Finance Report
`
`Novartis Exhibit 2273.001
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`
`
`Finance . 1n brief
`
`Key results
`
`Ph arm aceuticals
`
`Diagnostics
`
`Group
`
`2011
`2010
`
`2011
`2010
`
`2011
`2010
`
`1J'TT·1
`
`I
`
`I
`
`I
`
`rl
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`0.1
`- 1.6
`
`+5.9
`+7.6
`
`+1.4
`
`+0.3
`
`Core operating profa margin, % of sales
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`I
`
`40.9
`39.9
`
`22.4
`21.1
`
`35.6
`34.9
`
`lFRS results
`Sales
`
`Operating profit
`Net inco me
`
`Net inco me attri butable to Roche sh areholders
`Diluted EPS (CHF)
`
`Dividend per share (CHF) 11
`
`Core results
`Re sea re h and development
`
`Core operating profit
`Core EPS (CHF)
`
`Free cash flow
`Operating free cash flow
`Free cas h flow
`
`Net debt
`
`Capitalisation
`- Debt
`
`- Equi ty
`
`1) Proposed by the Board of Directors.
`
`20 11
`(mCHF)
`
`2010
`(mCHF)
`
`(CHF)
`
`% change
`(GER)
`
`20 11
`
`% of sales
`2010
`
`42,53 1
`13,454
`9,544
`9,343
`10.98
`
`6.80
`
`8,073
`15,149
`12.30
`
`47,473
`13,486
`8,89 1
`8,666
`10.11
`
`6.60
`
`9,050
`16,59 1
`12.78
`
`13,733
`3,904
`
`14. 149
`4,699
`
`-1 0
`
`0
`+7
`+ 8
`+ 9
`+ 3
`
`-11
`- 9
`-4
`
`- 3
`-1 7
`
`+1
`+1 7
`+ 26
`+ 26
`+ 25
`
`-1
`
`+ 6
`+11
`
`+1 4
`+ 21
`
`20 11
`(mCHF)
`
`2010
`(mCHF)
`
`(15,566)
`
`(19,157)
`
`41,335
`26,853
`14,482
`
`41 ,720
`30,058
`11 ,662
`
`31.6
`22.4
`
`28.4
`18.7
`
`19.0
`
`35.6
`
`19.1
`34.9
`
`32.3
`9.2
`
`(CHF)
`
`-1 9
`
`-1
`-11
`
`+ 24
`
`29.8
`9.9
`
`% change
`(GER)
`
`-1 8
`
`-1
`-11
`
`+ 27
`
`GER (Constant Exchange Rates) : The percentage changes at Constant Exchange Rates are calculated using simulations by reconsolidating both the 20 11 and 2010
`results at constant currencies (the average rates for the year ended 31 December 2010). This is the same concept that was previously labelled as 'Local currencies'
`by the Group.
`
`Core results and Core EPS (Earnings Per Share) : These exclude non•core items such as global restructuring charges and amortisation and impairment of intangible
`assets. This allows a transparent assessment of both the actual results and the underlying performance of the business. A full income statement for the Group and
`the operating results of the divisions are shown on both an IFRS and core basis. The core concept is fully described on pages 146-1 49 and reconciliations between
`the IFRS and core results are given there.
`
`Novartis Exhibit 2273.002
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Finance – 2011 in brief
`
`Roche in 2011
`
`Sales
`
`Operating results
`
`The Roche Group posted solid overall results in a challenging market in 2011. Core operating
`profit grew faster than sales, and Core Earnings per Share increased by 11% at constant exchange
`rates (CER). The appreciation of the Swiss franc against all major currencies had a significant
`impact on the results expressed in Swiss francs. However, the underlying currency exposure is
`mitigated by the large majority of the cost base located outside of Switzerland.
`
`Group sales increased slightly by 1% (CER) to 42.5 billion Swiss francs (–10% at reported
`exchange rates). Excluding Tamiflu, Group sales grew by 2% (CER).
`Pharmaceutical sales growth, excluding Tamiflu, was 1% (CER). The strong growth in key
`oncology products, Lucentis in ophthalmology and Actemra/RoActemra in rheumatoid arthritis
`was largely offset by the impacts of the US healthcare reforms, European austerity measures,
`price cuts in Japan during 2010 and lower Avastin sales in the US and in Western Europe.
`Diagnostics sales grew by 6% (CER), significantly ahead of market with Professional
`Diagnostics and Tissue Diagnostics being the major contributors.
`
`Core operating profit increased by 6% (CER) to 15.1 billion Swiss francs (–9% at reported
`exchange rates). The cost savings from the Operational Excellence programme initiated in 2010
`offset the substantially lower profit contribution from Avastin and Tamiflu as well as the impacts
`from healthcare reforms, price pressure and patent expiry.
