Roche: Committed to innovation and profitable growth. Dr. Alan Hippe, CFO Roche. London, November 2011

Transcription

1 Roche: Committed to innovation and profitable growth Dr. Alan Hippe, CFO Roche London, November

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 Financial performance Challenges and answers Sustainable strategy 3

4 HY 2011: Group performance Core EPS growth +10% 1 CHF m %Change CHF LC Sales 24,636 21, Core operating profit 9,159 8, as % of sales Core net income 6,062 5, as % of sales Attributable to Roche shareholders 5,965 5,697-4 Core EPS (CHF) IFRS net income 5,565 5, as % of sales local currency 4

5 YTD Sept 2011: Group sales Supporting full-year guidance, strong currency impact change in % Excluding CHF bn CHF CER Tamiflu 1 Pharmaceuticals Division Diagnostics Division Roche Group at Constant Exchange Rates, CER (average full year 2010) 5

6 HY 2011: Core operating profit development Profit growth driven by productivity improvements US healthcare reform incl. excise tax EU austerity measures Japan price cuts '834 Core Op. Profit FY10 Fx rates -367 Tamiflu Avastin US/WE CellCept US/WE Boniva US/WE sales Profit growth underlying business +950 Cost savings OpEx/ GNE integration Core Op. Profit FY10 Fx rates +5% 6

7 Continuous growth in operating profit and margin Group core operating profit (CHF bn) and margin 38.1% 34.7% 35.0% 37.2% +5% in LC local currency HY 2008 HY 2009 HY 2010 HY

8 Attractive dividend payout ratio Average yearly dividend growth ( ): 22% Payout Ratio of 52% 3.40 CHF Pay-out compound ratio calculated annual growth as dividend rate per share divided by core earnings per share (diluted) 8

9 Financial performance Challenges and answers Sustainable strategy 9

10 R&D productivity of Pharma industry Output relatively flat, while R&D costs have increased Industry R&D spend (US$ bn) # NMEs approved # New Molecular Entities (NMEs) (lagging 5 year average) R&D spend Notes: R&D spend figures may not include overhead components as reported in company annual reports Source:. NME data for from Peltzman, S. (1973) J. of Political Economy 81, no. 5: NME data for as reported in Hutt, P.B. (1982) Health Affairs 1(2) NME Data for from Parexel s Pharma R&D Statistical Sourcebook 2009/2010, FDA, and PhRMA. Industry R&D spend data from PhRMA Annual Membership Survey, 2008 and Parexel 2009/

11 R&D productivity Excellence in science key lever to reduce attrition Industry success rate Research Phase 0 Phase 1 Phase 2 Phase 3 Registration Launch Understanding of disease biology Probability of success - 64% 48% 25% 67% 83% 4% Leveraging Personalized Healthcare - stratify patient population early on Industry: 4% Roche: 9% Rigorous decision making transition only most promising projects Major decision points Source: Industry success rates - Linda Martin, KMR, Bernstein R&D conference 2011 Roche publically available data, BCG analysis 11

12 R&D allocation Mix of qualitative and quantitative factors Research & Early Development Late Stage Development Top down Project driven - Annual budget allocation - Number of phase II transitions expected - Unmet medical need - Market potential - Efficient development - Probability of technical success 12

13 Initiatives to do more with less in Late Stage Development Do same with lower costs Less investigational sites for the same trial: focus on active sites Reduce trial complexity: define and focus on relevant trial end-points Enhance competition with CRO s: reduce cost, but preserve quality Transfer non-core activities to lower cost sites (e.g. Nutley to India) Do more with same level of R&D investment More compounds to enter late-stage development, more studies with the same level of R&D investment Increase success rate Reduce attrition/increase probability of success with Personalised Healthcare approach Set high bar for transition to Late-stage development: only the most promising projects are worth high investment Late Stage Development Project driven - Unmet medical need - Market potential - Efficient development - Probability of technical success 13

14 Personalised Healthcare- benefit for all stake holders, including the industry Today Benefit from patient stratification Future Time to market Reduced Patient pool Faster penetration Lower development costs Price increase /stability Increased market share 14

15 Roche strategy for post-patent biologics marketplace Actively pursuing multiple strategies Innovate Re-define the standard of care Mode of administration, combination therapies and new drugs Protect Protect high standards Enforce efficacy and safety standards, defend intellectual property Expand Act to expand patient access in emerging markets Change from global pricing to tiered pricing, including 2nd brand 15

16 Financial performance Challenges and answers Sustainable strategy 16

17 Premium for innovation Roche: Focused on medically differentiated therapies Focus Pharma Dia MedTech OTC Generics Differentiation 17

