Genzyme and Relational Investors Case

1.Think aboutGenzymeand its business model. What does a biotechcompany do? How does it succeed? What isGenzyme'sbusiness model and financial strategy? What does Henr iTermeerwant for the company going forward?

2.What is the business model for Relational Investors? What are its keys to success?

3.Why is Relational Investors targeting Genzyme? It has been noted that value is creating by investing in projects that return more than the cost of capital. Look at Exhibit 8 of the case. Suppose Genzyme'scost of capital is 10%. Where is the company creating value? Where is it destroying value? What do you think should be done to improve?

4.Evaluate Relational Investors' criticisms and Genzyme'sdefense for each of the following areas:

o Capital allocation (investing in new projects)

o Share repurchase

o Board of director composition

o Executive pay

5.What do you think Genzyme should change its financial strategy?

6.Is there any way Termeer could have avoided this conflict with Whitworth, or was it unavoidable?