Roche boosted by strong drug sales in U.S. and China

Reuters

* Q3 sales 11.57 bln Swiss francs vs forecast 11.54 bln

* Healthy uptake of new drugs Perjeta and Kadcyla

* CEO says growth in China still strong

* Confirms full-year outlook

By Caroline Copley

ZURICH, Oct 17 (Reuters) - Strong demand for Roche's speciality cancer medicines, many of which are boughtprivately in emerging markets, has helped it defy an expectedslowdown in sales in China following a crackdown on salespractices there.

The Swiss group on Thursday posted an 8 percent rise inthird-quarter sales in local currencies - or 2.7 percent inSwiss francs, after adverse foreign exchange moves - helped bystrong uptake of two new breast cancer drugs.

The world's largest maker of cancer drugs chalked up growthof 12 percent in the United States in the first nine months ofthe year and said it had seen continued strong growth in China,where sales were up 23 percent.

This contrasts with the problems faced by othermultinational drugmakers in China where an anti-bribery drivehas hit promotional activities and sales. Many Chinese doctorshave refused to see drug representatives for fear of beingcaught up in the widening scandal.

The impact is expected to be felt most severely atGlaxoSmithKline, the company at the centre of briberyallegations, which reports results on Oct. 23.

But Roche's specialised cancer drugs, which are generallypaid for privately in China, have escaped largely unscathed.

"We have seen that the market as a whole has been affectedbut again due to the nature of our portfolio we are in adifferent situation at Roche," Chief Executive Severin Schwantold reporters.

He also slapped down recent speculation that the companycould merge with its cross-town rival Novartis andsaid the Hoffmann-Oeri families, which hold a majority stake inRoche, were committed to the firm's independence.

The Swiss group said quarterly sales rose to 11.57 billionSwiss francs ($12.6 billion), compared with the average analystforecast of 11.54 billion francs in a Reuters poll.

Analysts at Citi said it was a strong set of numbers andnoted the group's diabetes care unit - a weak point in recentquarters - showed signs of some stabilisation.

Shares in Roche were 0.1 percent higher by 0850 GMT, in linewith the European healthcare sector index.

BIOTECH BET

Roche's drugs business has so far been shielded from a waveof patent expiries that have hit rivals, as most of itstop-selling medicines are biotech drugs consisting of proteinsderived from living organisms that are hard to copy.

On Monday, Roche said it would invest $880 million to boostproduction of biologic therapies at four of its manufacturingsites, as it looks to shore up its position as market leader inthis fast-growing field.

Sales of its older cancer medicines Rituxan and Herceptincontinued to gain momentum in the quarter, rising 12 percent and 7 percent respectively, while Avastin benefited fromincreased use in ovarian and colorectal cancer.

This helped to offset weaker sales of hepatitis C treatmentPegasys, which tumbled 16 percent.

The Basel-based drugmaker is also developing follow-onmedicines - improved versions of its top-sellers - which ithopes will help it fend off anticipated competition fromso-called biosimilar copies when its older drugs go off patent.

In a sign this strategy is paying off, Roche said sales ofKadcyla, a treatment for an aggressive form of breast cancerwhich won U.S. approval in February, were 156 million francs inthe first nine months of the year, up from 83 million in thefirst half.

Sales of another new drug Perjeta, which last month gainedapproval in the United States for use to help shrink tumoursprior to surgery, had sales of 186 million francs.

Roche reiterated its expectation for full-year sales to growin line with 2012, when they rose 4 percent in local currencies,and core earnings to rise ahead of revenues. It also expects tofurther increase its dividend in 2013.

Some analysts have questioned whether this guidance isconservative and sales were already up 6 percent in constantexchange rates in the first nine months.

Dan O'Day, the head of Roche's pharmaceutical division saidhe expected demand for the firm's major growth drivers tocontinue in the fourth quarter.

But he cautioned last year's sales of flu drug Tamiflu hadbeen strong and said the loss of exclusivity on chemotherapydrug Xeloda could also weigh.

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