What science can do
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`Page 1 of 256
`
`AstraZeneca Exhibit 2108
`Mylan v. AstraZeneca
`IPR2015-01340
`
`

`

`Welcome to the AstraZeneca
`Annual Report and Form 20-F Information 2015.
`
`Learn about our main therapy areas:
`
`We are a global, science-led
`biopharmaceutical business and
`in this Annual Report we report on
`the progress we made in 2015 in
`pushing the boundaries of science
`to deliver life-changing medicines.
`AstraZeneca.
`What science can do.
`
`From page 4, Pascal Soriot, our
`Chief Executive Officer, reviews the
`progress we made during the year
`in delivering our strategy.
`
`Our Chief Financial Officer,
`Marc Dunoyer, reviews our financial
`performance from page 62.
`
`From page 82, Leif Johansson,
`our Chairman, reviews how our
`governance and approach to
`remuneration support delivery
`of the strategy.
`
`Front cover:
`New approaches in the treatment of asthma
`AstraZeneca is developing a therapy aimed
`at producing long-term benefit in asthma by
`addressing imbalances in the immune system
`that may be an underlying cause of the disease.
`Rather than simply treating symptoms by
`relaxing airway constriction and dampening
`inflammation in the lung, this therapy aims to
`target toll-like receptor 9 in dendritic cells in the
`lung. This could potentially change the way
`immune cells communicate with each other and
`restore a healthy balance to the immune system.
`
`Pushing the
`boundaries
`
`Respiratory, Inflammation and Autoimmunity
`We have pushed the boundaries of science in
`respiratory disease for 40 years
`
` See page 26
`
`Breaking through
`conventional thinking
`
`Cardiovascular and Metabolic diseases
`We take an integrated patient approach to
`reduce cardiovascular morbidity and mortality
`
` See page 30
`
`Redefining the
`treatment paradigm
`
`Oncology
`We are committed to advancing the science
`of oncology
`
` See page 34
`
`Important information for readers of this Annual Report
`For more information in relation to the inclusion of reported performance,
`Core financial measures and constant exchange rate (CER) growth rates
`as used in this Annual Report, please see the Financial Review on page
`64. Throughout this Annual Report, growth rates are expressed at CER
`unless otherwise stated.
`
`Definitions
`The Glossary and the Market definitions table from page 247 are
`intended to provide a useful guide to terms and AstraZeneca’s definitions
`of markets, as well as to acronyms and abbreviations, used in this
`Annual Report.
`
`Use of terms
`In this Annual Report, unless the context otherwise requires,
`‘AstraZeneca’, ‘the Group’, ‘we’, ‘us’ and ‘our’ refer to AstraZeneca PLC
`and its consolidated entities.
`
`Cautionary statement regarding forward-looking statements
`A cautionary statement regarding forward-looking statements and other
`essential information relating to this Annual Report can be found on
`page 251.
`
`Directors’ Report
`The following sections make up the Directors’ Report, which
`has been prepared in accordance with the requirements of the
`Companies Act 2006:
`> Business Review: Research and Development
`> Resources Review: Employees
`> Corporate Governance: including the Audit Committee Report
`and Corporate Governance Report
`> Directors’ Responsibility Statement
`> Development Pipeline
`> Sustainability: supplementary information
`> Shareholder Information
`> Corporate Information
`
`Strategic Report
`The following sections make up the Strategic Report, which has
`been prepared in accordance with the requirements of the Companies
`Act 2006:
`> AstraZeneca at a glance
`> Chief Executive Officer’s Review
`> Strategy
`> Therapy Area Review
`> Business Review
`> Resources Review
`> Financial Review
`
`Page 2 of 256
`
`

