Filing: Roche considered leaving Indy

It’s hard to believe now, but as recently as two years ago, Indianapolis was close to losing its 15th-largest employer. Roche Diagnostics Corp. was looking seriously at moving its 2,900-employee North American headquarters out of Indianapolis.

Such a development would have been disastrous for Indianapolis’ economy, which reached unemployment levels this year not seen since 2003. It also wouldn’t have helped the budding life sciences economy here, of which Roche is a key anchor.

The possible relocation was confirmed by documents filed in the court battle between Marsh Supermarkets Inc. and Roche over a sublease deal Roche welched on three years ago. A Hamilton County judge on Dec. 19 ordered Roche to pay Marsh $19.5 million in damages for backing out of its deal to lease the Marsh headquarters along Interstate 69 near 96th Street.

Roche officials said they would appeal the decision by Judge William Hughes.

“Roche’s corporate policy is to conduct business in a fair and ethical manner and the company believes it was acting in accordance with the terms of the contract when it terminated the sublease,” spokeswoman Betsy Cox said in an e-mail.

Big changes were afoot at Roche when it canceled the sublease deal in 2008. On May 5, 2008, the company said it would transfer 300 local jobs to Germany. Later that month, North American CEO Tiffany Olson resigned abruptly. Roche’s Asia-Pacific chief, Michael Tillmann, took over the local post about a week before the firm told Marsh it was pulling out of the deal.

Tillmann wanted to terminate the agreement with Marsh to give the company more flexibility if he decided to move Roche out of Indianapolis, according to court documents.

Switzerland-based Roche, which has both a pharmaceutical and diagnostic business, had at the time agreed to acquire South San Francisco-based Genentech Inc. Since Roche Diagnostics already had operations in Pleasanton, Calif., Roche officials wondered if it wouldn’t make more sense to centralize its operations in the Golden State.

One other option would have been to move the Indianapolis headquarters to New Jersey, where Roche also has significant pharmaceutical operations.

That evaluation process continued throughout 2009, as Roche closed its $46 billion purchase of Genentech. In December 2009, current and former employees and contractors at Roche told IBJ the company was evaluating all its locations around the globe, including Indianapolis.

The possibilities included a massive exodus from Indianapolis, where Roche oversees all North American sales operations of its lab analyzers and other diagnostic devices. Roche also operates manufacturing plants here that make components of its blood glucose monitors.

Or the changes could have been more modest, perhaps involving a move of research and development jobs to California or, alternatively, moving information technology workers from New Jersey to Indianapolis.

That analysis continued even after Tillmann’s resignation in January 2010. His replacement, Jack Phillips, ultimately decided to keep Roche Diagnostics' headquarters in Indianapolis.

In fact, Phillips has even been behind a modest expansion of Roche’s Indianapolis presence. The company built out one of its manufacturing plants that makes test strips for its glucose meters, creating work for more than 50 new employees.

Also, Roche selected Indianapolis as the location of a new human resources center, which handles payroll work for both diagnostic and pharmaceutical staff. The center added 50 jobs.