Headcount: 104,000
Pharma Revenues: $54,978 (-2%)
Net Income: $14,681 (-9%)
R&D: $15,725  (0%)

Roche reported sales of $54.9 billion within its pharma division in 2023. Despite losing $5.4 billion in COVID-related revenues, the pharma unit managed to grow 6% during the year driven by strong global demand for newer drugs.

The top five growth drivers of sales—Vabysmo (severe eye diseases), Ocrevus (multiple sclerosis), Hemlibra (hemophilia A), Polivy (blood cancer), and Phesgo (breast cancer)—generated total sales of $17.5 billion, an increase of $5.1 billion from 2022. Vabysmo, launched in early 2022, was a major growth driver with sales of $3 billion mainly in the U.S. and it has become one of Roche’s top drugs.

Sales of Ocrevus were $7.6 billion, an increase of 16%, which included 11% growth in the U.S. Hemlibra reported sales of $4.9 billion, an increase of 19%, led by U.S. sales. Sales of Perjeta were $4.5 billion with international growth being partly offset by a decline in sales in the U.S. Tecentriq sales were $4.4 billion, with growth of 11% across all regions.

Sales in the oncology therapeutic area increased by 4%, with the growth being driven by Polivy, Phesgo and Tecentriq, partially offset by biosimilar competition—sales of MabThera/Rituxan, Herceptin and Avastin decreased by a combined $1.3 billion due to the impact of biosimilars. Phesgo sales were $1.3 billion with a growth of 64% in all regions. Polivy sales increased by 108% to $0.9 billion across all regions, notably in the U.S. and Japan.

Sales in neuroscience grew by 16% mainly due to Ocrevus and Evrysdi, with Enspryng also contributing to the sales growth. In the immunology therapeutic area, Actemra/RoActemra sales increased by 7% despite the lower demand from hospitalized patients with COVID-19. Xolair sales in the U.S. were 5% higher, while sales of Esbriet were 70% lower because of generic competition, which was the main contributor to the overall 7% sales decline in immunology.

Sales in the haemophilia A therapeutic area grew by 16% due to the continued growth of Hemlibra. Sales in ophthalmology significantly increased reflecting the growth in Vabysmo sales, partially offset by the 52% decrease in Lucentis sales in the U.S. due to competition. For infectious diseases, Ronapreve sales decreased by 65% reflecting the lower sales due to the evolving COVID-19 situation. In other therapeutic areas, sales of Activase/TNKase were 6% higher mainly driven by increasing demand in the acute ischaemic stroke indication.

Mergers and Acquisitions

In October 2023, Roche announced it acquired Telavant Holdings, a Roivant company owned by Roivant Sciences and Pfizer, for $7.1 billion. The deal gave Roche RVT-3101, a Phase 3 ready therapy in development for inflammatory bowel disease, including ulcerative colitis and Crohn’s disease. Given the antibody’s novel mode of action targeting both inflammation and fibrosis, it has potential to be applied in multiple other diseases.

Another acquisition deal was unveiled in December 2023 when Roche paid $2.9 billion for Carmot Therapeutics and obtained access to three clinical-stage product candidates to treat obesity and diabetes, as well as several preclinical programs. Carmot’s lead asset is a Phase-2 ready, dual GLP-1/GIP receptor agonist for the treatment of obesity. Injected subcutaneously once a week, it has potential as a standalone and combination therapy to improve weight loss and to be expanded to other indications.

In divestment news, in May 2023 Roche said it plans to exit its legacy Genentech manufacturing facility in Vacaville, CA, as part of a broader strategy to evolve its manufacturing capabilities in line with future pipeline requirements.

Discovery and Development Partnerships

KSQ Therapeutics, a clinical-stage biotechnology company developing cancer therapies using its CRISPRomics discovery platform, entered into a worldwide license and collaboration agreement with Roche for the development and commercialization of KSQ-4279. KSQ-4279 is a first-in-class, potent, and selective small molecule inhibitor of USP1, a protein that regulates DNA damage response (DDR) in a manner distinct from other approaches, including PARP inhibitors.

Roche entered into a partnership with Alnylam to develop and commercialize zilebesiran, an investigational RNAi therapeutic currently in Phase 2 trials for the treatment of hypertension.

With PeptiDream Inc., Genentech, a member of the Roche group, entered into a collaboration and license agreement focused on the discovery and development of novel macrocyclic peptide-radioisotope (peptide-RI) drug conjugates.

PeptiDream will use its proprietary Peptide Discovery Platform System (PDPS) technology to discover, optimize, and develop macrocyclic peptide candidates for use as peptide-RI drug conjugates against targets of interest to Genentech. PeptiDream will lead early preclinical development before transitioning peptide-RI drug conjugate products arising from the collaboration to Genentech for further development and commercialization. PeptiDream will retain the right to develop and commercialize such peptide-RI drug conjugate products in Japan.

Ionis Pharmaceuticals entered a partnership with Roche for two early-stage programs for RNA-targeting investigational medicines for the treatment of Alzheimer’s disease (AD) and Huntington’s disease (HD). Roche gains exclusive worldwide rights and will be responsible for clinical development, manufacturing, and commercialization of the medicines if they receive regulatory approval. The companies will leverage Ionis’ discovery expertise for medicines that target the root cause of central nervous system diseases and Roche’s global experience developing and commercializing therapies for nervous system disorders.

Remix Therapeutics, a clinical stage biotechnology company developing small molecule therapies to modulate RNA processing and address underlying drivers of disease, entered a collaboration and license agreement with Roche for the discovery and development of small molecules that modulate RNA processing using Remix’s REMaster drug discovery platform.

MediLink Therapeutics has entered into a worldwide collaboration and license agreement with Roche for the development of a next-generation antibody-drug conjugate candidate YL211, targeting c-Mesenchymal epithelial transition factor (c-Met) against solid tumors.

Most recently, Ascidian Therapeutics, a biotechnology company seeking to treat human diseases by rewriting RNA, entered a research collaboration and licensing agreement with Roche for the discovery and development of RNA exon editing therapeutics targeting neurological diseases.

Headcount: 104,000
Pharma Revenues: $52,650 (+1%)
Net Income: $14,650 (-9%)
R&D: $17,348 (+8%)

Roche, a Swiss multinational healthcare company operates worldwide under two divisions, Pharmaceuticals and Diagnostics. Roche’s top therapeutic areas by revenue are Oncology, Neuroscience and Immunology. The Pharmaceuticals Division saw an increase of 1% in 2022, driven by growing demand for Ocrevus, Hemlibra, Vabysmo, Evrysdi and Tecentriq, which helped to offset declines for MabThera/Rituxan, Herceptin and Avastin, with sales impacted by continued biosimilar competition. COVID-19-related sales declined due to a 22% drop in sales of Actemra/RoActemra, while higher sales for Ronapreve in Japan compensated for lower sales in Europe.

Actemra/RoActemra, an anti-IL-6 receptor (aIL-6R) therapy, is approved in 116 countries for the treatment of rheumatoid arthritis and other inflammatory autoimmune conditions. IL-6 is believed to play a key role in activating the inflammatory pathway that contributes to the signs and symptoms of inflammatory autoimmune conditions.

On December 21, 2022, the FDA approved Actemra/RoActemra for the treatment of COVID-19 in hospitalized adults and retains Emergency Use Authorization for children between 2 and 18. Sales in 2022 were $2.9 billion, a decline of 22% at CER due to lower demand, as a result immunology sales decreased by 14%. Sales of Ronapreve, a neutralizing antibody combination developed with Regeneron, were up 17% to $1.8 billion. Declines in immunology sales were partly offset by higher sales of Xolair in the U.S. driven by steady growth in the chronic spontaneous urticaria indication.

Roche’s primary patents for MabThera/Rituxan, Herceptin and Avastin have expired worldwide, impacting Oncology sales, however the growth of Tecentriq, Phesgo, Polivy, Alecensa, Perjeta and Kadcyla partially helped offset losses.

Meanwhile, sales in neuroscience grew 23% at CER thanks to Ocrevus, a humanized anti-CD20 monoclonal antibody for the treatment of multiple sclerosis. Evrysdi, a treatment for spinal muscular atrophy, was also a growth driver, with sales of $1.2 billion.

Business news

Among asset acquisitions, Roche acquired a 100% controlling interest in Good Therapeutics, Inc., a privately owned U.S. company based in Seattle, WA, gaining access to Good Therapeutics’ PD-1-regulated IL-2 program and bolstering its immuno-oncology efforts. Roche paid $250 million upfront and additional contingent payments may be made based on the achievement of performance-related milestones.

Good Therapeutics was founded to create a new class of conditionally active therapeutics that will be more effective and avoid the problem of systemic immune activation seen with previous versions of such drugs. Conditionally active therapeutics are a new class of investigational drugs designed to offer potent activity only where it is needed. Good’s context-dependent molecules combine an antibody sensor directed against a specific marker and a therapeutic component that activates only when the sensor has bound to its target. The therapeutic component can be regulated by any molecule that an antibody can bind to, and the shape of the molecule is determined by the antibody bonding.

In 2022 the Pharmaceuticals Division initiated a portfolio prioritization program and continued the implementation of various global restructuring plans aimed at driving efficiency. The business process transformation aims to simplify system landscapes and streamline process complexity resulting in employee-related costs of $146 million and other reorganization expenses of $214 million.

The company’s manufacturing network strategy review in the Pharmaceuticals Division incurred site closure costs of $192.7 million related to sites in the U.S., Switzerland and Germany. Additionally, the Pharmaceuticals Division’s portfolio prioritization program incurred costs of $239 million mainly related to the closure of studies.

Approvals

Roche won several key approvals in 2022, namely Vabysmo, Lunsumio, and Actemra. Vabysmo was approved in the U.S. in January 2022 and showed a high initial uptake with sales $0.6 billion. Vabysmo is the first and only FDA-approved treatment designed to block 2 causes of wet age-related macular degeneration and dabetic macular edema (VEGF and Ang-2).

The FDA approval of Actemra intravenous (IV) for the treatment of COVID-19 in hospitalized adult patients represented the first FDA-approved monoclonal antibody to treat COVID-19.

Actemra is approved for this use in more than 30 countries.

In August, Xofluza became the first single-dose oral medicine for the treatment of influenza to be approved in the U.S. for children as young as five. The FDA also approved Xofluza to prevent influenza in children aged five years and older following contact with an infected person.

Additionally, Lunsumio (mosunetuzumab-axgb) was approved by the FDA for the treatment of adult patients with relapsed or refractory follicular lymphoma after two or more lines of systemic therapy. This indication was approved under accelerated approval based on response rate. With Lunsumio, people with heavily pre-treated follicular lymphoma may experience remission with a chemotherapy-free, fixed-duration treatment that can be accessed in an outpatient setting. Results from the phase II GO29781 study demonstrated that 80% of patients who received at least two prior therapies achieved durable response rates, with 60% experiencing complete remission. Lunsumio is now the first CD20xCD3 T-cell engaging bispecific antibody approved by the FDA to treat the most common slow-growing form of non-Hodgkin lymphoma, follicular lymphoma.

R&D

A Phase II study, FENopta, evaluating investigational oral fenebrutinib in adults with relapsing forms of multiple sclerosis (RMS), met its primary and secondary endpoints, showing significantly reduced magnetic resonance imaging (MRI) markers of MS disease activity in the brain compared to placebo, reducing the total number of new gadolinium-enhancing T1 brain lesions and significantly reducing the total number of new or enlarging T2 brain lesions.

Additionally, preclinical data have shown fenebrutinib to be potent and highly selective. Fenebrutinib is an investigational, highly selective oral Bruton’s tyrosine kinase (BTK) inhibitor, the only reversible BTK inhibitor currently in Phase III MS trials.

Additionally, Roche reported positive results from the global phase III Commodore 2 study evaluating the efficacy and safety of crovalimab in people with paroxysmal nocturnal haemoglobinuria (PNH) who have not been previously treated with complement inhibitors. The study met its co-primary efficacy endpoints of transfusion avoidance and control of haemolysis (the ongoing destruction of red blood cells measured by lactate dehydrogenase levels). Results showed that crovalimab, a novel, investigational anti-C5 recycling monoclonal antibody, given as a subcutaneous injection every four weeks, achieved disease control and was non-inferior to eculizumab, a current standard of care. Furthermore, results of the phase III COMMODORE 1 study in people with PNH switching from currently approved C5 inhibitors, supported the favorable benefit-risk profile of crovalimab. Results from both studies will be submitted to regulatory authorities around the world.

