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Roche Business Report Survey
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Innovation spanning the entire
healthcare spectrum
Our focus on products that deliver significant benefits to patients and health
professionals is a core element of our business strategy, and one of the key reasons
for our success. As a research-intensive company with a long-term strategic focus,
Roche strives to deliver sustainable value to all stakeholders.
Predisposition Page 8 Table of Contents
‘Information on predisposition
to disease offers huge potential – Business Report 2006
but we’ve got a long way to go.’
Key figures 2
The year 2006 in brief 3
Letter from the Chairman 5
Our people 78
‘I’ve got my life back,
and my children have got
Our communities 84
their father back.’
Assurance 94
Monitoring Page 86 GRI statement 95
Roche – a Global Market Presence 96
‘I monitor my blood glucose myself
every day and only go to the hospital
once a month.’
250
200
150
100
2004 2005 2006
Roche non-voting equity security Swiss Market Index (rebased)
Group
• Group sales advance 17% to 42.0 billion Swiss francs – a record increase
of over 6.5 billion Swiss francs.
• Operating profit margin increases 2.0 percentage points to 27.9%.
• Net income up 34% to 9.2 billion Swiss francs, driven by a strong operating
performance and significantly higher net financial income.
• Board to propose 20th consecutive dividend increase: 36% to 3.40 Swiss
francs per share and non-voting equity security.
Pharmaceuticals
• Pharmaceutical sales grow 21%, more than three times as fast as the global
market.
• Division reinforces its leadership in oncology.
• Operating profit margin rises 4.1 percentage points to 31.7%.
• Marketing approvals received for Avastin in lung cancer, Herceptin in early-
stage breast cancer and MabThera/Rituxan in rheumatoid arthritis.
• First marketing applications filed for Mircera in renal anemia.
• Major development targets met: 13 new marketing applications filed and
14 approvals received.
Diagnostics
• Division posts 5% sales growth, consolidating its global market leadership.
• As anticipated, divisional operating profit declines as a result of investments
in new product launches, impairment charges on intangible assets and
lower royalty income from licences in the molecular diagnostics segment.
• New range of Accu-Chek blood glucose monitoring products now available
worldwide.
2006 was another year of strong growth and exceptional items) increased by 27% in local cur-
outstanding financial performance at Roche. The rencies to 11.7 billion Swiss francs. The Group’s
Group’s sales rose 17% in local currencies to a record operating profit margin increased further, to 27.9%.
high of 42 billion Swiss francs. This 6.5 billion Swiss At the same time, we invested more in our divisions’
franc revenue increase over 2005 reflects organic rich research and development pipelines and also
growth. Top-line growth was driven primarily by increased spending on launch activities and the con-
the Pharmaceuticals Division, where sales advanced struction of new biotech manufacturing facilities.
at more than three times the market growth rate in
2006. Roche Diagnostics maintained its leadership Net financial income was also up significantly
position in an increasingly competitive market, compared with 2005. Total net income rose by one-
thanks to numerous new product launches and third to 9.2 billion Swiss francs – the highest profit
continued growth in all of the division’s business ever recorded by Roche. Core Earnings per Share
areas. (Core EPS) rose 26%.
The Group’s earnings performance improved sig- The Board of Directors will propose that the divi-
nificantly again last year. Operating profit (before dend for 2006 be increased by 36% to 3.40 Swiss
francs per share and non-voting equity security (up Roche’s strategy remains firmly focused on pre-
from 2.50 Swiss francs in 2005). Subject to your scription medicines and modern diagnostics. With
approval at the Annual General Meeting of Share- our increased financial strength, we have the
holders, this will be our 20th consecutive dividend resources for targeted business-building invest-
increase. ments in both of these core businesses. Developing
healthcare innovations – products and services rep-
As I indicated before, the Pharmaceuticals Division resenting real advances in the fight against serious
was the main driver behind the Group’s excellent diseases – is the most important thing Roche does,
results in 2006. Its sales exceeded 33 billion Swiss and our mission is not about to change. Our
francs, an increase of 21% in local currencies in research and development activities are aimed at
a market that averaged 6% growth last year. extending patients’ lives and improving their health
This robust increase was driven primarily by sus- and quality of life. Worldwide, we spend 18 million
tained strong demand for our cancer medicines, Swiss francs every day in pursuit of these objectives.
continued government stockpiling of the anti- Last year R & D expenditure in the Pharmaceuticals
influenza drug Tamiflu and sales of Bonviva/Boniva, Division amounted to 17.7% of sales. In absolute
for osteoporosis. Oncology, transplantation and figures, total R & D expenditure for the Group rose
virology are currently our three leading therapeutic to well over 6 billion Swiss francs in 2006, making
franchises. Very importantly, sales of our cancer Roche one of the most research-intensive compa-
medicines surged approximately 40% to 15 billion nies in the industry.
Swiss francs, and now account for half of the divi-
sion’s total revenues. For the first time, the Pharma- We plan to intensify cooperation between our
ceuticals Division’s operating profit (before excep- Pharmaceuticals and Diagnostics Divisions in
tional items) exceeded 10 billion Swiss francs, and its major therapeutic areas, in order to deliver more
operating profit margin rose significantly, to 31.7%. products tailored to the needs of specific patient
populations. The benefits of more precise diag-
The Diagnostics Division posted sales of 8.7 billion noses and better targeted treatments are already
Swiss francs, a 5% increase in local currencies over evident – particularly in oncology. Tighter cross-
the previous year. After a slow start, sales growth divisional linkages between our research, develop-
accelerated to slightly above the market growth rate ment and marketing organisations will strengthen
in the second half of the year, helped by the roll- our ability to actively shape the future of therapeu-
out of new products. Once again, the division’s tics and diagnostics.
Centralized Diagnostics business – particularly the
immunodiagnostics portfolio – was the main con- Roche has been reselected for inclusion in the Dow
tributor to growth. With the new portfolio of Jones Sustainability Indexes and the FTSE4Good
Accu-Chek blood glucose monitoring products Index Series. This is recognition of our efforts to
now on the market, we expect Roche Diabetes Care balance corporate responsibility with our business
to return to above-market growth as well. Divi- objectives and core mission to innovate healthcare.
sional operating profit (before exceptional items) We believe that making sustainability an integral
declined 21% in local currencies to approximately part of our business model and operations fosters
1.4 billion Swiss francs. The decrease was primarily innovation, minimises business risks and creates
due to higher costs for new product launches and value for all stakeholders.
ongoing pricing pressure in the division’s markets.
Operating profit was also impacted by impairment In the final analysis, of course, it is Roche’s people
charges on intangible assets relating to the Dise- who have made it the prosperous, innovative com-
tronic acquisition in 2003. pany it is today. Thanks to their untiring dedication
Franz B. Humer
Predisposition
Not only must predisposition markers be predictive of disease,
effective preventive measures must also be available. For exam-
ple, statins and blood pressure medications are routinely pre-
scribed to reduce the risk of cardiovascular disease in individuals
at elevated risk. Similarly, osteoporosis medicines could be pre-
scribed to predisposed individuals before they have lost signifi-
cant bone mass. Preventive measures could reduce the public
health burden of disease and expand the market for effective
medicines.
The Diagnostics Division posted an operating 1) Earnings before exceptional items and before financial
profit of 1.4 billion Swiss francs, down 21% in local income, financing costs, tax, depreciation and amortisa-
currencies from the high divisional profit recorded tion, including impairment.
A pioneer in personalised
medicine
In healthcare, as in most things, one size does
not fit all. Our genes and countless environmen-
tal factors influence the outcomes of the treat-
ments we receive, including our response to
medicines. Moreover, many diseases occur
in genetically distinct subtypes that vary in
their clinical course and prognosis. Thus, two
patients who seemingly have the same disease
and are treated with the same medicine may
respond in radically different ways. One may
benefit from treatment, while the other experi-
ences unwanted side effects without having any
clinical benefit at all. In the fight against HIV/AIDS and hepatitis C, doctors
now routinely perform viral load tests to guide treat-
Roche is committed to providing healthcare pro- ment selection, track patients’ responses to treatment,
fessionals with more powerful diagnostic tools and and make dosing or other adjustments if necessary.
targeted treatments based on science’s increasing
understanding of how diseases arise at the molecular These tests also play a key role in the development of
level. This is the one approach that promises steady new antiviral drugs. ‘Similar successes can be achieved
improvements in the therapeutic options available to in oncology and rheumatology’, says Dr Tim M. Jaeger
patients. Using innovative diagnostic technologies, (pictured), who heads the ‘Drive Personalised Health-
physicians will increasingly be able to identify patient care’ initiative at Roche. ‘Our Diagnostics and Pharma-
populations most likely to benefit from particular ceuticals Divisions are working together, for example,
treatments. on better ways of detecting and differentiating certain
cancers and on exploiting new mechanisms of drug
In recent years Roche has provided some examples of action to provide specific groups of patients with more
how linking diagnostic and pharmaceutical knowledge effective, targeted treatments.’ Projects like these make
can lead to more personalised healthcare. Roche a pioneer in improving patient care – and they
can ultimately do a great deal to ease the pressure on
stretched healthcare budgets.
Medical progress is essential for providing sustain- prioritise areas of significant unmet need where
able access to high-quality care – on this point we have the expertise to make a difference – areas
governments and other payers agree. To stay like oncology, virology, diabetes, inflammatory
competitive in today’s increasingly cost-sensitive and metabolic disorders and diseases of the central
market, research-based healthcare companies like nervous system. And we aim to be a leader in
Roche need to develop products with health eco- each of our areas of interest. Today Roche is the
nomic as well as clinical benefits. Medicines that market leader in high-growth therapeutic areas
extend patients’ lives, improve quality of life or such as oncology, transplantation and hepatitis,
have fewer side effects can offer both. And so can and a world leader in molecular and centralized
diagnostic tests that reduce treatment costs by diagnostics and diabetes management.
helping physicians choose the most appropriate
therapies for their patients the first time around. World-class R&D is the backbone of our strategy.
Diagnostics account for only 1–2% of healthcare That is why we spent well over 6 billion Swiss francs
spending, yet timely, accurate diagnostic informa- on it in 2006, and why in the coming years we will
tion is required for roughly 70% of all clinical continue to increase our R & D budget in selected
decisions. areas of opportunity. Our innovation model relies
on our own cutting-edge drug and diagnostics
Clinically differentiated products create value research and a global collaborative R & D network.
for all stakeholders Roche is the majority shareholder in Genentech
in the United States and Chugai in Japan. Both
At Roche our prime strategic focus is on innova- companies operate largely independently, because
tion. We strive to develop clinically differentiated we believe this encourages a greater diversity of
solutions for medical needs that have not yet been approaches, increasing the chances of success. In
adequately addressed. This creates value for all addition, the Group’s own research capabilities are
stakeholders, from patients, to providers, to health- augmented by a host of scientific and commercial
care systems as a whole. We devote all our resources collaborations with external biotech companies,
to two research-intensive businesses: pharmaceuti- universities and research organisations around the
cals and diagnostics. Within these businesses we world.
Early detection
Just as important as early diagnosis of breast cancer is fast iden-
tification of the tumour type, which can help doctors estimate
how quickly the cancer will grow and how it will respond to spe-
cific treatments. For example, knowing a breast cancer patient’s
HER2 status at diagnosis now enables doctors to select the most
effective treatment programme, increasing the patient’s chances
of survival.
Number of employees
2006 53,241
2005 49,027
2004 46,871
Key figures
% change % change in
In millions of CHF in CHF local currencies % of sales
Sales 33,294 22 21 100
– Roche Pharmaceuticals 20,666 22 20 62
– Genentech 9,125 38 37 27
– Chugai 3,503 –5 –1 11
EBITDA 12,168 34 34 36.5
Operating profit1) 10,545 40 40 31.7
Research and development 5,889 18 19 17.7
1) Before exceptional items
As the world’s leading provider of cancer With an estimated 1.2 million new cases annually, lung
medicines, the Roche Group is working hard to cancer is the most common form of cancer worldwide. It
help meet the enormous need for new treatment is the leading cause of cancer deaths in the world and in
options and targeted therapies. Europe. Non-small cell lung cancer is the most common
form of lung cancer, accounting for approximately 80%
Cancer is an abnormal growth of cells that proliferate of all cases. (→ Tarceva, Avastin)
through uncontrolled cell division. These malignant
cells may invade other tissues and spread (metasta- Each year, some 200,000 people worldwide are diag-
sise) to more distant parts of the body. Cancer is not nosed with kidney cancer, and 100,000 die of the
one disease but a group of more than 100 distinct disease, rates that are expected to increase. Kidney
disorders. It is one of the main causes of death in cancer is more common in men, and its incidence
industrialised countries. increases with age. Renal cell carcinoma accounts for
90% of all kidney cancers. (→ Avastin, Roferon-A)
Non-Hodgkin’s lymphoma, a group of over 30 cancers
that affect the lymphatic system, has grown in inci- Pancreatic cancer is a particularly aggressive disease
dence by 80% since the early 1970s. This class of that is extremely difficult to treat. It is often resistant to
cancer currently affects over 1.5 million people world- chemotherapy and radiotherapy and tends to spread
wide. (→ MabThera/Rituxan) quickly to other parts of the body. It kills a higher pro-
portion of patients in the first year after diagnosis than
Colorectal cancer – cancer of the large intestine or any other cancer. The fifth leading cause of cancer
rectum – accounts for over 1 million new cases (around deaths in the developed world, pancreatic cancer
10% of all newly diagnosed cancers) worldwide each claims the lives of 78,000 people every year. (→ Tarceva,
year. It is the second most common cause of cancer Xeloda)
deaths in Europe. The main treatment is surgery,
which may also be combined with radiotherapy and Stomach cancer accounts for close to 1 million new
chemotherapy. (→ Avastin, Xeloda) cases and at least 700,000 deaths each year, making
it the second most common type of cancer and the
Breast cancer is the most common cancer among second-largest cause of cancer deaths worldwide. It is
women worldwide, with over 1 million women newly the main type of cancer seen in China, Korea and
diagnosed and over 500,000 dying from the disease Japan, where over 80% of all cases occur. (→ Xeloda)
each year. There are different types of breast cancer,
and knowledge of tumour characteristics is important For more information, visit:
for treatment decisions. (→ Herceptin, Xeloda, Avastin) http://www.roche.com/diseases.htm
or recurrent colorectal cancer. The application was a filing for the same indication was submitted to
filed early under an MHLW initiative aimed at the EU’s European Medicines Agency (EMEA) in
expediting patient access to innovative medicines August. In addition, Roche filed an application
that are already approved in the US or EU, and it has in July for EU marketing authorisation of Avastin
also been given priority review status. for the treatment of advanced breast cancer. In
September the FDA asked Genentech to provide
In October, following priority review, the US Food additional data analysis to support its US applica-
and Drug Administration (FDA) approved Avastin tion for approval of Avastin to treat metastatic
for the treatment of non-small cell lung cancer breast cancer. Genentech has agreed to supply the
(NSCLC), the most common form of the disease; additional data by mid-2007.
Sales % change in
Product Generic name Indication in millions of CHF local currencies
MabThera/Rituxan rituximab non-Hodgkin’s lymphoma, 4,839 15
rheumatoid arthritis
Herceptin trastuzumab metastatic breast cancer, 3,927 81
adjuvant breast cancer
Avastin bevacizumab metastatic colorectal cancer, 2,962 76
advanced non-small cell lung cancer
Tamiflu oseltamivir treatment and prevention of influenza A and B 2,627 68
NeoRecormon, Epogin epoetin beta anemia 2,227 –1
CellCept mycophenolate mofetil transplantation 1,842 7
Pegasys peginterferon alfa-2a hepatitis B and C 1,467 3
Xeloda capecitabine colorectal cancer, breast cancer 971 20
Tarceva erlotinib non-small cell lung cancer, 813 108
advanced pancreatic cancer
Xenical orlistat weight loss, weight control 693 7
Xolair1) omalizumab asthma 537 31
Kytril granisetron nausea and vomiting induced by chemotherapy 498 0
or radiation therapy or following surgery
Nutropin somatropin growth hormone deficiency 494 3
Bonviva/Boniva ibandronic acid osteoporosis 488 462
Valcyte, Cymevene valganciclovir, ganciclovir cytomegalovirus infection 488 22
Lucentis1) ranibizumab wet age-related macular degeneration 478 –
Pulmozyme dornase alfa/DNase cystic fibrosis 436 10
Rocephin ceftriaxone bacterial infections 416 –56
Neutrogin lenograstim neutropenia associated with chemotherapy 379 9
Activase, TNKase alteplase, tenecteplase acute myocardial infarction (heart attack) 362 15
Interim analysis of a major phase III trial metastatic breast and colorectal cancer. Marketing
(AVOREN) released in December has shown that applications are planned worldwide, except Japan,
Avastin is also effective in a fourth type of cancer: in the first half of 2007 for approval of a com-
it significantly improves progression-free survival bination of Xeloda, oxaliplatin and Avastin for
when given as a first-line treatment for advanced metastatic colorectal cancer. The filings will be
renal cell carcinoma. These results will form the based on the results of two phase III studies com-
basis for a supplemental EU marketing application, pleted in 2006.
planned for 2007.
