Oct. 15 (Bloomberg) -- Roche Holding AG, the world’s biggest maker of cancer drugs, reported a 9.7 percent rise in third-quarter revenue and raised its 2009 sales forecast as more people buy Tamiflu, used to treat pandemic influenza.

Sales increased to 12.4 billion Swiss francs ($12.2 billion) from 11.30 billion francs a year earlier, the Basel, Switzerland-based company said today in an e-mailed statement. Analysts surveyed by Bloomberg had a median estimate of 12.1 billion francs. Roche doesn’t release quarterly earnings.

Demand for Tamiflu has climbed since the outbreak of H1N1 flu in April. Roche said it now expects the medicine, which has been shown to ease the symptoms and duration of swine flu, to generate sales of about 2.7 billion francs this year compared with an earlier estimate of 2 billion francs. Sales of the Avastin cancer medicine also boosted revenue, helped by its use against breast, lung and colorectal tumors.

“Third-quarter Tamiflu sales were a big surprise, though the fact that they also lifted guidance for next year was to be expected,” Carri Duncan, an analyst at Sal. Oppenheim in Zurich, said in a telephone interview. The infection rate is a “moving target,” she said.

The company said it expects full-year sales in both the pharmaceutical and diagnostic divisions to grow “well ahead” of the market, with “at least” high single-digit sales growth for the pharmaceutical unit. Roche maintained its target for double-digit core EPS growth in both 2009 and 2010 at constant exchange rates.

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Roche fell 5.6 francs, or 3.3 percent, to close at 163.9 francs in Zurich trading.

“The topline sales were good, though the market is disappointed that a lot of the growth in pharma came from Tamiflu and that the Avastin and Rituxan numbers were below consensus estimates,” said Eric Bernhardt, head of health care at Bellevue Asset Management. Still, “compared to other pharma companies, Roche is doing nicely.”

Revenue from Tamiflu increased almost tenfold to 994 million francs as swine flu spread. That beat analyst estimates of 590 million francs. Roche had previously said it expected the medicine to generate 2 billion francs in sales this year. The company also raised its forecast for 2010 sales of the medicine to 700 million francs from 400 million francs.

Pandemic Flu

The virus has infected more than 375,000 people worldwide and caused more than 4,500 deaths, according to the World Health Organization. The bug causes little more than a fever and cough in most cases. The WHO estimates that seasonal flu causes as many as 500,000 deaths a year.

Roche is testing a stronger daily dose of Tamiflu and also studying the effect of a longer treatment period. The drugmaker said in July it expects to complete the two clinical trials by November.

Much of the demand for the antiviral is coming from governments that are increasing their stockpiles of Tamiflu, and such orders will help boost sales next year, Bill Burns, the head of Roche’s drug-making unit, said on a conference call.

“There’s the beginnings of a sustainable mid-term business,” Burns said.

Sales of Avastin, the first drug to choke off the blood supply to tumors, increased 18 percent to 1.59 billion francs, below analyst estimates of 1.63 billion francs. Roche is seeking to expand use of the medicine by testing it against several cancer types and for use earlier in the disease. Avastin was developed by U.S. partner Genentech Inc., which Roche fully acquired in March for $46.8 billion.

Avastin Trials

The medicine is approved as a treatment for colorectal cancer, lung and breast tumors and is being tested in more than 400 clinical trials involving 40,000 patients worldwide. Avastin may become the world’s best-selling medicine within six years, consultant EvaluatePharma said last year.

The treatment “still has plenty of room for growth” and analyst estimates of potential sales of between 8 billion francs and 10 billion francs are “all doable,” Burns said on the conference call.

Third-quarter revenue from Herceptin, which targets the HER-2 protein linked to breast tumor growth, rose 2.3 percent to 1.33 billion francs from 1.30 billion francs. Roche last month filed for European approval for Herceptin’s use against gastric tumors after a study found it prolonged patients’ lives.

MabThera Sales

Sales of MabThera, used to treat non-Hodgkin’s lymphoma and rheumatoid arthritis, increased 2.7 percent to 1.51 billion francs, lagging analyst estimates of 1.61 billion francs.

Roche’s purchase of Genentech will boost income from best- selling cancer medicines such as MabThera, also known as Rituxan, which was developed by the U.S. biotechnology company. It will also yield savings of 1 billion Swiss francs a year by 2011, the Swiss drugmaker has said.

Roche repaid more than 7 billion francs of debt related to the acquisition during the third quarter and will also repay more than 5 billion francs by the middle of 2010. The Swiss company also said it remains on track to be “cash-flow positive” on the deal by 2015.

Revenue from Roche’s pharmaceutical business rose 11 percent to 9.93 billion francs from 8.94 billion francs a year earlier. Still, the drugmaker said the economic downturn in the U.S. was having “some impact” on some products.

Sales at the company’s diagnostic division gained 3.8 percent to 2.46 billion francs from 2.37 billion francs. Roche began exploring ways of weaving its two businesses more tightly together about three years ago.

To contact the reporter on this story: Dermot Doherty in Geneva at ddoherty9@bloomberg.net

Last Updated: October 15, 2009 11:39 EDT