`Research and development expenditure declined by 1% (CER) to 8.1 billion Swiss francs on
`a core basis, primarily driven by project prioritisation and savings from Operational Excellence.
`R&D costs are 19% of Group sales.
`IFRS operating results include restructuring charges from the Operational Excellence
`programme of 0.9 billion Swiss francs.
`
`Non-operating results
`
`Core net financial expenses decreased by 0.7 million Swiss francs primarily due to lower
`interest expenses resulting from the continued repayment of the debt taken out in 2009 to finance
`the Genentech transaction.
`
`Net income
`
`Cash flows
`
`Financial position
`
`Shareholder return
`
`IFRS net income increased by 26% (CER) to 9.5 billion Swiss francs (+7% at reported exchange
`rates), primarily driven by the strong operating result, lower restructuring charges, lower interest
`expenses and a lower tax rate.
`Core Earnings per Share increased by 11% in constant currencies (–4% at reported exchange
`rates).
`
`Operating free cash flow of 13.7 billion Swiss francs, up 14% CER.
`Free cash flow of 3.9 billion Swiss francs, up 21% CER.
`Repayment of debt is ahead of schedule with 42% of the notes and bonds issued in 2009 to
`finance the Genentech transaction being repaid by the end of 2011.
`
`Net working capital increased by 5%, reflecting higher levels of trade receivables within
`the public sector customers of certain Southern European countries.
`Net debt position improved by 3.6 billion Swiss francs to 15.6 billion Swiss francs.
`Credit ratings position strong: Moody’s at A1, upgraded from A2 during the second half of 2011,
`and Standard & Poor’s at AA–.
`
`Dividends are proposed to increase by 3%. This will represent the 25th consecutive year of
`dividend growth and will result in an increased pay-out ratio of 55.3%, subject to AGM approval.
`Total Shareholder Return (TSR) increased by 22% representing a combined performance of
`share and non-voting equity security.
`
`Novartis Exhibit 2273.003
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`ROCHE GROUP
`
`Finance in brief
`
`Finance - 2011 in brief
`
`Financial Review
`
`Roche Group Consolidated Financial Statements
`
`Notes to the Roche Group Consolidated Financial Statements
`
`1. Summary of significant accounting policies
`2. Operating segment information
`3. Chugai
`4. Financial income and financing costs
`5.
`Income taxes
`6. Business combinations
`7. Global restructuring plans
`8. Employee benefits
`9. Pensions and other post-employment
`benefits
`10. Employee stock options and other equity
`compensation plans
`11. Property, plant and equipment
`12, Goodwill
`13.
`Intangible assets
`14. Associates
`15. Financial and other long-term assets
`16.
`Inventories
`
`48
`61
`64
`66
`67
`70
`74
`76
`
`77
`
`83
`90
`93
`94
`97
`98
`98
`
`17. Accounts receivable
`18. Other current assets
`19. Marketable securities
`20. Cash and cash equivalents
`21. Accounts payable
`22. Accrued and other current liabilities
`23. Derivative financial instruments
`24. Provisions and contingent liabilities
`25. Other non-current liabilities
`26. Debt
`27. Equity attributable to Roe he shareholders
`28. Earnings per share and non-voting equity
`security
`29. Non-controlling interests
`30. Statement of cash flows
`31. Risk management
`32. Related parties
`33. Subsidiaries and associates
`
`99
`100
`100
`101
`101
`101
`102
`104
`110
`110
`115
`
`118
`119
`120
`121
`130
`132
`
`Report of Roche Management on Internal Control over Financial Reporting
`
`Report of the Statutory Auditor on the Consolidated Financial Statements
`
`Report of the Independent Auditor on Internal Control over Financial Reporting
`
`Multi-Year Overview and Supplementary Information
`
`Roche Securities
`
`ROCHE HOLDING LTD, BASEL
`
`Financial Statements
`
`Notes to the Financial Statements
`
`Appropriation of Available Earnings
`
`Report of the Statutory Auditor on the Financial Statements
`
`Inside cover
`
`1
`3
`42
`48
`
`137
`138
`140
`142
`152
`
`155
`157
`165
`166
`
`Novartis Exhibit 2273.004
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Financial Review
`
`Roche Group results
`
`Sales in billionsofCHF
`
`Core operating profit in billionsofCHF
`
`2011
`2010
`
`2009
`
`% CER gro,vth
`
`50
`
`+ 1.4
`
`+0.3
`
`+10.5
`
`I"
`
`I"
`
`I '"
`
`I'"
`
`20
`
`% of sales
`
`35.6
`34.9
`
`33.2
`
`Net income attributable to Roche shareholders in billionsofCHF
`
`Core EPS in CHF
`
`2011
`2010
`
`2009
`
`10
`
`12
`
`9.3
`8.7
`7.8
`
`12.30
`12.78
`
`12.34
`
`In 2011 the Roche Group's net income increased by 26% at constant exchange rates. This was driven by a solid operating
`performance in both the Pharmaceuticals and Diagnostics businesses. Costs for restructuring were less than in 2010,
`and financing costs and the tax rate were also lower. The cost savings from the Operational Excellence programme initiated
`in 2010 offset the substantially lower profit contribution from reduced sales ofTamiflu and Avastin, as well as the impacts
`from healthcare reforms, price pressure and patent expiry.
