AstraZeneca Annual Report and Form 20-F Information 2011

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Strategy and PerformanceOur business modelOur business model is driven by our strategy andis based on using the best innovative scienceand technology to invent or acquire, produce anddistribute innovative, patent-protected medicinesthat make a meaningful difference to people’shealth around the world.We also commercialise medicines that do not have patent protectionwhere we can obtain prices that reflect the quality and value of ourbrand. To pursue our strategy, we invest in those projects andproducts where we believe medical innovation or brand equity willenable us to make acceptable levels of return for our shareholders.The Life-cycle of a medicine overview on page 10 illustrates theprocess we use to develop new drugs. It starts with the identificationof an unmet medical need and market opportunity and the searchfor a potential medicine, and moves through clinical trials and drugdevelopment, regulatory submission, a medicine’s launch andmanagement of its life-cycle.An inherent element of our business model is the creation andprotection of our underlying IP assets. As the diagram below shows,the development of a new medicine requires a significant investmentof resources over a period of 10 or more years before product launch,with no guarantee of success. For this to be a viable investment, theresulting new medicine must be safeguarded from being copied witha reasonable amount of certainty for a reasonable period of time.This allows time to generate the revenue we need to reinvest in newpharmaceutical innovation. In addition to establishing and defendingour IP assets (see the Intellectual Property section from page 34) and,as illustrated in the diagram, we can also influence the return we makeon our investment by improving our:> R&D productivity (see from page 30)> Sales and marketing effectiveness (see from page 36)> Operational efficiency (see from page 38).A key goal for our planning process is to ensure that we sustain thecycle of successful innovation and, as a result, continue to refresh ourportfolio of patented products and so generate value for shareholders.Our business modelReinvestment of returns from period of patent protection into next generationof innovative medicinesReturn Investment$Creation andacquisition ofIP throughinnovativeR&DApplication forpatents to protectthe IP assetsdeveloped in apotential medicineClinical developmentprogrammes todetermine safety andefficacy of the potentialmedicine and generatefurther IP rights anddata for regulatorysubmissionsR&DproductivitySales and marketingeffectivenessOperationalefficiencyExtendpatentlifePeriod of IP protection for aninnovative medicine which allowsa return to be made on theinvestment undertakenExpiry of IP rights andcommoditisation ofknowledge whichtypically sees genericversions of a medicineentering a marketR&DLaunchSales and marketingInvestment in discovery, development and commercialisation of patentprotected medicinesCommercialisation ofmedicines that do nothave patent protection20 Strategy and Performance Our business modelAstraZeneca Annual Report and Form 20-F Information 2011
Our strategic priorities to 2014Our goal is to create sustainable value forshareholders by being one of the best-performingbiopharmaceutical companies. To achieve thatgoal, the pace of change across AstraZenecaneeds to accelerate and we need to deliver onthe following medium-term strategic priorities.PipelineWe are transforming our R&D organisation. We have streamlined andrefocused our product portfolio, introduced a new operating model,and simplified our site footprint. We continue to focus on improvingthe quantity and quality of R&D output, by building industry-leadingcapabilities in critical areas and a more outward-looking organisation,which accesses the best science, regardless of origin.While we are confident that long-term growth in demand for innovativebiopharmaceuticals will remain strong, it is clear that substantialimprovement in R&D productivity is needed if we are to sustainacceptable returns to shareholders. We are therefore acceleratingour R&D strategy. We are pioneering innovative ways of conductingresearch. Neuroscience is a challenging field of medical science withhigh unmet need, and one that a number of our competitors havechosen to exit. To reinvigorate our efforts in this therapeutic area,we plan to create a virtual innovative medicines unit (iMed) in whicha small group of scientists discover and develop a full pipeline ofmedicines, working with external partners and collaborators.They would replace our current scientific and laboratory resources.Alongside this, we plan to create a simpler, leaner, more flexibleorganisation through a variety of steps, which better support amore focused portfolio.Deliver the businessAt a time when many companies are exiting primary care,AstraZeneca is distinctive for combining a broad portfolio of primaryand specialty care products with a global reach. We will continue tobuild on our leading positions in Established Markets and to introduceinnovative ways of serving our customers, using digital and telephonechannels, service teams, and desk-based medical support. We willinvest in growth opportunities, including brands such as Crestor andBrilinta/Brilique and markets such as Japan and China. We will drivesales of our leading products which no longer benefit from patentprotection where we retain brand equity and can command priceswhich reflect the quality and value of our brand. In addition, wewill pursue further growth in Emerging Markets by expanding thepopulation we serve, supplementing our patented innovative productswith branded generic products sourced