Roche’s Top-line Results on Track to Meet Guidance

Technology Stocks News 17

Roche reported top-line results for the third quarter that put it on track to meet our expectations for the full year. Roche’s oncology drug portfolio and diagnostics segment form the basis of its personalized medicine strategy, feeding into the firm’s strong intangible assets and wide economic moat.

At constant currencies, Roche’s sales were up 8% in the third quarter, with 9% pharmaceutical growth and 7% diagnostics growth. Roche’s overall growth was 6% excluding a release of 340B sales reserves related to reported sales of its key cancer antibody therapies in the United States. Roche’s U.S. pharmaceutical sales growth of 10% was the biggest growth driver in the quarter even excluding the 340B adjustment (including the 340B sales reserves release, U.S. pharmaceutical sales grew 16% to CHF 3.9 billion, one third of Roche’s CHF 11.6 billion top line). In the diagnostics division, diabetes care remains a drag due to U.S. reimbursement headwinds, but double-digit immunoassay growth boosted professional diagnostics sales, and emerging markets continued to support overall diagnostics sales growth.

Turning to pharmaceutical product specifics, Rituxan and Avastin saw double-digit global sales growth in the quarter. The firm’s HER2 franchise (Herceptin, Kadcyla, and Perjeta) has grown 13% year to date and should only be further supported in the future by the recent neo-adjuvant approval for Perjeta, recent subcutaneous Herceptin approval in Europe, and expected approval of Kadcyla in Europe by the end of the year.

Lucentis’ 21% constant currency growth reflected strong use of less frequent administration in age-related macular degeneration as well as use in newer indications diabetic macular edema and retinal vein occlusion. Actemra continues to become a more significant growth driver for the firm, with sales growth of 33% in the quarter and global sales on track to surpass CHF 1 billion in 2013.

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