8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):

October 18, 2005

GENZYME CORPORATION

(Exact name of registrant as specified in its charter)

Massachusetts	0-14680	06-1047163
(State or other jurisdiction of incorporation or organization)	(Commission file number)	(IRS employer identification number)

500 Kendall Street, Cambridge, Massachusetts  02142

(Address of Principal Executive Offices)  (Zip Code)

Registrant’s telephone number, including area code:

(617) 252-7500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02	Results of Operations and Financial Condition.
On October 18, 2005, Genzyme Corporation issued a press release relating to its results of operations and financial condition for the quarter ended September 30, 2005. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.
Item 9.01	Financial Statements and Exhibits.
(c)	Exhibits
99.1	Press Release of Genzyme Corporation dated October 18, 2005.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	GENZYME CORPORATION
Dated: October 18, 2005	By:	/s/ MICHAEL S. WYZGA
		Michael S. Wyzga
		Executive Vice President, Finance;
		Chief Financial Officer; and
		Chief Accounting Officer

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INDEX TO EXHIBITS

Exhibit No.	Description
99.1	Press Release of Genzyme Corporation dated October 18, 2005.

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EX-99.1

Exhibit 99.1

For Immediate Release	Media Contact:	Investor Contact:
October 18, 2005	Bo Piela	Sally Curley
	617-768-6579	617-768-6140

Genzyme Delivers Strong Third-Quarter Results

CAMBRIDGE, MA—Genzyme Corp. (Nasdaq: GENZ) announced today that revenue increased 24 percent in the third quarter of 2005 to $708.1 million, up from $569.2 million in the same quarter a year earlier.  Revenue growth was driven by increases in all product areas.

GAAP net income was $115.7 million, or $0.43 per diluted share, compared with GAAP net income of $97.8 million, or $0.41 per diluted share, in the third quarter last year.

Non-GAAP net income increased 38 percent to $160.5 million, or $0.61 per diluted share, up from $115.9 million, or $0.49 per diluted share, in the third quarter a year ago.  Non-GAAP net income excludes pre-tax charges of $50.8 million for amortization and $12.7 million to write off in-process research and development acquired from Bone Care International Inc., along with the dilutive effect of contingent convertible debt.

“We are having an excellent year,” said Henri A. Termeer, Genzyme’s chairman and chief executive officer.  “The commitment we’ve made to invest in the company and to diversify is clearly making an impact.  We are delivering outstanding financial results consistently from quarter to quarter, while at the same time building a platform for future growth by investing in our broad research and development pipeline, expanding our global infrastructure, and acquiring new products.”

Genzyme’s gross margin grew to 78 percent of revenue from 73 percent in the third quarter a year ago, driven by margin improvements across the company’s business areas.  Increased margins for Synvisc^® (hylan G-F 20) resulting from the acquisition of U.S. sales rights contributed significantly to the overall margin improvement, as did greater utilization of manufacturing facilities.  Genzyme continues to invest in the global infrastructure that is enabling it to capture the full value of its products.  Last month, the company opened a new bio-manufacturing plant in Belgium for the production of monoclonal antibodies and proteins, and it completed the expansion of manufacturing centers in Ireland and the United Kingdom.  Genzyme has also completed the expansion of its Allston Landing facility, where it has increased capacity by 50 percent to manufacture Myozyme^® (alglucosidase alfa) in anticipation of commercial launch next year.

During the third quarter, Genzyme generated approximately $330 million in cash from operations and stock option exercises and recorded capital expenditures of $52 million.  The company also completed the Bone Care acquisition for $600 million in net cash and marketable securities and repaid approximately $350 million in debt associated with this purchase drawn on its equity line of credit.  Genzyme ended the quarter with approximately $950 million in cash and marketable securities.

Product Sales

Within the Renal area, revenue for Renagel^® (sevelamer hydrochloride), a phosphate binder for patients with end-stage renal disease on hemodialysis, was $106.9 million, an increase of 15 percent from $93.3 million in the same quarter last year.  Renagel revenue includes product sales, royalties and sales of bulk sevelamer.

(more)

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In July, Genzyme reported results from its Dialysis Clinical Outcomes Revisited (D-COR) study.  The study compared the difference in mortality and morbidity outcomes for patients receiving Renagel with those using calcium-based phosphate binders.  Results from the D-COR trial will be presented Nov. 10 and 11 at the American Society of Nephrology annual meeting and Nov. 15 at the American Heart Association annual meeting.  Genzyme expects to publish the study’s findings in a peer-reviewed medical journal.  The company also anticipates releasing next year additional hospitalization data from the study, along with an economic analysis of this data, as it becomes available through the Centers for Medicare and Medicaid Services database.

Renagel is currently positioned favorably on the formularies of many of the major Part D prescription drug plans available to Medicare beneficiaries.  U.S. patients taking Renagel will be eligible for coverage under these new plans beginning in 2006, which is expected to provide important support for the product’s growth over the coming years.

