Severin Schwan - Chief Executive Officer Dan ODay - COO Pharmaceuticals Roland Diggelmann - COO Diagnostics Alan Hippe - Chief Financial and IT Officer

Sachin Jain - Bank of America Matthew Weston - Credit Suisse Tim Race - Deutsche Bank Michael Leuchten – Barclays Andrew Baum – Citi Keyur Parekh - Goldman Sachs

Ladies and gentlemen, good morning or good afternoon. Welcome to the Roche’s Half Year Results 2015. I’m Shyer [ph], the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. After the presentation, there will be a Q&A session. [Operator Instructions]. At this time, it’s my pleasure to hand over to Dr. Severin Schwan, Chief Executive Officer. Please go ahead, sir.

Good afternoon ladies and gentlemen and welcome to our half year briefing. I am very pleased with our results for the first six months. I am very pleased with our results for the first six months. A very strong first half scaled up by 6% core earnings up by 7% and in particularly pleased by the progress on the product pipeline front. Daniel O'Day will cover this in more details. Let me just highlight the readout of the where we will present detail data later this year. Pharma up by 5%, very much driven by oncology, by immunology but we also saw very good uptake of Esbriet which has become an important growth driver already at this point. Diagnostics 7% up, clearly above market again, very much driven by professional diagnostics and we see also good double digit growth both in molecular diagnostics and in tissue diagnostics. Steady growth on a quarterly basis across all regions Turning to the margins, you can see a decline versus first half year last year but it is entirely due to the sale of filgrastim rights. If you would exclude that one-off effect, actually margins would have slightly gone up by 0.4% each points. That is also reflected on the core EPS levelled with a 2% growth at constant rates or 7% excluding the figures in sale. Now let me turn to the pipeline, we really making good progress here. You see this also reflected by the number of breakthrough therapy designation, now ahead of the growth. And, an unprecedented number of phase III starts as we go into2015. In the first six months alone, 13 Phase III starts and as we will see later many of them in the area of cancer immunotherapy. We continue to leverage our strength across the two divisions, pharma and diagnostics, driving personalized health care, you see now 60% of our pipeline being co-developed with companion diagnostics. Now, it’s really exciting times for us and I can't remember a time when we had so many new molecular entities being, I better have state to read out in such a short time frame. So, over two years, 2015 and 2016 we have now data and prospective filings for six new molecular entities. To conclude, we confirmed our guidance which we gave at the beginning of the year but based on the very strong results in the first six months, I would expect that we tend to land at the higher range at the guidance we gave to you. And with this I am happy to handover to Dan O’Day for pharma.