Headcount: 100,920
Total Revenue: $68,611 (+8%)
Pharma Revenues: $49,208 (+1%)
Net Income: $16,317 (-1%)
R&D: $14,968  (+14%)

TOP SELLING DRUGS  

In 2021 Roche’s Pharmaceuticals Division sales were relatively flat, increasing by just 1% to $49 billion. Demand for newly launched medicines to treat severe diseases, namely Hemlibra (haemophilia), Ocrevus (multiple sclerosis), Tecentriq (cancer), Evrysdi (spinal muscular atrophy) and Phesgo (cancer) drove the Swiss pharma giant’s performance for the year. While sales of these medicines all increased, the COVID-19 pandemic continued to have some negative impact on Roche’s pharmaceutical sales, as did biosimilar competition for MabThera/Rituxan, Herceptin, Avastin and Lucentis.

However, the negative impact caused by the pandemic and biosimilar competition, was partially offset by medicines for the treatment of COVID-19 that ultimately contributed to sales growth, including Actemra/RoActemra for severe COVID-19 pneumonia, which received U.S. FDA Emergency Use Authorization for the treatment of hospitalized adults and children. In addition, Ronapreve, an investigational neutralizing antibody combination for high-risk COVID-19 patients, developed with Regeneron, has been made available to patients in more than 40 countries across many geographies and economies.

Key product approvals

In January 2021, the European Commission (EC) approved single-dose, oral Xofluza for the treatment of uncomplicated influenza in patients aged 12 years and above. The EC has also approved Xofluza for post-exposure prophylaxis of influenza in individuals aged 12 years and above. Xofluza, with its rapid reduction in viral replication, could help patients recover more quickly, while also reducing the societal burden of influenza. This marks the first innovation in mechanism of action for an influenza antiviral approved by the EC in almost 20 years.

In March 2021, Roche’s Actemra/RoActemra became the first biologic therapy approved by the FDA for slowing the rate of decline in pulmonary function in adults with systemic sclerosis (SSc)-associated interstitial lung disease, a rare, debilitating condition that affects about 2.5 million people worldwide. Approximately 80% of SSc patients may be affected by interstitial lung disease (ILD), a progressive disease that can significantly impact lung function and can be life-threatening. In a global study, Actemra/RoActemra reduced the rate of progressive loss of lung function in people with SSc-ILD compared to placebo.

In April 2021, Roche confirmed that the FDA had approved its supplemental Biologics License Application for Xolair (omalizumab) prefilled syringe for self-injection across all approved U.S. indications. Xolair is the only FDA-approved biologic designed to target and block immunoglobulin E (IgE) for the treatment of moderate to severe persistent allergic asthma, chronic idiopathic urticaria (CIU) and nasal polyps.

In May 2021, Roche’s Tecentriq was approved by European Commission as a first-line monotherapy treatment for people with a type of metastatic non-small cell lung cancer. Tecentriq significantly improved overall survival in people with high PD-L1 expression, compared with chemotherapy in a Phase III study and the approval offers an alternative to chemotherapy for all eligible patients. This approval marks Tecentriq’s fourth indication in metastatic non-small cell lung cancer and fifth indication in lung cancer overall in the EU.

In other Tecetriq, news, in October 2021, the FDA approved the cancer drug as adjuvant treatment for certain people with early non-small cell lung cancer (NSCLC). Tecentriq is the first and only cancer immunotherapy approved for NSCLC in the adjuvant setting. Approval is based on the Phase III IMpower010 study showing adjuvant Tecentriq improved disease-free survival by more than one-third in PD-L1-positive Stage II-IIIA lung cancer, compared with best supportive care.

In October 2021, the FDA also approved Roche’s Susvimo, a first-of-its-kind therapeutic approach for neovascular or “wet” age-related macular degeneration (nAMD). Susvimo, previously called Port Delivery System with ranibizumab, is the first nAMD treatment in 15 years to provide an alternative to standard-of-care eye injections needed as often as once a month. By continuously delivering medicine into the eye through a refillable implant, Susvimo may help people with nAMD maintain their vision with as few as two treatments per year. Neovascular AMD impacts approximately 20 million people worldwide and is a leading cause of blindness in people over the age of 60.

Collaborations

In July 2021, Roche entered a drug discovery deal with Mimetas, a provider of organ-on-chip-based disease models and technology. The collaboration will focus on developing human disease models to characterize novel compounds in inflammatory bowel disease (IBD) and hepatitis B virus infections (HBV). Mimetas is responsible for developing tissue-based disease models and assays in the OrganoPlate, its proprietary organ-on-chip platform that increases predictability of biomarkers and reduces animal use in scientific testing. Roche gains access to technology, disease models, and scientific results. Roche will also receive an option to exclusively license specific disease models and assays for use in drug discovery.

In August 2021, Roche entered a collaboration with Shape Therapeutics, a biotechnology company developing RNA technologies for gene therapy. Through this partnership, ShapeTX will apply its proprietary RNA editing platform RNAfix and potentially leverage its AAVid technology platform for next-generation tissue-specific adeno-associated viruses (AAVs) for the development of gene therapy for certain targets in the areas of Alzheimer’s disease, Parkinson’s disease and rare diseases. During the course of the partnership, ShapeTX will conduct preclinical research to identify and deliver development candidates discovered by its AI-powered platforms RNAfix and, potentially, AAVid. Roche will be responsible for the development and worldwide commercialization of any potential products resulting from the collaboration. In addition to an initial payment, ShapeTX could receive milestones worth more than $3 billion from the collaboration.

In September 2021, Roche, through its biotech subsidiary Genentech, entered a collaboration with Adaptimmune Therapeutics to develop and commercialize allogeneic cell therapies to treat multiple oncology indications. The collaboration entails the development of allogeneic T-cell therapies for up to five shared cancer targets, and development of personalized allogeneic T-cell therapies. Adaptimmune is responsible for developing clinical candidates using its induced pluripotent stem cell (iPSC) derived allogeneic platform to produce T-cells (iT cells). Genentech will be responsible for the input TCRs and subsequent clinical development and commercialization. Adaptimmune received $150 million upfront and additional payments of $150 million over five years, unless the agreement is terminated earlier. Adaptimmune may also be eligible to receive milestones potentially exceeding $3 billion.

In December 2021, Roche acquired a 100% controlling interest in Protocol First, Inc., a privately owned U.S. company based in Salt Lake City, UT, for $55 million. The acquisition provides Roche access to Protocol First’s software solutions which enhance clinical research efficiency.

Lastly, during the year, Roche formed a collaboration with PathAI for artificial intelligence-based digital pathology applications for improved patient care. Artificial intelligence (AI) technology shows promise in advancing pathology imaging, which can benefit cancer patients through more precise diagnosis leading to targeted treatment.

The collaboration with PathAI expands pathologist access to innovative AI-powered technology to support companion diagnostic and drug development programs. It also builds on Roche’s Digital Pathology Open Environment, expanding the company’s commitment to improving patient outcomes and advancing personalized healthcare through innovation. Roche will initially distribute PathAI-developed research-use-only (RUO) algorithms through NAVIFY Digital Pathology, spanning multiple cancer types. The combined innovation will expand support for healthcare companies’ companion diagnostic and drug development programs.

Headcount: 101,200
Total Revenue: $66,049 (-5%)
Pharma Revenues: $50,431 (-8%)
Net Income: $17,06 (+25%)
R&D: $12,934 (+25%)

TOP SELLING DRUGS

Despite posting negative sales growth in 2020, Roche claimed the top spot in this year’s report backed by $50.4 billion of revenue in its pharmaceuticals division. Sales dipped 8% due to biosimilar erosion—strongest in the U.S.—and the impact of COVID-19, which reduced hospitalizations and outpatient visits.

New products were a major growth driver for Roche in 2020 with Tecentriq, Hemlibra, Ocrevus, Perjeta and Kadcyla leading the charge. Tecentriq sales were 58% higher at $3 billion, with growth in all regions. The launch and rollout of Hemlibra continued with sales reaching $2.4 billion—a 59% growth. Sales of Ocrevus were 26% higher at $4.7 billion while Perjeta sales were $4.2 billion, an increase of 19%, mostly due to growth in China. Kadcyla sales grew by 35% to $1.9 billion mainly due to higher demand in both the U.S. and Europe.

In the U.S., the first biosimilar versions of Herceptin (-33%), Avastin (-24%) and MabThera/Rituxan (-46%) entered the market in the second half of 2019 and U.S. sales of these three products dropped significantly as a result in 2020. At the same time, in Europe, the first biosimilar versions of Avastin came to market from mid-2020 and were a significant factor in the sales decline for the breast cancer drug in the second half of 2020.

COVID collaborations
In 2020 Roche responded to the challenges of the COVID-19 pandemic with both its pharmaceuticals and diagnostics businesses. In the pharmaceuticals division, Actemra/RoActemra has been adopted by many countries in their treatment guidelines to treat patients with severe COVID-19 pneumonia.

In August, Roche and Regeneron partnered to develop, manufacture and distribute REGN-COV2, Regeneron’s investigational antiviral antibody combination, to people around the globe. REGN-COV2 provided a much-needed treatment option for people already experiencing symptoms of COVID-19, and also has the potential to prevent infection in people exposed to the virus. This collaboration aims to increase supply of REGN-COV2 to at least three and a half times the current capacity, with the potential for even further expansion.

In April 2021, Roche and Regeneron announced that the Phase III clinical trial REGN-COV 2069 met both primary and secondary endpoints, reducing risk of infection by 81% for the non-infected patients, and reducing time-to-resolution of symptoms for symptomatic patients to one week vs. three weeks in the placebo group. Regeneron will distribute and record sales for REGN-COV2 in the U.S. and Roche will be responsible for distribution outside the U.S. Each company has committed to dedicate manufacturing capacity to REGN-COV2 each year.

In other COVID news, Roche formed a partnership with Atea Pharmaceuticals in October to develop, manufacture and distribute AT-527, an investigational novel oral antiviral. In April 2021, Atea dosed the first subject in the Phase III MORNINGSKY trial.

Drug development during the pandemic
Despite the massive disruption of a global pandemic, Roche’s commitment to developing new medicines resulted in seven new molecules moving to pivotal clinical studies in 2020, compared to approximately three per year over the last four years. Partnering efforts provided access to four late-stage medicines, about four times the average of recent years. In 2020, Roche was granted authorizations for four new medicines, and has a record number of 19 new medicines in registrational studies or filed for approval.

Two FDA approvals offer benefits for patients living with rare disorders of the central nervous system (CNS) which previously had limited treatment options. Enspryng is the first and only subcutaneous treatment for adults living with neuromyelitis optica spectrum disorder. This condition primarily damages the optic nerve(s) and spinal cord, causing blindness, muscle weakness, and paralysis. It often is misdiagnosed as multiple sclerosis.
Evrysdi was also approved for the treatment of spinal muscular atrophy (SMA) in adults and children two months of age and older. Throughout their lives, many people with SMA may lose their ability to perform critical physical movements, such as sitting upright.

On the cancer drug front, Gavreto (pralsetinib) received FDA approval for the treatment of adults with metastatic RET-altered non-small cell lung cancer, as detected by an FDA-approved test. This is a once-daily, oral precision therapy. Phesgo received approvals in the U.S. and the EU for the treatment of early and metastatic HER2-positive breast cancer. This fixed-dose combination of Perjeta and Herceptin with hyaluronidase is administered by subcutaneous injection, and is used in combination with intravenous chemotherapy.

Acquisitions and alliances
In 2020 Roche made several significant asset acquisitions and alliances. In September, Roche acquired the Irish biotech firm Inflazome for $449 million. Founded in 2016, the firm is developing inflammasome inhibitors to treat clinically unmet needs across various inflammatory diseases including Parkinson’s disease, Alzheimer’s disease, asthma, inflammatory bowel disease and arthritis, among other chronic inflammatory diseases. The firm’s portfolio includes orally available small molecule NLRP3 inhibitors. Through the acquisition, Roche gained complete rights to Inflazome’s portfolio of clinical and preclinical NLRP3 inhibitors.

In October, Roche bolstered is portfolio for cystic fibrosis (CF) treatment with the acquisition of Enterprise Therapeutics’ TMEM16A potentiator portfolio, which includes ETD002, a therapeutic candidate being evaluated in Phase 1 clinical trials for the treatment of CF. The TMEM16A portfolio is focused on treatments for CF and other severe respiratory disorders characterized by excessive mucus congestion. Genentech, a member of the Roche Group, is leading the development of the TMEM16A portfolio.

During the year Roche completed a licensing agreement with Sarepta Therapeutics under which it acquired the exclusive rights to launch and commercialize SRP-9001, Sarepta’s investigational micro-dystrophin gene therapy for Duchenne muscular dystrophy (DMD) outside the U.S. Roche paid Sarepta $1.15 billion upfront.

