News

Genentech deal could force Roche from PA

Swiss firm could abandon its famous 'green' campus in Research Park; jobs impact uncertain

The Swiss pharmaceutical company Roche will close its Palo Alto office if its bid to acquire biotechnology giant Genentech is successful, according to Vice President of Communications Jacqueline Wallach.

Who would move into a campus that has won accolades for its environmental practices -- such as a 95-percent recycling program including everything from laboratory materials to coffee grounds -- is unclear.

It is certain, however, that Roche's departure will make a dent in the city's tax rolls, according to Mayor Larry Klein. The firm is one of the top 25 generators of sales tax and the top five generators of utilities tax, providing as much as $300,000 annually, he said. That's a tiny piece of the $145 million city budget -- the perhaps more significant impact is the loss of a "superb corporate citizen," he said.

The firm has partnered with the city on environmental and safety initiatives, he said.

Sandra Lonnquist, president of the Palo Alto Chamber of Commerce, summed up her mood in one word -- "sadness."

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She echoed Klein's concern that the community will lose a civic-minded business leader.

This Monday, Roche offered South San Francisco-based Genentech about $44 billion to acquire the remainder of the company's shares. Roche has owned a majority stake since 1990.

If the Genentech deal goes through, Roche will close its own 1,000,000-square-foot research and development center in Stanford Research Park, which employs 1,000 workers, Wallach said.

The inflammation-research division would move to Nutley, N.J., and virology research would move to the Genentech facility in South San Francisco, she said.

But it's uncertain exactly when, because the Genentech acquisition offer hasn't been finalized yet, she said.

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The laboratories are currently housed at 3431 Hillview Ave., at the intersection of Arastradero Road and Foothill Expressway.

The site's history runs deep. Earlier tenant Syntex -- perhaps best known for manufacturing "the Pill" for birth-control -- was one of the first companies in the then-named Stanford Industrial Park, formed in 1951 to promote the school's ties to industry and government.

Roche has been at the site since it acquired Syntex in 1994.

How much of a dent the departure of the massive firm would make in the local economy is hard to measure. Wallach said Roche would not reveal how many employees live in Palo Alto, and that it's too soon to say how many jobs, if any, would be lost.

And workers tend to use the in-house cafeteria -- the company has free-trade coffee delivered -- rather than drive off-campus for lunch, she said.

Some money will be lost, however, according to the mayor.

Roche generates between $80,000 and $120,000 in sales tax and between $140,000 and $180,000 in utilities-user tax annually, Klein said.

The departure also means losing money visitors spend, Lonnquist said.

"It definitely has a ripple effect, no question about it, when that many employees are not going to be here and visitors ... are not going to come in on a regular basis," she said.

Business visitors to the multinational company -- Roche's Web site cites 79,000 employees in 150 countries -- generate hotel tax, she said. They also spend on meals and gifts, she said, adding, "You arrive into town you want to bring a little something back for your locals."

The future of the site itself is also uncertain.

The Genentech offer comes just a week after the city announced Roche planned to install a rooftop solar-power system that would have been the largest in Palo Alto, with enough power for 172 homes.

Those plans are tenuous now, Wallach said.

"We probably need to evaluate if it's worth installing them or not because we're essentially leaving," she said, adding she didn't know when the decision would be made.

The solar-power system would have been merely the latest in a slew of environmental initiatives that have made Roche's campus well-known for its green leanings.

The 17 acres of on-campus lawns no longer consume water and chemicals -- they've been converted to drought-resistant landscaping. The vehicle maintenance fleet was replaced with 30 electric vehicles resembling golf carts. Air conditioning costs have been cut 60 percent by using light-colored roofing compounds and non-toxic insulation materials.

A member of the Dow Jones Sustainability Index, the company is frequently cited by Palo Alto officials as an example of a local business that successfully went green.

Now, it is up to Roche to find another tenant to occupy their environmentally-friendly campus.

According to Jean Snider, director of Stanford Research Park, Roche has a ground lease, a structure resembling ownership that makes the lessee responsible for the property.

