The Roche Group announced strong operating results in a challenging market in
2011. Core operating profit grew faster than sales, and Core Earnings per Share
increased by 11% at constant exchange rates (-4% in Swiss francs). The
strengthening of the Swiss franc against major currencies, notably against the
US dollar and the euro, had a significant negative impact on the results
expressed in Swiss francs. However the underlying currency translation exposure
arising from non-Swiss franc revenues is significantly mitigated by the
majority of the Group’s cost base (80%) being located outside Switzerland.
Group sales increased by 1% in constant currencies 2 (-10% in Swiss francs;
+5% in US dollars) to 42.5 billion Swiss francs. Underlying growth was able to
compensate for the expected decline in Tamiflu and Avastin sales and the
impacts of healthcare reforms, austerity measures and price cuts. Excluding
Tamiflu, sales increased by 2% in constant currencies. Sales by the
Pharmaceuticals Division, excluding Tamiflu, grew 1%, reflecting the solid
growth of key medicines, including recently launched products. Including
Tamiflu, pharmaceutical sales remained stable in constant currencies (-12% in
Swiss francs; +4% in US dollars) for a total of 32.8 billion Swiss francs.
Diagnostics sales grew significantly faster than the in vitro diagnostics (IVD)
market at 6% at constant exchange rates (-7% in Swiss francs; +10% in US
dollars) totalling 9.7 billion Swiss francs. Professional Diagnostics (+9%) and
Tissue Diagnostics (+15%) were the main contributors.
The Group's core operating profit increased by 6% in constant currencies
(-9% in Swiss francs), resulting in an increase in the core operating profit
margin of 0.7 percentage points to 35.6% at reported exchange rates. Continued
pressure on prices was more than compensated by increased sales volume and
efficiency measures. Operating costs decreased primarily as a result of the
Operational Excellence programme launched in November 2010.
Core operating profit in the Pharmaceuticals Division grew 5% at constant
exchange rates to 13.4 billion Swiss francs. The core operating profit margin
of the division increased significantly by 1.0 percentage points at reported
exchange rates, driven by the Operational Excellence programme, resource
prioritisation and productivity improvements. This was achieved in spite of the
expected decline in Tamiflu sales of 0.5 billion Swiss francs, significantly
lower sales of Avastin in the metastatic breast cancer indication, and the
impact of healthcare reforms and austerity measures. Core operating profit in
the Diagnostics Division increased by 14% at constant exchange rates to 2.2
billion Swiss francs. Roche Diagnostics’ core operating profit margin increased
1.3 percentage points to 22.4% of sales at reported exchange rates, driven by
sales growth and further positive effects from ongoing productivity
improvements.
Roche CEO Severin Schwan commenting on the Group's 2011 results: "We
achieved our sales and earnings targets for the year and also made significant
progress with our pipeline. With 17 positive late-stage clinical trials in
2011, we continue to build our future business with innovative products.
Furthermore the planned acquisition of Illumina will strengthen our presence in
the fast-growing sequencing market and enable the discovery of complex
biomarkers for research and clinical use. For 2012 we expect Group sales to
grow at a low to mid-single-digit rate and we have set ourselves the target of
high single-digit Core Earnings per Share growth."