Roche Reports 1% Sales Decline in Q1

Swiss pharmaceutical company Roche has completed the first quarter of the year with a 1% year-on-year (y/y) sales decline in Swiss francs, with total group sales of CHF11.0 billion (USD11.99 billion). In local currencies, however, group sales saw a rise of 2% y/y. Breaking down sales by segment showed that sales in the diagnostics division were flat, while the pharmaceutical division experienced a 1% y/y decline. In the pharmaceutical division, the sales decline was highest in Western Europe, with a decline of 9% y/y, while the United States and Japan reported an increase in sales of 4% and 3% y/y, respectively.

Looking at pharmaceutical sales, oncology drugs continue to drive these, with MabThera/ Rituxan (rituximab) maintaining its top position, demonstrating an increase of 7% y/y (at constant exchange rates). Importantly, Herceptin (trastuzumab) overtook Avastin (bevacizumab), reporting CHF1, 428 billion in sales, an increase of 7% y/y, while Avastin saw a 1% y/y increase sales to CHF1,385 billion. Hepatitis drug Pegasys (peginterferon) climbed into the top four, with sales up 32% y/y. Pegasys was followed by ophthalmology drug Lucentis (ranibizumab), whose sales remained flat. Rheumatoid arthritis drug Actemra (tocilizumab) reported the highest sales growth among the top 20 products, with y/y sales growth of 46%. Bonviva/Bonviva (ibandronic acid), NeoRecormon/Epogin (epoetin beta), and Tamiflu showed the biggest drop in sales, with y/y declines of 31%, 28%, and 24%, respectively.

Outlook and Implications

Despite the slight decline in sales, Roche maintains its full-year outlook and expects the group and the pharmaceuticals sales to grow at low-to-mid single-digit rates, and diagnostics to grow above the market with a target of high single-digit core earnings-per-share growth.

Tamiflu, which has seen a 24% y/y (CER) sales decline, has still continued to drag down overall sales in the first quarter. The negative impact of Tamiflu on overall sales has begun to even out, however. Although Tamiflu contributed 1 percentage point to Roche's sale decline, currency effects had a 3-percentage-point negative impact on sales.

The highest growth was reported by Actemra, sales of which have been affected by its recent approvals and are expected to continue to rise (see Switzerland: 2 March 2012: Roche's Actemra Beats Humira As Monotherapy and United States - Japan: 23 December 2011: Chugai Applies for Enhanced Actemra Indication in US).

Looking at the product pipeline, Roche is focusing on its cancer drugs Zelboraf (vemurafenib) and Erivedge (vismodegib), with Erivedge having recently received US FDA approval (see United States - Switzerland: 1 February 2012: FDA Approves Roche's Skin Cancer Drug Erivedge and United States - Switzerland: 18 August 2011: Zelboraf Joins Yervoy with FDA Approval in Metastatic Melanoma Market, Targeting BRAF-Positive Population).

The company is expected to continue its efforts to acquire Illumina (US), having earlier increased its offer price to USD51.00 per share, with the current offer schedule expiring on 20 April (see United States - Switzerland: 9 April 2012: Further Opposition Voiced Against Roche's Takeover of Illumina). The acquisition of genetics company Illumina, if completed successfully, will boost Roche's capabilities in the companion diagnostics and life sciences field.