AstraZeneca Annual Report and Form 20-F Information 2011

More documents

Recommendations

Info

In the face of intensified pressures wedelivered a good performance in 2011and took difficult decisions to ensurethe future success of AstraZeneca.Louis Schweitzer ChairmanDear ShareholderI write to you at the end of a year in which researchbasedpharmaceutical companies faced a toughmarketplace and operating environment. Against thischallenging background, disciplined execution of ourstrategy delivered a good performance. Our strong cashflow supported a significant increase in cash distributionsto shareholders and continued investment to drive futuregrowth and value. These conditions also provided thebackdrop to the annual review by your Board of ourbusiness strategy – which remains to be a focused,integrated, innovation-driven, global, prescriptionbasedbiopharmaceutical business.Distributions to shareholders $m 2011 2010 2009Dividends 3,764 3,361 2,977Share repurchases 6,015 1 2,604 2 –Total 9,779 5,965 2,977Dividend for 2011 $ Pence SEK Payment dateFirst interim dividend 0.85 51.9 5.33 12 September 2011Second interim dividend 1.95 123.6 13.21 19 March 2012Total 2.80 175.5 18.541Share repurchases in 2011, net of proceeds from the issue of share capital equal to$409 million, were $5,606 million.2Share repurchases in 2010, net of proceeds from the issue of share capital equal to$494 million, were $2,110 million.6 Chairman’s Statement AstraZeneca Annual Report and Form 20-F Information 2011
Chairman’s StatementI would like to take this opportunity to review AstraZeneca’s financialperformance in 2011 and the decisions we took to ensure we continueto deliver sustainable value for you.Financial performanceGroup sales in 2011 were down 2% at CER to $33,591 million(2010: $33,269 million) and reported operating profit was up 10%at $12,795 million (2010: $11,494 million), which included the gainon the sale of Astra Tech. Performance for the year reflected strongdouble digit sales growth for Crestor, Seroquel XR and Symbicort.It was also impacted by government pricing interventions and genericcompetition, which combined to reduce revenue by some $3 billion.Revenue in the US was down 2%, as was revenue in markets outsidethe US: revenue was down 11% in Western Europe, up 4% inEstablished ROW and up 10% in Emerging Markets.Reported earnings per share for the full year were up 29% at$7.33 (2010: $5.60), which also included the non-taxable gainof $1.08 from the Astra Tech sale. Our effective tax rate alsobenefited from an adjustment in respect of prior periods followingthe announcement in March 2011 that HM Revenue & Customs in theUK and the US Internal Revenue Service had agreed the terms of anAdvance Pricing Agreement regarding transfer pricing arrangementsfor AstraZeneca’s US business.A challenging marketplaceThe world pharmaceutical market grew by 4.5% in 2011 and thefundamentals of the industry remain strong. First, the world populationcontinues to increase and age: it passed the seven billion mark in2011, while the number of people over 65 in 2030 is estimated to bealmost one billion, double the 2005 figure. Secondly, we are seeingthe emergence of expanding numbers of patients in new marketswho can access our medicines for the first time. Thirdly, there remainsconsiderable unmet medical need. Chronic diseases are on theincrease, not only in wealthy countries but also in middle income and,increasingly, lower income countries. For example, some 346 millionpeople around the world have diabetes while 24 million are affectedby Alzheimer’s Disease. Finally, advances in science and technologypromise the continued delivery of new medicines that can make a realdifference to patient health.Yet, while the fundamentals remain strong, the challenges facing theindustry have been unprecedented in recent years. Patents on someof the world’s most successful innovative medicines are starting toexpire and we face increasing competition from generic alternatives.Additionally, the need to improve R&D productivity and the number ofproduct launches remains a critical challenge for the whole sector.Around the world, rising healthcare costs, coupled with the difficulteconomic climate and continued austerity measures beingimplemented by governments, have resulted