Roche suffers double whammy as biosimilars, COVID-19 joined hands in weak quarter

Biosimilars to its top-selling cancer drugs and hits from COVID-19 were fingered as the culprits behind Roche’s first quarterly sales decline since 2011. (Roche)

Roche execs fingered biosimilars and COVID-19 as the culprits behind the company's first quarterly sales decline since 2011.

Together, copycats to Roche’s three top-selling cancer meds—Avastin, Rituxan and Herceptin—dealt a CHF 2.1 billion ($2.3 billion) blow to the Swiss pharma’s top line in the first half of 2020, the company said Thursday.

All three drugs had a disastrous second quarter. In the U.S., where biosimilars just recently entered, Avastin sales dropped 39% at unchanged exchange rates to CHF 471 million and Rituxan slid 33% to CHF 720 million. Herceptin also plummeted—by 46% to CHF 373 million—though its decline had something of a silver lining, stemming partly from a switch to Kadcyla in adjuvant HER2 breast cancer.

Europe also played a role: It looks as if the biosim erosion there is not over, as sales from Avastin, Rituxan and Herceptin declined 13%, 44% and 33%, respectively, in the quarter. Even international markets turned south for each of the three meds.

As a result, Roche now expects biosimilars and COVID-19 to take a CHF 4.7 billion ($5 billion) bite out of the trio this year, more than the CHF 4 billion it previously estimated, Roche’s pharma chief Bill Anderson told investors during a conference call Thursday. And he warned that the pandemic remains a “moving target.”

Those oncology bigshots were destined to decline, but Roche’s newer offerings—including multiple sclerosis antibody Ocrevus, hemophilia A therapy Hemlibra and eye drug Lucentis—didn’t soften the blow as much as expected. Thanks to the COVID-19-related slowdown, their combined 37% growth in the first half of 2021 fell short of previous increases.

“We at Roche have a special focus on specialized medicines, which are typically administered in a professional setting,” and that bit the company hard during the pandemic lockdown, CEO Severin Schwan said on the call.

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Ocrevus is Roche's best-selling new med outside of the megablockbuster cancer trio, with second-quarter sales at CHF 964 million. But its Q2 year-over-year growth of 12% at constant currencies marked a significant step back from the 38% it delivered in Q1, which was itself a letdown compared with the drug’s increases in previous quarters, which came in at around 50%.

Hemlibra suffered a similar fate; it grew sales by 59% year over year, but quarter over quarter numbers were a letdown. The hemophilia med delivered CHF 482 million in Q2, lower than Q1’s CHF 521 million and 6% below analyst estimates.

Because Hemlibra can be self-administered under the skin, some advance purchasing lifted sales in March, Anderson explained. Then, in the second quarter, new patient starts dropped as patients refrained from visiting doctors.

Lucentis—like the entire ophthalmology market—took a serious hit from COVID-19 as sales in the U.S. decreased by a quarter to CHF 341 million. Roche’s ex-U.S. partner Novartis on Tuesday reported the same scale of decline.

Then there’s PD-L1 rising star Tecentriq. The drug had been doubling sales year over year in recent periods—until the second quarter.

Tecentriq sales reached CHF 653 million, roughly in line with expectations. Its 54% year-over-year growth may look impressive, benefiting from recent FDA nods in small cell lung cancer and triple-negative breast cancer, but absolute sales gained only CHF 9 million over Q1.

Anderson said he expects a recent FDA approval for the combination of Tecentriq and Avastin in previously untreated liver cancer patients will add more momentum for Tecentriq in the future, especially when it rolls out the indication in Asia, where liver cancer is more prevalent than it is in the West. Chinese authorities are expected to deliver a verdict on that use this year.

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The only bright spot in Roche pharma’s gloomy Q2? Actemra. The decade-old IL-6 inhibitor saw sales jump 40% to CHF 795 million, 11% ahead of consensus, as physicians repurpose it off-label to treat patients with severe COVID-19 pneumonia. Roche’s phase 3 Covacta trial testing that theory is expected to read out soon.

Overall, Roche’s group sales declined 4% in the first half of 2021 to CHF 29.28 billion ($31.54 billion). Revenue hit bottom in May and has been recovering since June and into July, Schwan told investors. That’s why the Swiss pharma is maintaining its full-year forecast, saying that sales will grow in the low- to mid-single-digit range at constant exchange rates.

“We’re pleased at how we’ve weathered the storm so far—the ultimate impact will depend a lot on the length and severity of the pandemic,” Anderson said. “But we also see the healthcare system adapting, and we see hospitals, clinics and doctors figuring out how patients do get treated. So we’re confident that we won’t see another month like May.”