Roche gives "sales warning" due to slow-down in Xenical revenues

Swiss drugs major Hoffmann-La Roche reportedly has issued an unofficialwarning that second-quarter 2000 sales would be lower than expected, as a result of less robust turnover of its anti-obesity drug Xenical (orlistat). For the first quarter, Xenical had contributed 250 million Swiss francs ($153.5 million) of sales, and became the company's third best-selling product (Marketletter April 17).

The news led to an immediate 5% drop in Roche's share price, and the company went on to try to dispel fears by telling some analysts and wire services that growth would be in low single-digits, saying that its attempts to tell analysts that their estimates were too high had been misunderstood as meaning there had been little or no growth. And, according to a Wall Street Journal report, a Roche spokesman said the company still expected first-half net income growth to be 10%-15%, in line with analysts' expectations.

Meantime, Roche's selective announcement has led the Swiss stock exchange to check with the company on the way it released the sales warning, according to Reuters, which said an exchange spokesman had told the wire service that "we will have to clear up in detail what actually happened." The thought is that Roche may have violated Swiss stock market rules by not notifying the exchange and the public. The US Securities and Exchange Commission has already proposed a rule to stop so-called selective disclosure, such as conference calls limited to analysts.