In July Roche filed an EU marketing application
Xeloda (capecitabine) is an effective oral anticancer for approval of Xeloda in combination with
therapy that greatly simplifies treatment and also cisplatin for the treatment of stomach cancer.
saves costs by reducing the need for hospital visits. The filing is based on the results of a phase III
Strong sales growth in 2006 was fuelled mainly by comparative study of the efficacy and safety of
increased use of the product in the adjuvant treat- combined Xeloda and cisplatin versus the current
ment of colon cancer in the US and Europe. Xeloda standard therapy.
is currently also approved for the treatment of
Two years since its launch in 2004, sales and usage Anemia
of Tarceva (erlotinib), a targeted drug with proven
survival benefit in advanced non-small cell lung Anemia occurs when the number of red blood cells
cancer and advanced pancreatic cancer, continue to falls below normal, starving organs and tissues of
increase strongly. Tarceva has now been approved oxygen. It is seen in more than 80% of patients with
for the second- and third-line treatment of NSCLC chronic kidney (renal) disease, a condition that
in over 75 countries worldwide. In April Chugai affects more than 500 million people worldwide.
filed an application in Japan for approval of Tarceva Anemia is also seen in 75% of cancer patients
in advanced or recurrent NSCLC; the filing has undergoing chemotherapy. The potential long-
been given priority review status by the authorities. term effects of anemia include cardiovascular dis-
Market uptake of Tarceva for the treatment of pan- ease in renal patients, while in patients with cancer
creatic cancer is also strong, and the product is now it is associated with reduced survival and dimin-
the market leader in the US for this indication. In ished quality of life. Roche supports basic research
January 2007, after re-examining the data support- into anemia through its funding of the independent
ing Roche’s supplementary marketing application, Roche Foundation for Anemia Research (see Pro-
the EU authorities approved Tarceva for the treat- moting advances in science, p. 84).
ment of metastatic pancreatic cancer.
Despite sustained pricing pressure, sales of Neo- Sales of CellCept (mycophenolate mofetil) con-
Recormon (epoetin beta) rose 6% to 1.5 billion Swiss tinued to show solid growth in 2006, driven by
francs, with the product retaining a strong position particularly strong demand in the US. Thanks
in cancer-related anemia and its market leadership to its proven long-term survival benefits and low
in renal anemia in the regions where it is sold. As in toxicity, CellCept remains the leading product in
2005, market share gains in the oncology setting the mycophenolic acid market and the cornerstone
were driven by continued adoption of the conve- of immunosuppressant therapies.
nient once-weekly prefilled syringe formulation. In
January 2007 the EU authorities approved the use of Virology
the once-weekly dosage form to treat anemia in
patients with solid tumours. In Japan sales of Epogin Combined sales of Valcyte (valganciclovir) and
(epoetin beta) declined due to government-man- Cymevene (ganciclovir) continued to grow strongly
dated price cuts and the introduction of flat-rate in 2006, driven by increasing recognition among
reimbursement for epoetin products used in dialysis doctors of the need to prevent and treat cyto-
patients, which has reduced the overall size of the megalovirus infection in transplant patients, which
anemia market. Combined sales of NeoRecormon can be fatal. Sales are also being helped by increased
and Epogin declined slightly overall for the year. use of the products to treat cytomegalovirus infec-
tion in HIV/AIDS patients.
Mircera, the first continuous erythropoietin recep-
tor activator, is a new anti-anemia agent that differs Influenza, or flu, is a highly contagious viral illness
from existing medicines both functionally and that occurs mainly in the autumn and winter
structurally. In April Roche filed its first marketing months in temperate climates and year-round in
applications for approval of Mircera to treat anemia tropical areas. It is particularly dangerous for
resulting from chronic kidney disease. The EU and young children, the elderly and people with chronic
US filings seek approval for the use of the product health problems. Every year, 100 million people
both in patients who are on dialysis and in those not fall ill with the flu in Europe, Japan and the US
on dialysis (see Major development activities, p. 28). alone. Influenza outbreaks occur every year, though
In December the FDA accepted additional data their extent and severity vary widely. Pandemics,
submitted by Roche to facilitate the agency’s review or global epidemics, occur every 10 to 40 years and
of the US marketing application and extended can affect up to half the world’s population.
the review period by three months. The trial in
the patent lawsuit brought by Amgen in the US Worldwide sales of Tamiflu (oseltamivir) contin-
is expected to begin in September 2007. Roche ued to rise strongly, driven mainly by pandemic
remains confident that Mircera does not infringe stockpiling, as governments increased their popula-
any of Amgen’s erythropoietin patents. tion coverage. Since 2004 over 75 countries have
placed orders for pandemic stocks of Tamiflu, with
Transplantation some purchasing enough to cover 25–50% of their
populations. Through a collaborative network of its
The number of organ transplants performed own facilities and those of other companies, Roche
worldwide remains steady at approximately 70,000 now has access to manufacturing capacity for
annually. As medical science extends the life Tamiflu that exceeds all government orders received
expectancy of patients with transplanted organs, to date. Research into the most effective utilisation
demand continues to increase for safe, effective of Tamiflu against the H5N1 virus is continuing,
immunosuppressants to control transplant rejec- both at Roche and through collaborations with
tion and for medicines to combat infections associ- independent experts, the World Health Organiza-
ated with transplantation. Roche supports basic tion and other institutions. Following EU approval
transplantation research through its funding of of Tamiflu for influenza prophylaxis in children
the independent Roche Organ Transplantation aged 1–12 years, the medicine can now be pre-
Research Foundation (see Promoting advances in scribed for treatment or prophylaxis in all patients
science, p. 84). aged one year or older.
The hepatitis B and C viruses (HBV, HCV) cause 4 million new cases occur each year. Hepatitis C is
acute and chronic liver disease, potentially leading the main reason for liver transplantation.
to liver failure, cirrhosis and liver cancer. World-
wide, 350 million people are thought to be chron- Despite an overall decline in market volume in the
ically infected with HBV, a highly infectious US and competition from a combination treatment
pathogen that is responsible for an estimated 1 mil- in Japan, sales of Pegasys (peginterferon alfa-2a),
lion deaths annually. More than 170 million people for the treatment of hepatitis B and C, continued to
around the world are infected with HCV, and 3 to grow in 2006. The product remains the leading
pegylated interferon treatment for chronic hepati- indication were issued by the FDA and the EMEA,
tis C. Sales of Copegus (ribavirin) continued to for use in patients with active RA who have an
decline overall due to generic competition in the inadequate response to or are unable to tolerate
US. In January 2007 Chugai received approval to anti-TNF therapy. Launches in the US, EU and else-
market Copegus in Japan for the treatment of where have commenced.
chronic hepatitis C in combination with Pegasys.
Actemra (tocilizumab) is a first-in-class humanised
With its proven medicines and diagnostic tests, monoclonal antibody designed to block inter-
Roche contributes to the global effort to combat leukin-6, an important protein involved in the
HIV infection and AIDS. We also continue to help inflammation associated with RA. In April 2006
improve the standard of HIV care worldwide by Chugai filed a marketing application in Japan
initiating and supporting projects that can make a for use of Actemra in the treatment of adult RA
difference at the local level. For information on and systemic onset juvenile idiopathic arthritis.
initiatives by Roche to help expand access to Supporting data include phase III results showing
HIV/AIDS treatment in the developing world, see that Actemra monotherapy significantly improves
Playing an active role (p. 67 of this report) and visit the symptoms of RA and slows the progression of
http://www.roche.com/home/sustainability.htm. joint damage. Roche plans to file marketing appli-
cations for Actemra in RA in the US and the EU in
Roche’s HIV medicines achieved steady growth 2007. The product is currently approved in Japan
throughout 2006. Sales of Fuzeon (enfuvirtide), for the treatment of Castleman’s disease, a rare
which works by blocking the entry of HIV into cells lymphatic condition. (See also Major development
of the immune system, rose 19% compared with activities, p. 28.)
2005. Combined sales of Invirase and Fortovase
(saquinavir) increased 28% to 182 million Swiss Other major products and franchises
francs. Growth is being fuelled by increasing uptake
of the recently introduced Invirase 500 mg tablet, Osteoporosis causes a gradual loss of bone density,
which offers patients greater convenience. making bones brittle and prone to break. It affects
millions of people worldwide, especially women
Rheumatoid arthritis after the menopause.
Rheumatoid arthritis (RA) is an autoimmune dis- Bonviva/Boniva (ibandronic acid) is the first and
order characterised by joint inflammation, but the only once-monthly oral bisphosphonate approved
disease can also affect the lungs, eyes and bone mar- for the treatment of postmenopausal osteoporosis.
row. Even when treated, it can result in progressive As the worldwide rollout gathered pace, full-year
joint destruction and loss of mobility. The exact sales of the product continued to rise strongly. In the
cause of RA is unknown, and as yet there is no cure. US Boniva now accounts for some 16% of new bis-
Within two years of developing RA, up to 70% of phosphonate prescriptions. New data published in
patients have X-ray evidence of joint damage, and September show that patients on monthly Boniva
within ten years 80% are unable to work or perform tend to continue treatment significantly longer than
everyday tasks. RA is one of the most common those taking weekly bisphosphonates, thus increas-
autoimmune disorders and is now thought to affect ing their chances of sustained treatment results.
over 21 million people worldwide. Current treat- Bonviva/Boniva Injection was approved in the US
ments include disease-modifying antirheumatic and Europe in January and March, respectively, and
drugs (DMARDs) and biologic medications that is currently being launched in those markets. Given
inhibit tumour necrosis factor (TNF), an inflam- once every three months, this new formulation
matory cytokine. offers effective treatment to women unable to take
or tolerate oral bisphosphonates.
MabThera/Rituxan is the first therapy developed
for RA that selectively targets B cells, which play Global sales of Xenical (orlistat 120 mg), for weight
a key role in the disease. First approvals in this loss, grew steadily in 2006, despite the launch of a
In 2006, nine of the Group’s phase III clinical trials met their primary endpoints, and five major trials reported
positive follow-up data
Product Indication (trial) Result
Actemra Rheumatoid arthritis (SATORI) Significantly improved disease scores (ACR 20
and ACR 70) compared with methotrexate
Avastin + Xeloda Metastatic colorectal cancer, first-line treatment Avastin: Significantly longer progression-free
(NO16966) survival compared with chemotherapy alone
Xeloda: At least as effective as 5-fluorouracil
(5-FU) in terms of progression-free survival
when combined with oxaliplatin
Avastin Renal cell carcinoma (AVOREN) Significantly longer progression-free survival
compared with interferon alone
Bonviva/Boniva Osteoporosis (MOBILE, follow-up) Sustained efficacy at hip and spine,
good tolerability over 3 years
Herceptin Metastatic breast cancer, combination with Significantly longer progression-free survival
anastrozole hormonal treatment (TAnDEM) and time to progression compared with
hormonal treatment alone
Herceptin Adjuvant breast cancer Significantly longer overall survival
(HERA, 23-month follow-up) (34% reduced risk of death) compared
with chemotherapy alone
Herceptin Adjuvant breast cancer Significantly longer overall survival
(BCIRG 006, 36-month follow-up) (up to 41% reduced risk of death) compared
with no treatment following completion of
adjuvant chemotherapy
MabThera/Rituxan Indolent non-Hodgkin’s lymphoma, Significantly longer overall survival
first-line treatment (RCVP, follow-up) (40% reduced risk of death) compared with
CVP alone
MabThera/Rituxan Rheumatoid arthritis Significantly better inhibition of structural
(REFLEX, 12-month follow-up) damage to joints compared with methotrexate
alone
Mircera Renal anemia – correction of hemoglobin levels At least as effective as epoetin and
in dialysis patients (AMICUS) darbepoetin in terms of response rate
Mircera Renal anemia – correction of hemoglobin levels At least as effective as epoetin and
in predialysis patients (ARCTOS) darbepoetin in terms of response rate
Xeloda Gastric (stomach) cancer (ML17032) At least as effective as 5-FU in terms
of progression-free survival, with better
response rates
Xeloda Esophagogastric cancer (REAL 2) At least as effective as 5-FU in terms of
overall survival, with a significant overall
survival advantage when combined with
oxaliplatin
Xeloda Metastatic colorectal cancer, second-line treatment At least as effective as 5-FU in terms of
(NO16967) progression-free survival when combined
with oxaliplatin
110 research projects in major therapeutic areas Roche Pharmaceuticals currently has 110 projects
(January 2007) in preclinical research across six therapeutic areas
and 90 development projects in eight therapeutic
areas, including 20 in phase 0 (transition from pre-
Oncology 29 clinical to clinical development).
Central nervous system 26
In 2006 fifteen projects were either terminated or
Viral diseases 9
reverted to our R&D partners. Of these, eight were
Respiratory diseases 5 in phase I, six in phase II and one in phase III.
Inflammatory, autoimmune
and bone diseases 14
Engaging partnerships
Cardiovascular and
metabolic diseases 27 In 2006 Roche Pharmaceuticals continued to
strengthen its R & D portfolio by entering into flex-
ible licensing and other collaborative agreements to
complement the Group’s in-house activities. Dur-
ing the year 40 new agreements were signed, includ-
The Roche Group’s many promising research ing nine product transactions and 23 research and
projects and late-stage development compounds technology collaborations. In addition to three new
are testimony to the expertise of its more than co-development projects with Chugai, announced
12,000 research and development specialists and to in July, Roche signed agreements in the second half
their commitment to one goal: creating and bring- of the year with Plexxikon (targeted cancer com-
ing to market innovative, clinically differentiated pound), InterMune (protease inhibitors for hepati-
medicines. In 2006, for the fifth consecutive year, tis C) and Actelion (S1P1 immunomodulator for
Roche Pharmaceuticals was named to Science’s list autoimmune disorders).
of the top 20 employers in the biotech and pharma-
ceutical industries, moving up to third place in a Major development activities
field of over 300 companies. Genentech, a member
of the Roche Group, was again ranked number one. Oncology
Roche and its partners continue to explore the
Roche continues to refine its R & D selection crite- benefits of Avastin, Tarceva, Xeloda, Herceptin
ria to maximise the success of projects that reach and MabThera/Rituxan in additional important
phase III clinical testing, the most costly and time- cancer indications and also in combination with
consuming part of the drug development process. each other and other treatments in comprehensive
In 2006 nine of the Group’s phase III clinical trials clinical development programmes. Our oncology
successfully reached their primary clinical end portfolio is being expanded further, as promising
points. compounds progress through clinical develop-
ment.
R & D pipeline
Because of its mode of action, Avastin is demon-
In 2006 the Pharmaceuticals Division filed 13 new strating effectiveness against a wide range of solid
marketing applications and gained 14 regulatory tumours. Roche and Genentech are currently test-
approvals. At the beginning of 2007 the Division’s ing Avastin in eight distinct types of cancer, with
R & D pipeline comprised 101 clinical projects, plans for development in another eight. Avastin
including 48 new molecular entities (NMEs) and is being studied in phase III trials as an adjuvant
53 additional indications. Twenty-five NMEs are treatment for colon cancer, and in advanced
currently in phase I, 18 in phase II and five in phase (metastatic) pancreatic, prostate and ovarian can-
III or filed for regulatory review. In 2006 the total cer. It is also being tested in combination with
number of late-stage projects (NMEs and addi- Tarceva in NSCLC and in combination with Her-
tional indications) increased from 41 to 47. ceptin and other drugs in metastatic breast cancer.
