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Analysis before buying or selling Roche shares

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Information on Roche shares
ISIN code: CH0012032113
Ticker: SWX: ROG
Index or market: SMI
 

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Elements to consider before selling or buying Roche shares

Analysis N°1

The development of the online platform set up by Roche which should allow it to gain new customers in the coming years and better understand the needs of its consumers.

Analysis N°2

The fact that the market is in full development should also allow Roche to improve its competitiveness facing competition with a dilution of the competitive advantage.

Analysis N°3

The revival of economic growth and the rise in purchasing power after a long period of crisis is also good news for Roche, which should therefore continue to increase its sales.

Analysis N°4

The recent drop in fuel prices has also allowed Roche to reduce its transportation costs and enables it to be more competitive.

Analysis N°5

Recent tax policy reforms may also impact Roche's business model by giving it the opportunity to increase its profitability as an established player.

Analysis N°6

However, the American market which has a tendancy towards isolationism and which already generates losses for Roche could give similar ideas to other countries which would have a negative impact on the group's international sales.

Analysis N°7

The company lacks in regularity reggarding the ontroduction of new products which causes a drop in sales over certain periods.

Analysis N°8

The fact that the price of certain raw materials is significantly rising could also impact the profitability of the Roche group, as can the pay rises in the United States and China.

Analysis N°9

The group's profitability also depends on the exchange rate of certain highly volatile currencies due to its international presence, depending on the unstable geopolitical climate.

Analysis before buying or selling Roche shares
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General presentation of Roche

A thorough knowledge of Roche and its main activities is of course essential if you want to analyse its stock market share correctly. To help you do this, we have prepared a comprehensive overview of the company and its activities.

Roche Holding AG is a Swiss company that operates in the pharmaceutical sector. More precisely, this company is currently one of the largest pharmaceutical groups in the world.

In order to better understand the activities of the Roche Group, they can be divided into different divisions according to the share of turnover they generate and in this way:

  • Firstly, pharmaceuticals alone account for more than 76.4% of the company's turnover. Here, the turnover by therapeutic area is divided between oncology products with 52.4%, treatments for immune disorders with 18.5%, nervous system disorders with 11.1%, treatments for haemophilia A with 4.9%, treatment of ophthalmic diseases with 3.2% or infectious diseases with 1.9% and other miscellaneous treatments for 8%.
  • Next comes diagnostic equipment, which currently accounts for 23.6% of the company's turnover. This includes professional medical analysis equipment with 52.7% of the turnover in this segment, molecular analysis control devices with 27.3% of this segment, diabetes control with 12.1% of the turnover in this segment and finally tissue analysis with 7.9%.

It is also interesting to know how Roche Holding makes its profits worldwide with the geographical distribution of its turnover. Thus, the group only generates 1.1% of its turnover in Switzerland. The rest comes from Germany (5.7%), Europe (16.8%), the USA (46.6%), North America (1.5%), Japan (7.1%), Asia (14.8%), Latin America (4.1%) and Africa, Australia and Oceania (2.3%).

The major competitors of Roche

We now propose to find out who are the main opponents of the Roche group in its sector of activity. Indeed, Roche is not the only pharmaceutical group of this importance and has to face some competitors:

Pfizer

First of all, the American group Pfizer is the leader in this sector of activity and is present in more than 150 countries around the world. The group currently employs more than 81,800 people worldwide and is known for its numerous mergers with other competitors such as Warner-Lambert, Pharmacua and Wyeth.

Novartis

Another major competitor of Roche is the Swiss group Novartis, which was formed from the merger of Ciba-Geigy and Sandoz. It offers pharmaceutical products for the treatment of cardiovascular, respiratory and dermatological diseases, gastrointestinal diseases, cancers, central nervous system disorders and hormonal disorders, but also generic drugs, eye care products and other products.

Sanofi

Of course, the French transnational group Sanofi is also a serious competitor of Roche. Its activities include pharmaceuticals and vaccines. In this health sector, the Sanofi group ranks third worldwide in terms of turnover but eleventh in terms of market capitalisation. The vast majority of the group's turnover is generated outside Europe with 72.6% of its turnover and the company employs more than 100,000 people in around 100 countries. On the stock market, Sanofi is currently the third largest company on the Paris stock exchange and is partly owned by the L'Oréal group, which holds 9.48% of its capital.

Merck

Competition from the German group Merck, which is based in Darmstadt in the Land of Hesse and has been in existence since 1668, must also be taken into account. This group specialises in the fields of pharmaceuticals and chemicals. Merck was listed on the stock market in the 1990s and the majority of its shares are still owned by the Merck family in Germany.

GSK

Another major competitor of the Roche Group is, of course, the British multinational GlaxoSmithKline, one of the world's leading pharmaceutical companies. This group was formed by the merger of Glaxo Wellcome and SmithKline Beecham in 2000.

