Roche

2010
Roche Annual Report
Creating value for patients
Key figures
Roche Group
Sales
2010
mCHF Index 2008 = 100
Free cash ow
mCHF
47,473
4,699
2009 2008 Research and development 2

2010
49,051 45,617
mCHF
8,893 4,979 Total dividend

mCHF
9,050
5,693 3
2009 2008 Operating prot 2

2010
9,509 8,704
mCHF
5,175 4,313 Number of employees

80,653
16,591
2009 2008 Income taxes 2

2010
16,272 15,068
mCHF
81,507 80,080 Total employee remuneration

mCHF
3,135
11,934
2009 2008 Net income

2010
3,287 3,604
mCHF
12,080 11,129 Patients on clinical trials 4

327,804
8,891
2009 2008 Core Earnings per Share

2010
8,510 10,844
CHF
302,063 277,674 Eco-efciency rate 5

0.414
12.78
2009 2008
12.34 11.17
0.46 0.387
Price development of non-voting equity security (Genussschein) |

2008
300 250 200 150 100
in CHF
2009
2010
Roche non-voting equity security
Swiss Market Index (rebased)
1 2 3 4 5
Key figures indexed to 2008 = 100. Core results. Proposed by the Board of Directors. Development phase I to IV. For calculation of the Eco-Efficiency Rate see: www.roche.com/environment
Figures for 2008 as in Annual Report 2009. For a full index of Global Reporting Initiative (GRI) indicators used in the report see: www.roche.com/reporting_and_indices
Highlights 2010
January Eu Commission approves Herceptin for treatment of HER2positive advanced stomach cancer January FDa approves actemra for the treatment of moderately to severely active rheumatoid arthritis FEbruary Roche Annual General Meeting votes to increase shareholder dividend by 20%
20 %
april roche acquires medingo to expand its position in the growing insulin delivery systems market JunE FDa expands lucentis approval to include treatment of macular edema following retinal vein occlusion July atHEna clinical trial demonstrates high medical value of cobas 4800 HpV test, which detects high-risk genotypes 16 and 18, in screening for cervical cancer
47,000women
sEptEmbEr FDa clearance for cobas 8000 modular analyser series for highvolume lab testing
sEptEmbEr roche named Healthcare supersector leader in Dow Jones Sustainability Indexes for second year running
oCtobEr Encouraging new clinical data for Avastin in ovarian, MetMAb in lung and TDM1 in breast cancer presented at ESMO conference
october We report promising phase II results with rG7204 (brAF inhibitor), a new targeted medicine for advanced melanoma
noVEmbEr We launch the operational Excellence initiative to maintain long-term innovation capabilities
RG1678 a first-in-class GRI for schizophrenia
DECEmbEr Creating value for patients means having the courage to go with first-in-class and Phase II study where needs are great others have failed
Available therapies Effective against positive symptoms Significant side effects Positive symptoms often still occur in the stable phases between acute episodes
compound rG1678 shows improvement in negative symptoms of schizophrenia
RG1678 Effective against negative symptoms Potential to treat suboptimally controlled positive symptoms Fewer side effects New mechanism of action
Affecting nearly 24 million people worldwide, schizophrenia is a severe mental disorder that distorts the way a person thinks, acts, expresses emotions, perceives reality and relates to others. It is a lifelong disease that cannot be cured. On average it shortens life expectancy by 20 years due to the higher risk of suicide and also due to cardiovascular and pulmonary events. Because of negative symptoms, which usually have the greatest impact on quality of life, patients may be unable to live independently, hold jobs, establish personal relationships and manage everyday social situations. Many drugs developed to treat negative symptoms have failed in clinical trials, and the few available treatments offer only modest benefits.
RG1678, a glycine reuptake inhibitor (GRI) developed at Roche, may be the first drug to treat the negative symptoms of schizophrenia. Representing an entirely novel approach, RG1678 normalises glutamate neurotransmission by increasing synaptic levels of glycine, thereby targeting an important pathway in psychiatric disorders. It has the potential to become first-in-class compound of this type for the treatment of schizophrenia. In addition, RG1678 in combination with current treatments has the potential to treat suboptimally controlled positive symptoms, with little or no increase in side effects. Its novel mode of action could also have valu able therapeutic applications in other psychiatric disorders.
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Pharmaceuticals pipeline | Targeting areas of high unmet medical need

Phase I
Project ID Oncology RG3639 RG7256 RG7112 RG7160 RG7167 RG7304 RG7321 RG7334 RG7414 RG7420 RG7421 RG7422 RG7440 RG7444 RG7459 ADC NME RG7593 RG7594 RG7597 RG7686 CHU CHU dulanermin BRAF kinase inh MDM2 antag anti-EGFR huMAb CIF/MEK dual inh RAF/ MEK dual inh PI3 kinase inh anti-PlGF MAb anti-EGFL7 MAb MEK inh MEK inh PI3 kinase inh AKT inh anti-FGFR3 MAb IAP antag anti-CD22 antiangiogenic anti-HER3 MAb anti-glypican MAb ALK inh cancer metastatic melanoma solid and hematologic tumours solid tumours solid tumours solid tumours solid tumours solid tumours solid tumours solid tumours solid tumours solid and hematologic tumours solid tumours multiple myeloma solid tumours, lymphoma hematologic malignancies solid tumours metastatic epithelial tumours liver cancer NSCLC solid tumours Virology RG3484 RG7128 Inflammation and autoimmune disorders RG4934 RG7185 RG7413 Virology RG7432 CHU nucleoside polymerase inh serine palmitoyltransferase inh hepatitis C Central nervous system hepatitis C RG1450 RG1594 RG3487 Cardiovascular and metabolic diseases RG4929 RG7236 RG7273 RG7418 RG7685 11-HSD inh Cat S antag ABCA1 inducer anti-oxLDL MAb GIP/GLP-1 dual agonist metabolic diseases cardiovascular risk in chronic kidney disease dyslipidemia secondary prevention of cardiovascular events type 2 diabetes Central nervous system RG1594 RG1678 RG1678 depression cognitive disorders Ophthalmology depression Alzheimers disease RG3645 RG3645 Lucentis Lucentis diabetic macular edema AMD, high dose RG-No. CHU EVO Roche and/or Genentech managed Chugai managed Evotec ocrezulimab glycine reuptake inh glycine reuptake inh primary progressive MS schizophrenia, negative symptoms schizophrenia, suboptimally controlled Blue type Black type Legend Therapeutic protein, other biologic Small molecule First indication Additional indications RG7090 EVO gantenerumab ocrelizumab nicotinic 7 receptor agonist mGluR5 antag NMDA receptor antag Alzheimers disease relapsing-remitting MS Alzheimers disease treatment-resistant depression treatment-resistant depression RG1658 dalcetrapib Cardiovascular and metabolic diseases RG1439 aleglitazar cardiovascular risk reduction in type 2 diabetes atherosclerosis, cardiovascular risk reduction anti-IL-17 MAb CRTH2 antag anti-7 rhuMAb rheumatoid arthritis asthma ulcerative colitis Cardiovascular and metabolic diseases RG1512 RG7201 anti-P selectin MAb SGLT2 inh cardiovascular disease type 2 diabetes Inflammation and autoimmune disorders RG1569 RG1569 RG1569 RG1569 Actemra/RoActemra Actemra/RoActemra Actemra/RoActemra Actemra/RoActemra ankylosing spondylitis RA, SC formulation early rheumatoid arthritis RA DMARD inadequate responders (head-to-head) Selected abbreviations adj ADC AMD adjuvant treatment antibody-drug conjugate age-related macular degeneration antag antagonist breast cancer BC CLL chronic lymphocytic leukemia DMARD disease-modifying antirheumatic drug GBM glioblastoma multiforme HER2+ HER2-positive HER2-neg HER2-negative HPV inh JIA MAb maint m, met MS NHL NME NSCLC RA SC human papillomavirus inhibitor juvenile idiopathic arthritis monoclonal antibody maintenance treatment metastatic (cancer) multiple sclerosis non-Hodgkins lymphoma new molecular entity non-small cell lung cancer rheumatoid arthritis subcutaneous RG7227 HPV16 immunotherapy nucleoside polymerase inh prodrug danoprevir cervical neoplasia hepatitis C hepatitis C ADC ADC RG3502 RG3502 RG7159 RG7159 RG7204 trastuzumabDM1 trastuzumabDM1 anti-CD20 MAb anti-CD20 MAb BRAF inh Inflammation and autoimmune disorders RG3637 RG4930 RG7415 RG7416 RG3648 RG7449 lebrikizumab OX40L MAb rontalizumab anti-LT MAb Xolair anti-M1 prime MAb asthma asthma systemic lupus erythematosus rheumatoid arthritis chronic idiopathic urticaria asthma RG435 RG597 RG597 RG1273 RG1415 RG1415 Avastin Herceptin Herceptin pertuzumab Tarceva Tarceva ADC Project/Product Indication
Phase II
Project ID Oncology RG1273 RG1273 RG3502 RG3616 RG3616 RG3638 RG7159 RG7204 RG7433 CHU pertuzumab pertuzumab trastuzumabDM1 hedgehog pathway inh hedgehog pathway inh anti-Met MAb anti-CD20 MAb BRAF inh navitoclax (ABT-263) topoisomerase I inh early BC, HER2+ mBC, HER2+, 2nd-line early BC, HER2+ advanced basal cell carcinoma operable basal cell carcinoma metastatic NSCLC NHL, CLL met melanoma, 2nd-/3rd-line solid and hematologic tumours gastric cancer Project/Product Indication
Phase III
Project ID Oncology RG105 RG105 RG435 RG435 RG435 RG435 RG435 RG435 RG435 RG435 RG435 MabThera/Rituxan MabThera/Rituxan Avastin Avastin+Herceptin Avastin Avastin Avastin Avastin Avastin Avastin Avastin NHL, fast infusion NHL, SC formulation adj breast cancer, HER2+ mBC, HER2+, 1st-line adj NSCLC adj breast cancer, HER2-neg adj BC, triple negative relapsed ovarian cancer high-risk carcinoid GBM, 1st-line met colorectal cancer, treatment through multiple lines met breast cancer, 2nd-line BC, HER2+, SC formulation adj BC, HER2+, 2-yr treatment mBC HER2+, 1st-line adj NSCLC NSCLC, EGFR mutationpositive, 1st-line mBC, HER2+, 1st-line advanced mBC, HER2+ chronic lymphocytic leukemia indolent NHL metastatic melanoma, 1st-line Project/Product Indication
Registration
Project ID Oncology RG105 RG435* RG435* RG1415* MabThera/Rituxan Avastin Avastin+Xeloda Tarceva indolent NHL, 1st-line maint ovarian cancer, 1st-line met breast cancer, 1st-line NSCLC, EGFR mutationpositive, 1st-line Project/Product Indication
Inflammation and autoimmune disorders RG105** RG1569 Others CHU Epogin (EPOCH) chemother.-induced anemia MabThera/Rituxan Actemra/RoActemra ANCA-associated vasculitis JIA, systemic onset
Central nervous system RG1578 RG1662 RG7166 RG7412 mGluR2 antag GABA-A 5 inverse agonist triple reuptake inh anti-amyloid -peptide MAb
Ophthalmology RG7417 anti-factor D MAb geographic atrophy Phase I Phase II Phase III Registration * ** Initial studies in healthy volunteers and possibly in patients Efficacy, tolerability and dose-finding studies in patients Large-scale studies in patients for statistical confirmation of safety and efficacy Marketing application(s) filed in EU, US and/or Japan Filed in EU Filed in USA
Current as of January 2011
to medical challenges. Through our research we create state-of-the-art diagnostics and pioneering medicines that help millions of people around the world.
Our business | Innovation is our answer
Focus on personalised healthcare At Roche we aim to develop novel medicines and diagnostics that will help patients live longer, better lives. We constantly strive for scientific excellence so that we can continue developing effective therapeutic options where previously there were none. As the worlds largest biopharmaceutical company and the number one supplier of in vitro diagnostics, Roche has brought many highly effective drugs to market, including the industrys leading portfolio of cancer medicines. We were also one of the first companies to recognise the potential of personalised medicine. Today our expertise in molecular biology is enabling us to develop targeted medicines for specific patient groups. This contributes to better, safer, more cost-effective healthcare.
Contents
Inside cover
Key figures Pharmaceuticals pipeline Highlights 2010 Letters to Shareholders 4 Letter from the Chairman 8 Letter from the CEO Roche Group 13 Group Results and Outlook 16 Group Strategy Pharmaceuticals 27 Results 29 Sales review 36 Development highlights 45 Research and development Diagnostics 62 Results 67 Business area highlights 74 Research and development Corporate Governance, Remuneration Report 81 Corporate Governance 91 Remuneration Report Corporate Responsibility 104 Stakeholder engagement 105 Patients 115 People 122 Society 124 Responsible practices 131 Safety, security, health and environmental protection Independent Assurance Report 138 GRI statement
Inside cover
1 4 12 24 56 80 102
137
Roche Business Report 2010
Letter to Shareholders
Franz B. Humer
Dear Shareholders
2010wasachallengingyearforthepharmaceuticalindustry.Marketconditions,as anticipatedforquitesometime,becameeventougher.Inthewakeofthefinancial c risis,highgovernmentbudgetdeficitsaddedtopricingpressuresintheglobalhealthcaresector.InEuropemanygovernmentscutdrugpricessignificantly,whilehealthcare reformintheUSresultedinhigherrebatesonprescriptiondrugs.Ontheregulatory front,thehurdlesforgainingapprovalofnewmedicineswereraisedevenhigher,dramaticallyincreasingthecostofdrugdevelopmentanddelayingaccesstoinnovative treatments. Amidthesechallenges,Rochepostedgoodfull-yearresults.However,wealsofeltthe effectsofthemarketchangesIvejustdescribed.InJulytheUSFoodandDrugAdministration(FDA)rejectedourapplicationforacceleratedapprovalofTDM1,even thoughthisnovelcompoundisexpectedtosignificantlyimprovethetreatmentofbreast cancer.ThiswillincreasetheclinicaldevelopmentcostsforTDM1anddelaythis
promisingdrugsapproval.LateintheyeartheFDAannounceditsintentiontowithdraw approvalofAvastinincombinationwithchemotherapyforfirst-linetreatmentofmetastaticHER2-negativebreastcancer.WhileawithdrawalwillnotaffectUSpatients accesstoAvastininitsotherapprovedcancerindications,itwouldadverselyimpact patientswiththisveryseriousdisease.ThedaytheFDAmadeitsannouncement, theEuropeanMedicinesAgency(EMA)confirmedAvastinsvalueinthefightagainst breastcancer.InEuropewomenwithadvancedbreastcancerwillthuscontinueto haveaccesstothistreatmentoption. Wearecloselymonitoringdevelopmentsinhealthcarepolicyaroundtheworld.Precisely becausewebelieveourhighlyinnovativeproductscontributeinimportantwaysto moreeffective,cost-efficienthealthcaredelivery,weconsideritvitalforthefuturethat policymakersandhealthofficialslooknotonlyatthecostsofnewmedicinesbutalso attheinnovationtheyembodyandthebenefitstheyofferpatients.Giventhemanydiseasesthatstillcannotbetreatedsatisfactorily,oratall,medicalprogressshouldbe viewedmoreasapublicgoodthatdeservesvigorouspoliticalsupport. Whenwediscussinnovationwemustbearinmindthatitisinherentlyrisky.Pioneering researchanddevelopmenteffortssometimesproducebreakthroughs,buttheyalsocan sometimesnotachievethedesiredendpoints.Taspoglutideisacaseinpoint.Wesuspendedalate-stagedevelopmentprogrammeonthisnewtreatmentfortype2diabetes ataverylatestageofdevelopmentaftercarefulassessmentoftheavailablesafetyand efficacydata. Ourintenseresearchanddevelopmentactivitiesalsoyieldedsomeverystrongand promisingresultslastyear.Wecurrentlyhavetwelvenewmolecularentitiesinlate-stage development,halfofwhicharedesignedfortargeteduseinspecificpatientpopulations withthehelpofcompaniondiagnostictests.Wehavemadeenormousprogressin personalisedhealthcare,helpedbythecloseinterplaybetweenourPharmaceuticals andDiagnosticsDivisions.Thesedevelopmentsrepresentmajorstridesandmakeus confidentthatwewillremainanindustryleader. Rocheconvincinglymetitssalesandearningstargetsfor2010.Excludingsalesofour influenzamedicine,Tamiflu,whichasexpectedweredownsharplyfortheyear,Group salesrose5%inlocalcurrencies.NetincomeattributabletoRocheshareholders showedastrongincrease,advancing11%to8.7billionSwissfrancsdespitethecosts associatedwiththeOperationalExcellenceprogrammeamountingtoaconsiderable 1.3billionSwissfrancs.CoreEarningsperShare,akeyindicatorofunderlyingbusiness performance,increased10%inlocalcurrencies(4%inSwissfrancs). InviewofthecompanyshealthycashflowandpositiveoutlooktheBoardofDirectors willproposeadividendincreasefor2010of10%to6.60Swissfrancspershareand
non-votingequitysecurity(upfrom6.00Swissfrancsfor2009).Subjecttoyour approvalattheAnnualGeneralMeeting(AGM),thiswillbeRoches24thconsecutive annualdividendincrease. LookingaheadtotheAnnualGeneralMeetingon1March2011,Iwouldliketomention theupcomingchangesontheBoardofDirectors.WalterFreyandWolfgangRuttenstorferhavedecidednottostandforre-election.OnbehalfoftheentireBoard,Iwould liketothankthembothfortheirdedicatedservicetoRoche.Duringhislongtenureon theBoardMrFrey,whorunsahighlysuccessfulfamilycompany,hasmadesignificant contributionstotheGroupsgrowthandsuccess.AmongthestrengthsMrRuttenstorfer broughttotheBoard,hisexpertiseonthegrowthmarketsinEasternEuropeandthe MiddleEasthasbeenparticularlyvaluable. WeintendtousethisopportunitytostrengthentheBoardfurtherbynominatingaddi- tionalindependentdirectors.AsannouncedinDecember,PaulBulcke(CEONestlS.A.), hristophFranz(chairmanandCEODeutscheLufthansaAG)andPeterR.Voser C (CEORoyalDutchShellplc)willbestandingforelectionasnewmembersoftheBoard. AttheAnnualGeneralMeetingwewillalsoproposethatthetermofBoardmembers bereducedfromthreetotwoyears.ThiswillenableshareholderstoinfluencethecompositionoftheBoardatshorterintervalsinfuture. AftertenyearsofexceptionalserviceontheCorporateExecutiveCommittee,Erich HunzikerhasdecidedtoretirefromRocheattheendofMarch2011.ErichHunzikerwas appointedChiefFinancialOfficerin2001,becomingDeputyHeadoftheCorporate ExecutiveCommitteein2005.DuringhislongcareeratRoche,ErichHunzikerwasone ofthekeyarchitectsoftheGroupssuccessfuldevelopment.Iwouldliketotakethis opportunitytothankErichHunzikersincerelyforhisoutstandingcontributiontothe Groupsoverallsuccess. TheBoardofDirectorshasappointedAlanHippetosucceedErichHunzikerasChief FinancialOfficer.AlanHippewilljoinRocheasamemberoftheCorporateExecutive CommitteeasofApril2011.AlanHippeservedasamemberoftheexecutiveboardof ContinentalAGfrom2002to2009.SinceApril2009hehasbeenCFOandamember oftheexecutiveboardofThyssenKruppAG. Ourcompanywashonouredlastyearforoutstandingachievementsinanumberof areas.IamparticularlypleasedthattheDowJonesSustainabilityIndexesnamedusthe SupersectorLeaderinhealthcareforthesecondyearinarow,rankingRocheasthe worldsmostsustainablehealthcarecompany.Wefirmlybelievethatsustainablecorporatepoliciesandpracticesultimatelycreatelong-termvalueandpromoteinnovation.
Oursuccessasacompanyisbuiltonscientificexcellencethatbenefitspatients.The successfulintegrationofGenentechhasfurtherstrengthenedourinnovativecapabilitiesastheworldslargestbiotechcompanyandtheleadingsupplierofcancermedicines.Weleadinpersonalisedhealthcare,aretheworldsnumberonesupplierof in vitrodiagnosticsandhaveoutstandingproductportfoliosinboththePharmaceuticals andtheDiagnosticsDivision. Ourabilitytocreatevalueforallstakeholdersiscrucialtoourfuturesuccessandwe willcontinuetovigorouslypursuethisstrategy.
FranzB.Humer ChairmanoftheBoard
Severin Schwan
Dear Shareholders
SandroB.hadbeenrecentlydiagnosedwithmalignantmelanomashortlyafterhis28th birthday.Malignantmelanomaisoneofthedeadliest,mostaggressiveformsofskincancer, withover160,000newcasesreportedworldwideeachyear.Itishighlylikelytometastasise ataveryearlystage,andoncepatientshavedevelopedmetastasestherearealmostno treatmentoptionsavailabletothem.Lifeexpectancyfollowingdiagnosisistypicallyamatter ofmonths.Hisdoctorsgavehimfourmonthstolive. SandroB.mettheinclusioncriteriaforaphaseIIclinicaltrialinwhichwearetestingour novelinvestigationaldrugRG7204inpatientswithadvancedmalignantmelanomawhose cancercellscarryaspecificgeneticmutation.Adiagnostictestconfirmedthathehadthis mutation. Beforereflectinginmoredetailsonourclinicaltrials,Iwouldliketobrieflyreviewthe Groupsbusinessperformancein2010.DespitestrongpressureonpricesintheUSandin Europe,thePharmaceuticalsandDiagnosticsDivisionsbothpostedgoodresults.Excluding Tamiflusales,whichweredown2.3billionSwissfrancsfortheyear,salesinthePharmaceuticalsDivisionadvanced5%,abovetheoverallmarketgrowth.IncludingTamiflu,divisional salesdeclined2%inlocalcurrenciesto37.1billionSwissfrancs.Growthwasdrivenbykey
productsforoncology,ophthalmology,inflammatoryandautoimmunediseaseandanemia. Thankstocontinuedstrongdemandforouranticancermedicines,weexpandedourleadin thisimportantmarketsegment.IntheDiagnosticsDivisionsalesadvanced8%inlocal c urrencies,againsignificantlyoutpacingthemarketandsolidifyingRochespositionasthe leadingsupplierofin vitrodiagnostics.ProfessionalDiagnosticsandDiabetesCarewere thedivisionsprimarygrowthdrivers. TheGroupscoreoperatingprofitgrewfasterthansales,risingbyarobust7%to16.6billion Swissfrancsinlocalcurrencies.Profitabilityimprovedfurther,withthecoreoperatingmarginsinthePharmaceuticalsandDiagnosticsDivisionsadvancing1.9percentagepointsto 39.9%and3.8percentagepointsto21.1%,respectively.Onceagain,theearningspower ofouroperatingbusinesseswasalsoreflectedintheGroupsoperatingfreecashflow,which lastyearreachedastrong14.1billionSwissfrancs.Thankstoourstrongcashflow,by yearsendwehadalreadyrepaidathirdofthedebtincurredinconnectionwiththeGenentechtransactionearlierthanoriginallyplanned. Succeedinginourindustryistougherthanever.Pricingpressuresarerisingsharplyandthe requirementsforapprovalandreimbursementofnewmedicinesarebecomingincreasingly stringent.AtRocheweadditionallyexperiencedsetbackswithsomeofourlate-stagedevelopmentprojectslastyear,includingthediabetesdrugtaspoglutide. Inresponsetothesechallenges,mycolleaguesontheExecutiveCommitteeandIdecided totakeappropriateactionnowtoensureRocheslong-termsuccess.InNovember2010we launchedthecomprehensiveGroup-wideOperationalExcellenceprogramme,whichis designedtostrengthentheGroupsproductivityandinnovativecapacityintheyearsahead. Wehaveidentifiedawiderangeofopportunitiestoimproveprocessesandraiseproductivity andefficiency. ImplementationoftheOperationalExcellenceprogrammeisalreadyunderwayandwillcontinuethrough2012.Asaresultofthisinitiative,theworkforceofroughly82,000(at30June 2010)willbereducedby4,800positions,almost6%oftheglobalworkforce.Thegreatest changeswillbeinthePharmaceuticalsDivision,wherewewillbeadjustingourglobalsales organisationandtakingstepstoimproveefficiencyandproductivityinproductdevelopment andoptimiseourmanufacturingnetwork.IntheDiagnosticsDivision,theco-locationof relatedbusiness,R& D andoperationalfunctionsatselectedsiteswillenablethedivisionto streamlineitssitenetwork. Wearetakingthesemeasuresproactively,fromapositionofstrength.Rocheistheworlds biggestbiotechcompany,with13productsandproductlinesthatgenerateannualsales ofoveronebillionSwissfrancseach.Anddespitelastyearssetbacks,ourresearchand de elopmentpipelineremainsoneofthestrongestintheindustry.Withourcombined v strengthsinpharmaceuticalsanddiagnosticsandprovenexpertiseinmolecularbiology,we
10
areuniquelypositionedtorealisethepromiseofpersonalisedhealthcaretomaketreatments saferandmoreeffective.Therevolutionaryadvanceswearestartingtoseeinmolecular biologygiveusastrategiccompetitiveedgeacrossanumberofareas,includingourability toraiseresearchproductivity. Personalisedhealthcareparadigmsincreasinglyshapeourresearchanddevelopmentprogrammes.Wecurrentlyhavetwelvenewmolecularentitiesinlate-stagedevelopment,half ofwhicharetailoredtospecificpatientpopulations.OurBRAFinhibitorformalignant melanoma,MetMAbforlungcancer,TDM1andpertuzumabforbreastcancerandother projectsinvirologyandinflammationallrepresentpotentialmajoradvancesforpatients. Similarly,ourDiagnosticsDivisionisdevelopinganumberofbiomarkerstosupporttherapeuticdecision-making.Targetedtherapiesanddiagnosticteststhatcontributetobetter medicaldecisionsnotonlyimprovepatientcarebutalsohavehealtheconomicbenefitsthat makethemattractivetoregulatorsandpayers. OneofthemostimpressiveexamplesofpersonalisedhealthcareisRG7240,thedrugused totreatmalignantmelanomawhichImentionedearlier.Thankstoinsightsintospecific geneticchangesintumourcells,hugestridesarebeingachievednowinclinicaltrialsina diseaseonceconsideredvirtuallyuntreatable. Tumoursgenerallydevelopfromjustonecell.Everycellcontinuouslyundergoeschanges, knownasmutations,thataffectcertainsignallingpathwayswithinthecell.Mostmutations arecorrectedspontaneously,butsomemanagetoevadethebodysrepairmechanisms, causingcellstodivideuncontrollablyandthusformtumours.Scientistshavediscoveredthat inoverhalfofallmelanomapatients,thediseaseistriggeredbyahighlyspecificmutation ofthegenecodingfortheBRAFprotein,whichisinvolvedincellgrowth.ABRAFV600E mutationtriggersuncontrolledcellgrowthandthesecancerpatientsSandroB.for xamplehavevirtuallynoprospectofbeingcured. e RG7204,anoralcancerdrugco-developedwithourpartnercompanyPlexxikon,actsvia ahighlyinnovativemechanismtoinhibittheBRAFproteinimplicatedinthedisease.Thenew drugspecificallydestroysthosecellscarryingtheV600Emutationanddoesnotattack healthycellswithoutthemutation. Wehavedevelopedadiagnosticassayforusewiththedrugwhichiscapableofdetecting theV600Emutationintumours,andwillthushelpidentifypatientswhoareverylikelyto respondtothenewdrug.Thismeansthenewdrugwillbeusedonlyinpatientslikelyto benefitfromthenewtreatment. TheinterimresultsofaphaseIIItrial,whichwepublishedinJanuary2011,arevery ncouraging.Forthefirsttime,apersonalisedinvestigationalmedicine,RG7204,hasshown e asignificantsurvivalbenefitinmetastaticmelanoma.Thisisanimportantadvance
11
forpeoplewiththeBRAFV600mutation-positiveformofthediseasewhohavehad extremelylimitedtreatmentoptions.Fulldatawillbepresentedatamedicalmeetinglater thisyear.Rocheisworkingcloselywithglobalhealthauthoritiessothatpatientsworld- widecanalreadybetreatedwiththenewdrug. Thepursuitoftreatmentsofferingrealbenefitstopatientsisthecoreofourcorporate s trategy.Consistentwiththatstrategy,wewillcontinuetodriveprogressonourpromising developmentportfolio.Weexpectresultsfromatotalof19phaseIIandphaseIIItrials in2011and2012.Basedonourcurrentlate-stageportfolio,weexpecttosubmituptoeight reguatoryfilingsforapprovalofnewmolecularentitiesbytheendof2013.Moreover, l wearecurrentlyworkingonmorethan20additionalindicationsforexistingproducts. Goingforward,innovationsthatbenefitpatientswillcontinuetodriveoursuccess.Through excellenceinscience,westrivetodeveloppioneeringtreatmentsanddiagnosticteststhat prolongpatientslivesandtangiblyimprovetheirqualityoflife. Rocheowesitssuccesstoitsemployees.Thankstotheirtremendousdedicationandhard workweonceagainachievedourgoalslastyear,despiteanincreasinglychallengingmarket environment.OnbehalfoftheentireExecutiveCommittee,Iwouldliketothankallour employeesfortheirimportantcontributions. MakingsurethatRocheremainsanemployerofchoiceisanimportantpriorityforme.So Iamespeciallypleasedtoreportthatin2010ourcompanywasagainvotedatopemployer inpollsinanumberofcountries.Beingatopemployerisnotjustaboutgivingasmany employeesaspossibleopportunitiestodevelopprofessionallyandmakethingshappenin thecompany.Innovationdependsonadiversityofviewsandapproaches.Oneoftheways werepromotingdiversityatRocheisbyfillingmoremanagerialpositionswithwomen.Atthe startof2010,wesetourselvesthegoalofincreasingtheproportionofwomeninthetop 400leadershippositionsbyhalfto20%overthenextfiveyears.Iamhappytoreportthat wemadeprogressonthisfrontaswelllastyear. Whathappenedtotheyoungmanwithmelanoma?Likemanyoftheothertrialparticipants, SandroB.hasrespondedwelltoournewdrugforskincancer.Heisstillaliveanddoingwell. Thisisexactlywhatwehaveinmindwhenwetalkabouthelpingpatientsthroughexcellenceinscience.
SeverinSchwan ChiefExecutiveOfficer
Roche Group | Our Group posted
solid overall results in a challenging market in 2010. Core operating profit grew faster than sales, and Core Earnings per Share increased at a double-digit rate. We are steadily making progress in personalised healthcare. Of the twelve new molecular entities now in our late-stage pipeline, half are targeted at specific patient populations.
Roche Group
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Group Results and Outlook

Overall results TheRocheGrouppostedsolidoverallresultsin 2010.Groupsaleswerestableinlocalcurrencies at47.5billionSwissfrancs(3%inSwissfrancs; 1%inUSdollars).Thegoodunderlyinggrowthof bothdivisionscompensatedfortheexpected declineinTamiflusalesandtheimpactsofhealth- carereformsandausteritymeasures.Excluding T amiflu,salesincreasedby5%inlocalcurrencies. ThePharmaceuticalsDivisionrepresented78% ofGroupsalesandtheDiagnosticsDivisioncon- tributed22%. SalesinthePharmaceuticalsDivisiondeclinedby 2%inlocalcurrenciesto37.1billionSwissfrancs. ExcludingTamiflu,localgrowthwas5%,abovemarketgrowth.DemandfortheoncologydrugsAvastin, MabThera/Rituxan,Herceptin,XelodaandTarceva continuedtogrowstrongly.Additionalmajorgrowth driverswereActemra/RoActemrainrheumatoid arthritis,MircerainanemiaandLucentisinophthalmology.Actemra,whichisnowlaunchedinsome 50countriesincludingtheUnitedStates,theEUand Japan,reachedsalesof397millionSwissfrancsin 2010.Thesepositivefactorscompensatedformostof theexpectedstrongdeclineinTamiflusales,the reductioninCellCeptsalesduetoUSpatentexpiry inMay2009andtheimpactsoftheUShealthcare reforms,Europeanausteritymeasuresandpricecuts inJapan. TheDiagnosticsDivisionincreasedsalesto10.4billionSwissfrancsin2010,growing8%inlocal c urrencies(4%inSwissfrancs;8%inUSdollars), therebystrengtheningitsleadingmarketposition. MajordriverswereProfessionalDiagnosticswith11% salesgrowthandDiabetesCarewith4%sales growth. TheGroupscoreoperatingprofitincreasedby7%in localcurrencies(2%inSwissfrancs).ThePharmaceuticalsDivisionincreaseditscoreoperatingprofit by4%inlocalcurrencies,drivenprimarilybycost synergiesfromtheGenentechintegrationandproductivityimprovements.Coreoperatingprofitgrowth
intheDiagnosticsDivisionwas30%inlocalcurrencies,mainlyresultingfromsalesgrowthdueto newproductlaunchesandtheongoingoperational efficiencyprogrammes.TheGroupscoreoperating profitmarginincreasedby1.7percentagepointsto 34.9%,withthePharmaceuticalsDivisionimproving by1.9percentagepointsto39.9%andtheDiagnosticsDivisionby3.8percentagepointsto21.1%. In2010theGroupsnetincomeincreasedby4%to 8.9billionSwissfrancscomparedto2009.Net incomeattributabletoRocheshareholdersrose11% to8.7billionSwissfrancs. TheGroupsoperatingfreecashflowremainedstrong at14.1billionSwissfrancs.Afreecashflowof 4.7billionSwissfrancswasachievedin2010despite higherinterest,taxanddividendpayments.
The Board of Directors is proposing an increase of 10% in the dividend for 2010 to 6.60 Swiss francs per share and non-voting equity security for approval at the Annual General Meeting.
Ofthedebtraisedinearly2009,33%hadalready beenrepaidby31December2010.Inaddition,the Groupexerciseditsoptiontocallforredemption aportionoftheUSdollarnotesdue1March2014. Ofthetotalprincipalamountof2.75billionUSdollars,1.0billionUSdollarswillberedeemedinMarch 2011.ThenetdebtpositionoftheGroupis19.2billionSwissfrancs,adecreaseof4.7billionSwiss francsfrom31December2009. TheBoardofDirectorsisproposinganincreaseof 10%inthedividendfor2010to6.60Swissfrancs pershareandnon-votingequitysecurityforapproval attheAnnualGeneralMeeting.
14
Roche Group
Thiswouldbethe24thconsecutiveincreaseofthe dividendandcorrespondstoanincreaseinpayout ratiofrom49%in2009to52%for2010. Financial implications of Operational Excellence On17November2010theGroupannouncedimplementationplansforitsOperationalExcellenceprogramme,whichisaimedatadaptingcoststructures toanincreasinglychallengingmarketenvironment andachievingsignificantefficiencyandproductivity gains.Theinitiativeisexpectedtogeneratesavings of1.8billionSwissfrancsin2011,withprojected avingsof2.4billionSwissfrancsfrom2012onwards. s Implementationisscheduledtobesubstantially ompletedbytheendof2012.Duringtheperiod c from2010through2012Rocheexpectstoincur restructuringcoststotalling2.7billionSwissfrancs. Asaconsequenceofimplementingtherespective restructuringmeasures,significantcostswere alreadyincurredin2010.Thecostsin2010of1.3billionSwissfrancsmainlyrelatetoseverancepayments andimpairmentsofintangibleassets.ThePharmaceuticalsDivisionaccountsfor1.2billionSwissfrancs ofthesecosts,and0.1billionSwissfrancsrelate totheDiagnosticsDivision.Roughly40%ofthe chargesarenon-cash,beingmainlyimpairmentsof property,plantandequipmentandintangibleassets. The Group has expanded the presentation of its core results for 2010. Previously only Core EPS was shown, but now the full income statement for the Group and the operating results of the divisions are shown on both an IFRS and core basis. This allows a transparent assessment of both the actual results and the underlying performance of the business. The core results concept is fully described on pages 144147 of the Finance Report and reconciliations between the IFRS and core results are given there.
Outlook 2011 In2011,GroupandPharmaceuticalssales(excluding Tamiflu)areexpectedtogrowatlowsingle-digit ratesinlocalcurrencies,reflectingtheimpactofUS healthcarereformandEuropeanausteritymeasures. Pharmaceuticalssalesarethereforeexpectedto growinlinewiththemarket. In2011,Diagnosticssalesareagainexpectedto growsignificantlyaheadofthemarket,drivenbyfurtherrolloutofnewproductsinallbusinessareas. Inspiteofamorechallengingenvironmentandthe introductionofanexcisetaxintheUnitedStates, RocheaimsforCoreEarningsperSharetogrowata high-singledigitratein2011atconstantexchange rates. Rocheaimstoincreasethedividendinlinewith CoreEarningsperSharegrowth. Basedonthestrongoperatingfreecashflow,Roche expectstoreducedebtprogressivelyandtoreturnto anetcashpositionby2015.
Roche Group
15
Key achievements in 2010

Business/Finance achievements Pharmaceuticals sales (excluding Tamiflu) increased above market growth Diagnostics sales growth significantly ahead of market Core operating profit margin up significantly in both divisions Double-digit rise in Core Earnings per Share (at constant exchange rates) 10% dividend increase proposed for reporting year 2010 Products and pipeline 18 key drug approvals, including approved new indications for Actemra, Herceptin, Lucentis and MabThera/Rituxan Twelve new molecular entities in late-stage development, six with a personalised healthcare approach Four new molecular entities moved into late-stage clinical development: lebrikizumab (asthma), MetMAb (lung cancer) and RG7128 (hepatitis C), Ocrelizumab (multiple sclerosis) Fifty diagnostic tests and instruments launched in key markets Patients and access to healthcare Defined new pricing arrangements to increase patient access to our medicines in emerging markets Expanded commitment not to file or enforce patents in Low Income Coutries (LIC) as defined by the World Bank Launched EDUCARE progamme in Africa with International Atomic Energy Agency (IAEA) to establish online university to provide oncology training to doctors People Genentech voted Science magazines top employer for the eighth time, Roche rose from 17 th to 5 th place Increased percentage of women in key positions from 13% to 16% Published more than 1,200 scientific articles, nearly 60 in high-impact journals such as Nature, Science and Cell Society Employees generated over 1.2 million Swiss francs in annual Childrens Walk to support AIDS orphans in Malawi Refurbished the primary health coach of the Phelophepa health train in South Africa Responsible practices First year of the Roche SpeakUp line for reporting violations of our Code of Conduct demonstrated responsible use by employees Launched global marketing and sales compliance questionnaire to further promote good business conduct Rolled out Supplier Code of Coduct to over 500 suppliers and received their commitment Introduced online procurement training, completed by over 3,000 employees Roche named Healthcare Supersector Leader in Dow Jones Sustainability Indexes for second year running Safety, security, health Reduced our eco-balance measure of total environmental impact by 10%, and environmental protection five years ahead of target Kept greenhouse gas emissions stable despite significant growth of the company
To learn more about Roches achievements in the area of Corporate Responsibility see pages 102137.
16
Roche Group
Group Strategy
A changing healthcare sector

The dynamic of the healthcare markets is more and more impacted by the tension between steadily rising demand and limited financial resources. The growing pressure on healthcare budgets means that increasingly new funds will only be available for real innovations products that offer patients significant added value compared with conventional treatments. Despite the current challenges, the pharmaceutical industry has excellent prospects over the long term. Key drivers of this success include rising life expectancy, increasing prosperity in developing countries, numerous diseases for which there are as yet no effective therapies and, last but not least, rapid scientific and technological advances.
Theworldspopulationcontinuestoexpand,and peoplearelivinglongeronaverage.Greaterlife expectancymeansariseinage-relateddiseases suchascancer,diabetes,rheumatoidarthritis, arkinsonsandAlzheimers.Thisistruenotonly P oftheindustrialisedworldbutincreasinglyof developingcountriesandemergingmarketstoo. Moreover,therearestillnoeffectivetherapies forsome5,000diseases,andpatientresponseto existingdrugsisoftenunsatisfactory.Thereis consequentlysubstantialunmetmedicalneedand increasingdemandformoretargeteddiagnostics andmoreeffectiveandbetter-toleratedtherapies. Demographicchangesandgrowingdemandson medicalcareareplacinganevergreaterburdenon healthcaresystems.Therecentfinancialandeconomiccrisisandtheresultinggovernmentdeficitsin EuropeandtheUnitedStateshavefurtherexacerbatedthesituation.Politicalpressuretocurbhealthcarecostshasthereforegrown.InEurope,several countriesimposedsignificantpricereductionson pharmaceuticalproductsin2010.Healthcarereform intheUnitedStateshasledtoanincreaseindrug rebatesundergovernmenthealthinsuranceplans,and anewconsumptiontaxonpharmaceuticalsalesis plannedfor2011.Inaddition,USandEuropeanregulatoryauthoritieshavesignificantlyraisedthebar forapprovalofnewproductsandaretakingamuch morecriticallookatthetherapeuticbenefitsand safetyofnewdrugs.Decisionsaboutwhichmedicinestoadministerarebeingmadeincreasingly bypublicagenciesandhealthinsurersratherthan byphysicians. AshiftinthegrowthdynamicfromWesterntoFar EasternandLatinAmericanmarketshasbeenapparentforsometime.Thistrendwillbecomeeven strongerinfuture:by2013theemergingmarketswill accountforsome50%ofthegrowthintheglobal pharmaceuticalmarket,andtheirshareoftheworld marketwillincreasetoaround25%.TheAsianpharmaceuticalmarket,forexample,hasgrowntwice asfastastheoverallglobalmarketinrecentyears. ChinawhereRocheagainexpandeditspresencesignificantlyin2010hasbecomethethirdlargestpharmaceuticalmarketaftertheUnited StatesandJapanin2010.
Roche Group
17
Transforming the practice of medicine

Tapping the vast potential of modern science
Inordertoremaincompetitiveinthefuturedespitea tougherglobalenvironmentinthehealthcareindustry, Rocheispursuingaclearinnovationstrategybased onoutstandingscientificachievements.Wehavecon- fidenceinmodernsciencesvastpotentialfordevelopingtherapiesanddiagnosticteststhatwillreduce sufferingandhelppeopletolivelonger,healthier lives.Inparticular,weseesignificantopportunitiesin thefast-growingbodyofknowledgeaboutthemolecularbasisofdiseases.Adeeperunderstandingof diseasemechanismsandthegrowingrangeofestablishedandnewtherapeuticapproachesisenabling ustodevelopmorespecific,targetedproducts. Throughourmedicallydifferentiatedtherapieswe wanttoofferpatientsanddoctorssignificantmedical benefitintermsofeffectiveness,qualityandsafety, toprovidelaboratorieswithefficiencygainsandto givepayershealtheconomicbenefits.Wealsostrive toensurepatientsaccesstotreatments. Targeted,cost-effectivetherapiescanplayakeyrole inovercomingcurrentchallengesinthehealthcare sector.State-of-the-artdiagnosticswillalsobecome increasinglysignificantinarationalhealthcaresystem:diagnosticscurrentlyaccountforonlyaround2% ofhealthcarespending,yetaround70%ofallmed- icaldecisionsdependonaccurate,fastdiagnosis. Here,too,thereisvastpotential.
Personalised healthcare: tailoring treatment to patients

Patientswiththesameclinicaldiagnosismayre spondverydifferentlytothesamemedicines.While treatmentmaybeeffectiveandsuccessfulinsome patients,othersmayexperienceundesirableside effectsorthedesiredclinicalbenefitdoesnotoccur. Thisphenomenonisdueinmanycasestogenetic andothermoleculardifferencesbetweenindividual patients. Treatmentstailoredtodifferentpatientpopulations havemedicalandeconomicadvantagesandareconsequentlynotonlyimportantforpatientsandphy- siciansbutarealsowelcomedbyregulatoryagencies andhealthinsurers.Inaddition,earlyselectionof patientswhoarehighlylikelytorespondtoanew compoundincreasesthesuccessrateindrugdevelopmentwhilealsoloweringdevelopmentcosts. Combiningstrengthsinpharmaceuticalsanddiag- nosticswithprovenexpertiseinmolecularbiology, Rocheisuniquelypositionedtomakeitspersonalisedhealthcarestrategyareality.Thankstotheclose cooperationbetweenthePharmaceuticalsand DiagnosticsDivisions,underasingleroof,oneverythingfromresearchtosales,Rocheiscommitted tothesystematicpursuitofpersonalisedhealthcare. Thisconceptisbecomingarealityformoreand moreofourdevelopmentprojects.
18
Roche Group
Pairing targeted therapies with companion diagnostics

