Roche Holding AG RHHBY is reportedly contemplating the divestiture of Flatiron Health , a cancer data specialist Roche acquired in 2018 for $1.9 billion. The move underscores the complexities and potential pitfalls that large pharmaceutical companies encounter when investing in early-stage health technology firms.
Also Read: Roche’s New Immunotherapy Fails To Show Benefit Over Merck’s Blockbuster Keytruda In Lung Cancer Patients . Flatiron Health was founded by two former executives from Alphabet Inc’s GOOG GOOGL Google. The company manages electronic patient records for numerous U.
S. cancer clinics, boasting one of the most extensive repositories of cancer data. The start-up mines this data and sells it to pharmaceutical companies to aid in research and development.
Roche’s acquisition of Flatiron has not been without its challenges. Despite operating as a separate legal entity, Flatiron’s association with Roche has deterred some rival drugmakers from engaging with the start-up, impacting its sales. Flatiron generates approximately two-thirds of its revenue from selling data to pharmaceutical companies, a business model similar to that of Warburg Pincus -backed Modernizing Medicine , which has seen profitable returns for private equity investors.
The departure of key Roche executives who initially supported the Flatiron acquisition has left the company with fewer advocates within Roche. The Financial Times report adds that Roche is collaborating with Citigroup Inc .