• Quickening sales of Roche’s newer medicines offset the impact of rising biosimilar competition during the second quarter, helping to drive a 7% year-over-year jump in topline revenues for the Swiss pharma.
• In response, Roche raised its 2018 guidance for the second time this year and now predicts mid-single digit growth in group sales.
• The star of this year so far has been Roche’s multiple sclerosis medicine Ocrevus, which brought in just over $1 billion in sales through the end of June — a dramatic uptake after only five full quarters since the drug’s first approval. Roche estimates Ocrevus now commands a 10% share in the competitive U.S. market.

Investor bulls as well as bears can find evidence to support their case in Roche’s first-half results. Reasons for each are best illustrated by the diverging performance of drug sales in the U.S. and in Europe.

In the U.S., pharmaceutical revenue in the first half of the year grew by 15% year over year, as new medicines like Ocrevus (ocrelizumab), Perjeta (pertuzumab) and Alecenesa (alectinib) enjoyed strong growth.

Across the Atlantic, however, sales in Europe slumped 8% versus the prior year period, dampened by a near halving of sales of the blockbuster drug Rituxan (rituximab).

That sharp drop in sales is due to biosimilar competition, which has stolen market share away and weighed on pricing for Rituxan. Herceptin (trastuzumab), another multi-billion dollar biologic for Roche, faces a similar threat.

Daniel O’Day, head of Roche Pharmaceuticals, said Thursday the pharma is modeling a similar erosion of Herceptin sales in Europe as it has seen for Rituxan.

The question facing investors is whether Roche can continue its streak of seven consecutive years of sales growth, despite the likelihood that its top brands could soon face copycat rivals in both the U.S. and Europe.

Roche believes it can and, so far, it’s been right. Taken together, 14 of its newer medicines combined to add over $1.5 billion in sales between the first half of 2017 and the first half of 2018. That far exceeded the $400 million or so in impact Roche reported from biosimilar competition in Europe.

Ocrevus is a large part of the pharma’s recent success. The first drug approved for both primary progressive as well as relapsing forms of MS, Ocrevus has captured a sizable chunk of the competitive therapeutic market in the U.S.

About one in every three MS patients new to treatment or switching from other therapy went on to receive Ocrevus, O’Day said on a Thursday call with investors.

Roche hopes the drug will enjoy similarly strong growth in Europe, where it was approved in January.

But challenges remain to Roche’s story of new drug success. Tecentriq (atezolizumab), an important cancer medicine, has delivered positive trial results in first-line lung cancer yet remains a distant third to Merck & Co.’s Keytruda (pembrolizumab) and Bristol-Myers Squibb’s Opdivo (nivolumab).

On a constant exchange rate basis, sales of Tecentriq in the U.S. actually fell 2% in the first half of 2018 compared to the same period last year.

And, for investor bulls, expiration of primary patent protection to Herceptin and Avastin in mid-2019 could hasten biosimilar bleeding in the U.S.

Roche also disclosed for the first time the amount of revenue it earned from a key patent, by which it receives royalties from companies making biological medicines. Last year, the so-called “Cabilly” patent accounted for $840 million in royalty revenues. It is set to expire in December and Roche expects royalty revenue this year to be “significantly lower.”

For now, Roche remains on the right side of the growth ledger. Whether it continues to do so will fall on the shoulders of drugs like Ocrevus, Tecentriq and Perjeta.