`
`The strengthening of the Swiss franc against all major currencies on average year-to-date basis had a significant negative
`impact on the results expressed in Swiss francs. However the underlying currency translation exposure arising from non-Swiss
`franc revenues is mitigated by the majority of the Group's cost base being located outside Switzerland. In 2011 the Group's
`net income increased by 26% at constant exchange rates, but increased by only 7% when translated on consolidation into
`Swiss francs.
`
`Core EPS, which excludes non-core items such as global restructuring charges and amortisation and impairment
`of intangible assets, increased by 11% at constant exchange rates (decrease of 4% when translated into Swiss francs).
`
`Roche Group - Financial Review I Roche Finance Report 2011
`
`3
`
`Novartis Exhibit 2273.005
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Income statement
`
`IFRS results
`Sales
`
`Roya lties and other operating in co me
`
`Cost of sales
`
`Marketin g and distribution
`
`Re sea re h and development
`
`General and administration
`Operating profit
`
`Associ ates
`
`Financ ial income
`
`Financ ing costs
`Profit before taxes
`
`In come taxes
`Net income
`
`Attributab le to
`
`- Roche shareholders
`
`- Non-co ntrolling interests
`
`Dilu ted EPS (CHF)
`
`Core results
`Sales
`
`Royalties and other operating income
`
`Cost of sales
`
`Marketin g and d istri bution
`
`Re sea re h and development
`
`General and administration
`Operating profit
`
`Associ ates
`
`Financ ial income
`
`Financ ing costs
`Profit before taxes
`
`In come taxes
`Net income
`
`Attributab le to
`
`- Roche shareholders
`
`- Non-co ntrolling interests
`
`Core EPS (CHF)
`
`2011
`(mCHF)
`
`2010
`(mCHF)
`
`%change
`(CHF)
`
`% change
`(CER)
`
`42,531
`1,582
`(11,942)
`(8,049)
`(8,326)
`(2,342)
`13,45 4
`
`12
`647
`(2,228)
`11 ,885
`
`(2,341)
`9,544
`
`9,343
`201
`
`10.98
`
`42,531
`1,582
`(11 ,117)
`(7,967)
`(8,073)
`(1 ,807)
`15,149
`
`12
`647
`(2,228)
`13,580
`
`(2,895)
`10,685
`
`47,473
`1,694
`(13,293)
`(9,488)
`(10,026)
`(2,874)
`13,486
`
`(3)
`557
`(2,829)
`11 ,211
`
`(2,320)
`8,891
`
`8,666
`225
`
`10.11
`
`47,473
`1,694
`(12,51 1)
`(9,167)
`(9,050)
`(1 ,848)
`16,591
`
`(3)
`557
`(2,829)
`14,316
`
`(3,135)
`11 ,18 1
`
`10,470
`215
`
`10,955
`226
`
`12.30
`
`12.78
`
`-1 0
`- 7
`- 10
`- 15
`- 17
`- 19
`0
`
`-
`+ 16
`- 21
`
`+6
`
`+ 1
`+7
`
`+8
`- 11
`
`+9
`
`- 10
`- 7
`- 11
`- 13
`- 11
`- 2
`- 9
`
`-
`+ 16
`- 21
`- 5
`
`- 8
`-4
`
`- 4
`- 5
`
`- 4
`
`+1
`+7
`0
`- 5
`- 8
`- 11
`+17
`
`-
`+ 28
`- 10
`+24
`
`+ 18
`+26
`
`+ 26
`+ 2
`
`+ 25
`
`+1
`+7
`-1
`- 2
`-1
`+ 6
`+6
`
`-
`+ 28
`- 10
`
`+10
`
`+7
`+11
`
`+ 11
`+8
`
`+ 11
`
`4
`
`Roche Finance Report 2011
`
`I Roche Group - Financial Review
`
`Novartis Exhibit 2273.006
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Sales
`Sales increased slightly by 1% in constant currencies (-10% in Swiss francs; +5% in US dollars) to 42.5 billion Swiss francs.
`Excluding Tamiflu, sales increased by 2% in constant currencies. The Pharmaceuticals Division represented 77% of Group
`sales and the Diagnostics Division contributed 23%.
