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Roche (RHHBY) Q1 Hit by Currency Headwinds, Lower COVID-19 Sales
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Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) first-quarter 2024 revenues declined 6 % to CHF 14.4 billion due to the appreciation of the Swiss franc against most currencies and lower COVID-19-related sales.
Nevertheless, sales were up 2% at constant exchange rates (CER) as demand for newer drugs as well as diagnostics products, including immunodiagnostics, clinical chemistry tests and advanced staining solutions, more than offset the anticipated decline in COVID-19-related sales and the impact of biosimilar/generic erosion.
The company reports under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Sales in the Pharmaceuticals Division were up 2% in the first quarter to CHF 10.9 billion as strong growth in demand for key drugs was offset by the expected decline in sales of the COVID-19 medicine Ronapreve. Base business grew 7%, driven by the strong performances of Vabysmo (eye diseases), Phesgo (breast cancer), Ocrevus (multiple sclerosis), Polivy (blood cancer) and Hemlibra (hemophilia A).
The Diagnostics division’s sales were up 2% to CHF 3.5 billion. The base business in this division grew 8%, driven by demand for immunodiagnostic products, clinical chemistry tests and advanced staining solutions. However, lower demand for COVID-19 tests pulled down the total divisional sales.
Management stated that the impact of the drop in COVID-19-related sales is largely over and there will be no further material impact on group sales going forward.
Roche’s shares have lost 13.8% year to date against the industry’s growth of 9.9%.
Image Source: Zacks Investment Research
First Quarter in Detail
Vabysmo was the biggest growth driver of sales, with Phesgo, Ocrevus, Polivy and Hemlibra being the other significant contributors. These five drugs (in unison) generated sales of CHF 4.2 billion, up CHF 0.9 billion (at CER) from the prior-year quarter’s figure.
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 8% year over year to CHF 1.7 billion.
Sales of hemophilia A drug Hemlibra surged 8% year over year to CHF 1 billion.
Perjeta’s sales were down 3% year over year to CHF 936 million.
Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded sales growth of 1% to CHF 865 million.
Vabysmo sales surged 108% to CHF 847 million on strong demand.
Actemra/RoActemra’s (rheumatoid arthritis and COVID-19) sales were down 2% year over year to CHF 618 million.
Asthma drug Xolair generated sales of CHF 496 million, up 10% year over year.
Breast cancer drug Kadcyla generated sales of CHF 483 million, up 3% year over year.
Breast cancer drug Phesgo’s (a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection) sales surged 70% year over year to CHF 388 million.
Herceptin sales were down 17% on a year-over-year basis to CHF 364 million due to biosimilar uptake in various countries.
The spinal muscular atrophy drug Evrysdi generated sales of CHF 356 million, up 7% year over year.
Sales of the lung cancer drug Alecensa were up 4% to CHF 355 million.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 18% on a year-over-year basis to CHF 351 million due to biosimilar erosion.
Sales of Avastin, approved for multiple oncology indications, were down 15% to CHF 324 million due to biosimilar competition in the United States and Europe.
The blood cancer drug Polivy generated sales of CHF 250 million.
Blood cancer drug Gazyva/Gazyvaro’s sales totaled CHF 213 million, up 16% year over year.
Pulmozyme (cystic fibrosis) sales were down 6% year over year to CHF 112 million.
The negative impact of biosimilar/generic erosion on Lucentis (eye diseases), MabThera/Rituxan, Herceptin, Avastin, Esbriet and Actemra/RoActemra totaled CHF 0.4 billion (at CER).
Growth in the Diagnostics Division’s base business was driven by demand for immunodiagnostic products, clinical chemistry tests and advanced staining solutions, partially offset by the expected sales decline of COVID-19-related products. Immunodiagnostic products, which include cardiac, oncology and thyroid tests, were the main growth drivers (10%).
Sales of COVID-19 tests further declined to CHF 0.1 billion from CHF 0.3 billion in the year-ago quarter.
