Wednesday, Apr 14, 1999

Genentech Confirms Settlement Agreement with U.S. Government

Product Sales Increased 42 Percent Driven by Sales of Herceptin and Rituxan -- April 14, 1999 --

Genentech, Inc. (NYSE: GNE) today confirmed that it has reached a settlement agreement with the U.S. Attorney for the Northern District of California regarding Genentech's promotion of human growth hormone in the late 1980's and early 1990's. This agreement was reported as pending last week.

Genentech will pay a criminal fine and restitution in the total amount of $50 million with respect to a charge that the company promoted its human growth hormone from 1985-1994 for medical uses that had not been approved by the U.S. Food and Drug Administration (FDA).

The settlement amount, which was recorded as a special charge to Genentech's previously reported first-quarter 1999 earnings, is not expected to have any ongoing financial impact, nor is it expected to affect Genentech's long-term corporate strategy.

"As the U.S. Attorney has said, the promotional practices at issue stopped in 1994, and the company took steps at that time to reform its practices," said Arthur D. Levinson, Ph.D., Genentech's president and chief executive officer. "We chose to settle the matter in order to avoid the cost and distraction of protracted litigation. We're pleased to get the issue behind us so that we can continue to focus on our important work of meeting the needs of patients and building shareholder value."

In 1994, Genentech took a number of actions both on its own initiative and working with the FDA to address the agency's concerns about the promotion of its human growth hormone product. These steps included conducting training programs for employees and a campaign, which included extensive follow-up, to educate physicians about the FDA-approved indications for human growth hormone.

Genentech began its commitment to the understanding and treatment of human growth and development more than 15 years ago by pioneering the development of Protropin®, the first recombinant growth hormone product, as well as the company's first marketed product. Since then, the company has expanded its family of growth hormone products to include Nutropin® and Nutropin AQ®. Protropin is indicated for growth hormone deficiency in children, and Nutropin and Nutropin AQ are indicated for growth hormone deficiency in children and adults, growth failure associated with chronic renal insufficiency and short stature associated with Turner syndrome.

Genentech, Inc. is a leading biotechnology company that discovers, develops, manufactures and markets human pharmaceuticals for significant unmet medical needs. Twelve of the currently marketed biotechnology products stem from Genentech science. Genentech markets seven biotechnology products directly in the United States. The company has headquarters in South San Francisco, California, and is traded on the New York Stock Exchange and the Pacific Exchange under the symbol GNE.

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