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

FORM 10-Q

Commission File No. 0-14680

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

        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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

        Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o    No ý

        Number of shares of Genzyme Stock outstanding as of JulyOctober 31, 2008: 268,653,485270,519,673

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NOTE REGARDING REFERENCES TO OUR COMMON STOCK

        Throughout this Form 10-Q, 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. We have one outstanding series of common stock, which we refer to as "Genzyme Stock.Stock" or "our common stock."

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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our plans to seek marketing approvals for our products in additional jurisdictions,new territories, including Renvela, Myozyme, Aldurazyme and Synvisc-One;



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our expectations for United States Food and Drug Administration, or FDA, marketing approval of alglucosidase alfa (Myozyme®) produced at the 2000 liter bioreactor, or 2000L, scale and the timing of this anticipated approval;approval and our expectations for the timing to begin providing U.S. patients with commercial 2000L product;



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our intention to seek marketing approval from the European Agency for the Evaluation of Medicinal Products, or EMEA, for Myozyme produced at the 4000 liter bioreactor, or 4000L, scale, and our expectations regarding the anticipated receipt of approval and the timing of EMEA action;thereof;



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our expectations for Myozyme revenue and costs infor the remainder of 2008 and for sales growth, and our assessment of the Myozyme supply;



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our plans and the anticipated timing for pursuing marketing approvals for additional indications and uses for our products and services, including Renvela and Clolarclofarabine, and for regulatory action on our U.S. submissionmarketing application for Synvisc-One;Synvisc-One in the United States;



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our expectations for sales of Renagel/Renvela and Hectorol and the anticipated drivers for the future growth of these products;



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our expectations for Thymoglobulin includinginventory levels for the remainder of 2008 and long-term sales growth, as well as the timing for receipt of regulatory approvals and the commencement of production at our estimates of product returns due to product we recalledmanufacturing facility in 2008;Lyon, France;



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our estimated timetable for regulatory approvals and subsequent launches of Mozobil in the United States and Europe;



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



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Cerezyme's future contribution to our revenues and our expectations regarding its current growth trends;



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our intention to pursue our rights with respect to insurance coverage for our settlement of a class action lawsuit under a director and officer liability insurance program;



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our assessment of the financial impact of legal proceedings and claims on our financial position and results of operations;



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the sufficiency of our cash, investments and cash flows from operations;



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the redemption of all $690.0 million in principal outstanding under our 1.25% convertible senior notes on December 1, 2008;



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our U.S. and foreign income tax audits, including our provision for potential liabilities;

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our estimates of the cost to complete and estimated commercialization dates for our in-process research and development programs;



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our assessment of the deductibility of the amounts allocated to goodwill for our acquisition of Bioenvision, acquisition;Inc., or Bioenvision; and

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our expectations regarding the amortization of intangible assets related to our expected future contingent payments due to Synpac (North Carolina), Inc. and Wyeth.

        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 secure regulatory approvals for our products, services and manufacturing facilities and processes, and to do so in the anticipated timeframes, including our ability to obtain and maintain regulatory approvals for alglucosidase alfa (Myozyme®) produced at the 2000L scale in the United States and 4000L scale in Europe and the timing of these anticipated approvals;



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regulatory authority views regarding the safety, efficacy and risk-benefit profiles of our products;



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the content and timing of submissions to and decisions made by the FDA, the EMEA and other regulatory agencies related to our products and services and the facilities and processes used to manufacture our products;



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our ability to accurately forecast the impact of regulatory delays on our revenues, costs and earnings;



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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, including our ability to manufacture Thymoglobulin that meets our product specifications and in quantities sufficient to meet projected market demand and our ability to manufacture Myozymealglucosidase alfa at the 2000L and 4000L scales;



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our ability to satisfy the post-marketing commitments made to regulatory agencies as a condition of the marketing approvals of Fabrazyme, Aldurazyme, Myozyme and Clolar;



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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 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 in expanded areas of use and new markets;



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



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our ability to increase market penetration of our products and services both outside and within the United States;



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



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competition from lower cost generic or follow-on products;



