AstraZeneca Annual Report and Form 20-F Information 2011

Geographical ReviewUSAstraZeneca is the fourth largest pharmaceutical company in theUS, with a 6% market share of US prescription pharmaceuticalsby sales value.Sales in the US decreased by 2% to $13,426 million (2010: $13,727 million),as strong performance from our key growth brands was offset by theimpact of increased generic competition experienced by our maturebrands. Combined sales of our key growth brands, namely, Brilinta,Crestor, Onglyza, Seroquel, Symbicort and Faslodex, were up by16% to $8,474 million (2010: $7,316 million). Increased genericcompetition for Arimidex, and Toprol-XL and its authorised generic,resulted in a sales decline in these brands of 62% to $446 million(2010: $1,183 million).Brilinta was approved by the FDA in July to reduce the risk ofcardiovascular death and heart attacks in patients with acute coronarysyndromes (ACS). Unrestricted managed markets access was 59%,and trial among target interventional cardiologist initiators was 6% atthe end of 2011. Crestor achieved sales of $3,074 million (2010: $2,640million) and a total prescription growth of 4.4% within the statin market.This growth outpaced the market almost four-fold. A competitor toCrestor, atorvastatin, was available in generic form in the US beginningin late 2011.Seroquel continued to be the most prescribed atypical anti-psychotic,with sales up 10% to $4,123 million (2010: $3,747 million). TotalSeroquel prescriptions declined by 1%, driven by Seroquel IR erosionof 4% due to increased generic and branded competition. StrongSeroquel XR prescription volume growth of 17% partially offset thetotal Seroquel IR prescription volume decline. Seroquel XR accountsfor 18% of total Seroquel prescription volume in the US, up from 16%at the end of 2010.Symbicort pMDI continued to deliver steady growth in the US, withsales up 17% to $846 million (2010: $721 million) and prescriptiongrowth of 10%, leading the fixed combination class in total prescriptiongrowth. It achieved a 20.3% total prescription share and a 21.5% newprescription share of the inhaled corticosteroid/long-acting betaagonistmarket.Onglyza/Kombiglyze XR captured one in four new dipeptidylpeptidase IV (DPP-IV) patient treatment decisions and achieved a6.5% total prescription market share gain in 2011, ending the yearwith a total prescription market share of 16.5% of the DPP-IV inhibitormarket. Kombiglyze XR was launched in January 2011 and doctorsare now prescribing it to one in 10 new patients. Onglyza revenuesin the US were $156 million (2010: $54 million).Nexium was the fifth most prescribed branded pharmaceutical inthe US. In the face of continuing generic, OTC and pricing pressures,Nexium sales declined 11% to $2,397 million (2010: $2,695 million).Nexium remains the branded market leader retaining significantmarket share and volume within the proton pump inhibitor class.Sales of Toprol-XL and its authorised generic (metoprolol succinateextended-release tablets), which is marketed and distributed by ParPharmaceutical Companies, Inc. (Par) decreased 41% to $404 million(2010: $689 million), due to the impact of generic competition fromWatson Pharmaceuticals Inc. and Wockhardt Limited, which enteredthe market in 2010. In December, Mylan Inc. announced that itssubsidiary Mylan Pharmaceuticals Inc. (Mylan) received final approvalfrom the FDA for its ANDA for metoprolol succinate extended-releasetablets in 25mg, 50mg, 100mg and 200mg doses.Following multiple generic anastrozole products entering the USmarket in June 2010, sales of Arimidex declined by 91% to $42 million(2010: $494 million).In June, the US District Court ruled that Mylan did not infringethe Entocort formulation patent (EC patent no. 5,643,602). FollowingMylan’s entry of its generic, AstraZeneca launched an authorisedgeneric with marketing and distribution by Par Pharmaceutical, Inc.In 2011, sales of Synagis were down 12% to $570 million(2010: $646 million). Sales in the 2010/2011 RSV season startedslower than anticipated due to later than forecast seasonal onset,coupled with payer pressure resulting from wider adoption of morerestrictive guidelines regarding the use and dosing of Synagis bythe American Academy of Pediatrics.Sales for Aptium Oncology increased by 2% to $224 million (2010:$219 million) and sales for Astra Tech were down 24% to $77 million(2010: $101 million), all recorded in the period prior to its disposal toDENTSPLY International Inc., which completed in August.In March 2010, the Affordable Care Act came into force. It has had,and is expected to continue to have, a significant impact on our USsales and the US healthcare industry as a whole. For 2010, the impactof higher minimum Medicaid rebates on prescription drugs was areduction in our pre-tax profit for the period of nearly $230 million.In 2011, the overall reduction in our profit before tax for the year due tohigher minimum Medicaid rebates on prescription drugs, discounts onbranded pharmaceutical sales to Medicare Part D beneficiaries andan industry-wide excise fee was $750 million. These amounts reflectonly those effects of the Affordable Care Act that we know have hador will have a direct impact on our financial condition or results ofoperations and which we are therefore able to quantify based onknown and isolatable resulting changes in individual financial itemswithin our financial statements. There are other potential indirect orassociated consequences of these legislative developments, whichcontinue to evolve and which cannot be estimated but could havesimilar impacts. These include broader changes in access to oreligibility for coverage under Medicare, Medicaid or similargovernmental programmes, such as the recent proposals to limitMedicare benefits. These could indirectly impact our pricing or salesof prescription products within the private sector. By their nature andthe fact that these potentially numerous consequences are not directlylinked to a corresponding and quantifiable impact on our financialstatements, it is not possible to accurately estimate the financialimpact of these potential consequences of the Affordable Care Act orrelated legislative changes when taken together with the number ofother market and industry related factors that can also result in similarimpacts. Further details of the potential impact of the Affordable CareAct are contained in the Pricing pressure section from page 18 andthe Principal risks and uncertainties section from page 130.Currently, there is no direct government control of prices forcommercial prescription drug sales in the US. However, some publiclyfunded programmes, such as Medicaid and TRICARE (Department ofVeterans Affairs), have statutorily mandated rebates and discounts thathave the effect of price controls for these programmes. Additionally,pressure on pricing, availability and utilisation of prescription drugsfor both commercial and public payers continues to increase. Thisis driven by, among other things, an increased focus on genericalternatives. Primary drivers of increased generic use are budgetarypolicies within healthcare systems and providers, including the use of‘generics only’ formularies, and increases in patient co-insurance orco-payments. In 2011, 80% of the prescriptions dispensed in the USwere generic. While it is unlikely that there will be widespread adoptionof a broad national price-control scheme in the near future, there willcontinue to be increased attention to pharmaceutical prices and theirimpact on healthcare costs for the foreseeable future.78 Geographical ReviewAstraZeneca Annual Report and Form 20-F Information 2011