STOCK OWNERSHIP

The table below shows how many shares are held by anyone who is known to us to own more than 5% of the outstanding shares of our stock. The information in this table is as of March 30, 2007, and is based on filings submitted by these companies to the SEC regarding their ownership of our stock. Unless noted, each shareholder has sole voting and investment power for the shares listed in the table.

	Shares of Genzyme Stock
	Beneficially Owned		%
ClearBridge Advisors, LLC(1) ClearBridge Asset Management, Inc. Smith Barney Fund Management LLC 399 Park Avenue New York, NY 10022		21,387,427	8.11
Marsico Capital Management, LLC(2) 1200 17th Street, Suite 1600 Denver, CO 80202		18,208,686	6.91
UBS AG(3) FBO UBS Global Asset Management Bahnhofstrasse 45 PO Box CH-8021 Zurich, Switzerland		16,564,661	6.28
Sands Capital Management, LLC(4) 1100 Wilson Blvd., Suite 3050 Arlington, VA 22209		14,265,513	5.41

(1) Filing as a group, the parties share power to vote or to direct the vote for 19,099,274 of the shares listed, and share power to dispose or to direct the disposition of all of the shares listed. Of the shares listed:

· ClearBridge Advisors, LLC is an investment advisor and shares voting power for 18,745,160 shares and shares dispositive power for 20,147,341 of the shares listed;

· ClearBridge Asset Management, Inc. is an investment advisor and shares voting power for 38,192 shares and shares dispositive power for 924,164 of the shares listed; and

· Smith Barney Fund Management LLC is an investment advisor and shares voting and dispositive power for 315,922 of the shares listed.

(2) Marsico Capital Management, LLP (“Marsico”) is a registered investment advisor. No single client of Marsico is known to own more than 5% of the shares listed. Marsico has sole power to vote or to direct the vote with respect to 15,980,543 shares and has the power to dispose, or to direct the disposition of, all of the shares listed.

(3) UBS AG is a registered bank, and disclaims beneficial ownership of the shares listed, which reflect shares beneficially owned by the UBS Global Asset Management business group of UBS AG and its subsidiaries and affiliates on behalf of its clients (collectively, “UBS”). No single client of UBS is known to own more than 5% of the shares listed. UBS has sole power to vote and to direct the vote with respect to 13,782,478 shares and has the power to dispose, or to direct the disposition of, all of the shares listed.

(4) Sands Capital Management, LLC (“Sands”) is a registered investment advisor. Shares are beneficially owned by clients of Sands and may include investment companies registered under the Investment

Company Act and/or employee benefit plans, pension funds, endowment funds or other institutional clients. Sands has sole power to vote or to direct the vote with respect to 8,728,963 shares and has the power to dispose, or to direct the disposition of, all of the shares listed.

The following table shows how many shares of our stock are beneficially owned by our named executive officers listed in the compensation table on page 21, our directors, and all of our current executive officers and directors together as a group. Unless otherwise noted, each director and officer has sole voting and investment power for the shares listed. The information in this table is as of March 30, 2007 and is based on filings submitted by these individuals to the SEC.

	Shares of Genzyme Stock
	Beneficially Owned(1)
	*( Indicates less than 1%)**
Henri A. Termeer(2)		3,926,012	1.5	%
Earl M. Collier, Jr.		277,765	*
Alan E. Smith		450,927	*
Peter Wirth		770,499	*
Michael S. Wyzga		279,184	*
Douglas A. Berthiaume(3)		171,766	*
Henry E. Blair		66,361	*
Gail K. Boudreaux		45,000	*
Robert J. Carpenter		170,249	*
Charles L. Cooney(4)		86,922	*
Victor J. Dzau		72,587	*
Sen. Connie Mack III		97,587	*
Richard F. Syron		30,011	*
All current officers and directors as a group (17 people)		7,568,192	2.9	%

(1) The shares listed include the following stock options exercisable within 60 days after March 30, 2007:

	Number of Shares Subject
	To Stock Options
Henri A. Termeer		3,272,905
Earl M. Collier, Jr.		274,848
Alan E. Smith		420,325
Peter Wirth		764,617
Michael S. Wyzga		262,914
Douglas A. Berthiaume		90,360
Henry E. Blair		66,360
Gail K. Boudreaux		45,000
Robert J. Carpenter		141,424
Charles L. Cooney		62,886
Victor J. Dzau		72,587
Sen. Connie Mack III		97,587
Richard F. Syron		30,000
All current officers and directors as a group (17 people)		6,668,321

(2) The stock beneficially owned by Mr. Termeer includes 2,371 shares held by his wife and 1,256 shares held in trusts for the benefit of Mr. Termeer’s children. Mr. Termeer disclaims beneficial ownership of all shares held by his wife and the trusts.

(3) The stock beneficially owned by Mr. Berthiaume includes 4,048 shares held by his wife. Mr. Berthiaume disclaims beneficial ownership of all shares held by his wife.

(4) The stock beneficially owned by Dr. Cooney includes 9,614 shares held jointly with his wife, 240 shares held individually by his wife, 1,882 shares held by his son and 600 shares held by his grandchildren. Dr. Cooney disclaims beneficial ownership of all shares held individually by his wife, son and grandchildren.

ELECTION OF DIRECTORS

Our board of directors is currently divided into three classes, with each class being as equal in size as possible. As a result of a charter amendment approved by shareholders at the 2006 annual meeting, nominees presented for election to the board are now elected for one-year terms. Accordingly, the nominees for election this year will have terms expiring in 2008. If for some reason a nominee is unable to serve, the nominating and corporate governance committee may recommend, and the board may propose, a substitute nominee at the annual meeting and the proxies will vote to approve the election of the substitute nominee.

We currently have nine directors. Henry Blair, whose current term as a director expires at the annual meeting, has decided to not stand for re-election. Our board has decided to fix the number of directors at eight effective at the annual meeting. Douglas A. Berthiaume and Gail K. Boudreaux were recommended for re-election to the board by our nominating and corporate governance committee and selected for nomination by the board of directors. Each of the nominees has agreed to serve as a director if elected.

Set forth below are the biographies of each nominee for election this year, followed by biographies of our directors who are continuing in office:

Douglas A. Berthiaume, director since 1988

Mr. Berthiaume, 58, has been Chairman, President and Chief Executive Officer of Waters Corporation, a high technology manufacturer of high performance liquid chromatography instrumentation and consumables, and thermal analysis and mass spectrometry products used for analysis and purification, since 1994.

Gail K. Boudreaux, director since 2004

Ms. Boudreaux, 46, has served since December 2005 as Executive Vice President of Health Care Service Corporation (“HCSC”) responsible for the Illinois, Texas, New Mexico and Oklahoma Blue Cross and Blue Shield Plans and including HCSC subsidiaries Fort Dearborn Life, Colorado Bankers Life and Dental Network of America. From September 2002 to December 2005, Ms. Boudreaux was President of Blue Cross and Blue Shield of Illinois, a division of HCSC and the oldest and largest health insurance company in Illinois. From June 1982 to August 2002, Ms. Boudreaux held various positions of increasing responsibility at Aetna, Inc., a provider of health, dental, group, life, disability and long-term care benefits, including Senior Vice President and Head of Aetna Group Insurance, Vice President of Customer Service, and Regional Manager, Capitol Region. Ms. Boudreaux is a director of Dental Network of America and HCSC Insurance Services, both of which are subsidiaries of HCSC.

DIRECTORS CONTINUING IN OFFICE

The following directors were elected at our 2005 Annual Meeting or otherwise elected to the board for terms ending in 2008:

Robert J. Carpenter, director since 1994

Mr. Carpenter, 62, is Executive Chairman of the Board of Peptimmune, Inc., a privately-held company which develops immunotherapies for treating auto-immune and allergy diseases. He served as President and Chairman of Peptimmune from January 2002 until November 2004. He is also President of Boston Medical Investors, Inc., a privately-held company he formed in 1994 that invests in early stage health care companies.

Charles L. Cooney, Ph.D., director since 1983

Dr. Cooney, 62, is a Professor of Chemical and Biochemical Engineering, Faculty Director, Deshpande Center for Technological Innovation and Co-Director of the Program on the Pharmaceutical Industry at Massachusetts Institute of Technology. Dr. Cooney joined the MIT faculty as an Assistant Professor in 1970 and became a Professor in 1982. Dr. Cooney is a principal of BioInformation Associates, Inc., a consulting company.

Richard F. Syron, director since 2006

Mr. Syron, 61, has been Chairman and Chief Executive Officer of Federal Home Loan Mortgage Corporation, commonly referred to as Freddie Mac, the second largest source of mortgage financing in the United States, since December 2003. From June 1999 to January 2000, Mr. Syron served as president and chief executive officer of Thermo Electron Corporation, which designs and develops technology-based instruments, and from January 2000 until December 2003 also served as chairman of the Thermo Electron board. Mr. Syron is currently a member of the board of the Freddie Mac Foundation, is a trustee of Boston College, and is a trustee of the Woods Hole Oceanographic Institute.