`
`Sales in the Pharmaceuticals Division were stable in constant currencies at 32.8 billion Swiss francs. Excluding Tamiflu,
`the increase was 1%. Demand for the oncology drugs Herceptin, MabThera/Rituxan, Xeloda and Tarceva continued to grow
`strongly. Additional major growth drivers were Lucentis in ophthalmology, Actemra/RoActemra in rheumatoid arthritis and
`Mircera in renal anemia. These positive factors mostly offset the expected declines in sales of Tamiflu and Avastin, and patent
`expiry effects for NeoRecormon/Epogin, Bonviva/Boniva and Cell Ce pt. There were continuing negative impacts from the
`US healthcare reforms, European austerity measures and price cuts in Japan. The Diagnostics Division sales were 9.7 billion
`Swiss francs, growing 6% in constant currencies (-7% in Swiss francs; + 10% in US dollars), thereby strengthening its leading
`market position. Major growth areas were Professional Diagnostics (up 9%) and Tissue Diagnostics (up 15%).
`
`Divisional operating results for 2011
`
`Sales
`
`Core operating profit
`- margin, % of sales
`Operating profit
`- margin, % of sales
`Operating free cash flow
`- margin, % of sales
`
`Pharmaceuticals
`(mCHF)
`
`Diagnostics
`(mCHF)
`
`32,794
`
`13,406
`40.9
`
`12,251
`37.4
`
`12,914
`39.4
`
`9,737
`2,178
`22.4
`
`1,656
`17.0
`
`1,259
`12.9
`
`Corporate
`(mCHF)
`-
`(435)
`-
`(453)
`-
`(440)
`-
`
`Group
`(mCHF)
`
`42,531
`
`15, 149
`
`35.6
`13,454
`
`31.6
`13,733
`
`32.3
`
`Divisional operating results - Development of results compared to 2010
`
`Sales
`- % increase CER
`Core operating profit
`- % increase CER
`- margin: percentage point increase
`
`Operating profit
`- % increase in CER
`- margin: percentage point increase
`Operating free cash flow
`- % increase in CER
`- margin: percentage point increase
`
`Pharmaceuticals
`
`Diagnostics
`
`Corporate
`
`Group
`
`0
`
`+5
`+2.1
`
`+16
`
`+5.3
`
`+16
`+5.6
`
`+6
`
`+14
`+1.6
`
`+22
`
`+2.3
`
`-7
`-1.9
`
`-
`
`+15
`-
`
`+17
`-
`
`+8
`-
`
`+1
`
`+6
`+1.8
`
`+17
`
`+4.3
`
`+14
`+3.7
`
`Core operating results
`On a core basis, the Group's operating profit increased by 6% at constant exchange rates (decreased 9% in Swiss francs),
`while sales increased by 1% at CER. The core operating profit margin of both divisions increased, with the increase in
`profitability being driven by the Operational Excellence programme and resource prioritisation, particularly in marketing
`and distribution and research and development. The Operational Excellence programme led to a decline in marketing and
`distribution expenses and in research and development costs in constant currencies. The strong Swiss franc had a negative
`effect on the margin developments of 1.1 percentage points on Group level, a 1.1 percentage point on Pharmaceutical
`Division and 0.3 of a percentage point for the Diagnostics Division.
`
`Roche Group - Financial Review I Roche Fin ance Report 2011
`
`5
`
`Novartis Exhibit 2273.007
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`The Pharmaceuticals Division increased its core operating profit by 5% in constant currencies, driven by growth of
`the underlying business, resource prioritisation and Operational Excellence cost savings. Further efficiency improvements
`in general and administration costs were more than offset by 149 million Swiss francs of expenses for the new Branded
`Pharmaceutical Product Fee in the US, part of the US healthcare reforms. Core operating profit growth in the Diagnostics
`Division was 14% in constant currencies, mainly resulting from sales growth and various productivity improvement
`programmes. The increase of general and administration costs in Corporate of 15% is due to the shift of certain Finance
`functions from the Pharmaceuticals Division to Corporate.
`
`Operational Excellence
`On 17 November 2010 the Group announced the details of the Operational Excellence programme. The costs recognised
`in 2011 of 0.9 billion Swiss francs mainly relate to site closure and disposal costs in the Pharmaceutical business. Site closure
`and disposal costs totalled 407 million Swiss francs and were primarily due to the divestments of the sites at Palo Alto
`(California), Boulder (Colorado), Madison (Wisconsin) and Kulmbach (Germany). In the first half of 2011 the Group announced
`that it will not divest the chemical production facility in Florence (South Carolina) given the unfavourable market for chemical
`production assets and the Group’s expected future capacity requirements for small molecules. The Pharmaceuticals Division
`accounts for 850 million Swiss francs of these costs and 72 million Swiss francs relate to the Diagnostics Division.
