Roche Spins NJ Exit As Recruiters Eye Genentech
5 CommentsBy Ed Silverman // August 21st, 2008 // 1:47 pm
Never mind that Roche plans to move much of its US pharma operations from Nutley, New Jersey, to South San Francisco, if it succeeds in winning Genentech. Roche execs were happy this week to host New Jersey Governor Jon Corzine, who faces a shrinking pharma industry in the Garden State, and use the visit as an opportunity to boast that R&D will remain and may even expand there.
“Our decision to move Roche’s commercial operations to California was a strategic business decision and not about the business climate in New Jersey. The Roche-Nutley campus remains a very important hub for the company and will focus on discovering and developing medicines for cancer, metabolic and inflammatory diseases,” George Abercrombie, who heads Roche’s US pharma biz, says in a statement. (In the photo, Abercrombie is to the left and Corzine is to the right).
Abercrombie, whose own fate in a Genentech acquistion remains unclear, sounds like a man who is all but certain that a deal will go through. There seem to be some doubts, though, that Roche will actually get what it wants, even if it does raise its $89-a-share offer. The San Francisco Chronicle writes that many prized Genentech professionals are calculating what Roche would have to offer them to stay on after the takeover.
“The recruiters have been ringing their phones off the hook,” Rodney Ferguson, a former Genentech attorney, who keeps in touch with former colleagues, and is now managing director of the venture capital firm Panorama Capital in Menlo Park, California, tells the Chron. This raises the specter of a large brain drain, leaving Roche with something much less than dynamic culture that has guided Genentech to success in the lab and on Wall Street.
Why? If Roche is successful, the Chron notes, the deal will create a financial windfall for Genentech execs and scientists whose shares or options in the biotech will be cashed out, possibly at a much richer premium than Roche’s original offer. “From a poaching standpoint, you couldn’t have better conditions,” says Ferguson, who has a list of desirable Genentech recruits. “Somebody just handed them an obscene amount of money and is now changing their workplace, possibly for the worse.”
“In all honesty, you’re losing one of the great training grounds for the next generation of entrepreneurs and scientists,” Bryan Roberts, managing general partner of Venrock, a Palo Alto venture capital firm, tells the paper. “History would suggest that it will be very difficult for Roche to keep the same vibrancy of innovation that Genentech saw under an independent structure.”
Others, however, say this is also a good time for many Genentech employees to renegotiate employment terms, and for Genentech to find ways to retain people. “I think people would be silly to move precipitously,” Larry Setren, co-founder of the executive search firm Setren, Smallberg & Associates of Oakland and a former Genentech human resources vp, tells the paper. “They’re not going to lose the pieces of the company that has done so well for them.”
Hat tip to Jim at Bnet
US pharma operations from Nutley, New Jersey, to Genentech’s site in South San Francisco, although separate sales organizations would remain intact. And Roche’s manufacturing in Nutley will be closed and support functions, such as informatics and finance, will be consolidated
John Wisp
Mr. Silverman,
Could you do a side by side comparison of Genentech’s and Roche’s research track record. Include not only drugs brought to market and revenue generated, but also include publications in major science journals, developed pipelines, and the impact on patients’ lives. It should be interesting to see. I look forward to reading your article when you publish.
John
mrpas
Genentech is supposed to be a company responsible for investors returns. It is a doing a great job of bringing products and generating revenues; at the same time, like academic institutions, it is wasting a lot of money in basic research that does produce papers in Science and Nature, but better done at academic institutions rather than a money-making machine. One Roche acquires Genentech, one should expect the “basic” researchers with no intention to make drugs and no clear sight for drug discovery should be fired. Roche appears to be marking products whether they are discovered internally or in-licensed externally with the aim of growing good investors money; saving patient’s lives comes secondary for any capitalistic pharmaceutical company.
Laundry
Mrpas: like parents who think students should only spend time learning “academic stuff” and quit “wasting” time on games, you make a mistake by misunderstanding drug (or child) development. Genentech’s basic research really does get it closer to successful drug development. First, it has made it possible to recruit and retain the best and brightest,since they value the publication culture and the recognition it brings. Second, they are just practicing the latest techniques that are needed on the “real” drug development work. Every lesson learned is applied to further success on the drug side. The attitude you voice is understandable on the surface but deeply self-destructive in the longer run, and exactly the kind of worrysome mis-management that could kill the golden goose.
Pharma Monkey
“Mrpas” is voicing the exactly same kind of myopic and self-righteous opinion that is currently costing billions of dollars to almost all major pharma.
Basic research is essential to the health of pharma, and it is doubly so these days when academia is starving from very regrettable lack of funding. It has been shown time and time again that once a larger company acquires a smaller one and lets go of these loathsome basic researchers - the internal productivity levels of the combined new entity go down the drain.
The crude and trivialistic outlook exemplified by the statements made by “Mrpas” is one of the root causes of the decline of Pharma science (and therefore the new drug discovery) in the West. We can only hope that the strip-mining MBAs see the error of their ways before it’s too late.
John Wisp
“Laundry” and “Pharma Monkey” know what they’re talking about. “mrpas” is basic investor who deals only in dollars and cents like the bean counters at Roche.
“mrpas”, if basic research should only be left to academia then the pace of all research marches at academia’s pace. Too slow for biotechs. DNA took a huge leap of faith in funding its basic research to accelerate their scienctific knowledge needed to bring the next block buster drug to market. It was risky, but it has paid off handsomely for science, investors, and patients.
If left alone, Genentech could have done more. The buyout is inevitable. The “basic” researchers will take their passion and know how else where. Roche will be left with large debt, empty buildings, no ingenuity, and no way to save themselves when DNA’s patents run out.
John
p.s. It is very very easy to hide behind a mask as you have “mrpas” and sling mud.