Global Insight Perspective | |
Significance | Roche's Pharmaceutical division was once again the main growth driver behind the better-than-expected first-half sales. Sales at the flagship division grew three times faster than the global market, on the back of strong demand for cancer drugs and influenza-treatment Tamiflu. |
Implications | The robust first-half sales more than offset Roche’s heavy investment in new pipeline products as well the firm's pursuing of additional indications for already successful marketed drugs, particularly from its oncology franchise. |
Outlook | Based on the strong first-half performance, Roche remains optimistic on full-year profit and reiterated its sales outlook for 2006. In fact, critical to the future growth of the firm is the development and approval of expanded indications for some of its blockbuster oncology products |
Switzerland-based pharmaceutical giant Roche's group sales grew by 19% in Swiss francs, or by 16% in local currencies, to 19, 849 million Swiss francs, on the back of 23% pharmaceutical sales growth, more than three times as fast as the global market. Roche's pharmaceutical division notched up sales of 15,577 million Swiss francs, while the Diagnostics unit posted a more modest growth of 8%. Robust sales during the first half (H1) of the year offset Roche’s heightened investment in the promising pipeline and in new product launches.
Commenting on these results, Franz Humer, the firm's Chief Executive Officer, believes that sales revenue grew largely due to Roche's leading oncology products, influenza ('flu)-drug Tamiflu and its diagnostics brands. However, Humer stressed that the development of additional indications for already marketed products will stimulate additional growth.
Roche’s H1 2006 Results (CHF mil.) | ||
H1 2006 | % Change, Year-on-Year (Y/Y)* | |
Group Sales | 19, 849 | 19 |
Group Research and Development | 3,063 | 20 |
Group EBIDTA | 7,061 | 26 |
Group operating profit before exceptional items | 5,805 | 30 |
Group Net Income | 4,543 | 37 |
Pharma Research and Development | 2,736 | 24 |
Pharma EBIDTA | 5,847 | 34 |
Pharma operating profit before exceptional items | 5,016 | 38 |
Source: Roche’s financial results. | ||
Oncology, Tamiflu Shine Once Again
In the first half (H1)of 2006, sales of colon-cancer drug Avastin more than doubled to 1, 389 million Swiss francs, while breast-cancer drug Herceptin notched up sales of 1, 813 million Swiss francs, a huge increase of 105%. Aside from the company's oncology franchise, Roche is still benefiting from sales of its influenza treatment, Tamiflu, on the back of governmental stockpiling in the event of avian-'flu-derived pandemic threat. Tamiflu posted sales of 961 million Swiss francs, corresponding to a increase of 62%.
Roche’s H1 2006 Net Sales | ||
Brand | H1 Net Sales (CHF mil.) | % Change, Year-on-Year (Y/Y)** |
MabThera/Rituxan | 2,348 | 16 |
Herceptin | 1,813 | 105 |
Avastin | 1,389 | 119 |
NeoRecormon/Epogin | 1,100 | 1 |
Tamiflu | 961 | 62 |
CellCept | 891 | 7 |
Pegasys | 724 | 2 |
Xeloda | 472 | 27 |
Tarceva | 367 | 143 |
Xenical | 363 | 12 |
Total for Top 10 | 10,428 | N/A |
Total Pharmaceuticals*** | 15,577 | 23 |
Roche Pharmaceuticals | 9,670 | 21 |
Genentech | 4,223 | 47 |
Chugai | 1,684 | -7 |
*Order of products is based on first-half net sales; | ||
Outlook and Implications
On the back of the better-than-expected first-half, Roche now expects full-year sales and income for this year to be significantly higher than those of 2005. The firm reiterated its sales outlook announced during the release of its annual results, according to which the Pharmaceutical unit and the Group as a whole are expected to post double-digit growth. Besides its promising pipeline of new products, which have been bolstered recently by a string of external collaborations, the Swiss drug maker sees future growth in pursuing approvals for additional indications on already approved drugs. Roche’s U.S. subsidiary Genentech, for example, has asked the U.S. regulatory bodies to approve Avastin in the treatment of lung and breast cancer. Avastin is already licensed to treat colon cancer.
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