Annual General Meeting of Shareholders of Roche Holding Ltd 27 February 2006
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1 Annual Geneal Meeting of Shaeholdes of Roche Holding Ltd 27 Febuay 2006 Addess by Jan van Koeveinge Head Phama Global Technical Opeations (The addess as deliveed is definitive.)
2 Addess by Jan van Koeveinge Page 2/13 Shaeholdes, Ladies and Gentlemen, Aound the wold and at Roche, avian influenza and Tamiflu have been the focus of intense attention, and fo Roche they emain a key issue. In my talk today I would like to add to what ou Chaiman has aleady said on the subject by looking at seveal facets in geate detail. News stoies about the geogaphic spead of avian influenza and the pospect of a lethal new supe bug sweeping the globe ae a cause of widespead concen. The viulent H5N1 avian influenza vius has been speading outwads fom Asia since 2003 and has now eached Euope. Woldwide, the vius has claimed appoximately 90 human lives to date. Cuently, we ae dealing with a bid epidemic in othe wods, a vius that causes disease in bids. The disease has, especially in Euope, so fa only been diagnosed in bids in the wild. The few people in Asia to contact the vius so fa have been people who have been in vey close contact with infected bids. But nobody knows whethe and if so, when and whee the vius might undego the mutations enabling it to be tansmitted fom peson to peson. What the expets do agee on is that the pospect of a pandemic is vey eal and that the isks ae highe now than they have been in decades. So thee is no question about the need fo tageted pepaedness activities that will make it possible to mount an effective esponse in the event of a pandemic and thee is no question that the time to pepae is now. This will involve adjustments that ae both difficult and costly. Assuing the highest possible state of eadiness will equie decisions and action by govenments and in the healthcae secto. Pepaing fo a pandemic encompasses a vaiety of measues, one of which is the stockpiling of antivial medicines by national govenments so that thei counties populations will have eady access to them when needed. The theat of a human influenza pandemic poses a vey special challenge fo Roche, as ou dug Tamiflu is one impotant element of pandemic pepaedness. All the discussion devoted to avian influenza and Tamiflu seves as a eminde of how closely inteconnected healthcae innovation and copoate social esponsibility ae. Roche has taken tageted action to fulfil that esponsibility. Even befoe govenments began stockpiling Tamiflu, we initiated a massive incease in poduction capacity fo the dug at ou own isk. By the end of 2006 Roche will be capable of poducing ove 300 million packs of Tamiflu a yea which is oughly compaable to
3 Addess by Jan van Koeveinge Page 3/13 total poduction capacity in the influenza vaccine secto. You ll be heaing about ou ongoing effots to expand capacity futhe. We have taken the initiative on fou diffeent fonts to help ensue the availability of Tamiflu. Fist, we have povided the Wold Health Oganization (WHO) with a total of ove 5 million packs of Tamiflu fo apid local deployment if needed. And we will continue to wok closely with WHO. Secondly, to help keep pandemic pepaedness affodable, we have significantly educed the pice on deliveies fo govenment pandemic use. Oseltamivi, the active ingedient of Tamiflu, is being supplied at highly educed pices: industialised counties pay 7.70 pe teatment couse, and developing counties even less. Govenments can also buy pandemic eadiness supplies of Tamiflu in capsule fom at a steep discount: industialised and developing counties pay and espectively, o oughly 50 to 70 pecent off the egula pice. That is lowe than the pice we have seen quoted by geneic manufactues. Thidly, we have ganted fist sub-licenses fo the manufactue of pandemic supplies of the Tamiflu active ingedient, oseltamivi, to companies in China and India. Fouthly, we ae conducting talks with a numbe of companies that could povide us with additional poduct manufactuing suppot if needed.
