Roche Diagnostics Positioned fo gowth Heino von Pondzynski CEO Division Roche Diagnostics London, Septembe 9th, 2005 1 This pesentation contains cetain fowad-looking statements. These fowad-looking statements may be identified by wods such as believes, expects, anticipates, pojects, intends, should, seeks, estimates, futue o simila expessions o by discussion of stategy, goals, plans o intentions. Vaious factos may cause actual esults to diffe mateially in the futue fom those eflected in fowad-looking statements contained in this pesentation among othes: (1) picing and poduct initiatives of competitos; (2) legislative and egulatoy developments and economic conditions; (3) delay o inability in obtaining egulatoy appovals o binging poducts to maket; (4) fluctuations in cuency exchange ates and geneal financial maket conditions; (5) uncetainties in the discovey, development o maketing of new poducts o new uses of existing poducts; (6) inceased govenment picing pessues; (7) inteuptions in poduction; (8) loss of o inability to obtain adequate potection fo intellectual popety ights; (9) litigation; (10) loss of key executives o othe employees; and (11) advese publicity o news coveage. Fo maketed poducts discussed in this pesentation, please see full pescibing infomation on ou website at www.oche.com. 2
Financial Pefomance Gowth Dives Stategy and Outlook 3 Roche Diagnostics: a significant business One quate of Roche Goup sales & EBITDA H1 05 Sales CHF 16.6 bn H1 05 EBITDA CHF 5.5 bn Diagnostics Diagnostics 76 % 24 % 77 % 23 % Phama Phama 4
Roche Diagnostics Highlights H1 '05 Sales & magin gowth Consistent sales gowth as pedicted Opeating magins on tack as guided Key appovals fo H2 gowth Accu-Chek Aviva (FDA cleaed) Accu-Chek Spiit (FDA cleaed) Cobas AmpliSceen HBV Test (FDA appoved) News Numbe of IP & make access ageements Ageement with Lilly to develop optimized biomake eseach assays Exclusive stategic deal with 454 Life Sciences Inauguation of Banchbug PCR manufactuing facility FDA inspection of Bugdof conducted 5 H1 '05: Diagnostics sales H1 '04 H1 '05 gowth CHF m CHF m local CHF Diabetes Cae 1 1,353 1,375 3 % 2 % Molecula Diagnostics (ex. ind. bus.) 487 503 5 % 3 % Centalized Diagnostics 1,378 1,430 5 % 4 % Nea Patient Testing 1 336 338 3 % 1 % Roche in vito Diagnostics 3,554 3,646 4 % 3 % Applied Science 275 272 1 % -1 % Molecula Diag - industial business 50 52 11 % 4 % Life Science business 325 324 2 % 0 % Roche Diagnostics 3,879 3,970 4 % 2 % 2004 sales of NPT and DC have been adjusted to eflect switch of Pofessional Glucose fom DC to NPT 6
H1 '05: Sales by Region CHF 3,970 m local sales gowth Euope 1 49 % Asia-Pacific 7 % Euope Nth Ameica -1 % 4 % Japan 5 % Ibeia/ Latin Am 10 % Ibeia/Lat Am 10 % Asia-Pacific 15 % Othes 1 % Nth Ameica 28 % Japan 8 % 1 Euope, Middle East and Afica (excl. Ibeia) 7 Roche Diagnostics Gained maket leadeship in Japan Relative maket shae 2004 (in %) 1 US EMEA* Ibeia/ Latin Am Japan Asia Pacific 1 Roche 15 % Roche 28 % Roche 25 % Roche 10 % Roche 20 % 2 J&J 13 % Abbott 13 % Abbott 17 % Sysmex 9 % Abbott 13 % 3 Abbott 11 % Baye 9 % Izasa/ Beckmann 13 % Abbott 9 % Baye 7 % * Euope, Middle East and Afica 1 Souce: company epots, Boston Biomedical Consultants, Fuji Keizai, Roche analysis 8
