One of the major acquisitions this year has been Roche’s buyout of Genentech. Roche has made some quick and significant moves in closing the transaction and is aggressively moving towards integrating both companies by end of 2009. As all M&As go, the financial transaction is the simplest task. Genentech’s continued success on its financial statements will stay unseen and embedded inside Roche’s.
However, the complicated part of M&A is getting the right people from both companies in the right places, and the most interesting issue right now is the difference in their corporate cultures. Genentech, voted as the best place to work (as good- if not better than- Google), cultivates an independent entrepreneurial risk-taking research culture while Roche is known for its team-oriented lean operation culture. Roche has made several statements to indicate that they will not “change” Genentech after the acquisition is complete.
However, the synergistic initiatives have resulted in several major moves among the top brass. Arthur Levinson, who has led Genentech as the CEO since the mid-1990s will now become Chairman of the new board while Pascal Soriot, Roche’s Head of Global Pharma Operations will replace him as the new CEO. Ian Clark (Head of Commercial Operations) will become Chief Marketing Officer (Pharmaceuticals for Roche). David Ebersman (CFO) and Susan Desmond-Hellman (President of Product Development) are making an exit, although Ms. Desmond-Hellman will stay as an advisor starting later this year. These moves seem to indicate that Genentech will change to some extent, possibly a transformation to a team-oriented culture that keeps the independence and enterprising nature of roles intact.
Since Genentech becomes a “subsidiary-type” branch of Roche, they have all the access to development data for Genentech’s products. In a recent conference call, Bill Burns, Roche’s CEO of Pharmaceuticals said “… there was considerable biomarker data on some of the products that was not shared in the collaboration because it could result in future intellectual property … having the legal infrastructure protecting the outer walls of the family and not cutting across one member of the family, will allow a much broader transparency and sharing of that data. [Still, Roche] wants a considerable diversity of approach from the research and early development point of view.”
Of all the companies now suffering from tough economic times, Genentech has continuously done well and is very well-positioned to stay as the market leader. It is therefore important that Roche take whatever steps necessary to support innovation and development at Genentech while leveraging from a successful and important acquisition. Corporate culture has always been the centerpiece for M&A problems despite the tremendous financial benefits. It is in the interest of both Roche and Genentech to make sure that their core values of developing life-saving treatments stay intact.
