CEO: Roche, Genentech R&D won't merge

Despite the company's plans to review it structure, announce layoffs and achieve cost savings of $1.9 billion by 2013, Roche CEO Severin Schwan says the company has no intention of combining it's R&D unit with Genentech's R&D business. "We will keep the two respective research and early development organizations as independent units. I am very firm on that and I don't see any reason why you would put them together," the CEO said in an interview with Reuters. "You would kill innovation."

The Swiss drugmaker has been hit with a series of recent pipeline setbacks that have caused some concern. Roche has delayed development of Type 2 diabetes drug taspoglutide; FDA handed Roche and Genentech a refuse-to-file letter for trastuzumab-DM1; trials of rheumatoid arthritis drug ocrelizumab were suspended, and the FDA is reviewing a breast cancer indication for blockbuster drug Avastin. Those issues contributed to Roche's decision to cut costs. "Growth is slowing down, and that is related on the one hand to the price pressure that we see both in the U.S. and in a number of European countries and it is related to the late-stage setbacks in our pipeline," Schwan told Reuters. "Yes, there have been setbacks, but I think it's important to put it into perspective with our overall pipeline, which is very strong."

Since it's $47 billion buyout of Genentech, Roche has been fiercely protective of Genentech's legendary culture. Genentech leaders took top spots at Roche, and Swiss drugmaker has cut Roche employees rather than Genentech workers (Genentech's ranks have actually grown since the the buyout, according to a spokesperon). But analysts wonder if Roche's hesitance to cut Genentech R&D will interfere with the company's ultimate cost-cutting goal. "...[T]he fact that [Schwan] does indicate that he will look at R&D suggests that funds to support these two structures are going to become scarcer," said Vontobel analyst Andrew Weiss. 

In the interview, Schwan indicated that Roche's primary care salesforce could come under scrutiny as the company makes to look cuts following the taspoglutide delay.

- read the Reuters interview

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