Roche: Navigating through a volatile environment

San Francisco, January 2010

Dr. Erich Hunziker, CFODeputy Head of the Corporate Executive Committee

2010 + Healthcare remains a very attractive field –even in difficult times

Roche: translating excellence in science into patients’ benefit

3

Even in today’s environment demand for healthcare increases - but funding is and will remain challenging

Funding of healthcare

Today 2020

Paymentsby individuals

Co-payment-systemsSlowdown

of EconomySocial security systems

No. of healthcare events

Today 2020

Higher life expectancy

Population growth

Researchactivities

Access to healthcare

Health awareness

4

Lack of potential in BRIC countries?Generics replace

originals

Investors focus on the fundamental challenges for “Pharma”

?

Growth potential for Pharma ?

Today 2020

US Healthcare reform

Lack of innovation ?

5

A global pharmaceutical market perspective still looks

very attractive

Pharma 2020 report PriceWaterhouseCoopers

Actual 2008 Scenario 2020

377.6

193.4335.9

425.5104.5

90.8

46.5

311.8

247.5

76.6

North America

Europe

Japan

Asia/Africa/ Australia

Latin America

Sources: IMS Health Total Unaudited and Audited Global Pharmaceuticals Market by Region (2008); IMS Health Market Prognosis (March 2009)

and PWC analysis. Note: IMS Health has produced lower and upper projections for the growth of the global pharmaceuticals market over the

next five years. PWC has extrapolated from these projections to estimate the regional split in 2020, using the midpoint between the upper and

lower ranges

US $ 773 bn US $ 1’437 bn

6

Roche remains committed to the US market the most attractive single market for many years to come !

Source: Centers for Medicare and Medicaid, Office of the Actuary, National Health Statistics Group

U.S. Healthcare Spending, US$ Billions

2000 2008 2015

1500

2500

4000

U.S. Healthcare Spend as % of GDP

2000 2008 2015

14%

16%

20%

7Impact for Roche expected to be minimal

US healthcare reform: Medicare/ Medicaid exposure

Roche’s specialty care portfolio is in favorable position

Roche / Genentech:US payor type

Roche / Genentech: Majority of products covered by Medicare part B

part D

10%

part B

90%

Medicaid

5%

other

47%

Medicare

48%

8

In Europe we build on a very strong position

we understand hurdles to market access in Europe

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UKNLBECriteria

Sorenson, Drummond, Kanavos 2008

9

Selected emerging markets show strong growth…

… and are a third Roche focus point

20.4UK11

22.9Brazil9

23.4Russia8

26.1Italy7

26.6Spain6

40.1France5

15.6India14

12.4Mexico15

IMS Health Pharma Market Ranking 2013 US $ Bio

20.2Venezuela12

Turkey

Canada

Germany

China

Japan

United States

16.313

20.510

46.14

66.73

93.32

289.81

Source: IMS Health, Market Prognosis June 2009

10

For innovative products emerging markets offer attractive price levels

0

10

20

30

40

50

2004 2008

Total emerging marketsNorth America, Western Europe, Japan

Emerging markets CAGR 2004-08: 17 %

10095

0

20

40

60

80

100

E7

Group Sales Average Herceptin price(indexed)

US, France, Germany,

UK, Japan

21 %

17 %

83 % 79 %

CHF 45.6 bn

CHF bn

11

42

6962

54 51 48 4841

36

24

14

0

20

40

60

80

100

Total

Market

GSK

Pfizer

AZ

S-A J&J

MSD

Lilly

Novartis

Abbott

Roche

2008-2012 2013 & beyondSource: IMS Health MIDAS Market Segmentation MAT June 2008, Ethical protected brand sales only.