The following directors were elected at our 2006 Annual Meeting for terms ending in 2009:

Victor J. Dzau, M.D., director since 2000

Dr. Dzau, 61, is the Chancellor for Health Affairs and President and Chief Executive Officer of Duke University Health System in Durham, North Carolina. From July 1996 until September 2004, he was the Hersey Professor of the Theory and Practice of Medicine at the Harvard Medical School and Chairman of the Department of Medicine, Physician in Chief and Director of Research at Brigham and Women’s Hospital in Boston, Massachusetts. Dr. Dzau sits on the board of directors of Pepsico, Inc. and the Duke University Health System.

Senator Connie Mack III, director since 2001

Senator Mack, 66, has served since February 2005 as senior policy advisor and co-chairman of the government relations practice group at King & Spalding LLP, a Washington D.C. law firm. Senator Mack served as a United States Senator from the state of Florida from January 1989 until January 2001. After leaving the Senate, from February 2001 until February 2005 he served as senior policy advisor in the government relations practice at Shaw Pittman, a Washington, D.C. law firm. He is Chairman of the parent board of the H. Lee Moffitt Cancer Center and Research Institute. Senator Mack is also a director of Mutual of America Life Insurance Co., Darden Restaurants, EXACT Sciences Corporation, Moody’s Corp. and Spirit Aerosystems.

Henri A. Termeer, director since 1983

Mr. Termeer, 61, has served as our President and a Director since October 1983, as Chief Executive Officer since December 1985 and as Chairman of the Board since May 1988. For ten years prior to joining us, Mr. Termeer worked for Baxter International Laboratories, Inc., a manufacturer of human healthcare products. Mr. Termeer is a director of ABIOMED Inc. and is Deputy Chairman of the Federal Reserve Bank of Boston. Mr. Termeer is a trustee of Hambrecht & Quist Healthcare Investors and of Hambrecht & Quist Life Sciences Investors.

DIRECTOR COMPENSATION
for the year ended December 31, 2006

Name	Fees Earned or Paid in Cash ($)		Option Awards ($)(1)(2)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3)		All Other Compensation ($)		Total ($)
Douglas A. Berthiaume		75,000	461,223		73,911		—	610,134
Henry E. Blair		41,000	461,223		—		—	502,223
Gail K. Boudreaux		50,500	461,223		—		—	511,723
Robert J. Carpenter		47,000	461,223		—		—	508,223
Charles L. Cooney		59,500	461,223		—		—	520,723
Victor J. Dzau		51,500	628,310		—		—	679,810
Sen. Connie Mack		60,000	628,310		19,756		—	708,066
Richard F. Syron		46,833	756,348		—		—	803,181

(1) Effective January 1, 2006, we adopted the provisions of FAS 123R, “Share-Based Payment, an amendment of FASB Statement Nos. 123 and 95,” which requires us to recognize stock-based compensation expense in our financial statements for all share-based payment awards made to employees and directors based upon the grant date fair value of those awards. The amounts above represent the FAS 123R expense, excluding an estimate for forfeitures related to service-based vesting conditions, for all options that vested in 2006. On May 25, 2006, each non-employee director was granted stock options to purchase 15,000 shares of our stock at an exercise price of $58.50 per share, which was the closing price of our stock on that date. Each of these option grants have an aggregate grant date fair value of $469,862, or $31.32 per share, computed in accordance with FAS 123R and based on the Black-Scholes option pricing model. The 2006 expense for these grants was $283,204. We incorporate our discussion of the relevant assumptions we use to calculate grant date fair value into this section by reference from the section “Accounting for Stock-Based Compensation” in “Note A. Summary of Significant Accounting Policies” and “Note M. Stockholders’ Equity” of the “Notes To Consolidated Financial Statements” in our 2006 Annual Report on Form 10-K.

For Dr. Dzau and Sen. Mack, amounts also include expense for the incremental vesting of options granted in 2003 that vested in 2006 with current period expense of $60,275 and additional options granted in 2005 with current period expense of $106,811. The options granted to Dr. Dzau and Sen. Mack in 2005, which vested in May 2006, were a result of a change to an annual automatic grant of options under the 1998 Director Stock Option Plan that was approved by shareholders in May 2004. In order to ensure all our directors received the same total equity value and to complement options to the other directors granted under the new provision, Dr. Dzau and Sen. Mack were each granted additional options for 9,000 shares.

In addition, Mr. Syron was granted options to purchase 15,000 shares on February 28, 2006, the date he was elected to the board. These options have an exercise price of $69.34 per share, which was the

closing price of our stock on February 28, 2006 and vested on May 25, 2006. The options have a grant date fair value of $473,144, or $31.54 per share computed in accordance with FAS 123R and based on the Black-Scholes option pricing model.

(2) Non-employee directors had the following aggregate options outstanding as of December 31, 2006:

	Stock Options
	Outstanding
Douglas A. Berthiaume		90,360
Henry E. Blair		66,360
Gail K. Boudreaux		45,000
Robert J. Carpenter		141,424
Charles L. Cooney		62,886
Victor J. Dzau		72,587
Sen. Connie Mack		97,587
Richard F. Syron		30,000

These stock options have an average exercise price of $42.75 per share and a remaining average life of 5.9 years.

(3) Pursuant to the 1996 Directors Deferred Compensation Plan, Mr. Berthiaume and Sen. Mack defer all of their cash compensation into a Genzyme stock account which is invested in hypothetical shares of our stock. Dr. Cooney deferred compensation into a stock account from July 1996 through September 2002. Payments will be made in annual installments, up to a maximum of five, beginning in the calendar year following the year in which service as a director ends. Under the plan, if any payments are scheduled to be made to directors while they continue to serve on our board, those payments may only be made in cash.

Mr. Berthiaume has deferred a total of $170,750 under a deferral agreement dated March 29, 2004. In 2006, he deferred a total of $75,000 and was credited with 1,147.247 shares in his stock account. At December 30, 2005 he had a balance of 1,628.719 shares in his stock account, which had a market value of $115,291. At December 29, 2006, he had a total of 2,775.966 shares in his stock account, which had a market value of $170,944, providing him with earnings under the account of $55,653 for 2006. In addition, under a previous deferral agreement, Mr. Berthiaume elected to receive payments beginning in 2002. He received a cash payment of $18,258 in 2006 which was the last payment under that agreement.

Dr. Cooney has deferred a total of $156,250 under a deferral agreement dated June 23, 1996. He has been credited with a total of 3,977.206 shares in his stock account, which had a market value of $281,507 at December 30, 2005 and $244,916 at December 29, 2006, providing him with no earnings under the account for 2006.

Senator Mack has deferred a total of $277,000 under a deferral agreement dated June 17, 2001. In 2006, he deferred a total of $60,000 and was credited with 911.534 shares in his stock account. At December 30, 2005 he had a balance of 3,953.900 shares in his stock account, which had a market value of $279,857. At December 29, 2006, he had a total of 4,865.434 shares in his stock account, which had a market value of $299,613, providing him with earnings under the account of $19,756 for 2006.

Employee directors do not receive any additional compensation for their service on the board of directors. Non-employee directors receive the following cash compensation for their service on the board and its committees:

· an annual retainer of $25,000, paid quarterly;

· $2,000 for each board meeting they attend;

· $1,500 for each committee meeting they attend;

· an annual retainer of $14,000 for service as audit committee chair, paid quarterly;

· an annual retainer of $8,000 for service as compensation committee chair, paid quarterly; and

· an annual retainer of $4,000 for service as the chair of the nominating and corporate governance committee, paid quarterly.

Non-employee directors also receive stock option grants for each year (or partial year) that they serve on our board. Stock options are granted automatically under our 1998 Director Stock Option Plan on the date of each annual meeting of shareholders or, in the case of directors elected other than at an annual meeting, upon election to the board. The plan provides for an annual grant of options to purchase 15,000 shares of our stock to each non-employee board member, that fully vest on the date of the next annual meeting following the date of grant. Each option has an exercise price equal to the closing price of the stock on the date of grant and a term of ten years. The plan provides for acceleration of exercisability of all unvested options in the event of a change in control of the company. If the proposed 2007 Director Equity Plan is approved at the annual meeting, eligible directors will receive future equity awards as described in that plan, a copy of which is included as Appendix A to this proxy statement.

Under our 1996 Director Deferred Compensation Plan, each director may choose to defer the cash compensation payable to him or her as a director until his or her service as a director ends or until a different specified date. The director can elect to defer compensation in exchange for a future payment of cash, stock or a combination of cash and stock. As of December 31, 2006, three of the eight eligible directors had accounts under the plan.

