07.17.13
4070 Basel
Switzerland
Tel: (41) 61 688 1111
Fax: (41) 61 691 9391
www.roche.com
Top Selling Drugs
Account for 85% of total biopharma sales, up from 83% in 2011.
Our #1 Biopharma stayed light-years ahead of the competition in 2012. For comparison’s sake, it would have come in as #5 in our Top Pharma rankings, and also would’ve been the first company in that list to show sales growth for the year. This year’s 6% drop in the value of the Swiss franc isn’t as dramatic as the previous year’s 18% rise, so sales figures aren’t utterly exaggerated.
By constant exchange rates, Roche posted sales growth of 5% in its pharma segment, driven by growth from its array of oncology and hematology biologics. In line with a number of its major pharma competitors, Roche posted double-digit sales gains in several international markets (Asia-Pacific +15%, Latin America +11%) while western Europe languished (-2%). The company cited strong growth in China (+27%) and Brazil (+11%). U.S. sales also rose by 7% during the year. (Europe sales grew 1% in 1Q13, while U.S. sales jumped 13%.)
Oncology remains far and away Roche’s biggest segment, accounting for $22.8 billion in 2012 sales (up 11% in CHF). While doing research for this report, we came across “some analysts” who felt that Roche is too focused on oncology and hasn’t proved that it can excel in other therapeutic areas. Because keeping analysts and short-term shareholders happy is clearly more important than trying to overcome cancer. (That said, the company is trying to develop non-oncology drugs, including an injectable cholesterol treatment and a fingers-crossed Alzheimer’s drug.)
Roche has sustained its R&D budget in recent years, a contrast to many of its competitors. The company spent more than $8.0 billion in 2012, although it made a major R&D structuring announcement shortly before press time last year. As part of that restructuring, Roche closed its Nutley, NJ facility, formerly the company’s U.S. headquarters, laying off 1,000 employees. That move reduced pRED’s staff number to around 2,000, the same as Genentech’s. In September 2012, Roche disclosed that it will add a translational clinical research site in Manhattan, by Bellevue Hospital, moving 200 pRED staff from Nutley over to the East Side, with the expectation of moving in by the end of 2013.
As the biggest biopharma in the world, Roche is also the biggest biosimilars target in the world. By the end of the decade, Roche’s top three drugs will have lost patent protection in the U.S. and Europe, and Competitors are lining up to try for a piece of Rituxan, which loses EU protection this year. Roche has already seen sales decline for NeoRecormon/Epogin, its EU-only recombinant erythropoietin, with a $300 million drop in 2012.
Generic competition also did a number on non-biologics CellCept (-14% to $970 million in 2012) and Boniva (-54% to $323 million). Meanwhile, injectable hepatitis C treatment Pegasys/Copegus, after an 8% boost in 2012, fell 16% in 1Q13 sales. The company attributes that swing to a big boost in 1Q12 as Pegasys was added to a triple-combination therapy for HCV, but it’s likely the downward trend will continue as more advanced oral HCV treatments reach the market.
In November 2012, India’s Intellectual Property Appellate Board (IPAB) revoked Roche’s patent for Pegasys. Several months earlier, IPAB ruled against Roche in a patent fight over a generic form of cancer treatment Tarceva. During 2012, Roche began using an Indian manufacturer to make Herceptin and Rituxan for the local market, which it calls a “second brand strategy.”
Roche’s performance in both 2012 and 1Q13 was buoyed by Tamiflu, which benefited from a strong flu season in the U.S. While the company was happy with those results, Tamiflu gave the company quite a headache in the past year. Since 2009, a group of investigators has been trying to get access to Roche’s clinical study reports (CSRs) for Tamiflu after concerns arose about the antiviral drug’s efficacy. In November 2012, Roche offered to assemble an advisory board to review Tamiflu’s data and decide which analyses help suss out the drug’s usefulness. When Roche cited issues of patient privacy, the investigators called it out as stonewalling. That group contends that the FDA never examined data from the largest trial of Tamiflu when the drug was under review. We have a sneaking suspicion that the data will somehow remain incomplete until a few months before Tamiflu’s patent expires in 2016.
