011011 - roche at jp morgan_11211_13506[1]
TRANSCRIPT
Roche: Ensuring sustained success in a more challenging environment
JP Morgan - January 2011Dr. Erich Hunziker, Deputy Head of the Corporate Executive Committee and CFO
2
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; and11 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
All mentioned trademarks are legally protected
3
A position of strength
Operational Excellence – adapting to a changing environment
Continued focus on innovation
4
Even in an economic downturn demand for healthcare increases; but funding is and will become more challenging
Funding of healthcare
Today 2020
Paymentsby individuals
Co-payment-systemsSlowdown
of EconomySocial security systems
No. of healthcare events
Today 2020
Higher life expectancy
Population growth
Researchactivities
Access to healthcare
Health awareness
5
Emerging markets show strong growthand are a Roche focus point
20.4UK11
22.9Brazil9
23.4Russia8
26.1Italy7
26.6Spain6
40.1France5
15.6India14
12.4Mexico15
IMS Health Pharma Market Ranking 2013 US $ Bio
20.2Venezuela12
Turkey
Canada
Germany
China
Japan
United States
16.313
20.510
46.14
66.73
93.32
289.81
Source: IMS Health, Market Prognosis June 2009
Growth (CAGR) 2008-14
US, EU 3-4%
APAC, LATAM, CEMAI 9-13%
Total 5-6%
Source: CAGR 08-14 Decision Resource/groupH (+/-1.5% assumed)
6
13.2
11.5
10.3
9.7
8.9
7.2
6.4
6.1
ROCHE
NOVARTIS
ASTRAZENECA
BAYER
SANOFI-AVENTIS
GSK
PFIZER
MERCK & CO
Full Year 2009 YoY Growth %
Emerging markets also reward innovationRoche has the leading growth rate in emerging markets
0 5 10 15
5.4%
5.4%
5.3%
3.6%
3.5%
3.2%
3.1%
3.7%
% Market Share
Source: IMS Health MIDAS FY 2009 US$ LC Roche International Regions: Asia Pac, CEMAI, Lat AM (based on Roche subscription)
7
Biotech products drive growth in both divisions
67%
Biotech products as % of sales
Pharma Division
85%
Diagnostics Division
H1’ 2010
8
Long patent protection Biosimilars facing high hurdles
Long primary patent protection of our key biologics
similar2018Pegasys
earlier2018Rituxan/ MabThera
earlier2019Herceptin
marketed byNovartis
2019Lucentis
similar2019Avastin
EUROW/EM
USPatents
Biosimilars outlook
ROW/EM: investment in countries with strong IP regulations (China)
Brand awareness important
EU: legal and regulatory hurdles likely to remain high for biosimilars
US: 12 years data exclusivity
• 2 routes for biosimilar approval:
- Proof of similarity- Proof of inter-changeability
Both requiring clinical trials (still to be specified by FDA)
99
Biosimilar draft guidelines in Europe
• Phase III clinical trials (double blind, equivalence) as normal route for showing similarity, in particular where no pharmacodynamic (PD) pathway
– In Oncology usually no PD established– End points: Response Rate, PFS where most sensitive. OS data to be collected
• Clinical trials required for diseases with different mode of action – Rheumatoid Arthritis, Oncology– Metastatic, adjuvant
• Extrapolation only to indications with same mode of action– Not for different diseases, different mode of action, different dosing, different safety
requirements
