Annual Report 2002 - Roche

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Group Strategy We have set a strategic course that will enable us to sustain above-average growth as an independent group by exploiting the strengths and synergies of our core pharmaceuticals and diagnostics businesses. Franz B. Humer, Chairman of the Board of Directors and CEO Focus on expanding core healthcare businesses. Our position as one of the world’s leading pharmaceutical companies and the global leader in diagnostics is built on a long-term strategy. At Roche we began sharpening our focus on our core healthcare businesses relatively early on and against the general industry trend. In the 1990s our core divisions were expanded through a series of major business and technology acquisitions. These included a majority interest in California-based biotech pioneer Genentech; the rights to PCR technology, the new gold standard for rapid, reliable diagnostic testing; Syntex Corporation, which marked our entry into transplantation medicine; and Boehringer Mannheim, the global market leader in diagnostics. All these transactions have contributed greatly to increasing the value of the Roche Group in terms of our products, pipeline, technology base and market presence. Over the past five years we have been able to step up growth by focusing even more strongly on healthcare and steadily improving our operating performance. The sale of the Vitamins and Fine Chemicals Division in 2003 was a logical strategic follow-on to the spin-off of the Fragrances and Flavours Division in 2000. At the same time we have continued to strengthen our pharmaceuticals and diagnostics 16 Group Strategy
usinesses through targeted acquisitions. Important transactions include the purchase of AVL (point-of-care testing) in 2000, the alliance with Chugai in 2002 and the proposed acquisition of Disetronic (insulin pumps), announced in February 2003. Two pillar strategy. Roche is pursuing a groundbreaking strategy that sets it apart from its competitors. We want to position our Group as a global leader in pharmaceuticals and diagnostics and focus these high-tech businesses on developing innovative solutions for unmet medical needs. Each of our businesses is strong and successful in its own right, but Roche is more than the sum of its parts. We aim to achieve a decisive competitive edge in the medium to long term by having our Pharmaceuticals and Diagnostics Divisions work together whenever a joint approach makes sound medical, health economic and business sense. Our customers – doctors, laboratories and patients – will benefit, and so will our employees and shareholders. Our primary objective is to supply medicines offering definite improvements over existing therapies. And to promote better clinical outcomes, we are also working on diagnostic tests to predict the efficacy, toxicity and risks of drug therapies in individual patients and to monitor patients’ responses to therapy. Our two divisions are tackling joint projects in oncology, diabetes, rheumatoid arthritis, Alzheimer’s disease and hepatitis C. Intensive collaboration between Pharmaceuticals and Diagnostics also extends to the fields of proteomics and genomics/genetics. Our crossdivisional Proteomics Initiative, for example, includes projects to develop new blood tests for the early detection of colon and breast cancer. The Roche innovation cosmos. Given the many diseases for which there is still no cure, the need for new and better treatments remains enormous. Research and development are therefore the engine that drives our company. Roche is pursuing an innovation strategy in which size alone is not what counts. We believe that having too large an organisation can actually slow innovation and reduce productivity in healthcare research. So at Roche we have taken a different approach, one that relies on a network of highly motivated centres of excellence that collaborate closely on research, exchanging information and technologies across geographic and organisational boundaries, while maintaining a large measure of scientific and operational independence. Roche’s own pharma and diagnostics research units occupy centre stage in our innovation strategy, with Genentech and Chugai, our two most important strategic allies, also playing a leading role. Complementing and strengthening the Group’s dynamic R&D capabilities are over 50 scientific and commercial collaborations with biotech companies and universities. Our innovation model also includes Roche spin-offs like BioXell, set up in 2002, and the biotech company Basilea Pharmaceutica as potential drug development partners. Licensing agreements giving us access to new drug candidates and technologies are another important part of our strategy – last year alone we signed more than 20 new agreements. Alliances and licensing are also a key component of innovation management in the Diagnostics Division, which last year acquired the rights to the Institut Pasteur’s patent portfolio pertaining to human papillomavirus, to give just one example. Roche is considered a partner of choice in the healthcare industry. Thanks to our firm focus on healthcare, our strong and innovative core pharmaceuticals and diagnostics businesses and our extensive network of alliances, we are ideally equipped to meet the challenges of today’s and tomorrow’s healthcare market. Group Strategy 17
Page 1 and 2: Annual Report 2002 Roche Group Annu
Page 3 and 4: Group Performance at a Glance Sales
Page 5 and 6: Roche Group Annual Report and Group
Page 7 and 8: The sale of the Vitamins and Fine C
Page 9 and 10: While continuing with the successfu
Page 11 and 12: in biotechnology. At the beginning
Page 13 and 14: emain stable. Given the volatility
Page 15 and 16: Board of Directors as of 1 January
Page 17 and 18: Executive Committee from 1 January
Page 19: persons closely associated with the
Page 23 and 24: Pharmaceuticals Division in brief c
Page 25 and 26: also posted double-digit gains. Alt
Page 27 and 28: Western Europe. In November this no
Page 29 and 30: Transplantation - strong growth for
Page 31 and 32: ing positive decisions on both fili
Page 33 and 34: Research and development - substant
Page 35 and 36: Substantially expanded pipeline Ind
Page 37 and 38: oncology portfolio, the roll-out of
Page 39 and 40: Diagnostics Division in brief chang
Page 41 and 42: Helping to shape the future. Roche
Page 43 and 44: thing from glucose self-monitoring
Page 45 and 46: Centralized Diagnostics. Sales by o
Page 47 and 48: The global roll-out of Cobas TaqMan
Page 49 and 50: Vitamins and Fine Chemicals Divisio
Page 51 and 52: division outperformed expectations
Page 53 and 54: People and the Environment Human re
Page 55 and 56: worldwide the opportunity to purcha
Page 57 and 58: Safety and Environmental Protection
Page 59 and 60: Social Involvement The many faces o
Page 61 and 62: ‘We do not intend to make a profi
Page 63 and 64: Financial Review Figures reported F
Page 65 and 66: Treasury and Financing During 2002
Page 67 and 68: Operating profit: Double-digit incr
Page 69 and 70: Pharmaceuticals: Operating profit a
Page 71 and 72:
Net income in millions of CHF On a
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Foreign currency translation effect
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The adjusted basis The concept of t
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in millions of CHF Reconciliation o
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Consolidated balance sheet in milli
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Consolidated cash flow statement in
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Foreign currency translation Most G
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Deferred income tax is provided, us
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Provisions Provisions are recognise
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Changes effective 1 January 2001 Se
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Liquidity risk Group companies need
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Total Core Vitamines and Pharmaceut
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of which the Group’s majority int
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6. Chugai On 10 December 2001, Roch
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The fair value adjustments to inven
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Vitamin case Following the settleme
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10. Employee benefits in millions o
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The Group operates defined benefit
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12. Financial income (expense), net
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Income tax assets and liabilities A
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Patents, licences, trademarks 2002
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18. Other long-term assets in milli
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25. Equity Share capital At the Ann
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28. Minority interests in millions
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The carrying value of the Group’s
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2002 2001 Foreign currency derivati
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33. Cash flow statement in millions
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Report of the Group Auditors To the
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1995 1996 1997 c) 1998 1999 2000 20
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Additions to property, plant and eq
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Number of shares and non-voting equ
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Outstanding issues Summarised issue
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Balance sheet at 31 December in mil
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Participations The major participat
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Report of the Statutory Auditors To
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120° 30° 150° 90° 60° 30° 0°
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Garden City, 70.000 GBP | Roche Reg
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Diagnostics 27% Sales by division 1
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Annual Report 2002 - Roche

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