By John Miller
ZURICH (Reuters) – Swiss drugmaker Roche, encouraged by better than expected first-quarter sales, said it was confident new drugs will help to deliver revenue and profit growth even as its older medicines take a hit from cheaper copies.
Sales rose to 12.94 billion Swiss francs ($13.03 billion), ahead of the 12.704 billion franc average estimate of analysts in a Reuters poll.
The company, which confirmed its 2017 full-year targets, releases earnings details in July.
Drug unit head Dan O’Day said new immunotherapy Tecentriq, breast cancer drug Perjeta and newly approved multiple sclerosis drug Ocrevus will counteract looming patent expirations for cancer medicines Avastin, Herceptin and Rituxan.
Rituxan faces competition from near-copy biologics, called biosimilars, this quarter, with Herceptin exposed in the second half as patents expire.
“No surprises there, it’s very much as we anticipated,” O’Day told reporters. “We remain confident with the totality of our portfolio that we can offset the introduction of biosimilars in coming years.”
Its shares were up 1.1 percent by 0935 GMT while the European drug sector index rose 0.1 percent.
Big pharmaceutical companies often struggle to get a decent return on the billions of dollars spent annually on research as they face competition from a growing roster of cheap generics while healthcare providers push back against high prices.
Roche’s cross-town Basel rival, Novartis, expects sales to stagnate in 2017 as its new launches fail to completely compensate for a sales-eroding patent expiration on its blockbuster Gleevec blood cancer medicine.
Britain’s AstraZeneca, struggling with loss of patents on blockbusters like cholesterol pill Crestor, reported another quarter of falling drug sales on Thursday.
By contrast, German drug and chemical maker Bayer upgraded its profit guidance for 2017 on Thursday after its first-quarter results exceeded estimates.
Roche’s drug division sales rose 4 percent to 10.2 billion francs, topping the analysts’ average estimate of 9.89 billion. Diagnostic products rose 6 percent to 2.77 billion francs, also ahead of the poll.
Sales of Tecentriq, approved last year to treat bladder and lung cancer, hit 113 million francs, more than the 103 million estimate in the Reuters poll.
Perjeta sales rose 19 percent to 524 million francs, with Roche optimistic that a key trial result announced during the quarter will expand the medicine’s use in 2018.
“Key new drugs Perjeta (and) Tecentriq continued to roll out well and beat our expectations,” Tim Race, an analyst at Deutsche Bank, wrote. “Our first impression is of a solid quarter with few controversies.”
While Ocrevus was approved only in late March, Roche Chief Executive Severin Schwan said the launch was going “very well” in the $20 billion overall MS market.
For the first three months of 2017, the three older drugs that account for more than a third of Roche’s revenue also beat analyst expectations.
Herceptin sales rose 2 percent to 1.76 billion francs and Rituxan rose 4 percent to 1.9 billion francs.
While Avastin sales slipped 2 percent to 1.68 billion francs, the drop was less than expected.
Roche stuck to a 2017 target of a low- to mid-single-digit sales growth rate, with similar core earnings per share growth, but some analysts suggested the company was being tentative.
“The market is probably wondering why Roche isn’t raising its 2017 guidance after such a strong first quarter,” Zuercher Kantonalbank analyst Michael Nawrath wrote.
Schwan said it would be premature to judge all of 2017 by its first three months. “It’s early in the year,” Schwan said, on why he is not boosting the target. “We concluded that we stick to the guidance we gave at the beginning.”
($1 = 0.9932 Swiss francs)
(Editing by Michael Shields and Adrian Croft)