Genzyme (GZTR) 10-Q 10 May 10 2010 Q1 Quarterly report Financial data

Consolidated Statements of Oper

Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Revenues:
Net product revenue	$971,625	$1,037,244
Net service revenue	101,915	101,499
Research and development revenue	933	10,128
Total revenues	1,074,473	1,148,871
Operating costs and expenses:
Cost of products sold	279,739	235,562
Cost of services sold	65,872	60,250
Selling, general and administrative	553,310	317,961
Research and development	220,930	206,925
Amortization of intangibles	70,984	57,598
Contingent consideration expense	62,549
Total operating costs and expenses	1,253,384	878,296
Operating income (loss)	(178,911)	270,575
Other income (expenses):
Equity in loss of equity method investments	(697)
Other	(439)	(1,555)
Investment income	3,300	5,350
Total other income	2,164	3,795
Income (loss) before income taxes	(176,747)	274,370
Benefit from (provision for) income taxes	61,799	(78,884)
Net income (loss)	($114,948)	$195,486
Net income (loss) per share:
Basic (in dollars per share)	-0.43	0.72
Diluted (in dollars per share)	-0.43	0.7
Weighted average shares outstanding:
Basic (in shares)	266,251	270,854
Diluted (in shares)	266,251	277,628

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Current assets:
Cash and cash equivalents	$643,337	$742,246
Short-term investments	162,011	163,630
Accounts receivable, net	904,102	899,731
Inventories	608,642	608,022
Other current assets	310,626	210,747
Deferred tax assets	181,318	178,427
Total current assets	2,810,036	2,802,803
Property, plant and equipment, net	2,824,099	2,809,349
Long-term investments	156,351	143,824
Goodwill	1,404,153	1,403,363
Other intangible assets, net	2,032,449	2,313,262
Deferred tax assets-noncurrent	401,370	376,815
Investments in equity securities	79,881	74,438
Other noncurrent assets	146,456	136,870
Total assets	9,854,795	10,060,724
Current liabilities:
Accounts payable	175,764	189,629
Accrued expenses	870,460	696,223
Deferred revenue	32,585	24,747
Current portion of contingent consideration obligations	158,493	161,365
Current portion of long-term debt and capital lease obligations	8,407	8,166
Total current liabilities	1,245,709	1,080,130
Long-term debt and capital lease obligations	113,389	116,434
Deferred revenue-noncurrent	12,870	13,385
Long-term contingent consideration obligations	875,184	853,871
Other noncurrent liabilities	80,415	313,252
Total liabilities	2,327,567	2,377,072
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value	0	0
Common stock, $0.01 par value	2,665	2,657
Additional paid-in capital	5,770,283	5,688,741
Accumulated earnings	1,555,148	1,670,096
Accumulated other comprehensive income	199,132	322,158
Total stockholders' equity	7,527,228	7,683,652
Total liabilities and stockholders' equity	$9,854,795	$10,060,724

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) (USD $)
	Mar. 31, 2010	Dec. 31, 2009
Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	0.01	0.01
Common stock, par value (in dollars per share)	0.01	0.01

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Thousands	3 Months Ended Mar. 31, 2010		3 Months Ended Mar. 31, 2009
Cash Flows from Operating Activities:
Net income (loss)	($114,948)		$195,486
Reconciliation of net income (loss) to cash flows from operating activities:
Depreciation and amortization	122,688		98,958
Stock-based compensation	47,671		44,560
Provision for bad debts	2,449		5,762
Contingent consideration expense	62,549
Equity in loss of equity method investments	697
Deferred income tax benefit	(32,679)		(24,376)
Tax benefit from employee stock-based compensation	3,624		6,549
Excess tax benefit from stock-based compensation	480		(3,492)
Other	2,663		2,814
Increase (decrease) in cash from working capital changes (excluding impact of acquired assets and assumed liabilities):
Accounts receivable	(31,463)		(59,210)
Inventories	(28,225)		818
Other current assets	(48,640)		(22,659)
Accounts payable, accrued expenses and deferred revenue	139,598		12,565
Cash flows from operating activities	126,464		257,775
Cash Flows from Investing Activities:
Purchases of investments	(120,119)		(13,292)
Sales and maturities of investments	105,796		75,058
Purchases of equity securities	(3,302)		(4,870)
Proceeds from sales of investments in equity securities	3,077		1,264
Purchases of property, plant and equipment	(152,220)		(161,561)
Investments in equity method investment	(1,466)
Purchases of other intangible assets	(5,885)		(8,056)
Other	(10,547)		(47)
Cash flows from investing activities	(184,666)		(111,504)
Cash Flows from Financing Activities:
Proceeds from issuance of common stock	30,075		34,526
Repurchases of our common stock			(107,134)
Excess tax benefits from stock-based compensation	(480)		3,492
Payments of debt and capital lease obligations	(3,092)		(2,653)
Decrease in bank overdrafts	(20,728)		(3,392)
Payment of contingent consideration obligation	(31,600)
Other	116		1,995
Cash flows from financing activities	(25,709)		(73,166)
Effect of exchange rate changes on cash	(14,998)		(1,773)
Increase (decrease) in cash and cash equivalents	(98,909)	[1],[2]	71,332
Cash and cash equivalents at beginning of period	742,246		572,106
Cash and cash equivalents at end of period	$643,337		$643,438
[1]Goodwill and Other Intangible Assets-Note 8.
[2]Strategic Transactions-Note 6.

