SoftBank’s pharma AI bet has long odds

Roche tablets are seen positioned in front of a displayed Roche logo in this photo illustration shot January 22, 2016. REUTERS/Dado Ruvic/Illustration/Files

LONDON, Aug 4 (Reuters Breakingviews) - SoftBank (9984.T) may be hunting for tech treasure in pharma colossus Roche (ROG.S). The Japanese investor has amassed a $5 billion stake in the $342 billion Swiss drugmaker, according to Bloomberg. Its appeal lies in Roche’s increasing use of sophisticated data analysis to find drugs in its Genentech unit, Bloomberg says.

Using machine learning and other tools could help pharma companies find new drugs and strip out costs. Yet it’s a crowded sector, and still small: some 90 corporations including Roche, Pfizer (PFE.N) and Alphabet (GOOGL.O) subsidiary DeepMind shared some $473 million of revenue in 2019, according to Grand View Research. Big data could even be a threat to drugmakers. Clinical trials may become more sophisticated, allowing governments and healthcare providers to see the real value of drugs. Roche is currently valued on 18 times its forward earnings, versus peers that are on 14 times, according to Refinitiv. The Swiss group has many virtues, including a world leading cancer franchise, but value is not one of them. (By Aimee Donnellan)

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Editing by Neil Unmack and Karen Kwok

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