Archive for April 3rd, 2009

The Odd Couple

April 3rd, 2009 | No Comments | Source: Wall Street Journal

rocheIt’s easy to understand Roche’s dogged persistence in hunting down and finally, all-but-clinching a deal to acquire the 44% of G-Tech it didn’t already own.

Last year, 65% of Roche’s revenue derived from Herceptin, Avastin and other drugs developed by G-Tech.

But it’s hard to fathom how the unholy alliance is going to work. Since Roche first bought into G-Tech in 1992, the buttoned-down Swiss company has maintained an arm’s length relationship with its quirky, open-collared California sidekick.

G-TechHeck, for years after the partial acquisition, Roche’s managers had to get special permission just to visit the G-Tech campus.

Roche’s chairman seems to understand the challenge. “We need to do everything in our power to make sure this innovative culture in Genentech gets maintained,” Franz Humer told the Wall Street Journal.

He may not get a chance. Many top G-Tech scientists will pocket millions when the deal closes, and they may decide it’s time to start that winery rather than deal with mishegas from the Swiss.

There’s speculation for example that G-Tech’s revered CEO Art Levinson and top cancer exec Susan Desmond-Hellmann might split.

In illustrating Roche’s challenge, Ronald Martell, a former Roche employee who now runs Poniard Pharmaceuticals recalled for the Journal his interregnum at G-Tech.

G-TechexecUpon showing up at the California HQ for his first day, he witnessed a man clad in a grass skirt and a coconut bra shouting, “Surf’s up!”

It turned out to be Bob Swanson, the G-Tech co-founder who was rounding up the troops for a weekly beer festival known as Ho-Ho.

Having just left Roche, Martell was wearing a necktie.

“I didn’t want to be embarrassed,” he told the Journal.

Martell stashed the tie in his pocket.

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Taxing Health Benefits

April 3rd, 2009 | No Comments | Source: Washington Post

Since just about nobody likes the Big O’s plan to pay for health care by taxing the rich, lawmakers are floating the idea of taxing employee health benefits instead.

The current loophole reduces taxable earnings by $9,000 per year for those with family coverage, so probably not too many people are going to like the new idea, either.

Other than the flotilla of economists and tax experts that is, who have pointed out for years that the current exemption encourages people to sign up for Cadillac plans which shield exposure to true health care costs and thus contribute to cost escalation.

Recently, a bipartisan group of Senators got behind the idea of taxing health benefits.

The group includes Oregon Democrat Ron Wyden who said “it’s important to show Americans that you’re making savings in the enormous sums now being spent on health care before you go and ask them for billions of dollars more.” 

The Big O has a political problem with the idea of taxing health benefits, in that he lambasted Top Gun during the presidential campaign for making the very same idea central to his health proposals.

It’s a tax increase, scoffed Obama at the time.

Adding to the irony is that 2 years ago a Democratic-controlled Congress zapped the idea after George W. Bush put it in his budget request.

Nevertheless, the Big O is signaling he can swallow a health benefits tax if he has to for the greater good.

Why just last week White House budget director Peter Orszag said that taxing workers’ health benefits “most firmly should remain on the table,” according to the Washington Post.

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