Swiss drug maker Roche sees Q1 sales stutter

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By FRANK JORDANS, Associated Press

GENEVA (AP) — Swiss drug maker Roche Holding AG reported Thursday that group sales dipped one percent to 11.03 billion Swiss francs ($12.05 billion) in the first quarter, while hinting that it might be prepared to raise its offer for U.S. diagnostics firm Illumina Inc.

Excluding the effect of the strong Swiss currency, group sales rose two percent compared to the same period last year.

Analysts had expected slightly higher sales of around 11.58 billion francs.

"We remain on track to achieve our targets for the full year," Roche chief executive Severin Schwan said in a statement citing forthcoming new drugs to combat skin cancer and other diseases.

Sales in the United States grew six percent in the first quarter, led by hepatitis C medicine Pegasys and cancer drug Rituxan — known as MabThera outside the U.S. and Canada. Sales in Western Europe fell four percent partly due to cutbacks in government-funded health programs.

Roche, which reports earnings only every six months, said group sales are expected to grow at low to mid-single-digit rates for the full year 2012.

Addressing the monthslong effort to take over California-based Illumina, which specializes in gene sequencing to analyze patients' DNA, the Roche CEO indicated that a higher bid might still be possible.

Last month, Roche raised its offer to $51 cash per share from $44.50 per share, said by Illumina to be too low.

But Illumina's board has since dismissed the higher offer too, urging shareholders not to sell their stock.

"We continue to believe that on the basis of the public information that has been available to us, our offer price of $51 per share is full, fair and extremely attractive by every conceivable financial metric," said Schwan.

But he added that "if Illumina were to engage with us, we would consider any information supporting Illumina's contention that our offer undervalues the company and its prospects."

"Our goal has always been to enter into a negotiated transaction with Illumina and we firmly believe that our present offer is more than adequate to serve as a basis to begin that negotiation with Illumina," said Schwan.

On Wednesday, Roche sent a letter to Illumina shareholders ahead of the company's annual meeting in New York on April 18.

In the letter, Roche warned that Illumina's financial success was far less certain than the California company's board made out when it described itself as "the Apple of the genomics business."

"Unlike at Apple stores, crowd control of eager buyers has not been a problem for Illumina and not even Illumina has projected any surge in revenues from its products in any specific foreseeable time period," Roche said.

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