Severin Schwan has pulled out his crystal ball and sees a lot of trouble for the pharmaceutical industry, although not surprisingly, Roche does not appear in this particular vision. “Those who fail to bring sufficient innovation will be squeezed out of this market,” he tells The Wall Street Journal. “No one is immune to this failure. That applies equally to small companies and big companies.”

To stave off his own failure, Schwan is boosting R&D spending as a percentage of its sales, in a bid to spur drug development. And he maintains Roche should be well-placed to succeed in the years ahead, because its cancer meds, including Herceptin and Avastin, are effective in many patients and, therefore, widely covered by insurers.

Meanwhile, Joe Jimenez, who heads the pharma unit at Novartis, says that, “in the ’90s, everybody won.” Now, though, share prices of some drugmakers have fallen sharply as investors worry about growth. Some stocks will continue to decline until asset values exceed market caps, he says, and, at that piont, they will be taken over by stronger companies and broken up.

And what of Roche’s own bid to buy 44 percent of Genentech? The drugmaker already owns 56 percent, but the bid has stalled because the Genentech board rejected the offer and credit markets are tight (look here). Anxiety is running high inside Roche, as a result, but Schwan, of course, maintains a deal will happen.