Is this more evidence that Roche needs Genentech? The Swiss drugmaker posted disappointing profits--sending not only its stock tumbling, but Euro-pharma stocks in general. The company suffered a sickening drop in Tamiflu sales, partly offset by strong sales of the cancer meds it owns with Genentech. But that partial ownership wasn't enough to prevent an 8 percent decline in profits for 2008. And Roche offered a cautious outlook for 2009, predicting sales growth of around 5 percent.
No wonder, then, that Roche wants the 44 percent of Genentech it doesn't already own. The company exuded confidence about its proposed buyout of Genentech, despite the fact that it resorted to a hostile bid lower than its already-rejected earlier offer.
CFO Erich Hunziker said he's positive the company can get the financing it needs for the deal; in fact, it's planning to float some bonds to "serve as a base for further talks" on other financing sources. And responding to questions about Genentech, Hunziker got a little huffy (some would say defensive). "Over the last seven, eight years did you ever see that this management team did not achieve a major task which we have announced to you?" he said during the analyst call. "So maybe with this we'll go to the next question."
CEO Severin Schwan (photo) was no less confident, though perhaps more tactful. Today, he said he was sure Genentech stockholders would buy in, Forbes reports. "We are confident shareholders will consider this fair," he said.
- see the Wall Street Journal earnings story
- read the article in the WSJ Health Blog
- check out the market reaction at the Financial Times
- get more on the deal financing from MarketWatch
- find the story in Forbes