Third-quarter prescriptions for Hectorol^® (doxercalciferol) were on track with expectations.  Sales in the quarter were $14.1 million, as Genzyme reduced product inventory levels following the acquisition of Bone Care International on July 1, 2005.  Genzyme is working to establish inventory management arrangements with wholesale distributors of Hectorol as it has done with Renagel wholesalers.   Hectorol is a line of vitamin D2 products approved to treat secondary hyperparathyroidism in patients on dialysis and those with earlier stages of chronic kidney disease.  By combining the Hectorol and Renagel sales organizations, Genzyme increased its U.S. renal sales force substantially and extended its reach within both the end-stage renal disease and chronic kidney disease markets.

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Within the Therapeutics area, sales of Fabrazyme^® (agalsidase beta) enzyme replacement therapy for Fabry disease grew 36 percent to $79.1 million from $58.0 million in last year’s third quarter.  The European Commission recently approved an expansion of Fabrazyme’s label to include evidence of clinical efficacy from the Phase 4 study, further distinguishing the product in a competitive market.  Genzyme is seeking to add similar claims to the product’s U.S. label.

Sales of Cerezyme^® (imiglucerase for injection) enzyme replacement therapy for Type 1 Gaucher disease were $238.3 million compared with $208.4 million in the same period a year ago, an increase of 14 percent.  Cerezyme is a maturing product whose sales represent an increasingly smaller proportion of Genzyme’s overall revenue.  There are currently more than 4,500 patients receiving Cerezyme worldwide, with the largest number of new patients coming through Genzyme’s International Charitable Access Program.

Sales of Aldurazyme^®  (laronidase) enzyme replacement therapy for patients with MPS I were $20.1 million in the third quarter, compared with $10.3 million in the same quarter last year.  Aldurazyme is marketed through a joint venture with BioMarin Pharmaceutical Inc., so product sales are not reflected in Genzyme’s revenue.

Sales of Thyrogen^®  (thyrotropin alfa for injection) increased 20 percent to $18.5 million in the third quarter from $15.4 million a year earlier.  The U.S. Food and Drug Administration has confirmed that the application for Thyrogen’s use in thyroid remnant ablation procedures is approvable.  Genzyme is working to meet the FDA’s conditions for approval, which is expected in the second half of 2006.  This indication was added to the product’s European label earlier this year.

Within the Biosurgery area, Synvisc revenue was $57.7 million, more than double revenue of $24.6 million in the third quarter last year.  This increase includes the impact of Genzyme’s acquisition of sales rights for the product in the United States and five additional European countries.  Synvisc is a leading viscosupplementation product for

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the treatment of knee pain due to osteoarthritis.  The worldwide market for Synvisc is broad and growing, and Genzyme expects that new indications for the product and new formulations under development will contribute to the growth of the product and the company over the long term.

Sales of Sepra^™ products were $17.0 million, 13 percent greater than $15.1 million in the third quarter a year ago.

Within the Transplant area, combined sales of Thymoglobulin^®  (anti-thymocyte globulin, rabbit) and Lymphoglobuline^®  (anti-thymocyte globulin, equine) increased 14 percent in the third quarter to $32.4 million, up from $28.3 million during the same period last year.  These products are used in conjunction with immunosuppressant drugs to treat acute rejection in renal transplant procedures.

Total revenue for the Diagnostics/Genetics business increased to $84.7 million in the third quarter, up 9 percent compared with $77.6 million in last year’s third quarter.  Genzyme expects its diagnostic testing business to play an increasingly important role in the development of targeted therapeutics, an emphasis that will particularly help distinguish the company in the oncology field.  Genzyme recently launched a new laboratory test for epidermal growth factor receptor (EGFR) mutations associated with non-small cell lung cancer.  The test is designed to identify patients likely to respond to treatments for this disease.  It also introduced a new test to detect very low levels of disease in patients with B-cell chronic lymphocytic leukemia, the first test it has launched to complement Campath^® (alemtuzumab).   In addition, Genzyme is working to launch a new test this year to identify gene mutations believed to be associated with drug resistance to Gleevec^® (imatinib mesylate), the current first-line therapy for patients with chronic myeloid leukemia.

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Other revenue—including oncology revenue, sales of pharmaceutical intermediates, and royalties from the sale of WelChol^® (colesevelam hydrochloride)—was $37.6 million, compared with $17.9 million in the third quarter last year.

Oncology revenue was $12.2 million and includes profits and royalties from Campath, which is marketed by Schering AG and its U.S. affiliate Berlex; sales of Clolar^™ (clofarabine) for intravenous infusion; and R&D revenue.

Expenses

Selling, general and administrative expenses in the third quarter increased approximately in line with revenue growth.  SG&A spending rose to $202.0 million (or 29 percent of revenue), compared with $147.9 million (or 26 percent of revenue) in the third quarter last year, reflecting the addition or expansion of sales and marketing organizations for Hectorol, Clolar and Synvisc.

