Will Roche get what it paid for?

Nuala Moran, Senior Editor

Roche’s purchase of the 44 per cent of Genentech it doesn’t own has finally been agreed at $95 per share, and stock-owning employees at the Californian biotech are reported to be sitting on returns that could put bankers’ bonuses in the shade.

Now the task for Roche will be to preserve the value of its acquisition, maintaining the flow of innovation for which Genentech is renowned: the company is responsible for the discovery of some of biotech’s leading drugs, including the cancer treatments Herceptin and Avastin.

These have been developed and commercialised under a long-running partnership with Roche, which is often held up as the best and most productive example of collaboration in the industry.

But how do you contain the innovative spirit within a company containing dozens of entrepreneurially-minded people who now have money burning a hole in their pockets?

Roche insists it wants to retain these famously productive R&D staff, and will let Genentech operate as an independent unit. But the Swiss pharma giant will surely need to cut costs by consolidating the development and commercialisation of partnered products. There is talk already of closing Roche business units in the US and merging these operations with Genentech.

Closures and cutbacks at R&D-driven companies have often been the unfortunate spur for those who have lost jobs to branch out on their own. The inevitable disruption and altered atmosphere that comes with the change in ownership could well have a similarly unsettling effect at Genentech.

Alongside its blockbuster drugs, Genentech has created something universally acknowledged to be in short supply – an entrepreneurial culture. Perhaps some of its newly-enriched researchers should leave and set up a new venture to work on bottling that?