Basel, 30 January 2013

Roche delivers strong 2012 results

  • Group sales rise 4%1 to 45.5 billion Swiss francs due to oncology sales, clinical laboratory business
  • Core EPS 10% higher at 13.62 Swiss francs
  • Operating free cash flow rises 10% to 15.4 billion Swiss francs
  • HER2-franchise strengthened by Perjeta launch, filing of T-DM1 in US and Europe
  • Board proposes dividend increase of 8% to 7.35 Swiss francs, the 26th consecutive year of growth
  • Outlook for 2013: sales to grow in line with previous year, core earnings per share targeted to grow ahead of sales. Roche expects to further increase dividend.
Key figures
In millions
of CHF 		As % of
sales 		% change
2012 2011 2012 2011 CER* CHF USD
Group Sales 45,499 42,531 100 100 4 7 1
Pharmaceutical Division 35,232 32,794 77 77 5 7 2
Diagnostics Division 10,267 9,737 23 23 4 5 0
Core operating profit 17,160 15,149 37.7 35.6 11 13
Operating free cash flow 15,389 13,733 33.8 32.3 10 12
IFRS(2) Net income 9,773 9,544 21.5 22.4 1 2
Core earnings per share 13.62 12.30 10 11

* Constant exchange rates (average full-year 2011)

Roche CEO Severin Schwan, commenting on the Group's 2012 results: "2012 was a very good year for Roche. We met our financial targets, grew faster than the market, and our strong pipeline positions us well for further growth. A particular highlight in 2012 was the approval of breast cancer medicine Perjeta, which helps women with HER2-positive breast cancer live longer. We now look forward to getting T-DM1, our other novel breast cancer therapy, to patients as soon as possible."

Strong performance in 2012

Roche delivered a strong performance in 2012, with Group sales rising 4% to 45.5 billion Swiss francs due to growing demand for its cancer medicines and increased sales of diagnostic tests to clinical laboratories. This solid sales growth, along with productivity improvements, resulted in a double-digit increase in core operating profit and core earnings per share (EPS), as well as improved profitability. IFRS net income was slightly higher. The Group also benefited from the weakening of the Swiss franc against the dollar and the Japanese yen.

Solid sales growth

Roche's three top-selling products MabThera/Rituxan, Herceptin and Avastin all performed strongly in 2012 as demand grew in all regions. Avastin is back on the growth path following its successful launch in ovarian cancer in Europe at the end of 2011. It is also benefiting from significant uptake in Japan. Robust demand for clinical laboratory solutions (Professional, Tissue and Molecular Diagnostics businesses) helped the Diagnostics Division to again grow faster than the in vitro diagnostics market3. The Pharmaceuticals Division posted a 5% increase in sales to 35.2 billion Swiss francs, while the Diagnostics Division reported a 4% rise in sales to 10.3 billion Swiss francs.

The United States and emerging markets remained the main regional growth drivers for the Group, offsetting lower sales in Western Europe, which were weaker due to ongoing price pressure and generic competition.

Operating profitability further improved

The Group's core operating profit increased to 17.2 billion Swiss francs due to the solid sales development and an increase in royalty income. The core operating profit margin rose 2.1 percentage points to 37.7% as efficiency measures resulted in a lower cost of sales ratio, while spending on R&D remained stable.

Core operating profit at the Pharmaceuticals Division rose 13% to 15.5 billion Swiss francs, and the core operating profit margin increased by 3.1 percentage points to 44.0%. In Diagnostics core operating profit fell 2% to 2.2 billion Swiss francs, reflecting increased price pressure in Diabetes Care. The margin was 21.3%, above the margin achieved in the first six months of the year but 1.1 percentage points lower than in 2011.

Core earnings per share significantly higher

The Group's core EPS, which excludes non-core items such as restructuring charges and amortisation and impairment of intangible assets, rose 10% to 13.62 Swiss francs.

Strong operating free cash flow and improved net debt position

Operating free cash flow remained strong in 2012, rising 10% to 15.4 billion Swiss francs and contributing to the lower net debt position of 10.6 billion Swiss francs at the end of 2012, down from 15.6 billion Swiss francs at the start of the year. As a result of the strong cash flow, bonds totalling a nominal value of 1.6 billion euros were bought back early in 2012.

Robust R&D pipeline

Roche's pipeline continued to deliver in 2012 with 11 positive results out of 14 late-stage trials. The Group also launched three new cancer drugs: Perjeta for HER2-positive metastatic breast cancer and Erivedge for advanced basal cell carcinoma in the United States, and Zelboraf for BRAF V600 mutation-positive metastatic melanoma in Europe. The Group is confident that trastuzumab emtansine (T-DM1), which has been granted priority review in the United States, will also soon become available to patients with HER2-positive metastatic breast cancer following the strong overall survival data shown in the EMILIA trial.

The Diagnostics Division launched several new instruments and devices throughout 2012, reflecting advances in lab automation, near patient testing and diabetes management, as well as further expanding oncology, infectious disease and metabolic test menus.

Proposals for the Annual General Meeting 2013

Based on last year's strong results and the positive prospects for the future, the Board of Directors proposes that the dividend for 2012 be increased by 8% to 7.35 Swiss francs per share and non-voting equity security. Subject to approval by the Annual General Meeting of shareholders on 5 March 2013, this will be Roche's 26th consecutive annual dividend increase.

The Board of Directors recommends the re-election of, Pius Baschera, Paul Bulcke, William M. Burns, Christoph Franz, DeAnne Julius, Arthur D. Levinson, Andreas Oeri, Peter R. Voser and Beatrice Weder di Mauro at the Annual General Meeting. In addition, the Board recommends Severin Schwan be elected as a new member to the Board of Directors at the Annual General Meeting.

Roche expects Group sales in 2013 to increase in line with the sales growth recorded in 2012 at constant exchange rates. Core EPS is targeted to grow ahead of sales. Roche expects to further increase its dividend for 2013.

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