2018 revenue: $55.71 billion (CHF 56.85 billion)
2017 revenue: $52.23 billion (CHF 53.30 billion)
Headquarters: Basel, Switzerland
Roche successfully grew sales by 7% in 2018, even as biosimilar rivals unleashed their power in Europe. But 2019 will be the moment of truth for the Swiss drugmaker, as U.S. copycats to its trio of cancer megablockbusters—Herceptin, Rituxan and Avastin—are expected to arrive.
Roche’s Street-beating 2018 has multiple sclerosis rising star Ocrevus to thank, at least in part. In its first full year on the market, the drug easily busted the blockbuster barrier and raked in CHF 2.35 billion ($2.30 billion), making it the most successful launch in Roche’s history, according to CEO Severin Schwan.
And that's just the beginning. In October, Roche unveiled five-year data that could further expand Ocrevus’ growth potential. The long-term trial showed that patients treated with Ocrevus earlier had better disease progression outcomes compared with relapsed MS patients who switched from interferon beta-1a treatment.
Despite the upside from Ocrevus, though, Roche faces the prospect of some real pain after its top three cancer drugs come under biosimilar assault in the U.S., which executives are expecting later this year. Investors will be watching Herceptin, Avastin and Rituxan sales closely to see how they fare against the competition. A lot is at stake: Those three drugs all grew sales in the U.S. in 2018, together pulling in more than CHF 10 billion.
In Europe, however, it was a different scene for those oncology stalwarts. In a scenario that could offer some hints at biosim erosion in the U.S., Herceptin and Rituxan saw European sales drop during the fourth quarter by 34% and 46% year over year, to CHF 354 million and CHF 185 million, respectively. Rituxan has yielded about half of its European market to the knockoffs, and Herceptin copycats have grasped one-fourth by volume in just seven months, according to Bernstein analyst Ronny Gal in a recent note to clients. Together, biosimilars cost Roche CHF 1.3 billion in 2018, according to Chief Financial Officer Alan Hippe, Ph.D.
Executives have yet to lay out specific forecasts for sales erosion in the U.S. All three drugs have copycats approved by the FDA, with many more to come, but there’s still uncertainty about when those knockoffs will launch and how the U.S. landscape will play out.
Projecting biosim entries in the second half, Roche pharma chief Bill Anderson said on the fourth-quarter call that they won’t have “a huge impact” on total 2019 numbers. That said, after that 7% growth rate for 2018, Roche is forecasting 2019 sales growth in the low- to mid-single digits.
Even with the expected biosim onslaught, Roche is still a major oncology force to be reckoned with. In its HER2 portfolio, Perjeta generated sales of CHF 2.77 billion, up 27%, thanks to its recent approval as an adjuvant treatment to prevent breast cancer recurrence after surgery. Kadcyla’s increase of 8% in 2018 wasn’t so impressive, but Roche recently won FDA real-time review for its use in the adjuvant setting. A previous phase 3 trial showed that the Herceptin follow-up beat its predecessor in terms of reduction in disease recurrence or death.
PD-L1 inhibitor Tecentriq—though still lagging far behind Merck & Co.’s Keytruda and Bristol-Myers Squibb’s Opdivo—has made some progress on the market and in the clinic. Last year, Tecentriq hauled in CHF 772 million, 59% more than in 2017. A regimen that combines Tecentriq, Avastin and chemo won an FDA green light in first-line non-squamous non-small cell lung cancer with no EGFR or ALK mutations. And in a market that Tecentriq could enjoy by itself for a while, the FDA recently approved a Tecentriq-chemo combo in first-line extensive-stage small cell lung cancer, an indication that could add $1.5 billion in Tecentriq sales, Baader Helvea analysts have said.
In another first-in-class nod, Tecentriq—paired with Celgene chemotherapy Abraxane—just became the first immunotherapy the FDA allowed in triple-negative breast cancer, after showing they could reduce the risk of disease worsening or death by 40% versus chemo alone.
Outside of oncology, hemophilia A therapy Hemlibra garnered CHF 224 million in its first year on the market—and its sales have been almost doubling every quarter. After Hemlibra nailed an FDA nod with flying clinical colors in patients without factor VIII inhibitors last October, Jefferies analysts predicted 2025 sales of $5.5 billion.
Roche also has its follow-up hemophilia plan ready. By taking in Spark Therapeutics in a deal worth $4.8 billion, the Swiss drugmaker gets phase 3-ready hemophilia A gene therapy SPK-8011 and phase 1/2 candidate SPK-8016, plus Spark’s entire gene therapy expertise, including manufacturing know-how—not to mention the first FDA-approved gene therapy, Luxturna, which treats a rare form of blindness.
With Luxturna and a few clinical-stage pipeline drugs, the Spark buyout will also complement Roche’s ophthalmology franchise, according to Jefferies analysts, given its currently reliance on Novartis-partnered wet age-related macular degeneration drug Lucentis, which will likely face biosimilar competition around 2021.