Bayer HealthCare and Genzyme Corporation Enter New Strategic Agreement

Berlin, Germany and Tarrytown, NY, USA, March 31, 2009 – Bayer HealthCare announced today that it has entered a new strategic agreement with Genzyme Corporation, Cambridge, MA.

Under the agreement, Bayer transfers its hematological oncology portfolio to Genzyme – including the worldwide development and distribution rights for alemtuzumab currently marketed as MabCampath® or Campath® for the treatment of B-cell chronic lymphocytic leukemia (B-CLL), and gives Genzyme exclusive worldwide licenses for Leukine® (sargramostim) and Fludara® (fludarabine phosphate) for all present and future indications. In return, Bayer will receive milestone payments and royalties, depending on sales achieved by Genzyme, amounting up to 650 million USD from Genzyme. Bayer will then focus its resources in oncology on Nexavar® and additional development products.

Under the agreement, Bayer will also return to Genzyme the worldwide distribution and development rights for alemtuzumab but the companies will continue their established codevelopment partnership for alemtuzumab for an indication in MS. If both companies are successful and alemtuzumab is approved for the use in MS, Bayer has the option and will exercise its right to co-promote this product in this new indication globally. In this case, over the course of 10 years Bayer will receive royalties between 20 to 35 percent of revenues achieved by Genzyme to a maximum of 1.25 billion USD. Under the agreement Bayer may receive possible substantial sales-based milestone payments if Genzyme does not buy out its milestone obligation in 2020 for an amount in the range of 625 to 900 million USD.

“This transaction provides clear strategic benefit for Genzyme and Bayer,” said Arthur J. Higgins, Chairman of the Executive Committee of Bayer HealthCare. “For Bayer, it significantly improves the profitability for two of our key franchises – oncology and MS. It also reaffirms our commitment to the MS community. If we are successful and alemtuzumab is approved for use in MS, it will allow us to leverage the experience and established relationships we have in this therapeutic area to serve physicians and patients in this community.”

“Additionally, this new agreement assures that Bayer and Genzyme are better aligned to maximize the opportunity for alemtuzumab in both oncology and MS, and frees up resources to accelerate the development of Bayer’s exciting oncology pipeline,” Higgins continued.

The agreement also includes, following FDA licensure, sale of the new US Leukine manufacturing facility in Seattle, Washington. Bayer’s production sites in Berlin, Germany and Garbagnate, Italy will continue to produce Fludara as a contract manufacturer for Genzyme.

It is estimated that approximately 330 Bayer positions worldwide will be affected by this agreement, of which approximately 250 are in the United States and approximately 20 in Europe. Bayer and Genzyme will work together on a process to identify opportunities for continued employment for individuals in these positions as the business and manufacturing operations transition into Genzyme.

Global Bayer sales of Campath/MabCampath and Fludara for 2008 were about 76 and 100 million Euro, respectively. Bayer markets Leukine in the US only with 2008 sales of about 46 million Euro.

The agreement must undergo regulatory review and be approved by the relevant authorities; the companies hope that this process will be finalized until the end of the second quarter 2009.

One of the world's leading biotechnology companies, Genzyme is dedicated to making a major positive impact on the lives of people with serious diseases. Since 1981, the company has grown from a small start-up to a diversified enterprise with more than 11,000 employees in locations spanning the globe and 2008 revenues of $4.6 billion. In 2007, Genzyme was chosen to receive the National Medal of Technology, the highest honor awarded by the President of the United States for technological innovation.

With many established products and services helping patients in approximately 100 countries, Genzyme is a leader in the effort to develop and apply the most advanced technologies in the life sciences. The company's products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease, and diagnostic testing. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need.