Japan’s SoftBank Buys $5 billion Stake in Roche, Becoming One of its Largest Investors

Japanese multinational conglomerate SoftBank Group Corporation has become one of the largest investors of Swiss pharma giant Roche. On August 5th, Bloomberg reported that Softbank is quietly buying a whopping $5 billion stake in Roche, betting on the latter’s strategy of using data analysis in drug discovery and development.

As per reports, SoftBank believes that Genentech, a US biotech acquired by Roche for $47 billion in 2009, is significantly undervalued. The research unit of Genentech is currently led by Aviv Regev, a computational and systems biologist hired by Roche in May 2020. Regev has pioneered methods for deciphering RNA sequences in single cells and has also developed machine learning algorithms for data analysis.

SB Northstar Strikes Again

The deal was orchestrated by SB Northstar, the investment arm of SoftBank. Bloomberg reported in February that SB Northstar was planning to invest billions in biotech stocks. It has already invested in biopharma companies, namely AbCellera Biologics, Sana Biotechnology, Pacific Biosciences, and Invitae. According to a Financial Times report, SB Northstar is convinced that Roche’s $380 billion market value can expand to $1 trillion.

Launched in 2020 by Masayoshi Son, founder and CEO of SoftBank, SB Northstar was revealed as the “Nasdaq Whale” that made massive investments in US tech stocks last summer, including $6.3bn in Amazon, $2.2bn in Facebook, $1.8bn in Zoom and $1.4bn in Alphabet.

Roche’s Steady Growth

Roche reported solid revenue in 2020, which was largely contributed by its COVID-19 testing business.  Since 2018, the Swiss drugmaker has made significant acquisitions like Flatiron Health and Foundation Medicine to fortify its precision medicine pipeline. In addition, it recently acquired GenMark Diagnostics to foray into syndromic panel testing in an all-cash deal worth $1.8 billion.

In October 2020, it collaborated with Boston-based Atea Pharmaceuticals, Inc. to research, develop and distribute an oral antiviral treatment for COVID-19 called AT-527 outside the US. Besides, with Biogen’s Aduhelm garnering FDA approval, Roche is anticipating to advance its own Alzheimer’s drug into the clinic.

SoftBank’s decision to acquire a massive stake in Roche has surprised a few. However, it might turn out to be the Japanese firm’s astute investment strategy considering Roche’s steady growth in recent years.

Author

Rajaneesh K. Gopinath