BOARD MEETINGS AND COMMITTEES

The board of directors held eight meetings during 2006, including an annual two-day strategic review. The board has a standing audit committee, compensation committee, and nominating and corporate governance committee. Each committee operates under a written charter adopted by our board, each of which is publicly available in the “Our Commitment” section of our Web site, www.genzyme.com. The contents of our Web site are not part of this document.

We expect our board members to rigorously prepare for, attend and participate in all board and applicable committee meetings. Absent compelling and stated reasons, directors who attend fewer than 75% of regularly scheduled board and committee meetings in each of two consecutive years should not be nominated for re-election when their current term expires. Each board member is expected to ensure that other existing and planned future commitments do not materially interfere with his or her service as a director. We also expect that all of our board members will attend our annual meeting of shareholders. In 2006, each director attended at least 79% of all meetings of the board and all committees of the board on which he or she served. In addition, all of our directors attended the May 25, 2006 annual meeting of shareholders.

The board has reviewed the independence of each director, taking into account potential conflicts of interest, transactions, and other relationships that would reasonably be expected to compromise a director’s independence. In performing this review, the board reviewed the information disclosed under the heading “Significant Relationship” on pages 48 through 51 of our consolidated financial statements as of, and for the year ending, December 31, 2006, and other information disclosed in director responses to a questionnaire inquiring about, among other things, their relationships (and those of their immediate family members) with us, their affiliations, and other potential conflicts of interest. The board has determined that Mr. Berthiaume, Ms. Boudreaux, Mr. Carpenter, Drs. Cooney and Dzau, Senator Mack and

Mr. Syron are independent directors as defined by the listing standards of The NASDAQ Global Select Stock Market®. Mr. Termeer is not independent because of his employment as our chief executive officer. Mr. Blair, a current member of the board who is not standing for re-election this year, is not independent because of his employment as the chief executive officer of Dyax and our relationship with Dyax described under “Certain Relationships and Related Persons Transactions” on pages 44-45 of this proxy statement.

Audit Committee

We have a separately designated standing audit committee established by the board for the purpose of overseeing our accounting and financial reporting processes and audits of our financial statements. The audit committee held eight meetings in 2006. Current members are Mr. Berthiaume (chairman), Ms. Boudreaux, Senator Mack and Mr. Syron, each of whom is independent as defined by the NASDAQ® listing standards. Our board has identified Messrs. Berthiaume and Syron as our audit committee financial experts. The committee evaluates and selects our independent auditors, reviews our audited financial statements and discusses the adequacy of our internal controls with management and the outside auditors. The committee also supervises the relationship between the company and its outside auditors, reviews the scope of both audit and non-audit services and related fees, and determines the independence of the outside auditors.

Audit Committee Report

In the course of our oversight of Genzyme’s financial reporting process, we have (i) reviewed and discussed with management the audited financial statements for the fiscal year ended December 31, 2006, (ii) discussed with PricewaterhouseCoopers LLP, the company’s independent registered public accounting firm, the matters required to be discussed by Financial Accounting Standards Board Statement on Auditing Standards No. 61, Communication with Audit Committees, and (iii) received the written disclosures and the letter from the auditors required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, discussed with the auditors their independence, and considered whether the provision of non-audit services by the auditors is compatible with maintaining their independence.

Based on the foregoing review and discussions, we recommended to the board that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2006 for filing with the SEC.

	By the Audit Committee,
	Douglas A. Berthiaume, Chairman
	Gail K. Boudreaux
	Senator Connie Mack
	Richard F. Syron

Nominating and Corporate Governance Committee

The purpose of the nominating and corporate governance committee is to assist the board of directors by identifying for nomination qualified individuals to become board members, to nominate candidates for appointment to board committees, to monitor a process to assess the effectiveness of the board and its committees, and to develop and implement the company’s corporate governance guidelines. The committee met three times during 2006. Current members of the committee are Sen. Mack (chairman), Drs. Cooney and Dzau, Ms. Boudreaux, and Messrs. Berthiaume, Carpenter and Syron, each of whom is independent as defined by the listing standards applicable to issuers listed on NASDAQ. Mr. Carpenter became a member of the committee in February 2007.

Director selection criteria. The nominating and corporate governance committee is responsible for reviewing with the board, on an annual basis, the appropriate personal characteristics and professional competencies required of board members to work together as a team to properly oversee our strategies and operations.

In general, all board members are expected to possess certain personal characteristics necessary to creating a functional board: high personal and professional ethics, integrity and values; practical wisdom and mature judgment; an inquisitive and objective perspective; professional experience at a policy-making level in business, government, education or medicine; time availability for in-person participation at all board and committee meetings; and a commitment to representing the long-term interests of our shareholders. We also recognize the desirability of racial, ethnic and gender diversity in board membership.

In addition, the board as a group is expected to encompass the range of professional competencies advantageous to overseeing our diverse businesses. These professional competencies include accounting and financial literacy, industry knowledge, patient-based or payor-based experience or perspective, relevant medical or scientific knowledge, business, government or management experience, and experience with international markets.

Independence is an important selection criterion for nomination to our board. Independent directors should be free of any relationship with us or our management that may impair, or appear to impair, the director’s ability to make independent judgments. At a minimum, independent directors must satisfy the criteria for independence established by NASDAQ. Currently all of our directors are independent except for Mr. Termeer.

Finally, candidates should be enthusiastic and excited about their service on our board and working collaboratively with existing board members to create value for all of our shareholders.

Shareholder nominations for directorships. Shareholders may propose a director candidate for consideration by the nominating and corporate governance committee by directing such recommendation to the Secretary of Genzyme Corporation at 500 Kendall Street, Cambridge, Massachusetts 02142. The recommendation should include the nominee’s name, qualifications for board membership and consent to nomination, as well as the name, number of shares of our stock owned and contact information of the person making the recommendation. A shareholder wishing to formally nominate a director for election at a shareholder meeting must comply with the provisions in our bylaws addressing shareholder nominations of directors. The committee will assess such recommendations and nominees based on the director selection criteria described above.

Executive search firm. For the last four years, the nominating and corporate governance committee has engaged Spencer Stuart, an executive search firm, to assist in identifying qualified independent candidates for addition to our board. Spencer Stuart has been charged with the task of identifying, screening and interviewing potential candidates for submission to the committee for their consideration. Mr. Syron, who was elected to the board in February 2006 to fill a vacancy created by the retirement of Dr. Constantine Anagnostopoulos in May 2005, was a candidate recommended by Spencer Stuart for consideration by the committee.

Compensation Committee

The compensation committee held four meetings in 2006. Current members are Drs. Cooney (chairman) and Dzau and Messrs. Berthiaume and Carpenter. Mr. Carpenter was appointed to the committee in February 2007. Each member of the committee qualifies as an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code, as a “non-employee director” as defined by Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as “independent” as defined by the listing standards applicable to issuers listed on NASDAQ. The committee determines the compensation to be paid to all executive officers, including the chief executive officer, and administers our company benefit and equity plans, except the 1998 Director Stock Option Plan and the proposed 2007 Director Equity Plan. The committee is responsible for making recommendations to the board for the compensation and benefits for non-employee directors.

The compensation committee may delegate to subcommittees or to the company’s management some of the responsibilities of the full committee. The committee may delegate to an individual employee of the company the responsibility of the committee to approve certain stock option grants; however, such grants are made pursuant to a matrix or other guidelines previously approved by the committee. This delegated authority does not extend to grants made to members of the board or to officers of the company within the meaning set forth in the NASDAQ listing standards.

Compensation Committee Interlocks and Insider Participation

The compensation committee is comprised entirely of independent directors.

Compensation Committee Report

In fulfilling our role to discharge the board’s responsibilities relating to the total remuneration of the company’s senior executives and the company’s benefit and equity plans, we have reviewed and discussed with management the Compensation Discussion and Analysis found below. Based on the foregoing review and discussions, we recommended to the board that the Compensation Discussion and Analysis be included in the company’s proxy statement on Schedule 14A for filing with the SEC.

	By the Compensation Committee,
	Charles L. Cooney, Chairman
	Douglas A. Berthiaume
	Victor J. Dzau

COMPENSATION DISCUSSION AND ANALYSIS

In considering our executive compensation policies and practices, we have an obligation to balance our interest in conserving cash and minimizing shareholder dilution, with our interest in using compensation to attract, retain and motivate company management and employees who contribute to our success. In reconciling these competing concerns, we strive to act in the long-term best interests of the company and our shareholders. The board of directors has chartered the compensation committee to discharge the responsibilities of the board to establish executive compensation policies and oversee executive compensation practices. The compensation committee meets regularly with the full board to keep them informed of executive compensation issues, and consults with compensation consultants, academics and other experts to support the board’s commitment to be knowledgeable and current regarding executive compensation trends and best practices. Twice in the last four years the full board has been included in special meetings focused exclusively on executive compensation. These meetings were designed to educate board members on key issues in the business environment and the role those issues

play in executive compensation. These meetings also included reviews of our compensation philosophy for both equity and cash compensation, and accounting and disclosure issues.