• The requirements for clinical evaluation of biosimilar mAbs are open to broad interpretation in the current draft guideline. Roche believes that a number of aspects needs to be clarified prior to final implementation
10% Sales Lost calculated by subtracting given year sales (‘10, ’11, ‘12, ‘13) from full year sales from year prior to LOE.Data excludes sales lost impact of products with LOE prior to 2010.Source: Evaluate Pharma
40%
35%
30%
25%
0%
20%
10%
15%
5%
% o
f US
Sal
es L
ost
to G
ener
ics
/ B
iosi
mila
rs
Roche/Genentech
Pfizer/Wyeth
GlaxoSmithKline
Sanofi-Aventis
AstraZeneca
Johnson & Johnson
Eli Lilly
Merck/Schering Plough
2010 2011 2012 2013
Roche: Limited exposure to patent expiries
Novartis
11
Key Pharmaceuticals & Diagnostics productsA risk-diversified portfolio of drugs and BUs
MabThera/Rituxan
Xeloda
NeoRecormonCellCept
Herceptin
Avastin
Pegasys
Sal
es (
CH
F bn
)
Clinical Chemistry
Immunochemistry
Tarceva
Lucentis
* Sales 2009
0
5
10
15
20
25
30
35
'03 '04 '05 '06 '07 '08 '09
>C
HF
6bn*
>C
HF
1bn*
>C
HF
5bn*
2 with > than CHF 6 bn
1 with > than CHF 5 bn
11 with > than CHF 1 bn
Diabetes Care
Molecular DxBoniva/Bonviva
12
Actemra/RoActemra in Rheumatoid Arthritis Successful launch
0
20
40
60
80
100
120
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
CHF m
• Uptake remains very encouraging
• In US, Actemra prescribed by nearly 60% of rheumatologists, patient share currently 4-7% following anti-TNFs
• In Japan, launch restrictions lifted, improving patients’ access to Actemra
• Upcoming filing for sJIA in US and EU
Actemra/RoActemra quarterly sales
13
TamifluSales at normalized levels
Tamiflu quarterly sales (CHF m)
746
460
192
458
45 50 36106
304 349
727
533422
17091
119
65
54
233
65
75
97
260
267 663
95
237
0
200
400
600
800
1'000
1'200
Q1
07
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
Retail
Pandemic¹
1Governmental & Corporate
14
19.8
22.8 22.024.0 24.6
0
5
10
15
20
25
30
HY 2006 HY 2007 HY 2008 HY 2009 HY 2010
1 before exceptional items
Operating profit1 (CHF bn) and margin
Continuous growth in sales and margin
Group sales (CHF bn)
5.8
7.57.0
8.08.8
35.5%33.2%
0
2
4
6
8
10
12
HY 2006 HY 2007 HY 2008 HY 2009 HY 20100%
5%
10%
15%
20%
25%
30%
35%
40%
45%
CAGR: 11%
15
A position of strength
Operational Excellence – adapting to a changing environment
Continued focus on innovation
16
ApproachComprehensive scope, differentiated measures
Research & Early Dev.
Development
Tech Ops / Sites
Commercial – US/EU
1 Finance, IT, HR, Communication, Legal
Commercial - ROW
GroupFunctions1
G&A/Procurement
Moderate impactStrong impact
gRED pREDPharma
PartneringPharma
Medicines
17
Financial impact Expected savings of CHF 2.4 billion by 20121
2011 2012
Pharma Medicines
1’830
2’440
pRED
Other2
Group Functions
2 Pharma Partnering, gRED, Diagnostics sites
Commercial
Tech Ops & Sites
Development
1 In addition to synergies of CHF 1 billion from the Genentech integration
CHF million
140
420
80
120
370
440
270
320
1070900
70
70
18
Impact on headcount – by functionExpected reduction of 4’800 positions by end of 2012
TransferredPositions2
Positionsreduced
PharmaMedicines pRED Diagnostics Other1
