate in all material
respects as of the Closing Date as if made on and as of the Closing Date.

                (b)     PERFORMANCE OF COVENANTS. Genzyme shall have performed,
in all material respects, all covenants required by this Agreement to be
performed by Genzyme on or before the Closing Date.

                (c)     HSR ACT. The waiting period (and any extension thereof)
applicable to the consummation of the Agreement under the HSR Act applicable to
the transactions contemplated hereby shall have expired or been terminated.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       32


                (d)     NO RESTRAINTS. No injunction or other order preventing
the consummation of the transactions contemplated by this Agreement shall have
been issued since the Signing Date by any foreign, United States federal or
state court of competent jurisdiction and shall remain in effect; and no
foreign, United States federal or state, law, rule or regulation that makes
consummation of the transactions contemplated by this Agreement illegal shall
have been enacted or adopted since the Signing Date and shall remain in effect.

                (e)     ADDITIONAL DOCUMENTS. Genzyme shall have executed and
delivered such other documents as Wyeth may reasonably require evidencing
Genzyme's assumption of the obligations being assigned to Genzyme pursuant to
this Agreement.

                                   ARTICLE 13
                                 INDEMNIFICATION

        13.1    INDEMNIFICATION BY WYETH. Except as set forth in Section 13.2
hereof, and except to the extent caused by Genzyme's, or its Affiliates' or
licensees' negligent, reckless or willful acts or omissions, Wyeth shall
indemnify, defend and hold Genzyme and its directors, officers, employees,
agents and Affiliates harmless from and against any liabilities, damages, costs
or expenses, including reasonable attorneys' fees (collectively, "DAMAGES")
incurred or suffered as the result of Third Party claims, demands, or judgments
to the extent arising out of or relating to: (a) any material breach of any
covenant, agreement, representation or warranty of Wyeth contained in this
Agreement, and (b) any Product Liability relating to Synvisc Product sold by
Wyeth prior to the Closing but excluding defects introduced into such Synvisc
Product by Genzyme in violation of the warranties under the Supply Agreement.
The indemnification obligations arising in connection with the breach of any
representation or warranty by Wyeth shall expire upon the expiration of the
applicable representation or warranty as set forth in Section 9.10 or, if later,
with respect to any claim brought under this Section 13.1 prior to the
expiration date of the applicable representation or warranty, until the final
adjudication of such claim.

        13.2    INDEMNIFICATION BY GENZYME. Except as set forth in Section 13.1
hereof, and except to the extent caused by Wyeth's or its Affiliates', or
licensees' negligent, reckless or willful acts or omissions, Genzyme shall
indemnify, defend and hold Wyeth and its directors, officers, employees, agents
and Affiliates harmless from and against any Damages incurred or suffered as the
result of Third Party claims, demands, or judgments, to the extent arising out
of or relating to: (a) any activities relating to any Synvisc Product, including
without limitation the development, manufacture, storage, distribution,
promotion, and commercialization of Products, that are performed by or on behalf
of Genzyme, its Affiliates, or licensees after the Closing; (b) any Product
Liability relating to any Synvisc Product sold by Genzyme after the Closing, and
(c) any material breach of any covenant, agreement, representation or warranty
of Genzyme contained in this Agreement. The indemnification obligations arising
in connection with the breach of any representation or warranty by Genzyme shall
expire upon the expiration of the applicable representation or warranty as set
forth in Section 10.7, or, if later, with respect to any claim brought under
this Section 13.2 prior to the expiration date of the applicable representation
and warranty, until the final adjudication of such claim.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       33


        13.3    INDEMNIFICATION PROCEDURE. Each Party will notify the other
Party in writing in the event it becomes aware of a claim for which
indemnification may be sought hereunder. In case any proceeding (including any
governmental investigation) shall be instituted involving any Party in respect
of which indemnity may be sought pursuant to this Article 13, such Party (the
"INDEMNIFIED PARTY") shall promptly notify the other Party (the "INDEMNIFYING
PARTY") in writing and the Indemnifying Party and Indemnified Party shall meet
to discuss how to respond to any claims that are the subject matter of such
proceeding. The Indemnified Party shall cooperate fully with the Indemnifying
Party in defense of such matter. The Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, the
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Party
unless (a) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (b) the named parties to any such
proceeding (including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation of both Parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. All such fees and expenses shall be reimbursed as they are incurred. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but, if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Party agrees to
indemnify the Indemnified Party from and against any loss or liability by reason
of such settlement or judgment. The Indemnifying Party shall not, without the
written consent of the Indemnified Party, effect any settlement of any pending
or threatened proceeding in respect of which the Indemnified Party is, or
arising out of the same set of facts could have been, a party and indemnity
could have been sought hereunder by the Indemnified Party, unless such
settlement includes an unconditional release of the Indemnified Party from all
liability on claims that are the subject matter of such proceeding.

        13.4    INDEMNIFICATION FOR ACTIVITIES PRIOR TO CLOSING. Except as
provided in Section 2.2 of this Agreement, the obligations of the Parties under
Article 11 of the U.S. License Agreement and Article 11 of the Supply Agreement
(and, solely to the extent necessary to give meaning to such obligations, any
representations or warranties contained in these agreements) shall survive
termination of the Synvisc Agreements solely with respect to those activities
conducted prior to the Closing by either of the Parties.

        13.5    INSURANCE. Genzyme shall obtain by the Closing Date and maintain
at all times during the three (3) year period thereafter, Products Liability
Insurance with reputable and financially secure insurance carriers each having
an A.M. Best rating of A-VII or better, to cover its indemnification obligations
under Section 13.2, with limits of not less than one million dollars
($1,000,000.00) per occurrence and five million dollars ($5,000,000.00) in the
aggregate. Genzyme shall provide Wyeth with a Certificate of Insurance
evidencing this coverage within thirty (30) days after the Closing. Genzyme
shall have the right to maintain self-insurance with respect to all or a part of
its insurance obligations under this Section 13.5.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       34


                                   ARTICLE 14
                                 CONFIDENTIALITY

        14.1    NON-DISCLOSURE AND NON-USE.

                (a)     Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing, Wyeth agrees to keep confidential, and
not to publish or otherwise disclose or use for any purpose other than as
provided for in this Agreement, any Genzyme Confidential Information.

                (b)     Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing, Genzyme agrees to keep confidential,
and not to publish or otherwise disclose or use for any purpose other than as
provided for in this Agreement, any Wyeth Confidential Information.

                (c)     The obligations set forth in the foregoing Sections 14.1
(a) and (b) shall not apply to Confidential Information of a Party to the extent
the receiving Party establishes that such Confidential information:

                        (i)     was already known to the receiving Party, other
than under an obligation of confidentiality, at the time of disclosure by the
other Party;

                        (ii)    was generally available to the public or
otherwise part of the public domain at the time of its disclosure to the
receiving Party;

                        (iii)   became generally available to the public or
otherwise part of the public domain after its disclosure to the receiving Party,
and other than through any act or omission of the receiving Party in breach of
this Agreement;

                        (iv)    was disclosed to the receiving Party, other than
under an obligation of confidentiality, by a Third Party who had no obligation
to the disclosing Party not to disclose such information to others; or

                        (v)     was independently developed by employees of the
receiving Party who had no knowledge of or access to the Confidential
Information of the other Party.

        14.2    AUTHORIZED DISCLOSURE.

                (a)     Each Party may disclose Confidential Information of the
other Party to the extent such disclosure is required by an order of a court or
other government agency or is required to comply with applicable governmental
regulations, PROVIDED, HOWEVER, that if a Party is required by court order, law
or regulation to make any such disclosures of the other Party's Confidential
Information it will give reasonable advance notice to the other Party sufficient
to allow such other Party to seek confidential treatment of such Confidential
Information.

                (b)     Wyeth may disclose Genzyme Confidential Information,
without prior notice to Genzyme, (i) in connection with the performance of the
Transition Services described


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       35


in Article 8, to its Affiliates, permitted subcontractors, employees,
consultants, representatives or agents who are providing such Transition
Services, and (ii) to existing or potential acquirers or merger candidates, each
of whom prior to disclosure must be subject to a binding confidentiality
agreement.

                (c)     Genzyme may disclose Wyeth Confidential Information,
without prior notice to Wyeth, (i) in connection with the research, development,
manufacture, use or sale of Synvisc Products or in the performance of this
Agreement, to its Affiliates, licensees, employees, consultants, representatives
or agents, and (ii) to existing or potential acquirers or merger candidates,
potential collaborators, investment bankers, existing or potential investors,
venture capital firms or other financial institutions or investors for purposes
of obtaining financing, each of whom prior to disclosure must be subject to a
binding confidentiality agreement.

        14.3    PUBLICITY. The Parties agree that the public announcement of the
execution of this Agreement shall be substantially in the form of the press
release to be mutually agreed to by the Parties. Any other publication, news
release or other written public announcement referring to the other Party
relating to this Agreement, or such other Party's performance hereunder or under
the Synvisc Agreements, shall first be reviewed and approved by both Parties,
which approval shall not be unreasonably withheld; PROVIDED, HOWEVER, that any
disclosure which is required by law or by stock exchange regulations as advised
by the disclosing Party's counsel may be made without the prior consent of the
other Party, although the other Party shall be given prompt notice of any such
legally or otherwise required disclosure and to the extent practicable shall
provide the other Party an opportunity to comment on the proposed disclosure.

                                   ARTICLE 15
                     MUTUAL RELEASE; LIMITATIONS ON REMEDIES

        15.1    MUTUAL RELEASE.

                (a)     DEFINITIONS.

                        (i)     The term "ASSOCIATED PARTIES," when used herein
with respect to a Party, shall mean and include: (A) such Party's predecessors,
successors, executors, administrators, heirs and estate; (B) such Party's past,
present and future assigns, directors, officers, employees, agents and
representatives; (C) each entity that such Party has the power to bind (by such
Party's acts or signature) or over which such Party directly or indirectly
exercises control; and (D) each entity of which such Party owns, directly or
indirectly, at least 50% of the outstanding equity, beneficial, proprietary,
ownership or voting interests. For clarity, the term "Associated Parties" shall
include without limitation any and all Affiliates.

                        (ii)    The term "CLAIMS" shall mean and include all
past, present and future disputes, claims, controversies, demands, rights,
obligations, liabilities, actions and causes of action of every kind and nature,
including without limitation (A) any unknown, unsuspected or undisclosed claim;
(B) any claim or right that may be asserted or exercised in a capacity as a
stockholder, director, officer or employee, or in any other capacity; and (C)
any claim, right or


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       36


cause of action based upon any breach of any express, implied, oral or written
contract or agreement.

                        (iii)   The term "RELEASED CLAIMS," when used herein
with respect to a Party, shall mean and include each and every Claim that (A)
such Party may have had in the past, may now have or may have in the future
against the other Party or its Associated Parties, and (B) has arisen or arises
directly or indirectly out of, or relates directly or indirectly to, any
circumstance, agreement, activity, action, omission, event or matter occurring
or existing on or prior to the Signing Date to the extent such Claim relates to
or arises under the Synvisc Agreements; PROVIDED, HOWEVER, that the Released
Claims shall exclude: (1) any and all rights to seek and obtain indemnification
under this Agreement and the Synvisc Agreements to the extent that such rights
expressly survive termination of the Synvisc Agreements pursuant to Section 13.4
of this Agreement; and (2) any and all rights to seek and obtain enforcement of,
or a remedy arising out of the breach of, any obligation provided for in this
Agreement.

                (b)     RELEASE. Each Party, for itself and for each of its
Affiliates, hereby generally, irrevocably, unconditionally and completely
releases and forever discharges the other Party and each of the other Party's
Associated Parties from, and hereby irrevocably, unconditionally and completely
waives and relinquishes, each of such Party's Released Claims. The Parties
acknowledge they are aware that they may hereafter discover facts in addition to
or different from those now known or believed to be true with respect to the
subject matter of this release, but that it is their intention to hereby fully,
finally and forever settle and release all such claims, disputes and
differences, known or unknown, suspected or unsuspected, that now exist or
heretofore have existed between the Parties and that in furtherance of such
intention, this release shall remain in effect as a full and complete release
notwithstanding the discovery or existence of any such additional or different
facts.

        15.2    LIMITATION OF REMEDIES. The Parties agree and acknowledge that,
effective as of the Closing Date, the termination of the Synvisc Agreements and
Genzyme's acquisition of any and all of the rights in and to the Acquired Assets
described in Article 3, the transfer of those Acquired Assets pursuant to this
Agreement are final and irrevocable and shall in no way be modified, altered or
subject to any limitation, notwithstanding any alleged breach by Genzyme of any
provision hereunder, any alleged breach or default of any other obligation owed
to Wyeth, or termination of all or any portion of this Agreement for any reason.
In the event of any dispute arising out of or relating to Genzyme's payment
obligations under Article 7 hereunder, Wyeth agrees and understands that its
sole and exclusive remedy for any such claim shall be a claim for monetary
damages from and against Genzyme and that it hereby waives any and all remedies
or claims for equitable or other forms of relief, except for monetary damages.

        15.3    CONSEQUENTIAL DAMAGES. IN NO EVENT WILL EITHER PARTY OR ITS
AFFILIATES BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE, TREBLE OR
CONSEQUENTIAL DAMAGES, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER LEGAL
THEORY; PROVIDED, HOWEVER, THAT THIS LIMITATION WILL NOT LIMIT THE
INDEMNIFICATION OBLIGATION OF SUCH PARTY UNDER THE PROVISIONS OF ARTICLE 13 FOR
SUCH DAMAGES


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       37


CLAIMED BY A THIRD PARTY OR A PARTY'S LIABILITY FOR BREACH OF ITS OBLIGATIONS
UNDER ARTICLE 14.

        15.4    REMEDIES. Other than as set forth in Section 15.2, nothing in
this Agreement will limit either Party's right to seek immediate injunctive or
other equitable relief whenever the facts or circumstances would permit a Party
to seek such relief in a court of competent jurisdiction.

                                   ARTICLE 16
                          CLOSING; TERM AND TERMINATION

        16.1    TERM. Unless terminated prior to Closing under Section 16.2, the
terms and conditions of this Agreement will commence on the Signing Date and
will continue in full force and effect during the Term, except for certain
obligations that are limited in time as specified throughout this Agreement.

        16.2    TERMINATION RIGHT. Either Party shall have the right prior to
Closing to terminate this Agreement effective immediately upon written notice to
the other Party if the Closing does not occur upon the later of (i) the HSR
Clearance Date or (ii) March 31, 2005, solely because the conditions in Sections
12.1(c) and 12.2(c) have not been satisfied. After the conditions in Sections
12.1(c) and 12.2(c) have been fulfilled, either Party may terminate this
Agreement prior to Closing if, and only if, the other Party is unable to fulfill
its other Closing conditions under Sections 12.1 or 12.2, as applicable, and
such terminating Party has not waived fulfillment of such other Closing
conditions, in each case no later than fifteen (15) business days after the
satisfaction of the conditions set forth in Sections 12.1(c) and 12.2(c). Each
Party shall be liable and responsible for all costs incurred by such Party in
connection with the transactions contemplated by this Agreement in the event of
such termination. For avoidance of doubt, neither Party may terminate this
Agreement after Closing. As used herein, the term "HSR CLEARANCE DATE" shall
mean the earlier of (a) the date on which the United States Federal Trade
Commission shall notify Genzyme and Wyeth of early termination of the applicable
waiting period under the HSR Act or (b) the day after the date on which the
applicable waiting period under the HSR Act expires.

        16.3    SURVIVAL.

                (a)     The provisions of Articles 3, 14, and 15 and Sections
2.1, 2.2. 4.1, 6.6, 7.4(b), 7.5, 7.6, 7.7, 7.8, 7.9, 9.7, 10.5, 13.1, 13.2,
13.3, 13.4, 16.3, 17.2, 18.1, 18.3 through 18.12, together with any definitions
used or exhibits, schedules, or appendices referenced in the foregoing Articles
and Sections, will survive any expiration of this Agreement.

                (b)     In the event of termination of this Agreement as
permitted under Section 16.2 above, it shall forthwith be void and have no
effect, without liability or obligations as a result of such termination on the
part of any Party, its directors, officers or stockholders, except that the
provisions of Sections 9.7, 10.5, 16.3, 17.1, 17.2, 18.1 and 18.3 through 18.12
together with any definitions used or exhibits, schedules, or appendices
referenced in the foregoing Articles and Sections, will survive such
termination. Nothing contained herein shall relieve any Party from liability for
any breach of this Agreement occurring before such termination.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       38


                                   ARTICLE 17
                               DISPUTE RESOLUTION

        17.1    EXECUTIVE OFFICERS. The Parties will try to settle their
differences amicably between themselves. If any claim, dispute, or controversy
of whatever nature arising out of or relating to this Agreement, including the
performance or alleged non-performance of a Party of its obligations under this
Agreement (each a "DISPUTE") arises between the Parties, then a Party may notify
the other Party in writing of such Dispute. If such Dispute is not resolved
within ten (10) business days of such notice, the Parties hereby agree to
resolve such Dispute by referring the Dispute to their respective executive
officers designated below or their designees, for attempted resolution by
negotiations within fifteen (15) business days after such notice of Dispute is
received. The designated officers are as follows:

        For Wyeth: President Wyeth North America and Global Business

        For Genzyme: Genzyme Chief Executive Officer

        17.2    LITIGATION.

                (a)     In the event the designated officers are unable to
resolve such Dispute within the fifteen (15) business day period under Section
17.1, then the Parties hereby agree that they shall be permitted to pursue all
available remedies at law or in equity, PROVIDED HOWEVER, that no lawsuit may be
commenced by a Party unless it gives the other Party fifteen (15) business days
notice of its intent to initiate an action. The Parties agree that all disputes
will be submitted for resolution to the United States District Court for the
District of Massachusetts, and consent to venue in and the jurisdiction of that
Court.

                (b)     THE PARTIES WAIVE THE RIGHT TO TRIAL BY JURY.

                                   ARTICLE 18
                                  MISCELLANEOUS

        18.1    ASSIGNMENT. Either Party may assign its rights or obligations
under this Agreement in writing. This Agreement shall survive any merger,
acquisition or similar reorganization of either Party with or into, or the sale
of all or substantially all of such Party's assets related to the business to
which this Agreement relates sale of assets to, another party; provided, that in
the event of such merger, reorganization or sale, no intellectual property
rights of the acquiring corporation shall be included in the technology licensed
hereunder. This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.

        18.2    CONSENTS NOT UNREASONABLY WITHHELD OR DELAYED. Whenever
provision is made in this Agreement for either Party to secure the consent or
approval of the other, that


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       39


consent or approval shall not unreasonably be withheld or delayed, unless
specifically otherwise provided.

        18.3    NOTICES. All notices hereunder shall be in writing and shall be
deemed given if delivered personally or by facsimile transmission (receipt
verified), mailed by registered or certified mail (return receipt requested),
postage prepaid, or sent by express courier service, to the Parties at the
following addresses (or at such other address for a Party as shall be specified
by like notice; PROVIDED, THAT notices of a change of address shall be effective
only upon receipt thereof). Notice shall become effective upon receipt.

        If to Genzyme:

        Genzyme Corporation
        55 Cambridge Parkway
        Cambridge, MA  02142
        Attention: President, Genzyme Biosurgery
        Facsimile: (617) 761-8918

        With a copy to:

        Genzyme Corporation
        500 Kendall Street
        Cambridge, MA  02142
        Attention: General Counsel
        Facsimile: (617) 252-7553

        If to Wyeth:

        Wyeth Pharmaceuticals
        500 Arcola Road
        Collegeville, PA 19426
        Attention: Senior Vice President, Business Development
        Facsimile: (484) 865-9301

        With a copy to:

        Wyeth
        Five Giralda Farms
        Madison, NJ 07940
        Attention: General Counsel
        Facsimile: (973) 660-7050

        18.4    WAIVER. Except as specifically provided for herein, the waiver
from time to time by either of the Parties of any of their rights or their
failure to exercise any remedy shall not operate or be construed as a continuing
waiver of same or any other of such Party's rights or remedies provided in this
Agreement.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       40


        18.5    SEVERABILITY. If any term, covenant or condition of this
Agreement or the application thereof to any Party or circumstances shall, to any
extent, be held to be invalid or unenforceable, then (a) the remainder of this
Agreement, or the application of such term, covenant or condition to the Parties
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest extent
permitted by law; and (b) the Parties covenant and agree to renegotiate any such
term, covenant or application thereof in good faith in order to provide a
reasonably acceptable alternative to the term, covenant or condition of this
Agreement or the application thereof that is invalid or unenforceable, it being
the intent of the Parties that the basic purposes of this Agreement are to be
effectuated.

        18.6    CONSTRUCTION. Ambiguities, if any, in this Agreement shall not
be construed against any Party, irrespective of which Party may be deemed to
have authored the ambiguous provision. Except where the context otherwise
requires, where used, the singular shall include the plural, the plural the
singular, and the use of any gender shall be applicable to all genders.

        18.7    GOVERNING LAW. This Agreement shall be governed by and
interpreted under the laws of the Commonwealth of Massachusetts, without regard
to conflicts of laws, except for questions regarding Patents, which shall be
governed by and interpreted under the patent laws of the United States.

        18.8    HEADINGS. The Sections and paragraph headings contained herein
are for the purposes of convenience only and are not intended to define or limit
the contents of the Sections or paragraphs to which they apply.

        18.9    FACSIMILE EXECUTION; COUNTERPARTS. This Agreement may be
executed by facsimile and in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

        18.10   ENTIRE AGREEMENT; AMENDMENTS.

                (a)     This Agreement, including all addendums, exhibits,
schedules and attachments attached hereto, sets forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties with respect to the subject matter hereof, and supersedes
and terminates all prior agreements and understandings between the Parties with
respect to such subject matter, including but not limited to the Synvisc
Agreements, except as expressly set forth in Section 2.1. There are no
covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties with respect to such
subject matter other than as set forth in this Agreement as described above. In
the event of any conflict between this Agreement and the Pharmacovigilance
Procedures Addendum effective October 29, 2003, this Agreement shall govern.

                (b)     No alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties. This Agreement,
including without limitation, the addendums, exhibits,


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       41


schedules and attachments hereto, is intended to define the full extent of the
legally enforceable undertakings of the Parties with respect to the subject
matter hereof, and no promise or representation, written or oral, which is not
set forth explicitly is intended by either Party to be legally binding. Both
Parties acknowledge that in deciding to enter into the Agreements and to
consummate the transaction contemplated thereby neither Party has relied upon
any statement or representations, written or oral, other than those explicitly
set forth herein.

        18.11   INDEPENDENT CONTRACTORS. The status of the Parties under this
Agreement shall be that of independent contractors. Neither Party shall have the
right to enter into any agreements on behalf of the other Party, nor shall it
represent to any person that it has any such right or authority. Nothing in this
Agreement shall be construed as establishing a partnership or joint venture
relationship between the Parties.

        18.12   CURRENCY. The references in this Agreement to amounts expressed
in dollars ($) shall mean United States Dollars.

        18.13   FORCE MAJEURE. No failure or omission by the Parties in the
performance of any obligation of this Agreement shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any cause or
causes beyond the reasonable control of the Parties, including, but not limited
to, the following: acts of God; acts or omissions of any government; any rules,
regulations or orders issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm; flood; earthquake;
accident; war; rebellion; terrorism; insurrection; riot; and invasion and
provided, that such failure or omission resulting from one of the above causes
is cured as soon as is practicable after the occurrence of one or more of the
above-mentioned causes. The Party claiming force majeure shall notify the other
Party with notice of the force majeure event as soon as practicable, but in no
event longer than three (3) days after its occurrence with respect to an event
that prevents Wyeth from complying with its obligations under Sections 5.2 and
5.4, and otherwise within ten (10) business days after its occurrence, which
notice shall reasonably identify such obligations under this Agreement and the
extent to which performance thereof will be affected.

                            [SIGNATURE PAGE FOLLOWS]


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the Commission.

                                       42


        IN WITNESS WHEREOF, Genzyme and Wyeth have caused this Agreement to be
executed as of the date first written above by their respective duly authorized
officers.

WYETH, ACTING THROUGH ITS
WYETH PHARMACEUTICALS DIVISION


By:  /s/Robert A. Dougan
Name: Robert A. Dougan
Title: Senior Vice President


GENZYME CORPORATION


By:  /s/Henri A. Termeer
Name: Henri A. Termeer
Title: President, Chairman and CEO


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



                                  SCHEDULE 1.6
                                    EMPLOYEES

EAST REGION



       LAST NAME                         FIRST NAME                           JOBTITLE
- -----------------------------------------------------------------------------------------------------------------------------
                                                                  
- -----------------------------------------------------------------------------------------------------------------------------
Abesada-mata                       Ana                                  Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Alkire                             Judith                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Barese                             Adam                                 Dist mgr
- -----------------------------------------------------------------------------------------------------------------------------
Barnett                            John                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Boeckenstedt                       Kim                                  Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Bowers                             Terry                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Brudermann                         Christine                            Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Bryant                             William                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Ciullo                             Jessica                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Davenporte II                      Phillip                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Dehn                               Cheryl                               Dist mgr ii
- -----------------------------------------------------------------------------------------------------------------------------
Delgo                              Reynaldo                             Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Dolan                              Laurel                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Ferguson                           Richard                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Fitzgibbons                        Nancy                                Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Franklin                           Raymond                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Gabriel                            Maritza                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Gillis                             Robert                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Goodwin                            Ronald                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Kardash                            Christine                            Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Lane                               Wendy                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Lanius                             Avery                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Lavdas                             Anthony                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Makhoul                            George                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Manning                            Jeffrey                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Marcy                              Jay                                  Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Martin                             William                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
McKiernan                          James                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
McMillan                           Linda                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Melton                             Marlette                             Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Miller                             Julie                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Monk                               Ladd                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Montgomery                         Erin                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Nelson                             Joanne                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
New                                Natalie                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
O'Leary                            William                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Peek                               B. Randall                           Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Reagan                             John                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Reno                               Jamie                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Rosa                               Rafael                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Ryan                               Anne                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Samko                              Susan                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Sargent                            Enraku                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Sharpe                             Timothy                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Smith                              Douglas                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Smith                              Kermit                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Stephan                            Jerome                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Tassone                            Lauren                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Tsui                               Keung                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Tynan                              Sarah                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Verrette                           Carl                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Wasielewski                        Michael                              Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Winkfield                          Milton                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------


WEST REGION



       LAST NAME                         FIRST NAME                           JOBTITLE
- -----------------------------------------------------------------------------------------------------------------------------
                                                                  
- -----------------------------------------------------------------------------------------------------------------------------
Bickmore                           Charles                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Brandt                             Christopher                          Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Cielak                             Gregory                              Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Clark                              Kelly                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Clark                              David                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Clements                           Tiffany                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Crossin                            Michael                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Denson                             Mark                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Dustin                             Michael                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Forouzi                            Hamid                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Frieling                           Lisa                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Fuecker                            Michael                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Galeazzi                           Timothy                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Ganann                             Jerry                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
George                             Nicole                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Gerking                            Timothy                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Godwin                             Jared                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Goltzman                           Mark                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Grace                              Duane                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Gravley                            Charles                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Griggs                             Ronald                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Hart                               Gregory                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Hayden                             Ben                                  Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Hicks                              Tricia                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Honeycutt Jr.                      Lynn                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Hornak                             Jennifer                             Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Hurbis                             Terri                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Jackson                            Michael                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Johlfs                             John                                 Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Kimmi                              Philip                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Lister                             Brent                                Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Marnatti                           James                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Miller                             Rodney                               Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Rogers                             Kane                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Ryan                               Kelly                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Savage                             David                                Dist mgr i
- -----------------------------------------------------------------------------------------------------------------------------
Severson                           David                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Shahfari                           Ida                                  Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Sullivan                           Barbara                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Susan Jr/                          Richard                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Swetnam                            Randall                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Timmons                            Donnie                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Valero                             Patrick                              Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Wallace                            James                                Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Walz                               Kay                                  Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Warren                             J. Brent                             Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Weiszhaar                          Curtis                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Yaklich                            Gary                                 Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------
Yokoyama                           Amelia                               Musculoskel spec mgr
- -----------------------------------------------------------------------------------------------------------------------------



[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       45


                                  SCHEDULE 1.17
                              GOVERNMENT CONTRACTS

VETERANS ADMINISTRATION

        Vicky Bates
        Contracting Officer
        VA NAC
        Department of Veterans Affairs
        1st Ave. One Block North 22nd Street
        Hines, IL 60141 Phone: 708-786-4949
        USE ABOVE FOR VA PRIME VENDOR, MILITARY AND STATE VETERANS HOME
        INQUIRIES.
        VA Contract #: V797P-5406X

PHS/340B

        Jimmy Mitchell, Director
        HRSA
        DHHS/HRSA/BPHC/Office of Pharmacy Affairs
        4350 East-West Highway
        Room EWT/9-1D2
        Bethesda, MD 20814
        Phone: 301-594-4353

        340B Contract #: A79369-4


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       46


                                 SCHEDULE 3.1(b)
                                WYETH TRADEMARKS

SYNVISION                Common law mark used by Wyeth for a CD-ROM training
                         module for the SYNVISC brand team)

"wave design"            Appears on packaging, advertising and promotional
                         material(s) Not registered nor has Wyeth filed any
                         application.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       47


                                 SCHEDULE 3.1(c)
                              CUSTOMER INFORMATION

CUSTOMER LISTS.

The following Acquired Assets shall be provided to Genzyme in a secure
electronic format that is mutually agreed upon by the Parties, which will
include the translations of any data codes and the configuration of the
SalesWork application in which the data is stored. To the extent that Wyeth is
prohibited from providing any of the Acquired Assets listed below due to its
contractual obligations with IMS or SDI, Wyeth shall only be obligated to
provide such Acquired Assets to Genzyme if IMS or SDI, as applicable, consents
to such provision by Wyeth. Wyeth shall use reasonable efforts to obtain such
consent during the Pre-Closing Period. Wyeth shall have no obligation to make
any payments in connection with obtaining such consents unless Genzyme agrees to
reimburse Wyeth for such payments. The following items shall be provided for all
Synvisc Product customers beginning in October 2002 through the Closing Date.

                1.      Synvisc Product customer information including without
        limitation customer number and all related contact data, state licensure
        number and/or DEA licensure number, territory code, and address details,
        bill-to number and all related credit terms, credit limit, and customer
        address details, Ship-to number and all related shipping terms and
        address details, and a returns history and credit history for each
        customer. In addition, the parties shall reasonably agree on the extent
        to which Genzyme requires a hard copy of each state licensure
        certificate that Wyeth has on file for physicians who have purchased
        Synvisc Products from Wyeth, and the parties will reasonably agree on a
        mechanism for providing Genzyme with the necessary certificates.

                2.      For each of the Synvisc Product customer accounts that
        are captured in the SalesWorks application, Wyeth shall provide a list
        of existing sales account contacts with the following information to the
        extent available: contact name, addresses, phone numbers, Wyeth customer
        number, IMS customer number, customer notes, email addresses, customer
        to customer affiliations, Wyeth direct sales revenues, and all recorded
        call information (including call notes).

                3.      The following Synvisc Product customer billing
        information: customer number and related address details as of the
        billing, bill-to number and related address details as of the billing,
        ship-to number and related address details as of the billing, invoice
        number, identification of how the customer pricing was determined
        (catalog, contract, or promotion) (to be provided only pursuant to
        paragraph (c) below), date of billing, date of shipment, and line item
        details for item number, quantity ordered, quantity shipped, lot number,
        item price (to be provided only pursuant to paragraph (c) below),
        warehouse where the inventory was shipped from and any details as to how
        the Synvisc Product was shipped and additional charges related to the
        shipment and/or handling.

The above information shall be provided as soon as is reasonably possible by
Wyeth, but in no event later than the following dates. Genzyme represents that,
prior to the Closing Date, such information provided at the times set forth in
(a) and (b) below shall be maintained in a secure


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       48


manner as "Confidential Information" of Wyeth under the existing confidentiality
agreement and shall be accessible only to Genzyme's employees, agents,
consultants and contractors, including its information technology personnel, who
have a need to know such information solely in order to prepare Genzyme's
internal data management systems and to prepare to consummate the transaction
contemplated in this Agreement on the Closing Date.

                (a)     within ten (10) days following the Signing Date, a
        sample of the above information of sufficient size to reasonably allow
        Genzyme to perform mapping and related information technology activities
        in preparation for the full transfer of data to Genzyme;

                (b)     on or before December 1, 2004, all of the data above for
        all customers who have purchased Synvisc Product during the one year
        period prior to the Signing Date; and

                (c)     within ten (10) days following the Closing Date, all
        data above for all customers who have purchased Synvisc Product
        beginning in October 2002 until the Closing Date.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       49


                                 SCHEDULE 3.1(d)
                                  DOMAIN NAMES



                DOMAIN NAME          STATUS                 DIVISION          COUNTRY            EXPIRES
- --------------------------------------------------------------------------------------------------------
                                                                                   
             helloknees.org          Active          Pharmaceuticals              USA          1/28/2006
             helloknees.biz          Active          Pharmaceuticals              USA          1/27/2006
              helloknees.us          Active          Pharmaceuticals              USA          12/8/2005
            Helloknees.info          Active          Pharmaceuticals              USA          12/9/2005
            Hello-knees.com          Active          Pharmaceuticals              USA          12/9/2005
             helloknees.net          Active          Pharmaceuticals              USA          12/9/2005
             Helloknees.com          Active          Pharmaceuticals              USA          12/9/2005
         Knee-painrelief.us          Active          Pharmaceuticals              USA          11/2/2005
       Knee-painrelief.info          Active          Pharmaceuticals              USA          11/3/2005
        Knee-painrelief.biz          Active          Pharmaceuticals              USA          11/2/2005
        Knee-painrelief.org          Active          Pharmaceuticals              USA          11/3/2005
        Knee-painrelief.net          Active          Pharmaceuticals              USA          11/3/2005
        knee-painrelief.com          Active          Pharmaceuticals              USA          11/3/2005
         Kneepain-relief.us          Active          Pharmaceuticals              USA          11/2/2005
       Kneepain-relief.info          Active          Pharmaceuticals              USA          11/3/2005
        Kneepain-relief.biz          Active          Pharmaceuticals              USA          11/2/2005
        Kneepain-relief.org          Active          Pharmaceuticals              USA          11/3/2005
        Kneepain-relief.net          Active          Pharmaceuticals              USA          11/3/2005
        Knee-pain-relief.us          Active          Pharmaceuticals              USA          11/2/2005
      knee-pain-relief.info          Active          Pharmaceuticals              USA          11/3/2005
       Knee-pain-relief.biz          Active          Pharmaceuticals              USA          11/2/2005
       knee-pain-relief.org          Active          Pharmaceuticals              USA          11/3/2005
       Knee-pain-relief.net          Active          Pharmaceuticals              USA          11/3/2005
       knee-pain-relief.com          Active          Pharmaceuticals              USA          11/3/2005
          Kneepainrelief.us          Active          Pharmaceuticals              USA          11/2/2005
        Kneepainrelief.info          Active          Pharmaceuticals              USA          11/3/2005
         Kneepainrelief.biz          Active          Pharmaceuticals              USA          11/2/2005
         Kneepainrelief.org          Active          Pharmaceuticals              USA          11/3/2005
         Kneepainrelief.net          Active          Pharmaceuticals              USA          11/3/2005
Osteoarthritisoftheknee.com          Active          Pharmaceuticals              USA          4/10/2005
 Osteoarthritis-of-knee.com          Active          Pharmaceuticals              USA          4/10/2005



[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       50


                                 SCHEDULE 3.1(e)
                                  CLINICAL DATA

The following Acquired Assets shall be provided to Genzyme within thirty (30)
days after the Closing Date:

1.      Copies of existing consulting and investigator agreements for Global
Medical Affairs Studies 901 and 902.

2.      Existing study Master Files, to be determined by the Parties during the
Pre-Closing Period, for studies 300, 901, 902, MOVE and Burden of Illness.

3.      Existing SAS datasets and existing database QC documentation for studies
300, 901, 902, MOVE and Burden of Illness.

4.      Existing Statistical Analysis Plans for studies 300, 901, MOVE and
Burden of Illness.

5.      Existing editing guidelines for Data Management Plans (review guidelines
and coding conventions) for studies 300, 901, MOVE and Burden of Illness.

6.      Existing CRFs (blank and completed) for studies 300, 901 and MOVE.

7.      Existing updated tracking report for the Investigator Originated
Proposal Research Agreements with Dr. Melvin P. Rosenwasser, Dr. Lisa Mandl, Dr.
Carlos Guanche, Dr. Kevin Paul Shea, Dr. Victoria Brander and Sue Ann Sisto,
Ph.D.

8.      Existing audit reports / certificates for studies 901, Dr. Waddell's
repeat treatment study and MOVE.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       51


                                 SCHEDULE 3.1(f)
                           MARKETING AND SALES ASSETS

The following Acquired Assets shall be provided to Genzyme on or before the
Closing Date, unless otherwise noted below. To the extent that Wyeth is
prohibited from providing any of the Acquired Assets listed below due to its
contractual obligations with IMS or SDI, Wyeth shall only be obligated to
provide such Acquired Assets to Genzyme if IMS or SDI, as applicable, consents
to such provision by Wyeth. Wyeth shall use reasonable efforts to obtain such
consent during the Pre-Closing Period. Wyeth shall have no obligation to make
any payments in connection with obtaining such consents unless Genzyme agrees to
reimburse Wyeth for such payments.

MARKETING

1.      Existing electronic files for promotional materials in use.

2.      Existing electronic files for promotional items in development.

3.      One copy of existing ad/prom materials shall be provided within ten (10)
days following the Signing Date. At least ten (10) days prior to the Closing
Date, Genzyme shall inform Wyeth in writing of the ad/prom materials to be
shipped to Genzyme on or before the Closing Date. Within a reasonable time
period following the Closing Date, Wyeth shall destroy all ad/prom materials
that were not requested by Genzyme.

4.      Existing Synvisc Product related files on competitive viscosupplement
products.

5.      2005 ad/prom agency plans for professional, consumer, and PR agencies.

6.      Existing Synvisc Product related market research for up to 36 months
prior to Closing Date for product positioning, penetration, pricing, and
consumers.

7.      Existing SDI medical claims data for the 36 months prior to the Closing
Date.

8.      Existing copies of approved VSB speaking slides.

9.      Existing Synvisc Product specific tradeshow panel displays and the
Synvisc Product gel display.

10.     All webpages, graphic images and content (excluding hardware and
software) displayed at us.synvisc.com and Hellokness.com, including the content
and code in an electronic format to be mutually agreed by the Parties.

11.     Existing and in-process Synvisc Product sales training materials.

CORPORATE COMMUNICATION MATERIALS


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       52


1.      Existing Synvisc Product media kits, fact sheets, backgrounders and
promotional materials produced for Wyeth by the PR firm, Porter Novelli.

2.      The current video b-roll of Synvisc Product as produced by Porter
Novelli.

3.      Existing news coverage and broadcast tapes/videos of Synvisc Product
coverage prepared by Porter Novelli.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       53


                                 SCHEDULE 3.1(g)
                               ASSIGNED CONTRACTS

1.      Publication Agreement with Dr. Dan Brzuesek.

2.      Research Agreement with Dr. David Waddell.

3.      Investigator Originated Proposal, Research Agreement:

                  Dr. Lisa Mandl
                  Dr. Carlos Guanche
                  Dr. Kevin Paul Shea
                  Dr. Victoria Brander

Genzyme agrees to assume each of the following commitments to the extent that
Wyeth provides to Genzyme during the Pre-Closing Period written evidence
demonstrating such commitment:

1..     Arthroscopy Association of North America (AANA).
        A commitment of [**] per year.  This commitment expires in 2006.

2.      American Osteopathic Association of Sports Medicine (AOASM)
        A commitment of [**] per year.  This commitment expires January 2006.

3.      Association of Orthopedic Foot and Ankle Surgery (AOFAS)
        A commitment of [**] per year for outreach and educational purposes.
        This commitment expires February 2006.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       54


                                 Schedule 6.1(a)
                                 EMPLOYEE PLANS

  1.    Wyeth Retirement Plan - United States

  2.    Wyeth Savings Plan - United States

  3.    Wyeth Group Insurance Plan - This is an umbrella plan which includes the
        following plans:

        a.      Wyeth Comprehensive Medical Plan

        b.      Wyeth PPO Medical Plan

        c.      Wyeth Dental Plan

        d.      Wyeth Weekly Sickness and Accident Plan (short term disability
                plan)

        e.      Wyeth Voluntary Long Term Disability Plan

        f.      Wyeth Voluntary Accidental Death and Dismemberment Plan

        g.      Wyeth Business Travel Accident Plan

        h.      Wyeth Prescription Drug Plan

        i.      Wyeth Retiree Benefit Plan

        j.      Wyeth Basic and Voluntary Group Universal Life Insurance Plan

        k.      Wyeth Voluntary Dependent Life Insurance Plan

  4.    Wyeth Long Term Care Plan

  5.    Wyeth Flexible Benefits Plan which includes:

        a.      Wyeth Health Care Spending Account Plan

        b.      Wyeth Dependent Care Spending Account Plan

        c.      Wyeth Dependent Care Assistance Plan

        d.      Wyeth Premium Conversion Plan

  6.    Wyeth Supplemental Executive Retirement Plan

  7.    Wyeth Supplemental Employee Savings Plan


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       55


                                 Schedule 6.1(b)
                              BENEFIT ARRANGEMENTS

  1.    Wyeth Vacation Policy

  2.    Wyeth 1996 Stock Incentive Plan

  3.    Wyeth 1999 Stock Incentive Plan

  4.    Wyeth 2002 Stock Incentive Plan

  5.    Wyeth Performance Incentive Arrangement

  6.    Wyeth Deferred Compensation Plan

  7.    Wyeth Educational Assistance Program

  8.    Wyeth Adoption Assistance Program

  9.    Wyeth Life Management Program

  10.   Wyeth Relocation Program

  11.   Wyeth 529 College Savings Plan

  12.   Wyeth Matching Grants Program

  13.   Wyeth Property and Casualty Insurance Program

  14.   Wyeth Domestic Partner Benefits Program


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       56


                                 Schedule 6.1(c)
                                 ERISA LIABILITY

  None


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       57


                                 Schedule 6.1(d)
                               MULTIEMPLOYER PLANS

  None


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       58


                                 SCHEDULE 6.2(a)
                           EMPLOYEE LEASING AGREEMENT

        This Employee Leasing Agreement (the "AGREEMENT") is made and entered
into this 3rd day of November 2004, by and between Wyeth, Delaware corporation
acting through its Wyeth Pharmaceuticals Division ("WYETH"), and Genzyme
Corporation, a Massachusetts corporation ("GENZYME").

                                   WITNESSETH:

        WHEREAS, Wyeth and Genzyme have entered into a North American
Termination and Transition Agreement dated as of November 3, 2004 (the "NORTH
AMERICAN AGREEMENT"), and

        WHEREAS, Genzyme and Wyeth both wish to have certain employees of Wyeth,
as listed on SCHEDULE A hereto, (the "EMPLOYEES") remain on Wyeth's payroll and
to continue to participate in the Wyeth's employee benefit plans during the
Transition Period (as defined below) and to provide services to Genzyme during
such period; and

        WHEREAS, Wyeth will transfer the Employees to positions at Genzyme at
the expiration of the Transition Period; and

        WHEREAS, capitalized terms used herein but not defined have the meanings
ascribed to them in the North American Agreement;

        NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties, covenants and agreements
hereinafter set forth, and intending to be legally bound, the parties do hereby
agree as follows:

                                    ARTICLE I
                             ASSIGNMENT OF EMPLOYEES

1.1     ASSIGNMENT BY WYETH OF EMPLOYEES.

        (a)     As used in this Agreement, "ASSIGNMENT" shall mean the temporary
assignment of an employee of one legal entity, who remains during such period an
employee of, on the payroll of, and a participant in the applicable employee
benefit plans of, that entity, to another legal entity. "Assign" has a
correlative meaning.

        (b)     As used in this Agreement, "TRANSITION PERIOD" shall mean the
period commencing with the Closing Date of the North American Agreement and
continuing until the date upon which each Employee attains the age of 55 years
with ten or more years of continuous service with Wyeth, which with respect to
[**].

        (c)     Wyeth agrees to Assign the services of the Employees to Genzyme
for the duration of the Transition Period to perform duties after the Closing
Date, which are the same as the aggregate duties and responsibilities they are
performing with respect to their employment


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       59


prior to the Closing Date. In performing their respective duties hereunder, the
Employees shall be under the exclusive direction, control and supervision of
Wyeth (and not of Genzyme) and Wyeth shall have the sole right to exercise all
authority with respect to the employment (including termination of employment),
assignment and compensation of such Employees. Notwithstanding the foregoing,
Wyeth shall comply with the reasonable direction and requests of Genzyme
regarding the assigned duties and activities of the Employees. Wyeth shall have
sole responsibility for compliance with all laws relating to the
employer/employee relationship between Wyeth and the Employees, including, but
not limited to, federal, state and/or local laws on hours of labor, wages,
worker's compensation, unemployment compensation, insurance and social security
benefits. For purposes of all compensation and employee benefits, the Employees
shall be the legal employees solely of the Wyeth and not to be employees or
representatives of the Genzyme.

        For the duration of the Transition Period, the Employees will continue
to participate in the Wyeth's employee benefit plans, including, but not limited
to, all employee welfare benefit plans and employee pension benefit plans, as
defined under ERISA, to the extent that the Employees participated in such plans
on the date prior to the Closing Date (but also taking into account participant
elections that become effective during the Transition Period).

1.2     COMPENSATION OF THE EMPLOYEES. Wyeth shall be responsible for
establishing and paying the Employees' compensation and benefits related to
their employment with Wyeth. Genzyme shall have no obligation to the Employees
whatsoever for such compensation and benefits earned during the Transition
Period.

1.3     NO EMPLOYMENT AGREEMENT. Nothing in this Agreement shall (i) be
construed as an employment contract or as creating any contractual obligation
enforceable by the Employees against either Genzyme or Wyeth, or (ii) prevent
Wyeth from terminating the employment of the Employees.

1.4     TERM.

        (a)     This Agreement shall become effective as of the Closing Date and
terminate, with respect to each Employee, upon the expiration of the Transition
Period, subject to earlier termination provisions which may apply as set forth
in Article V of this Agreement.

        (b)     Effective upon the termination or expiration of the Transition
Period with respect to each Employee, said Employee shall automatically become a
Transferred Employee for all purposes under the North American Agreement.

        (c)     Notwithstanding anything herein to the contrary, this Agreement
may be extended beyond the period described in paragraph (a) of this Section by
the mutual written agreement of the parties hereto.

                                   ARTICLE II
                                  COMPENSATION


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       60


2.1     DEFINITION OF EMPLOYMENT COSTS. As used in this Agreement, "EMPLOYMENT
COSTS" shall mean the allocated costs incurred or accrued by Wyeth during the
term of this Agreement, with respect to the Assignment of the Employees pursuant
to this Agreement, for the any period, which shall include without limitation:

        (a)     All wages or salaries paid or payable to the Employees;

        (b)     All allocated costs of employee benefit plans (including welfare
plans and qualified pension plans) in which the Employees participate during the
Transition Period; provided, however, that the allocated cost of any insured
plan shall be the premiums attributable to such Employees' coverage under the
insured plan;

        (c)     The prorated costs attributable to the Employees' vacation
earned during the term of this Agreement; and

        (d)     All other direct costs related to the continuing
employer-employee relationship between the Employees and Wyeth, including
without limitation workers' compensation and unemployment compensation premiums,
and employer payroll tax obligations (including, without limitation, FICA, FUTA,
and state unemployment and short-term disability contributions).

2.2     PAYMENT OF EMPLOYMENT COSTS. Genzyme shall reimburse Wyeth for all
Employment Costs related to the Assignment of the Employees pursuant to this
Agreement. Wyeth shall invoice Genzyme on a monthly basis for such Employment
Costs, and Genzyme shall make payment related to such invoices within thirty
(30) days after the date of such invoices.

        If either party believes that there has been an error in an amount
invoiced or paid or the timing of any payment hereunder, then such party shall
notify the other party of such alleged error and shall provide written evidence
of the error as is available at the time of such notice. Each party shall
provide the other with sufficient records relating to the matter so as to permit
the parties to attempt to resolve the inconsistency. Following the determination
of whether an error occurred, any improper charge or invoice, overpayment or
underpayment found shall be remedied by the party that benefited from such
error. Notwithstanding the foregoing, neither party may question the accuracy,
correctness, timing or amount of any payment under this Agreement unless it
notifies the other party of its disagreement within the ninety (90) days
immediately following the date such payment was due. Upon request of the
receiving party, the supplying party shall provide commercially reasonable
support for all charges and expenses invoiced.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

Each of the parties represents and warrants to the other party as follows:

        (a)     It is duly incorporated, validly existing and in good standing
under the laws of its state or country of incorporation;


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       61


        (b)     It has full power and authority to enter into and perform this
Agreement;

        (c)     The execution, delivery and performance of this Agreement and
all transactions contemplated hereby have been duly authorized and approved by
all necessary corporate action and governing bodies;

        (d)     This Agreement is a valid and binding agreement enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and except as the availability of equitable remedies may be limited
under applicable law; and

        (e)     The execution, delivery and performance of this Agreement by it
will not contravene or constitute a default under any agreement or other
document or instrument by which it is or may be bound, including without
limitation any order, award, judgment, decree or injunction binding it.

                                   ARTICLE IV
                                 INDEMNIFICATION

4.1     INDEMNIFICATION BY WYETH. Wyeth agrees to indemnify and hold Genzyme
harmless from any and all claims, damages, losses, costs, expenses (including
reasonable legal fees), obligations, liens, assessments, judgments, settlements
and fines, including those asserted by any city, state or federal agency,
department or division, and any punitive, exemplary, special, incidental, or
consequential damages (solely to the extent imposed or arising out of a third
party claim) (all of the foregoing being a "CLAIM") either (i) suffered,
incurred or paid as a result of a failure to comply with material obligations or
requirements with respect to wages, salaries, statutory entitlements, employment
benefits due to the Employees, insurance (including but not limited to workers'
compensation), and all notices and filings regarding same or (ii) incurred or as
a result of willful misconduct or grossly negligent conduct of the Employees
arising while performing services under this Agreement, including without
limitation any claim against Genzyme arising out of the willful misconduct or
grossly negligent conduct of the Employees whether or not related to the
Employees' performance of services for Genzyme.

4.2     INDEMNIFICATION BY GENZYME. Genzyme agrees to indemnify and hold Wyeth
harmless from any and all Claims suffered or paid as a result of (i) the
services or Assignment of the Employees, including without limitation any claim
against Wyeth by a third party based upon the legal doctrine of RESPONDEAT
SUPERIOR or any similar cause of action arising out of or related to the acts of
the Employees, solely to the extent that such Claims arise from or are the
result of the direction or requests of Genzyme regarding the assigned duties and
activities of the Employees pursuant to Section 1.1 above or, (ii) Genzyme's
willful misconduct or grossly negligent conduct in relation to the services or
Assignment of the Employees.

4.3     SCOPE OF INDEMNIFICATION; DEFENSE OF CLAIMS. Any indemnification of
Wyeth or Genzyme hereunder shall include and extend to the benefit of its
respective directors, officers and Employees. Any party or other person that may
be entitled to indemnification under this Agreement (an "INDEMNIFIED PARTY")
shall give notice to the party obligated to indemnify it (an


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       62


"INDEMNIFYING PARTY") with reasonable promptness upon becoming aware of the
Claim or other facts upon which a claim for indemnification will be based; the
notice shall set forth such information with respect thereto as is then
reasonably available to the Indemnified Party. The Indemnifying Party shall have
the right to undertake the defense of any such claim and the Indemnified Party
shall cooperate in such defense and make available all records and materials
requested by the Indemnifying Party in connection therewith at the Indemnifying
Party's expense. The Indemnified Party shall not be entitled to indemnification
with respect to the costs and expenses of such defense if the Indemnifying Party
shall have assumed the defense of the claim with counsel reasonably satisfactory
to the Indemnified Party. The Indemnifying Party shall not be liable for any
claim settled without its consent, which consent may not be unreasonably
withheld.

4.4     LIMITATION OF REMEDIES. Except as set forth above, neither party shall
be liable to the other for indirect, special, incidental, consequential, or
punitive damages of the other party resulting from any breach of its obligations
hereunder or the breach of any warranty made hereunder.

                                    ARTICLE V
                            TERMINATION AND AMENDMENT

5.1.    AMENDMENT AND WAIVER. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by each party, or in the case of a waiver, by the
party against whom the waiver is to be effective. The failure of either party to
enforce at any time or for any of the provisions hereof will not be construed to
be a waiver of such provisions or of the right of such party thereafter to
enforce each and every such provision.

5.2     TERMINATION BY MUTUAL WRITTEN AGREEMENT. This Agreement may be
terminated at any time by the mutual written agreement of the parties hereto.

5.3     TERMINATION FOR CAUSE. Any party hereto may terminate this Agreement due
to a material breach by the other party of any of its obligations or covenants
hereunder upon thirty (30) calendar days' notice to the breaching party if such
breaching party fails to remedy such breach within such thirty (30) calendar
days or if such breach cannot be remedied within thirty (30) calendar days.

                                   ARTICLE VI
                               GENERAL PROVISIONS

6.1     NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
mailed by reputable overnight courier or certified mail (return receipt
requested) or sent by telecopier (confirmed thereafter by such certified mail)
to the parties at the following addresses or at such other addresses as shall be
specified by the parties by like notice:

if to Wyeth:


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       63


        Wyeth
        Five Giralda Farms
        Madison, New Jersey 07940
        Attention: Chief Financial Officer
        Telecopier Number: (973) 660-7156

with a copy to:
        Wyeth
        Five Giralda Farms
        Madison, New Jersey 07940
        Attention:  General Counsel
        Telecopier Number: (973) 660-7155

if to Genzyme:
        Genzyme Corporation
        55 Cambridge Parkway
        Cambridge, MA 02142
        Attention: President, Genzyme Biosurgery
        Facsimile: (617) 761-8918

with a copy to:
        Genzyme Corporation
        500 Kendall Street
        Cambridge, MA 02142
        Attention: General Counsel
        Facsimile: (617) 252-7553

Notice so given shall (in the case of notice so given by mail) be deemed to be
given and received on the third calendar day after mailing or the next business
day if sent by a reputable overnight courier and (in the case of notice so given
by telecopier or personal delivery) on the date of actual transmission or (as
the case may be) personal delivery.

6.2     GOVERNING LAW. This Agreement will be construed and enforced in
accordance with the internal substantive laws of the Commonwealth of
Massachusetts, without giving effect to the principles of conflicts of law
thereof.

6.3     HEADINGS. The article, section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All references herein to "Articles"
or "Sections" shall be deemed to be references to Articles or Sections hereof
unless otherwise indicated.

6.4     COUNTERPARTS. This Agreement may be executed in one or more counterparts
and each counterpart shall be deemed to be an original, but all of which shall
constitute one and the same original.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       64


6.5     PARTIES IN INTEREST; ASSIGNMENT; SUCCESSORS. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement shall inure to the benefit of
and be binding upon Wyeth and Genzyme and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies under or by reason of this
Agreement.

6.6     SEVERABILITY; ENFORCEMENT. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each party agrees that a court of
competent jurisdiction may enforce such restriction to the maximum extent
permitted by law, and each party hereby consents and agrees that such scope may
be judicially modified accordingly in any proceeding brought to enforce such
restriction.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.


WYETH                                 GENZYME CORPORATION

By:                                   By:
   -------------------------------       -----------------------------------

Name:                                 Name:

Title:                                Title:


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       65


                                   SCHEDULE A

                                    EMPLOYEES

[**]


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       66


                               SCHEDULE 6.2(a)(i)
                           GENZYME EMPLOYEE AGREEMENTS

                                    AGREEMENT

In consideration of my employment by Genzyme Corporation ("Genzyme"), a
Massachusetts corporation with its principal place of business in Massachusetts,
and in recognition that (i) as an employee of Genzyme I will have access to
Confidential Information (defined in Section 9 below), customers and corporate
opportunities of Genzyme, and (ii) if I become employed or affiliated with a
Competing Organization (defined in Section 9 below), Genzyme will be at risk, I
agree with Genzyme as follows:

1.      Confidential Information.

a.      No Unauthorized Disclosure or Use. While employed by Genzyme and
thereafter, I shall not, directly or indirectly, use or disclose to anyone
outside of Genzyme any Confidential Information other than pursuant to my
employment by and for the benefit of Genzyme.

b.      Ownership of Confidential Information. I agree that all originals and
all copies of manuscripts, letters, notes, notebooks, reports, models, computer
files and other materials containing, representing, evidencing, recording, or
constituting any Confidential Information (created by myself or others) shall be
the sole property of Genzyme or the property of third parties who lawfully
disclosed the Confidential Information under obligations of confidentiality.

c.      Third Party Confidential Information. I understand that Genzyme from
time to time has in its possession information which is claimed by others to be
proprietary or confidential and which Genzyme has agreed or is under an
obligation to keep confidential. I agree that all such information shall be
Confidential Information for purposes of this Agreement.

2.      Developments.

a.      Ownership. I agree that all Developments (defined in Section 9 below)
created during the period of my employment with Genzyme or during the six month
period following termination of my employment with Genzyme (whether or not made
on Genzyme's premises or disclosed by me to Genzyme), together with all products
or services which embody such Developments, shall be the sole property of
Genzyme.

b.      Assignment and Cooperation. I agree (i) to make and maintain adequate
and current written records of all Developments, and to disclose all
Developments promptly, fully and in writing to Genzyme immediately upon
development of the same and at any time upon request, (ii) to assign to Genzyme
all my right, title and interest in and to all Developments and to anything
tangible which evidences, incorporates, constitutes, represents or records any
such Developments, (iii) to cooperate and assist Genzyme in obtaining and
maintaining any


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       67


governmental protection it may seek for such Developments, and to execute all
documents that may be required therefor, and (iv) if such Developments
constitute works made for hire under the laws of the United States, to assign to
Genzyme all copyrights, patents and other proprietary rights I may have in any
such Developments, together with rights to file for and/or own wholly without
restriction United States and foreign copyrights, patents, and trademarks with
respect thereto.

c.      Prior Developments. I agree that the foregoing assignment covers all
results, outputs and products of my work for Genzyme prior to the date hereof
(whether as an employee or as a consultant), and that all related copyrights,
patents and other intellectual property rights, and that all such results,
output and products are Developments and the sole property of Genzyme.

