Roche profit misses poll as cancer drugs disappoint

Roche Holding AG's full-year profit missed forecasts due to disappointing sales of key cancer drugs, but the Swiss drugmaker confirmed its 2010 outlook.

Roche said on Wednesday core earnings per share rose 10 per cent to 12.19 Swiss francs ($11.52), narrowly missing the average forecast of 12.33 in a Reuters poll after big sellers Avastin, MabThera and Herceptin netted less than expected.

The world's largest maker of cancer drugs stuck to its core earnings per share guidance for double-digit growth this year and is aiming for mid-single digit sales growth at both the group as a whole and its drugs unit.

Many analysts see Roche and its local Swiss rival Novartis AG as the stars of the drugs sector, having focused on developing promising new drugs rather than cutting costs as a way to combat looming patent losses.

Roche Chief Executive Severin Schwan dismissed speculation Novartis could sell its stake in its rival to help pay for acquiring eyecare group Alcon, telling CNBC the talk was "pure speculation".

Roche stock was indicated to open down 2 percent, according to premarket data from bank Clariden Leu.

"Our first reaction is of slightly disappointing results. FY09 numbers were slightly light and double-digit core EPS growth guidance was as expected," analysts at Deutsche Bank said in a note.

TOUGH BUSINESS

Sector investors will now look to earnings from US group Pfizer, due later in the session, for more clues on how drugmakers hope to overcome tough industry fundamentals, which also include uncertainties over US healthcare reform.

AstraZeneca Plc last week cut another 8,000 jobs and gave a lacklustre forecast for the next few years and newspapers have reported GlaxoSmithKline Plc also plans to cut several thousand jobs.

Roche trades at about 12 times forecast 2011 earnings, a similar multiple to Novartis and more expensive than GlaxoSmithKline, Sanofi-Aventis and AstraZeneca.

It has had a boost from sales of antiviral Tamiflu thanks to the H1N1 swine flu pandemic, but sees that revenue stream falling from 3.2bn francs to 1.2bn this year.

The group proposed a higher dividend than expected, at 6.00 francs per share, and said it would progressively reduce debt from its $47bn Genentech buyout, return to a net cash position by 2015 and maintain its dividend policy.