What science can do
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`AstraZeneca Exhibit 2004
`Mylan v. AstraZeneca
`IPR2015-01340
`
`Page 1 of 248
`
`

`

`Welcome to the AstraZeneca Annual Report and Form 20-F Information 2014.
`
`At AstraZeneca, each and every one of us is bold
`in the belief that science should be at the centre
`of everything we do.
`
`Science compels us to push the boundaries of what is
`possible. We trust in the potential of ideas and pursue
`them, alone and with others, until we have transformed
`the treatment of disease.
`
`AstraZeneca. What science can do.
`See what science can do…
`The future of treatment for many of today’s diseases lies in uncovering mechanisms that are newly emerging or
`are still to be discovered. We believe the best way to help patients is to focus on breakthrough science to discover
`these mechanisms and develop novel, targeted therapies that interact with them.
`
`This is at the heart of our business and our purpose as a company: to push the boundaries of science to deliver
`life-changing medicines.
`
`…make hearts
`healthier
`
`…help more people
`survive cancer
`
`…help people
`breathe easier
`
`
`
`For more information see page 36
`
`
`
`For more information see page 40
`
`
`
`For more information see page 44
`
`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 72. Throughout this
`Annual Report, growth rates are expressed at CER unless
`otherwise stated.
`
`Definitions The Glossary and the Market definitions table from
`page 239 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 243.
`
`Directors’ Report The following sections make up the
`Directors’ Report, which has been prepared in accordance
`with the requirements of the Companies Act 2006:
`> Corporate Governance Report
`> Audit Committee Report
`> Development Pipeline
`> Responsible Business
`> 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
`> Chairman’s Statement
`> Chief Executive Officer’s Review
`> Strategy
`> Therapy Area Review
`> Business Review
`> Resources Review
`> Financial Review
`
`Front cover:
`Oncology combination therapies
`AstraZeneca is combining biologic and small molecule therapies for the treatment of cancer. These combinations not only target the tumour directly, but help boost the body’s own
`immune system to induce tumour cell death.
`
`Page 2 of 248
`
`

`

`Inside our Strategic Report
`
`Contents
`
`Dear shareholder
`Our Strategic Report is designed to help you assess how
`the Board of Directors performed in 2014 in promoting the
`success of AstraZeneca. It begins with an overview of
`AstraZeneca and our 2014 performance, and includes
`statements from our Chairman and Chief Executive Officer.
`It also includes a description of our strategy, business model,
`key performance indicators, principal risks, governance,
`executive remuneration, therapy areas, business activities
`and resources, as well as a financial review of 2014.
`
`Strategy
`Our strategic priorities, measures of success, principal risks,
`governance and executive remuneration
`
`Business model
`Life-cycle of a medicine
`Marketplace
`Strategic priorities
`Key performance indicators
`Risk overview
`Governance and Remuneration
`Board of Directors
`Senior Executive Team
`
`Therapy Area Review
`Our portfolio, pipeline projects, priorities, capabilities and
`activities in our therapy areas
`
`Therapy Area Overview
`Cardiovascular and Metabolic diseases
`Oncology
`Respiratory, Inflammation and Autoimmunity
`Infection, Neuroscience and Gastrointestinal
`
`Business Review
`Our activities across the entire life-cycle of a medicine
`
`Research and Development
`Manufacturing and Supply
`Sales and Marketing
`
`Resources Review
`The resources we use to achieve our strategy
`
`Employees
`Relationships
`Intellectual Property
`Infrastructure
`
`Financial Review
`
`A financial review of 2014
`
`Links to more information are denoted
`with the following symbols:
`
`10
`12
`14
`18
`20
`24
`26
`28
`30
`
` 32
` 35
` 40
` 44
` 48
`
` 52
` 56
`59
`
` 62
`65
`68
` 69
`
`70
`
`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/annualreport2014
`
`Strategic Report
`AstraZeneca at a glance
`Chairman’s Statement
`Chief Executive Officer’s Review
`Strategy
`Therapy Area Review
`Business Review
`Resources Review
`Financial Review
`
`Corporate Governance
`Corporate Governance Report
`Audit Committee Report
`Directors’ Remuneration Report
`
`Financial Statements
`Auditor’s Reports
`Consolidated Statements
`Group Accounting Policies
`Notes to the Group Financial Statements
`
`Additional Information
`Development Pipeline
`Patent Expiries
`Risk
`Geographical Review
`Responsible Business
`Financials (Prior year)
`Shareholder Information
`Corporate Information
`Trade Marks
`Glossary
`Index
`
`2
`4
`6
`10
`32
`52
`62
`70
`
`86
`96
`100
`
`130
`134
`138
`143
`
`197
`201
`203
`220
`227
`229
`232
`237
`238
`239
`242
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`1
`
`Strategic Report
`
`Corporate Governance
`
`Financial Statements
`
`Additional Information
`
`Page 3 of 248
`
`

