How to succeed in a changing market

David Loew, Head of Global Product Strategyand Chief Marketing Officer

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Pharma growth rates have declined in last decade

3

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1990 1995 2000 2005 2010 2015 2020

Source: EvaluatePharma

• Bolus of patent expiries• Price pressures

Pharma market growth rate (prescription drugs)

USA +6%

W. Europe -3%

Japan +1%

International +8%

1 Q2 2012 vs Q2 2011In CER=Constant Exchange Rates

4

Strong growth in International regionTotal sales: CHF 17’409m

4,00023%

1,94311%4,651

27%

6,81539%

2.12.0

2.2 2.22.4

Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012

CHF bn

HY 2012 Pharma: Strong performanceInternational region now larger than Europe

+14%1

Strong position through organic growth

5

261 289

158 16282

96

229

404

2011 2016Pfizer Novartis Merck Sanofi Roche GSK

% Pharma Rx market share, 2011

758 980

US

W. Europe

Japan

Emerging markets

Total

CAGR

+2%

±0%

+3%

+12%

+5%

Market size & growth by region (CHF bn)

8%

7%6%

5%5% 5%

Other +2%

Source: IMS market prognosis, excl. OTC Other represents Australia and CanadaSource: Decision Resources

Upcoming patent expiries in developed markets improve affordability of innovative drugs

6

2006-2010 2010-2015

market growth

$139 bn

market growth

$139 bn

loss of exclu-sivity

-$70 bn

net market growth

$69 bn

loss of exclu-sivity

-$120 bn

net market growth

$19 bn

Source: IMS Institute for Healthcare Informatics, Apr 2011.Established market countries are US, Japan, Germany, France, Italy, Spain, Canada, United Kingdom and South Korea

Phase II (23 NMEs)

Phase III(9 NMEs)

Registration(2 NMEs)

OncologyImmunologyVirology

Perjeta (pertuzumab)* HER2+ mBC 1LErivedge* advanced BCC

mericitabine HCV

rontalizumab SLE

danoprevir HCV

mGluR5 antag TRD

LT alpha MAb RA

P selectin MAb ACS/CVD

M1 prime MAb asthma

11 beta HSD inh metabolic diseases

etrolizumab ulcerative colitis

anti-factor D Fab geograph. atrophy

EGFL7 MAb solid tumors

crenezumab Alzheimer‘s

gantenerumab Alzheimer’sMAO-B inh Alzheimer’s

EGFR MAb solid tumors

mGluR2 antag depression

PI3K/mTOR inh solid & hem tumors

setrobuvir HCV

PI3K inh solid tumors

glypican-3 MAb liver cancerHER3/EGFR m. epithelial tumors

onartuzumab (MetMAb) solid tumors

bitopertin schizophrenia

aleglitazar CV risk reduction in T2D

obinutuzumab (GA101) hem. tumors

T-DM1 HER2+ mBC

ocrelizumab MStofogliflozin (SGLT2) type 2 diabetes

lebrikizumab severe asthma

Innovation is reflected in a strong NME pipeline

7

PCSK9 MAb metabolic diseases

arbaclofen fragile X syndrome (FXS)

oxLDL MAb sec prev CV events

CIF/MEK inh solid tumors

Raf & MEK dual inh solid tumors

PD-L1 MAb solid tumors

MEK inh solid tumors

AKT inhibitor solid tumors

MEK inh solid tumors

CD22 ADC hem malignanciesanti-angiogenic solid tumors

PI3K inh solid tumors

Steap 1ADC prostate ca.

ADC heme tumors

ADC ovarian ca.

CD44 MAb solid tumorsALK inhibitor NSCLCPI3K inh solid tumors

Bcl-2 inh CLL and NHL

ADC oncology

ChK1 inh solid tum & lymphoma

Tweak MAb oncology

ADC multiple myeloma

WT-1 peptide cancer vaccine

MDM2 ant solid & hem tumorsHER3 MAb solid tumorsCSF-1R MAb solid tumors

MDM2 ant solid & hem tumors

ADC oncology

ADC metastatic melanomaPI3k inh glioblastoma 2L ChK1 inh(2) solid tumorsBRAF inh (2) BRAF mut melanoma

BACE inh Alzheimer’s

GABRA5 NAM cogn. disordersGIP/GLP-1 dual ago type 2 diabetes

V1 receptor antag autism

IL-6 MAb RAIL-17 MAb autoimmune diseases

TLR7 agonist HBV- infectious diseases

Phase I(38 NMEs)

CardioMetabolismNeuroscienceOphthalmology

As of June 30 2012; * Approved in US, filed in EU

Roche’s oncology portfolio targets unmet needs

8

Cancer deaths Selected Roche products

Molecule Indication

Zelboraf Melanoma

Erivedge BCC

obinutuzumab Hematology

Perjeta Breast

T-DM1 Breast

MetMAb BreastColorectalLung

% Growth

+41%+37%

+58%

+35%Hematology

+48%

+36%

2008 2030

8 M

12 M

Lung

ColorectalBreast

SkinGastricLiver

Esophageal

Hematology

All Others

Note: Worldwide population is expected to grow by 21% from 2008 to 2030; Source: World Health Organization

