FACTORES LIMITANTES DE LAS POBLACIONES CINEGÉTICAS

Acquisitions – 2014: net assets acquired in millions of CHF

Pharmaceuticals Diagnostics Total

Intangible assets

– Product intangibles: in use 9 _{1,810 324 2,134}

– Product intangibles: not available for use 9 _{7,124 225 7,349}

– Technology intangibles: in use 9 _{155 – 155}

Deferred tax assets 4 _{481 6 487}

Inventories 760 2 762

Accounts receivable 37 – 37

Marketable securities 321 – 321

Cash and cash equivalents 340 5 345

Deferred tax liabilities 4 _{(3,345) (207) (3,552)}

Other net assets (liabilities) (455) (2) (457)

Net identifiable assets 7,228 353 7,581

Goodwill 8 _{2,666 404 3,070}

Total consideration 9,894 757 10,651

Cash 9,382 471 9,853

Deferred consideration 59 12 71

Contingent consideration 29 _{447 274 721}

Settlement of pre-existing relationship 6 – 6

Total consideration 9,894 757 10,651

Pharmaceuticals

Notes to the Roche Group Consolidated Financial Statements | Roche Group

hormone receptor-positive breast cancer and have failed current hormonal agents. Seragon is reported in the Pharmaceuticals Division. The total consideration was 988 million US dollars, of which 668 million US dollars was paid in cash, 65 million US dollars was deferred cash consideration which is being paid over the period from the date of control to the end of February 2015 and 255 million US dollars arose from a contingent consideration arrangement. The contingent payments are based on the achievement of performance-related milestones and the range of undiscounted outcomes is between zero and 1 billion US dollars.

Santaris Pharma A/S. On 2 September 2014 the Group acquired a 100% controlling interest in Santaris Pharma A/S (‘Santaris’), a private company based near Copenhagen, Denmark. Santaris has pioneered its proprietary Locked Nucleic Acid (LNA) platform that has contributed to an emerging era of RNA-targeting therapeutics. This new class of medicines has the potential to address difficult to treat diseases in a range of therapeutic areas. Santaris is reported in the Pharmaceuticals Division. The total consideration was 319 million US dollars, of which 254 million US dollars was paid in cash, 59 million US dollars arose from a contingent consideration arrangement and 6 million US dollars arose from the settlement of a pre-existing relationship. The contingent payments are based on the achievement of performance-related milestones and the range of undiscounted outcomes is between zero and 200 million US dollars.

InterMune, Inc. On 24 August 2014 the Group announced that it had entered into a merger agreement with InterMune, Inc. (‘InterMune’) to fully acquire InterMune at a price of 74 US dollars per share in an all-cash transaction. On 29 September 2014 the Group acquired a 100% controlling interest in InterMune, a publicly owned US company based in Brisbane, California that had been listed on Nasdaq. The acquisition has added a new medicine for idiopathic lung fibrosis, Esbriet, to the Group’s portfolio. Esbriet was approved by the FDA in October 2014. Idiopathic lung fibrosis is a progressive disease, which causes scarring of the lungs and has a survival rate of two to three years from diagnosis. Esbriet has the potential to make a considerable difference to the treatment of patients with this debilitating disease. InterMune is reported in the Pharmaceuticals Division. The total consideration was 8.8 billion US dollars which was paid in cash. On 29 September 2014 the Group issued 5.75 billion US dollars aggregate principal amount of senior notes to part finance the transaction (see Note 20).

Dutalys GmbH. On 18 December 2014 the Group acquired a 100% controlling interest in Dutalys GmbH (‘Dutalys’), a private company based in Vienna, Austria. Dutalys specialises in the discovery and development of fully human, bi-specific antibodies based on their proprietary DutaMab™ technology. The bi-specific antibodies developed with this platform are designed to provide novel, best-in-class molecules for several therapeutic areas. Dutalys is reported in the Pharmaceuticals Division. The total consideration was 294 million US dollars, of which 134 million US dollars was paid in cash and 160 million US dollars arose from a contingent consideration arrangement. The contingent payments are based on the achievement of performance-related milestones and the range of undiscounted outcomes is between zero and 355 million US dollars.