Consistently gowing above industy Gaining shae fom a high base % maket shae 39 38 38 37 35 Othes Dade Beh. Beckman C. Baye J&J Abbott Roche 6 6 6 6 6 7 7 7 7 7 9 9 8 8 9 9 10 10 10 10 14 14 13 12 12 15 17 18 20 21 2000 2001 2002 2003 2004 Souce: Roche analysis, Boston Biomedical Consultants, company epots 9 Magins outpacing competitos Opeating pofit 1 EBITDA % of sales 35% 30% 25% 20% 15% 10% 5% 0% '00 '01 '02 '03 '04 '00 '01 '02 '03 '04 31.2 29 28 26 27 21.4 19 18 19 17 17 17 18 15 16 12 11 12 13 11 Roche Diagnostics Av. pee magins* 1 befoe exceptional items * Company magins includes Abbott Diag., Baye Diag., Beckman Coulte, Becton Dickinson, Dade Behing, JNJ (Otho & Lifescan) 10
Financial Pefomance Gowth Dives Stategy and Outlook 11 Diabetes Cae: Blood glucose monitoing Two majo launches to egain maket shae Blood Glucose Monitoing* CHF m 1500 +3 % 1000 500 0 H1 '03 H1 '04 H1 '05 Accu-Chek Aviva Successo of Accu-Chek Advantage Successfully launched Nodic egions & Nethelands quickly egaining shae US launch July '05 Majo EU counties planned Q3 '05 Accu-Chek Compact Plus 2nd geneation device combining mete, stips and lancet Roll-out commenced Q2 in 10 EU makets Rapid maket adoption (+25 %) US launch planned Q1 '06 * metes, stip, lancets 12
Diabetes Cae: Insulin delivey Stong take-off of Accu-Chek Spiit CHF m 80 70 60 50 40 30 20 10 0 Insulin delivey* sales ex US +2 % H1 '03 H1 '04 H1 '05 Accu-Chek Spiit Small, state-of-the at pump offeing pesonalised display and menu Received FDA cleaance (510k) Launched key EU makets Q1 Accu-Chek D-TRONplus 2nd geneation convenient pump with pe-filled catidges Euopean launch completed FDA Inspection Bugdof conducted * infusion pumps, infusion sets, disposables 13 Centalized Diagnostics Immunochemisty gowing double-digit CHF m 550 500 450 400 350 300 250 200 150 100 50 0 Immunochemisty +16 % H1 '03 H1 '04 H1 '05 Stong instument placements tanslating into sales (H1 '05 appox 20 % up) Roche new maket leade in cadiac make testing (lab systems) New studies 1 evaluating potential utility of NT-poBNP testing in boad spectum of cadiovascula diseases 1 JACC 2005; Suppl A:45:3 Abstact no 170 AM J Cadiol 2005;95:948-954 Am Heat J 2005;149:744-50 AJH 2005;18:73S-81S 14
Molecula Diagnostics Blood sceening diving gowth CHF m 250 200 150 Viology +3 % H1 '03 H1 '04 H1 '05 Viology Fist fully automated eal-time PCR system fo IVD use launched in EU Integated platfom (Cobas AmpliPep + Cobas TaqMan instuments) HIV, HCV and HBV Tests 150 100 50 0 NAT blood sceening +8 % H1 '03 H1 '04 H1 '05 Blood Sceening >100 m blood donations tested by Roche Geman Red Coss implementation on plan Cobas AmpliSceen HBV Test FDA appoved Cobas AmpliSceen HIV & HCV Tests FDA appoved fo cadaveic ogan & tissue donations 15 Nea Patient Testing Stengthening & efocusing coe businesses CHF m 100 75 50 25 0 +18 % Coagulation +3 % Blood gas/ Electolytes H1 '03 H1 '04 H1 '05 +7 % Cadiac makes CoaguChek systems Inceasing move to self-testing New data available demonstating health benefits egula testing 1 CoaguChek XS pilot launch in selected EU counties Q4 05 OMNI C & S (blood gas/electolytes) Gowth fom Japan, Asia Pacific and Latin Ameica Cadiac eade Top T & D-Dime gaining usage NT-poBNP launch on tack Q3 05 1 ACOA study: Compaing Self-Management of Oal Anticoagulant Theapy with Clinic Management; Annals of Intenal Medicine. 2005;142:1-10 16
