Roche Holding Ltd · SIX:RO
Roche — pres030507e
77 slides from Roche's investor presentation, May 7, 2003
Slide 1: Roche Diagnostics: The Paradigm Shift Towards Health Information and Its Impact on Growth
r Media Briefing Roche Diagnostics The Paradigm Shift Towards Health Information and Its Impact on Growth 7 May 2003 1
Slide 2: Key questions for the briefing
r • Who are the competitors in the international diagnostics market? • What is the future direction of Roche Diagnostics? • How will the acquisition of Disetronic and the recent alliances with Affymetrix and Epigenomics contribute to the success of Roche Diagnostics? • And what is the role of Roche
Slide 3: Content
Content r • Heino von Prondzynski, Head of Roche Diagnostics - The Diagnostics Market: From IVD to Health Information - Roche Diagnostics: Shaping the market • Staffan Ek, Head of Diabetes Care • Manfred Baier, Head of Lab Network • Heino von Prondzynski, Head of Roche Diagnostics – Future growth dr
Slide 4: Content
Content r • Heino von Prondzynski, Head of Roche Diagnostics - The Diagnostics Market: From IVD to Health Information - Roche Diagnostics: Shaping the market • Staffan Ek, Head of Diabetes Care • Manfred Baier, Head of Lab Network • Heino von Prondzynski, Head of Roche Diagnostics - Future growth dr
Slide 5: The In-Vitro Diagnostics (IVD) market
The In-Vitro Diagnostics (IVD) market r In-vitro diagnostics • Clinical chemistry US $22 billion (chemistry based) • Immunoassays • Diabetes care • Molecular diagnostics In-vivo diagnostics • Instruments, heavy capital US $11 billion (physics based) intensive equipment (X-ray, CT, MRI, ultrasound) •
Slide 6: Perception of the IVD market in the past
Perception of the IVD market in the past r • “Poor step child of healthcare” • “Plagued by low margins and severe price pressures” • “Fiercely competitive” • “Short product lifecycle with high obsolescence” • “Little (or no) patent protection” • “Commodity products” ! 1990’s: lab consolidation and p
Slide 7: The IVD Market of the 2000's
The IVD Market of the 2000’s r Accelerated growth from new markets, new technologies • PCR technology driving molecular diagnostics and the Human Genome project ! paving the way for new markers & therapies and expanding the role of testing • Revolutionary advances in bioinformatics & microtechnology
Slide 8: Diagnostics: Integral to the healthcare mix
Diagnostics r Integral to the healthcare mix 2002E sales of healthcare products: US $ 570 billion in vitro Pharma Diagnostics 67% 4% in vivo Diagnostics - equipment in vivo 2% Diagnostics - contrast media other 1% 26% 8 Source: EDMA, Jan 2002
Slide 9: Steady market growth
Steady market growth r 25 22.5 21.2 20.4 20.6 20 19.1 19.6 US $ billion 15 10 1997 1998 1999 2000 2001 2002E 9 Source: Roche analysis, Boston Biomedical Consultants, company reports
Slide 10: Growth potential in all regions
Growth potential in all regions r US $ 22.6 billion Current Annual Growth Rate (CAGR) (2003 – 2008) Rest of World 10% $ 3.4 bn US $ 9.6 bn Europe 5% $ 7.3 bn Japan $ 2.4 bn infancy early growth late growth maturity Source: Kalorama information, 2002; total sales estimate for 2002 10
Slide 11: Two business models emerging
Two business models emerging r Global players / niche technology suppliers Third Wave Technologies Inc. Ventana Medical Systems Inc. Top 10 IVD companies • Roche Diagnostics Epoch Biosciencs Inc. Affymetrix • Abbott Laboratories • J&J / Ortho-Clinical Diagnostics EXACT Sciences Corp. • Bayer Diagnos
Slide 12: Consolidation has changed competitive landscape
Consolidation has changed r competitive landscape top 10 top 10 IVD top 10 IVD top 10 companies IVD companies IVD 51% companies 55% companies 60% 72% all other all other IVD all other IVD IVD companies companies all other 49% companies IVD 45% 41% companies 28% 1986 1988 1995 2002 12 Source: Roche a
Slide 13: Trends in health care
Trends in health care r Ageing shift in testing & treatment of infectious diseases to population chronic diseases (diabetes, heart disease, cancer) New agents emerging pathogens and resistant strains Benefits of healthcare costs moving to “evidence-based” medicine, prevention leading to tailored the