`

`AstraZeneca at a glance
`
`We are a global, science-led
`biopharmaceutical business. We are
`one of only a handful of companies to
`span the entire life-cycle of a medicine
`from research and development to
`manufacturing and supply, and the global
`commercialisation of primary care and
`specialty care medicines.
`
`We operate in more than 100 countries
`and our innovative medicines are used
`by millions of patients worldwide.
`
`Proposition to investors
`
`AstraZeneca is a global, science-led
`biopharmaceutical business...
`
`…distinctive
`R&D capabilities
`and a growing
`late-stage
`pipeline…
`
`…disciplined
`capital allocation
`and a commitment
`to a progressive
`dividend…
`
`…and a talented
`workforce
`committed to
`achieving our
`purpose.
`
`…with a focused,
`on-market
`portfolio in three
`main therapy
`areas and a
`strong global
`commercial
`presence…
`
`Business model from page 10
`
`Strategic priorities
`
`
`
`Strategic priorities from page 18
`
`A global business
`
` 13,500
`
`employees in
`North America
`(23.5%)
`
`3,500
`
`employees in
`Central and
`South America
`(6.1%)
`
`2,400
`
`employees in
`Middle East
`and Africa
`(4.2%)
`
`Financial highlights
`
`Revenue
`up 3% at CER to $26,095 million
`
`
`
` Achieve scientific
`leadership
`
`
`
` Return to
`growth
`
`
`
` Be a great place
`to work
`
` 18,800
`
`employees in Europe
`(excluding Russia)
`(32.7%)
`
` 1,500
`
`employees in
`Russia
`(2.6%)
`
`Growth drivers
` > Emerging Markets revenue rose by 12% to $5,827m
` > Japan revenue fell 3% due to mandated
`biennial price cuts, increased use of generics
`and Nexium recall in the fourth quarter
`
`Co-locating around three
`strategic R&D centres
`• Cambridge, UK
`• Gaithersburg, Maryland US
`• Mölndal, Sweden
`
`2,800
`
`employees in Japan
`(4.8%)
`
`9,700
`
`employees in China
`(16.9%)
`
`5,300
`
`employees in Asia Pacific
`(excluding China,
`Japan and Russia)
`(9.2%)
`
`57,500
`
`employees worldwide
`
`9,000
`
`employees in R&D
`
`10,200
`
`employees in Manufacturing
`and Supply
`
`34,800
`
`employees in Sales and
`Marketing
`
`Note: All employee numbers are
`approximate as at 31 December 2014.
`
`Net cash flow from operating activities
`down 5% (at actual rate of exchange)
`to $7,058 million
`
`Core operating profit
`down 13% at CER to $6,937 million
`
`2014
`2013
`2012
`
`$26.1bn
`
`$26,095m
`$25,711m
`$27,973m
`
`2014
`2013
`2012
`
`$7.1bn
`
`$7,058m
`$7,400m
`$6,948m
`
`2014
`2013
`2012
`
`$6.9bn
`
`$6,937m
`$8,390m
`$11,159m
`
`2
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`Strategic Report
`
`Page 4 of 248
`
`