Financial Pefomance Gowth dives Stategy and Outlook 17 Roche Diagnostics Gowth stategy Stategic famewok Shape Stetch Stengthen Shape Stetch Stengthen Coe business Futue gowth dives New makets 18
Roche Diagnostics Gowth stategy Stengthen coe business Stetch Shape Stengthen Stengthen and extend coe business Set foundation fo futue gowth Coe business Futue gowth dives New makets 19 Diabetes Cae: Gow Accu-Chek leadeship Complete potfolio of innovative poducts Gow and stengthen Accu-Chek band - state-of-the-at poducts - coss leveage blood glucose monitoing, insulin delivey and data management cicle-of-cae Diffeentiation though innovation - educe steps and devices - integate lancet, capillay action & measuement Analyze Continuous Stip Collect Act Lancing Stip Measuing Needle 20
Centalized Diagnostics: Leveage #1 position to dive seum wok aea penetation Incease pofitability, educe complexity and costs - povide total solution - automation & menu - value-added sevices - integate all pats in pocess - use seum wok aea placements to gain leadeship in immunodiagnostics - steamline potfolio to educe costs and impove custome convenience (technologies, platfoms and eagents) Low Medium High 2002 2002-2004 2006+ RD/Hitachi 747 MODULAR <P> PP, DP... RD/ Hitachi 917 RD/ Hitachi 717 Intega 800 Intega 700 Intega RD/ Hitachi 911/ 912 Intega 400/ 400+ RD/ Hitachi 902 RD/ Hitachi 704 MIRA MODULAR PP,DP... MODULAR <P> Intega 800 RD/Hitachi 912 Intega 400+ RD/Hitachi 902 cobas c 701 cobas c 501 cobas c 311 21 Molecula Diagnostics: Capitalize expetise to expand makets Gow and stengthen maket leadeship Expand menu in coe aeas viology HCV genotyping - expand blood sceening though testing sites and menu - maintain viology shae and picing though fully automated solutions & latest PCR technology women s health blood sceening genetics micobiology HPV, HSV I/ II WNV, pavo B19, HAV facto II, facto V, BCR/ ABL sepsis 22
Nea Patient Testing: Diving decentalization of testing Gow and stengthen maket leadeship - capitalize boad menu each - health-economic cost-benefit studies Integating boad menu with convenient systems - simplified poducts - integated unifom platfom fo acute diagnostics Cadiac Hospital Diabetes Coag basic detection modules RS232 USB Ethenet + + diffeent uppe housings coe instument module dockin station fo all instuments 23 Roche Diagnostics Gowth stategy Stengthen coe business, shape cuent makets Stetch Shape Shape & make new maket segments Develop futue gowth dives Stengthen Stengthen and extend coe business Set foundation fo futue gowth Coe business Futue gowth dives New makets 24
Technology and make discovey Setting foundation fo new maket ceation Poteomics - new system technology to handle multiple paametes and obtain competitive edge - new, high-value tests Potein Aay (IMPACT) Immunological Multi-Paamete Chip Technique Genomics - emeging new fields - ealy detection/ sceening - monitoing disease/ elapse - phamacogenomics - innovative new technologies - eal-time PCR - micoaay - methylation methyl-goup H C N O C C C N N H H 25 Oncology eseach pogam based on clinical need, medical value and technology match Cance site Sceening Diagnosis Relapse pediction Theapy pediction Monitoing Beast Colon Postate Blood/bone maow Live Bladde Lung TaqMan/ multiplexed PCR Micoaays No. tagets: 1-10 1000 100,000 Elecsys IMPACT (Potein Aay) 1-3 Up to 20 26