The identifiable assets acquired and liabilities assumed are set out in the table below. The amounts for Seragon, Santaris, InterMune and Dutalys are provisional based on preliminary information and valuations of the assets and liabilities and are subject to adjustment during 2015.

Pharmaceuticals acquisitions – 2014: net assets acquired in millions of CHF

Seragon Santaris InterMune Dutalys Total

Intangible assets

– Product intangibles: in use – – 1,810 – 1,810

– Product intangibles: not available for use 829 53 6,023 219 7,124

– Technology intangibles: in use – 155 – – 155

Deferred tax assets 10 10 461 – 481

Inventories – – 760 – 760

Accounts receivable – 2 35 – 37

Marketable securities – – 321 – 321

Cash and cash equivalents 16 3 321 – 340

Deferred tax liabilities (296) (49) (2,953) (47) (3,345)

Other net assets (liabilities) (12) (14) (429) – (455)

Net identifiable assets 547 160 6,349 172 7,228

Roche Group | Notes to the Roche Group Consolidated Financial Statements

The fair value of the intangible assets is determined using an excess earning method that is based on management forecasts and observable market data for discount rates, tax rates and foreign exchange rates. The present value is calculated using a risk-adjusted discount rate of 9.5% for Seragon, 8.9% to 9.4% for Santaris and 9.0% to 9.5% for InterMune. The valuations were performed by independent valuers. The intangible asset allocation for Dutalys is based on historical experience of similar acquisitions and the valuation will be completed by an independent valuer in the first half of 2015.

The fair value of InterMune inventories is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort to complete and sell the inventories. The InterMune accounts receivable comprise of gross contractual amounts due of 35 million Swiss francs which are all expected to be collectable at the date of acquisition.

Goodwill represents a control premium, the acquired work force and the synergies that can be expected from integrating the acquired companies into the Group’s existing business. For InterMune the control premium represents the premium paid over the traded market price to obtain control of the business. None of the goodwill is expected to be deductible for income tax purposes.

Directly attributable transaction costs of 15 million Swiss francs are reported in the Pharmaceuticals operating segment within general and administration expenses and mainly relate to the InterMune acquisition.

In the three months to 31 December 2014 InterMune contributed revenue of 44 million Swiss francs and a net loss of 292 million Swiss francs to the results reported for the Pharmaceuticals Division and the Group. If the acquisition had occurred on 1 January 2014 management estimates that InterMune would have contributed revenue of 144 million Swiss francs and a net loss of 790 million Swiss francs. This information is provided for illustrative purposes only and is not necessarily indicative of the results of the combined Group that would have occurred had InterMune actually been acquired at the beginning of the year, or indicative of the future results of the combined Group. The impact of the Seragon, Santaris and Dutalys acquisitions on the 2014 results were not material.

Diagnostics

Genia Technologies, Inc. On 3 June 2014 the Group acquired a 100% controlling interest in Genia Technologies, Inc. (‘Genia’), a US private company based in California. Genia is developing a single-molecule, semiconductor-based DNA sequencing platform using nanopore technology. Genia is reported in the Diagnostics operating segment as part of the Sequencing business. The total consideration was 257 million US dollars, of which 125 million US dollars was paid in cash and 132 million US dollars arose from a contingent consideration arrangement. The contingent payments are based on the achievement of performance-related milestones that may arise until June 2024 and the range of undiscounted outcomes is between zero and 225 million US dollars.

IQuum, Inc. On 10 June 2014 the Group acquired a 100% controlling interest in IQuum, Inc. (‘IQuum’), a US private company based in Massachusetts. IQuum has developed the Laboratory-in-a-tube (Liat™) system, which enables healthcare workers to perform rapid molecular diagnostic testing in a point-of-care setting, closer to patients and with minimal training. IQuum is reported in the Diagnostics operating segment as part of the Molecular Diagnostics business. The total consideration was 432 million US dollars, of which 282 million US dollars was paid in cash and 150 million US dollars arose from a contingent consideration arrangement. The contingent payments are based on the achievement of performance-related milestones that may arise until the first half of 2017 and the range of undiscounted outcomes is between zero and 175 million US dollars. In addition, the Group acquired 100% controlling interest in the related intellectual property holding company for a cash consideration of 35 million US dollars.

