Expect Roche To Post Steady Growth In Q3

by Trefis Team
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Roche Holdings
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Roche Holdings’ (NASDAQ:RHHBY) is scheduled to announce its Q3 earnings on October 19. We expect the company to post steady growth led by its oncology division. We also expect a ramp up in sales of new drugs Tecentriq and Ocrevus. Roche’s oncology franchise is dominated by three blockbuster drugs – Avastin, Herceptin and MabThera/Rituxan – that have reached their maturity phase. We expect low-single-digit growth for these drugs combined. While we expect Tecentriq to post solid growth, it is lagging behind other drugs in the PD1/L1 category and some of its combination studies were recently put on hold by the FDA. We expect the company’s management to give an outlook on Tecentriq and provide an update on its combination trials. Looking at the company’s HER2+ franchise, we expect a continued ramp up in Perjeta’s sales. The drug is seeing strong demand due to presurgical usage and metastatic breast cancer uptake in the EU.

Roche’s oncology business accounts for over 50% of the company valuation, according to our estimates. The segment accounted for 63% of the company’s overall sales in the first half of 2017. However, of late, the growth has slowed for its key oncology drugs, as they approach patent expiry. The low single-digit growth for some of its key drugs can primarily be attributed to expansion in China. You can read our take on Roche’s key oncology drugs in a previous note, Roche’s Blockbuster Oncology Drugs Losing Steam As They Approach Patent Expiry.

Looking at the Neuroscience division, Roche posted over 60% growth in the first half of 2017. This growth was primarily led by the company’s new drug, Ocrevus, which posted $200 million in revenues. Ocrevus, which received FDA approval at the end of March, is used for treatment of adult patients with relapsing forms of multiple sclerosis and primary progressive multiple sclerosis. We expect to see a healthy ramp up in the coming quarters.

Our price estimate of $33 for Roche Holdings’ stock is slightly above the current market price.

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