4 Addess by Jan van Koeveinge Page 4/13 Tamiflu a status epot Discoveed by Gilead 11 yeas ago Developed in ecod time Today available in 80 counties Oiginally developed fo seasonal flu; now also being stockpiled fo pandemic use Roche inceases poduction capacity fo the dug many times ove Ageement between Roche and Gilead Fo Roche, the Tamiflu stoy began in 1996, the yea Roche acquied the global ights to develop and maket the poduct fom Gilead Sciences in Califonia. Afte moving Tamiflu though development at top speed, we launched it in Noth Ameica (US and Canada) and Switzeland in time fo the 1999/2000 flu season. Launches in the majo Euopean makets followed thee yeas late, in time fo the 2002/2003 flu season. To date, ove 34 million people in oughly 80 counties aound the globe have been teated with Tamiflu. The poduct won t go off patent until If I may, I d like to spend a little time poviding some geneal backgound infomation on influenza. Influenza, the medical name fo what is usually just called the flu in eveyday speech, comes fom the Latin wod influee, meaning to flow in, o sometimes to ceep in. Real flu is a sevee acute vial espiatoy infection accompanied by feve. Unlike colds and othe flu-like illnesses, influenza is a seious, potentially fatal disease. The tem gippe, which is disappeaing fom English but is still widely used in othe languages, comes fom Fench, whee it oiginally meant a whim o mood. The wod pobably acquied its
5 Addess by Jan van Koeveinge Page 5/13 medical sense because of influenza s sudden onset and the unpedictable way in which it stikes some people while spaing othes. Influenza is chaacteised by the sudden onset of feve, coughing, fatigue/weakness, headache and aching muscles. The acute phase of the illness lasts five to seven days, but fatigue and weakness may bothe the patient even longe. Influenza is an epidemic disease, i.e. it geneally affects lage numbes of people in a given aea at the same time; and it usually stikes duing the cold months of the yea. An epidemic affecting populations aound the globe is called a pandemic. In the past influenza pandemics have occued at intevals of fom 10 to 40 yeas. Duing an influenza pandemic up to 50% of the population may become infected with the causative vius, and the death toll can be in the millions. Signs and symptoms of eal flu Sudden onset of illness Bad cough, headache, muscle ache, feve/chills and fatigue/weakness Acute espiatoy symptoms can last five to seven days Fatigue and weakness can pesist fo two to thee weeks The 20 th centuy witnessed thee majo influenza pandemics, the most devastating of which occued in and is emembeed as the Spanish flu. Woldwide, the Spanish flu pobably claimed between 20 and 50 million human lives. The Asian flu pandemic (A/H2N2) in the 1950s killed appoximately 1 million people. And moe than 800 thousand wee killed by the Hong Kong flu (A/H3N2) in the 1960s.
6 Addess by Jan van Koeveinge Page 6/13 The Wold Health Oganization (WHO) estimates that the next influenza pandemic will esult in about 7 million deaths. Accoding to WHO, an influenza pandemic occus when a new stain of influenza vius A emeges to which people have little o no immunity. As a esult, multiple epidemics occu simultaneously in populations aound the globe, with high mobidity and motality. The phases of a pandemic Estimated cuent phase of pandemic alet Intepandemic peiod Pandemic alet peiod Pandemic peiod Phase 1 Phase 2 Phase 3 Phase 4 Phase 5 Phase 6 Postpandemic peiod No new influenza vius subtypes detecte d in humans No new influenza vius subtypes detected in humans Risk of human A ciculating infection by animal vius vius pesent in subtype poses a animals is low substantial isk to humans Human infections with a new influenza vius subtype Human-tohuman spead is ae Small clustes with human- tohuman tansmission Spead highly lo calised Lage clustes with human-tohuman tansmission Spead still localised Incea sed and sustained tansmission in ge neal po pula tion Global pandemic isk Retun to intepandemic peiod A pandemic can be boken down into six phases. Expets believe we have eached the end of phase 3, which means that an influenza pandemic is vey likely in the nea futue.
