Roche

Roche Annual Report2010

Creating value for patients

Sales

Core Earnings per Share

Research and development 2

Total employee remuneration

Operating profit 2

Total dividend

Income taxes 2 mCHF

mCHF

mCHF

mCHF

mCHF

mCHF

mCHF

Number of employees

Net income Patients on clinical trials 4

Free cash flow

Eco-efficiency rate 5

Roche Group Index 2008 = 100

47,473

49,051

45,617

2010

2009

2008

12.78

12.34

11.17

CHF

9,050

9,509

8,704

2010

2009

2008

11,934

12,080

11,129

16,591

16,272

15,068

2010

2009

2008

5,6933

5,175

4,313

3,135

3,287

3,604

2010

2009

2008

80,653

81,507

80,080

8,891

8,510

10,844

mCHF

2010

2009

2008

327,804

302,063

277,674

4,699

8,893

4,979

2010

2009

2008

0.414

0.46

0.387

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

200

150

100

250

300

Roche non-voting equity security Swiss Market Index (rebased)

2008 2009 2010

Key figures

1 Keyfiguresindexedto2008=100.2 Coreresults.3 ProposedbytheBoardofDirectors.4 DevelopmentphaseItoIV.5 ForcalculationoftheEco-EfficiencyRatesee:

www.roche.com/environment

Figuresfor2008asinAnnualReport2009.ForafullindexofGlobalReportingInitiative(GRI)indicatorsusedinthereportsee:www.roche.com/reporting_and_indices

Affecting nearly 24 million people worldwide, schizo-phrenia is a severe mental disorder that distorts the way a person thinks, acts, expresses emotions, per-ceives 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 pulmo-nary 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 every- day 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 neu- rotransmission 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 schizophre-nia. In addition, RG1678 in combination with current treatments has the potential to treat suboptimally con-trolled 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.

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

Creating value for patients means having the courage to go where needs are great and others have failed

RG1678 — a first-in-class GRI for schizophrenia

07_Roche_AR10_ENG_Diagnostics.indd 72 28.01.2011 17:18:10

JanuaryEu Commission approves Herceptin for treatment of HER2-positive advanced stomach cancer

sEptEmbErFDa clearance for cobas 8000 modular analyser series for high- volume lab testing

octoberWe report promising phase II results with rG7204 (brAF inhibitor), a new targeted medicine for advanced melanoma

JanuaryFDa approves actemra for the treatment of moderately to severely active rheumatoid arthritis

JulyatHEna clinical trial demonstrates high medical value of cobas 4800 HpV test, which detects high-riskgenotypes 16 and 18, in screening for cervical cancer

sEptEmbErroche named Healthcare super-sector leader in Dow Jones Sustain-ability Indexes for second year running

noVEmbErWe launch the operational Excel-lence initiative to maintain long-term innovation capabilities

FEbruaryRoche Annual General Meeting votes to increase shareholder dividend by 20%

oCtobErEncouraging new clinical data for Avastin in ovarian, MetMAb in lung and T–DM1 in breast cancer presented at ESMO conference

DECEmbErPhase II study with first-in-class compound rG1678 shows improvement in negative symptoms of schizophrenia

aprilroche acquires medingo to expand its position in the growing insulin delivery systems market

JunEFDa expands lucentis approval to include treatment of macular edema following retinal vein occlusion

Highlights 2010

20 %

47,000  women

01_Roche_AR10_ENG_Highlights.indd 1 01.02.2011 08:40:03

Pharmaceuticals pipeline | Targeting areas of high unmet medical need

Project ID Project/Product Indication

Oncology

RG3639 dulanermin cancer

RG7256 BRAF kinase inh metastatic melanoma

RG7112 MDM2 antag solid and hematologic tumours

RG7160 anti-EGFR huMAb solid tumours

RG7167 CIF/MEK dual inh solid tumours

RG7304 RAF/ MEK dual inh solid tumours

RG7321 PI3 kinase inh solid tumours

RG7334 anti-PlGF MAb solid tumours

RG7414 anti-EGFL7 MAb solid tumours

RG7420 MEK inh solid tumours

RG7421 MEK inh solid tumours

RG7422 PI3 kinase inh solid and hematologic tumours

RG7440 AKT inh solid tumours

RG7444 anti-FGFR3 MAb multiple myeloma

RG7459 IAP antag solid tumours, lymphoma

ADC RG7593 anti-CD22 hematologic malignancies

NME RG7594 antiangiogenic solid tumours

RG7597 anti-HER3 MAb metastatic epithelial tumours

RG7686 anti-glypican MAb liver cancer

CHU ALK inh NSCLC

CHU – solid tumours

Inflammation and autoimmune disorders

RG4934 anti-IL-17 MAb rheumatoid arthritis

RG7185 CRTH2 antag asthma

RG7413 anti-β7 rhuMAb ulcerative colitis

Virology

RG7432 nucleoside polymerase inh

hepatitis C

CHU serine palmitoyltrans-ferase inh

hepatitis C

Cardiovascular and metabolic diseases

RG4929 11β-HSD inh metabolic diseases

RG7236 Cat S antag cardiovascular risk in chronic kidney disease

RG7273 ABCA1 inducer dyslipidemia

RG7418 anti-oxLDL MAb secondary prevention of cardiovascular events

RG7685 GIP/GLP-1 dual agonist type 2 diabetes

Central nervous system

RG1578 mGluR2 antag depression

RG1662 GABA-A α5 inverse agonist

cognitive disorders

RG7166 triple reuptake inh depression

RG7412 anti-amyloid β-peptide MAb

Alzheimer’s disease

Ophthalmology

RG7417 anti-factor D MAb geographic atrophy

Phase I Phase II Phase III RegistrationProject ID Project/Product Indication

Oncology

RG1273 pertuzumab early BC, HER2+

RG1273 pertuzumab mBC, HER2+, 2nd-line

ADC RG3502 trastuzumab–DM1 early BC, HER2+

RG3616 hedgehog pathway inh advanced basal cell carcinoma

RG3616 hedgehog pathway inh operable basal cell carcinoma

RG3638 anti-Met MAb metastatic NSCLC

RG7159 anti-CD20 MAb NHL, CLL

RG7204 BRAF inh met melanoma, 2nd-/3rd-line

RG7433 navitoclax (ABT-263) solid and hematologic tumours

CHU topoisomerase I inh gastric cancer

Inflammation and autoimmune disorders

RG3637 lebrikizumab asthma

RG4930 OX40L MAb asthma

RG7415 rontalizumab systemic lupus erythematosus

RG7416 anti-LT α MAb rheumatoid arthritis

RG3648 Xolair chronic idiopathic urticaria

RG7449 anti-M1 prime MAb asthma

Virology

RG3484 HPV16 immunotherapy cervical neoplasia

RG7128 nucleoside polymerase inh prodrug

hepatitis C

RG7227 danoprevir hepatitis C

Cardiovascular and metabolic diseases

RG1512 anti-P selectin MAb cardiovascular disease

RG7201 SGLT2 inh type 2 diabetes

Central nervous system

RG1450 gantenerumab Alzheimer’s disease

RG1594 ocrelizumab relapsing-remitting MS

RG3487 nicotinic α7 receptor agonist

Alzheimer’s disease

RG7090 mGluR5 antag treatment-resistant depression

EVO NMDA receptor antag treatment-resistant depression

Project ID Project/Product Indication

Oncology

RG105 MabThera/Rituxan NHL, fast infusion

RG105 MabThera/Rituxan NHL, SC formulation

RG435 Avastin adj breast cancer, HER2+

RG435 Avastin+Herceptin mBC, HER2+, 1st-line

RG435 Avastin adj NSCLC

RG435 Avastin adj breast cancer, HER2-neg

RG435 Avastin adj BC, triple negative

RG435 Avastin relapsed ovarian cancer

RG435 Avastin high-risk carcinoid

RG435 Avastin GBM, 1st-line

RG435 Avastin met colorectal cancer, treat-ment through multiple lines

RG435 Avastin met breast cancer, 2nd-line

RG597 Herceptin BC, HER2+, SC formulation

RG597 Herceptin adj BC, HER2+, 2-yr treatment

RG1273 pertuzumab mBC HER2+, 1st-line

RG1415 Tarceva adj NSCLC

RG1415 Tarceva NSCLC, EGFR mutation- positive, 1st-line

ADC RG3502 trastuzumab–DM1 mBC, HER2+, 1st-line

ADC RG3502 trastuzumab–DM1 advanced mBC, HER2+

RG7159 anti-CD20 MAb chronic lymphocytic leukemia

RG7159 anti-CD20 MAb indolent NHL

RG7204 BRAF inh metastatic melanoma, 1st-line

Inflammation and autoimmune disorders

RG1569 Actemra/RoActemra ankylosing spondylitis

RG1569 Actemra/RoActemra RA, SC formulation

RG1569 Actemra/RoActemra early rheumatoid arthritis

RG1569 Actemra/RoActemra RA DMARD inadequate responders (head-to-head)

Cardiovascular and metabolic diseases

RG1439 aleglitazar cardiovascular risk reduction in type 2 diabetes

RG1658 dalcetrapib atherosclerosis, cardiovascular risk reduction

Central nervous system

RG1594 ocrezulimab primary progressive MS

RG1678 glycine reuptake inh schizophrenia, negative symptoms

RG1678 glycine reuptake inh schizophrenia, suboptimally controlled

Ophthalmology

RG3645 Lucentis diabetic macular edema

RG3645 Lucentis AMD, high dose

Project ID Project/Product Indication

Oncology

RG105 MabThera/Rituxan indolent NHL, 1st-line maint

RG435* Avastin ovarian cancer, 1st-line

RG435* Avastin+Xeloda met breast cancer, 1st-line

RG1415* Tarceva NSCLC, EGFR mutation- positive, 1st-line

Inflammation and autoimmune disorders

RG105** MabThera/Rituxan ANCA-associated vasculitis

RG1569 Actemra/RoActemra JIA, systemic onset

Others

CHU Epogin (EPOCH) chemother.-induced anemia

Legend

Therapeutic protein, other biologic

Small molecule

Blue type First indication

Black type Additional indications

RG-No.CHUEVO

Roche and/or Genentech managedChugai managedEvotec

Phase I Initial studies in healthy volunteers and possibly in patients

Phase II Efficacy, tolerability and dose-finding studies in patients

Phase III Large-scale studies in patients for statistical confirmation of safety and efficacy

Registra-tion

Marketing application(s) filed in EU, US and/or Japan

* Filed in EU

** Filed in USA

Selected abbreviations

adj adjuvant treatmentADC antibody-drug conjugate AMD age-related macular

degenerationantag antagonistBC breast cancerCLL chronic lymphocytic

leukemiaDMARD disease-modifying

antirheumatic drugGBM glioblastoma multiformeHER2+ HER2-positiveHER2-neg HER2-negative

HPV human papillomavirusinh inhibitor JIA juvenile idiopathic arthritisMAb monoclonal antibodymaint maintenance treatmentm, met metastatic (cancer)MS multiple sclerosisNHL non-Hodgkin’s lymphomaNME new molecular entityNSCLC non-small cell lung cancerRA rheumatoid arthritisSC subcutaneous

Current as of January 2011

Our business | Innovation is our answer to medical challenges. Through our research we create state-of-the-art diagnostics and pioneering medicines that help millions of people around the world.

Focus on personalised healthcareAt 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 thera-

peutic options where previously there were none.

As the world’s largest biopharmaceutical company

and the number one supplier of in vitro diagnostics,

Roche has brought many highly effective drugs to

market, including the industry’s 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.

02_Roche_AR10_ENG_Table of Contents.indd 2 28.01.2011 10:36:00

Contents

Inside cover Key figures Inside cover Pharmaceuticals pipeline

1 Highlights 2010

4 Letters to Shareholders 4 Letter from the Chairman 8 Letter from the CEO

12 Roche Group 13 Group Results and Outlook 16 Group Strategy

24 Pharmaceuticals 27 Results 29 Sales review 36 Development highlights 45 Research and development

56 Diagnostics 62 Results 67 Business area highlights 74 Research and development

80 Corporate Governance, Remuneration Report 81 Corporate Governance 91 Remuneration Report

102 Corporate Responsibility 104 Stakeholder engagement 105 Patients 115 People 122 Society 124 Responsible practices 131 Safety, security, health and environmental protection

137 Independent Assurance Report 138 GRI statement

02_Roche_AR10_ENG_Table of Contents.indd 3 28.01.2011 10:36:00

4­ Roche Business Report 2010 Letter to Shareholders

Dear Shareholders

2010­was­a­challenging­year­for­the­pharmaceutical­industry.­Market­conditions,­as­anticipated­for­quite­some­time,­became­even­tougher.­In­the­wake­of­the­financial­­crisis,­high­government­budget­deficits­added­to­pricing­pressures­in­the­global­health-care­sector.­In­Europe­many­governments­cut­drug­prices­significantly,­while­healthcare­reform­in­the­US­resulted­in­higher­rebates­on­prescription­drugs.­On­the­regulatory­front,­the­hurdles­for­gaining­approval­of­new­medicines­were­raised­even­higher,­dra-matically­increasing­the­cost­of­drug­development­and­delaying­access­to­innovative­treatments.

Amid­these­challenges,­Roche­posted­good­full-year­results.­However,­we­also­felt­the­effects­of­the­market­changes­I’ve­just­described.­In­July­the­US­Food­and­Drug­Admin-istration­(FDA)­rejected­our­application­for­accelerated­approval­of­T–DM1,­even­though­this­novel­compound­is­expected­to­significantly­improve­the­treatment­of­breast­cancer.­This­will­increase­the­clinical­development­costs­for­T–DM1­and­delay­this­

Franz B. Humer

03_Roche_AR10_ENG_Letter to Shareholders.indd 4 28.01.2011 10:37:04

5­Roche Business Report 2010Letter to Shareholders

promising­drug’s­approval.­Late­in­the­year­the­FDA­announced­its­intention­to­withdraw­approval­of­Avastin­in­combination­with­chemotherapy­for­first-line­treatment­of­meta-static­HER2-negative­breast­cancer.­While­a­withdrawal­will­not­affect­US­patients’­access­to­Avastin­in­its­other­approved­cancer­indications,­it­would­adversely­impact­patients­with­this­very­serious­disease.­The­day­the­FDA­made­its­announcement,­ ­the­European­Medicines­Agency­(EMA)­confirmed­Avastin’s­value­in­the­fight­against­breast­cancer.­In­Europe­women­with­advanced­breast­cancer­will­thus­continue­to­have­access­to­this­treatment­option.­

We­are­closely­monitoring­developments­in­healthcare­policy­around­the­world.­Precisely­because­we­believe­our­highly­innovative­products­contribute­in­important­ways­to­­more­effective,­cost-efficient­healthcare­delivery,­we­consider­it­vital­for­the­future­that­­policymakers­and­health­officials­look­not­only­at­the­costs­of­new­medicines­but­also­­at­the­innovation­they­embody­and­the­benefits­they­offer­patients.­Given­the­many­dis-eases­that­still­cannot­be­treated­satisfactorily,­or­at­all,­medical­progress­should­be­viewed­more­as­a­public­good­that­deserves­vigorous­political­support.

When­we­discuss­innovation­we­must­bear­in­mind­that­it­is­inherently­risky.­Pioneering­research­and­development­efforts­sometimes­produce­breakthroughs,­but­they­also­can­sometimes­not­achieve­the­desired­endpoints.­Taspoglutide­is­a­case­in­point.­We­sus-pended­a­late-stage­development­programme­on­this­new­treatment­for­type­2­diabetes­at­a­very­late­stage­of­development­after­careful­assessment­of­the­available­safety­and­efficacy­data.

Our­intense­research­and­development­activities­also­yielded­some­very­strong­and­promising­results­last­year.­We­currently­have­twelve­new­molecular­entities­in­late-stage­development,­half­of­which­are­designed­for­targeted­use­in­specific­patient­populations­with­the­help­of­companion­diagnostic­tests.­We­have­made­enormous­progress­in­personalised­healthcare,­helped­by­the­close­interplay­between­our­Pharmaceuticals­and­Diagnostics­Divisions.­These­developments­represent­major­strides­and­make­us­confident­that­we­will­remain­an­industry­leader.­

Roche­convincingly­met­its­sales­and­earnings­targets­for­2010.­Excluding­sales­of­our­influenza­medicine,­Tamiflu,­which­as­expected­were­down­sharply­for­the­year,­Group­sales­rose­5%­in­local­currencies.­Net­income­attributable­to­Roche­shareholders­showed­a­strong­increase,­advancing­11%­to­8.7­billion­Swiss­francs­despite­the­costs­associated­with­the­‘Operational­Excellence’­programme­amounting­to­a­considerable­­1.3­billion­Swiss­francs.­Core­Earnings­per­Share,­a­key­indicator­of­underlying­business­performance,­increased­10%­in­local­currencies­(4%­in­Swiss­francs).

In­view­of­the­company’s­healthy­cash­flow­and­positive­outlook­the­Board­of­Directors­will­propose­a­dividend­increase­for­2010­of­10%­to­6.60­Swiss­francs­per­share­and­

03_Roche_AR10_ENG_Letter to Shareholders.indd 5 28.01.2011 10:37:04

6­ Roche Business Report 2010 Letter to Shareholders

non-voting­equity­security­(up­from­6.00­Swiss­francs­for­2009).­Subject­to­your­approval­at­the­Annual­General­Meeting­(AGM),­this­will­be­Roche’s­24­th­consecutive­annual­dividend­increase.

Looking­ahead­to­the­Annual­General­Meeting­on­1­March­2011,­I­would­like­to­mention­the­upcoming­changes­on­the­Board­of­Directors.­Walter­Frey­and­Wolfgang­Ruttens-torfer­have­decided­not­to­stand­for­re-election.­On­behalf­of­the­entire­Board,­I­would­like­to­thank­them­both­for­their­dedicated­service­to­Roche.­During­his­long­tenure­on­the­Board­Mr­Frey,­who­runs­a­highly­successful­family­company,­has­made­significant­contributions­to­the­Group’s­growth­and­success.­Among­the­strengths­Mr­Ruttenstorfer­brought­to­the­Board,­his­expertise­on­the­growth­markets­in­Eastern­Europe­and­the­Middle­East­has­been­particularly­valuable.

We­intend­to­use­this­opportunity­to­strengthen­the­Board­further­by­nominating­addi-­tional­independent­directors.­As­announced­in­December,­Paul­Bulcke­(CEO­Nestlé­S.A.),­­Christoph­Franz­(chairman­and­CEO­Deutsche­Lufthansa­AG)­and­Peter­R.­Voser­­(CEO­Royal­Dutch­Shell­plc)­will­be­standing­for­election­as­new­members­of­the­Board.

At­the­Annual­General­Meeting­we­will­also­propose­that­the­term­of­Board­members­­be­reduced­from­three­to­two­years.­This­will­enable­shareholders­to­influence­the­com-position­of­the­Board­at­shorter­intervals­in­future.

After­ten­years­of­exceptional­service­on­the­Corporate­Executive­Committee,­Erich­Hunziker­has­decided­to­retire­from­Roche­at­the­end­of­March­2011.­Erich­Hunziker­was­appointed­Chief­Financial­Officer­in­2001,­becoming­Deputy­Head­of­the­Corporate­Executive­Committee­in­2005.­During­his­long­career­at­Roche,­Erich­Hunziker­was­one­of­the­key­architects­of­the­Group’s­successful­development.­I­would­like­to­take­this­opportunity­to­thank­Erich­Hunziker­sincerely­for­his­outstanding­contribution­to­the­Group’s­overall­success.­­

The­Board­of­Directors­has­appointed­Alan­Hippe­to­succeed­Erich­Hunziker­as­Chief­Financial­Officer.­Alan­Hippe­will­join­Roche­as­a­member­of­the­Corporate­Executive­Committee­as­of­April­2011.­Alan­Hippe­served­as­a­member­of­the­executive­board­of­Continental­AG­from­2002­to­2009.­Since­April­2009­he­has­been­CFO­and­a­member­­of­the­executive­board­of­ThyssenKrupp­AG.

Our­company­was­honoured­last­year­for­outstanding­achievements­in­a­number­of­areas.­I­am­particularly­pleased­that­the­Dow­Jones­Sustainability­Indexes­named­us­the­Supersector­Leader­in­healthcare­for­the­second­year­in­a­row,­ranking­Roche­as­the­world’s­most­sustainable­healthcare­company.­We­firmly­believe­that­sustainable­corpo-rate­policies­and­practices­ultimately­create­long-term­value­and­promote­innovation.­

03_Roche_AR10_ENG_Letter to Shareholders.indd 6 28.01.2011 10:37:04

7­Roche Business Report 2010Letter to Shareholders

Our­success­as­a­company­is­built­on­scientific­excellence­that­benefits­patients.­The­successful­integration­of­Genentech­has­further­strengthened­our­innovative­capa-bilities­as­the­world’s­largest­biotech­company­and­the­leading­supplier­of­cancer­medi-cines.­We­lead­in­personalised­healthcare,­are­the­world’s­number­one­supplier­of­­in vitro­diagnostics­and­have­outstanding­product­portfolios­in­both­the­Pharmaceuticals­and­the­Diagnostics­Division.

Our­ability­to­create­value­for­all­stakeholders­is­crucial­to­our­future­success­and­we­will­continue­to­vigorously­pursue­this­strategy.

Franz­B.­Humer­

Chairman­of­the­Board

03_Roche_AR10_ENG_Letter to Shareholders.indd 7 28.01.2011 10:37:04

8­ Roche Business Report 2010 Letter to Shareholders

Dear Shareholders

Sandro­B.­had­been­recently­diagnosed­with­malignant­melanoma­—­shortly­after­his­28­th­birthday.­Malignant­melanoma­is­one­of­the­deadliest,­most­aggressive­forms­of­skin­cancer,­with­over­160,000­new­cases­reported­worldwide­each­year.­It­is­highly­likely­to­metastasise­at­a­very­early­stage,­and­once­patients­have­developed­metastases­there­are­almost­no­treatment­options­available­to­them.­Life­expectancy­following­diagnosis­is­typically­a­matter­of­months.­His­doctors­gave­him­four­months­to­live.

Sandro­B.­met­the­inclusion­criteria­for­a­phase­I I­clinical­trial­in­which­we­are­testing­our­novel­investigational­drug­RG7204­in­patients­with­advanced­malignant­melanoma­whose­cancer­cells­carry­a­specific­genetic­mutation.­A­diagnostic­test­confirmed­that­he­had­this­mutation.

Before­reflecting­in­more­details­on­our­clinical­trials,­I­would­like­to­briefly­review­the­Group’s­business­performance­in­2010.­Despite­strong­pressure­on­prices­in­the­US­and­in­Europe,­the­Pharmaceuticals­and­Diagnostics­Divisions­both­posted­good­results.­Excluding­Tamiflu­sales,­which­were­down­2.3­billion­Swiss­francs­for­the­year,­sales­in­the­Pharma-ceuticals­Division­advanced­5%,­above­the­overall­market­growth.­Including­Tamiflu,­divisional­sales­declined­2%­in­local­currencies­to­37.1­billion­Swiss­francs.­Growth­was­driven­by­key­

Severin Schwan

03_Roche_AR10_ENG_Letter to Shareholders.indd 8 28.01.2011 10:37:08

9­Roche Business Report 2010Letter to Shareholders

products­for­oncology,­ophthalmology,­inflammatory­and­autoimmune­disease­and­anemia.­Thanks­to­continued­strong­demand­for­our­anticancer­medicines,­we­expanded­our­lead­in­this­important­market­segment.­In­the­Diagnostics­Division­sales­advanced­8%­in­local­­currencies,­again­significantly­outpacing­the­market­and­solidifying­Roche’s­position­as­the­leading­supplier­of­in vitro­diagnostics.­Professional­Diagnostics­and­Diabetes­Care­were­the­division’s­primary­growth­drivers.

The­Group’s­core­operating­profit­grew­faster­than­sales,­rising­by­a­robust­7%­to­16.6­billion­Swiss­francs­in­local­currencies.­Profitability­improved­further,­with­the­core­operating­mar-gins­in­the­Pharmaceuticals­and­Diagnostics­Divisions­advancing­1.9­percentage­points­to­39.9%­and­3.8­percentage­points­to­21.1%,­respectively.­Once­again,­the­earnings­power­­of­our­operating­businesses­was­also­reflected­in­the­Group’s­operating­free­cash­flow,­which­last­year­reached­a­strong­14.1­billion­Swiss­francs.­Thanks­to­our­strong­cash­flow,­by­year’s­end­we­had­already­repaid­a­third­of­the­debt­incurred­in­connection­with­the­Genen-tech­transaction­—­earlier­than­originally­planned.

Succeeding­in­our­industry­is­tougher­than­ever.­Pricing­pressures­are­rising­sharply­and­the­requirements­for­approval­and­reimbursement­of­new­medicines­are­becoming­increasingly­stringent.­At­Roche­we­additionally­experienced­setbacks­with­some­of­our­late-stage­devel-opment­projects­last­year,­including­the­diabetes­drug­taspoglutide.

In­response­to­these­challenges,­my­colleagues­on­the­Executive­Committee­and­I­decided­­to­take­appropriate­action­now­to­ensure­Roche’s­long-term­success.­In­November­2010­we­launched­the­comprehensive­Group-wide­‘Operational­Excellence’­programme,­which­is­designed­to­strengthen­the­Group’s­productivity­and­innovative­capacity­in­the­years­ahead.­We­have­identified­a­wide­range­of­opportunities­to­improve­processes­and­raise­productivity­and­efficiency.

Implementation­of­the­Operational­Excellence­programme­is­already­underway­and­will­con-tinue­through­2012.­As­a­result­of­this­initiative,­the­workforce­of­roughly­82,000­(at­30­June­2010)­will­be­reduced­by­4,800­positions,­almost­6%­of­the­global­workforce.­The­greatest­changes­will­be­in­the­Pharmaceuticals­Division,­where­we­will­be­adjusting­our­global­sales­organisation­and­taking­steps­to­improve­efficiency­and­productivity­in­product­development­and­optimise­our­manufacturing­network.­In­the­Diagnostics­Division,­the­co-location­of­related­business,­R­&­D­and­operational­functions­at­selected­sites­will­enable­the­division­to­streamline­its­site­network.

We­are­taking­these­measures­proactively,­from­a­position­of­strength.­Roche­is­the­world’s­biggest­biotech­company,­with­13­products­and­product­lines­that­generate­annual­sales­­of­over­one­billion­Swiss­francs­each.­And­despite­last­year’s­setbacks,­our­research­and­de­velopment­pipeline­remains­one­of­the­strongest­in­the­industry.­With­our­combined­strengths­in­pharmaceuticals­and­diagnostics­and­proven­expertise­in­molecular­biology,­we­

03_Roche_AR10_ENG_Letter to Shareholders.indd 9 28.01.2011 10:37:08

10­ Roche Business Report 2010 Letter to Shareholders

are­uniquely­positioned­to­realise­the­promise­of­personalised­healthcare­to­make­treatments­safer­and­more­effective.­The­revolutionary­advances­we­are­starting­to­see­in­molecular­biology­give­us­a­strategic­competitive­edge­across­a­number­of­areas,­including­our­ability­to­raise­research­productivity.

Personalised­healthcare­paradigms­increasingly­shape­our­research­and­development­pro-grammes.­We­currently­have­twelve­new­molecular­entities­in­late-stage­development,­half­­of­which­are­tailored­to­specific­patient­populations.­Our­BRAF­inhibitor­for­malignant­melanoma,­MetMAb­for­lung­cancer,­T–DM1­and­pertuzumab­for­breast­cancer­and­other­projects­in­virology­and­inflammation­all­represent­potential­major­advances­for­patients.­­Similarly,­our­Diagnostics­Division­is­developing­a­number­of­biomarkers­to­support­thera-peutic­decision-making.­Targeted­therapies­and­diagnostic­tests­that­contribute­to­better­medical­decisions­not­only­improve­patient­care­but­also­have­health­economic­benefits­that­make­them­attractive­to­regulators­and­payers.

One­of­the­most­impressive­examples­of­personalised­healthcare­is­RG7240,­the­drug­used­to­treat­malignant­melanoma­which­I­mentioned­earlier.­Thanks­to­insights­into­specific­genetic­changes­in­tumour­cells,­huge­strides­are­being­achieved­now­in­clinical­trials­in­a­disease­once­considered­virtually­untreatable.

Tumours­generally­develop­from­just­one­cell.­Every­cell­continuously­undergoes­changes,­known­as­mutations,­that­affect­certain­signalling­pathways­within­the­cell.­Most­mutations­are­corrected­spontaneously,­but­some­manage­to­evade­the­body’s­repair­mechanisms,­causing­cells­to­divide­uncontrollably­and­thus­form­tumours.­Scientists­have­discovered­that­in­over­half­of­all­melanoma­patients,­the­disease­is­triggered­by­a­highly­specific­mutation­­of­the­gene­coding­for­the­BRAF­protein,­which­is­involved­in­cell­growth.­A­BRAF­V600E­mutation­triggers­uncontrolled­cell­growth­and­these­cancer­patients­—­Sandro­B.­for­­example­—­have­virtually­no­prospect­of­being­cured.

RG7204,­an­oral­cancer­drug­co-developed­with­our­partner­company­Plexxikon,­acts­via­­a­highly­innovative­mechanism­to­inhibit­the­BRAF­protein­implicated­in­the­disease.­The­new­drug­specifically­destroys­those­cells­carrying­the­V600E­mutation­and­does­not­attack­healthy­cells­without­the­mutation.

We­have­developed­a­diagnostic­assay­for­use­with­the­drug­which­is­capable­of­detecting­the­V600E­mutation­in­tumours,­and­will­thus­help­identify­patients­who­are­very­likely­to­respond­to­the­new­drug.­This­means­the­new­drug­will­be­used­only­in­patients­likely­to­benefit­from­the­new­treatment.

The­interim­results­of­a­phase­I I I­trial,­which­we­published­in­January­2011,­are­very­­encouraging.­For­the­first­time,­a­personalised­investigational­medicine,­RG7204,­has­shown­a­significant­survival­benefit­in­metastatic­melanoma.­This­is­an­important­advance­­

03_Roche_AR10_ENG_Letter to Shareholders.indd 10 28.01.2011 10:37:08

11­Roche Business Report 2010Letter to Shareholders

for­people­with­the­BRAF­V600­mutation-positive­form­of­the­disease­who­have­had­extremely­limited­treatment­options.­Full­data­will­be­presented­at­a­medical­meeting­later­this­year.­Roche­is­working­closely­with­global­health­authorities­so­that­patients­world-­wide­can­already­be­treated­with­the­new­drug.

The­pursuit­of­treatments­offering­real­benefits­to­patients­is­the­core­of­our­corporate­­strategy.­Consistent­with­that­strategy,­we­will­continue­to­drive­progress­on­our­promising­development­portfolio.­We­expect­results­from­a­total­of­19­phase­I I­and­phase­I I I­trials­­in­2011­and­2012.­Based­on­our­current­late-stage­portfolio,­we­expect­to­submit­up­to­eight­regu­latory­filings­for­approval­of­new­molecular­entities­by­the­end­of­2013.­Moreover,­ ­we­are­currently­working­on­more­than­20­additional­indications­for­existing­products.

Going­forward,­innovations­that­benefit­patients­will­continue­to­drive­our­success.­Through­excellence­in­science,­we­strive­to­develop­pioneering­treatments­and­diagnostic­tests­that­prolong­patients’­lives­and­tangibly­improve­their­quality­of­life.

Roche­owes­its­success­to­its­employees.­Thanks­to­their­tremendous­dedication­and­hard­work­we­once­again­achieved­our­goals­last­year,­despite­an­increasingly­challenging­market­environment.­On­behalf­of­the­entire­Executive­Committee,­I­would­like­to­thank­all­our­employees­for­their­important­contributions.

Making­sure­that­Roche­remains­an­employer­of­choice­is­an­important­priority­for­me.­So­­I­am­especially­pleased­to­report­that­in­2010­our­company­was­again­voted­a­top­employer­­in­polls­in­a­number­of­countries.­Being­a­top­employer­is­not­just­about­giving­as­many­employees­as­possible­opportunities­to­develop­professionally­and­make­things­happen­in­the­company.­Innovation­depends­on­a­diversity­of­views­and­approaches.­One­of­the­ways­we’re­promoting­diversity­at­Roche­is­by­filling­more­managerial­positions­with­women.­At­the­start­of­2010,­we­set­ourselves­the­goal­of­increasing­the­proportion­of­women­in­the­top­­400­leadership­positions­by­half­to­20%­over­the­next­five­years.­I­am­happy­to­report­that­­we­made­progress­on­this­front­as­well­last­year.­

What­happened­to­the­young­man­with­melanoma?­Like­many­of­the­other­trial­participants,­Sandro­B.­has­responded­well­to­our­new­drug­for­skin­cancer.­He­is­still­alive­and­doing­well.­This­is­exactly­what­we­have­in­mind­when­we­talk­about­helping­patients­through­excel-lence­in­science.­

Severin­Schwan

Chief­Executive­Officer

03_Roche_AR10_ENG_Letter to Shareholders.indd 11 28.01.2011 10:37:09

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.

04_Roche_AR10_ENG_Group.indd 12 28.01.2011 13:02:50

13­Roche Business Report 2010Roche Group

Group Results and OutlookOverall resultsThe­Roche­Group­posted­solid­overall­results­in­­

2010.­Group­sales­were­stable­in­local­currencies­­

at­47.5­billion­Swiss­francs­(–3%­in­Swiss­francs;­­

1%­in­US­dollars).­The­good­underlying­growth­of­

both­divisions­compensated­for­the­expected­

decline­in­Tamiflu­sales­and­the­impacts­of­health-­

care­reforms­and­austerity­measures.­Excluding­

­Tamiflu,­sales­increased­by­5%­in­local­currencies.­

The­Pharmaceuticals­Division­represented­78%­­

of­Group­sales­and­the­Diagnostics­Division­con-­

tributed­22%.

Sales­in­the­Pharmaceuticals­Division­declined­by­

2%­in­local­currencies­to­37.1­billion­Swiss­francs.­

Excluding­Tamiflu,­local­growth­was­5%,­above­mar-

ket­growth.­Demand­for­the­oncology­drugs­Avastin,­

MabThera/Rituxan,­Herceptin,­Xeloda­and­Tarceva­

continued­to­grow­strongly.­Additional­major­growth­

drivers­were­Actemra/RoActemra­in­rheumatoid­

arthritis,­Mircera­in­anemia­and­Lucentis­in­ophthal-

mology.­Actemra,­which­is­now­launched­in­some­

50 countries­including­the­United­States,­the­EU­and­

Japan,­reached­sales­of­397­million­Swiss­francs­in­

2010.­These­positive­factors­compensated­for­most­of­

the­expected­strong­decline­in­Tamiflu­sales,­the­

reduction­in­CellCept­sales­due­to­US­patent­expiry­

in­May­2009­and­the­impacts­of­the­US­healthcare­

reforms,­European­austerity­measures­and­price­cuts­

in­Japan.

The­Diagnostics­Division­increased­sales­to­10.4­bil-

lion­Swiss­francs­in­2010,­growing­8%­in­local­

­currencies­(4%­in­Swiss­francs;­8%­in­US­dollars),­

thereby­strengthening­its­leading­market­position.­

Major­drivers­were­Professional­Diagnostics­with­11%­

sales­growth­and­Diabetes­Care­with­4%­sales­

growth.

The­Group’s­core­operating­profit­increased­by­7%­in­

local­currencies­(2%­in­Swiss­francs).­The­Pharma-

ceuticals­Division­increased­its­core­operating­profit­

by­4%­in­local­currencies,­driven­primarily­by­cost­

synergies­from­the­Genentech­integration­and­prod-

uctivity­improvements.­Core­operating­profit­growth­

in­the­Diagnostics­Division­was­30%­in­local­curren-

cies,­mainly­resulting­from­sales­growth­due­to­­

new­product­launches­and­the­ongoing­operational­

efficiency­programmes.­The­Group’s­core­operating­

profit­margin­increased­by­1.7­percentage­points­to­

34.9%,­with­the­Pharmaceuticals­Division­improving­

by­1.9 percentage­points­to­39.9%­and­the­Diagnos-

tics­Division­by­3.8­percentage­points­to­21.1%.

In­2010­the­Group’s­net­income­increased­by­4%­to­

8.9­billion­Swiss­francs­compared­to­2009.­Net­

income­attributable­to­Roche­shareholders­rose­11%­

to­8.7­billion­Swiss­francs.

The­Group’s­operating­free­cash­flow­remained­strong­

at­14.1­billion­Swiss­francs.­A­free­cash­flow­of­

4.7 billion­Swiss­francs­was­achieved­in­2010­despite­

higher­interest,­tax­and­dividend­payments.

Of­the­debt­raised­in­early­2009,­33%­had­already­

been­repaid­by­31­December­2010.­In­addition,­the­

Group­exercised­its­option­to­call­for­redemption­­

a­portion­of­the­US­dollar­notes­due­1­March­2014.­

Of­the­total­principal­amount­of­2.75­billion­US­dol-

lars,­1.0­billion­US­dollars­will­be­redeemed­in­March­

2011.­The­net­debt­position­of­the­Group­is­19.2 bil-

lion­Swiss­francs,­a­decrease­of­4.7­billion­Swiss­

francs­from­31­December­2009.

The­Board­of­Directors­is­proposing­an­increase­of­

10%­in­the­dividend­for­2010­to­6.60­Swiss­francs­­­

per­share­and­non-voting­equity­security­for­approval­

at­the­Annual­General­Meeting.

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.

04_Roche_AR10_ENG_Group.indd 13 28.01.2011 13:02:50

14­ Roche Business Report 2010 Roche Group

This­would­be­the­24­th­consecutive­increase­of­the­

dividend­and­corresponds­to­an­increase­in­payout­

ratio­from­49%­in­2009­to­52%­for­2010.

Financial implications of Operational Excellence On­17­November­2010­the­Group­announced­imple-

mentation­plans­for­its­Operational­Excellence­pro-

gramme,­which­is­aimed­at­adapting­cost­structures­

to­an­increasingly­challenging­market­environment­

and­achieving­significant­efficiency­and­productivity­

gains.­The­initiative­is­expected­to­generate­savings­­

of­1.8­billion­Swiss­francs­in­2011,­with­projected­

­savings­of­2.4­billion­Swiss­francs­from­2012­onwards.­

Implementation­is­scheduled­to­be­substantially­

­completed­by­the­end­of­2012.­During­the­period­

from­2010­through­2012­Roche­expects­to­incur­

restructuring­costs­totalling­2.7­billion­Swiss­francs.

As­a­consequence­of­implementing­the­respective­

restructuring­measures,­significant­costs­were­

already­incurred­in­2010.­The­costs­in­2010­of­1.3­bil-

lion­Swiss­francs­mainly­relate­to­severance­payments­

and­impairments­of­intangible­assets.­The­Pharma-

ceuticals­Division­accounts­for­1.2­billion­Swiss­francs­

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 divi-sions 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 144–147 of the Finance Report and reconciliations between the IFRS and core results are given there.

Outlook 2011In­2011,­Group­and­Pharmaceuticals­sales­(excluding­

Tamiflu)­are­expected­to­grow­at­low­single-digit­

rates­in­local­currencies,­reflecting­the­impact­of­US­

healthcare­reform­and­European­austerity­measures.­­

Pharmaceuticals­sales­are­therefore­expected­to­­

grow­in­line­with­the­market.

In­2011,­Diagnostics­sales­are­again­expected­to­

grow­significantly­ahead­of­the­market,­driven­by­fur-

ther­rollout­of­new­products­in­all­business­areas.

In­spite­of­a­more­challenging­environment­and­the­

introduction­of­an­excise­tax­in­the­United­States,­

Roche­aims­for­Core­Earnings­per­Share­to­grow­at­a­

high-single­digit­rate­in­2011­at­constant­exchange­

rates.

Roche­aims­to­increase­the­dividend­in­line­with­­

Core­Earnings­per­Share­growth.

Based­on­the­strong­operating­free­cash­flow,­Roche­

expects­to­reduce­debt­progressively­and­to­return­to­

a­net­cash­position­by­2015.

15­Roche Business Report 2010Roche Group

Key achievements in 2010

Business/Finance Pharmaceuticals sales (excluding Tamiflu) increased above market growth

achievements 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 magazine’s 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 ‘Children’s 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

and environmental

Reduced our eco-balance measure of total environmental impact by 10%,

five years ahead of target

protection Kept greenhouse gas emissions stable despite significant growth of the company

To learn more about Roche’s achievements in the area of Corporate Responsibility see pages 102–137.

04_Roche_AR10_ENG_Group.indd 15 28.01.2011 13:02:50

16­ Roche Business Report 2010 Roche Group

The­world’s­population­continues­to­expand,­and­

people­are­living­longer­on­average.­Greater­life­

expectancy­means­a­rise­in­age-related­diseases­

such­as­cancer,­diabetes,­rheumatoid­arthritis,­

­Parkinson’s­and­Alzheimer’s.­This­is­true­not­only­ ­

of­the­industrialised­world­but­increasingly­of­ ­

developing­countries­and­emerging­markets­too.­

Moreover,­there­are­still­no­effective­therapies­­

for­some­5,000 diseases,­and­patient­response­to­

existing­drugs­is­often­unsatisfactory.­There­is­ ­

consequently­substantial­unmet­medical­need­and­

increasing­demand­for­more­targeted­diagnostics­­

and­more­effective­and­better-tolerated­therapies.­­

Demographic­changes­and­growing­demands­on­

medical­care­are­placing­an­ever­greater­burden­on­

healthcare­systems.­The­recent­financial­and­eco-

nomic­crisis­and­the­resulting­government­deficits­in­

Europe­and­the­United­States­have­further­exacer-

bated­the­situation.­Political­pressure­to­curb­health-

care­costs­has­therefore­grown.­In­Europe,­several­

countries­imposed­significant­price­reductions­on­

pharmaceutical­products­in­2010.­Healthcare­reform­

in­the­United­States­has­led­to­an­increase­in­drug­

rebates­under­government­health­insurance­plans,­and­

a­new­consumption­tax­on­pharmaceutical­sales­is­

planned­for­2011.­In­addition,­US­and­European­regu-

latory­authorities­have­significantly­raised­the­bar­­

for­approval­of­new­products­and­are­taking­a­much­

more­critical­look­at­the­therapeutic­benefits­and­

safety­of­new­drugs.­Decisions­about­which­medi-

cines­to­administer­are­being­made­increasingly­­

by­public­agencies­and­health­insurers­rather­than­­

by­physicians.­

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.

