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Roche Diagnostics Revenues Essentially Flat in 2022

NEW YORK – Roche on Thursday reported that sales in its diagnostics division for full-year 2022 were essentially flat as demand for COVID-19 tests in the second half of the year declined.

Overall, Roche reported CHF 63.28 billion ($69.63 billion) in revenues for the year, up 1 percent from CHF 62.80 billion in 2021 and up 2 percent at constant exchange rates, the firm said.

The pharmaceuticals division had CHF 45.55 billion in 2022 revenues, up 1 percent from CHF 45.04 billion in 2021.

Meanwhile, Roche Diagnostics had sales of CHF 17.73 billion in 2022, down slightly from CHF 17.76 billion in 2021 but up 3 percent at constant exchange rates. The division's base business was up 7 percent at constant exchange rates, and growth was mainly driven by immunodiagnostic products, Roche said. COVID-19 testing sales were CHF 4.1 billion, compared to CHF 4.7 billion in 2021. On a conference call to discuss the financial results, Roche Diagnostics CEO Matt Sause said that COVID-19 testing will no longer be a driver of growth going forward.

For the fourth quarter, diagnostics sales fell 13 percent to CHF 3.88 billion from CHF 4.46 billion in the same quarter in 2021. Sause noted that there was a 58 percent decline in COVID-19 testing sales in the fourth quarter of 2022 compared to the previous year and that the company expects a continual decline in COVID-19 testing as the disease moves to an endemic state.

Within the diagnostics division, Molecular Lab revenues fell 17 percent to CHF 3.45 billion in 2022 from CHF 4.17 billion in 2021 and made up 20 percent of diagnostics sales. Revenues declined as a result of lower COVID-19-related sales in North America and Europe, the Middle East, and Africa, although the decline was partially offset by growth in the base business across the portfolio, Roche said.

Sause said that Roche significantly expanded its installed base of automated molecular diagnostic instruments during the pandemic and that those placements will contribute to future growth of the company's base business.

Core Lab revenues rose 3 percent in 2022 to CHF 7.78 billion from CHF 7.56 billion in 2021, contributing 44 percent to diagnostics sales. Immunoassays, including cardiac and oncology tests, and clinical chemistry tests were the main growth drivers.

Point of Care revenues rose 15 percent during the year to CHF 3.59 billion from CHF 3.13 billion in the previous year and contributed nearly 20 percent to diagnostics division sales. Revenues were driven largely by the firm's SARS-CoV-2 Rapid Antigen test, while demand for the Cobas SARS-CoV-2 and Influenza A/B tests also grew, Roche said. The segment's base business growth was driven by the strong flu season in the Northern Hemisphere, Sause said.

Diabetes Care sales fell 5 percent in 2022 to CHF 1.60 billion, from CHF 1.69 billion in 2021, contributing 9 percent to diagnostics sales, and Pathology Lab revenues grew 10 percent to CHF 1.32 billion last year from 1.20 billion in 2021 and contributed 7 percent to diagnostics sales. Pathology sales increased as a result of growth in the advanced staining and companion diagnostics segments.

Sause said that the launches of the mid- and low-throughput Cobas Pure and Cobas 5800 instruments in 2022 allow Roche to continue to grow its market share in middle- and low-income countries, where the level of automation meets local customers' needs.

Sause also highlighted upcoming product launches in the diagnostics segment, noting that the firm expects to launch the point-of-care Cobas Pulse instrument for hospital blood glucose monitoring in the US, as well as three tests in its hepatitis portfolio. He also noted that the company plans to expand its digital solutions offerings.

Roche's 2022 net income was CHF 13.53 billion, with core EPS of CHF 20.30 per share, compared to CHF 14.94 billion, with core EPS of CHF 19.81 per share, in 2021.

As of Dec. 31, Roche had CHF 4.99 billion in cash and cash equivalents.

For 2023, the company expects sales to decline in the low-single-digit range at constant exchange rates due to a decline in COVID-19 sales of about CHF 5 billion, which CFO Alan Hippe said represents about 8 percent of the company's sales. Excluding COVID-19 sales, the firm anticipates solid underlying sales growth in both the pharmaceutical and diagnostics divisions. Core earnings per share are targeted to develop in line with the sales decline, also at constant exchange rates.

Sause added that the general diagnostic market is growing in the mid-single-digit range and that Roche Diagnostics expects to outpace that and grow in the mid- to high-single-digit range in 2023.

Roche announced separately on Thursday that Teresa Graham, Roche Pharmaceuticals' current head of global product strategy, will take over as CEO for the division, effective March 2023. She will also become a member of the corporate executive committee. Graham has served in her current role since 2019 and previously served as senior director for field reimbursement management, lifecycle leader, and marketing director for Genentech's Actemra business.

In addition, Levi Garraway, the company's chief medical officer and executive VP for global product development, will become a member of the enlarged corporate executive committee in March. Before joining Roche in 2019, he was director of the Joint Center for Cancer Precision Medicine across multiple Harvard teaching hospitals, including the Dana-Farber Cancer Institute, Brigham and Women's Hospital, Boston Children's Hospital, and the Broad Institute.