Roche Lifts Forecast as New Drugs Take Over to Drive Growth
(Bloomberg) -- Roche Holding AG raised this year’s profit and sales forecast as new medicines made up for eroding sales of its biggest drugs, which face competition from cheaper copies.
Sales will probably rise by a mid-single-digit percentage, boosted by U.S. tax reductions, the Basel, Switzerland-based company said in a statement Thursday. That will lift profit further after first-half results blew past analyst expectations.
The boost came in part from cancer medicines and in part from Roche’s forays into other types of disorders. Perjeta, a next-generation breast cancer medicine, saw sales climb 29 percent in the second quarter. Sales of new multiple sclerosis medicine Ocrevus almost tripled. Roche, the world’s biggest maker of cancer medicines, is at a turning point as its three biggest drugs -- accounting for 40 percent of last year’s sales -- face competition from cheaper copies called biosimilars.
The results beat expectations on all levels, with Roche’s business “firing on all cylinders,” Ian Hilliker, an analyst with Jefferies LLC in London, wrote in a note to investors.
Roche shares rose 2.1 percent to 243.40 Swiss francs at 9:02 a.m. in Zurich trading.
“We are very well on track to rejuvenate our portfolio,” Chief Executive Officer Severin Schwan said in a conference call with reporters. Ocrevus had the company’s best launch ever, he said.
The company’s best-selling breast cancer drug faced its first competition from biosimilars in Europe, causing sales to drop 7 percent there last quarter. Called Herceptin, or trastuzumab, it has been a pillar of Roche’s cancer business for two decades. Merck & Co. started selling a cheaper copy developed by Samsung Bioepis in the U.K. on March 8. It’s now available in Germany and Austria too. The drug’s sales decline will probably accelerate in the second half of the year, Schwan said.
Core earnings per share, which exclude some costs, rose 20 percent to 9.84 Swiss francs in the first half, exceeding the 9.03-franc estimate of eight analysts surveyed by Bloomberg. Without the effect of U.S. tax reform, earnings per share would have risen by 8 percent, Roche said.
Roche had previously said that sales and core earnings per share would probably rise by a low single-digit percentage at constant exchange rates this year.
The company also announced a shift in leadership on Thursday to the next generation of its controlling families. Joerg Duschmale, 34, a fifth-generation descendent of the company’s founder, will stand for election as a supervisory board member in 2020. He would replace Andreas Oeri, 69, who has served for more than two decades and plans not to seek re-election.
“I don’t expect any change in terms of strategy and support from the founding families,” Schwan said.
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