Diagnostics In 2009 sales again

Transcription

1 Diagnostics In 2009 sales again grew well ahead of the market, with strong uptake of new products contributing to market share gains in key segments such as immunoassays and tissue diagnostics. All business areas launched major new products that Roche believes will help drive above-market growth in Efforts to enhance operational efficiency are ongoing throughout the division and contributed to higher operating profit in The division will continue and expand these efforts in order to improve productivity and profitability further.

2 47 Diagnostics Division in brief Key figures In millions of CHF % change in CHF % change in local currencies % of sales Sales 10, Professional Diagnostics 4, Diabetes Care 2, Molecular Diagnostics 1, Applied Science Tissue Diagnostics Operating profit 1, Operating free cash flow 1, Research and development Diagnostics Executive Committee 31 December 2009 Jürgen Schwiezer 1 Manfred Baier Roland Diggelmann Dirk H. Ehlers Christian Hebich Michael Heuer Alexander Keller Frank Lennartz Hany Massarany Daniel O Day 2 Frank Pitzer 3 Claus-Joerg Ruetsch 3 Michael Tillmann Robert Yates CEO Division Roche Diagnostics Applied Science Asia Pacific Professional Diagnostics Finance and Services EMEA (Europe, Middle East, Africa) and Latin America Global Platforms and Support Human Resources Tissue Diagnostics Molecular Diagnostics Regulatory Affairs and Quality Management Legal North America Business Development 1 To 31 December 2009 see Corporate Governance. 2 Chief Operating Officer of Roche Diagnostics since 1 January Associate member.

3 48 Roche Business Report 2009 Diagnostics Roche s Diagnostics Division is the global leader in the 40 billion US dollar in vitro diagnostics market. The division strives to develop systems that make testing more efficient and provide results of high medical value. Diagnostics Division Roche s Diagnostics Division is the world s leading supplier of in vitro diagnostics (IVDs). IVD tests tests performed in a laboratory or at the point of care on blood and other samples from patients are a critical source of objective information about health and disease. Roche s diagnostic instruments and reagents help doctors detect diseases, select appropriate treatments and monitor patients responses to care. In addition, scientists use the division s research products to gain a better understanding of the causes of disease and discover new treatments. In over 150 countries the division serves customers spanning the entire healthcare spectrum from hospitals and commercial medical labs, to physicians, to patients with conditions requiring them to self-test. In 2009 Roche had a 20% share of the global IVD market, valued at an estimated 40 billion US dollars in annual sales. 1 Strategic priorities Changing demographics, new technologies and mounting pressure on budgets and pricing are among the trends shaping the healthcare market. The Diagnostics Division s strategic priorities are designed to respond to these trends and capitalise on the growth opportunities they present. Testing efficiency is one pillar of the division s business. Roche s automated diagnostic systems embody decades of engineering innovation. Future advances will include enhanced workflow integration and IT capabilities supporting electronic patient record management. Testing efficiency alone is not enough. Products of high medical value are critical for sustained competitiveness and growth. Novel Roche tests mark significant advances in oncology, cardiology and other major therapy areas. Increased investment in biomarker research and in trials to demonstrate the clinical utility of new tests will yield further innovations. Sales by region Europe/Middle 53% (+9%) East/Africa Japan 5% (+0%) Asia Pacific 10% (+25%) Latin America 6% (+15%) North America 26% (+4%) Other 0% ( 14%) Italics = growth rates (in local currencies). Together, Roche s Pharmaceuticals and Diagnostics Divisions are working to advance personalised healthcare. Activities are aligned to help increase drug R & D productivity, discover more targeted medicines and drive development of companion diagnostics. This has the potential to revalue diagnostics, which inform the majority of clinical decisions yet account for less than 3% of medical spending. The Diagnostics Division is outperforming the market in the Emerging Seven (E7) countries 2, most notably in China. To accelerate growth further, it is expanding its local organisations and investing in programmes to bring products to market more quickly. The division intends to improve its profitability further through a combination of strong sales growth and efficiency initiatives targeting virtually every area of operations. This report contains information on progress made in Figures on market growth, market share and market size are estimates based on company and independent reports and Roche analysis. 2 E7 markets = Brazil, Russia, India, China, South Korea, Mexico and Turkey.

