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Research Tree provides access to ongoing research coverage, media content and regulatory news on ROCHE HOLDING AG-GENUSSCHEIN. We currently have 7 research reports from 1 professional analysts.
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ROCHE HOLDING AG-GENUSSCHEIN
ROCHE HOLDING AG-GENUSSCHEIN
Newsflow on pipeline and biosimilar development to be more meaningful this year
20 Mar 17
Roche’s Q4 sales grew by 3% at CER (all sales numbers at CER unless specified) to CHF13.1bn. The deviation from our forecasts segment-wise were balanced at the net level – the better performance by the pharma business (+3% vs 2% in Q3) ironed out marginal underperformance in the diagnostics business (+5% vs 8% in Q3). For the full year, Pharma grew by 3% and Diagnostics by 7%, stepping up to group sales growth of 4% to CHF50.6bn. By therapeutic area for the year, oncology (64% of pharma sales) grew by 4%, immunology (18% of pharma sales) by 10%, neuroscience by 2%, while infectious diseases and ophthalmology (which only has Lucentis) declined by 14% and 10%, respectively. Adjusted operating profit of CHF16.4bn for the year was in line with our expectations, benefiting from better control on general and administrative expenses. On the other hand, we do not expect much respite on the R&D front as the company invests heavily in the line-up of drugs in the pipeline. The core EPS (CER) growth at 5% to CHF14.53 met management’s guidance of higher-than-revenue-growth guidance of low to mid single-digit. However, if we exclude the one-time gain of CHF426m, pertaining to changes to the pension plan in Switzerland, growth came in at 2%, slightly behind guidance. Geographically, the US pharma reported a better performance during the quarter (+3% vs +1% in Q3) as did Japan (+3% vs -3% in Q3 which coincided with the bi-annual price cuts) and International market (+3% vs +2% in Q3), although Europe was slower (+2% vs +5% in Q3). The US was driven by MabThera/Rituxan (+3%), Activase (+46%) and Xolair (+8%), offset to some extent by Avastin (-10%), Lucentis (-14%), Tarceva (-8%) and Cellcept (-31%). Europe, on the other hand, had most of the mature drugs in the red but was driven by Perjeta (+22%) and Actemra/RoActemra (+14%). The diagnostics business was driven by centralised and point of care Solutions (58% of diagnostics sales; grew by 9% for the year, primarily on the back of immunodiagnostics business), but offset to some extent by pricing pressure in the diabetes care business (18% of diagnostics sales; declined by 4% for the year). Molecular diagnostics and tissue diagnostics remained steady (7% and 14% at CER, respectively, for the year). Geographically, Asia Pacific reported the highest growth at 16%, driven primarily by China. In 2017, Roche expects sales to grow low to mid single-digit, at constant exchange rates. This, according to management, factors in the scenarios on potential catalysts during the year, including biosimilars and the APHINITY trial (which recently moved in the favour of the company). Core earnings per share are guided to be in line with sales growth.
Nothing wrong but sentiment in a dull stretch
25 Oct 16
Roche’s Q3 sales were marginally shy of the estimates at CHF12.48bn (vs our estimate of CHF12.56bn and the consensus estimate of CHF12.64bn), primarily due to the uninspiring performance of the mature drugs in the US. Nine months’ revenue came in at CHF37.5bn. These numbers represented (at CER) growth of 3% for the quarter and 4% for 9m. Forex had a positive impact of 150bp in Q3. The Pharma segment was up by 2% (vs 5% in Q2) to CHF9.7bn while the diagnostics business continued its robust performance at 8% growth (vs 8% in Q2) to CHF2.8bn. Of the main drugs in Pharma, while Herceptin (+4%), Lucentis (-1%), and Perjeta (+24%) came in ahead, Avastin (-3%), Tarceva (-18%), Xolair (+13%), Kadcyla (+5%) and Tamiflu (-23%) fell short of our expectations. The US market (+1% vs 5% in Q2, 3% in Q1) was hamstrung by MabThera (-3% vs 6% in Q2 and flat growth in Q1), Herceptin (flat vs +6% in Q2 and +4% in Q1), and Avastin (-9% vs flat in Q2 and -2% in Q1). While Europe (+5%) remained stable (vs 6% in Q2 and 5% in Q1), Japan languished in the second consecutive quarter (-3% vs 1% in Q2 and 4% in Q1), primarily due to price cuts in Avastin (although the 10.9% price-cut was narrowed to a decline of 6% at the sales level due to support from the volumes). The Diagnostics business saw a healthy Asia Pacific (+17% growth in 9m was marked by 24% growth in China) drive the 9% growth in the professional diagnostics sub-segment (~58% of diagnostics sales). The new high-volume testing immunoassay solution, Cobas E 801 (launched in June 2016) was reported to be ramping up fast on the back of the productivity and efficiency gains it offers. The second biggest sub-segment, diabetes care (18% of diagnostics sales), continued to reel under pricing pressure and the continued run-off of the lower Medicare prices to private plans. Management expects the turnaround by 2017. The remaining two segments – molecular diagnostics (16% of diagnostics sales) and tissue diagnostics (8% of diagnostics sales) – grew by 6% and 15%, respectively during the quarter. Sales guidance for the year was maintained at low-to-mid single-digit at CER, while the core EPS growth is guided to remain ahead of sales growth. The dividend is likely to increase from the 2015 level of CHF8.1 per share (we expect it to increase to CHF8.3 per share).