externally and marketedunder the AstraZeneca brand. To further strengthen revenues, wewill accelerate our efforts to secure late-stage/on-market productlicensing, acquisition, and peer collaboration opportunities.Across the Group, we are investing in our ability to meet the needsof those who pay for our medicines. In R&D, our new payer evidencegroup is ensuring that, as we develop our medicines, we gather notonly the clinical data required for regulatory approval, but also thehealth economics, cost/benefit information and ‘value-in-use’ datarequired by payers. Our HealthCore and IMS collaborations will gatherreal world evidence about the comparative effectiveness of ourproducts. This capability helps us to gain global reimbursement,broad market access and optimal pricing for our medicines.Business shapeGiven the pressures in the external environment, we will continue tosimplify the business. Simplification means not only cost reduction,but also streamlining processes and shifting to a more flexible costbase. In our Commercial organisation, we are simplifying our operatingmodel. We are consolidating the business into three regions: theAmericas, EMEA, and Asia-Pacific, running the global and regionalorganisations from three sites (Wilmington, US, London, UK, andShanghai, China), and changing our Established Markets footprintin line with declining sales. Following the success of our Nordic andCentral American clusters, we are creating further country clusters,to share resources and expertise more effectively. Across our Supplyand Manufacturing function, we continue to drive efficiencies throughour business improvement programmes, and to use outsourcing andpartnering to increase flexibility. We are also consolidating many ofour support services into shared services, driving Lean processimprovements, investing in automation and new global systems.We are outsourcing selected activities to specialist third partyproviders in low cost locations.PeopleTalented, motivated and capable people are critical to the successfulachievement of our strategic ambitions. We are focused on four keypeople priorities, as we lead through significant change in the business:> acquiring and retaining key capabilities and talent> further developing leadership and management capabilities> improving the strength and diversity of the talent pipeline> improving employee engagement.Responsible businessWe reviewed and reshaped our corporate responsibility priority actionplan during the year, taking into account our strategy, insights gainedfrom dialogue with stakeholders, and our internal risk assessment.Our new Responsible Business Plan, launched in April 2011, reflectsour commitment to enhancing the sustainability of our businessby operating responsibly. It underpins our work and provides theframework for applying integrity and high ethical standards acrossall our activities.The Responsible Business Plan’s objectives are closely aligned toour business strategy. We have given the highest priority to thoseareas most impacted by our strategic priorities, including sales andmarketing practices, access to healthcare, research ethics (includinganimal welfare), human rights, and supplier management. At thesame time we have not lost sight of other significant aspects of ourcorporate responsibility, such as patient safety and the environment.The Responsible Business Plan is overseen by a ResponsibleBusiness Council of senior leaders from within our organisation.Strategy and PerformanceAstraZeneca Annual Report and Form 20-F Information 2011Strategy and Performance Our strategic priorities to 2014 21
Page 1 and 2: healthAstraZeneca Annual Reportand
Page 3 and 4: Financial summary$33.6bnSales down
Page 5 and 6: China: We announcedour decision to
Page 7 and 8: OverviewOperational overview7979 pr
Page 9 and 10: Chairman’s StatementI would like
Page 11 and 12: Chief Executive Officer’s ReviewA
Page 13 and 14: The process of getting a drug to ma
Page 15 and 16: OverviewnovationInnovation drives p
Page 17 and 18: Our Strategy and PerformanceMore pe
Page 19 and 20: Using the full range of innovative
Page 21: Our strategyMissionto make the most
Page 25 and 26: Our performance in 2011Our performa
Page 27 and 28: Business shapePeopleResponsible bus
Page 29 and 30: Strategy and PerformanceaborationIm
Page 31 and 32: Delivering our strategyOur strategy
Page 33 and 34: Development projects20112010 129342
Page 35 and 36: Investing in capabilitiesA core com
Page 37 and 38: Patent expiries for our key markete
Page 39 and 40: our Established Markets footprint i
Page 41 and 42: Product qualityWe are committed to
Page 43 and 44: We have a global approach, supporte
Page 45 and 46: ComplianceWe ensure a culture of et
Page 47 and 48: tegrityBusiness ReviewWe are dedica
Page 49 and 50: Delivering our strategyResponsible
Page 51 and 52: India has the fastest growing numbe
Page 53 and 54: ProtestsAstraZeneca acknowledges th
Page 55 and 56: Also in 2011, the DIHR in collabora
Page 57 and 58: healthcollaborationRaising breast c
Page 59 and 60: Pipeline by Therapy Area at 31 Dece
Page 62 and 63: Therapy Area ReviewIn September, we
Page 64 and 65: Therapy Area ReviewGastrointestinal
Page 66 and 67: Therapy Area ReviewInfectionTherapy
Page 68 and 69: Therapy Area ReviewIn the pipelineI
Page 70 and 71: Therapy Area ReviewOur financial pe
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Therapy Area ReviewOncologyTherapy
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Therapy Area Reviewendpoints of pro
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Therapy Area ReviewOur financial pe
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healthinnovationReducing the number
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Geographical ReviewUSAstraZeneca is