3.      Exceptions to this Agreement. I understand that Genzyme does not desire
to acquire from me any trade secrets or confidential business information that I
may have acquired from others. I have informed Genzyme, in the space below, of
any (i) continuing obligations that I may have to any previous employers which
require me not to disclose information to Genzyme or compete with any such
previous employers; and (ii) confidential information or developments which I
claim as my own or otherwise intend to exclude from this Agreement because it
was developed by me prior to the date of this Agreement. I understand that after
execution of this Agreement I shall have no right to exclude confidential
information or developments from this Agreement.

(If there are none, please enter the word "None"; attach additional pages as
necessary)

        Note: For obligations not to disclose information to Genzyme or compete
with any such previous employers, give the date of such obligations, identify
the parties owed such obligations and the nature of the restriction. Please
attach any such agreement(s) to this Agreement.


4.      Employee's Obligation to Cooperate. At any time upon the request of
Genzyme, I shall execute all documents and perform all acts which Genzyme
considers necessary or advisable to secure its rights hereunder and to carry out
the intent of this Agreement.

5.      Return of Property. At any time upon the request of Genzyme, and in any
event upon cessation of employment, I shall return promptly to Genzyme all
property, including all Confidential Information and Developments and any copies
thereof. .

6.      Employment At-Will. Nothing in this Agreement shall require that Genzyme
employ me for any period of time. I understand that I am an employee-at-will and
that my employment relationship with Genzyme may be terminated by Genzyme or me
at any time for any reason, with or without cause and without prior notice.

7.      Restrictive Covenants.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       68


a.      I acknowledge and agree that Genzyme has invested substantial time,
money and resources in the development of its Confidential Information and the
development and retention of its customers, clients, collaborators, and
employees. I further acknowledge that during the course of my employment, I may
be introduced to customers, clients, and collaborators of Genzyme, and agree
that any "goodwill" associated with any customer, client, or collaborator
belongs exclusively to Genzyme. In recognition of the foregoing, I specifically
acknowledge and agree that while I am employed by Genzyme and for a period of
one (1) year after termination of such employment (for any reason, whether
voluntary or involuntary) I will not directly or indirectly in any position or
capacity engage in the following activities for myself or for any other person,
business, corporation, partnership or other entity:

(i)     call upon, solicit, divert, or accept, or attempt to solicit or divert
any of Genzyme's business or prospective business from any of Genzyme's
customers, clients, or collaborators, or prospective customers, clients, or
collaborators with whom I had contact or whose dealings with Genzyme I
coordinated or supervised or about whom I obtained Confidential Information, at
any time during the two (2) year period prior to the termination of my
employment, unless I obtain prior written consent of Genzyme;

(ii)    request, solicit, induce, hire (or attempt or assist in doing any of
these actions) any employee or other persons (including consultants) who may
have performed work or services for Genzyme within one (1) year prior to the
termination of my employment with Genzyme to perform work or services for any
person or entity other than Genzyme; or

(iii)   become employed by, associated with or render services to any Competing
Organization, worldwide, in connection with any Competing Product. I understand
and agree that this covenant not to compete is reasonable in that I can continue
my chosen profession when I leave the employment of Genzyme so long as I do not
work for companies that are Competing Organizations with Competing Products and
so long as I do not disclose confidential, proprietary and trade secret
information of Genzyme. I understand and agree that it does not impose an
unnecessary restraint because of the nature of the confidential, proprietary and
trade secret information of Genzyme related to the Competing Products which
mandates protection worldwide. I also understand and agree that the covenant is
necessary to protect the goodwill and confidential, proprietary and trade secret
information of Genzyme.

b.      Confirmation of Post-Employment Status. I agree to inform Genzyme, for a
period of one year following the termination of my employment, of every place of
employment and every affiliation I have in a company or business enterprise,
directly or indirectly, as an employee, owner, manager, stockholder, consultant,
director, officer, or partner. If I fail to so inform Genzyme, and I have
violated the obligations set forth in this Section 7, the one-year period shall
run from the date that Genzyme first learned of my activity.

c.      Small Ownership Exemption. The provisions of this Section 7 shall not
apply to ownership of less than one percent (1%) of the stock of any publicly
traded corporation.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       69


8.      Corporate Compliance. I agree that I will abide by all policies and
procedures that Genzyme may have in effect from time to time, including without
limitation, any applicable corporate compliance program. I further acknowledge
that failure to abide by policies and procedures may result in discipline,
including immediate termination of my employment.

9.      Definitions. The following terms, as used in this Agreement, shall have
the meanings set forth below:

a.      "Competing Organization" shall mean persons, organizations, or any other
entity, including myself, engaged in, or about to become engaged in, research or
development, production, distribution, marketing, providing or selling of a
Competing Product.

b.      "Competing Product" shall mean products, processes, or services of any
person, organization, or entity other than Genzyme, in existence or under
development, which are substantially similar, may be substituted for, or applied
to substantially similar end use of the products, processes or services with
which I worked on in any capacity, including a sales or marketing capacity, at
any time during my employment with Genzyme or about which I acquired
Confidential Information through my work with Genzyme.

c.      "Confidential Information" shall mean all trade secrets, proprietary
information, and other data or information (and any tangible evidence, record or
representation thereof), whether prepared, conceived or developed by an employee
of Genzyme (including myself) or received by Genzyme from an outside source,
which is in the possession of Genzyme (whether or not the property of Genzyme)
and which is maintained in confidence by Genzyme, including, but not limited to:
(i) significant technical and business information; (ii) all information
relating to the design, manufacture, application, know-how, research and
development of Genzyme's products and services; (iii) sources of supply and
material; (iv) operating and other cost data; (v) information relating to
present, past or prospective customers, customer proposals, price lists and data
relating to pricing of products or services; (vi) patient medical records and
all other information relating to patients; and (vii) any other information not
generally known in the industry, including specifically, all information
contained in manuals, memoranda, formulae, plans, drawings and designs,
specifications, supply sources, and records of Genzyme including without
limitation that which is legended or otherwise identified by Genzyme as
"Confidential Information." Notwithstanding the foregoing, the term Confidential
Information shall not apply to information which Genzyme has voluntarily
disclosed to the public without restriction or which has otherwise lawfully
entered the public domain.

d.      "Developments" shall mean all Confidential Information and all other
discoveries, inventions, ideas, concepts, research and other information,
processes, products, methods and improvements, or parts thereof (including,
without limitation, all computer programs, algorithms, subroutines, source
codes, object codes, designs, and improvements), conceived, developed, or
otherwise made by me, alone or jointly with others and in any way relating to
the Corporation's present or proposed services, programs or products or to tasks
assigned to me during the course of my employment, whether or not patentable or
subject to copyright protection and whether or not reduced to tangible form or
reduced to practice.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       70


e.      "Genzyme" shall mean Genzyme Corporation, and all other companies or
entities currently or which in the future Genzyme Corporation owns or controls,
directly or indirectly, capital stock or other equity interests representing at
least 40% of the outstanding voting stock or other equity interests.

10.     Miscellaneous Provisions.

a.      Entire Agreement and Amendment. This Agreement contains the entire and
only agreement between Genzyme and me respecting the subject matter hereof; it
supersedes all prior agreements with regard to the subject matter hereof. In the
event of any inconsistency between this Agreement and any other contract between
Genzyme and me, the provisions of this Agreement shall prevail (unless such
other contract expressly supersedes this Agreement). No modification of this
Agreement shall be binding upon me or Genzyme unless made in writing and signed
by an authorized officer of Genzyme.

b.      Survival and Waivers. This Agreement will remain in effect if I am
transferred, promoted, or reassigned to work on functions other than my present
functions anywhere within Genzyme. My obligations under this Agreement shall
survive the termination of my employment with Genzyme regardless of the manner
of or reasons for such termination, and regardless of whether such termination
constitutes a breach of any other agreement I may have with Genzyme. This
Agreement shall inure to the benefit of, and be binding upon, Genzyme and me and
our respective heirs, legal representatives, successors and assigns. Failure by
Genzyme to insist upon strict compliance with any term of this Agreement shall
not be deemed a waiver of that or any other right.

c.      Interpretation. In the event that any provision of this Agreement shall
be determined to be unenforceable by any court of competent jurisdiction by
reason of its extending for too great a period of time or over too large a
geographic area or over too great a range of activities, it shall be interpreted
to extend only over the maximum period of time, geographic area or range of
activities as to which it may be enforceable. If after application of the
immediately preceding sentence, any provision of this Agreement shall be
determined to be invalid, illegal or otherwise unenforceable by any court of
competent jurisdiction, the validity, legality and enforceability of the other
provisions of this Agreement shall not be affected. Except as otherwise provided
in this paragraph, any invalid, illegal or unenforceable provision of this
Agreement shall be severable, and all other provisions hereof shall remain in
full force and effect.

d.      Equitable Relief. I acknowledge and agree that (i) the provisions set
forth in this Agreement are necessary and reasonable to protect Genzyme's
Confidential Information and goodwill; (ii) the specific time, geography and
scope provisions set forth in Section 7 are reasonable and necessary to protect
Genzyme's business interests; and (iii) in the event of my breach of any of the
agreements set forth in this Agreement, Genzyme would suffer substantial
irreparable harm and that Genzyme would not have an adequate remedy at law for
such breach. In recognition of the foregoing, I agree that in the event of a
breach or threatened breach of any of these covenants, in addition to such other
remedies as Genzyme may have at law, without


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       71


posting any bond or security, Genzyme shall be entitled to seek and obtain
equitable relief, in the form of specific performance, or temporary, preliminary
or permanent injunctive relief, or any other equitable remedy which then may be
available.

e.      Governing Law and Jurisdiction. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the
Commonwealth of Massachusetts without regard to its principles of conflicts of
laws, and shall be deemed to be effective as of the first day of my employment
by Genzyme. I further agree that I shall be subject to the jurisdiction of the
courts of the Commonwealth of Massachusetts in any action brought by Genzyme in
connection with any of the provisions of this Agreement. Both parties further
acknowledge that venue shall lie in Massachusetts and that material witnesses
and documents would be located in Massachusetts. Both parties further agree that
any action, demand, claim or counterclaim relating to this Agreement shall be
resolved by a judge alone, and both parties hereby waive and forever renounce
the right to a trial before a civil jury.

BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE HAD ADEQUATE
OPPORTUNITY TO REVIEW THESE TERMS AND CONDITIONS AND TO REFLECT UPON AND
CONSIDER THE TERMS AND CONDITIONS OF THIS AGREEMENT. I FURTHER ACKNOWLEDGE THAT
I FULLY UNDERSTAND ITS TERMS AND THAT I VOLUNTARILY EXECUTED THIS AGREEMENT.

Employee's signature:


Date:
       --------------------------          ------------------------------
                                           Print Name:


                                           Accepted:

Genzyme Corporation

By:
      ---------------------------------


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       72


                                    AGREEMENT

In consideration of my employment by Genzyme Corporation ("Genzyme"), a
Massachusetts corporation with its principal place of business in Massachusetts,
and in recognition that as an employee of Genzyme I will have access to
Confidential Information (defined in Section 9 below), customers and corporate
opportunities of Genzyme, I agree with Genzyme as follows:

1.      Confidential Information.

a.      No Unauthorized Disclosure or Use . While employed by Genzyme and
thereafter, I shall not, directly or indirectly, use or disclose to anyone
outside of Genzyme any Confidential Information other than pursuant to my
employment by and for the benefit of Genzyme.

b.      Ownership of Confidential Information. I agree that all originals and
all copies of manuscripts, letters, notes, notebooks, reports, models, computer
files and other materials containing, representing, evidencing, recording, or
constituting any Confidential Information (created by myself or others) shall be
the sole property of Genzyme or the property of third parties who lawfully
disclosed the Confidential Information under obligations of confidentiality.

c.      Third Party Confidential Information. I understand that Genzyme from
time to time has in its possession information which is claimed by others to be
proprietary or confidential and which Genzyme has agreed or is under an
obligation to keep confidential. I agree that all such information shall be
Confidential Information for purposes of this Agreement.

2.      Developments.

a.      Ownership. I agree that all Developments (defined in Section 9 below)
created during the period of my employment with Genzyme or during the six month
period following termination of my employment with Genzyme (whether or not made
on Genzyme's premises or disclosed by me to Genzyme), together with all products
or services which embody such Developments, shall be the sole property of
Genzyme.

b.      Assignment and Cooperation. I agree (i) to make and maintain adequate
and current written records of all Developments, and to disclose all
Developments promptly, fully and in writing to Genzyme immediately upon
development of the same and at any time upon request, (ii) to assign to Genzyme
all my right, title and interest in and to all Developments and to anything
tangible which evidences, incorporates, constitutes, represents or records any
such Developments, (iii) to cooperate and assist Genzyme in obtaining and
maintaining any governmental protection it may seek for such Developments, and
to execute all documents that may be required therefor, and (iv) if such
Developments constitute works made for hire under the laws of the United States,
to assign to Genzyme all copyrights, patents and other proprietary rights I may
have in any such Developments, together with rights to file for and/or own
wholly without restriction United States and foreign copyrights, patents, and
trademarks with respect thereto.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       73


c.      Prior Developments. I agree that the foregoing assignment covers all
results, outputs and products of my work for Genzyme prior to the date hereof
(whether as an employee or as a consultant), and that all related copyrights,
patents and other intellectual property rights, and that all such results,
output and products are Developments and the sole property of Genzyme.

3.      Exceptions to this Agreement.

a. Confidential Information and/or Developments. I understand that Genzyme does
not desire to acquire from me any trade secrets or confidential business
information that I may have acquired from others. I have informed Genzyme, in
the space below, of any (i) continuing obligations that I may have to any
previous employers which require me not to disclose information to Genzyme or
compete with any such previous employers; and (ii) confidential information or
developments which I claim as my own or otherwise intend to exclude from this
Agreement because it was developed by me prior to the date of this Agreement. I
understand that after execution of this Agreement I shall have no right to
exclude confidential information or developments from this Agreement.


(If there are none, please enter the word "None"; attach additional pages as
necessary)

        Note: For obligations not to disclose information or compete with any
such previous employers, give the date of such obligations, identify the parties
owed such obligations and the nature of the restriction. Please attach any such
agreement(s) to this Agreement.


        b.   Developments Unrelated to Genzyme Business. Nothing in this
Agreement shall be construed to require or constitute the assignment of any
invention fully qualifying for protection under California Labor Code Section
2870. Therefore, this Agreement shall not apply to any invention that I develop
or developed on my own time without using Genzyme's equipment, supplies,
facilities, or trade secret information unless (1) the invention relates at the
time of conception or reduction to practice to the Genzyme's business, or actual
or demonstrably anticipated research or development of Genzyme, or (2) the
invention results from any work performed by me for Genzyme. I acknowledge that
this provision shall constitute sufficient and appropriate written notification
that this Agreement does not apply to an invention which qualifies fully under
the provisions of Labor Code Section 2870.

4.      Employee's Obligation to Cooperate. At any time upon the request of
Genzyme, I shall execute all documents and perform all acts which Genzyme
considers necessary or advisable to secure its rights hereunder and to carry out
the intent of this Agreement.

5.      Return of Property. At any time upon the request of Genzyme, I shall
return promptly to Genzyme all property, including all Confidential Information
and Developments.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       74


6.      Employment At-Will. Nothing in this Agreement shall require that Genzyme
employ me for any period of time. I understand that I am an employee-at-will and
that my employment relationship with Genzyme may be terminated by Genzyme or me
at any time for any reason, with or without cause and without prior notice.

7.      Restrictive Covenants.

a.      I acknowledge and agree that Genzyme has invested substantial time,
money and resources in the development of its Confidential Information and the
development and retention of its customers, clients, collaborators, and
employees. I further acknowledge that during the course of my employment, I may
be introduced to customers, clients, and collaborators of Genzyme, and agree
that any "goodwill" associated with any customer, client, or collaborator
belongs exclusively to Genzyme. In recognition of the foregoing, I specifically
acknowledge and agree that while I am employed by Genzyme and for a period of
one (1) year after termination of such employment (for any reason, whether
voluntary or involuntary) I will not directly or indirectly in any position or
capacity engage in the following activities for myself or for any other person,
business, corporation, partnership or other entity:

(i)     solicit or divert or attempt to solicit or divert any of Genzyme's
business or prospective business from any of Genzyme's customers, clients, or
collaborators, or prospective customers, clients, or collaborators with whom I
had contact or whose dealings with Genzyme I coordinated or supervised or about
whom I obtained Confidential Information, at any time during the two (2) year
period prior to the termination of my employment, unless I obtain prior written
consent of Genzyme; or

(ii)    request, solicit, or induce, (or attempt or assist in doing any of these
actions) any employee or other persons (including consultants) who may have
performed work or services for Genzyme within one (1) year prior to the
termination of my employment with Genzyme to perform work or services for any
person or entity other than Genzyme.

b.      Confirmation of Post-Employment Status. I agree to inform Genzyme, for a
period of one year following the termination of my employment, of every place of
employment and every affiliation I have in a company or business enterprise,
directly or indirectly, as an employee, owner, manager, stockholder, consultant,
director, officer, or partner. If I fail to so inform Genzyme, and I have
violated the obligations set forth in this Section 7, the one-year period shall
run from the date that Genzyme first learned of my activity.

c.      Small Ownership Exemption. The provisions of this Section 7 shall not
apply to ownership of less than one percent (1%) of the stock of any publicly
traded corporation.

8.      Corporate Compliance. I agree that I will abide by all policies and
procedures that Genzyme may have in effect from time to time, including without
limitation, any applicable corporate compliance program. I further acknowledge
that failure to abide by corporate policies may be grounds for discipline,
including immediate termination of my employment.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       75


9.      Definitions. The following terms, as used in this Agreement, shall have
the meanings set forth below:

a.      "Confidential Information" shall mean all trade secrets, proprietary
information, and other data or information (and any tangible evidence, record or
representation thereof), whether prepared, conceived or developed by an employee
of Genzyme (including myself) or received by Genzyme from an outside source,
which is in the possession of Genzyme (whether or not the property of Genzyme)
and which is maintained in confidence by Genzyme, including, but not limited to:
(i) significant technical and business information; (ii) all information
relating to the design, manufacture, application, know-how, research and
development of Genzyme's products and services; (iii) sources of supply and
material; (iv) operating and other cost data; (v) information relating to
present, past or prospective customers, customer proposals, price lists and data
relating to pricing of products or services; (vi) patient medical records and
all other information relating to patients; and (vii) any other information not
generally known in the industry, including specifically, all information
contained in manuals, memoranda, formulae, plans, drawings and designs,
specifications, supply sources, and records of Genzyme including without
limitation that which is legended or otherwise identified by Genzyme as
"Confidential Information." Notwithstanding the foregoing, the term Confidential
Information shall not apply to information which Genzyme has voluntarily
disclosed to the public without restriction or which has otherwise lawfully
entered the public domain.

b.      "Developments" shall mean all Confidential Information and all other
discoveries, inventions, ideas, concepts, research and other information,
processes, products, methods and improvements, or parts thereof (including,
without limitation, all computer programs, algorithms, subroutines, source
codes, object codes, designs, and improvements), conceived, developed, or
otherwise made by me, alone or jointly with others and in any way relating to
the Corporation's present or proposed services, programs or products or to tasks
assigned to me during the course of my employment, whether or not patentable or
subject to copyright protection and whether or not reduced to tangible form or
reduced to practice.

c.      "Genzyme" shall mean Genzyme Corporation, and all other companies or
entities currently or which in the future Genzyme Corporation owns or controls,
directly or indirectly, capital stock or other equity interests representing at
least 40% of the outstanding voting stock or other equity interests.

10.     Miscellaneous Provisions.

a.      Entire Agreement and Amendment. This Agreement contains the entire and
only agreement between Genzyme and me respecting the subject matter hereof; it
supersedes all prior agreements with regard to the subject matter hereof. In the
event of any inconsistency between this Agreement and any other contract between
Genzyme and me, the provisions of this Agreement shall prevail (unless such
other contract expressly supersedes this Agreement). No modification of this
Agreement shall be binding upon me or Genzyme unless made in writing and signed
by an authorized officer of Genzyme.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       76


b.      Survival and Waivers. This Agreement will remain in effect if I am
transferred, promoted, or reassigned to work on functions other than my present
functions anywhere within Genzyme. My obligations under this Agreement shall
survive the termination of my employment with Genzyme regardless of the manner
of or reasons for such termination, and regardless of whether such termination
constitutes a breach of any other agreement I may have with Genzyme. This
Agreement shall inure to the benefit of, and be binding upon, Genzyme and me and
our respective heirs, legal representatives, successors and assigns. Failure by
Genzyme to insist upon strict compliance with any term of this Agreement shall
not be deemed a waiver of that or any other right.

c.      Interpretation. In the event that any provision of this Agreement shall
be determined to be unenforceable by any court of competent jurisdiction by
reason of its extending for too great a period of time or over too large a
geographic area or over too great a range of activities, it shall be interpreted
to extend only over the maximum period of time, geographic area or range of
activities as to which it may be enforceable. If after application of the
immediately preceding sentence, any provision of this Agreement shall be
determined to be invalid, illegal or otherwise unenforceable by any court of
competent jurisdiction, the validity, legality and enforceability of the other
provisions of this Agreement shall not be affected. Except as otherwise provided
in this paragraph, any invalid, illegal or unenforceable provision of this
Agreement shall be severable, and all other provisions hereof shall remain in
full force and effect.

d.      Equitable Relief. I acknowledge and agree that (i) the provisions set
forth in this Agreement are necessary and reasonable to protect Genzyme's
Confidential Information and goodwill; (ii) the provisions set forth in Section
7 are reasonable and necessary to protect Genzyme's business interests; and
(iii) in the event of my breach of any of the agreements set forth in this
Agreement, Genzyme would suffer substantial irreparable harm and that Genzyme
would not have an adequate remedy at law for such breach. In recognition of the
foregoing, I agree that in the event of a breach or threatened breach of any of
these covenants, in addition to such other remedies as Genzyme may have at law,
without posting any bond or security, Genzyme shall be entitled to seek and
obtain equitable relief, in the form of specific performance, or temporary,
preliminary or permanent injunctive relief, or any other equitable remedy which
then may be available.

e.      Governing Law and Jurisdiction. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the
Commonwealth of Massachusetts without regard to its principles of conflicts of
laws, and shall be deemed to be effective as of the first day of my employment
by Genzyme. I further agree that I shall be subject to the jurisdiction of the
courts of the Commonwealth of Massachusetts in any action brought by Genzyme in
connection with any of the provisions of this Agreement. Both parties further
acknowledge that venue shall lie in Massachusetts and that material witnesses
and documents would be located in Massachusetts. Both parties further agree that
any action, demand, claim or counterclaim relating to this Agreement shall be
resolved by a judge alone, and both parties hereby waive and forever renounce
the right to a trial before a civil jury.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       77


BY PLACING MY SIGNATURE HEREUNDER, I ACKNOWLEDGE THAT I HAVE HAD ADEQUATE
OPPORTUNITY TO REVIEW THESE TERMS AND CONDITIONS AND TO REFLECT UPON AND
CONSIDER THE TERMS AND CONDITIONS OF THIS AGREEMENT. I FURTHER ACKNOWLEDGE THAT
I FULLY UNDERSTAND ITS TERMS AND THAT I VOLUNTARILY EXECUTED THIS AGREEMENT.


Employee's signature:


Date:
      --------------------------             --------------------------------
PRINT NAME:


                                            Accepted:


Genzyme Corporation


By:
    ---------------------------------
Its:


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       78


                               SCHEDULE 6.2(a)(ii)
                         GENZYME EMPLOYMENT APPLICATION

genzyme


                               APPLICATION FOR EMPLOYMENT
                               An Equal Opportunity Employer


PERSONAL

Name____________________________________________________________________________
                Last                  First                   Middle

Address_________________________________________________________________________
           Number    Street        City              State          Zip Code


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



Phone No. (_____) __________________________  Email ____________________________
         Area Code


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



                                                      APPLICATION FOR EMPLOYMENT
                                                   AN EQUAL OPPORTUNITY EMPLOYER

================================================================================

All persons shall be considered for employment without regard to race, color,
religion, national origin, citizenship status, disability, gender, veteran
status, sexual orientation or any other characteristic protected by applicable
federal, state, and local law.

Name:__________________________________________________________________________

================================================================================

     
Position Applied For:_______________________________________________________________________________________________________

Referral Source:   / / Advertisement:______________   / / Employee Referral:_______________   / / Job Fair:_________________

/ / Genzyme Website:______    / / Empl. Agency:_______    / / Internet Posting _______  / / Conference, Seminar, Etc.:______


Do you have the legal right to work in the U.S.?  Yes / /  No / /  If No, please Explain.

____________________________________________________________________________________________________________________________

Starting rate desired $____________ Per _____________ When can you start?___________________________________________________

If presently employed may we contact your current employer?   Yes / /   No / /

Have you ever been involuntarily terminated or asked to resign your employment?  / / Yes   / / No


EMPLOYMENT RECORD PLEASE LIST MOST RECENT EMPLOYMENT FIRST



    Company Name         Dates of Employment          Position/Title           Supervisor/Contact            Starting Salary
     & Address            Reason for Change         & Responsibilities              Phone #                   Ending Salary
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                 


- ----------------------------------------------------------------------------------------------------------------------------


- ----------------------------------------------------------------------------------------------------------------------------


- ----------------------------------------------------------------------------------------------------------------------------

* You may include any verified work performed on a volunteer basis.

Have you ever been debarred or otherwise precluded from participation in health
care payment programs funded by federal or state governments?  Yes / /   No / /
If yes, please explain:_____________________________________________________________________________________________________



[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



     
Have you ever been the subject of a debarment action by the federal Food and
Drug Administration? Yes / / No / /
If yes, please explain:_____________________________________________________________________________________________________




[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



EDUCATION



                                   Years                                    Graduate
  Name and Address of School     Completed     Courses or Major Studies     Yes or No    Degree or Certificate
- --------------------------------------------------------------------------------------------------------------
                                                                             
  High School                     1 / /
                                  2 / /
                                  3 / /
                                  4 / /
- --------------------------------------------------------------------------------------------------------------
  College/University              1 / /
                                  2 / /
                                  3 / /
                                  4 / /
- --------------------------------------------------------------------------------------------------------------
  Additional Training

- --------------------------------------------------------------------------------------------------------------
CRIMINAL CONVICTIONS

Have you ever been convicted of a felony?    Yes / /   No / /

If yes, provide details (place, date, offense, etc.) _______________________________________________________________________

Have you, in the past five years, ever been convicted of a misdemeanor?   Yes / /   No / /

If yes, provide details (place, date, offense, etc.) _______________________________________________________________________
IN MASSACHUSETTS: Do not include a first conviction for drunkenness, simple assault, speeding, minor
traffic violations, affray or disturbance of the peace.
IN CALIFORNIA:  Do not include a conviction for possession of marijuana that is more than five years old.
IN GEORGIA:  Do not include any conviction discharged under the Georgia First Offender Rule.
IN NEW JERSEY:  Criminal convictions will only be considered when they relate to job functions of position.
Please not that a criminal conviction will not necessarily bar employment with Genzyme.

____________________________________________________________________________________________________________________________

SEALED RECORDS NOTCE

An applicant for employment or an employee with expunged record, sealed record,
or records on file with the Commissioner of Probation may answer "no record"
with respect to an inquiry herein relative to prior arrests, criminal court
appearances, or convictions.
In addition, any applicant for employment may answer "no record" with respect to
any inquiry relative to prior arrests, court appearances, and adjudication in
all cases of delinquency or as a child in need of services which did not result
in a complaint transferred to the Superior Court for criminal Prosecution.


REFERENCES The names of two persons, not relatives, who have known you and your
work, for the past three years:

____________________________________________________________________________________________________________________________

Name____________________________________     Name  __________________________________
Relationship____________________________     Relationship____________________________
Address_________________________________     Address_________________________________
Phone___________________________________     Phone___________________________________

BUSINESS SKILLS



[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



/ / _________ (WPM) Typing      / / Word Processor/Computer_____________________
                                / / Systems used________________________________


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



NON-COMPEITION OR OTHER INTELLECTUAL PROPERTY AGREEMENTS

Are you restricted by any agreement with a former employer, such as a
non-competition, non-solicitation or similar agreement, that would in any way
restrict your ability to compete with a former employer, to work for Genzyme, to
solicit customers or clients for Genzyme, to recruit employees for Genyme, or
otherwise to perform any job responsibilities for Genzyme?

      Yes / /   No / /

Please attach any such agreement(s) to this application.

PLEASE READ BEFORE SIGNING

________________________________________________________________________________

(If you have any questions regarding the following statements, please ask them
of an employment interviewer before signing.)

     I understand that within the first three (3) working days of my employment
I must provide proof of employment authorization and proof of identity and
verify employment authorization by signing INS Form 1-9. Failure to do so in
accordance with the rules established under the Immigration Reform and Control
Act may result in immediate termination of my employment.

     Should I be employed by Genzyme, I agree to comply with all Genzyme rules
and regulations. I understand that Genzyme shall have the right to change its
rules and regulations at any time.

     Should I be employed by Genzyme, I understand that my employment is for no
stated term and is subject to termination at the will of Genzyme or myself, with
or without cause and with or without notice, at any time, at the option of
either Genzyme or myself.

     Should I be employed by Genzyme, I will sign an agreement to keep
confidential certain proprietary and business information of Genzyme.

     I certify that all of the statements made by me on this application are
true and complete to the best of my knowledge and that I have withheld nothing
that, if disclosed, would affect this application unfavorably. I UNDERSTAND THAT
ANY FALSIFICATION, MISREPRESENTATION OR OMISSION OF FACTS CALLED FOR IN THIS
APPLICATION MAY RESULT IN DENIAL OF EMPLOYMENT OR IMMEDIATE DISMISSAL.

     I hereby authorize Genzyme to verify the information I have provided in
this application and to conduct such investigation into the facts surrounding my
application as it may deem appropriate, including contacting my former employers
and any references given by me. I hereby release Genzyme and its employees and
officers from any and all claims for damages in conducting such verification.

     I hereby acknowledge that I have read, understand and consent to the above
statements.


Date
     -----------------------


Signature
         -------------------

It is unlawful in Massachusetts to require or administer a lie detector test as
a condition of employment or continued employment. An employer who violates this
law shall be subject to criminal penalties and civil liability.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



         GENZYME IS AN EQUAL OPPORTUNITY / AFFIRMATIVE ACTION EMPLOYER.

                           INVITATION TO SELF IDENTIFY

Applicant Name:______________________  Social Security No.:_____________________
                  (please print)

You are invited to provide information to assist Genzyme in meeting government
reporting requirements and furthering its affirmative action efforts in the
employment of qualified minorities, females, qualified persons with
disabilities, and qualified covered veterans. Providing this information is
STRICTLY VOLUNTARY and any information you provide will be kept confidential and
will not be used as the basis for any adverse employment decisions.

RACE DESIGNATION (See definitions on reverse side):

                                             / / Caucasian
                                             / / African American
        Please check one:                    / / Latin American
                                             / / Asian or Pacific Islander
                                             / / Native American

SEX  Please check one:  / / Male   / /  Female

VETERAN STATUS (See descriptions on reverse):
               Please check all that apply:  / / Vietnam-era Veteran
                                             / / Special Disable Veteran
                                             / / Other Protected Veteran

DISABILITY:  Do you have a physical or mental disability which would limit your
ability to perform the essential functions of the position for which you are
applying?
                        Yes / /     No / /

If there are any accommodations which we could make which would enable you to
perform the job property and safely, including special equipment, changes in the
physical layout of the job, elimination of certain duties relating to the job,
provision of personal assistance services, or other accommodations, please
describe them:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________


Please indicate, if known:
Hiring Manager or Human Resources Recruiter: ___________________________________

Specific Title of Position Applied For: ________________________________________

GENZYME DOES NOT DISCRIMINATE IN EMPLOYMENT ON THE BASIS OF RACE, COLOR,
NATIONAL ORIGIN, AGE, SEX, SEXUAL ORIENTATION, DISABILITY, VETERAN OR MARITAL
STATUS OR OTHER PROTECTED STATUS COVERED BY FEDERAL, STATE OR LOCAL LAW.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



SIGNATURE                                   DATE
         -------------------------------        ----------------------------


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.



DEFINITIONS:

          RACE/ETHNIC DEFINITIONS:

          CAUCASIAN (Not of Hispanic origin) - All persons having origins in any
          of the original peoples of Europe, North Africa, or the Middle East.
          AFRICAN AMERICAN (Not of Hispanic origin) - All persons having origins
          in any Black racial groups of Africa.
          LATIN AMERICAN - All persons of Mexican, Puerto Rican, Cuban, Central,
          or South American, or other Spanish culture origin, regardless of
          race.
          ASIAN OR PACIFIC ISLANDER - All persons having origins in any of the
          original peoples of the Far East, Southeast Asia, the Indian
          Subcontinent, or the Pacific Islands. This area includes, for example,
          China, India, Japan, Korea, the Philippine Islands, and Samoa.
          NATIVE AMERICAN - All persons having origins in any of the original
          peoples of North America, and who maintain cultural identification
          through tribal affiliation or community recognition.

"Individual With A Disability" means any person who:

          a) has a physical or mental impairment which substantially limits one
             or more of such person's major life activities;
          b) has a record of such impairment; or
          c) is regarded as having such impairment.

"Qualified Individual With A Disability" means an individual with a disability
who satisfies requisite skill, experience, education and other job-related
requirements of a particular job and is capable of performing its essential
functions with or without reasonable accommodation to his/her disability.

"Special Disabled Veteran" means (1) a person who is entitled to disability
compensation under laws administered by the U.S. Veterans Administration for a
disability (a) rated at 30 percent or more, or (b) rated at 10 or 20 percent in
the case of a veteran who has been determined to have a serious employment
disability; or (2) a person who was discharged or released from active duty
because of a disability incurred or aggravated in the line of duty.

"Qualified Special Disabled Veteran" means a Special Disabled Veteran (as
defined above) who is capable of performing a particular job with reasonable
accommodations to his/her disability.

"Vietnam-era Veteran" means a person who served more than 180 days of active
military, naval or air service, any part of which occurred (1) in the Republic
of Vietnam between February 28, 1961 and May 7, 1975, or (2) during the period
between August 5, 1964 and May 7, 1975 otherwise, and who was (1) discharged or
released with other than a dishonorable discharge or (2) was discharged or
released from active duty because of a service-connected disability.

"Other Protected Veteran" means a person who served on active duty at any point
between December 7, 1941 and April 28, 1952; or participated in a campaign or
expedition for which a campaign badge or expeditionary medal was authorized, and
was awarded such a badge or medal.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       79


                             SCHEDULE 6.2(b)(ii)(A)
                          CERTAIN TRANSFERRED EMPLOYEES

[**]


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       80


                             SCHEDULE 6.2(b)(ii)(B)
                          CERTAIN TRANSFERRED EMPLOYEES

[**]


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       81


                              SCHEDULE 6.3(a)(iii)
                                   EXCEPTIONS

1.      Trips and special business cards awarded to the Transferred Employees
identified by Wyeth as being recipients of the Golden Circle and Leadership
Awards for 2004.

2.      Plaques awarded to the Transferred Employees identified by Wyeth as
being recipients of the Golden Circle, Leadership and Achievement Awards for
2004.

Each of the above recognition award items shall be comparable to those
customarily given by Genzyme for similar sales achievement awards.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       82


                                  SCHEDULE 7.3
                              WYETH'S DELIVERABLES

1.      Wyeth's delivery to Genzyme of the following Acquired Assets in
        accordance with the delivery dates set forth in Section 3.3(a):

        A.      The delivery of an executed assignment document for the Wyeth
                Trademarks under Section 3.1(b);

        B.      Substantially complete delivery of the Customer Information
                under Section 3.1(c), further subject to the extent Wyeth can
                obtain necessary consents of IMS and SDI prior to the delivery
                date;

        C.      Substantially complete delivery of the Clinical Data under
                Section 3.1(e); and

        D.      Substantially complete delivery of the Marketing and Sales
                Assets under Section 3.1(f), further subject to the extent Wyeth
                can obtain necessary consents of IMS and SDI prior to the
                delivery date.

2.      Wyeth's satisfaction of its obligations under Sections 11.1(b) and
        3.1(g) to use reasonable efforts to obtain any necessary consents to
        assign the Assigned Contracts to Genzyme.

3.      The transfer of outstanding sales orders to Genzyme and the notice to
        customers pursuant to Attachment 1, Part II(a) and (b) of Schedule 8.1.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       83


                                  SCHEDULE 8.1
                            TRANSITION SERVICES PLAN

                                  ATTACHMENT 1
                 INVENTORY REPURCHASE; OUTSTANDING SALES ORDERS

Unless otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the North American Termination and Transition Agreement
(the "TERMINATION AND TRANSITION AGREEMENT") to which this Transition Services
Plan is attached.

I.      INVENTORY REPURCHASE

        Inventory

        Genzyme's repurchase of Wyeth's existing inventory of Synvisc Products
        shall be governed by Section 5.6 of the Termination and Transition
        Agreement.

        Thirty (30) days prior to the Closing Date Wyeth shall provide an
        estimate of the inventory of Wyeth-labeled Synvisc Products as of the
        Closing Date in a format substantially as set forth below.



                                                 PROJECTED
                                                 INVENTORY
- --------------------------------------------------------------------------------
                                                              INVENTORY TRANSFER
             DESCRIPTION            NDC                        PRICE TO GENZYME
- --------------------------------------------------------------------------------
                                                     

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
          by expiration date
- --------------------------------------------------------------------------------
                       Total
- --------------------------------------------------------------------------------


        Inventory Audit

        Genzyme shall be entitled to conduct a physical inventory of the
        Inventory in the possession of Wyeth on the Closing Date.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       84


II.     OUTSTANDING SALES ORDERS TO WYETH

        (a)     Not later than the close of business on the next day after the
Closing Date, Wyeth shall deliver to Genzyme by facsimile, with originals to
follow by reputable overnight courier, copies of (i) all outstanding sales
orders, as of the Closing Date and (ii) a statement of the amount of any such
sales orders filled by Wyeth and the quantity of such sales orders which have
not been filled, as of the Closing Date. From and after the Closing Date, all
unfilled sales orders shall be filled and invoiced to the customers by Genzyme.

        (b)     Not later than the close of business on the next day after the
Closing Date Wyeth shall notify by facsimile all customers with outstanding or
partially filled orders, that Genzyme will fill the remainder of the orders and
invoice them in response to such sales orders.

        (c)     In the event payment on sales for orders filled by Genzyme are
received by Wyeth, Wyeth shall promptly reimburse Genzyme and provide Genzyme
with the customer supporting documentation with the remittance.

        (d)     Following the Closing Date, Wyeth agrees to submit at the end of
each business day to Genzyme, by facsimile, any unsolicited, written sales
orders it receives for the Synvisc Products. After the Closing Date, any calls
received by Wyeth from customers who are calling to order Synvisc Product shall
be handled in accordance with Attachment 5 to this SCHEDULE 8.1.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       85


                                  ATTACHMENT 2
                       PRODUCT QUALITY RELATED COMPLAINTS

It is understood that the following guidelines will be observed when receiving,
processing, or responding to product quality related complaints (i.e., cGMP
recordable complaints).

1.      Prior to the Closing Date, Wyeth will receive, process and explain the
product quality complaint process to Synvisc Product customers. Genzyme will
continue to respond to all complaints for Synvisc Products. After the Closing
Date, Genzyme will be solely responsible for receiving, processing and
responding to all complaints for Synvisc Products.

2.      Prior to the Closing Date, Genzyme shall forward to Wyeth any product
quality related complaints for Synvisc Products received by Genzyme from any
person or entity other than Wyeth within three (3) business days of receipt.

3.      After the Closing Date, Genzyme shall be solely responsible for
maintaining a database to trend and track Synvisc Product quality related
complaints. To aid Genzyme, Wyeth will provide Genzyme with a summary of
historical Synvisc Product quality complaints received by Wyeth prior to the
Closing Date. This information will be provided within ten (10) business days
after the end of the month in which the Closing Date occurred.

4.      After the Closing Date, Wyeth shall forward by facsimile any written
product quality related complaints for Synvisc Products received by Wyeth to
Genzyme within three (3) business days of receipt. After the Closing Date, any
phone calls received by Wyeth from customers with Synvisc Product quality
related complaints shall be transferred to a phone number specified by Genzyme
within thirty (30) days prior to the Closing Date.

5.      Wyeth believes that the telephone number, 1-800-99WYETH, is the only
telephone number, email account or web site through which Synvisc
Product-related product complaints will be reported domestically.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       86


                                  ATTACHMENT 3
                              GOVERNMENT CONTRACTS

1.      Within one (1) business day after the Closing Date, Wyeth shall remove
Synvisc Product from the Government Contracts.

2.      After the Closing Date, inquiries pertaining to the Government Contracts
(to the extent such inquiries relate to sales of the Synvisc Products) will be
referred to:

                Genzyme Corporation
                55 Cambridge Parkway
                Cambridge, MA 02142
                Attn:  James A. Coccia
                Facsimile: (617) 591-5894

3.      Within ten (10) business days after the Closing Date, Genzyme shall
reinstate Synvisc Product as part of their own government contracts.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       87


                                  ATTACHMENT 4
                            OTHER TRANSITION SERVICES

800 PHONE LINES.

        1.      Dedicated Synvisc Product automated direct consumer telephone
line. Wyeth shall use reasonable efforts to assist Genzyme in the transfer of
such telephone number to Genzyme. In the event the telephone number cannot be
transferred to Genzyme, Wyeth shall maintain such telephone number until
December 31, 2005 and callers to such telephone number after the Closing Date
will be referred to a telephone number provided by Genzyme to Wyeth within
thirty (30) days prior to the Closing Date.

        2.      Synvisc Product Reimbursement hotline. Wyeth shall use
reasonable efforts to assist Genzyme in the transfer of such telephone number to
Genzyme. In the event the telephone number cannot be transferred to Genzyme,
Wyeth shall maintain such telephone number until December 31, 2005 and any
callers to such telephone number after the Closing Date will be "warm"
transferred to a phone number specified by Genzyme within thirty (30) days prior
to the Closing Date.

        3.      Synvisc Product Sales orders. After the Closing Date, any phone
calls received by Wyeth from customers who are calling to order Synvisc Product
shall be transferred to a phone number specified by Genzyme within thirty (30)
days prior to the Closing Date.


DOMAIN NAMES.

Wyeth shall use commercially reasonable efforts to transfer to Genzyme the
Domain Names listed on Schedule 3.1(e).


CUSTOMER INFORMATION.

Wyeth shall provide the customer information set forth in Schedule 3.1(d) for
all customers.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       88


                                 SCHEDULE 9.4(b)
                          PRODUCT LIABILITY PROCEEDINGS

Maurice and Sharon Gerack v. Genzyme and Wyeth Pharmaceuticals USDC, Southern
District of Florida, CA: 03-81115
Filed 27-Oct-2003, Settled on 27-Oct-2004


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       89


                                SCHEDULE 11.1(a)
                             PRE-CLOSING INFORMATION

The following information and materials shall be provided to Genzyme on or
before December 1, 2004, unless specifically stated in the narrative of the line
item.

I.      CLINICAL INFORMATION.

        1.      Copies of all present consulting agreements listed on
SCHEDULE 3.1(g), and the General Consulting Agreements with Dr. David Waddell
and Dr. Nicholas DiNubile. Copies of the Investigator Originated Proposal
Research Agreements with Dr. Melvin P. Rosenwasser, Dr. Lisa Mandl, Dr. Carlos
Guanche, Dr. Kevin Paul Shea, Dr. Victoria Brander and Sue Ann Sisto, Ph.D.

        2.      A copy of the terminated contract with Stanford University
relating to the Burden of Illness Study and the Move Study.

        3.      A copy of the present agreement with Precise Publications, LLC
and the purchase order with Innovus Research related to Synvisc Product.

        4.      A copy of Wyeth's 2005 Strategic Plan for Publications.

II.     PHARMACOVIGILANCE INFORMATION.

        1.      The identity of the company who provides literature for
monitoring Synvisc Product.

        2.      A download of citations for articles identified through the
safety-related literature search via End Note output.

        3.      A copy of Wyeth SOP 2411.

III.    MEDICAL INFORMATION.

        1.      A download of existing Synvisc Product medical inquiries and
responses from the Wyeth medical information database in a format agreed upon by
the Parties covering the last 2 calendar years prior to the Signing Date, to be
provided on or before December 30, 2004.

        2.      A download of the Synvisc Product medical inquiries and
responses from the Wyeth medical information database in a format agreed upon by
the Parties for the period commencing with the download under subsection 1 above
to the Closing Date, to be provided within ten (10) days after the Closing Date.

        3.      A copy of all response letters and response scripts revised or
finalized during the sixty (60) day period prior to December 1, 2004 with full
text copies of all non-published


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       90


referenced materials related to Synvisc Product that did not originate from
Genzyme. A copy of all draft response letters and draft response scripts in
progress as of December 1, 2004.

        4.      The average monthly number of domestic Synvisc Product-related
medical inquiries that require response by Wyeth for calendar years 2003 and
2004.

        5.      Current copies, as of December 1, 2004, of all Synvisc Product
response letters with full text copies of all available relevant non-published
referenced materials related to Synvisc Product that did not originate from
Genzyme to the extent not provided under #3 above.

        6.      Current copies, as of December 1, 2004, of all Synvisc Product
response scripts with full text copies of all available relevant non-published
referenced materials related to Synvisc Product that did not originate from
Genzyme to the extent not provided under #3 above.

        7.      Wyeth's existing bibliography of Synvisc Product-related
literature in Endnote format.

        8.      The identity of any commercial databases searched for medical
information monitoring for Synvisc Product.

        9.      One paper copy, if existing, of the full text of articles
identified through the medical information related search for Synvisc Product or
contained in the existing Wyeth Synvisc Product database in Endnote format.

IV.     TRANSFERRED EMPLOYEE INFORMATION.

        1.      To the extent that disclosure is not prohibited by any federal
or state law, the following information with respect to each Transferred
Employee shall be provided to Genzyme on the Signing Date:

                (a)  Overview of all benefits for which the DMs/MSMs are
currently eligible for/receive from Wyeth and summary plan descriptions.

                (b)  List of stock options by employee (DM/MSM) including
vesting schedule.

                (c)  List of employees (DM/MSM) to include: home address,
contact phone number(s) (home office and mobile), and current base salary for
offer letters.

                (d)  List identifying any DM/MSM on a Wyeth sponsored employment
visa and/or green card to understand immigration needs.

        2.      The following list of information shall be provided to Genzyme
for each Transferred Employee by no later than December 15, 2004:

                (a)  Social security number

                (b)  Birth date


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       91


                (c)  Gender

                (d)  Annual Salary - projected 1/1/05 salary including 2005
merit increase

                (e)  original hire date

        3.      The following list of information or materials shall be provided
to Genzyme by no later than the Closing Date:

                (a)  Employment history with Wyeth for each DM/MSM from the
beginning of 2002, including all job titles and compensation (base salary and
incentive)

                (b)  List of any DM/MSM on current leave of absence (medical,
personal, military), including type of leave and anticipated return to work
date, so Genzyme will know if there will be any open territories/positions.

                (c)  Performance ratings for each DM/MSM during the period in
which they supported Synvisc Product at Wyeth for '02, '03 and '04, as
applicable.

                (d)  To the extent available and from the beginning of 2002,
employee training history data for each Transferred Employee.

V.      MARKETING AND SALES INFORMATION.

The following information (Marketing, Reimbursement Information, Corporate
Communication Information, Sales Operations Information, and Regulatory) with
respect to Synvisc Product. To the extent that Wyeth is prohibited from
providing any of the information listed below due to its contractual obligations
with IMS or SDI, Wyeth shall only be obligated to provide such information to
Genzyme if IMS or SDI, as applicable, consents to such provision by Wyeth. Wyeth
shall use reasonable efforts to obtain such consent during the Pre-Closing
Period. Wyeth shall have no obligation to make any payments in connection with
obtaining such consents unless Genzyme agrees to reimburse Wyeth for such
payments.

        MARKETING.

                1.   Marketing (brand) plan, excluding Wyeth P&L, for '05(P),
        '04 and '03.

                2.   "Tactics" and "Strategic Options" presentations/plans,
        excluding Wyeth P&L, for '04, and '03.

                3.   Detailed marketing budgets for '05(B), '04, and '03.

                4.   Inventory report of currently available ad/prom materials
        with monthly usage rates for 2004.

                5.   Existing DTC "recontact" analysis and DTC ROI.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       92


                6.   Listing of market research plan ('04, '05) calendar with
        listing of any 3rd party vendors for '04 and '05.

                7.   Existing "Monthly Metrics" Reports derived from IMS data.

                8.   Database of physicians in the Physician Provider Network in
        searchable format mutually agreed upon the Parties to the extent such
        database is not included in item 10 of SCHEDULE 3.1(f).

                9.   Contact list of Frontier Council advisors/consultants.

                10.  Agendas/minutes from '04 consultant/advisory meetings
        (including without limitation Frontier Council).

                11.  Listing of grant support to any societies, associations and
        institutions with level of support for '03 and '04 and current
        commitments for '05.

                12.  Listing of tradeshows/meetings ('03, '04, '05 planned)
        attended with size of booth and current commitments for '05.

                13.  Copies of the following agency/vendor/consultant
        agreements/purchase orders with respect to the Synvisc Product:

                       Clinical Connections
                       i-Frontier
                       Covance (cost model)
                       VSB speakers, consultants and advisors (Frontier Council)

                14.  Listing of VSB programs supported/conducted in '04.

                15.  Listing of VSB programs planned and/or committed to for
        '05.

                16.  Contact list for VSB speakers.

                17.  Current compensation rates for VSB speakers.

        REIMBURSEMENT INFORMATION.

                1.   The filings related to Medicare, Medicaid, DOD, VA, and
        other government payers set forth below:

                     (a)   Copies of all filings made in the 12 months prior to
        the Signing Date as part of the quarterly Average Selling Price (ASP)
        submission to CMS for Synvisc Product, which should include Q1, Q2, and
        Q3 2004. Copies of January 2005 submission of Q4 2004 ASP info and April
        2005 submission of Q1 2005 info to be provided to Genzyme within thirty
        (30) days after the end of the relevant quarter. Wyeth shall


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       93


        provide a written explanation of ASP calculation used by Wyeth on or
        before the Closing Date.

                     (b)   Copies of all filings for Synvisc Product in the 12
        months prior to the Signing Date made as part of quarterly and annual
        Medicaid, VA, or other government payor requirements, if applicable.
        Copies of January 2005 submission of Q4 2004 filings and April 2005
        submission of Q1 2005 info to be provided to Genzyme within thirty (30)
        days after the end of the relevant quarter.

                2.   Existing copies of all written communication with CMS and
        other government payors in the 12 months prior to the Signing Date
        related to Synvisc Product, including letters, comments and documented
        meetings.

                3.   Great Valley Call customer report data for '04, stating the
        number of: inbound calls, faxed requests and calls transferred to
        Covance.

                4.   Current Covance Cost Model Data.

                5.   Copy of Medicaid Rebate Agreements for Synvisc Product.

                6.   The following information related to patient assistance
        program:

                     (a)   Request form, and

                     (b)   Number of kits sent.

                7.   List of existing managed market accounts related to Synvisc
        Product and the contact name and address.

        CORPORATE COMMUNICATION INFORMATION.

                1.   Current media list of orthopedic trade publications and
        contacts used to promote Synvisc Product.

                2.   Media list of key reporters who have followed Synvisc
        Product and the osteoarthritis market.

                3.   Any investor materials, including fact sheets, Q&A sheets,
        and conference call transcripts that mention Synvisc Product and the
        osteoarthritis market.

                4.   Hardcopy binder and CD of press releases related to Synvisc
        Product during the five years prior to the Closing Date (including those
        written by Porter Novelli).

        SALES OPERATIONS INFORMATION.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       94


                1.   Copies of the following reports currently generated by
        Wyeth dating back to October 2002.

                     (a)   Synvisc Product Daily Sales Status Report - This
        report consists of the following information: daily sales orders, open
        sales orders, daily shipments in units and dollars, class of trade
        information, zone and district summaries, sales by state information.
        The historical information (2002 to the present) needed is a monthly
        summary of the information contained in this report including sales
        orders, shipments in units and dollars, class of trade information, zone
        and district summaries and sales by state information.

                     (b)   Synvisc Product Key Metrics - This monthly report
        includes account, district and by-director level summaries. It provides
        market share information down to the account level. Copies from the
        inception of this report to the present.

                     (c)   Synvisc Product Performance Reports - These monthly
        reports include direct and indirect sales by account and by zip code.

                     (d)   Monthly Business Early View - This report contains a
        market TCR (Therapy Class Report) market share snapshot by territory and
        for total US.

                     (e)   Synvisc Product Monthly Metric Report - This report
        shows US market share information including comparisons to competitive
        products, Synvisc Product sales compared to budget, DDD performance,
        internal details and promotion expenditures compared to competitors.

                     (f)   Sales Rep. Performance Comparison Report - This
        report shows kit sales and growth % for each sales rep as compared to
        the US total/average and shows a comparative ranking.

                2.   Copies of the following reports currently generated by
        Wyeth dating back to October 2002:

                     (a)   Synvisc Product Weekly Report - This report includes
        all direct sales by account.

                     (b)   50% Drop-Off Accounts Report - This report lists
        accounts at which sales have dropped by 50% or more in the most recent
        rolling 6 month-period compared to the prior rolling 18 month-period.

                     (c)   Outlier Physician Information - This report shows
        accounts to which a sales was made for the first time in the last 24
        months.

                     (d)   Tactical Plan Physician Movement Analysis - This
        report shows changes and movements of accounts within and between
        defined customer groupings (super core, core, prime, dabbler).


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       95


                     (e)   Tactical Plan Information - This report provides
        tables and graphs showing information by each defined customer grouping
        by month.

                     (f)   Sales Call Report Summary Report - This report shows
        the number of professional and organizational calls by territory and
        includes charts breaking sales calls down into defined customer
        groupings at a summary, district and sales representative level.

                3.   The current sales territory mapping including a summary of
        territories by account, zip code, sales representative and key account
        listing, to the extent not otherwise provided hereunder.

                4.   The current travel and entertainment expense budgets by
        territory level.

        REGULATORY.

                1.   Copies of existing records maintained by Wyeth with respect
        to the Communications Clearance Committee ("CCC") with respect to
        Synvisc Product.

VI.     FINANCE AND ACCOUNTING INFORMATION.

        1.      Information regarding the inventory of Synvisc Product on hand
as of the Signing Date.

        2.      Bad debt information for Synvisc Product for the 3 years prior
to the Closing Date.

        3.      Copies of Sales Tax Exemption Certificates supplied by customers
in Hawaii, Idaho, Illinois, South Carolina, and Utah.


[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       96


                                SCHEDULE 11.1(c)

                        FORM OF MONTHLY INVENTORY REPORT



        DESCRIPTION                           NDC              INVENTORY
- --------------------------------------------------------------------------------
                                                         


                by expiration date

                             Total



[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request. An unredacted version of this exhibit has been filed
separately with the commission.

                                       97

EX-13.1

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EXHIBIT 13.1

FINANCIAL STATEMENTS
GENZYME CORPORATION AND SUBSIDIARIES

	Page No.
Consolidated Selected Financial Data	F-2
Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations	F-8
Report of Independent Registered Public Accounting Firm	F-72
Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2004, 2003 and 2002	F-74
Consolidated Balance Sheets as of December 31, 2004 and 2003	F-76
Consolidated Statements of Cash Flows for the Years Ended December 31, 2004, 2003 and 2002	F-77
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2004, 2003 and 2002	F-79
Notes to Consolidated Financial Statements	F-82

F-1

GENZYME CORPORATION
Consolidated Selected Financial Data

        These selected financial data have been derived from our audited, consolidated financial statements, including the consolidated balance sheets at December 31, 2004 and 2003 and the related consolidated statements of income and of cash flows for the three years ended December 31, 2004 and notes thereto appearing elsewhere herein. You should read the following information in conjunction with our audited, consolidated financial statements and related notes contained elsewhere in this annual report. These selected financial data may not be indicative of our future financial condition due to the risks and uncertainties associated with operating our business including those described under the caption "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Factors Affecting Future Operating Results" included in this annual report.

        Through June 30, 2003, we had three outstanding series of common stock—Genzyme General Division common stock, which we refer to as "Genzyme General Stock," Genzyme Biosurgery Division common stock, which we refer to as "Biosurgery Stock," and Genzyme Molecular Oncology Division common stock, which we refer to as "Molecular Oncology Stock." We also refer to our series of stock as "tracking stock." Unlike typical common stock, each of our tracking stocks was designed to reflect the value and track the financial performance of a specific subset of our business operations and its allocated assets, rather than operations and assets of our entire company. Through June 30, 2003, we allocated earnings or losses to each series of tracking stock based on the net income or loss attributable to the corresponding division determined in accordance with accounting principles generally accepted in the United States, as adjusted for the allocation of tax benefits.

        Effective July 1, 2003, we eliminated our tracking stock capital structure by exchanging, in accordance with the provisions of our charter, each share of Biosurgery Stock for 0.04914 of a share of Genzyme General Stock and each share of Molecular Oncology Stock for 0.05653 of a share of Genzyme General Stock. Options and warrants to purchase shares of Biosurgery Stock and options to purchase shares of Molecular Oncology Stock were converted into options and warrants to purchase shares of Genzyme General Stock. Effective July 1, 2003, we have one outstanding series of common stock. From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of shareholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of common stock, which we now refer to as Genzyme Stock.

        Effective July 1, 2003, as a result of the elimination of our tracking stock capital structure, all of our earnings or losses are now allocated to Genzyme Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to that date remain allocated to those series of stock in the preparation of our consolidated financial statements and are not affected by the elimination of our tracking stock structure. Accordingly, earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock represent earnings allocated to those tracking stocks through June 30, 2003. Earnings or losses allocated to Genzyme Stock through June 30, 2003 represent the earnings or losses of Genzyme General, as adjusted for the allocation of tax benefits. Earnings or losses allocated to Genzyme Stock after June 30, 2003 represent the earnings or losses for the corporation as a whole.

