Roche: Navigating through a volatile environment

London, Singapore, Tokyo, November 2010Dr. Erich Hunziker, Deputy Head of the Corporate Executive Committee and CFO

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This presentation contains certain forward-looking statements. These forward-looking statements may be identified by words such as ‘believes’, ‘expects’, ‘anticipates’, ‘projects’, ‘intends’, ‘should’, ‘seeks’, ‘estimates’, ‘future’ or similar expressions or by discussion of, among other things, strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this presentation, among others:

1 pricing and product initiatives of competitors;2 legislative and regulatory developments and economic conditions;3 delay or inability in obtaining regulatory approvals or bringing products to market; 4 fluctuations in currency exchange rates and general financial market conditions; 5 uncertainties in the discovery, development or marketing of new products or new uses of existing products,

including without limitation negative results of clinical trials or research projects, unexpected side-effects of pipeline or marketed products;

6 increased government pricing pressures; 7 interruptions in production; 8 loss of or inability to obtain adequate protection for intellectual property rights; 9 litigation;10 loss of key executives or other employees; and11 adverse publicity and news coverage.

Any statements regarding earnings per share growth is not a profit forecast and should not be interpreted to mean that Roche’s earnings or earnings per share for this year or any subsequent period will necessarily match or exceed the historical published earnings or earnings per share of Roche.

For marketed products discussed in this presentation, please see full prescribing information on our website –www.roche.com

All mentioned trademarks are legally protected

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A position of strength

Operational Excellence – adapting to a changing environment

Continued focus on innovation

4

Even in an economic downturn demand forhealthcare increases; but funding is and will become more challenging

Funding of healthcare

Today 2020

Paymentsby individuals

Co-payment-systemsSlowdown

of EconomySocial security systems

No. of healthcare events

Today 2020

Higher life expectancy

Population growth

Researchactivities

Access to healthcare

Health awareness

5

Lack of potential in BRIC countries?

Generics replace originals

Investors see fundamental challenges for “Pharma”

?

Growth potential for Pharma

Today 2020

US Healthcare reform

Lack of innovation ?

6

Financial impact

2010: ~CHF 200 m (Medicaid and hospitals rebates)

2011+ : 2010 + Excise tax

2013+ : offset impact by volume

Impact of US healthcare reformExtending coverage to an additional 32 million* Americans

Biosimilars

• 12 years data exclusivity

• 2 routes for biosimilar approval:

- Proof of similarity- Proof of inter-changeability

Both requiring clinical trials (still to be specified by FDA)

* By 2019; Congressional Budget Office estimate

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Emerging markets show strong growthand are another Roche focus point

20.4UK11

22.9Brazil9

23.4Russia8

26.1Italy7

26.6Spain6

40.1France5

15.6India14

12.4Mexico15

IMS Health Pharma Market Ranking 2013 US $ Bio

20.2Venezuela12

Turkey

Canada

Germany

China

Japan

United States

16.313

20.510

46.14

66.73

93.32

289.81

Source: IMS Health, Market Prognosis June 2009

Growth (CAGR) 2008-14

US, EU 3-4%

APAC, LATAM, CEMAI 9-13%

Total 5-6%

Source: CAGR 08-14 Decision Resource/groupH (+/-1.5% assumed)

8

0%

20%

40%

60%

80%

100%

HY

2005

HY

2006

HY

2007

HY

2008

HY

2009

HY

2010

Roche in Emerging MarketsOncology leading the trend

International region as% of Oncology sales

30%

22%

10%

15%

20%

25%

2005 2006 2007 2008 2009 2010

0%

20%

40%

60%

80%

100%

HY

2005

HY

2006

HY

2007

HY

2008

HY

2009

HY

2010

Herceptin

MabThera/RituxanInternationalRest

9

13.2

11.5

10.3

9.7

8.9

7.2

6.4

6.1

ROCHE

NOVARTIS

ASTRAZENECA

BAYER

SANOFI-AVENTIS

GSK

PFIZER

MERCK & CO

Full Year 2009 YoY Growth %

Emerging markets also reward innovationRoche has the leading growth rate in emerging markets

0 5 10 15

5.4%

5.4%

5.3%

3.6%

3.5%

3.2%

3.1%

3.7%

% Market Share

Source: IMS Health MIDAS FY 2009 US$ LC Roche International Regions: Asia Pac, CEMAI, Lat AM (based on Roche subscription)

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Biotech products drive growth in both divisions

67%

Biotech products as % of sales

Pharma Division

85%

Diagnostics Division

H1’ 2010

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Long patent protection Biosimilars facing high hurdles

Long primary patent protection of our key biologics

similar2018Pegasys

earlier2018Rituxan/ MabThera

earlier2019Herceptin

marketed byNovartis

2019Lucentis

similar2019Avastin

EUROW/EM

USPatents

Biosimilars outlook

US: recent healthcare legislation opens pathway for biosimilars

FDA in the process of developing guidelines

Data exclusivity for biologics 12 years

ROW/EM: investment in countries with strong IP regulations (China)