`

`Financial highlights
`
`Total Revenue*
`up 1% at CER to $24,708 million (down 7%
`at actual rate of exchange)
`
`Net cash flow from operating activities
`down 53% (at actual rate of exchange) to
`$3,324 million
`
`2015
`
`2014
`
`2013
`
`$24.7bn
`
`$24,708m
`
`$26,547m
`
`$25,806m
`
`2015
`
`2014
`
`2013
`
`$3.3bn
`
`$3,324m
`
`$7,058m
`
`$7,400m
`
`Core operating profit
`up 6% at CER to $6,902 million (down 1%
`at actual rate of exchange)
`
`Reported operating profit
`up 100% at CER to $4,114 million (up 93%
`at actual rate of exchange)
`
`2015
`
`2014
`
`2013
`
`$6.9bn
`
`$6,902m
`
`$6,937m
`
`$8,390m
`
`2015
`
`2014
`
`2013
`
`$4.1bn
`
`$4,114m
`
`$2,137m
`
`$3,712m
`
`Contents
`
`2
`4
`8
`24
`
`Strategic Report
`AstraZeneca at a glance
`Chief Executive Officer’s Review
`Strategy
`Therapy Area Review
` Respiratory, Inflammation
`26
`and Autoimmunity
` Cardiovascular and Metabolic diseases 30
` Oncology
`34
`Business Review
`42
`Resources Review
`52
`Financial Review
`62
`
`Corporate Governance
`Chairman’s Statement
`Corporate Governance Overview
`Board of Directors
`Senior Executive Team
`Corporate Governance Report
`Audit Committee Report
`Directors’ Remuneration Report
`
`82
`84
`86
`88
`90
`98
`103
`
`Core EPS
`for the full year up 7% at CER to $4.26
`(unchanged at actual rate of exchange)
`
`Reported EPS
`for the full year up 137% at CER to $2.23
`(up 128% at actual rate of exchange)
`
`2015
`
`2014
`
`2013
`
`$4.26
`
`$4.26
`
`$4.28
`
`$5.05
`
`2015
`
`2014
`
`2013
`
`$2.23
`
` Financial Review from page 62
`
`* As detailed on page 144, Total Revenue consists
`of Product Sales and Externalisation Revenue.
`
`For more information within
`this Annual Report
`
`
`
`For more information see
` www.astrazeneca.com
`
`This Annual Report is also available on our website,
`www.astrazeneca.com/annualreport2015
`
`$2.23
`
`$0.98
`
`$2.04
`
`Financial Statements
`136
`Auditor’s Reports (Group)
`140
`Consolidated Statements
`144
`Group Accounting Policies
`Notes to the Group Financial Statements 149
`Group Subsidiaries and Holdings
`194
`Auditor’s Report (Company)
`196
`Company Statements
`197
`Company Accounting Policies
`199
`Notes to the Company Financial
`Statements
`Group Financial Record
`
`200
`202
`
`Additional Information
`Marketed Products
`Development Pipeline
`Patent Expiries
`Risk
`Geographical Review
`Sustainability:
`supplementary information
`Financials (Prior year)
`Shareholder Information
`Corporate Information
`Trade Marks
`Glossary
`Index
`
`203
`205
`210
`212
`227
`
`234
`236
`240
`245
`246
`247
`250
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`1
`
`Strategic Report
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`Page 3 of 256
`
`

`

`Strategic Report
`
`AstraZeneca at a glance
`
`AstraZeneca is a global, science-led biopharmaceutical business…
`…with an on-market portfolio in our chosen therapy areas.
`
`Respiratory, Inflammation
`and Autoimmunity
`
`Cardiovascular
`and Metabolic diseases
`
`Oncology
`
`Infection, Neuroscience
`and Gastrointestinal
`
`$4,987m
`
`$9,489m
`
`$2,825m
`
`$6,340m
`
`Product Sales
`2014: $5,063m
`2013: $4,677m
`
`Highlights
`
`Product Sales
`2014: $9,802m
`2013: $8,830m
`
`Product Sales
`2014: $3,027m
`2013: $3,193m
`
`Product Sales
`2014: $8,203m
`2013: $9,011m
`
` > Respiratory sales up by 7%,
`including 25% in Emerging Markets,
`before completion of the acquisition
`of Takeda’s respiratory business
`
` > Sales of Symbicort down by 3%
`
` > Brilinta/Brilique sales up by 44%,
`including 64% in the US
`
` > Diabetes sales up by 26%, including
`76% in Emerging Markets
`
` > Sales of Crestor fell by 3% reflecting
`competition from generic statins and
`pricing pressure
`
` > Oncology sales up by 7%
`
` > New Oncology included for the first
`time (comprising Lynparza, Iressa
`(US) and Tagrisso)
`
` > Lynparza launched in 15 markets
`and sales of $94 million
`
` > Sales of Nexium declined by 26%,
`including 52% in the US following
`loss of exclusivity
`
` > Sales of Seroquel XR fell by 12%
`and Synagis fell by 26%
`
` Sales and Marketing from page 48, Financial Review from page 62 and Geographical Review from page 227
`
`We have distinctive R&D capabilities, a growing late-stage pipeline…
`
`Main therapy areas
`
`Opportunity-driven
`
`Respiratory,
`Inflammation and
`Autoimmunity
`
`Cardiovascular
`and Metabolic
`diseases
`
`Oncology
`
`Infection, Neuroscience
`and Gastrointestinal
`
`Small molecules
`
`Biologics
`
`Immunotherapies
`
`Protein engineering
`
`Devices
`
`Personalised healthcare and translational science capabilities
`
`NMEs in Phase III, pivotal Phase II
`or under regulatory review
`
` Therapy Area Review from page 24 and
`Research and Development from page 42
`
`15
`
`2015
`
`2014
`
`2013
`
`2012
`
`2
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`15
`13
`11
`6
`
`Page 4 of 256
`
`

`

`…and a strong global commercial presence, with strength in Emerging Markets.
`
`North America
`
`Europe
`
`International and Japan
`
`$10,007m
`
`Product Sales
`2014: $10,710m
`2013: $10,328m
`
`Employees
`
`7,600
`
`Highlights
`
`$5,323m
`
`Product Sales
`2014: $6,638m
`2013: $6,658m
`
`5,900
`
`$8,311m
`
`Product Sales
`2014: $8,747m
`2013: $8,725m
`
`21,900
`
` > Sales in the US declined by 6% reflecting entry
`of generic Nexium products and adverse Synagis
`guideline changes
`
` > Favourable performances were delivered by Brilinta,
`Farxiga, Bydureon and Lynparza as well as the
`acquired Respiratory medicines, Tudorza and Daliresp
`
` > Sales in Canada grew by 4%
`
` > Sales declined by 6%
`
` > Strong growth for Diabetes medicines was
`offset by generic competition facing Crestor and
`Seroquel XR
`
` > 14% decline in Symbicort sales reflected adverse
`pricing movements driven by competition from
`analogues in key markets
`
` > Emerging Markets revenue grew by 12%
`to $5,822 million, including China sales
`growth of 15%
`
` > Sales in Japan grew by 4% to $2,020 million
`
` > Opened facility in Russia
`
` Business Review from page 42
`
`Our talented employees are committed to achieving our Purpose in a sustainable way…
`61,500
`12,500
`8,900
`
`employees in
`Manufacturing
`and Supply
`
`employees worldwide
`
`employees in R&D
`
`Increasing our proximity to bioscience clusters and co-locating around three strategic R&D centres
`
` > Cambridge, UK
`
` > Gaithersburg, Maryland US
`
` > Gothenburg, Sweden
`
` Employees from page 52
`...and our disciplined
`capital allocation enables
`commitment to a
`progressive dividend.
`
`$3,443m
`
`$2.80
`
`Net cash shareholder distributions
`increased to $3,443 million
`
`Dividend per Ordinary Share
`unchanged
`
`All growth rates at CER.
`All employee numbers are approximate
`as at 31 December 2015.
`
`2015
`
`2014
`
`2013
`
`$3,443m
`
`2015
`
`$3,242m
`
`2014
`$2,979m 2013
`
`$2.80
`
`$2.80
`
`$2.80
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`3
`
`Strategic Report
`
`Page 5 of 256
`
`