Thank you Severin and good morning good afternoon to my side. It's a real pleasure to present the results from the pharma division from the first half of the year. In addition to I think very strong underlying sales growth from strategic products, the established products, the newly launched products, I am equally excited about the progress in the pipeline in the first half of the year and we really had an unprecedented time in terms of the number of new potential launches, new molecular entity launches that we will expect in the next eighteen months to two years and of course the very significant line expansion and I hope you have gone over those reviews today. So firstly on the half year results, I mean really excellent first half year results across all the regions in 2015, above the market and all regions. You see the U.S. growing at 7%, really driven by oncology, immunology and a very successful as you’ll see Esbriet launch. International plus 7%, good growth, particularly in Latin America, also Turkey and Korea. Japan, the entire portfolio of oncology, immunology really growing nicely in all indications at plus 7%. Then in Europe plus 2% despite pricing headwinds we are growing very nicely both with our newly launched products Perjeta and Esbriet and -- and clearly outpacing the effects of the price effects in Europe. I would just point out and would probably come back to this I am sure in the Q&A that in quarter four of last year in the United States we had a very early, very large tamiflu season. I remind of close to CHF 500 million. And if I look out over the course of the past several years, that was almost two times -- flu season and during those periods of time we have also had years that have been much less than that. So I just put that in the perspective as we look forward for the final results, in the U.S. it'll be the underlying strategic products will continue to grow well, but we will have to look at how the tamiflu season comes. On the profit margin side, you can see excluding filgrastim we had a growth of plus 6%, so good strong underlying cooperative profit growth. As we indicated here we are investing in our manufacturing network and you are beginning to see, I think in the first half of the year, some of the startup cost for that manufacturing network we eluded to this before. And that expansion of that will continue over the next coming years. But we would expect it to moderate a bit between now and year-end in terms of the effect on the P&L. I mean just to remind you, this is a good new story. I mean we are looking at expanding our manufacturing capacities by more than 40%, but I mean look at the demand for our biologic products that are currently launched, but also those coming to market by ocrelizumab, lebrikizumab, lampalizumab others we need to be prepared to this manufacturing capacity. On the entity side, we just make a point about that line item, because that driven above the sales growth, predominantly from the successful Esbriet launch. So as we break this down to the product side, I am going to get into all of these products in the next few slides. But I just want to emphasize, I mean Herceptin, 11%; Avastin 9%; Perjeta obviously growing very nicely, Actemra, 25%. I would say that as expected on the -- we are not seeing really full effect from the interfere on -- therapies in all the regions. So U.S., Europe and Japan -- side of course we have the patent deterioration there. We would expect to over the second half of this year to really complete the erosion on the patent side, but just to put that in the perspective. I mean -- alone would have added around 2% to 2.5% growth points, sales revenue growth points to our group results. So the system is working. Our new innovative medicines are far outpacing those that are going out patent and we have had very good momentum with those medicines. Turning to oncology with a very good first half for oncology as you see also from the pipeline, but from a growth standpoint, 8% growth, I’m going to get a little bit more into the Herceptin, the HER2 franchise and Avastin, but I would just point out MabThera growing nicely in oncology and into non-Hodgkin’s lymphoma set in also some price effect in the United States, but there is good underlying volume growth there as well, and in Tarceva as we expect we continue to see competition, in class competition in the first line and a bit in the second line. I would like to point out that the exciting news we saw where the Avastin, Tarceva combination we will be filing in the second half of this year in Europe which is good news for lung cancer patients in those countries have been recognize the EMEA approval and then Zelboraf were continuing to see combination, competition affecting our Zelboraf in United States and particular but I am also really pleased to say that based upon the BRIM and the coBRIM results and we presented to we are, will be now initiating, we have the filing in for that actually and we would expect news on that later this year as well for our and Zelboraf combination in melanoma. Thinking a little bit in and now I’m going from numbers by the way in the last slide that were first full half year to giving you a little bit more granularity on what’s happening specifically in the second quarter. So in the second quarter you see when an acceleration of the growth with the plus 19% growth on the HER2 franchise, you ask that plus 18% strong growth and that's basically driven by on Herceptin by longer treatment times and first line metastatic breast cancer in combination with Perjeta. For Herceptin in the EU, we have basically volume growth, its offset a bit by price decline and Herceptin internationally is 14% growth which I think demonstrates that our access programs in the emerging markets are really starting to take hold and countries like Brazil, like Turkey where we have growth of 19% and 17% respectively and in China where we have growth of 21% on Herceptin. Perjeta plus 64% in the second quarter driven by U.S. first line continued growth in the first line setting, we are very happy to say that we have now the positive opinion from Europe on the new adjuvant indication for Prejeta to be expect to have an indication in the third quarter of this year. And we have very good growth in Prejeta also in Europe. And Kadcyla plus 54%, we have strong uptake now in Europe where its beginning to penetrate into the second line setting outside of Europe where we were launching that. The US is fairly well penetrated in the second line setting and international we are beginning to get reimbursement to drive Kadcyla forward as well. Avastin, 13% growth in quarter two, really another strong performance in the US with 11% growth driven by ovarian cancer and first line positive colorectal cancer in the international setting we have a 27% growth for Avastin in the second quarter last time especially Brazil were increasing the market access and we had very good growth as well in China and we now have the approval in China for first line non-small cell lung cancer, which will be expected to grow Avastin further in China in the second half and beyond. Japan 29% growth across many indications and the EU with the good 4% growth on ovarian cancer and cervical cancer predominant growth. Let me now pass to immunology, immunology was a really strong quarter again, we are looking at a 26% growth if you were to exclude Esbriet from this growth, the growth would still be at 14%, so good strong underlying growth MabThera/Rituxan and we really seeing Actemra now and its seventh year of double-digit growth continue to uptake in the subcutaneous in the frontline model therapy setting. I’m really pleased to say that Actemra added to be eighth breakthrough therapy designation for Roche medicine, sense the designation was started this one in systemic sclerosis. So we are very excited to work with the FDA on additional approval for Actemra, Xolair continues to be very good growth and allergic asthma and in CIU and MabThera/Rituxan plus 10% is driven by rheumatoid arthritis and also vasculitis. In Lucentis as expected as indicated at the year-end call and also the first quarter call, we continue to have a lot of competition in this field right now not much has changed. We see a decline again in the second quarter that's in line with our expectations, so we continue to have competitive pressure in AMD and in DME. Of course we continue to work on this and look at our lifecycle plans for Lucentis including next generations of Lucentis and I'd just point out here as I don’t have another slide that Lampalizumab is very much on track for dry AMD in terms of its recruitment, but for Lucentis, we'll continue to be pressured as I indicated this year for the rest of the year as well. On Esbriet I mean this is really a good news story with a very successful launch in the United States continued good uptake in Europe with the change in the package insert to present the mortality data now in the package insert. We're clearly establishing market leadership with this product and still at the early stages of penetration into the patient population. So I think we can continue to see and in the second quarter we saw two things happening. We saw in the U.S. a very good strong uptake and we saw as you know in the past we had some patients that were still waiting for paid drug on our patient assistance programs we basically worked through that, so you see a bit of a double effect in quarter two. I wouldn’t necessarily extrapolate straight up for the rest of the year, but I'm very positive about the continued growth it does create for the remainder of the year and for the foreseeable future. So good strong growth across the portfolio and I'd like to turn my attention now to the good news from the portfolio and the innovation side. Let me start with cancer immunotherapy. I thought I would start just by showing you the slide that we literally showed to you at the beginning of this year only six months ago and at that time we had six molecules in the clinic we had 16 phase I, four phase II and only phase III at that time. Just as a reminder as you look at these slides atezolizumab monotherapy is shown in blue other novel in house compounds are shown in green and this combination immunotherapy is shown in this green blue the . Now only six months to the next slide to show you where we stand today and we're certainly not stopping here, but there's a couple of things I really want to point out here and Severin already made a mention of this we've got 10 new phase III starts with atezolizumab. We -- everything in the red box is our trials that have been added here in 2015 and those with the yellow checks are the data that we presented at ASCO that I know you're relatively up to speed on. But just to summarize what happened even since quarter one we disclosed three new phase III trials to our renal cell carcinoma or adjuvant bladder or adjuvant lung. A new phase I combination trial which is atezolizumab and multiple myeloma and a new immune doublet which is atezolizumab plus or [auto] inhibitor. So that's just in one quarter you continue to see the momentum as we progress. Where we see a strong signal we're going deep and strong with an as well as the diagnostic enriched population and you know in lung cancer we feel very well positioned as we enter into the first line setting with five innovative trials based upon the good results from ASCO or chemo combo data that was presented there where we saw again in the phase I and still early data response rates of 60% to 75% depending on the chemotherapy background. You're going to see updated data on that but we continue to see good durability in those responses as well. In bladder cancer we're very pleased that we were able to report to you I guess versus last week that we received positive news on our pivotal trial on bladder cancer and we will move ahead now to prepare the filing for bladder cancer in very early part 2016. And in kidney and breast where we have combinations with Avastin and with chemotherapy you've seen the data and we're very encouraged there. But at the same time of course we continue to look at the entirety of our immune-oncology portfolio at atezolizumab and other indications and in other combinations and we'll be informed by data as we move forward where we take other whole steps like this to change standard-of-care immunotherapy and cancer. So equally I’m very excited about the ocrelizumab data really looking forward to entrants we can’t confirm that we will be presenting data at entrants and in all presentation in Barcelona on October 9th. This is really exciting news for patients with multiple sclerosis. As we’ve reported you at the high-level, this trial was able to show against a very effective interferon on standard-of-care significant efficacy improvements on primary and secondary endpoints. And very importantly we showed adverse events that we’re very similar to Rebif in this trial. So I think we’re very enthusiastic about this data, it’s certainly give to the B-cell hypothesis multiple sclerosis. I remind you that ocrelizumab is fully humanize anti-body that’s been specifically design for chronic conditions like MS and selectively design to inhibit only certain B-cells to avoid interaction with B-cell that are still productive and helpful in immune system. And then also remind you that we have a very attractive dosing schedule with two times a year IV infusion. So we’re looking forward to presenting that data and we’re certainly comparing our organization for a successful entry into an area that certainly needs highly applications, highly safe medicines. As I slightly earlier stage but equally exciting the ACE910 news with our hemophilia A just last week we presented and update in Toronto. And the key message here is that if you look at the graph. Although again small numbers, but beginning to see the durability of this response, where we see response is now up to almost 18 months, 12 to 18 months and you can see the different dose ranges. We also have move two patients from a lower dose. Two patients which from cohort 1 to cohort 3 and continuing to get reduction and bleeding, so we see those dependant reduction in bleeding. I will just point out quickly that there were three patients that developed binding anti-ACE910 antibodies, but very importantly there is not impact on pharmacokinetics. So as you know the development of this binding antibodies towards drug is certainly not uncommon and not of a major concern when you don’t see and effect of it. Overall 9 of 18 patients have achieved zero bleeds and we’re very excited to say that we’ll be starting the first pivotal trial and our inhibitor population in the second half of this year and based upon that and based upon discussions of regulators, we would expect data in 2017. The half life is very attractive here should help us with the dosing and of course subcutaneous formation as well, so exciting about moving ahead ACE910. Lebrikizumab we are waiting the results now, but I thought I was just for the first time kind of give you the entirety of lebrikizumab program. Of course, we have the key indication this as an indication data is expect during the first half of 2016 and we also expect to be able to file in 2016. But equally important we started the trail and severe at a lessons, first patient have been rolling in that. Idiopathic pulmonary fibrosis, we have added arms to this trial and arm that now include aspirate with lebrikizumab to look for the combination effect there. We expect the first patient in this trial in the second half of 2015. And then very importantly, we also we’ll beginning our topic dermatitis trials in the second half of this year. I remind you that we saw now and two large pace through programs and Severin ask another 60% to 70% exacerbation rate and periostin high patients and we certainly look forward to seen the results for the Phase III as we get into the early part of next year. We’ve also made some decisions on our all timers program based upon a careful look and our internal data and more detail. Our reflection upon some of the external data out there in the marketplace, the fact that we have two very interesting, very attractive molecules that have data behind them in phase II. We've made a decision based upon the fact that we have had the chance to to take that into a phase III in patients. And, we intend now with to have discussions with the regulators about the ongoing trial. We intend to look at additional dose escalation on and continue to make decisions on that development program based upon the data that comes. My summary on this is that Alzheimer's continues to be a huge unmet medical need. But we see signals that indicate that there is a dose response here in these molecules. And, we've also seen that dose response to be even more effective in the or the earlier patient to be patients and I remind that and are really two different molecules that bind to differently in a very complex disease like Alzheimer's. I think its very good news that we have on different ways of attacking the anti-ameloid process and we will be data driven. We will be dated in terms of these trials in terms of how we move forward. And we'll be by the science behind these trials as we move forward but we're very encouraged by what we've seen so far in the data and the literature externally. Well, so let me close on the outlook. Lots of good news on the outlook. Just to update you since quarter 2 of course we've had the opera run 2 results reading out on . We've had the phase III start of and triple negative breast cancel and renal sarcocynoma and in our adjuvant on bladder cancer. We've had the phase II readouts, the interim readouts for and and the final readouts will come really very soon. And, I could see we've already had the data readout on bladder cancer. And then there are four important things that aren't on this list, I just want to raise your attention to. We intend to file our and relapse refractory based upon the data in the second half of this year. We expect with our partner to be filing in the 17 pre deleted breakthrough therapy designation. We expect also to be filing before and and Europe. And then finally, we would expect needs their approval expected in the third quarter. When I speak about the, you know, the exciting times in the portfolio, I wanted to end with 2 last lines which is to show you what we expect to read out file, some of these to be launched in this time period. although at this point, I haven't talked so much about already our data on . And it is extremely exciting data particularly with patients with CNS meds and they need a looking forward to filing that and showing more on that data in patients as well as other indication that we are pursuing. And then finally from the data flow for the rest of the year, I mean there's lots of exciting data that we forward to congresses, we'll have another big with expected to update you of course on our bladder and the lung cancer program as well as additional data on our inhibitor for lung cancer. is already mentioned. On October 9th we'll have the presentation on Opera 1 and 2. At the melanoma conference in San Francisco, we would expect to [indsicernible] the melanoma combo with as well as the combination and finally, triple negative breast cancer at this stage with and triple negative breast cancer and beyond this, I remind you, we've got with data at San Antonio. data most likely some time in September. More data on and mono therapy in humantology [indiscernible. So an exciting second half of the year in terms of news flow. Look forward to reporting back here on that and with that I would like to turn it over to Roland to cover the diagnostic result. Thank you.

