7. Roche

Roche Molecular Diagnostics
After a 4% dip in 2015, Roche's Diagnostics business bounced back to 7% growth in 2016, mainly driven by immunodiagnostics.

Roche
CEO: Severin Schwan
Based: Basel, Switzerland
2016 sales: $11.6 billion**
2015 sales: $11.2 billion
Change: +4%

*Fiscal year ended Dec. 31, 2016

At about 80% of sales, pharmaceuticals dominate Roche’s business. But as some of its most successful drugs—such as the cancer drugs Avastin and Herceptin—are facing competition, it may look to its Diagnostics unit to make up the difference.

Roche’s Diagnostics division houses its molecular diagnostics, centralized and point-of-care solutions, tissue diagnostics and diabetes care units. After a 4% dip between 2014 and 2015, the Diagnostics business bounced back to 7% growth in 2016mainly driven by immunodiagnostics, which falls under centralized and POC solutions.

While sales were up in all geographic regions, emerging markets were major drivers of growth. Latin America led diagnostics growth at 18%, followed by the Asia-Pacific (16%), with China making up more than half of absolute growth in this market. Diagnostics sales grew 2% in Japan and Europe, the Middle East and Africa and 3% in North America.

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Roche launched a number of new devices and tests in 2016, including a blood-based companion diagnostic for its cancer drug, Tarceva, and a complementary diagnostic to be used with the company’s Tecentriq for the treatment of metastatic non-small cell lung cancer.

The former runs on Roche’s Ventana BenchMark ULTRA automated tissue-staining instrument and the latter runs on its cobas 4800 system. It also launched its next-generation Accu-Chek Guide blood glucose monitoring system.

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Its top-selling portfolio, raking in $3.5 billion (CHF 3.4 billion), was its family of cobas devices, which includes automated sample preparation systems, fully automated molecular testing platforms and a point-of-care testing system.

Despite being the second-best performing portfolio with $2 billion (CHF 2 billion) in sales, Roche’s Diabetes Care business dropped 4% in 2016. While diabetes sales were stable in the Asia-Pacific region and grew in Latin America, this wasn’t enough to save the unit from pricing pressure in the U.S. 2016 continues a slump in diabetes sales from CHF 2.13 billion in 2015 and CHF 2.4 billion in 2014.

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Rumors emerged in May that the company may try to hive off its diabetes assets. But Roche Diagnostics chief Roland Diggelmann brushed them off, saying that it was a “good business” and “a business with a future.”

Later that month, the company signed on to sell Senseonics’ Eversense continuous glucose monitor (CGM) in Germany, Italy and the Netherlands. The system includes a tiny glucose sensor that is implanted under the skin of the upper arm and can be used for 90 days.

Eversense is a clear focus in Roche’s diabetes push; the company participated in a $41 million fundraising for Senseonics ahead of an anticipated FDA nod for the device. And in July, Roche joined Senseonics and partner TypeZero Technologies on a long-term, closed-loop system for blood glucose control using Roche’s Accu-Chek insulin pump, Senseonics’ 90-day sensor and TypeZero’s inControl software.

The only FDA-approved closed-loop system is Medtronic’s MiniMed 670G system, which automatically adjusts basal insulin based on glucose readings from a CGM. But its sensor can only be worn for seven days at a time.

And when rumors about a diabetes care sale bubbled up again early this year, Diggelmann put a stop to themRoche is, in fact, on the hunt for new technology that could save the business from its revenue slump, he said.

** Used the 2016 average exchange rate of CHF (million) / US $ (million) – 1.015/1

7. Roche