NEW YORK – Roche on Thursday reported its Diagnostics division revenues grew 10 percent year over year in the first half of the year but said that it expects the momentum from COVID-19 testing-related sales to slow throughout the rest of the year.
For the first half of 2021, the Roche Group reported CHF 32.30 billion ($33.21 billion) in total sales, up 5 percent in CHF and at constant exchange rates from CHF 30.71 billion during the first half of 2020.
Revenues for the Diagnostics division came in at CHF 9.95 billion, up 10 percent (and 11 percent at constant exchange rates) compared to the CHF 9.04 billion in revenues during the same period last year. Roche CEO Severin Schwan said on a conference call to discuss the firm's results that COVID-19 testing decreased in the second quarter of 2022 and that testing is expected to further decline for the remainder of the year.
However, he emphasized that the underlying business excluding COVID-19 has seen "good solid growth," despite some temporary impacts from lockdowns in China.
Core lab revenues were up 3 percent (and 4 percent at constant exchange rates) to CHF 3.88 billion from CHF 3.77 billion in the first half of 2021 and contributed 39 percent to diagnostics sales. The immunodiagnostics business grew 6 percent while the clinical chemistry business was up 8 percent. Sales increased due to the growth of routine testing largely in immunoassays, particularly driven by cardiac tests, and clinical chemistry.
Molecular lab diagnostics revenues fell 1 percent (but increased 1 percent at constant exchange rates) to CHF 1.98 billion from CHF 1.99 billion in H1 of 2021 and contributed 20 percent to half-year diagnostics sales. The firm said the increase was driven by growth in the base business across the portfolio and by the company's acquisition of GenMark in April 2021 but was offset by lower COVID-19-related sales in North America and the Europe, Middle East, and Africa region. The firm's virology business increased 4 percent during the first half of the year.
Roche Diagnostics CEO Thomas Schinecker said on the conference call that the company's Cobas instruments that were placed during the pandemic are being used for testing beyond COVID-19 and that the firm is still producing more instruments than it did before the pandemic.
Point of Care revenues increased 45 percent (46 percent at constant exchange rates) to CHF 2.61 billion in the first half of the year, contributing 26 percent to overall diagnostics sales. Roche's SARS-CoV-2 Rapid Antigen test was the main growth driver, the company said. The POC molecular business increased 54 percent, while the POC immunodiagnostics business grew by 75 percent.
During Q2, more than two-thirds of COVID-19 testing sales were from the company's rapid antigen test, Schinecker said. However, he noted that the PCR testing business is more stable because there are more customers with smaller volume orders. The rapid antigen test business is partially driven by large orders from governments, so if one customer disappears the volume of tests declines significantly, leading to "volatility," he said.
Diabetes Care sales were down 7 percent (and down 5 percent at constant exchange rates) in H1 to CHF 832 million from CHF 894 million in H1 2021 and contributed 8 percent to overall diagnostic sales. The decline was partially due to a base effect resulting from the resolution of a rebate dispute in the first quarter of 2021.
Pathology Lab revenues rose 11 percent (and grew 10 percent at constant exchange rates) to CHF 652 million from CHF 590 million in H1 of 2021 and contributed nearly 7 percent to overall diagnostic sales. The increase was driven by a 9 percent uptick in the advanced staining business and a 26 percent improvement in the companion diagnostics business.
By geography, diagnostics sales for H1 grew 39 percent in Asia Pacific, increased 34 percent in North America, and were down 14 percent in Europe, the Middle East, and Africa. Sales grew 2 percent in Latin America.
Net income for the Roche Group rose 12 percent in both CHF and at constant exchange rates) to CHF 9.16 billion, or CHF 11.76 per share in H1, from CHF 8.22 billion, or CHF 10.56 per share, in the first half of 2021.
As a result of the half-year results, Roche confirmed its previous guidance for full-year 2022 of stable sales or low-single digit percent sales growth at constant exchange rates. Core earnings per share are expected to grow in the low- to mid-single digit range at constant exchange rates. Sales of COVID-19 medicines and diagnostics are expected to decline by CHF 2 billion to approximately CHF 5 billion, it said.