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{\pard\sa900\fs50\f0\i Media Release\par}
{\pard\f0\li0\ri0\sa360\sl360\fs22 Basel, 23 July 2003 \line \line {\b Half-Year Media 
Conference} \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Basel, 23 July 2003, 10.00 am C.E.T.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Additional 
information} \par}{\pard\f0\li440\ri0\sl360\fs22 - Media 
Release (http://www.roche.com/med-cor-2003-07-23a) \par}{\pard\f0\li440\ri0\sl360\fs22 - Half-Year Report 2003 (http://www.roche.com/annual_reports.htm)\par}{\pard\f0\li440\ri0\sl360\fs22 - Audio 
webcast (http://www.roche.com/media/events.htm) of the conference \par}\line {\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Speeches English} \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 (The 
spoken German text (http://www.roche.com/de/media/events.htm) is definitive) \par}{\pard\f0\li440\ri0\sl360\fs22 - Franz 
B. Humer (http://www.roche.com/med-corp-detail-2003?id=1022&media-language=e#fbh)\line \u8211? Chairman of the Board of Directors and CEO Slides ( http://www.roche.com/hmk03hsle.pdf) 
\par}{\pard\f0\li440\ri0\sl360\fs22 - Heino von Prondzynski \line \u8211? Member of the Executive Committee 
and Head of Diagnostics Slides only ( http://www.roche.com/hmk03vsle.pdf) \par}{\pard\f0\li440\ri0\sl360\fs22 - William M. Burns 
\line \u8211? Member of the Executive Committee and Head of Pharmaceuticals Slides 
only ( http://www.roche.com/hmk03bsle.pdf) \par}{\pard\f0\li440\ri0\sl360\fs22 - Erich Hunziker (http://www.roche.com/med-corp-detail-2003?id=1022&media-language=e#eh)\line \u8211? Member 
of the Executive Committee and Chief Financial Officer Slides ( http://www.roche.com/hmk03ehsle.pdf)\par}\line {\pard\f0\li0\ri0\sa360\sl360\fs22 \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Franz 
B. Humer} \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Ladies and Gentlemen,\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Welcome to Roche\u8217?s 
half-year media conference. The Roche Group posted a very good result in the first half of 2003. Over 
the next hour my colleagues from the Executive Committee and I will be briefing you on the major results. 
As always, you will then have an opportunity to ask questions. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 As you now, 
there is more to the Roche success story than just numbers. First and foremost, innovative products 
like Pegasys for hepatitis C, the HIV fusion inhibitor Fuzeon, the pioneering cancer medicine Avastin 
and the world\u8217?s first pharmacogenomic test (AmpliChip CYP450) mean that many people can enjoy a significantly 
better quality of life, and often products like these can even extend life. Ladies and Gentlemen, the 
personal statements you\u8217?ve just seen, from people with first-hand experience with our diagnostic tests 
and medicines, will give you some idea of the benefits our company delivers to patients. That is a \u8216?return\u8217? 
