Swiss drug company Roche saw net profit rise by a record 34 per cent to SFr9.2 billion ($7.3 billion) last year due to strong sales of cancer treatment products.This content was published on February 7, 2007 - 08:02
It is the best result in the history of the Basel-based company and beats that of its local rival, Novartis, the world's fourth-largest pharmaceutical company.
Roche net sales increased 17 per cent to SFr42 billion and were in line with analysts' expectations.
"In both the pharmaceutical divisions and the diagnostics division, Roche anticipates continued above-market sales growth in local currencies," the company said in a statement on Wednesday.
Roche's portfolio of cancer drugs, including Herceptin and Avastin, has produced growth rates in sales and profits at the top end of the pharmaceutical industry.
"Top-line growth was a little better than expected," said a bank Vontobel analyst.
Global sales of influenza drug Tamiflu continued to grow strongly, up 68 per cent, driven mainly by governments and other organisations stockpiling in case of a pandemic, Roche said.
Roche said it now had Tamiflu manufacturing capacity that exceeded all government orders to date. But it expected sales of the influenza medicine to slow down this year.
"Roche Diagnostics maintained its leadership position in an increasingly competitive market, thanks to numerous new product launches and continued growth in all of the division's business areas," said Roche chairman and chief executive Franz Humer.
The results did not totally convince all analysts, however, and a cautious statement about expected 2007 profit margins saw shares dip slightly in morning trading.
"In spite of higher than expected sales, the profit split within the pharmaceuticals is worse than expected and the profit contribution from diagnostics is lower than forecast," said Bank Vontobel analyst Karl Heinz Koch.
Humer hinted that the company may use some of its SFr24.3 billion ($19.59) cash reserves to acquire other companies in the future, but ruled out a major takeover.
"We have the money there available should the opportunity present itself. The money is there for small and medium sized acquisitions," he said.
"A big acquisition makes no sense for us. The cash is not burning a hole in our pocket."
One option would be to increase Roche's stake in its US-based daughter biotech company Genentech or Japanese firm Chugai Pharmaceutical, Humer added.
Shareholders will receive a 36 per cent dividend increase to SFr3.40 per share, with Humer pledging further hikes in future.
Roche announced this week that it is restructuring its research and development operations, but did not say if this would result in an increased R&D budget, currently running at SFr6 billion ($4.84 billion) a year.
Earlier this month Novartis announced a net profit of $7.2 billion for 2006 – up 17 per cent on the previous year.
swissinfo with agencies
Roche, which was founded in 1896 in Basel, has core businesses in pharmaceuticals and diagnostics.
The group is the number one in the global diagnostics markets and is a leading supplier of medicines for cancer and transplantation.
Roche has a global workforce of about 68,000 in 150 countries, including 7,500 in Switzerland.
About a third of Roche stakes are held by local rival, Novartis.
Net profit: SFr9.17 billion
Full-year sales: SFr42.04 billion
Operating profit: SFr11.73 billion
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