AstraZeneca Annual Report and Form 20-F Information 2011

Strategy and PerformanceWorld pharmaceutical marketsWorld Sales($bn)Sales ($bn)761803839Growth in 20114.5%20092010 2011Market value in 2011100%USSales($bn)Sales ($bn)Western Sales Europe($bn)Sales ($bn)296310320Growth in 20113.4%197202204Growth in 20110.8%20092010 2011Market value in 201138.1%20092010 2011Market value in 201124.3%EstablishedSalesROW($bn)Sales ($bn)EmergingSalesROW($bn)Sales ($bn)129133138Growth in 20113.8%139158177Growth in 201112.0%20092010 2011Market value in 201116.5%20092010 2011Market value in 201121.1%Data based on world market sales using AstraZeneca’s market definitions as set out in the Marketdefinitions table on page 209. Source: IMS Health, IMS Midas Quantum Q3 2011.Advances in science and technologyInnovation leading to new drugs is critical to meeting unmet medicalneed. Existing drugs will continue to be important in meeting thegrowing demand for healthcare, particularly with the increasinguse of generic medication. At the same time, advances in diseaseunderstanding and the application of new technologies will berequired to ensure the delivery of new medicines. Such approachesinclude personalised healthcare and predictive science as well asnew types of therapy.With advances in the technologies for the design and testing of novelcompounds, new opportunities exist for the use of innovative smallmolecules as new medicines. The use of large molecules, or biologics,has also become an important source of innovation, with biologicsamong the most commercially successful new products. Forecastsfor 2016 predict that of the world’s top 100 pharmaceutical products,45% of sales will come from biologics. This compares with only 33%in 2010 and 15% in 2002. Most pharmaceutical companies nowpursue both small molecules and biologics R&D.The challengesR&D productivityImproving R&D productivity is a critical challenge for thepharmaceutical industry. Global investment in pharmaceutical R&Dby the top 500 pharmaceutical and biotech companies reached anestimated $133 billion in 2011, a 93% increase from $69 billion in2002. Over the same period, the number of new drug launches peryear in the US stayed broadly the same, with an annual average of 25.Increasing investment has not yet resulted in a sustained increase inoutput, although the FDA approved 30 new drugs in 2011. At thesame time, there appears to be a shift away from regulatorysubmissions for broad primary care medicines to more specialistdrugs treating, for example, more complex diseases, together withorphan drugs for rare medical conditions.To ensure it delivers a sustainable return on its R&D investment, theindustry is working to increase its probability of success in developingcommercially viable new drugs and moving to a lower, more flexiblecost base. It does so at a time when regulators and payers aredemanding more and better evidence of comparative effectivenessof compounds, which lengthens development times and increasesdevelopment costs.16 Strategy and Performance The pharmaceutical industryAstraZeneca Annual Report and Form 20-F Information 2011