Biotech and Pharma-case created by Bo Becker awarded by the Case Center

Apr. 07, 2015

Swiss pharmaceutical company Roche’s acquisition of California biotech firm Genentech in 2009 was the first in a series of big mergers between Biotech and Pharmaceutical companies – and it took place right in the middle of the financial crisis.

This takeover provides the setting for a Harvard Business School (HBS) case study that Bo Becker, now Professor in the Department of Finance at Stockholm School of Economics, but faculty member at HBS when the case was written, wrote with two colleagues. The case has been awarded the Case Center Award for best case in the category Finance, Accounting and Control.

– The case raises fascinating issues of the convergence between biotech and pharma, as the most successful biotech firms move from being pure development organizations to producing and distributing drugs worldwide, says Bo.

The case is used at SSE, HBS, and many other schools and is used to teach insights on governance and minority-majority conflicts, the role of credit markets in M&A, valuation in periods of financial turmoil, and bidding tactics.

– A striking feature of the situation is the sheer size of the acquisition. Roche needed to raise almost $40 billion at the deepest point of the 2008 financial crisis. Banks were extremely reluctant to provide loans. For Roche, the solution was to issue corporate bonds across a range of maturities and in all the large markets, says Bo.

Bo’s research is focused on corporate credit markets. He recently co-authored this year’s Konjunkturrådsrapport, a policy publication published by SNS. His main contribution was to a chapter on insolvency resolution and bankruptcy reform.

– Targeted reform of the Swedish reconstruction (företagsrekonstruktion) law could support a more heterogenous credit market, less bank dependence and better outcomes for distressed firms, says Bo.