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Roche’s Acquisition of Genentech Case Solution & Answer

Roche’s Acquisition of Genentech Case Solution

Introduction

In the pharmaceutical industry, Roche Group of Company is the famous global company which was established by the founder, Fritz Hoffman-La Roche in 1896. The CEO of the company observed that the standardized drugs must be manufactured which can treat the advanced diseases which are occurring day by day. He had to estimate the hostile tender which was the public shares ownership of Genentech, which was the subsidiary of Roche and a highlight explorer of biotechnology. It was considered that the company must possess the independent culture which has the independent strategies in the pharmaceutical industry.

Benefits and risks attached with acquisition

Acquisitions and mergers play vital role for the firm an its future growth, Acquisition make company to access assets and funds to finance the future developmental plans of company. Additionally it also allow firm to get more customer acquisition and market share. Acquisition allow firms to acquire power in the industry. It prevent firm from being in any dispute and counterfeiter products. In case of genentech Roche own 56% of company shares and intended to acquire the remaining 44% of shares. Actually from year pharma industry is stiving to come up with any new product, and to keep firm profitable and fulfit future plans of the company.  Further the advantages of acquisition for Roche iare mentioned below:

  1. This step of Roche will allow company to increase its position in the industry and make its company one of the world’s largest biotechnology firm.
  2. After acquisition company will save its cost and company will get to reduce its manufacturing and development cost, and also will allow them to focus on coming up with new products.
  3. Full ownership of company will allow them to get access to technology, resources and other research and development projects.
  4. Acquisition will allow company get the capital and cash in the company.
  5. Company will get full autonomy to make decisions and contract with its desirable dealers.

Whereas if we talk about the risks of acquisition, we can clearly say that with getting full ownership of company, Roche will be dealing with full risks of the company. Normally after acquisition firm face clash of cultures, it create confusion in the industry, it can also cause other financial problems. Further in case of Roche the Risks are given below:

  1. Earlier Company had culture of offering shares to its employees due to increase in group performance and employee interest in the company, If Roche acquire 100% of company’s share then it could cause a cultural conflict in the firm. Along with that will decrease employee motivation and team performance.
  2. After acquisition there are chances that firm share price face downfall due to paying high premium.
  3. To crack this deal there are chances that Roche have to borrow money to fulfil get the 100% ownership of the company.
  4. This acquisition will allow Roche to sell company in another market.
  5. It can reduce company revenue which company is earning through its popular cancer products, an industry can ban its popular products.
  6. Risk of new competitors and their new products will increase…………………..

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