Wallach said it's too early to say whom Roche will tap to fill the space, but acknowledged that with 760,000 square feet of laboratories, it may well be another scientific tenant.

"The question now is, 'Who can we woo?'" according to Lonnquist.

The Web firm Facebook, which houses 600 employees in a handful of downtown offices and confirmed last month it is looking for a central campus, did not respond to requests for comment on whether it would consider such a site.

Beyond the economic implications of Roche's move, Lonnquist described with disappointment how Palo Alto will lose a business quick to lead the environmental charge.

In addition to its own efforts, the firm has urged other research-park tenants to become certified green businesses, she said. It also partnered with the city's Utilities Department to design the zero-waste initiative.

"They've been serious leaders in the community. They've just been an outstanding partner," she said.

Chamber board member and Roche environment and safety Director Alex Haedrich has been a member of both the Green and Red Ribbon Task Forces to the mayor, focusing on environment and emergency-preparedness, respectively.

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Genentech deal could force Roche from PA

Swiss firm could abandon its famous 'green' campus in Research Park; jobs impact uncertain

by / Palo Alto Online

Uploaded: Wed, Jul 23, 2008, 10:56 am
Updated: Wed, Jul 23, 2008, 6:20 pm

The Swiss pharmaceutical company Roche will close its Palo Alto office if its bid to acquire biotechnology giant Genentech is successful, according to Vice President of Communications Jacqueline Wallach.

Who would move into a campus that has won accolades for its environmental practices -- such as a 95-percent recycling program including everything from laboratory materials to coffee grounds -- is unclear.

It is certain, however, that Roche's departure will make a dent in the city's tax rolls, according to Mayor Larry Klein. The firm is one of the top 25 generators of sales tax and the top five generators of utilities tax, providing as much as $300,000 annually, he said. That's a tiny piece of the $145 million city budget -- the perhaps more significant impact is the loss of a "superb corporate citizen," he said.

The firm has partnered with the city on environmental and safety initiatives, he said.

Sandra Lonnquist, president of the Palo Alto Chamber of Commerce, summed up her mood in one word -- "sadness."

She echoed Klein's concern that the community will lose a civic-minded business leader.

This Monday, Roche offered South San Francisco-based Genentech about $44 billion to acquire the remainder of the company's shares. Roche has owned a majority stake since 1990.

If the Genentech deal goes through, Roche will close its own 1,000,000-square-foot research and development center in Stanford Research Park, which employs 1,000 workers, Wallach said.

The inflammation-research division would move to Nutley, N.J., and virology research would move to the Genentech facility in South San Francisco, she said.

But it's uncertain exactly when, because the Genentech acquisition offer hasn't been finalized yet, she said.

The laboratories are currently housed at 3431 Hillview Ave., at the intersection of Arastradero Road and Foothill Expressway.

The site's history runs deep. Earlier tenant Syntex -- perhaps best known for manufacturing "the Pill" for birth-control -- was one of the first companies in the then-named Stanford Industrial Park, formed in 1951 to promote the school's ties to industry and government.

Roche has been at the site since it acquired Syntex in 1994.

How much of a dent the departure of the massive firm would make in the local economy is hard to measure. Wallach said Roche would not reveal how many employees live in Palo Alto, and that it's too soon to say how many jobs, if any, would be lost.

And workers tend to use the in-house cafeteria -- the company has free-trade coffee delivered -- rather than drive off-campus for lunch, she said.

Some money will be lost, however, according to the mayor.

Roche generates between $80,000 and $120,000 in sales tax and between $140,000 and $180,000 in utilities-user tax annually, Klein said.

The departure also means losing money visitors spend, Lonnquist said.

"It definitely has a ripple effect, no question about it, when that many employees are not going to be here and visitors ... are not going to come in on a regular basis," she said.

Business visitors to the multinational company -- Roche's Web site cites 79,000 employees in 150 countries -- generate hotel tax, she said. They also spend on meals and gifts, she said, adding, "You arrive into town you want to bring a little something back for your locals."

