Big pharma aims to show the drugs still sell

By Sam Cage

ZURICH (Reuters) - Roche Holding AG (ROG.VX: Quote, Profile, Research, Stock Buzz) will aim to reassure that big-selling drugs can keep driving profit when it kicks off the European earnings season, as big pharma's blockbusters face growing threats.

Weakness in sales of top products will be a theme for European drugmakers, reflecting ageing portfolios, safety issues with certain products and tough conditions for promoting new drugs.

Roche's local rival Novartis AG (NOVN.VX: Quote, Profile, Research, Stock Buzz) -- digesting a $39-billion move for eye care company Alcon (ACL.N: Quote, Profile, Research, Stock Buzz) to broaden its business as it faces loss of exclusivity on top-seller Diovan for blood pressure -- will likely highlight some of those problems when it reports next week.

"The drug industry is under attack on multiple fronts, but the single biggest overhang affecting the longer-term prospects of the group is the patent 'cliff' that begins in earnest in 2011," Sanford C. Bernstein analyst Tim Anderson said in a recent report.

Basel, Switzerland-based Roche -- now led by new Chief Executive Severin Schwan -- has benefited from a partnership with Genentech Inc (DNA.N: Quote, Profile, Research, Stock Buzz) and the U.S. biotech company's promising products like cancer drugs Avastin and Herceptin.

But Genentech shares were hurt by disappointing sales of Avastin last week, demonstrating the companies' reliance on the potential 10-billion-Swiss-franc ($9.97 billion) seller.

Roche's first-quarter sales are expected to be hit by the weak dollar and a previously flagged loss of sales of flu drug Tamiflu for government stockpiling, but are still seen rising 1 percent to 11.45 billion Swiss francs ($11.42 billion).

"The oncology franchise is still driving the vast majority of pharma growth," Deutsche Bank analysts said in a note. "Due to its premium growth, little exposure to political risk and significant pipeline upside, we continue to rate Roche 'buy'."