Swiss pharma giant Roche Holding AG’s (RHHBY Quick QuoteRHHBY - Free Report) third-quarter revenues declined 6% to CHF 14.7 billion due to lower COVID-19-related sales.

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 in the Pharmaceuticals Division were down 6% in the third quarter while the Diagnostics division sales declined 4%.

Sales in the first nine months of 2022 came in at CHF 47 billion, up 2% from last year.  Sales in the Pharmaceuticals division were flat at CHF 33.2 billion in the first nine months. Strong demand for new drugs, namely Hemlibra (hemophilia), Ocrevus (multiple sclerosis), Evrysdi (spinal muscular atrophy), and Phesgo (breast cancer), drove growth for this division. The uptake of the new eye drug Vabysmo (launched at the beginning of the year) was also strong.

Competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin also hurt sales, as expected.  Sales of Actemra/RoActemra and Ronapreve (COVID-19) were also significantly lower year over year as the pandemic continued to weaken in many countries in 2022.

The Diagnostics division’s revenues came in at CHF 13.8 billion, up 6% as the base business recorded continued strong growth in all regions.  As expected, the demand for COVID-19 tests plunged in the third quarter of 2022.

Nine Months Results in Detail

Sales of Ocrevus, used to treat two forms of multiple sclerosis, increased 17% to CHF 4.4 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.

Perjeta’s sales grew 5% to CHF 3.1 billion due to continued high demand in the International region.

Sales of Hemlibra surged 28% to CHF 2.8 billion, fueled by strong uptake in the United States, the International region and Europe.

Immuno-oncology drug, Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer), recorded 10% year-over-year sales growth to CHF 2.7 billion as sales increased due to high demand in the United States and Europe.

Arthritis drug Actemra/RoActemra recorded sales of CHF 2 billion, down 23% as COVID-19-related sales decreased, mainly in the United States and the International region.

Herceptin sales were down 18% to CHF 1.7 billion due to biosimilar uptake in various countries.

Sales of Avastin, approved for multiple oncology indications, were down 29% to CHF 1.7 billion due to biosimilar competition in the United States and Europe.

Asthma drug Xolair raked in sales of CHF 1.6 billion, up 10% as sales grew in the chronic spontaneous urticaria indication.

Sales of Rituxan/MabThera (blood cancer and rheumatoid arthritis) declined 20% to CHF 1.6 billion due to biosimilar erosion, primarily in the United States.

Kadcyla sales were up 11% to CHF 1.6 billion, driven by the usage of Kadcyla in the early breast cancer setting.

Sales of the lung cancer drug, Alecensa, were up 16% to CHF 1.1 billion on solid growth across all regions.

Sales of the ophthalmology drug Lucentis declined 25% to CHF 800 million, primarily due to competitive pressure. The first biosimilar version of Lucentis (with a restricted label) came to market in the United States at the beginning of the third quarter of 2022.

The recently approved spinal muscular atrophy drug, Evrysdi, generated sales of CHF 793 million on the back of strong uptake 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 631 million, down 36% as sales growth in Japan was partly offset by the sales decline in Europe. Roche and partner Regeneron (REGN Quick QuoteREGN - Free Report) have collaborated for the development and manufacture of the cocktail.

Roche is responsible for distribution in Europe and other countries outside the United States. Regeneron is responsible for the United States.

Esbriet, indicated for idiopathic pulmonary fibrosis, declined 25% to CHF 590 million due to generic uptake, mainly in the United States. The first generic versions were launched in May 2022.

Phesgo sales came in at CHF 526 million, up 150 %, as sales continued to show a  strong uptake, especially in Europe and the United States.

Revenues in the Diagnostics division increased 4%. The Point of Care businesses recorded strong growth (+30%).

2022 Guidance Reiterated

Sales are projected to remain stable or grow in the low-single digits (at constant exchange rates). Core earnings per share are estimated to grow in the low- to mid-single-digit range. 

Our Take

Roche’s performance in the third quarter was disappointing due to significantly lower COVID-19-related sales in both divisions.

Roche currently carries a Zacks Rank #4 (Sell). A couple of better-ranked stocks in the healthcare sector are Puma Biotechnology (PBYI Quick QuotePBYI - Free Report) and Dynavax (DVAX Quick QuoteDVAX - Free Report) .  While Puma sports a Zacks Rank #1 (Strong Buy), Dynavax carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Puma’s loss estimates have narrowed to 6 cents from 16 cents over the past 60 days. Puma surpassed estimates in three of the trailing four quarters and missing in the other one, the average being 201.37%.

Dynavax’s earnings estimates have increased to $1.73 from $1.14 for 2022 over the past 90 days. Earnings of Dynavax surpassed estimates in two of the trailing four quarters.