The strange story of a global pharma company’s Silicon Valley winery

CUPERTINO, Calif. — The Japanese drug maker Otsuka markets chemotherapies for leukemia, antidepressants for schizophrenia, and a pill that can alert your doctor when you swallow it. It also grows grapes and sells cabernet sauvignon.

Here in the upper reaches of the sun-kissed mountains just south of Stanford, you can find perhaps the oddest outpost of a powerful pharma company’s global operations: an upscale winery where weathered wooden signs warn tipsy tourists to “beware of rattlesnakes” just steps from the tasting room.

Otsuka bought Ridge Vineyards in 1986 — the main explanation seems to be that the drug maker’s chairman at the time loved a good Bordeaux — and has held onto the investment ever since.

These days, Otsuka uses Ridge as more than just a source of alternative revenue. Several times a year, its executives entertain business partners — or prospective business partners — by bringing them to Ridge to tour the vineyards and taste wine. Ridge sees the most traffic from its owner each January, during the J.P. Morgan Healthcare Conference in San Francisco.

“It’s like clockwork,” said Ridge’s CEO Mark Vernon, adding there’s nothing quite like tasting great wine and having “a little business conversation as well.”

Ridge actually has about two dozen vineyards scattered throughout Northern California wine country. The one here, the Monte Bello estate, is its original crown jewel, and to find it you have to drive for 15 minutes up a steep mountain road lined with switchback turns and one-lane zones. (On the way back down, a deer darted in front of a STAT reporter’s car.)

Otsuka — which also sells sparkling water through another wholly owned subsidiary — declined to answer STAT’s questions about why it’s held onto Ridge for all these years and how much money it makes. (Ridge is profitable, according to Vernon, and it sells bottles for between $30 to just over $200.)

But in general, owning a winery can be a tough and unpredictable business. Selling a $100 bottle of wine to a connoisseur generates lower returns than a medicine with a five-figure price tag paid for by insurance. And no amount of scientific ingenuity can stop bad weather from ruining the season’s crop.

Still, Ridge gives Otsuka a status symbol like few others. “They love it. They love the prestige and notoriety of owning Ridge,” Vernon said.

Otsuka bought Ridge three decades ago, in a deal that came about much like it buys experimental drugs: through a business relationship between two pharmaceutical executives.

One of Ridge’s founding investors was the chemist Carl Djerassi, who helped invent the birth control pill and who also worked at the pharmaceutical company Syntex.

Through Syntex, Djerassi was friendly with Akihiko Otsuka, Otsuka’s then-chairman — and knew that he liked wine. When the founding partners decided in the 1980s that it was time to get out of the wine business, Djerassi made the connection.

It was an era when the Japanese economy was on the rise and Japanese companies were aggressively making investments in the U.S. and all over the world. Akihiko Otsuka was interested — and became even more so when Paul Draper, Ridge’s longtime winemaker, wooed him with a blind tasting test, according to Vernon.

Draper, who’s now the winery’s executive chairman, likened the resulting deal to Otsuka “buying a Matisse.”

In the decades since, Vernon said, Otsuka has been the best kind of owner: supportive but also largely absentee. Junji Tashiro, president and CEO of Otsuka’s America business, sits on Ridge’s board of directors and attends the winery’s quarterly meetings. According to Vernon, today’s ownership has upheld the two informal demands that Akihiko Otsuka laid out in the 1980s: Keep making good wine. And don’t lose money.

Just last week, Otsuka carted in dozens of bottles of zinfandel (2015) and chardonnay (2016) to stock the open bar at a reception at an upscale law firm on the 26th floor of a skyscraper in downtown San Francisco.

The cocktail hour was held to kick off a day of meetings between Otsuka executives and up-and-coming biotech companies looking to forge a partnership, license out an experimental drug, or maybe even get acquired.

As the business-formal crowd sipped from their glasses of red or white, Ridge’s hospitality coordinator, Tom Carson, was brought up to give a short speech. He described Otsuka’s ownership philosophy this way: “We won’t tell you how to make wine. You don’t tell us how to make drugs.”