Swiss drugmaker Roche joined peers in striking a cautious note on 2011 as the sector grapples with US healthcare reforms and a push in Europe for lower drug prices.
The world's largest maker of cancer drugs, which is looking to cut costs after a string of product setbacks, posted a 4 per cent rise in 2010 core earnings per share, after sales growth of top-selling cancer drug Avastin slowed.
Full-year core EPS was 12.78 Swiss francs, compared with a forecast for 13.0 francs in a Reuters poll. Earnings rose 10 percent in local currencies.
Roche said sales in 2011 were expected to grow at low single-digit rates in local currencies as the impacts of the US healthcare reform and European austerity measures weigh. Its sales outlook does not include flu drug Tamiflu.
It is aiming for 2011 core earnings per share growth at a high single-digit rate at constant exchange rates.
Roche's comments echo downbeat 2011 outlooks from AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Novartis and Pfizer as they brace for higher costs from U.S. healthcare reform, pressure to keep a lid on prices and patent expirations of key drugs.
"Group sales in Q4 missed by 4 per cent. This was felt in second-half profits which missed by 2 per cent or 1 per cent on the full year," said Helvea analyst Karl-Heinz Koch. "Avastin is the main shortfall, but Herceptin was also weak," he said.
Roche stock, which has recovered some 5 per cent so far this year after losing 22 per cent in 2010, was indicated to open 2 per cent lower.
Roche, which recently said ThyssenKrupp's outgoing finance chief Alan Hippe would take over as its CFO, is trying to rebuild investor confidence after setbacks last year to key products such as Avastin knocked around a fifth off its stock price in 2010.
The group will slash thousands of jobs over the next two years as part of a far-reaching cost-cutting programme announced in November and aimed at offsetting the pipeline disappointments and difficult industry conditions.
Sales of Avastin, the most world's best-selling cancer medicine, grew only 2 per cent in the final quarter of 2010, down from 7 percent in the third quarter, making the fourth quarter one of the toughest periods for the drug.
Sales at the group's key pharma unit declined by 8 per cent in the fourth quarter.
Avastin has been approved for fighting several different cancers, including certain types of lung cancer, advanced colorectal and kidney cancers, but it has faced a number of setbacks and researchers highlighted yesterday the side-effect problems linked to the drug.
It had been approved to treat breast cancer, but it failed to help breast cancer patients live longer in four clinical trials, and US regulators in December rescinded its approval in breast cancer.
Avastin blocks vascular endothelial growth factor, or VEGF, which is needed to form blood vessels to feed tumors but also needed for normal blood vessel growth.
Recent encouraging data on drugs such as RG7204 for the deadliest form of skin cancer has, however, reminded markets the group still boasts one of the strongest pipelines in the industry and remains a leader in cancer treatments.
Reuters
