California Business Merger Puts Genentech At Head Of Roche

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Thursday, July 12, 2012.

A company merger can bring concerns that a company's culture or unique personality may be stifled or transformed by influences from the larger company. Such is the case in the business merger between Roche and Genentech, two biotechnology companies. Many feared that overseas-based Roche would slow down the innovative culture at California-based Genentech.

The culture at Genentech is more free-spirited than at Roche, which many believed allowed Genentech to be more innovative. Pharmaceutical sales in 2011 proved that Genentech played a major role in Roche's business. The top four highest selling medications for Roche were Rituxan, Avastin, Herceptin, and Lucentis, which were all created in Genentech labs. These top-selling drugs accounted for 55 percent of pharmaceutical sales for the company.

Additionally, the future of Genentech within Roche is also looking promising. Five of the seven most promising pharmaceutical products expected to be released will originate from the Genentech labs. One of these drugs is the experimental anti-cancer drug TDM-1, which has received significant recognition by the American Society of Clinical Oncology. Even as Genentech's success soars, one of Roche's main research facilities in New Jersey will be shut down after 80 years of operation. This further emphasizes the important role Genentech will be playing in Roche's operations and business model.

In many ways the business merger was more about the California-based Genentech reaching a global market. This has silenced skeptics who initially feared that Genentech would lose its innovative edge in the deal. When negotiating a merger, flexibility can be a critical part of seeing the plan to fruition. Roche appears to have taken the merger with stride and embraced the unique culture of the scientists at Genentech which has, in turn, led to the further success of both companies.

Source: Reuters, "Analysis: After Roche merger, biotech tail wags big pharma dog," Caroline Copley, July 3, 2012

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