<Page>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

------------------------

FORM 10-Q

<Table>

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</Table>

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
OR

<Table>

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</Table>

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NUMBER 0-14680

------------------------

GENZYME CORPORATION

(Exact name of registrant as specified in its charter)

<Table>

MASSACHUSETTS 06-1047163
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)

ONE KENDALL SQUARE, CAMBRIDGE, 02139
MASSACHUSETTS (zip code)
(Address of principal executive offices)
</Table>

(617) 252-7500
(Registrant's telephone number, including area code)

------------------------

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 /X/ No / /

The number of shares outstanding of each of the issuer's series of common stock
as of July 31, 2001:

<Table>

Genzyme General Division Common Stock....................... 207,640,118
Genzyme Biosurgery Division Common Stock.................... 39,366,313
Genzyme Molecular Oncology Division Common Stock............ 16,674,396
</Table>

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<Page>
NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

- planned divestiture of the Snowden-Pencer-Registered Trademark- product
lines and sale of our manufacturing facilities in Quebec, Canada and the
expected timing of these transactions;

- planned acquisition of Novazyme Pharmaceuticals, Inc. and the expected
timing of the transaction;

- planned redemption of our $21.2 million 5% convertible debentures;

- planned acquisition of the Class B limited partnership interests of
Genzyme Development Partners, L.P.;

- expected future revenues, operations and expenditures;

- product development and commercialization plans and expected timetables;
and

- projected cash needs.

These statements are only expectations of future results. These statements
are subject to risks and uncertainties, and our actual results may differ
significantly from those that are described in this report on Form 10-Q. These
risks and uncertainties include:

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

- our ability to manufacture sufficient amounts of our products for
development and commercialization activities;

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

- the content and timing of submissions to and decisions made by the Food
and Drug Administration, commonly referred to as the FDA, and other
regulatory agencies;

- the impact of the May 2001 expiration of the orphan drug status of
Cerezyme-Registered Trademark- and Ceredase-Registered Trademark- enzymes
on our revenues from these products;

- the FDA's response to the additional data and clarification we submitted
in connection with our Biologics License Application submission for
Fabrazyme-TM- enzyme;

- our ability to expand manufacturing capacity for sevelamer hydrochloride
for Renagel-Registered Trademark- capsules and tablets;

- our ability to optimize dosing and improve patient compliance with
Renagel-Registered Trademark- capsules and tablets;

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

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

- market acceptance of our products and services;

- our ability to obtain reimbursement for our products and services from
third-party payors, and the extent of such coverage;

- our ability to establish and maintain strategic license, collaboration and
distribution arrangements;

- the continued funding of our joint ventures;
<Page>
- our ability to successfully negotiate purchase and sale agreements for our
Snowden-Pencer-Registered Trademark- product lines and manufacturing
facility in Quebec, Canada;

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

- the operational integration and other risks associated with acquisitions;

- the satisfaction of conditions to closing the proposed acquisition of
Novazyme and the timing thereof; and

- the conditions in the financial markets relevant to the proposed
acquisition of Novazyme.

For a further description of these risks and other uncertainties, we
encourage you to carefully read Exhibit 99.2, "Factors Affecting Future
Operating Results," to our Annual Report on Form 10-K, as amended, for the
fiscal year ended December 31, 2000 (our "2000 Form 10-K").

NOTE REGARDING REFERENCES TO GENZYME DIVISIONS AND SERIES OF STOCK

Throughout this Form 10-Q, the words "we," "us," "our" and "Genzyme" refer
to Genzyme Corporation and all of its operating divisions taken as a whole, and
"our board of directors" refers to the board of directors of Genzyme
Corporation. In addition, we refer to our three operating divisions as follows:

- Genzyme General Division = "Genzyme General;"

- Genzyme Biosurgery Division = "Genzyme Biosurgery;" and

- Genzyme Molecular Oncology Division = "Genzyme Molecular Oncology."

We currently have three designated series of common stock. Each of these
series is intended to reflect the value and track the performance of one of our
divisions. We refer to each series of common stock as follows:

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

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

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

Holders of Genzyme General Stock, Biosurgery Stock and Molecular Oncology
Stock are stockholders of Genzyme Corporation and are subject to all of the
risks and uncertainties of Genzyme Corporation described in Exhibit 99.2 to our
2000 Form 10-K.

NOTE REGARDING INCORPORATION BY REFERENCE

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

NOTE REGARDING TRADEMARKS

GENZYME-Registered Trademark-, CEREZYME-Registered Trademark-,
CEREDASE-Registered Trademark-, THYROGEN-Registered Trademark-,
CARTICEL-Registered Trademark-, EPICEL-Registered Trademark- and
SNOWDEN-PENCER-Registered Trademark- are registered trademarks of Genzyme.
SAGE-TM-, SEPRA-TM-, SEPRAFILM-TM-, SEPRAMESH-TM-, SEPRAGEL-TM- and
FABRAZYME-TM- are trademarks of Genzyme. GENZYME-Registered Trademark- is a
registered service mark of Genzyme. RENAGEL-Registered Trademark- is a
registered trademark of GelTex Pharmaceuticals, Inc.
SYNVISC-Registered Trademark-, HYLAFORM-Registered Trademark- and
HYLAGEL-Registered Trademark- are registered trademarks of Genzyme Biosurgery
Corporation. FOCALSEAL-Registered Trademark- is a registered trademark of
Focal, Inc. NEUROCELL-TM- is a trademark of Diacrin/Genzyme LLC. ALDURAZYME-TM-
is a trademark of BioMarin/Genzyme LLC. WELCHOL-TM- is a trademark of Sankyo
Pharma Inc.
<Page>
GENZYME CORPORATION AND SUBSIDIARIES
FORM 10-Q, JUNE 30, 2001
TABLE OF CONTENTS

<Table>
<Caption>
PAGE NO.
--------

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

GENZYME CORPORATION AND SUBSIDIARIES
Unaudited, Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2001 and 2000.......................... 1
Consolidated Balance Sheets as of June 30, 2001 (unaudited) and
December 31, 2000................................................ 3
Unaudited, Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 2001 and 2000.............................. 4
Notes to Unaudited, Consolidated Financial Statements............. 5

GENZYME GENERAL
Unaudited, Combined Statements of Operations for the Three and Six
Months Ended June 30, 2001 and 2000.............................. 22
Combined Balance Sheets as of June 30, 2001 (unaudited) and
December 31, 2000................................................ 23
Unaudited, Combined Statements of Cash Flows for the Six Months
Ended June 30, 2001 and 2000..................................... 24
Notes to Unaudited, Combined Financial Statements................. 25

GENZYME BIOSURGERY
Unaudited, Combined Statements of Operations for the Three and Six
Months Ended June 30, 2001 and 2000.............................. 34
Combined Balance Sheets as of June 30, 2001 (unaudited) and
December 31, 2000................................................ 35
Unaudited, Combined Statements of Cash Flows for the Six Months
Ended June 30, 2001 and 2000..................................... 36
Notes to Unaudited, Combined Financial Statements................. 37

GENZYME MOLECULAR ONCOLOGY
Unaudited, Combined Statements of Operations for the Three and Six
Months Ended June 30, 2001 and 2000.............................. 42
Combined Balance Sheets as of June 30, 2001 (unaudited) and
December 31, 2000................................................ 43
Unaudited, Combined Statements of Cash Flows for the Six Months
Ended June 30, 2001 and 2000..................................... 44
Notes to Unaudited, Combined Financial Statements................. 45

ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 46

ITEM 3. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 92

PART II. OTHER INFORMATION

ITEM 2. Changes in Securities and Use of Proceeds................... 93

ITEM 4. Submission of Matters to a Vote of Security Holders......... 94

ITEM 6. Exhibits and Reports on Form 8-K............................ 96

Signatures............................................................ 98
</Table>
<Page>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

GENZYME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------

Revenues:
Net product sales......................................... $273,473 $201,439 $524,303 $385,860
Net service sales......................................... 24,235 21,347 47,995 42,313
Revenues from research and development contracts:
Related parties......................................... 1,313 157 1,632 303
Other................................................... 1,620 970 4,972 3,567
-------- -------- -------- --------
Total revenues........................................ 300,641 223,913 578,902 432,043
-------- -------- -------- --------
Operating costs and expenses:
Cost of products sold..................................... 79,600 53,643 156,132 101,902
Cost of services sold..................................... 13,428 11,967 26,849 23,818
Selling, general and administrative....................... 103,666 67,428 194,780 128,979
Research and development (including research and
development related to contracts)....................... 62,414 28,577 119,524 84,276
Amortization of intangibles............................... 30,174 5,684 59,165 11,782
Purchase of in-process research and development........... 8,768 -- 8,768 --
-------- -------- -------- --------
Total operating costs and expenses.................... 298,050 167,299 565,218 350,757
-------- -------- -------- --------
Operating income............................................ 2,591 56,614 13,684 81,286
-------- -------- -------- --------
Other income (expenses):
Equity in net loss of unconsolidated affiliates........... (11,796) (11,313) (20,811) (19,446)
Gain on affiliate sale of stock........................... -- -- -- 20,270
Gain (loss) on sale of investments in equity securities... (1,532) 14,165 (1,532) 14,165
Minority interest in net loss of subsidiary............... 725 1,352 1,999 2,208
Other..................................................... (133) 5,193 (3,843) 5,195
Investment income......................................... 12,493 10,631 22,641 20,575
Interest expense.......................................... (10,766) (3,836) (22,136) (7,775)
-------- -------- -------- --------
Total other income (expenses)......................... (11,009) 16,192 (23,682) 35,192
-------- -------- -------- --------
Income (loss) before income taxes........................... (8,418) 72,806 (9,998) 116,478
Benefit from (provision for) income taxes................... 2,064 (23,314) 2,734 (35,168)
-------- -------- -------- --------
Net income (loss) before cumulative effect of change in
accounting principle...................................... (6,354) 49,492 (7,264) 81,310
Cumulative effect of change in accounting principle, net of
tax....................................................... -- -- 4,167 --
-------- -------- -------- --------
Net income (loss)........................................... $ (6,354) $ 49,492 $ (3,097) $ 81,310
======== ======== ======== ========
Comprehensive income (loss), net of tax:
Net income (loss)......................................... $ (6,354) $ 49,492 $ (3,097) $ 81,310
-------- -------- -------- --------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments................ (3,723) (132) (17,844) (10,355)
-------- -------- -------- --------
Unrealized gain (loss) on interest rate swap contract,
net of tax............................................ 52 -- (455) --
-------- -------- -------- --------
Unrealized gains (losses) on securities:
Unrealized gains (losses) arising during the period... 21,654 (47,925) (987) 4,374
Reclassification adjustment for (gains) losses
included in net income.............................. 973 (5,501) 973 (5,501)
-------- -------- -------- --------
Unrealized gains (losses) on securities, net.......... 22,627 (53,426) (14) (1,127)
-------- -------- -------- --------
Other comprehensive income (loss)......................... 18,956 (53,558) (18,313) (11,482)
-------- -------- -------- --------
Comprehensive income (loss)................................. $ 12,602 $ (4,066) $(21,410) $ 69,828
======== ======== ======== ========
</Table>

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

1
<Page>
GENZYME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------

NET INCOME (LOSS) PER SHARE:
ALLOCATED TO GENZYME GENERAL STOCK:
Net income before cumulative effect of change in
accounting principle.................................... $ 21,718 $ 63,990 $ 46,863 $109,299
Cumulative effect of change in accounting principle, net
of tax.................................................. -- -- 4,167 --
-------- -------- -------- --------
Genzyme General net income................................ 21,718 63,990 51,030 109,299
Tax benefit allocated from Genzyme Biosurgery........... 9,627 4,604 17,743 9,836
Tax benefit allocated from Genzyme Molecular Oncology... 3,854 2,441 6,680 3,537
-------- -------- -------- --------
Net income allocated to Genzyme General Stock......... $ 35,199 $ 71,035 $ 75,453 $122,672
======== ======== ======== ========
Net income per share of Genzyme General Stock:
Basic:
Net income per share before cumulative effect of
change in accounting principle...................... $ 0.18 $ 0.42 $ 0.37 $ 0.72
Per share cumulative effect of change in accounting
principle, net of tax............................... -- -- 0.02 --
-------- -------- -------- --------
Net income per share allocated to Genzyme General
Stock............................................... $ 0.18 $ 0.42 $ 0.39 $ 0.72
======== ======== ======== ========
Diluted:
Net income per share before cumulative effect of
change in accounting principle...................... $ 0.17 $ 0.39 $ 0.35 $ 0.67
Per share cumulative effect of change in accounting
principle, net of tax............................... -- -- 0.02 --
-------- -------- -------- --------
Net income per share allocated to Genzyme General
Stock............................................... $ 0.17 $ 0.39 $ 0.37 $ 0.67
======== ======== ======== ========
Weighted average shares outstanding:
Basic................................................. 196,423 169,897 194,086 169,450
======== ======== ======== ========
Diluted............................................... 205,685 190,088 203,290 189,770
======== ======== ======== ========
ALLOCATED TO BIOSURGERY STOCK:
Net loss................................................ $(37,608) $(72,935)
Allocated tax benefit................................... 4,386 8,990
-------- --------
Net loss allocated to Biosurgery Stock.................. $(33,222) $(63,945)
======== ========
Net loss per share of Biosurgery Stock--basic and
diluted............................................... $ (0.91) $ (1.75)
======== ========
Weighted average shares outstanding..................... 36,659 36,531
======== ========
ALLOCATED TO MOLECULAR ONCOLOGY STOCK:
Net loss................................................ $ (8,331) $ (7,363) $(14,605) $(12,420)
======== ======== ======== ========
Net loss per share of Molecular Oncology Stock--basic
and diluted........................................... $ (0.52) $ (0.54) $ (0.91) $ (0.92)
======== ======== ======== ========
Weighted average shares outstanding..................... 16,088 13,626 15,998 13,561
======== ======== ======== ========
ALLOCATED TO SURGICAL PRODUCTS STOCK:
Net loss................................................ $(10,367) $(20,410)
======== ========
Net loss per share of Surgical Products Stock--basic and
diluted............................................... $ (0.70) $ (1.37)
======== ========
Weighted average shares outstanding..................... 14,905 14,880
======== ========
ALLOCATED TO TISSUE REPAIR STOCK:
Net loss................................................ $ (4,031) $ (9,002)
======== ========
Net loss per share of Tissue Repair Stock--basic and
diluted............................................... $ (0.14) $ (0.31)
======== ========
Weighted average shares outstanding..................... 28,666 28,598
======== ========
</Table>

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

2
<Page>
GENZYME CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 439,304 $ 236,213
Short-term investments.................................... 98,834 104,586
Accounts receivable, net.................................. 238,204 205,094
Inventories............................................... 166,146 170,341
Prepaid expenses and other current assets................. 44,627 37,681
Deferred tax assets--current.............................. 47,021 46,836
---------- ----------
Total current assets.................................. 1,034,136 800,751
Property, plant and equipment, net.......................... 553,358 504,412
Long-term investments....................................... 456,036 298,841
Notes receivable--related party............................. 10,327 10,350
Intangibles, net............................................ 1,573,563 1,539,782
Investments in equity securities............................ 116,599 121,251
Other noncurrent assets..................................... 52,817 42,713
---------- ----------
Total assets.......................................... $3,796,836 $3,318,100
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 33,543 $ 26,165
Accrued expenses.......................................... 139,375 139,683
Income taxes payable...................................... 51,687 46,745
Deferred revenue.......................................... 3,044 8,609
Current portion of long-term debt and capital lease
obligations............................................. 20,435 19,897
---------- ----------
Total current liabilities............................. 248,084 241,099
Long-term debt and capital lease obligations................ 230,674 381,560
Convertible notes and debentures............................ 609,210 283,680
Deferred tax liabilities.................................... 225,144 230,384
Other noncurrent liabilities................................ 7,672 6,236
---------- ----------
Total liabilities..................................... 1,320,784 1,142,959
---------- ----------
Stockholders' equity:
Genzyme General Stock, $0.01 par value.................... 2,074 956
Biosurgery Stock, $0.01 par value......................... 394 364
Molecular Oncology Stock, $0.01 par value................. 167 159
Treasury Stock--Genzyme General-at cost................... (901) (901)
Additional paid-in capital--Genzyme General Stock......... 2,006,823 1,269,284
Additional paid-in capital--Biosurgery Stock.............. 448,588 823,353
Additional paid-in capital--Molecular Oncology Stock...... 61,759 111,484
Deferred compensation..................................... (4,905) (9,943)
Notes receivable from stockholders........................ (11,682) (14,760)
Accumulated deficit....................................... (8,835) (5,738)
Accumulated other comprehensive income (loss)............. (17,430) 883
---------- ----------
Total stockholders' equity.............................. 2,476,052 2,175,141
---------- ----------
Total liabilities and stockholders' equity............ $3,796,836 $3,318,100
========== ==========
</Table>

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

3
<Page>
GENZYME CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
---------------------
2001 2000
--------- ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)......................................... $ (3,097) $ 81,310
Reconciliation of net income (loss) to net cash provided
by operating activities:
Depreciation and amortization........................... 78,025 32,838
Non-cash compensation expense........................... 4,972 --
Charge for in-process research and development.......... 8,768 --
Provision for bad debts................................. 1,825 4,311
Note received from a collaborator....................... -- (10,000)
Minority interest in net loss of subsidiary............. (1,999) (2,208)
Equity in net loss of unconsolidated affiliates......... 20,811 19,446
Gain on affiliate sale of stock......................... -- (20,270)
(Gain) loss on sale of investments in equity
securities............................................ 1,532 (14,165)
Deferred income tax expense (benefit)................... (14,811) 4,668
Other................................................... (1,167) (253)
Increase (decrease) in cash from working capital
changes:
Accounts receivable................................... (39,734) (21,718)
Inventories........................................... 11,252 (12,507)
Prepaid expenses and other current assets............. 1,321 (3,764)
Accounts payable, accrued expenses, income taxes
payable and deferred revenue........................ (4,969) 12,274
--------- ---------
Net cash provided by operating activities............. 62,729 69,962
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments.................................. (359,534) (322,868)
Sales and maturities of investments....................... 210,764 330,971
Acquisitions, net of acquired cash........................ (83,420) --
Purchases of equity securities............................ (8,318) (5,000)
Purchase of property, plant and equipment................. (72,067) (35,859)
Investments in unconsolidated affiliates.................. (22,744) (12,856)
Other..................................................... 785 (770)
--------- ---------
Net cash used in investing activities................. (334,534) (46,382)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.................... 59,079 30,965
Payments of notes receivable from stockholders............ 3,204 --
Proceeds from issuance of debt............................ 562,062 --
Payments of debt and capital lease obligations............ (151,303) (5,000)
Bank overdraft............................................ 2,007 --
Other..................................................... 2,403 2,054
--------- ---------
Net cash provided by financing activities............. 477,452 28,019
--------- ---------
Effect of exchange rate changes on cash..................... (2,556) (3,025)
--------- ---------
Increase in cash and cash equivalents....................... 203,091 48,574
Cash and cash equivalents at beginning of period............ 236,213 130,156
--------- ---------
Cash and cash equivalents at end of period.................. $ 439,304 $ 178,730
========= =========
</Table>

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

4
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

Our unaudited, consolidated financial statements for each period include the
balance sheets, statements of operations and cash flows of each of our divisions
and corporate operations taken as a whole. We eliminate all significant
intracompany items and transactions in consolidation. We prepared our unaudited,
consolidated financial statements following the requirements of the SEC for
interim reporting. As permitted under these rules, certain footnotes or other
financial information that are normally required by generally accepted
accounting principles can be condensed or omitted. We have reclassified certain
2000 data to conform to our 2001 presentation.

These financial statements include all normal and recurring adjustments that
we consider necessary for the fair presentation of our financial position and
operating results. Since these are interim financial statements, you should also
read the financial statements and notes included in our 2000 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 the results for future periods.

2. ACQUISITIONS

CLASS A LIMITED PARTNERSHIP INTERESTS OF GENZYME DEVELOPMENT PARTNERS, L.P.

In January 2001, we purchased all of the outstanding Class A limited
partnership interests of Genzyme Development Partners, L.P., which we refer to
as GDP, for a payment of approximately $25.7 million in cash plus royalties
payable over ten years on sales of certain Sepra-TM- products. We allocated the
acquired limited partnership interests of GDP to Genzyme Biosurgery. As a result
of the acquisition, significant control over the activities of GDP passed to us.
The acquisition was accounted for as a purchase, and the purchase price was
allocated to the fair value of the intangible assets acquired as follows
(amounts in thousands):

<Table>

Patents (to be amortized over 8 years)...................... $ 5,909
Trademarks (to be amortized over 10 years).................. 2,755
Technology (to be amortized over 10 years).................. 8,827
Goodwill (to be amortized over 10 years).................... 8,234
-------
Total................................................... $25,725
=======
</Table>

Accordingly, the results of operations of GDP are included in our consolidated
financial statements and the combined financial statements of Genzyme Biosurgery
from the date of acquisition.

WYNTEK DIAGNOSTICS, INC.

In June 2001, we acquired all of the outstanding capital stock of
privately-held Wyntek Diagnostics, Inc., for $65.0 million in cash. Wyntek is a
provider of high quality point of care rapid diagnostic tests for pregnancy and
infectious diseases. We allocated the acquisition to Genzyme General and
accounted for the acquisition as a purchase. Accordingly, the results of
operations of Wyntek are included in our consolidated financial statements and
the combined financial statements of Genzyme General from the date of
acquisition.

5
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
The purchase price and the allocation of the purchase price to the fair
value of the acquired tangible and intangible assets and liabilities is as
follows (amounts in thousands):

<Table>

Cash and cash equivalents................................... $ 4,974
Current assets.............................................. 4,966
Property, plant and equipment............................... 1,843
Deferred tax assets......................................... 2,312
Intangible assets (to be amortized over 5 to 10 years)...... 39,444
In-process research and development......................... 8,768
Goodwill (to be amortized over 10 years).................... 19,908
Deferred tax liability...................................... (14,197)
Assumed liabilities......................................... (2,784)
-------
Allocated purchase price................................ $65,234
=======
</Table>

In connection with the acquisition of Wyntek, we allocated approximately
$8.8 million of the purchase price to in-process research and development or
IPR&D. Our management assumes responsibility for determining the IPR&D valuation
and expects the final valuation will be completed upon closing the transaction.
The fair value assigned to purchased IPR&D was estimated by discounting, to
present value, the cash flows expected to result from the project once it has
reached technological feasibility. A discount rate consistent with the risks of
the project was used to estimate the present value of cash flows. In estimating
future cash flows, management considered other tangible and intangible assets
required for successful exploitation of the technology resulting from the
purchased IPR&D project and adjusted future cash flows for a charge reflecting
the contribution to value of these assets. The value assigned to purchased IPR&D
was the amount attributable to the efforts of Wyntek up to the time of
acquisition. This amount was estimated through application of the "stage of
completion" calculation by multiplying total estimated revenue for IPR&D by the
percentage of completion of the purchased research and development project at
the time of acquisition.

The nature of the efforts to develop the purchased IPR&D into commercially
viable products, principally relates to the completion and/or acceleration of
existing development programs, including the mandatory completion of several
phases of clinical trials and the costs necessary to manage the projects and
trials. Assuming the approval of the product by the FDA, costs related to the
wide scale manufacturing, distribution, and marketing of the product are
included in the projection. The resulting net cash flows from such project are
based on our management's estimates of revenues, cost of sales, research and
development expenses, sales and marketing expenses, general and administrative
expenses, and the anticipated income tax effect.

The discounting of net cash flows back to their present value is based on
the weighted average cost of capital, or WACC. The WACC calculation produces the
average required rate of return of an investment in an operating enterprise,
based on various required rates of return from investments in various areas of
that enterprise. The discount rate utilized in discounting the net cash flows
from

6
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
purchased IPR&D was 25%. This discount rate is higher than our WACC due to the
inherent uncertainties surrounding the successful development of the purchased
IPR&D.

The forecast data employed in the analyses was based upon product level
forecast information we obtained from numerous internal and external resources.
These resources included external market research and internal experts. Our
senior management reviewed and challenged the forecast data and related
assumptions and utilized the information in analyzing IPR&D. The forecast data
and assumptions are inherently uncertain and unpredictable. However, based upon
the information available at this time, our management believes the forecast
data and assumptions to be reasonable. These assumptions may be incomplete or
inaccurate, and no assurance can be given that unanticipated events and
circumstances will not occur. Accordingly, actual results may vary from the
forecasted results. Any such variance may result in a material adverse effect on
our financial condition and results of operations.

In the allocation of purchase price to the IPR&D, the concept of alternative
future use was specifically considered for the program under development. The
acquired IPR&D consists of Wyntek's work to complete the program. There are no
alternative uses for the in-process program in the event that the program fails
in clinical trials or is otherwise not feasible. The development effort for the
acquired IPR&D does not possess an alternative future use for us as defined by
generally accepted accounting principles. Consequently, in accordance with
generally accepted accounting principles, the amount allocated to IPR&D was
charged as an expense in our financial statements for the three and six months
ended June 30, 2001. We are amortizing the remaining acquired intangible assets
arising from the acquisition on a straight-line basis over their estimated
lives, which range from 5 years to 10 years.

Below is a brief description of the IPR&D program associated with Wyntek's
cardiovascular disease diagnostic product, including an estimation of when
management believes we may realize revenues from the sale of this product.

Wyntek is currently developing a cardiovascular product to rapidly measure
the quantitative levels of cardiac marker proteins. These are the leading
markers for the diagnosis of acute myocardial infarction. The product consists
of a mobile, stand-alone, quantitative diagnostic device and a reaction strip
that detects disease specific marker proteins. The device will be used to read
reaction strips at the patient's bedside or in an emergency room setting. Wyntek
expects to complete the regulatory review process and file its application for
marketing approval in early 2002 and begin selling the product during the second
half of 2002. Studies to date have demonstrated the viability of this product
but there can be no assurance that the regulatory authorities will approve this
product. A discount rate of 25% was used in valuing the projected cash flows.

FOCAL, INC.

In January 2001, Focal, Inc., a public company and developer of synthetic
biopolymers used in surgery, exercised its option to require us to purchase
$5.0 million in Focal common stock at a price of $2.06 per share. After that
purchase we held approximately 22% of the outstanding shares of Focal common
stock and began accounting for our investment under the equity method of
accounting. We allocated this investment to Genzyme Biosurgery. On June 30,
2001, we acquired the remaining 78% of the outstanding shares in an exchange of
shares of Biosurgery Stock for shares of Focal common stock. Focal shareholders
received 0.1545 of a share of Biosurgery Stock for each share of Focal common

7
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
stock they held. We issued approximately 2.1 million shares of Biosurgery Stock
as merger consideration. We allocated the acquired assets and liabilities to
Genzyme Biosurgery and accounted for the acquisition as a purchase.

