Roche’s acquisition of DNA ( Genentech ) shows change of the company’s long practiced successful strategy by the new CEO. This indicates lack of confidence in the prior strategy. The new strategy is in reality integration of autonomous subsidiaries, although Roche does not characterize this way.

We believe there will be a culture shock in the entire organization as we believe there are likely to be more changes to the existing strategies. New strategies may work out in the long run, but will hurt performance in the mid term.

We recommend slowly building short positions in the range of $88 to $110 with bulk of the position to be entered at the high end of the range.

On sympathy bounce . consider shorting AMLN. Based on what we have learned of LLY (Lilly)internal developments, an acquisition of AMLN is unlikely in the near term.