Poteomics pogam: Coloectal Cance Pomising novel makes identified TODAY FBOT maket 1 ~ US$ 100 m TOMORROW FOBT (fecal occult blood test) Sensitivity ~25 50 %* Make TM6 TM6 + TM7 Sensitivity 60 % 70 % TM6 + TM7 + BCM 3 + Specificity 80 % 75 % ** CRCM 6 Colonoscopy plus biopsy Sensitivity ca. 100 % Specificity ca. 100 % Colonoscopy plus biopsy Sensitivity ca. 100 % Specificity ca. 100 % 1 Souce: company epots * FOBT sensitivity: Collins et al. Annals Intenal Medicine 2005; 142: 81 Impeiale et al. NEJM 2004; 351:2704 ** peliminay intenal esults compaing cance against healthy in validation set only 27 Genomics pogam: Leukemia Need fo bette diagnosis Heteogeneous disease caused by genetic abnomalities Distinction between chonic, acute and sub-classifications essential fo successful teatment (~20 subgoups) No single test cuently sufficient to establish diagnosis Cuent tests (appox. 8) subjective, with up to 7 days tunaound Lack standadization and automation, and equie highly skilled staff Leukaemia Micoaay del(17p) del(13q) Othes CLL nbm CML t(9;22) sub-classification of majo leukaemia classes potential to eplace othe eseach methods/ technologies eseach pogam 05/ 06 t(9;22) t(11q23)/mll t(8;14) T-ALL T-ALL cotical t(1;19) t(12;21) Hypediploid ALL Othes ALL NL MDS Othes AML t(8;21) t(11q23)/mll t(15;17) inv(16) Complex Nomal + Othes 28
Applied Science and 454 Life Sciences Exclusive ageement enabling enty into new eseach business Load Genome into PicoTite Plate Load PicoTite Plate on machine Load Sequencing Reagents Pess GO! Sequence Genome 1 2 3 4 Taking High Thoughput Sequencing to a New Level Ulta high thoughput ~100 times faste ~90 % less expensive than cuent appoaches Potential diagnostic applications: Micooganism typing - ealie detection of esistance Oncology bette discimination of mutations Life science eseach maket Size: 1 B CHF Gowth: 5 % p.a. (diven by eplacement of old technology) Fo eseach use only 29 H2 '05: Enty into new makets Poduct BA 1 Indication Region LightCycle 480 AS High-thoughput eal-time PCR system fo high-end eseach maket Global Q3 454 Life Sciences sequencing poducts AS Ulta-fast nanotechnology-based genome sequencing system fo life science maket Global CARDIAC eade NT-poBNP NPT Stengthening cadiac potfolio in Nea Patient Testing maket Global Q4 SeptiFast MD Blood based test to apidly detect majo bacteial & fungal pathogens causing sepsis EU AmpliChip Leukemia Test MD Sub-classification of leukemia classes fo teatment optimisation Reseach study 1 Business Aeas: Applied Science (AS), Nea Patient Testing (NPT), Molecula Diagnostics (MD) 30
