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Roche's (RHHBY) 1H20 Sales Hit by the Coronavirus Pandemic
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Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) performance in the second quarter and consequently the first half of 2020 was negatively impacted by the outbreak of COVID-19, even though the company saw a surge in demand for COVID-19 diagnostics test.
Roche’s stock has gained 14.3% in the year so far compared with the industry’s growth of 2.2%.
The company reported sales of CHF 14.1 billion in the second quarter of 2020, down 4% from the year-ago quarter. Sales in the first half of 2020 came in at CHF 29.3 billion, down 4% from the year-ago period, stemming from the negative impacts of the coronavirus outbreak. Earnings per share came in at CHF 10.44 in the first half of 2020, down from CHF 11.12 in the first half of 2019.
The company reports results under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Sales at the Pharmaceuticals division were up 1% to CHF 23.2 billion, driven by growth in new drugs (launched since 2012), including Tecentriq, Hemlibra, Ocrevus and Perjeta, which offset the impact of competition from biosimilars for legacy drugs like MabThera/Rituxan, Herceptin and Avastin.
The Diagnostics division sales were up 3%, driven by COVID-19 testing. However, routine testing declined as COVID-19 caused delayed patient visits to physicians.
Results in Detail
Herceptin sales fell 28% due to biosimilar competition in the United States, Europe and Japan. Sales in the United States declined due to the switch to Kadcyla in the adjuvant setting.
Perjeta sales grew 17% owing to increased demand for adjuvant early breast cancer therapy. Kadcyla sales soared 39%, driven by its usage in the early breast cancer setting, the positive read-out from the Katherine study and patients switching to the new standard of treatment.
Sales of Avastin, approved for multiple oncology indications, were down 18% due to biosimilar competition.
Sales of Rituxan/MabThera declined 23% due to the entry of biosimilars in all major markets.
Sales of Ocrevus, the drug used to treat two forms of multiple sclerosis, rallied 25% on continued global growth.
Immuno-oncology drug, Tecentriq (for advanced bladder cancer and advanced lung cancer), recorded 74% year-over-year growth in sales, driven by the inclusion of new indications — extensive-stage small cell lung cancer and triple-negative breast cancer.
Sales of lung cancer drug, Alecensa, surged 34% on solid growth across all regions.
Performance of the immunology franchise was driven by 36% growth in Actemra/RoActemra sales and 2% in Xolair sales. Quite a few countries have included Actemra/RoActemra in their treatment guidelines for severe COVID-19 pneumonia. Gazyva/Gazyvaro sales jumped 35%. Sales of hemophilia A drug, Hemlibra, soared more than 94%.
Sales of ophthalmology drug, Lucentis, declined 19% as sales were especially affected by the COVID-19 pandemic due to disruptions in hospitals and ophthalmology practices and many patients delaying treatment during restrictions. Roche has a collaboration agreement with Novartis (NVS - Free Report) for this drug.
Revenues at the Diagnostics division rose 3%, owing to 61% growth in Molecular Diagnostics.
2020 Outlook Reiterated
Sales are expected to grow in low- to mid-single digits. Core earnings per share are estimated to rise broadly in line with sales.
Pipeline Progress
Roche is conducting several phase III studies in severe COVID-19 pneumonia. Remdacta, a global phase III study, was initiated to evaluate the safety and efficacy of Actemra/RoActemra in combination with Gilead Sciences’ (GILD - Free Report) antiviral, remdesivir, versus placebo plus remdesivir in hospitalized patients with severe COVID-19 pneumonia. The study began enrollment in June. Data from the trial are designed to supplement the phase III Covacta study.
The FDA approved Tecentriq in combination with Avastin for the treatment of people with unresectable or metastatic hepatocellular carcinoma (HCC), who have not received prior systemic therapy. The FDA also approved Tecentriq as a first-line (initial) treatment for adults with metastatic non-small cell lung cancer (NSCLC) whose tumors have high PD-L1 expression as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations.
Roche also launched a few diagnostics tests for COVID-19.
Our Take
Roche’s performance in the second quarter was negatively impacted by the COVID-19 outbreak as patients defer routine visits to the physicians. While the performance in the first quarter was reasonably good, weak performance in the second quarter affected the first-half results.
Nevertheless, the company maintained its outlook. Strong growth in Ocrevus, Perjeta, Tecentriq and Hemlibra countered biosimilar competition for Herceptin and MabThera from the likes of Amgen (AMGN - Free Report) .
