07.09.09
#2 Genentech
1 DNA Way, South San Francisco, CA 94080
Tel: (650) 225-1000 Fax: (650) 225-6000
www.gene.com
Headcount | 11,000 | |
Year Established | 1976 | |
Biopharma Revenues | $10,531 | +12% |
Royalty Revenues | $2,539 | +28% |
Total Revenues | $13,418 | +14% |
Net Income | $3,427 | +24% |
R&D Budget | $2,800 | +14% |
2008 Top Selling Drugs | |||
Drug | Indication | Sales | (+/-%) |
Avastin | colorectal cancer | $2,686 | +17% |
Rituxan | lymphoma, rheumatoid arthritis | $2,587 | +13% |
Herceptin | breast cancer | $1,382 | +7% |
Lucentis | wet AMD | $875 | +7% |
Xolair | asthma | $517 | +10% |
Tarceva | lung cancer | $457 | +10% |
Nutropin/Protropin | HGH deficiency | $358 | -4% |
Account for 84% of total pharma sales, same as in 2007.
PROFILE
So long, Genentech! It was nice having you at #2 all these years! Last year, majority owner Roche launched a bid to buy out the remaining shares of Genentech and fold it into Roche. It took eight months of negotiations and revised during the worldwide financial collapse, but Genentech finally merged with Roche in March 2009 for a payment of around $47 billion. Given the standards of how I count biopharma revenues, it appears that the new Roche will become #1 on next year’s Top 10 Biopharma list.
The Lowe Down
And one final company making its last appearance, thanks to Roche and the wonderful climate that the drug industry has found itself in. Genentech is biotech royalty, for sure, so seeing them swallowed up whole has been something of a shock (notwithstanding that they took a brief journey through the inside of that same whale at one point). I really hope that we’re not saying goodbye, but it’s too early to say. There have to be more changes coming — for one thing, you have to wonder what’s going to happen to their small-molecule people, since that’s not (historically) their strength, nor what Roche was presumably paying for. Give it a couple of years or so. And there’s one of the central problems of this industry — the changes we make take a long time to have an effect, and the attention of the investors is relatively short. (That could probably be rendered more concisely in Latin). And by the time we’re sure that some strategy hasn’t worked it, it’s been in place for years. Let’s hope that the Genentech acquisition doesn’t end up in that bin. . .—Derek Lowe |
Unlike the other major mergers in this year’s edition, Genentech wasn’t simply a pipeline-grab. Roche actually seems intent on making Genentech the U.S. face (and name) of the company, with plans to move its commercial operations H.Q. into Genentech’s South San Francisco site, and to retain that site’s research and early development campus as an independent center. Roche predicts $750 to $850 million in “synergies,” so I’m sure we’ll see a ton of layoffs affecting both sides of the company.
Some changes have already been made, and they highlight the issues Roche’s may face as it tries to spread Genentech’s biotech mojo throughout the entire company. The question we all have is: Is mojo spreadable?
On the one hand, the WSJ Health Blog quoted William Burns, Roche’s chief executive officer of pharmaceuticals, on the synergies of the merger: “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. So now 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.”
On the other hand, how do you retain the talent that fueled Genentech’s success? A few weeks after the deal was finalized, Genentech chief executive officer Art Levinson, stepped down. He was named chairman of Genentech’s board, a nominee for Roche’s board, and an advisor on research. Will he be able (and willing) to exert the same influence he once had on Genentech’s development teams?
In May, Susan Desmond-Hellmann, Genentech’s president of product development, was named chancellor of University of California, San Francisco. She’s regarded as a key figure in the company’s success in cancer treatments, and was supposed to be a member of the new Genentech’s Scientific Resource Board. Will her new role at UCSF remove her from Genentech’s orbit?
The Friend of my NME?
If there’s one knock I have on Genentech, it’s the company’s dearth of late-stage drugs. That’s a pretty nitpicky point, given the incredible success its key products are enjoying, and the new indications that are getting approved for powerhouse Avastin (as well as positive results for Rituxan, Herceptin and Tarceva).
It’s not as though Genentech wasn’t cognizant of the need for new drugs in its pipeline, before the merger. As part of its “Horizon 2010” plan (which did not include “get bought out by Roche”), the company wanted to get at least 20 NMEs into the clinic. But one of the other goals was “bring at least 15 major new products or indications onto the market,” (emphasis mine) which gave them plenty of room to talk about productivity without getting new drugs approved. They’re doing a great job with the new indications, but the company’s Phase III pipeline is stuffed with Avastin trials, and there aren’t so many prospects in the former group.
As I mentioned in Roche’s profile, Avastin failed in a clinical trial for early-stage colon cancer. Adding that indication would’ve opened it up to a huge new market and further cemented the company as tops in cancer treatments. Still, Avastin did managed to win accelerated approval for brain cancer in May 2009, and is involved in, according to Genentech, 450 trials against 30 different tumor types.
I guess I’m just carping. Genentech comported itself pretty well in its final year as an independent, posting double-digit sales growth and featuring a trio of billion-dollar biologics. It was never going to catch up to Amgen for the top slot, but Genentech can take consolation in
- helping thousands of cancer patients over the years, and
- blowing Amgen out of the water with combined bio-revenues in next year’s edition.
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