The purchase price and the allocation of the purchase price to the fair
value of the acquired tangible and intangible assets and liabilities is as
follows (amounts in thousands):

<Table>

Issuance of 2.1 million shares of Biosurgery Stock.......... $ 9,450
Issuance of options to purchase 231,566 shares of Biosurgery
Stock..................................................... 351
Acquisition costs........................................... 638
Existing equity investment in Focal......................... 5,488
Cash paid to selling security holder........................ 11
-------
Total purchase price.................................... $15,938
=======

Cash and cash equivalents................................... $ 2,331
Current assets.............................................. 6,003
Property, plant and equipment............................... 1,818
Notes receivable from related party......................... 168
Intangible assets (to be amortized over 3 to 12 years)...... 7,909
Goodwill (to be amortized over 12 years).................... 615
Assumed liabilities......................................... (3,273)
Notes receivable from stockholders.......................... 367
-------
Allocated purchase price.............................. $15,938
=======
</Table>

UNAUDITED PRO FORMA FINANCIAL SUMMARY

In December 2000, we acquired GelTex, a public company engaged in developing
therapeutic products based on polymer technology. We accounted for the
acquisition as a purchase and allocated it to Genzyme General. In
December 2000, we also acquired Biomatrix, a public company engaged in the
development and manufacture of viscoelastic biomaterials for use in orthopedic
and other medical applications. The following unaudited pro forma financial
summary is presented as if the acquisitions of GelTex, Biomatrix, Wyntek and
Focal were completed as of January 1, 2001 and 2000. The unaudited pro forma
combined results are not necessarily indicative of the actual results that would
have occurred had the acquisitions been consummated at those dates, or of the
future operations of the combined entities. Material nonrecurring charges, such
as the acquired in-process research and development charges of $118.0 million
resulting from the acquisition of GelTex, $82.1 million resulting from the

8
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
acquisition of Biomatrix and $8.8 million resulting from the acquisition of
Wyntek, are not reflected in the following pro forma financial summary:

<Table>
<Caption>
FOR THE SIX MONTHS ENDED
JUNE 30,
---------------------------------
2001 2000
--------------- ---------------
(UNAUDITED, AMOUNTS IN THOUSANDS)

Total revenues................................ $587,461 $524,610

Income before extraordinary items and
cumulative effect of change in accounting
principle................................... (12,162) 2,015

Net income (loss)............................. (7,995) 2,015

Net income allocated to Genzyme General Stock:
Net income allocated to Genzyme General
Stock before cumulative effect of change
in accounting principle................... $ 73,140 $ 83,607
Cumulative effect of change in accounting
principle, net of tax..................... 4,167 --
-------- --------
Net income allocated to Genzyme General
Stock..................................... $ 77,370 $ 83,607
======== ========

Net income per share allocated to Genzyme
General Stock:
Basic:
Net income per share before cumulative
effect of change in accounting
principle............................... $ 0.38 $ 0.47
Per share cumulative effect of change in
accounting principle, net of tax........ 0.02 --
-------- --------
Net income per share allocated to Genzyme
General Stock........................... $ 0.40 $ 0.47
======== ========
Diluted:
Net income per share before cumulative
effect of change in accounting
principle............................... $ 0.36 $ 0.45
Per share cumulative effect of change in
accounting principle, net of tax........ 0.02 --
-------- --------
Net income per share allocated to Genzyme
General Stock........................... $ 0.38 $ 0.45
======== ========

Net loss allocated to Biosurgery Stock........ $(83,484) $(74,009)
======== ========
Net loss per share allocated to Genzyme
Biosurgery Stock--basic and diluted......... $ 2.16 $ (1.93)
======== ========
</Table>

9
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. INVENTORIES (AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

Raw materials........................................ $ 50,986 $ 51,545
Work-in-process...................................... 85,306 73,520
Finished products.................................... 29,854 45,276
-------- --------
Total............................................ $166,146 $170,341
======== ========
</Table>

4. PRIVATE PLACEMENT OF $575.0 MILLION 3% CONVERTIBLE SUBORDINATED DEBENTURES

In May 2001, we completed the private placement of $575.0 million in
principal of 3% convertible subordinated debentures due May 2021. Net proceeds
from the offering were approximately $562.1 million. We have allocated the
principal amount of the debentures and the net proceeds from the offering to
Genzyme General. We will pay interest on these debentures on May 15 and
November 15 each year using cash allocated to Genzyme General. The first
interest payment will be made on November 15, 2001. The debentures are
convertible, upon the satisfaction of certain conditions, into shares of Genzyme
General Stock at an initial conversion price of $70.30 per share. The conversion
price is subject to adjustments. Holders of the debentures may require us to
repurchase all or part of their debentures for cash on May 15, 2006, 2011 or
2016, at a price equal to 100% of the principal amount of the debentures plus
accrued interest through the date prior to the date of purchase. Additionally,
if certain fundamental changes occur, each holder may require us to repurchase,
for cash, all or a portion of the holder's debentures. On or after May 20, 2004,
we may redeem for cash all or part of the debentures that have not previously
been converted or repurchased. Genzyme General used a portion of these proceeds
to repay the $150.0 million it had drawn under our revolving credit facility in
December 2000 to finance a portion of the cash component of the consideration
for the GelTex acquisition. We expect to utilize the remaining proceeds from the
sale of the debentures for Genzyme General's working capital and general
corporate purposes.

5. REDEMPTION OF $250.0 MILLION 5 1/4% CONVERTIBLE SUBORDINATED NOTES

In June 2001, we completed the redemption of our $250.0 million 5 1/4%
convertible subordinated notes due 2005. Prior to the redemption date, holders
of the notes elected to convert substantially all of the principal of the notes
into approximately 12,597,000 shares of Genzyme General Stock, 685,000 shares of
Biosurgery Stock and 682,000 shares of Molecular Oncology Stock. On June 15,
2001, the redemption date, we redeemed the remaining notes using cash allocated
to Genzyme General.

6. DERIVATIVE FINANCIAL INSTRUMENTS

On January 1, 2001, we adopted Statement of Financial Accounting Standards
or SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS 137 and SFAS 138. SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that we
recognize all derivative instruments as either assets or liabilities in our
consolidated balance sheet and measure those instruments at fair value.
Subsequent changes in fair value are reflected in current earnings or other
comprehensive income, depending on whether a derivative instrument is designated
as part of a hedge relationship and, if it is, the type of hedge relationship.

10
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GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)
In accordance with the transition provisions of SFAS 133, we recorded a
cumulative-effect adjustment of $4.2 million, net of tax, in our unaudited,
consolidated statement of operations for the six months ended June 30, 2001 to
recognize the fair value of certain common stock warrants held on January 1,
2001. Transition adjustments pertaining to interest rate swaps designated as
cash-flow hedges and foreign currency forward contracts were not significant.
For the three months ended June 30, 2001, we recorded a charge of $0.2 million
in other expense to reflect the change in value of certain common stock warrants
from April 1, 2001 to June 30, 2001. For the six months ended June 30, 2001, we
recorded a charge of $3.8 million in other expense to reflect the change in
value of certain common stock warrants from January 1, 2001 to June 30, 2001. We
also recorded a charge of $0.5 million in other comprehensive income for the six
months ended June 30, 2001 to reflect the change in value of our interest rate
swap contract during the period, net of tax.

In the normal course of business, we manage risks associated with foreign
exchange rates, interest rates and equity prices through a variety of
strategies, including the use of hedging transactions, executed in accordance
with our policies. Our hedging transactions include, but are not limited to, the
use of various derivative financial instruments. As a matter of policy, we do
not use derivative instruments unless there is an underlying exposure. We do not
use derivative instruments for trading or speculative purposes.

7. TAX BENEFIT (PROVISION)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, INCREASE/ JUNE 30, INCREASE/
------------------- (DECREASE) ------------------- (DECREASE)
2001 2000 % CHANGE 2001 2000 % CHANGE
-------- -------- ---------- -------- -------- ----------
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT PERCENTAGE DATA)

Benefit from (provision for)
income taxes.................... $2,064 $(23,314) (109)% $2,734 $(35,168) (108)%
Effective tax rate................ 25% 32% 27% 30%
</Table>

Our tax rates for both periods vary from the U.S. statutory tax rate as a
result of our:

- provision for state income taxes;

- use of a foreign sales corporation;

- nondeductible amortization of intangibles; and

- use of tax credits.

The decrease in our effective tax rate for both the three and six months
ended June 30, 2001, as compared to the same periods a year ago, was primarily
attributable to increased losses from Genzyme Biosurgery and a charge of
$8.8 million for in-process research and development resulting from our
acquisition of Wyntek in June 2001, offset in part by an increase in
non-deductible amortization of intangibles consisting largely of goodwill
resulting from our acquisitions of GelTex and Biomatrix in December 2000. The
tax benefit for the three and six months ended June 30, 2001 includes a
$2.2 million benefit resulting from the release of excess tax reserves.

11
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GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. NET INCOME (LOSS) PER SHARE

We calculate earnings per share for each series of stock using the two-class
method. To calculate basic earnings per share for each series of stock, we
divide the earnings allocated to each series of stock by the weighted average
number of outstanding shares of that series of stock during the applicable
period. When we calculate diluted earnings per share, we also include in the
denominator all potentially dilutive securities outstanding during the
applicable period. We allocate our earnings to each series of our common stock
based on the earnings attributable to that series of stock. The earnings
attributable to Genzyme General Stock, as defined in our charter, is equal to
the net income or loss of Genzyme General determined in accordance with
generally accepted accounting principles and as adjusted for tax benefits
allocated to or from Genzyme General in accordance with our management and
accounting policies. Earnings attributable to Biosurgery Stock and Molecular
Oncology Stock are defined similarly and, as such, are based on the net income
or loss of the corresponding division as adjusted for the allocation of tax
benefits.

We calculate the income tax provision of each division as if that division
were a separate taxpayer, which process includes assessing realizability of
deferred tax assets at the division level. Our management and accounting
policies provide that, if as of the end of any fiscal quarter, a division cannot
use any projected annual tax benefit attributable to it to offset or reduce its
current or deferred income tax expense, we may allocate the tax benefit to other
divisions in proportion to their taxable income without compensating payment or
allocation to the division generating the benefit. The tax benefits allocated to
Genzyme General, which are included in earnings attributable to Genzyme General
Stock, were:

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------
(UNAUDITED, AMOUNTS IN THOUSANDS)

Tax benefits allocated from:
Genzyme Biosurgery.................. $ 9,627 $4,604 $17,743 $ 9,836
Genzyme Molecular Oncology.......... 3,854 2,441 6,680 3,537
------- ------ ------- -------
Total............................. $13,481 $7,045 $24,423 $13,373
======= ====== ======= =======
</Table>

In the three and six months ended June 30, 2001, we allocated $4.4 million
and $9.0 million of tax benefits to Genzyme Biosurgery due to changes in the
deferred tax liability established for our acquisition of Biomatrix in
December 2000. In future periods, Genzyme Biosurgery or Genzyme Molecular
Oncology may recognize deferred tax assets in the calculation of their
respective tax provisions determined on a separate division basis in accordance
with generally accepted accounting principles. However, to the extent the
benefit of those deferred tax assets has been previously allocated to Genzyme
General in accordance with the management and accounting policies, the benefit
will be reflected as a reduction of net income to determine net income
attributable to Biosurgery Stock or Molecular Oncology Stock. As of June 30,
2001, the total tax benefits previously allocated to Genzyme General were (in
thousands):

<Table>

Genzyme Biosurgery.......................................... $186,462
Genzyme Molecular Oncology.................................. 31,204
</Table>

12
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. NET INCOME (LOSS) PER SHARE (CONTINUED)
GENZYME GENERAL STOCK

TWO-FOR-ONE STOCK SPLIT

At our annual meeting on May 31, 2001, our shareholders approved an
amendment to our charter which increased the total number of authorized shares
of Genzyme common stock from 390,000,000 to 690,000,000 and increased the number
of such shares designated as Genzyme General Stock from 200,000,000 to
500,000,000. On June 1, 2001, we completed a two-for-one split of Genzyme
General Stock by means of a 100% stock dividend paid to Genzyme General division
stockholders of record on May 24, 2001. We distributed a total of 97,184,967
shares of Genzyme General Stock to Genzyme General division stockholders in
connection with the stock split. All share and per share amounts for Genzyme
General Stock have been retroactively revised for all periods presented to
reflect the two-for-one split.

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -------------------
2001 2000 2001 2000
--------- --------- -------- --------
(UNAUDITED, AMOUNTS IN THOUSANDS)

Genzyme General net income before cumulative effect of
change in accounting principle............................ $ 21,718 $ 63,990 $ 46,863 $109,299
Cumulative effect of change in accounting principle, net of
tax(1).................................................... -- -- 4,167 --
-------- -------- -------- --------
Genzyme General net income.................................. 21,718 63,990 51,030 109,299
Tax benefit allocated from Genzyme Biosurgery............... 9,627 4,604 17,743 9,836
Tax benefit allocated from Genzyme Molecular Oncology....... 3,854 2,441 6,680 3,537
-------- -------- -------- --------
Net income allocated to Genzyme General Stock--basic........ 35,199 71,035 75,453 122,672
Effect of dilutive securities, net of tax(2):
5 1/4% convertible subordinated notes:
Interest expense.......................................... -- 2,250 -- 4,358
Amortization of purchasers' discount and offering
costs(3)................................................ -- 161 -- 311
5% convertible subordinated debentures:
Interest expense.......................................... -- 179 -- 350
Amortization of debt offering costs(4).................... -- 30 -- 60
-------- -------- -------- --------
Net income allocated to Genzyme General Stock--diluted...... $ 35,199 $ 73,655 $ 75,453 $127,751
======== ======== ======== ========
Shares used in computing net income per common
share--basic.............................................. 196,423 169,897 194,086 169,450
Effect of dilutive securities:
Stock options(5).......................................... 9,195 6,305 9,123 6,434
Warrants.................................................. 67 -- 81 --
5 1/4% convertible subordinated notes(2).................. -- 12,626 -- 12,626
5% convertible subordinated debentures(2)................. -- 1,260 -- 1,260
-------- -------- -------- --------
Dilutive potential common shares........................ 9,262 20,191 9,204 20,320
-------- -------- -------- --------
Shares used in computing net income per common share--
diluted(6)................................................ 205,685 190,088 203,290 189,770
======== ======== ======== ========
</Table>

13
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GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. NET INCOME (LOSS) PER SHARE (CONTINUED)

Net income per share of Genzyme General Stock:
Basic:
Net income per share before cumulative effect of change
in accounting principle............................... $ 0.18 $ 0.42 $ 0.37 $ 0.72
Per share cumulative effect of change in accounting
principle, net of tax(1).............................. -- -- 0.02 --
-------- -------- -------- --------
Net income per share allocated to Genzyme General
Stock................................................. $ 0.18 $ 0.42 $ 0.39 $ 0.72
======== ======== ======== ========
Diluted (2,6):
Net income per share before cumulative effect of change
in accounting principle............................... $ 0.17 $ 0.39 $ 0.35 $ 0.67
Per share cumulative effect of change in accounting
principle, net of tax(1).............................. -- -- 0.02 --
-------- -------- -------- --------
Net income per share allocated to Genzyme General
Stock................................................. $ 0.17 $ 0.39 $ 0.37 $ 0.67
======== ======== ======== ========
</Table>

- --------------------------
(1) This represents a cumulative effect adjustment resulting from the
January 1, 2001 required adoption of SFAS 133 to record the fair value of
certain derivative assets held on January 1, 2001.

(2) The net income per share allocated to Genzyme General Stock on a diluted
basis and weighted average shares--diluted for the six months ended
June 30, 2001 excludes the dilutive effect of the convertible notes and
debentures allocated to Genzyme General as the effect would be
anti-dilutive.

(3) We had been amortizing the debt discount and offering costs of approximately
$7.0 million over the term of the 5 1/4% convertible subordinated notes,
until they were converted or redeemed in the second quarter of 2001.

(4) We are amortizing the debt offering costs of approximately $0.9 million over
the term of the 5% convertible subordinated debentures, which mature in
August 2003. We have called these debentures for redemption in the third
quarter of 2001.

(5) We did not include the securities described in the following table in the
computation of Genzyme General's diluted earnings per share because these
securities had an exercise price greater than the average market price of
Genzyme General Stock during the following periods:

Shares of Genzyme General Stock issuable for
options........................................... 1,726 7,230 1,091 6,580
===== ===== ===== =====
</Table>

- --------------------------

(6) The net income per share allocated to Genzyme General Stock on a diluted
basis and weighted average shares--diluted for the three and six months
ended June 30, 2001, exclude the dilutive effect of the $575.0 million
debentures allocated to Genzyme General in May 2001 because the conditions
to conversion had not been met.

14
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. NET INCOME (LOSS) PER SHARE (CONTINUED)
BIOSURGERY STOCK

We created Biosurgery Stock on December 18, 2000. We created the Genzyme
Biosurgery Division by combining the businesses of our former Genzyme Surgical
Products and Genzyme Tissue Repair divisions as well as the acquired business of
Biomatrix. Accordingly, we amended our charter to create Biosurgery Stock and to
eliminate Genzyme Surgical Products Division common stock, which we refer to as
"Surgical Products Stock," and Genzyme Tissue Repair Division common stock,
which we refer to as "Tissue Repair Stock." Each outstanding share of, and
option to purchase, Surgical Products Stock was converted into the right to
receive 0.6060 of a share of, or option to purchase, Biosurgery Stock, and each
outstanding share of, and option to purchase, Tissue Repair Stock was converted
into the right to receive 0.3352 of a share of, or option to purchase,
Biosurgery Stock.

Prior to December 18, 2000, the net losses of Genzyme Surgical Products and
Genzyme Tissue Repair were allocated to Surgical Products Stock and Tissue
Repair Stock.

For all periods presented, basic and diluted net loss per share of
Biosurgery Stock are the same. We did not include the securities described in
the following table in the computation of Biosurgery Stock diluted net loss per
share for each period because these securities would have an anti-dilutive
effect due to the net loss allocated to Biosurgery Stock.

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2001 2000
------------------ ----------------
(UNAUDITED, AMOUNTS IN THOUSANDS)

Shares of Biosurgery Stock issuable for options............ 6,852 5,644
Warrants to purchase Biosurgery Stock...................... 3 3
Biosurgery designated shares reserved for options.......... 97 97
Biosurgery designated shares............................... 1,200 1,200
Shares issuable upon conversion of 6.9% convertible
subordinated note allocated to Genzyme Biosurgery........ 358 358
----- -----
Total shares excluded from the calculation of diluted net
loss per share of Biosurgery Stock....................... 8,510 7,302
===== =====
</Table>

MOLECULAR ONCOLOGY STOCK

For all periods presented, basic and diluted net loss per share of Molecular
Oncology Stock are the same. We did not include the securities described in the
following table in the computation of

15
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. NET INCOME (LOSS) PER SHARE (CONTINUED)
Molecular Oncology Stock diluted net loss per share for each period because
these securities would have an anti-dilutive effect due to the net loss
allocated to Molecular Oncology Stock.

Shares of Molecular Oncology Stock issuable for
options............................................. 1,294 566 1,139 619
Warrants to purchase Molecular Oncology Stock......... -- 10 -- 10
Molecular Oncology designated shares issuable upon
conversion of 5 1/4% convertible subordinated notes
allocated to Genzyme General........................ -- 682 -- 682
Molecular Oncology designated shares.................. 1,318 1,318 1,318 1,318
----- ----- ----- -----
Total shares excluded from the calculation of diluted
net loss per share of Molecular Oncology Stock...... 2,612 2,576 2,457 2,629
===== ===== ===== =====
</Table>

9. SEGMENT REPORTING

We present segment information in a manner consistent with the method we use
to report this information to our management. We have four reportable segments:

- Therapeutics, which as part of Genzyme General develops, manufactures and
sells human therapeutic products with an expanding focus on products that
treat patients suffering from lysosomal storage disorders and other
specialty therapeutics. The business derives substantially all its revenue
from sales of Cerezyme-Registered Trademark- enzyme and
Renagel-Registered Trademark- phosphate binder;

- Diagnostic Products, which as part of Genzyme General provides diagnostic
products to niche markets focusing on IN VITRO diagnostics;

- Genzyme Biosurgery, which develops, manufactures and sells instruments,
devices, biomaterials and biotherapeutic products to improve or replace
surgery, with an emphasis on the orthopaedics and cardiothoracic markets;
and

- Genzyme Molecular Oncology, which utilizes its functional genomics and
antigen discovery technology platforms to develop novel cancer products
focused on cancer vaccines and angiogenesis inhibitors and to generate
partnering revenue developing cancer products, with a focus on therapeutic
vaccines and angiogenesis inhibitors.

16
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. SEGMENT REPORTING (CONTINUED)
We have provided information concerning the operations in these reportable
segments in the following table:

Revenues:
Genzyme General:
Therapeutics(1)................................. $188,543 $148,578 $365,330 $282,396
Diagnostic Products(2).......................... 17,790 15,539 34,214 30,777
Other........................................... 31,352 22,414 60,464 43,836
Eliminations/Adjustments(3)..................... 1,313 163 1,683 311
-------- -------- -------- --------
Total Genzyme General......................... 238,998 186,694 461,691 357,320
Genzyme Biosurgery(4)............................. 60,364 36,256 114,520 71,205
Genzyme Molecular Oncology........................ 1,279 963 2,691 3,518
-------- -------- -------- --------
Total......................................... $300,641 $223,913 $578,902 $432,043
======== ======== ======== ========
Net income (loss):
Genzyme General:
Therapeutics(1)................................. $ 37,692 $ 54,252 $ 72,031 $ 83,515
Diagnostic Products(2).......................... (4,877) 815 (4,095) 1,530
Other........................................... 2,888 (625) 4,872 (796)
Eliminations/Adjustments(3,5)................... (13,985) 9,548 (25,945) 25,050
-------- -------- -------- --------
Net income for Genzyme General before cumulative
effect of change in accounting principle...... 21,718 63,990 46,863 109,299
Cumulative effect of change in accounting
principle, net of tax(5)...................... -- -- 4,167 --
-------- -------- -------- --------
Genzyme General net income...................... 21,718 63,990 51,030 109,299

Genzyme Biosurgery(4)............................. (33,222) (14,398) (63,945) (29,412)
Genzyme Molecular Oncology........................ (8,331) (7,363) (14,605) (12,420)
Eliminations/Adjustments(6)....................... 13,481 7,263 24,423 13,843
-------- -------- -------- --------
Total........................................... $ (6,354) $ 49,492 $ (3,097) $ 81,310
======== ======== ======== ========
</Table>

- ------------------------

(1) In December 2000, we acquired GelTex and allocated the acquisition to
Genzyme General. The operations of GelTex are included in our Therapeutics
segment for the three and six months ended June 30, 2001.

(2) In June 2001, we acquired Wyntek and allocated the acquisition to Genzyme
General. The results of operations of Wyntek are included in our Diagnostic
Products segment from June 1, 2001, the date of acquisition.

(3) Includes primarily amounts related to Genzyme General's research and
development and administrative activities that we do not specifically
allocate to a particular segment of Genzyme General. The six months ended
June 30, 2000 also includes a gain of $20.3 million relating to a

17
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. SEGMENT REPORTING (CONTINUED)
public offering of common stock by Genzyme Transgenics Corporation, an
unconsolidated affiliate, which we recognized in accordance with our policy
pertaining to affiliate sales of stock.

(4) In December 2000, we acquired Biomatrix and allocated the acquisition to
Genzyme Biosurgery. The operations of Biomatrix are included in the Genzyme
Biosurgery segment for the three and six months ended June 30, 2001. On
June 30, 2001, we acquired Focal and allocated the acquisition to Genzyme
Biosurgery. The results of operations of Focal will be included in the
results of the Genzyme Biosurgery segment from the date of acquisition.

(5) On January 1, 2001, in connection with the adoption of SFAS 133, Genzyme
General recorded a cumulative-effect adjustment of $4.2 million, net of tax,
to recognize the fair value of certain common stock warrants.
Eliminations/adjustments for Genzyme General includes a charge of
$0.2 million and $3.8 million for the three and six months ended June 30,
2001 to reflect the change in value of certain common stock warrants from
April 1, 2001 to June 30, 2001 and from January 1, 2001 to June 30, 2001.

(6) Includes income tax benefits that have not been recognized in the tax
provisions of the divisions.

SEGMENT ASSETS (AMOUNTS IN THOUSANDS):

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

Genzyme General(1):
Therapeutics...................................... $1,352,728 $1,341,656
Diagnostic Products(2)............................ 183,064 89,236
Other............................................. 80,914 77,153
Eliminations/Adjustments(3)....................... 1,438,221 991,008
---------- ----------
Total Genzyme General........................... 3,054,927 2,499,053
Genzyme Biosurgery(4)............................... 770,326 811,600
Genzyme Molecular Oncology.......................... 16,918 30,752
Eliminations/Adjustments(5)......................... (45,335) (23,305)
---------- ----------
Total........................................... $3,796,836 $3,318,100
========== ==========
</Table>

- ------------------------

(1) Segment assets for Genzyme General include primarily accounts receivable,
inventory and certain fixed and intangible assets.

(2) Segment assets for Diagnostic Products as of June 30, 2001 include
$73.4 million of additional assets resulting from the acquisition of Wyntek
in June 2001, including $39.4 million of intangible assets and
$19.9 million of goodwill.

(3) Segment assets for Eliminations/Adjustments for Genzyme General consists of
the difference between the total assets for Genzyme General's segments and
total combined assets for Genzyme General. Eliminations/Adjustments for
June 30, 2001 include net proceeds of $562.1 million from the private
placement of $575.0 million in principal of 3% convertible subordinated
debentures which was completed in May 2001. Genzyme General used a portion
of these proceeds to repay

18
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. SEGMENT REPORTING (CONTINUED)
the $150.0 million it had drawn under our revolving credit facility in
December 2000 to finance a portion of the cash component of the
consideration for the GelTex merger.

(4) Segment assets for Genzyme Biosurgery at June 30, 2001 include:

- $25.7 million of additional assets resulting from the acquisition of
the Class A limited partnership interests of Genzyme Development
Partners, L.P., including $17.5 million of intangible assets and
$8.2 million of goodwill; and

- $18.8 million of additional assets resulting from the acquisition of
Focal, Inc., including $7.9 million of intangible assets and
$1.8 million of property, plant and equipment.

(5) Represents the elimination of inter-tracking stock balances.

10. NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that all
business combinations be accounted for under the purchase method only and that
certain acquired intangible assets in a business combination be recognized as
assets apart from goodwill. SFAS No. 142 requires that ratable amortization of
goodwill be replaced with periodic tests of the goodwill's impairment and that
intangible assets other than goodwill be amortized over their useful lives. SFAS
No. 141 is effective for all business combinations initiated after June 30, 2001
and for all business combinations accounted for by the purchase method for which
the date of acquisition is after June 30, 2001. The provisions of SFAS No. 142
will be effective for fiscal years beginning after December 15, 2001, and will
thus be adopted by us, as required, in fiscal year 2002. The impact of SFAS
No. 141 and SFAS No. 142 on our financial statements has not yet been
determined.

11. SUBSEQUENT EVENTS

INTERDIVISIONAL FINANCING ARRANGEMENT

At June 30, 2001, $15.0 million of Genzyme General's cash remained available
to Genzyme Biosurgery under a $25.0 million interdivisional financing
arrangement with Genzyme General. We re-allocated this arrangement to Genzyme
Biosurgery from Genzyme Tissue Repair upon the formation of Genzyme Biosurgery
in December 2000. Under the terms of this arrangement, Genzyme Biosurgery may
draw down funds as needed each quarter in exchange for Biosurgery designated
shares based on the fair market value (as defined in our charter) of Biosurgery
Stock at the time of the draw. Biosurgery designated shares are shares of
Biosurgery Stock that are not issued and outstanding, but which our board of
directors may issue, sell or distribute without allocating the proceeds to
Genzyme Biosurgery. In July 2001, Genzyme Biosurgery drew $12.0 million of cash
under this arrangement in exchange for an additional reserve of 1,902,949
Biosurgery designated shares.