SHARE OF PROTECTED SALES EXPIRING % US$

Top 10 Corporations Protected Sales Expiring to 2012 & Beyond (US$ Const)

Patent expiry 2008-2012Roche has the lowest patent expiration risk & highest share of biotech products of leading pharma companies

12

Biosimilars outside US: much talked about……we have a clear strategy and time to protect our franchises

0

200

400

600

800

1'000

1'200

1'400

1'600

1'800

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

NeoRecormon

CHF m1

1 at constant average 2008 fx rates

Mircera

EPO franchise Europe/ROW

Patent expiry in

selected countries

13

Biosimilars in the US: status healthcare reform

Our innovative product portfolio is still many years away from patent expiry

Long patent protection of our key biologics in US

Avastin: 2019 Lucentis: 2019

Rituxan: 2016 Xolair: 2018

Herceptin: 2019 Pegasys: 2018

Currently no regulatory pathway for bio-similars / our view:

• Clinical trials required

• No inter-changeability

• Reasonable exclusivity period

14Diabetes Care Molecular Diagnostics

USA(Greater)Europe

Japan Asia / ChinaLatin

America

Geographic risk diversification

Unique “pillars of value” risk diversification

Roche is not just “Pharma”: it is the leading biotechnology company in the world with global customer access!

FUTURE PILLARS

Avastin adjuvantCancer (Colon, Breast,

Lung)

Avastin Brain, ovarian,gastric, prostate

CETP inhibitor

GLP-1

Pertuzumab

Ocrelizumab (MS)

Colorectal ca. Breast cancer Lung cancer

Oncology and RA RA

Breast ca., HER2+

Hepatitis C+B Transplantation

Osteoporosis

Anemia

T-DM1

Immuno-diagnostics

Aleglitazar

GLYT1 (CNS)

15

0.0 0.5 1.0 1.5 2.0 2.5

Pegasys

Tamiflu

YTD Sep '09

YTD Sep '08

Our “wild card”: high Tamiflu demand due to pandemic H1N1

+362 %

+38 %

746

460

192

458

45 50 36106

304349

727

119

65

54

233

65

75

97

260

267

0

200

400

600

800

1'000

1'200

Q1

07

Q2

07

Q3

07

Q4

07

Q1

08

Q2

08

Q3

08

Q4

08

Q1

09

Q2

09

Q3

09

Seasonal

Pandemic¹

1 Governmental & Corporate

Tamiflu quarterly sales (CHF m)

Valcyte /

Cymevene

+11 %

Major brands(CHF bn)

+7 %

Expected total Tamiflu sales for 2009 around CHF 2.7 bn

YTD Sep ‘09 vs. YTD Sep ‘08local growth

Oct ‘09:

16

• Young product portfolio (Material patent expiry risk in 5 to 8 years)

•Medically differentiated products and services: each product /

service has a strong competitive position

• Strong customer support organisations in the mature

and emerging markets

Roche has a strong position in a challenging environment

The Roche advantages

We have been preparing for rougher seas for many years

Medium-/Long-term efficiency programs instead of short-term trouble shooting

To learn faster than the competition is the only sustainable competitive advantage of a company!

19

Clear commitment to improve the bottom-line

Outstanding long-term value creation

1 Prescription and Diagnostics2 Continuing businesses, before exceptional items, years not always directly comparable

Every element of the cost base is going through constant improvement programs

0

2

4

6

8

10

HY'01 HY'02 HY'03 HY'04 HY'05 HY'06 HY'07 HY'08 HY'09

10%

15%

20%

25%

30%

35%

Group operating profit2 (CHF bn)

33.2%

CAGR 22 %

Currency and Tamiflu pandemic

20

An industry leading global manufacturing network

Toluca

Isando

Karachi

LeganésBoulder

Clarecastle Penzberg

= 5 Chemical = 6 Biotech = 14 Galenical

240

SSF

Singapore

ShanghaiFlorence Nutley: solids production to close by 2010

Basel: solids productionto close by 2012 Mannheim: Chemical

manufacturing to close in 2011

Vacaville: CHO manufacturing at CCP2to close at end of 2009;SSF: E. Coli manufacturing to transition to Singapore in 2011/2012

Hillsboro, Mannheim, Kaiseraugst:Future Fill/Finish Centers

Segrate

Montevideo

Rio

Oceanside

21

The Genentech transaction allows for a fundamental improvement of the US-cost basisWe now have a competitive situation around the world

-1‘050 +1'150 +1,640

-390-300

-1'650-120

1'000800300

2009 2010 2011

-1‘400 +380

Synergies

Taxes on synergies

Integration costs (net of taxes)

0

+610

CHF m

Synergies of the Genentech integration

22

All Finance functions under one leadership

A great place to work with industry leading ambitions

23

We actively manage our cash flows

Unique, state-of-the-art solution

~200reporting entities

Monthly Free Cash Flow Statements– Group– Divisions / sub-divisions– Local companies

