(Reuters) - Swiss drugmaker Roche Holding AG (>> Roche Holding Ltd.) said on Thursday it would buy the rest of U.S. cancer data company Flatiron Health for $1.9 billion (1.35 billion pounds) to speed development of cancer medicines and support its efforts to price them based on how well they work.

Privately held Flatiron, backed by Alphabet Inc (>> Alphabet), taps into data on individual cancer cases to help doctors select promising approaches for their patients.

It also stores billing data, doctors' notes and related information. (http://bit.ly/2EL5OKg)

Roche currently owns 12.6 percent of Flatiron.

In 2016, Roche led a $175 million investment into Flatiron, in part to help the Swiss company harness the deluge of still-underutilised data collected from cancer patients with the New York City-based company's products.

Roche has said Flatiron algorithms will improve not only its research and trials, but also buttress its arguments during head-to-head price talks with payers as new combinations of its expensive therapies hit the market. (http://reut.rs/2o9x6iY)

"It gives us better insights into the potential for our products," Roche's head of pricing Jens Grueger told Reuters in a 2016 interview.

"But it also creates flexibility in how we can create value contracts in the future."

Roche has made a number of bolt-on acquisitions in recent months, including in December when it said it would buy U.S. cancer drug specialist Ignyta Inc for $1.7 billion in a deal to broaden its oncology portfolio.

In 2014, Google Ventures led a $130 million investment in Flatiron as healthcare had become a hot area for venture capital, especially companies related to health, data and software. (http://reut.rs/2CnuZxb)

Roche and Flatiron expect the deal to close in the first half of 2018, after which the latter will continue its operations as a separate entity.

Allen & Company LLC is the financial adviser to Flatiron Health and Wilson Sonsini Goodrich & Rosati is its legal counsel. Davis Polk & Wardwell LLP is acting as legal counsel to Roche.

(Reporting by Akankshita Mukhopadhyay in Bengaluru and John Miller in Zurich; Editing by Arun Koyyur and Lisa Shumaker)

Stocks treated in this article : Roche Holding Ltd., Alphabet