Roche Holding AG, the world’s biggest maker of cancer drugs, reported a 7 percent decline in third-quarter revenue as demand for the Tamiflu antiviral fell.
Sales dropped to 11.5 billion Swiss francs ($12.1 billion) from 12.4 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 11.8 billion francs. Roche doesn’t release quarterly earnings.
Tamiflu sales tumbled after the pandemic swine flu that swept the globe last year waned and government orders for stockpiles of the drug were filled. Roche said it expects global health reform to cut revenue growth, stripping about 2 percentage points off sales this year and 2.5 percentage points in 2011. Sales of the Avastin cancer medicine, the company’s best-seller, are under threat because of U.S. and European regulatory reviews of the drug’s use in breast cancer.
“The top three products missed our estimates and Avastin’s not looking good,” said Carri Duncan, an analyst at Macquarie Group in Zurich. “We’ve seen sequentially that growth in Avastin sales is coming down and I don’t see how it’s going to get better.”
A strong Swiss franc weighed on revenue during the third quarter, reducing the value of sales generated in other currencies, the company said.
The shares declined 70 centimes, or 0.5 percent, to close at 138.4 francs in Zurich.
Roche reiterated its forecast for the year, saying core earnings per share, which excludes exceptional items and amortization and impairment of intangible assets, will probably increase at a double-digit pace in 2010 at constant exchange rates. The company wasn’t more specific. Sales are expected to grow in the mid-single-digit range in local currencies. The outlook excludes revenue from Tamiflu.
Sales of Tamiflu, which can ease the symptoms and duration of infection with flu, dropped to 98 million francs during the third quarter from 994 million francs a year earlier. Roche said it expects the medicine to bring as much as 1 billion francs in revenue this year. The World Health Organization in August declared an end to the pandemic.
Sales of Avastin increased about 1 percent to 1.61 billion francs, below analyst estimates of 1.69 billion francs. Roche is seeking to reassure investors that growth remains intact after the drug failed in several clinical trials this year and health regulators examined its use against breast malignancies. The company halted development of the drug as a therapy for colorectal cancer after initial treatment.
An advisory panel to the U.S. Food and Drug Administration in July voted 12 to 1 in favor of rescinding the so-called accelerated approval for Avastin in breast cancer. The agency on Sept. 17 delayed Roche’s application to expand use of the drug against breast tumors, while European regulators said Sept. 24 that they would review use of the medicine against the same disease. The medicine is approved for several cancer types, including colorectal and lung tumors.
“Regulatory and reimbursement uncertainty” over Avastin’s use against breast cancer weighed on sales of the therapy in the U.S. during the third quarter, Roche said.
No Signs of Impact
“A number of physicians are wondering about the future of the indication,” Pascal Soriot, head of the Swiss company’s pharmaceuticals division, said on a conference call. The company “hasn’t seen any signs of an impact” from the European review of the drug, he said. Roche isn’t promoting Avastin’s use against breast cancer in the U.S. pending an FDA decision on the drug, Soriot said separately.
Peak annual sales of the medicine would likely be at the low end of the company’s current forecast of 8 billion to 9 billion Swiss francs if the FDA were to revoke approval, Chief Executive Officer Severin Schwan has said.
Third-quarter revenue from MabThera, used to treat non-Hodgkin’s lymphoma and rheumatoid arthritis, increased about 1 percent to 1.52 billion francs, lagging analyst estimates of 1.57 billion francs.
Sales of Herceptin, which targets the HER-2 protein linked to breast tumor growth, rose about 2 percent to 1.36 billion francs from 1.33 billion francs. The drug in January won European approval as a treatment for stomach cancer that has spread in patients who test positive for HER-2.
The three medicines were developed by U.S. biotechnology company Genentech Inc., which Roche fully acquired last year for $46.8 billion. Roche is getting more income from the top-selling drugs thanks to the acquisition, which the company expects to yield savings of 1 billion francs a year by 2011.
The Swiss company has also had drug development setbacks this year, including delays to the experimental T-DM1 breast cancer medicine and the taspoglutide diabetes treatment.
Revenue from the Swiss company’s pharmaceuticals business fell 9 percent to 9 billion francs from 9.9 billion francs a year earlier. Revenue from the diagnostics division gained less than 1 percent to 2.48 billion francs. Roche is seeking to weave the two businesses more tightly together to better match patients with the most suitable treatments.