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Roche (RHHBY) 2023 Earnings Miss, COVID-19 Product Sales Down
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Roche’s (RHHBY - Free Report) performance in 2023 was impacted by a sharp decline in COVID-19-test sales and exchange rate fluctuations, even though newer drugs and the diagnostics base business maintained their growth.
Roche has lost 8.3% in the past six months against the industry’s growth of 11.2%.
Image Source: Zacks Investment Research
Sales in 2023 came in at $65.4 billion, missing the Zacks Consensus Estimate of $68.2 billion. Earnings per American Depositary Receipt of $2.58 also missed the Zacks Consensus Estimate of $2.68.
Sales were down 7% from 2022 due to a decline in COVID-19-related sales and biosimilar erosion of legacy drugs. The significant appreciation of the Swiss franc against most currencies negatively impacted results. Nevertheless, sales were up 1% at constant exchange rates (“CER”).
The company reports results under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Sales in the Pharmaceuticals Division were up 6% in 2023 to CHF 44.6 billion, driven by strong global demand for newer drugs.
The top five growth drivers of sales — Vabysmo (severe eye diseases), Ocrevus (multiple sclerosis), Hemlibra (hemophilia A), Polivy (blood cancer) and Phesgo (breast cancer) — generated total sales of CHF 14.8 billion, an increase of CHF 4.3 billion (at CER) from 2022. Vabysmo, launched in early 2022, generated sales of CHF 2.4 billion and has become one of Roche’s top drugs.
The Diagnostics division’s sales were down 13% to CHF 14.1 billion. COVID-19 test sales dropped to CHF 0.8 billion in 2023 from CHF 4.1 billion in 2022.
Excluding COVID-19 products, group sales increased 8%.
The company reported total sales of CHF 14.6 billion in the fourth quarter of 2023, flat year over year at CER. Pharmaceutical sales were down 2%, while Diagnostics Division sales gained 4%.
Results in Details
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 13% to CHF 6.4 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.
Sales of hemophilia A drug Hemlibra surged 16% to CHF 4.1 billion.
Perjeta’s sales grew 1% to CHF 3.8 billion owing to continued high demand. Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded 9% year-over-year sales growth to CHF 3.8 billion.
Actemra/RoActemra (rheumatoid arthritis and COVID-19) sales were up 5% to CHF 2.6 billion.
Vabysmo generated sales of CHF 2.4 billion on strong demand.
Asthma drug Xolair generated sales of CHF 2.2 billion, up 5%.
Breast cancer drug Kadcyla sales of CHF 2 billion were up 4%.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 15% to CHF 1.6 billion due to biosimilar erosion.
Herceptin sales were down 16% to CHF 1.6 billion due to biosimilar uptake in various countries.
Sales of Avastin, approved for multiple oncology indications, were down 19% to CHF 1.6 billion due to biosimilar competition in the United States and Europe.
Sales of the lung cancer drug Alecensa were up 8% to CHF 1.5 billion.
The spinal muscular atrophy drug Evrysdi generated sales of CHF 1.4 billion, up 39%.
Phesgo, a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection, saw sales of CHF 1.1 billion, up 64%.
The blood cancer drug Polivy generated sales of CHF 837 million.
Blood cancer drug Gazyva/Gazyvaro sales were CHF 811 million, up 19%.
Ronapreve, the antibody cocktail of casirivimab and imdevimab for treating recently diagnosed high-risk patients with mild to moderate COVID-19, generated sales of CHF 525 million, down 65% due to lower demand. Roche and partner Regeneron (REGN - Free Report) collaborated on the development and manufacturing of the cocktail.
Lucentis (ophthalmology) sales plunged 52% to CHF 460 million.
Pulmozyme (cystic fibrosis) sales were down 10% to CHF 452 million.
Revenues in the Diagnostics division declined due to lower demand for COVID-19 testing. The base business was up 7%, with immunodiagnostic products, particularly cardiac tests and diagnostic solutions for clinical chemistry and advanced staining, contributing significantly to its growth.