in pressure on prices.This includes pricing interventions in many countries. The regulatorylandscape is changing, becoming more global and more complex.It is no longer enough for new medicines to be safe and effective.Health authorities increasingly require additional information regardinga medicine’s comparative clinical and cost effectiveness.Our strategic responseIt was with these challenges in mind that your Board undertook itsstrategy review process in 2011. We are confident that long-termgrowth in demand for innovative biopharmaceuticals will remainstrong. We believe there continue to be opportunities to createvalue for those who invest in pharmaceutical innovation, and thatAstraZeneca has the skills and capabilities to take advantage of theseopportunities and turn them into long-term value through the research,development and marketing of our medicines. We also recognise thatthe industry is going through a period of fundamental change as itseeks to overcome the serious challenges we face.For us, that means a continued focus on ensuring we drive:> world class productivity in R&D> increased external collaboration> a global orientation, reflecting the growth in Emerging Markets> stronger customer orientation, particularly towards payers> operational efficiency with a flexible cost base.Our 2011 review highlighted the ongoing need for a substantialimprovement in R&D productivity if we are to sustain acceptablereturns to shareholders. We are therefore planning to accelerate ourR&D strategy. We intend to take a new approach to Neuroscience,closing our existing research centres and creating a new virtualinnovative medicines unit for our R&D in this challenging field.We also plan to reshape our other R&D global functions to bettersupport a more focused portfolio and create a simpler organisationwith greater flexibility in all functional areas.In his Chief Executive Officer’s Review on the following pages, DavidBrennan outlines the steps we took in 2011 to secure our futurebusiness success. David also emphasises that how we do businessis as important as what we do. We need to continue to work withintegrity and to high ethical standards if we are to deliver on ourpromise of bringing benefits to patients, creating sustainable valuefor shareholders and contributing to economic and social welfare.In this regard, the Board has an important role to play in setting highstandards and monitoring performance.OutlookWe continue to plan on the basis that revenue will be in the rangeof $28-34 billion a year over the 2010-14 period, as revenue growthfrom key franchises that retain exclusivity and continued growth inEmerging Markets are pressured by the loss of market exclusivity ona number of products. However, based on the evolution of the basecase assumptions since 2010, such as the downward pressure onrevenue from government interventions, revenue for the remainderof the period is likely to be in the lower half of the range.Returns to shareholdersIn recognition of the Group’s strong balance sheet and sustainablesignificant cash flow, and the Board’s confidence in the strategicdirection and long-term prospects for the business, we announced,in conjunction with the full year 2009 results, the adoption of aprogressive dividend policy, intending to maintain or grow thedividend each year. After providing for business investment, fundingthe progressive dividend policy and meeting our debt serviceobligations, the Board will also keep under review the opportunityto return cash in excess of these requirements to shareholdersthrough periodic share repurchases.The Board has recommended a second interim dividend of $1.95,a 5% increase over the second interim dividend awarded in 2010.This brings the dividend for the full year to $2.80 (175.5 pence, SEK18.54), an increase of 10% from 2010. In 2011, cash distributions toshareholders through dividends totalled $3,764 million and net sharerepurchases totalled $5,606 million.AppreciationIn the face of intensified pressures we delivered a good performancein 2011 and took difficult decisions to ensure the future successof AstraZeneca. None of this would have been possible withoutthe leadership of David Brennan and the other members of hisexecutive team. My thanks, and those of the whole Board, go tothem and all our employees for their effort in working to deliver onour promise.Louis SchweitzerChairmanOverviewAstraZeneca Annual Report and Form 20-F Information 2011 Chairman’s Statement 7
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: OverviewOperational overview7979 pr
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 and 22: Our strategyMissionto make the most
Page 23 and 24: Our strategic priorities to 2014Our
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
Page 72 and 73:
Therapy Area ReviewOncologyTherapy
Page 74 and 75:
Therapy Area Reviewendpoints of pro
Page 76 and 77:
Therapy Area ReviewOur financial pe
Page 78 and 79:
healthinnovationReducing the number
Page 80 and 81:
Geographical ReviewUSAstraZeneca is
Page 82 and 83:
Geographical ReviewEmerging Markets
Page 84 and 85:
Disciplined execution of our strate
Page 86 and 87:
Financial ReviewMeasuring performan
Page 88 and 89:
Financial ReviewResults of operatio
Page 90 and 91:
Financial ReviewFinancial position
Page 92 and 93:
Financial ReviewCapitalisation and
Page 94 and 95:
Financial ReviewResults of operatio
Page 96 and 97:
Financial ReviewSensitivity analysi
Page 98 and 99:
Financial Reviewover the performanc
Page 100 and 101:
healthcollaborationFighting the ris
Page 102 and 103:
Board of Directors and Senior Execu
Page 104 and 105:
Board of Directors and Senior Execu
Page 106 and 107:
Corporate Governance ReportOperatio
Page 108 and 109:
Corporate Governance ReportThe Boar
Page 110 and 111:
Corporate Governance ReportDuring 2
Page 112 and 113:
Corporate Governance ReportBusiness
Page 114 and 115:
Corporate Governance ReportPolitica
Page 116 and 117:
Directors’ Remuneration ReportDav
Page 118 and 119:
Directors’ Remuneration ReportVar
Page 120 and 121:
Directors’ Remuneration ReportAdd
Page 122 and 123:
Directors’ Remuneration ReportSum
Page 124 and 125:
Directors’ Remuneration ReportSum
Page 126 and 127:
Directors’ Remuneration ReportIn
Page 128 and 129:
Directors’ Remuneration ReportPer
Page 130 and 131:
Directors’ Remuneration ReportGai
Page 132 and 133:
RiskManagement reporting and assura
Page 134 and 135:
RiskCommercialisation and business
Page 136 and 137:
RiskCommercialisation and business
Page 138 and 139:
RiskSupply chain and delivery risks
Page 140 and 141:
RiskEconomic and financial risks co
Page 142 and 143:
Financial StatementsPreparation of
Page 144 and 145:
Financial StatementsConsolidated St
Page 146 and 147:
Financial StatementsConsolidated St
Page 148 and 149:
Financial StatementsGroup Accountin
Page 150 and 151:
Financial StatementsProperty, plant
Page 152 and 153:
Financial StatementsNotes to the Gr
Page 154 and 155:
Financial Statements3 Finance incom
Page 156 and 157:
Financial Statements4 Taxation cont
Page 158 and 159:
Financial Statements6 Segment infor
Page 160 and 161:
Financial Statements9 Intangible as
Page 162 and 163:
Financial Statements10 Other invest
Page 164 and 165:
Financial Statements15 Financial in
Page 166 and 167:
Financial Statements15 Financial in
Page 168 and 169:
Financial Statements18 Post-retirem
Page 170 and 171:
Financial Statements18 Post-retirem
Page 172 and 173:
Financial Statements20 Share capita
Page 174 and 175:
Financial Statements23 Financial ri
Page 176 and 177:
Financial Statements23 Financial ri
Page 178 and 179:
Financial Statements24 Employee cos
Page 180 and 181:
Page 182 and 183:
Page 184 and 185:
Financial Statements25 Commitments
Page 186 and 187:
Page 188 and 189:
Page 190 and 191:
Page 192 and 193:
Financial Statements26 LeasesTotal
Page 194 and 195:
Financial StatementsIndependent Aud
Page 196 and 197:
Financial StatementsCompany Account
Page 198 and 199:
Financial Statements4 ReservesShare
Page 200 and 201:
Financial StatementsGroup Financial
Page 202 and 203:
Development PipelineNCEsPhase III/R
Page 204 and 205:
Development PipelineNCEsPhases I an
Page 206 and 207:
Shareholder Information> For shares
Page 208 and 209:
Shareholder InformationDocuments on
Page 210 and 211:
Corporate InformationHistory and de
Page 212 and 213:
GlossaryThe following abbreviations
Page 214 and 215:
Index2011 performance summary 23Acc
Page 216:
Contact informationRegistered offic
show all

AstraZeneca Annual Report and Form 20-F Information 2011

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?