Bina Technologies, Inc. On 19 December 2014 the Group acquired a 100% controlling interest in Bina Technologies, Inc. (‘Bina’), a US private company based in Redwood City, California. Bina provides a big data platform for centralised management and processing of next generation sequencing data. Bina’s proprietary on-market Genomic Management Solution, Bina-GMS, empowers basic, translational and academic researchers to perform fast and scalable analyses to maximise the value of genomic data. The acquisition of Bina will accelerate product development and global commercialisation of the Bina-GMS as an enterprise software system supporting multiple sequencing technologies while developing a solution for Roche sequencing systems. Bina is reported in the Diagnostics operating segment as part of the Sequencing business. The total consideration was 114 million US dollars, of which 78 million US dollars was paid in cash, 13 million US dollars was deferred cash consideration which will be paid over the period from the date of control to the end of 2017 and 23 million US dollars arose from a contingent consideration arrangement. The contingent payments are based on the achievement of performance-related milestones and the range of undiscounted outcomes is between zero and 30 million US dollars.

Notes to the Roche Group Consolidated Financial Statements | Roche Group

The identifiable assets acquired and liabilities assumed are set out in the table below. The amounts for Bina are provisional based on preliminary information and valuations of the assets and liabilities and are subject to adjustment during 2015.

Diagnostics acquisitions – 2014: net assets acquired in millions of CHF

Genia IQuum Bina Total

Intangible assets

– Product intangibles: in use – 212 112 324

– Product intangibles: not available for use 225 – – 225

Deferred tax assets 5 1 – 6

Inventories – 2 – 2

Cash and cash equivalents – 4 1 5

Deferred tax liabilities (90) (72) (45) (207)

Other net assets (liabilities) – (1) (1) (2)

Net identifiable assets 140 146 67 353

Goodwill 89 271 44 404 Total consideration 229 417 111 757 Cash 112 283 76 471 Deferred consideration – – 12 12 Contingent consideration 117 134 23 274 Total consideration 229 417 111 757

The fair value of the intangible assets is determined using an excess earning method that is based on management forecasts and observable market data for discount rates, tax rates and foreign exchange rates. The present value is calculated using a risk-adjusted discount rate of 13.7% for Genia and 10.0% for IQuum. The valuations were performed by independent valuers. The intangible asset allocation for Bina is based on historical experience of similar acquisitions and the valuation will be completed by an independent valuer in the first half of 2015.

Goodwill represents a control premium, the acquired work force and the synergies that can be expected from integrating the acquired companies into the Group’s existing business. None of the goodwill is expected to be deductible for income tax purposes.

Directly attributable transaction costs of 4 million Swiss francs are reported in the Diagnostics operating segment within general and administration expenses.

The impact of the Genia, IQuum and Bina acquisitions on the 2014 results reported for the Diagnostics Division and the Group were not material.

Future acquisitions

Ariosa Diagnostics, Inc. On 2 December 2014 the Group announced an agreement to acquire a 100% controlling interest in Ariosa Diagnostics, Inc. (‘Ariosa’), a US private company based in San Jose, California. On 12 January 2015 the transaction closed. Ariosa is a molecular diagnostics testing service provider that provides a highly targeted and accurate non-invasive prenatal testing (‘NIPT’) service through their CLIA laboratory using cell-free DNA (cfDNA) technology. Ariosa’s proprietary Harmony™ Prenatal Test is a blood test that is performed as early as 10 weeks into pregnancy. By evaluating fetal cfDNA found in maternal blood, the test is designed to assess the risk of Down syndrome and other genetic abnormalities. Specifically, the test assesses the risk of trisomies 13, 18, and 21, which are indicative of an extra chromosome in the fetus that can lead to severe genetic conditions. The Harmony™ Prenatal Test has been validated to CLIA requirements by a robust clinical data set and supported by clinical studies. Ariosa will be reported in the Diagnostics operating segment as part of the Sequencing business. The purchase consideration is 400 million US dollars in cash and up to 225 million US dollars from a contingent consideration arrangement.

