Magazine
#8 Roche
Grenzacherstrasse 124, CH-4070 Basel, Switzerland
Tel: (41) 61 688 1111 Fax: (41) 61 691 9391
www.roche.com
| Headcount | 80,080 | |
| Year Established | 1896 | |
| Pharma Revenues* | $23,624 | +7%/-3%** |
| Total Revenues* | $42,261 | +10%/-1%** |
| Net Income | $10,046 | +5%/-5%** |
| R&D Budget | $8,194 | +17%/+5%** |
* See note below on Genentech contribution
** converted at avg. exch. rate / based on local currency (CHF)
| 2008 Top Selling Drugs | |||
| Drug | Indication | Sales | (+/-%) |
| Herceptin* | breast cancer | $3,335 | +19% |
| MabThera/Rituxan* | NHL | $2,900 | +15% |
| Avastin* | oncology | $2,138 | +27% |
| CellCept | transplantation | $1,945 | +16% |
| NeoRecormon/Epogin | anemia | $1,644 | -6% |
| Pegasys/Copegus | hepatitis C | $1,515 | +11% |
| Xeloda | oncology | $1,122 | +17% |
| Boniva | osteoporosis | $1,026 | +49% |
| Tarceva | lung cancer | $669 | +64% |
| Tamiflu | influenza | $564 | -68% |
| Valcyte | virology | $512 | +22% |
Account for 74% of total pharma sales, up from 66% in 2007.
* 2008 Drug revenues and sales figures for Roche do not include revenues from Genentech, which at the time was 56% owned by Roche and with which it co-marketed several major products. Revenues from Chugai, which is 60% owned by Roche, are counted in Roche’s results.
PROFILE
Every year, I jump through hoops to separate Roche’s sales figures from Genentech’s, in order to give you readers some representation of Genentech’s place in the biopharma sphere. After this edition, I’m done with those financial shenanigans! Thanks Roche, for buying the outstanding shares in Genentech for approximately $47 billion!
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The Lowe Down
Roche, 2009, Genentech deal. Forget the rest of the pipeline for now; there’s the story for you in four words. It’s noteworthy not just for the financial implications, but for the strategy behind it. Depending on your worldview, you could spin it as everything from a bold move to make the most out of what they have, all the way to a potentially catastrophic inability to leave well enough alone. I’m a bit more in the second camp, but I certainly hope that I’m wrong. I keep thinking that If Roche really didn’t want to mess around with Genentech’s culture, then perhaps they wouldn’t have bought them out in the face of determined opposition. But the deal gives us a price tag (or at least sets a bound) for what Roche felt that independent culture was worth. That said, what do they have for it? Avastin famously came up short in come key clinical data right after the deal, but it and the other biologics will no doubt continue to coin money for some time to come. The big question is what comes after them — and like all those big questions, we’re not going to be able to answer that one until years from now. That’ll be well after some of the people involved in the original decision may have moved out of range of its (good or bad) consequences.—Derek Lowe |
The takeover got ugly for a while as the companies fought over share price, but Roche prevailed. But did it prevail too soon? Part of the battle over Genentech’s share price was the long-term value of cancer drug Avastin. With total (Roche + Genentech) sales already reaching $4.8 billion in 2008, Avastin is being used in trials against several types of cancer. In May 2009, Roche received accelerated approval of Avastin to treat the most aggressive form of brain cancer.
But the big question was whether Avastin could prove efficacy in treating early colon cancer (adjuvant therapy with chemotherapy immediately after surgery). Positive results would have sent Genentech’s share price soaring and possibly put the company out of Roche’s reach. Some analysts think Roche upped its bid several times just to beat out the Avastin trial news. Unfortunately, four weeks after the merger was finalized, Roche announced that Avastin failed to meet its primary endpoint of disease-free survival.
The cancer news wasn’t all bad for Roche. In March 2009, the company reported positive results — significantly prolonging life — in stomach cancer patients treated with Herceptin, the breast cancer treatment for patients who overexpress HER2 protein. Nearly a quarter of stomach tumors fall into that category.
In February 2009, the company got EU approval for MabThera for treatment of chronic lymphocytic leukemia. That same month, the company reported that Avastin and Tarceva showed positive interim results in a lung cancer trial. In November 2008, Tarceva demonstrated progression-free survival in first-line maintenance of lung cancer. The company said that it has 130 clinical trials involving Tarceva (solo and combined with other treatments) in NSCLC lung cancer.
Actemra, the company’s IL-6 inhibitor, intended for rheumatoid arthritis patients who don’t respond adequately to TNF inhibitors, received approval in Japan and Europe for RA in the past year. It was first approved in Japan in 2005 for “Castleman’s disease.” Roche received a complete response letter from the FDA about Actemra’s BLA last fall, and in December 2008 it announced that it worked out a REMS strategy and would need to provide new preclinical animal data to the agency, but would not need to perform new clinical trials.
Roche appears less optimistic about getting Mircera, an erythropoietin receptor activator, onto the U.S. market. The anemia biologic, available in 56 countries, was approved by the FDA early in 2008, but Amgen won a permanent injunction against Roche in October 2008, on the grounds that Micerca violates Amgen’s Epogen patents. The district court initially thought it could allow Mircera on the market, provided it submitted to a number of conditions, but ultimately concluded, “Failure to enter a permanent injunction . . . would risk undermining the incentives for innovation that have produced, and hopefully will continue to produce, medical advances that extend and enhance the value of life. The Court therefore concludes that the public interest will not be disserved by a permanent injunction.” Ouch.
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Acquisition News
Target: Memory Pharmaceuticals Price: $50 million Announced: November 2008 What they said: “The innovative work carried out by the scientists at Memory will be fully integrated into Roche’s R&D portfolio with the aim of providing new hope for patients and caregivers affected by devastating diseases such as Alzheimer’s.”—William Burns, CEO Division Roche Pharmaceuticals |
Regardless, Roche is going to become the first Top 10 company to move from our Pharma list to our Biopharma ranks. The company, in fact, chose to leave PhRMA and join BIO in June 2009.
Integrating Genentech is a big gamble for Roche. In an October 2008 BusinessWeek panel, Roche chief executive officer Severin Schwan remarked, “I am not in favor of megamergers at all. You end up with huge overlaps and you destroy a lot of value. If you look at Genentech, even though it is a sizeable transaction in terms of financials, the two organizations are very complementary to each other. Genentech’s activities are centered in the U.S., whereas Roche is active on an international basis. And within the U.S., the commercial focus of Genentech is on oncology, whilst Roche is selling medicines in other diseases such as virology, transplantation, or osteoporosis.”
The $47 billion question is whether Roche’s golden goose will keep laying eggs.
For the full Roche profile, including pipeline and patent information, download the PDF.
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