Description of Business

Description of Business
	3 Months Ended Mar. 31, 2010
Description of Business
Description of Business	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 products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease, and diagnostic testing. Our commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need. We are organized into five financial reporting units, which we also consider to be our reporting segments: Personalized Genetic Health, which develops, manufactures and distributes therapeutic products with a focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as lysosomal storage disorders, or LSDs, and cardiovascular disease. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme, Myozyme, Aldurazyme and Elaprase and royalties earned on sales of Welchol; Renal and Endocrinology, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure, and endocrine and immune-mediated diseases. The unit derives substantially all of its revenue from sales of Renagel/Renvela (including sales of bulk sevelamer), Hectorol and Thyrogen; 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/Synvisc-One and the Sepra line of products; Hematology and Oncology, which develops, manufactures and distributes products for the treatment of cancer, the mobilization of hematopoietic stem cells and the treatment of transplant rejection and other hematologic and auto-immune disorders. The unit derives substantially all of its revenue from sales of Mozobil, Thymoglobulin, Clolar, Campath, Fludara and Leukine; and Multiple Sclerosis, which is developing a product for the treatment of MS. Effective January1, 2010, based on changes in how we review our business, we re-allocated certain of our business units among our segments and adopted new names for certain of our reporting segments. Specifically: our former Genetic Diseases reporting segment is now referred to as "Personalized Genetic Health," or "PGH," and now includes our cardiovascular business unit, which previously was reported under the caption "Cardiometabolic and Renal," and our Welchol product line, which previously was reported as part of our bulk pharmaceuticals business unit under the caption "Other;" our former Cardiometabolic and Renal reporting segment is now referred to as "Renal and Endocrinology" and now includes our immune-mediated diseases business unit, which previously was reported under the caption "Other," but no longer includes our cardiovascular business unit; and our former Hematologic Oncology segment is now referred to as "Hemato

Basis of Presentation and Signi

Basis of Presentation and Significant Accounting Policies
	3 Months Ended Mar. 31, 2010
Basis of Presentation and Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies	2. Basis of Presentation and Significant Accounting Policies Basis of Presentation Our unaudited, consolidated financial statements for each period include the statements of operations, 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 have reclassified certain 2009 data to conform to our 2010 presentation. 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, or U.S.GAAP. These financial statements include all normal and recurring adjustments that we consider necessary for the fair presentation of our financial position and results of operations. Since these are interim financial statements, you should also read our audited, consolidated financial statements and notes included in PartII., Item8. to our 2009 Form10-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. The balance sheet data as of December31, 2009 that is included in this Form10-Q was derived from our audited financial statements but does not include all disclosures required by U.S.GAAP. Our unaudited, consolidated financial statements for each period include the accounts of our wholly owned and majority owned subsidiaries. We account for our investments in entities not subject to consolidation using the equity method of accounting if we have a substantial ownership interest (20% to 50%) in or exercise significant influence over the entity. Our consolidated net income (loss) includes our share of the earnings or losses of these entities. All intercompany accounts and transactions have been eliminated in consolidation. Revenue RecognitionRecent Healthcare Reform Legislation In March2010, healthcare reform legislation was enacted in the United States, which contains several provisions that impact our business. Although many provisions of the new legislation do not take effect immediately, several provisions became effective in the first quarter of 2010. These include: an increase in the minimum Medicaid rebate to states participating in the Medicaid program from 15.1% to 23.1% on our branded prescription drugs and an increase of 17.1% for our drugs that are approved exclusively for pediatric patients; the extension of the Medicaid rebate to managed care organizations that dispense drugs to Medicaid beneficiaries; the expansion of the 340(B) Public Health Services, or PHS, drug pricing program, which provides outpatient drugs at reduced rates, to include additional hospitals and healthcare centers (this provision, however, does not apply to orphan drugs); and a requirement that the Medicaid rebate for a drug that is a "line extension" of a preexisting oral solid dosage form of the drug be linked in certain respects to the Medicaid r

