Roche Pharmaceuticals (RHHBY)

QUOTE AND NEWS
Bloomberg  Jul 3 
(Update1) Swine flu resistant to the Tamiflu medication was detected in a teenager who hadn’t taken the best- selling antiviral from Roche Holding AG, Hong Kong’s health department said.
StreetInsider.com  Jul 1 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Cellular+Dynamics+and+Roche+%28RHHBY%29+Expand+Existing+Cardiotoxicity+Screening+Agreement/4767246.html for the full story.
FiercePharma  Jul 1 
Once again, Pfizer calls an early halt to Sutent research--and it's not good news. The cancer drug failed as an add-on to chemotherapy in first-line treatment of colon cancer, the company said, proving no more effective than standard chemo...
Wall Street Journal  Jul 1 
Roche said it will cut the price of its viral drug Tamilflu for developing economies by half and allow them to spread payments over several years.
FiercePharma  Jun 30 
Don't panic about Tamiflu, Roche says--and the Centers for Disease Control and Prevention agrees. Both the drugmaker and the agency say they still consider the antiviral med effective against the H1N1 flu circulating the globe, despite news that a...
FiercePharma  Jun 30 
Are expensive cancer drugs a contemporary version of the emperor's new clothes? The Journal of the National Cancer Institute says they just might be. After analyzing data from existing studies, researchers found that some of the costliest drugs in...
Reuters  Jun 30 
Roche’s megabucks Genentech buy is looking more like a reverse takeover — in some ways, at least. The Swiss drugmaker splashed out $47 billion to buy out its biotech partner to secure access to Genentech’s impressive new drugs. But...
MarketWatch  Jun 29 
Social networking Web site Facebook said Monday it named David Ebersman as its new chief financial officer. Ebersman, who served as Genentech Inc. CFO from 2006 to 2009 before it was acquired by Roche Holding Ltd. , will start at Facebook in...
New York Times  Jun 29 
The first patient with a case of swine flu resistant to the antiviral drug Tamiflu has been found in Denmark, according to Danish health officials.
FierceBiotech  Jun 29 
Think Roche is a Big Pharma company? Think again. From now on, Roche--which just completed a buyout of Genentech--is a Big Biotech company. And to help signal the switch Roche is dropping out of PhRMA and is taking up Genentech's top position in...
Suggest a News Source
Topic
Top news source/blog that we're missing
Why do you recommend this news source?
Close 
Thanks for your suggestion!
 
BULLS: REASONS TO BUY

 
80% agree
 
Genentech purchase will let the company bundle oncology products

 
100% agree
 
CDC says two flu drugs, Tamiflu and Relenza, seem effective against the new strain

BEARS: REASONS TO SELL

 
0% agree
 
Much overhead resistance, weak stock, non-impressive institutional ownership.

 
RHHBY AT A GLANCE
 
 
 
 
 
 
 
 


Roche Pharmaceuticals (OTC: RHHBY) is a division of F. Hoffmann–La Roche, Ltd., a Basil, Switzerland-based health company that is one of the largest in the world by revenue. Total revenues for FY2008 were 45.6 billion CHF, driven mainly from sales of the cancer/arthritis drug MabThera/Rituxan (13.0%) and cancer drugs Avastin (11.4%) and Herceptin (11.2%) [1] MabThera's patent gives it protection through 2015, Avastin's through2019, and Herceptin's through 2019.[2] [3] This gives Roche one of the youngest yet super-profitable product portfolios in the pharmaceutical industry. The company has $4.03 dollars coming from new products (those launched within the last five years) for every dollar lost from patent-expiring ones, compared to an industry average of only 77 cents.[4] Roche also manufactures Tamiflu, one of the only available treatments and vaccinations for aggressive influenza. The drug was very profitable throughout the decade as governments around the world stockpiled it in the event of a flu pandemic but constituted only 1.3% of 2008 revenue as stockpiling programs have been completed. In the event of an Influenza outbreak, such as the swine flu scare of 2009, Roche stands to gain from a renewed demand for Tamiflu.

In March, 2009, the company completed its $46.8 billion buyout of the remainder of outsanding shares of US biotech company Genentech (of which it already owned a majority stake). [5] The company also holds a majority stake in Chugai Pharmaceuticals (4519-TO) of Japan.

