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Roche hopes to prosper from austerity

September 19, 2011

Executives at Roche Diagnostics expect the wave of austerity measures being taken by western governments—including the United States—to as much as double its sales of fluid- and DNA-based tests in the next three years, according to Bloomberg News.

That’s because cash-strapped government-run health plans will want to use the tests to make sure they’re not paying for expensive drugs that won’t benefit the patients who take them.

Roche Diagnostics, which runs its North American operations out of Indianapolis, won approval in August for a new test to identify end-stage skin cancer patients with a specific gene mutation, who will benefit from a new skin cancer drug called Zelboraf, also made by Roche. Roche Diagnostics also makes tests for such things as human papillomavirus, which causes cervical cancer.

“No country is going to be able to afford to increase the percentage of GDP spent on health care,” Roche Diagnostics Chief Operating Officer Daniel O’Day told Bloomberg. “What they’re all looking for is how we can take this certain pie we have for health care and better leverage it for society.”

Roche expects growth at the diagnostics unit to exceed the market this year, outpacing the drugmaker’s larger pharmaceuticals unit, which is suffering from declining revenue of its best-seller Avastin, an expensive cancer drug.

Roche got 22 percent of its revenue last year from diagnostics. Its professional diagnostics unit, which includes sales of the machines and the tests O’Day is touting, posted sales of roughly $880 million in North American sales last year.

Roche is developing a companion diagnostic test for lung cancer patients whose tumors have high concentrations of the Met protein, who could then be treated by Roche’s cancer drug Tarceva. Also, Roche is submitting to regulators a new test and drug to treat breast cancer.

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