Roche clocks fast growth for new meds Perjeta, Esbriet as it girds for biosim rivalries

Severin Schwan

Roche isn't in denial about oncoming biosimilar competition for its top-selling cancer drugs. But CEO Severin Schwan says its new meds are on track to fill in the gap--and sales growth in the first half of the year go some way toward proving that case.

The Swiss drugmaker's first-half sales grew by 3%, a touch better than analysts had expected. Demand for new products--and increased sales for older heavyweights such as Herceptin--overcame the strong Swiss franc to deliver that growth. Overall, the results were "a modest positive," Deutsche Bank analyst Tim Race told Reuters. Schwan confirmed Roche's 2015 guidance accordingly, saying results are likely to fall at the top of their predicted range.

The new HER2-positive breast cancer drugs Perjeta and Kadcyla were the standout performers of the period. The first drug of its kind to win approval in patients before surgery, Perjeta leapt by 72% year-over-year to 659 million Swiss francs in sales. Kadcyla delivered 362 million francs, up 65%, as Roche ($RHHBY) rolled the drug out into new markets in Europe and Brazil. The immunotherapy Xolair, which recently won a new indication for chronic hives, chipped in with 593 million francs, a 28% hike.

Plus, the idiopathic pulmonary fibrosis fighter Esbriet brought in 229 million francs--a major leap from last year's first half, thanks to its FDA approval in October. The drug has been on the market in Europe since 2011 and Canada since 2012, but was delayed in the U.S. because the FDA asked for additional data.

Those are solid growth numbers for Roche's slate of newer products. But other results illustrate the task those newer drugs face in filling in as older meds decline. Just consider the continued growth for Roche's stalwart HER2-positive breast cancer drug Herceptin--up 11% to 3.3 billion francs--and its top-selling cohorts Avastin (up 9% to 3.3 billion francs) and MabThera/Rituxan (up 6% to 3.5 billion francs).

Schwan told reporters that he's expecting biosimilar Herceptin and Rituxan to launch in Europe in 2017, "and according to our latest information, probably towards the end of 2017." As Reuters points out, U.S. biosims won't come till after patents expire in 2019.

Perjeta, Kadcyla, Esbriet and other new meds--including a PD-L1 immunotherapy, atezolizumab, that Roche figures it can launch late next year--will have time to build up in the meantime, Schwan said. And like Johnson & Johnson ($JNJ) with Remicade, Roche figures its older brands will hold their own in the face of biosims. "We will certainly be able to compete with our original products, based on the strong clinical base we have built up over literally a decade," Schwan said (as quoted by Reuters).

That faith may be misplaced, however; a new report from Morningstar analysts predicted that biosimilars will take a bigger-than-expected bite out of the top 10 biologics facing competition. The firm sees those 10 drugs slipping by almost half by 2020, to a combined $35 billion in sales from $62 billion last year. For example, Morningstar sees Rituxan coming in at $7.4 billion this year, but dropping to $4.8 billion by 2020, partly on price competition with biosims and partly on market share losses. (Consensus estimates for the med in 2020 are $5.7 billion.)

One range of products that Roche hopes will boost sales in a big way are immunotherapies for cancer, including that PD-L1 med it's on track to file in bladder cancer at the beginning of 2016, now that new data are in hand. Lung cancer, too, if studies come back positive. Though its drug will be late to the immuno-oncology party--Merck & Co. ($MRK) and Bristol-Myers Squibb ($BMY) have their own already on the market--Roche thinks its drug can step up quickly, partly because it targets PD-L1, rather than PD-1 as the others do.

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