Roche delivers strong 2013 results

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  • Group sales rise 6%1 to 46.8 billion Swiss francs
  • Pharmaceuticals sales 7% higher, driven by HER2 breast cancer franchise, Avastin, MabThera/Rituxan, Actemra/RoActemra and Lucentis. Diagnostics sales up 4% on strong Professional Diagnostics performance
  • Core EPS growth ahead of sales, up 10% to 14.27 Swiss francs
  • Positive regulatory decisions for Kadcyla, Perjeta and Herceptin SC strengthen HER2 franchise and US approval of Gazyva supports hematology franchise
  • Significant progress of R&D pipeline: 15 new molecular entities in late-stage development
  • Board proposes dividend increase of 6% to 7.80 Swiss francs, 27th consecutive year of dividend growth
  • Outlook for 2014: Sales expected to grow low- to mid-single digit, at constant exchange rates. Core earnings per share targeted to grow (at CER) ahead of sales. Roche expects to further increase its dividend
Key figures 2013

In millions of CHF
As % of sales
% change


2013201220132012CER*CHFUSD
Group Sales46,78045,499100100+6+3+4
Pharmaceuticals Division36,30435,2327877+7+3+4
Diagnostics Division10,47610,2672223+4+2+3

Core operating profit17,90417,16038.337.7+8+4
Operating free cash flow16,38116,1353535.5+5+2
IFRS2 Net income11,3739,66024.321.2+22+18
Core earnings per share14.2713.49+10+6

* Constant exchange rates (average full-year 2012)

Roche’s CEO Severin Schwan: “2013 was a very good year for Roche. We exceeded our financial targets with strong demand for our existing products and positive uptake of recently launched medicines and diagnostics. With the launch of Perjeta and Kadcyla we have added a new generation of treatments for women with a particularly aggressive type of breast cancer. Another highlight was the launch of Gazyva for chronic lymphocytic leukemia (CLL), in the United States. In Diagnostics we introduced a range of new instruments and tests that further strengthen our position as market leader, including the cobas 8100 and a new HPV test for cervical cancer. With our strong product pipeline we are well positioned for future success."

Strong performance in 2013

Group sales rose 6% to 46.8 billion Swiss francs in 2013 as a result of strong demand for Roche’s biologic medicines in the area of oncology, immunology and ophthalmology as well as for its clinical laboratory diagnostic products, especially immunoassays. This sales performance contributed significantly to an 8% increase in the Group’s core operating profit and, combined with lower financing costs, a 10% rise in core earnings per share. IFRS net income rose 22% to 11.4 billion Swiss francs as a result of lower restructuring costs and the reversal of previous impairment charges.

Strong sales growth

Sales of the Pharmaceuticals Division grew 7% to 36.3 billion Swiss francs due to the continued strength of established and new medicines for cancer (HER2 franchise, Avastin and MabThera/Rituxan) as well as good growth in medicines for rheumatoid arthritis (Actemra/RoActemra) and eye diseases (Lucentis). Sales growth was strongest in the United States (+10%) and emerging markets (+12%)3, which grew faster than Europe (+2%) and Japan (+2%).

The Diagnostics Division grew ahead of the in vitro market4, as all regions contributed to sales growth of 4%. Sales reached 10.5 billion Swiss francs with the most important contribution coming from continued strong demand for tests and instruments used in clinical laboratories, especially from Professional Diagnostics (+8%). As expected, the market environment for Diabetes Care (-3%) remained challenging in 2013 and Roche is continuing the restructuring measures that were initiated in 2012. Sales growth in Diagnostics was strongest in Asia-Pacific (+14%) and Latin America (+13%), and lower in mature markets: Europe (+2%), North America (+1%) and Japan (+2%).

The Swiss franc rose against a number of currencies in 2013, mainly the Japanese yen and the US dollar, while falling against the euro. Overall, this led to a negative impact on the results reported in Swiss francs.

Core operating profit further improved

Driven by the strong sales performance, the Group’s core operating profit increased by 8% (+4% in Swiss francs) to 17.9 billion Swiss francs. Higher operating costs were recorded for research and development, as well as for marketing and distribution to support growth in key markets such as the United States and China. Core operating profit in the Pharmaceuticals Division grew 7% to 16.1 billion Swiss francs and Diagnostics core operating profit increased by 4% to 2.2 billion Swiss francs.

Roche’s core earnings per share, which excludes non-core items such as global restructuring charges and amortisation and impairment of goodwill and intangible assets, rose 10% to 14.27 Swiss francs per share. This was driven by the strong operating performance and lower financing costs, due to lower interest payments following progressive repayment of the debt incurred for the Genentech transaction. IFRS net income rose 22% to 11.4 billion Swiss francs (+18% in Swiss francs) as a result of lower restructuring costs and the reversal of previous impairment charges.5

Strong operating free cash flow and improved net debt position

The Group’s operating free cash flow grew by 5% (+2% in Swiss francs) to 16.4 billion Swiss francs, enabling Roche to further reduce the Group’s debt position: by the end of the year, 67% of the debt incurred to finance the Genentech transaction in 2009 had been repaid. The net debt position of the Group at year-end 2013 was 6.7 billion Swiss francs, a decrease of 3.9 billion Swiss francs from year-end 2012. At 31 December 2013, the net debt to asset ratio was 11%.

