Was The $47 Billion Acquisition of Genentech In 2009 A Good Deal For Roche?

July 10th, 2019 by Trefis Team
+6.98%
Upside
39.26
Market
42.00
Trefis
RHHBY: Roche Holding logo
RHHBY
Roche Holding

Roche Holding (NASDAQ:RHHBY) acquired Genentech, a pharmaceuticals company with three blockbuster oncology drugs, in 2009 for a sum of $47 billion. Back in 2008, Genentech’s top drugs were Avastin, Rituxan, Herceptin, and Lucentis, which generated sales of over $7 billion. As of 2018, the same drugs generated over $21 billion in revenues for Roche, and it appears that Roche’s acquisition of Genentech was a good deal, especially considering how it benefited Roche’s broader R&D direction. You can look at our interactive dashboard analysis ~ Was Roche’s $47 Billion Acquisition of Genentech In 2009 A Bargain? ~ for more details. In addition, look at our data for healthcare companies here.

 

Roche Paid Genentech $47 Billion In 2009, Reflecting A 4.4x Revenue Multiple

Relevant Articles
  1. Should You Pick Roche Stock Around $40 After Positive Data For Its Obesity Drugs?
  2. Will Roche Stock Rebound To Its 2022 Highs of $50?
  3. Is Roche Stock Undervalued At $33?
  4. What’s Driving Roche Stock?
  5. Company Of The Day: Roche Holdings
  6. What’s Happening With Roche (RHHBY) Stock?

  • Genentech’s total sales were on the rise, and they grew from $7.6 billion in 2006 to $10.5 billion in 2008.
  • Avastin, Herceptin, Rituxan and Lucentis accounted for close to 70% of the company’s total sales.
  • Roche paid $46.8 billion for Genentech, reflecting a 4.4x revenue (2008) multiple.

The Same Blockbuster Drugs See Stellar Growth Over The Next 10 Years

  • 10 years down the line the same 4 drugs accounted for a whopping $21.1 billion in sales for Roche.
  • This compares with the $46.8 billion price paid by Roche for Genentech’s entire portfolio.
  • Avastin sales were $7.0 billion, Rituxan’s $7.1 billion, Herceptin $5.3 billion, and Lucentis $1.7 billion in 2018.

Comparing Roche’s Trailing Twelve Months Price To Sales To That of Johnson & Johnson, Pfizer, and Merck

  • Roche: 4.3
  • Johnson & Johnson 4.9
  • Pfizer 4.5
  • Merck 5.1

While the Genentech’s acquisition was a good deal for Roche, the same blockbuster drugs now face biosimilar competition, as they either have, or they are nearing, the loss of market exclusivity (Also See ~ How Much Revenue Can Roche’s Avastin Lose To Pfizer’s Biosimilar Zirabev?).

 

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs

For CFOs and Finance Teams | Product, R&D, and Marketing Teams

All Trefis Data

Like our charts? Explore example interactive dashboards and create your own.