Looking Back – Roche’s 2009 Acquisition of Genentech
One of 2009’s major pharmaceutical deals was Roche’s purchase of Genentech for $46.8 billion. It might be instructive to look back on the two companies relationship since it is perhaps one of the most widely known partnerships and is often touted as the most innovative and successful biotech-pharma deal.
Time Magazine heralds the era of genetic engineering
The relationship between the two companies is credited for solving a biotechnology company’s need for financing while strengthening a big pharma’s pipeline. The deal set the stage for similar deals that would happen throughout the 1990s, most significantly perhaps, Millennium’s licensing deals, partnerships with big pharma, eventual full product control and the building of its portfolio via acquisitions.
Genentech was the first biotechnology company to go public on Oct. 14, 1980, when it sold 1,000,000 shares for $35.00 per share using the symbol DNA (which, sadly, will be retired soon).
Genentech partnered with Roche in the early 1980s and Roche acquired a 55.9% stake in the company in 1990, the rest in 1999 when it sold a minority stake to the public. The deal worked well because it gave Genentech relative autonomy and a clear market split – Roche handled ex-U.S. sales and Genentech developed its blockbuster oncology portfolio (which includes top-selling Herceptin, Avastin and Tarceva). Over time, Roche became more reliant on Genentech’s pipeline and made an initial offer for the remainder of Genentech’s oustanding shares in 2008.
After the deal was announced in early March 2009, Genentech said it could win approvals on 15 new drugs between 2011 and 2015. And by 2015 Genentech could introduce 24 new uses of existing drugs in its portfolio.
When the deal finally went through, it effectively ended the existence of what was considered the world’s oldest and most successful biotechnology companies.
I remember I was a high school senior when I read the Time Magazine piece. The Genentech story, along with all the science fiction I read, was influential in the career I chose. One of the highlights of my career was visiting Genentech at 1 DNA Way in South San Francisco and pitching a piece of business (which we won), as well as having a friend leave New York, join Genentech, giving me the vicarious thrill of being on the inside. I’m looking forward to seeing how this story evolves.
To read more, here’s the Genentech press release, the NYTimes article on the announcement and FiercePharma’s dissection of the deal. For a more in-depth view of the company’s early days, visit UC Berkeley’s oral history project interview with DNA’s first CFO, Fred Middleton.
Image – Time Magazine
