Roche lifts FY'21 outlook boosted by COVID drugs, limited biosimilar erosion

Roche Holding AG lifted its 2021 outlook on continuing demand for its COVID-19 tests and an easing of the impact of biosimilars on sales of three former blockbuster cancer medicines in the U.S.

The Basel, Switzerland-based drugmaker raised its full-year guidance to mid-single-digit sales from low to mid-single-digit growth at constant exchange rates. At the same time, Roche reported third-quarter sales 3% higher than consensus and Jefferies' expectations at CHF 15.9 billion, boosted by an 18% rise at its diagnostics unit and high demand for medicines to treat the virus.

Ronapreve, the antibody cocktail co-developed with Regeneron Pharmaceuticals Inc. and first approved in 2021 for treating recently diagnosed high-risk patients with mild to moderate COVID-19, posted sales of CHF 1.1 billion, mostly thanks to demand in Europe and Japan.

Actemra, also used against the virus, came in well ahead of UBS analysts' forecasts at CHF 2.7 billion, helping sales in the company's pharmaceuticals division beat expectations by 4%. The therapy is also used to treat various other conditions, including severe COVID-associated pneumonia and rheumatoid and other forms of arthritis.

Speaking to reporters after the results, Roche's head of diagnostics, Thomas Schinecker, forecast a need for continuous COVID-19 testing over the next few years now that the virus is endemic. "There will be new variants that will appear over time with this virus," Schinecker said. "It's unlikely that we'll get to herd immunity, which also means that there will be testing."

While the fact that vaccinated people can still spread the virus means testing will need to continue, the amount of testing will depend on the efficacy of vaccines against new COVID-19 variants, Schinecker pointed out.

Roche's pharmaceuticals business was bolstered by strong sales of new medicines such as Hemlibra for hemophilia, which came in at CHF 779 million, compared with Jefferies' CHF 765 million estimate and consensus at CHF 767 million. Oncology drug Tecentriq was up 27% after gaining a new indication for the first-line treatment of a type of lung cancer, while spinal muscular atrophy therapy Evrysdi came in at CHF 153 million, below Jefferies' CHF 213 million forecast and consensus at CHF 208 million.

Total pharmaceutical sales helped offset the impact of biosimilar erosion to Roche's three former best-selling cancer medicines — Avastin, Herceptin and Rituxan — which came in at CHF 3.9 billion for the first nine months of the year, against a forecast full-year impact of CHF 4.6 billion. Biosimilars are copies of biologic drugs that are already available in the market to treat various diseases and conditions.

Leading global R&D

The Swiss drugmaker channeled CHF 12.2 billion into R&D in 2020, the largest life sciences investment in the world, Roche Pharmaceuticals CEO Bill Anderson told S&P Global Market Intelligence. While half of Roche's portfolio is focused on oncology and the company remains the biggest global maker of cancer medicines, a number of late-stage readouts are imminent in neurology, ophthalmology and rare disease.

Regulators will make the final call on the investigational Alzheimer's therapy gantenerumab, which recently received breakthrough therapy designation from the U.S. Food and Drug Administration, after late-stage trial results are reported in mid-2022. Jefferies assumes a launch later that year, with a 50% probability of peak worldwide sales of $6 billion by 2032.

"I am very pleased with our pipeline of new medicines," Roche CEO Severin Schwan said on the call with reporters. "We now have 17 new molecular entities in late-stage development and registration, which is a new all-time high for us and it will continue to drive the rejuvenation of our [pipeline]."