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



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our ability to continue to generate cash from operations and to effectively use ofour cash in business combinations or other strategic initiatives;resources to grow our business;



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the resolution of our dispute with our insurance carriers regarding our claim for coverage under a director and officer liability insurance program;



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the outcome of legal proceedings by or against us;

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our ability to successfully integrate the business we acquired from Bioenvision, Inc., or Bioenvision;



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the outcome of our IRS and foreign tax audits;



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general economic conditions; and



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

        We have included more detailed descriptions of these and other risks and uncertainties under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Risk Factors," in Part I., Item 2. of this Quarterly Report on Form 10-Q. 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 in light of future developments.

NOTE REGARDING INCORPORATION BY REFERENCE

        The United States Securities and Exchange Commission, commonly referred to as the SEC, allows us to disclose important information to you by referring you to other documents we have filed with them. The information that we refer you to is "incorporated by reference" into this Form 10-Q. Please read that information.

NOTE REGARDING TRADEMARKS

        Genzyme®, Cerezyme®, Ceredase®, Fabrazyme®, Thyrogen®, Myozyme®, Renagel®, Renvela®, Campath®, Clolar®, Evoltra®, Thymoglobulin®, Synvisc®, Sepra®, Seprafilm®, Carticel®, Epicel®, MACI®, Hylaform®, Cholestagel® and Hectorol® are registered trademarks, and Cholestagel™, Mozobil™, Lymphoglobuline™ and Synvisc-One™ are trademarks, of Genzyme or its subsidiaries. WelChol® is a registered trademark of Sankyo Pharma, Inc. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. All rights reserved.

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GENZYME CORPORATION AND SUBSIDIARIES

FORM 10-Q, JUNESEPTEMBER 30, 2008

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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income (Loss)

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

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

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GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited, amounts in thousands, except par value amounts)

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

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GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements

1.    Description of Business

        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 disorders, renal diseases, orthopaedics, organ transplant, diagnostic and predictive testing, and cancer. We are organized into six 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/Renvela (including sales of bulk sevelamer) and Hectorol;



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Therapeutics, which develops, manufactures and distributes therapeutic products, with an expanding 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, Myozyme, Aldurazyme and Thyrogen;



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



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Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial-based products, with an emphasis on products that meet medical needs in the orthopaedics and broader surgical areas. The unit derives substantially all of its revenue from sales of Synvisc, the Sepra line of products, Carticel and Matrix-induced Autologous Chondrocyte Implantation, or MACI;



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Genetics, which provides testing services for the oncology, prenatal and reproductive markets; and



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Oncology, which develops, manufactures and distributes products for the treatment of cancer, with a focus on antibody- and small molecule-based therapies. The unit derives substantially all of its revenue from sales and royalties received on sales of Campath and Clolarclofarabine and from the reimbursement of Campath development expenses. Clofarabine is marketed under the name Clolar in North and South America and as Evoltra elsewhere in the world.

        We report the activities of our diagnostic products, bulk pharmaceuticals and cardiovascular business units under the caption "Other." We report our corporate, general and administrative operations and corporate science activities under the caption "Corporate."

        Effective January 1, 2008, as a result of changes in how we review our business, certain general and administrative expenses, which were formerly allocated amongst our reporting segments and Other, are now allocated to Corporate.

        As a result of our acquisition of Bioenvision in October 2007, our Oncology business unit, which was formerly reported combined with "Other,"Other, now meets the criteria for disclosure as a separate reporting segment. We have revised our 2007 segment disclosures to conform to our 2008 presentation.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies

Basis of Presentation

        Our unaudited, consolidated financial statements for each period include the statements of operations and comprehensive income (loss), balance sheets and statements of cash flows for our operations taken as a whole. We have eliminated all intercompany items and transactions in consolidation. We prepare our unaudited, consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under these rules, we condense or omit certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States.

        These financial statements include all normal and recurring adjustments that we consider necessary for the fair presentation of our financial condition and results of operations. Since these are interim financial statements, you should also read our audited, consolidated financial statements and notes included in our 2007 Form 10-K. Revenues, expenses, assets and liabilities can vary from quarter to quarter. Therefore, the results and trends in these interim financial statements may not be indicative of results for future periods.

