Roche Third-Quarter Sales Up 20 Percent

By ALEXANDER G. HIGGINS

GENEVA – Demand for cancer drugs and an anti-flu treatment being stockpiled against a possible influenza pandemic helped boost Roche Holding AG’s third-quarter sales by 20 percent, the pharmaceutical giant said Wednesday.

For the three months ended Sept. 30, sales rose to 8.82 billion Swiss francs ($6.79 billion) from 7.37 billion francs in the third quarter of 2004.

While cancer drugs were the biggest contributor to growth in the quarter, much of the attention remained on Tamiflu. Until a vaccine becomes available, the drug is seen as the most effective medical defense against a flu pandemic that is expected to result if the virus causing the current international outbreak of bird flu changes into a virulent human influenza strain.

Roche, which is under growing pressure to ease its control on the manufacture of Tamiflu, said sales of the drug more than doubled to 279 million francs ($215 million) from 110 million francs a year earlier because of government and private demand.

The company stressed it is willing to work with governments and other companies to produce more of the drug and was already doing so, with seven of the 13 sites involved in making Tamiflu controlled by subcontractors. It also noted that it had donated to the World Health Organization’s stockpile enough doses of Tamiflu to treat 3 million people in the event of a pandemic.

"The group has already significantly expanded its Tamiflu production capacity several times, and Roche will continue to take action, both on its own and with a significant number of suppliers, to increase production capacity for Tamiflu to meet seasonal and pandemic needs," the company said.

Sales of the once-obscure drug have skyrocketed from $76 million in 2001 to 859 million francs ($661 million) this year.

Overall sales of prescription drugs increased 24 percent to 6.78 billion francs ($5.22 billion) in the third quarter, the Basel-based company said.

"Our pharmaceuticals division gained additional market share, with all major products contributing to this strong performance, particularly our new cancer medicines," Chief Executive Franz Humer said.

Sales of Mabthera, a treatment for non-Hodgkin’s lymphoma, rose to 1.06 billion francs ($816 million) from 877 million francs in the same period of 2004, while sales of Avastin – for colorectal cancer – more than doubled to 486 million francs ($374 million) from 235 million francs. Sales of breast-cancer drug Herceptin rose to 591 million francs ($455 million) from 373 million francs.

Sales at Roche’s diagnostics division rose 8.5 percent to 2.04 billion francs ($1.57 billion), the company said.

But much of the focus was on Tamiflu. The European Union, calling bird flu a global threat, has urged its members to stockpile the drug following the discovery of new cases in Greece, Romania and Turkey in recent days, which led to bans on poultry from those countries.

WHO recommends governments keep enough anti-viral drugs and regular human-flu vaccines to inoculate at least 25 percent of their populations.

Roche said Tuesday it will build a U.S. plant to make more Tamiflu, but demand for the drug is outstripping the company’s ability to make it. Some 40 countries are scrambling to create stockpiles to treat millions if a pandemic occurs, and there’s growing international pressure to ignore Roche’s patent rights and manufacturer inexpensive generic versions.

Thailand has announced its intention to do just that, and India-based Cipla Ltd. said it will be ready to ship generics next year, although it said Tuesday it will seek a license from Roche.

Taiwan said Wednesday it hopes to get a license from Roche to manufacture a generic version of Tamiflu.

But Roche maintains that it will not release its patent, which expires in 2016.

Responding to criticism that Roche is benefiting from a global health crisis, William M. Burns, chief executive of the company’s pharmaceuticals division, told Dow Jones Newswires on Wednesday that Roche was selling the drug at a significant discount to governments.

Humer said at a news conference that Roche’s discount for governments stockpiling Tamiflu is about 50 percent.

Burns said more than one-third of Tamiflu sales in the third quarter were made to individual buyers who are purchasing the prescription at the full retail price.

Tamiflu sells at different prices in various markets. In Switzerland, which has some of the world’s highest drug prices, a packet of 10 capsules – the full five-day treatment – costs about 86.50 francs ($67). It can cost up to $86.50 in the United States.

Roche shares dropped 3.2 percent to close at 186.50 francs ($143.62) on the Zurich exchange.