A­shift­in­the­growth­dynamic­from­Western­to­Far­

Eastern­and­Latin­American­markets­has­been­appar-

ent­for­some­time.­This­trend­will­become­even­

stronger­in­future:­by­2013­the­emerging­markets­will­

account­for­some­50%­of­the­growth­in­the­global­

pharmaceutical­market,­and­their­share­of­the­world­

market­will­increase­to­around­25%.­The­Asian­phar-

maceutical­market,­for­example,­has­grown­twice­­

as­fast­as­the­overall­global­market­in­recent­years.­

China­—­where­Roche­again­expanded­its­pres-

ence­significantly­in­2010­—­has­become­the­third-

largest­pharmaceutical­market­after­the­United­­

States­and­Japan­in­2010.

Group Strategy

05_Roche_AR10_ENG_Strategy.indd 16 28.01.2011 10:39:10

17­Roche Business Report 2010Roche Group

Transforming the practice of medicine

Personalised healthcare:

tailoring treatment to patients

Patients­with­the­same­clinical­diagnosis­may­re­-

spond­very­differently­to­the­same­medicines.­While­

treatment­may­be­effective­and­successful­in­some­

patients,­others­may­experience­undesirable­side­

effects­or­the­desired­clinical­benefit­does­not­occur.­

This­phenomenon­is­due­in­many­cases­to­genetic­

and­other­molecular­differences­between­individual­

patients.

Treatments­tailored­to­different­patient­populations­

have­medical­and­economic­advantages­and­are­con-

sequently­not­only­important­for­patients­and­phy-­

sicians­but­are­also­welcomed­by­regulatory­agencies­

and­health­insurers.­In­addition,­early­selection­of­

patients­who­are­highly­likely­to­respond­to­a­new­

compound­increases­the­success­rate­in­drug­devel-

opment­while­also­lowering­development­costs.­

Combining­strengths­in­pharmaceuticals­and­diag-­

nostics­with­proven­expertise­in­molecular­biology,­

Roche­is­uniquely­positioned­to­make­its­personal-

ised­healthcare­strategy­a­reality.­Thanks­to­the­close­

cooperation­between­the­Pharmaceuticals­and­­

Diagnostics­Divisions,­under­a­single­roof,­on­every-

thing­from­research­to­sales,­Roche­is­committed­­

to­the­systematic­pursuit­of­personalised­healthcare.­

This­concept­is­becoming­a­reality­for­more­and­­

more­of­our­development­projects.

Tapping the vast potential of

modern science

In­order­to­remain­competitive­in­the­future­despite­a­

tougher­global­environment­in­the­healthcare­industry,­

Roche­is­pursuing­a­clear­innovation­strategy­based­

on­outstanding­scientific­achievements.­We­have­con-­

fidence­in­modern­science’s­vast­potential­for­devel-

oping­therapies­and­diagnostic­tests­that­will­reduce­

suffering­and­help­people­to­live­longer,­healthier­

lives.­In­particular,­we­see­significant­opportunities­in­

the­fast-growing­body­of­knowledge­about­the­molec-

ular­basis­of­diseases.­A­deeper­understanding­of­

disease­mechanisms­and­the­growing­range­of­estab-

lished­and­new­therapeutic­approaches­is­enabling­­

us­to­develop­more­specific,­targeted­products.

Through­our­medically­differentiated­therapies­we­

want­to­offer­patients­and­doctors­significant­medical­

benefit­in­terms­of­effectiveness,­quality­and­safety,­

to­provide­laboratories­with­efficiency­gains­and­to­

give­payers­health­economic­benefits.­We­also­strive­

to­ensure­patients’­access­to­treatments.

Targeted,­cost-effective­therapies­can­play­a­key­role­

in­overcoming­current­challenges­in­the­healthcare­

sector.­State-of-the-art­diagnostics­will­also­become­

increasingly­significant­in­a­rational­healthcare­sys-

tem:­diagnostics­currently­account­for­only­around­2%­

of­healthcare­spending,­yet­around­70%­of­all­med-­

ical­decisions­depend­on­accurate,­fast­diagnosis.­

Here,­too,­there­is­vast­potential.­

05_Roche_AR10_ENG_Strategy.indd 17 28.01.2011 10:39:10

18­ Roche Business Report 2010 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 melanomaRoche’s­developmental­drug­RG7204­(BRAF­inhib-

itor)­is­currently­being­tested­in­patients­with­

advanced­malignant­melanoma­in­a­final­phase­I I I­­

clinical­trial.­Diagnosed­worldwide­in­about­160,000­

people­each­year,­malignant­melanoma­is­the­most­

aggressive­form­of­skin­cancer.­Thanks­to­insights­into­

specific­genetic­changes­in­tumour­cells,­huge­strides­

are­being­achieved­now­in­a­disease­once­consid-

ered­virtually­untreatable.­Developed­on­the­basis­of­

biomolecular­findings,­RG7204­is­an­oral­drug­that­

specifically­inhibits­the­deadly­chain­of­events­asso-

ciated­with­the­development­of­melanoma.­

In­roughly­half­of­all­melanoma­patients,­the­disease­

is­triggered­by­a­dangerous­mutation­of­the­BRAF­

gene.­A­Roche­assay­developed­to­detect­this­muta-

tion­will­help­identify­patients­very­likely­to­respond­­

to­RG7204.­Initial­phase­I I­trial­data­are­encouraging:­

disease­progression­was­significantly­delayed,­tu-­

mours­shrank­markedly­in­over­50%­of­patients­and­

there­was­a­noticeable­improvement­in­patients’­

quality­of­life.­

Extending the lives of lung cancer patients Non-small­cell­lung­cancer­(NSCLC)­is­the­most­­

frequent­tumour-related­cause­of­death­in­the­world.­

According­to­preliminary­data­from­a­phase­I I­trial,­

combining­the­novel­monoclonal­antibody­MetMAb­

with­Tarceva­(erlotinib)­nearly­doubles­progres-­

sion-free­survival­in­certain­patients­with­non-small­

cell­lung­cancer.­These­patients’­tumour­cells­ ­

carry­an­abnormally­high­concentration­of­a­cell­ ­

surface­protein­known­as­the­Met­receptor.­

These­receptors­can­be­identified­using­molecular­tis-­

sue­tests.­The­monoclonal­antibody­MetMAb­binds­

specifically­to­Met­receptors­and­prevents­activation­

of­a­cancer-promoting­growth­factor.­Roche­is­also­

developing­a­diagnostic­test­for­detecting­epidermal­

growth­factor­receptor­(EGFR)­mutations­for­pa-­

tients­with­NSCLC.­Patients­with­EGFR­mutations­re-­

spond­especially­well­to­the­anticancer­drug­Tarceva,­

so­determining­EGFR­mutation­status­would­help­

oncologists­to­personalise­and­optimise­cancer­treat-

ment­(see­also­personalised­healthcare­for­lung­­

cancer­on­page­22­and­23).­

Progress in the fight against stomach cancerStomach­(gastric)­cancer­is­the­second-leading­­

cause­of­cancer-related­deaths­in­the­world,­with­

over­900,000­new­cases­diagnosed­each­year.­ ­

In­2010­European,­US­and­South­Korean­regulators­

approved­Herceptin­for­use­in­HER2-positive­meta-

static­stomach­cancer.­

Already­an­established­therapeutic­option­in­breast­

cancer,­Herceptin­is­one­of­the­most­successful­

examples­of­personalised­healthcare­to­date.­The­

HER2­biomarker­is­detected­in­about­16–18%­of­­

gastric­tumours.­A­fast,­reliable­test­for­HER2­status­

provides­critical­guidance­in­both­approved­Her-­

ceptin­indications,­helping­doctors­to­identify­the­

patients­most­likely­to­respond­to­the­drug.­Her-­

ceptin­plus­chemotherapy­has­been­shown­to­prolong­

the­lives­of­patients­with­stomach­cancer­by­up­to­

35%.­

05_Roche_AR10_ENG_Strategy.indd 18 28.01.2011 10:39:10

19­Roche Business Report 2010Roche Group

Molecular­test­*­(PCR)­­

identifies­patients­carrying­­

a­mutated­BRAF­gene­

Tissue­test­*­identifies­­

tumours­with­high­expression­

of­the­Met­receptor­

Tissue­test*­determines­­

HER2­receptors­or­HER2­­

gene­expression

Active­ingredient­(BRAF inhibitor RG7204)­targets­

melanoma­cancer­cells­­

in­patients­with­mutated­­

BRAF­gene

Antibody­(MetMAb RG3638)­docks­on­Met­

receptor­and­inhibits­­

cancer-triggering­growth­

­factor

Antibody-drug­conjugate­

binds­to­HER2­receptors­­

(Herceptin)­and­linked­

chemo­therapy­agent­pene-

trates­cancer­cell­(T–DM1, RG3502)

DiagnosticsMAPK signalling Therapeutics

HER signalling

Met signalling Diagnostics

Diagnostics

Therapeutics

Therapeutics

Precision two-pronged attack on breast cancer Preliminary­results­from­a­phase­I I­study­of­trastuzu-

mab-DM1­(T–DM1)­in­HER2-positive­metastatic­

breast­cancer­show­that­the­drug­shrank­tumours­in­

one-third­of­the­women­who­had­failed­prior­ther-­

apies.­Known­as­an­antibody-drug­conjugate,­T–DM1­

links­trastuzumab,­the­active­ingredient­of­Hercep-­

tin,­with­the­potent­chemotherapeutic­agent­DM1.­

This­represents­a­new­targeted­‘two-in-one’­

approach­to­treating­cancer:­

The­antibody­trastuzumab­binds­to­HER2-positive­

cancer­cells­and­blocks­a­signalling­pathway­that­

makes­tumours­grow,­while­the­chemotherapy­agent­

DM1­penetrates­and­destroys­the­cancer­cells.­

Another­potential­new­weapon­against­breast­cancer­

is­pertuzumab­(RG1273),­the­first­of­a­novel­class­­

of­targeted­therapeutics­known­as­HER­dimerisation­

inhibitors.­RG1273­blocks­HER2­from­pairing­with­

other­HER­proteins,­thus­preventing­the­abnormal­ac-­

tivation­of­signal­cascades­that­occurs­in­cancer­cells.­

* These tests are being developed by Roche Diagnostics.

05_Roche_AR10_ENG_Strategy.indd 19 28.01.2011 10:39:21

20­ Roche Business Report 2010 Roche Group

Combining forces against hepatitis CHepatitis­C­virus­(HCV)­causes­acute­and­chronic­

liver­diseases­that­can­lead­to­liver­failure,­cirrhosis­

and­cancer.­There­are­currently­over­180­million­­

people­infected­with­HCV­worldwide.­Diagnostic­tests­

based­on­PCR­technology­can­now­measure­viral­

load­in­the­blood­of­patients­with­chronic­hepatitis­C­

infection­and­determine­which­of­the­four­different­

HCV­subgroups­(genotypes)­is­present.­

The­disease­can­then­be­treated­by­pegylated­inter-

ferons­tailored­to­the­respective­genotype­and­viral­

load­level,­such­as­the­Roche­product­Pegasys.­The­

viral­load­test­is­also­used­after­a­few­weeks­to­check­

treatment­response.­In­many­patients,­the­virus­can­

be­completely­eliminated.­For­chronic­hepatitis­C­

patients­who­do­fail­to­benefit­from­interferon-based­

therapy,­several­small­antiviral­molecules­are­in­clinical­

development­at­Roche.­

The­focus­here­is­on­hepatitis­C­subtype­1­infection,­

which­is­very­difficult­to­treat.­Initial­results­show­that­

in­patients­who­have­not­responded­to­interferons,­

the­new­combined­treatment­can­achieve­a­99.9%­

reduction­in­blood­viral­load­within­just­two­weeks.­

­

Hope for asthma sufferersAsthma­still­represents­a­major­unmet­medical­need.­

Moreover,­the­underlying­disease­mechanisms­are­

not­the­same­in­all­cases.­Our­scientists­have­discov-

ered­that,­in­a­particular­set­of­patients,­certain­

genes­are­activated­in­the­wrong­place­and­at­the­

wrong­time­by­the­chemical­messenger­interleukin-13­

(IL-13),­a­key­mediator­in­asthma­reactions.­Reduc-

ing­IL-13­levels­could­thus­be­a­way­of­relieving­

asthma­symptoms­in­this­patient­subpopulation.­­

This­approach­is­currently­being­tested­in­a­phase­I I­

trial­with­lebrikizumab­(RG3637),­involving­the­­

measurement­of­a­key­biomarker­called­periostin.­­

It­may­make­it­possible­to­identify­the­patients­most­

likely­to­respond­to­an­anti-IL-13­antibody­like­

RG3637.­Roche­Diagnostics­is­currently­developing­

an­appropriate­assay.

Once­just­a­vision,­personalised­healthcare­is­

increas­ingly­becoming­a­reality,­helped­by­pioneering­

efforts­at­Roche.­For­years­we­have­been­working­­

to­advance­more­personalised­treatment­options­

across­all­our­therapeutic­areas­of­interest.­Going­for-­

ward,­we­are­ideally­equipped­to­remain­at­the­fore-

front­of­this­groundbreaking­new­approach­to­health-

care­—­and­to­continue­realising­its­tremendous­

potential­for­all­our­stakeholders.

05_Roche_AR10_ENG_Strategy.indd 20 28.01.2011 10:39:21

21­Roche Business Report 2010Roche Group

Tissue­test*­determines­­

HER2­receptors­or­HER2­

gene­expression

Molecular­test*­(PCR)­to­

determine­levels­of­circulating­

Hepatitis­C­virus

Immunoassay*­measures­­

the­serum­level­of­the­protein­

periostin­(an­IL-13­gene­

product)­and­thus­detects­

lung­inflammation­driven­­

by­IL-13

Antibody­(pertuzumab RG1273)­inhibits­pairing­of­

HER1,­HER2­and­HER3­­

receptors­and­thus­prevents­

fatal­signalling­in­cancer­­

cells

HCV­nucleoside­polymerase­

inhibitor­(RG7128)­prevents­

reproduction­of­hepatitis­C­

viruses

Antibody­(lebrikizumab RG3637)­inhibits­chemical­

messenger­interleukin-13­­

that­triggers­inflammation­in­

asthmatic­reactions

IL-13 molecule

Lebrikizumab

Hepatitis C virus Diagnostics

Diagnostics

Therapeutics

Therapeutics

DiagnosticsHER signalling Therapeutics

* These tests are being developed by Roche Diagnostics.

05_Roche_AR10_ENG_Strategy.indd 21 28.01.2011 10:39:25

22­ Roche Business Report 2010 Roche Group

1 Initial diagnosisTissue­samples­from­the­patient­are­first­examined­­

in­the­pathology­laboratory­to­see­whether­cancer­

cells­are­present.­If­irregularities­in­cellular­shape­or­

structure­are­found,­more­extensive­tests­are­

required.

2 Specific cancer diagnosisRoche­has­developed­several­immunohistochemistry­

and­in situ­hybridisation­tests­for­use­on­the­Bench-

Mark­family­of­instruments­that­reliably­determine­the­

type­and­subtype­of­lung­tumour­present.­

3 PrognosisThe­pathologist­then­characterises­the­tumour­on­­

the­basis­of­cell­differentiation­and­other­criteria.­

Roche­is­currently­developing­a­number­of­molecular­

biomarkers­that­will­enable­physicians­to­predict­­

the­course­of­cancers­as­accurately­as­possible.

From precise diagnosis to more personalised therapy

Non-small cell lung cancer (NSCLC) is the world’s number one cause of cancer-

related 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 tumour’s molecular profile, the likelihood

of response to drug therapy and the most appropriate therapeutic options.

Roche has developed several immunohisto-chemistry and in situ hybridisation tests to determine the exact type of tumour present.

The diagnosis of lung cancer is complex. Imaging technologies are often used for an initial examination.

1

2

05_Roche_AR10_ENG_Strategy.indd 22 28.01.2011 10:39:42

23­Roche Business Report 2010Roche Group

4 TestsA­number­of­genes­have­been­identified­as­growth­

drivers­in­non-small­cell­lung­cancer­(NSCLC).­These­

include­the­EGFR­gene,­the­Met­receptors­and­the­

Pl3­kinase.

Tests­from­Roche­help­doctors­understand­the­mech-

anisms­driving­tumour­growth­and­thus­to­select­

drugs­most­likely­to­work­best­for­a­particular­patient.­

Roche­has­several­tests­on­the­market­or­in­devel-

opment­which­use­three­key­technologies­—­immuno-

histochemistry­(IHC),­in situ­hybridisation­(ISH)­

and­the­polymerase­chain­reaction­(PCR).

5 TherapyRoche’s­anticancer­medicines­Avastin­(bevacizumab)­

and­Tarceva­(erlotinib)­play­a­crucial­role­in­the­­

treatment­of­lung­cancer.­And­the­company­is­currently­

developing­a­number­of­new­innovative­drugs­to­

address­cancer-specific­pathways­and­offer­patients­

targeted­therapies.­In­addition,­Roche­Diagnostics­

offers­a­blood­test­enabling­physicians­to­monitor­

responses­to­cancer­treatment.

The pathologist grades the tumour by looking at the individual cells and determining the extent of cell differentiation.

Roche has tests on the market and in development to help physicians under-stand the mecha-nisms driving cancer growth and thus select the treatments most likely to benefit specific patients.

Roche’s Avastin and Tarceva have become pillars in the treat- ment of lung cancer. Roche continues to develop new com-pounds for targeted cancer therapy.

3

4

5

05_Roche_AR10_ENG_Strategy.indd 23 28.01.2011 10:39:45

Pharmaceuticals | Solid local-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 cutting-edge 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.

06_Roche_AR10_ENG_Pharmaceuticals.indd 24 28.01.2011 14:50:40

38,996

35,961

Sales | in millions of CHF

0908 10

37,05814,836

13,59414,776

Core operating profit | in millions of CHF

0908 10

54,81354,141 53,187

Number of employees

0908 10

25­Roche Business Report 2010Pharmaceuticals

Pharmaceuticals Division in brief

Key figures

In millions of CHF% change

in CHF% change in

local currencies % of sales

Sales 37,058 –5 –2 100

— United States 14,071 –5 –1 38

— Western Europe 9,467 –13 –5 25

— Japan 4,319 –9 –12 12

— International (Asia—Pacific, CEMAI 1,

Latin America, Canada, Others)

9,201 7 8 25

Core operating profit 14,776 0 4 39.9

Operating free cash flow 12,933 –13 –9 34.9

Research and development (core basis) 8,160 –5 –2 22.0

1 CEMAI: Central and Eastern Europe, Middle East, Africa, Central Asia, Indian Subcontinent.

Pharmaceuticals Management Team | 31 December 2010

Pascal Soriot 1, 2 Chief Operating Officer Pharmaceuticals, Head of Pharma Medicines

Hal Barron 2 Global Product Development, Chief Medical Officer

Ian Clark 2 Commercial Operations, North America and CEO, Genentech

Tuygan Göker 2 Commercial Operations, CEMAI

Meeta Gulyani 2 Global Portfolio Management

Peter Hug 2 Commercial Operations, Western Europe

Michael Knierim 2 Human Resources

David Loew 2 Global Product Strategy

Luke Miels 2 Commercial Operations, Asia—Pacific

Patrick Mongrolle 2 Finance

Jörg Rupp 2 Commercial Operations, Latin America

Patrick Yang 2 Global Technical Operations

Jean-Jacques Garaud 1 Pharma Research and Early Development (pRED)

Osamu Nagayama 1 President and CEO, Chugai

Richard Scheller 1 Genentech Research and Early Development (gRED)

Dan Zabrowski 1 Roche Partnering

1 Member of the Corporate Executive Committee — see Corporate Governance, p. 84–85.2 Member of the Pharma Medicines Leadership Team.

06_Roche_AR10_ENG_Pharmaceuticals.indd 25 28.01.2011 14:50:41

26­ Roche Business Report 2010 Pharmaceuticals

Pharmaceuticals Division

Solid­local-currency­growth­1­in­sales­of­strategic­

products­and­core­operating­profit,­additional­mar-

keting­approvals­for­strategic­products,­and­progress­

with­a­range­of­promising­projects­in­our­late-stage­

R­&­D­pipeline­made­2010­a­successful­year­overall­

for­the­Pharmaceuticals­Division.­Growth­was­driven­

primarily­by­strong­demand­for­key­medicines­from­

the­Group’s­oncology­and­inflammatory­disease­port-

folios.­Following­the­end­of­the­influenza­A­(H1N1)­

pandemic­and­completion­of­government­stockpiling­

orders,­sales­of­Tamiflu­declined­strongly.­

We­achieved­important­product­development­suc-

cesses­in­2010,­including­expanded­marketing­

ap­prov­als­for­Actemra/RoActemra­for­rheumatoid­

arthritis­in­the­US­and­the­EU,­Herceptin­for­stomach­

cancer­(EU­and­US),­MabThera/Rituxan­for­chronic­

lymphocytic­leukemia­(US)­and­maintenance­treat-

ment­of­follicular­lymphoma­(EU),­and­Lucentis­for­

macular­edema­following­retinal­vein­occlusion­(US).­

Key­regulatory­filings­included­marketing­applica-

tions­for­Actemra/RoActemra­for­juvenile­idiopathic­

arthritis­in­the­EU­and­US,­Herceptin­for­stomach­

cancer­in­Japan­and­Avastin­for­advanced­ovarian­

cancer­in­the­EU.­

During­the­year­we­made­decisions­to­move­several­

projects­into­late-stage­development,­including­

­ocrelizumab­for­multiple­sclerosis,­RG7128­for­hep-­

atitis­C,­lebrikizumab­for­asthma­and­RG3638­­

(MetMAb)­for­lung­cancer.­Positive­results­from­clin-­

ical­trials­with­other­late-stage­compounds­such­­

as­RG7204­(BRAF­inhibitor)­for­melanoma,­RG7159­

(GA101)­for­non-Hodgkin’s­lymphoma­and­chronic­

lymphocytic­leukemia,­and­T–DM1­and­pertuzumab­

for­HER2-positive­breast­cancer­were­published­or­

presented­at­major­medical­conferences­during­2010.­

These­targeted­compounds­are­designed­to­move­­

the­standard­of­care­for­these­diseases­and­improve­

patient­survival.­Roche’s­pharmaceutical­pipeline­

­currently­includes­12­new­molecular­entities­in­late-

stage­development.

At­the­same­time,­2010­was­a­year­of­significant­

­challenges.­Pressure­on­healthcare­budgets­in­many­

countries­and­healthcare­reforms­in­the­United­

States,­the­world’s­largest­market­for­pharmaceuti-

cals,­translated­into­mandatory­reductions­in­reim-

bursement­prices­or­higher­rebates­on­medicines­

under­statutory­health­insurance­or­government-

funded­programmes.­These­developments­already­

had­a­noticeable­impact­on­sales­in­2010,­and­­

we­expect­this­to­continue­into­2011­and­beyond.­­

In­addition,­we­experienced­several­product­devel-

opment­setbacks­in­2010.­The­most­serious­of­­

these­were­the­decision­to­suspend­phase­I I I­testing­

of­taspoglutide­for­type­2­diabetes,­and­regulatory­

developments­in­the­US­and­EU­concerning­Avastin­

as­a­treatment­for­advanced­breast­cancer.

In­December­the­European­and­US­health­authorities­

announced­decisions­that­are­pivotal­in­determining­

whether­Avastin­remains­available­as­a­treatment­­

for­metastatic­breast­cancer.­We­believe­strongly­that­

patients­should­have­this­option­and­are­pleased­­

that­the­European­authorities­continue­to­support­the­

use­of­Avastin­in­this­indication.­It­is­disappointing­

that­the­US­Food­and­Drug­Administration­(FDA)­has­

come­to­a­different­conclusion­after­reviewing­the­

same­set­of­data.­We­believe­that­women­with­HER2-

negative­metastatic­breast­cancer­living­in­the­US­

should­also­have­Avastin­as­a­treatment­option,­and­

we­have­requested­a­hearing­with­the­FDA­accord-

ingly­(see­p.­37).

Responding­to­the­tougher­operating­environment­

and­setbacks­outlined­above,­we­continued­to­

strengthen­our­Pharmaceuticals­organisation­to­

1 Unless otherwise stated, all growth rates are in local currencies.

Sales by region

United States 38% (–1%)

Asia—Pacific 6% (+8%)

Latin America 7% (+20%)

Other regions 3% (–9%)

CEMAI 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.

06_Roche_AR10_ENG_Pharmaceuticals.indd 26 28.01.2011 14:50:42

27­Roche Business Report 2010Pharmaceuticals

increase­efficiency­and­maintain­its­focus­on­inno-

vation.­We­believe­that­the­measures­now­being­

implemented­through­the­Group’s­Operational­Excel-

lence­programme­will­enhance­Roche’s­ability­to­

deliver­breakthrough­medicines­for­patients,­allowing­

us­to­expand­further­in­high-growth­emerging­econ-

omies­while­strengthening­our­presence­in­estab-

lished­markets.

Results and main business developments

Sales­by­the­Pharmaceuticals­Division­in­2010­

declined­2%­in­local­currencies­(–5%­in­Swiss­francs,­

–1%­in­US­dollars)­compared­with­2009­to­37.1 bil-

lion­Swiss­francs.­Excluding­Tamiflu,­the­division’s­

local-currency­sales­grew­5%,­above­the­global­ ­

market.­In­addition­to­the­Group’s­five­main­cancer­

medicines,­the­primary­sales­drivers­were­Lucentis,­

Actemra/RoActemra­and­Mircera.­Growth­from­these­

and­other­pharmaceuticals­largely­compensated­­

for­lower­sales­of­Tamiflu,­CellCept­and­NeoRecor-

mon/Epogin.­Together,­the­top­six­sales­drivers­—­

Avastin,­MabThera/Rituxan,­Herceptin,­Lucentis,­

Actemra/RoActemra­and­Xeloda­—­contributed­over­

1.3 billion­Swiss­francs­in­additional­sales­in­2010.­

Due­to­the­passing­of­the­influenza­A­(H1N1)­pan-

demic,­a­relatively­mild­influenza­season­and­the­

completion­of­most­government­stockpiling­orders,­

sales­of­Tamiflu­declined­strongly,­to­873 million­

Swiss­francs­(2.3 billion­francs­lower­than­in­2009).

Sales­expanded­fastest­in­the­International­region­

(8%,­or­11%­excluding­Tamiflu),­driven­by­demand­for­

MabThera,­Herceptin,­Avastin­and­other­key­medi-

cines­in­emerging­markets.­Particularly­strong­growth­

was­recorded­in­Latin­America­(20%),­led­by­Brazil­

and­Venezuela.­Solid­growth­in­the­Asia—Pacific­

region­(8%)­was­led­by­China­and­Taiwan.­A­slight­

decrease­in­the­United­States­(–1%)­reflects­sig-

nificantly­lower­sales­of­Tamiflu­and­CellCept,­as­well­

as­healthcare­reform­impacts­affecting­all­major­

products.­A­5%­decline­in­sales­in­Western­Europe­

was­due­primarily­to­markedly­lower­sales­of­Tamiflu­

and­NeoRecormon­and­the­effects­of­government­

austerity­measures­introduced­in­a­number­of­coun-

tries,­including­Greece­and­Spain­in­the­second­

quarter­and­Germany­in­the­third­quarter.­Together,­

healthcare­reforms­in­the­United­States­and­austerity­

measures­in­Europe­had­a­negative­impact­on­total­

sales­of­approximately­530­million­Swiss­francs­or­­

1.5­percentage­points.­Excluding­Tamiflu,­sales­in­the­­

US­and­Western­Europe­increased­4%­and­2%,­

respectively,­compared­with­market­growth­2­of­3%­

and­2%.­A­decline­in­sales­of­12%­in­Japan­reflects­

both­significantly­lower­demand­for­Tamiflu­and­­

the­impact­of­revised­National­Health­Insurance­reim-

bursement­prices­that­came­into­effect­in­April.­

Excluding­Tamiflu,­Japanese­sales­grew­3%­in­a­vir-

tually­flat­market.

Core­operating­profit­3­grew­4%­in­local­currencies­

and­was­stable­in­Swiss­francs­at­14.8­billion­Swiss­

francs.­The­corresponding­margin­increased­1.9­

­percentage­points­to­39.9%,­driven­by­synergies­from­

the­merger­with­Genentech­and­productivity­improve-

ments.­This­was­achieved­despite­the­expected­sharp­

decline­in­Tamiflu­sales­and­the­impact­of­health­­-­­

care­reforms­and­austerity­measures.­A­reduction­of­

1%­in­marketing­expenses­was­achieved­through­

tight­cost­management,­which­more­than­covered­­

an­increase­in­allowances­for­bad­debts­in­Southern­

Europe.­Research­and­development­expenses­

declined­2%­versus­2009­thanks­to­resource­priori-­

tisation­while­securing­long-term­growth­through­­

the­rich­R­&­D­pipeline.­In­addition­to­investments­in­

phase­I I I­initiations,­the­metabolism­franchise­and­­

the­earlier-stage­neurology­portfolio,­research­and­

development­expenses­included­costs­associated­

with­the­discontinuation­of­the­ocrelizumab­rheuma-

toid­arthritis­programme­(see­p.­51,­below)­and­

project­termination­costs­associated­with­the­Opera-

tional­Excellence­programme.

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).

Excluding Tamiflu, Pharma-ceuticals Division sales grew 5%, above the global market.

06_Roche_AR10_ENG_Pharmaceuticals.indd 27 28.01.2011 14:50:42

28­ Roche Business Report 2010 Pharmaceuticals

The­division’s­full-year­operating­free­cash­flow­

remained­strong­at­12.9­billion­Swiss­francs.­The­

decrease­of­9%­compared­with­2009­primarily­

reflects­the­payment­in­2010­of­certain­large­2009­

year-end­accruals,­including­employee­retention­­

and­severance­payments,­and­high­royalty­payments­

relating­to­strong­Tamiflu­sales­in­the­second­half­­

of­2009.­The­Pharmaceuticals­Division­is­on­track­to­

achieve­its­goal­of­pre-tax­annual­synergies­from­­

the­Genentech­merger­of­approximately­1­billion­

Swiss­francs­by­2011.­Synergies­of­over­800­million­

Swiss­francs­were­achieved­in­2010.­For­more­

­information­on­the­division’s­operating­results,­ ­

see­the­Finance­Report­(Part­2­of­this­Annual­­

Report).

In­the­year­under­review­the­Pharmaceuticals­­

Division­incurred­significant­non-core­costs­associ-

ated­with­restructuring­measures­implemented­­

under­the­Operational­Excellence­programme.­Most­

of­these­costs­relate­to­severance­payments­fol-

lowing­reductions­in­positions­in­sales­and­market-

ing,­global­manufacturing,­global­development,­­

and­research­and­early­development,­as­well­as­

impairments­of­intangible­assets.

Manufacturing infrastructure

Integration­of­the­Roche­and­Genentech­manufactur-

ing­and­supply­networks­continued­in­2010,­as­

­initiatives­were­implemented­to­ensure­that­global­

demand­for­commercial­and­clinical­supplies­of­­

our­medicines­can­be­met­and­that­necessary­adap-

tations­to­our­growing­pipeline­are­made­in­time.

A­number­of­important­milestones­were­achieved­­

in­2010.­In­April­Hillsboro­Operations­(Oregon,­USA)­

was­officially­inaugurated.­By­2013­Hillsboro­will­­

be­the­US­commercial­filling­and­packaging­facility­

for­our­medicines,­supplementing­facilities­in­

­Germany­and­Switzerland.­In­addition,­expansion­­

of­the­Kentucky­Distribution­Center­was­completed­

in­2010.­The­facility­now­serves­as­the­primary­

­distribution­centre­for­all­products­marketed­in­the­

United­States.

In­all,­Global­Technical­Operations­facilities­passed­

more­than­30­health­authority­inspections­in­2010.­

Our­biotech­production­facility­in­Singapore­received­

its­first­approvals­by­the­US­Food­and­Drug­Admin-

istration­(FDA),­to­manufacture­Lucentis­and­Avastin­

biologic­bulk­drug­substance­for­commercial­use­­

in­the­US.­Approval­by­the­EU­authorities­is­targeted­

for­2011.­Our­Kaiseraugst­(Switzerland)­facility­

­successfully­launched­Actemra­product­for­commer-

cialisation­in­the­United­States­14­days­after­FDA­

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

to­plan­for­the­closure­of­certain­operations­in­Mann-

heim­(Germany)­and­Basel­(Switzerland).

Following­a­detailed­analysis­of­organisational­

­structures­and­processes­as­part­of­the­Group-wide­

Operational­Excellence­programme,­Global­Technical­

Operations­will­further­refine­its­organisational­

­structure­to­improve­operational­efficiencies,­opti-

mise­manufacturing­assets­and­consolidate­the­

­technical­development­and­clinical­supply­network.­

Some­activities­will­be­reorganised­in­California,­

Mannheim­and­other­sites­by­the­end­of­2013,­result-

ing­in­a­reduction­of­approximately­750­positions.­­

In­addition,­Roche­intends­to­seek­buyers­for­its­US­

sites­in­Florence,­South­Carolina,­and­Boulder,­

­Colorado,­potentially­affecting­an­additional­600­jobs.­

Together­with­activities­initiated­in­the­last­two­­

years,­these­changes­will­reduce­the­number­of­

­manufacturing­locations­from­21­to­15­by­the­­

end­of­2013.

The core operating profit margin increased 1.9 percentage points to 39.9%.

06_Roche_AR10_ENG_Pharmaceuticals.indd 28 28.01.2011 14:50:42

29­Roche Business Report 2010Pharmaceuticals

Partnering activities

Collaboration­with­external­partners­has­long­been­­

a­cornerstone­of­Roche’s­R­&­D­strategy.­Access­­

to­external­innovation­through­licensing­and­targeted­

acquisitions­is­a­significant­means­of­strengthening­

the­R­&­D­portfolio­and­expanding­the­Group’s­tech-

nology­capabilities.­In­2010­Roche­Partnering­signed­

a­total­of­52­new­agreements,­including­one­prod­­­-­­

uct­transaction­and­40­research­and­technology­col-

laborations.­In­addition,­ten­product­outlicensing­

agreements­were­signed.

Among­Roche­Partnering’s­main­transactions­in­2010­

were­an­agreement­with­Belgian­company­reMYND­

to­develop­novel­therapeutics­that­could­slow­down­

neurodegeneration­in­Parkinson’s­and­Alzheimer’s­

patients.­A­new­collaboration­was­agreed­with­Aileron­

Therapeutics­to­discover,­develop­and­commercial-­

ise­a­novel­class­of­drugs­called­stapled­peptide­ther-­

apeutics,­a­potentially­transfor­mative­technology­­

to­create­drugs­for­important­disease­targets­that­are­

intractable­to­currently­available­modalities.­In­

December­Roche­acquired­Marcadia­Biotech,­a­pri-

vately­owned­US­company­focusing­on­the­devel-­

opment­of­innovative­therapeutics­for­­metabolic­ ­

diseases.­Marcadia’s­research­and­development­pro-

grammes­on­new­peptide­therapies­for­the­treatment­

of­type­2­diabetes­and­obesity­will­be­integrated­­

into­Roche’s­R­&­D­portfolio.­These­include­next­gener-­

ation­peptides­such­as­MAR701,­currently­in­phase­I­

development­for­type­2­diabetes.­Several­partners­

were­added­to­Roche’s­Expanding­the­Innovation­

Network­(EIN)­project,­which­is­designed­to­create­

and­deepen­relations­with­leading­academic­insti-­

tutions­worldwide.­Under­a­new­EIN­partnership­with­

Harvard­University,­Roche­provides­strategic­ques-

tions­and­know-how­to­Harvard,­with­Harvard­provid-

ing­innovative­solutions.

Genentech­Partnering­completed­four­product­trans-

actions­and­16­research­and­technology­collabo-

rations­in­2010,­supporting­the­cutting-edge­work­­

of­Genentech­Research­and­Early­Development.­

Among­these­is­an­expansion­of­the­antibody-drug­

conjugate­collaboration­with­Seattle­Genetics­in­

oncology.­New­collaborations­in­immunology­

included­an­exclusive­licensing­agreement­with­

Swiss-based­antibody­specialist­NovImmune,­cover-

ing­an­anti-IL-17­antibody­that­has­the­potential­­

to­benefit­patients­across­a­range­of­autoimmune­dis-

eases.­A­novel­research­programme­was­agreed­­

with­US­company­Adimab,­which­will­use­its­propri-

etary­discovery­platform­to­identify­fully­human­anti-

bodies­against­two­targets­selected­by­Genentech.­

Under­the­agreement,­Genentech­has­rights­to­

­commercialise­antibodies­generated­from­the­collab-

oration.

Sales review — selected key products

The­Pharmaceuticals­Division’s­broad-based­portfolio­

of­marketed­products­includes­ten­medicines­from­

Sales by therapeutic area

Oncology 57% (+7%)

Inflammatory and autoimmune diseases, transplantation 8% (+3%)

Central nervous system 3% (+2%)

Respiratory 3% (+7%)

Metabolic diseases, bone diseases 7% (–1%)

Infectious diseases 1% (–2%)

Cardiovascular diseases 3% (–3%)

Virology 10% (–39%)

Others 1% (–10%)

Renal anemia 3% (–6%)

Ophthalmology 4% (+27%)

Italics = growth rates (local currencies).

06_Roche_AR10_ENG_Pharmaceuticals.indd 29 28.01.2011 14:50:43

30­ Roche Business Report 2010 Pharmaceuticals

Top-selling pharmaceuticals — Roche Group | in millions of CHF

6,461 6,356 5,429 1,645 1,458

+9% *

Active substance:

bevacizumab 1

Indications:

colorectal cancer, breast cancer, non-small cell lung cancer, kidney cancer, glioblastoma

+9% *

Active substance:

rituximab 1

Indications:

non-Hodgkin’s lymphoma, chronic lymphocytic leukemia, rheumatoid arthritis

+7% *

Active substance:

trastuzumab 1

Indications:

HER2-positive breast can-cer, advanced HER2-posi-tive stomach cancer

+2% *

Active substance:

peginterferon alfa-2a 1

Indications:

hepatitis B and C

+27% *

Active substance:

ranibizumab 1

Indications:

wet age-related macular degeneration, macular edema following retinal vein occlusion

Avastin MabThera/Rituxan Herceptin Pegasys Lucentis **

06_Roche_AR10_ENG_Pharmaceuticals.indd 30 28.01.2011 14:50:46

31­Roche Business Report 2010Pharmaceuticals

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.

1,426 1,325 1,290 1,285 1,013

+17% *

Active substance:

capecitabine 2

Indications:

colorectal cancer, breast cancer, stomach cancer

+6% *

Active substance:

erlotinib 2

Indications:

advanced non-small cell lung cancer, advanced pancreatic cancer

–15% *

Active substance:

mycophenolate mofetil 2

Indications:

transplantation

–15% *

Active substance:

epoetin beta 1

Indications:

anemia

+1% *

Active substance:

ibandronate 2

Indications:

osteoporosis

Xeloda Tarceva CellCept NeoRecormon, Epogin Bonviva/Boniva

Thanks to the Pharmaceuticals Division’s broad-based portfolio, Roche is one of the world’s leading providers of clinically differentiated medicines for cancer, viral and inflammatory diseases, and metabolic disorders.

06_Roche_AR10_ENG_Pharmaceuticals.indd 31 28.01.2011 14:50:50

32­ Roche Business Report 2010 Pharmaceuticals

six­therapeutic­areas­that­generated­sales­of­over­­

1­billion­Swiss­francs­each­in­2010.­Of­these,­the­top­

three­recorded­sales­of­well­over­5­billion­Swiss­

francs­each.­Combined­sales­of­the­Group’s­top­20­

pharmaceuticals­amounted­to­32.6­billion­Swiss­

francs,­or­88%­of­divisional­sales.

Sales­of­the­division’s­oncology­portfolio­rose­7%­to­

21.3­billion­Swiss­francs­in­2010,­led­by­key­products­

Avastin,­MabThera/Rituxan,­Herceptin,­Xeloda­and­

Tarceva.­Together,­these­five­medicines­accounted­for­

over­half­of­total­pharmaceutical­sales.­Sales­of­

­antiviral­medicines­declined­39%,­for­a­full-year­total­

of­3.5­billion­Swiss­francs,­due­mainly­to­the­sharp­

decline­in­sales­of­Tamiflu.­Overall­sales­of­the­renal­

anemia­portfolio­declined­by­6%­to­1.2­billion­francs,­

with­strong­demand­for­Mircera­outweighed­by­

decreasing­sales­of­NeoRecormon/Epogin.­Sales­in­

the­combined­inflammation/autoimmune/transplan-

tation­portfolio­rose­3%­to­3.0­billion­francs:­growing­

demand­for­MabThera/Rituxan­for­rheumatoid­­

arthritis­and­strong­uptake­of­Actemra/RoActemra­

offset­continued­generic­erosion­of­CellCept­in­the­

United­States.­

OncologyGlobal­sales­of­Avastin­(bevacizumab),­for­advanced­

colorectal,­breast,­lung­and­kidney­cancer,­and­for­

relapsed­glioblastoma­(a­type­of­brain­tumour),­rose­

9%­to­6.5­billion­Swiss­francs,­reflecting­continued­

positive­uptake­of­the­product­overall.­Sales­growth­

in­Western­Europe­(7%)­was­driven­primarily­by­

­continued­uptake­for­breast­cancer­and­improved­

uptake­for­colorectal­and­lung­cancer.­Austerity­

measures­introduced­during­the­year­in­Greece,­

Spain,­Germany­and­other­markets­resulted­in­a­pro-

gressive­flattening­of­growth­in­the­region­as­a­­

whole­that­was­particularly­noticeable­in­the­fourth­

quarter.­Sales­in­the­US­were­flat­for­the­year,­reflect-

ing­reserve­adjustments­due­to­the­healthcare­

reforms­enacted­in­2010­and­regulatory­and­reim-

bursement­uncertainty­regarding­the­metastatic­

breast­cancer­indication­(see­p.­37);­together­these­

factors­led­to­a­decline­in­sales­in­the­second­

­half-year,­especially­the­fourth­quarter.­Avastin­main-

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-Hodgkin’s­

lymphoma­(NHL),­chronic­lymphocytic­leukemia­

(CLL)­and­rheumatoid­arthritis­(RA),­totalled­6.4 bil-

lion­Swiss­francs­in­2010,­an­increase­of­9%­versus­

2009.­Sustained­growth­in­the­oncology­segment­was­

driven­by­uptake­in­CLL­and­continued­strong­use­­

in­NHL­in­Western­Europe­and­the­US.­Solid­double-

digit­growth­in­the­International­region,­including­

strong­gains­in­key­emerging­markets,­reflects­uptake­

of­the­medicine­in­its­NHL­indications.­The­European­

rollout­of­MabThera­in­a­new­indication,­first-line­

maintenance­treatment­of­patients­with­follicular­lym-

phoma,­commenced­in­the­fourth­quarter.­Estimated­

sales­of­MabThera/Rituxan­in­the­RA­segment­

reached­the­1­billion­Swiss­franc­mark­in­2010­(16%­

of­the­product’s­total­sales),­17%­higher­than­in­

2009.­Growth­is­being­driven­by­increased­use­in­

patients­with­an­inadequate­response­to­one­or­more­

tumour­necrosis­factor­inhibitors­and­by­growing­

acceptance­of­six-month­repeat­treatment­intervals.

