* Investor day on March 18 is first since Genentech buyout
* Investors looking for pipeline strength after setbacks
By Katie Reid
ZURICH, March 16 (Reuters) - Investors are hoping Roche Holding AG's first product review since its Genentech buyout will reassure markets about its pipeline strength and justify its premium rating, after a series of recent setbacks.
Roche has had a shaky start to 2010 after sales of its cancer drugs fell short of expectations for last year, while disappointing data on blockbuster Avastin in gastric and prostate cancer have dented expectations for a key drug.
"Investor expectations are high for this event and Roche does not have much margin for error, given the series of minor setbacks recently and the disappointment on 2009 sales," Natixis analysts said in a note.
Still, Roche remains better placed than virtually all of its rivals thanks to its market-leading position in cancer and little near-term patent exposure, giving it a superior long-term growth profile.
Roche, whose rheumatoid arthritis drug ocrelizumab also slipped at a recent hurdle, is trading at around 12 times expected 2011 earnings, still at a premium to rival Novartis on 10, thanks to its impressive drug development.
"With the best-in-class patent protection profile, we expect Roche pharmaceuticals to outpace the overall market growth also in the years to come," said Kepler Capital Markets analyst Martin Voegtli.
The investor day on Thursday in New York is the first such meeting since Roche bought out the minority stake in California-based Genentech last year, and should give more insight into how the integration between the two groups is progressing.
MORE TO ROCHE THAN AVASTIN
Avastin, which is already approved to treat colorectal, breast, kidney and lung cancer, is a closely watched drug as many analysts believe it could be the world's biggest-selling pharmaceutical in a few years time.
Roche has said it expects Avastin to reach peak sales of between 8 billion ($7.53 billion) and 9 billion Swiss francs. It had annual global sales of 6.2 billion francs in 2009.
Avastin, which works by starving tumours of blood, is a flagship for Roche, given its potential to treat new types of cancer, and it recently had success in ovarian cancer.
Cancer drugs MabThera, Herceptin and Avastin are likely to be the medium-term growth drivers for Roche, the Natixis analysts said, adding that together they should generate 50 percent of sales in 2014.
Some analysts believe the market has failed to take notice of Roche's three upcoming blockbuster candidates, dalcetrapib, aleglitazar and RG1678.
These drugs could add 41 percent to its stock price and 19 percent upside to Roche's core earnings in 2015, according to analysts at J.P. Morgan, who will be looking for more details on these drugs on Thursday.
"Roche's late stage portfolio provides excellent diversification. At the current share price, we estimate Roche's pipeline, including Actemra which is now approved in all major markets, comes entirely for free," the analysts said. (Editing by Rupert Winchester)