Biotech Giant's First Big Buy

Biotech Giant's First Big Buy

South San Francisco-based Genentech, Inc. recently announced plans to acquire Houston-based biotechnology company Tanox for $919 million. It is the biotech giant's first-ever acquisition.

The two companies, along with Swiss drug maker Novartis AG, have been collaborating on the asthma drug Xolair, which is licensed for manufacture at Genentech's Vacaville plant.

Following the acquisition, expected to be completed early next year, Genentech will improve its financial results for Xolair by eliminating the royalty it currently pays to Tanox and by obtaining Novartis' profit share and royalty payments to Tanox. Genentech will also acquire Tanox's product pipeline, including potential treatments for diseases like HIV.