`
`East Japan Earthquake
`The earthquake on 11 March 2011 damaged the Chugai production plant at Utsunomiya. Production there was temporarily
`halted and was fully resumed by the end of August 2011. Some of Chugai’s contract manufacturers were also affected by
`the earthquake and, as a result, product shipment control lasted until the end of October 2011. Chugai’s promotional
`activities in Japan were affected, with events cancelled and sales employees diverted to ensure continued product supply
`and information flow for customers. These factors had a certain negative impact on Chugai’s sales and profits in the second
`half of 2011. Total costs incurred for write-offs of property, plant and equipment and inventories at Chugai in 2011 were
`57 million Swiss francs, net of amounts received from insurance. The earthquake also resulted in temporary interruptions
`in the supply of instruments by Hitachi, a key supplier to the Roche Professional Diagnostics business.
`
`Treasury and taxation
`Financial income was 0.6 billion Swiss francs, an increase of 28% at constant exchange rates, mainly due to foreign currency
`devaluation effects in Venezuela in both 2011 and 2010. Financing costs were 2.2 billion Swiss francs, a decrease of 0.6 billion
`Swiss francs, with interest costs being 10% lower at CER as debt is repaid. Tax expenses increased by 7% to 2.9 billion Swiss
`francs. However, the Group’s effective core tax rate decreased to 21.3% compared to 21.9% in 2010, mainly due to the lower
`tax rate in Basel, Switzerland, and the relatively lower percentage profit contribution from higher-tax jurisdictions.
`
`Net income and Earnings per share
`Net income increased by 26% at constant exchange rates driven by a solid operating performance, lower financing costs
`and a lower tax rate and by overall lower non-core items such as no global restructuring charges for Genentech integration
`in 2011 and lower charges for the Operational Excellence initiative. On a core basis, net income was 11% higher.
`
`The increase in diluted EPS of 25% (CER) was due to the increase in net income, as described above. The Core EPS, which
`excludes non-core items such as global restructuring charges and amortisation and impairment of intangible assets, increased
`by 11% at constant exchange rates (decreased 4% in Swiss francs). Supplementary net income and EPS information is given
`on pages 146–149. This includes calculations of Core EPS and reconciles the Core results to the Group’s published IFRS results.
`
`6
`
`Roche Finance Report 2011 | Roche Group – Financial Review
`
`Novartis Exhibit 2273.008
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Financial position
`
`Pharmaceuticals
`Net working capital
`Long-term net operating assets
`Diagnostics
`Net working capital
`Long-term net operating assets
`Corporate
`Net working capital
`Long-term net operating assets
`Net operating assets
`Net debt
`Pensions
`In come taxes
`Other non-operating assets, net
`Total net assets
`
`2011
`(mCHF)
`
`5,445
`14,563
`
`3,501
`12,022
`
`(42)
`2
`35,491
`(15,566)
`(4,952)
`174
`(665)
`14,482
`
`2010
`(mCHF)
`
`5.766
`14,595
`
`3,025
`12,025
`
`(45)
`3
`35,369
`(19,157)
`(3,808)
`(386)
`(356)
`11,662
`
`% change
`(CHF)
`
`% change
`(CER)
`
`-6
`0
`
`+16
`0
`
`-7
`-33
`0
`-19
`+30
`-
`+87
`+24
`
`-3
`-1
`
`+20
`+1
`
`-9
`+185
`+1
`-18
`+30
`-
`+68
`+27
`
`During the first half of 2011 the Swiss franc strengthened against many currencies. Following the intervention of the
`Swiss Central Bank this trend reversed in the second half of 2011 . Overall these currency translation effects largely netted
`out on balance sheet carrying values when consolidated into Swiss francs. In the Pharmaceuticals Division net working
`capital decreased by 3% in constant currencies despite increased trade receivables within the public sector customers of
`some Southern European countries, particularly Spain and Portugal, and continued sales growth in China. Long-term net
`operating assets decreased by 1% in constant currencies as utilisation of provisions created for the Operational Excellence
`restructuring programme were more than offset by lower property, plant and equipment following various site disposals.
`In Diagnostics the increase in net working capital of 20% in constant currencies was driven by build-ups in trade receivable
`in certain Southern European countries, increased inventory levels due to product launches and the build-up of Hitachi(cid:173)
`sourced instruments after the earthquake in Japan. The long-term net operating assets in constant currencies increased
`by 1% as the creation of provisions has been partially offset by higher levels of property, plant and equipment.
`
`The improvement in the net debt position was mainly due to the free cash flow of 3.9 billion Swiss francs, as described below.
`For pensions the increase in the net pension liability reflects falling interest rates leading to the discounted defined benefit
`obligation being higher.