Objectives and Overview of Executive Compensation. Our objective is to make executive compensation decisions that are thoughtful, straightforward and consistent with the overall goals of the organization.

· Our executive compensation philosophy is built on a platform of simplicity and alignment with shareholder interests. Therefore, we pay our executives using three components: base salary, annual incentive cash awards and long-term equity awards. We have avoided other long-term obligations such as defined benefit programs, supplemental employee retirement plans, deferred compensation, or retiree health benefits.

· Our perspective is long-term. Our compensation program reflects the nature of the business cycle of product development in our industry. This approach attempts to align our compensation decisions with shareholders’ interests in our achievement of sustainable business objectives and corporate performance goals. We operate in a complex, dynamic environment and it often takes several years to achieve our goals. For example, moving a product from concept to market can take in excess of 8 years, and many products never make it to market. Acquisitions, of products or companies, are opportunistic in nature. Building an infrastructure to accommodate future products and growth requires early investment with no guarantee of return.

· We also maintain a philosophy of inclusiveness by providing a broad-based equity program to motivate all employees to become stakeholders and invest in achieving success for the company. We believe a broad-based equity program further aligns our employees’ interests with our shareholders’ interests.

Process and Philosophy for Setting Executive Compensation. We look to our named executive officer group to focus on building and creating the future of the company and expect them to make sustainable strategic decisions that continue to move the company successfully forward. We apply deliberate, thoughtful processes throughout the year to discuss and correlate executive compensation levels with performance. By making compensation decisions based on both competitive market practice and our unique organization and culture we strive to achieve a balance between creating an attractive compensation program for our executives and recognizing shareholder interests in limiting company expenditures.

The goals we set for our chief executive officer and other executive officers are focused on a sustainable business strategy that includes:

· financial performance;

· company growth through both acquisitions and internal product development;

· managing the complexities of a global business with a diverse and growing product portfolio and expanding the business into a greater number of new markets; and

· operational business management, including development of a diverse and complex global manufacturing infrastructure, investment in strong science and research capabilities, integration of acquisitions, and development of a strong executive management team.

The compensation committee engages Towers Perrin, a leading international compensation consulting firm with special expertise in biotechnology and pharmaceutical industry compensation practices, to assist in its analysis of executive compensation. Towers Perrin has advised the committee since the mid-1990’s and provides a third party perspective based on their extensive knowledge of the industry as well as cross-industry general practice. They advise the committee of developments in the design of

compensation programs and provide benchmarks to compare our total compensation packages to those of companies with which we compete for executive talent. Towers Perrin meets one-on-one multiple times during the year with the chairman of the compensation committee and provides external perspective and information to us throughout the year. At the committee’s request, Towers Perrin also works with senior management to discuss data, trends and best practices, and provides findings and recommendations. Towers Perrin reports directly to the committee regarding executive compensation issues; however, they do perform other benefits-related work for us.

Market Benchmarking. Each year the compensation committee analyzes the compensation practices of peer companies from the biotechnology industry sector for comparison purposes and to gain an external perspective in preparation for setting executive salaries and target incentives for the coming year. The committee regularly reviews this industry group for its continuing relevance as well as other business sectors to ensure that the committee is comparing executive compensation levels against appropriate companies. Using this industry-based list, the committee then analyzes specific financial characteristics of each company to select our core peer group, which include:

· revenue size and growth rate;

· research and development expense;

· employee size;

· market capitalization;

· one- and three-year total shareholder return;

· net income;

· similar core businesses to ours; and

· international presence.

Following the compensation committee’s analysis and discussions with Towers Perrin and select senior management personnel, the committee selected the following companies as our core peer group for 2006: Amgen Inc.; Biogen Idec Inc.; Chiron Corporation (which was acquired by Novartis AG in April 2006); Genentech, Inc.; Gilead Sciences, Inc.; MedImmune, Inc.; Millennium Pharmaceuticals, Inc.; and Sepracor Inc. The committee looks at the data from this peer group on a holistic and individual basis to consider competitive pay positioning.

In addition to peer group analysis, each year the compensation committee considers survey data for market comparisons for selected executive positions. For 2006, the committee looked at the Towers Perrin Executive Compensation Data Bank surveys and the Watson Wyatt Biopharmaceutical and Pharmaceutical Long-Term Incentive Survey. These surveys help the committee to benchmark our incumbent executives to appropriate job match positions by looking at scope of responsibilities and internal comparisons.

Mr. Termeer’s compensation. At its meeting in December 2005, the compensation committee set executive compensation levels for 2006. In setting Mr. Termeer’s compensation, the primary points of reference are his performance over the past year and current competitive practice. In addition, the committee evaluated our sustained financial performance during his tenure, historical stock option grants to him over the past 10 years, and his cash compensation levels for the past 10 years. The committee also considered Mr. Termeer’s application of sound business judgment and the leadership he has provided to strategically develop and manage the business. The committee examined his overall job performance and considered the business challenges facing the company in the coming years. In setting his salary for 2006, the committee considered several items that significantly impacted the overall corporate results for 2005, which it believes will sustain continued growth and diversification, including:

· Strong stock and financial performance in 2005 with significant increase in revenues;

· Completion of four major expansion projects in Belgium, Ireland and the UK to support production for a broad range of products, including monoclonal antibodies and proteins, Myozyme® and antibody discovery research;

· Strengthening of our oncology business through the successful integration of ILEX Oncology, Inc. into our business;

· Expansion of the number of products that have multiple indications, which creates complexity in clinical trials and manufacturing, and supports a broader product portfolio;

· Expansion of the company’s capacity for growth in global markets through a strong acquisition strategy, the creation and continuation of a dynamic environment relative to the company’s peers, and a strong investment in science and research; and

· Integration of several strategic acquisitions and collaborations in oncology, cancer diagnostics, orthopaedics and renal disease, including three acquisitions in 2005:

—the re-acquisition of the sales and marketing rights to Synvisc® from Wyeth;

—the acquisition of Verigen AG, providing us with MACI®, a proprietary cell therapy product for cartilage repair; and

—the acquisition of Bone Care, Inc., adding Hectorol®, a treatment for hyperparathyroidism in patients on dialysis, expanding our renal product offerings.

The compensation committee believes that a significant portion of Mr. Termeer’s cash compensation should be tied to financial performance. The committee concluded that in 2005 all areas of our financial performance were strong and Mr. Termeer’s increase should reflect a structural emphasis on the annual incentive cash compensation. The committee set Mr. Termeer’s base salary at $1,433,000 and his annual cash incentive target at $1,700,000. For his annual cash incentive target, approximately 60%, or $1,020,000 is tied to financial corporate performance and 40%, or $680,000 is tied to individual performance. The committee increased Mr. Termeer’s overall cash compensation to $3,133,000.

In May 2006, the compensation committee granted Mr. Termeer options to purchase 400,000 shares of our stock. The committee determined the number of options to grant to Mr. Termeer by looking at the grant practice of our peer group and again considering Mr. Termeer’s unique role in our industry and consistent strong long-term performance in developing, growing and managing the business for the past 23 years. The committee reduced the number of shares in his option grant from the previous year, however, the committee believes the value of his equity award remains at a competitive level.

Setting 2006 base salary and target annual incentives for other named executive officers. To determine executive compensation for 2006, the compensation committee reviewed the compensation data of peer group companies, and compensation surveys of the pharmaceutical and biopharmaceutical

industries. The committee’s objective is to ensure that base salary ranges for our executive positions are aligned with our peers and reflect the individual performance of each executive. Each year the committee reviews our compensation philosophy for both cash and equity compensation, with the objective of ensuring our compensation program continues to be competitive and appropriate.

For the named executive officers other than himself, Mr. Termeer provides the compensation committee with an assessment of each officer’s individual performance and his recommendation for merit increases and target annual cash incentive compensation amounts. Because the named executive officers are responsible for implementing our strategic direction, Mr. Termeer’s recommendations focus on sustainable, strategic decision-making capabilities for each individual. The committee also reviews a three-year history of cash compensation and stock option grants for each of the named executive officers. The committee reviews Mr. Termeer’s recommendations and makes its compensation decisions based on each officer’s performance, its assessment of that individual’s performance relative to the group and in light of market information. At its December 2005 meeting, the committee approved base salary increases ranging from 3.5 - 4% for 2006 for the named executive officers other than Mr. Termeer.

A significant portion of executive compensation consists of annual cash incentive awards. The annual cash incentive targets are tied to performance measures, at both the corporate level and at individual areas of responsibility. Approximately 76% of the annual cash incentive target for the named executive officers is tied to corporate financial performance. The corporate financial performance component is payable based on the extent to which we achieve the operating income goals approved by the board in connection with approving the 2006 annual budget. The current corporate financial performance annual cash incentive formula allows for 100% payment when 100% of the target is met. If the target is exceeded, for every 1% above the target, 2.5% is added to the annual cash incentive payment up to a maximum of 150% payment for achievement of 120% or more of the target. If the target is not met, for every 1% below the target, 1.5% is deducted from the annual cash incentive payment. No corporate annual cash incentive is paid if less than 86% of the target is met.

