Top Companies Report

5 Roche

July 21, 2014

Headquarters: Basel, Switzerland

Headcount:  85,080  
Year Established: 1896  
Pharma Revenues: $43,560 3%
Net Income: $11,373 18%
R&D Budget: $9,270 -3%

Drug  Indication  2013 sales/CHF (+/- %)
Mabthera/Rituxan rheumatoid arthritis  6,951 5%
Avastin breast cancer 6,254 13%
Herceptin cancer 6,079 6%
Lucentis macular degeneration  1,689 5%
Xeloda cancer  1,509 2%
Tarceva lung cancer  1,339  4%
Pegasys hepatitis C 1,312  -19%
Actemra/RoActemra rheumatoid arthritis  1,037 30%

Roche, Ltd. has come a long way from its nineteenth century roots. Its acquisition of Genentech in 2009 made it the world’s largest pure play biopharma company, building on its previous investment in Japan’s Chugai Pharmaceutical Company and acquisition of the tissue-based diagnostics specialist, Ventana Medical Systems, in 2008.

Well prepared for the age of personalized and targeted medicine, Roche is leveraging a wide range of its own home-grown companion diagnostics and testing technologies (see pipeline for a sampling of diagnostics and the drugs they are used with).  Most of the compounds in its developmental pipeline come with their own marker or companion diagnostic, according to Alan Hippe, CFO of The Roche Group, who discussed the company’s pipeline and development strategies at the Jeffries Healthcare Conference in June.

As it fine tunes its own personalized medicines, Roche is also partnering with other companies in this area. Last month, for example, it launched a collaboration with Ferring Pharmaceuticals to develop a companion diagnostic device to be used with Ferring’s recombinant follicle-stimulating hormone, now in Phase III clinical testing. The result could be personalized infertility treatments for women.

This month, Genentech moved to buy the hormone-dependent cancer drug specialist, Seragon Pharmaceuticals for $700 million (and potentially another billion dollars pending the achievement of milestones). Roche’s pre-eminence in oncology drugs has been extended by its strength in immunotherapies, a legacy from Genentech and Chugai. Its leukemia treatment, MabThera is used to treat millions of patients, and the company is in late stage testing of a new glyol-engineered therapy, Gazyva, as well as the Bcl-2 inhibitor, RG7601, that the company is developing with AbbVie.

Meeting the challenge of accelerated approval
Gazyva was reviewed under an accelerated FDA approval process. The drug was approved eight months before expected, and available the day after approval.

Roche has also developed nine antibody-drug conjugates (ADCs) so far, and has over 25 ADC’s in its pipeline. Kadcyla (trastuzumab) was approved by FDA last year for treating HER2- positive metastatic breast cancer. Roche licenses the technology for making it from ImmunoGen, Inc.

In addition, the company is experimenting with combination therapies utilizing several of these diverse compounds. Its cancer treatment, Avastin was recently recommended for approval in Europe as an ovarian cancer treatment.

This May, the company made headlines at the American Society of Clinical Oncology (ASCO) meeting in Chicago, when it released results of clinical trials involving its monoclonal antibody MPDL3280A, developed by Genentech and Chugai. Oncologist Nicholas Vogelzang, with US Oncology in Las Vegas, has called it the most promising new agent for treating advanced bladder cancer “in at least 25 years,” according to a Bloomberg news report on the ASCO meeting. 

Cancer immunotherapies bind directly to the PD-1 protein that can switch off immune system response when cancer cells invade the body, or they bind to another protein, PD-L1, that some cancer cells use to turn off the PD-1 switch. Either way, they deactivate systems that prevent the human immune system from battling aggressive tumor cells.

This investigational therapy was found to shrink tumors in 43% of bladder cancer patients that were found positive for PD-L1. The market research firm, Decision Resources Group (Burlington, MA), expects demand for immunotherapy to reach nearly $9 billion by 2022, based on results so far. Others competing in this market are BMS and Ono, with the melanoma drug, ipilimumab or Yervoy, Merck’s pembrolizumab (MK-3475), and AstraZeneca and MedImmune, with MEDI4736.

Investing in Diagnostics for the Future
In June, Roche acquired the DNA-sequencing company, Genia, for $350 million, picking up a tool that will enable the company to develop more targeted therapies in the future.   

The company is moving well beyond oncology drugs, into areas such as hepatitis C treatment, and is also getting into neurological treatments such as Alzheimer’s. Last month, it launched a research collaboration with the research companies Inception and Versant on new treatments for multiple sclerosis.

In addition, Roche is tackling an important area that many Big Pharma companies have left, antibiotics, where its in vitro diagnostics tests will be important. The company recently linked up with Spero Therapeutics, a venture-funded biotech startup that is developing antibiotics based on improved understanding of microbial resistance. Earlier this year, Roche partnered with Discuva on gram negative infections, and also acquired Polyphor’s Phase II antibiotic.

Roche’s pipeline was invigorated by several new drug approvals this year, for therapies ranging from Actemra, designed to treat rheumatoid arthritis, to new applications for its macular degeneration treatment, Lucentis, and its oncology treatments Avastin and Herceptin. 

Roche has invigorated operational excellence programs throughout the company, including projects for Supply Chain Excellence and Direct Procurement Excellence, designed to ensure vendor quality. 

In 2013, the company opened a Supplier Relationship Center in California, with 18 different initiatives involving new technologies and methodologies to improve efficiency and better manage its 60,000 suppliers. The overall goal, Roche’s annual report says, is a systematic classification of suppliers, with a focus on strategic suppliers, partnerships and improved performance and risk management. Last year, Roche reports, its manufacturing facilities had 21 inspections by regulatory authorities without a negative finding.

The company plans to invest $896 million in global manufacturing over the next four years, and increase production capacity for biologics. All of these efforts are expected to create around 500 new jobs, the company says. The company has phased out production at its facility in Toluca, Mexico, which is slated for closing. 

Roche has also launched programs across the world to help make its medicines more accessible to patients, through such mechanisms as tiered pricing, patient assistance programs, and second brands of some products that are available in different dosage forms in different countries. 

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