        Our unaudited, consolidated financial statements for each period include the accounts of our wholly owned and majority owned subsidiaries. As a result of our adoption of Financial Accounting Standards Board, or FASB, Interpretation No., or FIN, 46R, "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 have less than a 100% interest, we record minority interest in our consolidated statements of operations for the ownership interest of the minority owner. We use the equity method of accounting to account for our investments in entities in which we have a substantial ownership interest (20% to 50%) which do not fall in the scope of FIN 46R, or over which we exercise significant influence. Our consolidated net income includes our share of the earnings or losses of these entities.

Recent Accounting Pronouncements

Adopted in 2008

         FASB Statement of Financial Accounting Standards No., or FAS, 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115."    Effective January 1, 2008, we adopted FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115," which permits, but does not require, entities to irrevocably elect to measure certain financial instruments and other assets and liabilities at fair value on an instrument-by-instrument basis. Unrealizedbasis, with subsequent unrealized gains and losses on items for which the fair value option has been elected should be recognized in earnings at each subsequent reporting date.as changes in fair value occur. In adopting FAS 159, we did not elect to measure any new assets or liabilities at their respective fair values and, therefore, the adoption of FAS 159 did not have an impact on our results of operations andor financial position.

         EITF Issue No. 07-1, "Accounting for Collaborative Arrangements."    In December 2007, the Emerging Issues Task Force, or EITF, of the FASB reached a consensus on Issue No. 07-1, "Accounting for Collaborative Arrangements." The EITF concluded on the definition of a collaborative arrangement and that revenues and costs incurred with third parties in connection with collaborative arrangements would be presented gross or net based on the criteria in EITF 99-19 and other accounting literature. Companies are also required to disclose the nature and purpose of collaborative arrangements along with the accounting policies and the classification and amounts attributable to transactions related to the arrangements. EITF 07-1 is effective January 1, 2009 and we will apply it retrospectively to all

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies (Continued)

periods presented for all collaborative arrangements existing as of the effective date. We are evaluating the impact, if any, that EITF 07-1 will have on our consolidated financial statements.

EITF, Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities."    In June 2007, the FASB ratified the EITF consensus reached in EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities," which provides guidance forrequires that nonrefundable prepaymentsadvanced payments for goods or services that will be used or rendered for future research and development activities and directs that such payments should be deferred and capitalized. Such amounts should be recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. EITF Issue No. 07-3 was effective for us beginning

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies (Continued)

January 1, 2008 and we applied it prospectively to new contracts we entered into on or after that date. The implementation of EITF Issue No. 07-3 did not have a material impact on our financial position, results of operations or cash flows.

         FASB Staff Position No., or FSP, 157-3, "Determining Fair Value of a Financial Asset in a Market That Is Not Active."    In October 2008, the FASB issued FSP 157-3, which clarified how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including for prior periods for which financial statements had not been issued. The implementation of FSP 157-3 did not have a material impact on our results of operations or financial position.

Effective in 2009

         EITF Issue No. 07-1, "Accounting for Collaborative Arrangements."    In December 2007, the FASB ratified EITF Issue No. 07-1, which defines collaborative arrangements and establishes reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties, including the appropriate income statement presentation and classification of, and the required disclosures related to, these arrangements. EITF Issue No. 07-1 is effective January 1, 2009 and we will apply it retrospectively to all periods presented for all collaborative arrangements existing as of the effective date. We are evaluating the impact, if any, that EITF Issue No. 07-1 will have on our consolidated financial statements.

