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7 000 917

F. Hoffmann-La Roche Ltd4070 Basel, Switzerland

© 2012

All trademarks are legally protected.

www.roche.com

E

Ro

che

| Annual R

eport 2011

Annual Report

00_00_Roche_AR11_Front Cover_ENG.indd 1 27.01.2012 10:07:43

was a landmark year for Roche Personalised Healthcare. This

annual report highlights the progress we made in advancing a strategic

priority shared by the entire Roche Group. We successfully launched

new tests and medicines tailored to the needs of specific patient popu-

lations and made good progress in developing others that also promise

to make treatment safer and more effective. At Roche we believe that

medically differentiated products benefit all healthcare stakeholders, from

patients and physicians to regulators and payers.

00_01_Roche_AR11_Our_business_Topic2011_ENG.indd 2 27.01.2012 10:13:51

626 x 297 210 210 19511

Our business

From precise diagnosis to targeted therapy.

Together, a potent new drug and a blood test to guide its use can be a life changer for patients. Roche is a global leader in both sectors: the world’s biggest biopharmaceuticals company, the leading supplier of in vitro diagnostics and an innovator across major disease areas from cancer to virology. Our business is science-driven. We are using our exceptional research and development capabilities to develop drugs, diagnostics and drug/diagnostic combinations to address some of medicine’s most pressing challenges.

Sales

42,53147,473

49,051

mCHF Free cash flow

3,9044,699

8,893

2011

2010

2009

mCHF

Research and development 2

8,0739,050

9,509

mCHF

Operating profit 2

16,591

16,272

mCHF

15,149Number of employees

80,12980,653

81,507

2011

2010

2009

Income taxes 2

2,8953,135

3,287

mCHF

Net income

9,5448,891

8,510

mCHF

Core Earnings per Share

12.3012.78

12.34

CHF

100

150

200

250

2010 20112009

Roche non-voting equity security Swiss Market Index (rebased)

Eco-efficiency rate 5

0.5390.414

0.460

2011

2010

2009

Patients on clinical trials 4

332,183277,079

268,614

2011

2010

2009

Total employee remuneration

10,30011,934

12,080

2011

2010

2009

mCHF

Total dividend

5,8653

5,693

5,175

2011

2010

2009

mCHF

Key figures

Roche Group Index 2009 = 100

Price development of non-voting equity security (Genussschein) in CHF

1 Key figures indexed to 2009 = 100.2 Core results.3 Proposed by the Board of Directors.4 Development phase I to IV; Numbers exclude patients

in Genentech studies initiated prior to the merger.5 For calculation of the Eco-Efficiency rate see:

www.roche.com/environment

Figures for 2009 as in Annual Report 2010.For a full index of Global Reporting Initiative (GRI)indicators used in the report see: www.roche.com/reporting_and_indices

Index1 40 60 80 100 120 Index1 40 60 80 100 120

Sales

42,53147,473

49,051

mCHF Free cash flow

3,9044,699

8,893

2011

2010

2009

mCHF


8,0739,050

9,509

mCHF

Operating profit 2

16,591

16,272

mCHF


80,12980,653

81,507

2011

2010

2009

Income taxes 2

2,8953,135

3,287

mCHF

Net income

9,5448,891

8,510

mCHF


12.3012.78

12.34

CHF

100

150

200

250

2010 20112009



0.5390.414

0.460

2011

2010

2009


332,183277,079

268,614

2011

2010

2009


10,30011,934

12,080

2011

2010

2009

mCHF

Total dividend

5,86535,693

5,175

2011

2010

2009

mCHF

Key figures







Index1 40 60 80 100 120 Index1 40 60 80 100 120

00_02_Roche_AR11_Key Figures_ENG.indd 3 27.01.2012 10:16:22

Highlights 2011

March

April

August

October

February

April

September

November

March

May

September

December

Roche Annual General Meeting votes to increase shareholder dividend by 10%

US marketing approval for targeted skin cancer medicine Zelboraf and cobas BRAF test companion diagnostic

Investigational medicine ocrelizumab shows significant reduction in multiple sclerosis disease main-tained for almost two years

Study with Avastin shows that womenwith newly diagnosed advanced ovar-ian cancer live significantly longer without their disease getting worse

Investigational medicine MetMAb in combination with Tarceva doubles the time people with lung cancer live without their disease getting worse

Roche named Healthcare Super-sector Leader in Dow Jones Sustainability Indexes for third year running

FDA grants priority review for New Drug Application for vismodegib in advanced form of skin cancer

Launch of the innovative, fully auto-mated clinical chemistry module cobas c 702 in the EU

Tarceva receives European approval for first-line use in a genetically distinct type of lung cancer

Marketing applications submitted in EU and US for pertuzumab in HER2-positive metastatic breast cancer

Roche announces positive clinical test results for its investigational medi-cine T–DM1 for an aggressive form of metastatic breast cancer

FDA approves cobas HPV test for cervical cancer screening, which detects high-risk genotypes 16 and 18

10 %

00_03_Roche_AR11_Highlights_ENG.indd 3 27.01.2012 10:18:15

626 x 297 195 210 21011

10 Management

Contents

Key figuresinside cover

Highlights 2011inside cover

4 Letters to Shareholders

Business Review

Research and Development

Manufacturing and Procurement

Marketing and Distribution

Our People

Community Involvement

Environmental Stewardship

Corporate Governance, Remuneration Report

138 Independent Assurance Report

16 Group results and outlook20 Market environment and Group strategy

26 Responsible business

34 Pharmaceuticals for unmet medical needs44 Diagnostics for better treatment decisions

47 Accessing external innovation49 Conducting responsible R & D

54 Manufacturing58 Quality and compliance

59 Green logistics61 Procurement

65 Access to healthcare69 Value-added services

72 Customer relationships73 Patient safety and advocacy

92 Great place to work95 Talent attraction

96 Employee development98 Reward and recognition

103 Humanitarian and social projects 105 Science and education

105 Arts and culture105 Community and environment

109 Health and safety110 Environmental footprint

115 Biodiversity115 Pharmaceuticals in the environment

120 Corporate Governance126 Remuneration Report

14

28

52

62

90

102

106

118

4 Roche Business Report 2011 | Letters to Shareholders

Letters to Shareholders

5Roche Business Report 2011Letters to Shareholders |

Dear Shareholders

The deepening debt crises in Europe and the United States, turbulent currency markets and slower global economic growth all had a profound impact on the business landscape in 2011. Increasing pressure on government budgets also weighed heavily on healthcare markets. With resources stretched, many countries are focusing on short-term savings targets and budget controls. A number of governments, particularly in Europe, have sought to ease their deficits by imposing substantial price cuts on pharmaceuticals — including innovative, patent-protected medicines — along with other measures aimed at controlling or reducing healthcare expenditure.

Amid these challenges Roche posted very strong results for the year. Group sales advanced 2% at constant exchange rates (excluding Tamiflu) to 42.2 billion Swiss francs. Earnings performance improved significantly faster, with net income rising 7% to 9.5 billion Swiss francs.

I am also very pleased that the Dow Jones Sustainability Indexes once again named us the Super-sector Leader in healthcare, ranking Roche as the world’s most sustainable healthcare company for the third consecutive year. We are convinced that sustainable corporate policies and practices create long-term value and promote innovation. They therefore support our primary mission as a company, which is to prolong people’s lives or improve quality of life through excellence in science.

For a research-based company like ours, recent developments in healthcare policy and policy-makers’ short-term focus on costs are a major cause for concern. Of course I understand that Roche as a leading pharmaceutical and diagnostics company — and indeed, our industry as a whole — must play its part in efforts to overcome the current financial and debt crises. We are pre-pared to do that. Through constructive dialogue we aim to contribute to finding a fair and sus-tainable balance between health policy and industrial policy — a balance that encourages and rewards the type of innovation from which society as a whole will benefit.

In my nearly four decades of working in the healthcare industry, I have rarely been as optimistic as I am now about the medium- to long-term outlook for research-based, innovation-driven companies. The fundamental trends point in the right direction: a growing, ageing global population; increas-ingly affluent emerging markets; rapid scientific and technological advances that are paving the way for more targeted, cost-effective treatments; and an undiminished need for medical progress, since many diseases are still not effectively treated.

We must not forget the increasing economic significance of innovation and the fact that nations, regions and communities around the globe compete with each other for investment and jobs. We see countries increasingly taking targeted action to promote research and innovation within their borders. I am very impressed by the progress Shanghai, Beijing, Singapore and other cities in emerging markets have made as they strive to become global leaders in the life sciences, particu-larly in pharmaceuticals and diagnostics. Moreover, their positive attitude and openness towards new scientific discoveries and technologies are definite assets.


These countries recognise that the research-based healthcare industry’s high productivity can translate into significant economic growth, generating skilled jobs, further investment and exports. High expenditures on research and development lead ultimately to strong value creation. Much of Roche’s R & D activity continues to be located at our headquarters in Switzerland precisely because of the country’s competitive advantage. Switzerland will remain one of the best places in the world for investments in science if we can maintain and strengthen these innovation-pro-moting advantages.

Why am I particularly optimistic about our company’s future? For over a decade now Roche has maintained its strategic focus on innovative diagnostics and therapeutics. As the world’s biggest biotech company, with 14 biopharmaceuticals on the market, we are ideally equipped to transform our growing knowledge of disease biology into novel treatments and tests. In 2011 we spent 8 billion Swiss francs on research and development — a sum that puts us among the top R & D spenders, regardless of the industry. Unlike some of our competitors, we intend to continue invest-ing heavily in research and development, particularly in those areas where we have competitive advantages: oncology, diabetes, inflammatory and autoimmune diseases, and neuroscience. At the same time, we will maintain our strong focus on the optimal use of resources and continued productivity improvements.

Roche remains the world’s leading supplier of cancer medicines and the number one in vitro diag-nostics company. With its combined strengths in pharmaceuticals and diagnostics and proven expertise in molecular biology, our company is uniquely positioned to make Personalised Healthcare a reality. The achievements of the past year — the US launch of Zelboraf in record time, the Euro-pean Medicines Agency’s positive opinion on this novel treatment for skin cancer and the progress of other projects in our development pipeline — are all testimony to this.

Cost-effective, targeted medicines and diagnostics have a key role to play in overcoming the health-care sector’s current difficulties. As pricing pressures increase, payers will shift resources to products and services offering the greatest incremental benefit to patients. As a company focused on developing medicines and tests that create real value for patients and physicians, we are well equipped to compete successfully in an increasingly challenging healthcare market. The strengths that serve us well today will be even more important tomorrow.

In view of the company’s strong performance and positive outlook — the difficult economic and financial environment notwithstanding — the Board of Directors is proposing a dividend increase of 3% to 6.80 per share and non-voting equity security for 2011 (up from 6.60 Swiss francs in 2010). Subject to your approval at the Annual General Meeting on 6 March 2012, this will be Roche’s 25 th consecutive annual dividend increase.

Finally, I want to inform you that André Hoffmann and Prof. Sir John Irving Bell, two highly experi-enced and distinguished Roche Board members, have agreed to stand for election for a further term at the forthcoming Annual General Meeting. I will be standing for re-election as Chairman and would be honoured by your continued confidence.

Franz B. Humer Chairman of the Board


Given the significantly harsher market conditions we faced, 2011 was no easy year for your company, but it was nevertheless a successful one.

Let’s look at Roche’s financial performance first. We met all of our 2011 targets, despite the significant impact of a strong Swiss franc on our reported results. Excluding sales of our influenza medicine Tamiflu, which as anticipated were down sharply from the previous year, Group sales advanced 2% at constant exchange rates, with pharmaceutical sales up 1%, in line with market growth. The Diagnostics Division posted a 6% increase in sales, reinforcing its position as the leading supplier of in vitro diagnostics.

Group profitability continued to improve ongoing productivity gains and cost savings. This is all the more impressive given the price cuts that were imposed on our products in some major markets. Core Earnings per Share — a key metric of underlying performance which excludes non-core items such as global restructuring charges, amortisation and impairment of intangible assets — increased 11% at constant exchange rates. Core operating profit grew strongly and faster than sales, rising 6% on a currency-adjusted basis to 15.1 billion Swiss francs. Both divisions again increased their core operating profit margins. Our solid earnings performance will enable us to continue investing heavily in research into the causes of disease and advancing the growing number of late-stage projects in our product pipeline.

The success rate of our clinical trial programmes has been extraordinary and makes me very opti-mistic about Roche’s future. In 2011 no fewer than 17 of our 20 major clinical trials for new medi-cines reported positive data — an excellent mark also compared to the industry as a whole. These results help position us even more strongly for future growth.

Roche owes its success to its employees. Thanks to their tremendous dedication and hard work we — once again — met our annual objectives in an ever more challenging market environment. On behalf of the Executive Committee, I take this additional opportunity to thank all Roche employees for their valuable contributions.

Importantly, 2011 was a landmark year for Roche Personalised Healthcare. Due to advances in molecular diagnostics, our therapies can increasingly be targeted at particular patient populations. Already, roughly half the new molecular entities in our late-stage portfolio are tailored to subsets of patients who can be identified using specific diagnostic tests.

Dear Shareholders


Zelboraf, our novel, personalised therapy for metastatic melanoma, the most aggressive form of skin cancer, is a major milestone for patients and their doctors, and for Roche. The US Food and Drug Administration approved Zelboraf and its companion diagnostic test in August 2011, followed late in the year by a recommendation for approval from the European Medicines Agency. This is the first time Roche has simultaneously launched a new medicine and a companion diagnostic. Close collaboration between our Pharmaceuticals and Diagnostics Divisions was crucial to bring-ing Zelboraf to market in the record time of just five years. Metastatic melanoma is extremely difficult to treat and every hour of every day a patient somewhere dies of the disease. Zelboraf inhibits a mutated form of the BRAF protein which occurs in about half of all melanomas and can be detected with the Roche test. This is the first targeted treatment shown to extend the survival of patients with metastatic melanoma and significantly improve their quality of life. We expect that approvals in many additional markets over the course of 2012 will make Zelboraf and its companion diagnostic available to patients worldwide.

In 2011 we also filed for regulatory approval of our novel biologic pertuzumab for the treatment of breast cancer. This is another instance of a new drug addressing a significant medical need. Breast cancer is the most common form of cancer in women, with more than 1.4 million new cases diag-nosed annually. Worldwide, breast cancer still claims the lives of over 450,000 women every year, despite major advances in therapy.

Pertuzumab is effective in the roughly 20% of breast cancer patients whose tumours carry a genetic mutation causing them to overproduce a protein known as the HER2 receptor. These HER2-posi-tive tumours are highly aggressive, fast growing and associated with a high risk of recurrence. Pertu zumab is designed specifically to prevent the HER2 receptor from pairing with other HER receptors, a process that is believed to play an important role in the formation and growth of several types of cancer. Adding pertuzumab to a treatment regimen of Roche’s medicine Herceptin and chemotherapy was found to reduce the risk of disease progression or death by an impressive 38%. Indeed, the clinical trial data are so encouraging that this drug combination could become the new standard first-line treatment for HER2-positive breast cancer.

We aspire to make good treatment options better. One of our goals is to see cancer — once a certain death sentence — increasingly become a chronic condition. Unfortunately, many cancers eventu-ally develop resistance to therapies. Cancer cells are ‘masters of evasion’ and often start growing and multiplying again. Combination regimens that attack cancers on several fronts simultaneously will thus gain in importance.

Zelboraf and pertuzumab are tangible examples in the field of cancer of how we deliver significant benefits to patients through excellence in science. We intend to build on successes like these in oncology, and in other therapeutic areas, by developing more effective, targeted strategies for fighting serious diseases. In addition to new cancer therapies, we are working on personalised medicines for hepatitis C, for asthma, and drugs to alleviate or cure various disorders of the central nervous system, including Alzheimer’s disease, schizophrenia and depression. We currently have more than 200 drug development projects in which we are also doing research that could lead to a companion diagnostic.


Molecular biology is ushering in a new era in medicine. Our clear strategic advantages in this field will figure more and more prominently in our R & D successes going forward. As our understanding of the underlying biology of diseases grows, so will our ability to develop targeted medicines and companion diagnostics. We are increasingly making personalised healthcare a reality. This holds tremendous potential for patients and healthcare systems — and for Roche.

We will encounter significant challenges and opportunities in the years ahead. Roche will respond boldly and decisively to both as we continue to serve the interests of patients, employees and you, our shareholders. Thank you for your continued confidence in our company.

Severin SchwanChief Executive Officer

10 Roche Business Report 2011 | Management

Board of Directors

Dr Franz B. Humer Prof. Bruno Gehrig André Hoffmann

Dr Andreas Oeri Prof. Pius Baschera Prof. Sir John Irving Bell

Paul Bulcke William M. Burns Lodewijk J. R. de Vink

Dr DeAnne JuliusDr Christoph Franz Dr Arthur D. Levinson

Prof. Beatrice Weder di MauroPeter R. Voser

Board of Directors per 31 December 2011

11Roche Business Report 2011Management |

A Corporate Governance and Sustainability Committee.B Audit Committee.C Remuneration Committee.D Presidium/Nomination Committee.E Non-executive director.

* Committee chairperson.

Board of Directors

Name (year of birth) Term ends First elected

Board of Directors Dr Franz B. Humer (1946) D *, E Chairman 2012 1995

Prof. Bruno Gehrig (1946) C *, D, E Vice-Chairman 2013 2004

André Hoffmann (1958) A, C, D, E Vice-Chairman 2012 1996

Prof. Pius Baschera (1950) A, E 2013 2007

Prof. Sir John Irving Bell (1952) B, E 2012 2001

Paul Bulcke (1954) B, E 2013 2011

William M. Burns (1947) A, E 2013 2010

Lodewijk J. R. de Vink (1945) B, E 2013 2004

Dr Christoph Franz (1960) C, E 2013 2011

Dr DeAnne Julius (1949) B *, E 2013 2002

Dr Arthur D. Levinson (1950) C, E 2013 2010

Dr Andreas Oeri (1949) A *, E 2013 1996

Peter R. Voser (1958) C, E 2013 2011

Prof. Beatrice Weder di Mauro (1965) B, E 2013 2006

Secretary to the

Board of Directors Dr Gottlieb A. Keller (1954)

Honorary Chairman

of the Board

of Directors Dr Fritz Gerber (1929)

12 Roche Business Report 2011 | Management

Corporate Executive Committee

Dr Severin Schwan

Dr Alan Hippe

Dr Pascal Soriot

Silvia Ayyoubi

Daniel O’Day

Dr Gottlieb A. Keller

Dr Richard Scheller

Osamu Nagayama

Dr Jean-Jacques Garaud

Dr Stephan Feldhaus

Dr Dan Zabrowski

Dr Sophie Kornowski-Bonnet(member as of 1 February 2012)

Corporate Executive Committee per 31 December 2011

13Roche Business Report 2011Management |


Name (year of birth) Position

Corporate Executive Committee Dr Severin Schwan (1967) CEO of the Roche Group

Dr Alan Hippe (1967) Chief Financial and IT Officer

Dr Pascal Soriot (1959) COO Division Roche Pharmaceuticals

Daniel O’Day (1964) COO Division Roche Diagnostics

Dr Gottlieb A. Keller (1954) General Counsel

Silvia Ayyoubi (1953) Head Group Human Resources

Enlarged Corporate Executive Osamu Nagayama (1947) President and CEO Chugai

Committee Dr Richard Scheller (1953) Head Genentech Research and

Early Development (gRED)

Dr Jean-Jacques Garaud (1955) Head Roche Pharma Research and

Early Development (pRED)

Dr Stephan Feldhaus (1962) Head Group Communications

Until February 2012 Dr Dan Zabrowski (1959) Head Roche Partnering

As of 1 February 2012 Dr Sophie Kornowski-Bonnet (1963) Head Roche Partnering

Secretary to the Corporate

Executive Committee

Per-Olof Attinger (1960)

Statutory Auditors

of Roche Holding Ltd

KPMG Klynveld Peat Marwick Goerdeler SA (reporting years 2004–2008)

KPMG AG (since 2009)

Auditor in charge: John A. Morris (2004–2010)

Ian Starkey (since 2011)

Chief Compliance Officer Dr Urs Jaisli (1956)

14 Roche Business Report 2011

Swiss francsCore Earnings per Share

15Roche Business Report 2011

BUSINESS REVIEW Group results in 2011. Roche posted strong overall results in a challenging

business environment. Core operating profit grew faster than sales, and Core

Earnings per Share (EPS) increased at a double-digit rate.

Outlook for 2012. Roche expects sales for Pharmaceuticals and the Group to

grow in the low-single-/mid-single-digit range. Diagnostics sales expected to grow

above the market. Roche targets high single-digit Core EPS growth in 2012.

Market environment. A changing healthcare sector, cost pressure and the

vast potential of modern science are transforming both the development and delivery

of healthcare, with innovation at the centre.

Group strategy. We strive to benefit patients and make healthcare more

efficient through innovations built on excellence in science. This is our response

to the medical and economic challenges facing society.

| Business Review16 Roche Business Report 2011

Group results

The Roche Group posted strong overall results in a challenging

market in 2011. Core operating profit grew faster than sales,

and Core Earnings per Share (EPS) increased by 11% at con-

stant exchange rates (–4% in Swiss francs) 1. The strengthen-

ing of the Swiss franc against major currencies, notably against

the US dollar and the euro, had a significant negative impact on

the results expressed in Swiss francs.

However the underlying currency translation exposure arising

from non-Swiss franc revenues is mitigated by the majority of

1 For a full explanation of the core results concept, see page 146 of the Finance Report (part 2 of this Annual Report).

the Group’s cost base (83%) being located outside Switzer-

land.

Solid sales growth

Group sales increased by 1% in constant currencies (–10% in

Swiss francs; +5% in US dollars) to 42.5 billion Swiss francs.

Underlying growth was able to compensate for the expected

decline in Tamiflu and Avastin sales, and the impacts of health-

care reforms, austerity measures and price cuts. Excluding

Tamiflu, sales increased by 2% in constant currencies. The

Pharmaceuticals Division represented 77% of Group sales and

the Diagnostics Division contributed 23%.

Pharmaceuticals

Sales by the Pharmaceuticals Division, excluding Tamiflu, grew

1% in 2011. Including Tamiflu, sales expressed in constant cur-

Group results and outlook

42,531 +1%15,149 +6%

9,544 +26%

millions of CHF (CER 1)Group sales

millions of CHF (CER)Core operating profit

millions of CHF (CER)Net income

Key figures

In millions of CHF % changes As % of sales

2011 2010 CER CHF USD 2011 2010

Group sales 42,531 47,473 1 –10 5 100 100

excl. Tamiflu 42,172 46,600 2 –10 6

— Pharmaceuticals Division

excl. Tamiflu

32,794

32,435

37,058

36,185

0

1

–12

–10

4

5

77 78

— Diagnostics Division 9,737 10,415 6 –7 10 23 22

Core operating profit

— Pharmaceuticals Division

— Diagnostics Division

15,149

13,406

2,178

16,591

14,776

2,202

6

5

14

–9

–9

–1

35.6

40.9

22.4

34.9

39.9

21.1

Operating free cash flow 13,733 14,149 14 –3 32.3 29.8

Core Earnings per Share (CHF) 12.30 12.78 11 –4

1 CER: Constant exchange rates (average full-year 2010).

Business Review

17Business Review | Roche Business Report 2011

rencies remained stable (–12% in Swiss francs; +4% in US

dollars) for a total of 32.8 billion Swiss francs. Sales reflected

solid growth of key medicines, including recently launched

products. Demand for cancer medicines Herceptin, MabThera/

Rituxan, Xeloda and Tarceva continued to grow, and initial

sales of the new targeted skin cancer medication Zelboraf,

launched in the US in August, have been very encouraging.

Additional major growth drivers were the eye medication

Lucentis, Actemra/RoActemra for rheumatoid arthritis and

Mircera for renal anemia. Negative impacts included expected

decreases in sales of Tamiflu, Avastin (metastatic breast can-

cer indication), NeoRecormon/Epogin, Bonviva/Boniva and

CellCept. The US healthcare reforms, European austerity mea-

sures and a base effect from the Japanese biennial price cuts

had a combined negative growth impact of 295 million Swiss

francs, equivalent to 1.0 percentage point, on divisional sales.

Oncology continued to account for the majority of the

di vision’s sales, with continued growth in Herceptin and

MabThera/Rituxan offsetting the expected decline in Avastin

sales. In virology sales of Tamiflu continued to decrease sub-

stantially, and while overall Pegasys sales declined for the year,

they began to recover in the second half following US launches

of new hepatitis C medicines that are used in combination with

Pegasys. Sales in inflammation/autoimmune/transplantation

increased due to strong uptake of Actemra/RoActemra and

growth of MabThera/Rituxan in rheumatoid arthritis more than

compensating for the negative impact of continued generic

erosion of CellCept.

In the regions, growth in US pharmaceutical sales was driven

mainly by demand for Lucentis, Rituxan and Actemra. Lower

sales in Western Europe were due primarily to government

austerity measures and budget constraints, including manda-

tory price cuts, higher rebates and increased utilisation con-

trols in some countries. Excluding Tamiflu, sales in the Inter-

national region grew 7%, helped by increasing demand for

key products in certain Asia—Pacific and Latin American

countries, notably China (+34%), Venezuela (+76%) and Brazil

(+12%).

A decrease of 3% in sales in Japan, excluding Tamiflu, was due

primarily to the direct and indirect effects of the disastrous

earthquake in March. Emergency relief efforts and the rapid

implementation by Chugai of a recovery programme to ensure

product supplies and restore production took priority over

marketing activities until normal operations could be resumed

towards the end of 2011. To ensure uninterrupted supplies

of medicines to patients, shipment controls were introduced

for a number of key products immediately following the earth-

quake. In some cases these controls were maintained well into

the fourth quarter, with promotional activities reduced accord-

ingly.

Diagnostics

Diagnostics sales grew significantly faster than the in vitro

diagnostics (IVD) market at 6% at constant exchange rates

(–7% in Swiss francs; +10% in US dollars) totalling 9.7 billion

Swiss francs in 2011. With 20% market share, Roche continued

to lead the global IVD market. The business areas Professional

Diagnostics (+9%) and Tissue Diagnostics (+15%) were the

main contributors.

Sales of Professional Diagnostics, by far the largest business

area, were driven by continued strong momentum in immu-

noassays and solid instrument placements. In early 2011 Roche

Professional Diagnostics took the leading position in its market

which includes IVD solutions for clinical laboratories and hos-

pital/ambulatory point-of-care testing. In Tissue Diagnostics,

demand for advanced staining products for the detection of

genes and proteins in tissue samples continued to fuel growth

at around twice the market rate. In Diabetes Care (+2%) and

Molecular Diagnostics (+4%), the new generation Accu-Chek

blood glucose monitoring systems and viral load tests for

infectious diseases, respectively, remained the main growth

drivers. Applied Science’s sales (–3%) were impacted by the

year-on-year decline in H1N1 influenza virus testing, increas-

ing competition in sequencing, and a slowdown in research

funding.

Diagnostics sales again grew in all regions with significant

contributions from both established and emerging markets.

The strongest gains were recorded in Asia—Pacific, driven

mainly by Professional Diagnostics’ immunoassay business

and reflecting Roche Diagnostics’ strong presence in China

(+27%). In Latin America, all business areas grew, with the

greatest contributions from Professional Diagnostics and Dia-

betes Care. Professional Diagnostics also drove sales in the

Pharmaceuticals Division — sales by region

–4% Western Europe (25%)

+3% United States (37%)

–3% Japan (12%)

+7% International (26%)

Excluding Tamiflu. At constant exchange rates (average full-year 2010).


EMEA (Europe, Middle East and Africa) region, where pricing

pressure and budget constraints were felt. In North America

Roche gained market share in the IVD core business following

the launch of new immuno assays, molecular and tissue tests.

The decline in Diabetes Care sales, due to the postponed

launch of the latest product portfolio in the US, was offset by

strong sales of the IVD core business. Sales in Japan contin-

ued to grow at several times the market rate, driven by gains in

Professional Diagnostics and Tissue Diagnostics.

Operating profit further improved

The Group’s core operating profit increased by 6% in constant

currencies (–9% in Swiss francs), resulting in an increase of

the core operating profit margin by 0.7 percentage points to

35.6% at reported exchange rates. Continued pressure on

sales prices was more than compensated by increased sales

volume and efficiency measures. Operating costs decreased

primarily as a result of the Operational Excellence programme

announced in November 2010.

Core operating profit in the Pharmaceuticals Division grew

5% at constant exchange rates to 13.4 billion Swiss francs. The

core operating profit margin of the division increased signifi-

cantly by 1.0 percentage point at reported exchange rates,

driven by Genentech integration synergies, resource prioriti-

sation and productivity improvements. This was achieved in

spite of the expected decline in Tamiflu sales of over 0.5 billion

Swiss francs, lower sales of Avastin in the metastatic breast

cancer indication, and the impact of healthcare reforms and

austerity measures.

Core operating profit in the Diagnostics Division increased by

14% at constant exchange rates to 2.2 billion Swiss francs. The

division’s core operating profit margin increased 1.3 percent-

age points to 22.4% of sales at reported exchange rates, driven

by sales growth and further positive effects from ongoing pro-

ductivity improvements.

Net income and Core EPS significantly up

Net income grew strongly mainly due to the good operating

performance, lower financing costs and a lower tax rate,

advancing 26% on a currency adjusted basis to 9.5 billion

Swiss francs (+7% in Swiss francs).

Core EPS, which excludes non-core items such as global

restructuring charges and amortisation and impairment of

intangible assets, increased by 11% in constant currencies

(–4% in Swiss francs).

Strong operating free cash flow and improved

net debt position

The Group’s operating free cash flow remained strongly posi-

tive at over 13.7 billion Swiss francs, advancing 14% in con-

stant currencies (–3% in Swiss francs).

Mainly due to the free cash flow, the net debt position of the

Group at the end of 2011 decreased by 3.6 billion Swiss francs,

from 19.2 billion Swiss francs at the start of the year to 15.6 bil-

lion Swiss francs. The net debt to asset ratio reached a level

of 25%.

Outlook 2012

Roche expects low to mid-single-digit sales growth at con-

stant exchange rates for the Group and the Pharmaceuticals

Division in 2012. Pharmaceuticals sales growth is expected

to accelerate, driven by the strength of its established product

portfolio as well as planned new product launches. Sales by

the Diagnostics Division are expected to again outpace the

market.

Despite a challenging market environment, based on the

expected sales growth and continued efficiency improve-

ments, Roche is aiming for a high single-digit increase in Core

EPS at constant exchange rates.

Roche will continue its attractive dividend policy.

Diagnostics Division — sales by region

+3% Europe, Middle East and Africa (EMEA) (50%)

+6% Japan (5%)

+17% Asia—Pacific (13%)

+15% Latin America (7%)

+4% North America (25%)

At constant exchange rates (average full-year 2010).


Key achievements in 2011*

Business/Finance

achievements

Group sales rise 2%, excluding Tamiflu. Significant foreign exchange impact of –12 percentage

points due to appreciation of the Swiss franc; overall Group sales at 42.5 billion Swiss francs

Pharmaceuticals sales, excluding Tamiflu, up 1% in line with the market; Diagnostics sales increase

6%, significantly ahead of the market

Core operating profit increases by 6%, significantly faster than sales, driven primarily by savings

from the Operational Excellence programme and continued productivity improvements

Core EPS rise 11% due to solid operating performance, lower financing costs and a lower tax rate

Strong operating free cash flow of 13.7 billion Swiss francs, up 14%

10% dividend increase for reporting year 2010; board proposes a dividend increase of 3% to

6.80 Swiss francs for 2011, the 25 th consecutive year of dividend growth

Responsible business Roche named Healthcare Supersector Leader in Dow Jones Sustainability Indexes for third

consecutive year

Established IT system and process for reporting on contributions to individual healthcare profes-

sionals to meet new regulatory requirements

Research and development Excellent progress in late-stage pipeline: 17 out of 20 trials deliver positive results in 2011;

24 key drug approvals and 21 major regulatory filings; 50 diagnostic tests and 13 instruments

launched in key markets

Leading position in Personalised Healthcare strengthened: targeted melanoma medicine Zelboraf

and companion diagnostic test successfully launched in the US; Tarceva approved in EU for EGFR-

mutated non-small cell lung cancer; launch of EGFR mutation test. Marketing applications filed in

US and EU for targeted cancer medicines vismodegib and pertuzumab

Very rich pipeline with 79 new molecular entities (NMEs) all of which are designed to be first

in class or best in class

Pharmaceuticals and Diagnostics Divisions collaborated on more than 200 projects

Manufacturing

and procurement

Established a unified sustainability audit protocol for suppliers, together with other

industry members

Marketing and distribution Basic principles of Swiss health technology assessments developed in joint initiative between

pharmaceuticals industry and santésuisse, the association of Swiss health insurers

Continued exploring differential pricing models to increase access to our medicines in emerging

markets, such as the Patient Assistance Programme in China

Hosted third annual International Experience Exchange for over 130 patient organisations to share

challenges, best practices and build relationships

Our people Ran first-ever global employee survey for Roche Group, with 80% participation rate

Prepared worldwide 2012 launch of CHRIS, a global IT solution hosting all employee-related

information and 12 major human resources processes

Increased number of women in key positions from 13% in 2009 to 18% in 2011, in line with our

5-year goal of 50% increase from 2009 to 2014

Community involvement Commenced building and equipping of two schools in Haiti and one in Pakistan following the

devastation caused by natural disasters

Laid foundation stone for a new teachers training college in Malawi, designed to house and train

540 teachers by 2013

Environmental stewardship Improved our eco-balance impact per employee by 4.3%, on target for improving our eco-balance

by 15% from 2010 levels by 2020

Reduced energy consumption by 7.7%, on track with our 5-year goal of 10% efficiency improve-

ment from 2009 to 2014 levels

* All growth rates at constant exchange rates (average full-year 2010).


Operating environment

The industry’s operating environment is characterised by two

opposing sets of forces. We are experiencing driving forces in

the form of constantly increasing demand for better healthcare

solutions in both industrialised and emerging markets, coupled

with dramatic progress in medical science and technologies

that can help provide the tools to meet that demand. In con-

trast, our industry faces resisting forces from unprecedented

pricing pressure and increasing regulatory hurdles. Innova-

tion, in our view, will be the agent for bringing decisive positive

change to this environment and for achieving sustainable

growth.

Growing demand for better healthcare options

Despite continued breakthroughs in treating serious diseases,

the need for medical care and for new treatments and tests

remains enormous. Two-thirds of all known diseases — some

5,000 — still go undiagnosed or untreated. Even where treat-

ments exist, response rates are unsatisfactory — only 50% of

patients, on average, respond favourably to today’s medicines.

Moreover, many treatments can cause serious side effects.

Genetic differences between patients are one of the main rea-

sons why even the best treatments can sometimes be ineffec-

tive. People are different, but medicines are not yet differenti-

ated. If these differences can be identified, the efficacy of

medicines can be increased significantly. Diagnostic testing

also holds tremendous potential for improving response rates.

Today, it accounts for only 2% of healthcare spending, even

though diagnostics adds value along the entire healthcare

chain, from prevention to diagnosis to monitoring, and directs

over 70% of medical decision-making.

Demand for better healthcare is also being driven by an

expanding world population, which is expected to grow from

seven billion in 2011 to nine billion by 2050. Additionally, sus-

tained economic growth, ageing populations and unhealthy

lifestyles point to a rising prevalence of acute and chronic dis-

eases such as cancer, diabetes, rheumatoid arthritis, respira-

tory diseases, Parkinson’s and Alzheimer’s diseases. The four

main non-communicable diseases — cardiovascular disease,

cancer, chronic lung diseases and diabetes — already kill three

in five people worldwide and cause great socioeconomic

harm, especially in the developing world.

Market environment and Group strategy

Patients worldwide are waiting for better treatment options

12 million diagnosed with cancer each year Oncology

235 million living with asthma

21 million living with rheumatoid arthritis Inflammation and autoimmune disorders

170 million infected with hepatitis C Virology

17 million die from cardiovascular disease every year

346 million living with diabetes Metabolism

24 million living with schizophrenia

1.3 million living with multiple sclerosis Neuroscience


Increasing price pressure in major markets offset by

growth in emerging markets

The slowdown of growth in pharmaceutical markets to low

single-digit rates in recent years reflects the rising number of

major products that have gone off-patent and, as a conse-

quence, face generic competition. In addition, political pres-

sure to contain healthcare costs has led several countries to

impose significant price reductions on pharmaceutical prod-

ucts. Concerted austerity measures were taken by govern-

ments in Germany, France, Spain, the UK, Greece and other

European countries, while government-mandated price cuts

were introduced in Japan, China, India, Brazil and Russia. In

the US, the government imposed a fee on branded pharma-

ceutical products as part of ongoing healthcare reforms and

further savings are expected over the coming years for Medi-

care- and Medicaid-funded medicines. As a result of these

cost containment measures, overall growth in developed mar-

kets is expected to remain stagnant.

In contrast to the modest outlook for industrialised countries,

we expect continued high growth in emerging markets. This

robust outlook is underpinned by rapid population increases,

rising personal incomes and efforts to improve access to

basic healthcare. We expect these favourable long-term

trends to lead to rising awareness of health issues and an

increased voice for patients in virtually all major emerging

markets.

Today, eight emerging countries are among the top 20 health-

care markets. The Asian market has grown twice as fast as

the overall global market in recent years. With a population of

1.35 billion, China is the world’s second-largest economic

power and third largest pharmaceuticals market. Nearly one-

quarter of the Chinese population will reach age 60 or above

by 2030, and incidence rates of cancer and other chronic dis-

eases increase as the population ages. In addition, govern-

ments are rapidly building diagnostics infrastructure that often

requires highly automated instruments to bridge the gap in the

number of skilled laboratory personnel.

Even though political volatility and talent retention are signifi-

cant challenges in many emerging markets, they hold signifi-

cant potential for the industry.

Rising regulatory hurdles for safety and value

Healthcare authorities, particularly those in the US and Europe,

have continuously raised their standards in assessing the ther-

apeutic benefits and safety of new drugs. It now takes ten to

twelve years, on average, to bring a new pharmaceutical prod-

uct to market, while new diagnostics require increasingly

higher upfront investments to generate clinical data and dem-

onstrate medical value.

At the same time healthcare authorities and research-driven

companies are working more closely together to adapt to

rapid advances in medical science and to improve regulatory

science, the science of developing tools, standards and ap -

proaches to assessing the safety and value of new products.

Pharmaceutical companies are also being challenged to justify

the value of their products, as many countries have imple-

mented health technology assessment (HTA) procedures to

improve healthcare services by making pricing, reimburse-

ment and funding decisions using the methods of evidence-

based medicine. This is a rapidly evolving field in Europe and

the US. Other countries, meanwhile, are introducing value-

based decision-making or value-based pricing to their HTA

systems to meet the expectations and needs of their citizens.

Consequently, decisions about what medicines to administer

are increasingly being made by public agencies and health

insurers rather than by physicians.

Expanding knowledge of disease biology

presents vast potential

Even though science is transforming the delivery of healthcare,

today’s medicines address only about 150 targets among the

more than two million proteins in the human body, many of

which may be implicated in disease. Clearly, we are just begin-

ning to understand disease processes.