Research and development spending was $128.0 million (or 18 percent of revenue) in the third quarter, up from $92.2 million (or 16 percent of revenue) in the same period last year.  During the quarter, Genzyme made excellent progress in advancing programs in its late-stage pipeline.   Highlights include the following:

•Regulatory action is expected in the next few months on the European and U.S. marketing applications for Myozyme, which could lead to product approval and launch early next year.  Genzyme is currently engaged in a broad range of activities to prepare for the product’s introduction.  Myozyme has been developed for the treatment of Pompe disease, a debilitating, progressive and often fatal muscular disorder.  The company recently began a clinical study involving patients with late-onset Pompe disease to provide further support for Myozyme’s use.

•Genzyme and Schering AG Germany are planning to initiate a Phase 3 clinical trial in the first half of next year evaluating Campath (alemtuzumab) for the treatment of multiple sclerosis.  Results from an interim analysis of the Phase 2 trial were highly encouraging, and the companies are working with clinical investigators and regulatory authorities to ensure that a comprehensive program is in place to manage patient safety in both the ongoing Phase 2 and planned

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Phase 3 studies.  The interim analysis, which was conducted after all patients had completed one year of treatment, showed a large treatment effect in favor of alemtuzumab in comparison with Rebif^® (interferon beta-1a) on both co-primary endpoints:  the rate of relapse of MS symptoms and the time to progression of clinically significant disability.  Review of the data also showed that three confirmed cases of severe idiopathic thrombocytopenic purpura (ITP) occurred in the trial.  ITP is a condition in which patients experience a low platelet count that can result in abnormal bleeding.  ITP can be detected by a routine blood test, and there are well-established medical management strategies.  Campath continues to be available in its current labeled indication for the treatment of B-cell chronic lymphocytic leukemia.

•Patient enrollment has resumed in the Phase 3 study of tolevamer, a novel non-absorbed polymer therapy that could be the first non-antibiotic treatment for Clostridium difficile-associated diarrhea (CDAD).  Enrollment in the trial had been interrupted briefly while a substitute source of a comparator product was obtained.  The interruption is not expected to affect the trial’s timelines.  CDAD is a widespread problem among hospitalized patients.  More than 400,000 cases occur annually in the United States alone, resulting in prolonged hospitalization and approximately 5,000 deaths.

•Enrollment continues in the pivotal trial of hylastan, a next-generation viscosupplementation product under development for the treatment of osteoarthritis. Hylastan could potentially require fewer injections than existing treatments.  It is currently being studied for the treatment of osteoarthritis pain.  Genzyme has also completed enrollment in several studies to extend the use of Synvisc, exploring the product’s use in relieving osteoarthritis pain in the hip, shoulder and ankle.

•Genzyme is conducting several clinical studies to support marketing approval of sevelamer carbonate tablets, a potential next-generation phosphate binder.  Enrollment has been completed in a trial evaluating the product’s equivalence to sevelamer hydrochloride for patients with end-stage renal disease.  Enrollment will soon begin in a study evaluating the product’s potential to benefit patients with chronic kidney disease, a significantly larger population.

•Enrollment is scheduled to begin in the first quarter of 2006 in the Phase 2 study evaluating the small molecule GENZ-11268 for the treatment of Gaucher disease.  Genzyme previously completed a Phase 1 study involving healthy volunteers.  GENZ-11268 has the potential to be applicable across a range of lysosomal storage disorders in addition to Gaucher disease.

•Dyax Corp. and Genzyme are preparing to initiate a Phase 3 study of DX-88.  The partners are developing DX-88 for the treatment of hereditary angioedema (HAE), a debilitating and life-threatening inflammatory condition characterized by recurrent attacks of severe pain and swelling in the limbs, abdomen and larynx.  In the Phase 3 study, DX-88 will be administered by subcutaneous injection; in

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previous studies, it had primarily been administered by intravenous infusion.  A subcutaneously administered treatment offers advantages because it could potentially make it possible for patients to self-administer the product at the onset of an HAE attack.  A Phase 1 study of subcutaneous administration was successfully completed earlier this year, and most trial sites participating in the open-label Phase 2 study have converted to subcutaneous dosing.  At the American College of Allergy, Asthma & Immunology Conference on November 6, Dyax will present final results from the Phase 1 subcutaneous study and describe initial experience with subcutaneous administration in the open-label Phase 2 study.

•Genzyme has taken several steps to address public calls for greater information about ongoing and completed clinical trials.  Specifically, the company has registered all of its active, company-sponsored Phase 2, 3 and 4 hypothesis-testing clinical trials on the National Institutes of Health Web site www.clinicaltrials.gov and is working to add this information to its own Web site.  Second, Genzyme is posting on its own Web site results from pivotal and post-marketing trials of its approved drugs and biologics. The site currently includes trial results for Genzyme’s therapies to treat lysosomal storage disorders and will be expanded to include results for additional products by year end.  These efforts are consistent with Genzyme’s support for greater transparency throughout the biotechnology and pharmaceutical industries regarding drug-development information.

