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Improving the standard of care
Alan Hippe
CFO Roche
London, November 2015
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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; and
11 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 2
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Performance update
Growth from existing and new products
Productivity and efficiency
Outlook
3
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Q3 2015: Sales growth for fifth consecutive year
4 All growth rates at constant exchange rates (CER)
0% 0% 1%
4%
2%
6%
4%
6% 6%
4%
8%
7%
5%
4%
5%
6%
5%
7%
6%
0%
2%
4%
6%
8%
10%
Q1
11
Q2
11
Q3
11
Q4
11
Q1
12
Q2
12
Q3
12
Q4
12
Q1
13
Q2
13
Q3
13
Q4
13
Q1
14
Q2
14
Q3
14
Q4
14
Q1
15
Q2
15
Q3
15
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HY 2015: Strong underlying Group core operating
profit & margin
5
% of sales
CHFbn
CER=Constant Exchange Rates
* Excluding sale of filgrastim rights in 2014 at CER
8'3 8'6 9'5 9'4 9'2
38'1% 38'5%
40'7% 41'0%
39'2%
HY 2011 HY 2012 HY 2013 HY 2014 HY 2015
+2% at CER (+7%*)
(+0.4%p
excl. filgrastim*)
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HY 2015: Strong underlying Group core operating
profit & margin
6
% of sales
CHFbn
CER=Constant Exchange Rates
* Excluding sale of filgrastim rights in 2014 at CER
8'3 8'6 9'5 9'4 9'2
38'1% 38'5%
40'7% 41'0%
39'2%
HY 2011 HY 2012 HY 2013 HY 2014 HY 2015
+2% at CER (+7%*)
(+0.4%p
excl. filgrastim*)
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2014: Dividend and payout ratio further increased
7 1 compound annual growth rate
8.00
31'9 34'5
38'8
44'8
48'6
51'6
55'3
54'5
54'7 56.0
0'00
1'00
2'00
3'00
4'00
5'00
6'00
7'00
8'00
9'00
10'00
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Dividend payout ratio (%) CHF
2014 payout ratio: 56.0%
Payout ratio calculated as dividend per share divided by core earnings per share (diluted); Note: For 1995, a special dividend was paid
out to mark F. Hoffmann-La Roche’s 100th anniversary in 1996
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Performance update
Growth from existing and new products
Productivity and efficiency
Outlook
8
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Roche strategy: Focused on medically
differentiated therapies
9
Generics
Differentiation
MedTech
OTC
Pre
miu
m f
or
inn
ova
tio
n
Dia Pharma
Focus
Regulators: Optimised benefit / risk ratio
Payors: Optimised benefit / cost ratio
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HER2 franchise: Significant growth opportunities
in current indications
• Increased patient share
• Longer treatment duration
• Emerging markets
10
96%
84%
63% 58%
93%
<5%
51%
58%
25%
<5%. <5% <5% 0%
100%
Herceptin Perjeta 1L Perjeta 2L Kadcyla
mBC
Patient shares
Sources: Market research tracking studies; Latest quarter Q315 in EU5 and US
US
EU5
EM
Growth
Neoadjuvant Adjuvant
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Anti-CD20: Multiple approaches across the
franchise 1L CLL Typical
5%
1L CLL Fit
6%
CLL 17p-del
1%
R/R CLL
5%
1L aNHL
27%
R/R aNHL
6%
iNHL
49%
GAZYVA (GOYA) in aNHL
(improve > SoC)
Gazyva (GALLIUM)
(improve > SoC)
Gazyva (GREEN)- Extend
chemo backbone
Venetoclax –
Extend efficacy
Rapidly and sustainably
convert market to SC
Broad development program for venetoclax as add on and in new tumour types
11
Rapidly and sustainably
convert market to SC
SoC=standard of care; SC=subcutaneous; CLL=chronic lymphocytic leukemia; iNHL=indolent non-hodgkin’s lymphoma; aNHL=aggressive NHL
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Franchise strategies for long term growth
New indications and longer duration
12
Growth
opportunity Indication
Global peak
sales potential
HER2
Potential and
new indications
Perjeta adjuvant (APHINITY)
Herceptin SC*
CD20
Potential and
new indications
Gazyva aNHL (GOYA)
Gazyva iNHL (GALLIUM)
MabThera SC*
Venetoclax
Small: up to CHF 0.5 bn medium= CHF 0.5 to CHF 1bn large > CHF1bn
*Sales replacing current IV products; SC=subcutaneous; iNHL=indolent non-hodgkin’s lymphoma; aNHL=aggressive NHL
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Multiple major pivotal trials reading out near term
