Roche Not Looking to Unload Its Diabetes Biz After Rumors it May Exit

Roche Not Looking to Unload Its Diabetes Biz After Rumors it May Exit February 1, 2017
By Mark Terry, BioSpace.com Breaking News Staff

There appears to be mixed messages about Swiss-based Roche and its diabetes business.

BloombergMarkets reported today that the company is considering a possible sale of its diabetes business. Alternative options include a partial sale or a spinoff. It noted that other companies have been moving out of the diabetes market due to downward pricing pressures. Johnson & Johnson has expressed the potential of a sale, partnership or joint venture for its diabetes business. In 2015, Bayer sold its diabetes-devices unit to Panasonic Healthcare Co. for about $1.1 billion.

According to its annual report today, sales of Roche’s diabetes care business dropped 5 percent to $2 billion in 2016, largely caused by continued cuts in U.S. reimbursement. However, in the company’s press conference, Severin Schwan, Roche’s chief executive officer, said, “We are well positioned in this segment, where we are the market leader. It’s a difficult situation we are going through, but we remain committed to this business.”

Overall, the company’s group sales rose 4 percent at constant exchange rates, and 5 percent in Swiss francs. Its Pharmaceuticals Division sales were up 3 percent, primarily driven by cancer drugs Perjeta, Herceptin, and Actemra/RoActemra. Its Diagnostics Division sales rose 7 percent, primarily as the results of immunodiagnostic solutions.

Roche also launched four new drugs in 2016. They were Cotellic for advanced melanoma, Alecensa for lung cancer, Venclexta for chronic lymphocytic leukemia, which is marketing with AbbVie (ABBV), and Tecentriq for bladder and lung cancer.

And in 2016 as well, five of the company’s drugs were given breakthrough therapy designations by the U.S. Food and Drug Administration (FDA). Those include Actemra/RoActemra (tocilizumab) for giant cell arteritis (GCA), Alecensa (alectinib) for advanced anaplastic lymphoma kinase (ALK)-positive non-small cell lung cancer (NSCLC), Ocrevustm (ocrelizumab) for primary progressive multiple sclerosis (MS), Venetoclax for AML combination therapy, and Venetoclax for CLL combination therapy.

For 2017, the company projected core earnings per share to grow at low- to mid-single-digit sales rise. That’s not quite as optimistic as last year’s, which was 5 percent to $14.66. Partly that’s because three of its strongest blockbuster cancer drugs, Rutuxan, Herceptin and Avastain, which make up more than 20 billion Swiss francs in annual sales, will be facing competition from lower-priced biosimilars.

“We’re going through a transition of our portfolio,” Schwan said in the conference call, “but the good news is, we can overcompensate with the launch of new medicines.”

Michael Nawrath, an analyst with Zeurcher Kantonalbank, wrote in a note to investors, “Biosimilars will hit Roche in the current year in Europe and then in 2018 in America in a big way, putting Roche under pressure to keep up new pipeline news and successful drug launches.”

Yesterday, U.S. President Donald Trump met with the heads of several pharmaceutical companies, outlining his plans to “streamline” the FDA and criticizing drug prices. Schwan downplayed the meeting, saying in the press conference, “We focus on truly differentiated medicines—medicines which will make a real difference for patients—I have no doubt whatsoever that there will be continued demand for such solutions and particularly the U.S., I’m convinced, will reward this kind of innovation.”

Since the U.S. market accounts for 40 percent of Roche’s sales, it’s likely that the company is more concerned about the uncertainty Trump and his administration has currently thrown into the pharmaceutical industry, especially with talks of pressure companies to manufacture more products in the U.S. Schwan emphasized Genentech’s presence and influence in the U.S.

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