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AstraZeneca 20-F 2007 Documents found in this filing:
15
Stanhope Gate
London
W1K
1LN
For the attention of Justin Hoskins By
fax 020
7304
5196 &
by
post
Dear
Ladies
and
Gentlemen
In
connection with the anticipated filing by AstraZeneca PLC (“AstraZeneca”) of
certain registration
statements with the US Securities and Exchange Commission, IMS Health hereby
authorises you to refer to IMS Health and certain pharmaceutical industry
data derived by IMS Health, as identified on the pages annexed hereto
as
Exhibit A, a selection of pages from AstraZeneca’s Annual Report and Form 20-F
Information for the fiscal year ended 2006 (the “Annual Report”), which is
incorporated by reference in the registration statements No. 33-83774 for
AstraZeneca and Zeneca Wilmington Inc. and No. 333-114165 for AstraZeneca,
each
on Form F-3, and in the registration statements No. 333-09060, No. 333-09062,
No. 33-65362, No. 33-65366, No. 333-12310, No. 333-12426, No. 333-12428, No.
333-13328, No. 333-13918 and No. 333-124689 on Form S-8 for AstraZeneca. A
copy
of the relevant pages of the Annual Report has been provided to IMS
Health.
Our
authorisation
is subject to your acknowledgement and agreement that:
Please
indicate
your agreement to the foregoing by signing in the space indicated below. Our
authorisation will not become effective until accepted and agreed by
AstraZeneca.
Very
truly
yours,
/s/
Clive
Savage
Director,
Corporate
Communications, EMEA
For
and on behalf
of IMS Health
ACCEPTED
AND
AGREED
this
21 day of
March 2007:
Exhibit A
“AFTER MY FIRST YEAR AS CHIEF EXECUTIVE OFFICER, I AM DELIGHTED TO INTRODUCE AN ANNUAL REPORT THAT NOT ONLY RECORDS OUR STRONG FINANCIAL PERFORMANCE DURING 2006 BUT ALSO DEMONSTRATES OUR COMMITMENT TO OVERCOMING THE CHALLENGES THAT WE AND OUR INDUSTRY FACE IN AN EVER-TOUGHER ENVIRONMENT AND TO CONTINUING TO DELIVER A PERFORMANCE THAT WILL PLACE US AMONG THE BEST IN THE INDUSTRY.” AstraZeneca is a successful, research-based, prescription pharmaceutical business. We bring benefit for patients and add value for our shareholders and wider society through innovation and the responsible delivery of medicines in important areas of healthcare. The demand for healthcare continues to grow. People are living longer, populations are increasing and the emergence of new economies means that the number of patients who can benefit from medicines is expanding. At the same time, many diseases remain under-diagnosed, sub-optimally treated or do not have effective therapies. Alongside these significant opportunities for AstraZeneca to make a difference, we face some tough challenges –including growing pressure on the price of our marketed products, higher costs and regulatory hurdles for the development of new ones and an increasingly competitive marketplace, including earlier challenges to our patents. Our strategy for achieving sustained, industry-leading growth within this environment centres on three key priorities:
PATIENTS, PRODUCTS, PEOPLE
AND PERFORMANCE To bring the most benefit for patients and those who treat them, we must continue to understand what makes a difference for them – and apply that insight across all of our activities to ensure we remain targeted on their changing needs. For the future, we recognise that sustainable long-term success depends on further strengthening the flow of new products – whether from our own laboratories or from outside AstraZeneca. The continued commitment and energy of our people is vital, and we aim to provide the leadership and support they need to deliver their best contribution to achieving our business goals. By keeping our promises in all aspects of our business, and effectively managing the associated opportunities and risks, we aim to drive a performance that will place us among the best in the industry. OUR YEAR IN BRIEF Product performance With sales of $1.5 billion, up 29% from last year, Arimidex is now the leading hormonal breast cancer therapy in the US, Japan and France. This continued growth is largely based on results from the ATAC study, which showed Arimidex to be superior to tamoxifen in the five years after surgery, when the risk of the cancer recurring is at its highest. In June, following approval through mutual recognition for a new use, many patients in Europe currently receiving tamoxifen can now be switched to Arimidex. Crestor, our highly effective treatment for managing cholesterol levels, achieved sales of over $2 billion, an increase of 59% over last year. Data from two clinical studies (ORION in 2005 and ASTEROID in 2006) demonstrated strong potential for Crestor in the treatment of atherosclerosis. The METEOR study has also now been completed, and the results will be