Media Release

Basel, 19 July 2004

Roche to sell its consumer health business – clear focus on pharmaceuticals and diagnostics

Roche Consumer Health sold to Bayer for a price of 3.6 billion Swiss francs
Roche to out-license US non-prescription rights to orlistat to GlaxoSmithKline for an upfront payment of 120 million Swiss Francs plus milestone payments and royalties

Roche today announced three transactions to divest its non-prescription activities:
• Roche sells its OTC (over-the-counter medicines) business Roche Consumer Health (RCH) including five manufacturing sites to Bayer
• Roche disposes of its 50% stake in Roche/Bayer joint venture in the US to Bayer
• Roche’s  pharmaceuticals division out-licenses US non-prescription rights to its anti-obesity drug orlistat to GlaxoSmithKline (GSK)
These transactions will reinforce Roche’s strategy of focusing on its innovation-driven pharmaceuticals and diagnostics divisions, two businesses with significant potential for above average market growth and high value creation. The three transactions have a combined value of over 3.7 billion Swiss francs, not including milestone payments and royalties for orlistat.

Roche Consumer Health to be acquired by Bayer
Roche and Bayer have signed a contract for Bayer Consumer Care to buy Roche’s non-prescription business Roche Consumer Health. The transaction includes all assets of RCH and the five pharmaceutical production factories Grenzach (Germany), Gaillard (France), Pilar (Argentina), Casablanca (Morocco) and Jakarta (Indonesia). In an additional transaction Roche will sell its 50% stake in its joint venture with Bayer, which markets the analgesic Aleve and some other OTC brands in the US. The purchase price for these two transactions is around 3.6 billion Swiss francs, to be paid in cash at closing. The OTC business of the Japanese company Chugai, in which Roche has a majority stake, is not part of the sale.

The acquisition of RCH will make Bayer Consumer Care, a division of Bayer HealthCare, one of the top three non-prescription businesses worldwide. The global headquarters of the combined company will be in Morristown, New Jersey (US). The European headquarters will be based in the Basel area, Switzerland, where the current global headquarters of RCH are located today. Research and Development will be situated at Bayer Consumer Care’s headquarters in Morristown and at the RCH site in Gaillard (France). The transactions are subject to approval by the relevant authorities and are expected to close by the end of 2004.

Orlistat non-prescription rights for US out-licensed to GSK
Roche’s pharmaceuticals division has granted GlaxoSmithKline Consumer Healthcare an exclusive license for the US non-prescription rights to the anti-obesity drug orlistat, marketed by Roche as a prescription medicine under the brand name Xenical. The agreement provides for an up-front payment of 100 million US dollars (around 120 million Swiss francs) and additional payments on the achievement of agreed milestones and royalties. Roche and GSK have already begun work to develop an OTC orlistat formulation in the US. Roche has also concluded an agreement to supply GSK with the active ingredient for the new formulation. Roche retains all rights to market Xenical as a prescription drug in the US and all rights (prescription and non-prescription) outside the US. In 2003 Roche’s worldwide sales of Xenical totaled 618 million Swiss francs (including 146 million Swiss francs in sales in the US).

Commenting on the transactions, Roche Chairman and CEO Franz B. Humer said: “With the sale of RCH we are proceeding with our long term strategy of focusing on our two research-driven, high-margin businesses diagnostics and prescription pharmaceuticals. These businesses have significant growth potential and a steadily increasing potential for synergies. The sale of Roche Consumer Health to Bayer ensures that Roche’s non-prescription brands move to a company with traditionally strong expertise and solid market positions in the non-prescription field, offering healthy prospects to Roche Consumer Health and its employees worldwide. By licensing out the US non-prescription rights to orlistat to GSK, Roche has gained a top-tier partner in pursuing a successful “OTC switch” and significant upside potential for future royalty streams.”

