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Will Roche (RHHBY) Buy the Remaining Stake in Chugai?

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As per a news report from Bloomberg, Switzerland-based oncology major, Roche (RHHBY) is set to buy the remaining 39.5% stake in its Japanese subsidiary, Chugai Pharmaceutical Co Ltd, for approximately $10 billion.

As of Jun 30, 2014, Roche owned a 61.5% stake in Chugai. The buyout will make Chugai a fully-owned subsidiary of Roche.

We note that Roche has been active on the acquisition front in recent times. Earlier in the month, Roche announced that it has entered into an agreement to acquire Denmark-based privately-held biopharmaceutical company, Santaris Pharma.

Last month, Roche entered into a definitive agreement to acquire privately-held biotechnology company, Seragon Pharmaceuticals, Inc.

The acquisition will provide Roche rights to Seragon’s entire portfolio of investigational next-generation oral selective estrogen receptor degraders (SERDs) for the potential treatment of hormone receptor-positive breast cancer.

The recent acquisitions will further strengthen Roche’s deep pipeline. Roche is well placed in the oncology market. In particular, Roche is a leader in the breast cancer market with its HER2 franchise. The HER2 franchise includes oncology drugs like Herceptin, Perjeta and Kadcyla. We are impressed by the company's efforts to expand its portfolio beyond oncology to immunology and ophthalmology.

We note that Roche also focuses on innovative diagnostic solutions for the early detection and treatment of diseases.

Roche currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader healthcare sector include Allergan (AGN), AstraZeneca (AZN), and Gilead Sciences (GILD). While Allergan and Gilead Sciences sport a Zacks Rank #1 (Strong Buy), AstraZeneca is a Zacks Rank #2 (Buy) stock.

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