Slide 14: New technologies support healthcare trends
New technologies support healthcare trends r Automation, increase lab efficiency, quicker, accurate results, consolidation & streamline billing, data collection & integrated connectivity patient management miniaturization (small samples, small devices) provides Micro- portability and functional inte
Slide 15: From pure testing to Health Information
From pure testing to Health Information r Today: • Tests on human blood, body fluids and tissues Tomorrow: • Health Information - Right information at the right time in the right place - Individual treatment of patients (e.g. test results, risk profiles, recommendation for treatment) 15
Slide 16: Paradigm shift in role of Diagnostics
Paradigm shift in role of Diagnostics r From reactive treatment… test drug test diagnosis monitoring • medical diagnosis • monitoring treatment / disease • test of cure / relapse 16
Slide 17: Driving healthcare decisions to tailored therapy and proactive wellness
Driving healthcare decisions r …to tailored therapy & proactive wellness test test test test drug/test test predisposition targeted general therapy screening monitoring screening diagnosis selection monitoring Earlier diagnosis Patient stratification – periodic disease status checks – differentiated
Slide 18: Content
Content r • Heino von Prondzynski, Head of Roche Diagnostics - The Diagnostics Market: From IVD to Health Information - Roche Diagnostics: Shaping the market • Staffan Ek, Head of Diabetes Care • Manfred Baier, Head of Lab Network • Heino von Prondzynski, Head of Roche Diagnostics - Future growth dr
Slide 19: Clear focus on innovating healthcare: two high tech pillars
Clear focus on innovating healthcare r Two high tech pillars 1990 2000 2003 • Focused healthcare company • Leading global position in Chugai Genentech Pharma diagnostics Syntex • Global leadership in biotechnology Vitamins and Fine Chemicals and key therapeutic areas Fragrances and Flavours r • Uniq
Slide 20: Shaping the future of diagnostics
r Shaping the future of diagnostics… We will strengthen our leading position in diagnostics and shape the health information market by integrating test results and medical information. We provide Actionable Health Information to support medical decision makers and superior patient management. 20
Slide 21: Roche Diagnostics has continuously increased its importance within the Roche group
Roche Diagnostics has continuously increased r its importance within the Roche group 25 Pharmaceuticals 20 Diagnostics CHF billion (adjusted) 15 10 26% 27% 27% 24% 24% 5 7% 0 1997 1998 1999 2000 2001 2002 Boehringer Mannheim integration 21
Slide 22: Roche Diagnostics continues to outpace the industry
Roche Diagnostics continues to outpace the industry r First quarter 2003 market share1 sales growth1,2 Roche 19% 11% Abbott 12% 0% J&J 11% 3% Bayer 8% 3%* Beckman C. 7% 4% Dade Behring 5% 5%* IVD Market 4% 0% 5% 10% 15% 0% 5% 10% source: Boston Biomedical Consultants, Roche analysis 1 excludes Life
Slide 23: Above average growth: five years in a row
Above average growth r Five years in a row 20% Market growth RD Growth rate 15% RD Market share 10% 5% 1998 1999 2000 2001 2002 23
Slide 24: Roche Diagnostics sales by region Q1 2003
Roche Diagnostics sales by region Q1 2003 r Growing in all major markets CHF 1,738 million Market share 2002 Europe* 46% USA Europe Japan APAC Japan 5% Roche Roche Abbott Roche Asia-Pacific 5% 1 (16%) (26%) (9%) (19%) Latin America 3% Iberia 5% J &J Abbott Roche Abbott 2 others** 2% (15%) (13%) (9%)
Slide 25: Operating profit margin advancing towards goal of >20% by 2006
Operating profit margin advancing firmly r towards goal of >20% by 2006 +15% local Manufacturing and operations CHF m +8% CHF • Increased operational scale in 1,984 Centralized Diagnostics and 1,833 Diabetes Care 1,639 • Improved processes / logistics EBITDA 27.4 as % of Product mix 26.6 sales 26.2
Slide 26: Roche Diagnostics structure: a fully integrated division