INTENDED REDEMPTION OF $21.2 MILLION 5% CONVERTIBLE SUBORDINATED DEBENTURES

On July 18, 2001, we sent notices to the holders of our $21.2 million 5%
convertible subordinated debentures indicating our intention to redeem any
debentures that remain outstanding on August 30, 2001 at a price equal to 103%
of the $21.2 million principal amount, plus accrued interest through the date of
redemption. We intend to pay the redemption price in cash.

19
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. SUBSEQUENT EVENTS (CONTINUED)
TRANSFER OF GENZYME'S 50% OWNERSHIP INTEREST IN ATIII LLC TO GENZYME
TRANSGENICS CORPORATION

On July 31, 2001, we transferred our 50% ownership interest in ATIII LLC,
our joint venture with Genzyme Transgenics for the development and
commercialization of transgenic recombinant human antithrombin III or ATIII, to
Genzyme Transgenics. In exchange for our interest in the joint venture, we will
receive a royalty on worldwide net sales (excluding Asia) of any of its products
based on ATIII beginning three years after the first commercial sale of each
such product up to a cumulative maximum amount of $30.0 million.

ACQUISITION OF GDP CLASS B LIMITED PARTNERSHIP INTERESTS

In July 2001, we notified the holders of the two Class B limited partnership
interests in GDP that we are exercising our option to buy the Class B limited
partnership interests for a payment of $70,000 per interest plus royalties on
sales of certain Sepra-TM- products. We will purchase the Class B limited
partnership interests on August 31, 2001. We will allocate the purchase of the
GDP Class B limited partnership interests to Genzyme Biosurgery.

NEUROCELL-TM- JOINT VENTURE REFUND

Diacrin/Genzyme LLC, our joint venture with Diacrin, Inc. to develop and
commercialize NeuroCell-TM--PD as a treatment for Parkinson's disease, did not
initiate a phase 3 clinical trial of NeuroCell-TM--PD by June 30, 2001. Because
a phase 3 trial of the product was not initiated by June 30, 2001, Genzyme
General had the right to elect to receive a refund of $20.0 million of the
$25.0 million Genzyme Biosurgery received from Genzyme General in connection
with the transfer to Genzyme General of Genzyme Biosurgery's interest in the
joint venture plus accrued interest thereon at a rate of 13.5% per annum. On
August 2, 2001, Genzyme General notified Genzyme Biosurgery of its election to
receive the refund. Genzyme Biosurgery can pay the refund amount in cash,
Biosurgery designated shares or both. The refund is due and payable within
90 days after Genzyme Biosurgery received the notice from Genzyme General.

ACQUISITION OF NOVAZYME PHARMACEUTICALS, INC.

On August 6, 2001, we entered into a definitive agreement to acquire
Novazyme Pharmaceuticals, Inc., for $137.5 million, payable in shares of Genzyme
General Stock plus the assumption of all outstanding options and warrants to
purchase shares of Novazyme common stock on an as-converted basis. Novazyme is a
privately held company that is developing biotherapies for the treatment of
lysosomal storage disorders. Novazyme shareholders are also eligible to receive
two subsequent payments totaling $87.5 million if we receive U.S. marketing
approval for two products using certain of Novazyme's technologies. The
contingent payments are also payable in shares of Genzyme General Stock. The
acquisition is subject to customary closing conditions. We expect to complete
the acquisition in the third quarter of 2001.

PHARMING GROUP, N.V. RECEIVERSHIP

20
<Page>
GENZYME CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED, CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. SUBSEQUENT EVENTS (CONTINUED)
$10.0 million, plus accrued and unpaid interest of approximately $0.2 million.
In addition, we have two joint ventures with Pharming for the development of
Pompe disease therapies. At June 30, 2001, Pharming owed the joint ventures an
aggregate amount of $1.7 million for its share of program costs, and the joint
ventures owed us approximately $6.4 million for reimbursement of program costs
incurred by us. At this time, the status of Pharming's receivership and our
position as a creditor is not known and we are therefore unable to determine the
impact, if any, on the realizable value of amounts due to us. Accordingly, no
adjustments have been made to our consolidated financial statements or the
combined financial statements of Genzyme General as of June 30, 2001.

21
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

COMBINED STATEMENTS OF OPERATIONS

(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -------------------
2001 2000 2001 2000
--------- --------- -------- --------

Revenues:
Net product sales......................................... $219,040 $171,470 $421,246 $326,809
Net service sales......................................... 18,305 15,061 36,537 30,181
Revenues from research and development contracts:
Related parties......................................... 1,313 157 1,632 303
Other................................................... 340 6 2,276 27
-------- -------- -------- --------
Total revenues........................................ 238,998 186,694 461,691 357,320
-------- -------- -------- --------
Operating costs and expenses:
Cost of products sold..................................... 47,469 37,051 95,363 69,271
Cost of services sold..................................... 10,617 8,944 20,901 17,772
Selling, general and administrative....................... 66,558 42,972 125,089 81,194
Research and development (including research and
development related to contracts)....................... 42,405 15,391 82,591 58,134
Amortization of intangibles............................... 18,182 2,011 35,852 3,979
Purchase of in-process research and development........... 8,768 -- 8,768 --
-------- -------- -------- --------
Total operating costs and expenses...................... 193,999 106,369 368,564 230,350
-------- -------- -------- --------
Operating income............................................ 44,999 80,325 93,127 126,970
-------- -------- -------- --------
Other income (expenses):
Equity in net loss of unconsolidated affiliates........... (11,016) (11,313) (19,495) (19,446)
Gain on affiliate sale of stock........................... -- -- -- 20,270
Gain (loss) on sale of investment in equity securities.... (1,532) 14,165 (1,532) 14,165
Minority interest in net loss of subsidiary............... 725 1,352 1,999 2,208
Other..................................................... (171) 5,174 (3,888) 5,153
Investment income......................................... 11,798 8,639 21,011 16,726
Interest expense.......................................... (7,282) (3,441) (13,680) (6,992)
-------- -------- -------- --------
Total other income (expenses)........................... (7,478) 14,576 (15,585) 32,084
-------- -------- -------- --------
Income before income taxes.................................. 37,521 94,901 77,542 159,054
Provision for income taxes.................................. (15,803) (30,911) (30,679) (49,755)
-------- -------- -------- --------
Division net income before cumulative effect of change in
accounting principle...................................... 21,718 63,990 46,863 109,299
Cumulative effect of change in accounting principle, net of
tax....................................................... -- -- 4,167 --
-------- -------- -------- --------
Division net income......................................... $ 21,718 $ 63,990 $ 51,030 $109,299
======== ======== ======== ========
Comprehensive income (loss), net of tax:
Division net income....................................... $ 21,718 $ 63,990 $ 51,030 $109,299
-------- -------- -------- --------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments................ (4,227) (174) (17,647) (10,397)
-------- -------- -------- --------
Unrealized gain (loss) on interest rate swap contract,
net of tax............................................ 52 -- (455) --
-------- -------- -------- --------
Unrealized gains (losses) on securities:
Unrealized gains (losses) arising during the period... 21,654 (43,424) (1,084) 6,785
Reclassification adjustment for (gains) losses
included in division net income..................... 973 (5,501) 973 (5,501)
-------- -------- -------- --------
Unrealized gains (losses) on securities, net............ 22,627 (48,925) (111) 1,284
-------- -------- -------- --------
Other comprehensive income (loss)......................... 18,452 (49,099) (18,213) (9,113)
-------- -------- -------- --------
Comprehensive income........................................ $ 40,170 $ 14,891 $ 32,817 $100,186
======== ======== ======== ========
</Table>

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

22
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

COMBINED BALANCE SHEETS

(AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

ASSETS

Current assets:
Cash and cash equivalents................................. $ 400,142 $ 135,841
Short-term investments.................................... 98,796 96,644
Accounts receivable, net.................................. 191,213 165,911
Inventories............................................... 108,331 108,767
Prepaid expenses and other current assets................. 34,936 28,012
Due from Genzyme Biosurgery............................... 38,680 18,645
Due from Genzyme Molecular Oncology....................... 6,655 4,660
Deferred tax assets--current.............................. 47,021 46,836
---------- ----------
Total current assets.................................... 925,774 605,316

Property, plant and equipment, net.......................... 495,382 446,759
Long-term investments....................................... 456,036 298,841
Notes receivable--related party............................. 10,159 10,350
Intangibles, net............................................ 1,000,223 977,147
Investments in equity securities............................ 116,599 119,648
Other noncurrent assets..................................... 50,754 40,992
---------- ----------
Total assets............................................ $3,054,927 $2,499,053
========== ==========

LIABILITIES AND DIVISION EQUITY

Current liabilities:
Accounts payable.......................................... $ 22,151 $ 20,091
Accrued expenses.......................................... 107,073 98,201
Income taxes payable...................................... 43,835 40,442
Deferred revenue.......................................... 1,189 6,401
Current portion of long-term debt and capital lease
obligations............................................. 1,449 1,448
---------- ----------
Total current liabilities............................... 175,697 166,583

Long-term debt and capital lease obligations................ 29,486 180,556
Convertible notes and debentures............................ 599,210 273,680
Deferred tax liabilities.................................... 128,363 124,613
Other noncurrent liabilities................................ 5,652 3,341
---------- ----------
Total liabilities....................................... 938,408 748,773
---------- ----------

Division equity............................................. 2,116,519 1,750,280
---------- ----------
Total liabilities and division equity................... $3,054,927 $2,499,053
========== ==========
</Table>

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

23
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

COMBINED STATEMENTS OF CASH FLOWS

(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
--------------------
2001 2000
--------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Division net income....................................... $ 51,030 $109,299
Reconciliation of division net income to net cash provided
by operating activities:
Depreciation and amortization........................... 50,794 22,844
Notes received from a collaborator...................... -- (10,000)
Non-cash compensation expense........................... 4,972 --
Provision for bad debts................................. 1,597 4,124
Deferred income tax (benefit) expense................... (14,811) 5,882
Charge for in-process research and development.......... 8,768 --
Equity in net loss of unconsolidated affiliates......... 19,495 19,446
Gain on affiliate sale of stock......................... -- (20,270)
Gain (loss) on sale of investment in equity
securities............................................ 1,532 (14,165)
Minority interest in net loss of subsidiary............. (1,999) (2,208)
Other................................................... (1,243) (1,148)
Increase (decrease) in cash from working capital
changes:
Accounts receivable................................... (31,613) (19,219)
Inventories........................................... 1,820 (4,183)
Prepaid expenses and other assets..................... 1,174 (3,529)
Due from Genzyme Biosurgery........................... (20,035) (1,513)
Due from Genzyme Molecular Oncology................... (1,995) (311)
Accounts payable, accrued expenses, income taxes
payable and deferred revenue........................ 33,968 22,260
--------- --------
Net cash provided by operating activities........... 103,454 107,309
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments.................................. (359,534) (239,134)
Sales and maturities of investments....................... 202,972 228,343
Purchases of equity securities............................ (3,318) --
Purchase of property, plant and equipment................. (69,584) (34,187)
Acquisitions, net of cash acquired........................ (60,026) --
Investments in unconsolidated affiliates.................. (22,744) (12,856)
Other..................................................... 1,444 3.047
--------- --------
Net cash used in investing activities............... (310,790) (54,787)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Allocated proceeds from issuance of Genzyme General
Stock................................................... 57,934 28,346
Allocated proceeds from issuance of debt.................. 562,062 --
Payments of debt.......................................... (151,083) --
Net cash allocated to Genzyme Biosurgery.................. 7 (4,940)
Net cash allocated to Genzyme Molecular Oncology.......... -- (15,000)
Bank overdraft............................................ 2,660 1,116
Other..................................................... 2,617 938
--------- --------
Net cash provided by financing activities........... 474,197 10,460
--------- --------
Effect of exchange rate changes on cash..................... (2,560) (3,031)
--------- --------
Increase in cash and cash equivalents....................... 264,301 59,951
Cash and cash equivalents at beginning of period............ 135,841 94,523
--------- --------
Cash and cash equivalents at end of period.................. $ 400,142 $154,474
========= ========
</Table>

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

24
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The unaudited, combined financial statements of Genzyme General for each
period include the balance sheets, statements of operations and cash flows of
the businesses we allocate to Genzyme General. We also allocate a portion of our
corporate operations to Genzyme General using methods described in our
allocation policy included in Exhibit 99.1 to our 2000 Form 10-K. These
unaudited, combined financial statements are prepared using amounts included in
our unaudited, consolidated financial statements included in this Form 10-Q. We
prepared these unaudited, combined financial statements for Genzyme General
following the requirements of the SEC for interim reporting. As permitted under
these rules, certain footnotes or other financial information that are normally
required by generally accepted accounting principles can be condensed or
omitted. We have reclassified certain 2000 data to conform to our 2001
presentation.

These financial statements include all normal and recurring adjustments that
we consider necessary for the fair presentation of Genzyme General's financial
position and operating results. Since these are interim financial statements,
you should also read the financial statements and notes for Genzyme General
included in our 2000 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 the results for future periods.

2. ACQUISITIONS

WYNTEK DIAGNOSTICS, INC.

The purchase price and the allocation of the purchase price to the fair
value of the acquired tangible and intangible assets and liabilities is as
follows (amounts in thousands):

<Table>

Cash paid................................................... $65,000
Acquisition costs........................................... 234
-------
Total purchase price...................................... $65,234
=======
Cash and cash equivalents................................... $ 4,974
Current assets.............................................. 4,966
Property, plant and equipment............................... 1,843
Deferred tax assets......................................... 2,312
Intangible assets (to be amortized over 5 to 10 years)...... 39,444
In-process research and development......................... 8,768
Goodwill (to be amortized over 10 years).................... 19,908
Deferred tax liability...................................... (14,197)
Assumed liabilities......................................... (2,784)
-------
Allocated purchase price.................................. $65,234
=======
</Table>

25
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
In connection with the acquisition of Wyntek, we allocated approximately
$8.8 million of the purchase price to in-process research and development or
IPR&D. Our management assumes responsibility for determining the IPR&D valuation
and expects the final valuation will be completed upon closing the transaction.
The fair value assigned to purchased IPR&D was estimated by discounting, to
present value, the cash flows expected to result from the project once it has
reached technological feasibility. A discount rate consistent with the risks of
the project was used to estimate the present value of cash flows. In estimating
future cash flows, management considered other tangible and intangible assets
required for successful exploitation of the technology resulting from the
purchased IPR&D project and adjusted future cash flows for a charge reflecting
the contribution to value of these assets. The value assigned to purchased IPR&D
was the amount attributable to the efforts of Wyntek up to the time of
acquisition. This amount was estimated through application of the "stage of
completion" calculation by multiplying total estimated revenue for IPR&D by the
percentage of completion of the purchased research and development project at
the time of acquisition.

26
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
accounting principles. Consequently, in accordance with generally accepted
accounting principles, the amount allocated to IPR&D was charged as an expense
in our financial statements for the three and six months ended June 30, 2001. We
are amortizing the remaining acquired intangible assets arising from the
acquisition on a straight-line basis over their estimated lives, which range
from 5 years to 10 years.

UNAUDITED PRO FORMA FINANCIAL SUMMARY:

In December 2000, we acquired GelTex, a public company engaged in developing
therapeutic products based on polymer technology. We accounted for the
acquisition as a purchase and allocated it to Genzyme General. The following
unaudited pro forma financial summary is presented as if the acquisitions of
GelTex and Wyntek were completed as of January 1, 2001 and 2000. The unaudited
pro forma combined results are not necessarily indicative of the actual results
that would have occurred had the acquisitions been consummated on those dates,
or of the future operations of the combined entities. Material nonrecurring
charges, such as acquired in-process research and development charges of
$118.0 million resulting from the acquisition of GelTex and $8.8 million
resulting from the acquisition of Wyntek, are not reflected in the following pro
forma financial summary:

<Table>
<Caption>
FOR THE SIX MONTHS ENDED
JUNE 30,
---------------------------------
2001 2000
--------------- ---------------
(UNAUDITED, AMOUNTS IN THOUSANDS)

Total revenues................................ $470,103 $405,645
Income before extraordinary items and
cumulative effect of change in accounting
principle................................... 48,717 70,234
Division net income........................... 52,884 70,234
</Table>

27
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

3. INVENTORIES (AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

Raw materials........................................ $ 35,453 $ 30,275
Work-in-process...................................... 55,467 47,880
Finished products.................................... 17,411 30,612
-------- --------
Total.............................................. $108,331 $108,767
======== ========
</Table>

4. PRIVATE PLACEMENT OF $575.0 MILLION 3% CONVERTIBLE SUBORDINATED DEBENTURES

In May 2001, we completed the private placement of $575.0 million in
principal of 3% convertible subordinated debentures due May 2021. Net proceeds
from the offering were approximately $562.1 million. We have allocated the
principal amount of the debentures and the net proceeds from the offering to
Genzyme General. We will pay interest on these debentures on May 15 and
November 15 each year using cash allocated to Genzyme General. The first
interest payment will be made on November 15, 2001. The debentures are
convertible, upon the satisfaction of certain conditions, into shares of Genzyme
General Stock at an initial conversion price of $70.30 per share. The conversion
price is subject to adjustment. Holders of the debentures may require us to
repurchase all or part of their debentures for cash on May 15, 2006, 2011 or
2016, at a price equal to 100% of the principal amount of the debentures plus
accrued interest through the date prior to the date of purchase. Additionally,
if certain fundamental changes occur, each holder may require us to repurchase,
for cash, all or a portion of the holder's debentures. On or after May 20, 2004,
we may redeem for cash all or part of the debentures that have not previously
been converted or repurchased. Genzyme General used a portion of these proceeds
to repay the $150.0 million it had drawn under our revolving credit facility in
December 2000 to finance a portion of the cash component of the consideration
for the GelTex acquisition. Genzyme General expects to utilize the remaining
proceeds from the sale of the debentures for working capital and general
corporate purposes.

5. REDEMPTION OF $250.0 MILLION 5 1/4% CONVERTIBLE SUBORDINATED NOTES

6. TAX PROVISION

Provision for income taxes....... $(15,803) $(30,911) (49)% $(30,679) $(49,755) (38)%
Effective tax rate............... 42% 33% 40% 31%
</Table>

28
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. TAX PROVISION (CONTINUED)
Genzyme General's tax rates for all periods vary from the U.S. statutory tax
rate as a result of its:

- provision for state income taxes;

- use of a foreign sales corporation;

- nondeductible amortization of intangibles; and

- use of tax credits.

The increase in Genzyme General's effective tax rate for both the three and
six month periods ending June 30, 2001 as compared to the same periods a year
ago was primarily attributable to an increase in nondeductable amortization of
intangibles, consisting largely of goodwill resulting from our December 2000
acquisition of GelTex. The tax provision for the three and six months ended
June 30, 2001 includes a $2.2 million benefit resulting from the release of
excess tax reserves.

7. DERIVATIVE FINANCIAL INSTRUMENTS

On January 1, 2001, we adopted SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS 137 and SFAS 138.
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that we recognize all
derivative instruments as either assets or liabilities in our combined balance
sheet and measure those instruments at fair value. Subsequent changes in fair
value are reflected in current earnings or other comprehensive income, depending
on whether a derivative instrument is designated as part of a hedge relationship
and, if it is, the type of hedge relationship.

In accordance with the transition provisions of SFAS 133, Genzyme General
recorded a cumulative-effect adjustment of $4.2 million, net of tax, in its
unaudited, combined statement of operations for the six months ended June 30,
2001 to recognize the fair value of certain common stock warrants held on
January 1, 2001. Transition adjustments pertaining to interest rate swaps
designated as cash-flow hedges and foreign currency forward contracts allocated
to Genzyme General were not significant. For the three months ended June 30,
2001, Genzyme General recorded a charge of $0.2 million in other expense to
reflect the change in value of certain common stock warrants from April 1, 2001
to June 30, 2001. For the six months ended June 30, 2001, Genzyme General
recorded a charge of $3.8 million in other expense to reflect the change in
value of certain common stock warrants from January 1, 2001 to June 30, 2001.
Genzyme General also recorded a charge of $0.5 million in division equity for
the six months ended June 30, 2001, to reflect the change in value of our
interest rate swap contract during the period, net of tax.

29
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

8. SEGMENT REPORTING

We present segment information for Genzyme General in a manner consistent
with the method we use to report this information to our management. Genzyme
General has two reportable segments:

- Therapeutics, which develops, manufactures and sells human therapeutic
products with an expanding focus on products that treat patients suffering
from lysosomal storage disorders and other specialty therapeutics. The
business derives substantially all its revenue from sales of
Cerezyme-Registered Trademark- enzyme and Renagel-Registered Trademark-
phosphate binder; and

- Diagnostic Products, which provides diagnostic products to niche markets
focusing on IN VITRO diagnostics.

We have provided information concerning the operations in these reportable
segments in the following table:

Revenues:
Therapeutics(1)................................... $188,543 $148,578 $365,330 $282,396
Diagnostic Products(2)............................ 17,790 15,539 34,214 30,777
Other............................................. 31,352 22,414 60,464 43,836
Eliminations/Adjustments(3)....................... 1,313 163 1,683 311
-------- -------- -------- --------
Total........................................... $238,998 $186,694 $461,691 $357,320
======== ======== ======== ========

Division net income:
Therapeutics(1)................................... $ 37,692 $ 54,252 $ 72,031 $ 83,515
Diagnostic Products(2)............................ (4,877) 815 (4,095) 1,530
Other............................................. 2,888 (625) 4,872 (796)
Eliminations/Adjustments(3,4)..................... (13,985) 9,548 (25,945) 25,050
-------- -------- -------- --------
Division net income before cumulative effect of
change in accounting principle.................. 21,718 63,990 46,863 109,299
Cumulative effect of change in accounting
principle, net of tax(4)........................ -- -- 4,167 --
-------- -------- -------- --------
Division net income............................. $ 21,718 $ 63,990 $ 51,030 $109,299
======== ======== ======== ========
</Table>

- ------------------------

(3) Includes primarily amounts related to Genzyme General's research and
development and administrative activities that we do not specifically
allocate to a particular segment of Genzyme

30
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

8. SEGMENT REPORTING (CONTINUED)
General. The amount for the six months ended June 30, 2000 also includes a
gain of $20.3 million relating to a public offering of common stock by
Genzyme Transgenics, an unconsolidated affiliate, which we recognized in
accordance with our policy pertaining to affiliate sales of stock.

(4) On January 1, 2001, in connection with the adoption of SFAS 133, Genzyme
General recorded a cumulative-effect adjustment of $4.2 million, net of tax,
to recognize the fair value of certain common stock warrants.
Eliminations/Adjustments for Genzyme General includes a charge of
$0.2 million for the three months ended June 30, 2001 and $3.8 million for
the six months ended June 30, 2001 to reflect the change in value of certain
common stock warrants.

SEGMENT ASSETS (AMOUNTS IN THOUSANDS):

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

Therapeutics........................................ $1,352,728 $1,341,656
Diagnostic Products(1).............................. 183,064 89,236
Other............................................... 80,914 77,153
Eliminations/Adjustments(2)......................... 1,438,221 991,008
---------- ----------
Total............................................. $3,054,927 $2,499,053
========== ==========
</Table>

- ------------------------

(1) Segment assets for Diagnostic Products as of June 30, 2001 include
$73.4 million of additional assets resulting from the acquisition of Wyntek
in June 2001, including $39.4 million of intangible assets, $19.9 million of
goodwill.

(2) Segment assets for Eliminations/Adjustments for June 30, 2001 include net
proceeds of $562.1 million from the private placement of $575.0 million in
principal of 3% convertible subordinated debentures which was completed in
May 2001. Genzyme General used a portion of these proceeds to repay the
$150.0 million it had drawn under our revolving credit facility in
December 2000 to finance a portion of the cash component of the
consideration for the GelTex merger.

9. NEW ACCOUNTING PRONOUNCEMENTS

We have included the impact that recently issued accounting standards will
have on our financial statements in Note 10., "New Accounting Pronouncements,"
to our unaudited, consolidated financial statements, which we incorporate by
reference into this note.

10. SUBSEQUENT EVENTS

INTERDIVISIONAL FINANCING ARRANGEMENT

31
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

10. SUBSEQUENT EVENTS (CONTINUED)
may draw down funds as needed each quarter in exchange for Biosurgery designated
shares based on the fair market value (as defined in our charter) of Biosurgery
Stock at the time of the draw. Biosurgery designated shares are shares of
Biosurgery Stock that are not issued and outstanding, but which our board of
directors may issue, sell or distribute without allocating the proceeds to
Genzyme Biosurgery. In July 2001, Genzyme Biosurgery drew $12.0 million of cash
under this arrangement in exchange for an additional reserve of 1,902,949
Biosurgery designated shares and used $8.5 million of the proceeds to pay a
portion of the $38.7 million due to Genzyme General.

INTENDED REDEMPTION OF $21.2 MILLION 5% CONVERTIBLE SUBORDINATED DEBENTURES

TRANSFER OF GENZYME'S 50% OWNERSHIP INTEREST IN ATIII LLC TO GENZYME
TRANSGENICS CORPORATION

On July 31, 2001, we transferred our 50% ownership interest in ATIII LLC,
our joint venture with Genzyme Transgenics for the development and
commercialization of ATIII, to Genzyme Transgenics. In exchange for our interest
in the joint venture, we will receive a royalty on worldwide net sales
(excluding Asia) of any of its products based on ATIII beginning three years
after the first commercial sale of each such product up to a cumulative maximum
amount of $30.0 million.

NEUROCELL-TM- JOINT VENTURE REFUND

ACQUISITION OF NOVAZYME PHARMACEUTICALS, INC.

On August 6, 2001, we entered into a definitive agreement to acquire
Novazyme, for $137.5 million, payable in shares of Genzyme General Stock plus
the assumption of all outstanding options and warrants to purchase shares of
Novazyme common stock on an as-converted basis. Novazyme is a privately held
company that is developing biotherapies for the treatment of lysosomal storage
disorders. Novazyme shareholders are also eligible to receive two subsequent
payments totaling $87.5 million if we receive U.S. marketing approval for two
products using certain of Novazyme's technologies. The contingent payments are
also payable in shares of Genzyme General Stock. The

32
<Page>
GENZYME GENERAL

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

10. SUBSEQUENT EVENTS (CONTINUED)
acquisition is subject to customary closing conditions. We expect to complete
the acquisition in the third quarter of 2001.

PHARMING GROUP, N.V. RECEIVERSHIP

On August 10, 2001, Pharming Group, N.V., a public company in the
Netherlands and our partner for the development of therapies for Pompe disease,
announced that it would file for receivership in order to seek protection from
its creditors. At June 30, 2001, we have an $8.5 million investment in Pharming
common stock and a 7% convertible senior note from Pharming for the principal
amount of $10.0 million, plus accrued and unpaid interest of approximately
$0.2 million. In addition, we have two joint ventures with Pharming for the
development of Pompe disease therapies. At June 30, 2001, Pharming owed the
joint ventures an aggregate amount of $1.7 million for its share of program
costs, and the joint ventures owed us approximately $6.4 million for
reimbursement of program costs incurred by us. At this time, the status of
Pharming's receivership and our position as a creditor is not known and we are
therefore unable to determine the impact, if any, on the realizable value of
amounts due to us. Accordingly, no adjustments have been made to our
consolidated financial statements or the combined financial statements of
Genzyme General as of June 30, 2001.