Global­sales­of­Herceptin­(trastuzumab),­for­HER2-

positive­breast­cancer­and­HER2-positive­metastatic­

stomach­cancer,­rose­7%­to­5.4­billion­Swiss­francs­

on­sustained,­solid­single-digit­growth­in­the­United­

States­and­Western­Europe,­and­double-digit­gains­­

in­the­International­region.­Herceptin­maintained­­

its­high­market­penetration­in­breast­cancer,­with­­

sales­also­benefitting­from­initial­uptake­for­stomach­

­cancer­in­EU­countries­and­other­markets.­In­addi-

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,­the­product’s­

33­Roche Business Report 2010Pharmaceuticals

three­largest­markets.­Global­sales­of­Xeloda­are­

benefitting­from­a­number­of­new­indications,­

­including­stomach­cancer­in­China,­an­expanded­

metastatic­colorectal­cancer­indication­in­Japan,­­

and­adjuvant­4­colon­cancer­in­Europe,­as­well­as­

increased­patient­share­in­metastatic­breast­ ­

cancer­in­the­US­and­EU.

Sales­of­Tarceva­(erlotinib),­for­advanced­lung­

and­pancreatic­cancer,­increased­6%­to­1.3­billion­

Swiss­francs,­driven­mainly­by­increased­use­in­­

the­second-line­non-small­cell­lung­cancer­setting.­

The­main­contributions­to­growth­came­from­the­

International­region,­Japan­and­the­US.­Mid-single-

digit­growth­in­the­US­reflects­steady­demand­in­­

the­lung­and­pancreatic­cancer­indications­and­the­

impact­of­government­healthcare­reforms.­Against­ ­

a­background­of­stable­demand,­sales­in­Western­

Europe­declined­slightly,­mainly­as­a­result­of­govern-

ment-mandated­price­reductions­and­rebates­in­

­several­major­markets.­Sustained­strong­sales­growth­

in­Japan­(37%)­reflects­continued­market­pene­-

tration­and­oncologists’­increasing­confidence­in­the­

benefits­of­treatment­with­Tarceva.

VirologyWorldwide­sales­of­Pegasys­(peginterferon­alfa-2a),­

for­hepatitis­B­and­C,­increased­2%­to­1.6­billion­

Swiss­francs­in­2010.­Flat­sales­in­the­United­States­

and­sales­decreases­in­Western­Europe,­Japan­­

and­certain­other­mature­markets­were­offset­by­

growth­in­the­International­region,­especially­ ­

Asia—Pacific­and­CEMAI­5­countries.­The­product’s­

market­share­continued­to­expand­in­the­main­

­European­markets,­the­US­and­Japan.­Global­sales­

continued­to­benefit­from­clinical­data­reinforcing­­

the­superiority­of­Pegasys­over­other­treatment­

options­and­increased­use­in­hepatitis­B.­The­hepatitis­

C­market­is­poised­for­major­expansion,­with­the­

introduction­of­a­new­generation­of­direct-acting­

antiviral­agents­expected­from­2011­onwards.­

Because­Pegasys­—­the­leading­pegylated­interferon­

—­is­used­in­most­hepatitis­treatment­development­

programmes­today,­it­is­expected­to­become­the­

backbone­of­future­combination­therapies­with­the­

new­antivirals­(see­also­p.­51,­below).­

Following­exceptional­demand­in­2009­due­to­the­

influenza­A­(H1N1)­pandemic,­sales­of­Tamiflu­(osel-

tamivir),­for­influenza­A­and­B,­totalled­873­million­

Swiss­francs­in­2010,­73%­(2.3­billion­francs)­lower­

than­in­2009.­With­government­stockpiling­orders­

largely­completed­by­early­2010­and­the­influenza­A­

(H1N1)­pandemic­passing­its­peak,­sales­fell­sharply­

in­the­last­three­quarters.­Sales­were­also­affected­­

by­relatively­mild­influenza­seasons­in­both­hemi-

spheres­during­2010.­Roche­remains­ready­to­address­

­potential­threats­posed­by­influenza­and­is­main-

taining­production­capacity­in­cooperation­with­

­exter­nal­manufacturing­partners­to­enable­a­rapid­

response­to­future­significant­outbreaks­or­govern-

ment­stockpiling­orders.

OphthalmologyUS­sales­of­Lucentis­(ranibizumab),­for­wet­age-

related­macular­degeneration­and­macular­edema­

following­retinal­vein­occlusion,­rose­27%­to­­

1.5­billion­Swiss­francs.­Strong­growth­throughout­

2010­was­driven­primarily­by­increases­in­the­­

total­number­of­patients­receiving­Lucentis­and­the­

time­patients­are­on­treatment.­The­US­launch­of­

Lucentis­for­the­treatment­of­macular­edema­(swell-

ing­in­the­retina)­following­retinal­vein­occlusion­

began­in­late­June,­and­initial­uptake­is­encouraging.­

Lucentis­was­­discovered­by­Genentech,­which­

retains­commer­­cial­rights­in­the­United­States.­

Novartis­has­exclusive­commercial­rights­for­the­­

rest­of­the­world.

Inflammation and autoimmune disordersAs­the­global­rollout­of­the­novel­rheumatoid­­

arthritis­medicine­Actemra­(tocilizumab,­known­as­

RoActemra­in­the­EU)­continued,­sales­in­2010­

totalled­397 million­Swiss­francs,­a­rise­of­177%­over­

2009.­Uptake­of­Actemra/RoActemra­in­the­EU,­­

the­United­States­and­other­launch­markets­remains­

very­encouraging.­Around­60%­of­US­rheumatol-

ogists­have­already­prescribed­the­medicine.­Contin-

ued­strong­sales­growth­in­Japan­reflects­increas­­-­­

ing­use­of­Actemra­as­a­first-line­biologic.­Chugai­

announced­in­August­that­the­Japanese­health­

authorities­had­removed­the­approval­conditions­for­

Actemra­for­the­rheumatoid­arthritis­and­polyar­tic-

ular-course­juvenile­idiopathic­arthritis­indica­tions.­

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.

06_Roche_AR10_ENG_Pharmaceuticals.indd 33 28.01.2011 14:50:50

1010,000

≤ 50volunteers or patients

molecules

molecules

investment

Creating value for patients means investing skill and resources in a long, uncertain journey

Clinical development — a long process that continues even after market launch

Phase IPreclinical development

1–2 years3–6 years

Preclinical testing evaluates a drug’s safety profile and pharma-cological 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 devel-opment. 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. Dur-ing phase I trials researchers are looking at how the drug is absorbed, distributed and changed (metabo-lised) 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.

06_Roche_AR10_ENG_Pharmaceuticals.indd 34 28.01.2011 14:50:53

2–3 1–2 1

≤ 500

≤ 15 ,000

100–1,000 *patients

patients

patients

molecules

moleculesmolecule

Phase II Phase III Phase IV

1.5–2 years 3–3.5 (or more) years 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 appropri-ate dose ranges and test whether the drug demonstrates clinical effi-cacy (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 signfi-cant ways. Phase II I trials compare the new drug with current treatments or, in some trials, with a placebo. Many phase II I trials last a long time, typically a year or more, and may involve several thousand patients in several countries.

Phase II I trials must include a large number of patients so that investiga-tors can evaluate the differences between types of treatment. Regula-tory agencies normally require results from phase II I trials before approving a new drug.

Phase IV trials are conducted after a drug has been approved by regu-latory agencies and launched on the market. Also known as post-mar-keting trials, they are designed to gather broader, ‘real-world’ experience with the new drug in routine medical practice. Phase IV trials generate addi-tional data on safety and efficacy in large numbers of patients and in par-ticular patient subgroups. They can also provide further information on how the drug works in comparison or in combination with other treatments.

Even large phase II I trials cannot iden-tify all potential side effects: this is another area where phase IV trials pro-vide essential additional information. Roche maintains a system of risk assessment programmes to identify and evaluate side effects that did not appear in phase I–II I trials.

* Patients per trial; 5–20 (or more) trials.

06_Roche_AR10_ENG_Pharmaceuticals.indd 35 28.01.2011 14:50:56

36­ Roche Business Report 2010 Pharmaceuticals

The­decision­gives­more­patients­access­to­Actemra­

and­follows­positive­results­from­a­routine­post-­

marketing­surveillance­programme.­Actemra/

RoActemra­is­now­available­in­some­50­countries­

worldwide.

Anemia and transplantationSales­of­the­renal­anemia­medication­Mircera­(me­-

thoxy­polyethylene­glycol-epoetin­beta)­rose­51%­to­

255­million­Swiss­francs.­Demand­for­Mircera,­which­

is­now­available­in­over­100­countries­worldwide,­­

is­coming­mainly­from­the­predialysis­segment­and­

new­patient­commencements.­Combined­sales­of­­

the­Group’s­established­anemia­medicines,­Roche’s­

NeoRecormon­and­Chugai’s­Epogin­(epoetin­beta),­

declined­15%­to­1.3­billion­Swiss­francs.­Roche­

­Pharmaceuticals’­overall­share­of­the­European­ane-

mia­market­remained­stable­despite­increasing­

biosimilar­competition,­due­mainly­to­the­strong­per-

formance­of­Mircera­in­the­major­EU­countries­­

and­a­robust­market­share­by­volume­for­NeoRecor-

mon­in­the­renal­indication.­A­10%­decline­in­sales­­

of­Epogin­in­Japan­was­due­mainly­to­competition­in­

the­dialysis­market­and­a­lower­National­Health­

Insurance­reimbursement­price,­factors­which­out-

weighed­increased­demand­for­the­medicine­in­­

the­predialysis­segment.

At­1.3­billion­Swiss­francs­for­the­full­year,­sales­

­revenue­from­CellCept­(mycophenolate­mofetil),­for­

the­prevention­of­solid­organ­transplant­rejection,­

remained­significant.­The­sales­decrease­of­15%­was­

due­primarily­to­the­loss­of­patent­exclusivity­in­­

the­United­States­in­2009.­The­resulting­losses­to­

competition­from­generic­versions­were­partly­offset­

by­sales­growth­in­Japan­and­the­International­

region.­

Development highlights — key marketed products

In­2010­the­Pharmaceuticals­Division­filed­20­major­

new­marketing­applications­and­gained­18­major­

­regulatory­approvals­(see­tables,­pp.­38­and­39).­The­

following­summaries­present­approvals,­filings­and­

major­clinical­trial­results­for­key­marketed­products,­

by­indication.

Actemra/RoActemraApprovals |­ In­January­2010­the­US­Food­and­Drug­

Administration­(FDA)­approved­Actemra­for­ ­

the­treatment­of­adult­patients­with­moderately­to­

severely­active­rheumatoid­arthritis­(RA)­who­­

have­had­an­inadequate­response­to­one­or­more­

tumour­necrosis­factor­(TNF)­inhibitors.­Actemra,­­

the­first­interleukin-6­receptor-inhibiting­monoclonal­

antibody­approved­to­treat­RA,­may­be­used­alone­­

or­in­combination­with­methotrexate­or­other­disease­

modifying­antirheumatic­drugs.­In­June­the­Euro­­-

pean­Commission­extended­the­product’s­existing­

marketing­approval­to­include­treatment­with­

RoActemra­plus­methotrexate­to­reduce­the­rate­of­

progression­of­joint­damage­and­improve­physical­

function­in­patients­with­rheumatoid­arthritis.­The­

new­indication,­which­is­based­on­two-year­data­from­

a­global­phase­I I I­study­(LITHE),­came­just­over­a­

year­after­the­medicine’s­initial­EU­approval,­further­

reinforcing­its­value­as­an­effective­treatment­for­­

RA.­In­January­2011­the­FDA­approved­Actemra­for­­

a­similar­indication­(inhibition­and­slowing­of­

­structural­joint­damage,­improvement­of­physical­

function,­and­achievement­of­major­clinical­response­

in­adults­with­moderately­to­severely­active­RA),­

based­on­a­supplemental­Biologics­License­Appli-

cation­(sBLA)­submitted­by­Genentech­in­March­

2010.

Filings |­ In­October­Genentech­submitted­a­second­

sBLA­to­the­FDA­and­Roche­submitted­an­Accel-

erated­Assessment­application­to­the­European­

­Medicines­Agency­(EMA),­seeking­to­extend­the­

approved­indications­of­Actemra/RoActemra­to­

include­treatment­of­systemic­juvenile­idiopathic­

arthritis­(sJIA).­Both­applications­are­based­on­posi-

tive­data­from­the­global­phase­I I I­TENDER­study.­

There­are­currently­no­approved­therapies­in­the­EU­

or­US­for­sJIA,­a­debilitating­and­difficult-to-treat­

Further major approvals for Actemra/RoActemra, Herceptin, MabThera/Rituxan and Lucentis.

06_Roche_AR10_ENG_Pharmaceuticals.indd 36 28.01.2011 14:50:56

37­Roche Business Report 2010Pharmaceuticals

the­FDA’s­‘Notice­of­Opportunity­for­Hearing’.­We­

believe­this­would­provide­an­opportunity­to­present­

our­views­that­the­data­are­clinically­meaningful­ ­

and­meet­the­applicable­legal­and­regulatory­stan-

dards­for­continued­approval.­Until­the­conclusion­­

of­these­proceedings,­Avastin­remains­FDA-approved­

for­use­in­combination­with­paclitaxel­for­metastatic­

HER2-negative­breast­cancer.­At­the­same­time­the­

FDA­issued­complete­responses­for­all­other­pending­

applications­concerning­Avastin­in­metastatic­breast­

cancer,­saying­that­the­applications­failed­to­support­

the­extension­of­the­proposed­indications:­for­first-

line­treatment­in­combination­with­docetaxel­(based­

on­AVADO)­and­in­combination­with­standard­chemo-

therapy­(based­on­RIBBON-1),­and­for­second-­

line­treatment­in­combination­with­standard­chemo-

therapy­(based­on­RIBBON-2).­These­decisions­do­

not­affect­the­availability­of­Avastin­for­its­approved­

uses­in­other­types­of­cancer­in­the­United­States.

Approvals |­ In­February­the­Chinese­health­author-

ities­approved­Avastin­for­the­treatment­of­metastatic­

colorectal­cancer,­its­first­indication­in­this­important­

market.

Filings |­ In­December­Roche­filed­an­application­

with­the­EU­authorities­for­approval­of­Avastin­­

as­frontline­treatment­for­ovarian­cancer,­based­on­

the­results­of­the­phase­I I I­GOG218­and­ICON-7­

­trials­(see­below,­Clinical Milestones).

Clinical milestones |­ Two­large­phase­I I I­trials­

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

the­results­of­both­trials­to­support­a­regulatory­appli-

cation­for­this­additional­indication­in­the­US­in­2011.­

Clinical­trial­results­led­to­a­number­of­adjustments­­

in­the­Avastin­development­programme­in­2010.­As­

disease­that­affects­the­whole­body­and­represents­

an­area­of­high­unmet­medical­need.

AvastinSince­its­initial­approval­in­2004­in­the­United­States­

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(including­colorec-

tal,­breast,­non-small­cell­lung,­brain,­gastric,­ovarian­

and­others)­and­different­settings­(advanced­or­

early-stage­disease).

Breast cancer |­ In­December,­following­a­review­

of­all­relevant­data,­the­European­Committee­for­

Medicinal­Products­for­Human­Use­(CHMP)­sup-

ported­the­continued­first-line­use­of­Avastin­in­

­combination­with­paclitaxel­chemotherapy,­describ-

ing­it­as­a­valuable­treatment­option­for­patients­

­suffering­from­metastatic­breast­cancer.­Paclitaxel­is­

the­chemotherapy­most­frequently­used­and­also­

most­frequently­partnered­with­Avastin­to­control­the­

disease.­The­committee­also­considered­combina-

tions­of­Avastin­with­two­other­types­of­chemother-

apy,­based­on­data­from­the­AVADO­and­RIBBON-1­

trials.­The­CHMP­recommended­that­the­combination­

with­docetaxel­be­removed­from­the­Avastin­label­

and­that­the­combination­with­capecitabine­(Xeloda)­

not­be­approved.­A­decision­by­the­European­Com-

mission­on­these­recommendations­is­expected­early­

in­2011.­The­CHMP­opinion­does­not­affect­the­­

other­approved­uses­of­Avastin­in­the­European­Union­

for­advanced­colorectal,­kidney­and­lung­cancer.

Also­in­December­the­FDA­announced­a­number­­

of­regulatory­decisions­concerning­the­use­of­Avastin­

for­metastatic­breast­cancer­in­the­US.­The­most­

important­of­these­is­the­agency’s­decision­to­initiate­

the­process­to­withdraw­the­current­conditional­

(‘accelerated’)­approval­for­Avastin­for­first-line­

treatment­of­metastatic­breast­cancer.­Roche­and­

Genentech­have­requested­a­hearing­pursuant­to­­

06_Roche_AR10_ENG_Pharmaceuticals.indd 37 28.01.2011 14:50:56

38­ Roche Business Report 2010 Pharmaceuticals

Major regulatory filings in 2010­1

ProductClinical data supporting filing Indication and/or dosage form Country

Actemra/

RoActemra

LITHE (2-year data) rheumatoid arthritis, reduction or inhibition of progression

of joint damage and improvement of physical function

USA

ML21753 rheumatoid arthritis signs and symptoms,

progressive joint damage

China (refiled)

TENDER systemic onset juvenile idiopathic arthritis EU, USA

Avastin RIBBON-2 metastatic breast cancer, second-line treatment USA

ICON-7, GOG 218 metastatic ovarian cancer EU

Herceptin ToGA advanced HER2-positive gastric cancer USA, China

Herceptin

+ Xeloda

ToGA advanced HER2-positive gastric cancer Japan

MabThera/

Rituxan

PRIMA advanced follicular lymphoma, first-line maintenance

following induction treatment with MabThera/Rituxan

plus chemotherapy

EU, USA,

Switzerland

RAVE ANCA-associated vasculitis USA

Mircera ML20680 renal anemia China

CORDATUS

(NH20052)

correction of symptomatic anemia in adults with chronic

kidney disease who do not yet need dialysis, once-monthly

administration

EU, Switzerland

Tarceva emerging data

from clinical trials,

ongoing clinical

experience

metastatic non-small cell lung cancer with EGFR-

activating mutations, first-line treatment

EU

Xeloda NO16968 (XELOXA) adjuvant colon cancer, combination with oxaliplatin Switzerland

data in the public

domain

advanced or refractory gastric cancer in patients who

are not candidates for curative surgery

Japan

XELOX (NO16966) metastatic colorectal cancer, combination with oxaliplatin China (refiled)

1 Includes supplemental indications.

phase­I I I­trials­with­Avastin­in­stomach­(AVAGAST)­

and­prostate­(CALGB­90401)­cancer­did­not­meet­

their­primary­endpoints­of­extending­overall­survival,­

Roche­has­decided­not­to­pursue­regulatory­filings­

for­these­indications.­A­phase­I I I­programme­inves-

tigating­the­addition­of­Avastin­to­standard­treat-

ment­with­MabThera/Rituxan­plus­chemotherapy­­

for­diffuse­large­B­cell­lymphoma,­an­aggressive­­

form­of­non-Hodgkin’s­lymphoma,­was­discontinued­

after­a­safety­and­efficacy­analysis­showed­an­unfa-

vourable­benefit–risk­assessment.­Following­eval-

uation­of­phase­I I I­data­(AVANT),­Roche­has­discon-

tinued­development­of­Avastin­in­adjuvant­colorectal­

cancer.­The­results­and­decision­on­adjuvant­colo-

rectal­cancer­do­not­affect­the­use­of­Avastin­in­­

the­metastatic­(advanced)­colorectal­cancer­setting,­

where­the­medicine­has­demonstrated­a­clinically­

meaningful­progression-free­and­overall­survival­

­benefit­in­both­first-­and­second-line­treatment.­

Avastin­has­shown­a­positive­benefit–risk­ratio­in­

these­and­all­other­approved­metastatic­cancer­

­indications.

HerceptinApprovals |­ The­European­Commission­approved­

Herceptin­in­combination­with­chemotherapy­for­use­

in­patients­with­metastatic­stomach­(gastric)­cancer­

exhibiting­high­levels­of­HER2,­in­January­2010.­

Approvals­for­the­same­indication­were­received­in­

Switzerland­in­May­and­the­US­in­October,­following­

priority­review­by­the­FDA.

Filings |­ In­June­the­Japanese­health­authorities­

gave­priority­review­status­to­an­application­sub­-­

06_Roche_AR10_ENG_Pharmaceuticals.indd 38 28.01.2011 14:50:56

39­Roche Business Report 2010Pharmaceuticals

Major regulatory approvals in 2010 1

ProductClinical data supporting filing Indication and/or dosage form Country

Actemra/

RoActemra

OPTION, TOWARD,

RADIATE, AMBITION,

LITHE (6-month data)

rheumatoid arthritis signs and symptoms USA

LITHE (2-year data) rheumatoid arthritis, reduction or inhibition of progression

of joint damage and improvement of physical function

EU, Switzerland,

USA 2

Avastin AVF 2107, E3200,

NO16966 (global);

ARTIST (China)

metastatic colorectal cancer China

Herceptin ToGA advanced HER2-positive gastric cancer EU, USA, Switzerland

Lucentis CRUISE, BRAVO macular edema following retinal vein occlusion USA

MabThera/

Rituxan

CLL-8 first-line chronic lymphocytic leukemia USA

REACH relapsed or refractory chronic lymphocytic leukemia USA

PRIMA advanced follicular lymphoma, first-line maintenance

following induction treatment with MabThera/Rituxan plus

chemotherapy

EU, Switzerland

REFLEX rheumatoid arthritis, inhibition of progression of joint

damage and improvement of physical function

EU

Mircera CORDATUS

(NH20052)

correction of symptomatic anemia in adults with

chronic kidney disease who do not yet need dialysis,

once-monthly administration

EU, Switzerland

Tarceva SATURN non-small cell lung cancer, first-line maintenance after

chemotherapy

USA, EU

Xeloda NO16968 (XELOXA) adjuvant colon cancer, combination with oxaliplatin EU

1 Includes supplemental indications.2 January 2011.

mitted­in­March­by­Chugai,­for­approval­of­Herceptin­

for­advanced­HER2-positive­stomach­cancer.­In­­

June­Roche­submitted­an­application­for­approval­ ­

of­the­same­indication­in­China.

Clinical milestones |­ In­December­patient­enrol-

ment­was­completed­for­a­phase­I I I­study­with­a­new­

subcutaneous­formulation­of­Herceptin­in­women­

with­HER2-positive­breast­cancer.­Herceptin­is­cur-

rently­given­intravenously­over­30­to­90­minutes.­­

The­innovative­subcutaneous­formulation,­which­is­

based­on­Halozyme’s­Enhanze­technology­(see­­

p.­128),­is­expected­to­take­less­than­five­minutes­­

to­administer­and­may­allow­patients­with­HER2-­

positive­breast­cancer­to­receive­treatment­in­their­

physician’s­office­or­at­home,­without­having­to­­

go­to­a­hospital.

LucentisApprovals |­ In­June­the­US­Food­and­Drug­Admin-

istration­(FDA)­approved­Lucentis­for­the­treatment­­

of­patients­with­macular­edema­(swelling­in­the­

­retina)­following­retinal­vein­occlusion­(RVO).­The­

approval­followed­a­six-month­priority­review­by­­

the­FDA.­RVO­occurs­when­blood­flow­through­a­ret-

inal­vein­becomes­blocked,­causing­swelling­(macu-

lar­edema)­and­hemorrhages­in­the­retina,­which­may­

result­in­blurring­or­vision­loss­in­all­or­part­of­one­

eye.

MabThera/Rituxan (oncology)Approvals |­ In­February­the­FDA­approved­Rituxan­

combined­with­fludarabine­and­cyclophosphamide­

chemotherapy­for­people­with­either­previously­

untreated­(first-line)­or­previously­treated­(relapsed­­

06_Roche_AR10_ENG_Pharmaceuticals.indd 39 28.01.2011 14:50:56

Disease area Oncology

Indication Second-line HER2-positive metastatic breast cancer

Trials EMILIA (TDM4370g / BO21977)

No. of patients 551 (recruited as of December 2010)

No. of study sites 216

No. of countries 22

Jone F., participant in the EMILIA study (T–DM1), Houston

Will it

06_Roche_AR10_ENG_Pharmaceuticals.indd 40 28.01.2011 14:51:34

Wayne C., T–DM1 Medical Director, Genentech, South San Francisco

work ?

06_Roche_AR10_ENG_Pharmaceuticals.indd 41 28.01.2011 14:51:57

Creating value for patients means building on good treatments to make them even better

T–DM1 — an antibody–drug conjugate

1970sNon-specific chemo-therapy agents

2000Herceptin (trastuzumab) — the new standard of care for HER2-positive metastatic breast cancer

The future?ADC targets chemo-therapy specifically to tumour cells

Chemotherapy Attacks both healthy and cancerous cells

Trastuzumab + chemo The monoclonal antibody trastuzumab specifically targets HER2-positive tumour cells

T–DM1 Attacks cancer cells only, no conventional chemotherapy burden

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 tras-tuzumab–DM1 (T–DM1), a novel antibody-drug conjugate (ADC) being developed to treat HER2-positive breast cancer. T–DM1 combines two powerful anticancer

approaches in one medicine. The trastuzumab antibody component blocks the signals that make HER2-positive cancer cells more

aggressive and sends a message to the patient’s immune system to destroy the cancer cells. It also delivers DM1, a potent chemo-

therapy agent, directly to the tumour cells to induce cell death.

T–DM1 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 II I registration trial comparing single-agent T–DM1 treatment with combined lapatinib (another HER2-targeted drug) plus capecitabine (Xeloda) chemotherapy in women with advanced HER2-positive breast cancer. Further trials are testing T–DM1 in combination with Roche’s pertuzumab, another next-generation HER-targeting antibody therapy.

Cancer cell

Healthy cell

Points of attack

Stable linker

DM1

T–DM1

Trastuzumab

06_Roche_AR10_ENG_Pharmaceuticals.indd 42 28.01.2011 14:51:59

43­Roche Business Report 2010Pharmaceuticals

MabThera/Rituxan (inflammation)Approvals |­ Roche­received­regulatory­approval­

in­October­for­two­additions­to­the­existing­EU­­

marketing­authorisation­for­MabThera­in­rheumatoid­

arthritis:­based­primarily­on­data­from­the­REFLEX­

study,­the­indications­were­expanded­to­include­

­inhibition­of­progression­of­joint­damage­and­im-­

prove­ment­of­physical­function;­and­information­­

on­enhanced­treatment­responses­in­seropositive­­

RA­patients­(see­below,­Clinical milestones)­

was­added­to­the­product’s­prescribing­information.

Filings |­ In­October,­based­on­data­from­the­phase­

I I/ I I I­RAVE­study,­Genentech­and­Biogen­Idec­

­submitted­a­supplemental­Biologics­License­Appli-

cation­to­the­FDA­for­approval­of­Rituxan­for­ANCA-

associated­vasculitis,­a­group­of­rare,­severe,­life-

threatening­autoimmune­diseases­characterised­by­

inflammation­of­blood­vessels­leading­to­organ­

­damage.­There­are­currently­no­approved­therapies­

for­the­condition,­and­treatment-associated­toxicities­

are­common­with­the­unapproved­standard­of­care,­

cyclophosphamide.

Clinical milestones |­ An­analysis­of­samples­from­

patients­with­RA­who­participated­in­two­phase­I I I­

trials­was­presented­at­the­European­League­Against­

Rheumatism­(EULAR)­annual­congress­in­June.­It­

showed­that­testing­for­specific­blood­markers­at­the­

time­of­diagnosis­could­have­a­significant­impact­­

on­treatment­decisions­and­lead­to­improved­patient­

quality­of­life.­Approximately­80%­of­RA­patients­­

have­at­least­one­of­two­characteristic­biomarkers­

produced­by­autoreactive­B­cells­—­rheumatoid­

­factor­(RF)­and­anticyclic­citrullinated­peptide­(anti-

CCP)­—­in­their­blood.­Such­patients­are­referred­

to­as­‘seropositive’.­Data­from­a­pooled­cohort­of­the­

two­studies­showed­that,­while­both­seropositive­­

and­seronegative­patients­benefitted­from­treatment­

with­MabThera/Rituxan,­the­response­was­enhanced­

in­the­seropositive­population.­Additional­biomarker­

analyses­from­other­phase­I I I­studies­are­pending.­

MabThera/Rituxan­is­the­first­and­only­selective­B­cell­

targeted­therapy­available­for­RA.

TarcevaApprovals |­ In­April­the­US­Food­and­Drug­Adminis-

tration­(FDA)­approved­Tarceva­as­a­maintenance­

treatment­for­patients­with­locally­advanced­or­meta-

static­non-small­cell­lung­cancer­(NSCLC)­whose­

or­refractory)­CD20-positive­chronic­lymphocytic­

leukemia,­based­on­the­results­of­the­CLL-8­and­

REACH­trials.­Following­regulatory­applications­by­

Roche­and­Genentech­in­the­first­quarter,­in­Octo-­

ber­the­European­Medicines­Agency­(EMA)­

approved­MabThera­as­maintenance­treatment­for­

people­with­follicular­lymphoma­who­have­re-­

sponded­to­induction­therapy;­the­FDA­is­currently­

reviewing­Genentech’s­sBLA­for­the­same­indica-­

tion­and­has­set­an­action­date­in­late­January­2011.­

Both­submissions­were­based­on­the­results­of­­

the­PRIMA­study,­which­showed­that­­continuing­

MabThera/Rituxan­for­two­years­(maintenance­­

therapy)­in­patients­who­responded­to­initial­treat-

ment­with­MabThera/Rituxan­plus­chemotherapy­

nearly­doubled­progression-free­survival,­compared­

with­those­who­did­not­receive­maintenance­­

treatment.

Clinical milestones |­ Based­on­positive­results­

from­a­phase­Ib­study­in­patients­with­follicular­lym-

phoma,­in­July­Roche­decided­to­advance­a­new­

subcuta­ne­ous­formulation­of­MabThera,­also­based­

on­­Halozyme’s­Enhanze­technology,­into­phase­­

I I I­development.­Subcutaneous­administration­has­

the­potential­to­significantly­simplify­treatment­­

by­shortening­administration­time­to­less­than­ten­

minutes­and­improving­patient­comfort.­A­phase­­

I I I­trial­is­expected­to­start­in­the­first­quarter­of­2011.­

Positive­data­from­a­phase­I I I­study­of­MabThera/

Rituxan­in­patients­with­advanced­follicular­lym-

phoma­who­did­not­have­symptoms­(asymptomatic­

disease)­were­presented­at­the­annual­meeting­­

of­the­American­Society­of­Hematology­in­December.­

The­study­showed­that­immediate­administration­­

of­single-agent­MabThera/Rituxan­as­induction­ther-

apy­followed­by­continued­(maintenance)­treatment­

with­MabThera/Rituxan­delayed­the­need­for­chemo-­

or­radiotherapy­and­extended­progression-free­

­survival,­compared­with­watchful­waiting.­These­are­

the­first­phase­I I I­data­to­show­that­initial­use­­

of­MabThera/Rituxan­monotherapy­as­induction­fol-

lowed­by­maintenance­can­provide­clinical­benefit­­

for­patients­with­asymptomatic­follicular­lymphoma,­­

a­disease­that­is­commonly­treated­only­when­

­symptoms­appear­(an­approach­known­as­‘watchful­

waiting’).

06_Roche_AR10_ENG_Pharmaceuticals.indd 43 28.01.2011 14:51:59

44­ Roche Business Report 2010 Pharmaceuticals

EGFR-activating­mutations­would­continue­to­benefit­

from­treatment­with­Tarceva­in­later­lines­of­therapy.

Clinical milestones |­ Results­from­a­randomised­

phase­I I I­study­(OPTIMAL)­presented­at­the­

­European­Society­for­Medical­Oncology­(ESMO)­

congress­in­October­demonstrated­that­first-line­

treatment­with­Tarceva­extended­progression-­­

free­survival­in­patients­with­advanced­NSCLC­with­

EGFR-activating­mutations­to­more­than­one­year,­

almost­three­times­longer­than­patients­who­received­

conventional­chemotherapy.­Interim­results­from­­

a­second­trial­investigating­Tarceva­in­this­indication­

(EURTAC)­are­expected­in­the­first­quarter­of­2011.­

As­many­as­30%­of­Asian­patients­with­lung­cancer­

and­an­estimated­10%­of­lung­cancer­patients­in­

Western­countries­have­this­distinct­form­of­NSCLC.

XelodaApprovals |­ In­March­the­EU­authorities­approved­

Xeloda­in­combination­with­oxaliplatin­(a­com­-­

bin­­ation­known­as­XELOX)­for­the­adjuvant­(post-

surgical)­treatment­of­patients­with­early­colon­

­cancer.­The­approval­was­based­on­results­from­­

the­NO16968­(XELOXA)­study,­one­of­the­largest­­

studies­of­patients­with­stage­II I­(early)­colon­cancer,­

which­showed­that­patients­taking­XELOX­imme-

diately­after­surgery­lived­disease-free­for­longer­

­compared­with­those­treated­with­a­chemotherapy­

regimen­consisting­of­5-fluorouracil­plus­leucovorin.­

Filings |­ In­Japan­Chugai­filed­marketing­applica-

tions­with­the­Ministry­for­Health,­Labour­and­­

Welfare­in­March­for­approval­of­Xeloda­combined­

with­­Herceptin­for­the­treatment­of­advanced­­

HER2-positive­stomach­cancer­and­in­September­­

for­Xeloda­in­advanced­or­refractory­gastric­

­(stomach)­cancer­in­patients­who­are­not­candi­-­

dates­for­­curative­surgery.

Clinical milestones |­ A­data­analysis­completed­

in­June­showed­that­NO17629,­a­phase­I I I­trial­inves-

tigating­Xeloda­in­combination­with­docetaxel­for­­

the­adjuvant­(postsurgical)­treatment­of­women­with­

early­breast­cancer,­did­not­meet­its­primary­end-

point­of­extending­disease-free­survival­but­did­meet­

the­secondary­endpoint­of­extending­overall­sur­-

vival.­Roche­has­decided­not­to­pursue­regulatory­

­filings­for­this­indication.­

Roche has 12 innovative new molecular entities in late-stage development, including six potential personalised healthcare medicines with planned companion diagnostic tests.

disease­has­not­progressed­after­four­cycles­of­

­platinum-based­first-line­chemotherapy.­In­April­the­

European­Commission­approved­Tarceva­as­mono-

therapy­for­maintenance­treatment­in­patients­with­

advanced­non-small­cell­lung­cancer­(NSCLC)­

whose­disease­remains­largely­unchanged­(known­­

as­stable­disease)­after­platinum-based­initial­

­chemotherapy.­Both­approvals­are­based­on­data­

from­the­phase­I I I­SATURN­study,­which­showed­

that,­compared­with­placebo,­Tarceva­significantly­

improved­overall­survival­in­patients­with­stable­

­disease.­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

­maintenance­and­second-line­treatment­settings­­

in­patients­with­advanced­or­metastatic­NSCLC,­­

irrespective­of­the­presence­of­EGFR-activating­

mutations.­A­licence­for­Tarceva­for­use­in­the­first-

line­setting­would­allow­physicians­to­personalise­

early­treatment­according­to­EGFR­activating­muta-

tion­status,­while­people­with­NSCLC­without­

06_Roche_AR10_ENG_Pharmaceuticals.indd 44 28.01.2011 14:51:59

45­Roche Business Report 2010Pharmaceuticals

Research and development

Roche’s­Pharmaceuticals­Division­is­committed­­

to­discovering­and­commercialising­innovative­medi-

cines­that­represent­true­medical­value­in­areas­­

of­high­unmet­need.­To­ensure­a­strong­flow­of­suit-

able­candidate­molecules­into­its­development­pipe-

line,­Roche­has­built­a­unique­innovation­network­of­

independent­research­and­development­centres.­In­

addition­to­Roche­and­Genentech,­it­includes­Chugai­

in­Japan­and­alliances­with­more­than­150­partner­

organisations­worldwide.­This­promotes­a­diversity­­

of­research­approaches­and­enables­access­to­new­

technologies­and­promising­drug­candidates.

Close­cooperation­between­the­Pharmaceuticals­

Division­and­Roche­Diagnostics­is­a­key­strategic­

advantage­for­our­company.­It­ensures­that­diagnos-

tics­expertise­is­seamlessly­integrated­into­all­parts­

of­the­pharmaceutical­R­&­D­process.­This­is­central­

to­Roche’s­goal­of­advancing­personalised­healthcare­

(PHC),­an­approach­that­seeks­to­tailor­treatments­­

to­specific­patient­subpopulations­based­on­growing­

scientific­understanding­of­biology­and­disease­at­­

the­molecular­level.

Two­recent­examples­of­the­progress­that­Roche­is­

making­towards­PHC­in­the­development­of­therapies­

for­difficult-to-treat­diseases­are­RG3638­(MetMAb)­

for­lung­cancer­and­RG7204­(BRAF­inhibitor)­for­

malignant­melanoma.­Roche­Diagnostics­is­develop-

ing­diagnostic­tests­designed­to­guide­appropriate­

use­of­both­compounds­in­their­target­patient­popu-

lations.­Roche’s­research­on­antibody–drug­conju-

gates­as­a­means­of­treating­cancer­is­another­

­example­of­a­highly­targeted­approach­with­the­

potential­of­improving­outcomes­while­reducing­­

the­side­­effects­of­treatment.­T–DM1,­for­HER2-­

positive­breast­cancer,­is­the­most­advanced­­

of­these­projects.­For­more­information,­see­below,­

Oncology,­and­also­pp.­18­and­19­of­this­report.

As­part­of­the­Group’s­Operational­Excellence­pro-

gramme,­the­Pharmaceuticals­Division­is­prioritising­

its­R­&­D­investments­in­order­to­dedicate­resources­

to­projects­with­the­highest­potential.­Following­­

a­comprehensive­portfolio­review,­Roche­decided­to­

discontinue­R­&­D­activities­in­RNA­interference,­

­consolidate­internal­functional­resources­and­reduce­

the­number­of­Pharma­Research­and­Early­Devel-

opment­sites­from­11­to­seven,­thereby­reducing­

fixed­costs­and­making­funds­available­for­additional­

external­research­partnerships­and­promising­new­

programmes­entering­phase­I I­clinical­development.

At­the­beginning­of­2011­the­division’s­R­&­D­pipe-­

line­included­102­projects­in­clinical­development­­

(phase­I­to­I I I­and­filed­for­regulatory­review).­Of­

these,­62­involved­new­molecular­entities­(NMEs)­

and­40­involved­additional­indications.­Twelve­­

NMEs­are­in­late-stage­development­(see­table,­ ­

p.­47).­Twenty-two­projects­investigating­additional­

indications­for­existing­products­are­in­phase­I I I.­­

The­Pharmaceuticals­pipeline­is­shown­in­the­fold-out­

inside­the­front­cover­of­this­report.­Further­details­

are­available­at­www.roche.com.

Roche and Genentech — 376 projects in research and early development (discovery, phases 0–II) | January 2011

Inflammation 65

Metabolic 29

Others 12

Ophthalmology 3

Virology 65

CNS 63

Oncology 139

Roche and Genentech — 39 projects in phase II I (or marketing applications filed) | January 2011

Oncology 26

Metabolic 2

CNS 3

Ophthalmology 2

Inflammation 6

06_Roche_AR10_ENG_Pharmaceuticals.indd 45 28.01.2011 14:52:00

46­ Roche Business Report 2010 Pharmaceuticals

target­HER2-positive­tumours­(see­p.­42).­Data­from­­

a­randomised­phase­I I­trial­(TDM4450g)­with­T–DM1­

in­previously­untreated­HER2-positive­metastatic­

breast­cancer­presented­at­the­ESMO­conference­in­

October­showed­efficacy­comparable­to­Herceptin­

plus­chemotherapy,­the­standard­of­care,­along­with­

a­significantly­reduced­side­effect­burden.­Final­

results­from­this­study­are­expected­in­2011.

Two­phase­I I I­registration­studies­in­metastatic­

HER2-­positive­breast­cancer­are­ongoing,­and­we­

plan­to­submit­global­marketing­applications­in­­

2012.­EMILIA,­investigating­T–DM1­in­pretreated­

patients,­is­expected­to­yield­data­on­progression-

free­survival­in­2012­and­overall­survival­in­2013.­

MARIANNE,­a­comparative­trial­of­first-line­treat-

ment­with­either­T–DM1­alone­or­T–DM1­plus­

­pertuzumab­versus­Herceptin­plus­chemotherapy,­

began­in­July.­Both­trials­are­investigating­therapeu-­

tic­options­that­target­HER2-positive­tumours­­

while­sparing­patients­the­burden­and­side­effects­­

of­conventional­chemotherapy.