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Fair Value Measurements
Fair Value Measurements	3. Fair Value Measurements A significant number of our assets and liabilities are carried at fair value. These include: fixed income investments; investments in publicly-traded equity securities; derivatives; and contingent consideration obligations. Fair Value MeasurementDefinition and Hierarchy Fair value is defined 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, we are permitted to use various valuation approaches, including market, income and cost approaches. We are required to follow an established fair value 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, equity securities, derivatives and contingent consideration obligations within the hierarchy as follows: Level1These 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 Level1 inputs include money market funds, U.S. government securities, bank deposits and exchange-traded equity securities. Level2These 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 Level2 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 Level2 inputs include forward foreign-exchange contracts. Level3These valuations are based on various approaches using inputs that are unobservable and significant to the overall fair value measurement. Certain assets and liabilities are classified within Level3 of the fair value hierarchy because they have unobservable value drivers and therefore have little or no transparency. The fair value measurement of the contingent consideration obligations related to the acquisition from Bayer is valued using Level3 inputs. 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 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 derivatives and equity securities using market data from observable and corroborated sources. We determine the fair value of the contingent consideration obligat

Net Income

Net Income (Loss) Per Share
	3 Months Ended Mar. 31, 2010
Net Income (Loss) Per Share
Net Income (Loss) Per Share	4. Net Income (Loss) Per Share The following table sets forth our computation of basic and diluted net income (loss) per common share (amounts in thousands, except per share amounts): Three Months Ended March31, 2010 2009 Net income (loss)basic and diluted $ (114,948 ) $ 195,486 Shares used in computing net income (loss) per common sharebasic 266,251 270,854 Effect of dilutive securities(1): Stock options(2) 5,553 Restricted stock units 1,138 Other 83 Dilutive potential common shares 6,774 Shares used in computing net income (loss) per common sharediluted(1,2) 266,251 277,628 Net income (loss) per common share: Basic $ (0.43 ) $ 0.72 Diluted $ (0.43 ) $ 0.70 (1) For the three months ended March31, 2010, basic and diluted net loss per share are the same. We did not include the securities described in the following table in the computation of diluted net loss per share because these securities would have an anti-dilutive effect due to our net loss for the period (amounts in thousands): Three Months Ended March31, 2010 Stock options 2,949 Restricted stock units 2,534 Other 247 Total shares excluded from calculation of diluted loss per share 5,730 (2) We did not include the securities described in the following table in the computation of diluted earnings (loss) per share because these securities were anti-dilutive during the corresponding period (amounts in thousands): ThreeMonthsEnded March31, 2010 2009 Shares issuable upon exercise of outstanding options 20,648 8,650

Comprehensive Income

Comprehensive Income (Loss)
	3 Months Ended Mar. 31, 2010
Comprehensive Income (Loss)
Comprehensive Income (Loss)	5. Comprehensive Income (Loss) The components of comprehensive income (loss) for the periods presented are as follows (amounts in thousands): Three Months Ended March31, 2010 2009 Net income (loss) $ (114,948 ) $ 195,486 Other comprehensive income (loss): Foreign currency translation adjustments (125,477 ) (120,148 ) Pension liability adjustments, net of tax(1) (9 ) Unrealized gains (losses) on securities, net of tax: Unrealized gains (losses) arising during the period, net of tax 3,638 (20,607 ) Reclassification adjustment of gains included in net income (loss), netoftax (1,178 ) (197 ) Unrealized gains (losses) on securities, net of tax(2) 2,460 (20,804 ) Other comprehensive loss (123,026 ) (140,952 ) Comprehensive income (loss) $ (237,974 ) $ 54,534 (1) Tax amounts for all periods were not significant. (2) Net of $(1.4) million of tax for the three months ended March31, 2010 and $11.9million of tax for the three months ended March31, 2009.

