Prognosis good for Swiss biotech giant

By Zhuan Ti | China Daily | Updated: 2016-05-20 07:30

Roche builds upon long-term growth plan in China with new investment and R&D center

Roche, the Swiss-based pharmaceuticals and diagnostics solutions provider, will continue to increase its investment in China as the nation adapts to the new normal economic conditions.

"We believe China will continue to be a strong and growing market, and we are deeply committed to bringing innovative drugs and diagnostics solutions to the market and expanding patient access through collaboration with local stakeholders," said Christoph Franz, chairman of the board of directors of Roche Holding Ltd.

Roche has positioned itself as a healthcare pioneer in China since 1994, when it set up a pharmaceutical branch in Shanghai. Over the past two decades, the company has developed a complete value chain that covers research and development, manufacturing as well as sales, Franz said.

China's aging population, growing individual wealth and the government's increasing investment in the healthcare sector are creating increasing opportunities for healthcare companies, which Roche is determined to seize.

To further strengthen its innovation capabilities in China, Roche announced last year it was investing 860 million yuan ($132.24 million) in a new research and development center, which is expected to be completed in 2018, and a new diagnostic manufacturing facility is also under construction.

Prognosis good for Swiss biotech giant

Franz outlined the challenges and opportunities Roche faces, and its business strategy in an interview with China Daily. The following are edited excerpts:

Can you give us a general introduction of Roche's business performance in 2015? How do you forecast Roche's business in 2016?

Roche is a research-based biotech company. Through our research we create state-of-the-art diagnostics and pioneering medicine that help millions of people around the world. We are one of very few companies in the world that has consecutively increased dividends over the past 29 years. We had a strong growth in 2015 and the company's overall sales increased 5 percent. We hope to maintain our earnings per share and dividend growth in 2016.

Innovation is our answer to the future and to ensure Roche's profit growth and pipeline expansion. Last year, Roche invested 9.3 billion Swiss francs ($9.55 billion) in R&D, which is approximately 20 percent of its total revenue. This is the largest R&D investment in the healthcare industry, and underscores our innovative focus. Our major pipeline progress sets the pace for 2016.

How would you evaluate the performance of the Chinese market and its contributions to Roche's global results in 2015?

In 2015, China was the third-largest market for Roche's pharmaceuticals business and the second-largest market for Roche's diagnostics business.

On the diagnostics side of our business we see very strong growth that is a reflection of China's investment in medical infrastructure and hospitals.

Roche has maintained strong growth in the diagnostic and pharmaceutical sectors in the last few years. How would you define Roche's unique attributes in the market?

We have a long history of firsts ... for example, we are the frontrunner in personalized healthcare, the global leader in cancer treatment.

Roche plays an increasingly important role in shaping the future of medicine by contributing to the personalized healthcare approach. Our strengths in pharmaceuticals and diagnostics enable us to better fit treatments to patients. In our research pipeline, 60 percent of our medicines are developed together with diagnostic tests.

In the future, we will be able to combine immunotherapy drugs and targeted drugs.

In recent years, the Chinese government has driven healthcare reform. Is this an opportunity or a challenge for Roche?

We recognize that accessibility and affordability of innovative drugs is still an issue in many countries including China. It's imperative for Roche to find various solutions to address the unmet needs of Chinese patients. One of the most important aspects for us is to have a level playing field with regard to regulatory processes, such as approval processes or reimbursement coverage. The Chinese government has been working hard to ensure this. My aspiration is to introduce a new drug to China the same day that it is introduced in the United States and Europe. We expect to see faster approvals of our "new-to-China" medicine, but also accelerated approval for "new-to-the-world" treatments like cancer immunotherapies.

In addition, the government has announced its goal of improving reimbursement coverage for critical illnesses, which will bring further opportunities. Roche has made tremendous efforts to improve affordability in terms of reimbursement breakthroughs at the provincial and city levels, in collaboration with the government, charity foundations and private healthcare insurance providers.

Our targeted therapy for the treatment of Her2-positive breast cancer has not yet been included in the National Reimbursement Drug List, since its latest update is about six years ago, but through our efforts, as well as the support of the government, the therapy has been included in the reimbursement list of 11 provinces covering a total population of 350 million.

How do you view China's rapid economic growth over the past 20 years, and its recent slowdown? Will Roche increase its investment in China in the future?

China is one of the most important markets for Roche globally. Roche invested considerably to build the full value chain in China from R&D and manufacturing to marketing and sales. Our investment has to be sustainable and founded on long-term thinking. It is not just about financial investment. Certainly, it is fundament for Roche to be financially success, while we are part of the local community. We affect activities and employees, but most importantly, we affect the lives of our patients we are serving. We have more to do to realize our purpose, "Doing now what patients need next".

We have a long-term plan for our growth and success in China and a plan to provide more benefits to more Chinese patients. Proud as we are of our past and present achievements, however, the future is what we are excited about.

As the chairman of Roche, you have a very busy schedule, how do you maintain a balance between life and work? What is your hobby?

Discovering the world and new peoples is close to my heart. I have always been a very curious person. I like to interact with people, love to work with them; talk to them to exchange ideas and get a variety of perspectives. All the different people make the different ways of living. I dedicate my spare time to my family and friends. I love diving in summer and skiing in winter. I love to read books at home. I think it is very important to be doing something different from my professional life to refresh my mind.

Nationality: German

Age: 56

Education:

•Graduate studies at Ecole Centrale de Lyon and Ecole Superieure de Commerce de Lyon (France)

•Graduate in Industrial Engineering from Darmstadt, Technical University (Germany)

•Doctorate from Darmstadt Technical University

•Postdoctoral research at University of California, Berkeley (US)

Professional career:

•1990: Deutsche Lufthansa AG

•1994: Deutsche Bahn AG, executive functions, member of the executive board and CEO of passenger transport division

•2004: CEO of Swiss International Air Lines AG

•2009: Deputy chairman of the executive board of Deutsche Lufthansa AG; CEO of Lufthansa Passenger Airlines