`

`Strategic Report
`
`Chief Executive Officer’s Review
`
`2015 was an exceptional year for AstraZeneca as we
`made significant progress in meeting both our near-
`and longer-term strategic goals. Building on the solid
`foundations of the previous two years, our success during
`2015 was based on a strong commitment to our values.
`It was this focus that made the year a great one for
`science and patients.
`
`It was this focus
`
`that made the year a
`great one for science
`and patients.”
`
`The first stage of our strategic journey
`involved strengthening our product pipeline
`and building our Growth Platforms. We are
`now well into the second stage of that
`journey, as we manage a transitional period
`of patent expiries, and are on track to
`continue driving our Growth Platforms
`and launch our new products.
`
`The increased momentum we built in
`2015 was exemplified by a number of
`developments towards the end of the
`year in each of our main therapy areas
`that will help deliver our strategy.
`
`Leadership in Oncology
`The first of those events was the approval
`in November of Tagrisso in the US. This
`approval marks a significant milestone in
`AstraZeneca’s journey, and in our leadership
`in Oncology. Tagrisso is the first treatment
`approved for patients with a very specific
`form of non-small cell lung cancer who
`present with a genetic mutation in the
`epidermal growth factor receptor but also
`have a secondary mutation, T790M. Its
`story is remarkable and, as shown over,
`it demonstrates our ability to successfully
`deliver our pipeline and, even more
`
`importantly, offer patients a new treatment
`option in a disease where very few
`solutions exist.
`
`Another significant development in
`Oncology came with our agreement in
`December to invest in a majority equity
`stake in Acerta Pharma, a company
`focused on haematology which represents
`a natural fit with our existing Oncology
`pipeline. The acquisition provides us with
`access to acalabrutinib (ACP-196), a
`potential best-in-class small molecule
`oral BTK inhibitor, which is expected to
`transform the treatment landscape for
`B-cell malignancies, the most common
`forms of blood cancers, and has potential in
`solid tumours and autoimmune diseases.
`
`The acquisition of Acerta Pharma
`will also reinforce our growing position in
`haematology – building on our agreement
`with Celgene, in April, to develop durvalumab
`across a range of blood cancers.
`
`Innovation in Cardiovascular and
`Metabolic diseases
`Also in December, we completed our
`acquisition of ZS Pharma. This transaction
`provides access to the potassium-binding
`compound ZS-9, a potential best-in-class
`treatment for hyperkalaemia (high potassium
`levels in the bloodstream). The acquisition
`represents a good fit with our pipeline and
`portfolio in Cardiovascular and Metabolic
`diseases (CVMD), which focuses on
`reducing morbidity, mortality and organ
`damage by addressing multiple risk factors
`across cardiovascular disease, diabetes
`and chronic kidney disease.
`
`4
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`Page 6 of 256
`
`

`

`AstraZeneca: Values in action
`Tagrisso (osimertinib) highlights how living our values can
`ensure we achieve our goals. It started with inspiration
`and effort of our scientists to design a compound precisely
`targeting the biological dysfunction associated with a specific
`form of non-small cell lung cancer. And, by putting patients
`first, working collaboratively and following the science, we
`delivered the fastest development journey in our history: less
`than three years from first patient dosed to approval. It was
`then shipped to patients in less than six hours.
`
`Transforming Respiratory treatment
`Another development in December, was
`our agreement to acquire Takeda’s core
`respiratory business. When completed, this
`agreement will expand our ownership of
`rights to roflumilast (Daliresp/Daxas), the
`only approved oral PDE4 inhibitor for the
`treatment of COPD. The agreement builds
`on our acquisition from Actavis, in March,
`of the rights to market Daliresp in the US.
`This important agreement will also provide
`us with access to other marketed medicines
`that complement our growing portfolio.
`Importantly, it will support our return to
`growth after 2017 and our goal to transform
`the way respiratory disease is treated.
`
`Achieve scientific leadership
`In addition to these developments, in the
`week before Christmas, we received our
`sixth approval for the year from the FDA.
`Subsequently, in February 2016, we
`received approval from the EU for Tagrisso
`for lung cancer.
`
`However, in what was a very busy and
`successful year, my Review can only
`give a flavour of what we achieved. The
`2015 Strategic priorities overview, shown
`on the right, lists some of our other
`achievements, as well as the challenges
`we faced. All these are explored in more
`detail throughout our Strategic Report.
`
`So far as achieving scientific leadership is
`concerned, one measure of the distance
`we have come is in the recognition we have
`received through ‘high-impact’ publications
`in major relevant scientific journals.
`AstraZeneca people had 58 such articles
`published in 2015 compared with seven
`in 2010 – a more than eightfold increase.
`
`2015 Strategic priorities overview
`
`Achieve scientific leadership
` > 6 approvals of NMEs or major LCM
`projects in major markets
` – Oncology: Iressa (US); Tagrisso
`(AZD9291/osimertinib) (US);
`Faslodex 500mg (China)
` – CVMD: Bydureon Dual Pen (Japan);
`Brilinta (US for treatment of history
`of heart attack)
` – RIA: Zurampic (US)
` > 2 Phase III NME starts:
` – anifrolumab for lupus
` – PT010 for COPD
` > 12 NME or major LCM regulatory
`submissions in major markets
` > Accelerated reviews included
` – Brilinta FDA granted Priority Review
`for PEGASUS
` – Tagrisso FDA and PMDA granted
`Priority Review. EMA accelerated
`assessment
` – FDA granted Fast Track status for
`anifrolumab for systemic lupus
`erythematosus; durvalumab for head
`and neck cancer; and tremelimumab
`for mesothelioma
` > 20 projects discontinued
`
`
`Artistic impression of
`osimertinib binding to
`mutant EGFR.
`
`Return to growth
` > 1% increase in Total Revenue
`to $24,708 million at CER; comprising
`Product Sales of $23,641 million (down 1%)
`and Externalisation Revenue of
`$1,067 million (up 140%)
` – Based on actual exchange rates, Total
`Revenue declined by 7%, reflecting the
`particular weakness of key trading
`currencies against the US dollar
` > 11% increase in Growth Platforms revenue
`contributing 57% of Total Revenue
` – Respiratory: up 7%, before completion
`of the acquisition of Takeda’s respiratory
`business
` – Brilinta/Brilique: up 44% underpinned by
`a recently-extended US label and positive
`CHMP opinion
` – Diabetes: up 26%, including 76% in
`Emerging Markets; global Farxiga/Forxiga
`growth of 137%
` – Emerging Markets: up 12%, including
`China and Latin America each growing
`by 15%
` – Japan revenue: up 4%
` – New Oncology: contributed $119 million,
`comprising Lynparza, Iressa (US) and
`Tagrisso
` > US revenue was down 6% to $9,474 million;
`Europe down 6% to $5,323 million; and
`Established ROW was stable at
`$3,022 million (at CER)
`
`Great place to work
` > Our quarterly employee survey (pulse) showed belief in our strategy stood at 89%
`(compared with 86% in our 2014 all-employee survey)
` > Exceeded our targets for senior leaders: women (42% versus 41%) and country of origin
`from an Emerging Market or Japan (15.6% versus 13%)
` > Exceeded our target by screening more than one million people in Kenya for hypertension
`as part of our Healthy Heart Africa programme
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`5
`
`Strategic Report
`
`Page 7 of 256
`
`

`

`Strategic Report
`
`Chief Executive Officer’s Review continued
`
`Strategic Report
`In this Strategic Report, we outline our
`business model, the marketplace in which
`we operate and the strategic priorities we
`decided upon in response to those
`conditions. We define our measures of
`success (our key performance indicators)
`and the risks we have identified to
`achieving our strategy.
`
`Subsequent sections explore our therapy
`areas as well as our business units and
`the resources we are able to deploy in
`their support.
`
`We also highlight how commitment to our
`values contributes to our success.
`
`Great people are central to our
`success and being a great place
`to work is at the heart of our
`efforts to release the talents
`of our employees.
`
`A pipeline ahead of plan
`Our pipeline is also a measure of our
`progress and 2015 was a year of
`considerable success. Of our six approvals
`for the year, the approval, in September,
`of Brilinta in the US for the treatment of
`patients with a history of heart attack
`beyond the first year was particularly
`impressive: it took just nine months to move
`from the presentation of top-line PEGASUS
`TIMI-54 data to launch.
`
`During the year we also made 12 major
`regulatory submissions. After our partner
`Amgen decided to terminate our
`collaboration on brodalumab in May, our
`subsequent collaboration with Valeant,
`with their specific expertise in dermatology,
`enabled submissions to be made in the
`US and EU by the end of the year. In July,
`results of a Phase III study for selumetinib
`did not meet its primary endpoint for uveal
`melanoma. As for saxagliptin/dapagliflozin,
`its submission in the EU and elsewhere
`remains on track despite a Complete
`Response Letter being received from
`the FDA in October.
`
`External recognition of the strength of our
`pipeline was provided by the number of
`accelerated reviews received by our
`candidate drugs during the year, including
`those for cancer, respiratory diseases and
`lupus. Internally, six Phase III investment
`decisions and 11 Phase II starts stand
`testament to the quality of the projects
`in development which will help deliver
`sustainable growth.
`
`Even after the approvals we received during
`the year, and the 18 approvals of the last
`two years, we ended 2015 with 15 projects
`in late-stage development, including recently
`
`acquired compounds. This exceeds the
`target set in 2013 of nine to 10 NMEs in
`Phase III/pivotal Phase II studies or under
`regulatory review by 2016.
`
`Collaboration as a way of life
`2015 was also a good year for
`collaborations which are an integral part
`of our business model and culture. They
`improve the productivity of our R&D and
`help maximise the value of our pipeline.
`With 10 deals we considerably exceeded
`our target. Some of these, such as our
`agreement with Celgene, are examples of
`strategic collaborations to broaden and
`accelerate the development of key pipeline
`assets. This is explained in more detail in
`the Business model on page 8.
`
`As well as externalising some of our early
`development projects outside our main
`therapy areas, we also divest medicines that
`can be better deployed by a partner with a
`primary focus in that area. Examples in 2015
`included the divestment of Entocort, our
`gastrointestinal medicine. Both routes allow
`us to leverage the capabilities and expertise
`of others, focus our own resources and
`deliver the greatest benefit to patients
`and shareholders.
`
`Scientific collaborations also help us
`push the boundaries of science. For
`example, during the year we announced
`four collaborations aimed at harnessing
`the power of CRISPR (clustered regularly-
`interspaced short palindromic repeats),
`including one with The Wellcome Trust
`Sanger Institute in Cambridge, UK –
`see over.
`
`6
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`Page 8 of 256
`
`

