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A technician prepares a sample inside a laboratory in Hong Kong, China. Photographer: Anthony Kwan/Bloomberg(bloomberg)
(Bloomberg) -- New medicines are taking over as the engines of growth at Roche Holding AG and AstraZeneca Plc as sales of aging blockbusters give way to competition from cheaper generics.
Astra and Roche pointed to new drugs for cancer, heart disease and multiple sclerosis that helped both drugmakers join rivals Novartis AG and GlaxoSmithKline Plc in beating analysts’ estimates for second-quarter profit. That marked a clean sweep for the four major European pharmaceutical companies that reported earnings so far this month.
Even as U.S. President Donald Trump rails against high drug prices in the world’s biggest pharma market, Europe’s drugmakers are posting gains in profits and share prices. Roche raised its forecast for the year on Thursday as a crucial medicine for multiple sclerosis recorded the best launch ever. Astra pointed to faster growth in the second half and said it expects more results from key research.
“Sometimes you follow the science and it works,” Daniel O’Day, Roche’s pharma chief, said in a breakfast with reporters on Thursday.
Astra rose as much as 3.5 percent in London, reaching their highest intraday level since the company was created by the merger of Sweden’s Astra AB and the U.K.’s Zeneca Group Plc in 1999. Roche gained as much as 3.7 percent in Zurich trading, the biggest gain in more than eight months.
Both Astra and Roche are grappling with competition to their top sellers -- aging blockbusters that now face cheaper copies. Astra has also sold rights to some medicines, such as the schizophrenia treatment Seroquel, to bolster its bottom line and support new research.
The U.K. drugmaker has “probably reached the end of the barrel of product rights that other companies might want to acquire,” said Andy Smith, an analyst at Edison Investment Research.
Roche’s Herceptin, which has been a pillar of its cancer business for two decades, faced its first competition from biosimilars in Europe, causing sales to drop 7 percent there last quarter. But a foray into other types of disorders paid off as Ocrevus, a new medicine for multiple sclerosis, saw sales almost triple last quarter and became the company’s most successful launch ever. Perjeta, a next-generation breast cancer medicine, also saw sales climb 29 percent in the quarter.
Similarly, Astra is suffering from the loss of patent protection on its heart drug Crestor and Symbicort for asthma. Yet cost cuts and new products including Lynparza for breast cancer and Imfinzi for lung cancer helped sales rise and earnings beat estimates.
The drugmaker’s “rich pipeline and sharp commercial focus make us confident that we have in place the right conditions for our return to growth this year,” said Chief Executive Officer Pascal Soriot.
Tagrisso, a drug that targets a genetic mutation in some lung tumors, along with Lynparza and Imfinzi all beat analysts’ projections for quarterly sales.
(Updates with analyst’s comment in seventh paragraph.)
--With assistance from Elizabeth Howcroft.
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