`
`Free cash flow
`
`Pharmaceuticals
`Diagnostics
`Corporate
`Operating free cash flow
`Treasury activities
`Taxes paid
`Dividends paid
`Free cash flow
`
`2011
`(mCHF)
`
`12,914
`1,259
`(440)
`13,733
`(1,493)
`(2,594)
`(5,742)
`3,904
`
`2010
`(mCHF)
`
`12,933
`1,634
`(418)
`14,149
`(1 ,396)
`(2,789)
`(5,265)
`4,699
`
`% change
`(CHF)
`
`% change
`(CER)
`
`0
`-23
`+5
`-3
`+7
`-7
`+9
`-17
`
`+16
`-7
`+8
`+14
`+25
`+5
`+9
`+21
`
`The Group's operating free cash flow remained strongly positive at 13.7 billion Swiss francs. There was an increase of 14%
`in constant currencies (-3% in Swiss francs), driven by strong operating results partly offset by increases in net working
`capital. Proceeds from site divestments and lower capital expenditure also contributed to the growth in operating free cash
`flow. The free cash flow in 2011 decreased by 0.8 billion Swiss francs to 3.9 billion Swiss francs. This was primarily due to
`the lower free cash flow in Swiss franc terms and higher dividend payments.
`
`Roche Group - Financial Review I Roche Finance Report 2011
`
`7
`
`Novartis Exhibit 2273.009
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Pharmaceuticals Division operating results
`
`Pharmaceuticals Division operating results
`
`IFRS results
`Sales
`
`Roya lties and other operating in co me
`
`Cost of sales
`
`Marketin g and distri bution
`
`Re sea re h and development
`
`Gen era I and administration
`Operating profit
`- margin, % of sales
`
`Core results 0
`Sales
`
`Roya lties and other operating in co me
`
`Cost of sales
`
`Marketin g and distribution
`
`Re sea re h and development
`
`Gen era I and administration
`Core operating profit
`- margin, % of sales
`
`Financial position
`Net working capital
`
`Long-term net operating asset s
`Net operating assets
`
`Free cash flow
`Operating free cash flow
`- margin, % of sales
`
`1) See pages 146-1 49 for definition of Core results and Core EPS.
`
`2011
`(mCHF)
`
`32.794
`1,453
`(7,436)
`(5,636)
`(7,397)
`(1,527)
`12,25 1
`37.4
`
`32.794
`1,453
`(7,053)
`(5,564)
`(7,173)
`(1,051)
`13,406
`40.9
`
`5,445
`14,563
`20,008
`
`12,9 14
`39.4
`
`2010
`(mCHF)
`
`%change
`(CHF)
`
`% change
`(CER)
`
`37,058
`1,537
`(8,169)
`(6,964)
`(9,090)
`(2,07 1)
`12,301
`
`33.2
`
`37,058
`1,537
`(7,947)
`(6,652)
`(8,160)
`(1,060)
`14,776
`39.9
`
`5.766
`14,595
`20,361
`
`12,933
`34.9
`
`-1 2
`- 5
`- 9
`-1 9
`-1 9
`- 26
`0
`+4.2
`
`-1 2
`- 5
`- 11
`-1 6
`-1 2
`-1
`
`- 9
`+ 1.0
`
`- 6
`0
`-2
`
`0
`+4.5
`
`0
`+9
`+1
`- 9
`-10
`-1 8
`+1 6
`+5.3
`
`0
`+9
`- 2
`- 6
`- 2
`+10
`+5
`+ 2.1
`
`- 3
`-1
`-2
`
`+1 6
`+5.6
`
`8
`
`Roche Finance Report 2011
`
`I Roche Group - Financial Review
`
`Novartis Exhibit 2273.0010
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Sales overview
`
`Pharmaceuticals Division - Sales by therapeutic area
`
`Therapeutic area
`
`Oncology
`Inflammation/Autoimmune/Transplantation
`Virology
`Metabolism/Bone
`Ophthalmology
`Respiratory diseases
`Renal anemia
`Ca rd iovascu lar diseases
`Central nervous system
`Infectious diseases
`Other therapeutic areas
`Total sales
`
`2011
`(mCHF)
`
`19,210
`2,816
`2,663
`2,015
`1,523
`1,095
`1,018
`901
`851
`355
`347
`32,794
`
`2010
`(mCHF)
`
`21,252
`2,950
`3,543
`2,568
`1,458
`1,154
`1,207
`982
`966
`422
`
`556
`37,058
`
`%change
`(CER)
`
`%of sales
`(2011)
`
`% of sales
`(2010)
`
`+2
`+7
`-16
`-12
`
`+23
`+10
`-9
`+4
`-2
`-7
`-31
`0
`
`59
`9
`8
`6
`5
`3
`3
`3
`2
`1
`1
`100
`
`57
`8
`10
`7
`4
`3
`3
`3
`3
`
`100
`
`In 2011 Pharmaceuticals Division sales were stable in constant currencies with growth in most key products offsetting
`negative impacts from healthcare reforms, austerity measures, pricing pressures and expected decreases in sales of certain
`major medicines. Excluding Tamiflu, sales growth of the Pharmaceuticals Division was 1% in constant currencies and was
`primarily driven by five products: Herceptin, MabThera/Rituxan, Lucentis, Actemra/RoActemra and Mircera. These products
`represent 42% of the portfolio (201 O: 37%) and together generated 1 .7 billion Swiss francs of additional sales in 2011 .