`

`Values in action: We follow the science
`Genetic engineering is not new. The Human
`Genome Project produced a complete
`genetic blueprint for building a human in
`2003 but, until now, scientists have been
`unable to manipulate genes simply and
`effectively. A new technology called CRISPR
`is changing that by allowing the genome
`of several different species to be edited
`precisely. We are using CRISPR to identify
`new targets for medicines and develop new
`models to test compounds which align more
`closely with human disease.
`
`Return to growth
`We delivered a strong pipeline and financial
`performance in 2015 as we began the next
`phase in our strategic journey. As the 2015
`Strategic priorities overview shows, Total
`Revenue in 2015 was up 1% at CER.
`The overview also shows the success
`we have had with our Growth Platforms
`where Product Sales grew by 11% and
`represented 57% of Total Revenue.
`
`Our top-line and gross-margin growth
`underpinned continued investment in
`R&D. Core R&D costs were up by 21%
`in the year which reflected the investment
`in the pipeline.
`
`Investing in China for the long term
`The extent of our ambition was
`demonstrated by our strategic investments,
`announced in December, to accelerate the
`delivery of innovative medicines to patients
`in China, the world’s second largest
`economy and our second largest market,
`and to support the delivery of our strategy.
`
`These initiatives will see AstraZeneca
`become the first multinational
`pharmaceutical company operating in
`China to commit to local development of
`its innovative global portfolio from research
`to commercialisation. Just as importantly,
`these initiatives will allow us to better
`integrate Chinese requirements into our
`global portfolio decisions.
`
`Great place to work
`Great people are central to our success and
`being a great place to work is at the heart
`of our efforts to release the talents of our
`employees. So, for example, during 2015,
`we held over 70 People Development Week
`
`events to help our staff take ownership
`of their personal development. A talented
`workforce is also diverse and I am pleased
`that we managed to exceed our targets for
`women and country of origin among our
`senior leaders. I take pride in the fact that
`our efforts are being increasingly recognised
`in external awards for the work environment
`we have instilled.
`
`That environment is nurtured by our
`investment in strategic R&D centres, such
`as Cambridge, UK where we now have
`more than 1,600 employees and where the
`construction of our R&D centre and global
`headquarters is progressing rapidly. These
`investments help create an environment
`of innovation and a focus on science and
`patients. They also attract a lot of talent
`from academia and other companies.
`
`A great place to work also has to be one
`where we do the right thing – for the
`patients who take our medicines, as well as
`the planet and society as a whole. If we are
`to deliver business success over the longer
`term, then sustainability has to be in our
`DNA. As the Chairman outlines in more
`detail in his Statement, the steps we are
`taking in this regard reflect a determination
`to do our fair share.
`
`Looking ahead
`The investments we made in 2015 were
`designed to ensure we achieved a balance
`between meeting our short-term goal of
`returning to growth and then delivering
`sustainable growth over the longer term as
`we build a sustainable, durable and more
`profitable business.
`
`CRISPR gene
`editing tool.
`
`As we face the transitional period of patent
`expiry for Crestor in the US, we’re confident
`that our strong execution on strategy,
`combined with the benefits of focused
`investments and new launches, keeps us on
`track to return to sustainable growth in line
`with our targets. The weakness of key
`trading currencies against the US dollar has
`continued. Based on average exchange
`rates in January 2016 and our published
`currency sensitivities, an adverse impact
`of around 3% from currency movements on
`Total Revenue and Core EPS in 2016 would
`be anticipated.
`
`Appreciation
`I am confident that in AstraZeneca we
`have the people who can overcome our
`short-term challenges and deliver longer-term
`sustainable growth. In that regard I would
`particularly like to welcome Pam Cheng and
`Sean Bohen who joined us during the year.
`In doing so, I would like to thank David Smith
`and Briggs Morrison whom Pam and Sean
`replaced, for the contributions they made to
`our strategic journey.
`
`In closing, I would like to pay tribute to
`everyone in AstraZeneca for making 2015
`a tremendous year. I have every confidence
`in their ability to continue that success in the
`years ahead.
`
`Pascal Soriot
`Chief Executive Officer
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`7
`
`Strategic Report
`
`Page 9 of 256
`
`

