Global Insight Perspective | |
Significance | Roche’s third-quarter sales were generally above expectations, riding on strong performances from the oncology portfolio, the antiviral Tamiflu and osteoporosis drug Bonviva/Boniva. |
Implications | The 19% sales growth maintained the trend of the first half of 2006. In local currency terms, group sales in the year to September were up by 17% and pharmaceutical sales grew by 21%; nearly four times the growth rate for medicines worldwide. Local growth for oncology drugs was 41% in the first nine months of the year. |
Outlook | There were a few clouds in the third quarter, such as a 5% sales decline at the Japanese subsidiary Chugai and a weak showing from the anaemia drug NeoRecormon/Epogin and the weight loss treatment Xenical. However, prospects for the full year continue to look bright. With a raft of new approvals and regulatory filings since the start of 2006, Roche is holding to its full-year forecast of double-digit sales growth for pharmaceuticals and the group as a whole. |
Oncology drugs and Tamiflu help to maintain Roche’s impressive growth record in the third quarter of the year, as the Swiss company replicated the 19% sales increase seen in the first half of 2006. Group sales were 10,478 million Swiss francs (US$8,239 million), with the core pharmaceuticals division lifting its turnover by 23% to 8,335 million Swiss francs. Genentech’s dynamic oncology portfolio and the forceful U.S. debut of eye drug Lucentis (ranibizumab) were key contributors to the group’s progress, while sales growth in diagnostics slowed a little from 8% in the first half to 5%.
Roche’s Sales for Q3 and January-to-September 2006 (CHF mil.) | ||||
Q3 2006 | % change y/y (CHF) | January-September | % change y/y (CHF) | |
Pharmaceuticals | 8,335 | +23 | 23,912 | +23 |
Roche Pharma | 5,251 | +25 | 14,921 | +20 |
Genentech | 2,299 | +30 | 6,522 | +41 |
Chugai | 785 | -5 | 2,469 | -6 |
Diagnostics | 2,143 | +5 | 6,415 | +7 |
Roche Group | 10,478 | +19 | 30,327 | +19 |
Source: Roche | ||||
Roche’s hefty oncology portfolio was once again a crucial growth driver. In the first nine months of the year, the oncology franchise managed a sales increase of 41% in local currencies. On a quarterly basis, there were standout performances from Herceptin (trastuzumab), with sales 71% higher, Avastin (bevacizumab, +53%) and Tarceva (erlotnib). Roche’s leading anticancer drug MabThera/Rituxan (rituximab), continued to grow strongly (+11%) from first-line use in indolent and aggressive non-Hodgkin’s lymphoma.
Away from oncology, government stockpiling in anticipation of an influenza pandemic more than doubled third-quarter sales of Tamiflu to 279 million Swiss francs. There was also a vigorous showing from osteoporosis drug Boniva (ibandronate sodium), as its quarterly sales soared to 142 million Swiss francs; up from just 14 million Swiss francs in the third quarter of 2005.
Roche’s Top 10 Pharmaceutical Product Sales in Q3 2006 (CHF mil.) | ||
Brand | Q3 sales | % change y/y (in CHF) |
MabThera/Rituxan | 1,177 | +11 |
Herceptin | 1,009 | +71 |
Avastin | 741 | +52 |
NeoRecormon/Epogin | 535 | -5 |
Tamiflu | 669 | +140 |
CellCept | 466 | +6 |
Pegasys | 350 | +0 |
Xeloda | 239 | +5 |
Tarceva | 211 | +109 |
Xenical | 160 | -1 |
Outlook and Implications
Roche’s sales in the third quarter and first nine months of 2006 were above most analysts’ expectations, and the company looks to be on a strong growth track for the rest of the year. The news is not all good, however. The Japanese subsidiary, Chugai, has been hit by government price cuts, and looked like a weak spot while Roche’s pharmaceutical sales growth significantly outpaced the market average in North America and Europe. The anaemia franchise (NeoRecormon and Epogin) is losing momentum, with Japanese price cuts and reimbursement changes again offsetting growth in the rest of the world. The sales for weight loss treatment Xenical also slipped back 1% in the quarter to 160 million Swiss francs.
Nonetheless, Roche has plenty of juice left in its oncology portfolio, and Tamiflu sales continue to build. In January–September, Roche secured 16 drug approvals in major markets, including MabThera/Rituxan for rheumatoid arthritis, Herceptin in early-stage breast cancer and Avastin for non-small cell lung cancer. A total of 15 regulatory filings in major markets were recorded over the same period. These vital signs support the group’s expectation that full-year sales and income will be significantly ahead of 2005, with double-digit sales growth predicted for the pharmaceutical division and Roche overall.