`This growth was partly offset by lower sales of Tamiflu, Avastin, NeoRecormon/Epogin, Bonviva/Boniva and CellCept. The
`US healthcare reforms, European austerity measures and a base effect from the Japanese biennial price cuts implemented
`in April 2010 had a combined incremental negative impact in 2011 of 295 million Swiss francs compared to 2010, equivalent
`to 1.2 percentage points on divisional sales growth.
`
`Oncology continued to account for the majority of the division's sales, with continued growth in Herceptin and MabThera/
`Rituxan offsetting the expected decline in Avastin sales. In virology, sales of Tamiflu continued to decrease substantially,
`and while overall Pegasys sales declined for the year, they began to recover in the second half following US launches of
`new hepatitis C medicines that are used in combination with Pegasys. Sales in inflammation/autoimmune/transplantation
`increased in constant currencies due to strong uptake of Actemra/RoActemra and growth of MabThera/Rituxan in
`rheumatoid arthritis more than compensating for the negative impact of continued generic erosion of CellCept.
`
`Roche Group - Financial Review I Roche Finance Report 2011
`
`9
`
`Novartis Exhibit 2273.0011
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Product sales
`
`Pharmaceuticals Division - Sales
`
`Oncology
`Avastin
`
`Herceptin
`
`MabThera/Rituxan 11
`
`Xeloda
`Tarceva
`
`Neutrogin
`
`NeoRecormon/Epogin 21
`
`Others
`Total Oncology
`
`Inflammation/ Autoimmune/ Transplantation
`CellCept
`
`MabTh era/Rituxan 11
`
`Act em ra/ RoActem ra
`
`Others
`Total Inflammation/Autoimmune/
`Transplantation
`
`Virology
`Pegasys
`
`Valcyte/Cymevene
`
`Tamiflu
`
`Copegus
`
`Others
`Total Virology
`
`Metabolism/ Bone
`Bonviva/Boniva
`
`Nutropin
`
`Xen ical
`
`Evista
`
`Others
`Total Metabolism/Bone
`
`Ophthalmology
`Lucentis
`Total Ophthalmology
`
`Respiratory diseases
`Xo lair
`
`Pulmozyme
`Total Respiratory diseases
`
`Ren al anemia
`NeoRecormon/Epogin 21
`
`M ircera
`Total Ren al anemia
`
`J O
`
`Roche Finance Report 2011
`
`I Roche Group - Financial Review
`
`20 10
`(mCHF)
`
`%change
`(CER)
`
`% of sales
`(2011)
`
`% of sales
`(2010)
`
`2011
`(mCHF)
`
`5,292
`5,253
`5,027
`1,354
`1,251
`
`278
`222
`533
`19,2 10
`
`991
`
`978
`618
`
`229
`
`6,461
`5,429
`5,363
`1,426
`1,325
`331
`333
`584
`21,252
`
`1,290
`
`993
`397
`270
`
`- 7
`
`+ 9
`+7
`+ 8
`+7
`-1 0
`- 22
`
`0
`+2
`
`-1 4
`
`+1 3
`+73
`- 5
`
`+7
`
`- 3
`
`+7
`- 53
`-1 4
`- 28
`-1 6
`
`- 22
`- 8
`- 21
`-1
`+ 2
`-12
`
`+23
`+23
`
`+11
`
`+1 0
`+10
`
`- 22
`+50
`- 9
`
`16
`16
`15
`4
`4
`
`17
`15
`14
`4
`4
`
`59
`
`57
`
`3
`
`3
`
`9
`
`4
`
`8
`
`6
`
`5
`
`5
`
`3
`
`2
`
`3
`
`3
`3
`
`8
`
`4
`
`10
`
`3
`
`7
`
`4
`
`4
`
`3
`
`3
`
`2,816
`
`2,950
`
`1,438
`
`569
`359
`164
`133
`2,663
`
`696
`317
`238
`206
`558
`2,015
`
`1,523
`1,523
`
`603
`492
`1,095
`
`674
`344
`1,0 18
`
`1,645
`
`605
`873
`212
`208
`3,543
`
`1,013
`405
`337
`222
`591
`2,568
`
`1,458
`1,458
`
`641
`513
`1,154
`
`952
`255
`1,207
`
`Novartis Exhibit 2273.0012
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Pharmaceuticals Division - Sales (continued)
`
`2011
`(mCHF)
`
`2010
`(mCHF)
`
`%change
`(CER)
`
`% of sales
`(2011)
`
`% of sales
`(2010)
`
`Cardiovascular diseases
`Activase/TNKase
`Others
`Total Cardiovascular diseases
`
`Central nervous system
`Madopar
`Rivotril
`Others
`Total Central nervous system
`
`Infectious diseases
`Rocephin
`Others
`Total Infectious diseases
`
`Other therapeutic areas
`
`453
`448
`901
`
`294
`187
`370
`851
`
`265
`90
`355
`
`347
`
`460
`522
`982
`
`308
`218
`440
`966
`
`311
`111
`422
`
`556
`
`Total sales
`
`32,794
`
`37,058
`
`+15
`-7
`+4
`
`+6
`-3
`-6
`-2
`
`-6
`-10
`-7
`
`-31
`
`0
`
`3
`
`3
`
`2
`1
`3
`
`1
`0
`1
`2
`
`1
`0
`1
`
`1
`
`100
`
`100
`
`1) Total MabThera/Rituxan sales of 6,005 million Swiss francs (2010: 6,356 million Swiss francs) split between oncology and Inflammation/Autoimmune/
`Transplantation franchises.
