Roche cuts drug pipeline in effort to revitalise business

Roche has cut a fifth of its drug pipeline in six months, shedding prospective cancer and neurology treatments as the Swiss company seeks to revitalise its business under new chief executive Thomas Schinecker.

Since the third quarter of 2023 when it had 82 new drugs in development, the company has jettisoned 16 drugs and added 12 others, including the weight-loss drug it gained through its $3.1bn acquisition of Carmot Therapeutics in December.

“There’s been a reduction of assets that don’t have the promise to be transformative medicines. We have rebuilt the pipeline to be the best in any field,” said Schinecker, who took over as chief in March last year.

The moves come after the company suffered recent high-profile clinical trial failures, including for its Alzheimer’s drug gantenerumab.

Roche said it was also reviewing its manufacturing operations to improve efficiency. It recently sold a large site in California to contract manufacturer Lonza for $1.2bn.

Its latest results show a 6 per cent fall in sales in the first quarter of 2024, which the company attributed to the strength of the Swiss franc and declining sales of its Covid-19 treatment Ronapreve.

When the effect of currency fluctuations was stripped out, sales increased 2 per cent, in line with analyst estimates, and the company reiterated guidance of mid single-digit sales growth for 2024.

Vabysmo, Roche’s recently launched medicine for eye diseases including wet age-related macular degeneration, recorded sales worth SFr847mn ($927mn) in the past quarter, well ahead of estimates. Sales of its multiple sclerosis treatment Ocrevus increased by 8 per cent to SFr1.6bn.

But analysts at Jefferies said that worries about the company’s “R&D productivity will take time to lift”, pointing to a lack of significant trial results expected in 2024 and growth tailing off for the company’s biggest-selling drugs. Shares were down 2.8 per cent in morning trading.

As part of its manufacturing review, the company said it would review whether to expand manufacturing in China. “We feel it’s important to manufacture [drugs] for China in China,” said Schinecker. It already made its diagnostics products in the country but had “limited manufacturing for pharma”, he added.

Western pharma groups are seeking to diversify production for the US market away from Chinese contract manufacturers, in response to draft US legislation that would prevent some Chinese companies from receiving federal funding.

AstraZeneca chief executive Pascal Soriot said last month that the company planned to build independent drug supply chains for the US and China.