About Genzyme

One of the world’s leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Founded in 1981, Genzyme has grown from a small start-up to a diversified enterprise with more than 8,000 employees in locations spanning the globe and 2004 revenues of $2.2 billion. With many established products and services helping patients in more than 80 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company’s products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune diseases, and diagnostic testing. Genzyme’s commitment to innovation continues today with a substantial development program focused on these fields, as well as heart disease and other areas of unmet medical need.

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This press release contains forward-looking statements regarding Genzyme’s future performance and strategy, including statements regarding the expected timing of regulatory responses regarding Genzyme’s marketing application for Myozyme, as well as product approval and launch estimates; the anticipated progress of several clinical trials, including those for Myozyme, Campath MS, tolevamer, hylastan, Synvisc, sevelamer carbonate, GENZ-11268 and DX-88; the presentation and publication of results from the D-COR trial and additional data from the study and the timing thereof; the impact of Medicare Part D prescription drug benefits on Renagel; the intention to seek expanded Fabrazyme labeling; the receipt of U.S. regulatory approval for Thyrogen’s use in thyroid remnant ablation procedures and the timing thereof; intentions to pursue new indications and formulations of Synvisc and the impact on Genzyme’s long-term growth; expectations regarding the role of Genzyme’s diagnostic testing business; and the potential launch of a new test to identify drug resistance to Gleevec.  These risks and uncertainties include, among others, the ability to successfully complete preclinical and clinical development of our products and services, including Myozyme and diagnostic testing services; Genzyme’s ability to expand the use of current products in existing and new indications, including Synvisc, Fabrazyme and Thyrogen; Genzyme’s ability to obtain and maintain regulatory approvals for products and services; Genzyme’s ability to successfully identify and market to new patients; the scope of third-party reimbursement coverage for Genzyme’s products and services, including Medicare Part D; Genzyme’s ability to successfully expand its sales and marketing teams in existing and new markets; Genzyme’s ability to manufacture products and product candidates in a timely and cost effective manner; Genzyme’s ability to effectively manage inventory levels; changes in legislation and regulations affecting the sale of Genzyme’s products and services; and the risks and uncertainties described in Genzyme’s SEC reports filed under the Securities Exchange Act of 1934, including the factors discussed under the caption “Factors Affecting Future Operating Results” in Genzyme’s Quarterly Report on Form 10-Q for the period ended June 30, 2005. Genzyme cautions investors not to place substantial reliance on the forward-looking statements contained in this press release. These statements speak only as of October 18, 2005 and Genzyme undertakes no obligation to update or revise the statements.

This press release includes certain non-GAAP financial measures that involve adjustments to GAAP figures.  Genzyme believes that these non-GAAP financial measures, when considered together with the GAAP figures, can enhance an overall understanding of Genzyme’s past financial performance and its prospects for the future.  The non-GAAP financial measures are included with the intent of providing both management and investors with a more complete understanding of underlying operational results and trends.  In addition, these non-GAAP financial measures are among the primary indicators Genzyme management uses for planning and forecasting purposes.  These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP figures.

Genzyme^®, Renagel^®, Hectorol^®, Fabrazyme^®, Cerezyme^®, Thyrogen^®, Synvisc^®, Myozyme^® , Aldurazyme^® , Thymoglobulin^® , Lymphoglobuline^® and Campath^® are registered trademarks and Sepra^™ and Clolar^™ are trademarks of Genzyme Corporation or its subsidiaries.  WelChol^® is a registered trademark of Sankyo

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Pharma Inc.  Gleevec^® is a registered trademark of Novartis Pharmaceutical Corporation.  All rights reserved.

Conference Call Information

There will be a conference call today at 11:00 a.m. Eastern to discuss Genzyme Corporation’s financial results for the third quarter of 2005.  If you would like to participate in the call, please dial 706-679-8722.  This call will also be Webcast live on the investor events section of www.genzyme.com.  A replay of this call will be available from 2:30p.m. Eastern today through midnight on October 25, 2005, by dialing 706-645-9291.  Please refer to reservation number 9257532.

Upcoming Events

Genzyme will announce its financial results for the fourth quarter of 2005 on February 15, 2006.  There will be a conference call to discuss these results at 11:00 a.m. Eastern.  If you would like to participate in the call, please dial 706-679-8722. This call will also be Webcast live on the investor events section of www.genzyme.com.  A replay of this call will be available by dialing 706-645-9291.  Please refer to reservation number 1549029.

# # #

Genzyme’s press releases and other company information are available at www.genzyme.com and by calling Genzyme’s investor information line at 1-800-905-4369 within the United States or 1-703-797-1866 outside the United States.