At the beginning of 2007 the Pharmaceuticals Division’s R&D pipeline comprised 101 projects, including Phase I: Initial studies in healthy volunteers and possibly in patients
48 new molecular entities (NMEs) and 53 additional indications. Twenty-five NMEs are currently in phase I, Phase II: Efficacy, tolerability and dose-finding studies in patients
eighteen in phase II and five in phase III or filed for regulatory review. Phase III: Large-scale studies in patients for statistical confirmation of safety and efficacy
Blue type signifies first indication, black type additional indications. Therapeutic protein
Current as of January 2007. Small molecule
Pharmaceuticals
Results from the phase III ‘Avastin in Lung’ trial Hematology and nephrology (anemia)
(BO17704), which is exploring the combination of The results of six major phase III trials of Mircera
Avastin with chemotherapy in the first-line treat- in renal anemia, involving over 2,400 patients
ment of advanced NSCLC, are expected in the first with chronic kidney disease, were presented at
half of 2007. major medical conferences in 2006. The data
show that dialysis patients can be switched directly
A phase II study investigating combined Herceptin and successfully to maintenance therapy with
and Avastin (without chemotherapy) in the first- once-monthly Mircera from other medicines
line treatment of HER2-positive metastatic breast requiring administration up to three times a week
cancer showed that 54% of the patients had a – the first time such a switch has been achieved.
complete or partial response (tumour shrinkage). In addition, two studies of anemia correction
Recruitment has started for a phase III trial in previously untreated patients with chronic
(AVEREL) to investigate adding Avastin to Her- kidney disease demonstrated that Mircera can be
ceptin plus docetaxel in the first-line treatment of given to these patients just twice monthly from
metastatic breast cancer. Roche and Genentech also the outset – another first. Clinical development
plan to investigate combined Avastin and Herceptin of Mircera for chemotherapy-induced anemia
in the adjuvant HER2-positive breast cancer set- in cancer patients, currently in phase II, is pro-
ting. ceeding as planned.
Roche and its partners are currently evaluating Rheumatology and autoimmune diseases
MabThera/Rituxan in a phase III trial as mainte- New clinical results published in 2006 on the use of
nance therapy following first-line treatment with MabThera/Rituxan in patients with rheumatoid
the product for indolent non-Hodgkin’s lym- arthritis (RA) who have not responded to therapy
phoma. MabThera/Rituxan is also being evaluated with one or more TNF inhibitors included the
in two phase III programmes as a first-line treat- first radiographic evidence that MabThera/Rituxan
ment and as therapy for relapses in chronic lym- significantly inhibits joint destruction and data
phocytic leukemia. showing the continued benefit of additional treat-
ment courses with the drug. Development of the
HERA, a major phase III trial in which Herceptin is product in a broader group of RA patients with
given to women with early-stage breast cancer for mild to moderate disease who have not responded
12 or 24 months, continues; further data will be adequately to treatment with disease-modifying
announced as the study matures. Herceptin is also antirheumatic drugs (DMARDs) is on track, with
being evaluated in phase III trials for the treatment four phase III trials in progress.
of HER2-positive stomach cancer.
Actemra is being developed as a treatment for RA in
Xeloda is currently being developed in the adjuvant one of the most extensive phase III programmes
breast cancer setting, and recruitment of patients Roche has ever undertaken. Five clinical trials
for a large phase III study of the product combined with over 4,000 patients are currently ongoing in
with docetaxel was completed in January 2007. 41 countries. Patient enrolment was completed in
December.
Omnitarg (pertuzumab), a HER2 dimerisation
inhibitor, is being developed for the treatment of Ocrelizumab is an anti-CD20 humanised mono-
ovarian and breast cancer. The results of a recent clonal antibody being developed by Roche and
phase II study of Omnitarg plus gemcitabine versus Genentech for moderate to severe rheumatoid
gemcitabine alone in advanced (platinum-resis- arthritis. Like MabThera/Rituxan, ocrelizumab also
tant) ovarian cancer are encouraging. Results from targets B cells. As a fully humanised antibody, it has
a phase II study of the drug in platinum-sensitive the potential to be even better tolerated. Promising
ovarian cancer are expected in 2007. The results of phase I/II data were presented at the American
both studies will form the basis for a decision on College of Rheumatology conference in November
progression to phase III development. showing that ocrelizumab was well tolerated and
Actemra – partnering
in action
Actemra (tocilizumab) is a humanised mono-
clonal antibody designed to block an inflamma-
tion-causing protein called interleukin-6 (IL-6).
It is the first drug of its class for rheumatoid
arthritis (RA), the first antibody-based drug to
originate in Japan and Roche and Chugai’s first
co-development project.
tightly controlled in the liver. Glucokinase is an closely mimics the action of the natural human
enzyme that plays a key role in both organs. By hormone GLP-1 and offers potential for weekly or
targeting both pathways, R1440, Roche’s first- longer administration intervals. Unlike other GLP-
in-class oral glucokinase activator, is designed to 1 analogues, R1583 has so far not provoked anti-
provide better control of type 2 diabetes than the body responses in any of the people given the drug.
current standard therapy. R1440 is currently in A phase IIb study is currently being prepared, with
phase II clinical trials. Roche is also developing first administration planned for early 2007.
other compounds that act on glucokinase and other
components of glucose metabolism as potential Dyslipidemia
treatments for type 2 diabetes. Lack of high-density lipoprotein cholesterol (HDL-
C), or ‘good’ cholesterol, is associated with an
In July Roche announced that it was exercising its increased risk of cardiovascular disease. R1658,
option to license, develop and market R1583 (BIM licensed from Japan Tobacco, is a cholesteryl ester
51077), a long-acting glucagon-like peptide-1 transfer protein (CETP) inhibitor with a unique
(GLP-1) analogue developed by Ipsen for type 2 mechanism of action that is designed to raise levels
diabetes. R1583 has a similar structure to and of HDL-C. Phase II studies are nearing completion;
the data indicate that the compound has a good Roche Pharmaceuticals is currently investing
safety profile and the desired effects on HDL-C and around 2 billion Swiss francs in manufacturing
other blood lipids (fats). The results of these stud- infrastructure projects, including major biotech
ies will form the basis for a decision in 2007 on facilities to produce the active ingredients of
entry into phase III testing. Unlike a development Avastin and Herceptin in Basel (Switzerland) and
compound from the same class that was recently Penzberg (Germany), new formulation, filling,
discontinued by another company, R1658 has not packaging and logistics facilities for injectable and
been associated with any adverse cardiovascular infusable medicines in Kaiseraugst (Switzerland)
changes or any increase in blood pressure when and Mannheim (Germany), and a facility in Toluca
given to patients as monotherapy or in combina- (Mexico) for the formulation of highly potent
tion with statins; nor did R1658 affect cardiovascu- medicines such as Xeloda.
lar parameters in animal models.
Virology
Chronic infection with HCV genotype 1 is one of
the most difficult types of hepatitis C to treat. This
viral subtype is found in the largest subgroup of
patients with hepatitis C. Only 50–55% of patients
with HCV genotype 1 respond to current treat-
ments, and many experience severe side effects. To
meet the need for new treatment options, Roche
has several novel anti-HCV agents in clinical devel-
opment. R1626, currently in phase II, is a potent
inhibitor of HCV polymerase, an enzyme that is
essential for replication of the virus. In addition,
two compounds from partnerships with Pharm-
asset and Maxygen entered phase I clinical testing
in 2006.
Manufacturing infrastructure
Number of employees
2006 20,712
2005 20,352
2004 19,565
Key figures
% change % change in
In millions of CHF in CHF local currencies % of sales
Sales 8,747 6 5 100
– Diabetes Care 3,019 5 3 35
– Centralized Diagnostics 3,100 7 5 35
– Molecular Diagnostics 1,211 3 3 14
– Near Patient Testing 785 8 7 9
– Applied Science 632 12 12 7
EBITDA 2,500 –4 –5 28.6
Operating profit1) 1,422 –20 –21 16.3
Research and development 700 0 –1 8.0
1) Before exceptional items.
totalled 2.5 billion francs, or 28.6% of sales, com- In the United States customers have had access to
pared with 31.7% in 2005; this was well above the the complete Roche portfolio of insulin delivery
industry average. products since the FDA lifted its import alert
on Accu-Chek insulin pumps in October. The
customer response there to the Accu-Chek Spirit
Business areas pump, which is now available in more than 30 coun-
tries, was very positive during its first three months
Diabetes Care on the US market. Roche Diabetes Care’s insulin
delivery business posted double-digit growth.
Roche Diabetes Care supplies a broad range of
blood glucose meters and insulin delivery systems Centralized Diagnostics
for better diabetes management. Monitoring systems
with integrated lancets, test strips and software for Laboratory workloads are increasing with the
storing and analysing data are an increasingly growing demand for tests to detect diseases early
important part of Roche’s diabetes care portfolio and for more targeted therapies. At the same time,
because they improve glucose control for many hospital-based and commercial laboratories are
users, in addition to offering greater convenience. under pressure to contain or cut costs. Roche
Activities aimed at integrating glucose monitoring Centralized Diagnostics supplies instruments,
and data management with insulin delivery are tests, data management software and services that
ongoing and may one day result in systems that enable laboratories to cope with these challenges by
closely mimic the way the healthy pancreas regu- simplifying workflows and enhancing productivity
lates blood glucose levels. and efficiency.
Roche Diabetes Care remained the global market In 2006 Roche Centralized Diagnostics posted
leader in 2006. Following 1% growth in the first above-market sales growth of 5% and remained the
half-year, sales rose 5% in the third quarter and industry leader with a market share of about 13%.
6% in the fourth. Full-year sales were up 3% from The rollout of the medium-throughput cobas 6000
the previous year. analyser series and the European launch of the
cobas c 111 analyser for customers with small testing
The new Accu-Chek product portfolio makes it volumes marked important steps in a business
even easier for people with diabetes to manage their strategy centred on making clinical chemistry and
condition. Besides the Accu-Chek Spirit insulin immunochemistry testing simpler and more effi-
pump, it includes the Accu-Chek Aviva and Accu- cient. An application for US marketing approval for
Chek Go blood glucose monitoring systems and the cobas c 111 analyser was submitted to the FDA
Accu-Chek Compact Plus, an all-in-one system in late 2006. The cobas 6000 analyser series is a fully
integrating a glucose meter with an automatic test automated, integrated system capable of handling
strip dispenser and a lancing device. Also new is the more than 95% of the routine tests performed
Accu-Chek Multiclix lancing device, which features daily by a medium-volume laboratory. Thanks to its
a unique preloaded lancet drum for safer, more flexible, modular design, it can be configured exactly
convenient and comfortable blood sampling. to customers’ individual needs, and new modules
Market uptake of these products has been strong, can be added at any time as those needs grow.
spurring additional sales growth and helping to off-
set declining sales of the Accu-Chek Advantage sys- Immunoassay sales continued to grow significantly
tem, one of Roche Diabetes Care’s most successful faster than the market, advancing 13% in 2006
products for nearly a decade. The rollout of new thanks to products like the Elecsys proBNP and
monitoring systems was completed in mid-2006 Elecsys Troponin T assays for cardiac disorders.
with the launch of the Accu-Chek Compact Plus in Sales of the NT-proBNP marker grew 28%, helped
North America and Accu-Chek Aviva in Japan. The by additional US approval of the Elecsys proBNP
entire new family of Accu-Chek products is now assay for use in assessing the risk of cardiac events
available worldwide. in patients with stable coronary artery disease.
the HIV viral load test for this platform is already monitoring and CoaguChek XS Plus for healthcare
well advanced, and Roche is preparing to submit professionals, commenced their European rollout in
its marketing application for the HCV test to the January and October, respectively. CoaguChek XS
FDA in early 2007. Monitoring viral load (the received FDA approval in the third quarter of 2006,
amount of virus in a patient’s blood) is an impor- and a full US launch is planned for the first quarter
tant way of assessing disease progression and treat- of 2007. These systems provide patients taking oral
ment response. anticoagulants and their health professionals accu-
rate, on-the-spot results from a single drop of blood.
In June Roche began rolling out the new fully Their successful launch has strengthened Roche’s
automated cobas s 201 modular blood screening global leadership in coagulation monitoring.
system and cobas TaqScreen MPX multiplex test
across Europe. The cobas TaqScreen MPX test, Roche Near Patient Testing is also the clear leader
which simultaneously detects HIV, HCV and HBV in hospital-based blood glucose monitoring. The
in donated blood, received CE Mark (Conformité Accu-Chek Inform meter and Accu-Chek Advan-
européenne) certification in March. These prod- tage and Accu-Chek Sensor test strips are the core
ucts are now available in all European countries. products driving Roche’s growing market share in
US filings for the multiplex test and a separate this segment.
West Nile Virus test on the cobas s 201 system are
planned for 2007. Applied Science
During the year additional large US laboratories The life sciences encompass disciplines ranging
signed on to offer the AmpliChip CYP450 Test, a from biology, genetics and proteomics to medical
microarray-based test that detects genetic varia- research into major disease areas such as cancer and
tions which can affect the way patients respond to virology. Roche Applied Science supplies a broad
treatment with many widely prescribed drugs. and growing array of instruments and highly spe-
cific test reagents and test kits for research applica-
Roche is preparing to submit filings to the FDA in tions in this diverse market.
the first half of 2007 for tests to detect and geno-
type low-, intermediate- and high-risk strains of Roche Applied Science’s sales grew 12% in 2006,
human papillomavirus (HPV). Persistent infection nearly twice the market growth rate. Growth
with certain HPV genotypes is a known risk factor was driven primarily by the LightCycler 480
for cervical cancer. instrument and Genome Sequencer 20 system.
LightCycler 480 is a highly versatile high-through-
Near Patient Testing put gene expression and mutation analysis plat-
form based on the polymerase chain reaction
Roche Near Patient Testing supplies products for (PCR) technology pioneered by Roche. The inno-
use outside the central laboratory, for example in vative Genome Sequencer 20 system, first launched
physicians’ offices and at patients’ bedsides. Portable in late 2005, marks Roche’s successful entry into
diagnostic and monitoring devices, rapid, simple- the attractive DNA sequencing research market.
to-perform tests and advanced software to support It can sequence long DNA fragments and entire
clinical decision-making at the point of care are its genomes 60 times faster than conventional com-
core product groups. mercially available instruments.
This business area reinforced its market leadership Roche Applied Science is also a supplier of indus-
in 2006. Overall sales rose 7% for the year, helped trial reagents and substrates, which account for a
by the continued trend towards decentralised major part of its sales revenues. These products
testing. were important contributors to growth in 2006.
