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Roche Diagnostics Sees Automation, New Assays as Growth Drivers as COVID Winds Down


This story has been corrected to note that while overall diagnostic revenues were down in all geographies, base business revenues were up in all geographies. We apologize for the error.

NEW YORK – As COVID-19-related sales continue to wind down, Roche Diagnostics is looking to increased automation and new assays to drive growth in its base testing business.

On a conference call Thursday following release of the company's Q3 2023 financial results, Roche Diagnostics CEO Matt Sause said that with several recent and future product releases, the firm aims to address staffing and wage pressures many laboratories have faced coming out of the pandemic.

"Creating efficiency in the laboratory and workflow automation is a critical success factor for our business in the central lab," he said, highlighting the US launch this week of Roche's Cobas connection modules (CCM) Vertical, which allows patient samples to be transported vertically, such as between different floors of a facility.

Sause said the system, which can process up to 2,500 samples per hour, expands the types of facilities in which the company can implement its automation systems and "make [Roche] competitive anywhere automation is a requirement."

The first CCM Vertical system is scheduled to begin operations at Vanderbilt University Medical Center in early 2024.

Sause also highlighted the company's Cobas C 703 and Cobas ISE Neo systems, which are slated for launch in the second quarter of 2024. According to Roche, the C 703 and ISE Neo instruments can run, respectively, up to 2,000 and 1,800 tests per hour, which Sause characterized as the highest level of "throughput and automation in the industry."

He added that the instruments' "smart hardware design reduces maintenance to once a month and features simplified serviceability with 56 percent less calibration events than our current analyzers."

"This allows laboratories to address labor shortages, increase efficiency, and improve output," he said.

Sause also provided an update on Roche's plans to integrate a mass spectrometer into its Cobas Pro Integrated Solutions analyzer, noting that the company remains confident that it will launch the instrument in the second half of 2024.

Regarding new test content, Sause cited Roche's Elecsys IL-6 immunoassay, which the company said Wednesday received IVDR certification for use in diagnosis of neonatal sepsis.

During the earnings call, Roche Group CEO Thomas Schinecker noted that Roche expects a CHF 4.5 billion decline in COVID-19 testing revenues in 2023. It had previously projected a CHF 5.0 billion decline. He added that the company expects the negative impact of COVID-19 testing declines will last only another two quarters.

"We're now at a very low level of COVID-19 sales," he said, adding that the company expects the performance of its base business will "shine through as soon as we have those two quarters behind us."

In the first nine months of 2023, diagnostics division revenues fell 25 percent to CHF 10.43 billion ($11.64 billion) compared to CHF 13.85 billion a year ago, or 18 percent at constant exchange rates (CER). Roche's total nine-month revenues fell 6 percent to CHF 44.05 billion ($49.15 billion) from CHF 47.04 billion during the same period in 2022. At CER, total revenues for the period rose 1 percent. Its pharmaceuticals division revenues rose 1 percent to CHF 33.62 billion from CHF 33.19 billion for the first nine months of 2022.

For the third quarter of 2023, Roche Diagnostics reported that its revenues fell 5 percent year over year at CER to CHF 3.33 billion from CHF 3.90 billion. Excluding COVID-19 sales, the base business grew by 7 percent in the quarter.

Within the diagnostics division, for the first nine months of the year Roche's core lab business revenues were flat on a reported basis at CHF 5.84 billion versus CHF 5.83 billion a year ago. Its molecular diagnostics business revenues were down 40 percent to CHF 1.65 billion from CHF 2.74 billion, while its pathology lab revenues were up 7 percent to CHF 1.05 billion from CHF 975 million a year ago. Diabetes care revenues were down 15 percent to CHF 1.04 billion from CHF 1.22 billion. Point-of-care revenues were down 72 percent to CHF 865 million from CHF 3.09 billion.

Core lab sales were driven by immunodiagnostics and clinical chemistry products, while the decline in the company's molecular diagnostics business was driven by an 88 percent drop in COVID-19-related sales, Roche said. That was partially offset by a 25 percent jump in cervical cancer screening revenues and a 14 percent jump in blood screening sales.

Pathology lab sales were driven by growth in the advanced staining and companion diagnostics businesses, while the decline in diabetes care revenue was largely driven by a drop in traditional glucose monitoring revenues as more patients moved to continuous monitoring. The decline in Roche’s point-of-care business was due to a drop in immunodiagnostics, which were down 88 percent, and molecular sales, which were down 42 percent year over year.

The company saw sales declines across all regions. Excluding COVID-19-related sales, base business revenues were up in all geographies.

Roche confirmed its previous guidance for low-single-digit percent sales decline at constant exchange rates for full-year 2023, with Schinecker saying that the company expects to be at “the upper end” of its guidance.

The company said core earnings per share are expected to develop in line with the sales decline at constant exchange rates.