Roche’s next-generation biologics may help it get through the biosimilars attack. In May 2013, Roche and Biogen Idec filed with the FDA and EMA for obinutuzumab, a followup to Rituxan. The drug has Breakthrough Therapy designation for the FDA, and posted mighty impressive results in treating chronic lymphocytic leukemia, in combination with chemotherapy and Rituxan.
Roche also gained approval for its Heceptin followup Perjeta last year, and its antibody-drug conjugate Kadcyla (previously T-DM1) in February 2013. The company has eight more ADCs in development for 10 cancer indications. Perjeta, Kadcyla and Herceptin all fit within the company’s HER2 breast cancer space, and trials seem to demonstrate synergistic effects in combination. (Adding Perjeta to Herceptin and taxane treatment in one trial extended progression-free survival by 50%.)
The company also got approval in the EU for Zelboraf, a melanoma treatment that will likely be overshadowed by Bristol-Myers Squibb’s Yervoy. The drug was approved by the FDA in 2011 and Roche’s diagnostic unit developed a test to identify good candidates for the drug. Even with Yervoy hanging over its head, Zelboraf brought in $250 million in 2012 revenues, and $90 million in 1Q13.
Cancer drug Avastin has continued along its rocky road. In June 2013, two glioblastoma trials of Avastin gave mixed results. As with the drug’s breast cancer approval, Avastin received clearance for brain cancer from an accelerated review. Postmarketing studies led the FDA to revoke Avastin’s label for breast cancer in 2011, but there doesn’t appear to be a call to do the same in brain cancer in light of the new glioblastoma results.
Shortly before press time, the Japanese Ministry of Health, Labor and Welfare approved Avastin to treat newly diagnosed glioblastoma and other aggressive brain cancer indications. The drug also got solid results in a trial against cervical cancer in June 2013, and was approved by the FDA to help treat metastatic colorectal cancer in January 2013.
In the UK, the National Institute for Health and Care Excellence (NICE) rejected funding to cover Avastin to treat two types of advanced ovarian cancer (May 2013), citing its cost-benefit profile. NICE has demonstrated remarkable consistency, as it has rejected Avastin for five indications so far, including colorectal, breast and lung cancer, contending that the benefits just aren’t that great for the price. The competition isn’t going to shed any tears when it sees a $6.0 billion drug stumbling, but it must be a bit confounding to other companies when a drug that’s so widely used has such strange trial results.
Roche’s oncology portfolio is the envy of the industry. While its top products will face patent expiration in the years ahead, we’re not convinced that the biosimilars issue is going to be sorted out in the U.S. soon enough to cause significant erosion to their sales. Even if it does, Roche’s next-generation of treatments have set the company up for years to come. It’s great that Roche isn’t standing still and treating those products as evergreens.
Lowe Down
Now here’s yet another organization where the first thing you point at is the oncology area. It’s as strong here — or stronger — than it is anywhere else in the industry. Rituxan’s a big part of that, and naturally enough, it’s also one of the first places that we might see a big biosimilar fight. But obinutuzumab is another part of the strategy. So far, that antibody has been performing well, and if it can follow in Rituxan’s path, things could be in good shape no matter what. But it’s going to be quite a while before anyone’s sure about that, since the real proof will be in survival benefit.
But you’ll notice that we’re talking about the Genentech side of things here. And why not? That’s where the biggest drugs are. On the Roche research end, one surprise was picking New York as the site of the new East Coast research center, and then bringing in the head of Sanford-Burnham from San Diego to run it. That’s about as non-Cambridge-ocentric as you can get, short of locating the whole thing in Montana. A lot of people will be watching to see if this works out. It’ll be hard to separate out all those variables, though: aren’t you supposed to just vary one thing at a time?
Loss of Humer
We doubt that Roche was trying to keep up with its cross-Basel rival Novartis on this, but in March 2013, Roche’s chairman Franz Humer announced that he will step down in 2014. Mr. Humer, a 16-year veteran of the company, served as chief executive officer from 1998 to 2008, stepping over to the chairmanship shortly before Roche’s purchase of Genentech.
Unlike with Novartis, there’s been no word about a $78 million non-compete clause in Mr. Humer’s contract. According to Roche’s financial statements, Mr. Humer’s total remuneration in the past three years comes out to $30.2 million, so we’re hoping the 66-year-old executive is content to retire into the sunset.