Roche Diagnostics structure r A fully integrated division 5 Regions 5 Business Areas 6 Global Functions Applied Science · EMEA (Europe, Middle · Finance & Services Diabetes Care East, Africa) · Business Development · North America Lab Network · Integrated Supply Chain · Iberia / Latin America Centra
Slide 27: Regional headquarters and R&D centers
Division Diagnostics r Regional headquarters and R&D centers Rotkreuz Mannheim Penzberg Applied Sience Basel Indianapolis Graz Molecular Diagnostics Central. Diagnostics Tokyo NPT Pleasanton Diabetes Care Branchburg Regional Headquarters Singapur Barcelona 27
Slide 28: Business Areas spanning all customer segments
Business Areas spanning all customer r segments Life Science Research IVD market Research Professionals Consumers research academia pharma biotech university hospital commercial lab hospital clinic GP patient consumer Applied Science Lab Network Molecular Diagnostics Centralized Diagnostics Near Pat
Slide 29: Applied Science: Entry into new markets
Applied Science r Entry into new markets Q1 ‘03: CHF 133 million (-3% local growth) • Genomic and proteomic tools for pharma and biotech sector Gene analysis (-20%) • Reagents and systems for Life Science research Industrial enzyme projects (+12%) • Industrial supplier of specialty LightCycler (-6%)
Slide 30: Lab Network: Molecular Diagnostics
Lab Network: Molecular Diagnostics r Transforming medicine through PCR Q1 `03: IVD Business: 198 Mio. CHF (+14% local growth) • Pioneered molecular testing with Virology (+5%) PCR Bloodscreening (+41%) • Diagnosis, monitoring disease progression and therapy response Woman`s Health (+45%) • Driving p
Slide 31: Lab Network: Centralized Diagnostics
Lab Network: Centralized Diagnostics r Integrated systems providing solid financial basis Q1 '03: CHF 623 million (+5% local growth) • Leader in automation and data management Clinical chemistry (0%) • Growth through leadership in serum Immunochemistry (+14%) work area and novel markers (e.g. proBNP
Slide 32: Lab Network: Near Patient Testing
Lab Network: Near Patient Testing r Bringing the lab to the patient Q1 '03: CHF 137 million (+4% local growth) • Small bench top & hand held devices, combining IT connectivity & sensor Blood gas/ technologies (+5%) Electrolytes Coagulation (+16%) • Market driven by ease of use, portability, connecti
Slide 33: Diabetes Care: Making living with diabetes easier
Diabetes Care r Making living with diabetes easier Q1 '03: CHF 628 million (+16% local growth) • Minimising discomfort and inconvenience by “one-step-handling” AC (+6%) (integrating monitor, strip and lancet) Advantage • Focus on providing complete package AC Active (+12%) – testing and data managem
Slide 34: Content
Content r • Heino von Prondzynski, Head of Roche Diagnostics • Staffan Ek, Head of Diabetes Care - Shaping the Future of Diabetes Management • Manfred Baier, Head of Lab Network • Heino von Prondzynski, Head of Roche Diagnostics - Future growth drivers - Concluding remarks 34
Slide 35: Diabetes Care: One of the 5 Business Areas
Diabetes Care r One of the 5 Business Areas 5 Regions 5 Business Areas 6 Global Functions Applied Science · EMEA (Europe, Middle · Finance & Services Diabetes Care East, Africa) · Business Development Lab Network · North America · Integrated Supply Chain · Iberia / Latin America Centr. Diagnostics ·
Slide 36: Diabetes is a global epidemic
Diabetes is a global epidemic r • WHO global estimates of people with Diabetes (mio people) 300 +3 % +3 % p.a. p.a. 150 20% on insulin therapy 2002 2025 36
Slide 37: Reduce risk of Diabetes complications
r Reduce risk of Diabetes complications Early diagnosis and effective blood glucose control • Approx. 75 million undiagnosed and are heading for potentially fatal complications • Poor management can lead to stroke, renal failure, amputation and blindness • Risk of complications is reduced significan
Slide 38: Glucose monitoring is 30% of the overall diabetes market
r Glucose monitoring is 30% of the overall diabetes market 8.0 CHF 21.5 billion (2001) 5.0 1.5 7.0 30% glucose insulin delivery insulin oral antidiabetic monitoring diabetes therapy Source: Roche estimates 38
Slide 39: Roche Diabetes Care is the global market leader
