Mixed quarterly results for the Basel pharmaceutical group.
At current exchange rates, turnover decreased by 6% over the first three Of the year. The erosion of sales is minimal but continuous for two years, and undoubtedly partly linked to the trajectory of the Swiss franc over the period; over this quarter, the exchange rate effect alone erased all of the growth in the pharmaceutical segment.
The group’s publication emphasizes the growth of the “business base” restated for the burst of activity linked to Covid, as well as the performance at constant exchange rate to defend another balance sheet, with in theory growth of 7% over the trimester. Pirouette of financial communication or legitimate re-interpretation of results? It’s up to investors to choose which version they attach the most credibility to.
What is certain is that Roche has undertaken a weight loss cure. An R&D titan and heavyweight in oncology, the Swiss group used to maintain an extraordinarily dense pipeline. But over the last six months, at the instigation of its new general director Thomas Schinecker, a fifth of the research programs for new molecules have been abandoned.
Manufacturing operations are also being scrutinized. Last month, Roche sold Genentech’s Vacaville, Calif., facility to Lonza for $1.2 billion. Complex, this restructuring program is only just beginning; it is part of a geographical and technical pivot for the group, which intends to develop new production capacities in gene therapies.
Roche should receive the green light from the regulator in the coming months to market its treatments against paroxysmal nocturnal hemoglobinuria and a category of breast cancers. Unlike Bayer, for example, the group is not beset by patent expiration requirements; To date, 55% of its marketed treatment portfolio is still considered innovative.
Of these, the Ocrevus, Hemlibra, Tecentriq and Alecensa franchises—for the treatment of multiple sclerosis, hemophilia and lung cancer—account for two-thirds of sales; the other third is largely dominated by the Vabysmo ophthalmological treatment.
Distortion linked to Covid aside, in the long term, the group’s economic and financial performance remains characterized by its remarkable stability. In the pantheon of large pharmaceutical groups, Roche also remains the most respected institution in terms of R&D – this despite some recent failures, among others in the fight against Alzheimer’s disease and the abandonment of Carmot’s anti-obesity treatment. Therpautics, although acquired a few months ago.
By falling to a valuation floor of fifteen times profits, the group’s market capitalization returned to a low it had not seen since 2012; over the last decade, it evolved at an average of twenty times profits.
For investors outside Switzerland, however, the still very high franc tarnishes the attractiveness of the situation.
