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Roche (RHHBY) Nine Months' Sales Fall on Lower COVID-19 Test Sale
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Roche’s (RHHBY - Free Report) performance in the third quarter and the first nine months of 2023 was impacted by a sharp decline in COVID-19 test sale and exchange rate fluctuations, even though the diagnostics base business and newer drugs maintained their growth.
The appreciation of the Swiss franc against most currencies had a significant adverse impact on the results.
Roche has lost 12.4% year to date against the industry’s growth of 8.6%.
Image Source: Zacks Investment Research
The company reported total sales of CHF 14.3 billion in the third quarter of 2023, up 7% year over year at constant exchange rates (“CER”).
Sales in the first nine months of 2023 came in at CHF 44 billion, down 6% from the same period in 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 CER.
Sales in the Pharmaceuticals Division rose 9% in the first half to CHF 33.6 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 a total of CHF 11.2 billion, increasing CHF 3.3 billion from the first nine months of 2022.
The Diagnostics division’s sales were down 18% to CHF 10.4 billion. COVID-19 test sales dropped to CHF 0.4 billion in the first nine months of 2023 from CHF 3.6 billion in the same period last year.
Excluding COVID-19 products, group sales increased by 9% at CER.
First Nine Months in Detail
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 14% to CHF 4.8 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.
Sales of hemophilia A drug Hemlibra surged 19% to CHF 3.1 billion.
Perjeta’s sales grew 6% to CHF 3 billion owing to continued high demand.
Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded 11% year-over-year sales growth to CHF 2.8 billion.
Actemra/RoActemra sales were up 2% to CHF 1.9 billion.
The biggest driver of revenues in the first nine months was the ophthalmology drug Vabysmo (approved in 2022), which generated sales of CHF 1.6 billion (mainly in the United States).
Asthma drug Xolair generated sales of CHF 1.6 billion, up 4%.
Kadcyla sales of CHF 1.5 billion were up 2%.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 15% to CHF 1.3 billion due to biosimilar erosion.
Herceptin sales were down 17% to CHF 1.3 billion due to biosimilar uptake in various countries.
Sales of Avastin, approved for multiple oncology indications, were down 20% to CHF 1.2 billion due to biosimilar competition in the United States and Europe.
Sales of the lung cancer drug Alecensa were up 9% to CHF 1.1 billion.
The spinal muscular atrophy drug Evrysdi generated sales of CHF 1.1 billion, up 45%.
Phesgo, a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection, saw sales of CHF 817 million, up 66%.
Blood cancer drug Gazyva/Gazyvaro sales were CHF 615 million, up 22%.
The blood cancer drug Polivy generated sales of CHF 605 million.
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 532 million, down 5% as the pandemic eased out. Roche and partner Regeneron (REGN - Free Report) collaborated on the development and manufacturing of the cocktail.
Revenues in the Diagnostics division declined 18%. The downside in sales across all regions is primarily due to the lower demand for COVID-19 tests. The base business was up 7%, driven by immunodiagnostics, particularly cardiac tests and diagnostic 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 4.5 billion (versus previous estimate of a decline of 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 declines.
Pipeline Updates
The European Commission approved Evrysdi for babies under two months old with spinal muscular atrophy.
Primary analysis from the phase III ALINA study showed that Alecensa reduced the risk of disease recurrence or death by 76% compared with platinum-based chemotherapy in people with completely resected stage IB anaplastic lymphoma kinase-positive non-small cell lung cancer.
Our Take
Roche’s performance in the first nine months 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.
Vabysmo has put up a stellar performance against Regeneron’s Eylea, whose sales have been under pressure in 2023. The approval of a higher dose of Eylea is expected to somewhat offset the sales decline.
However, competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin hurt sales.
Loss estimates for Dynavax for 2023 have narrowed to 23 cents from 51 cents in the past 90 days, while earnings estimates for 2024 are pinned at 8 cents per share.
Loss estimates for Acadia for 2023 have narrowed to 37 cents from 41 cents in the past 60 days, while earnings estimates for 2024 are pegged at 68 cents per share. The stock has surged 45.3% so far this year.
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Roche (RHHBY) Nine Months' Sales Fall on Lower COVID-19 Test Sale
Roche’s (RHHBY - Free Report) performance in the third quarter and the first nine months of 2023 was impacted by a sharp decline in COVID-19 test sale and exchange rate fluctuations, even though the diagnostics base business and newer drugs maintained their growth.
The appreciation of the Swiss franc against most currencies had a significant adverse impact on the results.
