This presentation contains certain forwar d-looking ...
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2
This presentation contains certain forward-looking statements. These forward-looking statements may be identified by words such as ‘believes’, ‘expects’, ‘anticipates’, ‘projects’, ‘intends’, ‘should’, ‘seeks’, ‘estimates’, ‘future’ or similar expressions or by discussion of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this presentation, among others:1 pricing and product initiatives of competitors;2 legislative and regulatory developments and economic conditions; 3 delay or inability in obtaining regulatory approvals or bringing products to market; 4 fluctuations in currency exchange rates and general financial market conditions; 5 uncertainties in the discovery, development or marketing of new products or new uses of existing
products, including without limitation negative results of clinical trials or research projects, unexpected side-effects of pipeline or marketed products;
6 increased government pricing pressures; 7 interruptions in production; 8 loss of or inability to obtain adequate protection for intellectual property rights; 9 litigation;10 loss of key executives or other employees; and11 adverse publicity and news coverage.Any statements regarding earnings per share growth is not a profit forecast and should not be interpreted to mean that Roche’s earnings or earnings per share for this year or any subsequent period will necessarily match or exceed the historical published earnings or earnings per share of Roche.
For marketed products discussed in this presentation, please see full prescribing information on our website www.roche.com
All mentioned trademarks are legally protected.
Additional information and where to find it
THIS PRESENTATION IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER TO PURCHASE OR A SOLICITATION OF AN OFFER TO SELL ILLUMINA COMMON STOCK. THE TENDER OFFER IS BEING MADE PURSUANT TO A TENDER OFFER STATEMENT ON SCHEDULE TO (INCLUDING THE OFFER TO PURCHASE, LETTER OF TRANSMITTAL AND OTHER RELATED TENDER OFFER MATERIALS) FILED BY ROCHE WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) ON JANUARY 27, 2012. THESE MATERIALS, AS THEY MAY BE AMENDED FROM TIME TO TIME, CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER, THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THESE MATERIALS AND OTHER DOCUMENTS FILED BY ROCHE WITH THE SEC AT THE WEBSITE MAINTAINED BY THE SEC AT WWW.SEC.GOV. THE OFFER TO PURCHASE AND RELATED MATERIALS MAY ALSO BE OBTAINED FOR FREE BY CONTACTING THE INFORMATION AGENT FOR THE TENDER OFFER, MACKENZIE PARTNERS, AT (212) 929-5500 OR (800) 322-2885 (TOLL-FREE).
ROCHE WILL BE FILING A PROXY STATEMENT ON SCHEDULE 14A AND OTHER RELEVANT DOCUMENTS WITH THE SEC IN CONNECTION WITH ITS SOLICITATION OF PROXIES FOR THE 2012 ANNUAL MEETING OF ILLUMINA (THE “PROXY STATEMENT"). PROMPTLY AFTER FILING A DEFINITIVE PROXY STATEMENT WITH THE SEC, ROCHE WILL MAIL THE PROXY STATEMENT AND A PROXY CARD TO EACH ILLUMINA STOCKHOLDER ENTITLED TO VOTE AT THE 2012 ANNUAL MEETING. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT CAREFULLY AND IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THESE MATERIALS (WHEN AVAILABLE) AND OTHER DOCUMENTS FILED BY ROCHE WITH THE SEC AT THE WEBSITE MAINTAINED BY THE SEC AT WWW.SEC.GOV. THE PROXY STATEMENT AND RELATED MATERIALS MAY ALSO BE OBTAINED (WHEN AVAILABLE) FOR FREE BY CONTACTING THE INFORMATION AGENT FOR THE TENDER OFFER, MACKENZIE PARTNERS, AT (212) 929-5500 OR (800) 322-2885 (TOLL-FREE).
ROCHE HOLDING LTD, CKH ACQUISITION CORPORATION AND THE INDIVIDUALS NOMINATED BY CKH ACQUISITION CORPORATION FOR ELECTION TO ILLUMINA’S BOARD OF DIRECTORS (THE “ROCHE NOMINEES") MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM ILLUMINA STOCKHOLDERS FOR USE AT THE 2012 ANNUAL MEETING OF STOCKHOLDERS, OR AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF. THE DIRECTORS AND EXECUTIVE OFFICERS OF ROCHE HOLDING LTD AND CKH ACQUISITION CORPORATION WHO MAY BE PARTICIPANTS IN THE SOLICITATION OF PROXIES HAVE NOT BEEN DETERMINED AS OF THE DATE OF THIS PRESS RELEASE. NO ADDITIONAL COMPENSATION WILL BE PAID TO SUCH DIRECTORS AND EXECUTIVE OFFICERS FOR SUCH SERVICES. INVESTORS AND SECURITY HOLDERS CAN OBTAIN ADDITIONAL INFORMATION REGARDING THE DIRECT AND INDIRECT INTERESTS OF THE ROCHE NOMINEES AND OTHER PARTICIPANTS BY READING THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE.
