Investor Update

Basel, 5 May 2004

Roche R&D Day 2004 highlights company’s focus on clinically differentiated medicines
Continuous flow of new products ensures future growth

• Innovative, risk-balanced portfolio of clinically differentiated medicines ensures
continued solid growth in both divisions

Pharmaceuticals Division
• Sixty-one new molecular entities (NMEs) in development pipeline, including six opt- in opportunities
• Major future growth drivers in oncology, virology and anemia
• Five innovative cancer drugs offering a survival benefit
• Study shows Pegasys to be superior as hepatitis B monotherapy
• CERA, an innovative erythropoietic compound delivering potent, sustained stimulation of red
blood cell formation, enters phase III
• Emerging portfolio in rheumatoid arthritis, osteoporosis, diabetes and asthma
• R483 (insulin sensitiser) enters phase III; R411 (dual integrin antagonist in asthma) successfully completes phase II
• Phase II programmes for MRA and MabThera in rheumatoid arthritis on track
• Boniva filing this quarter in the United States
• Roche revises peak sales expectations for Pegasys/Copegus to 2 billion Swiss francs, based on new phase III data in hepatitis B

Diagnostics Division
• Division expanding its lead in in vitro diagnostics by strengthening core businesses and creating and shaping new markets
• More than 20 major launches per year planned over the next five years; more than 70 new products in the pipeline
• Innovative technologies and programmes in place to extend diabetes care leadership
• Clinical genomics programmes in complex diseases and molecular oncology are expanding diagnostics into risk prediction, early detection and therapy prediction testing

At its R&D conference for analysts today, Roche gave a detailed overview of the late-stage development programmes under way in its Pharmaceuticals and Diagnostics Divisions. With an innovative, risk-balanced portfolio spanning a variety of disease areas of high medical need, Roche is well positioned to continue to deliver clinically differentiated drugs and diagnostics over the next several years and beyond.

Major growth drivers include more than 12 pharmaceutical products — already on the market or in late-stage development — with sales or sales potential of more than one billion Swiss francs each. In Diagnostics, highly innovative genomic/proteomic technologies and markers will create a market worth several billion Swiss francs.

In 2003 Roche’s Pharmaceuticals Division achieved all planned regulatory filings and expected approvals — a success rate above the industry average. In its Diagnostics Division the Group gained significant additional market share and improved profitability by developing highly innovative products for the prevention, early detection and diagnosis of disease.

Including R&D expenditure at Genentech and Chugai, the Roche Group will spend more than five billion Swiss francs on R&D in 2004.

The Pharmaceuticals Division’s pipeline
Roche’s pharmaceuticals pipeline has steadily improved in quantity, quality and value. The Group currently has 119 projects in research and 61 new molecular entities (NMEs), including six opt-in opportunities, in development. Roche plans to submit 25 regulatory filings over the next five years, including filings for 11 lead indications.

“With our well-balanced portfolio of clinically differentiated medicines, the Roche Group is well positioned to meet future healthcare challenges and ensure the company’s ability to achieve significant growth in the years ahead”, said William M. Burns, Head of Roche’s Pharmaceuticals Division.

Oncology: strengthening the Roche Group’s number one position
In the last five years the Roche Group has become the world’s leading supplier of anti-cancer treatments, supportive care products and cancer diagnostics. Roche’s product portfolio today offers a broad range of anti-cancer drugs, including key products for non-Hodgkin’s lymphoma (NHL), breast cancer (BC) and colorectal cancer (CRC).

Tarceva (R1415) recently became the first and only product in a new class of cancer drugs (HER1/EGFR inhibitors) to demonstrate a significant survival benefit in a trial in relapsed non-small cell lung cancer (NSCLC) patients. Results of this randomised phase III trial are expected to be presented at the American Society of Clinical Oncology (ASCO) conference in June. Roche is currently evaluating further indications in its Tarceva development programme. Tarceva is the fifth drug in Roche’s oncology portfolio to offer a survival benefit to patients. The others are Herceptin, MabThera, Xeloda and Avastin, which was recently launched in the United States.