[edit] Revenue Sources

Roche FY2008 Revenue by Region
Roche FY2008 Revenue by Region[6]
Roche FY2008 Revenue by Category
Roche FY2008 Revenue by Category[7]

In 2008, Roche earnings fell 1% to 45.6 billion CHF due to 6% growth in overall sales in local currencies (6% in pharmaceutical sales and 10% in diagnostics sales) that were adversely affected by the strengthening Swiss Franc (CHF). Oncology grew 15% in local currencies to 19.7 billion CHF and represents 55% of pharmaceutical sales. Within this category, blockbuster drug Avastin saw sales grow 37% in local currencies to 5.2 billion CHF. [8]

[edit] Corporate Overview

[edit] Pharmaceutical

In 2008, group sales (which include sales figures for Genentech and Chugai) decreased by 2% to 36 billion CHF. In local currencies, revenues rose 6% (or 10% excluding a predictable 68% drop insales of flu medicine Tamiflu after government stockpiling in 2007). Operating profit fell 1% to 12.9 billion CHF.[9]

[edit] Major Products

Roche had six drugs at blockbuster status (over $1 billion in sales) in 2008. They include:[10]

  • MabThera/Rituxin: cancer/RA drug with 5.9 billion CHF in revenue

MabThera, also known as Rituxin, is a drug with indications both for cancer and for rheumatoid arthritis (RA). Within the cancer field, it is currently used as a treatment for non-Hodgkins lymphoma, but it is undergoing testing for many other applications. Sales of the drug increased 16% in 2008.

  • Avastin: cancer drug with 5.2 billion CHF in revenue

Avastin sales grew 37% in 2008, primarily off of new applications. In February of 2008, the FDA approved the drug for treatment of breast cancer. Sales in Europe also grew due to usage of Avastin for colorectal cancer and lung cancer, as well as breast cancer.

  • Herceptin: cancer drug with 5.1 billion CHF in revenue

Herceptin is already a dominant treatment for adjuvant (early stage) breast cancer. Roche estimates its market share in Europe's five largest markets at approximately 75%, and penetration into the US market is already high.

  • CellCept: anti-inflammatory/autoimmune drug with 2.1 billion CHF in revenue

CellCept is an immunosuppressant used mainly for transplant patients. Its sales grew 13%, as it is a significantly less toxic alternative to its competitors.

  • NeoRecormon/Epogin: anemia/cancer drug with 1.7 billion CHF in revenue

NeoRecormon, also known as Epogin, is an anemia drug whose sales fell 13% in 2008. Causes include pricing pressure from branded competitors, as well as increased sales of biosimilar generics.

  • Pegasys: antiviral drug with 1.6 billion CHF in revenue

Pegasys is a major antiviral drug used mainly in the treatment of hepatitis C. Sales grew 6% in 2008, mainly in Japan and in emerging markets. The drug already has a 70% market share in the US.

[edit] Late-stage development projects on track:[11]

  • Colon cancer trial for Avastin: results expected 2009
  • Phase III trials combining new compunds with Herceptin to treat breast cancer

[edit] Diagnostics

Roche is a provider of diagnostics products (products for testing and treating medical conditions) in addition to its pharmaceutical products. 2008 Sales increased to 3% to 9.66 billion CHF (a 10% growth in local currencies). This largely came off sales increases of 9% in the Professional Diagnostics division (46% of group revenue), weighed against a sales decrease of 1% in the Diabetes Care division (31% of group revenue). Operating profit fell 28% to 1.19 billion CHF (a 22% drop in local currencies). The company cited decreased out-licensing income as an explanation for the drop.[12]

[edit] Trends and Forces

[edit] Pipeline Risks

Developing a new drug is a time-consuming and costly endeavor. Hundreds of thousands of candidate compounds must be screened to identify a handful of potential drugs, and even fewer of these candidate drugs are found to be effective at treating a disease. The drug must then pass strict safety standards in several series of clinical trials. The entire process of developing a new drug and bringing it to the market takes up to 10 to 15 years and on average costs $800 million.[13]

Roche spent 8.85 billion CHF on research in 2008.[14] Most of the company's product pipeline focuses on continuing the development of already certified successful drugs like Avastin. It has many clinical trials combining the drug with other compounds or using the drug for different cancer treatment applications. Success with these trials would extend the scope and duration of the drug's patent, bringing in billions more in revenue.[15]

[edit] Generic drugs: Not a large threat

For a detailed discussion of brand name vs generic medication, see also Brand name vs Generic medications.