F-2

CONSOLIDATED STATEMENTS OF OPERATIONS DATA

				For the Years Ended December 31,
				2004			2003			2002			2001			2000
				(Amounts in thousands)
Revenues:
	Net product sales			$	1,976,191		$	1,563,509		$	1,199,617		$	1,110,254		$	811,897
	Net service sales				212,392			130,984			114,493			98,370			84,482
	Revenues from research and development contracts:
		Related parties			2,850			2,967			2,747			3,279			509
		Other			9,712			16,411			12,615			11,727			6,432
			Total revenues		2,201,145			1,713,871			1,329,472			1,223,630			903,320
Operating costs and expenses:
	Cost of products sold				448,442			399,961			309,634			307,425			232,383
	Cost of services sold				140,144			75,683			66,575			56,173			50,177
	Selling, general and administrative (1)				599,388			519,977			438,035			424,640			264,551
	Research and development (including research and development related to contracts)				391,802			335,256			308,487			264,004			169,478
	Amortization of intangibles (2)				109,473			80,257			70,278			121,124			22,974
	Purchase of in-process research and development (3)				254,520			158,000			1,879			95,568			200,191
	Charge for impaired goodwill (4)				—			102,792			—			—			—
	Charge for impaired assets (5)				4,463			10,894			22,944			—			4,321
		Total operating costs and expenses			1,948,232			1,682,820			1,217,832			1,268,934			944,075
Operating income (loss)					252,913			31,051			111,640			(45,304	)		(40,755	)
Other income (expenses):
	Equity in loss of equity method investments				(15,624	)		(16,743	)		(16,858	)		(35,681	)		(44,965	)
	Gain on affiliate sale of stock (6)				—			—			—			212			22,689
	Gain (loss) on investments in equity securities (7)				(1,252	)		(1,201	)		(14,497	)		(25,996	)		15,873
	Minority interest				5,999			2,232			—			2,259			4,625
	Loss on sale of product lines (8)				—			(27,658	)		—			(24,999	)		—
	Other (9)				(357	)		959			40			(2,205	)		5,188
	Investment income				24,244			43,015			51,038			50,504			45,593
	Interest expense				(38,227	)		(26,600	)		(27,152	)		(37,133	)		(15,710	)
		Total other income (expenses)			(25,217	)		(25,996	)		(7,429	)		(73,039	)		33,293
Income (loss) before income taxes					227,696			5,055			104,211			(118,343	)		(7,462	)
(Provision for) benefit from income taxes					(141,169	)		(72,647	)		(19,015	)		2,020			(55,478	)
Net income (loss) before cumulative effect of change in accounting for goodwill and derivative financial instruments					86,527			(67,592	)		85,196			(116,323	)		(62,940	)
Cumulative effect of change in accounting for goodwill (2)					—			—			(98,270	)		—			—
Cumulative effect of change in accounting for derivative financial instruments, net of tax (10)					—			—			—			4,167			—
Net income (loss)				$	86,527		$	(67,592	)	$	(13,074	)	$	(112,156	)	$	(62,940	)

F-3

			For the Years Ended December 31,
			2004		2003			2002			2001			2000
			(Amounts in thousands, except per share amounts)
Net income (loss) per share:
Allocated to Genzyme Stock (11,12):
Net income before cumulative effect of change in accounting for derivative financial instruments			$	86,527	$	82,143		$	150,731		$	3,879		$	85,956
Cumulative effect of change in accounting for derivative financial instruments, net of tax (10)				—		—			—			4,167			—
Tax benefit allocated from Genzyme Biosurgery						8,720			18,508			24,593			28,023
Tax benefit allocated from Genzyme Molecular Oncology				—		3,420			9,287			11,904			7,476
Net income allocated to Genzyme Stock			$	86,527	$	94,283		$	178,526		$	44,543		$	121,455
Net income per share of Genzyme Stock:
	Basic:
		Net income per share before cumulative effect of change in accounting for derivative financial instruments	$	0.38	$	0.43		$	0.83		$	0.20		$	0.71
		Per share cumulative effect of change in accounting for derivative financial instruments, net of tax (10)		—		—			—			0.02			—
		Net income per share allocated to Genzyme Stock	$	0.38	$	0.43		$	0.83		$	0.22		$	0.71
	Diluted (13):
		Net income per share before cumulative effect of change in accounting for derivative financial instruments	$	0.37	$	0.42		$	0.81		$	0.19		$	0.68
		Per share cumulative effect of change in accounting for derivative financial instruments, net of tax (10)		—		—			—			0.02			—
		Net income per share allocated to Genzyme Stock	$	0.37	$	0.42		$	0.81		$	0.21		$	0.68
Weighted average shares outstanding (12):
	Basic			228,175		219,376			214,038			202,221			172,263
	Diluted			234,318		225,976			219,388			211,176			193,268
Allocated to Biosurgery Stock (11,14):
	Genzyme Biosurgery division net loss before cumulative effect of change in accounting for goodwill				$	(166,656	)	$	(79,322	)	$	(145,170	)	$	(87,636	)
	Cumulative effect of change in accounting for goodwill					—			(98,270	)		—			—
	Allocated tax benefit					14,005			9,706			18,189			448
	Net loss allocated to Biosurgery Stock				$	(152,651	)	$	(167,886	)	$	(126,981	)	$	(87,188	)
	Net loss per share of Biosurgery Stock—basic and diluted:
	Net loss per share before cumulative effect of change in accounting for goodwill				$	(3.76	)	$	(1.74	)	$	(3.34	)	$	(2.40	)
	Per share cumulative effect of change in accounting for goodwill					—			(2.46	)		—			—
	Net loss per share of Biosurgery Stock—basic and diluted				$	(3.76	)	$	(4.20	)	$	(3.34	)	$	(2.40	)
	Weighted average shares outstanding					40,630			39,965			37,982			36,359

F-4

		For the Years Ended December 31,
		2004	2003			2002			2001			2000
		(Amounts in thousands, except per share amounts)
Allocated to Molecular Oncology Stock (11):
	Net loss allocated to Molecular Oncology Stock		$	(9,224	)	$	(23,714	)	$	(29,718	)	$	(23,096	)
	Net loss per share of Molecular Oncology Stock—basic and diluted		$	(0.54	)	$	(1.41	)	$	(1.82	)	$	(1.60	)
	Weighted average shares outstanding			16,958			16,827			16,350			14,446
Allocated to Surgical Products Stock (11,14):
	Net loss											$	(54,748	)
	Net loss per share of Surgical Products Stock—basic and diluted											$	(3.67	)
	Weighted average shares outstanding												14,900
Allocated to Tissue Repair Stock (11,14):
	Net loss											$	(19,833	)
	Net loss per share of Tissue Repair Stock—basic and diluted											$	(0.69	)
	Weighted average shares outstanding												28,716

CONSOLIDATED BALANCE SHEET DATA

		December 31,
		2004		2003		2002		2001		2000
		(Amounts in thousands)
Cash and investments (15)		$	1,081,749	$	1,227,460	$	1,195,004	$	1,121,258	$	639,640
Working capital (16)			1,009,231		930,951		630,936		566,798		559,652
Total assets			6,069,421		5,004,528		4,093,199		3,935,745		3,318,100
Long-term debt, capital lease obligations and convertible debt, including current portion (17)			940,494		1,435,759		894,775		852,555		685,137
Stockholders' equity			4,380,156		2,936,412		2,697,847		2,609,189		2,175,141
	There were no cash dividends paid.

(1)

Selling, general and administrative expenses, or SG&A, for 2002 includes a $3.3 million charge for severance costs and the reversal of $5.5 million of accruals in excess of estimated requirements to fulfill our legal obligations to provide human transgenic alpha-glucosidase during the transition of Pompe clinical trial patients to a product derived from CHO cells. SG&A for 2001 includes $27.0 million of charges resulting from Pharming Group N.V.'s decision to file for and operate under a court supervised receivership.

(2)

Effective January 1, 2002, in connection with the provisions of Statement of Financial Accounting Standards, or SFAS, No. 142, "Goodwill and Other Intangible Assets," we ceased amortizing goodwill. We recorded $52.5 million of amortization expense related to our goodwill in 2001. Also, in connection with the adoption of SFAS No. 142, we tested the goodwill of our cardiothoracic reporting unit for impairment and as a result, reduced goodwill by recording a cumulative effect impairment charge of $98.3 million in our consolidated statements of operations for the year ended December 31, 2002.

F-5

(3)

Charges for in-process research and development, which we refer to as IPR&D, were incurred in connection with the following investment and acquisitions:

•

2004—$254.5 million related to our acquisition of ILEX;

•

2003—$158.0 million related to our acquisition of SangStat;

•

2002—$1.9 million related to our investment in Myosix;

•

2001—$86.8 million from the acquisition of Novazyme Pharmaceuticals, Inc. and $8.8 million from the acquisition of Wyntek Diagnostics, Inc.; and

•

2000—$118.0 million from the acquisition of GelTex Pharmaceuticals, Inc. and $82.1 million from the acquisition of Biomatrix.

(4)

Represents the write off of the goodwill associated with our orthopaedics reporting unit in June 2003 in accordance with SFAS No. 142.

(5)

Charges for impaired assets includes:

•

2004—$4.5 million charge to write down the assets related to our manufacturing and development facility in Oklahoma City, Oklahoma;

•

2003—$10.9 million charge, including $8.0 million to write off the fixed assets related to our FocalSeal product and a $2.9 million for the impairment of our manufacturing facility in Fall River, Massachusetts;

•

2002—$14.0 million to write off engineering costs related to a proposed manufacturing facility in Framingham, Massachusetts and $9.0 million to write off the assets at our bulk hyaluronic acid manufacturing facility in Haverhill, England; and

•

2000—$4.3 million to write off abandoned equipment at our Springfield Mills manufacturing facility, also in England.

(6)

During 2000, in accordance with our policy pertaining to affiliate sales of stock, we recorded gains of $22.7 million relating to public offerings of common stock by our unconsolidated affiliate, GTC Biotherapeutics, Inc. In the year ended December 31, 2001, our gain on affiliate sale of stock represents the gain on our investment in GTC as a result of GTC's various issuances of additional shares of its common stock.

(7)

Gain (loss) on investments in equity securities includes the following gains and losses resulting from the sale of equity investments and impairment charges because we assessed the declines in market value to be other than temporary:

•

2004—a charge of $2.9 million to write down our investment in the common stock of Macrogenics;

•

2003—a charge of $3.6 million charge to write down our investment in the common stock of ABIOMED, offset in part by $2.4 million of gains on the sales of investment in equity securities;

•

2002—charges of $9.2 million to write down our investment in GTC, $3.4 million to write down our investment in Cambridge Antibody Technology Group plc, $2.0 million to write down our investment in Dyax Corporation and $0.8 million to write down our investment in Targeted Genetics Corporation;

•

2001—charges of $8.5 million to write off our investment in Pharming Group, $11.8 million to write down our investment in Cambridge Antibody Technology Group and $4.5 million to write down our investment in Targeted Genetics; and

•

2000—gains of $16.4 million upon the sale of a portion of our investment in GTC and $7.6 million relating to our investment in Celtrix Pharmaceuticals, Inc. when it was acquired in a stock-for-stock transaction and a charge of $7.3 million for the write down of our investment in Focal Inc. common stock.

(8)

Gain (loss) on sale of product lines includes:

•

2003—a loss of $27.7 million related to the sale of substantially all of the tangible and intangible assets directly associated with our cardiac device business to Teleflex Inc.; and

•

2001—a loss of $25.0 million related to the sale of our Snowden-Pencer line of surgical instruments.

F-6

(9)

Other includes a $5.1 million payment received in connection with the settlement of a lawsuit in 2000.

(10)

On January 1, 2001, we adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No. 137 and SFAS No. 138. In accordance with the transition provisions of SFAS No. 133, we recorded and allocated to Genzyme General a cumulative effect adjustment of $4.2 million, net of tax, in our consolidated statements of operations to recognize the fair value of warrants to purchase shares of GTC common stock held on January 1, 2001.

(11)

Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Biosurgery Stock and Molecular Oncology Stock. From that date forward, all of our earnings are allocated to Genzyme General Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to July 1, 2003 remain allocated to those stocks and are not affected by the elimination of our tracking stock structure.

(12)

Reflects the two-for-one split of Genzyme General Stock on June 1, 2001.

(13)

Reflects the retroactive restatement of diluted earnings per share and diluted weighted average shares outstanding in accordance with Emerging Issues Task Force, or EITF, Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share."

(14)

We created Genzyme Biosurgery on December 18, 2000. Prior to this date, the operations allocated to Genzyme Biosurgery were included in the operations allocated to our former Genzyme Surgical Products and Genzyme Tissue Repair divisions and as of that date, the operations of Genzyme Surgical Products and Genzyme Tissue Repair ceased. Net loss per share of Biosurgery Stock for the year ended December 31, 2000 is calculated using the net loss allocated to Biosurgery Stock for the period from December 19, 2000 through December 31, 2000 and the weighted average shares of Biosurgery Stock outstanding during the same period. Loss per share data are not presented for Genzyme Biosurgery for the period from January 1, 2000 to December 18, 2000, as there were no shares of Biosurgery Stock outstanding during that period.

(15)

Includes cash, cash equivalents, short- and long-term investments, and all restricted investments.

(16)

At December 31, 2002, $284.0 million in principal drawn under our revolving credit facility and $10.0 million in principal of our 6.9% convertible subordinated note due May 2003 are included in the determination of working capital. At December 31, 2004, $100.00 million in principal drawn under our revolving credit facility is included in the determination of working capital.

(17)

Long-term debt, capital lease obligations and convertible debt, including current portions, consists of (amounts in millions):

		December 31,
		2004		2003		2002		2001		2000
1.25% convertible senior notes		$	690.0	$	690.0	$	—	$	—	$	—
3% convertible subordinated debentures			—		575.0		575.0		575.0		—
Capital lease obligations			150.1		154.5		25.8		26.9		27.9
Revolving credit facility			100.0		—		284.0		234.0		368.0
6.5% convertible note			—		11.3		—		—		—
Notes payable			0.4		5.0		—		6.7		5.5
6.9% convertible subordinated note			—		—		10.0		10.0		10.0
5% convertible subordinated debentures			—		—		—		—		23.7
51/4% convertible subordinated notes			—		—		—		—		250.0
	Total	$	940.5	$	1,435.8	$	894.8	$	852.6	$	685.1

The $100.0 million in principal balance outstanding under our revolving credit facility at December 31, 2004 is included in current portion of long-term debt, convertible notes and capital lease obligations because we repaid the entire $100.0 million in principal outstanding under the credit facility in January 2005.

F-7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF GENZYME CORPORATION
AND SUBSIDIARIES' FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that characterize our business. In particular, we encourage you to review the risks and uncertainties described under "Factors Affecting Future Operating Results" below. These risks and uncertainties could cause actual results to differ materially from those forecasted in forward-looking statements or implied by past results and trends. Forward-looking statements are statements that attempt to project or anticipate future developments in our business; we encourage you to review the examples of forward-looking statements under "Note Regarding Forward-Looking Statements." These statements, like all statements in this report, speak only as of the date of this report (unless another date is indicated) and we undertake no obligation to update or revise the statements in light of future developments.

INTRODUCTION

        We are a global biotechnology company dedicated to making a major impact on the lives of people with serious diseases. Our broad product and service portfolio is focused on rare genetic disorders, renal disease, orthopaedics, organ transplant, and diagnostic and predictive testing. We are organized into five financial reporting units, which we also consider to be our reporting segments:

•

Renal, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure. The unit derives substantially all of its revenue from sales of Renagel (including sales of bulk sevelamer);



•

Therapeutics, which develops, manufactures and distributes therapeutic products, with a focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as LSDs, and other specialty therapeutics, such as Thyrogen. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme and Thyrogen;



•

Transplant, which develops, manufactures and distributes therapeutic products that address the pre-transplantation, prevention and treatment of acute rejection in organ transplantation, as well as other auto-immune disorders. The unit derives its revenue primarily from sales of Thymoglobulin and Lymphoglobuline;



•

Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial products, with an emphasis on products that meet medical needs in the orthopaedics and broader surgical areas. The unit derives its revenue primarily from sales of Synvisc and the Sepra line of products; and



•

Diagnostics/Genetics, which develops, manufactures and distributes in vitro diagnostic products and provides testing services for the oncology, and prenatal and reproductive markets.

        We report the activities of our oncology, bulk pharmaceuticals, cardiovascular and drug discovery and development business units under the caption "Other." We report our corporate, general and administrative operations, and corporate science activities that we do not allocate to our financial reporting units, under the caption "Corporate."

        Through June 30, 2003, we had three outstanding series of common stock—Genzyme General Stock, Biosurgery Stock and Molecular Oncology Stock. We also referred to our series of stock as "tracking stock." Unlike typical common stock, each of our tracking stocks was designed to reflect the value and track the financial performance of a specific subset of our business operations and its allocated assets, rather than the operations and assets of our entire company. Through June 30, 2003, we allocated earnings or losses to each series of tracking stock based on the net income or loss

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attributable to the corresponding division determined in accordance with accounting principles generally accepted in the United States as adjusted for the allocation of tax benefits.

        Effective July 1, 2003, we eliminated our tracking stock capital structure by exchanging, in accordance with the provisions of our charter, each share of Biosurgery Stock for 0.04914 of a share of Genzyme General Stock and each share of Molecular Oncology Stock for 0.05653 of a share of Genzyme General Stock. Options and warrants to purchase shares of Biosurgery Stock, and options to purchase shares of Molecular Oncology Stock were converted into options and warrants to purchase shares of Genzyme General Stock. Effective July 1, 2003, we have one outstanding series of common stock. From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of shareholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of common stock, which we now refer to as Genzyme Stock.

        Effective July 1, 2003, as a result of the elimination of our tracking stock capital structure, all of our earnings or losses are now allocated to Genzyme Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to that date remain allocated to those series of stock in the preparation of our consolidated financial statements and are not affected by the elimination of our tracking stock structure. Accordingly, earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock represent earnings allocated to those tracking stocks through June 30, 2003. Earnings or losses allocated to Genzyme Stock through June 30, 2003 represent the earnings or losses of Genzyme General, as adjusted for the allocation of tax benefits. Earnings or losses allocated to Genzyme Stock after June 30, 2003 represent the earnings or losses for the corporation as a whole.

        Through June 30, 2003, the chief mechanisms intended to cause each tracking stock to "track" the financial performance of each division were provisions in our charter governing dividends and distributions. The provisions governing dividends provided that our board of directors had discretion to decide if and when to declare dividends, subject to certain limitations. To the extent that the following amount did not exceed the funds that would be legally available for dividends under Massachusetts law, the dividend limit for a stock corresponding to a division was the greater of:

•

the amount that would be legally available for dividends under Massachusetts law if the division were a separate legal corporation; or



•

the amount by which the greater of the fair value of the division's allocated net assets, or its allocated paid-in capital plus allocated earnings, exceeds its corresponding stock's par value, preferred stock preferences and debt obligations.

        The provisions in our charter governing dividends and distributions factored the assets and liabilities and income or losses attributable to a division into the determination of the amount available to pay dividends on the associated tracking stock. Through June 30, 2003, we calculated the income tax provision of each division as if such division were a separate taxpayer, which included assessing the realizability of deferred tax assets at the division level. Our management and accounting policies in effect at the time provided that if, at the end of any fiscal quarter, a division could not use any projected annual tax benefit attributable to it to offset or reduce its current or deferred income tax expense, we could allocate the tax benefit to other divisions in proportion to their taxable income without any compensating payments or allocation to the division generating the benefit. Through June 30, 2003, Genzyme Biosurgery and Genzyme Molecular Oncology had not generated taxable income, and thus had not had the ability to use any projected annual tax benefits. Genzyme General had generated taxable income, providing it with the ability to utilize the tax benefits generated by Genzyme Biosurgery and Genzyme Molecular Oncology. Consistent with our policy, we allocated the tax benefits generated by Genzyme Biosurgery and Genzyme Molecular Oncology through June 30,

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2003 to Genzyme General without making any compensating payments or allocations to the division that generated the benefit.

        Deferred tax assets and liabilities can arise from purchase accounting of an acquisition and relate to a division that does not satisfy the realizability criteria of SFAS No. 109, "Accounting for Income Taxes." Through June 30, 2003, such deferred tax assets and liabilities were allocated to the division to which the acquisition was allocated. As a result, the periodic changes in these deferred tax assets and liabilities did not result in a tax expense or benefit to that division. However, the change in these deferred tax assets and liabilities impacted our consolidated tax provision. These changes were added to division net income (loss) for purposes of determining net income (loss) allocated to a tracking stock.

        Within the general limits under our charter and Massachusetts law, the amount of any dividend payment will be at the board of directors' discretion. To date, we have never declared or paid a cash dividend on shares of any of our series of common stock, nor do we anticipate paying or declaring a cash dividend on shares of Genzyme Stock in the foreseeable future. Unless declared, no dividends will accrue on Genzyme Stock.

        The elimination of our tracking stock capital structure had no effect on our consolidated net income (loss). In this annual report, and future quarterly and annual reports, we will not provide separate financial statements for each of our former divisions, but will continue to provide our financial statements for the corporation as a whole.

MERGERS AND ACQUISITIONS

Acquisition of Verigen AG

        In February 2005, we acquired Verigen AG, a private company based in Germany with a proprietary cell therapy product for cartilage repair currently sold in Europe and Australia, for $10.0 million in initial payments and potential payments of up to an aggregate of approximately $40 million over the next six years based upon the achievement of development and commercial milestones relating to regulatory approval and commercialization in the United States for Verigen's Matrix-induced Autologous Chondrocyte Implantation product, which is referred to as MACI, and royalties on sales of the product. To date we have acquired approximately 96% of Verigen's shares and anticipate acquiring the remaining shares in the first half of 2005.

Acquisition of Synvisc Sales and Marketing Rights from Wyeth

        On January 6, 2005, we consummated an arrangement with Wyeth under which we reacquired Wyeth's sales and marketing rights to Synvisc in the United States, as well as Germany, Poland, Greece, Portugal and the Czech Republic. In exchange for the sales and marketing rights, we paid a total of $121.0 million in cash to Wyeth in the first quarter of 2005. Additionally, we will make a series of contingent payments to Wyeth based on the volume of Synvisc sales in the covered territories. These additional payments could extend out to June 2012, or could total a maximum of $293.7 million, whichever comes first. Upon closing this transaction, we began to record revenue from sales of Synvisc to end-users in these territories. We will continue to record all of the research and development expenses related to Synvisc and will also now record SG&A expenses related to the additional Synvisc sales force we assumed from Wyeth.

Acquisition of ILEX

        In December 2004, we completed our acquisition of ILEX, an oncology drug development company. The ILEX shareholders received 0.4682 of a share of Genzyme Stock for each ILEX share owned. Cash was paid for fractional shares. The transaction had a total value of approximately $1.1 billion, based on ILEX's 39.4 million shares outstanding at the date of acquisition and $55.88, the

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per share value of Genzyme Stock exchanged in the acquisition. We accounted for the acquisition as a purchase and, accordingly, included its results of operations in our consolidated statements of operations from December 20, 2004, the date of acquisition.

        The purchase price was allocated to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities as follows (amounts in thousands):

Issuance of 18,457,679 shares of Genzyme Stock		$	1,031,485
Issuance of options to purchase 1,736,654 shares of Genzyme Stock			38,440
Acquisition costs			10,728
Total purchase price		$	1,080,653
Cash and cash equivalents		$	121,128
Restricted cash			604
Accounts receivable			13,100
Inventories			16,584
Deferred tax asset—current			27,307
Other current assets			2,896
Property, plant and equipment			2,162
Restricted long-term investments			1,691
Goodwill			478,539
Other intangible assets (to be amortized over 11 to 12 years)			228,627
In-process research and development			254,520
Deferred tax asset—noncurrent			24,983
Other noncurrent assets			1,648
Assumed liabilities:
	Notes payable—short-term		(19,968	)
	Unfavorable lease liability		(1,610	)
	Liabilities for exit activities		(5,330	)
	Income tax payable		(40,852	)
	Other		(25,376	)
	Allocated purchase price	$	1,080,653

        The allocation of the purchase price remains subject to potential adjustments and reclassifications, including adjustments for liabilities associated with certain exit activities.

In-Process Research and Development

        In connection with our acquisition of ILEX, we acquired IPR&D related to three development projects, Campath (for indications other than B-cell chronic lymphocytic leukemia), Clolar (clofarabine) and tasidotin hydrochloride, formerly referred to as ILX-651.

        Campath is a humanized monoclonal antibody that binds to a specific target, CD52, on cell surfaces leading to the destruction of malignant, or cancerous, cells. Campath was launched in May 2001 in the United States and in August 2001 in Europe under the name MabCampath. The product is approved for use in patients with B-cell chronic lymphocytic leukemia who have been treated with alkylating agents and who have failed fludarabine therapy. At the time of acquisition, clinical trials in non-Hodgkin's lymphoma, multiple sclerosis and other cancer and non-cancer indications were being conducted.

        Clolar is a next-generation, purine nucleoside antimetabolite that is currently under investigation in pediatric and adult leukemias and solid tumors. In December 2004, after the date of acquisition of ILEX, the FDA granted marketing approval for Clolar for the treatment of children with refractory or

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relapsed acute lymphoblastic leukemia. At the time of the acquisition, clinical trials for hematologic cancer, solid tumor and additional pediatric acute leukemia indications were being conducted.

        Tasidotin is a next-generation synthetic pentapeptide analog of the natural substance dolastatin-15. This product candidate targets tubulin and has been chemically modified to provide improved pharmacological properties over earlier members of its class. ILEX initiated phase 2 clinical trials of tasidotin in late 2003 and 2004 in a variety of indications.

        As of the date this transaction closed, none of these projects had reached technological feasibility nor had an alternative future use. Accordingly, we allocated to IPR&D, and charged to expense in our consolidated statements of operations in December 31, 2004, $254.3 million, representing the portion of the purchase price attributable to these projects, of which $96.9 million is attributable to the Campath development projects, $113.4 million is attributable to the clofarabine development projects and $44.2 million is related to the tasidotin development projects.

        Management assumes responsibility for determining the IPR&D valuation. The fair value assigned to purchased IPR&D was estimated by discounting, to present value, the cash flows expected to result from each project once it has reached technological feasibility. We used a discount rate of 11% for Campath, 12% for Clolar and 13% for tasidotin and cash flows that have been probability-adjusted to reflect the risks of advancement through the product approval process. In estimating future cash flows, we also considered other tangible and intangible assets required for successful exploitation of the technology resulting from the purchased IPR&D projects and adjusted future cash flows for a charge reflecting the contribution to value of these assets.

Acquisition of Physician Services and Analytical Services Business Units of IMPATH

        In May 2004, we acquired substantially all of the pathology/oncology testing assets related to the Physician Services and Analytical Services business units of IMPATH, a national medical testing provider, for total cash consideration of $215.3 million. We accounted for the acquisition as a purchase and accordingly, included its results of operations related to these business units in our consolidated statements of operations from May 1, 2004, the date of acquisition. The purchase price is subject to adjustment based upon the completion of a post-closing assessment of the working capital of the acquired business units as of April 30, 2004, which we expect to complete in 2005.

        The purchase price was allocated to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities as follows (amounts in thousands):

Accounts receivable		$	14,483
Other current assets			5,021
Property, plant and equipment			15,028
Goodwill			157,516
Other intangible assets (to be amortized over 0.4 to 10 years)			34,760
Other noncurrent assets			1,048
Assumed liabilities			(12,579	)
	Allocated purchase price	$	215,277

Acquisition of Alfigen

        In February 2004, we acquired substantially all of the assets of Alfigen, a national genetic testing provider based in Pasadena, California, for an aggregate purchase price of $47.5 million in cash. We accounted for the acquisition as a purchase and, accordingly, the results of operations of Alfigen are included in our consolidated financial statements from February 21, 2004, the date of acquisition.

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        The purchase price was allocated to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities as follows (amounts in thousands):

Deferred tax assets—current		$	52
Other current assets			103
Property, plant and equipment			1,244
Goodwill			33,235
Other intangible assets (to be amortized over 5 to 10 years)			13,000
Liabilities for exit activities			(134	)
	Allocated purchase price	$	47,500

Acquisition of SangStat

        In September 2003, we completed an all cash tender offer for the outstanding common stock (and associated preferred stock purchase rights) of SangStat for $22.50 per outstanding SangStat share. We acquired two marketed products, Thymoglobulin and Lymphoglobuline, as well as product candidates in the clinical trial and research stages. The aggregate consideration paid was $636.6 million in cash. We accounted for the acquisition as a purchase. Accordingly, the results of operations of SangStat are included in our consolidated financial statements from September 11, 2003, the day after the expiration of the successful tender offer.

DISPOSITIONS

        In June 2003, we sold to Teleflex, for $34.5 million in cash, substantially all of the tangible and intangible assets directly associated with our cardiac devices business, excluding our Fall River, Massachusetts manufacturing facility, the assets related to our FocalSeal product and certain other assets. In addition, Teleflex assumed $6.3 million of trade obligations directly associated with our cardiac devices business. The assets sold had a net carrying value of approximately $68.1 million at the time of the sale. We recorded a net loss of $27.7 million in our consolidated statements of operations in 2003 in connection with this sale. We also recorded a tax benefit of $9.2 million for the reversal of related deferred tax liabilities. At the time of the sale, Teleflex decided to lease the Fall River facility through December 2004, with an option to extend the term to June 2005. In August 2004, Teleflex exercised this option and extended its lease to June 2005.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES

        The significant accounting policies and methods used in the preparation of our consolidated financial statements are described in Note A., "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements of Genzyme Corporation and Subsidiaries. The preparation of consolidated financial statements under accounting principles generally accepted in the United States requires us to make certain estimates and judgments that affect reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities in our financial statements. Our actual results could differ from these estimates under different assumptions and conditions. We believe that the following critical accounting policies affect the more significant judgments and estimates used in the preparation of our consolidated financial statements:

•

Revenue Recognition;



•

Income Taxes;



•

Inventories;



•

Long-Lived and Intangible Assets;

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•

Asset Impairments;



•

Strategic Equity Investments; and



•

Other Reserve Estimates.

Revenue Recognition

        We evaluate revenue from agreements entered into after June 15, 2003 that have multiple elements to determine whether the components of the arrangement represent separate units of accounting as defined in Emerging Issues Task Force, or EITF, Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." EITF 00-21 requires that: the delivered items have value to the customer on a standalone basis; there is objective and reliable evidence of fair value of the undelivered items; and the delivery or performance is probable and within our control for any delivered items that have a right of return. The determination that multiple elements in an arrangement meet the criteria for separate units of accounting requires us to exercise our judgment.

        We consider the factors or indicators set forth in EITF Issue No. 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent," in deciding whether to record revenue on a gross or net basis. The determination of whether we should recognize revenue on a gross or net basis involves judgment based on the relevant facts and circumstances which relate primarily to whether we act as a principal or agent in the process of generating revenues for the revenue transactions.

        We recorded revenues from sales of Gengraf, which we co-promoted with Abbott Laboratories through the end of 2004, on a gross basis, because we meet certain criteria that indicate we act as a principal as set forth in EITF Issue No. 99-19. The cost of purchasing Gengraf from Abbott is recorded as cost of products sold.

        The timing of product shipments and receipts by the customer can have a significant impact on the amount of revenue recognized in a particular period. Also, most of our products, including Cerezyme, Renagel, Synvisc and Fabrazyme, are sold at least in part through wholesalers. Inventory in the distribution channel consists of inventory held by wholesalers, who are our customers, and inventory held by retailers, such as pharmacies and hospitals. Our revenue in a particular period can be impacted by increases or decreases in wholesaler inventories. If wholesaler inventories increased to excessive levels, we could experience reduced purchases in subsequent periods, or product returns from the distribution channel due to overstocking, low end-user demand or product expiration.

        We use a variety of data sources to determine the amount of inventory in our United States distribution channel. For Cerezyme, Fabrazyme and Synvisc, we receive data on sales and inventory levels directly from our primary distributors. For Renagel, our data sources include prescription and wholesaler data purchased from external data providers and, in some cases, sales and inventory data received directly from wholesalers. As part of our efforts to limit inventory held by wholesalers and to gain improved visibility into the distribution channel, we executed inventory management agreements with our primary Renagel distributors during 2002 and renewed those agreements in 2003. These agreements provide incentives for the distributors to limit the amount of inventory that they carry, and to provide us with specific inventory and sales data.

        We record reserves for rebates payable under Medicaid and contracts with payors, such as managed care organizations, as a reduction of revenue at the time product sales are recorded. Our Medicaid and payor rebate reserves have two components:

•

an estimate of outstanding claims for end-user sales that have occurred, but for which related claim submissions have not been received; and



•

an estimate of future claims that will be made when inventory in the distribution channel is sold to end-users.

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Because the second component is calculated based on the amount of inventory in the distribution channel, our assessment of distribution channel inventory levels impacts our estimated reserve requirements. Our calculation also requires other estimates, including estimates of sales mix, to determine which sales will be subject to rebates and the amount of such rebates. As of December 31, 2004, our reserve for Medicaid and payor rebates was $30.6 million.

        We record allowances for product returns as a reduction of revenue at the time product sales are recorded. The product returns reserve is estimated based on our experience of returns for each of our products or, if the product does not have sufficient history of sales, for similar products. If product return trends change, the reserve is adjusted appropriately. Our estimate of distribution channel inventory is also used to assess the reasonableness of our product returns reserve.

        We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate and result in an impairment of their ability to make payments, additional allowances may be required.

        In 2002, we adjusted our revenue accounting to comply with the provisions of EITF Issue No. 01-09, "Accounting for Consideration given by a Vendor to a Customer (including a Reseller of a Vendor's Products)." EITF Issue No. 01-09 specifies that cash consideration (including a sales incentive) given by a vendor to a customer is presumed to be a reduction of the selling prices of the vendor's products or services and, therefore, should be characterized as a reduction of revenue. That presumption is overcome and the consideration should be characterized as a cost incurred if, and to the extent that, both of the following conditions are met:

•

the vendor receives, or will receive, an identifiable benefit (goods or services) in exchange for the consideration; and



•

the vendor can reasonably estimate the fair value of the benefit received.

We record fees paid to our distributors for services as operating expense where the criteria set forth above are met. The fees incurred for these services were $12.4 million in 2004, $13.8 million in 2003 and $19.4 million in 2002.

Income Taxes

        We use the assets and liability method of accounting for deferred income taxes.

        Our calculation of the income tax provision includes significant estimates, including estimates of income from foreign sales, research and development credits, orphan drug credits, state and foreign income taxes and other permanent items. Changes in estimates are reflected in our tax provision in the period of change. On a quarterly basis, we make our best estimate of the full year impact of these items on our tax rate. We adjust these estimates as required, including a tax return to provision adjustment.

        We record liabilities for income tax contingencies based on our best estimate of the underlying exposures. We are currently under IRS audit for tax years 1996 to 1999. We believe that we have provided sufficient liabilities for all exposures related to this audit. A favorable settlement of this audit may result in a reduction of future tax provisions, and the amount could be significant. Any such benefit would be recorded upon final resolution of the audit or expiration of the statute of limitations.

Inventories

        We value inventories at cost or, if lower, fair value. We determine cost using the first-in, first-out method. We analyze our inventory levels quarterly and write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value and inventory in excess of

F-15

expected requirements. Expired inventory is disposed of and the related costs are written off. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

        We capitalize inventory produced for commercial sale, which may result in the capitalization of inventory that has not been approved for sale. The determination of when inventory is ready for commercial sale requires the use of judgement. If a product is not approved for sale, it would likely result in the write-off of the inventory and a charge to earnings. At December 31, 2004, our total inventories included $5.5 million of inventory for Myozyme, which has not yet been approved for sale. In December 2004, we submitted a marketing application for Myozyme in the European Union and anticipate filing marketing applications in the United States and Japan in 2005. At December 31, 2003 our inventory for products not yet approved for sale was not significant.

Long-Lived and Intangible Assets

        In the ordinary course of our business, we incur substantial costs to purchase and construct property, plant and equipment. The treatment of costs to purchase or construct these assets depends on the nature of the costs and the stage of construction. Costs incurred in the initial design and evaluation phase, such as the cost of performing feasibility studies and evaluating alternatives, are charged to expense. Qualifying costs incurred in the committed project planning and design phase, and in the construction and installation phase, are capitalized as part of the cost of the asset. We stop capitalizing costs when an asset is substantially complete and ready for its intended use. Determining the appropriate period during which to capitalize costs, and assessing whether particular costs qualify for capitalization, requires us to make significant judgments. These judgments can have a material impact on our reported results.

        For products we expect to be commercialized, we capitalize the cost of validating new equipment for the underlying manufacturing process. We begin capitalization when we consider the product to have demonstrated technological feasibility, and end capitalization when the asset is substantially complete and ready for its intended use. Costs capitalized include incremental labor and direct material, and incremental fixed overhead and interest. Determining whether to capitalize validation costs requires judgment, and can have a significant impact on our reported results. Also, if we were unable to successfully validate the manufacturing process for any future product, we would have to write off to current operating expense any validation costs that had been capitalized during the unsuccessful validation process. To date, all of our manufacturing process validation efforts have been successful. As of December 31, 2004, capitalized validation costs, net of accumulated depreciation, were $10.3 million.

        We generally depreciate plant and equipment using the straight-line method over its estimated economic life, which ranges from 3 to 15 years. Determining the economic lives of plant and equipment requires us to make significant judgments that can materially impact our operating results. For certain specialized manufacturing plant and equipment, we use the units-of-production depreciation method. The units-of-production method requires us to make significant judgments and estimates, including estimates of the number of units that will be produced using the assets. There can be no assurance that our estimates are accurate. If our estimates require adjustment, it could have a material impact on our reported results.

        In accounting for acquisitions, we allocate the purchase price to the fair value of the acquired tangible and intangible assets, including acquired in-process research and development, or IPR&D. This allocation requires us to make several significant judgments and estimates. For example, we generally estimate the value of acquired intangible assets and IPR&D using a discounted cash flow model, which requires us to make assumptions and estimates about, among other things:

•

the time and investment that will be required to develop products and technologies;

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•

our ability to develop and commercialize products before our competitors develop and commercialize products for the same indications;



•

the amount of revenues that will be derived from the products; and



•

appropriate discount rates to use in the analysis.

Use of different estimates and judgments could yield materially different results in our analysis, and could result in materially different asset values and IPR&D charges.

        As of December 31, 2004, there was approximately $1.3 billion of net goodwill on our consolidated balance sheet. As of December 31, 2004, there were approximately $1.1 billion of net other intangible assets on our consolidated balance sheet. We amortize intangible assets using the straight-line method over their estimated economic lives, which range from 1 to 15 years or, if significantly greater, as the economic benefits of the assets are realized. To date, all of our assets have been amortized using the straight-line method. Determining the economic lives of acquired intangible assets requires us to make significant judgment and estimates, and can materially impact our operating results.

Asset Impairments

Impairment of Tangible and Intangible Assets, Other Than Goodwill

        We periodically evaluate long-lived assets for potential impairment under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." We perform these evaluations whenever events or changes in circumstances suggest that the carrying value of an asset or group of assets is not recoverable. If we believe an indicator of potential impairment exists, we test to determine whether the impairment recognition criteria in SFAS No. 144 have been met. In evaluating long-lived assets for potential impairment, we make several significant estimates and judgments, including:

•

determining the appropriate grouping of assets at the lowest level for which cash flows are available;



•

estimating future cash flows associated with the asset or group of assets; and



•

determining an appropriate discount rate to use in the analysis.

Use of different estimates and judgments could yield significantly different results in this analysis and could result in materially different asset impairment charges.

        As a result of our evaluations of long-lived assets, we recorded an impairment charge in 2004 of $4.5 million to write down assets related to a manufacturing facility in Oklahoma. We recorded an impairment charge in 2003 of $8.0 million to write off tangible and intangible assets associated with our decision to discontinue the active marketing and, ultimately, the sale of our FocalSeal product. In 2002, we recorded impairment charges of $14.0 million to write off capitalized engineering and design costs that were specific to a proposed manufacturing facility in Framingham, Massachusetts and $9.0 million for a manufacturing facility in Haverhill, England that manufactures bulk hyaluronic acid, or HA, with excess capacity.

Impairment of Goodwill

        Effective January 1, 2002, we adopted SFAS No. 142, which requires that ratable amortization of goodwill and certain intangible assets be replaced with periodic tests of goodwill's impairment and that other intangible assets be amortized over their useful lives unless these lives are determined to be indefinite. SFAS No. 142 requires goodwill be tested using a two-step process. The first step compares the fair value of the reporting unit with the unit's carrying value, including goodwill. When the carrying value of the reporting unit is greater than fair value, the unit's goodwill may be impaired, and the second step must be completed to measure the amount of the goodwill impairment charge, if any. In

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the second step, the implied fair value of the reporting unit's goodwill is compared with the carrying amount of the unit's goodwill. If the carrying amount is greater than the implied fair value, the carrying value of the goodwill must be written down to its implied fair value. We determine the implied fair value by discounting, to present value, the estimated future cash flow of the reporting unit, which includes various analyses, assumptions and estimates including discount rates, projected results and estimated cash flows.

        We are required to perform impairment tests under SFAS No. 142 annually and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable. For all of our acquisitions, various analyses, assumptions and estimates were made at the time of each acquisition specifically regarding product development, market conditions and cash flows that were used to determine the valuation of goodwill and intangibles. We completed the annual impairment tests for the $1.3 billion of net goodwill related to our reporting units during 2004, and determined that impairment charges were not required. When we perform impairment tests in future years, the possibility exists that changes in forecasts and estimates from those used at the acquisition date could result in impairment charges.

        In November 2001, we sold our Snowden-Pencer line of surgical instruments and recorded a loss of $25.0 million. In the three months ended March 31, 2002, upon adoption of SFAS No. 142, we tested the goodwill of Biosurgery's cardiothoracic reporting unit in accordance with the transitional provisions of that standard, using the present value of expected future cash flows to estimate the fair value of this reporting unit. We recorded a charge for impairment of goodwill of $98.3 million, which we reflected as a cumulative effect of a change in accounting for goodwill in our consolidated statements of operations in March 2002.

Strategic Equity Investments

        We invest in marketable securities as part of our strategy to align ourselves with technologies and companies that fit with Genzyme's future strategic direction. Most often we will collaborate on scientific programs and research with the issuer of the marketable securities.

        On a quarterly basis, we review the fair market value of these marketable securities in comparison to historical cost. If the fair market value of a marketable security is less than our carrying value, we consider all available evidence in assessing when and if the value of the investment can be expected to recover to at least its historical cost. This evidence would include:

•

continued positive progress in the issuer's scientific programs;



•

ongoing activity in our collaborations with the issuer;



•

a lack of any other substantial company-specific adverse events causing declines in value; and



•

overall financial condition and liquidity of the issuer of the securities.

        If our review indicates that the decline in value is "other than temporary," we write down our investment to the then current market value and record an impairment charge to our consolidated statements of operations. The determination of whether an unrealized loss is "other than temporary" requires significant judgment, and can have a material impact on our reported results. In September 2004, we recorded a $2.9 million impairment charge in connection with our investment in MacroGenics, Inc. and in June 2003, we recorded a $3.6 million impairment charge in connection with our investment in the common stock of ABIOMED, Inc. In 2002, we recorded impairment charges of $15.4 million, including:

•

$9.2 million in connection with our investment in the common stock of GTC Biotherapeutics Inc., which we refer to as GTC, common stock;

F-18

•

$3.4 million in connection with our investment in the ordinary shares of Cambridge Antibody Technology Group plc; and



•

$2.0 million in connection with our investment in the common stock of Dyax Corporation.

Given the significance and duration of the declines in the market values of these investments, we concluded that it was unclear over what period the recovery of the stock price for each of these investments would take place and, accordingly, that any evidence suggesting that the investments would recover to at least our historical cost was not sufficient to overcome the presumption that the current market price was the best indicator of the value of these investments.

        At December 31, 2004, our stockholders' equity includes $56.0 million of unrealized gains and $4.6 million of unrealized losses related to our investments in strategic equity securities. The unrealized losses are related to our investment in the common stock of BioMarin Pharmaceutical Inc. However, based on the following facts, we believe that the decline in market value of BioMarin stock below our costs is considered to be temporary:

•

BioMarin has two additional products that are either pending approval or are in very late stages of development;



•

BioMarin's management has clear initiatives to maintain or improve the pace of its progress. The recent setbacks relative to BioMarin's inventory and leadership turnover appear to be stabilized resulting in greater investor confidence and stock price improvement;



•

in November and December 2004, the price of BioMarin common stock improved and such improvement is currently maintained in 2005 and expected to continue;



•

we intend and are able to hold our investment in BioMarin common stock for a period of time sufficient to allow for the anticipated recovery in market value;



•

industry analyst reports on BioMarin indicate improved confidence with strong buy rating and target prices in excess of our cost; and



•

BioMarin has a strong balance sheet and sufficient liquidity to meet its near term needs.

        It is our practice to record impairment charges for investments that remain below cost for an extended duration.

F-19

Other Reserve Estimates

        Determining accruals and reserves requires significant judgments and estimates on the part of management. If our reserve estimates require adjustment, it could have a material impact on our reported results.

Policies Relating to Tracking Stocks (in effect through June 30, 2003)

        Through June 30, 2003, we had certain policies that specifically related to our tracking stocks, which are described below. Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we rescinded these policies.

Earnings per Share

        Through June 30, 2003, we calculated earnings per share for each series of stock using the two-class method. To calculate basic earnings per share for each series of stock, we divided the earnings allocated to each series of stock by the weighted average number of outstanding shares of that series of stock during the applicable period. When we calculated diluted earnings per share, we also included in the denominator all potentially dilutive securities outstanding during the applicable period if inclusion of such securities was not anti-dilutive. We allocated our earnings to each series of our common stock based on the earnings attributable to that series of stock. Through June 30, 2003, the earnings attributable to Genzyme Stock, as defined in our charter, were equal to the net income or loss of Genzyme General determined in accordance with accounting principles generally accepted in the United States, and as adjusted for tax benefits allocated to or from Genzyme General in accordance with our management and accounting policies in effect at the time. Earnings attributable to Biosurgery Stock and Molecular Oncology Stock were defined similarly and, as such, were based on the net income or loss of the corresponding division as adjusted for the allocation of tax benefits.

        Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings or losses to Biosurgery Stock and Molecular Oncology Stock. From that date forward, all of our earnings or losses are allocated to Genzyme Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to July 1, 2003 will remain allocated to those stocks and will not be affected by the elimination of our tracking stock structure.

Allocation of Revenue, Expenses, Assets, and Liabilities

        Our charter set forth which operations and assets were initially allocated to each division and stated that the division would also include all business, products or programs, developed by or acquired for the division, as determined by our board of directors. We then managed and accounted for transactions between our divisions and with third parties, and any resulting re-allocations of assets and liabilities, by applying consistently across divisions a detailed set of policies established by our board of directors. Our charter required that all of our assets and liabilities be allocated among our divisions in a reasonable and consistent manner. Our board of directors retained considerable discretion in determining the types, magnitude and extent of allocations to each series of common stock.

        Allocations to our divisions were based on one of the following methodologies:

•

specific identification—assets that were dedicated to the production of goods of a division or which solely benefit a division were allocated to that division. Liabilities incurred as a result of the performance of services for the benefit of a division or in connection with the expenses incurred in activities which directly benefit a division were allocated to that division. Such specifically identified assets and liabilities included cash, investments, accounts receivable, inventories, property and equipment, intangible assets, accounts payable, accrued expenses and

F-20

deferred revenue. Revenues from the licensing of a division's products or services to third parties and the related costs were allocated to that division;

•

actual usage—expenses were charged to the division for whose benefit such expenses were incurred. Research and development, sales and marketing and direct general and administrative services were charged to the divisions for which the service was performed on a cost basis. Such charges were generally based on direct labor hours;



•

proportionate usage—costs incurred which benefited more than one division were allocated based on management's estimate of the proportionate benefit each division received. Such costs included facilities, legal, finance, human resources, executive and investor relations; or



•

board directed—programs and products, both internally developed and acquired, were allocated to divisions by the board of directors. The board of directors also allocated long-term debt and strategic investments.

Income Tax Allocation Policy

        Through June 30, 2003, we calculated the income tax provision of each division as if such division were a separate taxpayer, which included assessing the realizability of deferred tax assets at the division level. Our management and accounting policies in effect at the time provided that if, as of the end of any fiscal quarter, a division could not use any projected annual tax benefit attributable to it to offset or reduce its current or deferred income tax expense, we could allocate the tax benefit to other divisions in proportion to their taxable income without compensating payment or allocation to the division generating the benefit.

RESULTS OF OPERATIONS

        The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.

REVENUES

        The components of our total revenues are described in the following table:

		2004		2003		2002		04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
		(Amounts in thousands, except percentage data)
Product revenue		$	1,976,191	$	1,563,509	$	1,199,617	26	%	30	%
Service revenue			212,392		130,984		114,493	62	%	14	%
	Total product and service revenue		2,188,583		1,694,493		1,314,110	29	%	29	%
Research and development revenue			12,562		19,378		15,362	(35	)%	26	%
	Total revenues	$	2,201,145	$	1,713,871	$	1,329,472	28	%	29	%

Product Revenue

        We derive product revenue primarily from sales of:

•

Renagel, for the reduction of elevated serum phosphorous levels in end-stage renal disease patients on hemodialysis, and bulk sevelamer;

F-21

•

Therapeutics products, including Cerezyme for the treatment of Gaucher disease, Fabrazyme for the treatment of Fabry disease and Thyrogen, which is an adjunctive diagnostic agent used in the follow-up treatment of patients with well-differentiated thyroid cancer;



•

Transplant's therapeutic products for the treatment of immune-mediated diseases, including Thymoglobulin and Lymphoglobuline, each of which induce immunosuppression of certain types of immune cells responsible for acute organ rejection in transplant patients;



•

Biosurgery products, including orthopaedic products such as Synvisc, the Sepra line of products and, through June 30, 2003, cardiac devices;



•

Diagnostic products, including infectious disease and cholesterol testing products; and



•

Other products, including bulk pharmaceuticals and WelChol, which is a mono and adjunctive therapy for the reduction of LDL cholesterol in patients with primary hypercholesterolemia.

        The following table sets forth our product revenues on a segment basis:

			2004		2003		2002		04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
			(Amounts in thousands, except percentage data)
Renal:
	Renagel (including sales of bulk sevelamer)		$	363,720	$	281,701	$	156,864	29	%	80	%
Therapeutics:
	Cerezyme			839,366		733,817		619,184	14	%	19	%
	Fabrazyme			209,637		80,617		26,101	160	%	209	%
	Thyrogen			63,454		43,438		28,270	46	%	54	%
	Other Therapeutics			2,462		1,802		871	37	%	107	%
		Total Therapeutics		1,114,919		859,674		674,426	30	%	27	%
Transplant:
	Thymoglobulin/Lymphoglobuline			108,928		29,953		—	264	%	N/A
	Other Transplant			42,125		14,367		—	193	%	N/A
		Total Transplant		151,053		44,320		—	241	%	N/A
Biosurgery:
	Synvisc			88,296		108,498		89,820	(19	)%	21	%
	Sepra products			61,647		47,731		39,142	29	%	22	%
	Other Biosurgery			30,415		60,700		98,890	(50	)%	(39	)%
		Total Biosurgery		180,358		216,929		227,852	(17	)%	(5	)%
Diagnostics/Genetics:
	Diagnostics Products			90,955		88,588		83,065	3	%	7	%
	Other Diagnostics/Genetics			753		607		322	24	%	89	%
		Total Diagnostics/Genetics		91,708		89,195		83,387	3	%	7	%
Other product revenue				74,433		71,690		57,088	4	%	26	%
		Total product revenue	$	1,976,191	$	1,563,509	$	1,199,617	26	%	30	%

F-22

2004 As Compared to 2003

Renal

        Worldwide sales of Renagel, including sales of bulk sevelamer, the raw material used to formulate Renagel, increased 29% to $363.7 million in 2004, as compared to 2003, primarily due to:

•

a $56.0 million increase in net sales related to increased customer volume, driven primarily by increased end-user demand in the United States and Europe;



•

a $23.3 million increase due to an 8% price increase that became effective in January 2004; and



•

a 10% increase in the average exchange rate for the Euro, which positively impacted Renagel revenue by $8.4 million.

        Sales of Renagel, including sales of bulk sevelamer, were approximately 18% of our total product revenue for 2004 and 2003. We expect sales of Renagel to increase, driven primarily by the continued adoption of the product by nephrologists worldwide. Renagel competes with several products and our future sales may be impacted negatively by these products. We discuss these competitors under the heading "Factors Affecting Future Operating Results—Our future success will depend upon our ability to effectively develop and market our products against our competitors," in this report. In addition, our ability to continue to increase sales of Renagel will be dependent on many other factors, including:

•

acceptance by the medical community of Renagel as the preferred treatment for elevated serum phosphorus levels in end-stage renal disease patients on hemodialysis;



•

our ability to optimize dosing and improve patient compliance with dosing of Renagel;



•

the availability of reimbursement from third-party payors and the extent of coverage, including under the Medicare Prescription Drug Improvement and Modernization Act, and the accuracy of our estimates of the payor mix;



•

the results of additional clinical trials for additional indications and expanded labeling;



•

the efficiency of our sales force;



•

our ability to manufacture sufficient quantities of product to meet demand and to do so at a reasonable price; and



•

the content and timing of our submissions to and decisions made by regulatory authorities.

        In addition, our ability to effectively manage wholesaler inventories and the levels of compliance with the inventory management programs we implemented with our wholesalers in 2002, and renewed in 2003 for a two year term terminable at will, could impact the revenue that we record from period to period.

Therapeutics

        The increase in our Therapeutics product revenue for 2004, as compared to 2003, is primarily due to continued growth in sales of Cerezyme, Fabrazyme and Thyrogen.

        The growth in sales of Cerezyme for 2004, as compared to 2003, is attributable to our continued identification of new Gaucher disease patients, particularly internationally. Our price for Cerezyme has remained consistent from period to period. Although we expect Cerezyme to continue to be a substantial contributor to revenues in the future, it is a mature product and we do not expect the current new patient growth trend to continue. The growth in sales of Cerezyme was also impacted by a 10% increase in the average exchange rate, which positively impacted sales of Cerezyme by $25.5 million.

F-23

        Our results of operations are highly dependent on sales of Cerezyme and a reduction in revenue from sales of this product would adversely affect our results of operations. Sales of Cerezyme are approximately 42% of our total product revenue for 2004, as compared to approximately 47% for 2003. Revenue from Cerezyme would be impacted negatively if competitors develop alternative treatments for Gaucher disease and the alternative products gain commercial acceptance, if our marketing activities are restricted, or if reimbursement is limited. Although orphan drug status for Cerezyme, which provided us with exclusive marketing rights for Cerezyme in the United States, expired in May 2001, we continue to have patents protecting our method of manufacturing Cerezyme until 2010 and the composition of Cerezyme as made by that process until 2013. The expiration of market exclusivity and orphan drug status will likely subject Cerezyme to increased competition, which may decrease the amount of revenue we receive from this product or the growth of that revenue. We are aware of companies that have initiated efforts to develop competitive products, and other companies may do so in the future. We discuss these competitors under the heading "Factors Affecting Future Operating Results—Our future success will depend upon our ability to effectively develop and market our products against our competitors," in this report.

        The increase in sales of Fabrazyme for 2004, as compared to 2003, is primarily attributable to:

•

a $38.5 million increase in European sales of Fabrazyme resulting from our continued identification of Fabry patients in Europe;



•

a $22.8 million increase due to the launch of Fabrazyme in Japan during the second quarter of 2004;



•

$61.7 million increase resulting from the inclusion of a full year of Fabrazyme sales in 2004; and



•

an increase in the average exchange rate of the Euro of 10%, which positively impacted sales by $6.2 million.

        The increase in sales of Thyrogen in 2004, as compared to 2003, is primarily attributable to volume growth, particularly in Europe, where sales increased 51% to $25.9 million.

Transplant

        We began recording product revenue for our Transplant business unit on September 11, 2003, the day that we completed the acquisition of SangStat and began including its results of operations in our consolidated financial statements. Other Transplant revenues for 2004 include $33.6 million in sales of Gengraf, which we co-promoted with Abbott Laboratories under an agreement that expired on December 31, 2004. We are aware of several products that compete with Thymoglobulin and Lymphoglobuline and that could have an adverse effect on our sales of these products. We discuss these competitors under the heading "Factors Affecting Future Operating Results—Our future success will depend upon our ability to effectively develop and market our products against our competitors," in this report.

Biosurgery

        Biosurgery's product revenue decreased 17% to $180.4 million for 2004, as compared to 2003. The decrease is primarily due to the absence of revenues from our line of cardiac device products following our sale of this product line in June 2003. Revenues from sales of cardiac device products were $40.2 million in 2003. Additionally, sales of Synvisc decreased 19% to $88.3 million for 2004 as compared to 2003. The decrease is primarily due to inventory reductions in the first half of 2004, as well as competitive pricing pressures and price discounts by Wyeth, our then U.S. marketing partner, in response to Medicare pricing rate changes. In addition, Wyeth reduced its inventory of Synvisc in the fourth quarter of 2004 in anticipation of our reacquisition of sales and marketing rights. We expect our purchase from Wyeth of sales and marketing rights to Synvisc in the U.S. and several European

F-24

countries will have a positive impact on the revenues we record for the product in 2005. These decreases were partially offset by a $13.9 million increase in sales of Sepra products, primarily due to increased market penetration in the U.S. and Japan. Additionally, we recognized a one-time, $5.0 million royalty payment in September 2004 under an agreement with Q-Med AB, for which there was no comparable amount in 2003. We are aware of several competitive viscosupplementation products on the market and in development that could adversely affect our sales of Synvisc in the future. We discuss these competitors under the heading "Factors Affecting Future Operating Results—Our future success will depend upon our ability to effectively develop and market our products against our competitors," in this report.

Diagnostics/Genetics

        Diagnostics/Genetics product revenue increased slightly for 2004, as compared to 2003. The increase is attributable to a 16% increase in the combined sales of infectious disease testing products and HDL and LDL cholesterol testing products to $68.3 million. This increase was partially offset by a 14% decrease in sales of point of care rapid diagnostic tests for pregnancy and infectious diseases to $22.7 million, and the expiration of our royalty agreement with Techne Corporation in June 2003, which resulted in no royalty revenue being recorded in 2004, as compared to $3.3 million in 2003.

Other Product Revenue

        The increase in Other product revenue for 2004, as compared to 2003, is primarily attributable to a $5.0 million milestone payment received in October 2004 from Schering-Plough in accordance with the terms of a license agreement related to p53 gene therapy. Additionally, sales of bulk pharmaceuticals increased 25% to $44.2 million primarily due to increased demand for liquid crystals. These increases were partially offset by a decrease in bulk sales of and royalties earned on sales of WelChol. Bulk sales of and royalties earned on WelChol decreased 31% to $24.9 million as a result of a decrease in demand from our U.S. marketing partner, Sankyo Pharma, Inc. Because we began recording revenues from our two marketed oncology products, Campath and Clolar, under this category at the end of 2004, we expect Other product revenue to increase in 2005.