         FAS 141 (revised141(revised 2007), or FAS 141R, "Business Combinations."    In December 2007, the FASB issued FAS 141 (revised 2007), "Business Combinations," or FAS 141R, which replaces FAS 141, "Business Combinations." FAS 141R retains the underlying conceptsfundamental concept of FAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisitionpurchase method of accounting but changes a numberand introduces new requirements for the recognition and measurement of significant aspects of applying this method. Acquisitionassets acquired, liabilities assumed, and noncontrolling interests. Under FAS 141R, acquisition costs will generally be expensed as incurred; noncontrolling interestsincurred and restructuring costs will be valued at fair value atexpensed subsequent to the acquisition date; in-process research and development, ordate. IPR&D will be recorded at fair valuecapitalized as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated withdate and will either be amortized over the life of the related product or written off as a business combination will generally be expensed subsequentcharge to earnings if the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense.project is subsequently abandoned or becomes impaired. FAS 141R is effective for us on a prospective basis for all business combinations for which the acquisition date isoccurring on or after January 1, 2009. Early adoption is not permitted. We are currently evaluating the effects if any, that FAS 141R will have on our consolidated financial statements.

         FAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51."    In December 2007, the FASB issued FAS 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51," which establishes new accounting and reporting standards that require the ownershipfor noncontrolling interests, in subsidiaries not held by the parent to be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent's equity. FAS 160 also requiresformerly known as minority interests, including the amount of consolidated net income attributable to the parent and to the noncontrolling interest, commonly referredchanges in parent's ownership interest and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. FAS 160 requires noncontrolling interests to asbe reclassified from the minorityliabilities section or the mezzanine section between liabilities and equity to the equity section of the consolidated balance sheet and to be reported separately from the parent's equity. In addition, FAS 160 requires the results from operations attributed to the noncontrolling interest to be clearly identified and presenteddisclosed separately from those of the parent on the face of the consolidated statement of income. Changes in a parent's ownership interest while the parent retains its controlling financial interest must be accounted for consistently, and when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary must be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any noncontrolling equity investment. FAS 160 also requires entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners.operations. FAS 160 is effective for us January 1, 2009 and adoption is prospective only. However, upon adoption, presentation and disclosure requirements described above must be applied retrospectively for all periods presented in our

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies (Continued)

periods presented in our consolidated financial statements. We are currently evaluating the effects, if any, that FAS 160 will have on our consolidated financial statements.

FASB Staff Position, or         FSP No. 157-2, "Effective Date of FASB Statement No. 157."    In accordance withFebruary 2008, the provisions ofFASB issued FSP No. 157-2, "Effective Date of FASB Statement No. 157," we electedwhich allowed us to defer the implementation of FAS 157, "Fair Value Measurements," as it relates to our non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in our consolidated financial statements on a nonrecurring basis, until January 1, 2009. We are evaluating the impact, if any, the adoption of FAS 157, for those assets and liabilities within the scope of FSP No. FAS 157-2, will have on our financial position, results of operations and liquidity. We did not have any non-financial assets or non-financial liabilities that would be recognized or disclosed on a recurring basis as of JuneSeptember 30, 2008.

         FAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133."    In March 2008, the FASB issued FAS 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133," which amends and expands the disclosure requirements of FAS 133, "Accounting for Derivative Instrumentsderivative instruments and Hedging Activities."hedging activities. FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the effects, if any, that FAS 161 will have on our consolidated financial statements.

         FSP No. 142-3, "Determination of the Useful Life of Intangible Assets."    In April 2008, the FASB issued FSP No. 142-3, "Determination of the Useful Life of Intangible Assets." FSP No. 142-3which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, "Goodwill and Other Intangible Assets".Assets." This change is intended to improve the consistency between the useful life of a recognized intangible asset under FAS 142 and the period of expected cash flows used to measure the fair value of the asset under FAS 141R and other generally accepted accounting principles. The requirement for determining useful lives must be applied prospectively to intangible assets acquired after the effective date and the disclosure requirements must be applied prospectively to all intangible assets recognized as of, and subsequent to, the effective date. FSP No. 142-3 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the effects, if any, that FSP No. 142-3 will have on our consolidated financial statements.