33
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

COMBINED STATEMENTS OF OPERATIONS

(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------

Revenues:
Net product sales................................. $54,433 $29,969 $103,057 $ 59,051
Net service sales................................. 5,930 6,286 11,458 12,132
Revenues from research and development
contracts....................................... 1 1 5 22
-------- -------- -------- --------
Total revenues................................ 60,364 36,256 114,520 71,205
-------- -------- -------- --------

Operating costs and expenses:
Cost of products sold............................. 32,131 16,592 60,769 32,631
Cost of services sold............................. 2,811 3,023 5,948 6,046
Selling, general and administrative............... 35,297 22,668 65,989 44,807
Research and development.......................... 11,956 8,453 22,675 17,295
Amortization of intangibles....................... 11,992 1,427 23,313 2,853
-------- -------- -------- --------
Total operating costs and expenses............ 94,187 52,163 178,694 103,632
-------- -------- -------- --------

Operating loss...................................... (33,823) (15,907) (64,174) (32,427)
-------- -------- -------- --------

Other income (expenses):
Equity in net loss of unconsolidated affiliate.... (780) -- (1,316) --
Other............................................. 38 19 45 42
Investment income................................. 427 1,815 939 3,599
Interest expense.................................. (3,470) (325) (8,429) (626)
-------- -------- -------- --------
Total other income (expenses)................. (3,785) 1,509 (8,761) 3,015
-------- -------- -------- --------

Division net loss................................... $(37,608) $(14,398) $(72,935) $(29,412)
======== ======== ======== ========
Comprehensive loss, net of tax:
Division net loss................................. $(37,608) $(14,398) $(72,935) $(29,412)
-------- -------- -------- --------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments........ 504 42 (197) 42
-------- -------- -------- --------
Unrealized gains (losses) on securities:
Unrealized gains (losses) arising during the
period...................................... -- (7,060) 97 (3,782)
Reclassification adjustment for (gains) losses
included in division net loss............... -- -- -- --
-------- -------- -------- --------
Unrealized gains (losses) on securities,
net......................................... -- (7,060) 97 (3,782)
-------- -------- -------- --------
Other comprehensive income (loss)................. 504 (7,018) (100) (3,740)
-------- -------- -------- --------
Comprehensive loss.................................. $(37,104) $(21,416) $(73,035) $(33,152)
======== ======== ======== ========
</Table>

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

34
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

COMBINED BALANCE SHEETS

(AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $ 22,989 $ 78,163
Short-term investments.................................... 38 --
Accounts receivable, net.................................. 46,668 38,952
Inventories............................................... 57,815 61,574
Prepaid expenses and other current assets................. 9,451 9,543
-------- --------
Total current assets.................................. 136,961 188,232

Property, plant and equipment, net.......................... 57,794 57,409
Notes receivable--related party............................. 168 --
Intangibles, net............................................ 573,340 562,635
Investment in equity securities............................. -- 1,603
Other noncurrent assets..................................... 2,063 1,721
-------- --------
Total assets.......................................... $770,326 $811,600
======== ========

LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accounts payable.......................................... $ 11,392 $ 6,074
Accrued expenses.......................................... 39,078 46,245
Due to Genzyme General.................................... 38,680 18,645
Current portion of long-term debt and capital lease
obligations............................................. 18,986 18,449
-------- --------
Total current liabilities............................. 108,136 89,413

Long-term debt and capital lease obligations................ 201,188 201,004
Convertible notes........................................... 10,000 10,000
Other noncurrent liabilities................................ -- 77
-------- --------
Total liabilities..................................... 319,324 300,494
-------- --------
Division equity............................................. 451,002 511,106
-------- --------
Total liabilities and division equity................. $770,326 $811,600
======== ========
</Table>

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

35
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

COMBINED STATEMENTS OF CASH FLOWS

(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-------------------
2001 2000
-------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Division net loss......................................... $(72,935) $(29,412)
Reconciliation of division net loss to net cash used in
operating activities:
Depreciation and amortization........................... 27,169 4,965
Provision for bad debts................................. 228 187
Equity in net loss of unconsolidated affiliate.......... 1,316 --
Other................................................... (76) 981
Increase (decrease) in cash from working capital
changes:
Accounts receivable................................... (8,029) (2,360)
Inventories........................................... 9,432 (8,324)
Prepaid expenses and other current assets............. 261 (441)
Accounts payable, accrued expenses and income taxes
payable............................................. (3,909) 3,035
Due to Genzyme General................................ 20,035 1,513
-------- --------
Net cash used in operating activities............... (26,508) (29,856)
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments.................................. -- (76,944)
Sales and maturities of investments....................... -- 102,628
Purchase of equity securities............................. (5,000) (5,000)
Purchase of property, plant and equipment................. (2,483) (1,672)
Acquisition, net of acquired cash......................... (23,394) --
Other..................................................... (659) (3,817)
-------- --------
Net cash provided by (used in) investing
activities........................................ (31,536) 15,195
-------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Allocated proceeds from issuance of Biosurgery Stock...... 756 1,253
Net cash allocated from Genzyme General................... (7) 4,940
Payments of capital lease obligations..................... (220) --
Payments of notes receivable from stockholders............ 3,204 --
Bank overdraft............................................ (653) (413)
Other..................................................... (214) --
-------- --------
Net cash provided by financing activities........... 2,866 5,780
-------- --------

Effect of exchange rate changes on cash..................... 4 6
-------- --------

Decrease in cash and cash equivalents....................... (55,174) (8,875)
Cash and cash equivalents at beginning of period............ 78,163 32,046
-------- --------
Cash and cash equivalents at end of period.................. $ 22,989 $ 23,171
======== ========
</Table>

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

36
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The unaudited, combined financial statements of Genzyme Biosurgery for each
period include the balance sheets, statements of operations and cash flows of
the businesses we allocate to Genzyme Biosurgery. We also allocate a portion of
our corporate operations to Genzyme Biosurgery using methods described in our
allocation policy included in Exhibit 99.1 to our 2000 Form 10-K. These
unaudited combined financial statements were prepared using amounts included in
our unaudited, consolidated financial statements included in this Form 10-Q. We
prepared these unaudited, combined financial statements for Genzyme Biosurgery
following the requirements of the SEC for interim reporting. As permitted under
those rules, certain footnotes or other financial information that are normally
required by generally accepted accounting principles can be condensed or
omitted. We have reclassified certain 2000 data to conform to our 2001
presentation.

These financial statements include all normal and recurring adjustments that
we consider necessary for the fair presentation of Genzyme Biosurgery's
financial position and operating results. Since these are interim financial
statements, you should also read the financial statements and notes for Genzyme
Biosurgery included in our 2000 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 the results for
future periods.

In December 2000, we acquired Biomatrix, Inc. We accounted for the
acquisition as a purchase. Immediately prior to the acquisition, we combined two
of our operating divisions, Genzyme Surgical Products and Genzyme Tissue Repair,
to form a new division called Genzyme Biosurgery. We allocated the acquired
assets and liabilities of Biomatrix to Genzyme Biosurgery. The combination of
Genzyme Surgical Products and Genzyme Tissue Repair to form Genzyme Biosurgery
did not result in any adjustments to the book values of the net assets of the
divisions because they remained divisions of the same corporation. We present
the financial statements of Genzyme Biosurgery as though the divisions had been
combined for all periods presented, and include the operations of Biomatrix from
the date of acquisition.

2. ACQUISITIONS

CLASS A LIMITED PARTNERSHIP INTERESTS OF GENZYME DEVELOPMENT PARTNERS, L.P.

In January 2001, we purchased all of the outstanding GDP Class A limited
partnership interests for a payment of approximately $25.7 million in cash plus
royalties payable over ten years on sales of certain Sepra-TM- products. We
allocated the acquired limited partnership interests of GDP to Genzyme
Biosurgery. As a result of the acquisition, significant control over the
activities of GDP passed to us. The acquisition was accounted for as a purchase,
and the purchase price was allocated to the fair value of the intangible assets
acquired as follows (amounts in thousands):

<Table>

37
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
Accordingly, the results of operations of GDP are included in the combined
financial statements of Genzyme Biosurgery from the date of acquisition.

FOCAL, INC.

The purchase price and the allocation of the purchase price to the fair
value of the acquired tangible and intangible assets and liabilities is as
follows (amounts in thousands):

<Table>

UNAUDITED PRO FORMA FINANCIAL SUMMARY

In December 2000, we also acquired Biomatrix, a public company engaged in
the development and manufacture of viscoelastic biomaterials for use in
orthopaedic and other medical applications. We accounted for this acquisition as
a purchase and allocated it to Genzyme Biosurgery. The following unaudited pro
forma financial summary is presented as if the acquisitions of Focal and
Biomatrix were completed as of January 1, 2001 and 2000. The unaudited pro forma
combined results are not necessarily indicative of the actual results that would
have occurred had the acquisition been

38
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

2. ACQUISITIONS (CONTINUED)
consummated at that date, or of the future operations of the combined entities.
Material nonrecurring charges, such as the acquired in-process and development
charge of $82.1 million related to our Biomatrix acquisition, are not reflected
in the following pro forma financial summary.

<Table>
<Caption>
FOR THE SIX MONTHS ENDED
JUNE 30,
---------------------------------
2001 2000
--------------- ---------------
(UNAUDITED, AMOUNTS IN THOUSANDS)

Total revenues................................ $114,667 $115,447

Division net loss............................. (83,484) (74,009)
</Table>

3. INVENTORIES (AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

Raw materials........................................ $15,533 $21,270
Work-in-process...................................... 29,839 25,640
Finished products.................................... 12,443 14,664
------- -------
Total............................................ $57,815 $61,574
======= =======
</Table>

4. SEGMENT REPORTING

We present segment information in a manner consistent with the method we use
to report this information to our management. Genzyme Biosurgery has three
reportable segments:

- Cardiothoracic, which includes chest drainage systems, lung sealants,
instruments and closures used in coronary artery bypass, valve
replacement, lung surgery and other cardiothoracic surgeries;

- Orthodpaedics, which includes the Synvisc-Registered Trademark-
viscosupplementation product and Carticel-Registered Trademark-
chondrocytes; and

- Biosurgical Specialties, which includes the Sepra-TM- products,
instruments for general and plastic surgery, and
Epicel-Registered Trademark- skin grafts.

39
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

4. SEGMENT REPORTING (CONTINUED)
We have provided information concerning the operations in these reportable
segments in the following table:

Revenues(1):
Cardiothoracic..................................... $17,367 $19,786 $ 35,656 $39,436
Orthopaedics....................................... 26,488 4,577 46,905 9,109
Biosurgical Specialties............................ 16,508 11,892 31,954 22,638
Other(2)........................................... 1 1 5 22
------- ------- -------- -------
Total................................................ $60,364 $36,256 $114,520 $71,205
======= ======= ======== =======

Gross Profit(1):
Cardiothoracic..................................... $ 5,291 $ 8,332 $ 12,455 $16,719
Orthopaedics....................................... 19,417 3,948 32,946 7,881
Biosurgical Specialties............................ 714 4,360 2,398 7,906
Other(2)........................................... -- 1 4 22
------- ------- -------- -------
Total................................................ $25,422 $16,641 $ 47,803 $32,528
======= ======= ======== =======
</Table>

- ------------------------

(1) In December 2000, we acquired Biomatrix and allocated the acquisition to
Genzyme Biosurgery. The operations of Biomatrix are included in the results
of Genzyme Biosurgery for the three and six months ended June 30, 2001. On
June 30, 2001, we acquired Focal and allocated the acquisition to Genzyme
Biosurgery's Cardiothoracic segment. The results of operations of Focal will
be included in the results of Genzyme Biosurgery from the date of
acquisition.

(2) The Other category includes revenue from Genzyme Biosurgery's research and
development contracts which we do not allocate to a particular segment of
Genzyme Biosurgery.

We do not allocate assets within Genzyme Biosurgery for purposes of segment
information. Total assets for Genzyme Biosurgery at June 30, 2001 of
$770.3 million include:

- $25.7 million of additional assets resulting from the acquisition of the
Class A limited partnership interests of GDP, including $17.5 million of
intangible assets and $8.2 million of goodwill; and

- $18.8 million of additional assets resulting from the acquisition of
Focal, including $7.9 million of intangible assets and $1.8 million of
property, plant and equipment.

5. NEW ACCOUNTING PRONOUNCEMENTS

40
<Page>
GENZYME BIOSURGERY

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS (CONTINUED)

6. SUBSEQUENT EVENTS

INTERDIVISIONAL FINANCING ARRANGEMENT

ACQUISITION OF GDP CLASS B LIMITED PARTNERSHIP INTERESTS

NEUROCELL-TM- JOINT VENTURE REFUND

41
<Page>
GENZYME MOLECULAR ONCOLOGY

A DIVISION OF GENZYME CORPORATION

COMBINED STATEMENTS OF OPERATIONS

(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2001 2000 2001 2000
-------- -------- -------- --------

Revenues:
Licensing revenue.................................. $ 548 $ 920 $ 1,212 $ 3,470
Royalty revenue.................................... 28 43 73 48
Research and development revenue................... 703 -- 1,406 --
------- ------- -------- --------
Total revenues................................... 1,279 963 2,691 3,518
------- ------- -------- --------

Operating costs and expenses:
Cost of revenues................................... 485 139 1,029 195
Selling, general and administrative................ 1,811 1,788 3,702 2,978
Research and development (including research and
development related to contracts)................ 7,568 4,594 13,229 8,652
Amortization of intangibles........................ -- 2,464 -- 5,420
------- ------- -------- --------
Total operating costs and expenses............... 9,864 8,985 17,960 17,245
------- ------- -------- --------

Operating loss....................................... (8,585) (8,022) (15,269) (13,727)
------- ------- -------- --------

Other income (expenses):
Interest income.................................... 268 177 691 250
Interest expense................................... (14) (70) (27) (157)
------- ------- -------- --------
Total other income (expenses).................... 254 107 664 93
------- ------- -------- --------
Loss before income taxes............................. (8,331) (7,915) (14,605) (13,634)
Tax benefit.......................................... -- 552 -- 1,214
------- ------- -------- --------
Division net loss.................................... $(8,331) $(7,363) $(14,605) $(12,420)
======= ======= ======== ========

Comprehensive loss, net of tax:
Division net loss.................................. $(8,331) $(7,363) $(14,605) $(12,420)
Other comprehensive loss, net of tax:
Unrealized gains (losses) on securities arising
during the period.............................. -- -- -- --
------- ------- -------- --------
Comprehensive loss................................... $(8,331) $(7,363) $(14,605) $(12,420)
======= ======= ======== ========
</Table>

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

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<Page>
GENZYME MOLECULAR ONCOLOGY

A DIVISION OF GENZYME CORPORATION

COMBINED BALANCE SHEETS

(AMOUNTS IN THOUSANDS)

<Table>
<Caption>
JUNE 30, DECEMBER 31,
2001 2000
----------- ------------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents................................. $16,173 $22,209
Short-term investments.................................... -- 7,942
Accounts receivable, net.................................. 323 231
Prepaid expenses and other current assets................. 240 126
------- -------
Total current assets.................................... 16,736 30,508

Equipment, net.............................................. 182 244
------- -------
Total assets............................................ $16,918 $30,752
======= =======

LIABILITIES AND DIVISION EQUITY
Current liabilities:
Accrued expenses.......................................... $ 1,076 $ 1,540
Due to Genzyme General.................................... 6,655 4,660
Deferred revenue--current portion......................... 1,855 2,208
------- -------
Total current liabilities............................... 9,586 8,408

Deferred revenue--long-term portion......................... 2,020 2,818
------- -------
Total liabilities....................................... 11,606 11,226

Division equity............................................. 5,312 19,526
------- -------
Total liabilities and division equity................... $16,918 $30,752
======= =======
</Table>

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

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<Page>
GENZYME MOLECULAR ONCOLOGY

A DIVISION OF GENZYME CORPORATION

COMBINED STATEMENTS OF CASH FLOWS

(UNAUDITED, AMOUNTS IN THOUSANDS)

<Table>
<Caption>
SIX MONTHS ENDED
JUNE 30,
-------------------
2001 2000
-------- --------

CASH FLOWS FROM OPERATING ACTIVITIES:
Division net loss......................................... $(14,605) $(12,420)
Reconciliation of division net loss to net cash used in
operating activities:
Depreciation and amortization........................... 62 5,499
Deferred income tax benefit............................. -- (1,214)
Other................................................... 152 (86)
Increase (decrease) in cash from working capital
changes:
Accounts receivable................................... (92) (139)
Prepaid expenses and other current assets............. (114) 206
Accrued expenses, deferred revenue and other.......... (1,615) 765
Due to Genzyme General................................ 1,995 311
-------- --------
Net cash used in operating activities............... (14,217) (7,078)
-------- --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments.................................. -- (6,790)
Sales and maturities of investments....................... 7,792 --
-------- --------
Net cash provided by (used in) investing
activities........................................ 7,792 (6,790)
-------- --------

CASH FLOWS FROM FINANCING ACTIVITIES:
Allocated proceeds from issuance of Molecular Oncology
Stock................................................... 389 1,366
Repayment of debt......................................... -- (5,000)
Net cash allocated from Genzyme General................... -- 15,000
-------- --------
Net cash provided by financing activities........... 389 11,366
-------- --------

Decrease in cash and cash equivalents....................... (6,036) (2,502)
Cash and cash equivalents at beginning of period............ 22,209 3,587
-------- --------
Cash and cash equivalents at end of period.................. $ 16,173 $ 1,085
======== ========
</Table>

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

44
<Page>
GENZYME MOLECULAR ONCOLOGY

A DIVISION OF GENZYME CORPORATION

NOTES TO UNAUDITED, COMBINED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The unaudited, combined financial statements of Genzyme Molecular Oncology
for each period include the balance sheets, statements of operations and cash
flows of the businesses we allocate to Genzyme Molecular Oncology. We also
allocate a portion of our corporate operations to Genzyme Molecular Oncology
using methods described in our allocation policy included in Exhibit 99.1 to our
2000 Form 10-K. These unaudited, combined financial statements are prepared
using amounts included in our unaudited, consolidated financial statements
included in this Form 10-Q. We prepared these unaudited, combined financial
statements for Genzyme Molecular Oncology following the requirements of the SEC
for interim reporting. As permitted under these rules, certain footnotes or
other financial information that are normally required by generally accepted
accounting principles can be condensed or omitted. We have reclassified certain
2000 data to conform to our 2001 presentation.

These financial statements include all normal and recurring adjustments that
we consider necessary for the fair presentation of Genzyme Molecular Oncology's
financial position and operating results. Since these are interim financial
statements, you should also read the financial statements and notes for Genzyme
Molecular Oncology included in our 2000 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 the
results for future periods.

2. NEW ACCOUNTING PRONOUNCEMENTS

45
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This discussion contains forward-looking statements. Actual results could
differ materially from those anticipated by the forward-looking statements due
to the risks and uncertainties described in the section of this report on
Form 10-Q entitled "Note Regarding Forward-Looking Statements" and in
Exhibit 99.2 to our 2000 Form 10-K. You should consider carefully each of these
risks and uncertainties in evaluating our financial condition and results of
operations.

We are a biotechnology company that develops innovative products and
services for significant unmet medical needs. We have three operating divisions:

- Genzyme General, which develops and markets:

- therapeutic products, with an expanding focus on products to treat
patients suffering from lysosomal storage disorders and other specialty
therapeutics;

- diagnostic products, with a focus on IN VITRO diagnostics; and

- other products and services, such as genetic testing services and lipid
and peptide products for drug delivery.

We currently have three designated series of common stock--Genzyme General
Division common stock, which we refer to as "Genzyme General Stock," Genzyme
Biosurgery Division common stock, which we refer to as "Biosurgery Stock" and
Genzyme Molecular Oncology Division common stock, which we refer to as
"Molecular Oncology Stock." We also refer to our series of stock as "tracking
stock." Unlike typical common stock, each of our tracking stocks is designed to
track the financial performance of a specific subset of our business operations
and its allocated assets, rather than the operations and assets of our entire
company. The chief mechanisms intended to cause each tracking stock to "track"
the financial performance of each division are provisions in our charter
governing the dividends and distributions. Under these provisions, our charter:

- factors the assets and liabilities and income or losses attributable to a
division into the determination of the amount available to pay dividends
on the associated tracking stock; and

- requires us to exchange, redeem or distribute a dividend to the holders of
Biosurgery Stock or Molecular Oncology Stock if all or substantially all
of the assets allocated to those corresponding divisions are sold to a
third party (a dividend or redemption payment must equal in value the net
after-tax proceeds from the sale; an exchange must be for Genzyme General
Stock at a 10% premium to the average market price of the exchanged stock
following the announcement of the sale).

To determine earnings per share, we allocate our earnings to each series of
our common stock based on the earnings attributable to that series of stock. The
earnings attributable to each series of stock is defined in our charter as the
net income or loss of the corresponding division determined in accordance with
generally accepted accounting principles and as adjusted for tax benefits
allocated to or from that division in accordance with our management and
accounting policies. Our charter also requires that all of our income and
expenses be allocated among our divisions in a reasonable and

46
<Page>
consistent manner. However, subject to its fiduciary duties, our board of
directors can, at its discretion, change the methods of allocating earnings to
each series of common stock. We intend to allocate earnings using our current
methods for the foreseeable future. Our board of directors has also adopted
accounting policies relating to the management of our operating divisions. These
policies are set forth in Exhibit 99.1 to our 2000 Form 10-K.

Because the earnings allocated to each series of stock are based on the
income or losses attributable to each corresponding division, we include
financial statements and management's discussion and analysis for the
corporation as well as for each of our divisions to aid investors in evaluating
our performance and the performance of each of our divisions.

While each tracking stock is designed to reflect a division's performance,
it is common stock of Genzyme Corporation and not of a division; each division
is not a company or a legal entity, and therefore does not and cannot issue
stock. Consequently, holders of a series of tracking stock have no specific
rights to assets allocated to the corresponding division. Genzyme Corporation
continues to hold title to all of the assets allocated to each division and is
responsible for all of its liabilities, regardless of what we deem for financial
statement presentation purposes as allocated to any division. Holders of each
tracking stock, as common stockholders, are therefore subject to the risks of
investing in the businesses, assets and liabilities of Genzyme as a whole. For
instance, the assets allocated to each division are subject to company-wide
claims of creditors, product liability plaintiffs and stockholder litigation.
Also, in the event of a Genzyme liquidation, insolvency or similar event,
holders of each tracking stock would only have the rights of common stock
holders in the combined assets of Genzyme.

We provide separate financial statements for each of our divisions as well
as consolidated statements that include the consolidated results of each of our
divisions and our corporate operations taken as a whole. You should read this
discussion of and analysis of our financial position and results of operations
in conjunction with those unaudited, consolidated financial statements and
related notes, which are included in this report.

In June 2001, we acquired Focal, Inc., a public company and developer of
synthetic biopolymers used in surgery. We allocated the acquired assets and
liabilities to Genzyme Biosurgery. The results of operations of Focal will be
included in our consolidated results and the results of Genzyme Biosurgery from
June 30, 2001, the date of acquisition.

In December, 2000, we acquired GelTex Pharmaceuticals, Inc., a public
company engaged in developing therapeutic products based on polymer technology.
We accounted for the acquisition as a purchase and allocated it to Genzyme
General. Accordingly, the results of operations of GelTex are included in our
consolidated financial statements and the combined financial statements of
Genzyme General from the date of acquisition. As part of the acquisition of
GelTex, we acquired all of GelTex's interest in RenaGel LLC, our joint venture
with GelTex. Our consolidated financial statements and the combined financial
statements for Genzyme General reflect the consolidation of RenaGel LLC from the
date of acquisition of GelTex. Prior to the acquisition of GelTex, we accounted
for our investment in RenaGel LLC under the equity method.

In December 2000, we also acquired Biomatrix, Inc., a company that develops,
manufactures, markets and sells a series of proprietary viscoelastic products
based on hyaluronan technology that are used in therapeutic medical applications
and skin care. We allocated the acquisition to Genzyme

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<Page>
Biosurgery. The operations of Biomatrix are included in our consolidated
financial statements and the combined financial statements of Genzyme Biosurgery
from the date of acquisition.

A. RESULTS OF OPERATIONS

GENZYME CORPORATION

The components of our consolidated statements of operations are described in
the following table:

Total revenues.................. $300,641 $223,913 34% $578,902 $432,043 34%
-------- -------- -------- --------
Cost of products and services
sold.......................... 93,028 65,610 42% 182,981 125,720 46%
Selling, general and
administrative................ 103,666 67,428 54% 194,780 128,979 51%
Research and development
(including research and
development related to
contracts).................... 62,414 28,577 118% 119,524 84,276 42%
Amortization of intangibles..... 30,174 5,684 431% 59,165 11,782 402%
Purchase of in-process research
and development............... 8,768 -- N/A 8,768 -- N/A
-------- -------- -------- --------
Total operating costs and
expenses.................. 298,050 167,299 78% 565,218 350,757 61%
-------- -------- -------- --------

Operating income................ 2,591 56,614 (95)% 13,684 81,286 (83)%
Other income (expenses), net.... (11,009) 16,192 (168)% (23,682) 35,192 (167)%
-------- -------- -------- --------

Income (loss) before income
taxes......................... (8,418) 72,806 (112)% (9,998) 116,478 (109)%
Benefit from (provision for)
income taxes.................. 2,064 (23,314) (109)% 2,734 (35,168) (108)%
-------- -------- -------- --------
Net income (loss) before
cumulative effect of change in
accounting principle.......... (6,354) 49,492 (113)% (7,264) 81,310 (109)%
Cumulative effect of change in
accounting principle, net of
tax........................... -- -- -- 4,167 -- N/A
-------- -------- -------- --------
Net income (loss)............... $ (6,354) $ 49,492 (113)% $ (3,097) $ 81,310 (104)%
======== ======== ======== ========
</Table>

REVENUES

The components of our revenues are described in the following table:

Product revenue................. $273,473 $201,439 36% $524,303 $385,860 36%
Service revenue................. 24,235 21,347 14% 47,995 42,313 13%
-------- -------- -------- --------
Total product and service
revenue..................... 297,708 222,786 34% 572,298 428,173 34%
Research and development
revenue....................... 2,933 1,127 160% 6,604 3,870 71%
-------- -------- -------- --------
Total revenues.............. $300,641 $223,913 34% $578,902 $432,043 34%
======== ======== ======== ========
</Table>

48
<Page>
PRODUCT REVENUE

We derive product revenue from sales by Genzyme General of therapeutic
products, including Cerezyme-Registered Trademark- and
Ceredase-Registered Trademark- enzymes and Renagel-Registered Trademark-
phosphate binder, diagnostic products and other products, and sales by Genzyme
Biosurgery of cardiothoracic products, including
FocalSeal-Registered Trademark--L surgical sealant, orthopaedic products,
including Synvisc-Registered Trademark- viscosupplementation product, and
biosurgical specialties products, including Seprafilm-TM- bioresorbable
membrane.

The following table sets forth our product revenue on a segment basis:

Genzyme General:
Therapeutics:
Cerezyme-Registered Trademark-
and
Ceredase-Registered Trademark-
enzymes................... $141,312 $134,854 5% $280,943 $263,459 7%
Renagel-Registered Trademark-
phosphate binder.......... 40,408 10,218 295% 69,003 10,218 575%
Thyrogen-Registered Trademark-
hormone................... 4,420 3,506 26% 8,600 6,867 25%
Other therapeutic
products.................. 2,083 -- N/A 4,579 1,852 147%
-------- -------- -------- --------
Total Therapeutics........ 188,223 148,578 27% 363,125 282,396 29%
Diagnostic Products........... 17,790 15,539 14% 34,214 30,777 11%
Other......................... 13,027 7,353 77% 23,907 13,636 75%
-------- -------- -------- --------
Total product revenue--
Genzyme General....... 219,040 171,470 28% 421,246 326,809 29%
-------- -------- -------- --------
Genzyme Biosurgery:
Cardiothoracic................ 17,367 19,786 (12)% 35,656 39,436 (10)%
Orthopaedics.................. 21,709 -- N/A 37,777 -- N/A
Biosurgical Specialties....... 15,357 10,183 51% 29,624 19,615 51%
-------- -------- -------- --------
Total product revenue--
Genzyme Biosurgery.... 54,433 29,969 82% 103,057 59,051 75%
-------- -------- -------- --------
Total product
revenues.............. $273,473 $201,439 36% $524,303 $385,860 36%
======== ======== ======== ========
</Table>

Product revenue continued to increase in both the three and six month
periods ended June 30, 2001 as compared to the same periods a year ago, due
primarily to increased sales of Renagel-Registered Trademark- phosphate binder,
which is used to reduce serum phosphorus levels in patients with end-stage renal
disease on dialysis, and continued growth in sales of
Cerezyme-Registered Trademark- enzyme for the treatment of Type I Gaucher
disease. We began recording revenues from Renagel-Registered Trademark-
phosphate binder during the second quarter of 2000 under an amended distribution
arrangement with GelTex, which we acquired in December 2000. Prior to this
amendment, revenues from Renagel-Registered Trademark- phosphate binder were
recorded by RenaGel LLC, our joint venture with GelTex, and were $8.0 million
for the three month period ended March 31, 2000.

Sales of Renagel-Registered Trademark- phosphate binder in both the three
and six months ended June 30, 2001 include sales of capsules and the new 800 mg
tablet formulation. We launched the tablet formulation in the United States
during the third quarter of 2000. In the first quarter of 2001, the
higher-than-anticipated demand for the 800 mg tablet formulation and certain
production constraints resulted in a temporary shortage of this dosage form of
Renagel-Registered Trademark- phosphate binder. Patients taking the 800 mg
tablets were shifted to an equivalent dose of 400 mg
Renagel-Registered Trademark- tablets or 403 mg Renagel-Registered Trademark-
capsules while we built an inventory of 800 mg tablets to support our re-launch
of this dosage form in June 2001. Despite the

49
<Page>
temporary shortage of the 800 mg tablet formulation, sales of
Renagel-Registered Trademark- phosphate binder increased significantly in each
of the three and six months ended June 30, 2001 in comparison to the same
periods of 2000 due to accelerating adoption of the product by nephrologists, as
evidenced by significant increases in both renewal prescriptions and new
prescriptions.

The steady growth in sales of Cerezyme-Registered Trademark- enzyme in the
three and six months ended June 30, 2001 was attributable to our continued
identification of new Gaucher disease patients worldwide coupled with
significant investment in our global infrastructure that has continued to
increase international sales of this product. Additionally, we continue to
market Ceredase-Registered Trademark- enzyme for the treatment of Gaucher
disease, although we have successfully converted virtually all Gaucher disease
patients to a treatment regimen using Cerezyme-Registered Trademark- enzyme.

Our results of operations are highly dependent on sales of
Cerezyme-Registered Trademark- enzyme and a reduction in revenue from sales of
this product would adversely affect its results of operations. Revenue from
Cerezyme-Registered Trademark- enzyme would be impacted negatively if
competitors developed alternative treatments for Gaucher disease and the
alternative products gained commercial acceptance. We are aware of companies
that have initiated efforts to develop competitive products and other companies
may do so in the future. Although orphan drug status for
Cerezyme-Registered Trademark- enzyme, which provided us with exclusive
marketing rights for Cerezyme-Registered Trademark- enzyme in the United States,
expired in May 2001, we continue to have patents protecting our method of
manufacturing Cerezyme-Registered Trademark- enzyme until 2010 and the
composition of Cerezyme-Registered Trademark- enzyme as made by that process
until 2013. The expiration of market exclusivity and orphan drug status in
May 2001 will likely subject Cerezyme-Registered Trademark- enzyme to increased
competition, which may decrease the amount of revenue we receive from this
product or the growth of that revenue.

The following table provides information regarding the change in sales of
our Gaucher disease therapies as a percentage of total product revenue during
the periods presented:

Sales of
Cerezyme-Registered Trademark-
and
Ceredase-Registered Trademark-
enzymes....................... $141,312 $134,854 5% $280,943 $263,459 7%
% of total product revenue...... 52% 67% 54% 68%
</Table>

Although sales of Genzyme General's Gaucher disease therapies continue to
increase, the decline as a percentage of total product revenue is a trend we
expect will continue in the second half of 2001. Genzyme General expects that
growth in the sales of Renagel-Registered Trademark- phosphate binder will
continue to increase. Revenue from sales of Renagel-Registered Trademark-
phosphate binder represented approximately 15% of our total product revenue for
the three month period ended June 30, 2001 as compared to 5% for the same period
a year ago. For the six month period ended June 30, 2001, sales of
Renagel-Registered Trademark- phosphate binder represented approximately 13% of
our total product revenue as compared to 3% for the same period a year ago.

Therapeutics revenue for each period also includes sales of
Thyrogen-Registered Trademark- hormone, which is an adjunctive diagnostic tool
for well-differentiated thyroid cancer. Revenues for
Thyrogen-Registered Trademark- hormone increased for the three months and six
months ended June 30, 2001 as compared to the same periods a year ago, due
primarily to increased market penetration.

Other therapeutics revenue increased for both the three and six months ended
June 30, 2001 due primarily to increased sales of Fabrazyme-TM- enzyme in France
under an Authorisation Temporaire d'utilisation from the French Medicines
Agency.

Diagnostic Products's revenues increased for the three and six-month periods
ended June 30, 2001 as compared to the same periods in 2000, due primarily to
increased sales of infectious disease testing

50
<Page>
products and HDL and LDL cholesterol testing products. Also contributing to the
increase for both periods is the addition of sales of point of care rapid
diagnostic tests for pregnancy and infectious diseases that we obtained through
our acquisition of Wyntek, which we acquired on June 1, 2001. Diagnostic
Product's revenue also includes royalties on product sales by Techne
Corporation's biotechnology group.

The increase in other product revenue for the three and six months ended
June 30, 2001 as compared to the same periods in 2000, was primarily
attributable to increased sales of lipids and peptides for drug delivery. The
increase in other service revenue in each of the three and six months ended
June 30, 2001 is due to increased sales of genetic testing services attributable
to expanded presence in the prenatal market and a broader test menu in oncology.

The decrease in cardiothoracic revenue in the three and six months ended
June 30, 2001 when compared to the same periods of 2000 was due to decreased
sales of chest drainage systems resulting from competitive pricing pressures in
that market as well as the withdrawal from certain commodity suture lines in
Europe. The decreases were offset, in part, by the continued sales revenue
growth in the minimally invasive cardiac surgery products and sales revenue from
the FocalSeal-Registered Trademark--L surgical sealant. We added
FocalSeal-Registered Trademark--L surgical sealant to the cardiothoracic product
category in the third quarter of 2000 pursuant to a distribution and marketing
agreement with Focal which, prior to our acquisition of Focal in June 2001,
provided us with exclusive distribution rights for this product in North
America.

The orthopaedics product revenue increased for the three and six months
ended June 30, 2001 when compared to the same periods of 2000 primarily due to
the sales of Synvisc-Registered Trademark- viscosupplementation product, which
was added to the orthopaedics product category in December 2000 through our
acquisition of Biomatrix.

The increase in biosurgical specialties product revenue in the three and six
months ended June 30, 2001 when compared to the same periods of 2000 is due to
increases in sales of Seprafilm-TM- bioresorbable membrane and Sepramesh-TM-
biosurgical composite. An increase in sales to original equipment manufacturers
and sales generated from Hylaform-Registered Trademark- and skin care products,
which was added to the biosurgical specialties product category in
December 2000, also contributed to the overall increase in biosurgical
specialties product revenue.

SERVICE REVENUE

We derive service revenues from three principal sources:

- genetic testing services performed by Genzyme General;

- Genzyme Biosurgery's Carticel-Registered Trademark- chondrocytes for the
treatment of cartilage damage; and

- Genzyme Biosurgery's Epicel-Registered Trademark- skin grafts for the
treatment of severe burns.

The following table sets forth our service revenues on a segment basis:

Genzyme General................... $18,305 $15,061 22% $36,537 $30,181 21%
Genzyme Biosurgery................ 5,930 6,286 (6)% 11,458 12,132 (6)%
------- ------- ------- -------
Total service revenues.......... $24,235 $21,347 14% $47,995 $42,313 13%
======= ======= ======= =======
</Table>

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<Page>
The increase in other service revenue in each of the three and six months
ended June 30, 2001 is due to increased sales of genetic testing services
attributable to expanded presence in the prenatal market and a broader test menu
in oncology, which was offset in part by a decrease in sales of
Epicel-Registered Trademark- skin grafts during the same period.

RESEARCH AND DEVELOPMENT REVENUE

The following table sets forth our research and development revenues on a
segment basis:

Genzyme General................... $1,653 $ 163 914% $3,908 $ 330 1,084%
Genzyme Biosurgery................ 1 1 -- 5 22 (77)%
Genzyme Molecular Oncology........ 1,279 963 33% 2,691 3,518 (24)%
------ ------ ------ ------
Total research and development
revenues...................... $2,933 $1,127 160% $6,604 $3,870 71%
====== ====== ====== ======
</Table>

The increase in research and development revenue in the three months ended
June 30, 2001 is primarily attributable to $1.0 million of additional research
and development services performed on behalf of Genzyme Transgenics Corporation.
For the six months ended June 30, 2001 research and development revenue
increased primarily due to $2.2 million of revenue recognized by GelTex and
$1.4 million recognized under the development agreement with Purdue Pharma for
which there are no similar amounts in the same period of 2000. In addition, in
the six months ended June 30, 2001 we recorded $1.3 million of additional
revenue from research and development services we performed on behalf of Genzyme
Transgenics. The increases in research and development revenue under these
contracts for the six months ended June 30, 2001 was offset in part by a
$2.0 million development milestone payment received under a license agreement
with Schering-Plough Corporation in the six months ended June 30, 2000 for which
there is no similar amount in 2001.

INTERNATIONAL PRODUCT AND SERVICE REVENUE

A substantial portion of our revenue was generated outside of the United
States, as described in the following table. Most of these revenues were
attributable to sales of Cerezyme-Registered Trademark- enzyme, which increased
4% and 10% to $71.4 million and $149.2 million in the three and six months ended
June 30, 2001 from $68.8 million and $135.8 million in the same periods last
year. Despite an approximate 6% decline in the average exchange rate of the euro
for both the three and six month periods ended June 30, 2001 as compared to a
year ago, international sales of Cerezyme-Registered Trademark- enzyme increased
for both periods due primarily to the continued identification of new Gaucher
disease patients worldwide coupled with significant investment in our global
infrastructure. International product and service revenue as a percent of total
product and service revenue decreased in both the three and six months ended
June 30, 2001 due primarily to increased sales of Renagel-Registered Trademark-
phosphate binder in the United States.

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The following table provides information regarding the change in
international product and service sales as a percentage of total product and
service revenue during the periods presented:

International product and
service revenue............... $100,875 $88,410 14% $209,778 $175,187 20%
% of total product and service
revenue....................... 34% 40% 37% 41%
</Table>

MARGINS

Product margin:
Genzyme General............... $171,571 $134,419 28% $325,883 $257,538 27%
% of total product revenue.... 63% 67% 62% 67%

Genzyme Biosurgery............ 22,302 13,377 66% 42,288 26,420 60%
% of total product revenue.... 8% 6% 8% 7%

Total product margin.......... $193,873 $147,796 31% $368,171 $283,958 30%
% of total product revenue.... 71% 73% 70% 74%

Service margin:
Genzyme General............... $ 7,688 $ 6,117 26% $ 15,636 $ 12,409 26%
% of total service revenue.... 32% 29% 33% 29%

Genzyme Biosurgery............ 3,119 3,263 (4)% 5,510 6,086 (9)%
% of total service revenue.... 13% 15% 11% 14%

Total service margin.......... $ 10,807 $ 9,380 15% $ 21,146 $ 18,495 14%
% of total service revenue.... 45% 44% 44% 44%

Total gross margin:
Genzyme General............... $179,259 $140,536 28% $341,519 $269,947 27%
% of total product and service
revenue..................... 60% 63% 60% 63%

Genzyme Biosurgery............ 25,421 $ 16,640 53% 47,798 32,506 47%
% of total product and service
revenue..................... 9% 8% 8% 8%

Total gross margin............ $204,680 $157,176 30% $389,317 $302,453 29%
% of total product and service
revenue..................... 69% 71% 68% 71%
</Table>

We provide a broad range of healthcare products and services. As a result,
our gross margin varies significantly based on the category of product or
service. Sales of therapeutic products, including Cerezyme-Registered Trademark-
enzyme, result in higher margins than sales of surgical or diagnostic products.

PRODUCT MARGIN

Product margins for products allocated to Genzyme General increased for the
three and six months ended June 30, 2001 as compared to the same periods a year
ago primarily as a result of

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<Page>
increased sales of Cerezyme-Registered Trademark- enzyme and
Renagel-Registered Trademark- phosphate binder during the first six months of
2001.

This increase was partially offset by charges to cost of products sold of
$4.7 million for the three months ended June 30, 2001 and $8.2 million for the
six months ended June 30, 2001 relating to the increased basis of the inventory
obtained in connection with our acquisition of GelTex in December 2000. The
decrease in Genzyme General's product margin as a percentage of product revenue
for the three and six month periods ended June 30, 2001 as compared to the same
periods a year ago is primarily attributable to increased sales of
Renagel-Registered Trademark- phosphate binder, a lower margin product. The
lower margin attributable to Renagel-Registered Trademark- phosphate binder was
offset in part by increased efficiencies and process improvements in
manufacturing Cerezyme-Registered Trademark- enzyme.

Product margins for products allocated to Genzyme Biosurgery increased
during the period due to increased sales of higher margin products such as
Synvisc-Registered Trademark- viscosupplementation products and devices for
minimally invasive cardiac surgery. This increase was partially offset by
charges to cost of products sold of $5.3 million for the three months ended
June 30, 2001 and $11.3 million for the six months ended June 30, 2001 to
amortize a portion of the increase to fair value of the inventory obtained in
connection with our acquisition of Biomatrix in December 2000. Without the
effect of these charges, Genzyme Biosurgery's product margins for the three
months ended June 30, 2001 would have increased 107% to $16.9 million and would
have increased 103% to $53.6 million for the six months ended June 30, 2001.

SERVICE MARGINS

Service margins for services allocated to Genzyme General for the three and
six months ended June 30, 2001, as compared to the same periods a year ago,
continued to increase primarily as a result of increased sales of our higher
margin DNA and cancer testing services.

Service margins for services allocated to Genzyme Biosurgery decreased for
the three and six months ended June 30, 2001 as a result of a decrease in
Carticel-Registered Trademark- chondrocytes and Epicel-Registered Trademark-
skin grafts service revenue and an increase in the fixed costs associated with
these services.

OPERATING EXPENSES

The increase in selling, general and administrative expenses for the three
and six months ended June 30, 2001 as compared to the same periods a year ago,
is attributable to:

- increased staffing to support the growth in several of Genzyme General's
product lines;

- increased expenditures to support the increased sales of
Cerezyme-Registered Trademark- enzyme, Renagel-Registered Trademark-
phosphate binder, Thyrogen-Registered Trademark- hormone and Fabrazyme-TM-
enzyme; and

- the addition of expenses from GelTex and Biomatrix, both of which we
acquired in December 2000.

The increase in research and development expenses for both the three and six
month periods ended June 30, 2001 as compared to the same period a year ago is
attributable to:

- increased spending on Genzyme General's programs to develop Fabrazyme-TM-
enzyme for the treatment of Fabry disease;

- the addition of spending on Synvisc-Registered Trademark-
viscosupplementation product as a result of our acquisition of Biomatrix;

- the addition of spending on the C. DIFFICILE colitis, DENSPM, iron
chelation, oral mucositis, anti-obesity, and GT102-279 programs as a
result of the acquisition of GelTex; and

54
<Page>
- increased spending on other internal programs.

Research and development expenses for the six months ended June 30, 2000
included a one-time charge of $19.5 million representing initial amounts payable
to Synpac (North Carolina), Inc. under a license granted to us by Synpac to
develop and commercialize a human alpha-glucosidase enzyme replacement therapy
for Pompe disease.

In connection with our acquisition of GelTex on December 14, 2000, we
converted options to purchase GelTex common stock into options to purchase
Genzyme General Stock. In accordance with FASB Interpretation No. 44,
"Accounting for Certain Transactions Involving Stock Compensation" ("FIN 44"),
at the date of acquisition, the intrinsic value for the unvested portion of
these options of $10.2 million was allocated to deferred compensation, a
component of stockholders' equity. This amount is being amortized to operating
expense over the remaining vesting period of one year from the date of
acquisition. The expense is being allocated to the appropriate expense
categories of our statement of operations based on the functional responsibility
of each employee or option holder. For the three and six months ended June 30,
2001, we recorded $2.3 million and $4.9 million of compensation expense related
to these options, of which $1.8 million and $4.0 million was charged to research
and development expense and $0.5 million and $0.9 million was charged to
selling, general and administrative expense. At June 30, 2001, $4.9 million
remained in deferred compensation, all of which will be fully amortized by
December 14, 2001.

AMORTIZATION OF INTANGIBLES

The increase in amortization of intangibles for both the three and six month
periods ended June 30, 2001 is primarily attributable to intangible assets
acquired in connection with the acquisitions of GelTex and Biomatrix in
December 2000 and Wyntek in June 2001.

PURCHASE OF IN-PROCESS RESEARCH AND DEVELOPMENT

WYNTEK

In connection with the acquisition of Wyntek, we allocated approximately
$8.8 million of the purchase price to IPR&D. Our management assumes
responsibility for determining the IPR&D valuation and expects the final
valuation will be completed upon closing the transaction. The fair value
assigned to purchased IPR&D was estimated by discounting, to present value, the
cash flows expected to result from the project once it has reached technological
feasibility. A discount rate consistent with the risks of the project was used
to estimate the present value of cash flows. In estimating future cash flows,
management considered other tangible and intangible assets required for
successful exploitation of the technology resulting from the purchased IPR&D
project and adjusted future cash flows for a charge reflecting the contribution
to value of these assets. The value assigned to purchased IPR&D was the amount
attributable to the efforts of Wyntek up to the time of acquisition. This amount
was estimated through application of the "stage of completion" calculation by
multiplying total estimated revenue for IPR&D by the percentage of completion of
the purchased research and development project at the time of acquisition.

55
<Page>
The discounting of net cash flows back to their present value is based on
the weighted average cost of capital, or WACC. The WACC calculation produces the
average required rate of return of an investment in an operating enterprise,
based on various required rates of return from investments in various areas of
that enterprise. The discount rate utilized in discounting the net cash flows
from purchased IPR&D was 25%. This discount rate is higher than our WACC due to
the inherent uncertainties surrounding the successful development of the
purchased IPR&D.

GELTEX AND BIOMATRIX

In December 2000, we acquired GelTex, a public company engaged in developing
therapeutic products based on polymer technology. We accounted for the
acquisition as a purchase and allocated it to Genzyme General. In connection
with the purchase of GelTex, we allocated approximately $118.0 million to
in-process research and development or IPR&D, which we recorded as a charge to
expense in our consolidated statement of operations for the year ended
December 31, 2000. In December 2000, we also acquired Biomatrix, a public
company engaged in the development and manufacture of viscoelastic biomaterials
for use in orthopaedic and other medical applications. We accounted for this
acquisition as a purchase and allocated it to Genzyme Biosurgery. In connection
with

56
<Page>
the purchase of Biomatrix, we allocated approximately $82.1 million to IPR&D,
which we recorded as a charge to expense in our consolidated statement of
operations for the year ended December 31, 2000. As of June 30, 2001, the
technological feasibility of both the GelTex and Biomatrix IPR&D projects had
not yet been reached and no significant departures from the assumptions included
in the valuation analysis had occurred. Substantial additional research and
development will be required prior to reaching technological feasibility. In
addition, each product needs to successfully complete a series of clinical
trials and to receive FDA or other regulatory approval prior to
commercialization. We cannot guarantee that these projects will ever reach
feasibility or develop into products that can be marketed profitably, nor can we
guarantee that we will be able to develop and commercialize these products
before our competitors develop and commercialize products for these indications.
If these products are not successfully developed and do not become commercially
viable, our results of operations could be materially affected.

Below is a brief description of the significant GelTex and Biomatrix IPR&D
projects, including an estimation of when management believes we may realize
revenues from the sales of these products in the respective application:

<Table>
<Caption>
ESTIMATED
COST TO
COMPLETE
VALUE AT AT
ACQUISITION JUNE 30,
PROGRAM PROGRAM DESCRIPTION DEVELOPMENT STATUS DATE 2001
- ------- ------------------------------------- ------------------------------- ----------- ---------
(IN MILLIONS)

GELTEX:
Renagel(R) Non-absorbed polymer phosphate binder - Clinical studies scheduled $ 19.7 $ 15.4
phosphate binder for the treatment of hyperphospatemia for completion in 2002, 2003,
and 2004

C. DIFFICILE Program to develop a toxin-binding - Phase 2 studies initiated in 37.4 45.0
colitis polymer for the treatment and 2000
prevention of antibiotic induced - U.S. marketing approval for
C. DIFFICILE colitis this product is expected by
2006

Oral Mucositis Focuses on the development of a - IND expected to be filed in 17.8 23.1
topical mouth rinse that combines the second quarter of 2002
barrier material and antimicrobial - Product launch expected in
polymers to create an anti-infective 2006
mechanism against oral mucositis, a
common side effect of radiation
therapy and chemotherapy

DENSPM Focuses on the development of a - Phase 1 safety study and 3.4 29.0
compound for the treatment of mild to dose-ranging studies
moderate psoriasis scheduled for 2001
- Product launch expected in
2006

Iron Chelation Focuses on the prevention and - Expected to file an IND in 15.7 28.9
treatment of transfusional or 2001
hereditary iron overload - Product launch expected in
2006

Anti-Obesity Builds on GelTex's expertise in - Expected to file an IND in 17.8 36.7
non-absorbed polymers and focuses on late 2002
the development of a compound that - Product launch expected in
will inhibit lipase and bind fat 2007
</Table>

57
<Page>

GT102-279 Second generation lipid-lowering - Development on hold $ 6.2 N/A(1)
compound with attributes of GelTex's
WelChol-TM- lipid lowering agent, but
requires 50% fewer tablets
------ ------
$118.0 $178.1
====== ======
- --------------------------
(1) Future development costs will be funded by our collaboration partner.

BIOMATRIX:
Visco- Use of elastoviscous solutions and - European marketing approval $ 33.8 $ 7.0
supplementation viscoelastic gels in disease expected by the end of 2001.
conditions to supplement tissues and U.S. trial scheduled for
body fluids, alleviating pain and 2002. Initiation of a next
restoring normal function generation
Synvisc-Registered Trademark-
program expected in the
fourth quarter of 2001 with
possible U.S. market approval
in the second half of 2004

Visco- Use of viscoelastic gels to provide - U.S. clinical studies of 8.6 6.5
augmentation scaffolding for tissue regeneration Hylaform-Registered Trademark-
or as an inert elastic filler for expected to start in the
tissues of the skin and the fourth quarter of 2001 with
subcutaneous and intermuscular market launch expected in the
connective tissues second half of 2003
- Hylagel-Registered Trademark-
Uro expected to be submitted
for FDA approval and approval
in Canada and Europe in 2002,
with product launch expected
in 2003

Visco- Use of viscoelastic gels and - Clinical studies have been $ 39.7 $ 7.3
separation membranes to separate tissues and to initiated in the U.S.,
decrease formation of adhesions and Germany, France, the United
excessive scars after surgery Kingdom and Belgium for
Sepragel-TM- Spine (formerly
Hylagel-Registered Trademark-
Nuro). Completion of patient
enrollment is expected by the
first quarter of 2002.
Patient follow up expected to
be completed by the first
quarter of 2003 with U.S.
marketing approval
anticipated in the first half
of 2004. European marketing
approval expected in the
second half of 2003, with
submissions for regulatory
approvals in the United
States and Canada thereafter.
- Expected product launch in
Europe by the second quarter
of 2002 and in the United
States by the fourth quarter
of 2002
------ ------
$ 82.1 $ 20.8
====== ======
</Table>

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<Page>
OTHER INCOME AND EXPENSES

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, INCREASE/ JUNE 30, INCREASE/
--------------------- (DECREASE) ------------------- (DECREASE)
2001 2000 % CHANGE 2001 2000 % CHANGE
--------- --------- ---------- -------- -------- ----------
(UNAUDITED, AMOUNTS IN THOUSANDS, EXCEPT PERCENTAGE DATA)

Equity in net loss of unconsolidated
affiliates.......................... $(11,796) $(11,313) 4% $(20,811) $(19,446) 7%
Gain on affiliate sale of stock....... -- -- N/A -- 20,270 100%
Gain (loss) on sale of equity
securities.......................... (1,532) 14,165 (111)% (1,532) 14,165 (111)%
Minority interest in net loss of
subsidiary.......................... 725 1,352 (46)% 1,999 2,208 (9)%
Other................................. (133) 5,193 (103)% (3,843) 5,195 (174)%
Investment income..................... 12,493 10,631 18% 22,641 20,575 10%
Interest expense...................... (10,766) (3,836) 181% (22,136) (7,775) 185%
-------- -------- -------- --------
Total other income (expenses)......... $(11,009) $ 16,192 (168)% $(23,682) $ 35,192 (167)%
======== ======== ======== ========
</Table>

EQUITY IN NET LOSS OF UNCONSOLIDATED AFFILIATES:

We record the results of the following joint ventures in equity in net loss
of unconsolidated affiliates:

<Table>
<Caption>
JOINT VENTURE PARTNER EFFECTIVE DATE PRODUCT/INDICATION GENZYME DIVISION
- ------------- ------------------------ -------------- ---------------------- -------------------

RenaGel LLC GelTex(1) June 1997 Renagel-Registered Trademark- Genzyme General
phosphate binder for
the reduction of serum
phosphorus in patients
with end-stage renal
disease
BioMarin/ Genzyme BioMarin Pharmaceutical September 1998 Aldurazyme-TM- enzyme Genzyme General
LLC Inc. for the treatment of
mucopolysaccharidosis-I
Pharming/ Genzyme Pharming Group, N.V. October 1998 Human alpha- Genzyme General
LLC glucosidase for the
treatment of Pompe
disease (transgenic
product)
Genzyme/ Pharming Pharming Group, N.V. June 2000 Human alpha- Genzyme General
Alliance LLC glucosidase for the
treatment of Pompe
disease (produced
using CHO cells)
Diacrin/Genzyme LLC Diacrin, Inc. October 1996 Products using porcine Genzyme Biosurgery
fetal cells for the (until May 1999);
treatment of Genzyme General
Parkinson's and (after May 1999)
Huntington's diseases
</Table>

- --------------------------

(1) We acquired GelTex in December 2000.

We currently own approximately 26% of the common stock of Genzyme
Transgenics and record our portion of its results in equity in net loss of
unconsolidated affiliates.

We record in equity in net loss of unconsolidated affiliates our portion of
the results of our joint ventures with BioMarin, Pharming and Diacrin. Included
in the three and six months ended June 30, 2001 are losses from Focal, which we
acquired in June 2001 and for which there are no similar amounts in the same
periods of 2000. Included in the three and six month periods ended June 30, 2000
are losses from RenaGel LLC, in which we and GelTex each own a 50% interest. We
acquired GelTex in December 2000. We have included the results of RenaGel LLC in
our consolidated financial statements from the date of acquisition. Our equity
in the net losses of RenaGel LLC were $4.5 million in the three months ended
June 30, 2000 and $6.0 million in the six months ended June 30, 2000.