The vast potential for further advances is steadily being

revealed with findings in new branches of research, such as

genomics or proteomics. As researchers refine their knowl-

edge of diseases at the molecular level, their insights are lead-

ing to new strategies for detecting and fighting disease. Take,

for example, the knowledge derived from molecular research

that cancer is not just cancer: the term covers approximately

250 different conditions, almost all of which affect body

tissues. Thanks to ultramodern methods for sequencing the

genome scientists know of some 350 genes involved in the

genesis of cancer. These include the breast cancer genes

BRCA1 and BRCA2 and a recently discovered mutated gene,

found in about 50% of all malignant melanomas and in approx-

imately 8% of all solid tumours.

The search to identify genes critical to the development of

cancers is by no means complete. Scientists worldwide are

participating in the Cancer Genome Project, an integrated

research venture that aims to detect all the mutations that

cause the 50 most common types of cancer. Efforts such as

these hold enormous promise to rapidly expand our knowl-


edge of disease biology and, in turn, transform the treatment of

disease through targeted diagnostic methods and medicines

adapted to the genetic constitution of degenerated cells.

Roche strategy

Roche’s mission has remained virtually unchanged since the

company was founded in 1896: to improve health and help

patients live longer, better lives. The entrepreneurial spirit and

inventiveness of our founders still define our culture. Today,

they provide the basis for medical advances, such as those

pioneered by Roche in the development of therapeutic anti-

bodies, that have led to the company becoming the world

leader in cancer medicines.

To continue anticipating and creating new trends, we are

harnessing our increasing understanding of disease biology to

make tomorrow’s treatments safer, more effective and more

personalised — to better fit them to patients’ genetic and other

characteristics. Over the past decade Roche has pursued a

strategy of developing medically differentiated medicines and

diagnostics. We believe that such products are more likely to

obtain regulatory approval and be accepted by patients, physi-

cians and payers because they provide value to the entire

healthcare system and, in turn, to our other stakeholders.

Focus on innovation in pharmaceuticals and diagnostics

We are convinced that innovation in healthcare is the driving

force for discovering and developing better and more cost-

efficient treatments. By focusing on prescription medicines

Observational biology

Disease mechanismsBasic biological mechanisms

Number of plausible targets

Pre-1950s 1950/60s 1990/00s Today

Cells/organisms

Pathways

Human genomeGenetic codeDNA structure

1970/80s

1,000Understanding disease mechanisms

New technologies allow better understanding of diseases


and in vitro diagnostic tests (IVDs) that create real value for

patients and physicians, Roche is positioned to succeed in an

increasingly challenging operating environment. As cost pres-

sures mount, payers will channel funding into options that offer

the greatest incremental benefits for patients.

By strategically aligning our organisation around our Pharma-

ceuticals and Diagnositics Divisions and encouraging inter-

divisional collaboration throughout the value chain — from

discovery to commercialisation — we have created distinct

competitive advantage: targeted therapies that offer medical

and economic value exceeding other options.

Our Pharmaceuticals and Diagnostics Divisions must, how-

ever, succeed in their own right, given their distinct business

models and success factors. We therefore maintain separate

organisations for each business, including product and leader-

ship responsibilities, while aligning both groups across the

value chain for advancing personalised healthcare.

Pharmaceuticals. Our Pharmaceuticals Division strives to

discover and develop first- and best-in-class targeted thera-

pies that provide unique benefits to patients. By pursuing sci-

entific excellence and maintaining high levels of R & D, we

expect to continue delivering medically differentiated prod-

ucts that address unmet medical needs. We will keep our focus

on areas where we believe our expertise can make a differ-

ence: oncology, virology, inflammatory and autoimmune disor-

ders, cardiovascular and metabolic disorders and diseases of

the central nervous system.

Diagnostics. Our Diagnostics Division is by far the world’s

leading supplier of IVDs, with a market share of 20%. We

develop instruments and tests for disease screening, for diag-

nosis and monitoring in laboratories and at the point of care

and for patient self-management. The division’s continued

success depends on the focused pursuit of testing efficiency

and medical value. By testing efficiency, we mean offering lab-

oratories complete test menus and solutions for efficient work-

flow and information management, ensuring that patients

receive fast, accurate and reliable test results. We are also

devoting substantial resources to acquiring intellectual prop-

erty and developing novel IVDs with high medical value, that

provide patients and physicians with answers to key medical

questions, and to validating and demonstrating the medical

and economic benefits of those tests.

Leverage our expertise in molecular biology

The rapidly expanding knowledge base of disease biology

and of the causes of disease holds enormous potential to pro-

vide significant benefits to patients. Our early understanding of

molecular biology prompted us make significant investment

in genetic engineering and related molecular sciences while

these exciting new approaches were still in their infancy. Today,

Roche is the world’s largest biotechnology company, with 14

biological products on the market. These biologics constitute

65% of our product portfolio, compared with an industry aver-

age of just 16%.

As our understanding of the molecular mechanisms of disease

grows, so does our ability to develop targeted treatments that

can make important contributions to healthcare management

Working together from discovery to market

Diagnostics

Pharma

BiomarkersAntibodiesDisease mechanisms

Tools e.g. sequencing

Pipeline projectse.g. lung cancer, asthma, hepatitis C

Medicines and tests

Research

Research assay

Development

Technically validated IVD assay

Commercialisation

Clinically validated IVD assay


and society. Our strengths in biotechnology research, devel-

opment and manufacturing mean that we are ideally equipped

to transform breakthrough innovations in science into benefits

for patients.

Deliver Personalised Healthcare

By combing our expertise and strengths in diagnostics and

pharmaceuticals, we are paving the way for Roche Personal-

ised Healthcare. Drawing on the growing body of knowledge

and our own research findings of the molecular causes of dis-

ease, we can now demonstrate that, in many cases, Personal-

ised Healthcare•identifies patients most likely to best respond to a specific

treatment•enhances the cost effectiveness of healthcare through the

stratification of the patient population•increases the efficiency and productivity of research and

development•supports the development of safer, more effective treat-

ments, thus reducing the risk and cost of side effects •improves medical outcomes and quality of life for patients

Today, we are interweaving the knowledge of our Pharmaceu-

ticals and Diagnostics Divisions with increasing effectiveness

throughout the development process for new medicines and

tests:•Many of our novel active substances have made an excellent

showing in scientific studies.•Our skin cancer drug, Zelboraf, and its companion test were

both approved in the US in 2011 in record time.•Our cancer drug, Tarceva, received approval in the EU for an

additional indication linked to the use of a Roche diagnostic

test.•One-half of our medicines in late-stage development have

companion tests and are tailored to specific patient popula-

tions.•All of our pharmaceutical projects have biomarker pro-

grammes (200+).

Foster innovation and empower people

Roche relies on a global network of specialised research cen-

tres, all operating with a high degree of autonomy. In addition,

Roche Pharmaceuticals partners with about 150 companies

worldwide. This approach reflects our view that innovative

research stems from fresh ideas and is most likely to flourish in

a company with strong in-house capabilities and a diverse

external network of partnerships.

Our goal is to lead through innovations in science by combin-

ing the critical mass of Big Pharma with the flexibility and

entrepreneurial spirit of smaller business units. This extends to

our talent management processes, which are all designed to

recognise and drive innovation. We also focus on creating

a working environment in which everyone feels valued and

respected. Fostering diversity is essential for our success, and

we are striving to increase the number of females in key posi-

tions by at least 50% from 2009 levels by 2014.

Creating sustainable value

Our commitment to discovering and developing innovative

products and services that are both commercially and medi-

cally successful is, and will continue to be, our most important

contribution to society. For Roche, business sustainability is

about the creation of shared value. We aim to provide value to

all stakeholders — be they patients, doctors, employees, inves-

tors or society at large. Indeed, our success in improving

patient’s lives hinges largely on our ability to integrate the ele-

ments of sustainability — social, environmental and economic

— throughout our operations and culture.

We strive, therefore, to achieve the following in all aspects of

our business:•Innovation through a focus on pharmaceuticals and diag-

nostics•Broader access to our products for patients in need of new

medicines•Respect for our employees, including offering high-quality,

rewarding employment

By making sustainability a part of everything we do, and coor-

dinating those efforts through our Corporate Sustainability

Committee, we encourage a corporate culture that seeks the

highest levels of sustainability. Roche, moreover, acknowl-

edges the United Nation’s Guiding Principles on Business and

Human Rights and recognises and follows the international

standard ISO 26000 guidance on social responsibility.

The effectiveness of this approach was reaffirmed in 2011

when Roche was named the most sustainable global health-

care company for the third consecutive year in the Dow Jones

Sustainability Indexes.


Behandlungs-beginn

24 WochenTherapie

Einstellungder Behandlung

48 WochenTherapie

72 WochenTherapie

Einstellungder Behandlung

Virusmengekeine Abnahme

Virusmengesignifikant gesunken

Virusmengegeringfügig gesunken

HCV-Konzentration:

Test

Woc

he 4

Test Woche 12

Test Woche 24

25Roche Business Report 2011Roche Personalised Healthcare |

Page

50

60

100

116

How Personalised Healthcare works

Today, findings from new basic research disciplines are enabling

scientists to refine their understanding of diseases at the molecular

level and identify subgroups of outwardly similar patients whose

disorders have different causes.

The features below highlight the subject from four different angles.

How Roche is making Personalised Healthcare a reality

Combining strengths in pharmaceuticals and diagnostics with proven

expertise in molecular biology, Roche is committed to the systematic

pursuit of Personalised Healthcare. This concept is becoming a reality

for more and more of our development projects.

Intervening at the molecular level

Cancer is a case in point of important insights derived from molecular

research. Thanks to ultramodern research techniques, including a series

of innovative systems from Roche, today’s scientists have identified

some 350 genes involved in the genesis of cancer and which may serve

as targets for therapy.

Personalised treatment strategies

Infection with the hepatitis C virus can cause liver disease. Information

on the infecting viral subtype can help doctors choose the right treatment

duration and predict the likelihood of a lasting virological response.

Common cause

2011 was a landmark year for Roche Personalised Healthcare.

Roche Personalised Healthcare

00_06_Roche_AR11_Boxed features_ENG.indd 25 27.01.2012 12:05:54


Our corporate culture is built on the values of integrity, cour-

age and passion. We are passionate about improving patients’

lives. And we have the courage to take appropriate risks,

knowing that we can manage those risks competently and with

high standards of integrity. Our values also underpin our cor-

porate responsibility and that of our employees to comply with

laws, regulations and standards. Our commitment to responsi-

ble behaviour goes beyond strict legal compliance to demand

conduct that is ethical and open and that creates long-term

value for our stakeholders.

Integrity and compliance

The Roche Group Code of Conduct guides our employees’

business behaviour worldwide and clearly expresses Roche’s

expectations as an employer. Our Code of Conduct covers top-

ics such as corporate and personal integrity, social responsi-

bility and compliance management. It provides information on

where to find help and advice and how to raise a compliance

concern.

To help comply with Roche’s standards of business behaviour,

we provide employees appropriate instruction, guidance and

support, including a mandatory series of interactive e-learning

programmes. Roche leaders, moreover, are obliged to carefully

consider business behaviour guidelines when selecting, in -

structing and monitoring people reporting to them.

The Chief Compliance Officer, supported by a network of 118

compliance officers, Group Audit & Risk Advisory and line

management, is committed to ensuring that the Roche Group

Code of Conduct is consistently complied with throughout the

company. The officer serves as a contact for our shareholders,

employees, customers, suppliers and the general public on

issues relating to the implementation of and compliance with

the Code of Conduct.

Roche also maintains a worldwide network of Export Control

Compliance Officers to ensure that it conforms to foreign trade

control legislation.

Strengthening compliance

In addition to our already comprehensive compliance pro-

gramme, we launched several initiatives in 2011, with a focus

on anti-corruption and good marketing practices. These in -

cluded six regional meetings where local compliance officers

reported on the implementation of Roche’s comprehensive

anti-corruption programme and on the Marketing and Sales

Compliance Questionnaire. Furthermore, Roche line managers

signed an assurance declaration confirming their compliance

with and commitment to implementing, controlling and enforc-

ing Roche’s integrity standards.

Roche requires partners, suppliers and other third parties with

whom we collaborate to adhere to the same high standards as

its employees. Local managers are responsible for monitoring

and reporting compliance with Roche integrity standards and

for responding quickly to non-compliant behaviour of Roche

business partners. To assist in this work, we introduced an

Anti-Corruption Compliance Questionnaire for Roche busi-

ness partners in 2011.

Fair and correct behaviour in competition is mandatory for

every Roche employee. During 2011 we updated the Behaviour

in Competition Compliance Questionnaire that enables per-

sonnel who are affected by competition law to self-assess

and monitor their own behaviour, as well as the behaviour of

employees reporting to them. Additionally, we have updated

the Roche guidelines for appropriate behaviour in the event of

an investigation by authorities.

New regulatory requirements involving transparency, such as

the so-called ‘Sunshine Act’ provisions in the US and similar

provisions in other countries, require companies to publically

report payments and other contributions granted to individual

healthcare professionals and institutions. To meet the new

reporting requirements, Roche set up an extensive internal

reporting system in 2011 to monitor its contributions to patient

organisations, health institutions and healthcare professionals,

as well as to ensure that those payments comply with Roche’s

integrity standards.

Reporting on compliance

Our employees are expected to report Code of Conduct viola-

tions to either their line manager, the local compliance officer

or the Chief Compliance Officer. Alternatively, they are also

encouraged to report non-compliance issues anonymously by

the Roche SpeakUp Line, which was established in 2009 and

can be accessed in 47 languages and 98 countries. Addition-

ally, any material violation of Roche’s integrity standards must

be reported in the Business Ethics Incidents Reporting system.

Responsible business


Roche does not tolerate violations of its Code of Conduct.

Employees who violate that code will be held accountable and

sanctioned in the appropriate way. This may include termina-

tion of employment. In 2011 we received 81 incident reports

by the Roche SpeakUp Line and 114 by the business ethics

reporting system. After investigating each incident and taking

corrective measures where necessary, 69 employment con-

tracts were terminated on account of unethical behaviour.

Risk and crisis management

Our Risk Management Charter sets out our approach for iden-

tifying, managing and reporting internal and external risks. We

also use stakeholder feedback to help manage social, environ-

mental and ethical risks. Our Risk Management Charter is

available on our website along with a list of principal risks to our

business.

Using consistent methodologies and processes, we routinely

perform risk assessments at all levels of our organisation. A

Group risk report, which covers all material risks, is annually

discussed with the Corporate Executive Committee and the

Audit Committee of the Board of Directors. We regularly

update our risk management processes to raise awareness

and understanding of risk throughout the Roche Group. In

drug development, for instance, we are developing a risk man-

agement methodology to identify and manage any risk that

could impact the achievement of a development project’s

goals.

Additionally, we have established incident management teams

throughout the Roche Group to ensure that we act quickly in

an emergency. These teams regularly rehearse different crisis

scenarios, alerts and escalation procedures.

In 2011 we strengthened our business continuity management,

including establishing a Business Continuity Management task

force to ensure that all our sites respond effectively to cata-

strophic events. The importance of these efforts was high-

lighted by the tsunami that struck Japan in March 2011 and the

widespread flooding in Thailand in fall 2011. The task force is

developing a Group-wide business continuity framework, as

well as guidelines for local implementation. This work will con-

tinue through 2012, with the goal of establishing strategies and

responses to mitigate business continuity risks.

Political donations

Roche remains independent of any political affiliation.

In Switzerland, Roche spends around 8 million Swiss francs on

contributions and donations to various organisations to safe-

guard its interests. These include payments to Interpharma,

economiesuisse, scienceindustries, SwissHoldings and vari-

ous chambers of commerce, financial assistance to trade

unions and donations to political parties at the cantonal and

federal level. Donations to political parties are each low-dou-

ble-digit thousand franc sums and overall less than 4% of total

contributions and donations.

Our employees in the US can make personal political contri-

butions through Roche’s Good Government Committee and

Genentech’s GenenPAC. Both are voluntary bipartisan non-

profit political action committees. In 2011 employees donated

273,304 US dollars to political campaigns through these com-

mittees.

More on the Web

• Roche Group Code of Conduct: www.roche.com/code_of_conduct• Group policies, positions and guidelines: www.roche.com/

policies_guidelines_and_positions• Risk management and compliance: www.roche.com/

risk_management_and_compliance• Responsible marketing: www.roche.com/

business_integrity_and_responsible_marketing


collaborations between Pharmaceuticals and Diagnostics


RESEARCH AND DEVELOPMENTCommitted. 8,073 million Swiss francs invested in research and development.

Innovative. Our Pharmaceuticals pipeline is one of the strongest in the industry.

As of January 2012 it included 122 projects: 79 involving new molecular entities and

43 additional indications or line extensions for existing medicines.

Successful. The Pharmaceuticals Division filed 21 major marketing applications —

including three for new molecular entities — gained 24 major approvals and announced

positive results from 17 out of 20 late-stage clinical trials.

Impactful. The Diagnostics Division launched 50 tests delivering enhanced

information for medical decision-making and 13 new or upgraded instruments in

key markets.

Integrated. Our Pharmaceuticals and Diagnostics Divisions are collaborating

on more than 200 projects across all therapeutic areas of interest at Roche.

collaborations between Pharmaceuticals and Diagnostics

30 Roche Business Report 2011 | Research and Development

Our R & D strategy

No company in the world invests more than we do in the quest

for innovative healthcare solutions. In 2011 Roche invested 8.1

billion Swiss francs in R & D (core basis 1), a decline of 1%, on a

currency-adjusted basis, versus 2010. More than 330,000

patients are currently enrolled in over 2,100 clinical trials

involving investigational or currently marketed Roche Group

medicines. We plan to maintain high levels of R & D investment

so that we can continue to move the most advanced projects

towards market launch while ensuring a steady flow of promis-

ing new compounds into late-stage development. We will also

1 For a full explanation of the core results concept, see page 146 of the Finance Report (part 2 of this Annual Report).

continue to develop newer and better diagnostic systems and

expand the range of tests they can perform, which is already

one of the broadest in the in vitro diagnostics industry.

People react differently to medications due to variations in

their genetic makeup. Identifying specific gene variants that

determine how well a certain treatment works and is tolerated

is a key element of our research and development efforts. This

is what drives our personalised healthcare approach — fitting

treatments to defined groups of patients. And its success

depends on systematically leveraging the combined capabili-

ties of our Pharmaceuticals and Diagnostics Divisions. Over

the last few years Roche has shown how the interweaving of

diagnostic and pharmaceutical expertise is increasingly paving

Key figures

Pharmaceuticals clinical development projects

Phase I Phase II Phase III, registration

New molecular entities (investigational new medicines) 47 21 11

Line extensions (additional indications, new dosage forms

for marketed or investigational medicines) 2 7 34

8,073

18,449

–1%

15,502

19.0%

2,947

7,173

332,183

–2% 21.9%900 +12% 9.2%

millions of CHF

Roche Group

(CER 2)

Pharmaceuticals

of sales

Diagnostics

Roche Group 1

Employees in R & D

Core R & D expenditures in 2011

millions of CHF (CER ) of salesPharmaceuticals

Patients in clinical trials

millions of CHF (CER) of salesDiagnostics

1 Decrease by 1% due to resource prioritisation and savings from the Operational Excellence programme. 2 Constant exchange rates (average full-year 2010).

Research and Development

31Roche Business Report 2011Research and Development |

the way for personalised healthcare, especially in oncology,

but now also in immunology and neuroscience. Our aim is to

provide healthcare professionals and patients with more pow-

erful diagnostic tools and targeted treatments based on new

insights into how diseases arise at the molecular level.

Diversity of approaches

Scientific breakthroughs are most likely to occur when scien-

tists are free to tackle problems from different angles and in

different ways. Roche scientists have this freedom. We believe

that a diversity of views, cultures and approaches promotes

creativity, especially in research and early development: Pharma

Research and Early Development (pRED), Genentech Research

and Early Development (gRED), Roche Diagnostics and Chu-

gai operate independently within the Group, forming the hubs

of an innovation network that includes alliances with more than

150 outside partners, such as universities, research institutes

and biotech companies. In 2011 Roche was again recognised

as one of our industry’s top partnering organisations. Together

with our partners we turn the multiplicity of ideas into medical

innovation; about one third of the current projects in Roche’s

pipeline have come from these alliances. You will find details

of the Group’s partnering activities in 2011 under Accessing

external innovation (page 47, below).

Collaborate from discovery to commercialisation

Over the past few years we have continuously improved the

organisational and technological framework for cooperation

between our Pharmaceuticals and Diagnostics Divisions.

Although they have different R & D processes, the two divisions

can share research facilities, technologies and discoveries

when working together on internal projects. This is a unique

advantage that sets Roche apart from other companies.

Diagnostic tools are finding increasing use in pharmaceutical

research. Most importantly, close cooperation is the basis for

the successful implementation of our personalised healthcare

strategy. Roche has identified a multitude of potential biomark-

ers 2 that can be used to evaluate disease processes, under-

stand disease diversity, identify drug targets and recognise

differences between patients. Once a biomarker is found, a

standardised diagnostic test can be developed before or dur-

ing clinical trials and prepared for regulatory approval along-

side the drug.

Today, Roche has biomarker programmes and dedicated bio-

marker teams for every drug in development. Our Pharmaceu-

ticals and Diagnostics Divisions are currently collaborating on

more than 200 projects across all therapeutic areas of interest

at Roche. More than half of these projects are in oncology,

followed by inflammation/immunology, neuroscience, virology

and metabolic diseases.

Our collaborative efforts improve not only the prospects

for more effective healthcare and better use of healthcare

resources but also the efficiency of bringing new therapies and

diagnostic tests to market.

2 Biomarker: a characteristic that can be measured and evaluated as an indicator of a normal biological process, a disease process, or a response to treatment.

Roche Diagnostics

Research andearly development

Late-stagedevelopment

Roche Pharma pRED

Roche Partnering

Pharma Medicines pMED

Genentech gRED

Unique structure fosters innovation

Chugai Pharmaceuticals


Improving development with Personalised Healthcare

We continue to intensify our efforts to improve R & D produc-

tivity and innovate drug development through our Personal-

ised Healthcare approach. Here and in other areas the Roche

Group’s expertise in molecular biology gives us a clear com-

petitive advantage.

Understanding the heterogeneity of diseases and using diag-

nostic tools to improve drug discovery and clinical develop-

ment, we can identify better drug targets and select patient

subgroups that are most likely to benefit from our treatments.

This is the core of Roche Personalised Healthcare, and this

targeted approach has already proven effective in reducing

the attrition rate of drug candidates by:•better profiling of drug candidates at early stages in develop-

ment •improving clinical trials results through better selection of

endpoints and stronger data•increasing the efficacy of drug candidates in clinical studies

by recruiting suitable patient subgroups

This allows us to pursue projects that might otherwise be

stopped because of side effects or lack of significant efficacy

in the patient sample as a whole, despite promising results in

some patients.

R & D pipeline

Growing number of new drug candidates and diagnostic tests

Roche has produced a steady flow of new drug candidates and

diagnostic tests in key therapeutic areas over the past few

years by leveraging its strengths in biotechnology and in vitro

diagnostics. By the end of 2011, our late-stage pipeline included

13 investigational new medicines (new molecular entities,

NMEs), compared with two in 2007. Seven of these are being

developed as personalised therapies.

Our goal in each case is to produce new medicines that are

first in class or best in class. Our commitment to following the

science translated into positive results in 17 out of 20 late-

stage clinical trials in 2011, seven of which have already formed

the basis for regulatory approvals or filings. The results sug-

gest that many of our investigational medicines have the

potential to offer significant advances in areas where new

treatment options are needed, including breast, lung and skin

cancer, asthma, and adult and childhood forms of rheumatoid

arthritis.

At the end of 2011 the Pharmaceuticals Division’s clinical

development portfolio (phases I to III and registration) included

79 new molecular entities (NMEs), up from 62 a year earlier,

and 43 additional indications. In 2011 we filed marketing appli-

cations for no fewer than three NMEs. Roche’s pharmaceuti-

cals development pipeline is shown on pages 38–39 of this

report. Further details are available at www.roche.com.

The Diagnostics Division’s R & D efforts resulted in the launch

of 50 tests and 13 new or upgraded instruments in key mar-

Number of collaborations between Roche Pharmaceuticals and Roche Diagnostics

2011

2009101

200738

2010

2008 70

200625

200+169


Roche companion diagnostics on the market or in late development *

Disease area Disease Drug Diagnostic test ** Technology Application

Virology CMV Valcyte CMV viral load PCR monitoring

HBV Pegasys and

other antivirals

HBV viral load PCR monitoring

HBV Pegasys, peginterferon

alfa-2b (Merck/SP)

HBsAg levels immunoassay monitoring

HCV Pegasys, peginterferon

alfa-2b (Merck/SP)

HCV viral load PCR monitoring

HCV merictabine (R7128) HCV viral load PCR monitoring

HCV danoprevir (RG7227) HCV viral load PCR monitoring

HIV antivirals HIV viral load PCR monitoring

HIV abacavir (GlaxoSmithKline) HLA-B genotype PCR screening

Oncology breast cancer Herceptin, lapatinib

(GlaxoSmithKline)

HER2 expression/

gene amplification

IHC, ISH selection

breast cancer tamoxifen and other

hormonal therapies

ER/PR expression IHC selection

breast cancer pertuzumab (RG1273) HER2 expression/

gene amplification

IHC, ISH selection

breast cancer trastuzumab emtansine

(T–DM1, RG3502)

HER2 expression/

gene amplification

IHC, ISH selection

cancer compound (Merck) p53 mutations microarray selection

colon cancer cetuximab (Merck) KRAS mutations PCR selection

colon cancer panitumumab (Amgen) KRAS mutations PCR selection

gastric cancer Herceptin HER2 expression/

gene amplification

IHC, ISH selection

melanoma Zelboraf BRAF mutation PCR selection

NSCLC Tarceva ***,

gefitinib (AstraZeneca)

EGFR mutations PCR selection

NSCLC onartuzumab

(MetMAb, RG3638)

Met expression IHC selection

NSCLC TG4010 (Transgene) MUC1 expression IHC selection

NSCLC crizotinib (Pfizer) ALK IHC selection

pancreatic cancer CP-4126 (Clovis Oncology) hENT1 expression IHC selection

sarcoma MDM2 antagonist

(RG7112)

p53 mutations PCR selection

Inflammation asthma lebrikizumab (RG3637) serum periostin

levels

immunoassay selection

rheumatoid

arthritis

MabThera/Rituxan RF, anti-CCP Ab immunoassay selection

Others osteoporosis Bonviva/Boniva and

other bisphosphonates

B-Crosslaps;

P1NP levels

immunoassay monitoring

transplantation CellCept MPA levels immunoassay monitoring

* We have further projects with other pharmaceutical companies which are not disclosed for confidentiality reasons. ** not available in all markets; *** selection of patients eligible for first-line treatment.black type = on the market, grey type = in development. monitoring = monitoring of a patient’s response to a particular treatment; screening = screening of patients for a particular genetic variation of HLA associated with hypersensitivity to abacavir; selection = selection of patients eligible for a particular treatment. ALK= anaplastic lymphoma receptor tyrosine kinase; anti-CCP = antibodies against cyclic citrullinated peptide; BRAF = B-isoform of the rapidly growing fibrosarcoma oncogene; CMV = cytomegalovirus; EGFR = epidermal growth factor receptor; ER/PR = estrogen receptor/progesterone receptor; HBV = hepatitis B virus; HBsAg = HBV surface antigen; HCV = hepatitis C virus; HER2 = human epidermal growth factor receptor 2; HIV = human immuno deficiency virus; hENT1 = human equilibrative nucleoside transporter; HLA = human leucocyte antigen; IHC = immunohistochemistry; ISH = in situ hybridisation; KRAS = member of the Ras family of oncogenes; MPA = mycophenolic acid; NSCLC = non-small cell lung cancer; PCR = polymerase chain reaction; P1NP = procollagen type 1 N-terminal propeptide; RF = rheumatoid factor; SP = Schering Plough.


kets. These product launches enhance the information avail-

able to guide treatment decisions and drive efficiency in clini-

cal laboratories and research centres.

Pharmaceuticals for unmet medical needs

In addition to progress with key investigational compounds, in

2011 Roche also passed significant regulatory and develop-

ment milestones with several currently marketed medicines.

An overview can be found in the tables of clinical trials, approv-

als and filings on pages 36, 42 and 43. The main regulatory and

clinical highlights from programmes in the fields of oncology,

immunology and ophthalmology are summarised below, to-

gether with status updates on promising investigational medi-

cines being developed to address viral diseases and disorders

of the central nervous system.

Oncology

We currently have 42 new compounds in development in

oncology. In addition to obtaining positive results from ten key

clinical trials in 2011, we filed marketing applications for the

most advanced of our investigational new medicines in the US

and the European Union: Zelboraf, for metastatic melanoma

(now approved in the US, Switzerland and Brazil); vismodegib,

for basal cell carcinoma (a form of skin cancer); and pertuzu-

mab, for HER2-positive metastatic breast cancer. In addition,

we made significant progress in the development of other

investigational compounds and with projects aimed at extend-

ing approved indications or introducing new dosage forms

of marketed products such as Avastin, Herceptin and Tarceva.

Zelboraf approved in US for metastatic melanoma

In August the US Food and Drug Administration (FDA)

approved Zelboraf for the treatment of BRAF V600E mutation-

positive inoperable or metastatic melanoma, as determined by

an FDA-approved test. The FDA simultaneously approved

Roche Diagnostics’ cobas BRAF test, a companion diagnostic

used to identify patients for whom treatment with Zelboraf is

appropriate. The approvals enabled Genentech to launch this

new oral, targeted cancer medicine in the US less than four

months after the marketing application was filed, and only five

years after the start of clinical trials. Marketing approval was

also obtained in Switzerland and Brazil in the fourth quarter.

In December the European Medicines Agency’s Committee

for Medicinal Products for Human Use (CHMP) unanimously

recommended that Zelboraf be granted full EU marketing

approval. The approvals and recommendation are based on

results from two clinical studies (BRIM3 and BRIM2), which

demonstrated a significant clinical benefit with Zelboraf in

patients with BRAF V600-mutated unresectable or metastatic

melanoma. We have filed marketing applications in a number of

other countries worldwide, including Australia and New Zea-

land, where rates of malignant melanoma are high. Roche

Diagnostics’ BRAF test received CE Mark 3 certification in

August.

Zelboraf (vemurafenib; RG7204, PLX4032) is being co-devel-

oped under a 2006 licence and collaboration agreement

between Roche and Plexxikon, a member of the Daiichi Sankyo

Group. Zelboraf is designed to target and inhibit some mutated

forms of the BRAF protein found in about half of all cases of

melanoma, the deadliest and most aggressive form of skin can-

cer. The BRAF protein is a key component of the RAS-RAF

pathway involved in normal cell growth and survival. Certain

mutations at position V600 keep the BRAF protein in an active

state and may cause excessive signalling in the pathway, lead-

ing to uncontrolled cell growth and survival. Roche is con-

ducting a broad development programme with Zelboraf that

includes testing combinations with other medicines (both

approved and investigational, from Roche, Genentech and

other companies), as well as studies in other tumour types. In

December 2011, in collaboration with Bristol Myers Squibb, we

initiated a phase I/II study with combined Zelboraf and Yervoy

(ipilimumab) in BRAF-mutated metastatic melanoma.

Vismodegib filed in US and EU for BCC skin cancer

In November the FDA accepted and filed Genentech’s new

drug application for vismodegib for the treatment of adults

with advanced basal cell carcinoma (BCC) for whom surgery

is considered inappropriate. The application was granted Pri-

ority Review status, and the FDA has assigned an action date

in March 2012. In December Roche submitted a marketing

application for the same indication in the EU. Both applications

are based on results from the pivotal phase II ERIVANCE BCC

study, which showed that vismodegib substantially shrank

tumours or healed visible lesions in 43% of patients with locally

advanced BCC and 30% of patients with metastatic BCC. Vis-

modegib (RG3616) is an investigational, oral, targeted medi-

cine designed to selectively inhibit abnormal signalling in the

Hedgehog pathway, an underlying molecular driver of BCC

that is implicated in more than 90% of cases. Roche is develop-

ing vismodegib under a collaboration agreement with Curis.

BCC is the most common type of skin cancer and is generally

considered curable by surgery. However, when advanced,

3 Certification that an in vitro diagnostic product complies with all requirements for use in the EU.


BCC can cause disfiguring and debilitating effects and in some

patients can ultimately be life-threatening.

Pertuzumab filed for HER2-positive breast cancer

In December we submitted marketing applications in the US

and EU for pertuzumab as a treatment for previously untreated

HER2-positive metastatic breast cancer. The filings are based

on results from CLEOPATRA, the first randomised phase III

study with pertuzumab, which compared combined pertuzu-

mab, Herceptin (trastuzumab) and docetaxel chemotherapy

with Herceptin and chemotherapy alone in people with previ-

ously untreated HER2-positive metastatic breast cancer. Peo-

ple who received pertuzumab in combination with Herceptin

and chemotherapy experienced a 38% reduction in the risk of

their disease worsening or death (progression-free survival,

PFS). Median PFS improved by 6.1 months from 12.4 months

for Herceptin and chemotherapy to 18.5 months for pertuzu-

mab, Herceptin and chemotherapy.

Pertuzumab (RG1273) is the first in a new class of targeted

anticancer agents known as HER2 dimerisation inhibitors. It is

designed to block the dimerisation (pairing) of HER2 with

other members of the HER family of receptors. HER dimerisa-

tion is believed to play an important role in the growth and

formation of several different cancer types. The mechanisms of

action of pertuzumab and Herceptin are believed to comple-

ment each other, as both bind to the HER2 receptor but on

different regions. This is thought to provide a more compre-

hensive blockade of HER signalling pathways. Pertuzumab is

being studied with the current standard of care, Herceptin plus

chemotherapy, in HER2-positive breast and stomach cancer.

Avastin regulatory update

Breast cancer. In July the European Commission approved an

extension to the Avastin EU breast cancer label. Avastin may

now be used in combination with Xeloda (capecitabine) for the

first-line treatment of women with metastatic breast cancer in

whom other chemotherapy options are not considered appro-

priate. In September the Japanese authorities approved Avas-

tin for the treatment of inoperable or recurrent breast cancer.

In November the FDA issued a final decision revoking US

approval of Avastin for the treatment of metastatic breast can-

cer. This followed a recommendation in July 2010 by an FDA

expert panel, the agency’s initial notice of revocation in Decem-

ber 2010, and an appeal in 2011 by Roche against removal of

the indication. The FDA decision does not affect the medicine’s

other approved indications in the US and elsewhere.

Ovarian cancer. Avastin received EU approval in December

for the treatment of women with newly diagnosed advanced

ovarian cancer. Based on the results of the phase III ICON-7

and GOG 218 trials, the new approval allows the use of Avastin

in combination with standard chemotherapy (carboplatin and

paclitaxel) for the front-line treatment (first-line treatment fol-

lowing surgery) of advanced epithelial ovarian, primary perito-

neal or fallopian tube carcinoma. Roche filed an additional EU

Late developmentPhase III and registration

42 projects

2 ophthalmology

3 metabolic

4 neuroscience

5 inflammation/immunology

28 oncology

Research and early developmentDiscovery programmes + phase 0, I and II projects

345 projects

2 ophthalmology

42 virology

42 metabolism

62 neuroscience

50 inflammation/immunology

147 oncology

R & D projects by therapeutic area (Roche and Genentech)


Pharmaceuticals Division — major clinical trials in 2011

Product Indication Trial (phase) Outcome Aim

Actemra moderate to severe rheumatoid arthritis, Actemra monotherapy vs combined Actemra + methotrexate

ACT-RAY (IIIb) efficacy (remission)and safety

additional data

Actemra (subcutaneous formulation)

rheumatoid arthritis double-blind, ran-domised, parallel group study (III)

non-inferiority of efficacy of subcutaneous formulation versus intravenous formulation

registration (new dosage form)

Actemra ankylosing spondylitis Builder 1 + 2 (III) Builder 1 did not meet proto-col-specified primary endpoint; programme terminated

registration (potential new indication)

Avastin recurrent platinum-sensitive ovarian cancer, versus chemotherapy

OCEANS (III) significantly improved PFS registration (potential new indication)

Avastin previously untreated, advanced non-squamous NSCLC, maintenance treatment in combination with pemetrexed chemotherapy

AVAPERL (III) significantly improved PFS additional data

Avastin + Herceptin

HER2-positive metastatic breast cancer

AVEREL (III) study did not meet protocol-specified primary endpoint


dalcetrapib patients with CHD, or CHD risk equivalents

dal-PLAQUE (IIb) data suggest possible beneficial vascular effects, generally well tolerated

exploratory (safety, efficacy)

dalcetrapib patients with CHD, or CHD risk equivalents

dal-VESSEL (IIb) endothelial function preserved, no change in blood pressure, generally well tolerated

exploratory (safety, efficacy)

Herceptin (subcutaneous formulation)

HER2-positive early breast cancer HannaH (III) comparable efficacy of subcutaneous formulation versus intravenous formulation

registration (new dosage form), personalised medicine

lebrikizumab adult asthma not adequately control-led by inhaled corticosteroids

MILLY (II) significantly improved pre-bronchodilator FEV1

proof of concept, personalised medicine

Lucentis diabetic macular edema, compared with sham injection

RIDE, RISE (III), 2-year data

rapid and sustained improve-ment in vision (significantly improved eye chart scores versus baseline)


Lucentis wet age-related macular degenera-tion, comparing alternative dosing regimens with monthly Lucentis

HARBOR (III) efficacy data do not support initiation of further high-dose studies, 0.5 mg PRN dosing to be discussed with FDA

registration (new dosing regimen)

obinituzumab (GA101)

relapsed indolent NHL, head-to-head comparison with MabThera/Rituxan

GAUSS (II) higher response rates with GA101 versus MabThera, phase III testing initiated

proof of concept

ocrelizumab relapsing-remitting multiple sclerosis randomised, multi-centre, placebo-controlled study (II)

significant reduction in disease activity, maintained through 96 weeks

dose-finding with open-label extension

onartuzumab (MetMAb)

2 nd -/3 rd -line NSCLC, combination with Tarceva

OAM4558g (II), final data (including OS)

significantly improved PFS and OS

proof of concept, personalised medicine

pertuzumab HER2-positive metastatic breast cancer, combination with Herceptin and docetaxel

CLEOPATRA (III) significantly improved progres-sion-free survival

registration, personalised medicine

Tarceva metastatic non-small cell lung cancer with epidermal growth factor recep-tor-activating mutations, first-line treatment, versus chemotherapy

EURTAC (III) significantly improved PFS potential new indication, personalised medicine

trastuzumab emtansine (T–DM1)

HER2-positive metastatic breast cancer, previously untreated HER2-positive, versus Herceptin plus chemotherapy

TDM4450g (II) significantly improved PFS proof of concept, personalised medicine

vismodegib advanced basal cell carcinoma, (single-arm trial)

ERIVANCE BCC/ SHH4476G (II)

objective response rate (tumour shrinkage, lesion healing)

registration

Zelboraf previously untreated BRAF V600 mutation-positive metastatic melanoma, versus chemotherapy

BRIM3 (III) significantly improved OS and PFS

registration, personalised medicine

BRAF = B-isoform of the rapidly growing fibrosarcoma oncogene; CHD = coronary heart disease; FEV1 = forced expiratory volume 1 (the volume of air that can be forced out in one second after taking a deep breath; a measure of lung function); HER2 = human epidermal growth factor receptor 2; NHL = non-Hodgkin’s lymphoma; NSCLC = non-small cell lung cancer; OS = overall survival (time between the start of treatment and death); PFS = progression-free survival (time between the start of treatment and disease progression); PRN = pro re nata (as needed).


marketing application in August, seeking approval of Avastin

for use in relapsed ovarian cancer. The EU filing is based on the

results of the phase III OCEANS study. The results, which were

also presented at the annual meeting of the American Society

of Clinical Oncology (ASCO) in June, show that an Avastin-

based regimen halved the risk of the disease getting worse

in women with recurrent ovarian cancer. These data add to

the growing body of evidence supporting the potential role

of Avastin in this disease, which includes the ICON-7 and

GOG 218 trials of Avastin in newly diagnosed ovarian cancer.

