On a pro-forma basis that included those two special factors, first-half net profit rose 15 per cent to 2.87 billion Swiss francs ($1.89 billion) on sales of 13.40 billion, up 7 percent.

Operating profit rose 17 per cent to 2.54 billion francs, in line with market expectations, while non-operating income rose 8 per cent to 1.0 billion francs despite the group's net debt of 3.1 billion francs.

Roche credited solid sales growth, improved operating margins and the strong non-operating profit for its profit rise despite continued pressure on prices.

Roche certificates opened firmer and outperformed other Swiss bluechips in early trading. They were up 225 francs or 1.31 per cent to 17,410 at 0735 GMT. Traders said speculation Roche could be included in Morgan Stanley's stock indexhelped support the certificates, Roche's most widely traded equity.

The vitamins scandal continued to weigh on Roche profits. In addition to a record $500 million fine Roche paid to settle US charges it conspired to fix prices, it took another $640 million charge to cover exposure to class-action suits and legal fees.

Chief executive Franz Humer said the new $640-million charge would probably suffice for 1999. "I would expect that this is the best estimate for the year--the fine of $500 million and these $640 (million) for class-actions (suits and legal fees) covers the US," he told Reuters in a telephone interview.

"In Europe I do not believe the investigation is advanced far enough that it will come to a conclusion this year." Humer said the new provision for the vitamins case "means that we are really in the final stages of the negotiations of the class-action and I hope we will be able to conclude that in the coming weeks".

Asked if any big strategic deals were in the works, he said: "Not that Iknow of, and I should know."

He declined to make a specific forecast for full-year profit, saying this depended on new product launches. "Will we be able to launch (influenza drug) Tamiflu this year? This could have a significant impact on sales as well as on our marketing costs," he said.