Roche Deep Pipeline Continues To Support Long-Term Value Creation

While other Big Pharma companies have spent a lot of the past decade-plus more focused on financial engineering through post-M&A cost-cutting and operational leverage, Roche (OTCQX:RHHBY) has been content to continue investing in clinical assets, augmenting and supplementing that along the way with M&A focused on acquiring compounds and technologies, not cost-cutting opportunities.

The net benefit? As highlighted in a recent report from Goldman Sachs analyst Keyur Parekh, Roche has doubled its enterprise value over the past decade (almost to the day), while increasing its market cap by 2.5 times. Low double-digit annualized returns have made Roche one of the top long-term performers in the group, and management continues to invest heavily in its pipeline.

Although I think Roche has established a difficult bar for future comparisons, I believe they will continue to generate strong returns from their deep pipeline, supporting mid-to-high single-digit growth in revenue, free cash flow, and earnings per share, along with respectable returns of capital to shareholders in the form of dividends.

 

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Roche Deep Pipeline Continues To Support Long-Term Value Creation