Roche plans to make a decision on whether to seek US mar-

keting approval for Avastin in ovarian cancer when final overall

survival results from all phase III trials are available (expected

2013). Ovarian cancer is the sixth type of cancer for which

Avastin has been approved.

Upon its initial approval in the US in 2004 for metastatic colo-

rectal cancer, Avastin (bevacizumab) became the first anti-

angiogenic therapy made widely available for the treatment of

patients with an advanced cancer. Today, Avastin continues

to transform cancer care through its proven survival benefit

across several types of cancer. It is approved in the US and

Europe for the treatment of advanced stages of colorectal,

non-small cell lung and kidney cancer, and is also available in

the US and over 32 other countries for the treatment of patients

with glioblastoma, a type of brain tumour. Avastin is approved

in more than 80 countries, including the EU and Japan, for

breast cancer.

Herceptin SC achieves positive phase III results

In October Roche announced that a phase III study (HannaH)

had achieved its primary objectives, demonstrating compara-

ble efficacy of a new investigational subcutaneous (SC) for-

mulation of Herceptin to the current intravenous (IV) infusion

formulation in women with HER2-positive early breast cancer.

Herceptin SC uses Halozyme Therapeutics’ Enhanze technol-

ogy, which enables the injection of large volumes of a medica-

tion under the skin. The SC formulation takes around five min-

utes to administer, compared with around 30 minutes for the

IV infusion. Subcutaneous administration may allow patients

to spend less time in hospital receiving their treatment than is

the case with intravenous delivery.

Herceptin (trastuzumab) is a humanised antibody, designed to

target and block the function of HER2, a protein produced by

a specific gene with cancer-causing potential. Herceptin acti-

vates the body’s immune system and suppresses HER2 to

target and destroy the tumour. Herceptin has demonstrated

unprecedented efficacy in treating both early and advanced

(metastatic) HER2-positive breast cancer as well as HER2-

positive advanced (metastatic) stomach cancer. Since 1998

Herceptin has been used to treat almost one million patients

with HER2-positive breast and stomach cancer worldwide. It is

approved in more than 150 countries.

Tarceva approved for genetically distinct type of NSCLC

In August the EU authorities approved Tarceva for use in

patients with locally advanced or metastatic non-small cell lung

cancer (NSCLC) with EGFR-activating mutations. Based on

the results of the phase III EURTAC study and additional data,

this approval enables the use of Tarceva as first-line mono-

therapy in people with this genetically distinct type of NSCLC.

Treatment with Tarceva in this setting has been shown to

more than triple the number of patients whose tumours shrink

(response rate) and to nearly double progression-free survival

(the time patients live without their disease progressing) com-

pared with chemotherapy. Roche filed a marketing application

for this indication with the Swiss health authorities in August,

and a regulatory submission in the US is planned for 2012.

Tarceva (erlotinib) is a once-daily, oral non-chemotherapy

treatment for advanced or metastatic NSCLC and advanced

pancreatic cancer. It has been shown to potently inhibit the

epidermal growth factor receptor (EGFR), a protein involved in

the growth and development of cancers. Tarceva is developed

in partnership with OSI Pharmaceuticals, a member of the

Astellas global group of companies.

Onartuzumab extends overall survival

in Met-positive NSCLC

Final data from a key phase II trial presented at the ASCO

annual meeting in June showed that people with metastatic

NSCLC whose tumours had high levels of Met, as determined

by Roche’s tissue-based companion diagnostic, lived twice as

long without their disease getting worse and lived three times

longer overall when they received onartuzumab plus Tarceva

compared with Tarceva alone. A phase III trial of combined

onartuzumab and Tarceva as second- and third-line treatment

in patients with metastatic Met-positive NSCLC (MetLung)

started in January 2012.

Onartuzumab (MetMAb, RG3638) is a unique monovalent

(one-armed) monoclonal antibody designed to target Met, a

protein associated with poor outcome in many cancers. The

compound blocks Met signalling in cancer cells by binding

specifically to the cell-surface Met receptor. Onartuzumab

is being investigated as a potential treatment for metastic

NSCLC, breast and colorectal cancer.


Pharmaceuticals pipeline

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1 approved in the EU2 submitted in the EU3 approved in US, CHMP

positive opinion in EU4 submitted in the US Personalised Healthcare project

RG-No Roche- and/or Genentech-managedCHU Chugai-managedRG105 MabThera is branded as Rituxan

in the US and JapanRG1569 Actemra is branded as RoActemra

in the EU

AMD age-related macular degenerationBC breast cancer CRC colorectal cancerDMARD-IR disease-modifying antirheumatic drug, inadequate responseDME diabetic macular edemaRVO retinal vein occlusion

MAb monoclonal antibodyNSCLC non-small cell lung cancerrhu recombinant, humaniseds.c. subcutaneous

On

colo

gy

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am

ma

tio

nIm

mu

no

log

y

Vir

olo

gy

Me

tab

oli

c C

ard

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lar

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S

Pha

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IP

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IIP

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Op

hth

alm

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Oth

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38 Roche Business Report 2011 | Pharmaceuticals pipeline 39Roche Business Report 2011Pharmaceuticals pipeline |

Seitenzahl_Pharma-Pipeline_ENG.indd 38-39 24.01.2012 14:55:13

04_R

oche

_AR

11_R

&D

_Pip

elin

e_EN

G.in

dd

227

.01.

2012

14

:24:

38


Trastuzumab emtansine (T–DM1) extends PFS

in HER2-positive breast cancer

In September promising phase II proof-of-concept data were

presented at the annual meeting of the European Society of

Medical Oncology (ESMO). The results of the TDM4450g

study showed that patients with previously untreated HER2-

positive metastatic breast cancer who received T–DM1 lived

significantly longer with their disease under control (progres-

sion-free survival, PFS) and experienced fewer side effects

typical of chemotherapy than patients who received standard

treatment with Herceptin (trastuzumab) plus docetaxel che-

motherapy. Recruitment has been completed for a phase III

trial (EMILIA) comparing T–DM1 treatment versus combined

Xeloda and lapatinib in patients whose HER2-positive meta-

static breast cancer had progressed on previous therapy.

Results are expected in the second quarter of 2012. We plan to

use the data as the basis for marketing applications in Europe

and the US in the second half of 2012.

Trastuzumab emtansine (T–DM1, RG3502) is a novel anti-

body–drug conjugate that combines the therapeutic effect of

trastuzumab (the active substance of Herceptin) with intracel-

lular delivery of DM1, a highly potent chemotherapy agent, to

specifically target HER2-positive tumours. The trastuzumab

antibody component blocks the signals that make HER2-posi-

tive cancer cells more aggressive and sends a message to

the patient’s immune system to destroy the cancer cells. It also

delivers the DM1 chemotherapy agent directly to tumour cells

to induce cell death.

Obinituzumab increases overall response rate

in relapsed NHL

Final results from a phase II study (GAUSS) comparing single-

agent obinituzumab with single-agent MabThera/Rituxan

(rituximab) in patients with relapsed indolent non-Hodgkin’s

lymphoma (NHL) were announced in the first half of 2011 and

presented at the annual meeting of the American Society of

Hematology in December. The study showed that obinituzu-

mab increased the overall response rate (ORR) of patients

with CD20+ indolent NHL, a common type of blood cancer,

compared with MabThera/Rituxan. Two phase III registration

trials in first-line diffuse large B-cell lymphoma (DLBCL) and

first-line indolent NHL were initiated in 2011. The phase III pro-

gramme also includes ongoing studies which are assessing

obinituzumab in chronic lymphocytic leukemia (CLL) and

relapsed/refractory indolent NHL.

Obinituzumab (RG7159, GA101) is a type II, glycoengineered,

anti-CD20 monoclonal antibody being developed as a po -

tential treatment for NHL and CLL. It has been specifically

designed to enhance the destruction of cancerous B cells by

activating other immune cells to attack the cancer cells and by

inducing direct cell death.

Immunology, ophthalmology

Further regulatory approvals and filings, along with new data

from phase III clinical trials again confirmed the benefits of

Actemra/RoActemra in rheumatoid arthritis (RA) and of

Lucentis for people with common types of eye disease. In addi-

tion, we currently have ten investigational new medicines in

development for chronic and progressive inflammatory and

autoimmune disorders such as rheumatoid arthritis, ulcerative

colitis, systemic lupus erythematosus and asthma.

Lebrikizumab improves lung function in adult asthma

Positive results announced in August from MILLY, a phase II

proof-of-concept study with the investigational medicine leb-

rikizumab showed that treatment with lebrikizumab resulted in

a significant increase in FEV1 (a measure of lung function) in

adults with asthma whose symptoms were inadequately con-

trolled with inhaled corticosteroids.

Lebrikizumab is a humanised monoclonal antibody being

developed for the treatment of moderate to severe persistent

asthma. It is designed to bind specifically to interleukin-13

(IL-13), which is thought to play a key role in the airway inflam-

mation, hyperresponsiveness and obstruction experienced by

asthma patients. In addition to contributing to the features of

asthma, IL-13 increases levels of periostin, a protein which can

be measured with a blood test. In MILLY patients with high

pretreatment periostin levels experienced a greater improve-

ment in lung function with lebrikizumab than patients with low

periostin levels. The results support further investigation of

lebrikizumab as a potential personalised medicine for patients

who suffer from moderate to severe uncontrolled asthma.

Roche is developing a periostin immunoassay as a companion

diagnostic test. It will be used to support phase III studies with

lebrikizumab, which are planned to start in early 2012.

Actemra/RoActemra approved for childhood arthritis

In April the FDA approved Actemra for the treatment of active

systemic juvenile idiopathic arthritis (sJIA, also known as juve-

nile rheumatoid arthritis), a rare, debilitating form of arthritis, in

children aged two years and older. The European Commission

approved RoActemra for this indication in August. Both approv-

als are based on positive data from the phase III TENDER study,

which showed that treatment with Actemra/RoActemra can

significantly improve the signs and symptoms of sJIA. Actemra/

RoActemra can be given alone or in combination with meth-

otrexate in patients with sJIA.


Effective in RA when used alone. In May a two-year phase

lllb study (ACT-RAY) showed that Actemra/RoActemra is

effective when used on its own in people with RA who do not

respond to methotrexate (MTX). The results demonstrated

that Actemra/RoActemra alone had comparable clinical effi-

cacy to Actemra/RoActemra plus MTX, a disease-modifying

antirheumatic drug widely prescribed for people with RA. Up

to 40% of people given MTX do not adequately respond to

treatment or experience adverse events and require other

drugs to help control their inflammation.

Non-inferiority of new subcutaneous formulation. In July

Chugai announced positive results from a phase III trial with

a new subcutaneous formulation of Actemra in RA patients,

showing non-inferiority of efficacy of the new formulation

compared with the current intravenous formulation. Subcuta-

neous injection is more convenient for patients and healthcare

providers, as it does not require intravenous access and takes

less time to administer than the intravenous infusion. The sub-

cutaneous formulation is being developed by Chugai in Japan

and jointly by Chugai and Roche outside Japan, with filings

planned for 2012 and 2013.

Actemra (tocilizumab), known as RoActemra in Europe, is the

result of research collaboration by Chugai and Osaka Univer-

sity. It is being co-developed globally by Roche, Chugai and

Genentech. Actemra/RoActemra is the first interleukin-6 (IL-6)

receptor-inhibiting monoclonal antibody approved to treat RA.

IL-6 is an immune system protein that plays a pivotal role in the

inflammation process associated with RA and certain other

autoimmune conditions. Actemra/RoActemra is available in

the US, EU, Japan and over 90 other countries for the treat-

ment of RA, alone or in combination with methotrexate or other

disease modifying antirheumatic drugs. It is also approved in

the US and EU for the treatment of systemic juvenile idiopathic

arthritis and in Japan for the treatment of Castleman’s disease

and polyarticular and systemic juvenile idiopathic arthritis.

Lucentis filed for DME in US

In December the FDA accepted and filed Genentech’s supple-

mental biologics licence application (sBLA) for approval of

Lucentis for the treatment of diabetic macular edema (DME),

assigning an action date in August 2012. The sBLA is based

on the results of two phase III studies, RISE and RIDE, which

showed that patients who received Lucentis experienced sig-

nificant, rapid and sustained improvement in vision compared

with those who received placebo (sham) injections.

Lucentis (ranibizumab) is a vascular endothelial growth factor

(VEGF) inhibitor approved by the FDA for the treatment of

neovascular (wet) age-related macular degeneration (AMD)

and for macular edema following retinal vein occlusion (RVO).

Lucentis is designed to bind to and inhibit VEGF, a protein that

is believed to play a critical role in the formation of new blood

vessels (angiogenesis) and the hyperpermeability (leakiness)

of the vessels. In wet AMD these blood vessels grow under the

retina and leak blood and fluid, causing rapid damage to the

macula (the central portion of the retina). In RVO, angiogenesis

and hyperpermeability can lead to macular edema (swelling

and thickening of the macula). Macular degeneration and mac-

ular edema may lead to impairment or loss of vision. Lucentis

was discovered by Genentech, which retains commercial rights

in the US. Novartis has exclusive commercial rights for the rest

of the world.

Virology

Expanded portfolio of investigational

medicines for hepatitis C

The hepatitis market is evolving and, to meet the different

needs of people infected with the hepatitis C virus (HCV),

future treatment options are likely to include interferon-free, as

well as interferon-containing triple- and quadruple-combina-

tion therapy regimens. Roche has several oral, direct-acting

antiviral agents in late-stage development for hepatitis C: the

nucleoside polymerase inhibitor mericitabine (RG7128; part-

nered with Pharmasset), the protease inhibitor danoprevir

(RG7227) and, following the acquisition in late 2011 of Anadys

Pharmaceuticals, the non-nucleoside polymerase inhibitor

setrobuvir. Danoprevir (in phase II development, LIP 4 decision

made in 2011) and mericitabine (in phase II, LIP decision made

in 2010) are being investigated in combinations in interferon-

free and interferon-containing regimens. Results from phase II

trials (INFORM SVR, DAUPHINE, MATTERHORN, PROPEL

and JUMP-C) are expected in 2012. Setrobuvir is currently

being evaluated in a phase II study in combination with the cur-

rent standard of care, Roche’s pegylated interferon Pegasys

and ribavirin (Copegus). Under a strategic agreement, Roche

and Merck have initiated the first of a series of clinical trials to

examine novel combinations of marketed and investigational

medicines for chronic hepatitis C. DYNAMO 1, a phase II study

evaluating the combination of mericitabine, Merck’s Victrelis,

Pegasys and Copegus in patients who have not responded to

prior therapy, began in late 2011.

4 Lifecycle Investment Point: decision to commence late-stage development leading to submission of marketing applications.


Metabolism, cardiovascular diseases

Roche has ten compounds in development for metabolic and

cardiovascular diseases. Two promising compounds with

novel modes of action are dalcetrapib for the treatment of

coronary heart disease, atherosclerosis and dyslipidemia, and

aleglitazar for reduction of the risk of heart attack and stroke

in patients with type 2 diabetes.

Dalcetrapib development update

In August Roche announced the results of two exploratory

phase IIb studies investigating the effects of dalcetrapib

on atherosclerotic disease progression (dal-PLAQUE) and

vascu lar function (dal-VESSEL) in patients with or at risk of

coronary heart disease. The studies, which were presented at

a major European medical conference, further support the

compound’s safety profile and potential for slowing athero-

sclerotic plaque progression.

Dalcetrapib (RG1658, JTT-705; licensed from Japan Tobacco)

is a novel cholesteryl ester transfer protein (CETP) modulator

that has been shown to raise levels of ‘good’ functional high-

density lipoprotein cholesterol (HDL-C), potentially promoting

removal of cholesterol from the blood vessels. The ongoing

phase III dal-OUTCOMES study, involving over 15,800 patients,

is investigating whether dalcetrapib reduces the risk of heart

attack and stroke in patients who have experienced a recent

acute coronary syndrome.

Pharmaceuticals Division — major regulatory approvals in 2011

Product Clinical data supporting filing Indication or dosage form Country

Avastin RIBBON 1 metastatic breast cancer, combination with Xeloda EU

Avastin international phase III data,

Japanese phase II data

inoperable or recurrent breast cancer, first-line treatment Japan

Avastin ICON-7, GOG 218 metastatic ovarian cancer, following surgery EU

Actemra/

RoActemra

LITHE (2-year data) rheumatoid arthritis, reduction or inhibition of progression of

joint damage and improvement of physical function

USA

TENDER systemic onset juvenile idiopathic arthritis USA, EU,

Switzerland

Herceptin ToGA advanced HER2-positive stomach cancer in patients who are

not candidates for curative surgery

Japan

Herceptin NOAH (Japan: NOAH and data

in the public domain)

HER2-positive breast cancer, neoadjuvant and/or adjuvant

treatment

Japan, EU

MabThera/

Rituxan

PRIMA advanced follicular lymphoma, first-line maintenance

following induction treatment with Rituxan/MabThera

plus chemotherapy

USA

RAVE Wegener’s granulomatosis, microscopic polyangiitis

(severe forms of ANCA-associated vasculitis)

USA

Pegasys Japanese phase II/III data chronic hepatitis B Japan

4 clinical studies Pegasys pre-filled pen, Pegasys ProClick Auto-Injector EU, USA,

Switzerland

Tarceva SATURN non-small cell lung cancer, first-line maintenance after

chemotherapy

China

EURTAC, published clinical

experience

metastatic non-small cell lung cancer with epidermal growth

factor receptor-activating mutations, first-line treatment

EU

PA 3, Japanese phase II data pancreatic cancer not amenable to curative resection,

combination with gemcitabine

Japan

Xeloda data in the public domain advanced or recurrent stomach cancer in patients who are

not candidates for curative surgery

Japan

XELOXA adjuvant colon cancer, combination with oxaliplatin Switzerland

Zelboraf BRIM2, BRIM3 BRAF-mutated inoperable or metastatic melanoma USA, Switzer-

land, Brazil


Aleglitazar development update

More than 60% of patients with type 2 diabetes (T2D) die from

heart disease and stroke, not from an inability to control blood

glucose. Aleglitazar (RG1439) is an oral medicine with the

potential to be the first therapy to specifically reduce cardio-

vascular risk in people with T2D. A global phase III programme

(ALECARDIO), which started in 2010, is investigating whether

aleglitazar can reduce cardiovascular morbidity and mortality

in patients with T2D who have suffered a recent acute coro-

nary syndrome event. In addition, in 2011 enrolment was com-

pleted for a phase II study (AleNEPHRO) which is evaluating

the benefits of aleglitazar in people with T2D and mild to mod-

erate renal (kidney) impairment.

Aleglitazar represents a new approach to reducing cardiovas-

cular risk in people with T2D, as it activates two key proteins

that regulate metabolic signalling in pathways that are com-

promised in T2D: peroxisome proliferator-activated receptors

alfa and gamma (PPARα and PPARγ). PPARα activation is

thought to increase fat combustion, lower triglycerides and

increase HDL-C (‘good’ cholesterol), potentially slowing the

advance of atherosclerosis. Activation of PPARγ improves glu-

cose metabolism and combats insulin resistance.

Neuroscience

Roche’s pharmaceuticals pipeline includes ten novel com-

pounds in development for central nervous system disorders

representing high unmet medical need. The most advanced of

these are investigational medicines in phase III clinical testing

for schizophrenia and multiple sclerosis. In addition, we have

several compounds in earlier stages of development as poten-

tial treatments for Alzheimer’s disease.

Bitopertin development update

Bitopertin (RG1678, formerly known as GlyT-1) is a glycine

reuptake inhibitor that is being co-developed globally with

Chugai. A phase III programme was initiated in late 2010, with

three trials investigating bitopertin in combination with anti-

psychotics in the treatment of negative symptoms of schizo-

phrenia and another three trials in patients with suboptimally

controlled positive symptoms of schizophrenia. A phase II

proof-of-concept study with bitopertin as monotherapy in

patients with acute exacerbations of schizophrenia began in

the first quarter of 2011. As the first in a new class of medicines,

bitopertin has the potential to become the first compound of

its type for the treatment of negative symptoms of schizophre-

nia. In addition, bitopertin in combination with current treat-

ments has the potential to treat suboptimally controlled posi-

Pharmaceuticals Division — major regulatory filings in 2011

Product Clinical data supporting filing Indication or dosage form Country

Avastin ICON-7, GOG 218 metastatic ovarian cancer Switzerland

OCEANS (AVF4095) ovarian cancer, relapsed EU

Herceptin NOAH (Japan: NOAH and data

in the public domain)

HER2-positive breast cancer, neoadjuvant and/or adjuvant

treatment

EU, Switzer-

land, Japan

Lucentis RISE, RIDE diabetic macular edema US

MabThera/

Rituxan

RAVE anti-neutrophil cytoplasm antibody (ANCA)-associated

vasculitis

Switzerland

RATE faster (90 minute) infusion schedule of Rituxan in combination

with chemotherapy for treatment of NHL

USA

RoActemra TENDER systemic onset juvenile idiopathic arthritis Switzerland

Tarceva EURTAC metastatic non-small cell lung cancer with epidermal growth

factor receptor-activating mutations, first-line treatment

Switzerland

Pegasys Japanese phase II/III data chronic hepatitis B Japan

pertuzumab CLEOPATRA HER2-positive metastatic breast cancer EU, USA

vismodegib ERIVANCE BCC (SHH4476G) adult patients with advanced basal cell carcinoma for whom

surgery is considered inappropriate

USA, EU

Zelboraf BRIM2, BRIM3 BRAF-mutated inoperable or metastatic melanoma EU, USA,

Switzerland,

Australia, NZ,

Brazil


tive symptoms, with little or no increase in side effects. Its novel

mode of action could also have valuable therapeutic applica-

tions in other psychiatric disorders.

Ocrelizumab maintains reduction of MS activity

up to 96 weeks

Ocrelizumab (RG1594) is an investigational, humanised mono-

clonal antibody designed to selectively target CD20-positive

B cells, which are believed to play a critical role in multiple

sclerosis (MS). The ocrelizumab phase III clinical programme

consists of two studies (Opera I and II) in patients with relaps-

ing-remitting multiple sclerosis (RRMS) and one (Oratorio) in

patients with primary-progressive multiple sclerosis (PPMS).

The programme was initiated in 2011 and is now enrolling

patients into all three trials. Results from a phase II study of

ocrelizumab in patients with RRMS, the most common clinical

form of the disease, were presented at a major medical confer-

ence in October. The study showed that the significant reduc-

tion in disease activity previously reported for 24 weeks was

maintained through 96 weeks of treatment. RRMS is charac-

terised by infrequent, acute exacerbations, with full or partial

recovery between attacks. There is no approved therapy to

treat PPMS, a much rarer form of the disease, which affects

about 10% of those with MS.

Differential targeting of amyloid in Alzheimer’s disease

Current research into Alzheimer’s disease (AD) suggests that

accumulation of amyloid beta (A-beta) peptides in the brain is

a hallmark of the disease and the main cause of loss of memory

in AD patients. We are currently developing two monoclonal

antibodies that are designed to bind to A-beta. Both are in

phase II clinical testing and represent two different approaches

to reducing amyloid burden in the brain.

Gantenerumab (RG1450), a fully human antibody originating

from a research collaboration with MorphoSys, binds and neu-

tralises disease-relevant aggregated forms of A-beta: those

that accumulate as plaques in the brain and those which inter-

fere with brain-cell functioning. A phase I study using positron

emission tomography (PET) imaging demonstrated that treat-

ment with gantenerumab resulted in reduction of brain amy-

loid, possibly through an immunological clearance mechanism

involving glial cells. An ongoing phase II trial, SCarlet RoAD, is

designed to identify patients with early (prodromal) AD and

treat them before more substantial damage to the brain has

occurred.

RG7412, a humanised antibody licensed from AC Immune,

binds to all forms of A-beta, including plaques, in the brain. Two

phase II studies began in 2011, evaluating treatment with

RG7412 in patients with mild to moderate AD: ABBY, a cogni-

tion study designed to detect a reduction in cognitive decline

to provide proof of clinical activity; and BLAZE, a biomarker

imaging study designed to measure changes in brain amyloid

plaque load using PET.

Diagnostics for better treatment decisions

In 2011 Roche invested 900 million Swiss francs in developing

novel diagnostic tests and platforms designed to provide bet-

ter information for treatment decisions and drive efficiency in

clinical laboratories and research centres.

Product launches in 2011

Our R & D efforts resulted in 50 tests and 13 new or upgraded

instruments and devices being introduced in key markets (see

table on page 45). The most important approvals and launches,

helping to broaden and differentiate our offering, are summa-

rised below.

Screening for cervical cancer

In April the US Food and Drug Administration approved the

cobas HPV test for identifying women at the highest risk for

cervical cancer. This is the only FDA-approved test that iden-

tifies 14 human papillomavirus (HPV) genotypes, twelve as a

pooled result, and genotypes 16 and 18 individually, which are

responsible for more than 70% of cervical cancers. It thereby

helps detect disease missed by current screening methods, as

shown by the ATHENA study, one of the largest-ever diagnos-

tics registration trials. The cobas HPV test is currently being

piloted in Sweden for primary cervical cancer screening.

Personalising cancer treatment

In the second half of 2011 CE Marks 5 were obtained for three

automated molecular tests that assist in tailoring treatment for

melanoma, colorectal and lung cancer patients:•The cobas BRAF test is a companion diagnostic for our

melanoma medicine Zelboraf; it was also approved by the

FDA in August (see page 34). •The cobas EGFR test identifies patients with non-small cell

lung cancer who might be eligible for first-line treatment with

epidermal growth factor receptor (EGFR) inhibitors such as

Tarceva.

5 Certification that an in vitro diagnostic product complies with all requirements for use in the European Union.


Diagnostics Division — major product launches in 2011

Area Product name Description Market Timeline

Instruments/devices

Laboratories cobas c 702 clinical chemistry module for high-volume laboratories EU, US Q1, 3

OptiView detection system for BenchMark tissue staining instruments EU, US Q2

Ultimate Reagent

Access

upgrade to BenchMark ULTRA tissue stainer for expedited

slide processing

WW Q2, 3

iScan Coreo scanner that enables digital viewing of tissue slides EU Q2

Diabetes Accu-Chek Mobile next-generation strip-free blood glucose meter EU, AP Q4

Care Accu-Chek FastClix one-click lancing device supporting blood glucose monitoring EU Q1

Life sciences LightCycler Nano desktop unit for real-time PCR analysis WW Q2

GS FLX+ System upgraded sequencing instrument and kit WW Q2

SeqCap EZ Choice,

SeqCap EZ Exome v3

microarrays for sequence capture WW Q1, 4

4.2M CGH,

2.1M CGH/SNP

microarrays for high-resolution analysis of genomic variations WW Q4

Cedex Bio bioprocess analyser for biotherapeutics manufacturing WW Q3

Tests/assays

Oncology HE4 immunoassay for early ovarian cancer detection EU Q1

HPV PCR test for cervical cancer screening US Q2

BRAF PCR test, identifies patients eligible for treatment with Zelboraf EU, US Q3

KRAS PCR test, supports therapy selection for colorectal cancer EU Q3

EGFR PCR test, supports therapy selection for lung cancer EU Q4

HER2 Dual ISH tissue test, supports diagnosis of HER2-positive breast cancer US Q2

29 IHC Primary

Antibodies

for IHC tissue testing including BCL2 (lymphomas), ERG

(prostate cancer), H. pylori (precursor of gastritis and ulcers),

MLH1 (colorectal cancer) and PR (breast cancer)

WW Q1–4

HER2 (4B5) Algorithm analytical imaging software, supports HER2 diagnostics US Q4

Virology/ HBsAg quant immunoassay for hepatitis B therapy monitoring EU Q1

Infectious

diseases

CMV Avidity,

Toxo IgG Avidity

immunoassays, help distinguish primary and non-primary

cytomegalovirus infections in pregnancy

EU Q1, 4

MPX 2.0 PCR blood screening test, detects HIV, HCV and HBV EU Q2

DPX PCR test, detects parvovirus B19 and HAV in human plasma US Q1

CMV PCR test to monitor cytomegalovirus infections EU Q1

HIV-1 2.0 PCR dual test, detects two HIV subtypes EU Q2

HCV 2.0 PCR test to measure hepatitis C viral load US Q1

HCV 2.0 (qual. and quant.) PCR tests to detect active HCV infections and measure viral load EU Q4

HLA-B 5701 PCR test to screen HIV patients for hypersensitivity to abacavir EU Q4

Metabolism Vitamin D total immunoassay, measures vitamins D2 and D3 EU Q2

hGH immunoassay, supports diagnosis of human growth hormone

disorders

EU, US Q1, 2

PTH (1–84) immunoassay to monitor patients with chronic kidney disease EU Q3

Maltose-independent

test strip chemistries

for the Accu-Chek Aviva blood glucose meter US,

Japan

Q3

GS GType HLA Primer

Sets

gene sequencing primer sets for research on the immune

system

WW Q1

black type = new product/first market launch, grey type = new product/launch in additional markets.AP = Asia—Pacific; EU = European Union; US = United States; WW = worldwide.

BCL2 = B-cell lymphoma 2 gene; BRAF = B-isoform of the rapidly growing fibrosarcoma oncogene; CGH = comparative genomic hybridisation; EGFR = epidermal growth factor receptor; ERG = ETS (E-twenty-six)-related gene; GS = Genome Sequencer; HAV = hepatitis A virus; HBV = hepatitis B virus; HBsAg = hepatitis B surface antigen; HCV = hepatitis C virus; HE4 = human epididymis secretory protein E4; HER2 = human epidermal growth receptor 2; HIV = human immunodeficiency virus; HLA = human leucocyte antigen; HPV = human papillomavirus; IHC = immunohistochemistry; ISH = in situ hybridi-sation; KRAS = member of the Ras family of oncogenes; MLH1= MutL Homolog 1 gene; PCR = polymerase chain reaction; PR = progesterone receptor; PTH = parathyroid hormone; SNP = single nucleotide polymorphism; Toxo IgG = toxoplasma-specific immunoglobulin G antibodies.


•The cobas KRAS test identifies mutations in the KRAS gene

that occur in 35% to 45% of colorectal cancers and are

predictive of non-response to anti-EGFR antibody therapies

such as cetuximab and panitumumab.

All three assays run on the cobas 4800 platform and offer

unmatched levels of sensitivity.

In June the FDA approved our Inform HER2 Dual ISH test,

which helps to verify whether a patient with breast cancer is

likely to respond to therapy with Herceptin. As the first fully

automated tissue-based assay able to detect both the HER2

gene and a central part of chromosome 17 on a single tissue

slide, the test allows pathologists to easily identify variations in

gene expression throughout the tumour, increasing the accu-

racy of diagnosis. The test can be combined with our HER2

(4B5) IHC test and Companion Algorithm HER2 (4B5) analyt-

ical imaging software, making Roche the only company offer-

ing a complete HER2 diagnostic workflow solution for labora-

tories.

Improved monitoring of hepatitis B therapy

In February our quantitative HBsAg immunoassay for hepatitis

B monitoring received CE Mark certification. The test uses our

Elecsys technology to measure levels of hepatitis B virus sur-

face antigen in serum or plasma. This enables doctors to

assess sustained treatment success with Pegasys or other

interferon-based medicines, helping them to tailor therapy to

individual needs.

Making blood glucose monitoring safer and easier

In September our maltose-independent test strips for the

Accu-Chek Aviva blood glucose meter received clearance by

the US FDA. The new strips do not cross-react with maltose

and hence offer increased safety; maltose interference can on

rare occasions result in falsely elevated blood sugar readings.

Their clearance paves the way for the launch of our new

Accu-Chek portfolio in the US. In November we started the roll-

out of our next-generation Accu-Chek Mobile with launches in

Australia and the Netherlands. Smaller than its predecessor,

the blood glucose meter provides 50 tests on a continuous

tape, eliminating the handling of single test strips.

Broadening laboratory offering

We expanded our cobas series of fully automated modular ana-

lysers for central laboratories with the launch of the cobas

c 702 clinical chemistry module in the US and the EU. Capable

of performing up to 2,000 tests per hour, the module’s inno-

vative reagent manager provides uninterrupted workflow for

high-volume testing. Following the launch of seven immuno-

assays, including a Vitamin D total test, the Elecsys test menu

for cobas analysers now stands at 95, making it the broadest

immunoassay menu available on a single platform.

Bringing PCR analysis to more researchers

In June Roche launched LightCycler Nano, a compact and

affordable desktop unit for real-time polymerase chain reac-

tion (PCR) analysis for genotyping, gene expression studies

and other applications. The Nano complements the larger

instruments in our LightCycler series, putting real-time PCR

capabilities within reach of many more researchers around the

world.

Ongoing R & D priorities

Roche Diagnostics maintained its significant R & D investments

in 2011, developing technologies and products for launch in

the coming years. Efforts are focused on the five areas high-

lighted below:

Novel biomarkers

In 2011 we continued to engage in biomarker research with our

pharmaceutical partners, drawing on our breadth of technolo-

gies for protein, genetic and tissue-based testing. The primary

focus was on oncology, virology, inflammatory, cardiovascular

and metabolic diseases. Roche Diagnostics collaborated with

Roche Pharmaceuticals on more than 200 projects, including

those addressing Met expression and periostin levels (see

pages 37, 40), and with more than 20 other pharmaceutical

partners on companion diagnostics.

Laboratory coagulation testing

We made significant investments in novel solutions for testing

of patients’ blood coagulation and hemostatic factors. In 2012

we plan to introduce a new instrument for mid- and high-

throughput testing in laboratories together with a comprehen-

sive assay menu, complementing our leading portable coagu-

lation testing systems for use at home and in doctors’ offices.

Our acquisition of Verum Diagnostica, a leader in platelet

function testing, will further strengthen Roche’s coagulation

portfolio.

All-in-one diabetes care systems

Our development pipeline emphasises integrated solutions

that facilitate personalised diabetes management and reduce

the number of devices and steps needed to monitor blood glu-

cose and deliver insulin. The SOLO micropump, for instance,

features a semi-disposable insulin pump patch and remote

control that allow the micropump to continuously deliver insu-

lin based on the patient’s needs. It is scheduled for launch

in the EU in 2012. In addition, a development and distribution


agreement reached with DexCom in November 2011 will en-

able Roche to integrate DexCom’s leading continuous glucose

sensing technologies into future insulin delivery systems.

High-volume DNA testing

We are developing platforms that we expect will be the first

to combine molecular tests for women’s health, virology and

blood screening. The platforms will bring greater automation,

throughput and cost efficiency to molecular diagnostics

and blood-screening laboratories, simplifying workflows and

reducing equipment and complexity. Development is sched-

uled to continue through 2012.

Next-generation sequencing

In 2011 we remained focused on developing faster, more effi-

cient sequencing systems to enable even broader study of the

human genome and genetic causes of disease. We maintained

an exclusive partnership with DNA Electronics for the devel-

opment of an electrochemical DNA sequencer and a collabo-

ration with IBM to develop a nanopore-based single molecule

sequencer. In October Roche licensed several technologies

from Arizona State University and Columbia University, to

directly read the sequence of nucleic acids in a single DNA

molecule as it passes through a nanopore. These technologies

will help advance the development project with IBM.

Accessing external innovation

Access to external innovation through targeted acquisitions,

licensing agreements to exchange intellectual property and

academic alliances are a significant means of strengthening

and expanding our global innovation network. Through col-

laboration agreements Roche explores ideas with some of the

Diagnostics Division — key product launches planned for 2012

Area Product name Description Market

Instruments/devices

Laboratories cobas t 611 coagulation analyser for mid- and high-throughput testing EU

BenchMark Special Stains fully automated tissue stainer WW

VENTANA iScan HT high-throughput scanner that enables digital viewing of tissue slides WW

Point–of- cobas b 101 multi-blood lipid and glucose point-of-care analyser EU

care cobas b 123 * blood gas analyser for critical care US

Diabetes

Care

Accu-Chek Nano

SmartView *

small blood glucose meter requiring no coding of test strips US

Accu-Chek Mobile next-generation strip-free blood glucose meter EU

Accu-Chek Combo* insulin pump with remote control and blood glucose meter US

SOLO Micropump insulin micropump with remote control and blood glucose meter EU

Tests/assays

Oncology HE4 immunoassay for early ovarian cancer detection US

p16 Histology IHC tissue test for cervical cancer early detection EU, US

ER * IHC tissue test for diagnosis of breast cancer US

GS GType TET2/CBL/

KRAS & RUNX1 Primer

Sets

gene sequencing primer sets for leukemia research WW

Virology/ CMV PCR test to monitor cytomegalovirus infections US

Infectious

diseases

CT/NG PCR test to detect chlamydia and gonorrhoea infections US

Metabolism Vitamin D total immunoassay, measures vitamins D2 and D3 US

black type = new product/first market launch, grey type = new product/launch in additional markets.EU = European Union; US = United States; WW = worldwide.

* These products were initially scheduled for launch in 2011; they have been filed with the FDA and will be launched as soon as they are approved.

CBL = Casitas B-cell lymphoma gene; CT/NG = Chlamydia trachomatis/Neisseria gonorrhoeae; ER = estrogen receptor; GS = Genome Sequencer; HE4 = human epididymis secretory protein E4; IHC = immunohistochemistry; KRAS = member of the Ras family of oncogenes; p16 = protein p16INK4a; PCR = polymerase chain reaction; RUNX1 = Runt-related transcription factor 1; TET2 = member of the TET family of oncogenes.


world’s leading scientists for translating science into clinically

differentiated medications and novel diagnostics. In a recent

survey by The Boston Consulting Group that measured the

partnering functions of the major pharmaceutical companies,

biotech companies ranked Roche as one of the best compa-

nies with which to partner. We had the highest average score

across all attributes, with particular strengths in deal structure

flexibility, executive leadership, alliance management and man-

ufacturing expertise. We also had the most nominations as ‘top

partner’ by survey respondents.

Acquisitions and licensing agreements

Roche Partnering signed 67 new agreements in 2011, includ-

ing three product transactions covering four products in total

and 53 research and technology collaborations. In addition,

11 product outlicensing agreements were signed. A special

team was created to source ‘open innovation’ by collaborating

at the earliest stages with academic institutions and other

external partners to establish product development partner-

ships. Among the team’s main transactions in 2011 was the

collaboration between PTC Therapeutics and the SMA Foun-

dation, giving Roche access to a first-in-class treatment for

spinal muscular atrophy, a devastating disease effecting chil-

dren and adolescents and the leading genetic cause of mortal-

ity in infants and toddlers. The acquisition of Anadys Pharma-

ceuticals brought setrobuvir into the Roche virology pipeline.

The US-based company is also developing ANA773, an oral,

small-molecule inducer of innate immunity, currenly in phase I

clinical trials, that may prove useful for treating HCV and other

chronic infections and cancer. In addition, Roche entered into

an agreement with Evotec AG of Germany to co-develop and

commercialise EVT-302, a compound that may slow the pro-

gression of Alzheimer’s disease.

