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Roche (RHHBY) Q1 Sales Affected by Biosimilars & COVID-19
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Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) performance in the first quarter of 2021 was disappointing as the coronavirus pandemic affected overall demand and the established pharmaceuticals business was adversely impacted by competition from biosimilars. Nevertheless, a surge in COVID-19 diagnostics tests somewhat offset this decline.
Roche’s stock has lost 4.2% in the year so far against the industry’s growth of 3.2%.
The company reported total sales of CHF 14.9 billion in the first quarter of 2021, down 1% from the year-ago quarter.
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 down 9% to CHF 10.6 billion due to biosimilars competition for legacy drugs like MabThera/Rituxan, Herceptin and Avastin (roughly CHF 1.6 billion of sales reduction in the United States, Europe and Japan) and the COVID-19 pandemic.
The pandemic continued to adversely impact sales, particularly for drugs where regular visits to hospitals or health practices are needed (i.e., for infusions). This was partly offset by additional sales of medicines used to treat COVID-19 (Actemra/RoActemra which was mostly for treating patients with severe COVID-19-associated pneumonia) along with the recently launched antibody combination, casirivimab/imdevimab.
Nevertheless, the decline was partially offset by growth in new drugs (launched in 2012), including Tecentriq, Hemlibra, Ocrevus and Evrysdi.
The Diagnostics division sales were up 55% to CHF 4.3 billion, driven by COVID-19 testing.
Quarter in Detail
Herceptin sales fell 35% to CHF 755 million due to biosimilar competition across all regions.
Perjeta sales grew 2% to CHF 988 million. Kadcyla sales soared 17% to CHF 478 million.
Sales of Avastin, approved for multiple oncology indications, were down 40% due to biosimilar competition in the United States and Europe.
Sales of Rituxan/MabThera (blood cancer and rheumatoid arthritis) declined 46% to CHF 705 million due to the biosimilar erosion as well as COVID-19 pandemic restrictions.
Sales of Ocrevus, used to treat two forms of multiple sclerosis, increased 16% to CHF 1.2 billion on continued growth.
Immuno-oncology drug, Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer), recorded 26% year-over-year sales growth to CHF 775 million.
Sales of lung cancer drug, Alecensa, rose 14% on solid growth across all regions.
Performance of the immunology franchise was driven by 22% growth in arthritis drug Actemra/RoActemra sales to CHF 779 million, as a number of countries included this medicine in their treatment guidelines for severe COVID-associated pneumonia. Asthma drug, Xolair, declined 6% to CHF 409 million.
Sales of hemophilia A drug, Hemlibra, surged 33% to CHF 661 million, fueled by strong uptakes in the United States and Europe despite COVID-19 restrictions having some impact on potential new patients.
The antibody cocktail of casirivimab and imdevimab, for the treatment of recently diagnosed high-risk patients with mild to moderate COVID-19, generated sales of CHF 166 million. Roche and partner Regeneron (REGN - Free Report) have collaborated on the development and manufacturing of the cocktail. Roche is responsible for distribution in Europe and other countries outside the United States.
Esbriet, indicated for idiopathic pulmonary fibrosis, declined 8%. The recently approved spinal muscular atrophy drug, Evrysdi, generated sales of CHF 80 million.
Revenues in the Diagnostics division increased mainly due to Roche’s comprehensive and growing portfolio of COVID-19 tests. The Point of Care and Molecular Lab businesses recorded strong growth (+281% and +86%, respectively) with COVID-19 testing.
Routine diagnostic testing, which was adversely impacted by the COVID-19 pandemic in 2020, also contributed to growth in the first quarter. Roche launched additional products in the first quarter, such as a research-use PCR test to help monitor SARS-CoV2 mutations, which further strengthened its position as the world’s leading supplier of COVID-19 tests.
Last month, Roche signed a definitive merger agreement with GenMark Diagnostics for $1.8 billion.
2021 Guidance 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
The European Commission approved Evrysdi, the first and only at-home SMA treatment with proven efficacy in adults and infants aged months and older.
The European regulatory authorities recommended the approval of Tecentriq as a first-line (initial) monotherapy treatment for people with a certain type of metastatic non-small cell lung cancer (NSCLC).
In March, Roche announced that one of the studies, REMDACTA, evaluating Actemra/RoActemra along with Gilead’s (GILD - Free Report) Veklury, did not reduce the duration of hospital stay for patients with severe COVID-19 pneumonia compared to those getting only Veklury.
In February, Roche obtained the CE mark for its new SARS-CoV-2 Rapid Antigen Test Nasal (for professional use).
Our Take
Roche’s performance in the first quarter of 2021 was mixed as COVID-19 disruptions and biosimilar competition weighed on the pharmaceuticals business, which comprises more than 75% of revenues and offset growth in Ocrevus, Tecentriq and Hemlibra.
Nevertheless, demand for Roche’s diagnostic tests is expected to remain strong as the pandemic continues and should positively impact the performance in 2021.
Repligen’s earnings estimates for 2021 have increased to $1.91 from $1.66 in the past 60 days.
