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 Moreover, the first of a threatened flood of biosimilar copies of
Roche's $22-billion-per-year trio of cancer drugs, Rituxan, Avastin
and Herceptin, have now been approved in Europe and the United
States.
Chief Executive Severin Schwan has long contended he can boost sales
despite these new biosimilar drug launches, largely by developing
new drugs to treat other diseases.
But Roche has just seen its new immunotherapy treatment Tecentriq
fail a bladder cancer trial, even though a similar drug from rival
Merck <MERK.NS> shone in a separate study.
That flop was closely followed by unimpressive data from Roche's
Aphinity study that showed combining Roche's two breast cancer drugs
Herceptin and Perjeta produced only a modest additional benefit.
As a result Kepler Cheuvreux analyst David Evans last month cut his
forecasts for peak adjuvant sales of Perjeta to $1.5 billion, from
$3.5 billion previously.
"Apart from the underwhelming Aphinity data, Roche has had some
other setbacks," Evans said in a note, citing the Tecentriq failure
and the approvals of rival biosimilars - near copies of branded
drugs derived from living organisms that cannot be exactly
duplicated but show the same effectiveness.
"Their impact in the second half might limit Roche's chances of
upgrading 2017 guidance," he said.
Roche now sees 2017 sales growth at a low- to mid-single-digit
percentage, with core earnings per share growing in line with sales.
This year, the share price is up just 4.7 percent, half local rival
Novartis's rise and among the laggards in the Stoxx 600 Europe
healthcare sector index <0#.SXDP>, up 6.3 percent, despite some good
news on Roche's development pipeline.
The U.S. Food and Drug Administration's approval of Ocrevus, the
first regulator-backed drug against primary progressive multiple
sclerosis, in March set the stage for Roche's next blockbuster.
Additionally, Roche's investigational haemophilia drug emicizumab is
seen topping $1.5 billion in sales by 2022 as it wrests business
from rival Shire, Thomson Reuters data shows.
Another of Roche's biosimilar-busting hopefuls, Alecensa,
demonstrated better results than Pfizer's Xalkori against lung
cancer, paving the way for use in early treatment of the disease.
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Roche also contends the Herceptin-Perjeta data is not as dire as
some judge it and believes it still reinforces its case with
regulators that the two medicines should be used together to keep
breast cancer from returning.
"Our view is shared by many experts," a Roche spokesman said.
STRATEGY TEST
But meanwhile the threat of cheaper biosimilars displacing Roche's
existing big-selling medicines is becoming a reality, with
knock-offs from Novartis, Celltrion and Mylan now coming on line.
Novartis's Rituxan copy was approved in Europe last month, and
managers there said this week they expected biosimilars to steadily
win over patients from the originals.
"It's only two weeks in," Novartis's Sandoz generics unit head
Richard Francis said, of Rituxan's European launch. "But the
reception we're seeing from physicians and payers and key
stakeholders is very positive."
A Roche spokesman said the arrival of biosimilars is no surprise,
but analysts remain concerned.
"Roche has $22 billion of revenues exposed to biosimilars," said Tim
Race, a Deutsche Bank analyst, in a note. "The rapid pace of
innovation, particularly in oncology, means we have a lower than
historical level of visibility that Roche can maintain its market
leadership."
(This version of the story corrects paragraph 6 to read "...peak
adjuvant sales of Perjeta..." instead of "...peak Perjeta sales...")
(Reporting by John Miller; Editing by Greg Mahlich)
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