Roche Holding AG

Half-year sales were CHF 30.3 billion, up 6% at constant exchange rates and minus 2% in Swiss francs. Core operating profit was up 10%, core operating margin increased by 1.7 percentage points, and core EPS grew 9%. Pharma sales rose 6% to CHF 23.6 billion, with core operating profit up 10% and a core margin of 53%. Diagnostics sales were CHF 6.7 billion, up 3% reported and 6% excluding China pricing reform; diagnostics core operating profit was CHF 1.2 billion, up 6%. Other reported figures included operating free cash flow up 21%, free cash flow up 58%, and net debt increasing by CHF 5.9 billion, while gross debt was roughly stable at CHF 31.8 billion. For 2026, Roche reiterated mid-single-digit sales growth, high-single-digit core EPS growth, and expected to increase dividends in Swiss francs. Management now expects roughly CHF 600 million of loss-of-exclusivity impact in 2026, down from earlier assumptions.

Thomas Schinecker framed the quarter as broadly strong, emphasizing that Roche is growing sales while expanding margins and advancing a “very full pipeline.” He highlighted 5 FDA priority reviews, 2 positive Phase III readouts, and what he called a highly productive second quarter for business development and diagnostics launches. His tone was confident and upbeat, with repeated comments about portfolio diversity, disciplined capital allocation, and robust news flow into 2027-2029. He also stressed that the company feels “comfortable” with where it stands and expects continued momentum across its franchises.

Alan Hippe focused on the bridge from sales to profit, pointing to cost discipline, favorable mix, and centralization benefits that helped core operating profit rise faster than sales. He noted that cost of sales grew 5% despite 8% volume growth, R&D rose only 1%, SG&A rose 3%, and operating free cash flow improved 21%. He also gave several specific drivers: CHF 258 million higher other revenue, including roughly CHF 70 million from a royalty settlement, a CHF 126 million cross-licensing settlement, and milestone income from Sugar for Fondo; diagnostics cost pressure from China pricing reform and about CHF 43 million of U.S. tariffs; and a CHF 5.9 billion increase in net debt due to dividends, taxes, and treasury flows. He said the core tax rate was 17.5% in the first half but expected to rise in the second half, with full-year tax rate likely around 20% or a bit lower.

The first analyst question focused on divarasib, asking whether the long Phase II PFS could allow an earlier readout in the ongoing Phase III study and whether the current CHF 1-2 billion peak sales opportunity might be too conservative after the positive data. Teresa Graham said Pharma Day would be the venue for a broader update on the divarasib program and that the company would then address the asset’s outlook more fully. More broadly, the Q&A topic signaled investor interest in whether Roche will increase its internal value estimate for divarasib after strong Phase III and Phase I/II results. Management did not update the peak sales range on the call and deferred further detail to a later event.