Roche ticks up diagnostics sales amid restructuring

Roche CEO Severin Schwan

Roche ($RHHBY) eked out 2% diagnostics sales growth the first half, as the Swiss giant tightened its hold on the immunoassay market but continued to struggle with diabetes and applied science.

The company raked in about $5.4 billion in diagnostics revenue in the first 6 months of 2013, riding a 6% jump in professional testing. Immunoassay sales jumped 12% on the half, and Roche's patient coagulation monitoring business increased 7%. The company's small but fast-growing tissue diagnostics segment grew 6%, fueled by a 22% jump in tissue staining revenue and continued demand for companion diagnostics.

However, the long-ailing diabetes care segment continued its slide, dropping 5% on the half thanks to ongoing price pressure and reimbursement challenges for blood glucose monitors, Roche said. But the company isn't standing pat: Roche said it plans to rethink every aspect of its diabetes business, including cost structure, sales, marketing and innovation, so far separating its blood glucose testing business from its insulin pump R&D segment.

Molecular diagnostics grew just 1% in the first half, as sluggish sales in genome sequencing dragged down a 4% revenue jump in molecular tests. In April, Roche began the process of dissolving its long-struggling applied science business, ditching some businesses and folding others under the molecular diagnostics umbrella, including the company's lukewarm sequencing unit.

Beyond restructuring and slashing jobs, Roche is working to expand its diagnostics reach, scoring a wealth of FDA approvals for immunoassays over the past quarter and, this month, spending $220 million on Constitution Medical Investors, a blood-testing specialist Roche said will give it a broader stake in the $2 billion hematology market.

On the whole, Roche rode stellar sales of its cancer drugs to $24.8 billion in net sales, a 3% increase over last year's H1. Profits soared about 40% to $6.4 billion on the half, and CEO Severin Schwan said he expects the recent launch of Perjeta, Kadcyla and a spate of new lab tests to drive revenue for the rest of the year.

"We will continue to focus on innovation with 68 new molecular entities in our pharma pipeline and 55 key diagnostics platforms and tests in development," Schwan said in a statement.

- read Roche's full results (PDF)

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