In July, Roche paid Blueprint Medicines $775 million for the co-development and co-commercialization rights for pralsetinib (Gavreto), an investigational, precision therapy in late-stage development for people with RET-altered non-small cell lung cancer (NSCLC), various types of thyroid cancer and other solid tumors.

Other significant transactions included an upfront payment of $190 million to Arrakis Therapeutics for a strategic collaboration and licensing agreement for the discovery of RNA-targeted small molecule (rSM) drugs against a broad set of targets across all of the Pharmaceutical Division’s research and development areas.

There was also an upfront payment of $200 million to Vaccibody AS for a worldwide collaboration and licensing agreement to develop DNA-based individualized neoantigen cancer vaccines based on VB10.NEO across multiple tumor types.

In addition, there was an upfront payment of $135 million to Vividion Therapeutics for rights to Vividion’s proteomics screening platform and proprietary small molecule library to target novel E3 ligases, as well as a range of oncology and immunology therapeutic targets.

Lastly, an upfront payment of $120 million was paid to UCB for rights to UCB’s investigational monoclonal antibody drug being developed as a potential treatment for patients with Alzheimer’s disease.

Headcount: 97,735
Pharma Revenues: $49,960 (+11%)
Net Income: $13,583 (+23%)
R&D: $10,293 (-16%)

TOP SELLING DRUGS

New products were the major growth driver for Roche in 2019. Demand for recently launched medicines for multiple sclerosis (Ocrevus) and haemophilia (Hemlibra) were particularly high and the same goes for the cancer immunotherapy Tecentriq. These three products were the major contributors to Roche’s pharma sales growth of 11% in 2019 to $49.9 billion.

Another highlight from the year was the approval of Rozlytrek, a targeted cancer treatment that marked a new chapter for Roche in the development of personalized healthcare. Biomarker testing for neurotrophic tyrosine receptor kinase (NTRK) gene fusions is the only way to identify people who may be eligible for treatment with Rozlytrek. Roche is leveraging its expertise in advanced diagnostics to help identify people with NTRK gene fusions using a companion diagnostic that is undergoing review.

During the year Roche made progress in other therapeutic areas besides oncology as well. It submitted documentation for two new medicines in the second half of the year: risdiplam in the hereditary disorder spinal muscular atrophy, and satralizumab for a specific disease of the central nervous system. For risdiplam, the FDA granted priority review and for satralizumab breakthrough therapy designation.

Gene therapy expansion
Gene therapies represent the future of life sciences. They are particularly promising for a number of rare diseases because they directly address the genetic cause of such conditions. Roche bolstered its presence substantially in this area, expanding its portfolio through the acquisition of the U.S. gene therapy pioneer Spark Therapeutics for $4.3 billion.

Based in Philadelphia, PA, Spark discovers, develops and delivers gene therapies for genetic diseases, including blindness, hemophilia, lysosomal storage disorders and neurodegenerative diseases. Its lead clinical asset is SPK-8011, a novel gene therapy for the treatment of hemophilia A, which entered Phase III in 2019. Spark also has SPK-8016 in a phase 1/2 trial aimed at addressing the hemophilia A inhibitor population.

Spark was the first company to receive FDA approval for a gene therapy for a genetic disease in 2017. That was for Luxturna, a one-time gene therapy indicated for the treatment of biallelic RPE65 mutation-associated retinal dystrophy.

Spark’s additional clinical assets include: SPK-9001, an investigational gene therapy for the potential treatment of hemophilia B in Phase III and SPK-7001 for choroideremia in Phase 1/2. The company is also developing SPK-3006 for Pompe disease and SPK-1001 for CLN2 disease (a form of Batten disease) which were on target for clinical development in 2019, as well as additional preclinical programs for Huntington’s disease and Stargardt disease.

In another significant acquisition, Roche bought Promedior for $1.39 billion, giving it the biotech’s entire portfolio of molecules for serious fibrotic diseases, notably PRM-151. Based in Lexington, MA, Promedior successfully advanced PRM-151 in human clinical trials and received breakthrough designation from the FDA for idiopathic pulmonary fibrosis (IPF).

PRM-151, a recombinant form of human pentraxin-2 (PTX-2) protein, has demonstrated both prevention and reversal of fibrosis and opens up new opportunities to treat a wide range of systemic fibrotic diseases. Phase II trial results demonstrated that PRM-151 is the first molecule to show significant lung function improvements on top of current therapies in IPF. PRM-151 has also shown promising early clinical trial data in myelofibrosis (MF) and its anti-fibrotic mechanism has therapeutic potential in other fibrotic diseases.

R&D alliances
During 2019, Roche, through its biotech subsidiary Genentech, entered several notable research collaborations. With Xencor, Inc. it entered into a research and license agreement to develop and commercialize novel IL-15 cytokine therapeutics, including XmAb24306. XmAb24306 is an IL-15/IL-15Rα cytokine complex engineered with Xencor’s bispecific Fc domain and Xtend Fc technology and is Xencor’s most advanced preclinical cytokine program.

The companies will co-develop XmAb24306 and other potential IL-15 programs, in which the companies will share development costs and profits. Additionally, the companies will engage in a two-year research program to discover new IL-15 drug candidates, including ones targeted to specific immune cell populations. Genentech paid Xencor $120 million upfront, and Xencor is eligible to receive up to $160 million in development milestones for the XmAb24306 program and up to $180 million in development milestones for each new IL-15 drug candidate.

In another deal, Skyhawk Therapeutics entered into a multi-target exclusive option and license agreement with Genentech to develop and commercialize small molecules that modulate RNA splicing. Skyhawk is using its SkySTAR technology platform to discover and develop innovative small molecule treatments directed to certain oncology and neurological disease targets.

The agreement grants Genentech an exclusive worldwide license to develop and commercialize potential therapeutics directed to multiple targets while Skyhawk received an upfront payment and is eligible to receive future payments and royalties. As part of the agreement, Genentech is responsible for clinical development and commercialization.

Convelo Therapeutics and Genentech formed a partnership for the discovery and development of novel remyelinating medicines for neurological disorders such as multiple sclerosis (MS).
Convelo receives an upfront payment and research support from Genentech, which has the option to acquire Convelo and downstream milestones.

Lastly, Genentech teamed up with Enable Injections in a drug delivery partnership. The agreement includes the potential for multiple molecule development programs including enFuse, under development by Enable to allow patient-administered subcutaneous delivery of high-volume therapeutics.

Enable’s enFuse is an on-body drug delivery platform with a drug transfer system compatible with standard syringes or vial container formats. The wearable enFuse platform is being developed for subcutaneous administration of large-volumes potentially ranging up to 50 mL. Designed for ease of use, enFuse has the potential to provide patients and their caregivers an alternative delivery method for subcutaneous administration of parenteral therapies outside of a clinical setting.

Headcount: 94,442
Total Revenues: $57,734 (+7%)
Pharma Revenues: $44,654 (+5%)
Net Income: $11,035 (+23%)
R&D: $12,281 (+6%)

TOP SELLING DRUGS  

Roche’s pharma sales grew 5% to $44.6 billion in 2018. Key growth drivers were the new multiple sclerosis medicine Ocrevus and cancer medicines Perjeta, Tecentriq, Alecensa as well as the new haemophilia medicine Hemlibra. With sales of $2.4 billion in its first full year on key markets, Ocrevus is the most successful new product launch in Roche’s history.

On the regulatory front, the Swiss pharma giant received several major approvals during the year. In the fourth quarter, FDA gave the green light to Tecentriq in combination with Avastin for a specific form of lung cancer. The regulator also granted accelerated approval for leukaemia drug Venclexta, and approved Xofluza, which is used to treat the flu.

At the end of the year it was announced that Roche’s CEO, Daniel O’Day, was stepping down from the helm after being with the company for more than 30 years in various roles. William Anderson succeeded him as the new chief executive at the start of 2019, having previously served as CEO of Genentech since 2017.

Oncology acquisitions
In 2018, Roche concluded several oncology-focused transactions to advance its personalized healthcare strategy with three U.S.-based acquisitions.

Three years after buying a majority stake in Foundation Medicine for more than $1 billion as part of a research and development collaboration, Roche acquired the rest of the company in a $2.4 billion follow-on deal for the business, which selects cancer treatments for patients based on their genetic profile.

The deal came on the heels of Roche’s $1.9 billion acquisition of oncology-focused electronic health record (EHR) software developer Flatiron Health. They make oncology-specific EHR systems, most notably an information exchange platform which allows researchers to access and learn from patient records. The company’s message is that large amounts of data could be used to speed up and, in some cases, replace certain clinical trials where patients are randomly assigned to a specific treatment.

Roche also entered an agreement to acquire Ignyta, a U.S. based pharmaceutical company focused on developing cancer therapies, for $1.7 billion. The acquisition expands Roche’s oncology portfolio globally. Ignyta will continue its operations in San Diego and will be responsible for the ongoing study of entrectinib, its most advanced cancer drug being studied in a range of solid tumor types. The company also has a portfolio of drugs in early stage of development that use gene therapy to kill the underlying diseases that drive cancer tumor growth. Ignyta employs an integrated “Rx/Dx” approach that combines precision medicines (Rx) and in-house molecular diagnostics (Dx) to both identify and target hard-to-treat cancers in hard-to-find patients.

Research collaborations
Roche entered several cancer research collaborations during the year. In the cellular therapy arena, it formed a deal with SQZ Biotechnologies to jointly develop and commercialize certain products based on antigen presenting cells (APCs) created by the SQZ platform for the treatment of oncology indications. The companies are also expanding a 2015 collaboration to jointly develop therapeutics derived from peripheral blood mononuclear cells (PBMCs).

With Kymab Group, Roche entered a clinical trial agreement, under which it will provide its PD-L1 blocking antibody atezolizumab for use in combination in Kymab’s upcoming Phase I-II clinical studies combining its lead investigational anti-ICOS antibody therapy KY1044 in patients with advanced solid cancers. Kymab will be responsible for conducting the clinical trials, and both companies will share data from the trials. Kymab continues to retain all commercial rights to KY1044.

Syapse and Roche entered into a multi-year strategic collaboration to help make precision medicine available to more cancer patients. Syapse and Roche will work jointly to develop software products and analytics solutions to provide the tools and insights healthcare providers need to practice precision medicine at scale, with the goal of improving patient outcomes. The companies will initially focus on four product programs: real-world evidence, so that physicians can make better care decisions; better understanding the health economics impact and patient outcomes of precision medicine; advancing electronic patient-reported outcomes to understand precision medicine’s effect on health-related quality of life; and accelerating clinical trial enrollment by matching patients to precision trials at the point of care.

Roche entered research deals in therapeutic areas other than cancer as well during the year. In diabetes, it partnered with Zealand Pharma for the Phase 3 trials with dasiglucagon for treatment of congenital hyperinsulinism (CHI). Zealand is responsible for conducting the Phase 3 trials, while Roche Diabetes Care provides its Accu-Chek Combo pump system for this study.

Icagen entered into a license and collaboration agreement with Roche to develop and commercialize small molecule ion channel modulators for the treatment of neurological disorders. The program incorporates Icagen’s platform for ion channels and is directed at a specific novel ion channel target expressed in neurons.

With BioMed X, Roche entered a research collaboration in the field of immunology. BioMed X launched a global call for applications to establish a new biomedical research group in Heidelberg, Germany with the goal of developing novel approaches for the treatment of several immune-mediated diseases.

Headcount: 93,734
Total Revenues: $54,591 (+5%)
Pharma Revenues: $42,219 (+5%)
Net Income: $9,039 (-9%)
R&D: $11,566 (+2%)

TOP SELLING DRUGS 

Roche Group’s pharmaceutical business reported solid overall results in 2017. Revenue grew 5% to $42.2 billion from $38.3 billion a year ago—good enough to move into the number two spot from four last year.

Pharmaceutical sales growth contributed $1.4 billion of new sales, representing 65% of the division’s growth. In oncology, HER2 franchise sales increased by 7% to $10.1 billion, led by Perjeta. MabThera/Rituxan sales were $7.5 billion, a growth of 1% globally, despite sales in Europe being 11% lower following biosimilar entry. Sales of Avastin were $6.7 billion, a decline of 2% due to competitive pressure. Sales in immunology grew to $7.6 billion, with Xolair and Actemra/RoActemra increasing by 16% and 14% respectively. Sales of Tamiflu fell by 33% due to competition from generics in the U.S. market.

During the year, the Swiss drug maker scored a major victory when FDA approved Ocrevus, a new multiple sclerosis (MS) drug from Roche’s Genentech unit that is poised to make a major impact on the market for MS and could prove to be a blockbuster. Since its launch, more than 30,000 prescriptions have been written and sales estimates for 2022 are projected to be more than $4 billion.

