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Roche sees 2021 growth, buoyed by COVID tests as pandemic persists

John Miller
·2-min read
FILE PHOTO: Logo of Swiss pharmaceutical company Roche is pictured in Rotkreuz

By John Miller

ZURICH (Reuters) - Roche Chief Executive Severin Schwan expects COVID-19 test demand to continue to surge, buoying the Swiss drug and diagnostics maker's forecast to lift 2021 sales and profit despite pressure on its main drugs business.

Roche, which reported full-year 2020 results on Thursday, predicts current-year sales growth in the low- to mid-single digit range at constant exchange rates, with core earnings per share growing similarly.

The Basel-based company's main pharmaceuticals business makes up three-quarters of overall sales but has taken a back seat during the pandemic to diagnostics, whose 15 tests for COVID-19 propelled it to double-digit sales growth as countries raced to track infections.

Fourth-quarter pharmaceuticals sales fell 7% to 10.2 billion Swiss francs ($11.3 billion), sharply contrasting with diagnostics revenue that rose 28% to 4.1 billion francs.

"I've been preaching, for years if not decades, how important diagnostics is, and how undervalued diagnostics is," Schwan told reporters on a call.

"Unfortunately, countries around the world underinvested into this area, and probably needed something like COVID-19 to recognize the importance of diagnostics."

Other diagnostics companies profited similarly from the pandemic, with Abbott Laboratories Inc last week publishing estimate-beating forecasts.

For 2020, Roche's net profit rose to 15.1 billion francs, from 14.1 billion in 2019. Sales were 58.3 billion francs, down 5% from 61.5 billion a year ago as the Swiss franc strengthened against other currencies like the U.S. dollar.

At constant exchange rates, sales rose 1%.

Roche shares slipped 0.5% at 0900 GMT, as Zuercher Kantonalbank analysts said results missed their expectations.

Weighing on drug sales were patients avoiding the doctor for fear of catching COVID-19, prompting a 2 billion franc pandemic-related hit to 2020 drug revenue.

As more vaccines from other companies arrive later this year, drugs unit head Bill Anderson is hoping for an improvement.

"The first half of the year will be relatively more difficult for the pharmaceuticals business, the second half will be strengthening," Anderson told reporters.

(Reporting by John Miller; Editing by Michael Shields)