that all of us at Roche are proud of.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 We are thus all the more pleased about 
our many new approvals, the progress of our development projects and the strong sales of our products 
in the first six months of this year.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Let me turn now to a summary of our key 
activities and results in the first half of 2003.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Group results 
for the first half of 2003 \u8212? a very good operating performance} \line As usual, we are 
publishing not only our consolidated results for the reporting period, but also adjusted results that 
exclude special items. This is a practice we introduced in 1999 and which from the start has always 
followed the same transparent set of principles. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 In the first half of 2003 
Roche achieved sales growth \u8212? on both an as reported and an adjusted basis \u8212? that was substantially 
above the market growth rate while continuing to improve profitability.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 On 
an adjusted basis \u8212? that is, excluding our discontinuing vitamins business \u8212? sales in our core Pharmaceuticals 
and Diagnostics Divisions totalled 13.9 billion Swiss francs, advancing 17% in local currencies and 
6% (as a result of currency impacts) in Swiss francs. The integration of Chugai in Japan contributed 
roughly 8 percentage points to the increase in local currency sales. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Gross 
cash flow (EBITDA) rose sharply, passing the 4 billion Swiss franc mark by a substantial margin. That 
is an impressive figure by any standards.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Reported operating profit increased 
by an even stronger 44%, to roughly 2.5 billion Swiss francs. This large increase is partly explained 
by the costs incurred in the first half of 2002 in relation to a Genentech lawsuit. But even excluding 
special items, (adjusted) operating profit in our core businesses advanced 15% in Swiss francs and 27% 
in local currencies, to 2.8 billion Swiss francs \u8212? and that means, it grew faster than sales. Even when 
our EBITDA and operating profit show markedly improved growth on an as reported basis \u8212? as they do for 
the first half of this year \u8212? we still like to stress the importance of the adjusted figures, because 
they enhance the visibility of our underlying businesses and put you in a better position to evaluate 
our performance over time.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Financial income was lower than in the first half 
of 2002 because of last year\u8217?s special gains on the sale of our stake in LabCorp. Without those one-time 
gains, financial income would have been virtually unchanged. The financial income figure includes an 
impairment charge of 277 million Swiss francs on shares whose market prices fell sharply in the second 
half of 2002 and did not recover sufficiently in the first six months of this year to reach the minimum 
target amounts we set at the beginning of 2003. As you will recall, movements in the market value of 
financial assets are now charged to income whenever the value remains more than 25% below original cost 
for six consecutive months. Erich Hunziker will be briefing you in detail about the results of our financial 
activities.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 After our one-time loss for 2002, net income is once again solidly 
in the black. Net income as reported in our interim financial statements reached 1.3 billion Swiss francs, 
and on an adjusted basis it was 1.6 billion Swiss francs. The decline versus the first half of last 
year was due to the gain I mentioned earlier on the sale of LabCorp shares (582 million Swiss francs 
after taxes), which was included in net income for the earlier period. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Sale 
of Vitamins and Fine Chemicals \u8211? Closing expected this year} \line Regarding the sale 
of the Vitamins and Fine Chemicals Division, we are now a good deal nearer to closing the transaction. 
However, there have been further changes to the terms of the sale. Roche and the Netherlands-based DSM 
group signed a purchase agreement on 10 February of this year, and then contacted the antitrust authorities 
in all major market regions. In July the parties adjusted the terms of the sale to the new realities 
by mutual agreement. Roche agreed to reduce the purchase price by 200 million euros, to 1.75 billion 
euros, in light of the unfavourable developments on the global vitamins market. This is reflected in 
the interim financial statements by an impairment charge of 375 million Swiss francs against net assets. 
In return, DSM waived a number of major closing conditions provided for in the original agreement. We 
are now only awaiting approval from the European and the US antitrust authorities in order to close 
the sale. Given the good progress we are making on this front, we expect to close the transaction in 
the third quarter of this year.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Strong sales growth \u8211? Both divisions 
outperform global market} \line I turn now to the most important results for the period 
in our two core businesses. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Sales in the Pharmaceuticals Division were up 
by one-fifth in local currencies, reaching a total of over 10 billion Swiss francs. Prescription drug 
sales accelerated markedly in the second quarter (from +18% to +24%) and expanded nearly three times 
as fast as the market. Sales advanced at above-market rates in North America, Japan and Europe. Even 
excluding Chugai, our prescription drug business outperformed the global pharmaceuticals market. It 
is important to note that the Chugai effect is not merely a result of \u8216?acquired revenues\u8217? \u8212? the fact 
is that the former Nippon Roche makes up a significant part of the new Chugai, and many of the new products 
now being marketed by Chugai in Japan originated at Roche. Apart from Chugai and another excellent performance 
by Genentech, growth was led by our oncology portfolio, which posted a 36% jump in sales revenues (to 