2024 Guidance
Roche expects total sales to grow in the mid-single-digit range (at CER). Core earnings per share are targeted to develop broadly in line with sales growth, excluding the impact of the resolution of tax disputes in 2023. Roche expects to further increase its dividend in Swiss francs.
Pipeline Updates
The FDA approved Vabysmo for the treatment of retinal vein occlusion. This is the third indication for Vabysmo, in addition to neovascular or ‘wet’ age-related macular degeneration and diabetic macular oedema.
Acquisition Updates
In December 2023, Roche announced that it would acquire Carmot Therapeutics, which includes three clinical-stage assets with best-in-class potential in obesity (CT-388 and CT-996) and diabetes (CT-868) in its portfolio.
In 2023, Roche acquired Telavant, including rights to the novel TL1A-directed antibody (RVT-3101) from Roivant for the treatment of inflammatory bowel disease.
Our Take
Roche’s performance in 2023 was decent, excluding COVID-19-related sales. The outlook for 2024 is ordinary. Vabysmo, Ocrevus, Hemlibra and Polivy boosted growth.
Vabysmo has put up a stellar performance against Regeneron’s Eylea, whose sales were under pressure in 2023. However, the approval of a higher dose of Eylea might pose challenges for Vabysmo.
However, competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin continue to hurt sales.
In the past 60 days, estimates for Novo Nordisk’s 2024 earnings per share have increased from $3.20 to $3.32. Shares of NVO have surged 56.8% in the past year.
Novo Nordisk’s earnings beat estimates in two of the last four quarters, met in one and missed in the other, delivering an average surprise of 1.85%. In the previously reported quarter, Novo Nordisk’s earnings beat estimates by 7.58%.
In the past 30 days, Sarepta’s loss estimates for 2023 have improved from a loss of $6.80 per share to $6.57 per share. During the same period, earnings estimates per share for 2024 have risen from $1.71 to $2.14.
Sarepta’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 48.67%. In the previous reported quarter, its earnings beat estimates by 72.29%.
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Roche (RHHBY) 2023 Earnings Miss, COVID-19 Product Sales Down
Roche’s (RHHBY - Free Report) performance in 2023 was impacted by a sharp decline in COVID-19-test sales and exchange rate fluctuations, even though newer drugs and the diagnostics base business maintained their growth.
Roche has lost 8.3% in the past six months against the industry’s growth of 11.2%.
Image Source: Zacks Investment Research
Sales in 2023 came in at $65.4 billion, missing the Zacks Consensus Estimate of $68.2 billion. Earnings per American Depositary Receipt of $2.58 also missed the Zacks Consensus Estimate of $2.68.
Sales were down 7% from 2022 due to a decline in COVID-19-related sales and biosimilar erosion of legacy drugs. The significant appreciation of the Swiss franc against most currencies negatively impacted results. Nevertheless, sales were up 1% at constant exchange rates (“CER”).
The company reports results under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Sales in the Pharmaceuticals Division were up 6% in 2023 to CHF 44.6 billion, driven by strong global demand for newer drugs.
The top five growth drivers of sales — Vabysmo (severe eye diseases), Ocrevus (multiple sclerosis), Hemlibra (hemophilia A), Polivy (blood cancer) and Phesgo (breast cancer) — generated total sales of CHF 14.8 billion, an increase of CHF 4.3 billion (at CER) from 2022. Vabysmo, launched in early 2022, generated sales of CHF 2.4 billion and has become one of Roche’s top drugs.
The Diagnostics division’s sales were down 13% to CHF 14.1 billion. COVID-19 test sales dropped to CHF 0.8 billion in 2023 from CHF 4.1 billion in 2022.
Excluding COVID-19 products, group sales increased 8%.
The company reported total sales of CHF 14.6 billion in the fourth quarter of 2023, flat year over year at CER. Pharmaceutical sales were down 2%, while Diagnostics Division sales gained 4%.
Results in Details
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 13% to CHF 6.4 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.
Sales of hemophilia A drug Hemlibra surged 16% to CHF 4.1 billion.
Perjeta’s sales grew 1% to CHF 3.8 billion owing to continued high demand.
Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded 9% year-over-year sales growth to CHF 3.8 billion.
