roche and its spare money

Roche Open to $3B Deal, Would ‘Seize’ Chance

By Naomi Kresge - Dec 22, 2011 8:26 PM GMT+1100 .

Roche Holding AG (ROG) is open to a deal as big as $3 billion and the Swiss drugmaker is ready to “seize” the right opportunities for acquisitions, Chief Executive Officer Severin Schwan said.

Roche would consider a deal about the same size as its $3.4 billion purchase of U.S. diagnostics company Ventana Medical Systems Inc. in 2008, Schwan said in an interview yesterday at the drugmaker’s headquarters in Basel, Switzerland. “If something comes up, of course we will seize it,” he said.

The world’s biggest cancer-drug maker wants deals to fit its focus on medicines sold alongside diagnostic tools that show which patients will benefit from the drugs, Schwan said. Roche will continue to seek products and technologies ranging in price from 100 million Swiss francs to 300 million francs ($320 million) as well as being open to a larger purchase like Ventana, Schwan said.

“I could also see mid-sized acquisitions as we had in the past,” he said. The Ventana deal “would certainly be a size, if the right opportunity was to come up, that we would look at.”

Roche is betting its tailored therapies will help it to grow even as governments cut spending on drugs. The company aims to introduce two medicines paired with diagnostic tests next year: Zelboraf for malignant melanoma, already sold in the U.S. and Switzerland and targeted for broader sale, and pertuzumab, a breast-cancer treatment which will be used alongside Roche’s older treatment Herceptin.

Drugs and Diagnostics

A third new medicine developed as a targeted treatment, vismodegib for basal cell carcinoma, won’t have a companion test because almost all patients with the disease respond to the therapy. Vismodegib was filed to regulators this year, and may reach the market in 2012, Schwan said.

“We see the synergies between pharma and diagnostics coming to life,” he said.

The shares rose 40 centimes, or 0.3 percent, to 156.70 francs at 10:07 a.m. in Zurich. Roche has risen 20 percent this year, including reinvested dividends, compared with a 7.3 percent drop in the Swiss Market Index.

Before taking over leadership of Roche in March 2008, Schwan, 44, a native of Austria, headed the company’s diagnostics unit.

Roche’s Acquisitions

Three of Schwan’s four announced acquisitions this year were to boost the diagnostics unit, which brings in about a fifth of Roche’s sales.

Roche bought Verum Diagnostica GmbH, a platelet-testing company, this month for 11 million euros ($14.4 million) in cash plus 2 million euros in potential milestone payments. In July, the company bought cervical-cancer diagnostic maker mtm laboratories AG for 130 million euros upfront plus 60 million euros in milestones. Roche bought PVT Probenverteiltechnik GmbH and its U.S. distribution arm PVT Lab Systems LLC, a maker of in-vitro diagnostics, in March for 65 million euros and as much as 20 million euros in milestones.

As head of diagnostics, Schwan led the company’s hostile takeover of Ventana under former CEO and fellow Austrian Franz Humer, who remains Roche’s chairman. The $46.8 billion acquisition of California biotechnology company Genentech, the biggest deal in Roche’s history, was completed after Schwan had been CEO for about a year.

Challenging Environment

Growth next year in emerging markets -- both in Asia and Latin America -- will help offset a stable U.S. market and decline in Europe, Schwan said.

“There is no doubt that the market environment will remain challenging,” Schwan said. “What I would expect for 2012 is the continued challenging environment and a shift from the developed to the developing markets in terms of market growth.”

The overall industry development will be reflected in Roche’s results next year, Schwan said, declining to provide a specific target. Roche will achieve a savings target for this year of 1.8 billion francs and expects by next year to meet the overall savings of its restructuring program, 2.4 billion francs on an annual ongoing basis, he said.

The company is monitoring unpaid bills in Spain, after accepting about 400 million francs in Greek government bonds in lieu of unpaid hospital debts, Schwan said.

“In Spain, the situation is by far not as dramatic as it has been in Greece,” the CEO said. “But of course the market is much bigger. It’s an important market for us and we have to watch it carefully.”


http://www.bloomberg.com/news/2011-12-22/roche-ceo-is-open-to-3-billion-takeover-would-seize-right-opportunity.html