To say the FDA’s approval of the drug back in March 2017 was big news in the MS world is an understatement. Why is Ocrevus touted for being the leading new drug approval from the class of 2017? Well, there are approximately 15 other medications—known as disease-modifying treatments, or DMTs — for MS, but they only treat the most common form of MS, called relapsing-remitting multiple sclerosis (RRMS).

Ocrevus is groundbreaking because, while it has been very effective for RRMS, it is also the first medication approved to treat primary-progressive multiple sclerosis (PPMS), a less-common form of the disease. According to the National Multiple Sclerosis Society, 85 percent of people with MS have RRMS, while 10 to 15 percent are diagnosed with PPMS.

Roche was awarded several other new drug approvals during the year, some of which are highlighted here. First, FDA gave the green light to cancer drug Perjeta, in combination with Herceptin and chemotherapy—the Perjeta-based regimen—for adjuvant treatment of HER2-positive early breast cancer at high risk of recurrence.

The drug enforcer also approved Roche’s Gazyva for previously untreated advanced follicular lymphoma. The approval marks the first treatment option to demonstrate superior progression-free survival over standard-of-care Rituxan-based therapy.

Hemlibra for haemophilia A with inhibitors was approved and is the first new medicine in nearly 20 years to treat people with haemophilia A with inhibitors. The drug was shown to substantially reduced bleeds in adults and children.

FDA also approved Zelboraf for Erdheim-Chester disease with BRAF V600 mutation. Zelboraf is the first FDA-approved treatment for Erdheim-Chester disease (ECD), a rare blood disease.

Alecensa also was approved as a first-line treatment for people with specific type of lung cancer. Approval was based on Phase III results that showed Alecensa extended the average time that people lived without their disease worsening compared to crizotinib.

Actemra/RoActemra was approved for the treatment of CAR T cell-induced cytokine release syndrome. Actemra/RoActemra is the first FDA-approved treatment for severe or life-threatening cytokine release syndrome induced by CAR T cell therapy. This marks the seventh FDA approval for Actemra/RoActemra since its U.S. launch in 2010

Lasty, FDA ok’d Roche’s Lucentis for diabetic retinopathy, the leading cause of blindness among working age adults in the U.S. It is the first and only medicine approved to treat all forms of diabetic retinopathy on the market.

Billion dollar deals

At the start of 2018 Roche made a couple of major M&A transactions. First, to boost its cancer pipeline, it paid $1.7 billion to acquire Ignyta, Inc., a U.S. based pharmaceutical company focused on developing cancer therapies. The acquisition expands Roche’s oncology portfolio globally. Ignyta is responsible for the ongoing study of entrectinib, its most advanced cancer drug being studied in a range of solid tumor types. The company also has a portfolio of drugs in early stage development that use gene therapy to kill the underlying diseases that drive cancer tumor growth. Ignyta employs an integrated “Rx/Dx” approach that combines precision medicines (Rx) and in-house molecular diagnostics (Dx) to both identify and target hard-to-treat cancers in hard-to-find patients.

Second, Roche continued its push into the personalized healthcare space with the purchase of Flatiron Health in a deal worth $1.9 billion. Flatiron is a healthcare technology and services company focused on accelerating cancer research and improving patient care. They develop oncology-specific electronic health record (EHR) systems, most notably an information exchange platform which allows researchers to access and learn from patient records. The company’s message is that large amounts of data could be used to speed up and, in some cases, replace certain clinical trials where patients are randomly assigned to a specific treatment.

Roche’s chief executive of its pharma division, Dan O’Day said the deal marks an important step in its personalized healthcare strategy for Roche. “We believe that regulatory-grade real-world evidence is a key ingredient to accelerate the development of, and access to, new cancer treatments,” he said. “As a leading technology company in oncology, Flatiron Health is best positioned to provide the technology and data analytics infrastructure needed not only for Roche but for oncology research and development efforts across the entire industry.” Previously, Roche led a Series C funding round for Flatiron in 2016.

In other precision medicine news, during the year Syapse and Roche entered into a multi-year strategic collaboration to help make precision medicine available to more cancer patients. The two companies unveiled plans to work jointly to develop software products and analytics solutions to provide the tools and insights healthcare providers need to practice precision medicine at scale, with the goal of improving patient outcomes. Roche is funding the development of these products, which aim to benefit oncologists, health systems, and stakeholders including payers. Syapse will develop and deploy these new products to the precision medicine ecosystem, beginning with its existing healthcare provider network.

The companies will initially focus on four product programs: real-world evidence, so that physicians can make better care decisions; better understanding the health economics impact and patient outcomes of precision medicine; advancing electronic patient-reported outcomes to understand precision medicine’s effect on health-related quality of life; and accelerating clinical trial enrollment by matching patients to precision trials at the point of care. Roche and Syapse will also collaborate on automated methods for measuring real-world outcomes.

Research Collaborations

On the collaboration front, during the year Roche teamed up with Confo Therapeutics for the discovery, development and commercialization of novel, small molecule agonists of an undisclosed G-protein coupled receptor (GPCR) for the treatment of neurological and developmental disorders. Roche gains exclusive rights to the compounds resulting from the collaboration and will be responsible for their development, manufacturing and commercialization. The financial terms included an upfront payment, preclinical milestones and research funding to Confo Therapeutics totaling more than $7 million over the first 30 month period with up to $96.3 million in milestone payments.

Roche’s Genentech unit was also very active in research tie-ups. At the very end of 2016 Genentech extended its exclusivity period for the research collaboration and license agreement with Phylogica Ltd. to discover novel antibiotics using Phylogica’s Phylomer drug discovery platform, including its proprietary cell penetrating peptide discovery technology.

At the beginning of 2017 Corvus Pharmaceuticals expanded its clinical collaboration with Genentech for CPI-444 in combination with atezolizumab (Tecentriq) to be evaluated in a Phase Ib/II clinical study as second-line therapy in non-small cell lung cancer (NSCLC). The study will be part of Morpheus, Genentech’s novel cancer immunotherapy platform established to develop immunotherapy combination therapies more rapidly and efficiently. CPI-444, Corvus’ lead product, is a selective and potent inhibitor of the adenosine A2A receptor. Atezolizumab, developed by Genentech, is a monoclonal antibody designed to target and bind to a protein called PD-L1 (programmed death ligand-1).

With Arvinas LLC, a private biotechnology company creating a new class of drugs based on protein degradation, Genentech expanded an existing license agreement for the development of new therapeutics using Arvinas’ Protac technology. The multi-year strategic collaboration initiated in October 2015 will now encompass additional disease targets. The Protac platform removes target proteins directly rather than inhibiting them. This differs from small molecule inhibitors, which often result in toxic side effects and eventual drug resistance. Under the revised terms of the agreement, Arvinas is now eligible to receive development and commercialization milestone payments in excess of $650 million. In addition, they are also able to receive tiered-royalties on sales of products resulting from the license agreement.

Genentech and Biothera Pharmaceuticals entered into a clinical trial collaboration agreement to assess the safety and efficacy of Biothera’s Imprime PGG in combination with Genentech’s atezolizumab, an anti-PD-L1 antibody, and bevacizumab, an anti-VEGF antibody, to treat patients with metastatic colorectal cancer. Genentech will conduct the multicenter trial, which will enroll approximately 40 patients in the initial phase of the study. Under the agreement, researchers will evaluate the potential of Imprime PGG, atezolizumab and bevacizumab to increase overall patient responses.

At the start of 2018, Genentech and Syndax Pharmaceuticals formed a new clinical collaboration to evaluate the combination of Syndax’s entinostat, an oral, small molecule, class I HDAC inhibitor, and Genentech’s programmed cell death ligand 1 (PD-L1) blocking antibody, atezolizumab (Tecentriq), in patients with second-line hormone receptor positive, human epidermal growth factor receptor 2 negative (HR+, HER2-) metastatic breast cancer. The planned Phase Ib/II, open-label, multicenter, randomized trial will enroll patients with metastatic HR+, HER2- breast cancer who have experienced disease progression during or following first-line therapy. Genentech will be responsible for conducting the trial.

Headcount: 94,052
Total Revenues: $49,626 (+5%)
Pharma Revenues: $38,369  (+5%)
Net Income: $9,550 (+8%)
R&D: $9,729 (+6%)

TOP SELLING DRUGS

Roche is a pioneer and leader in biologics for oncology and beyond and with $38.4 billion in drug sales for 2016, it moved up a spot from last year to become the fourth largest drug maker in the world. Sales in Roche’s Pharmaceuticals Division were driven by strong growth of Perjeta, Herceptin and Actemra/RoActemra, while lower sales were recorded for Pegasys, Tarceva and Lucentis.

In the U.S., Pharmaceuticals sales advanced 3%, led by the respiratory medicines Xolair and Esbriet. The recently launched medicines Tecentriq and Alecensa contributed to the growth as well. Sales of eye drug Lucentis and cancer medicines Avastin and Tarceva declined due to growing use of other therapeutic options. In Europe, sales growth of 4% was driven by Perjeta, Actemra/RoActemra and MabThera/Rituxan.

Fighting cancer

Roche recently launched four new medicines: Cotellic (advanced melanoma), Alecensa (lung cancer), Venclexta (chronic lymphocytic leukemia) and Tecentriq (bladder and lung cancer). In addition, five FDA breakthrough therapy designations were granted for Roche medicines in 2016.

A major highlight was the U.S. launch of Roche’s cancer immunotherapy medicine Tecentriq. It is the first FDA-approved treatment for people with a specific type of bladder cancer in more than 30 years. In addition, the FDA cleared Tecentriq for use in previously treated metastatic non-small cell lung cancer (NSCLC). The pivotal Oak trial showed that people with this form of lung cancer who received Tecentriq live significantly longer, regardless of their PD-L1 status, compared with those receiving chemotherapy.

Additional data presented at the ECTRIMS4 congress in September showed that Roche’s ocrelizumab increased disease control in both relapsing and primary progressive multiple sclerosis (RMS and PPMS). In March, Roche received regulatory approval for this medicine in RMS and PPMS in the U.S. and the EU.

Roche also presented other important clinical results in 2016. A pivotal study in a group of people with haemophilia A (Haven 1) showed that prophylaxis with emicizumab led to a significant reduction in the number of bleeds over time. A phase III study by Chugai (J-Alex) found that first-line treatment with Alecensa significantly reduced the risk of disease worsening or death compared to crizotinib, the current standard of care, in people with ALK-positive NSCLC. While Gazyva/Gazyvaro showed positive results in a major clinical trial (Gallium) in follicular lymphoma, a separate trial (Goya) of the medicine in diffuse large B-cell lymphoma, did not reach its primary study goal.

Also on the cancer battlefront, during the year, Roche launched the global cancer immunotherapy Centers of Research Excellence (imCORE) Network. This network brings together many of the world’s leading scientific and clinical experts in cancer immunotherapy to collaborate in investigating the most promising new treatment approaches. The goal is to rapidly initiate preclinical and clinical research based on the latest scientific discoveries and to aggregate and share data to accelerate the search for cures for people with cancer. The imCORE Network will focus on identifying approaches to expand the number of people who benefit from cancer immunotherapy by exploring new ways to activate a person’s immune system to fight their cancer.

Roche will invest up to roughly $100 million to support basic and clinical research collaborations related to cancer immunotherapy. This investment is incremental to Roche’s on-going research and development of investigational medicines and treatment approaches in the field of cancer immunotherapy.

To further bolster its research efforts, Roche entered a collaboration with Catalent, through its subsidiary Redwood Bioscience, to develop next-generation molecules coupling different therapeutic modalities using Catalent’s proprietary SMARTag technology.

Roche gains non-exclusive access to the SMARTag platform and will have an option to take commercial licenses to develop molecules directed to a defined number of targets. Use of SMARTag, Catalent’s programmable protein-modification technology, combined with the highly stable hydrazino-Pictet-Spengler (HIPS) conjugation platform, will permit evaluation of alternative sites of drug conjugation so that Roche may develop molecules optimized for efficacy, safety and stability.

Roche paid Catalent an up-front fee of $1 million and is to provide additional research funding during the initial phase of the collaboration. Catalent has the potential to receive up to $618 million in development and commercial milestones, plus royalties on net sales of products, if Roche pursues commercial licenses and all options are exercised.

Restructuring small molecules network

At the end of 2015, Roche unveiled plans to restructure its small molecules manufacturing network. The plans called for the closure of four manufacturing sites in Clarecastle, Ireland; Leganes, Spain; Segrate, Italy; and Florence, SC, in the U.S. The decision was made to address current underutilization as a result of its evolving portfolio.

