Roche beats forecasts on new drugs, one-off gain
Core earnings per share, adjusted for certain items, rose 7 percent to 7.74 Swiss francs ($7.86), where analysts had expected 7.52 francs on average.
The company also made a one-off accounting adjustment to its pension plan that boosted earnings by 426 million francs but that effect will be offset over time because it expects its pensioners to live longer and returns on its pension investments to remain depressed because of low interest rates.
Deutsche Bank analyst Tim Race said that excluding that effect, results were broadly in line with expectations.
“A 4 percent headline beat on self termed ‘Core EPS’, strangely includes one-time items, which when removed leave earnings in line with expectations,” he said.
Roche shares were down 0.2 percent at 0930 GMT, performing slightly better than the 0.5 decline in the STOXX Europe 600 Health Care index.
Roche, the world’s biggest maker of cancer drugs, also confirmed its target for currency-adjusted sales growth in the low to mid-single digit percentage range for the year. It also expects core earnings per share to be ahead of sales growth.
Rival Novartis warned on Tuesday its profit may decline this year as it ramps up marketing spending on new heart failure drug Entresto following a disappointing start for the medicine.
OLD AND THE NEW
Sales of Roche’s three major established cancer medicines — Herceptin, Avastin and Rituxan with more than 6 billion francs in annual sales each — continued to climb but Roche needs to push promising new drug as sales of its ageing bestsellers are expected to plateau and decline over the next few years.
“Over a 12-month period we are actually launching five new medicines…, this is an unprecedented number of new launches in the Roche history in such a short period of time,” Chief Executive Severin Schwan told journalists in a conference call.
Schwan told Reuters last month that he was increasingly confident the company will continue to lift sales and profit even as cut-rate copies of the Swiss drugmaker’s older cancer medicines start to grab business next year.
Big wins for three new drugs in recent months have helped to offset what he acknowledges as a serious threat from so-called biosimilars.
Rituxan, which was approved in Europe in 1998, still saw sales rise 5 percent in local currencies to 1.88 billion francs in the second quarter, ahead of analysts’ expectation for 1.83 billion. Herceptin and Avastin revenues were slightly below the consensus.
Among new drugs, sales of breast cancer treatment Perjeta jumped a currency-adjusted 35 percent to 467 million, just ahead of the consensus estimate of 449 million.
(Editing by Michael Shields and Keith Weir)
Source: Reuters Health