How
`does
`health
`connect
`us all?
`
`AstraZeneca Annual Report and
`Form 20-F Information 2010
`
`Page 1 of 224
`
`AstraZeneca Exhibit 2104
`Mylan v. AstraZeneca
`IPR2015-01340
`
`

`
`Financial highlights
`
`Sales unchanged at $33,269 million ($32,804 million in 2009)
`
`Core operating profit unchanged at $13,603 million ($13,621 million in 2009)
`
`$33.3bn
`$13.6bn
`$6.71
`$2.1bn
`
`Core EPS for the full year increased by 5% to $6.71 ($6.32 in 2009)
`
`Net share repurchases totalled $2,110 million ($nil in 2009)
`
`Important information for readers of this Annual Report and Form 20-F Information
`
`Cautionary statement regarding forward-looking statements
`The purpose of this Annual Report is to provide information to the members of the Company.
`The Company and its Directors, employees, agents and advisors do not accept or assume
`responsibility to any other person to whom this Annual Report is shown or into whose hands
`it may come and any such responsibility or liability is expressly disclaimed. In order, among
`other things, to utilise the ‘safe harbour’ provisions of the US Private Securities Litigation
`Reform Act of 1995 and the UK Companies Act 2006, we are providing the following
`cautionary statement: This Annual Report contains certain forward-looking statements with
`respect to the operations, performance and financial condition of the Group. Forward-looking
`statements are statements relating to the future which are based on information available at
`the time such statements are made, including information relating to risks and uncertainties.
`Although we believe that the forward-looking statements in this Annual Report are based on
`reasonable assumptions, the matters discussed in the forward-looking statements may be
`influenced by factors that could cause actual outcomes and results to be materially different
`from those expressed or implied by these statements. The forward-looking statements reflect
`knowledge and information available at the date of the preparation of this Annual Report 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 identified in the Principal
`risks and uncertainties section from page 96 of this Annual Report. Nothing in this Annual
`Report should be construed as a profit forecast.
`
`Inclusion of reported performance, Core financial measures and constant exchange
`rate growth rates
`For further information in relation to the inclusion of reported performance, Core financial
`measures and constant exchange rate (CER) growth rates as used in the Overview from page
`2 and throughout the Business Review and Corporate Governance from pages 24 and 94
`respectively, please refer to the Financial Review section on page 80.
`
`Throughout this Annual Report, growth rates are expressed at CER unless otherwise stated.
`
`AstraZeneca’s determination of non-GAAP measures together with our presentation of
`them within our financial information may differ from similarly titled non-GAAP measures
`of other companies.
`
`Statements of competitive position, growth rates and sales
`In this Annual Report, except as otherwise stated, market information regarding the position
`of our business or products relative to its or their competition is based upon published
`statistical sales data for the 12 months ended 30 September 2010 obtained from IMS Health,
`a leading supplier of statistical data to the pharmaceutical industry. For the US, dispensed
`new or total prescription data and audited sales data are taken, respectively, from IMS Health
`National Prescription Audit and IMS National Sales Perspectives for the 12 months ended
`31 December 2010; such data is not adjusted for Medicaid and similar state rebates. 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.
`Except as otherwise stated, growth rates are given at CER. For the purposes of this Annual
`Report, unless otherwise stated, references to the world pharmaceutical market or similar
`phrases are to the 44 countries contained in the IMS Health MIDAS Quantum database, which
`amounted to approximately 96% (in value) of the countries audited by IMS Health.
`
`AstraZeneca websites
`Information on or accessible through our websites, including astrazeneca.com,
`astrazenecaclinicaltrials.com and medimmune.com, does not form part of and is not
`incorporated into this Annual Report.
`
`External/third party websites
`Information on or accessible through any third party or external website does not form part
`of and is not incorporated into this Annual Report.
`
`Definitions
`The Glossary and the Market definitions table from page 217 are intended to provide a
`useful guide to terms and AstraZeneca’s definition of markets, as well as to acronyms
`and abbreviations used in this Annual Report. They are, however, provided solely for the
`convenience of the reader and should therefore not be relied upon as providing a definitive
`view of the subject matter to which they relate.
`
`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 and any reference to ‘this Annual Report’ is a reference to this Annual Report and Form
`20-F Information.
`
`Statements of dates
`Except as otherwise stated, references to days and/or months in this Annual Report are
`references to days and/or months in 2010.
`
`Figures
`Figures in parentheses in tables and in the Financial Statements are used to represent
`negative numbers.
`
`Page 2 of 224
`
`

`
`Overview
`
`Business Review
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`Health is something
`that connects us all
`
`In our mission to make a meaningful
`difference to the world’s health, we work
`closely with governments and regulators,
`those who pay for healthcare, our partners
`in industry and academia, and doctors.
`Through our activities we touch a great
`number of people’s lives and we are acutely
`conscious of our responsibility to patients
`and society in general.
`
`astrazeneca.com/
`annualreport2010
`
`Welcome to our 2010 Annual Report
`You will find this Annual Report and all the case
`studies featured in this document on our website,
`astrazeneca.com/annualreport2010
`
`Contents
`2 Overview
`2 AstraZeneca at a glance
`4 Our year in brief
`6 Chairman’s Statement
`8
` Chief Executive Officer’s Review
`10
` Our Strategy and Performance
`
`10 Our marketplace
`
`14 Our strategy
`
`18 Performance in 2010
`
`20 Life-cycle of a medicine
`
`24 Business Review
`24 Delivering our strategy
`
`26 Research and Development
`
`30
`Intellectual Property
`
`32 Sales and Marketing
`
`34 Supply and Manufacturing
`
`36 People
`
`40 Responsible Business
`
`50 Therapy Area Review
`70 Geographical Review
`75 Other Businesses
`78 Financial Review
`
`94 Corporate Governance
`94 Risk
`106 Board of Directors and Senior
`Executive Team
` 109 Corporate Governance Report
`119 Directors’ Remuneration Report
`
`135 Financial Statements
`135 Financial Statements
`
`205 Additional Information
`206 Development Pipeline
`211 Shareholder Information
`216 Corporate Information
`217 Glossary
`220 Index
`
`Directors’ Report
`The following sections comprise
`the Directors’ Report which has been
`prepared in accordance with the
`requirements of the Companies Act 2006:
`
`> Our Strategy and Performance
`> Business Review
`> Corporate Governance
`> Development Pipeline
`> Shareholder Information
`> Corporate Information
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Contents 1
`
`Page 3 of 224
`
`

`
`AstraZeneca at a glance
`
`Who we are
`
`What we do
`
`61,000 employees worldwide
`
`6Focus on six areas of healthcare
`61,000
`1010 medicines with sales of over $1 billion in 2010
`100Active in over 100 countries
`
`We discover, develop and commercialise
`prescription medicines for six important areas
`of healthcare: Cardiovascular, Gastrointestinal,
`Infection, Neuroscience, Oncology and
`Respiratory & Inflammation
`
`We have a broad range of medicines that
`includes established treatments for many
`serious illnesses, such as our antibiotic,
`Merrem/Meronem and Losec/Prilosec for
`acid-related diseases
`
`We use our scientific and commercial skills to
`develop a pipeline of innovative new medicines
`to meet medical need
`
`We had 10 medicines with sales of more than
`$1 billion each in 2010
`
`Cardiovascular
`Crestor
`for managing cholesterol levels
`Seloken/Toprol-XL
`for hypertension, heart failure and angina
`Atacand
`for hypertension and heart failure
`
`AstraZeneca is a focused, integrated,
`innovation-driven, global, prescription-based
`biopharmaceutical business
`
`Gastrointestinal
`Nexium
`for acid reflux
`
`Our mission is to make a meaningful
`difference to patient health through
`great medicines
`
`We are committed to acting responsibly
`and to the sustainable development of
`our business
`
`Our mission requires us to do things in the
`right way – to behave in accordance with
`our values and to act with integrity
`
`We believe that our approach delivers lasting
`value for patients, society and our shareholders
`
`Infection
`Synagis
`for RSV, a respiratory infection in infants
`
`Neuroscience
`Seroquel IR
`for schizophrenia and bipolar disorder
`Seroquel XR
`for schizophrenia, bipolar disorder and major depressive disorder
`
`Oncology
`Arimidex
`for breast cancer
`Zoladex
`for prostate and breast cancer
`
`Respiratory & Inflammation
`Symbicort
`for asthma and chronic obstructive pulmonary disease
`
`2 AstraZeneca at a glance
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Page 4 of 224
`
`

`
`Overview
`
`Business Review
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`How we work
`
`Where we work
`
`Our activities touch many people’s lives and
`we are committed to working in a spirit of
`collaboration to achieve our goal of better
`health for patients
`
`We have a global reach but local knowledge,
`being active in over 100 countries, with a
`growing presence in emerging markets such
`as China, Mexico, Brazil and Russia
`
`For patients and doctors, we provide
`medicines for some of the world’s most
`serious illnesses
`
`For the people who pay for healthcare, we
`work to make sure that our medicines offer
`value for money
`
`For our employees, we provide a culture in
`which they can feel appreciated, energised
`and rewarded for their contribution
`
`For our shareholders, we aim to deliver value
`through our continued focus on innovation
`and running our business efficiently
`
`For the wider community, we want to be
`valued for the contribution our medicines
`make to society and trusted for the way in
`which we do business
`
`We recognise the value of collaborative work
`and so continually seek to develop new ways
`of working with others who complement our
`existing skills, enhance our internal innovation
`or bring extra value to what we do
`
`In 2010, we had sales of $13,727 million in
`the US, $9,168 million in Western Europe,
`$5,176 million in Established ROW and
`$5,198 million in Emerging Markets
`
`Combining our disease area expertise with
`country-specific knowledge helps us to market
`and sell medicines that best meet local needs
`
`Of our 61,000 employees worldwide, 45.6%
`are in Europe, 30.5% in the Americas and
`23.9% in Asia, Africa and Australasia
`
`Around 15,700 people work in our R&D
`organisation and we have 14 principal R&D
`centres in eight countries, including Sweden,
`the US and the UK
`
`We have 9,300 employees at 23 Supply
`and Manufacturing sites in 16 countries
`
`Core investment of $4.2 billion in our R&D organisation in 2010
`
`$4.2bn
`80
`
`Over 80 major externalisation transactions completed over the
`past three years
`
`46%
`
`46% of sales and marketing workforce based in Emerging
`Markets compared with 16% in 2002
`
`23
`
`23 Supply and Manufacturing sites
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`AstraZeneca at a glance 3
`
`Page 5 of 224
`
`

`
`Our year in brief
`
`Summary financial and
`operational information for 2010
`
`Operational overview
`
`92 projects in clinical development, including 9 in Phase III or under
`regulatory review. 34 withdrawn during the year
`
`Revenue in the US fell 7%, while revenue in Rest of World rose by 7%
`
`Annual Crestor and Seroquel sales exceeded $5 billion each
`
`Revenue in Emerging Markets grew to over $5.1 billion, a 16% increase
`
`Financial highlights
`
`Sales $m (unchanged)
`
`2010
`2009
`2008
`
`Core operating profit $m (unchanged)
`
`2010
`2009
`2008
`
`Core gross margin $m (-1%)
`
`10,958
`
`2010
`2009
`2008
`
`Core earnings per Ordinary Share $ (+5%)
`
`2010
`2009
`2008
`
`5.10
`
`33,269
`32,804
`31,601
`
`13,603
`13,621
`
`27,024
`27,217
`25,408
`
`6.71
`6.32
`
`Net cash flow from operating activities $m
`
`2010
`2009
`2008
`
`10,680
`11,739
`
`8,742
`
`Reported operating profit $m (-1%)
`
`2010
`2009
`2008
`
`Reported gross margin $m (-1%)
`
`2010
`2009
`2008
`
`11,494
`11,543
`
`9,144
`
`26,880
`27,029
`25,003
`
`Reported basic earnings per Ordinary Share $ (+7%)
`
`2010
`2009
`2008
`
`5.60
`
`5.19
`
`4.20
`
`92
`7%
`$5bn
`$5.1bn
`$2.4bn
`$2.1bn
`
`The first phase of the restructuring programme is now complete,
`resulting in annual benefits of $2.4 billion
`
`Net share repurchases totalled $2.1 billion in 2010
`
`4 Our year in brief
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Page 6 of 224
`
`

`
`Overview
`
`Business Review
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`> Single R&D organisation in place, including
`new leadership team, global organisation
`structure and governance framework
`
`> Vimovo approved in the US and the EU;
`Brilique approved in the EU with Complete
`Response Letter received for Brilinta in the
`US; Kombiglyze™ XR (Onglyza™/metformin
`combination) approved in the US; decisions
`made in December to discontinue
`development of motavizumab and Certriad
`
`> Completed a deal with Rigel for the Phase III
`development of fostamatinib (for rheumatoid
`arthritis), and TC-5214, our neuroscience
`collaboration with Targacept, also entered
`Phase III development
`
`> Agreement with HealthCore, which maintains
`the largest commercially insured population
`data environment in the US, enables ‘real
`world’ studies of health outcomes
`
`> Portfolio of more than 100 generic products
`being licensed across 30 Emerging Markets
`for marketing under our brand
`
`> Crestor substance patent upheld in the
`US courts
`
`> Ranked in the top 8% in the sector in the
`Dow Jones Sustainability World and
`European Indexes
`
`> Reviewed and revised Responsible Business
`Plan to align it with strategic business priorities
`
`> Additional ways of reporting sales and
`marketing performance introduced to
`support increased transparency
`
`> Improvement in senior leader communications
`with employees but slight decline in employee
`engagement
`
`All growth rates are at CER
`
`Product performance summary
`Arimidex (2009: $1,921m; 2008: $1,857m)
`
`Atacand (2009: $1,436m; 2008: $1,471m)
`
`Crestor (2009: $4,502m; 2008: $3,597m)
`
`Nexium (2009: $4,959m; 2008: $5,200m)
`
`Seloken/Toprol-XL (2009: $1,443m; 2008: $807m)
`
`$1,512m -22%
`$1,483m +3%
`$5,691m +24%
`$4,969m 0%
`$1,210m -17%
`$4,148m -1%
`$1,154m +67%
`$2,746m +20%
`$1,038m -4%
`$1,115m 0%
`
`Seroquel IR (2009: $4,171m; 2008: $4,223m)
`
`Seroquel XR (2009: $695m; 2008: $229m)
`
`Symbicort (2009: $2,294m; 2008: $2,004m)
`
`Synagis (2009: $1,082m; 2008: $1,230m)
`
`Zoladex (2009: $1,086m; 2008: $1,138m)
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Our year in brief 5
`
`Page 7 of 224
`
`

`
`2010 was a year
`
`in which AstraZeneca
`maintained its strong
`fi nancial performance
`
`Louis Schweitzer
`Chairman
`
`Dividend information
`
`$2.55
`
`Dividend per Ordinary Share 2010
`
`Dividend for 2010
`First interim dividend
`Second interim dividend
`Total
`
`Distributions to shareholders $m
`Dividends
`Share repurchases
`
`$
` 0.70
`1.85
`2.55
`
`Pence
`44.9
`116.7
`161.6
`
`SEK
` 5.12
`11.99
`17.11
`
`Payment date
`13 September 2010
`14 March 2011
`
`2010
`3,361
`2,6041
`
`2009
`2,977
`–
`
`2008
`2,739
`610
`
`1 Share repurchases in 2010, net of proceeds from the issue of share capital equal to $494 million, were $2,110 million.
`
`6 Chairman’s Statement
`
`Page 8 of 224
`
`

`
`Overview
`Overview
`
`Business Review
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`Chairman’s Statement
`
`In the face of sustained pressures on the
`business, 2010 was a year in which AstraZeneca
`maintained its strong financial performance.
`We also made good progress in implementing
`our strategy to be a focused, integrated,
`innovation-driven, global, prescription-based
`biopharmaceutical business.
`
`Group sales in 2010 were unchanged at $33,269 million. Reported
`operating profit was $11,494 million, down 1%. Reported earnings
`per share for the full year were up 7% at $5.60 (2009: $5.19). Within
`the unchanged revenue total there was strong sales growth for
`medicines such as Crestor, Symbicort and Seroquel XR, and
`revenue outside the US increased by 7%, including a 16% increase
`in Emerging Markets. On the other hand US revenue was down
`by 7%. As expected, revenue in the US was affected by generic
`competition for Arimidex, Pulmicort Respules and Toprol-XL, as
`well as the absence of the H1N1 influenza (swine flu) vaccine
`revenue that benefited 2009 revenues.
`
`Pharmaceutical sector
`Our performance in 2010 took place against a background of
`continued world pharmaceutical market growth. This growth is
`being driven by increasing and ageing populations, as well as
`expanding numbers of patients in emerging markets who can
`benefit from our medicines, together with the increasing prevalence
`of chronic diseases and advances in science and technology. On
`the other hand, the pharmaceutical sector, including AstraZeneca,
`faces a number of challenges in the form of competition, particularly
`from generic versions of medicines, and declining R&D productivity.
`In addition, most of our sales take place in highly regulated markets
`where cost containment by governments and other payers for
`healthcare is a priority, especially in the wake of the economic
`downturn. We expect this pressure to continue, most notably in the
`US and European markets and the Board will keep its plans under
`continuous review to ensure we are able to respond to changes.
`
`AstraZeneca fully recognises the importance of its reputation.
`We are committed to doing business in an ethical and proper
`manner and take compliance with all laws seriously. Oversight of
`the pharmaceutical sector by regulators and competition authorities
`has intensified in recent years. The Board, assisted by the Audit
`Committee, plays an active role in monitoring performance.
`
`Our strategy
`Against this outlook, the Board believes its focused strategy is
`the most value-creating path for AstraZeneca. Our business model
`is based on using the best science and technology to invent and
`acquire, develop, produce and distribute innovative medicines that
`make a meaningful difference to patient health around the world.
`
`Underpinning this model is the creation, protection and subsequent
`sharing of intellectual property. It is on this basis that we continue
`to invest in new medicines and work to protect and optimise our
`investments by rigorously defending our patent rights. We were
`therefore pleased with the court decision upholding the validity and
`enforceability of the Crestor US substance patent.
`
`The focus of our efforts to implement our strategy in 2010 was
`on making the transformational changes to the business needed
`to generate sustainable long-term value. At the heart of these
`changes was the creation of a single R&D organisation which we
`are reshaping and in which we are investing to improve productivity
`and secure targeted levels of return. Complementing this is a single
`Commercial organisation which not only ensures that our medicines
`reach the doctors and patients who need them, but also works
`closely with R&D to ensure that our pipeline delivers the medicines
`
`most likely to deliver technical and commercial success. That
`includes working with payers to ensure that they value and are
`willing to purchase our medicines.
`
`Also central to our strategy is a firm belief in external collaboration.
`We have a desire to access the best science, whatever its origins,
`and to act as a valued and trusted partner.
`
`We have undertaken significant restructuring initiatives in furtherance
`of our strategy. The first phase of the restructuring programme is
`now complete, resulting in the realisation of annual benefits of
`$2.4 billion achieved to date at a cumulative cost of around $2.5 billion.
`
`Outlook and cash returns to shareholders
`We continue to plan on the basis that revenue will be in the range of
`$28-$34 billion a year over the 2010-14 period, as revenue growth
`from key franchises that retain exclusivity and continued growth in
`Emerging Markets are pressured by the loss of market exclusivity
`on a number of products.
`
`In recognition of the Group’s strong balance sheet and sustainable
`significant cash flow, and the Board’s confidence in the strategic
`direction and long-term prospects for the business, we announced,
`in conjunction with the full year 2009 results, the adoption of a
`progressive dividend policy, intending to maintain or grow the
`dividend each year. After providing for business investment, funding
`the progressive dividend policy and meeting our debt service
`obligations, the Board will also keep under review the opportunity
`to return cash in excess of these requirements to shareholders
`through periodic share repurchases.
`
`The Board has recommended a second interim dividend of
`$1.85, an 8% increase over the second interim dividend awarded
`in 2009. This brings the dividend for the full year to $2.55
`(161.6 pence, SEK 17.11), an increase of 11% from 2009. In 2010,
`cash distributions to shareholders through dividends totalled
`$3,361 million and net share repurchases totalled $2,110 million.
`
`Board changes
`There were a number of Board changes during the year. John
`Buchanan and Bo Angelin both left the Board immediately after the
`2010 AGM. John had been a Director for eight years and had also
`chaired the Audit Committee. His contribution to the work of the
`Board and the Audit Committee over those years was significant
`and we benefited greatly from his skills, experience and thoughtful
`approach. Bo was appointed as a Director in 2007 and stepped
`down in order to concentrate on his scientific work. He provided
`valuable insight to the Board and the Science Committee during
`his time as a Director. On behalf of their fellow Directors, I would
`like to thank both for their excellent service to AstraZeneca.
`
`Bruce Burlington joined the Board in August. He brings with him
`a wealth of pharmaceutical industry experience following a career
`at the FDA and subsequently at Wyeth, now part of Pfizer Inc. In
`January 2011, Shriti Vadera joined the Board. Her experience of
`emerging markets, and knowledge of global finance and public
`policy, will be invaluable. I would like to welcome both Bruce and
`Shriti to the Board.
`
`Appreciation
`2010 was a successful and challenging year for AstraZeneca.
`We maintained our strong financial performance and took and
`implemented difficult decisions to ensure the future success
`of the Group. None of this would have been possible without
`the leadership of David Brennan and the other members of his
`executive team. My thanks, and those of the whole Board, go
`to them and all our employees who did so much in 2010 for the
`long-term success of AstraZeneca.
`
`Louis Schweitzer
`Chairman
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Chairman’s Statement 7
`
`Page 9 of 224
`
`

`
` It is the manner in
`which we do business
`as much as what we do
`that will determine our
`long-term success
`
`David R Brennan
`Chief Executive Offi cer
`
`Operational highlights
`
`1
`
`Single R&D organisation in place
`
`Achieved major market approvals for Vimovo
`and Brilique/Brilinta; made submissions for
`dapaglifl ozin and Zinforo, but disappointments
`on other pipeline products
`
`8%
`
`Ranked in the top 8% in the sector in the
`Dow Jones Sustainability World and
`European Indexes
`
`$5bn
`
`Annual Crestor and Seroquel sales exceeded
`$5 billion each
`
`$5.1bn
`
`Revenue in Emerging Markets grew to over
`$5.1 billion, a 16% increase
`
`8 Chief Executive Offi cer’s Review
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Page 10 of 224
`
`

`
`Overview
`Overview
`
`Business Review
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`Chief Executive Officer’s Review
`
`2010 emphasised that it is the manner in which
`we do business as much as what we do that
`will determine our long-term success. It told us
`that, if we are to deliver our strategy and make
`a meaningful difference to the health of patients
`through great medicines, then we need to act
`with integrity and remain true to our values. We
`need to behave as an integrated organisation
`and work in collaboration with patients, doctors,
`payers and our many other stakeholders.
`
`Transforming R&D
`That journey starts with an R&D organisation that delivers world-
`class performance and where increased externalisation means
`we can access diverse sources of innovation. We made significant
`progress in 2010 with the creation of a single R&D organisation
`and of a leadership team comprising the best internal and external
`leaders. This includes the appointment of Martin Mackay as
`President, Global R&D. We have also put in place a new global
`organisation structure and governance framework. We are
`consolidating our site footprint and have refocused our resources
`on a smaller number of high-potential activities.
`
`The need for change is undiminished. Our R&D record over the
`past few years is disappointing and our results in 2010 were mixed.
`On the positive side, Vimovo, our medicine for arthritic pain, which
`we developed with Pozen Inc. was approved and launched in the
`EU and the US. Brilique/Brilinta, our treatment for acute coronary
`syndromes, has also been approved in the EU. Kombiglyze™ XR,
`a fixed dose combination of Onglyza™ and metformin, a further
`product in our BMS diabetes collaboration, was approved in
`the US.
`
`In 2010, we made major regulatory submissions for vandetanib
`(for thyroid cancer), Zinforo (an anti-bacterial medicine), dapagliflozin
`(for diabetes) and Axanum (a cardiovascular medicine). We completed
`a deal with Rigel for the Phase III development of fostamatinib (for
`rheumatoid arthritis), and TC-5214, our neuroscience collaboration
`with Targacept, also entered Phase III development.
`
`However, both Brilinta and Axanum received Complete Response
`Letters from the FDA during the year. We responded to the
`Brilinta letter in January 2011 and remain confident in our submission.
`Complete Response Letters were also received for motavizumab
`(for treating serious respiratory syncytial virus (RSV) disease) and
`Certriad (for the treatment of lipid abnormalities). Following these
`letters, we have withdrawn the biological license application
`relating to motavizumab and recorded an impairment charge of
`$445 million. In addition, we have ended our licence agreement
`with Abbott for the development of Certriad.
