Roche's revenue has been positively affected by its diagnostic unit and increasing demand for key products in Latin American and Asia-Pacific countries.
IHS Global Insight Perspective | |
Significance | Roche's revenues sank worldwide during the first nine months of 2011, due to appreciation of the Swiss franc and uncertainties surrounding the use of Avastin (bevacizumab) in breast cancer in the United States and Europe. |
Implications | In local currency terms, sales were flat amid a good performance by Roche's diagnostic business and increasing demand for key products in certain Latin American and Asia-Pacific countries, notably China, Venezuela and Brazil. |
Outlook | Advances on the regulatory front achieved during the first nine months of 2011—notably the approvals of personalised medicine Zelboraf (vemurafenib) in the US and of lung cancer drug Tarceva (erlotinib) in Europe—should boost sales' growth in future. In the meantime, the firm confirmed its expectation for low-single-digit growth in group and pharmaceuticals sales for 2011. |
Swiss pharmaceutical giant Roche has achieved disappointing results during the first nine months of 2011, reporting sales decline of 13% year-on-year (y/y) with total group sales of 31.5 billion Swiss francs (USD35 billion). In local currency terms, sales were flat. Roche's diagnostics business recorded sales down 8% y/y but up 6% y/y in local currency terms to CHF7.1 billion. In its pharmaceutical division, sales were down 1% in local currency terms and 14% y/y in the reported currency to CHF24.4 billion. In terms of break down by geography, sales were down in the double-digit range worldwide in the reported currency. In local currency terms, sales were slightly up (+1% y/y) at Roche's US and international operations. In Western Europe and Japan, sales were down 4% and 6% y/y respectively.
Roche: 9M Financial Highlights (Mil. CHF) | |||
M9 2011 (Mil. CHF) | % Change Y/Y (CHF terms) | % Change Y/Y (local currency terms) | |
Sales | 31,492 | -13 | 0 |
- Pharmaceuticals | 24,397 | -14 | -1 |
United States | 9,104 | -16 | 1 |
Western Europe | 6,210 | -15 | -4 |
Japan | 2,712 | -14 | -6 |
International* | 6,371 | -10 | 1 |
- Diagnostics | 7,095 | -8 | 6 |
* Asia–Pacific, CEMAI (Central and Eastern Europe, Middle East, Africa, Central Asia, Indian Subcontinent), Latin America, Canada, Others | |||
In Roche's pharmaceutical division, sales decline was prompted by an 8% y/y drop in sales of its cancer drug Avastin (bevacizumab). Sales of Avastin exclusively suffered in the US and Western Europe, with reported revenues down 15% y/y and 10% y/y in the two respective regions. Other oncology drugs in Roche's portfolio experienced sales increase in the high single digit range. Top-selling drug MabThera/Rituxan (rituximab) achieved sales growth of 7% y/y to CHF4.4 billion in local currency terms. Sales of Herceptin (trastuzumab), Xeldo (capecitabine) and Tarceva (erlotinib) steadily grew at a high single-digit growth rate during the first nine months of 2011. With sales of CHF1.1 billion, ophthalmology drug Lucentis (ranibizumab) was Roche's fourth best-selling drug in the first three quarters of the year as sales were up 26% y/y. Apart from Avastin, drugs that also experienced sales declines include hepatitis drug Pegasys (peginterferon alpha-2a), with sales falling by 5% y/y; anaemia treatment NeoRecormon/Epogin (epoetin beta), down 22%; CellCept (mycophenolate mofetil), down 12% y/y; and Bonviva/Boniva (ibandronate sodium), down 19% y/y.
Roche, Top 10 Selling Drugs, 9M 2011 | |||
Brand | First 9 Months 2011 (CHF) | % Change, Y/Y (local currency terms) | Franchise |
MabThera/Rituxan | 4,417 | 7 | Oncology |
Avastin | 3,942 | -8 | Oncology |
Herceptin | 3,905 | 8 | Oncology |
Lucentis | 1,128 | 26 | Ophthalmology |
Pegasys | 1,051 | -5 | Virology |
Xeloda (capecitabine) | 1,001 | 6 | Oncology |
Tarceva | 921 | 6 | Oncology |
CellCept | 770 | -12 | IAT |
NeoRecormon/Epogin | 690 | -22 | Anaemia |
Bonviva/Boniva | 551 | -19 | Metabolism/bones |
Source: Roche | |||
Outlook and Implications
Despite disappointing third-quarter results, Roche remains confident that it will meet its full-year objective. The firm expects group and pharmaceutical sales to grow at low single-digit rates at constant exchange rates during 2011. In line with results reported so far, sales of diagnostics are expected to grow ahead of the market, driven by the launch of new products. The appreciation of the Swiss franc and uncertainties surrounding the use of Avastin in metastatic breast cancer will strongly affect Roche's full-year results in 2011. Added to that, the US healthcare reform and cost-containment measures implemented in Europe during 2010/11 will have further impact on Roche's performance.
On the positive side, Roche made progress on the research and development and approval front during the first nine months of 2011. In August 2011, the US FDA approved its personalised medicine Zelboraf (vemurafenib) in late-stage metastatic or unresectable melanoma in patients whose tumours express the BRAF V600E mutation (see United States: 18 August 2011: Zelboraf Joins Yervoy with FDA Approval in Metastatic Melanoma Market, Targeting BRAF-Positive Population). During the period, Roche succeeded in securing EU approval for Tarceva for EGFR-mutated non-small-cell lung cancer and filed vismodegib for marketing authorisation in the US for the treatment of basal cell carcinoma. Future growth will be based on these new cancer products.