Actemra/RoActemra (rheumatoid arthritis and COVID-19) sales were up 5% to CHF 2.6 billion.
Vabysmo generated sales of CHF 2.4 billion on strong demand.
Asthma drug Xolair generated sales of CHF 2.2 billion, up 5%.
Breast cancer drug Kadcyla sales of CHF 2 billion were up 4%.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 15% to CHF 1.6 billion due to biosimilar erosion.
Herceptin sales were down 16% to CHF 1.6 billion due to biosimilar uptake in various countries.
Sales of Avastin, approved for multiple oncology indications, were down 19% to CHF 1.6 billion due to biosimilar competition in the United States and Europe.
Sales of the lung cancer drug Alecensa were up 8% to CHF 1.5 billion.
The spinal muscular atrophy drug Evrysdi generated sales of CHF 1.4 billion, up 39%.
Phesgo, a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection, saw sales of CHF 1.1 billion, up 64%.
The blood cancer drug Polivy generated sales of CHF 837 million.
Blood cancer drug Gazyva/Gazyvaro sales were CHF 811 million, up 19%.
Ronapreve, the antibody cocktail of casirivimab and imdevimab for treating recently diagnosed high-risk patients with mild to moderate COVID-19, generated sales of CHF 525 million, down 65% due to lower demand. Roche and partner Regeneron (REGN - Free Report) collaborated on the development and manufacturing of the cocktail.
Lucentis (ophthalmology) sales plunged 52% to CHF 460 million.
Pulmozyme (cystic fibrosis) sales were down 10% to CHF 452 million.
Revenues in the Diagnostics division declined due to lower demand for COVID-19 testing. The base business was up 7%, with immunodiagnostic products, particularly cardiac tests and diagnostic solutions for clinical chemistry and advanced staining, contributing significantly to its growth.
2024 Guidance
Roche expects total sales to grow in the mid-single-digit range (at CER). Core earnings per share are targeted to develop broadly in line with sales growth, excluding the impact of the resolution of tax disputes in 2023. Roche expects to further increase its dividend in Swiss francs.
Pipeline Updates
The FDA approved Vabysmo for the treatment of retinal vein occlusion. This is the third indication for Vabysmo, in addition to neovascular or ‘wet’ age-related macular degeneration and diabetic macular oedema.
Acquisition Updates
In December 2023, Roche announced that it would acquire Carmot Therapeutics, which includes three clinical-stage assets with best-in-class potential in obesity (CT-388 and CT-996) and diabetes (CT-868) in its portfolio.
In 2023, Roche acquired Telavant, including rights to the novel TL1A-directed antibody (RVT-3101) from Roivant for the treatment of inflammatory bowel disease.
Our Take
Roche’s performance in 2023 was decent, excluding COVID-19-related sales. The outlook for 2024 is ordinary. Vabysmo, Ocrevus, Hemlibra and Polivy boosted growth.
Vabysmo has put up a stellar performance against Regeneron’s Eylea, whose sales were under pressure in 2023. However, the approval of a higher dose of Eylea might pose challenges for Vabysmo.
However, competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin continue to hurt sales.
Zacks Rank & Stock to Consider
Roche currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the healthcare industry are Novo Nordisk (NVO - Free Report) and Sarepta Therapeutics (SRPT - Free Report) . NVO currently sports a Zacks Rank #1 (Strong Buy) and SRPT carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, estimates for Novo Nordisk’s 2024 earnings per share have increased from $3.20 to $3.32. Shares of NVO have surged 56.8% in the past year.
Novo Nordisk’s earnings beat estimates in two of the last four quarters, met in one and missed in the other, delivering an average surprise of 1.85%. In the previously reported quarter, Novo Nordisk’s earnings beat estimates by 7.58%.
In the past 30 days, Sarepta’s loss estimates for 2023 have improved from a loss of $6.80 per share to $6.57 per share. During the same period, earnings estimates per share for 2024 have risen from $1.71 to $2.14.
Sarepta’s earnings beat estimates in each of the last four quarters, delivering an average surprise of 48.67%. In the previous reported quarter, its earnings beat estimates by 72.29%.