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Henri Termeer on Startups, Drug Prices, Getting Older (Part 2)

Yesterday, we ran the first part of a wide-ranging interview with Henri Termeer, the legendary biotech entrepreneur and former CEO of Cambridge, MA-based Genzyme. He spoke about what kinds of startups he likes to get involved in, the trend toward drug companies working on rare diseases, and efforts to repair pharma’s damaged reputation.

Today, he speaks in more depth about specific lessons from his final days at Genzyme.

Xconomy: I’d like to switch gears here for a second. Now that you’ve had some time to reflect, a couple of years have gone by since you left Genzyme, have you spent time reflecting on what happened to the manufacturing at Allston? Were there any lessons learned there, which you are taking forward?

Henri Termeer: Yes. The lessons learned, when this happened, we were short on manufacturing capacity because we were having very early success with a product called Myozyme for Pompe disease. A deadly disease, and it got approved very broadly, very early. In Europe, we utilized excess capacity we had in one plant while we were building new plants. While we were putting more through that one plant, we created a condition that reduced the provision of inventories for other products, and also quality concerns. We had too many things happening at one time. There was too much stress on the plant. In the middle of that, as inventories were low, we were hit by a virus. It was difficult.

You’re probably familiar with the Black Swan concept. It was our Black Swan. We had never had a virus in our plants. We hadn’t calculated that in, in terms of the need for inventories we’d need to recover from such a condition. When it hit, and we had to close down the plant, it was extremely painful. The second part was just as painful. Not only did we have to close down the plant, we had to take it apart. When we took it apart, we, of course, had to put it back together. And the productivity at the plant was very slow in coming up to the productivity we had before we closed it down.

Henri Termeer

When we recovered, we recovered very slowly. The plant just didn’t come up the way we had hoped. The new plants, meanwhile, were being completed. A new plant in Framingham, MA was completed shortly after Sanofi took over. Currently, we see Genzyme recovering in a very important way. It’s very interesting. Genzyme had that interruption, in a marketplace that was connected very closely, passionately, to Genzyme. But we couldn’t support all patients with the appropriate dose.

Competition came in during that period of time. The competition was in the process of coming for decades before this happened. You would have thought that Genzyme would have lost all its market share. It certainly would have been the case with some broad-based products. Generic products tend to take over very fast when they come in, on price. But Genzyme didn’t lose its market share. Last week when Sanofi announced its results for Genzyme, they were up 25 percent. They are regaining, continuously, in the market.

X: Are you still upset about what happened? Would you still be the CEO of Genzyme if this virus hadn’t hit Allston?

HT: I don’t speculate. Sanofi’s interest was of a strategic nature. That interest would have been there, independent of this. I can’t predict what would have happened without it. But the lesson here is if you get a condition of this kind, where you have products coming to market very early, manufacturing is something that has to keep up. Things can happen that may never have happened before. It happened to us. It was a setback.

X: How has that experience influenced you, and how might it affect the advice you provide to other entrepreneurs going forward?

HT: I know of many risks out there. This is part of what you do, you manage risk. The unexpected risk makes me very aware that amazing things can happen. You can think ahead to build in some protection. In this case, it would have been inventories.

X: Any chance you’ll take an operating role again in a biotech company?

HT: I kind of doubt it, because … Next Page »

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  • http://www.facebook.com/jinpu.yang Jinpu Yang

    as a pioneer in a fairly new and fast-growing industry, it’s almost inevitable to encounter big, unforeseen challenges. For him, the personally experience of a big drawback such as the Allston incidence was probably unpleasant, but it happened and we all learned a valuable lesson.