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Geographical ReviewEmerging Markets
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Disciplined execution of our strate
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Financial ReviewMeasuring performan
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Financial ReviewResults of operatio
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Financial ReviewFinancial position
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Financial ReviewCapitalisation and
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Financial ReviewResults of operatio
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Financial ReviewSensitivity analysi
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Financial Reviewover the performanc
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healthcollaborationFighting the ris
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Board of Directors and Senior Execu
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Board of Directors and Senior Execu
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Corporate Governance ReportOperatio
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Corporate Governance ReportThe Boar
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Corporate Governance ReportDuring 2
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Corporate Governance ReportBusiness
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Corporate Governance ReportPolitica
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Directors’ Remuneration ReportDav
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Directors’ Remuneration ReportVar
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Directors’ Remuneration ReportAdd
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Directors’ Remuneration ReportSum
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Directors’ Remuneration ReportSum
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Directors’ Remuneration ReportIn
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Directors’ Remuneration ReportPer
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Directors’ Remuneration ReportGai
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RiskManagement reporting and assura
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RiskCommercialisation and business
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RiskCommercialisation and business
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RiskSupply chain and delivery risks
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RiskEconomic and financial risks co
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Financial StatementsPreparation of
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Financial StatementsConsolidated St
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Financial StatementsConsolidated St
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Financial StatementsGroup Accountin
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Financial StatementsProperty, plant
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Financial StatementsNotes to the Gr
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Financial Statements3 Finance incom
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Financial Statements4 Taxation cont
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Financial Statements6 Segment infor
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Financial Statements9 Intangible as
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Financial Statements10 Other invest
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Financial Statements15 Financial in
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Financial Statements15 Financial in
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Financial Statements18 Post-retirem
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Financial Statements18 Post-retirem
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Financial Statements20 Share capita
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Financial Statements23 Financial ri
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Financial Statements23 Financial ri
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Financial Statements24 Employee cos
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Financial Statements25 Commitments
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Financial Statements26 LeasesTotal
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Financial StatementsIndependent Aud
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Financial StatementsCompany Account
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Financial Statements4 ReservesShare
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Financial StatementsGroup Financial
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Development PipelineNCEsPhase III/R
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Development PipelineNCEsPhases I an
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Shareholder Information> For shares
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Shareholder InformationDocuments on
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Corporate InformationHistory and de
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GlossaryThe following abbreviations
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Index2011 performance summary 23Acc
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Contact informationRegistered offic
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AstraZeneca Annual Report and Form 20-F Information 2011

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