4 49 Sales and instrument placements were up strongly in 2009 Results and main business developments In 2009 the Diagnostics Division recorded sales of 10.1 billion Swiss francs, an increase of 9% in local currencies (4% in Swiss francs; 4% in US dollars) over This was more than twice the estimated IVD market growth rate (3 4%). All five divisional business areas contributed to sales growth, led by Professional Diagnostics and Diabetes Care. Immunoassays and single-strip blood glucose monitoring systems remained these businesses primary growth drivers. Molecular Diagnostics core blood screening and virology segments delivered a solid single-digit rise in overall sales. In the Applied Science unit, strong demand for the MagNA Pure and LightCycler product lines fuelled further above-market growth. The Tissue Diagnostics business, acquired in 2008, continued to grow well ahead of the market, driven mainly by its advanced tissue staining portfolio. Instrument placements were again up significantly for the division as a whole and were a major growth driver. Geographically, the EMEA 4 and Asia Pacific regions contributed most to growth, with all five business areas recording solid sales gains in these markets. Tissue Diagnostics remained the primary growth driver in North America. In Japan Professional Diagnostics and Applied Science grew moderately and Tissue Diagnostics achieved high double-digit growth, but divisional sales there were flat overall, largely due to reduced government IVD reimbursement and lower research funding. Sales in the E7 markets grew 24% and accounted for over 10% of total divisional sales revenues. Increased investment in these markets and strong demand for immunoassays and other leading-edge Roche products contributed to this strong, above-market growth. on schedule in the EU and other markets in the second half of the year. Roche expects this major addition to its cobas family of modular Serum Work Area systems to enhance its competitiveness significantly in both clinical chemistry and immunoassays. Altogether, the division launched over 20 major products in The Diagnostic Division s operating profit rose 12% in local currencies (1% in Swiss francs) to 1,198 million Swiss francs, and the operating margin at constant exchange rates advanced 0.4 percentage points. These increases largely reflect sales growth, tight cost management and the significant one-time expenses recorded in 2008, including those relating to the Ventana acquisition. In Swiss francs the margin decreased by 0.4 percentage points, to 11.9%, due to a particularly unfavourable combination of exchange rate movements. For more information on the division s operating results, see the Finance Report (Part 2 of this Annual Report). Efficiency gains Initiatives to simplify core processes, consolidate services, streamline product portfolios and reduce time to market are in place at a number of major sites. In 2009 such initiatives contributed to significant cost savings and helped the division limit headcount growth despite the acquisition of Swisslab and innovatis and despite a substantial sales force increase in China. Notable successes included the consolidation of regional call centres, the creation of shared service centres in North America and reductions in manufacturing costs. Existing and new programmes will be introduced at more sites to improve productivity further and achieve additional cost savings. Divisional sales growth was broad based, extending across all five business areas and all major regional markets except Japan. All business areas again launched major new products in The first two modules of the cobas 8000 analyser series for high-throughput laboratories were launched 3 Unless otherwise stated, all growth rates are in local currencies. 4 EMEA = Europe, Middle East and Africa.

5 50 Roche Business Report 2009 Diagnostics Roche s top-selling diagnostics sales in millions of CHF Accu-Chek Mobile cobas e 601 cobas c 501 Cobas TaqMan 48 cobas TaqScreen MPX Test 2,969 1,627 1, Accu-Chek blood glucose meters and insulin pump systems cobas e modules Modular Analytics Elecsys cobas c modules Modular Analytics Cobas Integra Cobas AmpliPrep Cobas TaqMan Cobas AmpliScreen cobas TaqScreen +6% * +19% * +4% * +4% * +8% * Diabetes management Immunoassays Clinical chemistry Virology Blood screening

6 51 An industry-leading portfolio of products for clinical testing, blood screening and life science research CoaguChek xs Ventana IHC reagents MagNA Pure LC2.0 Sysmex XT-4000i Genome Sequencer FLX CoaguChek meters Immunohistochemistry reagents MagNa Pure Systems Light Cycler Systems Sysmex analysers 454 Genome Sequencers +20% * +28% * +35% * +6% * +0% * Coagulation monitoring Advanced tissue staining Gene expression research Hematology DNA sequencing Images are not to scale. * Year-on-year sales growth in local currencies.