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Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Roche (RHHBY) Q1 Sales Affected by Biosimilars & COVID-19
Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) performance in the first quarter of 2021 was disappointing as the coronavirus pandemic affected overall demand and the established pharmaceuticals business was adversely impacted by competition from biosimilars. Nevertheless, a surge in COVID-19 diagnostics tests somewhat offset this decline.
Roche’s stock has lost 4.2% in the year so far against the industry’s growth of 3.2%.
The company reported total sales of CHF 14.9 billion in the first quarter of 2021, down 1% from the year-ago quarter.
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 down 9% to CHF 10.6 billion due to biosimilars competition for legacy drugs like MabThera/Rituxan, Herceptin and Avastin (roughly CHF 1.6 billion of sales reduction in the United States, Europe and Japan) and the COVID-19 pandemic.
The pandemic continued to adversely impact sales, particularly for drugs where regular visits to hospitals or health practices are needed (i.e., for infusions). This was partly offset by additional sales of medicines used to treat COVID-19 (Actemra/RoActemra which was mostly for treating patients with severe COVID-19-associated pneumonia) along with the recently launched antibody combination, casirivimab/imdevimab.
Nevertheless, the decline was partially offset by growth in new drugs (launched in 2012), including Tecentriq, Hemlibra, Ocrevus and Evrysdi.
The Diagnostics division sales were up 55% to CHF 4.3 billion, driven by COVID-19 testing.
Quarter in Detail
Herceptin sales fell 35% to CHF 755 million due to biosimilar competition across all regions.
Perjeta sales grew 2% to CHF 988 million. Kadcyla sales soared 17% to CHF 478 million.
Sales of Avastin, approved for multiple oncology indications, were down 40% due to biosimilar competition in the United States and Europe.
Sales of Rituxan/MabThera (blood cancer and rheumatoid arthritis) declined 46% to CHF 705 million due to the biosimilar erosion as well as COVID-19 pandemic restrictions.
Sales of Ocrevus, used to treat two forms of multiple sclerosis, increased 16% to CHF 1.2 billion on continued growth.
Immuno-oncology drug, Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer), recorded 26% year-over-year sales growth to CHF 775 million.
Sales of lung cancer drug, Alecensa, rose 14% on solid growth across all regions.
Performance of the immunology franchise was driven by 22% growth in arthritis drug Actemra/RoActemra sales to CHF 779 million, as a number of countries included this medicine in their treatment guidelines for severe COVID-associated pneumonia. Asthma drug, Xolair, declined 6% to CHF 409 million.
Sales of hemophilia A drug, Hemlibra, surged 33% to CHF 661 million, fueled by strong uptakes in the United States and Europe despite COVID-19 restrictions having some impact on potential new patients.
The antibody cocktail of casirivimab and imdevimab, for the treatment of recently diagnosed high-risk patients with mild to moderate COVID-19, generated sales of CHF 166 million. Roche and partner Regeneron (REGN - Free Report) have collaborated on the development and manufacturing of the cocktail. Roche is responsible for distribution in Europe and other countries outside the United States.
Esbriet, indicated for idiopathic pulmonary fibrosis, declined 8%. The recently approved spinal muscular atrophy drug, Evrysdi, generated sales of CHF 80 million.
Revenues in the Diagnostics division increased mainly due to Roche’s comprehensive and growing portfolio of COVID-19 tests. The Point of Care and Molecular Lab businesses recorded strong growth (+281% and +86%, respectively) with COVID-19 testing.
Routine diagnostic testing, which was adversely impacted by the COVID-19 pandemic in 2020, also contributed to growth in the first quarter. Roche launched additional products in the first quarter, such as a research-use PCR test to help monitor SARS-CoV2 mutations, which further strengthened its position as the world’s leading supplier of COVID-19 tests.
Last month, Roche signed a definitive merger agreement with GenMark Diagnostics for $1.8 billion.
2021 Guidance 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
The European Commission approved Evrysdi, the first and only at-home SMA treatment with proven efficacy in adults and infants aged months and older.
The European regulatory authorities recommended the approval of Tecentriq as a first-line (initial) monotherapy treatment for people with a certain type of metastatic non-small cell lung cancer (NSCLC).
In March, Roche announced that one of the studies, REMDACTA, evaluating Actemra/RoActemra along with Gilead’s (GILD - Free Report) Veklury, did not reduce the duration of hospital stay for patients with severe COVID-19 pneumonia compared to those getting only Veklury.
In February, Roche obtained the CE mark for its new SARS-CoV-2 Rapid Antigen Test Nasal (for professional use).
Our Take
Roche’s performance in the first quarter of 2021 was mixed as COVID-19 disruptions and biosimilar competition weighed on the pharmaceuticals business, which comprises more than 75% of revenues and offset growth in Ocrevus, Tecentriq and Hemlibra.
Nevertheless, demand for Roche’s diagnostic tests is expected to remain strong as the pandemic continues and should positively impact the performance in 2021.
Roche currently carries a Zacks Rank #4 (Sell). A better-ranked stock in the biotech sector is Repligen Corp. (RGEN - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Repligen’s earnings estimates for 2021 have increased to $1.91 from $1.66 in the past 60 days.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>