Genentech Partnering completed three product transactions

and signed six new research and technology collaborations in

2011. These agreements support the work of gRED and include

an in-licensing agreement, with an option to purchase, with

US-based Forma Therapeutics covering a new cancer target.

The agreement was nominated for Alliance of the Year by IN

VIVO, a leading healthcare industry information provider. An

in-licensing agreement with US-based Array Biopharma adds

a second compound for an important cancer target, a ChK1

inhibitor, to gRED’s development portfolio.

Roche Diagnostics signed more than 40 licensing agree-

ments in 2011, as well as acquiring PVT Probenverteiltechnik

(Germany)/PVT Lab Systems (US), mtm laboratories (Ger-

many) and, in early 2012, Verum Diagnostica (Germany). PVT

is a global market leader in providing customised automation

and workflow solutions for in vitro diagnostic (IVD) testing in

large commercial and hospital laboratories. mtm is a tissue

diagnostics company with a leading portfolio of IVDs for early

detection and diagnosis of cervical cancer. Verum Diagnostica

is specialised in laboratory coagulation testing. The division

also entered into a number of new research and technology

collaborations, including the development of PCR biomarker

tests (Merck and Clovis), tissue-based companion diagnostics

(Bayer and Pfizer), and automated target enrichment for bio-

medical research (Caliper).

Academic alliances

Roche’s innovation network expanded further during the year

thanks to new collaborations with academic institutions around

the world. pRED has developed an academic network with 130

partners in 76 academic institutions and 15 nations in the

Americas, Asia and Europe. In 2011 we added several leading

academic institutions to our Expanding the Innovation Network

programme, which has now 11 umbrella agreements, including

with the Hebrew University in Jerusalem and the Harvard Uni-

versity. Four new agreements are pending in Europe, the US

and China. The collaborations have already produced tangible

results, with two projects brought in-house and joint intellec-

tual property created. In 2011 Roche formed a strategic part-

nership with the Cancer Prevention and Research Institute of

Texas, a cooperation with the Swedish life science initiative

Uppsala BIO, and a three-way research agreement with Har-

vard University and the Chinese biotechnology organisation

Biobay.

Since its inception in 2010, pRED has established translational

R & D hubs with academic institutions through its academic

alliances group. Operating in France, the US, Canada, Switzer-

land, the Netherlands and Singapore, these hubs had more

than 80 programmes and projects under way at year-end. In

2011 pRED opened an R & D institute in France that serves as a

single entry point for academic collaborations across multiple

disease areas and scientific disciplines. Similarly, a transla-

tional research hub opened in Zurich will foster collaborations

between Roche Pharmaceuticals and Roche Diagnostics

and academic researchers from the Swiss Federal Institute

of Technology (ETH), the University of Zurich and University

Hospital Zurich.


Conducting responsible R & D

Safe and transparent clinical trials

Clinical trials determine the safety and efficacy of new medi-

cines and the clinical value of diagnostic tests. They also pro-

vide critical information on the cost-effectiveness of a treat-

ment or diagnostic test and how a treatment improves quality

of life. This information is shared with regulatory authorities

and payers in order to gain marketing approval and, ultimately,

reimbursement. In 2011 more than 330,000 patients received

state-of-the-art care and free treatment as participants in

Roche-sponsored clinical trials. In addition, more than 35,000

participating medical centres received educational, financial

and medical support.

Clinical trials

2011 2010 2009

Number of clinical trials 2,174 2,173 2,182

Number of healthcare

centres involved 35,849 34,636 34,508

Number of patients in

phase I–IV clinical trials* 332,183 277,079 268,614

* Numbers do not include patients in Genentech studies initiated prior to the merger.

Roche follows strict policies and processes to ensure the

safety, well-being and legal rights of people participating in

clinical trials, including the International Conference on Har-

monisation — Good Clinical Practice (ICH-GCP) guidelines. To

ensure compliance with these standards, we train, monitor and

audit those involved in our clinical trials, including contract

research organisations (CROs) that conduct or manage trials

on our behalf. We do not perform trials in countries where we

do not plan to market the medicine being tested.

We maintain a searchable database of clinical trials at www.

clinicaltrials.gov and www.roche-trials.com. Details of Roche

clinical trials are also available through the International Fed-

eration of Pharmaceutical Manufacturers and Associations

clinical trials portal and the US National Institutes of Health

global registry.

Roche further ensures sharing of clinical data by encouraging

its scientists to publish results of their work in medical journals

and to present them at scientific and medical congresses. In

2011 Roche scientist contributed 1025 scientific publications,

including articles that appeared in high-impact journals such as

Nature, Cell, Science or the New England Journal of Medicine.

Ethical practices

We have clear policies and procedures in place to maintain

high ethical standards in our R & D activities, including provid-

ing regular ethics training for employees.

Employees who encounter an ethical dilemma in their work,

and cannot resolve it with their colleagues, can contact our

Global Ethics Liaison Office, which then consults both internal

and external experts to seek a solution. In 2011 this office

received and resolved no enquiries.

The company has established the Roche Scientific and Ethics

Advisory Group (SEAG) to offer advice and counsel on a broad

range of ethical matters. The panel meets annually and is made

up of independent external experts appointed by Roche from

the fields of genetics, bioethics, law and sociology, as well as

lay members, such as representatives from patient advocacy

groups. In 2011 SEAG provided valuable input into Roche’s

new pre-approval access policy. The policy provides a global

approach to enabling access to medicines, prior to commercial

approval, for patients who have life-threatening diseases but

are unable to participate in clinical trials. SEAG also advised

on the development of principles for conducting stem cell

research at Roche.

Bioethics

Roche integrates ethical practices into its scientific research

through responsible, accountable and transparent approaches

to the development of diagnostics and therapeutics. The com-

pany has published several position papers on its R & D activi-

ties in areas such as genetics, stem cells and animal research.

We routinely review and update these positions and our poli-

cies for research involving either humans or animals, taking

into account scientific developments and public concerns.

The Roche Charter on Genetics ensures excellence and social

responsibility in our genetic research. We believe in the right of

every individual to self-determination, privacy and confidenti-

ality regarding the collection and use of genetic information.

Roche will not pursue the creation of genetically identical

human beings.

Stem cells and their application in drug research offer tremen-

dous potential to establish disease models to help identify

potential novel targets and screen compounds. Roche con-

ducts stem cell research in-house and through external col-

laborations as a means of improving drug development while

reducing animal testing and potential serious adverse events in

50 Roche Business Report 2011 | Research and Development50 Roche Business Report 2011 | Roche Personalised Healthcare

How Personalised Healthcare works

On average, only about five out of ten patients who receive a given therapy actually benefit from it, while some

may experience side effects.

Thanks to advances in new research disciplines, scientists now have a better understanding of disease at the

molecular level. As a result, they are able to distinguish patient subgroups in which different causes drive

what has traditionally been regarded as a single disease. In oncology, this has led to efforts to identify genetic

characteristics affecting patients’ responses to particular therapies.

Identifying clinically significant patient subgroups is a key element of our Personalised Healthcare strategy, which marries new diagnostic techniques with advances in biotechnology in an effort to develop more targeted, more efficient therapies.

This strategy is being systematically implemented at every stage of new product development at Roche and is aimed at helping us• better understand disease diversity • identify differences between patients• identify the best drug targets• improve the quality and efficiency of our R & D efforts• develop biomarkers and diagnostic tests




clinical trials. Our goal is to establish treatment strategies

for incurable or inadequately treated severe diseases, such as

central nervous system, cardiovascular and metabolic disor-

ders, and viral diseases. Roche is also exploring the potential

therapeutic use of stem cells for incurable or inadequately

treated severe diseases.

Animal welfare

Roche has a long-standing commitment to maintaining high

standards of animal welfare, and we take public concern about

animal research seriously. Wherever possible, we seek alterna-

tives to the use of animals, such as computer simulation or in

vitro testing using differentiated cells or stem cells rather than

animals.

Even so, animal research remains indispensable to biomedical

research for scientific and legal reasons. Regulatory authori-

ties require all healthcare companies to test the safety and

efficacy of new drugs in animals before they can be used in

humans. Roche is committed to acting ethically and to applying

the highest standards of care to animals used in scientific pro-

cedures, including conforming to all laws, regulations and

industry standards.

In 2011 we used 469,004 animals in our research, an 6.6%

decrease from 2010. The number of animals used by CROs

performing research on our behalf increased to 68,606 com-

pared with 55,913 in 2010. Approximately 98% of the animals

used were mice and rats.

Animals used in research

We aspire to use as few animals as possible without putting at

risk the reliability and validity of research and test results by

following a 3Rs approach: •Reduce: the number of animals needed •Refine: by tailoring procedures to minimise pain and discom-

fort •Replace: with other methods that do not involve animals or

use only cells or tissues of animals

In 2011, the Roche Ethics Committee on Animal Welfare spon-

sored the third Roche 3Rs Award, which recognises employ-

ees and contractors for their commitment to the 3Rs approach

and for improving animal welfare in three categories: labora-

tory animal care and management; scientific progress; and

surgery, methodology, training and techniques. Award-win-

ning projects included the development of a computer-aided

prediction tool that can be used to avoid toxicological effects

and reduce the number of animal experiments, and a project

that enables researchers to produce human antibodies with-

out first having to immunise laboratory animals.

Roche is a signatory to the Swiss Charter on Animal Welfare

that was adopted in 2010 by Interpharma, the association of

research-based pharmaceutical companies in Switzerland.

The charter commits us to consistently high standards of ani-

mal welfare through a programme of auditing, employee train-

ing, stakeholder dialogue, promotion of the 3Rs approach and

management of external contractors.

More on the web

• Roche’s Pharmaceuticals and Diagnostics Pipelines: www.roche.com/pipeline

• Personalised healthcare: www.roche.com/personalised_healthcare• Group policies, positions and guidelines: www.roche.com/

policies_guidelines_and_positions• Clinical trials and patient safety: www.roche.com/clinical_trials;

www.roche.com/managing_medication_safety• New products and technologies: www.roche.com/

innovation_and_technologies• Ethical standards: www.roche.com/ethical_standards• Genetics and bioethics: www.roche.com/genetics_and_bioethics• Animal welfare: www.roche.com/animal_welfare

Animals used in research (Roche and contract research

organisations) in 2011

97.8% mice and rats

0.7% other rodents and rabbits

0.3% dogs

0.5% primates

0.8% other


manufacturing sites


MANUFACTURING AND PROCUREMENTReliable. We maintained a steady supply of more than 120 medicines, 2,600 tests

and 140 instruments to patients and health professionals around the world.

Agile. We supported 100 development projects for new medicines and supplied

around 600 global clinical trials with study medication.

Eco-friendly. We reduced CO2 emissions by up to 85% in logistics pilot

projects by switching to alternative modes of transportation such as road and

sea ferry instead of air.

manufacturing sites

54 Roche Business Report 2011 | Manufacturing and Procurement

Our Pharmaceuticals and Diagnostics Divisions operate global

manufacturing and supply networks that play a vital role at

every stage of the product lifecycle starting with early product

development and manufacturing process design. Both divi-

sions work towards a common aim: deliver high-quality prod-

ucts and meet all quality and compliance requirements with

optimal financial performance. Regardless of where in the world

a Roche product is made, we apply the same set of rigorous

safety, quality, ethical, labour, health and environmental stan-

dards. With Roche’s business based on innovation, we con-

tinuously build and adapt our networks and optimise perfor-

mance to best serve our product pipelines and respond to new

market opportunities and changes in quality and regulatory

requirements.

Our procurement teams create sustainable value by ensuring

the efficient acquisition and delivery of goods and services in

accordance with our quality and compliance standards. The

teams support our business units in achieving their goals and

capturing savings that can be reinvested in the business.

Key figures

28

2,600over 12014,786

instruments140Employees

Portfolio

in manufacturing and logistics

medicines

Manufacturing sites 17 Pharmaceuticals, 9 Diagnostics and 2 joint sites

tests

Manufacturing

Pharmaceuticals

Our network. Our pharmaceutical manufacturing network

comprises 19 sites in Europe, the Americas and Asia, including

three Chugai sites in Japan. The employees at these facilities

make over 120 different medicines for commercial supply and

clinical trials. We synchronise supply with demand, from global

production planning to final delivery of medicines to our cus-

tomers. We synthesise some drug substances (small mole-

cules) chemically, while others (biologics) are produced by

sophisticated biotechnological processes that employ living

organisms. We then transform the drug substances into sterile

drug products such as vials and prefilled syringes and solid

dosage products like tablets and capsules. We dual-register

some sites, which enables us to produce key pharmaceutical

products at more than one site, thereby reducing the risk

of supply interruptions and better balancing production

capacity.

Contract manufacturing organisations (CMOs) complement

our own manufacturing capabilities and help us transition drug

candidates through our pipeline quickly and efficiently. We

outsource various phases of drug production to CMOs to

create capacity, access specialised capabilities and optimise

operating costs. At Roche, a dedicated team manages all

aspects of our relationships with CMOs, assuring product

quality, sustainability and operational and financial perfor-

mance. As part of Roche’s emerging markets strategy, we

work with governments and other partners to strengthen and

expand local manufacturing capabilities in order to improve

access to healthcare (see Access in emerging countries on

pages 65 and 68).

Roche is a global leader in biopharmaceutical production, with

approximately 25% of global biologic production capacity and

Manufacturing and Procurement

per 31 December 2011

Leganés

Florence

Vacaville

Hillsboro

South San Francisco

Oceanside Tucson

Rio de Janeiro

Toluca

Singapore

Shanghai UkimaUtsunomiya

Segrate

Rotkreuz

BaselKaiseraugst Penzberg

BranchburgBranford

Clarecastle

Reykjavik

GrazBurgdorf

Indianapolis

Puerto Rico

Fujieda

Pharma

Diagnostics

Mannheim

Biologics drug substances

Sterile drug products

Solid dosagedrug products

InstrumentsAssays/reagents Diabetes Care

Small molecules drug substances

55Roche Business Report 2011Manufacturing and Procurement |

drawing on decades of experience. Biologics manufacturing is

a challenging process, as it involves the use of living cells that

are highly sensitive to even the slightest changes in their envi-

ronment. Various factors such as nutrient solution, timing and

equipment can determine yield, amounts of unwanted by-

products and even the structure of the active ingredient being

produced. The process steps are illustrated on the next page.

We continue to follow the production of copies of biological

products, or biosimilars, and support regulatory activities to

ensure they are brought to market safely and effectively (see

Biosimilars on page 75).

Objectives and performance. The manufacturing organi-

sation’s primary objectives in 2011 were to support Roche’s

growing R & D pipeline and improve our manufacturing net-

work and processes, while maintaining a strong focus on

supply chain reliability and product quality. We continued to

foster a culture of continuous improvement and share best

practices across sites. Improvements introduced in 2011 include

additional common standards for producing small molecules,

which will help make site performance more transparent, and

establishing best practices for materials flows and productive

maintenance. In biologics production, we improved scrap-

handling practices, resulting in lower manufacturing costs,

Manufacturing sites — Roche Group

1

2

3

4

5

1 2 3 4 5


higher yields and improved manufacturing processes for

products such as Pulmozyme and Nutropin.

Supporting pipeline delivery. In 2011 pharmaceutical manu-

facturing supported 100 development projects for new medi-

cines. This included supplying investigational products for

approximately 600 global clinical trials that involved tens of

thousands of patients. Notable among these efforts was the

accelerated development of manufacturing processes for our

melanoma medicine Zelboraf (see R & D, page 34). Rapid scale-

up of the chemistry and an innovative tablet formulation based

on micro-precipitated bulk powder helped Roche to develop

and launch Zelboraf in just five years after the start of clinical

trials, including making it available to patients within five days

of FDA approval. Zelboraf illustrates the effectiveness of our

integrated global manufacturing network — Basel, Switzer-

land, provides the drug substance, Segrate, Italy, finalises pro-

duction and Leganés, Spain, packages the drug.

Investments. We invested in new facilities and upgraded

others — executing 25 major engineering projects in 2011 — to

ensure that we meet growing global demand for our medicines

and are prepared for future product launches. We continued to

transform our manufacturing facility for solid dosage forms in

Shanghai from a local to a global supply operation. In early

2011 the facility received FDA and EMA approvals to produce

Xeloda for US and EU markets. The approvals are among the

first to be issued to an international company in China.

Biotech production process

All process steps are performed under sterile, temperature-controlled conditions. Extensive testing throughout the process assures product quality.

Specific human genes are inserted into bacterial or mammalian cells to create a unique master cell line that yields the target ther-apeutic protein. This mas-ter cell bank is frozen for storage.

The cell culture is transferred to progressively larger bioreactors. Special nutrient medium is added. Its unique composition is optimised for each cell line and enables produc-tion of the desired protein (drug substance).

For production, cells are removed from the master cell bank, cultured in a liquid growth medium and transferred to larger ves-sels as the cells multiply.

The protein is separated from the biomass (cells, culture medium and waste products) leading to a pure solution. The centri-fugation, purification and concentration steps are specific to each desired protein.

The drug substance is for-mulated into a stable dos-age form (sterile liquid or powder), filled into vials or syringes, and packed for shipping.

Cell line Culture Fermentation Purification Formulation, filling

and packaging


In June Roche completed TP Expand in Penzberg (Germany),

a 191 million Swiss francs project that upgraded and expanded

the site’s therapeutic protein development and production

capacity. The project entailed renovating five buildings and

adding production and lab facilities for biotech manufacturing

and development. In November we completed construction of

a new technical R & D facility in Basel at a cost of 250 million

Swiss francs. This facility houses labs, offices and small-scale

production lines and is used to develop innovative processes

and technologies for turning active ingredients into tablets,

capsules and injectable medicines.

Supply chain challenges. The agility and resilience of our

global supply chain was tested in March, when the disastrous

earthquake in Japan interrupted Chugai’s Utsunomiya opera-

tions, and again in September, when a fire damaged our site

in Segrate. In response, Roche and Chugai immediately set up

supply chain taskforces that worked in close cooperation with

health authorities to ensure continued product supply and

regulatory compliance. Both sites have fully recovered from

these incidents and resumed production.

Operational Excellence. As part of the Operational Excel-

lence programme, announced in late 2010, and the ongoing

evaluation of our manufacturing network, we divested techni-

cal development and small molecule manufacturing operations

located in Boulder, USA, to Corden Pharma. Corden will con-

tinue to supply us with commercial-scale peptides and chemi-

cal active ingredients for important medicines. We also sold

our clinical plant in Oceanside, USA, to Gilead Sciences in our

ongoing programme to consolidate clinical and process devel-

opment operations. These divestments, along with other mea-

sures, lowered the number of people employed in pharma-

ceutical operations in the US by 15%.

Diagnostics

Our network. Our diagnostics operations network comprises

11 manufacturing sites and 2 global supply hubs in Europe and

the US. This network handles all aspects of procurement,

manu facturing and logistics for a broad portfolio of diagnostics

and diabetes care products. The portfolio includes over 2,600

tests for use with associated instruments. This translates into

the pro duction of 140 different instruments, ranging from large

work stations to hand-held meters, 6,400 reagent kits with

14,000 reagent and control components, and 160 consuma-

bles such as pipettes and cuvettes. A dedicated function pro-

vides quality and regulatory support to the global operations

network.

The majority of our instruments and tests are manufactured

in-house, which allows us to maintain cost and quality advan-

tages and leverage proprietary technologies and special exper-

tise. In general, we use external manufacturers to access intel-

lectual property and unique technologies, enabling us to focus

on our core competencies and optimise efficiencies and costs.

For example, we outsource the production of hand-held blood

glucose meters, large work stations, and consumables.

Objectives and performance. We reorganised operations

across the Diagnostics Division in 2010 to establish a single,

integrated function for driving excellence in manufacturing,

supply chain management and procurement. Since then, we

have pursued an agenda of delivering cost savings while build-

ing capabilities for sustainable high performance in quality,

cost and supply reliability. In 2011 we again realised an aggres-

sive cost-saving target, which contributed to the division’s

overall improvement in profitability. We also advanced three

performance initiatives: •Asset management: We invested in facilities to expand

capacity, alleviate bottlenecks and mitigate supply risks, and

we transferred product manufacturing to consolidate capac-

ity, increase utilisation and reduce costs. We also consoli-

dated our supplier base to ensure optimal alignment between

external suppliers and internal capacities.•Right-first-time manufacturing: We introduced a system-wide

programme to improve performance by systematically elimi-

nating errors, driving improvements in right-first-time rates,

quality and cost at all sites. The programme also served as a

forum for sharing best practices across the network.•Design for quality and manufacturability: We developed tools

and methodologies to ensure the establishment of robust

production processes and applied them to product develop-

ment projects across the division. We expect these changes

to pay dividends in the form of improved quality and manu-

facturability as new products are brought to market.

Supporting pipeline delivery and investments. Diagnostics

operations maintained the reliable supply of a growing and

increasingly diverse portfolio of instruments and assays, includ-

ing over 60 product launches (see table on page 45). To meet

the growing global demand and support the launches, we

invested in facilities and equipment and undertook more than

20 major capital projects in 2011. These include building a

compounding and filling facility in Mannheim, Germany, and

expanding a cell fermentation facility in Penzberg. Both will be

used for the production of immunoassays.

Operational Excellence. As part of the Operational Excel-

lence programme, we consolidated diagnostics R & D and

oper ational functions at several sites. In the second half of


2011, we began the transfer of chemical raw materials and ana-

lytical services from Mannheim to Penzberg. We also started

to set up infrastructure for instrument production of blood gas

and electrolyte monitoring systems in Rotkreuz, Switzerland,

in support of the move of that production from Graz, Austria.

Activities to transfer the production of insulin delivery systems

from Burgdorf, Switzerland, to Mannheim are also on track.

Quality and compliance

Every patient has the right to safe medicines and reliable diag-

nostic test results. Our robust and comprehensive quality man-

agement systems are designed to comply with all relevant laws

and regulations and are based on the most recent quality norms

and standards, including cGMP and those of ICH and ISO 1.

1 cGMP = current Good Manufacturing Practices; ICH = International Conference on Harmonisation of Technical Requirements for Regis-tration of Pharmaceuticals for Human Use; ISO = International Organi-zation for Standardization.

In 2011 our Pharmaceuticals and Diagnostics Divisions contin-

ued to invest in our quality systems to address changing regu-

latory requirements. We also took proactive steps to drive sus-

tainable quality and compliance and manage risks, including:•globally harmonising our quality systems •an end-to-end quality management programme at Roche

Pharmaceuticals to continuously optimise production pro-

cesses•strengthening product quality oversight of suppliers and

CMOs

In 2011 pharmaceutical operations successfully managed more

than 60 site inspections from health authorities worldwide.

Diagnostics operations passed more than 30 inspections.

We also collaborated with health authorities and industry

groups to provide thought leadership on technical quality

requirements. Roche, for example, served as an expert con-

sultant to the FDA for setting approval standards for medicines

labelled for use with a companion diagnostic test. Roche also

helped advance the understanding and use of Good Manufac-

Reducing the logistics environmental footprint by alternative modes of transportation

Canada

Rio de Janeiro

Kaiseraugst

Athens

Frankfurt

Kaiseraugst

Amsterdam

US

Carbon dioxide (CO2) emissions

Switching transportation of products from air freight to either road or sea transport reduced CO2 emissions by roughly 85% in pilot projects.

–85%


turing Practices by, among other activities, chairing a joint

FDA/EMA/PDA ICH Q10 implementation conference and

hosting training sessions for health authority inspectors at its

biologic drug substance and aseptic processing facilities. In

addition, we provided input on more than 130 guidance docu-

ments, proposed regulations and laws.

Green logistics

Roche is committed to incorporating sustainable business

practices in all areas of its supply chain to not only improve

processes but also as a means of ensuring patient safety and

product quality.

The Pharmaceuticals Division has established a green logistics

project to reduce its environmental footprint for the transpor-

tation of raw materials and finished products. The project

includes several pilots to study alternative modes of transpor-

tation. Notable among them was changing from air freight to

refrigerated road and sea ferry transport for cold-chain prod-

ucts shipped between Switzerland and Greece. This change

reduced carbon dioxide (CO2) emissions by roughly 85% and

packaging by a significant amount, as insulating material was

no longer required.

Similarly, the Diagnostics Division realised significant reduc-

tions in CO2 emissions by using alternative modes of transpor-

tation and innovations in packaging. For example, emissions

were reduced by 84% for shipments between the US and

France by switching from air freight to truck and sea transport.

In Italy, changing from road transport to rail cut the division’s

CO2 emissions by 67%. And CO2 emissions from freight ship-

ments between Germany and Great Britain were cut by 33% by

using temperature-controlled trailers.

Our first year of tracking reductions in CO2 emissions, waste

production and energy usage from logistics revealed several

challenges in data availability and quality, including differences

in methodologies among Roche sites for measuring energy

usage. In 2012 we will work to further develop reliable methods

of collecting consistent data throughout our organisation.

For more information, see Environmental Stewardship, pages

110–112.


Research assay Clinically validated IVD assay

Technically validated IVD assay

Research Development CommercialisationPharma

Diagnostics

60 Roche Business Report 2011 | Roche Personalised Healthcare

How Roche is making Personalised Healthcare a realityResearchers across the globe are making enormous progress in understanding diseases and

their root causes. This knowledge is leading to a dramatic increase in the identification of biological

targets to fight many diseases. At Roche we combine our strong in-house research capacities

and know-how with the latest external advances in science to identify potential drug candidates

and biomarkers.

Pharmaceuticals and Diagnostics under one roof

For Roche the crucial edge comes from integrating the knowledge in our Pharma-ceuticals and Diagnostics Divisions and drawing on it throughout the R & D process, from early research to approval of new diagnostic tests and medicines and their use by patients. The close cross-divisional cooperation between our R & D scientists distinguishes Roche from other companies.

A more efficient way to develop targeted therapies

Roche Personalised HealthcareRoche Personalised Healthcare



Procurement

Procurement is a key operating function at Roche. Our pro-

curement teams work closely with Roche business units to

help them achieve their goals and capture savings that can be

reinvested in the business. The teams carefully manage expen-

ditures to third parties, including direct expenses for items

such as raw materials, active pharmaceutical ingredients,

instruments, components, spare parts and contract manufac-

turing, and indirect expenses such as services, temporary

labour, travel, credit cards, IT and laboratory supplies.

In 2011 the Pharmaceuticals Division finished centralising pro-

curement functions, forming various departmental groups into

a single procurement team to simplify processes, align strate-

gies and leverage buying power. Together with the Diagnostics

procurement team, we have established a structured process

for major direct and indirect expenditures. By shifting to a glob-

ally aligned approach, with local execution, we expect to gen-

erate cost savings through larger purchasing volumes and

stronger, more strategic relationships with suppliers.

In 2011 Roche realised significant savings on direct and indi-

rect expenses, particularly for temporary labour, conferences,

events and travel. We also negotiated a global corporate credit

card agreement which, when implemented in 2012, will gen-

erate substantial savings.

Partnering with suppliers

We seek to build mutually beneficial relationships with sup-

pliers and encourage suppliers to continuously improve by: •working together on cost reduction and financial stability•ensuring integrated risk management•reducing our combined environmental footprint•demanding ethical behaviour•promoting innovation

We require our suppliers to commit to the sustainability prin-

ciples in the Roche Supplier Code of Conduct. This code incor-

porates the principles of the Pharmaceutical Supply Chain Ini-

tiative (PSCI), of which Roche is a founding member, and sets

standards on ethics, labour, health, safety, environment and

related management systems. In addition, we educate our

employees in ways to encourage sustainability among our

suppliers.

We audit critical suppliers for compliance with our sustain-

ability requirements. In 2011 we conducted 47 audits in the

direct spend area and 30 audits of service providers, with 36

of those audits conducted in China, India, Russia and Eastern

Europe. The majority of suppliers we audited met or exceeded

our minimum sustainability requirements. Audit findings

requiring corrective action related mainly to labour conditions,

health, safety and excessive work hours. We continue to work

closely with the suppliers concerned to ensure corrective

actions are taken, to offer training in sustainability awareness

and to mitigate risk. For further information, see Environmental

Stewardship, pages 108–109.

Together with other PSCI members, we have adopted a unified

sustainability audit protocol. The protocol sets minimum stan-

dards enabling the sharing of audit findings, which reduces

duplication of audits. In 2011 some suppliers started to share

self-assessment reports with PSCI members. In 2012 we will

pilot joint supplier audits using the new PSCI protocol.

More on the Web

• Roche product portfolio: www.roche.com/products• Biotech production: www.roche.com/biotechnology/production• Pharmaceutical Supply Chain Initiative:

www.pharmaceuticalsupplychain.org• Supplier engagement: www.roche.com/stakeholder_engagement • Supplier Code of Conduct: www.roche.com/

roche_supplier_code_of_conduct.pdf


patients received treatment with innovative Roche medicines during 2011


marketIng and dIstrIbutIon demonstrating value. We collaborated with payers and other stakeholders on

developing systematic methods for evaluating the cost and efficacy of new medicines

and diagnostics.

Improving access. We continued to pilot differential drug pricing programmes for

several leading Roche therapies in Egypt, Brazil, China and other emerging countries.

strengthening healthcare. We worked with governments and other organisa

tions on strengthening healthcare systems through further education of healthcare

professionals and supporting hospital infrastructure.

Improving outcomes. We funded programmes to increase awareness and

understanding of disease, to improve screening and early diagnosis and to foster

treatment compliance and rehabilitation.

64 Roche Business Report 2011 | Marketing and Distribution

Answering the demand for medical innovation and improved

patient access to healthcare is a challenge that requires the

cooperation of many different segments of society. Break

throughs in science are enabling Roche to improve the lives

of patients and transform the delivery of medicine. To be truly

effective, however, we must identify and meet the differing

needs of various patients and customers through collaboration

and partnership.

Our approach is to increase our emphasis on regional and local

activities that deliver value, improve access and maintain high

standards of patient care and safety. The objective is to deliver

innovative pharmaceuticals and diagnostics that offer signifi

cant medical, economic and social value over existing options.

Patients everywhere are seeking more and better healthcare

options and better access to healthcare. Our market access

strategy addresses this need, while focusing on the growing

demand in emerging and developing markets. The effective

ness of our strategy is reflected in the strong sales growth of

key Roche medicines and diagnostics in 2011, despite challeng

ing conditions in many markets.

Further information on the performance of our products can be

found in the Business Review, pages 14–18, and in the Finance

Report (Part 2 of this Annual Report), pages 10–16.

demonstrating value

We focus on the medical value of our products starting from

the earliest stages of development. Our objective is to com

mercialise only those medicines and diagnostic tests that

improve the length and quality of patients’ lives and that bring

clear medical and economic benefit to healthcare systems and

society.

We work closely with payers to demonstrate the value of our

products and services and, in turn, gain appropriate reim

bursement and market access. We collaborate with various

authorities and policymakers to develop Health Technology

Assessments (HTAs) and other models for systematically eval

uating the costs, benefits and efficient use of new medicines

and diagnostics. Our aim is to sustain medical innovation, meet

medical need and help address the mounting pressure on

healthcare budgets.

For example, in order to attain appropriate reimbursement

for our new oncology test that identifies patients carrying a

mutated BRAF gene, the German affiliate of Roche Diagnos

tics prepared a comprehensive HTA demonstrating the im

proved performance of the Roche test compared to other

methods. The HTA showed that switching to a test with fewer

false results improves treatment outcomes for patients and

reduces costs for payers and laboratories.

Key figures

7,967 –2% 18.7%5,564 –6% 16.9%2,403 +8% 24.7%

millions of CHF (CER)* of salesroche group

Core marketing and distribution (m&d) expenditures in 2011

millions of CHF (CER) of salesPharmaceuticals 1

millions of CHF (CER) of salesdiagnostics 2

1 Decrease by 6% due to tight cost management and savings from the Operational Excellence programme. 2 Increase by 8% reflecting higher launch costs by several business areas along with increased distribution costs following the earthquake in Japan.* Constant exchange rates (average fullyear 2010)

27,748 16,967 10,781 Roche Group Pharmaceuticals Diagnosticsemployees in m&d

Marketing and Distribution

65Roche Business Report 2011Marketing and Distribution |

Similarly, the Diagnostics Divisions’ UK affiliate collaborated

with the National Institute for Health and Clinical Excellence

(NICE), providing input to the institute’s establishment in 2011

of a Diagnostics Assessment Programme. The goal is to pro

mote rapid and consistent adoption of diagnostic tests that are

both clinically and costeffective, and to improve treatment

choice by evaluating diagnostics that have the potential to

improve key clinical decisions.

Roche joined other stakeholders in early 2011 to cofound the

Green Park Collaborative (GPC), an international initiative that

is exploring the feasibility of developing guidelines for the

design of clinical studies to meet the needs of HTA organi

sations and payers. We expect this programme to improve the

relevance of clinical research and accelerate patient access to

new drugs and technologies.

Furthermore, we actively participated in a joint initiative be

tween the pharmaceutical industry and santésuisse, an asso

ciation of Swiss health insurers, to develop basic principles of

future HTAs in Switzerland. We reached a consensus on pro

posals for the valuation of health technologies, with the objec

tive of improving quality and transparency in the healthcare

system, as well as increasing efficiency and thus reducing

costs.

Improving access to healthcare

Access remains a systemic cause of healthcare inequality that

requires the cooperation of governments, healthcare provid

ers, the media, patient groups, companies and nongovern

mental organisations. Roche is committed to making a contri

bution to this effort by working with stakeholders in enable and

improve access to healthcare and associated services globally.

We seek sustainable, effective ways to expand access to med

icines and diagnostics. We also tackle wider problems, such as

lack of disease awareness, low use of diagnostics and limited

healthcare infrastructure and budgets in order to improve

health conditions generally.

During 2011 we continued to work with payers to establish

commercial arrangements that improve access to our prod

ucts. These include flexible options such as volumebased dis

counts, price capping, cost sharing and pay for performance.

We also maintained patient assistance programmes to help

people obtain insurance, copay support or, in some instances,

partial supply of medicines to start or continue treatment.

These patientfocused solutions were particularly important

for maintaining access to our products during the financial

crises in 2010 and 2011, when many governments sought to

reduce or limit the growth of healthcare budgets in the face of

mounting pressure on public finances.

access in developed countries

Even in developed countries with advanced healthcare sys

tems, many people cannot afford treatment. And patients with

insurance still might not be able to pay for treatment if it is not

fully reimbursed.

Recognising this disparity, Roche maintains a number of

patient assistance programmes to improve access to our

medicines. In the United States, for example, Genentech Access

Solutions helps insured patients navigate the complexities of

health insurance and cover outofpocket costs associated

with their medicine, while the Genentech Access to Care

Foundation (GATCF) provides free medicines to patients who

are uninsured or rendered uninsured and meet certain finan

cial and medical criteria. In 2011 Genentech Access Solutions

helped more than 100,000 fully insured, underinsured and un

insured patients with access issues. In 2011 alone, GATCF pro

vided medicine to more than 40,000 uninsured patients who

needed our products.

access in emerging countries

Demand for healthcare services is growing worldwide. In

emerging countries, however, the infrastructure and funding

needed to meet this demand varies considerably, as does the

sustainability of healthcare systems. Roche actively supports

the governments of emerging countries in their efforts to

strengthen public healthcare systems. Our strategy is to focus

on running local clinical trials, working to accelerate regulatory

approvals and supporting market development. We fund pro

grammes for raising disease awareness, collaborate on devel

oping appropriate treatment policies, provide education and

training for healthcare professionals, along with other activities

to help develop healthcare infrastructure.

The cost of medicines and low rates of diagnostic testing are

also barriers to treatment in emerging countries. To improve

affordability and reach more people in need, we are conduct

ing pilot programmes for ‘differential pricing’ of treatments for

cancer, hepatitis C and other chronic illnesses. Under such

arrangements, we sell our products to the public healthcare

system at prices lower than in established markets, in return

for assurances of product reimbursement. We are exploring

the effectiveness of access models that include:•discount schemes for drugs prescribed through public

healthcare systems•second brands for government contracts•contracting local companies to fill, package or distribute our

brands


Top-selling pharmaceuticals in millions of CHF

Product

mabthera/rituxan

Sales growth (CER)*

+8%

Active substance

rituximab

Indications

nonHodgkin’s lymphoma, chronic lymphocytic leukemia, rheumatoid arthritis, ANCAassociated vasculitis

avastin

–7%

bevacizumab

colorectal cancer, breast cancer, nonsmall cell lung cancer, kidney cancer, ovarian cancer, glioblastoma

Herceptin

+9%

trastuzumab

HER2positive breast cancer, advanced HER2positive stomach cancer

Lucentis**

+23%

ranibizumab

wet agerelated macular degeneration, macular edema following retinal vein occlusion

Pegasys

–3%

peginterferon alfa2a

hepatitis B and C

6,005 5,292 5,253 1,4381,523

* Constant exchange rates (average fullyear 2010).** US sales. Lucentis is marketed outside the United States by Novartis.


Top-selling diagnostics in millions of CHF

Product

accu-Chek monitoring systems

Sales growth (CER)*

+3%

Market segment

Blood glucose monitoring

Business area

Diabetes Care

cobas e modules,modular analytics,elecsys

+13%

Immunoassays

Professional Diagnostics

cobas c modules,modular analytics,Cobas Integra

+7%

Clinical chemistry

Professional Diagnostics

Cobas ampliPrep/Cobas taqman

+3%

Virology (hepatitis B, hepatitis C, HIV)

Molecular Diagnostics

immunohistochemistry and in situ hybridisation

+15%

Advanced tissue staining

Tissue Diagnostics

2,470 1,987 1,397 541 444AccuChek Aviva Nano cobas e 602 cobas c 502 cobas TaqMan 48 Ventana IHC reagents


We seek partnerships with governments in emerging coun

tries through which we can develop tailored programmes that

meet local pricing, service, distribution and participation needs.

Our objective is a sustainable business model that balances

the needs of all stakeholders with our commitment to improve

access in emerging markets.

We have piloted differential pricing programmes for several of

our leading therapies in Egypt, Brazil, the Ukraine, China and

other countries. In Egypt our programme includes local pack

aging and branding of an alternative formulation of Pegasys,

our hepatitis C treatment. Egypt is now one of our topselling

markets, with over 104,000 patients having received treatment

since 2006. Working with the Brazil government, Roche nego

tiated a discount for MabThera, a drug used to treat patients

with nonHodgkin’s lymphoma, on condition that the drug is

reimbursed. Previously MabThera was available to only those

patients covered by private insurance or those paying outof

pocket. The result has been significant expansion of access,

now reaching 2,000 patients.