In February of this year the US Food and Drug Administration (FDA) approved Avastin, a humanised monoclonal antibody that targets vascular endothelial growth factor. Avastin, the first anti-angiogenesis treatment approved for cancer, is used with chemotherapy in patients with previously untreated metastatic CRC. Roche has a comprehensive development plan for Avastin in additional indications, including pancreatic and ovarian cancer and other solid tumours. Already shown to prolong survival in first-line CRC, Avastin is expected to establish itself as a broadly active anti-cancer therapy.

Roche continues to develop Xeloda, an effective oral chemotherapeutic agent that is activated in tumour tissues by the enzyme thymidine phosphorylase. The X-ACT trial, a large international phase III study comparing Xeloda with standard intravenous 5-FU/leucovorin in the adjuvant treatment of early-stage colon cancer, has just been concluded, and the results have been submitted for presentation at the June ASCO conference. Increasingly, Xeloda is becoming the agent of choice for use with new therapies in the study and treatment of metastatic CRC and BC — a trend that reflects growing recognition of the drug as an effective and safe option in these patient populations. Oral medications like Xeloda offer patients the convenience of taking their medication at home, reducing the need for visits to the clinic or hospital.

2003 was an outstanding year for MabThera, a therapeutic antibody that activates the body’s immune system by binding to the CD20 antigen (a protein on the surface of normal and malignant B cells). Roche highlighted the positive results which have been obtained with the drug both in first-line maintenance therapy and first-line induction therapy in indolent NHL. Also being evaluated for treatment of aggressive NHL in patients below 60 years of age, the drug met its primary efficacy endpoint in this patient population two years earlier than expected. Initial results indicate that MabThera plus chemotherapy is significantly more effective in these patients than conventional chemotherapy alone. Roche expects to present full results at this year’s ASCO conference. An extensive clinical and phase IV programme will recruit several thousand patients into randomised clinical trials, including a large-scale phase III trial in chronic lymphocytic leukemia (CLL).

Herceptin, the Roche Group’s targeted treatment for metastatic BC, received a positive CPMP opinion in April as first-line treatment in combination with Taxotere. Roche highlighted its comprehensive programme to maximise the curative impact of Herceptin in the adjuvant setting and in combination with hormonal therapy. These uses are being evaluated in major trials involving over 10,000 patients.

Preclinical oncology research
Roche highlighted its research on potential p53 pathway activators, recently published in Science. Nutlins, the first potent and selective small molecules to activate the p53 pathway by preventing the p53 inhibitor MDM2 from binding to the p53 gene were discovered by Roche scientists. Preclinical data indicate that these small molecules may provide a novel strategy for treating tumours with a normal p53 gene.

Virology: study shows superiority of Pegasys as hepatitis B monotherapy
In 2003 three products in Roche’s HIV portfolio, Viracept, Invirase and Fuzeon, generated sales of about 500 million Swiss francs. Roche drew attention to recent data on Fuzeon, the first HIV fusion inhibitor, which confirm the product’s sustained efficacy and generally good tolerability. Extensive data are expected to be presented at the International AIDS Conference in Bangkok, Thailand, in July.

Pegasys, Roche’s hepatitis C treatment, is winning the market share battle and is on track to achieve 2 billion Swiss francs in peak sales. The product’s success is due to a comprehensive clinical trial programme which has consistently shown Pegasys/Copegus to provide significant benefits over conventional interferon therapy in patients with HCV. Roche is focusing on expanding into new patient populations, such as HIV-HCV co-infected patients, patients with normal ALT levels and patients with hepatitis B.

This week Roche announced results from a second pivotal phase III trial with Pegasys in hepatitis B. Conducted in 15 countries, the trial investigated the efficacy and safety of Pegasys with or without lamivudine versus lamivudine alone. As in the recently reported study of Pegasys in HBeAg-negative chronic hepatitis B, Pegasys monotherapy was superior to lamivudine and the addition of lamivudine to Pegasys did not improve on the response rates achieved with Pegasys alone. Lamivudine is the most commonly used therapy for infections with hepatitis B virus. Full data from these encouraging phase III studies will be presented later this year, and a filing is planned for the second half of 2004.


