Dissecting Roche’s Performance across Its Segments



How did Roche’s pharmaceuticals segment perform?

Roche Holding (RHHBY) operates in two segments, pharmaceuticals and diagnostics. The pharmaceutical division is the largest revenue contributor and fetched 19.5 billion Swiss francs, which accounted for 78% of total revenues during the first six months of fiscal 2016. The division’s sales were up by 4% due in part to increased demand for oncology and immunology drugs.

Roche is focused on oncology drugs. Its three big drugs, MabThera/Rituxan, Herceptin, and Avastin, are exposed to biosimilars threats. For more information, please refer to How Biosimilars Could Threaten Roche’s Key Products.

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Perhaps these threats are the reason there are rumors that the Swiss drug maker may enter the orphan disease space by acquiring BioMarin (BMRN). Following drug patent expiries, the big pharma companies are eyeing smaller companies. Pfizer’s (PFE) recent Anacor acquisition, Jazz Pharmaceuticals’ (JAZZ) Celator acquisition, and Sanofi’s (SNY) pursuit of Medivation (MDVN) suggest that the industry is consolidating, and there might be more acquisitions in the second half of fiscal 2016.

How did Roche’s diagnostics division perform?

The diagnostics division grew by 6% to record 5.6 billion Swiss francs in 1H16. The growth was supported by rising Asia-Pacific sales. Professional diagnostics remained the largest contributor to the division’s sales.

It’s often risky to directly invest in a pharmaceuticals or biotechnology company, as any news release related to the success or failure of a drug can result in stock price volatility. Thus, to remain on the safer side, investors can choose the Vanguard Total World Stock Index Fund (VT), which holds 0.48% of its total holdings in Roche.

Continue to the next part for detailed analysis of the company’s pharmaceuticals division.


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