Roche Holding AG (ROG), the world’s biggest maker of cancer drugs, said first-half profit fell 7 percent as the strength of the Swiss franc offset rising sales of new medicines.
Net income declined to 5.6 billion francs ($6.3 billion) from 6 billion francs a year earlier, the Basel-based drugmaker said today in a statement. Earnings per share excluding some items, which Roche calls core earnings per share, were 7.57 francs, above the 7.43-franc average of eight analyst estimates compiled by Bloomberg.
The company’s new breast cancer drugs boosted revenue. Kadcyla sales almost tripled to 227 million francs at constant exchange rates, and Perjeta revenue almost quadrupled. Roche reiterated a full-year forecast of low- to mid-single digit revenue gains, in line with a 5 percent increase during the first half.
“The highlight is the uptake of the new drugs,” Odile Rundquist, a Geneva-based analyst for Helvea SA, said by phone. She has a buy rating on the shares. Rundquist also noted good results in Roche’s diagnostics unit.
Roche shares gained 0.6 percent to 268.20 francs in Zurich. The stock returned 18 percent in the past year through yesterday including reinvested dividends, compared with 22 percent for the Bloomberg Europe Pharmaceutical Index.
The company said earlier this month it agreed to buy Seragon Pharmaceuticals Inc. for as much as $1.7 billion to gain a new generation of experimental treatments for breast tumors. The deal gives Roche drugs designed to stop tumors from developing by blocking estrogen, which about 60 percent of breast cancers depend on to grow and spread.
Roche is still seeking “targeted” acquisitions amid a pharmaceutical and biotechnology deals environment in which valuations are high, Chief Executive Officer Severin Schwan said today in an interview.
The Swiss company is looking for bolt-on acquisitions in gene sequencing, Roland Diggelmann, head of Roche’s diagnostics unit, said in an interview. Roche agreed in June to buy Genia Technologies Inc. for as much as $350 million, part of a strategy to piece together its own sequencing portfolio after being rebuffed about two years ago by Illumina Inc., then the world’s second-biggest maker of DNA sequencers.
Roche’s first-half sales fell 1 percent to 22.9 billion francs. At constant exchange rates, which discounts the weakening of the U.S. dollar, Japanese yen and Latin American currencies versus the franc, revenue increased 5 percent. Diagnostics sales stayed level, while pharmaceutical sales dropped 2 percent.
Roche sees a foreign exchange impact on 2014 core earnings per share of 6 percentage point at current rates, according to a slide presentation. The Swiss franc strengthened 0.2 percent against the dollar in the six months through June, according to data compiled by Bloomberg.
To contact the reporter on this story: Naomi Kresge in Basel at firstname.lastname@example.org
To contact the editors responsible for this story: Phil Serafino at email@example.com John Bowker, Tom Lavell