Roche boosted by US drugs sales

Roche brushed off the impact of a stronger Swiss franc to report better than expected first-quarter results driven by surging sales of breast cancer drugs.

The Basel-based group has been facing currency headwinds since Switzerland's central bank abandoned its peg to the euro in January, sending the Swiss franc soaring against the single currency.

However, the impact has been cushioned by a simultaneous appreciation in the dollar because Roche makes almost half its drug sales in the US.

Revenues rose 3 per cent, or 5 per cent when adjusted for currency fluctuations, to SFr11.83bn, compared with the same period last year. This was better than the consensus SFr11.5bn expected by analysts. No profit data were provided.

The results provided a powerful riposte to recent questions over the group's ability to maintain its dominance in the treatment of HER2-positive breast cancer - an aggressive form of the disease accounting for about one in five cases.

Sales of medicines for HER2-positive tumours rose 23 per cent as two newer drugs - Perjeta and Kadcyla - added to the longstanding strength of Roche's blockbuster Herceptin therapy.

Roche received a setback last year when disappointing trial data cast doubt on Kadcyla's ability to become a long-term successor to Herceptin in combination with Perjeta. However, double-digit growth in all three of the group's HER2-positive drugs during the first quarter suggested there is little immediate threat to its position.

Analysts have highlighted the longer term challenge facing Roche as a new category of lower cost copycat drugs called biosimilars begin to compete with older biological medicines such as Herceptin.

The US Food and Drug Administration last month gave its first go-ahead for a biosimilar - an alternative to Amgen's Neupogen anti-infective drug - and more are expected to follow in months ahead.

However, Severin Schwan, chief executive, said he did not expect Roche to face its first biosimilar competition until 2017 in Europe and "even later" in the US. "Eventually biosimilars will enter," he said on Wednesday. "Our strategy is clearly to . . . develop new, better medicines to replace our current medicines."

Much of the group's focus is on a new class of cancer drugs called immunotherapies, which harness the immune system to fight tumours.

Roche is lagging Merck and Bristol-Myers Squibb of the US in the first wave of these treatments but Mr Schwan said he was confident of long-term success.

He pointed to the 30 research and development programmes that Roche has under way in immuno-oncology and said the breadth of its cancer portfolio would allow the group to come up with more effective combination therapies.

Andrew Baum, analyst at Citigroup, said he had "high conviction" about the long-term success of Roche's immunotherapy strategy but he remained concerned about the risks of biosimilar competition to some of its biggest-selling products.

Mr Schwan said the group continued to "scan the market" for deals after several acquisitions in the past year, including its $8.3bn acquisition of US-based InterMune. The focus remained on bolt-on deals rather than megamergers, he added.

Global drugmakers have been immersed in a wave of mergers and acquisitions in recent months, with Teva of Israel on Tuesday offering to buyMylan of the US for $40bn.

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