Despite slowing growth, Roche profits are on the move—thanks to tax reform

Basel, Switzerland-based Roche is pushing new launches Ocrevus, Tecentriq and Alecensa as its older stalwarts Herceptin, Rituxan and Avastin face increasing biosimilar threats. (Roche)

Add Roche to the list of companies expecting to benefit from U.S. tax law changes. The Swiss drug giant expects sales growth to slow this year as the biosimilars threat to its revenue gets real. But a lower tax rate means profits will grow just the same.

On Thursday, Roche reported 2017 sales of $57.3 billion, 5% above the prior year. New launches Ocrevus, Tecentriq and Alecensa helped as older drugs, such as Rituxan in Europe, slipped on biosimilar competition. Avastin, one of the drugmaker's top sellers, saw sales fall 2% around the world to $7.2 billion.

Looking ahead, the company hopes to additionally lean on its new hemophilia launch Hemlibra—a drug expected to bring in $2 billion by 2025—as the biosim threat to its triad of cancer blockbusters intensifies. All told, more than $22 billion in sales for Rituxan, Herceptin and Avastin could come under assault in the next few years.

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But in the meantime, Roche is looking to its wave of new launches to help counteract that erosion. Multiple sclerosis drug Ocrevus, which only won its U.S. nod in March, picked up momentum quickly and nearly reached blockbuster status in 2017. For the year, the drug generated more than $900 million in sales.

The company’s checkpoint inhibitor Tecentriq generated $527 million in sales last year after its 2016 approval, while Alecensa, approved to treat ALK+ non-small cell lung cancer, pulled in $389 million. Hemlibra only generated $3 million after its November launch, but the company and analysts have blockbuster expectations for that drug.

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Overall, Roche expects sales to be "stable" or grow in the low single digits in 2018. Reacting to the results, analysts with financial group ODDO BHF called Roche's 2018 guidance “cautious," but said the year “will be marked by the arrival of biosimilars which will impact growth of sales and margins.”

Taking Roche’s projections into account, the analysts wrote that tax reform could boost Roche's bottom line by 6% to 8%. The company said it's expecting its 2018 tax rate to be in "the low twenties," down from 26.6% last year, according to Reuters.

While Roche is a Swiss company expecting to benefit from U.S. tax reform, other drugmakers based in the States have put out optimistic projections after the changes went through late last year. Pfizer expects a tax rate of 17% this year, down from 23%. AbbVie, for its part, predicts a staggeringly low 9% tax rate in 2018.