Operational Excellence Ensuring sustained success in a more challenging environment. Conference Call; 17 November 2010

Transcription

1 Operational Excellence Ensuring sustained success in a more challenging environment Conference Call; 17 November 2010

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; 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 All mentioned trademarks are legally protected 2

3 Overview and Implications Key Initiatives Conclusions 3

4 Industry environment and Roche Responding decisively to recent challenges Industry Solid fundamentals Huge unmet medical need Dramatic progress in science & technology Roche Position of strength Clear strategic focus on Rx and Dx Leadership in innovation and markets High cash-flow and profitability 4

5 Industry environment and Roche Responding decisively to recent challenges Industry Solid fundamentals Huge unmet medical need Dramatic progress in science & technology Roche Position of strength Clear strategic focus on Rx and Dx Leadership in innovation and markets High cash-flow and profitability Challenging environment Pricing pressure in US and Europe Increasing regulatory hurdles Operational Excellence Compensate for recent product setbacks Focus on investments that will drive innovation 5

6 Approach Comprehensive scope, differentiated measures Pharma Medicines gred pred Pharma Partnering Group Functions 1 Research & Early Dev. Development Tech Ops / Sites Commercial US/EU Commercial - ROW G&A/Procurement 1 Finance, IT, HR, Communication, Legal Strong impact Moderate impact 6

7 Financial impact Expected savings of CHF 2.4 billion by CHF million Other 2 pred Group Functions Development Tech Ops & Sites Pharma Medicines Commercial In addition to synergies of CHF 1 billion from the Genentech integration 2 Pharma Partnering, gred, Diagnostics sites 7

8 Financial impact One-off restructuring costs of about CHF 2.7 billion CHF million Non-Cash Cash Total

9 Financial impact One-off restructuring costs of about CHF 2.7 billion CHF million IT / Other costs Portfolio prioritization costs 800 Site closure and transfer costs 1200 Employee-related costs Total

10 Impact on headcount by function Expected reduction of positions by end of 2012 Pharma Medicines pred Diagnostics Other 1 Positions affected Transferred Positions 2 Positions reduced Commercial Tech Ops/Sites Development Group Functions, Pharma Partnering, gred 2 Total number of positions transferred to other sites (800)/3rd parties (700) 10

11 Impact on headcount by geography Main impact in US and Europe USA CH Europe (excl. CH) ROW Positions affected Transferred Positions 1 Positions reduced Total number of positions transferred to other sites (800)/3rd parties (700) 11

12 Impact on product pipeline Protecting innovation capabilities general Retain diversity of approaches (gred, pred, Pharma Partnering, Diagnostics, Chugai) gred Maintain momentum after integration (stable budget 2011) pred Implement focused approach, maintain critical mass for core projects and increase flexibility for external partnerships development Optimize sites and sourcing network to secure funding for key programs 12