3
Roche in 2011: Targets fully achieved
7
Targets for 2011 FY 2011
Pharma Low single-digit 1,2 +1%
Diagnostics Above market1 +6%
Group Low single-digit 1,2 +2%
Operational excellence CHF 1.8 bn ~CHF 1.8 bn
Core EPS Around 10%1 +11%
Dividend min CHF 6.60 CHF 6.80 +3%
1 Growth rates, at constant exchange rates; 2 Excluding Tamiflu 2011 dividend as proposed by the Board of Directors
Priorities 2011
8
Improve Efficiency
• Implement ‘Operational Excellence’ as announced
• Capture remaining synergies from Genentech integration
Drive Innovation and Growth
• Progress late-stage pipeline• Prepare launches for potentially
three NMEs (BRAF inhibitor, pertuzumab, hedgehog inhibitor)
• Launch key diagnostic tests (HPV, BRAF, KRAS, EGFR)
2011: Bring personalised healthcare to patients
Group core operating profit (CHF bn) and margin
Continuous growth in operating profit and margin
15.116.3 16.6
15.1
33.0% 33.2%34.9% 35.6%
2008 2009 2010 2011
+6% in CER1
1 CER = constant exchange rates9
16,591
-609
-1,140
+1,764*
TamifluAvastin US/WECellCept US/WEBoniva US/WE
sales Profit growthunderlyingbusiness1
Cost savings OperationalExcellence
Core Operating
Profit2011
@ FY10Fx rates
CoreOperating
Profit2010
@ FY10Fx rates
– US healthcare reform incl. excise tax– EU austerity measures– Japan price cuts 2010 +6%
17,643+1,037
2011: Core operating profit developmentProfit growth driven by productivity improvements
10* corresponds to CHF 1,836 m at exchange rates at the time of Operational Excellence announcement;1 including Genentech integration synergies
CHF m
Continuous increase in dividends and pay-out ratio
11
2.002.50
3.40
4.605.00
6.006.60 6.80
2004 2005 2006 2007 2008 2009 2010 2011
CHF
Average yearly dividend growth (2004-2011): 19%
1 compound annual growth rate
2011Payout Ratio
of 55.3%
Pay-out ratio calculated as dividend per share divided by core earnings per share (diluted); 2011 as proposed by the Board of Directors
Priorities 2011
12
Improve Efficiency
• Implement ‘Operational Excellence’ as announced
• Capture remaining synergies from Genentech integration
Drive Innovation and Growth
• Progress late-stage pipeline• Prepare launches for potentially
three NMEs (BRAF inhibitor, pertuzumab, hedgehog inhibitor)
• Launch key diagnostic tests (HPV, BRAF, KRAS, EGFR)
2011: Bring personalised healthcare to patients
Actemra scphIII Japan
TarcevaEURTAC
2011: Science translates into clinical success17 positive trials
13
2 0 1 1
MetMAbNSCLC
Avastin+HerceptinAVEREL
ZelborafBRIM 3
dalcetrapibdal-PLAQUEdal-VESSEL
lebrikizumabMILLY
LucentisRIDE
T-DM1phII
Avastin+pemetrexed
AVAPERL
pertuzumabCLEOPATRA
Avastin OCOCEANS
LucentisRISE
ErivedgeERIVANCE
LucentisHARBOR
Positive trials
Herceptin scHANNAH
ActemraBUILDER I/II
GA101GAUSS
ActemraACT-Ray
2011: Three New Molecular Entities filedExpanding into selected therapeutic franchises
14
20152012 2013 20142011
aleg
litaz
ar
Met
MA
b
ocre
lizum
ab
T-D
M1
pert
uzum
ab
Zelb
oraf
Eriv
edge
mer
icita
bine
PotentialFilingYear
GA
101
Gly
T-1
dalc
etra
pib
Larger(> 1 bn)
Smaller(up to ~1 bn)
Non risk-adjusted
Metabolism
Oncology
Immunology
Neuroscience
Virology
dano
prev
ir
2016
lebr
ikiz
umab
Personalised Healthcare is a reality todaySignificant progress in 2011
15* Approved in the US, positive CHMP opinion in EU
PertuzumabMetastatic Breast Cancer
HER2 expression level
APPROVED*
LebrikizumabSevere uncontrolled asthma
Periostin level
ZelborafMetastatic MelanomaBRAF V600E Mutation
T-DM1Metastatic Breast CancerHER2 expression level
Mericitabine and danoprevir Hepatitis C
HCV viral load, genotype
MetMAbNSCLC
Met Status
FILED TO FILE IN 2012
In Ph III Ph III Ph III decision in 2012
Access to leading IHC/ISH* technology
Access to leading ECL** technology
Access to leading PCR*** technology
Access to leading Sequencing technology
*Immunohistochemistry / In situ hybridisation ** Electrochemiluminescence ***Polymerase Chain Reaction
Technologies
Strategic rationaleTransforming acquisitions have strengthened the Diagnostics business
Market position
1991 2003 2007 2012
SequencingIHC/ISH*Immunoassays Clinical ChemistryPCR***
# 1 Sequencing
# 1 TissueTesting
# 1Serum Work Area
# 1 Molecular
Testing
17
2012 sales outlook: Improved base line and new product launches
19
2011 sales
Declining•CellCept•Boniva/Bonviva•Lucentis•Neorecormon/Epogin
•Xenical•Tamiflu
Growing•Diagnostics
•Herceptin•MabThera/Rituxan•Pegasys•Avastin•Actemra•Tarceva
New launches•Zelboraf•Erivedge•pertuzumab
2012sales
Priorities 2012
20
Improve Efficiency
• Achieve ongoing annual savings from ‘Operational Excellence’ of CHF 2.4 bn(vs. CHF 1.8 bn in 2011)
• Continued focus on productivityimprovements and net working capital
Drive Innovation and Growth
• Progress late-stage pipeline• Launch three NMEs
(Zelboraf, Erivedge, pertuzumab)• Launch 16 key diagnostic products
2012: Continuously adapt to a changing environment
Outlook for 2012
21Barring unforeseen events; CER=Constant Exchange Rates; * vs. 2011: CHF 1.8 bn
Sales growth (CER) Group & Pharma: low to mid-single digitDiagnostics: above market
