SoftBank builds €5bn stake in Roche becoming one of largest investors

Japanese conglomerate believes Roche’s Genentech division is highly undervalued, sources say

Roche shares rose as much as 1 per cent in early trading on Wednesday. Photograph: iStock

Roche shares rose as much as 1 per cent in early trading on Wednesday. Photograph: iStock

 

SoftBank has quietly built a $5 billion (€4.22 billion) stake in Roche, placing a bet on the pharmaceutical company’s strategy of using data to develop drugs, according to people familiar with the matter.

The Japanese conglomerate is now one of Roche’s largest investors, according to data compiled by Bloomberg.

Roche’s sales have recently been boosted by its Covid-19 testing business. The company’s diagnostics unit reacted swiftly to the coronavirus pandemic, but the pharmaceuticals division, where aging cancer medicines face increasing competition, has had a more difficult time.

Shares have risen 8.8 per cent in the last 12 months, compared with a 14.7 per cent gain in the MSCI World Pharma Biotech and Life Sciences index over the same period. Roche shares rose as much as 1 per cent in early trading on Wednesday.

The drugmaker has a dual-class share structure with separate voting and non-voting shares. The founding families own 50.1 per cent of the voting class, while cross-town rival Novartis holds one-third. It’s unclear which types of shares SoftBank holds.

SoftBank believes Roche’s Genentech division, which focuses on data-based drug discovery and development, is highly undervalued, one of the people said, all of whom asked not to be identified because the information is private.

Roche last year hired Aviv Regev, a computational and systems biologist who was a core member of the Harvard University-affiliated Broad Institute, to lead the Genetech research unit.

New treatments

Roche is also developing a new pill for Covid-19 and an Alzheimer’s disease treatment. In June, the US approved Biogen’s Alzheimer’s drug Aduhelm, which was seen as a positive sign for the Roche medicine.

SoftBank has been increasingly focused on biotech and health care. It invested in Pacific Biosciences of California, AbCellera Biologics and Sana Biotechnology. In February, Bloomberg News reported that SoftBank was planning to spend billions investing in public biotech companies, via its asset management arm SB Northstar.

SB Northstar was launched in 2020 by SoftBank’s founder Masayoshi Son as a way to put the company’s massive cash pile to use. The billionaire personally holds a one-third stake.

Mr Son initially pushed a controversial programme of trading options, but has since been winding down its options strategy amid a backlash from investors.

SoftBank held a total of $19.9 billion of “highly liquid” securities as of the end of the latest quarter, including a $6.2 billion investment in Amazon.com Inc, $3.2 billion in Facebook Inc. and $1 billion in Microsoft Corp. SB Northstar has also invested in companies including Lucid Motors and The Hut Group. – Bloomberg