Brand awareness important

EU: legal and regulatory hurdles likely to remain high for biosimilars

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Patent expiries of large brands 2008-2014”Oxygen for innovation” CHF >100 bn

Source: Evaluate Pharma

YoY Sales loss [CHF bn]

36

1114

35

29

19

2008 2009 2010 2011 2012 2013 2014

Product Examples(> 3 bn CHF each)

• Prevacid • Aricept• Cozaar• Taxotere

• Lipitor• Plavix• Seretide• Zyprexa

• Diovan• Enbrel• Singulair• Lovenox

• Cymbalta• Epogen• Procrit

• Nexium• MabThera• Celebrex

13% Sales Lost calculated by subtracting given year sales (‘10, ’11, ‘12, ‘13) from full year sales from year prior to LOE.Data excludes sales lost impact of products with LOE prior to 2010.Source: Evaluate Pharma

40%

35%

30%

25%

0%

20%

10%

15%

5%

% o

f US

Sal

es L

ost

to G

ener

ics

/ B

iosi

mila

rs

Roche/Genentech

Pfizer/Wyeth

GlaxoSmithKline

Sanofi-Aventis

AstraZeneca

Johnson & Johnson

Eli Lilly

Merck/Schering Plough

2010 2011 2012 2013

Roche: Limited exposure to patent expiries

Novartis

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Key Pharmaceuticals & Diagnostics productsA risk-diversified portfolio of drugs and BUs

MabThera/Rituxan

Xeloda

NeoRecormonCellCept

Herceptin

Avastin

Pegasys

Sal

es (

CH

F bn

)

Clinical Chemistry

Immunochemistry

Tarceva

Lucentis

* Sales 2009

0

5

10

15

20

25

30

35

'03 '04 '05 '06 '07 '08 '09

>C

HF

6bn*

>C

HF

1bn*

>C

HF

5bn*

2 with > than CHF 6 bn

1 with > than CHF 5 bn

11 with > than CHF 1 bn

Diabetes Care

Molecular DxBoniva/Bonviva

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Advanced Non-Small Cell Lung Cancer

Avastin: Portfolio within a portfolioKey treatment option in multiple tumor types

MetastaticColorectal

• Superior OS 1st and 2nd line• Superior PFS 1st and 2nd line

• Superior OS 1st line• Superior PFS 1st and 2nd line

Ovarian • Superior PFS front line

• Superior PFS in multiple 1st

line trials • Superior PFS in 2nd line

MetastaticBreast

• Unsurpassed PFS and OSRecurrent

Glioblastoma

Renal • Superior PFS in 1st line

2009 Sales

75%- 80%

20%-25%

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Actemra/RoActemraBuilding new pillar

0

20

40

60

80

100

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

Q210

CHF m• Launched in ~50 countries so far

• Uptake in Japan remains strong

• In US after only 5 months, Actemra already prescribed by more than 50% of rheumatologists

• US patient share constantly increasing (currently 3-6% following anti-TNFs)

Actemra vs Humira H2H trialEnrolling patients

Actemra/RoActemra quarterly sales

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TamifluSales at normalized levels

Tamiflu quarterly sales (CHF m)

746

460

192

458

45 50 36106

304 349

727

533422

17091

119

65

54

233

65

75

97

260

267 663

95

237

0

200

400

600

800

1'000

1'200

Q1

07

Q2

07

Q3

07

Q4

07

Q1

08

Q2

08

Q3

08

Q4

08

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Retail

Pandemic¹

1Governmental & Corporate

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RocheActing from a position of strength

• Protection of current portfolio:- long patent protection- hurdles for biosimilars

• Diversified portfolio; 14 franchises with>CHF 1 bn sales

• Significant opportunities for Avastin based on approved indications

• Growth in emerging markets

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A position of strength

Operational Excellence – adapting to a changing environment

Continued focus on innovation

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19.8

22.8 22.024.0 24.6

0

5

10

15

20

25

30

HY 2006 HY 2007 HY 2008 HY 2009 HY 2010

1 before exceptional items

Operating profit1 (CHF bn) and margin

Continuous growth in sales and margin

Group sales (CHF bn)

5.8

7.57.0

8.08.8

35.5%33.2%

0

2

4

6

8

10

12

HY 2006 HY 2007 HY 2008 HY 2009 HY 20100%

5%

10%

15%

20%

25%

30%

35%

40%

45%

CAGR: 11%

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Roche’s response to new environment: Operational Excellence

Position of strength

• No major patent expiries mid-term

• Strong position in biologics

• High profitability and cashflow

Challenging environment

• Pricing pressure US and Europe

• Increasing regulatory hurdles

Continued focus on innovation

• Up to 14 late-stage assets

• Q4: 10 clinical trials reporting

Operational Excellence

• Focus on investments that will drive innovation

• Protect profitability

Communication on measures before year-end

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Roche’s response to new environmentOperational excellence initiative

Objectives

• protect our profitability and safeguard financial flexibility

• adapt cost structure while sustaining innovation leadership

• focus our resources towards investments that will drive innovation

Scope and timeline

• Group-wide

• measures decided before end of the year

• implementation in 2011 and 2012

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0%

25%

50%

75%

100%

9 10 11 12 13 14 15 16 17 19 21 39

EUR USD CHF GBP

Early debt redemption of USD 2.5 bn note due 201233% of Genentech transaction related debt repaid by September 2010

