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Restructuring impacts profits at Roche, although revenues rise

Closure of New Jersey plant sees pharma company face one-off charge of 858m Swiss francs

Roche - Nutley, New Jersey

Roche has reported a 14 per cent drop in first half net profits as a result of restructuring charges, but sales remained robust with a 4 per cent rise to 22.4bn Swiss francs ($22.8bn).

The closure of Roche's US R&D facility in Nutley, New Jersey, with the loss of 1,000 jobs contributed 858m Swiss francs to the decline because of one-off charges, although the company is expecting to save 370m Swiss francs a year as a result that will be invested in R&D.

Meanwhile, 530m Swiss francs-worth of costs came from other restructuring initiatives including the termination of the clinical programme for dalcetrapib, a cholesterol drug, and a revamp of its diabetes and applied science businesses cost another 289m Swiss francs.

Net profit came in at 4.3bn Swiss francs, although operating income rose 7 per cent to 8.6bn Swiss francs, said the company.

The rise in revenues was driven by the "solid performance of our existing portfolio," said chief executive Severin Schwann, as well as new product launches such as Perjeta (pertuzumab) for breast cancer and Zelboraf (vemurafenib) and Erivedge (vismodegib) for skin cancers.

Once again the company's top-selling products were breast cancer blockbuster Herceptin (trastuzumab), up 11 per cent to 2.95bn Swiss francs, followed by Avastin (bevacizumab) which rose 3 per cent to 2.8bn Swiss francs and MabThera/Rituxan (rituximab) which added 2.78bn Swiss francs, an increase of 9 per cent.

Other drivers for growth were hepatitis treatment Pegasys (peginterferon alfa-2a) - up a whopping 31 per cent to 903m Swiss francs after being included in a new triple drug combination for hepatitis C launched in the US and Europe - and arthritis treatment Actemra/RoActemra (tocilizumab) which gained 39 per cent to reach 385m Swiss francs thanks to increased confidence in its use by physicians.

Perjeta added 4m Swiss francs in its first few weeks on the market, while Zelboraf contributed 92m Swiss francs in the first half, having been approved in the US last August and Europe in February, and Erivedge added another 10m Swiss francs since its US launch in the first quarter.

Perjeta and Zelboraf have both been tipped as potential blockbusters with annual sales of $1.5bn ore more at peak, while Erivedge could also bring in revenues upwards of $500m a year, according to analysts.

The company also has high hopes for Herceptin follow-up T-DM1, which remains on track for filing as a treatment for HER2-positive metastatic breast cancer in both the US and Europe in the second half of the year, according to Schwann.

Roche re-iterated its full-year outlook for 2012, saying it expects low to mid-single-digit sales growth at constant exchange rates for both the group and the pharmaceuticals division in 2012.

27th July 2012

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