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GENZYME CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS

Quarter Ended September 30, 2005

(Amounts in thousands, except per share data)

	Before Charges, Amortization, FIN 46 & EITF 04-8			Dilution Due to Contingently Convertible Debt (EITF 04-8)			Amortization			IPR&D			NON-GAAP Before Effect of FIN 46			Effect of FIN 46			GAAP As Reported
Income Statement Classification:
Total revenues	$	708,063											$	708,063					$	708,063
Cost of products and services sold	$	(152,708	)										$	(152,708	)				$	(152,708	)
Selling, general and administrative	$	(201,830	)										$	(201,830	)	$	(172	)	$	(202,002	)
Research and development	$	(120,834	)										$	(120,834	)	$	(7,166	)	$	(128,000	)
Amortization of intangibles	$	—					$	(50,847	)				$	(50,847	)				$	(50,847	)
Purchase of in-process research and development	$	—								$	(12,700	)	$	(12,700	)				$	(12,700	)
Equity in income (loss) of equity method investments	$	(2,728	)										$	(2,728	)	$	3,668		$	940
Minority interest	$	—											$	—		$	3,670		$	3,670
Other	$	(807	)										$	(807	)				$	(807	)
Investment income	$	8,073											$	8,073					$	8,073
Interest expense	$	(6,749	)										$	(6,749	)				$	(6,749	)
Summary:
Income (loss) before income taxes	$	230,480		$	—		$	(50,847	)	$	(12,700	)	$	166,933		$	—		$	166,933
Provision for income taxes	$	(69,991	)	$	—		$	18,712		$	—		$	(51,279	)	$	—		$	(51,279	)
Net income allocated to Genzyme Stock	$	160,489		$	—		$	(32,135	)	$	(12,700	)	$	115,654		$	—		$	115,654
Net income per share of Genzyme Stock:
Basic	$	0.63		$	—		$	(0.13	)	$	(0.05	)	$	0.45		$	—		$	0.45
Diluted (1)	$	0.61		$	(0.01	)	$	(0.12	)	$	(0.05	)	$	0.43		$	—		$	0.43
Weighted average shares outstanding:
Basic	256,490			—			—			—			256,490			256,490			256,490
Diluted (1)	264,806			9,686			—			—			274,492			274,492			274,492

(1)GAAP As-Reported diluted earnings per share and diluted weighted average shares outstanding reflect the adoption of EITF 04-8. In accordance with the provisions of EITF 04-8, interest and debt fees related to our 1.25% convertible senior notes of $1.9 million, net of tax, have been added back to net income and approximately 9.7 million shares have been added to diluted weighted average shares for purposes of computing GAAP As-Reported diluted earnings per share.

GENZYME CORPORATION (GENZ)

Consolidated Statements of Operations

(Unaudited, amounts in thousands, except per share amounts)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2005			2004			2005			2004
Total revenues	$	708,063		$	569,229		$	2,006,151		$	1,610,068
Operating costs and expenses:
Cost of products and services sold	152,708			154,859			444,051			424,689
Selling, general and administrative	202,002			147,886			580,226			443,956
Research and development	128,000			92,188			364,471			284,374
Amortization of intangibles	50,847			27,657			132,138			81,147
Purchase of in-process research and development (1)	12,700			—			22,200			—
Total operating costs and expenses	546,257			422,590			1,543,086			1,234,166
Operating income	161,806			146,639			463,065			375,902
Other income (expenses):
Equity in income (loss) of equity method investments	940			(4,362		)	(1,195		)	(12,467		)
Minority interest	3,670			1,589			9,221			3,715
Gain (loss) on investments in equity securities	214			(2,706		)	5,172			(2,282		)
Other	(1,021		)	(19		)	(828		)	(733		)
Investment income	8,073			4,566			22,235			17,845
Interest expense (2)	(6,749		)	(5,429		)	(15,023		)	(33,250		)
Total other income (expenses)	5,127			(6,361		)	19,582			(27,172		)
Income before income taxes	166,933			140,278			482,647			348,730
Provision for income taxes	(51,279		)	(42,479		)	(147,804		)	(104,861		)
Net income	$	115,654		$	97,799		$	334,843		$	243,869
Net income per share of Genzyme Stock:
Basic	$	0.45		$	0.43		$	1.32		$	1.08
Diluted (3)	$	0.43		$	0.41		$	1.26		$	1.03
Weighted average shares outstanding:
Basic	256,490			228,156			253,499			226,815
Diluted (3)	274,492			244,406			270,823			242,413

(1)Includes charges for the purchase of in-process research and development of $(12,700)K related to our acquisition of Bone Care International, Inc. in July 2005 and $(9,500)K related to our acquisition of Verigen AG in February 2005.

(2)In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium.  Interest expense for the nine months ended September 30, 2004 includes charges of $(4,313)K for the premium paid upon redemption and $(5,329)K to write off the unamortized debt fees associated with these debentures.

(3)Reflects the retroactive application of the adoption of Emerging Issues Task Force Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings Per Share,” or EITF 04-8.  As a result of the adoption of EITF 04-8, the 9,686K shares issuable upon conversion of our $690.0 million in principal of 1.25% convertible senior notes, which were issued in December 2003, are now included in diluted weighted average shares for purposes of computing diluted earnings per share, unless the effect would be anti-dilutive.  In accordance with EITF 04-8, interest and debt fees related to the notes of $1.9 million, net of tax, for both the three months ended September 30, 2005 and 2004 and $5.6 million, net of tax, for both the nine months ended September 30, 2005 and 2004 have been added back to net income and approximately 9.7 million shares have been added to diluted weighted average shares outstanding for all periods presented for purposes of computing diluted earnings per share.