The transition began in 2016 and is planned to end by 2021. During the year, Roche divested two of the facilities. The 300,000 sq.-ft. API manufacturing plant in Florence was sold to Patheon. At the time of the sale Roche entered into a multi-year supply arrangement with the contract development and manufacturing organization (CDMO).

The Spanish facility in Leganes was sold to the contract manufacturing organization (CMO) Famar. In addition, the two companies at the time of sale signed a long-term manufacturing agreement that will allow Famar Leganes to supply Roche in the future from this facility with the current portfolio of products produced at the site.

With these changes Roche is responding to the evolution of its small molecule portfolio towards specialized medicines produced in lower volumes. To support the manufacture of a new generation of specialized small molecule medicines—produced in lower volumes than traditional medicines—Roche is investing roughly $310 million in a dedicated facility in Kaiseraugst, Switzerland to provide future technology requirements.

Headcount: 91,747
Total Revenues: $48,578 (+1%)
Pharma Revenues: $37,667 (+2%)
Net Income: $9,137 (-5%)
R&D: $9,667 (-7%)

TOP SELLING DRUGS

In Roche’s pharmaceuticals division sales rose 5% to $37.6 billion driven by the oncology portfolio (+8%), led by the HER2 medicines and Avastin. Sales of the immunology franchise grew by 24%, driven by the strong uptake of Esbriet, a new medicine for idiopathic pulmonary fibrosis, as well as higher sales of Actemra/RoActemra and Xolair. Sales of Pegasys declined due to competition from a new generation of treatments, while Valcyte/Cymevene and Xeloda faced generic competition as expected.

All regions contributed to the sales growth, with particularly strong performance in the U.S. (+6%) and in Europe (+4%), which was driven by strong demand for the HER2 medicines along with the strong uptake of Esbriet. Growth in the International region (+5%) was driven by key markets including Brazil (+10%) and China (+4%). In Japan, sales grew by 6%, driven by Avastin, the HER2 franchise and the new lung cancer medicine Alecensa.

Roche made positive pipeline progress in 2015. For its investigational medicine ocrelizumab, Roche announced strong data in both relapsing and primary progressive forms of multiple sclerosis. In addition, the company presented promising results for its lead investigational cancer immunotherapy medicine atezolizumab in bladder and lung cancer. Roche also received EU and U.S. approval for Cotellic plus Zelboraf to treat metastatic melanoma, and U.S. approval for the cancer medicine Alecensa for a specific form of lung cancer.

Towards the end of 2015 Roche announced plans to restructure its small molecule manufacturing network, prompting it to close four sites, affecting 1,200 positions. The affected sites are in Clarecastle, Ireland; Leganes, Spain; Segrate, Italy; and Florence, U.S. The company said the closures were necessary to address current underutilization as a result of its evolving portfolio and to support the manufacture of a new generation of specialized small molecule medicines—produced in lower volumes than traditional medicines. For this effort Roche is investing 300 million Swiss francs in a dedicated facility in Kaiseraugst, Switzerland to provide future technology requirements. The transition began in 2016 and is planned to end by 2021. Restructuring costs are estimated to be CHF 1.6 billion until 2021, of which as much as CHF 600 million will be in cash.

Bolstering its portfolio

Early in 2015 Roche expanded its portfolio in neuromuscular disease when it acquired Trophos, a privately held biotechnology company based in Marseille, France. Trophos’s proprietary screening platform generated olesoxime (TRO19622), which is being developed for SMA, a rare and debilitating genetic neuromuscular disease that is most commonly diagnosed in children. Results from a pivotal Phase II clinical trial with olesoxime in SMA showed a beneficial effect on the maintenance of neuromuscular function in individuals with Type II and non-ambulatory Type III SMA, as well as a reduction in medical complications associated with the disease. U.S. and EU regulatory authorities have granted orphan drug designation to olesoxime. The acquisition highlights Roche’s commitment to developing medicines for spinal muscular atrophy, a serious disease with no effective treatment.

Roche acquired Kapa Biosystems to strengthen its next-generation sequencing product offerings. Kapa is a provider of genomic tools in the life sciences sector that employs proprietary technologies to optimize enzymes for next-generation sequencing (NGS), as well as polymerase chain reaction (PCR) and real-time PCR applications. The company’s proprietary protein engineering technology is highly customizable and allows for the generation and screening of large numbers of enzyme variants. Tailored enzymes with improved performance for specific applications can be rapidly selected, expediting product development timelines. Kapa’s portfolio of NGS reagents includes enzymes such as novel DNA polymerases, with the potential to improve the performance of the entire sequencing workflow.

Key approvals and breakthroughs

In 2015, the FDA and the European Commission approved Cotellic in combination with Zelboraf for the treatment of people with BRAF mutation-positive metastatic melanoma. Updated pivotal data showed that the combination helped people to live significantly longer, with a median of two years, compared to Zelboraf alone.

The FDA also approved Alecensa for people with advanced ALK-positive NSCLC whose disease had progressed following treatment with crizotinib. This is the second approval for this medicine, which was created by Chugai, a member of the Roche Group, and approved in Japan in 2014.

Roche was granted FDA breakthrough therapy designation to ACE910 (RG6013, RO5534262) for the prophylactic treatment of people who are 12 years or older with haemophilia A with factor VIII inhibitors. In a Phase I study, ACE910 showed promising results as a prophylactic treatment administered as a weekly subcutaneous injection in people with severe haemophilia A with and without inhibitors to factor VIII.

Roche also received breakthrough status for Actemra/Actemra in systemic sclerosis. According to the company, Actemra/Actemra monotherapy and combination treatment regimens almost double sustained remission rates in people with early rheumatoid arthritis. In addition, five-year sustained efficacy of Actemra/Actemra was demonstrated in children with systemic juvenile idiopathic arthritis. Roche has initiated a global Phase III clinical trial initiated in systemic sclerosis, a potentially fatal disease with limited treatment options.

FDA also granted breakthrough therapy designation for Roche’s investigational cancer immunotherapy MPDL3280A (anti-PDL1) in non-small cell lung cancer. The designation was granted for the treatment of people with PD-L1-positive (Programmed Death-Ligand 1) non-small cell lung cancer (NSCLC) whose disease has progressed during or after platinum-based chemotherapy (and appropriate targeted therapy for those with an EGFR mutation-positive or ALK-positive tumor). This is the second FDA Breakthrough Therapy Designation for MPDL3280A following bladder cancer in 2014.

Clinical trial alliances

During the year, Roche and Celldex Therapeutics entered into a clinical trial collaboration to evaluate the safety, tolerability and preliminary efficacy of varlilumab, Celldex’s CD27 targeting investigational antibody, and MPDL3280A (anti-PDL1), Roche’s investigational cancer immunotherapy in a Phase 1/2 study in renal cell carcinoma.

Varlilumab and MPDL3280A are part of a new class of investigational medicines known as cancer immunotherapies that are designed to harness the body’s own immune system to fight cancer through separate yet complementary mechanisms of action that may enable the activation of T cells, restoring their ability to effectively detect and attack tumor cells. Preclinical data suggest the combination of these two mechanisms are synergistic and may enhance anti-tumor immune response compared to either agent alone.

In an immunotherapy alliance, Roche teamed up with Amgen to evaluate investigational candidates in cancer patients. The Phase Ib study the two firms are collaborating on is to evaluate the safety and efficacy of talimogene laherparepvec, Amgen’s investigational oncolytic immunotherapy, in combination with Roche’s investigational anti-PDL1 therapy, atezolizumab (also known as MPDL3280A), in patients with triple-negative breast cancer and colorectal cancer with liver metastases.

Talimogene laherparepvec is an investigational oncolytic immunotherapy designed to selectively replicate in tumors (but not normal tissue) and to initiate an immune response to target cancer cells. Atezolizumab is an investigational monoclonal antibody designed to interfere with the PD-L1 protein.

The combination trial aims to activate an anti-tumor immune response with talimogene laherparepvec and to block inhibitory T cell checkpoints with atezolizumab, to potentially increase the anti-tumor activity relative to each agent alone.

Roche and Upsher-Smith Laboratories, through its wholly-owned UK subsidiary Proximagen, formed an agreement for the further development of a novel, oral small molecule inhibitor of Vascular Adhesion Protein 1 (VAP-1), a cell-adhesion molecule that may be effective in the treatment of inflammatory diseases. The VAP-1 inhibitor is currently in Phase II clinical development. Roche is granted a worldwide exclusive license to develop and commercialize the compound. In a novel collaboration model, Roche and Proximagen will conduct additional Phase II studies to further define the therapeutic potential of the VAP-1 inhibitor. Based on these data Roche will assume responsibility for late stage development and worldwide commercialization. Proximagen will receive an upfront payment, along with downstream development, regulatory and sales milestones. In addition, Proximagen will also receive tiered royalties on net sales of a potential future product containing the molecule.

Research collaborations

On the research front, Roche entered a collaboration with Catalent, through its subsidiary Redwood Bioscience, to develop next-generation molecules coupling different therapeutic modalities using Catalent’s proprietary SmartTag technology. Roche gains non-exclusive access to the SmarTag platform and will have an option to take commercial licenses to develop molecules directed to a defined number of targets. Use of SmarTag, Catalent’s programmable protein-modification technology, combined with the highly stable hydrazino-Pictet-Spengler (HIPS) conjugation platform, will permit evaluation of alternative sites of drug conjugation so that Roche may develop molecules optimized for efficacy, safety and stability. Roche paid Catalent an upfront fee of $1 million and is to provide additional research funding during the initial phase of the collaboration. Catalent has the potential to receive up to $618 million in development and commercial milestones, plus royalties on net sales of products, if Roche pursues commercial licenses and all options are exercised.

In another alliance, Roche, Meiji Seika Pharma and Fedora formed a license agreement for the development and commercialization of OP0595, a beta-lactamase inhibitor in Phase I clinical development. Under the agreement, Roche obtains worldwide rights from both companies for development and commercialization with the exception of Japan, where Meiji will retain sole commercialization rights. Beta-lactamase inhibitors restore or potentiate the activity of beta-lactam antibiotics. The combination of OP0595 with a beta-lactam antibiotic targets severe infections caused by Enterobacteriaceae, including multi-drug-resistant strains. Roche entered the deal because it said there is an urgent need for new antibiotics able to combat the increasing resistance to antibiotics that is being seen worldwide. CP

Headcount: 88,509
Total Revenues: $47,961 (+1%)
Pharma Revenues: $37,082 (+1%)
Net Income: $9,635 (-16%)
R&D: $9,006 (+2%)

TOP SELLING DRUGS

Roche is one of the world’s largest biotech companies with medicines in oncology, immunology, infectious diseases, ophthalmology and neuroscience. In 2014, the Roche Group invested nearly $10 billion in R&D and posted total revenue of $47 billion.

In Roche’s Pharmaceuticals division sales grew 4% at constant exchange rates to $37 billion with the oncology portfolio performing strongly (+5% CER), particularly medicines for HER2-positive breast cancer (+20%). Sales of new cancer products made a significant contribution, as did sales of Avastin, which were 6% higher. Immunology sales also grew, especially in the treatment of rheumatoid arthritis (RA), with Actemra/ RoActemra up 23% and MabThera/Rituxan (in RA) up 12%, as well as Xolair for chronic hives and allergic asthma, which grew 25%. Tamiflu sales soared (+54%) towards the end of the year as a result of the flu epidemic in the U.S. The company reported these sales helped to offset lower sales of oral chemotherapy drug Xeloda, which now has generic competition in key markets; and hepatitis medicine Pegasys, which faced competition from a new generation of treatments.

In the U.S., sales were 6% higher, with medicines for HER2-positive breast cancer driving growth (+27%), along with Tamiflu (+62%). Xolair and Avastin also grew significantly, up 25% and 6% respectively. Xolair was approved by the FDA to treat a form of chronic hives in 2014, which adds to its use in allergic asthma. Early uptake of Esbriet was very positive, the company reported, however, sales did not reflect demand, as patients in the U.S. are currently transitioning from a patient assistance program to normal commercial supply.

In Europe, 3% higher sales were driven by solid growth in Germany and the UK, particularly in sales of HER2-positive breast cancer medicines. In the UK there was also some stockpiling of Tamiflu. Ongoing pricing pressure had an impact on sales in a number of markets, but demand remained high.

Sales in the International region were 2% higher, with strong growth in Latin America, in particular Venezuela, Argentina and Brazil, as well as in Algeria. In Russia, sales declined significantly in the fourth quarter as a result of economic conditions, while sales in the Middle East were impacted by a change in distributor. In China, sales were 4% higher, with demand increasing in the fourth quarter, and continued strong growth for key products such as Herceptin and MabThera/Rituxan. Growth was negatively impacted by the base effect of strong Tamiflu sales in 2013, as well as competition for Tarceva.

