Roche Holding AG has quietly built a $5 billion stake in SoftBank Group Corp., placed a bet on the pharmaceutical company's strategy of using data to develop drugs, according to people familiar with the matter.
The Japanese conglomerate is now one of the largest investors, according to Bloomberg data compiled by Roche.
Roche's sales have recently been boosted by its Covid - 19 testing business. The medical diagnostics unit quickly responded to the coronavirus pandemic, but the pharmaceutical division is facing increasing competition for aging cancer medicines.
Shares of the Basel-based company have risen 8.8% in the past 12 months, compared with a rise of 14.7% in the MSCI World Pharma Biotechnology Life Sciences index over the same period.
On Wednesday, Roche shares rose 1% in early trading as were increased by 1%.
The drugmaker has a separate voting and non-voting share structure with dual shares. The founding families own 50.1% of the voting class, while cross-town rival Novartis AG holds one-third. It's unclear what types of shares SoftBank holds.
SoftBank believes Roche's Genentech Division, which focuses on data-based drug discovery and development, is highly undervalued, one of the people asked not to be identified because the information is private. He hired last year Aviv Regev, a computational and systems biologist who was a core member of the Harvard University-affiliated Broad Institute, to lead the Gentech research unit.
Roche is also developing a new pill for Covid 19 and Alzheimer's disease treatment. In June, the U.S. FDA approved Aduhelm, an Alzheimer's drug by Biogen Inc., which was seen as a positive sign for Roche medicine.
SoftBank has focused on biotechnology and health care. It invested in Sana Biotechnology and Pacific Biosciences of California Inc. AbCellera Biologics and Pacific Biotechnology. SB Northstar was launched in 2020 by SoftBank's founder Masayoshi Son as a way to use the company’s massive cash pile. The billionaire personally holds a one-third share in the company.
Son initially launched a controversial program of trading options, but has since been winding down its options strategy amid a backlash from investors.
Since the end of the last quarter, SoftBank held a total of $19.9 billion of 'highly liquid" securities: including a $6.2 billion investment in Amazon.com Inc., $3.2 billion in Microsoft Corp and $1 billion in Facebook Inc. SB Northstar also invested in companies including Lucid Motors and The Hut Group