Bloomberg: Roche negotiating for rest of Chugai for $10B

A year ago, CEO Schwan said there was no need to buy the 40% it didn't own

August 15, 2014 | By Eric Palmer

Just last month Roche CEO Severin Schwan indicated he wasn't interested in mega-deals to build his company, only smaller, more targeted buys. Of course what is targeted and what is mega is in the eyes of the beholder. The Swiss drugmaker is reportedly in talks to buy up the 40% piece of Japanese partner Chugai Pharmaceutical it doesn't currently own. Price? $10 billion.

Sources tell Bloomberg that a deal could be announced next week, although one cautioned that a decision is not final on doing it.

Roche ($RHHBY) has held a position in the Japanese company since 2002 and, just a year ago, Schwan indicated he saw no reason for Roche to buy the rest of Chugai. He was volleying questions from analysts during the Q1 2013 earnings call about whether it might want to buy it out, like it had in 2009 when it paid $47 billion for the piece of the biotech Genentech it did not own. But the CEO pointed out that it has a different contractual structure with Chugai and has restructured its own business in Japan to avoid duplication.

There was no indication of what has changed. Schwan said last month that the company would stick to its strategy of doing, "targeted, small acquisitions and partnerships like the ones we have carried out in recent months." Roche recently agreed to pay up to $1.7 billion for Seragon Pharmaceuticals and its potentially groundbreaking breast cancer program.

The company was rumored last year to be looking at rare disease specialists Alexion ($ALXN) for $20 billion and BioMarin ($BMRN) for up to $13.5 billion, but nothing came of that. With Chugai, it may be more a matter of beefing up in a growing market than getting a portfolio of drugs. The two sell the Avastin, Herceptin and Tarceva cancer treatments together. They also jointly developed Actemra, a treatment for rheumatoid arthritis.