Roche posts good half year
results

Basel, 22 July 2010

Roche posts good half year results

Operating profit increases significantly faster than sales
â€" double-digit growth for Core Earnings per share
â€" outlook confirmed

Group

• Group first-half sales up 5% in local currencies (3% in Swiss
  francs, 7% in US dollars) to 24.6 billion Swiss francs.
• Operating profit (before exceptional items) up significantly,
  rising 11% in local currencies (10% in Swiss francs) to 8.8 billion
  Swiss francs â€" again advancing faster than sales.
• Net income rises 37% compared with first half of 2009; lower
  exceptional expenses relating to integration of Genentech.
• Core earnings per share up 11% in local currencies, 9% in Swiss
  francs.
• Full-year outlook for 2010 confirmed.

1 LC= local currencies

Pharma

• Sales grow 4% in local currencies (1% in Swiss francs, 6% in US
  dollars); excluding Tamiflu, sales advance 6%, ahead of the global
  market.
• Major drivers are the Group’s leading cancer
  medicines, as well as Lucentis, Actemra/RoActemra and Mircera;
  sales of oncology portfolio rise by 9% to 11.1 billion Swiss
  francs.
• Operating profit before exceptional items up 9% in local
  currencies (7% in Swiss francs).
• The FDA’s Oncologic Drugs Advisory Committee
  (ODAC) votes that use of Avastin for previously untreated advanced
  HER2-negative breast cancer be removed from the US label. FDA's
  final decision expected by September 2010.
• US marketing application submitted for innovative breast cancer
  medicine Tâ€"DM1 (for advanced HER2-positive breast
  cancer) based on positive phase II results.
• Positive phase-III trial results with Avastin in advanced
  ovarian cancer.

Diagnostics

• Diagnostics sales grow 9% in local currencies (7% in Swiss
  francs, 12% in US dollars) â€" significantly faster than
  the global IVD market â€" driven primarily by
  Professional Diagnostics, Diabetes Care and Applied Science.
• Operating profit rises substantially, up 45% in local
  currencies (47% in Swiss francs).
• Strong benefit of cobas 4800 HPV test in screening for cervical
  cancer demonstrated by ATHENA, the largest clinical trial ever
  performed in this indication.

Barring unforeseen events.

Severin Schwan, CEO of Roche, on the Group’s
Half Year results: “Roche achieved a strong
operating performance in the first half of 2010 despite an
increasingly challenging market environment; net income for the
period was up significantly. Excluding Tamiflu, Pharma sales
increased faster than the market, and Diagnostics continued to grow
significantly above the market rate. The US filing of T-DM1, an
“armed antibody†for the treatment
of HER-2 positive breast cancer, represents a major step towards
offering this innovative medicine to patients who have very limited
treatment options.“

Roche Group

Good half-year results

The Roche Group posted strong operating results in the first
half of 2010. Group sales grew by 5% in local currencies (3% in
Swiss francs; 7% in US dollars) to 24.6 billion Swiss francs. The
Pharmaceuticals Division increased its sales by 4% in local
currencies (1% in Swiss francs; 6% in US dollars) to 19.4 billion
Swiss francs. Demand for the cancer drugs Avastin,
MabThera/Rituxan, Herceptin, Xeloda and Tarceva continued to show
strong growth. Overall sales of oncology products rose 9% in local
currencies in the first half year, enabling Roche to solidify its
leading market position in this segment. Other major growth drivers
in the Pharmaceuticals Division included Lucentis in ophthalmology,
Actemra/RoActemra for rheumatoid arthritis and Mircera for anemia.
These positive factors more than offset the expected significant
decline in Tamiflu sales. Excluding Tamiflu, sales growth was 6% in
local currencies, again ahead of market growth. The Diagnostics
Division expanded its market leadership as sales reached 5.3
billion Swiss francs in the first six months of 2010, a 9% growth
rate in local currencies (7% in Swiss francs; 12% in US
dollars).

This strong growth was led by the Professional Diagnostics
unit’s immunoassay business and Diabetes
Care’s Accu-Chek Aviva, Accu-Chek Performa and
newly launched Accu-Chek Mobile blood glucose monitoring systems,
followed by Applied Science with strong growth in the cell analysis
segment.

The Group’s operating profit before
exceptional items increased significantly by 11% in local
currencies (10% in Swiss francs), again substantially above sales
growth. This rise was driven by the growth in sales and by further
productivity improvements. The Pharmaceuticals Division improved
its operating profit (before exceptional items) by 9% in local
currencies and 7% in Swiss francs to 8.0 billion Swiss francs, due
primarily to higher sales and cost synergies from the Genentech
integration. The Diagnostics Division’s
operating profit grew substantially, advancing 45% in local
currencies and 47% in Swiss francs to 947 million Swiss francs, due
mainly to strong sales growth and ongoing programmes to increase
operational efficiency.

Group net income increased 37% to 5.6 billion Swiss francs,
primarily as a result of the much lower exceptional charges
incurred in respect of the Genentech transaction in the first half
of 2010 compared with 2009. Excluding exceptional items, Group net
income attributable to Roche shareholders rose 8% in Swiss francs.
Core earnings per share, which does not include exceptional items
or amortisation and impairment of intangible assets, increased 11%
in local currencies (9% in Swiss francs).

The Group’s operating free cash flow remained
very solid at 6.4 billion Swiss francs. Roche is accelerating
repayment of the 48.2 billion Swiss francs borrowed on the capital
market to finance the acquisition of all outstanding shares of
Genentech in the first half of 2009. On 30 June 2010, 27% of the
notes and bonds had already been repaid. Furthermore, in the second
half of 2010 Roche will also repay, ahead of schedule, the 2.5
billion US dollar note due 1 March 2012. By the end of 2010 Roche
will thus have repaid one third of the debt incurred to finance the
Genentech transaction.

Full-year outlook for 2010 confirmed

Despite lower Tamiflu sales (expected to total 1 billion Swiss
francs in the current year, down from 3.2 billion Swiss francs in
2009) and the more challenging market environment, Roche confirms
its full-year outlook for 2010 on the basis of the positive
half-year results.

Barring unforeseen events, Roche expects local currency sales
growth in the mid-single-digit range for the Group and the
Pharmaceuticals Division in 2010 (excluding Tamiflu sales). For the
Diagnostics Division, Roche expects to grow significantly above the
market.

Roche is also aiming for double-digit growth in core earnings
per share at constant exchange rates.

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