RG7204­(PLX4032,­collaboration­with­Plexxikon)­

is­a­first-in-class­molecule­designed­to­selectively­

inhibit­a­cancer-causing,­mutated­form­of­the­BRAF­

protein­found­in­approximately­half­of­metastatic­

melanoma­tumours.­Promising­results­from­a­phase­­

I I­clinical­trial­(BRIM2)­were­presented­in­November­­

at­the­International­Melanoma­Research­Congress.­

The­data­showed­that­RG7204­shrank­tumours­­

in­over­half­of­patients­with­previously­treated­BRAF­

V600E­mutation-positive­metastatic­melanoma.­

Median­progression-free­survival­in­the­study­was­

6.2­months.­Typically,­progression-free­survival­for­

these­patients­is­approximately­two­months.­A­phase­

I I I­trial­(BRIM3)­in­previously­untreated­BRAF­

­mutation-positive­metastatic­melanoma­patients­met­

its­primary­endpoints­in­January­2011,­with­an­­

interim­analysis­showing­significantly­improved­over-

all­and­progression-free­survival­in­patients­who­

received­RG7204­compared­with­those­treated­with­

dacarbazine,­the­current­standard­of­care.­Roche­

Molecular­Diagnostics­is­developing­a­companion­

diagnostic,­cobas­4800­BRAF­V600­Mutation­­

Test­(see­pp.­59,­69,­78),­to­identify­patients­whose­

tumours­carry­the­abnormal­BRAF­gene­and­are­

therefore­appropriate­for­treatment­with­RG7204.

Four additional NMEs advance into late-stage development: MetMAb (lung cancer), lebriki-zumab (asthma), RG7128 (hepatitis C), ocrelizumab (MS).

OncologyRoche’s­clinical­development­pipeline­in­oncology­

includes­29­new­molecular­entities.­The­Pharma-

ceuticals­Division­is­further­strengthening­its­oncol-

ogy­portfolio­through­new­targeted­therapeutic­

options­and­expanding­into­new­indications.­Six­

oncology­NMEs­are­now­in­late-stage­clinical­testing.­

Pertuzumab­(RG1273)­is­a­HER2­dimerisation­inhi­b-

itor­that­is­being­studied­with­the­current­standard­­

of­care,­Herceptin­plus­chemotherapy,­in­HER2-­

positive­breast­cancer.­Data­from­a­phase­I I­trial­

(NEOSPHERE)­investigating­pertuzumab­and­

­Herceptin­plus­docetaxel­chemotherapy­in­HER2-

positive­early­breast­cancer­were­presented­at­ ­

the­San­Antonio­Breast­Cancer­Symposium­in­De-­

cem­ber.­The­results­showed­that­the­two­antibodies­

plus­docetaxel­given­in­the­neoadjuvant­setting­

(before­surgery)­improved­the­rate­of­complete­

tumour­­disappearance­in­the­breast­by­more­than­

half­compared­with­Herceptin­plus­docetaxel­chemo-

therapy.­Based­on­the­encouraging­efficacy­results­

from­NEOSPHERE,­pertuzumab­will­also­be­studied­

as­adjuvant­(postsurgical)­therapy­in­HER2-positive­

early­breast­cancer.­The­phase­I I I­clinical­programme­

in­this­setting­is­scheduled­to­start­in­late­2011.­

Results­and­related­regulatory­filings­are­expected­­

in­2011­from­a­phase­I I I­study­(CLEOPATRA)­eval-

uating­the­addition­of­pertuzumab­to­Herceptin­and­

chemotherapy­in­the­first-line­treatment­of­patients­

with­advanced­(metastatic)­disease.

Trastuzumab–DM1­(T–DM1,­RG3502)­is­a­novel­

anti­body–drug­conjugate­that­combines­the­thera-

peutic­effect­of­trastuzumab­(the­active­substance­­

of­­Herceptin)­with­intracellular­delivery­of­DM1,­­

a­highly­potent­chemotherapy­agent,­to­specifically­

06_Roche_AR10_ENG_Pharmaceuticals.indd 46 28.01.2011 14:52:00

47­Roche Business Report 2010Pharmaceuticals

RG3616­(GDC-0499;­collaboration­with­Curis)­is­

a­novel­compound­targeting­the­hedgehog­signalling­

pathway,­which­is­thought­to­be­implicated­in­

­sev­eral­cancers.­A­pivotal­phase­I I­study­with­reg-

istration­potential­is­currently­investigating­RG3616­

as­a­potential­treatment­for­advanced­basal­cell­

­carcinoma­(BCC).­RG3616­is­also­being­evaluated­­

in­a­phase­I I­study­as­a­therapy­for­operable­BCC.­­

In­the­fourth­quarter­Roche­decided­to­discontinue­

development­of­the­compound­in­ovarian­and­colo-

rectal­cancer­due­to­lack­of­benefit­in­phase­I I­trials.

RG7159­(GA101)­is­the­first­type­I I,­glycoengineered,­

anti-CD20­monoclonal­antibody­being­investigated­­

in­late-stage­clinical­trials­as­a­potential­treatment­for­

non-Hodgkin’s­lymphoma­(NHL)­and­chronic­lym-

phocytic­leukemia­(CLL).­It­has­been­specifically­

designed­to­enhance­the­destruction­of­cancerous­B­

cells­by­activating­other­immune­cells­to­attack­­

the­cancer­cells­and­by­inducing­direct­cell­death.­­

In­two­phase­I I­studies­presented­at­the­American­

­Society­of­Hematology­annual­meeting­in­Decem-­

ber,­treatment­with­RG7159­produced­promising­

response­rates­in­very­difficult-to-treat­patients­with­

either­indolent­or­aggressive­NHL­who­had­not­

responded­to­multiple­prior­treatments,­including­

MabThera/Rituxan.­Further­clinical­data­for­RG7159­

in­NHL­and­CLL­are­expected­in­2011.­Phase­I I I­

studies­of­RG7159­versus­MabThera/Rituxan­in­

aggressive­and­indolent­NHL­are­scheduled­to­start­

in­2011.

RG3638­(MetMAb)­is­a­unique­monoclonal­antibody­

that­binds­specifically­to­the­c-Met­protein­receptor.­

The­Met­pathway­can­be­inappropriately­activated­­

in­cancer­and­lead­to­invasive­growth.­New­phase­I I­

Twelve new molecular entities in ongoing or planned late-stage studies

Compound Indication Status Expected first filing

pertuzumab HER2-positive metastatic

breast cancer, first line

phase III started in 2008 2011

trastuzumab–DM1 HER2-positive metastatic

breast cancer, first and

second line

phase III started in first quarter 2009 2012

RG7204 (BRAF

inhibitor)

metastatic melanoma phase III trial in first-line treatment met primary

endpoints in January 2011

2011

RG3616 (hedgehog

pathway inhibitor)

advanced basal cell

carcinoma

pivotal phase II started in first quarter 2009 2011

RG7159 (GA101) chronic lymphocytic

leukemia, non-Hodgkin’s

lymphoma

phase III started in fourth quarter 2009

(chronic lymphocytic leukemia)

2013

RG3638 (MetMAb) solid tumours LIP 1 decision made, preparing for phase III post-2013

lebrikizumab asthma LIP 1 decision made, preparing for phase III post-2013

aleglitazar cardiovascular risk reduc-

tion in type 2 diabetes

phase III initiated in first quarter 2010 post-2013

dalcetrapib dyslipidemia, cardio-

vascular high risk

phase III enrolment completed in second quarter

2010

2013

RG7128 (HCV po-

lymerase inhibitor)

hepatitis C LIP 1 decision made, preparing for phase III 2013

RG1678 (glycine

reuptake inhibitor)

negative symptoms of

schizophrenia, subopti-

mally controlled positive

symptoms of schizophrenia

phase III started November 2010 2013

ocrelizumab multiple sclerosis

(RRMS and PPMS)

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).

06_Roche_AR10_ENG_Pharmaceuticals.indd 47 28.01.2011 14:52:00

Ragnar B., participant in the ALECARDIO (aleglitazar) trial, Stockholm

Disease area Metabolic and cardiovascular diseases

Indication CV risk reduction in patients with type 2 diabetes

Trials ALECARDIO

No. of patients 6,000

No. of study sites 750

No. of countries 24

What are the

06_Roche_AR10_ENG_Pharmaceuticals.indd 48 28.01.2011 14:52:43

Anita M.-W., Operations Program Leader, Roche Basel

implications ?

06_Roche_AR10_ENG_Pharmaceuticals.indd 49 28.01.2011 14:53:21

5 years

1–2 years

Reduction of blood glucose levels

Saving lives

Focused on reducing cardiovascular risk in people with type 2 diabetes

Blood glucose Blood fats Hypertension

Demonstrating the multiple effects of aleglitazar

Conventional trial in people with T2D

Trial with aleglitazar in T2D high-risk subpopulation

Increased risk of heart attack and stroke associated with T2D

Healthy people

People who have had a heart attack or stroke

People with T2D

People with T2D who have had a heart attack or stroke

Risk

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.

Aleglitazar, a dual PPAR α/γ 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 II I clinical trial with some 6,000 patients, is now testing the hypothesis that alegli-tazar can reduce cardiovascular morbidity and mortality in patients with T2D who have suffered a recent ACS event.

Creating value for patients means focusing on the unsolved issues

Aleglitazar

06_Roche_AR10_ENG_Pharmaceuticals.indd 50 28.01.2011 14:53:22

51­Roche Business Report 2010Pharmaceuticals

data­presented­at­the­annual­European­Society­for­

Medical­Oncology­(ESMO)­conference­in­October­

showed­a­significant­increase­in­progression-free­

survival­for­patients­with­high­Met-expressing­non-

small­cell­lung­cancer­(NSCLC)­who­were­treated­

with­MetMAb­plus­Tarceva.­Based­on­this­data,­in­

September­Roche­advanced­the­compound­into­late-

stage­development­for­the­second-­and­third-line­

treatment­of­NSCLC.­A­phase­I I I­study­in­patients­

with­high­Met-expressing­NSCLC­is­expected­to­

start­in­2011.­Roche­Tissue­Diagnostics­is­developing­

a­companion­diagnostic­test­to­identify­patients­­

with­high­Met-expressing­NSCLC­who­are­most­likely­

to­respond­to­treatment­with­RG3638­(see­pp.­19,­

59,­74).­A­phase­I I­study­to­investigate­the­addition­

of­MetMAb­to­chemotherapy,­with­or­without­Avastin,­

for­the­treatment­of­triple­negative­metastatic­breast­

cancer­is­expected­to­enrol­its­first­patient­in­the­­

first­quarter­of­2011.

Inflammation and autoimmune disordersRoche­has­eight­new­compounds­in­development­­

for­chronic­and­progressive­autoimmune­and­inflam-

matory­diseases­such­as­rheumatoid­arthritis­(RA)­

and­asthma,­five­of­which­are­in­phase­I I­clinical­test-

ing.­Lebrikizumab­is­a­humanised­monoclonal­anti-

body­designed­to­bind­specifically­to­interleukin-13,­

a­protein­thought­to­play­a­key­role­in­the­airway­

inflammation,­hyperresponsiveness­and­obstruction­

experienced­by­asthma­patients.­The­compound­­

is­being­developed­for­the­treatment­of­moderate­to­

severe­persistent­asthma.­Patient­recruitment­for­­

two­key­phase­I I­trials­(MOLLY­and­MILLY)­has­been­

completed.­Based­on­promising­phase­I I­results­with­

lebrikizumab­in­patients­whose­symptoms­remained­

uncontrolled­on­inhaled­corticosteroids,­with­or­

­without­a­second­controller,­Roche­has­decided­to­

advance­the­molecule­into­late-stage­clinical­testing.­

In­May­Roche­and­Biogen­Idec­announced­their­

decision­to­discontinue­development­of­ocrelizumab­

(RG1594)­for­rheumatoid­arthritis­(RA).­Following­­

a­detailed­analysis­of­the­efficacy­and­safety­results­

from­the­RA­programme,­the­companies­concluded­

that­the­overall­benefit–risk­profile­of­ocrelizumab­

was­not­favourable­in­RA,­taking­into­account­

­currently­available­treatment­options,­including­

MabThera/Rituxan.­Development­of­ocrelizumab­­

as­a­therapy­for­multiple­sclerosis­is­continuing­­

(see­p.­52).

Metabolic and cardiovascular diseasesRoche­has­nine­new­compounds­in­development­for­

metabolic­and­cardiovascular­diseases.­­Dalcetrapib­

(RG1658,­JTT-705;­licensed­from­Japan­Tobacco)­is­­

a­novel­cholesteryl­ester­transfer­protein­(CETP)­

modulator­being­tested­for­its­ability­to­reduce­cardio-

vascular­events­in­patients­with­­stable­coronary­

heart­disease­following­a­recent­acute­coronary­syn-

drome­event.­The­phase­II I­dal-HEART­programme­­

is­on­track:­recruitment­for­the­phase­I I I­dal-OUT-

COMES­trial­has­been­completed,­with­over­15,600­

participants­enrolled.­Results­from­two­phase­I Ib­

studies­(dal-VESSEL­and­dal-PLAQUE)­are­expected­

in­2011,­and­recruitment­for­a­further­phase­II I­study­

(dal-PLAQUE­2)­is­ongoing.­These­supporting­studies­

are­investigating­the­potential­impact­of­dalcetrapib­

treatment­on­atherosclerotic­plaque­burden,­using­

imaging­techniques­and­functional­tests.

Aleglitazar­(RG1439)­is­an­innovative­investigational­

treatment­designed­to­reduce­the­incidence­and­

impact­of­cardiovascular­mortality,­non-fatal­heart­

attack­and­stroke­in­patients­with­a­recent­acute­cor-

onary­syndrome­and­type­2­diabetes.­A­global­phase­

I I I­programme­(ALECARDIO)­began­recruitment­

early­in­2010.­Aleglitazar­has­the­potential­to­be­the­

first­therapy­to­specifically­reduce­cardiovascular­­

risk­in­people­with­type­2­diabetes.

Taspoglutide­(RG1583,­BIM51077;­licensed­from­

Ipsen)­is­a­once-weekly­human­glucagon-like­pep-

tide-1­(GLP-1)­hormone­analogue­in­development­­

for­the­treatment­of­type­2­diabetes.­In­September­

Roche­communicated­its­decision­to­stop­administer-

ing­taspoglutide­to­patients­in­global­phase­I I I­

­clinical­trials,­based­on­higher­than­expected­patient­

discontinuation­rates­observed­in­analyses­of­data­

from­the­T-emerge­programme,­and­also­due­to­­

the­antibody-monitoring­plan­implemented­to­address­

serious­hypersensitivity­reactions.­After­careful­

assessment­of­the­relevance­of­the­T-emerge­safety­

and­efficacy­data­to­support­future­regulatory­

approval­in­type­2­diabetes,­including­consideration­

of­the­current­portfolio­evaluation­initiative,­ ­

Roche­has­decided­to­discontinue­the­taspoglutide­

T-emerge­development­programme.

06_Roche_AR10_ENG_Pharmaceuticals.indd 51 28.01.2011 14:53:23

52­ Roche Business Report 2010 Pharmaceuticals

VirologyRoche­currently­has­two­direct-acting­antiviral­agents­

in­late-stage­development­for­hepatitis­C:­the­nucle-

oside­polymerase­inhibitor­RG7128­(partnered­with­

Pharmasset)­and­the­protease­inhibitor­danoprevir­(RG7227).­Both­of­these­oral­agents­are­being­inves-

tigated­in­combination­with­Pegasys­and­ribavirin,­

and­in­combination­with­each­other­in­an­interferon-

free­regimen.­RG7128­interim­phase­I Ib­results­

showed­good­efficacy­and­tolerability,­with­no­evi-

dence­of­viral­resistance­after­three­months’­therapy­

in­combination­with­Pegasys­and­ribavirin.­A­phase­I­

trial­(INFORM-1)­of­RG7128­and­danoprevir­as­an­

interferon-free­combination­showed­significant­viral­

suppression.­A­phase­I I I­programme­with­RG7128­­

is­expected­to­begin­in­2011.­In­October­2010­Roche­

acquired­the­global­rights­to­danoprevir,­to­increase­

the­strategic­flexibility­of­the­Group’s­hepatitis­C­

portfolio.

Central nervous systemThe­Roche­portfolio­has­10­novel­compounds­in­

development­for­disorders­of­the­central­nervous­sys-

tem,­including­schizophrenia,­multiple­sclerosis­and­

other­serious­conditions.­One­of­these­compounds­is­

RG1678,­a­novel­glycine­reuptake­inhibitor­being­

developed­for­the­treatment­of­schizophrenia,­an­area­

of­high­unmet­medical­need.­Promising­data­from­­

a­phase­I I­proof-of-concept­study­with­RG1678­in­

patients­with­negative­symptoms­of­schizophrenia­

were­presented­at­the­annual­meeting­of­the­Amer-

ican­College­of­Neuropsychopharmacology­in­

December.­A­global­phase­I I I­programme­has­been­

initiated­to­investigate­RG1678­in­combination­­

with­antipsychotics­in­patients­with­either­negative­

symptoms­or­suboptimally­controlled­positive­

­symptoms­of­schizophrenia,­indications­for­which­

there­are­currently­no­approved­treatments.­The­­

first­of­six­planned­trials­began­in­November­2010.­

As­the­first­in­a­new­class­of­medicines,­RG1678­­

has­the­potential­to­redefine­the­therapeutic­

approach­to­a­range­of­psychiatric­disorders­and­

deliver­clinical­benefits­beyond­those­achievable­­

with­current­treatment­options.

In­October­Roche­and­Biogen­Idec­reported­posi­-­

tive­results­from­a­phase­I I­trial­with­the­humanised­

anti-CD20­monoclonal­antibody­ocrelizumab­

(RG1594)­in­patients­with­relapsing-remitting­mul-

tiple­sclerosis­(RRMS),­one­of­the­leading­causes­­

of­neurological­disability­in­young­adults.­Data­pre-

sented­at­the­annual­meeting­of­the­European­

­Committee­for­Treatment­and­Research­in­Multiple­

Sclerosis­(ECTRIMS)­showed­that,­compared­with­

placebo,­ocrelizumab­significantly­reduced­signs­of­

disease­activity,­as­measured­by­brain­lesions­and­

annualised­relapse­rate,­with­no­opportunistic­infec-

tions­reported.­Two­phase­I I I­­studies­will­begin­in­the­

­second­quarter­of­2011­to­explore­the­drug’s­efficacy­

in­RRMS­compared­with­interferon,­the­current­

standard­of­care.­A­phase­I I I­study­investigating­the­

potential­of­ocrelizumab­in­patients­with­primary­

­progressive­multiple­sclerosis­(PPMS)­is­planned­to­

start­in­the­first­quarter­of­2011.­In­October­Genen-

tech­and­Biogen­Idec­amended­their­collaboration­on­

antibodies­targeting­CD20­and­agreed­that­Genen-

tech­will­have­respon­sibility­for­the­further­develop-

ment­of­ocrelizumab­in­multiple­sclerosis­in­the­US.

As the first in a new class of medicines, RG1678 has the potential to redefine the thera-peutic approach to a range of psychiatric disorders.

06_Roche_AR10_ENG_Pharmaceuticals.indd 52 28.01.2011 14:53:23

53­Roche Business Report 2010Pharmaceuticals

Focus on unmet medical needs

Cancer |­ According­to­the­latest­International­

Agency­for­Research­on­Cancer­(IARC)­estimate,­in­

2008­over­12­million­people­worldwide­were­diag-

nosed­with­cancer,­and­some­7.6­million­died­of­the­

disease.­The­IARC­anticipated­then­that­cancer­

would­surpass­heart­disease­as­the­leading­cause­­

of­death­worldwide­in­2010.­The­agency­also­fore-

casts­that­by­2030­there­will­be­over­26­million­new­

cases­and­17­million­deaths­per­year­from­cancer.­­

In­Europe­alone,­one­in­three­people­can­expect­to­

develop­cancer­in­their­lifetime.­Cancer­is­not­one­

disease­but­a­group­of­more­than­100­distinct­disor-

ders,­each­with­its­own­medical­challenges.

Non-Hodgkin’s lymphoma |­ A­group­of­over­30­

cancers­that­affect­the­lymphatic­system.­This­class­

of­cancer­currently­affects­over­1.5­million­people­

worldwide,­and­some­350,000­new­diagnoses­­

are­made­each­year.­Follicular­lymphoma­accounts­

for­about­one­in­four­of­all­cases­of­non-Hodgkin’s­

lymphoma.­It­can­occur­at­any­time­during­adulthood,­

though­people­are­typically­diagnosed­during­their­

sixties,­and­it­affects­as­many­men­as­it­does­women.

Chronic lymphocytic leukemia |­ The­most­common­

type­of­leukemia­in­adults,­accounting­for­25–30%­­

of­all­forms­of­leukemia.­The­incidence­of­CLL­in­

Western­countries­is­approximately­3­per­100,000,­

and­it­is­twice­as­common­in­men­as­in­women.

Colorectal cancer |­ Cancer­of­the­large­intestine­

or­rectum,­which­accounts­for­over­1­million­new­

cases­(around­10%­of­all­newly­diagnosed­cancers)­

worldwide­each­year.­It­is­the­second­most­common­

cause­of­cancer­deaths­in­Europe­and­the­third­­

most­common­worldwide.

Kidney cancer |­ This­type­of­cancer­is­newly­diag-

nosed­in­around­200,000­people­and­causes­100,000­

deaths­worldwide­every­year,­rates­that­are­expected­

to­increase.­Renal­cell­carcinoma­accounts­for­90%­

of­all­kidney­cancers.

Breast cancer |­ The­most­common­cancer­among­

women­worldwide.­Over­1.4­million­women­are­newly­

diagnosed­and­over­450,000­die­from­the­disease­

each­year.­As­there­are­several­different­types­of­

breast­cancer,­knowledge­of­tumour­characteristics­

is­important­for­treatment­decisions.­Some­15–25%­

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

­estimated­40,000­people­worldwide­die­from­the­

­disease;­the­number­of­new­cases­in­developed­

countries­is­expected­to­double,­to­227,000­per­year,­

by­2019.­Approximately­50%­of­melanomas­carry­

activating­mutations­in­the­BRAF­protein,­a­key­com-

ponent­of­the­RAS–RAF­signalling­pathway­involved­

in­normal­cell­growth­and­survival.­These­mutations­

cause­the­pathway­to­be­overactive,­which­may­­

lead­to­excessive­growth­and­cancer.­It­is­estimated­

that­approximately­8%­of­all­solid­tumours­carry­

BRAF­V600­mutations.

Pancreatic cancer |­ A­particularly­aggressive­dis-

ease­that­is­extremely­difficult­to­treat.­It­kills­a­higher­

proportion­of­patients­in­the­first­year­after­diagnosis­

than­any­other­cancer.­The­fifth­leading­cause­of­

cancer­deaths­in­the­developed­world,­pancreatic­

cancer­claims­nearly­80,000­lives­every­year.

6 Excluding non-melanoma skin cancers, most of which are easily treated and not life-threatening.

06_Roche_AR10_ENG_Pharmaceuticals.indd 53 28.01.2011 14:53:23

54­ Roche Business Report 2010 Pharmaceuticals

Gastric (stomach) cancer |­ Stomach­cancer­is­the­

second­most­common­cause­of­cancer-related­

deaths­in­the­world­and­the­fourth­most­commonly­

diagnosed­cancer.­It­accounts­for­over­1­million­­

new­cases­and­some­800,000­deaths­each­year.­The­

vast­majority­of­cases­occur­in­Asia,­where,­with­­

lung­cancer,­it­is­the­leading­malignancy.­Advanced­

(metastatic)­stomach­cancer­is­associated­with­a­

poor­prognosis:­the­median­survival­time­after­diag-

nosis­is­10–11­months­with­currently­available­ther-

apies.­Early­diagnosis­of­this­disease­is­challenging­

because­most­patients­with­early-stage­disease­do­

not­show­symptoms.

Age-related macular degeneration (AMD) |­ A­

major­cause­of­gradual­or­sudden,­painless,­central­

visual­loss­in­the­elderly­and­a­leading­cause­of­­

vision­loss­in­people­aged­60­and­older.­There­are­

two­forms­of­AMD­—­wet­and­dry.­All­cases­begin­

as­the­dry­form,­but­10–15%­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,­

which­affects­more­than­500­million­people­world-

wide.­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

­failure,­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 |­ Occur­as­a­result­of­a­mis-

taken­immune­response­to­the­body’s­own­tissues.­

The­causes­are­unknown.­Rheumatoid­arthritis,­mul-

tiple­sclerosis­and­lupus­erythematosus­are­among­­

the­most­common­autoimmune­disorders,­which­affect­

millions­of­people­worldwide.

Rheumatoid arthritis (RA) |­ An­autoimmune­dis-

ease­characterised­by­inflammation­that­leads­to­stiff,­

swollen­and­painful­joints,­ultimately­resulting­in­

­irreversible­joint­damage­and­disability.­More­than­­

20­million­people­worldwide­and­twice­as­many­

women­as­men­suffer­from­RA.­In­addition­to­inflam-

mation­of­the­joints,­such­as­the­hands,­feet­and­

wrists,­RA­can­cause­fatigue,­heart­disease­and­

increase­the­likelihood­of­developing­other­complica-

tions­such­as­osteoporosis,­anemia,­and­problems­

with­the­lungs­and­eyes.­It­can­shorten­life­expec-

tancy­by­6–10­years.­B­cells­(a­type­of­immune­cell)­

are­known­to­play­a­key­role­in­the­inflammation­

associated­with­RA.­Several­key­cytokines,­or­proteins,­

are­also­involved,­including­interleukin-6­(IL-6),­TNF­

alfa­and­interleukin-1­(IL-1).­IL-6­has­been­identified­

as­having­a­pivotal­role­in­the­­inflammation­process.

06_Roche_AR10_ENG_Pharmaceuticals.indd 54 28.01.2011 14:53:23

55­Roche Business Report 2010Pharmaceuticals

Multiple sclerosis (MS) |­ An­often­debilitating­

autoimmune­disease­in­which­nerve­impulses­passing­

through­the­central­nervous­system­are­disrupted­

due­to­damage­to­the­brain­and­spinal­chord.­This­

leads­to­unpredictable­and­highly­variable­symptoms­

ranging­from­abnormal­sensations­and­reduced­coor-

dination­to­pain,­paralysis,­visual­impairment­and­a­

decline­in­cognitive­and­other­functions.­According­

to­WHO­estimates,­approximately­1.3­million­people­

worldwide­are­living­with­the­disorder,­which­is­

­usually­diagnosed­in­adults­aged­between­20­and­­

40­years.­Relapsing-remitting­multiple­sclerosis­

(RRMS),­the­most­common­form,­is­characterised­by­

acute­exacerbations­with­full­or­partial­recovery­

between­attacks.­Primary­progressive­multiple­scle-

rosis­(PPMS)­is­characterised­by­neurological­

­disability­from­onset,­with­symptoms­gradually­wors-

ening­over­time.

Diabetes |­Recognised­as­a­global­epidemic­by­

the­World­Health­Organization.­The­International­­

Diabetes­Federation­estimates­that­some­360­million­

people­worldwide­will­have­diabetes­by­2030.­

According­to­the­WHO,­type­2­(adult­onset)­diabetes­

accounts­for­around­90%­of­all­cases.­Uncontrolled­

type­2­­diabetes­can­lead­to­severe­complications­

such­as­cardiovascular­disease,­stroke,­blindness,­

amputations,­and­kidney­failure,­resulting­in­signifi-

cant­healthcare­burdens­to­society.

Schizophrenia |­ A­severe­mental­disorder­that­

­distorts­the­way­a­person­thinks,­acts,­expresses­

emotions,­perceives­reality­and­relates­to­others.­

According­to­WHO­estimates,­schizophrenia­affects­

approximately­24­million­people­worldwide­and­is­

usually­diagnosed­in­adults­aged­between­15­and­35­

years.­The­symptoms­of­schizophrenia­are­broadly­

categorised­as­positive,­negative­and­cognitive.­Posi-

tive­symptoms­are­psychotic­behaviours­such­as­­

hallucinations­and­delusions.­Negative­symptoms­

include­apathy,­social­withdrawal,­lack­of­drive­­

and­reduced­ability­to­feel­pleasure­in­everyday­life.­

Cognitive­deficits­include­difficulty­concentrating­­

or­following­instructions,­difficulty­completing­tasks,­

memory­problems,­and­disorganised­thinking.­

­Persistent­negative­symptoms­are­a­major­cause­of­

burden­for­patients­and­caregivers.

Glossary

Adjuvant treatment |­ Treatment­given­after­surgical­

removal­of­a­tumour­to­lower­the­risk­of­relapse.

Disease-free survival |­ The­length­of­time­after­

treatment­for­a­specific­disease­during­which­­

a­patient­survives­with­no­sign­of­the­disease.

First-line treatment |­ The­initial­treatment­given­

after­diagnosis,­including­the­first­treatment­­

given­after­metastatic­cancer­has­been­diagnosed.

Maintenance treatment |­ Treatment­given­to­­pre-

vent­a­disease­getting­worse­or­to­prevent­a­cancer­

from­recurring­when­it­has­disappeared­following­

­initial­therapy.

Metastatic disease |­ Cancer­that­has­spread­

from­the­original­site­of­a­tumour­to­other­parts­of­­

the­body.­Also­referred­to­as­advanced­disease.

Neoadjuvant treatment |­ Treatment­given­to­

reduce­the­size­of­a­tumour­before­surgical­removal­­

is­attempted.

Overall survival |­ The­time­from­the­start­of­

­treatment­until­the­patient­dies.

Progression-free survival |­ The­length­of­time­

­during­and­after­treatment­during­which­a­patient­

lives­without­the­disease­getting­worse.

Second-line treatment |­ Treatment­given­if­the­

­initial,­or­first-line,­treatment­does­not­work,­or­if­ ­

the­cancer­stops­responding­to­it.

06_Roche_AR10_ENG_Pharmaceuticals.indd 55 28.01.2011 14:53:23

Diagnostics | In 2010 sales again 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 above-market growth in 2011.

07_Roche_AR10_ENG_Diagnostics.indd 56 28.01.2011 11:13:35

09

10,055

08

9,656

10

10,415

Sales | in millions of CHF

09

1,742

08

1,754

10

2,202

Core operating profit | in millions of CHF

09

25,508

08

25,404

10

26,194

Number of employees

57­Roche Business Report 2010Diagnostics

Diagnostics Division in brief

Key figures

In millions of CHF% change

in CHF% change in

local currencies % of sales

Sales 10,415 4 8 100

— Professional Diagnostics 4,858 7 11 47

— Diabetes Care 2,959 0 4 28

— Molecular Diagnostics 1,189 1 4 12

— Applied Science 868 0 4 8

— Tissue Diagnostics 541 13 17 5

Core operating profit 2,202 26 30 21.1

Operating free cash flow 1,634 42 48 15.7

Research and development (core basis) 890 –6 –2 8.6

Diagnostics Leadership Team | 31 December 2010

Daniel O’Day Chief Operating Officer Roche Diagnostics

Manfred Baier Applied Science

Colin Brown * (Dirk H. Ehlers) Professional Diagnostics

Paul Brown Molecular Diagnostics

Roland Diggelmann Asia—Pacific

Peter Finckh Platforms & Support

Christian Hebich Finance and Services

Michael Heuer EMEA (Europe, Middle East, Africa) and Latin America

David LaPré Operations

Annette Luther Communications

Kent Kost Quality and Regulatory

Hany Massarany Tissue Diagnostics

Wataru Ogawa Japan

Jack Phillips North America

Burkhard G. Piper ** Diabetes Care

Claus-Joerg Ruetsch Legal

Cris Wilbur Human Resources

Robert Yates Business Development

* From 1 June 2010.** To 31 December 2010.

07_Roche_AR10_ENG_Diagnostics.indd 57 28.01.2011 11:13:35

58­ Roche Business Report 2010 Diagnostics

Diagnostics Division

Roche’s­Diagnostics­Division­is­the­world’s­leading­

supplier­of­in vitro­diagnostics­(IVDs).­Performed­in­­

a­laboratory­or­at­the­point­of­care­on­blood,­tissue­

and­other­samples­from­patients,­IVD­tests­are­a­­crit-­

ical­source­of­objective­information­helping­doctors­

detect­diseases,­select­appropriate­treatments­and­

monitor­patients’­responses­to­care.­In­addition,­sci-

entists­use­the­division’s­research­products­to­gain­­

a­better­understanding­of­the­causes­of­disease­and­

to­discover­new­treatments.­In­over­130­countries­

Roche­Diagnostics­serves­customers­spanning­the­

entire­healthcare­spectrum­—­from­hospitals­and­

commercial­medical­labs,­to­physicians,­to­patients­

with­conditions­requiring­them­to­self-test.­The­

­division­offers­a­wide­range­of­technologies­allowing­

­the­detection­and­analysis­of­DNA,­RNA­and­­

proteins­­­on­a­large­base­of­instruments­installed­

worldwide.­Already­among­the­broadest­in­the­­

industry,­Roche’s­IVD­test­menu­is­steadily­expand-­

ing­and­drawing­on­the­latest­scientific­advances.­­

In­2010­Roche­had­approximately­a­20%­share­of­the­

global­IVD­market,­which­is­valued­at­an­estimated­

44­billion­US­dollars­in­annual­sales.­1­

Strategic priorities

Scientific­progress,­new­technologies­and­changing­

demographics­are­among­the­trends­expanding­­­

the­healthcare­market.­On­the­other­hand,­there­is­

mounting­pressure­on­healthcare­budgets­and­­

costs­worldwide.­Diagnostics­can­capitalise­on­all­

these­trends­by­translating­scientific­insights­into­

products­that­bring­patients­real­medical­benefit­and,­

at­the­same­time,­contribute­to­significant­cost­­

savings.­Enabling­precise­and­timely­disease­diagno-

sis­and­treatments­to­be­targeted­at­the­patients­

most­likely­to­benefit­is­of­great­value,­both­for­the­

well-being­­of­the­patient­and­in­allocating­medical­

resources­where­they­will­be­most­effective.­

The­Diagnostics­Division’s­strategic­priorities:• Improving testing efficiency is­one­pillar­of­the­

division’s­strategy.­Roche’s­automated­diagnostic­

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

immunoassays­in­testing­for­pre­eclampsia.­

Companion diagnostics­are­tests­that­enable­

doctors­to­identify­the­patients­most­likely­to­

benefit­from­a­particular­treatment­or­to­monitor­

responses­to­it.­Roche­already­markets­com-

panion­diagnostics­for­a­number­of­indications,­

with­more­in­late­stage­development­(see­list­ ­

on­page­59).• Deploying diagnostic tests in drug develop-

ment­is­crucial­to­help­increase­R­&­D­productivity­

and­develop­more­targeted­medicines.­Roche­

Diagnostics­is­collaborating­closely­with­the­

­Pharmaceuticals­Division­and­external­pharma­

1 Market size based on company and independent reports.

Sales by region

Europe/Middle

East/Africa 50% (+6%)

Japan 5% (+4%)

Asia—Pacific 12% (+20%)

Latin America 7% (+16%)

North America 26% (+5%)

Italics = growth rates (in local currencies).

07_Roche_AR10_ENG_Diagnostics.indd 58 28.01.2011 11:13:35

59­Roche Business Report 2010Diagnostics

Roche companion diagnostics on the market or in late development

Disease Area Disease Drug Diagnostic Test * Technology Application

Virology CMV Valcyte CMV viral load PCR Monitoring

HBV Pegasys and other antivirals

HBV viral load PCR Monitoring

HBV Pegasys, peginterferon alpha-2b (Merck/SP)

HBsAg levels Immunoassay Monitoring

HCV Pegasys, peginterferon alpha-2b (Merck/SP)

HCV viral load PCR Monitoring

HCV Polymerase inhibitor (R7128) HCV viral load PCR Monitoring

HCV Protease inhibitor (R7227) HCV viral load PCR Monitoring

HIV Antivirals HIV viral load PCR Monitoring

HIV abacavir (GlaxoSmithKline)

HLA-B 5701 genotype

PCR Screening

Oncology Breast cancer Herceptin, lapatinib (GlaxoSmithKline)

HER2 expression/ gene amplification

IHC, ISH Selection

Breast cancer Tamoxifen and other hormonal therapies

ER/PgR expression IHC Selection

Breast cancer pertuzumab (RG1273) HER2 expression/ gene amplification

IHC, ISH Selection

Breast cancer T–DM1 (RG3502) HER2 expression/ gene amplification

IHC, ISH Selection

Cancer compound (Merck) p53 mutations Microarray Selection

Colon cancer cetuximab (Merck), panitumumab (Amgen)

KRAS mutations (TheraScreen)

PCR Selection

Colon cancer cetuximab (Merck), panitumumab (Amgen)

KRAS mutations PCR Selection

Gastric cancer Herceptin HER2 expression/ gene amplification

IHC, ISH Selection

Melanoma BRAF inhibitor (RG7204)

BRAF V600E mutation PCR Selection

NSCLC gefitinib (AstraZeneca), Tarceva **

EGFR mutations (TheraScreen)

PCR Selection

NSCLC Tarceva **, gefitinib (AstraZeneca)

EGFR mutations PCR Selection

NSCLC MetMAb (RG3638) MET expression IHC Selection

NSCLC TG4010 (Transgene) MUC1 expression IHC Selection

Pancreatic cancer

CP-4126 (Clovis Oncology)

hENT1 expression IHC Selection

Inflammation Asthma lebrikizumab (RG3637) Serum periostin levels, CEA, IgE

Immunoassay Selection

Rheumatoid arthritis

MabThera/Rituxan RF, anti-CCP Ab Immunoassay Selection

SLE rontalizumab (RG7415) IFN-induced genes PCR Selection

Others Osteoporosis Bonviva/Boniva and other bisphosphonates

B-Crosslaps; P1NP levels

Immunoassay Monitoring

Transplantation CellCept MPA levels Immunoassay Monitoring

black type = on the market, grey type = in development; * not available in all markets. monitoring = monitoring of patient’s 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 = insitu 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.

07_Roche_AR10_ENG_Diagnostics.indd 59 28.01.2011 11:13:35

60­ Roche Business Report 2010 Diagnostics

Roche’s top-selling diagnostics | sales in millions of CHF

2,718 1,957 1,475 561 452

+4% *

Market segment:

Blood glucose monitoring

Business unit:

Diabetes Care

+17% *

Market segment:

Immunoassays

Business area:

Professional Diagnostics

+5% *

Market segment:

Clinical chemistry

Business area:

Professional Diagnostics

+2% *

Market segment:

Virology (hepatitis C, hepatitis B, HIV)

Business area:

Molecular Diagnostics

+17% *

Market segment:

Advanced tissue staining

Business area:

Tissue Diagnostics

Accu-Chek

monitoring systems

cobas e modules,

Modular Analytics,

Elecsys

cobas c modules,

Modular Analytics,

Cobas Integra

Cobas AmpliPrep/

Cobas TaqMan

immunohistochemistry

and in situ hybridisation

cobas­e­602 cobas­c­502Accu-Chek­Aviva­Nano cobas­TaqMan­48 Ventana­IHC­reagents

07_Roche_AR10_ENG_Diagnostics.indd 60 28.01.2011 11:13:38

61­Roche Business Report 2010Diagnostics

Images are not to scale.* Year-on-year sales growth in local currencies.

330 305 278 241

+19% *

Market segment:

Coagulation monitoring

Business area:

Professional Diagnostics

0% *

Market segment:

Blood screening

Business area:

Molecular Diagnostics

+4% *

Market segment:

Intensive care

Business area:

Professional Diagnostics

+11% *

Market segment:

Insulin Delivery Systems

Business unit:

Diabetes Care

CoaguChek Cobas AmpliScreen,

cobas TaqScreen

cobas systems for blood

gases, hospital blood

glucose systems

Accu-Chek insulin

delivery systems

236

–12% *

Market segment:

DNA purification and gene expression

Business area:

Applied Science

MagNA Pure,

LightCycler

An industry-leading portfolio of diagnostic tests and instruments for clinical testing and life science research.

cobas­TaqScreen­DPX­Test cobas­b­123­POC Accu-Chek­Combo MagNA­Pure­LC2.0CoaguChek­XS

07_Roche_AR10_ENG_Diagnostics.indd 61 28.01.2011 11:13:44

62­ Roche Business Report 2010 Diagnostics

partners­on­new­medicines­and­their­use­in­

per­­sonalised­settings­(see­also­the­R & D section­

on­page­74).• To­further­accelerate growth in emerging seven

(E7) countries 2­the­division­is­expanding­its­

local­organisations­and­investing­in­programmes­

to­bring­products­to­local­markets­more­quickly.­• The­division­intends­to­further­improve its prof-

itability­through­a­combination­of­strong­­sales­

growth­and­efficiency­initiatives­targeting­virtually­

every­area­of­operations.­This­report­contains­

information­on­the­progress­made­in­2010.

Results and main business developments

In­2010­the­Diagnostics­Division­recorded­sales­of­

10.4­billion­Swiss­francs,­an­increase­of­8%­in­local­

currencies­over­2009­3­(4%­in­Swiss­francs;­8%­in­

­­­US dollars).­This­was­significantly­above­the­estimat-­

ed­IVD­market­growth­rate­(5%)­4.

All­five­divisional­business­areas­contributed­to­sales­

growth,­led­by­Professional­Diagnostics­and­Diabetes­

Care.­Immunoassays­and­blood­glucose­monitoring­

systems­remained­these­businesses’­primary­growth­

drivers.­Strong­demand­for­advanced­tissue­stain-­

ing­products­continued­to­fuel­above-market­growth­

in­Tissue­Diagnostics.­Virology­was­the­main­con-­

tributor­to­sustained­sales­growth­in­Molecular­Diag-

nostics.­Strong­sales­of­cell­analysis­and­genomics­

­systems­were­Applied­Science’s­main­growth­drivers.­

Instrument­placements­were­again­up­significantly­­

for­the­division­as­a­whole­and­were­a­major­growth­

driver­in­all­segments.

