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Roche CEO: Emerging Markets Key to Momentum

Emerging markets, and in particular, Latin America will bethe drivers for continued growth, Swiss drug maker Roche told CNBC, even as thecompany faces price pressures elsewhere.


"We see strong double digit growth in emerging markets, astable business in the U.S. and price pressure in Europe, we clearly seedifferent dynamics from a regional perspective," CEO Severin Schwan told CNBCWednesday.

He said while the pharmaceutical industry has been facingprice pressures, Roche was bearing up better than most.

"We are less exposed to price pressure then our competitorsdue to the value and differentiation of our products. Specifically, there havebeen 6 percent price decreases in the industry but Roche prices decreasedaround 3 percent – half the industry pressure and reflects the innovation thatwe offer," he said.

Global pharmaceutical and biotech companies are facingincreasing competition from generic drugs as insurance companies and statemedical systems look to reduce costs. But Roche, the world's biggest maker ofcancer drugs, has been spared some of that pain as it doesn't face imminentpatent expiration for some of its key drugs.

Schwan conceded that generics were an accepted part of theindustry and rejuvenating Roche's existing pipeline would be the core strategyfor the drug giant in offsetting generic competition.

"We have a contract with society that we have patents forsome limited time and it's absolutely ok that generics come into the market.Our strategy is all about rejuvenating our pipeline continuously and I'm gladin 2012 we've made major progress in this respect," he said.

The Swiss drug maker post an 11 percent rise in full-yearearnings on the back of strong sales in cancer medicines and improvements inproductivity. Core earnings for 2012 rose to 13.62 Swiss francs per share,compared to 12.30 Swiss francs a year ago. Analysts in a Reuters poll hadforecast earnings of 13.60 Swiss francs.

The Basel-based drugmaker said it hoped sales this year willgrow in line with 2012, when group sales rose 7 percent to 45.5 billion Swissfrancs ($49.35 billion). It is also aiming for core earnings per share to growahead of sales.

This positive assessment contrasts with cross-town rivalNovartis which guided for a fall in profits in 2013 as it grapples withcompetition from cheaper copies of its top-selling product.

Schwan added that he expected to keep Roche's headcountstable but indicated a possible rise in emerging markets as it meets growingdemand.

He indicated no change to the company's strategy on mergersand acquisitions in the coming months.

Last year, the company pulled its hostile takeover attemptfor U.S. genetics company Illumina.

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