3. Roche

roche building
Roche’s newer drugs like Perjeta and Kadcyla are helping to prop up the aging breast cancer juggernaut.

3. Roche 
Headquarters: Basel, Switzerland
2016 revenues: CHF 50.576 billion (about $50.11 billion)
2015 revenues: CHF 48.145 billion (about $47.70 billion)

Roche has been chugging along, living to a large degree off the revenues of a very successful, but aging, portfolio of blockbuster oncology drugs such as Avastin, Herceptin and Rituxan.

But sales of those drugs fell short of expectations last year, and the challenges loom large for Rituxan and Herceptin in particular, as cheaper biosimilar versions of both are slated to hit the European market in the second half of this year.

Sales at the Swiss company grew 4% in 2016 at constant exchange rates to 50.6 billion Swiss francs ($51 billion) and its net profit was up 7% to CHF 9.7 billion ($9.8 billion), but both figures fell slightly below consensus estimates. So did the company estimates for this year that sales growth will be in the low- to mid-single digits and earnings will rise “broadly in line with sales.”

CEO Severin Schwan has said that innovation will carry the drugmaker forward, but evidence for that was not entirely clear in 2016.

Roche’s newer drugs like Perjeta and Kadcyla are helping to prop up the aging breast cancer juggernaut. The drugmaker has been testing various combinations with the older drugs, which when successful can drive sales of aging drugs as well as newer ones.

In one trial, however, neither Kadcyla by itself nor the Kadcyla/Perjeta combo beat Herceptin and chemotherapy in patients with advanced HER2-positive breast cancer. What has worked is Herceptin and Perjeta, alongside chemo, to treat metastatic breast cancer and early-stage breast cancer before surgery.

The combos helped pushed up sales of both meds. Herceptin sales grew 4% to about $6.7 billion while Perjeta delivered 26% growth in 2016, to about $1.8 billion, putting it in fourth place for Roche, sales-wise. Kadcyla was up 7% to about $821 million.

But Roche's Tecentriqa PD-L1 that is its first offering in the new immuno-oncology fielddisappointed, coming in a couple million dollars short of  investor expectations for the first year with about $158 million in sales. There are indications that the drug will pick up momentum, after it won an FDA nod for treating non-small cell lung cancer. In fact, Roche folks say that Tecentriq has stolen 10 percentage points off the market share of competitor Opdivo since then, even though Bristol-Myers Squibb’s drug won its approval for the second-line indication months ago.

Roche did launch four new drugs and nine diagnostics in 2016 and is expecting some key approvals this year, including for Ocrevus, which will treat multiple sclerosis. The drug actually was slated for a 2016 approval, but the FDA in December pushed the PDUFA date back three months to March 28 because of questions about the manufacturing process for the drug. That med has been pegged as the hottest prospective launch of 2017, but the MS market is tough these days, and pricing will be key.

One drug launched last year in partnership with AbbVie was a first-to-market BCL-2 inhibitor. Venclexta won FDA approval to treat relapsed chronic lymphocytic leukemia (CLL) patients with a particular genetic mutation and is projected to hit $1.5 billion to $2 billion in sales by the end of the decade.

The responsibility for selling Venclexta, Ocrevus and other Roche drugs in the U.S. will fall heavily on the company's new CEO at Genentech. Insider Bill Anderson in January took over the top spot for Roche’s U.S. unit to replace 55-year-old Ian Clark, who retired.

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3. Roche