7 52 Roche Business Report 2009 Diagnostics Immunoassay sales were again a major growth driver, increasing at roughly three times the market growth rate. The new cobas 8000 modular system will make Roche Professional Diagnostics an even stronger competitor in both immunoassay testing and clinical chemistry. Business area highlights Professional Diagnostics above-market growth and major new products Roche Professional Diagnostics is a leading supplier of instruments, tests, software and services for laboratories and of decentralised testing products to support clinical decision making at the point of care. In 2009 the business area had a 15% share of a global market estimated at 28 billion US dollars. Professional Diagnostics full-year sales grew nearly twice as fast as the market, rising 9% to 4,553 million Swiss francs. Immunoassay and clinical chemistry systems for laboratories, the two largest segments by sales, remained the primary growth drivers. Regionally, sales outpaced market growth everywhere except North America, where the industry as a whole experienced flat or negative sales growth in most segments as a result of the economic downturn. The immunoassay business gained further market share on sales growth of 19%; this was roughly three times the market growth rate. Clinical chemistry sales grew ahead of the market, advancing 4%. The placement rate for cobas modular analysers, particularly the cobas 6000 series for mid-size laboratories, remained high, fuelling sales in both these segments. Coagulation monitoring sales increased 20%, reinforcing Roche s leadership in this segment. Sales of the top-selling CoaguChek XS monitor for patient use were up strongly again, helped by continued robust demand in Europe and expanded Medicare reimbursement for home coagulation testing in the US. Studies indicate that self-testing helps patients on anticoagulants to keep their medication within the therapeutic range and can reduce complications. In August Professional Diagnostics began rolling out the cobas 8000 modular analyser series for highthroughput laboratories in Europe and other markets that recognise CE Mark certification. The response to this new flagship cobas platform has been overwhelmingly positive, with more than 20 orders shipped by the end of Two clinical chemistry modules (c 701 and c 502) were launched in By the end of 2010 four cobas 8000 clinical chemistry and immunoassay modules will be available worldwide in 38 customisable configurations. The new platform is based on the same proven technologies as the smaller cobas 6000 and cobas 4000 systems, with expanded sample handling and workflow capabilities and enhanced quality management features to meet the needs of laboratories performing up to 15 million tests per year. Professional Diagnostics immunoassay business has consistently grown at double-digit rates for the last nine years thanks to a large installed base and steadily expanding test menu. New tests introduced in 2009, like the Elecsys IL-6 (interleukin-6) immunoassay (an aid in the management of critically ill patients) and the high sensitivity Elecsys Troponin T assay (diagnosis of heart attack and cardiac risk stratification), were important growth drivers. In 2009 Professional Diagnostics launched six immunoassays and five new or second-generation clinical chemistry tests for a variety of therapy areas, including cardiology, women s health and critical care. In 2010 the business area will expand its test menu further, particularly in the US, where it expects to launch eight immunoassays. In September Roche concluded an exclusive license agreement with St. Vincent s Hospital, Sydney (Australia) for worldwide patent rights relating to the use of growth differentiation factor 15 (GDF-15) for the diagnosis of cardiac dysfunction. Elevated circulating levels of GDF-15 can help identify highrisk individuals with a variety of cardiovascular conditions, from stable coronary artery disease to heart failure. Together with an agreement signed with Hannover Medical School (Hannover, Germany) in January 2009, also relating to GDF-15, and Roche s own patents in this field, this latest agreement will further strengthen Roche s leading position in the diagnosis of cardiovascular diseases.

8 53 The new Accu-Chek portfolio delivered solid sales growth in a difficult market Diabetes Care market leadership strengthened Roche Diabetes Care develops and commercialises blood glucose (BG) monitoring and insulin delivery systems that enable people with diabetes to manage their condition more effectively. It is the industry leader with a 31% share of the global BG monitoring market, worth nearly 7 billion Swiss francs in global sales. Self-management is a cornerstone of diabetes care because so many daily activities affect blood glucose levels. Frequent BG testing can lower the risk of serious long-term diabetic complications like stroke, amputation and blindness, while helping people with diabetes to maintain and improve their quality of life. Combo, which was launched in nine markets during 2009, and by continued strong demand for Accu- Chek infusion sets. In September Diabetes Care announced interim data from its Accu-Chek 360 View Outcome Study. The data indicate that people with type 2 diabetes who are not receiving insulin can improve their glycemic control by testing and analysing their BG levels in a structured way and translating the results into appropriate action. The 12-month study underscores Roche s commitment to enhancing the medical value of diabetes self-management. The final results will be announced in June Excellent uptake of the latest Accu-Chek products helped drive above-market sales growth for Diabetes Care in In 2009 Diabetes Care s sales increased 6% to 2,969 million Swiss francs. This was significantly ahead of global market growth, which was flat due to the economic downturn. All regions except Japan delivered sales growth, with strong sales contributions from emerging markets. The Accu-Chek Aviva and Accu-Chek Performa BG monitoring systems remained the primary growth drivers. Accu- Chek Aviva, Roche s top-selling BG monitoring system, continued to post strong double-digit sales growth. Introduced in February 2009, the Accu-Chek Mobile, the first and only strip-free BG monitoring system, experienced excellent uptake in its launch markets and contributed to market share gains in the highvalue customer segment. At the end of 2009 it was available in nine European countries. Accu-Chek Mobile s enhanced ease of use is appreciated especially by people with insulin-dependent diabetes who need to test their BG frequently. The launch of the sleek Accu-Chek Aviva Nano and Accu-Chek Performa Nano, designed especially for younger users, has also been a significant success; at the end of 2009 these new single-strip meters were available in over 20 markets. Sales of insulin delivery systems showed double-digit growth for the year, helped by excellent uptake of the new, interactive insulin pump system Accu-Chek Molecular Diagnostics new products lay the foundation for future growth Roche Molecular Diagnostics develops and commercialises advanced diagnostic and blood screening platforms and tests based on Roche s proprietary real-time polymerase chain reaction (PCR) technology. The fast-growing (+12%), highly competitive molecular diagnostics market is valued at 4 billion Swiss francs; Roche is the leader with a 32% market share. Molecular Diagnostics full-year sales advanced 5% to 1,183 million Swiss francs. Growth was led by solid gains in the EMEA region, especially in the core blood screening business. The fully automated cobas TaqScreen MPX Test, available in Europe since 2006 and launched last year in the US, contributed strongly to 8% growth in this segment, with significant competitive gains in several markets. This multiplex blood screening test detects five viral targets. In virology, the largest segment by sales, Molecular Diagnostics retained its leading market share with 4% sales growth. Strong virology sales and new blood screening accounts in Portugal, Spain, Thailand and the UK resulted in above-market, double-digit sales growth in the Asia Pacific and EMEA regions. Since its EU launch in April, Roche s LightCycler MRSA Advanced Test has experienced positive uptake in countries where reporting methicillin-resistant Staphylococcus aureus (MRSA) infections is customary Molecular Diagnostics won several important new blood screening accounts in 2009, contributing to significant competitive gains in some markets.

