Roche Holding AG's CEO is skeptical that a vaccine for the coronavirus is imminent. Despite rising expectations — spurred in part by promising recent data from AstraZeneca PLC and Oxford University's contender — Severin Schwan has not altered his view on the length of time required to gain regulatory approval, given the high safety hurdle for any vaccine intended for billions of healthy people.
Schwan spoke to reporters after the Basel, Switzerland-based pharmaceutical group reported lower-than-expected first-half 2020 results, impacted by COVID-19 and the advent of biosimilar competition in the U.S. to its top three cancer medicines: Herceptin, Avastin and MabThera/Rituxan.
Roche CEO Severin Schwan
"The real challenge, like with any medicine, is not to develop a molecule or a vaccine — that's quickly done," Schwan said on a conference call. "It's encouraging what we see, that some of those vaccines trigger neutralizing antibodies — this is really promising. This is good news. But it's yet a completely different question to prove the safety of the vaccines and to prove efficacy in sufficiently large cohorts," he said.
Scaling up to produce large quantities is a further challenge, the CEO added.
Earlier in the day, Roche reported a fall in first-half group sales of 4% to CHF 29.28 billion, versus Cowen's CHF 30.53 billion estimate. "Every product in the quarter was below our estimates except Actemra, which has been used off-label for COVID-19 treatment," said analyst Steve Scala, who has an "outperform" rating on the stock.
Roche, the biggest manufacturer of cancer drugs in the world, said the impact of generic competition on its former blockbusters Avastin, Herceptin and MabThera is expected to swell to CHF 4.7 billion this year, given the additional knock from COVID-19. While Schwan acknowledged sales in May had experienced "a really significant decline" of 15%, he reiterated guidance for the year, based on a strong recovery since June.
Growth in diagnostics
Roche's Diagnostics unit supplied the first molecular test to the Chinese authorities for COVID-19 in January, launched an antibody test in June and is now set to roll out a rapid antibody test as part of its COVID-19 portfolio. Thomas Schinecker, the unit's CEO, said it had seen strong growth in June and so far in July, but routine testing has not yet returned to pre-pandemic levels.
"We are continuously ramping up because we see that the testing demand will remain high, very likely throughout the entire year of 2021 — if not longer … the virus will stay around for quite some time," Schinecker said on the call. "And even when there is a vaccine, by the time we have enough of [it], time will pass by quite significantly. So, we see that absolute need and we saw it already in February, March. That's why we took action as soon as we could."
Roche has quadrupled its production capacity but still cannot keep up with demand for molecular testing, Schinecker said. Roche has four or five years' worth of orders so far this year, with some governments sending in military planes to pick up instruments, he explained. "Diagnostic as expected benefited significantly from COVID testing and will continue to do so," said UBS analyst Michael Leuchten, who has a "buy" rating on the stock.
In the face of an unprecedented global health crisis, the pharmaceutical industry has pulled together to collaborate on research and develop potential therapeutics and vaccines. AstraZeneca, known to date for its cancer and respiratory medicines, struck an alliance with Oxford University to start making its candidate vaccine at risk ahead of late-stage trial results scheduled by year-end. Fellow U.K. drugmaker GlaxoSmithKline PLC, the world's biggest vaccine manufacturer, and Sanofi of France are collaborating on another candidate, while Novartis AG is focusing its research on future coronaviruses.
"I'm personally very optimistic that at some point, solutions will be available," Schwan said. "But I do think that it will take some more time to make vaccines broadly available for people around the world."