The New Nature of Business

Chapter 3Finding the Compass for a New Nature of Business

In some ways, Roche was doing very well when I joined its board in 1996, a hundred years after its founding. It was just about the largest pharmaceutical company in the world, with a portfolio consisting of some of the most innovative and most essential medicines. Each year, it helped millions of patients. It provided tens of thousands of jobs and returned its shareholders with handsome dividends. Yet there were growing areas of concern, too. The company was losing market share in its most profitable markets, and losing sight of its purpose, investing in a variety of noncore activities.

Even so, it shocked me to learn that US prosecutors alleged Roche was also doing something else: leading a price-fixing ring. Roche had for years colluded with its competitors, the prosecutor said, to keep the price of certain vitamins in the US market artificially high. That had enabled it and other participating companies to share in the profits and had cheated US consumers from billions of dollars. It was quite an accusation, and quite a welcome for me as the new face of the family shareholders. The court also considered the accusation proven. As a result, Roche was handed almost a billion dollars in fines, by courts in both the US and—a few years later—Europe.

To make matters worse, at around the same time Roche also had to withdraw two drugs it had recently launched on the market, at great expense. The company had belatedly discovered ...