Even in worst-case scenario, Roche will grow past biosimilar erosion in the U.S.: executive

Roche's sales for the first nine months of 2018 grew 7%, as newly launched drugs like Ocrevus for multiple sclerosis continue to shine. (Roche)

Roche’s trio of megablockbuster cancer drugs, Herceptin, Rituxan and Avastin, still held their ground in the third quarter, despite a biosimilar onslaught in Europe. And though next year will be a different story, thanks to U.S. copycats hitting the field, executives insist Roche will continue to grow.

How? On the back of its new drugs, including fast-launching multiple sclerosis star Ocrevus.

For the first three quarters of 2018, the powerhouse trio of Herceptin, Rituxan and Avastin still enjoyed sales of more than 5 billion Swiss francs each, thanks to strong growth in the U.S. and China. Herceptin and Avastin even managed 2% growth globally.

With 2019 biosim launches looming, though, analysts piled onto the prospects for these key assets during the third-quarter earnings call. Management assured them that “even in a worst-case scenario, we’ll be able to grow through that,” Roche Pharmaceuticals chief Daniel O’Day said on the Wednesday call.

Herceptin and Rituxan are suffering an increasing impact from biosimilars in Europe, with an Avastin hit still to come. For the third quarter, European sales of Herceptin and Rituxan plummeted 21% and 49%, to CHF 419 million ($422 million) and CHF 206 million, respectively.

Now, Roche expects Rituxan biosimilars in the U.S. in the first half of 2019, and Herceptin and Avastin knockoffs to roll in the second half. But O’Day said he doesn’t expect the sales hit to be as immediate or fast-growing as in Europe.

“When we look at Europe, … we have a variety of erosion rates depending on the country, … and it’s generally related to the heterogeneity of the healthcare system and the decision-making,” he said on the call. “I would put the U.S. in a highly heterogeneous system, … and although we expect significant entrant of biosimilar, we don’t expect the erosion rate to be similar to Europe at this stage, even with some potential additional activities with the administration.”

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Joining its peers, including Pfizer and AstraZeneca, in racking up growth in China, Roche saw the country—and its streamlined approval processes—as a main driver of its 8% sales boost in international markets for the first nine months. Roche got the volume boost in China after winning reimbursement for its three best-sellers around the third quarter of last year. And as the company flushed out initial pressure from huge price discounts, the increases are more conspicuous.

When questioned by one analyst about how sustainable its impressive performance in China could be, O’Day said it will continue at least for 2019 because no major biosimilars are in the offing next year. What he didn’t say, however, is that several domestic companies—including Fosun’s Henlius and Walvax’s Genor Biopharma—already have Herceptin copycats in phase 3 studies.

Perjeta and Kadcyla, the other two HER2 breast cancer therapies in Roche’s portfolio, both posted solid year-over-year sales growth for the first three quarters. Perjeta jumped 24% to CHF 2.0 billion, mainly driven by a 30% jump in the U.S. as it won approvals in both the pre- and postsurgery settings. And the company plans to file Kadcyla for postsurgery patients after posting positive data just this week.

RELATED: Roche eyes $1B-plus Tecentriq nod with small-cell lung cancer survival win

Multiple sclerosis therapy Ocrevus, which helmsman Severin Schwan had previously painted as “the most successful launch in the history of Roche,” has now been given to 70,000 people. Its sales grew 13% sequentially in the third quarter to CHF 633 million. The company just unveiled five-year data showing that patients with relapsing MS had better outcomes in brain atrophy and disability progression than those who switched to it from interferon.

Tecentriq continued to struggle, however, as it tries to challenge Merck & Co.’s Keytruda. The PD-L1 drug just returned positive overall survival data in first-line small cell lung cancer, which some analysts predicted could generate $1.5 billion in additional revenue. But in the much larger non-small cell lung cancer field, Tecentriq’s push into the front-line setting has been delayed by the FDA. And even if it finally gets the go-ahead, analysts from Evercore ISI, Bernstein and Credit Suisse have all suggested that the fight with Merck might not end in Roche’s favor.