`

`Therapy areas
`
`Cardiovascular
`and Metabolic diseases
`
`Oncology
`
`Respiratory, Inflammation
`and Autoimmunity
`
`Infection, Neuroscience
`and Gastrointestinal
`
`Leading medicines by sales value1
`
`Crestor
`for managing
`cholesterol levels
`
`2012: $6,253m
`2013: $5,622m
`$5,512m
`2014 (-1%)
`
`Seloken/
`Toprol-XL
`for hypertension,
`heart failure and
`angina
`
`2012: $918m
`2013: $750m
`$758m
`2014 (+4%)
`
`Iressa
`for lung cancer
`
`Faslodex
`for breast cancer
`
`Onglyza6
`for Type 2
`diabetes
`
`2012: $323m
`2013: $378m
`$820m
`2014 (+119%)
`
`Zoladex
`for prostate and
`breast cancer
`
`2012: $611m
`2013: $647m
`$623m
`2014 (-1%)
`
`2012: $654m
`2013: $681m
`$720m
`2014 (+7%)
`
`2012: $1,093m
`2013: $996m
`$924m
`2014 (-4%)
`
`Growth drivers
`
`Brilinta/Brilique revenue rose by 70%
`to $476 million
`
`Diabetes franchise revenue rose by
`139% to $1,870 million, aided in part
`by the acquisition of BMS’s share
`of the diabetes alliance, a strong
`US Farxiga launch and good uptake
`of Bydureon Pen
`
`Oncology became the sixth growth
`platform in January 2015; several
`potential submissions in 2015 to 2016;
`and expected to contribute largest
`proportion of pipeline-driven revenue
`growth, with potential to grow to
`one-quarter of sales by 2023
`
`Pulmicort3
`for asthma
`
`Symbicort4
`for asthma
`and COPD
`
`2012: $866m
`2013: $867m
`$946m
`2014 (+11%)
`
`2012: $3,194m
`2013: $3,483m
`$3,801m
`2014 (+10%)
`
`Nexium
`for acid-related
`diseases
`
`2012: $3,944m
`2013: $3,872m
`$3,655m
`2014 (-4%)
`
`Seroquel XR
`for schizophrenia,
`bipolar disorder
`and major
`depressive
`disorder
`
`2012: $1,509m
`2013: $1,337m
`$1,224m
`2014 (-8%)
`
`Synagis
`for RSV, a
`respiratory
`infection
`in infants
`
`2012: $1,038m
`2013: $1,060m
`$900m
`2014 (-15%)
`
`Respiratory franchise revenue rose
`by 10% to $5,063 million, with strong
`Symbicort performance in the US
`
`Value creation through science-led
`R&D, collaborations and licensing, such
`as the BACE inhibitor alliance with Lilly
`for Alzheimer’s disease
`
`In the pipeline2
`
`Phase I/II
`4
`LCM5
`projects
`15
`
`Phase III
`5
`Discontinued
`projects
`1
`
`Phase I/II
`36
`LCM5
`projects
`2
`
`Phase III
`15
`Discontinued
`projects
`2
`
`Phase I/II
`20
`LCM5
`projects
`3
`
`Phase III
`8
`Discontinued
`projects
`4
`
`Phase I/II
`
`15
`
`LCM5
`projects
`6
`
`Phase III
`4
`Discontinued
`projects
`2
`
`1 Indications may vary from country to country.
`2 NMEs, significant additional indications and LCM projects.
`3 Includes all formulations and devices.
`4 Includes all devices.
`5 Life-cycle management.
`6 Includes revenue for Kombiglyze XR/Komboglyze.
`
` Therapy Area Review from page 32
`
`Reported operating profit
`down 31% at CER to $2,137 million
`
`Core EPS
`for the full year down 8% at CER to $4.28
`
`Reported EPS
`for the full year down 34% at CER to $0.98
`
`2014
`2013
`2012
`
`$2.1bn
`
`$2,137m
`$3,712m
`$8,148m
`
`2014
`2013
`2012
`
`$4.28
`
`$4.28
`$5.05
`$6.83
`
`2014
`2013
`2012
`
`$0.98
`
`$0.98
`$2.04
`$4.95
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`3
`
`Strategic Report
`
`Page 5 of 248
`
`