Equity. For our named executive officers, equity is used as an incentive to manage the business to realize and maximize long-term shareholder value. We believe that equity compensation provides all of our employees an appropriate long-term incentive to motivate them, retain them in a future-oriented environment such as ours and to align our compensation program with shareholder interests. To utilize equity compensation responsibly and maintain competitiveness, the compensation committee establishes guidelines to limit the total number of equity awards that may be granted in a fiscal year to a stated percentage of shares outstanding. In determining the number of options to grant to each named executive officer, the committee looked at competitive equity data provided by Towers Perrin, our expected business position for the next several years and our stock option granting history for the last three years. In May 2006, the committee approved stock option grants ranging from 49,000 to 69,000 shares for our named executive officers, other than Mr. Termeer, at the same time that they approved stock option grants to all other eligible employees.

Without sustained growth and the resulting positive stock price performance, our executives carry the risk that they will not be able to realize any gain from the long-term equity-based awards. Our long-term incentive program, by design, provides a proper link to shareholder interests and to the company’s long-term performance. The compensation committee does not consider realized gains from prior stock option awards in its compensation decisions, for either cash or equity, as such awards recognize past achievement. While we encourage share ownership through this program, we do not have a formal share ownership policy. Historically, on average, our executive officers wait six years before exercising stock options. In addition, we do not have a specific policy regarding hedging the economic risk of share ownership, but advise our executive officers about the potential for violations under the short-sale rules of the Exchange Act.

Equity grant guidelines and timing. We award equity under three programs: a new hire grant program, a general grant program and a recognition grant program. Each year the compensation committee establishes guidelines and reviews our philosophy for granting equity under each program to determine appropriate and competitive grant levels. We have in place mechanisms for each of the three programs discussed below to help ensure that stock option grants are not back-dated. Each year the committee decides how it wants to use equity for the year, considering employee eligibility and past awards, and sets a budget to manage its use. For 2006, the committee decided to continue a broad-based granting philosophy, use stock options as the exclusive equity award, and manage to a maximum of 3.0% of shares outstanding for the combined programs.

New Hire Stock Option Grant. We utilize a new hire stock option grant program as an attraction tool in the hiring process for employees and executives throughout the year. Each year the compensation committee approves the total pool of stock options available for the program. The committee has approved a new hire grant matrix, based on salary level, that determines the number of options that may be awarded to eligible new employees, other than executive officers, when they are hired. The committee has authorized our senior vice president, chief human resources officer to pre-approve and administer new hire grants pursuant to the matrix. The committee reviews all new hire grants on an annual basis. Grants to newly hired executive officers require prior approval by the committee. The grant date and exercise price of a new hire stock option is set as the closing price of our stock on the date the employee begins work at Genzyme.

General Equity Grant. Our largest equity program, which includes executive officers and employees, is a broad-based equity grant of stock options pursuant to an overall long-term equity incentive compensation plan. Each year the compensation committee decides if it is going to approve a broad-based equity grant and if so, plans for it to occur on the date of the annual shareholders meeting. Such grants have covered approximately 85% of the shares granted during the calendar year for the past few years. Our bylaws call for the annual meeting to be held on the fourth Thursday of May or as otherwise determined by the board. The date of these annual meetings is set months in advance as part of the normal scheduling process for the board and its committees. This grant is not timed to coincide with the release of any material non-public information. The committee pre-approves a grant matrix, based on employee base salary and individual performance review rating, which determines the number of options that may be awarded to each eligible employee, other than the executive officers. The exercise price of the stock option grant is pre-approved by the committee and set as the closing price of the stock on the date of the grant, which is the date of the annual shareholders meeting.

Recognition Stock Option Grant. We also have a long-term equity incentive program to recognize those employees who demonstrate excellence and outstanding achievement during the year. Executive officers are not eligible for this program. Each year the compensation committee approves the total pool of options available for the recognition stock option program and has authorized our senior vice president, chief human resources officer to approve and issue the individual grants for the recognized employees. The individuals are nominated and vetted through an approval process that includes their immediate supervisor, the executive in charge of the business unit and our human resources department. At each meeting, the committee reviews all recognition grants that have been awarded since the last meeting. The exercise price of the option is set as the closing price of the stock on the date of the option grant, which is the date that all the appropriate approvals have been received and confirmed and our senior vice president, chief human resources officer signs the approval for granting the employee the recognition stock option.

Executive Employment Agreements. Messrs. Termeer and Wirth each have an employment agreement that renews automatically each January 1st for an additional one-year period, unless written notice of non-renewal is given. The agreement provides that the board, or a duly appointed committee of

the board, shall set salary annually, and that such base salary shall not be lower than the base salary for the preceding calendar year. Both agreements provide:

· certain life and disability insurance benefits;

· eligibility to participate in the company’s annual cash incentive plan;

· eligibility to participate in the company’s equity incentive plans;

· certain payments for termination without cause, even without a change in control event, or termination by the executive for good reason following a change in control;

· accelerated vesting of equity awards in the event of termination without cause due to death or disability; and

· confidentiality, non-competition and ownership of inventions provisions.

In addition, Mr. Wirth’s employment agreement obligates us to pay for malpractice insurance and attorney bar dues.

Executive Severance Agreements. We have severance agreements with all of our named executive officers other than Messrs. Termeer and Wirth, whose severance arrangements are described above. These agreements renew automatically each January 1st for an additional one-year period, unless written notice of non-renewal is given. Under these agreements, payments will be made upon the termination of the named executive officer’s employment by us without cause or by the named executive officer for good reason following a change in control.

For a more complete description and quantification of benefits payable to our named executive officers upon and following termination of employment see “Potential Payments Upon Termination or Change in Control” on pages 28-30.

None of Mr. Termeer’s, Mr. Wirth’s, or any named executive officer’s agreements contain any clawback provisions. None of the agreements provide for tax gross-up payments, which allows us to avoid the often significant costs that could be involved in gross-ups related to change in control.

Tax law limits on executive compensation. Section 162(m) of the Internal Revenue Code generally does not permit Genzyme a federal income tax deduction for taxable year compensation in excess of $1,000,000 paid to our chief executive officer and the other named executive officers of Genzyme. Certain performance-based compensation that has been approved by shareholders is exempt from the deduction limit. Although the 2006 salary and annual cash incentive awards paid to our named executive officers do not qualify for the performance-based exemptions, our shareholders have approved the 2001 and 2004 Equity Incentive Plans, which are designed to allow the deduction of the stock options granted to the named executive officers under those plans. We have in the past and may in the future award compensation that is not fully deductible under the statute when we view such compensation as consistent with our compensation policies and in the best interests of the company and its shareholders.

This discussion is intended to provide an overview and analysis of the policies and decisions made for executive compensation. We believe that the decisions of the compensation committee and the company follow a deliberate and thoughtful process and are aligned with the short- and long-term objectives of the corporation and its shareholders. The following tables and disclosures are intended to support and augment this discussion.

SUMMARY COMPENSATION TABLE
for the year ended December 31, 2006

Name and Principal Position	Year	Salary ($)	Option Awards ($)(1)(2)	Non-Equity Incentive Plan Compensation ($)(3)		All Other Compensation ($)(4)		Total ($)(5)
Henri A. Termeer	2006	1,431,938	19,166,150		1,725,500		125,330	22,448,918
Chief Executive Officer(6)	2005	1,365,000	11,338,650		1,759,500		72,855	14,536,005
	2004	1,300,000	10,044,373		1,770,000		72,575	13,186,948
Michael S. Wyzga	2006	467,654	1,940,886		433,125		11,000	2,852,665
Executive Vice President,	2005	450,000	1,817,548		445,000		8,400	2,720,948
Chief Financial Officer	2004	430,000	1,526,948		462,500		8,200	2,427,648
Earl M. Collier, Jr.	2006	514,615	2,068,913		433,125		11,000	3,027,653
Executive Vice President	2005	495,000	2,089,620		435,000		8,400	3,028,020
	2004	473,000	1,740,454		462,500		8,200	2,684,154
Alan E. Smith, Ph.D.	2006	472,692	2,280,276		342,500		11,000	3,106,468
Senior Vice President,	2005	457,000	1,325,794		348,000		8,400	2,139,194
Research; Chief Scientific	2004	439,000	1,187,498		358,000		8,200	1,992,698
Officer
Peter Wirth	2006	675,500	2,070,880		433,125		12,913	3,192,418
Executive Vice President,	2005	650,000	2,181,698		445,000		10,327	3,287,025
Chief Legal Officer(7)	2004	625,000	1,982,041		455,000		10,127	3,072,168

(1) Amounts represent the FAS 123R compensation expense, excluding an estimate of forfeitures related to service-based vesting conditions, recognized in our financial statements with respect to the vested portion of stock options granted in 2006 plus vesting that occurred in 2006 for options granted in previous years. In addition, FAS 123R requires us to fully expense stock options when there is no risk of forfeiture of the award. Mr. Termeer and Dr. Smith have each reached a company retirement eligibility threshold for option awards which provides for acceleration of vesting for stock options at termination of employment. Although Mr. Termeer and Dr. Smith’s 2006 option grants vest over four years and the company does not permit the exercise of unvested options, these grants have been fully expensed in 2006. Options granted prior to our adoption of FAS 123R will continue to be expensed over the requisite nominal vesting period.

