Roche Holdings Ltd.
) recently reported results for the first quarter of 2013.
Revenues grew 6% year over year to CHF 11.6 billion driven by
solid demand for its cancer drugs and increased sales of
diagnostic tests to clinical laboratories.
In particular, strong sales of Tamiflu (+84%) due to a severe
flu season in North America boosted sales in the first
Sales were also positively impacted by the strengthening of
the Swiss franc against the Japanese yen.
On a geographical basis, sales were particularly strong in the
US and international markets.
All growth rates mentioned below are on a year-on-year basis
and at constant exchange rates.
Roche reports business in two divisions: Pharmaceuticals
Division and Diagnostics Division.
Sales for the Pharmaceuticals Division climbed 7% to CHF 9.2
billion, driven by strong sales of from oncology drugs which were
Cancer drugs such as Herceptin (up 11%), Avastin (up 11%) and
MabThera/Rituxan (up 6%) performed very well during the first
quarter of 2013.
The strong growth in Avastin sales was due to its increased
demand in the ovarian and colorectal cancer indications.
Sales of rheumatoid arthritis (RA) drug Actemra/RoActemra were
up 32% during the first quarter of 2013.
Roche's Actemra primarily faces competition from
) Cimzia and
) Humira in the RA space.
Strong sales of newly launched drugs such as Zelboraf, Erivedge,
Kadcyla and Perjeta also benefited first quarter 2013 segmental
We note that Roche launched Kadcyla (indicated for
HER2-positive metastatic breast cancer) in the US in Feb 2013
while Perjeta (indicated for first line HER2-positive metastatic
breast cancer) obtained approval in the European Union in Mar
2013. Perjeta was launched in the US in Jun 2012.
However, sales of drugs such as Pegasys (indicated for
hepatitis B and hepatitis C) declined 15% year over year due to
the launch of triple-combination therapy.
Revenues from the Diagnostics Division went up 1% to CHF 2.4
billion, on the back of strong demand for tests and platforms
used in clinical laboratories.
The professional diagnostics (+5%) and tissue diagnostics
(+7%) sub-segments performed impressively during the quarter.
The growth was partially offset by declines in diabetes care
and applied sciences solutions.
Reimbursement cuts and intensified pricing pressure adversely
impacted the diabetes care business thereby reducing sales by
Applied science declined 10% as a result of discontinued
products and lower research funding.
2013 Outlook Backed
Roche continues to expect sales in 2013 to increase in line with
Sales are expected to be strong in emerging markets in
Roche expects core earnings per share to grow at a higher rate
than sales in 2013. Roche expects to further increase its
dividend in 2013.
Roche currently has a Zacks Rank #4 (Sell). As of now,
) looks well placed with a Zacks Rank #2 (Buy).
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