Roche First-Quarter Revenue Rises on U.S. Tamiflu Sales

Flu-stricken Americans and rising cancer drug sales helped Roche Holding AG boost revenue by 5.1 percent in a first quarter marked by approvals for two new breast-tumor drugs.

Sales rose to 11.6 billion Swiss francs ($12.4 billion), the Basel, Switzerland-based company said in a statement today. That beat the 11.5 billion-franc estimate of 12 analysts surveyed by Bloomberg. Roche doesn’t report quarterly earnings.

Revenue from cancer treatment Avastin rose 11 percent excluding currency shifts to 1.53 billion francs. The U.S. flu season helped push sales of the Tamiflu antiviral medicine up by 84 percent. Roche got regulatory approvals for Perjeta and Kadcyla, two drugs Roche is counting on to extend the franchise it’s building around the breast-cancer medicine Herceptin, sales of which rose 11 percent excluding currency shifts.

“On the pharma side, it’s very solid,” Odile Rundquist, a Geneva-based analyst for Helvea AG, said by phone. She has an accumulate recommendation on the stock. “It’s confirming the positive stance on the company.”

Herceptin, Roche’s second-best-selling drug, garnered 1.57 billion francs in first-quarter revenue.

Diagnostics Challenges

Challenges are visible in the diagnostics business, Rundquist said. Revenue declined at three of five units in that segment, which contributes about a fifth of Roche’s sales.

Roche rose 0.4 percent to 226.40 francs, the highest since June 2007, giving the company a market value of 195.4 billion francs. The stock has returned 52 percent in the past year including reinvested dividends, compared with a 33 percent return for the Bloomberg Europe Pharmaceutical Index.

Use of Avastin against ovarian cancer in Europe and treatment of colorectal cancer patients helped drive the sales increase for that drug, Roche said. U.S. regulators revoked approval for Avastin in metastatic breast cancer in 2011.

“The wash-out of the breast cancer indication is now behind them,” Rundquist said of Avastin sales. “Thanks to strong uptake in their two new indications, ovarian cancer and treatment across multiple lines in metastatic colorectal cancer, it will probably continue to have a good growth rate.”

Blood Cancer

Revenue from top-selling blood cancer drug Rituxan climbed 6 percent excluding currency shifts to 1.7 billion francs.

Whether Roche will be able to build on Rituxan with the same success as Herceptin may begin to become apparent this year. The company said it will present the first of four studies on its next-generation treatment GA101 at the American Society of Clinical Oncology’s annual meeting, which starts May 31. Roche aims to file GA101 for regulatory approval by the end of the year.

Diabetes care, Roche’s second-biggest diagnostics unit, suffered as governments cut costs and changed the way they reimburse Roche’s products, used to check blood sugar levels. Sales dropped 4 percent to 539 million francs. Roche isn’t the only one facing challenges as Bayer AG evaluated options for its own diabetes unit last year before deciding to keep the business.

Diabetes remains an “important market for us,” Roland Diggelmann, head of Roche’s diagnostics unit, said on a conference call with reporters today.

Perjeta, known chemically as pertuzumab, won European Union approval in March for women with a fast-growing type of breast cancer after being on the market in the U.S. since last year. It’s designed to work together with Herceptin and chemotherapy. Kadcyla, otherwise known as T-DM1, was cleared for sale in the U.S. last February.

“We expect continued strong launches,” Deutsche Bank AG analysts Tim Race and Mark Clark wrote in a note to investors before today’s results. The team rates Roche’s shares a buy.

Roche confirmed the forecast it made in January that 2013 sales will climb at about the same pace as last year’s 4 percent increase, based on constant exchange rates. So-called core earnings per share will increase faster than sales, the drugmaker said.

(Updates with closing share price in 7th paragraph.)
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