Roche outshines Novartis in first half

Franz Humer is stepping down as CEO but will remain chairman Keystone

The Roche pharmaceutical and diagnostics group of Basel has achieved a better financial performance in the first half of the year than its cross-city rival Novartis.

This content was published on July 19, 2007 - 11:50

Roche announced on Thursday that its net profit for the first six months was SFr5.86 billion ($4.88 billion), nearly a billion more than Novartis.

In a surprise move, Roche also announced that Franz Humer would be stepping down as CEO at the shareholders' meeting next year to make way for Severin Schwan, currently head of diagnostics.

The profit at Roche, which was up by 29 per cent on the comparable period last year, was boosted by strong sales of its cancer drugs, which include Avastin and Herceptin, and by the flu drug Tamiflu.

Contrary to Novartis, Roche does not see a slowdown in growth in its pharmaceuticals division in the second half of the year. It confirmed its outlook for the full year, with double-digit sales growth for the group and the pharmaceuticals division expected.

The Roche performance outstripped the market both in pharmaceuticals (+18 per cent) and diagnostics (+5 per cent).

Group sales were up by 15 per cent to SFr22.83 billion, also beating market expectations. Sales at Novartis were slightly higher at SFr23.93 billion.

"Roche posted impressive half year results, continuing the robust growth of previous years...At the same time we have positioned ourselves even more strongly for future growth through good progress in our research and development and a number of strategic acquisitions," Humer commented.

Hostile bid

The company has been investing its large cash supply in small acquisitions but in the last few weeks had a $3 billion hostile bid for diagnostics firm Ventana Medical Systems in the United States rejected.

"It's another set of surprisingly good figures," noted analyst Paul Diggle of Nomura Code Securities in London. "There's plenty of opportunity for them to be more upbeat with their guidance."

Analyst Denise Anderson at Kepler Equities was confident that Roche would continue to shine in the market. "In the second half, Roche will almost certainly continue to strongly outperform the sector in terms of growth in sales and profitability," she said.


Schwan, a 40-year-old Austrian, will take over as CEO on March 4, allowing Humer, also an Austrian by birth, to focus on his position as chairman. "In view of the increasing complexity of the tasks involved, the board has decided to separate the chairman and CEO roles," Humer said in a statement.

At Novartis, Daniel Vasella continues in his double role as both chairman and chief executive. Both Novartis and Roche have long been criticised for unifying the two roles.

In a separate development, the world's largest spirits maker, Diageo, announced that Humer would become its chairman from July 2008.

swissinfo with agencies

Key facts

Roche first half figures:
Sales: SFr22.827 billion (+15%)
Net income: SFr5.862 billion
Employees: 76,655 (end of 2006)
Novartis first half figures:
Sales: $19.941 billion (SFr23.93 billion)
Net income: $4.187 billion (SFr5.03 billion)
Employees: 98,788 (end of 2006)

Novartis has a 33.3% stake in Roche.

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Franz Humer

Humer was born in Austria in 1946.

After senior positions at Schering-Plough, Humer moved to Roche in 1995. He became chief executive in 1998, overseeing a dramatic turnaround at the group.

His leadership helped turn Roche into the pharmaceuticals firm with the most enviable pipeline of new drugs.

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Severin Schwan

Schwan was born in 1967 and is also an Austrian citizen.

Like Humer, he studied at Innsbruck University.

Schwan joined Roche as a trainee finance officer in 1993 and became chief executive of the group's second business, diagnostics, in 2006.

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