Roche acquires Telavant, rights to bowel disease drug

Swiss pharmaceutical company Roche (ROG.SW, RHHBY) acquired Telavant — a Roivant Sciences (ROIV, ROIVW) subsidiary — for $7.1 billion in a deal that will allow the multinational healthcare company to develop a bowel disease drug. Yahoo Finance's Seana Smith and Brad Smith take a closer look at what the deal could mean for Roche as it branches out into more experimental drugs.

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Video transcript

BRAD SMITH: Roche shares, they're also on the move here today. This comes after the Swiss health care giant announced it's acquiring Telavant from Roivant Sciences and Pfizer for over $7 billion. Telavant has the rights to develop, manufacture, and commercialize a new inflammatory bowel disease drug. Yeah, going to need that. All right, well, that's down by about half a percent right now for the company as they're making this acquisition. But this is a big deal that came across for Roivant, a company-- or Roche, rather, a company that's also just reported earnings as of last week, as well.

- Yeah, it's a big deal here. It's actually the largest deal that they have made since back in 2014. You talk about their therapies here, the treatments that they're gaining here with this deal. It's certainly a move to shore up the pipeline that we have seen for experimental medicines and exactly the role that Roche sees itself playing in that move going forward. They have been under pressure now for some time to improve and add medicines within that pipeline that they will be able to capitalize and commercialize off of, because their exposure there to COVID-19 pandemic, the products that were used during the pandemic to treat coronavirus, to treat COVID-19, certainly that has been rapidly dwindling. So they need to expand their medicine base, their experimental medicines in order to make up for some of that loss of revenue here going forward.

In terms of why this makes a lot of sense for, Roche, Roch head of the pharmaceutical unit, saying that from the perspective of wanting to go out there and find the best possible science. I think this is absolutely the kind of deal you can expect us to do more of, so signaling there that they are not done in terms of their acquisitions here moving forward. They see that as an important and also a very smart strategic play for Roche going forward, separating their business from some of the other pharma rivals out there, so certainly two names to keep on your radar moving forward in today's trading action.