Basel, 21 April 2004

First quarter exceeds expectations: 15% rise in sales results in further market share gains; Avastin successfully launched in United States

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Roche Group
• Roche Group lifts core business sales by 15% in local currencies and 14% in Swiss francs
• Redemption of outstanding LYONs IV convertible notes further reduces debt and interest expense: transaction yields one-time after-tax gain of 613 million Swiss francs
• Outlook for the current year
- Sales growth in both divisions to outpace global market
- Margins in pharmaceuticals and diagnostics businesses improving as planned
- Substantial increase in net income expected

Roche Pharmaceuticals
• Pharmaceuticals Division achieves double-digit sales growth in local currencies (+17%) and Swiss francs (+16%) - global market up 9%*
• Oncology franchise posts 27% growth. Avastin successfully launched in the United States
• Pegasys and Copegus: sales for first quarter already at 391 million Swiss francs
• Anti-anemia product CERA enters phase III clinical testing in patients with renal disease

* IMS, Moving Annual Total February 2003–January 2004.

Roche Diagnostics
• Diagnostics Division grows twice as fast as the market, with sales up 10% in local currencies (+11% in CHF)
• Above-average sales growth in diabetes care and molecular diagnostics segments (+15% and +14%, respectively, in local currencies)
• Igen acquisition completed — strong growth in key immunodiagnostics segment (+24% in local currencies)

Roche recorded sales of 7.6 billion Swiss francs in the first quarter of 2004. Compared with the same period last year, this represents an increase of 15% in local currencies (+14% in CHF) for the Group’s core businesses. The Pharmaceuticals Division continued to grow faster than the market, increasing its sales by 17% in local currencies (+16% in CHF). The Diagnostics Division gained additional market share on sales growth of 10% in local currencies (+11% in CHF).

Commenting on the first-quarter figures, Roche Chairman and CEO Franz B. Humer said, ‘Roche has started the new year very well. Our Pharmaceuticals and Diagnostics Divisions continue to grow significantly faster than the market. The launch of Avastin in the United States makes us the only healthcare company in the world to supply four medicines that can help extend the lives of people with cancer and underscores our leadership in oncology. Barring unforeseen events, our continuing progress on the operational side and the redemption of our LYONs IV convertible notes will result in a substantial improvement in our net income this year and will also strengthen our balance sheet further.’

	2004	2003	% Change	% Change
Sales from January to March	m CHF	mCHF	In CHF	In local currencies
Pharmaceuticals	5,646	4,888	16	17
Roche prescription	3,546	3,053	16	16
Genentech prescription	923	777	19	29
Chugai prescription	748	656	14	12
Prescription	5,217	4,486	16	18
OTC	429	402	7	5
Diagnostics	1,908	1,725	11	10
Core businesses (continuing    businesses)	7,554	6,613	14	15
Vitamins and Fine Chemicals	-	743	-100	-100
Group	7,554	7,356	3	3

Finance: major step towards strengthening the Group’s balance sheet
In early April Roche completed the call of its LYONs IV convertible notes. This marks a major step towards further reducing the Group’s debt and strengthening its balance sheet. The notes were mainly exchanged for Genentech shares. The transaction yielded a one-time pre-tax gain of 968 million Swiss francs and an after-tax gain of 613 million Swiss francs for Roche. The transaction has reduced Roche’s debt by 1.36 billion Swiss francs. The delivery of Genentech shares in exchange for the notes has decreased Roche’s interest in Genentech by 2.5% to 55.3%. Roche continues to hold a majority stake in Genentech, and its successful relationship with the US biotechnology company will remain unchanged.

Pharmaceuticals Division

The Pharmaceuticals Division increased its sales by 17% in local currencies and 16% in Swiss francs in the first quarter of 2004. Sales of prescription medicines were up 18% in local currencies (+16% in CHF), with Roche, Genentech and Chugai all contributing to this strong growth with solid double-digit gains. Consumer Health also grew well ahead of the market, increasing its sales by 5%.

