Genentech: After the Acquisition by Roche
Roche completed the acquisition of Genentech in 2009 for a total of $46.8 Billion dollars. Genentech was initially concerned about funding for early drug discovery with the acquisition taking place. Genentech was previously able to spend money on research and development for new drug discovery and now that Roche is fully in the picture, they were concerned that Roche may want to reduce funding for early drug discovery (Rothaermel, Pg. C415, 2012). Roche and Genentech were both concerned about the acquisition also because of the different cultures of the two firms even though they had been working together over the last twenty years. Genentech was a more relaxed company, allowing the employees to come to work dressed in jeans, while Roche had a more professional and traditional working environment. Genentech reached most of its successes within oncology, creating the best cancer drugs available on the market, by giving their scientists the time and money they needed to innovate. The scientists that research and develop these products are considered the key players for Genentech and Roche needs to make sure to find a way and keep these scientists since they create the products that generate the most revenue for the company. Summary
The acquisition by Roche appears to be a success because “the merger allowed Roche access to Genentech’s top-selling drugs, including the block-busters Avastin, MabThera, and Herceptin, all of which were outselling Roche’s own drugs” (Rothaermel,Pg. C431, 2012). “ In essence, the merger of Roche and Genentech was about Genentech going global” said Andew Weiss, analyst at Swiss private bank Vontobel (Copley, 2012). Because of the success that Genentech has achieved with their approach to research, “Roche is also now starting to adopt the Genentech approach by trying to understand the chain of events that cause disease” (Copley, 2012). The PESTEL analysis below discusses the impact of external forces the companies face in the biologic-pharmacuetical environment. Political
“President Obama signed the Biologics Price Competition and Innovation (BCPI) Act into law on March 23, 2010, as a part of his health care reform legislation” (Rothaermel, Pg. C437, 2012). By writing this Act into law, it allows for generic biologic drugs to have quicker approval through the FDA. Generic biologic companies would not have to spend the high costs that the original biologic companies had invested when conducting research and development. Allowing generic biologics on the market in a reduced timeframe would allow them to reap the benefits by charging lower prices, while not having to endure the pain and costs that came with creating the initial drug. Lower prices are great for insurance companies and the consumer but could be a major problem for the biologic pharmacuetical company that originally created and patented their product. The original company would need time to recoup the costs that it took to research and develop their products.
U.S. Congress passed the Comparative Effectiveness Research (CER) bill in 2009 that could also impact Genentech/Roche because it aims at lowering costs (Rothaermel, Pg. C435, 2012). The trials performed by CER could cause Genentech products to lower their prices and potentially lose their coverage through insurance and government coverage plans. This is also a problem for the same reason as listed above with Genentech/Roche needing to recover the high costs asscoaited with creating and producing their products. The Government now has greater involvement in the healthcare sector and that could interfere with, or even stop companies, from spending large amounts of time and money on potential new biologic pharmacuetical drugs. Economic
A lot of research and development breakthroughs were at Universities and other research institutions....
Cited: Copley, C. (2012, July 3). Analysis - After Roche Merger, biotech tail wags big pharma dog. Retrieved May 31, 2014, from Reuters.co.uk: http://uk.reuters.com/article/2012/07/03/uk-roche-genentech-idUKBRE8620FZ20120703
GEN News Highlights. (2012, July 3). Retrieved June 1, 2014, from Genetic Engineering & Biotechnology News: http://www.genengnews.com/gen-news-highlights/three-years-after-merger-genentech-r-d-outshines-that-of-roche-s/81246997/
Rothaermel, F. T. (2012). Strategic Management . McGraw-Hill Irwin.
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