presented in March 2007. The METEOR study forms the basis of a submission for an atherosclerosis label made to the Food and Drug Administration (FDA) and in the EU through the Mutual Recognition Procedure in January 2007. ASTEROID and ORION were included in the submission as supportive studies. Nexium, our treatment for acid-related diseases, achieved sales of $5.2 billion. During the year, we gained approval for the additional use of Nexium in children aged 12-17 years with gastro-oesophageal reflux disease, and for a new use in treating patients with the rare gastric acid disorder, Zollinger Ellison Syndrome. Seroquel, with sales of $3.4 billion, further strengthened its position as the market-leading atypical anti-psychotic therapy in the US and continued to grow strongly elsewhere. Already used for the treatment of schizophrenia and bipolar mania, we gained approval during the year in the US for its use in bipolar depression. Seroquel is the first and only single-agent medication approved for both mania and depression in bipolar disorder.
CHIEF EXECUTIVE OFFICER’S REVIEW CONTINUED
In December, the European Patent Office ruled that one of the European substance patents for Nexium would be rejected. Both Nexium and Seroquel continue to be the subject of patent litigation in the US following the filing of Abbreviated New Drug Applications in 2005 and 2006. AstraZeneca continues to have confidence in the intellectual property portfolio protecting Nexium and Seroquel and will defend and enforce its intellectual property rights protecting both products. Symbicort achieved global sales of $1.2 billion in 2006, up 18%. During the year, it was approved in the US in a pressurised Metered Dose Inhaler for maintenance treatment of asthma in patients aged 12 years and above. We continue to plan for a US launch for Symbicort around the middle of 2007, although achieving this launch timeline is dependent upon successful transfer of technology from development to manufacturing and completion of validation batches. In addition, Symbicort SMART was approved for use in adults through the EU Mutual Recognition Procedure. You can read more about our product performance in other sections of this report.
In our markets As we continue to focus on managing such challenges and building on our leading positions in established markets, we are also increasing our strength in fast-developing markets, such as China. During the year, we announced a $100 million R&D investment over the next three years in China, which reflects our commitment to building our presence in this important market. As part of this, I was pleased to hold in 2006 the first AstraZeneca Senior Executive Team meeting in that country.
Strengthening our pipeline Enhancing in-house discovery
and development The results of our drive to improve productivity are reflected in the sustained size of the early development portfolio. During 2006, 21 candidate drugs were selected for development (compared with 25 in 2005 and 18 in 2004). We have a number of compounds in the later stages of development including Zactima and Recentin (formerly AZD2171) for treating cancer, and AGI-1067 and AZD6140 for cardiovascular disease. You can read more about these and the other compounds in the therapy area review (pages 16 to 32) and in our development pipeline table on pages 40 to 42. Accessing external innovation
Building our biopharmaceuticals presence
INTRODUCTION To that end, we provide in this business review an overview of AstraZeneca’s business environment and information about our research, development, manufacturing and sales and marketing activities worldwide, including our 2006 performance in these areas, as seen through the eyes of the Board. We describe the external environment in which we operate, including the opportunities and challenges, the market for pharmaceuticals, the competitive and regulatory environment, and the principal risks and uncertainties. We describe our strategy for managing the opportunities and challenges of our business environment, the resources that we bring to bear and how they are aligned to create value through achievement of our strategic objectives, and likely future developments in our business. We also highlight the importance of leadership, effective decision-making and risk management. Finally, we explain how our progress towards achievement of our objectives is measured. In the therapy area, geographic and financial reviews, we report on our financial performance during 2006 at a global level, in different geographic areas and at a product level. We also report in detail on the progress of our pipeline and developments in relation to our marketed products (such as new indications, regulatory filings and clinical trial data).
