Swiss pharma giant Roche Holding AG RHHBY posted better-than-expected 2024 results and provided an encouraging outlook for 2025.
Sales in 2024 totaled $68.7 billion, which beat the Zacks Consensus Estimate of $68 billion. Earnings per American Depositary Receipt of $2.67 also beat the Zacks Consensus Estimate of $2.56.
Sales grew 7% year over year at constant exchange rates (CER) to CHF 60.5 billion, driven by strong demand for both drugs and diagnostics.
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The company reports under two divisions — Pharmaceuticals and Diagnostics. All growth rates mentioned below are on a year-over-year basis and at CER.
Sales in the Pharmaceuticals Division grew 8% in 2024 to CHF 46.2 billion, driven by strong growth in demand for its key drugs, namely Vabysmo (severe eye diseases), Phesgo (breast cancer), Ocrevus (multiple sclerosis) and Hemlibra (hemophilia A). Excluding COVID-19-related products, sales increased 9%.
The Diagnostics division’s sales rose 4% year over year to CHF 14.3 billion. The sales in this division were affected by the anticipated drop in demand for COVID-19-related products (sales of CHF 0.2 billion in 2024 compared with CHF 0.8 billion in 2023). Nonetheless, the base business in this division grew 8%, driven by demand for immunodiagnostic, pathology and molecular solutions products.
Sales grew 9% in the fourth quarter to CHF 15.5 billion.
Roche’s shares have risen 10.6% year to date against the industry’s decline of 1.2%.
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RHHBY’s Key Drugs Fuel Growth in 2024
Strong demand for key drugs and diagnostic solutions offset the expected decline of CHF 1.1 billion in COVID-19-related sales and an impact of CHF 1.0 billion from the loss of exclusivity on Avastin (various types of cancer), Herceptin (breast and gastric cancer), MabThera/Rituxan (blood cancer, rheumatoid arthritis), Esbriet (lung disease), Lucentis (severe eye diseases) and Actemra/RoActemra (rheumatoid arthritis, COVID-19).
The top four growth drivers — Vabysmo, Phesgo, Ocrevus and Hemlibra — achieved total sales of CHF 16.9 billion, reflecting an increase of CHF 3.3 billion from that recorded in 2023.
Ocrevus generated sales of $6.7 billion, up 9%.
Sales of hemophilia A drug Hemlibra surged 12% year over year to CHF 4.5 billion.
Vabysmo sales skyrocketed 68% to CHF 3.9 billion on strong demand in all regions.
Immuno-oncology drug Tecentriq’s (for advanced lung cancer, urothelial cancer and breast cancer) sales were flat at CHF 3.6 billion.
Perjeta’s sales rose 1% year over year to CHF 3.6 billion.
Actemra/RoActemra’s (rheumatoid arthritis and COVID-19) sales improved 5% year over year to CHF 2.6 billion.
Asthma drug Xolair generated sales of CHF 2.5 billion, up 16% year over year. Breast cancer drug Kadcyla generated sales of CHF 2 billion, up 7% during the said time frame.
Breast cancer drug Phesgo’s (a fixed-dose combination of Perjeta and Herceptin for subcutaneous injection) sales surged 62% year over year to CHF 1.7 billion.
Evrysdi generated sales of CHF 1.6 billion, up 18% year over year.
Sales of the lung cancer drug Alecensa rose 7% to CHF 1.55 billion.
Herceptin sales declined 11% on a year-over-year basis to CHF 1.38 billion due to biosimilar competition in various countries.
Sales of Rituxan/MabThera declined 13% to CHF 1.38 billion due to biosimilar erosion.
Sales of Avastin, approved for multiple oncology indications, were down 17% to CHF 1.2 billion due to biosimilar competition.
Activase/TNKase sales came in at CHF 1.2 billion, up 5%.
Sales of blood cancer drug Polivy surged 39% to CHF 1.1 billion.
Blood cancer drug Gazyva/Gazyvaro’s sales totaled CHF 910 million, up 16% year over year.
Pulmozyme (cystic fibrosis) sales rose 4% year over year to CHF 455 million.
Mircera (anemia related to kidney disease) generated sales of CHF 397 million, down 3%.
Core operating profit grew 14%, driven by higher sales, improved gross margin and effective cost management.
RHHBY 2025 Guidance
Roche expects total sales to grow in the mid-single-digit range (at CER) in 2025. Core earnings per share are expected to grow in the high single-digit range. Roche expects to increase its dividend in Swiss francs further.
Key Pipeline Updates
Earlier this month, Roche acquired Poseida Therapeutics for $9.00 per share in cash, plus a non-tradeable contingent value right (CVR) to receive certain contingent payments up to an aggregate of $4.00 per share in cash.
The prefilled syringe (PFS) of Vabysmo is now approved in the EU for three retinal conditions that can cause blindness.
The FDA accepted the supplemental Biologics License Application for Columvi combination for people with relapsed or refractory diffuse large B-cell lymphoma (DLBCL).
The phase IIb study, PADOVA, of prasinezumab missed the primary endpoint but suggested a possible benefit in early-stage Parkinson’s disease. Roche is further evaluating the data and will work with health authorities to determine the next steps.
Roche has a collaboration with Prothena PRTA for prasinezumab. Roche is obligated to make milestone payments to PRTA.
Earlier, Roche won FDA approval for its pipeline candidate, inavolisib, under the brand name Itovebi, for the treatment of breast cancer. The drug is approved in combination with Ibrance (palbociclib) and fulvestrant for the treatment of adults with endocrine-resistant, PIK3CA-mutated, hormone receptor (HR)-positive, human epidermal growth factor receptor 2 (HER2)-negative, locally advanced or metastatic breast cancer, as detected by an FDA-approved test, following recurrence on or after completing adjuvant endocrine therapy.
Our Take on RHHBY's Performance
Roche’s performance in 2024 was good as high demand for key drugs offset the decline in sales of legacy drugs. Ophthalmology drug Vabysmo continued its stellar performance. The drug posed stiff competition to Regeneron’s REGN ophthalmology drug Eylea. Positive data from additional studies bode well for the drug.
Regeneron co-developed Eylea with Bayer.
Growth in hemophilia treatment Hemlibra and multiple sclerosis drug Ocrevus also boosted the top line.
The company launched two new drugs in 2024 — Itovebi for a hard-to-treat breast cancer and PiaSky for a serious blood disorder.
However, pipeline setbacks weigh on the stock. Roche also expects loss of exclusivity for key drugs to impact adversely sales to the tune of CHF 1.2 billion in 2025.
RHHBY’s Zacks Rank
Roche currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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