9 54 Roche Business Report 2009 Diagnostics Excellence in science: Expertise in molecular biology 5 Major disease areas Over the years both Roche divisions have amassed tremendous expertise in molecular biology. Today they are applying this knowledge and a wide range of technologies in the pursuit of new tests and more targeted treatments in five major focus areas: oncology, inflammation, neuroscience, metabolism and virology. At the same time they are working together to gain further insights into molecular mechanisms that cause and drive disease. Every cancer drug development programme at Roche, for example, involves biomarker research aimed at validating treatment targets and identifying the patients most likely to respond to a new drug. Almost 30 years of cancer research at the molecular level have helped us develop new strategies that move us closer to the ultimate goal of one day curing cancer. Armed antibodies RNA interference Technologies & Methods Glycoengineering In silico science Nanotechnology formulations Structure-based drug design Stem Cells Signalling pathways Angiogenesis Biology Apoptosis Myeloid cell biology Innate immunity T-cell biology Oncology Inflammation Neuroscience Metabolism Virology 454 Life Sciences DNA Sequencing Viral resistance Neurodegeneration xcelligence Cell analysis Pharma Diagnostics NimbleGen Microarrays cobas, LightCycler Real-time PCR Ventana Tissue staining Immunoassays Multiplex protein analysis cobas cobas

10 55 Roche developed a test for the new pandemic flu virus within weeks after the virus was first reported or required. Studies indicate that the test s speed it reliably identifies MRSA carriers in less than two hours, versus one to three days using conventional methods can help significantly reduce the spread of this potentially deadly microbe in hospitals. Screening for MRSA is one of the fastest-growing segments in the North American molecular diagnostics market and is expanding in EMEA and some Asia Pacific markets. Roche expects to launch the LightCycler MRSA Advanced Test in the US in In December Molecular Diagnostics launched its new fully automated cobas 4800 System in Europe and other markets that accept CE Mark certification. The system is designed to meet the current and long-term molecular diagnostic testing needs of mid- to high-throughput laboratories, and Roche expects it to become a significant growth driver. The test menu currently comprises dual target tests for Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (NG) (the bacteria that cause chlamydia infections and gonorrhea) and a screening and genotyping test for human papillomavirus (HPV), the most common sexually transmitted infection, which is responsible for nearly all cervical cancers worldwide. In Australia and New Zealand, where the cobas 4800 System has been available with the CT/NG tests since September, the market response has been very strong. Next-generation oncology and microbiology assays for the system are in development. In August Molecular Diagnostics completed enrolment of patients into its pivotal ATHENA clinical trial. The trial, involving approximately 47,000 women, is designed to assess the value of screening women for cervical cancer using Roche s cobas 4800 HPV assay together with a standard Pap smear. Initial trial data will be available in February, and Roche expects to file the full ATHENA data set with the Food and Drug Administration (FDA) in the second quarter of If approved, the assay, which provides an aggregate result for 12 high-risk HPV genotypes and individual results for HPV genotypes 16 and 18 (the genotypes that put women at the greatest risk of developing cervical cancer), could help increase the sensitivity of screening for HPV infections that can lead to cervical cancer. When HPV DNA testing is performed in conjunction with a Pap smear, more women will be identified with precancerous cervical disease during the first round of cancer screening, enabling appropriate medical intervention. Additionally, because of the greater sensitivity of HPV DNA testing, women who are HPV DNA negative may potentially be deferred to longer screening intervals. Moreover, identification of HPV genotypes 16 and 18 provides actionable information guiding the clinician to investigate further those women at the highest risk for cancer. Applied Science broad-based growth Roche Applied Science supplies scientists in academia and the biotech and pharmaceutical industries with instruments and highly specific reagents and test kits for a broad range of research applications. The global life science research market, valued at 8 billion US dollars, grew approximately 8% in Applied Science s sales for 2009 totalled 870 million Swiss francs, an increase of 15% over the previous year. The MagNA Pure and LightCycler product lines (nucleic acid sample preparation (NAP) and quantitative polymerase chain reaction (qpcr) analysis) were again the biggest contributors to growth, with sales up 35% helped by strong demand for instruments and reagents for pandemic influenza testing and surveillance. In May Applied Science developed and launched the RealTime ready Influenza A/H1N1 Detection Set for research use, just weeks after first reports of the new pandemic flu virus in Mexico. The set enables rapid, accurate detection of the virus s RNA (genetic material). The FDA granted Emergency Use Authorization of the kit in November, making it available for clinical use in specially certified laboratories in the US. Other significant new products include the fully automated MagNA Pure 96 System for high-throughput NAP. Uptake by academic and industrial customers has been robust since the system s global launch in September. Tests for hospitalacquired infections like MRSA and for human papillomavirus infection are two of the fastest-growing segments in molecular diagnostics. In 2009 Roche launched competitive new products in both these segments in Europe. Demand for instruments and reagents for pandemic flu testing were a major sales driver for Roche Applied Science in 2009.

