In Roche's rosy pandemic scenario, it will take a $2B hit to COVID sales this year

Through the pandemic, we’ve grown accustomed to the humpbacked line graphs that show how COVID-19 has surged and retreated—and how it might behave in the near future. Roche’s Thursday presentation was no different.

On slide 14, the drugmaker presented its A and B scenarios, the first assuming more new variants and lower levels of long-term immunity, the second assuming the combination of vaccinations and widespread omicron infection could protect people for years.

The first: A continued roller coaster. The second: a black diamond ski-slope slide into a 2023 with a lot less COVID in the world.

Roche’s 2022 financial predictions assume the second. That means major diagnostics sales in the first quarter, less in the second quarter and even less in the second half.

It also means lower sales of Ronapreve, its Regeneron-partnered antibody, and Actemra, which is used to fend off dangerous immune system overreactions in hospitalized COVID patients.

Besides gaming the movement of the SARS-CoV-2 virus that causes COVID-19, Roche is forced to divine what governments will do when it comes to the bulk purchases that account for the largest share of its diagnostics and antibody sales.

Thomas Schinecker, Ph.D., who heads up Roche’s diagnostics division, is expecting governments to behave a bit more cautiously—shall we say more presciently?—when it comes to stocking up on diagnostic tests.

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Though Roche’s scenario B doesn’t include a new wave next winter, Schinecker figures governments won’t want to be caught out yet again. Like the devil-may-care grasshopper in the old fable, many governments failed to stock up on diagnostic tests ahead of two winter waves in a row—for 2022-23, they’ll behave more like ants, he said.

Roche will be turning out tests ahead of time to prepare. “We want to be ready,” Schinecker said. “We don’t want it to be because Roche can’t deliver. That would not be good.”

Likewise, Roche is expecting governments to continue buying Regeneron’s antibody cocktail despite the fact that the FDA has nixed its use against the omicron variant in the U.S. Its Japan-based partner Chugai, for instance, sees purchases continuing in its territories even though the U.S. has stopped using it.

Plus, there’s no guarantee the next COVID wave will be caused by an omicron offshoot; it might just as well be a new version of delta or some other earlier variant, CEO Severin Schwan said. “For example, there is a single antibody approved in the U.S. that got knocked out by beta,” he said. “It came back for delta.”

In the long run, Schinecker sees a new testing market emerging from COVID. People have grown accustomed to testing when they have a respiratory illness, and they’ll want to continue that post-pandemic. Roche is already rolling out a combination COVID-influenza rapid antigen test, for instance.

“It won’t be COVID only; it’ll be more like a respiratory market,” Schinecker said—and a market worth “single digit billions,” he figures.