Roche already has a number of products that are custom-made for specific patient populations and have become established standard treatments, including therapies for HER2-positive breast and stomach cancer and for infections caused by hepatitis B and hepatitis C viruses. Our late-stage pipeline contains twelve new molecular entities, six of which are tailored to specific patient groups and have a companion diagnostic test. These include new drugs for skin, lung and breast cancer and for viral and infectious diseases (see features on page 19 and 21).
Encouraging results in the battle against malignant melanoma RochesdevelopmentaldrugRG7204(BRAFinhibitor)iscurrentlybeingtestedinpatientswith advancedmalignantmelanomainafinalphaseIII clinicaltrial.Diagnosedworldwideinabout160,000 peopleeachyear,malignantmelanomaisthemost aggressiveformofskincancer.Thankstoinsightsinto specificgeneticchangesintumourcells,hugestrides arebeingachievednowinadiseaseonceconsideredvirtuallyuntreatable.Developedonthebasisof biomolecularfindings,RG7204isanoraldrugthat specificallyinhibitsthedeadlychainofeventsassociatedwiththedevelopmentofmelanoma. Inroughlyhalfofallmelanomapatients,thedisease istriggeredbyadangerousmutationoftheBRAF gene.ARocheassaydevelopedtodetectthismutationwillhelpidentifypatientsverylikelytorespond toRG7204.InitialphaseIItrialdataareencouraging: diseaseprogressionwassignificantlydelayed,tu- moursshrankmarkedlyinover50%ofpatientsand therewasanoticeableimprovementinpatients qualityoflife. Extending the lives of lung cancer patients Non-smallcelllungcancer(NSCLC)isthemost frequenttumour-relatedcauseofdeathintheworld. AccordingtopreliminarydatafromaphaseIItrial, combiningthenovelmonoclonalantibodyMetMAb withTarceva(erlotinib)nearlydoublesprogres- sion-freesurvivalincertainpatientswithnon-small celllungcancer.Thesepatientstumourcells carryanabnormallyhighconcentrationofacell surfaceproteinknownastheMetreceptor. Thesereceptorscanbeidentifiedusingmoleculartis- suetests.ThemonoclonalantibodyMetMAbbinds specificallytoMetreceptorsandpreventsactivation ofacancer-promotinggrowthfactor.Rocheisalso developingadiagnostictestfordetectingepidermal growthfactorreceptor(EGFR)mutationsforpa- tientswithNSCLC.PatientswithEGFRmutationsre- spondespeciallywelltotheanticancerdrugTarceva, sodeterminingEGFRmutationstatuswouldhelp oncologiststopersonaliseandoptimisecancertreatment(seealsopersonalisedhealthcareforlung canceronpage22and23). Progress in the fight against stomach cancer Stomach(gastric)canceristhesecond-leading causeofcancer-relateddeathsintheworld,with over900,000newcasesdiagnosedeachyear. In2010European,USandSouthKoreanregulators approvedHerceptinforuseinHER2-positivemetastaticstomachcancer. Alreadyanestablishedtherapeuticoptioninbreast cancer,Herceptinisoneofthemostsuccessful examplesofpersonalisedhealthcaretodate.The HER2biomarkerisdetectedinabout1618%of gastrictumours.Afast,reliabletestforHER2status providescriticalguidanceinbothapprovedHer- ceptinindications,helpingdoctorstoidentifythe patientsmostlikelytorespondtothedrug.Her- ceptinpluschemotherapyhasbeenshowntoprolong thelivesofpatientswithstomachcancerbyupto 35%.
Roche Group
19
MAPK signalling
Diagnostics Moleculartest* (PCR) identifiespatientscarrying amutatedBRAFgene
Therapeutics Activeingredient(BRAF inhibitor RG7204)targets melanomacancercells inpatientswithmutated BRAFgene
Met signalling
Diagnostics Tissuetest* identifies tumourswithhighexpression oftheMetreceptor
Therapeutics Antibody(MetMAb RG3638)docksonMet receptorandinhibits cancer-triggeringgrowth f actor
HER signalling
Diagnostics Tissuetest*determines HER2receptorsorHER2 geneexpression
Therapeutics Antibody-drugconjugate bindstoHER2receptors (Herceptin)andlinked chemo herapyagentpenet tratescancercell(TDM1, RG3502)
* These tests are being developed by Roche Diagnostics.
Precision two-pronged attack on breast cancer PreliminaryresultsfromaphaseIIstudyoftrastuzumab-DM1(TDM1)inHER2-positivemetastatic breastcancershowthatthedrugshranktumoursin one-thirdofthewomenwhohadfailedpriorther- apies.Knownasanantibody-drugconjugate,TDM1 linkstrastuzumab,theactiveingredientofHercep- tin,withthepotentchemotherapeuticagentDM1. Thisrepresentsanewtargetedtwo-in-one approachtotreatingcancer:
TheantibodytrastuzumabbindstoHER2-positive cancercellsandblocksasignallingpathwaythat makestumoursgrow,whilethechemotherapyagent DM1penetratesanddestroysthecancercells. Anotherpotentialnewweaponagainstbreastcancer ispertuzumab(RG1273),thefirstofanovelclass oftargetedtherapeuticsknownasHERdimerisation inhibitors.RG1273blocksHER2frompairingwith otherHERproteins,thuspreventingtheabnormalac- tivationofsignalcascadesthatoccursincancercells.
20
Roche Group
Combining forces against hepatitis C HepatitisCvirus(HCV)causesacuteandchronic liverdiseasesthatcanleadtoliverfailure,cirrhosis andcancer.Therearecurrentlyover180million peopleinfectedwithHCVworldwide.Diagnostictests basedonPCRtechnologycannowmeasureviral loadinthebloodofpatientswithchronichepatitisC infectionanddeterminewhichofthefourdifferent HCVsubgroups(genotypes)ispresent. Thediseasecanthenbetreatedbypegylatedinterferonstailoredtotherespectivegenotypeandviral loadlevel,suchastheRocheproductPegasys.The viralloadtestisalsousedafterafewweekstocheck treatmentresponse.Inmanypatients,theviruscan becompletelyeliminated.ForchronichepatitisC patientswhodofailtobenefitfrominterferon-based therapy,severalsmallantiviralmoleculesareinclinical developmentatRoche. ThefocushereisonhepatitisCsubtype1infection, whichisverydifficulttotreat.Initialresultsshowthat inpatientswhohavenotrespondedtointerferons, thenewcombinedtreatmentcanachievea99.9% reductioninbloodviralloadwithinjusttwoweeks.
Hope for asthma sufferers Asthmastillrepresentsamajorunmetmedicalneed. Moreover,theunderlyingdiseasemechanismsare notthesameinallcases.Ourscientistshavediscoveredthat,inaparticularsetofpatients,certain genesareactivatedinthewrongplaceandatthe wrongtimebythechemicalmessengerinterleukin-13 (IL-13),akeymediatorinasthmareactions.ReducingIL-13levelscouldthusbeawayofrelieving asthmasymptomsinthispatientsubpopulation. ThisapproachiscurrentlybeingtestedinaphaseII trialwithlebrikizumab(RG3637),involvingthe measurementofakeybiomarkercalledperiostin. Itmaymakeitpossibletoidentifythepatientsmost likelytorespondtoananti-IL-13antibodylike RG3637.RocheDiagnosticsiscurrentlydeveloping anappropriateassay. Oncejustavision,personalisedhealthcareis increasnglybecomingareality,helpedbypioneering i effortsatRoche.Foryearswehavebeenworking toadvancemorepersonalisedtreatmentoptions acrossallourtherapeuticareasofinterest.Goingfor- ward,weareideallyequippedtoremainattheforefrontofthisgroundbreakingnewapproachtohealthcareandtocontinuerealisingitstremendous potentialforallourstakeholders.
Roche Group
21
HER signalling
Diagnostics Tissuetest*determines HER2receptorsorHER2 geneexpression
Therapeutics Antibody(pertuzumab RG1273)inhibitspairingof HER1,HER2andHER3 receptorsandthusprevents fatalsignallingincancer cells
Hepatitis C virus
Diagnostics Moleculartest*(PCR)to determinelevelsofcirculating HepatitisCvirus
Therapeutics HCVnucleosidepolymerase inhibitor(RG7128)prevents reproductionofhepatitisC viruses
Lebrikizumab
Diagnostics Immunoassay*measures theserumleveloftheprotein periostin(anIL-13gene product)andthusdetects lunginflammationdriven byIL-13

IL-13 molecule
Therapeutics Antibody(lebrikizumab RG3637)inhibitschemical messengerinterleukin-13 thattriggersinflammationin asthmaticreactions
* These tests are being developed by Roche Diagnostics.
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Roche Group
From precise diagnosis to more personalised therapy

Non-small cell lung cancer (NSCLC) is the worlds number one cause of cancerrelated death, the most common form being adenocarcinoma. The illustrations show how diagnostic tests can provide patients suffering from NSCLC and their physicians with information about a tumours molecular profile, the likelihood of response to drug therapy and the most appropriate therapeutic options.
The diagnosis of lung cancer is complex. Imaging technologies are often used for an initial examination.
Roche has developed several immunohistochemistry and in situ hybridisation tests to determine the exact type of tumour present.
1 Initial diagnosis Tissuesamplesfromthepatientarefirstexamined inthepathologylaboratorytoseewhethercancer cellsarepresent.Ifirregularitiesincellularshapeor structurearefound,moreextensivetestsare required. 2 Specific cancer diagnosis Rochehasdevelopedseveralimmunohistochemistry andin situhybridisationtestsforuseontheBenchMarkfamilyofinstrumentsthatreliablydeterminethe typeandsubtypeoflungtumourpresent.
3 Prognosis Thepathologistthencharacterisesthetumouron thebasisofcelldifferentiationandothercriteria. Rocheiscurrentlydevelopinganumberofmolecular biomarkersthatwillenablephysicianstopredict thecourseofcancersasaccuratelyaspossible.
Roche Group
23
The pathologist grades the tumour by looking at the individual cells and determining the extent of cell differentiation.
4 3
Roche has tests on the market and in development to help physicians understand the mechanisms driving cancer growth and thus select the treatments most likely to benefit specific patients.
Roches Avastin and Tarceva have become pillars in the treatment of lung cancer. Roche continues to develop new compounds for targeted cancer therapy.
4 Tests Anumberofgeneshavebeenidentifiedasgrowth driversinnon-smallcelllungcancer(NSCLC).These includetheEGFRgene,theMetreceptorsandthe Pl3kinase. TestsfromRochehelpdoctorsunderstandthemechanismsdrivingtumourgrowthandthustoselect drugsmostlikelytoworkbestforaparticularpatient. Rochehasseveraltestsonthemarketorindevelopmentwhichusethreekeytechnologiesimmunohistochemistry(IHC),in situhybridisation(ISH) andthepolymerasechainreaction(PCR).
5 Therapy RochesanticancermedicinesAvastin(bevacizumab) andTarceva(erlotinib)playacrucialroleinthe treatmentoflungcancer.Andthecompanyiscurrently developinganumberofnewinnovativedrugsto addresscancer-specificpathwaysandofferpatients targetedtherapies.Inaddition,RocheDiagnostics offersabloodtestenablingphysicianstomonitor responsestocancertreatment.
currency growth in sales of strategic products and core operating profit despite lower Tamiflu revenues and a tougher market environment, additional approvals for key medicines and progress with promising projects in our late-stage development pipeline made 2010 a successful year. The Pharmaceuticals Division is focused on translating excellence in science into effective medicines for patients. It combines cuttingedge research at Roche, Genentech in the US, Chugai in Japan and over 150 partners worldwide with global scale and reach in clinical development, manufacturing and commercial operations.
Pharmaceuticals | Solid local-
Pharmaceuticals
25
Pharmaceuticals Division in brief
Sales |
in millions of CHF
Core operating prot |
in millions of CHF
Number of employees
38,996 35,961
37,058
54,141 13,594 14,836

14,776
54,813
53,187
08
09
10
08
09
10
08
09
10
Key figures
In millions of CHF % change in CHF % change in local currencies % of sales
Sales United States Western Europe Japan International (AsiaPacific, CEMAI 1, Latin America, Canada, Others) Core operating profit Operating free cash flow Research and development (core basis)
37,058 14,071 9,467 4,319 9,201 14,776 12,933 8,160
5 5 13 9 7 0 13 5
2 1 5 12 8 4 9 2
100 38 25 12 25 39.9 34.9 22.0
1 CEMAI: Central and Eastern Europe, Middle East, Africa, Central Asia, Indian Subcontinent.
Pharmaceuticals Management Team |

Pascal Soriot 1, 2 Hal Barron 2 Ian Clark 2 Tuygan Gker 2 Meeta Gulyani 2 Peter Hug 2 Michael Knierim 2 David Loew 2 Luke Miels 2 Patrick Mongrolle 2 Jrg Rupp 2 Patrick Yang 2 Jean-Jacques Garaud 1 Osamu Nagayama 1 Richard Scheller 1 Dan Zabrowski 1
31 December 2010
Chief Operating Officer Pharmaceuticals, Head of Pharma Medicines Global Product Development, Chief Medical Officer Commercial Operations, North America and CEO, Genentech Commercial Operations, CEMAI Global Portfolio Management Commercial Operations, Western Europe Human Resources Global Product Strategy Commercial Operations, AsiaPacific Finance Commercial Operations, Latin America Global Technical Operations Pharma Research and Early Development (pRED) President and CEO, Chugai Genentech Research and Early Development (gRED) Roche Partnering
1 Member of the Corporate Executive Committee see Corporate Governance, p. 8485. 2 Member of the Pharma Medicines Leadership Team.
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Pharmaceuticals
Pharmaceuticals Division
Solidlocal-currencygrowth1insalesofstrategic productsandcoreoperatingprofit,additionalmarketingapprovalsforstrategicproducts,andprogress witharangeofpromisingprojectsinourlate-stage R& D pipelinemade2010asuccessfulyearoverall forthePharmaceuticalsDivision.Growthwasdriven primarilybystrongdemandforkeymedicinesfrom theGroupsoncologyandinflammatorydiseaseportfolios.FollowingtheendoftheinfluenzaA(H1N1) pandemicandcompletionofgovernmentstockpiling orders,salesofTamifludeclinedstrongly. Weachievedimportantproductdevelopmentsuccessesin2010,includingexpandedmarketing ap rov lsforActemra/RoActemraforrheumatoid p a arthritisintheUSandtheEU,Herceptinforstomach cancer(EUandUS),MabThera/Rituxanforchronic lymphocyticleukemia(US)andmaintenancetreatmentoffollicularlymphoma(EU),andLucentisfor macularedemafollowingretinalveinocclusion(US). KeyregulatoryfilingsincludedmarketingapplicationsforActemra/RoActemraforjuvenileidiopathic arthritisintheEUandUS,Herceptinforstomach cancerinJapanandAvastinforadvancedovarian cancerintheEU. Duringtheyearwemadedecisionstomoveseveral projectsintolate-stagedevelopment,including crelizumabformultiplesclerosis,RG7128forhep- o atitisC,lebrikizumabforasthmaandRG3638 (MetMAb)forlungcancer.Positiveresultsfromclin- icaltrialswithotherlate-stagecompoundssuch asRG7204(BRAFinhibitor)formelanoma,RG7159 (GA101)fornon-Hodgkinslymphomaandchronic lymphocyticleukemia,andTDM1andpertuzumab forHER2-positivebreastcancerwerepublishedor presentedatmajormedicalconferencesduring2010. Thesetargetedcompoundsaredesignedtomove thestandardofcareforthesediseasesandimprove patientsurvival.Rochespharmaceuticalpipeline c urrentlyincludes12newmolecularentitiesinlatestagedevelopment. Atthesametime,2010wasayearofsignificant c hallenges.Pressureonhealthcarebudgetsinmany countriesandhealthcarereformsintheUnited States,theworldslargestmarketforpharmaceuticals,translatedintomandatoryreductionsinreim-
Sales by region
United States AsiaPacific Latin America Other regions CEMAI
38% (1%) 6% (+8%) 7% (+20%) 3% (9%) 9% (+4%)
Western Europe 25% (5%) Japan 12% (12%)
Italics = growth rates (local currencies). CEMAI: Central and Eastern Europe, Middle East, Africa, Central Asia, Indian Subcontinent.
bursementpricesorhigherrebatesonmedicines understatutoryhealthinsuranceorgovernmentfundedprogrammes.Thesedevelopmentsalready hadanoticeableimpactonsalesin2010,and weexpectthistocontinueinto2011andbeyond. Inaddition,weexperiencedseveralproductdevelopmentsetbacksin2010.Themostseriousof thesewerethedecisiontosuspendphaseIIItesting oftaspoglutidefortype2diabetes,andregulatory developmentsintheUSandEUconcerningAvastin asatreatmentforadvancedbreastcancer. InDecembertheEuropeanandUShealthauthorities announceddecisionsthatarepivotalindetermining whetherAvastinremainsavailableasatreatment formetastaticbreastcancer.Webelievestronglythat patientsshouldhavethisoptionandarepleased thattheEuropeanauthoritiescontinuetosupportthe useofAvastininthisindication.Itisdisappointing thattheUSFoodandDrugAdministration(FDA)has cometoadifferentconclusionafterreviewingthe samesetofdata.WebelievethatwomenwithHER2negativemetastaticbreastcancerlivingintheUS shouldalsohaveAvastinasatreatmentoption,and wehaverequestedahearingwiththeFDAaccordingly(seep.37). Respondingtothetougheroperatingenvironment andsetbacksoutlinedabove,wecontinuedto strengthenourPharmaceuticalsorganisationto
1 Unless otherwise stated, all growth rates are in local currencies.
Pharmaceuticals
27
increaseefficiencyandmaintainitsfocusoninnovation.Webelievethatthemeasuresnowbeing implementedthroughtheGroupsOperationalExcellenceprogrammewillenhanceRochesabilityto deliverbreakthroughmedicinesforpatients,allowing ustoexpandfurtherinhigh-growthemergingeconomieswhilestrengtheningourpresenceinestablishedmarkets.
Excluding Tamiflu, Pharmaceuticals Division sales grew 5%, above the global market.
healthcarereformsintheUnitedStatesandausterity measuresinEuropehadanegativeimpactontotal salesofapproximately530millionSwissfrancsor 1.5percentagepoints.ExcludingTamiflu,salesinthe USandWesternEuropeincreased4%and2%, 2 respectively,comparedwithmarketgrowth of3% and2%.Adeclineinsalesof12%inJapanreflects bothsignificantlylowerdemandforTamifluand theimpactofrevisedNationalHealthInsurancereimbursementpricesthatcameintoeffectinApril. ExcludingTamiflu,Japanesesalesgrew3%inavirtuallyflatmarket. Coreoperatingprofit3grew4%inlocalcurrencies andwasstableinSwissfrancsat14.8billionSwiss francs.Thecorrespondingmarginincreased1.9 p ercentagepointsto39.9%,drivenbysynergiesfrom themergerwithGenentechandproductivityimprovements.Thiswasachieveddespitetheexpectedsharp declineinTamiflusalesandtheimpactofhealth carereformsandausteritymeasures.Areductionof 1%inmarketingexpenseswasachievedthrough tightcostmanagement,whichmorethancovered anincreaseinallowancesforbaddebtsinSouthern Europe.Researchanddevelopmentexpenses declined2%versus2009thankstoresourcepriori- tisationwhilesecuringlong-termgrowththrough therichR& D pipeline.Inadditiontoinvestmentsin phaseIIIinitiations,themetabolismfranchiseand theearlier-stageneurologyportfolio,researchand developmentexpensesincludedcostsassociated withthediscontinuationoftheocrelizumabrheumatoidarthritisprogramme(seep.51,below)and projectterminationcostsassociatedwiththeOperationalExcellenceprogramme.
Results and main business developments

SalesbythePharmaceuticalsDivisionin2010 declined2%inlocalcurrencies(5%inSwissfrancs, 1%inUSdollars)comparedwith2009to37.1billionSwissfrancs.ExcludingTamiflu,thedivisions local-currencysalesgrew5%,abovetheglobal market.InadditiontotheGroupsfivemaincancer medicines,theprimarysalesdriverswereLucentis, Actemra/RoActemraandMircera.Growthfromthese andotherpharmaceuticalslargelycompensated forlowersalesofTamiflu,CellCeptandNeoRecormon/Epogin.Together,thetopsixsalesdrivers Avastin,MabThera/Rituxan,Herceptin,Lucentis, Actemra/RoActemraandXelodacontributedover 1.3billionSwissfrancsinadditionalsalesin2010. DuetothepassingoftheinfluenzaA(H1N1)pandemic,arelativelymildinfluenzaseasonandthe completionofmostgovernmentstockpilingorders, salesofTamifludeclinedstrongly,to873million Swissfrancs(2.3billionfrancslowerthanin2009). SalesexpandedfastestintheInternationalregion (8%,or11%excludingTamiflu),drivenbydemandfor MabThera,Herceptin,Avastinandotherkeymedicinesinemergingmarkets.Particularlystronggrowth wasrecordedinLatinAmerica(20%),ledbyBrazil andVenezuela.SolidgrowthintheAsiaPacific region(8%)wasledbyChinaandTaiwan.Aslight decreaseintheUnitedStates(1%)reflectssignificantlylowersalesofTamifluandCellCept,aswell ashealthcarereformimpactsaffectingallmajor products.A5%declineinsalesinWesternEurope wasdueprimarilytomarkedlylowersalesofTamiflu andNeoRecormonandtheeffectsofgovernment austeritymeasuresintroducedinanumberofcountries,includingGreeceandSpaininthesecond quarterandGermanyinthethirdquarter.Together,
2 Pharmaceutical market growth according to IMS (to end of September 2010). 3 Unless otherwise stated all results are on a core basis (see p. 14, above, and p. 144 of the Finance Report).
28
Pharmaceuticals
The core operating profit margin increased 1.9percentage points to 39.9%.

Thedivisionsfull-yearoperatingfreecashflow remainedstrongat12.9billionSwissfrancs.The decreaseof9%comparedwith2009primarily reflectsthepaymentin2010ofcertainlarge2009 year-endaccruals,includingemployeeretention andseverancepayments,andhighroyaltypayments relatingtostrongTamiflusalesinthesecondhalf of2009.ThePharmaceuticalsDivisionisontrackto achieveitsgoalofpre-taxannualsynergiesfrom theGenentechmergerofapproximately1billion Swissfrancsby2011.Synergiesofover800million Swissfrancswereachievedin2010.Formore i nformationonthedivisionsoperatingresults, seetheFinanceReport(Part2ofthisAnnual Report). IntheyearunderreviewthePharmaceuticals Divisionincurredsignificantnon-corecostsassociatedwithrestructuringmeasuresimplemented undertheOperationalExcellenceprogramme.Most ofthesecostsrelatetoseverancepaymentsfollowingreductionsinpositionsinsalesandmarketing,globalmanufacturing,globaldevelopment, andresearchandearlydevelopment,aswellas impairmentsofintangibleassets.
G ermanyandSwitzerland.Inaddition,expansion oftheKentuckyDistributionCenterwascompleted in2010.Thefacilitynowservesastheprimary d istributioncentreforallproductsmarketedinthe UnitedStates. Inall,GlobalTechnicalOperationsfacilitiespassed morethan30healthauthorityinspectionsin2010. OurbiotechproductionfacilityinSingaporereceived itsfirstapprovalsbytheUSFoodandDrugAdministration(FDA),tomanufactureLucentisandAvastin biologicbulkdrugsubstanceforcommercialuse intheUS.ApprovalbytheEUauthoritiesistargeted for2011.OurKaiseraugst(Switzerland)facility s uccessfullylaunchedActemraproductforcommercialisationintheUnitedStates14daysafterFDA approval.Ourbulkdrugmanufacturingfacilitiesin SouthSanFrancisco,VacavilleandOceanside (California,USA)receivedClassAcertification,an internationalbusinessawardrecognisingsystem aticprocessimprovements. Aspartofthecontinuousevaluationofourglobal manufacturingnetwork,wearealwaysreviewingand analysingourstructures,organisations,processes andoperations.In2010wesoldfacilitieslocatedin Isando(SouthAfrica)andKarachi(Pakistan).In addition,plantsinMontevideo(Uruguay)andNutley (NewJersey,USA)wereclosed,andwecontinue toplanfortheclosureofcertainoperationsinMannheim(Germany)andBasel(Switzerland). Followingadetailedanalysisoforganisational s tructuresandprocessesaspartoftheGroup-wide OperationalExcellenceprogramme,GlobalTechnical Operationswillfurtherrefineitsorganisational s tructuretoimproveoperationalefficiencies,optimisemanufacturingassetsandconsolidatethe t echnicaldevelopmentandclinicalsupplynetwork. SomeactivitieswillbereorganisedinCalifornia, Mannheimandothersitesbytheendof2013,resultinginareductionofapproximately750positions. Inaddition,RocheintendstoseekbuyersforitsUS sitesinFlorence,SouthCarolina,andBoulder, C olorado,potentiallyaffectinganadditional600jobs. Togetherwithactivitiesinitiatedinthelasttwo years,thesechangeswillreducethenumberof m anufacturinglocationsfrom21to15bythe endof2013.
Manufacturing infrastructure
IntegrationoftheRocheandGenentechmanufacturingandsupplynetworkscontinuedin2010,as i nitiativeswereimplementedtoensurethatglobal demandforcommercialandclinicalsuppliesof ourmedicinescanbemetandthatnecessaryadaptationstoourgrowingpipelinearemadeintime. Anumberofimportantmilestoneswereachieved in2010.InAprilHillsboroOperations(Oregon,USA) wasofficiallyinaugurated.By2013Hillsborowill betheUScommercialfillingandpackagingfacility forourmedicines,supplementingfacilitiesin
Pharmaceuticals
29
Sales by therapeutic area
Oncology Inflammatory and autoimmune diseases, transplantation Central nervous system Respiratory Metabolic diseases, bone diseases Infectious diseases Cardiovascular diseases Virology Others Renal anemia Ophthalmology
Italics = growth rates (local currencies).
57% (+7%) 8% (+3%) 3% (+2%) 3% (+7%) 7% (1%) 1% (2%) 3% (3%) 10% (39%) 1% (10%) 3% (6%) 4% (+27%)
Partnering activities
Collaborationwithexternalpartnershaslongbeen acornerstoneofRochesR& D strategy.Access toexternalinnovationthroughlicensingandtargeted acquisitionsisasignificantmeansofstrengthening theR& D portfolioandexpandingtheGroupstechnologycapabilities.In2010RochePartneringsigned atotalof52newagreements,includingoneprod ucttransactionand40researchandtechnologycollaborations.Inaddition,tenproductoutlicensing agreementsweresigned. AmongRochePartneringsmaintransactionsin2010 wereanagreementwithBelgiancompanyreMYND todevelopnoveltherapeuticsthatcouldslowdown neurodegenerationinParkinsonsandAlzheimers patients.AnewcollaborationwasagreedwithAileron Therapeuticstodiscover,developandcommercial- iseanovelclassofdrugscalledstapledpeptidether- apeutics,apotentiallytransfor ativetechnology m tocreatedrugsforimportantdiseasetargetsthatare intractabletocurrentlyavailablemodalities.In DecemberRocheacquiredMarcadiaBiotech,aprivatelyownedUScompanyfocusingonthedevel- opmentofinnovativetherapeuticsfor etabolic m diseases.Marcadiasresearchanddevelopmentprogrammesonnewpeptidetherapiesforthetreatment oftype2diabetesandobesitywillbeintegrated intoRochesR& D portfolio.Theseincludenextgener- ationpeptidessuchasMAR701,currentlyinphaseI developmentfortype2diabetes.Severalpartners wereaddedtoRochesExpandingtheInnovation
Network(EIN)project,whichisdesignedtocreate anddeepenrelationswithleadingacademicinsti- tutionsworldwide.UnderanewEINpartnershipwith HarvardUniversity,Rocheprovidesstrategicquestionsandknow-howtoHarvard,withHarvardprovidinginnovativesolutions. GenentechPartneringcompletedfourproducttransactionsand16researchandtechnologycollaborationsin2010,supportingthecutting-edgework ofGenentechResearchandEarlyDevelopment. Amongtheseisanexpansionoftheantibody-drug conjugatecollaborationwithSeattleGeneticsin oncology.Newcollaborationsinimmunology includedanexclusivelicensingagreementwith Swiss-basedantibodyspecialistNovImmune,coveringananti-IL-17antibodythathasthepotential tobenefitpatientsacrossarangeofautoimmunediseases.Anovelresearchprogrammewasagreed withUScompanyAdimab,whichwilluseitsproprietarydiscoveryplatformtoidentifyfullyhumanantibodiesagainsttwotargetsselectedbyGenentech. Undertheagreement,Genentechhasrightsto c ommercialiseantibodiesgeneratedfromthecollaboration.
Sales review selected key products

ThePharmaceuticalsDivisionsbroad-basedportfolio ofmarketedproductsincludestenmedicinesfrom
30
Pharmaceuticals
Top-selling pharmaceuticals Roche Group |
in millions of CHF
6,461
Avastin
6,356
MabThera/Rituxan
5,429
Herceptin
1,645
Pegasys
1,458
Lucentis **
+9% *
Active substance:
+9% *
Active substance:
+7% *
Active substance:
+2% *
Active substance:
+27% *
Active substance:
bevacizumab 1
Indications:
rituximab 1
Indications:
trastuzumab 1
Indications:
peginterferon alfa-2a 1
Indications:
ranibizumab 1
Indications:
colorectal cancer, breast cancer, non-small cell lung cancer, kidney cancer, glioblastoma
non-Hodgkins lymphoma, chronic lymphocytic leukemia, rheumatoid arthritis
HER2-positive breast cancer, advanced HER2-positive stomach cancer
hepatitis B and C
wet age-related macular degeneration, macular edema following retinal vein occlusion
Pharmaceuticals
31
Thanks to the Pharmaceuticals Divisions broad-based portfolio, Roche is one of the worlds leading providers of clinically differentiated medicines for cancer, viral and inflammatory diseases, and metabolic disorders.
1,426
Xeloda
1,325
Tarceva
1,290
CellCept
1,285
NeoRecormon, Epogin
1,013
Bonviva/Boniva
+17% *
Active substance:
+6% *
Active substance:
15% *
Active substance:
15% *
Active substance:
+1% *
Active substance:
capecitabine 2
Indications:
erlotinib 2
Indications:
mycophenolate mofetil 2
Indications:
epoetin beta 1
Indications:
ibandronate 2
Indications:
colorectal cancer, breast cancer, stomach cancer
advanced non-small cell lung cancer, advanced pancreatic cancer
transplantation
anemia
osteoporosis
1,2 The images above show molecular diagrams representing the active substance of each medicine (1 = therapeutic protein, 2 = small molecule). * Year-on-year sales growth in local currencies. ** US sales. Lucentis is marketed outside the United States by Novartis.
32
Pharmaceuticals
sixtherapeuticareasthatgeneratedsalesofover 1billionSwissfrancseachin2010.Ofthese,thetop threerecordedsalesofwellover5billionSwiss francseach.CombinedsalesoftheGroupstop20 pharmaceuticalsamountedto32.6billionSwiss francs,or88%ofdivisionalsales. Salesofthedivisionsoncologyportfoliorose7%to 21.3billionSwissfrancsin2010,ledbykeyproducts Avastin,MabThera/Rituxan,Herceptin,Xelodaand Tarceva.Together,thesefivemedicinesaccountedfor overhalfoftotalpharmaceuticalsales.Salesof ntiviralmedicinesdeclined39%,forafull-yeartotal a of3.5billionSwissfrancs,duemainlytothesharp declineinsalesofTamiflu.Overallsalesoftherenal anemiaportfoliodeclinedby6%to1.2billionfrancs, withstrongdemandforMirceraoutweighedby decreasingsalesofNeoRecormon/Epogin.Salesin thecombinedinflammation/autoimmune/transplantationportfoliorose3%to3.0billionfrancs:growing demandforMabThera/Rituxanforrheumatoid arthritisandstronguptakeofActemra/RoActemra offsetcontinuedgenericerosionofCellCeptinthe UnitedStates. Oncology GlobalsalesofAvastin(bevacizumab),foradvanced colorectal,breast,lungandkidneycancer,andfor relapsedglioblastoma(atypeofbraintumour),rose 9%to6.5billionSwissfrancs,reflectingcontinued positiveuptakeoftheproductoverall.Salesgrowth inWesternEurope(7%)wasdrivenprimarilyby c ontinueduptakeforbreastcancerandimproved uptakeforcolorectalandlungcancer.Austerity measuresintroducedduringtheyearinGreece, Spain,Germanyandothermarketsresultedinaprogressiveflatteningofgrowthintheregionasa wholethatwasparticularlynoticeableinthefourth quarter.SalesintheUSwereflatfortheyear,reflectingreserveadjustmentsduetothehealthcare reformsenactedin2010andregulatoryandreimbursementuncertaintyregardingthemetastatic breastcancerindication(seep.37);togetherthese factorsledtoadeclineinsalesinthesecond alf-year,especiallythefourthquarter.Avastinmainh taineditshighUSmarketshareinitsmetastatic colorectalandlungcancerindications.Verystrong salesgrowthinJapan(51%)wasdrivenbycontinued gooduptakeincolorectalandnon-smallcelllung cancer.Verystronggrowthwasalsorecordedin
LatinAmerica(42%).InthethirdquarterAvastin waslaunchedinChinainitsfirstindication,first-line treatmentofmetastaticcolorectalcancer;initial uptakehasbeenveryencouraging. Full-yearsales(oncologyandautoimmunediseases) ofMabThera/Rituxan(rituximab),fornon-Hodgkins lymphoma(NHL),chroniclymphocyticleukemia (CLL)andrheumatoidarthritis(RA),totalled6.4billionSwissfrancsin2010,anincreaseof9%versus 2009.Sustainedgrowthintheoncologysegmentwas drivenbyuptakeinCLLandcontinuedstronguse inNHLinWesternEuropeandtheUS.SoliddoubledigitgrowthintheInternationalregion,including stronggainsinkeyemergingmarkets,reflectsuptake ofthemedicineinitsNHLindications.TheEuropean rolloutofMabTherainanewindication,first-line maintenancetreatmentofpatientswithfollicularlymphoma,commencedinthefourthquarter.Estimated salesofMabThera/RituxanintheRAsegment reachedthe1billionSwissfrancmarkin2010(16% oftheproductstotalsales),17%higherthanin 2009.Growthisbeingdrivenbyincreasedusein patientswithaninadequateresponsetooneormore tumournecrosisfactorinhibitorsandbygrowing acceptanceofsix-monthrepeattreatmentintervals. GlobalsalesofHerceptin(trastuzumab),forHER2positivebreastcancerandHER2-positivemetastatic stomachcancer,rose7%to5.4billionSwissfrancs onsustained,solidsingle-digitgrowthintheUnited StatesandWesternEurope,anddouble-digitgains intheInternationalregion.Herceptinmaintained itshighmarketpenetrationinbreastcancer,with salesalsobenefittingfrominitialuptakeforstomach ancerinEUcountriesandothermarkets.Inaddic tion,improvementsinthequalityofHER2testing areexpandingthepopulationofpatientseligiblefor treatmentwithHerceptin.InJapan,whereHerceptin hasamarketshareofapproximately90%inits breastcancerindications,astablesalesvolumeand revisedreimbursementpricesfromAprilresulted inasignificantdeclineinsalesrevenuecompared with2009. Xeloda(capecitabine),forcolorectal,stomach andbreastcancer,generatedtotalsalesof1.4billion Swissfrancs,anincreaseof17%comparedwith 2009.Growthwasdrivenprimarilybystronggainsin theUnitedStates,JapanandChina,theproducts
Pharmaceuticals
33
threelargestmarkets.GlobalsalesofXelodaare benefittingfromanumberofnewindications, i ncludingstomachcancerinChina,anexpanded metastaticcolorectalcancerindicationinJapan, andadjuvant4coloncancerinEurope,aswellas increasedpatientshareinmetastaticbreast cancerintheUSandEU. SalesofTarceva(erlotinib),foradvancedlung andpancreaticcancer,increased6%to1.3billion Swissfrancs,drivenmainlybyincreasedusein thesecond-linenon-smallcelllungcancersetting. Themaincontributionstogrowthcamefromthe Internationalregion,JapanandtheUS.Mid-singledigitgrowthintheUSreflectssteadydemandin thelungandpancreaticcancerindicationsandthe impactofgovernmenthealthcarereforms.Against abackgroundofstabledemand,salesinWestern Europedeclinedslightly,mainlyasaresultofgovernment-mandatedpricereductionsandrebatesin s everalmajormarkets.Sustainedstrongsalesgrowth inJapan(37%)reflectscontinuedmarketpene trationandoncologistsincreasingconfidenceinthe benefitsoftreatmentwithTarceva. Virology WorldwidesalesofPegasys(peginterferonalfa-2a), forhepatitisBandC,increased2%to1.6billion Swissfrancsin2010.FlatsalesintheUnitedStates andsalesdecreasesinWesternEurope,Japan andcertainothermaturemarketswereoffsetby growthintheInternationalregion,especially AsiaPacificandCEMAI5countries.Theproducts marketsharecontinuedtoexpandinthemain E uropeanmarkets,theUSandJapan.Globalsales continuedtobenefitfromclinicaldatareinforcing thesuperiorityofPegasysoverothertreatment optionsandincreaseduseinhepatitisB.Thehepatitis Cmarketispoisedformajorexpansion,withthe introductionofanewgenerationofdirect-acting antiviralagentsexpectedfrom2011onwards. BecausePegasystheleadingpegylatedinterferon isusedinmosthepatitistreatmentdevelopment programmestoday,itisexpectedtobecomethe backboneoffuturecombinationtherapieswiththe newantivirals(seealsop.51,below). Followingexceptionaldemandin2009duetothe influenzaA(H1N1)pandemic,salesofTamiflu(oseltamivir),forinfluenzaAandB,totalled873million
Swissfrancsin2010,73%(2.3billionfrancs)lower thanin2009.Withgovernmentstockpilingorders largelycompletedbyearly2010andtheinfluenzaA (H1N1)pandemicpassingitspeak,salesfellsharply inthelastthreequarters.Saleswerealsoaffected byrelativelymildinfluenzaseasonsinbothhemispheresduring2010.Rocheremainsreadytoaddress p otentialthreatsposedbyinfluenzaandismaintainingproductioncapacityincooperationwith n e xter almanufacturingpartnerstoenablearapid responsetofuturesignificantoutbreaksorgovernmentstockpilingorders. Ophthalmology USsalesofLucentis(ranibizumab),forwetagerelatedmaculardegenerationandmacularedema followingretinalveinocclusion,rose27%to 1.5billionSwissfrancs.Stronggrowththroughout 2010wasdrivenprimarilybyincreasesinthe totalnumberofpatientsreceivingLucentisandthe timepatientsareontreatment.TheUSlaunchof Lucentisforthetreatmentofmacularedema(swellingintheretina)followingretinalveinocclusion beganinlateJune,andinitialuptakeisencouraging. Lucentiswas iscoveredbyGenentech,which d retainscommer ialrightsintheUnitedStates. c Novartishasexclusivecommercialrightsforthe restoftheworld. Inflammation and autoimmune disorders Astheglobalrolloutofthenovelrheumatoid arthritismedicineActemra(tocilizumab,knownas RoActemraintheEU)continued,salesin2010 totalled397millionSwissfrancs,ariseof177%over 2009.UptakeofActemra/RoActemraintheEU, theUnitedStatesandotherlaunchmarketsremains veryencouraging.Around60%ofUSrheumatologistshavealreadyprescribedthemedicine.ContinuedstrongsalesgrowthinJapanreflectsincreas inguseofActemraasafirst-linebiologic.Chugai announcedinAugustthattheJapanesehealth authoritieshadremovedtheapprovalconditionsfor Actemrafortherheumatoidarthritisandpolyar ict ular-coursejuvenileidiopathicarthritisindica ions. t
4 Adjuvant treatment is given after surgical removal of the tumour to lower the risk of relapse. 5 CEMAI: Central and Eastern Europe, Middle East, Africa, Central Asia, Indian Subcontinent.
Clinical development a long process that continues even after market launch
Creating value for patients means investing skill and resources in a long, uncertain journey
10,000
molecules
investment
10
molecules
50
Preclinical development
36 years
volunteers or patients
Phase I
12 years
Preclinical testing evaluates a drugs safety profile and pharmacological effects in the laboratory. Every promising new compound must pass rigourous preclinical testing before it can be studied in humans. New drugs usually undergo both in vitro (in test tubes, cell cultures and isolated organs) and in vivo (animal) testing. Computer models are playing an increasingly important role in preclinical development. Data from preclinical tests are essential for determining whether a drug is safe enough to be administered to people in clinical trials.
Phase I trials test the safety of various doses of a new drug. During phase I trials researchers are looking at how the drug is absorbed, distributed and changed (metabolised) in the body, how it is eliminated, how long these processes take, and whether there are any unwanted effects. These trials involve only a small number of people usually healthy volunteers. In some cases people whose disease is very advanced (cancer, for example) may also participate.
1001,000 *
patients
15 ,000
patients
23
500
patients
molecules
12
Phase II
1.52 years
molecules
molecule
Phase III
33.5 (or more) years
Phase IV
from market entry on
Phase II trials test the new drug in people who have the disease it is designed to treat. The number of patients in phase II trials is limited but usually larger than in phase I studies. In addition to further safety testing, these trials identify appropriate dose ranges and test whether the drug demonstrates clinical efficacy (proof of concept). Many new drugs fail in phase II testing.
A new drug moves into phase III clinical trials only if the phase I and phase II trial results suggest it might benefit patients in signficant ways. Phase III trials compare the new drug with current treatments or, in some trials, with a placebo. Many phase III trials last a long time, typically a year or more, and may involve several thousand patients in several countries. Phase III trials must include a large number of patients so that investigators can evaluate the differences between types of treatment. Regulatory agencies normally require results from phase III trials before approving a new drug.
Phase IV trials are conducted after a drug has been approved by regulatory agencies and launched on the market. Also known as post-marketing trials, they are designed to gather broader, real-world experience with the new drug in routine medical practice. Phase IV trials generate additional data on safety and efficacy in large numbers of patients and in particular patient subgroups. They can also provide further information on how the drug works in comparison or in combination with other treatments. Even large phase III trials cannot identify all potential side effects: this is another area where phase IV trials provide essential additional information. Roche maintains a system of risk assessment programmes to identify and evaluate side effects that did not appear in phase IIII trials.
* Patients per trial; 520 (or more) trials.
36
Pharmaceuticals
Further major approvals for Actemra/RoActemra, Herceptin, MabThera/Rituxan and Lucentis.