Core EPS growth target (CER)
High single-digit
Dividend outlook Continue attractive dividend policy
Operational Excellencesavings 2012+ : CHF 2.4 bn*
2011: Pharma sales in-line with guidance
23
2010 2011 ExcludingCHF m CHF m CHF CER Tamiflu1
change in %
Pharmaceuticals Division 37,058 32,794 -12 0 +1
United States 14,071 12,223 -13 +2 +3Western Europe 9,467 8,221 -13 -3 -4Japan 4,319 3,817 -12 -6 -3International 9,201 8,533 -7 +3 +7
1 CER = Constant Exchange Rates
2011: Pharma quarterly growth
24Excluding Tamiflu, absolute amounts in CHF m at Constant Exchange Rates (CER) average 2010; all growth rates at CER
-200
-100
0
100
200
300
400
500
Q1 Q2 Q3 Q4
US
International
Japan
WE
+1% +1%0%
+3%
CHF
m
2011: Pharma sales driversOncology, Lucentis and Actemra main growth drivers
2525Absolute amounts in CHF m at Constant Exchange Rates (CER) average 2010; all growth rates at CER
-800 -600 -400 -200 0 200 400 600
Avastin
NeoRecormon/Epogin
Mircera
Boniva/Bonviva
CellCept
Xeloda
Actemra/RoActemra
Lucentis
MabThera/Rituxan
Herceptin
InternationalUSJapanWestern Europe
+9%
+8%
+23%
+73%
-14%
-22%
-23%
-7%
Tamiflu: -467, -53%
+50%
+8%
2011: Pharma Division Profitability improvement in a challenging environment
26
Sales 32,794 100.0
Royalties & other op inc 1,453 4.4Cost of sales -7,053 -21.5M & D -5,564 -16.9R & D -7,173 -21.9G & A -1,051 -3.2
Core operating profit 13,406 40.9
2011 vs. 2010CER growth
2011CHF m % sales
CER = Constant Exchange Rates
5%
-6%
10%
-2%
-6%
-2%
9%
0%
G&A excl. excise tax
2011: Solid growth of the oncology franchise
27
Major brandsCHF bn
CER growth
CER = Constant Exchange Rates Oncology 2011 sales: 19.2 bn
Growth in US, Emerging markets and Japan
Strong growth in key markets: US, China and Brazil. US growth partially driven by shortage of IV 5FU
US & EU: Impact from mBC indication and austerity measures; strong growth in Emerging markets
Continued uptake in 1L maintenance in NHL approved in Oct ‘10 in EU and Jan ‘11 in US; further uptake in CLL
0 1 2 3 4 5 6 7
Tarceva
Xeloda
Herceptin
Avastin
MabThera/Rituxan
+9%
+8%
-7%
+7%
+8%
Expanded access in Emerging markets, increased HER2 testing and further uptake in HER2-positive gastric cancer
LucentisCompetitive environment in 2012
281 CER = Constant Exchange Rates; AMD = wet age-related macular degeneration; DME = diabetic macular edema
CHF m
US sales
• AMD: Lucentis share stable following CATT year 1 data release
• Market share in RVO up: 27% from 20% in Q4 ‘10
• Diabetic Macular Edema (DME): US filed, PDUFA August 2012
0
400
800
1200
1600
2008 2009 2010 2011
+23%1
Actemra/RoActemra in Rheumatoid Arthritis Growing in all regions
29
0
100
200
300
400
500
600
700
2008 2009 2010 2011
CHF mDrivers for future growth
• DMARD IR (first-line biologic) filed in US in December 2011
• H2H trial vs Humira (ADACTA): readout H1 2012
• Subcutaneous formulation: filing planned 2012 EU and US
Actemra/RoActemra sales
+73%1
1 CER = Constant Exchange Rates
2011/2012: Three potential New Molecular Entities launches
30
Zelboraf (BRAF inh.)
Metastatic melanoma
Approved in US Q3 2011Recommended for approval in EU
Erivedge (Hedgehog inh.)
Advanced basal cell carcinoma
Approved in US Jan 2012Filed in EU Q4 2011
pertuzumab
HER2+ 1L metastatic breast cancerFiled in US and EU Dec 2011
Establishing Zelboraf as new standard of care
31
78% 76%
9% 14%
13% 10%
1st line treatment(n=121)
2nd line treatment(n=74)
% o
f BRA
F v6
00 m
utat
ion-
posi
tive
met
asta
tic m
elan
oma
patie
nts
In BRAF V600 patients, Zelboraf is the dominant therapy(~60% of patients currently tested for BRAF status)
Other (Temodar, IL2, DTIC, Platinum, Taxane, Avastin...)
Yervoy
Zelboraf
Source: Quarterly chart audit: Charts of mM patients starting 1L or 2L therapy between Aug 15 and Nov 28; Confidence intervals for Zelboraf market share: +/-10%
Week 16no BCC
on biopsy
Erivedge in metastatic and locally advanced Basal Cell Carcinoma
32Week 20
Baseline
Week 8
32
In collaboration with Curis; A. Sekulic et al., EADO 2011
Approved in US Jan 2012Filed in EU Q4 2011
BCC Prevalence AdvancedBCC Prevalence
Europe andAustralia
US
1,900K
14K
1,850K
8K
Epidemiology*
*Basal cell carcinoma is not tracked in most cancer registries, including SEER. Prevalence is difficult to estimate and there is high uncertainty in our projections. Shown are estimates from incidence rates reported in literature and primary market research.
Pertuzumab in HER2+ 1st line mBCCLEOPATRA study
33D, docetaxel; PFS, progression-free survival; T, trastuzumab
0 5 10 15 20 25 30 35 400
10
20
30
40
50
60
70
80
90
100
Time (months)
Pertuzumab+T+D: median 18.5 months
Placebo+T+D: median 12.4 months
HR = 0.6295% CI 0.51‒0.75
p<0.0001
Δ = 6.1 months
Prog
ress
ion-
free
surv
ival
(%)
Filed in US and EU Dec 2011
Continuous sales growth in key emerging markets
34
0
1
2
3
4
2007 2008 2009 2010 2011
+3%+0%
+14%
+13%
CHF bn
Excluding Tamiflu, absolute amounts in CHF m at Constant Exchange Rates (CER) average 2010; all growth rates at CER
Brazil
China
India
Turkey
Mexico
Russia
Korea
Emerging markets: Where to grow?