Roche Group | Notes to the Roche Group Consolidated Financial Statements

Foundation Medicine, Inc. On 12 January 2015 the Group announced an agreement to enter into a broad strategic collaboration with Foundation Medicine, Inc. (‘FMI’) and to acquire a majority interest in FMI of up to 56.3% on a fully diluted basis. FMI is a publicly owned US company based in Cambridge, Massachusetts that is listed on Nasdaq under the stock code ‘FMI’. The Group will tender for approximately 15.6 million FMI shares at 50 US dollars per share with an aggregate tender value of approximately 780 million US dollars and will invest 250 million US dollars in acquiring 5 million newly issued FMI shares at 50 US dollars per share. The closing of the transaction is expected in the second quarter of 2015. The transaction will further advance FMI’s market-leading position in molecular information and genomic analysis while providing the Group with a unique opportunity to optimise the identification and development of novel treatment options for cancer patients. The partnership includes both a broad R&D collaboration with the potential for more than 150 million US dollars funding by the Group to accelerate FMI’s new product development initiatives, optimise treatments for oncology patients, and better design and understand the results of clinical trials based on molecular information, as well as commercial collaboration agreements aimed at expanding the global sales efforts for FMI’s current and future products. It is planned that FMI will be reported in the Pharmaceuticals Division.

Trophos. On 16 January 2015 the Group announced an agreement to acquire a 100% controlling interest in Trophos, a privately owned company based in Marseille, France. The closing of the transaction is expected in the first quarter of 2015. Trophos’ proprietary screening platform generated olesoxime (TRO19622), which is being developed for spinal muscular atrophy (‘SMA’), a rare and debilitating genetic neuromuscular disease that is most commonly diagnosed in children. Results from a pivotal phase II clinical trial with olesoxime in SMA showed a beneficial effect on the maintenance of neuromuscular function in individuals with Type II and non-ambulatory Type III SMA, as well as a reduction in medical complications associated with the disease. Trophos will be reported in the Pharmaceuticals Division. The purchase consideration is 120 million euros in cash and up to 350 million euros from a contingent consideration arrangement.

Acquisitions – 2013

Constitution Medical Investors, Inc. On 1 July 2013 the Group acquired a 100% controlling interest in Constitution Medical Investors, Inc. (‘CMI’), a US private company based in Massachusetts. CMI is the developer of a highly innovative hematology testing system, which is designed to provide faster and more accurate diagnosis of blood-related diseases, helping to improve patient care. CMI is reported in the Diagnostics operating segment as part of the Professional Diagnostics business area. The total consideration was 286 million US dollars, of which 220 million US dollars was paid in cash and 66 million US dollars arose from a contingent consideration arrangement. The contingent payments were based on the achievement of performance-related milestones that may arise until the end of 2017 and the range of undiscounted outcomes was between zero and 255 million US dollars. The identifiable assets acquired and liabilities assumed are set out in the table below.

Acquisitions – 2013: net assets acquired in millions of CHF

CMI

Intangible assets – Product intangibles: not available for use 262

Deferred tax liabilities (98)

Other net assets (liabilities) 1

Net identifiable assets 165

Goodwill 101

Total consideration 266

Cash 205

Contingent consideration 29 ₆₁

Total consideration 266

Cash flows from business combinations

Acquisitions: net cash outflow in millions of CHF

2014 2013

Pharmaceuticals Diagnostics Total Pharmaceuticals Diagnostics Total

Cash consideration paid (9,382) (471) (9,853) – (205) (205)

Deferred consideration paid 19 _{(7) – (7) – – –}

Notes to the Roche Group Consolidated Financial Statements | Roche Group