ThedecisiongivesmorepatientsaccesstoActemra andfollowspositiveresultsfromaroutinepost- marketingsurveillanceprogramme.Actemra/ RoActemraisnowavailableinsome50countries worldwide. Anemia and transplantation SalesoftherenalanemiamedicationMircera(me thoxypolyethyleneglycol-epoetinbeta)rose51%to 255millionSwissfrancs.DemandforMircera,which isnowavailableinover100countriesworldwide, iscomingmainlyfromthepredialysissegmentand newpatientcommencements.Combinedsalesof theGroupsestablishedanemiamedicines,Roches NeoRecormonandChugaisEpogin(epoetinbeta), declined15%to1.3billionSwissfrancs.Roche P harmaceuticalsoverallshareoftheEuropeananemiamarketremainedstabledespiteincreasing biosimilarcompetition,duemainlytothestrongperformanceofMircerainthemajorEUcountries andarobustmarketsharebyvolumeforNeoRecormonintherenalindication.A10%declineinsales ofEpogininJapanwasduemainlytocompetitionin thedialysismarketandalowerNationalHealth Insurancereimbursementprice,factorswhichoutweighedincreaseddemandforthemedicinein thepredialysissegment. At1.3billionSwissfrancsforthefullyear,sales r evenuefromCellCept(mycophenolatemofetil),for thepreventionofsolidorgantransplantrejection, remainedsignificant.Thesalesdecreaseof15%was dueprimarilytothelossofpatentexclusivityin theUnitedStatesin2009.Theresultinglossesto competitionfromgenericversionswerepartlyoffset bysalesgrowthinJapanandtheInternational region.
Development highlights key marketed products

In2010thePharmaceuticalsDivisionfiled20major newmarketingapplicationsandgained18major r egulatoryapprovals(seetables,pp.38and39).The followingsummariespresentapprovals,filingsand majorclinicaltrialresultsforkeymarketedproducts, byindication. Actemra/RoActemra Approvals | InJanuary2010theUSFoodandDrug Administration(FDA)approvedActemrafor thetreatmentofadultpatientswithmoderatelyto severelyactiverheumatoidarthritis(RA)who havehadaninadequateresponsetooneormore tumournecrosisfactor(TNF)inhibitors.Actemra, thefirstinterleukin-6receptor-inhibitingmonoclonal antibodyapprovedtotreatRA,maybeusedalone orincombinationwithmethotrexateorotherdisease modifyingantirheumaticdrugs.InJunetheEuro peanCommissionextendedtheproductsexisting marketingapprovaltoincludetreatmentwith RoActemraplusmethotrexatetoreducetherateof progressionofjointdamageandimprovephysical functioninpatientswithrheumatoidarthritis.The newindication,whichisbasedontwo-yeardatafrom aglobalphaseIIIstudy(LITHE),camejustovera yearafterthemedicinesinitialEUapproval,further reinforcingitsvalueasaneffectivetreatmentfor RA.InJanuary2011theFDAapprovedActemrafor asimilarindication(inhibitionandslowingof s tructuraljointdamage,improvementofphysical function,andachievementofmajorclinicalresponse inadultswithmoderatelytoseverelyactiveRA), basedonasupplementalBiologicsLicenseApplication(sBLA)submittedbyGenentechinMarch 2010. Filings | InOctoberGenentechsubmittedasecond sBLAtotheFDAandRochesubmittedanAcceleratedAssessmentapplicationtotheEuropean M edicinesAgency(EMA),seekingtoextendthe approvedindicationsofActemra/RoActemrato includetreatmentofsystemicjuvenileidiopathic arthritis(sJIA).BothapplicationsarebasedonpositivedatafromtheglobalphaseIIITENDERstudy. TherearecurrentlynoapprovedtherapiesintheEU orUSforsJIA,adebilitatinganddifficult-to-treat
Pharmaceuticals
37
diseasethataffectsthewholebodyandrepresents anareaofhighunmetmedicalneed. Avastin Sinceitsinitialapprovalin2004intheUnitedStates foradvancedcolorectalcancer,Avastinhasmade anti-angiogenictherapyafundamentalpillarofcancer treatment.Avastinisapprovedinmanycountries forthetreatmentofadvancedstagesofcolorectal, breast,non-smallcelllungandkidneycancer.Itis alsoavailableintheUSand29othercountriesforthe treatmentofpatientswithglioblastoma(atypeof braincancer).Nearlyamillionpatientshavebeen treatedwithAvastinsofar.Morethan1,000ongoing Roche-sponsoredor-supported,orindependently conductedclinicaltrialsareinvestigatingtheuseof Avastininover50tumourtypes(includingcolorectal,breast,non-smallcelllung,brain,gastric,ovarian andothers)anddifferentsettings(advancedor early-stagedisease). Breast cancer | InDecember,followingareview ofallrelevantdata,theEuropeanCommitteefor MedicinalProductsforHumanUse(CHMP)supportedthecontinuedfirst-lineuseofAvastinin c ombinationwithpaclitaxelchemotherapy,describingitasavaluabletreatmentoptionforpatients s ufferingfrommetastaticbreastcancer.Paclitaxelis thechemotherapymostfrequentlyusedandalso mostfrequentlypartneredwithAvastintocontrolthe disease.ThecommitteealsoconsideredcombinationsofAvastinwithtwoothertypesofchemotherapy,basedondatafromtheAVADOandRIBBON-1 trials.TheCHMPrecommendedthatthecombination withdocetaxelberemovedfromtheAvastinlabel andthatthecombinationwithcapecitabine(Xeloda) notbeapproved.AdecisionbytheEuropeanCommissionontheserecommendationsisexpectedearly in2011.TheCHMPopiniondoesnotaffectthe otherapprovedusesofAvastinintheEuropeanUnion foradvancedcolorectal,kidneyandlungcancer. AlsoinDecembertheFDAannouncedanumber ofregulatorydecisionsconcerningtheuseofAvastin formetastaticbreastcancerintheUS.Themost importantoftheseistheagencysdecisiontoinitiate theprocesstowithdrawthecurrentconditional (accelerated)approvalforAvastinforfirst-line treatmentofmetastaticbreastcancer.Rocheand Genentechhaverequestedahearingpursuantto
theFDAsNoticeofOpportunityforHearing.We believethiswouldprovideanopportunitytopresent ourviewsthatthedataareclinicallymeaningful andmeettheapplicablelegalandregulatorystandardsforcontinuedapproval.Untiltheconclusion oftheseproceedings,AvastinremainsFDA-approved foruseincombinationwithpaclitaxelformetastatic HER2-negativebreastcancer.Atthesametimethe FDAissuedcompleteresponsesforallotherpending applicationsconcerningAvastininmetastaticbreast cancer,sayingthattheapplicationsfailedtosupport theextensionoftheproposedindications:forfirstlinetreatmentincombinationwithdocetaxel(based onAVADO)andincombinationwithstandardchemotherapy(basedonRIBBON-1),andforsecond- linetreatmentincombinationwithstandardchemotherapy(basedonRIBBON-2).Thesedecisionsdo notaffecttheavailabilityofAvastinforitsapproved usesinothertypesofcancerintheUnitedStates. Approvals | InFebruarytheChinesehealthauthoritiesapprovedAvastinforthetreatmentofmetastatic colorectalcancer,itsfirstindicationinthisimportant market. Filings | InDecemberRochefiledanapplication withtheEUauthoritiesforapprovalofAvastin asfrontlinetreatmentforovariancancer,basedon theresultsofthephaseIIIGOG218andICON-7 t rials(seebelow,Clinical Milestones). Clinical milestones | TwolargephaseIIItrials involvingsome3,400patientshavedemonstratedthe potentialofAvastininovariancancer.Resultsfrom GOG218werepresentedattheannualmeetingofthe AmericanSocietyofClinicalOncology(ASCO)in June.Thetrialmetitsprimaryendpointofextending progression-freesurvival(theperiodapatient liveswithoutthediseasegettingworse)inwomen withpreviouslyuntreatedadvancedovariancancer. ICON-7,afurthertrialwithAvastininovariancancer, reportedpositiveresultsinearlyJuly.Thedata werepresentedattheEuropeanSocietyforMedical Oncology(ESMO)conferenceinOctober.Inaddition totheEUfilinginDecember,Rocheplanstouse theresultsofbothtrialstosupportaregulatoryapplicationforthisadditionalindicationintheUSin2011. Clinicaltrialresultsledtoanumberofadjustments intheAvastindevelopmentprogrammein2010.As
38
Pharmaceuticals
Major regulatory filings in 20101

Product Clinical data supporting filing Indication and/or dosage form Country
Actemra/ RoActemra
LITHE (2-year data) ML21753 TENDER
rheumatoid arthritis, reduction or inhibition of progression of joint damage and improvement of physical function rheumatoid arthritis signs and symptoms, progressive joint damage systemic onset juvenile idiopathic arthritis metastatic breast cancer, second-line treatment metastatic ovarian cancer advanced HER2-positive gastric cancer advanced HER2-positive gastric cancer advanced follicular lymphoma, first-line maintenance following induction treatment with MabThera/Rituxan plus chemotherapy
USA China (refiled) EU, USA USA EU USA, China Japan EU, USA, Switzerland USA China EU, Switzerland
Avastin Herceptin Herceptin + Xeloda MabThera/ Rituxan
RIBBON-2 ICON-7, GOG 218 ToGA ToGA PRIMA
RAVE Mircera ML20680 CORDATUS (NH20052) Tarceva emerging data from clinical trials, ongoing clinical experience Xeloda NO16968 (XELOXA) data in the public domain XELOX (NO16966)
1 Includes supplemental indications.
ANCA-associated vasculitis renal anemia correction of symptomatic anemia in adults with chronic kidney disease who do not yet need dialysis, once-monthly administration metastatic non-small cell lung cancer with EGFRactivating mutations, first-line treatment
EU
adjuvant colon cancer, combination with oxaliplatin advanced or refractory gastric cancer in patients who are not candidates for curative surgery metastatic colorectal cancer, combination with oxaliplatin
Switzerland Japan China (refiled)
phaseIIItrialswithAvastininstomach(AVAGAST) andprostate(CALGB90401)cancerdidnotmeet theirprimaryendpointsofextendingoverallsurvival, Rochehasdecidednottopursueregulatoryfilings fortheseindications.AphaseIIIprogrammeinvestigatingtheadditionofAvastintostandardtreatmentwithMabThera/Rituxanpluschemotherapy fordiffuselargeBcelllymphoma,anaggressive formofnon-Hodgkinslymphoma,wasdiscontinued afterasafetyandefficacyanalysisshowedanunfavourablebenefitriskassessment.FollowingevaluationofphaseIIIdata(AVANT),RochehasdiscontinueddevelopmentofAvastininadjuvantcolorectal cancer.TheresultsanddecisiononadjuvantcolorectalcancerdonotaffecttheuseofAvastinin themetastatic(advanced)colorectalcancersetting, wherethemedicinehasdemonstratedaclinically
meaningfulprogression-freeandoverallsurvival b enefitinbothfirst-andsecond-linetreatment. Avastinhasshownapositivebenefitriskratioin theseandallotherapprovedmetastaticcancer i ndications. Herceptin Approvals | TheEuropeanCommissionapproved Herceptinincombinationwithchemotherapyforuse inpatientswithmetastaticstomach(gastric)cancer exhibitinghighlevelsofHER2,inJanuary2010. Approvalsforthesameindicationwerereceivedin SwitzerlandinMayandtheUSinOctober,following priorityreviewbytheFDA. Filings | InJunetheJapanesehealthauthorities gavepriorityreviewstatustoanapplicationsub -
Pharmaceuticals
39
Major regulatory approvals in 2010 1

Product Clinical data supporting filing Indication and/or dosage form Country
Actemra/ RoActemra
OPTION, TOWARD, RADIATE, AMBITION, LITHE (6-month data) LITHE (2-year data)
rheumatoid arthritis signs and symptoms
USA
rheumatoid arthritis, reduction or inhibition of progression of joint damage and improvement of physical function metastatic colorectal cancer
EU, Switzerland, USA 2 China
Avastin
AVF 2107, E3200, NO16966 (global); ARTIST (China)
Herceptin Lucentis MabThera/ Rituxan
ToGA CRUISE, BRAVO CLL-8 REACH PRIMA
advanced HER2-positive gastric cancer macular edema following retinal vein occlusion first-line chronic lymphocytic leukemia relapsed or refractory chronic lymphocytic leukemia advanced follicular lymphoma, first-line maintenance following induction treatment with MabThera/Rituxan plus chemotherapy
EU, USA, Switzerland USA USA USA EU, Switzerland
REFLEX Mircera CORDATUS (NH20052) Tarceva Xeloda SATURN NO16968 (XELOXA)
rheumatoid arthritis, inhibition of progression of joint damage and improvement of physical function correction of symptomatic anemia in adults with chronic kidney disease who do not yet need dialysis, once-monthly administration non-small cell lung cancer, first-line maintenance after chemotherapy adjuvant colon cancer, combination with oxaliplatin
EU EU, Switzerland
USA, EU EU
1 Includes supplemental indications. 2 January 2011.
mittedinMarchbyChugai,forapprovalofHerceptin foradvancedHER2-positivestomachcancer.In JuneRochesubmittedanapplicationforapproval ofthesameindicationinChina. Clinical milestones | InDecemberpatientenrolmentwascompletedforaphaseIIIstudywithanew subcutaneousformulationofHerceptininwomen withHER2-positivebreastcancer.Herceptiniscurrentlygivenintravenouslyover30to90minutes. Theinnovativesubcutaneousformulation,whichis basedonHalozymesEnhanzetechnology(see p.128),isexpectedtotakelessthanfiveminutes toadministerandmayallowpatientswithHER2- positivebreastcancertoreceivetreatmentintheir physiciansofficeorathome,withouthavingto gotoahospital.
Lucentis Approvals | InJunetheUSFoodandDrugAdministration(FDA)approvedLucentisforthetreatment ofpatientswithmacularedema(swellinginthe r etina)followingretinalveinocclusion(RVO).The approvalfollowedasix-monthpriorityreviewby theFDA.RVOoccurswhenbloodflowthrougharetinalveinbecomesblocked,causingswelling(macularedema)andhemorrhagesintheretina,whichmay resultinblurringorvisionlossinallorpartofone eye. MabThera/Rituxan (oncology) Approvals | InFebruarytheFDAapprovedRituxan combinedwithfludarabineandcyclophosphamide chemotherapyforpeoplewitheitherpreviously untreated(first-line)orpreviouslytreated(relapsed
Will it
Disease area Indication Trials No. of patients No. of study sites No. of countries
Oncology Second-line HER2-positive metastatic breast cancer EMILIA (TDM4370g / BO21977) 551 (recruited as of December 2010) 216 22
Jone F., participant in the EMILIA study (TDM1), Houston
work ?
Wayne C., TDM1 Medical Director, Genentech, South San Francisco
TDM1 an antibodydrug conjugate
Creating value for patients means building on good treatments to make them even better
1970s
Non-specific chemotherapy agents
2000
Herceptin (trastuzumab) the new standard of care for HER2-positive metastatic breast cancer
The future?
ADC targets chemotherapy specifically to tumour cells
Points of attack Cancer cell
Healthy cell
Chemotherapy Attacks both healthy and cancerous cells
Trastuzumab + chemo The monoclonal antibody trastuzumab specifically targets HER2-positive tumour cells
TDM1 Attacks cancer cells only, no conventional chemotherapy burden
DM1
As the first therapeutic antibody targeting a specific cancer-related biomarker to receive FDA approval, Herceptin (trastuzumab) launched a revolution in the treatment of breast cancer. We continue to build on that breakthrough with trastuzumabDM1 (TDM1), a novel antibody-drug conjugate (ADC) being developed TDM1 to treat HER2-positive breast cancer. TDM1 combines two powerful anticancer approaches in one medicine. The trastuzumab antibody component Trastuzumab blocks the signals that make HER2-positive cancer cells more aggressive and sends a message to the patients immune system to destroy the cancer cells. It also delivers DM1, a potent chemotherapy agent, directly to the tumour cells to induce cell death.
Stable linker
TDM1 may offer patients with HER2-positive breast cancer effective treatment that spares them the burden and side effects of conventional chemotherapy. EMILIA is a phase III registration trial comparing single-agent TDM1 treatment with combined lapatinib (another HER2-targeted drug) plus capecitabine (Xeloda) chemotherapy in women with advanced HER2-positive breast cancer. Further trials are testing TDM1 in combination with Roches pertuzumab, another next-generation HER-targeting antibody therapy.
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orrefractory)CD20-positivechroniclymphocytic leukemia,basedontheresultsoftheCLL-8and REACHtrials.Followingregulatoryapplicationsby RocheandGenentechinthefirstquarter,inOcto- bertheEuropeanMedicinesAgency(EMA) approvedMabTheraasmaintenancetreatmentfor peoplewithfollicularlymphomawhohavere- spondedtoinductiontherapy;theFDAiscurrently reviewingGenentechssBLAforthesameindica- tionandhassetanactiondateinlateJanuary2011. Bothsubmissionswerebasedontheresultsof thePRIMAstudy,whichshowedthat ontinuing c MabThera/Rituxanfortwoyears(maintenance therapy)inpatientswhorespondedtoinitialtreatmentwithMabThera/Rituxanpluschemotherapy nearlydoubledprogression-freesurvival,compared withthosewhodidnotreceivemaintenance treatment. Clinical milestones | Basedonpositiveresults fromaphaseIbstudyinpatientswithfollicularlymphoma,inJulyRochedecidedtoadvanceanew subcuta e usformulationofMabThera,alsobased n o on alozymesEnhanzetechnology,intophase H IIIdevelopment.Subcutaneousadministrationhas thepotentialtosignificantlysimplifytreatment byshorteningadministrationtimetolessthanten minutesandimprovingpatientcomfort.Aphase IIItrialisexpectedtostartinthefirstquarterof2011. PositivedatafromaphaseIIIstudyofMabThera/ Rituxaninpatientswithadvancedfollicularlymphomawhodidnothavesymptoms(asymptomatic disease)werepresentedattheannualmeeting oftheAmericanSocietyofHematologyinDecember. Thestudyshowedthatimmediateadministration ofsingle-agentMabThera/Rituxanasinductiontherapyfollowedbycontinued(maintenance)treatment withMabThera/Rituxandelayedtheneedforchemo- orradiotherapyandextendedprogression-free s urvival,comparedwithwatchfulwaiting.Theseare thefirstphaseIIIdatatoshowthatinitialuse ofMabThera/Rituxanmonotherapyasinductionfollowedbymaintenancecanprovideclinicalbenefit forpatientswithasymptomaticfollicularlymphoma, adiseasethatiscommonlytreatedonlywhen s ymptomsappear(anapproachknownaswatchful waiting).
MabThera/Rituxan (inflammation) Approvals | Rochereceivedregulatoryapproval inOctoberfortwoadditionstotheexistingEU marketingauthorisationforMabTherainrheumatoid arthritis:basedprimarilyondatafromtheREFLEX study,theindicationswereexpandedtoinclude i nhibitionofprogressionofjointdamageandim- prove entofphysicalfunction;andinformation m onenhancedtreatmentresponsesinseropositive RApatients(seebelow,Clinical milestones) wasaddedtotheproductsprescribinginformation. Filings | InOctober,basedondatafromthephase II/IIIRAVEstudy,GenentechandBiogenIdec s ubmittedasupplementalBiologicsLicenseApplicationtotheFDAforapprovalofRituxanforANCAassociatedvasculitis,agroupofrare,severe,lifethreateningautoimmunediseasescharacterisedby inflammationofbloodvesselsleadingtoorgan d amage.Therearecurrentlynoapprovedtherapies forthecondition,andtreatment-associatedtoxicities arecommonwiththeunapprovedstandardofcare, cyclophosphamide. Clinical milestones | Ananalysisofsamplesfrom patientswithRAwhoparticipatedintwophaseIII trialswaspresentedattheEuropeanLeagueAgainst Rheumatism(EULAR)annualcongressinJune.It showedthattestingforspecificbloodmarkersatthe timeofdiagnosiscouldhaveasignificantimpact ontreatmentdecisionsandleadtoimprovedpatient qualityoflife.Approximately80%ofRApatients haveatleastoneoftwocharacteristicbiomarkers producedbyautoreactiveBcellsrheumatoid f actor(RF)andanticycliccitrullinatedpeptide(antiCCP)intheirblood.Suchpatientsarereferred toasseropositive.Datafromapooledcohortofthe twostudiesshowedthat,whilebothseropositive andseronegativepatientsbenefittedfromtreatment withMabThera/Rituxan,theresponsewasenhanced intheseropositivepopulation.Additionalbiomarker analysesfromotherphaseIIIstudiesarepending. MabThera/RituxanisthefirstandonlyselectiveBcell targetedtherapyavailableforRA. Tarceva Approvals | InApriltheUSFoodandDrugAdministration(FDA)approvedTarcevaasamaintenance treatmentforpatientswithlocallyadvancedormetastaticnon-smallcelllungcancer(NSCLC)whose
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Pharmaceuticals
Roche has 12 innovative new molecular entities in late-stage development, including six potential personalised healthcare medicines with planned companion diagnostic tests.
diseasehasnotprogressedafterfourcyclesof p latinum-basedfirst-linechemotherapy.InAprilthe EuropeanCommissionapprovedTarcevaasmonotherapyformaintenancetreatmentinpatientswith advancednon-smallcelllungcancer(NSCLC) whosediseaseremainslargelyunchanged(known asstabledisease)afterplatinum-basedinitial hemotherapy.Bothapprovalsarebasedondata c fromthephaseIIISATURNstudy,whichshowed that,comparedwithplacebo,Tarcevasignificantly improvedoverallsurvivalinpatientswithstable d isease.PatientswithadvancedNSCLCandstable diseaseafterinitialchemotherapyhavetumours thatprogressfaster,aremoreresistanttofurther linesofchemotherapyandhaveapoorerprognosis comparedwithpatientswhohaveacompleteor partialresponsetoinitialchemotherapy. Filings | InJuneRochesubmittedanapplicationto theEuropeanMedicinesAgency(EMA)toextend thecurrentmarketingapprovalforTarcevatoinclude first-linetreatmentofpatientswithadvancedNSCLC withEGFR-activatingmutations.Theapplication issupportedbyemergingdatafromclinicaltrialsand ongoingclinicalexperience,includingnewdata fromtheOPTIMALtrialpresentedatESMO(see below).Tarcevaistheonlyepidermalgrowthfactor receptor(EGFR)inhibitorapprovedforusein m aintenanceandsecond-linetreatmentsettings inpatientswithadvancedormetastaticNSCLC, irrespectiveofthepresenceofEGFR-activating mutations.AlicenceforTarcevaforuseinthefirstlinesettingwouldallowphysicianstopersonalise earlytreatmentaccordingtoEGFRactivatingmutationstatus,whilepeoplewithNSCLCwithout
EGFR-activatingmutationswouldcontinuetobenefit fromtreatmentwithTarcevainlaterlinesoftherapy. Clinical milestones | Resultsfromarandomised phaseIIIstudy(OPTIMAL)presentedatthe E uropeanSocietyforMedicalOncology(ESMO) congressinOctoberdemonstratedthatfirst-line treatmentwithTarcevaextendedprogression- freesurvivalinpatientswithadvancedNSCLCwith EGFR-activatingmutationstomorethanoneyear, almostthreetimeslongerthanpatientswhoreceived conventionalchemotherapy.Interimresultsfrom asecondtrialinvestigatingTarcevainthisindication (EURTAC)areexpectedinthefirstquarterof2011. Asmanyas30%ofAsianpatientswithlungcancer andanestimated10%oflungcancerpatientsin WesterncountrieshavethisdistinctformofNSCLC. Xeloda Approvals | InMarchtheEUauthoritiesapproved Xelodaincombinationwithoxaliplatin(acom bin tionknownasXELOX)fortheadjuvant(posta surgical)treatmentofpatientswithearlycolon c ancer.Theapprovalwasbasedonresultsfrom theNO16968(XELOXA)study,oneofthelargest studiesofpatientswithstageIII(early)coloncancer, whichshowedthatpatientstakingXELOXimmediatelyaftersurgeryliveddisease-freeforlonger c omparedwiththosetreatedwithachemotherapy regimenconsistingof5-fluorouracilplusleucovorin. Filings | InJapanChugaifiledmarketingapplicationswiththeMinistryforHealth,Labourand WelfareinMarchforapprovalofXelodacombined with erceptinforthetreatmentofadvanced H HER2-positivestomachcancerandinSeptember forXelodainadvancedorrefractorygastric ( stomach)cancerinpatientswhoarenotcandi datesfor urativesurgery. c Clinical milestones | Adataanalysiscompleted inJuneshowedthatNO17629,aphaseIIItrialinvestigatingXelodaincombinationwithdocetaxelfor theadjuvant(postsurgical)treatmentofwomenwith earlybreastcancer,didnotmeetitsprimaryendpointofextendingdisease-freesurvivalbutdidmeet thesecondaryendpointofextendingoverallsur vival.Rochehasdecidednottopursueregulatory f ilingsforthisindication.
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Research and development

RochesPharmaceuticalsDivisioniscommitted todiscoveringandcommercialisinginnovativemedicinesthatrepresenttruemedicalvalueinareas ofhighunmetneed.Toensureastrongflowofsuitablecandidatemoleculesintoitsdevelopmentpipeline,Rochehasbuiltauniqueinnovationnetworkof independentresearchanddevelopmentcentres.In additiontoRocheandGenentech,itincludesChugai inJapanandallianceswithmorethan150partner organisationsworldwide.Thispromotesadiversity ofresearchapproachesandenablesaccesstonew technologiesandpromisingdrugcandidates. ClosecooperationbetweenthePharmaceuticals DivisionandRocheDiagnosticsisakeystrategic advantageforourcompany.Itensuresthatdiagnosticsexpertiseisseamlesslyintegratedintoallparts ofthepharmaceuticalR& D process.Thisiscentral toRochesgoalofadvancingpersonalisedhealthcare (PHC),anapproachthatseekstotailortreatments tospecificpatientsubpopulationsbasedongrowing scientificunderstandingofbiologyanddiseaseat themolecularlevel. TworecentexamplesoftheprogressthatRocheis makingtowardsPHCinthedevelopmentoftherapies fordifficult-to-treatdiseasesareRG3638(MetMAb) forlungcancerandRG7204(BRAFinhibitor)for malignantmelanoma.RocheDiagnosticsisdevelopingdiagnostictestsdesignedtoguideappropriate useofbothcompoundsintheirtargetpatientpopu-
lations.Rochesresearchonantibodydrugconjugatesasameansoftreatingcancerisanother e xampleofahighlytargetedapproachwiththe potentialofimprovingoutcomeswhilereducing e theside ffectsoftreatment.TDM1,forHER2- positivebreastcancer,isthemostadvanced oftheseprojects.Formoreinformation,seebelow, Oncology,andalsopp.18and19ofthisreport. AspartoftheGroupsOperationalExcellenceprogramme,thePharmaceuticalsDivisionisprioritising itsR& D investmentsinordertodedicateresources toprojectswiththehighestpotential.Following acomprehensiveportfolioreview,Rochedecidedto discontinueR& D activitiesinRNAinterference, c onsolidateinternalfunctionalresourcesandreduce thenumberofPharmaResearchandEarlyDevelopmentsitesfrom11toseven,therebyreducing fixedcostsandmakingfundsavailableforadditional externalresearchpartnershipsandpromisingnew programmesenteringphaseIIclinicaldevelopment. Atthebeginningof2011thedivisionsR& D pipe- lineincluded102projectsinclinicaldevelopment (phaseItoIIIandfiledforregulatoryreview).Of these,62involvednewmolecularentities(NMEs) and40involvedadditionalindications.Twelve NMEsareinlate-stagedevelopment(seetable, p.47).Twenty-twoprojectsinvestigatingadditional indicationsforexistingproductsareinphaseIII. ThePharmaceuticalspipelineisshowninthefold-out insidethefrontcoverofthisreport.Furtherdetails areavailableatwww.roche.com.
Roche and Genentech 376 projects in research and early development (discovery, phases 0II) | January 2011
Roche and Genentech 39 projects in phase III (or marketing applications filed) | January 2011
Inflammation Metabolic Others Ophthalmology Virology
65 29 12 3 65
Oncology Metabolic CNS Ophthalmology Inflammation
26 2 3 2 6
CNS Oncology
63 139
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Four additional NMEs advance into late-stage development: MetMAb (lung cancer), lebrikizumab (asthma), RG7128 (hepatitis C), ocrelizumab (MS).
Oncology Rochesclinicaldevelopmentpipelineinoncology includes29newmolecularentities.ThePharmaceuticalsDivisionisfurtherstrengtheningitsoncologyportfoliothroughnewtargetedtherapeutic optionsandexpandingintonewindications.Six oncologyNMEsarenowinlate-stageclinicaltesting. Pertuzumab(RG1273)isaHER2dimerisationinhi b itorthatisbeingstudiedwiththecurrentstandard ofcare,Herceptinpluschemotherapy,inHER2- positivebreastcancer.DatafromaphaseIItrial (NEOSPHERE)investigatingpertuzumaband H erceptinplusdocetaxelchemotherapyinHER2positiveearlybreastcancerwerepresentedat theSanAntonioBreastCancerSymposiuminDe- cem er.Theresultsshowedthatthetwoantibodies b plusdocetaxelgivenintheneoadjuvantsetting (beforesurgery)improvedtherateofcomplete tumour isappearanceinthebreastbymorethan d halfcomparedwithHerceptinplusdocetaxelchemotherapy.Basedontheencouragingefficacyresults fromNEOSPHERE,pertuzumabwillalsobestudied asadjuvant(postsurgical)therapyinHER2-positive earlybreastcancer.ThephaseIIIclinicalprogramme inthissettingisscheduledtostartinlate2011. Resultsandrelatedregulatoryfilingsareexpected in2011fromaphaseIIIstudy(CLEOPATRA)evaluatingtheadditionofpertuzumabtoHerceptinand chemotherapyinthefirst-linetreatmentofpatients withadvanced(metastatic)disease. TrastuzumabDM1(TDM1,RG3502)isanovel anti odydrugconjugatethatcombinesthetherab peuticeffectoftrastuzumab(theactivesubstance of erceptin)withintracellulardeliveryofDM1, H ahighlypotentchemotherapyagent,tospecifically
targetHER2-positivetumours(seep.42).Datafrom arandomisedphaseIItrial(TDM4450g)withTDM1 inpreviouslyuntreatedHER2-positivemetastatic breastcancerpresentedattheESMOconferencein OctobershowedefficacycomparabletoHerceptin pluschemotherapy,thestandardofcare,alongwith asignificantlyreducedsideeffectburden.Final resultsfromthisstudyareexpectedin2011. TwophaseIIIregistrationstudiesinmetastatic HER2- ositivebreastcancerareongoing,andwe p plantosubmitglobalmarketingapplicationsin 2012.EMILIA,investigatingTDM1inpretreated patients,isexpectedtoyielddataonprogressionfreesurvivalin2012andoverallsurvivalin2013. MARIANNE,acomparativetrialoffirst-linetreatmentwitheitherTDM1aloneorTDM1plus p ertuzumabversusHerceptinpluschemotherapy, beganinJuly.Bothtrialsareinvestigatingtherapeu- ticoptionsthattargetHER2-positivetumours whilesparingpatientstheburdenandsideeffects ofconventionalchemotherapy. RG7204(PLX4032,collaborationwithPlexxikon) isafirst-in-classmoleculedesignedtoselectively inhibitacancer-causing,mutatedformoftheBRAF proteinfoundinapproximatelyhalfofmetastatic melanomatumours.Promisingresultsfromaphase IIclinicaltrial(BRIM2)werepresentedinNovember attheInternationalMelanomaResearchCongress. ThedatashowedthatRG7204shranktumours inoverhalfofpatientswithpreviouslytreatedBRAF V600Emutation-positivemetastaticmelanoma. Medianprogression-freesurvivalinthestudywas 6.2months.Typically,progression-freesurvivalfor thesepatientsisapproximatelytwomonths.Aphase IIItrial(BRIM3)inpreviouslyuntreatedBRAF m utation-positivemetastaticmelanomapatientsmet itsprimaryendpointsinJanuary2011,withan interimanalysisshowingsignificantlyimprovedoverallandprogression-freesurvivalinpatientswho receivedRG7204comparedwiththosetreatedwith dacarbazine,thecurrentstandardofcare.Roche MolecularDiagnosticsisdevelopingacompanion diagnostic,cobas4800BRAFV600Mutation Test(seepp.59,69,78),toidentifypatientswhose tumourscarrytheabnormalBRAFgeneandare thereforeappropriatefortreatmentwithRG7204.
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Twelve new molecular entities in ongoing or planned late-stage studies

Compound Indication Status Expected first filing
pertuzumab trastuzumabDM1
HER2-positive metastatic breast cancer, first line HER2-positive metastatic breast cancer, first and second line
phase III started in 2008 phase III started in first quarter 2009
2011 2012
RG7204 (BRAF inhibitor)
metastatic melanoma
phase III trial in first-line treatment met primary endpoints in January 2011 pivotal phase II started in first quarter 2009 phase III started in fourth quarter 2009 (chronic lymphocytic leukemia) LIP 1 decision made, preparing for phase III LIP 1 decision made, preparing for phase III phase III initiated in first quarter 2010 phase III enrolment completed in second quarter 2010 LIP 1 decision made, preparing for phase III phase III started November 2010
2011 2011 2013
RG3616 (hedgehog advanced basal cell pathway inhibitor) RG7159 (GA101) carcinoma chronic lymphocytic leukemia, non-Hodgkins lymphoma RG3638 (MetMAb) lebrikizumab aleglitazar dalcetrapib RG7128 (HCV polymerase inhibitor) RG1678 (glycine reuptake inhibitor) negative symptoms of schizophrenia, suboptimally controlled positive symptoms of schizophrenia ocrelizumab multiple sclerosis (RRMS and PPMS) solid tumours asthma cardiovascular risk reduction in type 2 diabetes dyslipidemia, cardiovascular high risk hepatitis C
post-2013 post-2013 post-2013 2013 2013 2013
phase III planned to start in first quarter (PPMS) and second quarter (RRMS) 2011
post-2013
1 Lifecycle investment point (decision to commence late-stage development leading to submission of marketing applications).
RG3616(GDC-0499;collaborationwithCuris)is anovelcompoundtargetingthehedgehogsignalling pathway,whichisthoughttobeimplicatedin s e ev ralcancers.ApivotalphaseIIstudywithregistrationpotentialiscurrentlyinvestigatingRG3616 asapotentialtreatmentforadvancedbasalcell c arcinoma(BCC).RG3616isalsobeingevaluated inaphaseIIstudyasatherapyforoperableBCC. InthefourthquarterRochedecidedtodiscontinue developmentofthecompoundinovarianandcolorectalcancerduetolackofbenefitinphaseIItrials. RG7159(GA101)isthefirsttypeII,glycoengineered, anti-CD20monoclonalantibodybeinginvestigated inlate-stageclinicaltrialsasapotentialtreatmentfor non-Hodgkinslymphoma(NHL)andchroniclymphocyticleukemia(CLL).Ithasbeenspecifically designedtoenhancethedestructionofcancerousB
cellsbyactivatingotherimmunecellstoattack thecancercellsandbyinducingdirectcelldeath. IntwophaseIIstudiespresentedattheAmerican S ocietyofHematologyannualmeetinginDecem- ber,treatmentwithRG7159producedpromising responseratesinverydifficult-to-treatpatientswith eitherindolentoraggressiveNHLwhohadnot respondedtomultiplepriortreatments,including MabThera/Rituxan.FurtherclinicaldataforRG7159 inNHLandCLLareexpectedin2011.PhaseIII studiesofRG7159versusMabThera/Rituxanin aggressiveandindolentNHLarescheduledtostart in2011. RG3638(MetMAb)isauniquemonoclonalantibody thatbindsspecificallytothec-Metproteinreceptor. TheMetpathwaycanbeinappropriatelyactivated incancerandleadtoinvasivegrowth.NewphaseII
What are the
Metabolic and cardiovascular diseases CV risk reduction in patients with type 2 diabetes ALECARDIO 6,000 750 24
Ragnar B., participant in the ALECARDIO (aleglitazar) trial, Stockholm
implications ?
Anita M.-W., Operations Program Leader, Roche Basel
Aleglitazar
Creating value for patients means focusing on the unsolved issues

For patients with type 2 diabetes (T2D), blood glucose control is no longer the biggest concern. More than 60% of patients with diabetes die from heart disease and stroke, not from an inability to control blood glucose. And 10% of patients who experience an acute coronary syndrome (ACS) event, such as a heart attack, die within one year. Currently, there are no drugs on the market that specifically and effectively control their high risk of cardiovascular disease.
Increased risk of heart attack and stroke associated with T2D
Healthy people People who have had a heart attack or stroke
Aleglitazar, a dual PPAR / co-agonist developed at Roche, may become the first compound with the potential to reduce cardiovascular morbidity and mortality specifically in high-risk patients with T2D. Aleglitazar is an excellent example of translational medicine: biochemical parameters, animal data, and biomarkers of efficacy and safety consistently supported hypotheses that were later proven in clinical settings. ALECARDIO, an innovative global, randomised, controlled phase III clinical trial with some 6,000 patients, is now testing the hypothesis that aleglitazar can reduce cardiovascular morbidity and mortality in patients with T2D who have suffered a recent ACS event.
People with T2D People with T2D who have had a heart attack or stroke
Risk
Demonstrating the multiple effects of aleglitazar Conventional trial in people with T2D
12 years Reduction of blood glucose levels 5 years
Trial with aleglitazar in T2D high-risk subpopulation
Blood glucose
Blood fats
Hypertension
Focused on reducing cardiovascular risk in people with type 2 diabetes
Saving lives
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datapresentedattheannualEuropeanSocietyfor MedicalOncology(ESMO)conferenceinOctober showedasignificantincreaseinprogression-free survivalforpatientswithhighMet-expressingnonsmallcelllungcancer(NSCLC)whoweretreated withMetMAbplusTarceva.Basedonthisdata,in SeptemberRocheadvancedthecompoundintolatestagedevelopmentforthesecond-andthird-line treatmentofNSCLC.AphaseIIIstudyinpatients withhighMet-expressingNSCLCisexpectedto startin2011.RocheTissueDiagnosticsisdeveloping acompaniondiagnostictesttoidentifypatients withhighMet-expressingNSCLCwhoaremostlikely torespondtotreatmentwithRG3638(seepp.19, 59,74).AphaseIIstudytoinvestigatetheaddition ofMetMAbtochemotherapy,withorwithoutAvastin, forthetreatmentoftriplenegativemetastaticbreast cancerisexpectedtoenrolitsfirstpatientinthe firstquarterof2011. Inflammation and autoimmune disorders Rochehaseightnewcompoundsindevelopment forchronicandprogressiveautoimmuneandinflammatorydiseasessuchasrheumatoidarthritis(RA) andasthma,fiveofwhichareinphaseIIclinicaltesting.Lebrikizumabisahumanisedmonoclonalantibodydesignedtobindspecificallytointerleukin-13, aproteinthoughttoplayakeyroleintheairway inflammation,hyperresponsivenessandobstruction experiencedbyasthmapatients.Thecompound isbeingdevelopedforthetreatmentofmoderateto severepersistentasthma.Patientrecruitmentfor twokeyphaseIItrials(MOLLYandMILLY)hasbeen completed.BasedonpromisingphaseIIresultswith lebrikizumabinpatientswhosesymptomsremained uncontrolledoninhaledcorticosteroids,withor w ithoutasecondcontroller,Rochehasdecidedto advancethemoleculeintolate-stageclinicaltesting. InMayRocheandBiogenIdecannouncedtheir decisiontodiscontinuedevelopmentofocrelizumab (RG1594)forrheumatoidarthritis(RA).Following adetailedanalysisoftheefficacyandsafetyresults fromtheRAprogramme,thecompaniesconcluded thattheoverallbenefitriskprofileofocrelizumab wasnotfavourableinRA,takingintoaccount c urrentlyavailabletreatmentoptions,including MabThera/Rituxan.Developmentofocrelizumab asatherapyformultiplesclerosisiscontinuing (seep.52).
Metabolic and cardiovascular diseases Rochehasninenewcompoundsindevelopmentfor metabolicandcardiovasculardiseases. alcetrapib D (RG1658,JTT-705;licensedfromJapanTobacco)is anovelcholesterylestertransferprotein(CETP) modulatorbeingtestedforitsabilitytoreducecardiovasculareventsinpatientswith tablecoronary s heartdiseasefollowingarecentacutecoronarysyndromeevent.ThephaseIIIdal-HEARTprogramme isontrack:recruitmentforthephaseIIIdal-OUTCOMEStrialhasbeencompleted,withover15,600 participantsenrolled.ResultsfromtwophaseIIb studies(dal-VESSELanddal-PLAQUE)areexpected in2011,andrecruitmentforafurtherphaseIIIstudy (dal-PLAQUE2)isongoing.Thesesupportingstudies areinvestigatingthepotentialimpactofdalcetrapib treatmentonatheroscleroticplaqueburden,using imagingtechniquesandfunctionaltests. Aleglitazar(RG1439)isaninnovativeinvestigational treatmentdesignedtoreducetheincidenceand impactofcardiovascularmortality,non-fatalheart attackandstrokeinpatientswitharecentacutecoronarysyndromeandtype2diabetes.Aglobalphase IIIprogramme(ALECARDIO)beganrecruitment earlyin2010.Aleglitazarhasthepotentialtobethe firsttherapytospecificallyreducecardiovascular riskinpeoplewithtype2diabetes. Taspoglutide(RG1583,BIM51077;licensedfrom Ipsen)isaonce-weeklyhumanglucagon-likepeptide-1(GLP-1)hormoneanalogueindevelopment forthetreatmentoftype2diabetes.InSeptember RochecommunicateditsdecisiontostopadministeringtaspoglutidetopatientsinglobalphaseIII c linicaltrials,basedonhigherthanexpectedpatient discontinuationratesobservedinanalysesofdata fromtheT-emergeprogramme,andalsodueto theantibody-monitoringplanimplementedtoaddress serioushypersensitivityreactions.Aftercareful assessmentoftherelevanceoftheT-emergesafety andefficacydatatosupportfutureregulatory approvalintype2diabetes,includingconsideration ofthecurrentportfolioevaluationinitiative, Rochehasdecidedtodiscontinuethetaspoglutide T-emergedevelopmentprogramme.
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Pharmaceuticals
As the first in a new class of medicines, RG1678 has the potential to redefine the therapeutic approach to a range of psychiatric disorders.
Virology Rochecurrentlyhastwodirect-actingantiviralagents inlate-stagedevelopmentforhepatitisC:thenucleosidepolymeraseinhibitorRG7128(partneredwith Pharmasset)andtheproteaseinhibitordanoprevir (RG7227).BothoftheseoralagentsarebeinginvestigatedincombinationwithPegasysandribavirin, andincombinationwitheachotherinaninterferonfreeregimen.RG7128interimphaseIIbresults showedgoodefficacyandtolerability,withnoevidenceofviralresistanceafterthreemonthstherapy incombinationwithPegasysandribavirin.AphaseI trial(INFORM-1)ofRG7128anddanoprevirasan interferon-freecombinationshowedsignificantviral suppression.AphaseIIIprogrammewithRG7128 isexpectedtobeginin2011.InOctober2010Roche acquiredtheglobalrightstodanoprevir,toincrease thestrategicflexibilityoftheGroupshepatitisC portfolio. Central nervous system TheRocheportfoliohas10novelcompoundsin developmentfordisordersofthecentralnervoussystem,includingschizophrenia,multiplesclerosisand otherseriousconditions.Oneofthesecompoundsis RG1678,anovelglycinereuptakeinhibitorbeing developedforthetreatmentofschizophrenia,anarea ofhighunmetmedicalneed.Promisingdatafrom aphaseIIproof-of-conceptstudywithRG1678in patientswithnegativesymptomsofschizophrenia werepresentedattheannualmeetingoftheAmericanCollegeofNeuropsychopharmacologyin December.AglobalphaseIIIprogrammehasbeen initiatedtoinvestigateRG1678incombination withantipsychoticsinpatientswitheithernegative symptomsorsuboptimallycontrolledpositive s ymptomsofschizophrenia,indicationsforwhich
therearecurrentlynoapprovedtreatments.The firstofsixplannedtrialsbeganinNovember2010. Asthefirstinanewclassofmedicines,RG1678 hasthepotentialtoredefinethetherapeutic approachtoarangeofpsychiatricdisordersand deliverclinicalbenefitsbeyondthoseachievable withcurrenttreatmentoptions. InOctoberRocheandBiogenIdecreportedposi tiveresultsfromaphaseIItrialwiththehumanised anti-CD20monoclonalantibodyocrelizumab (RG1594)inpatientswithrelapsing-remittingmultiplesclerosis(RRMS),oneoftheleadingcauses ofneurologicaldisabilityinyoungadults.DatapresentedattheannualmeetingoftheEuropean C ommitteeforTreatmentandResearchinMultiple Sclerosis(ECTRIMS)showedthat,comparedwith placebo,ocrelizumabsignificantlyreducedsignsof diseaseactivity,asmeasuredbybrainlesionsand annualisedrelapserate,withnoopportunisticinfectionsreported.TwophaseIII tudieswillbegininthe s s econdquarterof2011toexplorethedrugsefficacy inRRMScomparedwithinterferon,thecurrent standardofcare.AphaseIIIstudyinvestigatingthe potentialofocrelizumabinpatientswithprimary p rogressivemultiplesclerosis(PPMS)isplannedto startinthefirstquarterof2011.InOctoberGenentechandBiogenIdecamendedtheircollaborationon antibodiestargetingCD20andagreedthatGenentechwillhaverespon ibilityforthefurtherdevelops mentofocrelizumabinmultiplesclerosisintheUS.
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53
Focus on unmet medical needs

Cancer | AccordingtothelatestInternational AgencyforResearchonCancer(IARC)estimate,in 2008over12millionpeopleworldwidewerediagnosedwithcancer,andsome7.6milliondiedofthe disease.TheIARCanticipatedthenthatcancer wouldsurpassheartdiseaseastheleadingcause ofdeathworldwidein2010.Theagencyalsoforecaststhatby2030therewillbeover26millionnew casesand17milliondeathsperyearfromcancer. InEuropealone,oneinthreepeoplecanexpectto developcancerintheirlifetime.Cancerisnotone diseasebutagroupofmorethan100distinctdisorders,eachwithitsownmedicalchallenges. Non-Hodgkins lymphoma | Agroupofover30 cancersthataffectthelymphaticsystem.Thisclass ofcancercurrentlyaffectsover1.5millionpeople worldwide,andsome350,000newdiagnoses aremadeeachyear.Follicularlymphomaaccounts foraboutoneinfourofallcasesofnon-Hodgkins lymphoma.Itcanoccuratanytimeduringadulthood, thoughpeoplearetypicallydiagnosedduringtheir sixties,anditaffectsasmanymenasitdoeswomen. Chronic lymphocytic leukemia | Themostcommon typeofleukemiainadults,accountingfor2530% ofallformsofleukemia.TheincidenceofCLLin Westerncountriesisapproximately3per100,000, anditistwiceascommoninmenasinwomen. Colorectal cancer | Cancerofthelargeintestine orrectum,whichaccountsforover1millionnew cases(around10%ofallnewlydiagnosedcancers) worldwideeachyear.Itisthesecondmostcommon causeofcancerdeathsinEuropeandthethird mostcommonworldwide. Kidney cancer | Thistypeofcancerisnewlydiagnosedinaround200,000peopleandcauses100,000 deathsworldwideeveryyear,ratesthatareexpected toincrease.Renalcellcarcinomaaccountsfor90% ofallkidneycancers.
Breast cancer | Themostcommoncanceramong womenworldwide.Over1.4millionwomenarenewly diagnosedandover450,000diefromthedisease eachyear.Asthereareseveraldifferenttypesof breastcancer,knowledgeoftumourcharacteristics isimportantfortreatmentdecisions.Some1525% ofwomenwithbreastcancerhavetumourswith abnormallyhighlevelsofaproteinknownasHER2. HER2-positivetumoursareparticularlyaggressive, fast-growingandlikelytorecur. Lung cancer | Themostcommonformofcancer worldwide6andtheleadingcauseofcancerdeaths. Thereareanestimated1.4millionnewcasesannually. Non-smallcelllungcanceristhemostcommon form,accountingforapproximately80%ofallcases. Malignant melanoma | Thedeadliestandmost aggressiveformofskincancer.Thelifeexpectancy ofpeoplewithadvancedmelanomaisusually short,withlessthanoneinfourexpectedtobe aliveoneyearafterdiagnosis.Everyyearan e stimated40,000peopleworldwidediefromthe d isease;thenumberofnewcasesindeveloped countriesisexpectedtodouble,to227,000peryear, by2019.Approximately50%ofmelanomascarry activatingmutationsintheBRAFprotein,akeycomponentoftheRASRAFsignallingpathwayinvolved innormalcellgrowthandsurvival.Thesemutations causethepathwaytobeoveractive,whichmay leadtoexcessivegrowthandcancer.Itisestimated thatapproximately8%ofallsolidtumourscarry BRAFV600mutations. Pancreatic cancer | Aparticularlyaggressivediseasethatisextremelydifficulttotreat.Itkillsahigher proportionofpatientsinthefirstyearafterdiagnosis thananyothercancer.Thefifthleadingcauseof cancerdeathsinthedevelopedworld,pancreatic cancerclaimsnearly80,000liveseveryyear.
6 Excluding non-melanoma skin cancers, most of which are easily treated and not life-threatening.
54
Pharmaceuticals
Gastric (stomach) cancer | Stomachcanceristhe secondmostcommoncauseofcancer-related deathsintheworldandthefourthmostcommonly diagnosedcancer.Itaccountsforover1million newcasesandsome800,000deathseachyear.The vastmajorityofcasesoccurinAsia,where,with lungcancer,itistheleadingmalignancy.Advanced (metastatic)stomachcancerisassociatedwitha poorprognosis:themediansurvivaltimeafterdiagnosisis1011monthswithcurrentlyavailabletherapies.Earlydiagnosisofthisdiseaseischallenging becausemostpatientswithearly-stagediseasedo notshowsymptoms. Age-related macular degeneration (AMD) | A majorcauseofgradualorsudden,painless,central visuallossintheelderlyandaleadingcauseof visionlossinpeopleaged60andolder.Thereare twoformsofAMDwetanddry.Allcasesbegin asthedryform,but1015%progresstothewet form,whichcanresultinsuddenandseverecentral visionloss.InwetAMD,newbloodvesselsgrow undertheretinaandleakbloodandfluid,causing deteriorationofthemacula,theportionofthe eyeresponsibleforfine,detailedcentralvision.More than1.7millionAmericanshavetheadvancedform ofthiscondition. Anemia | Occurswhenthenumberofredblood cellsorthehemoglobinmoleculestheycontain fallsbelownormal,resultingininsufficientoxygen reachingorgansandtissues.Itisseeninupto 80%ofpatientswithchronickidney(renal)disease, whichaffectsmorethan500millionpeopleworldwide.Inaddition,anemiaaffectsthreeoutoffour cancerpatientsundergoingchemotherapy.Patients withuntreatedanemiamayneedbloodtransfusions. Thepotentiallong-termeffectsofanemiainclude cardiovasculardiseaseinrenalpatients,whilein patientswithcanceritisassociatedwithdiminished qualityoflife.
Hepatitis B and C | ThehepatitisBandCviruses (HBV,HCV),whicharecommonlytransmitted throughblood-to-bloodcontact,causeacuteand chronicliverdisease,potentiallyleadingtoliver f ailure,cirrhosislivercancer,anddeath.Worldwide, 350millionpeoplearethoughttobechronically infectedwithHBV,ahighlyinfectiousvirusthatis responsibleforanestimatedonemilliondeaths annually.Morethan170millionpeoplearoundthe worldareinfectedwithHCV,andthreetofour millionnewcasesoccureachyear.HepatitisCis themainreasonforlivertransplantation.Arecent studyontheHCV-relatedburdenofdiseasein 22Europeancountriesestimatedthatbetweenseven andninemillionpeople,orover1%ofthepopula tion,areinfectedwithHCV. Autoimmune disorders | Occurasaresultofamistakenimmuneresponsetothebodysowntissues. Thecausesareunknown.Rheumatoidarthritis,multiplesclerosisandlupuserythematosusareamong themostcommonautoimmunedisorders,whichaffect millionsofpeopleworldwide. Rheumatoid arthritis (RA) | Anautoimmunediseasecharacterisedbyinflammationthatleadstostiff, swollenandpainfuljoints,ultimatelyresultingin i rreversiblejointdamageanddisability.Morethan 20millionpeopleworldwideandtwiceasmany womenasmensufferfromRA.Inadditiontoinflammationofthejoints,suchasthehands,feetand wrists,RAcancausefatigue,heartdiseaseand increasethelikelihoodofdevelopingothercomplicationssuchasosteoporosis,anemia,andproblems withthelungsandeyes.Itcanshortenlifeexpectancyby610years.Bcells(atypeofimmunecell) areknowntoplayakeyroleintheinflammation associatedwithRA.Severalkeycytokines,orproteins, arealsoinvolved,includinginterleukin-6(IL-6),TNF alfaandinterleukin-1(IL-1).IL-6hasbeenidentified ashavingapivotalroleinthenflammationprocess. i
Pharmaceuticals
55
Multiple sclerosis (MS) | Anoftendebilitating autoimmunediseaseinwhichnerveimpulsespassing throughthecentralnervoussystemaredisrupted duetodamagetothebrainandspinalchord.This leadstounpredictableandhighlyvariablesymptoms rangingfromabnormalsensationsandreducedcoordinationtopain,paralysis,visualimpairmentanda declineincognitiveandotherfunctions.According toWHOestimates,approximately1.3millionpeople worldwidearelivingwiththedisorder,whichis u suallydiagnosedinadultsagedbetween20and 40years.Relapsing-remittingmultiplesclerosis (RRMS),themostcommonform,ischaracterisedby acuteexacerbationswithfullorpartialrecovery betweenattacks.Primaryprogressivemultiplesclerosis(PPMS)ischaracterisedbyneurological d isabilityfromonset,withsymptomsgraduallyworseningovertime. Diabetes | Recognisedasaglobalepidemicby theWorldHealthOrganization.TheInternational DiabetesFederationestimatesthatsome360million peopleworldwidewillhavediabetesby2030. AccordingtotheWHO,type2(adultonset)diabetes accountsforaround90%ofallcases.Uncontrolled type2 iabetescanleadtoseverecomplications d suchascardiovasculardisease,stroke,blindness, amputations,andkidneyfailure,resultinginsignificanthealthcareburdenstosociety. Schizophrenia | Aseverementaldisorderthat d istortsthewayapersonthinks,acts,expresses emotions,perceivesrealityandrelatestoothers. AccordingtoWHOestimates,schizophreniaaffects approximately24millionpeopleworldwideandis usuallydiagnosedinadultsagedbetween15and35 years.Thesymptomsofschizophreniaarebroadly categorisedaspositive,negativeandcognitive.Positivesymptomsarepsychoticbehaviourssuchas hallucinationsanddelusions.Negativesymptoms includeapathy,socialwithdrawal,lackofdrive andreducedabilitytofeelpleasureineverydaylife. Cognitivedeficitsincludedifficultyconcentrating orfollowinginstructions,difficultycompletingtasks, memoryproblems,anddisorganisedthinking. P ersistentnegativesymptomsareamajorcauseof burdenforpatientsandcaregivers.
Glossary
Adjuvant treatment | Treatmentgivenaftersurgical removalofatumourtolowertheriskofrelapse. Disease-free survival | Thelengthoftimeafter treatmentforaspecificdiseaseduringwhich apatientsurviveswithnosignofthedisease. First-line treatment | Theinitialtreatmentgiven afterdiagnosis,includingthefirsttreatment givenaftermetastaticcancerhasbeendiagnosed. Maintenance treatment | Treatmentgivento pre ventadiseasegettingworseortopreventacancer fromrecurringwhenithasdisappearedfollowing i nitialtherapy. Metastatic disease | Cancerthathasspread fromtheoriginalsiteofatumourtootherpartsof thebody.Alsoreferredtoasadvanceddisease. Neoadjuvant treatment | Treatmentgivento reducethesizeofatumourbeforesurgicalremoval isattempted. Overall survival | Thetimefromthestartof t reatmentuntilthepatientdies. Progression-free survival | Thelengthoftime d uringandaftertreatmentduringwhichapatient liveswithoutthediseasegettingworse. Second-line treatment | Treatmentgivenifthe i nitial,orfirst-line,treatmentdoesnotwork,orif thecancerstopsrespondingtoit.
grew well ahead of the market, with market share gains in key segments such as immunoassays and tissue diagnostics. Efforts to enhance operational efficiency continue throughout the division and contributed to higher operating profit in 2010. All business areas launched new products that will help drive abovemarket growth in 2011.
Diagnostics | In 2010 sales again
Diagnostics
57
Diagnostics Division in brief
Sales |
in millions of CHF
Core operating prot |