Significant filing and launch activities ahead
13
Year Molecule Indication Market
opportunity
Incremental
infrastructure
2015
Alectinib ALK+ NSCLC Low to medium
Cotellic/Zelboraf Melanoma Low
Venetoclax Hematology (CLL 17p del)* Low
2016
Ocrelizumab Multiple Scelerosis Medium
Atezolizumab NSCLC, bladder (2/3L) Medium
Lebrikizumab Asthma, AD, IPF, COPD Large
APHINITY Adj HER2+ breast cancer Low
GOYA NHL (aggressive) Low
2017
ACE 910 Hemophilia A Low to medium
Lampalizumab Geographic atrophy Low to medium
GALLIUM NHL (indolent) Low
Atezolizumab+chemo NSCLC (1L) Low
2018 Taselisib (PI3Ki) HER2-/HR+ breast cancer Low to medium
Idasanutlin (MDM2) Acute myeloid leukemia Low to medium
Oncology Neuroscience Ophthalmology Immunology
Small: up to CHF 0.5 bn medium= CHF 0.5 to CHF 1bn large > CHF1bn
NSCLC=non-small cell lung cancer; CLL=chronic lymphocytic leukemia; AD=atopic dermatitis; IPF=idiopathic pulmonary fibrosis; COPD=chronic obstructive pulmonary disease; NHL=non-hodgkin’s lymphoma; * first indication
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Performance update
Growth from existing and new products
Productivity and efficiency
Outlook
14
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Network
efficiencies
Complexity
reduction
Continuous process
improvement
Optimize utilization &
increase reliability
Do the same
with less
Focus resources on
key value driver
Remove >40% of all
presentations by stream-
lining the EP1 portfolio
(<0.1% sales impact2)
Improve capacity planning
across the network & align
to future needs
Implement lean principles,
e.g. to decrease end-to-end
cycle time by up to 50%3
Source: 1. Established Products 2. In 2016 3. For processes in scope
Need
Valu
e
We are also driving operational efficiencies
Select examples Technical Operations
15
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2015E 2014 2013 2012
Resources shifted to new & strategic products…
…while overall spend only increases slightly
Strategic In-market
Recently launched + NME
Mature
Product Marketing and Medical Costs (2012 – 2015)
60% 75%
16
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Achievements: Productivity
Doubled number of projects at same costs
2012 2013 2014 2010 2011
+90%
Filing Ph0-2 Ph3 Pharma Development Spend
Late stage development costs & number of projects
Excludes Chugai, pRED and gRED, Medical Affairs and PTD
Source: Roche internal development data 17
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Performance update
Growth from existing and new products
Productivity and efficiency
Outlook
18
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2015 outlook: Guidance upgraded
19
Group sales growth1 Mid-single digit
Core EPS growth1 Ahead of sales growth2
Dividend outlook Further increase dividend in Swiss francs
1 At constant exchange rates (CER) 2 Excluding sale of filgrastim rights in 2014
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Positive outlook
Strong pipeline mitigates biosimilar impact
2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E
Marketed
products
Sales
Pipeline
Biosimilars
MabThera, Herceptin, Avastin
NME launches
Venetoclax, Alectinib, Cotellic, Ocrelizumab, Atezolizumab,
Lebrikizumab, ACE910, Lampalizumab
20
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Newsflow in H2 2015
21
Vienna, 25 -29 Sep
• atezolizumab (+chemo)
- NSCLC: POPLAR , BIRCH,
P1b chemo combo update
- Bladder: P2 (2L cohort)
• alectinib
- ALK+ NSCLC: P2 update
• CEA-IL2v FP; IDOi
- solid tumors: P1 updates
San Antonio, 8-12 Dec
• Atezolizumab + chemo
- TNBC: P1b abraxane combo
San Antonio, 19-22 Nov
• atezolizumab
- GBM: P1
Barcelona, 7-10 Oct
• ocrelizumab
- RMS: P3 OPERA I/II
- PPMS: P3 ORATORIO
Orlando, 5-8 Dec
• venetoclax
- R/R CLL 17p del: P2
• venetoclax combinations
- AML: P1 + chemo
- NHL: P1 + Rituxan+benda
- CLL: P1 + Gazyva
• Gazyva + chemo
- NHL: P3 GADOLIN update
- CLL: P3 GREEN update
San Francisco, 18-21 Nov
• atezolizumab + Zelboraf
- mM: P1
• Cotellic + Zelboraf
- BRAF+mM: coBRIM OS data
Presentations planned
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Doing now what patients need next