2003 As Compared to 2002

Renal

        In the first quarter of 2003, we obtained reimbursement approval for the 800 mg tablet formulation of Renagel in France, the last major European market where this form of the product had been unavailable. In addition, in March 2003, we began shipping Renagel tablets to the European market from our manufacturing facility in Waterford, Ireland, upon receiving approval from the EMEA, to commence production of Renagel at the plant. In October 2003 we received final approval of this plant from the FDA.

        Worldwide sales of Renagel, including sales of bulk sevelamer, increased 80% to $281.7 million for the year ended December 31, 2003, as compared to the same period of 2002, primarily due to:

•

a $63.1 million increase in 2003 in net sales, primarily attributable to increased end-user demand in the United States and Europe. Sales of Renagel during 2002 were negatively impacted by reductions in domestic wholesaler inventories of $30.0 million, which were based on management's estimate of end-user demand. There are no similar reductions in 2003;



•

$13.1 million in 2003 of sales of bulk sevelamer to Chugai Pharmaceutical Co., Ltd. for which there were no comparable amounts in 2002. Chugai, together with its partner, Kirin Pharmaceutical Co. Ltd., has the right to develop and market Renagel in Japan, China and other Pacific Rim countries. Chugai launched commercial sales in Japan in June 2003. Our

F-25

agreement with Chugai calls for our supply of bulk sevelamer in exchange for royalties from Chugai on net sales of the finished product;

•

$9.7 million of additional revenue primarily attributable to the price increase for Renagel that became effective in February 2003; and



•

the average exchange rate for the Euro increased 20% in 2003, which positively impacted sales of Renagel by $9.9 million.

        Sales of Renagel, including sales of bulk sevelamer, are 18% of our total product revenue for 2003 as compared to approximately 13% for 2002.

Therapeutics

        The increase in our Therapeutics product revenue for 2003, as compared to 2002, is primarily due to continued growth in sales of Cerezyme, Fabrazyme and Thyrogen.

        The growth in sales of Cerezyme for 2003, as compared to 2002, is attributable to our continued identification of new Gaucher disease patients, particularly internationally, where unit sales of Cerezyme increased 17% from 2002. Our price for Cerezyme has remained consistent period to period. The growth in sales of Cerezyme was also positively impacted by the weakened U.S. Dollar against the Euro. During 2003, the U.S. Dollar weakened against the Euro by 20% on average, as compared to 2002. This positively impacted sales by $43.0 million.

        The increase in sales of Fabrazyme in 2003, as compared to 2002, is primarily attributable to:

•

growth in European sales of Fabrazyme, which increased 132% to $59.0 million resulting from our continued program to educate European physicians about Fabry disease and Fabrazyme; and



•

$19.5 million of additional sales resulting from the launch of Fabrazyme in the United States during the second quarter of 2003.

        The increase in sales of Thyrogen in 2003, as compared to 2002, is attributable to increased market penetration, particularly in Europe, where sales increased 94% to $17.1 million for 2003 as compared to 2002.

Transplant

        Transplant's product revenue for 2003 reflects sales beginning on September 11, 2003, the day on which we began including the results of operations of SangStat in our consolidated financial statements. Other Transplant revenue for 2003 include $13.1 million of sale of Gengraf, which we co-promoted with Abbott Laboratories under an agreement which expired on December 31, 2004.

Biosurgery

        Biosurgery's product revenue decreased 5% to $216.9 million in 2003, as compared to 2002. The decrease is primarily due to the absence of revenue from our line of cardiac device products following our sale of this product line in June 2003. Revenue from sales of cardiac products was $40.2 million through the date of disposition as compared to $80.1 million of the full year in 2002. This decrease was partially offset by a 21% increase in sales of Synvisc to $108.5 million, primarily due to increased utilization of the product within the existing customer base as well as the creation of new accounts. Additionally, sales of Sepra products increased 22% to $47.7 million for 2003, primarily due to increased market penetration.

F-26

Diagnostics/Genetics

        Diagnostic/Genetics product revenue increased 7% for 2003, as compared to 2002. The increase is primarily attributable to an 18% increase in sales of point of care rapid diagnostic tests for pregnancy and infectious diseases to $26.4 million, and a 2% increase in the combined sales of infectious disease testing products, and HDL and LDL cholesterol testing products to $62.2 million. This increase was partially offset by the expiration of our royalty agreement with Techne on June 30, 2003, which resulted in a decrease in royalty revenue to $3.3 million in 2003, as compared to $6.0 million in 2002.

Other Product Revenue

        The increase in Other product revenue for 2003, as compared to 2002, is primarily attributable to an increase in bulk sales of and royalties earned on sales of WelChol and an increase in sales of bulk pharmaceuticals. Bulk sales of and royalties earned on WelChol increased 34% to $36.3 million as a result of sales to our U.S. marketing partner, Sankyo, which has experienced continued market growth of the product in the United States. Sales of bulk pharmaceuticals increased 17% to $35.3 million primarily due to increased demand for liquid crystals.

Service Revenue

        We derive service revenue primarily from genetic and pathology/oncology testing services, which are included in our Diagnostics/Genetics reporting segment.

        The following table sets forth our service revenue on a segment basis:

		For the year ended December 31,						04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
		2004		2003		2002
		(Amounts in thousands, except percentage data)
Biosurgery		$	24,917	$	29,317	$	24,770	(15	)%	18	%
Diagnostics/Genetics			187,413		101,540		89,423	85	%	14	%
Other service revenue			62		127		300	(51	)%	(58	)%
	Total service revenue	$	212,392	$	130,984	$	114,493	62	%	14	%

2004 As Compared to 2003

        Service revenue attributable to our Biosurgery segment decreased 15% to $24.9 million in 2004, as compared to 2003, primarily due to $6.2 million of reimbursed expenses, classified as revenue, received from Wyeth in 2003, for which there were no comparable amounts in 2004 and will be no comparable amounts in the future. This decrease was partially offset by a 17% increase to $20.7 million in Carticel revenue due to volume growth and a price increase in 2004.

        Service revenue attributable to our Diagnostics/Genetics reporting segment increased 85% to $187.4 million in 2004, as compared to 2003. This increase is primarily attributable to:

•

$65.8 million of additional service revenue resulting from our acquisition of substantially all of the pathology/oncology testing assets of IMPATH in May 2004;



•

additional service revenue resulting from our acquisition of substantially all of the assets of Alfigen in February 2004;



•

continued growth in the prenatal screening and diagnosis market; and



•

increased sales of DNA testing services, primarily due to growth in the cystic fibrosis screening and diagnostic market.

F-27

2003 As Compared to 2002

        Service revenue attributable to our Biosurgery segment increased 18% to $29.3 million in 2003, as compared to 2002, primarily due to $6.2 million of reimbursed expenses, classified as revenue, from our Synvisc distribution partner in 2003, as compared to $1.5 million in 2002.

        Service revenue attributable to our Diagnostics/Genetics segment increased 14% to $101.5 million in 2003 as compared to 2002. This increase is primarily attributable to:

•

increased sales of molecular genetics (DNA) testing services, primarily due to growth in the cystic fibrosis screening and diagnosis market;



•

increased sales of cancer testing services; and



•

continued growth in the prenatal screening market.

International Product and Service Revenue

        A substantial portion of our revenue was generated outside of the United States. The following table provides information regarding the change in international product and service revenue as a percentage of total product and service revenue during the periods presented:

	2004			2003			2002			04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
	(Amounts in thousands, except percentage data)
International product and service revenue	$	992,643		$	741,757		$	523,981		34	%	42	%
% of total product and service revenue		45	%		44	%		40	%

2004 As Compared to 2003

        The increase in international product and service revenue for 2004, as compared to 2003, is primarily due to:

•

a $201.5 million increase in the combined international sales of Renagel, Cerezyme and Fabrazyme;



•

a $29.7 million increase in international sales of Thymoglobulin and Lymphoglobuline due to the acquisition of SangStat on September 11, 2003; and



•

an increase in the average exchange rate for the Euro of 10%, which positively impacted sales by $48.7 million.

        International sales of Renagel increased 60% to $140.8 million in 2004 primarily due to:

•

the expansion of the worldwide Renagel sales force;



•

favorable reception of published clinical data that has increased international adoption of the product, particularly in Europe, where unit sales increased 44% in 2004, as compared to 2003; and



•

an increase in the average exchange rate of the Euro, which positively impacted sales of Renagel by $8.4 million.

        International sales of Cerezyme increased 19% to $510.7 million in 2004 primarily due to an increase in the average exchange rate of the Euro of 10%, which positively impacted sales by $25.5 million.

F-28

        International sales of Fabrazyme increased 110% to $128.4 million in 2004 primarily due to:

•

our continued identification of patients in Europe;



•

the launch of Fabrazyme in Japan during the second quarter of 2004; and



•

an increase in the average exchange rate of the Euro, which positively impacted sales by $6.2 million.

2003 As Compared to 2002

        The increase in international product and service revenue as a percentage of total product and service revenue for 2003, as compared to 2002, is primarily due to:

•

a $180.1 million increase in the combined international sales of Renagel, Cerezyme and Fabrazyme; and



•

an increase in the average exchange rate for the Euro of 20% for 2003, which positively impacted sales by $63.0 million.

        International sales of Renagel increased 102% to $87.8 million for 2003, primarily due to:

•

the expansion of the worldwide Renagel sales force;



•

favorable promotion of published clinical data that has increased international adoption of the product, particularly in Europe, where unit sales increased from period to period; and



•

an increase in the average exchange rate of the Euro of 20%, which positively impacted sales of Renagel by $9.9 million.

        International sales of Cerezyme increased 31% to $429.5 million, primarily due to:

•

an increase of 17% in international unit sales;



•

$5.0 million of sales recorded in the third quarter of 2003 as a result of a successful completion of a bulk sale of Cerezyme to a customer in Eastern Europe under a contractual agreement that is referred to as a tender; and



•

an increase in the average exchange rate of the Euro of 20%, which positively impacted sales by $43.0 million.

        These increases were offset, in part, by $5.1 million of additional liabilities in 2003 arising from the UK Competition Appeal Tribunal's decision regarding Cerezyme pricing in the United Kingdom.

        International sales of Fabrazyme increased 134% to $61.1 million for 2003, primarily due to:

•

our continued program to educate European physicians about Fabry disease and Fabrazyme; and



•

an increase in the average exchange rate of the Euro of 20%, which positively impacted sales of Fabrazyme by $7.6 million.

Research and Development Revenue

        The following table sets forth our research and development revenue on a segment basis:

		For the year ended December 31,						04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
		2004		2003		2002
		(Amounts in thousands, except percentage data)
Therapeutics		$	—	$	1	$	834	(100	)%	(100	)%
Transplant			310		—		—	N/A		N/A
Biosurgery			4,241		7,046		285	(40	)%	>100	%
Other			5,109		9,245		11,282	(45	)%	(18	)%
Corporate			2,902		3,086		2,961	(6	)%	4	%
	Total research and development revenue	$	12,562	$	19,378	$	15,362	(35	)%	26	%

F-29

2004 As Compared to 2003

        The research and development revenue attributable to our Biosurgery reporting segment decreased in 2004 as compared to 2003 primarily due to:

•

a $2.3 million milestone payment received in 2003 from our Hylaform distribution partner in connection with filing for marketing approval in the United States for which there was no comparable amount in 2004; and



•

$2.7 million of revenue earned in 2003 related to milestone payments received from our Hylaform distribution partner for which there was no comparable amount in 2004.

        Other research and development revenue decreased primarily due to research and development contracts in our oncology business that expired at the end of 2003.

2003 As Compared to 2002

        For 2003, research and development revenue attributable to our Biosurgery reporting segment is primarily due to:

•

$2.0 million of reimbursements received from a partner for development projects associated with Synvisc;



•

a $2.3 million milestone payment received from our Hylaform distribution partner in connection with filing for marketing approval for Hylaform in the United States; and



•

$2.7 million of other milestone revenue earned in 2003 related to payments received from our Hylaform distribution partner and recorded as deferred revenue in 2002.

        For 2003 and 2002, Other research and development revenue includes revenue derived primarily from the following sources:

•

technology access fees received from Purdue Pharma, L.P. and Kirin Brewery Company, Ltd., which are recognized over the course of the associated research programs; and



•

research we performed on behalf of Purdue and Kirin.

MARGINS

        The components of our total margins are described in the following table:

		2004			2003			2002			04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
		(Amounts in thousands, except percentage data)
Product margin		$	1,527,749		$	1,163,548		$	889,983		31	%	31	%
	% of total product revenue		77	%		74	%		74	%
Service margin		$	72,248		$	55,301		$	47,918		31	%	15	%
	% of total service revenue		34	%		42	%		42	%
Total product and service gross margin		$	1,599,997		$	1,218,849		$	937,901		31	%	30	%
	% of total product and service revenue		73	%		72	%		71	%

2004 As Compared to 2003

Product Margin

        Our overall product margin increased $364.2 million, or 31% for 2004, as compared to 2003. This is primarily due to a $340.0 million, or 28%, increase in the combined sales of Renal, Therapeutics and

F-30

Diagnostics/Genetics products as well as an increase in sales of our newly acquired SangStat products beginning in September 2003.

        Product margin for our Renal reporting segment increased 43% for 2004, as compared to 2003. The increase is primarily due to a 29% increase in sales of Renagel (including bulk sevelamer), an 8% price increase, which became effective in January 2004, and the scale up of our global manufacturing facilities. In March 2003, we began shipping Renagel tablets manufactured at our facility in Ireland to the European market upon receiving approval from the EMEA to commence production of Renagel at the plant. In October 2003, we received final approval of this plant from the FDA, allowing shipment to the U.S.

        Product margin for our Therapeutics reporting segment increased 29% in 2004, as compared to 2003. The increase is primarily due to a 14% increase in sales of Cerezyme, a 160% increase in sales of Fabrazyme and a 46% increase in sales of Thyrogen in 2004. In addition, product margin for our Therapeutics reporting segment in 2003 includes the write off of $2.3 million of Cerezyme finished goods due to production issues, for which there is no similar write off in 2004.

        Product margin for our Biosurgery reporting segment increased 1% for 2004, as compared to 2003. The increase is primarily due to a 29% increase in sales of Sepra products and a one-time royalty payment recognized in 2004 for which there was no comparable amount recognized in 2003. These increases were partially offset by a 19% decrease in Synvisc sales and a 50% decrease in Other Biosurgery product revenue resulting from the sale of our cardiac device business in June 2003.

        Product margin for our Diagnostics/Genetics reporting segment decreased 19% for 2004, as compared to 2003. The decrease is primarily due to a 19% increase in cost of diagnostic products sold resulting from a one-time royalty payment of $1.2 million and manufacturing capacity variances attributable to a decline in the demand for certain diagnostic rapid test kits. Additionally, the expiration of our royalty agreement with Techne Corporation in June 2003 resulted in no royalty revenue being recorded in 2004 and therefore no product margin related to this royalty.

Service Margin

        Service margin for our Biosurgery reporting segment decreased 28% in 2004, as compared to 2003, primarily due to the absence of service revenue related to Synvisc in 2004. This decrease was a result of $6.2 million of reimbursed expenses, classified as revenue, received from Wyeth in 2003, for which there were no comparable amounts in 2004.

        Service margin for our Diagnostics/Genetics reporting segment increased 52% in 2004, as compared to 2003. This increase is primarily due to an 85% increase in service revenue resulting from our acquisition of certain of the pathology/oncology testing assets of IMPATH in May 2004, our acquisition of substantially all of the assets Alfigen in February 2004, continued growth in the prenatal screening and diagnosis market and increased sales of DNA testing services. These increases were offset by a 106% increase in costs associated with these services, including a one-time royalty payment of $3.3 million.

2003 As Compared to 2002

Product Margin

        Our overall product margin increased $273.6 million, or 31%, in 2003, as compared 2002, primarily due to $315.9 million, or 35%, increase in the combined sales of Renal, Therapeutics and Diagnostics/Genetics products as well as the introduction of sales of our newly acquired SangStat products beginning in September 2003.

F-31

        Product margin for our Renal reporting segment increased 75% in 2003, as compared to 2002. The increase is primarily due to a 71% increase in sales of Renagel, which was partially offset by $13.1 million in sales of bulk sevelamer, a lower margin product, to our Asian marketing partners, and an increase in the rebate reserve for the product corresponding to an increase in our estimates of the percentage of patients being reimbursed by government programs. Sales of Renagel (including sales of bulk sevelamer) increased 80% in 2003.

        Product margin for our Therapeutics reporting segment increased 28% in 2003, as compared to 2002. The increase is primarily due to a 19% increase in sales of Cerezyme, a 209% increase in sales of Fabrazyme and a 54% increase in sales of Thyrogen in 2003. The increase in Therapeutics product margin for 2003 is offset, in part, by the write off of $2.3 million of Cerezyme finished goods due to production issues, for which there is no similar charge in 2002.

        Product margin for our Biosurgery reporting segment increased 5% in 2003, as compared to 2002. The increase is primarily due to a 21% increase in sales of Synvisc and a 22% increase in sales of Sepra products, which were partially offset by a 39% decrease in Other Biosurgery product revenue resulting from the sale of our cardiac device business in June 2003.

        Product margin for our Diagnostics/Genetics reporting segment increased 35% in 2003, as compared to 2002. The increase is primarily due to a 7% increase in sales of diagnostic products and a 7% decrease in cost of products sold. The decrease in the cost of products sold in 2003 is primarily attributable to a charge of $2.9 million recorded in 2002 for the closure of a diagnostic products manufacturing facility in San Carlos, California for which there is no comparable charge in 2003.

Service Margin

        Service margin for our Biosurgery reporting segment increased 45% in 2003, as compared to 2002 primarily due to a 317% increase in service revenue related to Synvisc in 2003. These increases were a result of the classification of $6.2 million of reimbursed expenses from our Synvisc distribution partner as service revenue in 2003, compared to $1.5 million of reimbursed expenses in 2002.

        Service margin for our Diagnostics/Genetics reporting segment increased 8% in 2003, as compared to 2002, primarily due to a 22% increase in the combined sales of our molecular genetics (DNA) and cancer testing services.

OPERATING EXPENSES

Selling, General and Administrative Expenses

        The following table provides information regarding the change in SG&A during the periods presented:

	For the year ended December 31,						04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
	2004		2003		2002
	(Amounts in thousands, except percentage data)
Selling, general and administrative expenses	$	599,388	$	519,977	$	438,035	15	%	19	%

2004 As Compared to 2003

        SG&A increased $79.4 million for 2004, as compared to 2003, primarily due to:

•

an increase of $20.8 million in SG&A for Renagel largely attributable to additional selling and marketing activities aimed at increasing market penetration in Europe;

F-32

•

an increase of $42.6 million in SG&A for Therapeutics products, including:



•

$23.8 million attributable to additional selling and marketing activities for Fabrazyme in Europe and a full year of such expenses during 2004 in the United States;



•

$8.5 million attributable to an increase in marketing activities and sales force for Thyrogen; and



•

$6.3 million attributable to an increase in pre-launch activities for Myozyme, an investigational enzyme replacement therapy in late-stage development for Pompe disease.



•

an increase of $20.9 million in SG&A for Transplant resulting from a full year of SG&A activities after our acquisition of SangStat in September 2003;



•

an increase of $34.6 million in SG&A for Diagnostics/Genetics, primarily due to the acquisition of substantially all of the assets of Alfigen in February 2004 and our acquisition of certain of the pathology/oncology testing assets of IMPATH in May 2004; and



•

an increase of $3.6 million in Corporate SG&A resulting from increased professional fees associated with compliance with the Sarbanes-Oxley Act of 2002.

These increases were partially offset by decreases of:

•

$19.1 million in SG&A for Biosurgery, primarily driven by the sale of the cardiac device business in June 2003;



•

$4.0 million in Other SG&A, primarily due to a decrease in the allocation of SG&A to our cardiovascular and oncology businesses due to the change in the business unit organization structure; and



•

$20.0 million in Corporate SG&A resulting from an increase in the amount of SG&A allocated from Corporate to the reporting segments in 2004.

2003 As Compared to 2002

        SG&A increased $81.9 million, or 19% to $520.0 million in 2003 as compared to $438.0 million in 2002, primarily due to:

•

an increase of $13.4 million in SG&A for Renagel primarily due to selling and marketing activities related to increased market penetration for Renagel in Europe;



•

an increase of $28.0 million in SG&A for Therapeutics products, including:



•

$11.8 million attributable to our increased market penetration for Fabrazyme in Europe and the launch of the product in the United States during the second quarter of 2003;



•

$10.3 million attributable to an increase in expenditures related to other Therapeutics initiatives; and



•

$5.8 million of additional liabilities in 2003, arising from the U.K. Competition Appeal Tribunal's decision regarding Cerezyme pricing in the United Kingdom;



•

the addition of $11.8 million of SG&A for Transplant due to the acquisition of SangStat in September 2003 for which there are no comparable amounts in 2002;



•

an increase of $12.3 million in SG&A for Biosurgery, including:



•

an increase of $4.7 million associated with the costs of reimbursed expenses, classified as revenue, from our former Synvisc distribution partner;

F-33

•

an increase of $3.9 million related to the creation of a sales force and an increase in sales operations in France in 2003 as we began to sell Synvisc directly to customers; and



•

a $2.0 million charge for exit costs related to a leased facility in Lexington, Massachusetts due to our discontinuation of active marketing, and ultimately, the sale of our FocalSeal product line;



•

an increase of $8.6 million in SG&A for Diagnostics/Genetics, primarily due to increased administrative costs for our genetic testing business;



•

an increase of $7.3 million in Other SG&A, primarily due to an increase in spending for our cardiac science and drug discovery and development businesses; and



•

an increase of $14.5 million in Corporate SG&A, primarily due to increased consulting, relocation and severance expenses.

These increases were offset by a decrease of $14.0 million in spending for Biosurgery's cardiac device business resulting from the sale of this business in June 2003. SG&A for Biosurgery's cardiac device business includes $9.9 million of costs related to exiting this business in 2003.

        In 2003, the three remaining patients in the clinical trial for human transgenic alpha-glucosidase were transitioned to a CHO-cell derived product as part of the termination of the transgenic portion of our Pompe program and, as a result, we no longer required an accrual for costs related to our legal obligation associated with providing transgenic products to these patients. During 2003, we reversed the $2.1 million remaining in the reserve to Therapeutics SG&A. The following table shows the reserve for our contractual obligations to provide transgenic product. As of December 31, 2003, the remaining reserve was fully reversed (amounts in thousands):

Balance at December 31, 2001		14,124
Payments in 2002		(6,031	)
Revision of estimate		(5,497	)
Balance at December 31, 2002		2,596
Payments in 2003		(491	)
Revision of estimate		(2,105	)
Balance at December 31, 2003	$	—

Research and Development Expenses

        The following table provides information regarding the change in research and development expense during the periods presented:

	2004		2003		2002		04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
	(Amounts in thousands, except percentage data)
Research and development expenses (including research and development related to contracts)	$	391,802	$	335,256	$	308,487	17	%	9	%

F-34

2004 As Compared to 2003

        Research and development expenses increased $56.5 million for 2004, as compared to 2003, primarily due to:

•

a $7.2 million increase in spending on Renal research and development programs;



•

a $32.0 million increase in spending on certain Therapeutics research and development programs including:



•

$11.4 million for the manufacturing scale-up and the full enrollment in pivotal clinical trials for Myozyme;



•

$6.9 million from the consolidation of Dyax-Genzyme LLC, our joint venture with Dyax for the development of DX-88 for the treatment of hereditary angioedema, or HAE, and other chronic inflammatory diseases; and



•

$5.7 million on next-generation therapies for Gaucher disease.



•

an $11.4 million increase in spending on Transplant research and development programs; and



•

a $36.6 million increase in spending for Corporate research and development efforts related to our corporate science activities that we do not allocate to our reporting segments.

These increases were partially offset by decreases of:

•

$24.9 million in spending on certain Therapeutics research and development programs including:



•

$7.8 million for the Niemann-Pick B program as a result of our decision not to file for IND approval until 2005;



•

$4.1 million due to the cancellation of the CAT-192 program that we had been working in partnership with Cambridge Antibody Technology, or CAT; and



•

$2.9 million for our multiple sclerosis research and development program as we have shifted our focus to an alternative internally developed compound due to safety issues observed in the Phase 1 trial, which has been suspended; and



•

$8.7 million in spending on certain Other research and development programs including:



•

$1.6 million in our cardiovascular expenses as a result of the formation of MG Biotherapeutics LLC in June 2004. This collaboration with Medtronic, Inc. provided us with a partner to share the costs of these programs;



•

$2.3 million in research and development for our oncology businesses due to completion of immunotherapy trials; and



•

$4.6 million in expenses related to research and development programs associated with GelTex, which we acquired in 2000. Several of these programs were terminated in 2004.

2003 As Compared to 2002

        Research and development expenses increased $26.8 million or 9% to $335.3 million in 2003, as compared to $308.5 million in 2002, primarily due to:

•

a $15.7 million increase in spending on Therapeutics research and development programs including $4.3 million resulting from the consolidation of Dyax-Genzyme LLC;



•

a $5.1 million increase due to the addition of our Transplant reporting segment upon our acquisition of SangStat in September 2003, for which there are no comparable amounts in 2002;

F-35

•

a $5.4 million increase in spending on Biosurgery's orthopaedics business product development programs, particularly clinical trials for other indications for Synvisc;



•

a $16.7 million increase in other development expenses related to cardiovascular development programs, particularly cardiac cell therapy, as a result of clinical trials initiated in November 2002; and



•

an $11.4 million increase in spending for Corporate research and development efforts related to our corporate science activities that we do not allocate to our reporting segments.

        These increases were partially offset by:

•

a $16.3 million decrease in spending on Biosurgery's cardiac devices product development programs as a result of the sale of this business;



•

a $5.4 million decrease in spending on Biosurgery's biosurgical specialties product development programs, particularly clinical trials for Sepragel spine, that were terminated in 2002; and



•

a $6.1 million reduction in other research and development spending for oncology research and development programs.

        The $15.7 million net increase in spending for Therapeutics research and development programs includes a $26.5 million increase primarily due to the increased spending on Therapeutics research and development programs, partially offset by $10.8 million of additional research and development expenses in 2002, for which there are no comparable amounts during 2003. The $10.8 million consisted primarily of $8.8 million to reflect bulk product purchases and contract cancellation charges resulting from canceling our manufacturing contract for the clinical development of the enzyme replacement therapy for Pompe disease produced using the CHO cell line licensed from Synpac (North Carolina), Inc.

Amortization of Intangibles

        The following table provides information regarding the change in amortization of intangibles expense during the periods presented:

	2004		2003		2002		04/03 Increase/ Decrease) % Change		03/02 Increase/ (Decrease) % Change
	(Amounts in thousands, except percentage data)
Amortization of intangibles	$	109,473	$	80,257	$	70,278	36	%	14	%

        Amortization expense increased by $29.2 million for 2004, as compared to 2003, primarily due to additional amortization expense attributable to the intangible assets acquired in connection with our acquisition of SangStat in September 2003, our acquisition of substantially all of the assets of Alfigen in February 2004 and our acquisition of certain of the pathology/oncology testing assets of IMPATH in May 2004.

        The increase in amortization of intangibles to $80.3 million for the year ended December 31, 2003, as compared to $70.3 million the year ended December 31, 2002, is primarily due to amortization of intangible assets acquired in connection with our acquisition of SangStat in September 2003, which resulted in $10.6 million of amortization expense during 2003.

Purchase of In-Process Research and Development

        In connection with six of our acquisitions since 2000, we have acquired various IPR&D projects. Substantial additional research and development will be required prior to any of our acquired IPR&D programs and technology platforms reaching technological feasibility. In addition, once research is

F-36

completed, each product candidate acquired from ILEX, SangStat, Novazyme, GelTex and Biomatrix will need to complete a series of clinical trials, and receive FDA or other regulatory approvals prior to commercialization. Our current estimates of the time and investment required to develop these products and technologies may change depending on the different applications that we may choose to pursue. We cannot give assurances that these programs will ever reach feasibility or develop into products that can be marketed profitably. In addition, we cannot guarantee that we will be able to develop and commercialize products before our competitors develop and commercialize products for the same indications. If products based on our acquired IPR&D programs and technology platforms do not become commercially viable, our results of operations could be materially adversely affected.

ILEX

        In connection with our acquisition of ILEX, we have acquired IPR&D related to three development projects, Campath (for indications other than B-cell chronic lymphocytic leukemia), Clolar (clofarabine) and tasidotin hydrochloride, formerly referred to as ILX-651.

        Campath is a humanized monoclonal antibody that binds to a specific target, CD52, on cell surfaces leading to the destruction of malignant, or cancerous, cells. Campath was launched in May 2001 in the United States, and in August 2001 in Europe under the name MabCampath. The product is approved for use in patients with B-cell chronic lymphocytic leukemia who have been treated with alkylating agents and who have failed fludarabine therapy. At the time of acquisition, clinical trials in non-Hodgkin's lymphoma, multiple sclerosis and other cancer and non-cancer indications were being conducted.

        Clolar is a next-generation, purine nucleoside antimetabolite that is currently under investigation in pediatric and adult leukemias and solid tumors. In December 2004, after the date of our acquisition of ILEX, the FDA granted marketing approval for Clolar for the treatment of children with refractory or relapsed acute lymphoblastic leukemia. Clolar is the first new leukemia treatment approved specifically for children in more than a decade. At the time of the acquisition, clinical trials for hematologic cancer, solid tumor and additional pediatric acute leukemia indications were being conducted.

        Tasidotin is a next-generation synthetic pentapeptide analog of the natural substance dolastatin-15. This product candidate targets tubulin and has been chemically modified to provide improved pharmacological properties over earlier members of its class. ILEX initiated phase 2 clinical trials of tasidotin in late 2003 and 2004 in a variety of indications.

        As of the date our acquisition of ILEX, none of these projects had reached technological feasibility nor had an alternative future use. Accordingly, we allocated to IPR&D, and charged to expense in our consolidated statements of operations in December 2004, $254.5 million, representing the portion of the purchase price attributable to these projects, of which $96.9 million is attributable to the Campath development projects, $113.4 million is attributable to the clofarabine development project and $44.2 million is related to the tasidotin development projects.

        As of December 31, 2004, we estimated that it will take approximately three to six years and an investment of approximately $45 million to complete the development of, obtain approval for and commercialize Campath for non-Hodgkin's lymphoma and multiple sclerosis and other cancer and non-cancer indications. We estimated that it will take approximately three to six years and an investment of approximately $11 million to complete the development of, obtain approval for and commercialize Clolar for hematologic cancer, solid tumor and additional pediatric acute leukemia indications. We estimated that it will take approximately 5 years and an investment of approximately $23 million to complete the development of, obtain approval for and commercialize tasidotin.

F-37

SangStat

        In connection with our acquisition of SangStat, we acquired IPR&D related to two projects, RDP58 and cyclosporine capsule. RDP58 is a novel inhibitor of several inflammatory cytokines. Cyclosporine capsule is a novel, smaller-size formulation of generic cyclosporine, an immunosuppressive agent. As of the acquisition date, neither project had reached technological feasibility nor had an alternative future use. Accordingly, we allocated to IPR&D, and charged to expense in our consolidated statements of operations in September 2003, $158.0 million, representing the portion of the purchase price attributable to these two projects, of which $138.0 million is attributable to RDP58 and $20.0 million is attributable to cyclosporine capsule.

        In March 2004, we entered into an agreement with Proctor & Gamble Pharmaceuticals, Inc. (PGP), a subsidiary of The Proctor & Gamble Company, under which we granted to PGP an exclusive, worldwide license to develop and market RDP58 for the treatment of gastrointestinal and other disorders. We retained development and commercialization rights to RDP58 in pulmonary and other disorders that were not specifically licensed to PGP and also retained co-promotion rights with PGP in oncology-related disorders, such as chemo-therapy-induced diarrhea. In exchange for the grant of the license, PGP paid us an upfront fee, and agreed to make milestone payments and pay royalties on product sales.

        Also in March 2004, we received marketing authorization for both 25mg and 100mg cyclosporine capsules in a European country. We terminated our license for cyclosporine capsules in January 2005 and exited this market.

        As of December 31, 2004, we estimated that it will take approximately ten years and an investment of approximately $75.0 million to $100.0 million to complete the development of, obtain approval for and commercialize the first product based on the RDP58 technology for pulmonary and other disorders not licensed to PGP.

Novazyme

        In September 2001, in connection with our acquisition of Novazyme, we acquired a technology platform that we believe can be leveraged in the development of treatments for various LSDs. As of the acquisition date, the technology platform had not achieved technological feasibility and would require significant further development to complete. Accordingly, we allocated to IPR&D and charged to expense $86.8 million, representing the portion of the purchase price attributable to the technology platform. We recorded this amount as a charge to expense in our consolidated statements of operations for the year ended December 31, 2001.

        The platform technology is specific to LSDs and there is currently no alternative use for the technology in the event that it fails as a platform for enzyme replacement therapy for the treatment of LSDs. As of December 31, 2004, we estimated that it will take approximately four to eight years and an investment of approximately $100.0 million to $125.0 million to complete the development of, obtain approval for and commercialize the first product based on this technology platform.

Wyntek

        In June 2001, in connection with our acquisition of Wyntek, we allocated approximately $8.8 million of the purchase price to IPR&D. We recorded this amount as a charge to expense in our consolidated statements of operations for the year ended December 31, 2001.

        Wyntek was developing a cardiovascular product to rapidly measure the quantitative levels of cardiac marker proteins. In 2003, we cancelled our cardiac and stroke quantitative point of care rapid test development programs. No further development is planned for these programs.

F-38

GelTex

        In December 2000, in connection with the acquisition of GelTex, we allocated approximately $118.0 million of the purchase price to IPR&D, which we recorded as a charge to expense in our consolidated statements of operations for the year ended December 31, 2000. In 2003, we cancelled our original polymer development program. No further development is planned for this program. However, we have several ongoing development programs that are exploring potential alternative applications for the polymer platform technology. As of December 31, 2004, the technological feasibility of these projects had not yet been reached and no significant departures from the assumptions included in the valuation analysis had occurred.

Biomatrix

        In connection with our acquisition of Biomatrix in December 2000, we allocated approximately $82.1 million to IPR&D, which we recorded as a charge to expense in our consolidated statements of operations for the year ended December 31, 2000. As of December 31, 2004, the technological feasibility of the Biomatrix IPR&D projects had not yet been reached and no significant departures from the assumptions included in the valuation analysis had occurred.

Charge for Impairment of Goodwill

        In connection with our assessment of the value of our Biosurgery reporting unit and the elimination of our tracking stock structure, we determined that the fair value of Biosurgery's net assets was lower than their carrying value, indicating a potential impairment of the goodwill allocated to Biosurgery's orthopaedics reporting unit. Based on our analysis, we have concluded that the goodwill assigned to Biosurgery's orthopaedics reporting unit is fully impaired. Accordingly, we recorded a charge for impairment of goodwill of $102.8 million in our consolidated statements of operations in June 2003 to write off this goodwill.

Charge for Impaired Assets

        In 2004, due to a change in plans for future manufacturing capacity and research and development facilities, we determined that we will not require all of the space we had been leasing at our facility in Oklahoma City, Oklahoma. As a result, in December 2004, we recorded a charge of $2.1 million to research and development expenses to record the exit costs related to space we have vacated and a charge for impaired assets of $4.5 million to write off the assets related to that specific area of our Oklahoma facility.

        In connection with the sale of assets to Teleflex, we tested the carrying value of our manufacturing facility in Fall River, Massachusetts in June 2003 to determine whether the impairment recognition criteria had been met. Our impairment analysis indicated that the carrying value for the Fall River facility would not be fully recoverable. As a result of this assessment, we recorded a charge for impaired asset of $2.9 million in our consolidated statements of operations in June 2003 to write down the carrying value of the Fall River facility to its estimated fair value.

        In 2003, we discontinued the active marketing and, ultimately sold our FocalSeal product. In connection with the discontinuation of this product, we tested the carrying value of the assets associated with the product to determine whether the impairment recognition criteria had been met. Our impairment analysis indicated that the carrying value of these assets would not be fully recoverable. As a result of this assessment, we recorded total charges of $14.3 million in our consolidated financial statements in 2003 to write off the tangible and intangible assets associated with our FocalSeal product.

F-39

        During 2001, we began constructing a recombinant protein manufacturing facility adjacent to our existing facilities in Framingham, Massachusetts. During the quarter ended December 31, 2001, we suspended development of this site in favor of developing the manufacturing site we acquired from Pharming N.V. in Geel, Belgium. Throughout 2002, we considered various alternative plans for use of the Framingham manufacturing facility, including contract manufacturing arrangements, and whether the $16.8 million of capitalized engineering and design costs for this facility would be applicable to the future development of and activities at this site. In December 2002, due to a change in our plans for future manufacturing capacity requirements, we determined that we would not proceed with construction of the Framingham facility for the foreseeable future. As a result, we recorded a charge in 2002 to write off $14.0 million of capitalized engineering and design costs that were specific to the Framingham facility. The remaining $2.8 million of capitalized engineering and design costs were used in the construction of the Belgium manufacturing facility and, accordingly, have been reallocated as a capitalized cost of that facility.

        In the first quarter of 2002, we began a capital expansion program to build HA manufacturing capacity at one of our existing manufacturing facilities in Framingham, Massachusetts. We previously manufactured bulk HA at our manufacturing facility in Haverhill, United Kingdom. During the third quarter of 2002, we determined that we have sufficient inventory levels to meet demand until the Framingham facility is completed and validated, which is estimated to be within one year. In connection with this assessment, we concluded that we no longer require the manufacturing capacity at the HA Plant in England and we recorded an impairment charge of $9.0 million to write off the assets at the England facility.

OTHER INCOME AND EXPENSES

		2004			2003			2002			04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
		(Amounts in thousands, except percentage data)
Equity in loss of equity method investments		$	(15,624	)	$	(16,743	)	$	(16,858	)	(7	)%	(1	)%
Minority interest			5,999			2,232			—		169	%	N/A
Loss on investments in equity securities			(1,252	)		(1,201	)		(14,497	)	4	%	(92	)%
Loss on sale of product line			—			(27,658	)		—		(100	)%	N/A
Other			(357	)		959			40		(137	)%	2,298	%
Investment income			24,244			43,015			51,038		(44	)%	(16	)%
Interest expense			(38,227	)		(26,600	)		(27,152	)	44	%	(2	)%
	Total other income (expense), net	$	(25,217	)	$	(25,996	)	$	(7,429	)	(3	)%	250	%

2004 As Compared to 2003

Equity in Loss of Equity Method Investments

        Under this caption, we record our portion of the results of our joint ventures with BioMarin, Diacrin, Inc. and MG Biotherapeutics, and our investments in Peptimmune, Inc. and Therapeutic Human Polyclonals, Inc., which we refer to as THP.

        Our equity in loss of equity method investments decreased 7% to $15.6 million in 2004, as compared to $16.7 million in 2003. The largest component of our equity in loss of equity method investments was net losses from our joint venture with BioMarin, which decreased 36% to $9.7 million primarily due to increased sales of Aldurazyme, which was launched in the U.S. in April 2003 and in Europe in June 2003. This decrease is partially offset by a $2.5 million increase in equity in loss of

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equity method investments due to the net losses from our newly created joint venture, MG Biotherapeutics LLC, which we entered into with Medtronic in June 2004.

Minority Interest

        As a result of our adoption of FASB Interpretation No., or FIN, 46, "Consolidation of Variable Interest Entities," we have consolidated the results of Dyax-Genzyme LLC, formerly known as Kallikrein LLC, and Excigen Inc., a collaboration partner. Our consolidated balance sheet as of December 31, 2004 includes assets of $0.5 million related to Dyax-Genzyme LLC, substantially all of which are included in other current assets. We have recorded Dyax's portion of this joint venture's losses as minority interest in our consolidated statements of operations. The results of Excigen are not significant.

Loss on Investment in Equity Securities

        We review for potential impairment the carrying value of each of our strategic investments in equity securities on a quarterly basis. In September 2004, we recorded a $2.9 million impairment charge in connection with our investment in MacroGenics and in June 2003, we recorded a $3.6 million impairment charge in connection with our investment in the common stock of ABIOMED because we considered the decline in value of these investments to be other than temporary. Given the significance and duration of the decline as of September 30, 2004, with respect to our investment in MacroGenics, and as of June 30, 2003, with respect to our investment in ABIOMED, we concluded that it was unclear over what period the recovery of the stock price for these investments would take place, and, accordingly, that any evidence suggesting that the investments would recover to at least our historical cost was not sufficient to overcome the presumption that the current market price was the best indicator of the value of these investments.

        At December 31, 2004, our stockholders' equity includes $56.0 million of unrealized gains and $4.6 million of unrealized losses related to our investments in strategic equity securities. The unrealized losses are related to our investment in the common stock of BioMarin. The price of BioMarin common stock remained below cost for a portion of 2004. However, in the three months ended December 31, 2004, the stock price began to recover. As a result, we believe the unrealized losses related to our investment in BioMarin common stock at December 31, 2004 are temporary.

Investment Income

        Our investment income decreased 44% for 2004, as compared to 2003, due to decreases in our average portfolio yield, the amount of unrealized gains on our portfolio and our average cash and investment balances in 2004.

Interest Expense

        Our interest expense increased 44% for 2004, as compared to 2003, primarily due to an increase in average debt balances outstanding in 2004 resulting from:

•

$690.0 million in principal of our 1.25% convertible senior notes issued in December 2003 and due December 2023; and



•

$130.2 million capital lease obligation related to our corporate headquarters in Cambridge, Massachusetts recorded in November 2003.

In addition, in June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash. This included charges of $4.3 million for premium paid upon redemption and $5.3 million to write off the unamortized debt fees associated with these debentures. These charges

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were recorded as interest expense on our consolidated statements of operations in 2004. There were no similar charges in 2003.

        The increases were offset, in part, by

•

lower interest expense associated with our revolving credit facility due to a decrease in the average amount outstanding under this facility in 2004 as compared to 2003;



•

lower interest rates on our outstanding $690.0 million convertible senior notes as compared to the interest rate on our $575.0 million convertible subordinated debentures, which were redeemed in June 2004; and



•

lower interest expense associated with the 6.9% convertible subordinated note that we assumed in connection with our acquisition of Biomatrix and paid off in May 2003.

2003 As Compared to 2002

Equity in Loss of Equity Method Investments

        We record in equity in loss of equity method investments our portion of the results of our joint ventures with BioMarin and Diacrin and our portion of the losses of Peptimmune, THP, and through May 31, 2002, GTC.

        Our equity in loss of equity method investments decreased 1% to $16.7 million for the year ended December 31, 2003, as compared to $16.9 million for the year ended December 31, 2002. The largest component of our equity in loss of equity method investments was net losses from our joint venture with BioMarin.

        In January 2002, we formed Peptimmune as our wholly-owned subsidiary by contributing $5.0 million of cash and $0.3 million of other assets to Peptimmune in exchange for 5.5 million shares of Peptimmune's Series A voting preferred stock and 100 shares of Peptimmune common stock. We consolidated the results of Peptimmune through February 2003 because during that period we owned 100% of its outstanding stock. In March 2003, our investment in Peptimmune decreased to approximately 12% as a result of the sale by Peptimmune of shares of its Series B voting preferred stock to third-party investors. In accordance with our policy pertaining to affiliate sales of stock, we recorded a $2.9 million net gain ($4.5 million pre-tax) due to this sale, which was recorded as an increase to our investment in Peptimmune in Other noncurrent assets and an increase to Accumulated other comprehensive income in stockholders' equity in our consolidated balance sheet in June 2003. Although our ownership interest in Peptimmune has declined below 20%, we account for the investment in Peptimmune under the equity method of accounting because certain factors exist that cause us to continue to have significant influence over Peptimmune, including that the chairman of Peptimmune is a member of our board of directors and we have license and continuing service agreements with Peptimmune. Our equity in loss of equity method investments for Peptimmune has not been significant to date.

        In September 2003, in connection with the acquisition of SangStat, we acquired SangStat's interest in two collaborations with THP for the development of humanized polyclonal therapeutic products to be generated by the immune systems of transgenic animals. In December 2003, SangStat, our wholly-owned subsidiary, made an additional equity investment of $3.2 million in THP because THP produced the proof-of-principle engineered rabbit required for completion of this specific milestone. We are accounting for this investment under the equity method because we believe that conditions exist that indicate an ability to exercise significant influence over THP, including that one of our officers is a director of THP. When THP has produced a commercial-grade engineered rabbit, SangStat has the option to make an additional equity investment of $15.0 million, which would give us ownership of approximately 40% of THP's issued share capital.

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        We accounted for our investment in GTC under the equity method of accounting through May 2002, at which point our ownership interest and board representation was reduced below 20% and we did not have any other factors of significant influence. Accordingly, we began accounting for our investment in GTC under the cost method of accounting in June 2002.

Loss on Investments in Equity Securities

        We review for potential impairment the carrying value of each of our strategic investments in equity securities on a quarterly basis. In June 2003, we recorded a $3.6 million impairment charge in connection with our investment in the common stock of ABIOMED because we considered the decline in value of this investment to be other than temporary.

        In December 2002, we recorded $15.4 million in impairment charges, including:

•

$9.2 in connection with our investment in the common stock of GTC;



•

$3.4 million in connection with our investment in the ordinary shares of CAT; and



•

$2.0 million in connection with our investment in the common stock of Dyax.

Given the significance and duration of the declines, we concluded that it was unclear over what period the recovery of the stock price for each of these investments would take place and, accordingly, that any evidence suggesting that the investments would recover to at least our historical cost was not sufficient to overcome the presumption that the current market price was the best indicator of the value of each of these investments. At December 31, 2003, our stockholders equity includes $16.4 million of unrealized gains and $3.8 million of unrealized losses related to our other investments in equity securities.

Minority Interest

        In 2003, we acquired a 49.99% interest in Dyax-Genzyme LLC, our joint venture with Dyax for the development of DX-88 for the potential treatment of HAE and other chronic inflammatory diseases. Under our collaboration agreement with Dyax, we have agreed that both companies will share development costs for HAE going forward. The first significant research and development activities of the joint venture commenced in the fourth quarter of 2003. In addition, Dyax will receive milestone payments from us upon dosing the first HAE patient in a pivotal clinical trial of DX-88 and upon regulatory approval for the first indication. Dyax will also receive milestone payments from us if DX-88 is approved for additional indications. Both companies will share equally in profits from sales of DX-88 for HAE and/or other chronic inflammatory diseases. In March 2003, Dyax exercised an option to acquire from us all rights to DX-88 for surgical indications.

        In January 2003, the Financial Accounting Standards Board, or FASB, issued FASB Interpretation No., or FIN, 46, "Consolidation of Variable Interest Entities," as amended and revised in December 2003, which addresses the consolidation of variable interest entities, or VIEs, by business enterprises that are the primary beneficiaries. A VIE is an entity that does not have sufficient equity investment to permit it to finance its activities without additional financial support from a third party, or whose equity investors lack the characteristics of a controlling financial interest. The primary beneficiary of a VIE is the enterprise with the majority of the risk or rewards associated with the VIE. Immediate application of FIN 46 was required for all potential VIEs created after January 31, 2003. For potential VIEs created prior to February 1, 2003, the consolidation requirements apply for periods ending after March 15, 2004. FIN 46 also requires enhanced disclosures related to VIEs. As a result of our adoption of FIN 46, we have consolidated the results of Dyax-Genzyme LLC, which we became a member of in 2003. Our consolidated balance sheet at December 31, 2004 includes assets of $1.4 million related to Dyax-Genzyme LLC, substantially all of which are included in accounts

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receivable. We have recorded Dyax's portion of this joint venture's losses as minority interest in our consolidated statements of operations.

Investment Income

        Our investment income decreased 16% for the year ended December 31, 2003, as compared to the year ended December 31, 2002, due to a 1% decline in our average portfolio yield and a slight decline in average cash balances.

Interest Expense

        Our interest expense decreased 2% for 2003, as compared to 2002, primarily due to a slight decline in average debt balances outstanding for most of the year resulting from:

•

repayment, in 2002, of $4.4 million notes payable assumed in connection with our acquisition of GelTex;



•

payment, in May 2003, of the $10.0 million, 6.9% convertible subordinated note assumed in connection with the acquisition of Biomatrix; and



•

a reduction in the amount borrowed under the revolving credit facility in 2003.

        The decrease was offset, in part, by additional interest related to the following debt we assumed in 2003:

•

$11.3 million in principal of a 6.5% convertible note due March 29, 2004 in favor of UBS AG London assumed in connection with our acquisition of SangStat;



•

$5.0 million of notes payable, also assumed in connection with our acquisition of SangStat;



•

$690 million in principal of our 1.25% convertible senior notes issued in December 2003 and due December 2023; and



•

$130.2 million capital lease obligation related to our corporate headquarters in Cambridge, Massachusetts recorded in November 2003.

Provision for Income Taxes

	2004			2003			2002			04/03 Increase/ (Decrease) % Change		03/02 Increase/ (Decrease) % Change
	(Amounts in thousands, except percentage data)
Provision for income taxes	$	(141,169	)	$	(72,647	)	$	(19,015	)	94	%	282	%
Effective tax rate		62	%		1,437	%		18	%

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        Our provisions for income taxes were at rates other than the U.S. federal statutory tax rate for the following reasons:

	2004		2003		2002
Tax provision (benefit) at U.S. statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net	2.8		114.0		3.2
Extra-territorial income	(7.1	)	(221.0	)	(8.9	)
Goodwill impairment	—		711.7		—
Charges for purchased research and development	39.1		1,094.0		0.6
Benefit of tax credits	(4.7	)	(343.3	)	(15.7	)
Foreign rate differential	(4.4	)	(13.4	)	3.8
Other	1.3		60.1		0.3
Effective tax rate	62.0	%	1,437.1	%	18.3	%

        Our effective tax rates for 2004, 2003 and 2002 varied from the U.S. statutory rate as a result of:

•

our provision for state income taxes;



•

the tax benefits from export sales;



•

the impact of the write off of nondeductible goodwill in 2003;



•

nondeductible charges for IPR&D recorded in December 2004 and September 2003;



•

benefits related to tax credits; and



•

the foreign rate differential.

In addition, our overall tax rate has changed significantly due to fluctuations in our income (loss) before taxes, which was $227.7 million in 2004, $5.1 million in 2003 and $104.2 million in 2002.

        We are currently under IRS Audit for tax years 1996 to 1999. We believe that we have provided sufficiently for all audit exposures. A favorable settlement of this audit or the expiration of the statute of limitations on the assessment of income taxes for any tax year may result in a reduction of future tax provisions, which could be significant. Any such benefit would be recorded upon final resolution of the audit or expiration of the applicable statute of limitations.

        In 2001, the World Trade Organization, or WTO, determined that the tax provisions of the FSC Repeal and Extraterritorial Income Exclusion Act of 2000, or ETI, constitute an export subsidy prohibited by the WTO Agreement on Subsidies and Countervailing Measures Agreement. As a result, in October 2004, the U.S. enacted the American Jobs Creation Act of 2004, or the Act, which repeals the ETI export subsidy for transactions after 2004 with two years of transition relief (2005-2006). The Act also provides a 9% deduction for income from domestic production activities which will be phased in over the years 2005-2010. While we are still evaluating the net impact of this new legislation, we do not expect it to have a material effect on our ongoing effective tax rate. In addition, the Act creates a temporary incentive for U.S. multinational corporations to repatriate accumulated income earned outside the U.S. While we are still evaluating this provision, we do not expect to benefit from the repatriation provisions under this Act.

Earnings Allocations

        Through June 30, 2003, we calculated earnings per share for each series of stock using the two-class method. To calculate basic earnings per share for each series of stock, we divided the earnings allocated to each series of stock by the weighted average number of outstanding shares of that series of stock during the applicable period. When we calculated diluted earnings per share, we also included in

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the denominator all potentially dilutive securities outstanding during the applicable period if inclusion of such securities was not anti-dilutive. We allocated our earnings to each series of our common stock based on the earnings attributable to that series of stock. Through June 30, 2003, the earnings attributable to Genzyme Stock, as defined in our charter, were equal to the net income or loss of Genzyme General determined in accordance with accounting principles generally accepted in the United States, and as adjusted for tax benefits allocated to or from Genzyme General in accordance with our management and accounting policies in effect at the time. Earnings attributable to Biosurgery Stock and Molecular Oncology Stock were defined similarly and, as such, were based on the net income or loss of the corresponding division as adjusted for the allocation of tax benefits. The earnings allocated to each series of common stock are indicated in the table below:

			2003			2002
			(Amounts in thousands)
Earnings allocated to:
	Genzyme Stock		$	94,283		$	178,526
	Biosurgery Stock			(152,651	)		(167,886	)
	Molecular Oncology Stock			(9,224	)		(23,714	)
		Total net income (loss)	$	(67,592	)	$	(13,074	)

        Through June 30, 2003, we calculated the income tax provision of each division as if such division were a separate taxpayer, which included assessing the realizability of deferred tax assets at the division level. Our management and accounting policies in effect at the time provided that if, as of the end of any fiscal quarter, a division could not use any projected annual tax benefit attributable to it to offset or reduce its current or deferred income tax expense, we could allocate the tax benefit to other divisions in proportion to their taxable income without compensating payment or allocation to the division generating the benefit. The tax benefits allocated to Genzyme General and included in earnings attributable to Genzyme Stock were (amounts in thousands):

			2003		2002
			(Amounts in thousands)
Tax benefits allocated from:
	Genzyme Biosurgery		$	8,720	$	18,508
	Genzyme Molecular Oncology			3,420		9,287
		Total	$	12,140	$	27,795

        These tax benefits represent 13% and 16% of earnings allocated to Genzyme Stock in 2003 and 2002, respectively. The amount of tax benefits allocated to Genzyme General fluctuated based on the results of Genzyme Biosurgery and Genzyme Molecular Oncology. If the losses of those divisions declined then the tax benefits allocated to Genzyme General also declined.

Cumulative Effect of Change in Accounting Principle

        On January 1, 2002, we adopted SFAS No. 142, which requires that ratable amortization of goodwill and certain intangible assets be replaced with periodic tests of goodwill's impairment and that other intangible assets be amortized over their useful lives unless these lives are determined to be indefinite. SFAS No. 142 requires a transitional impairment test to compare the fair value of a reporting unit with the carrying amount of the goodwill.

        Upon adoption of SFAS No. 142, we tested the goodwill of our cardiothoracic reporting unit in accordance with the transitional provisions of that standard, using the present value of expected future cash flows to estimate the fair value of this reporting unit. We recorded an impairment charge of

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$98.3 million, which was reflected as a cumulative effect of a change in accounting for goodwill in our consolidated statements of operations in 2002.

Research and Development Programs

        Our research and development programs are focused on the areas of medicine where we market commercial products, namely rare inherited disorders, kidney disease, transplant and immune diseases, orthopaedics and cancer. We also conduct research in cardiovascular disease, diagnostic testing and other areas of unmet medical needs. Before we can commercialize our development-stage products, we will need to:

•

conduct substantial research and development;



•

undertake preclinical and clinical testing;



•

develop and scale-up manufacturing processes and validate facilities; and



•

pursue regulatory approvals and, in some countries, pricing approvals.

        This process is risky, expensive, and may take several years. We cannot guarantee that we will be able to successfully develop any product, or that we would be able to recover our development costs upon commercialization of a product that we successfully develop.

        Below is a brief description of our significant research and development programs:

Program	Program Description or Indication	Development Status at December 31, 2004	Year of Expected Product Launch
Fabrazyme	Fabry disease	Received European Commission marketing approval in 2001, FDA marketing approval in April 2003 and marketing approval in Japan in January 2004; post-marketing phase 4 trial completed and patients enrolled in open label study; post-marketing commitments ongoing	Product was launched in 2001
Aldurazyme	MPS 1	Received FDA marketing approval in April 2003 and European Commission marketing approval in June 2003; several post-marketing commitments ongoing. We incur 50% of the research and development costs of our joint venture with BioMarin	Product was launched in 2003
Myozyme	Pompe disease	Pivotal trial ongoing; submitted marketing application in the E.U. in December 2004; and anticipate filing in the U.S. and Japan in 2005.	2006
Tolevamer(1)	C. difficile associated diarrhea	Phase 2 trials completed in 2004; anticipate enrolling patients in a Phase 3 trial in the first half of 2005.	2007

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TGF-beta antagonists	I.P.F.	Phase 1-2 trial to start in 2005; Preliminary results anticipated in the first half of 2004. We incur 55% of the research and development costs incurred under our collaboration with Cambridge Antibody Technology Group	2010
Cyclosporine capsule(2)	Smaller size formulation of Cyclopsporine for chronic immunosuppression after transplantation (to prevent organ rejection)	Delivered notice terminating product license in January 2005	n/a
Viscosupplementation for osteoarthritis(3)	Viscosupplementation products to treat osteoarthritis of the knee, hip and other joints	Filed for Synvisc registration in Japan in 2003; currently enrolling patients in a pivotal clinical trial in U.S. for Synvisc in the hip and in Europe for Synvisc in the ankle and shoulder;	2005 through 2008
Sepra products(3)	Next stage products to prevent surgical adhesions for various indications	Preclinical; currently working on the development of a new anti-adhesion product	2005 through 2008
Campath(4)	B-cell chronic lymphocytic leukemia, non-Hodgkins lymphoma and multiple sclerosis	Phase 3 clinical trials in earlier-line CLL ongoing; phase 1-2 clinical trial in NHL ongoing; phase 2 clinical trial in MS fully enrolled	2007 through 2010
Clolar(4)	Pediatric and adult leukemias and solid tumors	Phase 2 trial in pediatric acute leukemias fully enrolled; phase 1-2 trial in adult hematologic cancers ongoing; phase 1 trial in solid tumors ongoing	2007 through 2010
Tasidotin(4)	Solid tumors	Phase 2 clinical trials ongoing	2009
DENSPM(1)	Liver cancer	Phase 1-2 clinical trial ongoing	2011
HIF-1a	Angiogenic gene therapy to treat coronary and peripheral artery disease	Phase 2 clinical trial ongoing	2008 through 2010
Cardiac cell therapy product	Tissue regeneration to treat congestive heart failure	Phase 1 clinical trial ongoing in Europe; anticipate filing IND in the U.S. by 2006	2009

(1)

Program acquired in connection with the December 2000 acquisition of GelTex.

(2)

Program acquired in connection with the September 2003 acquisition of SangStat.

(3)

Includes programs acquired in connection with the December 2000 acquisition of Biomatrix.

(4)

Program acquired in connection with the December 2004 acquisition of ILEX.

