Dear Shareholders
The past year was dominated by the global financial and economic crisis. Nevertheless, your company continued to perform strongly, building on the achievements of previous years. Once again, the Pharmaceuticals and Diagnostics Divisions’ sales grew well ahead of their respective markets.

Group sales rose 10% in local currencies, excluding pandemic Tamiflu sales, which, as expected, declined sharply. Including pandemic Tamiflu, sales increased 6% to 45.6 billion Swiss francs.

The Group’s operating profit increased to almost 14 billion Swiss francs, even though we increased our research and development spending on promising projects in our strong development pipeline.

Net income, at 10.8 billion Swiss francs, was down only slightly from the previous year’s record high, despite the marked appreciation of the Swiss franc against other major currencies and lower financial income. Core Earnings per Share (at constant exchange rates) were 2% higher than the year before. In view of these latest strong results, the Board of Directors will propose that the dividend for 2008 be increased by 9% to 5.00 Swiss francs per share and non-voting equity security (up from 4.60 Swiss francs for 2007). Subject to your approval at the next Annual General Meeting of Shareholders, this will be Roche’s 22nd consecutive annual dividend increase.

In today’s turbulent economic climate, it is more vital than ever that we stay focused on developing products that significantly improve the treatment options available to patients. In recent years this strategy has yielded some major advances, notably in the diagnosis and treatment of cancer.

We are particularly excited about the many large-scale clinical trials the Group is conducting with Avastin, the first targeted cancer medicine that halts the development of new blood vessels to tumours. While these trials require substantial investments of time and money, they hold out the promise of a longer, better life for countless patients suffering from a wide variety of cancers.

Ventana, the US-based leader in tissue diagnostics which we acquired for 3.8 billion Swiss francs in February 2008, continues to perform even more strongly than expected. Having access to tissue-based diagnostic tests and technologies will help us in our efforts to develop further personalised treatments, particularly for cancer.

Roche has also made considerable progress in developing biological medicines for the treatment of rheumatoid arthritis (RA), an autoimmune disease that affects over 21 million people worldwide.

Our novel medicine Actemra/RoActemra has been approved for the treatment of RA in Japan and the European Union. MabThera/Rituxan, our leading cancer medicine, continues to show benefit in RA patients as well. Data from a phase III clinical trial, for example, show that MabThera/Rituxan can prevent structural damage to joints in patients with early RA.

All told, twelve projects entered the final stage of clinical development at Roche in 2008, including three promising new molecules for the treatment of breast cancer (pertuzumab), type 2 diabetes (taspoglutide) and cardiovascular risk reduction (dalcetrapib).

On 21 July last year Roche announced its intention to purchase all outstanding shares of Genentech, a company in which we have held a majority stake for nearly 20 years. We remain committed to completing this transaction.

We believe that bringing Genentech entirely within the Roche Group will significantly enhance the Group’s ability to remain innovative over the long term. We will take the necessary care to preserve Genentech’s unique innovation culture. The Group will continue to encourage and promote a diversity of research approaches, because this helps create an ideal climate for medical progress. We will ensure that the existing research networks, technologies and expertise in our pharmaceuticals and diagnostics businesses can be shared across the Group. At the same time, we will leverage the scale of our combined operations in the US and improve operational efficiency.

Roche is taking this step from a position of strength and in the conviction that the proposed transaction is in the best interests of both companies’ employees, patients and you, our shareholders.

Roche’s Board of Directors and the Corporate Executive Committee are confident that this transaction will bring us significantly closer to our goal of being the world’s leading healthcare company.

We remain committed to operating our businesses in a responsible, sustainable manner that respects the needs of all our stakeholders. Our products are our greatest contribution to society; they provide significant benefits to patients, tangibly improving people’s health and increasing their quality and length of life. We recognise our responsibility to help expand global access to our products. We do this primarily through partnerships and in collaboration with various stakeholders.

Last year we achieved all of our environmental goals for improving energy efficiency and reducing emissions of greenhouse gases. We firmly believe that sustainable policies and business practices create long-term corporate value and support innovation. In recognition of its efforts, Roche was selected for inclusion in the Dow Jones World Sustainability Index for the fifth consecutive year.

Finally, we would like to take this additional opportunity to thank the 80,000 Roche employees worldwide for their tremendous dedication and professionalism. Without their efforts, Roche would not be one of the world’s most successful companies. Recruiting, retaining and developing talented people remain among our most important tasks.

Barring unforeseen events, we expect the Group to continue to perform strongly in 2009. In both the Pharmaceuticals and the Diagnostics Division we expect full-year sales to grow ahead of the market, with increases in the mid-single-digit range in local currencies. We will continue to invest in the large-scale confirmatory clinical trials that are vital to Roche’s long-term success.

Despite the higher research and development costs involved and an expected decrease in net financial income, we are aiming for Core Earnings per Share (Core EPS) at constant exchange rates to remain at the same high level as in 2008. We expect that the Genentech transaction will have a positive impact on Core EPS within the first year after closing.
Franz B. Humer
Chairman of the Board
Severin Schwan
Chief Executive Officer

Download Roche Annual Report 2008

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Roche Holding AG is a Switzerland-based pharmaceuticals and diagnostics company. The Company belongs to the Roche Group that operates through numerous subsidiaries and associated companies located around the world.

F. Hoffmann-La Roche Ltd
4070 Basel, Switzerland
Tel. +41 (0)61 688 11 11
Fax +41 (0)61 691 93 91

2008 in Brief
Group
• Roche reports strong results in a challenging market environment: Group sales up significantly, increasing by 10% in local currencies excluding Tamiflu pandemic sales.

• Strong organic growth of key products more than outweighs lower Tamiflu pandemic sales. Including Tamiflu pandemic sales, Group sales in local currencies rise 6%.

• Operating profit exceeds last year’s record by 4% in local currencies, reaching 13.9 billion Swiss francs despite increased level of R&D investment.

• Net income down by 5% in Swiss francs to 10.8 billion Swiss francs, primarily due to the strong Swiss franc, but also to lower net financial income.

• Core Earnings per Share at constant exchange rates 2% above previous year’s record level. Pharmaceuticals

• Pharmaceuticals sales advance 10%1 — twice the global market growth rate. This is the sixth double-digit increase in as many years.

• Oncology product sales grow by 15% to 19.7 billion Swiss francs. For the first time, three cancer products achieve sales of over 5 billion Swiss francs.

• Operating profit margin increases by 0.7 percentage points to 36.2% despite significantly lower Tamiflu pandemic sales and increased investments in the development pipeline.

• Avastin receives accelerated approval for breast cancer in US; applications for approval in brain cancer filed in US and EU.

• Actemra/RoActemra approved for rheumatoid arthritis in Japan, EU and Switzerland; additional data will be submitted to U.S. FDA in 2009.

• Twelve major phase III programmes initiated.

• Acquisitions of Piramed, Mirus and ARIUS significantly strengthen R&D pipeline with new compounds and technology platforms.

Diagnostics
• Divisional sales show double-digit growth, rising 10%.
• Operating profit margin declines 5.3 percentage points to 12.3%, mostly due to acquisition impacts and strong competition in the US diabetes care market.
• Integration of Tissue Diagnostics (Ventana) completed; the new business’s performance exceeds expectations.

Outlook
• Above-market sales growth in both divisions.
• Mid-single-digit sales growth — for both Divisions and Group.
• Core Earnings per Share target to remain at the high level of 2008 in spite of increased investments in research and development and expected lower net financial result.

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