Well, thank you, Dan. Good afternoon. Good morning. Its also a pleasure from my side to present the diagnostics result for the first half of the year. And, as you've seen already we've had a very good first half year with a 7% growth on the sales line, all business units contributing to the sales results. The sales and professional diagnostics growing at 7% which accounts for more than half of our sales, solid growth as well in diabetics care, despite the challenging environment in particular in the United States and then also double-digit growth in molecular and mutation diagnostics. So our clinical diagnostics business, the professional molecular and tissue growing at an 8% rate with good momemtum indeed. The geographic distribution with very good growth in all regions. And we just point out with particularity from Japan which is resulted from -- the underlying business growing at 5% in Japan and every other region growing well. EMEA which is the largest region with good growth and also in North America, it's -- for diabetes case, growth of 7%, so very good numbers there as well. And then as you would expect, even high growth in the emerging markets, APac and Latin America, good growth across the board, in particular China with a 24% growth rate for the first six months, also good growth in countries such as Turkey and India. Some other growth drivers in professional diagnostics and you can see the size of the growth here and of the business unit, continues to be driven by very positive momentum in immunodiagnostics growing at 12% which is now been growing at double-digit rate for more than 10 years. In molecular diagnostics we see very good continuous growth I virology and here in particular also in HPV as we continue to move HPV primary screening into the medical guidance, just recently an approval in the Netherlands to actually do just very much of that and also continued good growth in the United States. And then in tissue diagnostics -- tissue diagnostics in gland -- doing well also and growing at a double-digit rate. On the P&L we can see the flow through from the sales line to the bottomline and that is despite what we have -- which is significant investment in R&D in particular for sequencing, as we build our sequencing business in a goal to provide end to end solutions for eventually the clinical use of sequencing Also investment in the -- largely driven by the acquisitions that we made and by building continuous capabilities in the emerging markets, in particular in China. And then the cost to sales line we see good favorable product mix driven by the sales of course that are also indeed positive mix impact across the first six months. Some of the innovation highlights where we have flagged that [EuroMedLab] which is the largest European convention is introduced for the -- which is our immunology high throughput module which would be part of the -- family which is the very high throughput laboratory solution for -- work area for the combination of clinical chemistry and immunodiagnostics. And here again -- strategy is providing the large labs the ability to test as efficiently as possible. This module will be introduced next year, and you can see some of the advantages here in the slide, notably a double throughput per existing footprint. Very exciting on the side of our Roche blood safety solution -- the ability to integrate and to provide as the only company -- testing, so DNA testing as well as serology testing in one automatic integrated workflow, this is very exciting and we have just been receiving the approval for the -- which adds to a menu that we are going to be running on the serology side -- which is an antibody test for the adult T-cell leukemia detection. So very -- and then as you can see how technologies like to converge and come together with the ability to truly deliver some unique features to laboratories and drive their efficiencies again. Shifting to point of care; the introduction of the high sensitive -- we already have the -- test on our large laboratory instrument. This is the first and we are the first to provide high sensitive on the handheld instruments and you can immediately see here time to result which can be a shortest 12 minutes, which can really provide clinical, medical benefits in terms of the immediate rule-in or rule-out for a suspected acute myocardial infarction. So here as well, some innovation and more innovation around the molecular point of care, which is notably to the clear wave of program for the LIAT, you can see we have the approval now for the instrument and for the influenza A/B will continue to add to this menu on the respiratory panel side potentially then future expansion also to other infectious diseases. But what the clear way what gives us in this, the ability to reach out and view larger customer segments which is indeed the one that doesn’t require the laboratory specialized lab technicians, it also going to physician offices for instance so even the retail pharmacies in the United States. And then finally I would like to bring it together in terms of the Roche Group strategy and personalize healthcare and what you can see here is for example, of how diagnostics supported the ability to go for breakthrough designation, I will point out to here which you’ve heard from Daniel, which is PDL1 and now ability to provide very early insights into biomarket developments here the ability also can test for the PDL1 expression both on the cancer cell and on [p cell] into the results on the right side of the slide. But this should shows the ability to support personalize healthcare and having validated access available for late stage clinical trials. And I like to finish the outlook in terms of our product launches its going to continue to be a very busy year for us. We have some important launches coming up I will just point out two, which is the dedicated HbA1C analyzer, again high for dedicated HbA1C testing. And then in terms of tissue diagnostics a fully automated system in primary staining which is H&E 600 which will also come towards the end of the year and then you can see many additional essays that we’ll continue to develop and bring on to the existing platform which should continue to help us filling on the growth side. And with that thank you very much. And I’ll hand over to Alan Hippe for the financials.