13 Roche Group pharma R&D pipeline today phase I (38 NMEs) Status as of November 10, 2010 phase II (17 NMEs + 7 Als) phase III (8 NMEs + 23 Als) Registration (1 NME + 8 Als) RG3639 dulanermin cancer RG1273 pertuzumab EBC HER2+ RG105 Rituxan NHL fast infusion RG105* MabThera inhl maint 1 st line RG7256 BRaf inh(2) BRAF mutated melanoma RG1273 pertuzumab mbc HER2+ 2 nd line RG435 Avastin adj BC HER 2+ RG435* Avastin mbc combo docetaxel 1 st l. RG7112 MDM2 ant (2 ) solid & hem tumors RG3502 T-DM1 EBC RG435 Avastin ovarian cancer 1 st line RG435 Avastin mbc combo std chemos 1 st l. RG7160 EGFR humab solid tumors RG3616 hedgehog path inh advanced BBC RG435 Avastin mbc combo Herceptin 1 st line RG435** Avastin mbc 2 nd line RG7167 CIF/MEK solid tumors RG3616 hedgehog path inh operable BCC RG435 Avastin adj NSCLC RG1415 Tarceva NSCLC EGFR mut 1 st line RG7304 Raf & MEK dual inh solid tumors RG3638 Met Mab mnsclc RG435 Avastin adj BC HER2- RG105** Rituxan ANCA assoc vascul RG7321 PI3 kinase inh solid tumors RG7159 GA101 anti-cd 20 aggr. NHL RG435 Avastin adj BC Triple neg RG1569 Actemra sjia RG7334 anti-plgf solid tumors RG7204 BRaf inh met. melanoma 2nd/3rd l. RG435 Avastin relapsed ovarian ca CHU Edirol osteoporosis RG7347 anti-nrp1 solid tumors RG7433 navitoclax (ABT-263) sol & hem tumors RG435 Avastin high risk carcinoid CHU EPOCH chemo induced anemia RG7414 anti-egfl7 solid tumors CHU topoisomerase I inh gastric cancer RG435 Avastin glioblastoma 1 st line RG7420 MEK inh solid tumors RG667 palovarotene emphysema RG435 Avastin mcrc TML RG7421 MEK inh solid tumors RG3637 lebrikizumab (anti-il13) asthma RG597 Herceptin sc formulation HER2+ RG7422 PI3 K/mTOR solid & hem tumors RG4930 OX40L humab asthma RG597 Herceptin adj BC HER2+ (2yrs) * approved in EU RG7440 AKT inhibitor solid tumors RG7415 rontalizumab (IFN alpha Ab) SLE RG1273 pertuzumab mbc HER2+ 1 st line ** filed in US RG7444 FGFR3 oncology RG7416 anti-lt alpha RA RG1415 Tarceva adj NSCLC RG7459 IAP antag(2) oncology RG3648 Xolair chronic idiopathic urticaria RG1415 Tarceva NSCLC EGFR mut 1 st line RG7593 CD22 Mab vcmmae solid tumors RG3484 HPV16 cervical neoplasia RG3502 T-DM1 mbc 1 st line HER2+ RG7594 Antiangiogenic solid tumors RG7128* nucleoside polymerase inh. HCV RG3502 T-DM1 mbc 2nd line HER2+ RG7597 Her3 Mab solid tumors RG7227 danoprevir (protease inh) HCV RG7159 GA101 anti-cd 20 CLL NME CHU anti-glypican Mab liver cancer RG7201 SGLT2 inh type 2 diabetes RG7159 GA101 anti-cd 20 inhl Additional Indication RG7413 rhumab Beta7 ulcerative colitis RG1594 ocrelizumab RRMS RG7204 BRaf inh met. melanoma 1st line RG4934 anti-il-17 Mab RA RG3487 nic alpha7 AD RG1569 Actemra Ankylosing Spondylitis Oncology RG7449 anti-m1 prime Mab asthma Inflammation/Immunology RG7090 mglur5 antag (2) TRD RG1569 Actemra sc formulation RA RG7185 CRTH2 antag asthma Virology EVO NMDA receptor antag TRD RG1569 Actemra early RA RG7348 nucleoside analogue HCV Metabolic/Cardiovascular RG1569 Actemra RA DMARD IR H2H CNS RG7342 HCV pol (9) HCV RG1583 taspoglutide T2D Ophthalmology CHU serine palmitoyltransf inh HCV RG1658 dalcetrapib atherosclerosis CV risk red. Others RG1512 P selectin humab PVD RG1439 aleglitazar CV risk reduction in T2D RG beta HSD inh metabolic diseases RG1678 GlyT1 inh schizophrenia RG-No Roche Genentech managed RG7273 ABCA1 inducer dyslipidemia CHU Chugai managed RG3645 Lucentis diabetic macular edema RG7418 anti-oxldl sec prev CV events EVO Evotec RG3645 Lucentis AMD high dose RG7426 BHT-3021 type 1 diabetes RG105 MabThera is branded as RG1450 gantenerumab (A-beta) Alzheimer s Rituxan in US and Japan RG1578 mglur2 antag (2) depression RG1662 GABA-A a5 inv ago cogn. disorders RG1569 Actemra is branded as RG7166 triple reuptake inh depression RoActemra in EU RG7412 anti-abeta Alzheimer s RG7417 anti-factor D geographic atrophy 13

14 Impact on product pipeline Maintaining the majority of clinical programs Phase Number of clinical programs 30 Sep 2010 added 1 progressed 2 terminated 10 Nov 2010 Phase I Phase II Phase III progressed from previous phase or new program 2 progressed to next phase 14

15 Impact on product pipeline Industry-leading late stage pipeline maintained Number of NMEs Virology CNS Metabolic Inflammation Oncology 10 GlyT-1 inh aleglitazar taspoglutide dalcetrapib up to 14 HCV pol inh ocrelizumab MS GlyT-1 inh SGLT2 inh 1 aleglitazar taspoglutide dalcetrapib lebrikizumab 1 4 ocrelizumab Hedgehog inh MetMAb Hedgehog inh 2 taspoglutide dalcetrapib BRAF inhibitor T-DM1 BRAF inhibitor T-DM1 ocrelizumab Actemra ocrelizumab pertuzumab RG7159 (CLL) pertuzumab RG7159 (CLL, NHL) pertuzumab E 1 LIP and phase III decision pending 15

