[Ip-health] Reuters: Roche is "Not Embarrassed" by Costs of Cancer Drugs

[Mike Palmedo]

http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&storyID=2006-06-20T120801Z_01_L20472374_RTRIDST_0_HEALTH-ROCHE-PRICES.XML&rpc=66

Roche says not embarrassed by cost of cancer drugs

Tue Jun 20, 2006
By Thomas Atkins
Reuters

BASEL, Switzerland, June 20 (Reuters) - Swiss drug firm Roche is not
embarrassed by the high cost of some of its breakthrough cancer drugs
and even has room to raise prices in the United States, a senior
executive said on Tuesday.

Roche has produced enormous advances in cancer treatments in recent
years with drugs like breast cancer treatment Herceptin and
tumour-buster Avastin.

But the drugs' high prices -- running to tens of thousands of dollars a
year -- have sparked a lively debate about whether their developers have
gone too far and risk a backlash, similar to the controversy over AIDS
drug prices in the 1990s.

"We have looked at the cost and the benefit and then gone to the
hospitals to see if we could pass the red-face test," said Roche
pharmaceuticals head William Burns at a media event.

"We have no difficulty looking people in the eye and asking for it."

Development work for some of the drugs, like Avastin, took scientists 30
years to complete. "There was no guarantee we could crack it," Burns
said. "We still, at the end of the day, have to give a return to our
shareholders who took the risk."

Shares in Roche rose 50 percent last year alone on the back of a number
of drug breakthroughs, although they have slipped 3 percent so far in
2006, slightly underperforming the European pharma sector.

Industry analysts say concerns as to whether current high cancer drug
prices are sustainable in the long term is one factor checking some
investors' enthusiasm, especially since competition is increasing.

Cancer is the fastest-growing section of the pharmaceuticals market,
reflecting the growing incidence of the disease and the development of
costly targeted therapies that extend lives with far fewer toxic side
effects than standard chemotherapy.

A number of rival companies including industry giants Pfizer Inc. and
GlaxoSmithKline Plc are now moving into the sector in force.

HURDLE FOR RIVALS

Roche is advancing a 5-year push into oncology and says it aims to
extend its leading position in cancer medicine with new products and
fresh uses for existing ones.

The drugmaker has grown its oncology market share to 25 percent from 10
percent in the past five years and has development projects targeting
all the main tumour types.

Industry analysts at Merrill Lynch said in a note that the established
position of Roche's products created a high hurdle for competitors to
overcome, helping underpin prices.

But Dresdner Kleinwort Wasserstein believes pricing in the medium term
is a key risk not factored in by markets.

Roche's sales of cancer medicines totalled 10.2 billion Swiss francs
($8.3 billion) last year from 1.6 billion in 2000, fuelled by
blockbusters like MabThera, Herceptin and Avastin.

"If you have demonstrated the benefits, in the U.S. you can still raise
the prices. In Europe, it is very difficult to raise prices once a
product has been launched," Burns said.