Roche CEO: No appetite for expensive megadeals here

Roche CEO Severin Schwan

Not every drug chief wants to ride the wave of M&A sweeping through pharma. Example: Roche CEO Severin Schwan, who says he'll stay in the shallows.

"We're sticking to our previous strategy," Schwan told the Swiss business paper Finanz und Wirtschaft (as quoted by Reuters). "This includes targeted, small acquisitions and partnerships like the ones we have carried out in recent months."

Roche ($RHHBY) made its own huge deal back in 2009, when it bought the share of Genentech it didn't already own for $47 billion. Since then, Roche has racked up a series of smaller pharma and biotech buyouts, mostly aimed at restocking its pipeline as its older blockbusters near the patent cliff. For instance, the company agreed a few weeks ago to pay up to $1.7 billion for Seragon Pharmaceuticals and its potentially groundbreaking breast cancer program.

It's also focused on diagnostics because of its work in targeted drugs; the company has inked a couple of smaller buys and partnerships in that area this year, Reuters points out. Just last week, it teamed up with Merck KGaA to develop a companion diagnostic test for various cancers.

And it's in the diagnostics area that we find one classic illustration of Roche's recent deal strategies. Roche made a hostile bid for Illumina ($ILMN), a genetic sequencing company, back in 2012, but dropped out as the price crept up.

Indeed, Roche has a reputation for dealmaking discipline; it tends to bow out rather than risk overpaying. That's why analysts were scratching their heads last year when Roche was rumored to be buying the U.S. rare disease specialist Alexion ($ALXN) for a pricey $20 billion. Likewise a rumored deal for another rare disease drugmaker, BioMarin ($BMRN), for up to $13.5 billion.

Now, price is one of the big reasons Schwan isn't interested in lunging for a big buyout or merger. "We take a look at everything. But at present the calculations only add up in the fewest cases," Schwan said, adding that overspending on a deal would hamper its R&D funding. "We have to weigh up internal and external opportunities. It can't be that we have to put important internal opportunities on ice because of too-expensive acquisitions."

- read the Reuters story

Special Reports: Top 10 pharma companies by 2013 revenue - Roche | 15 Highest-Paid Biopharma CEOs of 2013 - Severin Schwan

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