Roche flags 2023 earnings decline on slump in Covid products
A view of the Roche towers, designed by architects Herzog and de Meuron, the headquarters of the Swiss pharma giant Roche, in Basel.
Gabriel Monnet | Afp | Getty Images
Roche warned of a decline in 2023 earnings, as revenue growth from new drugs including haemophilia treatment Hemlibra and multiple sclerosis drug Ocrevus would not make up for a steep demand drop for Covid treatments and diagnostic testing.
Sales and core earnings per share were expected to decrease at a “low single-digit” percentage this year, the Swiss drugmaker said in a statement on Thursday.
Last year, group revenue edged 1% higher to 63.3 billion Swiss francs ($69.78 billion), the company reported, beating market expectations of 63.2 billion francs, while core operating profit gained 1% to 22.2 billion Swiss francs, just shy of the average analyst estimate of 22.4 billion francs.
Roche CEO Severin Schwan told CNBC’s Geoff Cutmore that the company had expected last year’s decline and anticipated a further sharp drop-off in Covid-related sales, as the pandemic becomes endemic. The decline will equate to 5 billion Swiss francs, in his estimate.
Schwan, who is preparing to leave the chief executive job next month to become Roche chair, added that the company was seeing “good momentum” with newer medicines.
Addressing a drop in sales in some of its big legacy franchises, with increased competition in biosimilars, he said: “Growth is now really driven, on the one hand still by cancer medicines, but also importantly by new medicines in other therapeutic areas.” He referenced drugs in ophthalmology and for hemophilia and multiple sclerosis.
“When it comes to overall healthcare systems, I truly believe that those innovations will not only help to avoid a lot of suffering of patients but actually those innovations will help us manage the cost of the overall system, because we avoid a lot of follow-on costs.”
Analysts have said that market confidence in Roche’s drug development abilities, previously among the highest in the industry, has taken a blow from trial setbacks last year in Alzheimer’s disease and a cancer immunotherapy hopeful.
Schwan called it a “painful setback,” particularly due to the extent of the “unmet medical need.”
“This was a setback, but it’s not a reason to give up,” he told CNBC. “We have other molecules in this space, alternative approaches to make a difference in this disease.”
“That’s also what innovation is about, you have the courage to fail. If you want to go for breakthrough innovations, it’s not always working out, but we learn a lot from those failures,” he added.
The onus to reinvigorate the pipeline will be on chief executive officer-designate Thomas Schinecker, who is Roche’s head of diagnostics, and due to be promoted to group CEO in March.
In the wake of Schinecker’s appointment, the head of Roche’s pharmaceuticals division, Bill Anderson, decided in December to leave after 16 years with the Swiss drugmaker.
Roche said on Thursday that Teresa Graham, currently Head of Global Product Strategy for Roche Pharmaceuticals, would succeed Anderson.
CNBC’s Jenni Reid contributed to this report.
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