2.9 billion Swiss francs), and by other key prescription products, including NeoRecormon, CellCept and 
Pegasys plus Copegus, our new two-drug combination for hepatitis C. Our OTC business also recorded a 
noticeable rise in sales in the second quarter. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Sales in the Diagnostics Division 
once again advanced well ahead of the market, rising 7% in local currencies. The division was thus able 
to further expand its global market lead. Sales growth remained strongest in the division\u8217?s two most 
profitable segments, Diabetes Care and Molecular Diagnostics\u8217? in-vitro diagnostics business. Sales growth 
in the Asia-Pacific and Iberia regions was well into the double digits. Here, as in Europe and North 
America, revenues expanded far faster than the market.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 As previously announced 
a US appellate court has found that Roche did not violate an implied covenant of good faith and fair 
dealing under its licensing agreement with Igen. We are pleased with the court\u8217?s decision. Consistent 
with this finding, the court set aside an earlier award of $400 million in punitive damages and substantially 
reduced the compensatory damages awarded against Roche. In eliminating more that $486 million of the 
$505 million judgement previously entered against Roche, the court confirmed the correctness of the 
position that Roche has taken throughout the lawsuit. At the same time, the court upheld Igen\u8217?s right 
to terminate the licensing agreement with Roche. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Operating profit 
and EBITDA up by double digits in local currencies} \line Thanks to healthy sales growth 
and rigorous cost management, the profitability of both of our Group\u8217?s core businesses rose significantly. 
Both divisions reported double-digit gains in EBITDA and operating profits in local currencies. In the 
Diagnostics Division EBITDA for the half-year was well above the 1 billion Swiss franc mark for the 
first time. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Profitability in the first half of 2003 \u8211? Margin 
gains despite higher costs} \line The continued improvement in our operating profit margins 
is especially important to us. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Operating profit as a percentage of Group sales 
(excluding the Vitamins Division) showed a healthy 1.6% rise from the first half of 2002. Over the past 
two years we thus have raised the profitability of our core businesses from 17% to over 20%.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 The 
EBITDA margin \u8212? recognised as the most powerful comparative measure of a company\u8217?s profitability \u8212? improved 
by 0.8% to nearly 30%. Both core businesses contributed to this very good result.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 The 
Pharmaceuticals Division saw profitability improve again, despite substantially higher spending on new 
product launches (Pegasys, Copegus and Fuzeon) and the many highly promising projects in our R&D 
pipeline and despite the impact of continued generic pressure on sales of Roaccutane/Accutane. The increase 
was driven largely by sales of Roche prescription drugs, which generated an operating profit margin 
of 25%. The division\u8217?s EBITDA margin held steady at roughly 31%, a solid performance by industry standards.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Roche 
Diagnostics also posted another robust increase in profitability. The division\u8217?s EBITDA margin rose 
by an even stronger 3.2 percentage points and for the first time also surpassed the 30% mark. As a result, 
the division\u8217?s EBITDA margin is now well within the range reported by pharmaceutical companies. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Improving 
the Group\u8217?s financial structure \u8211? Further progress} \line In finance, the restructuring 
initiatives announced early this year are progressing as planned. Thus we have made significant progress 
in reducing the share of financial assets held in equities and in restructuring and reducing Group debt.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 The 
measures we have taken \u8212? and which Mr Hunziker will explain in detail later \u8212? will reduce the volatility 
of future financial earnings, lower the Group's interest expenses and improve the risk profile of our 
investment and debt portfolios.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Milestones in the first half 
of 2003 \u8211? Pursuing medical advances that benefit patients: Pharmaceuticals} \line That 
Roche had a successful first half this year is reflected not only in our sales and profit figures but 
also in a string of regulatory and clinical achievements. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 With the launch 
of Fuzeon, we have introduced the first truly novel anti-HIV medicine in seven years. The product was 
available in the United States and Europe within weeks of being approved in those markets. We are working 
hard to expand production capacity for the product in order to ensure that the greatest possible number 
of patients have access to it within the shortest possible time. At present it looks as if we will be 
able to supply the product to up to 50% more patients by the end of the year than originally planned.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Pegasys 
is now approved in over 80 countries and by the end of the first half of this year had already gained 
significant market share. With its high response rates, low toxicity and once weekly dosing, Pegasys 
offers convincing benefits for physicians and patients alike. Combination therapy with Pegasys and Copegus 
offers very good chances of a cure in hepatitis C, and we hope to see similarly good results in hepatitis 
B.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 The first six months of this year saw us further expand our global lead 
in oncology. Sales of our leading cancer medicines MabThera/Rituxan, Herceptin and Xeloda continued 
to grow strongly. Because of the complexities of cancer, significant advances in oncology are rare. 
