So, This Is What a Biotech Tycoon Looks Like

The biotech tycoon once controlled the world's placenta market. That's right, placentas, which it shouldn't surprise you to learn are rich in all kinds of proteins and life-giving goo that enterprising medical researchers can put to good use. And this is where that contract with the government scientists came into play—and also how the world's most expensive drug was born. But now we're getting ahead of ourselves.

In these nascent days of biotech, the industry felt like it could go anywhere. There were schemes aplenty to make money manipulating organic material not just to cure diseases, but also to create better hair-curling gels, dyes for blue jeans, and biological Drano. Looking for his opening, Termeer met with oil companies about developing an acid to separate petroleum from dirt, or maybe a lubricant to coat the insides of pipelines. Who knew? "Early on, we could have launched into any number of industries and we would have failed miserably," Termeer says. "Other companies did."

Finally, he zeroed in on the placentas, which scientists at the NIH were using to try to develop a treatment for Gaucher's disease, figuring the enzyme its sufferers are missing could be harvested from the protein-rich human placenta. The government researchers were doing work no capitalistic enterprise would. Like most rare diseases, Gaucher's had been given short shrift by the pharmaceutical industry for reasons of simple economics: Since any therapy would have a miniscule customer base, a company could never recoup the millions of dollars required to develop it.

To fulfill the contract with the NIH, Genzyme workers collected placentas from Boston-area hospitals. Then, in their Chinatown lab, they'd mash the afterbirth into a liquid they'd ship to the NIH. In December 1983, the NIH, with the FDA's go-ahead, was ready to test its experimental therapy on a four-year-old Maryland boy named Brian Berman, whose swollen spleen was scheduled to be removed. "He had a belly that looked like he swallowed a basketball," says Termeer, who'd made it a point to get to know the child. "His mother pleaded. She said, ‘Please give my son a chance.'"

The effect was immediate, and the boy's stomach shrank. Termeer called together the scientists who had founded his company and now sat on its board, and explained that they needed to invest everything they had into collecting and processing placentas. If the NIH's therapy continued to work, he told them, Genzyme could someday sell the enzyme as a drug; the heaviest R&D had already been done. "The board suggested to me that this was probably an anecdotal response that this boy had. One patient is always anecdotal," Termeer says. "But for me this was not anecdotal: I know this boy. I saw him get better."

The scientists were not persuaded. Even if the results held up in further trials, they said, there were still significant obstacles. Treating just one patient for a year would require obtaining and processing 22,000 placentas; to serve the full population of Gaucher's suffers would put the number of placentas needed into the tens of millions.

Termeer thanked the scientists for their opinions. Then he ignored them. "I said, ‘You may be right, but we're going to pursue it anyway.'" To him, the proof of the therapy's effectiveness was in Brian Berman's belly, and the supply hurdle was merely logistics, a business puzzle to be solved.

He remembered from his Baxter days that there was a small company in Lyon, France, collecting placentas as part of an outdated process to manufacture plasma. "We told them we'd build a plant next to their plant and that tissue they threw away, we'd process," Termeer says. When the plant was fully operational, upward of 70 percent of the discarded placentas from Western Europe and 35 percent of those from the United States found their way to the new Genzyme facility, where they were processed using an old-fashioned wine press. In 1991, the FDA approved the company's Gaucher's drug, and two years later Genzyme invented a way to make the enzyme more cheaply in a lab, relying on a formula that cultivated it in the harvested ovaries of Chinese hamsters. While the breakthrough would put an end to the placenta collecting, it would also require the company to build another factory. Termeer didn't hesitate: Before the new lab-based method was even approved by the FDA, he had built the $150 million Allston plant, and used it to make his first architectural statement.

"The question was, Do we put it in Allston or out in some field 30 miles from Boston? Or do we go to North Carolina?" Elliott Hillback remembers. "Henri's belief was that it was time to prove that biotech was to be in Boston. He wanted to put the industry right there on the Charles, right next to the Mass. Pike, as a way of saying we're here to stay."

The biotech tycoon is not much beloved by the editorial writers of the New York Times. This Termeer recognizes as the not-unpredictable (though sometimes uncomfortable) result of being the guy who sells the world's most expensive drug. Since it hit the market, Genzyme's treatment for Gaucher's has dropped jaws with its price tag. (Other superexpensive therapies have followed in its path, but because Cerezyme has to be administered for the duration of a person's life—and because it greatly extends most sufferers' lives—the total amount a patient will spend dwarfs the cost of almost any other drug.) Most recently it drew the ire of the Times, which, in a March editorial, held the company up as a poster child for greed in an era of skyrocketing healthcare costs.

The editorial, and others like it, suggested that Termeer is able to set the high price for Cerezyme and make his fabulous fortune through some kind of monopoly—which is exactly right. Termeer had understood from the start that the law and the market had given him tactical advantages worth exploiting. In 1983, the same year he joined Genzyme, Congress passed the Orphan Drug Act to encourage companies to research treatments for rare diseases. The law allowed companies that brought drugs to market seven years of monopoly sales. Termeer predicted that such exclusivity among a population so small meant that it was unlikely another company would ever compete with Genzyme. And insurance companies wouldn't balk at the price: Since so miniscule a number of their clients would be affected, they could stomach the cost by spreading it around among healthy policyholders. (In countries where insurance companies or governments don't pay, Genzyme's rare drugs are free. In 2006, the company handed out $34 million worth of Cerezyme.)

Still, Termeer knew from the moment he began pursuing the drug that he'd face a backlash about the price he'd end up charging. "I realize we're going to get questioned," he says. "But if we're afraid of this, we should get out of the business, because it's going to happen. It's not society's responsibility to say thank you. That's what I teach people in the company. If you're in this business so that people will be grateful, or so that people will understand all the hardship you endured, you're going to be disappointed."