Roche on Wednesday forecast profit growth would not outstrip sales in 2017 as the world's top cancer drugmaker increases spending on new products it hopes will offset declines in ageing biotech medicines now going off patent. The Swiss drugmaker dismissed speculation that it was looking to unload its diabetes care unit, saying it was "committed" to the business.
Core earnings per share this year are now targeted to grow broadly in line with a low- to mid-single-digit sales rise, the Swiss group said.
That contrasts with 2016 when core earnings per share rose 5 percent to 14.53 Swiss francs ($14.66), while sales grew 4 percent in constant currencies to 50.6 billion francs.
The Swiss drugmaker's three established cancer blockbusters Rituxan, Herceptin and Avastin, which account for annual sales of more than 20 billion Swiss francs, all face so-called biosimilar competition.
The first copies of Rituxan and Herceptin could arrive in Europe later this year.
Consequently, Chief Executive Officer Severin Schwan said he has dialed back 2017 profit growth expectations on the grounds that he must invest in new products including cancer immunotherapy Tecentriq, Cotellic for skin cancer and lung cancer drug Alecensa to fill the void.
"We are going through a transition, we have a number of mature products which will decline," Schwan said on a conference call. "We will see the impact of biosimilars in Europe. At the same time, we are able to offset that with the launch of new products."
Schwan played down the threat posed by US President Donald Trump's call for drugmakers to cut prices and invest more in America, arguing that innovative companies would still be rewarded and pointing out that Roche's big US presence via its Genentech unit.
Core net income in 2016 rose to 12.7 billion francs, Roche said, compared with the average 12.8 billion franc estimate by analysts in a Reuters poll.
Roche proposed raising its dividend to 8.20 francs per share, below the 8.45 franc average estimate in the poll.
Sales of Tecentriq, Cotellic and Alecensa added 400 million Swiss francs to sales, and Schwan expects that figure to grow significantly.
NEW LAUNCHES
"We've never seen this level of new launches, and there's more to come," he said. "We're going through a transition of our portfolio but the good news is, we can overcompensate with the launch of new medicines."
He still anticipates Ocrevus, Roche's new multiple sclerosis medicine, to be approved by the US Food and Drug Administration in March, with sales starting the following month.
The launch had been delayed from December. Roche's diabetes care business, part of Roche's diagnostics business, continued to face price pressure, especially in the United States. Still, Schwan said he remains committed to the business.
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