The division’s oncology, virology and transplantation franchises continued to be the main drivers of growth in prescription drug sales. Sales of oncology products1 were up 27%2, with major contributions to growth coming from products such as MabThera (+33%), Herceptin (+27%) and Kytril (+28%). Pegasys and Copegus captured additional market share both in the United States and internationally, as combined sales of the two products reached 391 million Swiss francs in the first quarter. In the transplantation segment, CellCept and Valcyte/Cymevene continued on a growth path, with sales rising by 23% and 38%, respectively. Sales of NeoRecormon and Epogin advanced 5% in the face of intense price competition.

Sales of prescription medicines outpaced market growth3 in all major regions. In North America sales increased by 22%, or twice as fast as the market (+11%), resulting in additional market share gains. European sales also grew at a double-digit rate (+17%), and thus substantially faster than the market average (+8%). Chugai likewise posted double-digit sales growth (+12%), despite a virtually stagnant Japanese market (+3%). In Latin America sales increased by 22% amidst an overall market recovery (+9%).

Oncology: US launch of Avastin contributes to accelerated growth
Sales of MabThera/Rituxan (US: +21%; Japan: +177%; Europe/RoW: +56%) continued to grow strongly, driven by increased use in the first-line treatment of aggressive and indolent non-Hodgkin’s lymphoma (NHL). In Europe 60% of patients with aggressive NHL and 34% of patients with indolent NHL are already being started on MabThera as first-line therapy.
Herceptin continued to deliver strong growth (+27%), particularly in Europe/RoW (+39%) and Japan (+28%). Herceptin combined with Taxotere has been shown to significantly improve survival in patients with an aggressive form of breast cancer. The data have been submitted to the European authorities to support a label extension for this drug combination.
Xeloda, for breast and colorectal cancer, continued to make a steadily growing contribution to the oncology franchise, posting sales growth of 34% in Europe, Latin America and Asia. Sales in the United States were down 49% for the first quarter, primarily due to changing wholesaler inventory levels and buying patterns; this trend should correct itself over the course of the year, however, as US prescriptions continue to grow at a strong +19% rate.
In the supportive cancer care segment, the division has begun rolling out Bondronat across Europe for use in patients with metastatic bone disease. Kytril, Roche’s anti-emetic for controlling nausea and vomiting associated with cancer therapy, continues to show strong growth (+28%) in all major markets.
The first quarter was also marked by the approval and launch of Avastin in the United States for first-line treatment with chemotherapy in patients with advanced cancer of the colon or rectum. Filings for Avastin, the first anti-angiogenesis agent for cancer, have been granted priority review status in Switzerland, Australia and Canada. An application for European marketing authorisation was filed in December 2003.

Virology: Pegasys and Copegus drive growth
Pegasys and Copegus, Roche’s combination therapy for hepatitis C, continued to show dynamic growth and gain market share, with combined sales of these two products rising to 391 million Swiss francs worldwide. In the last 12 months Pegasys and Copegus have posted sales of over 1 billion Swiss francs. Pegasys strengthened its market leadership in the United States (57%) during the first quarter. Programmes to develop Pegasys for additional indications are under way. In February, for example, Roche announced the results of a large-scale trial of the product in patients co-infected with HIV and HCV. Liver disease is the leading cause of hospital admissions and death in HIV/HCV co-infected patients. The trial patients who received Pegasys plus Copegus had the highest sustained virological response rate ever achieved in this patient population.

Sales of the anti-HIV drug Fuzeon, the world’s first fusion inhibitor, were up by nearly one-third from the previous quarter and are expected to increase further now that the product has also been launched in the key Spanish and Italian markets. Reimbursement negotiations in several other EU countries are ongoing, as are programmes to increase acceptance of subcutaneous self-injection of the medicine.

