Note: This story has been updated with comments from Roche's conference call to discuss its financial results.
NEW YORK – Impacts from China's volume-based procurement program and other healthcare pricing reforms led to flat Q1 diagnostics revenues year over year for Roche, company executives said Thursday.
Roche reported its diagnostics sales in the first quarter of 2025 came in at CHF 3.49 billion ($4.23 billion).
On a conference call to discuss the firm's Q1 financial results, Roche CEO Thomas Schinecker noted that the pricing reforms not only impacted Roche but also affected the entire diagnostics industry in China.
Roche Diagnostics CEO Matt Sause added that excluding China, diagnostic sales were up roughly 5 percent year over year. The firm saw a 15 percent revenue decline in the Asia-Pacific region that was heavily impacted by China, which is expected to continue throughout the year and will have a corresponding impact on profitability, he noted.
Sales in China itself were down 23 percent, and Roche's team in China is implementing cost discipline measures to offset the impact of the government's pricing reforms. However, the company had a "strong quarter" of instrument placements in China, and it remains a "critical market for us," Sause said.
Core lab revenues, which comprised 55 percent of total diagnostics sales, were down 1 percent to CHF 1.90 billion from CHF 1.93 billion in Q1. The core laboratory business was particularly affected by the reimbursement reductions and VBP program in China, offset partially by growth in the clinical chemistry business. Excluding China, the core lab business grew 8 percent.
Molecular lab sales rose 4 percent to CHF 634 million from CHF 611 million in 2024 and contributed 18 percent of total diagnostics sales. Sause noted that growth was spurred on by the blood screening segment, but the firm saw a 5 percent decline in the infectious disease business as HIV testing in Africa decreased as a result of paused USAID funding for testing. Excluding the HIV testing effect, molecular lab sales were up 6 percent.
Sales in the pathology lab segment grew 12 percent to CHF 417 million from CHF 372 million in 2024 and accounted for 12 percent of total diagnostics sales.
Roche's near-patient care business, which accounted for 15 percent of diagnostics sales, fell 6 percent to CHF 536 million from CHF 569 million last year. The decline was partially due to decreases in the blood glucose monitoring business as a result of the market shift to continuous glucose monitoring, Sause said. However, Roche is confident that its own continuous glucose monitoring solution and the launch of its Cobas Lumira point-of-care platform will drive growth for the near-patient care segment in the future, he added. Roche does not anticipate a material contribution from continuous glucose monitoring in 2025 but is scaling up manufacturing.
Sause noted that during Q1 the diagnostics division achieved two product launches of the planned 14 for the year. The company launched two Cobas Liat sexually transmitted infection tests and the acute coronary syndrome diagnostic algorithm during the quarter.
Overall, Roche posted CHF 15.44 billion in sales in the quarter, up 7 percent from CHF 14.40 billion in Q1 2024. At constant exchange rates, sales rose 6 percent year over year.
The pharmaceutical division had CHF 11.95 billion in Q1 sales, up 9 percent from CHF 10.92 billion in Q1 2024. At constant exchange rates, sales rose 8 percent year over year.
Earlier this week, the company announced that it intends to invest $50 billion in the next five years into expanding its footprint in the US. The money will be used in part for a new research and development center that will act as a hub for the firm's cardiovascular, renal, and metabolism programs in Massachusetts. Roche chose the Boston area because the firm "didn't have [an R&D] presence on the East Coast," Schinecker said.
The investment will also be used for a gene therapy manufacturing facility in Pennsylvania and expanded and upgraded manufacturing, distribution, and R&D sites in Kentucky, Indiana, New Jersey, Oregon, Arizona, and California for its medicines and diagnostics portfolio. Schinecker noted that the firm has been in negotiations with multiple different states for a new manufacturing site for peptides.
Schinecker said that it has always been Roche's strategy to build out its full value chain in the company's key markets, including the US, Europe, Japan, and China, to "be present where the patients are." The investment does not change the company's available capital expenditures and will not lead to a change in R&D spending, which is expected to remain flat in 2025. The firm will continue to remain "disciplined when it comes to our spending," he said.
Schinecker noted that the company has also put in mitigation measures to protect against the tariffs announced by President Donald Trump earlier this year. Roche does not expect much of an effect from tariffs in the first half of the year because it has shifted some inventories and increased manufacturing in the US and expects its measures "should mitigate a significant impact already this year," he said.
Roche confirmed its full-year outlook with sales expected to increase in the mid-single-digit percent range at constant exchange rates. The firm added that EPS for full-year 2025 is expected to increase in the high-single-digit percent range.