Strategic Transactions

Strategic Transactions
	3 Months Ended Mar. 31, 2010
Strategic Transactions
Strategic Transactions	6. Strategic Transactions Purchase of Intellectual Property from EXACT Sciences Corporation On January27, 2009, we purchased certain intellectual property in the fields of prenatal testing and reproductive health from EXACT Sciences Corporation, or EXACT Sciences, for our genetics business unit and 3,000,000 shares of EXACT Sciences common stock. We paid EXACT Sciences total cash consideration of $22.7million at that time. Of this amount, we allocated $4.5million to the acquired shares of EXACT Sciences common stock based on the fair value of the stock on the date of acquisition, which we recorded as an increase to investments in equity securities in our consolidated balance sheet as of March31, 2009. As the purchased assets did not qualify as a business combination and have not reached technological feasibility nor have alternative future use, we allocated the remaining $18.2million to the acquired intellectual property, which we recorded as a charge to research and development expenses in our consolidated statements of operations in March 2009. Additional amounts we paid during the first quarter of 2010 and will pay in the future to EXACT Sciences under this agreement are not significant. Purchase of In-Process Research and Development The following table sets forth the significant in-process research and development, or IPRD, projects for the companies and assets we acquired between January1, 2006 and March31, 2010 (amounts in millions): Company/Assets Acquired Purchase Price IPRD Programs Acquired Discount Rate Used in Estimating Cash Flows Year of Expected Launch Bayer (2009) $ 1,006.5 $ 458.7 alemtuzumab for MSUS 16 % 2012 174.2 alemtuzumab for MSex-US 16 % 2013 $ 632.9 (1) Bioenvision,Inc., or Bioenvision (2007) $ 349.9 $ 125.5 (2) Clolar(3) 17 % 2010-2016 (4) AnorMEDInc., or AnorMED (2006) $ 589.2 $ 526.8 (2) Mozobil(5) 15 % 2016 (1) Capitalized as an indefinite-lived intangible asset. (2) Expensed on acquisition date. (3) Clolar is approved for the treatment of relapsed and refractory pediatric acute lymphoblastic leukemia, or ALL. The IPRD projects for Clolar are related to the development of the product for the treatment of other medical issues. (4) Year of expected launch reflects both the ongoing launch of products for currently approved indications and the anticipated launch of the products in the future for new indications. (5) Mozobil received marketing approval for use in stem cell transplants in the United States in December 2008 and in Europe in July 2009. Mozobil is also being developed for tumor sensitization. Pro Forma Financial Summary The following pro forma financial summary is presented as if the acquisition from Bayer was completed as of January1, 2009. The 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 entit