Significant progress in pharmaceutical R&D pipeline

During 2013 Roche’s pharmaceutical R&D pipeline made significant progress both in oncology and in the areas of ophthalmology and immunology. The pipeline currently has 66 new molecular entities in clinical development of which 15 are in late-stage development. Based on promising mid-stage data Roche selected eight new compounds to progress to late-stage development during 2013: six compounds in oncology (anti-CD79b ADC, pan-PI3Ki, beta-sparing PI3Ki, alectinib (ALKi), Bcl-2i, anti-PDL1), etrolizumab for inflammatory bowel disease, lampalizumab for the eye disease geographic atrophy (an advanced form of dry AMD). In addition, Roche licensed-in oral octreotide, a treatment for the growth disorder, acromegaly.6

Proposals for the Annual General Meeting 2014

In light of the company’s strong performance in 2013, the Board of Directors is proposing an 6% dividend increase to 7.80 Swiss francs per share and non-voting equity security (2012: 7.35 Swiss francs), making this the 27th consecutive year of dividend growth.

The Board of Directors proposes that Christoph Franz, who has served as a non-executive Director on the Roche Board since 2011, be elected as Chairman of the Board.

In March 2013 a majority of Swiss citizens voted in a referendum in favour of a set of changes to the Swiss constitution regarding governance regulations of publicly quoted companies. Roche has decided to implement the new regulations earlier than required and will propose changes to the company’s Articles of Incorporation at the AGM on 4 March 2014: as of this year, the Chairman of the Board, all members of the Board of Directors and the members of the Remuneration Committee will be elected annually by the shareholders and binding votes on remuneration will be proposed to be implemented in 2014, ahead of the mandatory date of 2015.

Outlook for 2014

In 2014, Roche expects low- to mid-single digit growth in Group sales at constant exchange rates. Core EPS is targeted to grow (at CER) ahead of sales. Roche expects to further increase its dividend.

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About Roche

Headquartered in Basel, Switzerland, Roche is a leader in research-focused healthcare with combined strengths in pharmaceuticals and diagnostics. Roche is the world’s largest biotech company, with truly differentiated medicines in oncology, immunology, infectious diseases, ophthalmology and neuroscience. Roche is also the world leader in in vitro diagnostics and tissue-based cancer diagnostics, and a frontrunner in diabetes management. Roche’s personalised healthcare strategy aims at providing medicines and diagnostics that enable tangible improvements in the health, quality of life and survival of patients. Founded in 1896, Roche has been making important contributions to global health for more than a century. Twenty-four medicines developed by Roche are included in the WHO Model Lists of Essential Medicines, among them life-saving antibiotics, antimalarials and chemotherapy. In 2013 the Roche Group employed over 85,000 people worldwide, invested 8.7 billion Swiss francs in R&D and posted sales of 46.8 billion Swiss francs. Genentech, in the United States, is a wholly owned member of the Roche Group. Roche is the majority shareholder in Chugai Pharmaceutical, Japan. For more information, please visit www.roche.com.

All trademarks used or mentioned in this release are protected by law.

1) Unless otherwise stated, all growth rates are at constant exchange rates (CER). The percentage changes at CER are calculated using simulations by reconsolidating both the 2013 and 2012 results at constant currencies (the average rates for the year ended 31 December 2012).
2) International Financial Reporting Standards.
3) E7 emerging markets: Brazil, China, India, Mexico, Russia, South Korea and Turkey.
4) Market estimates from an independent IVD consultancy; data as of end Q3 2013.
5) As part of a broader initiative to expand production capacity of biologic medicines, Roche put back into service a discontinued production unit in Vacaville (USA). This resulted in a reversal of previously incurred impairment charges of 0.5 bn Swiss francs.
6) In February 2013, Roche signed an agreement with Chiasma, a privately held biopharma company, to develop and commercialise Octreolin.

Disclaimer: Cautionary statement regarding forward-looking statements
This document contains certain forward-looking statements. These forward-looking statements may be identified by words such as ‘believes’, ‘expects’, ‘anticipates’, ‘projects’, ‘intends’, ‘should’, ‘seeks’, ‘estimates’, ‘future’ or similar expressions or by discussion of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this document, among others: (1) pricing and product initiatives of competitors; (2) legislative and regulatory developments and economic conditions; (3) delay or inability in obtaining regulatory approvals or bringing products to market; (4) fluctuations in currency exchange rates and general financial market conditions; (5) uncertainties in the discovery, development or marketing of new products or new uses of existing products, including without limitation negative results of clinical trials or research projects, unexpected side effects of pipeline or marketed products; (6) increased government pricing pressures; (7) interruptions in production; (8) loss of or inability to obtain adequate protection for intellectual property rights; (9) litigation; (10) loss of key executives or other employees; and (11) adverse publicity and news coverage. The statement regarding earnings per share growth is not a profit forecast and should not be interpreted to mean that Roche’s earnings or earnings per share for any current or future period will necessarily match or exceed the historical published earnings or earnings per share of Roche

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