2. Roche

Roche is coming under a growing biosimilar threat to its top drugs. Thankfully for the company, new launches are progressing. (Roche)

2017 revenues: $54.12 billion (CHF 53.30 billion) 
2016 revenues: $50.07 billion (CHF 50.58 billion)
Headquarters: Basel, Switzerland

Four recent drug launches helped drive 5% sales growth for Roche in 2017, and the Swiss drugmaker needs that fuel to keep on coming. It's already suffering from biosimilar onslaughts against one oncology mainstay and it's bracing for U.S. copycat rollouts for its big three: Rituxan, Herceptin and Avastin. 

All told, that blockbuster trio generated $21.6 billion in 2017 worldwide sales—that’s about 40% of the company’s total of 53.3 billion Swiss francs ($54.7 billion). Herceptin registered 3% growth, led by the U.S. and Brazil, but Rituxan and Avastin weren’t so lucky.  

Rituxan was the first among the three to take a hit from a biosimilar. After Sandoz’s copycat landed in Europe in June, sales of the Roche brand in the region plummeted by 16% and 25% in the third and fourth quarter respectively, measured year over year. That plunge further worsened to 44% in the first quarter this year. 

Full-year Avastin sales dropped 2% for different reasons. In the U.S., it was dragged down by the increasing use of immunotherapy in lung cancer, according to Roche management. In Europe, a 5% decrease was caused mainly by France's decision not to cover the drug for breast cancer.

Whatever the varying challenges the three experienced in 2017, they’ll all have to worry about biosimilars heading into 2018. Biosimilar rivals for all three are cleared by major regulatory authorities, though legal battles could stall their launches for some time.

Besides Novartis’ Sandoz, a host of companies including Pfizer, Amgen, Mylan, Biocon, Celltrion, Samsung Bioepis and Teva (some working in pairs) have at least one such biosimilar either greenlighted or poised for approval. Jefferies analysts previously predicted that Rituxan biosimilars would be launched in the U.S. around the third quarter, while Herceptin could face biosims next year and Avastin in 2020 due to patent challenges. 

To compensate for expected losses in its top ranks, CEO Severin Schwan maintains innovation will help the company grow through the turbulence. Last year, that innovation brought in new sales, offering hints at just how much new drugs can contribute. Four relatively new drugs—Ocrevus, Perjeta, Tecentriq and Alecensa—together contributed to 80% growth in Roche’s pharma division.  

For its first full year on the market, Tecentriq garnered about $500 million in sales. The drug has been expanding its list of indications in hopes of accelerating that growth. But the drug's path isn't obstacle-free; for instance, a shortfall in a confirmatory bladder cancer trial has hit sales, even though the FDA decided to keep Tecentriq’s bladder cancer approval after it failed the phase 3 trial.  

RELATED: FDA says Tecentriq won't lose its bladder cancer nod despite phase 3 failure, Roche reports

One of its biggest goals: Expanding into the lucrative first-line lung cancer realm, and it expects its Tecentriq-chemo combo could be first to market in squamous nonsmall cell lung cancer, which represents about 30% of all NSCLC patients. But as Credit Suisse analysts pointed out, Tecentriq’s lead might be short-lived, with Merck close behind with a “near-identical” study of rival Keytruda, which by itself already has a first-line approval in nonsquamous disease. 

Ocrevus, approved by the FDA last March for relapsing or primary progressive forms of multiple sclerosis, returned $892 million in 2017 sales, and it was approved in the EU early this year. ALK-positive NSCLC treatment Alecensa turned its conditional U.S. approval into a full one in November and got a conditional nod from the EMA last February. Sales of the drug doubled in 2017, reaching $371 million.  

Meanwhile, Perjeta sales grew 19% to $359 million last year. Thanks to data from the Aphinity trial, the FDA in December approved Perjeta-Herceptin plus chemo for postsurgery treatment of HER2+ breast cancer at high risk of recurrence. Roche pharma chief Daniel O’Day said during the fourth-quarter earnings call that with good initial uptake, inclusion in the National Comprehensive Cancer Network’s guidelines and smooth reimbursement, Perjeta “will be a key growth driver for us in the United States.” 

RELATED: FDA puts Roche's Perjeta-Herceptin combo in the fast lane, but will it deliver?

Elsewhere, bispecific antibody Hemlibra was approved in November to reduce bleeding in hemophilia A patients with factor VIII inhibitors. Just a few days ago, it received FDA “breakthrough” designation in a bigger group of patients—those without inhibitors—and won official backing from cost watchdogs at the Institute for Clinical and Economic Review. Clarivate Analytics marked it as the top drug launch in 2018, with peak sales surpassing $4 billion in 2022. 

Flu drug blockbluster Tamiflu, however, had seen better days. Under pressure from generic competition in the U.S., Tamiflu sales dropped a whopping 33% to $568 million in 2017. But Roche might be able to pick up some lost ground in 2019 with a new, more powerful flu drug licensed from Shionogi. 

2. Roche