April 15, 2014 / 6:05 AM / 4 years ago

UPDATE 2-New cancer drugs limit Roche first-quarter sales drop

* Q1 sales 11.496 bln Swiss francs vs 11.887 bln forecast

* Hit by weak U.S. dollar, yen, LatAm currencies

* Confirms full-year guidance for higher sales and profits

* Shares outperform sector (Adds CFO comment, analyst, shares, details on immunotherapy)

By Caroline Copley

ZURICH, April 15 (Reuters) - A strong uptake of new cancer medicines helped Roche to limit a decline in first-quarter sales and the Swiss company confirmed a forecast for higher earnings this year.

Roche Holding AG said currency movements, the loss of exclusivity on chemotherapy drug Xeloda and falling sales of hepatitis medicine Pegasys combined to pull sales down 1 percent.

Excluding the impact of currency swings, sales grew 5 percent, thanks partly to the strong performance of its cancer drugs and rheumatoid arthritis treatment RoActemra.

Roche is yet to face a real challenge to its older biotech drugs by makers of copy-cat treatments and analysts say it has a promising pipeline of expensive cancer drugs after a string of successful launches.

Tim Race at Deutsche Bank, who rates Roche a “buy”, called the quarterly sales “robust”, pointing to a strong contribution from new breast cancer treatments Perjeta and Kadcyla.

Shares in Roche, which have see-sawed this year after gaining over 35 percent in 2013, were trading up 0.7 percent at 256.1 francs by 0831 GMT, compared to a slightly higher European healthcare sector index.

The Swiss franc’s strength against the U.S. dollar, Japanese yen and Latin American currencies shaved 6 percentage points of quarterly sales, which slipped to 11.5 billion Swiss francs ($13.08 billion). This was slightly below the average analyst forecast of 11.89 billion in a Reuters poll.

Roche’s Chief Financial Officer Alan Hippe said he expected a negative currency impact of 5 percentage points on full-year sales if current exchange rates persist.

Sales of Roche’s flu treatment Tamiflu rose 5 percent in Europe in the quarter. Governments have spent billions of dollars stockpiling the drug but its effectiveness was contested in a review by the respected Cochrane Report research network last week.

“Roche fundamentally disagrees with the conclusions of the Cochrane Report on Tamiflu,” Chief Executive Severin Schwan told reporters.

He said Tamiflu remained an important medicine against flu, but would not be drawn on whether the Cochrane Review’s findings would affect the drug’s sales, saying they depended on seasonal flu patterns and were very volatile.


Roche, which does not detail quarterly profits, is the first company to report among major drugmakers this quarter.

Sales of Perjeta, which targets the same protein found on some cancer cells as Roche’s older blockbuster Herceptin, more than tripled to 178 million francs, while Kadcyla chalked up 102 million francs in sales.

Roche has pushed ahead with developing such follow-on medicines which it hopes will replace or breathe new life into older treatments. It is banking on a strong ramp-up to defend its market share once copycat versions of biotech drugs known as “biosimilars” arrive.

Last week, Hospira successfully overturned two patents on Roche’s blockbuster breast cancer drug Herceptin in Britain, clearing the way for it to launch a biosimilar version in the country.

Roche has taken steps to defend sales at its blood cancer business and won approval for Gazyva, a follow-on to its top-seller MabThera, from U.S. health regulators in November. Gazyva notched up 8 million francs in sales in the first quarter.

Investors are awaiting data in early June on Roche’s immunotherapy drug anti-PD-L1 that helps the immune system fight cancer cells by disabling a protein that acts as a brake on the body’s ability to detect them.

Bristol-Myers Squibb, Merck & Co, AstraZeneca , Roche and others are racing to develop immunotherapies.

Roche said it had moved its anti-PD-L1 drug into late-stage trials for lung cancer and started an early-stage trial looking at the experimental medicine in combination with lung cancer drug Tarceva. It also has a new mid-stage trial for anti-PD-L1 in bladder cancer.

Roche confirmed guidance for low-to-mid single-digits sales growth this year, while expecting core earnings per share (EPS) to grow ahead of sales. It also plans a higher dividend. ($1 = 0.8791 Swiss Francs) (Reporting by Caroline Copley; editing by Tom Pfeiffer)

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