Roche's $8 billion InterMune buy not a signal for more big deals

By Caroline Copley and Ben Hirschler

LONDON (Reuters) - Roche's (ROG.VX) decision to buy U.S. biotech company InterMune (ITMN.O) for $8.3 billion (5.13 billion pound) last month was "exceptional" and not a sign of more ambitious plans for major acquisitions, the Swiss drugmaker's chief executive said on Tuesday.

Damping down expectations that Roche could embark on a series of such multibillion-dollar deals to bolster its presence in the treatment of rare diseases, Severin Schwan told Reuters there was no change in the company's M&A strategy or its likely pace of deal-making.

"A transaction of this size is really an exceptional thing," he said during a visit to London. "The last one we had was Ventana, which was in 2007, so you might have to wait another seven years until you have a similar type of transaction."

Roche paid $3.4 billion for U.S. diagnostics firm Ventana.

Schwan also played down talk that Roche might want to buy the shares in Japan's Chugai Pharmaceutical Co (4519.T) that it does not already own, declaring himself "happy" with the current relationship and ownership structure.

Buying InterMune brings Roche a promising new drug, pirfenidone, for treating a progressive and ultimately fatal scarring condition of the lungs called idiopathic pulmonary fibrosis.

It also helps diversify the world's leading maker of cancer drugs beyond oncology by expanding its interests in respiratory medicine, as well as taking it into the high-priced arena of rare diseases.

There has been persistent speculation that Roche might be plotting a determined assault on the rare-disease space, with talk last year linking it to both Alexion Pharmaceuticals (ALXN.O) and BioMarin Pharmaceuticals (BMRN.O).

But Schwan said his deal-making was "very agnostic" when it came to both the number of patients targeted and disease area. Instead, the key consideration was finding promising science in an area of high unmet medical need to bring innovative - and commercially successful products - to market.

Like its rivals, Roche is constantly on the look-out for external science that can lead to new drugs, and finding compelling targets involves large-scale screening.

Roche looks at approximately 1,500 opportunities every year and it concluded a total of around 150 deals last year, most of them for early-stage products and technologies.

NO MEGA-MERGERS

Healthcare companies are striking deals at a record pace, with year-to-date activity topping $363 billion, up 158 percent on the year-ago period, according to Thomson Reuters data.

Recent large deals have included AbbVie's (ABBV.N) $54 billion acquisition of Shire (SHP.L) and Medtronic's (MDT.N) acquisition of Covidien (COV.N) for $43 billion, but Schwan said such transformational deals were not on the cards at Roche.

"Big mega-mergers which drive up the numbers is not something we are in," he said. "Yes, this is happening but it has nothing to do with us."

Buying out the nearly 40 percent of Chugai that Roche does not own would increase its exposure to the important Japanese market and could cost around $10 billion, but Schwan said the current arrangement between the two groups was a success story.

"I'm happy with the current relationship and you can see that the model is working," he said.

While Roche enjoys a strong position as the world leader in oncology, it faces competition in the years ahead from cheaper so-called "biosimilar" versions of some of its biotech cancer drugs, such as Rituxan and Herceptin.

Importantly, it is also being challenged by competitors that, like Roche, are racing developing new immuno-oncology therapies to harness the power of body's immune system in the fight against tumours.

Schwan said such treatments could "rewrite the medical textbooks" and change the way cancer was treated, with better results for patients and significant changes for drug companies.

"I think it can be very disruptive in a positive sense," he said. "The real value will be in combination therapies."

Roche is moving five new immuno-oncology programmes into clinical trials this year and is exploring novels ways of combining different kinds of treatments, including using some cancers vaccines which failed in tests when given on their own.

(Editing by Pravin Char)