Swiss drugmaker Roche stuck to its full-year guidance on Thursday, offering some reassurance for investors after a grim week for its blockbuster cancer drug Avastin, according to Reuters. Once regarded as the darling of the pharmaceuticals industry, Roche has seen its crown slip due to a string of pipeline setbacks. Its shares fell to their lowest level in over a year on Wednesday after a U.S. panel called on officials to revoke approval for Avastin in advanced breast cancer. Roche unveiled weaker-than-expected first-half earnings but maintained its 2010 outlook despite tough market conditions and said it expected sales for both the pharmaceuticals unit and the group to rise in the mid-single-digit range in local currencies. Drugmakers are now having to deal with increased pricing pressures as cash-strapped governments, particularly in Europe, wrestle with record budget deficits by slashing medicine costs. Austerity measures are expected to have a 2 percent impact on Roche's sales this year, Chief Executive Severin Schwan said. Cross-town rival Novartis has said it sees more cuts in Europe this year, while GlaxoSmithKline has predicted prices would fall by somewhat more than the usual annual rate of 3 percent in the second half of 2010 and 2011. Roche also said on Thursday it still sees double-digit core earnings per share growth at constant exchange rates this year after posting an 11 percent rise in core EPS in the first six months of the year, in line with its own guidance. Core EPS rose to 6.91 Swiss francs, but this fell short of analyst expectations as sales of Avastin and another cancer drug, Herceptin, missed forecasts. Roche stock was up 1 percent at 138.20 francs at 1110 GMT, in line with gains in the STOXX European healthcare index. "The highlight of the H1 report is clearly the significant expansion in operating profit margin. Roche is delivering on cost containment measures and Genentech synergies," said Kepler Capital Markets analyst Martin Voegtli. "Guidance is fully maintained despite Avastin pressure in H2. Results will be received positively by market, although investors are still paralysed from the Avastin hit," he said. Peak sales of Avastin would likely be at the lower end of its previous guidance of 8-9 billion francs if the U.S. Food and Drug Administration did as the U.S. panel advised, Chief Executive Severin Schwan said. Schwan also said the group was ahead of schedule on its repayment of the debt it took on to buy out Genentech last year, adding the group was on track to reach its synergy goal of 1 billion francs next year. Novartis raised the bar for drugmakers last week when it increased its full-year sales goal, while Britain's GlaxoSmithKline, whose earnings were hit by a hefty legal charge, went some way to assuaging investors with a broadly in-line underlying financial performance. Roche, which until recently was trading at a premium to rivals, now trades at 9.2 times 2011 earnings, broadly in line with Novartis and at a slight discount to GlaxoSmithKline.