+49%

9

Redefining HER2 franchise: Perjeta and T-DM1

Herceptin+ chemotherapy

Efficacy

Tole

rabi

lity

Herceptin& Perjeta+ chemotherapy

T-DM1& Perjeta

T-DM1

EMILIA2L mBC

CLEOPATRA1L mBC

MARIANNE, 1L mBCT-DM1&Perjeta,

adjuvant BC

Improve the standard of careMultiple shots on goal in hematological cancers

10MabThera IV/SC and GA101 (per their respective current/planned product profiles) are mostly used in combination with chemotherapy and, in some indications, as maintenance therapy following combined R-Chemo/GA101-Chemo induction

Established standard of care Potential new standard of care Potential future standard of care

2010 2016

MabThera GA101

2012 2013 2014 20152011

Refractoryindolent NHL MabThera GA101MabThera

Subcutaneous

Aggressive NHL

2017 2018 2019 2020

CLL

MabThera GA101MabTheraSubcutaneous

1LIndolent NHL MabThera GA101MabThera Subcutaneous

Additional products in development: anti-CD22 and Bcl-2

Filing timelines

MabThera subcutaneous versus infusion

11

MabThera IV administration can take all day

MabThera SCadministration

Pharmacy preparation

IVline Rituximab IV administration + observation periodWaiting

room

Waiting room

Prep

MabThera SC injection takes 5–7 minutes

No pharmacy dose preparation, no IV line, no mandatory observation periodPh III SABRINA to be presented at ASH 2012

Time saving SC vs IV administration

Innovative approaches to improve market access

12

Established marketsEnvironment increasingly complex

Payers more active/influential

Emerging marketsBuild-up of healthcare systems,

but applying stricter cost regulations already

Enabling access through innovative pricing models

13

Pack based pricing Patient based pricing

Combinations(ex-US)

Indication based

Need for patient based information

Undifferentiated $$ by vial

$+$≠ $$

Avastin: Examples of successful capping programs

14

Potential pay back by Roche Costs covered by payers

Indications likely to reach10/11g per year limit• Breast cancer• Ovarian cancer

StatusGermany: over 40% insured patients covered by capping programItaly: ~30 000 patients tracked since 2009

Germany

Italy

Exceedance of 10 g limitPay back

Treatment with AvastinYear 1

Exceedance of 11 g limitPay back

Treatment with Avastin

6 weeks50% cost sharing

Innovation remains rewarded: Example of Perjeta

15

Herceptin IV totaltreatment cost

Perjeta total treatmentcost

Cap for combination Total cost including capon combination

Illustrative pricing for metastatic breast cancer, ex-US

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Roche growth in E7 countries is largely exceeding the market

17Source: Roche growth reflects in-market sales; Russia by Pharmexpert; India Roche in-market sales from internal data; All others IMS. Roche sales exclude Tamiflu & effect of divestments in Mexico & Turkey.Turkey 1Q 2012 in-market growth: Roche 15%, market -8%.

Current market rank

2011 growth

Roche Market

Brazil 2 10% 5%

China 3 34% 16%

Russia 3 11% 3%

Mexico 5 3% 5 %

Turkey 11 -1% 3%

S. Korea 16 17% 6%

India 28 17% 12%

Increasing polarisation in emerging marketsGrowth in patented medicines and unbranded generics

18

Example: Brazil market showing evidence of polarisation

Share expectedto grow further

Source: IMS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2005 2010

Non-categorised

Protected originals

Unbranded copies

Branded copies

Non-patented originals

Growing segments in Emerging markets

19

2000 2005 2010

Objective: Maintain high share in private segment – expand to public segment

Roche to maintain high share

Out of pocket

Private insurance

Public payers

Growing segment:We are testing various

models to increase access to medicinesSh

are

of fi

nanc

ing

by p

ayer

type

Illustrative for emerging markets

1,234

1,882

∼ 2,800

2010 2011 2012(proj)

+∼50%

+53%

MabThera in Brazilian public market

20

Trea

ted

patie

nts

Untapped pool of potential Herceptin patients

21

0

5'000

10'000

15'000

20'000

25'000

30'000

35'000

40'000

45'000

China Brazil Russia India Mexico Turkey S. Korea

Untreated patients

Treated by Roche

Source: Ideal questionnaires 2010; Herceptin patient pool defined as all Her2+ patients: tested & untested

22

Workshop C

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Biosimilar regulationsHow advanced were regulators before 2010?

24

Biosimilarpathways(excl. Mab)

Biosimilarpathways under development

Law in place

Biosimilar regulationsWhere are we today?

25

Biosimilarpathways

Biosimilarpathways under development

Law in place

Roche supports biosimilar regulatory pathways “Reditux“ example

26Columbia, Guatemala, Iraq, Panama, Morocco, Russia and S. Africa

Reditux registration rejected or delayed, additional data on clinical trial results requested

Roche growth strategy

27

Innovate Redefine the standard of care

Expand Improve patient access

Protect Ensure high standards for patients