The future of the site itself is also uncertain.

The Genentech offer comes just a week after the city announced Roche planned to install a rooftop solar-power system that would have been the largest in Palo Alto, with enough power for 172 homes.

Those plans are tenuous now, Wallach said.

"We probably need to evaluate if it's worth installing them or not because we're essentially leaving," she said, adding she didn't know when the decision would be made.

The solar-power system would have been merely the latest in a slew of environmental initiatives that have made Roche's campus well-known for its green leanings.

The 17 acres of on-campus lawns no longer consume water and chemicals -- they've been converted to drought-resistant landscaping. The vehicle maintenance fleet was replaced with 30 electric vehicles resembling golf carts. Air conditioning costs have been cut 60 percent by using light-colored roofing compounds and non-toxic insulation materials.

A member of the Dow Jones Sustainability Index, the company is frequently cited by Palo Alto officials as an example of a local business that successfully went green.

Now, it is up to Roche to find another tenant to occupy their environmentally-friendly campus.

According to Jean Snider, director of Stanford Research Park, Roche has a ground lease, a structure resembling ownership that makes the lessee responsible for the property.

Wallach said it's too early to say whom Roche will tap to fill the space, but acknowledged that with 760,000 square feet of laboratories, it may well be another scientific tenant.

"The question now is, 'Who can we woo?'" according to Lonnquist.

The Web firm Facebook, which houses 600 employees in a handful of downtown offices and confirmed last month it is looking for a central campus, did not respond to requests for comment on whether it would consider such a site.

Beyond the economic implications of Roche's move, Lonnquist described with disappointment how Palo Alto will lose a business quick to lead the environmental charge.

In addition to its own efforts, the firm has urged other research-park tenants to become certified green businesses, she said. It also partnered with the city's Utilities Department to design the zero-waste initiative.

"They've been serious leaders in the community. They've just been an outstanding partner," she said.

Chamber board member and Roche environment and safety Director Alex Haedrich has been a member of both the Green and Red Ribbon Task Forces to the mayor, focusing on environment and emergency-preparedness, respectively.

Comments

gm
Midtown
on Jul 24, 2008 at 9:05 am
gm, Midtown
on Jul 24, 2008 at 9:05 am
Like this comment

Does this mean we need to build less housing since there will be fewer jobs in Palo Alto? If the answer is yes then its no big deal that they are leaving. I'm sure it would be better if they didn't move but I always try and look for the positive in things.



Walter E. Wallis
Midtown
on Jul 24, 2008 at 10:05 am
Walter E. Wallis, Midtown
on Jul 24, 2008 at 10:05 am
Like this comment

Does this mean no solar array?


Ken
Southgate
on Jul 24, 2008 at 1:26 pm
Ken, Southgate
on Jul 24, 2008 at 1:26 pm
Like this comment

"a campus that has won accolades for its environmental practices -- such as a 95-percent recycling program including everything from laboratory materials to coffee grounds"

Translation: Roche was extorted by Palo Alto to conform to hyper green standards. No wonder they are getting out of town! They are moving to places that are business friendly.


It's $$$
Another Palo Alto neighborhood
on Jul 24, 2008 at 2:10 pm
It's $$$, Another Palo Alto neighborhood
on Jul 24, 2008 at 2:10 pm
Like this comment

Ken, you are making things up.
Roche has bigger fish to fry, it has $$$$$ in mind.


Walter E. Wallis
Midtown
on Jul 24, 2008 at 2:33 pm
Walter E. Wallis, Midtown
on Jul 24, 2008 at 2:33 pm
Like this comment

Ah, yes, unlike the rest of us noble souls, Roche actually works for money.


Ken
Southgate
on Jul 24, 2008 at 2:45 pm
Ken, Southgate
on Jul 24, 2008 at 2:45 pm
Like this comment

$$$,

Then why doesn't Roche decide to make its $$$ in Palo Alto, instead of SSF or Nutley?

