Swiss drugmaker Roche Holding brushed off the downturn in the first quarter, posting a 7 percent rise in sales led by cancer medicine Avastin, and sounded a confident note for the full year. Roche, which last month bought out US biotech group Genentech for $47 billion, said on Thursday it was confident of hitting the full-year targets it set before that deal.
Highlighting the pharmaceutical sector's capacity for resilience during tough economic times and boosting the stock. Plans for integrating Genentech will be finalised by mid-year and it aims to have completed the process by the end of 2009. Roche will update its full-year outlook in July to reflect the acquisition.
There were no indications of top scientists leaving Genentech due to the takeover, pharmaceuticals chief William Burns said, and staff from the two companies already know each other well through long-term co-operation. Health care is traditionally one of the last areas in which consumers cut back on spending, but there has been some slowdown and Roche's stock has fallen around 8 percent so far this year.
"We do see that the world pharmaceutical market is slowing down. There are patent expiries and as a result of the economic downturn, wholesalers are more prudent on inventories," Burns told reporters. The Swiss group is well insulated, however, because of its high-margin cancer drugs and limited exposure to markets in which consumers can easily cut spending.
Stripping out currency effects, quarterly sales rose 8 percent to 11.6 billion Swiss francs ($10.17 billion), in line with forecasts. That contrasts with downbeat quarterly results from Abbott and Celgene. Johnson & Johnson's profit fell but beat forecasts.
Roche stock rose 1.3 percent to 150.50 francs by 1141 GMT, outperforming a 0.3 percent rise in the European health care sector. Roche trades at nearly 12 times expected 2010 earnings, a healthy premium to other big European drugmakers - Swiss rival Novartis AG, GlaxoSmithKline Plc, AstraZeneca Plc and Sanofi-Aventis SA - thanks to its strong portfolio of cancer drugs and Genentech's growth prospects. Those cancer drugs drove growth in the first quarter, though some analysts said they performed a little weaker than expected.