Roche sets analysts purring with strong Q3 results

Roche has beaten market expectations in third quarter results, with new drugs gaining traction and its older medicines faring better than expected against cheaper biosimilar rivals.

The big Swiss pharma also said it expects to finish its much-delayed $4.3 billion takeover of Spark Therapeutics this year.

Sales in the third quarter rose 13% to 15.6 billion Swiss francs ($15.6 billion), with sales of its recently launched multiple sclerosis drug Ocrevus increasing almost 50% to 929 million francs.

The company also did well in China, with third-quarter sales in this country up 27% to 2.5 billion francs, where its older drugs Avastin, Herceptin, and Rituxan are becoming established as they face cheaper biosimilar competition in Europe and the US.

In a broker note, analysts from Jefferies Equity Research cited the strong performance in China, and a better than expected performance from new drugs.

Aside from Ocrevus, haemophilia drug Hemlibra, and cancer drugs Perjeta, Kadcyla and Tecentriq were all ahead of expectations.

There was also “negligible” impact from US biosimilars for Avastin and Herceptin, where the first biosimilar competitor is expected next month.

Roche has lifted its sales and earnings per share (EPS) targets, anticipating high, instead of mid to high, single digit constant exchange rate growth for both sales and EPS.

The analysts did say that much of the strong performance is down to the delayed impact of biosimilars in the US, but added that there is much more to come from the Swiss pharma.

The Jefferies team, including influential analyst Peter Welford, said that Roche is now its “preferred EU large-cap”, adding that the performance can be “sustained before future expansion”.

Current valuations ascribe no value to “likely the most exciting pipeline in pharma”, with several high-risk but innovative products that could bring substantial rewards, in areas where there are few likely competitors.

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