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Swiss pharma giant Roche Holding AG (RHHBY - Free Report) posted strong growth in the second quarter and first half of 2024 that propelled the company to raise its annual earnings guidance.
Second-quarter revenues increased 7% to CHF 15.4 billion. Sales were up 9% at constant exchange rates (CER) as the decline in COVID-19-related product sales no longer affected the overall top-line growth.
The company reports under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Total sales increased 5% in the first half to CHF 29.8 billion, driven by the high demand in both divisions. Excluding COVID-19-related products, sales increased 8%.
Core earnings per share totaled CHF 10.23 in the first half, up 9% from the year-ago period.
Sales in the Pharmaceuticals Division improved 5% in the first half to CHF 22.6 billion, driven by strong growth in demand for its key drugs.
The Diagnostics division’s sales rose 5% to CHF 7.2 billion. The base business in this division grew 9%, driven by demand for immunodiagnostic products.
Roche’s shares have risen 6.4% year to date compared with the industry’s growth of 20%.
Image Source: Zacks Investment Research
First Half in Detail
Vabysmo (eye diseases) was the biggest growth driver of sales, with Phesgo (breast cancer), Ocrevus (multiple sclerosis), Polivy (blood cancer) and Evrysdi (spinal muscular atrophy) being the other significant contributors. These five drugs (in unison) generated sales of CHF 7.3 billion, reflecting an increase of CHF 1.8 billion from the first-half 2023 level.
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 8% year over year to CHF 3.3 billion.
Sales of hemophilia A drug Hemlibra surged 7% year over year to CHF 2.1 billion.
Perjeta’s sales declined 2% year over year to CHF 1.9 billion.
Immuno-oncology drug Tecentriq’s (for advanced lung cancer, urothelial cancer and breast cancer) sales grew 2% to CHF 1.8 billion.
Vabysmo sales skyrocketed 93% to CHF 1.8 billion on strong demand in all regions, mainly the United States.
Actemra/RoActemra’s (rheumatoid arthritis and COVID-19) sales improved 3% year over year to CHF 1.3 billion.
Asthma drug Xolair generated sales of CHF 1.1 billion, up 10% year over year. Breast cancer drug Kadcyla generated sales of CHF 999 million, up 6% during the said time frame.
Evrysdi generated sales of CHF 838 million, up 25% year over year.
Breast cancer drug Phesgo’s (a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection) sales surged 60% year over year to CHF 799 million.
Sales of the lung cancer drug Alecensa rose 7% to CHF 766 million.
Herceptin sales declined 11% on a year-over-year basis to CHF 740 million due to biosimilar competition in various countries.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 17% to CHF 706 million due to biosimilar erosion.
Sales of Avastin, approved for multiple oncology indications, were down 16% to CHF 654 million due to biosimilar competition in the United States and Europe.
Activase/TNKase sales came in at CHF 593 million, down 2%.
Sales of blood cancer drug Polivy surged 54% to CHF 513 million.
Blood cancer drug Gazyva/Gazyvaro’s sales totaled CHF 445 million, up 15% year over year.
Pulmozyme (cystic fibrosis) sales declined 2% year over year to CHF 225 million.
Growth in the Diagnostics Division’s base business was driven by demand for immunodiagnostic products, which include cardiac, oncology and thyroid tests. Sales of COVID-19 tests further declined to CHF 0.1 billion in the first half of 2024 from CHF 0.4 billion in the corresponding period of 2023.
Raises 2024 EPS Guidance
Roche continues to expect total sales to grow in the mid-single-digit range (at CER). Core earnings per share are now expected to grow in the high single-digit range (previous estimate: grow 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.
Key Pipeline Updates
The FDA approved prefilled syringes of Vabysmo for three leading causes of vision loss.
Roche will reintroduce Susvimo in the United States for people with neovascular age-related macular degeneration.
The European Commission approved Alecensa as the first and only targeted adjuvant treatment for people with ALK-positive early-stage lung cancer.
The FDA granted priority review to inavolisib for advanced hormone receptor-positive, HER2-negative breast cancer with a PIK3CA mutation.
Our Take
Roche’s performance in the second quarter and the first half of 2024 was impressive on high demand for its drugs and tests. The second quarter saw an acceleration in growth as total sales were no longer affected by the decline in COVID-19 sales, resulting in very strong sales growth. Consequently, Roche raised its earnings outlook for the full year.
Ophthalmology drug Vabysmo continues its stellar performance. The drug has posed stiff competition to Regeneron’s (REGN - Free Report) ophthalmology Eylea. Positive data from additional studies bode well for the drug.
Regeneron co-developed Eylea with Bayer (BAYRY - Free Report) . 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.
Roche forayed into the obesity market when it acquired privately owned Carmot Therapeutics in January 2024 for $2.7 billion. The acquisition added a differentiated incretin portfolio with three candidates — CT-388, CT-996 and CT-868 — to its pipeline.