BUSINESS ENVIRONMENT and diabetes (market value $20 billion). High blood pressure and abnormal levels of blood cholesterol are well known to damage the arterial wall and thereby to lead to atherosclerosis. The most important and frequent manifestations of atherosclerosis are heart attacks and stroke. Diabetes is associated with an increased risk for a number of serious, sometimes life-threatening complications, including heart attack, stroke, blindness, kidney disease, nervous system disease and amputations. Heart disease death rates among adults with diabetes are two-to-four times higher than the rates for adults without diabetes. In the US, 21 million people suffer from diabetes and two in five people with diabetes still have poor cholesterol control, one in three have poor blood pressure control and one in five have poor glucose control. Gastrointestinal (GI) Neuroscience
BUSINESS ENVIRONMENT CONTINUED
Cancer Respiratory & Inflammation Information about the medicines we have or are developing in the above disease areas and our 2006 product performance is set out on pages 29 to31. Infection GROWING CHALLENGES FOR INDUSTRY Pressure on costs Nevertheless, healthcare systems, whether based on public or private funding, have a finite ability to pay for treatments. Cost-containment remains an ever-present constraint on industry growth. During 2006, further pricing pressures have been placed on the industry through legislation and other means, not only in major established markets, but also in China and India. For more information, see page 50 (Price Regulation). Doctors remain the principal decision makers regarding which of the available treatments should be prescribed for their patients, but as the economic burden of funding therapies increases, payers, including governments, health insurers, managed care organisations and employers are increasing their efforts to influence the choices doctors make. Demonstrating economic benefit Research and development
productivity Drug safety Competition Industry regulation Reputation
OUR RESOURCES, SKILLS AND CAPABILITIES
As well as building on our leading positions in existing key markets such as the US, Japan and Europe, we continue to increase our strength through strategic investment in the fast-growing markets of the future, of which China offers the most outstanding opportunity. Supply and manufacturing OUR RESEARCH
AND DEVELOPMENT Development portfolio Externalisation We continuously monitor new and emerging sciences for opportunities that will help us to develop the next generation of medicines that offer better results for patients. One such opportunity is biopharmaceuticals – medicines derived from biological molecules, which are often based on proteins produced naturally by living organisms in response to disease, for example antibodies. New technologies have opened up the possibility of producing effective, potent antibodies in large supply that can be used to fight disease. As part of our expansion into this fast-growing area, and building on a successful alliance, during 2006 we acquired Cambridge Antibody Technology Group plc (CAT) – a leading UK-based biotechnology company. CAT’s skills in biological therapeutics complement our expertise and strength in small molecule science, and provide a foundation for building a future pipeline of new products from both areas of research. For more information on CAT research, see page 38 or visit the website, cambridgeantibody.com. Elsewhere in this report you can read about other licences, collaborations and acquisitions we have entered into. Product portfolio management During 2005 to 2006, to further strengthen our effort in these areas, we reviewed and refined the way the relevant teams across our business work together. The refinements aim to improve the connectivity, co-ordination and focus of all the various activities, both internally and externally focused, that contribute to maintaining a high quality range of differentiated products that meet patient needs and add value for our stakeholders. More details about our Portfolio Management and Commercialisation can be found on page 43. OUR PEOPLE Leadership The Board of Directors: Our Board comprises Executive Directors, with direct responsibility for business operations, and Non-Executive Directors, who have responsibility to bring independent, objective judgement to bear on Board decisions. The Board sets Company strategy and policies and monitors progress
Atacand: The family of products to which Atacand belongs has been well accepted in the market and competes in the fastest growing sector in terms of value of the global hypertension market (angiotensin II antagonists – plain and combinations with diuretic). A 32mg dose is available to support the use of Atacand in hypertension and congestive heart failure (CHF). Launches of the 32mg dosage strength outside the US continued, and this strength is now available in most major markets. The clinical programme investigating the effect of Atacand (up to 32mg dosage) on retinopathy normotensive in diabetic patients (DIRECT) continued during 2006. Seloken/Toprol-XL is the world’s leading product by sales in the beta-blocker (plain and combinations with diuretic) class. As reported last year, on 17 January 2006 summary judgment was entered against AstraZeneca in the ongoing patent litigation in the US involving three companies challenging AstraZeneca’s patents and seeking FDA approval to sell metoprolol succinate (the generic name for Seloken/Toprol-XL). The Court found that the patents-in-suit are invalid and unenforceable. We disagree with and are disappointed by these conclusions and have appealed to the US Court of Appeals for the Federal Circuit. The appeal