7 Addess by Jan van Koeveinge Page 7/13 Tamiflu the poduct Tamiflu is an oal antivial medicine (neuaminidase inhibito) is not a vaccine is active against all clinically elevant influenza vius stains inhibits the vial enzyme neuaminidase; as a esult, influenza viuses ae unable to eplicate and spead inside the body has demonstated activity against the H5N1 avian influenza vius in animal models Active ingedient: oseltamivi (poduced by chemical synthesis) Dosage foms: capsules, syup People with suspected influenza should consult a docto immediately. Tamiflu has to be stated within 48 hous of the onset of symptoms. Teatment couse: 10 capsules; 1 capsule twice daily Now I d like to say a bit moe about Tamiflu itself. Tamiflu (oseltamivi) is not a vaccine, but an oal antivial medicine fo influenza, and belongs to a class of dugs known as neuaminidase inhibitos. These medicines inhibit a vial enzyme called neuaminidase, thus peventing influenza viuses fom speading inside the body. Tamiflu can be used fo the teatment and pevention of influenza in adults and in childen aged one yea o olde. Tamiflu is a pesciption medicine given in capsule fom (o as a syup in childen). The usual dose fo teatment of influenza in adults is one 75 mg capsule twice daily fo five days. A pack of Tamiflu contains a full teatment couse of 10 capsules. Fo full efficacy, teatment needs to be stated within two days of the onset of symptoms. When taken twice daily fo five days, as ecommended, Tamiflu can educe the seveity of patients symptoms and the likelihood of flu-elated complications like bonchitis and pneumonia, and it can hasten ecovey. Moeove, deaths among influenza patients teated with Tamiflu whethe adults o childen is lowe than among patients not teated with the medicine. Accoding to independent studies, teatment with Tamiflu educes motality in childen by 60 to 90 pecent.
8 Addess by Jan van Koeveinge Page 8/13 Tamiflu fo teatment and pevention of influenza The only neuaminidase inhibito fo oal use Reduces the seveity and duation of symptoms Can educe the isk of pneumonia and death One death epoted in 39,202 patients who took oseltamivi vesus Fifty-eight deaths among 136,800 patients not teated with antivial medication Leading intenational eseach goups that have investigated the efficacy of available antivials against avian H5N1 influenza in animal models have demonstated that Tamiflu is active against this vial stain. As you know, thee is no vaccine as yet fo this influenza vius stain, so Tamiflu is an impotant theapeutic option. Roche ecommends that appoved dose and duation of teatment/chemopophylaxis epesents the minimum equied fo the management of pandemic influenza. Additional studies ae unde way to assess the antivial activity of Tamiflu against the H5N1 avian influenza vius on a boad, ongoing basis. We ae also in discussions with WHO about tials that could povide additional clinical data.
9 Addess by Jan van Koeveinge Page 9/13 Roche is woking with WHO Ove 5 million packs of Tamiflu donated so fa In the event of an outbeak of pandemic influenza, Roche will ship supplies of the dug at its own cost to the aipot neaest the outbeak site WHO is woking with local govenment authoities on distibution We ae in constant contact with WHO and have been able to espond quickly in supplying Tamiflu to potential hot spots whee the dug has been ugently needed. Following the donations we made in 2004 and 2005, the 2 million additional packs of Tamiflu that we donated to WHO in Januay of this yea bing WHO s total stockpile of Tamiflu fo use in the event of an imminent pandemic to oughly 5 million packs. These supplies ae an emegency stockpile, and should not be egaded as a substitute fo national pandemic pepaedness measues. In closing, allow me to say a wod o two about how Tamiflu is manufactued and about ou poduction capacity fo the dug. The amount of detailed infomation we ve published on these topics is unpecedented and eflects both the intense global inteest in the subject and the global impotance of the poduct.