`

`Chairman’s Statement
`
`Dear shareholder
`
`As 2014 finished, it brought to a close
`an exceptional year for AstraZeneca.
`We ended it fully focused on the
`delivery of our strategy as an
`independent company. This means
`turning our attractive growth prospects
`and a rapidly progressing pipeline
`into life-changing medicines and
`value for shareholders.
`
`Net cash shareholder distributions
`increased by 9% (Actual growth) to
`$3,242 million (2013: $2,979 million;
`2012: $5,871 million)
`
`$3.2bn
`
`
`
`In his Review on the following pages,
`your Chief Executive Officer outlines the
`progress we made during the year in
`delivering our strategic priorities. I would
`like to concentrate on the context in
`which that progress was made and the
`implications for you, our owners.
`
`Clear decisions, responsibly made
`When Pfizer approached AstraZeneca
`during 2014, our responsibilities as Directors
`were clear: to act in a way that promoted
`the success of the Company for the benefit
`of its shareholders. In addition to assessing
`the value and deliverability of Pfizer’s
`proposals, we had to have regard
`to the long-term consequences of our
`decisions, the interests of employees,
`relationships with customers, our impact
`on the wider community, including patients,
`and the reputation of the Company. At each
`stage of the process, it was my duty as
`Chairman to ensure we carried out our
`deliberations responsibly, with those duties
`in mind. After extensive review and
`discussions, your Board rejected Pfizer’s
`various proposals. We did so because
`
` > the proposals fell short of AstraZeneca’s
`value as an independent, science-led
`company
` > AstraZeneca had excellent momentum in
`the delivery of our clearly defined strategy,
`underpinning the Board’s confidence in
`our long-term revenue targets and
`profitability
` > Pfizer’s proposals brought uncertainty
`and risks for AstraZeneca shareholders.
`
`In the wake of that decision, I believe
`we have taken full advantage of the
`opportunity to galvanise employees and
`build on our demonstrable progress as
`an independent company.
`
`A responsible business
`Of course, acting responsibly is not
`restricted to the AstraZeneca boardroom.
`It applies to all our activities. External
`recognition is particularly helpful in providing
`independent validation of our performance.
`I was therefore pleased that we were once
`again listed in the Dow Jones Sustainability
`World Index in 2014. We also retained our
`listing on the European Index for the seventh
`year running.
`
`In the biennial Access to Medicines Index,
`we were disappointed to find ourselves in
`15th position. We remain determined to find
`new ways to improve access to healthcare.
`I am confident that our Healthy Heart Africa
`programme, which aims to improve the lives
`of hypertensive patients across Africa
`through increased education, screening,
`diagnosis and treatment, will make an
`important contribution.
`
`Improved access matters because our
`innovative medicines can make a global
`contribution to better health. They help
`increase survival rates and improve quality
`of life for patients in important areas of
`medical need.
`
`4
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`Strategic Report
`
`Page 6 of 248
`
`

