How Much Revenue Does Roche’s Pharmaceutical Business Generate From The United States?
Roche (NASDAQ:RHHBY) generates its revenue from sales of pharmaceuticals and diagnostics products across the globe. The company generated $24 billion in pharmaceutical sales in the United States, accounting for 53% of its total pharmaceuticals revenue in 2018. This figure has been on a rise and it grew from 47% to 53% between 2015 and 2018. While Roche’s sales in the United States is higher than Merck, it is lower than some of the other pharmaceutical companies, including Johnson & Johnson and AbbVie. In this note we focus on the region-wise breakup of Roche’s pharmaceutical revenues, its business model, and revenue trajectory. We also compare the United States as a market for Roche with that for other large pharmaceutical companies. You can look at our interactive dashboard analysis ~ How Big Is The United States Market For Roche’s Pharmaceuticals Business? ~ for more details.
Roche Generates Its Revenue From Sales of Pharmaceutical And Diagnostics Products. United States As A Region Accounts For Over Half of The Company’s Pharmaceuticals Revenue
- Pharmaceuticals Revenue Contribution As of 2018:
- United States ~ 53%
- Europe ~ 20%
- International ~ 19%
- Japan ~ 8%
United States As A Market Garnered the Highest Sales For Roche Among Large Pharmaceutical Companies In 2018
- Roche’s sales in the United States grew from $18.4 billion in 2015 to $23.7 billion in 2018.
- This compares with Johnson & Johnson’s pharmaceutical sales, which grew from $18.3 billion to $23.3 billion over the same period.
- AbbVie’s sales in the United States grew from $13.6 billion to $21.5 billion between 2015 and 2018.
- Merck’s pharmaceutical sales in the United States didn’t see much growth and it remained in the range of $16 billion to $17 billion over the same period.
Roche’s Business Model
- What Need Does It Serve?
- Roche primarily serves the pharmaceuticals and diagnostics products markets. The company discovers, develops, and sells pharmaceutical products globally. Its drugs are used for the treatment of various types of diseases, including cancer, heart-related, and infectious, among others.
- Roche is a Swiss healthcare company with a global presence. The firm operates in two main segments: Pharmaceuticals and Diagnostics. The pharmaceutical segment produces drugs in various therapeutic segments, primarily Oncology, Immunology, Neuroscience, Anti-Infectious, and Ophthalmology.
- Roche has the largest oncology drug market share in the world with a range of successful products, such as Avastin, Herceptin, and Rituxan. The company also has a leading market position in in-vitro diagnostics. It reports its in-vitro diagnostics segment into four categories: Centralized And Point of Care Solutions, Tissue Diagnostics, Molecular Diagnostics, and Diabetes Care.
- Who Pays To Roche?
- Chain stores (Walgreens, CVS, Rite-Aid, Walmart), clinics, long term care facilities, health maintenance organizations, federal facilities, non-federal institutions, mail order pharmacies, and retail stores.
- What Buyers Care About?
- Price of drugs
- Subsidies available in the form of reimbursements
- Availability
- Any possible side effects
- For Diagnostics, buyers care about technological innovation, convenience of use, product performance, and service/product warranty.
- What Are The Alternatives To Roche?
- Within pharmaceuticals, other alternatives are Bristol-Myers Squibb, Johnson & Johnson, Pfizer, Merck, Abbvie, GlaxoSmithKline, and Teva, among others.
- Outside of pharmaceuticals, other alternatives are acupuncture, aromatherapy, ayurvedic medicine, chiropractic care, homeopathy, and nutritional counseling, among others.
- In Diagnostics, Roche competes with Abbott Labs, Siemens, GE Healthcare, Johnson & Johnson, Novartis, and Hitachi Medical Corp, among others.
The Contribution of the United States To Roche’s Pharmaceuticals Sales Has Increased Over The Recent Years
- Roche’s total pharmaceutical sales grew from $38.9 billion in 2015 to $44.9 billion in 2018.
- Given the pharmaceuticals sales growth in United States from $18.4 billion to $23.7 billion over the same period, the contribution of the United States as a region grew from 47% to 53%.
Roche’s Total Revenue Grew 15% Between 2015 And 2018, And It Can Grow Another 7% By 2020
- Roche’s pharmaceuticals sales growth over the recent years was led by Xolair and Actmera, among other drugs.
- The jump in 2018 sales can be attributed to Ocrevus, which has been the best drug launch for Roche, with sales of $2.4 billion in 2018.
- In fact, Ocrevus garnered $2.1 billion in sales from the United States alone. This explains the jump seen in the United States sales in 2018 in the chart above.
- Looking forward, the sales growth is expected to slow slightly, as the company’s blockbuster drugs face biosimilar competition. Although the new drugs will likely be able to more than offset the expected declines from older drugs.
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