Roche has said it will pay $725m in cash to buy Seragon Pharmaceuticals, a privately-held biotech company that researches breast cancer treatments.
It may pay up to another $1 billion based on certain milestones.
The Swiss-based drugmaker is looking to bolster its offering of breast cancer drugs with the purchase.
It has won approval for Kadcyla, a treatment for patients whose cancer cells contain increased amounts of the protein known as HER2.
Roche also has another new breast cancer drug, also a treatment for HER2-positive breast cancer, which makes up a quarter of all breast cancers and has no cure.
Since walking away from a $6.8 billion deal to buy US gene sequencing company Illumina in 2012, Roche has avoided multi-billion deals and instead has snapped up a couple of smaller diagnostic companies so far this year.
It has also partnered with various companies to develop antibiotics and said last week it will work with Inception Sciences Inc and Versant Ventures on a new company to develop therapies for patients with multiple sclerosis.
Seragon is the second notable acquisition in as many months for Roche, which bought privately held US gene-sequencing firm Genia Technologies for up to $350m in June, securing access to a technology that should allow it to decipher human genes more quickly at a cheaper cost.
Seragon was spun out from Aragon Pharmaceuticals last year when that firm was bought for up to $1 billion by Johnson & Johnson.