Roche Diagnostics Positioned for growth
Roche Diagnostics Positioned for growth
Roche Diagnostics Positioned for growth
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<strong>Roche</strong> <strong>Diagnostics</strong><br />
<strong>Positioned</strong> <strong>for</strong> <strong>growth</strong><br />
Heino von Prondzynski<br />
CEO Division <strong>Roche</strong> <strong>Diagnostics</strong><br />
London, September 9th, 2005<br />
1<br />
r<br />
This presentation contains certain <strong>for</strong>ward-looking statements. These <strong>for</strong>ward-looking<br />
statements may be identified by words such as “believes”, “expects”, “anticipates”,<br />
“projects”, “intends”, “should”, “seeks”, “estimates”, “future” or similar expressions or<br />
by discussion of strategy, goals, plans or intentions. Various factors may cause actual<br />
results to differ materially in the future from those reflected in <strong>for</strong>ward-looking<br />
statements contained in this presentation among others: (1) pricing and product<br />
initiatives of competitors; (2) legislative and regulatory developments and economic<br />
conditions; (3) delay or inability in obtaining regulatory approvals or bringing products<br />
to market; (4) fluctuations in currency exchange rates and general financial market<br />
conditions; (5) uncertainties in the discovery, development or marketing of new<br />
products or new uses of existing products; (6) increased government pricing pressures;<br />
(7) interruptions in production; (8) loss of or inability to obtain adequate protection <strong>for</strong><br />
intellectual property rights; (9) litigation; (10) loss of key executives or other employees;<br />
and (11) adverse publicity or news coverage.<br />
For marketed products discussed in this presentation, please see full prescribing<br />
in<strong>for</strong>mation on our website at www.roche.com.<br />
2
Financial Per<strong>for</strong>mance<br />
Growth Drivers<br />
Strategy and Outlook<br />
3<br />
<strong>Roche</strong> <strong>Diagnostics</strong>: a significant business<br />
One quarter of <strong>Roche</strong> Group sales & EBITDA<br />
r<br />
H1 ’05 Sales CHF 16.6 bn<br />
H1 ’05 EBITDA CHF 5.5 bn<br />
<strong>Diagnostics</strong><br />
<strong>Diagnostics</strong><br />
76 %<br />
24 %<br />
77 %<br />
23 %<br />
Pharma<br />
Pharma<br />
4
<strong>Roche</strong> <strong>Diagnostics</strong><br />
Highlights H1 '05<br />
r<br />
Sales &<br />
margin<br />
<strong>growth</strong><br />
• Consistent sales <strong>growth</strong> as predicted<br />
• Operating margins on track as guided<br />
Key<br />
approvals<br />
<strong>for</strong> H2<br />
<strong>growth</strong><br />
• Accu-Chek Aviva (FDA cleared)<br />
• Accu-Chek Spirit (FDA cleared)<br />
• Cobas AmpliScreen HBV Test (FDA approved)<br />
News<br />
• Number of IP & marker access agreements<br />
• Agreement with Lilly to develop optimized biomarker<br />
research assays<br />
• Exclusive strategic deal with 454 Life Sciences<br />
• Inauguration of Branchburg PCR manufacturing facility<br />
• FDA inspection of Burgdorf conducted<br />
5<br />
H1 '05: <strong>Diagnostics</strong> sales<br />
r<br />
H1 '04 H1 '05 <strong>growth</strong><br />
CHF m CHF m local CHF<br />
Diabetes Care 1 1,353 1,375 3 % 2 %<br />
Molecular <strong>Diagnostics</strong> (ex. ind. bus.) 487 503 5 % 3 %<br />
Centralized <strong>Diagnostics</strong> 1,378 1,430 5 % 4 %<br />
Near Patient Testing 1 336 338 3 % 1 %<br />
<strong>Roche</strong> in vitro <strong>Diagnostics</strong> 3,554 3,646 4 % 3 %<br />
Applied Science 275 272 1 % -1 %<br />
Molecular Diag - industrial business 50 52 11 % 4 %<br />
