The Roche Group's pharmaceuticals and diagnostics divisions both achieved above-market growth in the first half of 2008. Group sales for the period incrased by 4 per cent to 22 billion Swiss francs. Excluding Tamiflu pandemic sales to governments and corporations, total revenues rose 10 per cent. The rise in the Swiss franc against most currencies resulted in Swiss franc growth being 8 percentage points lower than growth in local currencies.
Excluding pandemic Tamiflu, the pharmaceuticals division's sales grew 9 per cent to 17.2 billion Swiss francs, more than twice as fast as the global market. Total divisional sales rose 3 per cent. Sales growth was fuelled primarily by continued strong demand for key medicines in the division's oncology, metabolism/bone, inflammation, transplantation and virology portfolios. Oncology sales increased significantly again, advancing 15 per cent led by Avastin, MabThera/Rituxan, Herceptin, Tarceva and Xeloda.
The diagnostics division's sales reached 4.7 billion Swiss francs, advancing 11 per cent. Immunochemistry and DNA sequencing products remained major growth drivers for the division. In the five months from the date of the Ventana acquisition in February to 30 June, the new Tissue Diagnostics business recorded sales of 164 million Swiss francs.
The Roche Group's net income for the period was 5.7 billion Swiss francs, with net income as a percentage of sales increasing to 26.0 per cent. The Group's financial condition remains strong. The ratio of equity (including non-controlling interests) to total assets is now 70 per cent and 84 per cent of total assets are financed long term.
Commenting on the Group's performance in the first half of 2008, Roche CEO Severin Schwan said: 'Roche posted a very good result in the first half of 2008. Sales of our cancer portfolio and other key products in pharma und diagnostics are the main contributors to the strong performance. Particularly the emerging markets record a significant growth. We could also maintain our high profitability despite significantly lower Tamiflu pandemic sales, the impact from recent diagnostics acquisitions and considerably increased investments in R&D.'
Operating profit before exceptional items increased 2 per cent for the Group, to 7.0 billion Swiss francs. The corresponding margin declined 0.8 percentage points to 32.0 per cent. With operating free cash flow at 4.8 billion Swiss francs, cash generation by the Group's underlying business remains strong.
The pharmaceuticals division posted an operating profit of 6.6 billion Swiss francs before exceptional items. The corresponding margin rose 1.9 percentage points for the period to 38.2 per cent, despite sharply lower Tamiflu pandemic sales and significantly increased R&D expenditure.
Roche reaffirms its targets for full-year 2008. Excluding Tamiflu pandemic sales to governments and corporations, Roche anticipates a high single-digit increase in Group sales, with above-market sales growth in both divisions. Despite considerably lower Tamiflu pandemic sales and significantly higher R&D spending, Roche is aiming for 2008 Core EPS at constant exchange rates to remain at least in line with the record level achieved in 2007.