Roche: Building on strength

Transcription

1 Roche: Building on strength Erich Hunziker, Deputy Head of the Corporate Executive Committee and CFO 1 This presentation contains certain forward-looking statements. These forward-looking statements may be identified by words such as believes, expects, anticipates, projects, intends, should, seeks, estimates, future or similar expressions or by discussion of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this presentation, among others: 1 pricing and product initiatives of competitors; 2 legislative and regulatory developments and economic conditions; 3 delay or inability in obtaining regulatory approvals or bringing products to market; 4 fluctuations in currency exchange rates and general financial market conditions; 5 uncertainties in the discovery, development or marketing of new products or new uses of existing products, including without limitation negative results of clinical trials or research projects, unexpected side-effects of pipeline or marketed products; 6 increased government pricing pressures; 7 interruptions in production 8 loss of or inability to obtain adequate protection for intellectual property rights; 9 litigation; 10 loss of key executives or other employees; and 11 adverse publicity and news coverage. Any statements regarding earnings per share growth is not a profit forecast and should not be interpreted to mean that Roche s earnings or earnings per share for this year or any subsequent period will necessarily match or exceed the historical published earnings or earnings per share of Roche. For marketed products discussed in this presentation, please see full prescribing information on our website All mentioned trademarks are legally protected 2 1

2 Performance update Our priorities 3 Our business model works - also in the current environment Short term Acting from a position of stability and strength: ~CHF 3 bn organic sales growth 1 Products serving high medical needs - less exposed to economic climate Long term Demand will remain for products with clear medical value Progress in science will lead to more targeted treatment options Well positioned with an innovation-focused business model leveraging Pharma & Diagnostics Genentech minority buy-out Roche reaffirms commitment to Genentech offer and a negotiated agreement 1 YTD Sept 2008, excluding Tamiflu government and corporate pandemic sales 4 2

3 Continued strong growth in both divisions CHF bn % change in USD YTD 9 07 YTD 9 08 CHF local growth Pharmaceuticals excl. Tamiflu pandemic Diagnostics Roche Group excl. Tamiflu pandemic YTD Sept '08: ~CHF 3 bn organic growth Strong underlying growth impacted by currency and Tamiflu effect +10% +11% +3% +11% +10% -89% +6% -2% , CHF m 1,562 3,209 Tamiflu pandemic 1,963-2,605 Roche Pharma GNE Chugai Dia Div Group Excluding Tamiflu pandemic -642 Group incl. Tamiflu pandemic FX Group CHF 6 3

4 Focus on differentiated products paying off Outstanding long-term value creation Group sales 1 (CHF billion) CAGR 15 % Group operating profit 2 (CHF billion) 31.4% % 27.9% % 22.9% 21.3% % CAGR 25 % Continuing to focus on our core assets 1 Prescription and Diagnostics 2 Continuing businesses, before exceptional items 7 Reconfirming objectives for 2008 Sales High single-digit local currency sales increase for Roche Group (excl. Tamiflu pandemic 1 ) Above-market sales growth 1 in both divisions Core EPS Core earnings per share target 2 at least at record 2007 level despite significant increase in R&D investment and considerably lower Tamiflu pandemic sales Shareholder return Continuous increase in dividend pay-out ratio over the next 3 years 1 Excluding government and corporate stockpiling orders of Tamiflu for pandemic use 2 At constant exchange rates Barring unforeseen events 8 4

5 Performance update Our priorities 9 Roche Challenge # 1 Achieve above peer level sales growth for both divisions 1 Can we constantly gain market share in both divisions?

