Roche will invest only in countries that reward innovation after posting third-quarter growth of 7%, the Swiss drugmaker's chief executive said, setting a condition for future spending in Europe.
The company kept its guidance unchanged because growth so far this year remained within its forecast. It expects a very good fourth quarter and seeks a third consecutive year of double-digit profit growth.
The executive outlined the company's outlook and investment conditions on Bloomberg Television's “The Opening Trade,” published Oct. 22. The remarks presented Roche's own assessment of its business and Europe's pharmaceutical industry.
Roche did not report third-quarter earnings. The executive pointed to double-digit operating profit growth when explaining the unchanged outlook, without giving a revised target.
Turning to research, he put the United States' share of innovation Roche accessed over the past four years at 50%. Asia, including China, supplied about the other half.
He described Europe as producing less innovation and linked that weakness to countries' reluctance to invest in growth. Germany had identified four growth sectors, including pharmaceuticals and biotechnology, but its actions differed from its plans.
“They really play to win and Europe is more playing not to lose,” he said of the contrast with the United States and Asia.
About half of Roche's pipeline, its portfolio of medicines under development, comes from internal research. The company conducts half its research and development in the United States and half elsewhere.
Roche will continue seeking innovation wherever it emerges. The executive put its success rate this year at 88%, without specifying the measure, and described the development portfolio's value as a record.
On an unnamed breast cancer medicine, he described a 30% improvement over current treatment without identifying the clinical measure. Roche is preparing to launch it.
He compared its sales potential with an earlier medicine that reached peak sales of about 7 billion Swiss francs. He described the relevant breast cancer category as accounting for about 70% of cases and expected the new medicine to exceed earlier sales levels.
Roche plans to launch first in the United States and hold discussions with European agencies that decide medicine reimbursement next year.
The executive described U.S. “most favored nation” pricing as allowing adjustments for differences in countries' income per person. Under his example, the United States would accept twice the price in a European country whose income per person was 50% lower.
He then tied future investment to payment for new medicines. “We will only invest in countries in the future that will reward innovation,” he said.
The remarks left open which countries would qualify, what prices Roche would seek and how much investment might depend on those decisions. He gave no specific threshold when asked what governments needed to change.
He argued that European decisions focused too narrowly on costs rather than patients' health and productivity. He put Swiss spending on medicines, including generic drugs, at 70 francs a month, without specifying the population basis.