Centralized Diagnostics cobas 6000 analyser series: Integrated clinical chemistry (cobas c 501 module) and
immunoassay (cobas e 601 module) platform for mid-volume laboratories;
designed for easy on-site expandability
cobas c 111: Stand-alone clinical chemistry and electrolyte analyser for
extra-small-workload laboratories
cobas IT 5000 solution: Laboratory information system that supports all steps of laboratory
testing, from order entry to result reporting. Features connectivity, sample management,
quality control and validation capabilities
Molecular Diagnostics cobas TaqScreen MPX multiplex Test: Multiplex test for the detection of HIV-1
(groups M and O), HIV-2 and hepatitis B and C on the cobas s 201 system;
can be used to screen whole blood, plasma and organs and tissues from living donors
LightCycler SeptiFast Test (CE): Rapidly and reliably detects and identifies
the 25 pathogens responsible for 90% of all bloodstream infections
Near Patient Testing CoaguChek XS Plus: Hand-held coagulation monitoring system for professional use
CoaguChek XS: Hand-held coagulation monitoring system for self-testing
Applied Science LightCycler 480 instrument: New 96-well format and software modules extending
the system’s broad range of applications
Professional Diagnostics1) cobas e 411: Stand-alone immunochemistry analyser for small- and
medium-workload laboratories. Successor to Elecsys 2010
MPA connectivity for the cobas 6000 analyser series: Connectivity hardware and software
for cobas 6000 and Modular Pre-Analytics modules; offers laboratories total automation
from sample preparation to result
Additional configurations of the cobas 6000 analyser series, combining the cobas c 501
and cobas e 601 modules: cobas <5012I601>, cobas <5012>, cobas <501I6012>,
cobas <6012>. The new configurations are designed to suit an even wider range
of laboratory workloads
cobas c 311 system: Stand-alone clinical chemistry analyser for small- to
medium-workload laboratories
MyLabView: Portal for online benchmarking of results obtained with Serum Work
Area analysers
cobas IT 3000 solution: Central lab data management system (WAM/middleware)
for instrument interface consolidation, providing result-related reagent and test
information
cobas IT 1000 solution: Work area manager for hospital point of care; product updates
will be released periodically throughout 2007
cobas h 232: Portable system for bedside or fixed-location cardiac testing;
test menu of Roche cardiac assays
cobas h 152: Hand-held meter for measuring cholesterol, triglycerides and
lactate in blood; designed for professional and self-testing environments
Molecular Diagnostics Cobas TaqMan 48 HBV Test for automated real-time PCR amplification and
quantitation of hepatitis B virus (US)
Cobas TaqScreen WNV Test and cobas s 201 system for automated real-time
PCR detection of West Nile virus in donated blood and plasma (US)
Cobas AmpliPrep/Cobas TaqMan HIV, HBV and HCV Tests for automated
real-time PCR amplification and quantitation of HIV-1 and hepatitis B and C virus
(HIV in US; HIV, HBV, and HCV in Japan)
Applied Science Broad rollout of Genome Sequencer FLX, a next-generation DNA sequencing system
that is even faster and more cost-efficient than Roche´s ultrafast Genome Sequencer 20
to the needs of low-workload laboratories. It com- of serious psychiatric diseases. Also in 2007, Roche
prises the cobas e 411 immunoassay system, will explore the use of its AmpliChip CYP450 Test
scheduled for launch in early 2007, and the cobas to identify variations in the CYP2D6 gene that
c 311 clinical chemistry system, due to follow in inhibit metabolism (conversion) of the breast
the second half of the year. The cobas e 411 system cancer drug tamoxifen in the body to its active
provides results for critical assays in as little as form. Women with CYP2D6 variants that make
nine minutes. them poor metabolisers of tamoxifen have been
shown to receive less therapeutic benefit from the
Proteomics research at Roche has identified several drug.
novel biomarker candidates for colorectal, lung and
breast cancer and rheumatoid arthritis. Near Patient Testing
Prevention
Not only can influenza disrupt holiday plans – it can be an illness
with devastating consequences. Each year, seasonal influenza
affects over 100 million people worldwide, with over 36,000 deaths
attributed to the disease in the US alone. Children and the
elderly are most at risk, along with people whose health is already
compromised by other conditions. Treating the initial case with
Tamiflu and giving Tamiflu prophylaxis to other family members is
proving effective in preventing transmission of influenza within
households.
Corporate Governance
Roche meets all relevant corporate governance Mauro was elected as a new member of Roche’s
requirements. In particular, it complies with all highest governing body, also for a term of four
applicable laws and with Swiss Stock Exchange years. Rolf Hänggi, who had served as a Vice-Chair-
(SWX Swiss Exchange) directives (including the man of the Board of Directors since 1996, declined
commentaries thereto) and the Swiss Code of Best to stand for re-election at the AGM.
Practice for Corporate Governance promulgated
by the Swiss business federation economiesuisse. At its organising meeting immediately following
The company’s internal governance framework, par- the AGM, the Board of Directors adopted changes
ticularly its Articles of Incorporation and Bylaws, to its committee structure and committee member-
embodies all the principles needed to ensure that ships as shown in the table on page 43. In particu-
the company’s businesses are managed and super- lar, the Audit and Corporate Governance Commit-
vised in a manner consistent with good corporate tee was reconstituted as the Audit Committee, and
governance, including the necessary checks and responsibility for corporate governance, sustain-
balances.1) ability and reporting on legal compliance, safety,
health and environmental protection, which
Our printed Annual Report contains selected links was previously part of the Audit and Corporate
to the Roche website (www.roche.com). Readers are Governance Committee’s remit, was transferred to
thus provided not only with a ‘snapshot’ of our a newly established Corporate Governance and
company at the reporting date but are also directed Sustainability Committee, chaired by Andreas Oeri.
to sources which they can consult at any time for The Finance and Investment Committee was dis-
up-to-date information about corporate govern- solved and its remit transferred to the new Audit
ance at Roche. Whereas each Annual Report covers Committee, chaired by DeAnne Julius.
a single financial year ending 31 December, our
website contains information of a more permanent At the next Annual General Meeting of Roche
nature as well as the latest Roche news. Amend- shareholders on 5 March 2007, the Board of Direc-
ments to our company’s Articles of Incorporation tors will propose that Pius Baschera and Wolfgang
and Bylaws and changes in the curricula vitae of the Ruttenstorfer be elected as additional members of
members of the Board of Directors and the Corpo- the Board.
rate Executive Committee are published in timely
fashion on our website, where they can be accessed Pius Baschera, a Swiss citizen born in 1950, has
by anyone looking for this information. been chairman of the board of Hilti Corporation
since the start of 2007. After completing degrees in
mechanical engineering and management studies
Board of Directors at the Swiss Federal Institute of Technology, Zurich,
Pius Baschera joined Hilti in 1979. He held a num-
At the 88th Annual General Meeting (AGM) of ber of positions in the United States and Europe
Roche Holding Ltd, on 27 February 2006, DeAnne
Julius, Peter Brabeck-Letmathe and Horst Teltschik
were elected to additional four-year terms on the
Board of Directors. In addition, Beatrice Weder di 1) http://www.roche.com/home/company/com_gov.htm
Board of Directors as of 1 January 2007 (from left): John I. Bell, Beatrice Weder di Mauro, Peter Brabeck-Letmathe,
Bruno Gehrig, André Hoffmann, Franz B. Humer, Lodewijk J. R. de Vink, DeAnne Julius, Walter Frey, Andreas Oeri, Horst Teltschik
* Committee chairperson.
1 January 2007.
2) http://www.roche.com/home/company/
com_gov/com_gov_arti.htm
Corporate Executive Committee as of 31 December 2006 (from left): Jonathan K. C. Knowles, Pierre Jaccoud,
Severin Schwan, Burkhard G. Piper, William M. Burns, Eduard Holdener, Franz B. Humer, Peter Hug, Erich Hunziker,
Rolf Schläpfer, Gottlieb A. Keller, Osamu Nagayama
• The company has a share capital of 160,000,000 (see §18 of the Articles of Incorporation of
Swiss francs, divided into 160,000,000 fully paid Roche Holding Ltd4) and the Minutes of the 88th
bearer shares with a nominal value of 1 Swiss Annual General Meeting of Roche Holding Ltd,
franc each. There are no restrictions on the exer- held 27 February 2006).5)
cise of the voting rights of these shares. Upon • Chairman of the Board of Directors Franz B.
deposit, shares can be voted without any restric- Humer continues to be the only director also
tions. serving in an executive capacity at Roche, and
• There is no authorised or conditional capital. the majority of seats on the Board of Directors
• In addition, 702,562,700 non-voting equity secur- are held by independent directors.
ities (NES) have been issued in bearer form. • None of the non-executive members of the
They do not form part of the share capital and Board of Directors has been a member of Roche’s
confer no voting rights. Each NES confers the Corporate Executive Committee or served in
same rights as one share to participate in avail- an executive capacity at any Group subsidiary
able earnings and in any liquidation proceeds during the three financial years preceding the
following repayment of the share capital. Roche’s current reporting period.
NES and the rights pertaining thereto (including • The internal organisation of the Board of Direc-
the provisions protecting the interests of NES tors and the division of authority and responsi-
holders) are described in §4 of the Articles of bilities between the Board and management, the
Incorporation of Roche Holding Ltd. remits of the Board committees and the informa-
• Information on debt instruments which have tion and control mechanisms available to the
been issued and on outstanding bonds is pro- Board in its dealings with corporate manage-
vided in the Finance Report, Note 30 to the ment are governed by the Bylaws.6)
Roche Group Consolidated Financial Statements • The Board of Directors of Roche Holding Ltd is
(‘Debt’, page 81). organised so as to ensure that the Group’s busi-
• Additional information on employee stock nesses are conducted responsibly and with a
options is provided in the Finance Report, Note focus on long-term value creation. To this end,
14 to the Roche Group Consolidated Financial the Roche Board has delegated certain responsi-
Statements (‘Employee stock options and other bilities to several committees.7) Their composi-
equity compensation benefits’, page 64). tion and chairpersons as of 1 January 2007 are
• Roche has issued no options apart from employee described on page 43.
stock options, Stock-settled Stock Appreciation • All the committees except the Presidium are
Rights (S-SARs) and options issued in connec- chaired by independent directors.
tion with debt instruments. • Under Articles 4.2.2 and 6.2/6.3 of the Bylaws of
• Neither the options awarded to employees nor the Board of Directors, the Independent Lead
the debt instruments which have been issued Director may, at his own discretion or at the
have any effect on Roche’s share capital. request of any member, convene a Board meeting
without the Chairman present. The Roche Board
(3) Board of Directors and Corporate Executive meets once a year to assess the Chairman’s per-
Committee formance. This meeting, which is not attended by
• Information on each member of the Board of the Chairman, is chaired by the Independent
Directors (including the years in which they were Lead Director.
elected and the years in which their terms end)
and each member of the Corporate Executive 3) http://www.roche.com/home/company/com_gov.htm
Committee is listed on pages 42 to 45 above. 4) http://www.roche.com/home/company/
com_gov/com_gov_arti.htm
Curricula vitae and other information (includ-
5) http://www.roche.com/home/company/
ing information on board memberships) are
com_gov/com_gov_gv.htm
available on the Internet.3) 6) http://www.roche.com/home/company/
• The Annual General Meeting elects the members com_gov/com_gov_bylaws.htm
of the Board of Directors in staggered elections 7) http://www.roche.com/home/company/
in which each nominee is voted on separately com_gov/com_gov_com.htm
• The Board of Directors regularly conducts a self- • The Chairman and the Secretary to the Board of
assessment of its performance. Directors are always present at Board meetings,
• The Board of Directors has established a system except when the Board is discussing their per-
of controls which is overseen by the Audit Com- formance or remuneration. The other members
mittee and by the Corporate Governance and of the Corporate Executive Committee are
Sustainability Committee and consists of the fol- invited to attend for, and report in person on,
lowing elements: those agenda items concerning them. When the
– Reports on financial and operating risks situation warrants, members of the Enlarged
– Internal audits Corporate Executive Committee may also be
– Compliance Officer invited to attend. The Board committees invite
– Safety, Health and Environmental Protection the Chairman of the Board and other Corporate
Department Executive Committee members to deliver reports
– Corporate Sustainability Committee at committee meetings and may elect to commis-
– Scientific and Ethics Advisory Group (SEAG), sion independent expert reports and call on the
for issues relating to genetics and genetic engi- services of consultants. The risk management
neering (established in 1999). system is subject to continuous review, with
• Each year several black-out periods are imposed review findings being presented to the Audit
during which senior employees are prohibited Committee or the full Board. Internal Audit regu-
from trading in company stock. The following larly briefs the Audit Committee with reference
black-out periods are in effect for 2007: to ongoing audit reports. Members of Internal
1 January to 7 February Audit attend Audit Committee meetings, as do
1 April to 17 April external auditors. For information on the exter-
1 July to 19 July nal auditors, see page 48.
1 October to 18 October • There are no management contracts which fall
Black-out periods can be changed by the Chair- within the meaning of Subsection 4.3 of the SWX
man of the Board of Directors if circumstances Directive on Information relating to Corporate
warrant. Governance.
• In 2006 the Board of Directors met for four
meetings, each from 3 to 6 hours in length*; once (4) Remuneration, shareholdings and loans
for a full-day meeting*; and once for a three-day All details regarding remuneration, sharehold-
official trip which included an additional Board ings and loans are set forth in the Remuneration
of Directors meeting*. The Board committees Report on pages 50 to 57.
met as follows in 2006:
– Presidium of the Board of Directors/ (5) Participatory rights of shareholders
Nomination Committee: five meetings • The participatory rights of shareholders are
(approx. 2 hours each*) defined in Roche’s Articles of Incorporation.8)
– Audit Committee: three meetings As Roche shares are issued to bearer, there are
(approx. 3 to 4 hours each*) no restrictions on admission to Annual General
– Corporate Governance and Sustainability Meetings, with the exception that shares must be
Committee: two meetings (approx. 3 hours deposited within a specified period before the
each*) date of a meeting and an admittance card must
– Remuneration Committee: two meetings be issued in the shareholder’s name, as provided
(approx. 2 to 3 hours each*) in §12 of the Articles of Incorporation. Any
– Audit and Corporate Governance Committee shareholder can elect to be represented by
(discontinued): one meeting (approx. 3 hours*) another shareholder at an Annual General Meet-
– Finance and Investment Committee (discon- ing. The Articles of Incorporation contain no
tinued): one meeting (approx. 2 hours*). restrictions on the exercise of voting rights, and
* These figures indicate the actual length of meetings and do
not include the directors’ extensive pre-meeting prepara- 8) http://www.roche.com/home/company/
tions and post-meeting follow-up activities. com_gov/com_gov_arti.htm
(6) Change of control and defensive measures Ernst & Young Ltd received the following remu-
• The Articles of Incorporation contain no provi- neration for their services as the auditors of
sions on the mandatory bid rule. Swiss law Genentech and Chugai:
applies.
• There are no change-of-control clauses. Those 2006 2005
components of remuneration based on Roche (millions of CHF)
NES would be terminated in the event of an Genentech and Chugai audits 4.8 4.4
acquisition, and vesting period restrictions on Other consulting services provided
pre-existing awards would be removed, so that all to Genentech and Chugai 0.7 0.5
such options could be immediately exercised. Total 5.5 4.9
13) http://www.roche.com/home/investors/
inv_contact.htm
Remuneration Report
Roche’s success depends on the abilities and dedica- Stock-settled Stock Appreciation Rights
tion of its people. Recognition of this is the founda-
tion of our remuneration policy and system. In this Stock-settled Stock Appreciation Rights (S-SARs)
remuneration report we inform our shareholders were introduced by Roche on 1 January 2005, thus
and interested members of the general public about establishing a uniform system of remuneration
the remuneration paid to our directors and senior throughout Roche. S-SARs entitle holders to bene-
executives. As an integral part of our Annual fit financially from any increase in the value of
Report, this remuneration report will be submitted Roche’s non-voting equity securities between the
for approval at the Annual General Meeting. grant date and the exercise date. Detailed informa-
tion is available on page 56 and 57.
Remuneration policy
Performance Share Plan
Roche revised its global remuneration policy in
2004. It is part of a framework of employee policies The members of the Corporate Executive Commit-
aimed at motivating and retaining current employ- tee and other members of senior management
ees, attracting talented new ones and helping all (some 50 individuals worldwide) participate in the
Roche employees to perform at consistently high Performance Share Plan (PSP), which was estab-
levels. Our remuneration policy is designed to fos- lished at the beginning of 2002 for periods of three
ter value creation and reinforce a culture of per- years each. The first performance cycle ended in
formance and innovation, and it applies to non- 2004, and the second cycle (PSP 2005–2007) is now
managerial employees as well as to managers. Key in its third year.
principles underpinning this policy are:
Starting in 2006, an adjusted plan design was intro-
• A focus on value creation duced. Under the new arrangements only one-third
• Pay for performance as many non-voting equity securities (NES) are
• Enabling employees to share in the company’s awarded, and a new three-year performance cycle
success starts each year, in contrast to the successive three-
• Fairness and transparency in remuneration year cycles under the old plan design. In 2006 there
decisions were thus two overlapping performance cycles, PSP
• Remuneration targeted at market median levels 2005–2007 and PSP 2006–2008, which however do
• A balanced mix of long- and short-term remu- not increase the total award. For details of the PSP,
neration components see page 53 and 54.
• Market-competitiveness.
Over the five years since the PSP was established in
Awards of Stock-settled Stock Appreciation Rights 2002, Roche securities (shares and NES), including
and a Performance Share Plan support these prin- dividend yields, have almost doubled in value,
ciples. These remuneration components are linked outperforming nine-fold the 11% value growth
to our company’s financial performance and com- delivered by a peer set of major pharmaceuticals
mercial success and thus align the interests of and diagnostics companies1).
Roche employees with those of the stockholders.
The value of CHF 100* invested 1st week of January 2002, for the period ending 31 December 2006
Apr
July
Oct
Jan
Apr
July
Oct
Jan
Apr
July
Oct
Jan
Apr
July
Oct
Jan
Apr
July
Oct
Dec
Roche NES 204 Roche share 195 Peer Set 111 * Prices translated at constant CHF
Price = 218.50 Price = 247.50 Index* exchange rates.
3) 10,000 Swiss francs per committee membership/year, except for members of the Presidium and vice-chairmen.