2,202
in millions of CHF
Number of employees
9,656
10,055
10,415
25,404
25,508
26,194
1,754
1,742
08
09
10
08
09
10
08
09
10
Key figures
In millions of CHF % change in CHF % change in local currencies % of sales
Sales Professional Diagnostics Diabetes Care Molecular Diagnostics Applied Science Tissue Diagnostics Core operating profit Operating free cash flow Research and development (core basis)
10,415 4,858 2,959 1,189 868 541 2,202 1,634 890
4 7 0 1 0 13 26 42 6
8 11 4 4 4 17 30 48 2
100 47 28 12 8 5 21.1 15.7 8.6
Diagnostics Leadership Team |

Daniel ODay Manfred Baier Colin Brown * (Dirk H. Ehlers) Paul Brown Roland Diggelmann Peter Finckh Christian Hebich Michael Heuer David LaPr Annette Luther Kent Kost Hany Massarany Wataru Ogawa Jack Phillips Burkhard G. Piper ** Claus-Joerg Ruetsch Cris Wilbur Robert Yates
* From 1 June 2010. ** To 31 December 2010.
31 December 2010
Chief Operating Officer Roche Diagnostics Applied Science Professional Diagnostics Molecular Diagnostics AsiaPacific Platforms & Support Finance and Services EMEA (Europe, Middle East, Africa) and Latin America Operations Communications Quality and Regulatory Tissue Diagnostics Japan North America Diabetes Care Legal Human Resources Business Development
58
Diagnostics
Diagnostics Division
RochesDiagnosticsDivisionistheworldsleading supplierofin vitrodiagnostics(IVDs).Performedin alaboratoryoratthepointofcareonblood,tissue andothersamplesfrompatients,IVDtestsarea rit- c icalsourceofobjectiveinformationhelpingdoctors detectdiseases,selectappropriatetreatmentsand monitorpatientsresponsestocare.Inaddition,scientistsusethedivisionsresearchproductstogain abetterunderstandingofthecausesofdiseaseand todiscovernewtreatments.Inover130countries RocheDiagnosticsservescustomersspanningthe entirehealthcarespectrumfromhospitalsand commercialmedicallabs,tophysicians,topatients withconditionsrequiringthemtoself-test.The d ivisionoffersawiderangeoftechnologiesallowing t hedetectionandanalysisofDNA,RNAand proteins nalargebaseofinstrumentsinstalled o worldwide.Alreadyamongthebroadestinthe industry,RochesIVDtestmenuissteadilyexpand- inganddrawingonthelatestscientificadvances. In2010Rochehadapproximatelya20%shareofthe globalIVDmarket,whichisvaluedatanestimated 44billionUSdollarsinannualsales.1
Sales by region
Europe/Middle East /Africa Japan AsiaPacific Latin America 50% (+6%) 5% (+4%) 12% (+20%) 7% (+16%)
North America 26% (+5%)

Italics = growth rates (in local currencies).
Strategic priorities
Scientificprogress,newtechnologiesandchanging demographicsareamongthetrendsexpanding thehealthcaremarket.Ontheotherhand,thereis mountingpressureonhealthcarebudgetsand costsworldwide.Diagnosticscancapitaliseonall thesetrendsbytranslatingscientificinsightsinto productsthatbringpatientsrealmedicalbenefitand, atthesametime,contributetosignificantcost savings.Enablingpreciseandtimelydiseasediagnosisandtreatmentstobetargetedatthepatients mostlikelytobenefitisofgreatvalue,bothforthe well-being fthepatientandinallocatingmedical o resourceswheretheywillbemosteffective. TheDiagnosticsDivisionsstrategicpriorities:
Improving testing efficiency isonepillarofthe

divisionsstrategy.Rochesautomateddiagnostic systemsembodydecadesofengineeringinno- vation.Testingcomponents,visualisationandana lysisunitsandworkflowmanagementsystems havecontinuouslyimprovedtoincludenewtech-
nologiesandsimplifyprocesses,meetingthe requirementsofallcustomersregardlessoflab size,locationortestingexperience. Demonstrating medical valueisbecoming themaindriverofdifferentiationinthediagnostics market,contributingtotherevaluationofIVDs. Despitetheirfundamentalimpactonthemajority ofclinicaldecisions,IVDscurrentlyaccountfor lessthan2%ofmedicalspendingandareclearly undervalued.Therearetwomaincategoriesof diagnosticsthatcontributetobetterhealthcare decisions.Stand-alone diagnosticsoffervalue byenablingthepreciseandtimelydiagnosis ofdiseasesandfacilitatingearlyscreeningfordis- easepredispositionandprognosis.Examples includethemolecularhumanpapillomavirus(HPV) testinscreeningforcervicalcancer,theMRSA testtodiagnoseinfectionwithmethicillin-resistant Staphylococcus aureus,andthePIGFandsFlt-1 immunoassaysintestingforpre clampsia. e Companion diagnosticsareteststhatenable doctorstoidentifythepatientsmostlikelyto benefitfromaparticulartreatmentortomonitor responsestoit.Rochealreadymarketscompaniondiagnosticsforanumberofindications, withmoreinlatestagedevelopment(seelist onpage59). Deploying diagnostic tests in drug developmentiscrucialtohelpincreaseR& D productivity anddevelopmoretargetedmedicines.Roche Diagnosticsiscollaboratingcloselywiththe P harmaceuticalsDivisionandexternalpharma
1 Market size based on company and independent reports.
Diagnostics
59
Roche companion diagnostics on the market or in late development

Disease Area Disease Drug Diagnostic Test * Technology Application
Virology
CMV HBV HBV HCV HCV HCV HIV HIV
Oncology
Breast cancer Breast cancer Breast cancer Breast cancer Cancer Colon cancer Colon cancer Gastric cancer Melanoma NSCLC NSCLC NSCLC NSCLC Pancreatic cancer Asthma Rheumatoid arthritis SLE Osteoporosis Transplantation
Valcyte Pegasys and other antivirals Pegasys, peginterferon alpha-2b (Merck/SP) Pegasys, peginterferon alpha-2b (Merck/SP) Polymerase inhibitor (R7128) Protease inhibitor (R7227) Antivirals abacavir (GlaxoSmithKline) Herceptin, lapatinib (GlaxoSmithKline) Tamoxifen and other hormonal therapies pertuzumab (RG1273) TDM1 (RG3502) compound (Merck) cetuximab (Merck), panitumumab (Amgen) cetuximab (Merck), panitumumab (Amgen) Herceptin BRAF inhibitor (RG7204) gefitinib (AstraZeneca), Tarceva ** Tarceva **, gefitinib (AstraZeneca) MetMAb (RG3638) TG4010 (Transgene) CP-4126 (Clovis Oncology) lebrikizumab (RG3637) MabThera/Rituxan rontalizumab (RG7415) Bonviva/Boniva and other bisphosphonates CellCept
CMV viral load HBV viral load HBsAg levels HCV viral load HCV viral load HCV viral load HIV viral load HLA-B 5701 genotype HER2 expression/ gene amplification ER/PgR expression HER2 expression/ gene amplification HER2 expression/ gene amplification p53 mutations KRAS mutations (TheraScreen) KRAS mutations HER2 expression/ gene amplification BRAF V600E mutation EGFR mutations (TheraScreen) EGFR mutations MET expression MUC1 expression hENT1 expression Serum periostin levels, CEA, IgE RF, anti-CCP Ab IFN-induced genes B-Crosslaps; P1NP levels MPA levels
PCR PCR Immunoassay PCR PCR PCR PCR PCR IHC, ISH IHC IHC, ISH IHC, ISH Microarray PCR PCR IHC, ISH PCR PCR PCR IHC IHC IHC Immunoassay Immunoassay PCR Immunoassay Immunoassay
Monitoring Monitoring Monitoring Monitoring Monitoring Monitoring Monitoring Screening Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Selection Monitoring Monitoring
Inflammation
Others
black type = on the market, grey type = in development; * not available in all markets. monitoring = monitoring of patients response to a particular treatment; screening = screening of patients for a particular genetic variation of HLA-associated with hypersensitivity to abacavir; selection = selection of patients eligible for a particular treatment (** = selection of patients eligible for earlier treatment). anti-CCP = antibodies against cyclic citrullinated peptide; BRAF = B-isoform of the rapidly growing fibrosarcoma oncogene; CEA = carcinoembryonic antigen; CMV = cytomegalovirus; HBV = hepatitis B; HBsAg = HBV surface antigen; HCV = hepatitis C; HER2 = human epidermal growth factor receptor 2; HIV = human immunodeficiency virus; hENT1 = human equilibrative nucleoside transporter; EGFR = epithelial growth factor receptor; ER = estrogene receptor; IHC = immunohistochemistry; ISH = in situ hybridisation; IFN = interferon; KRAS = member of the Ras family of oncogenes; MPA = mycophenolic acid; NSCLC = non-small cell lung cancer; PCR = polymerase chain reaction; P1NP = procollagen type 1 N-terminal propeptide; PgR = progesterone receptor; RF = rheumatoid factor; SLE = systemic lupus erythematosus; SP = Schering Plough.
60
Diagnostics
Roches top-selling diagnostics |
sales in millions of CHF
Accu-ChekAvivaNano
cobase602
cobasc502
cobasTaqMan48
VentanaIHCreagents
2,718
Accu-Chek monitoring systems
1,957
cobas e modules, Modular Analytics, Elecsys
1,475
cobas c modules, Modular Analytics, Cobas Integra
561
Cobas AmpliPrep/ Cobas TaqMan
452
immunohistochemistry and in situ hybridisation
+4% *
Market segment:
+17% *
Market segment:
+5% *
Market segment:
+2% *
Market segment:
+17% *
Market segment:
Blood glucose monitoring
Immunoassays
Clinical chemistry
Virology (hepatitis C, hepatitis B, HIV)
Advanced tissue staining
Business unit:
Business area:
Business area:
Business area:
Business area:
Diabetes Care
Professional Diagnostics
Molecular Diagnostics
Tissue Diagnostics
Diagnostics
61
An industry-leading portfolio of diagnostic tests and instruments for clinical testing and life science research.
CoaguChekXS
cobasTaqScreenDPXTest
cobasb123POC
Accu-ChekCombo
MagNAPureLC2.0
330
CoaguChek
305
Cobas AmpliScreen, cobas TaqScreen
278
cobas systems for blood gases, hospital blood glucose systems
241
Accu-Chek insulin delivery systems
236
MagNA Pure, LightCycler
+19% *
Market segment:
0% *
Market segment:
+4% *
Market segment:
+11% *
Market segment:
12% *
Market segment:
Coagulation monitoring
Blood screening
Intensive care
Insulin Delivery Systems
DNA purification and gene expression
Business area:
Business area:
Business area:
Business unit:
Business area:
Diabetes Care
Applied Science
Images are not to scale. * Year-on-year sales growth in local currencies.
62
Diagnostics
partnersonnewmedicinesandtheirusein per onalisedsettings(seealsotheR & D section s onpage74). Tofurtheraccelerate growth in emerging seven (E7) countries 2 thedivisionisexpandingits localorganisationsandinvestinginprogrammes tobringproductstolocalmarketsmorequickly. Thedivisionintendstofurtherimprove its profitabilitythroughacombinationofstrong ales s growthandefficiencyinitiativestargetingvirtually everyareaofoperations.Thisreportcontains informationontheprogressmadein2010.
bothmatureandemergingEMEA5economies(6%), helpedbystrongperformancesbyProfessional DiagnosticsandDiabetesCare.ProfessionalDiagnosticsandTissueDiagnosticsweretheprimary growthdriversinNorthAmerica(5%).InJapan(4%) overalldivisionalsalesgrewfasterthanthemarket withProfessionalDiagnosticsstrongperformanceoff- settingcontinuingchallengesinDiabetesCare. Increasedinvestmentandstrongdemandforimmunoassaysandotherleading-edgeRocheproducts contributedtorobustabove-marketgrowthintheE7 emergingmarkets(21%),whichin2010accounted foralmost13%oftotaldivisionalrevenues. OnaSwissfrancbasis,thedivisionscoreoperating profitfor2010increased26%(30%inlocalcurrencies)to2,202millionSwissfrancs,whilethecore operatingprofitmarginadvanced3.8percentage pointsto21.1%.Theseincreaseslargelyreflectthe strongperformanceofRocheskeydiagnostic p roductsaswellasongoinginitiativestoimprove operationalexcellence.Formoreinformationonthe d ivisionsoperatingresults,seetheFinanceReport. Thedivisionlaunchedatotalof39tests,whichex pandedtheimmunoassaymenuininfectiousdiseases,extendedthemoleculartestpanelinvirology andfurtherstrengthenedthetissueassayport- folioinoncology.Inaddition,11instrumentswere launchedinkeymarketsfacilitatingmaximum efficiencyinstate-of-the-arttestinginclinicallabo- ratories,re earchcentresandpoint-of-careunits s ( seetableofproductlaunchesonpage76).In2011 thedivisionplanstolaunch18keyproducts,includingtheUSintroductionofAccu-ChekCombofor themanagementofbloodglucoseindiabetes,the cobas4800HPVTestforcervicalcancerscreen- ingandthecobas4800BRAFMutationTestinmelanoma(seetableofproductlaunchesonpage78). Datafromthreeclinicalstudieswerepresentedat majorscientificcongresses:ATHENA,alargeregistrationtrialinvestigatingthebenefitsofHPVtesting
Results and main business developments

In2010theDiagnosticsDivisionrecordedsalesof 10.4billionSwissfrancs,anincreaseof8%inlocal currenciesover20093(4%inSwissfrancs;8%in U Sdollars).Thiswassignificantlyabovetheestimat- edIVDmarketgrowthrate(5%)4 .
Diagnostics sales increase 8%, significantly ahead of the market.

Allfivedivisionalbusinessareascontributedtosales growth,ledbyProfessionalDiagnosticsandDiabetes Care.Immunoassaysandbloodglucosemonitoring systemsremainedthesebusinessesprimarygrowth drivers.Strongdemandforadvancedtissuestain- ingproductscontinuedtofuelabove-marketgrowth inTissueDiagnostics.Virologywasthemaincon- tributortosustainedsalesgrowthinMolecularDiagnostics.Strongsalesofcellanalysisandgenomics s ystemswereAppliedSciencesmaingrowthdrivers. Instrumentplacementswereagainupsignificantly forthedivisionasawholeandwereamajorgrowth driverinallsegments. Salesagainoutpacedthemarketinallregions. GrowthwasverystronginAsiaPacific(20%) p articularlyinChinaandSouthKoreadriven mainlybyProfessionalDiagnostics.Despitepricing challenges,salesoutperformedthemarketin
2 E7 countries = Brazil, Russia, India, China, South Korea, Mexico, Turkey. 3 Unless otherwise stated, all growth rates are in local currencies. 4 Market growth based on company and independent reports (to end of September 2010). 5 EMEA = Europe, Middle East, Africa.
Diagnostics
63
inscreeningforcervicalcancer,PROTECT,arandomisedtrialstudyingtheNT-proBNPbiomarkerguidedapproachintreatmentofheartfailure, andtheSTePtrialaimingatimprovementofdiabetes managementthroughstructuredtesting.Allthree t rialsdemonstratedthehighmedicalvalueofRoche diagnosticproducts(seeR & D sectiononpage74).
zerland)andtheDiabetesCareR& D activitieson insulindeliverysystemsfromBurgdorf(Switzerland) toMann eim(Germany).Thedivisionbelieves h thatthesemeasures,whicharepartoftheGroupwideOperationalExcellenceprogramm,willenable ittoenhancesystemintegration,leverageexist- ingcapacitiesandreduceinfrastructurecostswhile maintainingthefocusoncustomersandinnovation. Thedivisionregularlyassessesthemixofin-sourcing andout-sourcinginitsmanufacturingandsupply chainoperations.Ingeneral,activitieswhichinvolve proprietarytechnologyorenableRochetoleverage internalexpertisearein-sourced.Operationsare o ut-sourcedwhenthisofferseconomiesofscaleor otheradvantageswhileensuringthecontinuedintegrityofRochesproductsandservices.Inrecentyears thelevelofout-sourcinghasgrowninlinewithsales.
Operations
RocheDiagnosticsBusinessAreas(BAs)areinnovationengines,translatingourgrowingunderstandingofdiseasesintonewproductsandapplications. TheBAheadquartersitesinRotkreuz,Switzerland (ProfessionalDiagnostics),Mannheim,Germany(Dia- betesCare),Pleasanton,USA(MolecularDiagnostics),Penzberg,Germany(AppliedScience), nd a Tucson,USA(TissueDiagnostics),arethedivisions mainR& D sites,withadditionalcentresofexcel- lencelocatedinBranford,USA(454LifeSciences), M adison,USA(NimbleGen),andIndianapolis,USA (DiabetesCare).InSeptemberRocheopenedanew DiagnosticsOperationsComplexforR& D andproductioninPenzberg.Anewimmunoassayproduction unitinMannheimwasinauguratedinOctober. In2010alifecyclemanagementapproachwasin- t troducedtoestablishastrongerconnectionbe ween eachBAanditsmarkets.Lifecycleteamsareac- count bleforthedevelopment,filing,approval nd a a launchofnewproductstomaximisetheirvalue fromlaunchtoobsolescence.Inaddition,twonew globalcross-BAfunctionshavebeencreatedto helpmaintainthefocusonproductprofitabilityand pro essefficiency.GlobalOperationswilldrive c operationalexcellenceinmanufacturing,supply chainanddirectprocurement,whileGlobalQuality& Regulatorywillensuresubmissionqualityandreduce timetoapproval.TheestablishedGlobalPlatforms andSupportfunctionwillcontinuetoplayakeyrole ininstrumentandsoftwaredevelopmentandcustomerservice. AsannouncedinNovemberoverthenexttwoto threeyearsRocheDiagnosticsintendstotransfer theproductionofchemicalrawmaterialsand a nalyticsservicesfromMannheimtoPenzberg both ( in ermany),bloodgasandelectrolytesmonitor- G ingactivitiesfromGraz(Austria)toRotkreuz(Swit-
Business development
Collaborationswithacademia,researchinstitutesand otherprivateandcommercialorganisationsgive RocheDiagnosticsrapidaccesstorelevantmedical, scientificandtechnologicaladvances.Intellectual property(IP)exchangeisastrategiccomponentof Rochesabilitytooffercustomersthemostextensive portfoliooftestsandtechnologiesyearafteryear. I n-licensingisanimportantopportunityforRocheto accessmarkersandtechnologies,whereasoutlicensingofIPcanhelpestablishnovelmarkersand technologiesfromRochemorerapidlyinthemarketplacebyinvolvingmoreplayerstodevelopand educatethemarket.ItisthusvitalforRocheDiagnosticstohaveexcellentinternalprocessestoidentify IPrapidlyandtomaintainclosecontactwithpartner companiesforbothin-andout-licensingagreements. In2010Rochecompletedmajoracquisitionsin D iabetesCare(MedingoLtd.)andTissueDiagnostics(BioImageneInc.)andenteredintoanumber ofresearchandtechnologycollaborationsinDiabetes Care(withInterComponentWare),MolecularDiagnostics(withtheGermanCancerResearchCentre) andAppliedScience(withIBMandDNAElectronics).Moreover,thedivisionsignedover80licensing agreements,approximatelyhalfofthemin-licensing IPtobroadenRochesinnovationbase(seeBusiness area highlightsformoredetails).
Can we find
Disease area Indication Trial No. of participants No. of study sites No. of countries
Virology / Oncology HPV (as a risk factor for cervical cancer) Registration trial ATHENA 47,208 61 1 (USA)
Chantal H., a potential participant in the ATHENA trial, Basel
out sooner ?
Rita S., Head of Assay Development, Roche Pleasanton
cobas 4800 HPV Test
Creating value for patients means proving the medical value of a diagnostic test in a rigorous clinical trial
Biomarker identification and clinical validation
Collaborations with research groups in academia and industry
Development of diagnostic test
Education of healthcare professionals
Regulatory approval
Show sensitivity and specificity Reimbursement
Health economics
Successful diagnostic test on market
Demonstrate medical value
The Roche ATHENA trial enrolled over 47,000 women, screening participants for cervical cell changes using both the Pap smear and the cobas 4800 HPV DNA Test (for 14 high-risk HPV genotypes). The results revealed that one in ten women of those aged 30 years or older who tested positive for HPV genotypes 16 or 18 were found to have cervical pre-cancer despite normal Pap smear tests. The cobas 4800 HPV Test enables physicians to identify women with cervical pre-cancer missed using cytology alone.
Persistent infection with high-risk human papillomavirus (HPV) is the leading cause of cervical cancer, implicated in more than 99% of all cases. Screening enables early identification and removal of pre-cancerous lesions, dramatically reducing the incidence and mortality of cervical cancer worldwide. However, many studies have shown that the Pap smear, which samples cells from the cervix and is currently the most common test used to detect cervical cancer, does not have adequate sensitivity, and that up to 50% of precancerous lesions are missed with a single Pap smear. Thousands of women ultimately diagnosed with cervical cancer had normal Pap smear results.
Diagnostics
67
Business area highlights

Professional Diagnostics ProfessionalDiagnosticsisaleadingsupplierof instruments,tests,softwareandservicesforclinical laboratoriesanddecentralisedtestingproductsto supportclinicaldecisionmakingatthepointofcare (POC).In2010ithada15%shareofagrowing globalmarketworth30billionUSdollars. ProfessionalDiagnosticsfull-yearsalesgrew abouttwiceasfastastheglobalmarket,rising11% to4,858millionSwissfrancsandoutpacingmarket growthinallregions.Immunoassayswereakey growthdriver,withsalesup17%in2010.Fora decadethissegmenthasconsistentlygrownatdouble-digitrates,thankstoastronginstalledbase andanever-expandingtestmenu.Salesofclinical chemistryandcoagulationmonitoringproducts grew5%and19%,respectively. In2010ProfessionalDiagnosticslaunchedeightnew ornext-generationimmunoassaysintheUSor marketsrecognisingtheCEMark,includingsixtests todiagnoseormonitorinfectiousdiseaseshepatitisAandC,HIV,herpessimplexvirus(HSV-1and HSV-2)andrubella(seetableofproductlaunches onpage76).Threenewornext-generationclinical chemistryproductswerealsointroducedinCE markets.In2011ProfessionalDiagnosticswillexpand itsimmunoassaymenufurther,withnewassays coveringarangeofdiseaseareas,includinginfectiousdiseasesandoncology. Demandforthecobas8000modularanalyserseries remainedstrongin2010.Firstlaunchedin2009,this platformforhigh-throughputtestingisnowavailable inallkeymarkets,includingtheUS.Followingthe introductionofthecobase602immunoassaymodule, high-volumelaboratoriesarenowabletofullyconsolidatetheirserumworkareas.Rocheoffersa om- c prehensiveportfolioofstandardisedintegratedsystemsforclinicallaboratoriesofalltypesandsizes, fromthestand-alone,low-volumecobas4000andthe medium-volumecobas6000tothecobas8000 modularanalyserseriesforhigh-volumelaboratories. IntheUSProfessionalDiagnosticsalsolaunchedthe cobasp501andp701post-analyticalunits,which automatethestorageandretrievalofsampletubes,
andcobasu411,asemi-automatedurineteststrip analyser.Therolloutofthenewcobasb123POC bloodgasanalysercommencedinEuropeand everal s marketsinLatinAmericaandAsiaPacific.TargetingspecificallyatthePOCsegmentandcapableof deliveringmanyvitalresultsintime-critical itua- s tions,thisinstrumentisanimportantadvancein bloodgasanalysis,theleadingsegmentinhospital POCtesting.TheUSlaunchofcobasb123POC i sexpectedin2011. Stronggrowthincoagulationmonitoringreinforced Rochesleadingpositioninthissegment.Continued strongdemandforportabletestingsystems,suchas thetop-sellingCoaguChekXSsystem,andexpanded Medicarecoverageforhomecoagulationtesting intheUSwerekeyfactorscontributingtogrowth. Studieshaverepeatedlyshownthatself-testinghelps patientsonanticoagulantstokeeptheirmedica- tionwithinthetherapeuticrangeandcanminimise theriskofcomplications. Deliveringonthepromiseofpersonalisedhealthcare,thePROTECTtrial,presentedattheAmerican HeartAssociationmeetinginNovember,demonstratedasignificantreductionintotalcardiovascular eventswhenheartfailuretherapywasguidedby concen rationsofthecardiacbiomarkerNT-proBNP. t Becauseofthisstrongclinicalbenefit,thetrialwas stoppedearlytoallowallpatientsaccesstothisnew treatmentstrategy(seeR & D sectiononpage74). Tofurtherstrengthenitscardiologyportfolio,Roche signedacross-licenseagreementwithAlereInc. g ivingeachpartysemi-exclusiveworldwiderightsfor natriureticpeptidebiomarkersprovenfortheirdiagnosticusefulnessinavarietyofcardiovascular diseases.IncollaborationwiththeAmericanCollege ofCardiology,ProfessionalDiagnosticsisdeveloping awebportalforbiomarkers,allowingphysiciansto accessthelatestinformationoncardiacbiomarkers andencouragingitsapplicationinclinicalpractice. Diabetes Care DiabetesCaredevelopsandcommercialisesblood glucose(BG)monitoringandinsulindeliverysystems thatenablepeoplewithdiabetestomanagetheir conditionmoreeffectively.ThegoalofdiabetestherapyistomaintaintheBGlevelsina(near-)normal rangeandthusavoiddiabetes-relatedcomplications. DiabetesCarenotonlyoffersindividualproduct
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innovations,butcombinesthesetoformintegrated solutionsthatencompassallareasofdiabetesmanagement.Itistheindustryleaderwitha32%share ofaglobalBGmonitoringmarketworthover8billion USdollars. In2010DiabetesCaressalesrose4%to2,959millionSwissfrancs.Thiswaswellabovetheglobal marketgrowthrateinanenvironmentthatremains challengingduetotheuncertaineconomicrecov- eryandgeneralpricepressure.SalesofBGmonitoringsystems(4%)weredrivenbyAccu-ChekAviva andAccu-ChekPerforma,whichshowedstrongdouble-digitgrowth,supportedbystrongmarketup- takeofthesleekversionsAccu-ChekAvivaNanoand Accu-ChekPerformaNanoespeciallydesignedfor younghigh-frequencytesters.Bytheendof2010 thesedeviceswereavailablein36countriesacross Europe,LatinAmericaandAsiaPacific.TheAccuChekMobilealsopostedsignificantsalesgrowth. ThisBGmonitoringsystemsstrip-freetechnologyis particularlyappreciatedbyinsulin-dependentpa- tientswhomeasuretheirbloodglucosefrequently andthusbenefitmostfromenhancedtestingconvenience.Introducedin2009,theAccu-ChekMobile isnowavailablein12countriesinEuropeand AsiaPacific.IntheEUmaltose-independentstrip chemistriesfortheAccu-ChekAviva,Accu-Chek Performa,Accu-ChekCompactandAccu-Chek Mobileproductlinesreceivedregulatoryapproval inJuneandwereimmediatelyrolledout. DiabetesCarepostedstronggrowthinEurope,Latin AmericaandAsiaPacific,withsignificantcontributionsfromemergingmarkets.IntheUSsalesde- creased2%slightlyunderperformingthemarket, whichremainednegativelyimpactedbythemacroeconomicenvironment,resultinginpricepressures andslowvolumegrowth.USandJapaneseregu- latoryapprovalsforthemaltose-freestripchemistries, expectedin2011,willenablethelatestadditions totheAccu-ChekportfoliotobelaunchedintheUS andJapanandareanticipatedtoboostsalesin thesekeymarkets. Insulindeliverysystemsposteddouble-digitsales growth,drivenmainlybycontinuedstronguptakeof thenewinteractiveinsulinpumpsystemAccu-Chek Combo,nowavailablein27countriesinEurope, LatinAmericaandAsiaPacific.InMayDiabetesCare
acquiredmicropumpspecialistMedingo,enhancing itsportfoliowithaninnovativemicropump.This acquisitionwillenableRochetobringintegrated insulindeliverysystemstoabroaderrangeofpeople withdiabetesandofferusersawiderrangeof optionstosuittheirneeds. DiabetesCareremainscommittedtoexploringand developingnewdiabetesmanagementconcepts asdemonstratedbytheStructuredTestingProtocol (STeP)clinicalstudyintype2diabeticpatients notusinginsulin.PresentedattheAnnualMeeting oftheEuropeanAssociationfortheStudyofDia- betes(EASD)inSeptember,theSTePstudyshows that lycemiccontrolcanbesignificantlyimproved g whentherapyisadjustedonthebasisofstructured BGmonitoringandpatternanalysis(seeR & D sectiononpage74). ThevisualisationandassessmentofBGandin- sulindataarepivotaltoeffectivediabetesmanagement,yetsharingthedatacontinuestoposesig- nificantchallengesforpeoplewithdiabetesand healthcareprofessionalsalike.Toaddressthisissue, DiabetesCareispartneringwitheHealthspecialist InterComponentWaretodevelopaweb-baseddiabetesmanagementsolutionthatimprovestheinter- actionbetweenpatientsandtheircaregiversbased onsecurelyshared,well-structuredinformation. Molecular Diagnostics MolecularDiagnosticsdevelopsandcommercial- isesadvanceddiagnosticandbloodscreening platformsandtestsbasedonRochesproprietary real-timepolymerasechainreaction(PCR)technology.With 32%marketshare,Rocheistheleader a inthehighlycompetitivemoleculardiagnostics market,valued t4billionUSdollarsandgrowing a 7%.Thisyearmarksthe25thanniversaryofPCRs debuttothescientificcommunity.PCRsunique abilitytoexponentiallyamplifysmallamountsoftarget DNAhasresultednnumerousdiagnostictechi niqueswhichwouldotherwisebetootimeconsumingorimpossibletoperform. MolecularDiagnosticscontinueditssteadyper- formancein2010,withsalesadvancing4%to 1,189millionSwissfrancs.Growthwasledbyvirology(2%),whichcurrentlyaccountsforabouthalf ofthebusinessareassales.Demandforthecobas
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4800system,launchedinlate2009,wasstrongwith thesystemnowinstalledin25countriesinEurope, AsiaPacific,LatinAmericaandCanada.cobas4800 offersfullautomationformid-tohigh-throughput testing;themenucurrentlyincludesdualtargettests forChlamydia trachomatisandNeisseria gonorrhoeae andascreeningandgenotypingtestforhuman papillomavirus(HPV).Regionally,NorthAmericasales showedgoodgrowth,whilesalesheldsteadyin theEU.LatinAmericaandAsiaPacificpostedexcellentdouble-digitgrowth.Strongcontributionfrom theE7marketswasledbyRussiaandMexico. In2010MolecularDiagnosticsaddedfournewor next-generationteststoitsportfolioinvirologyand infectiousdiseases.Thankstothefirst-of-its-kind dual-PCRtargetHIVviral-loadtest,whichgreatlyim- provestheabilityofphysicianstomakeinformed treatmentdecisions,MolecularDiagnosticswon amajorcontractinSouthAfricaforoverhalfamilliontestsperyear.Rochesnext-generationHBV test,whichreceivedtheCEMarkin2008,isnowalso availableintheUS.Thistestenablesbroadergenotypedetectionandincreasedworkflowflexibilityin themanagementofHBV.Inthebloodscreeningsegment,thefirstduplexassayforsimultaneousde- tectionofparvovirusB19andthehepatitisAvirus wassuccessfullylaunchedintheEUandother marketsrecognisingtheCEMark,contributingtoim- provedsafetyofhumanplasmaproducts.FDAap- provalofthistestisexpectedin2011.TheLightCycler MRSAAdvancedTest,Rochesflagshipproductin thehospital-acquiredinfectionsmarket,wasapproved andlaunchedintheUSinJuly.Studiesindicatethat thetestsspeeditidentifiesmethicillin-resistant Staphylococcus aureus(MRSA)carriersinlessthan twohours,versusonetothreedaysusingconventionalculture-basedmethodscanhelpsignificantly reducethespreadofthispotentiallydeadlymicrobe inhospitals.ScreeningforMRSAisoneofthefastest-growingsegmentsintheNorthAmericanmoleculardiagnosticsmarket.Thetestwaslaunchedinthe EUandothermarketswhichrecognisetheCEMark in2009(seetableofproductlaunchesonpage76). DatafromATHENA,aRoche-sponsoredUSregistrationtrialassessingtheutilityofthecobas4800HPV Testinscreeningforcervicalcancer,werepresented attheInternationalPapillomavirusConferencein Montreal.Thedataconfirmtheincreasedaccuracy
ofhumanpapillomavirus(HPV)DNAtesting,including16/18genotyping,overconventionalcytologic Paptesting(seeR & D sectiononpage74).Supported bytheATHENAresults,RochefiledtheHPVtestin theUSinJune,withapprovalexpectedinthesecond halfof2011.ThistestreceivedCEMarkcertification inlate2009andexperiencedastrongmarketuptake inCEmarketsthroughout2010.Tofurtherexpand itstestingpotentialincervicalcancer,Rocheentered intoaresearchcollaborationwiththe ermanCancer G ResearchCenter(DKFZ).Recentfindingsbythe DKFZindicatethattherelativeamountsofspecific RNAmarkersinHPV-infectedcellsenablehighly accuratediscriminationofcervicalcancerandhighgradefromlow-gradelesionsandthusfacilitate morespecificpredictionofwomensriskfordevelopingcervicalcancer. MolecularDiagnosticsisbuildingabest-in-class oncologyportfoliobysecuringrelevantintellectual property,developingrobustassaysandproviding completein vitro diagnosticssolutionscovering ams plepreparation,throughtoresultsanalysesand reporting.In2010Rocheobtainedaworldwide o- c exclusivelicencefromJohnsHopkinsUniversity andQiagenforthedevelopmentofdiagnosticassays forthebiomarkerphosphoinositide3-kinase(PI3K). ThePI3Kpathwayplaysamajorroleinseveral cancers,includingcolorectal,gastric,breastand endometrial,andiscurrentlyacentralfocusof cancerdrugdeve-lopment.Rochehasalsoobtained alicensefromGenzymeCorporationtodevelopa testforepidermalgrowthfactorreceptor(EGFR) mutationsasacompaniondiagnosticforTarceva.In recentstudiespatientswithnon-smallcelllung cancer(NSCLC)carryingmutationsintheEGFRgene showedenhancedresponsetoandmaybenefit mostfromtreatmentwithTarceva.TheEGFRmutation test,alongwithfurtheroncologytestsfortheBRAF V600mutationandKRASmutations,arescheduled forlaunchoncobas4800in2011. Applied Science AppliedSciencesuppliesscientistsinacademiaand thebiotechandpharmaceuticalindustrieswith instruments,reagentsandtestkitsforabroadrange ofresearchapplications.Thegloballifescience researchmarket,valuedat8billionUSdollars,grew approximately8%in2010.AppliedSciencehas roughly10%shareofthismarket.
Have I chosen
Central Nervous System Schizophrenia 6 phase III trials 3,600 240 27
Kenneth B.,participant in aclinical trial with RG1678, New York
wisely ?
Daniela A., Research Project Leader in Central Nervous System (CNS), Roche Basel
RG1678 a first-in-class GRI for schizophrenia
Creating value for patients means having the courage to go where needs are great and others have failed
Available therapies Effective against positive symptoms Significant side effects Positive symptoms often still occur in the stable phases between acute episodes RG1678 Effective against negative symptoms Potential to treat suboptimally controlled positive symptoms Fewer side effects New mechanism of action
Affecting nearly 24 million people worldwide, schizophrenia is a severe mental disorder that distorts the way a person thinks, acts, expresses emotions, perceives reality and relates to others. It is a lifelong disease that cannot be cured. On average it shortens life expectancy by 20 years due to the higher risk of suicide and also due to cardiovascular and pulmonary events. Because of negative symptoms, which usually have the greatest impact on quality of life, patients may be unable to live independently, hold jobs, establish personal relationships and manage everyday social situations. Many drugs developed to treat negative symptoms have failed in clinical trials, and the few available treatments offer only modest benefits.
RG1678, a glycine reuptake inhibitor (GRI) developed at Roche, may be the first drug to treat the negative symptoms of schizophrenia. Representing an entirely novel approach, RG1678 normalises glutamate neurotransmission by increasing synaptic levels of glycine, thereby targeting an important pathway in psychiatric disorders. It has the potential to become first-in-class compound of this type for the treatment of schizophrenia. In addition, RG1678 in combination with current treatments has the potential to treat suboptimally controlled positive symptoms, with little or no increase in side effects. Its novel mode of action could also have valu able therapeutic applications in other psychiatric disorders.
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AppliedScienceposted4%growthonsalestotalling 868millionSwissfrancs.Growthdriverswerethe c ellanalysissegment(thankstoincreaseddemand forsolutionsinoncologyandstemcellresearch), genomics(formerlyreportedassequencingandmi- t croarraybusinesses)andcustombiotech(due o recoveryoftheglobaleconomy).SalesoftheMagNA PureandLightCyclerproductlinesforsamplepreparationandquantitativePCRanalysisdeclineddue todramaticallylowerdemandforinfluenzaA(H1N1) virustesting.Allregionsshowedsalesincreases exceptLatinAmerica,wherethenegativeeffectof decreasedH1N1testingwasparticularlypronounced. SalesinAsiaPacificwereexceptionallystrong (15%),ledbyChinaandIndia. Salesforcellanalysissystemsremainedrobust, fuelledbyfullintegrationoftheinnovatisproduct portfolioandsteadilyincreasingdemandfor x CELLigenceautomatedreal-timecellanalysers (RTCA).InSeptemberAppliedScienceexpanded thisproductlinebylaunchingtheRTCAHTIn- strumentforhigh-throughputanalysisandthe RTCA ardioInstrumentforlabel-freecardiotoxic- C itytesting. Double-digitincreasesinsequencingreagentand microarrayssalesfuelledgrowthingenomics (17%),helpedbystrongworldwidedemandforthe GS uniorDNAsequencer,launchedinMay.This J medium-throughputbenchtopversionoftheGenome SequencerFLXSystembridgesthegapbetweenlow- andhigh-throughputsequencingandofferssolutions innearlyeveryfieldofbiologicalresearch.Thanks toitssize,efficiencyandcompetitiveprice,itputs next-generationsequencingtechnologywithinthe reachofthousandsofresearchersaroundtheworld. Inresponsetotheworldwidesurgeinresearch projectsinvolvingresequencingofthehumangenome tostudydiseasesinlargepopulations,Applied S cienceismakingadditionalinvestmentstodevelop systemstargetingthisapplication.InNovember AppliedScienceenteredintoanexclusivepartnership withDNAElectronicsforthedevelopmentofa low-cost,high-throughputDNAsequencer.The ys- s temwillcombine454LifeScienceslong-read sequencingtechnologywithDNAElectronicsinexpensive,highlyscalablemethodforelectrochemical detection.Moreover,thethirdgenerationofse-
quencingisalreadyonthehorizonandpromisesthe nextleapinperformance.InJuneRocheandIBM signedanagreementtodevelopanano ore-based p singlemoleculesequencertodirectlyreadand decodehumanDNA,basedonIBMsDNA ransistor t technology.Thisapproachpromisesgainsncosti efficiency,throughput,scalabilityandspeedcomparedwithothersequencingtechnologiescurrently availableorindevelopment. NimbleGencomplementeditsofferingonthecytogeneticsmicroarrayworkflowsystem,including arraysforsimultaneousanalysisofmultiplesamples, instruments,reagents,aswellasanalysisandvi- sualisationsoftware,nowprovidingacomprehensive solutionforhigh-resolutioncytogeneticanalyses ofchromosomalabnormalities. AppliedSciencetookfurtherstepstowardstransition ofitsproductsfrompureresearchuseintoroutine diagnostictools(IVDs).Apre-InvestigationalDevice Exemption(pre-IDE)submissionforNimbleGens microarrayplatformhasbeenfiledwiththeFDA;its approvalisthepre-requisiteforobtainingFDA clearanceforRochescytogeneticmicroarrays foruse sIVDs.Thesemicroarrays,whichdetect a chromosomalabnormalities,couldspearheada producttransitionintoIVDsandarecurrentlyunder development odemonstratetheirmedicalvalue t anddiagnostic tility. u Tissue Diagnostics TissueDiagnostics(VentanaMedicalSystemsin NorthAmerica)istheworldsleadingsupplier of issue-basedcancerdiagnostics.Itsinstruments t andreagentsystemsareusedinhistology,cytol- ogyanddrugdiscoverylaboratoriesworldwide.In 2010theunithada25%shareofthetissuediag- nostics arket,whichisvaluedatover2billionUS m dollarsandgrewapproximately910%. TissueDiagnosticssignificantlyoutpacedthe marketin2010,recordingsalesof541millionSwiss francs,anincreaseof17%comparedtotheyear- earlierperiod.Advancedtissuestainingimmunohistochemistry(IHC)andin situhybridisation (ISH)wasthemaingrowthdriver(17%),reflectingstrongreagentsalesandrobustuptakeof thefullyautomatedBenchMarkULTRAsystemfor simultaneousIHCandISHtestingonasingle
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platform.Thissystem,whichisnowavailablein51 countriesworldwide,setsnewstandardsintermsof randomslideaccess,user-friendlinessandhighqualityresults.Thebusinessareaperformedstrongly worldwide,growingtwotofourtimesasfastas themarketinEurope,LatinAmericaandAsiaPacific. Salesintheseregionsbenefitedfromintensified commercialisationeffortsoutsidetheUS,synergies withRochePharmaceuticalsinHER2testingin breastandgastriccancerandtheintroductionof BenchMarkGXataneconomicpriceinemerg- ingmarkets. In2010TissueDiagnosticslaunched15newantibodiesforIHCtestingtosupportthediagnosisof variouscancertypes(seetableofproductlaunches onpage76).SixDNAprobesforISHtestingwere addedtothemolecularassaymenuintheEUand othermarketsrecognisingtheCEMark,includingtwo newmolecularDNAtestsforthehumanepidermal growthfactorreceptor2(HER2)gene,enabling accurate,timelyassessmentofthelikelihoodofre- sponsetotreatmentwithHerceptininbreastand gastriccancer.ADNAprobetargetingtheinsulinlikegrowthfactor1receptor(IGF-1R)genewas addedtoTissueDiagnosticsnon-smallcelllung cancerbiomarkerpanel,whichalsoincludesassays forEGFRandMet.Strengtheningitspositionin p rostatecancertesting,TissueDiagnosticssecured theexclusiverightsfromAsymmetRxInc.foruse ofthep63biomarkerandlaunchedtwoDNAprobes enablingthedeterminationofERGgenomicrearrangementsonasingleslide.Whilethep63biomarkeristhegoldstandardforthedifferentialdiagno- sisofprostatecancer,ERGgenomicrearrangements havebeenshowntobeareliableprognosticmarker ofprostatecancer-specificmortalityincertain patientgroups. Theadvancedstaininginstrumentportfoliowas b olsteredworldwidewithtwonewadditions:DiscoveryULTRA,anautomatedIHCandISHplatform designedforuseintheresearchsettingandoffering improvementsineaseofuse,workflowandsystem flexibility,andBenchMarkGX,alow-volume,automatedtissuestaininginstrumentdesignedforcancer diagnosticsprofessionalswhowanttoexpand theirtestmenuandadoptautomationwithreduced investment.Withplacementsinover25countries bytheendof2010,acceptanceofBenchMarkGX
hasbeenverystrong,particularlyindeveloping markets.VANTAGE,anadvancedworkflowmanagement ystemforimprovedproductivityandpatient s safety,launchedin20082009,continuedtogain momentumwithsalesmorethandoublingcompared to heyear-earlierperiod. t TissueDiagnosticscompletedtwoacquisitions: B ioImageneInc.,aleaderindigitalpathologyanalysisandworkflow,withproductsenablinggeneration ofhigh-resolutionwhole-slidedigitalimagesfrom glassmicroscopeslidesaswellassoftwaretoview, analyseandmanagetissueimages,complementing andstrengtheningtheofferinginimageanalysis andinformationmanagement;andMariposaBioScience,aninnovatorinthefieldofantibodyproductiontosupportRochesproductionofbest-in- classantibodies.
Research and development

