Roche on Thursday announced that it has abandoned several drug development projects and potential acquisitions due to the expected price reductions for its popular prescription medicines in the United States.
Roche CEO Thomas Schinecker revealed during a media call on July 27 following the release of first-half results that the company is not taking legal action against the US government's Inflation Reduction Act (IRA) like some other large drugmakers are doing.
Nevertheless, Roche's work on new drugs has still been affected, Reuters reported.
Schinecker stated, "We have decided that we are not going to do certain trials, or that we are not going to do a merger or acquisition or licensing (deal) because it is becoming financially not viable," without providing further details.
This decision comes in the wake of legal challenges initiated by some drug manufacturers, such as Merck & Co and Bristol Myers Squibb, against the Biden administration's proposal to allow Medicare to negotiate drug prices.
Despite the setbacks, Roche recognises the importance of advancing its drug development projects to boost the company's stock market value.
CFO Alan Hippe emphasised that after facing challenges in the late-stage pipeline last year, their focus now is to replenish the pipeline and demonstrate a robust late-stage pipeline to investors.
Hippe stated during a press conference that progress has already been made in this regard, and the company's share price, which took a hit when the demand for COVID-19-related tests and treatments diminished, is expected to improve with the advancement of its drug development initiatives.
"The point is really the setbacks we had last year in the late-stage pipeline... we have to now fill up the pipeline again and prove ourselves that we really have a strong late-stage pipeline. Once that happens I'm not concerned about the share price," Hippe said, per a Reuters report.
With agency inputs.
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