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Roche Diagnostics Prepares for 'Biggest Launch Year Ever' as Revenues Fall 20 Percent in 2023

NEW YORK – Roche Diagnostics is preparing for a spate of new product launches in 2024 that will make it the "biggest launch year for diagnostics in the history of this division," Roche CEO Thomas Schinecker said on a conference call to discuss the firm's 2023 financial results.

Although the company saw a 20 percent decline in diagnostics sales year over year due to the expected decrease in COVID-19 testing-related sales, the base business rose 7 percent and the firm is preparing for launches in a variety of its segments, including core lab and molecular lab.

Roche Diagnostics CEO Matt Sause touted multiple launches in 2024, including the firm's i601 fully automated mass spectrometry system that will integrate with Roche's existing serum work area instrumentation to "make us even more competitive in that core lab space."

The company is also planning to launch its Cobas c703 high-throughput solution for clinical chemistry and its Cobas ISE Neo solution to "keep our strong momentum in the core lab," Sause said.

In the US, Roche plans to launch its Liat multiplex molecular respiratory virus test that detects influenza A/B, COVID-19, and respiratory syncytial virus, which Sause said will be a "very competitive launch." It also plans to launch a respiratory flex panel on the Cobas 5800, 6800, and 8800 molecular instruments that will use its new Temperature Assisted Generation of Signal chemistry to detect a broad panel of respiratory pathogens.

In addition, the firm will launch a second version of its high-throughput Cobas 6800/8800 instruments that will include additional functionality and "competitive features," Sause said.

Roche also expects to launch a molecular test for malaria that will detect all five plasmodium species that occur in humans and will be utilized for screening of blood donors, blood products, organs, and tissues.

As for COVID-19, Sause said the company had a $300 million government order of rapid antigen tests in the fourth quarter but is not expecting additional government orders or significant antigen testing sales. It believes the vast majority of COVID-19 testing will come from PCR-based multiplex tests, he added.

Overall, Roche reported CHF 58.72 billion ($67.99 billion) in revenues for the year, down 7 percent from CHF 63.28 billion in 2022 but up 1 percent at constant exchange rates, the firm said. Excluding COVID-19 products, sales increased by 8 percent at constant exchange rates.

Schinecker noted that, although headwinds like COVID-19 and biosimilar erosion were about CHF 6.4 billion — more than 10 percent of sales — in 2023, those headwinds are expected to decrease in 2024 and the strength of the underlying business will "shine through."

The pharmaceuticals division had CHF 44.61 billion in 2023 revenues, down 2 percent from CHF 45.55 billion in 2022 but up 6 percent at constant exchange rates. Excluding the COVID-19 medicine Ronapreve, sales rose by 9 percent.

Meanwhile, Roche Diagnostics had sales of CHF 14.10 billion in 2023, down 20 percent from CHF 17.73 billion in 2022 and 13 percent at constant exchange rates. The division's base business was up 7 percent at constant exchange rates, Roche said. COVID-19 testing sales were CHF 800 million compared to CHF 4.1 billion in 2022.

The base business growth was driven by immunodiagnostic products, including cardiac tests, clinical chemistry tests, and advanced staining, Roche said.

For the fourth quarter, diagnostics sales fell 5 percent to CHF 3.67 billion from CHF 3.88 billion in the same quarter in 2022. Total sales in the fourth quarter of 2023 were CHF 14.66 billion, down from CHF 16.24 billion in Q4 2022.

Within the diagnostics division, Molecular Lab revenues fell 36 percent to CHF 2.22 billion for full-year 2023 from CHF 3.45 billion in 2022 and made up 16 percent of diagnostics sales. Cervical cancer testing was up 23 percent, blood screening rose 13 percent, and the core virology business increased 6 percent, Sause noted.

Sause also mentioned the new LightCycler Pro, which launched in November 2023. The instrument will be a "very highly competitive entry in the real-time PCR marketplace," he said.

Core Lab revenues ticked down slightly to CHF 7.75 billion from CHF 7.78 billion in 2022 and contributing 55 percent to diagnostics sales. The segment saw a particularly strong performance in its cardiac testing business, Sause added. Both immunodiagnostics and clinical chemistry grew 10 percent year over year.

Point of Care revenues saw a large decline in 2023, dropping 62 percent to CHF 1.38 billion from CHF 3.59 billion in the previous year and contributing 10 percent to diagnostics division sales. Point-of-care immunodiagnostics declined 75 percent, while point-of-care molecular sales declined 42 percent. Excluding COVID-19, the division was up 4 percent driven by a strong respiratory season in the Northern hemisphere, Sause noted.

Diabetes Care sales fell 14 percent in 2023 to CHF 1.37 billion from CHF 1.60 billion in 2022, contributing nearly 10 percent to diagnostics sales, and Pathology Lab revenues grew 5 percent to CHF 1.39 billion in 2023 from 1.32 billion in 2022 and contributed 10 percent to diagnostics sales. The diabetes decline was driven by the market evolution from traditional to continuous glucose monitoring, Sause said, but Roche plans to launch its own continuous glucose monitoring solution in 2024 and expects "to change this trajectory in the future."

Sause said the firm expects mid- to high-single digit growth for diagnostics in 2024.

Roche CFO Alan Hippe also noted that its Foundation Medicine subsidiary has moved from the pharmaceutical division to the diagnostics division, effective Jan. 1. The move will not change the independence of Foundation and will have no impact on the sales, net income, EPS, or operating profit of the group as a whole, he added.

Roche's 2023 net income was CHF 12.36 billion, with core EPS of CHF 18.57 per share, compared to CHF 13.53 billion, with core EPS of CHF 20.30 per share, in 2022.

Schinecker said in a statement that the firm exceeded its guidance for 2023 and noted that the "significant appreciation of the Swiss franc versus most currencies strongly impacted results when reported in Swiss francs."

As of Dec. 31, Roche had CHF 5.38 billion in cash and cash equivalents.

For 2024, the company expects sales to grow in the mid-single digit range at constant exchange rates. Core earnings per share are expected to develop broadly in line with sales growth at constant exchange rates, excluding the impact from resolution of tax disputes in 2023. Schinecker noted that the firm believes the first quarter of 2024 will be the last time there will be a major impact from COVID-19.