35
2000 2005 2010
Objective: maintain high share in private segment –expand to public segment
Roche to maintain high share
Out of pocket
Private insurance
Public payers
Growing segment:We are testing various
models to increase access to medicinesSh
are
of fi
nanc
ing
by p
ayer
type
Illustrative for emerging markets
Second brand
Patient Assistance Program
Access to medicines in emerging marketsModels designed for individual market needs
36
Higher priced 1st brand for private market Lower priced 2nd brand for public market
Assist patients to initiate or continue treatment while maintaining list price
e.g. Egypt
e.g. China
Tailored models Designed for individual markets, depending on the local needs
Patient Assistance: Herceptin program in ChinaCreating platform for public reimbursement
371 CER = Constant Exchange Rates
0
100
200
300
400
500
600
700
AverageJan-July
Aug Sep Oct Nov Dec
New
pat
ient
sre
crui
ted
2011 China Herceptin sales: +128%1
Start:August 2011
6 cycles (commercial) + max. 8 cycles (donation)
Second brand1: Pegasys in Egypt Significant sales increase
38
CHF m
Sales Performance – Before and after 2nd brand launch
0102030405060708090
100
2002 2003 2004 2005 2006 2007 2008 2009 2010
Pegasys Sales Pegferon Sales
1 First brand (Pegasys) at full price; second brand (Pegferon) at reduced price
Major clinical and regulatory news flow
39
Timeline Compound Indication Milestone
Avastin mCRC Ph III TML
2012
pertuzumab 1st line HER2+ mBC US, EU approval
Erivedge advanced BCC US approval EU approval (2012/13)
Zelboraf metastatic melanoma EU approval
Lucentis DME US approval
T-DM1 2nd line HER2+ mBC Ph III EMILIA
Herceptin subcutaneous early HER2+ BC Ph III HANNAH (data presentation)
Herceptin adjuvant HER2+ BC Ph III HERA 2 years vs. 1 year
MabThera subcutaneous front-line follicular NHL Ph III
Actemra RA DMARD IR Ph III ADACTA H2H vs. Humira
Actemra subcutaneous RA, moderate to severe Ph III SUMMACTA/BREVACTA
Avastin newly diagnosed glioblastoma Ph III AVAglio
2013
dalcetrapib Atherosclerosis CV risk red. Ph III dal-OUTCOMES final analysis;2nd interim analysis in H1 2012
GA101 Front line CLL Ph III vs. chemotherapy
Glycin reuptake inh (GlyT-1) Schizophrenia Ph III (several studies)
Oncology and CV outcome studies are event driven, timelines may change
2010 2011 CHF in %CHF m CHF m growth CER
2011: Diagnostics Division sales Sustained high growth above the market*
Professional Diagnostics 4,858 4,686 -4% 9%Diabetes Care 2,959 2,675 -10% 2%Molecular Diagnostics 1,189 1,094 -8% 4%Applied Science 868 740 -15% -3%Tissue Diagnostics 541 542 0% 15%
Diagnostics Division 10,415 9,737 -7% 6%
* IVD market growth estimated 4%42
CER = Constant Exchange Rates
43
2011 vs. 2010CER growth
2011CHF m % sales
Sales 9,737 100.0
Royalties & other op inc 129 1.3Cost of sales -4,064 -41.7M & D -2,403 -24.7R & D -900 -9.2G & A -321 -3.3
Core operating profit 2,178 22.4
2011: Significant profit and margin increase Driven by strong sales and ongoing cost savings
14%
-12%
12%
8%
1%
-7%
6%
CER = Constant Exchange Rates
44
Outperformance in spite of a challenging market environment
Sources: 3rd party IVD consultancy, Analyst reports, Roche Analysis; *Q4 2011 market growth is an estimate
Quarterly Market & Roche Growth (%)
20112010
FY 2011: 6%
0
1
2
3
4
5
6
7
8
9
10
MarketRoche
Q3Q2Q1Q4Q3Q2Q1 Q4
Leveraging Key Strengths
• Worldwide IVD market leader
• Strong commercial presence
• Total solution offering *
North America+4%
25% of divisional sales
Latin America+15%
7% of divisional sales
Japan+6%
5% of divisional salesEMEA1
+3%
50% of divisional sales
2011: Diagnostics Division sales Strong growth in all regions
1 Europe, Middle East and Africa;All growth at CER (Constant Exchange Rates)
Asia Pacific+17%
13% of divisional sales
45
Roche is market leader in Asia PacificChina driving growth
Asia Pacific market by competitors
Source: Clearstate research and Roche estimates46
Outgrowing market nearly two-fold
Roche Diagnostics sales in China
0
0.5
1
1.5
2
2.5
3
3.5
2005 2006 2007 2008 2009 2010 2011
CAGR of 36%
CNY
bn
Roche23%
Abbott
Siemens
BeckmanBiomerieux
SysmexJ&J
BDHitachi
Others
47
2011: Growth driven by Professional and Tissue Diagnostics
CHF bn2011 vs. 2010CER growth
0 1 2 3 4 5
Tissue Dia
AppliedScience
MolecularDia
DiabetesCare
ProfessionalDia
EMEANorth AmericaRoW
+9%
+2%
+4%
-3%
+15%
Lower demand for H1N1 testing and slowdown in research funding; Launch of LightCycler Nano for PCR
Launch of HPV test in US; Launch of companion diagnostics oncology tests BRAF (ww) and EGFR & KRAS tests (CE Mark)
Maltose-independent test strip chemistry for Accu-ChekAviva approved in US; Strong growth in emerging markets
Expanding immunoassay menu; cobas c 702 clinical chemistry module launched; Acquisitions enhance product offering
29 new antibody (IHC) assays launched; US launch of HER2 dual ISH test; mtm labs acquisition
EMEA = Europe, Middle East and Africa, APAC = Asia Pacific CER = Constant Exchange Rates
48
FDA clears Accu-Chek Nano SmartView system
1 Not available in the US
• Small blood glucose (bG) monitoring system with sleek design and improved functions
• no coding required to calibrate meter andtest strips
• First launch of next generation Accu-Chekproduct portfolio in the US
• Expanding the success of the Accu-Chek Aviva Nano1 & Accu-Chek Performa Nano1 product line
49
Launch of cobas 4800 BRAF, EGFR* and KRAS* testsEnsuring the right therapy for the right patient
• Fast and reliable biomarker detection1,4
High sensitivity, broad mutation coverage, results < 8 hours
• Very accurate and highly reproducible results by PCR analysis1,3,4
Better sensitivity compared to Sanger sequencing1-4
• Pharma and Diagnostics PHC collaboration Joint launch of Zelboraf & BRAF V600 test
* Not available in the US; 1 S. Lee et al. Virchows Archv 2011, 2 J. Sosman et al. New Eng J Med in press 2012, 3 S. Anderson et al. Arch Path & Lab Med in press 2012, 4 cobas EGFR Mutation Test Package Insert
Acquisitions in 2011Strengthening product offering
Complement cobas HPV test, enhance offering
• exclusive IP on p16 biomarker
• cervical cancer screening, management & diagnosis
PVT mtm LabsVerum Diagnostica*
Improve labs’ testing efficiency
• post and pre-analytics automation for labs
• connectivity to cobasmodular analyzers
Expand coagulation testing portfolio
• platelet function testing
• growing market with high medical need
50
Professional Diagnostics Tissue Diagnostics
* Acquisition was completed on January 3, 2012.