`
`Leveraging our commercial assets
`Hand in hand with transforming R&D is the need to leverage our
`commercial assets. Our key medicines, such as Crestor, Symbicort
`and Seroquel XR, achieved double digit growth in 2010. Both
`Crestor and Seroquel XR were helped by US and EU approvals for
`additional indications. Nexium is already approved in 120 countries
`and in 2010 we signed an agreement with Daiichi Sankyo for its
`co-promotion and supply in Japan after it is approved for use.
`
`We are also focusing our efforts on ensuring that we have the right
`capabilities to successfully launch and commercialise the next wave
`of medicines from our pipeline, as well as to deliver our expansion
`plans in Emerging Markets, both through organic growth of
`
`products from our current portfolio and pipeline and also through
`selective additions of AstraZeneca branded generics. In 2010,
`we identified a portfolio of more than 100 generic products which
`we are currently licensing across 30 Emerging Markets. To help
`us license these dossiers and source the molecules, we are
`working with a number of companies in India, and have signed an
`agreement with Torrent to supply us with a portfolio of branded
`generic medicines.
`
`We are creating a much stronger focus on those who pay for
`our medicines to help us ensure that our medicines get to the
`right patients, at the right time and at a price they can afford,
`while reflecting our investment. As part of this, we have signed
`a collaboration agreement with HealthCore, which maintains the
`largest commercially insured population data environment in the
`US. This will enable us to carry out ‘real world’ studies of health
`outcomes, which is of increasing importance to payers around
`the world.
`
`In April 2010, we signed an agreement with the US Department of
`Justice to settle an investigation relating to the sales and marketing
`of Seroquel. The requirements of the associated Corporate Integrity
`Agreement include a number of active monitoring and self-reporting
`obligations which we have put in place.
`
`Efficiency across the value chain
`To be successful we need to be a lean and agile organisation.
`We continue to drive our operations strategy, simplifying and
`streamlining our infrastructure and reducing costs. Making changes
`to reshape the business and make it fit for purpose going forward
`affects a large number of people. In many parts of the business that
`has resulted in further reductions in our workforce. The executive
`team and I remain committed to ensuring that we manage these
`changes in the right way. This means dealing responsibly and
`sympathetically with affected individuals and the communities in
`which they live.
`
`People acting with integrity
`A good reputation is critical to our business success. We need to
`earn and maintain the trust of our customers, collaborators and all
`those with whom we do business. That means each of us needs to
`act with integrity and in accordance with our values. It explains why
`we set such great store by compliance with our Code of Conduct.
`During 2010, we reviewed our existing sales and marketing policies
`and standards and created a single new Global Policy on External
`Interactions which we aim to launch in the first quarter of 2011.
`
`A good reputation also requires a commitment to acting responsibly
`and to the sustainable development of our business. To that end,
`our responsible business objectives are closely aligned to our
`business strategy and, in 2010, we reviewed and reshaped our
`corporate responsibility priority action plan.
`
`Finally, I am grateful for the dedication and hard work of all
`our employees. The pace of change will not let up in 2011 but
`I remain confident that together we have the talent, motivation
`and commitment needed to improve patient health through
`great medicines.
`
`David R Brennan
`Chief Executive Officer
`
`AstraZeneca Annual Report and Form 20-F Information 2010
`
`Chief Executive Officer’s Review 9
`
`Page 11 of 224
`
`

`
`Our Strategy and Performance
`
`Our marketplace
`
`The world pharmaceutical market grew by
`5.2% in 2010 and more people than ever
`around the world had access to modern
`medicines, including more patients in emerging
`markets. Indeed, as the World pharmaceutical
`markets figure below shows, average revenue
`growth in Emerging Markets was, at nearly
`14%, more than three times the rate in
`Established Markets.
`
`While demand for medicines and world pharmaceutical markets,
`especially Emerging Markets, continued to grow in 2010, research-
`based pharmaceutical companies faced a challenging marketplace.
`Pricing pressures intensified in most Established Markets with
`increased competition from generic medicines and greater
`constraints being placed on our business by payers. In addition,
`industry-wide R&D productivity continued to decline.
`
`In 2010, the top five pharmaceutical markets in the world remained
`the US, Japan, Germany, France and China, with the US representing
`40.9% of global prescription pharmaceutical sales (2009: 41.2%).
`
`Growth drivers
`Expanding patient populations
`The world population has doubled in the last 50 years from three
`billion to over