March 17, 2009

Mergers put drug innovation at risk

An all-out merger of Swiss pharmaceutical Roche and California's Genentech Inc. carries the risk of stifling innovation, various analysts said.

Roche and Genentech agreed to close the gap between the two with a $46 billion deal that gives Roche the 44 percent of Genentech stock it hadn't already purchased, The Wall Street Journal reported Tuesday.

But, with a merger, they're taking a risk of changing their own inspired approach, Garrett Fitzgerald at the University of Pennsylvania told the Journal.

Analysts say the culture of the two companies is heads and tails. Roche is a suit-and-tie company, whereas Genentech prides itself in its casual approach that includes encouraging scientists to publish findings in scientific journals -- a standard no-no among large drug companies protective of their discoveries.

We need to do everything in our power to make sure this innovative culture in Genentech gets maintained, Roche's Chairman Franz Humer said recently.

In the drug business, where critical patents run out allowing generic drug companies to swoop in with cheaper brands, innovation is considered a necessity.

But, mergers aren't, inherently, conducive to creativity in the laboratory.

Pfizer Chief Executive Officer Jeffrey Kindler has said mergers in the past, have definitely hurt moral and hurt productivity, the Journal report said.