|16 October, 2019

Roche lifts 2019 sales view again as Chinese demand soars

Demand for cancer drugs for rural China helps spur growth

ZURICH- Swiss drugmaker Roche lifted its 2019 sales target on Wednesday for the third time this year, helped by newer medicines and as China bought more cancer drugs to treat a disease blamed for a quarter of the nation's annual deaths.

Roche's full-year revenue is now seen growing at a high-single-digit percentage rate, the Basel-based company said, to what would easily top $60 billion. That is up from the July's mid- to high-single digit growth estimate.

The new forecast sets a high bar for Swiss rival Novartis, which reports results next week.

Over a decade, China has gone from Roche's 10th biggest market to its second-largest behind the United States, with 4.5 billion Swiss francs ($4.5 billion) in 2018 sales.

The trend has accelerated, with growth in China topping 50% over the first nine months, about double 2018's rate.

Cancer has been on the rise in China, driven by air pollution and high rates of smoking. Water pollution and excessive use of chemical fertilisers and pesticides have also been blamed for an increase in rural cancer rates. 

Roche, the world's biggest cancer drug maker, is profiting as China approves more products from western pharmaceuticals makers, including the Swiss company's Rituxan/Mabthera, Herceptin and Avastin, and as the nation expands treatment beyond urban centres.

"We're benefiting from the fact that we have a major geographic expansion of both Herceptin and Mabthera, especially into rural areas," Roche drugs division head Bill Anderson said on a call, adding rapid Chinese sales growth this year was likely a "high-water mark."

"We've got our new medicines launching in China at an increasing pace, so we look forward to continued strong growth," Anderson said. "But greater than 50% is hard to achieve in an ongoing fashion."

Roche shares were 0.7% higher at 0930 GMT and are now up about 20% this year. That tops the 16% rise of Novartis.

Third-quarter sales rose 13% to 15.6 billion francs, Roche said. It does not report quarterly profit figures.

NEWER MEDICINES

Biosimilar copies of Roche's patent-expired Rituxan and Herceptin have taken their toll in Europe and are just now arriving in the United States.

Still, Chief Executive Severin Schwan has pledged to more than offset that erosion with newer medicines including multiple sclerosis drug Ocrevus, haemophilia A treatment Hemlibra and lung cancer drug Alecensa, all of which saw sales rise steeply over the first nine months of 2019. 

"The long-feared skid marks caused by biosimilars in the U.S. market are not visible," said Zuercher Kantonalbank's Michael Nawrath, who raised his rating to "overweight" from "market weight" on Wednesday.

($1 = 0.9975 Swiss francs)

(Reporting by John Miller; Editing by Michael Shields and Mark Potter) ((J.Miller@thomsonreuters.com; +41 58 306 7734; Reuters Messaging: j.miller.thomsonreuters.com@reuters.net))

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