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Roche Diagnostics Q1 Sales Up 22 Percent

NEW YORK – Roche on Monday said its diagnostics sales during the first quarter grew 22 percent year over year.

Roche as a whole, including both its pharmaceutical and diagnostics divisions, had CHF 16.45 billion ($17.16 billion) in sales in the quarter, up 10 percent from CHF 14.93 billion in Q1 of 2021. At constant exchange rates, sales increased 11 percent year over year.

The company's diagnostics division reported sales of CHF 5.29 billion for Q1, up from CHF 4.33 billion in the year-ago quarter and driven by momentum in the base business combined with continued demand for COVID-19 tests. The firm saw CHF 1.9 billion in COVID-19-related sales. At constant exchange rates, diagnostics sales increased 24 percent year over year, the Basel, Switzerland-based firm said. On a conference call to discuss Roche's financial results, CEO of Roche Diagnostics Thomas Schinecker said that the base business grew in the double-digit range.

The pharmaceutical division had CHF 11.16 billion in Q1 sales, up 5 percent from CHF 10.60 billion in Q1 of 2021.

In diagnostics, core lab revenues, which contributed 36 percent to total diagnostics sales, increased 6 percent to CHF 1.90 billion from CHF 1.79 billion, driven by an 8 percent contribution from the immunodiagnostics business, which grew by 11 percent and was driven by demand for cardiac tests. The clinical chemistry business was up 8 percent.

Molecular lab sales grew 19 percent to CHF 1.19 billion from CHF 996 million in 2021 and contributed 23 percent of total diagnostics sales. The division's growth was led by the virology business, which was up 31 percent, with particular strength in the Asia-Pacific and Europe, Middle East, and Africa regions.

Schinecker noted that the installed base of Cobas 6800/8800 molecular instruments was 750 at the start of the pandemic but has grown to more than 1,900. The firm also expects to see more than 500 placements this year for its new lower-throughput Cobas 5800 molecular system.

Roche's diabetes care business dropped 9 percent to CHF 417 million from CHF 460 million in the year-ago quarter as a result of the "continued contraction of the blood glucose monitoring market due to people switching to glucose monitoring systems." The contraction was slightly offset by higher demand in emerging markets. The firm added that there was a base effect from the resolution of a rebate dispute in Q1 2021 and excluding that, sales increased by 1 percent.

Sales in the pathology lab segment increased 13 percent to CHF 318 million from CHF 282 million in 2021 resulting from 19 percent growth in the companion diagnostics and 14 percent growth in the advanced staining businesses.

Point-of-care testing sales contributed 28 percent to diagnostics sales and grew 82 percent to CHF 1.47 billion from CHF 806 million last year, driven mainly by the SARS-CoV-2 Rapid Antigen Test. POC immunodiagnostics sales more than doubled year over year, while POC molecular sales were up 83 percent.

Schinecker said that the rapid antigen testing business was "pretty volatile" and that there would likely be fewer orders during the summer but added that the PCR business was less volatile, although the company does foresee a decline in COVID-19 testing.

Schinecker also said that lockdowns in China as a result of the COVID-19 pandemic would have an impact on diagnostics sales, but that the impact would be nowhere near the impact seen in March and April of 2020. He added that Roche believes it can compensate for those effects but that it needs to see how things continue to develop.

Roche confirmed its full-year outlook with sales expected to be stable or grow in the low-single digit range and core EPS growth in the low- to mid-single digit range at constant exchange rates.

The firm expects a "significant decline" in COVID-19-related testing for the rest of the year and anticipates sales of COVID-19 medicines and diagnostics to decrease by about CHF 2 billion to approximately CHF 5 billion. Excluding those impacts, total sales are expected to grow in the high-single digit range.

Roche CEO Severin Schwan said on the call that the full-year guidance does not include the potential for an uptick in COVID-19 testing demand during the winter respiratory season or during another surge. Schinecker added that it was possible there would be new variants or the reemergence of older variants that could drive testing increases but there was no way to know for sure.

Schwan also noted that, in terms of M&A, many companies have been interested in working with Roche because the route for going public is more limited, but that there has not been much change in Roche's overall strategy.

In a separate announcement, Belgium-based software company UgenTec said that its FastFinder software would be added to Roche's Flow system for laboratory workflow standardization and data automation. The solution connects and manages the process, including primary sample handling, nucleic acid purification, PCR setup, and the qPCR instrument. UgenTec said its FastFinder software, which includes workflow, artificial intelligence, genotyping, and quality control modules, would likely be an optional offering, although the final decision is up to Roche.