16 Impact on product pipeline Progressing Personalized Healthcare T-DM1 Metastatic breast cancer (HER-2 expression level) MetMAb Non-small cell lung cancer (MET status) Pertuzumab Metastatic breast cancer (HER-2/3 expression level) Lebrikizumab 1 Asthma (periostin level) RG 7128 Hepatitis C (HCV viral load, genotype) RG7204 Metastatic melanoma (BRAF V600E mutation) 1 LIP and phase III decision pending 16

17 Overview and Implications Key Initiatives Conclusions 17

18 Pharma Medicines Overview Implementing comprehensive initiatives commercial technical operations Downsize primary care sales force in response to taspoglutide setback Adapt related infrastructure, support functions and product promotion spend Focus resources to high growth products and markets Streamline manufacturing network Consolidate technical development and clinical production network Drive productivity through procurement savings development Strategic roles: co-locate at strategic sites Basel and South San Francisco Transactional roles: outsource to India Operational roles: move to more cost effective Roche sites like Welwyn or Shanghai Nutley becomes a pred center of excellence Shanghai buildup as a result of strategic focus on China 18

19 Pharma Medicines Commercial Main impact on primary care positions US & Europe North America Western Europe Other 2 Primary care Asia/Pacific Latin America CEMAI Note: Japan excluded 1 Central & Eastern Europe, Central Asia, Middle East, Africa and Indian Sub-Continent 2 including G&A 19

20 Pharma Medicines Commercial Shifting resources to high growth markets/products Example: China sales force Primary Care Specialty Care

21 Pharma Medicines Technical Operations Commercial manufacturing network as of 2014 Hillsboro Vacaville SSF Oceanside Boulder Florence Clarecastle Leganés Mannheim Penzberg Segrate Basel/Kaiseraugst Shanghai Toluca Singapore Rio Divestiture Reduction Small Molecules Drug Substance Biologics Drug Substance Solid Dosage Drug Product Sterile Drug Product 21

22 Pharma Medicines Development Global future footprint SSF - Oncology - Inflammation - Ophthalmology - Virology Nutley Welwyn Basel - Metabolism -CNS India Shanghai Strategic centers Operational centers Outsourcing site pred support 22

23 Pharma Medicines Development Lower cost locations for transactional roles Example: Number of positions in India

24 pred A focused and differentiated approach actions Adjust capacity to a streamlined early portfolio and exit sirna Focus resources on most promising assets and on increasing understanding of disease biology Create more budget flexibility by increasing variable spend to fund upcoming phase II trials and external partnerships Consolidate activities in fewer sites (tripod of key sites: Nutley, Penzberg, Basel) to reduce complexity Capture further savings through procurement 24

25 pred Streamlining of site network Madison Kulmbach Welwyn Penzberg Strasbourg Nutley Basel Schlieren Shanghai Divestiture Strategic sites Special centers 25

26 Roche Diagnostics Further drive efficiencies by consolidating selected R&D/manufacturing activities actions Accelerate delivery of ongoing operational excellence Streamline site network to enhance system integration, leverage existing capacities and reduce infrastructure costs by consolidating: Insulin delivery systems R&D with continuous blood glucose monitoring activities in Mannheim (manufacturing outsourced) Blood gas R&D/manufacturing with professional diagnostics activities in Rotkreuz Diagnostics raw material manufacturing in Penzberg 26

27 Roche Diagnostics Further streamlining of site network Madison Branford Pleasanton Branchburg Indianapolis Tucson Ponce Reykjavik Insulin delivery systems (IDS) R&D Burgdorf Mannheim IDS manufacturing outsourced Raw material manufacturing Penzberg Rotkreuz Blood gas & electrolytes Graz Diagnostics Sites Major R&D/manufacturing Other R&D/manufacturing 27

28 Group Functions Largest contribution from IT actions Streamline IT organisation without compromising customer support (e.g. consolidation of data center operations, decomissioning of systems, bundling of license costs, etc.) Increase operational efficiency through shared service centers (IT, HR, Finance) Empower all employees by an accelerated rollout of IT tools and technologies 28

29 Overview and Implications Key Initiatives Conclusions 29

30 Implementation timeline Completion by 2012, full benefits by 2013 Pharma Medicines Commercial Technical Operations Development today pred Diagnostics Other 1 1 Group Functions, Pharma Partnering, gred 30

31 Financial impact 2011 vs Guidance to be provided with 2010 year-end results Illustrative Results from Operational Excellence Risk factors Profit contribution of underlying business growth Price decline US health care reform Tamiflu Avastin mbc Operating Profit

32 Conclusions Roche well positioned for the future Unchanged innovation-driven strategy Optimized operational setup driving current business and increasing profitability Continued significant investments in industry-leading product pipeline Financial Outlook to be updated with Year-End 2010 results 32

33 We Innovate Healthcare 33