Investment-heavy H1 while top-line remains strong
26 Jul 16
After two consecutive quarters of 4% yoy growth, Roche reported 6% growth in Q2 16 to CHF12.6bn, coming in ahead of our as well as consensus estimates. NB All sales numbers at CER, unless mentioned otherwise. The quarter was driven by 5% growth in Pharma (to CHF9.7bn, +7% in CHF) and 8% growth in Diagnostics (to CHF2.9bn, +8.2% in CHF). The weak Swiss franc against the Japanese yen, Brazilian real and the euro boosted reported sales by another percentage point during the quarter. The 6% pharma growth in the US during the quarter resulted from a strong performance by MabThera (+6%), Xolair (+17%), Herceptin (+6%), Perjeta (+16%), Esbriet (+32%) and Actemra (+23%), though partially offset by a flat Avastin (market saturation), and lower sales from Lucentis (-10%) and Tarceva (-17%). Europe’s 6% growth was on the back of an impressive performance by Perjeta (+56%), followed by Actemra (+21%), and MabThera (+5%). China (+8% for H1) swung back to strong growth, leading the 5% growth in International pharma business. The Diagnostics business grew by 8% to CHF2.9bn, fuelled primarily by Asia Pacific (+18% in CHF), although growth was seen across the regions. By service line, strong growth in professional diagnostics (+11% in CHF, driven by immune-diagnostics and clinical chemistry), molecular diagnostics (+6% in CHF) and tissue diagnostics (+13% in CHF) was offset to some extent by anaemic diabetes care (+0.9% in CHF). Profitability details are disclosed on a half-yearly basis. The underlying operating profit growth for H1 was slower than the sales growth of 5%. It grew by 2% (in CHF) to CHF8.1bn (reflecting a margin decline of 140bp, predominantly in the diagnostics business), in line with our expectations. The company reported an earnings benefit from a one-time cash gain of CHF426m (pertaining to pensions) but we remove this item because of its one-off nature. The company maintained the guidance of low-to-mid single-digit growth at CER and a higher growth in core EPS. Management has acknowledged getting hit by the biosimilars from 2017-18. Several candidates for the Herceptin biosimilar, including from Amgen and Allergan, Mylan and Biocon, have already shown comparable efficacy and safety profile (in fact already launched in some markets, including India), indicating that generic erosion can come in ahead of the official US patent loss in 2019. In terms of M&A, the company maintained its strategy to stick to small/early-stage bolt-ons rather than mega mergers.
Strong Q1 with favourable forex impact
24 Apr 16
Roche begins the year with solid sales growth in Q1, coming in marginally ahead of our expectation. Total sales grew by 4% (same as Q4 15 growth rate) at CER (+5% in CHF, thanks to a stronger dollar and Japanese yen benefit, offset to some extent by devaluations in Argentina as well as in Venezuela) to CHF12.4bn (vs our expectation of CHF12.2bn). NB All growth numbers at CER unless specified otherwise. The Pharmaceuticals division grew by 4% (to CHF9.8bn, +5% in CHF), while the Diagnostics increased by 5% (to CHF2.6bn, +4% in CHF). Europe grew faster at 5%, driven by Perjeta (+65%), MabThera (+5%) and RoActemra (+17%). US growth of 3% was driven by Herceptin (+4%), Perjeta (+15%), Esbriet (+127%) and Xolair (+22%), offset to some extent by lower Avastin (-2%), Tamiflu (-15%), Lucentis (-13%) and Tarceva (-15%). The Diagnostics business grew on the back of a strong performance in Asia-Pacific (+16%; particularly China which grew at 24%) and LatAm (+21%) in immuno-diagnostic, molecular and tissue diagnostics businesses. The company does not give details on profitability in the quarterly results but maintained the annual guidance of core EPS growing faster than low-to-mid single-digit growth in sales.