Roche Diagnostics Gowth stategy Stengthen coe business, shape cuent makets, stetch maket boundaies Stetch Dive shift in diagnostics to a new level of influence in healthcae Exploe options outside cuent maket boundaies Shape Shape & make new maket segments Develop futue gowth dives Stengthen Stengthen and extend coe business Set foundation fo futue gowth Coe business Futue gowth dives New makets 31 IVD testing <1 % of healthcae cae spend.. but influences 60-70 % of medical decisions Wold-wide healthcae spend $2,500 bn othe healthcae costs 83 % diagnostic sevices 1 % phamaceuticals 16 % Souce: WHO 32
Diagnostics can make healthcae moe efficient Healthcae systems ae looking to save money Diagnostics saves acoss the entie healthcae spectum Detection Diagnosis Teatment Monitoing Relapse Ealy detection/ pedisposition Pecise diagnosis Pesonalized teatment Monito teatment Monito disease/ elapse Diagnostics will gain in impotance and maket potential as theapies and use of esouces ae optimized 33 Diagnostics value poposition Tailoing medicine fo efficient healthcae Ove 2 million advese dug eactions (ADRs) pe yea AmpliChip CYP450 could cut costs in 44 % of cases US health spending foecast gowth 7.3 % pe annum US health cae system could potentially save $21 bn by 2020 Potential ADR Savings USD bn 25 $21 20 $15 15 $10 10 $7 5 0 2005 2010 2015 2020 Calculation: Total ADRs ADRs associated with dug metabolized by CYP450 Enzyme (75 % of 59% x total ADRs Cost pe ADR (fom above) 2'000'000 Lazaou et al 885'000 Phillips et. al. $4'685 Classen et. al 34
Roche Diagnostics will dive the change Diagnostics makes healthcae moe efficient Integal pat of Roche s stategy of pesonalized medicine Roche can contibute acoss the healthcae spectum Tests that save healthcae budgets can command highe pices We ae focusing on high value-based picing models Moden diagnostics will addess two of today s majo healthcae challenges: cost and safety 35 Roche Diagnostics Solid, low isk business offeing high etun Financial Pefomance sales gowth outpacing maket significantly highe pofitability than pees Maket Leade maket leade in all egions numbe one in most attactive segments boadest custome base Boad Potfolio extensive potfolio high-value poducts extensive, focused R&D spend tack ecod maket shaping innovations Stong maket position and innovative potfolio will allow Roche to lead and shape the futue of moden diagnostics 36
Ou gowth objectives - Diagnostics Reaffimed 2005 and beyond 2005: sales gowth above maket Moe than 20 poduct launches in 2005 On way to achieve opeating pofit magin 1 aound 23 % in 2006 baing unfoeseen events 1 befoe exceptional items 37 Appendix 38
Investing significantly above competition Pimay focus on new makes and technology CHF m 1000 Total R&D spend RDC % R&D spend 2004 800 600 560 630 680 720 730 RNP RCD 400 RMD 200 RAS 0 2000 2001 2002 2003 2004 0% 50% 100% New Developments Technology Poduct Update Poduct Cae Othe 39 Leading poduct goups ~ 80 % of sales New poducts diving gowth in each segment maket ank 1 1 2 H1 05 CHF m % loc 1,290 +3 746 0 503 +16 Poduct goup (s) Accu-Chek metes & eagents Cobas Intega, RD/ Hitachi, MODULAR SWA Elecsys, E170 B.A. DC CD CD Maket segment Blood glucose monitoing Clinical Chemisty Immunochemisty 5 top bands ae No.1 1 226 +3 Amplico HIV, HCV, HBV MD Molecula Diagnostics - Viology 1 147 +8 AmpliSceen, AmpliNat, TaqSceen MD NAT Blood Sceening 1 87 +18 CoaguChek NPT Coagulation monitoing (POCT) 2 85-2 Accu-Chek infusion systems DC Insulin delivey 3 57 +3 OMNI NPT Blood gas & electolytes (POCT) Souce: Roche analysis, Company epots 40