Roche has lost 12.4% year to date against the industry’s growth of 8.6%.
Image Source: Zacks Investment Research
The company reported total sales of CHF 14.3 billion in the third quarter of 2023, up 7% year over year at constant exchange rates (“CER”).
Sales in the first nine months of 2023 came in at CHF 44 billion, down 6% from the same period in 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 CER.
Sales in the Pharmaceuticals Division rose 9% in the first half to CHF 33.6 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 a total of CHF 11.2 billion, increasing CHF 3.3 billion from the first nine months of 2022.
The Diagnostics division’s sales were down 18% to CHF 10.4 billion. COVID-19 test sales dropped to CHF 0.4 billion in the first nine months of 2023 from CHF 3.6 billion in the same period last year.
Excluding COVID-19 products, group sales increased by 9% at CER.
First Nine Months in Detail
Sales of Ocrevus, used to treat two types of multiple sclerosis, increased 14% to CHF 4.8 billion as demand in both indications (relapsing and primary progressive forms of multiple sclerosis) remained strong.
Sales of hemophilia A drug Hemlibra surged 19% to CHF 3.1 billion.
Perjeta’s sales grew 6% to CHF 3 billion owing to continued high demand.
Immuno-oncology drug Tecentriq (for advanced lung cancer, urothelial cancer and breast cancer) recorded 11% year-over-year sales growth to CHF 2.8 billion.
Actemra/RoActemra sales were up 2% to CHF 1.9 billion.
The biggest driver of revenues in the first nine months was the ophthalmology drug Vabysmo (approved in 2022), which generated sales of CHF 1.6 billion (mainly in the United States).
Asthma drug Xolair generated sales of CHF 1.6 billion, up 4%.
Kadcyla sales of CHF 1.5 billion were up 2%.
Sales of Rituxan/MabThera (for blood cancer and rheumatoid arthritis) declined 15% to CHF 1.3 billion due to biosimilar erosion.
Herceptin sales were down 17% to CHF 1.3 billion due to biosimilar uptake in various countries.
Sales of Avastin, approved for multiple oncology indications, were down 20% to CHF 1.2 billion due to biosimilar competition in the United States and Europe.
Sales of the lung cancer drug Alecensa were up 9% to CHF 1.1 billion.
The spinal muscular atrophy drug Evrysdi generated sales of CHF 1.1 billion, up 45%.
Phesgo, a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection, saw sales of CHF 817 million, up 66%.
Blood cancer drug Gazyva/Gazyvaro sales were CHF 615 million, up 22%.
The blood cancer drug Polivy generated sales of CHF 605 million.
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 532 million, down 5% as the pandemic eased out. Roche and partner Regeneron (REGN - Free Report) collaborated on the development and manufacturing of the cocktail.
Revenues in the Diagnostics division declined 18%. The downside in sales across all regions is primarily due to the lower demand for COVID-19 tests. The base business was up 7%, driven by immunodiagnostics, particularly cardiac tests and diagnostic 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 4.5 billion (versus previous estimate of a decline of 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 declines.
Pipeline Updates
The European Commission approved Evrysdi for babies under two months old with spinal muscular atrophy.
Primary analysis from the phase III ALINA study showed that Alecensa reduced the risk of disease recurrence or death by 76% compared with platinum-based chemotherapy in people with completely resected stage IB anaplastic lymphoma kinase-positive non-small cell lung cancer.
Our Take
Roche’s performance in the first nine months 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.
Vabysmo has put up a stellar performance against Regeneron’s Eylea, whose sales have been under pressure in 2023. The approval of a higher dose of Eylea is expected to somewhat offset the sales decline.
However, competition from biosimilars for established cancer medicines like Avastin, MabThera/Rituxan and Herceptin hurt sales.
Zacks Rank & Stock to Consider
Roche currently carries a Zacks Rank #4 (Sell).
A couple of better-ranked stocks in the healthcare industry are Dynavax Technologies (DVAX - Free Report) and Acadia Pharmaceuticals (ACAD - Free Report) . Dynavax currently sports a Zacks Rank #1 (Strong Buy) and ACAD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Loss estimates for Dynavax for 2023 have narrowed to 23 cents from 51 cents in the past 90 days, while earnings estimates for 2024 are pinned at 8 cents per share.
Loss estimates for Acadia for 2023 have narrowed to 37 cents from 41 cents in the past 60 days, while earnings estimates for 2024 are pegged at 68 cents per share. The stock has surged 45.3% so far this year.