Roche profits boosted by swine flu drug sales

PHARMACEUTICAL groups, like food stocks, are seen as good defensive investments when the global economy is sinking and stock markets are in rapid decline.

To prove the point Roche, the Switzerland-based pharma giant produced first-half results showing a huge surge in sales of Tamiflu, the swine flu drug. They helped the Swiss group increase underlying operating profits by 13% to €7.54 billion.

In the earlier part of the year the share price struggled, held back by the still weak global economic outlook.

But Roche’s share price is showing some signs of life lately and is up 2.2% since the start of 2009.

Its price performance has kept pace with the S&P 500 index since the start of 2009, as has Glaxo’s, though its price yesterday showed a decline of over 8% in the year-to-date.

Glaxo has manufacturing plants in Dungarvan, Co Waterford, and Cork. Roche has a production unit in Co Clare.

Neither is involved in making human vaccines in this country, according to IDA Ireland, which added that none of the companies manufacturing drugs here produce human vaccines.

While investors in the two groups have not done well in the year-to-date from the swine flu scare, analysts point out that in the total scheme of things Roche’s Tamiflu and Glaxo’s Relenza are relatively small parts of the total output of each international group.

In late July Glaxo announced it will raise its production of the swine flu treatment Relenza from 60 million courses last year to 190m by end 2009.

The British group’s second-quarter profits jumped 12% after currency benefits offset sales lost to generic versions of its drugs.

Investors, however, were impressed with the performance of Glaxo’s antiviral drug Relenza, which generated £60 million (€70m) in the quarter, compared with just £3m (€3.5m) in the same period last year.

Undoubtedly, sales will get a further boost from increased orders for the flu medicine, chief executive Andrew Witty said.

Glaxo plans to triple by the year’s end its capacity to manufacture the drug as the epidemic spreads to over 170 countries.