2010 Business Mix
Illumina proposed acquisition: Company overviewSolid business with strong revenue and margins
Geographic Mix
20%
25%55%
ROW
Europe
U.S.
Segment Mix
6%
7%
35%
22%
30%Sequencing Instruments Service
Arrays Instruments
Arrays Consumables
Sequencing Consumables
10%
80%
0%
10%
Customer Mix
Pharma/Biotech
ClinicalAcademic & Gov’t
Source: Analyst reports, Thomson Financials, Company website * not complete product range
Company Facts• Founded in 1998• Based in San Diego, California• ~2,100 FTEs (year-end 2010)2010 Financials• Revenue ’10: USD 903 m• CAGR ‘06–’10: 49%• Operating Margin: 23%
Product Portfolio*Sequencing Microarrays
BeadXpress
HiScan iScanHiSeq2000
GA IIx
HiScanSQ
MiSeq
52
HiSeq1000
Applied/Industry
Illumina proposed acquisition: Rationale
53
Strengthen portfolio• complement offering in sequencing• broaden menu of technologies for diagnostics customers
Entry into IVD• leverage diagnostics expertise to accelerate transition into
routine clinical use• unique Roche Rx-Dx collaboration for PHC solutions
Unlock commercial potential• leverage each company’s strengths• customer segments and geographic reach
Increase market participation• strengthen presence in fast-growing market
Key launches 2012
55
Area Product Market BA*
Instruments/Devices
Labs cobas t 611 - Coagulation analyzer BenchMark Special Stains - Tissue stainerVENTANA iScan HT - Digital tissue scanner
EUWWWW
RPDRTDRTD
Point of Care cobas b 101 - Multi lipid and glucose analyzercobas b 123 - Blood gas analyzer
EUUS
RPDRPD
Diabetes Care Accu-Chek Nano SmartView - bG1 monitoring systemAccu-Chek Combo – Insulin pump & bG meter combinedAccu-Chek Mobile – Next generation strip free bG meterSOLO Micropump – Insulin pump and bG meter combined
USUSEUEU
RDCRDCRDCRDC
Tests/Assays
Oncology HE4 - Ovarian cancerER – Breast cancerCINtec p16 Histology- Cervical cancerGS GType Sequencing Primer Sets- Leukemia
USUSEU, USWW
RPDRTDRTDRAS
Infectious Diseases
CMV – Cytomegalovirus infectionsCT/NG - Chlamydia and gonorrhoea infections
USUS
RMDRMD
Metabolism Vitamin D total - Vitamin D2 & D3 US RPD
* Business Areas. RPD: Roche Professional Diagnostics; RDC: Roche Diabetes Care; RMD: Roche Molecular Diagnostics ; RAS: Roche Applied Science; RTD: Roche Tissue Diagnostics; 1 bG: blood glucose
Achieve sales growth above the market
2011: Highlights
58
Core EPS +11%1
• Operating profit, financial result & taxes driving profit growth
Operational Excellence / Productivity improvements• CHF 1.8 bn savings realized in 2011; further implementation on track
Strong operating free cash flow• 14% CER growth (-3% in CHF)• Early buy-backs of CHF 3.2 bn notes
1 CER = Constant Exchange Rates
Dividend• Increased for the 25th consecutive year and will result in an increased pay-out
ratio of 55.3%
Sales 47,473 42,531 -10 +1Core operating profit 16,591 15,149 -9 +6
as % of sales 34.9 35.6
Core net financial income -2,272 -1,581 -30 -19Core tax rate in % 21.9 21.3 -0.6 p
Core net income 11,181 10,685 -4 +11as % of sales 23.6 25.1Attributable to Roche shareholders 10,955 10,470 -4 +11
Core EPS (CHF) 12.78 12.30 -4 +11
Operating free cash flow 14,149 13,733 -3 +14% of sales 29.8 32.3 +2.5 p
Free cash flow 4,699 3,904 -17 +21% of sales 9.9 9.2 -0.7 p
2011: Group performance Core EPS growth +11%1
59
CHF m % Change2010 2011 CHF CER
1 CER = Constant Exchange Rates
6%
-3%6%
-1%
-2%
-1%7%
1%
2011: Group operating performance Positive effects of Operational Excellence
60
-9% in CHF
G&A excl. excise tax
Higher royalty, milestone and product disposal incomeLower royalty (Herceptin, Tamiflu and Boniva) and manufacturing costsPrimary care sales force reduction & cost management
Project prioritisation and OpEx savings
Increase due to excise tax in the US
Efficiency improvements
Major driversSales
Royalties & other op. incCost of salesM & DR & DG & A
Core operating profit
2011 vs. 2010CER growth
Growth of Diagnostics Division, Herceptin, MabThera/Rituxan, Lucentis, and Actemra
CER = Constant Exchange Rates
16,591
-609
-1,140
+1,764*
TamifluAvastin US/WECellCept US/WEBoniva US/WE
sales Profit growthunderlyingbusiness1
Cost savings OperationalExcellence
Core Operating
Profit2011
@ FY10Fx rates
CoreOperating
Profit2010
@ FY10Fx rates
– US healthcare reform incl. excise tax– EU austerity measures– Japan price cuts 2010 +6%
17,643+1,037
2011: Core operating profit developmentProfit growth driven by productivity improvements
61* corresponds to CHF 1,836 m at exchange rates at the time of Operational Excellence announcement;1 including Genentech integration synergies
CHF m
Headcount development Net reduction ~2,000; growth in Diagnostics & China
62
4,800