In2010researchanddevelopment(R& D )costs(core basis)intheDiagnosticsDivisiontotalled890mil- lionSwissfrancs,adeclineof2%inlocal urrencies c comparedto2009.R& D costsasapercentageof salesdecreasedto8.6%.Inlinewithoveralldivisional strategy,thefocuswasondevelopingnext-gene- rationplatformstoimprovetesting fficiencyandon e developingnewtestsanddemonstratingtheirmedicalvaluewithrobustclinicaldata.Clinicalvalidation isrelativelynewintheIVDindustry.Besidessignif- icantinvestment,itrequiresexpertiseinclinicaldevel- opmentandincreasedinteractionwithnon-traditionalcustomerssuchaspayersandhealthcare professionals(seefeatureonpage66).Beingable o t drawonRochePharmaceuticalslong-standingex- pertiseinclinicalvalidationgivesRocheDiagnostics anadvantageovermostotherIVDcompanies. In2010threemajorclinicaltrialsdemonstratingthe significantmedicalvalueofRocheproductswere presentedatscientificcongresses: DatafromtheATHENAtrialwerepresentedatthe InternationalPapillomavirusConferenceinMontreal inJuly.ThisRoche-sponsoredUSregistrationtrial, thelargesteverperformedinthisindication,aimed o t assesstheutilityofthecobas4800HPVTestin screeningforcervicalcancer.Thedataclearlycon-
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75
firmedtheincreasedaccuracyofhumanpapilloma- virus(HPV)DNAtestingoverconventionalcytologic Paptesting.Outof47,000womenenrolledinthis trial,oneintenofthoseaged30yearsorolderwho testedpositiveforHPVgenotypes16or18were foundtohavecervicalpre-cancerdespitenormalPap tests.Thecobas4800HPVTestdetects14high- riskgenotypesofHPV,twelveasapooledresult,and genotypes16and18individually.Asdemonstrated byATHENA,thistesthelpsphysicianstorecognise andtreatprecursorsofcervicalcancerearlier,possiblybeforeitspreadsinthebody.Eachyeararound halfamillionwomenworldwidearediagnosedwith cervicalcancerandmorethan250,000succumb tothedisease. FinalresultsofPROTECT(Pro-BNPOutpatientTailoredChronicHeartFailureTherapy),aprospective randomisedclinicaltrialin151patients,werepresentedattheAmericanHeartAssociationcongress inChicagoinNovemberbythemainstudyinves- tigatorsfromHarvardUniversityandMassachusetts GeneralHospital.Promotinganewparadigmin themanagementofheartfailure,theresultsdemonstratedthatNT-proBNP-guidedheartfailurecare wasassociatedwithasignificant56%reductionin totalcardiovascularevents,suchasworsening heartfailure,heartfailurehospitalisation,andcardio- vas ulardeath,ascomparedwithstandardtreatment. c Asheartfailureranksamongthemostcostlychronic conditionsindevelopedcountries,reducingthe riskofcardiovasculareventsnotonlycontributesto b etterpatientoutcomesbutisalsolikelytoreduce healthcarecosts.TheRocheNT-proBNPtestis a vailableatthepoint-of-careandinlaboratories worldwidewhereitrunsonthecobasplatforms.Itis estimatedthatasmanyas23millionpeopleworldwidehaveheartfailurewith550,000newcasesdiagnosedeachyearintheUSaloneandamortality ratethatexceedsthatofmanycancers. TheSTeP(StructuredTestingProtocol)study,a prospective12-monthclinicaltrialin483non-insulintreatedpeoplewithtype2diabetes,waspresent- edattheAnnualMeetingoftheEuropeanAssociation fortheStudyofDiabetes(EASD)inStockholmn i September.Thestudydemonstratedthattheuse f o thisnewdiabetesmanagementapproachincluding structuredself-monitoringofbloodglucose(SMBG), datavisualisation,patternanalysisandderived-
therapyadjustmentscontributessignificantlyto a reductionofHbA1cvalues,improvesglycemic c ontrolandhelpstoreducediabetes-specificpsychologicaldistressanddepression.WhileSMBG iswidelyacceptedasacorecomponentofeffective diabetesmanagementinpeopleoninsulintherapy, thevalueofSMBGhassofarremainedcontroversial forinsulin-naivepeople,representingalargepart ofallpeoplewithtype2diabetes. InadditiontothemedicalvalueofIVDtestsapplied intheclinic,diagnosticstodayplayanumberof c riticalrolesindrugdevelopment,fromidentifying newtherapeutictargetsandscreeningoutun- promisingdrugcandidatestoselectingappropriate patientpopulationsforclinicaltrials.Somemay alsobecomecompaniondiagnosticsforpatientselec- tion,responsepredictionortherapeuticmonitor- ing.EverydrugunderdevelopmentatRochehasits ownassociatedbiomarkerprogramme,andDiag- nosticsexpertiseandadvicearemadeavailablefor eachofthese rogrammes.In2010theDiagnostics p andPharmaceuticalsDivisions,includingpRED, gRED,PharmaMedicinesandChugai,collaborated onmorethan160projectsacrossalldiseaseareas ofinterestatRoche.Morethanhalfoftheseprojects wereinoncology,followedbyinflammation,CNS, virologyandmetabolicdiseases.Inaddition,the DiagnosticsDivisioncollaboratedwithseveral otherpharma euticalcompaniestodevelopcomc paniondiagnosticsforkeybiomarkers,particularly c inon ology.
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Product launches in the Diagnostics Division

Major product launches in 2010
Business area Product name Product description Market Timelines
Six immunoassays in virology and infectious diseases
Two immunoassays in other disease areas Three clinical chemistry products cobas e 602 module for cobas 8000 modular analyser series cobas b 123 POC system cobas c 701/ cobas c 502/cobas e 602 modules for cobas 8000 modular analyser series cobas u 411 cobas p 501/cobas p 701 Diabetes Care Molecular Diagnostics Maltose-independent strip chemistries Four molecular tests in virology and infectious diseases
HIV combi 27 min: for improved combined testing of HIV-antigen and HIV-antibodies enabling more reliable early detection of HIV infection HSV-1 IgG and HSV-2 IgG: for quantitative detection of IgG antibodies to HSV Rubella IgM: to diagnose rubella infection in women anti-HCV: for presumptive diagnosis of HCV infection anti HAV: to diagnose HAV free -HCG and PAPP-A: to evaluate a risk of trisomy 21 in pregnancy STAT NT-proBNP: to evaluate the risk of heart failure next-generation tests for HbA1c and ferritin, and new MultiControl ClinChem immunoassay module with over 80 immunoassays and a throughput of 170 tests/hour for very high volume laboratories multi-parameter blood gas analyser for use at the point of care and in laboratories clinical chemistry and immunoassay modules for very high volume laboratories
EU, APAC, LATAM EU, APAC, LATAM US US US EU, APAC, LATAM US EU, APAC, LATAM EU
Q4
Q4 Q1 Q2 Q4 Q1 Q1 Q12 Q34
EU, APAC, LATAM US
Q4 Q34
Applied Science
NimbleGen CGX-6 multiplex array GS Junior NimbleGen cytogenetic workflow system RTCA Cardio Instrument RTCA HT Instrument
semi-automated urine test strip analyser post-analytical units for automated storage and retrieval of bar-coded primary and secondary sample tubes for Accu-Chek Aviva, Accu-Chek Performa, Accu-Chek Mobile, Accu-Chek Compact Cobas AmpliPrep/Cobas TaqMan Dual Target HIV-1 Test v2.0: for simultaneous detection of two regions of the HIV genome LightCycler MRSA Advanced Test: automated real-time PCR-based test for MRSA cobas TaqScreen DPX Test: for simultaneous quantitative detection of parvovirus B19 and a qualitative result for HAV Cobas AmpliPrep/Cobas TaqMan HBV Test v2.0: new-generation HBV viral-load test, which enables broader genotype detection and improved workflow flexibility for high-resolution analysis of chromosomal abnormalities, capable of analysing six samples simultaneously economic benchtop next-generation sequencing system for smaller laboratories complete solution for high-resolution cytogenetic analysis, including instruments, arrays, analysis and visualisation software for real-time cell analysis for functional monitoring of cardiotoxicity and arrhythmic effects for real-time high-throughput label-free impedance-based cell analysis
US US EU, APAC, LATAM US
Q4 Q4 Q34 Q3
US EU US
Q3 Q3 Q4
WW WW WW
Q1 Q2 Q2
WW WW
Q3 Q3
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Major product launches in 2010

Tissue Diagnostics
Fifteen antibodies for IHC testing in cancer
One antibody for IHC testing in infectious diseases Six DNA probes for ISH testing in cancer BenchMark GX Discovery ULTRA
anti-E-cadherin, anti-p63, Basal Cell Cocktail (anti-p63 and anti-keratin), anti-p120 catenin, anti-cyclin D1, anti-CD44, anti-CK5/6, anti-CAM5.2, anti-CD7, anti-CD10, anti-CK17, anti-hENT1, anti-MOC-31, anti-GPC3, anti-CK10 anti-Helicobacter pylori
US, EU
Q14
EU
Q1
DDISH HER2 Probe, SISH HER2 Probe, IGF-1R Probe, TOP2A Probe, 5pERG Probe, 3pERG Probe for economical low-volume automated advanced tissue staining for automated advanced tissue staining in the research setting
EU EU, APAC US, EU
Q24 Q2 Q12
black type = new product/first market launch, grey type = new product/launch in additional markets. APAC = AsiaPacific; EU = European Union; LATAM = Latin America; US = United States; WW = worldwide. DDISH = dual colour dual hapten ISH; HAV = hepatitis A; HbA1c = hemoglobin 1Ac; HBV = hepatitis B; HCG = human chorionic gonadotropin; HCV = hepatitis C; HIV = human immunodeficiency virus; HPV = human papillomavirus; HSV = herpes simplex virus; IHC = immunohistochemistry; ISH = in situ hybridisation; MRSA = methicillin-resistant Staphylococcus aureus; NT-proBNP = N-terminal fragment of B-type natriuretic peptide; PAPP-A = pregnancy-associated plasma protein; RTCA = real-time cell analyser; SISH = silver ISH; STAT = short turn-around time (tests used in emergency).
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Key product launches planned for 2011

Two immunoassays
cobas c 702 module for cobas 8000 modular analyser series cobas b 123 POC system Diabetes Care Accu-Chek Mobile LCM
Total Vitamin D: to measure vitamin D2 and D3 with greater precision HE4: aid in detecting ovarian cancer clinical chemistry module with throughput of 2,000 tests/hour for high-volume laboratories multi-parameter blood gas analyzer for use at the point of care and in laboratories next-generation strip-free blood glucose monitoring system with an integrated lancing device; significantly smaller than current version, with enhanced functionality sleek version for high-frequency users interactive insulin delivery system combining insulin pump and blood glucose monitoring system with broad data management capabilities cobas 4800 BRAF V600 Mutation Test: for identification of the V600 mutation in the BRAF gene cobas 4800 KRAS Mutation Test: for identification of mutations in the KRAS gene cobas 4800 EGFR Mutation Test: for identification of mutations in the EGFR gene cobas 4800 HPV Test: detects HPV 16 and HPV 18 individually and 12 other high-risk genotypes in a pooled result for HLA genotyping on the GS Junior System or GS FLX System new sequencing chemistry; enables extended read lengths on the GS FLX system (sequencing kit) ultra-high resolution arrays for CGH validation and combined CGH/SNP validation with 4.2 million and 2.1 million features for discovery of variations in gene copy numbers and single nucleotides to support the diagnosis of breast cancer on BenchMark ULTRA to support the diagnosis of breast cancer next-generation detection system for BenchMark platforms; delivers greater specificity, flexible detection options and improved turnaround time
EU EU US, EU
H1 H1 H1
US EU
H2 H2
Accu-Chek Nano Accu-Chek Combo
US US
H2 H2
Four molecular tests in oncology and infectious diseases
EU, US EU EU US WW WW WW
H2 H2 H2 H2 H1 H1 H2
Applied Science
GS G Type HLA Primer Sets GS FLX Titanum-XL 4.2M CGH and 2.1M CGH/SNP arrays
Tissue Diagnostics
ER/PR antibody for IHC testing HER2 Dual Colour ISH Probe for ISH testing FutureView
US US US, EU
H1 H2 H1
black type = new product/first market launch; grey type = new product/launch in additional markets. EU = European Union; US = United States; WW = worldwide. BRAF = B-isoform of the rapidly growing fibrosarcoma oncogene; CGH = comparative genomic hybridisation; EGFR = epithelial growth factor receptor; ER/PR = estrogene receptor/progesterone receptor; HE4 = human epididymis protein 4; HER2 = human epidermal growth factor receptor 2; HLA = human leukocyte antigen; HPV = human papillomavirus; IHC = immunohistochemistry; ISH = in situ hybridisation; KRAS = member of the Ras family of oncogenes; SNP = single nucleotide polymorphism.
Diagnostics
79
Glossary
Biomarker | Acharacteristicthatcanbemeasured andevaluatedasanindicatorofanormalbiological process,adiseaseprocessoraresponsetoatherapeuticintervention.Elevatedlevelsoftheprotein HER2incancer,forexample,areabiomarkerfor a highprobabilityofresponsetoHerceptin. Cell analysis | Methodsofmeasuringtheproperties ofcells,includingtheirsizeandshape,cellular parameterssuchasthepresenceofspecificproteins, andcellularprocessessuchasproliferationand growth.Cellanalysistechnologiesplayanimportant roleindrugdevelopmentandproduction. CE Mark certification | Certificationthatanin vitro diagnostic(IVD)productcomplieswithallsafety, healthandenvironmentalrequirementsforuseinthe EuropeanUnion.Certifieddiagnosticsarereferred toasCEIVDs. Clinical chemistry | Abranchofdiagnosticscomprisingteststhatdetectandmeasurechangesin thechemicalcompositionofbodyfluidsandtissues todiagnoseorpredictthecourseofadisease. DNA sequencing | Methodsofdeterminingthe orderofnucleotides(molecularbuildingblocks)in geneticmaterial.KnowinganindividualsDNA sequencecanprovideinsightsintogeneticchanges whichcontributetohumandiseaseorinfluence t reatmentresponse.High-throughputtechnologies readthousandsofsequencesatonce. Immunoassay | Alaboratorytestthatdetectsor measuresatargetsubstanceinasampleusing n a immunochemicalreaction,inwhichanantibody bindstoaspecificantigen.Thetargetcanbeadrug, aproteinoravirus,forexample. Immunohistochemistry (IHC) | Amethodofstainingbiologicaltissuesamplestodeterminethe res- p ence,levelandlocationofspecificproteinsincells; usedinthediagnosisofcancerandother iseases. d
In situ hybridisation (ISH) | Amethodofstaining biologicaltissuesamplestoidentifythepresence andcopynumberofspecificgenesorgeneticmutationsincells;usedinthediagnosisofcancerand otherdiseases. Micropump for insulin delivery | Anext-generation insulinpump,small,light-weight,discrete-to-wear thatdeliversinsulinwithouttubing.Itcombines ey k featuresofdurableinsulinpumpswiththebest attributesoftube-freepatchpumpsprovidingflexibilityandfreedomforabroaderrangeofinsulindependentpeoplewithdiabetes. Microarray | Adevicefordetermininggenetic changesthatmaycontributetohumandiseaseor influencetreatmentresponse.High-densitymicroarraysevaluatethousandsofDNAandRNA sequencesatonce. Point-of-care (POC) testing | Diagnostictesting performedatornearthesiteofpatientcareusing transportable(oftenhandheld)instrumentsandtest kits.Resultsareavailableimmediatelyhelpingto speedclinicaldecision-making. Polymerase chain reaction (PCR) | Alaboratory methodwidelyusedinresearchandindustrytomake millionsofcopiesofaDNAsequenceofinterest veryquickly.Real-timePCRsimultaneouslyamplifies (copies)andquantifiesthetargetedDNAmolecule. Virology | Inmoleculardiagnostics,testingtodetect certainseriousandprevalentviralinfections(e.g. HIVandhepatitisC)ortomonitortheirtreatment.
commitment to all stakeholders is reflected in its operating businesses focus on value creation, in a management culture that conforms to modern standards of corporate governance and in the Groups policy of communicating transparently.
Corporate Governance | Roches
Remuneration Report | Roches
success depends on the abilities and dedication of its people. Recognition of this forms the basis of our remuneration policy and system.
Corporate Governance
81
Rochecomplieswithallrelevantcorporategover nancerequirements,inparticularwithallapplicable laws,theSwissStockExchange(SIXSwiss Exchange)directives(includingthecommentaries thereto)andtheSwissCodeofBestPracticefor C orporateGovernancepromulgatedbytheSwiss businessfederationeconomiesuisse.Thecompanys internalgovernanceframework,particularlyitsArti clesofIncorporationandBylaws,embodiesallthe principlesneededtoensurethatthecompanysbusi nessesaremanagedandsupervisedinamanner consistentwithgoodcorporategovernance,includ ingthenecessarychecksandbalances.1 OurprintedAnnualReportcontainsselectedlinksto theRochewebsite(www.roche.com).Readersare thusprovidednotonlywithasnapshotofourcom panyatthereportingdatebutarealsodirectedto sourceswhichtheycanconsultatanytimeforup todateinformationaboutcorporategovernance atRoche.Whereaseachannualreportcoversasin glefinancialyearending31December,ourwebsite containsinformationofamorepermanentnatureas wellasthelatestRochenews.ThecompanysArti clesofIncorporation,Bylawsandthecurriculavitae ofthemembersoftheBoardofDirectorsandthe CorporateExecutiveCommitteearepublishedonour website.
AttheAGMon1March2011,theBoardofDirectors willproposeshorteningthetermofofficeofnewor directorsforreelectionfromthreetotwoyearsand theBoardwillnominatePiusBaschera,BrunoGehrig, LodewijkJ.R .deVinkandAndreasOeriforreelec tiontotheBoardandPaulBulcke,PeterR.Voserand ChristophFranzforelectionasnewMembersofthe Board. WalterFreyhasdecidedtoretireasmemberofthe BoardofDirectorsaftertenyearsofdistinguished service.TheBoardofDirectorsthanksWalterFrey forhislongstandingengagementandhismanycon tributionstoRochewhichstartedalreadywithhis activitiesasamemberoftheBoardofRochePharma AGinGermanyfrom1996to1998beforebecoming aBoardmemberofRocheHoldingLtdin2001. WolfgangRuttenstorferdecidedtoresignasamem beroftheBoardofDirectorsofRocheHoldingLtd afterfouryearsofservice.TheBoardofDirectors thanksWolfgangRuttenstorferforhisvaluablework andcontributiontoRoche.
Corporate Executive Committee

Startingon1January2010PascalSoriot,Memberof theCorporateExecutiveCommitteesinceApril2009, andDanielODaywereappointedasCOODivision RochePharmaceuticalsandCOODivisionRoche DiagnosticsandasanewmemberoftheCorporate ExecutiveCommittee,respectively. ErichHunziker,ChiefFinancialOfficer,ChiefInfor mationOfficerandDeputyHeadoftheCorporate ExecutiveCommittee,hasdecidedtoretirefrom RocheattheendofMarch2011andplanstofocus onanumberofboardmemberships.TheBoardof DirectorsofRocheHoldingLtdthanksErichHunziker forhismanyyearsofexceptionalserviceandout standingcontributionstotheGroupssuccess. TheBoardofDirectorshasappointedAlanHippeto succeedErichHunzikerasChiefFinancialOfficer.
Board of Directors
Atthe92ndAnnualGeneralMeeting(AGM)of RocheHoldingLtd,on2March2010,shareholders reelectedDeAnneJuliusandBeatriceWederdi MauroasmembersoftheBoardofDirectorsfora termofthreeyearsasprovidedbytheArticles ofIncorporation.PeterBrabeckLetmatheandHorst Teltschikhavedecidedtoretireasmembersofthe BoardofDirectorsaftermanyyearsofdistinguished service.ArthurD.LevinsonandWilliamM.Burns wereelectedasnewMembersoftheBoardfora termofthreeyearsasprovidedbytheArticlesof Incorporation.Atitsorganisingmeetingimmediately followingthe2010AGM,theBoardofDirectors hasapproveditscommitteesstructureanditscom mitteesmembershipsasshownonpage83.
1 http://www.roche.com/about_roche/corporate_governance.htm
82
Board of Directors per 31 December 2010 (from left): Dr Franz B. Humer, Prof. Bruno Gehrig, Andr Hoffmann, Dr Andreas Oeri, Prof. Pius Baschera, Prof. Sir John Irving Bell, William M. Burns, Lodewijk J. R. de Vink, Dr DeAnne Julius, Walter Frey, Dr Arthur D. Levinson, Dr Wolfgang Ruttenstorfer, Prof. Beatrice Weder di Mauro.
83
Board of Directors
Name (year of birth) Term ends First elected
Board of Directors
Dr Franz B. Humer (1946) Prof. Bruno Gehrig (1946) Andr Hoffmann (1958) Prof. Pius Baschera (1950) Prof. Sir John Irving Bell (1952) William M. Burns (1947) Lodewijk J. R. de Vink (1945) Walter Frey (1943) Dr DeAnne Julius (1949) Dr Arthur D. Levinson (1950) Dr Andreas Oeri (1949) Dr Wolfgang Ruttenstorfer (1950) Prof. Beatrice Weder di Mauro (1965)
D *, E C *, D, E C, D, E A, E C, E B, E C, E A, B, E B *, E C, E A *, E B, E A, B, E
Chairman Vice-Chairman Vice-Chairman
2012 2011 2012 2011 2012 2013 2011 2011 2013 2013 2011 2011 2013
1995 2004 1996 2007 2001 2010 2004 2001 2002 2010 1996 2007 2006
New proposed members of the Board of Directors, nominated for Paul Bulcke (1954) election at the Annual General Meeting Peter R. Voser (1958) Dr Christoph Franz (1960) on 1 March 2011
Secretary to the Board of Directors
Dr Gottlieb A. Keller (1954)
Honorary Chairman of the Board of Directors
Dr Fritz Gerber (1929)
A B C D E
Corporate Governance and Sustainability Committee. Audit Committee. Remuneration Committee. Presidium/Nomination Committee. Non-executive director. 1 January 2011
* Committee chairperson.
84
Corporate Executive Committee per 31 December 2010 (from left): Dr Severin Schwan, Dr Pascal Soriot, Daniel ODay, Dr Erich Hunziker, Silvia Ayyoubi, Dr Gottlieb A. Keller, Dr Richard Scheller, Dr Jean-Jacques Garaud, Dr Dan Zabrowski, Osamu Nagayama, Dr Stephan Feldhaus, Per-Olof Attinger.
85

Name (year of birth) Position
Dr Severin Schwan (1967) Dr Erich Hunziker (1953) Dr Pascal Soriot (1959) Daniel ODay (1964) Dr Gottlieb A. Keller (1954) Silvia Ayyoubi (1953) Dr Alan Hippe (1967) Osamu Nagayama (1947) Dr Richard Scheller (1953) Dr Jean-Jacques Garaud (1955) Dr Dan Zabrowski (1959) Dr Stephan Feldhaus (1962)
CEO of the Roche Group Chief Financial and IT Officer/ Deputy Head of the Corporate Executive Committee COO Division Roche Pharmaceuticals COO Division Roche Diagnostics General Counsel Head Human Resources Chief Financial and IT Officer President and CEO Chugai Head Genentech Research and Early Development (gRED) Head Roche Pharma Research and Early Development (pRED) Head of Roche Partnering Head Group Communications
As of 1 April 2011
Enlarged Corporate Executive Committee
Secretary to the Corporate Executive Committee
Per-Olof Attinger (1960) KPMG Klynveld Peat Marwick Goerdeler SA (reporting years 20042008)
Statutory Auditors of Roche Holding Ltd Chief Compliance Officer
KPMG AG (since 2009) Auditor in charge: John A. Morris (since 2004) Dr Urs Jaisli (1956)
AlanHippewilljoinRocheasamemberofthe C orporateExecutiveCommitteeasofApril2011. Asof1January2010JeanJacquesGaraudwas appointedasHeadofRochePharmaResearchand EarlyDevelopment(pRED)andtogetherwithDan ZabrowskiasHeadofRochePartnering.Bothwere appointedasnewmembersoftheEnlargedCorpo rateExecutiveCommittee.
Effective1August2010StephanFeldhauswas appointedHeadGroupCommunicationsandMember oftheEnlargedCorporateExecutiveCommittee reportingtoSeverinSchwanandreplacingPerOlof Attinger,whotookoveranewlycreatedposition asHeadCEOOfficeandSecretarytotheCorporate ExecutiveCommitteereportingtoSeverinSchwan.
86
Information relating to Corporate Governance

1 Group structure and shareholders Rochesoperatingbusinessesareorganisedinto twodivisions:PharmaceuticalsandDiagnostics. ThePharmaceuticalsDivisioncomprisesthetwo businesssegmentsRochePharmaceuticalsand Chugai,whereasGenentechastheformerthird segmenthasbeenintegratedintoRochePharma ceuticals.TheDiagnosticsDivisionconsistsof thefollowingfivebusinessareas:AppliedScience, DiabetesCare,MolecularDiagnostics,Profes sionalDiagnosticsandTissueDiagnostics.Busi nessactivitiesarecarriedoutthroughGroup subsidiariesandassociatedcompanies.Significant subsidiariesandassociatedcompaniesarelisted intheFinanceReport,Note34totheRocheGroup ConsolidatedFinancialStatements(Subsidiaries andassociates,page131). MajorshareholdersarelistedintheFinance Report,Notes28and33totheRocheGroup ConsolidatedFinancialStatements(Equity attributabletoRocheshareholdersandRelated parties,pages114and129)andinNote4to theFinancialStatementsofRocheHoldingLtd (Significantshareholders,page154). AndrHoffmann,ViceChairmanoftheBoardof Directors,andAndreasOeri,MemberoftheBoard ofDirectorsandChairmanoftheBoardsCorporate GovernanceandSustainabilityCommittee,serve intheirrespectivecapacitiesontheBoardandits Committeesasrepresentativesoftheshareholders groupwithpooledvotingrightsandreceivethe remunerationsetforthintheRemunerationReport onpage93andintheFinanceReport,Note33 totheRocheGroupConsolidatedFinancialState ments(Relatedparties,page129)andNote6 totheFinancialStatementsofRocheHoldingLtd (BoardandExecutiveremuneration,page155). Nootherrelationshipsexistwiththeshareholders withpooledvotingrights. Therearenocrossshareholdings.
2 Capital structure
InformationonRochescapitalstructureispro
videdintheFinanceReport,NotestotheFinancial StatementsofRocheHoldingLtd(pages153 and154).Additionaldetailsarecontainedinthe ArticlesofIncorporationofRocheHoldingLtd.2 ChangesinequityaredetailedintheFinance Report,NotestotheFinancialStatementsof RocheHoldingLtd(page154). Thecompanyhasasharecapitalof160,000,000 Swissfrancs,dividedinto160,000,000fullypaid bearershareswithanominalvalueof1Swiss franceach.Therearenorestrictionsontheexer ciseofthevotingrightsoftheseshares.Upon deposit,sharescanbevotedwithoutanyrestric tions. Thereisnoauthorisedorconditionalcapital. Inaddition,702,562,700nonvotingequity securities(NES)havebeenissuedinbearerform. Theydonotformpartofthesharecapitaland confernovotingrights.EachNESconfersthe samerightsasonesharetoparticipateinavail ableearningsandinanyliquidationproceeds followingrepaymentofthesharecapital.Roches NESandtherightspertainingthereto(including theprovisionsprotectingtheinterestsofNES holders)aredescribedin4oftheArticlesof IncorporationofRocheHoldingLtd. Informationondebtinstrumentswhichhavebeen issuedandonoutstandingbondsisprovidedin theFinanceReport,Note27totheRocheGroup ConsolidatedFinancialStatements(Debt,page 108). Additionalinformationonemployeestockoptions isprovidedintheFinanceReport,Note11tothe RocheGroupConsolidatedFinancialStatements (Employeestockoptionsandotherequitycom pensationplans,page79). Rochehasissuednooptionsapartfromemployee stockoptions,StocksettledStockAppreciation Rights(SSARs)andoptionsissuedinconnection withdebtinstruments. Neithertheoptionsawardedtoemployeesnor thedebtinstrumentswhichhavebeenissuedhave anyeffectonRochessharecapital.
2 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm
87
3 Board of Directors and Corporate Executive Committee InformationoneachmemberoftheBoardof Directors(includingtheyearsinwhichtheywere electedandtheyearsinwhichtheirtermsend) andoneachmemberoftheCorporateExecutive Committeeislistedonpages81to85.Curricula vitaeandotherinformation(includinginformation onboardmemberships)areavailableonthe Internet.3 TheAnnualGeneralMeetingelectsthemembers oftheBoardofDirectorsinstaggeredelections inwhicheachnomineeisvotedonseparately(see 18oftheArticlesofIncorporationofRoche HoldingLtd4andtheMinutesofthe92ndAnnual GeneralMeetingofRocheHoldingLtd,held 2March20105). WiththeexceptionofFranzB.Humer,WilliamM. BurnsandArthurD.Levinsonnoneofthemem bersoftheBoardofDirectorshasbeenamember ofRochesCorporateExecutiveCommitteeor servedinanexecutivecapacityatanyGroupsub sidiaryduringthethreefinancialyearspreceding thecurrentreportingperiod. TheinternalorganisationoftheBoardofDirectors andthedivisionofauthorityandresponsibilities betweentheBoardandmanagement,theremits oftheBoardcommitteesandtheinformation andcontrolmechanismsavailabletotheBoard initsdealingswithcorporatemanagementare governedbytheBylaws.6 TheBoardofDirectorsofRocheHoldingLtdis organisedsoastoensurethattheGroupsbusi nessesareconductedresponsiblyandwitha focusonlongtermvaluecreation.Tothisend,the RocheBoardhasdelegatedcertainresponsibili tiestoseveralcommittees7.Theircompositionand chairpersonsasof1January2011aredescribed onpage83.Eachcommitteesauthoritiesandre sponsibilitiesaredefinedindetailintheBylaws oftheBoardofDirectors.8 AllthecommitteesexceptthePresidiumare chairedbyindependentdirectors. AccordingtotheBylawsoftheBoardofDirectors attherequestofanyofitsmembersaBoard meetingwithouttheChairmanpresentmaybe convened.TheRocheBoardmeetsonceayear toassesstheChairmansperformance.This meeting,whichisnotattendedbytheChairman, ischairedbyoneoftheViceChairmen.
TheBoardofDirectorshasestablishedasystem
ofcontrolswhichiscontinuouslymonitoredbythe AuditCommitteeandbytheCorporateGover nanceandSustainabilityCommitteeandconsists ofthefollowingelements: R eportonfinancialandoperatingrisks (riskmanagementsystem) Systemofinternalcontrolsoverfinancial reporting(seepages135and138inthe FinanceReport) Internalaudits G roupComplianceOfficerandCompliance officersinsubsidiaries S afety,HealthandEnvironmentalProtection Department CorporateSustainabilityCommittee S cienceandEthicsAdvisoryGroup(SEAG), forissuesrelatingtogeneticsandgenetic engineering(establishedin1999). Eachyearseveralblackoutperiodsareimposed duringwhichsenioremployeesareprohibitedfrom tradingincompanystock.Thefollowingblackout periodsareineffectfor2011: 26December2010to2February 1Aprilto14April 26Juneto21July 1Octoberto13October BlackoutperiodscanbechangedbytheChair manoftheBoardofDirectorsifcircumstances warrant. In2010theBoardofDirectorsmetforfive meetings,eachfrom3to6hoursinlength* ;once forafulldaymeeting* ;andonceforathreeday
* These figures indicate the actual length of meetings and do not include the directors extensive pre-meeting preparations and post-meeting follow-up activities. 3 http://www.roche.com/about_roche/management/ board_of_directors.htm and http://www.roche.com/about_roche/management/ executive_committee.htm 4 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm 5 http://www.roche.com/about_roche/corporate_governance/ annual_general_meetings.htm 6 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm 7 http://www.roche.com/about_roche/corporate_governance/ committees.htm 8 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm
88
Board and Board Committees attendance 2010

Corporate Governance and Sustainability Committee
Board
Presidium/ Nomination Committee
Remuneration Committee
Audit Committee
Number of meetings F. B. Humer B. Gehrig A. Hoffmann P. Baschera J. I. Bell W. M. Burns ** L. J. R. de Vink W. Frey D. A. Julius A. D. Levinson ** A. Oeri W. Ruttenstorfer B. Weder di Mauro
5 5 5 5 5 5 5 5 5 4 5 5 5
5 5 5
4 4 4 4 3
5 5 5 5 4
2 3 3 2
Not a member of that committee. ** Board and Committee member since 2 March 2010.
visittoamajorsubsidiary* whichincludedaBoard ofDirectorsmeeting* .TheBoardcommitteesmet asfollowsin2010: residiumoftheBoardofDirectors/Nomination P Committee:fivemeetings(approx.2hours each* ) emunerationCommittee:fourmeetings9 R (approx.2to3hourseach* ) uditCommittee:fivemeetings(approx.3to4 A hourseach* ) orporateGovernanceandSustainabilityCom C mittee:threemeetings(approx.3hourseach* ). TheBoardofDirectorsregularlyconductsaself assessmentofitsperformance. ThemembersoftheCorporateExecutiveCommit teeareinvitedtoattendfor,andreportinperson on,thoseagendaitemsconcerningthem.When thesituationwarrants,membersoftheEnlarged CorporateExecutiveCommitteemayalsobe invitedtoattend.TheBoardcommitteesinvitethe ChairmanoftheBoardandotherCorporate ExecutiveCommitteememberstodeliverreports atcommitteemeetingsandmayelecttocommis sionindependentexpertreportsandcallon theservicesofconsultants.Theriskmanagement systemissubjecttocontinuousreview,with findingsbeingpresentedtotheAuditCommittee
orthefullBoard.10InternalAuditregularlybriefs theAuditCommitteewithreferencetoongoing auditreports.MembersofInternalAuditattend AuditCommitteemeetings,asdoexternalaudi tors.Forinformationontheexternalauditors,see page89. MembersoftheCorporateExecutiveCommittee haveamaximumordinarynoticeperiodoftwelve months. Therearenomanagementcontractswhichfall withinthescopeofSubsection4.3(annex)ofthe SIXDirectiveonInformationrelatingtoCorporate Governance. 4 Remuneration, shareholdings and loans Alldetailsregardingremuneration,shareholdings andloansaresetforthintheseparateRemunera tionReportonpages91to101andintheFinance Report,Notes28and33totheRocheGroup
* These figures indicate the actual length of meetings and do not include the directors extensive pre-meeting preparations and post-meeting follow-up activities. 9 Remuneration Committee members are not permitted to contribute to or attend Remuneration Committee meetings at which matters concerning them are deliberated or decided. 10 Additional information is provided in the Finance Report, Note 32 to the Roche Group Consolidated Financial Statements, Risk management, page 121.
89
ConsolidatedFinancialStatements(Equityattri butabletoRocheshareholdersandRelated p arties,pages114and129)andarelistedinthe Notes6and7totheFinancialStatementsof RocheHoldingLtd(BoardandExecutiveremune r ationandBoardandExecutiveshareholdings, pages155and157). 5 Participatory rights of shareholders
theiraudits.TheAuditCommitteeoversees andassessestheauditorsandmakesrecommen dationstotheBoard(forinformationonthe responsibilitiesoftheAuditCommittee,seeArti cle8.1oftheBylaws12).Thestatutoryauditors par icipatedinfourmeetingsoftheAuditCommit t teein2010. ThereportsofstatutoryauditorsontheConsoli datedFinancialStatementsandontheFinancial Statementscanbefoundonpages136and162, respectively,ofthisyearsFinanceReport. KPMGreceivedthefollowingremunerationfor theirservicesasstatutoryauditorsofRocheHold ingLtdandotherRochecompanies:
2010 2009 (millions of CHF)
Theparticipatoryrightsofshareholdersare
definedinRochesArticlesofIncorporation.11As Rochesharesareissuedtobearer,thereare norestrictionsonadmissiontoAnnualGeneral Meetings,withtheexceptionthatsharesmust bedepositedwithinaspecifiedperiodbeforethe dateofameetingandanadmittancecardmust beissuedintheshareholdersname,asprovided in12oftheArticlesofIncorporation.Anyshare holdercanelecttoberepresentedbyanother shareholderatanAnnualGeneralMeeting.The ArticlesofIncorporationcontainnorestrictions ontheexerciseofvotingrights,andtheonlyquo rumrequirementsarethosestipulatedin16, inconformitywiththeSwissCodeofObligations. Under10.2oftheArticlesofIncorporation,share holdersrepresentingshareswithanominalvalue ofatleast1millionSwissfrancscanrequestthe placementofitemsontheagendaofanAnnual GeneralMeeting.Thismustbedonenolaterthan 60daysbeforethedateofthemeeting. 6 Change of control and defensive measures TheArticlesofIncorporationcontainnoprovisions onthemandatorybidrule.Swisslawapplies. Therearenochangeofcontrolclauses.Those componentsofremunerationbasedonRocheNES wouldbeterminatedintheeventofanacquisi tion,andvestingperiodrestrictionsonpreexist ingawardswouldberemoved,sothatallsuch optionscouldbeexercisedimmediately. 7 Relationship to statutory auditors AttheAnnualGeneralMeetingofRocheHolding Ltdon2March2010,theshareholdersvotedto appointKPMGAG(KPMG)asstatutoryauditors (informationonhowlongtheauditorsandauditor inchargehavebeenservinginthesecapacities isprovidedonpage85).Thestatutoryauditors parti ipateinAuditCommitteemeetings.They c preparewrittenandoralreportsontheresultsof
Auditing services Audit-related services Tax consultancy services Total
20.8 2.6 1.5

24.9
21.9 3.7 1.3

26.9
Thestatutoryauditorsareelectedeachyearby theAnnualGeneralMeeting. Ernst&YoungLtdreceivedthefollowingremuner ationfortheirservicesastheauditorsofChugai:

2010 2009 (millions of CHF)
Chugai audits Other consulting services provided to Chugai Total

* In 2009: Genentech and Chugai.
2.2 0.1
2.3
2.2 2.2 *
4.4
8 Information policy Asprovidedby33oftheArticlesofIncorpora tion13 ,corporatenoticesarepublishedinthe Swiss Official Gazette of Commerceandinother dailynewspapersdesignatedbytheBoardof
11 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm 12 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm 13 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm
90
Directors(Basler Zeitung, Finanz und Wirtschaft, LAgefi, Le Temps, Neue Zrcher Zeitung). Rochereportsitshalfyearandfullyearresultsin businessreportspublishedinprintandonline formatsandatmediaevents.Inaddition,detailed firstandthirdquartersalesfiguresarepublished eachyearinAprilandOctober.Themostcurrent listofpublicationdatesisavailableinEnglishand GermanontheInternet.14 Allrelevantinformationanddocuments,including allmediareleases,investorupdates15andpresen tationstoanalystandinvestorconferencesare availableontheInternet.Furtherpublicationscan beorderedbyemail,faxortelephone: basel.webmaster@ roche.com, tel.+41(0)616888339, fax+41(0)616884343. ThecontactaddressforInvestorRelationsis: F.HoffmannLaRocheLtd,InvestorRelations, GroupFinance,4070Basel,Switzerland; tel.+41(0)616888880, fax+41(0)616910014. Additionalinformation,includingdetailson specificcontactpersons,isavailableonthe Internet.16 9 Chief Compliance Officer TheChiefComplianceOfficerwithhiscompliance officersnetworkiscommittedtoensuringthatthe RocheGroupCodeofConduct17isconsistently compliedwiththroughouttheRocheGroup.He alsoservesasacontactpersonforshareholders, employees,customers,suppliersandthegeneral publiconissuesrelatingtotheimplementation ofandcompliancewiththisCode.Employeesand otherpartieswhobecomeawareofviolationsof theRocheGroupCodeofConductcanbringthem totheattentionoftheirmanagersorsupervisors orreportthemtotheChiefComplianceOfficer (UrsJaisli,directphonenumber: +41(0)616884018, email:urs.jaisli@ roche.com). Suchdisclosureswillbetreatedconfidentially.In addition,asoftheendof2009,employeesmay anonymouslyreportirregularitiesorcomplaints intheircorrespondingmotherlanguageviaa speakuphotline.TheChiefComplianceOfficer reportsregularlytotheCorporateGovernance andSustainabilityCommittee.
10 Non-applicability/negative disclosure Itisexpresslynotedthatanyinformationnot c ontainedormentionedhereinisnonapplicable oritsomissionistobeconstruedasanegative declaration(asprovidedintheSIXSwissExchange r Corpo ateGovernanceDirectiveandtheCom mentarythereto).
14 15 16 17
http://www.roche.com/media.htm http://www.roche.com/investors.htm http://www.roche.com/investors/contacts.htm http://www.roche.com/about_roche/corporate_governance/ code_of_conduct.htm
Remuneration Report
91
Remuneration Report
Summary Rochessuccessdependsontheabilitiesanddedicationofitspeople.Recognitionofthisformsthebasis ofourremunerationpolicyandsystem. Oneoftheprimaryaimsofourremunerationpolicyis toencouragealong-termfocusandalignmanagementsinterestswiththeinterestsofRochesshareholdersandholdersofRochesnon-votingequity securities(NES).
Abalancedmixoflong-andshort-termremunerationcomponents
Marketcompetitiveness.
Basepay,bonuses,blockednon-votingequitysecurities (NES),awardsofStock-settledStockAppreciation Rights(S-SARs)andaPerformanceSharePlan(PSP) supporttheseprinciples.Theseremunerationcom- ponentsarelinkedtoourcompanysfinancialperfor- manceandcommercialsuccessandthusalignthe interestsofRocheemployeeswiththoseoftheshareholders. TheamountoftheseparatecomponentsofremunerationforeachindividualmemberoftheCorporate ExecutiveCommitteeisshownintheindividualdescrip- tionoftheremunerationoftheCorporateExecutive Committeeinthisreport. Base pay Basepay(cashpayment)levelsaredetermined accordingtomarketdataoftheworldsbiggestpharmaceuticalscompanies3forspecificpositionsand individualemployeesabilities,experienceandperfor- manceovertime.Payincreasesarelinkedtoindividual performanceandalsotakeintoaccountprevailing marketconditions3andthecompanysoveralleconomic situation.Basepayandpayincreasesareconclusively monitoredanddeterminedbytheRemuneration Committee. Bonuses Bonuses(cashpayment)areawardedinrecognition ofindividualcontributionstovaluecreationwhich gobeyondnormaljobexpectations,andtheyare meanttobeanincentivetocreateorstrengthennew businessopportunitiesandstriveforoutstanding results.BonusamountsarelinkedtoGroupordivisionalbusinessperformanceconsideringprofit,
1 See Stock options/Stock-settled Stock Appreciation Rights (S-SARs), page 95, 98 and 99. 2 See also in the Finance Report, Note 33 to the Roche Group Consolidated Financial Statements (Related parties, page 129) and Notes 6 and 7 to the Financial Statements of Roche Holding Ltd (Board and Executive remuneration and Board and Executive shareholdings, page 155 and 157). 3 Peer set for 2010: Abbott Laboratories, Amgen, Astellas, AstraZeneca, Bayer, Becton Dickinson, Biogen Idec, Bristol-Myers Squibb, Eli Lilly, Gilead, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis, Pfizer, Sanofi-Aventis, Takeda.
Thisremunerationreportwillbesubmittedseparatelyforapprovalatthe2011AnnualGeneral Meeting. TheremunerationofCorporateExecutiveCommittee membersandotherseniorRocheexecutivesis comprisedof: Basesalary(fixed) Bonus(variable) tock-settledStockAppreciationRights S (S-SARs)1(variable) PerformanceSharePlan(PSP)awards(variable) UnderthePSP20082010noNESwillbeawarded. TheS-SARsgrantedin2006,2007,2008,2009 and2010havestrikepricesabovetheNESprice asof31December2010andhavenovaluefor therecipients.ThiscanchangeifRochesfuture NESpriceimproves. TherehasbeennochangeinthebaseremunerationoftheBoardofDirectorssince2001.
Pleaseseetherestofthisreportforfulldetails2. Remuneration policy Rochefundamentallyreneweditsremunerationpolicy in2004andrevieweditin2010,reconfirmingthe keyprinciples.Itispartofaframeworkofemployee policiesaimedatmotivatingandretainingcurrent employees,attractingtalentednewonesandhelping allRocheemployeestoperformatconsistently highlevels.Ourremunerationpolicyisdesignedto fostervaluecreationandreinforceacultureof performanceandinnovation,anditappliestononmanagerialemployeesaswellastomanagers. Thekeyprinciplesunderpinningthispolicyare: Focusonvaluecreation Payforperformance Enablingemployeestoshareinthecompanys success Fairnessandtransparencyinremunerationdecisions
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Remuneration Report
Variable remuneration elements (bonuses, S-SARs and PSP) in relation to fixed base pay of the Members of the Corporate Executive Committee
Bonus S-SARs PSP
Individual target value