Future pillars of growth in specific therapeutic areas

Rheumatoid arthritis: MabThera and MRA on track
Rheumatoid arthritis (RA), an aggressive autoimmune disease, affects about 3.3 million adults worldwide and is an area of high medical need. Roche reported the development of a portfolio of clinically differentiated compounds to treat this disease. Results of phase II trials with MabThera/Rituxan in RA have transformed our understanding of the disease and opened up a number of new possibilities for its treatment. A proof-of-concept trial has produced positive safety and efficacy data. Roche disclosed the status of recruitment into the REFLEX phase III trial; the Group expects recruitment to be completed during the third quarter of this year.

MRA, a humanised monoclonal antibody that targets the interleukin-6 (IL-6) receptor and blocks the IL-6 signalling pathway, is being co-developed with Chugai for the treatment of RA. Positive phase II results were presented at major international meetings in 2003. Phase III testing is currently under way in Japan, and Roche disclosed its phase III development plans for the United States and the European Union, where enrolment of trial patients is expected to begin in the second half of 2004.

In addition to MabThera/Rituxan and MRA, Roche has several other compounds in early development in its RA portfolio. These include a dual integrin antagonist (R1295), a kinase inhibitor (R1503) and an anti-CD20 molecule (R1594), all in phase I. The portfolio also includes an interleukin-1 receptor antibody (R1599) and the compound R1628.

Osteoporosis: clear medical differentiation
Roche’s bisphosphonate, Boniva/Bonviva, approved for daily use last year in the United States and this year in Europe, is being developed as a convenient once-monthly oral tablet and as an IV formulation for those patients who do not tolerate oral bisphosphonates. Roche plans to submit filings for monthly oral use in the first half of this year in the United States and later this year in Europe. The filings will be based on the MOBILE study, the headline results of which were released earlier this year.

Anemia: innovative erythropoietic compound CERA moves into phase III
CERA (continuous erythropoiesis receptor activator) an innovative chemically synthesized new entity with unique receptor binding characteristics which is believed to be related to its ability to repeatedly and rapidly attach to and then detach from the receptor involved in triggering red blood cell formation. This results in continuous erythropoietin receptor activation and delivery of sustained anemia correction.

Renal anemia
A phase II programme investigating CERA in more than 350 renal patients is complete. Results from these studies, conducted in patients with chronic renal anemia, have shown that Roche’s innovative new chemical entity delivers potent and sustained stimulation of red blood cell formation at dosing intervals of up to once every three to four weeks. Roche announced that a comprehensive phase III study programme, involving more than 1,700 patients at over 300 sites worldwide, has already started.
Cancer-related anemia
CERA appears to be effective when given once every three weeks to patients with multiple myeloma and is well tolerated at all doses investigated. Larger phase II trials in patients with lymphoid malignancies and solid tumours are under way. An extensive phase III programme is expected to start later this year.

Type 2 diabetes: R483 moves into phase III
Despite the numerous therapeutic options available, there is still a significant medical need for drugs capable of producing a durable effect on glycemic control. Roche has an extensive development portfolio targeting a wide variety of mechanisms of type 2 diabetes. Insulin resistance plays a central role in the development and progression of type 2 diabetes and can be effectively addressed with oral insulin sensitisers.

Phase II studies with the insulin sensitiser R483 have been completed and show a significant dose-dependent reduction of HbA1c. R483 has the potential to be profiled as a “best in class” insulin sensitiser. The data also show a safety and tolerability profile comparable with the expected glitazone-class effects. Based on these phase II results, Roche has decided to progress R483 into phase III. Phase III studies involving approximately 5,000 patients are currently in preparation.

Asthma: R411 development programme to continue
Over 40 million people worldwide currently suffer from asthma, a disease which has a significant impact on normal, everyday activities. The dual integrin inhibitor R411 addresses the need for additional and more effective treatments. R411 is a novel, non-steroidal, oral treatment that targets the inflammatory process underlying asthma. In preclinical studies it has been found to block the activation and recruitment of blood cells involved in respiratory inflammation and to work better than single integrin antagonists. The results of phase II studies, obtained just a few days ago, support good safety and tolerability profiles. Based on initial efficacy data, Roche announced its decision to continue development.