2024 Guidance Reiterated
Roche expects total sales to grow in the mid-single-digit range (at CER). Core earnings per share are targeted to develop broadly in line with sales growth, excluding the impact of the resolution of tax disputes in 2023. Roche expects to further increase its dividend in Swiss francs.
Pipeline Updates
The FDA approved Alecensa as the first adjuvant treatment for people with ALK-positive early-stage lung cancer.
Xolair received FDA approval as the first and only medicine for children and adults with one or more food allergies.
New long-term data from two phase III studies on Vabysmo, showed sustained retinal drying and vision improvements in retinal vein occlusion.
Elecsys pTau217 assay was granted the FDA Breakthrough Device Designation to support earlier Alzheimer's disease diagnosis. This blood test is being developed in collaboration with Eli Lilly and Company (LLY - Free Report) .
Roche and Lilly expect that the test could play an important role in improving access to early and accurate Alzheimer’s diagnosis upon approval. The test should enable healthcare providers in identifying amyloid pathology, a key feature of Alzheimer’s disease.
Our Take
Roche’s performance in the first quarter was impacted by the negative impact of currency exchange rates and lower COVID-19-related sales.
Nevertheless, the ophthalmology drug Vabysmo continues its momentum. The drug posed stiff competition to Regeneron (REGN - Free Report) and Bayer’s (BAYRY - Free Report) ophthalmology Eylea. Positive data from additional studies bode well for the drug.
Regeneron co-developed Eylea with Bayer. While Regeneron records net product sales of Eylea in the United States, Bayer records net product sales of the drug outside the country.
Meanwhile, Roche is also looking to diversify and make inroads in the lucrative obesity market in the wake of declining sales from legacy drugs due to competition from biosimilars.
In January 2024, Roche acquired Carmot Therapeutics and gained three clinical-stage assets with best-in-class potential in obesity (CT-388 and CT-996) and diabetes (CT-868) in its portfolio.
Image: Bigstock
Roche (RHHBY) Q1 Hit by Currency Headwinds, Lower COVID-19 Sales
Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) first-quarter 2024 revenues declined 6 % to CHF 14.4 billion due to the appreciation of the Swiss franc against most currencies and lower COVID-19-related sales.
Nevertheless, sales were up 2% at constant exchange rates (CER) as demand for newer drugs as well as diagnostics products, including immunodiagnostics, clinical chemistry tests and advanced staining solutions, more than offset the anticipated decline in COVID-19-related sales and the impact of biosimilar/generic erosion.
The company reports under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Sales in the Pharmaceuticals Division were up 2% in the first quarter to CHF 10.9 billion as strong growth in demand for key drugs was offset by the expected decline in sales of the COVID-19 medicine Ronapreve. Base business grew 7%, driven by the strong performances of Vabysmo (eye diseases), Phesgo (breast cancer), Ocrevus (multiple sclerosis), Polivy (blood cancer) and Hemlibra (hemophilia A).
The Diagnostics division’s sales were up 2% to CHF 3.5 billion. The base business in this division grew 8%, driven by demand for immunodiagnostic products, clinical chemistry tests and advanced staining solutions. However, lower demand for COVID-19 tests pulled down the total divisional sales.
Management stated that the impact of the drop in COVID-19-related sales is largely over and there will be no further material impact on group sales going forward.
Roche’s shares have lost 13.8% year to date against the industry’s growth of 9.9%.
Image Source: Zacks Investment Research
First Quarter in Detail
Vabysmo was the biggest growth driver of sales, with Phesgo, Ocrevus, Polivy and Hemlibra being the other significant contributors. These five drugs (in unison) generated sales of CHF 4.2 billion, up CHF 0.9 billion (at CER) from the prior-year quarter’s figure.
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 8% year over year to CHF 1.7 billion.
Sales of hemophilia A drug Hemlibra surged 8% year over year to CHF 1 billion.
Perjeta’s sales were down 3% year over year to CHF 936 million.
Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded sales growth of 1% to CHF 865 million.
Vabysmo sales surged 108% to CHF 847 million on strong demand.
Actemra/RoActemra’s (rheumatoid arthritis and COVID-19) sales were down 2% year over year to CHF 618 million.
Asthma drug Xolair generated sales of CHF 496 million, up 10% year over year.
Breast cancer drug Kadcyla generated sales of CHF 483 million, up 3% year over year.
Breast cancer drug Phesgo’s (a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection) sales surged 70% year over year to CHF 388 million.
Herceptin sales were down 17% on a year-over-year basis to CHF 364 million due to biosimilar uptake in various countries.
The spinal muscular atrophy drug Evrysdi generated sales of CHF 356 million, up 7% year over year.
Sales of the lung cancer drug Alecensa were up 4% to CHF 355 million.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 18% on a year-over-year basis to CHF 351 million due to biosimilar erosion.
Sales of Avastin, approved for multiple oncology indications, were down 15% to CHF 324 million due to biosimilar competition in the United States and Europe.
The blood cancer drug Polivy generated sales of CHF 250 million.
Blood cancer drug Gazyva/Gazyvaro’s sales totaled CHF 213 million, up 16% year over year.
Pulmozyme (cystic fibrosis) sales were down 6% year over year to CHF 112 million.
The negative impact of biosimilar/generic erosion on Lucentis (eye diseases), MabThera/Rituxan, Herceptin, Avastin, Esbriet and Actemra/RoActemra totaled CHF 0.4 billion (at CER).
Growth in the Diagnostics Division’s base business was driven by demand for immunodiagnostic products, clinical chemistry tests and advanced staining solutions, partially offset by the expected sales decline of COVID-19-related products. Immunodiagnostic products, which include cardiac, oncology and thyroid tests, were the main growth drivers (10%).
Sales of COVID-19 tests further declined to CHF 0.1 billion from CHF 0.3 billion in the year-ago quarter.
2024 Guidance Reiterated
Roche expects total sales to grow in the mid-single-digit range (at CER). Core earnings per share are targeted to develop broadly in line with sales growth, excluding the impact of the resolution of tax disputes in 2023. Roche expects to further increase its dividend in Swiss francs.
Pipeline Updates
The FDA approved Alecensa as the first adjuvant treatment for people with ALK-positive early-stage lung cancer.
Xolair received FDA approval as the first and only medicine for children and adults with one or more food allergies.
New long-term data from two phase III studies on Vabysmo, showed sustained retinal drying and vision improvements in retinal vein occlusion.
Elecsys pTau217 assay was granted the FDA Breakthrough Device Designation to support earlier Alzheimer's disease diagnosis. This blood test is being developed in collaboration with Eli Lilly and Company (LLY - Free Report) .
Roche and Lilly expect that the test could play an important role in improving access to early and accurate Alzheimer’s diagnosis upon approval. The test should enable healthcare providers in identifying amyloid pathology, a key feature of Alzheimer’s disease.
Our Take
Roche’s performance in the first quarter was impacted by the negative impact of currency exchange rates and lower COVID-19-related sales.
Nevertheless, the ophthalmology drug Vabysmo continues its momentum. The drug posed stiff competition to Regeneron (REGN - Free Report) and Bayer’s (BAYRY - Free Report) ophthalmology Eylea. Positive data from additional studies bode well for the drug.
Regeneron co-developed Eylea with Bayer. While Regeneron records net product sales of Eylea in the United States, Bayer records net product sales of the drug outside the country.
Meanwhile, Roche is also looking to diversify and make inroads in the lucrative obesity market in the wake of declining sales from legacy drugs due to competition from biosimilars.
In January 2024, Roche acquired Carmot Therapeutics and gained three clinical-stage assets with best-in-class potential in obesity (CT-388 and CT-996) and diabetes (CT-868) in its portfolio.
Zacks Rank
Roche currently carries a Zacks Rank #5 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.