Roche's Partners: Replacing, or Fuelling In-House R&D?

Partnering is key to most, if not all, pharmaceutical companies these days because few of them have the internally generated pipeline they need. Thus it's "a sellers market," commented José Maria Romero, director of worldwide business development at GlaxoSmithKline PLC during last month's BioPartnering Europe conference in London. And since those with products want—and can afford to ask for—more than cash "you need flexibility in your deal structure to support partners' ambitions. Those who are more flexible build the best deals."

Most observers agree that Roche has a special talent when it comes to flexibility and therefore partnering. Roche's hallmark is the hands-off approach for which its relationship with Genentech Inc. provides an as yet unmatched definition. When the Swiss group first bought a majority of the US biotech's shares in 1990, "we knew it was best to tread lightly so as not to destroy the entrepreneurship and allow products to come through," recounts William M. Burns, head of Roche's pharmaceuticals division. That decision has paid off: Genentech products in 2002 accounted for nearly a fifth of Roche's pharmaceutical revenues, according to analysts at Sarasin in Switzerland. The Swiss group applied a similar strategy in the merger of its Japanese subsidiary with Chugai Pharmaceutical Co. Ltd. in December 2001; Chugai kept its Tokyo listing and most of its senior management [See Deal]