6 YTD Sept 08: Risk-diversified business continues to outperform the market Local sales growth Key products account for >70% of business Division Europe North America Latin America Asia/Pacific Japan 10% 5% 9% 6% 1% 3% 3% 11% 12% 13% 10% 16% 80% 70% 60% 50% 40% 30% 20% Boniva Tarceva Xeloda Pegasys CellCept NeoRecormon/ Epogin Herceptin -3% Other 10% MabThera/ Rituxan Roche excl. Tamiflu pandemic IMS YTD June '08 0% Major growth opportunities outside the US 100 % of Total 2007 Sales PEGASYS HERCEPTIN XELODA TARCEVA CELLCEPT MABTHERA AVASTIN EU / ROW (incl. Japan) US 12 6

7 A well balanced geographic split ROW of continued importance % of Total Pharma Sales Other Pharma EU US ROW 13 Oncology: Europe/RoW continues impressive growth Oncology sales YTD Sept (CHF bn) % 47% 41% YTD 9 04' YTD 9 05' YTD 9 06' YTD 9 07' YTD 9 08' Europe/RoW US Japan local growth +15 % 6% 40% 54% +28 % +9 % +20 % Double-digit growth outside the US Europe/RoW Continued strong increase in utilization across four 6 % approved tumor types Emerging markets contributing to continued MabThera, Herceptin, 40 % Tarceva growth still untapped xx % potential Japan x % Important progress made in portfolio rollout 54 %, Tarceva, Herceptin (adjuvant) launches 14 7

8 Our oncology strategy: Setting new standards of care New tumor types, new combinations, new lines of intervention Clinically differentiated product Example target all tumor types target all possible combinations target earlier (adjuvant) intervention Superior outcome for patients 3 rd line 3 rd line 3 rd line 2 nd line 2 nd line 1 st line 1 st line 15 GIST GBM 2 nd line Ovarian Adjuvant Prostate 1 st line RCC Adjuvant BC Adjuvant Completed NSCLC Ongoing CRC In preparation still early in its journey Realising full potential across tumour types Tumour Colon/ rectal Lung (NSCLC) Breast (HER2-) Breast (HER2+) Kidney (RCC) Early/adjuvant (Potential for cure) Phase III (AVANT, NSABP C-08, E5202, E5204) Phase III (E1505) Phase III (BEATRICE, E5103) Phase III (BETH w/herceptin) also trialed in gastric, ovarian, prostate, anhl, and brain (GBM) (Trial names) [Approval status]. More trials are ongoing than listed above. Advanced/metastatic (Extending life) 1 st -line of treatment 2 nd -line of treatment Launched [EU, US, JP; broad label in 1st and subsequent lines] Launched [EU majority of chemos, US carboplatin/paclitaxel] Launched [EU paclitaxel] Phase III (AVADO, RIBBON-1) Phase III (AVEREL w/herceptin) Launched [EU; with interferon] Phase III (BETA Lung w/tarceva) Phase III (RIBBON-2, incl. w/xeloda) 16 8

9 Funding Roche oncology products are cost-effective GBP in (000) Cost per QALY for selected drugs (UK data NICE/SMC) We aim to expand use of our products to earlierstage cancers, providing full benefit to patients MabThera 1st Line Follicular NHL Stage III/IV MabThera Aggressive NHL Herceptin early BC Tarceva 2nd line NSCLC Statins high risk Herceptin mbc Glivec CML Statins Elderly low risk 17 Oncology is still dramatically under funded Compared to other disease areas Mental disease 25.3% Total disease burden in DALYs Other 26.3% Cardiovascular 17.1% Cancer 16.7% Injuries 8.7% Resp. 5.9% Total healthcare costs Cancer 6.4% Cost breakdown in oncology (example: Germany) Inpatient hospital care 67% Drugs 8% Ambulatory 16% Other 9% Source: A pan-european comparison regarding patient access to cancer drugs, Karolinska Institute DALY: Disability-Adjusted Life Years, figures from 2002/3; Commonly used measure of the burden of disease 18 9

10 Comprehensive development program in RA Covers all treatment stages MabThera current Tx paradigm IMAGE** (MTX naive, X-ray study) SERENE* (MTX IR) MIRROR* (MTX IR, dose escalation) SCORE** (DMARDs IR) REFLEX (Anti-TNF IR) NSAIDs or Cox-2 DMARDs TNF inhibitors 2 nd biologic (+/- MTX) (+/-MTX) Actemra AMBITION* (6 mnth MTX free/ MTX naive, monotherapy) OPTION* (MTX IR) TOWARD* (DMARDs IR) LITHE** (MTX IR, X-ray study) RADIATE* (Anti-TNF IR) * Indication not yet approved, awaiting regulatory approval ** Phase III trial in progress 19 Roche has a low exposure to generics Long-term sustainable business Sales erosion due to generisation (% of 2004 sales) 100% 80% 60% Average European peers 40% 20% Roche 0%

