Roche Holding AG

The stable outlook reflects our assumption that Roche will maintain credit-protection metrics over the next 12-24 months including a pension- and lease-adjusted ratio of funds from operations (FFO) to net debt of more than 45% and of debt to EBITDA below 2x on a sustainable basis. We also take into account that Roche will likely maintain its excellent business positions and superior cash-generating ability, assuming the resilience of its drug portfolio and considering its robust pipeline of new products. Competition from biosimilar products has recently accelerated, but we expect 2019 to be a good year in terms of performance, as shown by solid interim results. Next year could be more challenging, amid increased competition from biosimilars. However, we forecast earnings

...Switzerland-based Roche Holding AG (Roche) is one of the most innovative pharmaceutical companies in the world. The group has always been at the forefront of research in oncology, with a leading role in the second generation of cancer drugs. It now has three $5 billion products reaching maturity. The group is also competing with Merck & Co in the third generation of immuno-oncology drugs. The group is facing competition from biosimilar products. Roche is facing substantial challenges because about $15 billion of revenue is at stake. However, its resilience and pipeline have been strong so far--not only in oncology. We expect 2019 to be a good year for Roche, but performance will likely worsen in 2020 as biosimilar competition intensifies in the U.S. , affecting the group's three best-selling drugs. Cancer drug Avastin will also face patent expiry in Europe by mid-2020. Uncertainties are weighing on the U.S. drug market. U.S. politicians are committed to clamping down on drug pricing. Several...

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