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Roche Q3 FY07 sales down on reduced Tamiflu demand

Sales at Swiss pharmaceutical company Roche were lower than analyst estimates due to a lessening demand for the company's Tamiflu influenza pill and slowed growth of Herceptin

Sales at Swiss pharmaceutical company Roche were lower than analyst estimates due to a lessening demand for the company's Tamiflu (oseltamivir) influenza pill and slowed growth of its breast cancer drug, Herceptin (trastuzumab).

Revenue rose 5.7 per cent to reach CHF 11.1bn (USD 9.4bn) from CHF 10.5bn in Q3 FY06. In a survey of analysts conducted by Bloomberg, a median sales estimate of CHF 11.4bn (USD 9.6bn) was expected.

Shares exhibited the biggest decline in over a year when Roche revealed that Tamiflu sales had peaked, while revenue from Herceptin increased 18 per cent, the slowest for the last five quarters.

Landsbanki Kepler analysts said that although Roche's growth was still above the market, it had already been included in the share price. They added that they needed additional news concerning clinical data to make the stock price go higher.

Roche's shares fell CHF 0.61, or 2.8 per cent, to rest at CHF 210.60 in a.m. trading on the Zurich stock exchange. The stock has lost about 3.6 per cent so far in 2007.

Roche does not report quarterly earnings.

FY07 growth estimate maintained
Roche has maintained its current profit growth estimate for FY07 and says that core earnings per share will accelerate more than in FY06. Revenue from pharmaceuticals and for the Roche Group is forecast to grow more than 10 per cent.

Avastin sales rose 45 per cent to reach CHF 1.1bn, which beat analyst expectations of CHF 1bn. The medicine is already approved to treat colon and lung cancer in the US and breast cancer in the EU. Avastin faces competition from ImClone Systemsí Erbitux (cetuximab), which is also approved to treat colon cancer.

Herceptin sales increased 18 per cent to reach CHF 1.2bn, below analyst estimates of CHF 1.2bn. Roche says it will investigate Herceptin for use in the treatment of other tumour types. A late-stage trial of Herceptin in the treatment of gastric cancer is underway, while Roche says it will look at the treatment of tumours in bladder cancer.

Takeovers and hostile bids
Roche has been trying to increase the ties between its diagnostic and pharmaceutical arms by making acquisitions of diagnostic companies. It has also made a hostile takeover bid for US-based Ventana Medical Systems (Ventana), which manufactures an Herceptin response test.

Ventana rejected Roche's USD 75 per share bid, but company has refused to raise the price. Roche has extended its tender offer for the outstanding shares of Ventana three times, the last being in September 2007.

New CEO
In July 2007, Roche revealed that it had selected Severin Schwan as its new CEO. Schwan, who is currently head of the company's diagnostics division, will take over in March 2008 from the current CEO, Franz Humer.

30th September 2008

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