`2) Total NeoRecormon/ Epogin sales of896 million Swiss francs (2010: 1,285 million Swiss francs) split between renal anemia and oncology franchises.
`
`Mab Thera/Rituxan
`
`United States
`Western Eu rope
`Japan
`International
`Total sales
`
`2011
`(mCHF)
`
`2,722
`1,574
`254
`1,455
`6,005
`
`2010
`(mCHF)
`
`3,026
`1,639
`273
`1,418
`6,356
`
`%change
`(CER)
`
`% of sales
`(2011)
`
`% of sales
`(2010)
`
`+6
`+7
`-1
`+14
`+8
`
`46
`26
`4
`24
`100
`
`48
`26
`4
`22
`100
`
`MabThera/Rituxan: for non-Hodgkin's lymphoma (NHL), chronic lymphocytic leukemia (CLL), rheumatoid arthritis
`(RA) and ANCA-associated vasculitis. The sustained growth in the oncology segment was driven by continued strong
`uptake of the new first-line maintenance indication in follicular lymphoma (a type of NHL) in Europe and the US, and by
`further uptake in CLL Sales growth of 14% in the International region, including key emerging markets such as China and
`Brazil, was mainly due to the continued uptake in NHL indications. Sales in the RA segment were 1 .0 billion Swiss francs
`in 2011, an increase of 13% in constant currencies. Growth in this segment came from increased use in patients with an
`inadequate response to treatment with tumour necrosis factor inhibitors and also from shortened repeat treatment intervals.
`
`Avastin
`
`United States
`Western Eu rope
`Japan
`International
`Total sales
`
`2011
`(mCHF)
`
`2,343
`1,448
`627
`874
`5,292
`
`2010
`(mCHF)
`
`3,190
`1.762
`625
`884
`6,461
`
`%change
`(CER)
`
`% of sales
`(2011)
`
`% of sales
`(2010)
`
`-14
`-8
`+7
`+11
`-7
`
`44
`27
`12
`17
`100
`
`49
`27
`10
`14
`100
`
`Roche Group - Financial Review I Roche Finance Report 2011
`
`11
`
`Novartis Exhibit 2273.0013
`Regeneron v. Novartis, IPR2021-00816
`
`

`

`Avastin: for advanced colorectal, breast, lung, kidney and ovarian cancer, and for relapsed glioblastoma
`(a type of brain tumour). The significant decline in overall sales was mainly due to regulatory and reimbursement
`uncertainty in the US, beginning in 2010, regarding the use of Avastin for metastatic breast cancer. This led to lower sales
`in the US throughout 2011 and also affected uptake for breast cancer in certain European and Latin American markets.
`The US market share in all other indications remained stable. Lower sales in Europe were due primarily to government
`austerity measures and price cuts, along with lower use for breast cancer. Market penetration in colorectal cancer remained
`stable despite increasing competition. Use of the medicine in lung cancer grew slightly in a number of EU countries. The
`approval by the EU in December 2011 of Avastin for front-line treatment of newly diagnosed advanced ovarian cancer is
`expected to have a positive impact on sales in Europe from 2012 onwards. Growth of 11 % in the International region reflects
`strong uptake of Avastin in its colorectal and lung cancer indications, led by Latin America (up 18%) and Asia-Pacific
`(up 34%), particularly in China following the launch for colorectal cancer in October 2010. Growth in Japan was driven by
`continued good uptake in non-small cell lung cancer. The new metastatic breast cancer indication, approved in Japan in
`September 2011, is also expected to contribute to future sales.
`
`In November 2011 the US Food and Drug Administration issued a final decision revoking approval of Avastin for the
`treatment of metastatic breast cancer. This followed a recommendation in July 2010 by an FDA expert panel, the agency's
`initial notice of revocation in December 2010, and an appeal in 2011 by Roc