4) The remuneration paid to F.B. Humer (the only executive member of the Board of Directors) is deducted from his agreed
salary (see ‘Remuneration of members of the Corporate Executive Committee’).
5) Remuneration for serving as Independent Lead Director and Vice-Chairman of the Board.
6) Prorated remuneration for serving as a member of the Board of Directors in January and February 2006 and as Vice-Chair-
man of the Board for the period from March to December 2006.
7) Prorated remuneration for the period from March to December 2006.
Roche paid 122,719 Swiss francs into a retirement Members of the Corporate Executive Committee
policy for John Bell in 2006. additionally receive annual expense allowances of
30,000 Swiss francs; the Chief Executive Officer
Horst Teltschik received honoraria (including receives an annual expense allowance of 50,000
expenses) amounting to 25,132 euros (39,457 Swiss Swiss francs. In 2006 the members of the Executive
francs) for serving on the boards of several Roche Committee received expense allowances totalling
subsidiaries in Germany. 200,000 Swiss francs.
Otherwise, no additional remuneration was paid to Heino von Prondzynski stepped down from the
members of the Board of Directors. Corporate Executive Committee on 31 December
2005. During 2006 he assisted with the transition to
(1.2) Remuneration of members of the his successor. Heino von Prondzynski resigned from
Corporate Executive Committee Roche with effect from 31 December 2006. In 2006
The general provisions assigning authority for deci- he was paid a salary of 1,300,000 Swiss francs. He
sions on Corporate Executive Committee remuner- received a bonus of 700,000 Swiss francs in respect
ation to the Remuneration Committee and to the of 2005 and an expense allowance of 30,000 Swiss
Board of Directors are outlined on page 51 of this francs.
remuneration report.
C. Performance Share Plan
In 2006 the members of the Corporate Executive The members of the Corporate Executive Commit-
Committee received the salaries, bonuses, stock tee and other members of senior management
options/Stock-settled Stock Appreciation Rights and (some 50 individuals worldwide) participate in the
non-voting equity securities shown in the tables on Performance Share Plan (PSP).
page 52.
2006 2005
Total estimated Total estimated
value of PSP awards value of PSP awards
Target number of Target number of (2005–200710) (2005–2007)
NES for PSP NES for PSP and 2006–200811)) and 2006–200812))
2006–2008 2005–2007 (in CHF) (in CHF)
F. B. Humer 10,365 48,028 4,252,957 3,498,039
W. M. Burns 2,578 9,557 883,833 696,068
E. Hunziker 2,750 11,708 1,053,024 852,733
G. A. Keller 1,203 4,380 406,629 319,010
J. K. C. Knowles 2,148 8,363 765,551 609,105
S. Schwan 1,117 3,106 307,575 226,220
Total 20,161 85,142 7,669,569 6,201,175
10) Estimated value for 2006: calculated using the year-end price as of 31 December 2006 (CHF 218.50 per non-voting equity secur-
ity [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 2007), and spread over the relevant period of time, i. e. 1⁄3 for the year 2006. The Board of Directors will
vote on the actual allocation of NES originally targeted on 31 December 2007 according to the TSR growth achieved.
11) Estimated value for 2006: calculated using the year-end price as of 31 December 2006 (CHF 218.50 per non-voting equity secur-
ity [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 2008), and spread over the relevant period of time, i. e. 1⁄3 for the year 2006. The Board of Directors will
vote on the actual allocation of NES originally targeted on 31 December 2008 according to the TSR growth achieved.
12) Estimated value for 2005: calculated using the year-end price as of 31 December 2006 (CHF 218.50 per non-voting equity secur-
ity [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 2007), and spread over the relevant period of time, i. e. 1⁄3 for the year 2005. The Board of Directors will
vote on the actual allocation of NES originally targeted on 31 December 2007 according to the TSR growth achieved.
171
The value of CHF 1001) invested 140
on 1 January 2005 120
127
80
100
100
40
0
1) Prices translated at constant CHF exchange rates. TSR = stock price appreciation plus dividend.
In 2006 the PSP moved to overlapping three-year bers of the Corporate Executive Committee as
performance cycles, with a new cycle beginning shown in the table on page 53. The Board of Direc-
each year. In 2006 there were thus two cycles in tors will decide on the actual level of NES or cash
progress (PSP 2005–2007 and PSP 2006–2008). equivalent awards for the cycles 2005–2007 and
Under the provisions of this plan, a number of non- 2006–2008 after the close of the 2007 and 2008
voting equity securities (NES) have been reserved financial years, respectively.
for the participants in each cycle. The number of
securities actually awarded will depend on whether At the end of two years and one year, respectively,
and to what extent an investment in Roche securi- of the PSP 2005–2007 and PSP 2006–2008 per-
ties (shares and NES) outperforms the average formance cycles (both based on a three-month
return on an investment in securities issued by a moving average at constant exchange rates) Roche
peer set of comparator companies.13) Comparisons ranked 2 and 11 compared with its peer set14) of
are based on the securities’ market prices and divi- 17 companies operating in the same industry.
dend yields, i. e. on Total Shareholder Return (TSR).
To reduce the effect of any short-term market fluc- Roche’s market value rose from 113 billion to
tuations, security prices are averaged over the three 192 billion Swiss francs in the period from 1 January
months (October to December) prior to the start 2005 to 31 December 2006, an increase of 79 billion
of a performance cycle and over the three months Swiss francs or 69.9 %. Dividends totalling 3.881 bil-
(October to December) at the end of the cycle. If lion Swiss francs (2005: 1.725 billion Swiss francs,
Roche securities perform as well as or better than 2006: 2.156 billion Swiss francs) were distributed.
those of 75% of the peer set and, in addition,
Roche’s TSR increases at least 10% during a cycle, D. Indirect benefits
the Board of Directors can elect to increase the Employer contributions that were made in 2006
maximum NES award by as much as two-fold. In to social security schemes, pension plans and a
the event that an investment in Roche securities
underperforms the average return delivered by the
peer companies, fewer or no NES will be awarded. 13) See footnote 1, page 50.
In 2006 NES were reserved under the plan for mem- 14) See footnote 1, page 50.
Indirect benefits
15) MGB: Stiftung der F. Hoffmann-La Roche AG für Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation
supplementing occupational pension benefits).
16) AHV/IV/ALV: Swiss social security programmes providing retirement, disability and unemployment benefits.
17) Owing to amendments to Switzerland’s Federal Occupational Old Age, Survivors’ and Disability Pension Act (BVG), contri-
butions on behalf of Franz B. Humer were limited to 1,308,585 Swiss francs. Existing contractual obligations result in an
additional provision of 1,549,862 Swiss francs by the company.
Group-wide employee stock purchase plan (Roche Pensions totalling 2,014,352 Swiss francs were paid
Connect) in respect of members of the Corporate to two former Corporate Executive Committee
Executive Committee are shown above in the table members.
‘Indirect benefits’.
Franz B. Humer, Erich Hunziker, William M. Burns
Roche Connect is a voluntary stock purchase plan and Jonathan K.C. Knowles received in total USD
offering employees the opportunity to buy Roche 193,104 (241,380 Swiss francs) for serving on the
non-voting equity securities (NES) up to an amount Chugai Board. Erich Hunziker, William M. Burns
equal to 10% of their annual salary at a 20% discount. and Jonathan K.C. Knowles are on the Genentech
NES purchased under this plan are subject to a hold- Board but have declined remuneration for serving
ing period, which in Switzerland is four years. in this capacity.
Roche paid 883,086 Swiss francs in occupational Otherwise, no additional remuneration was paid
pension contributions, 206,094 Swiss francs in to current or former members of the Corporate
employer AHV (social security) contributions and Executive Committee.
27,500 Swiss francs in Roche Connect contribu-
tions for Heino von Prondzynski. F. Highest total remuneration
Chairman and CEO Franz B. Humer was the mem-
E. Other remuneration, emoluments and loans ber of the Board and the member of the Corporate
to corporate officers Executive Committee with the highest total remu-
neration in 2006 (see ‘Remuneration of members
Gottlieb A. Keller repaid his mortgage loan from of the Corporate Executive Committee’, page 53).
the F. Hoffmann-La Roche Ltd Pension Fund at the Subject to changes in allocations and computations
end of 2006. relating to the three-year Performance Share Plan
(PSP) periods 2005–2007 and 2006–2008, Franz B.
Roche paid Severin Schwan 45,123 Swiss francs Humer’s salary was as follows:
for one-time relocation and housing costs.
18) Black-Scholes value as described in ‘Stock options/Stock-settled Stock Appreciation Rights’, see below.
19) See ‘Remuneration of members of the Corporate Executive Committee’, C. Performance Share Plan (PSP), page 53.
20) Estimated value for 2006 in the PSP 2005–2007 and PSP 2006-2008 cycles; not paid out in 2006.
21) Estimated value for 2005 in the PSP 2005–2007 cycle; not paid out in 2005.
22) Value for the year 2004 in the PSP 2002–2004 cycle.
23) MGB: Stiftung der F. Hoffmann-La Roche AG für Mitarbeiter-Gewinnbeteiligung (employee profit-sharing foundation
supplementing occupational pension benefits).
24) Including provision, see footnote 17, page 55.
25) Payments into pension schemes.
26) Including annual expense allowances and remuneration for serving on the Chugai Board [USD 138,750 (CHF 173,437)].
(* Figure does not include shares held in the shareholder group with pooled voting rights.)
Number of stock options and S-SARs held by members of the Corporate Executive Committee
on 31 December 2006 (S-SARs first issued in 2005)
200627) 200527) 2004 2003 2002
Total number 151,725 196,641 115,743 101,958 8,784
Strike price in CHF 195 123 129.50 77.80 115.50
Expiry date 2. 2. 2013 3. 2. 2012 3. 2. 2011 25. 2. 2010 26. 2. 2009
Grant value per option and (starting in 2005) per S-SAR in CHF
(Black-Scholes value minus 11%) 34.02 20.89 31.92 16.27 30.10
27) S-SARs.
All of the options shown in the table were issued using the Black–Scholes formula and as if the
by Roche as employee stock options. Each option options were tradable, with an 11% deduction for
entitles the holder to purchase one Roche non- the average two-year vesting period.
voting equity security (NES).
The strike prices, expiry dates and grant values for
Under the terms of this multi-year option plan, the options and S-SARs are shown in the table above.
strike price of the options shown was the closing The numbers of options and S-SARs as calculated
price for Roche NES on the last day of trading prior at the time of issue have been entered as values in
to the Roche Annual Media Conference. All of the the table ‘Remuneration of members of the Corpo-
options shown are non-tradable. One-third of the rate Executive Committee, B. Stock options/Stock-
options are subject to a vesting period of one year, settled Stock Appreciation Rights’ on page 52.
one-third have a vesting period of two years, and
one-third a vesting period of three years. Unvested
options lapse without compensation if employ-
ment is terminated voluntarily (for reasons other
than retirement), while vested options must be
exercised within a limited period of time. The fair
value of the options is calculated at the date of issue
using the Black-Scholes formula and as if the
options were tradable, with an 11% deduction for
the average two-year vesting period.
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Building and maintaining relationships with these We communicate with patients through health-
groups helps us to better understand their needs care professionals who pass on patients’ views
and develop our business strategy to generate max- to us, through product-related websites such as
imum benefits for both the company and our stake- www.accu-chek.com or www.bonepain.com, through
holders. The diagram ‘Our Relationships with Key our issue-management system and through patient
Stakeholders’ shows the main benefits of our rela- associations. In 2006 Roche worked with a number
tionships with different groups. of patient associations on a global, regional and
national level on issues important to patients such as time Innovest rated us top in their sustainability
healthcare policy, patient access to healthcare, dis- ranking of 44 global pharmaceutical companies.
ease awareness, education and patient information. These results clearly support the integration of sus-
We maintain close relationships with health author- tainability into our business.
ities and healthcare professionals to ensure new
products meet legal requirements and user needs. In partnership with our suppliers
In 2006 our Pharmaceuticals Division carried out Our aim is for suppliers and service providers to
an extensive stakeholder engagement project with meet our own internal standards for employment
key opinion leaders, patient groups, oncology soci- and environmental performance as well as legal
eties, clinical trial groups and the research commu- requirements. Roche’s internal guidelines explain
nity. The project aimed to gain a global perspective the conduct we expect from the companies we
of these groups and their perception of Roche and purchase from.
will be used as a basis for further developing our
relationships with them. We have around 80 key suppliers. We monitor
how well they comply with our guidelines, using
Dialogue with our customers can provide positive questionnaires and on-the-spot audits, keeping a
and negative feedback. Such reality checks are an particularly close eye on workplace safety, industrial
important source of information for improving our hygiene, pollution and waste management.
products and services, ensuring successful product
launches and meeting the needs of our customers. Two-thirds of these suppliers had been audited by
the end of 2006. Compliance was found to be accept-
Increasing value for our shareholders able or good at 85% of them. Roche is working with
and investors the remaining 15% to help them improve their
standards. Should a supplier refuse either an audit
We aim to achieve a fair valuation of our business, or request for improvement, Roche will cease to do
and our communication is based on the principle business with them.
of fair disclosure. We communicate with investors
and the wider financial community to help inform More on the web:
their investment decisions. An increasing number
of investors also seek information about environ- • Corporate Sustainability Committee Charter, goals
mental, social and governance issues. and activities: www.roche.com/sus-charter
• Access to medicines: www.roche.com/sus-access
In 2006 we engaged directly with investors through • Patient groups: www.roche.com/sus-patient_groups
the Annual General Meeting, customer visits to • Investor relations: www.roche.com/investors
Roche, Roche-organised events, our Annual and • Media: www.roche.com/media
Half-Year Reports and Investor Updates. We also • Suppliers: www.roche.com/sus-suppliers
participated in 26 broker conferences and held • Employees: www.roche.com/sus-employees
26 road shows in key markets. • Scientific community: www.roche.com/science
and www.roche.com/sus-foundations
Roche’s Investor Relations team was ranked by • Governments, NGOs, Regulatory Authorities, Health-
Institutional Investor amongst the best in Switzer- care Payers: www.roche.com/sus-external_affairs
land and the pharmaceutical sector in 2006 and
IR Magazine in Europe judged our investment com-
munity events to be the best in continental Europe Priority actions
across all sectors.
We have six key priorities (see table on page 65) to
Roche was listed as a healthcare leader in the Dow ensure we make the maximum contribution to sus-
Jones World, Dow Jones STOXX and FTSE4Good tainable development. These are part of a broad
Sustainability Indexes, for the third year. For the first work plan that covers our everyday activities.
There are many ethical and social issues that have Extending access to medicines is an integral part of
an impact on our business and must be well man- healthcare, along with prevention, diagnosis, treat-
aged. These include: ment and monitoring. Working with governments
and other organisations is the only way to increase
• Value, access to and affordability of our access to innovative and life-saving tests and
medicines and diagnostics medicines. This is why Roche has implemented dif-
• Retaining and attracting top talent ferent programmes and partnerships for improving
• Business ethics access in least developed and developed countries.
• Responsible marketing
• Conduct of clinical trials The value of innovative products
• Patient safety and product quality
• New technologies Cancer is the second biggest killer in Europe after
• Respecting human rights. heart disease. Some oncology specialists suggest
that the cost of innovative drugs such as Avastin,
This section explains each of these issues, their Roche’s treatment for colorectal cancer, prevents
importance to Roche and how we are responding to doctors from using it. With the increasing preva-
them. lence of cancer and stretched healthcare budgets
this debate will continue.
