Having held a steady focus on personalised healthcare through its diagnostics unit, pharmaceutical giant Roche is digging deeper with data analytics.
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Roche’s pharmaceutical division is the world’s second largest, and one of the world’s most profitable. Such illustrious stature might seem contrary to the philosophy of Vice Chairman André Hoffmann, who leads Roche’s largest shareholder group. The great-grandson of founder Fritz Hoffmann-La Roche, Hoffmann believes the main purpose of business is not to make money. This belief is borne out in the way Roche operates, which sets it apart from most of big pharma.
One unique attribute of Roche is the approach of its diagnostics division, Roche Diagnostics, which coexists rather quietly alongside the lucrative Roche Pharma. It accounts for nearly a quarter of Roche’s sales, but has generated lower margins than pharmaceuticals, and does not attract investors who fixate on blockbuster drugs. It focuses on personalised healthcare, which is essentially the opposite, being based on the specific genetic makeup of individual patients.
For over two decades Roche has stayed the course with personalised healthcare, an area of medicine that has gained momentum of late. Early diagnosis is one of its primary applications. Thus Roche’s diagnostics division helped get the company through the pandemic, with its PCR and antigen tests turning healthy profits. And as The Economist reports, “advances in gene sequencing and other techniques from molecular biology helped identify SARS-COV-2, the COVID-19 virus, as well as ways to fight it.” This helped prove the value of combining biotechnology and diagnostics.
Tim Haines, Managing Partner of Abingworth, a venture capital firm focused on biotech, has declared the present moment a “golden age of diagnostics”. Roche is boosting its commitment, specifically by expanding into digitisation and data analytics for customized cancer treatments. CEO Severin Schwan, whose background is in diagnostics, reasons that if the treatments are more effective, the drugs will be more valuable. It helps that healthcare professionals have become more open to sharing medical data, and regulators are more willing to expedite drug approvals.
For years Roche has been keen to expand the use of data analytics in biotechnology, both for diagnostics and drug development. In 2018 the company acquired American firms Foundation Medicine, a gene-sequencing company, and Flatiron Health, which generates healthcare data. Schwan sees both as being in the “insights” business, which he believes could become a third pillar for Roche. Of course, the more the Swiss company moves into digital, the more likely it will find itself battling the tech titans of Silicon Valley, which already seek to dominate digital healthcare.