Thanks Roland. Hello to everybody I have the pleasure now also to lead you through the financial results have been quite strong and we have a solid first half of this year. You see the highlights on the slide for the business result as well as for the cash flow, I would cover them all in more detail in my slides. So I just move on and start with the half year performance and what you are seeing here is comprehensive set of numbers and the sales are already describe. We have good momentum over here, you’ve see the cooperating profit increasing by 2% in constant rates, if you within plus7% and when you go to core net income and you see really and you look really at it, half year 2015 compared to half year 2014, and it's a reduction of about 3 billion and I will talk about the financial result and also about the tax rate later on. When you then go from the core net income to IFRS net income its another billion, another reduction of 1 billion and pretty much the same in both obvious as you can see, but the impact are very, very different I can show you. And in 2015 is very much acquisition related and as we had on one hand the fair value inventory write-down that we had to do in the first half roughly 223 million and the other point certainly is the amortization of as figured another 525 million and Swiss francs and that's pretty much explains the difference between core net income and the IFRS net income. And we’ll talk about operating free cash flow, you see a reduction here at 1.3 billion and we’ll explain that later on and when you look at the free cash flow another reduction here, let me explain that for what’s the difference between the movement in the operating free cash flow and the free cash flow by one point it certainly the dividend, we have paid higher dividends. And the other point is we have made a prepayment for taxes in 2013 reducing the base in '14 and certainly now showing up as a higher difference in 2015. Good, with that let's go to the P&L and Roland and Dan I think have done the job already to a major extent. What you're seeing here is the sales increase, you see royalties and other operating income and you see it's slowed by 210 million certainly is one reason for that, we had huge impact last year positively with 428 million and but you also see that we had quite a momentum in the royalty income left us here with the reduction of 210. The cost of sales well very clear, we are investing here in our manufacturing network for fantastic reasons and that's showing here. I think it was indicated here and you see the impact that we have on the gross margin which I think is really specifically in the range that we have indicated to you furthermore, we don’t expect that momentum to stay over the second half of this year. And you look at M&A, well I think that's the average story. We have invested here in to that molecule which is doing fantastically well in the market you see that. It's roughly 80 million here and then you see really R&D and G&A we're definitely moving to a reasonable direction. Good, with that well I think a quick comment on the margins and I think when you look at the margins and allow me to exclude the sale of here which certainly impacted 2014 and if you exclude that you see basically the margins going up in every field and also for the group, so I think we're really on the right track here. When you look at the core net financial result at first sight, I think that looks a little bit like the usual. We have a reduction here well we did less on the debt redemption side, but when you look at the interest expense, it's less of an impact and you might say okay fine you did all the debt restructuring et cetera. Well the major point here to mention is that certainly our gross debt is much higher than less here at the same time. We have now CHF24.1 billion on the balance sheet in gross debt last year we had 19.1 billion nevertheless we evidently have lower interest expenses here and that certainly thanks to the debt restructuring and the good financing we have done. You see a negative impact really in the comparison in the net income from equity security and that's really BioFire. BioFire last year contributed positively 55 million. We have not seen that again in the first half of 2015 as expected, so I think that's the explanation here and then we have a couple of currency losses and basically driven by Venezuela in here as well. Good the tax rate. And you see quite a pick up here. And as we say this is not constant rate actuals that you're seeing and that's also the difference between the actuals. So plus 2.5 percentage points I think if you were looking at constant exchange rate tax rate it would be 25.5% two reasons for that first higher profit higher core profits in U.S. but the second one is certainly also the strengthening of the U.S. dollar here. As in the second half, we will certainly see the positive impact coming from the R&D tax credit if approved by the government and I think really the tax rate -- the group tax rate should be between 24% and 25% in constant rates. Good with that let's move onto the balance sheet. Not a lot to say here. I think on one hand you see on the left hand side that really the cash on marketable securities come down at half year 2015 compared to year-end 2014. And the point here is really we've paid the dividend and on top we've paid for our acquisitions and furthermore there's not a lot of incentive at the moment. We have liquidity in the banks in Switzerland. The other point is about the non-current assets you see an increase here of 6% in the constant exchange rate and that's certainly driven by goodwill and the increase of the intangible assets which is certainly driven by the acquisition that we have done. On the right hand side you see really the liabilities and here you see the non-current liabilities are going down in constant rates by 2% and two major reasons here long-term debt reduction as well as reduction of liabilities related to our pension plans. You see net debt on total assets at 25% and I'll come back to that. So let's talk about cash. And when you look at the operating free-cash-flow, development first half to first half here and we have a reduction of 1.3 billion and roughly half of that, it certainly driven by all the investments we have done in expanded a manufacturing work we have just mentioned one example, but also the investments in intangible assets roughly half of that is driving that then certainly in the first half of 2015 we are missing the proceed is coming from the sale of the that we have had in the first half of 2014. And on top of that well it’s about networking capital. When you look at the net trade working capital, I cannot be so unhappy, because when you really compare it to sales and put in the ratio. The ratio is about a stable nevertheless when we look at the table slide I think it something we can improve. Yes, Greece and Southern Europe. Let me first say, well visits another new topic. I think we feel with this topic since 2011 and you can take it from the slide, I think we reported on that couple of time and you see how nice we have reduced our exposure in that region by about 50%. So I would say we have get a lot of experience here implement type controls and you see in Greece in the first half it went up a little bit nevertheless I think given the magnitude of our group, it’s not really substantial what you see here. But very, very clear what we are calling to monitor is whether our contract and the terms and conditions respect this in the future. Group net debt, the group net debt developments, net debts going up from ’14 going as you can see year-end 2014 to 17.3 billion at half year 2015, which is not the pricing that our use of development as we have pay to dividend of 6.9 billion. And you see based on our operating free cash flow we were able to reduce that or let’s say to reduce the impact coming from the incident 50% already. Group balance sheet, net debt which our less as I promise, I’ll come back to that and what you seeing that the ratio has increased steadily we are now at 25%, we have that range between all in 15% and that we want to achieve net debt in ratio to . Let me say here from either the 0% is much more important and really the 15%. So I think that still comfortable what we have in here and nevertheless certainly we want to generation cash to bring that down. Now exchange rates. Big topic, what you see here on that slide is the impact on the sales growth and coming on one on left hand side, you see the impact really and the sales growth in constant rate and on the right hand side you see the sales growth in Swiss francs. And in between you see all the currency impact sounds that we have had in the first half of 2015. And one thing is remarkable here, I think no-body is really surprise about the impact of the euro which you’d see on the right hand side. You see on the left hand side so that we had quite a positive impact coming from the strengthening of the U.S. dollar. So I think that’s how done a little bit and mitigated, the negative impact coming from the euro. So okay, I think that’s a little bit to setup that we have see in the first half and when you then look on the next slide and you look at half year and you see really at half year the minus 3 percentage points that I’ve talked about already. You see the impact on the cooperating profit with minus 4% and you see the impact on core EPS of minus 7%. As shown the U.S. are roll here of between the core operating profit as a core EPS as our major debt it’s in U.S. or the major portion of our debt it’s in U.S. dollar. What’s now coming up as a full year? As you know how we model this, we are assuming that the exchange rate at June 30th 2015 just remain until the end of the year. And if this where the case at full year we will have and impact on sales of minus 6 percentage points and impact on the cooperated profit of minus 8 percentage points and an impact on core EPS of minus 10 percentage points. And as you can see on the left hand side of that slide that is once again and driven by the U.S. dollar development were by really the euro impact is pretty steady and really impacting us quarter-by-quarter. You see really that the U.S. dollar and in fact it’s now between the two developments we have seen for the average of the two years and that’s meanwhile its positive impact we have seen in the first half is quite diminished in the second half. Having said all this, we are seeing that the U.S. dollar has strengthened again. And if I apply today’s exchange rate and then we roughly have less of an impact at the full year and the impact reduced and by about a percentage point there would be for sales minus 5% points for the cooperative profit roughly minus 7% points and for - - EPS minus 9% points. Good, with that Severin has said everything about the guidance. We feel very comfortable with the guidance and expect to fulfill this at the upper part of the range. Thanks a lot and we are excited to take your questions. Thank you. Thank you, Alan. We are ready for question time. Can we have the first question please?

[Operator instructions] The first question is from Tim Race of Deutsche Bank. Please go ahead.

Hi there. Thanks for taking my question. The question is I suppose first. If you look at what you've shown on beach talking about ten new PDO who wants to be started with you talking about studies and Alzheimer's . Where first half of the year was below sales, where should we expect to go in terms of increases going forward. And another question on progression. Obviously its relatively high in the first half of the as soon as the increase, when should that stabilize and can you give a little bit of guidance on that. Then, just one question on clinically adjusted we're going to Phase II . Can you just tell us when we're going to see more data from that Phase II study we've requested. Thank you.

