Shareholders in Swiss drug giant Roche are learning the downside of making big bets on new drugs, writes aimeedonnellan
Credit Suisse analysts reckoned the drug could eventually generate around $10 billion of sales. If shareholders had valued that revenue at the same 4 times multiple at which Roche currently trades, the drug could have added nearly $40 billion of value to the company. The Swiss company’s shares fell 4% on Monday morning, knocking about $12 billion off the company’s value. That suggests investors were attaching a less than one-in-three chance of the drug being a success.
Still, the failure is a setback for chief executive designate Thomas Schinecker and for Roche’s plans to diversify away from the crowded market for cancer drugs in favour of diseases with fewer cures. Roche investors should brace for more big bets. Alibaba’s Singles Day enters healthier phase
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