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Take profits on Roche

Roche has proven its credentials as the most secure of the European big pharma companies, but 2013 will bring headwinds
December 12, 2012

The price performance of shares in Swiss pharma giant Roche (ROG) left most of its European competitors well behind in 2012. With gains topping 40 per cent when dividends are included, taking a profit in the run-up to Christmas is a tempting option and one shareholders should seriously consider.

IC TIP: Hold at 188CHF

There is little fault to find in the performance of Roche's development pipeline. In recent months the company achieved further progress with an expanded indication for Avastin in advanced colorectal cancer, as well as positive data from trials for Perjeta and Herceptin in metastatic breast cancer. Other pharma companies would be embarrassed by such riches. However, there are headwinds. For example, eventually so-called biosimilar medicines will start to chip away at key sources of revenues. Regulators in developed nations have been consistently unenthusiastic about biosimilars, but in India Roche recently lost a key patent for its Pagasys hepatitis C drug, thus opening the door for potential biosimilar competitors.

Roche has also been criticised over the way it tested and promoted antiviral drug Tamiflu. The British Medical Journal called for the company to release all the data it holds on Tamiflu so that regulators can reassess its effectiveness in dealing with side-effects of influenza, including pneumonia.