Financial Highlights (Unaudited)
(In millions, except per share, stock price and employee data)

% Change from Preceding Year Years ended December 31, 2006 2005 2004  2006/2005  2005/2004             Product sales $7,640 $5,488 $3,749 39% 46%             Total operating revenues 9,284 6,633 4,621 40    44                Cost of sales 1,181 1,011 673 17    50                 COS as a % of sales 15% 18% 18%                     Research and development expenses(1) 1,773 1,262 948 40    33                 R&D as a % of revenues 19% 19% 21%                   Marketing, general and administrative expenses(1) 2,014 1,435 1,088 40    32                 MG&A as a % of revenues 22% 22% 24%                     Collaboration profit sharing 1,005 823 594 22    39                Recurring charges related to redemption(2) 105 123 145 (15)   (15)               Special items: litigation-related(3) 54 58 37 (7)   57                Pretax operating income 3,152 1,921 1,136 64    69                 Pretax operating margin 34% 29% 25%                     Net income 2,113 1,279 785 65    63                Diluted earnings per share 1.97 1.18 0.73 67    62                Non-GAAP net income(4) $2,390 $1,387 $ 894 72% 55%             Non-GAAP net income as a % of revenues(4) 26% 21% 19%                     Non-GAAP diluted EPS(4) 2.23 1.28 0.83 74    54                Shares used to compute diluted earnings per share 1,073 1,081 1,079 (1)    0                Shares outstanding at year-end 1,053 1,054 1,047 (0)    1                Stock price at year-end $81.13 $92.50 $54.44 (12)    70                No cash dividends were paid                 Cash, cash equivalents, short-term investments, long-term marketable debt and equity securities and equity hedge instruments $4,375 $3,887 $2,802 13   39                Property, plant and equipment, net 4,173 3,349 2,091 25    60                Total assets 14,842 12,147 9,403 22    29                Long-term debt(5),(6) 2,204 2,083 412 6    *                Total liabilities 5,364 4,677 2,621 15    78                Total stockholders' equity 9,478 7,470 6,782 27    10                Capital expenditures(6) 1,214 1,400 650 (13)    115                Number of employees at year-end 10,533 9,563 7,646 10    25

(1) Amount in 2006 includes employee stock-based compensation expense due to our adoption of FAS 123R on January 1, 2006. In 2006, $140 million of employee stock-based compensation expense was allocated to research and development expenses, and $169 million of employee stock-based compensation expense was allocated to marketing, general and administrative expenses.

(2) Represents the amortization of other intangible assets in 2006, 2005 and 2004, related to the June 30, 1999 redemption of our Special Common Stock (Redemption) and the effects of push-down accounting.

(3) Amount in 2006 includes accrued interest and bond costs relate to the City of Hope (COH) trial judgment. Amount in 2005 includes accrued interest and bond costs related to the COH trial judgment and net amounts paid related to other litigation settlements. Amount in 2004 includes accrued interest and bond costs related to the COH trial judgment, net of a released accrual on a separate litigation matter. For further information on these items, see the "Results of Operations" section of Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of Part II of our 2006 Form 10-K on file with the Securities and Exchange Commission (SEC).

(4) Non-GAAP amounts exclude recurring charges related to the Redemption, litigation-related special items, and in 2006, also exclude employee stock-based compensation expense recognized under FAS 123R, and all related tax effects. GAAP net income as a percentage of operating revenues was 23 percent in 2006, 19 percent in 2005 and 17 percent in 2004. See pages 26-27 for the full reconciliation between our non-GAAP and GAAP numbers. For further information on these items, see the "Results of Operations" section of Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of Part II of our 2006 Form 10-K on file with the SEC.

(5) Includes approximately $2 billion related to our debt issuance in July 2005. Amount in 2005 is net of the repayment of $425 million to extinguish the consolidated debt and noncontrolling interest related to a synthetic lease obligation. For further information, see Note 8, "Leases, Commitments and Contingencies" in Part II, Item 8 of our 2006 10-K on file with the SEC.

(6) Excludes approximately $104 million in 2006 and $94 million in 2005 of capitalized costs related to our accounting for construction projects of which we are considered to be the owner during the construction period. We have recognized $216 million and $94 million as a construction financing obligation in long-term debt as of December 31, 2006 and 2005, respectively.

* Calculation not meaningful.

All share and per share amounts reflect the May 2004 two-for-one split of Genentech Common Stock.

(Unaudited)
(In millions, except per share)

Total Operating Revenues	Net Income	Diluted Earnings Per Share
Contract Revenue Royalties Product Sales	Non-GAAP(1) GAAP	Non-GAAP(1) GAAP

(1) Non-GAAP earnings per share and non-GAAP net income exclude recurring charges related to the 1999 Redemption, litigation-related special items, and in 2006, also exclude employee stock-based compensation expense recognized under FAS 123R, and all related tax effects. See pages 26-27 for the full reconciliation between our non-GAAP and GAAP numbers. All share and per share amounts reflect the May 2004 two-for-one split of Genentech Common Stock.