Roche beats revenue estimates, shares slip as copycats eat into Xolair sales (updated)

Roche Holding AG

Thu 06:47

Adds details from investor call throughout, and shares in paragraph 4
By Patrick Wingrove and Marleen Kaesebier
ZURICH/ LONDON, Oct 22 - Swiss drugmaker Roche ROPC.S beat third-quarter sales expectations on Thursday, supported by steady demand for key medicines such as Ocrevus to buy time as it looks abroad to restock a pipeline facing looming patent expiries.
Group revenue rose 7% at constant exchange rates to 16.13 billion Swiss francs ($19.61 billion), exceeding a company-compiled consensus forecast of 15.75 billion francs ($19.15 billion).
But the quarter brought an early warning of competitive pressure - blockbuster Xolair missed market forecasts after the first cheaper copycat launched, generating sales of 848 million francs ($1.03 billion) against expectations of 925 million francs ($1.12 billion).
Shares fell 1.1% in morning trade. 
With several older blockbuster drugs nearing patent expiry, Roche is banking on its biggest products to drive near-term growth while stepping up external dealmaking for next-generation treatments. The company has struck a deal worth over $15 billion with China's Hansoh Pharma, it was reported Monday.
Taking aim at Europe's biotech ecosystem, CEO Thomas Schinecker said on Thursday that roughly 50% of the group's external licensing deals over the past four years were made in the US and the other 50% in China and Asia. 
"This shows you a little bit the status where Europe is in terms of its innovation," Schinecker said.
Management also noted the drag from China's healthcare pricing reforms was easing despite double-digit declines there, with the diagnostics division - which grew 5% to 3.54 billion francs ($4.30 billion) - set to return to "normal" mid- to high-single-digit growth next year.
Roche also benefited from a stabilising dollar against the Swiss franc, easing prolonged exchange-rate drag in a North American market that accounts for nearly half of group revenue.
Top-selling therapies drove the pharmaceutical unit, led by multiple sclerosis shot Ocrevus, which rose 9% at constant currencies to 1.84 billion francs ($2.24 billion).

 (Reporting by Patrick Wingrove and Marleen Kaesebier; Editing by Linda Pasquini, Jacqueline Wong and Louise Heavens)
 ((marleen.kaesebier@thomsonreuters.com;))