Life Science business 325 324 2 % 0 %<br />
<strong>Roche</strong> <strong>Diagnostics</strong> 3,879 3,970 4 % 2 %<br />
2004 sales of NPT and DC have been adjusted to reflect switch of ‘Professional Glucose’ from DC to NPT<br />
6
H1 '05: Sales by Region<br />
r<br />
CHF 3,970 m<br />
local sales <strong>growth</strong><br />
Europe 1 49 %<br />
Asia-Pacific 7 %<br />
Europe<br />
Nth<br />
America<br />
-1 %<br />
4 %<br />
Japan 5 %<br />
Iberia/ Latin<br />
Am<br />
10 %<br />
Iberia/Lat Am 10 %<br />
Asia-Pacific<br />
15 %<br />
Others 1 %<br />
Nth America 28 %<br />
Japan<br />
8 %<br />
1 Europe, Middle East and Africa (excl. Iberia)<br />
7<br />
<strong>Roche</strong> <strong>Diagnostics</strong><br />
Gained market leadership in Japan<br />
r<br />
Relative market share 2004 (in %) 1<br />
US<br />
EMEA*<br />
Iberia/<br />
Latin Am<br />
Japan<br />
Asia Pacific<br />
1<br />
<strong>Roche</strong><br />
15 %<br />
<strong>Roche</strong><br />
28 %<br />
<strong>Roche</strong><br />
25 %<br />
<strong>Roche</strong><br />
10 %<br />
<strong>Roche</strong><br />
20 %<br />
2<br />
J&J<br />
13 %<br />
Abbott<br />
13 %<br />
Abbott<br />
17 %<br />
Sysmex<br />
9 %<br />
Abbott<br />
13 %<br />
3<br />
Abbott<br />
11 %<br />
Bayer<br />
9 %<br />
Izasa/<br />
Beckmann<br />
13 %<br />
Abbott<br />
9 %<br />
Bayer<br />
7 %<br />
* Europe, Middle East and Africa<br />
1 Source: company reports, Boston Biomedical Consultants, Fuji Keizai, <strong>Roche</strong> analysis<br />
8
Consistently growing above industry<br />
Gaining share from a high base<br />
r<br />
% market share<br />
39 38 38 37 35<br />
Others<br />
Dade Behr.<br />
Beckman C.<br />
Bayer<br />
J&J<br />
Abbott<br />
<strong>Roche</strong><br />
6 6 6 6 6<br />
7 7 7 7 7<br />
9 9 8 8 9<br />
9 10 10 10 10<br />
14 14 13 12 12<br />
15 17 18 20 21<br />
2000 2001 2002 2003 2004<br />
Source: <strong>Roche</strong> analysis, Boston Biomedical Consultants, company reports<br />
9<br />
Margins outpacing competitors<br />
r<br />
Operating profit 1<br />
EBITDA<br />
% of sales<br />
35%<br />
30%<br />
25%<br />
20%<br />
15%<br />
10%<br />
5%<br />
0%<br />
'00 '01 '02 '03 '04 '00 '01 '02 '03 '04<br />
31.2<br />
29<br />
28<br />
26<br />
27<br />
21.4<br />
19<br />
18 19<br />
17<br />
17<br />
17 18<br />
15 16<br />
12 11<br />
12 13<br />
11<br />
<strong>Roche</strong> <strong>Diagnostics</strong><br />
Av. peer margins*<br />
1 be<strong>for</strong>e exceptional items<br />
* Company margins includes Abbott Diag., Bayer Diag., Beckman Coulter,<br />
Becton Dickinson, Dade Behring, JNJ (Ortho & Lifescan)<br />
10
Financial Per<strong>for</strong>mance<br />
Growth Drivers<br />
Strategy and Outlook<br />
11<br />
Diabetes Care: Blood glucose monitoring<br />
Two major launches to regain market share<br />
r<br />
Blood Glucose Monitoring*<br />
CHF m<br />
1500<br />
+3 %<br />
1000<br />
500<br />
0<br />
H1 '03 H1 '04 H1 '05<br />
Accu-Chek Aviva<br />
Successor of Accu-Chek Advantage<br />
• Successfully launched Nordic regions &<br />
Netherlands – quickly regaining share<br />
• US launch July '05<br />
• Major EU countries planned Q3 '05<br />
Accu-Chek Compact Plus<br />
2nd generation device combining meter,<br />
strips and lancet<br />
• Roll-out commenced Q2 in 10 EU markets<br />
• Rapid market adoption (+25 %)<br />
• US launch planned Q1 '06<br />
* meters, strip, lancets<br />
12
Diabetes Care: Insulin delivery<br />
Strong take-off of Accu-Chek Spirit<br />
r<br />
CHF m<br />
80<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
Insulin delivery*<br />
sales ex US<br />
+2 %<br />
H1 '03 H1 '04 H1 '05<br />
Accu-Chek Spirit<br />
