Roche Holding AG is sticking to its dual-track research structure that some analysts have urged it to dismantle as the Swiss drugmaker seeks ways to slash costs after pipeline setbacks.
Chief Executive Severin Schwan told Reuters the group would not ring-fence research and development (R&D) from cutbacks but said merging separate operations at Roche and its US biotech unit Genentech would be "fundamentally wrong".
"We will keep the two respective research and early development organisations as independent units. I am very firm on that and I don't see any reason why you would put them together," he said.
"You would kill innovation," Schwan said in an interview at the 114-year-old group's headquarters in Basel.
Roche, hit by a bout of setbacks for key drugs, announced an efficiency drive on September 3. Some analysts are worried the cuts may fall short of annual savings of 2 billion to 3 billion Swiss francs ($2-3 billion) that they believe can be made.
Problems with cancer drug Avastin and experimental diabetes treatment taspoglutide have punched a big hole in Roche's short-term growth potential and dented investor confidence in the group.
Schwan acknowledged times were tough but said he was confident the pipeline would start to deliver again after a lean couple of years.
"Growth is slowing down, and that is related on the one hand to the price pressure that we see both in the US and in a number of European countries and it is related to the late-stage setbacks in our pipeline," the 42-year-old said.
"However, growth rates will pick up again when our new products are coming through."
The group expects sales to pick up again after 2012 as some of its products in late-stage development start to reach the market.
"Yes, there have been setbacks, but I think it's important to put it into perspective with our overall pipeline, which is very strong," Schwan said.
Adding to Roche's worries is the looming threat of generic competition to some of its complex biological cancer drugs, such as MabThera and Herceptin, which could emerge in Europe as early as 2014 and 2015 when patents expire.
Schwan played down the impact that so-called biosimilars were likely to have on the group's bottom line. "If you look at our biologics, a big portion of turnover is protected for many years to come," he said.
"The impact that we will see from biosimilars on MabThera and Herceptin, in particular, will be limited and I am confident that with our strong pipeline we can compensate and even over-compensate for that."
Schwan said he expected further consolidation within the pharmaceutical industry as it faces more pressures, although Roche's focus would remain on small and medium-sized deals.