Roche’s Fight With Pfizer May Be Just The Beginning
Roche (NASDAQ:RHHBY) recently sued Pfizer to block the latter’s biosimilar (generic version) for Herceptin- a cancer biologic that earned $2.5 billion in sales in the U.S. for Roche in 2016. The fight is unlikely to stop there for Roche, as it has a lot more at stake. About 40% of the company’s revenue in 2016 came from biologics Avastin, Herceptin and Rituxan. These drugs have either lost patent exclusivity, or are expected to lose it in the next 1-2 years. Accordingly, we may see more lawsuits from Roche in a bid to defend its revenues from these drugs. Take a look at our interactive breakdown of Roche’s business, which shows the company’s high dependence on drugs that are expected to lose sales in the coming years.
Our price estimate for Roche stands at $33, implying a slight premium to the market price.
Roche’s Dependence On Cancer Biologics Avastin, Herceptin And Rituxan Is High
In 2017, we expect Roche’s Oncology Drugs Revenue to account for nearly 50% of Roche’s total revenue. In addition, about 70% of Roche’s Oncology Drugs Revenue will be attributed to Avastin, Herceptin and Rituxan. However, as mentioned above, the issue is that these drugs are expected to lose sales going forward.
As These Cancer Biologics Will Face Competitive Pressure, Expect More Of A Fight From Roche
The chart above shows the historical revenue for Rituxan and Herceptin, as well as our forecasts for their sales over the coming years. As the charts clearly show, we expect substantial declines in revenues for these drugs as they eventually face biologic competition. Accordingly, it is very possible that Roche will take further action to defend the sales of these drugs as competition mounts.
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