Value, access and affordability However, a focus on the price of the drug ignores
the medical value these products provide. Roche’s
Developing products and services that save and innovative drugs Avastin, Herceptin, MabThera,
improve lives is the greatest contribution Roche can Tarceva and Xeloda have revolutionised the way
make to society. But countless people in both the cancer is treated, providing significant benefits to
developed and developing world cannot access the millions of cancer patients and improving the effi-
tests and medicines they need. ciency of healthcare systems. These drugs can slow
the progression of cancer, dramatically improve
Many developing countries lack even the most basic quality of life and even save lives when used in the
healthcare facilities. As well as medicines, they early stage of the disease (see box).
need the infrastructure and health professionals
to ensure the right diagnosis is made and the right We increasingly find that governments and payers
medicines get to the right people. Education is also grant full reimbursement for our oncology drugs
essential for combating the spread of preventable once they have seen the demonstrable benefits
infections, including HIV/AIDS. to patients, society and healthcare systems. For
example, based on remarkable results in early
Even in industrialised nations, the availability breast cancer, payers in several countries have taken
of some medicines varies between neighbouring exceptional measures to reimburse early treatment
countries. Some patients with the same disease are with Herceptin before the drug received regulatory
able to live longer, healthier lives than others simply approval.
because of where they live, due to varying levels
of access to medicines. Even when medicines are Only 16% of total healthcare spend is on medicines,
available, some people cannot afford them, or the and just 1% on diagnostic tests. But use of diagnos-
insurance to pay for them. tics, combined with medicines, can dramatically
increase effectiveness in healthcare by enabling pre-
vention, early diagnosis, treatment and treatment
Priority Actions
Priority Goals Progress
Embedding Ensure that contributing – Identified business-relevant sustainability issues and analysed links
sustainability to sustainable development between those issues and Roche’s economic success
is part of our daily work – Began developing key performance indicators to measure progress
and increases the success – Piloted sustainability risk identification process to flag SEE topics
of our business. – Reselected in DJSI and FTSE4Good Indexes
More on page 60 and at www.roche.com/sus-principles_objectives
Access to Continue to develop – 13 new marketing applications filed and 14 marketing approvals received
healthcare innovative medicines and – 166,070 patients participated in clinical trials
ways to increase access – 87% of people living with HIV/AIDS covered by reduced pricing
to our products globally – Established Technology Transfer Initiative for sub-Saharan Africa
(in developed, developing and the LDCs; 3 agreements signed in 2006
and least developed – Tamiflu manufacturing capacity increased over 500% in 2 years
countries). More on page 64 and at www.roche.com/sus-access
Ensuring Strengthen ethical – Code of Conduct e-learning programme available in ten languages
responsible compliance and awareness and launched in 86 countries
business in all Roche activities – Published revised position paper on clinical trials
practices – Published details of 375 clinical trials and 117 trial results
on independent website
– 17 phase I patient trials in seven different medical conditions published
for first time
– Developed guidelines on working with patient groups and published
list of key groups on website
– Over 80% of animal testing sites now AAALAC accredited.
More on page 69 and at www.roche.com/sus-governance,
www.roche.com/sus-research_dev and www.roche.com/sus-ethics
Patient safety Provide highly effective – Strengthened Safety Risk Management plan to emphasise safe use
medicines whose benefits of Roche products and maintain positive benefit/risk profile
exceed risks and with – Updated global website to improve transparency and disclosure on our
minimal adverse drug safety processes
reactions More on page 74 and at www.roche.com/sus-patient_safety
Retain and Establish programmes – Genentech ranked first and Roche Pharmaceuticals third in Science
attract top talent to retain and attract the magazine’s top employers in the biotech and pharmaceutical industries
best talent for the right job, – 90% of Roche employees surveyed say they are proud to work for Roche
and foster performance – 78% of key management positions filled internally
culture – 30% of eligible employees participated in employee non-voting equity
securities programme
– Introduced new secondment policy enabling employees to contribute
to projects in developing countries for 3 to 18 months
– Launched Roche Engage which focuses on how to engage employees
with our business strategy
More on page 78 and at www.roche.com/sus-employees
Safety, Implement action plans – Developed position papers covering key SHE issues
health and at all sites to achieve long- – Developed and allocated site-specific goals to contribute to Group goals
environmental term Group goals: – Organised global SHE conference focusing on risk management,
protection – Reduce accident and energy efficiency and on the development of action plans to reach goals
absence rates – Issued Group directive on energy conservation, based on international
– Reduce environmental energy workshops, including energy efficiency standards for equipment
impacts and installations
– Ensure energy efficiency – Met five-year targets for reducing emissions of greenhouse gases and
targets volatile organic compounds (VOCs) sooner than planned
– Reduce emissions of – 19 sites received the Roche Responsible Care Network award for
greenhouse gas and VOC outstanding low accident rates or positive trends
– Improve compliance with – Received no relevant fines relating to SHE
Roche’s SHE standards More on page 88 and at www.roche.com/sus-she
monitoring. This brings great cost benefits and programmes. This often includes any additional
health benefits. We have an increasing respon- treatment and testing other than that normally
sibility to demonstrate not only the medical but the received. Where necessary we continue to provide
economic benefits our products bring. our drugs free of charge until the product is com-
mercially available.
Enabling global access
Over 7,000 hospitals and clinics worldwide are
We sell our products and services in more than compensated for each patient taking part in Roche
170 countries, and our customers have access to trials. This money is often used to fund additional
them through regular channels such as clinicians’ nursing staff, educational centres and research that
practices, pharmacies and hospitals. otherwise would not be possible. Phase IV, or post-
approval trials, allow clinicians to become familiar
We provide free medicines and testing to patients with a new drug and its safety profile prior to its
involved in our extensive phase I-IV clinical trial widespread availability.
In the United States we support several Patient • Continue research and development into new
Assistance Programmes providing free medicines HIV/AIDS medicines
for people who need them but have inadequate • Promote education, training and knowledge-
or no health insurance. These include the Roche sharing
Patient Assistance Programme and the Partnership • Donate technical expertise to local service
for Prescription Assistance. providers and manufacturers.
The Genentech Access to Care Foundation and the Patents and pricing of HIV/AIDS medicines
Genentech Endowment for Cystic Fibrosis both
provide free medicines to eligible uninsured and With as many as 25 million people living with the
underinsured patients. In October 2006 Genentech disease in sub-Saharan Africa, improving access to
announced that it has doubled its contribution to HIV/AIDS treatment remains a priority.
independent charities that provide financial assis-
tance for the medical treatment of eligible patients. Roche’s policy is not to enforce existing patents
Genentech further unveiled plans to begin a first- or apply for new patents for any of our medicines
of-its-kind programme to cap the overall cost of in the least developed countries (LDCs1)). The
Avastin at USD 55,000 per year and per eligible same applies to HIV/AIDS medicines in other sub-
patient for any FDA-approved indication. The Saharan African countries. We supply our protease
programme will be available for eligible patients inhibitors Invirase (saquinavir) and Viracept (nelfi-
regardless of whether they are insured or not. navir) at no-profit prices to the LDCs and all of
The company anticipates the launch of the new sub-Saharan Africa. These are the lowest prices at
programme in the first quarter of 2007. which the medicines can viably be made available
in the long term. Roche also supplies the drugs at
Patients benefiting from access to free Roche Group reduced prices in countries defined by the World
products in 2006 Bank as low- or lower middle-income.
Number of patients actively participating
in phase I–IV trials worldwide 166,070 Our no-profit pricing applies to more than 26 mil-
Number of patients benefiting from lion people in 63 countries, covering 64% of all
Patient Assistance Programmes people living with HIV/AIDS. This increases to
(United States only) 75,500 87% if we include the reduced prices charged in
Total 241,570 low- and lower middle-income countries.
Technology Transfer Initiative (see box). Three noses were made in sub-Saharan Africa on infants
agreements for technology-sharing were reached exposed to HIV. Some 440,000 patients in this
within nine months of the January 2006 launch, region had their HIV/AIDS treatment monitored.
and discussions continue with 22 companies from
14 countries. Cambodia Treatment Access Programme (CTAP).
This public-private partnership has increased the
AmpliCare. Viral load tests allow doctors to moni- availability of HIV/AIDS therapies and provides
tor precisely the progression of a patient’s HIV local training for healthcare professionals. Since
infection and modify treatment to keep drug resis- its launch in 2003, the programme has enrolled
tance under control. Through AmpliCare, local over 1,000 patients, provided HIV/AIDS training
authorities and hospitals have built and equipped for 400 Cambodian healthcare workers and, in
laboratories, trained lab workers and diagnosed and September 2006, opened a permanent treatment
monitored their patients. In 2006, 299,000 diag- centre in the capital, Phnom Penh.
CARE. This partnership between Roche and the In 2006 we implemented an e-learning programme
PharmAccess Foundation has helped make – Behaviour in Business: Roche’s Principles and
HIV/AIDS treatment sustainable by strengthening Guidelines/Code of Conduct – to strengthen
local health systems and training African healthcare awareness. The programme is available in ten lan-
workers. In 2006, we hosted the fourth CARE man- guages, and rollout will be completed early in 2007
agement exchange workshop, a training meeting with a target participation rate of at least 90%
for 150 healthcare workers from 15 African coun- (excluding employees of Chugai, Genentech and
tries. The event provided valuable insight into the other US affiliates which have their own compli-
real needs of people involved in the fight against ance programmes).
HIV/AIDS in Africa. The findings will be submitted
for publication in 2007. This global initiative has increased compliance
awareness, leading to a higher number of alleged
WHO Division for Tropical Diseases. In 2006 we compliance failures referred to the compliance offi-
ran a series of workshops on auditing and quality cer. Out of 36 alleged compliance failures, 23 cases
assurance for researchers managing and moni- required corrective action, including termination
toring WHO trials on tropical diseases. We also of employment contracts. In 2007 we will continue
audited WHO trials of leishmaniasis and supported raising awareness of the Code of Conduct with an
training events in sub-Saharan Africa and Asia. emphasis on local training initiatives.
• Access programmes and partnerships: Ethical concerns often arise when developing new
www.roche.com/sus-access_programmes medicines and diagnostics. Groundbreaking sci-
• HIV/AIDS patent and pricing policies ence such as stem cell research brings great benefits,
www.roche-hiv.com but also presents risks and comes with responsibil-
• Roche Patient Assistant Foundation: ities.
www.rocheusa.com/programs/patientassist.asp
Ethics Liaison Office and resolved. None of them mous samples to ensure patient confidentiality and
required further escalation. the redesign of patient consent forms to make them
clearer.
Key topics addressed at the 2006 CREAG meeting
included our policy on Transparency in Clinical Responsible animal testing
Trials, and a review of recent cases that have been
brought to the Global Ethics Liaison Office. Roche takes public concern about the use of ani-
mals for scientific research very seriously. We
A second independent panel, the Science and Ethics support all efforts to find alternatives, including
Advisory Group (SEAG), provides Roche with external organisations such as the Swiss 3Rs Foun-
guidance, advice and counsel on issues broadly dation (Replace, Reduce, Refine). In 2007 we plan
related to genetics, genomics and proteomics. Key to establish a Roche ‘3Rs award’ to stimulate further
topics discussed in 2006 included the use of anony- internal efforts in this area.
We do not use animals if the same results can be As an active member of major industry associa-
obtained without them. But animal experiments are tions, Roche contributes to reviews of their codes of
sometimes the only suitable way to identify side practice. These include the EFPIA Code of Practice
effects and are often legally required. We then use the for the Promotion of Medicines, last reviewed in
test which causes the animal the least distress, such as November 2004, and the revised IFPMA Code of
non-invasive magnetic resonance imaging (see box). Pharmaceutical Marketing Practices which came
into force on January 1, 2007.
In 2006 we designed an animal welfare audit check-
list for our contractors. Our goal is to encourage The General Manager of each Roche affiliate is
discussion within our industry about independent responsible for ensuring compliance with their
auditing – possibly involving animal welfare organ- national code of practice, which is based on either
isations – of contractors such as specialised animal the IFPMA or EFPIA code, and all applicable laws
experimentation companies. on marketing of pharmaceuticals. Compliance is
monitored by our Internal Audit team and Com-
In 2006 over 95% of all animals used in our pliance Officer.
research were mice and rats. Just over 0.5% were
non-human primates. Animals used in research We strongly believe that patients should have an
carried out by contractors represent less than 10% active role in decisions regarding their health
of all animals used by the Roche Group. and well-being. To ensure this, we work alongside
patient groups who share our aim to provide new,
We expect all our testing sites will have received effective and safe treatments as quickly and system-
accreditation from the Association for the Assess- atically as possible.
ment and Accreditation of Laboratory Animal Care
(AAALAC) by the end of 2007. We introduced a set of guidelines for working with
patient groups in February 2006. These aim to cre-
More on the web: ate genuine and mutually beneficial partnerships
that reflect common values of integrity, indepen-
• Roche Corporate Principles and Code of Conduct: dence, respect and transparency. They specify that
www.roche.com/sus-principles_code_conduct work carried out must benefit the patients repre-
• The Clinical Research Ethics Advisory Group: sented by the group, and that groups should not be
www.roche.com/sus-creag asked to endorse a specific product (see box).
• The Science and Ethics Advisory Group:
www.roche.com/sus-seag Protecting our intellectual property
• Animal welfare:
www.roche.com/sus-animal_welfare Adequate protection of innovation is essential in
• Policy and position papers: our industry if we are to continue finding new diag-
www.roche.com/sus-policies_positions_guidelines nostics and drugs to fight diseases such as cancer,
Alzheimer’s, diabetes and HIV/AIDS.
Counterfeiting poses health risks ment and customs officials. We are doing our
utmost to tackle the problem. Our statement on
Fake pharmaceutical and diagnostic products are counterfeiting is available on our website.
not only an infringement of intellectual property
rights, but more importantly endanger the lives and Biosimilars
well-being of patients. Fakes can cause serious
illness or death if they contain harmful ingredients Several innovative biological medicines will reach
or deprive patients of proper treatment. the end of their patent period in the next few years,
and the introduction of products claiming to be
Responsibility for preventing and controlling drug similar to the original is likely. These are known as
counterfeiting rests primarily with national gov- biosimilars, or follow-on biologics. As the manu-
ernments and international organisations. Roche facture of both the active substance and the finished
cooperates worldwide with regulators, law enforce- product requires a high level of quality control to
ensure clinical safety, the approval of biosimilars There are concerns that clinical trials in developing
requires its own set of guidelines, and we are con- countries may not be carried out to the same stan-
tributing to their development. dard as in the developed world. Roche employs
ICH GCP as the minimum global standard for all
More on the web: Roche trials. In 2005, we introduced additional
policies for conducting clinical trials in low- and
• Marketing guidelines: middle-income countries to support our wider
www.roche.com/sus-marketing global position on clinical research.
• Guidelines for working with patient groups:
www.roche.com/sus-patient_groups We support training on good clinical practice in sub-
• Global patent function: www.roche.com/sus-patents Saharan Africa and on quality assessments in Asia
• Counterfeiting: www.roche.com/sus-patents through the Forum for Ethical Review Committees
• Biosimilars: www.roche.com/sus-biosimilars in Asia and the Western Pacific Region (FERCAP).
Before medicines are released, evidence of their We publish data from our clinical trials, so that
safety and effectiveness must be provided, using more people can benefit from the findings. Our
well-designed and controlled clinical studies. online clinical trial protocol registry and results
database (see address below) provides information
All clinical studies in Roche are conducted in com- about all new trials and key results from completed
pliance with international guidelines and must be phase II–IV trials. Both the registry and the database
approved by regulatory authorities. These include are hosted by an independent company.
the Food and Drug Administration (FDA), the
European Agency for the Evaluation of Medicinal Details of 375 clinical trials and 117 trial results
Products (EMEA) and Ethics Committees and local have been published on the website since its launch
Institutional Review Boards. in April 2005, with more than 100,000 people
accessing the database. This includes 39 studies on
These boards ensure proposed trials are acceptable, breast cancer, 47 on anemia and 66 on hepatitis.
that participants are fully informed about benefits In addition, from December 2006 all Roche trials
and risks related to their participation and that are now posted on the US National Institutes of
investigators take appropriate actions to protect Health’s global registry at www.clinicaltrials.gov.
patients from any harm.
Following requests from patient groups, recom-
Our Framework for Discussing and Resolving Eth- mendation by the WHO, and consultation with the
ical Issues in Clinical Research, together with the Clinical Research Ethics Advisory Group (CREAG),
Good Clinical Practice Toolkit we provide to those we now post information on phase I trials con-
involved, ensure all trials of our pharmaceutical ducted in patients (17 posted year to date, in seven
products meet International Conference on Har- different medical conditions). This enables patients
monisation (ICH), WHO and other internation- with serious diseases to seize this – albeit small –
ally-recognised standards on good clinical practice, opportunity to find a new treatment solution.
as well as local laws.
More on the web:
Our guidelines are available on our intranet and
employees working on trials are trained and • Global position statement on clinical research,
required to follow them. All trials, and the processes resolving ethical issues and clinical trials in
and systems used to conduct them, are audited by developing countries:
our Pharmaceuticals Division Quality Assurance all at www.roche.com/sus-clinical_research
team. • Clinical trial registry: www.roche-trials.com
Ensuring patient safety and firms the safety and effectiveness of our products
product quality in the marketplace, giving us early indications of
potential product issues and helping us to take
Users of our medicines and diagnostics have the preventative action.
right to expect every effort is made to ensure their
safety. Roche has systematic processes for collect- In early 2007 we plan to update our website to
ing, reporting and analysing data to ensure patient include more detail about patient safety, product
safety throughout the product lifecycle, in full com- quality and related procedures.
pliance with local regulations.