Due to Food and Drug Administration (FDA) regulations, pharmaceutical patents last 17 years, during which a pharmaceutical company has an exclusive right to manufacture a particular drug. After the patent expires, generic versions of the product can be produced and sold by competitors. Generic medication is cheaper to produce (due to the substantially lower research and development costs) than brand medication, and the lower cost is often a strong incentive for consumers to choose generics over branded drugs. In addition, the presence of a generic alternative may force a decrease in the brand name medication's price, through increased competition. Roche's business model is highly dependent on patent protection and the enforcement of intellectual property rights, and weak patent protection decreases the profitability of drugs. Major pharmaceutical companies are constantly threatened by the entrance of generics.

Roche, however, has one of the youngest pipelines in the industry. Its biggest drugs - MabThera/Rituxan, Avastin, and Herceptin - accounted for 35.6% of 2008 total revenue and have patent protection through 2015, 2019, and 2019, respectively. The only major drug for which the company is losing revenue due to pricing pressure (both from branded competition and generics) is the anemia drug NeoRecormon/Epogin, whose sales fell 13% in 2008 in a market whose overall sales fell 10%.[16]

[edit] Flu Pandemics/Epidemics

There is always a threat of a regional or even global outbreak of a major influenza virus. For example, the Spanish influenza pandemic of 1918 infected 500 million people and killed 10% of victims [17]. More recently, the Avian flu of the early 2000s killed at least 200 people around the world, particularly in Southeast Asia. [18]. The Swine flu scare of April 2009 similarly has threatened countries all over the world, and the possibility that it could turn into a major flu pandemic is a serious concern. Public health officials all over the world have stocked up on vaccines and treatments in the event of such an outbreak. Roche's influenza treatment and vaccine, Tamiflu, is the most powerful and successful treatment for particularly infectious flu strains as of 2009. Fear over the Avian flu outbreak in the early 2000s Increased demand for Tamiflu and boosted Roche's earnings for several years. A sustained period of calm can result in decreased demand for Tamiflu and hurt Roche's bottom line, but renewed fear of outbreak (such as the Swine flu scare) can be a significant boon to earnings.

[edit] Competition

Competitors to Roche's major drugs include:

  • MabThera/Rituxan -- MabThera competes with Bexxar by GlaxoSmithKline. The two drugs do not align perfectly, however, as Bexxar tends to be a treatment that follows initial use of MabThera. [19]
  • Avastin -- Avastin competes in a number of different indications (including colorectal and kidney cancer) with with Erbitux by ImClone/Bristol-Myers Squibb, Nexavar by Bayer/Onyx, Sutent by Pfizer, Gleevec by Novartis, and Vectibix by Amgen. The drugs all work differently, targeting and killing cancer through different mechanisms. [20] [21]
  • Herceptin -- Herceptin competes head-to-head with Tykerb by GlaxoSmithKline over breast cancer patients. GlaxoSmithKline is funding a trial comparing the drugs that is expected to be completed in 2011.[22]


[edit] References

  1. Roche 2008 Financial Report
  2. [www.yale.edu/ybps/pharmaceuticalcasecompetition2007/PharmaCase2007.pdf]
  3. [mba.tuck.dartmouth.edu/cib/PDFs/Butz.pdf]
  4. Tough Projections for Big Pharmas: Drug Revenues Don't Look Promising.
  5. Trading Markets. "Roche Acquires Genentech." 30 March 2009
  6. Roche 2008 Annual Report
  7. Roche 2008 Annual Report
  8. Roche 2008 Annual Report
  9. Roche 2008 Financial Report, Pharmaceutical Section
  10. Roche 2008 Financial Report
  11. Roche 2008 Annual Report
  12. Roche 2008 Financial Report
  13. "2007 Pharmaceutical Industry Profile.
  14. Roche 2008 Annual Report
  15. Roche 2008 Annual Report
  16. Roche 2008 Financial Report
  17. Wikipedia Entry on Spanish Flu
  18. Wikipedia Entry on Avian Flu
  19. [1]
  20. WebMD Guide to Colorectal Cancer Treatment
  21. San Francisco Chronicle. "Study: Avastin expands reach." 3 June 2007.
  22. Herceptin vs. Tykerb Drug Trial
 
Worried about pump and dump?
We review changes
for stock spam
Want to make Wikinvest better?
We need your help,
contribute today
Do you write software?
We are recruiting
the best engineers
Like Wikinvest?
Spread the word —
Tell your friends!
Wikinvest © 2006, 2007, 2008, 2009. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki