ASTRAZENECA
`
`ANNUAL REPORT AND
`FORM 20-F INFORMATION 2007
`
`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007
`
`CONTACT
`INFORMATION
`
`REGISTERED OFFICE
`AND CORPORATE
`HEADQUARTERS ADDRESS
`AstraZeneca PLC
`15 Stanhope Gate
`London W1K 1LN
`UK
`Tel: +44 (0)20 7304 5000
`Fax: +44 (0)20 7304 5151
`
`US DEPOSITARY
`JPMorgan Chase Bank
`JPMorgan Service Center
`PO Box 3408
`South Hackensack
`NJ 07606-3408
`US
`Tel (toll free in the US):
`888 697 8018
`Tel (outside the US):
`+1 (201) 680 6630
`
`ASTRAZENECA.COM
`
`INVESTOR RELATIONS
`CONTACTS
`UK: as above or e-mail
`IR@astrazeneca.com
`Sweden:
`AstraZeneca AB
`SE-151 85 Södertälje
`Sweden
`Tel: +46 (0)8 553 260 00
`Fax: +46 (0)8 553 290 00
`or e-mail
`IR@astrazeneca.com
`US:
`Investor Relations
`AstraZeneca
`Pharmaceuticals LP
`1800 Concord Pike
`PO Box 15437
`Wilmington
`DE 19850-5437
`US
`Tel: +1 (302) 886 3000
`Fax: +1 (302) 886 2972
`
`REGISTRAR AND
`TRANSFER OFFICE
`Equiniti Limited
`Aspect House
`Spencer Road
`Lancing
`West Sussex
`BN99 6DA
`UK
`Tel (freephone in the UK):
`0800 389 1580
`Tel (outside the UK):
`+44 (0)121 415 7033
`
`SWEDISH SECURITIES
`REGISTRATION CENTRE
`VPC AB
`PO Box 7822
`SE-103 97 Stockholm
`Sweden
`Tel: +46 (0)8 402 9000
`
`This Annual Report and
`Form 20-F Information
`is also available online at
`astrazeneca.com/
`annualreport2007
`
`AstraZeneca Exhibit 2101
`Mylan v. AstraZeneca
`IPR2015-01340
`
`Page 1 of 208
`
`

`
`INTRODUCTION
`AstraZeneca and our year in brief
`Financial highlights
`Chairman’s statement
`Chief Executive Offi cer’s review
`
`01
`01
`02
`04
`05
`
`08
`
`09
`13
`17
`
`18
`
`27
`
`28
`31
`33
`33
`35
`37
`
`38
`50
`53
`56
`59
`
`63
`66
`68
`69
`73
`75
`77
`77
`
`78
`
`DIRECTORS’ REPORT
`Goals, strategy and
`performance measurement
`Business environment
`Business organisation
` > Board of Directors at
`31 December 2007
` > Chief Executive Offi cer, delegation of
`authority and Senior Executive Team 20
`Our resources, skills and capabilities 21
` > Medicines
`21
` > Research and development
`23
` > R&D governance and
`portfolio management
` > Development pipeline
`at 31 January 2008
` > Sales and marketing
` > Intellectual property
` > Supply and manufacturing
` > People
` > Main facilities
`Corporate governance
`and managing risk
`Cardiovascular (CV) medicines
`Gastrointestinal (GI) medicines
`Neuroscience medicines
`Oncology medicines
`Respiratory and Infl ammation
`(R&I) medicines
`Infection medicines
`Other businesses
`Geographical review
`In the global community
`Environmental review
`Financial review
` > Measuring performance
` > Business background and
`major events affecting 2007
` > Results of operations – summary
`analysis of year to 31 December 2007 79
` > Financial position, including
`81
`cash fl ow and liquidity
`83
` > Acquisition of MedImmune
`84
` > Restructuring and synergy costs
` > Capitalisation and shareholder return 84
` > Future prospects
`84
` > Financial risk management policies 85
` > Critical accounting policies
`and estimates
` > Off-balance sheet transactions,
`contingent liabilities and commitments 90
` > Post-employment benefi ts
`92
`
`86
`
` > International accounting transition 92
` > New accounting standards
`92
` > Sarbanes-Oxley Act section 404
`92
` > Results of operations – summary
`analysis of year to 31 December 2006 93
` > Financial position, including
`cash fl ow and liquidity – 2006
`
`95
`
`REMUNERATION REPORT
`
`98
`
`116
`
`116
`
`116
`
`117
`
`117
`118
`
`FINANCIAL STATEMENTS
`Preparation of the Financial
`Statements and Directors’
`responsibilities
`Directors’ responsibilities for,
`and report on, internal control
`over fi nancial reporting
`Auditors’ reports on the Financial
`Statements and on internal control
`over fi nancial reporting
`(Sarbanes-Oxley Act section 404)
`Independent auditors’
`report to the members of
`AstraZeneca PLC (Group)
`Consolidated income statement
`Consolidated statement of
`118
`recognised income and expense
`119
`Consolidated balance sheet
`Consolidated cash fl ow statement 120
`Accounting policies (Group)
`121
`Notes to the Financial
`124
`Statements (Group)
`124
` 1 Operating profi t
` 2 Restructuring and synergy costs 124
` 3 Finance income and expense
`125
` 4 Taxation
`125
` 5 Earnings per $0.25 Ordinary Share 127
` 6 Segment information
`128
` 7 Product sales information
`130
` 8 Property, plant and equipment
`131
` 9 Goodwill
`132
` 10 Intangible assets
`133
` 11 Other investments
`134
` 12 Inventories
`134
` 13 Trade and other receivables
`135
` 14 Cash and cash equivalents
`135
` 15 Interest bearing loans
`and borrowings
` 16 Financial risk management
`136
`objectives and policies
`138
` 17 Financial instruments
`142
` 18 Trade and other payables
` 19 Provisions for liabilities and charges 142
` 20 Statement of changes in equity 143
` 21 Reserves
`144
` 22 Minority interests
`145
` 23 Dividends to shareholders
`145
` 24 Acquisitions of business operations 145
` 25 Post-retirement benefi ts
`148
`
`135
`
`153
`
`26 Employee costs and share option
`plans for employees
` 27 Commitments and
`158
`contingent liabilities
`174
` 28 Leases
` 29 Statutory and other information 175
`30 Share capital of parent company 176
`Principal subsidiaries
`177
`Independent auditors’
`report to the members of
`AstraZeneca PLC (Company)
`Company balance sheet
`Accounting policies (Company)
`Notes to the Financial
`Statements (Company)
` 1 Fixed asset investments
` 2 Other debtors
` 3 Non-trade creditors
` 4 Loans
` 5 Reserves
` 6 Reconciliation of movement in
`shareholders’ funds
` 7 Share capital
` 8 Commitments and
`183
`contingent liabilities
` 9 Statutory and other information 183
`Group fi nancial record
`184
`
`178
`179
`180
`
`181
`181
`181
`181
`181
`182
`
`182
`182
`
`ADDITIONAL INFORMATION
`Shareholder information
`Risk
`Corporate information
`Cross-reference to Form 20-F
`Glossary
`
`186
`186
`193
`200
`201
`202
`
`Cautionary statement regarding
`forward-looking statements
`The purpose of this Annual Report and Form 20-F
`Information is to provide information to the members
`of the Company. In order, among other things, to
`utilise the ‘safe harbour’ provisions of the US Private
`Securities Litigation Reform Act 1995 and the UK
`Companies Act 2006, we are providing the following
`cautionary statement: This Annual Report and
`Form 20-F Information contains certain forward-
`looking statements with respect to the operations,
`performance and fi nancial condition of the Group.
`Although we believe our expectations are based
`on reasonable assumptions, any forward-looking
`statements, by their very nature, involve risks and
`uncertainties and may be infl uenced by factors that
`could cause actual outcomes and results to be
`materially different from those predicted. The forward-
`looking statements refl ect knowledge and information
`available at the date of the preparation of this Annual
`Report and Form 20-F Information and the Company
`undertakes no obligation to update these forward-
`looking statements. We identify the forward-looking
`statements by using the words ‘anticipates’, ‘believes’,
`‘expects’, ‘intends’ and similar expressions in such
`statements. Important factors that could cause actual
`results to differ materially from those contained in
`forward-looking statements, certain of which are
`beyond our control, include, among other things,
`those factors identifi ed in the section ‘Risk’ on
`pages 193 to 199 of this document. Nothing in
`this Annual Report and Form 20-F Information
`should be construed as a profi t forecast.
`© AstraZeneca PLC 2008
`
` Trade marks
`Trade marks of the AstraZeneca group of companies
`appear throughout this document in italics.
`AstraZeneca, the AstraZeneca logotype and the
`AstraZeneca symbol are all trade marks of the
`AstraZeneca group of companies. Trade marks
`of companies other than AstraZeneca appear with
`a ® or ™ sign and include: Abraxane®, a registered
`trade mark of Abraxis BioScience, Inc.; Aspirin™,
`a trade mark of Bayer AG; Avastin™, a trade mark of
`Genentech, Inc.; BiTE™, developed by Micromet, Inc.
`and MedImmune, Inc.; Cubicin™, a trade mark of
`Cubist Pharmaceuticals, Inc.; CyDex Captisol™,
`a trade mark of CyDex Pharmaceuticals Inc.;
`CytoFab™, a trade mark of Protherics, Inc.; Herceptin™,
`a trade mark of Genentech, Inc.; Humira™, a trade
`mark of Abbott Biotechnology Ltd.; Lean Sigma™,
`a trade mark of Smallpiece Enterprises Limited;
`Prinivil™, a trade mark of Merck & Co., Inc.; Seretide™,
`a trade mark of GlaxoSmithKline; Taxotere™, a trade
`mark of Aventis Pharma SA; TriCor™, a trade mark of
`Fournier Industrie et Santé; Zocor™, a trade mark of
`Merck & Co., Inc.; and Zyprexa™, a trade mark of
`Eli Lilly and Company.
`Use of terms
`In this Annual Report and Form 20-F Information,
`unless the context otherwise requires, ‘AstraZeneca’,
`‘the Group’, ‘we’, ‘us’ and ‘our’ refer to AstraZeneca
`PLC and its consolidated entities.
`Statements of dates
`Except as otherwise stated, references to days and/or
`months in this Annual Report and Form 20-F Information
`are references to days and/or months in 2007.
`
`Statements of competitive position
`Except as otherwise stated, market information
`in this Annual Report and Form 20-F Information
`regarding the position of our business or products
`relative to its or their competition is based upon
`published statistical data for the 12 months ended
`30 September 2007, obtained from IMS Health,
`a leading supplier of statistical data to the
`pharmaceutical industry. Except as otherwise
`stated, these market share and industry data from
`IMS Health have been derived by comparing our
`sales revenue to competitors’ and total market
`sales revenues for that period. For the purposes of
`this Annual Report and Form 20-F Information,
`references to the world pharmaceutical market or
`similar phrases are to 52 countries contained in IMS
`Health’s MIDAS Quantum database, which amount to
`approximately 95% (in value) of the countries audited
`by IMS Health.
`Statements of growth rates, sales
`and market data
`Except as otherwise stated, growth rates and sales in
`this Annual Report and Form 20-F Information
`are given at constant exchange rates (CER) to show
`underlying performance by excluding the effects of
`exchange rate movements. Market data are given
`in actual US dollars.
`AstraZeneca websites
`Information on or accessible through our
`websites, including astrazeneca.com,
`astrazenecaclinicaltrials.com, medimmune.com
`and cambridgeantibody.com, does not form part
`of this document.
`
`Designed by Addison Corporate Marketing Limited.
`Printed by St Ives Westerham Press Limited.
`
`Page 2 of 208
`
`

`
`
`
`ASTRAZENECA AND OUR YEAR IN BRIEF
`
`INTRODUCTION
`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007 01
`
`ASTRAZENECA IS ONE OF THE WORLD’S LEADING PHARMACEUTICAL COMPANIES WITH
`A BROAD RANGE OF MEDICINES DESIGNED TO FIGHT DISEASE IN IMPORTANT AREAS OF
`HEALTHCARE. BACKED BY STRONG SCIENCE AND WIDE-RANGING COMMERCIAL SKILLS,
`WE ARE COMMITTED TO SUSTAINABLE DEVELOPMENT OF OUR BUSINESS AND THE
`DELIVERY OF A FLOW OF NEW MEDICINES THAT BRING BENEFIT FOR PATIENTS AND
`CREATE ENDURING VALUE FOR OUR SHAREHOLDERS AND SOCIETY.
`
` >
`
` >
` >
`
` >
`
` >
`
` >
` >
` >
`
`2007 IN BRIEF
`Sales up 7% to $29,559 million.
` >
`
`Crestor sales up 33% to $2,796 million;
` >
`Symbicort up 22% to $1,575 million;
`Seroquel up 15% to $4,027 million;
`and Arimidex up 10% to $1,730 million.
`Nexium sales down 2% to $5,216 million.
`Our product portfolio now includes 11 medicines
`with annual sales of more than $1 billion each.
`Sales up 17% in emerging markets.
`Operating profit (excluding restructuring and
`synergy costs) up 8% to $9,060 million.
`Cash distributions to shareholders totalled
`$6,811 million (dividends $2,641 million;
`share re-purchases $4,170 million).
`Earnings per share (excluding restructuring
`and synergy costs) were $4.20, ahead of target.
`Dividend up 9% to $1.87 for the full year.
`Investment in R&D increased to more than $5 billion.
`A record 36 new compounds were selected for
`development and 24 compounds progressed to first
`human exposure. Phase III development pipeline doubled
`from five to 10 projects.
`Over 20 major externalisation deals and two
`significant acquisitions in the past two years.
`Acquisition of MedImmune in June 2007
`established us as a leader in biotechnology
`amongst our pharmaceutical peers.
`Productivity initiatives, including restructuring
`programme, progressing to plan.
`
` >
`
` >
`
` >
`
`Page 3 of 208
`
`

`
`INTRODUCTION
`
`02
`
`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007
`
`FINANCIAL HIGHLIGHTS
`
`Growth rates represent underlying performance,
`which shows growth at constant exchange
`rates (CER) by excluding the effects of
`exchange rate movements. Underlying CER
`growth is calculated by retranslating the
`current year’s performance at the previous
`year’s exchange rates and adjusting for other
`exchange effects, including hedging.
`
`SALES $M
`
`OPERATING PROFIT $M
`
`07
`
`06
`
`05
`
`GROWTH
`
`29,559
`
`+7%
`
`071
`
`26,475
`
`+11%
`
`23,950
`
`+10%
`
`07
`
`06
`
`05
`
`GROWTH
`
`9,060
`
`+8%
`
`8,094
`
`-4%
`
`8,216
`
`+28%
`
`6,502
`
`+39%
`
`PROFIT BEFORE TAX $M
`
`EARNINGS PER ORDINARY SHARE $
`
`071
`
`07
`
`06
`
`05
`
`GROWTH
`
`8,949
`
`+2%
`
`071
`
`7,983
`
`-9%
`
`8,543
`
`+29%
`
`6,667
`
`+41%
`
`07
`
`06
`
`05
`
`R&D INVESTMENT $M
`
`SG&A COSTS $M
`
`071
`
`07
`
`06
`
`05
`
`GROWTH
`
`5,089
`
`+22%
`
`071
`
`5,162
`
`+24%
`
`3,902
`
`+16%
`
`3,379
`
`-4%
`
`07
`
`06
`
`05
`
`GROWTH
`
`4.20
`
`+7%
`
`3.74
`
`-5%
`
`3.86
`
`+34%
`
`2.91
`
`+41%
`
`GROWTH
`
`9,886
`
`+4%
`
`10,364
`
`+9%
`
`9,096
`
`+5%
`
`8,695
`
`+4%
`
`RETURNS TO SHAREHOLDERS –
`DIVIDENDS AND SHARE RE-PURCHASES $M
`
`07
`
`06
`
`05
`
`6,811
`
`6,367
`
`4,718
`
`1 Excluding restructuring and synergy costs.
`
`Page 4 of 208
`
`

`
`
`
`INTRODUCTION
`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007 03
`
`FINANCIAL HIGHLIGHTS CONTINUED
`
`PRODUCT PERFORMANCE SUMMARY $M
`
`NEXIUM -2%
`
`SEROQUEL +15%
`
`CRESTOR +33%
`
`5,216
`5,182
`4,633
`
`07
`06
`05
`
`4,027
`3,416
`
`2,761
`
`2,796
`
`2,028
`
`07
`06
`05
`
`1,268
`
`PULMICORT +10%
`
`07
`06
`05
`
`1,454
`1,292
`1,162
`
`ATACAND +9%
`
`07
`06
`05
`
`1,287
`1,110
`974
`
`MERREM +20%
`
`07
`06
`05
`
`773
`604
`505
`
`07
`06
`05
`
`ARIMIDEX +10%
`
`07
`06
`05
`
`1,730
`1,508
`1,181
`
`SYMBICORT +22%
`
`07
`06
`05
`
`1,575
`1,184
`1,006
`
`SELOKEN/TOPROL-XL -22%
`
`CASODEX +6%
`
`07
`06
`05
`
`1,438
`1,795
`1,735
`
`LOSEC/PRILOSEC -20%
`
`07
`06
`05
`
`1,143
`1,371
`1,652
`
`SYNAGIS 1
`
`07
`
`618
`
`07
`06
`05
`
`1,335
`1,206
`1,123
`
`ZOLADEX +4%
`
`07
`06
`05
`
`1,104
`1,008
`1,004
`
`FLUMIST 1
`
`07
`
`53
`
`1 Sales of MedImmune products are consolidated in AstraZeneca accounts from 1 June 2007.
`As a result, there are no prior period sales included.
`
` DIVIDEND FOR 2007
`
`First interim dividend
`Second interim dividend
`Total
`
`
`
`
`
`
`$
`0.52
`1.35
`1.87
`
`Pence
`25.3
`67.7
`93.0
`
`SEK
`3.49
`8.61
`12.10
`
`Payment date
`17 September 2007
`17 March 2008
`
`Page 5 of 208
`
`

`
`INTRODUCTION
`
`04
`
`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007
`
`CHAIRMAN’S STATEMENT
`
`We have continued our investment in both
`areas and you can read a review of the
`progress made in this report.
`
`The acquisition of MedImmune was a major
`decision, which the Board sees as
`transformational for the Company. The addition
`of MedImmune builds on the earlier investment
`in Cambridge Antibody Technology in the
`field of biologics and takes AstraZeneca
`into vaccine technology for the first time.
`MedImmune brings not only first class biologics
`and vaccines assets to the Group but also
`around 3,000 skilled professionals with
`expertise ranging from discovery through to
`commercialisation. In developing areas of
`medical science, these are skills that are
`scarce and valuable. I am confident that the
`combined strength of our existing small
`molecule expertise and the newly acquired
`expertise in large molecules and vaccines
`will generate benefits for the Company and
`its shareholders.
`
`Our key products have continued to deliver
`benefits to millions of patients every day around
`the world. We have met our sales targets
`despite depressed pricing in our traditional
`heartlands of Europe and the US and
`challenges to our intellectual property. In the
`emerging markets, we have continued to build
`our businesses for the benefit of patients today
`as well as pursuing opportunities to broaden
`access to our medicines in the future.
`
`2007 has not been an easy year for the
`pharmaceutical sector. With pressure on
`pricing and increased demand for investment,
`companies have been forced to drive
`efficiencies right across the business in order
`to maintain shareholder returns. The Board
`has been fully supportive of the programme
`that David Brennan has put in place to improve
`productivity in every area of the Company.
`There is no question that this sort of activity
`poses challenges for a management team
`and the Board believes that this high level of
`change has been handled responsibly and in
`a way that is consistent with the values of
`the Company.
`
`During 2007, the Board has reviewed key
`aspects of the Company’s strategy and
`operations including its financial policies, human
`resources planning, and externalisation projects.
`In January 2008, the Board concluded its
`yearly review of its own processes to ensure
`that it is functioning well and properly
`representing the interests of shareholders.
`
`At the end of July, I announced the resignation
`of Jon Symonds as Chief Financial Officer
`to pursue his career outside AstraZeneca.
`
`Jon had completed 10 years of distinguished
`service in the Group and his experience
`and management skills were greatly valued.
`I am delighted that Simon Lowth joined the
`Company in November as an Executive
`Director and the Chief Financial Officer.
`Simon brings with him a successful track
`record of business transformation in previous
`strategic and financial roles at Scottish Power.
`He has proved to be a valuable addition to
`David Brennan’s leadership team.
`
`There were a number of changes to the
`composition of the Board during the year.
`At our AGM in April, we said a warm farewell
`and thank you to Peter Bonfield and Erna
`Möller when they stepped down as Non-
`Executive Directors following 12 years of
`service. Their individual contributions to the
`Company over those years were significant
`and both served on various Board committees.
`In addition, Peter ably took on the role of
`AstraZeneca’s senior, independent Non-
`Executive Director for many years. Also in April,
`Joe Jimenez resigned as a Non-Executive
`Director following his appointment to an
`executive position at Novartis and we wish
`him well.
`
`I was pleased on behalf of the Board to be able
`to welcome Bo Angelin as a new Non-
`Executive Director in July. Bo is a distinguished
`medical scientist and I am sure that he will
`provide a valuable contribution to the Board’s
`work. It also gives me pleasure to report that
`Michele Hooper, who has been a member of
`the Board for over four years now, has agreed
`to become our new senior, independent
`Non-Executive Director, in succession to
`Peter Bonfield.
`
`In 2008, our strategy remains unchanged:
`we shall continue to meet the needs of patients
`today, while investing for the benefit of patients
`of the future. By doing this successfully and
`responsibly, we will deliver the greatest rewards
`to shareholders and society as a whole. The
`business environment will continue to present
`challenges and the Board will work with
`David Brennan and his leadership team to
`ensure that our business continues to adapt
`as needed, taking advantage of opportunities
`and investing for sustainable growth.
`
`LOUIS SCHWEITZER
`Chairman
`
`Group sales increased by 7% in 2007 to a total
`of $29.6 billion. The inclusion of MedImmune
`for seven months of the year increased sales
`by 3%. Operating profit was $8.1 billion, reduced
`by restructuring and synergy costs of $966
`million and by a $178 million loss from the
`inclusion of MedImmune. Excluding
`restructuring and synergy costs, operating
`profit for 2007 was up by 8% and R&D
`investment increased to over $5 billion for
`the full year.
`
`Reported earnings per share for the full year
`were $3.74, compared with $3.86 in 2006.
`Earnings per share excluding restructuring
`and synergy costs were $4.20, compared
`with our guidance of $3.98 to $4.13 on the
`same basis. The Board has recommended a
`10% increase in the second interim dividend
`to $1.35 (67.7 pence, SEK 8.61) per
`Ordinary Share. This brings the dividend for
`the full year to $1.87 (93.0 pence, SEK
`12.10), an increase of 9%. In 2007, cash
`distributions to shareholders, through a
`combination of dividends and share
`re-purchases totalled $6.8 billion. Share
`re-purchases for the full year amounted to
`$4.2 billion. The Board expects to undertake
`share re-purchases in the region of $1 billion
`in 2008, subject to business needs.
`
`With the debt that we issued following the
`acquisition of MedImmune, we have now
`established a balanced portfolio of short-term
`funding, which we intend to pay down over the
`next three or four years, as well as medium-
`to long-term funding, while still maintaining a
`strong credit rating.
`
`Our drive to strengthen the pipeline has been
`led by the review conducted in 2006 to
`determine the areas of disease where we
`could derive the most value for patients and
`shareholders. This resulted in a strategy
`reflecting both our inherent strength in certain
`fields of research and the areas of greatest
`unmet medical need. As a result, we are
`focusing on six disease areas and ensuring
`that we have access to leading research in
`each area. Some of this research resides in
`our own laboratories and some has been
`sourced from third party researchers.
`
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`CHIEF EXECUTIVE OFFICER’S REVIEW
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`INTRODUCTION
`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007 05
`
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`Challenging our cost structure to make
`room for further investment in R&D and
`externalisation, whilst increasing access
`to our medicines.
`
`Promoting a culture of responsibility and
`accountability is a fourth priority that
`underpins the other three.
`
`As the industry changes and our business
`evolves, it is important that we have a
`workforce and style of leadership that can
`leverage opportunities and adapt quickly to
`changing circumstances. I believe that a lean
`infrastructure, combined with an agile
`mindset and a responsible approach to
`business, will be a critical success factor in
`determining our future.
`
`STRENGTHENING THE PIPELINE
`I am pleased to report very significant progress
`during the year. The number of phase III
`projects in the pipeline has doubled to 10 from
`five and it was a record year for our phase I
`development pipeline with 24 new molecules
`entering first tests in man, compared with 12
`in 2006. Importantly, we are also improving
`the quality of our early phase pipeline by
`researching the use of biomarkers, to give
`us an indication early in the discovery process
`of any toxicity or other signals that might
`impede progression of a molecule at a
`later stage.
`
`It is just as important to gain access to
`leading science from outside AstraZeneca
`and our externalisation programme has
`delivered over 20 major deals in the
`last two years, as well as the acquisitions
`of Cambridge Antibody Technology and
`MedImmune.
`
`We also continue to partner with external
`organisations that share our commitment
`to finding novel solutions for important areas
`of healthcare. During 2007 we formed
`a number of important new collaborations,
`including one with Bristol-Myers Squibb
`Company to co-develop and co-commercialise
`saxagliptin and dapagliflozin, two products
`in development for the treatment of
`Type 2 diabetes.
`
`VALUED MEDICINES
`At AstraZeneca, we take great pride in our
`track record of pharmaceutical innovation
`which spans seven decades and includes
`the introduction of many world-leading
`medicines. The key products in our range
`continue to make a difference for millions
`of patients around the world every day.
`
`We remain focused on leveraging the full
`potential of our range and delivered a growth
`in sales during 2007 despite pricing challenges
`in key markets in Europe and the US, where
`payers and healthcare providers have been
`wrestling with the dual challenge of a growing
`demand for healthcare as a result of the
`ageing population and continued public
`demand for the benefits that modern
`medicines provide.
`
`Highlights in 2007 included:
`
` >
`
` >
`
` >
`
` >
`
`Seroquel XR, the sustained release form
`
`of our schizophrenia therapy, was launched
`in the US. It was also approved for sale in
`Canada and The Netherlands and the EU
`mutual recognition process has been
`completed, paving the way for launches
`in other European markets in the coming
`months. Regulatory submissions for
`Seroquel XR for the treatment of major
`depressive disorder and generalised
`anxiety disorder are planned for 2008.
`
`The atherosclerosis label for our statin,
`Crestor, has been approved in the US,
`reflecting its efficacy in slowing the
`progression of atherosclerosis in adult
`patients with elevated cholesterol as an
`adjunct to diet.
`
`We launched our asthma therapy,
`Symbicort, in the US and our innovative
`Symbicort Maintenance and Reliever
`Therapy (Symbicort SMART) is proving
`popular with patients in many European
`countries because, by combining both
`maintenance and rapid relief therapies
`in a single inhaler, it puts them more in
`control of their variable disease.
`
`Nexium continues to be the strongest
`
`performing branded proton pump inhibitor
`in the US, although the highly competitive
`market and the challenge of generic
`omeprazole are both significant. In the
`emerging markets, Nexium continues to
`show very strong growth.
`
` >
`
`Arimidex remains the product of choice
`
`for post-menopausal breast cancer
`patients and its sales are firmly in line
`with market growth.
`
`In the emerging markets of Asia, Eastern
`Europe and Russia, we have continued to
`build our business focusing on maximising
`our sales today whilst investing to broaden
`access to our medicines in future. During the
`year, we opened a new Process R&D facility
`
`2007 was a transformational year for
`AstraZeneca and I am very proud of the
`way that my Senior Executive Team and all
`our employees are adapting to a challenging
`external environment and addressing the
`needs of our business.
`
`Strengthening our pipeline continues to be our
`highest priority and we have made substantial
`progress over the past twelve months. We
`have also successfully delivered against our
`sales targets, whilst continuing to challenge
`all aspects of our cost base and drive
`productivity throughout the organisation.
`
`The acquisition of MedImmune in June gave
`us a leading position in biologics technology
`and took us into vaccines for the first time.
`This was a very significant move for the
`Group. Increased investment in these
`approaches to fighting disease was key to our
`strategy of strengthening our ability to deliver
`the next generation of valued medicines.
`MedImmune is a leader in both biologics and
`vaccines and brings expertise and capabilities
`that span the pipeline from discovery through
`commercialisation. It is also a vertically-
`integrated company that has invested for
`future growth and gives us significant biologics
`and vaccines manufacturing capability and
`capacity. By combining our own biologics
`projects and those of Cambridge Antibody
`Technology under MedImmune’s leadership,
`I believe we have created a powerful engine
`to drive future development.
`
`Our key strategic priorities are:
`
` >
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` >
`
`Strengthening our pipeline of new
`medicines from our own research
`laboratories and by gaining access to
`scientific innovation outside AstraZeneca.
`
`Delivering the full potential of all our
`marketed medicines through rigorous
`life cycle management and excellent
`customer support.
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`INTRODUCTION
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`06
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`ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2007
`
`CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
`
`in Bangalore, India, to add to the existing R&D
`facility and we are investing in a new centre
`for translational medicine in Shanghai, which
`will focus on researching medicines
`especially designed to help patients in China.
`
`In Japan, the world’s second largest
`pharmaceutical market, we are working
`with the authorities to increase the range
`of medicines available to Japanese patients.
`Mutual recognition of research data
`generated in other Asian countries means
`that we are able to progress more quickly
`with dedicated studies for these markets.
`
`Inevitably, as a successful, research-based
`pharmaceutical company, this year we have
`received further challenges to some of our
`patents, the details of which are set out
`elsewhere in this report. We will maximise
`the value of our intellectual property and will
`vigorously defend our patents in order to
`protect the many years of research, and the
`considerable investment, which have delivered
`the medicines to which those patents relate.
`
`BECOMING LEAN AND AGILE
`In 2007, we accelerated our focus on
`productivity, recognising the pressure on
`the industry to deliver more with less. In the
`first quarter we made the first significant
`announcement of role reductions associated
`with the implementation of our asset strategy
`review. As a result of this review, we have
`changed the manufacturing pattern across
`our operations and have addressed excess
`manufacturing capacity in some areas.
`Our drive is to maximise the efficiency of our
`supply chain whilst maintaining the highest
`possible standards of quality and security of
`supply at every stage.
`
`At the half-year, we announced further job
`reductions resulting from productivity
`improvements in other areas of the business.
`The full implementation of these reductions
`will take until 2009. However, they reflect
`important efficiency improvements including:
`the centralisation of clinical data
`management to a single approach managed
`at two locations; re-shaping the sales force in
`several European countries to be able to
`better respond to changes in the respective
`national healthcare systems; the
`establishment of a single, global contract
`with IBM for information technology services
`and support; and the globalisation of
`functions such as Human Resources and
`Regulatory Affairs.
`
`Implementing changes that involve the loss
`of loyal employees is one of the hardest tasks
`for a Chief Executive Officer and 2007 has
`been particularly challenging in this respect.
`Throughout, we have consulted fully with
`staff representatives and acted in line with
`local labour laws. We have also provided
`appropriate support to help individuals to
`pursue their careers beyond AstraZeneca and
`have engaged with the communities around
`our affected sites to mitigate the local impact.
`
`DOING BUSINESS THE RIGHT WAY
`As we drive the business forward, maintaining
`our fundamental commitment to corporate
`responsibility (CR) remains a top priority.
`We continuously work to ensure that our
`high level values are translated into consistent
`actions and behaviours worldwide that are
`aligned with, and support the achievement
`of our strategic business objectives.
`
`In 2007, we further strengthened our CR
`leadership and governance to make sure
`that we have appropriate systems in place
`for identifying the risks and opportunities
`associated with our CR, together with effective
`frameworks for managing them and driving
`compliance with all relevant policies and
`standards. As part of this, we reviewed and
`expanded our Code of Conduct to provide
`clear direction and guidance for all our staff
`on what is required of them. The new Code
`is being translated into over 40 languages
`and will be distributed to all our employees
`in early 2008. In addition, since the
`acquisition in June, we are working closely
`with MedImmune, which has its own
`long-standing commitment to working
`responsibly, to make sure that our policies
`and standards are aligned.
`
`CR targets and measures are included in our
`business performance management framework
`and related objectives are being included in
`personal targets at all levels to support the
`integration of CR management across the
`full range of our business activities.
`
`You can read about key aspects of our
`commitment to doing business the right
`way, and our performance, throughout this
`report and further details are provided on
`our website, astrazeneca.com/responsibility.
`We are making progress, but in the ever-
`changing world in which we live, there will
`always be work to do to ensure that
`AstraZeneca is not only valued as a source
`of great medicines, but also trusted for the
`way in which we do business worldwide.
`
`SENIOR EXECUTIVE TEAM CHANGES
`There were several important changes to my
`Senior Executive Team during 2007. Following
`the departure of Jon Symonds at the end of
`July after a decade of outstanding service,
`we welcomed Simon Lowth as our new
`Chief Financial Officer at the beginning of
`November. During th