(in % relation to value of base pay)
max. 100%
100%
33.33% (based on annual base pay measured at 1 January of first year of cycle)
Minimum Maximum
(in % relation to value of base pay)
0% 200% (Cash payment)
0% 150% (Value development determined by performance of NES after grant)
0% 66.66% (Value development determined by performance of NES after grant) Group performance of TSR in relation to TSR performance of peer set (see page 95 to 96)
Performance criteria
Group objectives (Group and divisional business performance) and individual objectives considering profit, sales growth, OPAC (Operating Profit After Capital Charge)
Individual contributions upon the Remuneration Committees decision at its own discretion
Split in % a) Group objectives b) Individual objectives 70% 30% n.a. n.a. 100%
salesgrowth,OPAC(OperatingProfitAfterCapital Charge)performanceandtotheachievementof individualandfunctional,measurableandqualitative performanceobjectives.Forreasonsofcompeti- tivenessRochedoesnotdisclosedetailsofindividual objectivesofthemembersoftheCorporateExec- utiveCommittee.TheRemunerationCommitteeofthe BoardofDirectorshasdefinedtheCorporateEx- ecutiveCommitteemembersbonusesinDecember 2010basedonresultsachievedfor2010. Stock-settled Stock Appreciation Rights (S-SARs) Stock-settledStockAppreciationRightswere introducedon1January2005,thusestablishinga uniformsystemofremunerationthroughoutRoche. S-SARsentitleholderstobenefitfinanciallyfrom anyincreaseinthevalueofRochesnon-votingequity securitiesbetweenthegrantdateandtheexer- cisedate.Awardsareallocatedindividuallyuponthe RemunerationCommitteesdecisionatitsowndiscretion.Detailedinformationisavailableonpage95 andpage98to99.
Performance Share Plan ThemembersoftheCorporateExecutiveCommittee andothermembersofseniormanagement(cur- rentlysome120individualsworldwide)participate inthePerformanceSharePlan(PSP).ThePSP wasestablishedin2002forperiodsofthreeyears eachandisbasedonathree-yearcomparison ofthetotalshareholderreturn(TSR)with17com3 petingcompanies .In2010therewerethreeoverlappingperformancecycles,(PSP20082010, PSP20092011andPSP20102012)ofwhichPSP 20082010closedon31December2010. DetailsforthePSP20082010calculationandaddi- tionalinformationaresetforthinRemuneration ofmembersoftheCorporateExecutiveCommittee, D.PerformanceSharePlan(PSP),page95. Remuneration of the Board of Directors and the Corporate Executive Committee EachyeartheRemunerationCommittee,whichis entirelycomprisedofindependentexternalmembers oftheBoardofDirectors,setsremunerationforthe
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93
membersoftheBoardofDirectorsandtheCorporate ExecutiveCommittee(cashpayments,bonuses, options,Stock-settledStockAppreciationRightsand policydecisionsaboutpensionbenefits).Theterms ofthePerformanceSharePlanaredeterminedannually bytheBoardofDirectors,actinguponrecommen- dationsfromtheRemunerationCommittee.TheRemunerationCommitteecontinuouslytrackssalarytrends inthemarketoftheworldsbiggestpharmaceuticals companies3andreportstotheBoardofDirectors.Informationonthiscommitteesremit,powersandits proceduresformakingremunerationdecisionscanbe foundintheBylawsoftheRocheBoardofDirectors4. Followingtherevisionoftheremunerationpolicy includingmarketcomparisonswiththeworldsmajor pharmaceuticalcompanies3 ,theRemuneration CommitteehasdeterminedthebonusesandremuRemuneration of members of the Board of Directors
Remuneration 2010 (in CHF)
nerationoftheChairmanoftheBoardofDirectors, themembersoftheCorporateExecutiveCommittee takingintoconsiderationpersonnelchanges. Thefollowingpagesprovidedetailedinformationon theremunerationearnedbyeachmemberofthe BoardofDirectorsandbyeachmemberoftheCorporateExecutiveCommitteefor2010. 1 Remuneration 1.1 Remuneration of members of the Board of Directors | In2010themembersoftheBoardof Directors5receivedtheremunerationincashshown
4 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm 5 For a list of members, their positions and their committee memberships and chairmanship, see page 83.
Additional compensation 2010 for committee members/chairs 6 (in CHF)
Additional special compensation 2010
F. B. Humer
(see page 97 7)
50,000
(Remuneration as Chairman of the Board of Directors see page 97 7)
B. Gehrig A. Hoffmann P. Baschera J. I. Bell W. M. Burns L. J. R. de Vink W. Frey D. A. Julius A. D. Levinson A. Oeri W. Ruttenstorfer B. Weder di Mauro
400,000 8 400,000 8 300,000 300,000 250,000 9 300,000 300,000 300,000 250,000 9 300,000 300,000 300,000
30,000 30,000 30,000 30,000 60,000 60,000 30,000 60,000 30,000 60,000
Remuneration of former members of the Board of Directors

Remuneration 2010 (in CHF) Additional compensation 2010 for committee members/chairs 6 (in CHF)
Additional special compensation 2010
P. Brabeck-Letmathe H. Teltschik
50,000 10 50,000 10
See page 94
6 With the exception of members of the Presidium and the Vice-Chairmen, Board members receive CHF 30,000/year for each committee they serve on and CHF 60,000/year for each committee they chair. 7 See G. Highest total remuneration to a member of the Board of Directors, pages 97 and 98. 8 Remuneration for serving as Vice-Chairman of the Board. 9 Prorated remuneration for the period from March to December 2010. 10 Prorated remuneration for the period from January to March 2010.
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Remuneration Report
inthetableRemunerationofmembersoftheBoard ofDirectorsonpage93fortheirBoardactivities. RemunerationofallmembersoftheBoardofDirectorswillagainremainunchangedfor2011. Besidethecashpayments,thenon-executivemembersoftheBoardofDirectorswerenotawardedany shares,non-votingequitysecurities,Stock-settled StockAppreciationRights(S-SARs)11,stockoptions orRestrictedStockUnits(RSUs)in2010. HorstTeltschikreceivedhonorariaamountingto 19,635euros(27,096Swissfrancs)forservingon theboardsofseveralRochesubsidiariesinGermany. WilliamM.Burnsreceivedhonorariaamountingtoa totalof25,000USdollars(26,000Swissfrancs) forservingasamemberoftheBoardofDirectorsof ChugaiPharamaceuticalCo.,Ltd. SincehiselectiontotheBoardofDirectorsofRoche HoldingLtdArthurD.Levinsonreceivedpayments
forhisconsultingworkandforhisBoardmembershipofGenentechamountingto342,367USdollars (356,062Swissfrancs). For2010themembersoftheBoardofDirectors receivedremunerationtotalling14,662,589Swiss francs12(2009:18,608,650Swissfrancs). Noadditionalremunerationwaspaidtomembersof theBoardofDirectors. 1.2 Remuneration of members of the Corporate Executive Committee | Thegeneralprovisions assigningauthorityfordecisionsonCorporateExecutiveCommitteeremunerationtotheRemuneration CommitteeandtotheBoardofDirectorsareoutlined onpages91to93ofthisremunerationreport.
11 See Stock options/Stock-settled Stock Appreciation Rights (S-SARs), page 98. 12 See Remuneration of members of the Board of Directors, page 93.
Remuneration of members of the Corporate Executive Committee A. Base pay | in CHF

Annual salary 2010 Annual salary 2009 Annual salary 2008
S. Schwan S. Ayyoubi E. Hunziker G. A. Keller D. ODay P. Soriot Total
3,750,000 1,100,000 2,000,000 1,500,000 1,000,000 2,000,000

11,350,000
2,875,002 725,004 2,000,000 1,500,000 * 1,246,878
2,283,340 481,670 2,000,000 1,350,000 * *
* Not a member of the Corporate Executive Committee.
DuetoobligationsfromhisformerRocheassignment intheUS,DanielODayreceivedthefollowingpaymentsin2010:Mortgagesubsidy15,000USdollars (15,600Swissfrancs),forfinancial/taxservice 9,796USdollars(10,188Swissfrancs).DanielODay receivedinaddition82,415Swissfrancsforthe schoolingofhischildren. For2010themembersoftheCorporateExecutive Committeereceivedremunerationtotalling 38,759,516Swissfrancs13(2009:54,858,227Swiss francs).
B. Bonus AllmembersoftheCorporateExecutiveCommittee willreceivethebonus2010asacashpaymentdue forpaymentattheendofApril2011. On31December2010theStock-settledStock AppreciationRightsgrantedin2006,2007,2008
13 See Remuneration of members of the Corporate Executive Committee, (A.F. and H.) excluding AHV/IV/ALV, page 94 to 98.
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95
Bonus
Bonus for 2010 Bonus for 2009 Bonus for 2008
Total (in CHF)
Total (in CHF)
Total (in CHF)
S. Schwan S. Ayyoubi E. Hunziker G.A. Keller D. ODay P. Soriot Total
3,000,000 1,000,000 2,000,000 1,000,000 1,300,000 3,312,500 **

11,612,500
4,675,178 1,637,909 3,606,905 1,813,506 * 2,000,000
3,000,000 500,000 2,200,000 1,000,000 * *
* Not a member of the Corporate Executive Committee. ** Including an additional compensation for the successful integration of Genentech amounting to 1,312,500 Swiss francs, paid in 2010.
C. Stock-settled Stock Appreciation Rights (S-SARs)

S-SARs 14 2010 (value in CHF 15) S-SARs 14 2009 (value in CHF 15) S-SARs 14 2008 (value in CHF 15)
3,559,911 1,068,022 1,779,990 1,335,010 890,030 1,779,990

10,412,953
3,559,849 889,993 1,957,935 1,334,989 * 1,401,735
2,225,542 445,146 1,958,480 1,335,313 * *
* Not a member of the Corporate Executive Committee. 14 See Stock options/Stock-settled Stock Appreciation Rights (S-SARs), page 98. 15 Black-Scholes value as described in Stock options/Stock-settled Stock Appreciation Rights (S-SARs), page 98 and 99. Values for 2008 and 2009 according to Annual Report 2009, page 79.
and2009mostofwhichcanbeexercised,follow- ingtheendofthevestingperiodinFebruary2010, hadnovaluefortherecipients.16 MembersoftheCorporateExecutiveCommittee additionallyreceiveannualexpenseallowancesof 30,000Swissfrancs,totalling180,000Swissfrancs. D. Performance Share Plan (PSP) ThemembersoftheCorporateExecutiveCommittee andothermembersofseniormanagement(currently some120individualsworldwide)participateinthe PerformanceSharePlan(PSP). In2006thePSPmovedtooverlappingthree-year performancecycles,withanewcyclebeginning
eachyear.In2010therewerethusthreecyclesin progress(PSP20082010,PSP20092011andPSP 20102012);AsinthepreviousyearforthePSP 20072009,thePSP20082010endedon31December2010withoutanyawardsoftargetedNES. Undertheprovisionsofthisplan,anumberofnonvotingequitysecuritieshavebeenreservedfor theparticipantsineachcycle.Thenumberofse- curitiesactuallyawardedwilldependonwhether andtowhatextentaninvestmentinRochesecurities (sharesandNES)outperformstheaveragereturn
16 See strike prices in table Stock options and S-SARs, page 101.
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Remuneration Report
onaninvestmentinsecuritiesissuedbyapeerset ofcomparatorcompanies17.Comparisonsarebased onthesecuritiesmarketpricesanddividendyields, i.e.onTotalShareholderReturn(TSR).Toreducethe effectofshort-termmarketfluctuations,security pricesareaveragedoverthethreemonths(October toDecember)priortothestartofaperformance cycleandoverthethreemonths(OctobertoDecember)attheendofthecycle.IfRochesecurities performaswellasorbetterthanthoseof75%ofthe peersetand,inaddition,RochesTSRincreases atleast10%duringacycle,theBoardofDirectors canelecttoincreasethemaximumNESaward byasmuchastwo-fold.IntheeventthataninvestmentinRochesecuritiesunderperformsthe averagereturndeliveredbythepeercompanies, fewerornoNESwillbeawarded. In2010NESwerereservedundertheplanformembersoftheCorporateExecutiveCommitteeas showninthetablebelow.TheBoardofDirectorswill decideontheactuallevelofNESorcashequivalent awardsforthecycles20092011and20102012 afterthecloseofthe2011and2012financialyears, respectively.TheaimofthePSPistoprovide anincentivetoparticipantstoachievesteadyvalue growth.
AttheendofthePSP20082010cycle(basedona three-monthmovingaverageatconstantexchange rates)withdistributeddividendstotalling13.454billionSwissfrancs(2008:3.967billionSwissfrancs; 2009:4.312billionSwissfrancs;2010:5.175billion Swissfrancs),theTSRoftheRochesecurities (NESandshares)ranked#15,comparedwithits peersetofcompaniesoperatinginthesamein- dustry.Therefore,accordingtothetermsoftheplan, theparticipantsreceivednoneoftheoriginally targetedNES(seetablebelowfordetails). E. Indirect benefits Employercontributionsmadein2010tosocialsecurityschemes,pensionplansandaGroup-wide employeestockpurchaseplan(RocheConnect)in respectofmembersoftheCorporateExecutive CommitteeareshowninthetableIndirectbenefits in2010onpage97. RocheConnectisavoluntarystockpurchaseplan offeringemployeestheopportunitytobuyRoche non-votingequitysecurities(NES)uptoanamount equalto10%oftheirannualsalaryata20%dis-
17 See footnote 3, page 91.
Performance Share Plan (PSP)

2010 18 Total estimated value of PSP awards (20082010, 20092011 and 20102012) (value in CHF) 2009
Target number of NES for PSP 20102012
Target number of NES for PSP 20092011
No awards of targeted number of NES for PSP 20082010
No NES awarded in 2010 for PSP 20082010 (value in CHF)
No NES awarded in 2009 for PSP 20072009 (value in CHF)
5,991 1,597 3,994 2,995 1,997 3,994

20,568
5,011 1,002 4,009 3,006 904 2,104

16,036
502,425 118,688 365,470 274,046 132,479 278,475

1,671,583
* Not a member of the Corporate Executive Committee. 18 Total estimated value for 2010: PSP 20082010: none of the originally targeted NES awarded. PSP 20092011 and 20102012: Estimated value calculated using the year-end price as of 31 December 2010, CHF 137.00 per non-voting equity security (NES), based on the number of NES originally targeted subject to changes in the number and value of NES awardable under the plan on 31 December 2011 and 31 December 2012, respectively, and spread over the relevant period of time, i.e. for the year 2010. The Board of Directors will vote on the actual allocation of NES originally targeted on 31 December 2011 and 31 December 2012, respectively, according to the TSR achieved.
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97
Indirect benefits in 2010

Pension funds/MGB 19 (in CHF) AHV/IV/ALV 20 (in CHF) Roche Connect (in CHF) Payments for tax consulting services (in CHF)
456,122 986,100 622,401 529,325 304,350 311,505

3,209,803
351,284 137,919 203,889 177,250 56,524 273,067

1,199,933
89,588 3,000 50,004 37,500 7,294

187,386
8,827 6,118 6,225 5,918

27,088
19 MGB: Stiftung der F. Hoffmann-La Roche AG fr Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational pension benefits). 20 AHV/IV/ALV: Swiss social security programmes providing retirement, disability and unemployment benefits.
count.NESpurchasedunderthisplanaresubjectto aholdingperiod,whichisfouryearsinSwitzerland. F. Other remuneration, emoluments and loans In2010pensionsandtwopaymentsfortaxconsultingservicestotalling2,118,892Swissfrancswere paidtofourformerCorporateExecutiveCommittee members. MembersoftheCorporateExecutiveCommitteehave amaximumnoticeperiodoftwelvemonths.Inconnectionwiththenewcompanyandpersonnelstructure,membersoftheCorporateExecutiveCommittee canreceivecompensationamountingtooneannual basepayincaseofterminationofthecontractbythe company(terminationthroughnofaultandnotbased onlackofperformance)untiltheageofsixty.
G. Highest total remuneration to a member of the Board of Directors FranzB.Humerasthechairmanwasthememberof theBoardwiththehighesttotalremunerationfor 2010(seeRemunerationofmembersoftheBoardof Directors,page93).TheChairmansremuneration consistsofbasesalaryandbonusawards.AsChairmanoftheBoardafterthehandoverofhisexecu- tivefunctionasCEOattheAnnualGeneralMeeting on4March2008,hedidnotreceiveanyadditional S-SARsorNESfromnewPSPcyclesandwas nolongerenrolledinanyRochestockoptionplan orS-SARs. AccordingtotheannouncementintheAnnual Report2009,theBoardofDirectorsreducedthe Chairmansbasesalaryin2010to4millionSwiss
Highest total remuneration to a member of the Board of Directors

2010 (in CHF) 2009 21 (in CHF)
Salary Bonus Total Pension funds/MGB 22 Roche Connect Total (value)
4,507,500 2,200,000 6,707,500 2,995,801 75,000

10,033,43123
6,030,000 4,992,018 11,022,018 2,995,109 75,000

14,353,552
21 For detailed calculation of the remuneration as Chairman and CEO for 2009 see Annual Report 2009, page 82. 22 MGB: Stiftung der F. Hoffmann-La Roche AG fr Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational pension benefits). 23 Includes additional compensation for Committee members (CHF 50,000), payments for tax consulting services (CHF 49,130) and Chugai advisory mandate USD 150,000 (CHF 156,000), not including employer contribution to AHV/IV/ALV (CHF 565,871).
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Remuneration Report
Highest total remuneration to a member of the Corporate Executive Committee

2010 (in CHF) 2009 24 (in CHF)
Salary Bonus Total S-SARs (Black-Scholes value 25 at grant minus 11%) Pension funds/MGB 26 Roche Connect Estimated value of targeted (not awarded) NES according to Performance Share Plan 27 (* 20092011, 20102012, no awards/value of NES of 20082010) Total Total (value)
3,750,000 3,000,000 6,750,000 3,559,911 456,122 89,588
2,875,002 4,675,178 7,550,180 3,559,849 456,941 69,790
502,425 *
11,396,87328
408,793 24
12,101,478
24 For detailed information see Annual Report 2009, page 83. 25 Black-Scholes value as described in Stock options/Stock-settled Stock Appreciation Rights (S-SARs), page 98 to 99. 26 MGB: Stiftung der F. Hoffmann-La Roche AG fr Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational pension benefits). 27 Basic rules and detailed calculation see Remuneration of members of the Corporate Executive Committee, D. Performance Share Plan, page 96, footnote 18, respectively. 28 Includes an annual expense allowance (CHF 30,000), payments for tax consulting services (CHF 8,827), excluding employer contribution to AHV/IV/ALV payments.
francs(asof1April2010)anddeterminedatthe endof2009thathistotalremuneration,including bonuses,contributionstopensionfundsandad- ditionalcompensation(expenseallowance)will, dependingontheachievementofobjectives,not exceedthemaximumamountof11millionSwiss francs.Theshareholdersagreedtothismaximum amountwiththeapprovaloftheRemuneration Report2009attheAnnualGeneralMeetingon 2March2010.Theeffectivetotalremuneration was8.8%belowofthedeterminedmaximumand 30.1%lowerthan2009. H. Highest total remuneration to a member of the Corporate Executive Committee SeverinSchwanasCEOwasthememberoftheCorporateExecutiveCommitteewiththehighesttotal remunerationfor2010(seeRemunerationofmembersoftheCorporateExecutiveCommittee,A.F., page94topage97). Noadditionalremunerationwaspaidtocurrentor formermembersoftheCorporateExecutiveCommittee.
1.3 Security holdings | DirectorsAndrHoffmann andAndreasOeriandmembersofthefounders familieswhoarecloselyassociatedwiththembelong toashareholdergroupwithpooledvotingrights. Attheendof2010thisgroupheld80,020,000shares (50.01%ofissuedshares).Detailedinformation aboutthisgroupcanbefoundintheFinanceReport, Note33totheRocheGroupConsolidatedFinancial Statements(Relatedparties,page129)andin theNote4totheFinancialStatementsofRoche HoldingLtd(Significantshareholders,page154).In addition,asof31December2010themembers oftheBoardofDirectorsandpersonscloselyassociatedwiththemandthemembersoftheExecutive Committeeandpersonscloselyassociatedwith themheldsharesandNESasshowninthetableon page100. 1.4 Stock options/Stock-settled Stock Appreciation Rights (S-SARs) | At31December2010Franz B.HumerandWilliamM.Burns(beingtheonly membersoftheBoardofDirectorsholdingoptions andasof1January2005S-SARsduetotheir formerpositions)andthemembersoftheCorporate ExecutiveCommitteeheldoptionsandStock- settledStockAppreciationRights(S-SARs;first
Remuneration Report
99
introducedon1January2005)asshowninthetable StockoptionsandS-SARsonpage101. Alloftheoptionsshowninthetablewereissuedby Rocheasemployeestockoptions.Eachoption entitlestheholdertopurchaseoneRochenon-voting equitysecurity(NES)ataspecifiedstrikeprice atgrant. Underthetermsofthismulti-yearoptionplan, thestrikepriceforoptionsshownwastheclosing priceforRocheNESonthelastdayoftrading priortotheRocheAnnualMediaConference.Allof theoptionsshownarenon-tradable.One-third oftheoptionsaresubjecttoavestingperiodofone year,one-thirdhaveavestingperiodoftwoyears, andone-thirdavestingperiodofthreeyears. Unvestedoptionslapsewithoutcompensation ifemploymentisterminatedvoluntarily(forreasons otherthanretirement),whilevestedoptionsmust beexercisedwithinalimitedperiodoftime.Ifemploy- mentisinvoluntarily(layofforredundancy,job eliminationorreductioninforce)terminated,granted butunvestedoptionsvestimmediatelyandmust beexercisedwithinsixmonthsortheyareforfeited. Thefairvalueoftheoptionsiscalculatedatthe dateofissueusingtheBlack-Scholesformulaandas iftheoptionsweretradable,withan11%deduction fortheaveragetwo-yearvestingperiod. TheS-SARsshowninthetableonpage101were introducedbyRocheon1January2005inplaceof stockoptions.S-SARsentitleholderstobenefit financiallyfromanyincreaseinthevalueofRoches NESbetweenthegrantdateandtheexercisedate. ThestrikepriceforS-SARsunderthetermsofthis multi-yearplanwastheclosingpriceforRocheNES onthefirstdayoftradingaftertheRocheAnnual MediaConference.AllS-SARsvestwithinthreeyears ofthegrantdate:i.e.one-thirdvestattheendof oneyear,one-thirdattheendoftwoyears,andonethirdattheendofthreeyears.VestedS-SARs mustbeexercised(convertedintoNES)withinseven yearsofthegrantdate,andunexercisedS-SARs lapsewithoutcompensation.Thefairvalueofthe optionsiscalculatedatthedateofissueusingthe Black-Scholesformulaandasiftheoptionswere tradable,withan11%deductionfortheaveragetwoyearvestingperiod.
Thestrikeprices,expirydatesandgrantvalues foroptionsandS-SARsareshowninthetableon page101.ThenumbersofoptionsandS-SARs ascalculatedatthetimeofissuehavebeenentered asvaluesinthetableRemunerationofmembers oftheCorporateExecutiveCommittee,C.Stock-settledStockAppreciationRights(S-SARs)onpage95.
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Remuneration Report
Security holdings (at 31 December 2010)

Close relatives security holdings (number/type)
Shares (number)
NES (number)
Others (number)
Board of Directors F. B. Humer 3 197,215 S-SARs see 1.4 2500 ROGTPK Tracker-plus Cert. Zrcher Kantonalbank on Roche Genussschein (ROG) as underlying, Valor 10 716 273, ISIN: CH0107162734 B. Gehrig A. Hoffmann 50 * 150 200 250,000 UBS Long/Short Certificates linked to Roche Bearer Shares/ Roche Non-Voting Equity securities (Valor: 10 690 162, ISIN: CH0106901629) P. Baschera J. I. Bell W. M. Burns L. J. R. de Vink W. Frey D. A. Julius A. D. Levinson A. Oeri 1 300 3 72,500 350 * 1,647 79,254 307,793 1,550 NES Stock options, S-SARs see 1.4 31,600 American Depository Receipts (ADR), RHHBY, US ISIN: US7711951043 250,000 UBS Long/Short Certificate linked to Roche Bearer Shares/ Roche Non-Voting Equity securities (Valor: 10 690 162, ISIN: CH0106901629) W. Ruttenstorfer B. Weder di Mauro Total 1,000 200
74,407

586,259

1,550 NES
Corporate Executive Committee S. Schwan S. Ayyoubi E. Hunziker G. A. Keller D. ODay P. Soriot Total 3 3 3 1,253 3 2
1,267
35,978 12,213 62,458 31,278 220 6,314

148,461
570 NES 70 NES

640 NES
Stock options, S-SARs see 1.4 Stock options, S-SARs see 1.4 Stock options, S-SARs see 1.4 S-SARs see 1.4 S-SARs see 1.4 S-SARs see 1.4
* Shares held by the shareholders group with pooled voting rights not listed.
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101
Stock options and S-SARs

Number of stock options and S-SARs held by current and former members of the Corporate Executive Committee on 31 December 2010 (S-SARs first issued in 2005) 2010 29 2009 29 2008 29 2007 29 2006 29 2005 29 2004 30 Total
Corporate Executive Committee S. Schwan S. Ayyoubi E. Hunziker G. A. Keller D. ODay P. Soriot 154,443 46,335 77,223 57,918 38,613 77,223 175,362 43,842 96,450 43,842 21,762 69,051 105,576 21,117 92,907 63,345 20,133 63,345 29,190 3,243 48,651 24,327 10,269 29,190 15,696 2,517 26,160 15,696 5,856 23,544 + 21,636 Total Former Corporate Executive Committee members F. B. Humer W. M. Burns Strike price (CHF) Market price per NES on 31 December 2010 (CHF) Expiry date Grant value per option and (starting in 2005) per S-SAR in CHF (Black-Scholes value minus 11%)
29 S-SARs. 30 Stock options. 31 As of 2008 Franz B. Humer does not receive any additional S-SARs. Franz B. Humer received stock options and S-SARs as a Member of the Corporate Executive Committee until 2007. 32 As of 2010 Wiliam M. Burns does not receive any additional S-SARs. William M. Burns received stock options and S-SARs as a Member of the Corporate Executive Committee until 2009.
4,983 30 3,957 34,074
1,864 2,360 20,915

487,114 123,371 396,380 205,128 96,633 283,989
451,755
450,309
366,423
144,870
111,105
43,014
25,139
1,592,615
None 31 None 32 175.50 137.00
None 31 109,602 145.40
None 31 105,576 195.80
48,651 48,651 229.60
52,317 26,160 195.00 196.50
42,589 34,074 123.00
129.50
143,557 324,063
4.2.2017 23.05
5.2.2016 20.30
31.1.2015 21.08
8.2.2014 36.59
2.2.2013 2.1.2013 34.02 37.02
3.2.2012 20.89
3.2.2011 31.92
Corporate Responsibility | In
2010 the Dow Jones Sustainability Indexes named Roche Supersector Leader in healthcare for the second consecutive year. Sustainability is at the core of our business practices and this positioning reflects our commitment to running our business in a way that is ethical, responsible and creates long-term value for stakeholders. During the year we made progress on our long-term diversity and energy goals and introduced new programmes to increase access to our products.
Corporate Responsibility
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Corporate responsibility in brief
Wefocusondevelopingnewmedicinesanddiag nosticsthataddressunmetmedicalneedandhelp patientsleadlonger,betterlives.Discovering anddevelopingtheseproductsremainsourgreatest responsibility. Thenatureofourbusinessmeanswealwaysthink longterm.Ittakeseighttotwelveyearstobringour medicinestomarket,sobeingsustainableiscritical foroursuccess,aswellasforourcustomers,sup pliersandpartners.Weaimtobalancetheneedsof individuals,societyandtheenvironmentinourwork, andtobearewardingemployerthatattractstalented people.Ourvaluesofintegrity,courageandpassion guideemployeestodotherightthingintheirwork. Our approach Wefocusonthecorporateresponsibilityissuesthat aremostrelevanttoourstakeholdersandhavethe greatestpotentialtoimpactourbusiness.Wemonitor ourprogressusingkeyperformanceindicators(KPIs) foreachissue.During2010werevisedourKPIsto alignthemwithourstrategicframework,ensurethey supportourlongtermbusinessstrategyandgoals, andfurtherintegrateresponsiblebehaviourthrough outthebusiness. TheupdatedKPIsmeasurethevaluewecreatefor fourmainstakeholdergroups:employees,patients, investorsandsociety.Wereportagainstseveralof theseKPIs,plusadditionalperformancemeasures, throughoutthisAnnualReportandonourwebsite. In2010wewerenamedSupersectorLeaderin healthcareforthesecondyearrunningintheDow JonesSustainabilityIndexes(DJSI),inrecognition ofourcommitmenttosustainablepractices.Weuse thisindexandotheranalysestoevaluateourperfor mance,andtoidentifyareaswherewecanimprove orlearnfromothers. Managing corporate responsibility AtRoche,corporateresponsibilityisanintegralpart ofeveryonesworkandiscoordinatedbyourCor porateSustainabilityCommittee(CSC),asshownin thediagram.TheCSCidentifiesandassessessig nificantsocial,ethicalandenvironmentalrisksand opportunities,anddevelopsandrevisescorporate positionsandguidelinesonrelatedtopics.Itmetfor mallyfourtimesin2010and,inSeptember,hosted
thesixthannualsustainabilityworkshop,attended bysustainabilityexpertsfromaroundtheGroup. Accesstomedicinesanddiagnosticsandthevalue ofourproductsandservicesremainedhighon theagendathisyear,whileaworkinggroupdis cussedournewKPIs. More on the Web

Sustainability principles:
www.roche.com/principles
CSC Charter: www.roche.com/csr_committees KPIs: www.roche.com/sus-kpi.pdf
Roche management of sustainability

Board of Directors
Board Committee
for Corporate Governance and Sustainability
Corporate Sustainability Committee (CSC)

Core Team and Working Team
Key material sustainability topics
A network of more than 150 colleagues from all relevant Corporate and Divisional Functions
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Stakeholder engagement
Weaimtocreatevalueforourstakeholdersthrough themedicalbenefitsourproductsprovide,our dailybusinessactivities,andspecificactivitieswith eachgroup.Weregularlyseekstakeholdersviews whenformulatingbusinessstrategy,settingpriorities includingthoserelatingtoCorporateResponsibil ity(CR),andthroughoutproductdevelopment.We Stakeholder engagement in 2010
Stakeholder group Examples of engagement
believeintwowaydialoguewherebothpartieslearn fromeachother.Thetableshowsexamplesfrom 2010,andthereisfurtherinformationonourwebsite. More on the Web

Stakeholder engagement:
www.roche.com/stakeholder_engagement
Results of engagement
Patients and patient groups
Ran workshops for patient groups in several countries, including France and Germany Reviewed informed consent forms with patient advocacy group, EGAN
Better understanding of patients needs so we can help them manage their disease Consent forms easier for patients to read and understand Improved understanding of customer needs Over 3,000 HCPs participated in American Society of Clinical Oncology virtual conference Development of effective public health policies and regulations, and shared learnings Roche and WADA signed a memorandum of understanding Development of tools to assess costeffectiveness Improved understanding among payers of the value of our products and services Increased awareness and understanding of the strategic framework among the global work force Improved investor understanding of our business model, strategy and late-stage pipeline Minimised supply chain risks Extended supplier audits to business critical service providers (indirect spend) Ensure recognition for our access programmes Launched project with the Chinese Ministry of Health to establish an organ donation system Help to reduce health inequalities Maintain positive relationships with communities Support the next generation of scientists
Healthcare professionals (HCPs) Governments, regulators and industry
Market research and needs assessment among HCPs in US and top five EU countries Virtual conference services for HCPs Participated in industry initiatives on topics such as biosimilars Developed guidelines for misuse of compounds with the World Anti-Doping Agency
Healthcare payers Worked with payers to develop methods to evaluate and compare the effectiveness of medicines Developed a pricing toolkit and computer models in association with payers Employees Group-wide programmes to promote our strategic framework Ran management town hall meetings at major sites Investors Suppliers and business partners Attended over 70 investor meetings and conferences Worked with key suppliers to commit to our new Supplier Code of Conduct Began aligning supplier audit protocols with those of other PSCI members Non-governmental Worked with the Access to Medicines Index organisations on its 2010 ranking Engaged with Amnesty International, Declaration of Bern and others on organ donation in China Communities Donated time, money and expertise to causes such as AIDS orphans in Malawi and clean water in Uganda Contributed to local communities through initiatives such as Roche Genetics Education Programme Media Over 120 corporate press releases and trade news updates
Maintain a positive media image and protect our reputation
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Patients
Excellenceinscienceisfurtheringourunderstanding ofthemechanismsofdisease.Weareusingthis knowledgetodevelopmedicallydifferentiatednew therapiesandhelpimprovepatientsqualityoflife. Furthermore,byfittingtreatmentstopatientsand achievingbetteroutcomes,personalisedhealthcare makesmoreefficientuseofhealthcarebudgets. Wecanincreasethiscontributiontosocietyby:
demonstratingthemedicalandeconomicvalue
ofourproducts helpingtoimproveglobalaccesstohealthcare runningsafeandethicalclinicaltrials ensuringpatientsafety buildingrelationshipswithpatientsgroups listeningandrespondingtocustomersviews.
Ourhealtheconomistsandreimbursementmanagers workwithnationalandlocalhealthauthoritiesto demonstratetheeconomicandhealthbenefitsofour productsandserviceswithineachhealthcaresys tem.Weengagewithpayersandprovidersthrough outaproductslifecycle,andprovideguidanceon howtoassessthevalueofourproductsandservices throughevaluationssuchasHTAs.Inmarketssuch astheUK,wehavedevelopedmodelsthatassessthe costsandclinicalconsequencesofcertainthera piescomparedwithdifferenttreatmentoptions,to helppayersandhealthcareprovidersmakein formedchoices. Weworkwithpayerstoagreepricingarrangements thatsuittheirneeds.Ourapproachconsidersa rangeofoptionsforreachingamutuallyagreeable price,suchasvolumebasedandotherdiscounts, pricecapping,costsharingandpaymentbyresults. Thisworkwasparticularlyimportantformain tainingaccesstoourproductsin2010,whenmany governmentsfocusedonreducinghealthcare budgetsorrestrictingtheirgrowth,tohelpmanage publicfinances. Ourpositionsonpersonalisedhealthcare,assessing thevalueofourproductsandservices,andpricing describeourapproachinmoredetailandareavailable onourwebsite. Global access to healthcare Theprovisionofhealthcareisasharedresponsibility, andlackofaccesstomedicinesanddiagnosticsis oneofmanysystemiccausesofhealthcareinequality. Otherbarriersincludelackofdiseaseawareness, lowlevelsofdiagnosis,andlimitedhealthcareinfra structureandbudgets. Wehaveanimportantroletoplayintacklingthe globalhealthcarechallenge.Weworkwithgovern ments,healthcareproviders,themedia,patient groupsandnongovernmentalorganisations(NGOs) toincreaseaccessandtacklethesewiderproblems. Healthneedsindevelopingcountriesandemerging marketsdifferfromthoseinthedevelopedworld. Wecreatetailoredprogrammestoboostaccesstoour products,plusresearchanddevelopment(R& D ) modelsforthediscoveryofnewproductsforthese regions.Wearecommittedtofindingsustainable
The value of medicines and diagnostics Healthcarepayershavetobalancemedicalneedand clinicalimpactwiththecostofnewmedicinesand theallocationofscarcebudgets.Thishasledtothe developmentofavarietyofmethodsfordetermin ingappropriatecoverageandreimbursementrates byexaminingtheclinical,economic,socialand ethicalimplicationsofamedicaltechnology.These arebroadlytermedHealthTechnologyAssess ments(HTAs).DifferentprovidersusedifferentHTAs, resultinginvaryinghealthcarepriorities,delivery andaccesslevels. Itisessentialthatpayerscanassessourproducts usingobjective,consistentandopenprocesses, whichconsiderthefullcycleofcareaswellasclini calandeconomicvalue,forindividualpatientsand forsociety.Forthisreason,wehaveaglobaldepart mentthatsetsandmaintainspricesforourportfolio, throughouttheproductlifecycle.Italsoensuresour clinicaltrialsassessthecosteffectivenessaswell asefficacy. Whensettingthepriceforanewtestordrug,welook atthemedicalbenefititprovides,andcompareits lifecyclevaluewiththeavailablealternatives.Manyof ourproductshelpreducetreatmenttimesandthe needforsurgeryorpalliativecare,minimisehospital stays,preventdiseasefromreturning,andspeed patientsreturntowork.Theassociatedsavingsare alsotakenintoaccount.Additionally,weconsider localreimbursementmodels,populationsizeand prevalenceofthedisease,andlevelofunmetneed.
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andimpactfulwaystomakealongtermdifferenceto healthcare.Theillustrationshowssomeofourpro grammestoincreaseaccesstohealthcare,andthere arefurtherdetailsonourwebsite. Access for those most in need | TheWorldHealth Organization(WHO)listsmanyofourdrugsas essentialmedicines.Theseandourotherproducts areavailablethroughdoctors,hospitals,laborato riesandpharmaciesinover160countriesmainly inthosewithestablishedhealthcaresystems. However,aroundathirdoftheworldspopulation doesnothaveadequateaccesstohealthcare. Poorercountriessufferthehighestlevelsofdisease andhavetheweakesthealthcaresystems.Manyface acriticalshortageofhealthcareprofessionalsand facilities,aswellaslowlevelsofunderstandingofthe causes,preventionandtreatmentofdisease.We aimtoprovidesustainableaccesstohealthcarein thesecountriesbasedon: Sustainablepatentandpricingpolicies Partnershipswithgovernments,NGOsandothers Education,trainingandknowledgetransfer R& D intodiseaseswithunmetmedicalneeds. Wehavenotfiledorenforcedpatentsforanyofour medicinesintheLeastDevelopedCountries(LDCs) definedbytheUnitedNationssince2001.In2010 weexpandedthispolicytoincludetheLowIncome Countries(LICs)definedbytheWorldBank,cover inganothersixcountries.Inaddition,wedonotfile orenforcepatentsforanyantiretroviralHIVmedi cinesinsubSaharanAfrican(sSA)countries. WesupplytwoHIVmedicinesatnoprofitpricesin theLDCsandsSA,andweprovidethesemedicines atreducedpricesinlowermiddleincomecountries. Valcyte,ourmedicineforAIDSrelatedcytomegalo virusretinitis,isavailableatreducedpricesforNGO ledAIDStreatmentprogrammesintheLDCs,LICs, sSA,andlowermiddleincomecountries. Wefocusondevelopingpartnershipswithgovern mentsandNGOsinthesecountries.Ouraimisto estabishprogrammesthatraiseawareness,train l healthcareproviders,andimproveinfrastructure.This approachincreasesthecapabilitiesofhealthcare systemssotheycanstarttosustainablymeetpatient needs.Thisincreasesaccesstohealthcare,and
new drug leads selected by OneWorld Health to investigate as potential new treatments for childhood diarrhoea
40
47,000
patients received free medicines through the Genentech Access to Care Foundation
1,100,000
infants tested for HIV through the AmpliCare Initiative
19,500
employees participated in the annual Childrens Walk to support care centres and provide educational opportunities for AIDS orphans in Malawi, as well as local community activities
developsnewmarketsforourproductsandservices inthelongerterm. In2010wejoinedforceswiththeInternational AtomicEnergyAgency(IAEA)tolaunchEDUCARE, amajornewprogrammetoimprovecancercare inAfrica.Cancerkillsmorepeopleeachyearindevel opingcountriesthanAIDS,malariaandtuberculo siscombined,yetthereisverylittleoncologyinvest ment.Theprogrammeisestablishinganonline universityofferingcomprehensivetraininginseveral areasofcancermanagement,andanetworkfor doctorstoshareknowledgeandexperiencewiththeir peers.Rocheisprovidingfinancialsupport,con
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11,000,000
treatment courses of anti-influenza medicine Tamiflu donated to WHO for countries most in need, two sublicensing agreements reached and the Tamiflu Reserves Programme established for developing countries
55
312
months employees can go on secondment to contribute their skills and expertise to help make a difference in health services in LDCs
countries where Roche does not file or enforce patents for any of its medicines
83% 13 4
of HIV-infected patients eligible for no-profit or reduced-price Roche medicines
pilot countries selected for online university courses in oncology under the EDUCARE initiative in sSA, in partnership with IAEA
45,000
people reached each year in rural South Africa by the Phelophepa Healthcare train
AIDS technology agreements reached with companies in LDCs and sSA for on-site technical help to manufacture generic versions of Roches HIV medicine saquinavir
450
children supported in sSA in monitoring their diabetes through a partnership with Novo Nordisks Changing Diabetes in Children programme
2,000
orphaned children given primary healthcare plus other services and assistance through Re & Act and support to the UNICEF & ECPP AIDS Orphan programmes
sultationandexpertise.In2010weidentifiedsuitable sitesforpilotprogrammesinGhana,Zambia,Tan zania,andUganda,wherewewillbegintrainingpro grammesin2011. Wealsohaveanumberofprogrammesforincreasing accesstodiagnostictests.WeareapartnerinNovo NordisksChangingDiabetesinChildrenprogramme, alongwiththeWorldDiabetesFoundationandsev eralAfricangovernments.Morethan450childrenin Africawereenrolledintheprogrammebytheend of2010.Theyreceivededucationindiabetescareand accesstoinsulinanddiabetessuppliesprovided byRoche.Wealsohelptotrainhealthcareworkers,
patientsandtheirfamilies.In2010wetookpartin workshopsforhealthcareworkersinCameroon andUganda,andparticipatedintheDiabetesLeader shipForumAfrica2010.Morethan260participants from32subSaharanAfricancountriesattendedthis event,todiscusstheappropriateresponsetothe increasingburdenofdiabetesandothernoncommu nicablediseasesinAfrica. Anumberofourpartnershipsimproveresearchinto neglecteddiseasesofthedevelopingworld.For example,in2010welaunchedaresearchfellowship togetherwiththeWHOsprogrammeforresearch andtrainingintotropicaldiseases(TDR),theGates
108
FoundationandtheInternationalFederationofPhar maceuticalManufacturersandAssociations(IFPMA). Thisfellowshipgivesresearchersfromdeveloping countriesfirsthandexperienceofstateoftheart processesandtechniques,tohelpimprovetheir researchandclinicaldevelopmentexpertise. Rocherankedsixthinthe2010AccesstoMedicines Index,anindependentrankingof20research focusedpharmaceuticalcompaniesbasedon106 indicators.Wearepleasedwiththisscore,partic ularlyastheindexfocusedondiseasesoutsideour areasofspecialty,andsodidnottakeintoaccount ourEDUCAREcancerinitiativeordiagnosticsaccess programmes. Access in emerging markets | Improvinghealth carestandardsinmiddleincomecountriespresent asubstantialmarketopportunityforRoche.The marketresearchagencyIMSestimatesthatby2012, thevalueofemergingmarketswillequalroughly 80%ofUSmarketvalueandexceedthatofWestern Europe.Ouremergingmarketsstrategyfocuses onspeedingupregulatoryapprovalsandsupporting marketdevelopment,primarilyinmajoremerging economiessuchasBrazil,China,IndiaandRussia. Everycountryshealthcaresystemisatadifferent stageofdevelopmentandhasdifferentneeds.We workwithgovernmentsineachcountrytohelp establishappropriatepolicies,processesandpro grammes,suchasdiseaseawareness,localclin icaltrialsandtrainingforhealthcareprofessionals. Wealsodevelopspecificpricingprogrammesfor individualemergingmarkets,wheremanypatients cannotaffordlongtermtreatmentfordiseases
Boosting cancer care in Morocco In Morocco, our partnership with the Lalla Salma Association Against Cancer (ALSC) has helped increase cancer awareness and access to treatment, and led to the launch of the first national cancer plan. This plan includes the construction of new cancer centres, expanded screening programmes, and education and awareness initiatives. We also partner with ALSC to provide access to our cancer treatments for the eight million Moroccans living below the poverty line, who otherwise fall outside the healthcare system. ALSC buys the drugs at a much reduced price, and Roche donates the money received to help strengthen healthcare infrastructure in the country. In 2010 1,300 cancer patients received free treatment as a result of this partnership. Our efforts are paying dividends, as the market for cancer treatments has more than quadrupled in the last five years. At a special ceremony in November 2010, Roche accepted the International Award from Princess Lalla Salma for our efforts.
suchascancer,hepatitisCandrheumatoidarthritis. In2010wenegotiatedcommercialaccesspro grammesinmiddleincomecountriesforourhepatitis drugPegasys,aswellasforourcancerdrugs A vastin,Herceptin,MabTheraandTarceva. Forexample,IndiahasahighhepatitisCinfection rate,coupledwithlowlevelsofdiagnosisandlimited
Impact of our HIV access programmes

