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Roche profits take a leap but drugs sales remain weak

Roche has enjoyed strong profits but it has few new drugs in the pipeline

(swissinfo.ch)

The Swiss pharmaceuticals and diagnostics group, Roche, saw net profits soar by 50 per cent last year to SFr8.6 billion ($5.13 billion). The vast rise is largely down to one-off deals.

Among those deals was the sale of the company's stake in US biotech firm, Genentech, which earned the group a hefty profit of SFr2.5 billion.

Net profit on an adjusted basis from continuing businesses rose 14 per cent to SFr5.01 billion. This was in line with analysts' expectations.

Extraordinary income helped to mask a rather poor performance in terms of sales. They rose eight per cent to SFr27.5 billion, but the increase was just one percent in local currencies.

"This year we've seen two conflicting forces," said the company's pharmaceutical division chief, William Burns. "On the one hand we've had the expiry of many patents in the US but on the positive side we've had double-digit growth for six of our top 10 products."

Unfortunately for Roche, growth in those products wasn't enough to carry more disappointing performers such as the anti-obesity drug, Xenical, which saw flat sales in its second year on the market.

The company said the outlook for the pharmaceutical side should brighten in the second half of the current year.

"We're building franchises and have brought in drugs to enhance our oncology offers for example," says Burns. "And we have a number of significant line extensions of existing products such as Xeloda going into Europe."

But analysts warn that Roche has only one major product launch scheduled for this year - the hepatitis C drug, Pegasys. And they say the drug may face stiff competition from Pegintron, developed by the Schering-Plough Corporation.

"They need more launch products," says Zurichkantonal Bank analyst, Meinrad Gyr. "With more in-licensing and marketing they can catch up but it won't happen this year."

Roche also announced Wednesday that it is to propose a 100-for-one share split of its shares and certificates.

It means the company is the latest in a string of top Swiss business names to take advantage of an expected change in the law to allow the introduction of lower denominated stocks.

Roche also said it was raising its cash dividend to SFr115 per share.

swissinfo with agencies


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