The Roche Group posted 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."