Bayer Management Board Chairman and CEO Werner Wenning stated: “By combining these two businesses we will become a top-tier OTC player and we believe that together we can continue to grow the business at above-market rates. The acquisition helps us to advance our growth strategy for Bayer HealthCare, by enhancing the Consumer Health elements of that portfolio, and we believe that this deal will be accretive in the second year after closing.”
“We are delighted that Roche has selected GSK to market OTC orlistat in the US," said Jack Ziegler, President, GlaxoSmithKline Consumer Healthcare. "Building on our successes in switching Nicorette and NicoDerm CQ in the US, and with the commitment of our whole US Consumer Healthcare organisation, we believe OTC orlistat will have an important role in aiding weight loss in the US."

About the combined OTC businesses of Bayer Consumer Care and Roche Consumer Health
The combined OTC businesses of Bayer Consumer Care and Roche Consumer Health will have sales of around 2.4 billion euros and employ around 6700 people in 120 countries (including five production sites from Roche’s pharmaceuticals division). Bayer Consumer Care with Roche Consumer Health will have a number of important analgesic, dermatological, gastrointestinal and nutritional products that offer outstanding growth potential across the globe. The product portfolio includes such well-known brands as Bayer’s Aspirin, Alka-Seltzer, Midol and One-A-Day and Roche’s Aleve, Bepanthen, Berocca, Flanax, Redoxon, Rennie and Supradyn.

About Roche Consumer Health
Roche launched its first OTC brand Sirolin, a cough syrup, in 1898 and over the next 100 years continued to expand its presence in the OTC market by launching a variety of vitamin and skin care products and analgesics. Major Roche OTC brands include Saridon (launched in 1933), Redoxon (1934), Bepanthen (1944), Supradyn (1959), Berocca (1972) and Elevit Pronatal (1984). In 1991 Roche took a major step towards achieving critical mass in OTC by acquiring Nicholas, adding such brands as Rennie (1929) and Aspro (1915) to its OTC portfolio.

In 1992 Roche established Roche Consumer Health (RCH) as a separate OTC subdivision within the Group’s pharmaceuticals division. Since then RCH has continued to grow and expand through further brand launches, acquisitions and Rx-to-OTC switches in key markets. Acquisitions have included brands such as Sanatogen (1993), Euphytose (1995), Citrosodina (1995) and Biovital (1996). Significant switches have included the naproxen analgesic brands Flanax and Apronax in Latin America and Aleve in key European markets. In 1997 Bayer and RCH formed a joint venture to market and sell Aleve in the US.

Headquartered in Kaiseraugst, Switzerland, RCH reported sales of 1.6 billion Swiss francs in 2003. Approximately 3200 employees work for RCH in over 50 countries, including employees at five pharmaceutical production factories.

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 and is 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 research and development agreements with numerous partners, including majority ownership interests in Genentech and Chugai.

About Bayer HealthCare
Bayer HealthCare, a subgroup of Bayer AG with sales of approximately €8.9 billion in 2003, is one of the world's leading, innovative companies in the health care and medical products industry. The company combines the global activities of the divisions Animal Health, Biological Products, Consumer Care, Diagnostics Professional Testing Systems and Diagnostics Self Testing Systems and Pharmaceuticals. 34,600 people are employed by Bayer HealthCare worldwide. Bayer Consumer Care, a division of Bayer HealthCare, is headquartered in Morristown, N.J.  Bayer Consumer Care is among the largest marketers of over-the-counter medications and nutritional supplements in the world. Some of the most trusted and recognizable brands in the world today come from the Bayer portfolio of products.  For more information on Bayer HealthCare, go to www.bayerhealthcare.com.

Roche Group Media Relations Contacts:
Daniel Piller, Head Media Office
Alexander Klauser, Media spokesperson
Phone: +41 (0)61 688 88 88
email: basel.mediaoffice@roche.com

Roche Media Relations Contacts in the US:
Alfred Wasilewski, Executive Director Public Affairs
Phone: +1 973 562 2212
email: alfred.wasilewski@roche.com

Bayer AG Media Relations Contacts:
Guenter Forneck, Media spokesperson
Phone: +49(0)214/30-50446
email: guenter.forneck.gf@bayer-ag.de

GlaxoSmithKline Media Relations Contacts:
Alice Hunt, Media spokesperson
Phone: +44 (0)20 8047 4019
email: alice.m.hunt@gsk.com