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Roche Diagnostics 2017 Revenues Rise 5 Percent Boosted by Immunodiagnostics, Tissue Dx Growth

NEW YORK (GenomeWeb) – Roche today reported that its 2017 diagnostics revenues grew 5 percent year over year, driven by strength in immunodiagnostic product sales within its centralized and point-of-care solutions business.

For the year ended Dec. 31, Roche's Diagnostics division reported revenues of CHF 12.08 billion ($12.93 billion), up from CHF 11.47 billion in the prior year. The diagnostics division reported fourth quarter revenues of CHF 3.28 billion, up 4 percent from CHF 3.11 billion in Q4 2016.

Roche reported overall revenues of CHF 53.30 billion in 2017, up 5 percent from CHF 50.58 billion in 2016.

"In 2017, we made significant progress with good growth in both divisions driven by newly launched medicines and tests," Roche CEO Severin Schwan said in a statement.

Within Roche Diagnostics, centralized and point-of-care solutions revenues rose 7 percent to CHF 7.18 billion from CHF 6.70 billion in the prior year. Integrated serum work area solutions drove growth, with immunodiagnostics revenues increasing 13 percent and clinical chemistry revenues growing 3 percent.

Roche said that in 2017, within its centralized and point-of-care solutions business, it finalized a serology-screening portfolio for the Cobas e 801, enabling labs to cover the full spectrum of serology testing on fully automated instrumentation. In all, 900 Cobas e 801 modules have been placed in the market since its introduction, the firm said.

Roche's molecular diagnostics product revenues increased 4 percent to CHF 1.92 billion from CHF 1.85 billion in 2016. Human papillomavirus screening revenues rose 15 percent and blood screening revenues were up 1 percent year over year in this segment. In virology products, which also are part of Roche's molecular diagnostics business, sales growth was flat, and strong growth in HIV virology testing compensated for declining sales of HCV tests that had enjoyed strong sales in 2016.

The firm's tissue diagnostics revenues grew 11 percent to CHF 1.02 billion from CHF 914 million in 2016, driven by growth in advanced staining, where revenues were up 11 percent, and primary staining, where revenues rose 12 percent. Within the tissue diagnostics business, companion diagnostics revenues grew 13 percent.

Roche said that its diabetes care revenues were down 3 percent year over year to CHF 1.97 billion from CHF 2.02 billion in 2016, reflecting challenging market conditions, particularly in North America.

Regionally, Asia-Pacific sales rose 15 percent overall and China sales grew 21 percent for the Diagnostics division. Sales increased 3 percent in EMEA and 12 percent in Latin America, but were flat in North America.

Roland Diggelmann, CEO of Roche Diagnostics, said during a webcast of the firm's earnings presentation that 2017 was the first year in which the diagnostics division exceeded CHF 12 billion in total sales. The firm's clinical diagnostics business achieved "above market" growth at 7 percent year over year, he said.

Diggelmann said that Roche Diagnostics continues to see pressure from reimbursement and pricing in its diabetes testing business, and US Centers for Medicare & Medicaid Services reimbursement cuts in 2016 are spilling over into private payor markets, which is impacting performance.

Although virology testing sales showed flat growth in 2017, the advent of direct anti-viral analogs drove "a lot of HCV testing towards" Roche in 2016, he said, and as a result, the firm expected that 2017 would become a rebasing year.

Overall, Roche reported net income of CHF 8.83 billion, down 9 percent from CHF 9.73 billion in 2016, due to impairments of goodwill and intangible assets. Core earnings per share were CHF 15.34, up 6 percent from CHF 14.53 in 2016.

In 2017, Roche's Pharmaceutical division revenues grew 5 percent to CHF 41.22 billion from CHF 39.10 billion.

During the webcast, Schwan said that the firm would see benefits from changes in US tax legislation, such as a contribution to core earnings growth in 2018. Roche noted that its core corporate tax percentage is expected to drop into the low twenties from mid-to-high twenties previously.

The firm said that in 2018 it expects overall sales to grow in the flat-to-low single digits, and it expects that core earnings per share will grow at high-single digits. The firm expects that excluding the effects of changes in US tax legislation, core earnings per share will grow broadly in line with sales.