After plan to acquire Illumina is scuttled, speculations begin on Roche next steps
Some market-watchers had said that Roche probably wouldn’t pursue Illumina’s competitors as a backup plan, but rumors are surfacing that it might indeed be getting ready to do that
But according to at least one media source, Rochemay not have exited the market itself when it walked away from Illumina, and itmay be looking at other companies or younger technologies as a way to bolsterits own position and become a competitor to Illumina.
Certainly, some market-watchers have rejected thenotion that Roche would pursue a smaller company or take on less-establishedtechnology. Dr. Jerry Isaacson, head of healthcare industry dynamics at businessintelligence firm GlobalData, for example, wrote: "After losing their bid tobuy Illumina, Roche is not likely to go after a smaller sequencing company. Ifthey had been after disruptive technology, there are other, much cheapercompanies they could have acquired, such as Oxford Nanopore, Helicos orPacific Biosciences. The larger goal of this acquisition has always beenapparent—to integrate sequencing into the development of drugs and, in turn,use the technology to diagnose disease."
"While Roche would continue to gain revenue byselling the sequencing technology, the ultimate goal was to drivepharmaceutical sales," Isaacson continued. "As we have written previously, itdid not appear that Roche would look for the standard cost-cutting measures andexpansion of markets to pay for the Illumina deal. The only way the acquisitionmade sense was for Roche to springboard to stronger pharmaceutical sales."
Isaacson maintained that in the end, though, Rochemay be better off without such an ambitious in-house program, saying: "While itmay seem attractive to be able to offer researchers, doctors and hospitals anall-in-one platform to assist with the diagnosis and treatment of disease, thisapproach has drawbacks. Roche could have found itself trying to sellproprietary sequencing technology while other companies were relying ongeneric, plug-and-play diagnostics."
Roche hasn't made an announcement one way or theother as to future acquisition plans around sequencing technologies, but accordingto the Swiss newspaper Der Sonntag,which cited unnamed sources, Roche is looking for alternatives after the failed$6.8 billion bid for Illumina. Specifically, the newspaper reports that Rocheis talking to research centers at three large universities about buying theirgene-sequencing technology.
This would make some sense. As Reuters recentlynoted in its coverage of the failed deal and the rumors coming from Der Sonntag, Roche has been developing targetedtherapies, particularly for cancer, and Illumina's technology or something likeit would help the company to progress further in the field because Roche couldidentify which patients benefit from a given drug.
As Reuters also noted, after dropping the tender offerfor Illumina, Roche CEO Severin Schwan said Roche would look for other ways toexpand its leadership in the diagnostics business.
This doesn't necessarily mean a new corporate acquisitiontarget or even an internal gene-sequencing program from the ground up—though eitheris possible, as is a combination of the two—as Der Sonntag quoted Roche Chairman Franz Humer as saying that Rocheis already working on two of its own gene-sequencing projects, one of them withthe help of IBM, and Hummer also noted that Roche has a "good relationship"with privately-held Oxford Nanopore, which is one of Illumina's competitors.