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

Xconomy National — 

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 that ties you down. There may be moments where that may be a good thing to do for a short moment, as a bridge to a different situation. But I very much like this moment. I was tied down into Genzyme for 30 years. This moment gives me the space, the freedom, the excitement that satisfies me greatly. When you start a company, it never can be done fast. When you build a company, in our field, it takes 10-15 years to really make big progress.

I love the process of mentoring, and bringing new people on board, and giving them some hints of what worked for me and didn’t work for me. I’d like to do that across many different organizations rather than be tied down into a single one.

X: On a personal note, how do you stay healthy and active?

HT: I can’t sit down. That’s my great problem. People have used the word “retirement” sometimes. I haven’t quite figured out what to do with that word. I work as much as I worked before. It’s exciting. That keeps me engaged, and in many ways, I think it keeps me healthy. If I tried to play golf, it would be a shame for the people who watched it, and I would not succeed. I just need to do stuff. My office is right next to my home. I have a two-second commute. As I’m talking to you, I’m walking through my meeting room here, and there’s a sitting room overlooking the harbor in Marblehead, MA. It’s absolutely delightful. I get into Cambridge and Boston quite a bit. I try to avoid taking on responsibilities with people who are very far away, except for the Netherlands, because that’s where my family is. You can get yourself organized in a way that avoids many of the things I don’t enjoy that much. I’m enjoying life.

X: Have you had some time to pick up new hobbies, or spend more time with the kids or grandkids?

HT: Yes. I have a 12-year-old girl who is extremely demanding. I take her to school, and she tells me not to speak (laughs). We have a great time together, it’s great fun, and I didn’t have that before. To help her grow up, and help her with homework. I have a son in England who’s getting married this summer, who’s 27, and we do a lot of things together as a family. In summer, I do some sailing in Maine. We have a place in Maine where we spend a lot of time.

I have a good life. This has been a little bit of a surprise to me, because I was so tied into the Genzyme picture, I still feel very close to the people side of that picture. But I don’t feel in any way out of touch or miss the routine part of what I had at Genzyme.

X: You mentioned getting into Boston a lot, spending time in that hub, and not spending a lot of time on planes. What are your thoughts on the hubs for biotech? It looks to me like Boston has tremendous momentum, and is positioning itself to be the No. 1 hub, while some of the other hubs on the West Coast have gotten a little weaker. Where do you think the action is going to be in biotech for the next 10 or 20 years?

HT: It’s not a competition, but Boston is clearly in an extremely nice position. The combinations of skills, capabilities, and the critical mass of companies, the labor force—everything helps in this environment. Boston is extraordinary. It has been for a while. But it has built from strength to strength. Every one of the Big Pharmas is here, not with small investments, but with big investments. You go to Cambridge, and you see big cranes like you do in Shanghai. They’re building research labs for Pfizer, for Sanofi, and for others. It’s extremely exciting.

Boston is [well-positioned] because of the rate of innovation, and because of the central role that the patient plays, and the quality and multi-dimensional nature of the academic hospitals. They are absolutely at the center of this kind of development. They [the hospitals] see the patients every day, and figure out who fits what therapy based on a diagnostic approach. The critical mass is here, and it will be like that for many years to come. It will eventually quiet down, but for the time being, Boston has a very strong effect from this cluster. Boston will inevitably grow in importance, and it might be such that other places will decrease in importance, but the whole field will grow and Boston will grow in a very important, contributing way.

X: Is it the best place to start a biotech company today?

HT: This kind of company, yes. In biotech, diagnostics and therapeutics, this is the place to do it. Here you can do it in a virtual sense. You’re seeing companies being started with a handful of people, and they are able to use the environment in a way that’s very effective. You couldn’t do it in a place that doesn’t have the proximity, of having so many people with so many skills in one place.

X: You say your mother is 99?

HT: 98 now, she’ll be 99 in September.

X: How long do you think you’ll live?

HT: Did you see the recent cover of National Geographic? On the cover it has a picture of a baby, and says, “This baby will grow up to be 120.”

When I think about my healthcare, it was better in my lifetime than my mother’s healthcare. She lived through big challenges, wars. I hope to do better than she does, assuming I have a little bit of her good genes. Yes, 99 is a goal. I still think of stuff from an R&D perspective that will take 20 years to complete.

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  • 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.