UPDATE 2-Roche to spend $3.2 billion on towering Basel base

Wed Oct 22, 2014 9:06am EDT

Related Topics

* To build new R&D centre, office tower, renovate buildings

* 205 metre "Building 2" will be Switzerland's tallest

* Investment financed through cash from operations

* Sign of commitment to Swiss base despite immigration uncertainty (Adds details on financing, architects, Basel as pharmaceutical hub)

By Caroline Copley

ZURICH, Oct 22 (Reuters) - Drugmaker Roche is spending billions of dollars constructing the two tallest buildings in Switzerland for its global HQ, a vote of confidence in its Swiss base despite uncertainty over the country's immigration laws.

"Building 1" is already under construction in Basel and at a height of 178 metres (580 ft) will become the country's tallest building when it opens at the end of 2015.

Roche said on Wednesday it would spend a further 3 billion Swiss francs ($3.2 billion) on the site over the next decade, including the construction of "Building 2" - another office tower which will be even taller, at 205 metres, and is due to be ready for occupation by 2021.

The drugmaker traces its roots in Basel to 1896 when Fritz Hoffman-La Roche set up the business, and it is now one of the world's most successful pharmaceutical companies, whose leading position in cancer treatments has propelled its market value to around $250 billion.

Basel is home to Roche's corporate HQ and also used as the centre for its non-U.S. production of the $6 billion-a-year biotech cancer treatment Avastin. However it says the current site, parts of which date back to the 1930s, is not fit for purpose and needs to be modernised.

"Roche is committed long-term to Switzerland and to Basel in its dual role as corporate headquarters and one of our most important sites worldwide," Chief Executive Severin Schwan said.

The latest development of the Basel site, which will also include a new research and development centre, is being designed by architects Herzog & de Meuron who created the "Bird's Nest" for Beijing's 2008 Olympics.

The investment comes as Swiss lawmakers decide how to implement a February vote that called for restrictions on the number of immigrants from the European Union.

Other multinationals, including Swiss engineer ABB , have warned the government against a too-rigid interpretation of the vote, which called for quotas on EU migrants. Last month food group Nestle's chairman said the company would have to move its research centres abroad if it could no longer attract the best people.

Around two-thirds of Roche's workforce in Basel are foreign and the drugmaker relies on Switzerland's open borders to recruit the best talent.

CONFIDENCE

In an interview with Reuters last month, Schwan, an Austrian, expressed confidence that a pragmatic solution would be found for the current immigration dilemma.

"The bottom line is that Switzerland has always been extremely open," he said. "There is a culture which fosters education, innovation and that works well for companies like Roche and Novartis."

The company said the 3 billion francs for the latest upgrade of its site would be financed through cash flow from its current business. Roche had 16.4 billion francs in operating free cash flow last year.

Tucked away in a corner of Switzerland right on the French and German borders, Basel, a city with a population of just over 195,000 people has been moulded by the presence of Novartis and Roche - the world's two largest drugmakers by market value.

Under former Chairman Daniel Vasella, Novartis spent over 2 billion francs transforming its formerly industrial site on the other side of the Rhine river into a state-of-the-art campus.

Roche's investment will help consolidate the firm's 9,000 employees in Basel - who are currently spread around the city - at its main site on Grenzacherstrasse.

Of the 3 billion francs set aside for the upgrade, 550 million will be spent on Building 2, which will house 1,700 workers. A further 1.7 billion is allocated for the new research complex which will have space for 1,900 staff and is expected to go into service between 2021 and 2022.

Roche will also renovate existing buildings to make them more energy efficient and upgrade infrastructure at a cost of 700 million francs.

(1 US dollar = 0.9486 Swiss franc) (Editing by Louise Heavens and Pravin Char)

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