        The aggregate actual and estimated research and development expense for the programs described above is as follows (amounts in millions):

Costs incurred for the year ended December 31, 2003	$128.9
Costs incurred for the year ended December 31, 2004	$165.4
Cumulative costs incurred as of December 31, 2004	$684.8
Estimated costs to complete as of December 31, 2004	$640 to $795

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        Our current estimates of the time and investment required to develop these products may change depending on the approach we take to pursue them, the results of preclinical and clinical studies, and the content and timing of decisions made by the FDA and other regulatory authorities. We cannot provide assurance that any of these programs will ever result in products that can be marketed profitably. In addition, we cannot guarantee that we will be able to develop and commercialize products before our competitors develop and commercialize products for the same indication. If certain of our development-stage programs do not result in commercially viable products, our results of operations could be materially adversely affected.

Liquidity and Capital Resources

        We continue to generate cash from operations. At December 31, 2004, we had cash, cash equivalents, and short- and long-term investments of $1.1 billion, a decrease of $145.7 million from cash, cash equivalents and short- and long-term investments of $1.2 billion at December 31, 2003. This decrease in our cash balance is due primarily to our expenditure of $580.1 million in connection with the redemption of our 3% convertible subordinated debentures in June 2004.

        The following is a summary of our statements of cash flows for 2004 and 2003.

Cash Flows from Operating Activities

        Cash flows from operating activities are as follows (amounts in thousands):

			2004			2003
Cash flows from operating activities:
	Net cash provided by operating activities before working capital changes		$	678,068		$	479,809
	Decrease in cash from working capital changes (excluding impact of acquired assets and assumed liabilities)			(100,556	)		(91,951	)
		Cash flows from operating activities	$	577,512		$	387,858

        Cash flows from operating activities increased $189.7 million, or 49%, for 2004, as compared to 2003, primarily due to growth in earnings, adjusted for non-cash items (including depreciation, amortization, charges for purchase of IPR&D deferred income taxes and impairment charges), which increased $198.3 million, or 41%, to $678.1 million for 2004, as compared to 2003. This increase was offset, in part, by a $8.6 million net increase in cash used to fund working capital changes primarily due to a $111.3 million increase in accounts receivable and a $13.9 million decrease in accounts payable and accrued expenses, offset in part, by a $18.8 million decrease in inventory and a $5.9 million decrease in prepaid expenses and other current assets.

        Cash flows from operating activities increased 74% for 2003, as compared to 2002, primarily due to growth in earnings, adjusted for non-cash items (including depreciation, amortization, charges for purchase of IPR&D, deferred income taxes, tax benefits from employee stock options and impairment charges), which increased $166.6 million, or 53%, to $479.8 million in 2003, as compared to 2002. This increase was offset in part by $92.0 million in net cash used to fund working capital changes primarily due to a $65.6 million increase in accounts receivable and a $45.1 million increase in prepaid expenses and other current assets, offset in part by an $11.8 million decrease in inventory and a $6.9 million increase in accounts payable and accrued expenses.

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Cash Flows from Investing Activities

        Cash flows from investing activities are as follows (amounts in thousands):

			2004			2003
Cash flows from investing activities:
	Net sales of investments, including investments in equity securities		$	318,453		$	(188,690	)
	Purchases of property, plant and equipment			(187,400	)		(259,598	)
	Sale of product line			—			34,513
	Investments in equity method investments			(24,107	)		(28,056	)
	Acquisitions, net of acquired cash			(152,377	)		(565,306	)
	Other investing activities			(265	)		(21,055	)
		Cash flows from investing activities	$	(45,696	)	$	(1,028,192	)

        In 2004, net sales of investments, including investments in equity securities, provided $318.5 million in cash. For the same period, acquisitions and capital expenditures accounted for significant cash outlays. In 2004, we used:

•

$187.4 million in cash to fund purchases of property, plant and equipment, primarily related to the ongoing expansion of our manufacturing capacity in Ireland, the United Kingdom, Belgium and the United States, ongoing tenant improvements at our corporate headquarters facility in Cambridge, Massachusetts and expenditures related to other manufacturing expansions and relocations; and



•

$152.4 million in cash for acquisitions, including $47.5 million to acquire substantially all of the assets of Alfigen in February 2004 and $215.3 million to acquire certain of the pathology/oncology testing assets of IMPATH in May 2004, offset in part by $110.4 million of net cash acquired in connection with our acquisition of ILEX in December 2004.

        For 2003, acquisitions, capital expenditures and net purchases of investments accounted for the most significant cash outlays for investing activities. In 2003, we used:

•

$565.3 million in cash, net of $71.3 million of acquired cash, to acquire SangStat in September 2003;



•

$259.6 million in cash to fund purchases of property, plant and equipment, primarily related to the ongoing expansion of our manufacturing capacity in Ireland, the United Kingdom, Belgium and the United States, the ongoing build out of our corporate headquarters facility in Cambridge, Massachusetts and expenditures related to other manufacturing expansions and relocations.



•

$188.7 million in cash for the net purchase of investments, including investments in equity securities; and



•

$40.2 million in cash to fund our equity method investments and make milestone payments to equity investees.

        These uses of cash were offset, in part, by $34.5 million in cash generated by the sale to Teleflex of substantially all of the assets directly associated with our cardiac device business.

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Cash Flows from Financing Activities

        Our cash flows from financing activities are as follows (amounts in thousands):

			2004			2003
Cash flows from financing activities:
	Proceeds from issuance of common stock		$	140,311		$	116,459
	Proceeds from draw on credit facility			135,000			616,000
	Payment of debt and capital lease obligations			(650,818	)		(914,128	)
	Proceeds from issuance of debt			—			672,975
	Bank overdraft			15,434			(2,543	)
	Minority interest			5,424			3,060
	Other financing activities			922			2,233
		Cash flows from financing activities	$	(353,727	)	$	494,056

        In 2004, financing activities used $353.7 million of cash primarily due to $650.8 million of cash utilized to repay debt and capital lease obligations, including:

•

$575.0 million of cash used to redeem our 3% convertible subordinated debentures in June 2004;



•

$35.0 million of cash used to repay a portion of the principal balance drawn under our revolving credit facility;



•

$20.0 million to repay a note payable assumed in December 2004 in connection with our acquisition of ILEX; and



•

$11.3 million to repay a 6.5% convertible note and $5.0 million to repay other notes payable assumed in September 2003 in connection with our acquisition of SangStat.

This decrease was offset, in part, by $140.3 million of proceeds from the issuance of stock under our stock plans and $135.0 million drawn under our revolving credit facility that matures in December 2006.

        For 2003, financing activities generated $494.1 million of cash primarily due to $116.5 million of proceeds from the issuance of common stock under our stock plans and $673.0 million of proceeds, net of $17.0 million of debt issuance costs, from the issuance of $690.0 million in principal of 1.25% convertible senior notes. This source was offset by $298.1 million in cash utilized to repay debt and capital lease obligations, including $284.0 million used to repay the amounts outstanding under our revolving credit facility and $10.0 million used to pay the 6.9% convertible subordinated note assumed in connection with our acquisition of Biomatrix.

Revolving Credit Facility

        In December 2003, we entered into a three year, $350.0 million revolving credit facility maturing in December 2006. In June 2004, we drew down $135.0 million under this facility to maintain a certain level of cash balances. In September 2004, we repaid $25.0 million of the outstanding principal balance and in November we repaid $10.0 million. As of December 31, 2004, $100.0 million in principal remained outstanding under this credit facility. This amount is included in current portion of long-term debt, convertible notes and capital lease obligations in our consolidated balance sheet because we repaid the entire $100.0 million in principal outstanding under the credit facility in January 2005. Borrowings under this credit facility bear interest at LIBOR plus an applicable margin, which was 2.83% at December 31, 2004. The terms of our revolving credit facility include various covenants, including maximum leverage ratios. We currently are in compliance with these covenants.

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3% Convertible Subordinated Debentures

        On June 1, 2004, we redeemed our outstanding 3% convertible subordinated debentures for $580.1 million, which amount includes $575 million of principal, $4.3 million of premium and $0.8 million of accrued interest. In connection with the redemption, we also recorded a non-cash charge of $5.3 million to interest expense in our consolidated statements of operations in June 2004 to write off the unamortized debt fees incurred with the original issuance of these debentures.

Contractual Obligations

        As of December 31, 2004, we had committed to make the following payments under contractual obligations (amounts in millions):

	Payments Due by Period
Contractual Obligations
	Total		2005		2006		2007		2008			2009		After 2009
Long-term debt obligations(1)	$	790.4	$	100.4	$	—	$	—	$	690.0	(1)	$	—	$	—
Capital lease obligations(1)		249.5		42.1		15.2		15.2		15.2			15.2		146.6
Operating leases(1)		241.4		40.1		34.4		27.2		21.8			17.0		100.9
Interest obligations(2)		33.8		8.6		8.6		8.6		8.0			—		—
Unconditional purchase obligations		39.4		25.1		3.9		3.6		3.6			3.2		—
Capital commitments(3)		233.5		151.3		39.2		18.2		21.1			3.7		—
Research and development agreements(4)		192.6		29.9		23.6		29.3		29.3			29.3		51.2
Total contractual obligations	$	1,780.6	$	397.5	$	124.9	$	102.1	$	789.0		$	68.4	$	298.7

(1)

See Note M, "Long-Term Debt and Leases" to our consolidated financial statements for additional information on long-term debt and lease obligations.

(2)

Represents interest payment obligations related to our 1.25% convertible senior notes due December 2023.

(3)

Consists of contractual commitments to vendors that we have entered into as of December 31, 2004 for construction on our outstanding capital projects. Our estimated cost of completion for assets under construction as of December 31, 2004 is $233.5 million, as follows (amounts in millions):

Location		Cost to Complete at December 31, 2004
Geel, Belgium		$	122.5
Waterford, Ireland			14.9
Waltham, Massachusetts, U.S.			32.4
Allston, Massachusetts, U.S.			12.7
Other			51.0
	Total estimated cost to complete	$	233.5

(4)

From time to time, we enter into agreements with third parties to obtain access to scientific expertise or technology that we do not already have. These agreements frequently require that we pay our licensor or collaborator a technology access fee, milestone payments upon the occurrence of certain events, and/or royalties on sales of products that utilize the licensed technology or arise out of the collaborative research. In addition, these agreements may call for us to fund research activities not being performed by us. The amounts indicated on the research and development agreements line of the contractual obligations table above represent committed funding obligations to our key collaborators under our significant development programs. Should we terminate any of our license or collaboration agreements, the funding commitments contained within them would expire. In addition, the actual amounts that we pay our licensors and collaborators will depend on numerous factors outside of our control, including the success of our preclinical and clinical development efforts with respect to the products being developed under these agreements, the content and timing of decisions made by the USPTO, the FDA and other regulatory authorities, the existence and scope of third party intellectual property, the reimbursement and competitive landscape around these products, and other factors described under the heading "Factors Affecting Future Operating Results" below.

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Financial Position

        We believe that our available cash, investments and cash flows from operations will be sufficient to fund our planned operations and capital requirements for the foreseeable future. Although we currently have substantial cash resources and positive cash flow, we intend to use substantial portions of our available cash for:

•

product development and marketing;



•

business combinations and other strategic business initiatives;



•

expanding existing and constructing new facilities;



•

expanding staff; and



•

working capital, including satisfaction of our obligations under capital and operating leases.

        Our cash reserves may be further reduced to pay principal and interest on outstanding debt, including the $100.0 million in principal outstanding under our revolving credit facility and our $690.0 million in principal of 1.25% convertible senior notes due December 1, 2023. The notes are initially convertible into Genzyme Stock at a conversion price of approximately $71.24 per share. Holders of the notes may require us to repurchase all or any part of the notes for cash, common stock, or a combination, at our option, on December 1, 2008, 2013 or 2018, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest through the date prior to the date of repurchase. Additionally, upon a change of control, each holder may require us to repurchase for cash at 100% of the principal amount of the notes plus accrued interest, all or a portion of the holder's notes. On or after December 1, 2008, we may redeem for cash at 100% of the principal amount of the notes plus accrued interest, all or part of the notes that have not been previously converted or repurchased.

        In addition, we have several outstanding legal proceedings. Involvement in investigations and litigation can be expensive and a court may ultimately require that we pay expenses and damages. As a result of legal proceedings, we also may be required to pay fees to a holder of proprietary rights in order to continue certain operations. We have provided you detail on certain of these legal proceedings in the notes to our consolidated financial statements.

        To satisfy these and other commitments, we may have to obtain additional financing. We cannot guarantee that we will be able to obtain any additional financing, extend any existing financing arrangement, or obtain either on favorable terms.

Off-Balance Sheet Arrangements

        We do not use special purpose entities or other off-balance sheet financing arrangements. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance and have joint ventures and certain other arrangements that involve research, development, and the commercialization of products resulting from the arrangements. Entities falling within the scope of FIN 46 are included in our consolidated results if we qualify as the primary beneficiary. Entities not subject to consolidation under FIN 46 are accounted for under the equity method of accounting if our ownership percentage exceeds 20% or if we exercise significant influence over the entity. We account for our portion of the losses of these entities in the line item "Equity in loss of equity method investments" in our statements of operations.

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Related Party Relationships

        The table below describes our significant related party relationships as of December 31, 2004. This information is taken from questionnaires that our directors and senior executives are asked to complete on an annual basis. We have not undertaken to independently confirm the accuracy of this information.

				Officer & Director Ownership in and Compensation from Related Entity
Company		Affiliation with Genzyme	Officers & Directors Relationship
				Stock Shares	Stock Options	2004 Cash Compensation
ABIOMED, Inc.	-Cost method investment		Henri A. Termeer, Genzyme Chairman, President and Chief Executive Officer, is a director of ABIOMED	29,551	53,000	$	22,200
Biogen IDEC Inc.	-Distribution arrangement for Avonex		Mark R. Bamforth, Genzyme officer, is a passive investor in Biogen IDEC Inc.	—	—		—
			C. Ann Merrifield, Genzyme officer, is a passive investor in Biogen IDEC Inc.	—	—		—
BioMarin Pharmaceutical Inc.	-Cost method investment - -Joint venture partner in     BioMarin/Genzyme LLC		None	—	—		—
Caduceus Private Investments II, L.P.	-Cost method investment		None	—	—		—
Cambridge Antibody Technology Group plc	-Cost method investment - -Collaboration partner		Mark. R. Bamforth, Genzyme officer, is a passive investor in CAT	—	—		—
Cortical Pty Ltd.	-Cost method investment - -Collaboration partner		None	—	—		—
Dyax Corporation	- -Cost method investment - -Joint venture partner with     Genzyme in     Dyax-Genzyme LLC		Henri A. Termeer, Genzyme Chairman, President and Chief Executive Officer, is a former strategic advisory committee member	2,649	—		—
			Henry E. Blair, Genzyme director and co-founder, is the Chairman, President and Chief Executive Officer of Dyax(1)	124,953	517,300		—
			Constantine E. Anagnostopoulos, Genzyme director, is also a director of Dyax	13,585	41,060	$	21,875
			Charles L. Cooney, Genzyme director, is a former strategic advisory committee member	—	18,255		—
			Mark R. Bamforth, Genzyme officer, is a passive investor in Dyax	1,000	—		—
			Peter Wirth, Genzyme officer, is a former strategic advisory committee member	9,780	—		—
			The wife of Donald E. Pogorzelski, Genzyme officer, is a passive investor in Dyax	5,000	—		—

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Excigen, Inc.	-Collaboration partner	Earl M. Collier, Jr. and James A. Geraghty, both Genzyme officers, are directors of Excigen	—	—		—
GTC Biotherapeutics, Inc.	-Cost method investment	Henri A. Termeer, Genzyme Chairman, President and Chief Executive Officer is a former director of GTC	9,500	50,500
		Henry E. Blair, Genzyme director and co-founder, is a former director of GTC	1,530	29,500		—
		Charles L. Cooney, Genzyme director, is a member of the strategic advisory board for GTC	—	3,000		—
		James A. Geraghty, Genzyme officer, is a director of GTC	51,791	100,000	$	12,000
		Earl M. Collier, Jr., Genzyme officer, is a passive investor in GTC	1,000
		Richard H. Douglas, Genzyme officer, is a passive investor in GTC	180	—		—
		Peter Wirth, Genzyme officer(2)	—	2,000		—
MacroGenics, Inc.	-Cost method investment	None	—	—		—
	-Collaboration partner		—	—
Medtronic, Inc.	-Joint venture partner with Genzyme in MG Biotherapeutics LLC	Gail K. Boudreaux, Genzyme director, is a passive investor in Medtronic	67	—		—
		Earl M. Collier, Jr., Genzyme officer, is a passive investor in Medtronic	1,000	—		—
		Elliott D. Hillback, Genzyme officer, is a passive investor in Medtronic	1,000	—		—
		Evan M. Lebson, Genzyme officer, is a passive investor in Medtronic	100	—		—
		Senator Connie Mack III, Genzyme director, is a passive investor in Medtronic	95	—		—
MPM BioVentures III, Q.P., L.P.	-Cost method investment	MPM had invested in Peptimmune, Inc.	—	—		—
Myosix SA	-Consolidated investment - -Collaboration partner	Earl M. Collier, Jr. and James A. Geraghty, both Genzyme officers, are directors of Myosix	—	—		—

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Oxford Bioscience Partners IV, L.P.	-Cost method investment	Peter Wirth, Genzyme officer, is a limited partner in the MRNA Fund II, L.P. and has a made a $100,000 capital commitment to the partnership	—	—		—
		Alison Lawton, Genzyme officer, is a limited partner and has made a $50,000 capital commitment to the partnership	—	—		—
Peptimmune	-Equity method investment - -Service agreements	Robert J. Carpenter, Genzyme director, is the Chairman of Peptimmune *  Series B preferred stock **  Common stock	119,047* 1,000,000**	1,050,000	$	258,671
ProQuest Investment II, L.P.	-Cost method investment	None	—	—		—
Therapeutic Human Polyclonals, Inc.	-Equity method investment	James A. Geraghty, Genzyme officer, is a director of THP	—	—		—
Theravance, Inc.	-Cost method investment	Elliott D. Hillback Genzyme officer, is a passive investor in Theravance	800	—		—
ViaCell, Inc.	-Cost method investment - -Research agreement	None	—	—		—
Wyeth Laboratories, Inc.	-Distribution arrangement for Synvisc through 2004	Earl M. Collier, Jr., Genzyme officer, is a passive investor in Wyeth	—	—		—
		Zoltan A. Csimma, Genzyme officer, is a former employee of Wyeth. His spouse is a current employee of Wyeth. Totals exclude options and compensation of spouse.	1,442	60,000		—

(1)

Mr. Blair's 2004 compensation from Dyax can be found in Dyax's 2005 proxy statement.

(2)

Mr. Wirth received these stock options in 1998 when Genzyme was affiliated with GTC.

Recent Accounting Pronouncements

        EITF Issue No. 03-6,"Participating Securities and the Two-Class Method Under FASB Statement No. 128."    In April 2004, the EITF issued Statement No. 03-6, "Participating Securities and the Two-Class Method Under FASB Statement No. 128, Earnings Per Share." EITF 03-6 addresses a number of questions regarding the computation of earnings per share by a company that has issued securities other than common stock that contractually entitle the holder to the right to participate in dividends when, and if, declared. The issue also provides further guidance in applying the two-class method of calculating earnings per share, clarifying the definition of a participating security and how to apply the two-class method. EITF 03-6 was effective for fiscal periods beginning after March 31, 2004 and was required to be retroactively applied. We evaluated the terms of our convertible notes and debentures and determined that none of these instruments qualified as participating securities under the provisions of EITF 03-6. As a result, the adoption of EITF 03-6 had no effect on our earnings per share for the years ended December 31, 2004 and 2003.

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        EITF Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share."    In September 2004, the EITF reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share." EITF 04-8 requires that all contingently convertible debt instruments be included in diluted earnings per share using the if-converted method, regardless of whether the market price trigger (or other contingent feature) has been met. EITF 04-8 is effective for reporting periods ending after December 15, 2004 and requires that prior period earnings per share amounts presented for comparative purposes be restated. Under the provisions of EITF 04-8, the $690.0 million in principal under our 1.25% convertible senior notes, which represent 9.7 million potential shares of common stock, will be included in the calculation of diluted earnings per share using the if-converted method regardless of whether or not the contingent requirements have been met for conversion to common stock. We adopted EITF 04-8 during the fourth quarter of 2004, and have determined that the adoption of EITF 04-8 has not had a significant impact on prior periods' earnings per share calculations due to the fact that the Notes were outstanding for only a portion of the month in 2004.

        EITF Issue No. 04-10, "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds."    In September 2004, the EITF reached a consensus on Issue No. 04-10, "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds." EITF 04-10 requires that operating segments that do not meet the quantitative thresholds can be aggregated to produce a reporting segment if: (i) the aggregation is consistent with the objective and basic principles of SFAS No. 131, "Segment Reporting"; (ii) the segments have similar economic characteristics; and (iii) the segments have a majority of other aggregation criteria, such as similar products and services, production processes, types of customers, distribution methods and regulatory environment. The consensus on EITF 04-10 originally was effective for fiscal years ended after October 13, 2004. Concurrently, the FASB staff began drafting a proposed FASB Staff Position, or FSP, to provide guidance in determining whether two or more operating segments have similar economic characteristics. Since the guidance in EITF 04-10 and the proposed FSP are interrelated, the effective date of Issue 04-10 has been postponed to coincide with the effective date of the FSP. In March 2005, the FASB released for public comment proposed FSP No. FAS 131-a, "Determining Whether Operating Segments Have 'Similar Economic Characteristics' under Paragraph 17 of FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information." The proposed FSP provides additional guidance on how to determine whether two or more of a company's operating segments have similar economic characteristics when assessing whether those operating segments may be aggregated into a single operating segment. The proposed FSP indicates that (1) both quantitative and qualitative factors should be considered in determining whether the economic characteristics of two or more operating segments are similar and (2) the factors that a company should consider in making this assessment should be based on the factors that the company's chief operating decision maker uses in allocating resources to the individual segments. We are monitoring developments related to EITF 04-10 and proposed FSP No. FAS 131-a and will adopt the final standards, if any, upon issuance.

        SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4."    In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials should be recognized as current period charges in all circumstances. SFAS No. 151 will be effective for us beginning January 1, 2006. We do not expect the adoption of SFAS No. 151 to have a material effect on our consolidated financial statements.

        SFAS No. 123R, "Share-Based Payment, an amendment of FASB Statement Nos. 123 and 95"    In December 2004, the FASB issued a revision to SFAS 123, also known as SFAS 123R, that amends existing accounting pronouncements for share-based payment transactions in which an enterprise receives employee and certain non-employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that

F-57

may be settled by the issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based compensation transactions using APB 25 and generally requires such transactions be accounted for using a fair-value-based method. SFAS 123R's effective date would be applicable for awards that are granted, modified, become vested, or settled in cash in interim or annual periods beginning after June 15, 2005. SFAS 123R includes three transition methods: one that provides for prospective application and two that provide for retrospective application. We intend to adopt SFAS 123R prospectively commencing in the third quarter of the fiscal year ending December 31, 2005. We expect that the adoption of SFAS 123R will cause us to record, as expense each quarter, a non-cash accounting charge approximating the fair value of such share based compensation meeting the criteria outlined in the provisions of SFAS 123R.

Market Risk

        We are exposed to potential loss from financial market risks that may occur as a result of changes in interest rates, equity prices and foreign currency exchange rates. At December 31, 2004, we held various derivative contracts in the form of foreign exchange forwards and an interest rate swap. The derivatives contain no leverage or option features. We also held a number of other financial instruments, including investments in marketable securities, and had balances outstanding under several debt securities.

Interest Rate Risk

        We are exposed to potential loss due to changes in interest rates. The principal interest rate exposure is to changes in U.S. interest rates. Instruments with interest rate risk include short-term and long-term investments in fixed income securities. Other exposures with interest rate risk include fixed rate convertible debt, a fixed rate interest rate swap and fixed rate debt. To estimate the potential loss due to changes in interest rates, we performed a sensitivity analysis using the instantaneous adverse change in interest rates of 100 basis points across the yield curve.

        We used the following assumptions in preparing the sensitivity analysis:

•

convertible bonds that are "in-the-money" at year end are considered equity securities and are excluded;



•

convertible bonds that are "out-of-the-money" at year end are analyzed by taking into account both fixed income and equity components; and



•

bonds will mature on the first available date.

        On this basis, we estimate the potential loss in fair value from changes in interest rates to be $17.6 million, with fair value of losses on our debt instruments partially offset by the fair value of gains on our investment portfolio.

F-58

Foreign Exchange Risk

        As a result of our worldwide operations, we may face exposure to adverse movements in foreign currency exchange rates, primarily to the Euro, British pounds and Japanese yen. These exposures are reflected in market risk sensitive instruments, including foreign currency receivables and payables, foreign exchange forward contracts and foreign equity holdings.

        Taking these variances into account, as of December 31, 2004, by applying a 10% unfavorable change in exchange rates, we estimated the potential impact in fair value of our foreign exchange exposure to be $2.6 million at December 31, 2004.

Equity Price Risk

        We hold investments in a limited number of U.S. and European equity securities. We estimated the potential loss in fair value due to a 10% decrease in equity prices of each security held at year-end to be $11.8 million. This estimate assumes no change in foreign exchange rates from year-end spot rates and excludes any potential risk associated with securities that do not have readily determinable market value.

Factors Affecting Future Operating Results

        Our future operating results could differ materially from the results described in this report due to the risks and uncertainties related to our business, including those discussed below.

Our financial results are highly dependent on sales of Cerezyme.

        We generate a significant portion of our revenue from sales of Cerezyme, our enzyme-replacement product for patients with Gaucher disease. Sales of Cerezyme totaled $839.4 million for the year ended December 31, 2004, representing approximately 42% of our consolidated product revenue for 2004. Because our business is highly dependent on Cerezyme, negative trends in revenue from this product could have a significant adverse effect on our operations and cause the value of our securities to decline substantially. We will lose revenue if alternative treatments gain commercial acceptance, if our marketing activities are restricted, or if reimbursement is limited. In addition, the patient population with Gaucher disease is not large. Because a significant percentage of that population already uses Cerezyme, opportunities for future sales growth are constrained. Furthermore, changes in the methods for treating patients with Gaucher disease, including treatment protocols that combine Cerezyme with other therapeutic products or reduce the amount of Cerezyme prescribed, could limit growth, or result in a decline, in Cerezyme sales.

If we fail to increase sales of several products and services, we will not meet our financial goals.

        Over the next few years, our success will depend substantially on our ability to increase revenue from many different products and services. The products include Cerezyme, Renagel, Synvisc, Thymoglobulin, Thyrogen, Clolar, Campath and diagnostic testing services. Our ability to increase sales will depend on a number of factors, including:

•

acceptance by the medical community of each product or service;



•

the availability of competing treatments that are deemed more efficacious, more convenient to use, or more cost effective;



•

our ability, and the ability of our collaborators, to efficiently manufacture sufficient quantities of each product to meet demand and to do so in a cost efficient manner;

F-59

•

regulation by the U.S. Food and Drug Administration, commonly referred to as the FDA, and the European Agency for the Evaluation of Medicinal Products, or EMEA, and other regulatory authorities;



•

the scope of the labeling approved by regulatory authorities for each product and competitive products;



•

the effectiveness of our sales force;



•

the extent of coverage, pricing and level of reimbursement from governmental agencies and third party payors; and



•

the size of the patient population for each product or service.

        Part of our growth strategy involves conducting additional clinical trials to support approval of expanded uses of some of our products and pursuing marketing approval for our products in new jurisdictions. With Synvisc, for example, we are pursuing marketing approval in Japan and are seeking to expand approval in the United States to cover use as a treatment of pain from osteoarthritis in the hip. The success of this component of our growth strategy will depend on the content and timing of our submissions to regulatory authorities and whether and when those authorities determine to grant approvals.

        Because the healthcare industry is extremely competitive and regulatory requirements are rigorous, we spend substantial funds marketing our products and attempting to expand approved uses for them. These expenditures depress near-term profitability, with no assurance that the expenditures will generate future profits that justify the expenditures.

Our future success will depend on our ability to effectively develop and market our products against those of our competitors.

        The human healthcare products and services industry is extremely competitive. Other organizations, including pharmaceutical, biotechnology, device and diagnostic testing companies, have developed and are developing products and services to compete with our products, services, and product candidates. If doctors, patients or payors prefer these competitive products or these competitive products have superior safety, efficacy, pricing or reimbursement characteristics, we will have difficulty maintaining or increasing the sales of our products.

        Celltech Group plc and Actelion Ltd. have developed Zavesca®, a small molecule drug candidate for the treatment of Gaucher disease, the disease addressed by Cerezyme. Zavesca has been approved by both the FDA and the EMEA as an oral therapy for use in patients with mild to moderate Type 1 Gaucher disease for whom enzyme replacement is unsuitable. Teva Pharmaceuticals Industries Ltd., a licensee of Celltech, has received marketing approval of Zavesca in Israel. In addition, Transkaryotic Therapies Inc. (TKT) is conducting a Phase 1/2 clinical trial for its gene-activated glucocerebrosidase program, also to treat Gaucher disease.

        Nabi Biopharmaceuticals is currently marketing PhosLo®, a calcium based phosphate binder. Like Renagel, PhosLo is approved for the control of elevated phosphate levels in patients with end-stage kidney failure. In addition, Shire Pharmaceuticals Group plc recently received FDA approval for Fosrenol®, a non-calcium based phosphate binder, and has filed for marketing approval of Fosrenol in the European Union and Canada. Renagel also competes with over-the-counter calcium carbonate products such as TUMS®.

        Outside the United States, TKT is marketing a competitive enzyme replacement therapy for Fabry disease, the disease addressed by Fabrazyme. In addition, while Fabrazyme has received Orphan Drug designation, which provides us with seven years of market exclusivity for the product in the United

F-60

States, other companies may seek to overcome our market exclusivity and, if successful, compete with Fabrazyme in the United States.

        Several companies market products that, like Thymoglobulin and Lymphoglobuline, are used for the prevention and treatment of acute rejection in renal transplant. These products include Novartis AG's Simulect®, Pfizer Inc.'s ATGAM®, Ortho Biotech's Orthoclone OKT®3, Fresenius Biotech GmbH's ATG-Fresenius S® and the Roche Group's Zenapax®. Competition in the acute transplant rejection market largely is driven by product efficacy due to the potential loss of transplanted organs as the result of an acute organ rejection episode.

        Current competition for Synvisc includes Hyalgan®, produced by Fidia S.p.A. and marketed in the United States by Sanofi-Synthelabo; Orthovisc®, produced and marketed outside of the United States by Anika Therapeutics, Inc. and marketed in the United States by Ortho Biotech; Artz®, a product manufactured by Seikagaku Kogyo that is sold in Japan by Kaken Pharmaceutical Co. and in the United States by Smith & Nephew Orthopaedics under the name Supartz®; a product owned and manufactured by Savient Pharmaceuticals, Inc., which is marketed under the name Nuflexxa™ in the United States and Euflexxa™ in Europe; and Durolane®, manufactured by Q-Med AB. We are also aware of other directly competitive products are under development. Furthermore, several companies market products designed to relieve the pain associated with osteoarthritis. Synvisc will have difficulty competing with any of these products to the extent the competitive products are considered more efficacious, less burdensome to administer or more cost-effective.

        The examples above are illustrative. Almost all of our products face competition. Furthermore, the field of biotechnology is characterized by significant and rapid technological change. Discoveries by others may make our products or services obsolete. For example, competitors may develop approaches to treating lysosomal storage disorders (LSDs) that are more effective or less expensive than our products and product candidates. Because a significant portion of our revenue is derived from products that address this class of diseases and a substantial portion of our expenditures is devoted to developing new therapies for this class of diseases, such a development would have a material negative impact on our operations. Furthermore, our recent acquisition of ILEX Oncology, Inc. and certain of the pathology/oncology testing assets of IMPATH Inc., reflect our commitment to the oncology area. Many pharmaceutical and biotechnology companies are pursuing programs in this area, and these organizations may develop approaches that are superior to ours.

If we fail to obtain adequate levels of reimbursement for our products from third party payors, the commercial potential of our products will be significantly limited.

        A substantial portion of our domestic and international revenue comes from payments by third party payors, including government health administration authorities and private health insurers. Governments and other third party payors may not provide adequate insurance coverage or reimbursement for our products and services, which would impair our financial results.

        Third party payors are increasingly scrutinizing pharmaceutical budgets and healthcare expenses and are attempting to contain healthcare costs by:

•

challenging the prices charged for healthcare products and services;



•

limiting both the coverage and the amount of reimbursement for new therapeutic products;



•

limiting coverage for treatment of a particular patient to a maximum dollar amount or specified period of time;



•

denying or limiting coverage for products that are approved by the FDA or other governmental regulatory bodies but are considered experimental or investigational by third party payors; and

F-61

•

refusing in some cases to provide coverage when an approved product is used for disease indications in a way that has not received FDA or other applicable marketing approval.

        Attempts by third party payors to reduce costs in any of these ways could decrease demand for our products. In addition, in certain countries, including countries in the European Union and Canada, the coverage of prescription drugs, the pricing, and the level of reimbursement are subject to governmental control, and we may therefore be unable to negotiate coverage, pricing and/or reimbursement on terms that are favorable to us. Government health administration authorities may also rely on analyses of the cost-effectiveness of certain therapeutic products in determining whether to provide reimbursement for such products. Our ability to obtain satisfactory pricing and reimbursement may depend in part on whether our products, the cost of some of which are high in comparison to other therapeutic products, are viewed as cost-effective.

        Furthermore, legislatures, including the U.S. Congress, occasionally discuss implementing broad-based measures to contain healthcare costs. If third party reimbursement is further constrained, or if legislation is passed to contain healthcare costs, our profitability and financial condition will suffer. For example, the Medicare Prescription Drug, Improvement and Modernization Act (or the Medicare Modernization Act (MMA)) was enacted into law in December 2003. Reimbursement changes resulting from the MMA may negatively affect product sales of some of our marketed products. Previously, the "average wholesale price" (AWP) mechanism was the basis of Medicare Part B payment for physician-administered drugs and biologics. Effective January 1, 2005, this changed to an "average sales price" (ASP) methodology under the MMA. Under the new ASP methodology, Thyrogen, Synvisc and our LSD products are being reimbursed under a new Medicare Part B system that reimburses each product at 106% of its ASP (sometimes referred to as "ASP + 6%"). As a result, reimbursement rates for these products may be lower than 2004 reimbursement rates, in particular, because the ASP methodology deducts sales incentives offered to healthcare providers from the sale prices used to calculate ASP, a deduction that was not made to AWP. Under the MMA, Medicare coverage for Renagel will be available for the first time beginning in 2006. Medicare Part D, which applies to Renagel, will be administered by private vendors under contract with the U.S. government. Each vendor will establish its own Part D formulary for prescription drug coverage and pricing for the first time during 2005, and we are therefore unable to predict how many vendors will cover Renagel and on what terms.

Guidelines and recommendations published by various organizations can reduce the use of our products.

        Professional societies, practice management groups, private health/science foundations, and organizations involved in various diseases may publish guidelines or recommendations to the health care and patient communities from time to time. Recommendations of government agencies or these other groups/organizations may relate to such matters as usage, dosage, route of administration, and use of related therapies. Organizations like these have in the past made recommendations about our products and products of our competitors. Recommendations or guidelines that are followed by patients and health care providers could result in decreased use of our products. In addition, the perception by the investment community or shareholders that recommendations or guidelines will result in decreased use of our products could adversely affect prevailing market prices for our common stock. Our success also depends on our ability to educate patients and healthcare providers about our products and their uses. If these education efforts are not effective, then we may not be able to increase the sales of our existing products or successfully introduce new products to the market.

We may encounter substantial difficulties managing our growth.

        Several risks are inherent to our plans to grow our business. Achieving our goals will require substantial investments in research and development, sales and marketing, and facilities. For example, we have spent considerable resources building out and seeking regulatory approvals for our

F-62

manufacturing plants. We cannot assure you that these facilities will prove sufficient to meet demand for our products or that we will not have excess capacity at these facilities. In addition, building our facilities is expensive, and our ability to recover these costs will depend on increased revenue from the products produced at the facilities.

        We produce relatively small amounts of material for research and development activities and clinical trials. Even if a product candidate receives all necessary approvals for commercialization, we may not be able to successfully scale up production of the product material at a reasonable cost or at all.

        If we are able to grow sales of our products, we may have difficulty managing inventory levels. Marketing new therapies is a complicated process, and gauging future demand is difficult. With Renagel, for example, we have encountered problems in the past managing inventory levels at wholesalers. Comparable problems may arise with our other products, particularly during market introduction.

        Growth in our business may also contribute to fluctuations in our operating results, which may cause the price of our securities to decline. Our revenue may fluctuate due to many factors, including changes in:

•

wholesaler buying patterns;



•

reimbursement rates;



•

physician prescribing habits;



•

the availability or pricing of competitive products; and



•

currency exchange rates.

        We may also experience fluctuations in our quarterly results due to price changes and sales incentives. For example, purchasers of our products, particularly wholesalers, may increase purchase orders in anticipation of a price increase and reduce order levels following the price increase. We occasionally offer sales incentives and promotional discounts on some of our products and services that could have a similar impact. In addition, some of our products are subject to seasonal fluctuation in demand.

        Our operating results and financial position also may be impacted when we attempt to grow through business combination transactions. We may encounter problems assimilating operations acquired in these transactions. Business combination transactions often entail the assumption of unknown liabilities, the loss of key employees, and the diversion of management attention. Furthermore, in any business combination, including our recent acquisitions of ILEX Oncology, Inc. and certain of the pathology/oncology testing assets of IMPATH Inc., there is a substantial risk that we will fail to realize the benefits we anticipate when we decide to undertake the transaction. We have in the past taken significant charges for impairment of goodwill and for impaired assets acquired in business combination transactions. We may be required to take similar charges in the future.

Manufacturing problems may cause product launch delays, inventory shortages, recalls and unanticipated costs.

        In order to generate revenue from our approved products, we must be able to produce sufficient quantities of the products. Many of our products are difficult to manufacture. Our products that are biologics, for example, require product characterization steps that are more onerous than those required for most chemical pharmaceuticals. Accordingly, we employ multiple steps to attempt to control the manufacturing processes. Minor deviations in these manufacturing processes could result in unacceptable changes in the products that result in lot failures, product recalls, or product liability.

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        Certain of the raw materials required in the commercial manufacturing and the formulation of our products are derived from biological sources, including mammalian sources and human plasma. Such raw materials may be subject to contamination or recall. Also, some countries in which we market our products may restrict the use of certain biologically derived substances in the manufacture of drugs. A material shortage, contamination, recall, or restriction of the use of certain biologically derived substances in the manufacture of our products could adversely impact or disrupt our commercial manufacturing of our products or could result in a mandated withdrawal of our products from the market. This too, in turn, could adversely affect our ability to satisfy demand for our products, which could materially and adversely affect our operating results.

        In addition, we may only be able to produce certain of our products at a very limited number of facilities. For example, we manufacture all of our Cerezyme and a portion of our Fabrazyme products at our facility in Allston, Massachusetts. A number of factors could cause production interruptions at our facilities, including equipment malfunctions, labor problems, natural disasters, power outages, terrorist activities, or disruptions in the operations of our suppliers.

        Manufacturing is also subject to extensive government regulation. Regulatory authorities must approve the facilities in which human healthcare products are produced. Any third party we use to fill-finish or package our products to be sold in the U.S. must also be licensed by the FDA. As a result, third party providers may not be readily available on a timely basis. In addition, facilities are subject to ongoing inspections and minor changes in manufacturing processes may require additional regulatory approvals, either of which could cause us to incur significant additional costs and lose revenue.

We rely on third parties to provide us with materials and services in connection with the manufacture of our products.

        Certain materials necessary for commercial production of our products, including specialty chemicals and components necessary for manufacture, fill-finish and packaging, are provided by unaffiliated third-party suppliers. In some cases, such materials are specifically cited in our drug application with the FDA so that they must be obtained from that specific source and could not be obtained from another supplier unless and until the FDA approved that other supplier. In addition, there may only be one available source for a particular chemical or component. For example, we acquire polyalylamine (PAA), used in the manufacture of Renagel and Welchol, from Cambrex Charles City, Inc., the only source for this material currently qualified in our FDA drug applications for these products. Our suppliers may also be subject to FDA regulations regarding manufacturing practices. We may be unable to manufacture our products in a timely manner or at all if these third-party suppliers were to cease or interrupt production or otherwise fail to supply these materials or products to us for any reason, including due to regulatory requirements or actions, adverse financial developments at or affecting the supplier, or labor shortages or disputes.

        We also source some of our fill-finish, packaging and distribution operations to third-party contractors. The manufacture of products, fill-finish, packaging and distribution of our products requires successful coordination among these third-party providers and Genzyme. Our inability to coordinate these efforts, the lack of capacity available at the third-party contractor or any other problems with the operations of these third-party contractors could require us to delay shipment of saleable products, recall products previously shipped or could impair our ability to supply products at all. This could increase our costs, cause us to lose revenue or market share and damage our reputation.

If our strategic alliances are unsuccessful, our operating results will be negatively impacted.

        Several of our strategic initiatives involve alliances with other biotechnology and pharmaceutical companies, including a joint venture with BioMarin Pharmaceutical Inc. with respect to Aldurazyme. The success of this and similar arrangements is largely dependent on technology and other intellectual

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property contributed by our strategic partners or the resources, efforts, and skills of our partners. Disputes and difficulties in such relationships are common, often due to conflicting priorities or conflicts of interest. Merger and acquisition activity may exacerbate these conflicts. The benefits of these alliances are reduced or eliminated when strategic partners:

•

terminate the agreements or limit our access to the underlying intellectual property;



•

fail to devote financial or other resources to the alliances and thereby hinder or delay development, manufacturing or commercialization activities;



•

fail to successfully develop, manufacture or commercialize any products; or



•

fail to maintain the financial resources necessary to continue financing their portion of the development, manufacturing, or commercialization costs or their own operations.

        Furthermore, payments we make under these arrangements may exacerbate fluctuations in our financial results. In addition, under some of our strategic alliances, we make milestone payments well in advance of commercialization of products with no assurance that we will ever recoup these payments. We also may make equity investments in our strategic partners, as we did with Cambridge Antibody Technology Group plc and MacroGenics, Inc. in 2003. Our strategic equity investments are subject to market fluctuations, access to capital and other business events, such as initial public offerings, the completion of clinical trials and regulatory approvals, which can impact the value of these investments. As a result, if any of our strategic equity investments decline in value and remain below cost for an extended duration, we will incur financial statement charges related to the decline in value of that investment.

The development of new biotechnology products involves a lengthy and complex process, and we may be unable to commercialize any of the products we are currently developing.

        We have multiple products under development and devote considerable resources to research and development, including clinical trials. For example, we are currently conducting three clinical trials for Myozyme, an enzyme replacement therapy intended to treat Pompe disease, and we are spending considerable resources attempting to develop new treatments for Gaucher disease.

        Before we can commercialize our development-stage product candidates, we will need to:

•

conduct substantial research and development;



•

undertake preclinical and clinical testing;



•

develop and scale-up manufacturing processes; and



•

pursue regulatory approvals and, in some jurisdictions, pricing approvals.

        This process involves a high degree of risk and takes many years. Our product development efforts with respect to a product candidate may fail for many reasons, including:

•

failure of the product candidate in preclinical studies;



•

difficulty enrolling patients in clinical trials, particularly for disease indications with small populations;



•

patients exhibiting adverse reactions to the product candidate or indications or other safety concerns;



•

insufficient clinical trial data to support the effectiveness of the product candidate;



•

our inability to manufacture sufficient quantities of the product candidate for development or commercialization activities in a timely and cost-efficient manner; or

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•

our failure to obtain the required regulatory approvals for the product candidate or the facilities in which it is manufactured.

        Few research and development projects result in commercial products, and success in preclinical studies or early clinical trials often is not replicated in later studies. We may decide to abandon development of a product or service candidate at any time or we may be required to expend considerable resources repeating clinical trials or conducting additional trials, either of which would adversely impact possible revenue from those product candidates.

        Our efforts to expand the approved indications for our products and to gain marketing approval in new jurisdictions also may fail. These expansion efforts are subject to many of the risks associated with completely new products, and, accordingly, we may fail to recoup the investments we make pursuing these expansions.

Government regulation imposes significant costs and restrictions on the development and commercialization of our products and services.

        Our success will depend on our ability to satisfy regulatory requirements. We may not receive required regulatory approvals on a timely basis or at all. Government agencies heavily regulate the production and sale of healthcare products and the provision of healthcare services. In particular, the FDA and comparable agencies in foreign jurisdictions must approve human therapeutic and diagnostic products before they are marketed, as well as the facilities in which they are made. This approval process can involve lengthy and detailed laboratory and clinical testing, sampling activities and other costly and time-consuming procedures. Several biotechnology companies have failed to obtain regulatory approvals because regulatory agencies were not satisfied with the structure or conduct of clinical trials. Similar problems could delay or prevent us from obtaining approvals. Furthermore, regulatory authorities, including the FDA, may not agree with our interpretations of our clinical trial data, which could delay, limit or prevent regulatory approvals.

        Therapies that have received regulatory approval for commercial sale may continue to face regulatory difficulties. If we fail to comply with applicable regulatory requirements, regulatory authorities could take actions against us, including:

•

issuing warning letters;



•

issuing fines and other civil penalties;



•

suspending regulatory approvals;



•

refusing to approve pending applications or supplements to approved applications;



•

suspending product sales in the United States and/or exports from the United States;



•

mandating product recalls; and



•

seizing products.

        Furthermore, the FDA and comparable foreign regulatory agencies may require post-marketing clinical trials or patient outcome studies. We have agreed with the FDA, for example, to a number of post-marketing commitments as a condition to U.S. marketing approval for Fabrazyme and Aldurazyme. In addition, regulatory agencies subject a marketed therapy, its manufacturer and the manufacturer's facilities to continual review and periodic inspections. The discovery of previously unknown problems with a therapy or the facility used to produce the therapy could prompt a regulatory authority to impose restrictions on us, or could cause us to voluntarily adopt such restrictions, including withdrawal of one or more of our products or services from the market.

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        We believe some of our products are prescribed by physicians for uses not approved by the FDA or comparable regulatory agencies outside the U.S. Although physicians may lawfully prescribe pharmaceuticals products for such off-label uses, our promotion of off-label uses is unlawful. Some of our practices intended to make physicians aware of off-label uses of our products without engaging in off-label promotion could nonetheless be construed as off-label promotion. Although we have policies and procedures in place designed to help assure ongoing compliance with regulatory requirements regarding off-label promotion, some non-compliant actions may nonetheless occur. Regulatory authorities could take enforcement action against us if they believe we are promoting, or have promoted, our products for off-label use.

Legislative or regulatory changes may adversely impact our business.

        The FDA has designated some of our products, including Fabrazyme and Myozyme, as orphan drugs under the Orphan Drug Act. The Orphan Drug Act provides incentives to manufacturers to develop and market drugs for rare diseases, generally by entitling the first developer that receives FDA marketing approval for an orphan drug to a seven-year exclusive marketing period in the United States for that product. In the past Congress has considered legislation to change the Orphan Drug Act to shorten the period of automatic market exclusivity and to grant marketing rights to simultaneous developers of a drug. Legislation similar to the Orphan Drug Act has been enacted in other countries outside of the United States, including the European Union. The orphan legislation in the European Union is available for therapies addressing conditions that affect fewer than five out of 10,000 persons. The market exclusivity period is for ten years, although that period can be reduced to six years if, at the end of the fifth year, available evidence establishes that the product is sufficiently profitable not to justify maintenance of market exclusivity. If the Orphan Drug Act or other similar legislation is amended to reduce the protections afforded orphan drugs, any approved drugs for which we have been granted exclusive marketing rights may face increased competition, which may decrease the amount of revenue we receive from these products.

        In addition, the United States government and other governments have shown significant interest in pursuing healthcare reform. Any government-adopted reform measures could adversely impact:

•

the pricing of therapeutic products in the United States or internationally;



•

the ability of consumers residing in the United States to purchase therapeutic products that have been imported from manufacturers and distributors located outside of the United States; and



•

the amount of reimbursement available from governmental agencies or other third party payors.

        New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, which relate to health care availability, methods of delivery or payment for products and services, or sales, marketing or pricing may cause our revenue to decline, and we may need to revise our research and development programs.

Importation of products from Canada and other countries into the United States may lower the prices we receive for our products.

        In the United States and abroad, our products are subject to competition from lower-priced versions of our products and competing products from other countries where government price controls or other market dynamics result in lower prices. Our products that require a prescription in the United States may be available to consumers in markets such as Canada and Mexico without a prescription, which may cause consumers to further seek out these products in these lower priced markets. The ability of patients and other customers to obtain these lower priced imports has grown significantly as a result of the Internet, an expansion of pharmacies in Canada and elsewhere that target to American purchasers, the increase in U.S.-based businesses affiliated with Canadian pharmacies marketing to

F-67

American purchasers, and other factors. Most of these foreign imports are illegal under current U.S. law. However, the volume of imports continues to rise due to the limited enforcement resources of the FDA and the U.S. Customs Service, and there is increased political pressure to permit the imports as a mechanism for expanding access to lower priced medicines.

        The importation of lower-priced versions of our products into the United States and other markets adversely affects our profitability. This impact could become more significant in the future.

We may require significant additional financing, which may not be available to us on favorable terms, if at all.

        As of December 31, 2004, we had $1.1 billion in cash, cash equivalents and short- and long-term investments, excluding investments in equity securities.

        We intend to use substantial portions of our available cash for:

•

product development and marketing;



•

business combinations and other strategic business initiatives;



•

expanding existing and constructing additional facilities;



•

expanding staff; and



•

working capital, including satisfaction of our obligations under capital and operating leases.

        We may further reduce available cash reserves to pay principal and interest on outstanding debt, including our $690.0 million in principal of 1.25% convertible senior notes due December 2023.

        To satisfy our cash requirements, we may have to obtain additional financing. We may be unable to obtain any additional financing or extend any existing financing arrangements at all or on terms that we or our investors consider favorable.

We may fail to adequately protect our proprietary technology, which would allow competitors or others to take advantage of our research and development efforts.

        Our long-term success largely depends on our ability to market technologically competitive products. If we fail to obtain or maintain adequate intellectual property protection in the United States or abroad, we may not be able to prevent third parties from using our proprietary technologies. Our currently pending or future patent applications may not result in issued patents. Patent applications are confidential for 18 months following their filing, and because third parties may have filed patent applications for technology covered by our pending patent applications without us being aware of those applications, our patent applications may not have priority over patent applications of others. In addition, our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products, or provide us with any competitive advantage. If a third party initiates litigation regarding our patents, our collaborators' patents, or those patents for which we have license rights, and is successful, a court could declare our patents invalid or unenforceable or limit the scope of coverage of those patents.

        Governmental patent offices and courts have not consistently treated the breadth of claims allowed in biotechnology patents. If patent offices or the courts begin to allow or interpret claims more broadly, the incidence and cost of patent interference proceedings and the risk of infringement litigation will likely increase. On the other hand, if patent offices or the courts begin to allow or interpret claims more narrowly, the value of our proprietary rights may be reduced. Any changes in, or unexpected interpretations of, the patent laws may adversely affect our ability to enforce our patent position.

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        We also rely upon trade secrets, proprietary know-how, and continuing technological innovation to remain competitive. We attempt to protect this information with security measures, including the use of confidentiality agreements with our employees, consultants, and corporate collaborators. These individuals may breach these agreements and any remedies available to us may be insufficient to compensate our damages. Furthermore, our trade secrets, know-how and other technology may otherwise become known or be independently discovered by our competitors.

We may be required to license technology from competitors or others in order to develop and commercialize some of our products and services, and it is uncertain whether these licenses will be available.

        Third party patents may cover some of the products or services that we or our strategic partners are developing or producing. A patent is entitled to a presumption of validity, and, accordingly, we face significant hurdles in any challenge to a patent. In addition, even if we are successful in challenging the validity of a patent, the challenge itself may be expensive and require significant management attention.

        To the extent valid third party patent rights cover our products or services, we or our strategic collaborators would be required to seek licenses from the holders of these patents in order to manufacture, use, or sell these products and services, and payments under them would reduce our profits from these products. We may not be able to obtain these licenses on acceptable terms, or at all. If we fail to obtain a required license or are unable to alter the design of our technology to fall outside the scope of a third party patent, we may be unable to market some of our products and services, which would limit our profitability.

We may incur substantial costs as a result of litigation or other proceedings.

        A third party may sue us or one of our strategic collaborators for infringing the third party's patent or other intellectual property rights. Likewise, we or one of our strategic collaborators may sue to enforce intellectual property rights or to determine the scope and validity of third party proprietary rights. If we do not prevail in this type of litigation, we or our strategic collaborators may be required to:

•

pay monetary damages;



•

stop commercial activities relating to the affected products or services;



•

obtain a license in order to continue manufacturing or marketing the affected products or services; or



•

compete in the market with a substantially similar product.

        We are also currently involved in litigation matters and investigations that do not involve intellectual property claims and may be subject to additional actions in the future. For example, we are currently defending several lawsuits brought in connection with the elimination of our tracking stock in June 2003, some of which claim considerable damages. Also, the federal government, state governments and private payors are investigating and have begun to file actions against numerous pharmaceutical and biotechnology companies, including Genzyme, alleging that the companies have overstated prices in order to inflate reimbursement rates. Enforcement authorities also have instituted actions under health care "fraud and abuse" laws, including anti-kickback and false claims statutes. Moreover, individuals who use our products or services, including our diagnostic products and genetic testing services, sometimes bring product and professional liability claims against us or our subsidiaries.

        We have only limited amounts of insurance, which may not provide coverage to offset a negative judgment or a settlement payment. We may be unable to obtain additional insurance in the future, or

F-69

we may be unable to do so on acceptable terms. Any additional insurance we do obtain may not provide adequate coverage against any asserted claims.

        Regardless of merit or eventual outcome, investigations and litigations can result in:

•

diversion of management's time and attention;



•

expenditure of large amounts of cash on legal fees, expenses, and payment of damages;



•

limitations on our ability to continue some of our operations;



•

decreased demand for our products and services; and



•

injury to our reputation.

Our international sales and operations are subject to the economic, political, legal and business environments of the countries in which we do business and our failure to operate successfully or adapt to changes in these environments could cause our international sales and operations to be limited or disrupted.

        Our international operations accounted for approximately 45% of our consolidated product and service revenues for the year ended December 31, 2004. We expect that international product and service sales will continue to account for a significant percentage of our revenues for the foreseeable future. In addition, we have direct investments in a number of subsidiaries outside of the United States, primarily in the European Union, Latin America and Japan. Our international sales and operations could be limited or disrupted, and the value of our direct investments may be diminished, by any of the following:

•

economic problems that disrupt foreign healthcare payment systems;



•

fluctuations in currency exchange rates;



•

the imposition of governmental controls;



•

less favorable intellectual property or other applicable laws;



•

the inability to obtain any necessary foreign regulatory approvals of products in a timely manner;



•

import and export license requirements;



•

political instability;



•

terrorist activities and armed conflict;



•

restrictions on direct investments by foreign entities and trade restrictions;



•

changes in tax laws and tariffs;



•

difficulties in staffing and managing international operations; and



•

longer payment cycles.

        Our operations and marketing practices are also subject to regulation and scrutiny by the governments of the other countries in which we operate. In addition, the Foreign Corrupt Practices Act also prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. Failure to comply with domestic or foreign laws could result in various adverse consequences, including possible delay in approval or refusal to approve a product, recalls, seizures, withdrawal of an approved product from the market, and/or the imposition of civil or criminal sanctions.

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        A significant portion of our business is conducted in currencies other than our reporting currency, the U.S. Dollar. We recognize foreign currency gains or losses arising from our operations in the period in which we incur those gains or losses. As a result, currency fluctuations among the U.S. Dollar and the currencies in which we do business have caused foreign currency transaction gains and losses in the past and will likely do so in the future. Because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates, we may suffer significant foreign currency transaction losses in the future due to the effect of exchange rate fluctuations.

Our level of indebtedness may harm our financial condition and results of operations.

        At December 31, 2004, we had $790.4 million of outstanding indebtedness, excluding capital leases. We may incur additional indebtedness in the future. Our level of indebtedness will have several important effects on our future operations, including:

•

increasing our vulnerability to adverse changes in general economic and industry conditions; and



•

limiting our ability to obtain additional financing for capital expenditures, acquisitions, general corporate and other purposes.

        Our ability to make payments and interest on our indebtedness depends upon our future operating and financial performance.

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Management's Report on Internal Control Over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting refers to the process designed by, or under the supervision of, our chief executive officer and chief financial officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:

(1)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of assets;



(2)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and



(3)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

        Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.

        We have excluded the acquisition of certain assets of two business units of IMPATH and the acquisition of ILEX from our assessment of internal controls over financial reporting as of December 31, 2004 because they were acquired in purchase business combinations during 2004. The two acquired business units of IMPATH are a component of our Diagnostics/Genetics reporting segment and represent 1% and 3% respectively, of the consolidated assets and revenues as of and for the year ended December 31, 2004. ILEX, a wholly-owned subsidiary, represents 3% and 0%, respectively, of the consolidated assets and revenues as of and for the year ended December 31, 2004.

        Our management's assessment of the effectiveness of our internal controls over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included below.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Genzyme Corporation:

        We have completed an integrated audit of Genzyme Corporation's 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive income, of cash flows and of stockholders' equity present fairly, in all material respects, the financial position of Genzyme Corporation and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        As discussed in Note I to the consolidated financial statements, the Company changed its method for accounting for goodwill in 2002.

Internal control over financial reporting

        Also, in our opinion, management's assessment, included in the accompanying "Management's Report on Internal Control Over Financial Reporting," that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework issued by the COSO. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management's assessment and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

F-73

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        As described in "Management's Report on Internal Control Over Financial Reporting," management has excluded the acquisitions of IMPATH and ILEX Oncology, Inc. from its assessment of internal control over financial reporting as of December 31, 2004 because they were acquired by the Company in purchase business combinations during 2004. We have also excluded IMPATH and ILEX Oncology, Inc. from our audit of internal control over financial reporting. The two acquired business units of IMPATH, components of the Company's Diagnostic/Genetics reporting segment, represent 1% and 3%, respectively, of the consolidated assets and revenues as of and for the year ended December 31, 2004. ILEX Oncology, Inc., a wholly owned subsidiary of the Company, represents 3% and 0%, respectively, of the consolidated assets and revenues as of and for the year ended December 31, 2004.