In China, less than 10% of women with HER2positive breast

cancer receive Herceptin. To address the many challenges

limiting access to our treatment, Roche China started several

programmes in association with Chinese governmental institu

tions and nonprofit organisations. These included improving

HER2 testing quality and running patient education pro

grammes. In August we worked with the Cancer Foundation of

China to establish a patient assistance programme where eli

gible patients pay for the first half of treatment. The Cancer

Foundation, with support from Roche, then provides the sec

ond half, ensuring that women receive the full benefit of treat

ment. Although early, we have already seen a significant in

crease in the number of women gaining access to Herceptin.

access in least developed countries

The world’s least developed countries (LDCs) suffer the high

est levels of disease and weakest healthcare systems. Many

face large budget constraints and a critical shortage of health

care professionals and facilities, as well as low levels of under

standing of the causes, prevention and treatment of disease.

access to healthcare programme highlights

(Further details are available on our website)

54 countries where Roche does not file or

enforce patents for any of its medicines

50+healthcare professionals partici-

pated in pilot online university courses in

oncology under the EDUCARE initiative

in SSA countries, in partnership with IAEA

13HIV/aIds technology agreements

reached with companies in LDCs and

SSA countries for onsite technical help to

manufacture generic versions of Roche’s

HIV medicine saquinavir

3,300children supported in nine African

countries and India in monitoring their

diabetes through a partnership with Novo

Nordisk’s Changing Diabetes in Children

programme

11,000,000treatment courses of anti-influ-

enza medicine tamiflu donated

to the WHO for countries most in need

3–12month secondments granted to

employees for contributing their skills

and expertise to help make a difference

in health services in LDCs

806,045people reached in rural South

Africa by the TransnetPhelophepa

healthcare train since its inception

in 1994

40,000+patients received free medicines

through the Genentech Access to

Care Foundation

1,350,000infants tested for HIV through the

AmpliCare initiative


To address these inequalities, we use our expertise to support

the modernisation of healthcare systems. Rather than donating

money, we form programmes and partnerships that provide:•sustainable patent and pricing policies•research into diseases with high unmet medical need•education, training, knowledge transfer and capacity building

Establishing and operating these programmes is beyond the

scope of a single entity. For that reason, Roche collaborates

with local governments, nonprofit organisations and other

companies to deliver healthcare to patients and facilitates

experience exchange and education for healthcare profes

sionals, with an emphasis on local engagement.

In 2011 our partnership with Novo Nordisk in the Changing

Diabetes in Children programme expanded to nine countries

with the addition of India, Ethiopia and Kenya. In 2011 approxi

mately 3,300 children were enrolled in this programme, which

provides insulin and other diabetes care supplies, as well as

basic education and training for families and healthcare work

ers. To date, 47 clinics have been established and 600 health

care professionals trained.

AmpliCare, a programme started by our Diagnostics Division

in 2002, continues to supply HIV viral load tests at the lowest

possible price in SSA countries and several countries in South

America and Asia. In 2011 we worked with health ministries

and funding agencies to secure financing for AmpliCare’s Early

Infant Diagnosis (HIV) initiative. By yearend 23% of partici

pating countries were selffinancing the programme, 46%

were accessing the Global Fund’s resources or other third

party funders, while 31% remained dependent on UNITAID

funds. In addition, we renegotiated our funding agreement

with the Clinton Health Access Initiative, a global healthcare

organisation that aims to strengthen integrated health systems

in the developing world and expand access to care and treat

ment for HIV/AIDS, malaria and tuberculosis.

Patents are a fundamental requirement of our business model

of investing in the complex, expensive and risky process of

innovation. However, we are aware that patents can present

one of many barriers to providing basic medical care in the

world’s poorest countries. For this reason, Roche does not file

for new patents or enforce existing patents on any Roche med

icines, for any disease, in LDCs, as defined by the United

Nations, or in lowincome countries, as defined by the World

Bank. Nor do we file or enforce patents for antiretroviral HIV

medicines in the hardhit subSaharan African (SSA) coun

tries. Consequently, generic versions of any Roche medicine

can be produced and distributed in these countries without

applying for a license.

Providing value-added services

Research and development of innovative medicines and diag

nostics is the cornerstone of our contribution to tackling

healthcare challenges. We believe, however, that we have a

responsibility as a leading healthcare company to further help

patients through a holistic approach to healthcare. We put this

into action by providing numerous valueadded services to

develop healthcare infrastructure, raise disease awareness,

host screening programmes, educate healthcare profession

als and provide patient support networks.

We also work with governments and other payers to increase

healthcare productivity and make efficient use of financial

resources. While these services support our negotiations with

payers on the price of our drugs and tests, our overriding con

cern is to help people get better faster, remain healthy and live

longer, productive lives.

Increasing healthcare awareness

Healthcare awareness and education can be as important to

a patient’s wellbeing as proper medical diagnosis and treat

ment. With that in mind, we publish newsletters, magazines

and periodicals aimed at helping people make healthy choices

that prevent disease. Other activities include organising dis

ease awareness campaigns in association with patient groups

or local hospitals and conducting screening programmes.

Through these campaigns we seek to not only increase gen

eral awareness, but also to advance the early detection of dis

eases such as breast, lung and colon cancer, rheumatoid

arthritis, hepatitis, osteoporosis and diabetes.

In 2011 we organised a multidisciplinary workshop on ovarian

cancer in Rome with the National Observatory on Women’s

Health and the patients group. ACTO. Attendees included

national and regional authorities, representatives from regional

institutions, scientific societies, clinicians and media. The

event highlighted the need for increased cooperation amongst

stakeholders, for the establishment of centres of excellence

and for greater awareness and understanding of ovarian

cancer, including the importance of regular medical check

ups.

Roche, in cooperation with four patient associations in Argen

tina, published Reflejos del Alma (Reflections of the Soul) to

increase awareness of breast cancer. The book tells the stories

of 26 women with breast cancer and demonstrates how it is

possible to face the disease with a positive attitude and that

life goes on, even after breast surgery, chemotherapy and/or

radio therapy and possible relapses. The book and its message

of hope reached thousands of women in Argentina, where

Develop healtheducation material

Run diseaseawareness campaigns

Promote healthy lifestyles

Host screeningprograms

Organise patient support programs

Offer therapy adherence program

Run rehabilitation sessions

Co-develop economic models

Collaborate on therapy guidelines

Support managed care programs

Establish patient registries

HEALTHCARE PROFESSIONALS PAYERS

PEOPLE/PATIENTS

„KEE

P W

ELL“„MAKE W

ELL“

Provide furthereducation and training

Enable clinicaltrial participation

Establish healthcarenetworks

Strengthen hospital andlab infrastructure

Provide disease & therapy information


breast cancer is the leading cause of female cancer mortality,

with 16,500 new cases every year.

Every year on World Diabetes Day, Roche Diabetes Care con

ducts numerous campaigns to raise awareness and encourage

people to take action to prevent diabetes. These activities,

which include blood glucose screening on campuses and in

public venues in Germany, Switzerland, France, Spain and Italy,

are accompanied by workshops, healthy food and sporting

events to demonstrate how food and exercise impact blood

glucose levels. In the US, Roche funded the Diabetes Hands

Foundation’s Big Blue Test, an awareness campaign that re

inforces the importance of exercise in managing diabetes.

offering patient support and resources

We also produce information for patients, family members

and caregivers to help them understand diseases, treatment

options and the proper use of our products. We maintain web

Value-added services


sites that provide the latest information on diagnostic tests and

treatment options, including monitoring and managing poten

tial side effects. These websites serve as portals to resource

centres or patient support programmes and provide access

to trained nurses along with strategies for living with disease.

In addition, we operate counselling centres and telephone help

lines and coordinate services to improve treatment compliance

and rehabilitation.

Our online resources include www.accuchekconnect.com,

which offers personal discovery tools and other resources for

those living with diabetes, as well as clinical evidence and case

studies for healthcare professionals. For osteoporosis preven

tion and care, www.boniva.com supports the Roche prescrip

tion therapy Boniva with safety information and the MyBoniva

Program, a personal resource centre that helps with compli

ance. Similarly, www.herceptin.com offers guidance to those

being treated with Herceptin for HER2positive breast and

gastric cancer and information on financial support, among

other resources.

Working with patient groups

Patient groups are important partners for Roche. They give us

insight into the challenges facing patients and their families,

and share our interest in helping patients understand and

manage their condition. The changing role of patient groups

and patients — from passive to active, informed users — has

increased our level of engagement.

Transparency is essential to these endeavours. We publicly

declare all patient group relationships and provide a short

description of our activities on our website. We also acknowl

edge financial and nonfinancial support, as guided by the

European Federation of Pharmaceutical Industries and Asso

ciations (EFPIA).

Using a variety of channels, we collaborate on education and

training materials and services that are often developed glob

ally but adapted and administered locally for cultural sensitiv

ity and language preferences. We provide financial support

through projects of mutual interest and benefit in the areas of

breast and colorectal cancer, as well as cancer in general. We

also support hepatitis through the World Hepatitis Alliance and

the European Liver Patient Association, and provide advocacy

support by meeting with individuals and responding to patient

requests about new therapies, such as Zelboraf.

Among our many patient advocacy activities in 2011, Roche

hosted the third annual International Experience Exchange

for Patient Organisations in Frankfurt, Germany. The twoday

event was attended by representatives of 130 patient groups

from around the world and provided a forum for discussing

trends and challenges in healthcare and advocacy.

In July we held a Rheumatoid Arthritis (RA) advocacy training

workshop for 12 patient groups. We also provided support

to RA patient groups to attend an EU parliamentary event to

help raise awareness of the social and economic impact of the

disease.

Roche continued its longstanding collaboration with the Euro

pean Patient Network for Medical Research and Health (EGAN)

by holding the seventh joint strategy workshop for patient

organisations, health authorities, academia and industry. Ask

ing how to improve patient involvement during all stages of

research and clinical development, Roche and EGAN trans

lated workshop discussions into ten strategic recommenda

tions on how to make this a reality.

Furthering professional development

We help healthcare professionals improve patient care by pub

lishing a broad range of education and training materials about

diseases, treatment options, safety concerns, product use

and general healthcare topics. In addition, our medical teams

organise symposiums to educate and support physicians. We

have, for example, established virtual medical conferences

connected to the annual meeting of the American Society

of Clinical Oncology (ASCO). As the world’s largest clinical

oncology event, ASCO attracts thousands of healthcare pro

fessionals to learn about the latest clinical trials and research

in the area of cancer.

Our interaction with healthcare professionals is aimed at

exchanging scientific information that improves the use and

effectiveness of our products and services. For that reason, we

routinely seek input from healthcare professionals to identify

unmet medical needs in specific disease areas and to develop

our clinical trials, publications and educational materials.

We also conduct accredited continuing education courses in

areas such as epidemiology, treatment options and patient

Contributions to patient organisations

35.8% disease awareness and general education

9.2% workshops, seminars and meetings

10.3% educational grants

44.7% treatment adherence projects


counselling. We, moreover, help develop healthcare networks,

which have proven invaluable in helping healthcare profes

sionals share knowledge of diseases and new technologies

and in encouraging discussion on standards of care.

In the area of diagnostics, we establish testing laboratories,

train technicians on the correct use of instrumentation, run

pathology educational courses and set up quality control pro

grammes to ensure the reliability of diagnostic test results. We

also educate on how diagnostic products improve medical

value and assist with development of testing and treatment

guidelines to improve patient outcomes.

At the 2011 ASEAN (Association of Southeast Asia Nations)

Cancer Stakeholders Forum, Roche announced a landmark

prospective study, ‘The Burden of Cancer and its Economic

and Social Impact on ASEAN Communities’, involving more

than 10,000 cancer patients in all ten ASEAN countries. The

study, which is wholly supported by Roche and conducted

by the George Institute for Global Health of Sydney, Australia,

will serve as a tool to inform evidencebased policy decisions,

cancer control planning, and research prioritysetting in the

region.

In the US, we provided an educational grant to Omnia Educa

tion, a fullservice continuing medical education provider with

an exclusive focus on women’s health issues. Our grant helped

deliver an educational course about cervical cancer and HPV,

including a report of results from our HPV trial.

managed care programmes and financial modelling

We apply our industryleading expertise and innovative think

ing to develop healthcare networks and managed care pro

grammes for payers and hospitals. We establish patient regis

tries for our new medicines to collect realworld data on their

effectiveness and safety and on patient compliance. Payers

and healthcare professionals use these data to make more

informed decisions for treatment and for budgeting purposes.

Our managed care programmes, such as the Cancer Cham

pion, provide resources for healthcare organisations to start

their own comprehensive programmes for oncology patient

care and management. In addition, we work with payers to

determine the economics of healthcare plans by providing

capacity planning and costing models to assist with planning

and budgeting.

managing customer relationships

With customers ranging from patients and healthcare profes

sionals to hospitals, laboratories and healthcare payers, we

must meet a diverse range of needs and expectations. Regard

less of the customer, we seek to build longterm relationships

that are both professional and transparent.

meeting customer needs

We track customer satisfaction at regular intervals, usually

annually or biannually, benchmarking our performance against

our peers and industry averages. Through surveys conducted

by Roche and third parties, we gauge customer satisfaction in

our representative’s knowledge and helpfulness during visits,

the effectiveness of our medical support and clinical data dis

tribution and the quality of our information, and our educatio

nal materials. In addition our Diagnostics Division looks at deli

very times, service and technical support levels.

We analyse this feedback to identify the most appropriate com

munication channels and to establish sales and marketing

plans, setting targets in areas that have been identified as

important to our customers and where we see opportunities to

improve our performance.

In a number of countries we are transitioning our teams from

transactional selling to consultative selling, as a means of

forming closer working relationships or partnerships with key

customers. In Spain, for example, we developed practices over

several years that increase understanding of customer needs

and expectations, while also gauging their satisfaction with our

services. As a result, Roche Spain received the Madrid Exce

lente award for customer confidence and creating sustainable

value, the first pharmaceutical company to be selected for this

award.

Our Swiss programme ‘Effect — The Roche way of selling’ puts

the customer’s needs at the centre of the sales dialogue in

order to create value for the customer and for Roche. The

programme custom tailors sales representatives competency,

training and coaching framework and aims to achieve excel

lence in valuebased selling through continuous improvement

of all infield teams.

Contributions to healthcare institutions

40.8% education of healthcare professionals

6.7% education of patients and general public

52.5% research


driving commercial effectiveness

As an organisation focused on developing innovative medi

cines and diagnostic tests, the majority of our expenditures are

directed to proving clinical safety and efficacy. The data we

generate during clinical trials are used to produce articles in

professional publications and educational materials. The reli

ability of this data for confirming commercial effectiveness is

equally critical to Roche and, increasingly, to clinicians who

seek to apply evidence gained from clinical trials to their own

clinical decisionmaking.

In addition, nontraditional customers, such as payers, regula

tors or managed care organisations, are increasingly emerging

as key players in the decisionmaking process between regu

latory delivery to patients. For this reason, our ability to address

these new audiences and translate complex data can provide

us with new opportunities.

Due to these shifts, our sales and marketing practices have

evolved to focus primarily on educating customers and pa

tients. Today our sales representatives must have deep medi

cal knowledge as they are often required to discuss clinical

data and safety profiles in depth with healthcare professionals.

We further drive commercial effectiveness with intensive train

ing courses in professional selling skills and customercentred

approaches that build longterm business partnerships with

our customers.

In Spain we introduced a qualitative performance measure

ment system for our representatives based on sales excellence.

The system mirrors the commercial excellence departments

established by a number of our affiliates, offering professional

selling skills courses and professional coaching for sales man

agers.

Increasing use of social media has created opportunities to

reach out to patients and stakeholders and improve the effec

tiveness of our business. Following the introduction of Roche’s

social media guidelines in 2010, our Social Media Advisory

Board developed employee training materials in 2011 that high

light best practices in support of our business goals and our

policies governing the use of social media. These include train

ing programmes for employees and an internal educational

campaign to raise awareness of various social media channels

and their use. Over 300 socialmedia ambassadors were trained

through 23 fullday classes in ten countries.

Collaborating across divisions

With our advances in Personalised Healthcare, representa

tives from our Pharmaceuticals and Diagnostics Divisions

increasingly work together in many disease areas, starting at

the earliest stages of development and carrying through to

commercialisation. They perform joint sales calls to explain

the value and effectiveness of our products in making better

clinical decisions. And they team up to host sciencebased

symposiums, publish clinician training materials and develop

combined reimbursement strategies.

In France, for example, the two divisions codeveloped a qual

ity assurance programme for HER2 testing that decreases

false negative results by 1%. This increased reliability of diag

nosis resulted in nearly 500 women in France becoming eli

gible for Herceptin therapy who otherwise would not have

received this targeted treatment. Activities like these not only

provide value to our customers, allowing them to make better

use of available resources, but they are also difficult to mimic

or duplicate by our peers, and clearly differentiate Roche in the

marketplace.

ensuring patient safety

Roche products must not only be effective, they must be safe

throughout their life on the market. While any medicine may

cause side effects, our priority is to minimise these and make

sure the benefits outweigh the risks in patients for whom they

are indicated.

We have global systems in place to collect data on adverse

events and monitor the safety profile from the time a medicine

is evaluated in clinical studies to when it is withdrawn from the

market. All products have a proactive safety management plan

that is supported by a qualified physician who continuously

monitors overall safety. We have risk management plans in

place, reviewed and approved by regulatory authorities.

Our Drug Safety Committee is responsible for drug safety gov

ernance and for proactively ensuring patient safety. The com

mittee is chaired by either Roche’s Global Head of Safety Risk

Management or Chief Medical Officer.

We regularly analyse medicines against reference safety data

bases to help us identify potential safety risks, and we have

skilled people, processes and systems in place to collect

safety information from healthcare providers and patients.

We monitor the medical literature to extract any new relevant

safety information about our medicines. All our employees are

required to immediately report any issue relating to the safety

or quality of our medicines.

All adverse events are stored in a global safety database

and reviewed by a qualified physician. Selected reports are

Phase 1–3 clinical trials

Submission to the relevant regulatory authorities (usually 7 or 15 days)

Integrated Safety Risk Management Process

On market

Safety Information captured in Drug Safety Database

Patients

Healthcare providers

Roche representativesStudy Management Teams

Governance: Drug Safety Committee

Drug Safety Operations Department

Approval by health authorities

Signal evaluation New adverse drug reaction ?

Label change or recall

Notification

No action

N

Signal detection Y


promptly submitted to appropriate regulatory authorities, as

required. If there is a link to one of our products, we evaluate

whether the benefits of the medicine still outweigh the risks.

We have procedures in place to promptly inform physicians,

healthcare providers and regulators of new safety information.

We update product labelling with new safety information as

required and inform healthcare providers with updated advice

on the use of our medicines. We have a strict product recall

process to ensure that we can withdraw products rapidly

should quality or safety problems arise. The quality of our

processes and systems are regularly audited internally and

inspected by major regulatory authorities.

During 2011 we completed activities related to the merger of

Genentech and Roche, including implementing a single set of

safety processes and the global safety database.

Counterfeits

Counterfeit medicines and diagnostic products often look

identical to authentic versions and are difficult to detect, par

ticularly for patients. Counterfeits can cause serious illness,

or even death, if they contain harmful ingredients, as well as

depriving patients of proper treatment, if they are ineffective.

Counterfeiting also creates a financial burden on govern

ments, not only from money wasted on counterfeits and related

network global professionals overseeing patient safety


enforcement measures, but also costs resulting from counter

feits causing severe damage to patients’ health.

While estimates of the scale of the problem vary widely, traf

ficking in counterfeit medicinal products, including medical

devices and diagnostics, is widespread and affects both devel

oping and developed countries. The World Health Organiza

tion (WHO) has identified counterfeiting as a growing, often

underestimated danger, citing, in particular, the problems of

product toxicity, instability and ineffectiveness.

Responsibility for preventing and controlling counterfeiting

rests primarily with national governments and international

organisations. Roche cooperates with and contributes to

efforts to develop stronger laws and improve enforcement as

well as educate the public and train local officials. The goal is

to prevent negative impacts on public health caused by coun

terfeit medicinal products. We have also implemented internal

anticounterfeiting measures for the design, packaging and

labelling of our products. Additionally, we continue to work

with authorities on a system to track and trace products from

distribution to dispensary.

Through our membership in the EFPIA we contributed to the

European Commission’s Falsified Medicines Directive which

was adopted in 2011. The directive aims to protect Europe’s

patients and prevent counterfeit medicines from entering the

supply chain, with strong safety measures, including unique

product identification numbers, tamperevident packaging and

restrictions on repackaging. Other actions include steps to en

sure reliability in wholesale distribution, increased scrutiny of

suppliers of active ingredients and stronger collaboration with

customs authorities, especially with the World Customs Orga

nisation. We have intensified investigative work, together with

other companies, to prevent counterfeits. We hired investigative

staff in Shanghai, China and plan to implement new measures

in highrisk regions such as Latin America and the Middle East.

We continue, meanwhile, to push for a harmonised EU system

for product verification and the resolution of issues related

to the sale of products through the Internet. Additionally, we

advocate increased public awareness of counterfeiting, and

have provided information on our website that explains the

risks of counterfeits and provides contact information for

reporting possible counterfeits.

biosimilars

Unlike traditional medicines that contain small molecules pro

duced by chemical synthesis, biological medical products have

complex molecular structures. They are produced from living

organisms with a unique genetic property using sophisticated

manufacturing processes that are difficult to reproduce. Cop

ies of biological products are therefore similar but not identical

to the original. These biosimilar products cannot be consid

ered generic medicines or approved based on the limited data

most regulatory bodies accept for generics.

We support the development of a clear regulatory framework

for the approval of biosimilar products. The European Medi

cines Agency has established such a system and the United

States Congress introduced a legislative process for approv

ing biosimilars in 2010, as part of US healthcare reform. For

countries that have no such framework, we believe that regula

tory authorities should follow the WHO guidelines on evalua

tion of similar biotherapeutic products. We believe these are

the minimum standard for ensuring that similar versions of

our biotherapeutic products are brought to market safely and

effectively. Further information can be found in the Manufac-

turing and Procurement chapter, pages 55–56. Our position on

biosimilars is available on the Roche website.

Roche actively engaged in discussions and provided feed back

to national regulatory agencies throughout 2011 for develop

ing appropriate pathways for approving biosimilar products,

including biosimilar antibodies. Our activities were largely con

ducted through associations, including the Emerging Bio

pharmaceutical Enterprises (EBE), Biotechnology Industry

As sociation of America and the International Federation of

Pharmaceutical Manufacturers and Associations (IFPMA).

During 2011 regulatory authorities in developing markets,

including Argentina, Brazil, Mexico and Peru, implemented

directives and guidance for the approval of biosimilar prod

ucts. Chile, Columbia, India and several other countries are in

the process of developing similar regulations. Together, these

actions signal a strong commitment from developing countries

to follow WHO guidance and principles on biosimilars.

Contributing to public policy

Roche contributes to the democratic process by sharing its

views and expertise with governments and regulators to help

develop effective laws, regulations and policies for public

health. We also collaborate in more general areas, such as

assessing the value of healthcare and working with public

health organisations, think tanks and academics.

We contribute to policy development through our membership

in industry bodies, including the European Diagnostics Manu

facturers Association (EDMA), Advanced Medical Technology

Association (AdvaMed), EBE, IFPMA and EFPIA.


Through our participation in the EFPIA, we assisted with new

EU legislation aimed at strengthening systems for monitoring

the safety of medicines and, in particular, protecting against

counterfeit medicines and ensuring patients receive reliable

information on prescription medicines. Additionally, we en

gaged in discussions on EU directives for protecting personal

data and marketing in vitro diagnostic (IVD) products. And we

provided input to several EU legislative processes aiming to

modernise the rules for conducting clinical trials.

In conjunction with AdvaMed we advocated on regulatory and

reimbursement reform in the US with both the FDA and Cen

ters for Medicare & Medicaid Services (CMS). Our focus was

on speedier FDA approvals and timelier CMS coverage and

payment determinations. We also engaged with the United

States Congress, along with patient organisations such as the

National Health Council, on the use of IVDs in enabling early

detection of disease and targeting the right treatments to the

right patients, plus the value of diagnostics in reducing overall

healthcare costs.

During 2011 Roche Diabetes Care advocated to the EU an

innovative approach to personalised diabetes management, as

a case study for chronic disease management.

marketing responsibly and ethically

The pharmaceutical industry is governed by strict regulations

and industry guidelines for the sale and marketing of products.

As one of the world’s largest healthcare companies, Roche

takes seriously its obligation to meet these high standards. We

have rigorous internal processes to ensure that our employees

adhere to the laws, regulations and industry codes of conduct

that support good marketing practices. These include uphold

ing our social responsibility for ensuring that decisions about

healthcare products and services are made using transparent,

open, fair and consistent processes.

Our Code of Conduct sets out standards for interacting and

engaging with healthcare professionals. The goal is to enable

healthcare professionals to make decisions independently,

based on all relevant data available, for delivering the greatest

medical benefit to patients. We continuously train staff who

interact with healthcare professionals to increase awareness

and understanding of our Code of Conduct, as well as industry

and countryspecific marketing codes, guidelines and best

practices. In addition, Roche uses a global marketing and

sales compliance questionnaire to help local managers assess

compliance with and awareness of responsible marketing

practices. All general managers, moreover, must sign a decla

ration of assurance acknowledging compliance with those

practices.

In 2011 we further strengthened our practices for promoting

good business practices by ensuring compliance with new

regulatory requirements around transparency, especially the

Sunshine Act in the United States and guidelines of Associa

tion of the British Pharmaceutical Industry (please refer to the

Responsible Business chapter, pages 26–27).

More on the Web

• Our products: www.roche.com/products• Assessing the value of our products and pricing: www.roche.com/

medical_value_patents_and_pricing• Access to healthcare overview: www.roche.com/

access_to_healthcare• Genentech Access solutions:

www.GenentechAccessSolutions.com• List of patient groups supported: www.roche.com/patient-groups• Roche clinical trials and patient safety: www.roche.com/

clinical_trials; www.roche.com/managing_medication_safety• Counterfeiting: www.roche.com/counterfeiting• Patents and biosimilars: www.roche.com/patents• Responsible marketing: www.roche.com/

business_integrity_and_responsible_marketing• Roche’s policies, guidelines and positions: www.roche.com/

policies_guidelines_and_positions• Stakeholder engagement: www.roche.com/

stakeholder_engagement

Roche Business Report 2011Personalised Healthcare |

The benefits as seen by patients and experts

Personalised Healthcare

PatientDoretha ‘Dee’ Burrell

Insurance executiveProf. Thomas Szucs

PhysicianDr Caroline Robert

InvestigatorProf. Henry Lik-Yuen Chan

Medical laboratory scientistDr José Gilberto Vieira

ResearcherDr Shirin Khambata Ford

78 Roche Business Report 2011 | Personalised Healthcare

‘The immediate combination of diagnosis, therapy and monitoring of treatment success in hepatitis B infection is a major step forward. This increases the benefits for our patients enormously!’

‘About 350 million people are infected with the hepatitis B virus;

about 75 percent of these people are living in Asia. By predicting

better and earlier who is going to respond to therapy allows

us to provide more effective care. Assurance of our patients also

increases their compliance to therapy, resulting in an increase

of the desired treatment outcome. For patients who do not respond

very well we may be able to modify treatment to increase their

chances to respond and benefit from modern therapies.’

InvestigatorProf. Henry Lik-Yuen Chan


Director, Cheng Suen Man Shook Centre for Hepatitis Studies, Director, Centre for Liver Health, The Chinese University of Hong Kong, Hong Kong, China


‘It’s a very exciting time for us. We are all aware that we are entering a new era of skin cancer treatment!’

‘Skin cancer was an area of high unmet medical need, but

with the new compounds becoming available we are going

to improve the survival of our patients. The stratification and

targeted treatment of this fatal disease represents a major

step forward. As next steps we have to establish screening

for the relevant genetic mutations. We also need to learn

how best to combine the various compounds, some still in

development, in order to maximise impact and benefit for

patients.’

PhysicianDr Caroline Robert


Chef de Service Cancer Institute Gustave RoussyVillejuif near Paris, France


‘The option of targeted treatment gave me hope and a better quality of life!’

‘Hearing the words, “you have breast cancer” were

the most devastating words I had ever heard. I was so

frightened, not sure how life would be for me going

forward. It gives me peace to know that my oncologist

believed in targeted therapy and I am most grateful

to have been administered such a treatment which has

improved the quality of my life for the past four years.’

PatientDoretha ‘Dee’ Burrell


Author, Motivational Speaker,Mother, Grandmother, Lover of LifePhiladelphia, USA


‘In my view, Personalised Healthcare will be the only way of husbanding our resources in a way that makes good business sense!’

‘For the insurance companies, Personalised Healthcare is

extremely important because in future we will simply not

be able to afford to stick to the “one-size-fits-all” method

of providing patients with medicines or technologies in a

rough-and-ready manner. Professional analyses tell us that

both from an economic and from a medical view-point,

diagnostics-based, optimised therapy, say for hepatitis C,

is superior to standard treatment strategies.’

Insurance executiveProf. Thomas Szucs


Chairman, Helsana Insurance GroupZurich, Switzerland


‘As a researcher strongly committed to driving Personalised Healthcare forward, I appreciate some of the distinct advantages of having both Pharmaceuticals and Diagnostics under one roof.’

‘In the field of oncology it is particularly helpful to involve

diagnostics as early as possible in clinical development.

This increases the efficiency and speed of discovering and

developing patient selection markers that could have an

actual impact in the clinic, and make an important difference

to patients’ lives. In order to do this at a high frequency for

our drug candidates across multiple indications, a dedicated

in-house diagnostics effort is required, and Roche clearly

has one of the largest and strongest in the industry.’

Scientific/Biomarker expertDr Shirin Khambata Ford


Senior Biomarker & Experimental Medicine LeaderOncology Translational MedicineRoche Nutley, USA


‘We see tremendous changes in our tasks. With Personalised Healthcare, diagnostic services gain relevance rapidly since our test results become integral factors for the development of modern treatment strategies.’

‘Increasingly, treatment decisions are based on sophisticated

laboratory analysis covering complex diseases, cancer for

example. Modern diagnostic methods enable us to provide

precise data and thus offer a reliable basis for treatment

decisions. Rapid initiation of the right therapy and an opti-

mised use of the limited resources of our healthcare system

result from this strategy. This is a real win-win sit uation for

patients and for society as a whole.’

Medical laboratory scientist Dr José Gilberto Vieira


Medical Advisor, Fleury LaboratorySão Paulo, Brazil


employees worldwide

1,735


Our peOpleGlobal. Roche employs 81,735 people in 108 countries worldwide with 23% of

employees working in R&D.

Diverse. Our workforce represents more than 136 nationalities and the percentage

of women in key positions increased from 13% in 2009 to 18% in 2011, in line with our

five-year goal.

engaged. We conducted the first global employee survey for the Roche Group,

with an 80% participation rate overall.

Aligned and performance-focused. We aligned our compensation strategy

and performance management principles worldwide to create a stronger link between

company and individual performance and reward.

1,735

92 Roche Business Report 2011 | Our People

Roche is dedicated to translating innovation in science into

clear benefits for patients. To do so, we need highly skilled,

passionate and motivated people who are inspired to make

a difference in improving health around the world.

We work to achieve this by:•developing our people at all levels to realise their full potential•offering an inclusive culture that draws on the diverse skill,

background and knowledge of every employee•identifying our internal and external talent — those who have

the right skillsets for current and future business require-

ments

Together our activities improve our ability to solve problems,

discover innovative solutions and enhance the effectiveness

and performance of our teams and leaders. Inclusion supports

engagement which, in turn, fosters productivity and creativity.

It is our people worldwide who set us apart and who make

Roche an employer of choice. Our ability to attract, engage and

retain diverse talent ensures that we can continue to deliver

innovative healthcare solutions for patients well into the future.

Building a great workplace, every day

Our people drive our business. By consistently employing and

developing the best people, Roche has achieved its business

goals and excelled in science and innovation year after year.

To attract and retain the best and brightest minds, Roche is

committed to maintaining an excellent workplace — one that

goes beyond offering attractive compensation and benefits to

Key figures

roche employees worldwide (full-time equivalents/FTe*)

2011 2010 2009

Europe 35,509 35,811 35,310

North America 22,429 23,695 25,412

Asia 16,251 14,964 14,169

Latin America 4,506 4,633 4,930

Australia 755 858 891

Africa 679 692 795

Total 80,129 80,653 81,507

* Full Time Equivalent (FTE) is used to reflect the actual working time of full and part time employees. For example, two part-time employees working 50% would result in the equivalent of one full time equivalent (FTE) versus two employees (headcount).

employees (FTe) by operating unit

2011 2010 2009

Roche Pharmaceuticals 44,397 46,335 48,181

Chugai 6,908 6,852 6,632

Diagnostics Division 27,380 26,194 25,508

Other 1,444 1,272 1,186

Total 80,129 80,653 81,507

employees (FTe) by function

2011 2010 2009

Servicing 15,041 15,160 13,408

Manufacturing and logistics 14,786 14,770 16,395

Marketing and distribution 27,748 27,536 28,682

Research and development 18,449 19,039 18,894

General and administration 4,105 4,148 4,128

Total 80,129 80,653 81,507

employees by contract type

2011 2010 2009

Regular (FTE) 78,013 78,537 79,631

Fixed term (FTE) 2,116 2,116 1,876

Full time (headcount) 76,911 76,767 77,866

Part time (headcount) 4,824 4,845 4,562

18% on track to reach 2014 goalWomen in key positions +38% since 2009

Our People

93Roche Business Report 2011Our People |

Selected 2011 external awards and recognition

Rank Award Roche site

eXAMe

Best pharmaceutical company in Brazil

Roche Brazil

CrF Institute

Top employer for China

Roche China

2 universum — Ideal employers 2011

Top employer for natural sciences

Roche Switzerland



Pan-European



Roche Germany

6 Deloitte Best Company to Work For

Standard of excellence award

South Africa

10 Fortune’s 100 Best Companies by Size Genentech SSF*

15 Science Top employers Roche Basel

15 Great place to Work Roche Portugal

21 Great place to Work

Top 25 multinational employers

Roche Group

23 Great place to Work Latin America Region

Top 50 Fortune’s 100 Best Companies to Work For

Among large companies

Genentech SSF

Top 100 Working Mother Magazine 100 Best Companies Genentech SSF

* South San Francisco

providing employees with the chance to develop personally

and professionally, build their career, gain recognition for their

achievements and make their mark in their area of expertise.

Roche is consistently recognised as an excellent employer by

a range of well-respected organisations. This reflects our

steadfast commitment to create and maintain a working cul-

ture that embodies the Roche core values of integrity, courage

and passion. Our organisational structure aims to strike a bal-

ance between diversity, scale, reach, speed and cohesion to

enable and leverage innovation throughout the value chain.

In October 2011 Roche was honoured as one of the best multi-

national employers by the Great Place to Work Institute. More

than 350 multinational companies were chosen to participate

in this inaugural competition, and only three medical compa-

nies were selected as best employers.

The table below highlights some of the awards we received in

2011.

engaging employees

One measure of a great work environment is whether employ-

ees are actively engaged, both emotionally and intellectually.

Our experience and numerous studies show that employee

engagement is a key driver of employee well-being, as well as

better individual and business performance. For these rea-

sons, we constantly seek new opportunities to engage our

employees and drive innovation. Additionally, one of Roche’s

strategic five-year strategic goals is to achieve an employee

engagement level of 80%, which would bring us in line with the

very best employers.

To help realise this objective, we carried out the first-ever

Roche Group Global Employee Opinion Survey (GEOS) in 2011.


Conducted at all sites worldwide and offered in 20 languages,

the survey gave employees the opportunity to provide man-

agement with candid, anonymous feedback on a variety of top-

ics. The GEOS questionnaire measured the needs, expecta-

tions and desires of our employees, which helps us to continue

to build engagement and to identify areas that may need inter-

vention or additional support; The employee response rate was

80%. This provides solid data from which to infer key findings,

highlight best practices, identify areas for improvement and

design effective programmes. From a top-line standpoint, the

survey indicated an overall engagement level of 62% — which

places us slightly above the pharmaceutical industry bench-

mark.

Group-wide results indicate that employees are proud to work

for the company and believe in its future success. They also

have high satisfaction with their immediate work environment,

which includes factors such as colleagues, line managers and

physical working conditions. Facets of working life at Roche

with lower scores include decision-making, work processes

and the employee connection with senior leaders. These areas

will be the focus of initiatives sponsored by the Corporate

Executive Committee over the coming months.

Roche will continue to measure employee engagement, with

follow-up surveys at 18 months intervals. These efforts will

leave us well positioned to create and deliver the engagement

initiatives required to attract and retain top talent.

leveraging diversity

To realise Roche’s innovation goals, we work to sustain a

culture of mutual respect, integrity and trust, so that differing

views and perspectives can be freely exchanged, debated,

refined and, ultimately, leveraged into valuable scientific break-

throughs and business results.

Today, 46% of our 81,735 employees are women. Our employ-

ees worldwide represent more than 136 different nationalities.

And people from more than 82 nationalities work at our global

headquarters in Basel.

We know a diverse workforce provides the inspiration and

innovation on which our future business depends. People from

diverse backgrounds bring different methodologies, ideas and

knowledge to the workplace, spurring greater creativity, im-

proved problem-solving and unique collaborations.

A key area of focus is increasing the proportion of women in

Roche’s top management. We have committed at the highest

executive level to increase the percentage of women in key

positions 1 by 2014. To achieve this, Roche has established

a host of programmes and practices to better support women

— and other diverse talent — throughout their career. These

range from basic measures such as granting parental leave

and permitting flexible work schedules to enhancing mentor-

ing and sponsorship programmes and maintaining ties with

leadership networks.

Gender diversity

2011 2010 2009

Women in total workforce 46% 46% 46%

Women in line management 35% 37% 37%

Women in top 120 executive

positions 15% 15% 9%

Women in key positions 1 18% 16% 13%

In 2011 we implemented initiatives to attract diverse talent in

our branding and recruitment activities which emphasise diver-

sity and inclusion. Additionally, the Roche careers portal high-

lights our commitment to respect, empowerment and opportu-

nity for all. Another example comes from Roche Italy, where that

business unit participated in the Diversity at Work event in

Milan, which aims to connect diverse candidates (ethnicity,

gender, physical ability and so on) with potential employers

and open positions.

Roche affiliates were asked in 2011 to report on the effective-

ness of local benefit programmes in supporting Roche’s diver-

sity strategy. In 2012 we will use this data to identify areas for

improvement, with family friendly benefits such as flexible

workplace and work-schedule arrangements, and improved

childcare support added to local plans as appropriate. Addi-

tionally, the Pharmaceuticals Division has diversity action plans

in place at its top 20 affiliates. These plans address local needs

after an assessment of the strengths and opportunities of affil-

iates against six diversity best practices, ranging from recruit-

ment to flexible work arrangements.

We revised our benefit and mobility policies, implementing

new programmes that, for example, expand opportunities for

women to gain international experience. We also sought ways

to better assist working parents by delivering improved child-

care services and enhanced support for dual-career families.

And we launched a support programme to help partners of

assignees find employment in their host country.

1 Defined as those roles that are critical to business delivery, that drive significant value, and have the greatest breadth and depth of responsi-bility.


We have programmes to support a positive work-life balance.

One example is the Family & Career Network formed in 2010

in Basel to help our employees combine family responsibilities

and career. In 2011 this network executed several initiatives,

including championing the recommendations of an internal

review. These included outlining the commuting needs of

working parents, studying and summarising best practices

from other countries and launching a bilingual website to make

life easier for working parents in Basel.

Roche is also working to ensure gender balance in its global

leadership development programmes. During 2011, 33% of the

participants in 16 key leadership programmes were women, up

slightly from 32% in 14 such programmes in 2010. The per-

centage of female high potentials (promising employees who

are being prepared for leadership positions) remained stable in

2011 at 39%.

leadership pipeline

2011 2010

Number of high potentials 4,690 4,681

Percentage of women

high potentials 39% 38%

Percentage of women in global leadership

programmes 33% 32%

Our development efforts are beginning to show results, with

the number of female succession candidates for top positions

rising to 30% in 2011 from 26% in 2010. Additionally, 18% of key

leadership positions within Roche were held by women at the

end of 2011, up from 16% in 2010.

Towards the end of 2011, Sophie Kornowski-Bonnet, former

General Manager of Roche Pharmaceuticals in France, was

appointed Head of Roche Partnering. She assumes her new

role on 1 February 2012, and joins Roche’s Enlarged Corporate

Executive Committee.