11 1 56 Roche Business Report 2009 Diagnostics Significant product launches by business area (2010) Total (25)* Cell analysis systems showed very strong sales growth in 2009, driven mainly by the xcelligence product t l y line but also partly attributable to the acquisition of innovatis AG in March. Applied Science s latest Real Time Cell Analyser the xcelligence RTCA DP (dual plate) instrument has been a growth driver since its worldwide launch in April. Its value as a cancer research tool was enhanced further by the November launch of the xcelligence System D CIM-Plate 16, a culture plate enabling scientists l to study cell migration and invasion dynamically, 1 0 e in real time, over the entire time span of an experiment. This may help researchers identify molecular targets for new drugs that inhibit cancer cells ability to invade nearby tissues and migrate (metastasise) to distant parts of the body. Microarray sales rose 44%, nearly four times the global array market growth rate. Growth was fuelled by continued strong performance of NimbleGen s innovative Sequence Capture technologies, which ideally complement the business area s next-generation sequencing systems, and by the introduction of the high-resolution, high-throughput MS 200 Microarray Scanner. Sales of DNA sequencing reagents showed a robust 26% increase, but overall sales of DNA sequencing systems were flat due to the economic downturn and the resulting decline in research funding, particularly in the US. The US administration s 2009 stimulus package for biomedical research is expected to alleviate the situation in The launch of a mediumthroughput, benchtop version of the Genome Sequencer (GS) FLX System in 2010 is expected to spur further growth. The GS Junior System will close the market gap between low-throughput traditional 0 sequencing and the ultra-high-throughput of instruments like the GS FLX System, putting next-generation 6 (7) ( ) sequencing technology within the reach of thousands of additional researchers worldwide. Tissue Diagnostics rapid penetration of new markets Roche Tissue Diagnostics (Ventana Medical Systems in North America) is the world s leading supplier of tissue-based cancer diagnostics. Its instruments and reagent systems are used in histology, cytology and drug discovery laboratories worldwide. In 2009 the unit had a 20% share of the tissue diagnostics market, which is valued at over 2 billion Swiss francs. Tissue Diagnostics recorded sales of 480 million Swiss francs in 2009, a 29% increase over the eleven months sales consolidated a year earlier following the Ventana acquisition in February On a comparable basis, sales rose 21%, significantly outpacing the market, which is estimated to be growing at 12%. The business area s core advanced tissue staining portfolio remained the primary growth driver, with immunohistochemistry (IHC) reagents for cancer diagnosis and advanced staining instruments fuelling robust 27% growth in this segment. Placements of the fully automated BenchMark Ultra, successfully launched in North America and Europe in 2008,