That is why Roche is proud to be the supplier of three cancer medicines which have been shown in clinical 
trials to extend patients\u8217? lives. And Avastin, which we will be commercialising with Genentech, is another 
reason for new hope in the fight against cancer. The data from a phase III trial in colorectal cancer 
patients are so convincing that the FDA has included Avastin in its fast-track programme, which is designed 
to facilitate the development and expedite the approval of promising new medicines for life-threatening 
diseases.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Besides Avastin, a number of other developmental products have produced 
very good clinical results in major therapeutic areas such as oncology, anemia management and transplantation.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 We 
are especially pleased about signing our first in-licensing agreement with Chugai. MRA, which we will 
be developing and commercialising with our Japanese partner, is a highly promising drug candidate for 
rheumatoid arthritis.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 I believe it is fair to say that the advantages of our 
strategy of cooperating with a network of strong, highly motivated partner companies are being borne 
out more and more clearly by the results. Roche\u8217?s own R&D organisation will continue to play a key 
role in future. Five of our 10 top-selling pharmaceuticals, I might note here, originated in Roche laboratories.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Milestones 
in the first half of 2003 \u8211? Pursuing medical advances that benefit patients: Diagnostics} \line The 
acquisition of Swiss-based Disetronic has significantly strengthened Roche Diabetes Care, the Diagnostics 
Division\u8217?s biggest and most profitable business area. By bringing together the global leader in diabetes 
management and the number two supplier of insulin pumps, we have done more than just broaden our product 
base, which now ranges from meters for glucose self-monitoring to devices for flexible, individualised 
insulin delivery. We have also moved closer to our long-term goal of developing a fully automated artificial 
pancreas. This will bring about a dramatic improvement in the quality of life of people with diabetes. 
We have initiated all necessary steps and are working closely with the FDA to address complaints by 
the FDA regarding production processes and documentation at Disetronic. The planned launch of a new 
generation of insulin pumps in the second half of 2004 will not be affected.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Last 
month\u8217?s launch of AmpliChip CYP450 marks a major step towards more tailored healthcare. The GeneChip 
technology licensed-in from Affymetrix will enable us to develop DNA microarrays for a wide range of 
diseases and establish new standards for genetic testing in routine clinical settings. We are planning 
to launch a number of additional tests next year \u8212? initially for use in research. As we did with PCR 
technology in the 1990s, we want to deploy the GeneChip technology in developing and shaping the market 
for oncology and genomic diagnostics. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Activities in developing 
countries \u8211? Major strides in first half-year} \line Innovative products offering major 
improvements in the healthcare available to patients worldwide are our core business. As a good corporate 
citizen, Roche also accepts its responsibility towards developing countries. In the first half of 2003 
we undertook significant initiatives in this area.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 We updated our pricing policy 
for protease inhibitors within the Accelerating Access Initiative with the aim of further improving 
access to these WHO-defined essential drugs in countries that are hardest hit by the AIDS pandemic.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 We 
now offer direct supplies of Viracept and Invirase to sub-Saharan Africa and UN-defined Least Developed 
Countries at \u8216?no-profit\u8217? prices \u8212? regardless of the quantities required. These prices are 30\u8211?50% below 
those of generic manufacturers. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 We also reiterated that Roche will not take 
action against infringements of patents it holds on HIV/AIDS medicines or file new patents for such 
medications in these countries. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 However, low prices alone will not solve the 
problem. The complex regimen needed to treat HIV/AIDS can only work properly if an intact infrastructure 