In 2011 Roche became a member of Catalyst, an international

non-profit organisation that works to build inclusive work-

places and expand opportunities for women and business. As

a result, every Roche employee now has free access to this

resource for research, information and advice. We also worked

to promote understanding and awareness of diversity across

the organisation through internal communication activities,

including launching a Roche Group diversity and inclusion

intranet and updating the diversity section of our website.

Fostering innovation at work

Innovation is critical to Roche’s success, and our talent man-

agement approach actively fosters the generation and expres-

sion of new ideas.

Our strategy is four-fold:•attract and retain a cross section of exceptional people •create an inclusive environment that fosters ongoing dia-

logue and performance feedback •support employees’ personal and professional development •recognise and reward outstanding performance

Roche sponsors numerous annual competitions, symposiums

and awards to encourage creativity, spur collaboration and

recognise the company’s most innovative thinkers. We also

actively support promising young people through programmes

that provide increased access to leading scientists or the

resources to pursue scientific discoveries. Thinking of socie-

ty’s future workforce needs, our scientists interacted with

youth and children to spark their understanding of and interest

in a career in science. To commemorate UNESCO’s Inter-

national Year of Chemistry in 2011, and as part of Bring Your

Kids to Roche Day, our scientists in Basel presented a theatri-

cal play and an exhibition that explained how new molecules

become medicine. Others were involved on a regular basis

with Swiss Youth Researchers on special projects.

In all cases, the goal is the same: igniting and fostering viable,

innovative ideas that create maximum value for our patients,

customers, employees and investors.

Attracting top talent

We hire outstanding people. This is a central element of our

global HR vision, since employing the best talent is key to

ensuring a steady stream of the promising new ideas that drive

innovation.

Our ability to attract, engage and retain a diverse workforce

worldwide is, and will continue to be, affected by certain vari-

ables, including:•competition for key talent•changes in emerging market dynamics•the rise of technology, which enables flexible working and

new working styles•changes in worldwide demographics


In response to these challenges, Roche continuously develops

innovative recruitment strategies that reflect best practices

and market conditions. We deploy a team of talent scouts, for

example, to strengthen our talent pipelines with critical target

groups. We also target top business schools and attend key

business events to build awareness of Roche as an employer

of choice and as a progressive, engaging company.

To further ensure we reach target candidates, we have imple-

mented a global social media strategy. This initiative and our

talent relationship management strategy were recognised by

the Corporate Leadership Council, an international organisa-

tion that identifies and builds on the best practices of the

world’s top companies.

To reach the maximum number of potential candidates, Roche

hosts career websites in 91 countries. During 2011 Roche

career sites drew approximately 2.8 million visits. The Genen-

tech site attracted an additional 1.06 million visits. In total,

Roche received 360,000 applications for posted vacancies and

registered 205,000 new candidates to the Roche Group talent

pool, a database of employees and job seekers interested in

becoming Roche employees. Approximately 43% of our annual

vacancies are filled internally, as we encourage employees to

constantly identify and pursue new career opportunities.

To maintain our success in developing innovative products, we

aim to attract the best scientific minds by promoting leading-

edge research, strengthening our innovation network and

building scientific collaboration with academia through ini-

tiatives such as our postdoctoral programmes in research and

Early Development (gRED and pRED). These programmes

seek to foster advances in science, emphasising basic and fun-

damental discovery research, with work performed alongside

leading scientists and a clear commitment to publish in top

scientific and medical journals. In 2011 the gRED postdoctoral

programme had 120 positions, while the pRED programme had

117 projects on offer, with 85 active postdocs.

As a top employer, we pay close attention to the changing val-

ues and expectations of the workforce. We recognise, for

example, that many employees today have different attitudes

to and expectations about working more flexibly and merging

work and social life. We continually review our policies to

address these emerging trends and to ensure that Roche

remains an attractive employer of choice for current and future

generations.

Attracting employees: staffing rates

2011 2010 2009

New hires 8,463 8,279 8,192

Internal staffing rate 43% 45% 29%

External staffing rate 57% 55% 70%

retaining employees: turnover

2011 2010 2009

Total 10.1% 9.5% 7.0%

Europe 6.8% 5.7% 5.1%

North America 15.1% 12.3% 7.8%

Asia 8.9% 10.0% 7.2%

Latin America 14.8% 19.3% 13.4%

Australia 18.2% 20.2% 10.9%

Africa 18.4% 16.8% 18.3%

reasons for leaving

2011 2010 2009

Employee-initiated 50% 46% 51%

Employer-initiated 41% 44% 40%

Neutral 10% 10% 9%

Developing employees

At Roche, we recognise that developing and training employ-

ees is not only critical to the personal growth of our people but

also to the success of our company. When our employees are

successful in their positions and prepared to take on future

roles, including leadership positions, they deliver their best

possible performance. Our commitment to developing our

employees remains steadfast in these times of organisational

change.

employees

Roche provides development opportunities for all employees.

These range from formal technical and leadership training

pro-grammes to job assignments that offer valuable on-the-

job experience. We also offer mentoring and coaching pro-

grammes. We continued in 2011 to refresh the local offerings

in well-established markets, such as South San Francisco and

Basel, and introduced suites of programmes in our emerging

markets, such as the Roche China Academy in Shanghai which

opens in early 2012.


We are supplementing our classroom training with technology-

enabled programmes such as web-based simulations and vir-

tual classrooms. As shown in the next table, these approaches

allow us to manage training investment while ensuring access

to development opportunities for all employees.

learning and development

2011 2010 2009

Total training investment

(million CHF) 116 150 146

Training spend per employee

(CHF) 1,417 1,829 1,794

Total number of training hours

(million) 2.08 1.87 2.16

Average training hours

per employee 26 23 26

Number of postdoc students

and interns * 1,050 780 656

* Excluding Chugai.

To support development activity, we encourage every employ ee

to participate in career development discussions with their

manager. These discussions help to guide personal develop-

ment and identify the skills and training employees need to

achieve their career goals. In 2011 we introduced a suite of

online tools to support career development planning activities,

including building core competencies, establishing develop-

ment focus areas and providing guidance on career paths.

Going forward, we will maintain our efforts to strengthen and

stimulate employee development by introducing a system-

wide process and online development planning tool which will

be available to every Roche employee and manager.

Current and future leaders

Leadership succession planning was again a strategic priority

in 2011 and will continue to be in 2012. Roche has a number of

initiatives in place to accelerate development of its next gen-

eration of leaders. An example is Perspectives, our global

leadership rotation programme. Twenty alumni from this pro-

gramme are building impressive careers across the Roche

world, from Hong Kong, Vietnam and Shanghai to Spain, Basel

and San Francisco.

In addition, we offer a comprehensive suite of leadership

development programmes to help new and prospective lead-

ers progress in their careers. These include specially designed

development and assessment centres and action learning

through special global project teams. The objective is to edu-

cate leaders across the organisation on what it means to be

a leader at Roche and to furnish our leaders with the skills they

need to excel. We foster an approach of ‘leaders leading lead-

ers’ that features significant mentoring and coaching from

executives. In addition, the Executive Committee meets indi-

vidually with prospective leaders and reviews their develop-

ment plans quarterly. We continued in 2011 to encourage the

development of leaders by rotating talent across the organi-

sation and conducting cross-functional and cross-divisional

talent reviews. Our commitment to developing leadership skills

is vital to Roche continuing to lead in science and innovation

with a globally and culturally diverse workforce.

Global mobility

International experience is an important contributor to the

development of our future leaders, as it encourages the shar-

ing of diverse perspectives for improving our global business

in a manner that respects local cultures. The number of Roche

international assignments has risen sharply in recent years,

from 340 in 2005 to 658 in 2011. As part of our diversity strat-

egy, we also increased the number of women on international

assignment from 21% in 2005 to 26% in 2011.

To ease their transition into new cultures and environments,

and support their return home, Roche assists employees and

their families before, during and after their assignment abroad.

We also continuously assess our mobility programmes to

ensure they support the needs of a diverse assignee popu-

lation.

As the health and safety of our international assignees and

their families is one of our primary concerns, we rolled out

a global health insurance programme through a leading expa-

triate health insurer in 2011. This programme offers first-class

treatment and ensures access to high-quality medical facilities

regardless of location. In addition we implemented a security

briefing programme for assignees and their family members in

advance of assignments to high-risk countries.

In 2012 our focus will be on the harmonisation of global desti-

nation services, such as immigration support, welcome ser-

vices and house hunting. Our goal is to ensure a consistent

quality of experience for all assignees and their families,

regardless of destination.


rewarding and recognising employees

We reward strong performance through a transparent and

consistent process that encourages fairness, continuous feed-

back, dialogue and development. This approach, together with

Roche’s competitive compensation and benefits programme,

contributes significantly to attracting and retaining the best

people. Following the integration of Genentech in 2010, we

focused on aligning our remuneration policies and processes.

This culminated in the rollout in 2011 of a new compensation

strategy and global performance management principles that

bring a common philosophy and approach to all Roche employ-

ees worldwide.

performance management

As more employees work on an increasing number of projects

and tasks across borders, functions and sites, it has become

ever more important that we adopt cohesive standards to man-

age and reward employee performance. During 2011 we made

good progress against this objective, laying the groundwork to

roll out Roche’s global performance management principles in

2012. This new unified approach will better enable Roche to

maximise scientific and business results by creating a stronger

link between performance and reward. Moreover, it enables

managers to better differentiate and reward strong employee

performance.

The new programme also emphasises and encourages con-

tinuous two-way dialogue between employees and their man-

agers, instead of a formal once-per-year performance evalua-

tion. This enables both parties to reach a shared understanding

of objectives, achievements and compensation, while provid-

ing more frequent opportunities to share ideas, define busi-

ness objectives, adjust strategies and advance employee

development. In 2011 91% of our employees took part in per-

formance management discussions.

Workplace evaluations of all Roche employees will now follow

common policies and processes, with performance ratings

calibrated to ensure fairness and consistency. Additionally,

evaluations will focus on ‘what’ results were achieved —

whether individual and team objectives were met — as well as

‘how’ the results were achieved — whether Roche values of

integrity, courage and passion as well as our leadership com-

petencies were demonstrated.

To promote the adoption of Roche’s global performance man-

agement principles, our human resources team together with

senior leaders conducted workshops and briefing sessions

throughout 2011 in our primary markets. Additionally, employ-

ees may access supplementary communications materials

such as performance management and annual bonus guides

and web-based training.

During 2012 we will build on these educational efforts by con-

ducting workshops to ensure that our people have the knowl-

edge and expertise required to fully support our performance-

oriented culture.

Compensation

Remuneration is one aspect of Roche’s comprehensive strat-

egy to attract talented people, motivate and retain current

employees, and encourage strong performance. In 2011 the

company’s total investment in remuneration was 10.3 billion

Swiss francs.

In association with our new global performance management

principles, Roche is implementing a globally aligned compen-

sation strategy. The new common approach creates a stronger

link between performance and reward, positioning our employ-

ees to share in Roche’s success by linking their goals to corpo-

rate goals, while promoting a culture of performance, growth

and innovation.

Roche’s new compensation strategy also establishes a com-

mon bonus system for all eligible employees. The annual bonus

will comprise three components: individual performance; per-

formance of the individual’s global function, region or affiliate

organisation; and the Roche Group’s achievement of strategic

goals.

Most Roche employees transition to the new approach in Jan-

uary 2012, with the first bonus payout under the new approach

scheduled for early 2013. A key objective for 2012 will be to

support our managers’ and employees’ adoption of these prin-

ciples and approaches through ongoing training and work-

shops. We will also analyse and share information gained from

Roche business units in North America Pharmaceuticals which

implemented the approach in 2011.

To further align employee interests with those of our share-

holders, we maintain an employee stock purchase programme.

Through Roche Connect, employees in most countries can

purchase non-voting equity shares at a discount of up to 20%.

In 2011, 16,512 employees in 42 countries (37.28% of those

eligible) participated in this programme, purchasing securities

worth 58 million Swiss francs. Additionally, 18,150 managers

and employees received non-voting equity securities through

the Roche Long-Term incentive plan.


Benefits

A competitive benefit programme is integral to the reward

package Roche offers employees. Typical packages ensure

employees are protected financially in case of illness, disability,

retirement or death, while also offering a series of supplemen-

tary programmes designed to improve health and wellness.

Over 93% of affiliates offer extensive benefits plans.

Roche regularly reviews its benefit programmes to make cer-

tain they reflect the evolving needs of our workforce. During

2011 we implemented benefit plans in some emerging markets

and sought to align affiliates’ benefit programmes within coun-

tries to ensure fairness and to benefit from economies of scale.

In January 2011 we rolled out International SOS, a global assis-

tance programme that provides employees and immediate

family members with access to emergency medical and secu-

rity support services during business and personal travel.

Roche is diligent in its efforts to mitigate financial risks associ-

ated with our benefit plans. Given the uncertainty in the world’s

financial markets in 2011, we monitored the funding status of

our major pension funds closely. Cash injections were made in

some countries, often in combination with pension plan policy

changes, such as the elimination of early retirement incentives.

We also continued to introduce more flexible retirement mod-

els to better accommodate the diverse needs of an ageing

workforce.

In 2012 we will work to increase our employees’ awareness of

the benefits Roche offers through a series of communication

initiatives.

Aligning human resource processes

Roche’s new approaches toward performance management

and compensation will be supported operationally by our

Common Human Resource Information Solution (CHRIS). This

comprehensive system integrates 12 major human resource

processes, including organisational management, compensa-

tion and benefits, performance, succession and talent man-

agement, international assignment management, all learning

and training programmes and payroll and time management in

certain countries.

CHRIS incorporates the best practices of Genentech and

Roche and sets the foundation for a more efficient and effec-

tive HR organisation by streamlining, standardising and simpli-

fying data management across national and affiliate bounda-

ries. This implementation advances Roche’s ability to operate

effectively internationally.

Implementing CHRIS was a major undertaking for Roche’s HR

organisation in 2010 and 2011. Prime challenges included

aligning more than 17 legacy systems across multiple plat-

forms and countries, as well as translating the system into 10

languages. The project encompassed virtually all Roche affili-

ates, with team members located around the world.

In November 2011 CHRIS reached a major milestone when

Roche’s North America Pharmaceuticals Division switched to

the new system with minimal disruption. As of January 2012,

CHRIS is live in 108 countries and at 187 affiliates and agencies.

Maintaining fair employment practices

The Roche Employment Policy governs human rights and

labour relations at every Roche site, setting out our inclusive

workplace philosophy and exacting employment practices.

Roche does not tolerate any form of workplace discrimination

based on gender, race, age, skin colour, religion, marital status,

sexual preference, heritage or physical or mental disability, nor

do specific Roche sites tolerate any other forms of discrimina-

tion prohibited by law or regulation in the countries or localities

where they operate.

The Chief Compliance Officer monitors implementation of and

compliance with this policy in association with a network of HR

managers and compliance officers at each site, who also

ensure the appropriate policies and programmes are in place

to promote fair, respectful and consistent treatment for all

employees. For example, our Basel site reviewed remuneration

fairness with an external expert, achieving good results: equal

pay for equal work for men and women is a reality.

Our directive on the protection of personal data ensures that

we safeguard employee information and comply with all rele-

vant local legislation.

We respect our employees’ right to freedom of association and

collective bargaining. If they desire, Roche employees can be

represented by unions, works councils or similar organisa-

tions. Currently, 8,800 Roche employees are trade union mem-

bers and more than 30,980 belong to other labour groups.

Additionally, the Roche Europe Forum represents the interests

of about 35,300 employees in 26 countries. Our goal is to

maintain an open dialogue with employee representatives at all

times. For example, in 2011 we approached employee repre-

sentative councils in 25 locations and at the European level

to involve them in the implementation of our new compensa-

tion strategy and performance management principles.


Receptors

OncogenicBRAF

KSR

RAF

Grb2

Transcriptionfactor

MEK

ERK

ERK


Intervening at the molecular level

Thanks to ultramodern methods of sequencing the genome — including a series of innovative technologies

from Roche — today’s scientists have identified some 350 genes involved in the genesis of cancer. An

example is the BRAF gene that is found in a mutated form in about 50% of all cases of metastatic melanoma

(the most aggressive form of skin cancer) and approximately 8% of all solid tumours.

A mutation of the BRAF gene results in an abnormal BRAF protein that is locked in an active state. This may lead to uncontrolled cell growth and survival, potentially driving the development and progression of a tumour.

Our new cancer medicine Zelboraf selectively blocks the action of the altered BRAF protein. This may cause cancer cells to stop growing or even die, which in turn can lead to tumour shrinkage, reduce the risk of disease progression and extend a patient’s life.

Personalised Healthcare is the strategy of the future. Not only for cancer, but also for fighting infectious diseases like hepatitis B and C, inflammatory diseases such as asthma and diseases of the central nervous system.




We treat our employees fairly throughout the employment

cycle, including supporting those affected by organisational

changes such as our Operational Excellence programme. To

date around 4,100 positions have been reduced in Roche Phar-

maceuticals as a result of the programme. Of those reductions,

about 1,400 took place in 2010 and a further 2,700 during 2011,

including transfers to third parties. These changes have been

partially off-set by headcount increases in our Diagnostics

Division and in emerging markets, such as China, where we

continue to build capacities and capabilities given the increas-

ing importance of those markets to Roche.

By the end of March 2011, we had concluded consultations

with employee representative bodies about Operational Excel-

lence and ensured that social plans and support measures

were in place to meet the needs of all affected employees.

Those measures included severance pay, outplacement ser-

vices, counselling, access to career centres, retraining and

redeployment options.

More on the Web

• Employees: www.roche.com/employees• Global careers portal: http://careers.roche.com• Employment policy: www.roche.com/employment_policy.pdf• Group policies, positions and guidelines: www.roche.com/

policies_guidelines_and_positions• Commitments to employees: www.roche.com/commitments


COMMUNITY INVOlVeMeNTFocused giving. We direct our efforts across four strategic areas, with an

emphasis on innovation, collaboration and sustainability, as exemplified by the

EDUCARE programme which trains healthcare professionals in oncology in

sub-Saharan Africa.

Measuring impacts. We assess our engagement through the outcomes of the

projects we support. To advance this, we strengthened our processes for collecting

outcome information from our affiliates during 2011.

Community redevelopment. A particular area of focus in 2011 was

redevelopment projects in communities which had been devastated by natural

disasters, such as the rebuilding of schools in Haiti and Pakistan.

Supporting education. In partnership with UNICEF Switzerland we laid the

foundation for a new teachers training college in Malawi, that will house and train

540 teachers in 2013.

103Roche Business Report 2011Community Involvement |

Our approach

As with our core business activities, Roche’s philanthropic

work aims to leverage innovation and collaboration to create

lasting benefit. For this reason, we evaluate our philanthropic

projects by their impact and not by their cost.

We direct our giving to four areas of priority: humanitarian and

social projects, science and education, arts and culture, and

community and environment. We also seek to respond to

needs that would not be addressed without Roche involve-

ment. Emphasis is placed on projects that reflect four criteria:•Innovation: applies creative and effective solutions to soci-

ety’s challenges•Sustainability: delivers enduring effects in a dynamic,

resource-constrained world•Collaboration: draws on the strengths and capacities of

respective partners•Outcomes: provides tangible long-term benefits to the

people involved

Our actions are guided by Roche’s Corporate Donations and

Non-commercial Sponsorship Policy.

Philanthropic donations, both by the company and its fully-

supported philanthropic entities, may only be made to regis-

tered or accredited non-governmental organisations or not-

for-profit charities. Additionally, donations made by local

affiliates are directed to local purposes. This enables Roche to

tailor its activities to local culture and need, while also support-

ing employee engagement and allowing a quick response

when required.

Our preference is to engage as a true collaborator and at the

earliest possible stage. We aim to be an active, long-term part-

ner by sharing the risks, commitments and investments to

achieve project success. We focus our resources on select

projects that have a lasting impact rather than across many

initiatives.

All of our affiliates must report annual donation amounts

through the Roche Financial Group reporting system. We

also solicit data on project outcomes, such as the number

of patients benefiting from disaster relief, the number of health-

care workers trained or the number of classrooms con-

structed.

Humanitarian and social projects

The largest part of our philanthropic giving is directed toward

humanitarian and social projects, as we believe that improving

human services and support systems is the most effective way

to help build stronger, healthier communities. We also aim to

provide support that can be maintained on a long-term basis

by local resources. In countries that do not have adequate

healthcare infrastructure or delivery systems, we find invest-

ments in education and prevention often a more sustainable

solution than medicine or diagnostic donations.

Our activities in 2011 included continued support of the

EDUCARE programme. Launched in 2010, this programme

supports training of healthcare professionals in sub-Saharan

Africa and is conducted by the International Atomic Energy

Agency, as the launch of their Virtual University for Cancer

Control and Regional African Cancer Training Network. In 2011

EDUCARE conducted a proof-of-concept training model

(18-hour in-service cervical cancer training course with 50

plus enrollees) and identified the ten training priorities among

the pilot member states of Ghana, Tanzania, Uganda and

Zambia.

In association with the Albert Einstein College of Medicine, we

initiated a model programme in Ethiopia to enhance cancer

care and cancer awareness by reducing delays in treatment,

increasing capacity to deliver basic care and improving the

quality of care with a focus on women’s reproductive cancers.

The programme was launched in 2011 at the Oncology National

Conference, a working forum attended by close to 100 Ethio-

pian cancer care leaders and practitioners.

During 2011 the Roche Employee Action and Charity Trust

(Re & Act) launched a disaster relief campaign to aid commu-

Breakdown of giving by area, 2011

88% humanitarian and social projects

4% science and education

5% arts and culture

3% community and environment

104 Roche Business Report 2011 | Community Involvement

nity redevelopment following the devastating earthquake in

Haiti and extensive flooding in Pakistan. Employees from more

than 40 of our affiliates raised donations which, along with

core funding from Roche, are helping to build, equip and oper-

ate two schools in Haiti and one school in Pakistan. All three

schools are expected to open by spring 2012. Both projects

deliver benefit beyond the initial schools since they establish

models that can be further replicated.

The majority of our contributions are managed locally. This

allows each business unit to determine how best to address

the needs of its own community. After the disastrous earth-

quake that occurred in Japan in March 2011, our colleagues

at Chugai initiated emergency support, making a significant

donation to the Japanese Red Cross to help with relief

efforts. This gift was augmented by 60,000 courses of Tamiflu

donated to the health authorities to help fight influenza at

refugee centres. We also contributed a range of diagnostic

instruments and diabetes care supplies to help treat almost

11,000 patients.

We encourage employee engagement. Each year on June 16,

Roche employees worldwide join the Roche Children’s Walk to

generate support for children in need. In 2011 nearly 16,000

employees participated from 104 sites and raised about one

million Swiss francs, including matching funds from Roche.

The majority of these funds will be used to continue supporting

programmes in Malawi which provide HIV/AIDS orphans with

food, education and skills training. The Walk proceeds also

enabled Roche, with its partner UNICEF Switzerland, to assist

building a critical new teachers training college in Malawi. In

April 2011 we helped break ground for the college which will

house and train 540 teachers. The balance of the Walk funds

will be used by individual Roche sites to support vulnerable

children locally.

examples of indicators and measures of success 2011

Category Community beneficiaries Roche employee engagement Infrastructure and system changes

Humanitarian

and social

Individuals screened Field relief medicines logistics

consultations

Social service centres renovated

Student teachers trained Volunteers with disabled children Prototype schools constructed

Children enrolled in secondary

school

Employee walkers raising funds

for vulnerable children

Mobile health clinic operations and

construction of health train

Disabled children assisted Teachers training college

constructed

Electricity installed at day centres

Mothers in maternal health

sessions

Community bore holes drilled

or repaired

Science and

education

Teachers in professional

development workshops

Scientists as workshop trainers Industrial placement of students

Children aided by tutoring Science/technology educational

presentors

Teaching methods adopted

Secondary students conducting

academic research

Volunteer tutors or mentors

Arts and culture Museum visitors Roche expert workshop leaders Creativity workshops established

Arts and science students joint

projects

Performances of commissioned

music

Children in creativity workshop Ongoing museum operations

Concert audiences

for challenging music

Community and

environment

Individuals and families assisted

with community services

Workforce volunteers in local

programmes

Cultural groups sustained

Family counseling sessions Recreation programmes established

Public sites cleaned up

This list of exemplary outcomes is representative of activities by more than 100 Roche affiliates around the globe and corporate headquarters.

105Roche Business Report 2011Community Involvement |

Sharing know-how can yield a more lasting benefit than a strict

material or financial contribution. Since 2005 Roche has sup-

ported the International Committee of the Red Cross (ICRC) in

its work to provide displaced people with access to clean

water. In that time, Roche has assisted more than 1.4 million

civilian beneficiaries in seven countries through cash and in-

kind donations. In 2011 we extended annual commitment to

support the ICRC to 2017.

Science and education

Our business is founded on excellence and innovation in

science and technology. Essentially, we aim to attract the

best scientific minds by promoting leading-edge research,

strengthening our innovation network and building scientific

collaboration with academia. We also support programmes

that improve science education, draw talent to science careers

and engage outstanding young scientists.

To encourage young people to choose science as a career, we

support initiatives that promote interest in natural sciences.

During 2011 in Switzerland, we funded the launch of Science

on the Move, a nationwide competition conducted to identify

the secondary school class with the greatest dedication and

commitment to the field of natural sciences. At the culminating

competition held at Roche headquarters, 10 finalists earned a

science day in Basel or Rotkreuz and the winning class was

awarded a science week in California.

In September we were a lead sponsor of the 2011 Swiss Talent

Forum, which gathered 100 selected secondary and college

students from Switzerland and around Europe to discuss the

future of health. Following extensive debate, this young per-

sons’ think tank developed several concrete proposals to

address emerging healthcare challenges.

Arts and culture

We support arts and culture as a reflection of our passion for

innovative thinking as characterised by creativity, excellence

and distinctiveness. During 2011 we presented Roche Conti-

nents at the Salzburg Festival. The programme encourages art

and science students from across Europe to explore the con-

nection between their two realms through a series of creativity

workshops and related contemporary music performances.

In February Toshio Hosokawa’s orchestral piece ‘Woven

Dreams’ received its New York City premiere at Carnegie Hall.

Hosokawa’s composition is the fifth work Roche has commis-

sioned by an outstanding contemporary composer under the

auspices of Roche Commissions.

We provide further support for creative expression through

monthly Roche ’n’ Jazz events. Together with the Roche-

founded Museum Tinguely and the Bird’s Eye Jazz Club, we

bring modern inventive jazz to the community of Basel. Now in

its sixth year, Roche ’n’ Jazz has entertained more than 17,000

people with performances by 66 ensembles.

Community and environment

One of the keys to Roche’s success is our involvement in the

communities where we operate. To maximise their effect,

projects are selected and managed locally. In 2011 two exem-

plary affiliate programmes made a positive difference in Brazil

and Turkey.

In 2001 Roche planted the seeds that would grow to become

the Programa Vizinho Legal (Good Neighbour Programme) in

São Paulo, Brazil. It aims to transform Jaguaré, a local commu-

nity confronted with numerous social vulnerabilities, into a

healthier place with a commitment to a better future.

With few public facilities and just four hours of school provided

daily, the programme works to mitigate social idleness and

keep children off the streets. Toward that end, the Good

Neighbour Programme has developed numerous cultural and

sports activities and also built proactive attitudes toward

healthcare and critical health issues.

Since initiating the programme, Roche has seen progress on

many measures, including social skills, self-esteem, cultural

repertoire and better societal interactions. In 2011 the Good

Neighbour Programme reached 442 children and adolescents

and 860 families. Since 2001 it has helped over 6,000 children

and adolescents.

Roche Turkey is also deeply engaged with local communities,

often in partnership with UNICEF Turkey. In 2011 Roche Turkey

participated in the Stars of Istanbul, a large-scale arts event

emphasising a brighter future for children. Giant star-shaped

sculptures, inspired by the culture and history of the city, were

displayed throughout Istanbul and then auctioned to raise

money for UNICEF. Additionally, Roche Turkey used a portion

of the funds raised through the Roche Children’s Walk to help

UNICEF Turkey establish a new kindergarten which opened in

March 2011 for 120 pupils aged three to six.

More on the Web

• Donations and sponsorship: www.roche.com/donations_and_sponsorship

• Community programmes: www.roche.com/society• Roche Employee Action and Charity Trust: http://react.roche.com/


professionals employed globally in the field of health, safety, security and environmental protection


environmental stewardshipprevention. We continued to foster employee engagement in and responsibility

for safety, security and environmental protection through education, awareness and

training.

minimised footprint. We introduced more new sustainable technologies and

processes to minimise our impact on the environment.

improved eco-balance. We reduced our ecological impact per employee by 4%,

on target for a 15% improvement by 2020 from 2010 levels.

reduced energy use. We reduced energy consumption by 7.7% and CO2

emissions by 4.3%, on track to reach our five-year goal of a 10% reduction by 2014.

108 Roche Business Report 2011 | Environmental Stewardship

Protecting people and the environment is essential to our busi-

ness. At Roche, we refer to safety, security, health and environ-

mental protection as SHE, and approach it with the same sense

of responsibility, and just as methodically, as we do issues con-

cerning quality, productivity and cost efficiency.

We strive for continuous improvement in SHE wherever pos-

sible and economically viable. We seek sustainable long-term

improvement by changing behaviour, adapting equipment to

the most recent standards and by developing innovative pro-

cesses throughout our organisation.

Improving and monitoring performance

Employee engagement and training

Prevention is the key to effective SHE management. More than

600 employees support our SHE programmes worldwide. SHE

teams at each Roche site identify risks, develop mitigation

plans and communicate SHE policy and guidelines to employ-

ees and other stakeholders.

We believe that education, awareness and training is the best

way to foster employee engagement in and responsibility for

SHE. We, therefore, conduct regular training sessions, regional

conferences and workshops and provide online tools in local

languages to most employees. In 2011 our employees partici-

pated in more than 200,000 hours of SHE training. We also

encourage employees to identify areas for improvement and

periodically review the effectiveness of our SHE management

system.

Using a wiki-style database of SHE good practices, our

employees regularly share knowledge and exchange new

ideas. The database includes solutions from simple proce-

dures, like a safe method for opening cardboard boxes, to best

practices for operating complex energy management systems

and guidelines for ergonomic office seating.

The Roche Responsible Care Award recognises the best con-

tributors to and applications of our SHE practices. We received

119 entries for the 2011 award and saw implementation of

numerous solutions found in the database with 14 sites being

awarded.

Audits and assessments

We assess SHE performance by comparing our results against

laws and regulations, internal standards and those set by

organisations such as the International Chamber of Com-

merce’s Business Charter for Sustainable Development, the

International Organization for Standardization and the chemi-

cal industry’s Responsible Care programme.

We conduct internal audits every three years at critical chemi-

cal, pharmaceutical and diagnostics manufacturing sites. The

audit frequency for all other facilities is determined by risk

potential, strategic importance, past performance and other

site-specific circumstances. Our internal audits stipulate nec-

essary SHE improvements. Plant management and local SHE

officers, meanwhile, conduct more frequent spot checks and

inspections to assess compliance with SHE standards.

We expect external manufacturers, suppliers and service pro-

viders to meet the same SHE standards as we do. To ensure

compliance with these standards, we, or third-party auditors

retained by us, periodically audit the operations of our suppli-

ers and issue recommendations for improvement. In the event

of unsatisfactory SHE performance, we may terminate a con-

tract or refuse to award a contract to a supplier.

Key figures

0.0670.16412.67

6.88

on track to reach 2015 goal




Roche accident rate (RAR)

tJ/employeeEnergy efficiency

t/employee

million impact points/employee

CO2 efficiency

Total environmental impact

+3.2%–7.7%–4.3%–4.0%

Environmental Stewardship

109Roche Business Report 2011Environmental Stewardship |

she audits

2011 2010 2009 2008

internal audits

Follow-up 23 24 27 25

First time 3 4 2 2

external audits*

Follow-up 5 5 4 n.a.

First time 42 31 34 17

* of direct materials suppliers

Of the 23 internal follow-up audits in 2011, almost all sites

improved their performance. Recommended SHE improve-

ments following these audits included increasing involvement

of line management and improving business continuity man-

agement. Further details can be found in the chapter Manu

facturing and Procurement, page 61.

safeguarding employees and property

security

Our goal is to protect our employees and visitors, physical

assets, intellectual property and products from harm or loss. In

addition, we have a separate IT security organisation that man-

ages issues such as virus protection.

In 2011 Roche implemented travel security and help services

for all employees and their family members. These services

include a 24-hour hotline to professional advice and support in

case of a medical or security emergency during travel. We also

provide preventive medical and security information in about

200 countries and more than 300 cities and regions. By year-

end we issued guidelines for the emergency evacuation of

expats and business travellers.

Further security activities in 2011 included attending the East-

ern Europe Security Workshop in Istanbul, Turkey, where site

security officers together with the Chief Security Officer dis-

cussed priority issues such as transportation security, product

counterfeiting and information security.

health and safety

Employee health and safety is our first priority. Our primary

objective is to keep the Roche accident rate (RAR) below 0.07

through 2015 and reduce it to below 0.06 by 2020, and to

reduce the Roche illness rate (RIR) to less than 0.01 by 2020.

(RAR corresponds to the number of working days lost due to

occupational accidents per employee each year at a Roche

site. RIR corresponds to the number of working days lost due

to occupational illnesses per employee per year.)

We maintain an integrated programme of employee consulta-

tion, workplace inspections and training across all areas of the

business. Our approach is to promote a strong safety culture

that empowers all of our employees to report and address

safety issues. We expect similarly rigorous policies from our

contractors. We also encourage the safety and well-being of

our employees by selling protective equipment for recreational

activities at a discount and conducting bicycle safety checks,

among other activities.

Health and safety activities in 2011 included expanding our

successful US driver-safety programme to other Roche sites,

which includes defensive driving techniques and specific

health checks such as vision and hearing. A number of sites,

such as Pleasanton, California, USA, offer special training in an

ergonomic showroom to prevent injuries from poor use of

furniture, machines and equipment.

These and other on-going efforts to further improve workplace

safety have resulted in a decline of approximately 45% in the

number of work-related accidents per million working hours

from 2005 to 2011. Employees reported 390 occupational acci-

dents in 2011, a 10% decrease in frequency compared with

2010, while the resulting number of lost days increased 3.9%.

Overall, the Roche accident rate worsened by 3.2%. The

number of reported cases of occupational illnesses decreased

to 141 in 2011 from 182 cases in 2010. The increase of the

Roche illness rate (lost days due to occupational illnesses) is

due to a single case causing an absence of nearly a year.

The overall positive trend in occupational accidents and illness

was recognised in 2011 when Roche Spain received a social

safety bonus for their low accident rate and our Mannheim site

received the Chemical Industry Association’s Responsible

Care Award for its ergonomics training programme.

Our occupational accident and illness profile remains consis-

tent, with slips, falls and repetitive strains representing the

majority of work-related incidents in 2011 and no major acci-

dents for three consecutive years. Outside the workplace,

however, two employees died tragically during a summer party

organised by the company in Switzerland. The employees were

hit by a falling tree during a thunderstorm.


employee safety and health

2011 2010 2009 2008

Roche accident rate 0.067 0.065 0.074 0.078

Roche illness rate 0.025 0.014 0.008 0.008

Number of occupational

accidents 390 432 392 474

Cases of occupational

illnesses 141 182 227 270

Work-related fatalities 0 0 0 0

Work-related accidents

per million working

hours 2.67 2.97 2.92 3.42

protecting our property

Counterfeit products are major risk to our patients and our

reputation. We have implemented a number of anti-counter-

feiting measures and we continue to work with authorities on

a system to track and trace products from distribution to dis-

pensary. Further details can be found in the chapter Marketing

and Distribution, pages 73–75.

minimising our environmental footprint

As part of our commitment to sustainable development, we

proactively seek to employ new, more sustainable technolo-

gies and processes and to minimise our impact on the environ-

ment.

eco-balance

Eco-balance measures the demand we place on the Earth’s

eco-systems, allocating environmental impact points to two

ecologically relevant factors: the consumption of resources,

such as raw materials, water and energy, and the impact from

waste and emissions to the air, water and soil. These points are

added and then related to the number of employees which

enables us to monitor our environmental impact per employee

(million impact points).

We have established a Group-wide goal for eco-balance which

allows management at each of Roche site to establish local

strategies and objectives for reducing environmental impacts

best fitted to their individual situation.

Our total environmental impact per employee in 2011 was 6.88

million impact points, a 4% improvement from 2010. We have

targeted to improve our eco-balance by 15% from 2010 levels

by 2020.

eco-efficiency

Eco-efficiency is based on the concept of creating more goods

and services while using fewer resources and creating less

waste and pollution. We quantify eco-efficiency by the eco-

efficiency rate (EER), a ratio of sales to expenditures on envi-

ronmental protection and environmental impact points which

is calculated in accordance with the Swiss Federal Office for

the Environment (FOEN). The more efficiently we increase

sales and reduce environmental harm, while keeping growth of

expenditures on environmental protection lower, the higher

the EER value and thus eco-efficiency.

We seek to improve eco-efficiency by focusing primarily on

reducing material and energy consumption, reducing waste

and using renewable resources. These and other efforts

resulted in our EER in 2011 improving by 30% to 0.539 from

2010.

eco-efficiency rate (eer)

2011 2010 2009 2008

Sales

(million CHF) 42,531 47,473 49,051 45,617

Environmental

expenditure

(million CHF) 140 194 186 209

Environmental

impact (106

environmental

impact points) 563,742 591,592 572,983 564,328

EER (x 1000) 0.539 0.414 0.460 0.387

In 2011 we invested 118 million Swiss francs in SHE measures,

compared with 163 million in 2010. Our SHE costs in 2011 were

311 million Swiss francs, the same as 2010.

increasing energy efficiency

Our goal is to reduce total energy consumption — fossil fuels

and electricity — in gigajoules per employee by 10% by 2014,

with 2009 as a baseline, and by 20% by 2020, based on 2010

levels. Our long-term goal is to reduce energy consumption

per employee by approximately 50% from 2005 levels.

Our long-term strategy is to improve energy efficiency aggres-

sively before substituting fossil fuels with sustainable energy.

The goal is to increase the proportion of sustainable energy we

use to 20% by 2020. Since energy use is the main source of

greenhouse gas emissions, and reducing energy consumption

also lowers operating costs, energy conservation is a priority

Raw materials

Primary energy

Water

Landfilled waste

Emissions to the water

Emissions to the air

Environmental impact per employee in 2011:

6.88 Mio impact points Products

67042

41374

1981

22967

54988

375390


throughout the Group. Our systematic approach to energy

management includes:•constructing energy-efficient buildings•retrofitting heating, cooling and air conditioning installations•adjusting the range of acceptable temperatures in offices

and other workplaces•purchasing energy-efficient equipment, including hybrid

and diesel-efficient cars•changing work processes•reviewing employees’ travel needs

In 2011 we continued to focus on the responsible use of re-

sources and continuous reductions in energy consumption.

