Roche plans to keep the Genentech site in San Francisco, and transition its New Jersey corporate headquarters to the West Coast. Additionally, research and early stage development will operate as standalone units. Roche expects to save about $850 million in the reduction of redundant services and positions, but there’s no word yet as to the actual number of jobs that could be eliminated.

Negotiations between the two firms were far from smooth. An initial $44B offer by Roche, made last July, was met with disdain by Genentech’s board of directors. Roche fired back by taking an even lower offer of $43.7B directly to Genentech’s shareholders—but that didn’t go over well either, and Roche was forced to go back to the well. Last week, the drug company made a firm offer of $46.8 billion, a price that appears to have satisfied Genentech’s board.

“We believe this is a fair offer for Genentech shareholders, and the committee is pleased to come to a successful conclusion of this process,” said Charles Sanders, chairman of the special committee of Genentech’s board of directors. “We look forward to working with Roche to complete the transaction as expeditiously as possible.”

Genentech and Roche’s partnership began nearly two decades ago, when Roche purchased controlling interest in the biotech firm. Over the years, Genentech has morphed from a smaller specialty firm to a sprawling bio-giant with annual revenue fluctuating around the $12 billion mark.

Roche has not commented on the deal beyond statements in a press release. The company has scheduled no press conferences or investor calls, and told Pharm Exec that none are in the works.

Another Mega Merger
The Roche/Genentech deal comes just three days after news broke that Merck would merge with Schering-Plough, and less than two months after Pfizer signed a deal to purchase Wyeth. Mergers and acquisitions are going strong, as Big Pharma faces looming patent expiration and a scarce supply of new drugs. However, not everyone thinks mergers are the best strategy. The New York Times comments section exploded with negative reactions after the Merck announcement. Most readers voiced fears that Big Pharma was getting “too big.”

While many analysts disagree that the general public should be concerned at this point, some did tell Pharm Exec that the push for large-scale mergers might not be the best course.

“Large-scale mega mergers at this stage in the game don’t really solve the fundamental problem,” said Peter Young, president of Young & Partners. “You don’t invent faster because you’re bigger, and the reality is that they are only buying themselves a little bit more time. The best analogy is that if you own four houses on a lot and one burns down, the others are fine. However, if you decide to glue them together in order to have more size and scale, [then] if one part of the house burns, there’s a risk that everything will burn down.”