The option awards expense was determined using the Black-Scholes option valuation model, which estimates the value of an equity award using subjective assumptions which can vary over time. Valuation information for the 2006 option awards can be found below in the “Grants of Plan-Based Awards” table on page 24. For a more complete discussion of our adoption of FAS 123R and the relevant assumptions we use to calculate the grant date fair value of option awards, see the section “Accounting for Stock-Based Compensation” in “Note A. Summary of Significant Accounting Policies” and “Note M. Stockholders’ Equity” of the “Notes To Consolidated Financial Statements” in our 2006 Annual Report on Form 10-K.

(2) Option award amounts include the following expense for options vested or expensed in 2006:

	Henri A. Termeer		Michael S. Wyzga		Earl M. Collier, Jr.		Alan E. Smith		Peter Wirth
Grant Date	Expense ($)		Expense ($)		Expense ($)		Expense ($)		Expense ($)
1/30/97		—		—		75		—		—
5/25/00		9,757		—		—		—		—
5/31/01		13,670		—		—		—		—
5/30/02		845,157		130,697		258,649		131,238		260,691
5/29/03		2,144,568		406,339		406,339		203,170		406,339
5/27/04		1,992,545		350,861		350,861		246,902		350,861
5/26/05		2,521,933		409,443		409,443		287,797		409,443
5/25/06		11,638,520		643,546		643,546		1,411,171		643,546
Total		19,166,150		1,940,886		2,068,913		2,280,276		2,070,880

Mr. Termeer and Dr. Smith have each reached a retirement eligibility threshold which provides for acceleration of vesting at termination of employment. Amounts above represent the full FAS 123R expense for their grants awarded in 2006, even though the options vest over the next four years.

In addition to any expense for options that may be granted in future years, we will incur the following expense for options granted to the named executive officers in prior years as they vest:

	Henri A. Termeer		Michael S. Wyzga		Earl M. Collier, Jr.		Alan E. Smith		Peter Wirth
Year	Expense ($)		Expense ($)		Expense ($)		Expense ($)		Expense ($)
2007		5,400,092		1,325,804		2,289,034		616,762		1,325,804
2008		3,337,489		954,183		551,993		388,109		954,183
2009		1,008,773		565,306		163,777		115,119		565,306
2010		—		159,512		—		—		159,512

(3) In February 2007, the compensation committee evaluated the achievement of the 2006 annual cash incentive targets. For 2006, the company exceeded the operating income goals established in the 2006 budget by 1% and, in accordance with the corporate financial performance formula, the committee awarded the corporate performance cash incentive at 102.5% of target for all of the named executive officers. In addition, Mr. Termeer made recommendations to the committee for the individual performance component of each named executive officer’s annual incentive based on his evaluation of each officer’s performance for the year. Following their assessment of each officer’s performance, the committee awarded the individual performance component to the named executive officers other than Mr. Termeer at 95% to 100% of target. Aggregate total bonuses for the named executive officers, other than Mr. Termeer, ranged from 101% to 102% of target.

Mr. Termeer’s individual performance target for 2006 was set at 40% of his total cash incentive, or $680,000. The compensation committee awarded Mr. Termeer 100% of his individual cash incentive, which reflects the company’s strong financial performance for 2006 and other factors, including:

· $3.2 billion of 2006 product and service revenue, which increased 17% over 2005;

· a 20% increase in international product and service revenue to $1.5 billion for 2006;

· the acquisition of AnorMED, Inc., providing us with Mozobil™, a potentially significant product candidate for stem cell transplant;

· the approval of Myozyme for patients with Pompe disease in both the United States and the European Union, with a rapid worldwide product launch in the second quarter;

· European Union approval of Synvisc for the treatment of osteoarthritis in the ankle and shoulder;

· an increase in manufacturing capacity in Ireland, Belgium, the UK and the U.S., including FDA approval of our Waterford facility for the fill and finish, packaging and labeling for thymoglobulin; and

· a successful focus on sustainable future growth through global commercial activity, investment in science and research, and building a deep product pipeline.

(4) All other compensation above includes company contributions made under our retirement savings plan, a 401(k) plan.

(5) The three components we use to pay our executives are intended to reward the achievement of the financial, operational and strategic goals of the company. The cash compensation paid to our executives is highly leveraged with a focus on the annual cash incentive which is weighted to achieving annual goals and objectives of the company. Our non-cash equity awards promote a long-term pay-for-performance environment that is directly tied to the performance of our stock. Our executives may or may not realize the non-cash equity value in the future, as any gains are highly dependent on sustained growth and resulting strong stock price performance. Using the fair value of equity awards granted in 2006 to the named executive officers, other than Mr. Termeer, salary and bonus amounts ranged from 31–38% of total compensation. Mr. Termeer’s salary and bonus accounted for approximately 21% of his total compensation. These calculations exclude 2006 vesting of options that were granted in prior years.

(6) All other compensation for Mr. Termeer for 2006 includes insurance premiums totaling $28,103 we paid for life and disability insurance benefits. In addition, for security purposes we provide a driver to Mr. Termeer for commuting to and from work and work-related events. The benefit to Mr. Termeer for his personal commuting expenses was $60,845 for 2006. This benefit is based on the driver’s salary plus vehicle expenses, including gas, mileage, and vehicle lease expense. Mr. Termeer also received a grossed-up taxable benefit of $25,382 in 2006 for personal use of the corporate aircraft.

(7) For Mr. Wirth, all other compensation for 2006 includes an insurance premium of $1,913 we paid for life insurance benefits.

Our policy on the use of corporate aircraft. We pay for travel on private and commercial aircraft for our executives, but only if such travel is directly related to the performance by the executive of his or her job. We lease an aircraft for business travel and pay for the service based on the route traveled regardless of the passenger load. Employees authorized to use the aircraft for business travel are allowed to bring family members or guests along on the trip provided they have the prior approval of the chief executive officer and the chief financial officer. When an employee brings a family member or guest along on a business trip and does not reimburse the company for such costs, then the employee is considered to have received a benefit equal to the value of the trip. We use the equivalent cost of first class airfare method to calculate the value of this benefit. The value of the trip is determined by data on an equivalent first class trip as quoted by our independent travel agency.

In certain circumstances we consider the presence of spouses at business functions integral to the success of a business trip. A significant portion of our economic growth includes expansion into emerging markets, such as China and Southeast Asia. This expansion activity often includes ceremonial meetings with dignitaries of local governments. Spouses of our representatives are expected to attend these ceremonial meetings by the local dignitaries. Generally, the success of the meetings and the benefit to Genzyme is deemed to be substantial and therefore the cost of the spouse’s flight is considered a normal business expense and no taxable fringe benefit is created. For similar reasons, we view the spouse’s flight as integrally and directly related to the performance of the executive’s duties and, consequently, do not consider the cost to represent a perquisite.

The specific facts and circumstances of each trip that includes spousal travelers are reviewed by us and may require the value of the spousal travel to be declared income to the employee for financial and/or tax reporting. When appropriate, the value of the travel will be reported as income to the employee and will be grossed up to pay the taxes due for this additional income.

GRANTS OF PLAN-BASED AWARDS

for the year ended December 31, 2006

Name	Grant Date	All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Sh)			Grant Date Fair Value of Stock and Option Awards ($)
Henri A. Termeer	5/25/06		400,000		$	58.50	$	11,638,520
Michael S. Wyzga	5/25/06		69,000		$	58.50	$	2,007,645
Earl M. Collier, Jr.	5/25/06		69,000		$	58.50	$	2,007,645
Alan E. Smith	5/25/06		48,500		$	58.50	$	1,411,171
Peter Wirth	5/25/06		69,000		$	58.50	$	2,007,645

On May 25, 2006, stock options were granted to the named executive officers, at the same time that stock options were granted to all qualified, eligible employees of the company. The option grants were approved by our compensation committee at a meeting held on May 24, 2006. The grants have an exercise price of $58.50 per share which was the closing price of our stock on May 25, 2006, the date of grant. The options have a ten-year term and vest 20% at grant with an additional 20% vesting annually over the next four years on the anniversary of the date of grant. The options also contain a provision for acceleration of exercisability of all unvested options in the event of a change in control of the company.