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Inventories
Inventories	7. Inventories March31, 2010 December31, 2009 (Amounts in thousands) Raw materials $ 113,567 $ 123,434 Work-in-process 298,235 288,653 Finished goods 196,840 195,935 Total $ 608,642 $ 608,022 In order to build a small inventory buffer to help us more consistently manage the resupply of Cerezyme to patients in approximately 100 countries and reduce interruptions in shipping that occur in the absence of inventory, we began shipping 50% of Cerezyme demand at the end of February 2010. Although we achieved our goal of building a small inventory buffer for Cerezyme during the first quarter of 2010, we announced in April 2010 that the 50% shipping allocation will be extended due to an interruption in operations at our Allston facility at the end of March 2010. The interruption resulted from an unexpected city electrical power failure that compounded issues with the plant's water system. The issues have been corrected and the facility is operational. We estimate that we will need to continue the 50% shipping allocation for two to three months. We are currently assessing whether approximately $7million in the aggregate of Cerezyme and Fabrazyme work-in-process material, the majority of which is Cerezyme, that was unfinished when the interruption occurred can be finished and expect to complete our assessment over the next month. If we determine that this Cerezyme and/or Fabrazyme material cannot be finished, we will have to write off that inventory as a charge to cost of products sold in our consolidated statements of operations in the second quarter of 2010. We capitalize inventory produced for commercial sale, which may result in the capitalization of inventory prior to regulatory approval of a product. If a product is not approved for sale, it would result in the write off of the inventory and a charge to earnings. We have been working to increase the productivity of the Fabrazyme manufacturing process, which has performed at the low end of the historical range since the re-start of production, and have developed a new working cell bank for Fabrazyme that is in its second run. Regulatory approval of the new working cell bank is required. As of March31, 2010, the amount of inventory for Fabrazyme related to the new working cell bank that has not yet been approved for sale was not significant. Manufacturing-Related Charges We manufacture the majority of our supply requirements for sevelamer hydrochloride (the active ingredient in Renagel) and sevelamer carbonate (the active ingredient in Renvela) at our manufacturing facility in Haverhill, England. In December2009, equipment failure caused an explosion and fire at this facility, which damaged some of the equipment used to produce these active ingredients as well as the building in which the equipment was located. As a result, we have temporarily suspended production of sevelamer hydrochloride and sevelamer carbonate at this facility while repairs are made. We resumed production of sevelamer hydrochloride in May2010. We anticipate that the facility will resume production of sevelamer carbonate in

Goodwill and Other Intangible A

Goodwill and Other Intangible Assets
	3 Months Ended Mar. 31, 2010
Goodwill and Other Intangible Assets.
Goodwill and Other Intangible Assets	8. Goodwill and Other Intangible Assets The following table contains the change in our goodwill during the three months ended March31, 2010 (amounts in thousands): Personalized Genetic Health Renal and Endocrinology Biosurgery Hematology and Oncology Multiple Sclerosis Other Total Goodwill $ 339,563 $ 319,882 $ 110,376 $ 375,889 $ 318,059 $ 261,631 $ 1,725,400 Accumulated impairment losses(1) (102,792 ) (219,245 ) (322,037 ) Balance as of December31, 2009 339,563 319,882 7,584 375,889 318,059 42,386 1,403,363 Net exchange differences arising during the period 494 494 Other changes in carrying amounts during the period 296 296 Balance as of March31, 2010 $ 339,563 $ 319,882 $ 7,584 $ 375,889 $ 318,059 $ 43,176 $ 1,404,153 Goodwill $ 339,563 $ 319,882 $ 110,376 $ 375,889 $ 318,059 $ 262,421 $ 1,726,190 Accumulated impairment losses(1) (102,792 ) (219,245 ) (322,037 ) Balance as of March31, 2010 $ 339,563 $ 319,882 $ 7,584 $ 375,889 $ 318,059 $ 43,176 $ 1,404,153 (1) Accumulated impairment losses include: a $102.8million pre-tax charge recorded in 2003 to write off the goodwill of our Biosurgery reporting segment's orthopaedics reporting unit; and a $219.2million pre-tax charge recorded in 2006 to write off the goodwill of our genetic testing reporting unit. Other Intangible Assets The following table contains information about our other intangible assets for the periods presented (amounts in thousands): As of March31, 2010 As of December31, 2009 Gross Other Intangible Assets Accumulated Amortization Net Other Intangible Assets Gross Other Intangible Assets Accumulated Amortization Net Other Intangible Assets Finite-lived other intangible assets: Technology(1) $ 1,939,700 $ (896,937 ) $ 1,042,763 $ 2,180,232 $ (877,611 ) $ 1,302,621 Distribution rights(2) 446,374 (246,832 ) 199,542 440,521 (227,726 ) 212,795 Patents 188,652 (135,209 ) 53,443 188,651 (131,898 ) 56,753 License fees 98,586 (48,576 ) 50,010 98,647 (47,052 ) 51,595 Customer lists 88,448 (46,306 ) 42,142 87,423 (43,822 ) 43,601 Trademarks 60,621 (48,984 ) 11,637 60,608 (47,623 ) 12,985 Total finite-lived other intangible assets 2,822,381 (1,422,844 ) 1,399,537 3,056,082 (1,375,732 ) 1,680,350 Indefinite-lived other intangible assets: IPRD 632,912 632,912 632,912 632,912 Total other intangible assets $ 3,455,293 $ (1,422,844 ) $ 2,032,449