Anemia: NeoRecormon and Epogin maintain their market position
NeoRecormon and Epogin, the leading treatments for anemia in patients with renal disease and cancer, posted 5% growth. Sales were affected by price erosion, which has resulted in flattening growth rates in the anti-anemia market, and by slow growth in the oncology segment early in the quarter. However, NeoRecormon sales in the oncology segment are expected to improve further thanks to the recent approval and launch of a more convenient and cost-effective pre-filled syringe for once-weekly dosing in patients with lymphoid cancers.
An extensive programme of phase III clinical trials with the newly developed anemia treatment CERA in patients with renal disease has commenced in Europe and the United States.

Transplantation: strong double-digit growth
CellCept (+23%), Roche’s low-toxicity immunosuppressant for kidney, liver and heart transplantation and the top-selling branded immunosuppressant in the United States, continued to achieve impressive sales increases in the United States and all other key markets.
Combined sales of Valcyte and Cymevene were up 38%. This strong growth was driven primarily by the launch of Valcyte in a number of countries, following EU and US approval of the product in 2003 for the prevention of CMV disease in transplant patients.

Other major products
Sales of Xenical have stabilised (+1%). In March the European authorities approved an extension to Xenical’s prescribing label based on the XENDOS study. The label now includes information on Xenical’s ability to reduce the risk of developing type 2 diabetes. In addition, Sweden’s reinstatement of reimbursement for the product has helped stimulate sales in Europe.
Tamiflu sales remained strong in Japan in the first quarter. Growing concerns about the avian flu and the potential for a pandemic in the coming years have led to intense discussions with the WHO and a number of government agencies.
A once-daily oral formulation of Bonviva/Boniva, a medicine for the prevention and treatment of osteoporosis, was approved by the European authorities in February 2004. Moreover, results from a new phase III trial indicate that once-monthly oral dosing of the drug is at least as effective as a once-a-day regimen, while at the same time promising to increase patient acceptance and enhance treatment compliance. Publication of the final results and submission of approval applications to the European and US regulatory authorities are planned for this year.
Rocephin sales grew 4% in the first quarter. Strong sales were reported in North America because of the flu outbreak there. Sales erosion in Europe/RoW was less than anticipated due to the absence of generic competition in Italy.

Consumer Health: above-market growth
In the first quarter of 2004 sales of non-prescription (OTC) medicines, including sales by Chugai in Japan, grew 5% in local currencies (+7% in CHF) to 429 million Swiss francs. Excluding Chugai, the Group’s consumer health sales grew by 8% in local currencies, significantly outpacing the market as a whole. This strong growth was fuelled by sales of the Group’s most important OTC brands, which were up 10% in local currencies, and particularly by increased sales in the core markets of Spain (+19%), the United Kingdom (+14%), Brazil (+30%) and Turkey (+25%).
As previously announced, Roche is reviewing various strategic options for Roche Consumer Health. A decision is expected in the course of this year.

Diagnostics Division

Roche Diagnostics continued to grow significantly faster than the market in the first quarter of 2004. Divisional sales totalled 1.9 billion Swiss francs, a 10% increase over last year’s first quarter results in local currencies (+11% in CHF). The first-quarter sales figures are substantially better than those of other leading diagnostics companies.

All regions once again contributed to growth. Double-digit sales gains were posted in Asia–Pacific, Latin America, Iberia and Japan. In Latin America sales benefited from the region’s economic recovery. The market slowdown seen last year in the United States continued in the first quarter of 2004. After adjusting for special items (sale of product lines), however, Roche Diagnostics once again outpaced the US market by a significant margin. Worldwide sales growth was driven primarily by insulin pump sales, diabetes monitoring products, immunodiagnostics and the molecular diagnostics business. Sales gains in Europe were in the high single-digit range despite the cost containment measures implemented in a number of countries.

Diabetes Care: new products well received in the marketplace
Roche Diabetes Care extended its market leadership as sales rose 15% (+15 in CHF) compared with the very strong results posted a year earlier. Roche Diabetes Care is confident of its ability to maintain above-market growth worldwide.
The Accu-Chek Compact system is expected to continue delivering steady growth. In the first quarter Accu-Chek Go was launched in France and Austria, and Accu-Chek Advantage III was rolled out on schedule in the United States and Germany. Both devices offer users enhanced convenience.
The FDA is expected to conduct a re-inspection of Disetronic’s Burgdorf facility in the third quarter of 2004, after issuing an advisory letter last year regarding production processes and documentation at the site.

