Roche looks to pipeline, new diseases for growth

Yesterday, Roche concluded its first pipeline update following last year's acquisition of Genentech. As expected, the Swiss drugmaker highlighted its late-stage drug pipeline (chart), noting that its positioned to launch six new therapies by the end of 2014. And the drugmaker is investing very heavily--in fact, more than almost any other than the industry--in shoring up its pipeline for years to come.

Roche's strength now comes from a number of blockbuster cancer drugs. But sales of those therapies are slowing a bit as the brands mature, and the company's recent attempts to extend Avastin's label have been unsuccessful. Roche said yesterday it's investing 20 percent of its sales--or 10 billion Swiss francs--in R&D each year. Roche CEO Severin Schwan reminded investors that 2009 was a peak investment year. "We are certainly at the point where we have to control overall expenses" in R&D, he said, according to the Wall Street Journal. "At the end of the day, it is always, how much do you get out of your investments? We are uniquely positioned to deliver long-term growth."

Roche's future growth will come from expanding indications of existing cancer medications, as well as launching new oncology therapies. One near-term prospect is Trastuzumab-DM1, an update to Herceptin that is expected to be filed with the FDA by the end of the year. Additionally, the company will look outside the oncology market for growth. It's developing taspoglutide for diabetes and dalcetrapib for raising "good" HDL cholesterol. Dalcetrapib is in the same class of drugs as Pfizer's famous failure torcetrapib. Roche believes its drug avoids the problems experienced with Pfizer's version, but analysts still see the program as a big risk for the company.

- see this chart of Roche's late-stage pipeline
- here's the Wall Street Journal article