Our activities included:

•reducing automobile fuel consumption and fleet emissions to

meet lower CO2 emissions targets, such as the 120 g/km

standard set by our Western European pharmaceutical oper-

ations reducing fossil fuel and electricity consumption by

recovering waste heat from building cooling systems in Basel•developing ‘green IT programmes’, such as use of low-

energy LED screens, consolidating data centres and using

the heat generated from them for heating other buildings•using recycled and sustainably harvested building materials

to renovate an office building in Nutley (New Jersey), US,

which achieved Leadership in Energy and Environmental

Design (LEED) Gold certification•installing window film in buildings on the Genentech campus,

USA, which provides additional insulation by blocking 99%

eco-balance


of ultraviolet radiation and 90% of infrared heat, but only 30%

of visible light

These activities resulted in improved energy usage in several

areas, including:•a 6.3% reduction in business travel related fuel consumption •a 16.1% decrease in car fuel consumption •a 57% increase in the use of sustainably generated electricity

Together with reduced energy consumption in buildings and

stationary equipment, and a relatively stable staffing level, our

overall energy consumption declined 7.7% in 2011. Energy con-

sumption per employee was 164.2 gigajoules per employee,

which surpassed our 2011 target of 171 gigajoules.

lowering greenhouse gas emissions

Greenhouse gas (GHG) emissions at Roche originate from the

generation and use of energy. Our goal, therefore, for improv-

ing energy efficiency and reducing energy consumption also

applies to GHG emissions: a 10% reduction, measured in

tonnes per employee by 2014 from 2009 levels and a 20%

reduction by 2020 from 2010 levels. We expect to achieve fur-

ther reductions by substituting fossil fuels with energy from

sustainable sources.

We seek to decrease GHG emissions by establishing energy

standards that ensure new plants and buildings are designed

for maximum energy efficiency, while optimising and retrofit-

ting existing assets. We also encourage the exchange of best

practices through a variety of communication channels.

We are reducing the amount of fuel we use to heat, cool and

operate our sites and for business-related travel, however, the

latter is declining at a slower rate. We, nevertheless, reduced

greenhouse gas emissions by 4.3% as a consequence of

energy savings measures.

Greenhouse gas emissions (CO2 equivalents)

2011 2010 2009 2008

Total emissions

(million tonnes) 1,031 1.077 1.053 1.062

Total emissions

per million CHF

of sales (tonnes) 24.23 22.69 21.47 23.28

energy use terajoules

2011 2010 2009 2008

Total energy use 13,372 14,495 13,898 13,662

Total energy use per

million CHF of sales 0.314 0.305 0.283 0.299

Total energy use per

employee 0.164 0.176 0.176 0.178

reducing the use of halogenated hydrocarbons

Halogenated hydrocarbons are in use as refrigerants in cooling

equipment. Chlorinated compounds deplete the ozone layer

whereas the fluorinated and partially fluorinated ones have a

considerable global warming potential. All of them are persis-

tent and thus stay in the atmosphere over a long period of time.

We plan to reduce halogenated refrigerants at all Roche sites

by 90% by 2015. Newly acquired sites, such as Genentech and

Ventana, will work towards separate timelines.

Even though less than 1% of our GHG emissions are haloge-

nated hydrocarbons, our preference is to eliminate all such

emissions. However, recent acquisitions and the lack of alter-

natives in some countries make complete elimination of these

chemicals by 2015 unrealistic. We nevertheless continue to

examine alternatives and work with refrigeration suppliers to

make further reductions.

We have made significant progress reducing emissions of

halo genated hydrocarbons. Since 2004 we have eliminated all

halons and reduced fully halogenated compounds by 90%,

excluding Genentech sites.

halogenated hydrocarbons tonnes

2011 2010 2009 2008

Inventory 181.9 205.2 179.8 144.6

Emissions 3.8 3.8 6.5 3.4

energy use by type

10.0% fuel used by company vehicles

1.6% oil

29.0% grid electricity

16.7% fuel due to business air travel

3.8% district heating

1.2% waste

37.7% natural gas


decreasing other air emissions

We minimise emissions to air through a variety of technologies

and practices. Our priorities are to avoid pollutants, reduce

quantities of pollutants and control remaining pollutant emis-

sions in line with our eco-balance goals. Our overall objective

is to keep emissions to the low levels we have achieved in

recent years.

Our strategy prescribes a continuous improvement pro-

gramme for reducing emissions to air at our manufacturing

operations. These include flue gas scrubbers to reduce nitro-

gen oxides (NOx) and sulphur dioxide (SO2) and various incin-

eration and freezing processes to reduce the release of volatile

organic compounds (VOCs), which may also reduce energy

use.

We completed pilot studies in 2011 for using cryogenic equip-

ment to reduce air emissions and plan to install this equipment

in our Florence (US) site to freeze out volatile organic com-

pounds from waste air. Our emissions to air fluctuate from year

to year, but remain at very low levels.

emissions to air tonnes

2011 2010 2009 2008

VOCs* 124 164 177 213

Particulates 20 33 27 27

Nitrogen oxides 222 262 286 193

Sulphur dioxide 8 7 9 10

* volatile organic compounds

managing waste

Waste is a parameter of our eco-balance. Our waste reduction

targets, therefore, are reflected in our goal to improve the

Group’s eco-balance by 15% by 2020. We maintain waste

reduction goals for individual sites, however, we do not set a

Group goal because of large year-to-year fluctuations, mainly

due to waste from construction and demolition activities.

Roche, as with other pharmaceutical and diagnostics compa-

nies, produces relatively low volumes of chemicals and thus

generates small quantities of chemical waste. We are reducing

already low volumes of waste as we produce more biotech

products and fewer chemical-based products. We, neverthe-

less, accept responsibility for all waste generated from our

operations, including that deposited in the past at our sites or

in landfills. We permit landfilling only as a last resort and, even

then, only for inert materials such as slag or incineration ash.

Depending on the availability of suitable local waste-treatment

plants, we may dispose of non-hazardous general waste in

authorised landfills.

With an 8.6% increase in total production in 2011, waste gen-

eration went up slightly by 4%, as we incorporated waste

mitigation measures such as increased solvent recycling in

Singapore. General waste, meanwhile, declined 11.5% mainly

because of lower amounts of construction waste and new

recycling methods in South San Francisco and Poncé (Puerto

Rico).

In 2011 the Roche Environmental Awareness in Chemical Tech-

nology (REACT) programme awarded proposals for improving

the sustainability of chemical processes and syntheses. We

received submissions for replacing hazardous chemicals,

avoiding waste and reducing energy consumption, all of which

also cut costs. One winning team reduced by one-half the

amount of reagents and solvents needed to manufacture an

equal amount of product, while replacing hazardous reagents

previously used with less problematic ones.

In 2011 Roche participated in a technical investigation of the

Kesslergrube landfill in Grenzach, Germany, as a former user of

that site. The evaluation of remediation options is ongoing. In

Switzerland, Roche and other companies continued to clean

up hazardous waste landfills in Kölliken and Bonfol.

At its Belleville New Jersey USA site Roche has dismantled all

buildings and is studying various remediation options. At the

Nutley, USA, site, Roche is conducting a full-scale technical

investigation of soil and groundwater conditions. Some local-

ised remediation activities have been completed or are under-

way, including groundwater treatment, soil excavation and

installation of soil-vapour extraction systems.

waste tonnes

2011 2010 2009 2008

General waste

produced 24,121 27,249 19,828 42,823

General waste

per million CHF

of sales 0.57 0.57 0.40 0.94

Chemical waste

produced 30,170 29,020 27,605 31,295

Chemical waste

per million CHF

of sales 0.70 0.61 0.56 0.69


Conserving and protecting water resources

Roche supports global efforts to promote water protection,

conserve water reserves and improve access to clean drinking

water. Our long-term goal is to reduce total wastewater toxicity

by 20% in 2020 from a 2015 baseline, however, we continue to

investigate reliable performance indicators and measurement

methods for establishing that baseline. In the meantime, we are

striving to stabilise water consumption throughout the Group.

Over half of the total quantity of water utilised is used in cooling

circuits and is thus not chemically contaminated. After analysis

it is discharged as such. The rest is purified in treatment plants

before being released to watercourses.

Even though we do not operate sites that demand large vol-

umes of water in areas of water scarcity, we adopt conserva-

tion and reduction programmes according to local conditions

and needs. For example, our Californian sites use drought-

resistant landscaping. At other sites we reduce water con-

sumption by:•collecting and recycling water from cooling towers, creating

a closed-loop system•reusing cleaning water for next ‘first rinse’ and recycling

used water•reducing cooling requirements and improving cooling pro-

cesses•improving heat recovery

We record organic emissions into water as total organic car-

bon (TOC) after treatment in a wastewater treatment plant. We

only discharge wastewaters and pollutants if they comply fully

with relevant regulations, including pre-treatment require-

ments. At above 90%, the elimination rates in our wastewater

treatment plants are already high. We seek to further minimise

contamination of water by:•reducing discharges of toxic and poorly biodegradable sub-

stances and heavy metals•reducing wastewater production•treating or pre-treating wastewater, with ozone in some

cases, for non- or poorly degradable contaminants

Our method for calculating environmental impact (eco-bal-

ance) includes water usage, reflecting the importance of

reducing total withdrawal to our overall environmental target.

In 2011 our activities in the area of water management included:•Collaborating with German scientific institute Wasserver-

sorgung Langenau on establishing a new indicator for meas-

uring the total toxicity of wastewater rather than total organic

carbon (TOC)

•Eliminating a chemical containing an octyl phenol moiety

from our processes because of potentially negative impacts

on aquatic life•Analysing water-related risks using the World Business

Council for Sustainable Development water tool, which iden-

tified five sites that will be studied to determine the availabil-

ity of clean water to meet future business needs•Commissioning a wastewater treatment plant with anaerobic

degradation at Penzberg, Germany, that captures methane

to generate heat and electricity, with surplus energy fed into

site grids and other buildings

As a result of these and other activities our water consumption

decreased by 9% in 2011 to 3.3 million cubic metres, with major

reductions achieved in cooling and irrigation because of cooler

weather, particularly in California.

In 2011 we transferred 5.7 million cubic meters of water to

treatment plants, resulting in the discharge of 228 tonnes of

organic matter. In addition, 288 kilogrammes of heavy metals,

of which most were leaching from metal pipes, was discharged

from our operations into watercourses.

water usage and discharge

2011 2010 2009 2008

Water withdrawn

(million cubic metres) 20.4 19.6 18.6 21.0

Water used


Wastewater discharged

to treatment plant


Organic matter

discharged to

watercourses after

treatment (tonnes) 228 242 154 592

Heavy metals

discharged to

watercourses after

treatment (kilogrammes) 288 463 426 545


supporting biodiversity

Roche supports the principles of resource stewardship defined

in the Convention on Biological Diversity (CBD) and its three

main goals covering:•the conservation of biological diversity •the sustainable use of its components•the fair and equitable sharing of the benefits from the use of

genetic resources

We avoid the use of non-commodity natural-resource materi-

als as a source for products or the discovery and development

of pharmaceuticals. If, however, we discover or develop a com-

mercial product derived from natural plant, microbial or animal

genetic materials, our use of those resources will be guided by

the principles and goals of the CBD.

We, otherwise, do not operate facilities in protected areas or

areas of high biodiversity values, as all our sites require access

to city infrastructure and are as such in urban environments.

pharmaceuticals in the environment

We consider the entire lifecycle of our drugs, and take steps to

minimise the release of pharmaceuticals into the environment

at all stages.

We design our manufacturing sites to reduce the risk of active

ingredients entering wastewater. We also support pharmaceu-

tical take-back programmes and employ proactive measures

to prevent the release of our products into the environment in

several ways:•offering financial incentives to ensure that unused or out-

dated products are returned by retailers and others in the

supply chain•establishing policies that require returned or waste pharma-

ceutical product be incinerated rather than disposed of in

landfills •supporting research into the effects of our pharmaceuticals

in the environment •providing to authorities environmental risk assessments for

all new medicines

Traces of pharmaceutical products can enter the environment

in a variety of ways: the manufacturing process, improper dis-

posal of unused medicines and through natural process fol-

lowing normal patient use. Patient use, however, is generally

recognised as the primary contributor.

Evidence suggests that exposure to these trace concentra-

tions in surface, ground and drinking water does not pose

harm to human health. The risks to aquatic life are thought to

be greater. Scientific studies have not identified any short-term

effects from exposure to low-level concentrations of pharma-

ceuticals, but more research is being conducted to evaluate

potential long-term impacts. We, therefore, recognise the

need for further research into possible effects and support

scientific work in this field.

legislation and compliance

We meet all local laws or regulations, however, our Group pol-

icies are often more rigorous than external standards.

We are fully on track with the registration of our chemical

materials according to the European legislation on Registra-

tion, Evaluation, Authorisation and Restriction of Chemicals

(REACH) and requirements from the Globally Harmonised

System of Classification and Labelling of Chemicals.

For eight consecutive years prior to 2011, we incurred no sig-

nificant fines for SHE-related violations. During 2011, however,

we were assessed small fines for four minor infractions with

respect to environmental issues and one for failing to comply

with equipment safety regulations. While these incidents pre-

sented no significant risk to our employees or the local com-

munity, we take all incidents seriously and have taken steps to

correct each problem and prevent similar incidents from

occurring in future. Additionally, a fire caused by an electrical

failure in our finished-goods warehouse in Budaörs (Hungary)

destroyed products stored there for the Hungarian market and

a fire at our Segrate (Italy) plant resulted from overheating of a

powder mill. Fortunately, nobody was hurt in either incident.


Test week 12

Test

wee

k 4

Test week 24

Start oftreatment

72 weeksof therapy

Treatmentstopped

Treatment stopped

Viral load not reduced

Viral load reduced significantly

Viral load reduced slightly

HCV concentration:

24 weeks of therapy

48 weeks of therapy


Personalised treatment strategies

Infection with the hepatitis C virus (HCV) can cause acute or chronic liver damage and ultimately lead

to liver failure, cirrhosis or cancer of the liver. Worldwide, about 170 million people are infected with HCV.

Today we know that there are a number of subtypes of HCV that differ not only in their molecular structure

but also in their responsiveness to treatment. Roche has developed molecular tests that can identify

which HCV subtype a patient has. This information helps physicians predict how long a patient should

continue treatment (e.g. 24, 48 or 72 weeks) in order to achieve a lasting virological response.

Personalised Healthcare — improving physicians’ ability to predict response and adjust treatment

Roche’s Personalised Healthcare strategy draws on advances in molecular biology to• monitor patients’ responses to therapy• adjust the duration of therapy to patients’ needs• administer medicines at precisely the right time within a long-term treatment strategy• develop new diagnostic tests and medicines in a more focused, efficient way




she goals

education

Goal Basis Target date

Improve SHE education by increasing

SHE training per employee to an

average of 4hr/year

2020

safety


Improve Roche accident rate

(number of lost working days due to

occupational accidents) by 12%

(RAR < 0.07) until 2015 and by 24%

(RAR < 0.06) until 2020

2010 2015

2020

Reduce number of occupational

accidents causing lost working days

(cases per 200,000 working hours)

by 12% (< 0.6) until 2015 and by 27%

(< 0.5) until 2020

2010 2015

2020

Keep Roche illness rate (number

of lost working days due to

occupational illnesses) below 0.01

2010 2020

Bring number of cases of occupational

illnesses causing lost working days

(cases per 200,000 working hours)

below 0.32 until 2015

2010 2015

environmental protection


Improve energy efficiency

(GJ/employee) by 10% until 2014

and by 20% until 2020

2009

2010

2014

2020

Increase share of sustainable

energies in total energy consumption

to 20% until 2020

2010 2020

Reduce CO2 emission per employee

in line with improving energy

efficiency by 20% until 2020

2010 2020

Reduce total environmental impacts

(calculated as eco-balance according

to Swiss Federal Office for the

Environment (BAFU)) per employee

by 15% until 2020

2010 2020

Reduce total waste water toxicity

by 10% until 2020

2015 2020

More on the Web

• Environmental protection: www.roche.com/environment• SHE policy: www.roche.com/

safety_health_and_environmental_protection.pdf• EER and eco-balance: www.roche.com/

fact_sheet_eco_efficiency.pdf • SHE goals: www.roche.com/she_goals• SHE performance: www.roche.com/she_performance• SHE services: www.roche.com/she_services• Group fact sheets, positions, policies and guidelines:

www.roche.com/policies_guidelines_and_positions; www.roche.com/policy_guidelines_and_audits


After its foundation 115 years ago, Roche over the years specialised as a leader in research-focused healthcare with combined strengths in pharmaceuticals and diagnostics.


Corporate GovernanCe roche is committed to all its stakeholders. The operating businesses’

focus on value creation and innovation, a management culture that conforms to

modern standards of corporate governance and the Group’s policy of communicating

transparently build the basis for a successful implementation of commitments to

all stakeholders.

remuneration report roche’s success depends on the abilities and dedication of its

people. Recognition of this forms the basis for guidelines and the system of

Roche’s performance-oriented remuneration policy.

120 Roche Business Report 2011 | Corporate Governance

Roche complies with all relevant corporate governance

requirements, in particular with all applicable laws, the Swiss

Stock Exchange (SIX Swiss Exchange) directives (including

the commentaries thereto) and the Swiss Code of Best Prac-

tice for Corporate Governance promulgated by the Swiss busi-

ness federation ‘economiesuisse’. The company’s internal gov-

ernance framework, particularly its Articles of Incorporation

and Bylaws, embodies all the principles needed to ensure that

the company’s businesses are managed and supervised in a

manner consistent with good corporate governance, including

the necessary checks and balances. 1

Our printed Annual Report contains selected links to the

Roche website (www.roche.com). Readers are thus provided

not only with a ‘snapshot’ of our company at the reporting date

but are also directed to sources which they can consult at any

time for up-to-date information about corporate governance at

Roche. Whereas each annual report covers a single financial

year ending 31 December, our website contains information of

a more permanent nature as well as the latest Roche news. The

company’s Articles of Incorporation, Bylaws and the curricula

vitae of the members of the Board of Directors and the Corpo-

rate Executive Committee are published on our website.

Board of Directors

At the 93 rd Annual General Meeting (AGM) of Roche Holding

Ltd, on 1 March 2011, shareholders approved shortening the

term of office of new or directors for re-election from three

to two years and re-elected Pius Baschera, Bruno Gehrig,

Lodewijk J.R. de Vink and Andreas Oeri as members of the

Board of Directors for the new term of two years as provided

by the Articles of Incorporation. Walter Frey and Wolfgang

Ruttenstorfer have decided to retire as members of the Board

of Directors. Paul Bulcke, Peter R. Voser and Christoph Franz

were elected as new Members of the Board for a term of two

years as provided by the Articles of Incorporation.

At its organising meeting immediately following the 2011 AGM,

the Board of Directors has approved its committees’ structure

and its committees’ memberships as shown on page 11.

At the AGM on 6 March 2012, the Board of Directors will nomi-

nate John I. Bell, André Hoffmann und Franz B. Humer for re-

election to the Board.

Corporate executive Committee

Erich Hunziker, Chief Financial Officer, Chief Information Offi-

cer and Deputy Head of the Corporate Executive Committee,

had decided to retire from Roche at the end of March 2011.

The Board of Directors has appointed Alan Hippe to succeed

Erich Hunziker as Chief Financial and IT Officer and as a mem-

ber of the Corporate Executive Committee as of 1 April 2011.

Sophie Kornowski-Bonnet, former General Manager of Roche

Pharma in France, has been appointed Head of Roche Partner-

ing at the Group’s headquarters in Basel and joined the

Enlarged Corporate Executive Committee as a new member on

1 February 2012 reporting to Severin Schwan, CEO of the

Roche Group.

She succeeded Dan Zabrowski, who took over the position as

Head of Roche Applied Science in the Diagnostics Division,

located in Penzberg, Germany, as of 1 February 2012. Dan

Zabrowski is a member of the Diagnostics leadership team

and is reporting to Daniel O’Day, COO Roche Diagnostics.

Information on each member of the Board of Directors (includ-

ing the years in which they were elected and the years in which

their terms end) and on each member of the Corporate Execu-

tive Committee is listed on pages 10 to 13.

information relating to Corporate Governance

1 Group structure and shareholders•Roche’s operating businesses are organised into two divi-

sions: Pharmaceuticals and Diagnostics. The Pharmaceuti-

cals Division comprises the two business segments Roche

Pharmaceuticals and Chugai, whereas Genentech as the

former third segment has been integrated into Roche Phar-

maceuticals. The Diagnostics Division consists of the follow-

ing five business areas: Applied Science, Diabetes Care,

Molecular Diagnostics, Professional Diagnostics and Tissue

Corporate Governance

1 http://www.roche.com/about_roche/corporate_governance.htm


121Roche Business Report 2011Corporate Governance |

Diagnostics. Business activities are carried out through

Group subsidiaries and associated companies. Detailed

information of Roche Holding Ltd and of significant subsidi-

aries and associated companies (including company name,

listing information, domicile, share capital, and equity inter-

est) are listed in the Finance Report, Note 33 to the Roche

Group Consolidated Financial Statements (‘Subsidiaries and

associates’, page 132).•Major shareholders are listed in the Finance Report, Notes

27 and 32 to the Roche Group Consolidated Financial State-

ments (‘Equity attributable to Roche shareholders’ and

‘Related parties’, pages 115 and 130) and in Note 4 to the

Financial Statements of Roche Holding Ltd (‘Significant

shareholders’, page 158).•André Hoffmann, Vice-Chairman of the Board of Directors,

and Andreas Oeri, Member of the Board of Directors and

Chairman of the Board’s Corporate Governance and Sustain-

ability Committee, serve in their respective capacities on the

Board and its committees as representatives of the share-

holders group with pooled voting rights and receive the

remuneration set forth in the Remuneration Report on page

128 and in the Finance Report, Note 32 to the Roche Group

Consolidated Financial Statements (‘Related parties’, page

130) and Note 6 to the Financial Statements of Roche Hold-

ing Ltd (‘Board and Executive remuneration’, page 159). In

2011/2012 Lukas Duschmalé, member of the shareholders

group with pooled voting rights makes a six-month intern-

ship at Roche in Singapore and Shanghai. No other relation-

ships exist with the shareholders with pooled voting rights.•There are no cross-shareholdings.

2 Capital structure•Information on Roche’s capital structure is provided in the

Finance Report, Notes to the Financial Statements of Roche

Holding Ltd (page 157). Additional details are contained in

the Articles of Incorporation of Roche Holding Ltd. 2

•Changes in equity are detailed in the Finance Report, Notes

to the Financial Statements of Roche Holding Ltd (page 157).•The company has a share capital of 160,000,000 Swiss

francs, divided into 160,000,000 fully paid bearer shares with

a nominal value of 1 Swiss franc each. There are no restric-

tions on the exercise of the voting rights of these shares.

Upon deposit, shares can be voted without any restrictions.•There is no authorised or conditional capital.•In addition, 702,562,700 non-voting equity securities (NES)

have been issued in bearer form. They do not form part of the

share capital and confer no voting rights. Each NES confers

the same rights as one share to participate in available earn-

ings and in any liquidation proceeds following repayment of

the share capital. Roche’s NES and the rights pertaining

thereto (including the provisions protecting the interests

of NES holders) are described in §4 of the Articles of Incor-

porat ion of Roche Holding Ltd.•Information on debt instruments which have been issued

and on outstanding bonds is provided in the Finance Report,

Note 26 to the Roche Group Consolidated Financial State-

ments (‘Debt’, page 110).•Additional information on employee stock options is pro-

vided in the Finance Report, Note 10 to the Roche Group

Consolidated Financial Statements (‘Employee stock options

and other equity compensation plans’, page 83).•Roche has issued no options apart from employee stock

options, Stock-settled Stock Appreciation Rights (S-SARs)

and options issued in connection with debt instruments.•Neither the options awarded to employees nor the debt

instruments which have been issued have any effect on

Roche’s share capital.

3 Board of Directors and Corporate executive Committee•Information on each member of the Board of Directors

(including the years in which they were elected and the years

in which their terms end) and on each member of the Corpo-

rate Executive Committee is listed on pages 10 to 13. Cur-

ricula vitae and other information (including information on

board memberships) are available and continuously updated

on the Internet. 3

•The Annual General Meeting elects the members of the

Board of Directors in staggered elections in which each

nominee is voted on separately (see §18 of the Articles of

Incorporation of Roche Holding Ltd 4 and the Minutes of the

93 rd Annual General Meeting of Roche Holding Ltd, held

1 March 2011 5).•With the exception of Franz B. Humer, William M. Burns and

Arthur D. Levinson none of the members of the Board of

Directors has been a member of Roche’s Corporate Execu-

tive Committee or served in an executive capacity at any

Group subsidiary during the three financial years proceeding

the current reporting period.•The internal organisation of the Board of Directors and the

division of authority and responsibilities between the Board

and management, the remits of the Board committees and

3 http://www.roche.com/about_roche/management/ board_of_directors.htm and http://www.roche.com/about_roche/ management/executive_committee.htm

4 http://www.roche.com/about_roche/corporate_governance/ article_of_incorporation.htm

5 http://www.roche.com/about_roche/corporate_governance/ annual_general_meetings.htm


http://www.roche.com/about_roche/corporate_governance/article_of_incorporation.htm

http://www.roche.com/about_roche/corporate_governance/annual_general_meetings.htm


http://www.roche.com/about_roche/management/board_of_directors.htm

http://www.roche.com/about_roche/management/executive_committee.htm


the information and control mechanisms available to the

Board in its dealings with corporate management are gov-

erned by the Bylaws. 6

•The Board of Directors of Roche Holding Ltd is organised

so as to ensure that the Group’s businesses are conducted

responsibly and with a focus on long-term value creation. To

this end, the Roche Board has delegated certain responsi-

bilities to several committees 7. Their composition and chair-

persons as of 1 January 2012 are described on page 11. Each

committees’ authorities and responsibilities are defined in

detail in the Bylaws of the Board of Directors.8

•All the committees except the Presidium are chaired by inde-

pendent directors. •According to the Bylaws of the Board of Directors at the

request of any of its members a Board meeting without the

Chairman present may be convened. The Roche Board

meets once a year to assess the Chairman’s performance.

This meeting, which is not attended by the Chairman, is

chaired by one of the Vice-Chairmen.•As part of the Management Information System the Board of

Directors is informed about the most important issues, sales

development etc. on a monthly basis. The Board has access

to an electronic information platform which provides timely

information to the Board of Directors and the Board’s com-

mittees along with the systems of controls as set forth below.•The Board of Directors has established a system of controls

which is continuously monitored by the Audit Committee and

by the Corporate Governance and Sustainability Committee

and consists of the following elements:

— Report on operating and financial risks (risk management

system)

Roche has a system in place to identify and manage all type

of risks potentially affecting its business. Roche’s Risk

Management Charter sets out the approach and accom-

panying responsibilities. Pharmaceuticals and Diagnostics

divisions and global functions conduct a formal risk

assessment process at least once a year and must develop

risk plans for their most material risks. These are monitored

and deviations reviewed in regular performance dialogues.

The consolidated Group Risk Report including target risk

profile is discussed at the Corporate Executive Committee

and approved together with the Group Business Plan. It is

also presented to the Audit Committee. The process is

subject to regular reviews, with findings presented to the

Audit Committee or the full Board.

For details on risk management including risk factors and

the Risk Management Charter see ‘Risk Management and

Compliance’ on our website. 9 Financial risk management is

specifically described in the Finance Report. 10

— System of internal controls over financial reporting (see

pages 137 and 140 in the Finance Report)

— Internal audit

Group Audit reports to the General Counsel with direct

access and regular briefings to the Audit Committee about

ongoing activities and audit reports. The Chief Audit &

Risk Advisory Executive attends all Audit Committee

meetings, as do the external auditors.

Group Audit is an independent appraisal function, which

evaluates and reviews the Group’s activities as a service to

Management. The annual audit plan with yearly defined

focus areas (e.g. emerging markets, third-party manage-

ment) is validated by Senior Management and presented

to the Audit Committee. The Roche Group is committed to

maintain a high standard of internal control throughout

its worldwide operations. Management is responsible to

assess the business risks in all aspects of its operation and

to implement effective and efficient processes and con-

trols whilst ensuring compliance with internal and external

rules and regulations.

By conducting operational audits, Group Audit determines

management’s response to the risks surrounding business

processes and systems and evaluates the appropriate-

ness, completeness and efficiency of the processes and

controls. Action plans to implement necessary changes

and enhancements are developed together with the busi-

ness/auditee and are tracked to completion.

— External auditors, see page 124

— Chief Compliance Officer and Compliance officers in sub-

sidiaries, see page 125

— Safety, Health and Environmental Protection Department 11

— Corporate Sustainability Committee 12

— Science and Ethics Advisory Group (SEAG), for issues

relating to genetics and genetic engineering (established

in 1999) 13.•The members of the Corporate Executive Committee are

invited to attend for, and report in person on, those agenda

items concerning them. When the situation warrants, mem-

bers of the Enlarged Corporate Executive Committee may

9 http://www.roche.com/corporate_responsibility/business_ethics/ risk_management_and_compliance.htm

10 Additional information is provided in the Finance Report, Note 31 to the Roche Group Consolidated Financial Statements, ‘Risk management’, page 121.

11 http://www.roche.com/corporate_responsibility/environment.htm12 http://www.roche.com/corporate_responsibility.htm13 http://www.roche.com/corporate_responsibility/

csr_research_and_development/genetics_and_bioethics.htm


7 http://www.roche.com/about_roche/corporate_governance/ committees.htm


http://www.roche.com/about_roche/corporate_governance/committees.htm



http://www.roche.com/corporate_responsibility/business_ethics/risk_management_and_compliance.htm

http://www.roche.com/fb11d.pdf

http://www.roche.com/corporate_responsibility/environment.htm

http://www.roche.com/corporate_responsibility.htm

http://www.roche.com/corporate_responsibility/csr_research_and_development/genetics_and_bioethics.htm


also be invited to attend. The Board committees invite the

Chairman of the Board and other Corporate Executive Com-

mittee members to deliver reports at Committee meetings

and may elect to commission independent expert reports

and call on the services of consultants. •Each year several black-out periods are imposed during

which senior employees are prohibited from trading in com-

pany stock. The following black-out periods are in effect for

2012:

26 December 2011 to 1 February 2012

1 April to 12 April 2012

26 June to 26 July 2012

1 October to 16 October 2012

Black-out periods can be changed by the Chairman of the

Board of Directors if circumstances warrant.•In 2011 the Board of Directors met for four meetings, each

from 3 to 6 hours in length *; once for a full-day meeting *; and

once for a three-day visit to a major subsidiary *. The Board

committees met as follows in 2011:

— Presidium of the Board of Directors/Nomination Commit-

tee: four meetings (approx. 2 hours each*)

— Remuneration Committee: two meetings 14 (approx. 2 to 3

hours each *)

— Audit Committee: four meetings (approx. 3 to 4 hours

each *)

— Corporate Governance and Sustainability Committee:

three meetings (approx. 3 hours each *).

As of 1 March 2011, the Board’s committees have partly

changed their membership. The individual participation of

Board members at Committee meetings outlined in the chart

above reflect the attendance in the old (1 January until

28 February 2011) and in the new (as of 1 March 2011) Com-

mittee compositions.

14 Remuneration Committee members are not permitted to contribute to or attend Remuneration Committee meetings at which matters concerning them are deliberated or decided.

* These figures indicate the actual length of meetings and do not include the directors’ extensive pre-meeting preparations and post-meeting follow-up activities.

Board and Board committees attendance 2011

Board

Presidium/ Nomination Committee

Remuneration Committee

Audit Committee


and Sustainability

Committee

number of meetings 4 4 2 4 3

F. B. Humer 4 4 – *** ***

B. Gehrig 4 4 2 – –

A. Hoffmann 4 4 2 – 2

P. Baschera 4 – – – 2

J. I. Bell 4 – 1 2 –

P. Bulcke ** 3 – – 3 –

W. M. Burns 4 – – 1 1

L. J. R. de Vink 4 – 1 3 –

Ch. Franz ** 3 – 1 – –

D. A. Julius 4 – – 4 –

A. D. Levinson 4 – 2 – –

A. Oeri 4 – – – 3

P. R. Voser ** 3 – 1 – –

B. Weder di Mauro 4 – – 3 1

– Not a member of that Committee.** New Board and Committee member since 1 March 2011.*** Franz B. Humer is invited as a guest to these Board Committee meetings.

Board and Board committees attendance 2011 of (as of 28 February 2011) retired Board members

W. Frey 1 – – 1 1

W. Ruttenstorfer – – – – –


•The Board of Directors regularly conducts an assessment of

its performance.•Members of the Corporate Executive Committee have a

maximum ordinary notice period of twelve months.•There are no management contracts which fall within the

scope of Subsection 4.3 (annex) of the SIX Directive on

Information relating to Corporate Governance.

4 remuneration, shareholdings and loans

All details regarding remuneration, shareholdings and loans

are set forth in the separate Remuneration Report on pages

126 to 136 and in the Finance Report, Notes 27 and 32 to the

Roche Group Consolidated Financial Statements (‘Equity

attributable to Roche shareholders’ and ‘Related parties’,

pages 115 and 130) and are listed in the Notes 6 and 7 to the

Financial Statements of Roche Holding Ltd (‘Board and

Executive remuneration’ and ‘Board and Executive share-

holdings’, pages 159 and 162).

5 participatory rights of shareholders•The participatory rights of shareholders are defined in

Roche’s Articles of Incorporation. 15 As Roche shares are

issued to bearer, there are no restrictions on admission to

Annual General Meetings, with the exception that shares

must be deposited within a specified period before the date

of a meeting and an admittance card must be issued in the

shareholder’s name, as provided in §12 of the Articles of

Incorporation. Any shareholder can elect to be represented

a third party at an Annual General Meeting. The Articles of

Incorporation contain no restrictions on the exercise of vot-

ing rights, and the only quorum requirements are those stip-

ulated in §16, in conformity with the Swiss Code of Obliga-

tions. •Under §10.2 of the Articles of Incorporation, shareholders

representing shares with a nominal value of at least 1 million

Swiss francs can request the placement of items on the

agenda of an Annual General Meeting. This must be done no

later than 60 days before the date of the meeting.

6 Change of control and defensive measures•The Articles of Incorporation contain no provisions on the

mandatory bid rule. Swiss law applies.•There are no change-of-control clauses. Those components

of remuneration based on Roche NES would be terminated

in the event of an acquisition, and vesting period restrictions

on pre-existing awards would be removed, so that all such

options could be exercised immediately.

7 relationship to statutory auditors

At the Annual General Meeting of Roche Holding Ltd on

1 March 2011, the shareholders voted to appoint KPMG AG

(KPMG) as statutory auditors. Based on the existing legal

requirements of the Swiss Code of Obligations (Article 730a)

about the maximum term of office of seven years of the audi-

tor in charge, Ian Starkey replaced his predecessor John

Morris as auditor in charge starting with the business year

2011 (information on how long the auditors and auditor in

charge have been serving in these capacities is provided on

page 13). The statutory auditors participate in Audit Commit-

tee meetings. They prepare written and oral reports on the

results of their audits. The Audit Committee oversees and

assesses the auditors and makes recommendations to the

Board (for information on the responsibilities of the Audit

Committee, see Article 8.1 of the Bylaws 16). The statutory

auditors participated in four meetings of the Audit Commit-

tee in 2011.

The reports of statutory auditors on the Consolidated Finan-

cial Statements and on the Financial Statements can be

found on pages 138 and 166, respectively, of this year’s

Finance Report.

KPMG received the following remuneration for their services

as statutory auditors of Roche Holding Ltd and as the audi-

tors of other Roche companies (new including Chugai):

2011 2010 (millions of CHF)

Auditing services 19.2 20.8

Audit-related services 1.3 2.6

Tax consultancy services 1.6 1.5

total 22.1 24.9

The statutory auditors are elected each year by the Annual

General Meeting.

8 information policy•As provided by §33 of the Articles of Incorporation 17, corpo-

rate notices are published in the Swiss Official Gazette of

Commerce and in other daily newspapers designated by the

Board of Directors (Basler Zeitung, Finanz und Wirtschaft,

L’Agefi, Le Temps, Neue Zürcher Zeitung). •Roche reports its half-year and full-year results in business

reports (published in print and online formats) and at media






events. In addition, detailed first- and third-quarter sales fig-

ures are published each year in April and October. The most

current list of publication dates is available in English and

German on the Internet. 18 •All relevant information and documents, including all media

releases, investor updates 19 and presentations to analyst

and investor conferences are available on the Internet. Fur-

ther publications can be ordered by e-mail, fax or telephone:

[email protected],

tel. +41 (0)61 688 83 39,

fax +41 (0)61 688 43 43.•The contact address for Investor Relations is: F. Hoffmann-

La Roche Ltd, Investor Relations, Group Finance, 4070 Basel,

Switzerland;

tel. +41 (0)61 688 88 80,

fax +41 (0)61 691 00 14.

Additional information, including details on specific contact

persons, is available on the Internet. 20

9 Chief Compliance officer and

Compliance officers network

The Chief Compliance Officer with his compliance officers

network is committed to ensuring that the Roche Group

Code of Conduct 21 is consistently complied with throughout

the Roche Group. He also serves as a contact person for

shareholders, employees, customers, suppliers and the gen-

eral public on issues relating to the implementation of and

compliance with this Code. Employees and other parties

who become aware of violations of the Roche Group Code of

Conduct can bring them to the attention of their managers or

supervisors or report them to the Chief Compliance Officer

(Urs Jaisli, direct phone number: +41 (0)61 688 40 18,

e-mail: [email protected]). Such disclosures will be

treated confidentially. In addition, as of the end of 2009,

employees may anonymously report irregularities or com-

plaints in their corresponding mother language via a ‘speak-

up hotline’.

In addition Roche has established a Business Ethics Incident

Reporting (BEIR) system which enables the Chief Compli-

ance Officer to capture, track and monitor alleged violations

from initial reports by local Compliance Officers through to

resolution. Business ethics incidents are recorded in the sys-

tem when the local Compliance Officer receives specific and

concrete information about a material alleged violation of the

Roche Group Code of Conduct in one of certain pre-defined

categories. 22 The Corporate Governance and Sustainability

Committee and the Audit Committee of the Board of Direc-

tors are informed on substantial violations.

The Chief Compliance Officer reports to the General Counsel

and regularly to the Corporate Governance and Sustainabil-

ity Committee and to the Audit Committee of the Board of

Directors.

10 non-applicability/negative disclosure

It is expressly noted that any information not contained or

mentioned herein is non-applicable or its omission is to be

construed as a negative declaration (as provided in the SIX

Swiss Exchange Corporate Governance Directive and the

Commentary thereto).

18 http://www.roche.com/media.htm19 http://www.roche.com/investors.htm20 http://www.roche.com/investors/contacts.htm21 http://www.roche.com/about_roche/corporate_governance/

code_of_conduct.htm 22 http://www.roche.com/corporate_responsibility/business_ethics/

risk_management_and_compliance.htm

http://www.roche.com/about_roche/corporate_governance/code_of_conduct.htm

http://www.roche.com/corporate_responsibility/business_ethics/risk_management_and_compliance.htm

126 Roche Business Report 2011 | Remuneration Report

Summary

Roche’s success depends on the abilities and dedication of its

people. Recognition of this forms the basis of our remuneration

policy and system.

One of the primary aims of our remuneration policy is to

encourage a long-term focus and align management’s inter-

ests with the interests of Roche’s shareholders and holders of

Roche’s non-voting equity securities (NES).