Image: Bigstock
Roche (RHHBY) Sales, Earnings Grow in 1H24, '24 EPS View Raised
Swiss pharma giant Roche Holding AG (RHHBY - Free Report) posted strong growth in the second quarter and first half of 2024 that propelled the company to raise its annual earnings guidance.
Second-quarter revenues increased 7% to CHF 15.4 billion. Sales were up 9% at constant exchange rates (CER) as the decline in COVID-19-related product sales no longer affected the overall top-line growth.
The company reports under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Total sales increased 5% in the first half to CHF 29.8 billion, driven by the high demand in both divisions. Excluding COVID-19-related products, sales increased 8%.
Core earnings per share totaled CHF 10.23 in the first half, up 9% from the year-ago period.
Sales in the Pharmaceuticals Division improved 5% in the first half to CHF 22.6 billion, driven by strong growth in demand for its key drugs.
The Diagnostics division’s sales rose 5% to CHF 7.2 billion. The base business in this division grew 9%, driven by demand for immunodiagnostic products.
Roche’s shares have risen 6.4% year to date compared with the industry’s growth of 20%.
Image Source: Zacks Investment Research
First Half in Detail
Vabysmo (eye diseases) was the biggest growth driver of sales, with Phesgo (breast cancer), Ocrevus (multiple sclerosis), Polivy (blood cancer) and Evrysdi (spinal muscular atrophy) being the other significant contributors. These five drugs (in unison) generated sales of CHF 7.3 billion, reflecting an increase of CHF 1.8 billion from the first-half 2023 level.
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 8% year over year to CHF 3.3 billion.
Sales of hemophilia A drug Hemlibra surged 7% year over year to CHF 2.1 billion.
Perjeta’s sales declined 2% year over year to CHF 1.9 billion.
Immuno-oncology drug Tecentriq’s (for advanced lung cancer, urothelial cancer and breast cancer) sales grew 2% to CHF 1.8 billion.
Vabysmo sales skyrocketed 93% to CHF 1.8 billion on strong demand in all regions, mainly the United States.
Actemra/RoActemra’s (rheumatoid arthritis and COVID-19) sales improved 3% year over year to CHF 1.3 billion.
Asthma drug Xolair generated sales of CHF 1.1 billion, up 10% year over year. Breast cancer drug Kadcyla generated sales of CHF 999 million, up 6% during the said time frame.
Evrysdi generated sales of CHF 838 million, up 25% year over year.
Breast cancer drug Phesgo’s (a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection) sales surged 60% year over year to CHF 799 million.
Sales of the lung cancer drug Alecensa rose 7% to CHF 766 million.
Herceptin sales declined 11% on a year-over-year basis to CHF 740 million due to biosimilar competition in various countries.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 17% to CHF 706 million due to biosimilar erosion.
Sales of Avastin, approved for multiple oncology indications, were down 16% to CHF 654 million due to biosimilar competition in the United States and Europe.
Activase/TNKase sales came in at CHF 593 million, down 2%.
Sales of blood cancer drug Polivy surged 54% to CHF 513 million.
Blood cancer drug Gazyva/Gazyvaro’s sales totaled CHF 445 million, up 15% year over year.
Pulmozyme (cystic fibrosis) sales declined 2% year over year to CHF 225 million.
Growth in the Diagnostics Division’s base business was driven by demand for immunodiagnostic products, which include cardiac, oncology and thyroid tests. Sales of COVID-19 tests further declined to CHF 0.1 billion in the first half of 2024 from CHF 0.4 billion in the corresponding period of 2023.
Raises 2024 EPS Guidance
Roche continues to expect total sales to grow in the mid-single-digit range (at CER). Core earnings per share are now expected to grow in the high single-digit range (previous estimate: grow 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.
Key Pipeline Updates
The FDA approved prefilled syringes of Vabysmo for three leading causes of vision loss.
Roche will reintroduce Susvimo in the United States for people with neovascular age-related macular degeneration.
The European Commission approved Alecensa as the first and only targeted adjuvant treatment for people with ALK-positive early-stage lung cancer.
The FDA granted priority review to inavolisib for advanced hormone receptor-positive, HER2-negative breast cancer with a PIK3CA mutation.
Our Take
Roche’s performance in the second quarter and the first half of 2024 was impressive on high demand for its drugs and tests. The second quarter saw an acceleration in growth as total sales were no longer affected by the decline in COVID-19 sales, resulting in very strong sales growth. Consequently, Roche raised its earnings outlook for the full year.
Ophthalmology drug Vabysmo continues its stellar performance. The drug has posed stiff competition to Regeneron’s (REGN - Free Report) ophthalmology Eylea. Positive data from additional studies bode well for the drug.
Regeneron co-developed Eylea with Bayer (BAYRY - Free Report) . 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.
Roche forayed into the obesity market when it acquired privately owned Carmot Therapeutics in January 2024 for $2.7 billion. The acquisition added a differentiated incretin portfolio with three candidates — CT-388, CT-996 and CT-868 — to its pipeline.
Zacks Rank
Roche currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.