H1 '05: Diagnostics local sales 1 (1) By egion & Business Aea (vs. H1 '04) Global % loc m CHF gowth Nth Am. % loc m CHF gowth EMEA % loc m CHF gowth RoW m CHF % loc gowth Diabetes Cae 1,375 3 418-8 754 8 203 13 AC Advantage 618-5 228-19 277 5 113 8 AC Aviva 4 n.a. 1 n.a. 3 n.a. n.a. n.a. AC Compact/Plus 226 25 96 22 114 29 15 18 Lancets 91-1 41 1 41-6 9 17 Infusion Systems 85-2 14-18 69 2 2-1 Mol Dia (ex Ind Bus) 503 5 187 3 178-1 138 19 Viology 226 3 94 2 79-1 53 10 Blood sceening 147 8 51 5 53-7 43 40 Women s Health 44 9 21 8 12 11 11 9 Micobiology 18 13 1 34 3 16 13 11 Cl. Genomics 6 14 3 21 2 11 0-5 Centalized Dia 1,430 5 278 5 741 2 411 9 Clinical chemisty 746 0 182-1 377-2 186 5 Elecsys 503 16 82 19 266 13 155 19 Coagulation 74 0 3 49. 47-3 24 2 Hematology 50 24 2 30 24 27 24 20 Uinalysis 28 6 8 16 9-6 11 11 41 H1 '05: Diagnostics local sales 1 (2) By egion & Business Aea (vs. H1 '04) Global % loc m CHF gowth Nth Am. % loc m CHF gowth EMEA % loc m CHF gowth RoW m CHF % loc gowth Nea Patient Testing 338 3 122 0 150 0 66 15 HosPOC 142-1 70-8 46-5 27 33 Coag. Monitoing 87 18 41 25 42 10 5 33 Pimay Cae 86-3 10-13 53-3 23 2 Hospital Glucose 55-7 54-8 0 n.a. 0 n.a. In vito Diagnostics 3,646 4 1,005-2 1,823 4 818 12 Applied Science 272 1 105 4 111-1 56-1 Total Genomics Total Poteomics 132 50-2 1 44 24 0 4 55 16-5 -4 33 10-1 5 Applications Industial Business 12 73-2 7 3 33 n.a. 6 10 28-15 12 0 12 n.a. -2 Molecula Ind Bus 52 11 2 19 0-23 50 11 Life Science Business 324 2 107 5 111-1 106 4 Roche Diagnostics 3,970 4 1,112-1 1,934 4 924 11 42
Fou unique new poducts to povide gowth stimulus in 2005 Accu-Chek D-TRONplus convenient - pe-filled catidges (Humalog, Lilly) - easy handling Accu-Chek Spiit flexible - flexible display, customizable menu, lage catidge - next geneation of highly dependable insulin pumps Accu-Chek Aviva dependable - unique safety featues, 5 sec, 0.6 µl, finge o AST - successo of Accu-Chek Advantage Accu-Chek Compact Plus easy - convenient, one step handling, all-in-one system components - 3d geneation integated system to incease attactiveness of Accu-Chek Compact line oll out stated Euope Q4 04 oll out Q1/ Q2 05 oll out Q1/ Q2 05 oll out Q2/ Q3 05 Launch dates ae estimates based on expected egulatoy appoval timelines; US launches may be late than indicated 43 Poduct launches planned fo 2005 Integated Cobas AmpliPep + Cobas TaqMan Instument HIV, HCV, HBV Cobas AmpliSceen HBV Test (US-IVD) AmpliChip CYP450 Test (US-IVD) Accu-Chek Spiit LightCycle 2.0 (CE-IVD) Accu-Chek Aviva Accu-Chek FlexLink Linea Aay HPV Genotyping Test (CE-IVD + US-RUO) Accu-Chek Compact Plus Quant PCR Maste Mix TaqMan Linea Aay HCV Genotyping Test (CE-IVD) 2005 HbA1c analyze Cobas TaqMan CT Test (CE-IVD) 454 Life Science Sequencing poducts Elecsys Polactin II COBAS IT 1000 Data management softwae LightCycle 2.0 Facto II & V Tests (CE-IVD) LightCycle 480 Accu-Chek Pocket Compass 3.0 Launch dates ae estimates only and based on expected egulatoy appoval timelines; US launches may be late than indicated SeptiFast (CE-IVD) CARDIAC eade NT-poBNP Mycophenolic acid (MPA) AmpliChip Leukemia Test (Reseach use) 44