Ok. Thanks, Tim. So, first let me start with the and the . You know, we're not guiding at this time of the year in terms of for the future. But I'll give you a couple of elements in terms of how we think about things. You know, the first thing I would say on the R&D side, its just going to reinforce our philosophy on R&D which is basically on the research and early development side we generally keep, you know, they're very much in line from , but we've always said late stage we would fluctuate to accommodate the opportunities in the portfolio if we see things that are strong investment opportunities. I would say that as I look at the last four years or five years, we've been able to almost double the number of projects in our late stage development with approximately the same spend. I think we'll now have to look carefully as we go into 2016, about what does this mean in terms of our opportunities therapy which we are very excited about because as you know, in addition to our readouts that and programs that we've committed to, we have a number of phase I we readouts that will start to take place with the and other combinations with our other therapy agent with our new thing. Over the course of the next 12 to 18 months, we want to be flexible to go after those opportunities. In terms of all pharma as I said before, I think we have two really buyable assets here, but we will take this in a phased approach and a gated approach. Certainly we'll look first of all at growth, what can we do with the gross of these two compounds in here, because is a little further ahead, that's why we've elevated to those with to a level where we feel comfortable we've got, you know, a safe dose at a higher level than we did going into phase III. And we were looking at dose ranges of 3 to 5 times of what we saw back in our phase II whereas we came to know, we are reviewing that. But, I can assure you that we'll make prudent investments that go after the large opportunity if we feel that we have a dose that has a higher likelihood than certainly we had in phase II of success. So, these 2 pieces will come into account when we look at our . We'll be disappointed but I don't know if we'll also go after the opportunity that we feel are in the best interests of making sure that our innovation portfolio will continue to drive our growth also in the mid-term. Given the fact that we know that we'll have in the mid-term and we want to make sure that our innovation is in a good position to be able to outscript that. On the cards, I would say that we are investing in our manufacturing facility again. We're not going to give longer term guidance on this so but what I would say and what I did say is that it includes a better moderation and in the second half of the year, we have new plants and new facilities that will be coming online in 2016-2017, you know, and there will be an effect, of course, between those new plants coming online and getting the capacity up there and then an effect on standard costs. So, So do not want to guide specifically at this right now, but I would mentioned that -- line items we in the pharma division have a very strong attractive margin that we are working from and that's something as a base that we think about quite a bit when we look at forward guidance. On the PDL1 we would expect some data on that later in 2016 third this stage. I do not know exactly where yet, but hopefully still within this year.

The next question is from Sachin Jain from Bank of America. Please go ahead.

Hi. Sachin Jain from Bank of America. I will kick up for the financial and just pick on the line -- just touch pharma SG&A and plans -- salesforces in the next year what I imagine would be a substantial --. And then a couple of questions; on lebrikizumab, the phase 2 you are starting at -- does that have a biomarker program at -- asthma? And as we head into the asthma base wondering you could just give us a high level view of how -- differentiate here given the -- 60%ish is roughly ballpark --? And then on crenezumab, could you just clarify what -- phase 3? And I think in answer to last question you mentioned three to five times the prior phase to those and if actually case of that kind of goes in what efficacy and safety are you seeing relative to what you have reported -- ? And then just one final one on PDL1 in chemo combo, you have now got that in phase 3 in two chemos, so would you give some color as to how -- you are investigating chemo combo in phase 1? Thank you.

Thanks. So on the SG&A program -- I think it would be probably best to answer that question to see the data at -- rest assured that we understand this is a very competitive market and I think when we see the data we can have a very healthy dialogue around what type of a profile or product we have, we have heard -- and I have confidence around the high level data, but rest assured that we will not hesitate to invest in this market to succeed in this market in an -- it's a bit early I think to talk specifically about that. I am happy to answer this question after --. In terms of lebrikizumab, for -- to date we have not been successful at finding a very substantiated biomarker, I would say that intermune had a terrific body of data around -- probably one of the best sample of -- and IPF that are scientifics and - are plotting over and certainly looking for different characteristics and different mechanisms on the biomarker side. But scientific hypothesis that I am aware of right now that -- maybe an indicator in IPF [ph] so at this stage it's more exploratory and if we can find something that would helpful we will try, but we are really looking for the impact of the combination that lebrikizumab and Esbriet. Now you have another question on, I think fairly broad question, but I will do my best on lebrikizumab and how we will be feeling about our results in -- positive in the competition I guess. I think we are feeling very good. As you know we have had two large phase 2 attempts with this. And we have seen pretty consistent, greater than 60% reduction in exacerbations in the -- 8% to 10% FED1 [ph] improvements. And when I look across competitive landscape, either for the IL size, or the IL 13, that's strong data, that combined with - frequency that we expect to have at around every one per month it puts us in a confidence division in addition to our timeline, if you will be leading out next year which means we could be filing still next year and potentially launching in 2017. So when I put all those pieces together, I am feeling about lebrikizumab with all the caveats have gone away for phase 3 results. And certainly from a biomarker perspective we are looking we are looking at eosinophils as well as periostin, but I have to say this is clearly overlapping those populations. But we’re seeing two really robust large phase II trials that have indicated that without a doubt periostin seems to be predictive and we’ll continue to look at the phase III results for eosinophils and other biomarkers as well. I don't have a lot more to say in crenezumab. I kind of opened the bucket there but for competitive reasons I would not comment currently on the dose for crenezumab and other than to say that we’re confident that we can get a higher dose than we had in phase II to go into phase III and we’ll continue to explore that dose response curve with crenezumab. But I wanted to, for a variety of reasons I won’t get into details at this particular stage. And then finally in the chemo combo -- oh gosh, now I got to the end and then I've forgotten.

The question was whether we explore it for other cancer types.

Yes, for other caner types. I mean we are exploring it right now. I don't have a lot of data to give out at this time. But we are as you can imagine, our cancer immunotherapy group is constantly looking at when do we start another phase I trial, we do have a look at phase I in all tumor types and as we get more data on that, that helps us understand what are the tumors might be if you like chemo responses, I mean you can start to scientifically understand that it would probably those tumors have a good response rate in a first line setting, and then we could see a synergy with PDL1. But we’re not ready to disclose that yet for competitive reasons. But we are certainly looking at that to see how and if we expand the program in an aggressive way.

The next question is from Michael Leuchten from Barclays. Please go ahead.

Three questions, please. The obligatory one on your guidance, you've obviously stated that you're planning to come in at the upper end of the range; however, you've done 5% CR growth in the first quarter, 7% in the second quarter. Outside the Tamiflu headwind in the second half, I was just wondering what other headwinds you're looking at that doesn't allow you to be a bit more optimistic? The second question on Rituxan US growth. We have another quarter that was quite strong, then you alluded to price increases there. I'm just wondering if there's anything else going on. And then going back to lebrikizumab in atopic dermatitis, you also have a Phase II asset from Chugai, an IL-31 in atopic dermatitis. Are those two programs independent? Are you able to compare those two or is it too early to say? Thank you.

Thank you, Michael. So perhaps I can give it a try on guidance before I hand over to Dan. I mean we had the internal discussions, is it time for an upgrade, shall we stick to the original guidance, and it's a fact that being given the strong performance we saw in the first half and that's why we are optimistic and by this said that we expect to land at the upper range of the guidance. No, there are no specifics beyond Tamiflu. Tamiflu, of course will very much depend on how the flu season goes, but the underlying business remain strong. There are of course generic risks, not far specifically, but for the industry overall, we see in particular volatility market such as Russia the Middle East or Venezuela for example. But, no, the underlying performance is very strong, no specific risks on the horizon. So we are very optimistic and very positive about the remainder of this year. And on this positive note, I hand over to Dan.

So thanks Michael. Yes I can give you a little more color on Rituxan growth. About half of that growth in the US is priced and that the other half is really indolent non-Hodgkin's lymphoma volume growth. So we are continuing to see now good volume growth. And of course outside the United States we see strong volume growth still in many parts of the world with non-Hodgkin`s lymphoma. On lebrikizumab, yes its good you are student of our portfolio to pick-up on that Chugai component, and I think the first thing I would say just one of the strength of Roche Group having a diversity of approaches having multiple shots on goal with different mechanisms for different diseases like atopic dermatitis. The two programs are probably at different stages I mean lebrikizumab of course we have a lot of information on and a lot of patients, maybe not in atopic dermatitis but across multiple indications which gives us the confidence to move into a phase III with that. With the Chugai compound is at an earlier phase and we'll continue to look at that and evaluate that as well but I think it's -- we can say that we're fortunate to have multiple assets that we can look at for these diseases in needs.