`

`Revenue … was in line
`with our upgraded
`guidance and reflected the
`fact that the accelerating
`performance of our
`growth platforms more
`than offset the impact of
`loss of exclusivity.”
`
`Financial performance in 2014
`Revenue was up 3% to $26,095 million,
`which was in line with our upgraded
`guidance. On an actual basis, revenue
`was up 1% as a result of the negative
`impact of exchange rate movements.
`Core operating profit in 2014 was down
`13% to $6,937 million while Core EPS
`were $4.28, down 8%.
`
`Our performance reflected the delayed
`launch of generic Nexium (esomeprazole)
`in the US as well as the accelerating
`performance of our growth platforms, which
`now contribute over half of our revenues.
`Taken together, they more than offset the
`impact of loss of exclusivity. Our strong
`performance in Emerging Markets was a
`particular highlight, with China becoming
`our second largest market.
`
`Distributions to shareholders $m
`
`Dividends
`Proceeds from issue of shares
`Share repurchases1
`Total
`
`Dividend per Ordinary Share $
`
`Dividend per Ordinary Share
`
`Dividend for 2014
`
`First interim dividend
`Second interim dividend
`Total
`
`Loss of exclusivity
`The loss of exclusivity referred to above, and
`its timing, has had, and continues to have,
`an impact on AstraZeneca. Over the coming
`years, this trend will continue as medicines
`such as Nexium and Crestor continue to
`lose exclusivity in key markets, including the
`US and Europe.
`
`Established Markets facing rising healthcare
`costs. On the supply side, the industry faces
`an ongoing R&D productivity challenge.
`Costs have risen significantly and, while in
`2014 the FDA approved the highest number
`of new medicines for 18 years, there is still
`some way to go in improving the probability
`of success of our projects.
`
`Of course, loss of exclusivity is a normal
`part of an innovative medicine’s life-cycle.
`It comes at the end of the period when a
`new medicine is safeguarded from being
`copied so that we can generate returns
`on the investment we have made. A
`well-functioning intellectual property system
`of this type, which rewards innovation, is
`the principal economic safeguard in our
`industry. It is why we commit significant
`resources to establishing and defending
`our patent protections.
`
`The challenging environment
`continues
`More generally, we continue to face
`challenging market conditions. While the
`world pharmaceutical market is growing
`and underlying demographic trends remain
`favourable to long-term growth, many of the
`drivers of demand and supply in the sector
`are under pressure.
`
`On the demand side, we face increased
`competition from generic drugs as some
`of the world’s most successful medicines
`come off patent. In addition, securing an
`appropriate level of reward for our medicines
`is becoming more difficult in the face of
`intense pricing pressures, particularly in
`
`2014
`3,521
`(279)
`–
`3,242
`
`2014
`2.80
`
`2013
`3,461
`(482)
`–
`2,979
`
`2013
`2.80
`
`2012
`3,665
`(429)
`2,635
`5,871
`
`2012
`2.80
`
`$
`0.90
`1.90
`2.80
`
`Pence
`53.1
`125.0
`178.1
`
`Payment date
`SEK
`6.20 15 September 2014
`15.62
`23 March 2015
`21.82
`
`Return to shareholders
`Consistent with our progressive dividend
`policy to maintain or grow the dividend
`each year, the Board has recommended
`a second interim dividend of $1.90 per
`Ordinary Share. This brings the dividend for
`the full year to $2.80 per Ordinary Share.
`
`The Board regularly reviews its distribution
`policy and its overall financial strategy to
`strike a balance between the interests
`of the business, financial creditors and
`shareholders. We continue to target a
`strong, investment grade credit rating.
`
`Outlook
`As we look to the future, we expect sales
`revenue to decline by mid single-digit
`percent at CER in 2015. Consistent with
`our business model, we will continue to
`seek externalisation revenue from
`collaborations and licensing select products
`and technologies. Core EPS is expected
`to increase by low single-digit percent at
`CER. This expectation involves a number of
`assumptions, including the imminent launch
`of a Nexium generic in the US market.
`
`Appreciation
`Before closing, and on behalf of the
`Board, I want to thank the employees
`of AstraZeneca. Their outstanding efforts
`helped us achieve so much in 2014
`towards leading in science and returning to
`growth. In particular, I want to express my
`appreciation to Pascal and all the members
`of the Senior Executive Team for showing
`such inspirational leadership throughout
`a challenging year.
`
`Finally, I would like to thank all my fellow
`Directors for the quality of their contributions
`and conscientiousness they brought to our
`discussions throughout an exceptionally
`busy 2014.
`
`1 The share repurchase programme was suspended effective 1 October 2012.
`
`Leif Johansson
`Chairman
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`5
`
`Strategic Report
`
`Page 7 of 248
`
`

`

`Chief Executive Officer’s Review
`
`Dear shareholder
`
`2014 was a remarkable year that shows
`what AstraZeneca can achieve by
`following the science.
`
`We strengthened and accelerated our
`pipeline, and increased the momentum
`behind our growth platforms. Our efforts
`are creating significant value for patients
`and shareholders.
`
`AstraZeneca has completed the first phase
`in its strategic journey. We have rebuilt
`strong foundations for sustainable delivery
`and are on track to return to growth by 2017.
`Fuelled by an exciting portfolio, oncology
`has become AstraZeneca’s sixth growth
`platform and will deliver life-changing
`medicines to patients and long-term growth.
`
`Achieve scientific leadership
`The changes we have made in the last
`two years have transformed AstraZeneca’s
`pipeline and accelerated clinical
`programmes. For example, we have already
`achieved our 2016 target for the number of
`potential medicines in Phase III – three years
`ahead of schedule. The changes have also
`helped towards our goal of achieving
`scientific leadership in our three main
`therapy areas: Respiratory, Inflammation
`and Autoimmunity (RIA); Cardiovascular and
`Metabolic diseases (CVMD); and Oncology.
`
`We achieved a record 12 approvals in 2014
`and, while we must expect occasional
`setbacks, such as the discontinuation of
`a few early-stage projects, we have every
`reason to be confident in our pipeline. In
`addition to launching new medicines, such
`as Lynparza and Movantik/Moventig, by the
`end of 2016, we anticipate
`
` > 12 to 16 Phase II starts
` > 14 to 16 NME and major line extension
`regulatory submissions
` > 8 to 10 NME and major line extension
`approvals.
`
`A highlight of the year came in December
`when Lynparza was approved in the US
`and EU as the first PARP inhibitor for the
`
`treatment of women with BRCA-mutated
`(BRCAm) ovarian cancer who have had
`very limited treatment options to date.
`The story of Lynparza shows what
`AstraZeneca can achieve by following
`the science. Less than three years ago,
`Lynparza development was discontinued
`following Phase II study results. These
`indicated that the progression-free survival
`(PFS) benefit seen in the overall ovarian
`cancer population was unlikely to translate
`into an overall survival benefit. Attempts to
`identify a suitable dose of the new tablet
`formulation also proved challenging.
`
`Our teams were undeterred. They saw
`an opportunity to explore why the data
`showed better efficacy in patients with
`BRCAm ovarian cancer and sought to
`re-analyse the Phase II data. This included
`obtaining the BRCAm status for almost
`all patients – itself a great achievement.
`Looking at the data again made it clear that
`the team was right – Lynparza significantly
`prolonged PFS compared with placebo in
`patients with BRCAm ovarian cancer. In
`parallel, the team also identified a suitable
`dose and tablet formulation.
`
`This really does exemplify our values in
`action and demonstrates our determination
`to push the boundaries of science to deliver
`life-changing medicines. We continue to
`explore the potential of this exciting new
`medicine, and additional late-stage clinical
`studies are underway to explore Lynparza’s
`benefit for a variety of other cancers.
`
`Respiratory, Inflammation and
`Autoimmunity
`
`The American College of Rheumatology
`annual meeting in Boston, MA
`accepted more than 15 abstracts of
`AstraZeneca work.
`
`We are making significant progress in the
`RIA therapy area. Eight projects are in
`Phase III or registration. In particular, we are
`leveraging biologics in severe asthma and
`COPD, and developing several promising
`assets in inflammation and autoimmune
`disease areas. These include dermatology,
`gout, systemic lupus and rheumatoid
`arthritis. In November, we strengthened our
`own capabilities by acquiring the rights to
`Almirall’s respiratory business, and inhalation
`device subsidiary, which will help us develop
`the next generation of devices that meet
`patient needs. We further strengthened our
`respiratory portfolio through our agreement
`– announced in February 2015 – to acquire
`the rights to Actavis’s branded respiratory
`business in the US and Canada.*
`
`Phase III studies began in 2014 for
`tralokinumab for the treatment of severe,
`inadequately controlled asthma.
`Furthermore, we decided to progress
`benralizumab to Phase III in COPD based
`on the finding that patients with elevated
`eosinophils seem to benefit from the drug.
`
`Highlighting the potential of our inflammation
`and autoimmunity biologics portfolio, two
`Phase IIb studies for mavrilimumab and
`sifalimumab both met their primary
`endpoints. Results from Phase III trials for
`brodalumab also met all primary endpoints
`
`* Transaction subject to competition law clearances as well as
`other customary terms and conditions.
`
`6
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`Strategic Report
`
`Page 8 of 248
`
`