Left3,850
OpEx target2012+
OpEx status31.12.2011
82,104
80,129
30/09/2010 31/12/2011
Transfers to 3rd parties
OpEx Left-3,850
Others, net -15
+770
Dia +1,489
Headcount developmentOpEx reduction1
1 net of transfers to 3rd parties
Reference base for OpEx
Notified 690
4,540
-369
Pharma China
16,27214,836
1,742
16,59114,776
2,202
15,14913,406
2,178
Roche Group Pharma Division Diagnostics Division
33.2%34.9% 35.6%
38.0%39.9% 40.9%
17.3%21.1% 22.4%
CHF m
% of sales
+1.8 %p1
(+0.7 %p)
+1.6 %p1
(+1.3 %p)
+2.1 %p1
(+1.0 %p)
+14 %1
(-1 %)
+5 %1
(-9 %)
+6 %1
(-9 %)
2010 20112009
Group core operating profit and margin Strong margin increase over years
631 CER = Constant Exchange Rates
High operating free cash flow and margin
64
12.4
15.714.1
13.7
27.1%
32.1%29.8%
32.3%
2008 2009 2010 2011
Group operating free cash flow (CHF bn) and margin
+14%1
CHF bn
% of sales
1 CER = Constant Exchange Rates
Cash flow development 2010 – 2011Higher free cash flows
65
14'149
4'699
5'265
OFCF Dividend Tax andtreasury
FCF
16'102
5'670
5'762
OFCF Dividend Tax andtreasury
FCF
OFCF = Operating free cash flow; FCF = Free cash flow
2010 2011
+14%(CHF: -3% to 13,733)
All at constant exchange rates average full year 2010
CHF m
66
Core net financial resultContributor to earnings growth
-50
-40
-30
-20
-10
0
10
20
30
2008 2009 2010 2011
Net cash (debt) (CHF bn)Financial income (CHF bn)
Financing costs (CHF bn)
Liquid funds
Debt Net cash (debt)
Core financial income and financing costs excl. net pension management
-0.24
-1.80
-2.17
-1.66
0.44
0.29
-0.01
0.15
2008 2009 2010 2011
Increasing dividend pay-out ratio
67
5.00
6.006.60 6.80
44.8%48.6%
51.6%55.3%
2008 2009 2010 2011
Dividend(CHF)
Dividendpay-out ratio
2011 as proposed by the Board of Directors
0%
25%
50%
75%
100%
2009-2010
2011 2012 2013 2014 2015 2016 2017 2019 2021 2039
42% of original Genentech debt paid back already 9.4% repaid in 2011
69
58%
2011 early buy-backs:
• 2014 USD 1 bn (early redemption option)• 2013 EUR 968 m (tender offer)• 2012 CHF 302 m (tender offer)• 2015 GBP 350 m (tender offer)• 2023 GBP 50 m (tender offer)
9.4%
At fx rates of date of issuance 2009
Roche: Aiming for a sustainable net debt leverage of 0-15%
70
302520151050
RocheGSK
Abbott
Amgen
Gilead Bayer
Pfizer
LillyNovartis
Becton D.
BMS
MerckAZ
J&J
Biogen
Sanofi
Takeda
35
S&P rating
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
Leverage1 (%)
-15 -10 -5-35 -30 -25 -20
AAAAA+AAAA-A+AA-BBB+BBBBBB-BB+
1 Net Debt / Total Assets (%)Source: Thompson Datastream; Bloomberg (May 23; 2011); BCG analysis
2010:31%
2011: 25%
31 December 2011: Balance sheet Bond repayments of CHF 4 bn; equity ratio at 24%
33.4 33.3
16.7 16.9
10.9 11.3
11.7 14.5
34.4 30.9
15.0 16.2
Non-currentassets
Assets Equity & liabilities
Non-currentliabilities
Equity(Net assets)
Other currentassets
Cash andmarketablesecurities
Currentliabilities
CHF bn
61.6 61.661.0
19% 24%
55%
27%
18%
54%
28%
18%
56% 50%
25% 26%
61.0
31/12/10 31/12/11 31/12/10 31/12/11
+2%
+3%
0%
+9%
-10%
+27%
+1% +1%
% change in CER vs 31/12/10
% change in CER vs 31/12/10
Net debt/total assets:
25%
71CER = Constant Exchange Rates
Tighter management of receivables due to increasingly challenging environment
72
0
2'000
4'000
6'000
8'000
10'000
12'000
2010 2011 2010 2011
DiagnosticsPharma
Group receivables
Receivables in Southern European
countries*
1 at CER (Constant Exchange Rates) * Spain, Italy, Portugal and Greece
+6%1
-4%1
Implementing action plans in critical markets
• New commercial policies introduced
• Strict credit limits
• Forfaiting deals
• Successful settlement of EUR 0.4 bntrade receivables in Greece with government bonds
CHF
m
Financial terms
• $44.50 per share total consideration of $ 5.7 billion
Status
• Commenced tender offer to purchase all of the outstanding common stock of Illumina Illumina to respond within 10 business days
• Commenced proxy process for the next Illumina annual shareholder meeting (proposal to shareholders to appoint a majority of Roche-nominated directors to Illumina’s Board)
• Commenced regulatory process73
Illumina TransactionFinancial terms / Status
0.96 0.95 0.92 0.90 0.87 0.84 0.820.78
0.87 0.90 0.91 0.93
0.89
1.04
J F M A M J J A S O N D
1.28 1.30 1.29 1.30 1.25 1.21 1.181.12
1.20 1.23 1.23 1.23
1.23
1.38
J F M A M J J A S O N D
average YTD 2011
2011/12 currency impact on Swiss Franc results
75
Monthly average fx rate 2011
CHF/USD
CHF/EUR
average YTD 2010
-15%
-11%average YTD 2011
Q1 HY Sept YTD
FY
Sales -2 0 +3 +3
Core operating profit
-1 +2
Core EPS -2 +1
Assuming the 31 Dec 2011 exchange rates remain stable until end of 2012, 2012 impact is expected to be (%p):
average YTD 2010
Priorities 2012
