For Its Own Rescue Remedy, Roche Is Buying Telavant

For Its Own Rescue Remedy, Roche Is Buying Telavant
Theodora Lee Joseph, CFA

4 months ago2 mins

Mentioned in story

What’s going on here?

Roche announced on Monday that it’s buying irritable bowel drugmaker Telavant for $7.1 billion, which should give the Swiss pharmaceutical company a dose of calming relief.

What does this mean?

Roche, like many pharmaceutical companies, made more money than usual during the pandemic and its aftershock. But now that those lingering sales are winding down, the firm needs to find new experimental medicines to keep the cash flowing in – and fast. That’s probably why Roche is making its biggest deal since 2014, acquiring Telavant and its unique antibody therapy – designed in partnership with Roivant Sciences and Pfizer – that can tackle both the inflammation and fibrosis that are common symptoms of various diseases.

Why should I care?

For markets: Swipe the card.

That’s just the start of Roche’s shopping spree: the Swiss company’s on the hunt for all sorts of shiny deals, from early-stage testing projects to drugs in their late development. But there’s no guarantee that retail therapy will heal investors’ moods. The company’s shares have fallen 30% this year while Europe’s stock market index, the Stoxx 600, stayed pretty flat. That’s a sign of concern over Roche’s productivity, and those doubts may well hover around until the firm’s internal research gets a makeover too.

Roche stock
Source: Google Finance

The bigger picture: Big Pharma x Big Tech.

Major pharmaceutical companies have their eyes locked on artificial intelligence, believing in its potential to identify new drugs, streamline production processes, and as a result, pull up company stock prices. Mind you, that’s a long-term plan. So for now, they’ll have to rely on big deals to shake up their businesses. They’ll be in good company, though: major oil players like ExxonMobil and Chevron are shelling out on smaller fry, since the rising cost of borrowing has meant only richer firms can afford to graduate from window shopping.

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