18 P&L structure reflecting innovation based strategy Peer group core operating profit margin 2010 Eli Lilly Roche Merck Novartis Sanofi Pfizer GSK Astra JNJ GSK JNJ Eli Lilly Novartis Astra Pfizer Merck Sanofi Roche R&D % sales 22% 19% 18% 16% 14% 14% 14% 13% 11% M&D+G&A % sales 33% 32% 32% 31% 29% 29% 29% 25% 23% FY 2010 figures; restated to a core basis based on publicly available information Astra Sanofi Pfizer Roche Merck GSK Eli Lilly Novartis JNJ Core operating profit margin % sales 28% 27% 31% 31% 30% 35% 1. Pfizer: Non-core items in CoS 2. Eli Lilly: 8%p. lower CoS ratio vs. Roche. Not feasible to judge if definition of Lilly s CoS same as Roche s 3. JNJ: No adjustments feasible as no details are disclosed. 38% 38% 44% 18

19 Focused Diversified Roche: Staying focused on Prescription and Diagnostics Novartis 60% Merck & Co 90% Rx 1 OTC Vaccines Animal Health Generics Biosimilars Dx Others Ophthalmolog y Pfizer 87% GSK 82% Sanofi Aventis 79% Bayer 31% Abbott 57% J&J 36% Generics/ EMs Generics/ EMs Eli Lilly 94% Branded Gx Intention AstraZeneca 100% Branded Gx Intention Roche 78% Amgen 100% Crop/Material Science Medical devices Medical devices BMS 100% 1 As of 2010 sales Source: FCMG; Company Annual Reports = Active Business Unit = Recent Transaction (post 2006) = Recent Transaction New Business Area (post 2006) 19

20 Roche: Focus on selected business/disease areas Aim to play in the lead Roche * 1 11 Novartis * Abbott Sanofi 4 6 Pfizer Merck JNJ AstraZeneca 5 Amgen 4 2 Sources: IMS MIDAS in PADDS; For Diagnostic: Industry Analyst Report; *Lucentis sold by Roche in US, by Novartis in RoW 20

21 Our delivery Personalized Healthcare becoming reality T-DM1 Metastatic breast cancer (HER-2 expression level) Pertuzumab Metastatic breast cancer (HER-2/3 expression level) Mericitabine 1 Hepatitis C (HCV viral load, genotype) MetMAb 1 Non-small cell lung cancer (MET status) Lebrikizumab 1 Asthma (periostin level) Zelboraf Metastatic melanoma (BRAF V600E mutation) 1 LIP decision made, phase III start pending 21

22 Zelboraf Vismodegib Pertuzumab T-DM1 Obinutuzumab Glyt-1 Dalcetrapib Ocrelizumab MetMAb Mericitabine Lebrikizumab Aleglitazar Portfolio outlook Market expectations regarding peak sales Larger (> 1 bn) Smaller (up to ca 1 bn) gred pred potential Launch Year Non risk-adjusted

23 CHF bn Efficiency improvements and long-term growth Track-record Outlook Core operating profit and margin 38.1% 34.7% 35.0% 37.2% Profitability FY 2011 Target increased to around 10% Core EPS growth * HY 2008 HY 2009 HY 2010 HY 2011 Number of NMEs 2 ocrelizumab Actemra 4 taspoglutide dalcetrapib ocrelizumab pertuzumab 10 Glycine reuptake inh aleglitazar taspoglutide dalcetrapib ocrelizumab Hedgehog inh Zelboraf T-DM1 GA101 (CLL) pertuzumab LIP decision made, phase III start pending 12 mericitabine 1 ocrelizumab MS Glycine reuptake inh aleglitazar dalcetrapib lebrikizumab 1 MetMAb 1 Hedgehog inh Zelboraf T-DM1 GA101 (CLL, NHL) pertuzumab HY 2011 Growth Potential NMEs filings in 2011 Zelboraf (metastatic melanoma) pertuzumab (1 st l. HER2+ mbc) vismodegib (advanced BCC) *in local currency 23

24 Confirming outlook for 2011 Continued strong business performance Sales growth (in LC) Genentech synergies Operational Excellence savings Core EPS growth target (in LC) Dividend outlook Group & Pharma (excl. Tamiflu): low single-digit Diagnostics: significantly above market : CHF 1.0 bn* 2011 : CHF 1.8 bn : CHF 2.4 bn Around 10% Grow in-line with Core EPS; maintain at least last year s dividend in CHF Barring unforeseen events; LC=Local Currency; * vs. 2010: CHF 0.8 bn 24

25 We Innovate Healthcare 25

26 HY 2011: Group core operating profit and margin Strong margin increase over years CHF m 35.0% 37.2% 38.1% +1.8 % p 1 (+0.9 % p) 40.0% 42.2% 43.9% +2.7 %p 1 (+1.7 %p) % of sales 8'403 9' % 1 (-10 %) 8'251 7'650 8' % 1 (-10 %) 7' % 22.3% 21.9% -0.2 %p 1 (-0.4 %p) ' % 1 (-9 %) 1'063 1 local currency Roche Group Pharma Division Diagnostics Division 26