12 57 Roche has a biomarker programme for every drug that it is developing accelerated steadily during the year. This is the first and only system to perform simultaneous IHC and in situ hybridisation (ISH) testing on a single continuous and random access platform, enabling samples to be added and removed at any time without interrupting workflow. Full-year sales of the Symphony slide staining instrument and hematoxylin and eosin reagents for the high-volume primary staining market grew 39%. Tissue Diagnostics won market share in all regions, with especially strong gains in Asia Pacific and Latin America. It successfully leveraged the existing Roche infrastructure to expedite the hiring of sales personnel and the introduction of new products in EMEA, Asia Pacific and Latin America, contributing to above-market growth in these regions. By the close of 2009 the business area had established its own sales organisations in six of the E7 markets, and most of its major instruments and IHC reagents were already registered and available in Brazil, India, China and Mexico. Roche is addressing the increasing demand for fully automated products in emerging markets, which is contributing to strong market share gains there. In 2009 Tissue Diagnostics launched 17 new IHC reagents to aid in diagnosing various cancers, including leukemia, lymphoma and cancers of the colon and prostate. Working closely with Roche s Pharmaceuticals Division, it continued to develop exploratory tests that may one day lead to companion diagnostics for Roche therapies. As a direct result of this collaboration, Tissue Diagnostics expects two HER2 assays to receive CE-IVD Marking in the first half of 2010 for use as aids in assessing both breast and gastric cancer patients for whom Herceptin treatment is being considered. Research and development Roche s Diagnostics Division continues to invest heavily in innovation. In 2009 research and development (R&D) costs totalled 978 million Swiss francs, an increase of 5% over R&D costs as a percentage of sales remained stable at 9.7%. Projects accounting for a significant share of R & D spending in 2009, and which will remain funding priorities in 2010, include the ATHENA trial of Roche Molecular Diagnostics cobas 4800 HPV screening and genotyping test in the US, development of the cobas 8000 modular analyser series and development of a next-generation molecular diagnostic platform for mid- to high-throughput IVD testing and blood screening. The division also invested in developing new products in its tissue diagnostics business. Expansion of the immunoassay menu will be a further major focus of R&D investment in The division s R&D productivity has improved in recent years. Since 2007 the number of major product launches has increased significantly, and the division expects 2010 to be another excellent year in terms of strengthening its product portfolio (see chart on p. 56 and the tables of Major product launches on pp ). The discovery and validation of biomarkers is essential to realising the promise of personalised healthcare. In pharmaceutical R&D they have many uses, from identifying new therapeutic targets and screening out unpromising drug candidates to selecting appropriate patient populations for clinical trials. In the clinic, biomarker tests increasingly provide invaluable information for early diagnosis and about disease predisposition, prognosis and the likelihood of treatment response (response prediction), contributing to earlier, more targeted therapeutic interventions. Roche s IVD portfolio already includes companion diagnostics contributing to more effective treatment in a number of conditions, including HER2-positive breast cancer, precancerous cervical changes caused by human papillomavirus infection, hepatitis B and C infection and cytomegalovirus disease. The Diagnotics Division is focusing much of its R & D spending on high-growth areas like molecular diagnostics, immunoassays and tissue diagnostics. Roche is working on potential companion diagnostic tests in all of the Group s key disease areas of interest, particularly oncology.

13 58 Roche Business Report 2009 Diagnostics Every drug being developed at Roche has a biomarker programme associated with it, and Diagnostics expertise and advice are made available for each of these programmes. At the end of 2009 Roche had five biomarker tests in late stage and six in early stage clinical validation for use as potential companion diagnostic tests and over 30 exploratory stage diagnostic programmes, in the areas of oncology, metabolism, virology, autoimmune and inflammatory disease and central nervous system disorders. There has to be a strong case for a biomarker s ability to detect disease or predict a clinical outcome before it moves into late-stage validation, where the aim is to establish clinical validity conclusively through further testing on samples collected in ongoing drug trials. more likely than seronegative patients to achieve a significant improvement in their disease following MabThera/Rituxan treatment. This could signal a major advance over the current trial-and-error approach to treating RA, in which patients cycle through various treatment options until an optimum response is achieved. Roche already markets assays for rheumatoid factor and anti-ccp. Given the Pharmaceuticals Division s strong oncology portfolio, identifying and validating biomarkers to support the use of Roche s marketed and developmental cancer medicines is naturally a major focus of research. Encouraging projects include a PCR-based test for BRAF V600E, a cancer-causing gene mutation associated with poor prognosis in several cancers, including malignant melanoma. Developed by Roche Molecular Diagnostics, the test was proven essential for selecting suitable patients in a phase I trial with the BRAF kinase inhibitor RG7204 in metastatic melanoma. RG7204, which selectively targets and induces cell death in tumours harbouring the BRAF V600E mutation, markedly prolonged progressionfree survival in patients in the trial who tested positive for the mutation. The test has also been used successfully in clinical trials to identify mutationpositive colorectal cancers. If RG7204 is approved, Roche expects to launch the BRAF V600E test as the companion diagnostic. Two other highly promising biomarkers that have already reached late-stage clinical validation are rheumatoid factor and anti-cyclic citrullinated peptide (anti-ccp) antibodies that are found in the blood of many rheumatoid arthritis (RA) patients. An analysis of pooled data from two clinical trials with MabThera/ Rituxan in RA show that patients who are seropositive for either of these antibodies are two to three times