11 Roche has a unique investment case Roche: Unique geographic risk diversification USA (Greater) Europe Japan Asia / China Latin America in CRC Roche: Unique pillars of value risk diversification in NSCLC in BC MabThera Xeloda adjuvant CC adjuvant NSCLC Herceptin Tarceva Actemra MabThera in RA adjuvant BC Pegasys Immuno- Diagnostics Neo Recormon Mircera Diabetes Care Boniva CellCept Molecular Diagnostics CETP i GLP-1 Pertuzumab Ocrelizumab (AI) FUTURE PILLARS 21 The short/medium-term sales perspective Challenge # 1: Achieve above industry-standard sales growth Conclusion # 1: Roche wants to maximize assets on hand and to translate value opportunities into reality 22 11

12 Challenge # 2 Turn attractive top line into attractive bottom line 2 Can we achieve an attractive top-line and still deliver strong EPS growth? Doing the right things right Three focus areas People are key! Activate potential and constantly educate: to learn faster than our competitors is the only sustainable factor of success! The right quantum size for Roche? Fixed cost versus variable cost Operational productivity 24 12

13 To learn faster than the competition is the only sustainable competitive advantage of a company! Activate our employees potential Constant education to overcome fear of change Number of employees To achieve our ambitions we have to activate the potential of our 80,000 employees! Our leadership and communications efforts have to concentrate here low Readiness for change high 26 13

14 Innovation and Change Management Performance improvements are not linear Performance Major obstacles are overcome; innovation reaches certain adoption level Innovation widely adopted; further pushing the performance with this innovation becomes increasingly difficult Time 27 Large-Scale Transformation Requires multiple S-Curves building on each other Performance Critical for large scale transformation is that major innovations build on each other Quantum change Continuous improvement; preparation of next quantum change Time Combination of quantum-leap progress and continuous improvement Organisation needs a major step change every few years followed by a period of stability to digest, optimize and continuous improvements 28 14

15 What is the right quantum size for a sustainable Roche? Even if costs grow considerably slower than sales, there is risk that we build up too much infrastructure / fixed costs! Sales 29 Constantly improving operational productivity Operational productivity is an important key enabler for the Roche Group We must become better and cheaper in whatever we do! 30 15

16 Committed to continuously increase pay-out ratio over the next 3 years CHF Dividend CAGR 1 ( 91-07): 19% Compound Annual Growth Rate compound includes centenary annual growth bonus. rate 2007 Dividend: Proposed by the Board of Directors. 31 Short/medium term bottom-line perspective Challenge # 2: Achieve above industry-standard value creation Conclusion # 2: Roche has many programs running to ensure above industry standard EPS-growth 32 16

17 Challenge # 3 Filling the strategic gap Can we produce enough internal and external innovation to maintain the Roche Group s Leadership position? Sustainable leadership How can we constantly provide benefit to customers? Innovation Research Development Production Marketing & Distribution Customer benefit Which degree of innovation (= medical differentiation) is necessary to jump regulatory and reimbursement hurdles? 34 17

18 How could the new S-curve look like for a differentiated healthcare company? Benefit, Performance Medically differentiated products The power of statistics basis of drug approval Stratification of patients by biomarkers Individual patients, Payors and physicians at the core Efficiency to compensate for price cuts Issues with noncompliance Future built on price increases Physicians at the core Evolution over time 35 Roche is extremely well positioned to be a pioneer in differentiated healthcare and personalized medicine concepts Benefit, Performance Differentiated healthcare : personalized medicine (e.g. dialysis, cancer, diabetes, HIV, Hepatitis) Pharma 1990: primary care versus specialty care Evolution over time 36 18