         FASEITF Issue No. 162, "The Hierarchy of Generally Accepted Accounting Principles.03-6-1, "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities."    In MayJune 2008, the FASB issued FAS 162, "The HierarchyEITF Issue No. 03-6-1, which clarifies that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends, whether paid or unpaid, participate in undistributed earnings with common stockholders. Awards of Generally Accepted Accounting Principles." FAS 162 identifies the sources of accounting principlesthis nature are considered participating securities and the framework for selecting the principles used in the preparationtwo-class method of financial statements. FAS 162computing basic and diluted earnings per share must be applied. EITF Issue No. 03-6-1 is effective 60 days followingfor us on January 1, 2009 with retrospective application. We do not expect the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." The implementation of this standard will notEITF Issue No. 03-6-1 to have a material impact on our consolidated financial position and results of operations.

         EITF Issue No. 07-5, "Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity's Own Stock."    In June 2008, the FASB ratified EITF Issue No. 07-5, which provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies (Continued)

and settlement provisions. It also clarifies the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF Issue No. 07-5 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the effects, if any, that EITF Issue No. 07-5 will have on our consolidated financial statements.

3.    Fair Value Measurements

        A significant number of our financial instruments are carried at fair value. These assets and liabilities include:

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fixed income and money market investments;



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derivatives; and

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

3.    Fair Value Measurements (Continued)

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investments in publicly-traded equity securities.

Fair Value Measurement—Definition and Hierarchy

        Effective January 1, 2008, we implemented FAS 157 "Fair Value Measurements," for our financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The adoption of FAS 157 tofor our financial assets and liabilities did not have a material impact on our consolidated financial position and results of operations.

        FAS 157 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, FAS 157 permits the use of various valuation approaches, including market, income and cost approaches. FAS 157 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

        The fair value hierarchy is broken down into three levels based on the reliability of inputs. We have categorized our fixed income, derivatives and equity securities within the hierarchy as follows:

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Level 1—These valuations are based on a "market approach" using quoted prices in active markets for identical assets. Valuations of these products do not require a significant degree of judgment. Assets utilizing Level 1 inputs include money market funds, U.S. government securities, bank deposits and exchange-traded equity securities;



•

Level 2—These valuations are based primarily on a "market approach" using quoted prices in markets that are not very active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Fixed income assets utilizing Level 2 inputs include U.S. agency securities, including direct issuance bonds and mortgage-backed securities, asset-backed securities, corporate bonds and commercial paper. Derivative securities utilizing Level 2 inputs include forward foreign-exchange contracts; and



•

Level 3—These valuations are based on various approaches using inputs that are unobservable and significant to the overall fair value measurement. Certain assets are classified within Level 3 of the fair value hierarchy because they trade infrequently and, therefore, have little or no transparency. We currently have no assets or liabilities that are valued with Level 3 inputs.

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

3.    Fair Value Measurements (Continued)

Valuation Techniques

        Fair value is a market-based measure considered from the perspective of a market participant who would buy the asset or assume the liability rather than our own specific measure. All of our fixed income securities are priced by our custodial agent and nationally known pricing vendors, using a variety of daily data sources, largely readily-available market data and broker quotes. To validate these prices, we compare the fair market values of our fixed income investments using market data from observable and corroborated sources. We also perform the fair value calculations for our derivative and equity securities using market data from observable and corroborated sources. In periods of market inactivity, the observability of prices and inputs may be reduced for manycertain instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

3.    Fair Value Measurements (Continued)

        The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of JuneSeptember 30, 2008 (amounts in thousands):

(1)

Changes in the fair value of our fixed income investments and investments in publicly-traded equity securities are recorded in accumulated other comprehensive income (loss), a component of stockholders' equity, in our consolidated balance sheets. In the three months ended September 30, 2008, we recorded a charge of $5.3 million to write down our investments in certain venture capital funds, which we account for using the cost method of accounting, because we considered them to be other than temporarily impaired. Our determination of the impairment charge was made using Level 3 measurements under FAS 157. Subsequent to September 30, 2008, these investments continue to be accounted for under the cost method of accounting and are subject to our ongoing reviews for impairment.

