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Roche (RHHBY) 9M21 Sales Grow on Strong COVID-19 Tests, View Up

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Swiss pharma giant Roche Holding AG’s (RHHBY - Free Report) performance in the third quarter of 2021 and the first nine months of 2021 was encouraging driven by strong demand for coronavirus tests, recently launched drugs, and diagnostics platforms. The company also raised its outlook for the full year.

Roche’s stock has gained 12.8% in the year so far compared with the industry’s growth of 13.2%.

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The company reported total sales of CHF 46.7 billion in the first nine months of 2021, up 6% from the year-ago period.

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 flat at CHF 33.4 billion as the business recovers from the COVID-19 pandemic and the biosimilar impact slows down as expected.

The Diagnostics division’s revenues came in at CHF 13.3 billion, up 39% due to high demand for COVID-19 tests, a strong recovery in the base business, and the newly launched diagnostics platforms.

For the third quarter, the Pharmaceuticals division’s sales grew 5% while the Diagnostics division sales jumped 18%.  The demand for coronavirus tests remained high in the third quarter due to the Delta variant.

Sales of Actemra/RoActemra, Hemlibra, Ocrevus, and Tecentriq, as well as for Evrysdi (spinal muscular atrophy) and Phesgo (breast cancer) offset the decline resulting from biosimilar competition for MabThera/Rituxan, Avastin, and Herceptin.

Nine Months Results in Detail

Performance of the immunology franchise was driven by 30% growth in arthritis drug Actemra/RoActemra sales to CHF 2.7 billion, as several countries included this medicine in their treatment guidelines for severe COVID-19-associated pneumonia.

Sales of Avastin, approved for multiple oncology indications, were down 39% to CHF 2.4 billion due to biosimilar competition in the United States and Europe.
Herceptin sales fell 32% to CHF 2.1 billion due to biosimilar competition across all regions. Sales of Rituxan/MabThera (blood cancer and rheumatoid arthritis) declined 41% to CHF 2 billion due to biosimilar erosion as well as COVID-19 pandemic restrictions.

Sales of asthma drug, Xolair, increased 2% to CHF 1.4 billion.

Perjeta’s sales grew 4% to CHF 3 billion due to high demand in the International region (China, Argentina, and Brazil) in both early and metastatic breast cancer settings. Kadcyla sales soared 16% to CHF 1.5 billion.

Sales of Ocrevus, used to treat two forms of multiple sclerosis, increased 17% to CHF 3.7 billion on continued growth.

Immuno-oncology drug, Tecentriq (for advanced lung cancer, urothelial cancer, and breast cancer), recorded 27% year-over-year sales growth to CHF 2.5 billion as sales increased in all regions, most notably in Japan, primarily due to the growth in the treatment of hepatocellular carcinoma (HCC).

Sales of hemophilia A drug, Hemlibra, surged 42% to CHF 2.2 billion, fueled by strong uptake in the United States and Europe.

Sales of lung cancer drug, Alecensa, rose 19% on solid growth across all regions.

Ronapreve, 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 1.1 billion. Roche and partner Regeneron (REGN - Free Report) have collaborated on the development and manufacture of the cocktail. Roche is responsible for distribution in Europe and other countries outside the United States.

Gazyva sales came in at CHF 501 million, up 8%.

Esbriet, indicated for idiopathic pulmonary fibrosis, declined 4% to CHF 789 million.  The recently approved spinal muscular atrophy drug, Evrysdi, generated sales of CHF 396 million.

Revenues in the Diagnostics division increased 39% mainly due to Roche’s comprehensive and growing portfolio of COVID-19 tests. The Point of Care and Molecular Lab businesses recorded strong growth (279% and 36%, respectively) with COVID-19 testing.

2021 Guidance

Sales are now expected to grow in the mid-single-digit range, at constant exchange rates (earlier expectation: in the low to mid-single-digit range). Core earnings per share are estimated to grow broadly in line with sales, at constant exchange rates.

Pipeline Progress  

The FDA approved Tecentriq for adjuvant treatment of certain people with early-stage non-small cell lung cancer (NSCLC).

In September, the European Medicines Agency recommended the approval of RET inhibitor Gavreto as monotherapy for patients with advanced RET-fusion positive NSCLC.

The FDA granted Breakthrough Therapy Designations (BTD) to Venclexta/Venclyxto combination therapy for the treatment of adult patients with myelodysplastic syndromes, a rare form of blood cancer. The drug is being developed with AbbVie (ABBV - Free Report) . The regulatory body also granted BTD to gantenerumab for the treatment of people with Alzheimer’s disease.

Our Take

Roche’s performance in the third quarter of 2021 was encouraging with the pharmaceuticals business showing signs of recovery from COVID-19 disruptions. The diagnostics division also maintained its stellar performance on strong demand for COVID-19 tests due to the Delta variant. The increase in outlook was positive as well.

 

Roche currently carries a Zacks Rank #2 (Buy). Another top-ranked stock in the large cap pharmaceutical sector is Pfizer (PFE - Free Report) , which carries a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer’s earnings estimates for 2021 have increased to $4.07 from $4.01 and to $3.54 from $3.35 in the past 60 days.