Roche-Genentech deal could spark worker defections

By Deena Beasley

LOS ANGELES (Reuters) - Roche Holding AG's (ROG.VX: Quote, Profile, Research) plan to buy Genentech Inc (DNA.N: Quote, Profile, Research) runs the risk of triggering an exodus of employees hesitant to work for a big pharmaceutical company, industry sources said on Tuesday.

"It's easy for people in the (San Francisco) Bay area to find financing ... You could see entire groups just leaving if they have the guts to do it," said Martin Babler, chief executive at drug delivery company Talima Therapeutics and a former senior executive at Genentech, which is based in South San Francisco, California.

Switzerland-based Roche stunned investors with its offer on Monday to pay $43.7 billion, or $89 a share, for the 44 percent of Genentech it does not already own.

Genentech has said its independent directors are reviewing the proposal. Chief Executive Arthur Levinson was due to meet with Roche officials on Tuesday evening in San Francisco, Roche said.

"One of the potential outcomes of this could in fact be a spike of really interesting people coming out of there," said Bill Greene, managing director at venture capital firm MPM Capital and another former Genentech employee. "That could, at least temporarily, be quite good for the industry."

The two companies have worked together since 1990. Under their current agreement, in place since 1999, Roche owns 56 percent of the No. 2 U.S. biotechnology company and holds rights to market Genentech's drugs outside North America and Japan.

"Roche has a different culture, a different business model than Genentech," said Babler. "Within Genentech there is a perception that Roche operates as a big pharma company. With the way they did the deal, they haven't managed that perception."

The maker of top-selling cancer drugs including Avastin, Herceptin, and Rituxan, Genentech is one of the most successful biotechnology companies of all time and has acted as something of a proving ground for industry talent.