Roche profits drop on one-off costs
Thursday, July 26, 2012
GENEVA (AP) — Swiss drugmaker Roche Holding AG on Thursday posted a 17 percent drop in first-half net profit from the same period a year, but its strong sales of cancer drugs and cost-cutting contributed to a rise in core operating profits and an outlook for continued sales growth that beat analysts’ expections.
Roche confirmed its expectation for growth to continue at low to middle single-digit rates through the rest of the year, while posting the drop in first-half profit to 4.26 billion Swiss francs ($4.3 billion), down from 5.15 billion francs in the comparable January-to-June period of 2011.
The Basel, Switzerland-based company said its net income also fell 14 percent, mainly due to one-off costs from the closure of its Nutley, New Jersey, site. The former U.S. headquarters is to be closed by the end of 2013, in a money-saving consolidation of research and development programs that the company said would result in annual savings of 370 million francs a year.
But the drugmaker’s core operating profit rose 7 percent in the first half of the year to 8.6 billion francs, and its sales grew 3 percent to 22.4 billion francs. Those exceeded analysts’ expectations for a 2.8 percent rise in core operating profit and 2 percent increase in sales growth.
The results were helped by the sales of established and new cancer drugs and recent cost-cutting drives.
The world’s largest manufacturer of cancer drugs, including its key drug Avastin for lung, brain and colorectal cancer, posted the figures before the opening of the Zurich exchange. Its shares closed Wednesday at 167.90 francs, up 4.81 percent since the start of the year.
“Roche delivered strong operating results in the first half of 2012, driven by the solid performance of our existing portfolio as well as new product launches,” Chief Executive Severin Schwan said. In a statement, he cited new cancer drugs Zelboraf, Erivedge and Perjeta and product pipeline with 72 new molecular entities in clinical development.
The company said it saw strong sales in hepatitis drug Pegasys and rheumatoid arthritis treatment Actemra/RoActemra. Roches also makes the influenza treatment Tamiflu, medical diagnostic tests, the Accu-Chek blood-sugar testing system, weight-loss drug Xenical and HIV medicine Fuzeon, breast cancer drug Herceptin and Tarceva for pancreatic cancer.
About 1,000 jobs are to be lost in the United States, with those operations shifted to Basel and Schlieren, Switzerland, and to Penzberg, Germany. The company expects the consolidation to result in about 80 more jobs in Switzerland and Germany.
In 2011, Roche said it had more than 80,000 employees worldwide, more than a quarter of them in the United States.