59
<Page>
Excluding these losses, our equity in net loss of unconsolidated affiliates
increased in both the three and six months ended June 30, 2001 due primarily to
increased losses from our joint venture with BioMarin, our joint ventures with
Pharming, and our equity position in Genzyme Transgenics, which were offset in
part by decreased losses from our joint venture with Diacrin.

GAIN ON AFFILIATE SALE OF STOCK

During the six months ended June 30, 2000, in accordance with our policy
pertaining to affiliate sales of stock, we recognized a gain of $20.3 million
due to the issuance by Genzyme Transgenics, an unconsolidated affiliate, of
additional shares of its common stock. There were no similar transactions
recognized during the three and six months ended June 30, 2001.

GAIN (LOSS) ON INVESTMENT IN EQUITY SECURITIES

In April 2001, Antigenics, Inc. announced that it had entered into a
definitive merger agreement with Aronex Pharmaceuticals, Inc. The merger was
completed in July 2001. Under the terms of the merger agreement, we will receive
0.0594 shares of Antigenics common stock for each of our shares of Aronex common
stock. As a result of this merger, we recorded a $1.2 million realized loss to
reflect the fair market value of our investment in Aronex at June 30, 2001.

In the second quarter of 2000, we recorded a realized gain of $5.5 million
upon the sale of a portion of our investment in Genzyme Transgenics common
stock. We also recognized a realized gain of $7.6 million resulting from the
acquisition of Celtrix Pharmaceuticals, Inc. by Insmed Pharmaceuticals, Inc. in
which our shares of Celtrix common stock were exchanged on a 1-for-1 basis for
shares of Insmed common stock.

MINORITY INTEREST IN NET LOSS OF SUBSIDIARY

ATIII LLC is our joint venture with Genzyme Transgenics for the development
and commercialization of ATIII. We allocate our interest in ATIII LLC to Genzyme
General. Due to our combined direct and indirect interest in ATIII LLC, Genzyme
General consolidates the results of ATIII LLC and records Genzyme Transgenics'
portion of the losses of that joint venture as minority interest. Minority
interest increased in the three and six months ended June 30, 2001 due to a
change in the funding agreement for the joint venture in March 2001, effective
January 1, 2001, which increased Genzyme Transgenics' portion of the losses
incurred by ATIII LLC to 50% as compared to 30% for the same periods a year ago.

INVESTMENT INCOME

Our investment income increased for the three and six months ended June 30,
2001 due primarily to higher average invested cash balances as compared to the
three and six months ended June 30, 2000. In May 2001, we completed the private
placement of $575.0 million in principal of 3% convertible subordinated
debentures due May 2021. Net proceeds from the offering were approximately
$562.1 million. We allocated the principal balance of the debentures and the net
proceeds from the offering to Genzyme General. A portion of the net proceeds
from the private placement of the debentures was used to repay the
$150.0 million Genzyme General had drawn under our revolving credit facility in
December 2000.

INTEREST EXPENSE

Our interest expense increased for the three and six months ended June 30,
2001 as compared to the same periods a year ago primarily due to additional
interest expense resulting from the $150.0 million of debt drawn on our
revolving credit facility in December 2000 as part of the financing of the
GelTex acquisition and the private placement of $575.0 million in principal 3%
convertible debentures issued in May 2001. A portion of the net proceeds from
the private placement of the

60
<Page>
debentures was used to repay the $150.0 million Genzyme General had drawn under
our revolving credit facility in December 2000.

TAX PROVISION

Benefit from (provision for)
income taxes.................... $2,064 $(23,314) (109)% $2,734 $(35,168) (108)%
Effective tax rate................ 25% 32% 27% 30%
</Table>

Our tax rates for both periods vary from the U.S. statutory tax rate as a
result of our:

- provision for state income taxes;

- use of a foreign sales corporation;

- nondeductible amortization of intangibles;

- use of tax credits; and

- share of losses of unconsolidated affiliates.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

On January 1, 2001, we adopted Statement of Financial Accounting Standards
or SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as
amended by SFAS 137 and SFAS 138. SFAS 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that we
recognize all derivative instruments as either assets or liabilities in our
consolidated balance sheet and measure those instruments at fair value.
Subsequent changes in fair value will be reflected in income, unless the
derivative is part of a qualified hedging relationship.

In accordance with the transition provisions of SFAS 133, we recorded a
cumulative-effect adjustment of $4.2 million, net of tax, in our unaudited,
consolidated statement of operations for the six months ended June 30, 2001 to
record the fair value of certain common stock warrants held on January 1, 2001.
Transition adjustments pertaining to interest rate swaps designated as cash-flow
hedges and our foreign currency forward contracts were not significant. For the
three months ended June 30, 2001, we recorded a charge of $0.2 million in other
expense to reflect the change in the value of certain common stock warrants from
April 1, 2001 to June 30, 2001. For the six months ended June 30, 2001, we
recorded a charge of $3.8 million in other expense to reflect the change in
value of certain common stock warrants from January 1, 2001 to June 30, 2001. We
also recorded a charge of $0.5 million in other comprehensive income for the six
months ended June 30, 2001 to reflect the change in the value of our interest
rate swap contract during the period, net of tax.

In the normal course of business, we manage risks associated with foreign
exchange rates, interest rates and equity prices through a variety of
strategies, including the use of hedging transactions, executed in accordance
with our policies. Our hedging transactions include, but are not limited to, the
use of various derivative financial instruments. As a matter of policy, we do
not use derivative instruments unless there is an underlying exposure. Any
change in the value of our derivative instruments would be substantially offset
by an opposite change in the value of the underlying hedged items. We do not use
derivative instruments for trading or speculative purposes.

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<Page>
GENZYME GENERAL
A DIVISION OF GENZYME CORPORATION

The following discussion summarizes the key factors our management believes
necessary for an understanding of Genzyme General's financial statements.

The components of Genzyme General's combined statements of operations are
described in the following table:

Total revenues.................. $238,998 $186,694 28% $461,691 $357,320 29%
-------- -------- -------- --------

Cost of products and services
sold.......................... 58,086 45,995 26% 116,264 87,043 34%
Selling, general and
administrative................ 66,558 42,972 55% 125,089 81,194 54%
Research and development
(including research and
development related to
contracts).................... 42,405 15,391 176% 82,591 58,134 42%
Amortization of intangibles..... 18,182 2,011 804% 35,852 3,979 801%
Purchase of in-process research
and development............... 8,768 -- N/A 8,768 -- N/A
-------- -------- -------- --------
Total operating costs and
expenses.................... 193,999 106,369 82% 368,564 230,350 60%
-------- -------- -------- --------

Operating income................ 44,999 80,325 (44)% 93,127 126,970 (27)%
Other income (expenses), net.... (7,478) 14,576 (151)% (15,585) 32,084 (149)%
-------- -------- -------- --------

Income before income taxes...... 37,521 94,901 (60)% 77,542 159,054 (51)%
Provision for income taxes...... (15,803) (30,911) (49)% (30,679) (49,755) (38)%
-------- -------- -------- --------

Division net income before
cumulative effect of change in
accounting principle.......... 21,718 63,990 (66)% 46,863 109,299 (57)%
Cumulative effect of change in
accounting principle, net of
tax........................... -- -- -- 4,167 -- N/A
-------- -------- -------- --------
Division net income............. $ 21,718 $ 63,990 (66)% $ 51,030 $109,299 (53)%
======== ======== ======== ========
</Table>

REVENUES

The components of Genzyme General's total revenues are described in the
following table:

Product revenue................. $219,040 $171,470 28% $421,246 $326,809 29%
Service revenue................. 18,305 15,061 22% 36,537 30,181 21%
-------- -------- -------- --------
Total product and service
revenue..................... 237,345 186,531 27% 457,783 356,990 28%
Research and development
revenue....................... 1,653 163 914% 3,908 330 1,084%
-------- -------- -------- --------
Total revenues................ $238,998 $186,694 28% $461,691 $357,320 29%
======== ======== ======== ========
</Table>

62
<Page>
PRODUCT AND SERVICE REVENUES

The following table sets forth Genzyme General's product and service
revenues on a segment basis:

Product Revenue:
Therapeutics:
Cerezyme-Registered Trademark-
and
Ceredase-Registered Trademark-
enzymes................... $141,312 $134,854 5% $280,943 $263,459 7%
Renagel-Registered Trademark-
phosphate binder.......... 40,408 10,218 295% 69,003 10,218 575%
Thyrogen-Registered Trademark-
hormone................... 4,420 3,506 26% 8,600 6,867 25%
Other therapeutic
products.................. 2,083 -- N/A 4,579 1,852 147%
-------- -------- -------- --------
Total Therapeutics........ 188,223 148,578 27% 363,125 282,396 29%

Diagnostic Products........... 17,790 15,539 14% 34,214 30,777 11%
Other......................... 13,027 7,353 77% 23,907 13,636 75%
-------- -------- -------- --------
Total product revenue..... 219,040 171,470 28% 421,246 326,809 29%
Service Revenue:
Other......................... 18,305 15,061 22% 36,537 30,181 21%
-------- -------- -------- --------
Total product and service
revenue....................... $237,345 $186,531 27% $457,783 $356,990 28%
======== ======== ======== ========
</Table>

THERAPEUTICS

Genzyme General's continued increase in product revenue for both the three
and six month periods ended June 30, 2001 as compared to the same periods a year
ago, was primarily due to increased sales of Renagel-Registered Trademark-
phosphate binder, which is used to reduce serum phosphorus levels in patients
with end-stage renal disease on dialysis, and continued growth in sales of
Cerezyme-Registered Trademark- enzyme for the treatment of Type I Gaucher
disease. Genzyme General began recording revenues from
Renagel-Registered Trademark- phosphate binder during the second quarter of 2000
under an amended distribution arrangement with GelTex, which we acquired in
December 2000. Prior to this amendment, revenues from
Renagel-Registered Trademark- phosphate binder were recorded by RenaGel LLC, our
joint venture with GelTex, and were $8.0 million for the three month period
ended March 31, 2000.

Sales of Renagel-Registered Trademark- phosphate binder in both the three
and six months ended June 30, 2001 include sales of capsules and the new 800 mg
tablet formulation. Genzyme General launched the tablet formulation in the
United States during the third quarter of 2000. In the first quarter of 2001,
the higher-than-anticipated demand for the 800 mg tablet formulation and certain
production constraints resulted in a temporary shortage of this dosage form of
Renagel-Registered Trademark- phosphate binder. Patients taking the 800 mg
tablets were shifted to an equivalent dose of 400 mg
Renagel-Registered Trademark- tablets or 403 mg Renagel-Registered Trademark-
capsules while Genzyme General built an inventory of 800 mg tablets to support
our re-launch of this dosage form in June 2001. Despite the temporary shortage
of the 800mg tablet formulation, sales of Renagel-Registered Trademark-
phosphate binder increased significantly in each of the three and six months
ended June 30, 2001 in comparison to the same periods of 2000 due to
accelerating adoption of the product by nephrologists, as evidenced by
significant increases in both renewal prescriptions and new prescriptions.

The steady growth in sales of Cerezyme-Registered Trademark- enzyme in the
three and six months ended June 30, 2001 was attributable to Genzyme General's
continued identification of new Gaucher disease patients worldwide coupled with
significant investment in our global infrastructure that has continued to
increase international sales of this product. Additionally, Genzyme General
continues to market

63
<Page>
Ceredase-Registered Trademark- enzyme for the treatment of Gaucher disease,
although we have successfully converted virtually all Gaucher disease patients
to a treatment regimen using Cerezyme-Registered Trademark- enzyme.

Genzyme General's results of operations are highly dependent on sales of
Cerezyme-Registered Trademark- enzyme and a reduction in revenue from sales of
this product would adversely affect its results of operations. Revenue from
Cerezyme-Registered Trademark- enzyme would be impacted negatively if
competitors developed alternative treatments for Gaucher disease and the
alternative products gained commercial acceptance. Genzyme General is aware of
companies that have initiated efforts to develop competitive products and other
companies may do so in the future. Although orphan drug status for
Cerezyme-Registered Trademark- enzyme, which provided us with exclusive
marketing rights for Cerezyme-Registered Trademark- enzyme in the United States,
expired in May 2001, we continue to have patents protecting our method of
manufacturing Cerezyme-Registered Trademark- enzyme until 2010 and the
composition of Cerezyme-Registered Trademark- enzyme as made by that process
until 2013. The expiration of market exclusivity and orphan drug status in
May 2001 will likely subject Cerezyme-Registered Trademark- enzyme to increased
competition which may decrease the amount of revenue we receive from this
product or the growth of that revenue.

The following table provides information regarding the change in sales of
Genzyme General's Gaucher disease therapies as a percentage of total product
revenue during the periods presented:

Although sales of Genzyme General's Gaucher disease therapies continue to
increase, the decline as a percentage of total product revenue is a trend we
expect will continue in the second half of 2001. Genzyme General expects that
growth in the sales of Renagel-Registered Trademark- phosphate binder will
continue to increase. Revenue from sales of Renagel-Registered Trademark-
phosphate binder represented approximately 18% of Genzyme General's total
product revenue for the three month period ended June 30, 2001 as compared to 6%
for the same period a year ago. For the six month period ended June 30, 2001,
sales of Renagel-Registered Trademark- phosphate binder represented
approximately 16% of Genzyme General's total product revenue as compared to 3%
for the same period a year ago.

DIAGNOSTIC PRODUCTS

Diagnostic Products' revenues increased for the three and six-month periods
ended June 30, 2001 as compared to the same periods in 2000, due primarily to
increased sales of infectious disease testing products and HDL and LDL
cholesterol testing products. Also contributing to the increase for both periods
is the addition of sales of point of care rapid tests for pregnancy and
infectious diseases acquired through our acquisition of Wyntek, which we
acquired on June 1, 2001. Diagnostic Products' revenue also includes royalties
on product sales by Techne Corporation's biotechnology group.

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<Page>
OTHER PRODUCT AND SERVICE REVENUE

RESEARCH AND DEVELOPMENT REVENUE

INTERNATIONAL PRODUCT AND SERVICE REVENUE

A substantial portion of Genzyme General's revenue was generated outside of
the United States, as described in the table below. Most of these revenues were
attributable to sales of Cerezyme-Registered Trademark- enzyme. International
sales of Cerezyme-Registered Trademark- enzyme increased 4% to $71.4 million in
the three-month period ended June 30, 2001 from $68.8 million in the same period
last year. International sales of Cerezyme-Registered Trademark- enzyme
increased 10% to $149.2 million for the six month period ended June 30, 2001
from $135.8 million for the same period last year. Despite an approximate 6%
decline in the average exchange rate of the euro for both the three and six
month periods ended June 30, 2001 as compared to a year ago, international sales
of Cerezyme-Registered Trademark- enzyme increased for both periods due
primarily to the continued identification of new Gaucher disease patients
worldwide coupled with significant investment in our global infrastructure.
International product and service revenue as a percent of total product and
service revenue decreased in both the three and six months ended June 30, 2001
due primarily to increased sales of Renagel-Registered Trademark- phosphate
binder in the United States.

The following table provides information regarding the change in
international product and service sales as a percentage of total product and
service revenue during the periods presented:

International product and
service revenue............... $88,349 $79,235 12% $185,467 $157,007 18%
% of total product and service
revenue....................... 37% 42% 41% 44%
</Table>

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<Page>
MARGINS

Product margin.................. $171,571 $134,419 28% $325,883 $257,538 27%
% of product revenue............ 78% 78% 77% 79%

Service margin.................. 7,688 6,117 26% 15,636 12,409 26%
% of service revenue............ 42% 41% 43% 41%

Total gross margin.............. $179,259 $140,536 28% $341,519 $269,947 27%
% of total product and service
revenue....................... 76% 75% 75% 76%
</Table>

Genzyme General provides a broad range of healthcare products and services.
As a result, Genzyme General's gross margin may vary significantly based on the
category of product or service. Sales of therapeutic products, including
Cerezyme-Registered Trademark- enzyme, result in higher margins than diagnostic
products.

PRODUCT MARGIN

Product margin for the three and six month periods ended June 30, 2001, as
compared to the same periods a year ago, increased primarily as a result of
increased sales of Renagel-Registered Trademark-( ) phosphate binder and
Cerezyme-Registered Trademark- enzyme. This increase was partially offset by
charges to cost of products sold of $4.7 million for the three months ended
June 30, 2001 and $8.2 million for the six months ended June 30, 2001 relating
to the increased basis of the inventory obtained in connection with our
acquisition of GelTex in December 2000. Product margin as a percentage of
product revenue for the three month period ended June 30, 2001 was unchanged, as
compared to the same period a year ago, while decreasing slightly for the six
month period ended June 30, 2001, as compared to a year ago. This was primarily
attributable to the increased sales of Renagel-Registered Trademark- phosphate
binder, a lower margin product. Genzyme General began selling
Renagel-Registered Trademark- phosphate binder in April 2000. The lower margin
attributable to Renagel-Registered Trademark- phosphate binder was offset in
part by increased efficiencies and process improvements in manufacturing
Cerezyme-Registered Trademark- enzyme.

SERVICE MARGIN

Service margin for the three and six month periods ended June 30, 2001
increased in comparison to the same periods a year ago primarily as a result of
increased sales of our higher margin DNA and cancer testing services. While this
trend continued, service margin as a percentage of service revenue increased
only slightly for both the three and six-month periods ended June 30, 2001. This
was primarily attributable to service revenue increasing at a rate greater than
the rate of increase for cost of services sold for both periods. For the three
month period ending June 30, 2001, a service revenue increase of 22% was offset
by a 19% increase in the cost of services sold as compared to the same period a
year ago. For the six month period ending June 30, 2001, a service revenue
increase of 21% was offset by a 18% increase in the cost of services sold as
compared to the same period a year ago.

OPERATING EXPENSES

The increase in selling, general and administrative expenses for both the
three and six month periods ended June 30, 2001 as compared to same periods a
year ago is related to:

- increased staffing to support the growth in several of Genzyme General's
product lines;

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- increased expenditures to support the increased sales of
Cerezyme-Registered Trademark- enzyme, drive the growth in sales of
Renagel-Registered Trademark- phosphate binder and
Thyrogen-Registered Trademark- hormone, and prepare for the
commercialization of Fabrazyme-TM- enzyme; and

- the addition of expenses from GelTex, which was acquired in
December 2000.

The increase in research and development expenses for both the three and six
month periods ended June 30, 2001 as compared to the same period a year ago is
attributable to:

- the cost of post-marketing clinical development efforts for of
Renagel-Registered Trademark- phosphate binder, which was included in
equity in net gain (loss) of unconsolidated affiliates before we purchased
GelTex;

- the addition of spending on the C. DIFFICILE colitis, DENSPM, iron
chelation, oral mucositis, anti-obesity, and GT102-279 programs as a
result of our acquisition of GelTex; and

- increased spending on Genzyme General's program to develop Fabrazyme-TM-
enzyme for the treatment of Fabry disease; and on other internal programs.

In connection with our acquisition of GelTex on December 14, 2000, we
converted options to purchase GelTex common stock into options to purchase
Genzyme General Stock. In accordance with FIN 44, at the date of acquisition,
the intrinsic value for the unvested portion of these options of $10.2 million
was allocated to deferred compensation, a component of stockholders' equity.
This amount is being amortized to operating expense over the remaining vesting
period of one year from the date of acquisition. The expense is being allocated
to the appropriate expense categories of Genzyme General's statement of
operations based on the functional responsibility of each employee or option
holder. For the three months ended June 30, 2001, Genzyme General recorded
$2.3 million of compensation expense related to these options, of which
$1.8 million was charged to research and development expense and $0.5 million
was charged to selling, general and administrative expense. For the six months
ended June 30, 2001, Genzyme General recorded $4.9 million of compensation
expense related to these options, of which $4.0 million was charged to research
and development expense and $0.9 million was charged to selling, general and
administrative expense. At June 30, 2001, $4.9 million remained in deferred
compensation, a component of division equity, all of which will be fully
amortized by December 14, 2001.

AMORTIZATION OF INTANGIBLES

PURCHASE OF IN-PROCESS RESEARCH AND DEVELOPMENT

WYNTEK

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of the technology resulting from the purchased IPR&D project and adjusted future
cash flows for a charge reflecting the contribution to value of these assets.
The value assigned to purchased IPR&D was the amount attributable to the efforts
of Wyntek up to the time of acquisition. This amount was estimated through
application of the "stage of completion" calculation by multiplying total
estimated revenue for IPR&D by the percentage of completion of the purchased
research and development project at the time of acquisition.

68
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process and file its application for marketing approval in early 2002 and begin
selling the product during the second half of 2002. Studies to date have
demonstrated the viability of this product but there can be no assurance that
the regulatory authorities will approve this product. A discount rate of 25% was
used in valuing the projected cash flows.

GELTEX

In December 2000, in connection with the acquisition of GelTex, Genzyme
General allocated approximately $118.0 million of the purchase price to
in-process research and development or IPR&D which Genzyme General recorded as a
charge to expense in its statement of operations for the year-ended
December 31, 2000. As of June 30, 2001, the technological feasibility of the
projects had not yet been reached and no significant departures from the
assumptions included in the valuation analysis had occurred. Substantial
additional research and development will be required prior to reaching
technological feasibility. In addition, each product needs to successfully
complete a series of clinical trials and to receive FDA or other regulatory
approval prior to commercialization. We cannot guarantee that these projects
will ever reach feasibility or develop into products that can be marketed
profitably, nor can we guarantee that Genzyme General will be able to develop
and commercialize these products before our competitors develop and
commercialize products for these indications. If these products are not
successfully developed and do not become commercially viable, our results of
operations could be materially affected.

Below is a brief description of the GelTex IPR&D projects, including an
estimation of when management believes Genzyme General may realize revenues from
the sales of these products in the respective application:

Renagel(R) Non-absorbed polymer phosphate binder - Clinical studies scheduled $ 19.7 $ 15.4
phosphate binder for the treatment of hyperphospatemia for completion in 2002, 2003,
and 2004

C. DIFFICILE Program to develop a toxin-binding - Phase 2 studies initiated 37.4 45.0
colitis polymer for the treatment and in 2000
prevention of antibiotic induced - U.S. marketing approval for
C. DIFFICILE colitis this product is expected by
2006

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Iron Chelation Focuses on the prevention and - Expected to file an IND in 15.7 28.9
treatment of transfusional or 2001
hereditary iron overload - Product launch expected in
2006

GT102-279 Second generation lipid-lowering - Development on hold 6.2 N/A(1)
compound with attributes of GelTex's
WelChol-TM- lipid lowering agent, but
requires 50% fewer tablets
------ ------
$118.0 $178.1
====== ======
</Table>

- --------------------------

(1) Future development costs will be funded by our collaboration partner.

OTHER INCOME AND EXPENSES

Equity in net loss of
unconsolidated affiliates...... $(11,016) $(11,313) (3)% $(19,495) $(19,446) --
Gain on affiliate sale of
stock.......................... -- -- -- -- 20,270 (100)%
Gain (loss) on investment in
equity securities.............. (1,532) 14,165 (111)% (1,532) 14,165 (111)%
Minority interest in net loss of
subsidiary..................... 725 1,352 (46)% 1,999 2,208 (9)%
Other............................ (171) 5,174 (103)% (3,888) 5,153 (175)%
Investment income................ 11,798 8,639 37% 21,011 16,726 26%
Interest expense................. (7,282) (3,441) 112% (13,680) (6,992) 96%
-------- -------- -------- --------
Total other income
(expenses)................. $(7,478) $14,576 (151)% $(15,585) $ 32,084 (149)%
======== ======== ======== ========
</Table>

EQUITY IN NET LOSS OF UNCONSOLIDATED AFFILIATES

Genzyme General records in equity in net loss of unconsolidated affiliates
its portion of the results of our joint ventures with BioMarin, Pharming and
Diacrin. Included in the three and six month periods ended June 30, 2000 are
losses from RenaGel LLC, in which we and GelTex each own a 50% interest. We
acquired GelTex in December 2000. We have included the results of RenaGel LLC in
our combined financial statements from the date of acquisition.

Genzyme General's equity in the net losses of RenaGel LLC were $4.5 million
in the three months ended June 30, 2000 and $6.0 million in the six months ended
June 30, 2000. Excluding these losses, Genzyme General's equity in net loss of
unconsolidated affiliates increased in both the three and six months ended
June 30, 2001 due primarily to increased losses from our joint venture with
BioMarin,

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our joint ventures with Pharming, and our equity position in Genzyme Transgenics
which were offset in part by decreased losses from our joint venture with
Diacrin.

GAIN ON AFFILIATE SALE OF STOCK

During the six months ended June 30, 2000, in accordance with our policy
pertaining to affiliate sales of stock, Genzyme General recognized a gain of
$20.3 million due to the issuance by Genzyme Transgenics, an unconsolidated
affiliate, of additional shares of Genzyme Transgenics Corporation common stock.
There were no similar transactions during the three and six-month periods ended
June 30, 2001.

GAIN (LOSS) ON INVESTMENT IN EQUITY SECURITIES

In April 2001, Antigenics announced that it had entered into a definitive
merger agreement with Aronex. The merger was completed in July 2001. Under the
terms of the merger agreement, we will receive 0.0594 shares of Antigenics
common stock for each of our shares of Aronex common stock. As a result of this
merger, we recorded a $1.2 million realized loss to reflect the fair market
value of our investment in Aronex at June 30, 2001.

MINORITY INTEREST IN NET LOSS OF SUBSIDIARY

Due to our combined direct and indirect interest in ATIII LLC, Genzyme
General consolidates the results of ATIII LLC and records Genzyme Transgenics'
portion of the losses of that joint venture as minority interest. Minority
interest increased in the three and six months ended June 30, 2001 due to a
change in the funding agreement for the joint venture in March 2001, effective
January 1, 2001, which increased Genzyme Transgenics' portion of the losses
incurred by ATIII LLC to 50% as compared to 30% for the same periods a year ago.

INVESTMENT INCOME

Genzyme General's investment income increased for the three and six months
ended June 30, 2001 due primarily to higher average cash balances as compared to
the same periods a year ago. In May 2001, we completed the private placement of
$575.0 million in principal of 3% convertible subordinated debentures due
May 2021. Net proceeds from the offering were approximately $562.1 million. We
allocated the principal balance of the debentures and the net proceeds from the
offering to Genzyme General. Genzyme General used a portion of the net proceeds
from the private placement of the debentures to repay the $150.0 million it had
drawn under our revolving credit facility in December 2000.

INTEREST EXPENSE

Genzyme General's interest expense increased for the three and six months
ended June 30, 2001 as compared to the same periods a year ago primarily due to
additional interest expense resulting from the $150.0 million of debt drawn on
our revolving credit facility in December 2000 as part of the financing of the
GelTex acquisition and the private placement of $575.0 million in principal 3%
convertible debentures issued in May 2001. Genzyme General used a portion of the
net proceeds from the private placement of the debentures to repay the
$150.0 million it had drawn under our revolving credit facility in
December 2000.

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TAX PROVISION

<Table>
<Caption>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, INCREASE/ JUNE 30, INCREASE/
--------------------- (DECREASE) --------------------- (DECREASE)
2001 2000 % CHANGE 2001 2000 % CHANGE
--------- --------- ---------- --------- --------- ----------
(UNAUDITED, AMOUNTS IN THOUSANDS EXCEPT PERCENTAGE DATA)

Provision for income taxes.... $(15,803) $(30,911) (49)% $(30,679) $(49,755) (38)%
Effective tax rate............ 42% 33% 40% 31%
</Table>

Genzyme General's tax rates for all periods vary from the U.S. statutory tax
rate as a result of its:

- provision for state income taxes;

- use of a foreign sales corporation;

- nondeductible amortization of intangibles; and

- use of tax credits.