76
Improve Efficiency
• Achieve ongoing annual savings from ‘Operational Excellence’ of CHF 2.4 bn(vs. CHF 1.8 bn in 2011)
• Continued focus on productivityimprovements and net working capital
Drive Innovation and Growth
• Progress late-stage pipeline• Launch three NMEs
(Zelboraf, Erivedge, pertuzumab)• Launch 16 key diagnostic products
2012: Continuously adapt to a changing environment
Outlook for 2012
77Barring unforeseen events; CER=Constant Exchange Rates; * vs. 2011: CHF 1.8 bn
Sales growth (CER) Group & Pharma: low to mid-single digitDiagnostics: above market
Core EPS growth target (CER)
High single-digit
Dividend outlook Continue attractive dividend policy
Operational Excellencesavings 2012+ : CHF 2.4 bn*
7979
Roche Group development pipeline
Marketed products development programmes
Roche Pharma global development programmes
Roche Pharma research and early development
Genentech research and early development
Roche Group 2011 results
Diagnostics
Foreign exchange rate information
phase I (47 NMEs+2 AIs)
NMEAdditional Indication
OncologyImmunologyVirologyCardioMetabolismNeuroscienceOphthalmologyOthers
RG-No Roche Genentech managedCHU Chugai managed
CIF/MEK inh solid tumorsRG7167
Raf & MEK dual inh solid tumorsRG7304
MDM2 ant solid & hem tumorsRG7112
BRAF inh (2) BRAF mut melanoma RG7256
PlGF MAb solid tumorsRG7334
glypican-3 MAb liver cancerRG7686
PDL1 MAb solid tumorsRG7446
BACE inh Alzheimer’s RG7129
ABCA1 inducer dyslipidemiaRG7273
GABRA5 cogn. disordersRG1662
MEK inh solid tumorsRG7420
AKT inhibitor solid tumorsRG7440
MEK inh solid tumorsRG7421
CD22 ADC hem malignanciesRG7593
CRTH2 antag asthmaRG7185
HER3/EGFR m. epithelial tumorsRG7597
anti-angiogenic solid tumorsRG7594
IAP ant solid tum & lymphomaRG7459
FGFR3 MAb oncologyRG7444
CatS antag CV risk in CKD RG7236
GIP/GLP-1 dual ago type 2 diabetesRG7685
PI3K inh solid tumorsRG7604
- ADC prostate ca.RG7450
ADC hematologic tumorsRG7596
ADC ovarian ca.RG7458
- solid tumors or NHLRG7603
CD44 MAb solid tumorsRG7356
ALK inhibitor NSCLCCHUPI3K inh solid tumorsCHU
Bcl-2 inh CLL and NHLRG7601
ADC oncologyRG7599
ChK-1 inh solid tum & lymphomaRG7602
Roche Development PipelineProjects in Phase 1
Tweak MAb oncologyRG7212
V1 receptor antag autism RG7314
- metabolic diseasesRG7652
ADC multiple myelomaRG7598
Oncology Other DTAs
WT-1 peptide cancer vaccineCHU
IL-6 MAb RACHU
Status as of December 31, 2011
HER3 MAb solid tumorsRG7116CSF-1R MAb solid tumorsRG7155
MDM2 ant solid & hem tumorsRG7388
Zelboraf + ipilimumab met. melanomaRG7204
TSLPR MAb asthmaRG7258IL-17 MAb autoimmune diseases RG7624
TLR7 agonist HCVRG7795- infectious diseaseRG7667 *
ADC oncologyRG7600
IL-17 MAb inflammatory diseases RG4934
Lucentis sust. deliv. AMD/RVO/DMERG3645
80
phase II (21 NMEs + 7 Als)
phase III(8 NMEs + 29 Als)
Registration(3 NMEs + 5 Als)
NMEAdditional Indication
RG-No Roche Genentech managedCHU Chugai managedRG105 MabThera is branded as
Rituxan in US and JapanRG1569 Actemra is branded as
RoActemra in EU
vismodegib operable BCCRG3616
onartuzumab (MetMAb) mNSCLCRG3638* *
pertuzumab HER2+ EBC RG1273
pertuzumab HER2+ mBC 2nd lineRG1273
T-DM1 HER2+ EBCRG3502
Avastin ovarian cancer 1st lineRG435*
Tarceva NSCLC EGFR mut 1st lineRG1415*
MabThera ANCA assoc vasculRG105
Xolair chronic idiopathic urticariaRG3648
Rituxan NHL fast infusionRG105Avastin HER2+ BC adjRG435
Avastin NSCLC adjRG435
bitopertin schiz neg symptomsRG1678
Avastin HER2-neg. BC adjRG435Avastin relapsed ovarian caRG4351
Avastin high risk carcinoidRG435Avastin glioblastoma 1st lineRG435
Avastin triple-neg. BC adjRG435
aleglitazar CV risk reduction in T2DRG1439dalcetrapib atherosc CV risk redRG1658
Lucentis AMD 0.5 mg PRN RG3645
pertuzumab HER2+ mBC 1st lineRG1273
Herceptin HER2+ BC sc formRG597Herceptin HER2+ adj BC (2yrs)RG597
GA101 iNHL relapsedRG7159
Tarceva NSCLC adjRG1415
Actemra early RA RG1569
T-DM1 HER2+ mBC 1st lRG3502
GA101 CLLRG7159
Actemra RA DMARD IR H2HRG1569
Avastin mCRC TMLRG435
T-DM1 HER2+ pretreated mBCRG3502
Actemra RA sc formulationRG1569
MabThera NHL sc formulationRG105
ocrelizumab RMSRG1594
Avastin mBC 2nd lineRG435Activase extended time window AISRG36264
Zelboraf papillary thyroid cancerRG7204
Zelboraf metastatic melanomaRG72043
bitopertin schiz subopt controlRG1678
GA101 DLBCLRG7159GA101 iNHL front-lineRG7159
tofogliflozin (SGLT2) type 2 diabetesCHU
EPOCH chemo induced anemiaCHU
Roche Development PipelineProjects in Phase 2, 3 and Registration
Erivedge advanced BCCRG36162
ocrelizumab PPMSRG1594
mericitabine HCVRG7128
lebrikizumab severe asthmaRG3637
onartuzumab (MetMAb) mBCRG3638onartuzumab (MetMAb) mCRC 1LRG3638
Lucentis diabetic macular edemaRG36454