GENZYME CORPORATION (GENZ)

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands)

	September 30,		December 31,
	2005		2004
Cash and all marketable securities	$	950,342	$	1,079,454
Other current assets	1,193,933		1,082,437
Property, plant and equipment, net	1,294,990		1,310,256
Intangibles, net	3,152,539		2,360,315
Other assets	212,674		236,959
Total assets	$	6,804,478	$	6,069,421
Current liabilities	$	628,819	$	624,398
Noncurrent liabilities	1,208,502		1,064,867
Stockholders’ equity	4,967,157		4,380,156
Total liabilities and stockholders’ equity	$	6,804,478	$	6,069,421

Genzyme General (GENZ)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage amounts)

											Q3-05 vs. Q3-04						YTD
	Q3-04(1)		Q4-04(1)		Q1-05(1)		Q2-05(1)		Q3-05(1)		% B/(W)		FY 2003(1)		FY 2004(1)		09/30/05(1)
Total revenues:
Renal
Renagel phosphate binder (including Sevelamer)	$	93,308	$	99,272	$	99,403	$	100,847	$	106,869	15	%	$	281,701	$	363,720	$	307,119
Hectorol	—		—		—		—		14,138				—		—		14,138
Other Renal	—		—		—		—		—				—		—		—
Total Renal product and service revenue	93,308		99,272		99,403		100,847		121,007		30	%	281,701		363,720		321,257
Renal R&D revenue	—		—		—		—		—				—		—		—
Total Renal	93,308		99,272		99,403		100,847		121,007		30	%	281,701		363,720		321,257
Therapeutics
Cerezyme enzyme	208,378		218,647		225,951		235,953		238,329		14	%	733,817		839,366		700,233
Fabrazyme enzyme	57,996		63,918		70,026		74,424		79,076		36	%	80,617		209,637		223,526
Thyrogen hormone	15,428		17,731		17,715		20,699		18,503		20	%	43,438		63,454		56,917
Other Therapeutics	575		655		807		1,281		1,903		231	%	1,802		2,462		3,991
Total Therapeutics product and service revenue	282,377		300,951		314,499		332,357		337,811		20	%	859,674		1,114,919		984,667
Therapeutics R&D revenue	—		—		554		235		—				1		—		789
Total Therapeutics	282,377		300,951		315,053		332,592		337,811		20	%	859,675		1,114,919		985,456
Transplant
Thymoglobulin/Lymphoglobuline	28,342		30,314		27,221		33,576		32,434		14	%	29,953		108,928		93,231
Other Transplant	12,669		6,999		3,917		1,465		1,677		(87	)%	14,367		42,125		7,059
Total Transplant product and service revenue	41,011		37,313		31,138		35,041		34,111		(17	)%	44,320		151,053		100,290
Transplant R&D revenue	261		49		17		—		13		(95	)%	—		310		30
Total Transplant	41,272		37,362		31,155		35,041		34,124		(17	)%	44,320		151,363		100,320
Biosurgery
Synvisc viscosupplementation product and services	24,630		13,783		44,016		58,778		57,748		134	%	55,579		88,296		160,542
Sepra products	15,085		16,771		16,652		17,099		17,025		13	%	25,959		61,647		50,776
Other Biosurgery	16,814		13,533		14,250		16,395		18,028		7	%	32,414		55,332		48,673
Total Biosurgery product and service revenue	56,529		44,087		74,918		92,272		92,801		64	%	113,952		205,275		259,991
Biosurgery R&D revenue	227		1,391		134		9		1		(100	)%	5,127		4,241		144
Total Biosurgery	56,756		45,478		75,052		92,281		92,802		64	%	119,079		209,516		260,135
Diagnostics/Genetics
Diagnostic Products	21,667		23,001		26,866		22,121		25,302		17	%	88,588		90,955		74,289
Genetic Testing	55,915		54,698		52,507		54,396		59,368		6	%	102,147		188,166		166,271
Total Diagnostics/Genetics product and service revenue	77,582		77,699		79,373		76,517		84,670		9	%	190,735		279,121		240,560
Diagnostics/Genetics R&D revenue	—		—		—		—		—				—		—		—
Total Diagnostics/Genetics	77,582		77,699		79,373		76,517		84,670		9	%	190,735		279,121		240,560
Other
Other product and service revenue	15,935		27,332		24,496		26,348		33,050		107	%	71,710		74,495		83,894
Other R&D revenue	1,999		2,983		5,417		4,513		4,599		130	%	7,597		8,011		14,529
Total Other	17,934		30,315		29,913		30,861		37,649		110	%	79,307		82,506		98,423
Total revenues	$	569,229	$	591,077	$	629,949	$	668,139	$	708,063	24	%	$	1,574,817	$	2,201,145	$	2,006,151