Small, state-of-the art pump offering<br />
personalised display and menu<br />
• Received FDA clearance (510k)<br />
• Launched key EU markets Q1<br />
Accu-Chek D-TRONplus<br />
2nd generation convenient pump with<br />
pre-filled cartridges<br />
• European launch completed<br />
• FDA Inspection Burgdorf conducted<br />
* infusion pumps, infusion sets, disposables<br />
13<br />
Centralized <strong>Diagnostics</strong><br />
Immunochemistry growing double-digit<br />
r<br />
CHF m<br />
550<br />
500<br />
450<br />
400<br />
350<br />
300<br />
250<br />
200<br />
150<br />
100<br />
50<br />
0<br />
Immunochemistry<br />
+16 %<br />
H1 '03 H1 '04 H1 '05<br />
• Strong instrument placements translating<br />
into sales (H1 '05 approx 20 % up)<br />
• <strong>Roche</strong> new market leader in cardiac<br />
marker testing (lab systems)<br />
• New studies 1 evaluating potential utility<br />
of NT-proBNP testing in broad spectrum<br />
of cardiovascular diseases<br />
1 JACC 2005; Suppl A:45:3 Abstract no 170 AM J Cardiol 2005;95:948-954<br />
Am Heart J 2005;149:744-50<br />
AJH 2005;18:73S-81S<br />
14
Molecular <strong>Diagnostics</strong><br />
Blood screening driving <strong>growth</strong><br />
r<br />
CHF m<br />
250<br />
200<br />
150<br />
Virology<br />
+3 %<br />
H1 '03 H1 '04 H1 '05<br />
Virology<br />
First fully automated real-time PCR system <strong>for</strong><br />
IVD use launched in EU<br />
• Integrated plat<strong>for</strong>m (Cobas AmpliPrep +<br />
Cobas TaqMan instruments)<br />
• HIV, HCV and HBV Tests<br />
150<br />
100<br />
50<br />
0<br />
NAT blood screening<br />
+8 %<br />
H1 '03 H1 '04 H1 '05<br />
Blood Screening<br />
• >100 m blood donations tested by <strong>Roche</strong><br />
• German Red Cross implementation on plan<br />
• Cobas AmpliScreen HBV Test FDA approved<br />
• Cobas AmpliScreen HIV & HCV Tests FDA<br />
approved <strong>for</strong> cadaveric organ & tissue<br />
donations<br />
15<br />
Near Patient Testing<br />
Strengthening & refocusing core businesses<br />
r<br />
CHF m<br />
100<br />
75<br />
50<br />
25<br />
0<br />
+18 %<br />
Coagulation<br />
+3 %<br />
Blood gas/<br />
Electrolytes<br />
H1 '03 H1 '04 H1 '05<br />
+7 %<br />
Cardiac<br />
markers<br />
CoaguChek systems<br />
• Increasing move to self-testing<br />
• New data available demonstrating<br />
health benefits regular testing 1<br />
• CoaguChek XS pilot launch in<br />
selected EU countries Q4 ‘05<br />
OMNI C & S (blood gas/electrolytes)<br />
• Growth from Japan, Asia Pacific and<br />
Latin America<br />
Cardiac reader<br />
• Trop T & D-Dimer gaining usage<br />
• NT-proBNP launch on track Q3 ‘05<br />
1 ACOA study: Comparing Self-Management of Oral Anticoagulant Therapy with Clinic Management; Annals of Internal<br />
Medicine. 2005;142:1-10<br />
16
Financial Per<strong>for</strong>mance<br />
Growth drivers<br />
Strategy and Outlook<br />
17<br />
<strong>Roche</strong> <strong>Diagnostics</strong> Growth strategy<br />
Strategic framework<br />
r<br />
Shape<br />
Stretch<br />
“Strengthen”<br />
“Shape”<br />
“Stretch”<br />
Strengthen<br />
Core<br />
business<br />
Future<br />
<strong>growth</strong><br />
drivers<br />
New<br />
markets<br />
18
<strong>Roche</strong> <strong>Diagnostics</strong> Growth strategy<br />
Strengthen core business<br />
r<br />
Stretch<br />
Shape<br />
Strengthen<br />
• Strengthen and extend core business<br />
• Set foundation <strong>for</strong> future <strong>growth</strong><br />
Core<br />
business<br />
Future<br />
<strong>growth</strong><br />
drivers<br />
New<br />
markets<br />
19<br />
Diabetes Care: Grow Accu-Chek leadership<br />
