Summary:
Roche is considering divesting Flatiron Health, a cancer data specialist acquired for $1.9 billion in 2018.
Roche's ownership of Flatiron has deterred some drugmakers from working with the start-up, hurting its sales.
Key executives who initially supported the deal have left Roche, leaving Flatiron with fewer advocates.
Roche is exploring options such as divesting the business or selling a stake to a partner.
Despite Flatiron's struggles, its data has been valuable for improving cancer drug development at Roche.
The strategic review may not lead to a change in ownership.
Roche Reevaluates Flatiron Health: A $1.9 Billion Acquisition Under Scrutiny
Roche, the Swiss pharmaceutical giant, is considering its options for Flatiron Health, a cancer data specialist it acquired for $1.9 billion in 2018. This move highlights the challenges big pharma companies face when investing in start-ups.
Flatiron, founded by former Google executives, manages electronic patient records for a vast network of cancer clinics in the US. This gives the company access to a wealth of data on the disease, which it then analyzes and sells to pharmaceutical companies for research and development purposes.
However, the acquisition hasn't been as fruitful as expected. Roche's ownership of Flatiron has deterred some drugmakers from working with the start-up, hurting its sales. Additionally, key executives who initially championed the deal have since left Roche, leaving Flatiron with fewer advocates within the company.
Roche is now working with Citigroup to explore various options for Flatiron, including divesting the business or selling a stake to a partner who could help manage it. Despite Flatiron's struggles, its data has been valuable for improving cancer drug development at Roche, which currently has 60 oncology drugs in clinical trials.
While a sale remains a possibility, the strategic review may not lead to a change in ownership. Roche's diagnostics division, responsible for about a quarter of the company's revenue, has been actively investing in health tech businesses. This acquisition follows the company's $2.4 billion purchase of Foundation Medicine, another cancer-focused genomic profiling company.
This situation highlights the complexities of integrating start-ups into large corporations, especially when dealing with sensitive data and potential conflicts of interest. It remains to be seen whether Roche will ultimately retain Flatiron or seek a new owner for the valuable cancer data specialist.
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