/s/ Pricewaterhouse Coopers LLP

PricewaterhouseCoopers LLP
Boston, Massachusetts
March 14, 2005

F-74

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income

(Amounts in thousands)

				For the Years Ended December 31,
				2004			2003			2002
Revenues:
	Net product sales			$	1,976,191		$	1,563,509		$	1,199,617
	Net service sales				212,392			130,984			114,493
	Revenues from research and development contracts:
		Related parties			2,850			2,967			2,747
		Other			9,712			16,411			12,615
			Total revenues		2,201,145			1,713,871			1,329,472
Operating costs and expenses:
	Cost of products sold				448,442			399,961			309,634
	Cost of services sold				140,144			75,683			66,575
	Selling, general and administrative				599,388			519,977			438,035
	Research and development (including research and development related to contracts)				391,802			335,256			308,487
	Amortization of intangibles				109,473			80,257			70,278
	Purchase of in-process research and development				254,520			158,000			1,879
	Charge for impaired goodwill				—			102,792			—
	Charge for impaired asset				4,463			10,894			22,944
			Total operating costs and expenses		1,948,232			1,682,820			1,217,832
Operating income					252,913			31,051			111,640
Other income (expenses):
	Equity in loss of equity method investments				(15,624	)		(16,743	)		(16,858	)
	Minority interest				5,999			2,232			—
	Loss on investments in equity securities				(1,252	)		(1,201	)		(14,497	)
	Loss on sale of product line				—			(27,658	)		—
	Other				(357	)		959			40
	Investment income				24,244			43,015			51,038
	Interest expense				(38,227	)		(26,600	)		(27,152	)
			Total other income (expenses)		(25,217	)		(25,996	)		(7,429	)
	Income before income taxes				227,696			5,055			104,211
	Provision for income taxes				(141,169	)		(72,647	)		(19,015	)
	Net income (loss) before cumulative effect of change in accounting for goodwill				86,527			(67,592	)		85,196
	Cumulative effect of change in accounting for goodwill				—			—			(98,270	)
	Net income (loss)			$	86,527		$	(67,592	)	$	(13,074	)
Comprehensive income (loss), net of tax:
	Net income (loss)			$	86,527		$	(67,592	)	$	(13,074	)
	Other comprehensive income (loss), net of tax:
		Foreign currency translation adjustments			80,371			133,317			80,191
		Gain on affiliate sale of stock, net of tax			—			2,856			—
		Other			959			2,988			(3,564	)
		Unrealized gains (losses) on securities:
			Unrealized gains (losses) arising during the period		16,243			(3,878	)		(29,703	)
			Reclassification adjustment for (gains) losses included in net income (loss)		201			(3,129	)		9,565
			Unrealized gains (losses) on securities, net of tax		16,444			(7,007	)		(20,138	)
		Other comprehensive income			97,774			132,154			56,489
Comprehensive income				$	184,301		$	64,562		$	43,415

The accompanying notes are an integral part of these consolidated financial statements.

F-75

			For the Years Ended December 31,
			2004		2003			2002
Net income (loss) per share:
Allocated to Genzyme Stock (1):
	Genzyme General net income (loss)		$	86,527	$	82,143		$	150,731
	Tax benefit allocated from Genzyme Biosurgery			—		8,720			18,508
	Tax benefit allocated from Genzyme Molecular Oncology			—		3,420			9,287
	Net income allocated to Genzyme Stock		$	86,527	$	94,283		$	178,526
Net income per share of Genzyme Stock:
	Basic		$	0.38	$	0.43		$	0.83
	Diluted		$	0.37	$	0.42		$	0.81
Weighted average shares outstanding:
	Basic			228,175		219,376			214,038
	Diluted			234,318		225,976			219,388
Allocated to Biosurgery Stock (1):
	Genzyme Biosurgery net loss before cumulative effect of change in accounting for goodwill				$	(166,656	)	$	(79,322	)
	Cumulative effect of change in accounting for goodwill					—			(98,270	)
	Allocated tax benefit					14,005			9,706
	Net loss allocated to Biosurgery Stock				$	(152,651	)	$	(167,886	)
	Net loss per share of Biosurgery Stock—basic and diluted:
		Net loss before cumulative effect of change in accounting for goodwill			$	(3.76	)	$	(1.74	)
		Per share cumulative effect of change in accounting for goodwill				—			(2.46	)
	Net loss per share of Biosurgery Stock—basic and diluted				$	(3.76	)	$	(4.20	)
Weighted average shares outstanding						40,630			39,965
Allocated to Molecular Oncology Stock (1):
	Net loss allocated to Molecular Oncology Stock				$	(9,224	)	$	(23,714	)
	Net loss per share of Molecular Oncology Stock—basic and diluted				$	(0.54	)	$	(1.41	)
	Weighted average shares outstanding					16,958			16,827

(1)

Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those divisions and are not affected by the elimination of our tracking stock structure.

The accompanying notes are an integral part of these consolidated financial statements.

F-76

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except par value amounts)

			December 31,
			2004			2003
ASSETS
Current assets:
	Cash and cash equivalents		$	480,198		$	292,774
	Cash and cash equivalents—restricted			604			—
	Short-term investments			70,994			120,712
	Accounts receivable, net			546,613			397,439
	Inventories			293,658			267,472
	Prepaid expenses and other current assets			78,725			110,872
	Notes receivable—related party			2,399			—
	Deferred tax assets			160,438			133,707
		Total current assets		1,633,629			1,322,976
Property, plant and equipment, net				1,310,256			1,151,133
Long-term investments				528,262			813,974
Restricted investments				1,691			—
Notes receivable—related parties				9,491			12,318
Goodwill, net				1,290,916			621,947
Other intangible assets, net				1,069,399			895,844
Investments in equity securities				150,253			110,620
Other noncurrent assets				75,524			75,716
		Total assets	$	6,069,421		$	5,004,528
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	88,140		$	97,474
	Accrued expenses			394,143			267,304
	Deferred revenue and other income			12,612			6,837
	Current portion of long-term debt, convertible notes and capital lease obligations			129,503			20,410
		Total current liabilities		624,398			392,025
Long-term debt and capital lease obligations				120,991			150,349
Convertible notes and debentures				690,000			1,265,000
Deferred revenue—noncurrent				7,716			3,388
Deferred tax liabilities				225,850			205,923
Other noncurrent liabilities				20,310			51,431
		Total liabilities		1,689,265			2,068,116
Commitments and contingencies (Notes J, K, M, O)
Stockholders' equity:
	Preferred stock, $0.01 par value			—			—
	Common stock, $0.01 par value			2,491			2,247
	Additional paid-in capital			4,217,357			2,957,578
	Notes receivable from stockholders			(13,865	)		(13,285	)
	Accumulated earnings (deficit)			(112,033	)		(198,560	)
	Accumulated other comprehensive income			286,206			188,432
		Total stockholders' equity		4,380,156			2,936,412
		Total liabilities and stockholders' equity	$	6,069,421		$	5,004,528

The accompanying notes are an integral part of these consolidated financial statements.

F-77

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Amounts in thousands)

					For the Years Ended December 31,
					2004			2003			2002
Cash Flows from Operating Activities:
	Net income (loss)				$	86,527		$	(67,592	)	$	(13,074	)
	Reconciliation of net income (loss) to net cash from operating activities:
		Depreciation and amortization				205,114			160,459			134,000
		Non-cash compensation expense				10			592			1,335
		Provision for bad debts				12,249			2,865			8,029
		Charge for purchase of in-process research and development				254,520			158,000			1,879
		Charge for impairment of goodwill				—			102,792			—
		Charge for impaired assets				4,463			10,894			22,944
		Minority interest				(5,999	)		(2,232	)		—
		Equity in loss of equity method investments				15,624			16,743			16,858
		Loss on investments in equity securities				1,252			1,201			14,497
		Loss on sale of product line				—			27,658			—
		Write off of unamortized debt fees				5,329			—			—
		Deferred income tax provision				45,047			7,001			10,670
		Tax benefit from employee stock options				49,974			57,536			8,410
		Cumulative effect of change in accounting for goodwill				—			—			98,270
		Other				3,958			3,892			9,348
		Increase (decrease) in cash from working capital changes (excluding impact of acquired assets and assumed liabilities):
			Accounts receivable			(111,345	)		(65,608	)		(18,427	)
			Inventories			18,751			11,844			(41,651	)
			Prepaid expenses and other current assets			5,920			(45,082	)		(11,168	)
			Accounts payable, accrued expenses and deferred revenue			(13,882	)		6,895			(19,081	)
				Cash flows from operating activities		577,512			387,858			222,839
Cash Flows from Investing Activities:
	Purchases of investments					(653,478	)		(1,059,407	)		(476,683	)
	Sales and maturities of investments					976,085			920,592			568,541
	Purchases of equity securities					(4,154	)		(52,547	)		(4,050	)
	Proceeds from sale of equity securities					—			2,672			4,773
	Purchases of property, plant and equipment					(187,400	)		(259,598	)		(225,437	)
	Proceeds from sale of product line					—			34,513			—
	Investments in equity method investees					(24,107	)		(28,056	)		(25,260	)
	Purchases of intangible assets					(5,110	)		(8,413	)		—
	Milestone payment to BioMarin					—			(12,100	)		—
	Note received from collaborator					—			—			(7,000	)
	Acquisitions, net of acquired cash					(152,377	)		(565,306	)		—
	Other					4,845			(542	)		2,750
				Cash flows from investing activities		(45,696	)		(1,028,192	)		(162,366	)

The accompanying notes are an integral part of these consolidated financial statements.

F-78

			For the Years Ended December 31,
			2004			2003			2002
Cash Flows from Financing Activities:
	Proceeds from issuance of common stock			140,311			116,459			31,898
	Proceeds from draw on credit facility			135,000			616,000			50,000
	Proceeds from issuance of debt						672,975			—
	Payments of debt and capital lease obligations			(650,818	)		(914,128	)		(7,787	)
	Payments of notes receivable from stockholders			—			—			974
	Bank overdraft			15,434			(2,543	)		(2,442	)
	Minority interest payable			5,424			3,060			—
	Other			922			2,233			4,007
		Cash flows from financing activities		(353,727	)		494,056			76,650
Effect of exchange rate changes on cash				9,335			32,241			22,677
Increase (decrease) in cash and cash equivalents				187,424			(114,037	)		159,800
Cash and cash equivalents at beginning of period				292,774			406,811			247,011
Cash and cash equivalents at end of period			$	480,198		$	292,774		$	406,811
Supplemental disclosures of cash flows:
Cash paid during the year for:
	Interest, net of capitalized interest		$	14,736		$	19,135		$	24,494
	Income taxes		$	73,734		$	95,180		$	37,747
Supplemental disclosures of non-cash transactions:
	Mergers and Acquisitions—Note C.
	Dispositions of assets—Note D.
	Property, Plant and Equipment—Note H.
	Equity Method Investments—Note K.
	Capital lease obligation for Genzyme Center—Note M.

        In conjunction with the acquisitions of ILEX, substantially all of the assets of Alfigen and the Physician Services and Analytical Services business units of IMPATH in 2004 and SangStat in 2003, we assumed the following net liabilities (amounts in thousands):

		For the Years Ended December 31,
		2004			2003			2002
Net cash paid for acquisition and acquisition costs		$	(152,377	)	$	(565,306	)	$	—
Issuance of common stock and options			(1,069,925	)		—			—
Fair value of assets acquired			350,623			361,598			—
Net deferred tax asset—current and noncurrent			53,718			—			—
Acquired in-process research and development			254,520			158,000			—
Goodwill			669,290			132,550			—
Liabilities for exit activities and integration			(10,813	)		(11,067	)		—
Income taxes payable			(40,852	)		—			—
Net deferred tax liability assumed			—			(17,371	)		—
	Net liabilities assumed	$	54,184		$	58,404		$	—

The accompanying notes are an integral part of these consolidated financial statements.

F-79

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

(Amounts in thousands)

		Shares				Dollars
		2004	2003		2002	2004		2003			2002
COMMON STOCK:
GENZYME STOCK:
	Balance at beginning of year	224,717	214,814		213,179	$	2,247	$	2,148		$	2,132
	Issuance of Genzyme Stock under stock plans	5,950	6,947		1,621		59		69			16
	Exercise of warrants and stock purchase rights	—	3		14		—		—			—
	Shares issued for the conversion of Biosurgery Stock to Genzyme Stock	—	1,997		—		—		20			—
	Shares issued for the conversion of Molecular Oncology Stock to Genzyme Stock	—	959		—		—		10			—
	Shares issued for the acquisition of ILEX Oncology	18,458	—		—		185		—			—
	Cancellation of shares	—	(3	)	—		—		—			—
	Balance at end of year	249,125	224,717		214,814	$	2,491	$	2,247		$	2,148
BIOSURGERY STOCK:
	Balance at beginning of year		40,482		39,554			$	405		$	395
	Issuance of Biosurgery Stock under stock plans		207		302				2			3
	Shares issued in connection with investment in Myosix		—		626				—			7
	Shares converted into Genzyme Stock from the consolidation of the tracking stocks		(40,689	)	—				(407	)		—
	Balance at end of year		—		40,482			$	—		$	405
MOLECULAR ONCOLOGY STOCK:
	Balance at beginning of year		16,899		16,762			$	169		$	168
	Issuance of Molecular Oncology Stock under stock plans		90		137				1			1
	Cancellation of shares		(11	)	—				—			—
	Shares converted into Genzyme Stock from the consolidation of the tracking stocks		(16,978	)	—				(170	)		—
	Balance at end of year		—		16,899			$	—		$	169

The accompanying notes are an integral part of these consolidated financial statements.

F-80

		2004			2003			2002
ADDITIONAL PAID-IN CAPITAL:
GENZYME STOCK:
	Balance at beginning of year	$	2,957,578		$	1,810,358		$	1,745,819
	Issuance of Genzyme Stock under stock plans		140,251			115,938			30,395
	Exercise of warrants and stock purchase rights		—			—			233
	Conversion of Biosurgery Stock to Genzyme Stock		—			814,982			—
	Conversion of Molecular Oncology Stock to Genzyme Stock		—			149,103			—
	Payment from Genzyme Biosurgery in connection with transfer of NeuroCell joint venture interest		—			—			27,063
	Acquisition of ILEX Oncology		1,069,732			—			—
	Tax benefit from disqualified dispositions		49,974			57,536			8,410
	Amortization of deferred compensation		10			592			1,335
	Other		(188	)		9,069			(2,897	)
	Balance at end of year	$	4,217,357		$	2,957,578		$	1,810,358
BIOSURGERY STOCK:
	Balance at beginning of year				$	823,364		$	843,544
	Issuance of Biosurgery Stock under stock plans					308			936
	Payment to Genzyme General in connection with transfer of NeuroCell joint venture interest					—			(27,063	)
	Issuance of Biosurgery Stock in connection with investment in Myosix					—			1,581
	Other					(9,077	)		4,366
	Conversion of Biosurgery Stock to Genzyme Stock					(814,595	)		—
	Balance at end of year				$	—		$	823,364
MOLECULAR ONCOLOGY STOCK:
	Balance at beginning of year				$	148,799		$	148,481
	Issuance of Molecular Oncology Stock under stock plans					141			314
	Other					3			4
	Conversion of Molecular Oncology Stock to Genzyme Stock					(148,943	)		—
	Balance at end of year				$	—		$	148,799
NOTES RECEIVABLE FROM STOCKHOLDERS:
	Balance at beginning of year	$	(13,285	)	$	(12,706	)	$	(13,245	)
	Accrued interest receivable on notes		(614	)		(613	)		(622	)
	Payments of notes receivable		34			34			1,161
	Balance at end of year	$	(13,865	)	$	(13,285	)	$	(12,706	)
ACCUMULATED DEFICIT:
	Balance at beginning of year	$	(198,560	)	$	(130,968	)	$	(117,894	)
	Net income (loss)		86,527			(67,592	)		(13,074	)
	Balance at end of year	$	(112,033	)	$	(198,560	)	$	(130,968	)

The accompanying notes are an integral part of these consolidated financial statements.

F-81

		2004		2003			2002
ACCUMULATED OTHER COMPREHENSIVE INCOME, NET OF TAX:
	Balance at beginning of year	$	188,432	$	56,278		$	(211	)
	Foreign currency translation adjustments		80,371		133,317			80,191
	Gain on affiliate sale of stock, net of tax		—		2,856			—
	Additional minimum pension liability, net of tax		—		2,529			(2,529	)
	Change in unrealized gains (losses) on investments and derivatives, net of tax		17,403		(6,548	)		(21,173	)
	Accumulated other comprehensive income	$	286,206	$	188,432		$	56,278

The accompanying notes are an integral part of these consolidated financial statements.

F-82

GENZYME CORPORATION AND SUBSIDIARIES

Notes To Consolidated Financial Statements

NOTE A.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

        We are a global biotechnology company dedicated to making a major positive impact on the lives of people with serious diseases. Our broad product portfolio is focused on rare genetic disorders, renal disease, orthopaedics, organ transplant, and diagnostic and predictive testing. We are organized into five financial reporting units, which we also consider to be our reporting segments:

•

Renal, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure. The unit derives substantially all of its revenue from sales of Renagel (including sales of bulk sevelamer);



•

Therapeutics, which develops, manufactures and distributes therapeutic products, with a focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as LSDs, and other specialty therapeutics, such as Thyrogen. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme and Thyrogen;



•

Transplant, which develops, manufactures and distributes therapeutic products that address pre-transplantation, as well as other auto-immune disorders. The unit derives its revenue primarily from sales of Thymoglobulin and Lymphoglobuline;



•

Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial products, with an emphasis on products that meet medical needs in the orthopaedics and broader surgical areas. The unit derives its revenue primarily from sales of Synvisc, the Sepra line of products and, through June 30, 2003, sales of cardiac devices; and



•

Diagnostics/Genetics, which develops, manufactures and distributes in vitro diagnostic products and provides testing services for the oncology, and prenatal and reproductive markets.

        We report the activities of our oncology, bulk pharmaceuticals, cardiovascular and drug discovery and development business units under the caption "Other." We report our corporate, general and administrative operations, and corporate science activities that we do not allocate to our financial reporting units, under the caption "Corporate."

Policies Relating to Tracking Stock and the Elimination of Our Tracking Stock Structure

Elimination of Tracking Stock Structure

        Through June 30, 2003, we had three outstanding series of common stock—Genzyme General Stock, Biosurgery Stock and Molecular Oncology Stock. We also referred to these series of common stock as "tracking stock." Unlike typical common stock, each of our tracking stocks was designed to reflect the value and track the financial performance of a specific subset of our business operations and its allocated assets, rather than the operations and assets of our entire company. Through June 30, 2003, we allocated earnings or losses to each series of tracking stock based on the net income or loss attributable to the corresponding division determined in accordance with accounting principles generally accepted in the United States as adjusted for the allocation of tax benefits.

        Effective July 1, 2003, we eliminated our tracking stock capital structure by exchanging, in accordance with the provisions of our charter, each share of Biosurgery Stock for 0.04914 of a share of Genzyme General Stock and each share of Molecular Oncology Stock for 0.05653 of a share of

F-83

Genzyme General Stock. In the aggregate, 1,997,392 shares of Genzyme General Stock were exchanged for the outstanding shares of Biosurgery Stock and 959,045 shares of Genzyme General Stock were exchanged for the outstanding shares of Molecular Oncology Stock. Options and warrants to purchase shares of Biosurgery Stock were converted into options and warrants to purchase 401,257 shares of Genzyme General Stock, with exercise prices ranging from $24.42 to $2,370.98, and options to purchase shares of Molecular Oncology Stock were converted into options to purchase 198,855 shares of Genzyme General Stock, with exercise prices ranging from $25.83 to $474.97. Effective July 1, 2003, we have one outstanding series of common stock, which we now refer to as Genzyme Stock.

        Effective July 1, 2003, as a result of the elimination of our tracking stock capital structure, all of our earnings or losses are now allocated to Genzyme Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to that date remain allocated to those series of stock in the preparation of our consolidated financial statements and are not affected by the elimination of our tracking stock structure. Accordingly, earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock represent earnings allocated to those tracking stocks through June 30, 2003. Earnings or losses allocated to Genzyme Stock through June 30, 2003 represent the earnings or losses of Genzyme General, as adjusted for the allocation of tax benefits. Earnings or losses allocated to Genzyme Stock after June 30, 2003 represent the earnings or losses for the corporation as a whole. Accordingly, earnings allocated to Genzyme Stock for the year ended December 31, 2004, reflect the earnings for the corporation as a whole. Earnings allocated to Genzyme Stock for the year ended December 31, 2003 reflect the earnings allocated to Genzyme General for the period from January 1, 2003 through June 30, 2003 and do not include the losses allocated to Biosurgery Stock and Molecular Oncology Stock for that period. Earnings allocated to Genzyme Stock for the period from July 1, 2003 through December 31, 2003 reflect earnings for the corporation as a whole.

        Through June 30, 2003, the chief mechanisms intended to cause each tracking stock to "track" the financial performance of each division were provisions in our charter governing dividends and distributions. The provisions governing dividends provided that our board of directors had discretion to decide if and when to declare dividends, subject to certain limitations. To the extent that the following amount did not exceed the funds that would be legally available for dividends under Massachusetts law, the dividend limit for a stock corresponding to a division was the greater of:

•

the amount that would be legally available for dividends under Massachusetts law if the division were a separate legal corporation; or



•

the amount by which the greater of the fair value of the division's allocated net assets, or its allocated paid-in capital plus allocated earnings, exceeded its corresponding stock's par value, preferred stock preferences and debt obligations.

        The provisions in our charter governing dividends and distributions factored the assets and liabilities and income or losses attributable to a division into the determination of the amount available to pay dividends on the associated tracking stock. Through June 30, 2003, we calculated the income tax provision of each division as if such division were a separate taxpayer, which included assessing the realizability of deferred tax assets at the division level. Our management and accounting policies in effect at the time provided that if, at the end of any fiscal quarter, a division could not use any projected annual tax benefits attributable to it to offset or reduce its current or deferred income tax expense, we could allocate the tax benefit to other divisions in proportion to their taxable income without any compensating payments or allocation to the division generating the benefit. Through

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June 30, 2003, Genzyme Biosurgery and Genzyme Molecular Oncology had not generated taxable income, and thus had not had the ability to use any projected annual tax benefits. Genzyme General had generated taxable income, providing it with the ability to utilize the tax benefits generated by Genzyme Biosurgery and Genzyme Molecular Oncology. Consistent with our policy, we allocated the tax benefits generated by Genzyme Biosurgery and Genzyme Molecular Oncology through June 30, 2003 to Genzyme General without making any compensating payments or allocations to the division that generated the benefit.

        The tax benefits allocated to Genzyme General and included in earnings attributable to Genzyme Stock for the years ended December 31, 2003 and 2002, reflecting allocations through June 30, 2003, were (amounts in thousands):

		For the Years Ended December 31,
		2004	2003		2002
Tax benefits allocated from:
Genzyme Biosurgery		N/A	$	8,720	$	18,508
Genzyme Molecular Oncology		N/A		3,420		9,287
	Total	N/A	$	12,140	$	27,795

        Deferred tax assets and liabilities can arise from purchase accounting and relate to a division that does not satisfy the realizability criteria of Statement of Financial Accounting Standards, or SFAS, No. 109 "Accounting for Income Taxes." Through June 30, 2003, such deferred tax assets and liabilities were allocated to the division to which the acquisition was allocated. As a result, the periodic changes in these deferred tax assets and liabilities did not result in a tax expense or benefit to that division. However, the change in these deferred tax assets and liabilities impacted our consolidated tax provision. These changes were added to division net income (loss) for purposes of determining net income (loss) allocated to a tracking stock.

        Within the general limits under our charter and Massachusetts law, the amount of any dividend payment will be at the board of directors' discretion. To date, we have never declared or paid a cash dividend on shares of any of our series of common stock, nor do we anticipate paying or declaring a cash dividend on shares of Genzyme Stock in the foreseeable future. Unless declared, no dividends will accrue on shares of Genzyme Stock.

        The elimination of our tracking stock structure had no effect on our consolidated net income or loss. In this Form 10-K, and future Quarterly and Annual Reports, we will not provide separate financial statements for each of our former divisions, but will continue to provide our consolidated financial statements for the corporation as a whole.

Allocation Policy Related to Tracking Stocks

        Through June 30, 2003, our charter set forth which operations and assets were initially allocated to each division and stated that the division would also include all business, products or programs, developed by or acquired for the division, as determined by our board of directors. We then managed and accounted for transactions between our divisions and with third parties, and any resulting re-allocations of assets and liabilities, by applying consistently across divisions a detailed set of policies established by our board of directors. Our charter required that all of our assets and liabilities be

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allocated among our divisions in a reasonable and consistent manner. Our board of directors retained considerable discretion in determining the types, magnitude and extent of allocations to each series of common stock.

        Allocations to our divisions were based on one of the following methodologies:

•

specific identification—assets that were dedicated to the production of goods of a division or which solely benefit a division were allocated to that division. Liabilities incurred as a result of the performance of services for the benefit of a division or in connection with the expenses incurred in activities which directly benefit a division were allocated to that division. Such specifically identified assets and liabilities included cash, investments, accounts receivable, inventories, property and equipment, intangible assets, accounts payable, accrued expenses and deferred revenue. Revenues from the licensing of a division's products or services to third parties and the related costs were allocated to that division;



•

actual usage—expenses were charged to the division for whose benefit such expenses were incurred. Research and development, sales and marketing and direct general and administrative services were charged to the divisions for which the service was performed on a cost basis. Such charges were generally based on direct labor hours;



•

proportionate usage—costs incurred which benefited more than one division were allocated based on management's estimate of the proportionate benefit each division received. Such costs included facilities, legal, finance, human resources, executive and investor relations; or



•

board directed—programs and products, both internally developed and acquired, were allocated to divisions by the board of directors. The board of directors also allocated long-term debt and strategic investments.

Risks and Uncertainties

        We are subject to risks and uncertainties common to companies in the biotechnology industry. These risks and uncertainties may affect our future results, and include:

•

our ability to successfully complete preclinical and clinical development of our products and services;



•

the content and timing of submissions to and decisions made by the FDA and other comparable regulatory agencies outside the U.S.;



•

our ability to manufacture sufficient amounts of our products for development and commercialization activities and to do so in a timely and cost-efficient manner;



•

our ability to obtain and maintain adequate patent and other proprietary rights protection of our products and services and successfully enforce our proprietary rights;



•

the scope, validity and enforceability of patents and other proprietary rights held by third parties and their ability to commercialize our products and services;



•

the accuracy of our estimates of the size and characteristics of the markets to be addressed by our products and services, including growth projections;



•

market acceptance of our products and services;

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•

our ability to successfully grow our business through mergers, acquisitions, collaborations and internal development;



•

our ability to identify new patients for our products and services;



•

the accuracy of our information regarding the products and resources of our competitors and potential competitors;



•

the availability of reimbursement for our products and services from third-party payers, and the extent of such coverage and the accuracy of our estimates of the payor mix for our products;



•

our ability to establish and maintain strategic license, collaboration and distribution arrangements and to manage our relationships with collaborators, distributors and partners;



•

the continued funding and operation of our joint ventures by our partners; and



•

the impact of changes in the exchange rate for the Euro and other currencies on our product and service revenues in future periods.

Basis of Presentation

        Our consolidated financial statements for each period include the statements of operations and comprehensive income, balance sheets, statements of cash flows and statement of stockholders' equity for our corporate operations taken as a whole. We have eliminated all significant intercompany items and transactions in consolidation. We have reclassified certain 2003 and 2002 data to conform to our 2004 presentation.

Principles of Consolidation

        Our consolidated financial statements include the accounts of our wholly owned and majority owned subsidiaries. As a result of the adoption of FIN 46, "Consolidation of Variable Interest Entities," we also consolidate certain variable interest entities for which we are the primary beneficiary. For consolidated subsidiaries in which we own less than 100% interest, we record minority interest in our statements of operations for the ownership interest of the minority owner. We use the equity method to account for investments in entities in which we have a substantial ownership interest (20% to 50%) which do not fall in the scope of FIN 46, or over which we exercise significant influence. Our consolidated net income includes our share of the earnings of these entities. All significant intercompany accounts and transactions have been eliminated in consolidation.

Dividend Policy

        We have never paid a cash dividend on shares of our stock. We currently intend to retain our earnings to finance future growth and do not anticipate paying any cash dividends on our stock in the foreseeable future.

Use of Estimates

        Under accounting principles generally accepted in the United States, we are required to make certain estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses,

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and disclosure of contingent assets and liabilities in our financial statements. Our actual results could differ from these estimates.

Cash and Cash Equivalents

        We value our cash and cash equivalents at cost plus accrued interest, which we believe approximates their market value. Our cash equivalents consist principally of money market funds and municipal notes with original maturities of three months or less. We generally invest our cash in investment-grade securities to mitigate risk.

Investments

        We invest our excess cash balances in short-term and long-term marketable debt securities. As part of our strategic relationships, we may also invest in equity securities of other biotechnology companies, some of which are currently, or have been in the past, considered related parties. Other investments are accounted for as described below.

        We classify our auction rate municipal bonds and variable rate municipal demand notes as current investments. As of December 31, 2003, such investments had been classified as cash and cash equivalents. The carrying value of these securities as of December 31, 2004 was approximately $33 million. The carrying value of the securities as of December 31, 2003 was not significant.

        We accounted for our investment in GTC under the equity method of accounting until May 2002, at which point our ownership interest and board representation was reduced below 20% and we did not have any other factors of significant influence. Accordingly, we ceased to have significant influence over GTC and we ceased accounting for our investment in GTC under the equity method of accounting in June 2002.

        We consolidated the results of Peptimmune through February 2003 because during that period we owned 100% of its outstanding stock. In March 2003, our investment in Peptimmune decreased to approximately 12% as a result of the sale by Peptimmune of shares of its Series B voting preferred stock to third-party investors. Although our ownership interest in Peptimmune has declined below 20%, we account for the investment in Peptimmune under the equity method of accounting because certain factors exist that cause us to continue to have significant influence over Peptimmune, including that the chairman of Peptimmune is a member of our board of directors and we have license and continuing service agreements with Peptimmune.

        We classify all of our marketable equity investments as available-for-sale. We classify our investments in marketable debt securities as either held-to-maturity or available-for-sale based on facts and circumstances present at the time we purchase the securities. As of each balance sheet date presented, we classified all of our investments in debt securities as available-for-sale. We report available-for-sale investments at fair value as of each balance sheet date and include any unrealized holding gains and losses (the adjustment to fair value) in stockholders' equity. Realized gains and losses are determined on the specific identification method and are included in investment income. If any adjustment to fair value reflects a decline in the value of the investment, we consider all available evidence to evaluate the extent to which the decline is "other than temporary" and mark the investment to market through a charge to our statement of operations. Investments in equity securities for which fair value is not readily determinable are carried at cost, subject to review for impairment.

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We classify our investments with remaining maturities of 12 months or less as short-term investments exclusive of those categorized as cash equivalents. We classify our investments with remaining maturities of greater than twelve months as long-term investments, unless we do not expect to hold the investment to maturity.

        For additional information on our investments, please read Note J., "Investments in Marketable Securities and Strategic Equity Investments," and Note K., "Equity Method Investments," below.

Inventories

        We value inventories at cost or, if lower, fair value. We determine cost using the first-in, first-out method.

        We analyze our inventory levels quarterly and write down to its net realizable value:

•

inventory that has become obsolete;



•

inventory that has a cost basis in excess of its expected net realizable value;



•

inventory in excess of expected requirements; and



•

expired inventory.

        We capitalize inventory produced for commercial sale, which may result in the capitalization of inventory that has not been approved for sale. If a product is not approved for sale, it would result in the write-off of the inventory and a charge to earnings. At December 31, 2004, our total inventories included $5.5 million of inventory for Myozyme, which has not yet been approved for sale. In December 2004, we submitted a marketing application for Myozyme in the European Union. At December 31, 2003, our inventory for products not yet approved for sale was not significant.

Property, Plant and Equipment

        We record property, plant and equipment at cost. When we dispose of these assets, we remove the related cost and accumulated depreciation and amortization from the related accounts on our balance sheet and include any resulting gain or loss in our statement of operations.

        We generally compute depreciation using the straight-line method over the estimated useful lives of the assets. We compute economic lives as follows:

•

plant and equipment—three to fifteen years;



•

furniture and fixtures—five to seven years; and



•

buildings—twenty to forty years.

        We depreciate certain specialized manufacturing equipment and facilities over their remaining useful lives using the units-of-production method. We evaluate the remaining life and recoverability of this equipment periodically based on the appropriate facts and circumstances.

        We amortize leasehold improvements and assets under capital leases over their useful life or, if shorter, the term of the applicable lease.

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        For products we expect to commercialize, we capitalize, to construction-in-progress, the costs we incur in validating the manufacturing process. We begin this capitalization when we consider the product to have demonstrated technological feasibility and end this capitalization when the asset is substantially complete and ready for its intended use. These capitalized costs include incremental labor and direct material, and incremental fixed overhead and interest. We depreciate these costs using the straight-line method or the units-of-production method.

Goodwill and Other Intangible Assets

        Our intangible assets consist of:

•

goodwill;



•

covenants not to compete;



•

purchased technology rights;



•

customer lists; and



•

patents, trademarks and trade names.

        Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which requires that ratable amortization of goodwill and certain intangible assets be replaced with the periodic tests of goodwill's impairment and that other intangible assets be amortized over their useful lives unless these lives are determined to be indefinite.

        We amortize intangible assets using the straight-line method over their estimated useful lives, which range between 1 to 15 years or, if significantly greater, as the economic benefits of the assets are realized. To date, all of our assets have been amortized using the straight-line method.

Accounting for the Impairment of Long-Lived Assets

        We periodically evaluate our long-lived assets for potential impairment under SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." We perform these evaluations whenever events or changes in circumstances suggest that the carrying amount of an asset or group of assets is not recoverable. Indicators of potential impairment include:

•

a significant change in the manner in which an asset is used;



•

a significant decrease in the market value of an asset;



•

a significant adverse change in its business or the industry in which it is sold; and



•

a current period operating cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the asset.

        If we believe an indicator of potential impairment exists, we test to determine whether impairment recognition criteria in SFAS No. 144 have been met. We charge impairments of the long-lived assets to operations if our evaluations indicate that the carrying value of these assets is not recoverable.

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Translation of Foreign Currencies

        We translate the financial statements of our foreign subsidiaries from local currency into U.S. dollars using:

•

the current exchange rate at each balance sheet date for assets and liabilities;



•

the average exchange rate prevailing during each period for revenues and expenses; and



•

the historical exchange rate for our investments in our foreign subsidiaries.

We consider the local currency for all of our foreign subsidiaries to be the functional currency for that subsidiary. As a result, we included translation adjustments for these subsidiaries in stockholders' equity. We also record as a charge or credit to stockholders' equity exchange gains and losses on intercompany balances that are of a long-term investment nature. Our stockholders' equity includes net cumulative foreign currency translation gains of $253.7 million at December 31, 2004 and $173.3 million at December 31, 2003. Gains and losses on all other foreign currency transactions are included in our results of operations.

Derivative Instruments

        SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that we recognize all derivative instruments as either assets or liabilities in our consolidated balance sheet and measure those instruments at fair value. Subsequent changes in fair value are reflected in current earnings or other comprehensive income, depending on whether a derivative instrument is designated as part of a hedge relationship and, if it is, the type of hedge relationship.

Revenue Recognition

        We recognize revenue from product sales when persuasive evidence of an arrangement exists, the product has been shipped, and title and risk of loss have passed to the customer and collection from the customer is reasonably assured. We recognize revenue from service sales, such as Carticel services and genetic testing services, when we have finished providing the service. We recognize the revenue from the contracts to perform research and development services and selling and marketing services over the term of the applicable contract and as we complete our obligations under that contract. We recognize non-refundable, up-front license fees over the related performance period or at the time we have no remaining performance obligations.

        Revenue from milestone payments for which we have no continuing performance obligations is recognized upon achievement of the related milestone. When we have continuing performance obligations, the milestone payments are deferred and recognized as revenue over the term of the arrangement as we complete our performance obligations.

        We evaluate revenue from agreements that have multiple elements to determine whether the components of the arrangement represent separate units of accounting as defined in EITF Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." EITF 00-21 requires that the delivered items have value to the customer on a standalone basis, there is objective and reliable evidence of fair

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value of the undelivered items; and delivery or performance is probable and within our control for any delivered items that have a right of return.

        We follow the guidance of EITF 99-19, "Reporting Revenue Gross as a Principal versus Net as an Agent" in the presentation of revenues and direct costs of revenues. This guidance requires us to assess whether we act as a principal in the transaction or as an agent acting on behalf of others. We record revenue transactions gross in our statements of operations if we are deemed the principal in the transaction, which includes being the primary obligor and having the risks and rewards of ownership.

        We receive royalties related to the manufacture, sale or use of our products or technologies under license arrangements with third parties. For those arrangements where royalties are reasonably estimable, we recognize revenue based on estimates of royalties earned during the applicable period and adjust for differences between the estimated and actual royalties in the following quarter. Historically, these adjustments have not been material. For those arrangements where royalties are not reasonably estimable, we recognize revenue upon receipt of royalty statements from the licensee.

        We record allowances for product returns, rebates payable to Medicaid, managed care organizations or customers and sales discounts. These allowances are recorded as reductions of revenue at the time product sales are recorded. These amounts are based on our estimates of the amount of product in the distribution channel and the percent of end-users covered by Medicaid or managed care organizations. We record consideration paid to a customer or reseller of our products as a reduction of revenue unless we receive an identifiable and separable benefit for the consideration, and we can reasonably estimate the fair value of the benefit received. If both conditions are met, we record the consideration paid to the customer as an expense.

        We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers was to deteriorate and result in an impairment of their ability to make payments, additional allowances may be required.

Research and Development

        We expense internal and external research and development costs, including costs of funded research and development arrangements, in the period incurred. We also expense the cost of purchased technology in the period of purchase if we believe that the technology has not demonstrated technological feasibility and that it does not have an alternative future use.

Issuance of Stock By a Subsidiary or an Affiliate

        We include gains on the issuance of stock by our subsidiaries and affiliates in net income unless that subsidiary or affiliate is a research and development, start-up or development stage company or an entity whose viability as a going concern is under consideration. In those situations, we account for the change in our equity ownership of that subsidiary or affiliate in other comprehensive income or loss.

Income Taxes

        We use the asset and liability method of accounting for deferred income taxes. Our provision for income taxes includes income taxes currently payable and those deferred because of temporary

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differences between the financial statement and tax bases of assets and liabilities. We record liabilities for income tax contingencies based on our best estimate of the underlying exposures.

        We have not provided for possible U.S. taxes on the undistributed earnings of foreign subsidiaries. We do not believe it is practicable to determine the tax liability associated with the repatriation of our foreign earnings because it is our policy to indefinitely reinvest these earnings in non-U.S. operations. These undistributed foreign earnings totaled $133.4 million at December 31, 2004 and $64.4 million at December 31, 2003.

Comprehensive Income (Loss)

        Comprehensive income (loss) consists of net income or loss and all changes in equity from non-shareholder sources, including changes in unrealized gains and losses on investments and on derivative instruments designated as hedges, foreign currency translation adjustments and minimum liabilities for accumulated benefit obligations, net of taxes.

Net Income (Loss) Per Share

        Through June 30, 2003, we calculated earnings per share for each series of stock using the two-class method. To calculate basic earnings per share for each series of stock, we divided the earnings allocated to each series of stock by the weighted average number of outstanding shares of that series of stock during the applicable period. When we calculated diluted earnings per share, we also included in the denominator all potentially dilutive securities outstanding during the applicable period if inclusion of such securities was not anti-dilutive. We allocated our earnings to each series of our common stock based on the earnings attributable to that series of stock. Through June 30, 2003, the earnings attributable to Genzyme Stock, as defined in our charter, were equal to the net income or loss of Genzyme General determined in accordance with accounting principles generally accepted in the United States and as adjusted for tax benefits allocated to or from Genzyme General in accordance with our management and accounting policies in effect at the time. Earnings attributable to Biosurgery Stock and Molecular Oncology Stock were defined similarly and, as such, were based on the net income or loss of the corresponding division as adjusted for the allocation of tax benefits.

        Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings or losses to Biosurgery Stock and Molecular Oncology Stock. From that date forward, all of our earnings or losses are allocated to Genzyme Stock. Earnings or losses allocated to Biosurgery Stock and Molecular Oncology Stock prior to July 1, 2003 will remain allocated to those stocks and are not affected by the elimination of our tracking stock structure.

Accounting for Stock Based Compensation

        In accounting for stock-based compensation, we do not recognize compensation expense for qualifying options granted to our employees and directors under the provisions of our stock-based compensation plans with fixed terms and an exercise price greater than or equal to the fair market value of the underlying series of our common stock on the date of grant. All stock-based awards to non-employees are accounted for at their fair value in accordance with SFAS No. 123, as amended, and Emerging Issues Task Force, or EITF, Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services."

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        The following table sets forth our net income (loss) data as if compensation expense for our stock-based compensation plans was determined in accordance with SFAS No. 123, as amended, based on the fair value at the grant dates of the awards (amounts in thousands):

		For the Years Ended December 31,
		2004			2003			2002
		(Amounts in thousands, except per share amounts)
Net income (loss):
	As reported	$	86,527		$	(67,592	)	$	(13,074	)
	Add: employee stock-based compensation included in as-reported, net of tax		6			375			844
	Deduct: pro forma employee stock-based compensation expense, net of tax		(94,078	)		(80,035	)		(69,728	)
	Pro forma	$	(7,545	)	$	(147,252	)	$	(81,958	)

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        The following table sets forth the impact to our historical net income (loss) per share data as if compensation expense for our stock-based compensation plans was determined in accordance with SFAS No. 123:

			For the Years Ended December 31,
			2004			2003			2002
Net income (loss) per share allocated to Genzyme Stock (1):
	Basic:
		As reported	$	0.38		$	0.43		$	0.83
		Pro forma	$	(0.03	)	$	0.08		$	0.56
	Diluted:
		As reported	$	0.37		$	0.42		$	0.81
		Pro forma	$	(0.03	)	$	0.08		$	0.55
Net loss per share allocated to Biosurgery Stock – basic and diluted (1):
		As reported				$	(3.76	)	$	(4.20	)
		Pro forma				$	(3.82	)	$	(4.37	)
Net loss per share of Molecular Oncology Stock – basic and diluted (1):
		As reported				$	(0.54	)	$	(1.41	)
		Pro forma				$	(0.63	)	$	(1.63	)

(1)

Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings or losses to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings or losses are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those divisions and are not affected by the elimination of our tracking stock structure.

The effects of applying SFAS No. 123 are not necessarily representative of the effects on reported net income (loss) in future years. Additional awards in future years are anticipated.

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        We estimate the fair value of each option grant using the Black-Scholes option-pricing model. In computing these pro forma amounts, we used the following assumptions:

	Risk-Free Interest Rate	Volatility	Dividend Yield	Expected Option Life (In Years)	Average Fair Value
GENZYME STOCK:
2004	3.47%	54%	0%	5	$	21.92
2003	3.26%	54%	0%	5	$	22.37
2002	4.64%	54%	0%	5	$	16.77
BIOSURGERY STOCK:
Through June 30, 2003	2.16%	91%	0%	5	$	1.49
2002	4.64%	91%	0%	5	$	3.13
MOLECULAR ONCOLOGY STOCK:
Through June 30, 2003	2.16%	105%	0%	5	$	1.93
2002	4.64%	105%	0%	5	$	1.92

Recent Accounting Pronouncements

EITF Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments." In March 2004, the FASB approved the consensus reached on EITF Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments". EITF 03-01 provides guidance on determining when an investment is considered impaired, whether that impairment is other than temporary and the measure of the impairment loss. EITF 03-01 also provides new disclosure requirements for other-than-temporary impairments on debt and equity investments. In September 2004, the FASB delayed until further notice the effective date of the measurement and recognition guidance contained in EITF 03-01, however the disclosure requirements are currently effective. We do not expect the adoption of EITF 03-01 to have a material impact on our financial position, results of operations or cash flows.

EITF Issue No. 03-6, "Participating Securities and the Two-Class Method Under FASB Statement No. 128." In April 2004, the EITF issued Statement No. 03-6, "Participating Securities and the Two-Class Method Under FASB Statement No. 128, Earnings Per Share." EITF 03-6 addresses a number of questions regarding the computation of earnings per share by a company that has issued securities other than common stock that contractually entitle the holder to the right to participate in dividends when, and if, declared. The issue also provides further guidance in applying the two-class method of calculating earnings per share, clarifying the definition of a participating security and how to apply the two-class method. EITF 03-6 was effective for fiscal periods beginning after March 31, 2004 and was required to be retroactively applied. We evaluated the terms of our convertible notes and debentures and determined that none of these instruments qualified as participating securities under the provisions of EITF 03-6. As a result, the adoption of EITF 03-6 had no effect on our earnings per share for the years ended December 31, 2004, 2003 and 2002.

EITF Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share." In September 2004, the EITF reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share." EITF 04-8 requires that all contingently convertible debt instruments be included in diluted earnings per share using the if-converted method, regardless of

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whether the market price trigger (or other contingent feature) has been met. EITF 04-8 is effective for reporting periods ending after December 15, 2004 and requires that prior period earnings per share amounts presented for comparative purposes be restated. Under the provisions of EITF 04-8, the $690.0 million in principal under our 1.25% convertible senior notes, which represent 9.7 million potential shares of common stock, will be included in the calculation of diluted earnings per share using the if-converted method regardless of whether or not the contingent requirements have been met for conversion to common stock. We adopted EITF 04-8 during the fourth quarter of 2004, and have determined that the adoption of EITF 04-8 has not had a significant impact on the 2003 earnings per share calculations due to the fact that the notes were not outstanding for a significant period of time in 2003.

EITF Issue No. 04-10, "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds." In September 2004, the EITF reached a consensus on Issue No. 04-10, "Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds." EITF 04-10 requires that operating segments that do not meet the quantitative thresholds can be aggregated to produce a reporting segment if: (i) the aggregation is consistent with the objective and basic principles of SFAS No. 131, "Segment Reporting"; (ii) the segments have similar economic characteristics; and (iii) the segments have a majority of other aggregation criteria, such as similar products and services, production processes, types of customers, distribution methods and regulatory environment. The consensus on EITF 04-10 originally was effective for fiscal years ended after October 13, 2004. Concurrently, the FASB staff began drafting a proposed FASB Staff Position, or FSP, to provide guidance in determining whether two or more operating segments have similar economic characteristics. Since the guidance in EITF 04-10 and the proposed FSP are interrelated, the effective date of Issue 04-10 has been postponed to coincide with the effective date of the FSP. In March 2005, the FASB released for public comment proposed FSP No. FAS 131-a, "Determining Whether Operating Segments Have 'Similar Economic Characteristics' under Paragraph 17 of FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information." The proposed FSP provides additional guidance on how to determine whether two or more of a company's operating segments have similar economic characteristics when assessing whether those operating segments may be aggregated into a single operating segment. The proposed FSP indicates that (1) both quantitative and qualitative factors should be considered in determining whether the economic characteristics of two or more operating segments are similar and (2) the factors that a company should consider in making this assessment should be based on the factors that the company's chief operating decision maker uses in allocating resources to the individual segments. We are monitoring developments related to EITF 04-10 and proposed FSP No. FAS 131-a and will adopt the final standards, if any, upon issuance.

SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials should be recognized as current period charges in all circumstances. SFAS No. 151 will be effective for us beginning January 1, 2006. We do not expect the adoption of SFAS No. 151 to have a material effect on our consolidated financial statements.

SFAS No. 123R, "Share-Based Payment, an amendment of FASB Statement Nos. 123 and 95" In December 2004, the FASB, issued a revision to SFAS 123, also known as SFAS 123R, that amends existing accounting pronouncements for share-based payment transactions in which an enterprise receives employee and certain non-employee services in exchange for (a) equity instruments of the

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enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based compensation transactions using APB 25 and generally requires such transactions be accounted for using a fair-value-based method. SFAS 123R's effective date would be applicable for awards that are granted, modified, become vested, or settled in cash in interim or annual periods beginning after June 15, 2005. SFAS 123R includes three transition methods: one that provides for prospective application and two that provide for retrospective application. We intend to adopt SFAS 123R prospectively commencing in the third quarter of the fiscal year ending December 31, 2005. We expect that the adoption of SFAS 123R will cause us to record, as expense each quarter, a non-cash accounting charge approximating the fair value of such share based compensation meeting the criteria outlined in the provisions of SFAS 123R.

NOTE B.    NET INCOME (LOSS) PER SHARE

Genzyme Stock (1):

        The following table sets forth our computation of basic and diluted net income per share of Genzyme Stock (amounts in thousands, except per share amounts):

				For the Years Ended December 31,
				2004		2003		2002
Net income				$	86,527	$	82,143	$	150,731
Tax benefit allocated from Genzyme Biosurgery					—		8,720		18,508
Tax benefit allocated from Genzyme Molecular Oncology					—		3,420		9,287
Net income allocated to Genzyme Stock – basic					86,527		94,283		178,526
	Effect of dilutive securities:
		11/4% convertible senior notes (2):
			Interest expense		—		497		—
Net income allocated to Genzyme Stock – diluted				$	86,527	$	94,780	$	178,526
Shares used in computing net income per common share – basic					228,175		219,376		214,038
	Effect of dilutive securities:
		Shares issuable for the assumed conversion of our 1.25% convertible senior notes (2)			—		557		—
		Stock options (3)			6,133		6,033		5,340
		Warrants and stock purchase rights			10		10		10
			Dilutive potential common shares		6,143		6,600		5,350
Shares used in computing net income per common share – diluted (2,3,4)					234,318		225,976		219,388
Net income per share of Genzyme Stock:
	Basic			$	0.38	$	0.43	$	0.83
	Diluted			$	0.37	$	0.42	$	0.81

(1)

Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those divisions and are not affected by the elimination of our tracking stock structure.

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(2)

Reflects the retroactive application of the provisions of EITF 04-8. The assumed conversion of our $690.0 million in principal 1.25% convertible senior notes does not impact the diluted earnings per share calculation for the year ended December 31, 2004 because the effect would be anti-dilutive or for the year ended December 31, 2002 because the notes were not issued until December 2003.

(3)

We did not include the securities described in the following table in the computation of diluted earnings per share because these securities had an exercise price greater than the average market price of Genzyme Stock during each such period (amounts in thousands):

	For the Years Ended December 31,
	2004	2003	2002
Shares of Genzyme Stock issuable upon exercise of outstanding options	6,078	8,974	13,576

(4)

We did not retroactively include the potentially dilutive effect of the assumed conversion of the $575.0 million in principal of 3% convertible subordinated debentures in the computation of dilutive earnings per share for Genzyme Stock for the years ended December 31, 2003 and 2002, because we redeemed these debentures for cash in June 2004. The debentures were contingently convertible into approximately 8.2 million shares of Genzyme Stock at an initial conversion price of $70.30 per share.

Biosurgery Stock (1):

        For the periods presented, basic and diluted net loss per share of Biosurgery Stock were the same. We did not include the securities described in the following table in the computation of Biosurgery Stock diluted net loss per share for each period because these securities would have an anti-dilutive effect due to the net loss allocated to Biosurgery Stock (amount in thousands):

	For the Years Ended December 31,
	2003	2002
Shares of Biosurgery Stock issuable upon exercise of outstanding options	7,796	7,573
Warrants to purchase Biosurgery Stock	7	7
Biosurgery designated shares(2)	3,128	3,118
Biosurgery designated shares reserved for options(2)	62	77
Shares issuable upon conversion of the 6.9% convertible subordinated note allocated to Genzyme Biosurgery (3)	—	358
Total shares excluded from the calculation of diluted net loss per share of Biosurgery Stock	10,993	11,133

(1)

Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those divisions and are not affected by the elimination of our tracking stock structure.

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(2)

Biosurgery designated shares were authorized shares of Biosurgery Stock that were not issued and outstanding, but which our board of directors could have issued, sold or distributed without allocating the proceeds to Genzyme Biosurgery. Effective July 1, 2003, all shares of Biosurgery Stock were cancelled in connection with the elimination of our tracking stock structure.

(3)

These shares were reserved in connection with the conversion of the 6.9% convertible subordinated note we assumed upon our acquisition of Biomatrix in December 2000. We paid cash to satisfy this note in May 2003.

Molecular Oncology Stock (1):

        For all periods presented, basic and diluted net loss per share of Molecular Oncology Stock are the same. We did not include the securities described in the following table in the computation of Molecular Oncology Stock diluted net loss per share for each period because these securities would have an anti-dilutive effect due to the net loss allocated to Molecular Oncology Stock (amounts in thousands):

	For the Years Ended December 31,
	2003	2002
Shares of Molecular Oncology Stock issuable upon exercise of outstanding options	3,465	2,870
Molecular Oncology designated shares (2)	1,651	1,651
Total shares excluded from the calculation of diluted net loss per share of Molecular Oncology Stock	5,116	4,521

(1)

Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those divisions and are not affected by the elimination of our tracking stock structure.

(2)

Molecular Oncology designated shares were authorized shares of Molecular Oncology Stock that were not issued and outstanding, but which our board of directors could have issued, sold or distributed without allocating the proceeds to Genzyme Molecular Oncology. Effective July 1, 2003, all shares of Molecular Oncology Stock were cancelled in connection with the elimination of our tracking stock structure.

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NOTE C.    MERGERS AND ACQUISITIONS

Acquisition of Verigen AG

        In February 2005, we acquired Verigen AG, a private company based in Germany with a proprietary cell therapy product for cartilage repair currently sold in Europe and Australia, for $10.0 million in initial payments and potential payments of up to an aggregate of approximately $40 million over the next six years based upon the achievement of development and commercial milestones relating to regulatory approval and commercialization in the United States for Verigen's MACI and royalties on sales of the product. To date we have acquired approximately 96% of Verigen's shares and anticipate acquiring the remaining shares in the first half of 2005.

Acquisition of Synvisc Sales and Marketing Rights from Wyeth

        On January 6, 2005 we consummated an arrangement with Wyeth under which we reacquired the sales and marketing rights to Synvisc in the United States, as well as Germany, Poland, Greece, Portugal and the Czech Republic. In exchange for the sales and marketing rights, we paid a total of $121.0 million in cash to Wyeth in the first quarter of 2005. Additionally, we will make a series of contingent payments to Wyeth based on the volume of Synvisc sales in the covered territories. These additional payments could extend out to June 2012, or could total a maximum of $293.7 million, whichever comes first. Upon closing this transaction, we began to record revenue from sales of Synvisc to end-users in these territories. We will continue to record all of the research and development expenses related to Synvisc and will also now record SG&A expenses related to the additional Synvisc sales force we assumed from Wyeth.

Acquisition of ILEX

        In December 2004, we completed our acquisition of ILEX, an oncology drug development company. The ILEX shareholders received 0.4682 of a share of Genzyme Stock for each ILEX share owned. Cash was paid for fractional shares. The transaction had a total value of approximately $1.1 billion, based on ILEX's 39.4 million shares outstanding at the date of acquisition, and our offer price of $55.88, the per share value of Genzyme Stock exchanged in the acquisition. We accounted for the acquisition as a purchase and accordingly, included its results of operations in our consolidated statements of operations from December 20, 2004, the date of acquisition.

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        The purchase price was allocated to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities as follows (amounts in thousands):

Issuance of 18,457,679 shares of Genzyme Stock		$	1,031,485
Issuance of options to purchase 1,736,654 shares of Genzyme Stock			38,440
Acquisition costs			10,728
	Total purchase price	$	1,080,653
Cash and cash equivalents		$	121,128
Restricted cash			604
Accounts receivable			13,100
Inventories			16,584
Deferred tax assets – current			27,307
Other current assets			2,896
Property, plant and equipment			2,162
Restricted long-term investments			1,691
Goodwill			478,539
Other intangible assets (to be amortized over 11 to 12 years)			228,627
In-process research and development			254,520
Deferred tax assets – noncurrent			24,983
Other noncurrent assets			1,648
Assumed liabilities:
	Notes payable – short-term		(19,968	)
	Unfavorable lease liability		(1,610	)
	Liabilities for exit activities		(5,330	)
	Income tax payable		(40,852	)
	Other		(25,376	)
	Allocated purchase price	$	1,080,653

        The purchase price was allocated to the intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed amounted to $478.5 million, which was allocated to goodwill. We expect that substantially all of the amount allocated to goodwill will not be deductible for tax purposes.

        The allocation of the purchase price remains subject to potential adjustments, including adjustments for liabilities associated with certain exit activities.

In-Process Research and Development

        In connection with our acquisition of ILEX, we acquired IPR&D related to three development projects, Campath (for indications other than B-cell chronic lymphocytic leukemia), Clolar (clofarabine) and tasidotin hydrochloride, formerly referred to as ILX-651.

        Campath is a humanized monoclonal antibody that binds to a specific target, CD52, on cell surfaces leading to the destruction of malignant, or cancerous, cells. Campath was launched in

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May 2001 in the United States and in August 2001 in Europe under the name MabCampath. The product is approved for use in patients with B-cell chronic lymphocytic leukemia who have been treated with alkylating agents and who have failed fludarabine therapy. At the time of acquisition, clinical trials in non-Hodgkin's lymphoma, multiple sclerosis and other cancer and non-cancer indications were being conducted.

        Clolar is a next-generation, purine nucleoside antimetabolite that is currently under investigation in pediatric and adult leukemias and solid tumors. In December 2004, after the date of acquisition of ILEX, the FDA granted marketing approval for Clolar for the treatment of children with refractory or relapsed acute lymphoblastic leukemia. At the time of the acquisition, clinical trials for hematologic cancer, solid tumor and additional pediatric acute leukemia indications were being conducted.

        Tasidotin is a next-generation synthetic pentapeptide analog of the natural substance dolastatin-15. This product candidate targets tubulin and has been chemically modified to provide improved pharmacological properties over earlier members of its class. ILEX initiated phase 2 clinical trials of tasidotin in late 2003 and 2004 in a variety of indications.

        As of the date this transaction closed, none of these projects had reached technological feasibility nor had an alternative future use. Accordingly, we allocated to IPR&D, and charged to expense in our consolidated statements of operations in December 31, 2004, $254.5 million, representing the portion of the purchase price attributable to these projects, of which $96.9 million is attributable to the Campath development projects, $113.4 million is attributable to the clofarabine development projects and $44.2 million is related to the tasidotin development projects.