HIV-infected patients living in countries eligible for no-profit medicines HIV-infected patients living in countries eligible for reduced-price medicines
68 %
83 %
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accesstotreatment.Counterfeitmedicinespresent furtherchallenges.OurPharmaceuticalsandDiag nosticsDivisionshavesetupscreeningcamps,blood banksanddialysisclinicstohelpovercomethese problems.Wehavealsoengagedsupplychainsecu rityexpertsKezzlertoprovideencryptionsoftware thatenablesconsumerstoverifythattheirmedicine isgenuinewhentheybuyit,usingtheirmobilephone. CostassistanceprogrammesareavailableinIndia basedontherecommendationofthetreatngdoctor. i Asaresultofthesecombinedefforts,thenumber ofpatientsreceivingPegasysandourcancerdrugs hasdramaticallyincreased. Access in the developed world | Evenincountries withadvancedhealthcaresystems,manypeople cannotaffordtreatmentortheinsurancetopayfor it.IntheUnitedStates,Genentechhelpspatients toaccessourmedicines,regardlessoftheirability topay. GenentechAccessSolutionshelpsinsuredpatients navigatethecomplexitiesofhealthinsurance coveragebyexplainingwhattheirpolicycoversand whattheyneedtopayfor,andbyhelpingthem findpaymentsupportprogrammeswherepossible. In2010weassistedmorethan107,000people. TheGenentechAccesstoCareFoundation(GATCF) providesfreemedicinestouninsuredandunderin suredpatientswhomeetcertainfinancialandmedi calcriteria.In2010GATCFprovidedfreemedicines tomorethan47,000patients. Safe and ethical clinical trials Clinicaltrialsareessentialtodemonstratethatnew medicinesaresafeandeffectiveandthatdiagnostic testsprovideusefuldata.Theyalsoprovideimpor tantinformationaboutthecosteffectivenessof atreatmentandhowthisimprovesqualityoflife.In addition,trialsprovideparticipatinghospitalswith educational,financialandmedicalsupport,andgive patientsaccesstothelatesttherapies.Patients receivefreetreatmentduringthetrial,anduntilthe drugisavailablethroughthehealthcaresystemif noapprovedalternativeexists. Wehavestrictpoliciesandprocessestoensurethe safety,wellbeingandlegalrightsofpeopletaking partinclinicaltrials.Inaddition,wedonotperform
trialsincountrieswherewedonotplantomarketthe medicinebeingtested.WeincorporatetheInter nationalConferenceonHarmonisation(ICH)Good ClinicalPractice(GCP)guidelinesintoourclinical trialprogrammes,andtrain,monitorandauditall thoseinvolvedtoensurecompliance.In2010we revisedtheinformationweprovidetopatientstaking partinRochetrialswithhelpfromtheEuropean GeneticAlliancesNetwork(EGAN),tomakeit clearerandeasiertounderstand. Clinical trials
2010 2009 2008
Number of clinical trials Number of healthcare centres involved Number of patients in phase IIV clinical trials
Roche and Genentech.
1,429 30,006 327,804
1,552 31,447 302,063
1,596 29,886 277,674
Peoplecansearchforclinicaltrialstotakepartin orlearnfromtheresultsofcompletedtrialsat www.rochetrials.com.Asof31December2010 thewebsitecontaineddetailsof842protocols and385trialresults.Thesestudiescovermorethan 100conditionsincludingAlzheimersdisease, asthma,around30cancers,cardiovasculardisease, depression,diabetes,hepatitis,HIV/AIDS,influenza andobesity.Thewebsitehad194,241visitorsin 2010.Detailsofourclinicaltrialsarealsoavailable throughtheInternationalFederationofPharma ceuticalManufacturersandAssociations(IFPMA) clinicaltrialsportal,andtheUSNationalInstitutes ofHealthsglobalregistry. Westorebiologicalmaterialusedinclinicaltrials, suchastissue,organs,bloodandotherbodilyfluids, inhumanspecimenrepositories,orbiobanks. Thismaterialisinvaluableforlearningmoreabout diseasesandexploringpossibletreatments. Theyalsocontainsensitiveinformationaboutthe personprovidingthesample.Wearededicated toprotectingdonorsprivacyandensuringtheyare fullyinformedabouthowtheirsampleanddata willbeusedbeforetheyagreetotakepartinatrial. Weapplyequallystrictmeasurestoallpersonaldata aboutcustomers,suppliersandemployees,inline withourdirectiveontheprotectionofpersonaldata.
Can I handle
Disease area Indication Trial No. of patients No. of study sites No. of countries
Oncology First-line metastatic colorectal cancer AVEX (Avastin in the Elderly with Xeloda), MO19286 280 fully recruited 54 10
Daisy D., St. Michaels Hospital, Oncology Clinical Research Group, Toronto
this ?
Jane A., Senior InternationalClinical Trial Manager, Roche Basel
Phase IV clinical trials with Avastin in advanced colorectal cancer
Creating value for patients means doing post-approval trials so an effective medicine can benefit an even wider population
Increasing the number of patients who can benefit from Avastin
ML18147 (TML) ML20907 (CAIRO3) ML21768 (AIO0207)
2012 * 2013 * 2013 *
820 780 760
Duration of treatment
ML19033 (NordicACT) MO18420 (DREAM)
2012 * 2013 * 2014 *
249 640 450
New chemotherapy combinations Avastin
ML21662 (TRIBE)
MO19286 (AVEX) MO18725 (OLIVIA)
2012 * 2014 *
280 80
Special populations
* First results expected
Number of patients in trial
Nearly a million patients have been treated with Avastin since it was first launched in 2004, and this breakthrough cancer medicine is being developed further in an extensive clinical trial programme. Cancer treatment is constantly evolving as oncologists try new drug combinations. Phase IV clinical trials, conducted after a medicine has entered the market, can generate valuable new insights, even for a drug as thoroughly studied as Avastin. Phase IV trials provide important additional information on safety and efficacy in the real-life setting of routine oncology practice, and on the use of Avastin in special populations, such as the elderly. Many phase IV trials are further evaluating Avastin in patients with metastatic colorectal cancer. Some are designed to determine the optimal duration of treatment, while others are investigating new combinations of Avastin with other medicines.
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Organ transplantation | In2010anNGOraised concernsthatorgansusedintwoRocheclinicaltrials inChinamayhavebeenharvestedwithoutconsent, andpossiblyfromexecutedprisoners.Thetrialsinto theuseoftheimmunosuppressantCellCeptin organtransplantsinvolve298patientsat16accred itedtransplantcentres,andarebeingcarriedout toestablishwhetherthestandardCellCeptdosewill safelyandeffectivelypreventorganrejectionin peopleofChineseorigin. ForclinicaltrialsinChinawefollowthesamescien tific,medicalandethicalstandardsasinallother countries.Wesupportaworldwidebanonanyuseof organsfromexecutedprisoners,aswellasonthe deathpenalty.However,asinmanycountries,Chi neselegislationpreventspharmaceuticalcompanies fromdeterminingtheoriginoftransplantorgans. Wewillcompletethetwotrialsbuthavenoplansto carryoutfurthertransplantationtrialsinChinaat thisstage.Anyfuturetrialswillcontinuetoadhereto theDeclarationofIstanbulonOrganTraffickingand TransplantTourismandtheWHOGuidingPrinciples onHumanCell,TissueandOrganTransplantation. WecontributedtochangesinChineselegislationin 2007.Asaresultofthesechanges,thenumberof transplantsfromlivingdonorshasincreased.Efforts tointroduceasystemforpeopleinChinatosign theirconsenttodonateanorganarealsohavinga positiveeffect.Westronglybelievethatorgando nationbyfreelyconsentingdonorsisthemosteffec tivewaytocontributetoanethicalandsustainable solutioninthisareaofmedicalpractice.Wewelcome allsupportinthisarea,toimprovethesituationfor patientsinneedoforgans. Patient safety Anymedicinemaycausesideeffectsinsome patients.Ourpriorityistomakesurethebenefits o utweightherisks.Wehaverobustprocessesin allcountriestomonitorhowpatientsreacttoour m edicines.Weregularlyanalysemedicinesagainst variousreferencedatabasestohelpusspotpoten tialsafetyrisks.Allproductsinclinicaldevelopment haveasafetymanagementplan,andallmarketed medicineshaveariskmanagementplanreviewed andapprovedbymajorhealthauthorities.
Weinvestigateallreportedsideeffectstofindout whetherourproductcausedthem.Ifthereisalink, wereevaluatewhetherthebenefitsofthemedicine orteststilloutweightherisks.Wealsohaveproce duresinplacetopromptlyinformpatients,physicians, healthcareprovidersandregulatorsofanynewprod uctsafetyinformation.Weupdateproductlabelling andinformationwithnewsafetyinformationas requiredand,whennecessary,writetohealthcare providerswithupdatedadviceontheuseofour products. Wehaveastrictproductrecallprocesstoensurewe canwithdrawproductsrapidlyontherareoccasions thatqualityproblemsdoarise.In2010therewereno recallsinvolvingthepublic. Patient advocacy Transparencyisessentialwhenpharmaceuticalcom paniespartnerwithpatientadvocates.Wedeclare ourpatientgrouppartnershipsonourwebsite,along withashortdescriptionofthepartnershipsactivi ties.Wealsodeclaresignificantormeaningfulnon financialsupport,asguidedbytheEuropeanFed erationofPharmaceuticalIndustriesandAssociations (EFPIA).Ourpositionstatementandguidelinesfor workingwithpatientgroupsdescribeourapproach andareavailableonourwebsite.
Patient groups are important partners for Roche. They give us insight into the challenges facing patients and their families, and share our interest in helping patients to understand and manage their condition.
Examplesofourpatientadvocacyin2010include runningworkshopsinFrankfurt,Germany,andBrus sels,Belgium,tohelppatientgroupsimprovethe supporttheyprovidepeoplelivingwithdisease.In
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France,theRocheFoundationorganisedaChronic DiseaseMeetinginMay2010.Thisevent,whichwill nowbeheldannually,broughttogetheralmost 300patients,patientrepresentativesandhealthcare professionalstodiscusswaystoimprovequalityof lifeforpatientswithchronicdisease.TheFoundation alsolaunchedanewpatienttestimonywebsite, www.lavoixdespatients.fr,whichpublishespatient experiencesandsharesthemthroughlinksto socialnetworkssuchasFacebookandTwitter. Patient education and awareness Ourresponsibilitiesdonotstoponcewehavesup pliedaproduct.Wealsohelphealthcareprofessionals andpatientstofullyunderstandtheirdiseaseand treatmentoptions,howtouseourproductscorrectly, andanyotherservicesavailableforimprovingout comes. ExamplesincludetheAccuChekConnectwebsite andcoachingprogrammes,whichhelpdiabetic patientstolinktheirbehaviourtotheircondition.We alsoprovidesupportservicesforourcancermedi cines,includingcallsfromtrainedoncologynursesto helppatientsmanagetheirtherapy,treatmentdiaries torecordandlearnfromtheirexperiences,patient treatmentcalendarsandappointmentreminders. OurBagofHopeprogrammepartnerswiththe JuvenileDiabetesResearchFoundation(JDRF)to distributebagscontaininginformationanddia betessuppliestonewlydiagnosedtype1diabetics. Todate,thisprojecthashelpednearly100,000 patientstoadjusttolifewiththeircondition.In2010 RochereceivedJDRFsChancellorsAwardfor thiswork. Inaddition,wehelphealthcareprofessionalsand patientgroupstoproducenewslettersandmagazines, informationpacks,guidesforfriends,familyand caregivers.Wealsosupplyneedleboxes,counselling hotlinesandeducationprogrammes.Forexample, wehavepartneredwiththeEuropeanGeneticsAlli ancesNetworktoproduceaseriesofsimpleleaflets inseverallanguages,whichanswerpatientsques tionsontopicssuchasclinicaltrialsandbiobanks. Theseareavailableatwww.biomedinvo4all.com. In2010weaddedleafletsonPersonalisedHealth careandtheSocialandPsychologicalAspects ofDiagnosticTesting.
Chugaialsosupportseffortstoraisediseaseaware ness.InJune2010thecompanyheldaneventto promotetheimportanceofearlydetectionandtreat mentofrheumatoidarthritis,whichaffectsaround 700,000peopleinJapan.Awarenessdaysineight Japanesecitiesbroughtattentiontotheimpor tanceofdetectingcoloncancerearly.Forthesecond yearrunning,thecampaignusedagiantinflatable colonwithinformationpostedonthewalls,forvisitors towalkthroughandlearnhowtohelpprevent coloncancerduringdailylife.InDecemberChugai sponsoredaneventrunbythecancercharity MedicineandHumour,whichhelpspatientsand theirfamiliestomanagethedisease. More on the Web
Personalised healthcare: www.roche.com/phc_in_r_d Roche position statements on PHC, access to medicines and
diagnostics, pricing, neglected diseases, and working with patient groups: www.roche.com/policies_guidelines_and_positions Access to medicines report: www.roche.com/ access_to_healthcare Programmes in LDCs: www.roche.com/ programmes_in_least_developed_and_developed_countries Programmes in developed countries: www.GenentechAccessSolutions.com Roche trials and patient safety: www.roche-trials.com; www.roche.com/clinical_trials; www.roche.com/managing_medication_safety List of patient groups supported: www.roche.com/patient-groups Accu-Chek Connect: www.accu-chekconnect.com International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) clinical trials portal: www.ifpma.org/clinicaltrials US National Institutes of Healths global registry: www.clinicaltrials.gov
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People
Ourpursuitofexcellenceinscienceprovidesdirec tionandpurposeduringchallengingeconomictimes. Morethanever,werelyonourpeopletodevelop anddeliverinnovativeproductstopatientsandthere bycontributetothefutureofhealthcare. Itisthecommitmentofour80,653employees,and theirdemonstrationofourvaluesofintegrity,courage andpassion,thatmakearealdifferenceinthelives ofpatients. Asacompanydedicatedtoinnovationandscience, ahighlyskilled,passionateandmotivatedworkforce isatthecoreofwhoweareandwhatwedo.We wanttobeatrulygreatplacetoworkfortodaysmost talentedpeople,bygivingthemthechancetomake theirmark,providinganenvironmentwheretheycan growandrecognisingthemfortheirachievements.
Aschangingdemographicsandtalentshortagescon tinuetoimpactthelabourmarket,competitionfor highlyskilledandexperiencedemployeesremainsan ongoingchallenge.Weareconstantlysteppingup ourpracticestosourceandattractthebesttalentin thehealthcareindustry. Personalandprofessionaldevelopmentisveryimpor tanttoouremployeesandapriorityinaninnovation drivencompanylikeours.Thisremainsthecasedur ingthesignificantorganisationalchangescurrently underway.Westriveforourpeopletoreachtheirfull potentialandsupportthemateverystage. Webelieveinrewardingachievementandcommit mentwithfairandattractivecompensation.This approachcontributessignificantlytoattracting,reward ing,recognisingandretainingtheright eople. p
Selected external awards and recognitions (with top rankings)

Rank 2010 Award Roche site
1 1 1 1 3 4 4 4
Science Magazines Top Employer Survey Universum The Swiss Professional Survey 2010 Health/medicine sector CRF Institute Top employer for engineers CRF Institute Top employer for Switzerland San Francisco Business Times Best Places to Work in the Bay Area Fast Company Magazines Worlds Most Innovative Companies 2010 San Diegos Best Places to Work Great Places to Work Denmark Best Pharma Company/Best Multinational Company/ Best medical company
Genentech Roche Basel Roche Germany Roche Switzerland Genentech Genentech Genentech Roche Denmark
5 7 8 8 9 9
Science Magazine Top Employers Survey Fortunes 100 Best Companies to Work For Large Companies Great Places to Work Austria Best Employers with 50250 Employees Great Places to Work Spain Best Workplaces 2010 JRA Best Workplaces New Zealand Small to Medium Sized Business Category Great Places to Work Urugay 1 st place amongst pharmaceutical companies
Roche Basel Genentech Roche Vienna Roche Madrid Roche Auckland Roche Urugay
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Peoplefromdiversebackgroundsbringarange ofperspectivestotheirwork,helpingtodriveinno vation.Thisiswhywevaluetheexperienceofall employeesandfosteraninclusiveworkingenviron mentinwhicheveryonefeelsrespectedregardless ofage,backgroundorgender,wheretheycan developtheircareersandseethepositiveimpact oftheirwork. Thewayweimplementtheorganisationalchanges takingplaceaspartofourrecentlyannounced OperationalExcellenceprogrammewilltestourcom mitmenttoremainingagreatplacetowork. Being a great place to work Rochewasrecognisedasanattractiveemployerby anumberofawardsin2010.Forexample,Genentech
hasbeennamedbestemployerinthehealthcare industrybySciencemagazineforeightofthelastnine years,andin2010Rocherosefrom17thto5thplace inthesamesurvey.Surveyparticipantsgaveboth companieshighratingsforbeinginnovativeleaders inthehealthcareindustryandfordoingimportant, highqualityresearch.Activitiesinthefieldofsocial responsibilitywerealsoratedhighlyandcontrib utedtothepositiveresults.Rochewasalsorecog nisedinrankingsbyUniversum,TopEmployer,and theGreatPlacetoWorkInstitute . Championing diversity In2010RochesExecutiveCommitteecommittedto increasingthepercentageoffemaleleadersinkey positionsby50%by2014.Keypositionsaredefined asthoserolesthatarecriticaltobusinessdelivery, drivesignificantvalue,andhavethegreatestbreadth anddepthofresponsibility.Keypositionsareclosely linkedtoorganisationalstructure.Wewilltherefore reviseourcurrentlistofaround400positionsto reflecttherecentchangesthathavetakenplace. Giventhecommitmenttoincreasefemaleleaders inkeypositions,wehavereplacedourpreviously reportedwomeninseniorleadershipmetric(based onapproximately2,000positions),withtheper centageofwomeninkeypositions.Thebaselinefor thisnewmetricwas13%womeninkeypositions inDecember2009.Wearealreadyseeingapositive impactfromthevariousactionstakentosupport womeninleadership,withanincreaseofwomenin keypositionsto16%inDecember2010. Gender diversity
2010 2009 2008
Programmes to ensure diversity in the workforce
Global and local leadership programmes todevelopinclusive leadershipbehavioursandfostera cultureofdiversity
Sponsored employee affinity groups, associations and networks toprovidesupport,exchange ofideasandsharelearnings
Programmes to improve understanding oftheneedsofemployees withdisabilitiesandtoincrease numberofhires
Mobility programmes topromote internationaltransferofemployees acrosstheglobe
Women in total workforce Women in management Women in top 120 executives Women in key positions 16% 13% NA 46% 37% 15% 46% 37% 9% 46% 37% 8%
Attraction and sourcing processes and standards toensure diversityofcandidatepools
Programmes focusing on older employees whichvaluetheir expierienceandretainknowledge
Genderisonlyoneelementofourcommitmentto diversity,andwedonottoleratediscriminationofany form,asstatedinourglobalEmploymentPolicy. Ourapproachistoembeddiversityinallourmain processesandobjectives.OurHumanResources
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functionhasmeasuresandgoalsinallkeyprocesses relatingtorecruiting,developing,promotingand recognisingemployees,tosupportadiversework forceandinclusiveenvironment.Inthecontextof ourdiversitygoal,wehaveextendedourrangeof programmesandinitiativestoencourageandsafe guardemployeediversity,andsupportanumberof employeeassociationsandnetworks.Theseinclude RocheBaselsFamilyandCareersandWomenin Leadershipgroups,GenentechWomenProfession als(GWP)andGenentechOut& E qual(GO&E), StrengtheningTiesAcrossGenerationsSeniors (STAGES),andAfricanAmericansinBiotechnology (AAIB). Fostering innovation Innovationisthecoreofourbusiness,andisdriven bydiverseapproaches,ideasandexperiences.Our talentmanagementprocessesarealldesignedto recogniseanddriveinnovation.Inadditionwecon ductabroadarrayofspecificandlocalisedactivi ties.OurPharmaResearchandEarlyDevelopment researchorganisationintroducedascientificcareer ladderin2010andsponsoredamajorrecognition programme,theLeoSternbachAwardsforInnovation inChemistry.Thisyear,theawardrecognised DrBradGravesandhisteamfornewclassesofcom poundsintheareaofcancertreatment.Research organisationsatbothRocheandGenentechpartici pateininternalandexternalscienceconferences andwritepublicationsinprestigejournals.In2010 Rochepublishedmorethan1,200sientificarticles, ofwhichnearly60wereinhighimpactjournalssuch asNature,Cell,ScienceandtheNew England Journal of Medicine.OurPostdocfellowshipprogramme awardsgrantstoourbestscientists,enablingthem toconductexploratoryresearch,andstrengthening ourR& D talentpipeline.SeveralGenentechscien tistsreceivedprestigiousexternalscienceawardsin 2010,amongthemDrRichardScheller,whoreceived theKavliPrizeinNeuroscience,andDrNapoleone Ferrara,whowontheLaskerDeBakeyClinicalMedi calResearchAward. Attracting employees | Toattracttalent,we continuetoleverageourstronganddifferentiating employerbrandthroughcareerswebsitesin91 countries.Thesesiteshadapproximately1.7million visitorsin2010.Inaddition,theGenentechcareer websitehad1.2millionvisits.Wereceived266,110
applications* forspecificjobs,andregistered 167,800newcandidates* totheRocheGroupTalent Pooladatabaseofjobseekersinterestedin becomingRocheemployees. Advertisingrolesinternallyalsooffersgreaterop portunitiesforRocheemployees,asbyjoiningthe RocheTalentPooltheyarenotifiedbyemailas soonaswepostapositionmatchingtheirprefer encesandskills. Weregularlyconductaglobalsurveytogaugethe effectivenessofourrecruitmentservicesandtrain ourrecruitersworldwideonthelatestmethodsand strategies.Throughouttheyear,asmallgroupof ourrecruitmentspecialistsattendedbusinesscon ferencesandeventsattopinternationalbusiness schoolstogiveprospectiveemployeesthechanceto learnmoreaboutourcompanyandforustoadd targetedtalenttoourpipelineforthefuture.These andmanyotherinitiatives,combinedwiththework ofourprofessionalrecruitmentteamsaroundthe globe,ensureourpoolofdiverseandtalentedcandi datescontinuestogrow. In2010Rochescoredamongstthetopcompanies ontalentattractionandretentionintheDowJones SustainabilityIndexes. TheTalentSelectionSurveyshowsa10pointin creaseinthepercentageofRocherecruitment managerswhobelievetheirnewhireperformswell comparedwiththeirpeers.Thisplacesusabove thebenchmarkinthisexternalsurveyofover75mul tinationalcorporations,andsuggeststhatweare successfullyattractingtoptalent. Developing employees | In2010weenhancedour supportforemployeestodevelopfunctional,profes sionalandleadershipskills.Thisyear71%ofour employeestookpartincareerdevelopmentplanning discussions.Inaddition,weworkwithemployees individuallytoguidetheirdevelopmentaccordingto theirneeds,interestsandspecialities.Consistent globaltrainingmaterialsnowreflectourdevelopment philosophy,whichisbasedonemployeeengage ment,individualgrowthandorganisationalsuccess.
* Excluding Genentech, Ventana and Chugai.
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Ourleadershipdevelopmentprogrammesinstilwhat itmeanstobealeaderatRoche,andequipmanagers toliveuptotheseexpectations.Toincreasethecon sistencyoftheseprogrammesworldwide,in2010we createdaglobalframeworkforleadershipdevelop menttobeimplementedinphasesby2013.Thiseffort willbesupportedbythecontinuingrolloutofaglob alLearningManagementSystem,andwillprovide easieraccesstolearninganddevelopmentsupport. Ourbusinessisbecomingincreasinglyglobal,and thisyearweintroducedapartnershipwithGlobal English,aservicethatprovidesonlinebusinessEng lishtraining.Theondemandservicegivesemployees accesstofast,costeffectiveandintensivelanguage courses.Todate,over1,200employeesfrom38coun trieshaveusedtheservice. OurDiagnosticsandEuropeanPharmaceuticalsaffili atesofferednearly38,300coursesin2010through ourcommontrainingmodel,whetheronlineorclass roombasedtrainingsessions,withalmost45,800 employeestakingpart. Learning and development
2010 2009 2008
Leadership pipeline
2010
Number of high-potential leaders Percentage of women high-potential leaders Percentage of women in leadership programmes Internal staffing rate of key positions (Top 120)
4,681 38% 32% 85%
Wecompletedoursuiteofgloballeadershippro grammeswiththeintroductionofamoduleforglobal employeeswithhighpotentialinthelongerterm. Globalprogrammesarenowavailableforhighpoten tialleadersatallcareerstages.Wehavealso enhancedoursuiteofprogrammesbyupdatingcon tenttofocusoninclusivebehaviourandcultural awareness,aswellastobuildgreatercollaboration andunderstandingacrossdivisions,regionsand functions.Finally,wehaveimprovedthewaywe selectparticipants,setlearninggoalsandmeasure theeffectivenessoftheprogrammes. Ourleadershipdevelopmentprogrammeprovedsuc cessfulwhenseveraloutstandinginternalleaders steppedintocriticalrolesduringtheorganisational changesthattookplacethisyear.Theinternalfill rateforallpositionsis45%,and85%forthetop120 executivepositions. In2010theDowJonesSustainabilityIndexesrated RocheasthebestcompanyintheHealthcaresector forhumancapitaldevelopment,contributingtoour positionashealthcaresupersectorleader. International mobility | Weconsiderinternational experiencetobeanimportantaspectinthepro fessionaldevelopmentoffutureleaders.In2010we sawamarkedincreaseinthenumberofnewinter nationalassignments,from247in2009to364in 2010.ThiswaspartlyduetotheGenentechintegra tionandresultingexchangeoftalentedemployees betweenCaliforniaandotherpartsoftheworld.Our 626expatriatesandcrossboundaryemployeesrep resent55differentnationalities,and27%arewomen. Movingabroadcanbestressful,sowetrytomake theexperienceassmoothaspossible.InApril2010 welaunchedrevisedinternationalassignment
Total training investment (million CHF) Training spend per employee (CHF) Total number of training hours (million) Average training hours per employee Number of postdocs, students and interns *
* Excluding Chugai.
150 1,829 1.87 23 780
146 1,794 2.16 26 656
139 1,734 2.4 29 565
Developing tomorrows leaders | In2010wecon tinuedourprogressinidentifyinganddeveloping highpotentialleaderscapableoftakingoncritical seniorrolesintheshort,mediumandlongterm.
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policies,offeringadditionalflexibilitytoassignees. Wenowalsoofferachildcareallowanceandin creasedspousalsupport.Inaddition,weintroduced astandardhealthcareprogrammeforglobalassign ees,whichhascomeintoeffecton1January2011. Thisprogrammeofferscompetitivehealthinsurance toassigneesandtheirfamiliesthroughaleading specialistprovider. Rewarding and recognising employees Performance management | In2010,92%ofour employeestookpartinperformancemanagement d iscussionswiththeirmanagerstoreachashared understandingoftheirperformanceobjectivesand achievementsthroughtheyearanddeterminecom pensation. Asthemobilityofouremployeesincreasesandmany leadersmanageorganisationsacrosscountrybor ders,weareworkingtoalignourperformanceman agementprinciplesgloballyin2011and2012.The newcommonapproachwillputgreateremphasison anongoingdialoguebetweenemployeesandman agers.Webelievethiscontinuoustwowayfeedback processwillcontributetotimelyinputaboutideas forimprovement,betteremployeedevelopmentand ultimatelymaximisescientificinnovationandbusi nessresults. Compensation | Ourtotalremunerationinvestment in2010amountedtoapproximately11.9billionSwiss francs. Ourbasepaypackagesrewardperformanceand commitment,whileourbonusschemesincentivise employeesforinnovationandoutstandingresults thatsupportourstrategicobjectives.Bonusesreflect bothindividualandteamachievements,aswellas overallbusinessperformance. Wewantemployeestoshareinoursuccess.Through RocheConnect,employeesinmostcountriescan purchasenonvotingequitysecuritiesatadiscount ofupto20%.In2010,16,824employeesin42coun triestookpartinthisprogramme.Thisrepresents approximately37%ofeligibleemployees,andsecuri tiesworth61millionSwissfrancswerepurchased in2010.Additionally,15,410managersandemployees receivednonvotingequitysecuritiesthroughthe RocheLongTermPlan.
During2011and2012,ourgoalistorolloutourglob allyalignedcompensationstrategy,supportedby thenewGlobalPerformanceManagementprinciples. Thenewcommonapproachwillensureourcompany remainscompetitiveandsustainable,andcontinues tocreatevalueforallstakeholders.Bymaintaininga stronglinkbetweenperformanceandcompensation, wewillpreserveemployeesopportunitytosharein oursuccess. Benefits | Benefitsareanimportantpartofthe totalrewardpackageweofferouremployees.Most programmesaretailoredtolocalmarketsandregu lations,buttypicalexamplesincludefinancialsupport foremployeesandtheirdependentsuponretirement andincaseofillness,disabilityordeath.Thesebene fitsusuallysupplementlocalstatesystems.Wealso offerwellnessprogrammesthatencourageahealthy lifestyle,andbenefitsthatsupportemployeeswork/ lifebalance.Over91%ofaffiliatesofferextensiveben efitsplans.Mostgobeyondstateschemes,and includefreeaccesstoawiderangeofmedicalser vices. In2010weworkedtomakeaffiliatesbenefitpro grammesconsistentwithincountries.Thiswillensure employeesaretreatedequallyandimproveefficien cybyconsolidatingvendors.IntheUnitedStates, ourcombinedworkforceof24,000employeeswillall enjoythesameattractiveandcompetitivebenefit programmesfrom1January2011.IntheUnitedKing dom,wehaveextendedourflexiblebenefitspro grammetocoverallPharmaceuticalsandDiagnostics employeesfrom1April2011. Inaddition,wehaveintroducedaglobalassistance programmetosupportemployeesandtheirfamilies whiletravellingabroad.Thiswillprovideaccess tomedicalandsecurityinformationandemergency assistancefrom1January2011. During2010,wecontinuedtocloselymonitorthe statusofourmajorpensionfunds.Alongsidesome cashinjections,weinitiatedchangesinseveral localpensionplans.Someofourmajorpensionfunds removedearlyretirementincentivesandhaveintro ducedmoreflexibleretirementmodelsinanticipation ofanageingworkforce.
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Aligning human resources processes Overthecourseof2011,GenentechandourNorth Americanpharmaceuticaloperationswillbeincorpo ratedintoourCommonHRInformationSolution (CHRIS).CHRISenablesgloballyalignedprocesses thathavebeenadjustedtoreflectthebestprac ticesofbothGenentechandtherestoftheRoche Group.Currently,CHRIScovers181affiliatesand representativeofficesand77%ofRocheemployees. Human rights and labour relations TheRocheEmploymentPolicygovernshumanrights andlabourrelations.TheChiefComplianceOfficer monitorsimplementationandcompliancewiththis policyandservesasacontactforallemployees. Werespecttherightofemployeestofreedomofas sociationandcollectivebargaining.Morethan7,030 ofouremployeesaretradeunionmembersand over32,110aremembersoforganisationsthatfreely representthem(incountrieswherethisislegal). TheRocheEuropeForumrepresentstheinterestsof almost35,800employeesin26countries. Ourdirectiveontheprotectionofpersonaldata ensuresthatwesafeguardemployeeinformationand complywithrelevantlocallegislation. AdedicatedEmployeeRelationsOfficermonitorsthe levelofemployeeengagementandensuresthat appropriateprogrammesandpoliciesareinplaceto ensurefair,transparentandrespectfultreatment ofemployees,includingduringtheimplementation ofourOperationalExcellenceprogramme.We willmanagethisprogrammecarefully,keepingem ployeeswellinformedthroughout,supporting themthroughthechangesandensuringthoseleav ingthecompanyaretreatedwithfairness,dignity, andinasociallyresponsibleway.Ourlocallydefined severancepackagestypicallyincludearangeof measurestoreflectthedifferentneedsofthoseaf fected.Measuresincludeseverancepaywith optionstoconverttotime,outplacementservices, counselling,careersfairsandcentres,retraining andredeploymentoptions,aswellasanincreased focusoninternalrecruitmentandopportunities.
More on the Web:

Employees: www.roche.com/employees Group policies, positions and guidelines:
www.roche.com/policies_guidelines_and_positions
Global careers portal: http://careers.roche.com Employment policy: www.roche.com/employment_policy.pdf Core standards: www.roche.com/commitments
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Key figures
Our employees Rocheemploys80,653peoplein108countries, clusteredinfivemainregions.Ourworkforce representsmorethan131nationalities,with24% ofemployeesworkinginR& D .
Employees (FTE) by function

2010 2009 2008
Servicing Manufacturing & Logistics Marketing & Distribution Research &
15,160 14,770 27,536 19,039 4,148

80,653
13,408 16,395 28,682 18,894 4,128

81,507
12,292 15,381 28,426 18,518 5,463

80,080
Roche employees worldwide (Full-Time Equivalents/FTE)

2010 2009 2008
Development General & Administration Total
Europe North America Asia Latin America Australia Africa Total
35,811 23,695 14,964 4,633 858 692 80,653
35,310 25,412 14,169 4,930 891 795 81,507
34,570 25,823 13,065 4,988 887 747 80,080 New hires Internal staffing rate External staffing rate
2010 2009 2008
Staffing rates
8,279 45% 55%
8,192 29% 71%
9,169 35% 65%
Employees (FTE) by operating divisions

2010 2009 2008
Pharma 1 Chugai Diagnostics Other Total

1 2
46,335 6,852 26,194 1,272

80,653
48,181 2 6,632 25,508 2 1,186 2

81,507
47,551 6,590 25,404 535

80,080
Retaining employees In2010staffturnoverincreasedfrom7%to9.5%. Driveroftheincreaseisthefirstwaveofemployer relatedterminationsaspartofOperationalExcel lenceinAustralia,LatinAmericaandNorthAmerica.
Including Genentech. 2009 restated to reflect consolidation of Finance and IT into Other.
Turnover *
2010 2009 2008
Total
9.5% 5.7% 12.3% 10.0% 19.3% 20.2% 16.8%
7.0% 5.1% 7.8% 7.2% 13.4% 10.9% 18.3%
9.9% 9.5% 10.4% 8.1% 14.3% 15.1% 11.1%
Employees by contract types

2010 2009 2008
Europe North America Asia Latin America Australia Africa
Regular (FTE) Fixed Term (FTE) Full Time (headcount) Part Time (headcount)
78,537 2,116 76,767 4,845
79,632 1,876 77,866 4,562
78,216 2,184 76,058 4,342
* Regular and temporary employees under Roche contract.
Reasons for leaving

2010 2009 2008
Employee-initiated Employer-initiated Neutral
46% 44% 10%
51% 40% 9%
56% 24% 20%
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Society
Ourresponsibilityextendsbeyondthehealthcare productsweprovidetopatientsandthewell-beingof ouremployees.Wearealsocommittedtosupporting thewelfareofcommunitiesinwhichweoperate. Ourdonationprogrammesseektogivebacktocommunitiesinfourstrategicareas:humanitarianand socialprojects;scienceandeducation;artsandculture;andcommunityandenvironment.Ineach area,wesupportprogrammesthatmeetthecriteria definedbyourpolicyonphilanthropicdonations andnon-commercialsponsorship,aswellasprogrammesthatwebelievewillmakealasting, tangibledifference. A rigorous approach Tocreaterealchange,wehavedeveloped atargetedstrategywhichhingesonfourcriteria: Innovative:appliescreativeandeffective solutionstosocietyschallenges Sustainable:deliversenduringeffectsin adynamic,resource-constrainedworld Collaborative:drawsonthestrengthsand capacitiesofrespectivepartners Outcome-driven:providestangiblelong-term benefitstothepeopleinvolved Wemakemostofourcontributionslocally,sothat eachbusinessunitcanbestaddresstheneedsofits owncommunity.Ourbusinessesconceiveand implementtheircommunityactivitiestoprovidethe greatestpossibleimpactgiventhespecificchallengeandavailablecapabilities. Someissuescallforglobalintervention.Insuch cases,weworkwithourinternationalnetwork ofpartnerstosupportprojectsthatwillmeetsocietysmostcriticalneeds.Theseprojectsdonotoften makeheadlines,butneverthelesshelptoresolve fundamentalobstaclestogoodhealth,suchasalack ofbasicmedicalsuppliesortrainedhealthcare professionals.Bymobilisingourresourcesandexperienceacrossourfourstrategicareas,weaimto makeanotabledifference. Managing impact Developingandmanagingourphilanthropicactivities requirescarefulcoordination.PrinciplesandprioritiesaresetattheGrouplevel,andimplementedlo callybybusinessunitsandpartners.
Breakdown of giving by area |
in 2010
Humanitarian and social projects Science and education Arts and culture Community and environment 3% 6% 4% 87%
Launchingaprogrammeorcontributingtoacauseis onlythefirststepinRochessocialengagement.We carefullyconsiderwhatwewantourphilanthropyto achieve,andcontinuallymonitorprogresstowards thedesiredimpact.Therefore,wetracktheoutcomes ofourprojects,notjusttheinitialinvestment. Sample philanthropic impacts

Patient and community health outreach 2,000 orphaned children given primary healthcare in Malawi Courses for 200 community health workers held in South African villages Community rebuilding 53 bore holes rehabilitated and strengthening in Uganda 18 primary school classrooms built and furnished in Malawi Education enhancement and opportunity 100 students receive secondary scholarships; 6 receive post-secondary assistance in Malawi 6 students enrolled in 6-week international research exchange in Germany and the United States
Humanitarian and social projects Improvingwell-beingisatthecoreofRochesphilosophy.Humanitarianandsocialprojectsaccountfor thelargestportionofourgivingandfocusonsupportingthemostvulnerablemembersofsociety, oftenchildren. Employeeparticipationinourprogrammesamplifies theirimpact.Forexample,19,500employeesfrom morethan100affiliatesparticipatedinthe2010 annualChildrensWalk.Theygeneratedover1.2millionSwissfrancs,includingmatchingfundsfrom
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thecompany.Thisyear,65%ofthismoneywillgoto supportdaycarecentresinMalawithatprovide food,shelter,educationandskillstrainingtoAIDS orphans.Theremaining35%willsupportlocal charitiesthatsupportvulnerablechildren,selected byaffiliates. Itisimportantthatemployeesseetheimpactoftheir efforts.Eachyear,nineofthemostsuccessfullocal ChildrensWalkfundraisersvisittheprogrammeswe support,toreaffirmourcommitmentandwitness thedifferencewemakeinMalawi.Theythenreturn homeandactasambassadorsforthewalkandits objectives. Accesstohealthcareshouldbeuniversal,butinmany countriesthisisnotthecase.Wehaveanumber ofprogrammesthathelptobuildinfrastructure,providebasichealthcareortransferknowledgeand expertise. Forexample,theRoche-sponsoredPhelophepa healthtraindelivershealthsuppliesandservicesto poorandremoteSouthAfricancommunities.In 2010thetrains16thyearRocherefurbishedthe primaryhealthcoach,improvingventilation,privacy, anddisabledaccess. Science and education ExcellenceinscienceiscriticalforRoche.Weaimto inspirefuturegenerationsofscientistswhowill drivethediscoveryofnewtreatmentsanddiagnostics fortodaysunmetmedicalneeds. Weprovideyoungscientistswithopportunitiesto expandtheirexperienceinthefieldthroughour InternationalRochePostdocFellowshipProgram.In 2010webuiltuptheprogrammeto100positions withtwo-yeargrants,expandableuptofouryears basedonscientificmerit.TheseareforjointR& D projectswithpartneruniversities,includingthefirst postdocsapprovedinChinaandJapan.In2011, additionalprogrammesareplanned. Scienceandhealthmattersofteninvolveethicalconsiderations.RocheNutleysupportstheNewChoices, NewResponsibilitiesprogramme,whichintroduces middle-andhigh-schoolstudentstobioethics.The curriculumsupplementhasreachedapproximately 40,000studentssinceitsintroductionin1990prima-
rilythroughthe1,600teachersRochehelpedtrain. Thisyear,wealsoexpandedourRoche Genetics EducationProgramme,providingteachingmaterials forsecondaryteachersintheBaselregion.With fourlaboratoryworkshopsandtwoTalkingScience workshops,theschool-basedtrainingmodelraises understandingandinterestingenetics. Arts and culture Innovationcomesinmanyforms.Weseeastrong creativeconnectionbetweenscienceandthearts.In partnershipwiththeLucerneFestival,theCleveland OrchestraandCarnegieHall,weregularlycommission newworksfromcontemporarycomposers.This August,wewelcomedtheworldpremiereofToshio HosokawasorchestralpieceWovenDreams,and announcedoursixthcommissiontocomposerSofia Gubaidulina.Weprovidefurthersupportforcrea- tivityandexpressionthroughmonthlyRochenJazz events,wherewebringtogetherthelocalcommunitywithworld-classmusicianstoexploremodern, inventivemusic.Nowinitsfifthyear,RochenJazz hasentertainedmorethan15,000peoplewithperformancesby55ensembles. Community and environment Webelievethatindividualwell-beingiscloselytied tohealthycommunities.Forexample,inKualaLumpur Rochehasestablishedacommunity-basedreha- bilitationprojectwithMalaysiasDepartmentofSocial Welfare.Theprojectprovidesoccupationaltherapy forchildrenwithmental,physical,developmentalor emotionalconditionsinruralcommunities.This helpsthechildrenimprovebasicmotorfunctionsand reasoningabilities,andthereforetoleadindependentandproductivelives. More on the Web
Roche social programmes: www.roche.com/society Roche n Jazz: www.roche-n-jazz.net Roche Re & Act: www.react.roche.com
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Responsible practices
Ourreputationisoneofourmostvaluableassets. Itisvitalthatallemployeescomplywithlaws,regulationsandinternalstandardstofulfilourcommit- menttoactwithintegrity.Thisistheminimumour stakeholdersexpect.Forthesereasons,wejudge ourselvesnotonlyonourresults,butalsoonhow weachievethem. Integrity and compliance TheRocheGroupCodeofConductsetsclearex- pectationsforourpeople.Itguidesemployeeson correctbusinessbehaviour,howtoactwithintegrity, andhowtospeakupincaseofcomplianceconcerns. Weencourageemployeestospeaktotheirlinemanager,thelocalcomplianceofficerortheChief ComplianceOfficer.Theycanalsoreportcompliance concernsanonymouslyusingtheSpeakUptelephone lineandwebservice.LaunchedinDecember2009, SpeakUpoperatesin47languagesand98countries, makingitavailabletoalmost70,000employees. Between1December2009and31December2010, 122reportsweremadeviathesystem.Roughly halfweregeneralcommentsaboutRochesbusiness, whicharenotclassedasnon-compliances.The otherhalfrelatedtoallegedviolationsoftheCodeof Conduct.Analysisoftheissuesreportedshowsthat employeesareusingtheSpeakUpLineresponsibly. In2010,110materialbusinessethicsincidentswere reportedintotal,includingsevencasesreported throughtheSpeakUpline.Afterinvestigatingeach incidentandtakingcorrectiveactionwherenecessary,weterminated61employmentcontractsas aresultofunethicalbehaviour. Wecarriedoutvariousactivitiestostrengthen compliancein2010.Weupdatedouronlinetraining programmesonourCodeofConductandonanti- trustissuesbyclearlylistingtheoptionsavailablefor reportingconcerns.In2010webeganrollingout amoreuser-friendlyonlinetrainingprogramme,called RocheBehaviourinBusiness(RoBiB),andseta targetfor95%ofemployeestocompleteitin2011. Weheldseveralmeetingsforlocalcomplianceofficerstosharebestpracticein2010.Wenowusethe GenentechstaglineComplianceisgoodbusiness tocommunicateaconsistentmessagethroughout
Roche.Weaskedlocalmanagerstoimplementa comprehensiveanti-corruptioncomplianceprogramme,andlaunchedaglobalRocheMarketing andSalesComplianceQuestionnairetofurther promotetheimportanceofgoodbusinessconduct. Wewillcontinuethesemeetingsthroughout2011. Risk and crisis management OurRiskManagementCharterdefinesourriskmanagementapproachandresponsibilities.Itisavailable onourwebsitealongwithalistofriskstoourbusiness.Weusestakeholderfeedbacktohelpidentify andassesssocial,environmentalandethicalrisks andopportunities,andincludethemostsignificantin theGroupriskmanagementprocess.Wehavein- troducedanewsystemtodetermineexposurefrom salesandmarketingrisksthatarenotyetfullymitigated. TheGroupandallsubsidiarieshaveestablishedcrisis managementteamstoensureweactquicklyinan emergency.Theseteamsregularlyrehearsedifferent crisisscenarios,alertsandescalationprocedures. WeareusingourexperienceofourpandemicpreparednessplaninresponsetotheH1N1influenza pandemicin2009tostrengthenourbusinesscontinuityproceduresglobally. Sustainable supply chain Wespentaround18billionSwissfrancsin2010with 3rdpartiesonrawmaterials,activepharmaceuti- calingredientsandotherdirectspend,plusindirect spendlikecontractR& D ,licences,laboratorysupplies,equipment,consultancy,marketingservices andothers.Ensuringthatthecompaniessupply- ingtheseproductsandservicesactresponsiblyis anessentialpartofsustainableprocurement. RocheisamemberofthePharmaceuticalSupply ChainInitiative(PSCI)andendorsesthePSCIPrinciples,whichsetstandardsforsuppliersintheareas ofethics,labour,healthandsafety,theenvironment, andrelatedmanagementsystems.OurSupplierCode ofConduct,introducedin2009,incorporatesthese Principles,aswellasotherimportanttopicssuch asinnovation,financialsecurityandsupplierdiversity. Attheendof2010themajorityofkeysuppliers hadprovidedtheirwrittencommitmenttotheSupplier Code,whichisnowincludedinnewsuppliercontracts.
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Roche supplier assessment prioritisation

