Roche hit by worst-case biosim assault—to the tune of $5.6B—as COVID-19 hurts new king Ocrevus

Roche expects biosimilars to Herceptin, Avastin and Rituxan will cost the company roughly CHF 4.6 billion in 2021 sales. (Roche)

Before biosimilars to Herceptin, Avastin and Rituxan arrived in the U.S., Roche laid out an estimated range of potential damage to its business. By the look of its first post-biosim year, the company was hit with its worst-case scenario.

Biosimilars to the three cancer megablockbusters in the U.S., EU and Japan put a CHF 5.05 billion ($5.62 billion) dent in Roche’s top line in 2020, the company said Thursday. The worldwide loss was about CHF 5.7 billion.

“We’ve seen the worst that it can get—the impact was bigger than certainly our base case,” Roche’s pharma chief Bill Anderson said during a conference call with investors.

The U.S. market contributed a large share of the decline, especially given that Herceptin and Rituxan copycats had already been on the European market for some time. In the U.S., Avastin sales dropped 37% in 2020 to CHF 1.80 billion, Rituxan fell by 32% to CHF 2.86 billion, and Herceptin by 47% to CHF 1.36 billion.

The drop was also bigger than industry watchers had expected; none of the three drugs’ global sales met analysts’ consensus.

For 2021, the absolute reduction will be milder at roughly CHF 4.6 billion ($5.1 billion) globally, Anderson added. That may sound like a positive turn, but it’s much larger than the CHF 3.57 billion analysts at Jefferies had modeled, which they noted was already above consensus expectations.

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It also looks more severe if we put this into the perspective of Roche’s historical forecast. By what Roche called a “conservative” erosion from biosims, the company had in 2019 projected a CHF 9.6 billion gap between 2018 and 2023 sales for the three drugs. Anderson’s numbers now indicate that the drugs will have crossed that threshold by 2021.

Roche has traditionally pointed to new drugs to back up its confidence that the company will grow through the biosimilar attack. But COVID-19 derailed that plan, at least for the pharma business, in 2020.

Multiple sclerosis drug Ocrevus dethroned Avastin as Roche’s best-selling drug beginning in the third quarter of 2020. But its 17% year-over-year annual growth was significantly slowed by COVID-19, which dragged its CHF 4.33 billion haul below the Street’s consensus. The reported growth level was partially hurt by a strong Swiss franc; at constant currencies, Ocrevus’ increase amounted to 24%.

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Ocrevus was attracting high levels of patients switching from another MS drug up to the first quarter of 2020. Then came the pandemic, and switching slowed dramatically, Anderson said. Because Ocrevus targets B cells and is injected by a healthcare professional, some existing patients became nervous about whether to get a dose out of concerns that the therapy might hurt their immune system’s strength against the novel coronavirus—or that going into a therapy center could increase their chance of infection.

In the third quarter, some of the patients who delayed their doses came back, Anderson said. But because Ocrevus is dosed every six months, the Q2 drop also extended to Q4. The rate of switching is still significantly below pre-pandemic levels—at 40% in October by Roche’s market research. So this cycle of quarterly sales fluctuations will probably continue for years to come, Anderson warned.

Whatever increases Ocrevus and other newer drugs such as Tecentriq and Hemlibra pulled off, they were not enough to turn Roche pharma’s 2020 into a sales-positive year. Overall, Roche’s pharma sales came in at CHF 44.53 billion ($49.53 billion) down by 8% year over year, or 2% at unchanged exchange rates.