r Roche Diabetes Care is the global market leader with increasing market shares Other 7% 8% 10% 11% 11% 10% 10% Abbott 9% Lifescan 32% 30% 28% 29% 16% 17% 16% 14% Bayer 34% 35% 36% 37% Roche 1999 2000 2001 2002 Note: Other includes Generics, Private Label including Abbott’s activities, KDK, Therasen
Slide 40: Roche Diabetes Care is pioneer and market leader in blood glucose monitoring
Roche Diabetes Care is pioneer and market r leader in blood glucose monitoring systems • For more than 25 years, we have been committed to delivering products that meet the needs of people with diabetes by providing advance in technology, products and services • Around 4.100 employees globally are c
Slide 41: Innovative products designed for different consumer segments
Innovative products r Designed for different consumer segments Accu-Chek Advantage / Sensor • # 1 selling system, worldwide • our confidence system • unique Comfort Curve strip • accurate results in 25 seconds • 100-value memory with time, date, and downloading capability Accu-Chek Active • small wi
Slide 42: Integrated spot monitoring will be a major growth driver
r Integrated spot monitoring will be a major growth driver of the future Accu-Chek Compact • Convenient with fully automated strip handling • 17 test strip drum fully integrated / all-in-one system • Accurate reading in 7-8 seconds with maximum safety • 1.5 µl sample volume 42
Slide 43: Providing Actionable Health Information
r Providing Actionable Health Information Collect-connect-analyze-act Accu-Chek Pocket Compass links meters, data management and remote connectivity 43
Slide 44: Mellibase: prognostic simulation for diabetes
Mellibase: prognostic simulation for diabetes r Managing scarce resources in Diabetes Care Benefit: Improved (cost-) Patient Risk Profile Medical Evidence effectiveness of treatment: (Age, HbA1c, etc) and Guidelines • Individualization: Enables Individualized Risk Report doctors to choose most effec
Slide 45: Monitoring and therapy delivery are converging
Monitoring and therapy delivery are converging r $ Growing market (people with diabetes in millions) 300 +3% p.a. 150 " Creating value 20% are on insulin therapy Blood Insulin Glucose Therapy 2002 2025 Monitoring* CHF 5 billion CHF 4.5 billion insulin +5% p.a. # Insulin pump market +10% p.a. deliver
Slide 46: Disetronic & Roche: Shaping the future in Diabetes Care
Disetronic & Roche r Shaping the future in Diabetes Care • Expand RD’s role in the rapidly growing, profitable market of Diabetes management • Create a platform for additional growth through entry into the insulin pump market • Leverage the Accu-Chek brand and proven business models from the blood g
Slide 47: One step closer to the vision of an automated pancreas
One step closer to the vision r of an automated pancreas Syringe Insulin Pens Delivery Pump Pump/bG Meter Communication Open-loop Automated Pancreas Closed-loop CM AP Integrated Insulin Algorithm Blood Strips Systems Glucose Monitoring Meters and Strips Strips Today 47
Slide 48: Disetronic transaction: timing and planned next steps
Disetronic transaction r Timing / planned next steps • Competition authority filings 28 February - 8 April • Start of due diligence 24 February • Publication of tender offer 24 March • Disetronic extraordinary shareholder meeting 23 April • End of first offer period 28 April ! “Roche successfully ac
Slide 49: Several key product launches for 2003
Several key product launches for 2003 r • Accu-Chek Compact Test strip (June 2003): Enhanced test strip with 1.5 µl sample volume and 7 to 8 sec. test time • Accu-Chek Advantage III meter (September 2003): Enhanced smaller meter with additional features • Accu-Chek Go (December 2003): New system (me
Slide 50: Content
Content r • Heino von Prondzynski, Head of Roche Diagnostics • Staffan Ek, Head of Diabetes Care • Manfred Baier, Head of Lab Network - Providing tailor-made solutions for professional diagnostics • Heino von Prondzynski, Head of Roche Diagnostics - Future growth drivers - Concluding remarks 50
Slide 51: Lab Network: 3 of the 5 Business Areas
Lab Network r 3 of the 5 Business Areas 5 Regions 5 Business Areas 6 Global Functions Applied Science · EMEA (Europe, Middle · Finance & Services Diabetes Care East, Africa) · Business Development · North America Lab Network · Integrated Supply Chain · Iberia / Latin America Centr. Diagnostics · Inf
