AstraZeneca Annual Report and Form 20-F Information 2011

Investing in capabilitiesA core component of our R&D strategy is strengthening four corecapabilities. In 2010, we announced an investment of more than$200 million over five years to develop capabilities in the areas ofpayer partnering, personalised healthcare, predictive science andclinical design. We are making steady progress in building theseskills both internally and through external collaborations. Examplesof our efforts in 2011 include:> Payer partnering – a new payer evidence function has beenestablished to support both our Commercial and R&D organisationsin addressing the evidence needs of payers at every stage of theproduct life-cycle. A key part of this support comes from newcapabilities in analysing observational data. We have entered aunique collaboration with HealthCore, the health outcomes researchsubsidiary of Wellpoint, Inc., to conduct real world studies, designedto determine how to most effectively and economically treatdiseases. This provides access to the largest commercially insuredpopulation data environment in the US and is fully operational,supporting both development projects and marketed brands.Building on this, in January 2012, we signed a three-year collaborationagreement with IMS Health Inc., providing AstraZeneca with accessto pre-existing anonymised health records. This information willprovide a degree of insight into how medicines that are already onthe market are working in real-world settings across Europe, and willhelp inform our discovery and clinical development programmes.> Personalised healthcare – our personalised healthcare capabilityis focused on identifying patients that are most likely to benefit fromour medicines. The proportion of our development portfolio utilisingor investigating personalised healthcare approaches such as theuse of biomarkers has increased from 25% at the end of 2010 toover 50%, including 10 projects that involve a companion diagnosticto target therapy. Our recently formed personalised healthcaregroup continues to support Iressa with initiatives to improve thespeed and quality of diagnostic testing, contributing to Iressa’sincrease in sales.> Predictive science – we are integrating modelling and simulationinto many different aspects of R&D. We recruited 25 external expertsfrom the global modelling and simulation community to acceleratethe development of our predictive science capability. Modellingand simulation is now used in the areas of biology, chemistry,formulation development, preclinical and clinical safety assessment,pharmacokinetic and pharmacodynamic evaluation and clinicaltrial simulation.> Clinical design – we implemented a range of innovative changesto drive consistency and excellence in the critically importantcapability of clinical trial design and interpretation. Almost 90%of our R&D teams have incorporated the changes and are startingto utilise a new design and interpretation framework.Our resourcesAt the end of 2011, our R&D organisation comprised approximately11,300 people at 14 principal centres in eight countries.Our R&D transformation that began in 2010 has been largelycompleted, resulting in the closure of several of our R&D facilitiesand a net reduction of 1,400 positions. The exit of R&D personneland activities from the Charnwood site in the UK and the Lund sitein Sweden was completed in 2011 and the facilities will be closed inearly 2012. Our approach to implementing such change is outlinedin the Managing change in our organisation section on page 42.In February 2012, we announced the next phase of restructuring.Further details are set out in the Our strategic priorities to 2014 sectionfrom page 21.Our R&D geographic footprint includes four main small moleculefacilities in: the UK (Alderley Park and Macclesfield); Sweden (MöIndal);and the US (Waltham, Massachusetts). Other sites with a focus onresearch are in Sweden (Södertälje), Canada (Montreal, Quebec) andFrance (Reims). We also have a clinical development facility in Osaka,Japan. Our principal sites for biologics and vaccines are in the US(Gaithersburg, Maryland and Mountain View, California) and in theUK (Cambridge). Our Wilmington, Delaware site in the US now focuseson late stage development across the portfolio. Finally, our strategicexpansion in Emerging Markets continues and includes the growth ofour ‘Innovation Centre China’ research facility in Shanghai, China aswell as our research facility in Bangalore, India.In 2011, there was Core R&D expenditure 1 of $5.0 billion in ourR&D organisation (2010: $4.2 billion; 2009: $4.3 billion). In addition,$189 million was spent on acquiring product rights (such asin-licensing) (2010: $1,017 million; 2009: $764 million) and weinvested approximately $468 million on the implementation of ourR&D restructuring strategy. The allocations of 2009-2011 spend byearly and late activities are presented below.R&D spend analysis 2011 2010 2009iMeds (%) (Discovery and early56% 73% 70%development)GMD (%) (Late stage development) 44% 27% 30%Core R&D costs ($m) 5,033 4,219 4,3341Reported expenditure in our R&D organisation was $5.5 billion (2010: $5.3 billion;2009: $4.4 billion).Business ReviewAstraZeneca Annual Report and Form 20-F Information 2011Delivering our strategy Research and Development 33