In the old Syntex days, the corporate development people were extremely upset by the anit-industry attitude of Palo Alto. Nothing has changed, except that it has gotten worse.

Palo Alto is anti-business.


Walter E. Wallis
Midtown
on Jul 24, 2008 at 2:59 pm
Walter E. Wallis, Midtown
on Jul 24, 2008 at 2:59 pm
Like this comment

The HP way is dead, too. It's embalmer just might be the VP.

Syntex and the old HP. Dang! Those free donuts were nice.


Ken
Southgate
on Jul 24, 2008 at 3:18 pm
Ken, Southgate
on Jul 24, 2008 at 3:18 pm
Like this comment

Walter,

The problem was that the free donuts were given to research staff who were required to attend regulatory meetings, endlessly so. These folk got fat on the donuts, but progressively had less time and focus on their projects (to find new drugs). It is one thing when a motivated researcher decides to spend many extra hours at night, trying to work the problem, and quite another when he/she is forced to go back in a night to finish what should have been finished during the regualr work day (but cannot, because the day is fractured by reg meetings). It was a huge hidden tax.


chris
University South
on Jul 24, 2008 at 10:36 pm
chris, University South
on Jul 24, 2008 at 10:36 pm
Like this comment

better yet convert the Roche site to housing for people working in the research park; that will further reduce the traffic in Palo Alto

the Chinese are onto something when they provide on-site housing for workers


chris
University South
on Jul 24, 2008 at 10:52 pm
chris, University South
on Jul 24, 2008 at 10:52 pm
Like this comment

Facebook used to offer bonuses for living close to work / maybe this could be a live/work site for Facebook


Resident
Old Palo Alto
on Jul 24, 2008 at 11:12 pm
Resident, Old Palo Alto
on Jul 24, 2008 at 11:12 pm
Like this comment

Chris,

The Japanese are even more progressive - they provide housing and a high salary for their workers on work visas (singles only), and make sure that they LEAVE after the job is finished.


Walter E. Wallis
Midtown
on Jul 25, 2008 at 2:22 am
Walter E. Wallis, Midtown
on Jul 25, 2008 at 2:22 am
Like this comment

"Saint Peter don'tcha call me cause I can't go, I owe my soul to the company store." I lived in a company town with a company store a while ago. When the boss owns your house, he owns you.


roche worker
Old Palo Alto
on Jul 26, 2008 at 11:28 pm
roche worker, Old Palo Alto
on Jul 26, 2008 at 11:28 pm
Like this comment

I have worked at Syntex and Roche for 30 years. I find most of your comments a joke. Over 1000 hard working people who have been working to create better drugs for society are losing their jobs. I could care less about solar panels or a green campus. Many great individuals who have devoted their lives to Roche and the Palo Alto campus are now out of work. That should be the story here, not the shrubs etc.


roche worker
Old Palo Alto
on Jul 26, 2008 at 11:29 pm
roche worker, Old Palo Alto
on Jul 26, 2008 at 11:29 pm
Like this comment

I have worked at Syntex and Roche for 30 years. I find most of your comments a joke. Over 1000 hard working people who have been working to create better drugs for society are losing their jobs. I could care less about solar panels or a green campus. Many great individuals who have devoted their lives to Roche and the Palo Alto campus are now out of work. That should be the story here, not the shrubs etc.


roche worker
Old Palo Alto
on Jul 26, 2008 at 11:29 pm
roche worker, Old Palo Alto
on Jul 26, 2008 at 11:29 pm
Like this comment

I have worked at Syntex and Roche for 30 years. I find most of your comments a joke. Over 1000 hard working people who have been working to create better drugs for society are losing their jobs. I could care less about solar panels or a green campus. Many great individuals who have devoted their lives to Roche and the Palo Alto campus are now out of work. That should be the story here, not the shrubs etc.


roche worker
Old Palo Alto
on Jul 26, 2008 at 11:30 pm
roche worker, Old Palo Alto
on Jul 26, 2008 at 11:30 pm
Like this comment

I have worked at Syntex and Roche for over 30 years. I find most of your comments a joke. Over 1000 hard working people who have been working to create better drugs for society are losing their jobs. I could care less about solar panels or a green campus. Many great individuals who have devoted their lives to Roche and the Palo Alto campus are now out of work. That should be the story here, not the shrubs etc.


