Roche sales grew last year. So did core earnings, by a healthy 10%. But the Swiss drugmaker's executives weren't jumping for joy. In fact, they were quite measured in their outlook for 2013, predicting sales growth of about 4%, along the same lines as its 2012 results.
But during a quarter when some of Roche's ($RHHBY) closest rivals derived their earnings growth solely from cost-cutting--with sales flat at best--the company's numbers look quite robust. Pharma revenues grew by 5% at constant exchange rates, with double-digit growth from the cancer drug Herceptin (11%), hepatitis treatment Pegasys (12%), and the bone drug Actemra (33%). The anti-inflammatory MabThera/Rituxan topped Roche's sales charts with 6.7 billion Swiss francs, or $7.3 billion, a 9% increase. And thanks to the surprisingly severe flu season, Tamiflu sales were up as well. Lucentis, however, lost 9% of its sales, thanks to new competition from the Regeneron ($REGN) vision treatment Eylea.
"The results are solid, and mostly in line with what we were expecting," Credit Suisse analyst Thomas Kaufmann told the Financial Times. "The positive surprise is the boost in Tamiflu sales, but they are always a one-off, as they depend on the severity of flu outbreaks around the world, which vary hugely from year to year."
Geographically, the pharma division grew fastest in emerging markets, but the U.S. was its strongest market, with 7% growth to 13.86 billion Swiss francs, or $15.2 billion. Europe proved a drag, with a 2% decline.
And CEO Severin Schwan figures those trends will continue."I think we will still have a stable environment in the US, double digit growth in emerging markets, and a very constrained environment in Europe," he said. "The fundamental issues in Europe--public and household deficits--are not resolved, so the pressure on healthcare costs will remain."
Some analysts figure Roche's 2013 outlook is overly cautious. After all, the company is expecting to launch T-DM1, its highly anticipated breast cancer treatment. And Perjeta, its Herceptin follow-up, is gaining steam. "In our opinion, sales in 2013 should pick up more strongly; we see the guidance as conservative as usual," ZKB analyst Michael Nawrath told Reuters.
And Schwan was decidedly upbeat about those new drugs at Roche's earnings release in Basel. "We do not only believe that we will defend the franchise, we believe that with those two important new medicines we will actually grow the franchise in the medium to long term," Schwan said (as quoted by Reuters).