Direct spend Contract manufacturers API manufacturers Hazardous-chemical manufacturers Indirect spend CROs, R & D laboratories 3 rd -Party waste management Animals Priority for auditing and improvement
Chemicals/Biotech raw materials Primary packaging
Temp labour, Logistics services Construction, Marketing services Fleet services, Travel, Facility management
Risk
Secondary packaging
Informatics, General & admin services Consulting services, Engineering services Equipment
The Roche Supplier Code of Conduct demands high ethical standards from suppliers. It further demands high standards on social responsibility, safety, health, environment and management systems. It also demands cooperation with suppliers on additional important topics such as innovation, economic sustainability and supplier diversity.
InMay2010weintroducedonlinetrainingtoteach procurementstaffhowtoencouragesustainability amongoursuppliers.Thetrainingisavailableonour intranetinChinese,English,GermanandSpanish. Morethan3,000employeeshavetakenthecourseto date.Someclassroomtrainingsessionswerealso held.Ourpharmaceuticaldivisionintroducedanew ProcurementCodeofConducttoguideprocurementmanagersinresponsiblesourcing. WewillcontinuetoimplementboththeSupplierand ProcurementCodesofConductduring2011.Wealso plantoworkwithselectedhigh-impactsuppliersto measureandreducetheirenvironmentalfootprints, followingapilotprojectwithalogisticssupplier. Wemonitorcompliancewithoursustainabilityrequirementsatcriticalsuppliersusinginternaland externalaudits.Wetakearisk-basedapproach toprioritisethecompaniestoaudit,whichfactors inrisklevelsbyindustryaswellasprevioussus- tainabilityperformance. In2010weconducted36auditsinthedirectspend area(e.g.API,chemicalsandbiologicalssuppliers, contractmanufacturers).Forthefirsttime,webegan auditsofcriticalserviceproviders.Weaudited27
contractresearchcompanies,temporarylabour agencies,marketingagencies,logisticsproviders andotherserviceproviders.Themajorityofsup- pliersmetourstandards,whilefindingsrequiring actionrelatedmainlytolabourconditions,health andsafety.Wewillworkwithsupplierstocorrect problemsfoundandprovidetrainingtoprevent futureissues. AspartofourworkwiththePSCI,wehavebegunto alignoursuppliersustainabilityauditprotocolwith thoseofothermembercompanies.Thiswillpromote transparencyandenableustoshareauditfindings, reducingbureaucracyandduplicationofeffort.We havesuccessfullypilotedthealignedauditproto- colwithtwosupplierssofar. Responsible research Ourbusinessmodelreliesonscientificexcellenceand adetailedunderstandingofthemechanismsof disease,sowecantranslatescientificbreakthroughs intoinnovativemedicinesanddiagnosticsthatmake adifference.However,ethicalquestionsinevitably ariseasweexplorethepotentialofcutting-edgetechnologies.Wecarefullyconsiderandmanageany concernstomakesurewemaintainourintegritywhile makingsurethatnoopportunitiesarelost.
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Ethics in R & D | Wehaveclearpoliciesandproceduresinplacetopreservehighethicalstandards inourresearchanddevelopment(R &D )activities. Ourpositiononclinicalresearchdefinesthesestandardsandclarifiesourviewsonspecificareasof concern. Employeeswhoencounteranethicaldilemmain theirwork,andcannotresolvethiswiththeirimmediatecolleagues,cancontactourGlobalEthicsLiai- sonOffice.In2010thisofficereceivedandresolved 23queries,withouttheneedforescalation.The vastmajorityrelatedtoinformedconsentandtheuse ofsamplesfrombiobanks.TheGlobalEthicsLiaison Officeconsultsexpertswithinandoutsidethecompanytobrokerasolutionasneeded. In2010wemergedourexternalScienceandEthics AdvisoryGroup(SEAG)withtheClinicalResearch EthicsAdvisoryGroup(CREAG)toformoneindepen- dentbodythatadvisesusonethicalissuesinour R& D activities.ThenewSEAGcomprisesexternal expertsinethics,lawandsocialscience,aswellas patientadvocates.Itwillcontinuetoprovideadvice asrequiredandmeetformallyonceayear.
Weprovideregularonlineethicstrainingforem- ployeesandinApril2010launchedanewonline modulebasedoncasestudies. Animal welfare | Wetakepublicconcernaboutanimalresearchveryseriously.Wepromotetheuseof alternativemethodsandworkhardtoidentifyoptions otherthantheuseofanimals.However,animaltestingremainsindispensabletobiomedicalresearchfor scientificandlegalreasons.Regulatoryauthorities requireallhealthcarecompaniestotestthesafetyand efficacyofnewdrugsinanimalsbeforetheycanbe usedinhumans. In2010weused502,105animalsinourresearch, aslightincreaseon2009.Forthefirsttime,wealso reportthenumberofanimalsusedbycontractors carryingoutresearchonourbehalf55,913.Around 97%ofallanimalsweremiceandrats. Wefollowandpromotethe3Rsapproachtoanimal research.Thismeanswereplaceanimaltestswhere possible,reducethenumberofanimalsused,and refinetestsandanimalwelfarestandards.Allem ployeesandcontractorswhoperformanimalresearch forusarerequiredtomeetorexceedapplicablelaws andindustrystandards.
Key activities in 2011
Access to healthcare Expandsuccessful accessprogrammesin developingcountries toothercountries
Employee engagement Achievepositiveratings inemployeeengagement surveys(80%positive ratingsbyend2014)
Diversity Increasepercentage ofwomeninkeypositions (50%increasefrom 2009to2014)
Philanthropy Systematicallycollect andreportoutcomesof affiliatephilanthropic activitiesandcorporate signatureprogrammes
Suppliers Continueimplementation ofboththeProcurement andSupplierCodeof Conduct
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Weuseincentives,trainingandcommunicationsto promotethe3Rs.TheseincludetheRoche3Rs Awardforemployeesglobally,whichnexttakesplace in2011.Thisyearwebeganworkona3Rsdatabase forsharinggoodpracticesthroughouttheGroup, whichwillbelaunchedin2011. RochewasoneofthefoundersofthenewSwiss CharteronAnimalWelfare,adoptedin2010byInterpharma,theassociationofresearch-basedpharmaceuticalcompaniesinSwitzerland.TheCharter commitsustoconsistentlyhighstandardsofani- malwelfarethroughaprogrammeofauditing,em- ployeetraining,stakeholderdialogue,promotion ofthe3Rsandmanagementofexternalcontractors. Wewillreportourprogressinimplementingthe Charter. OurAnimalWelfareEthicsCommitteebecamefully operationalandmetfourtimesin2010.Thecommitteehasdevelopedrecommendationsfortheuse ofcontractorsforanimalresearchandwillexamine allnewstudiesusingnon-humanprimates(NHPs), particularlythosecarriedoutbycontractors.The committeehascreatedaquestionnairetohelpre- searcherssubmitNHPstudiesforexamination.Italso advisesemployeesonbestpracticeswhenworking
withanimals.ThecommitteecoversRocheresearch facilitiesinEuropeandtheUSA,andwillincludeour ShanghaisiteandChugaifrom2011. Innovation and new technologies | Breakthroughs insciencecreateopportunitiesfornewdrugdis- covery,developmentanddelivery.Forexample,stem cellsandtheirapplicationsoffertremendouspotentialforrelievingchronicpainandevencuringserious conditionssuchasarthritis,diabetesandParkinsons disease.Inparticular,thediscoveryofinducedplurip- otentstemcellsderivedfromadultcellsprovidesan alternativetoembryonicstemcells,openingupadditionalopportunitiesinthispromisingfield. Weareinvolvedinstemcellresearchpartnerships, includingtheInstituteforStemcellTherapyandEx- plorationofMonogenicdiseases(iSTEM)inFrance andtheMassachusettsGeneralHospitalandHarvard UniversityintheUnitedStates.In2009weestablishedStemCellsforResearch(SCR)inBaseland Nutleytodevelopourexpertiseinthisarea.This groupfocusesondrugdiscovery,pre-clinicalsafety testinganddiseasemodelling. Wearecommittedtoresponsibleandtransparent stemcellresearch.Wehavethereforeestablished
Customer relationship management Provideaddedvalue throughcustomersatisfactionassessments tomeetorexceed c ustomerexpectations
Responsible marketing ApplythenewSales& MarketingCompliance QuestionnaireGroup-wide
CR reporting Evaluateandimplement improvedITsystems forreportingonkeycontributionstohealthcare institutions,patientorganisations,andindividual HCPs
Green IT Promotebestpracticesof useofvirtualITtoreduce energyconsumptionand solutionstoreducetravel andenableexpanded communication
Energy efficiency Reduceenergyconsumptionandimprove energyefficiency (10%reductionfrom 2009to2014)
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Animals used in research (Roche and contract research organisations) | in 2010
Mice and Rats Other rodents and rabbits Dogs Primates Other (fish, frogs)
97.1% 1.1% 0.3% 0.5% 1.0%
Responsible marketing Strictregulationsandindustryguidelinesgovern thesaleandmarketingofmedicinesanddiagnostics, tomakesuretheyareprescribed,administered andusedcorrectly,andthatpatientsunderstandthe benefitsandrisksoftakingthem. However,regulationsvaryfromcountrytocountry, evenwithinEurope.In2010RocheandothercorporatemembersoftheEuropeanFederationofPhar- maceuticalIndustryAssociations(EFPIA)developed aLeadershipStatementwhichprovidesguidance infivesensitiveareas.Theserelateto:patientinfor- mation;trainingformedicalsalesrepresentatives; theprovisionofmedicalsamplestohealthcareprofessionals;organisingmeetingsforhealthcare professionals;andrelationshipswithpatientorganisations.Rochehasfullycommittedtofollowing thisguidance.Inaddition,ourChiefComplianceOffi- cerjoinedEFPIAsnewTrustReputationandCom- pliancePolicyCommittee. Rochemanagersareresponsibleforensuringall marketingactivityundertheircontrolcomplies withourCodeofConductandindustrymarketing codes.In2010welaunchedtheRocheMarketing
bindingprinciplesforstemcellresearchinconsul- tationwithinternalandexternalstakeholders,which wewillpublishin2011. Inpartnershipwithbiopharmaceuticalcompany alozyme,weareexploringanewmethodofdrug H d eliverythatcouldmakeitpossibletogivebiological medicinessuchasHerceptinandMabThera/ Rituxanbysubcutaneousinjectionratherthanintravenously.HalozymesEnhanzetechnologyallows subcutaneousinjectionoflargevolumesofmedicine injustthreetofiveminutes,makingitmorecon- venientandcosteffectivethanintravenousdelivery.
Working with stakeholders to make the best product
Regulators and policy makers Input into regulatory filings Clinical trial design Shape treatment guidelines
Physicians and healthcare providers
Product
Clinical trial design, participation and results publication Feedback on product performance and profile Input into training and education material Shape treatment guidelines
Patients and patient groups Market research on patients needs Focus groups on product profile (e.g. ease of use) Co-develop support, awareness and educational material Training for patient groups
Payers and reimbursers Health outcome studies Determination of medical value Reimbursement programmes
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andSalesComplianceQuestionnaire(RMSCQ),to helpmanagersassesshowwelltheiroperations performonsensitivecompliancetopics.AllGeneral Managershavetosignadeclarationthatconfirms theircompliance.Wealsoranrefreshertrainingon responsiblemarketingforglobalproductstrategy teamsinthepharmaceuticalbusiness.2011wewill carryoutrefreshercoursesonantitrustissuesand anti-corruption. Customer relationship management Ourcustomersrangefrompatients,healthcareprofessionals,hospitalsandreferencelaboratoriesto publicandprivatehealthcarepayers.Itisimportant tomanagetheserelationshipsinaprofessional andtransparentway.Weconsidertheirneedsand viewswhendevelopingourproductsandservices. Wefocusonbuildingstrategic,long-termpartnershipswithhealthcareadministrators,aswellasspecialistsinindividualdiseaseareas.Thishelpsus gainabroaderoverviewofpatientneedsacrossall areasofhealthcare,andenablesustoofferafull rangeofappropriatepharmaceuticalanddiagnostic products.Thisapproachalignsmorecloselywith ourvisionforpersonalisedhealthcare,andwillim- provecustomerservice,identifyadditionaloppor- tunitiesandcreateefficienciesandcostsavings. Forexample,GenentechemploysThoughtLeader Liaisons,whoworkwithexternalmedicalexpertsto ensureweunderstandtheiropinionsandestablish lasting,mutuallybeneficialpartnerships. Wecarryoutcomprehensivemarketresearchand analysistobetterunderstandtheneedsofspecific customergroupsandmarkets.In2010indepen- dentresearchamong246cancerspecialistsinthe UnitedStatesandfiveEuropeancountriesshowed thatRochescustomerretentioninthesemarkets is90%comparedwithanaveragerateof72% amongourpeers.Inadditiontoproductefficacy, themaindriversofcustomerretentionwasfoundto bethesalesrepresentativesconduct,knowledge andexpertise,andtheinformationandsupportprovidedforpatientsandclinicians. Public policy Weshareourviewsandexpertisewithgovernments andregulatorstohelpdevelopeffectivelaws,regula-
tionsandpoliciesforpublichealthaswellasfor moregeneralareas,suchastheassessmentofthe valueofhealthcareandourworkwithpublic healthorganisations,thinktanksandacademics. OneexampleisourcontributiontotheEuropean CommissionProcessonCorporateResponsibilityin thefieldofpharmaceuticals.Thisprocesswas launchedin2010toimprovetransparencyandbusinessethics,accesstomedicinesindeveloping countries,andpricingandreimbursementsystems inEurope.Wearealsoparticipatinginaproject todevelopmarketaccessforbiosimilardrugs. In2010wedevelopedguidelinesforsharinginformationonthepotentialofmisuseofdrugsinsports, inassociationwiththeWorldAnti-DopingAgency (WADA).RocheandWADAsignedamemorandum ofunderstandingdescribingtheprocesstofollow whensuspicionarises.WADApresentedRochewith anawardinrecognitionofourroleinthisarea. Wealsocontributetopolicydevelopmentthrough ourmembershipofindustrybodiessuchasthe EuropeanDiagnosticsManufacturersAssociation (EDMA),theEuropeanBiopharmaceuticalEnterprises(EBE),theInternationalFederationofPharmaceuticalManufacturersandAssociations(IFPMA), andtheEuropeanFederationofPharmaceuticalIndustryAssociations(EFPIA).In2010EFPIAapproved fourpriorityareasforthenexttwoyears.Theserelateto:improvingtheeffectivenessofhealthtechnologyassessments;strengtheningintellectualproper- tyframeworks;enhancingethics,trustandreputation; andattractingmoreR& D totheEuropeanUnion. ThroughEFPIA,wecontributedtoupdatestoEuropeanUnion(EU)legislationaimedatstrength- eningsystemsformonitoringthesafetyofmedicines, inparticulartoprotectagainstcounterfeitmedi- cinesandensurepatientsreceivereliableinformation onprescriptionmedicines.Thisworkwillcontinue in2011. WehavecontributedtotherevisionoftheEUDirectiveontheProtectionofAnimalsusedforScientific Purposessincetheprocessbeganin2001.TheDirectiveaimstobalancetheneedsofresearchandpatientswithanimalwelfare.Significantnewprovisions includeamandatoryethicalreviewprocessand thedevelopmentandimplementationofalternative
130
methodsthattangiblyimproveanimalwelfare.The DirectivewillapplyinallEUmemberstatesfrom November2012. WecontributedtoresponsesfromEDMAandEBE toaEuropeanCommissionconsultationonin vitrodiagnostics(IVDs)in2010.WesupporttheCommissionsproposedrisk-basedclassificationsystemfor IVDs,aslongasmanufacturersaregivenenough timetoadjusttotheincreaseindevelopmentcosts itwillincur.Moreclarityisneededonproposed requirementsforprovidingclinicalevidenceforhighriskIVDs.AlsothroughEDMA,wecontributedto theEuropeanCommissionsreviewofthemedicaldevicessector,whichidentifiedmajorchallengesrelatingtocompetitiveness,innovationandpatientaccess. Combating counterfeits | Counterfeitmedicalproductsareillegalandaseriousglobalpublichealth problem.Theyendangerpatients,undermineconfidenceinthehealthcareindustry,breachintellectual propertyrights,andwastehealthcarebudgets.We workwithrelevantstakeholderstoimproveproduct security,strengthenandenforceexistinglaws,train localofficialsandeducatethepublic.ThroughEFPIA, wehavecontributedtotheproposedEuropeanCommissionDirectiveonCounterfeiting. Eliminatingcounterfeitsrequiresacomprehensive, universalapproachacrossthepharmaceuticalindustry.Thisshouldincludestandardisedproductserialisationanduniversalsafetyfeatures.2010sawthe conclusionofanEFPIApilotprojectofonepotential approach:asystemforverifyingthatmedicinesdispensedinpharmaciesaregenuine.Oneachpack,a uniquebarcodesmallerthanafingernailholdsa r andomserialnumber,andtheproductcode,batch number,andexpirydate.Beforedispensingamedicine,pharmacistsscanthebarcodetocheckitis authentic.Pharmacistsin25storesscannedandverifiedalmost100,000packsfrom14manufacturers, includingRoche.Theresultsshowthatthetechnologyisafeasible,cost-effectiveandsecuremeans ofenhancingpatientsafetyandsupplychainsecurity. Biosimilar products | Unliketraditionalmedicines whichcontainsmallmoleculesproducedbychemical synthesis,biologicalmedicalproductshavecomplex molecularstructures.Theyareproducedfromliving systemsusingsophisticatedmanufacturingpro-
cessesthataredifficulttoreproduce.Copiesofabiologicalproductarethereforesimilarbutnotidenti- caltotheoriginal.Thesebiosimilarproductscannot beconsideredgenericmedicines,orapproved basedonthelimiteddatasetmostregulatorybodies acceptforgenerics. Wesupportthedevelopmentofaclearregulatory frameworkfortheapprovalofbiosimilarproducts, whichcomparesthemwiththeoriginaldrug.The EuropeanMedicinesAgencyhasestablishedsucha system,andpublishedadditionaldraftguidelineson similarbiologicalmedicinalproductscontainingmonoclonalantibodiesforreview.TheUSCongressintroducedalegislativeprocessforapprovingbiosimilars aspartofthehealthcarereformsinMarch2010.For countrieswherethereisnospecificframeworkfor approvingbiosimilars,webelievethatregulatory authoritiesshouldfollowtheWorldHealthOrganization(WHO)GuidelinesonEvaluationofSimilar BiotherapeuticProducts,whereacomparisonwithan originalbiologicalproductisrequiredtoestablish similarity.In2010weengagedwithregulatoryauthor- itiesandbiosimilarmanufacturersaroundtheworld topromotetheWHOguidelinesastheminimumstan- dard.Wewillcontinuetodosotoensuresimilar v ersionsofourbiotherapeuticproductsbroughtto marketaresafeandeffective.Anupdatedposition onbiosimilarsisavailableonourwebsite. Political contributions | Rochedoesnotfundindividualpoliticians.EmployeesintheUSAcanmake personalcontributionsthroughRochesGoodGovernmentCommittee(GGC)andGenentechsGenenPAC.Botharevoluntarypoliticalactioncommittees (PAC).In2010employeesdonated340,899USdollarstopoliticalcampaignsthroughthesePACs. More on the Web
All position papers: www.roche.com/

policies_guidelines_and_positions
Responsible marketing, risk management and compliance:

www.roche.com/business_integrity_and_responsible_marketing www.roche.com/risk_management_and_compliance The Pharmaceutical Industry Principles for Responsible Supply Chain Management: http://pharmaceuticalsupplychain.org Patents, counterfeiting and biosimilars: www.roche.com/medical_value_patents_and_pricing; www.roche.com/patents New products and technologies: www.roche.com/csr_research_and_development www.roche.com/innovation_and_technologies
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Safety, security, health and environmental protection

Rocheisdedicatedtogoodhealth.Weareascommittedtopreservingthesafetyandwell-beingof ouremployeesandtheenvironmentaswearetoim- provinghealthandqualityoflifeforpatients. Managing SHE Goodsafety,security,healthandenvironmental(SHE) managementisessentialtoourbusiness.Weem- ployateamof20dedicatedpeopleatourheadquartersinBasel,whichiscomplementedbyateamof 13intheUnitedStates.Whileover600full-timeem- ployeessupportourSHEprogrammeacrossour sites,maintaininggoodperformanceiseveryem- ployeesresponsibility. EachsiteidentifiesitsspecificSHErisksandopportunities,andcommunicatestheseaccordingtolocal preferences.ThisensuresthatcolleaguesunderstandandadheretoourSHEpolicyandguidelines. Ourpolicyistointernallyauditcriticalsitessuchas chemicalandpharmaceuticalmanufacturingfacilities everythreeyears,andallotherrelevantsitesperiod- icallyaccordingtorisk.TheseauditsrateSHEper- formanceaccordingtointernalstandards,andstipu- latefutureimprovements.Wehaveincorporated GenentechsitesintothecorporateSHEauditprogrammeandthesearenowassessedagainstthe samestandardsasotherRocheoperations. SHE audits
2010 2009 2008
supplementthesecourses.In2010weexpanded thenumberoflanguagesouronlineSHEtrainingis availablein,bringingthetotalto13andensuring allRocheemployeescanunderstandthematerials. Thisenabled53,000employeestoaccesstheprogrammeand41%ofthesehaveparticipated.In2011 wewillexpandthisprogrammetoGenentech employees. Security ThevisionofsecurityatRocheistoprotectouremployeesandvisitors,physicalassets,intellectual propertyandproductsfromharmorloss.Ourglobal networkofsitesecurityofficersworkedwithRoches ChiefSecurityOfficerin2010onsupplychainsecuri- ty,travelsecurity,incidentmanagement,andtraining. WehavelaunchedapilotprojectinLatinAmericato systematicallyassesstransportsecurityrisksinour supplychainsuchastrucksbeingintercepted,and implementadditionalsecuritymeasuresasneces- sary.Wehavealsoimprovedthehelpavailablefor employeesshouldemergencysituationsariseduring businesstravel.Thisincludessecurityanalysisbefore travellingtodangerouscountries,andasecurityand medicaladviceserviceforuseduringtravel. Regionalsecurityrisksneedtailoredsolutions.In 2010theGroupsecurityteamchairedaseriesofre- gionalsecurityworkshopstoreinforcethisapproach. Forexample,aworkshopinIndianapolis,United States,enabledparticipantstoexchangeinsightsand experiencesintheareasofintellectualpropertyprotection,workforceviolenceandsupplychainsecurity. Health and safety
Worldwide audits First-time audits
24 4
27 2
25 2
In2010wevisited24sites,fourforthefirsttime.Of the20sitespreviouslyaudited,almostallhadim- provedtheirperformance.Recommendedimprovementsin2010includeincreasedtrainingontopics suchasemergencymanagement,businesscontinuity,andsafedriving.Asweexpectsimilarlyhigh SHEstandardsfromoursuppliers,ourprocurement departmentconductsSHEauditsatthirdparty locationsandissuesfollow-uprecommendations. TrainingisatthecoreofourSHEstrategy.Local managersprovidetailoredtrainingthroughlectures andcoursescustomisedtosite-specificSHErisks. RegularregionalSHEconferencesandworkshops
2010
2009
2008
Roche accident rate Occupational accidents Occupational illnesses Work-related fatalities Work-related accidents per million working hours
0.065 432 184 0
0.074 392 227 0
0.078 474 270 0
2.97
2.92
3.42
Employeehealthandsafetyisoneofourforemost priorities.Wehaverigorouspoliciestosafeguard theirwell-being,andexpectthesamestandardsfrom ourcontractors.
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InvestmentsinSHEtrainingappeartobepaying off.Wehavereducedwork-relatedaccidentspermillionworkinghoursby36%since2005.Employees reported432occupationalaccidentsin2010,a10% increaseinfrequencycomparedwithlastyear.However,theaverageseveritytheresultingnumberof lostdaysdecreased4%.Overall,theRocheaccidentrateameasurethatcombinesfrequencywith severityimprovedbyapproximately11%.Occupationalillnessimprovedinbothincidenceandseverity, with184casesreported. Ouroccupationalaccidentandillnessprofileremains consistent,withslips,fallsandrepetitivestrains representingthemajorityofwork-relatedcomplaints in2010.Therewerenomajoraccidentsthisyear forthethirdconsecutiveyear. Thoughwearepleasedwiththispositivetrend,we recognisetheneedtoremainvigilant.Wehave installeddefibrillatorsincentrallocationsatalmost allsites,andcontinuetosupportouremployees well-being,bothduringandoutsideofworkhours. ManyRochesitesorganisecampaignstoreduce accidentsoutsidetheworkplace,suchassellingprotectivesportsequipment,andrunningmotorcycle safetycourses. Environmental footprint Ourtotalenvironmentalfootprintiscomprisedof manyindividualimpacts,includingenergyuse,water andwaste.Wemeasureourtotalimpactusingthe eco-balancemetricdevelopedbytheSwissAgency fortheEnvironment(BAFU).Thisweightstheimpactsofairandwateremissions,landfillwaste,primaryenergy,andrawmaterialusagetocalculatea totalfootprint.Wealsocalculateimpactperemployee sowecanmeasureourprogressasthebusiness grows.Wesetourselvesatargettoimproveourecobalanceby10%from2005levelsby2015. Wearepleasedtohavereachedthisgoalearly,and nowplantoimproveoureco-balanceafurther 15%from2010levelsby2020.Thisyear,inkeeping withanupdatedBAFUeco-balancemethodology, wehaveincludedadditionalparameterssuchas wateruse,resultinginaneco-balanceof7.17.
Total environmenttal impact eco-balance

Use of resources energy raw materials water Emissions air VOC SO 2 NO x CO 2 halogenated hydrocarbons particles water TOC heavy metals phosphorus nitrogen Landfilled waste inert waste construction waste reactor waste mio impact points Eco-balance per employee 7.17 242 t 0.463 t 33 t 136 t 1,226 t 14,900 t 7,208 t 3,796 t 33 t 164 t 7t 262 t 1,070,794 t 14,495 TJ 67,529 t 19,667,601 t
Eco-efficiency rate (EER)

2010 2009 2008
Sales (million CHF) Environmental Expenditure (million CHF) Environmental damage (10 9 environmental damage units) EER
47,473
49,051
45,617
194
186
209
591,592 0.414
572,983 0.460
564,328 0.387
Weassesstheefficiencyofourenvironmentalinvestmentsandrunningcostsbycomparingsalesfigureswithourtotalenvironmentalexpendituresand impact,ascalculatedaccordingtotheBAFUmethodology.Ourresultingeco-efficiencyrate(EER)has decreasedto0.414,a10%changefrom2009. Thereisadetaileddefinitionatwww.roche.com/ fact_sheet_eco_efficiency.pdf.
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Energy and climate change AsRochesgreenhousegasemissionsresultmainly fromenergyuse,ourclimateandenergystrategies areinextricablylinked. Ourpriorityistoreduceemissionswhileremaininga viable,profitablecompany.Weplantodothisby increasingenergyefficiencyandswitchingtosustainableenergy.ThroughaGroupdirective,wehave developedasystematicapproachforconservingenergy.Thisincludesmeasuressuchasdesigning newplantsandbuildingstobemoreenergyefficient, andoptimisingandretrofittingexistingassets.The directivecoversallaspectsofourbusiness,frompurchasingandoperations,toresearch,marketing, administration,andtransport. In2005wesetagoaltoimproveenergyefficiency measuredasconsumptionperemployeeby10% by2010.Withanimprovementof7.4%infiveyears, wemissedthisgoal.Thisshortcomingislargelydue torecentacquisitionsandcorrespondingincreases inbusinesstravel,whichhaveraisedouroverall energyconsumption.Theenergyefficiencyofbuildings,plantsandmachineryhasimprovedbymore than20%duringthisperiod. Wearefirmlycommittedtoimprovingourperformance.Thisyearwedefinedplansforafurther10% efficiencyimprovementby2014,from2009levels. Inthelongerterm,weaimtoreduceusageby20% peremployeeby2020,from2010levels.Achieving thesegoalswillrequiresignificantlearningandinvestment.Weareimprovingourenergymeasurement andmanagementprocesses,definingaccountabilities,anddevelopingframeworksforcommunication andknowledge-sharing. Eachbusinessunitandsitewillneedtocontributeif wearetoreachourenergyefficiencygoals.Thisyear weaskedthe58largestenergy-consumingsites acrossthebusinesstocreateenergyreductionaction plans.Theresponsehasbeenverypositive,resulting intotalpotentialsavingsof1,400terajoulesperyear. Asignificantproportionofthesesavingscomefrom retrofittingrefrigeration,heating,ventilationandairconditioningsystems.Weareconfidentthatsuccessfullyimplementingthesubmittedplanswillachieve our2014goal,andwillcloselymonitorimplementationoftheplanstomakesuretheystayontrack.
Greenhouse gas emissions |
CO2 equivalent 2009 2008
2010
Total emissions (million tonnes) Total emissions per million CHF of sales (tonnes) 22.69 21.47 23.28 1.077 1.053 1.062
Energy use |
terajoules 2010 2009 2008
Total energy use Total energy use per million CHF of sales Total energy use per employee
14,495 0.305 0.176
13,898 0.283 0.176
13,662 0.299 0.178
Employeeawarenessandmotivationwillalsobecriticaltoachievingourgoals.Wearefortunatetohave innovativeanddedicatedemployees.OurannualResponsibleCareAwardrecognisesthisbyencouragingemployeestocollaborateonideasforenergysavingprojects.Thisyearwerewardedsitesthat includedremarkableprojectsintheirenergyreductionplans.Werecognisedelevensitesforon-site energyconservationprojects,andfivereceived awardsforprojectsinvolvingtheirfleetsandflights. Whilewearereducingtheamountoffuelweuse toheat,coolandrunourbuildingsandmanufacturing sites,businesstravelisprovingmoreofachallenge. Businessairtravelisincreasing,andnowrepresents almost17%ofoverallenergyuse.Introducedin 2009,ourpolicyofusingonlycarsthatemitamaximum120grammesofCO2perkilometreinour EuropeanPharmafleetby2012isbearingfruit,and hasimprovedfuelconsumptionefficiencyby4% inoneyear. Whileefficiencymeasureswillplayalargerolein reachingourenergytarget,wemustalsoconsiderthe typesoffuelweuse.Ourlong-termstrategyisto continuetoreplacefossilfuelswithsustainableenergysourceswhereverpracticalandfeasible.Asa Group,ourgoalistoincreasetheproportionofsustainableenergyweuseto20%by2020.
134
Energy use by type |

Fuel used by company vehicles Oil Fuel due to business air travel Grid electricity District heating Waste/ Renewable energy Natural gas
10.0 1.6
acquiredsiteswillworktowardsseparatetimelines togivethemthesametimeframeasoperations involvedintheoriginalprocess(forGenentechthus thetargettobemetis2022). Achievingthesetargetswillrequiresignificant investment.Thoughwearesearchingforalternatives, therearecurrentlynoviablesubstitutesinsomecircumstances.Wewillcontinuetoexaminealternatives andworkwithrefrigerationsupplierstomakefurther reductionsinthefuture. Emissions to air |
tonnes
16.7 29.0 3.8
2010
2009
2008
1.2 37.7
VOCs Particulates Nitrogen oxides Sulphur dioxide
164 33 262 7
177 27 286 9
213 27 193 10
Halogenated hydrocarbons |
tonnes
2010
2009
2008
Holdings
205.2
179.8
144.6
Emissions
3.8
6.5
3.4
Ithasbeenchallengingtoreduceemissionsof chemicalrefrigerantsthatareeitherozone-depleting, suchasCFCsandHCFCs,orhaveahighglobal warmingpotential,suchasHFCs.Thevolumeof refrigerantholdingsreportedsignificantlyincreased in2010asGenentechsfiguresincluderented orleasedbuildingsandequipmentforthefirsttime. WecommittedtophaseoutallCFCsandHCFCsfrom ouroperationsby2010,andallhalogenatedhydrocarbonrefrigerantsby2015.Thoughwehavemade significantprogressa100%reductionofhalons andan82%reductionoffullyhalogenatedcompoundsinsevenyearsexcludingGenentechsites ourrecentacquisitionsandlackoftechnicalsolutionsforsomeapplicationshavemadethisgoalun- realistic.Inconsultationwithourengineers,sites, andbusinessrepresentatives,wedecidedtorevise ourgoal.Wenowplantoreducehalogenated refrigerantsatRochesitesby90%by2015.Newly
Ourmanufacturingoperationsemitvolatileorganic compounds(VOCs),particulates,nitrogenoxides (NO x)andsulphurdioxide(SO 2).Thesecontributeto variousformsofpollution,includingairpollution, smog,andacidrain.Weminimiseemissionstoair whereverpossiblethroughavarietyoftechnologies andpractices.FluegasscrubbersreduceNO xand SO 2 .VOCsarereducedthroughvariousincineration andfreezingprocesses.ThoughstillunderinvestigationinSwitzerlandandtheUS,thelattermay alsoreduceenergyuse.Thetableshowsouremissionstoairin2010.Particulates,NO x andSO 2 fluctuatefromyeartoyear,butalwaysatverylow levels. Waste |
tonnes
2010
2009
2008
General waste produced General waste per million CHF of sales Chemical waste produced Chemical waste per million CHF of sales 0.61 0.56 0.69 29,020 27,605 31,295 0.57 0.40 0.94 27,249 19,828 42,823
Rochesincreasedwasteproductionthisyear reflectsanumberofoperationalchanges.The37% increaseingeneralwasteincludeslargeamounts
135
ofconstructionwastefromdemolishedbuildings inMannheim,Germany,andBelleville,USA.Chem- icalwasteincreasedslightlyinlinewithhigher productionvolumes. Water

2010 2009 2008
Water withdrawn (million cubic metres) Water used (million cubic metres) Wastewater discharged to treatment plant (million cubic metres) Organic matter discharged to watercourses after treatment (tonnes) Heavy metals discharged to watercourses after treatment (kilogrammes) 463 426 545 242 154 592 6.3 5.2 7.3 3.6 2.8 2.4 19.6 18.6 21.0
ouroperationsdischarged463kilogrammesofheavy metals,intowatercourses,primarilyflushedout frommetalpipes.Wedischargethesepollutantsonly ifthisfullycomplieswithallrelevantregulations, includingpre-treatmentrequirements.Wearestriving toreducetotalwastewatertoxicityby10%between 2015and2020,andarecurrentlydevelopinganalyticalmethodsandperformancemeasurestohelpus achievethis. Biodiversity Pharmaceuticalsandthenaturalworldhavebeen closelylinkedforcenturies.Natureholdsmuch inspirationandpotentialfortreatingillness,andwe mustguardagainstspeciesloss.Wesupportthe principlesofresourcestewardshipasdefinedinthe ConventiononBiologicalDiversity(CBD). ThewinnersofRoches2010ECOmpetitionaward havefoundasurprisinglysimple,yeteffectivewayto countertheprevalenceofinvasiveplantspecies. OurColoradositerecentlywelcomedaherdofmountaingoatswithanappetitefortheweedsthreat- e ningthelocalecosystem.Comparedwithharsh chemicalsorlabour-intensivealternatives,thegoats providealow-impactandcost-effectivemeansto solvingasignificantenvironmentalchallenge. Pharmaceuticals in the environment (PiE) Tracesofpharmaceuticalproductsmaketheirway intotheenvironment,primarilythroughnatural processesfollowingnormalpatientuse.Manufactur ingandimproperdisposalbypatientsalsocon trib teasmallproportion.Currentevidencesuggests u thatexposuretotheselow-levelconcentrationsin surface,groundanddrinkingwaterdoesnotposeany harmtohumanhealth,butwerecognisetheneed forfurtherresearchintotheeffectsandsupportscien ificworkinthisfield. t Theriskstoaquaticlifearethoughttobegreater. Studiestodatedonotsuggestanyshort-term effectsfromexposuretolow-levelconcentrationsof pharmaceuticals,butmoreresearchisbeingconductedtoevaluatethepotentialimpactoflong-term exposure. Weconsidertheentirelifecycleofourdrugs,and takestepstominimisereleasesintotheenvironment atallstages.Wedesignourmanufacturingsitesto
WateravailabilityisincreasinglycriticalforRoche andforsociety,andvariesgeographically.While Rochecurrentlyhasnohigh-usageoperationsin areasofwaterscarcity,weadaptconservationand reductionprogrammesaccordingtolocalconditions andneeds.Forexample,ourCaliforniansitesuse drought-resistantlandscaping.Atothersites,wecollectandrecyclewaterfromourcoolingtowers, c reatingaclosed-loopsystemthatreduceswateruse. Wecarefullymanagebothwateruseandwastewater discharges.Ourwithdrawalandconsumptionin- creasedin2010duelargelytotheinclusionoftwo newsites.Thisyear,ouroperationswithdrew19.6 millioncubicmetresofwater.Reducingtotalwithdrawalisanimportantpartofouroverallenvironmentaltarget,andourrevisedmethodforcalculating environmentalimpact(eco-balance)nowincludes waterusagetoreflectthis. Wecarefullycontrolthequalityofwateremissions. In2010wedischarged6.3millioncubicmetresto treatmentplants.Aftertreatment,wedischarged242 tonnesoforganicmatteranincreaseprimarily causedbytheacquisitionofasubstantialSingapore biotechoperation.Inlinewithlow-levelfluctuations,
136
reducetheriskofactiveingredientsenteringwastewater,andusefinancialincentivestoencourage customerstoreturnunusedproductforproperdisposal. Compliance and incidents Wemeetalllocallawsorregulationsasamini- mum,butsetoursightshigher.OurGrouppolicies areoftenmorerigorousthanexternalstandards. WereceivednosignificantSHEfinesin2010forthe eighthconsecutiveyear. However,wepaidthreesmallfinesthisyearforminor infractions.Theserelatedtoawaterqualityviola tion,aphysicaldefectinastoragetank,andexcessiveuseofaboiler.Whilenoneoftheseincidents presentedasignificantrisktoouremployeesorthe localcommunity,wetakeallincidentsseriously. Wehavetakenstepstocorrecteachproblemand preventsimilarincidentsfromoccurringinfuture. More on the Web
SHE performance and goals: www.roche.com/she_performance Environmental protection: www.roche.com/environment SHE policy: www.roche.com/safety_health_and_environmental_
protection.pdf
Group fact sheets, positions, policies and guidelines:

www.roche.com/policies_guidelines_and_positions
Genentech sustainability report:

www.gene.com/gene/about/environmental
Independent Assurance Report
137
TotheCorporateGovernanceandSustainabilityCommitteeof RocheHoldingLtd,Basel(Roche). Wehaveperformedassuranceprocedurestoprovideassurance onthefollowingaspectsofthe2010corporateresponsibility reportingofRoche. Subject matter Dataandinformationdisclosedinthecorporateresponsibility reportingofRocheanditsconsolidatedsubsidiaries,excluding ChugaiPharmaceuticalCo.,Ltd.,forthebusinessyearended 31December,2010onthefollowingaspects: Themanagementandreportingprocesseswithrespectto thecorporateresponsibilityreportingandtothepreparation ofSHEandpeoplekeyfiguresaswellasthecontrol environmentinrelationtothedataaggregationofthese keyfigures; TheSHEkeyfiguresinthetablesonpages131to136 andsomeselectedpeoplekeyfiguresdisclosedonpages 115to121oftheRocheBusinessReport2010.
TheRocheCorporateGovernanceandSustainabilityCommittee isresponsibleforboththesubjectmatterandthecriteria. Ourresponsibilityistoprovideaconclusiononthesubjectmatterbasedonourassuranceproceduresinaccordancewith theInternationalStandardonAssuranceEngagements(ISAE) 3000.
Main assurance procedures Ourassuranceproceduresincludedthefollowingwork: Evaluation of the application of Group guidelines | ReviewingtheapplicationoftheRocheinternalcorporate responsibilityreportingguidelines; Site visits | VisitingselectedsitesofRochesPharmaceuticalsandDiagnosticsDivisionsinGermany,Hungary, RussiaandtheUS.Theselectionwasbasedonquantitative andqualitativecriteria; Interviewingpersonnelresponsibleforinternalcorporate responsibilityreportinganddata ollectionatthesites c wevisitedandattheGroupleveltodeterminetheunderstandingandapplicationofRocheinternalcorporate responsibilityguidelines; Assessment of the key figures | Performingtestson Criteria TheRocheGroupinternalcorporateresponsibilityreporting asamplebasisofevidencesupportingselectedSHEand peoplekeyfigures(Rocheaccidentrate,energyconguidelinesbasedontheResponsibleCareprogramme sumption,CO2emissionsrelatedtoenergyconsumption, Health,SafetyandEnvironmentalProtectionreportingguide- l inespublishedbytheEuropeanChemicalIndustryCouncil releaseofhalogenatedhydrocarbons,useofwater, CEFICandtheSustainabilityReportingGuidelinesG3pub- finesinrelationtosafetyandenvironmentalprotection, lishedonOctober2006bytheGlobalReportingInitiative headcount/FTEdata,staffturnoverandseniormanage(GRI);and mentpositions)concerningcompleteness,accuracy, ThedefinedproceduresbywhichSHEandpeoplekey adequacyandconsistency; Review of the documentation and analysis of relevant figuresaregathered,collatedandaggregatedinternally. policies and basic principles | Reviewingtherelevant documentationonasamplebasis,ncludinggroupsustaini Responsibility and methodology abilitypolicies, anagementandreportingstructures m Theaccuracyandcompletenessofcorporateresponsibilityindiand ocumentation. d catorsaresubjecttoinherentlimitationsgiventheirnature Assessment of the processes and data consolidation | andmethodsfordetermining,calculatingandestimatingsuch data.Ourassurancereportshouldthereforebereadincon- Reviewingtheappropriatenessofthemanagementand nectionwithRochesinternalguidelines,definitionsandprocereportingprocessesforcorporateresponsibilityreporting; duresonthereportingofitscorporateresponsibilityperforandAssessingtheconsolidationprocessofdataatthe mance. grouplevel.
138
Conclusions Inouropinion Theinternalcorporateresponsibilityreportingguidelines arebeingappliedproperly; Theinternalreportingsystemtocollectandaggregate SHEandpeoplekeyfiguresisfunctioningasdesignedand providesanappropriatebasisforitsdisclosure. Basedonourworkdescribedinthisreportandtheassessa mentofcriteria,nothinghascometoour ttentionthatcauses ustobelievethatthecorporateresponsibilityinformation mentionedinthesubjectmatterand isclosedwiththecorpod rateresponsibilityreportingintheRocheBusinessReport 2010doesnotgiveafair ictureofRochesperformance. p Zurich,21January2011 PricewaterhouseCoopersAG
The Global Reporting Initiative sustainability reporting guidelines

WiththisyearsAnnualReportwecontinueourapproach ofaligningoursustainabilityreportingtotheguidelinesofthe GlobalReportingInitiative(GRI). AsforthelastthreeAnnualReports,Rocheisoftheopinion thattheA+leveloftheGRIG3guidelinesappliestoitsAnnual Report2010.Thiswascheckedwithandconfirmedbythe GRI. Detailsofhowwereportagainsteachindicatorcanbefound atwww.roche.com/reporting_and_indices
DrThomasScheiwiller
StephanHirschi
SeverinSchwan
Published by F. Hoffmann-La Roche Ltd 4070 Basel, Switzerland Tel. +41 (0)61 688 11 11 Fax +41 (0)61 691 93 91 Media Office Group Communications 4070 Basel, Switzerland Tel. +41 (0)61 688 88 88 Fax +41 (0)61 688 27 75 Investor Relations 4070 Basel, Switzerland Tel. +41 (0)61 688 88 80 Fax +41 (0)61 691 00 14 World Wide Web www.roche.com Corporate Sustainability Committee Tel. +41 (0)61 688 40 18 E-mail: corporate.sustainability @ roche.com To order publications Tel. +41 (0)61 688 83 39 Fax +41 (0)61 688 43 43 E-mail: basel.webmaster @ roche.com
Next Annual General Meeting: 1 March 2011
Cautionary statement regarding forward-looking statements

This Annual Report 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 causeactual results to differ materially in the future from those reflected in forward-looking statements contained inthis Annual Report, 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 inproduction; (8) loss ofor inability to obtain adequate protection for intellectual property rights; (9) litigation; (10)loss of key executives orother employees; and (11) adverse publicity and news coverage. The statement regarding earnings per share growth is not aprofit forecast and should not be interpreted to mean thatRoches earnings or earnings per share for 2010 or any subsequent period will necessarily match or exceed the historical published earnings or earnings per share of Roche. All trademarks mentioned enjoy legal protection. Links to third party pages are provided for convenience only. We do not express any opinion on the content of any thirdparty pages and expressly disclaim any liability for all thirdparty information and the use of it. The Roche Annual Report is published in German and English. Printed on non-chlorine bleached, FSC-certified paper. The Roche Annual Report is issued by F. Hoffmann-La Roche Ltd, Basel, Group Communications.
On the cover: Jone F. (USA), a participant in the phase III EMILIA trial, is receiving treatment with TDM1 for advanced HER2-positive breast cancer.
F. Hoffmann-La Roche Ltd 4070 Basel, Switzerland 2011 All trademarks are legally protected. www.roche.com
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2010

Roche Annual Report

Creating value for patients

2009 2008 Research and development 2

8,893 4,979 Total dividend

2009 2008 Operating prot 2

5,175 4,313 Number of employees

2009 2008 Income taxes 2

81,507 80,080 Total employee remuneration

2009 2008 Net income

12,080 11,129 Patients on clinical trials 4

2009 2008 Core Earnings per Share

302,063 277,674 Eco-efciency rate 5

Price development of non-voting equity security (Genussschein) |

Roche non-voting equity security

Swiss Market Index (rebased)

RG1678 a first-in-class GRI for schizophrenia

compound rG1678 shows improvement in negative symptoms of schizophrenia

Pharmaceuticals pipeline | Targeting areas of high unmet medical need

Current as of January 2011

Our business | Innovation is our answer

Roche Business Report 2010

Roche Business Report 2010

Roche Business Report 2010

Roche Business Report 2010

Roche Business Report 2010

Roche Business Report 2010

Roche Business Report 2010

Roche Business Report 2010

Roche Group | Our Group posted

Roche Business Report 2010

Group Results and Outlook

Roche Business Report 2010

Roche Business Report 2010

Key achievements in 2010

Roche Business Report 2010

A changing healthcare sector

Roche Business Report 2010

Transforming the practice of medicine

Personalised healthcare: tailoring treatment to patients

Roche Business Report 2010

Pairing targeted therapies with companion diagnostics

Roche Business Report 2010

Diagnostics Moleculartest* (PCR) identifiespatientscarrying amutatedBRAFgene

Therapeutics Activeingredient(BRAF inhibitor RG7204)targets melanomacancercells inpatientswithmutated BRAFgene

Diagnostics Tissuetest* identifies tumourswithhighexpression oftheMetreceptor

Therapeutics Antibody(MetMAb RG3638)docksonMet receptorandinhibits cancer-triggeringgrowth f actor

Diagnostics Tissuetest*determines HER2receptorsorHER2 geneexpression

Therapeutics Antibody-drugconjugate bindstoHER2receptors (Herceptin)andlinked chemo herapyagentpenet tratescancercell(TDM1, RG3502)

* These tests are being developed by Roche Diagnostics.

Roche Business Report 2010

Roche Business Report 2010

Diagnostics Tissuetest*determines HER2receptorsorHER2 geneexpression

Therapeutics Antibody(pertuzumab RG1273)inhibitspairingof HER1,HER2andHER3 receptorsandthusprevents fatalsignallingincancer cells

Diagnostics Moleculartest*(PCR)to determinelevelsofcirculating HepatitisCvirus

Therapeutics HCVnucleosidepolymerase inhibitor(RG7128)prevents reproductionofhepatitisC viruses

Diagnostics Immunoassay*measures theserumleveloftheprotein periostin(anIL-13gene product)andthusdetects lunginflammationdriven byIL-13

Therapeutics Antibody(lebrikizumab RG3637)inhibitschemical messengerinterleukin-13 thattriggersinflammationin asthmaticreactions

* These tests are being developed by Roche Diagnostics.

Roche Business Report 2010

From precise diagnosis to more personalised therapy

3 Prognosis Thepathologistthencharacterisesthetumouron thebasisofcelldifferentiationandothercriteria. Rocheiscurrentlydevelopinganumberofmolecular biomarkersthatwillenablephysicianstopredict thecourseofcancersasaccuratelyaspossible.

Roche Business Report 2010