Roche: Ensuring sustained success in a more challenging environment

Transcription

1 Roche: Ensuring sustained success in a more challenging environment December 2010 Dr. Erich Hunziker, Deputy Head of the Corporate Executive Committee and CFO

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 A position of strength Operational Excellence adapting to a changing environment Continued focus on innovation 3

4 Even in an economic downturn demand for healthcare increases; but funding is and will become more challenging No. of healthcare events Funding of healthcare Population growth Health awareness Higher life expectancy Access to healthcare Research activities Social security systems Slowdown of Economy Co-paymentsystems Payments by individuals Today 2020 Today

5 Investors see fundamental challenges for Pharma Growth potential for Pharma US Healthcare reform Lack of innovation? Generics replace originals Lack of potential in BRIC countries?? Today

6 Impact of US healthcare reform Extending coverage to an additional 32 million* Americans Biosimilars 12 years data exclusivity 2 routes for biosimilar approval: - Proof of similarity - Proof of inter-changeability Both requiring clinical trials (still to be specified by FDA) Financial impact 2010: CHF m (Medicaid and hospitals rebates) 2011: CHF 300 m (Medicaid and hospitals rebates) CHF 100 m (Medicare part B) + Excise tax : offset impact by volume * By 2019; Congressional Budget Office estimate 6

7 Emerging markets show strong growth and are another Roche focus point Growth (CAGR) US, EU 3-4% APAC, LATAM, CEMAI 9-13% Total 5-6% IMS Health Pharma Market Ranking 2013 US $ Bio United States Japan China Germany France Spain Italy Russia Brazil Canada UK Venezuela Turkey India Source: CAGR Decision Resource/groupH (+/-1.5% assumed) 15 Mexico 12.4 Source: IMS Health, Market Prognosis June

8 Emerging markets also reward innovation Roche has the leading growth rate in emerging markets % Market Share Full Year 2009 YoY Growth % 3.7% ROCHE % 3.1% 3.2% 5.4% NOVARTIS ASTRAZENECA BAYER SANOFI-AVENTIS % 5.4% GSK PFIZER % MERCK & CO Source: IMS Health MIDAS FY 2009 US$ LC Roche International Regions: Asia Pac, CEMAI, Lat AM (based on Roche subscription) 8

9 Biotech products drive growth in both divisions Pharma Division Diagnostics Division 67% 85% Biotech products as % of sales H

10 Long patent protection Biosimilars facing high hurdles Long primary patent protection of our key biologics Biosimilars outlook Patents US EU ROW/EM US: recent healthcare legislation opens pathway for biosimilars Avastin Lucentis similar marketed by Novartis FDA in the process of developing guidelines Data exclusivity for biologics 12 years Rituxan/ MabThera Herceptin earlier earlier EU: legal and regulatory hurdles likely to remain high for biosimilars Pegasys 2018 similar ROW/EM: investment in countries with strong IP regulations (China) Brand awareness important 10

11 Novartis Pfizer/Wyeth Roche: Limited exposure to patent expiries 40% 35% 30% 25% 20% 15% 10% 5% 0% % Sales Lost calculated by subtracting given year sales ( 10, 11, 12, 13) from full year sales from year prior to LOE. Data excludes sales lost impact of products with LOE prior to Source: Evaluate Pharma 11 % of US Sales Lost to Generics / Biosimilars Roche/Genentech Johnson & Johnson GlaxoSmithKline Eli Lilly AstraZeneca Merck/Schering Plough Sanofi-Aventis

12 Key Pharmaceuticals & Diagnostics products A risk-diversified portfolio of drugs and BUs 35 2 with > than CHF 6 bn Sales (CHF bn) with > than CHF 5 bn 11 with > than CHF 1 bn Avastin MabThera/Rituxan Herceptin Diabetes Care Pegasys Immunochemistry 10 CellCept NeoRecormon Tarceva 5 Clinical Chemistry Xeloda Lucentis Molecular Dx 0 Boniva/Bonviva '03 '04 '05 '06 '07 '08 '09 * Sales 2009 >CHF 6bn* >CHF 1bn* >CHF 5bn* 12

13 Actemra/RoActemra in Rheumatoid Arthritis Successful launch Actemra/RoActemra quarterly sales CHF m Uptake remains very encouraging In US, Actemra prescribed by nearly 60% of rheumatologists, patient share currently 4-7% following anti-tnfs In Japan, launch restrictions lifted, improving patients access to Actemra Upcoming filing for sjia in US and EU 20 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q

14 Tamiflu Sales at normalized levels Tamiflu quarterly sales (CHF m) 1'200 1'000 Retail Pandemic¹ Q Governmental & Corporate 460 Q Q Q Q1 Q2 Q Q Q Q2 09 Q Q Q Q Q

15 Continuous growth in sales and margin Group sales (CHF bn) Operating profit 1 (CHF bn) and margin CAGR: 11% 33.2% % % 40% 35% 30% 25% 20% % % 5% 0 HY 2006 HY 2007 HY 2008 HY 2009 HY HY 2006 HY 2007 HY 2008 HY 2009 HY % 1 before exceptional items 15