10 Addess by Jan van Koeveinge Page 10/13 The making of Tamiflu Fom aw mateials to active ingedient ANISE ANISE E-COLI Extaction Concentation Puification Modification Removal of biomass Extaction of acid Shikimic acid CHEMICAL CONVERSION 1st step 2nd step 3d step Chemical plant Filtation Dying Epoxide E.COLI Active ingedient Final step FINAL STEP Chemical plant Filtation Dying Azi de Small vessels Dangeous: toxic and potentially explosive Manufactuing Tamiflu is a complex pocess involving 10 main steps, some of which ae quite challenging. The stating mateial used to poduce Tamiflu is shikimic acid, which is eithe extacted fom sta anise pods o obtained by fementation (i.e. using biotechnology). This mateial is souced fom outside supplies. At pesent, most of the shikimic acid used to make Tamiflu comes fom sta anise. Howeve, we intend to aise the popotion obtained by fementation. This will make us less dependent on the (limited) supply of sta anise. Shikimic acid is used to poduce an epoxide intemediate, which is then to an azide. The dependence on azide chemisty in this pat of the poduction pocess necessitates the use of special equipment and specially tained staff. Convesion of the epoxide to the azide has to be caied out unde highly contolled conditions because it involves a potentially explosive eaction. Ou facilities ae not equipped fo this pat of the poduction pocess, which we theefoe entust to patne companies with expetise in this aea. The azide is then used to poduce oseltamivi, the active ingedient of Tamiflu.
11 Addess by Jan van Koeveinge Page 11/13 The making of Tamiflu to finished dug Active ingedient The esulting white oseltamivi powde is filled into capsules afte being ganulated to impove its flow popeties. The alcohol ganulation pocess egisteed fo this poduct is a bit atypical fo the phamaceutical industy, and only a limited numbe of facilities ae equipped to cay it out on a commecial scale. We ae cuently conducting talks with a numbe of companies that have the appopiate facilities and know-how fo specific poduction steps and that could help us expand ou supply chain futhe, if need be. Stong public inteest in the avian influenza situation has esulted in inceased demand fo Tamiflu fom vaious sectos, including pivate individuals and institutions. Ou top pioities ae to ensue that Tamiflu is available to seasonal flu patients and to fill govenment odes fo pandemic eadiness supplies. So fa we have ageed on volumes and delivey schedules with moe than 65 counties that ae stockpiling Tamiflu fo pandemic use. Because of the stong demand and manufactuing lead times fo Tamiflu, we have expessly stated that it would be unealistic to expect that lage Tamiflu odes can be filled at shot notice.
12 Addess by Jan van Koeveinge Page 12/13 Woldwide, moe than a dozen poduction facilities ae involved in the Tamiflu supply chain today, and ove half of them ae opeated by companies othe than Roche. The aw mateials and excipients equied to make Tamiflu ae being souced fom ove 50 outside supplies. Futhe capacity inceases will be achieved by expanding ou poduction netwok step-by-step. Poduction capacity fo Tamiflu Roche is investing poactively Millions of teatment couses '99 - ' Ca pacity foe casts fo 2006 und cu ent at 9 Novembe With the help of patne companies, we will significantly incease ou own poduction capacity this yea, putting us in a position to poduce ove 300 million packs of Tamiflu annually by the end of The expansion will be achieved by a futhe stepwise scale-up of Roche s poduction netwok, both intenally and togethe with thid paties, and means a ten fold incease ove the capacity in 2004.
13 Addess by Jan van Koeveinge Page 13/13 A esponsible esponse Healthcae innovation and copoate social esponsibility ae intetwined. At Roche we take social esponsibility seiously. We have donated a total of ove 5 million packs of Tamiflu to the Wold Health Oganization (WHO) fo apid local deployment if needed. Govenments woldwide can puchase pandemic supplies of Tamiflu at a significant discount. Sub-licenses to manufactue supplies fo local pandemic use have been ganted to companies in China and India. By the end of 2006 Roche will be able to poduce moe than 300 million packs of Tamiflu annually. Poduction planning has ou full attention. Ladies and Gentlemen, avian influenza and the theat of a human influenza pandemic ae challenges confonting the entie global community. In developing Tamiflu, ou company has supplied a poduct with an impotant ole to play in pandemic pepaedness and esponse effots. I can assue you that we do eveything we can to live up to the esponsibilities this entails.
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