Roche lifts full-year forecast as Q1 sales climb 9 percent, topping estimates

Headline results for the first quarter:

Pharmaceuticals division sales

11.9 billion Swiss francs ($11.8 billion; forecasts of 11.2 billion francs)

+12%

Revenue

14.8 billion francs ($14.7 billion; forecasts of 14.2 billion francs)

+9%

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"We have started the year with strong sales growth, driven by the newly launched products in our pharmaceuticals division," remarked CEO Severin Schwan, adding "I'm very pleased that 90 percent, the vast majority of our growth, comes from our new medicines."

Meanwhile, William Anderson, head of the company's pharmaceuticals unit, noted that growth came despite sticking to to a plegde made last year to freeze prices on its medicines in the US. "We haven't taken any price increases in the US since July 1," Anderson said, adding "overall in the world, our 10 percent sales growth in pharma was based on 15 percent volume growth and 5 percent average price declines across the portfolio."

Other results:

  • Pharmaceuticals division sales in US: 6.6 billion francs ($6.5 billion), up 20 percent, led by revenue from Ocrevus, Hemlibra, Perjeta and Tecentriq
  • Pharmaceuticals division sales in Europe: 2.1 billion francs ($2.1 billion), down 8 percent, hit by biosimilar competition to Herceptin and MabThera/Rituxan
  • Avastin: 1.8 billion francs ($1.8 billion), up 9 percent   
  • Herceptin: 1.7 billion francs ($1.7 billion), down 6 percent, with sales in Europe plunging 44 percent to 300 million francs ($298 million)
  • MabThera/Rituxan: 1.7 billion francs ($1.7 billion), down 3 percent, with sales in Europe falling 38 percent to 171 million francs ($170 million)
  • Perjeta: 868 million francs ($861 million), up 41 percent, driven by use in the early breast cancer adjuvant setting
  • Ocrevus: 836 million francs ($829 million), up 67 percent
  • Tecentriq: 336 million francs ($333 million), up 135 percent, boosted by first-in-class launches in front-line small cell lung cancer and front-line triple-negative breast cancer
  • Hemlibra: 219 million francs ($217 million), with "strong uptake" in non-inhibitors driven by large centre and patient requests in the US
  • Alecensa: 196 million francs ($194 million), up 61 percent, with Roche noting that market share of new patients in front-line lung cancer in the US is 70 percent and close to this in Japan

Looking ahead:

Roche expects revenue this year to grow in the mid-single digit range, at constant exchange rates, lifted from an earlier forecast of low- to mid-single digit growth. Core earnings per share targeted to grow "broadly in line" with sales, at constant exchange rates.

Schwan reaffirmed Wednesday that it expects to close the $4.8-billion purchase of Spark Therapeutics in the first half of the year, despite the US Federal Trade Commission taking longer than anticipated to clear the transaction. "Our firm expectation is it will close at the conditions we have offered," the executive said, adding that further mid-sized transactions on the Spark model are "well possible."

What analysts said:

"This strong first-quarter performance underscores our confidence in Roche," commented analysts at Jefferies Financial Group. Meanwhile, Zuercher Kantonalbank analyst Michael Nawrath said "Roche can keep up the unbroken growth, as long as Ocrevus, Hemlibra and the entire (breast cancer) franchise maintain their momentum."

Pipeline update:

Roche disclosed that it has dropped early-stage development of RG6049 in neurodegenerative disorders.

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