Does Roche's Q3 flout diversification theory?

Maybe drugmakers need to diversify if they don't have a.) a pandemic flu product or two, and b.) price-resistant cancer meds. Roche posted a 9.7 percent boost in third-quarter revenues to $12.2 billion and raised its full-year sales forecast. The impetus: Strong sales of its anti-influenza med Tamiflu, plus growth in use of the cancer blockbuster Avastin.

What's more, the company says full-year pharma sales will grow "well ahead" of the market, projecting high single-digit increases in its drug sales. "[C]ompared to other pharma companies, Roche is doing nicely," analyst Eric Bernhardt of Bellevue Asset Management told Bloomberg. And Roche doesn't have much to worry about price-wise going forward, even in this environment of strong downward pressure on healthcare costs, another analyst told Dow Jones, because of its strong cancer portfolio.

True, Roche's U.S. sales suffered somewhat because of generic rivals for CellCept, the organ transplant med that fell off patent in May. Sales for that drug declined by 29 percent over the third quarter, depressing growth in the company's U.S. drug revenues to 4 percent, compared with 14 percent worldwide (in local currencies). And Avastin sales didn't live up to analyst expectations. Still, the numbers seem designed to disprove the absolute necessity of broad diversification. What do you think?

- here's Roche's earnings release
- read the Bloomberg coverage
- see the Dow Jones story

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