has been fully briefed and argued and a decision of the Federal Circuit is expected in 2007. Further information about this litigation is set out on page 142. In November, Sandoz (formerly Eon) launched its 25mg metoprolol succinate product in the US and we announced that we had entered into a supply and distribution agreement with Par Pharmaceutical Companies, Inc. to distribute an authorised generic version of metoprolol succinate extended-release tablets in the US. Currently, the authorised generic product will be distributed only in the 25mg dosage strength. The signing of this agreement does not affect the availability of our branded Toprol-XL. We will continue to manufacture Toprol-XL and to make it available in the US. The timing of any approval or entry to the market of other proposed generic products is hard to predict, and consequently the 2007 financial contribution from sales of Toprol-XL in the US is difficult to forecast with any degree of certainty. Exanta: In February 2006, we announced that we were withdrawing the anti-coagulant Exanta (melagatran/ximelagatran) from the market and terminating its development. This decision was triggered by new patient
The cholesterol absorption inhibitor project aims to provide additional LDL-C reduction when an absorption inhibitor is used in combination with a statin. Our development compound (AZD4121) is expected to enter clinical development during 2007. AZD6610 is a PPAR alpha compound with partial effect on gamma receptors and is in Phase II clinical testing for the treatment of combined dyslipidaemia (LDL-C and trygliceride elevation with low levels of HDL-C). Patients with various mixed dyslipidaemias are expected to become more prominent segments of the dyslipidaemic population, due to increased prevalence of metabolic syndrome and diabetes. In July we signed an agreement with Abbott Laboratories to co-develop and co-promote a cholesterol treatment in the US to treat three important blood lipids – LDL-C, HDL-C and triglycerides –in a single pill. The fixed-dose combination therapy will combine Crestor with either ABT 335, a next-generation fenofibrate currently under development by Abbott, or Abbott’s currently marketed fenofibrate, TriCor™. Final selection between the two programmes will be based upon data generated from the initial studies, with an anticipated regulatory submission to the FDA in 2009. Thrombosis In the anti-platelet area AZD1283 has been selected for pre-clinical development. The aim is to develop an effective anti-platelet drug with markedly reduced bleeding risk. AZD9684 has been tested in a proof-of-principle study with patients with diagnosed acute pulmonary embolism. Data indicate that the compound enhances the endogenous fibrinolytic system. Due to its short half-life, the compound needs to be given parenterally to treat acute thrombosis-related CV events. In 2006 we entered into an agreement with the Australian company Cerylid Biosciences to acquire kinase inhibitors that have the potential to deliver a very effective anti-platelet therapy with minimal risk for bleeding complications. The aim is to start a lead optimisation pre-clinical project in early 2007. Atrial fibrillation (AF) Details of all compounds in the CV pipeline are contained in the table on page 16. PERFORMANCE 2006
Underlying performance Sales of Toprol-XL in the US were up 7% for the full year to $1,382 million. Total prescriptions in the US increased by 10% versus last year. The November launch of Sandoz’s 25mg metoprolol succinate product in the US was followed by an announcement that we had entered into a supply and distribution agreement with Par Pharmaceutical to distribute an authorised generic version of the same 25mg dosage strength in the US market. As a consequence, adjustments were taken in respect of pipeline inventory in the marketplace with the effect that sales are now being recognised as prescriptions are written. Sales of Seloken in other markets were down 7% for the full year to $413 million. Atacand sales in the US were up 12% to $260 million with new prescriptions up 7%. In other markets, Atacand sales were up 14% to $850 million. Plendil sales were down 24% as a result of generic competition in the US market, where Plendil sales declined by 71% to $24 million. PERFORMANCE 2005 Underlying performance Crestor sales for the full year reached $1,268 million, up 38%. Crestor sales in the US increased by 34% to $730 million for the full year. In the week ending 20 January 2006, share of new prescriptions in the US statin market was 6.9% . Market share in the dynamic segment (new and switch patients) was 8.8% in that same week. In other markets, sales for the full year were up 41%, on good growth in Europe (up 44%) and Canada (up 25%). Volume share of the statin market for Crestor in November 2005 was 13.4% in Canada; 11.2% in the Netherlands; 11.7% in Italy; and 6.0% in France. Sales of Toprol-XL in the US increased by 32% for the full year to $1,291 million, which was ahead of underlying growth of 23% as a result of the de-stocking which occurred in 2004. Sales of Seloken in other markets were up 4% for the full year. Atacand sales in the US were down 8% for the full year to $232 million, in line with the decline in total prescriptions. Increased promotion following regulatory approval for the heart failure indication stabilised Atacand prescription market share over the second half of 2005. In other markets, Atacand sales were up 14% for the full year to $742 million. Plendil sales for the full year were down 23% worldwide as a result of generic competition in the US market, where sales declined by 49% to $84 million. Zestril sales also fell, by 27% from $440 million to $332 million.