Bayer

Finally, the Bayer AG group should also be followed closely, as it is a company specialising in the German pharmaceutical and agrochemical sector founded in 1863 in Barmen. The Bayer Group specialises in the development of medicines, non-prescription health products and crop protection products for the agricultural sector. The group is also known for being the first company in the world to synthesise pure aspirin in 1897.

The major partners of Roche

The Roche group is constantly establishing strategic partnerships and alliances in the field of research, production or distribution in order to consolidate its commercial forces.

Bayer

For example, Roche joined forces with Bayer in the late 1990s with the creation of a joint venture in the United States to produce and market pain relievers and other non-prescription drugs.

Unicancer

In 2008, Roche joined forces with UNICANCER to collect data in metastatic breast cancer.

Areva

In 2012, the Areva group joined forces with Roche to build a joint laboratory located in France. The project was completed in 2013.

Sentara Consolidated Laboratories of Norfolk

In 2017, Roche also established a partnership with an American laboratory, Sentara Consolidated Laboratories of Norfolk which has become a player in the MCOE network set up by Roche.

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Positive factors for Roche shares
The factors in favour of a rise in the Roche share price:

First of all, the automation of activities implemented by the Roche Group brings an improvement in the quality of products and has enabled the Group to develop further or, on the contrary, to reduce its activities in line with the real needs of the market.

The Roche group has also demonstrated its ability to adapt to new markets through expertise that enables it to penetrate them more easily and to establish a long-term presence in them. As a result of this external expansion, Roche has been able to generate more revenues but also to protect itself against the cyclical risks of the market in which it mainly operates.

The Roche Group is also recognised as a reliable supplier as it has a strong base of its own raw materials suppliers. This enables it to cope with supply chain bottlenecks and to meet its orders.

Roche can also rely on a strong and reliable distribution network which it has built up over time and which enables it to reach a large part of the world market.

The Group also has a highly skilled workforce, which it is constantly strengthening through attractive training and apprenticeship programs. The Roche Group invests heavily in the training and skills development of its employees, which not only provides the Group with a workforce but also increases employee motivation.

Another strength of the Group is the particularly high level of satisfaction of Roche's customers. Thanks to its dedicated Customer Relationship Management department Roche has succeeded in achieving a very high level of customer satisfaction among its existing customers and thus attracting more prospects.

The Group's returns on capital expenditure are also a strength. Roche has successfully completed numerous projects with rapid and significant returns on investment.

Finally, the last advantage of the Group is of course its capacity for innovation with a successful track record in the recurrent development of new products.

Negative factors for Roche shares
The factors in favour of a drop in the Roche share price:

Firstly, it is known that the Roche Group encounters some difficulties in integrating certain companies that have a different working culture from its own. The group is unable to merge with some smaller companies because of this difference.

On the labour market, Roche is known to spend a lot of money on training its employees. However, this expenditure may be a drag on profitability in a period of falling production costs for the pharmaceutical industry as a whole and in particular in the face of competition which seems to be reducing such expenditure.

It is also known that both the rate of return of the Roche group and its net contribution are below the average for the industry.

The lack of diversity in the product range offered by this company is also regrettable. This limited choice may allow some of its main competitors to take market share from it. Similarly, Roche is rather poor at anticipating rising demand for certain products with sometimes insufficient or sometimes too much stock.

It should also be borne in mind here that, although the Roche Group is currently one of the leaders in the pharmaceuticals sector, its success in its ancillary activities remains limited. The company is experiencing some difficulties in expanding into other product segments.

Lastly, it should be borne in mind that Roche faces very strong competition from companies in the same sector, which puts additional pressure on results.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

Which subsidiaries does the Roche group own?

The Roche group carries out its activities through various subsidiaries specialized either by type of production or by geographic area and which are the result of an international expansion strategy implemented by this group for many years. Roche's subsidiaries include Genentech, Ventana Medical Systems, Roche in the United Kingdom, Roche in Israel, Roche in the United States and Roche.

What are the latest figures to know about the Roche share?

The analysis of financial and stock market data for the Roche share is of course essential if you want to put in place a good strategy for this security. Regarding the latest official publications of the group, there is a total market capitalization of the group of around 252,909 million CHF at the end of 2019. The turnover for the 2018 financial year was CHF 58,846 million with net profit of CHF 10,500 million.

Is Roche one of the largest pharmaceutical industries in the world?

Yes, to date, the Roche group is among the largest pharmaceutical industries in the world. More precisely and in terms of turnover, this Swiss company is positioned as number three in this sector of activity, just behind the Pfizer and Novartis groups and just before Merck and Sanofi. Of course, this positioning can change depending on the change in the distribution of market shares.

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