A better trade as a result of expected savings: Roche Holding acquires Genentech
Roche Holding already owned the majority of Genentech, so the agreement in
March 2009 to acquire full ownership of the company should not have much
impact. The better trade may result from the savings Roche Holding expects
to reap from the purchase.
Roche Holding expects to save as much as $850 million a year from the
purchase of Genentech. The stated goal is to improve coordination on product
development, which should make it easier to blend the two companies. The
challenge to making this better trade stick, will be how Roche handles
Genentech's innovative corporate culture. Genentech has nurtured a
free-wheeling style, rewarding its best managers and most productive
scientists with freedom not offered at other companies, which has resulted in
one of the world's most successful biotechnology company.
The wooing of Genentech began in earnest in July 2008. Roche originally
offered $89 per share, then reduced the offer to $86.50 out of frustration,
only to receive a counteroffer of $112 by the Genentech directors. The final
selling price was $95 per share. Roche owned nearly 56 percent of Genentech
before the acquisition was set in motion.
Under terms of the agreement, Genentech's research and early clinical trial
operations will remain autonomous. The business will be based in the San
Francisco area at Genentech's headquarters instead of New Jersey, home of
Roche's American business.
Roche officials said the company wants to stick with its specialty drugs and
has no desire to branch into the generic or consumer market. The three
top-selling drugs in the Roche line are Avastin, Herceptin and Rituxan, all
cancer drugs and all developed by Genentech. Many of the self-developed drugs
in the Roche family are for rheumatoid arthritis and diabetes.
Roche Holding is a Swiss global healthcare company that operates worldwide in
two divisions: pharmaceuticals and diagnostics. Roche Holding AG has shares
listed on the SIX Swiss Exchange. In 2008 it had revenues of 45.62 CHF. Roche
also owns the Japanese biotechnology company Chugai Pharmaceuticals. Roche
Holding became the first company to mass produce vitamin C and in 1957
introduced tranquilizers that included Valium and Rohypnol. It has also
popularized the acne drugs marketed as Accutane and Roaccutane, as well as
some chemotherapy drugs. It manufactures and sells several cancer drugs.
Genentech is considered the founder of the biotechnology industry. It was
founded in 1976 by venture capitalist Robert A. Swanson and Biochemist Herbert
W. Boyer, a pioneer in the field of DNA technology. Genentech employs more
than 1,100 researchers and scientists to cover a range of activity from
molecular biology to protein chemistry to bioinformatics and physiology.
Their areas of expertise include five disease categories: oncology,
immunology, tissue growth and repair, neuroscience, and infectious disease.
There are plans to expand into microbiology, medical imaging, and
neuroscience. Genentech was named one of the ten best companies to work for
in surveys conducted by Fortune Magazine in each of the last ten years.
Genentech CEO Arthur D. Levinson was voted the "nicest" CEO in 2008 and given
an approval rating of 93 percent.
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