Genzyme General (GENZ)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage and per share amounts)

																Q3-05 vs. Q3-04								YTD
	Q3-04(1)			Q4-04(1)			Q1-05(1)			Q2-05(1)			Q3-05(1)			% B/(W)		FY 2003(1)			FY 2004(1)			09/30/05(1)
Revenues:
Total product and service revenue	$	566,742		$	586,654		$	623,827		$	663,382		$	703,450		24	%	$	1,562,092		$	2,188,583		$	1,990,659
Total R&D revenue	2,487			4,423			6,122			4,757			4,613			85	%	12,725			12,562			15,492
Total revenues	569,229			591,077			629,949			668,139			708,063			24	%	1,574,817			2,201,145			2,006,151
Total product and service gross profit	411,883			422,757			477,734			518,132			550,742			34	%	1,143,123			1,599,997			1,546,608
SG&A expense	147,886			155,432			181,839			196,385			202,002			(37	)%	455,395			599,388			580,226
R&D expense	92,188			107,428			114,745			121,726			128,000			(39	)%	295,725			391,802			364,471
Amortization of intangibles	27,657			28,326			41,186			40,105			50,847			(84	)%	64,720			109,473			132,138
Purchase of in-process research and development (2)	—			254,520			9,500			—			12,700					158,000			254,520			22,200
Charges for impaired assets (3)	—			4,463			—			—			—					7,996			4,463			—
Operating income (loss)	146,639			(122,989		)	136,586			164,673			161,806			10	%	174,012			252,913			463,065
Other income (expenses):
Equity in income (loss) of equity method investments	(4,362		)	(3,157		)	(1,718		)	(417		)	940			122	%	(16,743		)	(15,624		)	(1,195		)
Minority interest	1,589			2,284			2,194			3,357			3,670			131	%	2,232			5,999			9,221
Gain (loss) on investments in equity securities	(2,706		)	1,030			141			4,817			214			108	%	(1,201		)	(1,252		)	5,172
Gain on sale of product line (4)	—			—			—			—			—					1,709			—			—
Other	(19		)	376			(60		)	253			(1,021		)	(5274	)%	994			(357		)	(828		)
Investment income	4,566			6,399			6,618			7,544			8,073			77	%	42,312			24,244			22,235
Interest expense (5)	(5,429		)	(4,977		)	(3,808		)	(4,466		)	(6,749		)	(24	)%	(22,380		)	(38,227		)	(15,023		)
Income (loss) before income taxes	140,278			(121,034		)	139,953			175,761			166,933			19	%	180,935			227,696			482,647
Provision for income taxes	(42,479		)	(36,308		)	(44,395		)	(52,130		)	(51,279		)	(21	)%	(98,792		)	(141,169		)	(147,804		)
Division net income (loss) before allocated tax benefits	97,799			(157,342		)	95,558			123,631			115,654			18	%	82,143			86,527			334,843
Allocated tax benefits	—			—			—			—			—					12,140			—			—
Net income (loss) allocated to Genzyme Stock (1)	$	97,799		$	(157,342	)	$	95,558		$	123,631		$	115,654		18	%	$	94,283		$	86,527		$	334,843
Net income (loss) per share of Genzyme Stock-diluted (1,6,7)	$	0.41		$	(0.68	)	$	0.36		$	0.46		$	0.43		5	%	$	0.42		$	0.37		$	1.26
Weighted average shares outstanding-diluted (6,7)	244,406			232,255			267,893			270,084			274,492			12	%	225,976			234,318			270,823

Genzyme General (GENZ)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage amounts)

