(Bloomberg) -- Big European drugmakers lifted their financial guidance as a focus on new, innovative drugs helped stimulate sales.
Roche Holding AG said 2024 profit will rise in a high-single-digit percentage range, fueled by new treatments like eye medicine Vabysmo.
Demand for many of AstraZeneca Plc’s cancer drugs increased, and the company raised its outlook for percentage profit growth into the mid-teens.
Sanofi SA said earnings per share would be flat from last year, after earlier predicting a decrease.
Drug giants are intensifying their search for new products that can reach large markets while avoiding competition that can bring down prices. Chief Executive Officer Thomas Schinecker said Roche has trimmed 25% of its pipeline programs to tend to those most likely to succeed. AstraZeneca is continuing to look for new solutions in cancer, spending as much as $2.4 billion for Fusion Pharmaceuticals to gain drugs that target tumors with deadly radiation.
Roche shares rose as much as 4.4% after the earnings results were released Thursday, while Sanofi’s gained 4.8%, their biggest intraday increase since late April. Astra’s fell as much as 3.4% on concern over margins, but the stock is still up 11% this year.
Investors are looking for early signs that Sanofi can make good on its promise to churn out innovative medicines faster than it has in the past. The company plans to publish 12 late-stage trial readouts through 2025, with many investors now focused on results for experimental multiple-sclerosis drug tolebrutinib.
That’s an encouraging sign of progress on the drug-pipeline front, which is probably more important for investors than the company’s improved financial performance, analysts John Murphy and Mila Bankovskaia of Bloomberg Intelligence said in a note.
Obesity Drugs
Looming over all the companies is the potential to join Novo Nordisk A/S and Eli Lilly & Co. in the market for obesity drugs that’s estimated to reach $130 billion by the end of the decade. Astra and Roche are both developing oral alternatives to the medications that are now mainly given as injections.
Roche sees a “very high” chance for the success of its experimental weight-loss drugs and anticipates sales from that business within five years, Schinecker said Thursday. After last year’s $3.1 billion acquisition of Carmot Therapeutics, the company is still on the hunt for external obesity assets and will stay disciplined on price amid stiff competition, the CEO said in an interview.
Roche is honing its focus to five therapy areas, an increasingly common step in the industry. The Swiss drugmaker will focus on cancer and hematology; neurology; immunology; ophthalmology, and cardiovascular and metabolism, Schinecker said. Roche’s sales accelerated in the second quarter as it no longer faced a tough year-on-year comparison after the end of the Covid-19 pandemic slashed its Covid test and treatment revenue.
“It is a pretty exciting time in the industry right now because we’re understanding the biology so much more,” said Teresa Graham, Roche’s pharmaceutical unit chief. “That’s not just about Roche; I think that’s the whole industry.”
--With assistance from Ashleigh Furlong.
(Adds comments from Roche CEO in the 10th paragraph)
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