19 Roche 2015: Disease Biology Areas (DBAs) Alignment and focus Disease Biology Areas Idea DBA Oncology DBLT DBA Metabolic DBLT DBA CNS DBLT Market Focus on five DBAs Decisions made by Disease Biology Leadership Teams (DBLTs) against measurable metrics Up to Proof of Concept: DBLTs manage compound progression within respective DBA After Proof of Concept: DBLTs responsible for conducting scientific/ medical reviews and providing options to Pharma Leadership Team DBA Inflammatory DBLT Clear focus More independent and flexible disease areas DBA Viral DBLT Faster and simpler decision processes 37 Key drivers for long term development in place Develop the short term drivers while shaping the others Inherent development risk Low High ILLUSTRATIVE Oncology Autoimmune Existing Earlier Phases Maturity of portfolio Virology CNS Metabolic 38 19

20 Phase 3 Major Roche managed projected submissions Over the next years mbc + docetaxel (EU) glioblastoma 2nd line (EU) MabThera CLL (EU) Tarceva+ NSCLC 2nd line (EU) MabThera CLL relapsed (EU) mbc + standard chem (EU) Herceptin gastric Ca (EU) Tarceva NSCLC 1 st line maint (EU) Tarceva + NSCLC 1 st line maint (EU) Xeloda adj CC combo oxaliplatin MabThera RA DMARD IR + MTX-naive and PJD (EU) adj CC (EU) gastric Ca metastatic (EU) ovarian Ca (EU) MabThera inhl maint 1 st line (EU) Xeloda adj BC Xeloda+ adj CC (EU) taspoglutide (GLP-1) (R1583) type II diabetes ocrelizumab (R1594) RA S & S + LN (EU) prostate Ca (EU) +Herceptin mbc 1st line (EU) pertuzumab (R1273) HER 2+ mbc (EU) ocrelizumab (R1594) RA PJD (EU) adj mbc Her 2+(EU) adj NSCLC (EU) HER2- adj BC (EU) MabThera+ aggressive NHL (EU) Tarceva adj NSCLC (EU) post 2011 DBA Oncology DBA Inflammation DBA Virology DBA Metabolic DBA CNS Others dalcetrapib (CETP inh) (R1658) dyslipidemia Phase 2 aleglitazar (R1439) type II diabetes glioblastoma 1st line (EU) NSCLC squamous (EU) IGF-1R inh humab(r1507) Ewing s sarcoma HPV 16 (R3484) cervical neoplasia Alpha7 nic ago (R3487) AD / schizophrenia GlyT1 inh (R1678) Schizophrenia pertuzumab (R1273) early BC (EU) ocrelizumab (R1594) RRMS (EU) Tarceva+ NSCLC 1 st line (EU) CERA (R744 ) cancer anaemia TDM1 (R3502) mbc (EU) RAR gamma (R667) emphysema 39 Status as of September 30, 2008 Unless stated otherwise, submissions will occur in US and EU Roche Pharma pipeline overview Focused on five Disease Biology Areas Oncology Xeloda MabThera Herceptin Tarceva Pertuzumab T-DM1 R1507 (IGF-1R mab) Apomab Apo2L/TRAIL Anti-CD40 mab Hedgehog antagonist 18 ph. I compounds On Hand RA/Inflammation MabThera Actemra R1594 ocrelizumab R667 RARg 11 ph. I compounds Metabolic R1658 CETP Inh. R1583 GLP-1 R1439 dual PPAR 9 phase I compounds Promising Late Stage Virology Pegasys Tamiflu R3484 HPV16 R7128 HCV pol. Inh. R7227 HCV prot. inh. Emerging Mid-Term CNS ocrelizumab RRMS R1678 Schizophrenia R3487 Alzheimer s 4 phase I compounds Early Stage 40 20

21 Long-term perspective Roche 2015 is a crucial platform Challenge # 3: Filling the value gap Conclusion 3: With Roche 2015 we have the right platform in place to identify the right priorities 41 We Innovate Healthcare 21