`

`Strategic Report Strategy
`
`Business model
`
`Our Purpose and Values drive what we do – and how we do it. This includes our
`business model and our determination to create sustainable value across every
`medicine’s life-cycle.
`
`AstraZeneca’s investor proposition
`
`How it works
`
`Science-led biopharmaceutical
`company in three therapy areas
`
`Productive
`R&D
`
`Strong
`business
`
` > Platform of small
`molecules and
`biologics
` > Sustainable model
`and growing early-
`stage pipeline
` > Growing late-stage
`pipeline with immuno-
`oncology strength
` > Protein engineering
`
` > Strong portfolio of
`established products
` > Global scale with
`Emerging Markets
`strength
` > Six platforms driving
`growth towards a
`balanced portfolio
`of primary care and
`specialty care
`medicines
` > Durability through
`devices and
`companion diagnostics
`
`Sustainable
`organisation
`
` > Innovative,
`entrepreneurial
`culture
` > Strong talent base
` > Efficient and
`productive
`organisation
` > Balanced pipeline
`to drive sustainable
`growth
`
`Disciplined
`capital allocation
`
`Commitment to
`progressive dividend
`
`Externalisation
`Our business model includes externalisation as part of our portfolio management
`strategy and is a result of increasing R&D productivity and a focus on three
`main therapy areas. Externalisation activities relate to specific risk- and
`reward-sharing strategic collaborations that provide greater access to strong
`science and broaden, accelerate and maximise the development and
`commercialisation potential for some of our medicines and help bring those
`medicines to patients faster. Milestone payments and royalties arising from
`externalisation activities are included in the income statement as Externalisation
`Revenue. Externalisation allows us to leverage the capabilities and expertise
`of others, focus on our main therapy areas and deliver the greatest benefit to
`patients and shareholders.
`
`Externalisation activities in 2015 included our collaboration with Celgene,
`leveraging the expertise of AstraZeneca in immuno-oncology along with the
`experience of Celgene in the study and treatment of blood cancers, for the
`development and commercialisation of durvalumab across a range of
`haematological malignancies. Similarly, our collaboration with Lilly, entered
`into in 2014, combines the scientific expertise from our two organisations and,
`by sharing the risks and cost of late-stage development, aims to accelerate the
`advancement of AZD3293 and progress a new approach to support the treatment
`of Alzheimer’s disease patients around the world. AstraZeneca retains
`significant interest, and continued participation, in the key decision making
`undertaken within these strategic collaborations.
`
` Financial Review on page 62
`
`8
`
`AstraZeneca Annual Report and Form 20-F Information 2015
`
`Strategic priorities
`Our strategic priorities reflect how we
`aim to achieve our Purpose. They are to
`
` Strategic priorities from page 16
`
`Inputs
`
`Demographic trends are favourable to our
`industry’s long-term growth; while innovative
`scientific research continues to deliver
`new ways of fulfilling unmet medical need.
`As the Marketplace section from page 12
`demonstrates, however, the economic, social
`and political environment presents not only
`significant opportunities but challenges
`as well.
`To achieve our Purpose, we seek to maximise
`the value of our resources, including our
`employees, IP and partners.
`
` Resources Review from page 52
`
`We have strong commercial franchises that
`focus on Respiratory, Inflammation and
`Autoimmunity; Cardiovascular and Metabolic
`diseases; and Oncology. We have combined a
`broad portfolio of primary care and specialty
`care medicines with a global reach. We
`believe our capabilities, pipeline and portfolio
`will enable us to build on our leading
`positions in Established Markets and achieve
`further growth in Emerging Markets.
`
` Therapy Area Review from page 24
`
`Sustainability
`
`
`
` In the wider world from page 55
`
`Purpose and Values
`
`Page 10 of 256
`
`

`

`1
`
`2
`
`3
`
`Achieve scientific
`leadership
`
`Return
`to growth
`
`Be a great
`place to work
`
`These priorities reflect the choices we have
`made to focus our R&D and commercial
`investments, prioritise and accelerate
`promising assets and business development,
`and transform our innovation model and the
`way we work.
`
`Outputs
`
`Returns to shareholders
`Revenue from the sale of our medicines
`generates cash flow, which helps us fund
`business investment. It also enables us
`to meet our debt service obligations and
`follow our progressive dividend policy.
`This involves balancing the interests
`of our business, financial creditors
`and shareholders.
`
` Financial Review from page 62
`
`Improved health
`Continuous scientific innovation is vital
`to achieving sustainable healthcare as it
`creates value by
` > improving health outcomes and
`transforming patients’ lives
` > enabling healthcare systems to reduce
`costs and increase efficiency
` > improving access to healthcare and
`healthcare infrastructure
` > helping develop the communities
`in which we operate through local
`employment and partnering.
`
`How we create and sustain value over
`the life-cycle of a medicine across our
`chosen therapy areas
`
`Investment in the R&D, Manufacturing and
`Supply, and Sales and Marketing of innovative
`medicines. This includes targeted business
`development through collaboration, in-licensing
`and acquisitions.
`
`Investm
`
`ent in dis c o
`
`
`
`Reinvest m
`
`
`r e t u rns
`
`
`
`f
`
`t o
`
`n
`
`e
`
`Inputs
`
`Outputs
`
`
`
`
`v
`
`e
`
`r
`
`y
`
`,
`
` d e v elopment and co
`
`
`
`m
`
`Our
`Purpose
`
`
`
`mercialisatio
`
`n of
`
`edicines
`
` patent-protected m
`
`Reinvestment of returns from sales,
`externalisation (see page 8) and divestments
`to develop and sustain the next generation of
`innovative medicines.
`
`Business model
`
`We strive to operate in accordance with
`a disc