Discover how Genzyme parlayed a $62,000 SBIR grant into groundbreaking treatments for rare diseases, ultimately becoming a $20 billion acquisition and transforming medicine's approach to orphan diseases.
In 1981, a small Boston startup named Genzyme received a $62,000 grant from the National Institutes of Health (NIH) to develop a method for producing enzymes at scale. It seemed like a modest investment in an obscure corner of biotechnology. Who could have imagined that this tiny grant would spark a revolution in treating rare diseases, create an entirely new pharmaceutical business model, and ultimately lead to a $20.1 billion acquisition—one of the largest in biotech history?
The story of Genzyme is more than a business success—it's about how government funding enabled a company to pursue treatments for diseases affecting so few people that no traditional pharmaceutical company would touch them. In doing so, Genzyme didn't just build a company; it gave hope to millions of patients with rare genetic disorders who had been abandoned by mainstream medicine.
When Genzyme was founded in 1981, the pharmaceutical industry had a dirty secret: if your disease affected fewer than 200,000 Americans, you were essentially on your own. These "orphan diseases" were economically toxic to drug companies. Why spend hundreds of millions developing a drug for 10,000 patients when you could develop one for 10 million?
The math was brutal but simple. Drug development costs the same whether you're treating a thousand patients or a million. But revenues scale with patient population. For rare diseases, the numbers simply didn't work.
Enter Genzyme's founders: scientist Henry Blair and entrepreneur George Whitesides Jr. (later joined by legendary CEO Henri Termeer in 1983). They saw opportunity where others saw impossibility. Their insight: what if you could make the economics work by charging premium prices for life-saving treatments that had no alternatives?
But first, they needed to prove they could actually make these treatments. And for that, they needed funding that no rational investor would provide.
Genzyme's first SBIR grant in 1981—$62,000 from the NIH—was specifically for developing large-scale enzyme production techniques. To understand why this was crucial, you need to understand Gaucher disease.
Gaucher disease is a genetic disorder where patients lack an enzyme called glucocerebrosidase. Without it, fatty substances accumulate in organs, causing enlarged spleens and livers, bone pain, and potentially death. The disease affects maybe 10,000 people worldwide. The only theoretical treatment was enzyme replacement—literally giving patients the enzyme they couldn't produce.
But there was a massive problem: where do you get these enzymes? The only source was human placentas. It took 22,000 placentas to treat one patient for one year. The logistics were nightmarish, the costs astronomical, and the supply completely inadequate.
Genzyme's SBIR grant funded research into a radical alternative: what if you could produce these enzymes using modified cells in bioreactors? It was highly speculative, technically challenging, and had no guarantee of success.
"No venture capitalist would have funded this," Henri Termeer later recalled. "The market was too small, the technology too uncertain, and the development timeline too long. The SBIR grant was literally the only option."
Using the SBIR funding, Genzyme's scientists worked to develop a revolutionary production method. Instead of extracting enzymes from human tissue, they would insert human genes into hamster ovary cells, then grow these cells in massive bioreactors. The cells would become living factories, producing human enzymes at scale.
The challenges were immense:
Over seven years, Genzyme won seven SBIR awards totaling several hundred thousand dollars. Each grant built on the previous one:
This staged funding was crucial. "Each SBIR grant was a lifeline," recalled one early employee. "We were always six months from bankruptcy. The grants kept us alive while we solved one problem after another."
By 1991, after a decade of development largely sustained by government grants, Genzyme received FDA approval for Ceredase, the first effective treatment for Gaucher disease. The approval was historic—it proved enzyme replacement therapy could work.
But here's where Genzyme's business model innovation matched their scientific innovation. They priced Ceredase at $150,000 per patient per year—astronomical by 1991 standards. Critics were outraged. How could they charge so much?
Genzyme's argument was compelling:
The strategy worked. Ceredase generated $50 million in revenue in its first full year—extraordinary for a drug treating so few patients.
Ceredase's success proved the model. Genzyme began systematically targeting other rare genetic diseases:
Fabry Disease: Developed Fabrazyme (approved 2003)
Pompe Disease: Developed Myozyme (approved 2006)
Multiple Sclerosis: Developed Lemtrada (approved 2014)
Each drug built on the manufacturing expertise developed with SBIR funding. The bioreactor technology, purification methods, and quality control systems—all initially funded by government grants—became Genzyme's competitive advantage.
Let's examine the numbers:
Government Investment (1981-1990):
Value Created:
That's an 8,000-fold return on the government's investment in dollar terms. But the human return is incalculable.
The nature of SBIR funding was perfectly suited to Genzyme's needs in ways private capital could never match:
Henri Termeer was explicit about this: "Without SBIR, Genzyme simply wouldn't exist. No other funding source would have supported our work on such a small market with such uncertain technology."
Genzyme's success catalyzed fundamental changes in the pharmaceutical industry:
The Orphan Drug Revolution: Genzyme proved rare disease drugs could be profitable. Today, orphan drugs are among the industry's most attractive markets, with over 500 approved treatments.
Premium Pricing Acceptance: Genzyme pioneered the ultra-high-price model for life-saving treatments with no alternatives. This model now sustains innovation in gene therapy, CAR-T cancer treatments, and other breakthrough therapies.
Bioprocessing Innovation: Genzyme's manufacturing techniques became industry standard. Their bioreactor technology and purification methods are now used to produce everything from COVID vaccines to cancer antibodies.
Patient Advocacy: Genzyme pioneered deep engagement with patient communities, funding diagnostic programs and patient support services. This model is now standard for rare disease companies.