Complete portfolio of innovative products<br />
r<br />
Grow and strengthen<br />
Accu-Chek brand<br />
- state-of-the-art products<br />
- cross leverage blood glucose<br />
monitoring, insulin delivery and data<br />
management → “circle-of-care”<br />
Differentiation through<br />
innovation<br />
- reduce steps and devices<br />
- integrate lancet, capillary action &<br />
measurement<br />
Analyze<br />
Continuous Strip<br />
Collect<br />
Act<br />
Lancing Strip<br />
Measuring Needle<br />
20
Centralized <strong>Diagnostics</strong>: Leverage #1 r<br />
position to drive “serum work area” penetration<br />
Increase profitability, reduce<br />
complexity and costs<br />
- provide total “solution”<br />
- automation & menu<br />
- value-added services<br />
- integrate all parts in process<br />
- use serum work area placements to<br />
gain leadership in<br />
immunodiagnostics<br />
- streamline portfolio to reduce<br />
costs and improve customer<br />
convenience (technologies,<br />
plat<strong>for</strong>ms and reagents)<br />
Low Medium High<br />
2002 2002-2004 2006+<br />
RD/Hitachi<br />
747<br />
MODULAR<br />
PP, DP...<br />
RD/ Hitachi<br />
917<br />
RD/ Hitachi<br />
717<br />
Integra 800<br />
Integra 700<br />
Integra<br />
RD/ Hitachi<br />
911/ 912<br />
Integra<br />
400/ 400+<br />
RD/ Hitachi<br />
902<br />
RD/ Hitachi<br />
704<br />
MIRA<br />
MODULAR<br />
PP,DP...<br />
MODULAR<br />
<br />
Integra<br />
800<br />
RD/Hitachi<br />
912<br />
Integra<br />
400+<br />
RD/Hitachi<br />
902<br />
cobas<br />
c 701<br />
cobas<br />
c 501<br />
cobas<br />
c 311<br />
21<br />
Molecular <strong>Diagnostics</strong>: Capitalize<br />
expertise to expand markets<br />
r<br />
Grow and strengthen market<br />
leadership<br />
Expand menu in core areas<br />
virology<br />
HCV genotyping<br />
- expand blood screening through<br />
testing sites and menu<br />
- maintain virology share and pricing<br />
through fully automated solutions &<br />
latest PCR technology<br />
women’s<br />
health<br />
blood<br />
screening<br />
genetics<br />
microbiology<br />
HPV, HSV I/ II<br />
WNV, parvo B19,<br />
HAV<br />
factor II, factor V,<br />
BCR/ ABL<br />
sepsis<br />
22
Near Patient Testing:<br />
Driving decentralization of testing<br />
r<br />
Grow and strengthen market<br />
leadership<br />
- capitalize broad menu reach<br />
- health-economic cost-benefit studies<br />
Integrating broad menu with<br />
convenient systems<br />
- simplified products<br />
- integrated uni<strong>for</strong>m plat<strong>for</strong>m <strong>for</strong> acute<br />
diagnostics<br />
Cardiac<br />
Hospital<br />
Diabetes<br />
Coag<br />
basic detection<br />
modules<br />
RS232 USB Ethernet<br />
+ +<br />
different upper housings<br />
core instrument<br />
module<br />
dockin station <strong>for</strong> all<br />
instruments<br />
23<br />
<strong>Roche</strong> <strong>Diagnostics</strong> Growth strategy<br />
Strengthen core business, shape current markets<br />
r<br />
Stretch<br />
Shape<br />
• Shape & make new market segments<br />
• Develop future <strong>growth</strong> drivers<br />
Strengthen<br />
• Strengthen and extend core business<br />
• Set foundation <strong>for</strong> future <strong>growth</strong><br />
Core<br />
business<br />
Future<br />
<strong>growth</strong><br />
drivers<br />
New<br />
markets<br />
24
Technology and marker discovery<br />
Setting foundation <strong>for</strong> new market creation<br />
r<br />
Proteomics<br />
- new system technology to<br />
handle multiple parameters and<br />
obtain competitive edge<br />
- new, high-value tests<br />
Protein Array (IMPACT)<br />
Immunological Multi-Parameter Chip Technique<br />
