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Roche (RHHBY) 1H Revenues, Earnings Down on Lower COVID-19 Test Sales
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Roche Holding AG’s (RHHBY - Free Report) performance in the first half was average, as COVID-19 product related sales declined significantly impacting the top line, even though the diagnostics base business and newer drugs maintain their growth.
Roche’s stock movement has remained flat year to date against the industry’s growth of 1.8%.
Image Source: Zacks Investment Research
The company reported total sales of CHF 14.4 billion in the second quarter of 2023, flat year over year.
Sales in the first half of 2023 came in at CHF 29.8 billion, down 8% from the same period in 2022. Core earnings per share totaled CHF 10.10 for the year, down from CHF 11.76 in the first half of 2022.
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 (CER).
Sales in the Pharmaceuticals Division were up 8% in the first half to CHF 22.7 billion, driven by strong global demand for newer drugs.
The top five growth drivers of sales — Vabysmo, Ocrevus (multiple sclerosis), Hemlibra (hemophilia), Evrysdi (spinal muscular atrophy) and Phesgo (breast cancer) — generated total sales of CHF 7.5 billion, an increase of CHF 2.2 billion from the first half of 2022.
The Diagnostics division’s sales were down 23% to CHF 7.1 billion. COVID-19 test sales dropped to CHF 0.4 billion in the first half of 2023 from CHF 3.1 billion in the same period last year, when demand was exceptionally high.
Excluding COVID-19 products, group sales increased 8% at CER.
First Half in Detail
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 15% to CHF 3.2 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.
Sales of hemophilia A drug Hemlibra surged 20% to CHF 2.1 billion.
Perjeta’s sales grew 9% to CHF 2.1 billion owing to continued high demand. Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded 12% year-over-year sales growth to CHF 1.8 billion.
Actemra/RoActemra sales were down 6% to CHF 1.3 billion.
Asthma drug Xolair raked in sales of CHF 1 billion, up 4%.
Kadcyla sales of CHF 1 billion were flat.
The biggest driver of revenues in the first half was ophthalmology drug Vabysmo (approved in 2022) which generated sales of CHF 957 million (mainly in the United States).
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 17% to CHF 882 million due to biosimilar erosion.
Herceptin sales were down 19% to CHF 878 million due to biosimilar uptake in various countries.
Sales of Avastin, approved for multiple oncology indications, were down 21% to CHF 837 million due to biosimilar competition in the United States and Europe.
Sales of the lung cancer drug Alecensa were up 10% to CHF 758 million.
The spinal muscular atrophy drug, Evrysdi, generated sales of CHF 705 million, up 48%.
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 550 million, up 2%.
Roche and partner Regeneron (REGN - Free Report) collaborated for developing and manufacturing the cocktail.
Roche is responsible for distribution in Europe and other countries outside the United States and Regeneron is responsible for the United States.
Phesgo, a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection, saw sales of CHF 517 million, up 69%.
Blood cancer drug Gazyva/Gazyvaro sales came in at CHF 402 million, up 22%.
Blood cancer drug Polivy generated sales of CHF 353 million.
Sales of the ophthalmology drug Lucentis declined 46% to CHF 299 million, primarily due to competitive pressure. Lucentis started facing biosimilars as soon as the first version (with a restricted label) came to market in the United States at the beginning of the third quarter of 2022.
Revenues in the Diagnostics division declined 23%. The downside in sales across all regions is primarily due to the lower demand for COVID-19 tests. The base business was up 6%, driven by immunodiagnostics, particularly cardiac tests, and diagnostics solutions for clinical chemistry.
2023 Guidance Reiterated
Roche expects a decline in total sales in the low single-digit range (at CER) due to a plunge in sales of COVID-19 products of nearly CHF 5 billion. Excluding this impact, sales growth is anticipated to be solid in both divisions’ base businesses. Core earnings per share are targeted to develop broadly in line with sales decline.
Pipeline Updates
The European Commission approved fixed-duration Columvi (glofitamab) for people with relapsed or refractory diffuse large B-cell lymphoma. The FDA also approved the drug.
Roche entered into a partnership with Alnylam ALNY to co-develop and co-commercialize RNAi therapeutic zilebesiran to treat hypertension in patients with high cardiovascular risk.
Per the terms, Alnylam is entitled to an upfront payment of $310 million. It will also receive development, regulatory and commercial milestones including substantial near-term milestones, together with equal profit and loss share in the United States and royalties ex-US.
Our Take
Roche’s performance in the first half was decent excluding COVID-19-related sales. New drugs, namely Ocrevus, Hemlibra, Evrysdi and Tecentriq boosted growth and the uptake of the new eye drug Vabysmo (launched at the beginning of 2022), was outstanding.
However, sales are likely to be affected further by the expected nosedive in sales of COVID-19 products of nearly CHF 5 billion. Competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin also hurt sales.
In the past 60 days, earnings estimates for NVS for 2023 have gained 22 cents to $6.89. NVS topped earnings estimates in all of the last four quarters, the four-quarter earnings surprise being 6.56%, on average.