The grant date fair value of the stock options granted in 2006 was $29.10 per share, computed in accordance with FAS 123R and based on the Black-Scholes option pricing model. We incorporate our discussion of the relevant assumptions we use to calculate the grant date fair value of option awards into this section by reference from the section “Accounting for Stock-Based Compensation” in “Note A. Summary of Significant Accounting Policies” and “Note M. Stockholders’ Equity” of the “Notes To Consolidated Financial Statements” in our 2006 Annual Report on Form 10-K.

Stock option grants for the named executive officers include vesting acceleration in the event of death or disability. Nonstatutory options are transferable to defined family members. In addition, upon retirement, if the named executive officer is at least 60 years old and has completed five years of service with the company, vesting is fully accelerated and the executive officer will have three years to exercise the options unless they otherwise would expire under their stated terms. This retirement eligibility provision applies only to options granted after December 1, 2003.

If a named executive officer leaves his employment with us for any reason other than death, disability or retirement (as described above), he may exercise vested options for a period of 90 days from the date of termination. If terminated for cause, he may exercise vested options for a period of 90 days from the date of termination. Unvested options will be cancelled as of the date of termination.

The terms and conditions for option grants to the named executive officers are the same as the provisions for option grants to all our employees, except for the acceleration of vesting and transferability provisions discussed above. The acceleration of vesting under the retirement eligibility provision applies to all our employees.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

for the year ended December 31, 2006

Name	Number of securities underlying unexercised Options (#) Exercisable(1)		Number of securities underlying unexercised Options (#) Unexercisable(1)(2)			Option Exercise Price ($)		Option Expiration Date
Henri A. Termeer(3)(4)		861		—			595.75	10/16/2007
		3,705		—			124.69	10/16/2007
		517		—			392.13	5/28/2008
		1,751		—			124.69	5/28/2008
		465,802		—			29.44	1/25/2009
		1,224		—			467.56	1/25/2009
		4,148		—			95.76	1/25/2009
		4,719		—			223.18	8/26/2009
		—		8,421	(3)		226.83	5/25/2010
		400,000		—			26.50	5/25/2010
		500,000		—			53.47	5/31/2011
		4,945		—			126.59	5/31/2011
		—		7,417	(4)		126.59	5/31/2011
		5,614		—			274.31	5/31/2011
		600,000		—			32.52	5/30/2012
		6,181		—			85.74	5/30/2012
		7,017		—			41.50	5/30/2012
		380,000		95,000			46.24	5/29/2013
		276,000		184,000			43.90	5/27/2014
		170,000		255,000			62.98	5/26/2015
		80,000		320,000			58.50	5/25/2016

Name	Number of securities underlying unexercised Options (#) Exercisable(1)		Number of securities underlying unexercised Options (#) Unexercisable(1)(2)		Option Exercise Price ($)		Option Expiration Date
Michael S. Wyzga		254		—		460.02	2/2/2008
		42		—		392.13	5/28/2008
		143		—		124.69	5/28/2008
		5,000		—		22.06	12/23/2008
		41		—		139.53	12/23/2008
		140		—		64.57	12/23/2008
		144		—		467.56	1/25/2009
		488		—		95.76	1/25/2009
		287		—		223.18	8/26/2009
		343		—		226.75	5/25/2010
		592		—		135.25	2/9/2011
		791		—		126.59	5/31/2011
		505		—		274.31	5/31/2011
		29,224		—		32.52	5/30/2012
		954		—		85.74	5/30/2012
		166		—		41.50	5/30/2012
		72,000		18,000		46.24	5/29/2013
		48,600		32,400		43.90	5/27/2014
		27,600		41,400		62.98	5/26/2015
		13,800		55,200		58.50	5/25/2016

Name	Number of securities underlying unexercised Options (#) Exercisable(1)		Number of securities underlying unexercised Options (#) Unexercisable(1)(2)		Option Exercise Price ($)		Option Expiration Date
Earl M. Collier, Jr.		468		—		656.08	1/30/2007
		192		—		595.75	10/16/2007
		421		—		124.69	10/16/2007
		90		—		392.13	5/28/2008
		306		—		124.69	5/28/2008
		484		—		467.56	1/25/2009
		1,640		—		95.76	1/25/2009
		4,719		—		223.18	8/26/2009
		4,373		—		26.50	5/25/2010
		479		—		226.75	5/25/2010
		4,945		—		135.25	2/9/2011
		21,000		—		53.47	5/31/2011
		3,115		—		126.59	5/31/2011
		505		—		274.31	5/31/2011
		36,820		—		32.52	5/30/2012
		3,708		—		85.74	5/30/2012
		651		—		41.50	5/30/2012
		72,000		18,000		46.24	5/29/2013
		16,200		32,400		43.90	5/27/2014
		27,600		41,400		62.98	5/26/2015
		13,800		55,200		58.50	5/25/2016

Name	Number of securities underlying unexercised Options (#) Exercisable(1)		Number of securities underlying unexercised Options (#) Unexercisable(1)(2)		Option Exercise Price ($)		Option Expiration Date
Alan E. Smith		109		—		595.75	10/16/2007
		1,403		—		124.69	10/16/2007
		108		—		392.13	5/28/2008
		367		—		124.69	5/28/2008
		103,282		—		29.44	1/25/2009
		437		—		467.56	1/25/2009
		1,483		—		95.76	1/25/2009
		584		—		223.18	8/26/2009
		34,604		—		26.50	5/25/2010
		650		—		226.75	5/25/2010
		560		—		135.25	2/9/2011
		44,000		—		53.47	5/31/2011
		692		—		126.59	5/31/2011
		785		—		274.31	5/31/2011
		90,525		—		32.52	5/30/2012
		806		—		85.74	5/30/2012
		830		—		41.50	5/30/2012
		36,000		9,000		46.24	5/29/2013
		34,200		22,800		43.90	5/27/2014
		19,400		29,100		62.98	5/26/2015
		9,700		38,800		58.50	5/25/2016

Name	Number of securities underlying unexercised Options (#) Exercisable(1)		Number of securities underlying unexercised Options (#) Unexercisable(1)(2)		Option Exercise Price ($)		Option Expiration Date
Peter Wirth		225		—		595.75	10/16/2007
		1,403		—		124.69	10/16/2007
		112		—		392.13	5/28/2008
		763		—		124.69	5/28/2008
		232,180		—		29.44	1/25/2009
		610		—		467.56	1/25/2009
		2,067		—		95.76	1/25/2009
		287		—		223.18	8/26/2009
		48,216		—		26.50	5/25/2010
		1,208		—		226.75	5/25/2010
		520		—		135.25	2/9/2011
		62,000		—		53.47	5/31/2011
		642		—		126.59	5/31/2011
		1,571		—		274.31	5/31/2011
		185,300		—		32.52	5/30/2012
		1,468		—		85.74	5/30/2012
		2,245		—		41.50	5/30/2012
		72,000		18,000		46.24	5/29/2013
		48,600		32,400		43.90	5/27/2014
		27,600		41,400		62.98	5/26/2015
		13,800		55,200		58.50	5/25/2016

(1) Includes stock options originally granted in our Biosurgery and Molecular Oncology tracking stocks which were converted into stock options for Genzyme Stock on June 30, 2003. A total of 87,659 of these converted options are exercisable and 15,838 are unexercisable with exercise prices from $41.50 to $656.08.

(2) Unless otherwise noted, stock options vest 20% on the date of grant and 20% per year over four years on the anniversary of the date of grant. Stock options expire 10 years from their date of grant.

(3) On May 20, 2000, Mr. Termeer was granted stock options for our Molecular Oncology Stock which converted to options for Genzyme Stock in 2003. These options vest on May 25, 2007, however, vesting may be accelerated upon (a) completion of two consecutive fiscal years in which the average Total Shareholder Return (“TSR”) for Genzyme Stock equals or exceeds the 75th percentile of the Standard and Poor’s (“S&P”) Biotechnology Index, and (b) the share price for Genzyme Stock has appreciated at a rate equal to or greater than a compounded annual rate of ten percent from the date of grant.

(4) On May 31, 2001, Mr. Termeer was granted stock options for our Biosurgery Stock which converted to options for Genzyme Stock in 2003. These options vest on May 31, 2008, however, vesting may be accelerated upon (a) completion of two consecutive fiscal years in which the average TSR for Genzyme Stock equals or exceeds the 75th percentile of the S&P Biotechnology Index, and (b) the share price for Genzyme Stock has appreciated at a rate equal to or greater than a compounded annual rate of ten percent from the date of grant.

OPTION EXERCISES AND STOCK VESTED

None of our named executive officers exercised options or acquired stock upon vesting of stock awards in 2006.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, the company’s stock price and the executive’s age.

Termination outside of a change in control. Pursuant to the employment agreements with Messrs. Termeer and Wirth, in the event that we terminate either of these executives without cause, other than due to death or disability, we must:

· make a lump sum payment of two times the sum of the annual salary and annual cash incentive;

· continue health and life and disability insurance and other benefits for two years from the date of termination; and

· provide full vesting of all non-performance based rights, options or awards under our equity incentive plans.

