Genentech says may repurchase shares, pay dividend

NEW YORK, March 14 (Reuters) - Biotechnology company Genentech Inc (DNA.N: Quote, Profile, Research) said on Friday its board is discussing the possibility of buying back shares or paying a dividend to shareholders as it decides what to do with its increasing free cash flow.

Speaking at its annual investor meeting, David Ebersman, the company's chief financial officer, said it expects to reach a goal of generating cumulative free cash flow of $12 billion between January 2006 through 2010.

Ebersman said the company is discussing how to get the best returns on its cash. Those options include licensing products from other companies and engaging in mergers and acquisitions.

"While in-licensing is our preferred approach, we're open to using M&A as a tactic," Ebersman said.

He said options also include expanding its share repurchase program or initiating a dividend payment to shareholders, though nothing has been decided and there are pros and cons with each approach, he said.

(Additional reporting by Toni Clarke)