Genomics<br />
- emerging new fields<br />
- early detection/ screening<br />
- monitoring disease/ relapse<br />
- pharmacogenomics<br />
- innovative new technologies<br />
- real-time PCR<br />
- microarray<br />
- methylation<br />
methyl-group<br />
H<br />
C<br />
N<br />
O C C C<br />
N N H<br />
H<br />
25<br />
Oncology research program based on clinical<br />
need, medical value and technology match<br />
r<br />
Cancer site<br />
Screening<br />
Diagnosis<br />
Relapse<br />
prediction<br />
Therapy<br />
prediction<br />
Monitoring<br />
Breast<br />
Colon<br />
Prostate<br />
Blood/bone<br />
marrow<br />
Liver<br />
Bladder<br />
Lung<br />
TaqMan/ multiplexed PCR<br />
Microarrays<br />
No. targets: 1-10<br />
1000 – 100,000<br />
Elecsys<br />
IMPACT<br />
(Protein Array)<br />
1- 3 Up to 20 26
Proteomics program: Colorectal Cancer<br />
Promising novel markers identified<br />
r<br />
TODAY<br />
FBOT market 1 ~ US$ 100 m<br />
TOMORROW<br />
FOBT<br />
(fecal occult<br />
blood test)<br />
Sensitivity ~25 – 50 %*<br />
Marker<br />
TM6<br />
TM6 + TM7<br />
Sensitivity<br />
60 %<br />
70 %<br />
TM6 + TM7 + BCM 3 +<br />
Specificity 80 % 75 % **<br />
CRCM 6<br />
Colonoscopy<br />
plus biopsy<br />
Sensitivity “ca. 100 %”<br />
Specificity “ca. 100 %”<br />
Colonoscopy<br />
plus biopsy<br />
Sensitivity “ca. 100 %”<br />
Specificity “ca. 100 %”<br />
1 Source: company reports<br />
* FOBT sensitivity: Collins et al. Annals Internal Medicine 2005;<br />
142: 81 Imperiale et al. NEJM 2004; 351:2704<br />
** preliminary internal results comparing cancer<br />
against healthy in validation set only<br />
27<br />
Genomics program: Leukemia<br />
Need <strong>for</strong> better diagnosis<br />
r<br />
• Heterogeneous disease caused by genetic abnormalities<br />
• Distinction between chronic, acute and sub-classifications essential <strong>for</strong><br />
successful treatment (~20 subgroups)<br />
• No single test currently sufficient to establish diagnosis<br />
• Current tests (approx. 8) subjective, with up to 7 days turnaround<br />
• Lack standardization and automation, and require highly skilled staff<br />
Leukaemia Microarray<br />
del(17p)<br />
del(13q)<br />
Others<br />
CLL<br />
nBM<br />
CML<br />
t(9;22)<br />
• sub-classification of major<br />
leukaemia classes<br />
• potential to replace other research<br />
methods/ technologies<br />
• research program ’05/ ’06<br />
t(9;22)<br />
t(11q23)/MLL<br />
t(8;14)<br />
T-ALL<br />
T-ALL cortical<br />
t(1;19)<br />
t(12;21)<br />
Hyperdiploid<br />
ALL Others<br />
ALL<br />
NL<br />
MDS<br />
Others<br />
AML<br />
t(8;21)<br />
t(11q23)/MLL<br />
t(15;17)<br />
inv(16)<br />
Complex<br />
Normal + Others<br />
28
Applied Science and 454 Life Sciences<br />
Exclusive agreement enabling entry into new<br />
research business<br />
r<br />
Load Genome<br />
into PicoTiter Plate<br />
Load PicoTiter<br />
Plate on machine<br />
Load Sequencing<br />
Reagents<br />
Press GO!<br />
Sequence Genome<br />
1<br />
2<br />
3<br />
4<br />
Taking High Throughput Sequencing to a New Level<br />
• Ultra high throughput<br />
– ~100 times faster<br />
~90 % less expensive than<br />
current approaches<br />
• Potential diagnostic applications:<br />
– Microorganism typing - earlier detection of<br />
resistance<br />
– Oncology – better discrimination of mutations<br />
• Life science research<br />
market<br />
• Size: 1 B CHF<br />
• Growth: 5 % p.a.<br />
(driven by replacement of old technology)<br />
For research use only<br />
29<br />
H2 '05: Entry into new markets<br />
r<br />
Product<br />
BA 1<br />
Indication<br />
Region<br />
LightCycler 480<br />