Investment in BioMarin/Genzyme

Investment in BioMarin/Genzyme LLC
	3 Months Ended Mar. 31, 2010
Investment in BioMarin/Genzyme LLC
Investment in BioMarin/Genzyme LLC	9. Investment in BioMarin/GenzymeLLC We and BioMarin PharmaceuticalInc., or BioMarin, have entered into agreements to develop and commercialize Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, used to treat an LSD known as mucopolysaccharidosis, or MPS, I. Under the relationship, an entity we formed with BioMarin in 1998 called BioMarin/GenzymeLLC has licensed all intellectual property related to Aldurazyme and other collaboration products on a royalty-free basis to BioMarin and us. BioMarin holds the manufacturing rights and we hold the global marketing rights. We are required to pay BioMarin a tiered royalty payment ranging from 39.5% to 50% of worldwide net product sales of Aldurazyme. Prior to January1, 2010, we determined that we were the primary beneficiary of BioMarin/GenzymeLLC and, as a result, we: consolidated the income (losses) of BioMarin/GenzymeLLC and recorded BioMarin's portion of BioMarin/GenzymeLLC's income (losses) as minority interest in our consolidated statements of operations; and recorded the assets and liabilities of BioMarin/GenzymeLLC in our consolidated balance sheets at fair value. Effective January1, 2010, in accordance with new guidance we adopted for consolidating variable interest entities, we were required to reassess our designation as primary beneficiary of BioMarin/GenzymeLLC. Under the new guidance, the entity with the power to direct the activities that most significantly impact a variable interest entity's economic performance is the primary beneficiary. We have concluded that BioMarin/GenzymeLLC is a variable interest entity, but does not have a primary beneficiary because the power to direct the activities of BioMarin/GenzymeLLC that most significantly impact its performance, is, in fact, shared equally between us and BioMarin through our commercialization rights and BioMarin's manufacturing rights. Effective January1, 2010, we no longer consolidate the results of BioMarin/GenzymeLLC and instead record our portion of the results of BioMarin/GenzymeLLC in equity in loss of equity method investments in our consolidated statements of operations. For the three months ended March31, 2010, the results of BioMarin/Genzyme LLC and our portion of the results of BioMarin/GenzymeLLC were not significant.

Investment in Isis Pharmaceutic

Investment in Isis Pharmaceuticals, Inc. Common Stock
	3 Months Ended Mar. 31, 2010
Investment in Isis Pharmaceuticals, Inc. Common Stock
Investment in Isis Pharmaceuticals, Inc. Common Stock	10. Investment in Isis Pharmaceuticals,Inc. Common Stock As of March31, 2010, our investment in Isis common stock had a carrying value of $80.1million, or $16.02 per share, and a fair market value of $54.7million, or $10.93 per share. The closing price per share of Isis common stock exhibited volatility during 2009 and the three months ended March31, 2010 and has remained below our historical cost since September1, 2009, with closing prices subsequent to that date ranging from a high of $15.69 per share to a low of $8.66 per share. We considered all available evidence in assessing the decline in value of our investment in Isis common stock, including investment analyst reports and Isis's expected results and future outlook, none of which suggests that the decline would be "other than temporary." Currently, the average 12-month price estimate for Isis common stock among some analysts is approximately $16 per share. As a result of our analysis, as of March31, 2010, we consider the $25.5million unrealized loss on our investment in Isis common stock to be temporary. We will continue to review the fair value of our investment in Isis common stock in comparison to our historical cost and in the future, if the decline in value has become "other than temporary," we will write down our investment in Isis common stock to its then current market value and record an impairment charge to our consolidated statements of operations.