An insider who knows
Old Palo Alto
on Jul 27, 2008 at 2:58 pm
An insider who knows, Old Palo Alto
on Jul 27, 2008 at 2:58 pm
Like this comment

roche worker,

The big fish (Roche) ate the small fish (Syntex), although Syntex offered itself up. It was not a hostile takeover. Small independent pharaceutical companies, like Syntex, had become a thing of the past, partly due to market conditions and, more importantly, regulatory conditions, both national and local.

The Palo Alto campus lost its focus (searching for new, disease-modifying drugs). Over time, it became more about egoistic outdoor art, witch hunts looking for sexual harassment, homosexual rights, zero-waste, eliminating radioactivity and organic solvents, sponsoring indoor art shows, endless meetings to conform to non-productive regulations, solar/environmental awards, etc. In brief, the PA campus was marinated in PA attitudes.

Roche, in one step, can get rid of the biz-light attitude that dominated the PA campus. Is it any wonder that Roche prefers SSF (the Industrial City) over Palo Alto?

The old Syntex days are over, yet PA officials are still off chasing global warming, world peace, justice-for-all, etc. It won't end, until realists are voted into power in this city. It will take at least a decade of dedicated effort to get over the negative image of Palo Alto as anti-business.


Resident
Old Palo Alto
on Jul 27, 2008 at 10:51 pm
Resident, Old Palo Alto
on Jul 27, 2008 at 10:51 pm
Like this comment

Do law firms pay our city tax for the fees they charge their clients?



Always Wondering ..
Evergreen Park
on Jul 29, 2008 at 8:17 am
Always Wondering .., Evergreen Park
on Jul 29, 2008 at 8:17 am
Like this comment

> The Palo Alto campus lost its focus (searching for new,
> disease-modifying drugs). Over time, it became more about
> egoistic outdoor art, witch hunts looking for sexual harassment,
> homosexual rights, zero-waste, eliminating radioactivity and
> organic solvents, sponsoring indoor art shows, endless meetings
> to conform to non-productive regulations, solar/environmental
> awards, etc. In brief, the PA campus was marinated in PA attitudes.

Interesting. It's easy to speculate about such trends from the outside, but it's so much nicer to know what's really going on in a place from an insider's point-of-view.

Would be an interesting exercise to try to figure out how many of these trends were driven by the Palo Alto City Government. One such trend, "zero waste" would seem to have a lot of impact on a company like Roche, with so many people.

Any thoughts on why the PA Roche Campus became de-focused on its primary mission?


An insider who knows
Old Palo Alto
on Jul 29, 2008 at 2:17 pm
An insider who knows, Old Palo Alto
on Jul 29, 2008 at 2:17 pm
Like this comment

Always Wondering,

Internal Syntex/Roche regulators, reacting to PA/state/national pressure, became compliant and seduced to become part of the Palo Alto way. There were a few internal people who resisted, and complained that the company should fight back, but they soon disappeared. It was a gradual thing, but seemingly inexhorable. Top level managers wanted to go along to get along.

In many ways, the Syntex/Roche demise parallels the demise of Palo Alto. This should not be surprising, becasue they were both part of the same mindset.

If I could reduce it to two sentences, I would say:

The regulaotry burden became too much for the mid-level managers to cope with. They needed to focus on the basic mission, but the distractions were too much to overcome.


outsider
Fairmeadow
on Jul 29, 2008 at 3:32 pm
outsider, Fairmeadow
on Jul 29, 2008 at 3:32 pm
Like this comment

I don't know if insider is mike, but the person who really knows what is going on is councilman John Barton. Ask him.


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