While the financial returns are staggering, the real triumph of Genzyme is measured in lives transformed:
Brian Berman, diagnosed with Gaucher disease at age 3, was one of the first Ceredase patients: "Before treatment, I couldn't play sports, I was always tired, and my parents were told I might not make it to adulthood. Ceredase gave me a normal life. I'm now 35, married, with two kids. That's what that $62,000 grant made possible."
The Crowley Family: John Crowley's two children with Pompe disease inspired him to leave his business career and join the fight for treatments. Genzyme's Myozyme saved their lives. Crowley later became CEO of Amicus Therapeutics, developing treatments for other rare diseases. (Their story inspired the film "Extraordinary Measures.")
Global Impact: In Brazil, where many Gaucher patients had no treatment options, Genzyme worked with the government to establish treatment programs. Over 700 Brazilian patients now receive treatment, transforming a death sentence into a manageable condition.
In 2011, French pharmaceutical giant Sanofi acquired Genzyme for $20.1 billion after a dramatic hostile takeover battle. The acquisition validated everything Genzyme had built—rare disease drugs were now so valuable that big pharma would fight to own them.
But Genzyme's legacy extends far beyond the acquisition:
Industry Transformation: Today, over 50 companies focus primarily on rare diseases, collectively valued at hundreds of billions of dollars.
Treatment Expansion: The FDA has approved over 500 orphan drugs since Genzyme pioneered the model, versus fewer than 10 in the decade before.
Manufacturing Revolution: Genzyme's bioprocessing innovations are now used to produce treatments worth over $100 billion annually.
Hope Realized: Millions of rare disease patients who once had no options now have treatments, with hundreds more in development.
The Genzyme story offers crucial lessons:
For Entrepreneurs:
For Policymakers:
Today, the rare disease field Genzyme pioneered is experiencing a new revolution with gene therapy—one-time treatments that could cure genetic diseases entirely. Companies like Spark Therapeutics (acquired for $4.3 billion) and Bluebird Bio are building on Genzyme's foundation, developing million-dollar treatments that cure rather than manage disease.
Many of these companies also started with SBIR grants, following the path Genzyme blazed. The ecosystem Genzyme created—from manufacturing techniques to regulatory pathways to reimbursement models—makes these new innovations possible.
When that first $62,000 SBIR grant was awarded to Genzyme in 1981, nobody could have imagined it would transform medicine's approach to rare diseases. That modest investment didn't just build a company or generate returns—it created hope where none existed.
Today, when a child is diagnosed with a rare genetic disease, there's a good chance a treatment exists or is in development. That's the true return on the government's investment: not the billions in value created, but the birthdays celebrated, the dreams pursued, and the lives lived that wouldn't have been possible without that initial $62,000 bet on an impossible idea.
As Henri Termeer reflected shortly before his death in 2017: "SBIR didn't just fund Genzyme—it funded a revolution in how we think about treating human disease. Every rare disease patient who has a treatment today owes something to that first government grant. It proved that with the right support, we can make the impossible possible."
That's the power of patient, risk-tolerant government funding: it enables entrepreneurs to pursue solutions to problems that markets alone would never address. In Genzyme's case, that meant bringing hope to the hopeless—surely the greatest return on investment of all.
Here's where the story gets interesting. By 2002, iRobot had proven technology, manufacturing capabilities, and a sustainable military business—but the founders' original vision included consumer robots. The question was how to make the leap.
The answer came from an unexpected source: the navigation and sensor technologies developed for military robots. "We realized that the same algorithms that helped PackBot avoid obstacles in a battlefield could help a vacuum cleaner navigate a living room," said Joe Jones, iRobot's co-inventor of the Roomba.
But transitioning from $45,000 military robots to sub-$200 consumer products required massive investment in redesign and retooling. This is where iRobot's government-funded foundation proved invaluable:
When the Roomba launched in 2002, it was an immediate sensation. The first production run of 15,000 units sold out in two months. By 2005, iRobot had sold over 2 million Roombas. The company went public in 2005 at a $279 million valuation—a remarkable return on the government's cumulative $51 million investment.
But the real return on investment extends far beyond iRobot's financial success:
Direct Financial Returns:
Indirect Economic Impact:
National Security Benefits:
Perhaps the most significant return on the government's investment is the ecosystem iRobot helped create. Former iRobot employees have founded dozens of robotics companies, many following the same SBIR-to-success pathway. Helen Greiner left to found CyPhy Works (now Aria Insights), which received SBIR funding for drone development. Other alumni started companies in agricultural robotics, healthcare automation, and logistics.
"We proved that the SBIR-to-commercialization model works for deep tech," Angle reflects. "Now there's a whole playbook that robotics startups can follow."
iRobot's journey from SBIR recipient to public company offers crucial lessons for modern entrepreneurs:
Today, iRobot continues to leverage government partnerships while dominating the consumer robotics market. The company maintains military contracts worth tens of millions annually while selling millions of consumer robots. This dual-track strategy, enabled by early government support, provides stability and funds continued innovation.
In 2024, as iRobot develops AI-powered home robots and advanced military systems, the company's trajectory validates the government's 1991 bet on three MIT dreamers. That initial $100,000 SBIR grant didn't just launch a company—it created an industry, saved lives, and demonstrated how strategic government funding can transform speculative research into world-changing products.
Colin Angle puts it simply: "Without SBIR and DARPA, there would be no iRobot. And without iRobot proving the model, the entire robotics industry would look very different. That's the real return on investment—not just one company's success, but enabling an entire technological revolution."