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Roche’s Molecular Dx Sales Drop 3 Percent In Q3 As It Awaits FDA Clearance of Tests

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
Roche reported this week that total revenue for its Molecular Diagnostics segment declined 3 percent in the third quarter, compared with the same period one year ago and matching a decline in the second quarter, but overall revenue for its entire Diagnostics business rose 4 percent year over year.
While Roche’s overall revenues for the three months ended Sept. 30 increased 5.7 percent to CHF 11.1 billion ($9.4 billion), its Diagnostics business rang up sales of CHF 2.3 billion, a 4 percent gain on the comparable period a year ago. The firm’s pharmaceutical sales rose 6 percent to CHF 8.9 billion for the third quarter.
Sales for Roche’s Molecular Diagnostics segment declined 3 percent to CHF 282 million for the quarter. Severin Schwan, CEO of Roche Diagnostics, said during the Q3 conference call that molecular diagnostics sales were down due to a dip in sales to industrial markets, which comprises Roche’s sale of Taq enzymes to other healthcare providers.
The decline was expected as some of Roche’s foundational PCR patents have recently expired, which has driven down the cost of its PCR reagents. Excluding the industrial business, the sales of molecular diagnostics increased roughly 3 percent.
But Roche has several molecular diagnostic tests awaiting US Food and Drug Administration clearance, which should provide healthy future growth for the segment.
Chief among those is its Amplicor HPV test, which would be the second FDA-cleared molecular diagnostic test for human papillomavirus. If approved, it would join Qiagen’s HPV test, which that firm gained through its recent $1.6 billion acquisition of Digene (see BioCommerce Week 6/6/2007), on the US market. Roche also has a genotyping HPV test awaiting FDA clearance, as well as a molecular test for hepatitis C virus and a multiplex test for HIV/HCV/HBV.
Roche’s Professional Diagnostics business had 7 percent sales growth for the quarter to CHF 1 billion, while sales of its Diabetes Care products were flat year over year at CHF 768 million.
Roche officials said that virology diagnostics, “one of the business area’s largest segments,” rose 3 percent, driven by placements of the automated Cobas AmpliPrep/Cobas TaqMan platform in European, Asia-Pacific, and US markets.
Meantime, Roche Applied Science posted an 11 percent increase in third-quarter sales to CHF 167 million. The segment's main growth drivers were the LightCycler 480 and Genome Sequencer 20 systems and research reagents, the firm said.
Roche also noted that the Japanese Red Cross has renewed a pact to use its PCR-based testing devices to screen the nation’s supply of donated blood for HIV and hepatitis B and C.
Roche said it will supply next-generation nucleic acid-screening products to accommodate Japan’s 5 million annual blood donations. The tools will comprise Roche’s Cobas 401 and its TaqScreen MPX test, which can detect HIV-1, HIV-2, and hepatitis B and C viruses.
The company said in 2008 the 401 and the TaqScreen MPX will replace its AmpliNAT multiplex test, which has been in routine use in three Japanese Red Cross testing centers since 1999.
Financial terms of the agreement were not released, but Schwan said during the conference call that it is an important agreement for Roche and the company had beat out a bid from Chiron for the contract.
In addition, Roche said that the US Food and Drug Administration had cleared the firm’s TaqScreen West Nile Virus test for blood screening.
Schwan said he expects the diagnostics business to outperform the industry’s average growth this year.
“As to the acquisitions, we are on track,” said Schwan. “We completed NimbleGen in August and entered the research microarray market, and we have extended the tender offer for Ventana until the beginning of November.”
Roche acquired privately held NimbleGen Systems for $272.5 million, which is 20 times its 2006 revenues (see BioCommerce Week 6/20/2007). Roche officials said during the call that the acquisition completes the firm’s offering in the genomics life science market.
Roche also is pressing ahead with its $3 billion hostile bid to acquire Ventana Medical Systems, despite being rebuffed by Ventana’s management (see BioCommerce Week 7/25/2007). Roche has extended its offer to Ventana’s shareholders until Nov. 1, but Ventana’s management has called the bid “grossly inadequate.”
The acquisition of NimbleGen and the $154.9 million purchase of next-generation DNA sequencing firm 454 Life Sciences earlier this year (see BioCommerce Week 4/4/2007), as well as the proposed acquisition of Ventana, were intended to increase the firm’s presence in the life sciences research field and forge closer ties between its diagnostics and pharmaceutical-development business.
Two papers published in academic journals this week showed how a combination of Roche’s newly acquired technologies could improve upon PCR for sample preparation in large-scale genome resequencing projects.
The papers were published in the advanced online edition of Nature Methods and describe similar methods based on NimbleGen's microarray technology for capturing selected regions of the genome for high-throughput resequencing. One of the papers discussed the use of NimbleGen arrays for DNA sample preparation prior to resequencing on 454's FLX instrument.

Stan Rose, president of Roche NimbleGen, told BioCommerce Week sister publication BioArray News this week that NimbleGen scientists are “collaborating closely” with 454 on sequence capture technology development and optimization for 454 sequencing.

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