More on the web:
We work hard to protect patients from potential
adverse reactions to our drugs. We examine all • Patient safety:
reported adverse events to identify what is related to www.roche.com/sus-patient_safety
the product and what might be incidental to use of • Risk management procedure:
the product. Adverse reactions are identified as early www.roche.com/sus-risk_management
as possible and classified in terms of their severity
and whether the risks outweigh the benefits.
Position on new technologies
Our drug safety department works with all Roche
affiliates to monitor drugs both before and after New technologies offer great opportunities for
they are launched. While reporting a suspected medical advances but their development and use
adverse reaction to Roche is mandatory during also create legitimate social concerns. For this
phase I–III trials, once the drug has been launched reason, we continuously monitor, evaluate and
we rely on patients, healthcare professionals and discuss the use of developing technologies.
authorities to do so. Employees must immediately
report any information on a suspected adverse Biotechnology uses living organisms to make or
event or quality issue to our Drug Safety Depart- modify products or processes for a specific use.
ment. Applications of biotechnology include genetic
engineering, gene and stem cell therapy. Roche does
Our risk management procedure ensures patients not currently carry out any stem cell research.
and the relevant authorities are informed promptly
once an adverse reaction has been confirmed. Many Biotechnology also has the potential to replace
health authorities require us to report serious certain chemicals during drug manufacture,
adverse reactions within 15 days. Our country and making processes safer and more environmentally
manufacturing sites are also subject to health sound. In 2006 we published a new position paper
authority inspections. on the safety, health and environmental aspects
of biotechnology. A paper on nanotechnology is
Our Pharma Manufacturing Standards lay out rules currently being drafted.
and tightly-controlled procedures to ensure high
quality standards and compliance with external More on the web:
regulations. They cover all aspects of our business
and include a comprehensive safety data review • Roche Position paper on biotechnology:
process. This ensures any new information we www.roche.com/sus-biotechnology
receive about a drug is assessed and product infor- • Roche charter on genetics:
mation is updated as necessary. www.roche.com/sus-genetics
• Science and Ethics Advisory Group:
Our Diagnostics Division ensures product design, www.roche.com/sus-seag
production, release and post-market surveillance • Embryonic stem cells and therapeutic cloning:
activities all meet regulatory and customer require- www.roche.com/sus-stem_cell
ments. Our global complaint handling system con- • Bioprospecting and biodiversity:
www.roche.com/sus-biodiversity
Therapy
By selectively targeting the B cells that play a key role in RA,
MabThera interrupts a series of reactions in the process that
leads to the joint inflammation, cartilage loss and bone erosion
characteristic of the disease. More than 1,000 patients with RA
have been treated with MabThera in clinical trials to date.
MabThera is marketed in the US by Genentech and Biogen Idec
under the brand name Rituxan.
We employ 74,372 people in 66 countries around Employees (FTE) by operating divisional group in 2006
the world. Roche created 4,577 new jobs in 2006,
increasing our total workforce by 6.6%.
Roche Pharmaceuticals 36,608
Chugai 6,161
The Roche business strategy is based on sustained
Genentech 10,472
innovation and growth. Our main source of innova-
tion comes from talented individuals within the
company. Therefore our ability to retain, attract and Other 419
recruit the most talented and motivated employees
is vital to our continued business success. To retain Diagnostics 20,712
these people, it is essential that they can successfully
develop their skills and careers at Roche. We must
also continue to attract and recruit the best talent on
the market to enable our business to grow. Employees (FTE) by region in 2006
Value chain
We want to attract the best talent in our industry. Our ‘One door into Roche’ programme, launched
To achieve this objective we must remain an in 2005, enables prospective employees to search
employer of choice. We monitor perceptions of for jobs throughout the company on our website –
Roche as an employer through feedback on our by function, division or country. Job seekers receive
website and our ratings in external surveys. personalised e-mail alerts when appropriate posi-
tions become available. We have accumulated a
Our continual efforts to be an employer of choice global talent pool of more than 60,000 external can-
were again recognised by external studies around didates through this process, allowing us to build
the world in 2006. Science magazine voted Genen- relationships with potential recruits. Since 2005 we
tech first and Roche Pharmaceuticals third out of have filled 1,700 positions using this system.
330 companies in the top employers in the biotech
and pharmaceutical industries. The survey covered Roche is keen to reach as many people as pos-
questions such as corporate image, leadership and sible as a potential employer. In October 2006,
direction, work culture and environment, social we launched accessibility features on our career
responsibility, compensation and benefits, and website to improve usability and accessibility for
work–life balance. We have consistently improved people with disabilities.
our position over the last five years. Genentech held
on to the number one spot for the fifth year running. E-recruiting has halved the time it takes to recruit.
This improves efficiency and reduces the dropout
In 2006 Roche was also named an ‘employer of rate of desirable candidates by enabling us to act
choice’ by surveys in Canada, Chile, Italy, Germany, faster than competitors. It also helps to increase
Portugal, Spain and the US. Our Australian recruit- mobility and development opportunities for exist-
ing team was awarded ‘Best recruiting team’ and ing employees who have the chance to work else-
Roche Diagnostics Germany was named ‘Best where within the Roche Group, by opening up the
employer for women’. For a full list of awards internal job market for all to see.
received by local divisions, visit our dedicated
career website at http://careers.roche.com.
How does an international assignment con- skills in an ever-changing environment like ours. It
tribute to individual and company performance? enables people to reach beyond their limits and strive
‘An international assignment offers a unique oppor- to achieve more. An international assignment is a
tunity to be exposed to unusual circumstances, be it powerful tool to develop talent, share best practices
personally, professionally, and culturally. It fosters a between countries and come up with innovative ways
greater creativity, flexibility and adaptability – crucial to support our strategy.’
Developing successful
careers
‘I like the fact that Roche expects efficiency and results
from its employees, while providing a fair and caring
working environment.’
Udo Bäckert is Head of Technical Services in Basel and
has been with the company for 23 years
‘The global opportunities which I have enjoyed in my In her three years at Roche, Louisa Shen has worked in
career at Roche have tremendously broadened my a range of Diagnostics roles in Switzerland, Canada and
perspective in both my work and personal life. The work China
is always very demanding and challenging, I can say
for certain that there is never a boring day.’
Twenty mid- and top-level managers from our Asia Roche Pharmaceuticals introduced a new policy in
Pacific Diagnostics Division took part in our first 2006, enabling employees to expand their horizons
annual APAC Discovery programme in September and contribute their skills and expertise to projects
2006. The two-week course at the internationally in developing countries by taking a secondment of
recognised Nanyang Business School in Singapore three to 18 months away from their regular jobs.
focuses on development of their leadership skills.
Participants are selected for their high leadership Roche Diagnostics has set up an exchange pro-
potential, consistent track record and commitment gramme enabling employees from IT departments
to the company. Graduates of the programme will in Germany, Switzerland and the US to work in
form a pool of emerging leaders to ensure Roche’s another country.
continuing success in the region. Rapid growth of
our Asia–Pacific companies underlines the need for We focus on developing leadership skills to build a
a highly-trained and ambitious workforce in this pool of talented leaders within Roche to ensure our
region. future success. In 2006 we launched Roche Engage
– a new senior executive development programme
A career at Roche can be very international. We are for the top 350 managers across the Group. The
keen to enable our employees to broaden their programme focuses on helping senior leaders to
experience by working in other countries (see box). apply their leadership skills, engaging employees
Almost 350 employees from 35 different countries in our strategies and enabling them to deliver our
are currently on international assignments in 52 business goals.
countries.
The total attrition rate of permanent staff was We offer several non-voting equity securities-owner-
6.6% in 2006. The proportion of regretted losses ship programmes that give employees the opportu-
(those not initiated by Roche) was only 2.1% (1,574 nity to have a financial stake in the company’s suc-
employees). We are pleased that our research func- cess. Roche Long-Term, launched in 2005, provides a
tion – the source of our innovation – continues consistent approach to performance-related equity-
to see a low number of departures of qualified based remuneration, enabling senior managers to
employees. share in the company’s long-term financial growth.
Staff turnover and regretted losses Roche Connect allows all employees (except those
2006 2005 2004 in the US, due to legal restrictions) to purchase non-
Fluctuation 6.6% 6.7% 6.1% voting equity in the company at a discounted rate.
Regretted losses 2.1% 2.2% 2.9% Around 13,800 employees (30% of those eligible)
are participating in this programme, up from
11,600 in 2005.
Diversity within our workforce is invaluable to our Roche respects the right of every employee to be
capacity for innovation, on which the success of our part of an employee organisation. Roche is working
business depends. Roche does not tolerate discrim- in an open dialogue with legal employee represen-
ination on any grounds. We promote people on tations in all countries where we operate. Roche
three criteria only: performance, potential and does not record individual memberships of unions
functional and geographic mobility. but we estimate that 8% of our employees are
members of a union. 86% of employees are repre-
We employ people from all over the world. 55% of sented by a works council or a similar organisation.
our employees at our corporate headquarters in the Roche has founded the Roche Euroforum to repre-
Basel region are foreigners and represent 65 nation- sent all employees in Europe (approximately 33,000
alities. Around 52% of our affiliate companies are people).
headed by nationals of where the company is based
(down from 60% last year) and their management More on the web:
teams include a consistently high proportion of
local staff. • ‘One door into Roche’ e-recruitment facility:
http://careers.roche.com
We want Roche to be an attractive employer for • Corporate Principles:
both men and women. Women account for around www.roche.com/sus-principles_code_conduct
45% of our total workforce, 31% of centrally • Group Employment Policy:
tracked managers and 4.3% of senior managers. www.roche.com/sus-employment_policy
We are working to attract and retain more women. • Human rights: www.roche.com/sus-human_rights
The proportion of women at Roche has been • Local employer of choice awards:
steadily increasing. www.roche.com/sus-emp_of_choice and
http://careers.roche.com
Gender diversity • Safety, health and environment:
2006 2005 2004 www.roche.com/sus-she
Women in total workforce 45% 43% 42%
Women in management 31% 32% 31%
Number of women in top
80 management positions 4 7 5
Women candidates for top
management positions 22% 16% 12%
Work–life balance
2006 2005 2004
Part-time employees 6.3% 6% 5.8%
Our community involvement – as described by our or through our support for projects to promote
new Group Policy on Donations and non-commer- advances in basic science and encourage young
cial Sponsorship – is targeted in four key areas: people to be enthusiastic about life sciences.
• Improve access to medicines and diagnostics In addition to local projects, we provide global sup-
• Promote advances in basic science through port for research in specific areas through a number
education of foundations, such as the Roche Organ Trans-
• Encourage innovation and excellence through plantation Research Foundation and the Roche
contemporary culture and arts Foundation for Anemia Research (RoFAR). To date
• Support communities in which our employees RoFAR has awarded over seven million Swiss francs
live and work. to 34 research projects around the world. The
Roche Research Foundation in Switzerland gave
While this is part of our civic responsibility, it also financial support to 70 research projects of young
provides an environment that inspires our employees scientists in 2006. Our MBA Fellowship pro-
to make Roche a successful, sustainable business. gramme provides grants to encourage talented
scientists to complement their medical or science
We usually get involved in projects where our qualifications with a degree in business.
knowledge and expertise can make a significant dif-
ference and prefer to work closely with local partners
and other parties with special expertise. We measure Encouraging innovation in the arts
our success by the impact of each project and not
by the total amount spent. This is why we do not We see close links between artistic creativity and
publish detailed figures on the amount we spend on innovation in our own activities – in science and
community support. We do not donate drugs except elsewhere in the business. Roche has been a patron
for disaster relief and pandemic situations. of contemporary arts and music for more than a
century. As part of this commitment, Roche Com-
Community support by area (% spend) missions sponsors new musical works by outstand-
Humanitarian and social projects 82.8% ing contemporary composers (see box).
Science and education 14.0%
Arts and culture 1.9% In November 2006 Roche launched a joint project
Community and environment 1.3% with the Salzburg Festival. The ‘Roche Continents –
Youth! Arts! Science!’ series encourages young
people to attend contemporary music events and
Access to healthcare explore the link between innovation in music and
art and innovation in science.
We use our expertise to improve access to health-
care and our medicines. We focus our efforts where Roche founded and maintains the Museum
they will benefit those in greatest need. For further Tinguely AG in Basel, showcasing innovative art-
details please see page 64. work. Roche’n’Jazz, launched in September 2005,
is a monthly evening of live contemporary jazz
music held at the Museum Tinguely and regularly
Promoting advances in science attended by up to 400 employees and members
of the public. We plan to roll out local
In many countries Roche is a driving force in the Roche’n’ Jazz events at other Roche sites around
scientific community through our own activities the world.
Connecting innovation
in music and science
The Cleveland Orchestra is a partner in Roche
Commissions, a pioneering international project
for the advancement of contemporary classical
music. Its conductor, Franz Welser-Möst, dis-
cusses what makes the partnership work.
Are there links between innovation in music and Do you think Roche Commissions is successful?
in science? Absolutely – we both share a common goal. We aim
In both science and music, everything we discover for quality in our work, not quantity. Like Roche,
already exists in some form; we just have to find it. the Cleveland Orchestra is known for outstanding
Science takes a technical approach to research and technical ability and innovation. We give new pieces of
musicians take a more emotional approach. What’s music a chance to be heard for the first time in quality
fascinating is the point where these two meet. Whether performances at the highest level. Both organisations
we are developing new medicines or composing new also share a curiosity about the future and recognise
music, our work is to create a response, physical or the need to invest in it.
emotional, in human beings.
Monitoring
People with type 2 diabetes do produce insulin, but their body
doesn’t produce enough or cannot make effective use of it. After
diagnosis they can control their blood glucose levels by adopting
a healthy lifestyle and diet but may also have to inject insulin
or take tablets. Products such as Accu-Chek meters and strips
enable people with diabetes to monitor their own blood glucose
accurately and conveniently.
Safety, health and environmental protection (SHE) Roche is committed to upholding the high environ-
cannot be separated from our business success. mental and safety standards set by Responsible Care
SHE is fully integrated in everything we do. All – a global initiative established by the chemical
employees are expected to play their part in pro- industry to achieve continual improvement in its
tecting the environment and making Roche a safe SHE performance. Our Responsible Care Network
and healthy place to work. communicates our commitment to these standards
and provides a forum for sites to share advice and
Our commitment to SHE is enshrined in the Roche best practice.
Corporate Principles. We revised our Safety, Health
and Environmental Protection Policy in late 2005 to Our SHE management system covers all relevant
restate and strengthen our commitments. aspects of internationally-recognised standards
such as the International Organization for Stan-
In 2006 we invested 271 million Swiss francs in SHE dardization’s environmental management stan-
infrastructure in new manufacturing buildings dard, ISO 14001, and the European Eco-Manage-
and extension of existing installations. Operating ment and Audit Scheme (EMAS). It is not our goal
costs including SHE services and personnel costs to achieve ISO or EMAS certification for all our
amounted to 351 million Swiss francs. sites but nine Roche manufacturing sites have
chosen to implement this standard voluntarily and
are certified to ISO 14001. Three of these sites have
SHE management also attained EMAS certification.
Responsibility for implementing the SHE policy Awareness and continual reduction of risks is
and guidelines lies with the general managers of essential to prevent accidents and incidents that
affiliate companies and individual site managers. could affect people, the environment and our busi-
They are supported by a safety and environmental ness. All risks are registered and evaluated via a
officer at each site who coordinates with the cor- web-based tool. This information is assessed at
porate SHE team. Divisional champions – Eco- Group level to build a global risk profile.
delegates – are responsible for raising awareness
of SHE within their divisions, in addition to their
regular jobs. A total of 570 of our employees work Goals
full-time in SHE across the Group.