AS<br />
High-throughput real-time PCR system <strong>for</strong><br />
high-end research market<br />
Global<br />
Q3<br />
454 Life Sciences<br />
sequencing<br />
products<br />
AS<br />
Ultra-fast nanotechnology-based genome<br />
sequencing system <strong>for</strong> life science market<br />
Global<br />
CARDIAC reader<br />
NT-proBNP<br />
NPT<br />
Strengthening cardiac portfolio in Near Patient<br />
Testing market<br />
Global<br />
Q4<br />
SeptiFast<br />
MD<br />
Blood based test to rapidly detect major<br />
bacterial & fungal pathogens causing sepsis<br />
EU<br />
AmpliChip<br />
Leukemia Test<br />
MD<br />
Sub-classification of leukemia classes <strong>for</strong><br />
treatment optimisation<br />
Research<br />
study<br />
1 Business Areas: Applied Science (AS), Near Patient Testing (NPT), Molecular <strong>Diagnostics</strong> (MD)<br />
30
<strong>Roche</strong> <strong>Diagnostics</strong> Growth strategy<br />
Strengthen core business, shape current markets,<br />
stretch market boundaries<br />
r<br />
Stretch<br />
• Drive shift in diagnostics to a new level<br />
of influence in healthcare<br />
• Explore options outside current<br />
market boundaries<br />
Shape<br />
• Shape & make new market segments<br />
• Develop future <strong>growth</strong> drivers<br />
Strengthen<br />
• Strengthen and extend core business<br />
• Set foundation <strong>for</strong> future <strong>growth</strong><br />
Core<br />
business<br />
Future<br />
<strong>growth</strong><br />
drivers<br />
New<br />
markets<br />
31<br />
IVD testing
<strong>Diagnostics</strong> can make healthcare more<br />
efficient<br />
r<br />
• Healthcare systems are looking to save money<br />
• <strong>Diagnostics</strong> saves across the entire healthcare spectrum<br />
Detection Diagnosis Treatment Monitoring Relapse<br />
Early detection/<br />
predisposition<br />
Precise<br />
diagnosis<br />
Personalized<br />
treatment<br />
Monitor<br />
treatment<br />
Monitor disease/<br />
relapse<br />
<strong>Diagnostics</strong> will gain in importance and market potential<br />
as therapies and use of resources are optimized<br />
33<br />
<strong>Diagnostics</strong> value proposition<br />
Tailoring medicine <strong>for</strong> efficient healthcare<br />
r<br />
• Over 2 million adverse drug<br />
reactions (ADRs) per year<br />
• AmpliChip CYP450 could cut<br />
costs in 44 % of cases<br />
• US health spending <strong>for</strong>ecast<br />
<strong>growth</strong> 7.3 % per annum<br />
• US health care system could<br />
potentially save $21 bn by 2020<br />
Potential ADR Savings<br />
USD bn<br />
25<br />
$21<br />
20<br />
$15<br />
15<br />
$10<br />
10<br />
$7<br />
5<br />
0<br />
2005 2010 2015 2020<br />
Calculation:<br />
Total ADRs<br />
ADRs associated with drug metabolized by CYP450 Enzyme (75 % of 59% x total ADRs<br />
Cost per ADR (from above)<br />
2'000'000 Lazarou et al<br />
885'000 Phillips et. al.<br />
$4'685 Classen et. al<br />
34
<strong>Roche</strong> <strong>Diagnostics</strong> will drive the change<br />
r<br />
• <strong>Diagnostics</strong> makes healthcare more efficient<br />
• Integral part of <strong>Roche</strong>’s strategy of personalized medicine<br />
• <strong>Roche</strong> can contribute across the healthcare spectrum<br />
• Tests that save healthcare budgets can command higher prices<br />
• We are focusing on high value-based pricing models<br />
Modern diagnostics will address two of today’s major<br />
healthcare challenges: cost and safety<br />
35<br />
<strong>Roche</strong> <strong>Diagnostics</strong><br />
Solid, low risk business offering high return<br />
r<br />
Financial<br />
