Roche (ROG) Q3 2024 earnings summary

Executive summary

• Group sales grew 6% at constant exchange rates (CER) to CHF 45.0 billion year-to-date September 2024, with base business up 8% at CER, offsetting COVID-19 and loss of exclusivity (LOE) declines.

• Pharmaceuticals Division sales rose 7% (CER) to CHF 34.3 billion, led by innovative brands such as Vabysmo, Phesgo, Ocrevus, Hemlibra, and Polivy; Diagnostics Division sales increased 5% (CER) to CHF 10.7 billion, with base business up 8%.

• Five major regulatory approvals and three positive phase III readouts, including US approval for Itovebi (inavolisib), Ocrevus Zunovo (SC), Tecentriq Hybreza (SC), and EU approval for Vabysmo in RVO and PiaSky in PNH.

• Young portfolio (launched since 2015) now accounts for 56% of Pharma sales, with strong growth from Vabysmo, Phesgo, and Elevidys.

• Diagnostics saw significant launches, including Cobas Pro Serology Solution, Respiratory Flex, Accu-Chek SmartGuide, and completed the LumiraDx acquisition.

Financial highlights

• Group sales: CHF 45.0 billion (+6% CER, +2% CHF) YTD Sep 2024; Pharma: CHF 34.3 billion (+7% CER); Diagnostics: CHF 10.7 billion (+5% CER).

• Diagnostics base business grew 8% at CER, offsetting a 62% decline in COVID-19-related sales; COVID-19 sales declined by CHF 1.1 billion YTD.

• Oncology sales increased 2% to CHF 11.9 billion; Hematology up 12% to CHF 5.8 billion; Neurology up 14% to CHF 7 billion.

• Exchange rate movements negatively impacted reported sales growth, especially from USD, JPY, CNY, and EUR, with -4pp on sales.

• Young portfolio contributed 56% of Pharma sales as of YTD Sep 2024.

Outlook and guidance

• 2024 guidance raised: group sales expected to grow mid-single digit at CER, with high single-digit core EPS growth (excluding 2023 tax dispute resolution); further dividend increase in Swiss francs planned.

• COVID-19 sales impact will be negligible in 2025; base business momentum expected to continue in both pharma and diagnostics.

• Consensus growth rates for 2025 sales and core EPS considered reasonable.

• Currency headwinds expected to impact full-year results: -4pp on sales, -6pp on operating profit, -7pp on core EPS.