and a functioning basic healthcare system are in place. Above all, prevention will succeed only where 
there is adequate information and education and the political will exists to make it succeed. These 
factors are also of key importance in the CARE project, which Roche is funding and supporting in Kenya, 
C\u244?te d\u8217?Ivoire, Uganda and Senegal. The aim is to provide comprehensive treatment, and Roche is preparing 
to launch a similar project in Asia.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 The donation of the rights and technology 
to manufacture benznidazole to the government of Brazil is another example of ways in which Roche is 
fulfilling its commitment to good corporate citizenship. Benznidazole is the most effective medicine 
available for the treatment of Chagas\u8217? disease, a potentially fatal tropical disease that affects some 
18 million people in Central and South America. There are between 5 million and 6 million sufferers 
in Brazil alone.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Malaria continues to be a major threat. In 1998 Roche began 
cooperating with the University of Nebraska to help develop a new, effective and inexpensive antimalarial 
drug. A compound with very good in-vitro and in-vivo characteristics was identified, and in 1999 the 
project was continued by the University of Nebraska and the Swiss Tropical Institute with support from 
the WHO. In May 2003 Roche turned over its role as pharmaceutical partner in the project to an Indian 
producer. This will help to ensure that the manufacturing costs are kept as low as possible if the drug 
is successfully brought to market. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Through these initiatives Roche is contributing 
to making life-saving medicines available to as many people as possible in economically underprivileged 
countries. Clearly, much remains to be done, and we have no intention of resting on past achievements.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Forecasts 
being met} \line Before I proceed to the outlook, let me come back briefly to the projections 
we announced at the Annual Media Conference in February. With one proviso, we have met or exceeded all 
our sales and earnings expectations. While the Diagnostics Division is growing significantly faster 
than the market, growth in the first half lagged a little behind the double-digit rate targeted again 
for the year as a whole. However, we are confident that more dynamic sales growth in the second half, 
helped by the launch of new products and the integration of Disetronic from May on, will enable us to 
achieve our goal by the end of the year.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 We are well aware of the challenges 
that meeting our goals will involve. The challenge of successfully strengthening our pipeline will require 
our full attention, as will the tasks of carefully integrating Disetronic and resolving the outstanding 
issues in our business relationship with Igen. In addition, we will have to focus considerable energy 
on further implementing our strategy for achieving a balanced financial performance by 2004 in what 
remains a volatile and difficult marketplace. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 The task of expanding our collaboration 
with Genentech and Chugai and linking Roche, Chugai and Genentech in a network spanning the globe is 
another challenge that we are actively working on.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Outlook \u8212? 
Guidance for full-year 2003 reaffirmed} \line Based on our good results for the first 
six months, we expect to meet or exceed the full-year sales and earnings guidance we released early 
this year. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 For the Roche Group as a whole, we thus expect sales and operating 
profit to increase by double digits in local currencies. The same holds for the Pharmaceuticals Division 
and (including the contribution from Disetronic) for the Diagnostics Division as well. In addition, 
we expect the Group\u8217?s operating profit margin to at least remain stable compared with 2002. \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Ladies 
and Gentlemen, our regulatory and clinical achievements, our successful market roll-outs and our sales 
and earnings figures all attest to the fact that we are successfully implementing our strategy of focusing 
on two innovative core businesses \u8212? pharmaceuticals and diagnostics. The progress we have made has strengthened 
our conviction that as a global healthcare leader we are steering the right course. We will continue 