1 Group Functions, Pharma Partnering, gRED
Commercial
Development
Tech Ops/Sites
-4‘800
-600
-640-260
-4’800+1‘500
-2‘650
-800
-1‘350
-6‘300
Positionsaffected
2 Total number of positions transferred to other sites (800)/3rd parties (700)
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1500
1200
900
400
200
400
600
200
Financial impactOne-off restructuring costs of about CHF 2.7 billion
CHF million
2010 2011 2012
Non-Cash
Cash
Total 2010-12
1’500
800
400 2’700
20
0%
25%
50%
75%
100%
9 10 11 12 13 14 15 16 17 19 21 39
EUR USD CHF GBP
Early debt redemption of USD 2.5 bn note due 201233% of Genentech transaction related debt repaid by September 2010
• Exercise of call option on 9 September 2010 to redeem USD 2.5 bn notes originally due 2012
• Repayment of USD 3.0 bn and EUR 1.5 bn floating rate notes in Q1/2010
• Of the CHF 48.2 bn bonds and notes issued to finance the Genentech transaction, cumulative 15.7 bn (33%) will have been repaid as per September 2010 1
• Outlook 2010: USD 0.5 bn ‘Genentech legacy’ note repayment at maturity in July 2010
1) Original net proceeds in CHF
21
0utlook for 2010: on track to achieve the goals
Barring unforeseen events;Total Tamiflu sales of up to CHF 1 bn assumed for 2010; LC=Local Currency* Continuous increase in dividend pay-out ratio over the period 2008-2010
Sales growth (in LC) Group & Pharma (excl. Tamiflu): mid single-digitDiagnostics: significantly above market
Core EPS growth (in LC) Double-digit
Synergies 2010: CHF 800 m2011: CHF 1,000 m
Debt 2010: 33% reduction (revised from 25%)2015: Aim to return to net cash position
3 yr Dividend outlook Maintained (as announced in 2008)*
R&D investment Slightly below 2009 level
22
Financial impact 2011 vs. 2010Guidance to be provided with 2010 year-end results
Illustrative
• Price decline
• US health carereform
• Tamiflu
• Avastin mBC
Results from‚OperationalExcellence‘
Profit contributionof underlying
business growth
Riskfactors
Operating
Profit 2010
23
A position of strength
Operational Excellence – adapting to a changing environment
Continued focus on innovation
24
Competitors’ strategies to address the trendsTwo distinctly different groups emerging
DiversificationBecoming more “Healthcare” than pure “Pharma”(incl. OTC, vaccines, medical devices, generics, branded generics, bio-similars, eye care, etc.)
FocusPharma / Diagnostics(no generics or bio-similars)
Roche
25
Our strategic franchisesFocus on areas with high unmet medical need
CNSHigh unmet medical need - high risk/high reward“The new oncology?”
Virology Focus on hepatitis; existing infrastructure to launch new products.
Metabolism Only dalcetrapib targets primary care; aleglitazar: specialty product.
Oncology Leader in oncology with strong pipeline-Regulatory requirements evolving, raising the bar for new products (including competition)
Inflammation RA biologics: area of high growth – Actemra strongly positioned
26
Our DistinctivenessDiversity of approaches fueling global scale and reach
Autonomous centers
GenentechR&ED
Diversity Scale, Reach, Speed
“Federation” of >150 partners
* DBA: Disease Biology Areas
RocheDBAs* Research
Early Dev.
