Genentech Inc. (DNA) on Monday said its fourth-quarter profit rose as strong sales of its cancer drugs offset higher expenses, including the cost of launching new lung cancer drug Tarceva (search).

The world's second biggest biotechnology company posted a net profit of $206.6 million, or 19 cents per share, compared with a profit of $126.7 million, or 12 cents per share adjusted for a stock split, in the year-ago period.

Excluding items, the South San Francisco, Calif.-based company posted a profit of 21 cents per share, missing Wall Street's average expectations by 1 cent.

Genentech shares fell to $52.50 in after-hours trading on Inet from their close at $54.43 on the New York Stock Exchange (search), a drop of 3.5 percent.

The company, which is majority owned by Swiss drugmaker Roche Holding AG (search) , in October said fourth-quarter profit would dip as a result of higher research and development spending as well as the cost associated with the Tarceva launch.

But revenue continued to surge, rising 41 percent to $1.32 billion. Product sales for the fourth quarter increased 47 percent to $1,06 billion, led by sales of colon cancer treatment Avastin.

In its third full quarter on the market, Avastin had sales of $200.4 million, up from $183 million in the previous quarter.

Earlier this month, Genentech notified physicians that the Avastin label would now include information about an increased risk of blood clots that can cause heart attacks and strokes, but it is too early to tell if that would affect usage in colon cancer patients.

Tarceva had sales of $13.3 million since its November approval.