As a Massachusetts resident, I have been following the story of Genzyme back to Sept. 2001 drawing on my understanding of the ecosytem that surrounds a corporate balance sheet and the intersection of a business game with government, people and non government organizations.
While I have not worked at Genzyme, I have developed an opinion that Genzyme operates a culture lost in its past success based on a founders passion and has not adapted itself in an ecosystem that can sustain itself and influence a health ecology around the globe. Genzyme is operating in the tradition of any company responding to "Wall Street" ups and downs and has shaped its agenda to sustain.
This is no surprise. Most US based companies that mustered fast growth profits based on a tradition of investment that limits its focus on ROI for shareholders rather than a triple bottom line. Most of the companies and economic decision makers perpetuate a corporate culture based on historical success profitable until a harmful event occurs. The response to the harmful event become the roadmap for the future.
Genzyme has experienced this kind of event. June 2009, a virus outbreak in its Allston MA manufacturing plant resulted in steep delays of production of drugs critical to the treatment of people with Gaucher or Fabry Disease. The initial response shut down this plants operations. In the months that followed, it became clear that Genzyme had not developed manufacturing production systems that prevent hazardous exposure. The delays to correct the problem indicated Genzyme did not have skill and competence in applying the systems and processes for manufacturing that comply with FDA requirements or are standard practice for a mature and stable company with profit. By April 2010 the FDA levied a $175M fine on Genzyme for the event and poor response.
The incident and the lack of quality response that follows is smaller scale than the impact of the BP Oil skill, but reflects the ongoing types of drama that occur when a profitable company grows in size and does not put systems in place to respond strategically to the requirements of GRI, GRI or ESG metrics.
Most of the ongoing drama's in industry today and years past reflects this viscious cycle. The State of Massachusetts where I lived has not been successful in breaking its this destructive pattern. I saw this pattern form in the mid 80's with the demise of Digital Equipment Corporation (DEC). In 1986, DEC stood strong with 160,000 employees globally. Then through the dysfunction of its CEO, Ken Olsen, who did not believe personal computing was the new wave, DEC began a cycle of destruction and downsized over the next 5-7 years from 160,000 employees globally to fewer than 35,000. DEC was then acquired by Compaq. Compaq was absorbed by Hewlett Packard and the drama continues with a focus on CEO behavior and ethic that has resulted in HP dismissing its past two CEO's; Carly Fiorina and Marc Hurd.
On the brighter side, I view Genzyme can shift away from this vicious cycle because of the current progress by 7700 companies that comprise the membership of the UN Global Compact.
Genzyme today stands at a door of possibility to sustain its company by adopting the action research practice of the UN Global Compact and can learn from the progress of companies, e.g. Danisco and Sanofi Aventis and the results they have achieved from defining a a steep CSR/Sustainability Agenda.
In this particular case, Sanofi Aventis happens to be a company that offered an unsolicited bid to Genzyme which was refused and is now rumored to be positioned to be conversing with Genzyme Board of Directors, e.g. Carl ICann; who are open to selling their stock to Sanofi Aventis.
Whether on its own or merged with Sanofi Aventis, the solution for Genzyme to sustain is to organize itself to view the Genzyme economy as a participant in an ecosystem that can sustain if it shifts its attitude and perspective to adopt a global agenda for sustainability from which to survive. If Genzyme economic decision makers embark on embedding sustainability as part of a global agenda, they could even influence a struggling state that has had massive economic decline and job loss and shift the US challenging experience of a declining economy.
If Genzyme can begin now with review of Sanofi Aventis, 2009 CSR report. Sanofi Aventis has had significant progress in implementing its steep commitment to CSR, as reported in its recenlty released 2009 CSR report. This could be the simplest gesture of getting on track that Genzyme could initiate now.
Sanofi Avenits' virtual report provides an audio presentation Christopher A. Viehbacher, CEO, Sanofi Aventis outlines in less than 2 minutes Sanofi Aventis clear commitment to its steep global mission to improve the health of as many 6.8B people walking the planet. The strategy includes addressing present and future public health agenda, increasing innovation to R&D and opening the company to merger acquisitions and building infrastructure to make the world a better way to live.
Genzyme's auditor is Deloitte Touche, who authored the CSR Sustainabililty Framework for adoption by the UN Global Compact membership. I must admit, I find it ironic that I have seen nothing in the Boston or national investment press about how an agenda of Sustainability is an opportunity for Genzyme. I did one last quick "internet" search at Foley and Lardner, LLP search engine that brought me to an archive of articles on Genzyme at the Mass High Tech Press Outlet.
How is the EcoSystem that surrounds Genzyme Responding?
If you take the time that I did last night to trace through 2 years of press dating back to June 16, 2009 - you can view some serious glitches in the the system of regulation that surrounds Genzyme based on the American tendency to respond to issues in business by evoking "laws of fear" or fall back on the drama of the shareholder reports authored by investment sites and legal authorities that Genzyme is leading itself into a corner to end up with a "hostile takeover." Yesterdays headline in the Boston Globe announced a 1,000 person layoff. If you read closely in the fine print, there is no immediate threat of a 1,000 person pink slip day of layoff. The threat of layoff was defined as a workforce reduction over the next 15 months of 1,000 employees.