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Roche's (RHHBY) 1H20 Sales Hit by the Coronavirus Pandemic
Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) performance in the second quarter and consequently the first half of 2020 was negatively impacted by the outbreak of COVID-19, even though the company saw a surge in demand for COVID-19 diagnostics test.
Roche’s stock has gained 14.3% in the year so far compared with the industry’s growth of 2.2%.
The company reported sales of CHF 14.1 billion in the second quarter of 2020, down 4% from the year-ago quarter. Sales in the first half of 2020 came in at CHF 29.3 billion, down 4% from the year-ago period, stemming from the negative impacts of the coronavirus outbreak. Earnings per share came in at CHF 10.44 in the first half of 2020, down from CHF 11.12 in the first half of 2019.
The company reports results under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Sales at the Pharmaceuticals division were up 1% to CHF 23.2 billion, driven by growth in new drugs (launched since 2012), including Tecentriq, Hemlibra, Ocrevus and Perjeta, which offset the impact of competition from biosimilars for legacy drugs like MabThera/Rituxan, Herceptin and Avastin.
The Diagnostics division sales were up 3%, driven by COVID-19 testing. However, routine testing declined as COVID-19 caused delayed patient visits to physicians.
Results in Detail
Herceptin sales fell 28% due to biosimilar competition in the United States, Europe and Japan. Sales in the United States declined due to the switch to Kadcyla in the adjuvant setting.
Perjeta sales grew 17% owing to increased demand for adjuvant early breast cancer therapy. Kadcyla sales soared 39%, driven by its usage in the early breast cancer setting, the positive read-out from the Katherine study and patients switching to the new standard of treatment.
Sales of Avastin, approved for multiple oncology indications, were down 18% due to biosimilar competition.
Sales of Rituxan/MabThera declined 23% due to the entry of biosimilars in all major markets.
Sales of Ocrevus, the drug used to treat two forms of multiple sclerosis, rallied 25% on continued global growth.
Immuno-oncology drug, Tecentriq (for advanced bladder cancer and advanced lung cancer), recorded 74% year-over-year growth in sales, driven by the inclusion of new indications — extensive-stage small cell lung cancer and triple-negative breast cancer.
Sales of lung cancer drug, Alecensa, surged 34% on solid growth across all regions.
Performance of the immunology franchise was driven by 36% growth in Actemra/RoActemra sales and 2% in Xolair sales. Quite a few countries have included Actemra/RoActemra in their treatment guidelines for severe COVID-19 pneumonia. Gazyva/Gazyvaro sales jumped 35%. Sales of hemophilia A drug, Hemlibra, soared more than 94%.
Sales of ophthalmology drug, Lucentis, declined 19% as sales were especially affected by the COVID-19 pandemic due to disruptions in hospitals and ophthalmology practices and many patients delaying treatment during restrictions. Roche has a collaboration agreement with Novartis (NVS - Free Report) for this drug.
Revenues at the Diagnostics division rose 3%, owing to 61% growth in Molecular Diagnostics.
2020 Outlook Reiterated
Sales are expected to grow in low- to mid-single digits. Core earnings per share are estimated to rise broadly in line with sales.
Pipeline Progress
Roche is conducting several phase III studies in severe COVID-19 pneumonia. Remdacta, a global phase III study, was initiated to evaluate the safety and efficacy of Actemra/RoActemra in combination with Gilead Sciences’ (GILD - Free Report) antiviral, remdesivir, versus placebo plus remdesivir in hospitalized patients with severe COVID-19 pneumonia. The study began enrollment in June. Data from the trial are designed to supplement the phase III Covacta study.
The FDA approved Tecentriq in combination with Avastin for the treatment of people with unresectable or metastatic hepatocellular carcinoma (HCC), who have not received prior systemic therapy. The FDA also approved Tecentriq as a first-line (initial) treatment for adults with metastatic non-small cell lung cancer (NSCLC) whose tumors have high PD-L1 expression as determined by an FDA-approved test, with no EGFR or ALK genomic tumor aberrations.
Roche also launched a few diagnostics tests for COVID-19.
Our Take
Roche’s performance in the second quarter was negatively impacted by the COVID-19 outbreak as patients defer routine visits to the physicians. While the performance in the first quarter was reasonably good, weak performance in the second quarter affected the first-half results.
Nevertheless, the company maintained its outlook. Strong growth in Ocrevus, Perjeta, Tecentriq and Hemlibra countered biosimilar competition for Herceptin and MabThera from the likes of Amgen (AMGN - Free Report) .
Roche currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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