	Q3-04(1)			Q4-04(1)			Q1-05(1)			Q2-05(1)			Q3-05(1)			FY 2003(1)			FY 2004(1)			YTD 09/30/05(1)
Total product and service revenue	$	566,742		$	586,654		$	623,827		$	663,382		$	703,450		$	1,562,092		$	2,188,583		$	1,990,659
As a% of total product and service revenue:
Renagel phosphate binder (including Sevelamer)	16		%	17		%	16		%	15		%	15		%	18		%	17		%	15		%
Hectorol	0		%	0		%	0		%	0		%	2		%	0		%	0		%	1		%
Cerezyme enzyme	37		%	37		%	36		%	36		%	34		%	47		%	38		%	35		%
Fabrazyme enzyme	10		%	11		%	11		%	11		%	11		%	5		%	9		%	11		%
Thyrogen hormone	3		%	3		%	3		%	3		%	3		%	3		%	3		%	3		%
Thymoglobulin/Lymphoglobuline	5		%	5		%	4		%	5		%	5		%	2		%	5		%	5		%
Synvisc viscosupplementation product and services	4		%	3		%	7		%	9		%	8		%	3		%	4		%	8		%
Sepra products	3		%	3		%	3		%	3		%	2		%	2		%	3		%	3		%
Diagnostics/Genetics	14		%	13		%	13		%	11		%	12		%	12		%	13		%	12		%
Other	8		%	8		%	7		%	7		%	8		%	8		%	8		%	7		%
Total product and service gross margin	73		%	72		%	77		%	78		%	78		%	73		%	73		%	78		%
Total revenues	$	569,229		$	591,077		$	629,949		$	668,139		$	708,063		$	1,574,817		$	2,201,145		$	2,006,151
SG&A expense as a% of total revenue	26		%	26		%	29		%	29		%	29		%	29		%	27		%	29		%
R&D expense as a% of total revenue	16		%	18		%	18		%	18		%	18		%	19		%	18		%	18		%
Operating income (loss) as a% of total revenue	26		%	(21		)%	22		%	25		%	23		%	11		%	11		%	23		%
Provision for income taxes as a% of profit (loss) before tax	30		%	(30		)%	32		%	30		%	31		%	48		%	62		%	31		%
Condensed Balance Sheet Information:	09/30/04		(8)	12/31/04		(8)	03/31/05		(8)	06/30/05		(8)	09/30/05		(8)	12/31/03		(8)	12/31/04		(8)	09/30/05		(8)
Cash and all marketable securities	$	823,446		$	1,079,454		$	1,042,267		$	1,638,481		$	950,342		$	1,227,460		$	1,079,454		$	950,342
Other current assets	992,019			1,082,437			1,077,182			1,084,917			1,193,933			909,490			1,082,437			1,193,933
Property, plant and equipment, net	1,231,775			1,310,256			1,297,802			1,275,087			1,294,990			1,151,133			1,310,256			1,294,990
Intangibles, net	1,669,358			2,360,315			2,466,938			2,447,344			3,152,539			1,517,791			2,360,315			3,152,539
Other assets	196,116			236,959			208,390			207,430			212,674			198,654			236,959			212,674
Total assets	$	4,912,714		$	6,069,421		$	6,092,579		$	6,653,259		$	6,804,478		$	5,004,528		$	6,069,421		$	6,804,478
Current liabilities	$	526,189		$	624,398		$	519,445		$	913,099		$	628,819		$	392,025		$	624,398		$	628,819
Noncurrent liabilities	1,073,694			1,064,867			1,054,506			1,041,186			1,208,502			1,676,091			1,064,867			1,208,502
Stockholders’ equity	3,312,831			4,380,156			4,518,628			4,698,974			4,967,157			2,936,412			4,380,156			4,967,157
Total liabilities and stockholders’ equity	$	4,912,714		$	6,069,421		$	6,092,579		$	6,653,259		$	6,804,478		$	5,004,528		$	6,069,421		$	6,804,478

Notes:

(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.

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 refer to as Genzyme Stock.

(2)Includes charges for the purchase of in-process research and development of $(254,520)K related to our acquisition of ILEX Oncology, Inc. in December 2004, $(9,500)K related to our acquisition of Verigen AG in February 2005, $(12,700)K related to our acquisition of Bone Care International, Inc. in July 2005 and $(158,000)K related to our acquisition of SangStat Medical Corporation in September 2003.

(3)Includes impairment charges of $(4,463)K recorded in December 2004 to write down the assets of a manufacturing facility in Oklahoma and $(7,996)K recorded in September 2003 to write down the assets of our FocalSeal business.

(4)Represents the final adjustment to the net loss recorded on the sale of our cardiothoracic devices business to Teleflex Inc. in accordance with the sale agreement.  We recorded an estimated net loss of $(29,367)K in June 2003, which we allocated to Genzyme Biosurgery.  However, as a result of the elimination of our tracking stock capital structure effective July 1, 2003, the final adjustment to the net loss is allocated to Genzyme General.

(5)In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium. Interest expense for the year ended December 31, 2004 includes charges of $(4,313)K for the premium paid upon redemption and $(5,329)K to write off the unamortized debt fees associated with these debentures.

(6)Reflects the retroactive application of the adoption of Emerging Issues Task Force Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings Per Share,” or EITF 04-8.  As a result of the adoption of EITF 04-8, the 9,686K shares issuable upon conversion of our $690.0 million in principal of 1.25% convertible senior notes, which were issued in December 2003, are now included in diluted weighted average shares for purposes of computing diluted earnings per share, unless the effect would be anti-dilutive.

(7)For all periods except Q4-04 and the year ended December 31, 2004, includes the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock, and the potentially dilutive effect of the assumed conversion of our 1.25% convertible senior notes.  Dilutive earnings per share for the year ended December 31, 2003 was not impacted by the adoption of EITF 04-8 because our convertible senior notes were only outstanding for a portion of the month in December 2003.

In Q4-04, excludes the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock, and the potentially dilutive effect of the assumed conversion of our 1.25% convertible senior notes because the effect would be anti-dilutive due to our net loss for the period.

For the year ended December 31, 2004, excludes the potentially dilutive effect of the assumed conversion of our convertible senior notes because the effect would be anti-dilutive.

(8)Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating assets and liabilities to Genzyme Biosurgery and Genzyme Molecular Oncology.  From that date forward, all of our assets and liabilities are allocated to Genzyme General.