Stockholders' Equity

Stockholders' Equity
	3 Months Ended Mar. 31, 2010
Stockholders' Equity
Stockholders' Equity	11. Stockholders' Equity Long-Term Incentive Program for Senior Executives From 2007 through 2009, our long-term incentive program for senior executives was comprised of equity awards in the form of time vesting stock options and time vesting RSUs. Beginning with 2010, the equity vehicles for our long-term incentive program for senior executives includes a combination of: time vesting stock options; and performance and market vesting awards comprised of PSUs, tied to the achievement of pre-established performance and market goals over a three-year performance period, and cash. Approximately half of each senior executive's grant consists of time vesting stock options with the remainder in PSUs. For the 2010 through 2012 performance period, the performance metrics are: cash flow return on invested capital; and relative total shareholder return, or R-TSR, measured against the performance of a subset of biotechnology peer companies (currently 28 companies) in the SP500 Health Care Index. Each metric is weighted equally. For both metrics, performance between the threshold level and the target level will be awarded in PSUs. The PSUs will be paid out in shares of our stock at the end of the three-year period if performance between the threshold level and target level is achieved. If performance above the target level is achieved, the portion of the award above the target level will be paid out in cash up to a predetermined maximum cash award. Since it is possible that the PSUs may not pay out at all, it is completely "at risk" compensation. In January 2010, the compensation committee of our board of directors approved a range for the three-year cash flow return on invested capital metric of 85% to 115%. For performance between 85% and 100% of the cash flow return on invested capital target, the payout range is 50% to 100% of the senior executive's target PSU award associated with this performance measure. Performance between 101% and 115% of the cash flow return on invested capital target will result in a cash payment that will be awarded based on performance achieved between target and maximum levels, up to a predetermined maximum. The committee also approved the following performance levels for R-TSR: Performance Level Percentile Rank Threshold 40th Target 65th Maximum 75th For performance between the R-TSR threshold and target levels, the payout range is 35% to 100% of the senior executive's target PSU award associated with this performance measure. R-TSR performance between the target and maximum levels will result in a cash payment that will be awarded based on performance achieved between target and maximum levels, up to a predetermined maximum. If a participating senior executive's employment is terminated before the end of the performance period because of death, disability or retirement, payment of the PSU will be pro-rated to the date of termination based upon the company's actual achievement of performance levels at the end of the performance period. Upon a change in control, payment of a PSU will be paid out at the target performance level and pro-rated

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Commitments and Contingencies
Commitments and Contingencies	12. Commitments and Contingencies Pending FDA Consent Decree In March 2010, the FDA notified us that it intended to take enforcement action to ensure that products manufactured at our Allston facility are made in compliance with good manufacturing practice, or GMP, regulations. We have received a draft consent decree from the FDA that provides for a potential up-front disgorgement of past profits of $175.0million, which we have recorded as a charge to SGA in our consolidated statements of operations for the first quarter of 2010 and as an increase to accrued expenses on our consolidated balance sheet as of March31, 2010. We recorded this charge during the first quarter of 2010 because it is probable that we will have to pay this amount to the FDA and we can reasonably estimate the amount that will be paid. In addition, if the fill-finish operations at our Allston facility are still operating after deadlines for domestic and exported products, the draft provides for disgorgement of 18.5% of revenues from sales of products manufactured and distributed from our Allston facility after those deadlines. We and the FDA are having discussions regarding appropriate deadlines for moving fill-finish operations, as well as the details of the disgorgement provisions. Finally, if fill-finish operations are moved from our Allston facility but certain remediation actions relating to overall GMP compliance are not met by deadlines over the coming years in a remediation plan to be approved by the FDA, the draft provides for payment of $15,000 per day per violation until the compliance milestones are met. We expect that the FDA will allow us to continue to ship our Cerezyme, Fabrazyme and Myozyme products that are produced or fill-finished at our Allston facility because the FDA has determined that these products meet the definition of "medical necessity" that would justify continued production of these products at Allston during the enforcement period. The FDA, however, has made a preliminary determination that Thyrogen, which is fill-finished at our Allston facility, does not meet the FDA's definition and may require us to cease fill-finishing the product at Allston when we enter into the consent decree. We are actively negotiating with the FDA the terms of the consent decree and presenting our view that there is also patient need for uninterrupted supply of Thyrogen. We expect that the negotiations will be completed during the second quarter of 2010. Legal Proceedings Federal Securities Litigation In July 2009 and August 2009, two purported securities class action lawsuits were filed in the U.S. District Court for the District of Massachusetts against us and our President and Chief Executive Officer. The lawsuits were filed on behalf of those who purchased our common stock during the period from June26, 2008 through July21, 2009 and allege violations of Section10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule10b-5 promulgated thereunder. Each of the lawsuits is premised upon allegations that we made materially false and misleading statements and omissions by failing to disclose instances of viral contamination at two of our ma

