Roche's 1H Earnings Decline On Lower COVID-19 Sales, CFO Says Late-Stage Pipeline Has Gaps That Needs To Be Filled

Roche Holding AG RHHBY said sales for 1H 2023 dropped to CHF 30.62 billion from CHF 33.9 billion in the same period last year, reflecting the expected tapering of demand for COVID-19 tests that was booming during the pandemic.

Sales at the diagnostics division plunged 29% to CHF 7.09 billion, and revenue at the pharma divisions was up 1% to CHF 22.68 billion.

Core net profit for the half year was CHF 8.59 billion, down from CHF 10.16 billion a year before.

Core operating profit was down 6% (-14% in CHF) to CHF 10.91 billion, reflecting the sales decline in COVID-19 products and the income from the patent settlement in Japan in the first half of 2022.

Half-year sales of Vabysmo, an injection for wet or neovascular, age-related macular degeneration and diabetic macular edema that won approval early last year, came in at CHF 957 million.

The company noted that the U.S. patients included around 30% naive patients, ~70% switches (mostly from Regeneron Pharmaceuticals Inc REGN Eylea (aflibercept).

Looking ahead, the company continues to expect a sales decline of low single percentage digits at constant currency, with a fall in core EPS along those lines. Excluding Covid-19 products, Roche expects solid sales growth in both divisions.

Roche's Chief Financial Officer, Alan Hippe, emphasized the need for superior drug development projects in later stages to enhance the Swiss pharmaceutical company's stock market value. 

"The point is really the setbacks we had last year in the late-stage pipeline... we have to now fill up the pipeline again and prove ourselves that we really have a strong late-stage pipeline. Once that happens, I'm not concerned about the share price," Reuters reported, citing Alan Hippe's comments in a press conference.

He also noted that some progress has been made already. The company's share price was negatively impacted due to the decline in COVID-19-related demand for tests and treatments.