Roche sees itself well positioned with a full pipeline
Published: Thursday, Feb 1st 2024, 14:50
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Roche looks back on a difficult financial year 2023. It was always clear that copycat products and the loss of Covid-19 sales would have a negative impact. In the end, however, the strong Swiss franc depressed profits more than expected. Nevertheless, the management is confident for 2024.
The company succeeded in offsetting a good portion of these negative factors with its newer resources. In the end, however, sales fell by 7 percent to 58.7 billion Swiss francs. At constant exchange rates, however, it increased by 1 percent.
Sales performance was therefore better than expected by management, which had anticipated a low single-digit percentage decline in sales at constant currencies. On a constant currency basis, Roche therefore more than made up for the decline in Covid-19 sales of 4.3 billion and the loss of sales from generic products totaling 2.1 billion.
Both divisions with light and shade
At 44.6 billion, the Pharma division's turnover was 2 percent lower in 2023. Without currency effects, it would have reported an increase of 6 percent. This was largely thanks to newer products such as the ophthalmic drug Vabysmo, the MS drug Ocrevus and the blood drug Hemlibra.
Revenue in the diagnostics business fell by 20 percent to 14.1 billion Swiss francs. At constant currencies, the decline was 13 percent. The division has been suffering from lower sales of Covid tests since the end of the coronavirus pandemic. However, as Roche emphasized in the press release, the basic business has recovered to such an extent that it is now showing growth comparable to the period before the coronavirus pandemic.
Strong franc weighs on profit
Meanwhile, the significant appreciation of the Swiss franc against most currencies had a particularly negative impact on results. Roche reported net income of 12.4 billion Swiss francs, compared with 13.5 billion in the previous year. The core operating result, which analysts use as a benchmark, fell by 13 percent, causing correspondingly long faces. As the CEO explains, this was partly due to increased expenditure on research and development.
And if you listen to the manager, Roche is unlikely to reduce expenditure too significantly in the future either. After all, the Group currently has numerous promising pipeline candidates, said Schinecker. In the current year alone, results are expected from more than 10 studies that are already at least in phase II of clinical development. He is confident that these will include candidates that Roche can use to support its sales.
Roche is not leaning far out of the window when it comes to the outlook for the 2024 financial year, which has already begun. CEO Thomas Schinecker and his management team anticipate a mid-single-digit percentage increase in sales at constant exchange rates. Core earnings per share should also increase by a mid-single-digit percentage. In addition, the Group is continuing its efforts to increase the dividend in Swiss francs.
At least the losses from generic products and the loss of coronavirus sales are likely to have less of an impact in 2024. Copycat products are likely to cost another 1.6 billion in sales, while there should be hardly any after-effects from Covid after the first quarter.
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