RHHBY Roche Holdings Ltd AG (QX)

By Denise Roland 

BASEL, Switzerland-- Roche Holding AG said profit climbed in 2016, as several of its top-selling drugs continued to prosper in the absence of cheaper competitors, while its chief executive shrugged off U.S. President Donald Trump's criticism of high drug prices.

The company posted net profit of 9.6 billion Swiss francs ($9.7 billion) for 2016, 8% higher than a year earlier. Revenue increased 5% to 50.6 billion francs. Those figures missed analyst expectations of 10.7 billion and 50.7 billion Swiss francs, respectively.

Basel, Switzerland-based Roche has to date suffered less than its pharmaceutical peers from the launch of cheap copycats to its drugs, in part because its biggest medicines are manufactured with living cells rather than by chemical processes, making them more complex to imitate.

That is likely to shift later this year, when cheaper copycats of two of Roche's biggest-selling treatments--cancer drugs Herceptin and Mabthera--are expected to be launched in Europe in the second half of the year.

Chief Executive Severin Schwan said Roche was prepared for this onset of new competition with a lineup of new drugs that he said would offset a decline in its older medicines.

Mr. Schwan also said he remained bullish on the U.S. market, where Roche generates nearly half of its total drug pharmaceuticals revenue, despite Mr. Trump's comments to a group of drug company bosses Tuesday that "we have to get the prices way down."

One reason for Mr. Schwan's confidence, he said, was that the U.S. is one of the biggest beneficiaries of investment by the pharmaceutical industry. He said Roche invested "over-proportionally" in the U.S., where it employs more than 25,000 people, in part through its California-based Genentech division.

Mr. Schwan has also long argued that Roche is less exposed to pricing pressure than some other companies because its drugs aren't easily substitutable with those from rivals. "If you have true innovation, with true added value, the U.S. will be the first country to honor that innovation," he said.

Roche said it expects sales and core earnings per share to grow by a low-to-mid single-digit percentage in 2017, at constant exchange rates.

The company proposed a full-year dividend of 8.20 Swiss francs, up from 8.10 francs last year.

Roche said sales of its medicines increased to 39.1 billion Swiss francs, a 5% increase from 37.3 billion francs a year earlier.

That growth was driven in part by Perjeta and Herceptin, both for the HER2-positive form of breast cancer. Perjeta, a newer drug, has boosted sales of the well-established Herceptin because taken together, they prolong survival, lengthening treatment.

Actemra, for rheumatoid arthritis, also contributed strongly to revenue growth, with sales up 16%.

Roche's smaller diagnostics division notched higher growth still, with revenue up 6% to 11.5 billion francs. That was driven by Roche's point-of-care business, which provides tools for diagnosing patients in the clinic or hospital.

Core operating profit, a measure that strips out certain items such as impairments, tax and financing costs, rose 5% to 18.4 billion Swiss francs. Analysts expected core operating profit of 18.6 billion francs.

Write to Denise Roland at Denise.Roland@wsj.com

(END) Dow Jones Newswires

February 01, 2017 05:12 ET (10:12 GMT)

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