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July 23, 2020

Roche’s Covid-19 tests could be enough to offset losses during lockdown

By Agne Suipyte

Strong demand for Covid-19 diagnostics helps to maintain growth for Roche sales in the first half of 2020.

Covid-19 tests continue to drive Roche sales

Roche Group appears to have weathered the storm, reporting sales growth of 1% at constant exchange rates (CER) during H1 2020, despite the Covid-19 pandemic negatively affecting sales across the whole business.

Roche’s Covid-19 antibody test has been instrumental in identifying individuals who have contracted the virus and controlling its spread. Therefore, Covid-19 testing has been a strong contributor to the 3.4% sales growth experienced by the company’s diagnostics division in the H1 2020. The molecular diagnostic division, including the SARS-CoV-2 PCR test, grew by 61%.

The pandemic had a negative impact on sales across the whole of the group’s portfolio. This highlights the importance of Covid-19 tests on the group’s sales.

New drugs, including Tecentriq, Hemlibra, Ocrevus, Perjeta and Kadcyla, together contributed an additional CHF2.0bn ($2.2bn) CER of new sales.

The pandemic has had a negative impact on regular business activity

Roche reported a 10% drop in second-quarter revenue as its regular business has been greatly impacted by the coronavirus pandemic. Patients have been discouraged from visiting physicians and disruption has been caused to regular hospital and healthcare practices. This has contributed to a lower level of sales achieved in the second quarter.

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Centralised and point-of-care solutions sales decreased by 10% during the first half of the year, attributable to a reduction in routine testing volumes during the Covid-19 pandemic. Diabetes Care sales also decreased by 6% due to Covid-19 effects.

Signs of recovery are still uncertain

Roche remains confident that an uptick in revenue that started in June may indicate that the company will still achieve growth in 2020. The group’s sales grew 3% during June, now the company is expecting low to mid-single-digit growth.

However, the recovery of sales from a difficult second quarter is still uncertain. Global Covid-19 cases continue to grow, and in some regions, secondary lockdown restrictions have been implemented to prevent second waves of infection. Reintroduction or prolonged restrictions during the pandemic could cause Roche’s sales to drop again.

Roche is also experiencing biosimilar erosion in the US, which could expand to Europe. The first biosimilar versions of Avastin, one of the company’s most lucrative drugs, is expected to enter the European market in 2020. This could also weaken the group’s chances of recovery.

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