Sales­again­outpaced­the­market­in­all­regions.­

Growth­was­very­strong­in­Asia—Pacific­(20%)­—­

­particularly­in­China­and­South­Korea­—­driven­

mainly­by­Professional­Diagnostics.­Despite­pricing­

challenges,­sales­outperformed­the­market­in­­

both­mature­and­emerging­EMEA­5­economies­(6%),­

helped­by­strong­performances­by­Professional­ ­

Diagnostics­and­Diabetes­Care.­Professional­Diag-

nostics­and­Tissue­Diagnostics­were­the­primary­

growth­drivers­in­North­America­(5%).­In­Japan­(4%)­

overall­divisional­sales­grew­faster­than­the­market­

with­Professional­Diagnostics’­strong­performance­off-­

setting­continuing­challenges­in­Diabetes­Care.­

Increased­investment­and­strong­demand­for­immu-

noassays­and­other­leading-edge­Roche­products­

contributed­to­robust­above-market­growth­in­the­E7­

emerging­markets­(21%),­which­in­2010­accounted­

for­almost­13%­of­total­divisional­revenues.

On­a­Swiss­franc­basis,­the­division’s­core­operating­

profit­for­2010­increased­26%­(30%­in­local­cur-­

rencies)­to­2,202­million­Swiss­francs,­while­the­core­

operating­profit­margin­advanced­3.8­percentage­

points­to­21.1%.­These­increases­largely­reflect­the­

strong­performance­of­Roche’s­key­diagnostic­

­products­as­well­as­ongoing­initiatives­to­improve­

operational­excellence.­For­more­information­on­the­

­division’s­operating­results,­see­the­Finance­Report.­

The­division­launched­a­total­of­39­tests,­which­ex­-­

panded­the­immunoassay­menu­in­infectious­dis-

eases,­extended­the­molecular­test­panel­in­virology­

and­further­strengthened­the­tissue­assay­port-­

folio­in­oncology.­In­addition,­11­instruments­were­

launched­in­key­markets­facilitating­maximum­­

efficiency­in­state-of-the-art­testing­in­clinical­labo-­

ratories,­re­search­centres­and­point-of-care­units­

­(see­table­of­product­launches­on­page­76).­In­2011­

the­division­plans­to­launch­18­key­products,­includ-

ing­the­US­introduction­of­Accu-Chek­Combo­for­­

the­management­of­blood­glucose­in­diabetes,­the­

cobas­4800­HPV­Test­for­cervical­cancer­screen-­

ing­and­the­cobas­4800­BRAF­Mutation­Test­in­mela-

noma­(see­table­of­product­launches­on­page­78).­

Data­from­three­clinical­studies­were­presented­at­

major­scientific­congresses:­ATHENA,­a­large­regis-

tration­trial­investigating­the­benefits­of­HPV­testing­

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 sales increase 8%, significantly ahead of the market.

07_Roche_AR10_ENG_Diagnostics.indd 62 28.01.2011 11:13:44

63­Roche Business Report 2010Diagnostics

in­screening­for­cervical­cancer,­PROTECT,­a­ran-

domised­trial­studying­the­NT-proBNP­biomarker-

guided­approach­in­treatment­of­heart­failure,­ ­

and­the­STeP­trial­aiming­at­improvement­of­diabetes­

management­through­structured­testing.­All­three­

­trials­demonstrated­the­high­medical­value­of­Roche­

diagnostic­products­(see­R & D section­on­page­74).

Operations

Roche­Diagnostics’­Business­Areas­(BAs)­are­inno-

vation­engines,­translating­our­growing­understand-

ing­of­diseases­into­new­products­and­applications.­

The­BA­headquarter­sites­in­Rotkreuz,­Switzerland­

(Professional­Diagnostics),­Mannheim,­Germany­(Dia-­

betes­Care),­Pleasanton,­USA­(Molecular­Diagnos-

tics),­Penzberg,­Germany­(Applied­Science),­­­and­

Tucson,­USA­(Tissue­Diagnostics),­are­the­division’s­

main­R­&­D­sites,­with­additional­centres­of­excel-­

lence­located­in­Branford,­USA­(454­Life­Sciences),­

­Madison,­USA­(NimbleGen),­and­Indianapolis,­USA­

(Diabetes­Care).­In­September­Roche­opened­a­new­

Diagnostics­Operations­Complex­for­R­&­D­and­pro-

duction­in­Penzberg.­A­new­immunoassay­production­

unit­in­Mannheim­was­inaugurated­in­October.

In­2010­a­lifecycle­management­approach­was­in-­

troduced­to­establish­a­stronger­connection­be­­tween­

each­BA­and­its­markets.­Lifecycle­teams­are­ac-­

count­able­for­the­development,­filing,­approval­­and­

launch­of­new­products­to­maximise­their­value­­­

from­launch­to­obsolescence.­In­addition,­two­new­

global­cross-BA­functions­have­been­created­to­­

help­maintain­the­focus­on­product­profitability­and­

pro­cess­efficiency.­Global­Operations­will­drive­­

operational­excellence­in­manufacturing,­supply­

chain­and­direct­procurement,­while­Global­Quality­&­

Regulatory­will­ensure­submission­quality­and­reduce­

time­to­approval.­The­established­Global­Platforms­

and­Support­function­will­continue­to­play­a­key­role­

in­instrument­and­software­development­and­cus-

tomer­service.­

As­announced­in­November­over­the­next­two­to­

three­years­Roche­Diagnostics­intends­to­transfer­

the­production­of­chemical­raw­materials­and­

­analytics­services­from­Mannheim­to­Penzberg­­(both­

in­­Germany),­blood­gas­and­electrolytes­monitor-­

ing­activities­from­Graz­(Austria)­to­Rotkreuz­(Swit-­

zerland)­and­the­Diabetes­Care­R­&­D­activities­on­

insulin­delivery­systems­from­Burgdorf­(Switzerland)­

to­Mann­heim­(Germany).­The­division­believes­­

that­these­measures,­which­are­part­of­the­Group-

wide­Operational­Excellence­programm,­will­enable­­

it­to­enhance­system­integration,­leverage­exist-­

ing­capacities­and­reduce­infrastructure­costs­while­

maintaining­the­focus­on­customers­and­innovation.

The­division­regularly­assesses­the­mix­of­in-sourcing­

and­out-sourcing­in­its­manufacturing­and­supply­

chain­operations.­In­general,­activities­which­involve­

proprietary­technology­or­enable­Roche­to­leverage­

internal­expertise­are­in-sourced.­Operations­are­

­out-sourced­when­this­offers­economies­of­scale­or­

other­advantages­while­ensuring­the­continued­integ-

rity­of­Roche’s­products­and­services.­In­recent­years­

the­level­of­out-sourcing­has­grown­in­line­with­sales.­

Business development

Collaborations­with­academia,­research­institutes­and­

other­private­and­commercial­organisations­give­

Roche­Diagnostics­rapid­access­to­relevant­medical,­

scientific­and­technological­advances.­Intellectual­

property­(IP)­exchange­is­a­strategic­component­of­

Roche’s­ability­to­offer­customers­the­most­extensive­

portfolio­of­tests­and­technologies­year­after­year.­

­In-licensing­is­an­important­opportunity­for­Roche­to­

access­markers­and­technologies,­whereas­out-

licensing­of­IP­can­help­establish­novel­markers­and­

technologies­from­Roche­more­rapidly­in­the­market-

place­by­involving­more­players­to­develop­and­­

educate­the­market.­It­is­thus­vital­for­Roche­Diagnos-

tics­to­have­excellent­internal­processes­to­identify­­

IP­rapidly­and­to­maintain­close­contact­with­partner­

companies­for­both­in-­and­out-licensing­agreements.

In­2010­Roche­completed­major­acquisitions­in­

­Diabetes­Care­(Medingo­Ltd.)­and­Tissue­Diagnos-

tics­(BioImagene­Inc.)­and­entered­into­a­number­­

of­research­and­technology­collaborations­in­Diabetes­

Care­(with­InterComponentWare),­Molecular­Diag-

nostics­(with­the­German­Cancer­Research­Centre)­

and­Applied­Science­(with­IBM­and­DNA­Electron-

ics).­Moreover,­the­division­signed­over­80­licensing­

agreements,­approximately­half­of­them­in-licensing­­

IP­to­broaden­Roche’s­innovation­base­(see­Business

area highlights­for­more­details).

07_Roche_AR10_ENG_Diagnostics.indd 63 28.01.2011 11:13:45

Disease area Virology / Oncology

Indication HPV (as a risk factor for cervical cancer)

Trial Registration trial ATHENA

No. of participants 47,208

No. of study sites 61

No. of countries 1 (USA)

Chantal H., a potential participant in the ATHENA trial, Basel

Can we find

07_Roche_AR10_ENG_Diagnostics.indd 64 28.01.2011 11:14:15

Rita S., Head of Assay Development, Roche Pleasanton

out sooner ?

07_Roche_AR10_ENG_Diagnostics.indd 65 28.01.2011 11:14:48

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 geno-types). The results revealed that one in ten women of those aged 30 years or older who tested positive for HPV ge- notypes 16 or 18 were found to have cer- vical 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.

Biomarker identification and clinical validation

Development of diagnostic test

Collaborations with research groups in academia and industry

Demonstrate medical value

Show sensitivity and specificity

Regulatory approval

Reimbursement

Health economics

Education of healthcare professionals

Successful diagnostic teston market

Creating value for patients means proving the medical value of a diagnostic test in a rigorous clinical trial

cobas 4800 HPV Test

Persistent infection with high-risk human papilloma- virus (HPV) is the leading cause of cervical cancer, implicated in more than 99% of all cases. Screening enables early identification and removal of pre-cancer-ous lesions, dramatically reducing the incidence and mortality of cervical cancer worldwide. However, many studies have shown that the Pap smear, which sam- ples cells from the cervix and is currently the most com-mon test used to detect cervical cancer, does not have adequate sensitivity, and that up to 50% of pre-cancerous lesions are missed with a single Pap smear. Thousands of women ultimately diagnosed with cervical cancer had normal Pap smear results.

07_Roche_AR10_ENG_Diagnostics.indd 66 28.01.2011 11:14:49

67­Roche Business Report 2010Diagnostics

Business area highlights

Professional Diagnostics Professional­Diagnostics­is­a­leading­supplier­of­

instruments,­tests,­software­and­services­for­clinical­

laboratories­and­decentralised­testing­products­to­

support­clinical­decision­making­at­the­point­of­care­

(POC).­In­2010­it­had­a­15%­share­of­a­growing­­

global­market­worth­30­billion­US­dollars.­

Professional­Diagnostics’­full-year­sales­grew­­

about­twice­as­fast­as­the­global­market,­rising­11%­

to­4,858 million­Swiss­francs­and­outpacing­market­

growth­in­all­regions.­Immunoassays­were­a­key­

growth­driver,­with­sales­up­17%­in­2010.­For­a­­

decade­this­segment­has­consistently­grown­at­dou-

ble-digit­rates,­thanks­to­a­strong­installed­base­­

and­an­ever-expanding­test­menu.­Sales­of­clinical­

chemistry­and­coagulation­monitoring­products­­

grew­5%­and­19%,­respectively.­

In­2010­Professional­Diagnostics­launched­eight­new­

or­next-generation­immunoassays­in­the­US­or­­

markets­recognising­the­CE­Mark,­including­six­tests­

to­diagnose­or­monitor­infectious­diseases­—­hepa-

titis­A­and­C,­HIV,­herpes­simplex­virus­(HSV-1­and­

HSV-2)­and­rubella­(see­table­of­product­launches­­

on­page­76).­Three­new­or­next-generation­clinical­

chemistry­products­were­also­introduced­in­CE­­

markets.­In­2011­Professional­Diagnostics­will­expand­

its­immunoassay­menu­further,­with­new­assays­­

covering­a­range­of­disease­areas,­including­infec-

tious­diseases­and­oncology.

Demand­for­the­cobas­8000­modular­analyser­series­

remained­strong­in­2010.­First­launched­in­2009,­this­

platform­for­high-throughput­testing­is­now­available­

in­all­key­markets,­including­the­US.­Following­the­

introduction­of­the­cobas­e­602­immunoassay­module,­

high-volume­laboratories­are­now­able­to­fully­con-

solidate­their­serum­work­areas.­Roche­offers­a­­com-­

prehensive­portfolio­of­standardised­integrated­sys-

tems­for­clinical­laboratories­of­all­types­and­sizes,­

from­the­stand-alone,­low-volume­cobas­4000­and­the­

medium-volume­cobas­6000­to­the­cobas­8000­­

modular­analyser­series­for­high-volume­laboratories.­

In­the­US­Professional­Diagnostics­also­launched­the­

cobas­p­501­and­p­701­post-analytical­units,­which­

automate­the­storage­and­retrieval­of­sample­tubes,­

and­cobas­u­411,­a­semi-automated­urine­test­strip­

analyser.­The­rollout­of­the­new­cobas­b­123­POC­

blood­gas­analyser­commenced­in­Europe­and­­several­

markets­in­Latin­America­and­Asia—Pacific.­Target-

ing­specifically­at­the­POC­segment­and­capable­of­

delivering­many­vital­results­in­time-critical­­situa-­

tions,­this­instrument­is­an­important­advance­in­

blood­gas­analysis,­the­leading­segment­in­hospital­

POC­testing.­The­US­launch­of­cobas­b­123­POC­­

­is­expected­in­2011.­

Strong­growth­in­coagulation­monitoring­reinforced­

Roche’s­leading­position­in­this­segment.­Continued­

strong­demand­for­portable­testing­systems,­such­as­

the­top-selling­CoaguChek­XS­system,­and­expanded­

Medicare­coverage­for­home­coagulation­testing­­

in­the­US­were­key­factors­contributing­to­growth.­

Studies­have­repeatedly­shown­that­self-testing­helps­

patients­on­anticoagulants­to­keep­their­medica-­

tion­within­the­therapeutic­range­and­can­minimise­

the­risk­of­complications.

Delivering­on­the­promise­of­personalised­health-

care,­the­PROTECT­trial,­presented­at­the­American­

Heart­Association­meeting­in­November,­demon-

strated­a­significant­reduction­in­total­cardiovascular­

events­when­heart­failure­therapy­was­guided­by­

concen­trations­of­the­cardiac­biomarker­NT-proBNP.­

Because­of­this­strong­clinical­benefit,­the­trial­was­

stopped­early­to­allow­all­patients­access­to­this­new­

treatment­strategy­(see­R & D section­on­page­74).­

To­further­strengthen­its­cardiology­portfolio,­Roche­

signed­a­cross-license­agreement­with­Alere­Inc.­

­giving­each­party­semi-exclusive­worldwide­rights­for­­

natriuretic­peptide­biomarkers­proven­for­their­diag-

nostic­usefulness­in­a­variety­of­cardiovascular­ ­

diseases.­In­collaboration­with­the­American­College­

of­Cardiology,­Professional­Diagnostics­is­developing­

a­web­portal­for­biomarkers,­allowing­physicians­to­

access­the­latest­information­on­cardiac­biomarkers­

and­encouraging­its­application­in­clinical­practice.­

Diabetes Care Diabetes­Care­develops­and­commercialises­blood­

glucose­(BG)­monitoring­and­insulin­delivery­systems­

that­enable­people­with­diabetes­to­manage­their­

condition­more­effectively.­The­goal­of­diabetes­ther-

apy­is­to­maintain­the­BG­levels­in­a­(near-)­normal­

range­and­thus­avoid­diabetes-related­complications.­

Diabetes­Care­not­only­offers­individual­product­

Successful diagnostic teston market

07_Roche_AR10_ENG_Diagnostics.indd 67 28.01.2011 11:14:50

68­ Roche Business Report 2010 Diagnostics

innovations,­but­combines­these­to­form­integrated­

solutions­that­encompass­all­areas­of­diabetes­man-

agement.­It­is­the­industry­leader­with­a­32%­share­­

of­a­global­BG­monitoring­market­worth­over­8 billion­

US­dollars.­

In­2010­Diabetes­Care’s­sales­rose­4%­to­2,959 mil-

lion­Swiss­francs.­This­was­well­above­the­global­

market­growth­rate­in­an­environment­that­remains­

challenging­due­to­the­uncertain­economic­recov-­

ery­and­general­price­pressure.­Sales­of­BG­monitor-

ing­systems­(4%)­were­driven­by­Accu-Chek­Aviva­

and­Accu-Chek­Performa,­which­showed­strong­dou-

ble-digit­growth,­supported­by­strong­market­up-­

take­of­the­sleek­versions­Accu-Chek­Aviva­Nano­and­­

Accu-Chek­Performa­Nano­especially­designed­for­

young­high-frequency­testers.­By­the­end­of­2010­

these­devices­were­available­in­36­countries­across­

Europe,­Latin­America­and­Asia—Pacific.­The­Accu-

Chek­Mobile­also­posted­significant­sales­growth.­

This­BG­monitoring­system’s­strip-free­technology­is­

particularly­appreciated­by­insulin-dependent­pa-­

tients­who­measure­their­blood­glucose­frequently­

and­thus­benefit­most­from­enhanced­testing­con-

venience.­Introduced­in­2009,­the­Accu-Chek­Mobile­

is­now­available­in­12­countries­in­Europe­and­­

Asia—Pacific.­In­the­EU­maltose-independent­strip­

chemistries­for­the­Accu-Chek­Aviva,­Accu-Chek­

Performa,­Accu-Chek­Compact­and­Accu-Chek­

Mobile­product­lines­received­regulatory­approval­­

in­June­and­were­immediately­rolled­out.­

Diabetes­Care­posted­strong­growth­in­Europe,­Latin­

America­and­Asia—Pacific,­with­significant­contri-

butions­from­emerging­markets.­In­the­US­sales­de-­

creased­2%­slightly­underperforming­the­market,­

which­remained­negatively­impacted­by­the­macro-

economic­environment,­resulting­in­price­pressures­

and­slow­volume­growth.­US­and­Japanese­regu-­

latory­approvals­for­the­maltose-free­strip­chemistries,­

expected­in­2011,­will­enable­the­latest­additions­­

to­the­Accu-Chek­portfolio­to­be­launched­in­the­US­

and­Japan­and­are­anticipated­to­boost­sales­in­­

these­key­markets.

Insulin­delivery­systems­posted­double-digit­sales­

growth,­driven­mainly­by­continued­strong­uptake­of­

the­new­interactive­insulin­pump­system­Accu-Chek­

Combo,­now­available­in­27­countries­in­Europe,­

Latin­America­and­Asia—Pacific.­In­May­Diabetes­Care­

acquired­micropump­specialist­Medingo,­enhancing­

its­portfolio­with­an­innovative­micropump.­This­

acquisition­will­enable­Roche­to­bring­integrated­­

insulin­delivery­systems­to­a­broader­range­of­people­

with­diabetes­and­offer­users­a­wider­range­of­

options­to­suit­their­needs.­

­

Diabetes­Care­remains­committed­to­exploring­and­

developing­new­diabetes­management­concepts­­

as­demonstrated­by­the­Structured­Testing­Protocol­

(STeP)­clinical­study­in­type­2­diabetic­patients­­

not­using­insulin.­Presented­at­the­Annual­Meeting­­

of­the­European­Association­for­the­Study­of­Dia-­

betes­(EASD)­in­September,­the­STeP­study­shows­

that­­glycemic­control­can­be­significantly­improved­

when­therapy­is­adjusted­on­the­basis­of­structured­

BG­monitoring­and­pattern­analysis­(see­R & D sec-

tion­on­page­74).­

The­visualisation­and­assessment­of­BG­and­in-­

sulin­data­are­pivotal­to­effective­diabetes­manage-

ment,­yet­sharing­the­data­continues­to­pose­sig-­

nificant­challenges­for­people­with­diabetes­and­

healthcare­professionals­alike.­To­address­this­issue,­

Diabetes­Care­is­partnering­with­eHealth­specialist­

InterComponentWare­to­develop­a­web-based­diabe-

tes­management­solution­that­improves­the­inter-­

action­between­patients­and­their­caregivers­based­

on­securely­shared,­well-structured­information.­

Molecular Diagnostics Molecular­Diagnostics­develops­and­commercial-­

ises­advanced­diagnostic­and­blood­screening­

platforms­and­tests­based­on­Roche’s­proprietary­

real-time­polymerase­chain­reaction­(PCR)­tech-­

nology.­With­­a­32%­market­share,­Roche­is­the­leader­

in­the­highly­competitive­molecular­diagnostics­

market,­valued­­at­4­billion­US­dollars­and­growing­

7%.­This­year­marks­the­25th­anniversary­of­PCR’s­

debut­to­the­scientific­community.­PCR’s­unique­

ability­to­exponentially­amplify­small­amounts­of­target­

DNA­has­resulted­­in­numerous­diagnostic­tech-

niques­which­would­otherwise­be­too­time­consum-

ing­or­impossible­to­perform.­

Molecular­Diagnostics­continued­its­steady­per-­

formance­in­2010,­with­sales­advancing­4%­to­­

1,189­million­Swiss­francs.­Growth­was­led­by­virol-

ogy­(2%),­which­currently­accounts­for­about­half­­

of­the­business­area’s­sales.­Demand­for­the­cobas­

07_Roche_AR10_ENG_Diagnostics.indd 68 28.01.2011 11:14:50

69­Roche Business Report 2010Diagnostics

4800­system,­launched­in­late­2009,­was­strong­with­

the­system­now­installed­in­25­countries­in­Europe,­

Asia—Pacific,­Latin­America­and­Canada.­cobas­4800­

offers­full­automation­for­mid-­to­high-throughput­

testing;­the­menu­currently­includes­dual­target­tests­

for­Chlamydia trachomatis­and­Neisseria gonorrhoeae­

and­a­screening­and­genotyping­test­for­human­­

papillomavirus­(HPV).­Regionally,­North­America­sales­

showed­good­growth,­while­sales­held­steady­in­­

the­EU.­Latin­America­and­Asia—Pacific­posted­excel-

lent­double-digit­growth.­Strong­contribution­from­

the­E7­markets­was­led­by­Russia­and­Mexico.

In­2010­Molecular­Diagnostics­added­four­new­or­

next-generation­tests­to­its­portfolio­in­virology­and­

infectious­diseases.­Thanks­to­the­first-of-its-kind­

dual-PCR­target­HIV­viral-load­test,­which­greatly­im-­

proves­the­ability­of­physicians­to­make­informed­

treatment­decisions,­Molecular­Diagnostics­won­­

a­major­contract­in­South­Africa­for­over­half­a­mil-

lion­tests­per­year.­Roche’s­next-generation­HBV­­

test,­which­received­the­CE­Mark­in­2008,­is­now­also­

available­in­the­US.­This­test­enables­broader­geno-

type­detection­and­increased­workflow­flexibility­in­

the­management­of­HBV.­In­the­blood­screening­seg-

ment,­the­first­duplex­assay­for­simultaneous­de-­

tection­of­parvovirus­B19­and­the­hepatitis­A­virus­

was­successfully­launched­in­the­EU­and­other­­

markets­recognising­the­CE­Mark,­contributing­to­im-­

proved­safety­of­human­plasma­products.­FDA­ap-­

proval­of­this­test­is­expected­in­2011.­The­LightCycler­­

MRSA­Advanced­Test,­Roche’s­flagship­product­in­

the­hospital-acquired­infections­market,­was­approved­

and­launched­in­the­US­in­July.­Studies­indicate­that­

the­test’s­speed­—­it­identifies­methicillin-resistant­

Staphylococcus aureus­(MRSA)­carriers­in­less­than­

two­hours,­versus­one­to­three­days­using­conven-

tional­culture-based­methods­—­can­help­significantly­

reduce­the­spread­of­this­potentially­deadly­microbe­

in­hospitals.­Screening­for­MRSA­is­one­of­the­fast-

est-growing­segments­in­the­North­American­molec-

ular­diagnostics­market.­The­test­was­launched­in­the­

EU­and­other­markets­which­recognise­the­CE­Mark­

in­2009­(see­table­of­product­launches­on­page­76).­

Data­from­ATHENA,­a­Roche-sponsored­US­registra-

tion­trial­assessing­the­utility­of­the­cobas­4800­HPV­

Test­in­screening­for­cervical­cancer,­were­presented­

at­the­International­Papillomavirus­Conference­in­

Montreal.­The­data­confirm­the­increased­accuracy­

of­human­papillomavirus­(HPV)­DNA­testing,­includ-

ing­16/18­genotyping,­over­conventional­cytologic­

Pap­testing­(see­R & D section­on­page­74).­Supported­

by­the­ATHENA­results,­Roche­filed­the­HPV­test­in­

the­US­in­June,­with­approval­expected­in­the­second­

half­of­2011.­This­test­received­CE­Mark­certification­

in­late­2009­and­experienced­a­strong­market­uptake­

in­CE­markets­throughout­2010.­To­further­expand­­

its­testing­potential­in­cervical­cancer,­Roche­entered­

into­a­research­collaboration­with­the­­German­Cancer­

Research­Center­(DKFZ).­Recent­findings­by­the­

DKFZ­indicate­that­the­relative­amounts­of­specific­

RNA­markers­in­HPV-infected­cells­enable­highly­

accurate­discrimination­of­cervical­cancer­and­high-

grade­from­low-grade­lesions­and­thus­facilitate­­

more­specific­prediction­of­women’s­risk­for­devel-

oping­cervical­cancer.­

Molecular­Diagnostics­is­building­a­best-in-class­

oncology­portfolio­by­securing­relevant­intellectual­

property,­developing­robust­assays­and­providing­

complete­in vitro diagnostics­solutions­covering­­sam-

ple­preparation,­through­to­results­analyses­and­

reporting.­In­2010­Roche­obtained­a­worldwide­­co-­

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.

07_Roche_AR10_ENG_Diagnostics.indd 69 28.01.2011 11:14:50

Kenneth B., participant in a clinical trial with RG1678, New York 

Disease area Central Nervous System

Indication Schizophrenia

Trials 6 phase III trials

No. of patients 3,600

No. of study sites 240

No. of countries 27

Have I chosen

07_Roche_AR10_ENG_Diagnostics.indd 70 28.01.2011 11:15:17

Daniela A., Research Project Leader in Central Nervous System (CNS), Roche Basel

wisely ?

07_Roche_AR10_ENG_Diagnostics.indd 71 28.01.2011 11:15:41

Affecting nearly 24 million people worldwide, schizo-phrenia is a severe mental disorder that distorts the way a person thinks, acts, expresses emotions, per-ceives 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 pulmo-nary 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 every- day 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 neu- rotransmission 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 schizophre-nia. In addition, RG1678 in combination with current treatments has the potential to treat suboptimally con-trolled 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.

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

Creating value for patients means having the courage to go where needs are great and others have failed

RG1678 — a first-in-class GRI for schizophrenia

07_Roche_AR10_ENG_Diagnostics.indd 72 28.01.2011 11:15:58

73­Roche Business Report 2010Diagnostics

Applied­Science­posted­4%­growth­on­sales­totalling­

868­million­Swiss­francs.­Growth­drivers­were­the­­

­cell­analysis­segment­(thanks­to­increased­demand­

for­solutions­in­oncology­and­stem­cell­research),­

genomics­(formerly­reported­as­sequencing­and­mi-­

croarray­businesses)­and­custom­biotech­(due­­to­

recovery­of­the­global­economy).­Sales­of­the­MagNA­

Pure­and­LightCycler­product­lines­for­sample­pre-

paration­and­quantitative­PCR­analysis­declined­due­

to­dramatically­lower­demand­for­influenza­A­(H1N1)­

virus­testing.­All­regions­showed­sales­increases­

except­Latin­America,­where­the­negative­effect­of­

decreased­H1N1­testing­was­particularly­pronounced.­

Sales­in­Asia—Pacific­were­exceptionally­strong­

(15%),­led­by­China­and­India.

Sales­for­cell­analysis­systems­remained­robust,­

fuelled­by­full­integration­of­the­innovatis­product­

portfolio­and­steadily­increasing­demand­for­

­xCELLigence­automated­real-time­cell­analysers­

(RTCA).­In­September­Applied­Science­expanded­

this­product­line­by­launching­the­RTCA­HT­In-­

strument­for­high-throughput­analysis­and­the­­

RTCA­­Cardio­Instrument­for­label-free­cardiotoxic-­

ity­testing.

Double-digit­increases­in­sequencing­reagent­and­

microarrays­sales­fuelled­growth­in­genomics­­

(17%),­helped­by­strong­worldwide­demand­for­the­

GS­­Junior­DNA­sequencer,­launched­in­May.­This­

medium-throughput­benchtop­version­of­the­Genome­

Sequencer­FLX­System­bridges­the­gap­between­low-­

and­high-throughput­sequencing­and­offers­solutions­

in­nearly­every­field­of­biological­research.­Thanks­­

to­its­size,­efficiency­and­competitive­price,­it­puts­

next-generation­sequencing­technology­within­the­

reach­of­thousands­of­researchers­around­the­world.

In­response­to­the­worldwide­surge­in­research­

projects­involving­resequencing­of­the­human­genome­

to­study­diseases­in­large­populations,­Applied­

­Science­is­making­additional­investments­to­develop­

systems­targeting­this­application.­In­November­

Applied­Science­entered­into­an­exclusive­partnership­

with­DNA­Electronics­for­the­development­of­a­­

low-cost,­high-throughput­DNA­sequencer.­The­­sys-­

tem­will­combine­454­Life­Sciences’­long-read­

sequencing­technology­with­DNA­Electronics’­inex-

pensive,­highly­scalable­method­for­electrochemical­

detection.­Moreover,­the­third­generation­of­se-­

quencing­is­already­on­the­horizon­and­promises­the­

next­leap­in­performance.­In­June­Roche­and­IBM­

signed­an­agreement­to­develop­a­nano­pore-based­

single­molecule­sequencer­to­directly­read­and­

decode­human­DNA,­based­on­IBM’s­DNA­­transistor­

technology.­This­approach­promises­gains­­in­cost-

efficiency,­throughput,­scalability­and­speed­com-

pared­with­other­sequencing­technologies­currently­

available­or­in­development.

NimbleGen­complemented­its­offering­on­the­cyto-

genetics­microarray­workflow­system,­including­

arrays­for­simultaneous­analysis­of­multiple­samples,­

instruments,­reagents,­as­well­as­analysis­and­vi-­

sualisation­software,­now­providing­a­comprehensive­

solution­for­high-resolution­cytogenetic­analyses­­

of­chromosomal­abnormalities.­

Applied­Science­took­further­steps­towards­transition­

of­its­products­from­pure­research­use­into­routine­

diagnostic­tools­(IVDs).­A­pre-Investigational­Device­

Exemption­(pre-IDE)­submission­for­NimbleGen’s­

microarray­platform­has­been­filed­with­the­FDA;­its­

approval­is­the­pre-requisite­for­obtaining­FDA­­

clearance­for­Roche’s­cytogenetic­microarrays­­

for­use­­as­IVDs.­These­microarrays,­which­detect­ ­

chromosomal­abnormalities,­could­spearhead­a­­

product­transition­into­IVDs­and­are­currently­under­

development­­to­demonstrate­their­medical­value­­

and­diagnostic­­utility.­

Tissue DiagnosticsTissue­Diagnostics­(Ventana­Medical­Systems­in­

North­America)­is­the­world’s­leading­supplier­ ­

of­­tissue-based­cancer­diagnostics.­Its­instruments­

and­reagent­systems­are­used­in­histology,­cytol-­

ogy­and­drug­discovery­laboratories­worldwide.­In­

2010­the­unit­had­a­25%­share­of­the­tissue­diag-­

nostics­­market,­which­is­valued­at­over­2­billion­US­

dollars­and­grew­approximately­9–10%.

Tissue­Diagnostics­significantly­outpaced­the­­

market­in­2010,­recording­sales­of­541­million­Swiss­

francs,­an­increase­of­17%­compared­to­the­year-­

earlier­period.­Advanced­tissue­staining­—­immuno-

histochemistry­(IHC)­and­in situ­hybridisation­

(ISH)­—­was­the­main­growth­driver­(17%),­reflect-

ing­strong­reagent­sales­and­robust­uptake­of­­

the­fully­automated­BenchMark­ULTRA­system­for­

simultaneous­IHC­and­ISH­testing­on­a­single­­

07_Roche_AR10_ENG_Diagnostics.indd 73 28.01.2011 11:16:09

74­ Roche Business Report 2010 Diagnostics

has­been­very­strong,­particularly­in­developing­­

markets.­VANTAGE,­an­advanced­workflow­manage-

ment­­system­for­improved­productivity­and­patient­

safety,­launched­in­2008–2009,­continued­to­gain­

momentum­with­sales­more­than­doubling­compared­

to­­the­year-earlier­period.­

Tissue­Diagnostics­completed­two­acquisitions:­

­BioImagene­Inc.,­a­leader­in­digital­pathology­analy-

sis­and­workflow,­with­products­enabling­generation­

of­high-resolution­whole-slide­digital­images­from­

glass­microscope­slides­as­well­as­software­to­view,­

analyse­and­manage­tissue­images,­complementing­

and­strengthening­the­offering­in­image­analysis­­

and­information­management;­and­Mariposa­Bio-

Science,­an­innovator­in­the­field­of­antibody­produc-

tion­to­support­Roche’s­production­of­best-in-­

class­antibodies.

Research and development

In­2010­research­and­development­(R­&­D)­costs­(core­­

basis)­in­the­Diagnostics­Division­totalled­890 mil-­

lion­Swiss­francs,­a­decline­of­2%­in­local­­currencies­

compared­to­2009.­R­&­D­costs­as­a­percentage­of­

sales­decreased­to­8.6%.­In­line­with­overall­divisional­

strategy,­the­focus­was­on­developing­next-gene-­

ration­platforms­to­improve­testing­­efficiency­and­on­

developing­new­tests­and­demonstrating­their­med-

ical­value­with­robust­clinical­data.­Clinical­validation­

is­relatively­new­in­the­IVD­industry.­Besides­signif-­

icant­investment,­it­requires­expertise­in­clinical­devel-­

opment­and­increased­interaction­with­non-tradi-

tional­customers­such­as­payers­and­healthcare­

professionals­(see­feature­on­page­66).­Being­able­­to­

draw­on­Roche­Pharmaceuticals’­long-standing­ex-­

pertise­in­clinical­validation­gives­Roche­Diagnostics­

an­advantage­over­most­other­IVD­companies.

In­2010­three­major­clinical­trials­demonstrating­the­

significant­medical­value­of­Roche­products­were­

presented­at­scientific­congresses:

Data­from­the­ATHENA­trial­were­presented­at­the­

International­Papillomavirus­Conference­in­Montreal­

in­July.­This­Roche-sponsored­US­registration­trial,­

the­largest­ever­performed­in­this­indication,­aimed­­­to­

assess­the­utility­of­the­cobas­4800­HPV­Test­in­

screening­for­cervical­cancer.­The­data­clearly­con-

platform.­This­system,­which­is­now­available­in­51­

countries­worldwide,­sets­new­standards­in­terms­of­

random­slide­access,­user-friendliness­and­high-

quality­results.­The­business­area­performed­strongly­

worldwide,­growing­two­to­four­times­as­fast­as­­

the­market­in­Europe,­Latin­America­and­Asia—Pacific.­

Sales­in­these­regions­benefited­from­intensified­

commercialisation­efforts­outside­the­US,­synergies­

with­Roche­Pharmaceuticals­in­HER2­testing­in­

breast­and­gastric­cancer­and­the­introduction­of­

BenchMark­GX­at­an­economic­price­in­emerg-­

ing­markets.

In­2010­Tissue­Diagnostics­launched­15­new­anti-

bodies­for­IHC­testing­to­support­the­diagnosis­of­

various­cancer­types­(see­table­of­product­launches­

on­page­76).­Six­DNA­probes­for­ISH­testing­were­

added­to­the­molecular­assay­menu­in­the­EU­and­

other­markets­recognising­the­CE­Mark,­including­two­

new­molecular­DNA­tests­for­the­human­epidermal­

growth­factor­receptor­2­(HER2)­gene,­enabling­

accurate,­timely­assessment­of­the­likelihood­of­re-­

sponse­to­treatment­with­Herceptin­in­breast­and­

gastric­cancer.­A­DNA­probe­targeting­the­insulin-

like­growth­factor­1­receptor­(IGF-1R)­gene­was­

added­to­Tissue­Diagnostics’­non-small­cell­lung­

cancer­biomarker­panel,­which­also­includes­assays­

for­EGFR­and­Met.­Strengthening­its­position­in­

­prostate­cancer­testing,­Tissue­Diagnostics­secured­

the­exclusive­rights­from­AsymmetRx­Inc.­for­use­­

of­the­p63­biomarker­and­launched­two­DNA­probes­

enabling­the­determination­of­ERG­genomic­rear-

rangements­on­a­single­slide.­While­the­p63­biomark-

er­is­the­gold­standard­for­the­differential­diagno-­

sis­of­prostate­cancer,­ERG­genomic­rearrangements­

have­been­shown­to­be­a­reliable­prognostic­marker­

of­prostate­cancer-specific­mortality­in­certain­

patient­groups.­

The­advanced­staining­instrument­portfolio­was­

­bolstered­worldwide­with­two­new­additions:­Dis-

covery­ULTRA,­an­automated­IHC­and­ISH­platform­

designed­for­use­in­the­research­setting­and­offering­

improvements­in­ease­of­use,­workflow­and­system­

flexibility,­and­BenchMark­GX,­a­low-volume,­auto-

mated­tissue­staining­instrument­designed­for­cancer­

diagnostics­professionals­who­want­to­expand­­

their­test­menu­and­adopt­automation­with­reduced­

investment.­With­placements­in­over­25­countries­­

by­the­end­of­2010,­acceptance­of­BenchMark­GX­

07_Roche_AR10_ENG_Diagnostics.indd 74 28.01.2011 11:16:09

75­Roche Business Report 2010Diagnostics

firmed­the­increased­accuracy­of­human­papilloma-­

virus­(HPV)­DNA­testing­over­conventional­cytologic­

Pap­testing.­Out­of­47,000­women­enrolled­in­this­

trial,­one­in­ten­of­those­aged­30­years­or­older­who­

tested­positive­for­HPV­genotypes­16­or­18­were­

found­to­have­cervical­pre-cancer­despite­normal­Pap­

tests.­The­cobas­4800­HPV­Test­detects­14­high-­

risk­genotypes­of­HPV,­twelve­as­a­pooled­result,­and­

genotypes­16­and­18­individually.­As­demonstrated­

by­ATHENA,­this­test­helps­physicians­to­recognise­

and­treat­precursors­of­cervical­cancer­earlier,­possi-

bly­before­it­spreads­in­the­body.­Each­year­around­

half­a­million­women­worldwide­are­diagnosed­with­

cervical­cancer­and­more­than­250,000­succumb­­

to­the­disease.

Final­results­of­PROTECT­(Pro-BNP­Outpatient­Tai-

lored­Chronic­Heart­Failure­Therapy),­a­prospective­

randomised­clinical­trial­in­151­patients,­were­pre-

sented­at­the­American­Heart­Association­congress­

in­Chicago­in­November­by­the­main­study­inves-­

tigators­from­Harvard­University­and­Massachusetts­

General­Hospital.­Promoting­a­new­paradigm­in­­

the­management­of­heart­failure,­the­results­demon-

strated­that­NT-proBNP-guided­heart­failure­care­

was­associated­with­a­significant­56%­reduction­in­

total­cardiovascular­events,­such­as­worsening­­

heart­failure,­heart­failure­hospitalisation,­and­cardio-­

vas­cular­death,­as­compared­with­standard­treatment.­

As­heart­failure­ranks­among­the­most­costly­chronic­

conditions­in­developed­countries,­reducing­the­­

risk­of­cardiovascular­events­not­only­contributes­to­

­better­patient­outcomes­but­is­also­likely­to­reduce­

healthcare­costs.­The­Roche­NT-proBNP­test­is­

­available­at­the­point-of-care­and­in­laboratories­

worldwide­where­it­runs­on­the­cobas­platforms.­It­is­

estimated­that­as­many­as­23­million­people­world-

wide­have­heart­failure­with­550,000­new­cases­diag-

nosed­each­year­in­the­US­alone­and­a­mortality­ ­

rate­that­exceeds­that­of­many­cancers.­

The­STeP­(Structured­Testing­Protocol)­study,­a­

prospective­12-month­clinical­trial­in­483­non-insulin-

treated­people­with­type­2­diabetes,­was­present-­

ed­at­the­Annual­Meeting­of­the­European­Association­

for­the­Study­of­Diabetes­(EASD)­in­Stockholm­­in­

September.­The­study­demonstrated­that­the­use­­of­

this­new­diabetes­management­approach­including­

structured­self-monitoring­of­blood­glucose­(SMBG),­

data­visualisation,­pattern­analysis­and­derived-

therapy­adjustments­contributes­significantly­to­­a­

reduction­of­HbA1c­values,­improves­glycemic­

­control­and­helps­to­reduce­diabetes-specific­psy-

chological­distress­and­depression.­While­SMBG­­

is­widely­accepted­as­a­core­component­of­effective­

diabetes­management­in­people­on­insulin­therapy,­

the­value­of­SMBG­has­so­far­remained­controversial­

for­insulin-naive­people,­representing­a­large­part­­

of­all­people­with­type­2­diabetes.­

In­addition­to­the­medical­value­of­IVD­tests­applied­

in­the­clinic,­diagnostics­today­play­a­number­of­

­critical­roles­in­drug­development,­from­identifying­

new­therapeutic­targets­and­screening­out­un-­

promising­drug­candidates­to­selecting­appropriate­

patient­populations­for­clinical­trials.­Some­may­­

also­become­companion­diagnostics­for­patient­selec-­

tion,­response­prediction­or­therapeutic­monitor-­

ing.­Every­drug­under­development­at­Roche­has­its­

own­associated­biomarker­programme,­and­Diag-­

nostics­expertise­and­advice­are­made­available­for­

each­of­these­­programmes.­In­2010­the­Diagnostics­

and­Pharmaceuticals­Divisions,­including­pRED,­

gRED,­Pharma­Medicines­and­Chugai,­collaborated­

on­more­than­160 projects­across­all­disease­areas­­

of­interest­at­Roche.­More­than­half­of­these­projects­

were­in­oncology,­followed­by­inflammation,­CNS,­

virology­and­metabolic­diseases.­In­addition,­the­

Diagnostics­Division­collaborated­with­several­ ­

other­pharma­ceutical­companies­to­develop­com-

panion­diagnostics­for­key­biomarkers,­particularly­­

in­on­cology.­

07_Roche_AR10_ENG_Diagnostics.indd 75 28.01.2011 11:16:09

76­ Roche Business Report 2010 Diagnostics

Product launches in the Diagnostics Division

Major product launches in 2010

Business area Product name Product description Market Timelines

Professional Diagnostics

Six immunoassays 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

EU, APAC, LATAM

EU, APAC, LATAM USUSUS

Q4

Q4

Q1Q2Q4

Two immunoassays in other disease areas

— free ß-HCG and PAPP-A: to evaluate a risk of trisomy 21 in pregnancy

— STAT NT-proBNP: to evaluate the risk of heart failure

EU, APAC, LATAMUS

Q1

Q1

Three clinical chemistry products

next-generation tests for HbA1c and ferritin, and new MultiControl ClinChem

EU, APAC, LATAM

Q1–2

cobas e 602 module for cobas 8000 modular analyser series

immunoassay module with over 80 immunoassays and a throughput of 170 tests/hour for very high volume laboratories

EU Q3–4

cobas b 123 POC system multi-parameter blood gas analyser for use at the point of care and in laboratories

EU, APAC, LATAM

Q4

cobas c 701/ cobas c 502/cobas e 602 modules for cobas 8000 modular analyser series

clinical chemistry and immunoassay modules for very high volume laboratories

US Q3–4

cobas u 411 semi-automated urine test strip analyser US Q4

cobas p 501/cobas p 701 post-analytical units for automated storage and retrieval of bar-coded primary and secondary sample tubes

US Q4

Diabetes Care Maltose-independent strip chemistries

for Accu-Chek Aviva, Accu-Chek Performa, Accu-Chek Mobile, Accu-Chek Compact

EU, APAC, LATAM

Q3–4

Molecular Diagnostics

Four molecular tests in virology and infectious diseases

— 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

US

US

EU

US

Q3

Q3

Q3

Q4

Applied Science NimbleGen CGX-6 multiplex array

for high-resolution analysis of chromosomal abnormalities, capable of analysing six samples simultaneously

WW Q1

GS Junior economic benchtop next-generation sequencing system for smaller laboratories

WW Q2

NimbleGen cytogenetic workflow system

complete solution for high-resolution cytogenetic analysis, including instruments, arrays, analysis and visualisation software

WW Q2

RTCA Cardio Instrument for real-time cell analysis for functional monitoring of cardiotoxicity and arrhythmic effects

WW Q3

RTCA HT Instrument for real-time high-throughput label-free impedance-based cell analysis

WW Q3

07_Roche_AR10_ENG_Diagnostics.indd 76 28.01.2011 11:16:09

77­Roche Business Report 2010Diagnostics

Major product launches in 2010

Business area Product name Product description Market Timelines

Tissue Diagnostics Fifteen antibodies for IHC testing in cancer

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

US, EU Q1–4

One antibody for IHC testing in infectious diseases

anti-Helicobacterpylori EU Q1

Six DNA probes for ISH testing in cancer

DDISH HER2 Probe, SISH HER2 Probe, IGF-1R Probe, TOP2A Probe, 5pERG Probe, 3pERG Probe

EU Q2–4

BenchMark GX for economical low-volume automated advanced tissue staining

EU, APAC Q2

Discovery ULTRA for automated advanced tissue staining in the research setting US, EU Q1–2

black type = new product/first market launch, grey type = new product/launch in additional markets.APAC = Asia—Pacific; 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 = insitu hybridisation; MRSA = methicillin-resistant Staphylococcusaureus;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).

