Roche Chief Says Covid Test Growth to Abate in Second Half

This content was published on July 22, 2021 - 10:21

(Bloomberg) -- Roche Holding AG said growth momentum for its Covid-19 testing business will probably abate in coming months, signaling a leveling off of the jackpot that fueled sales lately.

Roche’s diagnostics unit swiftly developed a wide array of tests in response to the pandemic, buoying sales and making up for a more difficult time at the pharmaceuticals division, where aging cancer medicines face competition.

The company said Thursday the test growth will probably at least slow in the second half of the year as more people get vaccinated around the world, though it won’t melt away entirely. The stock fell as much as 2.3% in Zurich trading.

“This virus will stay with us,” Chief Executive Officer Severin Schwan said on a conference call. “It will continue to mutate, and as such there will be a continued need for vaccines, for new vaccines and boosters, as well as tests and medicines.”

Much of the testing slowdown Roche anticipates is due to the comparison with last year’s sales, Schwan said in a television interview. The company developed Covid diagnostic tools in the first half of 2020 and sales took off in the second half, creating a much higher base for comparison going forward.

Schwan’s comments came as the drugmaker reported first-half profit that beat estimates. Earnings per share rose to 10.56 Swiss francs from 10.44 francs excluding some items, the Basel, Switzerland-based company said. Analysts expected 10.18 francs a share in a survey.

Two Drugs

Roche is “very confident” about meeting its full-year forecast. It estimates that sales and earnings excluding some items will grow by a low- to mid-single-digit percentage.

Two medicines in the company’s pipeline of experimental drugs are attracting scrutiny: a pill for Covid and a new Alzheimer’s disease treatment.

The Covid antiviral Roche is developing together with U.S. biotech Atea Pharmaceuticals Inc. is in the second stage of testing. Results from the third -- and final -- level of trials should be available by the end of the year, according to Schwan.

The drug would complement rather than replace vaccines, Roche executives said. For one thing, the molecule is complicated to make, and “there’s just not enough production capacity,” said Bill Anderson, Roche’s pharmaceuticals chief. While it’s hard to pinpoint the capacity Roche will have this year and next -- among other things, that will depend on the dose chosen -- being able to treat tens of millions of people is more likely than billions, Anderson said.

‘Not Desperate’

On Roche’s plans for gantenerumab, the experimental therapy being studied for Alzheimer’s disease, the company will hold discussions with the U.S. Food and Drug Administration about accelerating approval while it completes an ongoing clinical trial, according to Schwan.

The Alzheimer’s landscape shifted after the U.S.’s controversial approval last month of Biogen Inc.’s drug Aduhelm, which was seen as a positive sign for the Roche medicine despite recent setbacks.

Roche’s pharma unit showed signs of a turnaround in recent months, although competition from biosimilar copies of the company’s older cancer medicines continued to weigh on growth. Sales of the oncology drug Avastin dropped 40% in the first half. But with 18 new experimental drugs in late-stage trials, the company is optimistic and sees no need to boost its pipeline with a big takeover deal, Schwan and Anderson said.

“We have almost no interest in late-stage stuff,” Anderson said. “It’s really priced for companies that are desperate, and we’re not desperate.”

(Updates with executive comment from the 10th paragraph)

©2021 Bloomberg L.P.

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