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


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


Roche's reputation as most-favored partner derives largely from this hands-off style of management. "This approach to partnering is one of our key differentiators in negotiations," says Zabrowski. "From a price standpoint, of course, you have to be competitive. But what Roche also brings to the table is flexibility in the deal structure. For many companies, involvement in decision-making is very attractive. And when we say we work collaboratively, they know we mean it."

Many other large-caps have had to learn the hard way that there are real risks in buying a biotech for a product and then discarding the human talent that produced it. "It's unrealistic that you're going to go to the parents of a newborn and say, 'Let me have him—and I'll invite you to his wedding,'" Zabrowski says. "That just isn't going to work."

In 2002, Roche bought a 50.1 percent share in Chugai for an estimated $1.4 billion, marking the first foreign takeover of a Japanese drug firm—and giving Roche a sizeable footprint in that emerging market. Its deals were regularly praised in the press as "elegant" and "innovative."

"The concept of arm's-length management is an important cornerstone of how we work today," says Zabrowski. "Our partners have a vested interest in the success of their innovation. They are the experts. At Roche, we value that. We want to engage them as much as we can."

As an example, Zabrowski points to a recent deal with Actelion for its novel S1P-receptor agonist in Phase I for autoimmune diseases. "They are making all the decisions through Phase II," he says. "We respect their ability. We do not tell them what to do. It's a true collaboration."

Roche's early-stage pipeline is packed with such joint projects.


Yet Roche isn't completely free of the general pharma malaise. The company's in-house discovery is no more productive than most large-caps'. This year, Roche projects that its sales growth will drop into the single digits for the first time in eight years.

"Even though our own patent losses are five, six, seven years off, our sense of urgency is no less," says Zabrowski. "I wake up every morning thinking, How do we fill our pipeline through our internal R&D and our licensing efforts to help offset the loss of sales over the next decade?"

Like other drug giants, Roche is restructuring its R&D organization to increase efficiency and cut costs. It is flattening hierarchies, integrating functions, pushing responsibility down. Budgets for both R&D and M&As will increase.

But to realize the dream of personalized medicine, Roche will have to improve in-house discovery, and that means rolling the dice on long-shot biotech inventions.


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