Overview:

The future of medicine

is personalised

Severin Schwan, CEO

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 – www.roche.com

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Agenda

Morning session

09:00 Severin Schwan: Overview

David Loew: Pharmaceuticals

Hal Barron: Late stage pipeline

10:15 Q&A

10:45 Break

11:00 Daniel O’Day: Diagnostics

Alan Hippe: Financial view

11:40 Q&A

12:00 Lunch

Afternoon session

13:10 Breakout sessions: 3 in parallel

(pRED, gRED, Emerging markets)

14:10 Breakout sessions: 3 in parallel

(pRED, gRED, Emerging markets)

15:10 Closing Q&A

16:00 Drinks

Our strategy

R&D productivity - general considerations

R&D allocation and governance at Roche

Pipeline progress

An increasingly challenging environment

Where do we go from here?

4

Regulators

Medical benefit-risk ratio

• Efficacy (clinical endpoints)

• Safety (‘zero’ tolerance)

Payers

Economic benefit-cost ratio

• Constrained funding capacity

• Demanding real outcome evidence

Investors

Economic risk-return ratio

• Declining Returns

• Declining Growth

5

Roche strategy: Focused on medically

differentiated therapies

Generics

Differentiation

MedTech

OTC

Pre

miu

m f

or

inn

ova

tio

n

Dia Pharma

Focus

Regulators: Optimised benefit / risk ratio

Payors: Optimised benefit / cost ratio

Roche strategy: Leveraging Pharma & Diagnostics

Through-out discovery to market

Unrestricted know-how and IP exchange

Faster adoption of PHC solutions (medicine and test)

Pharmaceuticals

Diagnostics

Development Commercialisation Research

Research assay Technically validated

IVD assay

Clinically validated

IVD assay

6

More efficient development

Roche strategy: Tailor made access options for

high value products

7

Established Markets Emerging Markets

Universal access and coverage

-> Negotiate prices for new medicines

Limited patient access

-> Enable access to public funding

Value based pricing Tiered pricing

Our strategy

R&D productivity - general considerations

R&D productivity at Roche

Pipeline progress

R&D productivity of Pharma industry: average

returns1 falling to critical levels

9 1 Different methodologies (e.g. IRR, economic returns) Sources: Bernstein Research 2011, McKinsey 2011, KPMG 2011, Deloitte 2011, Roche analysis

0%

5%

10%

15%

20%

25%

1960 1970 1980 1990 2000 2010

Bernstein

KPMG

Deloitte

McKinsey

Cost of Capital:

8%-10%

Return on R&D

investment

R&D productivity differs substantially among

players

10

4 x $ 710 m Peak Sales

(per $1 bn R&D)

Average annual

NME peak sales (2001-10)1

US$ bn

Average annual R&D investment (1997-2006)1

US$ bn

Roche

1 Peak sales and R&D calculated pro forma to account for major M&A Source: EvaluatePharma; BCG analysis; Roche analysis

$ 165 m Peak Sales

(per $1 bn R&D)

Implications of R&D productivity challenge

Segregation will continue as only true innovation will be rewarded

11

Willingness to pay for added value

Me

dic

al

dif

fere

nti

ati

on

high low

No / limited

differentiation

High

differentiation

True

innovators

Generics

‘Me-too’

players ??

low

h

igh

Our strategy

R&D productivity - general considerations

R&D allocation and governance at Roche

Pipeline progress

Roche R&D productivity

Key success factors

13

In-house cutting edge science

External innovation

Efficient resource allocation

In house cutting edge science

Providing an environment for top scientists

14

• Culture of empowerment & decentralised

decision making

• At the forefront of leading academic research

Exchange with academia: hiring top

academic scientists/clinicians

Post-doc program : >240 postdocs p.a.