Slide 52: Interaction between patient and physician
Interaction between patient and physician r Possible applications of Professional Diagnostics Locations Diagnostic Application (examples) Coagulation monitoring in Doctor’s office case of thrombosis treatment 1) e.g. CoaguCheck 2) After / during surgery ICU e.g. bloodgas monitoring - OMNI C 3) patie
Slide 53: Roche Diagnostics role in professional diagnostics: doctor's office
Roche Diagnostics role in r professional diagnostics Roche Diagnostics provides tailor-made solutions, which have to meet the different needs of the different locations and medical questions Doctor’s office Ease of use, whole blood, selected tests CoaguChek S 53
Slide 54: Roche Diagnostics role in professional diagnostics: ICU / emergency room
Roche Diagnostics role in r professional diagnostics ICU / emergency room 100% reliability, very easy to use, ultra rapid result Cardiac T for diagnosis of cardial infarct OMNI S (Troponin T) bloodgas monitoring response time: 14 minutes response time: 1 - 2 minutes 54
Slide 55: Roche Diagnostics role in professional diagnostics: molecular
Roche Diagnostics role in r professional diagnostics COBAS Taqman The Molecular Biologist or Bloodbank requires the most sensitive and specific technologies: PCR, gene and arrays for sensitive detection of viral infection (Hepatitis, HIV) or bacterial infection (Chlamydia), COBAS AmpliPrep for purpo
Slide 56: Roche Diagnostics role in professional diagnostics: central laboratory
Roche Diagnostics role in r professional diagnostics Central Laboratory For a detailed in-depth diagnosis a pathologist requires economical, high quality systems with a broad menu of tests. e.g. Modular Hybrid: a combination of Clinical Chemistry and Immunochemistry with approx. >130 different metho
Slide 57: Growth Opportunities: large menu and optimized serum work area
Growth Opportunities r Large menu and an optimized serum work area solution • Allergies • Thyroid • Vitamins • Fertilty • Blood cells • Oncology • Enzymes • Urine analytes • Cardiac • Substrates • Clotting factors • Bone markers • Ions • Anaemia • Proteins • Therapeutic drugs (TDM) • Drugs of abuse
Slide 58: Growth Opportunities: blood screening market share
Growth Opportunities r Current Blood Screening Market Share USA Russia Japan Germany China Brazil South Korea Top Countries England/Wales Roche France Chiron Italy Homebrew Taiwan Potential Spain Australia Turkey Thailand South Africa Netherlands Canada 0 2'000'000 4'000'000 6'000'000 8'000'000 10'0
Slide 59: Strategy and Perspectives
Strategy and Perspectives r New technologies will stimulate growth of business and progress of medicine by providing solutions for today’s unmet needs in Medical Practise Examples: - Specific and early identification of heart failure by pro-BNP on Elecsys and in Point of Care - Rapid and specific id
Slide 60: NT proBNP: Life Saving Decisions
NT proBNP r Life Saving Decisions Heart Failure as cause of symptom Low NT proBNP – Invasive treatment? Exclusion of heart failure (Heart Surgery or Ballon Angioplasty) High NT proBNP – Invasive treatment required! Study: 420 patients 2 years 10 lives saved 20 heart attacks prevented 60
Slide 61: Sepsis diagnosis tomorrow revolutionized through PCR
Sepsis diagnosis tomorrow revolutionized r through PCR method Day 1 Day 2 Day 3 Day 4 culture adjustment 2-3 days Blood Culture Gram Species Resistance adjustment 6h PCR Gram, Species, Resistance (VRE and MRSA only) PCR 61
Slide 62: Cancer Diagnosis
Cancer Diagnosis r Roche holds leading position in tumor marker sales 16 different test kits (2001: US $ 81 million, 19% growth) today tomorrow • Early detection of tumor growth Diagnosis of • Identification of individual disease factors for treatment and early intervention • Monitoring of cancer re
Slide 63: Several key product launches for 2003
Several key product launches for 2003 r Molecular Diagnostics • Q2 '03: Cyp450 AmpliChip ASR (Nth. Am.) • Q3 '03: AmpliScreen West Nile Virus Roche • Q4 '03: HCV genotyping test ASR (Nth. Am.) CYP450 AmpliChip * ** * * Centralized Diagnostics • Q2-Q4 '03: Elecsys marker (P1NP, SHBG, Cyp450 AmpliChip
