Leadership in varied approaches to gene therapy.	Expanding Synvisc with next-generation products.	Developing new point-of-care diagnostic tests.

PATIENT COMMITMENT DRIVES INNOVATION
Developing novel technologies and therapies that will make a major positive difference in the lives of patients who have serious diseases is the basis of our business. To make such a difference, we must continue to innovate, and to be satisfied with nothing less than therapies that change the standard of care and the progression of diseases. As we grow, we are tackling diseases that affect more people so that we can impact larger markets.

Today it is more difficult and costly than ever to bring new drugs to market, but we believe that society recognizes the value of life-altering therapies. In 2006, for example, Myozyme, our newest product, was recognized as the most innovative drug of the year in Spain. The National Pharmaceutical Council granted Myozyme its prestigious "Panorama del Medicamento 2006" Award in a ceremony chaired by the Spanish Minister of Health. Myozyme also earned the 2006 UK Prix Galien Gold Medal, presented biannually to new products judged to be the most innovative. Through our innovation, we have carefully constructed a diversified portfolio of products that helps us manage risk and ensure the ongoing sustainability and growth of Genzyme. While there is significant investment associated with this effort, we expect it to yield healthier, more satisfying lives for patients as well as long-term rewards for shareholders.

APPROACH TO SCIENCE
Genzyme's science organization has a broad role - discovering new drugs, evaluating acquisition targets, and supporting our products and medical areas. We have discovered powerful molecules that may have applications in multiple diseases, and by thoroughly investigating mechanisms of action, we have been able to identify new indications for existing products. This approach is critical to keeping our pipeline filled with product candidates at all stages of development. For example, over the past few years, we have built a base of research in renal disease that rivals our long-established lysosomal storage disorder programs. Our goal is to build a portfolio around marketed products to address other aspects of disease.

A RICH LATE-STAGE PORTFOLIO
Genzyme is conducting or initiating approximately 20 late-stage clinical trials, and we expect to have data from nearly half of these in 2007. These potential products are distributed throughout our diverse portfolio, and three of them in particular are novel products that could transform the course of life-threatening diseases. Tolevamer, Campath, and Mozobil offer the prospect of changing the standard of care in Clostridium difficile-associated disease, multiple sclerosis, and stem-cell transplantation, respectively. These product candidates would continue to diversify Genzyme from a company that develops therapies for conditions with small patient populations to one that also focuses on larger disease areas. Additionally, in the cases of tolevamer and Campath, we would gain opportunities in disease areas that are new to the company.

ONGOING COMMITMENT TO GENE THERAPY
A hallmark of Genzyme's development approach is to undertake and persevere with research and development in new technologies. The premier example is our continuing commitment to gene therapy - a technology that holds the promise of not just treatment, but of actual cure. Over almost 20 years, we have clearly demonstrated our leadership in this field through our preclinical and clinical work, and we also operate a leading gene therapy manufacturing facility. We believe that Genzyme has a very good chance of being the company that will make a gene therapy approach become a reality.

Our gene therapy work addresses a number of serious medical conditions and approaches. Progress continues on our first phase 2 gene therapy trial, which investigates our proprietary HIF-1-alpha gene for the treatment of peripheral arterial disease. We have an ongoing phase 1-2 gene therapy trial in Parkinson's disease and plan to enter the clinic in 2007 in gene therapy for age-related macular degeneration. These trials are in addition to preclinical work in gene therapy for lysosomal storage disorders, the genetic disease category that we currently serve with enzyme replacement therapies. For each of these diseases, our gene therapy candidates use different vectors that target different organs for varying durations of treatment.

ONCOLOGY
We continue to expand uses for Campath and are evaluating additional studies in stratified patient populations, including those with minimal residual disease and those with specific genetic mutations. Additionally, we are conducting a clinical trial of subcutaneous injection of Campath, which would make receiving treatment easier for patients. We also plan to initiate a phase 1 study with an oral formulation of Clolar for the treatment of myelodysplastic syndromes.

Beyond blood-borne cancers, we are advancing our early-stage programs in solid tumor indications. Ongoing phase 1 clinical work includes a study of our small molecule DENSPM in liver cancer. In 2006, we initiated a phase 1-2 clinical study of our GC1008 molecule, a TGF-beta antagonist, in renal cell cancer and melanoma. We also plan to file for a phase 1 trial with an oral formulation of tasidotin in solid tumors. Beyond Genzyme's clinical trials, independent investigator-sponsored trials (ISTs) are examining our molecules in multiple oncology applications, and we anticipate that these studies will lead to important future discoveries.

ENDOCRINOLOGY: TSH
In addition to expanding Thyrogen to the ablation area, we have filed in the United States and European Union for a phase 2 trial of a different formulation of thyroid-stimulating hormone in multinodular goiter and expect to begin enrolling patients in spring 2007.

GENETIC DISEASES
We advanced our efforts as part of our ongoing commitment to ASM-deficient Niemann Pick disease by initiating a clinical trial in January 2007. We are pleased to have reached this early milestone. Our phase 2 trial of Deferitin continues. This small molecule is a treatment for iron overload in patients with severe forms of chronic anemia.

Even with the success of Cerezyme, we continue to demonstrate our commitment to patients with Gaucher disease through our phase 2 investigation of a small molecule therapy. This molecule also has the potential to treat other conditions, including Fabry, Tay-Sachs, and Sandhoff diseases.

RENAL DISEASE
We are intent on serving patients across the full spectrum of renal disease, and in 2007 we expect our investment in research in the renal area to equal that in genetic diseases. In 2006, we filed for a phase 1 trial of GC1008 in kidney sclerosis and anticipate beginning the study in spring 2007. Kidney sclerosis causes a progressive loss of kidney function, eventually leading to the need for hemodialysis. We continue preclinical research programs in polycystic kidney disease, a powder formulation of sevelamer carbonate for chronic kidney disease, and a next-generation phosphate binder.

ORTHOPAEDICS/BIOSURGICAL SPECIALTIES
In 2007, we plan to initiate pilot clinical studies of a spray formulation of Seprafilm in abdominal and gynecological uses. This new form of Seprafilm holds much promise for laparoscopic surgeries. We also continue clinical development of hylastan, a next-generation viscosupplement, as well as supporting numerous investigator-sponsored trials studying Synvisc's mechanism of action and its application to additional joints.

TRANSPLANT / IMMUNE-MEDIATED DISEASES
We have completed enrollment in our phase 2 trial examining the use of Thymoglobulin to minimize patient exposure to steroids in kidney transplantation. We expect to have data from this study in mid-2007.

We are also studying new uses for Thymoglobulin both within and beyond transplants. Our study of Thymoglobulin in liver transplant patients is fully enrolled, and we expect final data in 2008. New phase 2 studies are planned in 2007 to investigate Thymoglobulin's role in the group of bone marrow disorders known as myelodysplastic syndromes and in new-onset Type 1 diabetes.

Our phase 1 trial of GC1008 in idiopathic pulmonary fibrosis (IPF) continues in the United States and has expanded to include sites in Europe. We expect to complete this study in the second half of 2007 and to begin a phase 2 trial early in 2008. IPF is a life-threatening immune-mediated disease affecting approximately 100,000 people worldwide, and there is currently no approved therapy. Overall, fibrosis represents a large area of unmet medical need without a standard of care. We have an ongoing phase 1 trial of an Fc receptor antibody in the treatment of idiopathic thrombocytopenic purpura and are considering the application of this antibody in other immune-complex diseases, including lupus.