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Roche Diagnostics Revenues Increase 6 Percent in 2020

Note: This story has been updated with additional information from the company's earnings call.

NEW YORK – Roche on Thursday reported a 6 percent increase in sales of its diagnostics division for full-year 2020, driven primarily by its COVID-19 testing portfolio.

Overall, Roche reported CHF 58.32 billion ($64.66 billion) in revenues for the year, down 5 percent from CHF 61.47 in 2019, but up 1 percent at constant exchange rates, the firm said.

The pharmaceuticals division had CHF 44.53 billion in 2020 revenues, down 8 percent from CHF 48.52 billion in 2019.

Meanwhile, Roche Diagnostics had sales of CHF 13.79 billion in 2020, up 6 percent from CHF 12.95 billion in 2019. For the fourth quarter, diagnostics sales increased 20 percent to CHF 4.13 billion from CHF 3.44 billion in the same quarter in 2019.

During the fourth quarter, Roche received Emergency Use Authorization from the US Food and Drug Administration for its Elecsys Anti-SARS-CoV-2 S antibody test, which quantitatively measures antibodies and can measure a person's vaccine-induced immune response, and the company received CE marking for its Elecsys SARS-CoV-2 antigen test to support high-volume testing of COVID-19 patients. Roche has filed for EUA for the antigen test, it said in a statement. Roche Diagnostics CEO Thomas Schinecker said on a conference call to discuss the earnings that the antigen test would be "another weapon to diagnose people quickly.

He added that production capacity for SARS-CoV-2 tests has ramped up significantly, and the firm expects to provide 40 million tests per month by the end of the first quarter and 70 million per month by the end of the first half of 2021. The firm's current capacity is 20 million tests per month.

By the end of 2020 there were more than 1,0000 high-throughput Cobas 6800/8800 instruments in place, and during the year more than twice the number that Roche had projected were installed.

Schinecker said he expects both the COVID-19 portfolio and the core business to grow in 2021, and added that Roche plans to launch 17 assays in 2021, which will drive growth in the future.

For full-year 2020, Molecular Diagnostics revenues grew 78 percent to CHF 3.76 billion from CHF 2.11 billion in 2019 and contributed 27 percent to 2020 diagnostics sales. Growth was driven mostly by COVID-19 testing, offsetting the decline in routine testing as a result of the pandemic, Roche said.

In the Molecular Diagnostics segment, virology grew by 180 percent year over year, LightMix systems grew by 189 percent, and the point-of-care molecular business grew by 152 percent year over year, Schinecker said on the call.

Centralized and Point of Care Solutions revenues decreased 7 percent to CHF 7.27 billion in 2020 from CHF 7.82 billion in 2019 and contributed 53 percent to diagnostics sales. Diabetes Care sales decreased 13 percent in 2020 to CHF 1.67 billion, from CHF 1.92 billion in 2019, contributing 12 percent to diagnostics sales, and Tissue Diagnostics revenues decreased 1 percent to CHF 1.09 billion last year from 1.10 billion in 2019 and contributed 8 percent to diagnostics sales.

The immunodiagnostics business, which is included in Roche's Centralized and Point of Care Solutions segment, was strongly impacted by the decline in routine testing worldwide, especially in China, due to the pandemic. The immunodiagnostics business declined by 6 percent year over year, while the clinical chemistry business declined by 11 percent. In contrast, the point-of-care immunodiagnostics business increased 667 percent at constant exchange rates.

The blood glucose monitoring business declined by 4 percent, while insulin delivery systems declined 15 percent. In the Tissue Diagnostics segment, advanced staining increased by 5 percent year over year and companion diagnostics increased 8 percent. Tissue Diagnostics sales increased due to a recovery from manufacturing delays in the previous year, Roche said in a statement. The main downturn in Tissue Diagnostics came during the second quarter of 2020, Schinecker said.

He emphasized that testing volumes and sales in the second half of 2021 is a question mark for the Diagnostics segment and would depend on how quickly COVID-19 vaccines are rolled out and the demand for COVID-19 testing. Roche CEO Severin Schwan added that there's "no doubt" Roche will see good growth for Diagnostics in the first half of the year, but that there is uncertainty about the demand for SARS-CoV-2 testing in the second half. In addition, there will be a base effect on the growth figures in 2021, since 2020's H2 sales were significantly higher than its H1 sales, Schwan said.

Roche's 2020 net income was CHF 15.01 billion, or CHF 19.16 per share, compared to CHF 14.12 billion, or CHF 20.16 per share in 2019.

As of Dec. 31, 2020, Roche had CHF 5.73 billion in cash or cash equivalents.

For 2021, the company expects low- to mid-single-digit growth in sales and core EPS growth "broadly in line with sales," both at constant exchange rates.