Roche raises outlook as cancer and flu drugs gain
Last Updated: 2007-04-18 9:01:06 -0400 (Reuters Health)
By Douwe Miedema
ZURICH (Reuters) - Swiss drugmaker Roche Holding AG's first-quarter sales jumped 16 percent to 11.4 billion Swiss francs ($9.41 billion) on demand for cancer drugs and flu pill Tamiflu, it said on Wednesday, lifting its annual outlook.
Sales in Roche's all-important pharmaceutical division rose by 18 percent -- three times faster than the global market -- to 9.14 billion francs, driven by new uses of its top cancer treatments and a surge in demand for Tamiflu.
"Based on the successful first three months we raise the outlook for 2007 and expect core earnings per share to grow above group sales," Chief Executive Officer Franz Humer said in a statement.
The group had previously said core earnings per share would grow in line with sales. The company left its sales outlook for 2007 unchanged, forecasting double-digit growth for group and pharma sales in 2007.
Roche certificates, its most commonly traded form of equity, added as much as 3 percent to a two-month high of 229.70 francs.
The stock had lost 6 percent since its full-year results on worries over earlier cautious 2007 guidance and future margin growth at the company, which trades at a premium to the sector.
The first-quarter numbers were just above the average expectations in a Reuters poll of 20 analysts. These were for group sales to rise to 11.12 billion francs, while pharma sales were pencilled in at 8.9 billion.
The company does not report profit for the first quarter.
Denise Anderson, an analyst at Kepler Equities, said the results would increase confidence in the group's prospects, while new products and additional uses of existing drugs could add billions to the sales line this year.
Roche is the latest global drugmaker to beat forecasts, after Eli Lilly and Co. and Johnson & Johnson kicked off the U.S. industry's reporting season by topping expectations and Merck & Co. Inc. said last week it would exceed analysts' estimates.
TAMIFLU BOOSTER
Tim Anderson at Prudential Equity said the higher-than-expected sales figure was largely due to Tamiflu revenues, which offset slightly disappointing diagnostic sales.
Sales of Tamiflu are hard to predict, since they depend heavily on stockpiling by governments, as countries across the world brace themselves for a possible outbreak of a bird flu pandemic.
Tamiflu revenues came in at 865 million francs, 47 percent up on a year earlier and well ahead of analysts' expectations.
As a result, total sales of Tamiflu to governments this year would come in at the upper end of the previously forecast range of 800 million to 1.2 billion francs, Roche pharmaceuticals head William Burns said in an interview.
Among the cancer products, sales of Avastin and Herceptin stood out, increasing 41 percent and 36 percent respectively to 923 million and 1.17 billion francs, on wider use in Europe and the United States.
"There has been a very strong adoption of a number of products and, indeed, we're breaking new ground," Burns said.
Avastin, originally developed for colorectal cancer, is now also being used in breast and lung cancer, while Herceptin is being used increasingly in treating early-stage as well as advanced breast cancer.
Burns was also upbeat on Actemra arthritis drug, one of Roche's most promising pipeline compounds, saying first phase III trials had shown positive results and adding further details would be unveiled at a medical meeting in Barcelona in June.
CHOLESTEROL DRUG DECISION
The group reiterated it expected approval for anaemia drug Mircera in 2007 and said it would make a decision on whether to move into expensive final clinical trials with an experimental drug to raise "good" cholesterol later this year.
The cholesterol pill is being closely watched in the industry after Pfizer Inc.'s similar drug torcetrapib was scrapped in December following excess deaths in clinical tests.
In a separate statement, Roche also said its cancer drug Avastin had been approved in Japan for patients with inoperable advanced or recurrent colorectal cancer. Bear Stearns analysts said the green light came three months earlier than expected.
Roche has a strong portfolio of new drugs to fight cancer, the fastest-growing area of medical advances, substantial exposure to profitable biotech therapies and few generic challenges in the coming years.
Roche shares trade at more than 20 times expected 2007 earnings, well above those of its rivals Novartis at 17 times and GlaxoSmithKline Plc at 15 times, which some analysts say may limit the stock's upside potential.
(Additional reporting by Ben Hirschler in London)
