Swiss-based Roche has announced its intention to acquire the rest of biotech firm Genentech, in which Roche already has a majority stake. The consolidation makes a degree of sense given the ongoing redundant operations (and cost centers) in the two organizations.
The financial markets, news organizations and other bloggers like Pharmalot all seem surprised by this announcement. While the timing is a certainly a bit of surprise, the announcement itself isn’t.
When Severin Schwan took the helm about a year ago, it was widely suspected that he wanted to make his mark at the Basel-based giant by bringing Genentech fully into the fold. At a large meeting of Roche employees in Basel last September, Schwan was asked whether Genentech will remain an independent entity. At that time, his answer was ‘for now,’ although everyone in the meeting was left with the distinct impression that ‘for now’ meant ‘not for long.’
The relationship between Roche and Genentech dates back to 1990s when Roche purchased a majority stake in the company. Roche has had rights to acquire the remaining shares. In 1999, Roche required Genentech to redeem all of its outstanding special common shares not owned by Roche. Roche then re-listed Genentech and conducted several subsequent stock offerings.
The relationship between Roche and Genentech has been a productive one for both over the years. The collateral damage and employee defections in both organizations (here in the U.S. as well as overseas) could destroy the one thing that has given them a competitive advantage over time – their people.