High quality of publications (Science, Cell,

Nature: 17 in 2010, 12 in 2011)

• Focus on translating science into patient

benefit

Patent applications of leading

healthcare companies

1 Source: WIPO-databank, counted are all Patent Cooperation Treaty (PCT)-applications per international classification C (covers all Pharmaceuticals, Biotech and Chemicals, excluding Diagnostics)

0

50

100

150

200

250

300

2009 2010 2011

Companies rated in the above analysis include:

Abbott, Amgen, AstraZeneca, BMS, GSK, J&J, Merck (US), Novartis,

Pfizer, and Sanofi

Roche

R&D resource allocation

Decision criteria for portfolio trade off

15

Development Research

Medical need

Plausibility of scientific hypothesis

Expertise in the field

Scientific judgment

Analysis

Strength of preclinical / early clinical data

Market potential / competition

Technical feasibility

Roche R&D: Allocation of funds

16

Decides

overall ‘risk

appetite’

Corporate

Executive

Committee

(CEC)

Sets total*

budget by unit

(Total CHF 8bn)

• Invest proportionally more into R&D as compared to peers

• Cap / keep R&D stable in view of the overall market risks

Diagnostics

(CHF 0.9bn)

REDs

(CHF 2.5bn)

Chugai

(CHF 0.8bn)

(arms length)

Late stage

(CHF 3.9bn)

Reviews

allocation

Approves LIP

decisions

Oncology Neuroscience Immunology Virology Metabolism

MetMAb e.g.

* Refers to actual 2011 figures

R&D allocation of funds: Next level & governance

Rigorous project evaluations

17

Research Launch

Ph

0

Registration

Major independent decision points

Ph

1

Ph

2

Ph

3

RRC ESPC LSPC / CEC

Research Review Committee

(RRC)

Early Stage Portfolio

Committee (ESPC)

Late Stage Portfolio Committee (LSPC)

Corporate Executive Committee (CEC)

18

Reduce

complexity

Optimise

resource

allocation

Refine

infrastructure

Nutley

• Increase investment in late stage

• Leverage support functions

• Reduce infrastructure costs

(support functions / site

infrastructure)

• Unify sites for ‘non clinical

safety and chemistry’

• Close R&D centres (Nutley)

• Co-locate management

TCRC

Example: Optimise research at pRED

Shanghai

Basel

Welwyn Penzberg

Schlieren

Support Centers

Strategic sites

35 36 47 42 38

16 18

21 23

23 8 8

11 11 11

0

20

40

60

80

2009 2010 2011 HY 2012before R&D

prioritisation

HY 2012after R&D

prioritisationPhase I Phase II Phase III + Registration

New Molecular Entities

Continued focus on external innovation

Roche Partnering

19

150 existing partnerships

33% of total R&D pipeline compounds (phase 1-3) are from

external

CHF 32% of total Pharma sales (2011) are from partnership

compounds

Our strategy

R&D productivity - general considerations

R&D allocation and governance at Roche

Pipeline progress

Roche portfolio: Increasing value through focus

21

35 36 47

42 38

16 18

21 23

23 8

8

11 11

11

0

20

40

60

80

2009 2010 2011 HY 2012

before R&D

prioritisation

HY 2012

after R&D

prioritisation

Phase I Phase II Phase III + Registration

New Molecular Entities

59 62

76 72

79

Expanding into selected therapeutic franchises

22

Non risk-adjusted

2017 onwards 2015 2012 2013 2014

ale

gli

taza

r

on

art

uzu

ma

b

oc

relizu

ma

b

T-D

M1

Potential

Filing

Year

GA

10

1

bit

op

ert

in

Larger

(> 1 bn)

Smaller

(up to

~1 bn)

Metabolism Oncology Immunology Neuroscience Virology

2016/17

leb

rik

izu

ma

b

ron

talizu

ma

b

an

ti-P

CS

K9

LIP candidates

2012 target: 3 out of 5

Bc

l-2

-se

l in

h

etr

olizu

ma

b

MEK

09

73

me

ric

ita

bin

e

da

no

pre

vir

Pe

rje

ta

2012

Late stage pipeline Potential phase II / LIP read outs

23

Number of NMEs

2013

Oncology

Neuroscience

Metabolism

Virology

Immunology

EGFR ADCC Mab (GA201) etrolizumab

MEK 0973

rontalizumab

Bcl-2-sel inhibitor

anti-PCSK9

5

Dual PI3k/ mTor inh.

anti-EGFL7

PI3 kinase inhibitor

anti factor D

crenezumab

mGluR5 antagonist

mGluR2 antagonist

setrobuvir

10

gantenerumab

LIP=Lifecycle Investment Point

Ophthalmology

Summary

1

2 Strong growth in Emerging Markets facilitated by

innovative access models

3 Leading product pipeline providing value for the future

Strategic focus on innovation and driving Personalised

Healthcare

24

We Innovate Healthcare