07_Roche_AR10_ENG_Diagnostics.indd 77 28.01.2011 11:16:10

78­ Roche Business Report 2010 Diagnostics

Key product launches planned for 2011

Business area Product name Product description Market Timelines

Professional Diagnostics

Two immunoassays — Total Vitamin D: to measure vitamin D2 and D3 with greater precision

— HE4: aid in detecting ovarian cancer

EU

EU

H1

H1

cobas c 702 module for cobas 8000 modular analyser series

clinical chemistry module with throughput of 2,000 tests/hour for high-volume laboratories

US, EU H1

cobas b 123 POC system multi-parameter blood gas analyzer for use at the point of care and in laboratories

US H2

Diabetes Care Accu-Chek Mobile LCM next-generation strip-free blood glucose monitoring system with an integrated lancing device; significantly smaller than current version, with enhanced functionality

EU H2

Accu-Chek Nano sleek version for high-frequency users US H2

Accu-Chek Combo interactive insulin delivery system combining insulin pump and blood glucose monitoring system with broad data management capabilities

US H2

Molecular Diagnostics

Four molecular tests in oncology and infectious diseases

— 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 individu-ally and 12 other high-risk genotypes in a pooled result

EU, US

EU

EU

US

H2

H2

H2

H2

Applied Science GS G Type HLA Primer Sets

for HLA genotyping on the GS Junior System or GS FLX System

WW H1

GS FLX Titanum-XL new sequencing chemistry; enables extended read lengths on the GS FLX system (sequencing kit)

WW H1

4.2M CGH and 2.1M CGH/SNP arrays

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

WW H2

Tissue Diagnostics ER/PR antibody for IHC testing

to support the diagnosis of breast cancer on BenchMark ULTRA

US H1

HER2 Dual Colour ISH Probe for ISH testing

to support the diagnosis of breast cancer US H2

FutureView next-generation detection system for BenchMark platforms; delivers greater specificity, flexible detection options and improved turnaround time

US, EU 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 = insitu hybridisation; KRAS = member of the Ras family of oncogenes; SNP = single nucleotide polymorphism.

07_Roche_AR10_ENG_Diagnostics.indd 78 28.01.2011 11:16:10

79­Roche Business Report 2010Diagnostics

Glossary

Biomarker |­ A­characteristic­that­can­be­measured­

and­evaluated­as­an­indicator­of­a­normal­biological­

process,­a­disease­process­or­a­response­to­a­thera-

peutic­intervention.­Elevated­levels­of­the­protein­

HER2­in­cancer,­for­example,­are­a­biomarker­for­­a­

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 |­ A­branch­of­diagnostics­com-

prising­tests­that­detect­and­measure­changes­in­­

the­chemical­composition­of­body­fluids­and­tissues­­

to­diagnose­or­predict­the­course­of­a­disease.

DNA sequencing |­ Methods­of­determining­the­

order­of­nucleotides­(molecular­building­blocks)­in­

genetic­material.­Knowing­an­individual’s­DNA­

sequence­can­provide­insights­into­genetic­changes­

which­contribute­to­human­disease­or­influence­

­treatment­response.­High-throughput­technologies­

read­thousands­of­sequences­at­once.­

Immunoassay |­ A­laboratory­test­that­detects­or­

measures­a­target­substance­in­a­sample­using­­­an­

immunochemical­reaction,­in­which­an­antibody­

binds­to­a­specific­antigen.­The­target­can­be­a­drug,­

a­protein­or­a­virus,­for­example.­

Immunohistochemistry (IHC) |­ A­method­of­stain-

ing­biological­tissue­samples­to­determine­the­­pres-­

ence,­level­and­location­of­specific­proteins­in­cells;­

used­in­the­diagnosis­of­cancer­and­other­­diseases.

In situ hybridisation (ISH) |­ A­method­of­staining­

biological­tissue­samples­to­identify­the­presence­

and­copy­number­of­specific­genes­or­genetic­muta-

tions­in­cells;­used­in­the­diagnosis­of­cancer­and­

other­diseases.

Micropump for insulin delivery |­ A­next-generation­

insulin­pump,­small,­light-weight,­discrete-to-wear­

that­delivers­insulin­without­tubing.­It­combines­­key­

features­of­durable­insulin­pumps­with­the­best­

attributes­of­tube-free­patch­pumps­providing­flex-

ibility­and­freedom­for­a­broader­range­of­insulin-

dependent­people­with­diabetes.

Microarray |­ A­device­for­determining­genetic­

changes­that­may­contribute­to­human­disease­or­

influence­treatment­response.­High-density­micro-

arrays­evaluate­thousands­of­DNA­and­RNA­

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.

07_Roche_AR10_ENG_Diagnostics.indd 79 28.01.2011 11:16:10

Corporate Governance | Roche’s 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 Group’s policy of communicating transparently.

Remuneration Report | Roche’s success depends on the abilities and dedication of its people. Recognition of this forms the basis of our remuneration policy and system.

08_Roche_AR10_ENG_Corporate Governance.indd 80 28.01.2011 09:07:57

81­Roche Business Report 2010Corporate Governance

Roche­complies­with­all­relevant­corporate­gover­

nance­requirements,­in­particular­with­all­applicable­

laws,­the­Swiss­Stock­Exchange­(SIX­Swiss­

Exchange)­directives­(including­the­commentaries­

thereto)­and­the­Swiss­Code­of­Best­Practice­for­

­Corporate­Governance­promulgated­by­the­Swiss­

business­federation­‘economiesuisse’.­The­company’s­

internal­governance­framework,­particularly­its­Arti­

cles­of­Incorporation­and­Bylaws,­embodies­all­the­

principles­needed­to­ensure­that­the­company’s­busi­

nesses­are­managed­and­supervised­in­a­manner­

consistent­with­good­corporate­governance,­includ­

ing­the­necessary­checks­and­balances.­1

Our­printed­Annual­Report­contains­selected­links­to­

the­Roche­website­(www.roche.com).­Readers­are­

thus­provided­not­only­with­a­‘snapshot’­of­our­com­

pany­at­the­reporting­date­but­are­also­directed­to­

sources­which­they­can­consult­at­any­time­for­up­

to­date­information­about­corporate­governance­­

at­Roche.­Whereas­each­annual­report­covers­a­sin­

gle­financial­year­ending­31­December,­our­website­

contains­information­of­a­more­permanent­nature­as­

well­as­the­latest­Roche­news.­The­company’s­Arti­

cles­of­Incorporation,­Bylaws­and­the­curricula­vitae­

of­the­members­of­the­Board­of­Directors­and­the­

Corporate­Executive­Committee­are­published­on­our­

website.

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

has­approved­its­committees’­structure­and­its­com­

mittees’­memberships­as­shown­on­page­83.

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,­

and­Daniel­O’Day­were­appointed­as­COO­Division­

Roche­Pharmaceuticals­and­COO­Division­Roche­

Diagnostics­and­as­a­new­member­of­the­Corporate­

Executive­Committee,­respectively.­

Erich­Hunziker,­Chief­Financial­Officer,­Chief­Infor­

mation­Officer­and­Deputy­Head­of­the­Corporate­

Executive­Committee,­has­decided­to­retire­from­

Roche­at­the­end­of­March­2011­and­plans­to­focus­

on­a­number­of­board­memberships.­The­Board­of­

Directors­of­Roche­Holding­Ltd­thanks­Erich­Hunziker­

for­his­many­years­of­exceptional­service­and­out­

standing­contributions­to­the­Group’s­success.­

The­Board­of­Directors­has­appointed­Alan­Hippe­to­

succeed­Erich­Hunziker­as­Chief­Financial­Officer.­

Corporate Governance

1 http://www.roche.com/about_roche/corporate_governance.htm

08_Roche_AR10_ENG_Corporate Governance.indd 81 28.01.2011 09:07:57

82­ Roche Business Report 2010 Corporate Governance

Board of Directors per 31 December 2010 (from left): Dr Franz B. Humer, Prof. Bruno Gehrig, André 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.

08_Roche_AR10_ENG_Corporate Governance.indd 82 28.01.2011 09:08:15

83­Roche Business Report 2010Corporate Governance

A Corporate Governance and Sustainability Committee.B Audit Committee.C Remuneration Committee.D Presidium/Nomination Committee.E Non-executive director.

* Committee chairperson. 1 January 2011

Board of Directors

Name (year of birth) Term ends First elected

Board of Directors Dr Franz B. Humer (1946) D *, E Chairman 2012 1995

Prof. Bruno Gehrig (1946) C *, D, E Vice-Chairman 2011 2004

André Hoffmann (1958) C, D, E Vice-Chairman 2012 1996

Prof. Pius Baschera (1950) A, E 2011 2007

Prof. Sir John Irving Bell (1952) C, E 2012 2001

William M. Burns (1947) B, E 2013 2010

Lodewijk J. R. de Vink (1945) C, E 2011 2004

Walter Frey (1943) A, B, E 2011 2001

Dr DeAnne Julius (1949) B *, E 2013 2002

Dr Arthur D. Levinson (1950) C, E 2013 2010

Dr Andreas Oeri (1949) A *, E 2011 1996

Dr Wolfgang Ruttenstorfer (1950) B, E 2011 2007

Prof. Beatrice Weder di Mauro (1965) A, B, E 2013 2006

New proposed members of the Board of Directors, nominated for election at the Annual General Meeting on 1 March 2011

Paul Bulcke (1954)

Peter R. Voser (1958)

Dr Christoph Franz (1960)

Secretary to the Board of Directors Dr Gottlieb A. Keller (1954)

Honorary Chairman of the Board of Directors Dr Fritz Gerber (1929)

08_Roche_AR10_ENG_Corporate Governance.indd 83 28.01.2011 09:08:16

84­ Roche Business Report 2010 Corporate Governance

Corporate Executive Committee per 31 December 2010 (from left): Dr Severin Schwan, Dr Pascal Soriot, Daniel O’Day,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.

08_Roche_AR10_ENG_Corporate Governance.indd 84 28.01.2011 09:08:40

85­Roche Business Report 2010Corporate Governance

Corporate Executive Committee

Name (year of birth) Position

Corporate Executive Committee Dr Severin Schwan (1967) CEO of the Roche Group

Dr Erich Hunziker (1953) Chief Financial and IT Officer/

Deputy Head of the Corporate Executive Committee

Dr Pascal Soriot (1959) COO Division Roche Pharmaceuticals

Daniel O’Day (1964) COO Division Roche Diagnostics

Dr Gottlieb A. Keller (1954) General Counsel

Silvia Ayyoubi (1953) Head Human Resources

As of 1 April 2011 Dr Alan Hippe (1967) Chief Financial and IT Officer

Enlarged Corporate Executive Committee

Osamu Nagayama (1947) President and CEO Chugai

Dr Richard Scheller (1953) Head Genentech Research and Early Development (gRED)

Dr Jean-Jacques Garaud (1955) Head Roche Pharma

Research and Early Development (pRED)

Dr Dan Zabrowski (1959) Head of Roche Partnering

Dr Stephan Feldhaus (1962) Head Group Communications

Secretary to the Corporate Executive Committee Per-Olof Attinger (1960)

Statutory Auditorsof Roche Holding Ltd

KPMG Klynveld Peat Marwick Goerdeler SA (reporting years 2004–2008)

KPMG AG (since 2009)

Auditor in charge: John A. Morris (since 2004)

Chief Compliance Officer Dr Urs Jaisli (1956)

Alan­Hippe­will­join­Roche­as­a­member­of­the­

­Corporate­Executive­Committee­as­of­April­2011.­

As­of­1­January­2010­Jean­Jacques­Garaud­was­

appointed­as­Head­of­Roche­Pharma­Research­and­

Early­Development­(pRED)­and­together­with­Dan­

Zabrowski­as­Head­of­Roche­Partnering.­Both­were­

appointed­as­new­members­of­the­Enlarged­Corpo­

rate­Executive­Committee.

Effective­1­August­2010­Stephan­Feldhaus­was­

appointed­Head­Group­Communications­and­Member­

of­the­Enlarged­Corporate­Executive­Committee­

reporting­to­Severin­Schwan­and­replacing­Per­Olof­

Attinger,­who­took­over­a­newly­created­position­­

as­Head­CEO­Office­and­Secretary­to­the­Corporate­

Executive­Committee­reporting­to­Severin­Schwan.

08_Roche_AR10_ENG_Corporate Governance.indd 85 28.01.2011 09:08:40

86­ Roche Business Report 2010 Corporate Governance

Information relating to Corporate Governance

1 Group structure and shareholders• Roche’s­operating­businesses­are­organised­into­

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

attributable­to­Roche­shareholders’­and­‘Related­

parties’,­pages­114­and­129)­and­in­Note­4­to­­

the­Financial­Statements­of­Roche­Holding­Ltd­

(‘Significant­shareholders’,­page­154).• André­Hoffmann,­Vice­Chairman­of­the­Board­of­

Directors,­and­Andreas­Oeri,­Member­of­the­Board­

of­Directors­and­Chairman­of­the­Board’s­Corporate­

Governance­and­Sustainability­Committee,­serve­­

in­their­respective­capacities­on­the­Board­and­its­

Committees­as­representatives­of­the­shareholders­

group­with­pooled­voting­rights­and­receive­the­

remuneration­set­forth­in­the­Remuneration­Report­

on­page­93­and­in­the­Finance­Report,­Note­33­­

to­the­Roche­Group­Consolidated­Financial­State­­

ments­(‘Related­parties’,­page­129)­and­Note­6­­

to­the­Financial­Statements­of­Roche­Holding­Ltd­

(‘Board­and­Executive­remuneration’,­page­155).­

No­other­relationships­exist­with­the­shareholders­

with­pooled­voting­rights.• There­are­no­cross­shareholdings.

2 Capital structure• Information­on­Roche’s­capital­structure­is­pro­

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.­Roche’s­

NES­and­the­rights­pertaining­thereto­(including­

the­provisions­protecting­the­interests­of­NES­

holders)­are­described­in­§4­of­the­Articles­of­

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

any­effect­on­Roche’s­share­capital.

2 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm

08_Roche_AR10_ENG_Corporate Governance.indd 86 28.01.2011 09:08:40

87­Roche Business Report 2010Corporate Governance

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

2 March­2010­5).• With­the­exception­of­Franz­B.­Humer,­William­M.­

Burns­and­Arthur­D.­Levinson­none­of­the­mem­­

bers­of­the­Board­of­Directors­has­been­a­member­

of­Roche’s­Corporate­Executive­Committee­or­

served­in­an­executive­capacity­at­any­Group­sub­­

sidiary­during­the­three­financial­years­preceding­

the­current­reporting­period.• The­internal­organisation­of­the­Board­of­Directors­

and­the­division­of­authority­and­responsibilities­

between­the­Board­and­management,­the­remits­

of­the­Board­committees­and­the­information­­

and­control­mechanisms­available­to­the­Board­­

in­its­dealings­with­corporate­management­are­

governed­by­the­Bylaws.­6­• The­Board­of­Directors­of­Roche­Holding­Ltd­is­

organised­so­as­to­ensure­that­the­Group’s­busi­­

nesses­are­conducted­responsibly­and­with­a­

focus­on­long­term­value­creation.­To­this­end,­the­

Roche­Board­has­delegated­certain­responsibili­

ties­to­several­committees­7.­Their­composition­and­

chairpersons­as­of­1­January­2011­are­described­

on­page­83.­Each­committees’­authorities­and­re­­

sponsibilities­are­defined­in­detail­in­the­Bylaws­­

of­the­Board­of­Directors.­8­• All­the­committees­except­the­Presidium­are­

chaired­by­independent­directors.­• According­to­the­Bylaws­of­the­Board­of­Directors­

at­the­request­of­any­of­its­members­a­Board­

meeting­without­the­Chairman­present­may­be­

convened.­The­Roche­Board­meets­once­a­year­­

to­assess­the­Chairman’s­performance.­This­

meeting,­which­is­not­attended­by­the­Chairman,­

is­chaired­by­one­of­the­Vice­Chairmen.

• The­Board­of­Directors­has­established­a­system­

of­controls­which­is­continuously­monitored­by­the­

Audit­Committee­and­by­the­Corporate­Gover­

nance­and­Sustainability­Committee­and­consists­

of­the­following­elements:

—­ ­Report­on­financial­and­operating­risks­

(risk­management­system)

—­ ­System­of­internal­controls­over­financial­

reporting­(see­pages­135­and­138­in­the­

Finance­Report)

—­ Internal­audits

—­ ­Group­Compliance­Officer­and­Compliance­

officers­in­subsidiaries

—­ ­Safety,­Health­and­Environmental­Protection­

Department

—­ Corporate­Sustainability­Committee

—­ ­Science­and­Ethics­Advisory­Group­(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

08_Roche_AR10_ENG_Corporate Governance.indd 87 28.01.2011 09:08:40

88­ Roche Business Report 2010 Corporate Governance

visit­to­a­major­subsidiary­*­which­included­a­Board­

of­Directors­meeting­*.­The­Board­committees­met­

as­follows­in­2010:

—­ ­Presidium­of­the­Board­of­Directors/Nomination­

Committee:­five­meetings­(approx.­2­hours­

each­*)

—­ ­Remuneration­Committee:­four­meetings­9­

(approx.­2­to­3­hours­each­*)

—­ ­Audit­Committee:­five­meetings­(approx.­3­to­4­

hours­each­*)

—­ ­Corporate­Governance­and­Sustainability­Com­

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 loansAll­details­regarding­remuneration,­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.

Board and Board Committees attendance 2010

Board

Presidium/ Nomination Committee

Remuneration Committee

Audit Committee

Corporate Governance

and Sustainability

Committee

Number of meetings 5 5 4 5 3

F. B. Humer 5 5 – – –

B. Gehrig 5 5 4 – –

A. Hoffmann 5 5 4 – –

P. Baschera 5 – – – 2

J. I. Bell 5 – 4 – –

W. M. Burns ** 5 – – 5 –

L. J. R. de Vink 5 – 4 – –

W. Frey 5 – – 5 3

D. A. Julius 5 – – 5 –

A. D. Levinson ** 4 – 3 – –

A. Oeri 5 – – – 3

W. Ruttenstorfer 5 – – 5 –

B. Weder di Mauro 5 – – 4 2

– Not a member of that committee.** Board and Committee member since 2 March 2010.

08_Roche_AR10_ENG_Corporate Governance.indd 88 28.01.2011 09:08:40

89­Roche Business Report 2010Corporate Governance

their­audits.­The­Audit­Committee­oversees­­

and­assesses­the­auditors­and­makes­recommen­

dations­to­the­Board­(for­information­on­the­

responsibilities­of­the­Audit­Committee,­see­Arti­

cle­8.1­of­the­Bylaws­12).­The­statutory­auditors­

par­ticipated­in­four­meetings­of­the­Audit­Commit­

tee­in­2010.

The­reports­of­statutory­auditors­on­the­Consoli­

dated­Financial­Statements­and­on­the­Financial­

Statements­can­be­found­on­pages­136­and­162,­

respectively,­of­this­year’s­Finance­Report.

­

KPMG­received­the­following­remuneration­for­

their­services­as­statutory­auditors­of­Roche­Hold­

ing­Ltd­and­other­Roche­companies:

2010 2009 (millions of CHF)

Auditing services 20.8 21.9

Audit-related services 2.6 3.7

Tax consultancy services 1.5 1.3

Total 24.9 26.9

The­statutory­auditors­are­elected­each­year­by­

the­Annual­General­Meeting.

Ernst­&­Young­Ltd­received­the­following­remuner­

ation­for­their­services­as­the­auditors­of­Chugai:

2010 2009 (millions of CHF)

Chugai audits 2.2 2.2

Other consulting services

provided to Chugai 0.1 2.2 *

Total 2.3 4.4

* In 2009: Genentech and Chugai.

8 Information policy• As­provided­by­§33­of­the­Articles­of­Incorpora­

tion­13,­corporate­notices­are­published­in­the­

Swiss Official Gazette of Commerce­and­in­other­

daily­newspapers­designated­by­the­Board­of­

Consolidated­Financial­Statements­(‘Equity­attri­

butable­to­Roche­shareholders’­and­‘Related­

­parties’,­pages­114­and­129)­and­are­listed­in­the­

Notes­6­and­7­to­the­Financial­Statements­of­

Roche­Holding­Ltd­(‘Board­and­Executive­remune­r­

ation’­and­‘Board­and­Executive­shareholdings’,­

pages­155­and­157).

5 Participatory rights of shareholders• The­participatory­rights­of­shareholders­are­

defined­in­Roche’s­Articles­of­Incorporation.­11­As­

Roche­shares­are­issued­to­bearer,­there­are­ ­

no­restrictions­on­admission­to­Annual­General­

Meetings,­with­the­exception­that­shares­must­­

be­deposited­within­a­specified­period­before­the­

date­of­a­meeting­and­an­admittance­card­must­­

be­issued­in­the­shareholder’s­name,­as­provided­

in­§12­of­the­Articles­of­Incorporation.­Any­share­­

holder­can­elect­to­be­represented­by­another­

shareholder­at­an­Annual­General­Meeting.­The­

Articles­of­Incorporation­contain­no­restrictions­­

on­the­exercise­of­voting­rights,­and­the­only­quo­­

rum­requirements­are­those­stipulated­in­§16,­ ­

in­conformity­with­the­Swiss­Code­of­Obligations.­• Under­§10.2­of­the­Articles­of­Incorporation,­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 auditorsAt­the­Annual­General­Meeting­of­Roche­Holding­

Ltd­on­2­March­2010,­the­shareholders­voted­to­

appoint­KPMG­AG­(KPMG)­as­statutory­auditors­

(information­on­how­long­the­auditors­and­auditor­

in­charge­have­been­serving­in­these­capacities­­

is­provided­on­page­85).­The­statutory­auditors­

parti­cipate­in­Audit­Committee­meetings.­They­

prepare­written­and­oral­reports­on­the­results­of­

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

08_Roche_AR10_ENG_Corporate Governance.indd 89 28.01.2011 09:08:40

90­ Roche Business Report 2010 Corporate Governance

Directors­(Basler Zeitung, Finanz und Wirtschaft,

L’Agefi, Le Temps, Neue Zürcher 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 OfficerThe­Chief­Compliance­Officer­with­his­compliance­

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 disclosureIt­is­expressly­noted­that­any­information­not­

­contained­or­mentioned­herein­is­non­applicable­

or­its­omission­is­to­be­construed­as­a­negative­

declaration­(as­provided­in­the­SIX­Swiss­Exchange­

Corpo­rate­Governance­Directive­and­the­Com­

mentary­thereto).

14 http://www.roche.com/media.htm 15 http://www.roche.com/investors.htm 16 http://www.roche.com/investors/contacts.htm 17 http://www.roche.com/about_roche/corporate_governance/

code_of_conduct.htm

08_Roche_AR10_ENG_Corporate Governance.indd 90 28.01.2011 09:08:40

91­Roche Business Report 2010Remuneration Report

SummaryRoche’s­success­depends­on­the­abilities­and­dedica-

tion­of­its­people.­Recognition­of­this­forms­the­basis­

of­our­remuneration­policy­and­system.­

One­of­the­primary­aims­of­our­remuneration­policy­is­

to­encourage­a­long-term­focus­and­align­manage-

ment’s­interests­with­the­interests­of­Roche’s­share-

holders­and­holders­of­Roche’s­non-voting­equity­

securities­(NES).

• This­remuneration­report­will­be­submitted­sepa-

rately­for­approval­at­the­2011­Annual­General­

Meeting.• The­remuneration­of­Corporate­Executive­Committee­

members­and­other­senior­Roche­executives­is­

comprised­of:

­ —­ Base­salary­(fixed)

­ —­ Bonus­(variable)

­ —­ ­Stock-settled­Stock­Appreciation­Rights­

(S-SARs)­1­(variable)

­ —­ Performance­Share­Plan­(PSP)­awards­(variable)• Under­the­PSP­2008–2010­no­NES­will­be­awarded.• The­S-SARs­granted­in­2006,­2007,­2008,­2009­

and­2010­have­strike­prices­above­the­NES­price­­

as­of­31­December­2010­and­have­no­value­for­­

the­recipients.­This­can­change­if­Roche’s­future­­

NES­price­improves.• There­has­been­no­change­in­the­base­remunera-

tion­of­the­Board­of­Directors­since­2001.

Please­see­the­rest­of­this­report­for­full­details­2.

Remuneration policyRoche­fundamentally­renewed­its­remuneration­policy­

in­2004­and­reviewed­it­in­2010,­reconfirming­the­­

key­principles.­It­is­part­of­a­framework­of­employee­

policies­aimed­at­motivating­and­retaining­current­

employees,­attracting­talented­new­ones­and­helping­

all­Roche­employees­to­perform­at­consistently­ ­

high­levels.­Our­remuneration­policy­is­designed­to­

foster­value­creation­and­reinforce­a­culture­of­ ­

performance­and­innovation,­and­it­applies­to­non-

managerial­employees­as­well­as­to­managers.­­

The­key­principles­underpinning­this­policy­are:• Focus­on­value­creation• Pay­for­performance• Enabling­employees­to­share­in­the­company’s­

success• Fairness­and­transparency­in­remuneration­decisions

• A­balanced­mix­of­long-­and­short-term­remunera-

tion­components• Market­competitiveness.

Base­pay,­bonuses,­blocked­non-voting­equity­securities­

(NES),­awards­of­Stock-settled­Stock­Appreciation­

Rights­(S-SARs)­and­a­Performance­Share­Plan­(PSP)­

support­these­principles.­These­remuneration­com-­

ponents­are­linked­to­our­company’s­financial­perfor-­

mance­and­commercial­success­and­thus­align­the­­

interests­of­Roche­employees­with­those­of­the­share-

holders.­

The­amount­of­the­separate­components­of­remunera-

tion­for­each­individual­member­of­the­Corporate­­

Executive­Committee­is­shown­in­the­individual­descrip-­

tion­of­the­remuneration­of­the­Corporate­Executive­

Committee­in­this­report.

Base payBase­pay­(cash­payment)­levels­are­determined­

according­to­market­data­of­the­world’s­biggest­phar-

maceuticals­companies­3­for­specific­positions­and­

individual­employees’­abilities,­experience­and­perfor-­

mance­over­time.­Pay­increases­are­linked­to­individual­

performance­and­also­take­into­account­prevailing­

market­conditions­3­and­the­company’s­overall­economic­

situation.­Base­pay­and­pay­increases­are­conclusively­

monitored­and­determined­by­the­Remuneration­­

Committee.

BonusesBonuses­(cash­payment)­are­awarded­in­recognition­­

of­individual­contributions­to­value­creation­which­­

go­beyond­normal­job­expectations,­and­they­are­

meant­to­be­an­incentive­to­create­or­strengthen­new­

business­opportunities­and­strive­for­outstanding­

results.­Bonus­amounts­are­linked­to­Group­or­divi-

sional­business­performance­considering­profit,­­

Remuneration Report

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.

09_Roche_AR10_ENG_Remuneration Report.indd 91 28.01.2011 09:10:09

92­ Roche Business Report 2010 Remuneration Report

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

any­increase­in­the­value­of­Roche’s­non-voting­equity­

securities­between­the­grant­date­and­the­exer-­

cise­date.­Awards­are­allocated­individually­upon­the­

Remuneration­Committee’s­decision­at­its­own­dis-

cretion.­Detailed­information­is­available­on­page­95­

and­page­98­to­99.

Performance Share PlanThe­members­of­the­Corporate­Executive­Committee­

and­other­members­of­senior­management­(cur-­

rently­some­120­individuals­worldwide)­participate­­

in­the­Performance­Share­Plan­(PSP).­The­PSP­­

was­established­in­2002­for­periods­of­three­years­­

each­and­is­based­on­a­three-year­comparison­­

of­the­total­shareholder­return­(TSR)­with­17­com-

peting­companies­3.­In­2010­there­were­three­over-

lapping­performance­cycles,­(PSP­2008–2010,­­

PSP­2009–2011­and­PSP­2010–2012)­of­which­PSP­

2008–2010­closed­on­31 December­2010.

Details­for­the­PSP­2008–2010­calculation­and­addi-­

tional­information­are­set­forth­in­‘Remuneration­­

of­members­of­the­Corporate­Executive­Committee,­

D. Performance­Share­Plan­(PSP)’,­page­95.

Remuneration of the Board of Directors and the Corporate Executive CommitteeEach­year­the­Remuneration­Committee,­which­is­

entirely­comprised­of­independent­external­members­

of­the­Board­of­Directors,­sets­remuneration­for­the­

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)

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

Committee’s decision at

its own discretion

Group performance of

TSR in relation to

TSR performance

of peer set

(see page 95 to 96)

Split in %

a) Group objectives

b) Individual objectives

70%

30%

n.a.

n.a.

–

100%

09_Roche_AR10_ENG_Remuneration Report.indd 92 28.01.2011 09:10:09

93­Roche Business Report 2010Remuneration Report

neration­of­the­Chairman­of­the­Board­of­Directors,­­

the­members­of­the­Corporate­Executive­Committee­­

taking­into­consideration­personnel­changes.­

The­following­pages­provide­detailed­information­on­

the­remuneration­earned­by­each­member­of­the­

Board­of­Directors­and­by­each­member­of­the­Cor-

porate­Executive­Committee­for­2010.

1 Remuneration1.1 Remuneration of members of the Board of Directors |­ In­2010­the­members­of­the­Board­of­

Directors­5­received­the­remuneration­in­cash­shown­

members­of­the­Board­of­Directors­and­the­Corporate­

Executive­Committee­(cash­payments,­bonuses,­

options,­Stock-settled­Stock­Appreciation­Rights­and­

policy­decisions­about­pension­benefits).­The­terms­­

of­the­Performance­Share­Plan­are­determined­annually­

by­the­Board­of­Directors,­acting­upon­recommen-­

dations­from­the­Remuneration­Committee.­The­Remu-

neration­Committee­continuously­tracks­salary­trends­

in­the­market­of­the­world’s­biggest­pharmaceuticals­

companies­3­and­reports­to­the­Board­of­Directors.­In-

formation­on­this­committee’s­remit,­powers­and­its­

procedures­for­making­remuneration­decisions­can­be­

found­in­the­Bylaws­of­the­Roche­Board­of­Directors­4.

Following­the­revision­of­the­remuneration­policy­

including­market­comparisons­with­the­world’s­major­

pharmaceutical­companies­3,­the­Remuneration­

Committee­has­determined­the­bonuses­and­remu-

Remuneration of members of the Board of Directors

Remuneration 2010(in CHF)

Additional compensation 2010for 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 400,000 8 –

A. Hoffmann 400,000 8 –

P. Baschera 300,000 30,000

J. I. Bell 300,000 30,000

W. M. Burns 250,000 9 30,000

L. J. R. de Vink 300,000 30,000

W. Frey 300,000 60,000

D. A. Julius 300,000 60,000

A. D. Levinson 250,000 9 30,000

A. Oeri 300,000 60,000

W. Ruttenstorfer 300,000 30,000

B. Weder di Mauro 300,000 60,000

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.

Remuneration of former members of the Board of Directors

Remuneration 2010(in CHF)

Additional compensation 2010for committee members/chairs 6

(in CHF) Additional special compensation 2010

P. Brabeck-Letmathe 50,000 10 –

H. Teltschik 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.

09_Roche_AR10_ENG_Remuneration Report.indd 93 28.01.2011 09:10:09

94­ Roche Business Report 2010 Remuneration Report

for­his­consulting­work­and­for­his­Board­member-

ship­of­Genentech­amounting­to­342,367­US­dollars­

(356,062­Swiss­francs).

For­2010­the­members­of­the­Board­of­Directors­

received­remuneration­totalling­14,662,589­Swiss­

francs­12­(2009:­18,608,650­Swiss­francs).

No­additional­remuneration­was­paid­to­members­of­

the­Board­of­Directors.

1.2 Remuneration of members of the Corporate Executive Committee |­ The­general­provisions­

assigning­authority­for­decisions­on­Corporate­Exec-

utive­Committee­remuneration­to­the­Remuneration­

Committee­and­to­the­Board­of­Directors­are­outlined­

on­pages­91­to­93­of­this­remuneration­report.­

in­the­table­‘Remuneration­of­members­of­the­Board­

of­Directors’­on­page­93­for­their­Board­activities.­

Remuneration­of­all­members­of­the­Board­of­Direc-

tors­will­again­remain­unchanged­for­2011.

Beside­the­cash­payments,­the­non-executive­mem-

bers­of­the­Board­of­Directors­were­not­awarded­any­

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

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 CommitteeA. Base pay | in CHF

Annual salary2010

Annual salary2009

Annual salary2008

S. Schwan 3,750,000 2,875,002 2,283,340

S. Ayyoubi 1,100,000 725,004 481,670

E. Hunziker 2,000,000 2,000,000 2,000,000

G. A. Keller 1,500,000 1,500,000 1,350,000

D. O’Day 1,000,000 * *

P. Soriot 2,000,000 1,246,878 *

Total 11,350,000

* Not a member of the Corporate Executive Committee.

Due­to­obligations­from­his­former­Roche­assignment­

in­the­US,­Daniel­O’Day­received­the­following­pay-

ments­in­2010:­Mortgage­subsidy­15,000­US­dollars­

(15,600­Swiss­francs),­for­financial/tax­service­­

9,796­US­dollars­(10,188­Swiss­francs).­Daniel­O’Day­

received­in­addition­82,415­Swiss­francs­for­the­

schooling­of­his­children.

For­2010­the­members­of­the­Corporate­Executive­

Committee­received­remuneration­totalling­

38,759,516­Swiss­francs­13­(2009:­54,858,227­Swiss­

francs).

B. BonusAll­members­of­the­Corporate­Executive­Committee­

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.

09_Roche_AR10_ENG_Remuneration Report.indd 94 28.01.2011 09:10:09

95­Roche Business Report 2010Remuneration Report

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)

S. Schwan 3,559,911 3,559,849 2,225,542

S. Ayyoubi 1,068,022 889,993 445,146

E. Hunziker 1,779,990 1,957,935 1,958,480

G. A. Keller 1,335,010 1,334,989 1,335,313

D. O’Day 890,030 * *

P. Soriot 1,779,990 1,401,735 *

Total 10,412,953

* 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(PSP­2008–2010,­PSP­2009–2011­and­PSP­

2010–2012);­As­in­the­previous­year­for­the­PSP­

2007–2009,­the­PSP­2008–2010­ended­on­31 Decem-

ber­2010­without­any­awards­of­targeted­NES.

Under­the­provisions­of­this­plan,­a­number­of­non-

voting­equity­securities­have­been­reserved­for­­

the­participants­in­each­cycle.­The­number­of­se-­

curities­actually­awarded­will­depend­on­whether­­

and­to­what­extent­an­investment­in­Roche­securities­

(shares­and­NES)­outperforms­the­average­return­­

16 See strike prices in table ‘Stock options and S-SARs’, page 101.

Bonus

Bonus for 2010

Bonus for 2009

Bonusfor 2008

Total(in CHF)

Total(in CHF)

Total(in CHF)

S. Schwan 3,000,000 4,675,178 3,000,000

S. Ayyoubi 1,000,000 1,637,909 500,000

E. Hunziker 2,000,000 3,606,905 2,200,000

G.A. Keller 1,000,000 1,813,506 1,000,000

D. O’Day 1,300,000 * *

P. Soriot 3,312,500 ** 2,000,000 *

Total 11,612,500

* 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.

09_Roche_AR10_ENG_Remuneration Report.indd 95 28.01.2011 09:10:09

96­ Roche Business Report 2010 Remuneration Report

on­an­investment­in­securities­issued­by­a­peer­set­­

of­comparator­companies­17.­Comparisons­are­based­

on­the­securities’­market­prices­and­dividend­yields,­

i.e.­on­Total­Shareholder­Return­(TSR).­To­reduce­the­

effect­of­short-term­market­fluctuations,­security­

prices­are­averaged­over­the­three­months­(October­

to­December)­prior­to­the­start­of­a­performance­

cycle­and­over­the­three­months­(October­to­Decem-

ber)­at­the­end­of­the­cycle.­If­Roche­securities­­

perform­as­well­as­or­better­than­those­of­75%­of­the­

peer­set­and,­in­addition,­Roche’s­TSR­increases­­

at­least­10%­during­a­cycle,­the­Board­of­Directors­

can­elect­to­increase­the­maximum­NES­award­­

by­as­much­as­two-fold.­In­the­event­that­an­invest-

ment­in­Roche­securities­underperforms­the­­

average­return­delivered­by­the­peer­companies,­

fewer­or­no­NES­will­be­awarded.­

In­2010­NES­were­reserved­under­the­plan­for­mem-

bers­of­the­Corporate­Executive­Committee­as­­

shown­in­the­table­below.­The­Board­of­Directors­will­

decide­on­the­actual­level­of­NES­or­cash­equivalent­

awards­for­the­cycles­2009–2011­and­2010–2012­

after­the­close­of­the­2011­and­2012­financial­years,­

respectively.­The­aim­of­the­PSP­is­to­provide­­

an­incentive­to­participants­to­achieve­steady­value­

growth.­

At­the­end­of­the­PSP­2008–2010­cycle­(based­on­a­

three-month­moving­average­at­constant­exchange­

rates)­with­distributed­dividends­totalling­13.454­bil-

lion­Swiss­francs­(2008:­3.967­billion­Swiss­francs;­

2009:­4.312­billion­Swiss­francs;­2010:­5.175­billion­

Swiss­francs),­the­TSR­of­the­Roche­securities­­

(NES­and­shares)­ranked­#15,­compared­with­its­

peer­set­of­companies­operating­in­the­same­in-­

dustry.­Therefore,­according­to­the­terms­of­the­plan,­

the­participants­received­none­of­the­originally­ ­

targeted­NES­(see­table­below­for­details).

E. Indirect benefitsEmployer­contributions­made­in­2010­to­social­secu-

rity­schemes,­pension­plans­and­a­Group-wide­

employee­stock­purchase­plan­(Roche­Connect)­in­

respect­of­members­of­the­Corporate­Executive­­

Committee­are­shown­in­the­table­‘Indirect­benefits­

in­2010’­on­page­97.­

Roche­Connect­is­a­voluntary­stock­purchase­plan­

offering­employees­the­opportunity­to­buy­Roche­

non-voting­equity­securities­(NES)­up­to­an­amount­

equal­to­10%­of­their­annual­salary­at­a­20%­dis-

Performance Share Plan (PSP)

Target number of NES for PSP

2010–2012

Target number of NES for PSP

2009–2011

No awards of targeted number

of NES for PSP 2008–2010

2010 18

Total estimated value of

PSP awards (2008–2010,

2009–2011 and 2010–2012)

(value in CHF)

No NES awarded

in 2010 for PSP 2008–2010 (value in CHF)

2009

No NES awarded

in 2009 for PSP 2007–2009 (value in CHF)

S. Schwan 5,991 5,011 – 502,425 – –

S. Ayyoubi 1,597 1,002 – 118,688 – –

E. Hunziker 3,994 4,009 – 365,470 – –

G. A. Keller 2,995 3,006 – 274,046 – –

D. O’Day 1,997 904 – 132,479 – *

P. Soriot 3,994 2,104 – 278,475 – –

Total 20,568 16,036 – 1,671,583 – –

* Not a member of the Corporate Executive Committee. 18 Total estimated value for 2010: PSP 2008–2010: none of the originally targeted NES awarded. PSP 2009–2011 and 2010–2012: 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. ¹⁄³ 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.