In Japan, 7% higher sales were driven by strong demand for HER2-positive breast cancer medicines, as well as Avastin and Actemra, in particular for the subcutaneous form. In the osteoporosis segment, there was good sales growth for Edirol, as well as Bonviva. Early uptake was very strong for the newly approved Alecensa (alectinib) in ALK-positive lung cancer. The 2014 performance also reflected the continued increase in contribution from personalized healthcare. Sales of products with a companion diagnostic test on label now represent 23% of Pharmaceuticals division sales.

In Roche’s other division, Diagnostics, sales increased 6% to $11.5 billion. Professional Diagnostics, with 8% growth, was the main growth contributor led by its immunodiagnostics business. Sales of Molecular Diagnostics increased by 6%, with 8% growth in the underlying molecular businesses. Sales were 10% higher in Tissue Diagnostics and 1% higher in Diabetes Care. There was also positive early uptake for the new molecular laboratory testing systems, launched during the year, the cobas 6800 and the cobas 8800. Sales growth was driven by Asia–Pacific (+15%) and EMEA (+4%). Growth in Asia–Pacific was driven by a strong performance in China (+23%). Sales increased 4% in North America, 13% in Latin America and were flat in Japan.

Positive Pipeline

During the year, two new indications were approved for cancer medicine Avastin, platinum-resistant ovarian cancer and cervical cancer, while Gazyvaro was approved for the treatment of chronic lymphocytic leukemia in Europe. Esbriet, the newly acquired idiopathic lung fibrosis medicine, was granted FDA Breakthrough Therapy Designation in July and subsequently launched in October. The FDA also granted Breakthrough Therapy Designation for Lucentis in diabetic retinopathy and for a new cancer immunotherapy compound, anti- PDL1, in bladder cancer.

Clinical trial data from the Phase III CLEOPATRA study of Perjeta in HER2-positive metastatic breast cancer was one of the highlights of 2014. The results showed that adding Perjeta to Herceptin and chemotherapy, increased survival time for previously untreated patients to an unprecedented almost five years. Clinical trial results for cobimetinib combined with Zelboraf in advanced melanoma (tested against Zelboraf alone), were also announced during the year, showing that treatment with the combination halved the risk of the disease worsening. Roche now has over 30 different combination therapies in its oncology pipeline.

Phase III studies of bitopertin for schizophrenia did not meet primary endpoints, and a Phase III study of gantenerumab in early-stage Alzheimer’s disease was discontinued after a pre-planned futility analysis.

Cancer immunotherapy is a key focus area for Roche, with seven investigational medicines in five types of cancer currently in development. Roche’s most advanced investigational medicine in this area, anti-PDL1, showed promising early results in combination with Avastin in renal cell carcinoma, as well as positive early data in other solid tumors. Roche also reported positive news from two Phase III studies of Avastin in HER2- negative breast cancer, a very aggressive and common form of breast cancer.

In hemophilia A, early data on ACE910, an innovative bispecific antibody, showed an encouraging reduction in bleeding rates for all patients on the trial. Lampalizumab, the first potential treatment for geographic atrophy, initiated Phase III trials in September. Development of onartuzumab was discontinued in advanced MET-positive non-small cell lung cancer, as it failed to show clinically meaningful efficacy.

Building Capabilities with Strategic Acquisitions

During the year, Roche made a number of targeted acquisitions to complement its current product portfolio in both divisions, but only some of those in Pharmaceuticals are highlighted here. The largest deal was Roche’s acquisition of InterMune for $8.3 billion. The acquisition broadens Roche’s respiratory portfolio globally with InterMune’s lead drug pirfenidone, approved for idiopathic pulmonary fibrosis (IPF) in the EU and Canada, and is under regulatory review in the U.S. IPF is a progressive, irreversible and ultimately fatal disease characterized by progressive loss of lung function due to fibrosis, or scarring, in the lungs.

Also, Genentech, a member of the Roche Group, acquired Seragon Pharmaceuticals, a privately held biotechnology company based in San Diego, CA, for $725 million, plus additional payments of up to $1 billion based on milestone achievements. With this acquisition, Genentech obtained rights to Seragon’s entire portfolio of investigational next-generation oral selective estrogen receptor degraders (SERDs), for the potential treatment of hormone receptor-positive breast cancer. The acquisition of the Phase I program offers a potential new approach for hormone receptor-positive breast cancer.

Roche also acquired Santaris Pharma, a privately held Denmark-based biopharma company for $250 million in cash up front and additional payments of as much as $200 million based on certain milestones. Santaris’ Locked Nucleic Acid (LNA) platform is focused on the discovery and development of RNA-targeting therapeutics, a new class of medicines with the potential to address hard to treat diseases. Roche plans to maintain Santaris’ operations in Denmark, where the existing site will be renamed Roche Innovation Center Copenhagen. The acquisition combines Santaris Pharma’s next-generation antisense technology and LNA expertise with Roche’s deep experience in disease biology, chemistry, drug safety, drug formulation, delivery, and development.

In 2014 Roche entered into several clinical supply agreements. With Infinity Pharmaceuticals it started a master clinical supply agreement under which Roche will supply Gazyva (obinutuzumab) to Infinity for planned clinical studies to evaluate the combination of Gazyva and duvelisib (IPI-145), Infinity’s oral inhibitor of phosphoinositide-3-kinase (PI3K)-delta and PI3K-gamma, in patients with hematologic malignancies.

Pharmacyclics and Roche entered into a master clinical drug supply agreement to evaluate the safety, tolerability and efficacy of IMBRUVICA (ibrutinib), an oral Bruton’s tyrosine kinase (BTK) inhibitor, in combination with GAZYVA (obinutuzumab), a new CD20-directed antibody in patients with non-Hodgkin Lymphoma (NHL) and Chronic Lymphocytic Leukemia/Small Lymphocytic Lymphoma (CLL/SLL). Pharmacyclics will initially conduct a Phase III study in CLL/SLL, and plans to evaluate the combination for NHL. IMBRUVICA is being jointly developed and commercialized by Pharmacyclics and Janssen Biotech, Inc. Both products are approved for the treatment of CLL. The use of these products in combination is investigational.

Celldex Therapeutics and Roche formed a pact to evaluate the safety, tolerability and preliminary efficacy of varlilumab, Celldex’s CD27 targeting investigational antibody, and MPDL3280A (anti-PDL1), Roche’s investigational cancer immunotherapy in a Phase 1/2 study in renal cell carcinoma.

Also of note, Roche expanded its partnership with DKSH Business Unit Healthcare, a market expansion services provider with a focus on Asia. DKSH is currently managing Roche’s entire supply chain operations for pharmaceutical products and distribution to hospitals, clinics and pharmacies in Cambodia, Hong Kong, Laos, Malaysia, Myanmar, Thailand and Vietnam. Now DKSH and Roche will work together in Singapore for the first time.

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

TOP SELLING DRUGS

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.

Headcount: 82,089
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

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?

—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.

Headcount: 80,129
Bio/Pharma Revenues: $37,110 (4%)
Total Revenues: $48,128 (5%)
Net Income: $10,800 (26%)
R&D Budget: $9,135 (16%)

Top-Selling Drugs

Account for 84% of total biopharma sales, up from 80% in 2010

PROFILE
Our Top Biopharma is also the top beneficiary of currency fluctuations. The average value of the Swiss franc (CHF) appreciated against the dollar by a mind-blowing 18% in 2011, making Roche’s figures look a lot better in our converted figures. Don’t be fooled. In CHF, revenues fell 12% in 2011, driven by losses among eight of its top nine products.

That’s if you follow Roche’s reporting currency. If all exchange rates are kept constant across its various sales currencies, then Roche’s biopharma revenues were flat for the year. Pharma division sales in western Europe dropped 4%, while the U.S. was up 3% and “International” was up 7%, surpassing Europe in overall drug revenues for the first time.

What led to the slump? The biggest drop came because of Avastin. The company took a body blow when the FDA revoked Avastin’s approval for treatment of metastatic breast cancer (mBC) in November 2011. That decision ended a process that began in July 2010, when an advisory panel questioned its effectiveness in that indication. The agency decided in December 2010 to keep the indication on Avastin’s label, but revoked it after recent clinical trials showed little benefit to offset the drug’s risks. Upon receiving the news, Roche announced that it will begin a Phase III trial of Avastin and paclitaxel in patients with previously untreated mBC and try to identify a biomarker to help identify patients who may have a better response to Avastin.

As we predicted last year, Avastin fell from Roche’s best-seller spot, passed by Rituxan as its sales fell 18% in CHF. It nearly dropped to #3, but narrowly surpassed Herceptin’s 2011 sales. The company hopes to boost Avastin’s performance with approval to treat ovarian cancer (approved in the EU in December 2011); in 1Q12, that indication helped it post 1% sales growth. (And it remained popular enough that several batches of counterfeit Avastin were discovered in the U.S. distribution chain in the past year, sneaking across a shady network of international distributors.)

In May 2012, Roche ended development of dalcetrapib, its CETP inhibitor that was in Phase III trials to raise HDL levels. Unlike the last CETP inhibitor to make it to Phase III, Pfizer’s torcetrapib, this one didn’t raise mortality rates. It just didn’t have efficacy. However, much like torcetrapib, dalcetrapib was projected last autumn as having a potential market of $10 billion in annual sales by Roche’s head of pharma research and early development, Jean-Jacques Garaud. When the program was canceled, the company admitted it was a high-risk project, but still conveyed disappointment in its failure.

In November 2011, Roche’s chairman said the company was not planning more job cuts, after 4,800 layoffs were announced a year earlier. However, shortly before press time Roche announced that it will close its R&D site in Nutley, NJ and lay off 1,000 employees. R&D activity will be consolidated in Switzerland and Germany. The company said that it will open a translational clinical research site on the east coast, with around 240 employees. The Nutley site had been in operation for 80 years, and served as the company’s U.S. HQ before the 2009 acquisition of Genentech. All operations there will cease by the end of 2013.

“All operations” includes the clinical supply manufacturing facility that Roche opened in Nutley mere months ago. That 17,000-sq.-ft. site handled highly potent compounds for preclinical through Phase II work. At the ribbon-cutting in October 2011, Waseem Malick, Roche’s vice president for pharmaceutical and analytical R&D, said, “This is a vitally important milestone for the Nutley site, as well as pharmaceutical research and early development at Roche.”

As part of the announcement, R&D head Mr. Garaud left the company. The company didn’t cite dalcetrapib’s failure as the cause for this round of layoffs, but it’s our prerogative to play connect-the-dots; closing your symbolic former HQ, shuttering a high-potency facility less than a year after touting it as a “vitally important milestone,” and letting your early R&D head walk? That makes this looks like a serious, cost-cutting response to bad news, not just a carefully planned phase-out. Costs and savings from the layoffs will be revealed after press time, at Roche’s 1H12 earnings call.

But let’s not accentuate the negative! Roche saw several drug and biologic approvals in the past year. In January 2012, Roche got approval for Erivedge, a skin cancer drug developed by Genentech and partner Curis, based on a single study of 96 patients, under the FDA’s Priority Review program. Another skin cancer treatment, Zelboraf, was cleared by the FDA in August 2011. That one will benefit from Roche’s diagnostics expertise; a companion test was approved by the FDA and will identify patients who can benefit from the drug.

Roche’s diagnostics business appears to be critical to its R&D efforts, especially in oncology, where personalized treatments can grow into blockbusters. As more tumor-related biomarkers are identified, the company’s expertise in developing assays may give it a leg up on drug developers that need to partner for a diagnostic. The company reported in its annual report that it has more than 200 drug development projects that could also employ a companion diagnostic. According to the former R&D head, 80% of Roche’s projects are biomarker-personalized.

The proto-personalized drug, Herceptin, was developed by Roche’s Genentech unit and targets the 20% of metastatic breast cancer patients whose tumors express the HER2 receptor protein. In June 2012, the company got approval for Perjeta, a new drug that goes after the same HER2-positive mBC indication. In a Phase III trial, Perjeta added more than six months of progression-free survival (PFS) when added to Herceptin and docetaxel chemotherapy compared to those two therapies without Perjeta. Some analysts project Perjeta’s sales to peak around $8.5 billion.

The company is still hoping to get its antibody-drug conjugate, T-DM1, approved in that same subclass of metastatic breast cancer. It combines the biologic active in Herceptin with a  chemotherapy agent to deliver the highly toxic contents to the cancer cell directly. The first Phase III trial of T-DM1 reported preliminary results in March 2012 and Roche reported better PFS than patients on Xeloda and Tykerb. Another study showed that Roche’s RA drug, Actemra, performed better than Humira (in a somewhat stilted contest in which Actemra was at its highest dose, and Humira at its lowest, according to Abbott).