Worldwideexecution
Roche Dx
Chugai
Late-stage development
Manufacturing
Commercialisation
27
Roche Group pharma R&D pipeline today
Status as of November 10, 2010
phase I (38 NMEs)
phase II (17 NMEs + 7 Als)
phase III(8 NMEs + 23 Als)
Registration(1 NME + 10 Als)
NMEAdditional Indication
OncologyInflammation/ImmunologyVirologyMetabolic/CardiovascularCNSOphthalmologyOthers
RG-No Roche Genentech managedCHU Chugai managedEVO Evotec
RG105 MabThera is branded as Rituxan in US and Japan
RG1569 Actemra is branded as RoActemra in EU
* approved in EU** filed in US
hedgehog path inh operable BCCRG3616Met Mab mNSCLCRG3638
pertuzumab EBC HER2+RG1273
hedgehog path inh advanced BBCRG3616 Avastin mBC 2nd lineRG435**
pertuzumab mBC HER2+ 2nd lineRG1273
topoisomerase I inh gastric cancerCHUnavitoclax (ABT-263) sol & hem tumorsRG7433
OX40L huMab asthmaRG4930lebrikizumab (anti-IL13) asthmaRG3637palovarotene emphysemaRG667
rontalizumab (IFN alpha Ab) SLERG7415
Xolair chronic idiopathic urticariaRG3648HPV16 cervical neoplasiaRG3484 nucleoside polymerase inh. HCVRG7128* danoprevir (protease inh) HCVRG7227SGLT2 inh type 2 diabetesRG7201
nic alpha7 ADRG3487mGluR5 antag (2) TRDRG7090NMDA receptor antag TRDEVO
ocrelizumab RRMSRG1594
anti-glypican Mab liver cancerCHUrhuMab Beta7 ulcerative colitisRG7413
anti-LT alpha RARG7416
serine palmitoyltransf inh HCVCHU
gantenerumab (A-beta) Alzheimer‘sRG1450
anti-factor D geographic atrophyRG7417
BHT-3021 type 1 diabetesRG7426
mGluR2 antag (2) depressionRG1578
anti-Abeta Alzheimer‘sRG7412triple reuptake inh depressionRG7166
11 beta HSD inh metabolic diseasesRG4929P selectin huMab PVDRG1512
ABCA1 inducer dyslipidemiaRG7273anti-oxLDL sec prev CV eventsRG7418
GABA-A a5 inv ago cogn. disordersRG1662
anti-IL-17 Mab RARG4934anti-M1 prime Mab asthmaRG7449
nucleoside analogue HCVRG7348
BRaf inh met. melanoma 2nd/3rd l.RG7204
EGFR huMab solid tumorsRG7160CIF/MEK solid tumorsRG7167Raf & MEK dual inh solid tumorsRG7304
anti-PLGF solid tumorsRG7334anti-NRP1 solid tumorsRG7347
MDM2 ant (2 ) solid & hem tumorsRG7112
MEK inh solid tumorsRG7420
PI3 K/mTOR solid & hem tumorsRG7422
PI3 kinase inh solid tumorsRG7321
anti-EGFL7 solid tumorsRG7414
dulanermin cancerRG3639
AKT inhibitor solid tumorsRG7440
MEK inh solid tumorsRG7421
CD22 Mab vcMMAE solid tumorsRG7593
MabThera iNHL maint 1st lineRG105*
Avastin mBC combo std chemos 1st l.RG435Avastin mBC combo docetaxel 1st l.RG435*
Edirol osteoporosisCHUEPOCH chemo induced anemiaCHU
Tarceva NSCLC EGFR mut 1st lineRG1415
CRTH2 antag asthmaRG7185
Rituxan NHLfast infusionRG105pertuzumab mBC HER2+ 2nd lineRG1273BRaf inh(2) BRAF mutated melanomaRG7256 Avastin adj BC HER 2+RG435
Avastin ovarian cancer 1st lineRG435Avastin mBC combo Herceptin 1st lineRG435Avastin adj NSCLCRG435
Actemra sJIARG1569GA101 anti-CD 20 aggr. NHLRG7159
HCV pol (9) HCVRG7342
T-DM1 EBCRG3502
GlyT1 inh schizophreniaRG1678
Avastin adj BC HER2-RG435
Avastin relapsed ovarian caRG435Avastin high risk carcinoidRG435Avastin glioblastoma 1st lineRG435
Avastin adj BC Triple negRG435
aleglitazar CV risk reduction in T2DRG1439
taspoglutide T2DRG1583dalcetrapib atherosclerosis CV risk red.RG1658
Lucentis diabetic macular edemaRG3645Lucentis AMD high doseRG3645
pertuzumab mBC HER2+ 1st lineRG1273
