Roche's fourth-quarter sales boosted by Ocrevus launch

Roche announced Thursday that fourth-quarter sales increased 5 percent year-over-year to 13.9 billion Swiss francs ($14.9 billion), with revenue from prescription drugs climbing 6 percent to 10.6 billion francs ($11.4 billion). The company noted that growth in its pharmaceuticals unit was driven mainly by Ocrevus, Tecentriq, Perjeta and Alecensa.

In the quarter, sales of Ocrevus, which gained FDA approval last year for both relapsing and primary progressive forms of multiple sclerosis, reached 369 million francs ($396 million). The product gained European clearance earlier this month, with Roche indicating that the drug will likely become a blockbuster this year (for related analysis, see Physician Views Results: Five key questions answered ahead of Ocrevus' EU launch).

For other products, sales of Perjeta in the quarter jumped 22 percent on a constant exchange rate basis to 579 million francs ($621 million), while revenue from Tecentriq surged 65 percent year-over-year to 132 million francs ($142 million). In addition, sales of Alecensa nearly doubled versus the year-ago period to 118 million francs ($127 million).

Roche added that quarterly sales of Rituxan/MabThera slipped 3 percent to 1.8 billion francs ($1.9 billion), due to competition from biosimilars, with revenue from Herceptin up 6 percent to the same amount. Further, sales of Avastin rose 1 percent on a constant exchange rate basis to 1.7 billion francs ($1.8 billion).

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For 2017, Roche indicated that Ocrevus, Tecentriq and Alecensa contributed 1.4 billion francs ($1.5 billion) of new sales, representing 65 percent of the pharmaceutical division's growth. Annual sales of prescription drugs rose 5 percent to 41.2 billion francs ($44.2 billion), with the company's overall revenue up by the same percentage to 53.3 billion francs ($57.4 billion), in line with analyst estimates.

Roche noted that net income last year slipped 9 percent to 8.8 billion francs ($9.4 billion), hit by impairments of goodwill and intangible assets, including charges linked to Esbriet. CEO Severin Schwan said "I am particularly pleased with the successful launch of Ocrevus and Hemlibra and important approvals for additional indications for Perjeta, Tecentriq and Alecensa."

For the current year, the company predicts that sales are expected to grow in the stable to low-single digit range, on a constant exchange rate basis, held back by biosimilar competition to Rituxan in the US. Schwan noted that the decline in Rituxan's sales will likely accelerate this year, while Herceptin will also face competition from biosimilars. Meanwhile, earnings per share are targeted to grow in the high-single digits, boosted by recent changes to tax laws in the US. Roche indicated that its tax rate will drop from 26.6 percent last year to the low 20s range in 2018.

"While we are...facing the entry of biosimilars for important medicines, the strength of our portfolio and the success of our recent launches makes us confident we can compensate for this impact," Schwan remarked. The executive added "the guidance reflects a lot of confidence. This confidence again is based on the strength of our portfolio and the success of new medicines."

UBS Group analyst Jack Scannell said the guidance "will settle the nerves," adding "what Roche have done is bounded uncertainty. They have suggested to markets that the worst end of the plausible range is very unlikely to happen."

Roche also disclosed Thursday that it has ended late-stage development of lampalizumab, which was being investigated for geographic atrophy (GA). The company started two Phase III studies of the drug in 2014, announcing in September last year that the first trial, dubbed Spectri, failed to meet its primary endpoint of reducing mean change in GA lesion area compared to sham treatment at one year. For related analysis, read ViewPoints: Lampalizumab data show cracks in Roche's biomarker armour.

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