Per<strong>for</strong>mance<br />
• sales <strong>growth</strong> outpacing<br />
market<br />
• significantly higher<br />
profitability than<br />
peers<br />
Market Leader<br />
• market leader in all<br />
regions<br />
• number one in most<br />
attractive segments<br />
• broadest customer<br />
base<br />
Broad Portfolio<br />
• extensive portfolio<br />
high-value products<br />
• extensive, focused<br />
R&D spend<br />
• track record market<br />
shaping innovations<br />
Strong market position and innovative portfolio will<br />
allow <strong>Roche</strong> to lead and shape the future of modern diagnostics<br />
36
Our <strong>growth</strong> objectives - <strong>Diagnostics</strong><br />
Reaffirmed<br />
r<br />
2005 and beyond<br />
• 2005: sales <strong>growth</strong> above market<br />
• More than 20 product launches in 2005<br />
• On way to achieve operating profit margin 1 around 23 % in 2006<br />
barring un<strong>for</strong>eseen events<br />
1 be<strong>for</strong>e exceptional items<br />
37<br />
r<br />
Appendix<br />
38
Investing significantly above competition<br />
Primary focus on new markers and technology<br />
r<br />
CHF m<br />
1000<br />
Total R&D spend<br />
RDC<br />
% R&D spend 2004<br />
800<br />
600<br />
560<br />
630<br />
680<br />
720 730<br />
RNP<br />
RCD<br />
400<br />
RMD<br />
200<br />
RAS<br />
0<br />
2000 2001 2002 2003 2004<br />
0% 50% 100%<br />
New Developments Technology<br />
Product Update Product Care<br />
Other<br />
39<br />
Leading product groups ~ 80 % of sales<br />
New products driving <strong>growth</strong> in each segment<br />
market<br />
rank<br />
1<br />
1<br />
2<br />
H1 ’05<br />
CHF m % loc<br />
1,290 +3<br />
746 0<br />
503 +16<br />
Product group (s)<br />
Accu-Chek meters &<br />
reagents<br />
Cobas Integra, RD/ Hitachi,<br />
MODULAR SWA<br />
Elecsys, E170<br />
B.A.<br />
DC<br />
CD<br />
CD<br />
Market segment<br />
Blood glucose monitoring<br />
Clinical Chemistry<br />
Immunochemistry<br />
r<br />
5 top<br />
brands<br />
are<br />
No.1<br />
1<br />
226 +3<br />
Amplicor HIV, HCV, HBV<br />
MD<br />
Molecular <strong>Diagnostics</strong> - Virology<br />
1<br />
147 +8<br />
AmpliScreen, AmpliNat,<br />
TaqScreen<br />
MD<br />
NAT Blood Screening<br />
1<br />
87 +18<br />
CoaguChek<br />
NPT<br />
Coagulation monitoring (POCT)<br />
2<br />
85 -2<br />
Accu-Chek infusion<br />
systems<br />
DC<br />
Insulin delivery<br />
3<br />
57 +3<br />
OMNI<br />
NPT<br />
Blood gas & electrolytes (POCT)<br />
Source: <strong>Roche</strong> analysis, Company reports<br />
40
H1 '05: <strong>Diagnostics</strong> local sales 1 (1)<br />
By region & Business Area (vs. H1 '04)<br />
r<br />
Global<br />
% loc<br />
m CHF<br />
<strong>growth</strong><br />
Nth Am.<br />
% loc<br />
m CHF<br />
<strong>growth</strong><br />
EMEA<br />
% loc<br />
m CHF<br />
<strong>growth</strong><br />
RoW<br />
m CHF<br />
% loc<br />
<strong>growth</strong><br />
Diabetes Care 1,375 3 418 -8 754 8 203 13<br />
AC Advantage 618 -5 228 -19 277 5 113 8<br />
AC Aviva 4 n.a. 1 n.a. 3 n.a. n.a. n.a.<br />
AC Compact/Plus 226 25 96 22 114 29 15 18<br />
Lancets 91 -1 41 1 41 -6 9 17<br />
Infusion Systems 85 -2 14 -18 69 2 2 -1<br />
Mol Dia (ex Ind Bus) 503 5 187 3 178 -1 138 19<br />
Virology 226 3 94 2 79 -1 53 10<br />
Blood screening 147 8 51 5 53 -7 43 40<br />
Women‘s Health 44 9 21 8 12 11 11 9<br />
Microbiology 18 13 1 34 3 16 13 11<br />
Cl. Genomics 6 14 3 21 2 11 0 -5<br />
Centralized Dia 1,430 5 278 5 741 2 411 9<br />
Clinical chemistry 746 0 182 -1 377 -2 186 5<br />
Elecsys 503 16 82 19 266 13 155 19<br />
Coagulation 74 0 3 49. 47 -3 24 2<br />