The increase in Genzyme General's effective tax rate for the both the three
and six month periods ending June 30, 2001 as compared to the same periods a
year ago was primarily attributable to an increase in nondeductable amortization
of intangibles, consisting largely of goodwill resulting from our December 2000
acquisition of GelTex. The tax benefit for the three and six months ended
June 30, 2001 includes a $2.2 million benefit resulting from the release of
excess tax reserves.

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

On January 1, 2001, we adopted SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended by SFAS 137 and SFAS 138.
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that we recognize all
derivative instruments as either assets or liabilities in our combined balance
sheet and measure those instruments at fair value. Subsequent changes in fair
value will be reflected in income, unless the derivative is part of a qualified
hedging relationship.

In accordance with the transition provisions of SFAS 133, Genzyme General
recorded a cumulative-effect adjustment of $4.2 million, net of tax, in its
unaudited, combined statement of operations for the six months ended June 30,
2001 to recognize the fair value of certain common stock warrants held on
January 1, 2001. Transition adjustments pertaining to interest rate swaps
designated as cash-flow hedges and foreign currency forward contracts allocated
to Genzyme General were not significant. For the three months ended June 30,
2001, Genzyme General recorded a charge of $0.2 million in other expense to
reflect the change in value of certain common stock warrants from April 1, 2001
to June 30, 2001. Genzyme General also recorded a charge of $0.3 million in
division equity to reflect the change in value of our interest rate swaps during
the three month period, net of tax. For the six months ended June 30, 2001,
Genzyme General recorded a charge of $3.8 million in other expense to reflect
the change in value of certain common stock warrants from January 1, 2001 to
June 30, 2001. Genzyme General also recorded a charge of $0.5 million in
division equity for the six months ended June 30, 2001, to reflect the change in
value of our interest rate swap contract during the period, net of tax.

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instruments would be substantially offset by an opposite change in the value of
the underlying hedged items. We do not use derivative instruments for trading or
speculative purposes.

GENZYME BIOSURGERY
A DIVISION OF GENZYME CORPORATION

In June 2001, we acquired Focal Inc., a leading developer of synthetic
bipolymers used in surgery. We allocated the acquired assets and liabilities to
Genzyme Biosurgery. The results of operations of Focal will be included in our
results of Genzyme Biosurgery from June 30, 2001, the date of acquisition.

The components of Genzyme Biosurgery's combined statements of operations are
described in the following table:

Total revenues................... $60,364 $36,256 66% $114,520 $ 71,205 61%
-------- -------- -------- --------
Cost of products and services
sold........................... 34,942 19,615 78% 66,717 38,677 72%
Selling, general and
administrative................. 35,297 22,668 56% 65,989 44,807 47%
Research and development......... 11,956 8,453 41% 22,675 17,295 31%
Amortization of intangibles...... 11,992 1,427 740% 23,313 2,853 717%
-------- -------- -------- --------
Total operating costs and
expenses....................... 94,187 52,163 81% 178,694 103,632 72%
-------- -------- -------- --------
Operating loss................... (33,823) (15,907) 113% (64,174) (32,427) 98%
Other income (expenses), net..... (3,785) 1,509 (351)% (8,761) 3,015 (391)%
-------- -------- -------- --------
Division net loss................ $(37,608) $(14,398) 161% $(72,935) $(29,412) 148%
======== ======== ======== ========
</Table>

REVENUES

Cardiothoracic................... $17,367 $19,786 (12)% $ 35,656 $ 39,436 (10)%
Orthopaedics..................... 26,488 4,577 479% 46,905 9,109 415%
Biosurgical specialties.......... 16,508 11,892 39% 31,954 22,638 41%
------- ------- -------- --------
Total product and service
revenue.................. 60,363 36,255 66% 114,515 71,183 61%
Research and development
revenue........................ 1 1 -- 5 22 (77)%
------- ------- -------- --------
Total revenues............. $60,364 $36,256 66% $114,520 $ 71,205 61%
======= ======= ======== ========
</Table>

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The decrease in cardiothoracic revenue in the three and six months ended
June 30, 2001 when compared to the same periods of 2000 was due to decreased
sales of chest drainage systems resulting from competitive pricing pressures in
that market as well as the withdrawal from certain commodity suture lines in
Europe. The decreases were offset, in part, by the continued growth in the
minimally invasive cardiac surgery products and the sales revenue from the
FocalSeal-Registered Trademark--L surgical sealant, which was added to the
cardiothoracic product category in the third quarter of 2000 pursuant to a
distribution and marketing agreement with Focal which, prior to our acquisition
of Focal in June 2001, provided us with exclusive distribution rights for this
product in North America.

The orthopaedics product revenue increase for the three and six months ended
June 30, 2001 when compared to the same periods of 2000 was primarily due to
sales of Synvisc-Registered Trademark- viscosupplementation product, which
product we added to the orthopaedics product category in December 2000 through
our acquisition of Biomatrix.

The increase in biosurgical specialties product revenue in the three and six
months ended June 30, 2001 when compared to the same periods of 2000 was due to
increases in sales of Seprafilm-TM- bioresorbable membrane and Sepramesh-TM-
biosurgical composite. An increase in sales to original equipment manufacturers
and sales generated from Hylaform-Registered Trademark- and skin care products,
which were added to the biosurgical specialties product category in December
2000 also contributed to the overall increase in biosurgical specialties product
revenue.

International revenue as a percentage of total sales for the three months
ended June 30, 2001 was 21% as compared to 25% in the same period of 2000.
International sales as a percentage of total sales for the six months ended
June 30, 2001 was 21% as compared to 26% in the same period of 2000.

MARGINS

Product margin.................... $22,302 $13,377 67% $42,288 $26,420 60%
% of product revenue.............. 41% 45% 41% 45%

Service margin.................... $ 3,119 $ 3,263 (4)% $ 5,510 $ 6,086 (9)%
% of service revenue.............. 53% 52% 48% 50%

Total gross margin................ $25,421 $16,640 53% $47,798 $32,506 47%
% of total product and service
revenue......................... 42% 46% 42% 46%
</Table>

Genzyme Biosurgery provides a broad range of healthcare products and
services. As a result, Genzyme Biosurgery's gross margins vary significantly
depending on the market conditions of each product or service.

In December 2000, we acquired Biomatrix and adjusted the acquired inventory
to fair value, resulting in an increase to inventory of $11.3 million. This
amount was amortized to cost of products sold as the acquired inventory was
sold. During the quarter ending June 30, 2001, the remaining acquired inventory
was sold and the related $5.3 million of the $11.3 million was charged to cost
of products sold. Additionally, a $1.0 million charge related to the
underfunding of an acquired retirement plan was included in cost of products
sold.

Excluding the adjustments described above, product margins increased in the
three and six months ended June 30, 2001 as a result of an increase in sales of
higher margin products such as Synvisc-Registered Trademark-
viscosupplementation product and devices for minimally invasive cardiac surgery.

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Service margins decreased for the three and six months ended June 30, 2001
as a result of a decrease in Epicel-Registered Trademark- skin grafts service
revenue with no reduction in the fixed costs associated with these services.

OPERATING EXPENSES

The increase in selling, general and administrative expenses for the three
months ended June 30, 2001 as compared to the same period in 2000 was due to the
additional selling, general and administrative expenses related to the Biomatrix
business, which we purchased in December 2000. In addition, $5.5 million in
costs associated with the consolidation of European operations and $0.8 million
for litigation costs also increased these expenses during the two periods.

Genzyme Biosurgery's research and development expenses increased during the
three months ended June 30, 2001 as compared to the same period in 2000 due to
an increase in spending for orthopaedics development programs, primarily as a
result of the addition of the Synvisc-Registered Trademark- viscosupplementation
product to the orthopaedics line in December 2000 through our acquisition of
Biomatrix.

AMORTIZATION OF INTANGIBLES

The increase in amortization of intangibles for the three and six months
ended June 30, 2001 is primarily attributable to intangible assets acquired
since year end in connection with our acquisitions of Biomatrix in
December 2000 and the GDP Class A limited partnership interests in
January 2001.

PURCHASE OF IN-PROCESS RESEARCH AND DEVELOPMENT

In December 2000, we acquired Biomatrix, a public company engaged in the
development and manufacture of viscoelastic biomaterials for use in orthopaedic
and other medical applications. We accounted for this acquisition as a purchase
and allocated it to Genzyme Biosurgery. In connection with the purchase of
Biomatrix, we allocated approximately $82.1 million to IPR&D, which Genzyme
Biosurgery recorded as a charge to expense in its statement of operations for
the year ended December 31, 2000.

As of June 30, 2001, the technological feasibility of the Biomatrix IPR&D
projects had not yet been reached and no significant departures from the
assumptions included in the valuation analysis had occurred. Substantial
additional research and development will be required prior to reaching
technological feasibility. In addition, each product needs to successfully
complete a series of clinical trials and to receive FDA or other regulatory
approval prior to commercialization. We cannot guarantee that these projects
will ever reach feasibility or develop into products that can be marketed
profitably, nor can we guarantee that we will be able to develop and
commercialize these products before our competitors develop and commercialize
products for these indications. If these products are not successfully developed
and do not become commercially viable, our results of operations could be
materially affected.

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Below is a brief description of the Biomatrix IPR&D projects, including an
estimation of when management believes we may realize revenues from the sales of
these products in the respective application:

<Table>
<Caption>
ESTIMATED
COST TO
COMPLETE
VALUE AT AT
ACQUISITION JUNE 30,
PROGRAM PROGRAM DESCRIPTION DEVELOPMENT STATUS DATE 2001
- ------- ---------------------------------- -------------------------------- ----------- ---------
(IN MILLIONS)

Visco- Use of elastoviscous solutions and - European marketing approval $33.8 $ 7.0
supplementation viscoelastic gels in disease expected by the end of 2001.
conditions to supplement tissues U.S. trial scheduled for 2002.
and body fluids, alleviating pain Initiation of a next
and restoring normal function generation
Synvisc-Registered Trademark-
program expected in the fourth
quarter of 2001 with possible
U.S market approval in the
second half of 2004

Visco- Use of viscoelastic gels to - U.S. clinical studies of 8.6 6.5
augmentation provide scaffolding for tissue Hylaform-Registered Trademark-
regeneration or as an inert expected to start in the
elastic filler for tissues of the fourth quarter of 2001 with
skin and the subcutaneous and market launch expected in the
intermuscular connective tissues second half of 2003
- Hylagel-Registered Trademark-
Uro expected to be submitted for
FDA approval and approval in
Canada and Europe in 2002,
with product launch expected
in 2003

Visco- Use of viscoelastic gels and - Clinical studies have been $39.7 $ 7.3
separation membranes to separate tissues and initiated in the U.S.,
to decrease formation of adhesions Germany, France, the United
and excessive scars after surgery Kingdom and Belgium for
Sepragel-TM- Spine (formerly
Hylagel-Registered Trademark-
Nuro). Completion of patient
enrollment is expected by the
first quarter of 2002. Patient
follow-up expected to be
completed by the first quarter
of 2003 with U.S. marketing
approval anticipated in the
first half of 2004. European
marketing approval expected in
the second half of 2003, with
submissions for regulatory
approvals in the United States
and Canada thereafter
- Expected product launch in
Europe by the second quarter
of 2002 and in the United
States by the fourth quarter
of 2002
----- -----
$82.1 $20.8
===== =====
</Table>

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OTHER INCOME AND EXPENSES

Equity in net loss of
unconsolidated affiliate........ $ (780) $ -- N/A $(1,316) $ -- N/A
Other............................. 38 19 100% 45 42 7%
Investment income................. 427 1,815 (76)% 939 3,599 (74)%
Interest expense.................. (3,470) (325) 968% (8,429) (626) 1,246%
------- ------ ------- ------
Total other income (expenses)... $(3,785) $1,509 (351)% $(8,761) $3,015 (391)%
======= ====== ======= ======
</Table>

EQUITY IN NET LOSS OF UNCONSOLIDATED AFFILIATES

In January 2001, Focal completed the exercise of its option to require us to
purchase $5.0 million in Focal common stock at a price of $2.06 per share. After
that purchase we held approximately 22% of the outstanding shares of Focal
common stock and began accounting for our investment under the equity method of
accounting. We allocated our investment in Focal to Genzyme Biosurgery. Genzyme
Biosurgery records in equity in net loss of unconsolidated affiliate its portion
of the results of Focal. Genzyme Biosurgery's equity in net loss of
unconsolidated affiliate increased for the three and six months ended June 30,
2001 when compared to the same period in 2000 because Genzyme Biosurgery did not
own an equity interest in Focal in 2000. On June 30, 2001, we acquired the
remaining 78% of the outstanding shares in an exchange of shares of Biosurgery
Stock for shares of Focal common stock.

INVESTMENT INCOME

Investment income decreased as a result of lower average cash balances in
the first three and six months of 2001 when compared to the first three and six
months of 2000.

INTEREST EXPENSE

Interest expense increased primarily as a result of the $218.0 million of
indebtedness outstanding as of June 30, 2001, under the portion of our revolving
credit facility that we allocated to Genzyme Biosurgery. In December 2000,
Genzyme Biosurgery drew $200.0 million under this facility to finance a portion
of the cash component of the Biomatrix merger consideration.

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GENZYME MOLECULAR ONCOLOGY
A DIVISION OF GENZYME CORPORATION

The following discussion summarizes the key factors our management believes
necessary for an understanding of Genzyme Molecular Oncology's financial
statements.

The components of Genzyme Molecular Oncology's combined statements of
operations are described in the following table:

Total revenues................... $ 1,279 $ 963 33% $ 2,691 $ 3,518 (24)%
------- ------- -------- --------
Cost of revenues................. 485 139 249% 1,029 195 428%
Selling, general and
administrative................. 1,811 1,788 1% 3,702 2,978 24%
Research and development
(including research and
development related to
contracts)..................... 7,568 4,594 65% 13,229 8,652 53%
Amortization of intangibles...... -- 2,464 (100)% -- 5,420 (100)%
------- ------- -------- --------
Total operating costs and
expenses..................... 9,864 8,985 10% 17,960 17,245 4%
------- ------- -------- --------
Operating loss................... (8,585) (8,022) (7)% (15,269) (13,727) (11)%
Other income (expenses), net..... 254 107 137% 664 93 614%
------- ------- -------- --------
Loss before taxes................ (8,331) (7,915) 5% (14,605) (13,634) 7%
Tax benefit...................... -- 552 (100)% -- 1,214 (100)%
------- ------- -------- --------
Division net loss................ $(8,331) $(7,363) 13% $(14,605) $(12,420) (18)%
======= ======= ======== ========
</Table>

REVENUES

The components of Genzyme Molecular Oncology's revenues are described in the
following table:

Licensing revenue................ $ 548 $ 920 (40)% $ 1,212 $ 3,470 (65)%
Royalty revenue.................. 28 43 (35)% 73 48 52%
Research and development
revenue........................ 703 -- N/A 1,406 -- N/A
------- ------ -------- --------
Total revenues................. $ 1,279 $ 963 33% $ 2,691 $ 3,518 (24)%
======= ====== ======== ========
</Table>

Licensing revenue in the three and six months ended June 30, 2001 included
revenue recognized from a technology access fee associated with the cancer
antigen discovery agreement that Genzyme Molecular Oncology entered into with
Purdue Pharma, L.P. in the fourth quarter of 2000 and from payments received
under cancer diagnostic and SAGE-TM- license agreements. Licensing revenue
decreased as compared to the same periods of 2000, due to a $2.0 million
development milestone payment received in the first quarter of 2000 under a
license agreement with Schering-Plough Ltd. for which no similar payment was
received in 2001.

Research and development revenue in the three and six months ended June 30,
2001 was solely attributable to research performed in connection with Genzyme
Molecular Oncology's discovery agreement with Purdue Pharma.

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COST OF REVENUE

Genzyme Molecular Oncology's cost of revenue includes:

- work performed on the cancer antigen discovery agreement with Purdue
Pharma; and

- royalties paid to third parties.

Cost of revenue increased in the three and six months ended June 30, 2001 as
a result of the work performed under the Purdue Pharma discovery agreement that
started in the fourth quarter of 2000.

OPERATING EXPENSES

Genzyme Molecular Oncology's selling, general and administrative expenses
increased for the three and six months ended June 30, 2001 as a result of
enhanced business development efforts.

Research and development expenses increased for the three and six months
ended June 30, 2001 as compared to the same period of last year. The increase
was primarily attributable to growth in the number of Genzyme Molecular
Oncology's cancer vaccine clinical trials from two to five, additional
investment in its dendritic-tumor cell fusion program and increased activity in
its antigen discovery programs.

AMORTIZATION OF INTANGIBLES

Genzyme Molecular Oncology's amortization of intangibles is attributable to
intangible assets acquired in connection with the acquisition of
PharmaGenics, Inc. in June 1997. Because Genzyme Molecular Oncology fully
amortized these intangible assets in June 2000, there were no amortization
expenses for the three months or the six months ended June 30, 2001.

OTHER INCOME AND EXPENSE

Genzyme Molecular Oncology's other income increased in the three months
ended June 30, 2001 due to an increase in interest income that is attributable
to higher average cash balances. Interest expense decreased in the three and six
months ended June 30, 2001, as compared to the same period of 2000, due to the
May 2000 repayment of $5.0 million that Genzyme Molecular Oncology borrowed
under our revolving credit facility. This amount was outstanding during the
first quarter of 2000.

TAX BENEFIT

As part of the acquisition of PharmaGenics in 1997, Genzyme Molecular
Oncology recorded a deferred tax liability of $7.6 million resulting from the
difference between the book and tax basis of the acquired completed technology.
Amortization of this deferred tax benefit was completed in the second quarter of
2000.

B. LIQUIDITY AND CAPITAL RESOURCES

GENZYME CORPORATION

At June 30, 2001, we had cash, cash equivalents, and short- and long-term
investments of $994.2 million, an increase of $354.5 million from December 31,
2000.

We generated $62.7 million in cash from our operations for the six months
ended June 30, 2001.

Our investing activities utilized $334.5 million in cash for the six months
ended June 30, 2001. Investing activities used:

- $148.8 million for our net investment activity;

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- $25.7 million as payment for our purchase of all of the GDP Class A
limited partnership interests as described below;

- $60.0 million to fund the acquisition of Wyntek, net of cash acquired;

- $5.0 million of cash to purchase additional shares of Focal common stock;

- $72.1 million to fund purchases of property, plant and equipment; and

- $22.7 million to fund our investments in unconsolidated affiliates.

During the six months ended June 30, 2001, we received $59.1 million of cash
from the exercise of stock options and the purchase of shares under our employee
stock plans. Our financing activities used $2.0 million to repay bank
overdrafts.

In January 2001, we purchased all of the outstanding Class A limited
partnership interests of GDP for a payment of approximately $25.7 million in
cash plus royalties on sales of certain Sepra-TM- products for ten years. We
allocate our interest in GDP to Genzyme Biosurgery. As a result of the
acquisition, significant control over the activities of GDP passed to us. The
acquisition was accounted for as a purchase and the entire purchase price was
allocated to the fair value of the intangible assets acquired and goodwill,
which will be amortized over eight or ten years depending upon the asset
classification.

In January 2001, Focal, Inc., a public company and developer of synthetic
biopolymers used in surgery, exercised its option to require us to purchase
$5.0 million in Focal common stock at a price of $2.06 per share. After that
purchase we held approximately 22% of the outstanding shares of Focal common,
stock and began accounting for our investment under the equity method of
accounting. We allocated this investment to Genzyme Biosurgery. On June 30,
2001, we acquired the remaining 78% of the outstanding shares in an exchange of
shares of Biosurgery Stock for shares of Focal common stock. Focal shareholders
received 0.1545 of a share of Biosurgery Stock for each share of Focal common
stock they held. We issued approximately 2.1 million shares of Biosurgery Stock
as merger consideration. We allocated the acquired assets and liabilities to
Genzyme Biosurgery and accounted for the acquisition as a purchase.

In May 2001, we completed the private placement of $575.0 million in
principal of 3% convertible subordinated debentures due May 2021. Net proceeds
from the offering were approximately $562.1 million. We have allocated the
principal amount of the debentures and the net proceeds from the offering to
Genzyme General. We will pay interest on these debentures on May 15 and
November 15 of each year using cash allocated to Genzyme General. The first
interest payment will be made on November 15, 2001. The debentures are
convertible, upon the satisfaction of certain conditions, into shares of Genzyme
General Stock at an initial conversion price of $70.30 per share. The conversion
price is subject to adjustments. Holders of the debentures may require us to
repurchase all or part of their debentures for cash on May 15, 2006, 2011 and
2016, at a price equal to 100% of the principal amount of the debentures plus
accrued interest through the date prior to the date of purchase. Additionally,
if certain fundamental changes occur, each holder may require us to repurchase,
for cash, all or a portion of the holder's debentures. On or after May 20, 2004,
we may redeem for cash all or part of the debentures that have not previously
been converted or repurchased. Genzyme General used a portion of these proceeds
to repay the $150.0 million it had drawn under our revolving credit facility in
December 2000 to finance a portion of the cash component of the consideration
for the GelTex acquisition. Genzyme General expects to utilize the remaining
proceeds from the sale of the debentures for working capital and general
corporate purposes.

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Stock by means of a stock dividend paid to Genzyme General division stockholders
of record on May 24, 2001. We distributed a total of 97,184,967 shares of
Genzyme General Stock to Genzyme General division stockholders in connection
with the stock split. All share and per share amounts for Genzyme General Stock
have been retroactively revised to reflect the two-for-one stock split.

In June 2001, we acquired all of the outstanding capital stock of Wyntek
Diagnostics, Inc. for $65.0 million in cash. We allocated the acquisition to
Genzyme General and accounted for the acquisition as a purchase.

We have access to a $500.0 million revolving credit facility,
$150.0 million of which matures in December 2001 and $350.0 million of which
matures in December 2003. At December 31, 2000, $368.0 million was outstanding
under this facility, $150.0 million of which was allocated to Genzyme General
and $218.0 million of which was allocated to Genzyme Biosurgery. In May 2001,
Genzyme General repaid the $150.0 million Genzyme General had drawn under this
facility in December 2000 to finance a portion of the cash component of the
GelTex merger consideration. At June 30, 2001, $18.0 million remained
outstanding under the portion of the facility that matures in December 2001 and
$200.0 million was outstanding under the portion of the facility that matures in
December 2003, all of which was allocated to Genzyme Biosurgery. Borrowings
under this facility bear interest at LIBOR plus an applicable margin.

At June 30, 2001, $15.0 million of Genzyme General's cash remained available
to Genzyme Molecular Oncology under a $30.0 million interdivisional financing
arrangement with Genzyme General. Under the terms of this arrangement, Genzyme
Molecular Oncology may draw down funds as needed each quarter in exchange for
Molecular Oncology designated shares based on the fair market value (as defined
in our charter) of Molecular Oncology Stock at the time of the draw. Molecular
Oncology designated shares are shares of Molecular Oncology Stock that are not
issued and outstanding, but which our board of directors may issue, sell or
distribute without allocating the proceeds to Genzyme Molecular Oncology.

Prior to our acquisition of Biomatrix, Biomatrix sold 744,000 shares of its
common stock to certain of its employees, directors and consultants in exchange
for ten-year, full recourse promissory notes. The notes accrue interest at rates
ranging from 5.30% to 7.18% and mature at various dates from May 2007 through
September 2009, upon which all outstanding principal and accrued interest
becomes payable. As a result of the acquisition, these shares were converted
into 532,853 shares of Biosurgery Stock and we recorded $14.7 million of
outstanding principal and accrued interest to stockholders' equity because the
notes were received in exchange for the issuance of stock. As of June 30, 2001,
the outstanding balance of these notes is $10.2 million.

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We believe that our available cash, investments and cash flow from
operations will be sufficient to fund our planned operations and capital
requirements for the foreseeable future. Although we currently have substantial
cash resources and positive cash flow, we intend to use substantial portions of
our available cash for:

- product development and marketing;

- expanding facilities;

- working capital; and

- strategic business initiatives.

Our cash reserves will be further reduced to pay principal and interest on
the following debt:

- $575.0 million in principal under our 3% convertible subordinated
debentures due May 15, 2021, which are convertible into shares of Genzyme
General Stock;

- $218.0 million in principal outstanding under our revolving credit
facility with a syndicate of commercial banks;

- $21.2 million in principal under our 5% convertible subordinated
debentures due August 2003, which are convertible into shares of Genzyme
General Stock; and

- $10.0 million in principal under our 6.9% convertible subordinated note in
favor of UBS Warburg LLC that matures in May 2003 and is convertible into
shares of Biosurgery Stock.

If we use cash to pay or redeem any of the debt described above, including
principal and interest due on it, our cash reserves will be diminished. To
satisfy these and other commitments, we may have to obtain additional financing.
We cannot guarantee that we will be able to obtain any additional financing,
extend any existing financing arrangement, or obtain either on favorable terms.

NEW ACCOUNTING PRONOUNCEMENTS

SUBSEQUENT EVENTS

INTERDIVISIONAL FINANCING ARRANGEMENT

In July 2001, Genzyme Biosurgery drew $12.0 million of cash under the
$25.0 million interdivisional financing arrangement with Genzyme General in
exchange for an additional reserve of 1,902,949 Biosurgery designated shares. A
balance of $3.0 million remains available to Genzyme Biosurgery under this
arrangement.

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INTENDED REDEMPTION OF $21.2 MILLION 5% CONVERTIBLE SUBORDINATED DEBENTURES

On July 18, 2001, we sent notices to the holders of our $21.2 million 5%
convertible debentures indicating our intention to redeem any of these
debentures that remain outstanding on August 30, 2001 at a price equal to 103%
of the $21.2 million principal amount, plus accrued interest through the date of
redemption. We intend to pay the redemption price in cash.

TRANSFER OF GENZYME'S 50% OWNERSHIP INTEREST IN ATIII LLC TO GENZYME
TRANSGENICS CORPORATION

ACQUISITION OF GDP CLASS B LIMITED PARTNERSHIP INTERESTS

NEUROCELL-TM- JOINT VENTURE REFUND

ACQUISITION OF NOVAZYME PHARMACEUTICALS, INC.

PHARMING GROUP, N.V. RECEIVERSHIP

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$10.0 million, plus accrued and unpaid interest of approximately $0.2 million.
In addition, we have two joint ventures with Pharming for the development of
Pompe disease therapies. At June 30, 2001, Pharming owed the joint ventures an
aggregate amount of $1.7 million for its share of program costs, and the joint
ventures owed us approximately $6.4 million for reimbursement of program costs
incurred by us. At this time, the status of Pharming's receivership and our
position as a creditor is not known and we are therefore unable to determine the
impact, if any, on the realizable value of amounts due to us. Accordingly, no
adjustments have been made to our consolidated financial statements or the
combined financial statements of Genzyme General as of June 30, 2001.

GENZYME GENERAL
A DIVISION OF GENZYME CORPORATION

At June 30, 2001, Genzyme General had cash, cash equivalents, and short- and
long-term investments of $955.0 million, an increase of $423.6 million from
December 31, 2000.

Genzyme General generated $103.5 million in cash from its operations for the
six months ended June 30, 2001.