Assuming the employment of Messrs. Termeer and Wirth had been terminated without cause on December 31, 2006, they would have been entitled to the following payments:

			Value of Accelerated Equity
	Cash(1)		Awards(2)
Henri A. Termeer	$	6,478,671		$	5,696,020
Peter Wirth	$	2,298,591		$	1,018,968

(1) Cash payment amounts are based on the following components:

· base pay using current salary;

· annual cash incentive, calculated by taking the higher of (a) the last cash incentive paid, or (b) the average of the last two cash incentives paid, times the multiplier;

· health benefits, based on current COBRA rates;

· life and disability insurance premiums, based on current formula calculations; and

· accrued vacation balances.

(2) Assumes a stock price of $61.58, which was the closing price of our stock on December 29, 2006, the last trading day of the year.

Termination following a change in control. Following termination by us, other than for cause or because of disability, or by Mr. Termeer or Mr. Wirth, for good reason following a change in control, we must:

· make a lump sum severance payment of three times the sum of the annual salary and annual cash incentive;

· continue life, accident and health insurance coverage for three years, unless comparable benefits are provided by a new employer; and

· in certain circumstances, pay legal costs and relocation expenses associated with the termination.

Pursuant to the severance agreements with Messrs. Collier and Wyzga and Dr. Smith, upon termination of employment by us without cause or by the named executive officer for good reason following a change in control, we must:

· make a lump sum severance payment of two times the sum of the annual salary and annual cash incentive;

· continue life, disability, accident and health insurance plans for two years following the date of termination, unless comparable benefits are provided by a new employer;

· provide outplacement services; and

· in certain circumstances, pay legal costs and relocation expenses associated with such termination.

Assuming the employment of our named executive officers had been terminated without cause by us, or by the named executive officers for good reason, on December 31, 2006, following a change in control, they would have been entitled to the following cash payments:

Henri A. Termeer	$	9,916,921
Michael S. Wyzga	$	2,149,606
Earl M. Collier, Jr.	$	2,205,084
Alan E. Smith	$	1,952,284
Peter Wirth	$	3,635,386

Cash payment amounts are based on the following components:

· base pay using current salary;

· annual cash incentive, calculated by taking the higher of (a) the last cash incentive paid, or (b) the average of the last two cash incentives paid, times the multiplier;

· health benefits, based on current COBRA rates;

· life and disability insurance premiums, based on current formula calculations;

· accrued vacation balances;

· outplacement services, using the maximum provided for in the agreements;

· relocation services, based on most recent costs paid by us for executive relocation; and

· legal fees, based on an estimate of average attorney rates and hours of estimated services needed.

Under the terms and conditions of the named executive officers’ stock option awards, in the event of a change in control, they will receive full vesting of their outstanding stock options under our equity incentive plans. Assuming a change in control occurred on December 31, 2006, the cost of accelerating the vesting of their outstanding stock options would be as follows:

	Value of Accelerated Equity
	Awards(1)
Henri A. Termeer		$	5,696,020
Michael S. Wyzga		$	1,018,968
Earl M. Collier, Jr.		$	1,018,968
Alan E. Smith		$	660,668
Peter Wirth		$	1,018,968

(1) Assumes a stock price of $61.58, which was the closing price of our stock on December 29, 2006, the last trading day of the year.

Under the employment agreements with Messrs. Termeer and Wirth, a “change in control” shall be deemed to have occurred if: (A) any person, other than the company, any trustee or other fiduciary holding securities under an employee benefit plan of the company or a corporation owned, directly or indirectly, by the stockholders of the company in substantially the same proportions as their ownership of stock of the company is or becomes the beneficial owner, directly or indirectly, of securities of the company representing 30% or more of the combined voting power of the company’s then outstanding securities; (B) during any period of twenty-four (24) consecutive months, individuals who at the beginning of such period constitute the board and any new director (other than a director designated by a person who has entered into an agreement with the company to effect a transaction described in paragraphs (A), (C) or (D)) whose election by the board or nomination for election by the board or by the stockholders of the company was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (C) the stockholders of the company approve a merger or consolidation of the company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting securities of the company or such surviving entity outstanding immediately after such merger or consolidation or (ii) a merger or consolidation effected to implement a recapitalization of the company (or similar transaction) in which no person acquires 30% or more of the combined voting power of the company’s then outstanding securities; or (D) the stockholders of the company approve a plan of complete liquidation of the company or an agreement for the sale or disposition by the company of all or substantially all of the company’s assets.

Under the severance agreements with Messrs. Wyzga and Collier and Dr. Smith, a “change in control” shall be deemed to have occurred if: (A) any person, other than Genzyme, any trustee or other fiduciary holding securities under an employee benefit plan of Genzyme or a corporation owned, directly or indirectly, by the stockholders of Genzyme in substantially the same proportions as their ownership of stock of Genzyme, is or becomes the beneficial owner, directly or indirectly, of securities of Genzyme representing 50% or more of the combined voting power of Genzyme’s then outstanding securities; (B) during any period of twenty-four (24) consecutive months, individuals who at the beginning of such period constitute the board and any new director (other than a director designated by a person who has entered into an agreement with Genzyme to effect a transaction described in section (A), (C) or (D)) whose election by the board or nomination for election by the board or by the stockholders of Genzyme was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; (C) there is consummated a merger, share exchange or consolidation of Genzyme with any other corporation or business entity or the sale or other disposition of all or substantially all of Genzyme’s assets (each, a “Business Combination”), other than (1) a Business Combination that would result in the voting securities of Genzyme outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of another entity) beneficial ownership, directly or indirectly, of a majority of the combined voting power of the company or the surviving entity (including any person that, as a result of such transaction, owns all or substantially all of Genzyme’s assets either directly or through one or more subsidiaries) outstanding immediately after such Business Combination or (2) a merger, share exchange or consolidation effected to implement a recapitalization of Genzyme (or similar transaction) following which no person is or becomes the beneficial owner of 50% or more of the combined voting power of Genzyme’s then outstanding securities; or (D) the stockholders of Genzyme approve a plan of complete liquidation of Genzyme.

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		GENZYME CORPORATION
		500 Kendall Street
		Cambridge, MA 02142
		(617) 252-7500

Date:		Thursday, May 24, 2007
Time:		2:00 - 4:00 p.m.
Place:		The Cambridge Marriott Hotel
		2 Cambridge Center
		Cambridge, Massachusetts 02142
Purpose:		We are holding the annual meeting for shareholders to consider six company sponsored proposals and one shareholder sponsored proposal, as follows:
		· The re-election of two directors, each for a one-year term;
		· An amendment to our 2004 Equity Incentive Plan to increase the number of shares of common stock covered by the plan by 3,500,000 shares and to merge our 1997 Equity Incentive Plan into the 2004 plan;
		· Approval of our 2007 Director Equity Plan;
		· An amendment to our 1999 Employee Stock Purchase plan to increase the number of shares of common stock covered by the plan by 1,500,000 shares;
		· An amendment to our bylaws to provide for majority voting for the election of directors in uncontested elections;
		· The ratification of our selection of independent auditors;
		· A shareholder sponsored proposal, if properly presented at the meeting, that executive severance agreements be approved by shareholders; and
		· Action on any other matter that may be properly brought before the meeting.

	Page
General Information About Voting		3
Stock Ownership		5
Election of Directors		7
Directors Continuing in Office		8
Director Compensation		9
Board Meetings and Committees		11
Compensation Discussion and Analysis		14
Summary Compensation Table		21
Grants of Plan-Based Awards		24
Outstanding Equity Awards at Fiscal Year-End		25
Option Exercises and Stock Vested		27
Potential Payments Upon Termination or Change in Control		28
Equity Plans		31
Proposal to Amend our 2004 Equity Incentive Plan		31
Proposal to Approve our 2007 Director Equity Plan		36
Proposal to Amend our 1999 Employee Stock Purchase Plan		37
Proposal to Amend our Bylaws to Provide for Majority Voting for the Election of Directors in Uncontested Elections		39
Proposal to Ratify our Selection of Auditors		40
Shareholder Proposal that Executive Severance Agreements be Approved by Shareholders		41
Certain Relationships and Related Persons Transactions		44
Section 16(a) Beneficial Ownership Reporting Compliance		45
Independent Auditors		46
Shareholder Communications with the Board of Directors		46
Shareholder Proposals		47
SEC Filings		47
Appendix A—2007 Director Equity Plan		A-1
Appendix B—Senior Executive Severance Policy		B-1

April 12, 2007
	By order of the Board of Directors,
	Peter Wirth, Secretary

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)			Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		24,466,731	(1)		$	53.80		11,404,465	(2)
Equity compensation plans not approved by security holders		11,868,151			$	44.04		424,922
Total		36,334,882			$	50.88		11,829,387