Negotiations for a merger between long time partners Roche and Genentech failed to materialize. Both the companies are counter accusing each other of not negotiating in good faith.

Roche valued the new offer at $42.1 billion for the 44 percent of Genentech it did not already own, compared with the original offer's value of $43.7 billion.

The committee of Genentech directors had rejected Roche's initial offer on the basis of a low offer. In a statement, it criticized Roche for taking a "unilateral and opportunistic step in an attempt to take advantage of current market conditions."

Roche has stated that it would now directly contact the shareholders of Genentech with an offer of $86.50 a share. In July it had offered $89. However analysts fear that the offer will not be accepted by the shareholders.

The relationship between the companies went sour with Roche's bid to gain full control of Genentech. This it says was an effort to better coordinate activities of the companies and to lock in Genentech's products for the future.

Genentech has been developing products for Roche which have shown the best sales in the past - Avastin, Herceptin and Rituxan. Fears are rife that many Genentech scientists and executives might quit due to the rift in the relationship between the two companies.