While developing new biologics and small molecules, Roche is also keeping an eye on the biosimilar regulatory environment. Its only at-risk biologic is Rituxan (which several companies are going after), while its other major products should have patent coverage until 2019 and beyond. Still, Roche isn’t exactly looking forward to dealing with biosimilars of its biggest drug. In its public statements, the company cites the need to maintain patient safety as its paramount concern regarding biosimilars, while supporting “the development of a clear regulatory framework for the approval of biosimilar products, which compares them with the original drug.”
(We should note that Roche was banned from selling Mircera, its pegylated-erythropoietin, in the U.S. despite FDA approval. After legal actions that stretched from 2005 to 2009, Roche conceded that Mircera infringed on Amgen’s Epogen and Aranesp patents.)

Roche, thanks to its Genentech integration, is the world’s largest biopharma, and the biggest actor in oncology. The company has several key prospects in new drugs and expansions of existing ones, and its diagnostics prowess may help it build “niche blockbusters” in the years ahead. So, while “flat” isn’t a good year for Roche, the company’s still in no danger of losing its Top Biopharma position, unless Amgen, Novo Nordisk and Merck Serono decide to merge.

Headcount: 80,653

Pharma Revenues: $35,629 (-1%/-5%*)

Total Revenues: $45,643 (1%/-3%*)

Net Income: $8,548 (9%/4%*)

R&D Budget:  $7,845 (-5%/-8%*)

* Converted at avg. exch. rate / based on reported currency (EUR)

Top-Selling Drugs in 2010

Account for 77% of total biopharma sales, same as in 2009.

PROFILE

A funny thing happened on the way to the top. Just 18 months ago, Roche’s Avastin was on the march to becoming the world’s top-selling drug. A few failed trials and regulator/payor restrictions later, and Avastin wound up posting a 5% decline in 4Q10 and a 6% drop in 1Q11. Now it’s not even the top-selling drug at Roche! (That honor went to Rituxan in 1Q11.)

It began with a missed endpoint in a Phase III trial in prostate cancer in March 2010 (noted in last year’s report, a long with failures in stomach and early colorectal cancers). Then the big shoe dropped in July 2010 when an FDA advisory panel questioned Avastin’s effectiveness as a breast cancer treatment. The panel voted 12-1 against keeping that indication for the drug, and the FDA followed its suggestion in December 2010.

Avastin had received accelerated approval for Avastin in breast cancer in 2008, but the FDA cited several trials that showed Avastin failed to prolong overall survival in breast cancer patients or slow down the disease enough relative to the risks of Avastin’s side effects. It’s not the first time that a drug with accelerated approval ended up losing that indication, but it’s certainly the most high profile one.

Roche, naturally, appealed the FDA’s ruling. So while the rest of the biotech industry was gathered in Washington DC in late June for the BIO conference, Roche executives were at the FDA’s White Oak Campus in Silver Spring to argue for Avastin’s reinstatement as a breast cancer treatment. The FDA’s ban is pending the outcome of the hearing process, but if it’s upheld, it could lead to a $1 billion drop in Avastin revenues. (The EMA still considers Avastin beneficial against breast cancer.) (UPDATE: The FDA upheld its ruling.)

Meanwhile, the UK’s NICE considers Avastin too expensive for colorectal cancer treatment, given the benefits (six extra weeks of life, on average). Roche tried developing a new patient access scheme, but was rejected by the inaptly named institute.

Oh, and Roche is still battling to keep pharmacists from giving patients Avastin instead of Lucentis for wet macular degeneration, going so far as to highlight the higher death rate in patients treated with Avastin instead of Lucentis for that indication.

What does all this mean? Well, Roche has revised its peak sales estimates of Avastin from $8.7 billion to around $6.7 billion and, given that it posted $6.2 billion in 2010 sales, that may mean this is as good as it gets. That’s an awfully big number, but Roche was expecting a lot more from the Avastin engine when it acquired Genentech in 2008. (And Avastin did just post good results against ovarian cancer, so there’s still a potential for growth.)

But enough about Avastin. What else is going on at our Top Biopharma company? In last year’s report, Tamiflu posted the biggest single-year revenue gain of any drug we covered, driven by H1N1 pandemic influenza stockpiling. This time around, it posted the biggest drop in revenues, losing $2.1 billion in revenues. (The next largest loss came from Merck’s Cozaar/Hyzaar hypertension drug, which shed $1.5 billion after losing patent protection.)

This year didn’t start well for Roche, either. The pharma division posted a 10% drop in revenues (in CHF) in 1Q11, although a huge currency flux made those numbers look good in dollars. Even if you exclude the trailing sales of Tamiflu, Roche Pharma dropped 8% in the quarter.

These declines, combined with some serious pipeline problems (as well as pricing pressures in Europe and healthcare reform dues in the U.S.), led Roche to break out the old Operation Axe-cellence (whoops! I meant “Excellence”). Following up on 2009’s restructuring and layoffs, Roche in September 2010 announced that it was reviewing operations. By November, it had decided that 4,800 jobs will be cut, 800 will be transferred and 700 will be outsourced, and more facilities will be shut down or consolidated. The company plans to cut, transfer or outsource the jobs of 2,650 people from sales and marketing, 1,350 from manufacturing, 800 from product development, 600 from research and early development, 640 from diagnostics and 260 from back-office functions. This latest round of cuts is designed to yield $2.4 billion in annual savings, but will cost $3.2 billion to implement, continuing through the end of 2012. There were R&D cuts, including the decision to cancel all RNA interference programs, but no talk of merging Roche and Genentech’s early R&D units.

As I wrote, the restructuring wasn’t just the result of Avastin restrictions and no Tamiflu sales. Roche has had some late-stage pipeline problems, too. The Phase III trial of GLP-1 diabetes treatment taspoglutide was called off due to a high rate of gastrointestinal reactions. Roche cancelled the trial in September 2010 and returned rights to partner Ipsen in February 2011. At one point, taspoglutide had peak annual sales estimates of $2.0 billion.

In August 2010, the FDA issued a Refuse To File letter for the accelerated BLA of Herceptin-followup T-DM1. The agency contended that the Phase II trials of T-DM1 that formed the basis of the BLA “did not meet the standard for accelerated approval because all available treatment choices approved for metastatic breast cancer, regardless of HER2 status, had not been exhausted in the study population,” according to a Roche statement. The company is continuing its Phase III trial and expects to re-file in mid-2012.

That said, Roche has around a dozen NMEs in Phase IIb or III, half of which have accompanying diagnostic tests for personalized medicine applications. At the recent ASCO meeting, Roche made a splash with vemurafenib, a melanoma treatment that reduced risk of dying by a mind-blowing 63% in one trial. In June 2011, Roche joined forces with Bristol-Myers Squibb to put vemurafenib in dual treatment with BMS’ recently approved Yervoy, to put a double-whammy on melanoma in certain genomically-defined patient populations. In all, the company hopes to make as many as 10 new drug submissions by the end of 2013.

More than double the size of the #2 biopharma, Roche is in no danger of losing the top spot in our ranks. However, the company has a tough road ahead. Its products are effective but expensive, making them lightning-rods in the new age of payor-austerity. Also, the threat of biosimilars is still years ahead: Avastin is protected until 2018, by most standards, but Herceptin and Mabthera have patent expiries in Europe in 2014 and 2015, respectively. If Roche doesn’t get its next generation of bio-blockbusters on the market, it could be looking at a long, slow decline. (Or, of course, a mega-merger.)  —GYR

THE LOWE DOWN

The verdict on the merger? So far, so pretty good, at least from the outside. It’s created the biggest oncology company in the world, thanks to Avastin. And no matter how big the company is, Avastin is so big by itself that, for some time to come, it’ll be the biggest factor in how people see the whole company. Oncology being the ever-fragmented field it is, there always seem to be more patient populations and treatment combinations to add some Avastin to, which generates a steady supply of news for the analysts. Works in another indication? Things are good. Provisional approval being rolled back? Things aren’t so good.

That’s sort of a shame, since they have a lot of other things going on, including a nearly J&J-like number of outside collaborations. But there are worse problems than having lots of attention paid to your huge-selling cancer drug, as many other companies can demonstrate.

Of course, Roche (like everyone else) has had its pipeline problems and its rounds of layoffs. But overall, between these folks and Novartis, the Swiss pharma industry is looking pretty respectable these days. —Derek Lowe

ACQUISITION NEWS

Target: Marcadia Biotech

Price: $287 million, plus $250 million in potential milestones

Announced: December 2010

What they said: Pretty much nothing. The company put out no press release about the purchase and only revealed the price two months later. In its annual report, the company noted, “In December Roche acquired Marcadia Biotech, a privately owned U.S. company focusing on the development of innovative therapeutics for metabolic diseases. Marcadia’s research and development programs on new peptide therapies for the treatment of type-2 diabetes and obesity will be integrated into Roche’s R&D portfolio. These include next generation peptides such as MAR701, currently in Phase I development for type-2 diabetes.”

On the diagnostic side of the business (which, admittedly, is growing ever more intertwined with the drug side, much to my chagrin), Roche acquired BioImagene in August 2010 for $100 million in cash. BioImagene is a provider of digital pathology laboratory solutions, creating high-res, whole-slide digital images from glass microscope slides.

In March 2011, Roche bought PVT, for approximately $90 million, plus $38 million in milestones. PVT’s product portfolio covers automation of pre- and post-analytical tasks, such as centrifuging, pipetting, sorting and archiving across a large variety of sample formats. The company’s products “enable clinical laboratories to reliably manage low to very high sample volumes and to arrange their lab space with great flexibility,” according to a Roche statement.

OUTSOURCING NEWS

With its November 2010 Operational Excellence restructuring announcement, Roche noted that it would transfer or outsource 1,500 jobs, in addition to 4,800 layoffs. It appears that the outsourcing activity involves sales reps, with several reports indicating that Tamiflu’s sales would be conducted by a contract sales organization.

In September 2010, Argenta extended its small molecule discovery outsourcing collaboration with Roche unit Genentech. The agreement permitted Genentech to place projects with Argenta’s sister division, BioFocus. That division provides integrated medicinal chemistry, in vitro biology and ADME services. Argenta and Genentech began working together in 2005, with Argenta providing computer-aided drug design and other services to screen NCEs against Genentech-defined targets. Both Argenta and BioFocus are owned by Galapagos NV.

Next Profile: Amgen

Headcount: 81,507 (54,973 in bio/pharma)
Bio/pharma Revenues: $36,017 (+8%)
Royalty Revenues: $1,182 (+7%)
Total Revenues: $45,304 (+3%)
Net Income: $7,528 (-25%)
R&D Budget: $2,800 (+13%)

Account for 81% of total bio/pharma sales, up from 77% in 2008.

PROFILE

We have a new #1! With Roche’s acquisition of Genentech, which closed in April 2009, Roche supplanted Amgen and moved into the top rank of global biopharma companies. If I listened to critics and scrapped the Biopharma category, Roche would’ve ranked #5 in the overall list, jumping ahead of AZ, Merck and J&J. But Roche took the message of this acquisition seriously enough that it quit PhRMA and joined BIO, so I’m keeping my Pharma and Biopharma lists separate for another year.

Unlike its Basel neighbor Novartis, Roche reports its results in Swiss francs. Fortunately, the average exchange rates in 2009 and 2008 were almost identical, causing few discrepancies when comparing results. (That said, the franc began appreciating against the dollar in 1Q10, so those numbers may skew a little.)

Roche’s Tamiflu posted the biggest jump of any drug in this year’s report, as H1N1 preparations led to $2.9 billion in sales, up from $564 million in 2008. Of course, that number will drop during 2010, but it sure must have helped Roche to gain $2.4 billion in extra revenues during an integration year. In fact, that number happens to offset almost exactly the $2.2 billion in restructuring/integration charges Roche incurred over the course of 2009! (Roche expects to pay another $900 million or so during 2010 in restructuring charges.)

The biggest charges involved stopping construction on a bulk manufacturing site in Vacaville, CA, shutting down manufacturing in Nutley, NJ, where Roche had operations for 80 years (it’ll keep research at the site), and closing an R&D facility in Palo Alto, CA. Roche also evaluated Genentech’s partnerships and collaborations and did some hardcore prioritizing; in the span of one week in December 2009, Roche ended development projects with Seattle Genetics, Actelion and Genmab.