Next question please.

The next question is from Alexandra Hauber from UBS. Please go ahead.

I have a relatively long question on manufacturing and two little questions. I do understand that you don't want to provide guidance on COGS, but I'm just looking to really better understand the various moving parts that affect your manufacturing part of the COGS before the royalties and collaboration agreement payments. So basically, right now those manufacturing costs are high because you're paying contract manufacturers, but what happens when you phase those out and you start shipping from your own facility? Are they just going to stay high or are they going to go even higher because you're having really high unit costs due to low capacity utilization? And then when exactly are you going to start that shipping? And I was just a little bit confused as Dan just mentioned several facilities that may start shipping in 2016 and 2017. I thought we're talking mainly about Vacaville. Could you clarify that? And then just more general on COGS, I always thought that 2016 would actually be a year where we see a step-down of pharma COGS just because you're benefiting from the expiration of the Queen's patent. Is all that capacity expansion going to more than offset that benefit you're getting on the royalty line? Two very quick questions; one on Esbriet. The US obviously saw a great quarter-on-quarter growth; in Europe was a little bit more pedestrian. I was just wondering whether the new IPF treatment guidelines, which has just been released last week by the ERS and several other organizations are going to help you here? And then one question on diagnostics; really in molecular diagnostics we've seen a couple of quarters as really, really strong growth and I was just wondering whether you could be a bit more specific what's driving that, especially to which extent any of your acquisitions may have contributed to that and if you could potentially quantify that acquisition effect? Thank you.

Thank you, Alexandra. Dan, you want to take that.

Maybe Alan you feed into this manufacturing question if you like. But Alexandra thanks for the question. I would just say a couple of assumptions you made in your question that I would probably clarify a bit. I mean the first one is higher manufacturing cost because of contract manufacturing. I mean we have an arrangement with contract manufacturers; we have our own manufacturing network. I would certainly not imply that contract manufacturers are the sole reason or the major reason for the increase here and we think it's by the way very strategically important to have these contract manufacturers to allow us to have flexibility in our system moving forward based upon demand curves as you can imagine have a lot of different projections as we go into the future. So we continue to have about 80% of our biological manufacturing internally about 20% externally. We think that's a good mix for our high value manufacturing segment. The other thing I would say is that our investment in the manufacturing to your point about Vacaville, we have investments in both drug substance and in drug product and drug product as you know is finish, build and package and deliver. We have a need for both right now both in terms of our current portfolio in terms of what we're able to deliver to the market and what's there for the future with the new portfolio. So certainly Vacaville is one key component of our manufacturing increase, but it's not only Vacaville, we have increases at other sites like Oceanside like Penzberg to enhance our drug product manufacturing as well. So we're not going to disclose all those details, but I think you'll be happy that we're building a robust network that allows us to fluctuate with the demands and the needs of our product line. You want to say anything else on manufacturing before I cover Esbriet; Alan or -- Yes I can and first of all I think to be how should I say balanced here I think very clear I think as Dan said I think we're investing heavily here I think you're right when you look 2016 I think the major impact is really coming from Vacaville other impacts are following especially when it comes to Penzberg and other locations here. And also I think the point is, I think there might be less royalty expenses which certainly helps to balance the impact, the negative impact out here. What is key to the case is, I think when Vacaville comes online, and it’s not like that we can sell that capacity right away. So there will be a couple of -- that will be an empty capacity. Now that have recess, we have high depreciation and all that other stuffs really comes in here. And but nevertheless I think really as there are a couple of mitigating effects which are robust yet to really get through this period.

Good and then Alexandra, actually it -- I think we had really good performance in U.S. and Europe. I mean Europe good strong growth after three years in the marketplace. As I said before we’re establishing our market leadership versus a competition. Relative to your comment around guidelines, I mean those have just been recently determined, not even rolled out yet. I think stand firm on our product profile and the differentiated nature of our product profile as we enter into the market. So we continue to be bullish on Europe and the U.S. in terms of Esbriet growth for the future?

Yes, thank you Alexandra. Couple of points on molecular diagnostics indeed, we've seen really good, gross. We've seen good momentum. A big part is in that virology segment, which is the largest. There again I pointed out the HPV continues gross above the market penetration in the U.S. and other markets. In terms of that assays in oncology we has the KRAS approval from the FDA. We now have the first full panel of all competitive with KRAS, VRAS and EGFR. So this is extension of the menu putting those in the platforms. And when we speak about platform it’s cobas 6800/8800, which we’re just introducing. This is a multi-year program of course with an instrument of that size. We have now somewhere around the 100 instruments placed in the market, so we continue to see good uptake and good reception and of course and it will be about adding menu to those platforms. And may be the last point that I wanted to make, of course, also what you're seeing in molecular is also the Ariosa which are from the acquisition that we made last year, which are now fully into the molecular sales report. This is largely non-invasive prenatal testing, which is doing well, and which is growing according to our expectations across the world actually.

The next question is from Tim Anderson from Bernstein. Please go ahead.

On Alzheimer's, I'm trying to make sure I understand your strategy here, because it seems like really you probably have to tak one compound or the other, because at the end of the day, if both were successful, it would be kind of awkward to sell both in the marketplace. Generally, you're going to need two Phase III trials for an approval of an Alzheimer's drug, like crenezumab or gantenerumab. You're now going to be running just one trial for each compound, at least as you've described it today. There's one running with gant; you've talked about a new one starting with crenezumab. I don't quite understand when you talk about the phasing of trials, given how long it takes to run these trials, it seems like you really would not want to run one trial to completion and then run a second one because that would take years and years. So is it conceivable here that you're really going to be running up to four Phase III trials, and what does that kind of say about the nature of R&D spending because these are very expensive programs? Second question is on ocrelizumab and just the filing strategy. In Q1 your deck said that you would file in relapsing, remitting, and as from 2015, you have Phase III results now, but you're talking about filing it in 2016, even though it's only July. Looks like you're waiting for the primary progressive data; I'm wondering why that's the plan now. It seems like a high risk indication that could potentially just merely delay the filing and not gain you anything if that data's negative and, of course, no-one's had success yet in primary or progressive.

