San Francisco Business Times -- As it looks toward a marriage with Genentech Inc. and South San Francisco, Swiss drug maker Roche is filing for divorce from Palo Alto.
Roche plans to move its inflammation business from Palo Alto to Nutley, N.J. — no matter the fate of its plan to buy the rest of Genentech — and could shift its virology business from Palo Alto to South San Francisco. Meanwhile, Roche said it will move its U.S. pharmaceutical commercial operations from Nutley to South San Francisco.
Roche is not disclosing the exact number of jobs that would shift between Palo Alto, South San Francisco and New Jersey. This much, however, is sure: South San Francisco will gain hundreds of jobs, New Jersey will lose hundreds and the Palo Alto operations that employed 3,000 people before Roche took control likely will be shuttered.
“I’m not getting numbers or dates or projections or anything,” said South San Francisco Deputy City Manager Marty Van Duyn. “They’re basically playing it close to the vest until they get this thing completed.”
That thing is Roche’s proposed $43.7 billion deal to buy the remaining 34.1 percent of Genentech that it doesn’t already own. First, however, Roche must kiss and make up — at a higher price — with the world’s largest biotech.
Genentech’s three-person committee that weighed Roche’s offer — including cofounder Herbert Boyer — on Aug. 13 rejected Roche’s initial bid, saying Genentech would consider a richer offer. Analysts tracking the deal have said the price could jump from $89 per share to as high as $125 per share, which would boost the deal’s pricetag to $61.4 billion.
Regardless of whether the deal goes through, the inflammation business will move to New Jersey, said Roche spokeswoman Nina Devlin of Brunswick Group, a New York City public relations firm. That business has been a cornerstone of the Palo Alto site since it was the home of Syntex Corp.
Roche, which bought Syntex in 1994, employs about 1,000 people at its 1 million-square-foot Palo Alto site. More than three-quarters of that space is for laboratories.
“It’s too early in the process to talk about jobs,” Devlin said, adding that Roche hasn’t released a timeline for when it will start moving jobs from Palo Alto.
Roche officials were not made available to talk to the Business Times.
Roche’s planned shift of operations comes 18 months after the company hyped another reorganization of research work into disease biology areas. That concentrated virology and inflammation in Palo Alto, cancer drug research at Nutley, metabolism and central nervous system work in Basel, Switzerland, and therapeutic protein research in Germany and China.
A Roche spokesman at the time called the reorganization positive for the Palo Alto site, forecasting long-term growth.
Under Roche’s latest plan, South San Francisco would be home to an independent Genentech research and early development unit — a concept Roche officials have taken pains to stress since the buyout plan was unveiled July 21. At the time, Roche CEO Severin Schwan said separate Genentech research operations will “safeguard a diversity of different approaches” and secure a long-term flow of medicines.
Genentech already has some 8,000 employees in more than 2.8 million square feet in South San Francisco. Its 10-year master plan calls for nearly doubling its local workforce and footprint, mainly with office and laboratory space.
If Roche completes the Genentech deal and moves all the operations it says it will to South San Francisco, Genentech’s 10-year plan could accommodate that growth, Van Duyn said.
“I think they’re still committed to Genentech’s 10-year plan,” he said.
