Roche throws light on DNA computers in £3.6bn Illumina bid

Roche has made a $5.7 billion (£3.6 billion) hostile bid for Illumina, with DNA analysis systems as a key focus.

UPDATED: On 29 March 2012, Roche raised its offer to $6 billion (£3.8 billion).

As the Swiss pharmaceutical giant announced its move, it described Illumina as a "leading provider of integrated systems for DNA sequencing". Illumina had turned down a lower offer earlier this month.

Roche insisted that the move was aimed at improving technology and customer reach, rather than removing cost – which is often done by cutting staff and removing duplicated systems and sites. However, a combined business could seek to unify the two companies' core SAP systems.

The technology focus is around DNA – which contains the genetic instructions used for a body's development and operation. Sequencing computers, which present DNA data, each cost tens of thousands of dollars, are vast machines, and produce advanced information that can be used to tailor medicine.

Roche and Illumina are both developing ways of reading DNA quickly, as part of an attempt to enable pharmaceutical companies to routinely tailor drugs to patients. The price of the devices is expected to fall as competition increases, and analysis times could also decrease from days to hours as processes are improved.

Both firms also sell information management and workflow management technology to help researchers and diagnostic staff to interpret the data.

"DNA sequencing is expected to help to discover complex biomarkers that could become companion diagnostics and be paired with specific treatments in the long-term," said Roche.

Roche, as it made its new bid, told shareholders the two companies would benefit from combined genetics and genomics technology for research and diagnosis.

It said that following its acquisitions of Cetus, IGEN, and Ventana for its diagnostics business, an acquisition of Illumina was the right move to grow the business further.

In a letter to Illumina's employees, Roche chief executive Severin Schwan insisted the bid "is not driven by cost synergies, but by the strategic value of Illumina's business and its significant growth potential as part of Roche".

Nevertheless, both firms base their back office operations on SAP enterprise resource planning and may see this as an opportunity to move to a single global instance of the platform.

Roche also uses SAP business intelligence and supply chain management globally, as well as SAP Sybase mobile data management. It states on its website that global informatics "is at the heart of the pharma business, supporting all stages of the lifecycle of a product".

It claims to be one of the world's most advanced pharmaceutical users of SAP HANA in-memory technology to analyse large data volumes quickly.

"The exchange of vast quantities of scientific and management information places enormous demands on our IT infrastructure and applications," states Roche, "and we continually invest to ensure we can meet these demands."

DNA image credit: Zephyris

Copyright © 2012 IDG Communications, Inc.

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