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

3.    Fair Value Measurements (Continued)

(2)

As of JuneSeptember 30, 2008, the aggregate fair value of our foreign exchange contracts was an unrealized lossgain of $4.8$1.5 million, which we recorded as an increase to accruedprepaid expenses and other current assets in our consolidated balance sheets as of that date. Changes in the fair value of our forward foreign exchange contracts are recorded in unrealized foreign exchange gains and losses, a component of selling, general and administrative expenses, or SG&A, in our consolidated statements of operations.

        The carrying amounts reflected in our consolidated balance sheets for cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

4.    Net Income Per Share

        The following table sets forth our computation of basic and diluted net income per common share (amounts in thousands, except per share amounts):

(1)

We did not include the securities described in the following table in the computation of diluted earnings per share because these securities were anti-dilutive during the corresponding period (amounts in thousands):

(2)

We began issuing restricted stock units, or RSUs, under our 2004 Equity Incentive Plan inIn May 2007, in connection with our2008, we completed a general equity grant program.to eligible employees, 85% of whom received grants consisting entirely of RSUs.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions

Bioenvision

        Effective October 23, 2007, we completed our acquisition of Bioenvision through the culmination of a two steptwo-step process consisting of a tender offer completed in July 2007, and a merger approved in October 2007. We paid gross consideration of $349.9 million in cash, including $345.4 million for the outstanding shares of Bioenvision Commoncommon and Series A Preferred Stockpreferred stock and options to purchase shares of Bioenvision Common Stock,common stock, and approximately $5 million for acquisition costs. The acquisition of Bioenvision provided us with the rights to clofarabine outside North America.

        In connection with the merger, holders of 2,880,000 shares of Bioenvision Common Stock,common stock, representing less than 5% of the outstanding shares of Bioenvision Common Stockcommon stock on an as-converted basis immediately before the merger became effective, submitted written demands for appraisal of their shares and elected not to accept the $5.60 per share merger consideration. We referreferred to these stockholdersholders as dissenting stockholders. We obtained ownershipdissenters. In September 2008, the appraisal demand was resolved with substantially all of the dissenting shares and accounteddissenters for a total of $16.6 million in cash, consisting of the merger based on 100% ownership of Bioenvision. In October 2007, we accrued $16.1 million in our consolidated balance sheets, which represented our estimate of the price to be paid to the dissenting shareholders upon resolution of their appraisal demand.all other Bioenvision stockholders, plus interest accrued.

        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 value of the assets acquired and liabilities assumed amounted to $85.3 million, which was allocated to goodwill. We expectanticipate that substantially all of the amount allocated to goodwill will be deductible for tax purposes.

        The allocation of purchase price remains subject to potential adjustments, including adjustments for liabilities associated with certain exit and tax restructuring activities. We recorded immaterial adjustments to the purchase price in the first half ofnine months ended September 30, 2008.

Purchase of In-Process Research and Development

        We did not complete any acquisitions in the sixnine months ended JuneSeptember 30, 2008. In connection with certain acquisitions that we completed between January 1, 2006 and December 31, 2007, we acquired various IPR&D projects. The following table sets forth the significant IPR&D projects for the companies and certain assets we acquired between January 1, 2006 and December 31, 2007 (amounts in millions):

(1)

IPR&D charges totaled $125.5 million related to the acquisition of Bioenvision, of which $106.4 million was charged to IPR&D and $19.1 million was charged to equity in income (loss) of equity method investments.

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Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions (Continued)

(2)

Clofarabine, which is approved for the treatment of relapsed and refractory pediatric acute lymphoblastic leukemia, or ALL, is marketed under the name Clolar in North and South America and as Evoltra elsewhere in the world. The IPR&D projects for Clolarclofarabine are related to the development of the product for the treatment of other medical diseases.

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Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions (Continued)

(3)

In June 2008, we submitted marketing applications for Mozobil in the United States and Europe. We expect to launch Mozobil in these regions during the first half of 2009, following regulatory approval.

(4)

Year of expected launch is not provided for AMD070 at this time because we are assessing our future plans for this program.