Benefit from

Benefit from (Provision for) Income Taxes
	3 Months Ended Mar. 31, 2010
Benefit from (Provision for) Income Taxes
Benefit from (Provision for) Income Taxes	13. Benefit from (Provision for) Income Taxes Three Months Ended March31, 2010 2009 (Amounts in thousands) Benefit from (provision for) income taxes $ 61,799 $ (78,884 ) Effective tax rate 35 % 29 % Our effective tax rate for both periods presented varies from the U.S. statutory tax rate as a result of: income and expenses taxed at rates other than the U.S. statutory tax rate; our provision for state income taxes; domestic manufacturing benefits; benefits related to tax credits; tax benefits in the amount of $15.2million as a result of the resolution of tax examinations in major tax jurisdictions; tax expenses in the amount of $10.7million resulting from the remeasurement of the deferred tax assets related to our acquisition from Bayer in 2009 for the three months ended March31, 2010; and non-deductible stock-based compensation expenses totaling $11.9million for the three months ended March31, 2010, as compared to $9.7million for the three months ended March31, 2009. We are currently under audit by various states and foreign jurisdictions for various years. We believe that we have provided sufficiently for all audit exposures. Settlement of these audits or the expiration of the statute of limitations on the assessment of income taxes for any tax year will likely result in a reduction of future tax provisions. Any such benefit would be recorded upon final resolution of the audit or expiration of the applicable statute of limitations.

Segment Information

Segment Information
	3 Months Ended Mar. 31, 2010
Segment Information
Segment Information	14. Segment Information We present segment information in a manner consistent with the method we use to report this information to our management. Effective January1, 2010, based on changes in how we review our business, we re-allocated certain of our business units amongst our segments and adopted new names for certain of our reporting segments. Under the new reporting structure, we are organized into five reporting segments as described above in Note1., "Description of Business," to these consolidated financial statements. We have revised our 2009 segment disclosures to conform to our 2010 presentation. We have provided information concerning the operations of these reportable segments in the following tables (amounts in thousands): Three Months Ended March31, 2010 2009 Revenues: Personalized Genetic Health(1) $ 392,504 $ 549,960 Renal and Endocrinology 252,423 242,468 Biosurgery 137,366 119,522 Hematology and Oncology(2) 156,310 88,573 Multiple Sclerosis(2) 7,291 Other 135,859 140,603 Corporate 11 454 Total $ 1,074,473 $ 1,148,871 Income (loss) before income taxes: Personalized Genetic Health(1,3) $ (27,024 ) $ 351,795 Renal and Endocrinology 114,542 106,062 Biosurgery 28,993 28,332 Hematology and Oncology(2) 8,388 (2,985 ) Multiple Sclerosis(2) (89,925 ) (16,445 ) Other(4) 4,228 (4,798 ) Corporate(5) (215,949 ) (187,591 ) Total $ (176,747 ) $ 274,370 (1) Includes the impact of supply constraints for Cerezyme and Fabrazyme. (2) On May29, 2009, we acquired the worldwide rights to the oncology products Campath, Fludara and Leukine and alemtuzumab for MS from Bayer. As of that date, we ceased recognizing research and development revenue for Bayer's reimbursement of a portion of the development costs for alemtuzumab for MS. The fair value of the research and development costs for alemtuzumab for MS that will be reimbursed by Bayer is accounted for as an offset to the contingent consideration obligations for alemtuzumab for MS. Includes contingent consideration expense of $21.4 million for our Hematology and Oncology reporting segment and $41.1 million for our Multiple Sclerosis reporting segment for the three months ended March31, 2010 for which there were no comparable amounts for the same period of 2009. (3) Includes a charge of $175.0million recorded to SGA for the three months ended March31, 2010 for the potential up-front disgorgement of past profits provided for in the draft consent decree we received from the FDA. We recorded this charge because it is probable that we will have to pay this amount to the FDA and we can reasonably estimate the amount that will be paid. (4) Includes a charge of $18.2million recorded to research and development expense in our consolidated statements of operations for the three months ended March31, 2009, for intellectual property we acquired from EXACT Sciences in January 2009. (5) Loss bef

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Apr. 30, 2010
Document and Entity Information
Entity Registrant Name	GENZYME CORP
Entity Central Index Key	0000732485
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		266,868,620
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1