Roche Holding AG (RHHBF), a Swiss drugmaker, has reduced the amount of revenue it expects to lose to cheaper generic competition this year, offering investors a more favorable near-term outlook. The company now expects copycat medicines to reduce annual sales by about 600 million Swiss francs, or $736 million, compared with its previous estimate of 1 billion francs. Roche also reported better-than-expected first-half earnings, although quarterly revenue matched analyst estimates and management kept its full-year guidance unchanged. Chief Executive Officer Thomas Schinecker said the company was moving toward the upper end of its guidance but remained cautious about how performance may develop during the third quarter.

Roche shares rose as much as 3.2% in Zurich, reversing an earlier decline, as investors weighed the lower expected impact from generic competition against mixed product-level performance. The stock has gained about 4.6% this year but has underperformed Novartis AG, a rival drugmaker. Roche's blockbuster eye medicine Vabysmo recorded weaker U.S. performance, suggesting its recovery may be taking longer than analysts had expected. The reduced generic-sales pressure could still provide Roche with additional breathing room as it works to replace revenue from older medicines facing cheaper competition.

Roche is relying on new drugs and acquisitions to offset about 5.8 billion francs in revenue that analysts expect the company to lose to copycat medicines by 2029, with breast cancer and obesity among its largest potential growth areas. One of the most important assets in that strategy is giredestrant, an experimental breast-cancer pill that Roche plans to launch in the U.S. near the end of the year, subject to regulatory approval. Citi analysts estimate the treatment could generate $14.5 billion in annual sales at its peak, while Roche expects its submission to European Union regulators to be ready within the next year. Different regulatory timelines and growing resistance to high drug prices may make giredestrant an important test of how much European governments are willing to pay for new treatments, potentially influencing Roche's longer-term growth prospects.