17 See footnote 3, page 91.

09_Roche_AR10_ENG_Remuneration Report.indd 96 28.01.2011 09:10:09

97­Roche Business Report 2010Remuneration Report

count.­NES­purchased­under­this­plan­are­subject­to­

a­holding­period,­which­is­four­years­in­Switzerland.

F. Other remuneration, emoluments and loans In­2010­pensions­and­two­payments­for­tax­consult-

ing­services­totalling­2,118,892­Swiss­francs­were­

paid­to­four­former­Corporate­Executive­Committee­

members.­

Members­of­the­Corporate­Executive­Committee­have­

a­maximum­notice­period­of­twelve­months.­In­con-

nection­with­the­new­company­and­personnel­struc-

ture,­members­of­the­Corporate­Executive­Committee­

can­receive­compensation­amounting­to­one­annual­

base­pay­in­case­of­termination­of­the­contract­by­the­

company­(termination­through­no­fault­and­not­based­

on­lack­of­performance)­until­the­age­of­sixty.

G. Highest total remuneration to a member of the Board of DirectorsFranz­B.­Humer­as­the­chairman­was­the­member­of­

the­Board­with­the­highest­total­remuneration­for­

2010­(see­‘Remuneration­of­members­of­the­Board­of­

Directors’,­page­93).­The­Chairman’s­remuneration­

consists­of­base­salary­and­bonus­awards.­As­Chair-

man­of­the­Board­after­the­handover­of­his­execu-­

tive­function­as­CEO­at­the­Annual­General­Meeting­

on­4­March­2008,­he­did­not­receive­any­additional­

S-SARs­or­NES­from­new­PSP­cycles­and­was­­

no­longer­enrolled­in­any­Roche­stock­option­plan­­

or­S-SARs.

According­to­the­announcement­in­the­Annual­

Report­2009,­the­Board­of­Directors­reduced­the­

Chairman’s­base­salary­in­2010­to­4­million­Swiss­

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)

S. Schwan 456,122 351,284 89,588 8,827

S. Ayyoubi 986,100 137,919 3,000 6,118

E. Hunziker 622,401 203,889 50,004 6,225

G. A. Keller 529,325 177,250 37,500 –

D. O’Day 304,350 56,524 7,294 5,918

P. Soriot 311,505 273,067 – –

Total 3,209,803 1,199,933 187,386 27,088

19 MGB: Stiftung der F. Hoffmann-La Roche AG für Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational pension benefits).

20 AHV/IV/ALV: Swiss social security programmes providing retirement, disability and unemployment benefits.

Highest total remuneration to a member of the Board of Directors

2010 (in CHF)

2009 21

(in CHF)

Salary

Bonus

Total

4,507,500

2,200,000

6,707,500

6,030,000

4,992,018

11,022,018

Pension funds/MGB 22 2,995,801 2,995,109

Roche Connect 75,000 75,000

Total (value) 10,033,431 23 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 für 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).

09_Roche_AR10_ENG_Remuneration Report.indd 97 28.01.2011 09:10:10

98­ Roche Business Report 2010 Remuneration Report

Highest total remuneration to a member of the Corporate Executive Committee

2010 (in CHF)

2009 24

(in CHF)

Salary

Bonus

Total

3,750,000

3,000,000

6,750,000

2,875,002

4,675,178

7,550,180

S-SARs

(Black-Scholes value 25 at grant minus 11%) 3,559,911 3,559,849

Pension funds/MGB 26 456,122 456,941

Roche Connect 89,588 69,790

Estimated value of targeted (not awarded) NES according

to Performance Share Plan 27

(* 2009–2011, 2010–2012, no awards/value of NES of 2008–2010)

Total 502,425 * 408,793 24

Total (value) 11,396,873 28 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 für 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(as­of­1 April­2010)­and­determined­at­the­­

end­of­2009­that­his­total­remuneration,­including­

bonuses,­contributions­to­pension­funds­and­ad-­

ditional­compensation­(expense­allowance)­will,­

depending­on­the­achievement­of­objectives,­not­

exceed­the­maximum­amount­of­11­million­Swiss­

francs.­The­shareholders­agreed­to­this­maximum­

amount­with­the­approval­of­the­Remuneration­

Report­2009­at­the­Annual­General­Meeting­on­

2 March­2010.­The­effective­total­remuneration­­

was­8.8%­below­of­the­determined­maximum­and­

30.1%­lower­than­2009.

H. Highest total remuneration to a member of the Corporate Executive CommitteeSeverin­Schwan­as­CEO­was­the­member­of­the­Cor-

porate­Executive­Committee­with­the­highest­total­

remuneration­for­2010­(see­‘Remuneration­of­mem-

bers­of­the­Corporate­Executive­Committee’,­A.–F.,­

page­94­to­page­97).­

No­additional­remuneration­was­paid­to­current­or­

former­members­of­the­Corporate­Executive­Commit-

tee.

1.3 Security holdings |­ Directors­André­Hoffmann­

and­Andreas­Oeri­and­members­of­the­founders’­

families­who­are­closely­associated­with­them­belong­

to­a­shareholder­group­with­pooled­voting­rights.­­

At­the­end­of­2010­this­group­held­80,020,000­shares­

(50.01%­of­issued­shares).­Detailed­information­

about­this­group­can­be­found­in­the­Finance­Report,­

Note­33­to­the­Roche­Group­Consolidated­Financial­

Statements­(‘Related­parties’,­page­129)­and­in­­

the­Note­4­to­the­Financial­Statements­of­Roche­

Holding­Ltd­(‘Significant­shareholders’,­page­154).­In­

addition,­as­of­31­December­2010­the­members­­

of­the­Board­of­Directors­and­persons­closely­asso-

ciated­with­them­and­the­members­of­the­Executive­

Committee­and­persons­closely­associated­with­­

them­held­shares­and­NES­as­shown­in­the­table­on­

page­100.

1.4 Stock options/Stock-settled Stock Apprecia-tion Rights (S-SARs) |­ At­31­December­2010­Franz­

B.­Humer­and­William­M.­Burns­(being­the­only­­

members­of­the­Board­of­Directors­holding­options­

and­as­of­1­January­2005­S-SARs­due­to­their­ ­

former­positions)­and­the­members­of­the­Corporate­

Executive­Committee­held­options­and­Stock-­

settled­Stock­Appreciation­Rights­(S-SARs;­first­

09_Roche_AR10_ENG_Remuneration Report.indd 98 28.01.2011 09:10:10

99­Roche Business Report 2010Remuneration Report

The­strike­prices,­expiry­dates­and­grant­values­­

for­options­and­S-SARs­are­shown­in­the­table­on­

page­101.­The­numbers­of­options­and­S-SARs­­

as­calculated­at­the­time­of­issue­have­been­entered­

as­values­in­the­table­‘Remuneration­of­members­­

of­the­Corporate­Executive­Committee,­C.­Stock-set-

tled­Stock­Appreciation­Rights­(S-SARs)’­on­page­95.

introduced­on­1­January­2005)­as­shown­in­the­table­

‘Stock­options­and­S-SARs’­on­page­101.

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

financially­from­any­increase­in­the­value­of­Roche’s­

NES­between­the­grant­date­and­the­exercise­date.­

The­strike­price­for­S-SARs­under­the­terms­of­this­

multi-year­plan­was­the­closing­price­for­Roche­NES­

on­the­first­day­of­trading­after­the­Roche­Annual­

Media­Conference.­All­S-SARs­vest­within­three­years­

of­the­grant­date:­i.e.­one-third­vest­at­the­end­of­­

one­year,­one-third­at­the­end­of­two­years,­and­one-

third­at­the­end­of­three­years.­Vested­S-SARs­­

must­be­exercised­(converted­into­NES)­within­seven­

years­of­the­grant­date,­and­unexercised­S-SARs­

lapse­without­compensation.­The­fair­value­of­the­

options­is­calculated­at­the­date­of­issue­using­the­

Black-Scholes­formula­and­as­if­the­options­were­

tradable,­with­an­11%­deduction­for­the­average­two-

year­vesting­period.

09_Roche_AR10_ENG_Remuneration Report.indd 99 28.01.2011 09:10:10

100­ Roche Business Report 2010 Remuneration Report

Security holdings (at 31 December 2010)

Shares (number)

NES (number)

Close relatives’

security holdings (number/type)

Others (number)

Board of Directors

F. B. Humer 3 197,215 – S-SARs see 1.4

2500 ROGTPK Tracker-plus Cert.

Zürcher Kantonalbank on

Roche Genussschein (ROG) as underlying,

Valor 10 716 273, ISIN: CH0107162734

B. Gehrig 50 150 – –

A. Hoffmann –* 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 1 – – –

J. I. Bell 300 1,647 – –

W. M. Burns 3 79,254 – Stock options, S-SARs see 1.4

L. J. R. de Vink – – – 31,600 American Depository Receipts (ADR),

RHHBY, US ISIN: US7711951043

W. Frey 72,500 – – –

D. A. Julius 350 – 1,550 NES –

A. D. Levinson – – – –

A. Oeri –* 307,793 250,000 UBS Long/Short Certificate

linked to Roche Bearer Shares/

Roche Non-Voting Equity securities

(Valor: 10 690 162, ISIN: CH0106901629)

W. Ruttenstorfer 1,000 – – –

B. Weder di Mauro 200 – – –

Total 74,407 586,259 1,550 NES

Corporate Executive Committee

S. Schwan 3 35,978 570 NES Stock options, S-SARs see 1.4

S. Ayyoubi 3 12,213 – Stock options, S-SARs see 1.4

E. Hunziker 3 62,458 – Stock options, S-SARs see 1.4

G. A. Keller 1,253 31,278 70 NES S-SARs see 1.4

D. O’Day 3 220 – S-SARs see 1.4

P. Soriot 2 6,314 – S-SARs see 1.4

Total 1,267 148,461 640 NES

* Shares held by the shareholders group with pooled voting rights not listed.

09_Roche_AR10_ENG_Remuneration Report.indd 100 28.01.2011 09:10:10

101­Roche Business Report 2010Remuneration Report

Stock options and S-SARs

Number of stock options and S-SARs held by current and former membersof 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 Execu-

tive Committee

S. Schwan 154,443 175,362 105,576 29,190 15,696 4,983 30 1,864 487,114

S. Ayyoubi 46,335 43,842 21,117 3,243 2,517 3,957 2,360 123,371

E. Hunziker 77,223 96,450 92,907 48,651 26,160 34,074 20,915 396,380

G. A. Keller 57,918 43,842 63,345 24,327 15,696 – – 205,128

D. O’Day 38,613 21,762 20,133 10,269 5,856 – – 96,633

P. Soriot 77,223 69,051 63,345 29,190 23,544

+

21,636

– – 283,989

Total 451,755 450,309 366,423 144,870 111,105 43,014 25,139 1,592,615

Former Corporate

Executive Commit-

tee members

F. B. Humer None 31 None 31 None 31 48,651 52,317 42,589 – 143,557

W. M. Burns None 32 109,602 105,576 48,651 26,160 34,074 – 324,063

Strike price (CHF) 175.50 145.40 195.80 229.60 195.00

196.50

123.00 129.50

Market price per NES

on 31 December 2010

(CHF)

137.00

Expiry date 4.2.2017 5.2.2016 31.1.2015 8.2.2014 2.2.2013

2.1.2013

3.2.2012 3.2.2011

Grant value per

option and

(starting in 2005)

per S-SAR in CHF

(Black-Scholes value

minus 11%)

23.05 20.30 21.08 36.59 34.02

37.02

20.89 31.92

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.

09_Roche_AR10_ENG_Remuneration Report.indd 101 28.01.2011 09:10:10

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.

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 102 28.01.2011 11:54:14

103­Roche Business Report 2010Corporate Responsibility

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 approachWe­focus­on­the­corporate­responsibility­issues­that­

are­most­relevant­to­our­stakeholders­and­have­the­

greatest­potential­to­impact­our­business.­We­monitor­

our­progress­using­key­performance­indicators­(KPIs)­

for­each­issue.­During­2010­we­revised­our­KPIs­to­

align­them­with­our­strategic­framework,­ensure­they­

support­our­long­term­business­strategy­and­goals,­

and­further­integrate­responsible­behaviour­through­

out­the­business.

The­updated­KPIs­measure­the­value­we­create­for­

four­main­stakeholder­groups:­employees,­patients,­

investors­and­society.­We­report­against­several­of­

these­KPIs,­plus­additional­performance­measures,­

throughout­this­Annual­Report­and­on­our­website.­

In­2010­we­were­named­‘Supersector­Leader’­in­

healthcare­for­the­second­year­running­in­the­Dow­

Jones­Sustainability­Indexes­(DJSI),­in­recognition­­

of­our­commitment­to­sustainable­practices.­We­use­

this­index­and­other­analyses­to­evaluate­our­perfor­

mance,­and­to­identify­areas­where­we­can­improve­

or­learn­from­others.­

Managing corporate responsibilityAt­Roche,­corporate­responsibility­is­an­integral­part­

of­everyone’s­work­and­is­coordinated­by­our­Cor­­

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

Corporate responsibility in brief

Roche management of sustainability

Board of Directors

Key material sustainability topics

Board Committee for Corporate Governance and Sustainability

Corporate Sustainability Committee (CSC)Core Team and Working Team

A network of more than 150 colleagues from all relevant Corporate and Divisional Functions

Corporate Executive Committee

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 103 28.01.2011 11:54:14

104­ Roche Business Report 2010 Corporate Responsibility

We­aim­to­create­value­for­our­stakeholders­through­

the­medical­benefits­our­products­provide,­our­ ­

daily­business­activities,­and­specific­activities­with­

each­group.­We­regularly­seek­stakeholders’­views­

when­formulating­business­strategy,­setting­priorities­

including­those­relating­to­Corporate­Responsibil­­

ity­(CR),­and­throughout­product­development.­We­

believe­in­two­way­dialogue­where­both­parties­learn­

from­each­other.­The­table­shows­examples­from­

2010,­and­there­is­further­information­on­our­website.

More on the Web• Stakeholder engagement:

www.roche.com/stakeholder_engagement

Stakeholder engagement

Stakeholder engagement in 2010

Stakeholder group Examples of 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

Healthcare

professionals

(HCPs)

— Market research and needs assessment

among HCPs in US and top five EU countries

— Virtual conference services for HCPs

— Improved understanding of customer needs

— Over 3,000 HCPs participated in American

Society of Clinical Oncology virtual conference

Governments,

regulators and

industry

— Participated in industry initiatives on topics

such as biosimilars

— Developed guidelines for misuse of com-

pounds with the World Anti-Doping Agency

— Development of effective public health poli-

cies and regulations, and shared learnings

— Roche and WADA signed a memorandum of

understanding

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

— Development of tools to assess cost-

effectiveness

— Improved understanding among payers of

the value of our products and services

Employees — Group-wide programmes to promote our

strategic framework

— Ran management town hall meetings at

major sites

— Increased awareness and understanding of

the strategic framework among the global

work force

Investors — Attended over 70 investor meetings and

conferences

— Improved investor understanding of our busi-

ness model, strategy and late-stage pipeline

Suppliers and

business partners

— Worked with key suppliers to commit to our

new Supplier Code of Conduct

— Began aligning supplier audit protocols with

those of other PSCI members

— Minimised supply chain risks

— Extended supplier audits to business critical

service providers (indirect spend)

Non-governmental

organisations

— Worked with the Access to Medicines Index

on its 2010 ranking

— Engaged with Amnesty International,

Declaration of Bern and others on organ

donation in China

— Ensure recognition for our access

programmes

— Launched project with the Chinese Ministry

of Health to establish an organ donation

system

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

— Help to reduce health inequalities

— Maintain positive relationships with

communities

— Support the next generation of scientists

Media — Over 120 corporate press releases and trade

news updates

— Maintain a positive media image and protect

our reputation

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 104 28.01.2011 11:54:14

105­Roche Business Report 2010Corporate Responsibility

Our­health­economists­and­reimbursement­managers­

work­with­national­and­local­health­authorities­to­

demonstrate­the­economic­and­health­benefits­of­our­

products­and­services­within­each­healthcare­sys­

tem.­We­engage­with­payers­and­providers­through­

out­a­product’s­lifecycle,­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 healthcareThe­provision­of­healthcare­is­a­shared­responsibility,­

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

Excellence­in­science­is­furthering­our­understanding­

of­the­mechanisms­of­disease.­We­are­using­this­

knowledge­to­develop­medically­differentiated­new­

therapies­and­help­improve­patients’­quality­of­life.­

Furthermore,­by­fitting­treatments­to­patients­and­

achieving­better­outcomes,­personalised­healthcare­

makes­more­efficient­use­of­healthcare­budgets.

We­can­increase­this­contribution­to­society­by:• demonstrating­the­medical­and­economic­value­

of­our­products• helping­to­improve­global­access­to­healthcare• running­safe­and­ethical­clinical­trials• ensuring­patient­safety­• building­relationships­with­patients­groups• listening­and­responding­to­customers’­views.

The value of medicines and diagnosticsHealthcare­payers­have­to­balance­medical­need­and­

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

patients’­return­to­work.­The­associated­savings­are­

also­taken­into­account.­Additionally,­we­consider­

local­reimbursement­models,­population­size­and­

prevalence­of­the­disease,­and­level­of­unmet­need.

Patients

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 105 28.01.2011 11:54:15

106­ Roche Business Report 2010 Corporate Responsibility

develops­new­markets­for­our­products­and­services­

in­the­longer­term.

In­2010­we­joined­forces­with­the­International­

Atomic­Energy­Agency­(IAEA)­to­launch­EDUCARE,­

a­major­new­programme­to­improve­cancer­care­­

in­Africa.­Cancer­kills­more­people­each­year­in­devel­­

oping­countries­than­AIDS,­malaria­and­tuberculo­­

sis­combined,­yet­there­is­very­little­oncology­invest­

ment.­The­programme­is­establishing­an­online­­

university­offering­comprehensive­training­in­several­

areas­of­cancer­management,­and­a­network­for­­

doctors­to­share­knowledge­and­experience­with­their­

peers.­Roche­is­providing­financial­support,­con­­

and­impactful­ways­to­make­a­long­term­difference­to­

healthcare.­The­illustration­shows­some­of­our­pro­

grammes­to­increase­access­to­healthcare,­and­there­

are­further­details­on­our­website.

Access for those most in need |­ The­World­Health­

Organization­(WHO)­lists­many­of­our­drugs­as­

essential­medicines.­These­and­our­other­products­

are­available­through­doctors,­hospitals,­laborato­­

ries­and­pharmacies­in­over­160­countries­—­mainly­

in­those­with­established­healthcare­systems.­ ­

However,­around­a­third­of­the­world’s­population­

does­not­have­adequate­access­to­healthcare.­

Poorer­countries­suffer­the­highest­levels­of­disease­

and­have­the­weakest­healthcare­systems.­Many­face­

a­critical­shortage­of­healthcare­professionals­and­

facilities,­as­well­as­low­levels­of­understanding­of­the­

causes,­prevention­and­treatment­of­disease.­We­­

aim­to­provide­sustainable­access­to­healthcare­in­

these­countries­based­on:• Sustainable­patent­and­pricing­policies• Partnerships­with­governments,­NGOs­and­others• Education,­training­and­knowledge­transfer• R­&­D­into­diseases­with­unmet­medical­needs.

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

estab­lish­programmes­that­raise­awareness,­train­

healthcare­providers,­and­improve­infrastructure.­This­

approach­increases­the­capabilities­of­healthcare­

systems­so­they­can­start­to­sustainably­meet­patient­

needs.­This­increases­access­to­healthcare,­and­

40

47,000

1,100,000

19,500

new drug leads selectedby OneWorld Health to investigate as potential new treatments for childhood diarrhoea

patients received free medicines through the Genentech Access to Care Foundation

infants tested for HIV through the AmpliCare Initiative

employees participated in the annual Children’s Walk to support care centres and provide educational opportunities for AIDS orphans in Malawi, as well as local community activities

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 106 28.01.2011 11:54:15

107­Roche Business Report 2010Corporate Responsibility

patients­and­their­families.­In­2010­we­took­part­in­

workshops­for­healthcare­workers­in­Cameroon­­

and­Uganda,­and­participated­in­the­Diabetes­Leader­

ship­Forum­Africa­2010.­More­than­260­participants­

from­32­sub­Saharan­African­countries­attended­this­

event,­to­discuss­the­appropriate­response­to­the­

increasing­burden­of­diabetes­and­other­non­commu­

nicable­diseases­in­Africa.

A­number­of­our­partnerships­improve­research­into­

neglected­diseases­of­the­developing­world.­For­

example,­in­2010­we­launched­a­research­fellowship­

together­with­the­WHO’s­programme­for­research­

and­training­into­tropical­diseases­(TDR),­the­Gates­

sultation­and­expertise.­In­2010­we­identified­suitable­

sites­for­pilot­programmes­in­Ghana,­Zambia,­Tan­­

zania,­and­Uganda,­where­we­will­begin­training­pro­

grammes­in­2011.

We­also­have­a­number­of­programmes­for­increasing­

access­to­diagnostic­tests.­We­are­a­partner­in­Novo­

Nordisk’s­Changing­Diabetes­in­Children­programme,­

along­with­the­World­Diabetes­Foundation­and­sev­

eral­African­governments.­More­than­450­children­in­

Africa­were­enrolled­in­the­programme­by­the­end­­

of­2010.­They­received­education­in­diabetes­care­and­

access­to­insulin­and­diabetes­supplies­provided­­

by­Roche.­We­also­help­to­train­healthcare­workers,­

553–12

83%

11,000,000

13

450 2,000

4

45,000

countries where Roche does not file or enforce patents for any of its medicines

months employees can go on secondment to contribute their skills and expertise to help make a difference in health services in LDCs

of HIV-infected patients eligible for no-profit or reduced-price Roche medicines

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

AIDS technology agreements reached with companies in LDCs and sSA for on-site technical help to manufacture generic versions of Roche’s HIV medicine saquinavir

children supported in sSA in monitoring their diabetes through a partnership with Novo Nordisk’s ‘Changing Diabetes in Children’ programme

orphaned children given primary healthcare plus other services and assistance through Re & Act and support to the UNICEF & ECPP AIDS Orphan programmes

pilot countries selected for online university courses in oncology under the EDUCARE initiative in sSA, in partnership with IAEA

people reached each year in rural South Africa by the Phelophepa Healthcare train

employees participated in the annual Children’s Walk to support care centres and provide educational opportunities for AIDS orphans in Malawi, as well as local community activities

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 107 28.01.2011 11:54:15

108­ Roche Business Report 2010 Corporate Responsibility

such­as­cancer,­hepatitis­C­and­rheumatoid­arthritis.­

In­2010­we­negotiated­commercial­access­pro­

grammes­in­middle­income­countries­for­our­hepatitis­

drug­Pegasys,­as­well­as­for­our­cancer­drugs­

­Avastin,­Herceptin,­MabThera­and­Tarceva.­

For­example,­India­has­a­high­hepatitis­C­infection­

rate,­coupled­with­low­levels­of­diagnosis­and­limited­

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.

Every­country’s­healthcare­system­is­at­a­different­

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 treat-

ment, 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.

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 %

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 108 28.01.2011 11:54:16

109­Roche Business Report 2010Corporate Responsibility

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 1,429 1,552 1,596

Number of healthcare

centres involved 30,006 31,447 29,886

Number of patients in

phase I–IV clinical trials 327,804 302,063 277,674

Roche and Genentech.

People­can­search­for­clinical­trials­to­take­part­in­­

or­learn­from­the­results­of­completed­trials­at­­

www.roche­trials.com.­As­of­31­December­2010­­

the­website­contained­details­of­842­protocols­­

and­385­trial­results.­These­studies­cover­more­than­

100­conditions­including­Alzheimer’s­disease,­

asthma,­around­30­cancers,­cardiovascular­disease,­

depression,­diabetes,­hepatitis,­HIV/AIDS,­influenza­

and­obesity.­The­website­had­194,241­visitors­in­

2010.­Details­of­our­clinical­trials­are­also­available­

through­the­International­Federation­of­Pharma­­

ceutical­Manufacturers­and­Associations­(IFPMA)­

clinical­trials­portal,­and­the­US­National­Institutes­­

of­Health’s­global­registry.­

We­store­biological­material­used­in­clinical­trials,­

such­as­tissue,­organs,­blood­and­other­bodily­fluids,­

in­human­specimen­repositories,­or­‘biobanks’.­ ­

This­material­is­invaluable­for­learning­more­about­

diseases­and­exploring­possible­treatments.­ ­

They­also­contain­sensitive­information­about­the­

person­providing­the­sample.­We­are­dedicated­­

to­protecting­donors’­privacy­and­ensuring­they­are­

fully­informed­about­how­their­sample­and­data­­

will­be­used­before­they­agree­to­take­part­in­a­trial.­

We­apply­equally­strict­measures­to­all­personal­data­

about­customers,­suppliers­and­employees,­in­line­

with­our­directive­on­the­protection­of­personal­data.

access­to­treatment.­Counterfeit­medicines­present­

further­challenges.­Our­Pharmaceuticals­and­Diag­

nostics­Divisions­have­set­up­screening­camps,­blood­

banks­and­dialysis­clinics­to­help­overcome­these­

problems.­We­have­also­engaged­supply­chain­secu­

rity­experts­Kezzler­to­provide­encryption­software­

that­enables­consumers­to­verify­that­their­medicine­

is­genuine­when­they­buy­it,­using­their­mobile­phone.­

Cost­assistance­programmes­are­available­in­India­

based­on­the­recommendation­of­the­treat­ing­doctor.­

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 trialsClinical­trials­are­essential­to­demonstrate­that­new­

medicines­are­safe­and­effective­and­that­diagnostic­

tests­provide­useful­data.­They­also­provide­impor­

tant­information­about­the­cost­effectiveness­of­­

a­treatment­and­how­this­improves­quality­of­life.­In­

addition,­trials­provide­participating­hospitals­with­

educational,­financial­and­medical­support,­and­give­

patients­access­to­the­latest­therapies.­Patients­

receive­free­treatment­during­the­trial,­and­until­the­

drug­is­available­through­the­healthcare­system­if­­

no­approved­alternative­exists.­

We­have­strict­policies­and­processes­to­ensure­the­

safety,­well­being­and­legal­rights­of­people­taking­

part­in­clinical­trials.­In­addition,­we­do­not­perform­

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 109 28.01.2011 11:54:16

Disease area Oncology

Indication First-line metastatic colorectal cancer

Trial AVEX (Avastin in the Elderly with Xeloda), MO19286

No. of patients 280 — fully recruited

No. of study sites 54

No. of countries 10

Daisy D., St. Michael’s Hospital, Oncology Clinical Research Group, Toronto

Can I handle

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 110 28.01.2011 11:54:43

Jane A., Senior International Clinical Trial Manager, Roche Basel

this ?

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 111 28.01.2011 11:55:07

Avastin

Creating value for patients means doing post-approval trials so an effective medicine can benefit an even wider population

Phase IV clinical trials with Avastin in advanced colorectal cancer

Duration of treatment

New chemotherapy combinations

Special populations Number of patients in trial

* First results expected

Increasing the number of patients who can benefit from Avastin

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 evalu-ating 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.

ML18147 (TML)

ML19033 (NordicACT)

MO18420 (DREAM)

MO19286 (AVEX)

ML21662 (TRIBE)

MO18725 (OLIVIA)

2012 * 820

249

780

640

760

450

80

280

2012 *

2013 *

2012 *

2014 *

2014 *

ML20907 (CAIRO3)

ML21768 (AIO0207)

2013 *

2013 *

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 112 28.01.2011 11:55:08

113­Roche Business Report 2010Corporate Responsibility

We­investigate­all­reported­side­effects­to­find­out­

whether­our­product­caused­them.­If­there­is­a­link,­

we­re­evaluate­whether­the­benefits­of­the­medicine­

or­test­still­outweigh­the­risks.­We­also­have­proce­

dures­in­place­to­promptly­inform­patients,­physicians,­

healthcare­providers­and­regulators­of­any­new­prod­

uct­safety­information.­We­update­product­labelling­

and­information­with­new­safety­information­as­

required­and,­when­necessary,­write­to­healthcare­

providers­with­updated­advice­on­the­use­of­our­

products.

We­have­a­strict­product­recall­process­to­ensure­we­

can­withdraw­products­rapidly­on­the­rare­occasions­

that­quality­problems­do­arise.­In­2010­there­were­no­

recalls­involving­the­public.

Patient advocacyTransparency­is­essential­when­pharmaceutical­com­

panies­partner­with­patient­advocates.­We­declare­

our­patient­group­partnerships­on­our­website,­along­

with­a­short­description­of­the­partnership’s­activi­

ties.­We­also­declare­significant­or­meaningful­non­­

financial­support,­as­guided­by­the­European­Fed­­

eration­of­Pharmaceutical­Industries­and­Associations­

(EFPIA).­Our­position­statement­and­guidelines­for­

working­with­patient­groups­describe­our­approach­

and­are­available­on­our­website.­

Examples­of­our­patient­advocacy­in­2010­include­

running­workshops­in­Frankfurt,­Germany,­and­Brus­

sels,­Belgium,­to­help­patient­groups­improve­the­

support­they­provide­people­living­with­disease.­In­

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 safetyAny­medicine­may­cause­side­effects­in­some­

patients.­Our­priority­is­to­make­sure­the­benefits­

­outweigh­the­risks.­We­have­robust­processes­in­­

all­countries­to­monitor­how­patients­react­to­our­

­medicines.­We­regularly­analyse­medicines­against­

various­reference­databases­to­help­us­spot­poten­­

tial­safety­risks.­All­products­in­clinical­development­

have­a­safety­management­plan,­and­all­marketed­

medicines­have­a­risk­management­plan­reviewed­

and­approved­by­major­health­authorities.

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.

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 113 28.01.2011 11:55:09

114­ Roche Business Report 2010 Corporate Responsibility

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 Health’s global registry: www.clinicaltrials.gov

France,­the­Roche­Foundation­organised­a­Chronic­

Disease­Meeting­in­May­2010.­This­event,­which­will­

now­be­held­annually,­brought­together­almost­­

300­patients,­patient­representatives­and­healthcare­

professionals­to­discuss­ways­to­improve­quality­of­­

life­for­patients­with­chronic­disease.­The­Foundation­­

also­launched­a­new­patient­testimony­website,­ ­

www.lavoixdespatients.fr,­which­publishes­patient­

experiences­and­shares­them­through­links­to­­

social­networks­such­as­Facebook­and­Twitter.­

Patient education and awarenessOur­responsibilities­do­not­stop­once­we­have­sup­

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

Roche­received­JDRF’s­Chancellor’s­Award­for­­

this­work.

In­addition,­we­help­healthcare­professionals­and­

patient­groups­to­produce­newsletters­and­magazines,­

information­packs,­guides­for­friends,­family­and­­

caregivers.­We­also­supply­needle­boxes,­counselling­

hotlines­and­education­programmes.­For­example,­­

we­have­partnered­with­the­European­Genetics­Alli­

ances­Network­to­produce­a­series­of­simple­leaflets­

in­several­languages,­which­answer­patients’­ques­

tions­on­topics­such­as­clinical­trials­and­bio­banks.­

These­are­available­at­www.biomedinvo4all.com.­­

In­2010­we­added­leaflets­on­Personalised­Health­

care­and­the­Social­and­Psychological­Aspects­­

of­Diagnostic­Testing.

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 114 28.01.2011 11:55:09

115­Roche Business Report 2010Corporate Responsibility

Our­pursuit­of­excellence­in­science­provides­direc­

tion­and­purpose­during­challenging­economic­times.­

More­than­ever,­we­rely­on­our­people­to­develop­­

and­deliver­innovative­products­to­patients­and­there­

by­contribute­to­the­future­of­healthcare.

It­is­the­commitment­of­our­80,653­employees,­and­

their­demonstration­of­our­values­of­integrity,­courage­

and­passion,­that­make­a­real­difference­in­the­lives­

of­patients.

As­a­company­dedicated­to­innovation­and­science,­­

a­highly­skilled,­passionate­and­motivated­workforce­

is­at­the­core­of­who­we­are­and­what­we­do.­We­

want­to­be­a­truly­great­place­to­work­for­today’s­most­

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,­recognising­and­retaining­the­right­­people.­

People

Selected external awards and recognitions (with top rankings)

Rank 2010 Award Roche site

1 Science Magazine’s Top Employer Survey Genentech

1 Universum — The Swiss Professional Survey 2010

‘Health/medicine sector’

Roche Basel

1 CRF Institute

‘Top employer for engineers’

Roche Germany

1 CRF Institute

‘Top employer for Switzerland’

Roche Switzerland

3 San Francisco Business Times

‘Best Places to Work in the Bay Area’

Genentech

4 Fast Company Magazine’s

‘World’s Most Innovative Companies 2010’

Genentech

4 San Diego’s Best Places to Work Genentech

4 Great Places to Work — Denmark

Best Pharma Company/Best Multinational Company/

Best medical company

Roche Denmark

5 Science Magazine Top Employers Survey Roche Basel

7 Fortune’s ‘100 Best Companies to Work For’

‘Large Companies’

Genentech

8 Great Places to Work — Austria

‘Best Employers with 50–250 Employees’

Roche Vienna

8 Great Places to Work — Spain

‘Best Workplaces 2010’

Roche Madrid

9 JRA Best Workplaces — New Zealand

‘Small to Medium Sized Business Category’

Roche Auckland

9 Great Places to Work — Urugay

‘1 st place amongst pharmaceutical companies’

Roche Urugay

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 115 28.01.2011 11:55:09

116­ Roche Business Report 2010 Corporate Responsibility

has­been­named­best­employer­in­the­healthcare­

industry­by­Science­magazine­for­eight­of­the­last­nine­

years,­and­in­2010­Roche­rose­from­17­th­to­5­th­place­

in­the­same­survey.­Survey­participants­gave­both­

companies­high­ratings­for­being­innovative­leaders­

in­the­healthcare­industry­and­for­doing­important,­

high­quality­research.­Activities­in­the­field­of­social­

responsibility­were­also­rated­highly­and­contrib­­

uted­to­the­positive­results.­Roche­was­also­recog­

nised­in­rankings­by­Universum,­Top­Employer,­and­

the­Great­Place­to­Work­Institute­™.­

Championing diversity In­2010­Roche’s­Executive­Committee­committed­to­

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

Women in total

workforce 46% 46% 46%

Women in management 37% 37% 37%

Women in top

120 executives 15% 9% 8%

Women in

key positions 16% 13% NA

Gender­is­only­one­element­of­our­commitment­to­

diversity,­and­we­do­not­tolerate­discrimination­of­any­

form,­as­stated­in­our­global­Employment­Policy.­­

Our­approach­is­to­embed­diversity­in­all­our­main­

processes­and­objectives.­Our­Human­Resources­

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

Programmes to ensure diversity in the workforce

Global and local leadership programmes to­develop­inclusive­leadership­behaviours­and­foster­a­culture­of­diversity

Sponsored employee affinity groups, associations and net-works to­provide­support,­exchange­of­ideas­and­share­learnings

Programmes to improve under-standing of­the­needs­of­employees­with­disabilities­and­to­increase­number­of­hires

Mobility programmes to­promote­international­transfer­of­employees­across­the­globe

Attraction and sourcing pro-cesses and standards to­ensure­diversity­of­candidate­pools

Programmes focusing on older employees which­value­their­expierience­and­retain­knowledge

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 116 28.01.2011 11:55:11

117­Roche Business Report 2010Corporate Responsibility

applications­*­for­specific­jobs,­and­registered­

167,800­new­candidates­*­to­the­Roche­Group­Talent­

Pool­—­a­database­of­job­seekers­interested­in­

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.­

function­has­measures­and­goals­in­all­key­processes­

relating­to­recruiting,­developing,­promoting­and­­

recognising­employees,­to­support­a­diverse­work­

force­and­inclusive­environment.­In­the­context­of­­

our­diversity­goal,­we­have­extended­our­range­of­

programmes­and­initiatives­to­encourage­and­safe­­

guard­employee­diversity,­and­support­a­number­of­

employee­associations­and­networks.­These­include­

Roche­Basel’s­Family­and­Careers­and­Women­in­

Leadership­groups,­Genentech­Women­Profession­­

als­(GWP)­and­Genentech­Out­&­Equal­(GO­&­E),­

Strengthening­Ties­Across­Generations­Seniors­

(STAGES),­and­African­Americans­in­Biotechnology­

(AAIB).­

Fostering innovationInnovation­is­the­core­of­our­business,­and­is­driven­

by­diverse­approaches,­ideas­and­experiences.­Our­

talent­management­processes­are­all­designed­to­

recognise­and­drive­innovation.­In­addition­we­con­

duct­a­broad­array­of­specific­and­localised­activi­­

ties.­Our­Pharma­Research­and­Early­Development­

research­organisation­introduced­a­scientific­career­

ladder­in­2010­and­sponsored­a­major­recognition­

programme,­the­Leo­Sternbach­Awards­for­Innovation­

in­Chemistry.­This­year,­the­award­recognised­

Dr Brad­Graves­and­his­team­for­new­classes­of­com­

pounds­in­the­area­of­cancer­treatment.­Research­

organisations­at­both­Roche­and­Genentech­partici­

pate­in­internal­and­external­science­conferences­

and­write­publications­in­prestige­journals.­In­2010­

Roche­published­more­than­1,200­sientific­articles,­­

of­which­nearly­60­were­in­high­impact­journals­such­

as­Nature,­Cell,­Science­and­the­New England Jour-

nal of Medicine.­Our­Post­doc­fellowship­programme­

awards­grants­to­our­best­scientists,­enabling­them­­

to­conduct­exploratory­research,­and­strengthening­

our­R­&­D­talent­pipeline.­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 * Excluding Genentech, Ventana and Chugai.

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 117 28.01.2011 11:55:11

118­ Roche Business Report 2010 Corporate Responsibility

Leadership pipeline

2010

Number of high-potential leaders 4,681

Percentage of women

high-potential leaders 38%

Percentage of women

in leadership programmes 32%

Internal staffing rate of key positions

(Top 120) 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

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

Total training

investment

(million CHF) 150 146 139

Training spend per

employee (CHF) 1,829 1,794 1,734

Total number of

training hours (million) 1.87 2.16 2.4

Average training hours

per employee 23 26 29

Number of postdocs,

students and interns * 780 656 565

* Excluding Chugai.

Developing tomorrow’s leaders |­ In­2010­we­con­

tinued­our­progress­in­identifying­and­developing­

high­potential­leaders­capable­of­taking­on­critical­

senior­roles­in­the­short,­medium­and­long­term.­

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 118 28.01.2011 11:55:11

119­Roche Business Report 2010Corporate Responsibility

During­2011­and­2012,­our­goal­is­to­roll­out­our­glob­

ally­aligned­compensation­strategy,­supported­by­­

the­new­Global­Performance­Management­principles.­

The­new­common­approach­will­ensure­our­company­

remains­competitive­and­sustainable,­and­continues­

to­create­value­for­all­stakeholders.­By­maintaining­a­

strong­link­between­performance­and­compensation,­

we­will­preserve­employees’­opportunity­to­share­in­

our­success.­

Benefits |­ Benefits­are­an­important­part­of­the­

total­reward­package­we­offer­our­employees.­Most­

programmes­are­tailored­to­local­markets­and­regu­­

lations,­but­typical­examples­include­financial­support­

for­employees­and­their­dependents­upon­retirement­

and­in­case­of­illness,­disability­or­death.­These­bene­­

fits­usually­supplement­local­state­systems.­We­also­

offer­wellness­programmes­that­encourage­a­healthy­

lifestyle,­and­benefits­that­support­employees’­work/

life­balance.­Over­91%­of­affiliates­offer­extensive­ben­

efits­plans.­Most­go­beyond­state­schemes,­and­

include­free­access­to­a­wide­range­of­medical­ser­

vices.­

In­2010­we­worked­to­make­affiliates’­benefit­pro­

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.

policies,­offering­additional­flexibility­to­assignees.­

We­now­also­offer­a­childcare­allowance­and­in­­

creased­spousal­support.­In­addition,­we­introduced­

a­standard­healthcare­programme­for­global­assign­

ees,­which­has­come­into­effect­on­1­January­2011.­

This­programme­offers­competitive­health­insurance­

to­assignees­and­their­families­through­a­leading­

specialist­provider.­

Rewarding and recognising employeesPerformance management |­ In­2010,­92%­of­our­

employees­took­part­in­performance­management­

­discussions­with­their­managers­to­reach­a­shared­

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.

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 119 28.01.2011 11:55:12

120­ Roche Business Report 2010 Corporate Responsibility

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

Aligning human resources processes Over­the­course­of­2011,­Genentech­and­our­North­

American­pharmaceutical­operations­will­be­incorpo­

rated­into­our­Common­HR­Information­Solution­

(CHRIS).­CHRIS­enables­globally­aligned­processes­

that­have­been­adjusted­to­reflect­the­best­prac­­

tices­of­both­Genentech­and­the­rest­of­the­Roche­

Group.­Currently,­CHRIS­covers­181­affiliates­and­

representative­offices­and­77%­of­Roche­employees.­

Human rights and labour relationsThe­Roche­Employment­Policy­governs­human­rights­

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.

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 120 28.01.2011 11:55:12

121­Roche Business Report 2010Corporate Responsibility

Employees (FTE) by function

2010 2009 2008

Servicing 15,160 13,408 12,292

Manufacturing &

Logistics 14,770 16,395 15,381

Marketing &

Distribution 27,536 28,682 28,426

Research &

Development 19,039 18,894 18,518

General &

Administration 4,148 4,128 5,463

Total 80,653 81,507 80,080

Staffing rates

2010 2009 2008

New hires 8,279 8,192 9,169

Internal staffing rate 45% 29% 35%

External staffing rate 55% 71% 65%

Retaining employeesIn­2010­staff­turnover­increased­from­7%­to­9.5%.­

Driver­of­the­increase­is­the­first­wave­of­employer­

related­terminations­as­part­of­Operational­Excel­­

lence­in­Australia,­Latin­America­and­North­America.

Turnover *

2010 2009 2008

Total 9.5% 7.0% 9.9%

Europe 5.7% 5.1% 9.5%

North America 12.3% 7.8% 10.4%

Asia 10.0% 7.2% 8.1%

Latin America 19.3% 13.4% 14.3%

Australia 20.2% 10.9% 15.1%

Africa 16.8% 18.3% 11.1%

* Regular and temporary employees under Roche contract.

