- Third-quarter sales of Roche's coronavirus testing products helped its diagnostics unit overcome continued downturn in its core business, with overall growth reaching 18%, the company reported Thursday.
- Diagnostics head Thomas Schinecker said pandemic-driven declines in routine testing during the second and third quarters, which improved sequentially, cost the company $1 billion, but COVID-19 testing benefits were "more than able to compensate for that."
- Schinecker also teased anticipated benefit from the company's recently launched antigen test. The product had only begun rolling out in European markets for the final week of the third quarter and is not yet authorized for use in the U.S., so the company said its expected benefit won't be visible until the next round of quarterly results.
The impact of COVID-19 testing on the performance of Roche's diagnostics unit and the broader company is clear. Over the first nine months of the year, the division achieved 9% growth. That figure is a testament to how Roche has been able to scale its COVID-19 products, given that growth was just 2% in the second quarter.
Anticipating the fear among some analysts that arrival of a vaccine will drastically cut demand for its molecular and antigen testing, Roche executives gave additional color on how they see the business line could survive in that scenario. For one, they pointed to the need for antibody testing once a vaccine is available.
In the near term, Schinecker says the company will continually increase its PCR test supply as new manufacturing lines go live in the coming months. At least until the middle of next year when a vaccine is expected, demand will still significantly exceed supply, Schinecker added.
Roche expects growth to accelerate in the fourth quarter, largely thanks to the expansion of antigen testing. "It's only a matter of how much we can produce," Schinecker said, calling antigen tests a "big relief" to strain on other areas of diagnostics. Even without the antigen test benefit, in the first nine months of the year Roche's point-of-care immunodiagnostics products grew 120%.
Once there's slightly less urgent demand for COVID-19 tests, the most desirable tests will be those running on highly automated, high-throughput systems, Schinecker argued — a key product area for Roche.
Schinecker predicted a shift in demand for testing won't occur until at least the middle of next year, giving Roche three more quarters to build on the trend of COVID-19 testing growth.
Additionally, Schinecker said Roche believes the distribution of a vaccine will be a boon to its antibody testing business, making the tests "a lot more relevant going forward."
Roche CEO Severin Schwan said that even if demand for coronavirus testing decreases, the company expects governments are more willing to make upfront investments to be better prepared for the next pandemic. Those systems can be leveraged for important non-coronavirus testing too. As such, in the mid- to longer-term, "the market will just be bigger," Schwan argued.
Roche confirmed its full-year outlook for low- to mid-single digit sales growth.