About this Author
DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

Chemistry and Drug Data: Drugbank
Chempedia Lab
Synthetic Pages
Organic Chemistry Portal
Not Voodoo

Chemistry and Pharma Blogs:
Org Prep Daily
The Haystack
A New Merck, Reviewed
Liberal Arts Chemistry
Electron Pusher
All Things Metathesis
C&E News Blogs
Chemiotics II
Chemical Space
Noel O'Blog
In Vivo Blog
Terra Sigilatta
BBSRC/Douglas Kell
Realizations in Biostatistics
ChemSpider Blog
Organic Chem - Education & Industry
Pharma Strategy Blog
No Name No Slogan
Practical Fragments
The Curious Wavefunction
Natural Product Man
Fragment Literature
Chemistry World Blog
Synthetic Nature
Chemistry Blog
Synthesizing Ideas
Eye on FDA
Chemical Forums
Symyx Blog
Sceptical Chymist
Lamentations on Chemistry
Computational Organic Chemistry
Mining Drugs
Henry Rzepa

Science Blogs and News:
Bad Science
The Loom
Uncertain Principles
Fierce Biotech
Blogs for Industry
Omics! Omics!
Young Female Scientist
Notional Slurry
Nobel Intent
SciTech Daily
Science Blog
Gene Expression (I)
Gene Expression (II)
Adventures in Ethics and Science
Transterrestrial Musings
Slashdot Science
Cosmic Variance
Biology News Net

Medical Blogs
DB's Medical Rants
Science-Based Medicine
Respectful Insolence
Diabetes Mine

Economics and Business
Marginal Revolution
The Volokh Conspiracy
Knowledge Problem

Politics / Current Events
Virginia Postrel
Belmont Club
Mickey Kaus

Belles Lettres
Uncouth Reflections
Arts and Letters Daily
In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

In the Pipeline

« 10,000 Hours To Drug Discovery? | Main | Open Pharma? »

January 30, 2009

Roche Goes Hostile - Or Does It?

Email This Entry

Posted by Derek

An analysis of the offer here, from the Dealbook blog at the New York Times. This one leans toward the idea that the whole thing is an attempt to move Genentech's board to accept a deal, rather than go through with a real tender offer. Either way, someone's clearly been reading Delaware securities law (and the original affiliation agreement between the two companies) very closely indeed.

No matter what the intent, not everyone thinks it's it going to work. And as with the Pfizer / Wyeth deal, the cost of insuring Roche's debt have gone up steeply in response to all this.

Meanwhile, at the WSJ Health Blog, they're wondering how this is all going down with Genentech's "brainy, headstrong" scientific staff. Maybe Roche figures there aren't many other places to go? More on this Monday when some of the dust settles.

Comments (9) + TrackBacks (0) | Category: Business and Markets


1. pandora on January 30, 2009 3:07 PM writes...

or Roche just wish all these "brainy, headstrong" scientists find somewhere else to go, so it can save some money on severance pay?

Permalink to Comment

2. Hap on January 30, 2009 3:25 PM writes...

I'm missing a lot. How does the tender offer force the Genentech board to deal?

If the employees have nowhere else to go, they can always subtly take "in-cubicle" vacations of some sort. They don't even have to consciously decide to lower their productivity - unhappy people will probably not produce as much, thereby eliminating the advantage Roche is hoping to gain. I guess that part of the merger is predicated on the "If you love a bird, set it free - if it doesn't come back, hunt it down and kill it" relationship theory.

Permalink to Comment

3. George Laszlo on January 30, 2009 5:34 PM writes...

A key component of the seemingly desperate moves by Roche is the deep commitment it has made to its own staff to reshape the organization. They have already announced exactly how the company will be reorganized, including the physical relocations of discovery, development, marketing and sales organizations. So, both Genentech and Roche employees know exactly what will happen once the merger becomes reality. In other words, Roche has reached the point of no return. Genentech shareholders will hold out and Roche will have no choice but to up the price. So, who is in a weaker position? Genentech, the company that probably already knows what the outcome of the Avastin studies will be or Roche, the company that has employees on both sides wondering what is going on.

On a separate note, with the large number of layoffs going on in the Bay area from Biotech companies, it's unlikely that the Genentech scientists will leave before all of this plays out. Remember, there is a bigger world out there and it's not looking very good right now.

Permalink to Comment

4. anon on January 31, 2009 3:35 PM writes...

DNA has been in limbo for many months; lots of job postings, but no action-- it's like Dead Man Walking.

What of the rumor Roche wanted to add more Discovery in New Jersey? True or not?

Permalink to Comment

5. lucifer on February 1, 2009 3:20 PM writes...

Sunday's newspaper round-up: GSK, Rio Tinto, Lloyds
Sun 01 Feb 2009

LONDON (SHARECAST) - Britain's largest pharmaceuticals company, GlaxoSmithKline, is poised to axe thousands of jobs in order to cut costs and boost profits, reports the Observer.

GSK is putting the finishing touches to plans which will see in the region of 6,000 global positions axed as it faces up to the growing challenges in the industry, adds the Sunday Telegraph.

Permalink to Comment

6. anon on February 1, 2009 4:20 PM writes...

I would be interested to know how many Ph.D. Med Chemists 1) PFE 2) GSK still has left. My sources tell me that some of the research sites are already quite thinly staffed.

Permalink to Comment

7. The Pharmacoepidemiologist on February 2, 2009 4:55 AM writes...

Word is that DNA's Board will equivocate until April, when the next major batch of Avastin data is due. If that batch is positive, then DNA probably doubles and Roche won't buy it. Otherwise, Roche will bring this deal to closure by June. The accounting gnomes in Basel see the cash flow improvement from the purchase and shut down of Palo Alto as providing the next round of profit increases. That Roche will effectively kill the goose laying those golden eggs doesn't see to have occurred to anyone over in Switzerland.

Permalink to Comment

8. The Pharmacoepidemoilogist on February 2, 2009 5:03 AM writes...

Curious no one is mentioning the massive job cutting going on in big pharma--Pfizer-Wyeth will effectively gut whole towns in Pennsylvania and New Jersey. (Probably north of 25K jobs will disappear from those two states.) If Bristol-Myers Squibb goes, there's probably another 5-10K jobs lost. That's a lot of jobs. Derek usually writes about such things...

Permalink to Comment

9. pi* on February 4, 2009 6:49 PM writes...

@ the Pharmacoepidemoilogist
presumably he's bored writing the same damn thing over and over again. there was an earlier post about self plagiarism, there's only so many ways to rearrange these sentences.
I am interested in knowing what the rumors are, one of the reasons i look at this site, although understand that it must be tough to write the same things and then read the same comments.
I think some interesting blogging can be done on the effects of these job cuts on workers though.
What exactly can workers do?
Go on strike (seems pretty much against the politics here)?
Government regulation against mergers that aren't in the best interest of society (seems pretty much against the politics here)?
(curious thing, you would assume that most pharma workers have spent a solid 10 years in university. Funny the politics aren't a little bit more to the left)
Start our own companies? I would if I had a clue.
Sitting around and bitching about how mba's don't have a clue seems to be the favored course of action.

Permalink to Comment


Remember Me?


Email this entry to:

Your email address:

Message (optional):

The Last Post
The GSK Layoffs Continue, By Proxy
The Move is Nigh
Another Alzheimer's IPO
Cutbacks at C&E News
Sanofi Pays to Get Back Into Oncology
An Irresponsible Statement About Curing Cancer
Oliver Sacks on Turning Back to Chemistry