In other moves, Roche hired Dr. John C. Reed as head of Pharma Research and Early Development (pRED) in January 2013. Dr. Reed previously served as chief executive officer of the Sanford-Burnham Medical Research Institute and published a number of papers in the oncology area. The pRED group doesn’t include efforts from Roche’s Genentech unit, which has retained independence since its 2009 acquisition.
Roche also gained a new chief operating officer in August 2012. Daniel O’Day took over that role following the departure of Pascal Soriot, who left to take the top job at AstraZeneca. Mr. O’Day had been COO for the diagnostics business.
De-Acquire
You may notice something funny about this year’s Roche profile; there’s no “Acquisitions” sidebar! For the first time since our 2005 edition, Roche hasn’t acquired another company. It tried awfully hard to pick up Life Technologies, but came up short. Thermo Fisher Scientific bought the genetic testing equipment maker for $13.6 billion in April 2013. Reports surfaced that Sigma-Aldrich was the runner-up, but that SA planned to sell Life’s gene sequencing business to Roche as part of the the deal.
In January 2013, Roche gave up on its year-long effort to acquire Illumina, Inc., another gene-sequencing company. Roche had offered as much as $6.7 billion for that business during negotiations, but Illumina’s management held out for a bigger offer, leading Roche to walk away. Illumina’s chief executive complained that Roche took its offer public, which damaged his board’s ability to discuss an acceptable price. That board was sued by a money manager in Switzerland for $10 million in damages for refusing to negotiate with Roche.
Switzerland
Tel: (41) 61 688 1111
Fax: (41) 61 691 9391
www.roche.com
Headcount | 82,089 | |
Year Established | 1896 | |
Bio/Pharma Revenues | $37,582 | 1% |
Total Revenues | $48,534 | 1% |
Net Income | $10,425 | -4% |
R&D Budget | $8,031 | -4% |
Top Selling Drugs
Drug | Indication | $ | (+/- %) |
MabThera/Rituxan | rheumatoid arthritis | $7,154 | 5% |
Herceptin | breast cancer | $6,282 | 6% |
Avastin | oncology | $6,148 | 3% |
Pegasys/Copegus | hepatitis C | $1,759 | 8% |
Xeloda | oncology | $1,625 | 6% |
Lucentis | wet age-related macular degeneration | $1,580 | -8% |
Tarceva | lung cancer | $1,402 | -1% |
CellCept | transplantation | $970 | -14% |
Actemra | rheumatoid arthritis | $898 | 28% |
Xolair | asthma | $752 | 10% |
NeoRecormon/Epogin | anemia | $719 | -29% |
Valcyte | CMV retinitis | $681 | 6% |
Activase | acute ischemic stroke | $623 | 21% |
Tamiflu | influenza | $597 | 47% |
Pulmozyme | cystic fibrosis | $573 | 3% |
Our #1 Biopharma stayed light-years ahead of the competition in 2012. For comparison’s sake, it would have come in as #5 in our Top Pharma rankings, and also would’ve been the first company in that list to show sales growth for the year. This year’s 6% drop in the value of the Swiss franc isn’t as dramatic as the previous year’s 18% rise, so sales figures aren’t utterly exaggerated.
By constant exchange rates, Roche posted sales growth of 5% in its pharma segment, driven by growth from its array of oncology and hematology biologics. In line with a number of its major pharma competitors, Roche posted double-digit sales gains in several international markets (Asia-Pacific +15%, Latin America +11%) while western Europe languished (-2%). The company cited strong growth in China (+27%) and Brazil (+11%). U.S. sales also rose by 7% during the year. (Europe sales grew 1% in 1Q13, while U.S. sales jumped 13%.)
Oncology remains far and away Roche’s biggest segment, accounting for $22.8 billion in 2012 sales (up 11% in CHF). While doing research for this report, we came across “some analysts” who felt that Roche is too focused on oncology and hasn’t proved that it can excel in other therapeutic areas. Because keeping analysts and short-term shareholders happy is clearly more important than trying to overcome cancer. (That said, the company is trying to develop non-oncology drugs, including an injectable cholesterol treatment and a fingers-crossed Alzheimer’s drug.)
