- Increased demand for coronavirus tests helped elevate its Q3 revenues
- However, Roche’s drug unit missed sales expectations to send shares lower
- Roche share price hit a fresh 6-month low as it broke and closed below the critical support line at 310
Shares of Roche GS (SIX: ROG) fell 3.49% today after the Swiss drugmaker reported lower-than-expected drug sales.
Fundamental analysis: Covid-19 helping sales
Roche said that increased demand for coronavirus tests helped elevate its Q3 revenues and compensate for plummeting drug sales.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the DMNnewsletter, today.
Thomas Schinecker, head of Roche’s diagnostics business said a surge in new coronavirus cases were fueling demand for the low-cost antigen tests as the supply PCR tests is still low.
In spite of the fact that Roche’s antigen tests, which cost around $5 apiece, are less accurate than PCR tests, Schinecker claimed they proved useful in a number of cases.
“Since the world is still in shortages (of) PCR tests, we strongly believe the antigen tests are a significant contribution … because you’re going to identify most of the people that are actually spreading the infections,” he said.
Antigen tests serve to spot proteins on the surface of the virus, while PCR tests detect genetic material found in the virus. Countries like the U.S., Germany and the U.K. continue to import millions of these tests as they’re preparing for a second coronavirus wave.
According to some experts, PCR tests are still the absolute standard and other tests, like the antigen ones, should be used when there are no better options.
Sales in Roche’s diagnostics business jumped by 18% to 3.6 billion Swiss francs ($4 billion).
Revenue of Roche’s drug unit plunged 4% to 11.1 billion francs as unlicensed cancer medicines like Avastin, Herceptin and Rituxan are facing strong competition against its rival products, called biosimilars.
Roche projected competition from biosimilars would cost the company 4.7 billion francs in sales in 2020.
Technical analysis: New 6-month low
Shares of Roche dropped 3.49% today after Roche’s drug sales missed estimates. Therefore, Roche share price hit a fresh 6-month low as it broke and closed below the critical support line at 310 (the purple line).
The sellers will be targeting a trip to the 300 handle now, while the former support at 310 becomes new resistance that is likely to cap any rebound attempts.
Revenue in Roche’s diagnostics branch has climbed thanks to a surge in demand for coronavirus tests. As a result, Roche stock price nearly 3.5% lower today.