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Roche (RHHBY) 1H Revenues, Earnings Down on Lower COVID-19 Test Sales
Roche Holding AG’s (RHHBY - Free Report) performance in the first half was average, as COVID-19 product related sales declined significantly impacting the top line, even though the diagnostics base business and newer drugs maintain their growth.
Roche’s stock movement has remained flat year to date against the industry’s growth of 1.8%.
Image Source: Zacks Investment Research
The company reported total sales of CHF 14.4 billion in the second quarter of 2023, flat year over year.
Sales in the first half of 2023 came in at CHF 29.8 billion, down 8% from the same period in 2022. Core earnings per share totaled CHF 10.10 for the year, down from CHF 11.76 in the first half of 2022.
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 (CER).
Sales in the Pharmaceuticals Division were up 8% in the first half to CHF 22.7 billion, driven by strong global demand for newer drugs.
The top five growth drivers of sales — Vabysmo, Ocrevus (multiple sclerosis), Hemlibra (hemophilia), Evrysdi (spinal muscular atrophy) and Phesgo (breast cancer) — generated total sales of CHF 7.5 billion, an increase of CHF 2.2 billion from the first half of 2022.
The Diagnostics division’s sales were down 23% to CHF 7.1 billion. COVID-19 test sales dropped to CHF 0.4 billion in the first half of 2023 from CHF 3.1 billion in the same period last year, when demand was exceptionally high.
Excluding COVID-19 products, group sales increased 8% at CER.
First Half in Detail
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 15% to CHF 3.2 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.
Sales of hemophilia A drug Hemlibra surged 20% to CHF 2.1 billion.
Perjeta’s sales grew 9% to CHF 2.1 billion owing to continued high demand.
Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded 12% year-over-year sales growth to CHF 1.8 billion.
Actemra/RoActemra sales were down 6% to CHF 1.3 billion.
Asthma drug Xolair raked in sales of CHF 1 billion, up 4%.
Kadcyla sales of CHF 1 billion were flat.
The biggest driver of revenues in the first half was ophthalmology drug Vabysmo (approved in 2022) which generated sales of CHF 957 million (mainly in the United States).
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 17% to CHF 882 million due to biosimilar erosion.
Herceptin sales were down 19% to CHF 878 million due to biosimilar uptake in various countries.
Sales of Avastin, approved for multiple oncology indications, were down 21% to CHF 837 million due to biosimilar competition in the United States and Europe.
Sales of the lung cancer drug Alecensa were up 10% to CHF 758 million.
The spinal muscular atrophy drug, Evrysdi, generated sales of CHF 705 million, up 48%.
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 550 million, up 2%.
Roche and partner Regeneron (REGN - Free Report) collaborated for developing and manufacturing the cocktail.
Roche is responsible for distribution in Europe and other countries outside the United States and Regeneron is responsible for the United States.
Phesgo, a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection, saw sales of CHF 517 million, up 69%.
Blood cancer drug Gazyva/Gazyvaro sales came in at CHF 402 million, up 22%.
Blood cancer drug Polivy generated sales of CHF 353 million.
Sales of the ophthalmology drug Lucentis declined 46% to CHF 299 million, primarily due to competitive pressure. Lucentis started facing biosimilars as soon as the first version (with a restricted label) came to market in the United States at the beginning of the third quarter of 2022.
Revenues in the Diagnostics division declined 23%. The downside in sales across all regions is primarily due to the lower demand for COVID-19 tests. The base business was up 6%, driven by immunodiagnostics, particularly cardiac tests, and diagnostics solutions for clinical chemistry.
2023 Guidance Reiterated
Roche expects a decline in total sales in the low single-digit range (at CER) due to a plunge in sales of COVID-19 products of nearly CHF 5 billion. Excluding this impact, sales growth is anticipated to be solid in both divisions’ base businesses. Core earnings per share are targeted to develop broadly in line with sales decline.
Pipeline Updates
The European Commission approved fixed-duration Columvi (glofitamab) for people with relapsed or refractory diffuse large B-cell lymphoma. The FDA also approved the drug.
Roche entered into a partnership with Alnylam ALNY to co-develop and co-commercialize RNAi therapeutic zilebesiran to treat hypertension in patients with high cardiovascular risk.
Per the terms, Alnylam is entitled to an upfront payment of $310 million. It will also receive development, regulatory and commercial milestones including substantial near-term milestones, together with equal profit and loss share in the United States and royalties ex-US.
Our Take
Roche’s performance in the first half was decent excluding COVID-19-related sales. New drugs, namely Ocrevus, Hemlibra, Evrysdi and Tecentriq boosted growth and the uptake of the new eye drug Vabysmo (launched at the beginning of 2022), was outstanding.
However, sales are likely to be affected further by the expected nosedive in sales of COVID-19 products of nearly CHF 5 billion. Competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin also hurt sales.
Roche currently carries a Zacks Rank #3 (Hold). A better-ranked large cap pharma is Novartis (NVS - Free Report) , sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In the past 60 days, earnings estimates for NVS for 2023 have gained 22 cents to $6.89. NVS topped earnings estimates in all of the last four quarters, the four-quarter earnings surprise being 6.56%, on average.