14 59 Glossary Biomarker A characteristic that can be measured and evaluated as an indicator of a normal biological process, a disease process or a response to a therapeutic intervention. Elevated levels of the protein HER2 in cancer, for example, are a biomarker for a high probability of response to Herceptin. Cell analysis Methods of measuring the properties of cells, including their size and shape, cellular parameters such as the presence of specific proteins, and cellular processes such as proliferation and growth. Cell analysis technologies play an important role in drug development and production. CE Mark certification Certification that an in vitro diagnostic (IVD) product complies with all safety, health and environmental requirements for use in the European Union. Certified diagnostics are referred to as CE IVDs. Clinical chemistry A branch of diagnostics comprising tests that detect and measure changes in the chemical composition of body fluids and tissues to diagnose or predict the course of a disease. Immunoassay A laboratory test that detects or measures a target substance in a sample using an immunochemical reaction, in which an antibody binds to a specific antigen. The target can be a drug, a protein or a virus, for example. Immunohistochemistry (IHC) A method of staining biological tissue samples to determine the presence, level and location of specific proteins in cells; used in the diagnosis of cancer and other diseases. In situ hybridisation (ISH) A method of staining biological tissue samples to identify the presence and copy number of specific genes or genetic mutations in cells; used in the diagnosis of cancer and other diseases. Polymerase chain reaction (PCR) A laboratory method widely used in research and industry to make millions of copies of a DNA sequence of interest very quickly. Real-time PCR simultaneously amplifies (copies) and quantifies the targeted DNA molecule. Virology In molecular diagnostics, testing to detect certain serious and prevalent viral infections (e.g. HIV and hepatitis C) or to monitor their treatment. DNA sequencing Methods of determining the order of nucleotides (molecular building blocks) in genetic material. Knowing an individual s DNA sequence can provide insights into genetic changes which contribute to human disease or influence treatment response. High-throughput technologies read thousands of sequences at once. HER2 (human epidermal growth factor receptor 2) A protein involved in normal cell growth and found at increased levels in some cancers, including some breast and gastric cancers. Cancer cells may be tested in the laboratory for HER2 levels to help choose the most appropriate treatment.

15 60 Roche Business Report 2009 Diagnostics Product launches in the Diagnostics Division Major product launches in 2009 Business area Product Market and quarter Professional Diagnostics Elecsys immunoassays for PlGF (placenta growth factor) and sflt1 (soluble fms-like tyrosine kinase 1) for the diagnosis of preeclampsia Elecsys IL-6 (interleukin-6) immunoassay to aid the management of critically ill patients Elecsys Troponin I Assay: test for cardiac-specific troponin I levels to predict mortality risk in patients with acute coronary syndrome Diabetes Care Molecular Diagnostics Applied Science Tissue Diagnostics High-sensitivity Elecsys Troponin T immunoassay for the diagnosis of heart attack and cardiac risk stratification Sysmex XT-4000i: mid- to high-throughput hematology analyser with test capabilities for whole blood and other body fluids cobas c 701 clinical chemistry module for the cobas 8000 analyser series for high-throughput laboratories. Throughput: up to 2,000 tests/hour cobas p 501 and cobas p 701 automated storage and retrieval modules for bar-coded primary and secondary sample tubes cobas c 502 clinical chemistry module for the cobas 8000 analyser series. Throughput: up to 600 tests/hour Accu-Chek Mobile: integrated lancing and blood glucose monitoring device employing a unique no strip technology that replaces test strips with a continuous tape of 50 tests Accu-Chek Aviva Nano and Accu-Chek Performa Nano: sleeker versions of the Accu-Chek Aviva and Accu-Chek Performa meters, offering an enhanced feature set Accu-Chek Combo: interactive insulin delivery system combining an insulin pump and a blood glucose meter with broad data management capabilities; the meter also functions as a pump remote control Accu-Chek Active: new version of an existing meter, featuring an extended memory and a number of fail-safe capabilities LightCycler MRSA Advanced Test: automated real-time PCR-based test for methicillin-resistant Staphylococcus aureus. The test can identify MRSA carriers in under two hours cobas p 630 instrument and AmpliLink 3.3 software: the only pre-analytical instrument to unite primary tube handling with fully automated sample preparation, amplification and detection for molecular diagnostics cobas 4800 platform for automated DNA extraction and real-time PCR amplification and detection; with tests for human papillomavirus, Chlamydia trachomatis and Neisseria gonorrhoeae NimbleGen MS 200: fully automated high-resolution microarray scanner for use with all NimbleGen DNA microarrays xcelligence RTCA DP (dual plate) system: highly flexible medium-throughput system for real-time non-invasive cell analysis LightCycler 1536 system for high-throughput quantitative PCR analysis MagNA Pure 96 high-throughput system for preparing nucleic acid samples for PCR analysis INFORM EGFR DNA Probe: detects extra copies of the epidermal growth factor receptor (EGFR) gene, an abnormality associated with non-small cell lung cancer BenchMark XT advanced staining instrument BenchMark Ultra advanced staining system with continuous and random processing and STAT capabilities Intended use of CONFIRM anti-her2/neu Primary Antibody and INFORM HER2 DNA Probe expanded to include analytical claims regarding performance with gastric as well as breast tissue samples US Q4 Contractual territory in EMEA Q2 EU Q3 EU Q3 EU Q4 EU Q4 EU Q4 Worldwide Q2 Worldwide Q2 Worldwide Q2 Worldwide Q4 EMEA, APAC Q1 LATAM, APAC Q1 Additional European markets, LATAM, Q1 Japan Q4 EMEA, APAC Q2 EU = European Union; EMEA = Europe, Middle East and Africa; APAC = Asia Pacific; LATAM = Latin America; US = United States.