• Exercise of call option on 9 September 2010 to redeem USD 2.5 bn notes originally due 2012

• Repayment of USD 3.0 bn and EUR 1.5 bn floating rate notes in Q1/2010

• Of the CHF 48.2 bn bonds and notes issued to finance the Genentech transaction, cumulative 15.7 bn (33%) will have been repaid as per September 2010 1

• Outlook 2010: USD 0.5 bn ‘Genentech legacy’ note repayment at maturity in July 2010

1) Original net proceeds in CHF

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A position of strength

Operational Excellence – adapting to a changing environment

Continued focus on innovation

25

Competitors’ strategies to address the trendsTwo distinctly different groups emerging

DiversificationBecoming more “Healthcare” than pure “Pharma”(incl. OTC, vaccines, medical devices, generics, branded generics, bio-similars, eye care, etc.)

FocusPharma / Diagnostics(no generics or bio-similars)

Roche

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Inflammation+Ophthalmology

11 NMEs

CNS10 NMEs

Virology5 NMEs

Oncology24 NMEs

14% Diagnostics

25% Vitamins

11% Flavours& Fragrances

50%Pharma

Metabolic10 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

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Our DistinctivenessDiversity of approaches fueling global scale and reach

Autonomous centers

GenentechR&ED

Diversity Scale, Reach, Speed

“Federation” of >150 partners

* DBA: Disease Biology Areas

RocheDBAs* Research

Early Dev.

Worldwideexecution

Roche Dx

Chugai

Late-stage development

Manufacturing

Commercialisation

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Late-stage pipeline progressing wellExtensive clinical data by year-end

2007 2008 2009 2010E

Number of NMEs

2

4

10Metabolic

Oncology

Inflammation

ocrelizumab

dalcetrapib

pertuzumab

dalcetrapib

taspoglutide

Actemra

ocrelizumab

aleglitazar

CNS

taspoglutide

ocrelizumab

pertuzumab

T-DM1

Hedgehog inh

BRAF inhibitor

RG7159 (CLL)

GlyT-1 inh

up to 14Virology

1 LIP decision made, phase III pending; 2 LIP and phase III decision pending

SABCS

SMR / Intl. Melanoma Congress

ECTRIMS

ACNP

ASH

AASLD

dalcetrapib

taspoglutide

aleglitazar

SGLT2 inh2

GlyT-1 inh

ocrelizumab MS1

lebrikizumab2

HCV pol inh1

pertuzumab

BRAF inhibitor

T-DM1

Hedgehog inh

RG7159(CLL, NHL)

MetMAb1 ESMO

ESMO

Phase II data expected in 2010

Recruitment finalized

Recruitment on track

Phase II in house

Data in 2011

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Our strategic franchisesFocus on areas with high unmet medical need

CNSHigh unmet medical need - high risk/high reward“The new oncology?”

Virology Focus on hepatitis; existing infrastructure to launch new products.

Metabolism Only dalcetrapib targets primary care; aleglitazar: specialty product. High internal hurdles for phase III decisions.

Oncology Leader in oncology with strong pipeline-Regulatory requirements evolving, raising the bar for new products (including competition)

Inflammation RA biologics: area of high growth – Actemra strongly positioned

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Diagnostics Continued high growth driven by need for medical value

HPVearly diagnosis

BRAF testpatient selection

dual HER2protein & gene

IVD <2 % total worldwide healthcare spendInfluences >60 % of critical decision making

MRSAscreening

Potential to improve healthcare efficiency

Innovative tests in areas of medical need

Digital Pathologytissue analysis

Patch pump diabetes care

Testing efficiency

Diagnosis

Companion Diagnostics

medical value

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Personalised Healthcare to deliver medical value Leveraging Pharma & Diagnostics from discovery to commercialisation

• Prospective biomarker analysis

• Correct sample collection and patient consent

• Molecular biology foundation

• Unrestricted knowhow & IP exchange

• Defined label on launch

• Potential companion diagnostic

Research Development Commercialisation

More targeted clinical trials

Improved target selection

Safer, more efficacious medicine

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0utlook for 2010: on track to achieve the goals

Barring unforeseen events;Total Tamiflu sales of up to CHF 1 bn assumed for 2010; LC=Local Currency* Continuous increase in dividend pay-out ratio over the period 2008-2010

Sales growth (in LC) Group & Pharma (excl. Tamiflu): mid single-digitDiagnostics: significantly above market

Core EPS growth (in LC) Double-digit

Synergies 2010: CHF 800 m2011: CHF 1,000 m

Debt 2010: 33% reduction (revised from 25%)2015: Aim to return to net cash position

3 yr Dividend outlook Maintained (as announced in 2008)*

R&D investment Slightly below 2009 level

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

cost cutting: innovation remains key !

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

• We are preparing for fundamental changes

in the healthcare environment

Roche delivering now – but still investing into the future!

The Roche advantages

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We Innovate Healthcare