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Genzyme CEO says deal will take time

Says firm ‘can’t be angry’ over Sanofi bid

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By Robert Weisman
Globe Staff / January 20, 2011

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With a takeover offer from French drug maker Sanofi-Aventis SA set to expire at midnight tomorrow, Genzyme Corp. chief executive Henri A. Termeer is apparently not feeling a sense of urgency. Termeer said yesterday that “it will take time’’ to negotiate a deal to sell the largest biotechnology company in Massachusetts.

“It took us 30 years to get to where we are,’’ Termeer told about 200 local business leaders at a breakfast meeting of the Greater Boston Chamber of Commerce. “So it will take some time to understand the next step, to understand the dynamics and the value.’’

Termeer gave no specifics about the takeover talks, which involve high-ranking executives from both companies. But in a tone more tempered than in the recent past, when he decried Sanofi’s unsolicited $69-a-share tender offer as woefully inadequate, Termeer said his Cambridge company “can’t be angry’’ because of the $18.5 billion bid.

Nonetheless, he said, Genzyme will press Sanofi to sweeten the offer, partly by finding a way to recognize the prospective value of Genzyme’s experimental drug for multiple sclerosis that is on track for US approval next year. While the two parties have diverged in their forecasts of the drug’s potential sales, they are exploring a mechanism — called a contingent value right — that would give Genzyme shareholders an additional payout if the treatment meets sales targets.

“If we do have a transaction, we’ll have a transaction that’s done in the right way,’’ Termeer insisted. He said the deal “will work itself out,’’ dismissing Sanofi’s tender offer as “an administrative thing’’ and “really a placeholder’’ while the parties negotiate. The tender offer, which initially expired in December, was extended for a month after only a few investors turned over their shares. It was an effort by Sanofi to appeal directly to Genzyme stockowners after the board rejected its bid.

Joking with his Four Seasons Hotel audience about the Paris-based suitor, Termeer said, “I thought about doing this [speech] in French. But I could have lost a few of you, including myself.’’

Sanofi representatives yesterday would not comment on Termeer’s remarks. The company’s chief executive, Christopher A. Viehbacher, told life sciences investors in California last week that a Genzyme acquisition would raise Sanofi’s profile in North America, boost its biotechnology franchise, and give it new products at a time when some of its best-selling drugs are losing patent protection.

Termeer yesterday said he was confident any company that bought Genzyme would want to keep its research and manufacturing operations in the area largely intact. “Only then will they get the return on their investment,’’ he said, noting that the company’s science and its people are a key source of biotechnology innovation.

Genzyme, with annual revenue of about $4.5 billion, has more than 10,000 employees around the globe, including about 4,500 in Massachusetts. Last fall, the company said it was cutting about 1,000 jobs worldwide. But while it is has been eliminating some positions in the state, it also has been hiring for others here.

Termeer was upbeat about the future of the biomedical sector in Massachusetts despite a dearth of new medicines and continued industry consolidation. While big pharmaceutical companies have chased “blockbuster’’ drugs to treat general conditions such as high cholesterol, he said, Genzyme has led the way in pioneering effective, highly specific treatments for patients with rare genetic disorders such as the enzyme deficiencies Gaucher and Fabry diseases.

The business, Termeer said, is currently passing through an “extraordinary moment of readjustment to create the next platform of growth.’’ He noted that the market for new therapies and disease cures is expanding by hundreds of millions of people in emerging economies such as Brazil, Russia, and China, boosting future sales of drugs.

“This area [Boston] is the mecca of discovery, and it will be that way forever,’’ said Termeer, who turns 65 next month and is expected to retire in the coming year. “We can’t mess that up. . . . This is deeply ingrained, and it has grown over decades. The drivers to achieve change and breakthroughs has never been greater.’’

Termeer conceded that 2009’s viral contamination at Genzyme’s Allston Landing plant pushed down the company’s stock value, making it more attractive to would-be buyers such as Sanofi.

“The unpredictable will trip you, and we were tripped,’’ he said.

But he said the company was wrapping up a two-year recovery plan and would soon resume full drug shipments and establish back-up production capacity at its new plant in Framingham. “We can withstand any kind of supply shortage that could hit us,’’ he said.

Robert Weisman can be reached at weisman@globe.com.