        Management assumes responsibility for determining the IPR&D valuation. The fair value assigned to purchased IPR&D was estimated by discounting, to present value, the cash flows expected to result from each project once it has reached technological feasibility. We used a discount rate of 11% for Campath, 12% for Clolar and 13% for tasidotin and cash flows that have been probability-adjusted to reflect the risks of advancement through the product approval process. In estimating future cash flows, we also considered other tangible and intangible assets required for successful exploitation of the technology resulting from the purchased IPR&D projects and adjusted future cash flows for a charge reflecting the contribution to value of these assets.

Restructuring Plans

        In connection with the acquisition of ILEX, we initiated an integration plan to consolidate and restructure certain functions and operations, including the relocation and termination of certain ILEX personnel and the closure of certain ILEX's leased facilities. These costs have been recognized as liabilities assumed in connection with the acquisition of ILEX in accordance with EITF 95-3 and are subject to potential adjustment as certain exit activities are confirmed or refined. The following table

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summarizes the liabilities established for exit activities related to the acquisition of ILEX (amounts in thousands):

	Employee Related Benefits		Closure of Leased Facilities			Other Exit Activities			Total Exit Activities
Recorded at acquisition date	$	4,900	$	216		$	214		$	5,330
Payments in 2004		—		(140	)		(5	)		(145	)
Balance at December 31, 2004	$	4,900	$	76		$	209		$	5,185

        We expect to pay employee related benefits to the former employees of ILEX through the first quarter of 2006.

        We also recorded an estimated tax liability of $40.9 million related to the integration of ILEX.

Acquisition of Physician Services and Analytical Services Business Units of IMPATH

        In May 2004, we acquired substantially all of the pathology/oncology testing assets related to the Physician Services and Analytical Services business units of IMPATH, a national medical testing provider, for total cash consideration of $215.3 million. We accounted for the acquisition as a purchase and accordingly, included its results of operations related to these business units in our consolidated statements of operations from May 1, 2004, the date of acquisition. The purchase price is subject to adjustment based upon the completion of a post-closing assessment of the working capital of the acquired business units as of April 30, 2004.

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        The purchase price and the allocation of the purchase price to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities are as follows (amounts in thousands):

Cash paid		$	212,094
Acquisition costs			3,183
	Total purchase price.	$	215,277
Accounts receivable		$	14,483
Inventory			1,956
Deferred tax assets – current			541
Other current assets			2,524
Property, plant & equipment			15,028
Goodwill			157,516
Other intangible assets (to be amortized over 0.4 to 10 years)			34,760
Deferred tax assets – noncurrent			835
Other non current assets			213
Assumed liabilities:
	Customer credit balances		(6,674	)
	Unfavorable lease liability		(2,269	)
	Liabilities for exit activities		(1,470	)
	Other assumed liabilities		(2,166	)
	Allocated purchase price	$	215,277

        The purchase price was allocated to the intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed amounted to $157.5 million, which was allocated to goodwill. Pro forma results are not presented for our acquisition for the pathology/oncology testing assets of IMPATH because the acquisition did not have a significant effect on our results of operations.

        In connection with the acquisition of these assets, we initiated an integration plan to consolidate and restructure certain functions and operations, including the relocation and termination of certain personnel and the closure of certain of the facilities leased by these business units of IMPATH. These costs have been recognized as liabilities assumed in connection with the purchase of the IMPATH assets in accordance with EITF Issue No. 95-3, "Recognition of Liabilities in Connection with Purchase Business Combinations." The following table summarizes the liabilities established for exit activities related to this acquisition (amounts in thousands):

	Employee Related Benefits			Closure of Leased Facilities			Total Exit Activities
Recorded at acquisition date	$	1,434		$	36		$	1,470
Payments in 2004		(447	)		(4	)		(451	)
Balance at December 31, 2004	$	987		$	32		$	1,019

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        We expect to pay employee related benefits to former employees of the Physician Services and Analytical Services business units of IMPATH and make payments related to the closure of certain of the facilities leased by these business units through the end of 2005.

Acquisition of Alfigen

        In February 2004, we acquired substantially all of the assets of Alfigen, Inc., or Alfigen, a national genetic testing provider based in Pasadena, California, for an aggregate purchase price of $47.5 million in cash. We accounted for the acquisition as a purchase and accordingly, the results of operations of Alfigen are included in our consolidated financial statements from February 21, 2004, the date of acquisition.

        The purchase price and the allocation of the purchase price to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities are as follows (amounts in thousands):

Cash paid		$	47,500
	Total purchase price	$	47,500
Deferred tax assets—current		$	52
Other current assets			103
Property, plant & equipment			1,244
Goodwill			33,235
Other intangible assets (to be amortized over 5 to 10 years)			13,000
Liabilities for exit activities			(134	)
	Allocated purchase price	$	47,500

        The purchase price was allocated to the intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed amounted to $33.2 million, which was allocated to goodwill. We will perform an impairment test for the goodwill on a periodic basis in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets." Pro forma results are not presented for the acquisition of substantially all of the assets of Alfigen because the acquisition did not have a significant effect on our results of operations.

        In connection with the acquisition of Alfigen, we initiated an integration plan to consolidate and restructure certain functions and operations of Alfigen, including the termination of certain Alfigen personnel. These costs have been recognized as liabilities for employee related benefits assumed in connection with the acquisition of the Alfigen assets in accordance with EITF 95-3. The amount of assumed liabilities for employee related benefits was not significant and, as of December 31, 2004, all employee related benefits have been paid to the eligible former employees of Alfigen.

Acquisition of SangStat

        In September 2003, we completed an all cash tender offer for the outstanding common stock (and associated preferred stock purchase rights) of SangStat for $22.50 per outstanding SangStat share. The aggregate consideration paid (or set aside) was $636.6 million in cash. We accounted for the acquisition

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as a purchase. Accordingly, the results of operations of SangStat are included in our consolidated financial statements from September 11, 2003, the day after the expiration of the tender offer.

        The purchase price and the allocation of the purchase price to the estimated fair value of the acquired tangible and intangible assets and assumed liabilities are as follows (amounts in thousands):

Cash paid for shares tendered		$	602,269
Amount paid for the buyout of options to purchase shares of SangStat common stock			28,269
Acquisition costs			6,021
Total purchase price		$	636,559
Cash and cash equivalents		$	71,253
Marketable securities			28,182
Accounts receivable			25,745
Inventories			33,069
Deferred tax asset current			68,040
Other current assets			4,385
Property, plant and equipment			2,779
Intangible assets (to be amortized over 1.25 to 10 years)			256,000
Goodwill			132,111
In-process research and development			158,000
Other assets			11,438
Assumed liabilities:
	6.5% convertible note due March 29, 2004		(11,267	)
	Notes payable		(6,965	)
	Other assumed liabilities		(39,733	)
Liabilities for exit activities			(11,067	)
Deferred tax liability			(85,411	)
Allocated purchase price		$	636,559

        The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed amounted to $132.1 million, which was allocated to goodwill. We expect that substantially all of the amount allocated to goodwill will not be deductible for tax purposes.

        In connection with the acquisition of SangStat, we initiated an integration plan to consolidate and restructure certain functions and operations of SangStat, including the relocation and termination of certain SangStat personnel and the closure of certain of SangStat's leased facilities. These costs have been recognized as liabilities assumed in connection with the purchase of SangStat in accordance with

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EITF 95-3. The following table summarizes the liabilities established for exit activities related to the acquisition of SangStat (amounts in thousands):

	Employee Related Benefits			Closure of Leased Facilities (1)			Other Exit Activities			Total Exit Activities
Recorded at acquisition date	$	7,118		$	2,561		$	49		$	9,728
Revision of estimate		1,315			(233	)		257			1,339
Payments in 2003		(831	)		—			—			(831	)
Balance at December 31, 2003		7,602			2,328			306			10,236
Revision of estimate		(455	)		(320	)		(184	)		(959	)
Payments in 2004		(5,454	)		(1,408	)		(122	)		(6,984	)
Balance at December 31, 2004	$	1,693		$	600		$	—		$	2,293

(1)

Includes costs associated with the closure of leased facilities in the United States, Germany, Spain and Canada.

        We expect to pay employee related benefits through and make payments related to leased facilities through the first half of 2005.

Pro Forma Financial Summary (Unaudited)

        The following pro forma financial summary is presented as if the acquisitions of ILEX and SangStat were completed as of the beginning of each period presented. The pro forma combined results are not necessarily indicative of the actual results that would have occurred had the acquisitions been consummated on those dates, or of the future operations of the combined entities. Material nonrecurring charges related to these acquisitions, such as IPR&D charges of $254.5 million resulting

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from the acquisition of ILEX and $158.0 million resulting from the acquisition of SangStat are included in the following pro forma financial summary:

		For the Years Ended December 31,
		2004		2003
Total revenues		$	2,235,274	$	1,834,907
Net income (loss)		$	43,805	$	(398,708	)
Net income (loss) allocated to Genzyme Stock		$	43,805	$	(236,833	)
Net income (loss) per share allocated to Genzyme Stock:
	Basic	$	0.18	$	(1.00	)
Diluted		$	0.17	$	(1.00	)
Weighted average shares outstanding:
	Basic		246,028		237,834
	Diluted		252,499		237,834
Net loss allocated to Biosurgery Stock:
	Net loss allocated to Biosurgery Stock			$	(152,651	)
	Net loss per share allocated to Biosurgery Stock – basic and diluted			$	(3.76	)
	Weighted average shares outstanding – basic and diluted				40,630
Net loss allocated to Molecular Oncology Stock:
	Net loss allocated to Molecular Oncology Stock			$	(9,224	)
	Net loss per share allocated to Molecular Oncology Stock			$	(0.54	)
	Weighted average shares outstanding – basic and diluted				16,958

NOTE D.    DISPOSITION OF ASSETS

Cardiac Device Assets

        In June 2003, we sold to Teleflex, for $34.5 million in cash, substantially all of the tangible and intangible assets directly associated with our cardiac devices business, excluding our Fall River, Massachusetts manufacturing facility, the assets related to our FocalSeal product and certain other assets. In addition, Teleflex assumed $6.3 million of trade obligations directly associated with our cardiac devices business. The assets sold had a net carrying value of $68.1 million at the time of the sale. We recorded a net loss of $27.7 million in our consolidated financial statements in June 2003 in connection with this sale. We also recorded a tax benefit of $9.2 million for the reversal of related deferred tax liabilities, which was also recorded in our consolidated statements of operations. Teleflex is leasing the Fall River facility and in August 2004, exercised its option to extend the term of the lease to June 30, 2005.

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NOTE E.    DERIVATIVE FINANCIAL INSTRUMENTS

        We use an interest rate swap to mitigate the risk associated with a floating rate lease obligation, and have designated the swap as a cash flow hedge. The notional amount of this swap at December 31, 2004 was $25.0 million. Because the critical terms of the swap agreement correspond to the related lease obligation, there were no amounts of hedge ineffectiveness for any period presented. No gains or losses were excluded from the assessment of hedge effectiveness. We record the differential to be paid or received on the swap as incremental interest expense. The fair value of the swap at December 31, 2004, representing the cash requirements to settle the agreement, was approximately $(1.1) million. The lease obligation that the interest rate swap is associated with matures in the fourth quarter of 2005.

        We periodically enter into foreign currency forward contracts, all of which have a maturity of less than three years. These contracts have not been designated as hedges and, accordingly, unrealized gains or losses on these contracts are reported in current earnings. The notional settlement value of foreign currency forward contracts outstanding at December 31, 2004 is $86.4 million. At December 31, 2004, these contracts had a fair value of $4.1 million, representing an unrealized loss. The amount has been recorded in our consolidated statement of operations for the year ended December 31, 2004 and in accrued expenses in our consolidated balance sheet as of December 31, 2004.

NOTE F.    ACCOUNTS RECEIVABLE

        Our trade receivables primarily represent amounts due from distributors, healthcare service providers, and companies and institutions engaged in research, development or production of pharmaceutical and biopharmaceutical products. We perform credit evaluations of our customers on an ongoing basis and generally do not require collateral. We state accounts receivable at fair value after reflecting certain allowances. This allowance was $42.4 million at December 31, 2004 and $22.8 million at December 31, 2003.

NOTE G.    INVENTORIES

		December 31,
		2004		2003
		(Amounts in thousands)
Raw materials		$	65,000	$	53,056
Work-in-process			79,747		96,088
Finished products			148,911		118,328
	Total	$	293,658	$	267,472

        In June 2003, we sold $21.3 million of inventory related to our cardiac devices business to Teleflex.

        In connection with the acquisition of SangStat in September 2003, we acquired $33.1 million of inventory, of which $1.0 million is raw materials, $22.6 million is work in-process and $9.5 million is finished goods. In addition, we acquired $8.0 million of generic cyclosporine inventory that is included in other noncurrent assets in our consolidated balance sheet as of December 31, 2003 because we did not expect to sell this inventory in the twelve months following that date. In the fourth quarter of 2004 we wrote off this $8.0 million of generic cyclosporine inventory because we have exited this market.

F-110

        In connection with the acquisition of ILEX in December 2004, we acquired $16.6 million of inventory, of which $0.4 million is raw materials and $16.2 million are finished goods.

        We capitalize inventory produced for commercial sale, which may result in the capitalization of inventory that has not yet been approved for sale. If a product is not approved for sale, it would likely result in the write-off of the inventory and a charge to earnings. At December 31, 2004, our total inventories included $5.5 million of inventory for Myozyme, which has not yet been approved for sale. In December 2004, we submitted a marketing application for Myozyme in the European Union. At December 31, 2003, our inventory for products not yet approved for sale was not significant.

NOTE H.    PROPERTY, PLANT AND EQUIPMENT

	December 31,
	2004			2003
	(Amounts in thousands)
Plant and equipment	$	657,697		$	618,997
Land and buildings		473,400			418,481
Leasehold improvements		203,204			182,564
Furniture and fixtures		44,029			38,772
Construction-in-progress		429,474			301,717
		1,807,804			1,560,531
Less accumulated depreciation		(497,548	)		(409,398	)
Property, plant and equipment, net	$	1,310,256		$	1,151,133

        Our total depreciation expense was $95.6 million in 2004, $80.2 million in 2003 and $62.5 million in 2002.

        We have non-cancelable capital lease obligations related to our new corporate headquarters, certain administrative offices and certain machinery and equipment.

        Property, plant and equipment includes the following amounts for assets subject to capital leases (amounts in thousands):

		December 31, 2004
Building – Corporate headquarters in Cambridge, Massachusetts		$	130,221
Building – Administrative offices in Waltham, Massachusetts			25,000
	Total		155,221
Less accumulated depreciation			(13,348	)
Assets subject to capital leases, net		$	141,873

        We capitalize costs we have incurred in validating the manufacturing process for products which have reached technological feasibility. As of December 31, 2004, capitalized validation costs, net of

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accumulated depreciation, were $10.3 million. We have capitalized the following amounts of interest costs incurred in financing the construction of our manufacturing facilities (amounts in millions):

For the Years Ended December 31,
2004		2003		2002
$	8.7	$	6.2	$	4.5

        The estimated cost of completion for assets under construction as of December 31, 2004 is $233.5 million.

        In 2004, due to a change in plans for future manufacturing capacity and research and development facilities, we determined that we will not require all of the space we had been leasing at our facility in Oklahoma City, Oklahoma. As a result, in December 2004, we recorded a charge of $2.1 million to research and development expenses to record the exit costs related to space we have vacated and a charge for impaired assets of $4.5 million to write off the assets related to that specific area of our Oklahoma facility.

        During 2001, we began constructing a recombinant protein manufacturing facility adjacent to our existing facilities in Framingham, Massachusetts. During the quarter ended December 31, 2001, we suspended development of this site in favor of developing the manufacturing site we acquired from Pharming N.V. in Geel, Belgium. Throughout 2002, we considered various alternative plans for use of the Framingham manufacturing facility, including contract manufacturing arrangements, and whether the $16.8 million of capitalized engineering and design costs for this facility would be applicable to the future development at this site. In December 2002, due to a change in our plans for future manufacturing capacity requirements, we determined that we would not proceed with construction of the Framingham facility for the foreseeable future. As a result, we recorded a charge in the fourth quarter of 2002 to write off $14.0 million of capitalized engineering and design costs that were specific to the Framingham facility. The remaining $2.8 million of capitalized engineering and design costs were used in the construction of the Belgium manufacturing facility and, accordingly, have been reallocated as a capitalized cost of that facility.

        In 2002, we began a capital expansion program to build HA manufacturing capacity at one of our existing manufacturing facilities in Framingham. We previously manufactured bulk HA at our manufacturing facility in Haverhill, United Kingdom. During the third quarter of 2002, we determined that we had sufficient inventory levels to meet demand until the Framingham facility was completed and validated, which was estimated to be within one year. In connection with this assessment, we concluded that we no longer require the manufacturing capacity at the HA plant in the United Kingdom and recorded an impairment charge of $9.0 million in our consolidated statements of operations to write off the assets at the United Kingdom facility.

NOTE I.    GOODWILL AND OTHER INTANGIBLE ASSETS

        Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets," which requires that ratable amortization of goodwill and certain intangible assets be replaced with periodic tests of the goodwill's impairment and that other intangible assets be amortized over their useful lives unless these lives are determined to be indefinite.

F-112

Cumulative Effect of Change in Accounting for Goodwill

        Upon adoption of SFAS No. 142, we tested the goodwill of Biosurgery's cardiothoracic reporting unit in accordance with the transitional provisions of that standard, using the present value of expected future cash flows to estimate the fair value of this former reporting unit. We recorded an impairment charge of $98.3 million, which we reflected as a cumulative effect of a change in accounting for goodwill in our consolidated statements of operations in March 2002.

Goodwill

        Effective January 1, 2002, in accordance with the provisions of SFAS No. 142, we ceased amortizing goodwill. The following table contains the changes in our net goodwill during the years ended December 31, 2004 and 2003 (amounts in thousands):

	As of December 31, 2003		Acquisition		Impairment		Adjustments			As of December 31, 2004
Renal	$	76,753	$	—	$	—	$	—		$	76,753
Therapeutics		354,709		—		—		—			354,709
Transplant (1)		132,550		—		—		(439	)		132,111
Biosurgery		7,585		—		—		—			7,585
Diagnostic/Genetics (2,3)		49,249		190,751		—		5			240,005
Other (3,4)		1,101		478,539		—		113			479,753
Goodwill, net	$	621,947	$	669,290	$	—	$	(321	)	$	1,290,916

	As of December 31, 2002		Acquisition		Impairment			Adjustments		As of December 31, 2003
Renal	$	76,753	$	—	$	—		$	—	$	76,753
Therapeutics		354,709		—		—			—		354,709
Transplant (1)		—		132,550		—			—		132,550
Biosurgery (5)		110,376		—		(102,791	)		—		7,585
Diagnostic/Genetics (3)		49,244		—		—			5		49,249
Other (3)		993		—		—			108		1,101
Goodwill, net	$	592,075	$	132,550	$	(102,791	)	$	113	$	621,947

(1)

Represents the goodwill resulting from our acquisition of SangStat in September 2003. We recorded additional adjustments to the goodwill in 2004 related to the finalization of the purchase price allocations and revisions of estimates of liabilities established to exit activities.

(2)

Includes $157.5 million of goodwill resulting from our acquisition of certain of the pathology/oncology testing assets of IMPATH in May 2004 and $33.2 million of goodwill resulting from our acquisition of substantially all of the assets of Alfigen in February 2004.

(3)

The adjustments to goodwill relate to foreign currency revaluation adjustments for goodwill denominated in foreign currencies.

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(4)

Addition in 2004 represents the goodwill resulting from our acquisition of ILEX in December 2004.

(5)

In connection with our assessment of the value of our Biosurgery reporting unit and the elimination of our tracking stock structure, we determined that the fair value of Biosurgery's net assets was lower than their carrying value, indicating a potential impairment of the goodwill allocated to Biosurgery's orthopaedics reporting unit, which resulted from our acquisition of Biomatrix in December 2000. The fair value was determined by discounting, to present value, the estimated future cash flows of the reporting unit. Based on our analysis, we have concluded that the goodwill assigned to Biosurgery's orthopaedics reporting unit is fully impaired. Accordingly, we recorded a charge for impairment of goodwill of $102.8 million in our consolidated statements of operations in June 2003 to write off the goodwill allocated to Biosurgery's orthopaedics reporting unit.

        We completed the annual impairment tests for the $801.4 million of net goodwill in the third quarter of 2004, as provided by SFAS No. 142, and determined that none of the goodwill allocated to our reporting units was impaired and, therefore, no impairment charges were required. We are required to perform impairment tests under SFAS No. 142 annually and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable.

Other Intangible Assets

        The following table contains information on our other intangible assets for the periods presented (amounts in thousands):

		As of December 31, 2004							As of December 31, 2003
		Gross Other Intangible Assets		Accumulated Amortization			Net Other Intangible Assets		Gross Other Intangible Assets		Accumulated Amortization			Net Other Intangible Assets
Technology (1)		$	1,011,068	$	(206,194	)	$	804,874	$	785,991	$	(138,404	)	$	647,587
Patents			183,360		(57,403	)		125,957		183,360		(43,413	)		139,947
Trademarks			60,227		(20,754	)		39,473		58,027		(15,606	)		42,421
License fees			44,789		(12,592	)		32,197		38,072		(9,400	)		28,672
Distribution agreements			14,075		(7,038	)		7,037		13,950		(5,294	)		8,656
Customer lists (2)			83,578		(25,444	)		58,134		38,038		(11,895	)		26,143
Other			11,420		(9,693	)		1,727		9,200		(6,782	)		2,418
	Total	$	1,408,517	$	(339,118	)	$	1,069,399	$	1,126,638	$	(230,794	)	$	895,844

(1)

Includes completed technology valued at $224.7 million resulting from our acquisition of ILEX in December 2004. The value assigned to this technology will be amortized over an estimated life of 12 years.

(2)

Includes customer lists valued at $34.5 million resulting from our acquisition of certain of the pathology/oncology testing assets of IMPATH in May 2004 and $11.0 million resulting from our acquisition of substantially all of the assets of Alfigen in February 2004. The value assigned to these customer lists will be amortized over a weighted average period of ten years.

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        All of our other intangible assets are amortized over their estimated useful lives. Total amortization expense for our other intangible assets was:

•

$109.5 million for the year ended December 31, 2004;



•

$80.3 million for the year ended December 31, 2003; and



•

$71.5 million for the year ended December 31, 2002.

        The estimated future amortization expense for other intangible assets for the five succeeding fiscal years is as follows (amounts in thousands):

Year ended December 31,	Estimated Amortization Expense
2005	$	123,214
2006		114,633
2007		114,633
2008		113,924
2009		110,464

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NOTE J.    INVESTMENTS IN MARKETABLE SECURITIES AND STRATEGIC EQUITY INVESTMENTS

Marketable Securities (amounts in thousands):

		December 31,
		2004				2003
		Cost		Market Value		Cost		Market Value
Cash equivalents(1):
	Corporate notes	$	71,339	$	71,345	$	24,968	$	24,970
	U.S. Government agencies		—		—		10,103		10,103
	Money market funds		257,412		257,412		63,526		63,526
	Money market funds – restricted cash (2)		604		604		—		—
			329,355		329,361		98,597		98,599
Short-term:
	Corporate notes		18,674		18,866		95,669		95,819
	U.S. Government agencies		38,179		38,134		1,562		1,576
	Non U.S. Government agencies		—		—		3,085		3,088
	U.S. Treasury notes		14,108		13,994		20,227		20,229
			70,961		70,994		120,543		120,712
Long-term:
	Corporate notes		234,501		232,992		297,749		305,195
	U.S. Government agencies		143,756		142,593		167,256		168,589
	Non U.S. Government agencies		11,912		11,929		21,410		21,708
	Fixed income fund		253		253		—		—
	Money market funds – restricted investments (2)		1,691		1,691		—		—
	U.S. Treasury notes		141,378		140,495		318,689		318,482
			533,491		529,953		805,104		813,974
Total cash equivalents, short- and long-term investments		$	933,807	$	930,308	$	1,024,244	$	1,033,285
Investments in equity securities		$	98,836	$	150,253	$	98,053	$	110,620

(1)

Cash equivalents are included as part of cash and cash equivalents on our consolidated balance sheets.

(2)

In connection with our acquisition of ILEX Oncology in December 2004, we acquired a letter of credit that ILEX maintained in connection with their leased facility in Texas. The letter of credit is 105% collateralized with $2.3 million in restricted cash.

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        The following table contains information regarding the range of contractual maturities of our investments in debt securities (amounts in thousands):

	December 31,
	2004				2003
	Cost		Market Value		Cost		Market Value
Within 1 year	$	400,316	$	400,355	$	219,140	$	219,311
1-2 years		236,312		235,433		322,265		325,435
2-10 years		297,179		294,520		482,839		488,539
	$	933,807	$	930,308	$	1,024,244	$	1,033,285

Realized and Unrealized Gains and Losses on Marketable Securities and Investments in Equity Securities

        We review the carrying value of each of our strategic investments in equity securities on a quarterly basis for potential impairment. In September 2004, we recorded a $2.9 million impairment charge in connection with our investment in MacroGenics and in June 2003, we recorded a $3.6 million impairment charge in connection with our investment in the common stock of ABIOMED because we considered the decline in value of these investments to be other than temporary. Given the significance and duration of the decline in value of these investments as of September 30, 2004, with respect to our investment in MacroGenics, and as of June 30, 2003, with respect to our investment in ABIOMED, we concluded that it was unclear over what period the recovery of the stock price for these investments would take place, and, accordingly, that any evidence suggesting that the investments would recover to at least our historical cost was not sufficient to overcome the presumption that the current market price was the best indicator of the value of these investments.

        At December 31, 2004, our stockholders' equity includes $56.0 million of unrealized gains and $4.6 million of unrealized losses related to our investments in strategic equity securities. The unrealized losses are related to our investment in the common stock of BioMarin. However, based on the following facts, we believe that the decline in market value of BioMarin stock below our costs is considered to be temporary:

•

BioMarin has two additional products that are either pending approval or are in very late stages of development;



•

BioMarin's management has clear initiatives to maintain or improve the pace of its progress. The recent setbacks relative to BioMarin's inventory and leadership turnover appear to be stabilized resulting in greater investor confidence and stock price improvement;



•

in November and December 2004, the price of BioMarin common stock improved and such improvement is currently maintained in 2005 and expected to continue;



•

we intend and are able to hold our investment in BioMarin common stock for a period of time sufficient to allow for the anticipated recovery in market value;

F-117

•

industry analyst reports on BioMarin indicate improved confidence with strong buy rating and target prices in excess of our cost; and



•

BioMarin has a strong balance sheet and sufficient liquidity to meet its near term needs.

        We record gross unrealized holding gains and losses related to our investments in marketable securities and strategic investments, to the extent they are determined to be temporary, in stockholders' equity. The following table sets forth the amounts recorded:

	December 31,
	2004		2003
Unrealized holding gains	$	57.1 million	$	26.6 million
Unrealized holding losses	$	9.2 million	$	5.0 million

        The following table shows strategic investments in equity securities of unconsolidated entities that we hold as of December 31, 2004 (amounts in thousands):

	December 31, 2004
	Adjusted Cost		Market Value		Unrealized Gain/(Loss)
ABIOMED, Inc. (1)	$	12,185	$	35,631	$	23,446
BioMarin Pharmaceutical Inc. (1)		18,000		13,435		(4,565	)
Caduceus Private Investments II, L.P. (2)		1,388		1,388		—
Cambridge Antibody Technology Group plc (1,3)		41,012		63,947		22,935
Cortical Pty Ltd. (2,4)		736		736		—
Dyax Corporation (1)		1,096		4,114		3,018
GTC Biotherapeutics, Inc. (1)		5,811		7,486		1,675
Healthcare Ventures V and VII		2,757		2,757		—
MacroGenics, Inc. (2)		2,138		2,138		—
MPM Bioventures III Q.P., L.P.		2,124		2,124		—
Oxford Bioscience Partners IV LP		3,375		3,375		—
Proquest Investments II, L.P.		3,214		3,214		—
Theravance, Inc. (1)		—		4,908		4,908
ViaCell, Inc. (5)		5,000		5,000		—
Total at December 31, 2004	$	98,836	$	150,253	$	51,417

	December 31, 2003
	Adjusted Cost		Market Value		Unrealized Gain/(Loss)
	(Amounts in thousands)
Total at December 31, 2003	$	98,053	$	110,620	$	12,567

(1)

Marketable equity securities that have readily determinable market values are stated at market value. We record temporary unrealized gains and losses related to these investments in other comprehensive income.

F-118

(2)

Equity securities without readily determinable market values and for which we do not exercise significant influence are stated at cost and are periodically reviewed for impairment.

(3)

Our investment in CAT is denominated in British pounds sterling. We translated this investment into U.S. dollars at the current exchange rate on December 31, 2004.

(4)

Our investment in Cortical Pty Ltd. is in Australian dollars. We translated this investment into U.S. Dollars at the current exchange rate on December 31, 2004.

(5)

Our investment in ViaCell, Inc. is stated at cost because as of December 31, 2004, ViaCell had not yet completed its initial public offering.

Cambridge Antibody Technology Group plc

        We have a strategic alliance with CAT, a UK-based biotechnology company which we refer to as CAT, for the development and commercialization of human monoclonal antibodies directed against transforming growth factor (TGF)-beta. Prior to September 2003, we owned 307,982 ordinary shares of CAT, which were purchased upon entering into the initial collaboration in September 2000. We purchased 1.8 million ordinary shares of CAT in September 2003 for $15.8 million and an additional 2.5 million ordinary shares in October 2003 for $22.3 million. Following these purchases, we hold approximately 9% of the outstanding shares of CAT at December 31, 2004.

GTC Biotherapeutics, Inc.

        On April 4, 2002, GTC purchased approximately 2.8 million shares of GTC common stock held by us for an aggregate consideration of $9.6 million. We received $4.8 million in cash and a promissory note for the remaining amount. We committed to a 24-month lock-up provision on the remaining 4.9 million shares of GTC common stock held by us, which was approximately 15% of the shares of GTC common stock outstanding as of December 31, 2003. We accounted for our investment in GTC under the equity method of accounting until May 2002, at which point our ownership interest and board representation was reduced below 20% and we did not have any other factors of significant influence. Accordingly, we ceased to have significant influence over GTC and we began accounting for our investment in GTC under the cost method of accounting in June 2002.

        We recorded in equity in loss of equity method investments our portion of GTC's results through May 2002. Our recognized portion of GTC's net losses was $1.9 million in 2002. The fair market value of our investment in GTC common stock was $7.5 million at December 31, 2004 and $14.8 million at December 31, 2003.

        We provide GTC with certain research and development and administrative services and sublease to GTC laboratory, research and development agreement of $2.9 million in 2003. During 2004, we received approximately $2.0 million from GTC under our other agreements. At December 31, 2004, GTC owed us $2.8 million under these agreements.

F-119

        Through May 2002, we accounted for our investment in GTC under the equity method of accounting. The following table contains condensed statement of operations data for GTC for the year ended December 31, 2002 (amounts in thousands):

	For the Year Ended December 31, 2002
Revenues	$	10,379
Operating loss		(25,909	)
Net loss		(24,320	)

Dyax Corporation

        In May 2002, we extended to Dyax a $7.0 million line of credit. Dyax issued a senior secured promissory note in the principal amount of $7.0 million to us under which it can request periodic advances of not less than $250,000 in principal, subject to certain conditions. Advances under this note bear interest at the prime rate plus 2%, which was 7.25% at December 31, 2004, and are due, together with any accrued but unpaid interest, in May 2005. Dyax may extend the maturity of the note to May 2007 if the collaboration is in effect, no defaults or events of default exist and Dyax satisfies the financial covenants in the note as of the initial maturity date. As of December 31, 2004, Dyax had drawn $7.0 million under the note, which we have recorded as a note receivable-related party in our consolidated balance sheet. We consider Dyax as a related party because the chairman and chief executive officer of Dyax is a member of our board of directors.

        In October 1998, we entered into a collaboration agreement with Dyax to develop and commercialize one of Dyax's proprietary compounds for the treatment of chronic inflammatory diseases. In May 2002, we restructured our collaboration agreement with Dyax for the development of the kallikrein inhibitor DX-88. In 2003, we acquired a 49.99% interest in Dyax-Genzyme LLC, formerly known as Kallikrein LLC, our joint venture with Dyax for the development of DX-88 for HAE and other chronic inflammatory diseases. As a result of our adoption of FIN 46, we have consolidated the results of Dyax-Genzyme LLC, which we became a member of in 2003. Our consolidated balance sheet as of December 31, 2004 includes assets of $0.5 million related to Dyax-Genzyme LLC, substantially all of which are included in other current assets. We have recorded Dyax's portion of this joint venture's losses as minority interest in our consolidated statements of operations.

        Under the terms of the collaboration agreement, both companies will share development costs of DX-88 for HAE going forward. In addition, Dyax will receive milestone payments from us upon dosing the first HAE patient in a pivotal clinical trial of DX-88 and upon regulatory approvals for the first indication. Dyax will also receive milestone payments from us if DX-88 is approved in additional indications. Contingent upon successful development and receipt of regulatory approvals we will market the product worldwide. Both companies will share equally in profits from sales of DX-88 for HAE and/or other chronic inflammatory diseases. In March 2003, Dyax exercised an option to acquire from us all rights to DX-88 for surgical indications.

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NOTE K.    EQUITY METHOD INVESTMENTS

        The following tables describe:

•

the amount of funding we have provided to each equity method investment to date;



•

amounts due to us by each equity method investment as of December 31, 2004 for services we provided on behalf of the equity method investment, which we have recorded on our balance sheet as prepaid expenses and other current assets;



•

our portion of the losses of each equity method investment for the periods presented, which we have recorded as charges to equity in loss of equity method investments in our consolidated statements of operations; and



•

total net losses of each equity method investment for the periods presented.

Equity Method Investment		Total Funding through December 31, 2004		Receivables as of December 31, 2004
		(Amounts in millions)
BioMarin/Genzyme LLC		$	107.2	$	—
Genzyme AG Research LLC			21.9		—
Genzyme AG Research LLC II			8.5		—
Diacrin-Genzyme LLC			33.3		0.2
Peptimmune, Inc.			—		0.2
Therapeutic Human Polyclonals, Inc.			—		—
MG Biotherapeutics LLC.			10.0		2.4
	Totals	$	180.9	$	2.8

		Our Portion of the Net Losses from Our Equity Method Investments									Total Losses of Our Equity Method Investments
Equity Method Investments
		2004			2003			2002			2004			2003			2002
		(Amounts in millions)									(Amounts in millions)
BioMarin/Genzyme LLC		$	(9.7	)	$	(15.2	)	$	(14.5	)	$	(19.3	)	$	(29.7	)	$	(29.6	)
Diacrin-Genzyme LLC			(0.1	)		(0.3	)		(0.5	)		(0.2	)		(0.4	)		(0.7	)
Peptimmune, Inc			(1.8	)		(0.8	)		—			(14.6	)		(7.5	)		—
Therapeutic Human Polyclonals, Inc.			(1.5	)		(0.4	)		—			(3.9	)		(3.4	)		—
GTC Biotherapeutics, Inc.			—			—			(1.9	)		—			—			(24.3	)
MG Biotherapeutics LLC			(2.5	)		—			—			(5.0	)		—			—
Other			—			—			—			—			0.1			—
	Totals	$	(15.6	)	$	(16.7	)	$	(16.9	)	$	(43.0	)	$	(40.9	)	$	(54.6	)

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        Condensed financial information for our equity method investments, excluding GTC, is summarized below:

	For the Year Ended December 31,
	2004			2003			2002
	(Amounts in thousands)
Revenue	$	42,583		$	11,540		$	296
Gross profit		27,630			6,816			(7,692	)
Operating expenses		(71,321	)		(47,903	)		(22,776	)
Net loss		(43,016	)		(40,907	)		(30,321	)

	December 31,
	2004		2003
	(Amounts in thousands)
Current assets	$	109,097	$	103,067
Noncurrent assets		6,184		1,179
Current liabilities		19,351		13,881
Noncurrent liabilities		1,292		—

BioMarin/Genzyme LLC

        In September 1998, we and BioMarin Pharmaceutical Inc. formed a joint venture, BioMarin/Genzyme LLC, to develop and commercialize Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, used to treat an LSD known as MPS I. BioMarin/Genzyme LLC is owned 50% by BioMarin and one of its wholly owned subsidiaries, which we refer to collectively as the BioMarin Companies, and 50% by us. In connection with the formation of BioMarin/Genzyme LLC, we, the BioMarin Companies and BioMarin/Genzyme LLC entered into a collaboration agreement under which we and the BioMarin Companies granted to BioMarin/Genzyme LLC a world-wide, exclusive, irrevocable, royalty-free right and license or sublicense to develop, manufacture and market Aldurazyme for the treatment of MPS I and other alpha-L-iduronidase deficiencies. All program-related costs for BioMarin/Genzyme LLC are equally funded by BioMarin, on behalf of the BioMarin Companies, and us. We and BioMarin are required to make monthly capital contributions to BioMarin/Genzyme LLC to fund budgeted operating costs. If either BioMarin or Genzyme fails to make two or more of the monthly capital contribution, and the other party does not exercise its right to terminate the collaboration agreement or compels performance of the funding obligation, the defaulting party's (or, in the case of default by BioMarin, the BioMarin Companies') percentage interest in BioMarin/Genzyme LLC and future funding responsibility will be adjusted proportionately.

        On April 30, 2003, the FDA granted marketing approval for Aldurazyme as an enzyme replacement therapy for patients with the Hurler and Hurler-Scheie forms of MPS I, and Scheie patients with moderate to severe symptoms. Aldurazyme has been granted orphan drug status in the United States, which generally provides seven years of market exclusivity.

        On June 11, 2003, the European Commission granted marketing approval for Aldurazyme to treat the non-neurological manifestations of MPS I in patients with a confirmed diagnosis of the disease.

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Aldurazyme has been granted orphan drug status in the European Union, which provides ten years of market exclusivity.

        We are commercializing Aldurazyme in the United States and are launching Aldurazyme in the European Union on a country-by-country basis as pricing and reimbursement approvals are obtained. Aldurazyme is manufactured at BioMarin's facility in California and is sent to either our manufacturing facility in Allston, Massachusetts or to a third-party facility for the final filling and finish process.

        Our portion of the net losses of BioMarin/Genzyme LLC are included in equity in loss of equity method investments in our consolidated statements of operations.

MG Biotherapeutics LLC

        In June 2004, we entered into a collaboration with Medtronic, Inc. for the development of new treatments for heart disease. One aspect of this collaboration involved the formation of MG Biotherapeutics LLC. In June 2004, we made an initial capital contribution of $10.0 million to MG Biotherapeutics LLC, which is included in other noncurrent assets in our consolidated balance sheet as of December 31, 2004.

NOTE L.    ACCRUED EXPENSES

		December 31,
		2004		2003
		(Amounts in thousands)
Compensation		$	116,328	$	100,894
Purchase accrual			18,119		31,883
Bank overdraft			31,085		15,651
Income taxes payable			50,080
Other			178,531		118,876
	Total accrued expenses	$	394,143	$	267,304

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NOTE M.    LONG-TERM DEBT AND LEASES

Long-Term Debt and Capital Lease Obligations

        Our long-term debt and capital lease obligations consist of the following (amounts in thousands):

	December 31,
	2004			2003
1.25% convertible senior notes due December 2023	$	690,000		$	690,000
3% convertible subordinated debentures due May 2021		—			575,000
6.5% convertible note		—			11,275
Revolving credit facility maturing in December 2006		100,000			—
Notes payable		369			5,042
Capital lease obligations		150,125			154,442
	$	940,494		$	1,435,759
Less current portion		(129,503	)		(20,410	)
Total	$	810,991		$	1,415,349

        Over the next five years, we will be required to repay the following principal amounts on our long-term debt (excluding capital leases) (amounts in millions):

2005		2006		2007		2008		2009		After 2009
$	100.4	$	—	$	—	$	690.0	$	—	$	—

1.25% Convertible Senior Notes

        On December 9, 2003, we completed the private placement of $690.0 million in principal of 1.25% convertible senior notes due December 1, 2023. After deducting offering costs of $17.0 million, net proceeds from the offering were approximately $673.0 million. We will pay interest on these notes on June 1 and December 1 each year.

        The notes are convertible into shares of Genzyme Stock at an initial conversion rate, subject to adjustment, of 14.0366 shares per $1,000 principal amount of notes (representing an initial conversion price of approximately $71.24 per share) in the following circumstances:

•

if the closing sale price of Genzyme Stock for at least 20 consecutive trading days in the 30 consecutive trading day period ending on the trading day immediately preceding the day the notes are surrendered for conversion exceeds 120% of the conversion price in effect on that 30^th trading day;



•

during the five consecutive trading day period immediately following any 10 consecutive trading day period (the "Note Measurement Period"), if the trading price per $1,000 principal amount of notes on each trading day during the Note Measurement Period was less than 95% of the conversion value of the notes on such trading day, unless the notes are surrendered after December 1, 2018 and the closing sale price of Genzyme Stock on the trading day immediately preceding the day the notes are surrendered is greater than 100% but equal to or less than 120% of the conversion price then in effect;

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•

if specified corporate transactions have occurred, as provided in the Indenture and terms of the note; or



•

if we redeem the notes. We have the right to redeem the notes for cash, in whole or in part, at our sole option on and after December 1, 2008.

        Furthermore, on each of December 1, 2008, December 1, 2013 and December 1, 2018, holders of the notes may require us to purchase all or a portion of their notes at a purchase price equal to 100% of the principal amount of notes to be purchased, plus any accrued and unpaid interest to, but excluding, the purchase date. We will pay the purchase price, solely at our option, in cash, shares of Genzyme Stock or a combination of cash and shares of Genzyme Stock, provided that we will pay any accrued and unpaid interest in cash. The shares of Genzyme Stock will be valued at 100% of the average closing sale price of Genzyme Stock for the 10 trading days immediately preceding, and including, the third business day immediately preceding the purchase date.

        Interest expense related to these notes was approximately $12 million in 2004 and was not significant in 2003. The amount in 2004 includes approximately $3 million for amortization of debt offering costs. The fair value of these notes, was $729.7 million at December 31, 2004 and $706.4 million at December 31, 2003.

3% Convertible Subordinated Debentures

        On June 1, 2004, we redeemed our outstanding 3% convertible subordinated debentures for $580.1 million, which amount includes $575 million of principal, $4.3 million of premium and $0.8 million of accrued interest. In connection with the redemption, we also recorded a non-cash charge of $5.3 million to interest expense in our consolidated statements of operations in June 2004 to write off the unamortized debt fees incurred with the original issuance of these debentures.

        Interest expense related to these debentures was $8.6 million in 2004 and $20.0 million in 2003, which amounts include $1.4 million in 2004 and $2.8 million in 2003 for amortization of debt offering costs. The fair value of these debentures was $582.9 million at December 31, 2003.

6.5% Convertible Note

        In connection with our acquisition of SangStat, we assumed an $11.3 million, 6.5% convertible note due and paid on March 29, 2004 in favor of UBS AG London.

Revolving Credit Facility

        In December 2003 we entered into a three year $350.0 million revolving credit facility, maturing in December 2006. In June 2004, we drew down $135.0 million under this facility to maintain a certain level of cash balances. In September 2004, we repaid $25.0 million of the outstanding balance and in November we repaid $10.0 million. As of December 31, 2004, $100.0 million in principal remained outstanding under this credit facility. This amount is included in current portion of long-term debt, convertible notes and capital lease obligations in our consolidated balance sheet because we repaid the entire $100.0 million in principal outstanding under the credit facility in January 2005. Borrowings under this credit facility bear interest at LIBOR plus an applicable margin, which was 2.83% at December 31, 2004. The terms of our revolving credit facility include various covenants, including

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financial covenants, that require us to meet minimum liquidity and interest coverage ratios and to meet maximum leverage ratios. We currently are in compliance with these covenants.

6.9% Convertible Subordinated Note

        In connection with our acquisition of Biomatrix, we assumed a 6.9% convertible subordinated note due May 14, 2003 in favor of UBS Warburg LLC. In May 2003, we paid $10.0 million in cash to satisfy this note.

Notes Payable

        Notes payable were assumed as follows:

•

$20.0 million in connection with our acquisition of ILEX on December 20, 2004 that was subsequently paid on December 31, 2004;



•

an aggregate $7.0 million in connection with our acquisition of SangStat in September 2003. We paid $2.0 million in September 2003 and $5.0 million in December 2004 to satisfy these notes;



•

$1.6 million in connection with our acquisition of Novazyme in September 2001, which matured and was paid in December 2002; and



•

an aggregate $5.4 million in connection with our acquisition of GelTex in December 2000, that matured and were paid in June and September 2002.

Capital Leases

        We have non-cancelable capital lease obligations related to certain machinery and equipment, administrative offices and our new corporate headquarters.

        Our capital lease obligation related to our administrative offices in Waltham, Massachusetts requires us to make interest-only lease payments of $2.1 million per year through 2005. During the term of the lease, we have the option to purchase the building and improvements for a purchase price equal to the total amount funded by the lessor of $25.0 million, plus accrued and unpaid lease payments, and certain other costs. This aggregate amount is referred to as the Purchase Option Price. At the end of the lease term of October 31, 2005, we have the option to:

•

purchase the building and improvements for the Purchase Option Price;



•

arrange for the facility to be purchased by a third party; or



•

return the building and improvements to the lessor.

        In the case of the latter two options, we are contingently liable to the extent the lessor is not able to realize 85% of the Purchase Option Price upon the sale or disposition of the property. The $25.0 million is recorded as part of the current portion of the long-term capital lease obligations at December 31, 2004 and as a long-term capital lease obligation at December 31, 2003.

        Our capital lease obligation related to our new corporate headquarters, which we began to occupy in November 2003, requires us to make monthly payments of $1.3 million, which will be adjusted to $1.5 million in 2013. We have recorded the value of the building and related obligations of

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$130.2 million in our consolidated balance sheet. The term of the lease is for fifteen years and may be extended at our option for two successive ten-year periods.

        Over the next five years and thereafter, we will be required to pay the following amounts under our non-cancelable capital leases (amounts in millions):

2005		$	42.1
2006			15.2
2007			15.2
2008			15.2
2009			15.2
Thereafter			146.6
	Total lease payments		249.5
Less: interest			(99.4	)
	Total principal payments		150.1
Less current portion			(29.1	)
	Total	$	121.0

Operating Leases

        We lease facilities and personal property under non-cancelable operating leases with terms in excess of one year. Our total expense under operating leases was (amounts in millions):

For the Years Ended December 31,
2004		2003		2002
$	45.7	$	45.7	$	35.5

        Over the next five years and thereafter, we will be required to pay the following amounts under non-cancelable operating leases (amounts in millions):

2005		2006		2007		2008		2009		After 2009		Total
$	40.1	$	34.4	$	27.2	$	21.8	$	17.0	$	100.9	$	241.4

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NOTE N.    STOCKHOLDER'S EQUITY

Common Stock

        Through June 30, 2003, we had three outstanding series of common stock. Each series was designed to reflect the value and track the performance of one of our divisions. We refer to each series of common stock as follows:

•

Genzyme General Division Common Stock = "Genzyme General Stock;"



•

Genzyme Biosurgery Division Common Stock = "Biosurgery Stock;" and



•

Genzyme Molecular Oncology Division Common Stock = "Molecular Oncology Stock."

        On July 1, 2003, in connection with the elimination of our tracking stock structure, we reclassified the Biosurgery Stock and Molecular Oncology Stock equity accounts into the Genzyme General Stock equity accounts. The elimination of our tracking stock capital structure had no effect on our consolidated net income or loss. On May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of stock, which we now refer to as Genzyme Stock.

        The following tables describe the number of authorized, issued and outstanding shares of our common stock at December 31, 2004 and 2003:

		At December 31, 2004
Series
	Authorized	Issued	Outstanding
Genzyme Stock, $0.01 par value	690,000,000	249,124,534	249,018,176
Undesignated	—	—	—
Total	690,000,000	249,124,534	249,018,176

		At December 31, 2003
Series
	Authorized	Issued	Outstanding
Genzyme General Stock, $0.01 par value	500,000,000	224,716,717	224,610,359
Genzyme Biosurgery Stock, $0.01 par value	100,000,000	—	—
Genzyme Molecular Oncology Stock, $0.01 par value	40,000,000	—	—
Undesignated	50,000,000	—	—
Total	690,000,000	224,716,717	224,610,359

Directors' Deferred Compensation Plan

        Each member of our board of directors who is not also one of our employees may defer receipt of all or a portion of the cash compensation payable to him or her as a director and receive either cash or stock in the future. Under this plan, the director may defer his or her compensation until his or her services as a director cease or until another date specified by the director.

        Under a deferral agreement, a participant indicates the percentage of deferral to allocate to cash and stock, upon which a cash deferral account and a stock deferral account is established. The cash account bears interest at the rate paid on 90-day Treasury bills with interest payable quarterly. The stock account is for amounts invested in hypothetical shares of Genzyme Stock. These amounts will be

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converted into shares quarterly at the average closing price of the stock for all trading days during the quarter.

        Distributions are paid in a lump sum or in annual installments for up to five years. Payments begin the year following a director's termination of service or, subject to certain restrictions, in a year elected by the participant. As of December 31, 2004, three of the eight eligible directors had accounts under this plan, and two directors are currently participating under this plan. We have reserved 105,962 shares of Genzyme Stock to cover distributions credited to stock accounts under the plan. We had not made any stock distributions under this plan as of December 31, 2004. Through December 31, 2004, we made cash distributions totaling $36,255 to one director under the terms of his deferral agreement.

Preferred Stock

	At December 31, 2004			At December 31, 2003
Series
	Authorized	Issued	Outstanding	Authorized	Issued	Outstanding
Series A Junior Participating, $0.01 par value	3,000,000	—	—	2,000,000	—	—
Series B Junior Participating, $0.01 par value	—	—	—	1,000,000	—	—
Series C Junior Participating, $0.01 par value	—	—	—	400,000	—	—
Undesignated	7,000,000	—	—	6,600,000	—	—
	10,000,000	—	—	10,000,000	—	—

        On May 27, 2004, our shareholders approved amendments to our charter that:

•

eliminated the Series B and Series C designations of Genzyme preferred stock; and



•

increased the authorized amount of our Series A Junior Participating Preferred Stock from 2,000,000 to 3,000,000 shares.

        Our charter permits us to issue shares of preferred stock at any time in one or more series. Our board of directors will establish the preferences, voting powers, qualifications, and special or relative rights or privileges of any series of preferred stock before it is issued.

Stock Rights

        Under our shareholder rights plan, each outstanding share of Genzyme common stock also represents one preferred stock purchase right for our stock. When the stock purchase rights become exercisable, the holders of our stock will be entitled to purchase one share of Series A Junior Participating Preferred Stock, par value $0.01 per share, for $150.00.

        A stock purchase right becomes exercisable either:

•

ten days after our board of directors announces that a third party has become the owner of 15% or more of the total voting power of our outstanding common stock combined; or

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•

ten business days after a third party announces or initiates a tender or exchange offer that would result in that party owning 15% or more of the total voting power of our outstanding common stock combined.

In either case, the board of directors can extend the ten-day delay. These stock purchase rights expire in March 2009.

Equity Plans

        The purpose of the 2004 Equity Incentive Plan is to attract, retain and motivate key employees and consultants, upon whose judgment, initiative and efforts the financial success and growth of the business of the company largely depend. The Plan was approved by shareholders in May 2004. All of our employees are eligible to receive grants under the 2004 Equity Incentive Plan. The plan provides for the grant of incentive stock options and nonstatutory stock options. The exercise price of option grants may not be less than the fair market value at the date of grant. Options granted under the plan may not be re-priced without shareholder approval. Each option has a maximum term of ten years. The compensation committee of our board of directors, or its delegate as applicable, determines the terms and conditions of each stock option grant, including who among eligible persons will receive grants, the form of payment of the exercise price, the number of shares granted, the vesting schedule and the terms of exercise. At December 31, 2004, a total of 6,800,000 shares of Genzyme Stock have been reserved for issuance under the 2004 Equity Incentive Plan. There are currently no options outstanding under the plan.

        The 2001 Equity Incentive Plan is an amendment and restatement of the 1990 Equity Incentive Plan which was merged into the 2001 Equity Incentive Plan and approved by shareholders in May 2001. The purpose of the plan is to attract and retain key employees and consultants, provide an incentive for them to achieve long-range performance goals, and enable them to participate in our long-term growth. All of our employees are eligible to receive grants under the 2001 Equity Incentive Plan. The plan provides for the grant of incentive stock options and nonstatutory stock options. The exercise price of option grants may not be less than the fair market value at the date of grant. Options granted under the plan may not be re-priced without shareholder approval. Each grant has a maximum term of ten years. The compensation committee of our board of directors, or its delegate as applicable, determines the terms and conditions of each option grant, including who among eligible persons will receive option grants, the form of payment of the exercise price, the number of shares granted, the vesting schedule and the terms of exercise. At December 31, 2004, a total of 13,628,558 shares of Genzyme Stock have been reserved for issuance under the plan, with 12,797,900 options outstanding and 830,658 options available for grant.

        The purpose of the 1997 Equity Incentive Plan is to attract and retain key employees and consultants, provide an incentive for them to achieve long-range performance goals, and enable them to participate in our long-term growth. All employees capable of contributing significantly to the successful performance of Genzyme, except for our officers and directors, are eligible to receive grants under this plan. The 1997 Equity Incentive Plan provides for the grant of nonstatutory stock options only. The exercise price of option grants may not be less than the fair market value at the date of grant. Option grants have a maximum term of ten years. The compensation committee of our board of directors, or its delegate as applicable, determines the terms and conditions of each option grant, including who among eligible persons will receive option grants, the form of payment of the exercise price, the number of shares granted, the vesting schedule and the terms of exercise. The 1997 Equity Plan was

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approved by our board of directors in October 1997. At December 31, 2004, a total of 18,911,805 shares of Genzyme Stock have been reserved for issuance under the 1997 Equity Incentive Plan, with 18,700,249 options outstanding and 211,556 options available for grant.

        Nonstatutory options to purchase 15,000 shares of Genzyme Stock are granted annually to non-employee members of our board of directors under our 1998 Director Stock Option Plan. These options have an exercise price at fair market value on the date of grant, expire ten years after the initial grant date and vest on the date of the next shareholders meeting following the date of grant. The 1998 Director Stock Option Plan was approved by shareholders in May 1998, and amended by shareholders in May 2001 and May 2004. At December 31, 2004, a total of 786,491 shares of Genzyme Stock have been reserved for issuance under the 1998 Director Stock Option Plan, with 467,753 options outstanding and 318,738 options available for grant.

		Shares Under Option		Weighted Average Exercise Price		Number Exercisable
GENZYME STOCK:
Outstanding at December 31, 2001		25,360,780		$	27.80	11,815,491
	Granted	6,950,890			32.52
	Exercised	(1,204,888	)		14.76
	Forfeited and cancelled	(1,244,058	)		36.79
Outstanding at December 31, 2002		29,862,724			29.23	16,002,081
	Granted	7,529,838			45.74
	Exercised	(5,998,204	)		16.84
	Forfeited and cancelled	(1,260,842	)		52.30
	Converted From Biosurgery Stock(1)	401,257			214.76
	Converted From Molecular Oncology Stock (1)	198,855			141.97
Outstanding at December 31, 2003		30,733,628		$	37.95	17,779,047
	Granted	9,051,690			43.66
	Exercised	(4,663,495	)		25.41
	Forfeited and cancelled	(977,102	)		55.99
Outstanding at December 31, 2004		34,144,721		$	40.66	20,616,197

		Shares Under Option		Weighted Average Exercise Price		Number Exercisable
BIOSURGERY STOCK:
Outstanding at December 31, 2001		7,003,870		$	12.54	3,783.030
	Granted	2,107,453			4.32
	Exercised	(18,373	)		6.02
	Forfeited and cancelled	(950,920	)		10.34
Outstanding at December 31, 2002		8,142,030			10.65	4,734,922
	Granted	58,550			2.10
	Exercised	—			—
	Forfeited and cancelled	(500,364	)		10.27
	Converted to Genzyme Stock (1)	(7,700,216	)		10.62
Outstanding at December 31, 2003 and 2004		—

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		Shares Under Option		Weighted Average Exercise Price		Number Exercisable
MOLECULAR ONCOLOGY STOCK:
Outstanding at December 31, 2001		2,774,019		$	9.68	1,407,425
	Granted	845,811			2.44
	Exercised	(497	)		4.68
	Forfeited and cancelled	(68,294	)		9.23
Outstanding at December 31, 2002		3,551,039			7.97	1,990,842
Granted		39,000			2.49
	Exercised	(5,680	)		2.33
	Forfeited and cancelled	(153,583	)		7.24
	Converted to Genzyme Stock (1)	(3,430,776	)		7.97
Outstanding at December 31, 2003 and 2004		—

(1)

In connection with the elimination of our tracking stock structure, we converted options and warrants to purchase shares of Biosurgery Stock and Molecular Oncology Stock into options and warrants to purchase shares of Genzyme Stock. While the issuance of the replacement options caused a new measurement date, the resulting intrinsic value was not significant.

The total exercise proceeds for all options outstanding at December 31, 2004 was $118.5 million.

        The following table contains information regarding the range of option prices for Genzyme Stock as of December 31, 2004:

		Weighted Average Remaining Contractual Life			Exercisable
Range Of Exercise Prices	Number Outstanding as of 12/31/04		Weighted Average Exercise Price		Number Exercisable as of 12/31/04	Weighted Average Exercise Price
$0.22 – $20.59	4,457,297	3.10	$	15.36	4,350,309	$	15.28
20.61 – 32.52	8,543,914	6.27		30.25	6,320,507		29.56
32.61 – 46.24	14,064,732	8.73		44.48	4,597,457		44.20
46.25 – 53.47	5,755,318	6.64		52.17	4,312,138		52.48
53.56 – 2,356.12	1,323,460	6.45		101.52	1,035,786		107.61
$0.22 – $2,356.12	34,144,721	7.00	$	40.66	20,616,197	$	38.48

Employee Stock Purchase Plan

        Our 1999 Employee Stock Purchase Plan allows employees to purchase our stock at a discount. There are 4,829,391 shares of Genzyme Stock authorized for purchase under the plan as of December 31, 2004, of which 1,565,193 remain available.

        We place limitations on the number of shares of stock that can be purchased under the plan in a given year.

