July 26 (Bloomberg) -- Roche Holding AG’s first-half profit sank 17 percent on costs to shut a U.S. research site and restructuring at two other units.
Net income fell to 4.37 billion Swiss francs ($4.42 billion) from 5.26 billion francs a year earlier, the Basel, Switzerland-based company said in a statement today. Earnings per share excluding some items were 6.94 francs, compared with a 6.95-franc average estimate of 12 analysts surveyed by Bloomberg. Cancer drugs helped boost sales 3 percent to 22.4 billion francs, beating the 22 billion-franc average estimate.
Roche, the world’s biggest maker of cancer medicines, announced the closing of its Nutley, New Jersey, research and development center in June after the failure of its good-cholesterol medicine dalcetrapib. The closing will lead to annual savings of 370 million francs, the company said.
“Our recent decision to close the Nutley site and the related consolidation of our research and early development activities at other sites will free up resources that we can invest in our promising clinical programs,” Chief Executive Officer Severin Schwan said in the statement.
Roche rose 0.2 percent to 168.20 francs at 9:05 a.m. in Zurich. The shares had returned 10 percent including reinvested dividends this year through yesterday, compared with a 12 percent return for the Bloomberg Europe Pharmaceutical Index.
Closing the Nutley site cost 858 million francs as of June, while reorganizing Roche’s diabetes and applied science units cost 289 million francs. Roche booked 530 million francs for other restructuring, including abandoning dalcetrapib.
Roche has had “meaningful” success recently with clinical trials of experimental cancer therapies T-DM1 and pertuzumab, Tim Anderson, a Sanford C. Bernstein & Co. analyst in New York, wrote in a note to clients before the results.
Pertuzumab, sold under the brand name Perjeta, won approval in the U.S. in June for patients with a fast-growing type of breast cancer. Roche repeated it plans to file for regulatory approval of T-DM1, a breast cancer drug that carries chemotherapy directly into tumor cells, in the U.S. and Europe by the end of the year.
Higher sales of cancer medicines and the Pegasys drug for hepatitis helped offset the impact of austerity measures in Europe, where governments are pushing drug prices lower in an effort to rein in spending. Sales in western Europe fell 3 percent.
“I see a relatively stable situation at the moment in Europe,” Schwan said in a conference call with reporters today. He said he expects “very moderate growth” in the near future in Europe, offset by the U.S. and continuing double digit growth in emerging markets.
Public and private customers in Europe had run up 2 billion euros ($2.43 billion) in unpaid bills by the beginning of the year, Schwan said. The Spanish government’s bill-repayment program helped cut that figure by 24 percent to about 1.5 billion euros, he said.
Roche repeated the forecast it issued in February, saying it expects percentage sales growth this year in the low- to mid-single-digit range at constant exchange rates for the company and the pharmaceutical division. Roche also expects diagnostic sales to outpace the market. Core earnings per share should increase by a high single-digit percentage, the company repeated.
“Overall the numbers are good,” said Andrew Weiss, an analyst at Bank Vontobel AG in Zurich who recommends buying the shares. “It’s a strong set of numbers based on good quality and growth.”
Roche will hold a conference call for analysts and investors at noon. Roche doesn’t report quarterly earnings.
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