Roche has sustained its R&D budget in recent years, a contrast to many of its competitors. The company spent more than $8.0 billion in 2012, although it made a major R&D structuring announcement shortly before press time last year. As part of that restructuring, Roche closed its Nutley, NJ facility, formerly the company’s U.S. headquarters, laying off 1,000 employees. That move reduced pRED’s staff number to around 2,000, the same as Genentech’s. In September 2012, Roche disclosed that it will add a translational clinical research site in Manhattan, by Bellevue Hospital, moving 200 pRED staff from Nutley over to the East Side, with the expectation of moving in by the end of 2013.
As the biggest biopharma in the world, Roche is also the biggest biosimilars target in the world. By the end of the decade, Roche’s top three drugs will have lost patent protection in the U.S. and Europe, and Competitors are lining up to try for a piece of Rituxan, which loses EU protection this year. Roche has already seen sales decline for NeoRecormon/Epogin, its EU-only recombinant erythropoietin, with a $300 million drop in 2012.
Generic competition also did a number on non-biologics CellCept (-14% to $970 million in 2012) and Boniva (-54% to $323 million). Meanwhile, injectable hepatitis C treatment Pegasys/Copegus, after an 8% boost in 2012, fell 16% in 1Q13 sales. The company attributes that swing to a big boost in 1Q12 as Pegasys was added to a triple-combination therapy for HCV, but it’s likely the downward trend will continue as more advanced oral HCV treatments reach the market.
In November 2012, India’s Intellectual Property Appellate Board (IPAB) revoked Roche’s patent for Pegasys. Several months earlier, IPAB ruled against Roche in a patent fight over a generic form of cancer treatment Tarceva. During 2012, Roche began using an Indian manufacturer to make Herceptin and Rituxan for the local market, which it calls a “second brand strategy.”
Roche’s performance in both 2012 and 1Q13 was buoyed by Tamiflu, which benefited from a strong flu season in the U.S. While the company was happy with those results, Tamiflu gave the company quite a headache in the past year. Since 2009, a group of investigators has been trying to get access to Roche’s clinical study reports (CSRs) for Tamiflu after concerns arose about the antiviral drug’s efficacy. In November 2012, Roche offered to assemble an advisory board to review Tamiflu’s data and decide which analyses help suss out the drug’s usefulness. When Roche cited issues of patient privacy, the investigators called it out as stonewalling. That group contends that the FDA never examined data from the largest trial of Tamiflu when the drug was under review. We have a sneaking suspicion that the data will somehow remain incomplete until a few months before Tamiflu’s patent expires in 2016.
Roche’s next-generation biologics may help it get through the biosimilars attack. In May 2013, Roche and Biogen Idec filed with the FDA and EMA for obinutuzumab, a followup to Rituxan. The drug has Breakthrough Therapy designation for the FDA, and posted mighty impressive results in treating chronic lymphocytic leukemia, in combination with chemotherapy and Rituxan.
Roche also gained approval for its Heceptin followup Perjeta last year, and its antibody-drug conjugate Kadcyla (previously T-DM1) in February 2013. The company has eight more ADCs in development for 10 cancer indications. Perjeta, Kadcyla and Herceptin all fit within the company’s HER2 breast cancer space, and trials seem to demonstrate synergistic effects in combination. (Adding Perjeta to Herceptin and taxane treatment in one trial extended progression-free survival by 50%.)
The company also got approval in the EU for Zelboraf, a melanoma treatment that will likely be overshadowed by Bristol-Myers Squibb’s Yervoy. The drug was approved by the FDA in 2011 and Roche’s diagnostic unit developed a test to identify good candidates for the drug. Even with Yervoy hanging over its head, Zelboraf brought in $250 million in 2012 revenues, and $90 million in 1Q13.
Cancer drug Avastin has continued along its rocky road. In June 2013, two glioblastoma trials of Avastin gave mixed results. As with the drug’s breast cancer approval, Avastin received clearance for brain cancer from an accelerated review. Postmarketing studies led the FDA to revoke Avastin’s label for breast cancer in 2011, but there doesn’t appear to be a call to do the same in brain cancer in light of the new glioblastoma results.