16 Roche Acting from a position of strength Protection of current portfolio: - long patent protection - hurdles for biosimilars Diversified portfolio; 14 franchises with>chf 1 bn sales Significant opportunities for Avastin based on approved indications Growth in emerging markets 16

17 A position of strength Operational Excellence adapting to a changing environment Continued focus on innovation 17

18 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 18

19 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 19

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

21 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) 21

22 Early debt redemption of USD 2.5 bn note due % of Genentech transaction related debt repaid by September % Exercise of call option on 9 September 2010 to redeem USD 2.5 bn notes originally due % 50% 25% 0% EUR USD CHF GBP Repayment of USD 3.0 bn and EUR 1.5 bn floating rate notes in Q1/2010 Of the CHF 48.2 bn bonds and notes issued to finance the Genentech transaction, cumulative 15.7 bn (33%) will have been repaid as per September Outlook 2010: USD 0.5 bn Genentech legacy note repayment at maturity in July ) Original net proceeds in CHF 22

23 0utlook for 2010: on track to achieve the goals Sales growth (in LC) Group & Pharma (excl. Tamiflu): mid single-digit Diagnostics: significantly above market Synergies 2010: CHF 800 m 2011: CHF 1,000 m R&D investment Core EPS growth (in LC) Slightly below 2009 level Double-digit Debt 2010: 33% reduction (revised from 25%) 2015: Aim to return to net cash position 3 yr Dividend outlook Maintained (as announced in 2008)* Barring unforeseen events; Total Tamiflu sales of up to CHF 1 bn assumed for 2010; LC=Local Currency * Continuous increase in dividend pay-out ratio over the period

24 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

25 A position of strength Operational Excellence adapting to a changing environment Continued focus on innovation 25

26 Competitors strategies to address the trends Two distinctly different groups emerging Diversification Becoming more Healthcare than pure Pharma (incl. OTC, vaccines, medical devices, generics, branded generics, bio-similars, eye care, etc.) Focus Pharma / Diagnostics (no generics or biosimilars) Roche 26

27 Our strategic franchises Focus on areas with high unmet medical need CNS High unmet medical need - high risk/high reward The new oncology? Metabolism Only dalcetrapib targets primary care; aleglitazar: specialty product. High internal hurdles for phase III decisions. Virology Focus on hepatitis; existing infrastructure to launch new products. Inflammation Oncology RA biologics: area of high growth Actemra strongly positioned Leader in oncology with strong pipeline-regulatory requirements evolving, raising the bar for new products (including competition) 27

28 Our Distinctiveness Diversity of approaches fueling global scale and reach Federation of >150 partners Autonomous centers Worldwide execution Genentech R&ED Roche DBAs* Roche Dx Chugai Research Early Dev. Late-stage development Manufacturing Commercialisation Diversity Scale, Reach, Speed * DBA: Disease Biology Areas 28

29 Operational Excellence: 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 29

30 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 + 10 Als) RG3639 dulanermin cancer RG1273 pertuzumab EBC HER2+ RG105 Rituxan NHLfast 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 RG7090 mglur5 antag (2) TRD RG1569 Actemra sc formulation RA Inflammation/Immunology 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 30

31 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 1 GlyT-1 inh SGLT2 inh 1 aleglitazar taspoglutide dalcetrapib lebrikizumab 1 4 ocrelizumab Hedgehog inh MetMAb Hedgehog inh 2 ocrelizumab Actemra taspoglutide dalcetrapib ocrelizumab pertuzumab BRAF inhibitor T-DM1 RG7159 (CLL) pertuzumab BRAF inhibitor T-DM1 RG7159 (CLL CLL,, NHL) pertuzumab 1 LIP and phase III decision pending E 31

32 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 32

33 Diagnostics Continued high growth driven by need for medical value Potential to improve healthcare efficiency Innovative tests in areas of medical need Testing efficiency Patch pump diabetes care Digital Pathology tissue analysis medical value Diagnosis MRSA screening HPV early diagnosis Companion Diagnostics IVD <2 % total worldwide healthcare spend Influences >60 % of critical decision making dual HER2 protein & gene BRAF test patient selection 33

34 The Roche advantages We do not sacrifice our long-term future by short-term cost cutting: innovation remains key! We have established an entrepreneurial model for our R&D setup We are preparing for fundamental changes in the healthcare environment Roche delivering now but still investing into the future! 34

35 We Innovate Healthcare 35

36 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) 36

37 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

38 Avastin: Portfolio within a portfolio Key treatment option in multiple tumor types 2009 Sales Ovarian Metastatic Breast Superior PFS front line Superior PFS in multiple 1 st line trials Superior PFS in 2 nd line 20%-25% Renal Superior PFS in 1 st line Recurrent Glioblastoma Unsurpassed PFS and OS 75%- 80% Advanced Non-Small Cell Lung Cancer Superior OS 1 st line Superior PFS 1 st and 2 nd line Metastatic Colorectal Superior OS 1 st and 2 nd line Superior PFS 1 st and 2 nd line 38