Nutley, NJ, shutdown leaves roughly equal staffs for parent company and its subsidiary.

Three years after its acquisition by Roche, Genentech is still enough of an R&D powerhouse to retain its own Genentech Research and Early Development (gRED) unit with roughly as many people as the counterpart of its corporate parent.

After the decision to shut down the Nutley, NJ, research site and eliminate 1,000 jobs last week, Roche Pharma Research and Early Development (pRED) will end up with about the same size workforce of 2,000 staffers as gRED.

The shutdown at Nutley, which once served as Roche’s U.S. headquarters, came two years after a 2010 initiative intended to cut 6% of its global workforce, some 4,800 jobs, over two years. Back then, pRED lost 600 positions, far more than gRED, among a total 1,500 jobs Roche cut in Nutley, led by the shift of the combined company’s top U.S. executives, and its sales and marketing operations, to Genentech’s home base of South San Francisco, CA.

“In essence, the merger of Roche and Genentech was about Genentech going global. At the time they probably had the upper hand and I think that hasn’t changed,” Andrew Weiss, an analyst at Swiss private bank Vontobel, told Reuters.

Since the acquisition, Roche labs have experienced several high-profile and costly failures. Most recently in May, Roche halted Phase III trials of experimental heart drug dalcetrapib, one of several new medicines in development that are designed to raise levels of beneficial cholesterol, a failure some have speculated may have been the final nail in Nutley’s coffin. Roche cited a lack of clinically meaningful efficacy, while noting in a statement that “our pipeline remains robust” with 23 positive late-stage clinical trials reporting over the previous 16 months, and a “significant” increase in new molecular entities in late-stage development.

By contrast, Genentech has enjoyed one success after another through its approach of unlocking the biological pathway of a disease to find a specific target for its drugs, developing a drug before the biology is truly understood. One exception came last November, when FDA revoked its 2008 approval of Avastin (bevacizumab) with paclitaxel for the treatment of women with Her2-negative metastatic breast cancer in the U.S., after later studies showed that the drug had not been shown to be safe and effective for that use.

But since Genentech’s successes have outnumbered its setbacks, Roche has begun to adopt Genentech’s research approach by trying to understand the chain of events that cause disease.

Despite being part of the same company, pRED and gRED operate separately. “We talk to each other, but we don’t talk about science too much. We talk about life, books and movies,” Jean-Jacques Garaud, Roche’s French/American head of pRED, told Reuters last year.

Roche argues maintaining two research units gives researchers the freedom to tackle problems from different angles, though another analyst concludes that gRED has outshined pRED since the merger.

“The discovery track record of pRED over the past decade has not been exactly overwhelming, particularly in comparison to its counterpart in South San Francisco,” Fabian Wenner, head of European Healthcare Research at Kepler Capital Markets, told Reuters. “The question is whether this can be changed or whether something more fundamental needs to be done?”

Genentech executives sought the separation, citing fears the merger would hamstring their traditional focus on innovation, thus leading to a brain drain of top researchers. Seeking to reassure Genentech that it would not operate the combined company as a traditional big pharma, Roche went as far as to leave the industry group Pharmaceutical Research and Manufacturers of America in 2009, instead joining the Biotechnology Industry Organization.


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