Astra, Roche Join Rivals in Boosting Forecasts as New Drugs Prosper

(Bloomberg) -- Drugmakers AstraZeneca Plc and Roche Holding AG joined major European rivals in raising their estimates for full-year results as new medicines begin to pay off.

Sales and core earnings per share at Switzerland’s Roche will rise by a percentage in the mid- to high-single digits this year, the company said, as new drugs for cancer and multiple sclerosis offset pressure on older products. At Astra, product sales for the year are now expected to increase by a low double-digit percentage, helped by demand for the U.K. drugmaker’s roster of new cancer treatments. The stock surged in London trading.

Like Astra and Swiss rival Novartis AG, Roche is seeing a handful of new medicines take over as the blockbusters that buoyed sales for a decade fade. Sales of Roche’s hemophilia therapy Hemlibra and Tecentriq for cancer breezed past analysts’ estimates in the first half. Astra’s cancer franchise saw sales surge by 51% last quarter amid demand for newcomers Lynparza and Imfinzi.

GlaxoSmithKline Plc lifted its earnings forecast for the year on Wednesday, helped by a new shot for shingles that has quickly become a blockbuster. Glaxo is starting to encroach on Roche and Novartis’s turf by expanding into the cancer field. Novartis last week said earnings excluding some items would grow by a low double-digit to mid-teens percentage this year, the second boost to its estimate since the start of the year.

Astra in China

Roche had previously nudged its estimate in April, saying it expected mid single-digit growth. The stock rose as much as 1.6% in Zurich trading. Glaxo gained as much as 1.9% in London, and Astra climbed as much as 6.5%, reaching a record.

Astra, Roche Updates Earn Analyst Praise as Drug Stocks Jump

Astra’s second-quarter profit came in at 73 cents a share, well above analysts’ expectations, while net operating cash flow rebounded for the first half. The company remains open to acquisitions where it can add value, like its deal with Daiichi Sankyo Co. earlier this year for rights to a breast cancer drug, Chief Executive Officer Pascal Soriot said in an interview with Bloomberg TV.

Sales in China, one of the company’s most important markets, rose 34%. Soriot had said earlier this year that performance there would be hurt in the second half by the country’s bulk-buying drug program for major cities.

“The impact of those price pressures hasn’t been really coming as quickly as we thought initially, but they are coming,” he said in the interview.

What Bloomberg Intelligence Says

“We continue to see Astra as the preeminent large-pharma growth story.”

-- Sam Fazeli, pharma analyst

Click here to read the piece

Roche said its planned acquisition of Spark Therapeutics should close this year as it works with U.S. and U.K. regulators, but didn’t provide an explanation for the holdup.

CEO Severin Schwan said the competition for Roche’s aging blockbuster cancer drugs will likely intensify in the fourth quarter. Rivals Amgen Inc. and Allergan Plc last week announced the availability of two cheaper biosimilar versions of Roche’s Avastin and Herceptin.

In terms of stock performance, Novartis is ahead so far this year with a 23% gain. Glaxo has gained about 11% in the period, beating Roche’s and Astra’s 8% increases.

To contact the reporters on this story: Tim Loh in Munich at tloh16@bloomberg.net;John Lauerman in London at jlauerman@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Marthe Fourcade, Thomas Mulier

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