Herceptin sc formulation HER2+RG597Herceptin adj BC HER2+ (2yrs)RG597
GA101 anti-CD 20 iNHLRG7159BRaf inh met. melanoma 1st lineRG7204
Tarceva adj NSCLCRG1415
Actemra early RARG1569
T-DM1 mBC 1st line HER2+RG3502
GA101 anti-CD 20 CLLRG7159
Actemra RA DMARD IR H2HRG1569
Avastin mCRC TML RG435
T-DM1 mBC 2nd line HER2+RG3502
Actemra sc formulation RARG1569
Tarceva NSCLC EGFR mut 1st lineRG1415
Actemra Ankylosing SpondylitisRG1569
Rituxan ANCA assoc vasculRG105**
Her3 Mab solid tumorsRG7597Antiangiogenic solid tumorsRG7594
IAP antag(2) oncologyRG7459FGFR3 oncologyRG7444
28
Impact on product pipelineIndustry-leading late stage pipeline maintained
2007 2008 2009 2010E
Number of NMEs
2
4
10Metabolic
Oncology
Inflammation
ocrelizumab
dalcetrapib
pertuzumab
dalcetrapib
taspoglutide
Actemra
ocrelizumab
aleglitazar
CNS
taspoglutide
ocrelizumab
pertuzumab
T-DM1
Hedgehog inh
BRAF inhibitor
RG7159 (CLL)
GlyT-1 inh
up to 14Virology
1 LIP and phase III decision pending
dalcetrapib
taspoglutide
aleglitazar
SGLT2 inh1
GlyT-1 inh
ocrelizumab MS1
lebrikizumab1
HCV pol inh
pertuzumab
BRAF inhibitor
T-DM1
Hedgehog inh
RG7159(CLL, NHL)
MetMAb
29
Impact on product pipelineProgressing Personalized Healthcare
T-DM1Metastatic breast cancer
(HER-2 expression level)
PertuzumabMetastatic breast cancer
(HER-2/3 expression level)
RG 7128Hepatitis C
(HCV viral load, genotype)
1 LIP and phase III decision pending
MetMAbNon-small cell lung cancer
(MET status)
Lebrikizumab1
Asthma
(periostin level)
RG7204Metastatic melanoma
(BRAF V600E mutation)
30
Diagnostics Continued high growth driven by need for medical value
HPVearly diagnosis
BRAF testpatient selection
dual HER2protein & gene
IVD <2 % total worldwide healthcare spendInfluences >60 % of critical decision making
MRSAscreening
Potential to improve healthcare efficiency
Innovative tests in areas of medical need
Digital Pathologytissue analysis
Patch pump diabetes care
Testing efficiency
Diagnosis
Companion Diagnostics
medical value
31
• We do not sacrifice our long-term future by short-term
cost cutting: innovation remains key !
• We have established an entrepreneurial model for our R&D – setup
• We are preparing for fundamental changes
in the healthcare environment
Roche delivering now – but still investing into the future!
The Roche advantages
32
We Innovate Healthcare
33
Impact on headcount – by geographyMain impact in US and Europe
USA CHEurope
(excl. CH) ROW
-3’550
-770
-1’300
-680 -6‘300
Positionsaffected
TransferredPositions1
Positionsreduced
1 Total number of positions transferred to other sites (800)/3rd parties (700)
-4’800+1‘500
34
Financial impactOne-off restructuring costs of about CHF 2.7 billion
Total 2010-12
2’700
IT / Other costs
Portfolio prioritization costs
Site closure and transfer costs
Employee-related costs
CHF million
400
1200
800
300
35
Advanced Non-Small Cell Lung Cancer
Avastin: Portfolio within a portfolioKey treatment option in multiple tumor types
MetastaticColorectal
• Superior OS 1st and 2nd line• Superior PFS 1st and 2nd line
• Superior OS 1st line• Superior PFS 1st and 2nd line
Ovarian • Superior PFS front line
• Superior PFS in multiple 1st
line trials • Superior PFS in 2nd line
MetastaticBreast
• Unsurpassed PFS and OSRecurrent
Glioblastoma
Renal • Superior PFS in 1st line
2009 Sales
75%- 80%
20%-25%