Tuesday, 12 December 2023 Reading time : 2 minutes

Roche's losing streak is not over yet, and equity investors are facing a loss in 2023. The stocks have lost around 12% since the beginning of the year, significantly underperforming its rival Novartis as well as the Swiss market.

The setback follows a steep rise that took Roche shares to a record high of over CHF 400.00 in April 2022. Since then, they have lost up to 40% of their value. In our view, the outbreak of the corona pandemic partly explains the ups and downs. Roche was one of the leading suppliers of PCR tests and generated billions in additional revenue from their sale. This also boosted the share price. This also boosted the share price. As the pandemic has abated, these revenues have eroded which has weighed on the quarterly results in 2023.

However, we believe the corona effect is not Roche's only problem. For several years, the loss of patent protection for various blockbuster drugs has been putting pressure on the company’s sales. For a long time, Roche was able to cope well with this cliff, but last year the pharma group suffered two major setbacks in research. The late-stage study results on two new drugs fell far short of expectations. The treatments were intended for use in cancer and Alzheimer's disease.

To boost its pipeline, Roche announced the acquisition of Telavant Holdings in October. The group is thus acquiring the rights to a drug used to treat inflammatory bowel diseases.

After the string of bad news, the outlook for the new year should be a little brighter. The aftermath of the coronavirus pandemic are expected to end in 2024, commented Roche CEO Thomas Schinecker at the presentation of the third quarter earnings. Newly approved drugs, including the eye treatment Vabysmo, should, according to the company, help to boost sales next year. In addition, further research results are expected in early 2024, which could provide a boost, but could trigger further share price losses if results are disappointing.

Reverse Convertible on Roche

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