Roche , the maker of the Tamiflu flu drug, posted a 29 percent drop in first-half net profit and missed forecasts, hit by financing costs related to its $47 billion acquisition of Genentech.

However, Roche, which is also the world's largest maker of cancer drugs, on Thursday also upped its earnings guidance, now expecting double-digit core earnings per share growth in 2009 and 2010 and said it will use cash flow to repay net debt used in buying out Genentech.

The Swiss group's first-half net profit fell to 4.1 billion Swiss francs ($3.8 billion) from 5.7 billion francs in the same period last year compared to an average forecast of 5.0 billion francs, according to a Reuters poll of 15 analysts.

Total Tamiflu production capacity, including third-party manufacturers, will be expanded to 400 million packs annually by the start of 2010, Roche said.

Healthcare is normally one of the last areas where consumers cut back. But it has recently begun to underperform, hit by prospects of more competition, problems getting new drugs to market and cheaper medicines from generics manufacturers.

(Reporting by Sam Cage)