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Roche Diagnostics Q1 Sales Climb 50 Percent

NEW YORK – Roche on Wednesday said its diagnostics sales during the first quarter 2021 grew 50 percent year over year, in part on demand for the company's COVID-19 products.

Roche as a whole, including both its pharmaceutical and diagnostics divisions, had CHF 14.93 billion ($16.26 billion) in sales in the quarter, down 1 percent from CHF 15.14 billion in Q1 of 2020 as a result of the appreciation of the Swiss franc. At constant exchange rates, sales increased 3 percent year over year.

The company's diagnostics division reported sales of CHF 4.33 billion for Q1, up from CHF 2.88 billion in the year-ago quarter. At constant exchange rates, diagnostics sales increased 55 percent year over year, the Basel, Switzerland-based firm said. The pharmaceutical division had CHF 10.60 billion in Q1 sales, down 14 percent from CHF 12.26 billion in Q1 of 2020. The firm saw $1.2 billion in COVID-19-related sales.

In diagnostics, core lab revenues, which contributed 41 percent to total diagnostics sales, increased 28 percent to CHF 1.77 billion from CHF 1.38 billion, driven by a 40 percent increase in the immunodiagnostics business.

Molecular lab sales grew 86 percent to CHF 1.11 billion from CHF 614 million in 2020 and contributed 26 percent of total diagnostics sales. The growth was driven by virology sales, mostly high-throughput PCR SARS-CoV-2 tests, the company said. During the quarter, Roche launched a research-use SARS-CoV-2 Variant Set 1 test for use on the Cobas 6800/8800 system to monitor coronavirus mutations by detecting key spike mutations associated with increased human-to-human transmission, it added.

In a conference call to discuss the firm's financial results, Roche Diagnostics CEO Thomas Schinecker said he expects growth in the molecular business in the second quarter, but because the second quarter of 2020 was already showing positive impacts from SARS-CoV-2 molecular PCR tests, the growth would probably not be at the same levels as Q1 2021 sales growth.

Roche's diabetes care business was up 13 percent to CHF 460 million from CHF 425 million in the year-ago quarter, driven by the blood glucose monitoring business, which offset a decline in insulin delivery systems. The company noted that demand for digital diabetes management solutions remained solid.

Sales in the pathology lab segment increased 9 percent to CHF 282 million from CHF 270 million in 2020 as a result of growth in companion diagnostics and advanced staining instruments sales.

Point-of-care testing sales contributed 17 percent to diagnostics sales and nearly quadrupled to CHF 716 million from CHF 190 million last year due to the company's point-of-care COVID-19 testing portfolio. Most recently, Roche's SARS-CoV-2 Rapid Antigen Test Nasal received CE marking in February, along with special approval for at-home self-testing in Germany.

Schinecker said that as the pandemic has progressed, he has seen people move away from research platforms toward highly automated platforms as more testing has become available and health systems try to consolidate their instruments. Roche is particularly well prepared for that shift because it has "the most automated platform on the market," he said.

The company also said it has continued to ramp up its production capacity for COVID-19-related diagnostics and medicines, and Schinecker noted the Cobas 6800/8800 products, in particular, have been a manufacturing focus.

Although there has been some drop in demand for SARS-CoV-2 testing in the US, many other countries "won't have achieved herd immunity" and will still have a strong demand for testing. In addition, many school children may not be vaccinated once the school year starts in September, adding to the testing demand and providing opportunities for Roche in the second half of the year, Schinecker said.

Many experts have compared the likely future of COVID-19 testing to that of flu testing, a seasonal and endemic market. Schinecker said that the flu market was previously predominantly in the US, since many other countries don't have the same demand, but that other countries will have a demand for COVID-19 testing so its sales could be higher than demand for flu testing globally.

Roche CEO Severin Schwan did note that there will be a decline of COVID-19 testing in diagnostics and that the company would have some headwinds as the pandemic enters a different stage in which vaccines are expected to reduce the number of cases.

Beyond COVID-19, Roche received CE marking for its automated Cobas Pure Integrated Solutions analyzer and for eight new configurations of its Cobas Pro Integrated Solutions analyzer that have upped the instrument's testing capacity.

Two Elecsys immunoassays also received CE marking during the quarter, one for Epstein-Barr virus and one for anti-p53 autoantibodies, which helps diagnose certain cancers.

In March, Roche announced it would acquire GenMark Diagnostics for $1.8 billion. Schwan said in a statement that the "upcoming acquisition of GenMark underlines our commitment to help control infectious disease and antibiotic resistance." The deal is expected to close in the second quarter of 2021. Schinecker said GenMark's ePlex analyzer would complement Roche's portfolio and fill an instrument gap for Roche. The analyzer will also allow for earlier detection, which is shown to improve outcomes, he said.

Schinecker also echoed Schwan's statements on the use of the analyzer for antibiotic resistance, saying that with the ePlex platform Roche can support antibiotic stewardship. He warned that one future pandemic that will come will be the result of antibiotic resistance.

GenMark's molecular ePlex analyzer supports multiplex testing for infectious diseases and the company has seen significant demand for its ePlex Respiratory Pathogen Panel 2, which simultaneously identifies 21 pathogens including SARS-CoV-2.

Roche confirmed its full-year outlook with sales growth expected in the low- to mid-single digit range and core EPS growth "broadly in line with sales," at constant exchange rates.

In its guidance, Schinecker said Roche had risk-adjusted for the second half of the year, assuming the majority of COVID-19 sales would come in the first half of 2021.