Roche posts strong first half results

BASEL, Switzerland — Roche CEO Severin Schwan announced yesterday that “Roche achieved a strong operating performance in the first half of 2010 despite an increasingly challenging market environment. Our sales increased faster than the market. The US filing of T-DM1, an “armed antibody” for the treatment of HER-2 positive breast cancer, represents a major step towards offering this innovative medicine to patients who have very limited treatment options.“

The Roche Group posted strong operating results in the first half of 2010. Group sales grew by five percent in local currencies (three percent in Swiss francs; seven percent in US dollars) to 24.6 billion Swiss francs. The Pharmaceuticals Division increased its sales by four percent in local currencies (one percent in Swiss francs; six percent in US dollars) to 19.4 billion Swiss francs. Demand for the cancer drugs Avastin, MabThera/Rituxan, Herceptin, Xeloda and Tarceva continued to show strong growth. Overall sales of oncology products rose nine percent in local currencies in the first half year, enabling Roche to solidify its leading market position in this segment. Other major growth drivers in the Pharmaceuticals Division included Lucentis in ophthalmology, Actemra/RoActemra for rheumatoid arthritis and Mircera for anemia.

These positive factors more than offset the expected significant decline in Tamiflu sales. Excluding Tamiflu, sales growth was six percent in local currencies, again ahead of market growth. The Diagnostics Division expanded its market leadership as sales reached 5.3 billion Swiss francs in the first six months of 2010, a nine percent growth rate in local currencies (seven percent in Swiss francs; 12 percent in US dollars).

This strong growth was led by the Professional Diagnostics unit’s immunoassay business and Diabetes Care’s Accu-Chek Aviva, Accu-Chek Performa and newly launched Accu-Chek Mobile blood glucose monitoring systems, followed by Applied Science with strong growth in the cell analysis segment.

The group’s operating profit before exceptional items increased significantly by 11 percent in local currencies (10 percent in Swiss francs), again substantially above sales growth. This rise was driven by the growth in sales and by further productivity improvements. The Pharmaceuticals Division improved its operating profit (before exceptional items) by nine percent in local currencies and seven percent in Swiss francs to 8 billion Swiss francs, due primarily to higher sales and cost synergies from the Genentech integration. The Diagnostics Division’s operating profit grew substantially, advancing 45 percent in local currencies and 47 percent in Swiss francs to 947 million Swiss francs, due mainly to strong sales growth and ongoing programmes to increase operational efficiency.

Group net income increased 37 percent to 5.6 billion Swiss francs, primarily as a result of the much lower exceptional charges incurred in respect of the Genentech transaction in the first half of 2010 compared with 2009. Excluding exceptional items, Group net income attributable to Roche shareholders rose eight percent in Swiss francs. Core earnings per share, which does not include exceptional items or amortization and impairment of intangible assets, increased 11 percent in local currencies (nine percent in Swiss francs).

Despite lower Tamiflu sales and the more challenging market environment, Roche confirms its full-year outlook for 2010 on the basis of the positive half-year result. Barring unforeseen events, Roche expects local currency sales growth in the mid single-digit range for the Group and the Pharmaceuticals Division in 2010. For the Diagnostics Division, Roche expects to grow significantly above the market.