In Praise of Independence: Q&A with Roche's Dan Zabrowski - Pharmaceutical Executive

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In Praise of Independence: Q&A with Roche's Dan Zabrowski
Roche has always gone its own way: investing in biologics, championing personalized medicine, and checking its ego at the door when doing deals. Now that the rest of Big Pharma has caught on, can a new generation of leaders keep the Swiss giant ahead of its time?


Pharmaceutical Executive


"Find" and "get" are the exclusive mandate of Zabrowski and his team. They keep track daily of the phenomenally fluid pharma and biotech landscape relevant to Roche's five DBAs (Disease Biology Areas): oncology, virology/infectious diseases, autoimmune/inflammation, cardiovascular/metabolism, and central nervous system. This requires sleuthing through all the public information, identifying compounds of interest, and analyzing each one. "The analysis consists of determining the prospect of the compound succeeding as well as finding out who owns it, who else wants it, and what is the doability of the deal," he says.

As the competition over biotech products and platforms increases along with their valuations, the ability to make a keen, quick risk assessment is key. "With deals being focused on earlier in the R&D lifecycle, you have to have a balance between the scientific data generated to that point and your belief," he says. "Belief is a critical component in all this."

Yet belief requires confirmation. "How do you determine whether your belief is wholesale optimism or grounded in reality?" says Zabrowski. "You ask a lot of scientific experts and key opinion leaders, and develop some understanding of whether your belief has merit." He leans back in his chair. "And the whole time you're doing that, you also need to be aggressive against the competition while keeping an eye on the economics," he says. "Don't end up overpaying."

VENTANA PLAYS HARD TO GET

Is there a secret to creating good partnerships? "Large pharmas have to check their ego so they can really understand what their partner wants," Zabrowski says. "If you can transcend yourself and put yourself in their shoes, then you can have an open dialog about both your and your partner's needs. That is very important in our business-development world."

But even at Roche, when Zen fails, reach for the stick.

Last year, one of the biggest deals was Roche's acquisition of Ventana. The Arizona-based diagnostics company is the world's leading maker of human tissue–based systems for both disease diagnosis and drug discovery. One of its many products is the HER2 test used to genetically screen breast-cancer patients for susceptibility to Herceptin. Owning both the diagnostic and the drug would be a bonanza for Roche, giving it not only market exclusivity but many additional potential test-and-treatment synergies.

After Ventana snubbed Roche's numerous bids, the Swiss company began pursuing a hostile takeover in July with a $3 billion offer. Ventana dismissed the offer as "grossly inadequate"—even though it had immediately jacked up its stock by 50 percent. When Roche insisted in October that it would never sweeten the deal, Ventana reluctantly opened its books.

It all got a little nasty in the press—proof that the staid Swiss firm was determined to win.

In January, Roche relented, slapping down $3.4 billion, and Ventana not only accepted—CEO Christopher Gleeson gave Roche a big bear hug, saying he was "very excited" to be joining its ranks.

When I spoke to Zabrowski, the happy ending was still three weeks off. "Hostile takeovers in general are obviously not something one would want to do," he said. "But if we acquire Ventana, we'll maintain the same autonomy and independence we allow all of our partners." In fact, Gleeson, who had once refused to answer Humer's calls, is staying on. (For Roche's other top deals in '07, see the box .]


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