Slide 64: Content
Content r • Heino von Prondzynski, Head of Roche Diagnostics - The Diagnostics Market: From IVD to Health Information - Roche Diagnostics: Shaping the market • Staffan Ek, Head of Diabetes Care • Manfred Baier, Head of Lab Network • Heino von Prondzynski, Head of Roche Diagnostics - Future growth dr
Slide 65: Three pillars of innovation strength
Three pillars of innovation strength r In-house R&D Innovation Alliances Ventures 65
Slide 66: Driving a revolution in new testing
Driving a revolution in new testing r Molecular diagnostics and the human genome project genetics and cancer microbiology (eg. Sepsis) revenue women's health (eg. HPV, cervical cancer) blood bank screening infectious diseases (eg. HIV, HCV) time 66
Slide 67: Women's Health: New growth opportunity
Women’s Health r New growth opportunity Products Expanded Women’s Molecular Diagnostics Health Portfolio • Genetic tests (CF) • Osteoporosis new • Cancer • Breast • Ovarian Pap Smear - Out of • Fertility vial testing current • STD - CT/NG • Osteoporosis HPV CT/NG other STD’s Traditional New (Lab) (O
Slide 68: Move to screening: HPV test
Move to screening: HPV test r >95% sensitivity for pre-cancers • HPV DNA present in 99.7% of all cervical cancer (can be objectively measured*) • Effective primary screening possible Pap Test with Pap/HPV HPV screening with Pap Test HPV Triage screening Test follow-up Pap 1950-1997 1999 2001 2003 20
Slide 69: Intellectual property: value creation through IP management
Intellectual property r Value creation through IP management • Strengthen market competitive- Number of diagnostics patents issued ness through targeted acquisition, alliances and in-licensing 18,000 2000’s • specific markers (HPV, proBNP) EU • Platforms (Amira, AVL, 12,000 Disetronic) 6,000 US • Pi
Slide 70: Creating value through alliances, licensing and acquisitions
Creating value through alliances, r licensing and acquisitions PCR-Technology CombiMatrix Cetus Corporation Amira Medical 1991 1998 2000 2001 2002 2003 Boehringer Mannheim Integration INSTITUT PASTEUR 70
Slide 71: Affymetrix: Microarrays help tailoring cancer therapy
Affymetrix: r Microarrays help tailoring cancer therapy Shift to "right patient/right drug" Tumor patient X Tumor patient Y Molecular tumor portraits with multiple markers Pattern recognition 1 1 Drug A Drug C probability of survival probability of survival 0.5 0.5 Drug B Drug B Drug A 0 1 2 3 years
Slide 72: Initial menu of high value Affymetrix based assays by end of 2004
Roche Diagnostics will launch an initial menu of r high value Affymetrix based assays by end of 2004 1. p450 2. p53 3. CF 4. HPV Roche 5. HIV GenoTyping (Europe) 6. CRC Risk Prediction 72
Slide 73: Starting this year: CYP450
Starting this year: CYP450 r Moving chips out of research into diagnostics • CYP450 genotyping determines a patients metabolic status • Patients are divided into 4 categories of metabolizers • poor • efficient • intermediate Roche • and ultra-rapid * ** CYP450 GeneChip * * ! Knowing a patients respo
Slide 74: The Venture Unit Lifecycle
The Venture Unit Lifecycle r Focused Integrated High Venture unit … helps select and develop ideas Importance of Venture unit … Venture Unit generates, attracts, Venture unit … Role selects & helps helps diffuse develop ideas process Low Time RD`s Venture Evolution 2001 2003 2005 „Currently, at Roch
Slide 75: Venture Timeline: Clear Pathway to success
Venture Timeline r Clear Pathway to success Venture Fair Action Lab and Pitch 1st Review 2nd Review VO reviews VO reviews VO reviews 60 days 100 days 100 days future of venture Idea Team Selection Selection 75
Slide 76: Building on our strengths for the future
Building on our strengths for the future r • World-class science & pioneering product development • Global marketing and sales presence • Leading network of partnerships and alliances • History of first to market • Financial funding • Breadth spanning research → lab → NPT → consumer • Strong foundat
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