The other feed to Genzymes instability has been it price per share dance since 2008. With the outbreak of viruses that contaminated the Allston plants drug production of Fabrizyme and Cerazyme that Genzyme's stock value fell from its all time high of $80 a share in 2008 to an all time low of $47.16 this Spring. With the press buzz regarding the Sanofi Aventis offer the stock climbed slightly above $70.00 a share by the end of July 2010. This would make any company ripe for a merger acquisition.
In contrast to share value, Genzyme profits in 2009 of $422.3M on $4.5B in sales sustains its position as a Fortune 500 company. So the $175M FDA fine paid from profit seems to have sparked more harmful activity rather than inspire a change to leadership based on ESG investment practices.
Biopharm has been slow to move into a Sustainability framework beyond the metrics of corporate citizenship, green building and volunteerism. Genzyme is proud of its Green Building Corporate Headquarters in Cambridge, MA. But none of this allays my continued concern as a person who residees in the United States in Massachusetts where Genzyme is head quartered. Successful Biopharm of the 90's is no longer the path for success today. Matthew Emmens, CEO made this clear in his presentation last April at Babson College Conference for the Life Sciences.
The ecosystem that surrounds Genzyme is a system of defeat perpetuating the economic downturn in Massachusetts that also swells throughout the United States. Genzyme lives in a system of government, regulation and economic development that is faltering on a federal and state level and does not speak the speak of a company living in a global economy. The FDA views this fine cutting into their profits as a constructive step. This makes me wonder why the FDA could not have simply asked that these funds of profit be directed to resources that correct the problems and steer Genzyme to a sustainable future?
The tradition of response in the United States to catastrophes of this kind, is to fire a CEO, fine a company or make the company directly responsible for the harm it has caused its consumers. Massachusetts now stands to have another decline in its job census the the Massachusetts High Technology Council and our State Leadership has failed to alter.
I could not find through my screen to the "Internet," anything that showed me that Genzyme has formed productive partnerships with government and NGO economic development leaders to breath life into a regional and global ecosystem in the economy of suppliers, patients, distributors through out is global geography.
The most popular news outlets reporting on Genzyme are perpetuating the tradition of reporting that focused on lost profits, hostile take overs, lost jobs, and a stock valuation that is unsteady and emotionally reactive. A human side to this story was brought to life by reporters, who interviewed patient families about their history of loyalty, but I could find no story on how Genzyme was going to assure a response of quality for the production and supply maintenance of the drugs these families have come to rely on. .
Can Genzyme find an Ecosystem to Regroup ?
No where have I found in the reports, a "tale of meaningful use," where Genzyme is adopting the priniciples modeled through strategy and action similar to the approach led by Kathryn Winkler, Chief Sustainability Officer for EMC. Aman Singh, Vault.com CSR and Diversity Editor interviewed me last April on how I perceived Kathryn's CSR role and why this is different response than most companies as to how they approach the green, csr or sustainability practices. In my interview with Aman, I pointed out that
"Kathrin's skill of engaging the EMC workforce into the vision of sustainability is based on a simple premise: 'corporate sustainability is really about business survival: Take the long view, or your business won't survive in a failing global society or environment. Long-term sustainability affects customers, employees, suppliers, neighbors, partners, governmental bodies, and civil society. If we make our business choices based on how we interact with those stakeholders, then we are promoting sustainability."
This view of engagement, which I teach in a program to my leadership clients hold high regard for the social network that surrounds an economy of resource that serves all stakeholders with a global view that we now live in a time of business, work and living that requires values, principles and infrastructure that sustains health, environment, and planet. Without this view, we will continue to perpetuate a more rapid stream of destruction as evidenced by the BP Oil Spill and the increasing number of hazards impacting the health of the environment and people.
What is in the future for Genzyme?
I chose not to approach Genzyme's current situation by writing a tale of woe that predicted more failure or advised a Sanofi Aventis purchase or merger. I cannot directly influence Henri Temeer, CEO of Genzyme and its Board of Directors on what strategy to follow. Ultimately the market will see a future for Genzyme, whether it remains standing on its own as a Fortune 500 global company or merges with another global biopharmaceutical leader. Ultimately Genzyme still has time to chose its own future if they are prepared to act to #sustainnow that exercises precaution.
Lavinia Weissman is an ecologist and sustainability leadership coach with a practice based in Boston MA. Through her practice, Lavinia draws on people representing all sectors of thought to build ecological approaches to work and the economy to sustain health and the environment. Her imagination and passion is to empower practical and concrete strategies of action that exercise precaution.
About Lavinia's Approach to her Work.
Lavinia's practice draws on knowledge of ESG, CSR and Sustainability pracitces and the system of network that surround this subject matter expertise based. She is a capacity builder who draws on social network analysis and to develop deliberately designed methods of educationthat lead cultures of change through the convening of people to learn to do and act sustainably.
Lavinia is available to guide the imagination and development of thinking from a practical view for anyone who choses to navigate the chaos at the present time and find a personal path that is more productive to assuring the eco system is nourished and lives so employees, patients, shareholders and economic regions can survive.