Roche sees 2017 earnings, sales growing in the low- to mid-single digit range

Roche said Wednesday alongside its fourth-quarter financial results that it expects core earnings per share this year to grow "broadly in line" with sales, which the company predicts will rise in the low- to mid-single digit range at constant exchange rates. "We are going through a transition, we have a number of mature products which will decline," CEO Severin Schwan remarked.

The company's cancer drugs MabThera/Rituxan, Herceptin and Avastin are set to face competition from biosimilars, with the first biosimilar versions of MabThera/Rituxan and Herceptin possibly arriving in Europe later this year. "We will see the impact of biosimilars in Europe," Schwan said, adding "at the same time, we are able to offset that with the launch of new products." The executive noted that the 2017 forecasts take into account the investment in new products, including cancer immunotherapy Tecentriq, Cotellic for skin cancer and lung cancer drug Alecensa, that is needed to plug the gap.

Commenting on the guidance, analysts noted that this was the first time in three years that Schwan has not made a more bullish earnings prediction. Morgan Stanley analyst Vincent Meunier remarked that Roche is setting "achievable targets which we understand could potentially be upgraded later," adding "we remain confident in Roche’s ability to deliver." Meanwhile, Zuercher Kantonalbank analyst Michael Nawrath indicated that "biosimilars will hit Roche in the current year in Europe and then in 2018 in America in a big way, putting Roche under pressure to keep up new pipeline news and successful drug launches." 

In the fourth quarter, sales of Roche's prescription drugs rose 3 percent year-over-year on a constant currency basis to just under 10 billion Swiss francs ($10.1 billion), while overall revenue lifted by the same percentage to 13.1 billion francs ($13.2 billion). Roche noted that growth was driven by Perjeta, Herceptin and Actemra/RoActemra, which was partially offset by lower sales of Pegasys, Tarceva and Lucentis.

For specific products, sales of Perjeta rose 14 percent on a constant currency basis to 467 million francs ($472 million), while revenue from Kadcyla climbed 2 percent to 215 million francs ($217 million). Further, sales of Actemra/RoActemra jumped 14 percent to 450 million francs ($455 million).

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For the full year, sales of prescription drugs increased 5 percent to 39.1 billion francs ($39.5 billion), with overall revenue up by the same percentage to 50.6 billion francs ($51.1 billion), falling short of analyst estimates of 50.7 billion francs ($51.2 billion). Net income in the 12-month period climbed 7 percent to 9.7 billion francs ($9.8 billion).

Tecentriq, which gained US approval last October for second-line lung cancer after being cleared for advanced bladder tumours in May, posted annual sales of 157 million francs ($159 million), missing analyst forecasts of 162 million francs ($164 million). Full-year sales of Tecentriq, Cotellic and Alecensa reached a combined 384 million francs ($388 million), with Schwan expecting this figure to grow significantly.

Commenting on US President Donald Trump's recent call for drugmakers to cut prescription drug prices, Schwan said he remained bullish on the country, where Roche generates nearly half of its total pharmaceuticals revenue. "We focus on truly differentiated medicines...I have no doubt whatsoever that there will be continued demand for such solutions and particularly the US, I'm convinced, will reward this kind of innovation," Schwan said. The executive added that Roche invested "over-proportionally" in the US, where it employs more than 25 000 people, in part through its Genentech division.

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