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        The following table shows the shares purchased by employees for the past three years:

Shares Issued	Genzyme Stock	Biosurgery Stock	Molecular Oncology Stock
2002	415,622	283,043	135,900
2003	970,496	202,151	84,143
2004	1,288,424	—	—
Available for purchase as of December 31, 2004	1,565,193	—	—

Stock Compensation Plans

        The disclosure regarding how we account for our five stock-based compensation plans: the 1997 Equity Incentive Plan, the 2001 Equity Incentive Plan, the 2004 Equity Incentive Plan, the 1998 Director Stock Option Plan (each of which are stock option plans) and the 1999 Employee Stock Purchase Plan is included in Note A., "Summary of Significant Accounting Policies—Accounting for Stock-Based Compensation," to our consolidated financial statements.

Purchase Rights

        Upon our acquisition of Novazyme in 2001, we assumed certain third parties' rights to purchase Novazyme Series B preferred stock that we converted into rights to purchase 66,846 shares of Genzyme Stock valued at $1.8 million. In connection with the conversion of these rights, we paid cash in lieu of fractional shares, which reduced the number of converted rights to 66,830. The converted rights have an exercise price of $18.20 per right. The aggregate purchase price of the rights at the date of conversion was $1.2 million. These purchase rights expire 15 days following the filing of our first IND application with the FDA for a treatment for Pompe disease utilizing certain technology acquired from Novazyme.

        Purchase rights activity is summarized below:

	Genzyme Stock
	Purchase Rights		Exercise Price
Outstanding at December 31, 2001	20,829		$	18.20
Rights exercised	(798	)		18.20
Outstanding at December 31, 2002	20,031			18.20
Rights exercised	(4,509	)		18.20
Outstanding at December 31, 2003	15,522			18.20
Rights exercised	—			—
Outstanding at December 31, 2004	15,522			18.20

Designated Shares

        Prior to June 30, 2003, designated shares were authorized shares of Biosurgery Stock and Molecular Oncology Stock that were not issued and outstanding, but which our board of directors could issue, sell or distribute without allocating the proceeds or benefits to the division that the series of stock tracked. Designated shares were not eligible to receive dividends and could not be voted by us.

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We created designated shares when we transferred cash or other assets from Genzyme General to Genzyme Biosurgery or Genzyme Molecular Oncology or from other interdivision transactions. As part of the elimination of our tracking stock structure, effective July 1, 2003 all outstanding designated shares of Biosurgery Stock and Molecular Oncology Stock were cancelled. We have reserved for issuance shares of Genzyme Stock to meet potential commitments under our Directors Deferred Compensation Plan and with respect to outstanding options.

Notes Receivable from Shareholders

        In connection with the acquisition of Biomatrix, we acquired notes receivable from certain former employees, directors, and consultants. The notes are full-recourse promissory notes that accrue interest at rates ranging from 5.30% to 7.18% and mature at various dates from May 2007 through September 2009, at which point all outstanding principal and accrued interest become payable. There is $13.9 million outstanding of principal and accrued interest at December 31, 2004 that is recorded in shareholders' equity because the notes were originally received in exchange for the issuance of stock.

NOTE O.    COMMITMENTS AND CONTINGENCIES

Legal Proceedings

        We periodically become subject to legal proceedings and claims arising in connection with our business. We do not believe that there were any asserted claims against us as of December 31, 2004 that will have a material adverse effect on our results of operations, financial condition or liquidity.

        Four lawsuits have been filed against us regarding the exchange of all of the outstanding shares of Biosurgery Stock and Molecular Oncology Stock for shares of Genzyme Stock, each of which is a purported class action on behalf of holders of Biosurgery Stock. The first case, filed in Massachusetts Superior Court in May 2003, alleged a breach of the implied covenant of good faith and fair dealing in our charter and a breach of our board of directors' fiduciary duties. The plaintiff in this case sought an injunction to adjust the exchange ratio for the tracking stock exchange. The Court dismissed the complaint in November 2003, but the plaintiff in this case has appealed this dismissal. This appeal was argued before the Massachusetts Appeals Court in March 2005 and we are awaiting the Appeals Court's ruling. Two substantially similar cases were filed in Massachusetts Superior Court in August and October 2003. These cases were consolidated in January 2004, and in July 2004, the consolidated case was stayed pending disposition of a fourth case, which was filed in the U.S. District Court for the Southern District of New York in June 2003. This case alleges violations of federal securities laws, common law fraud, and a breach of the merger agreement with Biomatrix in addition to the state law claims contained in the other cases. The plaintiffs are seeking an adjustment to the exchange ratio, the rescission of the acquisition of Biomatrix, and unspecified compensatory damages. We believe each of these cases is without merit and continue to defend against them vigorously.

        On March 27, 2003, the OFT in the United Kingdom issued a decision against our wholly-owned subsidiary, Genzyme Limited, finding that Genzyme Limited held a dominant position and abused that dominant position with no objective justification by pricing Cerezyme in a way that excludes other delivery/homecare service providers from the market for the supply of home delivery and homecare services to Gaucher patients being treated with Cerezyme. In conjunction with this decision, the OFT imposed a fine on Genzyme Limited and required modification to its list price for Cerezyme in the United Kingdom. Genzyme Limited appealed this decision to the Competition Appeal Tribunal. On

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May 6, 2003, the Tribunal issued an order that stayed the OFT's decision, but required Genzyme Limited to provide a homecare distributor a discount of 3% per unit during the appeal process. The Tribunal issued its judgment on Genzyme Limited's appeal on March 11, 2004, rejecting portions of the OFT's decision and upholding others. The Tribunal found that the list price of Cerezyme should not be reduced, but that Genzyme Limited must negotiate a price for Cerezyme that will allow homecare distributors an appropriate margin. These negotiations are ongoing. The Tribunal also reduced the fine imposed by the OFT for violation of U.K. competition laws. In response to the Tribunal's decision, we recorded an initial liability of approximately $11 million in our 2003 financial statements and additional liabilities totaling approximately $3 million during 2004, all of which remain in accrued expenses in our consolidated balance sheet as of December 31, 2004. On April 13, 2004, Genzyme Limited filed an application with the Tribunal for permission to appeal to the High Court. The application is still pending.

        In June 2003, we filed suit in U.S. District Court for the District of Massachusetts, as co-plaintiff with Biogen IDEC and Abbott Laboratories against Columbia University seeking a declaration that Columbia's U.S. Patent 6,455,275 is invalid. The patent relates to the manufacture of recombinant proteins in Chinese hamster ovary, or CHO, cells, which are the cells we use to manufacture Cerezyme, Fabrazyme and Thyrogen, and which our joint venture partner BioMarin uses to manufacture Aldurazyme. This new patent was issued by the USPTO in September 2002 from a family of patents and patent applications originally filed in 1980. We are licensed under the patent family for a royalty of 1.5% of sales but, because we were confident that the new patent was mistakenly issued by the USPTO and is invalid, we did not pay the royalty pending the outcome of the litigation. We then received notice from Columbia that we were in breach of our license agreement. A hearing on motions for a summary judgment was scheduled for November 2004; however, Columbia recently rescinded the breach notification and filed with the Court a covenant not to enforce its patent 6,455,275 against any plaintiff in this litigation. In view of this covenant, the Court granted Columbia's motion to dismiss the plaintiff's main claim for lack of subject matter jurisdiction.

        We are not able to predict the outcome of these cases or estimate with certainty the amount or range of any possible loss we might incur if we do not prevail in the final, non-appealable determinations of these matters. Therefore, except for approximately $11 million in liabilities established in 2003 and approximately $3 million in additional liabilities arising during 2004 from the Tribunal's decision regarding Cerezyme pricing in the United Kingdom, we have not accrued any amounts in connection with these potential contingencies. We cannot provide you with assurance that the matters listed above, or other legal proceedings, will not have a material adverse impact on our financial condition or results of operations.

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NOTE P.    INCOME TAXES

        Our income (loss) before income taxes and the related income tax provision (benefit) are as follows:

		For the Years Ended December 31,
		2004			2003			2002
		(Amounts in thousands)
Domestic		$	103,470		$	(41,764	)	$	92,016
Foreign			124,226			46,819			12,195
Total		$	227,696		$	5,055		$	104,211
Currently payable:
	Federal	$	51,742		$	42,928		$	(3,598	)
	State		11,769			8,107			4,249
	Foreign		32,611			14,611			7,694
Total			96,122			65,646			8,345
Deferred:
	Federal		44,423			5,738			11,137
	State		(2,255	)		118			(882	)
	Foreign		2,879			1,145			415
Total			45,047			7,001			10,670
Provision for (benefit from) income taxes		$	141,169		$	72,647		$	19,015

        Our provisions for income taxes were at rates other than the U.S. federal statutory tax rate for the following reasons:

	For the Years Ended December 31,
	2004		2003		2002
Tax provision (benefit) at U.S. statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net	2.8		114.0		3.2
Extra-territorial income	(7.1	)	(221.0	)	(8.9	)
Goodwill impairment	—		711.7		—
Charge for purchased research and development	39.1		1,094.0		0.6
Benefit of tax credits	(4.7	)	(343.3	)	(15.7	)
Foreign rate differential	(4.4	)	(13.4	)	3.8
Other	1.3		60.1		0.3
Effective tax rate	62.0	%	1,437.1	%	18.3	%

        Our effective tax rates for 2004, 2003 and 2002 varied from the U.S. statutory rate as a result of:

•

our provision for state income taxes;



•

the tax benefits from export sales;



•

the impact of the write off of nondeductible goodwill in 2003;

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•

nondeductible charges for IPR&D recorded in December 2004 and September 2003;



•

benefits related to tax credits; and



•

the foreign rate differential.

In addition, our overall tax rate has changed significantly due to fluctuations in our income (loss) before taxes, which was $227.7 million in 2004, $5.1 million in 2003 and $104.2 million in 2002.

        The components of net deferred tax assets (liabilities) are described in the following table:

		December 31,
		2004			2003
		(Amounts in thousands)
Deferred tax assets:
	Net operating loss carryforwards	$	149,106		$	72,001
	Tax credits		30,245			51,240
	Realized and unrealized capital (gains) losses		(3,575	)		14,469
	Inventory		4,730			5,505
	Intercompany profit in inventory eliminations		42,559			45,265
	Reserves, accruals and other		52,883			32,336
	Gross deferred tax assets		275,948			220,816
	Valuation allowance		(10,268	)		(10,268	)
	Net deferred tax assets		265,680			210,548
Deferred tax liabilities:
	Depreciable assets		(22,045	)		(23,538	)
	Deferred gain		(898	)		(898	)
	Intangible assets		(308,149	)		(258,328	)
	Net deferred tax liabilities	$	(65,412	)	$	(72,216	)

        Our ability to realize the benefit of net deferred tax assets is dependent on our generating sufficient taxable income and capital gain income before net operating loss, capital loss and tax credit carryforwards expire. While it is not assured, we believe that it is more likely than not that we will be able to realize all of our net deferred tax assets. The amount we can realize, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

        At December 31, 2004, we had for U.S. income tax purposes, net operating loss carryforwards of $417.8 million and tax credit carryforwards of $30.2 million. Our net operating loss carryforwards expire between 2007 and 2023 and the tax credits expire between 2011 and 2024. Ownership changes, as defined under the Internal Revenue Code, may have limited the amount of net operating loss carryforwards which may be utilized annually to offset future taxable income. For foreign purposes, we had net operating loss carryforwards of $9.2 million in 2004, which carryforward indefinitely.

        We are currently under IRS audit for tax years 1996 to 1999. We believe that we have provided sufficiently for all audit exposures. A favorable settlement of this audit or the expiration of the statute of limitations on the assessment of income taxes for any tax year may result in a reduction of future tax

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provisions, which could be significant. Any such benefit would be recorded upon final resolution of the audit or expiration of the statute.

        In 2001, the World Trade Organization, or WTO, determined that the tax provisions of the FSC Repeal and Extraterritorial Income Exclusion Act of 2000, or ETI, constitute an export subsidy prohibited by the WTO Agreement on Subsidies and Countervailing Measures Agreement. As a result, in October 2004, the U.S. enacted the American Jobs Creation Act of 2004, or the Act, which repeals the ETI export subsidy for transactions after 2004 with two years of transition relief (2005-2006). The Act also provides a 9% deduction for income from domestic production activities which will be phased in over the years 2005-2010. While we are still evaluating the net impact of this new legislation, we do not expect it to have a material effect on our ongoing effective tax rate.

        In addition, the Act creates a temporary incentive for U.S. multinational corporations to repatriate accumulated income earned outside the U.S. While we are still evaluating this provision, we do not expect to benefit from the repatriation provisions under this Act.

NOTE Q.    BENEFIT PLANS

Defined Contribution Plans

        We have three defined contribution plans:

•

the Genzyme Corporation 401(k) Plan, which we refer to as the 401(k) Plan;



•

the Genzyme Surgical Products Corporation Savings and Investment Plan, which we refer to as the GSP Plan; and



•

the Biomatrix, Inc. Retirement Plan, which we refer to as the Biomatrix Plan.

        The 401(k) Plan was established effective January 1, 1988 to provide a long-range program of systematic savings for eligible employees. Employees of our wholly-owned subsidiaries in the United States of America are eligible to participate in the 401(k) Plan, including employees of the former Deknatel Snowden Pencer, Inc., which we acquired in 1996, who also participate in the GSP Plan and employees of the former Biomatrix, which we acquired in December 2000, who also participate in the Biomatrix Plan. Eligible employees may elect, through salary reduction agreements, to have up to 18% or a maximum of $13,000, through December 31, 2004, and $14,000, effective January 1, 2005, of their eligible compensation contributed on a pre-tax basis to the 401(k) Plan each year on their behalf. We make bi-weekly matching contributions to the 401(k) Plan equal to:

•

100% of the elective contributions made to the 401(k) Plan by each participant to the extent that such elective contributions do not exceed 2% of the participant's eligible compensation for such pay period; and



•

50% of the amount of elective contributions made to the 401(k) Plan by the participant to the extent such elective contributions exceed 2% but do not exceed 6% of the participant's eligible compensation for such pay period.

SG&A includes the following charges related to the 401(k) Plan, representing our matching contributions and an insignificant amount of administrative fees incurred in each year:

•

$13.7 million in 2004;

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•

$10.8 million in 2003; and



•

$9.2 million in 2002.

        Effective December 31, 2000, the GSP Plan and the Biomatrix Plan were frozen. As of that date, no new contributions from participants or contributions from us have been accepted by either plan and no new participants have been allowed to enter these two plans. Existing participants continue to have full access to their account balances in the GSP Plan and Biomatrix Plan, including the ability to initiate fund transfers among the available investment options, loans and hardship distributions. Effective December 31, 2000, participants in both the GSP Plan and Biomatrix Plan became eligible to participate in the Genzyme 401(k) Plan.

Retirement Plans

        In December 2003, the FASB issued SFAS No. 132 (revised) "Employers' Disclosures about Pensions and Other Postretirement Benefits." This statement revises employers' disclosures about pension plans and other postretirement benefit plans. It requires additional disclosures related to the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. For U.S. defined benefit pension plans and other defined benefit postretirement plans, SFAS No. 132 (revised) is effective for fiscal years ending after December 15, 2003. Disclosure of information about foreign plans required under SFAS No. 132 (revised) is effective for fiscal years ending after June 15, 2004. The adoption of SFAS No. 132 (revised) did not have a material impact on our disclosures about pensions and other postretirement benefits in 2003, because we only have one U.S. defined benefit plan for the former employees of Deknatel Snowden Pencer, Inc., which has been frozen since December 1995 and is fully funded as of December 31, 2003 and 2004. Disclosure of information about foreign plans required under SFAS No. 132 (revised) is effective for fiscal years ending after June 15, 2004.

        We have defined benefit pension plans for certain employees in foreign countries. These plans are funded in accordance with requirements of the appropriate regulatory bodies governing each plan.

        The following table sets forth the funded status and amounts recognized for our foreign defined benefit pension plans (amounts in thousands):

	December 31,
	2004			2003
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	40,630		$	30,145
Service cost		2,477			1,805
Interest cost		2,316			1,762
Plan participants' contributions		1,030			798
Actuarial loss		4,176			2,558
Foreign currency exchange rate changes		3,715			3,923
Benefits paid		(455	)		(361	)
Projected benefit obligation, end of year	$	53,899		$	40,630

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Change in plan assets:
Fair value of plan assets, beginning of year	$	31,826		$	15,639
Return on plan assets		3,010			2,862
Employer contribution		2,266			9,928
Plan participants' contributions		1,030			798
Foreign currency exchange rate changes		2,793			2,865
Benefits paid		(352	)		(266	)
Fair value of plan assets, end of year	$	40,573		$	31,826
Benefit obligation in excess of plan assets	$	(13,316	)	$	(8,804	)
Unrecognized net actuarial loss		18,298			13,747
Net amount recognized	$	4,982		$	4,943

        Amounts recognized in our consolidated balance sheets consist of (amounts in thousands):

	December 31,
	2004			2003
Prepaid benefit cost	$	9,153		$	8,571
Accrued benefit liability		(4,171	)		(3,628	)
Accumulated other comprehensive income		—			—
Net amount recognized	$	4,982		$	4,943

        The weighted average assumptions used in determining related obligations of pension benefit plans are shown below:

		December 31,
		2004	2003
Weighted average assumptions:
	Discount rate	4.90%	5.43%
	Rate of compensation increase	3.50%	3.50%

        The weighted average assumptions used to determine the net pension expense are shown below:

		December 31,
		2004	2003	2002
Weighted average assumptions:
	Discount rate	5.43%	5.75%	6.00%
	Rate of return on assets	8.00%	7.00%	6.75%
	Rate of compensation increase	3.50%	3.52%	3.50%

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        The components of net pension expense are as follows (amounts in thousands):

	December 31,
	2004			2003			2002
Service cost	$	2,477		$	1,805		$	1,293
Interest cost		2,316			1,762			1,397
Expected return on plan assets		(3,010	)		(1,326	)		(1,203	)
Amortization and deferral of actuarial (gain)/loss		876			550			154
Net pension expense	$	2,659		$	2,791		$	1,641

        The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets are as follows (amounts in thousands):

	December 31,
	2004		2003
Projected benefit obligation	$	4,269	$	3,463
Accumulated benefit obligation		3,927		3,162
Fair value of plan assets		—		—

        At December 31, 2003, accumulated other comprehensive income includes the reversal of the additional minimum pension liability and related taxes recorded in 2002.

        At December 31, 2004 and 2003, plan assets for our foreign defined pension benefit plans consist solely of the assets of our defined pension benefit plan in the United Kingdom, which we refer to as our UK Pension Plan. Defined pension benefit plan assets for our other foreign subsidiaries as of December 31, 2004 and 2003 were not significant.

        The investment objective of our UK Pension Plan is to maximize the overall return from investment income and capital appreciation without resorting to a high risk investment strategy. The plan has no employer-related investments. Our UK Pension Plan retains professional investment managers that invest plan assets primarily in equity securities, bonds, property, and cash and other investments, which is consistent with the plan's liability profile. The weighted average asset allocations for our UK Pension Plan at December 31, 2004 and 2003 were as follows:

		December 31,
		2004	2003
United Kingdom equity securities		57%	43%
Other overseas equity securities		22%	19%
Bonds		10%	8%
Real estate		6%	1%
Other		5%	29%
	Total	100%	100%

        Our UK Pension Plan's benchmark asset allocation strategy is to invest plan assets 60% in UK equity securities, 20% in other overseas equity securities, 15% in bonds and 5% in property. The

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assumption made for the expected return on assets is based on the benchmark allocation strategy for our UK Pension Plan. Returns for individual asset categories are derived from market yields at the effective date, together with, in the case of equity-type assets, allowance for the additional future return expected from such assets compared to fixed interest investments.

Contributions

        We expect to contribute approximately $3 million to our UK Pension Plan in 2005.

Estimated Future Benefit Payments

        We expect to pay the following benefit payments for our foreign defined pension benefit plans, which reflect expected future service, as appropriate (amounts in thousands):

	Estimated Future Benefit Payments
2005	$	758
2006		822
2007		930
2008		1,139
2009		1,238
2010-2014		8,081

NOTE R.    SEGMENT REPORTING

        In accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," we present segment information in a manner consistent with the method we use to report this information to our management. Applying SFAS No. 131, we have five reporting segments as described in Note A., "Summary of Significant Accounting Policies—Business," to this Form 10-K.

        We have provided information concerning the operations of these reporting segments in the following table (amounts in thousands):

			For the Years Ended December 31,
			2004		2003		2002
Revenues:
	Renal		$	363,720	$	281,701	$	156,864
	Therapeutics			1,114,919		859,675		675,260
	Transplant (1)			151,363		44,320		—
	Biosurgery			209,516		253,292		252,907
	Diagnostics/Genetics (1)			279,121		190,735		172,810
	Other (1)			79,604		81,059		68,672
	Corporate			2,902		3,089		2,959
		Total	$	2,201,145	$	1,713,871	$	1,329,472

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Depreciation and amortization expense:
	Renal		$	28,547		$	27,418		$	22,510
	Therapeutics			12,394			11,798			8,246
	Transplant (1)			36,199			11,276			—
	Biosurgery			32,785			35,481			37,943
	Diagnostics/Genetics (1)			22,094			13,334			10,329
	Other (1)			24,407			23,272			23,174
	Corporate			48,688			37,880			31,798
		Total	$	205,114		$	160,459		$	134,000
Equity in loss of equity method investments:
	Therapeutics		$	(9,853	)	$	(15,497	)	$	(14,928	)
	Transplant (1)			(1,486	)		(449	)		—
	Biosurgery			—			—			—
	Diagnostics/Genetics			—			—			—
	Other			(2,485	)		—			—
	Corporate (2)			(1,800	)		(797	)		(1,930	)
		Total	$	(15,624	)	$	(16,743	)	$	(16,858	)
Income (loss) before income taxes:
	Renal		$	107,608		$	49,596		$	(18,153	)
	Therapeutics			592,197			404,131			279,824
	Transplant (1)			(27,093	)		(166,204	)		—
	Biosurgery (3)			(3,699	)		(160,907	)		(66,718	)
	Diagnostics/Genetics (1)			(15,465	)		8,626			6,314
	Other (1)			(331,374	)		(81,312	)		(73,305	)
	Corporate (4)			(94,478	)		(48,875	)		(23,751	)
		Total	$	227,696		$	5,055		$	104,211

(1)

Results of operations of companies acquired and amortization of intangible assets related to these acquisitions are included in segment results beginning on the date of acquisition. Charges for IPR&D related to these acquisitions are included in the segment results in the year of acquisition. Acquisitions completed since January 1, 2002 include:

Company Acquired	Date Acquired	Business Segment(s)	IPR&D Charge
ILEX	December 20, 2004	Other	$254.5 million
Pathology/oncology testing assets of IMPATH	May 1, 2004	Diagnostics/Genetics	None
Alfigen	February 21, 2004	Diagnostics/Genetics	None
SangStat	September 11, 2003	Transplant	$158.0 million

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(2)

In 2004 and 2003, represents our portion of the losses of Peptimmune, an equity method investment, effective April 1, 2003. In 2002 represents our portion of the net loss of GTC, an unconsolidated affiliate through May 2002, which we do not specifically allocate to a particular reporting segment.

(3)

Includes:

•

a $102.8 million charge for the impairment of goodwill recorded in June 2003 to write off the goodwill allocated to Biosurgery's orthopaedics reporting unit;

•

a $2.9 million charge for the impairment of our manufacturing facility in Fall River, Massachusetts recorded in June 2003;

•

a charge of $8.0 million in September 2003 to write off the tangible and intangible assets related to our FocalSeal product, which we stopped selling in December 2003; and

•

$27.7 million for the net loss recorded in connection with the sale of substantially all of the tangible and intangible assets of our cardiac device business to Teleflex in June 2003.

(4)

The amount in Corporate for net income consists primarily of interest income, interest expense and other income and expense items that we do not specifically allocate to a particular segment.

Segment Assets

        We provide information concerning the assets of our reporting segments in the following table (amounts in thousands):

			December 31,
			2004		2003		2002
Segment Assets (1):
	Renal (2)		$	616,979	$	598,164	$	467,164
	Therapeutics			949,168		866,676		829,796
	Transplant (3)			408,090		441,948		—
	Biosurgery (4,5)			294,715		324,254		539,651
	Diagnostics/Genetics (6)			464,870		177,740		165,924
	Other (7,8)			971,065		252,481		254,872
	Corporate (3,6,7,8,9)			2,364,534		2,343,265		1,835,792
		Total	$	6,069,421	$	5,004,528	$	4,093,199

(1)

Assets for our five reporting segments and Other include primarily accounts receivable, inventory and certain fixed and intangible assets.

(2)

In June 2004, we reallocated $50.0 million of property, plant and equipment related to our manufacturing facilities in the United Kingdom from Corporate to our Renal reporting segment. Accordingly, we have also reallocated $46.4 million of assets from Corporate to Renal as of December 31, 2003 to conform the prior year segment asset disclosure to the new presentation of these assets.

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(3)

In September 2003, we acquired SangStat for cash consideration paid (or set aside) of $636.6 million. Total assets for SangStat as of September 11, 2003, the date of acquisition, include (amounts in millions):

		Amount		Business Segment
Cash and short-term investments		$	99.4	Corporate
Accounts receivable			25.7	Transplant
Inventory			33.1	Transplant
Deferred tax assets-current			68.0	Corporate
Other current assets			4.4	Transplant
Property, plant and equipment			2.8	Transplant
Goodwill			132.6	Transplant
Other intangible assets			256.0	Transplant
Other assets			11.4	Corporate
	Total	$	633.4

(4)

At December 31, 2003, reflects reductions of:

•

$102.8 million for the impairment of goodwill recorded in June 2003 related to the write off of the goodwill allocated to Biosurgery's orthopaedics reporting unit;

•

$68.1 million for the sale of substantially all of the tangible and intangible assets of our cardiac device business to Teleflex in June 2003;

•

$8.0 million for the write off of the assets associated with our FocalSeal product; and

•

$2.9 million for the impairment of our manufacturing facility in Fall River, Massachusetts.

(5)

Upon the adoption of SFAS No. 142, we tested the goodwill of Biosurgery's cardiothoracic reporting unit in accordance with the transitional provisions of that standard, using the present value of expected future cash flows to estimate the fair value of this former reporting unit. We recorded an impairment charge of $98.3 million, which we reflected as a cumulative effect of change in accounting for goodwill in our consolidated statements of operations in March 2002.

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(6)

In February 2004, we acquired substantially all of the assets of Alfigen for cash consideration paid of $47.5 million and in May 2004 we acquired substantially all of the pathology/oncology testing assets of IMPATH for cash consideration of $215.3 million. Total assets for these acquisitions as of their dates of acquisition include (amounts in millions):

		Alfigen		IMPATH		Total		Business Segment
Accounts receivable		$	—	$	14.5	$	14.5	Diagnostics/Genetics
Inventories			—		2.0		2.0	Diagnostics/Genetics
Deferred tax asset—current			—		0.5		0.5	Diagnostics/Genetics
Other current assets			0.1		2.5		2.6	Diagnostics/Genetics
Property, plant and equipment			1.2		15.0		16.2	Diagnostics/Genetics
Goodwill			33.2		157.5		190.7	Diagnostics/Genetics
Other intangible assets			13.0		34.8		47.8	Diagnostics/Genetics
Deferred tax asset—noncurrent			—		0.8		0.8	Diagnostics/Genetics
Other assets			—		0.2		0.2	Diagnostics/Genetics
	Total	$	47.5	$	227.8	$	275.3

(7)

In December 2004, we acquired ILEX for total consideration of $1.1 billion. Total assets for ILEX as of December 20, 2004, the date of acquisition, include (amounts in millions):

		Amount		Business Segment
Cash and cash equivalents		$	121.1	Corporate
Restricted cash			0.6	Corporate
Accounts receivable			13.1	Other
Inventories			16.6	Other
Deferred tax asset—current			27.3	Other
Other current assets			2.9	Other/Corporate
Property, plant and equipment			2.2	Other
Restricted long-term investments			1.7	Corporate
Goodwill			478.5	Other
Other intangible assets			228.6	Other
Deferred tax assets—noncurrent			25.0	Other
Other assets			1.6	Other/Corporate
	Total	$	919.2

(8)

In September 2003 we reclassified $80.0 million of cash, cash equivalents, short- and long-term investments related to our drug discovery and development business from Other to Corporate because we consider these to be corporate assets. We have reclassified our segment asset disclosures for 2002 to conform to the current presentation of these assets in 2003.

(9)

Includes the assets related to our corporate, general and administrative operations and corporate science activities that we do not allocate to a particular segment, including cash, cash equivalents, short-and long-term investments, net property, plant and equipment and deferred tax assets.

F-146

        Segment assets for Corporate consist of the following (amounts in thousands):

		December 31,
		2004		2003		2002
Cash, cash equivalents, short- and long-term investments		$	1,081,749	$	1,227,460	$	1,195,004
Deferred tax assets-current			160,438		133,707		115,244
Property, plant & equipment, net			804,948		730,107		414,076
Investment in equity securities			150,253		110,620		42,945
Other			167,146		141,371		68,523
	Total	$	2,364,534	$	2,343,265	$	1,835,792

Geographic Segments

        We operate in the healthcare industry and we manufacture and market our products primarily in the United States and Europe. Our principal manufacturing facilities are located in the United States, United Kingdom, Switzerland, Ireland, France and Germany. We purchase products from our subsidiaries in the United Kingdom and Switzerland for sale to customers in the United States. We set transfer prices from our foreign subsidiaries to allow us to produce profit margins commensurate with our sales and marketing effort. Our subsidiary in Luxembourg is our primary distributor of therapeutic products in Europe. The following table contains certain financial information by geographic area (amounts in thousands):

			For the Years Ended December 31,
			2004		2003		2002
Revenues:
	United States		$	1,208,184	$	971,821	$	805,492
	Europe			723,102		544,646		386,928
	Other			269,859		197,404		137,052
		Total	$	2,201,145	$	1,713,871	$	1,329,472

			December 31,
			2004		2003		2002
			(Amounts in thousands)
Long-lived assets:
	United States		$	911,279	$	897,869	$	504,850
	Europe			621,951		449,949		253,103
	Other			4,781		1,969		1,744
		Total	$	1,538,011	$	1,349,787	$	759,697

        Our results of operations are highly dependent on sales of Cerezyme. Sales of this product represented approximately 42% of our product revenue in 2004, approximately 47% of our product revenue in 2003 and approximately 52% of our product revenue in 2002. We manufacture Cerezyme at a single manufacturing facility in Allston, Massachusetts. We sell this product directly to physicians,

F-147

hospitals and treatment centers as well as through an unaffiliated distributor. Distributor sales of Cerezyme represented 25% of Cerezyme revenue in 2004, 27% in 2003 and 43% in 2002. Sales of Cerezyme to one of our United States distributors represented 5% of our total revenue in 2004, 7% in 2003 and 9% in 2002. We believe that our credit risk associated with trade receivables is mitigated as a result of the fact that this product is sold to a large number of customers over a broad geographic area.

        Sales of Renagel represented 18% of our product revenue in 2004 and 2003 and 13% in 2002. Distributor sales of Renagel represented 59% of Renagel revenue in 2004, 62% in 2003 and 72% in 2002.

NOTE S.    QUARTERLY RESULTS (UNAUDITED)

			1st Quarter 2004		2nd Quarter 2004		3rd Quarter 2004		4th Quarter 2004
			(Amounts in thousands, except per share amounts)
Net revenue			$	491,251	$	549,588	$	569,229	$	591,077
Operating income (loss)				102,008		127,255		146,639		(122,989	)
Net income (loss)				67,894		78,176		97,799		(157,342	)
Income (loss) per share:
	Allocated to Genzyme Stock:
		Basic	$	0.30	$	0.35	$	0.43	$	(0.68	)
		Diluted	$	0.29	$	0.33	$	0.41	$	(0.68	)

			1st Quarter 2003			2nd Quarter 2003			3rd Quarter 2003			4th Quarter 2003 (1)
			(Amounts in thousands, except per share amounts)
Net revenue			$	381,859		$	418,903		$	436,978		$	476,131
Operating income (loss)				62,687			(33,875	)		(73,462	)		75,701
Net income (loss)				45,369			(74,530	)		(95,733	)		57,302
Income (loss) per share:
	Allocated to Genzyme Stock:
		Basic	$	0.29		$	0.33		$	(0.43	)	$	0.26
		Diluted	$	0.28		$	0.32		$	(0.43	)	$	0.25
	Allocated to Biosurgery Stock:
		Basic and diluted	$	(0.29	)	$	(3.46	)		N/A			N/A
	Allocated to Molecular Oncology Stock:
		Basic and diluted	$	(0.28	)	$	(0.26	)		N/A			N/A

(1)

Includes approximately $11 million of additional liabilities arising from the U.K. Competition Appeals Tribunal's decision regarding Cerezyme pricing in the United Kingdom

F-148

GENZYME CORPORATION

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

Column A		Column B	Column C		Column D	Column E
			Additions
Description		Balance at Beginning of Period	Charged to Costs and Expenses	Charged to Other Accounts	Deductions	Balance at End of Period
Year ended December 31, 2004:
	Accounts receivable allowances	26,638,000	12,616,000	34,393,000	31,250,000	42,397,000
Year ended December 31, 2003:
	Accounts receivable allowances	18,869,000	2,838,000	13,433,000	8,502,000	26,638,000
Year ended December 31, 2002:
	Accounts receivable allowances	14,210,000	7,324,000	2,997,000	5,662,000	18,869,000

F-149

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FINANCIAL STATEMENTS GENZYME CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF GENZYME CORPORATION AND SUBSIDIARIES' FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Report of Independent Registered Public Accounting Firm
GENZYME CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Amounts in thousands)
GENZYME CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (Amounts in thousands, except par value amounts)
GENZYME CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Amounts in thousands)
GENZYME CORPORATION AND SUBSIDIARIES Consolidated Statements of Stockholders' Equity (Amounts in thousands)
GENZYME CORPORATION AND SUBSIDIARIES Notes To Consolidated Financial Statements
GENZYME CORPORATION SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

EX-21

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EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Name	Direct Parent	Ownership		Jurisdiction of Incorporation
BioMarin/Genzyme LLC	Genzyme Corporation	50	%	Massachusetts
GLBC LLC	Genzyme Corporation	100	%	Massachusetts
Genzyme Europe BV	Genzyme Luxembourg S.à.r.l.	100	%	The Netherlands
Genzyme Flanders	Genzyme Luxembourg S.à.r.l.	100	%	Belgium
Genzyme GmbH	Genzyme Corporation	100	%	Germany
Genzyme Ireland Limited	Genzyme Luxembourg S.à.r.l.	100	%	Republic of Ireland
Genzyme Limited	Genzyme Corporation	100	%	United Kingdom
Genzyme Pharmaceuticals	Genzyme Corporation	100	%	Switzerland
Genzyme Securities Corporation	Genzyme Corporation	100	%	Masssachusetts
Genzyme Polyclonals S.A.S.	SangStat Atlantique	100	%	France
SangStat Atlantique	SangStat Medical Corporation	100	%	France

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EXHIBIT 21

EX-23

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Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (File Nos. 33-61853, 333-51790, 333-31548, 333-63802, 333-100727, 333-107179, 333-114290) and in the Registration Statements on Form S-8 (File Nos. 33-58359, 33-60437, 333-10003, 333-33249, 333-83677, 333-51906, 33-30007, 33-68208, 333-33265, 333-10005, 333-33251, 333-83669, 333-33291, 33-21241, 333-55126, 333-42371, 333-81275, 333-87967, 333-81277, 333-83673, 333-64103, 333-83681, 333-51872, 333-52202, 333-66130, 333-70310, 333-76762, 333-76766, 333-76768, 333-76770, 333-100722, 333-90514, 333-90512, 333-90510, 333-60495, 333-106691, 333-106692, 333-111314, 333-116650, 333-116651, 333-116653, 333-114184) of Genzyme Corporation of our report dated March 14, 2005 relating to the consolidated financial statements, financial statement schedule, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting and of our report dated January 27, 2004 relating to the financial statements of BioMarin/Genzyme LLC which appear in this Form 10-K.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
March 14, 2005

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Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

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Exhibit 31.1

Certification Pursuant To
Rules 13a-14(a) And 15d-14(a) Under The Securities Exchange Act Of 1934, As Amended

I, Henri A. Termeer, certify that:

1.

I have reviewed this annual report on Form 10-K of Genzyme Corporation (the "Registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.

The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5.

The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: March 14, 2005. /s/  HENRI A. TERMEER Henri A. Termeer
Chief Executive Officer

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Exhibit 31.1

Certification Pursuant To Rules 13a-14(a) And 15d-14(a) Under The Securities Exchange Act Of 1934, As Amended

EX-31.2

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Exhibit 31.2

Certification Pursuant To
Rules 13a-14(a) And 15d-14(a) Under The Securities Exchange Act Of 1934, As Amended

I, Michael S. Wyzga, certify that:

1.

I have reviewed this annual report on Form 10-K of Genzyme Corporation (the "Registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.

The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5.

The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

Date: March 14, 2005. /s/  MICHAEL S. WYZGA Michael S. Wyzga
Chief Financial Officer

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Exhibit 31.2

Certification Pursuant To Rules 13a-14(a) And 15d-14(a) Under The Securities Exchange Act Of 1934, As Amended

EX-32.1

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EXHIBIT 32.1

Certification by the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Pursuant to 18 U.S.C. Section 1350, I, the undersigned Chief Executive Officer of Genzyme Corporation (the "Company"), hereby certify that the Annual Report on Form 10-K of the Company for year ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  HENRI A. TERMEER Henri A. Termeer
Chief Executive Officer
March 14, 2005

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EXHIBIT 32.1

Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-32.2

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EXHIBIT 32.2

Certification by the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Pursuant to 18 U.S.C. Section 1350, I, the undersigned Chief Financial Officer of Genzyme Corporation (the "Company"), hereby certify that the Annual Report on Form 10-K of the Company for the year ended December 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  MICHAEL S. WYZGA Michael S. Wyzga
Chief Financial Officer
March 14, 2005

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EXHIBIT 32.2

Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

EX-99

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Exhibit 99

BioMarin/Genzyme LLC
Index to Financial Statements

	Page(s)
Report of Independent Public Accountants	1
Consolidated Balance Sheets as of December 31, 2004 (Unaudited) and 2003	2
Consolidated Statements of Operations for the years ended December 31, 2004 (Unaudited), 2003 and 2002	3
Consolidated Statements of Cash Flows for the years ended December 31, 2004 (Unaudited), 2003 and 2002	4
Consolidated Statements of Changes in Venturers' Capital for each of the years ended December 31, 2001, 2002 and 2003, and 2004 (Unaudited)	5
Notes to Financial Statements	6-13

Report of Independent Auditors

To the Steering Committee of BioMarin/Genzyme LLC:

        In our opinion, the accompanying balance sheets and the related statements of operations, of cash flows and changes in Venturers' capital present fairly, in all material respects, the financial position of BioMarin/Genzyme LLC at December 31, 2003, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Steering Committee of the Joint Venture; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by the LLC's management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
January 27, 2004

1

BioMarin/Genzyme LLC
Consolidated Balance Sheets
(Amounts in thousands)

			December 31,
			2004		2003
			(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	14,351	$	14,586
	Accounts receivable, net			16,710		5,423
	Funding receivable-BioMarin Companies			—		1,938
	Funding receivable-Genzyme			—		1,938
	Inventories			38,626		37,277
		Total assets	$	69,687	$	61,162
LIABILITIES AND VENTURERS' CAPITAL
Current liabilities:
	Due to BioMarin Companies		$	2,160	$	4,051
	Due to Genzyme Corporation			6,212		6,864
	Accrued expenses			2,921		1,176
	Deferred revenue			458		67
		Total liabilities		11,751		12,158
Commitments and contingencies (Note H)				—		—
Venturers' capital:
	Venturers' capital—BioMarin Companies			28,968		24,502
	Venturers' capital—Genzyme Corporation			28,968		24,502
		Total venturers' capital		57,936		49,004
		Total liabilities and venturers' capital	$	69,687	$	61,162

The accompanying notes are an integral part of these consolidated financial statements.

2

BioMarin/Genzyme LLC
Consolidated Statements of Operations
(Amounts in thousands)

			For the Years Ended December 31,
			2004			2003			2002
			(Unaudited)
Revenues:
	Net product sales		$	42,583		$	11,540		$	296
Operating costs and expenses:
	Cost of products sold			14,954			4,723			7,988
	Selling, general and administrative			26,872			21,829			7,053
	Research and development			20,191			14,738			15,046
		Total operating costs and expenses		62,017			41,290			30,087
Loss from operations				(19,434	)		(29,750	)		(29,791	)
Interest income				151			71			143
Net loss			$	(19,283	)	$	(29,679	)	$	(29,648	)
Net loss attributable to each venturer:
	BioMarin Companies		$	(9,641	)	$	(14,840	)	$	(14,824	)
	Genzyme Corporation		$	(9,642	)	$	(14,839	)	$	(14,824	)

The accompanying notes are an integral part of these consolidated financial statements.

3

BioMarin/Genzyme LLC
Consolidated Statements of Cash Flows
(Amounts in thousands)

					For the Years Ended December 31,
					2004			2003			2002
					(Unaudited)
Cash Flows from Operating Activities:
	Net loss				$	(19,283	)	$	(29,679	)	$	(29,648	)
	Reconciliation of net loss to net cash used in operating activities:
		Noncash charges for inventory write down				—			2,800			7,207
		Increase (decrease) in cash from working capital changes:
			Accounts receivable			(11,287	)		(5,423	)		—
			Inventories			(1,349	)		(22,792	)		(24,492	)
			Prepaid expenses and other current assets			—			—			—
			Due to BioMarin Companies.			(1,891	)		1,914			(959	)
			Due to Genzyme Corporation			(652	)		4,094			542
			Accrued expenses			1,745			1,076			86
			Deferred revenue			391			67			—
				Cash flows from operating activities		(32,326	)		(47,943	)		(47,264	)
Cash Flows from Financing Activities:
	Capital contributed by BioMarin Companies					16,045			25,943			25,140
	Capital contributed by Genzyme Corporation					16,046			25,942			25,140
				Cash flows from financing activities		32,091			51,885			50,280
Increase in cash and cash equivalents						(235	)		3,942			3,016
Cash and cash equivalents at beginning of period						14,586			10,644			7,628
Cash and cash equivalents at end of period					$	14,351		$	14,586		$	10,644
Supplemental disclosure of noncash transaction:
	Funding Receivable—Note D.

The accompanying notes are an integral part of these consolidated financial statements.

4

BioMarin/Genzyme LLC
Consolidated Statements of Changes in Venturers' Capital
(Amounts in thousands)

	Venturers' Capital
	BioMarin Companies			Genzyme Corporation			Total Venturers' Capital
Balance at December 31, 2001	$	1,145		$	1,145		$	2,290
2002 capital contributions		25,140			25,140			50,280
2002 net loss		(14,824	)		(14,824	)		(29,648	)
Balance at December 31, 2002		11,461			11,461			22,922
2003 capital contributions		27,881			27,880			55,761
2003 net loss		(14,840	)		(14,839	)		(29,679	)
Balance at December 31, 2003		24,502			24,502			49,004
2004 capital contributions (unaudited)		14,107			14,108			28,215
2004 net loss (unaudited)		(9,641	)		(9,642	)		(19,283	)
Balance at December 31, 2004 (unaudited)	$	28,968		$	28,968		$	57,936

The accompanying notes are an integral part of these consolidated financial statements.

5

BioMarin/Genzyme LLC

Notes to Consolidated Financial Statements

A.    Nature of Business and Organization

        BioMarin/Genzyme LLC, or the Joint Venture, is a limited liability company organized under the laws of the State of Delaware. The Joint Venture is owned:

•

50% by BioMarin Pharmaceutical Inc., which is referred to as BioMarin, and BioMarin Genetics, Inc., a wholly-owned subsidiary of BioMarin. BioMarin and its subsidiary are referred to as the BioMarin Companies; and



•

50% by Genzyme Corporation, which is referred to as Genzyme.

The BioMarin Companies and Genzyme are collectively referred to as the Venturers and individually as a Venturer. The Joint Venture was organized in September 1998 to develop and commercialize Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, used to treat a lysosomal storage disorder known as mucopolysaccharidosis I, or MPS I. The Joint Venture commenced operations as of September 4, 1998.

        The Joint Venture, BioMarin Companies and Genzyme entered into a Collaboration Agreement dated as of September 4, 1998. Under the terms of the Collaboration Agreement, Genzyme and the BioMarin Companies granted to the Joint Venture a world-wide, exclusive, irrevocable, royalty-free right and license or sublicense to develop, manufacture and market Aldurazyme for the treatment of MPS I and other alpha-L-iduronidase deficiencies. All program-related costs are equally funded by BioMarin, on behalf of the BioMarin Companies, and Genzyme. BioMarin and Genzyme are required to make monthly capital contributions to the Joint Venture to fund budgeted operating costs. If either BioMarin or Genzyme fails to make two or more of the monthly capital contribution, and the other party does not exercise its right to terminate the Collaboration Agreement or compels performance of the funding obligation, the defaulting party's (or, in the case of default by BioMarin, the BioMarin Companies') percentage interest in the Joint Venture and future funding responsibility will be adjusted proportionately.

        The Steering Committee of the Joint Venture serves as the governing body of the Joint Venture and is responsible for determining overall strategy for the program, coordinating activities of the Venturers as well as performing other such functions as appropriate. The Steering Committee is comprised of an equal number of representatives of each Venturer.

        On April 30, 2003, the United States Food and Drug Administration, commonly referred to as the FDA, granted marketing approval for Aldurazyme as an enzyme replacement therapy for patients with the Hurler and Hurler-Scheie forms of MPS I, and Scheie patients with moderate to severe symptoms. Aldurazyme has been granted orphan drug status in the United States, which generally provides seven years of market exclusivity.

        On June 11, 2003, the European Commission granted marketing approval for Aldurazyme to treat the non-neurological manifestations of MPS I in patients with a confirmed diagnosis of the disease. Aldurazyme has been granted orphan drug status in the European Union, which provides ten years of market exclusivity.

        Genzyme is commercializing Aldurazyme in the United States and is launching Aldurazyme in the European Union on a country-by-country basis as pricing and reimbursement approvals are obtained. Aldurazyme is manufactured at BioMarin's facility in California and is sent to either Genzyme's manufacturing facility in Allston, Massachusetts or to a third-party facility for the final filling and finish process.

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B.    Summary of Significant Accounting Policies

Basis of presentation

        The Joint Venture is considered a partnership for federal and state income tax purposes. As such, items of income, loss, deductions and credits flow through to the Venturers. The Venturers have responsibility for the payment of any income taxes on their proportionate share of taxable income of the Joint Venture.

        As of December 31, 2003 and for the years ended December 31, 2003 and 2002, the Joint Venture qualifies as a significant subsidiary to both BioMarin and Genzyme and, as a result, audited financial statements are presented for those periods. As of December 31, 2004 and for the year ended December 31, 2004, the Joint Venture does not meet the criteria of a significant subsidiary to either BioMarin or Genzyme and, as a result, the financial statements for those periods have not been audited.

Principles of Consolidation

        The consolidated financial statements of the Joint Venture include the accounts of its wholly owned and majority owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Accounting method

        The financial statements have been prepared under the accrual method of accounting in conformity with accounting principles generally accepted in the United States of America.

Fiscal year-end

        The Venturers have determined that the fiscal year-end of the Joint Venture is December 31.

Uncertainties

        The Joint Venture is subject to risks common to companies in the biotechnology industry, including:

•

the ability of the Joint Venture to manufacture sufficient amounts of its products for development and commercialization activities;



•

the accuracy of the Joint Venture's estimates of the size and characteristics of markets to be addressed by the Joint Venture's products;



•

market acceptance of the Joint Venture's products;



•

the Joint Venture's ability to obtain reimbursement for its products from third-party payors, where appropriate;



•

the accuracy of the Joint Venture's information concerning the products and resources of competitors and potential competitors;



•

the Joint Venture's ability to successfully obtain timely additional regulatory approvals and adequate patent and other proprietary rights protection for its products; and

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•

the content and timing of decisions made by the FDA and other regulatory agencies regarding the Joint Venture's products and manufacturing facilities.

Use of estimates

        Under accounting principles generally accepted in the United States of America, the Joint Venture is required to make certain estimates and assumptions that affect reported amounts of assets, liabilities, revenues, expenses, and disclosure of contingent assets and liabilities in its financial statements. The Joint Venture's actual results could differ from these estimates.

Cash and cash equivalents

        Cash and cash equivalents, consisting principally of money market funds with initial maturities of three months or less, are valued at cost plus accrued interest, which approximates fair market value. All of the Joint Venture's cash is held on deposit at one financial institution.

Inventories

        Inventories are valued at cost or, if lower, fair value. The Venturers determine the cost of raw materials and work in process using the average cost method and the cost of finished goods using the specific identification method. The Venturers analyze the Joint Venture's inventory levels quarterly and write down to its net realizable value:

•

inventory that has become obsolete;



•

inventory that has a cost basis in excess of its expected net realizable value;



•

inventory in excess of expected requirements; and



•

expired inventory.

        The Joint Venture capitalizes inventory produced for commercial sale, which may result in the capitalization of inventory that has not been approved for sale. If a product is not approved for sale, it would likely result in the write off of the inventory and a charge to earnings. At December 31, 2004 (unaudited) and 2003, all of the Joint Venture's inventories are related to a product that has been approved for sale.

Comprehensive Loss

        The Joint Venture reports comprehensive income (loss) in accordance with Financial Accounting Standards Board, or FASB, Statement of Financial Accounting Standards, or SFAS, No. 130, "Reporting Comprehensive Income." The comprehensive net loss for the years ended December 31, 2004 (unaudited), 2003 and 2002 does not differ from the reported net loss.

Transactions with affiliates

        The majority of the Joint Venture's operating expenses consist of project expenses incurred by the Venturers, either for internal operating costs or for third-party obligations incurred by the Venturers on behalf of the Joint Venture which are then charged to the Joint Venture. The Joint Venture owed a

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total of $8.4 million at December 31, 2004 (unaudited) and $10.9 million at December 31, 2003 to the Venturers for project expenses incurred on behalf of the Joint Venture.

Revenue Recognition

        The Joint Venture recognizes revenue from product sales when persuasive evidence of an arrangement exists, the product has been delivered to the customer, title and risk of loss have passed to the customer, the price to the buyer is fixed or determinable and collection from the customer is reasonably assured. Revenue transactions are evidenced by customer purchase orders, customer contracts in certain instances, invoices and related shipping documents.

        The timing of product shipments and receipts can have a significant impact on the amount of revenue that the Joint Venture recognizes in a particular period. Also, Aldurazyme is sold in part through distributors. Inventory in the distribution channel consists of inventory held by distributors, who are the Joint Venture's customers, and inventory held by retailers, such as pharmacies and hospitals. The Joint Venture's revenue in a particular period can be impacted by increases or decreases in distributor inventories. If distributor inventories increased to excessive levels, the Joint Venture could experience reduced purchases in subsequent periods. To determine the amount of Aldurazyme inventory in the Joint Venture's U.S. distribution channel, the Joint Venture receives data on sales and inventory levels directly from its primary distributors for the product.

        The Joint Venture records reserves for rebates payable under Medicaid and payor contracts, such as managed care organizations, as a reduction of revenue at the time product sales are recorded. The Joint Venture's Medicaid and payor rebate reserves have two components:

•

an estimate of outstanding claims for end-user sales that have occurred, but for which related claim submissions have not been received; and



•

an estimate of future claims that will be made when inventory in the distribution channel is sold to end-users.

        Because the second component is calculated based on the amount of inventory in the distribution channel, the Joint Venture's assessment of distribution channel inventory levels impacts its estimated reserve requirements. The Joint Venture's calculation also requires other estimates, including estimates of sales mix, to determine which sales will be subject to rebates and the amount of such rebates. The Joint Venture updates its estimates and assumptions each period, and records any necessary adjustments to its reserves. Accrued expenses for the Joint Venture includes a reserve for Medicaid and payor rebates payable of $0.5 million at December 31, 2004 (unaudited) and $0.2 million at December 31, 2003.

        The Joint Venture records allowances for product returns, if appropriate, as a reduction of revenue at the time product sales are recorded. Several factors are considered in determining whether an allowance for product returns is required, including:

•

the nature of Aldurazyme—Aldurazyme serves as a treatment, rather than a cure, for MPS I and, therefore, must be administered/infused to the patient on a weekly basis. Aldurazyme treats a small patient population, and the Joint Venture has insight into the patients receiving treatment. In addition, Aldurazyme has been granted Orphan Drug status in the United States

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and European Union. As a result, Aldurazyme is not currently subject to significant external risk factors such as technological obsolescence or competition;

•

the customers' limited return rights—due to the nature, purpose and means of use of Aldurazyme, customers do not have the right to return the product in the ordinary course of business, other than for defects. Aldurazyme, like all biotechnology products, must meet stringent FDA regulations and therefore is subjected to strict quality testing before it is sold. As a result, the Joint Venture expects the incidence of defects to be de minimus. Coupled with the inability to return the product, there is a high cost to the product which deters Aldurazyme customers from carrying significant amounts of inventory;



•

Genzyme's experience of returns for similar products. Genzyme has extensive experience with other lysosomal storage disorder products in the market, similar to Aldurazyme. These products are marketed and distributed through similar means and to similar customers. Genzyme's experience with these products is directly applicable to Aldurazyme and supports the Joint Venture's conclusions related to returns; and



•

the Joint Venture's estimate of distribution channel inventory, based on sales and inventory level information provided by the primary distributors for Aldurazyme, as described above.

        Based on these factors, the Joint Venture has concluded that product returns will be minimal and, therefore, an allowance for product returns for Aldurazyme is not necessary at December 31, 2004 (unaudited) or 2003. In the future, if any of these factors and/or the history of product returns changes, an allowance for product returns may be required.

Research and development

        Research and development costs are expensed in the period incurred. These costs are primarily comprised of development efforts performed by the Venturers or payments to third parties made by the Venturers, both on behalf of the Joint Venture, during the respective periods.

Income taxes

        The Joint Venture is organized as a pass-through entity; accordingly, the financial statements do not include a provision for income taxes. Taxes, if any, are the liability of the BioMarin Companies and Genzyme, as Venturers.

Recent Accounting Pronouncement

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, and Amendment of ARB No. 43, Chapter 4." SFAS No. 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS No. 151 is effective for inventory costs incurred after October 31, 2005. The Venturers do not anticipate that the adoption of SFAS No. 151 will have a material impact on financial statements of the Joint Venture.

C.    Accounts Receivable

        The Joint Venture's trade receivables primarily represent amounts due from distributors and healthcare service providers. The Joint Venture states accounts receivable at fair value, after reflecting

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an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make payments. The Joint Venture believes that its credit risk associated with trade receivables is mitigated by the following factors:

•

the product is sold to a diverse set of customers over a broad geographic range;



•

the Joint Venture performs credit evaluations of its customers on an ongoing basis; and



•

the Joint Venture performs a detailed, monthly review of the receivable aging and specific customer balances.

        There was no allowance for doubtful accounts recorded at either December 31, 2004 (unaudited) or 2003. To-date, due to the customers' credit worthiness, the monthly review of the receivable balances and the customers' need to maintain a supply of Aldurazyme and Genzyme's similar products, the Joint Venture has not written-off any receivables and no allowance for doubtful accounts has been necessary. In the future, if the financial condition of any of the Joint Venture's customers were to deteriorate and result in an impairment of the customer's ability to make payments, an allowance for doubtful accounts may be required.

D.    Funding Receivable

        At December 31, 2003, both Venturers had not provided their funding commitments for December 2003 and, as a result, the Joint Venture recorded funding receivable from each venturer of $1.9 million. Both Venturers paid their December 2003 funding commitments in January 2004. There were no funding amounts receivable from the Venturers at December 31, 2004 (unaudited).

E.    Inventories (amounts in thousands)

		December 31,
		2004		2003
		(Unaudited)
Raw materials		$	2,155	$	1,608
Finished products			36,471		35,669
	Total	$	38,626	$	37,277

        The Joint Venture recorded charges of $2.8 million in 2003 to cost of products sold to write off certain production runs during the scale up of Aldurazyme manufacturing. There were no similar charges recorded in 2004 (unaudited).

        The Joint Venture capitalizes inventory produced for commercial sale, which may result in the capitalization of inventory that has not been approved for sale. If a product is not approved for sale, it would likely result in the write off of the inventory and a charge to earnings. At December 31, 2004 (unaudited) and 2003, all of the Joint Venture's inventories are related to a product that has been approved for sale.

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F.    Accrued Expenses (amounts in thousands):

		December 31,
		2004		2003
		(Unaudited)
Royalties		$	2,095	$	855
Other			826		321
	Total accrued expenses	$	2,921	$	1,176

G.    Venturers' Capital

        As of December 31, 2004 (unaudited), Venturers' capital is comprised of monthly capital contributions made by the Venturers to fund budgeted costs and expenses of the Joint Venture in accordance with the Collaboration Agreement, net of losses allocated to the Venturers. All funding is shared equally by the two Venturers. As of December 31, 2004 (unaudited), the BioMarin Companies and Genzyme have each provided a total of $107.2 million of funding to the Joint Venture.

H.    Commitments and Contingencies

        The Joint Venture may become subject to legal proceedings and claims arising in connection with its business. There were no asserted claims against the Joint Venture as of December 31, 2004 (unaudited).

I.    Segment Information

        The Joint Venture operates in one business segment—human therapeutics. Disclosures about revenues by geographic area and revenues from major customers are presented below.

        The following table contains revenue information by geographic area (amounts in thousands):

			For the Years Ended December 31,
			2004		2003		2002
			(Unaudited)
Revenues:
	US		$	12,568	$	4,499	$	—
	Europe			27,468		6,881		296
	Other			2,547		160		—
		Total	$	42,583	$	11,540	$	296

        The Joint Venture's results of operations are solely dependent on sales of Aldurazyme. BioMarin manufactures Aldurazyme at a single manufacturing facility in California. The fill and finish process is completed at either Genzyme's manufacturing facility in Allston, Massachusetts or at a third party.

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Sales of Aldurazyme to distributors, as compared to total revenues in 2004 (unaudited) and 2003, were as follows:

	% of Total Revenues
	2004		2003
	(Unaudited)
Sales to U.S. distributors	12	%	19	%
Sales to European distributors	6	%	9	%
Total sales to distributors	18	%	28	%

        Sales of Aldurazyme to a single U.S. distributor were 7% in 2004 (unaudited) and 12% of total revenues in 2003. There were no sales of Aldurazyme to distributors in 2002.

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QuickLinks

Exhibit 99

BioMarin/Genzyme LLC Index to Financial Statements
Report of Independent Auditors