In 2005, we set a number of new long-term quanti-
Roche monitors implementation of the SHE policy, tative targets for global SHE performance, adding
guidelines and directives by auditing sites across to our existing goals to:
the Group – 23 were audited in 2006. Higher-risk • Reduce the Roche Accident Rate by 20% by 2010
sites are audited more often. Recommendations for from 2005 baseline (workdays lost/employee)
• Reduce general absence rate including illness Informative accidents are made anonymously and
and home accidents by 10% by 2015 from 2005 are published on our intranet so other sites are
baseline (days lost/employee) made aware of potential hazards and can take
• Reduce total energy consumption by 10% action to prevent similar incidents.
by 2010 from 2005 baseline (GJ/employee)
• Improve total ecobalance by 10% by 2015 from The annual Roche Responsible Care Network
2005 baseline (points/employee) Awards recognise sustained outstanding health and
• Reduce greenhouse gas emissions by 10% by 2008 safety performance of individual sites based on
from 2003 baseline (CO 2 equivalent/unit sales) their Roche Accident Rates over the previous three
• Reduce VOC emissions by 10% by 2008 from years. In 2006 19 sites received the award for out-
2003 baseline (tonnes VOC/unit sales) standing low accident rates or positive trends.
• Have no relevant SHE-related fines.
We recognise that employee well-being is not only
affected in work hours. We have started to collect
Occupational health and safety data on general absences and non work-related
accidents to assess the causes of such absences and
A safe and healthy workplace is essential for our seek possible improvements.
employees’ well-being and productivity. In our large
research and manufacturing operations, safety and Roche offers a range of programmes at our sites to
health committees have been established to help the promote employee health and well-being inside
safety, health and environment officer (SEO) raise and outside the workplace. These include free
awareness, organise training and implement tech- medical check-ups, workplace ergonomic evalua-
nical improvements to reduce risks in the work- tions, counselling, fitness centres, healthy meals at
place. In smaller sites this responsibility lies solely staff restaurants and other programmes to promote
with the SEO. In 2006 a total of 126,329 hours were healthy lifestyles. We also have several initiatives to
invested globally in SHE training at Roche. promote well-being by improving our employees’
work–life balance (see page 82).
We measure our safety and health performance
using the Roche Accident Rate – the number of
working days lost due to occupational accidents Environmental footprint
per employee per year. The rate decreased by 16.5%
to 0.083 in 2006. The development of the Roche Roche is committed to environmental protection
accident rate (RAR) is showing a positive trend, throughout the lifecycle of its products – from
i. e. a decreasing number of accidents. The severity research and production to packaging, transport
of the accidents, however, is going into the oppo- and distribution, use and disposal.
site direction, i. e. more lost days per accident are
reported than last year. Concerning occupational We measure our global environmental footprint
diseases, both numbers of recognised cases as well using our Eco-Efficiency Rate (EER) – the ratio of
as lost days per case are lower than in 2005. The sales to environmental impacts and expenditure.
majority of cases (77%) are still referring to the Eco-efficiency as described by the World Business
locomotor system. Council for Sustainable Development (WBCSD) is
the concept of creating more value with less nega-
Health and safety tive impact. The EER takes into account a wide
2006 2005 2004 range of factors such as energy use and emissions to
Roche Accident Rate 0.083 0.099 0.088 air and water – weighted according to their signifi-
Occupational accidents 473 563 493 cance – to produce a single value. The higher the
Occupational illnesses 302 333 208 EER, the greater the degree of eco-efficiency. A full
Work-related fatalities 0 0 0 explanation of how the EER is calculated can be
Work-related accidents found on our website.
per million working hours 3.67 4.66 4.78
In 2006 our EER was 49.97, an increase of more than nated soil; water; SHE aspects of biotechnology
100% from the previous year. The different sources and prevention of misuse of biological materials for
of this tremendous improvement are an almost 50% biowarfare. These are available on our website.
reduction in the environmental damage (in par-
ticular emissions to the air and the water, including
corrections of former overreportings) as well as the Energy and climate change
very pleasing development of the sales figures.
Global warming and climate change have been well
Eco-Efficiency Rate documented. Greenhouse gas emissions – such as
2006 2005 2004 carbon dioxide – resulting from human activities
Sales (in millions of CHF) 42,041 35,511 29,522 are considered responsible for accelerating these
Environmental expenditure global trends. Industry is one source of these emis-
(in millions of CHF) 255 242 192 sions and must take appropriate measures to reduce
Environmental damage its impact. International agreements, such as the
(in millions of environmental Kyoto Protocol, and national legislation define tar-
damage units) 3.30 6.02 8.40 gets and schedules for reducing emissions.
EER 49.97 24.39 18.31
Roche supports the targets set out in the Kyoto Pro-
We also calculate our eco-balance to define the tocol to reduce global greenhouse gas emissions.
ecological impact of Roche’s operations without We are working towards our own goal – set in 2003
considering economic parameters, according to the – to reduce our emissions by 10% over the five years
method set out by the Swiss Agency for the Envi- until 2008. Because of the close link between car-
ronment (BAFU). Eco-balance takes into account bon dioxide emissions and energy use, most meas-
outputs to the environment – emissions and waste – ures to reduce energy consumption also decrease
and use of resources such as raw materials and these emissions. Roche promotes measures such as
energy. Each parameter is weighted according to the moving to less emission-intensive energy sources,
significance of its impact. By setting a global target applying innovative building technology and con-
to improve our eco-balance – encompassing our tinually upgrading our infrastructure to improve
entire environmental footprint – individual sites energy efficiency. In 2006 Roche used 12,467 tera-
are able to identify and focus on areas where they joules of energy, almost the same amount as in 2005
can make most significant improvements. Our eco- despite business growth of 18.4%.
balance in 2006 was 5.42, already matching our
global target for 2015. We run an ECOmpetition Roche is introducing fuel-efficient low-emission
every three years to encourage employees to think hybrid vehicles to its fleet of corporate cars,
about the environment and submit ideas on its to reduce emissions from transport. More than
protection. These initiatives not only benefit the 240 hybrid vehicles have been introduced to Roche
environment but can also cut costs significantly, Pharmaceuticals’ fleet in the USA since a similar
for example by introducing measures to reduce programme was introduced there in 2004. Roche
energy use of air-conditioning systems at several Group member Chugai, in Japan, added more
sites. Entries are being submitted for the current hybrid cars to its fleet in 2006, bringing the total to
competition launched in October 2006. From 2007 48. Employees in Australia are now offered hybrid
the Roche Responsible Care Network Awards will vehicles as company cars. Roche Australia has
reward energy-saving initiatives to encourage sites begun to offset carbon emissions from transport by
to help us meet our global commitment to reduce planting trees on an area destroyed by fire.
energy use by 10% by 2010. In 2006, we published
new global position papers setting out our strategies Our affiliates in North and South America held
on six key environmental issues, meeting last year’s their first annual energy conservation summit in
goal to hold a public position on key topics of 2006 to discuss strategy, share best practice on
public interest. Topics covered are: greenhouse gases energy conservation and promote the message that
and climate change; energy; landfills and contami- every employee can help to conserve energy.
Roche is committed to phasing out all halogenated Energy use by type (%)
hydrocarbons – potent greenhouse gases and ozone
depleters – from our cooling systems by 2015. In
2006, we reduced our holdings of these gases by 5%
Natural gas 39.9
to 141.2 tonnes, compared to 2005. The gases are
Oil 3
held in sealed cooling systems and fire extinguish-
Coal 0
ers but some leakage does occur, resulting in emis-
Waste 1.4
sions of 7.7 tonnes in 2006, up from 7.2 tonnes the
Renewable energy 0.4
previous year.
We measure our greenhouse gas emissions in Volatile organic compounds (VOCs) from manu-
accordance with the Greenhouse Gas Protocol, facturing processes and particulates from combus-
taking into account both direct emissions (from tion plants contribute to local air pollution and
waste incineration, transport, power generation smog. In 2006 Roche emitted 281 tonnes of VOCs
from fossil fuels) and indirect emissions (from grid and 27 tonnes of particulates, compared with 604
electricity). Emissions from halogenated hydro- tonnes and 50 tonnes in 2005, respectively.
carbons are included as CO2 equivalents. Roche
emitted 0.980 million tonnes of CO2 equivalents These significant reductions are to a large extent
in 2006, 9.1% down from 1.078 million tonnes in due to over-reporting by one main contributor in
2005. previous years that has now been corrected. We
have introduced closed systems or suitable exhaust
Roche calculates its impact on climate change by air treatment at a number of our sites to reduce
normalising our total emissions – expressed as CO2 these emissions.
equivalents – per million Swiss francs of sales. In
2006, the result was 23.31, a decrease of 23.2% from Nitrogen oxides (NOX) and sulphur dioxide (SO2)
the previous year. emissions can contribute to acid rain. Roche emit-
ted 219 tonnes of NOX and 15 tonnes of SO2 from
Total energy use (terajoules) burning fossil fuels in 2006. This represents – on a
2006 2005 2004 very low level – a reduction in overall inorganic
Total energy use 12,467 12,515 11,909 emissions of 54% from the previous year.
Total energy use per
million CHF of sales 0.296 0.352 0.403 We invested some 25 million Swiss francs to mod-
ernise and convert the power station that supplies
Greenhouse gas emissions (tonnes CO2 equivalents) our Mannheim site in Germany from coal to natu-
2006 2005 2004 ral gas in 2005. This has reduced emissions of nitro-
Total emissions 980,008 1,078,445 1,027,567 gen oxides by nearly 30% a year and emissions of
Total emissions per sulphur dioxide and dust to almost zero. The more
million CHF of sales 23.31 30.37 34.80 efficient modernised plant has cut carbon dioxide
emissions by more than 30,000 tonnes a year, a
reduction of more than 45%.
SHE training
Does this training raise awareness of Roche SHE representatives can use at their sites. We also offer a
goals? further education programme on SHE issues for those
The SHE goals were a key focus of this year’s confer- interested in knowing more.
ence in Germany. Participants created local action
plans for their own sites to support our global SHE Are new recruits introduced to SHE procedures
goals. as part of their induction?
Until now, new employees have been introduced to
Do you have local training? SHE as part of their general induction to their depart-
Our network of SEOs are the backbone of the SHE ments. Right now, we are completing a computer-
organisation at Roche. They lead the SHE organisation based training programme which will be mandatory for
at site and company level and provide professional all new employees. All new employees will be asked to
knowledge, tools and support. We have a range of complete a checklist with the help of their supervisor or
tailor-made SHE training courses – from classroom- colleagues to help them learn about SHE procedures
based lectures to hands-on training – that local SHE specific to their workplace.
tion has already been completed at some sites and is potentially damage ecosystems. In 2006, 1,086 kilo-
ongoing at others. grams of heavy metals were emitted after treat-
ment, down 26% from the previous year.
An additional 25,200 tonnes of materials such as
paper, cardboard, glass, metals, wood and plastics Roche supports research into the source and impact
were recycled. of trace chemicals – including pharmaceuticals –
in watercourses. Environmental risk assessments
have shown that active pharmaceutical ingredients
Water found in watercourses are primarily caused by
both normal use and inappropriate disposal of
The availability of clean water is critical to Roche. our products by consumers, not by pollution from
We cannot manufacture pharmaceuticals and diag- manufacturing sites.
nostic products without it. The use of biotechnol-
ogy is replacing some chemical processes in our
research and production, reducing safety risks, but Compliance and incidents
these techniques also require greater water use.
In 2006 we used 4.3 million cubic metres of water. We are committed to fully complying with all rele-
We are committed to reducing our water consump- vant laws and regulations in all countries where we
tion through local programmes at site level as well operate. Our own SHE global standards and guide-
as through efforts to improve our eco-balance. lines take precedence where they exceed local regu-
lations. Roche received no significant SHE-related
A winning idea from the 2004 ECOmpetition was fines in 2006 and no incident or accident with a
realised in 2006. Roche Jacarepaguá in Brazil has significant impact on people or the environment
cut its total water use by 12% by reusing wastewater was reported anywhere in the Roche Group.
in a cooling system, saving approximately 130,000
Swiss francs a year. Roche recognises that some substances used in
the manufacture of pharmaceutical products could
Water consumption (million cubic metres) potentially be misused for narcotics, toxins or
2006 2005 2004 chemical weapons. Such regulated chemicals are
Water use 4.3 3.9 4.3 used by Roche only in small quantities, under rig-
Total water use (cubic metres orous control and in compliance with all applicable
per million CHF of sales) 101.5 109.8 145.65 legislation.
Assurance
Independent Assurance Report on the Roche nal guidelines, definitions and procedures estab-
Group Sustainability Reporting lished to prepare and report on its sustainability
performance.
To the Roche Corporate Sustainability Committee:
Roche Group is responsible for both the subject
We have performed evidence-gathering procedures matter and the evaluation criteria.
to provide assurance on the Sustainability Report-
ing of Roche and its consolidated subsidiaries Our responsibility is to provide a conclusion on the
excluding Chugai and Genentech (the ‘Group’), all subject matter based on our evidence-gathering
for the year ended December 31, 2006. procedures in accordance with the International
Standard on Assurance Engagements (ISAE) 3000
We have performed evidence-gathering proce- ‘Assurance Engagements other than Audits or
dures on (hereafter jointly referred as the ‘subject Reviews of Historical Information’, approved
matter’): December 2003 by the International Auditing and
Assurance Standards Board (IAASB).
• The SHE key figures in the tables from pages 88
to 93; We planned and performed our evidence-gathering
• Some selected social dimension information procedures to obtain a basis for our conclusions in
(‘social data’); accordance with an ISAE 3000 limited and reason-
• The management and reporting processes for the able assurance engagement. We have not performed
preparation of the report and figures. an audit according to International Standards on
Auditing. Accordingly, we do not express such an
We have evaluated the subject matter against the audit opinion.
following criteria (‘evaluation criteria’) described
on pages 88 and 95: Our evidence-gathering procedures included the
following work:
• The Roche Group internal sustainability report-
ing guidelines with respect to the Responsible • At the site level, assessing how Roche staff apply
Care Health, Safety and Environmental reporting the Group internal sustainability reporting
guidelines published by the European Chemical guidelines as well as observing compliance with
Industry Council CEFIC and the ‘Sustainability the Group internal sustainability reporting
Reporting Guidelines 2002’ published by the guidelines, visiting a sample of five sites in
Global Reporting Initiative (GRI); Switzerland, Sweden, Poland, and the US, cover-
• The procedures by which the SHE data and the ing the Pharmaceuticals and Diagnostics divi-
social data are prepared, collated and aggregated sions;
internally; • Performing tests on a sample basis of the internal
• The control environment over the accuracy and sustainability reporting system used to collect
completeness of the SHE data and the social SHE data and the social data from Group sites;
data. • Performing specific procedures to check, on a
sample basis, the SHE data and the social data;
The accuracy and completeness of sustainability • Interviewing the responsible staff for data collec-
data is subject to inherent limitations given their tion and sustainability reporting on the sites we
nature and methods for determining, calculating or visited and on Group level;
estimating such data. Our Assurance Report should • Assessing the data consolidation process on
therefore be read in connection with Roche’s inter- Group level;
• Reading and performing tests of the relevant dimension information, in all material respects,
documentation on a sample basis, including based on the evaluation criteria.
Group policies, management and reporting
structures, documentation and systems used to Based on our work described in this report, nothing
collect, analyse and aggregate reported SHE data has come to our attention that causes us to believe
and social data; that the SHE and social dimension information dis-
• Performing tests on a sample basis of evidence closed with the Sustainability Reporting does not
supporting selected SHE data and social data with give a fair picture of the SHE and social perform-
regard to the reported data aggregation from the ance, or that the procedures by which the SHE
selected sites to Group level. data and social dimension information were pre-
pared, collated and aggregated are not based on
However, we have not performed site visits at established and accepted measurement and analyt-
Chugai and Genentech. ical methods, in all material respects, based on the
evaluation criteria.
In our opinion
PricewaterhouseCoopers AG, Basel,
• the Roche Group internal sustainability reporting 19 January, 2007
guidelines are applied properly at the selected
sites;
• the internal SHE reporting system on the Group
level to collect the SHE data is functioning as
designed;
• the social dimension reporting provides an
appropriate basis for the disclosure of social Dr Thomas Scheiwiller Jürg Hutter
The Global Reporting Initiative ‘This report has been prepared in accordance with
sustainability reporting guidelines the 2002 GRI Guidelines. It represents a balanced
and reasonable presentation of our organisation’s
We report in accordance with the 2002 Global economic, environmental, and social performance.’
Reporting Initiative (GRI) Guidelines through our
Annual Report and website. The GRI has reviewed
this report and confirms it meets ‘In Accordance’
criterion.