Roche didn’t scuttle all of Genentech’s deals. In August 2009, Roche exercised Genentech’s option to buy Lonza’s cell culture manufacturing site in Singapore for $290 million, with another $70 million in potential milestones. The site has 80,000 liters of fermentation capacity and will be used to make bulk substance for Avastin. Roche is also building a mammalian facility in Singapore, expected to come online next year.

In addition, the CEOs of Roche’s Pharma and Diagnostics division both retired at the end of 2009, as did the head of research. Genentech’s chief operating officer, Pascal Soriot, was named COO of the Pharma division. His role at Genentech (which is now the U.S. face of Roche) was taken by Ian Clark, previously the head of Pharma’s Global Product Strategy unit.

After all this restructuring and shuffling, Roche expects to save more than $800 million in annual costs.

Is that enough to offset Genentech’s loss of independence? Sure, it wasn’t the scrappy little biotech by the bay anymore, but in an era where the largest pharmas keep touting their new “biotech” structures where they devolve accountability and try to promote an entrepreneurial vibe in companies with more than 75,000 employees, it’s odd to see Roche is busily swallowing up its own perfectly fine biopharma.

But modern pharma is as much about managing business processes as it is about drug development. Since Roche actually has a pretty extensive pipeline of new molecules as well as label extensions for some of its blockbusters, it can afford to focus on cost savings and restructuring globally. And, hey, at least Roche isn’t touting the benefits of generics or consumer healthcare!

This isn’t to say that Roche has no weak spots. CellCept went generic in the U.S. in May 2009, leading to a $500 million fall in sales. Roche’s NeoRecormon fell 11% because of pressure from biosimilars (see Bio Attack on next page). Boniva sank after safety worries led insurers to cut access; the approval of Amgen’s Prolia should drop it even further.

Roche suffered a major setback with its investigational type 2 diabetes treatment, taspoglutide. In a Phase III trial of the GLP-1 drug, which Roche is co-developing with Ipsen, a small but significant number of patients — fewer than 1%, according to Roche — had hypersensitive reactions to it. Roche had been hoping to bring the drug to market in 2011 to compete with Novo Nordisk’s Victoza and Lilly/Amylin’s Byetta, but will now delay filing for at least 12 to 18 months. The company projected peak sales of $1.8 billion for the drug, and some analysts called it as high as $3 billion, but now there’s talk that Roche may end up throwing in the towel and giving the compound back to Ipsen. That’s a terrible blow given Roche’s desire to build a non-oncology franchise.

Roche and partner Biogen Idec also got bad news in March 2010 when ocrelizumab trials in RA were suspended due to safety risks. Trials against lupus were suspended earlier due to safety risks, too. Trials are continuing in MS, but in May 2010 the companies elected to end development in RA, the indication that was key to building another multi-billion-dollar biologic (and extending the RA franchise after Rituxan loses patent protection in a few years).

In January 2010, Roche got FDA approval for Actemra, an RA treatment for patients who don’t respond to TNF-alpha inhibitors. The company hopes that further data will allow for earlier prescription of Actemra. Peak sales could top $2 billion, or reports of side effects in Japan, where it was approved earlier, could limit it to a niche product.

Roche suffered failures in several Avastin trials (prostate and gastric cancer, with success in an ovarian cancer trials), but the cancer drug managed to keep rolling on, posting nearly 20% sales growth and becoming Roche’s top seller in 2009. In 1Q10, sales were up another 18% to $1.6 billion. The FDA approved Avastin to treat chronic lymphocytic leukemia in adults in February 2010, and if it manages to add that ovarian cancer indication (or early breast cancer, where it showed good results in a recent trial), Roche will silence (some of) the critics who complained that $47 billion was too high a price for Genentech.

Despite some pipelne setbacks, Roche has several top prospects. The company is already holding three aces — Avastin, Rituxan and Herceptin are all poised to post more than $5 billion in 2010 sales — so the next few years will tell us whether they add enough top-sellers for a full house.

Return to Top Biopharma Report homepage.

Headcount: 80,080
Pharma Revenues*: $23,624 (+7%/-3%**)
Total Revenues*: $42,261 (+10%/-1%**)
Net Income: $10,046 (+5%/-5%**)
R&D Budget: $8,194 (+17%/+5%**)

* See note below on Genentech contribution

** Converted at avg. exch. rate / based on local currency (CHF)

Account for 74% of total pharma sales, up from 66% in 2007.

* 2008 Drug revenues and sales figures for Roche do not include revenues from Genentech, which at the time was 56% owned by Roche and with which it co-marketed several major products. Revenues from Chugai, which is 60% owned by Roche, are counted in Roche’s results.

PROFILE

Every year, I jump through hoops to separate Roche’s sales figures from Genentech’s, in order to give you readers some representation of Genentech’s place in the biopharma sphere. After this edition, I’m done with those financial shenanigans! Thanks Roche, for buying the outstanding shares in Genentech for approximately $47 billion!

The takeover got ugly for a while as the companies fought over share price, but Roche prevailed. But did it prevail too soon? Part of the battle over Genentech’s share price was the long-term value of cancer drug Avastin. With total (Roche + Genentech) sales already reaching $4.8 billion in 2008, Avastin is being used in trials against several types of cancer. In May 2009, Roche received accelerated approval of Avastin to treat the most aggressive form of brain cancer.

But the big question was whether Avastin could prove efficacy in treating early colon cancer (adjuvant therapy with chemotherapy immediately after surgery). Positive results would have sent Genentech’s share price soaring and possibly put the company out of Roche’s reach. Some analysts think Roche upped its bid several times just to beat out the Avastin trial news. Unfortunately, four weeks after the merger was finalized, Roche announced that Avastin failed to meet its primary endpoint of disease-free survival.

The cancer news wasn’t all bad for Roche. In March 2009, the company reported positive results — significantly prolonging life — in stomach cancer patients treated with Herceptin, the breast cancer treatment for patients who overexpress HER2 protein. Nearly a quarter of stomach tumors fall into that category.

In February 2009, the company got EU approval for MabThera for treatment of chronic lymphocytic leukemia. That same month, the company reported that Avastin and Tarceva showed positive interim results in a lung cancer trial. In November 2008, Tarceva demonstrated progression-free survival in first-line maintenance of lung cancer. The company said that it has 130 clinical trials involving Tarceva (solo and combined with other treatments) in NSCLC lung cancer.

Actemra, the company’s IL-6 inhibitor, intended for rheumatoid arthritis patients who don’t respond adequately to TNF inhibitors, received approval in Japan and Europe for RA in the past year. It was first approved in Japan in 2005 for “Castleman’s disease.” Roche received a complete response letter from the FDA about Actemra’s BLA last fall, and in December 2008 it announced that it worked out a REMS strategy and would need to provide new preclinical animal data to the agency, but would not need to perform new clinical trials.

Roche appears less optimistic about getting Mircera, an erythropoietin receptor activator, onto the U.S. market. The anemia biologic, available in 56 countries, was approved by the FDA early in 2008, but Amgen won a permanent injunction against Roche in October 2008, on the grounds that Micerca violates Amgen’s Epogen patents. The district court initially thought it could allow Mircera on the market, provided it submitted to a number of conditions, but ultimately concluded, “Failure to enter a permanent injunction . . . would risk undermining the incentives for innovation that have produced, and hopefully will continue to produce, medical advances that extend and enhance the value of life. The Court therefore concludes that the public interest will not be disserved by a permanent injunction.” Ouch.

Regardless, Roche is going to become the first Top 10 company to move from our Pharma list to our Biopharma ranks. The company, in fact, chose to leave PhRMA and join BIO in June 2009.

Integrating Genentech is a big gamble for Roche. In an October 2008 BusinessWeek panel, Roche chief executive officer Severin Schwan remarked, “I am not in favor of megamergers at all. You end up with huge overlaps and you destroy a lot of value. If you look at Genentech, even though it is a sizeable transaction in terms of financials, the two organizations are very complementary to each other. Genentech’s activities are centered in the U.S., whereas Roche is active on an international basis. And within the U.S., the commercial focus of Genentech is on oncology, whilst Roche is selling medicines in other diseases such as virology, transplantation, or osteoporosis.”

The $47 billion question is whether Roche’s golden goose will keep laying eggs.

Return to Top Pharma Report homepage.

Headcount: 78,604
Pharma Revenues*: $21,998 (+9%)
Total Revenues*: $38,486 (+9%)
Net Income: $9,541 (+35%)
R&D Budget: $6,995 (+12%)

* See note about revenues after Top Selling Drugs below

Account for 65% of total pharma sales, up from 63% in 2006.

* Drug revenues and sales figures for Roche do not include revenues for Genentech, which is 60% owned by Roche and with which it co-markets several major products. Revenues from Chugai, also 60% owned by Roche, are counted in Roche’s results.

PROFILE

Roche continues to blaze a singular trail in the pharma biz, posting strong results from its two (majority owned) strategic allies, Genentech and Chugai, while sticking to its philosophy that diagnostics and therapeutics are growing ever more intertwined.

The company gained a new chief executive officer in March 2008, with Severin Schwan replacing Franz Humer, who retained his role as chairman of Roche Holdings. Mr. Schwan, who is only four years older than me, was previously the chief executive of Roche’s Diagnostics unit. In that light, the company’s lengthy pursuit of Ventana Medical Systems makes plenty of sense. Roche made an initial offer of $3.0 billion ($75/share) for the cancer diagnostics company in June 2007. The public back-and-forth got ugly as Ventana held out for a $100/share offer. The companies eventually settled on $89.50/share ($3.4 billion, payable in cash) in February 2008.

When the deal was first proposed, Mr. Schwan remarked, “Our combined company will be uniquely positioned to develop companion diagnostics which enable the identification of patient responses to treatments, thereby offering more cost-efficient, differentiated and targeted medicines to patients.” Given Roche’s position in oncology drugs, which includes a stable of powerhouse antibodies, the Ventana deal may pay for itself many times over, if its diagnostics enable the company to develop fine-tuned cancer treatments.

Roche’s cancer drugs continued to fuel company growth in 2007. Herceptin, MabThera/Rituxan and Avastin all posted huge gains last year, and label expansions are opening new areas for treatment. Avastin received approval in the EU to treat colon cancer, and got accelerated approval by the FDA to be added to chemotherapy for breast cancer.

The company also looks poised to expand its rheumatoid arthritis treatments with Actemra, a biologic picked up in the company’s acquisition of Chugai. Actemra is already on the market in Japan and is pending approval in the U.S., with an advisory committee meeting scheduled for July 2008.

Still, biologics weren’t Roche’s only big products. The company’s 2006 results were also boosted by huge government stockpiling of its flu treatment, Tamiflu. With those stockpiles filled and contracts winding down, Tamiflu’s 2007 numbers dragged and 2008 isn’t looking too snappy. However, all that ramped-up manufacturing capacity — remember when we were all going to die from H5N1 a few seasons ago? — isn’t so easy to ramp down.

To help moderate the ebb-and-flow of Tamiflu demand, Roche has undertaken a curious new program: the company is selling “reservations” of Tamiflu to U.S. corporations. According to Roche, a contract will guarantee delivery of a course of Tamiflu treatment within two days for each employee, at the prevailing wholesale price. The contract itself will cost $6 per employee covered, and will be renewable annually. I have no idea how the company will record revenue from this setup, but I doubt it’ll count toward Tamiflu sales directly.

IP Theft or Competition?

Roche may not be interested in following Swiss counterpart Novartis into the world of generics, but the company has invested a lot of time and money in Mircera, an erythropoietin stimulating agent (ESA) that the U.S. Patent and Trademark Office ruled is an infringement on several of Amgen’s biologic patents. Mircera received FDA approval in November 2007, but a judge’s injunction and the USPTO ruling in February 2008 put the brakes on Roche’s plans for getting Mircera into the U.S. market. Roche launched Mircera in the EU in late 2007.

The courts may decide on a “fair” royalty rate and allow Mircera on the market, an action that Amgen considers tantamount to rewarding IP theft. Aranesp and Epogen, the infringed drugs, are having dosage and label problems (see Amgen’s profile for more info), but the two combined for $6.0 billion in 2007 sales for Amgen.

Unbroken

In a Financial Times article by Andrew Jack and Haig Simonian in July, Mr. Schwan sounded sanguine about the state of the pharma industry. He remarked, “I do wonder whether the pharma model is really broken. I fundamentally believe if you are able to come up with innovative medicines including diagnostics, there will be demand. [. . .] I don’t see a need to diversify into other businesses. I’m not saying this is the wrong strategy but this is not our strategy.”

A company with a couple of runaway bio-drugs (remember, the sales figures I quote don’t include Genentech’s reported sales of the products), Roche looks like it can walk the walk to back up Mr. Schwan’s talk.

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