– including reconciliation to net cash position

Fully automated, integrated and transparent viewon cash generation and use of cash

Regular monthly financial reporting– Income statement– Balance sheet

+ Flow information: identifying cash

and non-cash movements

Work day 3

Work day 5

24

Debt repayment progressing according to plan> CHF 6.5 bn paid back in Sept 2009, over half by 2013

13%

25%28%

38%

53%

59%

66%

74%77%

87%

93%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009

2010

2011

2012

2013

2014

2015

2016

2017

2019

2021

2022-2039

Private PlacementCHFExisting GNEExisting RocheEMTN144A

Existing Genentech

At market values as presented at HY 2009 conference, excluding repayment of Chameleon bond

Repayment of bonds with 6 months maturity

• CHF 4 bn 1.2% bond

• USD 2.5 bn 1.95% bond

25

Financial impact Genentech transaction

Accretive to net income from 2010

1) assumes 10% annual net income growth of Genentech as a stand-alone entity, i.e. as if it had not been taken private

Taxes on interest expenses

Non-controlling interests1

(Minorities)

Interest expenses

+350 +770

0

+1,030

Taking Genentech privateCHF m

-1'700 -2'000 -1'920

1'4002'000 2'200

650

770750

2009 2010 2011

A very attractive form of “share buy back”(with an additional synergy component)

26

Compensation aligned with value creation

Corporate strategy and

actionsFinancial results

Competitive

Position Share price

KPI’s

Compens.

Sales growthCash flow/ OPAC

Progress in PipelineMarket share

Share priceRelative TSR

Option/SharePrograms

Bonus

2727

Continued commitment to great place to work

Place ofemployment

Austria

Russia

Italy

Spain#1 Ranking 5

consecutive years

New ZealandPeru

Genentech

USA

Genentech

Genentech and Roche

USA

28

Our commitment to performance

Attractive for shareholders and bondholders

Barring unforeseen events;Total Tamiflu sales of CHF 700 million assumed for 2010; LC=Local Currency

Sales growth (in LC)

Core EPS growth (in LC)

2009: Pharma: at least high single-digit

Diagnostics: well above market

2009: Double-digit

2010: Double-digit

Synergies 2009: CHF 300 m

2010: CHF 800 m

2011: CHF 1,000 m

Debt 2010: 25% debt reduction

2015: Aim to return to net cash position

3 yr Dividend outlook Maintained (as announced in 2008)

29

Roche is a learning organisation - ready to deliver results in a challenging environment

• Efficiency programs running for several years, benchmarking

with other industries in tough environments

• Selected adjustment of organisation in mature markets /

Strategic build up in emerging markets

• Genentech transaction a platform to realise attractive synergies

in the USA

The Roche advantages

At the end of the storm there is no future without investment in innovation now!

We are not sacrificing the long-term perspectives by short-sighted cost cuts

31

Competitors’ strategies to address the trends

Two distinctly different groups emerging

Diversification

Becoming more “Healthcare” than

pure “Pharma”

(incl. OTC, vaccines, medical devices,

generics, branded generics, bio-

similars, eye care, etc.)

Focus

Pharma / Diagnostics

(no generics or bio-

similars)

Roche

32

Inflammation13 NMEs

CNS6 NMEs

Ophthamology1 NMEs

Oncology26 NMEs

14% Diagnostics

25% Vitamins

11% Flavours

& Fragrances

50%Pharma

Metabolic11 NMEs

Yesterday

1990 2008

TomorrowToday

21%Diagnostics

of which56% Oncology

79% Pharma

CHF 9.7bn CHF 45.6bnSales

Diagnostics

Illustrative

StrategyBroadening the portfolio with high value franchises

33

Our Distinctiveness

Diversity of approaches fueling global scale and reach

Autonomous centers

Genentech

R&ED

Diversity Scale, Reach, Speed

“Federation” of >150 partners

* DBA: Disease Biology Areas

Roche

DBAs* Research

Early Dev.