•This remuneration report will be submitted separately for a

consultative vote at the 2012 Annual General Meeting.•The remuneration of Corporate Executive Committee mem-

bers and other senior Roche executives is comprised of:

— Base salary (fixed), in 2011 base salaries remained un-

changed with the exception of Daniel O’Day’s base salary

— Bonus (variable), in 2011 for the Corporate Executive Com-

mittee the bonus was provided 50% in cash payments and

50% in non-voting equity securities which are blocked for

3 or 10 years (blocking period according to each Corpo-

rate Executive Committee member’s individual decision)

— Stock-settled Stock Appreciation Rights (S-SARs) 1 (vari-

able)

— Performance Share Plan (PSP) awards (variable)•Under the PSP 2009–2011 no NES will be awarded.•The S-SARs granted in 2006 until 2008 and 2010 have strike

prices above the NES price as of 31 December 2011 and for

the time being have no value for the recipients. This can

change if Roche’s future NES price improves.•There has been no change in the base remuneration of the

Board of Directors since 2001.

Please see the rest of this report for full details 2.

Remuneration policy

Roche fundamentally renewed its remuneration policy in 2004

and reviewed it in 2010, reconfirming the key principles. It is

part of a framework of employee policies aimed at motivating

and retaining current employees, attracting talented new ones

and helping all Roche employees to perform at consistently

high levels. Our remuneration policy is designed to foster value

creation and reinforce a culture of performance and innova-

tion, and it applies to non-managerial employees as well as to

managers.

The key principles underpinning this policy are:•Focus on value creation•Pay for performance•Enabling employees to share in the company’s success•Fairness and transparency in remuneration decisions•A balanced mix of long- and short-term remuneration components•Market competitiveness

Base pay, bonuses, blocked non-voting equity securities

(NES), awards of Stock-settled Stock Appreciation Rights

(S-SARs) and a Performance Share Plan (PSP) support these

principles. These remuneration components are linked to our

company’s financial performance and commercial success

and thus align the interests of Roche employees with those of

the shareholders.

The amount of the separate components of remuneration for

each individual member of the Corporate Executive Committee

is shown in the individual description of the remuneration of

the Corporate Executive Committee in this report.

Base pay

Base pay (cash payment) levels are determined according to

market data of the world’s biggest pharmaceuticals compa-

nies 3 for specific positions and individual employees’ abilities,

experience and performance over time. Pay increases are

linked to individual performance and also take into account

prevailing market conditions 3 and the company’s overall eco-

nomic situation. Base pay and pay increases are conclusively

monitored and determined by the Remuneration Committee.

Bonuses

Bonuses are awarded in recognition of individual contributions

to value creation which go beyond normal job expectations,

Remuneration Report

1 See ‘Stock-settled Stock Appreciation Rights (S-SARs)’, pages 127, 130, 134 and 136.

2 See also in the Finance Report, Note 32 to the Roche Group Consoli-dated Financial Statements (‘Related parties’, page 130) and Notes 6 and 7 to the Financial Statements of Roche Holding Ltd (‘Board and Executive remuneration’ and ‘Board and Executive shareholdings’, pages 159 and 162).

3 Peer set for 2011: Abbott Laboratories, Amgen, Astellas, AstraZeneca, Bayer, Becton Dickinson, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Merck & Co., Novartis, Pfizer, Sanofi-Aventis, Takeda.

Remuneration Report

127Roche Business Report 2011Remuneration Report |

and they are meant to be an incentive to create or strengthen

new business opportunities and strive for outstanding results.

Bonus amounts are linked to Group or divisional business per-

formance considering profit, sales growth, OPAC (Operating

Profit After Capital Charge) performance and to the achieve-

ment of individual and functional, measurable and qualitative

performance objectives. For reasons of competitiveness Roche

does not disclose details of individual objectives of the mem-

bers of the Corporate Executive Committee. The Remuner-

ation Committee of the Board of Directors has defined the

Corporate Executive Committee members bonuses in Decem-

ber 2011 based on the before mentioned objectives and cor-

responding results achieved for 2011.

Stock-settled Stock Appreciation Rights (S-SARs)

Stock-settled Stock Appreciation Rights were introduced on

1 January 2005, thus establishing a uniform system of remu-

neration throughout Roche. S-SARs entitle holders to benefit

financially from any increase in the value of Roche’s non-voting

equity securities between the grant date and the exercise date.

Awards are allocated individually upon the Remuneration

Committee’s decision at its own discretion. Detailed informa-

tion is available on pages 130, 134 and 136.

Performance Share Plan (PSP)

The members of the Corporate Executive Committee and other

members of senior management (currently some 145 individu-

als worldwide) participate in the Performance Share Plan

(PSP). The PSP was established in 2002 for periods of three

years each and is based on a three-year comparison of the

total shareholder return (TSR) with 15 competing companies 3.

In 2011 there were three overlapping performance cycles,

(PSP 2009–2011, PSP 2010–2012 and PSP 2011–2013) of which

PSP 2009–2011 closed on 31 December 2011. The terms of the

Performance Share Plan are determined annually by the Board

of Directors, acting upon recommendations from the Remu-

neration Committee.

Details for the PSP 2009–2011 calculation and additional infor-

mation are set forth in ‘Remuneration of members of the Cor-

porate Executive Committee, D. Performance Share Plan

(PSP)’, page 131.

Remuneration of the Board of Directors and the


Each year the Remuneration Committee of the Board of Direc-

tors sets remuneration for the members of the Board of Direc-

Variable remuneration elements (bonuses, S-SARs and PSP)

in relation to fixed base pay of the Members of the Corporate Executive Committee

Bonus S-SARs PSP

Individual target value, assessed in

consideration of the performance

of competitors 3 and the

macroeconomic development

(in % relation to value of base pay)

max. 100% 100% 33.33%

(based on annual base pay

measured at 1 January

of first year of cycle)

Minimum

Maximum

(in % relation to value of base pay)

0%

200%

(Cash payment/

blocked NES)

0%

150%

(Value development

determined by

performance of NES

after grant)

0%

66.66%

(Value development

determined by

performance of NES

after grant)

Performance criteria Group objectives (Group

and divisional business

performance) and

individual objectives

considering profit,

sales growth, OPAC

(Operating Profit After

Capital Charge)

Individual contributions

upon the Remuneration

Committee’s decision at

its own discretion

Group performance of

TSR in relation to

TSR performance

of peer set

(see pages 131 to 132)

Split in %

a) Group objectives

b) Individual objectives

70%

30%

n.a.

n.a.

100%

–


tors and the Corporate Executive Committee (cash payments,

bonuses, Stock-settled Stock Appreciation Rights and policy

decisions about pension benefits). The terms of the Perfor-

mance Share Plan are determined annually by the Board of

Directors, acting upon recommendations from the Remunera-

tion Committee. The Remuneration Committee continuously

tracks salary trends in the market of the world’s biggest phar-

maceuticals companies 3 and reports to the Board of Directors.

Information on this committee’s remit, powers and its proce-

dures for making remuneration decisions can be found in the

Bylaws of the Roche Board of Directors 4.

Following the revision of the remuneration policy including

market comparisons with the world’s major pharmaceutical

companies 3, the Remuneration Committee has determined the

bonuses and remuneration of the Chairman of the Board of

Directors, the members of the Corporate Executive Committee

taking into consideration personnel changes.

The following pages provide detailed information on the remu-

neration earned by each member of the Board of Directors and

by each member of the Corporate Executive Committee for

2011.

1 Remuneration

1.1 Remuneration of members of the Board of Directors. In

2011 the members of the Board of Directors 5 received the

remuneration in cash shown in the table ‘Remuneration of

members of the Board of Directors’ below for their Board activ-


5 For a list of members, their positions and their committee memberships and chairmanship, see page 11.

Remuneration of members of the Board of Directors

Remuneration 2011(in CHF)

Additional compensation 2011for committee members/chairs 6

(in CHF)Additional special compensation

2011

F. B. Humer (see page 133 7) 50,000 (Remuneration as Chairman

of the Board of Directors

see page 133 7)

B. Gehrig 400,000 8 –

A. Hoffmann 400,000 8 –

P. Baschera 300,000 30,000

J. I. Bell 300,000 30,000

P. Bulcke 250,000 9 30,000

W. M. Burns 300,000 30,000

L. J. R. de Vink 300,000 30,000

Ch. Franz 250,000 9 30,000

D. A. Julius 300,000 60,000

A. D. Levinson 300,000 30,000

A. Oeri 300,000 60,000

P. R. Voser 250,000 9 30,000

B. Weder di Mauro 300,000 30,000

Remuneration of former members of the Board of Directors

Remuneration 2011(in CHF)

Additional compensation 2011for committee members/chairs 6

(in CHF)Additional special compensation

2011

W. Frey 50,000 10 –

W. Ruttenstorfer 50,000 10 –

6 With the exception of members of the Presidium and the Vice-Chairmen, Board members receive CHF 30,000/year for each committee they serve on and CHF 60,000/year for each committee they chair.

7 See ‘G. Highest total remuneration to a member of the Board of Directors’, pages 132 and 133. 8 Remuneration for serving as Vice-Chairman of the Board. 9 Prorated remuneration for the period from March to December 2011.10 Prorated remuneration for the period from January to March 2011.



ities. Remuneration of all members of the Board of Directors

will again remain unchanged for 2012.

Beside the cash payments, the non-executive members of the

Board of Directors were not awarded any shares, non-voting

equity securities, Stock-settled Stock Appreciation Rights

(S-SARs) 11, Restricted Stock Units (RSUs) in 2011.

William M. Burns received honoraria amounting to a total of

25,000 US dollars (22,250 Swiss francs) for serving as a mem-

ber of the Board of Directors of Chugai Pharmaceutical Co.,

Ltd. Arthur D. Levinson received payments for his consulting

work and for his Board membership of Genentech amounting

to 396,620 US dollars (352,992 Swiss francs). John I. Bell

received payments for his consulting work in the scientific

advisory board of Roche totalling 60,000 Swiss francs.

In 2011 Horst Teltschik, a former member of the Board of

Directors, received honoraria amounting to 19,635 euros

(24,151 Swiss francs) for serving on the boards of several

Roche subsidiaries in Germany.

For 2011 the members of the Board of Directors received

remuneration totalling 13,784,080 Swiss francs12 (2010:

14,662,589 Swiss francs; 2009: 18,608,650 Swiss francs).

No additional remuneration was paid to members of the Board

of Directors.

1.2 Remuneration of members of the Corporate Executive

Committee. The general provisions assigning authority for

decisions on Corporate Executive Committee remuneration to

the Remuneration Committee and to the Board of Directors are

outlined on pages 126 to 128 of this remuneration report.

Due to contractual obligations from his former Roche assign-

ment in the US, in 2011 Daniel O’Day received 446,864 Swiss

francs in addition to his remuneration.

Alan Hippe received additional payments for costs occurred

for his relocation to Switzerland etc. amounting 118,276 Swiss

francs.

11 See ‘Stock-settled Stock Appreciation Rights (S-SARs)’, page 134. 12 See ‘Remuneration of members of the Board of Directors’, page 128.

Remuneration of members of the Corporate Executive Committee

A. Base pay in CHF

Annual salary2011

Annual salary2010

Annual salary2009

S. Schwan 4,000,000 3,750,000 2,875,002

S. Ayyoubi 1,200,000 1,100,000 725,004

A. Hippe 1,200,000 ** * *

G. A. Keller 1,500,000 1,500,000 1,500,000

D. O’Day 1,225,000 1,000,000 *

P. Soriot 2,000,000 2,000,000 1,246,878

Total 11,125,000

* Not a member of the Corporate Executive Committee.** Prorated remuneration for the period from April to December 2011.

For 2011 the members of the Corporate Executive Committee

received remuneration totalling 43,925,402 Swiss francs 13

(2010: 39.959 million Swiss francs; 2009: 56.970 million Swiss

francs).

B. Bonus

All members of the Corporate Executive Committee will receive

the bonus 2011 as a 50% cash payment and 50% in form of

Roche non-voting equity securities which are blocked for 3 or

10 years (blocking period according to each Corporate Execu-

tive Committee member’s individual decision). Cash payment is

due at the end of April 2012, the Roche non-voting equity

securities are granted at the beginning of 2012 based on the

market value averaged over the last three months of 2011.13 See ‘Remuneration of members of the Corporate Executive Committee’,

(A.–F. and H.) including AHV/IV/ALV, pages 129 to 133.


Bonus

Bonus for 2011

Bonus for 2010

Bonusfor 2009

Total(in CHF)

Total(in CHF)

Total(in CHF)

S. Schwan

Cash payment 1,500,000 3,000,000 3,000,000

Blocked non-voting equity securities 837,585 ** – 1,675,178 **

Total bonus 2,337,585 3,000,000 4,675,178

S. Ayyoubi

Cash payment 500,000 1,000,000 1,000,000

Blocked non-voting equity securities 419,810 *** – 637,909 ***

Total bonus 919,810 1,000,000 1,637,909

A. Hippe *****

Cash payment 600,000 * *

Blocked non-voting equity securities 335,034 ** * *

Total bonus 935,034 * *

G. A. Keller

Cash payment 500,000 1,000,000 1,000,000

Blocked non-voting equity securities 279,195 ** – 813,506 **

Total bonus 779,195 1,000,000 1,813,506

D. O’Day

Cash payment 650,000 1,300,000 *

Blocked non-voting equity securities 545,753 *** – *

Total bonus 1,195,753 1,300,000 *

P. Soriot

Cash payment 1,000,000 3,312,500 **** 2,000,000

Blocked non-voting equity securities 839,620 *** – –

Total bonus 1,839,620 3,312,500 2,000,000

Total 8,006,997

* Not a member of the Corporate Executive Committee.** Calculation of value in consideration of reduction of value due to blocking period (reduced market value: for 10 years = 55.839%), value at grant date

on 6 January 2012: CHF 162.80 per non-voting equity security. Number of blocked non-voting equity securities granted based on the market value averaged over the last three months of 2011 (value CHF 146.85 per non-voting equity security).

*** Calculation of value in consideration of reduction of value due to blocking period (reduced market value: for 3 years = 83.962%), value at grant date on 6 January 2012: CHF 162.80 per non-voting equity security. Number of blocked non-voting equity securities granted based on the market value averaged over the last three months of 2011 (value CHF 146.85 per non-voting equity security).

**** Including an additional compensation for the successful integration of Genentech amounting to CHF 1,312,500 paid in 2010.***** Prorated remuneration for the period from April to December 2011.Number of blocked non-voting equity securities granted: S. Schwan: 10,214, S. Ayyoubi: 3,404, A. Hippe: 4,085, G. A. Keller: 3,404, D. O’Day: 4,426, P. Soriot: 6,809.

C. Stock-settled Stock Appreciation Rights (S-SARs)

S-SARs 14

2011(value in CHF 15)

S-SARs 14


S-SARs 14


S. Schwan 3,560,209 3,559,911 3,559,849

S. Ayyoubi 1,068,095 1,068,022 889,993

A. Hippe 178,086 * *

G. A. Keller 1,335,107 1,335,010 1,334,989

D. O’Day 890,087 890,030 *

P. Soriot 1,780,127 1,779,990 1,401,735

Total 8,811,711

* Not a member of the Corporate Executive Committee.14 See ‘Stock-settled Stock Appreciation Rights (S-SARs)’, pages 134.15 Black-Scholes value as described in ‘Stock-settled Stock Appreciation Rights (S-SARs)’, pages 134 and 136. Values for 2009 and 2010 according to

Annual Report 2010, page 95.


The S-SARs granted in 2006 until 2008 and 2010 have strike

prices above the NES price as of 31 December 2011 and have

for the time being no value for the recipients. This can change

if Roche’s future NES price improves. 16

Members of the Corporate Executive Committee additionally

receive annual expense allowances of 30,000 Swiss francs,

totalling 180,000 Swiss francs.

D. Performance Share Plan (PSP)

The members of the Corporate Executive Committee and other

members of senior management (currently some 145 individu-

als worldwide) participate in the Performance Share Plan

(PSP).

In 2006 the PSP moved to overlapping three-year performance

cycles, with a new cycle beginning each year. In 2011 there

were thus three cycles in progress (PSP 2009–2011, PSP 2010–

2012 and PSP 2011–2013). As in the previous years for the PSP

2007–2009 and PSP 2008–2010, the PSP 2009–2011 ended on

31 December 2011 without any awards of targeted NES.

Under the provisions of this plan, a number of non-voting

equity securities have been reserved for the participants in

each cycle. The number of securities actually awarded will

depend on whether and to what extent an investment in Roche

securities (shares and NES) outperforms the average return

on an investment in securities issued by a peer set of compara-

tor companies 17. Comparisons are based on the securities’

market prices and dividend yields, i.e. on Total Shareholder

Return (TSR). To reduce the effect of short-term market fluc-

tuations, security prices are averaged over the three months

(October to December) prior to the start of a performance

cycle and over the three months (October to December) at the

end of the cycle. If Roche securities perform as well as or

better than those of 75% of the peer set and, in addition,

Roche’s TSR increases at least 10% during a cycle, the Board

of Directors can elect to increase the maximum NES award by

as much as two-fold. In the event that an investment in Roche

securities underperforms the average return delivered by the

peer companies, fewer or no NES will be awarded.

In 2011 NES were reserved under the plan for members of the

Corporate Executive Committee as shown in the table below.

The Board of Directors will decide on the actual level of

NES or cash equivalent awards for the cycles 2010–2012 and

16 See strike prices in table ‘S-SARs’, page 136. 17 See footnote 3, page 126.

Performance Share Plan (PSP)

Target number of NES for PSP

2011–2013

Target number of NES for PSP

2010–2012

No awards of targeted

number of NES for PSP

2009–2011

2011 18

Total estimated

value of PSP awards (2009–2011,

2010–2012 and

2011–2013) (value in CHF)

2011

No NES awarded

in 2011 for PSP 2009–2011 (value in CHF)

2010

No NES awarded

in 2010 for PSP 2008–2010 (value in CHF)

2009

No NES awarded

in 2009 for PSP 2007–2009

(value in CHF)

S. Schwan 9,460 5,991 – 819,933 – – –

S. Ayyoubi 2,838 1,597 – 235,351 – – –

A. Hippe 2,838 * * 150,603 * * *

G. A. Keller 3,547 2,995 – 347,162 – – –

D. O’Day 2,365 1,997 – 231,477 – – *

P. Soriot 4,730 3,994 – 462,954 – – –

Total 25,778 16,574 – 2,247,480 – – –

* Not a member of the Corporate Executive Committee.18 Total estimated value for 2011: PSP 2009–2011: none of the originally targeted NES awarded. PSP 2010–2012 and 2011–2013: Estimated value calculated

using the year-end price as of 31 December 2011, CHF 159.20 per non-voting equity security (NES), based on the number of NES originally targeted subject to changes in the number and value of NES awardable under the plan on 31 December 2012 and 31 December 2013, respectively, and spread over the relevant period of time, i.e. 1/3 for the year 2011. The Board of Directors will vote on the actual allocation of NES originally targeted on 31 December 2012 and 31 December 2013, respectively, according to the TSR achieved.


2011–2013 after the close of the 2012 and 2013 financial years,

respectively. The aim of the PSP is to provide an incentive to

participants to achieve steady value growth.

At the end of the PSP 2009–2011 cycle (based on a three-

month moving average) with distributed dividends totalling

15.179 billion Swiss francs (2011: 5.692 billion Swiss francs,

2010: 5.175 billion Swiss francs, 2009: 4.312 billion Swiss

francs), the TSR of the Roche securities (NES and shares)

ranked #15, compared with its peer set of companies operat-

ing in the same industry. Therefore, according to the terms of

the plan, the participants received none of the originally tar-

geted NES (see table on page 131 for details).

E. Indirect benefits

Employer contributions made in 2011 to social security

schemes, pension plans and a Group-wide employee stock

purchase plan (Roche Connect) in respect of members of the

Corporate Executive Committee are shown in the table ‘Indi-

rect benefits in 2011’ below.

Indirect benefits in 2011

Pension funds/MGB 19

(in CHF) AHV/IV/ALV 20

(in CHF)Roche Connect

(in CHF)

Payments for tax consulting services

(in CHF)

S. Schwan 459,527 371,276 100,008 4,654

S. Ayyoubi 479,139 127,513 3,000 4,166

A. Hippe 164,937 68,973 23,331 16,714

G. A. Keller 548,149 132,894 37,500 –

D. O’Day 309,080 142,009 12,504 3,132

P. Soriot 311,796 208,331 – –

Total 2,272,628 1,050,996 176,343 28,666

19 MGB: Stiftung der F. Hoffmann-La Roche AG für Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational pension benefits).

20 AHV/IV/ALV: Swiss social security programmes providing retirement, disability and unemployment benefits.

Roche Connect is a voluntary stock purchase plan offering

employees the opportunity to buy Roche non-voting equity

securities (NES) up to an amount equal to 10% of their annual

salary at a 20% discount. NES purchased under this plan are

subject to a holding period, which is four years in Switzerland.

F. Other remuneration, emoluments and loans

Erich Hunziker, Chief Financial Officer, retired from Roche at

the end of March 2011. In 2011 Erich Hunziker received the fol-

lowing payments based on existing contractual obligations:

salary (2,000,004 Swiss francs, last payment per December

2011), bonus (612,860 Swiss francs, will be paid in April 2012),

Employer contribution to Pension funds etc. (2,153,559 Swiss

francs). In 2012 he will receive the agreed payment as per his

contract consisting of an one-year salary of 2 million Swiss

francs and a bonus of 2 million Swiss francs. This payment is

already included in the Corporate Executive Committee mem-

bers total amount of 43,925,402 Swiss francs.

In 2011 pensions totalling 2,095,748 Swiss francs were paid to

two former Corporate Executive Committee members.

Members of the Corporate Executive Committee have a maxi-

mum notice period of twelve months. In connection with the

new company and personnel structure, members of the Cor-

porate Executive Committee can receive compensation of one

annual base pay in case of termination of the contract by the

company (termination through no fault and not based on lack

of performance) until the age of sixty.

G. Highest total remuneration to a member of the

Board of Directors

Franz B. Humer as the chairman was the member of the Board

with the highest total remuneration for 2011 (see ‘Remunera-

tion of members of the Board of Directors’, pages 128 and 133).

The Chairman’s remuneration consists of base salary and

bonus awards. As Chairman of the Board after the handover of

his executive function as CEO at the Annual General Meeting

on 4 March 2008, he did not receive any additional S-SARs or

NES from new PSP cycles and was no longer enrolled in any

Roche S-SARs programme.


H. Highest total remuneration to a member of the


Severin Schwan as CEO was the member of the Corporate

Executive Committee with the highest total remuneration for

2011 (see ‘Remuneration of members of the Corporate Execu-

tive Committee’, A.–F., pages 129 to 132 and table above).

No additional remuneration other than the before stated pay-

ments was paid to current or former members of the Corporate

Executive Committee.

Highest total remuneration to a member of the Corporate Executive Committee

2011 (in CHF)

2010 24

(in CHF)2009 24

(in CHF)

Salary 4,000,000 3,750,000 2,875,002

Bonus

— Cash payment 1,500,000 3,000,000 3,000,000

— Blocked non-voting equity securities 837,585 ** – 1,675,178 **

Total 6,337,585 6,750,000 7,550,180

S-SARs

(Black-Scholes value 25 at grant minus 11%) 3,560,209 3,559,911 3,559,849

Pension funds/MGB 26 459,527 456,122 456,941

Roche Connect 100,008 89,588 69,790

Estimated value of targeted (not awarded) NES according to

Performance Share Plan 27

(*2010–2012, 2011–2013, no awards/value of NES of 2009–2011)

Total 819,933 * 502,425 408,793

Total (value) 11,311,916 28 11,396,873 12,101,478

** Calculation of value in consideration of reduction of value due to the 10-year blocking period (reduced market value: for 10 years = 55.839%).24 For detailed calculation of the remuneration for 2010 and 2009 see Annual Report 2010, page 98.25 Black-Scholes value as described in ‘Stock-settled Stock Appreciation Rights (S-SARs)’, pages 134 and 136.26 MGB: Stiftung der F. Hoffmann-La Roche AG für Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational

pension benefits).27 Basic rules and detailed calculation see ‘Remuneration of members of the Corporate Executive Committee, D. Performance Share Plan’, page 131,

footnote 18, respectively.28 Includes an annual expense allowance (CHF 30,000), payments for tax consulting services (CHF 4,654), excluding employer contribution to AHV/IV/ALV

payments.

Highest total remuneration to a member of the Board of Directors

2011 (in CHF)

2010 21

(in CHF)2009 21

(in CHF)

Salary 4,000,000 4,507,500 6,030,000

Bonus

— Cash payment 1,600,000 2,200,000 2,200,000

— Blocked non-voting equity securities – – 2,792,018 *

Total 5,600,000 6,707,500 11,022,018

Pension funds/MGB 22 2,983,549 2,995,801 2,995,109

Roche Connect 75,000 75,000 75,000

Total (value) 8,884,687 23 10,033,431 14,353,552

* Calculation of value in consideration of reduction of value due to the 10 year blocking period (reduced market value: for 10 years = 55.839%).21 For detailed calculation of the remuneration for 2010 and 2009 see Annual Report 2010, page 97.22 MGB: Stiftung der F. Hoffmann-La Roche AG für Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation supplementing occupational

pension benefits).23 Includes additional compensation for Committee members (CHF 50,000), payments for tax consulting services (CHF 42,638) and Chugai advisory

mandate USD 150,000 (CHF 133,500), not including employer contribution to AHV/IV/ALV (CHF 369,782).


1.3 Security holdings. Directors André Hoffmann and

Andreas Oeri and members of the founders’ families who are

closely associated with them belong to a shareholder group

with pooled voting rights. At the end of 2011 this group held

72,018,000 shares (45.01% of issued shares). Detailed informa-

tion about this group can be found in the Finance Report, Note

32 to the Roche Group Consolidated Financial Statements

(‘Related parties’, page 130) and in the Note 4 to the Financial

Statements of Roche Holding Ltd (‘Significant shareholders’,

page 158). In addition, as of 31 December 2011 the members

of the Board of Directors and persons closely associated with

them and the members of the Executive Committee and per-

sons closely associated with them held shares and NES as

shown in the table on page 135.

1.4 Stock-settled Stock Appreciation Rights (S-SARs). At

31 December 2011 Franz B. Humer and William M. Burns

(being the only members of the Board of Directors holding

S-SARs due to their former positions) and the members of the

Corporate Executive Committee held Stock-settled Stock

Appreciation Rights (S-SARs) as shown in the table ‘S-SARs’

on page 136.

The S-SARs shown in the table on page 136 were introduced

by Roche on 1 January 2005 in place of stock options. S-SARs

entitle holders to benefit financially from any increase in the

value of Roche’s NES between the grant date and the exercise

date. The strike price for S-SARs under the terms of this multi-

year plan was the closing price for Roche NES at grant date. All

S-SARs vest within three years of the grant date: i.e. one-third

vest at the end of one year, one-third at the end of two years,

and one-third at the end of three years. Vested S-SARs must

be exercised (converted into NES) within seven years of the

grant date, and unexercised S-SARs lapse without compensa-

tion. The fair value of the S-SARs is calculated at the date of

issue using the Black-Scholes formula and as if the S-SARs

were tradable, with an 11% deduction for the average two-year

vesting period.

The strike prices, expiry dates and grant values for S-SARs are

shown in the table on page 136. The numbers of S-SARs as

calculated at the time of issue have been entered as values in

the table ‘Remuneration of members of the Corporate Execu-

tive Committee, C. Stock-settled Stock Appreciation Rights

(S-SARs)’ on page 130.


Security holdings (at 31 December 2011)

Shares (number)

NES (number)

Close relatives’

security holdings (number/type)

Others (number)

Board of Directors

F. B. Humer 7,492 192,680 – S-SARs see 1.4

2500 ROGTPK Tracker-plus Cert.

Zürcher Kantonalbank on

Roche Genussschein (ROG) as underlying,

(Valor: 10 716 273, ISIN: CH0107162734)

B. Gehrig 50 300 – –

A. Hoffmann –* 200 – 250,000 UBS Long/Short Certificates

linked to Roche Bearer Shares/

Roche Non-Voting Equity securities

(Valor: 10 690 162, ISIN: CH0106901629)

P. Baschera 1 – – –

J. I. Bell 300 1,647 – –

P. Bulcke - 850 – –

W. M. Burns 3 83,784 – S-SARs see 1.4

L. J. R. de Vink – – – 31,600 American Depository Receipts (ADR),

RHHBY, US ISIN: US7711951043

Ch. Franz – 350 – –

D. A. Julius 350 – 1,550 NES –

A. D. Levinson – – – –

A. Oeri –* 307,793 – 250,000 UBS Long/Short Certificate

linked to Roche Bearer Shares/

Roche Non-Voting Equity securities

(Valor: 10 690 162, ISIN: CH0106901629)

P. R. Voser – 3,600 – –

B. Weder di Mauro 200 800 – –

Total 8,396 592,004 1,550 NES

Corporate Executive

Committee

S. Schwan 3 39,867 570 NES S-SARs see 1.4

S. Ayyoubi 3 12,329 – S-SARs see 1.4

A. Hippe – 2,708 – S-SARs see 1.4

G. A. Keller 2,153 28,168 1,100 Shares S-SARs see 1.4

D. O’Day 3 674 – S-SARs see 1.4

P. Soriot 2 6,373 – S-SARs see 1.4

Total 2,164 90,119 570 NES

1,100 Shares

* Shares held by the shareholders group with pooled voting rights not listed.


S-SARs

Number of S-SARs held by current and former membersof the Corporate Executive Committee on 31 December 2011

2011 2010 2009 2008 2007 2006 Total

Corporate Executive

Committee

S. Schwan 231,483 154,443 175,362 105,576 29,190 15,696 711,750

S. Ayyoubi 69,447 46,335 43,842 21,117 3,243 2,517 186,501

A. Hippe 10,767 – – – – – 10,767

G. A. Keller 86,808 57,918 43,842 63,345 24,327 15,696 291,936

D. O’Day 57,873 38,613 21,762 20,133 10,269 5,856 154,506

P. Soriot 115,743 77,223 69,051 63,345 29,190 23,544

+

21,636

399,732

Total 572,121 374,532 353,859 273,516 96,219 84,945 1,755,192

Former Corporate

Executive Committee

members

F. B. Humer None 29 None 29 None 29 None 29 48,651 52,317 100,968

W. M. Burns None 30 None 30 109,602 105,576 48,651 26,160 289,989

Strike price (CHF) 140.10

140.30

175.50 145.40 195.80 229.60 195.00

196.50

Market price per NES on

31 December 2011 (CHF)

159.20

Expiry date 28.2.2018

29.04.2018

4.2.2017 5.2.2016 31.1.2015 8.2.2014 2.2.2013

2.1.2013

Grant value per S-SAR

in CHF

(Black-Scholes value

minus 11%)

15.38

16.54

23.05 20.30 21.08 36.59 34.02

37.02

29 As of 2008 Franz B. Humer does not receive any additional S-SARs. Franz B. Humer received S-SARs as a Member of the Corporate Executive Committee until 2007.

30 As of 2010 William M. Burns does not receive any additional S-SARs. William M. Burns received S-SARs as a Member of the Corporate Executive Committee until 2009.

138 Roche Business Report 2011 | Independent Assurance Report

To the Corporate Governance and Sustainability Committee of

Roche Holding Ltd., Basel (‘Roche’).

We have performed assurance procedures to provide assur-

ance on the following aspects of the 2011 corporate responsi-

bility reporting of Roche.

Subject matter

Data and information disclosed in the corporate responsibility

reporting of Roche and its consolidated subsidiaries, exclud-

ing Chugai Pharmaceutical Co. Ltd., for the business year

ended December 31, 2011 on the following aspects and with

the indicated level of assurance:•The management and reporting processes with respect to

the corporate responsibility reporting and to the preparation

of SHE, people and donations & sponsorships key figures as

well as the control environment in relation to the data aggre-

gation of these key figures with a reasonable assurance;•The SHE key figures in the tables on pages 106 to 118 and

some selected people key figures disclosed on pages 90 to

101 of the Roche Business Report 2011 with a limited assur-

ance; and•The consolidated data and information on the Roche Group

level in relation to donations & sponsorships data, disclosed

on page 103, excluding health care professionals (HCPs)

related activities, with a limited assurance.

Criteria•The Roche Group internal corporate responsibility reporting

guidelines based on the Responsible Care Health, Safety and

Environmental Protection reporting guidelines published by

the European Chemical Industry Council CEFIC and the ‘Sus-

tainability Reporting Guidelines G3.1’ published in 2011 by

the Global Reporting Initiative (GRI); •The Roche Group internal Corporate Reporting Manual, ver-

sion 2011 ‘Sustainability Reporting — Economic Performance

Data’;•The defined procedures by which SHE, people and dona-

tions & sponsorships key figures are gathered, collated and

aggregated internally; and•Good practice procedures by which internal reporting sys-

tems and processes are designed, managed and operated.

Responsibility and Methodology

The accuracy and completeness of corporate responsibility

indicators are subject to inherent limitations given their nature

and methods for determining, calculating and estimating such

data. Our assurance report should therefore be read in con-

nection with Roche’s internal guidelines, definitions and pro-

cedures on the reporting of its corporate responsibility per-

formance.

The Roche Corporate Governance and Sustainability Commit-

tee is responsible for both the subject matter and the criteria.

Our responsibility is to provide a conclusion on the subject

matter based on our assurance procedures in accordance

with the International Standard on Assurance Engagements

(ISAE) 3000.

For those subject matters with a limited assurance the evi-

dence-gathering procedures are more limited than with a rea-

sonable assurance (for example, an audit of financial state-

ments), and therefore less assurance is obtained than in an

overall reasonable assurance engagement.

Independent Assurance Report

139Roche Business Report 2011Independent Assurance Report |

Main Assurance Procedures

Our assurance procedures included the following work:•Evaluation of the application of group guidelines Reviewing the application of the Roche internal corporate

responsibility reporting and donations & sponsorships

guide lines;•Site visits Visiting selected sites of Roche’s Pharmaceuticals and Diag-

nostics Divisions in Austria, Ukraine, Poland, Romania, Tur-

key, UK, Ireland and Puerto Rico. The selection was based on

quantitative and qualitative criteria; Interviewing personnel responsible for internal corporate

responsibility reporting and data collection at the sites we

visited and at the Group level to determine the understand-

ing and application of Roche internal corporate responsibility

guidelines.•Assessment of the key figures Performing tests on a sample basis of evidence supporting

selected SHE, people and donations & sponsorships key fig-

ures (Roche accident rate, energy consumption, CO2 emis-

sions related to energy consumption, release of halogenated

hydrocarbons, use of water, general waste, headcount/FTE

data, staff turnover and labor practices information, contri-

butions to philanthropic organizations, patient organizations,

health institutions, public policy bodies) concerning com-

pleteness, accuracy, adequacy and consistency.•Review of the documentation and analysis of relevant

policies and basic principles Reviewing the relevant documentation on a sample basis,

including group corporate responsibility policies, manage-

ment and reporting structures and documentation.•Assessment of the processes and data consolidation Reviewing the appropriateness of the management and

reporting processes for corporate responsibility reporting;

and Assessing the consolidation process of data at the group

level.

Conclusions

In our opinion•The internal corporate responsibility reporting guidelines are

being applied properly;•The internal reporting systems to collect and aggregate SHE,

people and donations & sponsorships key figures are func-

tioning as designed and provide an appropriate basis for its

disclosure.

Based on our work described in this report and the assess-

ment of criteria, nothing has come to our attention that causes

us to believe that the corporate responsibility information men-

tioned in the subject matter and disclosed with the corporate

responsibility reporting in the Roche Business Report 2011

does not give a fair picture of Roche’s performance.

Zurich, 27 January 2012

PricewaterhouseCoopers AG

Clive Bellingham Stephan Hirschi

Cautionary statement regarding forward-looking

statementsThis Annual Report 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 Annual

Report, among others: (1) pricing and product initiatives of competi-

tors; (2) legislative and regulatory developments and economic con-

ditions; (3) delay or inability in obtaining regulatory approvals or bring-

ing products to market; (4) fluctuations in currency exchange rates

and general financial market conditions; (5) uncertainties in the dis-

covery, development or marketing of new products or new uses of

existing products, including without limitation negative results of clini-

cal 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.

The statement 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 2011 or any subsequent period will neces-

sarily match or exceed the historical published earnings or earnings

per share of Roche.

All trademarks mentioned enjoy legal protection.

Links to third party pages are provided for convenience only. We do

not express any opinion on the content of any third-party pages and

expressly disclaim any liability for all third-party information and the

use of it.

The Roche Annual Report is published in German and English.

Printed on non-chlorine bleached, FSC-certified paper.

The Roche Annual Report is issued by

F. Hoffmann-La Roche Ltd, Basel, Group Communications.

Published by

F. Hoffmann-La Roche Ltd

4070 Basel, Switzerland

Tel. +41 (0)61 688 11 11

Fax +41 (0)61 691 93 91

Media Office

Group Communications


Tel. +41 (0)61 688 88 88

Fax +41 (0)61 688 27 75

Investor Relations


Tel. +41 (0)61 688 88 80

Fax +41 (0)61 691 00 14

World Wide Web

www.roche.com

Corporate Sustainability Committee

Tel. +41 (0)61 688 40 18

E-mail: [email protected]

To order publications

Tel. +41 (0)61 688 83 39

Fax +41 (0)61 688 43 43

E-mail: [email protected]

Next Annual General Meeting:

6 March 2012

Sales

42,53147,473

49,051

mCHF Free cash flow

3,9044,699

8,893

2011

2010

2009

mCHF


8,0739,050

9,509

mCHF

Operating profit 2

16,591

16,272

mCHF


80,12980,653

81,507

2011

2010

2009

Income taxes 2

2,8953,135

3,287

mCHF

Net income

9,5448,891

8,510

mCHF


12.3012.78

12.34

CHF

100

150

200

250

2010 20112009



0.5390.414

0.460

2011

2010

2009


332,183277,079

268,614

2011

2010

2009


10,30011,934

12,080

2011

2010

2009

mCHF

Total dividend

5,86535,693

5,175

2011

2010

2009

mCHF

Key figures







Index1 40 60 80 100 120 Index1 40 60 80 100 120

00_02_Roche_AR11_Key Figures_ENG.indd 3 27.01.2012 10:16:22

Highlights 2011

March

April

August

October

February

April

September

November

March

May

September

December

Roche Annual General Meeting votes to increase shareholder dividend by 10%

US marketing approval for targeted skin cancer medicine Zelboraf and cobas BRAF test companion diagnostic

Investigational medicine ocrelizumab shows significant reduction in multiple sclerosis disease main-tained for almost two years

Study with Avastin shows that womenwith newly diagnosed advanced ovar-ian cancer live significantly longer without their disease getting worse

Investigational medicine MetMAb in combination with Tarceva doubles the time people with lung cancer live without their disease getting worse

Roche named Healthcare Super-sector Leader in Dow Jones Sustainability Indexes for third year running

FDA grants priority review for New Drug Application for vismodegib in advanced form of skin cancer

Launch of the innovative, fully auto-mated clinical chemistry module cobas c 702 in the EU

Tarceva receives European approval for first-line use in a genetically distinct type of lung cancer

Marketing applications submitted in EU and US for pertuzumab in HER2-positive metastatic breast cancer

Roche announces positive clinical test results for its investigational medi-cine T–DM1 for an aggressive form of metastatic breast cancer

FDA approves cobas HPV test for cervical cancer screening, which detects high-risk genotypes 16 and 18

10 %

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626 x 297 195 210 21011

7 000 917

F. Hoffmann-La Roche Ltd4070 Basel, Switzerland

© 2012

All trademarks are legally protected.

www.roche.com

E

Ro

che

| Annual R

eport 2011

Annual Report

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