Roche's Rush

Roche staff in Nutley, N.J., left, target cells with high-powered tools including, from top, microscopes, monitors and gene panels

Chad Robert Springer/White Door Photo for TIME

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Not surprising, Genentech's own board balked at the offer, which came to $89 a share. That price will surely rise--to more than $100 a share, by some estimates--but the deal will almost definitely go through. Nonetheless, Roche will have to work hard to hang on to Genentech's laid-back culture, one that has always attracted top minds. "They know there won't be the same flexibility and creativity Genentech is known for," says biotech analyst Geoff Porges of Sanford C. Bernstein & Co. "Roche is perhaps the industry's most brilliant acquirer, but it has never shown it can innovate internally."

Schwan argues that taking over Genentech will, in fact, allow it to focus even more on the science at its core. But he also recognizes the need for freedom. "Genentech research needs to stay autonomous," Schwan says. "That is the key to preserving the specific culture they have."

British forecaster EvaluatePharma says Roche is on track to take over as Big Pharma's top dog by 2014, up from No. 5 today. But it won't get there without a fight. Crosstown rival Novartis is also revamping how it does R&D and holds a 13% stake in Alnylam. U.K. concern GlaxoSmithKline already underwent its own re-engineering, and the results are evident. In 2000 its pipeline had two major prospects; now, stocked with 34 late-phase drugs on the horizon, it appears to be one of the industry's healthiest.

Roche, however, retains one key advantage: it has already seen its own line of attack succeed. The proof? Roche's first targeted breast-cancer drug, Herceptin. Developed by Genentech, Herceptin was marketed specifically to destroy cancers containing the her-2/neu protein, which doctors can detect using a 21-gene screen diagnostic. Herceptin has helped thousands of women combat breast cancer. But there's no doubt it has also helped Roche's bottom line: at $40,000 a year per patient, Herceptin grew globally in sales nearly 25%, to $4.1 billion, last year. "You need self-confidence to take risks," Schwan says. But, he adds, "if you are successful, you must be even more thoughtful about the future rather than dwelling on the past." And that prescription may be just what Big Pharma needs.