EUR 850.00 For Business Accounts Only

Morningstar | Roche's oncology and diagnostics dominance continues to support a wide moat rating.

We think Roche's drug portfolio and industry-leading diagnostics conspire to create sustainable competitive advantages. As the market leader in both biotech and diagnostics, this Swiss healthcare giant is in a unique position to guide global health care into a safer, more personalized, and more cost-effective endeavor.In Roche's pharmaceutical division, blockbuster cancer biologics acquired with Genentech--including Avastin, Rituxan, and Herceptin--continue to grow as they gain market share in approved indications and garner widened approval in new indications and emerging markets. Strong information sharing continues between Genentech and Roche researchers, boosting research and development productivity and personalized medicine offerings that take advantage of Roche's diagnostic arm. For example, BRAF inhibitor Zelboraf, approved in melanoma in 2011, is among the first drugs tested in biomarker-selected patients from the start. Roche's biologics focus and innovative pipeline are key to the firm's ability to maintain its wide moat and continue to achieve growth as current blockbusters mature. Three fourths of Roche's top pharmaceutical sales are from biologics, which provides a buffer against traditional generic competition. With the launch of Perjeta in 2012 and Kadcyla in 2013, Roche is in a strong position to continue expanding its breast cancer franchise beyond Herceptin, regardless of biosimilars (which entered in late 2017 in Europe and which should enter in 2019 in the U.S.). Gazyva, now approved in CLL and NHL, could also extend the longevity of the Rituxan franchise. Avastin's lung cancer sales are vulnerable to competition from new therapies Opdivo and Keytruda, but Roche's own immuno-oncology drug Tecentriq launched in 2016. Roche's diagnostics business is also strong. With a 20% share of the global in vitro diagnostics market, Roche holds the number-one rank in this industry over competitors Siemens, Abbott, and Ortho. Pricing pressure has been intense in the diabetes-care market, but new instruments and immunoassays have buoyed the core professional diagnostics segment.