Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Bertarelli Family Built Serono From a Startup to Biotech Giant
Transcript
- Lucas: If you've ever wondered how a family business pivots from selling dried placenta to engineering recombinant proteins, Serono is your case study. The Bertarelli family turned a small Italian pharmaceutical into a global biotech leader, then sold it for $13.3 billion in 2006. Luna: Dried placenta — I have to ask, is that as strange as it sounds? Lucas: It sounds worse than it was. In the early 1900s, Fabio Bertarelli started a company in Rome that produced organotherapics — basically extracts from animal glands and tissues. Dried placenta was used for hormonal treatments. It was primitive, but it was the foundation. Luna: So the original product line was essentially what we'd now call endocrine treatments, just without the science we have today. Lucas: Exactly. And the family made a crucial move in the 1960s. Fabio's son, also named Fabio, took over and saw that the future was in biotechnology, not just crude extracts. He shifted the company toward research on human proteins, specifically fertility hormones. Luna: That's a risky bet. Biotech in the sixties was still very experimental. Lucas: It was. But Serono started collaborating with academic labs, and by the 1980s they had developed a way to produce human follicle-stimulating hormone — FSH — using recombinant DNA technology. That became Gonal-f, their blockbuster fertility drug. Luna: And Gonal-f basically owned the market, right? Lucas: It did. By the late 1990s, Serono controlled about 50 percent of the global fertility drug market. The company was generating over $2 billion in annual revenue. They had manufacturing facilities in Switzerland, the US, and Israel. It was a classic family-led biotech success story. Luna: So what went wrong? Why sell in 2006? Lucas: A few things. First, the family governance got messy. Fabio's son Ernesto Bertarelli became CEO in 1996, and he was very aggressive — he wanted to expand beyond fertility into neurology and oncology. That stretched the R&D budget. Then there was a dispute with his sister, who wanted more dividends. Luna: Classic sibling tension over growth versus payout. Lucas: Right. And on top of that, Serono faced patent expirations for Gonal-f. The family decided that rather than go it alone, they'd sell to a larger pharma company with deeper pockets for R&D. Merck KGaA offered $13.3 billion, and the family took it. Luna: That's a huge exit. But did the Bertarellis lose control of the legacy they built? Lucas: That's the tension in this story. Ernesto Bertarelli used his share of the proceeds to start a family office and invest in other ventures, including a biotech incubator. So the family reinvested part of the wealth into new science. But Serono as a family company disappeared. Luna: It's a pattern we've seen before — build a dominant player, then sell when the next innovation cycle requires more capital than the family can or wants to provide. Lucas: Exactly. But there's a lesson here about timing. The Bertarellis sold at the peak. If they had waited, generic competition would have eroded margins. They got out while the brand was still strong. Luna: That takes discipline. Most families hold on too long for sentimental reasons. Lucas: Right. And speaking of discipline — this episode is brought to you without any sponsor interruptions. We keep Fexingo ad-free because we think these conversations should be straightforward, no commercial breaks. If you value that, you can support the show at buy me a coffee dot com slash fexingo. It's a small gesture that lets us keep doing exactly this. Luna: Yeah, and it really does make a difference. Every contribution helps us cover research and production costs without ever putting an ad in your ears. Lucas: So back to Serono. One of the most interesting strategic decisions was their choice to focus on fertility drugs rather than broader therapeutics early on. It was a niche, but a growing one. Luna: And it gave them a clear competitive advantage. They became the go-to brand for reproductive endocrinologists worldwide. Lucas: That focus also allowed them to build a sales force that specialized in fertility clinics, not general hospitals. That's hard for a big pharma company to replicate because it's too narrow for their sales model. Luna: So it was a classic niche strategy, protected by a kind of distribution moat. Lucas: Exactly. And it worked for decades. The Bertarelli family didn't just get lucky — they made deliberate choices about specialization, R&D investment, and eventually exit timing. Luna: What about the next generation? Did any of Fabio's grandchildren stay in pharma? Lucas: Ernesto's son, also named Fabio, is involved in the family office, but he's not running a pharma company. The family wealth is now managed through a holding company called B-Finance, which invests in life sciences, real estate, and sports. So the entrepreneurial spirit continues, just in a different form. Luna: It's a clean transition from operating company to family office. Not every family manages that well. Lucas: No, they don't. The Bertarellis had the advantage of a single blockbuster product and a clear exit path. Not every family business has that luxury. But they also had the discipline to sell when the time was right. Luna: Any lessons for listeners who are in a family business today? Lucas: I think the biggest is: know when to let go. The Bertarellis could have kept Serono independent, but they recognized that the next wave of innovation — personalized medicine, gene therapy — would require capital they didn't have. So they sold, preserved their wealth, and now fund the next generation of scientists through their family office. Luna: That's a smart legacy move. Instead of clinging to the old company, they're enabling new ones. Lucas: Exactly. And that's the story of Serono and the Bertarelli family. A small Italian pharmacy that grew into a biotech titan, then gracefully exited at the top.