Roche's O'Day says portfolio firing well in international markets, Japan a star

Roche's Daniel O'Day

Roche ($RHHBY) was upbeat on Asia and emerging markets for pharma in its third-quarter sales call, with Dan O'Day, chief operating officer for pharmaceuticals, nearly breathless in running through geographies and summing them overall with a thumbs-up with a special nod to Japan.

"Above market in all regions driven by really strong volume momentum with both the new products being rolled out and also some of these long established products continuing to grow through line extensions," O'Day said on the Oct. 22 earnings call. "Our focus on improved market access, in the emerging markets in particular, is helping to drive the growth."

Overall for international region, Roche posted a 6% growth rate in the third quarter, O'Day said, highlighting sharp demand in countries as diverse as Turkey and Iran to Japan where sales rose 8%, "really driven across the oncology and immunology portfolio."

He also noted the company heads into Northern Hemisphere flu season in the fourth quarter and that early signs are upbeat on sales.

"Tamiflu is really the main swing factor as we look forward to quarter four," O'Day said. "We had an early and strong flu season in the U.S. between the end of 2014 and early 2015 and as we have adjusted our guidance for the markets for the full-year, we've assumed really a normal flu season in the United States, which is really where we had the seasonal demand."

In the oncology space, the launch of Kadcyla in new markets with many reimbursement deals in place that saw gains in international of 74% driven by Latin America, and Brazil in particular. "Further growth is expected as reimbursement negotiations are ongoing in the international market over the coming quarters," O'Day said.

Growth reached 16% for Avastin in international sales, also driven by Latin America. And prospects in China for oncology were also bright, O'Day said.

"I would just point out that we just recently received the approval for first-line non-small cell lung cancer in China in August, so beginning the rollout of that important indication in China, where lung cancer is obviously of high prevalence."

And last, but not least, O'Day said Japan was white hot.

"Japan at plus-13% growth in all indications, really, across the board in Japan, some of the highest market shares we have the world," he said.

Roche CFO Alan Hippe

Alan Hippe, chief financial officer, provided some upbeat detail on emerging markets in response to a question from Sachin Jain, an analyst with Bank of America-Merrill Lynch.

"Clearly, I think on a macroeconomic level, as we all know, there are clearly evolutions and volatility going on in the emerging markets and if I look from a year ago, clearly, if you look at IMS growth projections, if you look at our own growth projections, they have come down a bit for sure, but we continue to see strong potential in emerging markets," Hippe said.

"You can see it driving our quarter three sales. To (CEO Severin Schwan)'s point when you consider the nature of highly differentiated medicines in emerging markets, those are the ones that are going to gain reimbursement; those are the ones that are going to have growth in the future there, as opposed to non-differentiated products or genericized products."

- here's the Roche release and presentation (PDF)

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