Switzerland's Roche expects no copycat competition to its biotech cancer drugs for another two years, giving it space to grow a successful portfolio of new and established medicines.
The strategy is working so far, with group sales in the first half increasing by a slightly better-than-expected 3 per cent as demand for oncology drugs helped offset the strength of the Swiss franc.
The shares rose 1.5 per cent in early trading on Thursday, with Deutsche Bank analyst Tim Race describing the results as "a modest positive".
Roche is the world's largest maker of cancer drugs and investors are banking on its ability to stay ahead as it advances into the hot new field of immunotherapy, where it faces rivals such as Bristol-Myers Squibb and Merck.
The company needs to keep producing novel products to counter the threat posed by cheap copies of biotech drugs, known as biosimilars, as well as innovative competition to eye drug Lucentis and hepatitis C treatment Pegasys.
Its three top-selling cancer drugs - Herceptin, Rituxan and Avastin - are all still growing but the patents on the first two have already expired in Europe.
Still, copying such drugs is hard and Roche doesn’t expect biosimilar Herceptin and Rituxan to emerge just yet.
"We expect them to enter in Europe in 2017 and, according to our latest information, probably towards the end of 2017," Roche chief executive Severin Schwan told reporters in a results call on Thursday.
Biosimilars in the United States will come only later, since Roche has patent protection there until 2019.
That gives it time to establish newer cancer drugs, like Perjeta and Kadcyla, and push into immunotherapy with its experimental drug atezolizumab and other products. Roche now has more than 40 immunotherapy programmes in clinical development.
“We will certainly be able to compete with our original products, based on the strong clinical base we have built up over literally a decade,” Mr Schwan said.
At constant exchange rates, first-half sales rose 6 per cent, helped by diagnostics and the performance of non-cancer products such as Esbriet, a drug for a fatal lung condition that Roche acquired when it bought InterMune for $8.3 billion last August.
The company is also stepping up work on Alzheimer’s disease by moving crenezumab into Phase III trials and investigating higher-dose tests with gantenerumab.
Roche reiterated its forecast for 2015 sales to grow in the low-to-mid single-digit range, after stripping out currency fluctuations, with core earnings per share (EPS) growing faster.
Group sales in the half year of 23.6 billion Swiss francs (€22.4 billion) generated core earnings per share (EPS) down 5 per cent at 7.22 francs. Profit growth was held back by the absence of a one-off gain booked in the same period last year.
Analysts in a Reuters poll had forecast sales of 23.5 billion francs and core EPS of 7.35 francs.
Reuters
