Swiss drug maker Roche Holding AG posted a 7 percent increase in its full-year profits as lower costs offset adverse exchange rate effects and falling sales.
The Basel-based company said Wednesday that its net profit last year of 9.54 billion Swiss francs ($10.35 billion) compared with 8.89 billion francs for 2010.
It credited the advance to a streamlining effort that saw 2,000 net jobs being lost during the year at a time when it has had to deal with the surging value of the Swiss franc and waning sales of some of its recent best-selling drugs.
The world's biggest manufacturer of cancer drugs, which reports earnings only every six months, has battled against the strength of the Swiss franc. Sales fell 10 percent to 42.53 billion francs partly as a result of the adverse exchange rate, though this also squeezed production costs and salaries outside Switzerland.
Roche also reported that earnings per share fell 4 percent to 12.30 francs from 12.78 francs, in line with analyst expectations.
"We achieved our sales and earnings targets for the year and also made significant progress with our pipeline," Severin Schwan, Roche's chief executive, said in a statement.
Roche shares fell modestly after the results, trading 0.8 percent lower at 154.50 francs on the Zurich exchange in morning trading.
In recent days, much of the focus has centered on the company's hostile takeover attempt of U.S.-based DNA diagnostics firm Illumina Inc. for $5.7 billion. San Diego-based Illumina has rejected the offer and adopted a "poison pill" provision to prevent an unwanted takeover of the company.
Aside from the planned takeover, Schwan cited 17 positive late-stage clinical trials in 2011 and several important regulatory filings. These include two potentially lucrative skin cancer drugs _ Erivedge for advanced basal cell carcinoma and Zelboraf for metastatic melanoma.
"The planned acquisition of Illumina will strengthen our presence in the fast-growing sequencing market and enable the discovery of complex biomarkers for research and clinical use," said Schwan. Roche expects the market for DNA sequencing, where Illumina is a world leader, to grow to $2 billion in 2015 from $1 billion today.
"We think gene sequencing will be one of the really big technologies of the future," Schwan said.
Roche expects group sales to grow by a low to mid-single digit rate this year provided exchange rates remain stable.
Healthcare reforms resulting from budget cuts, and a $600 million drop in sales of Avastin to treat breast cancer, also affected pharmaceutical sales last year. Revenue from Tamiflu fell by about $500 million compared to the previous year, as governments ceased stockpiling the drug in preparation for a flu pandemic.
Sales growth was strongest in emerging countries, especially in China, while Europe and Japan lagged behind.
Analysts at Zuercher Kantonalbank said the annual results were encouraging. They noted its pipeline of new drugs, its peer-beating growth projections and the proposed dividend increase of 3 percent to 6.80 francs.