Roche Beats First-Half Forecasts as Cancer Drug Sales Rise

The Swiss pharmaceuticals company confirms a forecast for full-year sales to increase in the low to mid-single digits, and for earnings per share to grow faster than revenue.
By Laura Board ,

Swiss pharmaceuticals company Roche beat earnings and sales expectations in the first half after a strong performance from its oncology medicines.

The company said on Thursday that sales rose 5% at constant exchange rates - or 6% in Swiss francs - to just over Sfr25 billion ($25.4 billion), above a consensus forecast compiled by Reuters for revenue of Sfr24.8 billion. Earnings per share came in at Sfr7.74, up 5% on a constant currency basis, and compared with a forecast for Sfr7.64 as net profit climbed by 3% to Sfr5.48 billion. The company confirmed its previous 2016 forecast for sales to grow at a low- to mid-single digit at constant exchange rates. Core earnings per share will grow faster than sales, it reiterated.

First-half sales at Roche's pharmaceuticals division rose 4%, unchanged from the first-quarter growth rate, while diagnostics picked up pace to expand by 6%, up from 5% in the first quarter.

Roche has several key drugs in the pipeline as it prepares to take on competition from Novartis (NVS) - Get Report and Mylan (MYL) - Get Report   for some of Roche's older drugs in the second half of 2017.

"The launch of our first cancer immunotherapy medicine Tecentriq is off to a strong start," said Roche CEO Severin Schwan in a statement. "We also completed the U.S. and EU filings of Ocrevus, which brings us an important step closer toward launching this promising multiple sclerosis medicine. Based on our half year performance, I am confident that we will meet our full-year targets for 2016."

Roche received a blow on Monday when It admitted that trials of its new blood cancer drug, Gazyva, failed to deliver a significant improvements over an older medicine, Rituxan, in people with an aggressive type of blood cancer. The drug already has approval to treat follicular lymphoma.

Jefferies analysts said the announcement came "as a surprise after the early positive headlines" and called the sales outlook for the drug, into question.

In the first half, Roche said cancer drugs Herceptin and Avastin were among the star performers in its pharmaceuticals division, from which it derives roughly 80% of its sales. Actemra/roactemra, which is used mainly to treat rheumatoid arthritis, rose 25%.

Earlier this month financial blog Betaville reported that Roche was considering making an offer for Nova, Calif.-based BioMarin Pharmaceutical (BMRN) - Get Report , which has a market value of $15.2 billion.

Roche CEO Schwan had previously suggested large healthcare companies looked pricey and any purchases it makes would be bolt-on deals.

Roche shares close in Zurich on Wednesday at Sfr253.00, translating into a market value of Sfr218.4 billion. The stock has slipped 6% in the past year.

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