Roche lines up manufacturing and R&D reshuffle
pharmafile | April 1, 2009 | News story | Sales and Marketing |Â Â Genentech, RocheÂ
Genentech's decision to succumb to Roche's $48.8 billion merger bid has signalled a revamp of manufacturing, R&D and other divisions to reduce duplification.
The merger gives the company an opportunity to reduce taxes by transferring some of its manufacturing base from the US to countries with lower tax rates. One consequence of the marriage is that Roche's manufacturing operations in Nutley, New Jersey, will be closed, with an estimated 400 jobs likely to be lost.
Support functions, such as informatics and finance, will also be consolidated with those of Genentech.
In its purchase offer, Roche made it clear that it believes the merged company has "significant excess manufacturing capacity for biologics".
In its first overtures to Genentech, Roche had suggested that some of that excess capacity could be diverted towards the provision of contract manufacturing services, but later updates retreated from that view.
Roche's commercial operations in the US will move from their current home in Nutley to Genentech's South San Francisco campus.
South San Francisco will also serve as the primary hub for research and early development, and Roche said it has already begun to wind down operations at its Palo Alto facility and will relocate the site's virology research and development activities – and around 270 staff – to the Genentech site. The Palo Alto site closure will lead to around 500 lay-offs over the next 12-18 months.
Roche's inflammation group, also based in Palo Alto, is being rolled into the Nutley R&D organisation.
Roche's chairman, Franz Humer, said that every effort will be taken to preserve Genentech's innovation culture, given that it has one of the best records in the biopharmaceutical industry in bringing successful new products to market.
Part of Humer's pledge is to allow Genentech to operate "as an independent research centre- with its own unique culture – within the Roche group,"
Overall, Roche believes the merger will allow for annual pre-tax cost synergies of $750 million to $850 million by "reducing complexity and eliminating duplicative functions and processes."
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