1 submitted in EU2 approved in US, filed in EU3 approved in US, EU: CHMP pos. opinion4 submitted in US
T-DM1 HER2+ mBC 3rd lRG3502
oxLDL MAb sec prev CV eventsRG7418
rontalizumab SLERG7415
danoprevir HCVRG7227 *
mGluR5 antag TRDRG7090
LT alpha MAb RARG7416
gantenerumab Alzheimer’sRG1450
P selectin MAb ACS/CVDRG1512
M1 prime MAb asthmaRG7449
11 beta HSD inh metabolic diseasesRG4929
rhuMab-Beta7 ulcerative colitisRG7413
anti-factor D Fab geographic atrophyRG7417
EGFL7 MAb solid tumorsRG7414
Abeta MAb Alzheimer‘sRG7412
MAO-B inh Azheimer’sRG1577
EGFR MAb solid tumorsRG7160
Status as of December 31, 2011
mGluR2 antag depressionRG1578
PI3K/mTOR inh solid & hem tumorsRG7422
setrobuvir HCVRG7790
pertuzumab HER2+ gastric cancerRG1273
* LIP decision Dec 2011
PI3K inh solid tumorsRG7321
* approved in the EU ** FPI Jan 2012
OncologyImmunologyVirologyCardioMetabolismNeuroscienceOphthalmologyOthers
Suvenyl enthesopathyCHU
81
Changes to the development pipelineSince Q3 2011 update on October 13, 2011
82
New to Phase I New to Phase II New to Phase III New to Registration
8 NMEs transitioned from Ph0RG7258 TSLPR MAb asthma RG7155 CSF-1R MAb solid tumorsRG7116 HER3 MAb solid tumorsRG7388 MDM2 solid and hem tumorsRG7600 ADC oncologyRG7624 IL-17 MAb autoimmune diseasesRG7667 infectious disease1 NME following acquisition of AnadysRG7795 TLR7 agonist in HCV 2 AIs following FPIRG7204 Zelboraf + ipilimumabmetastatic melanomaRG3645 Lucentis sustained delivery AMD/RVO/DME
3 NMEs transitioned from Ph1RG7422 PI3K/mTOR inh solid & hem tumorsRG1578 mGluR2 antag depressionRG7321 PI3K inh solid tumors
1 NME following acquisition of AnadysRG7790 setrobuvir HCV
1 AIRG1273 pertuzumab HER2+ gastric cancer
1 NME transitioned from Ph2RG3638 onartuzumab (MetMAb) mNSCLC
1 AI transitioned from Ph2RG1273 pertuzumab HER2+ EBC
1 AI added by Chugai (in-licensed from Denko)CHU Suvenyl enthesopathy
1 NME FiledRG1273 pertuzumab HER2+ mBC1st line
1 AI FiledRG105 Rituxan NHL fast infusion
Removed from Phase I Removed from Phase II Removed from Phase III Removed from RegistrationDiscontinuation (2 NMEs)RG7166 triple reuptake inhdepressionRG7432 nucleoside pol inh HCV
Reverted to Partner (1 NME)RG7433 navitoclax (ABT-263) solid & hematological tumors
Discontinuation (1 AI)RG435 Avastin+HerceptinHER2+ mBC 1st line
GA101(RG7159)NHL aggress. DLBCL
NME submissions and their additional indicationsProjects currently in Phase 2 and 3
Unless stated otherwise, submissions are planned to occur in US and EU. indicates a submission which has occurred with regulatory action pending* NDA timeline is driven by the event rate in dal-OUTCOMES; updated timeline estimate will be provided in Q3 2012 after 2nd year event rate is known# negative symptoms and sub-optimal control
NeuroscienceOphthalmologyNME
OncologyImmunologyVirologyCardioMetabolism
T-DM1 (RG3502)HER2+ advanced mBC
glycine reuptake inhib(RG1678) schizophrenia#
mericitabine(RG7128) HCV
GA101 (RG7159)CLL
dalcetrapib (RG1658)*atherosclerosis CV risk red.
onartuzumab (MetMAb)(RG3638) mNSCLC
T-DM1 (RG3502)HER2+ mBC 1st line
ocrelizumab (RG1594)PPMS and RMS
danoprevir (RG7227)(HCV protease inh)
2012 2013 2014 2015 2016
Status as of December 31, 2011
onartuzumab (MetMAb)mBC, mCRC
mGluR5 antag (RG7090)Tx resistant depression
lebrikizumab (RG3637) asthma
EGFR MAb (RG7160)solid tumors
anti-factor D Fab (RG7417)geographic atrophy
aleglitazar (RG1439)CV risk reduction in T2D
GA101(RG7159)NHL indolent refractory
pertuzumab (RG1273)HER2+ EBC
2011
Erivedge (RG3616) adv. basal cell ca
pertuzumab (RG1273)HER2+ mBC 1st line
Zelboraf (RG7204)met. melanoma
83
TarcevaNSCLC adj (US)
AvastinNSCLC adj
Tarceva (US)NSCLC EGFR mutation 1st line
2011 2012 2013 2014 Post 2014
HerceptinHER2+ BC adj 2 year
Avastintriple negative BC adj
Avastinglioblastoma 1st line
AvastinHER2+ BC adj
Herceptinsc formulation HER2+
AvastinHER2- BC adj
Actemraearly RA
Xolair (US)chronic idiopathic urticaria
ActemraRA DMARD IR H2H (EU)
Avastinovarian cancer 1st line (US)
AvastinmCRC TML
OncologyImmunologyVirologyCardioMetabolism
NeuroscienceOphthalmology
Actemrasc formulation
AvastinmBC 2nd line (EU)
MabTherasc formulation (EU)
indicates submission to Health Authorities has occurred.
Unless stated otherwise, submissions are planned to occur in US and EU.
LucentisAMD 0.5 mg PRN (US)
Activaseextend. time window AIS (US)
Avastinrelapsed ovarian cancer (EU)
Avastinrelapsed ovarian cancer (US)
Lucentisdiabetic macular edema (US)
TarcevaNSCLC adj (EU)
RituxanNHL faster infusion (US)
ActemraDMARD IR (US)
Status as of December 31, 2011
Submissions of additional indications for existing productsProjects currently in Phase 2 and 3
84