Roche reports double-digit profit growth, continued integration of Genentech

BASEL, Switzerland — At the close of the second business quarter, pharmaceutical manufacturer Roche is announcing an increase in sales and operating profit compared with the same period last year.

In a second-quarter earnings report, Roche said the integration of Genentech continues, with research and early development already operating under Roche auspices. The company also announced significant gains in integrating Genentech's manufacturing and administration. Swiss-based Roche, which has owned a majority stake in Genentech since 1990, agreed in March to pay a reported $46.8 billion to acquire full ownership of the U.S.-based pharmaceutical company.

Due to integration costs of about $3 billion, net income for Roche was down 29% through the first 6 months of 2009, according to the report. However, the company said it remains optimistic in its 2009 outlook after posting a 10% increase in group sales in local currencies (9% in Swiss francs) through June, which helped yield a 20% increase in operating profit.

Roche expects to record double-digit core earnings-per-share in 2009 and 2010, and the group will use strong operating free cash flow to repay debt — roughly 25% of outstanding debt by the end of 2010 — with the hope of returning to a positive net cash position by 2015.

The announced growth was driven by sales of Roche's Tamiflu, Pegasys and Lucentis products, according to the report.