Near Patient Testing: Urisys launched in United States; OMNI S available worldwide
While Roche Near Patient Testing posted a 1% decline in overall sales for the quarter (+0% in CHF), revenues in this business area show a 3% gain (+4% in CHF) if special items (sale of the OPTI product line and drugs-of-abuse testing business) are taken into account. In the primary care and patient self-testing segments, sales of coagulation meters and Accutrend cholesterol testing products showed double-digit growth. As part of a global market rollout, the Urisys 1100 was launched in the United States, strengthening Roche Diagnostics’ position in the automated urinalysis segment. The global rollout of the OMNI S blood gas and electrolyte analyser continues and is making a major contribution to consolidating Roche’s leading position in this segment.
The launch of Cobas IT 1000, an innovative data management software package for use at the point of care, is planned for the second quarter of 2004. This Internet-based solution will create additional incentives for customers to draw on the broad portfolio of products supplied by Near Patient Testing and will help Roche Diagnostics to extend its lead in the hospital point of care segment.
A contract signed in the first quarter of this year with Novation, one of the largest healthcare group purchasing organisations in the United States, will generate additional sales momentum.

Centralized Diagnostics: immunochemistry drives growth
Overall, sales by Roche Centralized Diagnostics increased 5% (+8% in CHF). Sales of immunodiagnostic products grew well ahead of the market, increasing by 24% (+27% in CHF). The completed acquisition of Igen has created additional potential for growth in the immunodiagnostics market, the single largest diagnostics segment, currently worth over 8 billion Swiss francs. Mounting demand for tools designed to optimise laboratory workflow is expected to provide an additional stimulus for growth. Systems like Modular Pre-Analytics open up additional growth opportunities for Roche Centralized Diagnostics, the leading supplier of integrated analytical systems. The business area expanded its broad menu of cardiac diagnostic tests by licensing in a highly sensitive immunoassay.

Molecular Diagnostics: women’s health and blood screening the most important growth segments
Roche Molecular Systems increased its sales by 14% in the first quarter (+13% in CHF). The blood screening and women’s health segments were the biggest contributors to growth.
Sales of screening tests to ensure the safety of blood products were fuelled by the signing of new contracts in expanding markets and by the introduction of additional tests. Roche Diagnostics strengthened its leading position in the Asia–Pacific region and Japan, for example, by expanding its partnership with Asian blood banks. The Cobas AmpliScreen HIV-1 Test was approved in the United States for testing blood plasma and donor organs. Preparations for filing an application for AmpliChip CYP 450 as an in vitro diagnostic are moving ahead as planned. Roche intends to submit applications to the US and European authorities this year. European approval is expected in the middle of 2004.
The European launch of an HPV test in April of this year is an important landmark in the development of Roche’s women’s health portfolio. It is the first PCR-based test for detecting HPV and is capable of identifying all 13 high-risk subtypes of the virus.
Following a decline in 2003, sales to industrial customers were up 14% (+5% in CHF) for the first quarter.

Applied Science: return to growth
Following last year’s noticeable downturn, the biotechnology market returned to healthy growth, with Roche Applied Science posting a 10% rise in sales in this segment (+9% in CHF). The introduction of additional components for the LightCycler 2.0 system, offering an even wider range of applications for PCR technology, and a focus on genomics and life science research will contribute to further growth.

1 Oncology portfolio: MabThera/Rituxan, Herceptin, Xeloda, Bondronat, Kytril, Furtulon, Neupogen, NeoRecormon (25%), Roferon-A (85%), Neutrogin, Picibanil, Avastin.
2 Unless otherwise noted, all percentage changes are based on results in local currencies.
3 Source: IMS, Moving Annual Total February 2003 - January 2004

Annex