Roche

Roche ($RHHBY)
CEO: Severin Schwan
Based: Basel, Switzerland
2015 sales: $11.24 billion
2014 sales: $11.78 billion
Change: -4%

Roche ($RHHBY) relies on diagnostics for its bread and butter business, and the company made more headway in the market in 2015 thanks to M&A and R&D.

Roche kicked things off in 2015 with a $1.2 billion deal for Foundation Medicine to boost its cancer diagnostic offerings. As part of the agreement, Roche said that it would shell out up to $150 million in funding over the next 5 years for a "broad R&D collaboration" aimed at speeding up product development and boosting global commercialization, the company said.

But Roche's dealmaking didn't stop there. Last year the company snatched up Germany's Signature Diagnostics to build out its cancer testing portfolio. Roche also picked up Kapa Biosystems to get its hands on the company's next-generation sequencing (NGS) products.

"This acquisition builds on Roche's commitment to develop a differentiated NGS portfolio that will provide our customers with a complete genetic testing solution," Roland Diggelmann, COO of Roche Diagnostics, said at the time.

In August, Roche struck two deals: one with molecular diagnostics firm Lumora, and another with microbiology diagnostics outfit GeneWEAVE. Through the Lumora agreement, Roche gained access to the company's quick sequencing tech, which could help set it apart from rivals. Roche's GeneWEAVE deal was also strategic, as it boosted Roche's drug-resistant bacteria testing offerings amid outbreaks of superbugs and hospital-acquired infections.

Meanwhile, the company concentrated on gaining new approvals and rolling out products to generate more positive momentum. Roche got FDA blessings for diagnostics including a rapid test for C. difficile and a companion diagnostic for pharma giant Pfizer's ($PFE) non-small cell lung cancer treatment.

Even though Roche's diagnostics business performed well across the board, its diabetes unit still lagged due to price cuts and reimbursement issues in the U.S. Some investors have speculated that the company will sell off the underperforming unit, especially after Bayer offloaded its diabetes device business. But analysts said that they shouldn't hold their breath.

Roche could get as much as 6 billion Swiss francs ($6.4 billion) from selling the unit, Barclays analyst Michael Leuchten told Bloomberg last year. But "there just aren't enough natural buyers out there for two people selling a lemon at a good price," Leuchten said.

Roche is also shrugging off rumors that it would sell its flailing diabetes testing unit. "It's still a good business," Roland Diggelmann, head of Roche diagnostics, told Reuters in May. "We don't disclose the margins but it is a cashflow-generating business and it's a business with a future."  

-- Emily Wasserman (email | Twitter)

For more:
Roche exec sees brighter days for company's flailing diabetes testing biz
Roche launches rapid HIV, hep C tests in Europe
Roche's M&A party rages on with Kapa Biosystems deal
Roche shells out up to $425M for superbug testing outfit
Analysts: Roche sale of diabetes diagnostics unit could be a long time coming
Roche charges ahead with diagnostics R&D after sealing Foundation deal

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