Exit Activities

        In connection with severalour acquisitions of our acquisitions,AnorMED and Bioenvision, we initiated integration plans to consolidate and restructure certain functions and operations, including the relocation and termination of certain personnel of these acquired entities and the closure of certain of the acquired entities' leased facilities. These costs have been recognized as liabilities in accordance with EITF Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase or Business Combination," and are subject to potential adjustments as certain exit activities are confirmed or refined. The following table summarizes the liabilities established for exit activities related to these acquisitions (amounts in thousands):

(1)

Represents amounts accrued for employee related benefits and other exit activities resulting from our acquisition of Bioenvision. We completed payment of these benefits and other exit activities in June 2008.

(2)

We expect to pay employee benefits related to our acquisition of AnorMED through 2008 and payments related to the closing of thea leased facility through 2012.

Pro Forma Financial Summary

        The following pro forma financial summary is presented as if the acquisition of Bioenvision had been completed as of January 1, 2007. These pro forma combined results are not necessarily indicative of the actual results that would have occurred had the acquisition been consummated on that date, or of the future operations of the combined entities. Material nonrecurring charges related to the

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Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions (Continued)

acquisition of Bioenvision, such as IPR&D charges of $125.5 million, are included in the following pro forma financial summary as of January 1, 2007 (amounts in thousands, except per share amounts):

6.    Strategic Transactions

        We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense.

Strategic Alliance with Osiris Therapeutics, Inc.

        In October 2008, we entered into a strategic alliance with Osiris Therapeutics, Inc., or Osiris, whereby we obtained an exclusive license to develop and commercialize Prochymal and Chondrogen, mesenchymal stem cell products, outside of the United States and Canada. Osiris will commercialize Prochymal and Chondrogen in the United States and Canada. We will pay Osiris a nonrefundable upfront payment of $75.0 million by November 21, 2008, and an additional $55.0 million nonrefundable upfront license fee on July 1, 2009, both of which will be charged to research and development expense in our consolidated statements of operations during the fourth quarter of 2008.

        Osiris will be responsible for completing, at its own expense, all clinical trials of Prochymal for the treatment of GvHD and Crohn's disease, both of which are in phase 3 trials, and clinical trials of Prochymal and Chondrogen through phase 2 for all other indications. Osiris will be responsible for 60% and we will be responsible for 40% of the clinical trial costs for phase 3 and 4 clinical trials of Prochymal (other than for the treatment of GvHD and Crohn's disease) and Chondrogen. Osiris is eligible to receive:

•

up to $500.0 million in development and regulatory milestone payments for all indications of Prochymal and up to $100.0 million for Chondrogen, unless we elect to opt out of further development of Chondrogen; and



•

up to $250.0 million in sales milestones for all indications of Prochymal and up to $400.0 million for all indications of Chondrogen for the prevention and treatment of conditions of articulating joints.

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Notes to Unaudited, Consolidated Financial Statements (Continued)

6.    Strategic Transactions (Continued)

Osiris is also eligible to receive tiered, double-digit royalties from us on sales of Prochymal and Chondrogen outside of the United States and Canada.

Collaboration with PTC Therapeutics, Inc.

        On July 15, 2008, we entered into a collaboration agreement with PTC Therapeutics, Inc., or PTC, to develop and commercialize PTC124, PTC's novel oral therapy in late-stage development for the treatment of nonsense-mutation-mediated Duchenne muscular dystrophy, or DMD, and nonsense-mutation-mediated cystic fibrosis, or CF. Under the terms of the agreement, PTC will commercialize PTC124 in the United States and Canada, and we will commercialize the treatment in all other countries. In connection with the collaboration agreement, we paid PTC a nonrefundable upfront payment of $100.0 million, which we recorded as a charge to research and development expense for our Therapeutics segment in our consolidated statements of operations in July 2008. We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense. PTC will conduct and be responsible for the phase 2b trial of PTC124 in DMD, the phase 2b trial of PTC124 in CF and two proof-of-concept studies in other indications to be determined. Once these four studies have been completed, we and PTC will share research and development costs for PTC124 equally. We and PTC will each bear the sales and marketing and other costs associated with the commercialization of PTC124 in our respective territories. PTC is eligible to receive up to $337.0 million in milestone payments as follows:

•

up to $165.0 million in development and approval milestones, the majority of which are towould be paid upon the receipt of approvals obtained outside of the United States and Canada; and



•

up to $172.0 million in sales milestones, commencing if and when annual net revenuessales for PTC124 outside of the United States and Canada reach $300.0 million and increasing in increments through revenues of $2.4 billion.