On Alzheimer's strategy, I mean let me just take a step back and be clear on the decisions we’ve taken so far and then no way I am articulating that this is a comprehensive decision across both programs at this stage. I just want to be really clear on that. I mean we are still in the process of looking at dose escalations on both programs and we are still in the process of having regulatory discussions. So I would be cautious to interpret that we are going to go ahead with two trials for both programs right away. What we have said is that we will take crenezumab into a late stage trial, because we are at a stage of confidence with that program and stage of understanding the dose, that we will move with that. So on gantenerumab we still have work to do, I would say. And that work will inform of on exactly how that we will certainly inform you as we make those decisions. I would remind you again that first of all Alzheimer's is very big medical need. It's a very complex disease. We have an IGG1 and an IGG4. They are different, they attack different portions at different ways of the anti-amyloid, with crenezumab all three, gantenerumab with two. We are looking at data on APOE E4 carriersin terms of genetic manifestations, and is that information suggest that one mechanism would actually be more effective in one patient populations versus another. So there is a number of things that we are looking at, we are not definitive about our decision making here. But as we proceed with our decision making and our thought process I think your confusion I hope will be alleviated. Certainly we understand that doing two phase 3 trials sequentially would not make a lot of sense, because then you don’t have one compound, two trials that allow you to file. But we are just not in a position yet to be able to give you clarity on that, because we are still making decisions internally. So I hope that helps a little bit in terms of where we are at right now and this ground is moving and we are moving with that at this stage with analysis of the discussion. And ocrelizumab, yeah. Let me go back to that a second, because you are right. I mean I think and just three years ago we had initially put that filing timeline into 2015 and some things have changed since then. I mean one thing that's changed is that the standard timelines, if you like, in the industry for filing. Remember, these are very complex filings with lots and lots of data points. But Gilenya and Ticfidera, for instance, had filing timelines that were a bit longer than the assumptions that we made several years ago. So we kind of applied standard timelines to our filing timeline base upon the RMS ocrelizumab OPERA 1 an 2 results, and that pushes us into the beginning part of 2016. So that's what we are -- it has nothing to do with the data results or are components in the data. It really has to do with the length of time we think it will take to put together a very comprehensive file in a very professional way. To your comment PPMS, you know that it doesn’t really affects the timeline at this stage. You know that's going to readout in quarter three. It is a high risk opportunity for us. We will await the results. And if the results are positive then we will come back to you and have a discussion of what that means for the ocrelizumab program. But certainly our organization is completely engaged and committed now with all the data analysis that had to occur -- there is a lot, and preparing the file as quickly as possible.

The next question is from Matthew Weston of Credit Suisse. Please go ahead. Q – Matthew Weston: Thank you very much. Three questions if I can. Another one on filing timelines but a different product. With atezolizumab in bladder, you remain steadfast that you're looking for a 2016 filing. Now I realize it's always hard until all the data is in house, but given that you anticipate having the data pre-ESMO, if all was well with the OS data for bladder, do you still think it will take until 2016 for you to file atezo in that indication? Secondly on gantenerumab, can you just remind us what dose you're actually using today in Marguerite RoAD? And should we now consider Marguerite RoAD as much more of a hypothesis generating trial rather than a pivotal study, given the multiple changes you've already made in recruitment criteria, and now you're highlighting potential changes in dose? And then finally, I guess a big picture overview question. For very many years, Genentech was seen as the premier place to work in the biotech industry, and clearly, that's still the case. But given the plethora of biotech IPOs we now have seen in the US and internationally, there are many places to work in terms of biotech. So can you just quickly walk us through what you're seeing in terms of a talent environment, particularly in South San Francisco, what that means for compensation and the outlook for talent in biotech?

Right, thank you Mathew. Perhaps I can take your last question first regarding competition for talent really in the Bay area. Now first of all the management team, the organization overall is very stable. Our fluctuation rates remains very stable and actually below what you would see in the industry overall. So in spite of the biotech boom, in spite of the many IPOs which are happening overall, it has been relatively stable; but it is also true that there is competition for talent. And to be honest I would be worried if people would not hire people from Genentech anymore that would be a bad sign. And it’s been our task to provide an environment which is vibrating where people really believe they can make a difference. That's what we do every day and so far that is working well. And I have a lot of respect for Mike Varney, Ian Clark, the local management team; how they create a vibrant environment, also which is very specific culture in Genentech. Compensation is part of it. Of course we do watch what is happening around us and we always have to remain competitive. But it is not only compensation, it's much more. It's something really-really special about that place. They is focus on science, they focus on patients, the culture which you feel when you get there. And I think that is the most convincing element when it comes to not only a attracting talent but also retaining talent. And with this, back to atezolizumab. Exactly, atezolizumab. So thanks Mathew for the question. We’re obviously looking constantly at when the data is coming in on atezolizumab, how we can process that data, work with the FDA on our breakthrough therapy designations. We continue to be on the timeline to file in bladder and based upon a positive outcome with BIRCH and POPLAR in the very near term, in early 2016. We think that's the period of time that it will take to put together the two strong files. And certainly we would always look for acceleration opportunities, but that is our guidance and that is plan that we are working to. For gantenerumab, a couple of things, just to clarify your dose question. We’ve been exploring doses of 105 milligrams and 225 milligrams in the current ongoing trials. Now your point about Marguerite RoAD, I'm afraid it's a bit too premature for me to answer at this stage. This is part of the discussions and the part of the deliberation that we are having inside the organization right now and in discussion with regulatory authorities about this trial, what the utility of this trial could be in a forward program for gantenerumab at a higher dose. But at this stage I can’t really give you a definitive statement on Marguerite RoAD, other than suggest that we do continue to have it open into enroll patients and will determine what role that will play in our overall gantenerumab program as we make decisions on the entire program.

The next question is from Andrew Baum from Citi. Please go ahead.

Three questions. First, listening to you I'm getting a very clear impression that we shouldn't expect any significant M&A activity, certainly at least in pharma, to offset future biosimilar pressures, given the internal opportunities you've outlined as well as, I would say the high biotech valuations. I just want to make sure that that is exactly the right take-home to take. Second question, could you just give us your anticipation of how the conversion of Rituxan and Herceptin in Europe to the subcutaneous formulation is going to protect pricing when biosimilar entrants enter that market? If you have any indication on that, that would be interesting. And then finally on tax rate; there's obviously a higher expected tax rate, you side mix; should we expect a general migration upwards as a function of this, and is there anything that can be done to optimize or stabilize it against the increasing US contribution? Many thanks.

Thank you, Andrew. Perhaps I can reflect on the M&A activity. I fully agree with you. I think you have hit the nail. Valuations in general tend to be very high at the moment especially for later stage assets and as expected while we haven’t done much in that space. And you are right we need a lot of energy and focus on our internal programs and the many opportunities which are emerging. And certainly when it comes to big transactions there's always a risk that you get this traction and that you defocus from what really counts, and that is discovering and developing new medicines. So you are absolutely right. Having said that I would still say that we keep looking out for smaller very targeted bolt-on acquisitions in terms of products, in terms of technologies. We have seen this happening both in diagnostics and in pharma over the last year actually also some smaller acquisitions in the first half of this year and I expect this to continue. But you are right it is unlikely that you see bigger transactions in the current climate. And with this Dan over to you.

Yes sure. So on -- hi Andrew, on the subcutaneous just to give you again a couple of the facts where Herceptin is significantly ahead of MabThera in terms of penetration so far. It started about a year and half earlier. With Herceptin subq we're in around 44 countries, 45 countries right now and within that framework of countries we have a market share that's growing, but it's a little over 30% at this stage. With Rituxan we're just starting to launch that into, if you like, the major European markets of France and Italy. As you know Germany is not a market that is very prone to subcutaneous because of the way that infusions are reimbursed in that particular market. We've known all along that Herceptin and Rituxan subq is, it's like if one element in the biosimilar defense strategy, it's one chain link in the armor if you like. Clearly the sustainable and even stronger chain link is -- and as you know replacing the standard of care therapy with Perjeta, with Kadcyla, with Gadzya, with BCL-2, with ADC79b and we continue on those strategies obviously vehemently. But what I would say how does this affect biosimilar uptick? Well if you remember I mean from a healthcare savings standpoint, we're talking about taking infusions in particularly the Herceptin adjuvant setting, but also in the maintenance forms of MabThera where patients would be going sometimes just for these medicines and taking those infusions down from anywhere from two hours to three hours down to anywhere from 5 minutes to about 10 minutes or 15 minutes. And when you think about the totality of the cost of a healthcare system particularly in a socialized healthcare market, that does look at the totality of cost, I think this gives us a real advantage as biosimilars come out in terms of savings for the healthcare system with biosimilar pricing that we don’t expect in any way to be like small molecule pricing. So if you look at the price differential if you look at the savings in the healthcare system we think for some markets, for some institutions, it's going to be a really important way to defend our franchise. But again it's only one piece in the total armamentaria as we continue to change the way cancer is treated.

Alan, on the tax side.