Worldwideexecution

Roche Dx

Chugai

Late-stage

development

Manufacturing

Commercialisation

34

COO Pharma

P. SoriotgRED

R. Scheller*Partnering

D. Zabrowski*

CFO

E. HunzikerGen. Counsel

G. KellerHR

S. AyyoubiCommunications

P. Attinger*

pRED

J.-J. Garaud*

* Enlarged CEC

Chugai

O. Nagayama*

COO Diagnostics

D. O’Day

CEOS. Schwan

Genentech Integration: Company transforming

Roche Corporate Executive CommitteeEffective January 1, 2010

pRED: Pharma Research and Early Development

gRED: Genentech Research and Early Development

35

Existing Earlier Phases

ILLUSTRATIVE

Inherent development risk

Maturity of portfolio

Low

High

Oncology

Autoimmune

Metabolic

CNSVirology

Key drivers for long term development in place

Develop the short term drivers while shaping the others

36

Roche pharma pipeline overview

Five Disease Biology Areas

MabThera/Rituxan

XelodaHerceptin

TarcevaR1273(pertuzumab)

Oncology

Avastin

R7159(3rd gen anti-CD20)Apomab

On handPromisinglate stage

Emerging mid-term

Early stage

Inflammation

Virology

R7128(HCV pol. inh.)

TamifluR3484(HPV16)

Pegasys

R7227(HCV pro. inh.)

R1594(ocrelizumab)

9 ph. I compounds

ActemraMabThera/Rituxan

Anti-IL 13

15 ph. I compounds

R3616(hedgehog inh.)

R1583(taspoglutide)

Metabolism

6 ph. I compounds

R1658(dalcetrapib)

R1439(aleglitazar)

CNS

4 ph. I compoundsR3487(Alzheimer’s)

R1594(ocrelizumab)R1678(schizophrenia)

R3502(trastuzumab-DM1)

DacetuzumabDulanermin

R1507(IGF-1R mAb)

R7201(SGLT-2 inh)

37

New potentially company or industry-transforming projects

37

Dalcetrapib

Taspoglutide

Aleglitazar

Metabolism Oncology Immunology &Ophthalmology

CNS

T-DM1

Pertuzumab

GA101

Hedgehog pathway inhibitor

BRAF inhibitor

Ocrelizumab RA

Lucentis – DME & RVO

Actemra

Lebrikizumab(Anti-IL13)

GlyT1 inh

Ocrelizumab MS

= Proof of concept

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38

World Top 10 Products (according to *Evaluate Pharma*)

6 are Biopharmaceuticals; 4 are Oncology; 3 are Roche

Sales CHF bnCompany

5.5

5.8

6.5

6.6

7.0

7.2

7.5

8.0

9.0 - 9.5

9.6

Insulin Analogues Novo, Lilly et al

Gleevec/Glivec Novartis

Spiriva Boehringer Ingelheim

Crestor AstraZeneca

Roche

Seretide/Advair GSK

Lantus Sanofi Aventis

Roche

Roche

Humira Abbott

Forecast of Top 10 Products (2014)

Source: EvaluatePharma Sept 1st 2009; 2014 based on consensus estimates

39

Top 10 Pharma Businesses by 2014(according to *Evaluate Pharma*)

Modest Big Pharma growth to 2014, even post mega-mergers

18.1Abbott

20.1Eli Lilly

25.4J&J

27.5Merck & Co

32.8AstraZeneca

35.9Roche

37.2Novartis

39.9GSK

44.8Sanofi-Aventis

45.3Pfizer

Sales CHF bnCompany

2008 Rx Sales Rank (Actual) 2014 Rx Sales Rank (Forecast)

12%20.3Teva

3%21.9Abbott

- 5%24.4AstraZeneca

1%26.7J & J

0%40.5GSK

- 1%42.5Sanofi-Aventis

1%46.9Merck S-P

4%47.7Novartis

5%47.8Roche

- 4%48.8Pfizer Wyeth

CAGR 08-14Sales CHF bnCompany

Source: EvaluatePharma Sept 1st 2009; 2014 based on consensus Bank Analyst estimates

40

•We do not sacrifice our long-term future by short-term

cost cutting: innovation remains key !

•We have established an entrepreneurial model for our R & D – set up

•We are preparing for fundamental changes

in the healthcare environment

Roche delivering now – but still investing into the future!

The Roche advantages

41

We Innovate Healthcare