16 61 Major product launches planned for Business area Product Market and quarter Professional Diagnostics Diabetes Care Molecular Diagnostics Applied Science Tissue Diagnostics cobas e 602 immunoassay module for the cobas 8000 modular analyser series for high-volume laboratories. Throughput: up to 170 tests/hour Eight Elecsys immunoassays in the US; six in the EU cobas c 701 and cobas c 502 clinical chemistry modules for the cobas 8000 modular analyser series. Throughput: up to 2,000 and 600 tests/hour, respectively cobas p 501 and cobas p 701 automated storage and retrieval modules for bar-coded primary and secondary sample tubes cobas c 702 advanced clinical chemistry module for the cobas 8000 modular analyser series. Features automated reagent loading, enabling consolidation of a broader test menu. Throughput: up to 170 tests/hour cobas b 123 benchtop multiparameter analyser (blood gas, electrolytes, CO-oximetry and metabolites) for use at the point of care HIV combi 27 min: improved combination assay for HIV 1 antigen (p24) and HIV antibodies, enabling more reliable early detection of infection with the human immunodeficiency virus Accu-Chek Mobile: integrated lancing and blood glucose monitoring device employing a unique no strip technology that replaces test strips with a continuous tape of 50 tests Accu-Chek Combo: interactive insulin delivery system combining an insulin pump and a blood glucose meter with broad data management capabilities; the meter also functions as a pump remote control Accu-Chek Aviva Nano: sleeker version of the Accu-Chek Performa meter, offering an enhanced feature set LightCycler MRSA Advanced Test: automated real-time PCR-based test for methicillin-resistant Staphylococcus aureus Cobas AmpliPrep/Cobas TaqMan CMV (CE IVD): a viral load monitoring test that will enable physicians to improve the management of cytomegalovirus (CMV) disease in solid organ transplant patients cobas TaqScreen DPX Test: multi-dye blood screening test designed to simultaneously provide a quantitative result for parvovirus B19 and a qualitative result for hepatitis A virus Cobas AmpliPrep/Cobas TaqMan HIV-1 v2: second-generation test with a unique dual-target design enabling detection of two separate regions of the HIV-1 genome Cobas TaqMan 48 HIV v2 (CE IVD) High Pure virology test: offers a manual sample preparation option for customers with a low-volume workload GS Junior System: economical benchtop next-generation DNA sequencing system for smaller laboratories NimbleGen CGX-6 multiplex arrays: microarrays for high-resolution analysis of chromosomal abnormalities; capable of analysing six samples simultaneously xcelligence RTCA HT instrument, for automated high-throughput cell analyses and screening SeqCap EZ Exome v.2: in-solution enrichment capture technology for targeted next-generation sequencing Next-generation ultra-high density NimbleGen microarrays Dual colour/dual hapten in situ hybridisation (ISH) kit enabling target gene detection and control on a single slide. For use with all molecular markers; specifically to support HER2 testing Ventana anti-her2 neu (4B5) primary antibody and Ventana HER2 DNA probe: CE IVDs for assessing the likelihood of response to Herceptin treatment in both breast and gastric cancer patients BenchMark GX: economical, low-volume advanced tissue staining platform that automates all slide processing steps from baking to staining CE-IVD molecular probes targeting the enzyme TOP2A and the cell surface receptor IGF1R, for use as an aid in diagnosing and managing breast and lung cancer Discovery Ultra: platform for immunohistochemistry and in situ hybridisation research, offering significant improvements in ease of use, workflow and flexibility US Q3 Q1-Q4 US Q2 US Q2 EU Q4 EU Q4 EU Q4 Additional EU markets Q1-Q3 APAC Q1 Additional EU markets Q1 APAC Q1, US Q3-Q4 US Q3-Q4 US Q2 EU Q3 EU Q3 US Q4 EU Q4 Worldwide Q1 Worldwide Q1 Worldwide Q1 Worldwide Q2 Worldwide Q3 Q4 Q2 EU, APAC Q2 EU Q2-Q4 US, EU Q2 APAC, Japan, LATAM Q4 5 Planned launches may be delayed or not occur as a result of adverse regulatory decisions or other factors. EU = European Union; EMEA = Europe, Middle East and Africa; APAC = Asia Pacific; LATAM = Latin America; US = United States.

17 They re reading genes to help save lives one day Precision and speed count in modern molecular diagnostics. We re working to improve both. Our genome sequencers can read the building blocks of highly variable genes in a matter of days instead of weeks, which is how long it takes to achieve the same precision with conventional sequencing methods. This may one day help to extend and improve the lives of transplant patients. Currently we are investigating the use of our sequencers for HLA (human leukocyte antigen) genotyping of blood stem cells. Stem cell transplantation is performed to treat a number of diseases, including leukemia. Donors and recipients cells need to be as HLA-compatible as possible for treatment to be successful. Studies have shown that the Genome Sequencer FLX System * is a powerful research tool for high-resolution HLA genotyping, which is critical for people needing transplants. The closer the match between the donor s and recipient s HLA genes, the smaller the risk of transplant rejection. * For life science research only. Not for use in diagnostic procedures.

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