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Roche's CEO reveals hopes for Alnylam tie-up

Roche's CEO-in-waiting, Severin Schwan, has added his comments regarding the Swiss company's tie-up with US-based Alnylam Pharmaceuticals.

Roche's CEO-in-waiting, Severin Schwan, has added his comments regarding the Swiss company's tie-up with US-based Alnylam Pharmaceuticals.

Schwan said that Alnylam offered Roche an entry to a new technology platform to develop medications and investigate new frontiers in biotechnology.

In early July 2007, Roche entered an alliance with Alnylam, thereby accessing a non-exclusive license to its genetic therapeutics platform in exchange for USD 331m in upfront cash payments and equity investment.

A local media report also cited current CEO Franz Humer, who said he could not say if Roche would raise its USD 75 per share bid for Ventana Medical Systems. Currently, Roche's offer is 50 per cent higher than Ventana's average share price over the last three months.

Humer will hand over the CEO reigns to Schwan in March 2008 and will leave to work with beverage company Diageo later in July. Humer will stay on as Roche's chairman.

Roche's division of the chairman and CEO positions were due to "increasing complexity of the tasks involved". Humer has been a non-executive director at Diageo since 2005 and will replace Lord Blyth of Rowington.

The Roche division signifies that four out of five of Europe's largest pharma companies have changed their CEOs, leaving Novartis' Daniel Vasella as the longest-serving CEO and the only head to combine the roles of CEO and chairman.

According to Collins Stewart analysts, Novartis will be feeling the pressure to follow suit. Vasella, who has led the company since the 1996 merger of Sandoz and Ciba-Geigy, has been slated by some shareholders for his dual role and large salary deal.

H1 FY07 results strong
In H1 FY07, Roche's revenues rose 15 per cent to reach CHF 23bn (USD 19.1bn), an increase of CHF 3bn on the equivalent period of FY06.

The company's operating profit margin was 32.8 per cent, an increase of 3.6 per cent. Net income increased 29 per cent to level out at CHF 5.9bn (USD 4.9bn), attributed to "outstanding operating results and a further increase in net financial income". EPS in the period was up 21 per cent to reach CHF 5.95 (USD 4.93), which out performed sales growth.

Pharmaceutical sales increased 18 per cent, which is almost three times the global market growth rate. Cancer drugs lead, delivering 22 per cent growth. Rituxan (rituximab), a drug for rheumatoid arthritis and non-Hodgkin's lymphoma, racked up sales of USD 582m, which was an 11 per cent rise on Q2 FY06.

Genentech, which is a Roche subsidiary, posted sales for Avastin (evacizumab), which treats lung, breast and colon cancer, of USD 564m - an increase of 33 per cent on Q2 FY06. Sales of the drug for breast cancer, Herceptin (trastuzumab), rose three per cent, to rest at USD 329m.

Sales were up five per cent, while an operating profit margin of 20.8 per cent was posted.

18th July 2007

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