Genzyme General's investing activities utilized $310.8 million in cash for
the six months ended June 30, 2001. Investing activities used:

- $156.6 million for Genzyme General's net purchases, sales and maturity of
investments;

- $69.6 million to fund purchases of plant, property and equipment;

- $60.0 million to fund the acquisition of Wyntek, net of cash acquired, as
described below; and

- $22.7 million to fund Genzyme General's investments in unconsolidated
affiliates.

During the six months ended June 30, 2001, Genzyme General received
$57.9 million in cash from the exercise of stock options and purchase of shares
under our employee stock plans.

In May 2001, we completed the private placement of $575.0 million in
principal of 3% convertible subordinated debentures due May 2021. Net proceeds
from the offering were approximately $562.1 million. We have allocated the
principal amount of the debentures and the net proceeds from the offering to
Genzyme General. We will pay interest on these debentures on May 15 and
November 15 each year using cash allocated to Genzyme General. The first
interest payment will be made on November 15, 2001. The debentures are
convertible, upon the satisfaction of certain conditions, into shares of Genzyme
General Stock at an initial conversion price of $70.30 per share. The conversion
price is subject to adjustments. Holders of the debentures may require us to
repurchase all or part of their debentures for cash on May 15, 2006, 2011 or
2016, at a price equal to 100% of the principal amount of the debentures plus
accrued interest through the date prior to the date of purchase. Additionally,
if certain fundamental changes occur, each holder may require us to repurchase,
for cash, all or a portion of the holder's debentures. On or after May 20, 2004,
we may redeem for cash all or part of the debentures that have not previously
been converted or repurchased. Genzyme General used a portion of these proceeds
to repay the $150.0 million it had drawn under our revolving credit facility in
December 2000 to finance a portion of the cash consideration for the GelTex
acquisition. Genzyme General expects to utilize the remaining proceeds from the
sale of the debentures for working capital and general corporate purposes.

In June 2001, we completed the redemption of our $250.0 million in principal
5 1/4% convertible subordinated notes due 2005. Prior to the redemption date,
holders of the notes elected to convert

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substantially all of the principal of the notes into approximately 12,597,000
shares of Genzyme General Stock, 685,000 shares of Biosurgery Stock and 682,000
shares of Molecular Oncology Stock. On June 15, 2001, the redemption date, we
redeemed the remaining notes using cash allocated to Genzyme General.

Genzyme General, together with our other operating divisions, has access to
our $500.0 million revolving credit facility, $150.0 million of which matures in
December 2001 and $350.0 million of which matures in December 2003. At
December 31, 2000, $368.0 million was outstanding under this facility,
$150.0 million of which was allocated to Genzyme General and $218.0 million of
which was allocated to Genzyme Biosurgery. In May 2001, Genzyme General repaid
the $150.0 million it had drawn under this facility in December 2000 to finance
a portion of the cash component of the GelTex merger consideration. At June 30,
2001, $18.0 million remained outstanding under the portion of the facility that
matures in December 2001 and $200.0 million was outstanding under the portion of
the facility that matures in December 2003, all of which was allocated to
Genzyme Biosurgery. Borrowings under this facility bear interest at LIBOR plus
an applicable margin.

We believe that Genzyme General's available cash, investments and cash flow
from operations will be sufficient to fund its planned operations and capital
requirements for the foreseeable future. Although Genzyme General currently has
substantial cash resources and positive cash flow, it intends to use substantial
portions of its available cash for:

- product development and marketing;

- expanding facilities;

- working capital; and

- strategic business initiatives.

Genzyme General's cash reserves will be further reduced to pay principal and
interest on the following debt:

- $575.0 million in principal under our 3% convertible subordinated
debentures due May 15, 2021, which are convertible into shares of Genzyme
General Stock; and

- $21.2 million in principal under our 5% convertible subordinated
debentures due August 2003, which are convertible into shares of Genzyme
General Stock.

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If Genzyme General uses cash to pay or redeem any of this debt, including
principal and interest due on it, its cash reserves will be diminished. In
addition, Genzyme General's cash resources will be reduced to the extent that
the liabilities of Genzyme Biosurgery or Genzyme Molecular Oncology affect our
consolidated results of operations.

To satisfy these and other commitments, Genzyme General may have to obtain
additional financing. We cannot guarantee that Genzyme General will be able to
obtain any additional financing, extend any existing financing arrangement, or
obtain either on favorable terms.

SUBSEQUENT EVENTS

INTERDIVISIONAL FINANCIAL ARRANGEMENT

INTENDED REDEMPTION OF $21.2 MILLION 5% CONVERTIBLE SUBORDINATED DEBENTURES

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TRANSFER OF GENZYME'S 50% OWNERSHIP INTEREST IN ATIII LLC TO GENZYME
TRANSGENICS CORPORATION

NEUROCELL-TM- JOINT VENTURE REFUND

ACQUISITION OF NOVAZYME PHARMACEUTICALS, INC.

PHARMING GROUP, N.V. RECEIVERSHIP

GENZYME BIOSURGERY
A DIVISION OF GENZYME CORPORATION

At June 30, 2001, Genzyme Biosurgery had cash, cash equivalents, and short-
and long-term investments of $23.0 million, a decrease of approximately
$55.1 million from December 31, 2000.

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Genzyme Biosurgery used $26.5 million in cash for operations for the first
six months of 2001. This is primarily due to Genzyme Biosurgery's net loss of
$72.9 million for the six months ended June 30, 2001.

Genzyme Biosurgery's investing activities utilized $31.5 million in cash for
the six months ended June 30, 2001. Investing activities used:

- $25.7 million as a payment for our purchase of all of the GDP Class A
limited partnership interests;

- $5.0 million was used to purchase Focal common stock; and

- $2.5 million was used to fund capital expenditures.

During the six months ended June 30, 2001, Genzyme Biosurgery received
$0.8 million in cash from the exercise of stock options and the purchase of
shares under our employee stock plans. Genzyme Biosurgery also received
$3.2 million from the partial payment of notes receivable from our stockholders.
Genzyme Biosurgery's financing activities used $0.7 million to repay bank
overdrafts.

In January 2001, Focal, Inc., a leading developer of synthetic biopolymers
used in surgery, exercised its option to require us to purchase $5.0 million in
Focal common stock at a price of $2.06 per share. After that purchase we held
approximately 22% of the outstanding shares of Focal common stock and began
accounting for our investment under the equity method of accounting. We
allocated this investment to Genzyme Biosurgery. On June 30, 2001, we acquired
the remaining 78% of the outstanding shares in an exchange of shares of
Biosurgery Stock for shares of Focal common stock. Focal shareholders received
0.1545 of a share of Biosurgery Stock for each share of Focal common stock they
held. We issued approximately 2.1 million shares of Biosurgery Stock as merger
consideration. We allocated the acquired assets and liabilities to Genzyme
Biosurgery and accounted for the acquisition as a purchase.

In connection with our acquisition of Biomatrix, we assumed a 6.9%
convertible subordinated note in favor of UBS Warburg LLC that matures in
May 2003. At June 30, 2001, $10.0 million of the principal of this note remained
outstanding. Genzyme Biosurgery will use a part of its cash flow to satisfy debt
service on this note. If all or a portion of the note is not converted at the
option of the holder into Biosurgery Stock, at maturity Genzyme Biosurgery's
cash reserves will be diminished by the amount necessary to repay the
outstanding principal of the note.

Prior to our acquisition of Biomatrix, Biomatrix sold 744,000 shares of its
common stock to certain of its employees, directors and consultants in exchange
for ten-year, full recourse promissory notes. The notes accrue interest at rates
ranging from 5.30% to 7.18% and mature at various dates from May 2007 through
September 2009, upon which all outstanding principal and accrued interest
becomes payable. As a result of the acquisition, these shares were converted
into 532,853 shares of Biosurgery Stock and Genzyme Biosurgery recorded
$14.7 million of outstanding principal and accrued interest to division equity
because the notes were received in exchange for the issuance of stock. As of
June 30, 2001, the outstanding balance of these notes is $10.2 million.

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Genzyme Biosurgery, together with our other operating divisions, has access
to our $500.0 million revolving credit facility, $150.0 million of which matures
in December 2001 and $350.0 million of which matures in December 2003. At
December 31, 2000, $368.0 million was outstanding under this facility,
$150.0 million of which was allocated to Genzyme General and $218.0 million of
which was allocated to Genzyme Biosurgery. In May 2001, Genzyme General repaid
the $150.0 million it had drawn under this facility in December 2000 to finance
the cash component of the GelTex merger consideration. At June 30, 2001,
$18.0 million remained outstanding under the portion of the facility that
matures in December 2001 and $200.0 million was outstanding under the portion of
the facility that matures in December 2003, all of which was allocated to
Genzyme Biosurgery. Borrowings under this facility bear interest at LIBOR plus
an applicable margin. Genzyme Biosurgery will use a large part of its cash flow
to make principal and interest payments on this debt. If Genzyme Biosurgery's
cash flow from operations is insufficient to meet these obligations, it may need
to borrow additional funds to make these payments.

We believe that Genzyme Biosurgery's cash resources, together with revenues
generated from its products and distribution agreements and from the anticipated
sale of certain assets, will be sufficient to finance its planned operations and
capital requirements through 2001. Genzyme Biosurgery intends to use substantial
portions of its available cash for:

- research and development;

- product development and marketing, including for
Synvisc-Registered Trademark- viscosupplementation product;

- expanding facilities; and

- working capital.

Genzyme Biosurgery's cash needs may differ from those planned, however, as a
result of many factors, including the:

- results of research and development efforts;

- ability to establish and maintain strategic alliances;

- ability to enter into and maintain licensing arrangements and additional
distribution arrangements;

- ability to share costs of product development with research and marketing
partners;

- costs involved in enforcing patent claims and other intellectual property
rights;

- market acceptance of novel approaches and therapies;

- success of its initiatives to reduce expenses and streamline its
operations;

- development of competitive products;

- ability to satisfy regulatory requirements of the FDA and other
governmental authorities; and

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- ability to sell its Snowden-Pencer-Registered Trademark- product lines and
its manufacturing facilities in Canada, as described below.

Genzyme Biosurgery's cash reserves may be further reduced to pay principal
and interest on the following debt:

- $218.0 million in principal under our revolving credit facility with a
syndicate of commercial banks;

- $10.0 million in principal under our 6.9% convertible subordinated note in
favor of UBS Warburg LLC that matures in May 2003 and is convertible into
shares of Biosurgery Stock.

If we use cash to pay or redeem this debt, including principal and interest
on it, our cash reserves will be diminished.

In February 2001, Genzyme Biosurgery announced its intention to divest the
Snowden-Pencer-Registered Trademark- surgical instruments product lines. These
product lines include hand-held reusable instruments and endoscopic instruments
for general, plastic, gynecological and cardiovascular surgery. In May 2001,
Genzyme Biosurgery terminated the production of Synvisc-Registered Trademark-
viscosupplementation product in Canada and announced its intention to sell its
manufacturing facilities in Pointe-Claire, Quebec, Canada.

Genzyme Biosurgery will require significant additional financing to continue
operations at anticipated levels. We cannot guarantee that Genzyme Biosurgery
will be able to obtain any additional financing, extend any existing financing
arrangement, or obtain either on terms that we consider favorable. If Genzyme
Biosurgery has insufficient funds or is unable to raise additional funds, it may
delay, scale back or eliminate certain of its programs. Genzyme Biosurgery may
also have to sell to, or co-develop with third parties, rights to commercialize
technologies or products that it would otherwise have sought to commercialize
itself.

SUBSEQUENT EVENTS

INTERDIVISIONAL FINANCING ARRANGEMENT

ACQUISITION OF GDP CLASS B LIMITED PARTNERSHIP INTERESTS

NEUROCELL-TM- JOINT VENTURE REFUND

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designated shares or both. The refund is due and payable within 90 days after
Genzyme Biosurgery received the notice from Genzyme General.

GENZYME MOLECULAR ONCOLOGY
A DIVISION OF GENZYME CORPORATION

At June 30, 2001, Genzyme Molecular Oncology had cash and cash equivalents
of $16.2 million, a decrease of $14.0 million from cash, cash equivalents and
short-term investments of $30.2 million at December 31, 2000.

Genzyme Molecular Oncology used $14.2 million in cash for operations for the
first six months of 2001. This is primarily due to Genzyme Molecular Oncology's
net loss of $14.6 million for the six months ended June 30, 2001.

Genzyme Molecular Oncology's investing activities in the first six months of
2001 provided $7.8 million from the sales and maturities of investments.

During the six months ended June 30, 2001, Genzyme Molecular Oncology
received $0.4 million in cash from the exercise of stock options and the
purchase of shares under our employee stock plans.

Genzyme Molecular Oncology, together with the other operating divisions, has
access to Genzyme's $500.0 million revolving credit facility, $150.0 million of
which matures in December 2001 and $350.0 million which matures in
December 2003. At December 31, 2000, $368.0 million was outstanding under this
facility, $150.0 million of which was allocated to Genzyme General and
$218.0 million of which was allocated to Genzyme Biosurgery. In May 2001,
Genzyme General repaid the $150.0 million it had drawn under this facility in
December 2000 to finance the cash component of the GelTex merger consideration.
At June 30, 2001, $18.0 million remained outstanding under the portion of the
facility that matures in December 2001 and $200.0 million was outstanding under
the portion of the facility that matures in December 2003, all of which was
allocated to Genzyme Biosurgery. Borrowings under this facility bear interest at
LIBOR plus an applicable margin.

We anticipate that Genzyme Molecular Oncology's current cash resources,
together with amounts available from the following sources, will be sufficient
to fund its operations through the third quarter of 2002:

- anticipated revenues generated from license agreements;

- committed research funding from collaborators;

- the $15.0 million remaining under the interdivisional financing
arrangement with Genzyme General; and

- amounts available to Genzyme Molecular Oncology under our revolving credit
facilities.

Genzyme Molecular Oncology plans to spend substantial amounts of funds on,
among other things:

- research and development;

- pre-clinical and clinical testing;

- pursuing regulatory approvals; and

- working capital.

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Genzyme Molecular Oncology's cash needs may differ from those planned,
however, as a result of many factors, including the:

- results of research and development and clinical testing;

- achievement of milestones under existing licensing arrangements;

- ability to establish and maintain additional strategic collaborations and
licensing arrangements;

- costs involved in enforcing patent claims and other intellectual property
rights;

- market acceptance of novel approaches and therapies;

- development of competitive products and services; and

- ability to satisfy regulatory requirements of the FDA and other government
authorities.

Genzyme Molecular Oncology may require significant additional financing to
continue operations at anticipated levels. It cannot be guaranteed that Genzyme
Molecular Oncology will be able to obtain any additional financing, extend any
existing financing arrangement, or obtain either on terms that are considered
favorable. If Genzyme Molecular Oncology has insufficient funds or is unable to
raise additional funds, it may delay, reduce or eliminate certain of its
programs. Genzyme Molecular Oncology may also have to sell to, or co-develop
with, third parties rights to commercialize technologies or products that it
would otherwise have sought to commercialize itself.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to potential loss from financial market risks that may occur
as a result of changes in interest rates, equity prices and foreign exchange
rates. Our exposure to these risks has not materially changed since
December 31, 2000.

We incorporate by reference our disclosure related to market risk which is
set forth under the heading "Management's Discussion and Analysis of Genzyme
Corporation and Subsidiaries' Financial Condition and Results of
Operations--Euro-The New European Currency;" "--Market Risk;"
"--Interest Rate Risk;" "--Foreign Exchange Risk;" and "--Equity Price Risk" in
Exhibit 13.1 to our 2000 Form 10-K.

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GENZYME CORPORATION AND SUBSIDIARIES
FORM 10-Q, JUNE 30, 2001

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

On May 8, 2001, we sold $500.0 million in aggregate principal amount of 3%
convertible subordinated debentures due May 15, 2021 in a private placement
under Section 4(2) of the Securities Act of 1933 to three institutional
purchasers, Credit Suisse First Boston, Goldman, Sachs & Co. and Salomon Smith
Barney. We also granted these purchasers a 30-day option to purchase an
additional $75.0 million in principal amount of our 3% debentures, which was
exercised for the entire $75.0 million in principal amount on May 10, 2001. Our
net proceeds from this offering were approximately $562.1 million.

Holders of our 3% convertible subordinated debentures may surrender these
debentures for conversion into shares of Genzyme General Stock at an initial
conversion price (subject to adjustments) of approximately $70.30 per share of
Genzyme General Stock if any of the following conditions is satisfied:

- if the closing sale price of Genzyme General Stock for at least 20 trading
days in the 30 trading day period ending on the trading day prior to the
day of surrender is more than 110% of the conversion price per share of
Genzyme General Stock at such preceding trading day;

- if we have called the debentures for redemption; or

- upon the occurrence of specified corporate transactions.

The preceding description of our 3% convertible subordinated debentures is
qualified in its entirety by reference to the copy of the Indenture dated as of
May 8, 2001 pursuant to which these debentures were issued, which is filed as
Exhibit 4.1 to our Current Report on Form 8-K filed with the SEC on May 11, 2001
and is incorporated by reference herein.

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

I. We held our annual meeting of stockholders on May 31, 2001. The following
represents the results of the voting on proposals submitted to the
stockholders at the annual meeting for a vote:

a. Proposal to elect two directors for a term of office expiring in 2004:

<Table>
<Caption>
NUMBER OF VOTES
---------------------
NOMINEE FOR WITHHELD
- ------- ---------- --------

Douglas A. Berthiaume
Genzyme General Stock................................ 81,551,621 570,900
Genzyme Biosurgery Stock*............................ 3,739,687 94,464
Genzyme Molecular Oncology Stock*.................... 1,947,746 14,016
---------- -------
Total................................................ 87,239,054 679,380
</Table>

<Table>
<Caption>
NUMBER OF VOTES
---------------------
NOMINEE FOR WITHHELD
- ------- ---------- --------

Henry E. Blair
Genzyme General Stock................................ 81,331,355 791,166
Genzyme Biosurgery Stock*............................ 3,739,700 94,451
Genzyme Molecular Oncology Stock*.................... 1,947,751 14,011
---------- -------
Total................................................ 87,018,806 899,628
</Table>

Each nominee received a majority of the votes cast, and therefore has
been duly elected as a director of Genzyme. The terms of office for Henri
A. Termeer, Constantine E. Anagnostopoulos, Robert J. Carpenter, Charles
L. Cooney, Victor J. Dzau and Connie Mack III as directors of Genzyme
continued after the annual meeting.

b. Proposal to amend our corporate charter to increase the number of
authorized shares of our common stock from 390,000,000 to 690,000,000
shares and to increase the number of such shares designated as Genzyme
General Stock from 200,000,000 to 500,000,000 shares.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING
---------- ------------- ----------------

Genzyme General Stock................. 68,745,727 13,314,684 62,110
Biosurgery Stock*..................... 3,608,782 215,395 9,973
Molecular Oncology Stock*............. 1,888,041 68,642 5,079
---------- ---------- ------
Total................................. 74,242,550 13,598,721 77,162
</Table>

The proposal received the affirmative vote of a majority in interest of
all shares outstanding, and entitled to vote, and therefore has been
adopted.

c. Proposal to amend our 1999 Employee Stock Purchase Plan to increase the
number of shares of Genzyme General Division Stock authorized for
issuance under the plan by 400,000 shares.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING BROKER NON-VOTES
---------- ------------- ---------------- ----------------

Genzyme General Stock....... 62,070,022 1,496,299 117,801 18,438,399
Biosurgery Stock*........... 2,003,090 142,884 13,452 1,674,723
Molecular Oncology Stock*... 814,912 56,640 6,420 1,083,789
---------- --------- ------- ----------
Total....................... 64,888,024 1,695,823 137,673 21,196,911
</Table>

The proposal received a majority of the votes cast, and therefore has
been adopted.**

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d. Proposal to amend our 1999 Employee Stock Purchase Plan to increase the
number of shares of Biosurgery Stock authorized for issuance under the
plan by 100,000 shares.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING BROKER NON-VOTES
---------- ------------- ---------------- ----------------

Genzyme General Stock....... 62,047,785 1,515,165 121,172 18,438,399
Biosurgery Stock*........... 2,002,761 145,448 11,218 1,674,723
Molecular Oncology Stock*... 811,221 59,496 7,255 1,083,789
---------- --------- ------- ----------
Total....................... 64,861,767 1,720,109 139,645 21,196,911
</Table>

The proposal received a majority of the votes cast, and therefore has
been adopted.**

e. Proposal to amend our 1998 Director Stock Option Plan to increase the
number of shares of Genzyme General Stock available for issuance under
the plan by 125,000 shares.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING BROKER NON-VOTES
---------- ------------- ---------------- ----------------

Genzyme General Stock....... 56,995,892 6,528,523 159,777 18,438,329
Biosurgery Stock*........... 1,788,698 351,722 19,007 1,674,723
Molecular Oncology Stock*... 797,896 71,617 8,459 1,083,789
---------- --------- ------- ----------
Total....................... 59,582,486 6,951,862 187,243 21,196,841
</Table>

The proposal received a majority of the votes cast, and therefore has
been adopted.**

f. Proposal to amend our 1998 Director Stock Option Plan to increase the
number of shares of Biosurgery Stock available for issuance under the
plan by 200,000 shares.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING BROKER NON-VOTES
---------- ------------- ---------------- ----------------

Genzyme General Stock....... 56,946,059 6,575,881 162,182 18,438,399
Biosurgery Stock*........... 1,765,363 370,496 17,598 1,680,694
Molecular Oncology
Stock**................... 796,709 72,336 8,928 1,083,789
---------- --------- ------- ----------
Total....................... 59,508,131 7,018,713 188,708 21,202,882
</Table>

The proposal received a majority of the votes cast, and therefore has
been adopted.**

g. Proposal to amend our 1998 Director Stock Option Plan to increase the
number of shares of Molecular Oncology Stock available for issuance under
the plan by 150,000 shares.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING BROKER NON-VOTES
---------- ------------- ---------------- ----------------

Genzyme General Stock....... 56,111,016 7,418,485 154,621 18,438,399
Biosurgery Stock*........... 1,771,492 362,627 19,337 1,680,694
Molecular Oncology
Stock**................... 797,826 71,506 8,640 1,083,789
---------- --------- ------- ----------
Total....................... 58,680,334 7,852,618 182,598 21,202,882
</Table>

The proposal received a majority of the votes cast, and therefore has
been adopted.**

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h. Proposal to approve our 2001 Equity Incentive Plan.

<Table>
<Caption>
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
VOTES FOR VOTES AGAINST VOTES ABSTAINING BROKER NON-VOTES
---------- ------------- ---------------- ----------------

Genzyme General Stock....... 56,003,887 7,498,113 182,122 18,438,399
Biosurgery Stock*........... 1,917,711 215,046 20,699 1,680,694
Molecular Oncology Stock*... 809,237 59,274 9,461 1,083,789
---------- --------- ------- ----------
Total....................... 58,730,835 7,772,433 212,282 21,202,882
</Table>

The proposal received a majority of the votes cast, and therefore has
been adopted.**

- ------------------------

* Represents the actual number of Biosurgery shares and Molecular Oncology
shares voted multiplied by 0.14.

** For this purpose, abstentions and broker non-votes are not counted.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

See the Exhibit Index immediately following the signature page to this
report on Form 10-Q.

(b) Reports on Form 8-K

We filed a Current Report on Form 8-K dated April 25, 2001 on April 26,
2001 to announce that we entered into an Agreement and Plan of Merger
with Focal, Inc.

We filed an amendment to our Current Report dated December 18, 2000 on
May 3, 2001 to include the unaudited pro forma combined financial
information which describes the pro forma effect of our merger with
Biomatrix and our merger with GelTex on the statements of operation for
the year ended December 31, 2000 of both Genzyme Corporation and Genzyme
Biosurgery, the division to which we allocated the assets, liabilities
and operations of Biomatrix.

We filed an amendment to our Current Report on Form 8-K dated
December 14, 2000 on May 3, 2001 to include the unaudited pro forma
combined financial information which describes the pro forma effect of
our merger with GelTex and our merger with Biomatrix on the statements of
operation for the year ended December 31, 2000 of both Genzyme
Corporation and Genzyme General, the division to which we allocated the
assets, liabilities and operations of GelTex.

We filed a Current Report on Form 8-K dated May 8, 2001 on May 11, 2001
to announce our sale of 3% convertible subordinated debentures in a
private placement.

We filed a Current Report on Form 8-K dated May 8, 2001 on May 18, 2001
to include (1) the audited financial statements of Wyntek
Diagnostics, Inc., a company that we had previously announced our
intention to acquire, as of December 31, 2000 and 1999 and for each of
the two years in the period ended December 31, 2000, and (2) the
unaudited financial statements of Wyntek as of and for the three months
ended March 31, 2001 and 2000.

We filed a Current Report on Form 8-K dated May 22, 2001 on May 22, 2001
to include (1) the unaudited financial statements of Focal as of
December 31, 2000 and 1999 and for each of the three years in the period
ended December 31, 2000, (2) the unaudited financial statements of Focal
as of and for the three months ended March 31, 2001 and 2000, and
(3) the unaudited pro forma combined financial information which
describes the pro forma effect of our planned acquisitions of Focal and
Wyntek on the unaudited statements of

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operations for the three months ended March 31, 2001 and the year ended
December 31, 2000 and the unaudited balance sheet as of march 31, 2001 of
both Genzyme Corporation and Genzyme Biosurgery, the division to which we
will allocate the assets, liabilities and operations of Focal.

We filed a Current Report on Form 8-K dated June 1, 2001 on June 6, 2001
to announce the completion of our acquisition of Wyntek.

We filed a Current Report on Form 8-K dated June 1, 2001 on June 6, 2001
to announce the amendment of our charter to increase (1) the total number
of authorized shares of our common stock and (2) the number of authorized
shares designated as Genzyme General Stock.

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GENZYME CORPORATION AND SUBSIDIARIES
FORM 10-Q, JUNE 30, 2001

SIGNATURES

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

<Table>

GENZYME CORPORATION

DATE: August 14, 2001 By: /s/ MICHAEL S. WYZGA
-----------------------------------------
Michael S. Wyzga
SENIOR VICE PRESIDENT, FINANCE; CHIEF
FINANCIAL OFFICER; AND CHIEF ACCOUNTING
OFFICER
</Table>

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GENZYME CORPORATION AND SUBSIDIARIES
FORM 10-Q, JUNE 30, 2001

EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT NO. DESCRIPTION
- ----------- ------------------------------------------------------------

*3.1 Restated Articles of Organization of Genzyme, as amended.
Filed as Exhibit 3 to Genzyme's Current Report on Form 8-K
filed on June 6, 2001.
*3.2 By-laws of Genzyme, as amended. Filed as Exhibit 3.2 to
Genzyme's Form 10-Q for the quarter ended September 30,
1999.
*4.1 Indenture, dated as of May 8, 2001, by and between Genzyme
and State Street Bank and Trust Company as trustee,
including the form of debenture. Filed as Exhibit 4.1 to
Genzyme's Current Report on Form 8-K filed on May 11, 2001.
*4.2 Registration Rights Agreement, dated as of May 3, 2001, by
and among Genzyme, Credit Suisse First Boston Corporation,
Goldman Sachs & Co. and Salomon Smith Barney Inc. Filed as
Exhibit 4.2 to Genzyme's Current Report on Form 8-K filed on
May 11, 2001.
10.1 2001 Equity Incentive Plan. Filed herewith.
</Table>

- ------------------------

* Indicates an exhibit previously filed with the Securities and Exchange
Commission and incorporated herein by reference. Exhibits filed with Forms
10-Q or 8-K were filed under Commission File No. 0-14680.