PTC is also eligible to receive tiered, double-digit royalties from sales of PTC124 outside of the United States and Canada.

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Notes to Unaudited, Consolidated Financial Statements (Continued)

6.    Strategic Transactions (Continued)

Strategic Alliance with Isis Pharmaceuticals, Inc.

        On January 7, 2008, we entered into a strategic alliance with Isis Pharmaceuticals, Inc., or Isis, whereby we obtained an exclusive, worldwide license to develop and commercialize mipomersen, a lipid-lowering drug targeting apolipoprotein B-100, which is currently being developed for the treatment of familial hypercholesterolemia, or FH, an inherited disorder that causes exceptionally high levels of LDL-cholesterol. In February 2008, we made a nonrefundable payment to Isis of $150.0 million, of which $80.1 million was recorded as an investment in equity securities in our consolidated balance sheets based on the fair value of the five million shares of Isis common stock we acquired in connection with the transaction, and the remaining $69.9 million was allocated to the mipomersen license, which had not reached technological feasibility and did not have alternative future use. We recorded the $69.9 million license fee as a charge to research and development expense in our consolidated statements of operations in the first quarter of 2008. We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense.three months ended March 31, 2008.

        In June 2008, we finalized the terms of our license and collaboration agreement with Isis and paid Isis an additional $175.0 million upfront nonrefundable license fee, which we recorded as a charge to research and development expense in our consolidated statements of operations in June 2008. Under the terms of the agreement, Isis will contribute up to the first $125.0 million in funding for the

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

6.    Strategic Transactions (Continued)

development of mipomersen and, thereafter, we and Isis will share development costs for mipomersen equally. The initial funding commitment by Isis and shared development funding willwould end when the mipomersen program is profitable. In the event the research and development of mipomersen is terminated prior to Isis completing their funding obligation, we are not entitled to any refund of our $175.0 million upfront payment. Accordingly, the $175.0 million was recorded as research and development expense in June 2008. Isis is eligible to receive up to $750.0 million in commercial milestone payments and up to $825.0 million in development and regulatory milestone payments.

        We will be responsible for funding sales and marketing expenses until mipomersen revenues are sufficient to cover such costs. Profits on mipomersen initially will be allocated 70% to us and 30% to Isis. The profit ratio willwould be adjusted on a sliding scale if and as annual revenues for mipomersen ramp up to $2.0 billion, at which point we willwould share profits equally with Isis. The results of our mipomersen program are included in the results of our cardiovascular business unit, which are reported under the caption "Other" in our segment disclosures.

7.    Inventories

        In JulyWe capitalize inventory produced for commercial sale, which may result in the capitalization of inventory prior to regulatory approval. If a product is not approved for sale, it would result in the write off of the inventory and a charge to earnings. Our total inventories at September 30, 2008 we wrote off one lotincluded $9.4 million of Thymoglobulin, valued at approximately $5Myozyme and $4.9 million due to a filter failureof Campath inventory, produced at our fill-finishmanufacturing facility in Waterford, Ireland.

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Notes to Unaudited, Consolidated Financial Statements (Continued)Belgium, that have not yet been approved for sale.

8.    Goodwill and Other Intangible Assets

Goodwill

        The following table contains the change in our goodwill during the sixnine months ended JuneSeptember 30, 2008 (amounts in thousands):

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

8.    Goodwill and Other Intangible Assets (Continued)

        We are required to perform impairment tests related to our goodwill under FAS 142 annually and whenever events or changes in circumstances suggest that the carrying value of an intangible asset may not be recoverable. We completed the required annual impairment tests for our $1.4 billion of net goodwill in the third quarter of 2008 and determined that no impairment charges were required.

Other Intangible Assets

        The following table contains information about our other intangible assets for the periods presented (amounts in thousands):