Roche Holding AG

Ladies and gentlemen, welcome to the Roche Full Year 2020 presentation Investor and Analysts webinar. My name is Marco and I am the technical operator for today's call. Kindly note that the webinar is being recorded. I would like to inform you that all participants are in listen-only mode during the call. After the presentation, there is a question and answer session planned. You are invited to send in questions throughout the entire session using the Q&A functionality of Zoom. In addition to that, you may also raise your virtual hands to address your questions verbally. For participants joining via phone, to raise your hand, use star 9 on your phone's dial pad. When you then get selected to ask your questions, please follow the instructions from the phone and press star 6 to unmute yourself. At this time, it is my pleasure to introduce you to Karl Mahler, Head of Investor Relations and Group Planning.

Karl, the stage is yours. Thank you, Marco. Welcome to our full year 2020 analyst call. Personally, I hope that you're all well, safe, and in good condition. I trust in that. Basically, you have two hours booked with Roche, one hour presentation and one hour will be Q&A. Most of you are familiar with the Zoom functionalities. Marco already highlighted that, so you can raise the hand if you have any kind of questions. You can also use the telephone line. We'll organize this one. And you also can send me an email, and then I can read those things to you. in these unstable times. So we wanted to give you some stability. So actually we have the same setup as always. So that is good news. And with this one, I want to hand over to Severin. Severin, the floor is yours. Thank you. Severin, you're on mute.

That helps. Thank you. and welcome everybody to our year-end briefing. Let's go right into the numbers. If I can have the next slide, please. Next slide. Good. So you have seen overall results, 1% growth on the sales side, EPS growing over proportionally with 4% and a dividend increase in this range. If we move on, please. That's, I feel, an interesting slide, because even though the sites might look a little bit boring at first sight, that was happening a lot below the surface. On the one hand, what you can see is continued good growth on the pharma side, which actually would have compensated for the biosimilars impact if we wouldn't have suffered from COVID-19, where patients delayed appointments and as a result of it, there was less prescriptions for medicines. the impact of biosimilars was significant. Some were higher than we originally expected. And then of course you have seen a very good momentum in particular in the second half of last year with diagnostics. Now on the cost side, I think it's really remarkable that we could increase R&D spend for pharma with over 800 million. That is an 8% increase versus a sales decline of 2%. It's investments in our pipeline. We have really fantastic opportunities we want to fund. And we could do that with all the savings in other areas, manufacturing, energy, etc. So I'd say, yeah, pretty good. Pretty good story in terms of protecting our margins, but at the same time, investing into the future if we move on. That's an overview of all our contributions over the last year in the fight against COVID-19. And all of that happened on top of the ongoing business. Diagnostics, really fantastic to see the buildup of the portfolio, literally out of nothing, 15 new solutions. And you might have seen just this week we announced a nasal antigen test. So we hope that that will be yet another opportunity to broaden testing for more people because it's more convenient and you don't need a healthcare professional to assist for the testing. Likewise, on the pharma side, important collaborations with Regeneron, with Artea. We'll come back to that in a moment. If we go to the next slide. That's another angle to look at our various efforts in COVID-19. And really the point I'd like to make here is COVID-19 in some form or another will stay with us. I mean, we all hope that we will overcome the pandemic, but COVID-19 will continue to stay with mankind like the flu virus. And that's the reason why we are investing in particular into the development of a small molecule in this collaboration with Athea. If clinical trial results should read out positively, that would be a very important contribution, potentially during the pandemic, but certainly also beyond. We go to the next slide, please. Right here, the numbers again, you have seen that already minus 2% on the pharma side and plus 14 on the diagnostic side. Next slide. The quarterly picture. Next slide. Right. That's an interesting slide because you can see how the business was impacted by the lockdowns. First time in the second quarter with really a significant impact on the pharma portfolio. And you see here in orange, the newly launched products where we started off extremely well in the first quarter. And then you see the impact where patients just simply didn't go to their doctor or to the hospital anymore and growth came down. Now it's somehow somewhat recovered in the third quarter. And then again, you see a decline in the fourth quarter. So partly this is due because a number of countries were going into lockdown mode again. And partly this is also true to this carryover effect of Ocrevus, which patients are supposed to take every six months. And then on the diagnostic side, you see the contrary effect because here we have been ramping up our production capacities and as such could increasingly meet the demand. If we move on. Right. So that's good to see. On the pharma side, an increasing portion of our business is now from the newly launched medicines. On a group level, it's over 40%. And as we see continued good growth with the new products, that should really make us confident for the growth over the coming years. Next slide, please. Profitability, we could keep the margin with all the efficiency gains we had throughout the organization. Next slide. That's again an important one. And as we discussed so much about COVID-19 and the pandemic and when it is over and kind of contributions we make here, we forget that the vast majority of our work is on our other portfolio. And today, still many more people die from other severe diseases other than COVID-19. So we keep investing in our portfolio. And 2020 was a really good year in terms of portfolio progress. You see that we transferred a number of new molecular entities into the late stage in our pipeline. And as a result of this, we have now a record of 19 new molecular entities in our late stage portfolio. And that is not counting for the indications. So this is just new molecular entities only in late stage phase three registrational trials. We've never had a stronger pipeline than today. And we intend to move additional molecules into late stage in the current year. So that's really, I mean, understandably, everybody focus on COVID-19. But I think that's the real story. of 2020 when it comes to our mid and longer term prospects. And likewise on the diagnostic side, whilst we have been heavily investing into COVID-19, we did not stop working on our new platforms and on our menu of essays. And again, there is a number of very important launches to come already starting in 2021. And again, that should provide us with growth for the years to come. Next slide, please. Bill will cover this in much more detail. You have probably seen the more recent data on Farisimab, also PDS. So ophthalmology is really increasingly a tremendous opportunity for us if we move on. So in terms of our guidance, in terms of our outlook, good continued momentum with our new medicines in pharma. We expect very good growth in the first half of the year in particular. And then it will depend on how the COVID-19 pandemic develops. And that is offset by still a significant impact from the entry of biosimilars. Parallel will work, of course, on our efficiency across the organization. And we move on to the next slide. That gives us the confidence for an acceleration of growth in 2021. So our guidance is mid-single-digit growth on the sales line, EPS in line with sales, and that should again allow us to increase dividends in Swiss francs for the next year. So who is next? Bill, Thomas? Bill, over to you. Thanks.