Shortly before press time, the Japanese Ministry of Health, Labor and Welfare approved Avastin to treat newly diagnosed glioblastoma and other aggressive brain cancer indications. The drug also got solid results in a trial against cervical cancer in June 2013, and was approved by the FDA to help treat metastatic colorectal cancer in January 2013.
In the UK, the National Institute for Health and Care Excellence (NICE) rejected funding to cover Avastin to treat two types of advanced ovarian cancer (May 2013), citing its cost-benefit profile. NICE has demonstrated remarkable consistency, as it has rejected Avastin for five indications so far, including colorectal, breast and lung cancer, contending that the benefits just aren’t that great for the price. The competition isn’t going to shed any tears when it sees a $6.0 billion drug stumbling, but it must be a bit confounding to other companies when a drug that’s so widely used has such strange trial results.
Roche’s oncology portfolio is the envy of the industry. While its top products will face patent expiration in the years ahead, we’re not convinced that the biosimilars issue is going to be sorted out in the U.S. soon enough to cause significant erosion to their sales. Even if it does, Roche’s next-generation of treatments have set the company up for years to come. It’s great that Roche isn’t standing still and treating those products as evergreens.
Lowe Down
Now here’s yet another organization where the first thing you point at is the oncology area. It’s as strong here — or stronger — than it is anywhere else in the industry. Rituxan’s a big part of that, and naturally enough, it’s also one of the first places that we might see a big biosimilar fight. But obinutuzumab is another part of the strategy. So far, that antibody has been performing well, and if it can follow in Rituxan’s path, things could be in good shape no matter what. But it’s going to be quite a while before anyone’s sure about that, since the real proof will be in survival benefit.
But you’ll notice that we’re talking about the Genentech side of things here. And why not? That’s where the biggest drugs are. On the Roche research end, one surprise was picking New York as the site of the new East Coast research center, and then bringing in the head of Sanford-Burnham from San Diego to run it. That’s about as non-Cambridge-ocentric as you can get, short of locating the whole thing in Montana. A lot of people will be watching to see if this works out. It’ll be hard to separate out all those variables, though: aren’t you supposed to just vary one thing at a time?
—Derek Lowe
Loss of Humer
We doubt that Roche was trying to keep up with its cross-Basel rival Novartis on this, but in March 2013, Roche’s chairman Franz Humer announced that he will step down in 2014. Mr. Humer, a 16-year veteran of the company, served as chief executive officer from 1998 to 2008, stepping over to the chairmanship shortly before Roche’s purchase of Genentech.
Unlike with Novartis, there’s been no word about a $78 million non-compete clause in Mr. Humer’s contract. According to Roche’s financial statements, Mr. Humer’s total remuneration in the past three years comes out to $30.2 million, so we’re hoping the 66-year-old executive is content to retire into the sunset.
In other moves, Roche hired Dr. John C. Reed as head of Pharma Research and Early Development (pRED) in January 2013. Dr. Reed previously served as chief executive officer of the Sanford-Burnham Medical Research Institute and published a number of papers in the oncology area. The pRED group doesn’t include efforts from Roche’s Genentech unit, which has retained independence since its 2009 acquisition.
Roche also gained a new chief operating officer in August 2012. Daniel O’Day took over that role following the departure of Pascal Soriot, who left to take the top job at AstraZeneca. Mr. O’Day had been COO for the diagnostics business.
De-Acquire
You may notice something funny about this year’s Roche profile; there’s no “Acquisitions” sidebar! For the first time since our 2005 edition, Roche hasn’t acquired another company. It tried awfully hard to pick up Life Technologies, but came up short. Thermo Fisher Scientific bought the genetic testing equipment maker for $13.6 billion in April 2013. Reports surfaced that Sigma-Aldrich was the runner-up, but that SA planned to sell Life’s gene sequencing business to Roche as part of the the deal.
In January 2013, Roche gave up on its year-long effort to acquire Illumina, Inc., another gene-sequencing company. Roche had offered as much as $6.7 billion for that business during negotiations, but Illumina’s management held out for a bigger offer, leading Roche to walk away. Illumina’s chief executive complained that Roche took its offer public, which damaged his board’s ability to discuss an acceptable price. That board was sued by a money manager in Switzerland for $10 million in damages for refusing to negotiate with Roche.