Andrew, it’s a good question and I guess if you come back to this, because well I think on last live we had it down purpose, I think we have quite an upswing clear in the tax rate in the first half. As I said, a little bit of an extraordinary here, and especially driven by the strong U.S. dollar; and as I said what I expect constant currency rate, tax rate between 24% and 25%. Bob you made a good point, I think certainly. I think if the business stronger in the U.S. it has an implication on the tax rate. And among the other hand as you know, I think we're optimizing things here, as we do it generally in productivity and efficiency, so I think that's a steady movement that we put in here. And we will see what we can achieve, but I think that’s what I can say. For this year I think most important is you won’t see that tax rate at we've had as half year at full year.

The next question is from Keyur Parekh, Goldman Sachs. Please go ahead.

I've got three questions; first, Dan, if I can just perhaps push you a little bit more on the broader question about timelines? If I look at what your peer group have done from releasing headline data to filings, especially when it comes to the PD-1 products. It's in a matter of weeks. Even if I assume that you don't have the data in-house for either bladder or for lung until the end of September, I'm slightly confused why you can't file this year. Is there something I'm missing? Do you need both data sets before you can file? Are you going to pursue a simultaneous filing strategy? If you can just help us understand why it's going to take until 2016, that would be very appreciated. Secondly, you obviously initiated a Phase III on PDL1 plus chemo. If you can help me understand, or if you can help us, give us some color on what you have seen in the Phase I study that gives you confidence of starting of Phase III, that would be helpful. And then thirdly, just, Severin, on the broader corporate margins. I know Roche has previously stated that, given the high level of margins already, we should anticipate a modest increase going forward, rather than a step change. Given where the growth is coming from, can you help us reconcile that with the marginal contribution from the various franchises so be it the HER2 versus Avastin versus Rituxan, all of those I suspect are franchises which have a more corporate margins contribution. Thank you.

I can take your last question in terms of margin outlook. Now first of all, if we look at the first half here this year, if you exclude the filgrastim sale, actually on a corporate level margins have slightly gone up. They’ve slightly gone up. And as you've rightly said this was our guidance. So that’s what we expected and that is what is happening. Now if we look at further ahead, then I would say it all depends on our pipeline and the data readout. I mean, I have no doubt whatsoever. In the longer term margins will depend on the quality and the medical differentiation of our medicines. If our medicines are differentiated, if we truly move to standard-of-care then authorities around the world will reward this innovation and our pricing negotiation position will be very strong. Conversely if you are not able to renew our pipeline, if the differentiation would only be marginal, I have no doubts whatsoever the pressure on margins would be very high. So from where I stand today, I am confident for the long-term and that is really at a size of the strong late-stage pipeline, which we see emerging here. As you have seen, we have six new molecular entities where we have data readouts, fillings within a timeframe of only two years 2015, 2016. There's actually more to come thereafter and that’s what makes me confident. Having said that we also have to make sure that we successfully launched those assets, if you, if you look at ocrelizumab for example. But we -- you know whilst we intend to file beginning 2016, there will not be much sales in 2016. Iit will be only at post, towards the end of 2016. But of course we will buildup our M&D market infrastructure to make it a true success. And likewise as far as cancer immunotherapy, for example, is concerned I mean we have the very beginning, but as you have seen we are ramping up investments on the R&D side with many phase III starts. But I truly believe those are good investments and those are the investment to secure long term premium prices and our margins on a corporate level, right. And with this Dan

Well, just Severin mentioned, there are 6 NME's between now and end of 2016, that we’ll be getting data on filing and launching, I just remind you as we go into 2017, we get data on Lampalizumab and ACE910 as well. And these are all programs I think of course, they all have risk with them, but I would say that predominantly in the phase II trials we manage to derisk any of these, and many of these have to campaigning diagnostics and the targeted therapy approach that allows for both higher probability of success I would with these as well as good discussions with payers and regulators. Specifically on the timelines again thank you for asking one more time on atezolizumab and bladder cancer. What I can assure you is that we will do everything possible to file these as soon as possible they are both being looked at in parallel bladder and lung. So it's not that one is getting in the way of the other. They both happen to have similar timelines. Relative to your benchmarking, I don't know how to put that in the context, the wigs, I would remind you that this is our first filing for the NME and for the molecule and it requires a good and very strong and very professional but also as fast as possible we can get a together package. So I don't have more data to give you on that other than we look forward to filing those in early 2016. There is nothing data wise that is causing that to do a fast or slow. We’re expecting good results in those timelines. And of course with bladder we already have the results. And then finally thanks to the PDL1 chemo question. We will be presenting some extension data as I mentioned at ESMO. What I can say without referring to the data is we continue to see good durability and response in our chemo combos in first line lung and then obviously the longer the durable response the more we separate from any effect that you could hypothesize that you would get with chemo alone. So look forward to presenting that data and that update to further at ESMO.

Okay. Thank you, Dan. We are a bit overtime already, perhaps we can take one more question please.

The next question is from Richard Vosser, JP Morgan. Please go ahead.

First question on ACE910; when could we see trials for the non-inhibitor patients in hemophilia A? And one question just on the dosing; whether you would continue with weekly dosing in your proposed Phase III in the inhibitor patients or go for less frequent dosing straight away or move to that in the future. And then a couple of follow-up questions on atezo. Just one on the chemo combo; the commentary from some of the key opinion leaders was really one of skepticism, and I think you probably touched on the durability there in the answer to the last question, so has that had any impact on the recruitment of your Phase III trials? The interactions beyond ASCO with key opinion leaders, have you been able to change their minds? How's that gone down with them? Some idea there would be great. And then finally to the PDL1 assay, just wondering how the conversations with regulators have progressed now the POPLAR data is really in the public domain and whether any conversations have taken place towards a standardized assay. Thanks very much.

Thank you very much. So on the ACE910. We will be starting the inhibitor study already next year. And we expect to start the non-inhibitor study already next year. I remind you, in terms of recruitment for these trials -- because this is a different mechanism of action it's not a factor 8 replacement, that we don’t have to look for a particularly patient type in terms of experienced or non experienced for factor 8, which allows us to recruit I think in a good fashion. On your dosing question, not completely finalized yet, but we would hope to go with the dosing that's less frequent and once we clear, perhaps once every two weeks in the inhibitor population. And in the non-inhibitor population we are going to see if we can extend that dosing to an even greater interval. I do not know exactly what that would be, but we will be working potentially having it to be more or like once per month, but we will be looking at that. In terms of atazo-chemo combo, yes, interesting; of course we have great respect for and great collaboration support from the thought leader I personally did not walk away from ASCO thinking there was a negative impression on our chemo combo data. I am quite sure and hopefully there are people that are looking critically at all data at ASCO. But I have to say we haven’t felt that as a general sentiment number one, with the thought leaders that we are working with. We are just beginning to recruit now and open up the different five phase 3 programs. They are not at all enrolling patients yet. But we haven’t seen or noticed or experienced any difficulty with recruitment, particularly in this first lines I think where chemo as a standard of care and we are adding atezolizumab. So I think I wouldn’t expect to see an issue with recruitment. And then finally on the PDL1 assay, we are literally -- of course as you can imagine in discussions with the agency right now, with a bladder data where you know it's really a tumor cell expression or TC expression where PDL1. And we expect to get the final readout on POPLAR and BIRCH, which will have the aura that tumor cell or the immune cell readout the PDL1, in terms of the discussion around standards. I think it's a bit early yet for that. So I think the data will drive the standards not the other way around. So we look forward to first of all see the entirety of that pivotal trial for lung cancer having those discussions with the agency and then coming back and discussing with you how we see the PDL1 diagnostic markers being used in these disease states and other disease states.

Thank you very much, and thank you all for joining us for the briefing today. Have a good day and thank you for your interest in Roche.

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