Roche Holding (QX) (USOTC:RHHBY)
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6 Months : From May 2019 to Nov 2019
By Denise Roland
Roche Holding AG lifted its outlook for the year as strong sales of its newer medicines blunted the impact of emerging generic competition to several of its top-selling cancer drugs.
The Swiss health-care giant has long been a dominant force in cancer drugs but is increasingly looking beyond oncology as several of its old blockbusters start to compete against lower-cost copies. Of its newer drugs, the biggest sellers are Ocrevus for multiple sclerosis and Hemlibra for hemophilia.
Roche said Thursday that strong sales of those medicines in the first six months of the year offset a decline in best-selling cancer drugs Herceptin and Rituxan, which have lost patent protection in Europe and now compete with cheaper copies known as biosimilars. That competition is likely to intensify later this year, with the expected launch of biosimilars of those two drugs, plus another top-seller Avastin, in the U.S.
Chief Executive Severin Schwan said first-half results showed Roche was "very well on track to rejuvenate our portfolio," as the sales of older medicines start to fall. The company expects to lose billions of dollars in revenue from its big cancer drugs in the next few years.
Diversifying its portfolio has also gained importance as the cancer drug market becomes more competitive, with several rivals piling into cancer-drug research in recent years.
Despite these pressures, the company said it now expects sales and core earnings per share to grow by a mid to high single digit percentage in 2019, having previously said it expected mid single digit percentage growth.
Roche reported sales of 30.5 billion Swiss francs ($30.94 billion) for the first half of the year, a 9% increase at constant currencies. Core operating profit, a closely watched measure that strips out some one-time items, rose 11% to 12.4 billion francs. Net income grew 19% to 8.9 billion francs.
As part of its efforts to diversify, Roche is looking to gain a toehold in gene therapy, a type of treatment that provides a working copy of a defective gene to address inherited diseases. In February, it said it had agreed to acquire Philadelphia-based Spark Therapeutics Inc. for about $4.8 billion, but has faced delays in closing the deal due to competition concerns.
The U.S. Federal Trade Commission hasn't specified its concerns, but competition experts say they likely center on the possibility that Roche could delay one of Spark's gene therapy programs to boost sales of one of its own drugs.
One of Roche's key growth drivers, Hemlibra, is injected regularly to prevent bleeding in patients with hemophilia A, the most common form of the disease. Spark is in the advanced stages of developing a gene therapy directed at hemophilia A that would potentially cure the disease in one shot, drastically shrinking the market for Hemlibra. Gene therapies introduce new DNA into the body to replace faulty or missing genes, raising the prospect of curing certain inherited diseases.
"We feel very confident we can answer all the questions that are part of this review and confident we can close the transaction by the end of the year," said Mr. Schwan.
Write to Denise Roland at Denise.Roland@wsj.com
(END) Dow Jones Newswires
July 25, 2019 03:59 ET (07:59 GMT)
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