THE ROCHE APPROACH TO PARTNERING

ROCHE FINANCIALS

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."

"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.

QUICK FIXES AND BIG DREAMS

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.