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Roche to Purchase Genentech

Posted by on Wednesday, January 27, 2010, 6:04
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Roche Diagnostics is ready to buy the Genentech in the next 6 months. This deal will be one of the most important deals from the point of the pharmaceutical market worldwide. This deal is found to very significant from the point of view of the customers because it will surely reduce the price of the medicines that were previously manufactured by the Genentech. The deal of the Roche will be the third biggest financial venture after Pfizer’s $68 billion offer to purchase Wyeth and Merck’s takeover of Schering-Plough at 41 billion dollars. Roche is going to acquire the full ownership of the Genentech at $46.8 billion that would be the one of the biggest deal in the history of pharmaceutical industry.

The deal of Roche and Genentech is different than Pfizer-Wyeth and Merck-Schering because rather than the takeover deal it is a merger of two big pharmaceutical giants. Pfizer and Wyeth are strangers, and Merck and Schering have a joint venture on cholesterol drugs but are otherwise not related. And in both those deals, executives describe potential costs savings as a big benefit. But in the Roche-Genentech deal the main goal is the improve coordination on product development. So, the deal is not only meant to increase the profits but also to provide customers with the better quality of medications at the cheapest possible costs.

The deal of Roche is only getting finalized this year, but this deal came into picture when Roche first purchased 20% share of the Genentech in 1990. From that year till today Roche is being capturing the Genentech. Roche has been very efficient in making the cost savings from $750 million to $850 million a year. So, these two companies were having a very good symbiotic relationship and they are growing in accordance. Now, both the managements have decided to sell all the drugs of Genentech even under the brand of the Roche. This will be great benefit to both the companies as this will be improving the profit range. Up course it would be very difficult task to the managers of the Roche and Genentech to manage the entire working strength, but they are quite sure that they would be able to take up with the task.

Roche has also promised that it will not be cutting down the employees of the Genentech, so it’s a great step in the time of recession. There will be some problems initially, but once everyone gets used to the new environment the problem is solved. Genentech was only having the market in the United States, so with the help of the Roche it would be getting the good market outside the United States. Even in the European markets the drugs of the Genentech would be available. Generic drugs market would be new target of the Roche so that they could even reach a wide variety of customers. Roche will also be focusing on some of the specialty segments once it also gets the research workers from the Genentech. This will be very helpful for the Roche to invent the new medications.

Even the profits from the Roche would have a marked increase because of the Genentech best-selling drugs would now be sold under the brand name of Roche. The Roche-Genentech deal would be finalized in next 2 months. Experts say that Roche and Genentech together would be a very strong position holder in the pharmaceutical market after their collaboration. The manufacturing capacity of the drugs of the Roche would be increased; this will improve the profits of the company. But, this deal will surely bring down the prices of the drugs and would finally be beneficial to the customer.