`

`…our business shape
`is changing to become
`more sustainable, durable
`and profitable.”
`
`for the treatment of moderate to severe
`psoriasis, with two of these trials showing
`superior efficacy compared to the current
`standard of care. Following top-line results
`from the Phase III programme for lesinurad
`in combination with xanthine oxidase
`inhibitors in gout patients, our regulatory
`filing in the EU has been accepted.
`
`Cardiovascular and Metabolic diseases
`
`The 74th Scientific Sessions of the
`American Diabetes Association in San
`Francisco, CA accepted for presentation
`43 abstracts reporting results of our R&D
`in diabetes. The Annual Meeting of the
`European Association for the Study of
`Diabetes in Vienna, Austria accepted 29
`abstracts for presentation.
`
`A record total of six major market approvals
`in 2014 for medicines that treat Type 2
`diabetes further demonstrates how we are
`achieving scientific leadership. We also had
`positive results from a Phase III study of
`saxagliptin/dapagliflozin combination in
`patients with Type 2 diabetes and are
`progressing a regulatory filing in the US.
`
`The acquisition in February 2014 of BMS’s
`share of the diabetes alliance was a
`significant event for AstraZeneca and we
`now have one of the broadest non-insulin
`anti-diabetic portfolios in the industry. Our
`diabetes strategy is to shift the treatment
`paradigm towards early use of combination
`therapies, help accelerate the achievement
`of patients’ treatment goals and potentially
`delay disease progression.
`
`2014 was a strong year for our growth
`platform, Brilinta/Brilique, both in terms of
`revenue growth and news flow. The US
`
`Strategic priorities overview
`
`Achieve scientific leadership
`
` > 12 approvals of NMEs or major LCM projects in major markets
` − CVMD: Bydureon Pen (US and EU), Farxiga/Forxiga (US and Japan), Xigduo
`XR (US) and Xigduo (EU) for Type 2 diabetes; Myalept (US) for generalised
`lipodystrophy; Epanova (US) for dyslipidaemia
` − Oncology: Lynparza (US and EU) for BRCA-mutated ovarian cancer
` − Neuroscience: Movantik/Moventig (US and EU) for opioid-induced
`constipation
`
` > 11 Phase III starts, including 5 NMEs: MEDI4736 and AZD9291 for non-small
`cell lung cancer; tremelimumab for mesothelioma; roxadustat for chronic kidney
`disease and end-stage renal disease; and tralokinumab for severe asthma
`
` > 6 NME or major LCM regulatory submissions in major markets
` − CVMD: Bydureon Pen (Japan) and saxagliptin/dapagliflozin FDC (US)
` − Oncology: Iressa (US) and Lynparza (US)
` − Inflammation: lesinurad (US and EU)
`
` > 9 projects discontinued
`
` > 3 acquisitions: the rights to Almirall’s respiratory franchise and inhalation
`device subsidiary; Definiens; and completion of the acquisition of BMS’s share
`of the diabetes alliance
`
`Return to growth
`
` > 3% increase in revenue to $26,095 million
` − Accelerating performance of growth platforms more than offset impact
`of loss of exclusivity
`
` > 15% increase in growth platforms revenue contributing 53% of total revenue
` − Brilinta/Brilique +70%; continued global progress
` − Diabetes +139%; successful Farxiga/Forxiga launch and good uptake
`of Bydureon Pen in the US
` − Respiratory +10%; Emerging Markets growth of 27% and decelerating
`US growth of 15%
` − Emerging Markets +12% to $5,827 million
` − Japan revenue -3%; due to mandated biennial price cuts, increased use
`of generics and Nexium recall in the fourth quarter
`
` > US revenue was up 4% to $10,120 million, with Europe down 1% at
`$6,638 million; Established ROW revenue was down 4% to $3,510 million
`
` > 22% growth in China, making it our second largest market
`
`Great place to work
`
` > Our 2014 employee survey showed understanding of our strategy up by
`14 percentage points, to 88%, compared with the previous survey in 2012 –
`4 points above the global high performing company norm. Belief in
`our direction rose by 18 points, to 86%
`
` > Following transactions, some 4,100 BMS and Almirall employees were
`integrated into AstraZeneca
`
` > Simplified organisation with 75% of employees now within six management
`steps of the CEO (40% in 2012)
`
`Do business responsibly
`
` > AstraZeneca launched the Healthy Heart Africa programme to address
`hypertension in Africa for some of the poorest people in the community
`
`AstraZeneca Annual Report and Form 20-F Information 2014
`
`7
`
`Strategic Report
`
`Page 9 of 248
`
`

