Beset by copies, Roche gets sales boost from China

By John Miller

ZURICH (Reuters) - Roche's third-quarter revenue beat analysts' forecasts as new drugs such as Ocrevus for multiple sclerosis picked up pace and as China bought more of older medicines whose sales are dropping elsewhere following patent expiries.

Third-quarter sales rose 7 percent to 13.97 billion Swiss francs ($14.10 billion), the Swiss drugmaker said on Wednesday, compared with analysts' average forecast of 13.8 billion francs in a Reuters poll.

The world's biggest maker of cancer drugs did not give profit figures, saving those for the full-year report in early 2019.

So far, Roche's bet on new drugs is paying off, even as sales of its Rituxan blood cancer medicine fell by half in Europe and Herceptin for breast cancer dropped 21 percent in the third quarter as rivals' cheaper biosimilar copies crowded in. U.S. copies are due next year.

The company is also getting increasing support from its expansion in China, where sales of Avastin, Rituxan and Herceptin are on the rise and where regulators in August gave quick approval to one of Roche's newest medicines, Alecensa, for a tough-to-treat lung cancer mutation.

"In China, we have very good growth," Roche drugs division head Daniel O'Day told reporters on a call.

"That's largely driven by the fact that we have our three medicines, Avastin, Herceptin and (Rituxan) now broadly reimbursed within the China environment," he said. "We expect that growth to continue."

Chinese growth was the main driver in Roche's overall 8 percent hike in international sales.

"It's a beat driven by stronger performance of the legacy drugs," said Deutsche Bank analyst Tim Race of the quarterly results. "This may be a theme until we see biosimilar launches in the U.S.."

Roche shares opened more than 1 percent higher, trimming their decline for the year to 2.4 percent.

Roche joins other drugmakers including AstraZeneca that have been seeking to boost sales in China, where faster approvals and broader coverage are boosting its attractiveness as a market.

Swiss rival Novartis is also making a big push in China, with research and development facilities and a recent deal with a local manufacturer to make its cancer therapy Kymriah.

ROCHE HISTORY

After hiking his sales and profit outlook twice this year, Chief Executive Severin Schwan on Wednesday stuck to his forecast for 2018 sales to grow by a mid-single-digit percentage. Core earnings per share is expected to grow by a mid-teens percentage.

In the quarter, Ocrevus sales doubled to 633 million francs, putting it easily on track to top 2 billion francs in the full year. Already, 70,000 people have got the medicine.

"This is the most-successful launch in the history of Roche," Schwan said on the call.

Sales of Perjeta, which Roche combines with Herceptin to fight breast cancer, rose 27 percent to 700 million francs.

Tecentriq, an immunotherapy that has struggled to gain traction against rival Merck's Keytruda in a key lung cancer indication, rose 71 percent to 204 million francs.

Roche also has high hopes for haemophilia A medicine Hemlibra after the U.S. Food and Drug Administration's approval this month cleared the way for it to pursue a market dominated by therapies made by Shire, Bayer and Novo Nordisk.

($1 = 0.9908 Swiss francs)

(Reporting by John Miller; Editing by Michael Shields and Mark Potter)