Hematology 50 24 2 30 24 27 24 20<br />
Urinalysis 28 6 8 16 9 -6 11 11<br />
41<br />
H1 '05: <strong>Diagnostics</strong> local sales 1 (2)<br />
By region & Business Area (vs. H1 '04)<br />
Global<br />
% loc<br />
m CHF<br />
<strong>growth</strong><br />
Nth Am.<br />
% loc<br />
m CHF<br />
<strong>growth</strong><br />
EMEA<br />
% loc<br />
m CHF<br />
<strong>growth</strong><br />
r<br />
RoW<br />
m CHF<br />
% loc<br />
<strong>growth</strong><br />
Near Patient Testing 338 3 122 0 150 0 66 15<br />
HosPOC 142 -1 70 -8 46 -5 27 33<br />
Coag. Monitoring 87 18 41 25 42 10 5 33<br />
Primary Care 86 -3 10 -13 53 -3 23 2<br />
Hospital Glucose 55 -7 54 -8 0 n.a. 0 n.a.<br />
In vitro <strong>Diagnostics</strong> 3,646 4 1,005 -2 1,823 4 818 12<br />
Applied Science 272 1 105 4 111 -1 56 -1<br />
Total Genomics<br />
Total Proteomics<br />
132<br />
50<br />
-2<br />
1<br />
44<br />
24<br />
0<br />
4<br />
55<br />
16<br />
-5<br />
-4<br />
33<br />
10<br />
-1<br />
5<br />
Applications<br />
Industrial Business<br />
12<br />
73<br />
-2<br />
7<br />
3<br />
33<br />
n.a.<br />
6<br />
10<br />
28<br />
-15<br />
12<br />
0<br />
12<br />
n.a.<br />
-2<br />
Molecular Ind Bus 52 11 2 19 0 -23 50 11<br />
Life Science Business 324 2 107 5 111 -1 106 4<br />
<strong>Roche</strong> <strong>Diagnostics</strong> 3,970 4 1,112 -1 1,934 4 924 11<br />
42
Four unique new products to provide<br />
<strong>growth</strong> stimulus in 2005<br />
Accu-Chek D-TRONplus “convenient”<br />
- pre-filled cartridges (Humalog, Lilly)<br />
- easy handling<br />
Accu-Chek Spirit “flexible”<br />
- flexible display, customizable menu, large cartridge<br />
- next generation of highly dependable insulin pumps<br />
Accu-Chek Aviva “dependable”<br />
- unique safety features, 5 sec, 0.6 µl, finger or AST<br />
- successor of Accu-Chek Advantage<br />
Accu-Chek Compact Plus “easy”<br />
- convenient, one step handling, all-in-one system components<br />
- 3rd generation integrated system to increase attractiveness of<br />
Accu-Chek Compact line<br />
r<br />
roll out started<br />
Europe Q4 ’04<br />
roll out<br />
Q1/ Q2 ‘05<br />
roll out<br />
Q1/ Q2 ‘05<br />
roll out<br />
Q2/ Q3 ‘05<br />
Launch dates are estimates based on expected regulatory approval timelines; US launches may be later than indicated<br />
43<br />
Product launches planned <strong>for</strong> 2005<br />
r<br />
Integrated Cobas AmpliPrep +<br />
Cobas TaqMan Instrument<br />
HIV, HCV, HBV<br />
√<br />
√<br />
Cobas AmpliScreen<br />
HBV Test (US-IVD)<br />
AmpliChip CYP450<br />
Test (US-IVD)<br />
√<br />
Accu-Chek<br />
Spirit<br />
√<br />
LightCycler 2.0<br />
(CE-IVD)<br />
√<br />
Accu-Chek<br />
Aviva<br />
Accu-Chek<br />
FlexLink<br />
√<br />
√<br />
√<br />
√<br />
Linear Array HPV<br />
Genotyping Test<br />
(CE-IVD + US-RUO)<br />
Accu-Chek<br />
Compact Plus<br />
Quant PCR<br />
Master Mix<br />
TaqMan<br />
Linear Array HCV<br />
Genotyping Test<br />
(CE-IVD)<br />
2005<br />
HbA1c<br />
analyzer<br />
Cobas TaqMan<br />
CT Test (CE-IVD)<br />
454 Life Science<br />
Sequencing products<br />
Elecsys<br />
Prolactin II<br />
COBAS IT 1000<br />
Data management<br />
software<br />
LightCycler 2.0<br />
Factor II & V Tests (CE-IVD)<br />
LightCycler 480<br />
Accu-Chek Pocket<br />
Compass 3.0<br />
Launch dates are estimates only and based on expected regulatory approval timelines; US launches may be later than indicated<br />
√<br />
√<br />
√<br />
√<br />
√<br />
SeptiFast<br />
(CE-IVD)<br />
CARDIAC reader<br />
NT-proBNP<br />
Mycophenolic<br />
acid (MPA)<br />
AmpliChip<br />
Leukemia Test<br />
(Research use)<br />
44
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