Robust top-line pulled down by substantial one-offs and investments
17 Feb 16
Roche’s Q4 sales increased by 4% at CER (-1% in CHF) to CHF12.6bn, driven by 3% growth at Pharma (CHF9.6bn, -1% in CHF) and 7% at Diagnostics (CHF3bn, flat growth in CHF). For the full year, sales increased by 5% (+1% in CHF) to CHF48.1bn – Pharma +5% (+2% in CHF) and Diagnostics +6% (flat in CHF). The growth was fuelled by the oncology and immunology portfolios, and by the immuno-diagnostics business within professional diagnostics (+8%). These numbers were slightly ahead of our expectations; we had estimated sales of CHF47.9bn (vs CHF48.1bn in actuals). Geographically, the US did a better job than our expectations with 6% growth (+11% in CHF) in pharma and 3% growth (+7% in CHF) in diagnostics (where it is reported as North America), while Europe (+4% CER and -7% CHF growth in pharma) languished. The adjusted gross margin decline was steeper than our expectation at 370bp, due to higher manufacturing and sourcing costs, amortisation of Esbriet-related intangibles (acquired as part of the InterMune acquisition) and inventory write-offs (worth CHF539m for Esbriet) in the pharma business. Operating profit in the diagnostics business was also impacted by higher research expenses in professional diagnostics and on-going investments in the sequencing business along with price erosion in the diabetes care business. Net income came in far behind our expectation, further run down by higher-than-expected restructuring costs (CHF1.1bn vs our expectation of CHF300m) and an unforeseen forex loss of CHF470m booked within net financial income. The company ended the year with a net profit of CHF8.9bn (vs our estimate of c.CHF11bn). The company's reported core net profit came in at CHF11.6bn (core EPS 13.49). As a reminder, the company defines core numbers by excluding restructuring charges, amortisation, impairments, legal charges, business combinations and pension plan settlement, etc., from the reported numbers. This is a general practice followed by Big Pharma; however, we exclude only the restructuring charges to arrive at adjusted numbers, which explains a substantial difference between our core/adjusted numbers and the company's reported core numbers. The restructuring cost exceeded our expectations, following the decision in November 2015 to reorganise the manufacturing network for small molecules. Of the targeted CHF1.1bn, CHF301m pertained to the Diagnostics business and remainder to the Pharmaceutical division. The programme involves upgrading the manufacturing capability towards producing specialised medicines in lower volumes to keep pace with the future technological requirements; in effect four manufacturing sites – Ireland, Spain, Italy and the US – are being closed. Management's guidance for 2016 stands at growth of low to mid single-digit for revenue and a slightly better core EPS (taking without forex - devaluations in Argentina as well as in Venezuela - the EPS number as the base). The dividend of CHF8.1 per share represents an increase of 1.3% yoy, lagging behind our estimate of CHF8.6.
Strong performance along with key R&D successes
27 Oct 15
Q3 was another resilient quarter, slightly ahead of our expectations, with strong organic growth softening the impact of negative currency. For both 3m and 9m, sales increased 6% organically to CHF11.9bn and CHF35.5bn, respectively, while negative currency brought down the reported growth to 1% and 2%, respectively. The earnings numbers are not disclosed in quarterly releases. The sales outlook has been upgraded from low-to-mid single-digit to mid single-digit range, while the guidance for core EPS growth stays ahead of sales growth. The positive impact of the dollar strength will continue to be offset by weaker other currencies such as the EUR and JPY, with the net negative forex impact of 4ppts on sales, 6ppts on core operating profit and 9ppts on core EPS for the year.
Interim results lead to upgrades
27 Mar 17
Bioventix reported a strong set of interim results with revenues increasing by 32% (c.12-17% at constant exchange rates (CER)), driven largely by the continued roll-out of its customers’ Vitamin D assay products. This, in turn, led to a 41% increase in pre-tax profits and a 40% increase in adjusted EPS; which is reflective of the operational gearing of the business. We are upgrading our adjusted EPS to 78.7p (+5%) and, consequently, are raising our target price to 1750p. At this price level, the shares would trade on a 22.4x FY 2018 P/E and an EV/EBITDA of 17x. We await confirmation of Siemen’s high sensitivity troponin assay launch, expected in FY 2018.
27 Mar 17
Elecosoft* (ELCO): Steadily building profits (CORP) | Bioventix* (BVXP): Interim results lead to upgrades (CORP) | Hurricane Energy (HUR): Halifax discovery (BUY) | KBT Business Technology* (KBT): interims and contract win (CORP) | Independent Oil & Gas* (IOG): Licence updates (CORP)
N+1 Singer - Morning Song 22-03-2017
22 Mar 17
Carador Income Fund (CIFU LN) Premium rating restored, high levels of refinancing activity | Cello Group (CLL LN) Outlook getting brighter – watch Pulsar | Eckoh (ECK LN) Largest ever US secure payments win | eg solutions (EGS LN) Full year results in line | Futura Medical (FUM LN) Licensing deal for CSD500 in Portugal | Verona Pharma (VRP LN) Global agreement with QuintilesIMS to support development of RPL554 | Xaar (XAR LN) 2016 results slightly ahead, reduced visibility in 2017
Sinclair Pharma - Aesthetically Positioned to Continue Double-Digit Growth
23 Mar 17
With an innovative and differentiated product portfolio of injectable devices addressing the fast-growing aesthetics market, Sinclair is best positioned to continue to achieve double-digit revenue growth in the medium term.
N+1 Singer - Futura Medical - Licensing deal for CSD500 in Portugal
22 Mar 17
The agreement with F Lima further extends the market reach of CSD500, Futura’s erectogenic condom, and brings the total number of distribution partners to eight. The deal is in line with the company’s stated strategy of partnering with leading regional players in the consumer products space. We expect the condom to be launched in Portugal later this year. We retain a positive stance.