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Strategic Alliance with Roche

Based on a strategic alliance agreement, Chugai merged with Roche, one of the world’s leading pharmaceutical companies, in October 2002. Under this agreement, Roche acquired a majority of Chugai’s stock. Chugai became a member of the Roche Group and created a unique business model under which it has grown successfully by maintaining managerial independence.

After this alliance, Chugai expanded its product lineup and development pipeline as a result of in-licensing products from Roche, and acquired the number-one share of the oncology market in Japan.*1 In addition, its research and development and other business operations were strengthened, and products from Chugai’s own research were able to grow into global products through the Roche Group’s network.

To strengthen collaboration with Roche from the early stages of research and development, in August 2014 Chugai and Roche made a partial amendment to the licensing agreement with regard to the out-licensing of Chugai’s in-house products to Roche. This amendment will support the further growth of Chugai products.

News Release “Amendment of Business Arrangements Regarding the Conditions for Out-Licensing Chugai Products Based on the Strategic Alliance between Chugai and Roche (August 28, 2014)”

*1  Copyright 2016 IMS Health Source: JPM 2015. Reprinted with permission. The scope of the market is defined by Chugai.

About Roche

Established in 1896 and headquartered in Basel, Switzerland, Roche is one of the world’s leading pharmaceutical companies, with business operations in more than 150 countries. The Roche Group contributes to medicine in a wide range of fields through its two business segments: pharmaceuticals and diagnostics.

Two Revenue Bases

The strategic alliance with Roche allows Chugai to in-license and sell Roche’s groundbreaking therapies on an exclusive basis in Japan. This stable earnings foundation allows us to concentrate investment on highly innovative proprietary technologies and drug discovery. Moreover, out-licensing our in-house products to Roche gives us access to global markets, which provides a revenue base that drives growth. Meanwhile, the alliance enables Roche to sell our products – which we create through highly innovative, specialized research – in global markets. It is a win-win relationship.

Details of the Strategic Alliance with Roche

Roche owns 59.9 percent of Chugai’s outstanding shares based on the strategic alliance, but Roche and Chugai have agreed to cooperate in maintaining the listing of Chugai’s common stock on the First Section of the Tokyo Stock Exchange. Both Chugai and Roche believe that maintaining Chugai’s management independence brings diversity to the Roche Group, and that the pharmaceuticals it creates as a result contribute to all stakeholders, including patients and minority shareholders. Chugai will continue to manage its business with autonomy and independence.

Restrictions on Roche’s Shareholding
Period Maximum Shareholding
Percentage
Oct. 1, 2002 – Sept. 30, 2007 50.1%
Oct. 1, 2007 – Sept. 30, 2012 59.9%
Oct. 1, 2012 and thereafter Cooperate in maintaining
Chugai’s listing

Arrangements Regarding Products

  • Chugai has first refusal rights to develop and sell Roche products in Japan
  • Roche has first refusal rights to develop and sell Chugai products in all countries of the world
    • excluding Japan, South Korea and Taiwan
    • all of its products to Roche at the achievement of early PoC*2
    • Chugai retains co-promotion rights in the United Kingdom, Germany and France (a co-promotion right in China is to be discussed on a product-by-product basis)
*2  A demonstration that the therapeutic effect conceived in the research stage is effective in humans. Early PoC means that in addition to safety, signs of efficacy or pharmacological effect have been confirmed in a limited number of cases.
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