Emphysema: phase II under way
Emphysema belongs to the spectrum of tobacco-induced chronic obstructive pulmonary diseases (COPDs) and is the fourth leading cause of death in the United States. R667, a selective retinoic acid agonist, is in phase II for the treatment of emphysema. In animal studies it has demonstrated the ability to regenerate lung tissue and restore lung function. Phase Ib data will be available at the end of this year. The results of a phase II (proof-of-concept) trial of the drug’s efficacy, safety and tolerability in emphysema patients with alpha-1 antitrypsin deficiency (AATD) will be available by the second half of 2006.

CNS: data on NK-1 receptor antagonist expected by the end of 2004
Phase II development of R673, an NK-1 receptor antagonist, for the treatment of depression and anxiety is ongoing. Initial trials indicate an excellent safety and tolerability profile. Full phase II data are expected by the end of 2004.


Diagnostics Division driving growth with innovative programmes

The diagnostics pipeline: unparalleled in terms of breadth, depth and innovation
“With its broad and innovative product portfolio, Roche Diagnostics has consistently delivered significant market share gains over the last five years (> 20% market share today) and continues to expand its position as the number one diagnostics company worldwide. The business is growing twice as fast as the in vitro diagnostics market”, said Heino von Prondzynski, Head of Roche’s Diagnostics Division.

Last year Roche Diagnostics invested nearly 10% of annual sales revenues (CHF >700 million) in R&D, an above-average figure for the industry in both percentage and absolute terms. R&D expenditure in key growth areas is focused on developing new technologies for innovative products that will offer additional value for healthcare providers.

As the market leader, Roche Diagnostics aims to expand its market share leadership in key focus areas — notably diabetes care, molecular diagnostics and immunochemistry — through technology and product innovation. Roche Diagnostics also aims to bring about a paradigm shift in the role of diagnostics by creating and shaping new market segments, e.g. in molecular medicine and clinically actionable health information.

The division has over 70 new products in the pipeline — making it the broadest and deepest pipeline in the industry — and plans to launch more than 20 major products annually over the next five years. These include a number of validated genomic and proteomic markers for risk prediction and early detection of various cancer types, osteoporosis, myocardial infarction, stroke and rheumatoid arthritis.

Diabetes Care: number one position to be strengthened further
Roche Diagnostics, the world market leader in blood glucose monitoring, will expand its already broad product portfolio by focusing on three core product areas: integrated blood glucose monitoring systems, continuous glucose monitoring systems and insulin pump systems. Connecting IT systems that will allow data points to be translated into meaningful medical information are another key focus.

Customers’ demands for ease of use are driving the development of integrated technologies that minimise the steps involved in measuring blood sugar. Two technological approaches — one aimed at reducing the number of devices, the second the number of steps — are being developed concurrently to achieve a single integrated device. The ‘continuous strip’ is a breakthrough technology enabling many tests to be performed on a single strip and is expected to generate over 1 billion Swiss francs in annual sales by its fourth year on the market. The second integrated device in development combines a lancet and measuring needle and is designed to improve patient comfort.

In addition, Roche is pursuing two technologies for continuous glucose measurement: microdialysis and a needle-sensor technology. Clinical trials with the GlucOnline microdialysis system will begin in July 2004, while additional work is required to prove the feasibility of the needle-type sensor technology.

The integration of Disetronic into Roche is complete, development programmes have been defined, and preparations for an FDA re-audit are progressing well. A pilot launch of the new Sensotrend insulin pump, acquired through Disetronic, started in April in the Netherlands. Germany will follow as the next pilot market in autumn, with a global roll-out expected in 2005.

Molecular Diagnostics: expanding into predisposition, early detection and therapy prediction testing
Molecular Diagnostics offers the broadest test menu in the industry, including clinical diagnostic tests for virology, infectious diseases, oncology, women’s health and genetics as well as for blood screening.

Clinical genomics
Genomics will play an increasingly important role in future clinical practice. Roche’s clinical genomics portfolio will be expanded by adding genetic tests for cancer analysis, early disease detection and patient stratification as well as for risk prediction and pharmacogenomics.