`

`Chief Executive Officer’s Review continued
`
`Focus on…our pipeline
`At 31 December 2014, our pipeline
`comprised 133 projects, including 118 in
`clinical development and 16 approved or
`launched. Our late-stage pipeline has
`transformed faster than we anticipated, with
`13 NMEs in Phase III/pivotal Phase II, or
`under regulatory review compared with the
`original target of eight set in March 2013.
`Our early-stage pipeline has also grown
`rapidly through a sharp focus on novel
`science and technologies, providing a
`sustainable discovery engine behind our
`main therapy areas.
`
` Therapy Area Review from page 32
`
`Development projects
`
`2014
`
`2013
`
`2012
`
`40
`
`35
`
`321
`
`262
`
`33
`
`29
`
`27
`
`193
`
`204
`
`24
`
`75
`
`236
`
`
`
` Phase I
`
`
`
` Phase II
`
`
`
` Late-stage
`development7
`
` LCM projects
`
`1 Includes eight projects that are either approved or launched in at least one market. Includes one project that is filed in at least one market.
`2 Includes eight projects that are either approved or launched in at least one market. Includes one project that is filed in at least one market.
`3 Included four projects that were either approved or launched in at least one market. Included four projects that were filed in at least one market.
`4 Included five projects that were either approved or launched in at least one market. Included one project that was filed in at least one market.
`5 Included five projects that were either approved or launched in at least one market.
`6 Included eight projects that were filed, approved or launched in at least one market.
`7 Phase III/pivotal Phase II, or under regulatory review.
`
`Department of Justice’s closure of its
`investigation into the PLATO clinical trial
`in August reaffirmed our confidence in
`Brilinta/Brilique and the PLATO trial. In
`September, new data indicated that the
`profile of Brilinta/Brilique was comparable
`whether administered pre-hospital or
`in-hospital in ST segment elevation
`myocardial infarction (STEMI) patients.
`Most recently, in January 2015, we
`announced that the PEGASUS-TIMI 54
`study, a large-scale outcomes trial involving
`over 21,000 patients, had met its primary
`endpoint in both 60mg and 90mg doses.
`The study demonstrated that, when taken
`in combination with aspirin, Brilinta/Brilique
`reduced more major cardiovascular
`thrombotic events in patients with a history
`of heart attack than using aspirin alone.
`
`Oncology
`
`We presented over 40 scientific abstracts
`related to our investigational medicines to
`the American Society of Clinical Oncology
`meeting in Chicago, IL and the European
`Society of Medical Oncology 2014
`Congress in Madrid, Spain.
`
`AstraZeneca has a deep-rooted heritage
`in oncology. Our vision is to help patients
`by redefining the cancer treatment
`paradigm. Our broad pipeline of next-
`generation medicines is focused on four
`main disease areas: breast, ovarian, lung
`and haematological cancers. For these, we
`are targeting immunotherapy; the genetic
`drivers of cancer and resistance; DNA
`damage repair; and antibody-drug
`conjugates (ADCs).
`
`investigational non-small cell lung
`cancer (NSCLC) compound, AZD9291.
`AZD9291 is a highly selective, irreversible
`inhibitor of both the activating sensitising
`epidermal growth factor receptor (EGFR)
`mutation and the resistance mutation
`T790M. The FDA has granted it
`breakthrough therapy designation as
`well as orphan drug and fast track status.
`This will allow us to speed the medicine’s
`development and we are planning to file
`for approval in the US in the second
`quarter of 2015. At just over two years
`after the compound entered clinical
`testing, this would represent a tremendous
`achievement.
`
`In a development that enhances its value to
`patients and demonstrates our commitment
`to personalised healthcare, Iressa now
`includes blood-