vigorously and independently pursuing a strategy for long-term success that enables us to deliver benefits 
to patients, physicians, employees and shareholders.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Erich 
Hunziker} \par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Good morning Ladies and Gentlemen\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Major 
restructuring underway \u8211? Reducing interest expenses and risk profile} \line All activities 
of Corporate Finance in the first half of 2003 were targeted towards achieving conditions for a balanced 
financial income by the end of 2004. The top priorities were a reduction of our debt and the further 
reduction of the risk profile of our financial investments. Let us start with a look at the operating 
results.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Operating performance (financial statements) \u8211? Influenced 
by special items} \line Including Vitamins we show a considerable increase at operating 
profit level: this is - in addition to the strong performance of our core businesses - due to special 
items: in 2003 the impact of the Vitamins Division sale to DSM is 375 million Swiss francs, whereas 
in 2002 provisions created by Genentech for the City of Hope Medical Center legal case were 778 million 
francs.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Operating performance core businesses \u8211? Significant operating 
profit growth} \line The adjusted figures show the operating profit of our core businesses 
without these special items. Although the Group is launching several important new products, the increase 
of Marketing and Distribution expenses was kept at reasonable levels. The increase of Research and Development 
costs is due to two major factors: the integration of Chugai and the impressive number of promising 
development projects including activities to support in-licensed and opt-in compounds. The increase 
of administration cost is mainly due to the Chugai integration. The significant improvement of the \u8220?other 
operating expenses\u8221? has primarily three reasons: significantly lower foreign exchange losses on accounts 
receivables (mainly in Latin America), a one-time income from a litigation settlement in Diagnostics 
and reduced costs for software implementations.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 In total, operating profit 
increased by an impressive 27% in local currencies and 15% in Swiss francs. Compared to the first half 
of 2002, the operating profit margin improved by 1.6 percentage points to 20.1%.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Net 
financial income (expense) \u8211? LabCorp 2002, foreign exchange gains equal impairment 2003} \line On 
this chart you see the major factors influencing our financial income:\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 You 
can see the massive interest expenses primarily resulting from our convertible debt instruments. Since 
their interest charges are fixed long-term, we cannot profit from the historically low interest rate 
environment. We therefore intend to repay or re-finance these instruments as quickly as possible. Interest 
income is much lower than in 2002, due to a decrease of \u8220?cash and marketable securities\u8221? and the lower 
interest rate environment. On the positive side we can take note of attractive foreign currency gains.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 In 
the first half of 2002 we generated significant gains from the sale of LabCorp shares. So far in 2003 
we have reduced our investment in equity securities, while balancing gains and losses.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 At 
the end of 2002 we revised our accounting policy for impairment of financial assets. In addition to 
the existing impairment triggers, any equity securities that have a market value of more than 25% below 
their original cost for a period of more than six months are considered as impaired. Applying this rule 
at 30 June 2003 we had to take an impairment charge of 277 million francs. This results primarily from 
equities, which were already below 25% at year-end 2002, but for less than six months. At the end of 
June 2003, 150 million francs of our equity securities would fulfill the below 25% criteria, but not 
yet the six month one.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Cash and marketable securities \u8211? Further 
reducing investment in equity securities} \line In line with our goal to reduce the risk 
profile of our investments, we have reduced the investments in equity securities by 1.3 billion francs. 