Complex diseases
With various test systems, such as the AmpliChip CYP 450, and a multitude of other projects in development, Roche Diagnostics will be able to deliver tests for risk prediction (e.g. thrombophilia, osteoporosis) and the sub-classification of diseases (hypertension, rheumatoid arthritis, asthma) which will help shape therapy choices tailored to patients’ needs.

Cancer diagnostics
Roche will be launching a number of highly innovative tests for early cancer detection and more differentiated cancer diagnosis within the next five years.

A p53 GeneChip for analysing mutations in the p53 tumour suppressor gene will support tailored therapy in patients with bladder cancer. Roche plans to launch this product in 2005.

GeneChip technology will also be used to distinguish different types of leukemia, a heterogeneous complex of diseases caused by distinct genetic abnormalities. The launch of a chip-based test capable of identifying sub-classes of leukemia with an accuracy close to 100% is planned for 2006/2007; the test will deliver information on prognosis and therapy within two days and help to diagnose patients more precisely.

Screening tests that can detect prostate, colorectal, breast and lung cancers with a sensitivity and specificity of up to 90% are planned for launch in 2008 on the Elecsys and/or TaqMan systems. Microarray-based tests to predict cancer recurrence or therapy outcome will be developed and will help target therapy to patient’s needs.

Blood screening
The market for blood screening products is expected to exceed 1 billion Swiss francs, and Roche currently has a >50% market share. In the blood screening sector there is strong demand for new tests, e.g. for the detection of West Nile virus or parvovirus B19, and for fully automated testing systems that will allow single donor testing. Roche will meet these market needs with its next generation of automated blood screening products, the Cobas “s” series.

Women’s health
The Amplicor Human Papillomavirus (HPV) test (approved in Europe in April 2004), development of a linear array HPV product and a Cobas TaqMan test that allows fully automated quantitative measurement of viral DNA with real-time PCR offer opportunities for growth in the women’s health segment. This market is projected to grow to up to 1 billion Swiss francs.

Immunochemistry
Roche gained additional market share last year in the immunochemistry segment. This segment — the largest in the in vitro diagnostics market, is a high-margin business with an estimated value of approximately 8 billion Swiss francs today. The roll-out of a next-generation Serum Work Area platform (combining clinical chemistry and immunodiagnostics) was initiated recently.

Shaping the healthcare market
Several key initiatives in diagnostics will create some of the new markets of the future. These include efforts to expand phenotype (“proteomics”) and genotype testing. New proteomic markers for various types of cancer and RA are moving into prototype and product development this year. An assay for the newly identified breast cancer marker BCM 18 is significantly more specific than today’s standard tests and will be ready for launch in 2006. Early investment in emerging markets will enable Roche to shape the marketplace and remain the industry leader.

About Roche
Headquartered in Basel, Switzerland, Roche is one of the world’s leading innovation-driven healthcare groups. Its core businesses are pharmaceuticals and diagnostics. Roche is number one in the global diagnostics market, the leading supplier of pharmaceuticals for cancer and a leader in virology and transplantation. As a supplier of products and services for the prevention, diagnosis and treatment of disease, the Group contributes on a broad range of fronts to improving people’s health and quality of life. Roche employs roughly 65,000 people in 150 countries. The Group has alliances and R&D agreements with numerous partners, including majority ownership interests in Genentech and Chugai.

All trademarks used or mentioned in this release are legally protected.
GENECHIP is a trademark of Affymetrix

A live audio webcast of the Roche R&D Media Day will be available from 08:00h to 16:00h (Central European Time) on 5 May 2004 on our website.

Disclaimer
This release contains certain forward-looking statements. These forward-looking statements may be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future” or similar expressions or by discussion of strategy, goals, plans or intentions. Various factors may cause actual results to differ materially in the future from those reflected in forward-looking statements contained in this presentation among others: (1) pricing and product initiatives of competitors; (2) legislative and regulatory developments and economic conditions; (3) delay or inability in obtaining regulatory approvals or bringing products to market; (4) fluctuations in currency exchange rates and general financial market conditions; (5) uncertainties in the discovery, development or marketing of new products or new uses of existing products; (6) increased government pricing pressures; (7) interruptions in production; (8) loss of or inability to obtain adequate protection for intellectual property rights; (9) litigation; (10) loss of key executives or other employees; and (11) adverse publicity or news coverage.