Reasons for leaving

2010 2009 2008

Employee-initiated 46% 51% 56%

Employer-initiated 44% 40% 24%

Neutral 10% 9% 20%

Key figures

Our employeesRoche­employs­80,653­people­in­108­countries,­­

clustered­in­five­main­regions.­Our­workforce­­

represents­more­than­131­nationalities,­with­24%­­

of­employees­working­in­R­&­D.­

Roche employees worldwide (Full-Time Equivalents/FTE)

2010 2009 2008

Europe 35,811 35,310 34,570

North America 23,695 25,412 25,823

Asia 14,964 14,169 13,065

Latin America 4,633 4,930 4,988

Australia 858 891 887

Africa 692 795 747

Total 80,653 81,507 80,080

Employees (FTE) by operating divisions

2010 2009 2008

Pharma 1 46,335 48,181 2 47,551

Chugai 6,852 6,632 6,590

Diagnostics 26,194 25,508 2 25,404

Other 1,272 1,186 2 535

Total 80,653 81,507 80,080

1 Including Genentech.2 2009 restated to reflect consolidation of Finance and IT

into Other.

Employees by contract types

2010 2009 2008

Regular (FTE) 78,537 79,632 78,216

Fixed Term (FTE) 2,116 1,876 2,184

Full Time (headcount) 76,767 77,866 76,058

Part Time (headcount) 4,845 4,562 4,342

10_Roche_AR10_ENG_Corporate Responsibility Part1.indd 121 28.01.2011 11:55:12

122­ Roche Business Report 2010 Corporate Responsibility

Our­responsibility­extends­beyond­the­healthcare­

products­we­provide­to­patients­and­the­well-being­of­

our­employees.­We­are­also­committed­to­supporting­

the­welfare­of­communities­in­which­we­operate.­

Our­donation­programmes­seek­to­give­back­to­com-

munities­in­four­strategic­areas:­humanitarian­and­

social­projects;­science­and­education;­arts­and­cul-

ture;­and­community­and­environment.­In­each­­

area,­we­support­programmes­that­meet­the­criteria­

defined­by­our­policy­on­philanthropic­donations­­

and­non-commercial­sponsorship,­as­well­as­pro-

grammes­that­we­believe­will­make­a­lasting,­ ­

tangible­difference.­

A rigorous approachTo­create­real­change,­we­have­developed­­

a­targeted­strategy­which­hinges­on­four­criteria:­• Innovative:­applies­creative­and­effective­

solutions­to­society’s­challenges­• Sustainable:­delivers­enduring­effects­in­

a­dynamic,­resource-constrained­world­• Collaborative:­draws­on­the­strengths­and­

capacities­of­respective­partners• Outcome-driven:­provides­tangible­long-term­

benefits­to­the­people­involved

We­make­most­of­our­contributions­locally,­so­that­

each­business­unit­can­best­address­the­needs­of­its­

own­community.­Our­businesses­conceive­and­­

implement­their­community­activities­to­provide­the­

greatest­possible­impact­given­the­specific­chal-

lenge­and­available­capabilities.­

Some­issues­call­for­global­intervention.­In­such­

cases,­we­work­with­our­international­network­­

of­partners­to­support­projects­that­will­meet­socie-

ty’s­most­critical­needs.­These­projects­do­not­often­

make­headlines,­but­nevertheless­help­to­resolve­­

fundamental­obstacles­to­good­health,­such­as­a­lack­

of­basic­medical­supplies­or­trained­healthcare­­

professionals.­By­mobilising­our­resources­and­expe-

rience­across­our­four­strategic­areas,­we­aim­to­

make­a­notable­difference.

Managing impact Developing­and­managing­our­philanthropic­activities­

requires­careful­coordination.­Principles­and­priori-

ties­are­set­at­the­Group­level,­and­implemented­lo­-

cally­by­business­units­and­partners.­

Launching­a­programme­or­contributing­to­a­cause­is­

only­the­first­step­in­Roche’s­social­engagement.­We­

carefully­consider­what­we­want­our­philanthropy­to­

achieve,­and­continually­monitor­progress­towards­

the­desired­impact.­Therefore,­we­track­the­outcomes­

of­our­projects,­not­just­the­initial­investment.

Sample philanthropic impactsPatient 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

and strengthening

— 53 bore holes rehabilitated

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-being­is­at­the­core­of­Roche’s­philos-

ophy.­Humanitarian­and­social­projects­account­for­

the­largest­portion­of­our­giving­—­and­focus­on­sup-

porting­the­most­vulnerable­members­of­society,­

often­children.

Employee­participation­in­our­programmes­amplifies­

their­impact.­For­example,­19,500­employees­from­

more­than­100­affiliates­participated­in­the­2010­

annual­Children’s­Walk.­They­generated­over­1.2­mil-

lion­Swiss­francs,­including­matching­funds­from­­

Society

Breakdown of giving by area | in 2010

Humanitarian

and social projects 87%

Science

and education 6%

Arts and culture 4%

Community

and environment 3%

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 122 28.01.2011 09:17:41

123­Roche Business Report 2010Corporate Responsibility

the­company.­This­year,­65%­of­this­money­will­go­to­

support­day­care­centres­in­Malawi­that­provide­

food,­shelter,­education­and­skills­training­to­AIDS­

orphans.­The­remaining­35%­will­support­local­­

charities­that­support­vulnerable­children,­selected­

by­affiliates.

It­is­important­that­employees­see­the­impact­of­their­

efforts.­Each­year,­nine­of­the­most­successful­local­

Children’s­Walk­fundraisers­visit­the­programmes­we­

support,­to­reaffirm­our­commitment­and­witness­­

the­difference­we­make­in­Malawi.­They­then­return­

home­and­act­as­ambassadors­for­the­walk­and­its­

objectives.

Access­to­healthcare­should­be­universal,­but­in­many­

countries­this­is­not­the­case.­We­have­a­number­­

of­programmes­that­help­to­build­infrastructure,­pro-

vide­basic­healthcare­or­transfer­knowledge­and­

expertise.

For­example,­the­Roche-sponsored­Phelophepa­

health­train­delivers­health­supplies­and­services­to­

poor­and­remote­South­African­communities.­In­­

2010­—­the­train’s­16­th­year­—­Roche­refurbished­the­

primary­health­coach,­improving­ventilation,­privacy,­

and­disabled­access.

Science and educationExcellence­in­science­is­critical­for­Roche.­We­aim­to­

inspire­future­generations­of­scientists­who­will­ ­

drive­the­discovery­of­new­treatments­and­diagnostics­

for­today’s­unmet­medical­needs.

We­provide­young­scientists­with­opportunities­to­

expand­their­experience­in­the­field­through­our­

International­Roche­Postdoc­Fellowship­Program.­In­

2010­we­built­up­the­programme­to­100­positions­

with­two-year­grants,­expandable­up­to­four­years­

based­on­scientific­merit.­These­are­for­joint­R­&­D­

projects­with­partner­universities,­including­the­first­

postdocs­approved­in­China­and­Japan.­In­2011,­

additional­programmes­are­planned.

Science­and­health­matters­often­involve­ethical­con-

siderations.­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 cultureInnovation­comes­in­many­forms.­We­see­a­strong­

creative­connection­between­science­and­the­arts.­In­

partnership­with­the­Lucerne­Festival,­the­Cleveland­

Orchestra­and­Carnegie­Hall,­we­regularly­commission­

new­works­from­contemporary­composers.­This­

August,­we­welcomed­the­world­premiere­of­Toshio­

Hosokawa’s­orchestral­piece­‘Woven­Dreams’,­and­

announced­our­sixth­commission­to­composer­Sofia­

Gubaidulina.­We­provide­further­support­for­crea-­

tivity­and­expression­through­monthly­Roche­’n’­Jazz­

events,­where­we­bring­together­the­local­communi-

ty­with­world-class­musicians­to­explore­modern,­

inventive­music.­Now­in­its­fifth­year,­Roche­’n’­Jazz­

has­entertained­more­than­15,000­people­with­per-

formances­by­55­ensembles.

Community and environmentWe­believe­that­individual­well-being­is­closely­tied­­

to­healthy­communities.­For­example,­in­Kuala­Lumpur­

Roche­has­established­a­community-based­reha-­

bilitation­project­with­Malaysia’s­Department­of­Social­

Welfare.­The­project­provides­occupational­therapy­

for­children­with­mental,­physical,­developmental­or­

emotional­conditions­in­rural­communities.­This­­

helps­the­children­improve­basic­motor­functions­and­

reasoning­abilities,­and­therefore­to­lead­indepen-

dent­and­productive­lives.

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

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 123 28.01.2011 09:17:42

124­ Roche Business Report 2010 Corporate Responsibility

Our­reputation­is­one­of­our­most­valuable­assets.­­

It­is­vital­that­all­employees­comply­with­laws,­regula-

tions­and­internal­standards­to­fulfil­our­commit-­

ment­to­act­with­integrity.­This­is­the­minimum­our­

stakeholders­expect.­For­these­reasons,­we­judge­

ourselves­not­only­on­our­results,­but­also­on­how­­

we­achieve­them.

Integrity and complianceThe­Roche­Group­Code­of­Conduct­sets­clear­ex-­

pectations­for­our­people.­It­guides­employees­on­

correct­business­behaviour,­how­to­act­with­integrity,­

and­how­to­speak­up­in­case­of­compliance­con-

cerns.­

We­encourage­employees­to­speak­to­their­line­man-

ager,­the­local­compliance­officer­or­the­Chief­ ­

Compliance­Officer.­They­can­also­report­compliance­

concerns­anonymously­using­the­SpeakUp­telephone­

line­and­web­service.­Launched­in­December­2009,­

SpeakUp­operates­in­47­languages­and­98­countries,­

making­it­available­to­almost­70,000­employees.­

Between­1­December­2009­and­31­December­2010,­

122­reports­were­made­via­the­system.­Roughly­­

half­were­general­comments­about­Roche’s­business,­

which­are­not­classed­as­non-compliances.­The­­

other­half­related­to­alleged­violations­of­the­Code­of­

Conduct.­Analysis­of­the­issues­reported­shows­that­

employees­are­using­the­SpeakUp­Line­responsibly.­

In­2010,­110­material­business­ethics­incidents­were­

reported­in­total,­including­seven­cases­reported­

through­the­SpeakUp­line.­After­investigating­each­

incident­and­taking­corrective­action­where­nec-

essary,­we­terminated­61­employment­contracts­as­­

a­result­of­unethical­behaviour.­

We­carried­out­various­activities­to­strengthen­­

compliance­in­2010.­We­updated­our­online­training­

programmes­on­our­Code­of­Conduct­and­on­anti-­

trust­issues­by­clearly­listing­the­options­available­for­

reporting­concerns.­In­2010­we­began­rolling­out­­

a­more­user-friendly­online­training­programme,­called­

Roche­Behaviour­in­Business­(RoBiB),­and­set­a­­

target­for­95%­of­employees­to­complete­it­in­2011.

We­held­several­meetings­for­local­compliance­offi-

cers­to­share­best­practice­in­2010.­We­now­use­the­

Genentech’s­tagline­‘Compliance­is­good­business’­­

to­communicate­a­consistent­message­throughout­

Roche.­We­asked­local­managers­to­implement­a­

comprehensive­anti-corruption­compliance­pro-

gramme,­and­launched­a­global­Roche­Marketing­

and­Sales­Compliance­Questionnaire­to­further­­

promote­the­importance­of­good­business­conduct.­­

We­will­continue­these­meetings­throughout­2011.­

Risk and crisis management Our­Risk­Management­Charter­defines­our­risk­man-

agement­approach­and­responsibilities.­It­is­available­

on­our­website­along­with­a­list­of­risks­to­our­busi-

ness.­We­use­stakeholder­feedback­to­help­identify­

and­assess­social,­environmental­and­ethical­risks­

and­opportunities,­and­include­the­most­significant­in­

the­Group­risk­management­process.­We­have­in-­

troduced­a­new­system­to­determine­exposure­from­

sales­and­marketing­risks­that­are­not­yet­fully­miti-

gated.

The­Group­and­all­subsidiaries­have­established­crisis­

management­teams­to­ensure­we­act­quickly­in­an­

emergency.­These­teams­regularly­rehearse­different­

crisis­scenarios,­alerts­and­escalation­procedures.­­

We­are­using­our­experience­of­our­pandemic­pre-

paredness­plan­in­response­to­the­H1N1­influenza­

pandemic­in­2009­to­strengthen­our­business­conti-

nuity­procedures­globally.

Sustainable supply chainWe­spent­around­18­billion­Swiss­francs­in­2010­with­

3rd­parties­on­raw­materials,­active­pharmaceuti-­

cal­ingredients­and­other­direct­spend,­plus­indirect­

spend­like­contract­R­&­D,­licences,­laboratory­sup-

plies,­equipment,­consultancy,­marketing­services­

and­others.­Ensuring­that­the­companies­supply-­

ing­these­products­and­services­act­responsibly­is­­

an­essential­part­of­sustainable­procurement.

Roche­is­a­member­of­the­Pharmaceutical­Supply­

Chain­Initiative­(PSCI)­and­endorses­the­PSCI­Princi-

ples,­which­set­standards­for­suppliers­in­the­areas­­

of­ethics,­labour,­health­and­safety,­the­environment,­

and­related­management­systems.­Our­Supplier­Code­

of­Conduct,­introduced­in­2009,­incorporates­these­

Principles,­as­well­as­other­important­topics­such­­

as­innovation,­financial­security­and­supplier­diversity.­

At­the­end­of­2010­the­majority­of­key­suppliers­­

had­provided­their­written­commitment­to­the­Supplier­

Code,­which­is­now­included­in­new­supplier­con-

tracts.­

Responsible practices

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 124 28.01.2011 09:17:42

125­Roche Business Report 2010Corporate Responsibility

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 researchOur­business­model­relies­on­scientific­excellence­and­

a­detailed­understanding­of­the­mechanisms­of­ ­

disease,­so­we­can­translate­scientific­breakthroughs­

into­innovative­medicines­and­diagnostics­that­make­

a­difference.­However,­ethical­questions­inevitably­

arise­as­we­explore­the­potential­of­cutting-edge­tech-

nologies.­We­carefully­consider­and­manage­any­­

concerns­to­make­sure­we­maintain­our­integrity­while­

making­sure­that­no­opportunities­are­lost.­

In­May­2010­we­introduced­online­training­to­teach­

procurement­staff­how­to­encourage­sustainability­

among­our­suppliers.­The­training­is­available­on­our­

intranet­in­Chinese,­English,­German­and­Spanish.­

More­than­3,000­employees­have­taken­the­course­to­

date.­Some­classroom­training­sessions­were­also­

held.­Our­pharmaceutical­division­introduced­a­new­

Procurement­Code­of­Conduct­to­guide­procure-

ment­managers­in­responsible­sourcing.

We­will­continue­to­implement­both­the­Supplier­and­

Procurement­Codes­of­Conduct­during­2011.­We­also­

plan­to­work­with­selected­high-impact­suppliers­to­

measure­and­reduce­their­environmental­footprints,­

following­a­pilot­project­with­a­logistics­supplier.

We­monitor­compliance­with­our­sustainability­re-

quirements­at­critical­suppliers­using­internal­and­

external­audits.­We­take­a­risk-based­approach­­

to­prioritise­the­companies­to­audit,­which­factors­­

in­risk­levels­by­industry­as­well­as­previous­sus-­

tainability­performance.­

In­2010­we­conducted­36­audits­in­the­direct­spend­

area­(e.g.­API,­chemicals­and­biologicals­suppliers,­

contract­manufacturers).­For­the­first­time,­we­began­

audits­of­critical­service­providers.­We­audited­27­

Roche supplier assessment — prioritisation

Contract manufacturersAPI manufacturersHazardous-chemical manufacturers

Priority for auditing and improvement

Direct spend Indirect spend

Chemicals/Biotech raw materialsPrimary packaging

Secondary packaging

CROs, R & D laboratories3 rd -Party waste managementAnimals

Temp labour, Logistics servicesConstruction, Marketing servicesFleet services, Travel, Facility management

Informatics, General & admin servicesConsulting services, Engineering servicesEquipment

Ris

k

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.

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 125 28.01.2011 09:17:42

126­ Roche Business Report 2010 Corporate Responsibility

Ethics in R & D |­ We­have­clear­policies­and­pro-

cedures­in­place­to­preserve­high­ethical­standards­­

in­our­research­and­development­(R &­D)­activities.­

Our­position­on­clinical­research­defines­these­stan-

dards­and­clarifies­our­views­on­specific­areas­of­­

concern.­

Employees­who­encounter­an­ethical­dilemma­in­­

their­work,­and­cannot­resolve­this­with­their­immedi-

ate­colleagues,­can­contact­our­Global­Ethics­Liai-­

son­Office.­In­2010­this­office­received­and­resolved­

23­queries,­without­the­need­for­escalation.­The­­

vast­majority­related­to­informed­consent­and­the­use­

of­samples­from­biobanks.­The­Global­Ethics­Liaison­

Office­consults­experts­within­and­outside­the­com-

pany­to­broker­a­solution­as­needed.­

In­2010­we­merged­our­external­Science­and­Ethics­

Advisory­Group­(SEAG)­with­the­Clinical­Research­

Ethics­Advisory­Group­(CREAG)­to­form­one­indepen-­

dent­body­that­advises­us­on­ethical­issues­in­our­

R­&­D­activities.­The­new­SEAG­comprises­external­

experts­in­ethics,­law­and­social­science,­as­well­as­

patient­advocates.­It­will­continue­to­provide­advice­

as­required­and­meet­formally­once­a­year.­

We­provide­regular­online­ethics­training­for­em-­

ployees­and­in­April­2010­launched­a­new­online­

module­based­on­case­studies.­

Animal welfare |­ We­take­public­concern­about­ani-

mal­research­very­seriously.­We­promote­the­use­of­

alternative­methods­and­work­hard­to­identify­options­

other­than­the­use­of­animals.­However,­animal­test-

ing­remains­indispensable­to­biomedical­research­for­

scientific­and­legal­reasons.­Regulatory­authorities­

require­all­healthcare­companies­to­test­the­safety­and­

efficacy­of­new­drugs­in­animals­before­they­can­be­

used­in­humans.­

In­2010­we­used­502,105­animals­in­our­research,­­

a­slight­increase­on­2009.­For­the­first­time,­we­also­

report­the­number­of­animals­used­by­contractors­

carrying­out­research­on­our­behalf­—­55,913.­Around­

97%­of­all­animals­were­mice­and­rats.

We­follow­and­promote­the­3Rs­approach­to­animal­

research.­This­means­we­replace­animal­tests­where­

possible,­reduce­the­number­of­animals­used,­and­

refine­tests­and­animal­welfare­standards.­All­em­-

ployees­and­contractors­who­perform­animal­research­

for­us­are­required­to­meet­or­exceed­applicable­laws­

and­industry­standards.

Key activities in 2011

Access to healthcare

Expand­successful­­access­programmes­in­developing­countries­­to­other­countries

Employee engagement

Achieve­positive­ratingsin­employee­engagement­surveys­(80%­positive­ratings­by­end­2014)

Diversity

Increase­percentage­­of­women­in­key­positions­(50%­increase­from­­2009­to­2014)

Philanthropy

Systematically­collect­­and­report­outcomes­of­affiliate­philanthropic­­activities­and­corporate­­signature­programmes

Suppliers

Continue­implementation­­of­both­the­Procurement­­and­Supplier­Code­of­­Conduct­

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 126 28.01.2011 09:17:44

127­Roche Business Report 2010Corporate Responsibility

with­animals.­The­committee­covers­Roche­research­

facilities­in­Europe­and­the­USA,­and­will­include­our­

Shanghai­site­and­Chugai­from­2011.

Innovation and new technologies |­ Breakthroughs­

in­science­create­opportunities­for­new­drug­dis-­

covery,­development­and­delivery.­For­example,­stem­

cells­and­their­applications­offer­tremendous­poten-

tial­for­relieving­chronic­pain­and­even­curing­serious­

conditions­such­as­arthritis,­diabetes­and­Parkinson’s­

disease.­In­particular,­the­discovery­of­induced­plurip-­

otent­stem­cells­derived­from­adult­cells­provides­an­

alternative­to­embryonic­stem­cells,­opening­up­addi-

tional­opportunities­in­this­promising­field.­

We­are­involved­in­stem­cell­research­partnerships,­

including­the­Institute­for­Stem­cell­Therapy­and­Ex-­

ploration­of­Monogenic­diseases­(iSTEM)­in­France­

and­the­Massachusetts­General­Hospital­and­Harvard­

University­in­the­United­States.­In­2009­we­estab-

lished­Stem­Cells­for­Research­(SCR)­in­Basel­and­

Nutley­to­develop­our­expertise­in­this­area.­This­

group­focuses­on­drug­discovery,­pre-clinical­safety­

testing­and­disease­modelling.

We­are­committed­to­responsible­and­transparent­

stem­cell­research.­We­have­therefore­established­

We­use­incentives,­training­and­communications­to­

promote­the­3Rs.­These­include­the­Roche­3Rs­­

Award­for­employees­globally,­which­next­takes­place­

in­2011.­This­year­we­began­work­on­a­3Rs­database­

for­sharing­good­practices­throughout­the­Group,­

which­will­be­launched­in­2011.

Roche­was­one­of­the­founders­of­the­new­Swiss­

Charter­on­Animal­Welfare,­adopted­in­2010­by­Inter-

pharma,­the­association­of­research-based­phar-

maceutical­companies­in­Switzerland.­The­Charter­­

commits­us­to­consistently­high­standards­of­ani-­

mal­welfare­through­a­programme­of­auditing,­em-­

ployee­training,­stakeholder­dialogue,­promotion­­

of­the­3Rs­and­management­of­external­contractors.­

We­will­report­our­progress­in­implementing­the­

Charter.­

Our­Animal­Welfare­Ethics­Committee­became­fully­

operational­and­met­four­times­in­2010.­The­commit-

tee­has­developed­recommendations­for­the­use­­

of­contractors­for­animal­research­and­will­examine­

all­new­studies­using­non-human­primates­(NHPs),­

particularly­those­carried­out­by­contractors.­The­

committee­has­created­a­questionnaire­to­help­re-­

searchers­submit­NHP­studies­for­examination.­It­also­

advises­employees­on­best­practices­when­working­

Customer relation-ship management

Provide­added­value­through­customer­satis-faction­assessments­­to­meet­or­exceed­­customer­expectations

Responsible marketing

Apply­the­new­Sales­&­­Marketing­Compliance­Questionnaire­Group-wide­

CR reporting

Evaluate­and­implement­improved­IT­systems­­for­reporting­on­key­con-tributions­to­healthcare­­institutions,­patient­organi-sations,­and­individual­HCPs

Green IT

Promote­best­practices­of­use­of­virtual­IT­to­reduce­energy­consumption­and­solutions­to­reduce­travel­and­enable­expanded­communication

Energy efficiency

Reduce­energy­con-sumption­and­improve­energy­efficiency­­(10%­reduction­from­­2009­to­2014)

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 127 28.01.2011 09:17:45

128­ Roche Business Report 2010 Corporate Responsibility

Animals used in research (Roche and contract research organisations) | in 2010

Mice and Rats 97.1%

Other rodents

and rabbits 1.1%

Dogs 0.3%

Primates 0.5%

Other (fish, frogs) 1.0%

Responsible marketingStrict­regulations­and­industry­guidelines­govern­­

the­sale­and­marketing­of­medicines­and­diagnostics,­

to­make­sure­they­are­prescribed,­administered­­

and­used­correctly,­and­that­patients­understand­the­

benefits­and­risks­of­taking­them.­

However,­regulations­vary­from­country­to­country,­

even­within­Europe.­In­2010­Roche­and­other­corpo-

rate­members­of­the­European­Federation­of­Phar-­

maceutical­Industry­Associations­(EFPIA)­developed­

a­Leadership­Statement­which­provides­guidance­­

in­five­sensitive­areas.­These­relate­to:­patient­infor-­

mation;­training­for­medical­sales­representatives;­­

the­provision­of­medical­samples­to­healthcare­pro-

fessionals;­organising­meetings­for­healthcare­­

professionals;­and­relationships­with­patient­organi-

sations.­Roche­has­fully­committed­to­following­­

this­guidance.­In­addition,­our­Chief­Compliance­Offi-­

cer­joined­EFPIA’s­new­Trust­Reputation­and­Com-­

pliance­Policy­Committee.­

Roche­managers­are­responsible­for­ensuring­all­

marketing­activity­under­their­control­complies­­

with­our­Code­of­Conduct­and­industry­marketing­

codes.­In­2010­we­launched­the­Roche­Marketing­

binding­principles­for­stem­cell­research­in­consul-­

tation­with­internal­and­external­stakeholders,­which­

we­will­publish­in­2011.

In­partnership­with­biopharmaceutical­company­

­Halozyme,­we­are­exploring­a­new­method­of­drug­

­delivery­that­could­make­it­possible­to­give­biological­

medicines­such­as­Herceptin­and­MabThera/­

Rituxan­by­subcutaneous­injection­rather­than­intra-

venously.­Halozyme’s­Enhanze­technology­allows­

subcutaneous­injection­of­large­volumes­of­medicine­

in­just­three­to­five­minutes,­making­it­more­con-­

venient­and­cost­effective­than­intravenous­delivery.

Working with stakeholders to make the best product

Regulators and policy makers

– Health outcome studies– Determination of medical value– Reimbursement programmes

– Clinical trial design, participation and results publication

– Feedback on product performance and profile

– Input into training and education material– Shape treatment guidelines

– Input into regulatory filings– Clinical trial design– Shape treatment guidelines

– 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

Patients and patient groups

Physicians and healthcare providers

Payers and reimbursers

Product

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129­Roche Business Report 2010Corporate Responsibility

tions­and­policies­for­public­health­as­well­as­for­

more­general­areas,­such­as­the­assessment­of­the­

value­of­healthcare­and­our­work­with­public­­

health­organisations,­think­tanks­and­academics.­

One­example­is­our­contribution­to­the­European­

Commission­Process­on­Corporate­Responsibility­in­

the­field­of­pharmaceuticals.­This­process­was­

launched­in­2010­to­improve­transparency­and­busi-

ness­ethics,­access­to­medicines­in­developing­­

countries,­and­pricing­and­reimbursement­systems­­

in­Europe.­We­are­also­participating­in­a­project­­

to­develop­market­access­for­biosimilar­drugs.­

In­2010­we­developed­guidelines­for­sharing­infor-

mation­on­the­potential­of­misuse­of­drugs­in­sports,­­

in­association­with­the­World­Anti-Doping­Agency­

(WADA).­Roche­and­WADA­signed­a­memorandum­

of­understanding­describing­the­process­to­follow­

when­suspicion­arises.­WADA­presented­Roche­with­

an­award­in­recognition­of­our­role­in­this­area.

We­also­contribute­to­policy­development­through­

our­membership­of­industry­bodies­such­as­the­­

European­Diagnostics­Manufacturers­Association­

(EDMA),­the­European­Biopharmaceutical­Enter-

prises­(EBE),­the­International­Federation­of­Pharma-

ceutical­Manufacturers­and­Associations­(IFPMA),­

and­the­European­Federation­of­Pharmaceutical­In-

dustry­Associations­(EFPIA).­In­2010­EFPIA­approved­

four­priority­areas­for­the­next­two­years.­These­re-

late­to:­improving­the­effectiveness­of­health­technol-

ogy­assessments;­strengthening­intellectual­proper-­

ty­frameworks;­enhancing­ethics,­trust­and­reputation;­

and­attracting­more­R­&­D­to­the­European­Union.­

Through­EFPIA,­we­contributed­to­updates­to­Euro-

pean­Union­(EU)­legislation­aimed­at­strength-­

ening­systems­for­monitoring­the­safety­of­medicines,­

in­particular­to­protect­against­counterfeit­medi-­

cines­and­ensure­patients­receive­reliable­information­

on­prescription­medicines.­This­work­will­continue­­

in­2011.

We­have­contributed­to­the­revision­of­the­EU­Direc-

tive­on­the­Protection­of­Animals­used­for­Scientific­

Purposes­since­the­process­began­in­2001.­The­Direc-

tive­aims­to­balance­the­needs­of­research­and­pa-

tients­with­animal­welfare.­Significant­new­provisions­

include­a­mandatory­ethical­review­process­and­­

the­development­and­implementation­of­alternative­­

and­Sales­Compliance­Questionnaire­(RMSCQ),­to­

help­managers­assess­how­well­their­operations­­

perform­on­sensitive­compliance­topics.­All­General­

Managers­have­to­sign­a­declaration­that­confirms­

their­compliance.­We­also­ran­refresher­training­on­

responsible­marketing­for­global­product­strategy­

teams­in­the­pharmaceutical­business.­2011­we­will­

carry­out­refresher­courses­on­antitrust­issues­and­

anti-corruption.

Customer relationship managementOur­customers­range­from­patients,­healthcare­pro-

fessionals,­hospitals­and­reference­laboratories­to­

public­and­private­healthcare­payers.­It­is­important­

to­manage­these­relationships­in­a­professional­­

and­transparent­way.­We­consider­their­needs­and­

views­when­developing­our­products­and­services.

We­focus­on­building­strategic,­long-term­partner-

ships­with­healthcare­administrators,­as­well­as­spe-

cialists­in­individual­disease­areas.­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

that­Roche’s­customer­retention­in­these­markets­­

is­90%­—­compared­with­an­average­rate­of­72%­

among­our­peers.­In­addition­to­product­efficacy,­­

the­main­drivers­of­customer­retention­was­found­to­

be­the­sales­representative’s­conduct,­knowledge­­

and­expertise,­and­the­information­and­support­pro-

vided­for­patients­and­clinicians.

Public policyWe­share­our­views­and­expertise­with­governments­

and­regulators­to­help­develop­effective­laws,­regula-

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 129 28.01.2011 09:17:46

130­ Roche Business Report 2010 Corporate Responsibility

cesses­that­are­difficult­to­reproduce.­Copies­of­a­bio-

logical­product­are­therefore­similar­but­not­identi-­

cal­to­the­original.­These­‘biosimilar’­products­cannot­

be­considered­generic­medicines,­or­approved­­

based­on­the­limited­data­set­most­regulatory­bodies­

accept­for­generics.

We­support­the­development­of­a­clear­regulatory­

framework­for­the­approval­of­biosimilar­products,­

which­compares­them­with­the­original­drug.­The­

European­Medicines­Agency­has­established­such­a­

system,­and­published­additional­draft­guidelines­on­

similar­biological­medicinal­products­containing­mon-

oclonal­antibodies­for­review.­The­US­Congress­intro-

duced­a­legislative­process­for­approving­biosimilars­

as­part­of­the­healthcare­reforms­in­March­2010.­For­

countries­where­there­is­no­specific­framework­for­

approving­biosimilars,­we­believe­that­regulatory­

authorities­should­follow­the­World­Health­Organi-

zation­(WHO)­Guidelines­on­Evaluation­of­Similar­

Biotherapeutic­Products,­where­a­comparison­with­an­

original­biological­product­is­required­to­establish­

similarity.­In­2010­we­engaged­with­regulatory­author-­

ities­and­biosimilar­manufacturers­around­the­world­

to­promote­the­WHO­guidelines­as­the­minimum­stan-­

dard.­We­will­continue­to­do­so­to­ensure­similar­

­versions­of­our­biotherapeutic­products­brought­to­

market­are­safe­and­effective.­An­updated­position­­

on­biosimilars­is­available­on­our­website.

Political contributions |­ Roche­does­not­fund­in-

dividual­politicians.­Employees­in­the­USA­can­make­

personal­contributions­through­Roche’s­Good­Gov-

ernment­Committee­(GGC)­and­Genentech’s­Genen-

PAC.­Both­are­voluntary­political­action­committees­

(PAC).­In­2010­employees­donated­340,899­US­dol-

lars­to­political­campaigns­through­these­PACs.

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

methods­that­tangibly­improve­animal­welfare.­The­

Directive­will­apply­in­all­EU­member­states­from­

November­2012.

We­contributed­to­responses­from­EDMA­and­EBE­­

to­a­European­Commission­consultation­on­in vitro­di-

agnostics­(IVDs)­in­2010.­We­support­the­Commis-

sion’s­proposed­risk-based­classification­system­for­

IVDs,­as­long­as­manufacturers­are­given­enough­

time­to­adjust­to­the­increase­in­development­costs­­

it­will­incur.­More­clarity­is­needed­on­proposed­

requirements­for­providing­clinical­evidence­for­high-

risk­IVDs.­Also­through­EDMA,­we­contributed­to­

the­European­Commission’s­review­of­the­medical­de-

vices­sector,­which­identified­major­challenges­relat-

ing­to­competitiveness,­innovation­and­patient­access.­

Combating counterfeits |­ Counterfeit­medical­prod-

ucts­are­illegal­and­a­serious­global­public­health­

problem.­They­endanger­patients,­undermine­confi-

dence­in­the­healthcare­industry,­breach­intellectual­

property­rights,­and­waste­healthcare­budgets.­We­

work­with­relevant­stakeholders­to­improve­product­

security,­strengthen­and­enforce­existing­laws,­train­

local­officials­and­educate­the­public.­Through­EFPIA,­

we­have­contributed­to­the­proposed­European­Com-

mission­Directive­on­Counterfeiting.­

Eliminating­counterfeits­requires­a­comprehensive,­

universal­approach­across­the­pharmaceutical­indus-

try.­This­should­include­standardised­product­seriali-

sation­and­universal­safety­features.­2010­saw­the­

conclusion­of­an­EFPIA­pilot­project­of­one­potential­

approach:­a­system­for­verifying­that­medicines­dis-

pensed­in­pharmacies­are­genuine.­On­each­pack,­a­

unique­barcode­smaller­than­a­fingernail­holds­a­

­random­serial­number,­and­the­product­code,­batch­

number,­and­expiry­date.­Before­dispensing­a­medi-

cine,­pharmacists­scan­the­barcode­to­check­it­is­

authentic.­Pharmacists­in­25­stores­scanned­and­ver-

ified­almost­100,000­packs­from­14­manufacturers,­

including­Roche.­The­results­show­that­the­technol-

ogy­is­a­feasible,­cost-effective­and­secure­means­­

of­enhancing­patient­safety­and­supply­chain­security.

Biosimilar products |­ Unlike­traditional­medicines­

which­contain­small­molecules­produced­by­chemical­

synthesis,­biological­medical­products­have­complex­

molecular­structures.­They­are­produced­from­living­

systems­using­sophisticated­manufacturing­pro-

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 130 28.01.2011 09:17:47

131­Roche Business Report 2010Corporate Responsibility

supplement­these­courses.­In­2010­we­expanded­­

the­number­of­languages­our­online­SHE­training­is­­

available­in,­bringing­the­total­to­13­and­ensuring­­

all­Roche­employees­can­understand­the­materials.­

This­enabled­53,000­employees­to­access­the­pro-

gramme­and­41%­of­these­have­participated.­In­2011­

we­will­expand­this­programme­to­Genentech­

employees.­

SecurityThe­vision­of­security­at­Roche­is­to­protect­our­em-

ployees­and­visitors,­physical­assets,­intellectual­

property­and­products­from­harm­or­loss.­Our­global­

network­of­site­security­officers­worked­with­Roche’s­

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

experiences­in­the­areas­of­intellectual­property­pro-

tection,­workforce­violence­and­supply­chain­security.

Health and safety

2010 2009 2008

Roche accident rate 0.065 0.074 0.078

Occupational accidents 432 392 474

Occupational illnesses 184 227 270

Work-related fatalities 0 0 0

Work-related accidents

per million working

hours 2.97 2.92 3.42

Employee­health­and­safety­is­one­of­our­foremost­

priorities.­We­have­rigorous­policies­to­safeguard­

their­well-being,­and­expect­the­same­standards­from­

our­contractors.

Roche­is­dedicated­to­good­health.­We­are­as­com-

mitted­to­preserving­the­safety­and­well-being­of­­

our­employees­and­the­environment­as­we­are­to­im-­

proving­health­and­quality­of­life­for­patients.

Managing SHEGood­safety,­security,­health­and­environmental­(SHE)­

management­is­essential­to­our­business.­We­em-­

ploy­a­team­of­20­dedicated­people­at­our­headquar-

ters­in­Basel,­which­is­complemented­by­a­team­of­­

13­in­the­United­States.­While­over­600­full-time­em-­

ployees­support­our­SHE­programme­across­our­

sites,­maintaining­good­performance­is­every­em-­

ployee’s­responsibility.­

Each­site­identifies­its­specific­SHE­risks­and­oppor-

tunities,­and­communicates­these­according­to­local­

preferences.­This­ensures­that­colleagues­under-

stand­and­adhere­to­our­SHE­policy­and­guidelines.­

Our­policy­is­to­internally­audit­critical­sites­such­as­

chemical­and­pharmaceutical­manufacturing­facilities­

every­three­years,­and­all­other­relevant­sites­period-­

ically­according­to­risk.­These­audits­rate­SHE­per-­

formance­according­to­internal­standards,­and­stipu-­

late­future­improvements.­We­have­incorporated­

Genentech­sites­into­the­corporate­SHE­audit­pro-

gramme­and­these­are­now­assessed­against­the­

same­standards­as­other­Roche­operations.­

SHE audits

2010 2009 2008

Worldwide audits 24 27 25

First-time audits 4 2 2

In­2010­we­visited­24­sites,­four­for­the­first­time.­Of­

the­20­sites­previously­audited,­almost­all­had­im-­

proved­their­performance.­Recommended­improve-

ments­in­2010­include­increased­training­on­topics­

such­as­emergency­management,­business­continu-

ity,­and­safe­driving.­As­we­expect­similarly­high­­

SHE­standards­from­our­suppliers,­our­procurement­

department­conducts­SHE­audits­at­third­party­­

locations­and­issues­follow-uprecommendations.­

Training­is­at­the­core­of­our­SHE­strategy.­Local­

managers­provide­tailored­training­through­lectures­

and­courses­customised­to­site-specific­SHE­risks.­

Regular­regional­SHE­conferences­and­workshops­

Safety, security, health and environmental protection

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 131 28.01.2011 09:17:47

132­ Roche Business Report 2010 Corporate Responsibility

Investments­in­SHE­training­appear­to­be­paying­­

off.­We­have­reduced­work-related­accidents­per­mil-

lion­working­hours­by­36%­since­2005.­Employees­

reported­432­occupational­accidents­in­2010,­a­10%­

increase­in­frequency­compared­with­last­year.­How-

ever,­the­average­severity­—­the­resulting­number­of­

lost­days­—­decreased­4%.­Overall,­the­Roche­acci-

dent­rate­—­a­measure­that­combines­frequency­with­

severity­—­improved­by­approximately­11%.­Occupa-

tional­illness­improved­in­both­incidence­and­severity,­

with­184­cases­reported.

Our­occupational­accident­and­illness­profile­remains­

consistent,­with­slips,­falls­and­repetitive­strains­­

representing­the­majority­of­work-related­complaints­

in­2010.­There­were­no­major­accidents­this­year­—­

for­the­third­consecutive­year.

Though­we­are­pleased­with­this­positive­trend,­we­

recognise­the­need­to­remain­vigilant.­We­have­

installed­defibrillators­in­central­locations­at­almost­

all­sites,­and­continue­to­support­our­employees’­

well-being,­both­during­and­outside­of­work­hours.­

Many­Roche­sites­organise­campaigns­to­reduce­

accidents­outside­the­workplace,­such­as­selling­pro-

tective­sports­equipment,­and­running­motorcycle­

safety­courses.­

Environmental footprintOur­total­environmental­footprint­is­comprised­of­

many­individual­impacts,­including­energy­use,­water­

and­waste.­We­measure­our­total­impact­using­the­

‘eco-balance’­metric­developed­by­the­Swiss­Agency­

for­the­Environment­(BAFU).­This­weights­the­im-

pacts­of­air­and­water­emissions,­landfill­waste,­pri-

mary­energy,­and­raw­material­usage­to­calculate­a­

total­footprint.­We­also­calculate­impact­per­employee­

so­we­can­measure­our­progress­as­the­business­

grows.­We­set­ourselves­a­target­to­improve­our­eco-

balance­by­10%­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 14,495 TJ

raw materials 67,529 t

water 19,667,601 t

Emissions air

VOC 164 t

SO2 7 t

NOx 262 t

CO2 1,070,794 t

halogenated

hydrocarbons 3,796 t

particles 33 t

water

TOC 242 t

heavy metals 0.463 t

phosphorus 33 t

nitrogen 136 t

Landfilled waste inert waste 1,226 t

construction waste 14,900 t

reactor waste 7,208 t

Eco-balance

mio impact points

per employee 7.17

Eco-efficiency rate (EER)

2010 2009 2008

Sales (million CHF) 47,473 49,051 45,617

Environmental

Expenditure

(million CHF) 194 186 209

Environmental damage

(10 9 environmental

damage units) 591,592 572,983 564,328

EER 0.414 0.460 0.387

We­assess­the­efficiency­of­our­environmental­in-

vestments­and­running­costs­by­comparing­sales­fig-

ures­with­our­total­environmental­expenditures­and­

impact,­as­calculated­according­to­the­BAFU­method-

ology.­Our­resulting­eco-efficiency­rate­(EER)­has­

decreased­to­0.414,­a­10%­change­from­2009.­­

There­is­a­detailed­definition­at­www.roche.com/

fact_sheet_eco_efficiency.pdf.­

11_Roche_AR10_ENG_Corporate Responsibility Part2.indd 132 28.01.2011 09:17:47

133­Roche Business Report 2010Corporate Responsibility

Greenhouse gas emissions | CO2 equivalent

2010 2009 2008

Total emissions

(million tonnes) 1.077 1.053 1.062

Total emissions

per million CHF of sales

(tonnes) 22.69 21.47 23.28

Energy use | terajoules

2010 2009 2008

Total energy use 14,495 13,898 13,662

Total energy use

per million CHF of sales 0.305 0.283 0.299

Total energy use per

employee 0.176 0.176 0.178

Employee­awareness­and­motivation­will­also­be­criti-

cal­to­achieving­our­goals.­We­are­fortunate­to­have­

innovative­and­dedicated­employees.­Our­annual­Re-

sponsible­Care­Award­recognises­this­by­encour-

aging­employees­to­collaborate­on­ideas­for­energy-