Roche Holding AG, Europe's largest pharmaceutical company by revenue, intends to double down on its investment in research and streamline other parts of its business after spending about CHF800 million more on R&D in 2020 to advance 20 late-stage experimental medicines and early-stage gene therapy.
Bill Anderson, head of Roche's pharmaceuticals division, said he plans to make a similar investment in the pipeline in 2021 even though sales in the company's pharmaceutical unit were down 2% due to the impact of the COVID-19 pandemic. Savings from less travel and similar efficiencies will be plowed back into research, CEO Severin Schwan said on a Feb. 4 call with reporters after the Basel, Switzerland-based pharmaceutical group reported results for the full year and the fourth quarter.
"We believe in the future, we believe in innovation," Schwan said. "And we doubled down on innovation, and we continue to invest into innovation. And that's exactly what we have done over the last year. And that's what we will continue to do during the current year."
Spark Therapeutics Inc., the gene therapy developer acquired by Roche in 2019, benefited from an increase in investment and suggested that gene therapies could comprise a growing number of Roche's experimental assets in the future as the potential for these novel one-time treatments is realized, Anderson said. Spark was the first company to commercialize a genetic therapy for inherited disease with Luxturna.
"They're really off to the races," Anderson said on a call with reporters. "There's some really promising ideas in that in that space and I know that Spark certainly has those ambitions. I think you're going to see increasing numbers of Spark entries on the pipeline chart."
Anderson reiterated his belief in the potential of Roche's late-stage Alzheimer's disease treatment, ganteranumab. The company jettisoned two experimental assets in Alzheimer's in 2019 after they failed to show effectiveness against the memory-robbing brain disease, so all eyes are on ganteranumab's phase 3 results, which are set to read out in just over a year.
"We think there's a good probability that this mechanism is going to work … but I would say that overall, we recognize it's still a high-risk area," Anderson said. "But, the good news is we're going to know that within a little more than a year. And after 15 or 20 years of major, major investment, it feels good to be this close to an answer."
Pandemic impact
Roche said full-year 2020 sales in its pharmaceutical unit were impacted by CHF2 billion from the effects of the pandemic, coming in at CHF44.5 billion, compared with Jefferies' estimate of CHF45.13 billion and consensus at CHF45.75 billion. In addition, the introduction of biosimilar competitors to its brand-name products was greater than Roche had foreseen, at CHF7 billion for the year, and that is expected to have a CHF4.6 billion impact in 2021, Anderson said.
Still, rheumatoid arthritis drug Actemra posted fourth-quarter sales of CHF724 million, beating SG Cowen's CHF675 million forecast due to its use against COVID-19. Diagnostics were broadly in line with analyst expectations — at CHF13.79 billion compared with Jefferies' estimate of CHF14.07 billion and consensus at CHF13.75 billion — with the molecular diagnostics division strongly benefiting from COVID-19 tests but offset by a decline in routine business.
Looking ahead, Schwan forecast sales growth in the low- to mid-single-digit range at constant exchange rates, at the lower end of analyst forecasts. Roche attributed the muted outlook to the expected continuing impact of the pandemic on the pharma business in the first half of 2021 although this is forecast to improve in the second half of the year. In contrast, Diagnostics will see a strong first half of 2021, with growth flattening in the second half.
"From my perspective, I am just amazed and I'm also proud, I have to say of what we could contribute here over the last year," the CEO told reporters. "We have now a record number of molecular entities in late-stage development, we've never had so many opportunities in late-stage development: 19 new medicines, and many more indications. So, really significant progress over 2020."
