Roche’s 2011 earnings may have experienced a 4% drop but the company is remaining optimistic about growth in the new year as new products flood onto the market.
The Swiss drugmaker posted a 4% drop in core earnings per share to 12.30 Swiss francs when it released its 2011 results this morning. The slump resulted from a strengthening of the Swiss franc against major currencies, notably against the US dollar and euro. Forecasts had the figure at at least 12.40 Swiss francs. However, removing the currency impact, earnings per share rose 11%.
The company said the underlying currency translation exposure arising from non-Swiss franc revenues was significantly mitigated by the majority of the Group’s cost base – 80% - being located outside Switzerland.
Likewise, the appreciation of the Swiss franc saw a 10% drop in Group sales to 42.5 billion francs from 47.47 billion francs in 2010. However, Group sales increased by 1% in constant currencies. “Underlying growth was able to compensate for the expected decline in Tamiflu and Avastin sales and the impacts of healthcare reforms, austerity measures and price cuts,” the drugmaker said in a statement.
Despite the challenging market in 2011, the company’s outlook for 2012 is positive – low to mid-single digit sales growth for Group and Pharma; diagnostics to grow above the market; and high single-digit Core EPS growth target.
The optimism comes out of a number of successes in the company’s late stage pipeline where 17 out of 20 trials delivered positive results in 2011. Meanwhile, new products on the horizon, which are expected to add to the company’s coffers, include targeted cancer drugs Erivedge (vismodegib), which has just received approval in the USA, and pertuzumab, which is currently awaiting approval in the USA and EU.
Further to this, the targeted melanoma drug Zelboraf with companion diagnostic has launched successfully in the USA and indication extensions for cancer drug Avastin is also hoped to drive sales. This is a bonus for the company after revenue from Avastin fell 7% at constant exchange rates last year to 5.3 billion Swiss francs, which was also hit by the US Food and Drug administration revoking the drug’s use as a treatment for breast cancer late last year.
Roche is certainly setting its sights on diagnostics as a driving force of growth, with the planned $5.7 billion acquisition of Illumina, “which will strengthen our presence in the fast-growing DNA sequencing market and enable the discovery of complex biomarkers for research and clinical use,” Roche chief executive Severin Schwan said. “We continue to build our future business with innovative products.”