FX.co ★ Roche Q1 Sales Down, Confirms FY24 View; Stock Down

Roche Holding AG's shares declined by around 3% in Switzerland following the pharmaceutical giant's report of sluggish first-quarter sales, despite confirming forecasts for fiscal 2024. Excluding COVID-19-related products, sales for the quarter jumped by 7%.

The company maintains its anticipation for a mid-single-digit percentage increase in group sales for 2024, calculated at constant exchange rates. Core earnings per share are expected to rise in alignment with sales growth, factoring out the effects of any resolution of tax disputes in 2023. Additionally, Roche plans to enhance its dividend in Swiss francs.

Roche CEO Thomas Schinecker noted the company's robust start to the year, reporting high single-digit growth in their fundamental business, excluding COVID-19 sales. Schinecker asserted that the impact of COVID-19-related sales on the company's revenue is almost negligible. He also acknowledged the influence of the Swiss franc's appreciation against most currencies on the firm's sales reported in Swiss francs compared to the previous year's same period. However, he remained confident about the company's growth prospects.

In the first quarter, group sales fell by 6% to 14.40 billion Swiss francs from 15.32 billion francs the prior year. Although quarterly sales witnessed a moderate growth of 2% at constant exchange rates. Roche noted that the strong demand for newer medicines and diagnostics products, including immunodiagnostics and clinical chemistry tests, more than compensated for the expected decline in COVID-19-related sales and biosimilar/generic erosion effects.

Post the recent quarter, the downturn in COVID-19-related sales has essentially ceased and is unlikely to critically impact group sales further, as per the company. Pharmaceuticals Division saw a 7% growth in its base business driven by robust global demand for newer medicines for severe diseases. The company highlighted impressive growth in sales of Vabysmo, Phesgo, Ocrevus, Polivy, and Hemlibra.

Roche’s Diagnostics Division saw an 8% increase in its base business, backed by growth across all regions due to demand for immunodiagnostic products, clinical chemistry tests, and advanced staining solutions. Despite low demand for COVID-19 tests, sales in the division grew slightly by 2% to 3.48 billion francs.

In the United States, there was a 5% sales increase (5.69 billion francs) led by robust demand for new medicines like Vabysmo, Polivy, Ocrevus, Phesgo, Evrysdi, and Xolair. Sales in Europe surged by 11% to 2.20 billion francs, whereas, in Japan, sales plummeted by 45% to 649 million francs due to the base effect of supplying Ronapreve to the government in the first quarter of 2023.

Sales in the International region grew by 12% to 2.38 billion francs, while China recorded an 11% sales growth.

Finally, Roche's shares were trading at 223.60 Swiss Francs in Switzerland, marking a 2.7% decline.