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Tamiflu takes the shine off Roche results

Published on 24/04/08 at 05:00pm

Falling sales of its blockbuster flu treatment Tamiflu have dented Roche's balance sheet. The Swiss company managed sales of 10.9 billion swiss francs, a year-on-year increase of just 2% in the first quarter of 2008.

Revenue was also hit by the weakness of the US dollar, which pushed down Roche's turnover in Swiss francs: that 2% rise in sales in local currencies became a 4% fall and was in any case lower than analysts predicted. Although revenue was up 9% if Tamiflu sales were excluded, Roche shares dipped when the results were announced.

Sales at Roche's pharma division fell 6% to 8.57 billion swiss francs although oncology drugs - which account for over half of the groups pharma sales - grew 15% overall. Pharma growth was around twice as fast as the global market, the company said.

In the cancer portfolio, sales of MabThera/Rituxan were up 17%, breast cancer drug Herceptin rose 11% and sales of Avastin rose 35 per cent. Although both Herceptin and Avastin sales were below analyst estimates, Roche received a boost in January with EU approval for the use of Avastin in metastatic colorectal cancer in combination with any chemotherapy.

"Excluding pandemic sales of Tamiflu, both divisions achieved above-market sales growth," said Roche chief executive Severin Schwan. "This means we are on track to achieve the goals we announced for 2008. Gains in the cancer portfolio more than compensated for the Tamiflu issue," he added.

Governments' stockpiling of Tamiflu seems to have peaked for the time being, with sales down 64% to 278 million swiss francs in Q1. Roche also received a setback two months ago when new data showed significant resistance to the drug, and the company has already admitted that the loss of Tamiflu sales will cost 1.7 billion swiss francs this year. It is all a far cry from the heady days of Q1 2005, when Tamiflu sales rocketed to 424 million swiss francs in response to warnings of a global influenza pandemic.

Elsewhere within Roche, diagnostic division sales were up 9% in local currencies in Q1 (3% in Swiss francs, 19% in US dollars), with professional diagnostics and applied science the main growth drivers.

The company says that despite lower Tamiflu sales and higher R&D spending, it still expects to come close to last year's 20% level of core earnings per share.

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