Since in parallel to this reduction the overall amount invested in cash and marketable securities declined 
from 15.8 billion to 11.8 billion francs, the equity securities still account for 21% of our portfolio.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Net 
financial income (expense) \u8211? Decline equals LabCorp gain in 2002} \line This chart shows 
the details of the net financial result: excluding the one-time gains from the sale of LabCorp shares 
in 2002, the 2003 result is in line with the one in 2002.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Net 
income (financial statements) \u8211? Decline due to absence of 2002 LabCorp gain} \line The 
positive developments at operating profit level were not able to compensate the special effect of the 
sale of LabCorp shares: the net income decreases by 28%.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Net 
income core businesses \u8211? Decline due to absence of 2002 LabCorp gain} \line The LabCorp 
impact is also clearly visible in the adjusted results. On the positive side we were able to keep the 
tax rate within the target range.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Capital market instruments 
\u8211? Maturity profile considerably improved} \line In the first half year 2003 we were able 
to improve our debt situation in a significant manner: by paying back the LYON II and the Bullet, we 
reduced debt by 3.1 billion francs. A newly established European Medium Term Notes programme allowed 
us to raise 750 million Euro at very attractive conditions to replace existing short-term bank debt.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Free 
cash flow of 1.5 billion Swiss francs in first half of 2003 \u8211? Substantial repayment of debt } \line During 
the first six months of 2003, Roche again generated a positive free cash flow: the core business was 
generating a strong EBITDA of 4.1 billion francs. Capex and working capital increased as expected, 600 
million francs were paid out to Vitamins customers (these payments had already been provided for in 
the past).\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 Whereas the EMTN-program generated 750 million Euro, debt repayment 
and the Disetronic acquisition totaled 7.8 billion francs. I will address the transactions involving 
own equity instruments in the next chapter.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Convertible debt/own 
equity instruments \u8211? New rules already implemented in 2002} \line As a matter of principle 
Roche in general only holds Genussscheine (GS) underlying convertible debt instruments. To explain the 
developments in the first half of 2003, let us look back to 2002: as you can see from the chart, by 
30 June 2002 Roche had several convertibles outstanding, backed by 40 million GS. Of these 40 million, 
23 million were physical GS, another 17 million were held in the form of forward purchases. During the 
second half of 2002 new developments with regards to accounting treatment of such forward purchases 
obligations were included in an exposure draft published by the IAS Board: whereas in the past, these 
forward purchases were reported as part of equity, they should be reported in the future as debt at 
their net present value. In the interest of increased transparency, Roche therefore decided to reclassify 
these forward purchases as of 31 December 2002 in a pro-active manner to long-term debt, at their net 
present value of 2.4 billion francs. In addition we had to place collateral of 673 million francs with 
the counter party financial institutions of such forward purchases. A painful result of the new accounting 
treatment is to amortize the difference between final undiscounted forward purchase value and the discounted 
net present value: the Roche P+L therefore had to take an annual interest charge of 145 million francs.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Convertible 
debt/own equity instruments \u8211? Developments first half of 2003} \line In the first half 
of 2003 we were able to improve the situation in a considerable manner: in April the \u8220?LYON II\u8221? was paid 
back without converting. The \u8220?underlying\u8221? GS were used for the Disetronic Acquisition and sold into 
the market. The proceeds out of this sale were used to close a considerable part of the forward purchases. 
Had we stopped at this point, we would have left the remaining convertibles without underlying GS. Moreover 
the counter-parties of these forward purchases would have sold their GS into the market. We therefore 
secured these GS by means of Low Exercise Price Options (LEPOs).\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 By 30 June 
2003 we only hold 30 million GS under considerably improved conditions: the long-term debt reflecting 
forward purchases was reduced by 1.3 billion francs, the underlying collateral by 516 million francs 
and the annualised interest charge from 145 to 62 million francs.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Equity 
increased \u8211? Driven by net income} \line Equity increased due to the net income and the 
restructuring in the field of own equity instruments.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Balance 
sheets \u8211? Solid financing, higher equity ratio} \line The significant reduction of debt 
helped us to increase our equity ratio to 44%.\par}{\pard\f0\li0\ri0\sa360\sl360\fs22 {\b Outlook \u8211? Guidance 
for full-year 2003 reaffirmed} \line Let me close with our outlook: Barring unforeseen 
developments Roche expects for 2003 double-digit local currency growth in sales and operating profit 
for our core businesses, at least a stable Group operating profit margin compared to 2002 and a tax 
rate of 29% for our core businesses. And thereafter Roche expects a Group operating profit margin above 
20% in the medium term, Pharma approaching 25% by end of 2004 and Diagnostics slightly over 20% by 2006. 
By 2004, conditions will be in place for a balanced financial performance.\par}
{\pard \par}
{\pard\sb180\f1\fs22 {\b F. Hoffmann-La Roche Ltd}\line 4070 Basel\line Switzerland \par}
{\pard\sb180\f1\fs22 Corporate Communications\line Roche Group Media Relations \par}
{\pard\sb180\f1\fs22 Tel. +41 61 688 88 88\line Fax +41 61 688 27 75\line www.roche.com \par}
}