GASTROINTESTINAL (GI) MEDICINES CONTINUED PIPELINE In addition to exploring new areas of clinical use for Nexium and further broadening the scope of its use in current areas, we focus on developing novel approaches to treating GERD by inhibition of reflux with or without concomitant treatment of gastro-oesophageal hypersensitivity. During the year, AZD3355 and AZD9343 were tested in humans. Based on its better profile, AZD3355 was selected to enter Phase II testing in patients for the treatment of GERD. Following the disease area review described on page 38 we took the decision to discontinue discovery work in other areas of GI. Details of all compounds in the GI pipeline are contained in the table on page 20. PERFORMANCE 2006 Underlying performance In the US, Nexium sales increased by 13% to $3,527 million. Dispensed tablet volume for Nexium increased by 17%; all other PPI class brands in aggregate declined by 4%. Nexium volume growth more than offset lower realised prices from contracted sales. Sales of Nexium in other markets reached $1,655 million for the full year (up 10%) as good volume growth in France and Italy helped mitigate the significant price erosion in Germany. As a result, Europe sales improved by 6% to $1,166 million, whilst Asia Pacific revenues increased by 14% to $195 million, driven by Japan and China. Losec/Prilosec sales were down 16% to $1,371 million. Prilosec sales were down 12% in the US and Losec sales in other markets were down 17%. Sales in Japan were up 7% at $227 million, whilst sales in China were flat. PERFORMANCE 2005 Underlying performance In the US, Nexium sales increased by 15% to $3,125 million. Nexium market share of total prescriptions in the US PPI market was 30.3% in December 2005. Strong growth in dispensed tablets (up 14%) was partially offset by lower realised prices resulting from performance-based contracts and Medicaid. Nexium was the only branded PPI to gain market share in 2005. Sales of Nexium in other markets reached $1,508 million for the full year (up 25%) on a 2 percentage point gain in market share. Losec/Prilosec sales were down 17% to $1,652 million. In the US, sales were $264 million, a fall of 28%. In other markets, Losec sales declined 15% overall, although sales increased by 25% in Japan and by 16% in China.
PIPELINE
Abbreviations in this pipeline table are explained in the Glossary on pages 179 and 180.
NEUROSCIENCE MEDICINES CONTINUED
WE AIM TO STRENGTHEN OUR POSITION IN THE NEUROSCIENCE MARKET, THROUGH FURTHER GROWTH OF SEROQUEL AND THE SUCCESSFUL INTRODUCTION OF A RANGE OF LIFE-CHANGING MEDICINES IN AREAS OF SIGNIFICANT MEDICAL NEED.
PIPELINE
PRODUCTS This profile has led to the increased use of Seroquel, exceeding market growth in all markets commercialised by AstraZeneca. Seroquel is the market-leading atypical anti-psychotic in the US in terms of monthly new and total prescriptions. In Europe, Seroquel continues to grow two to three times faster than the atypical market by value. Seroquel for the treatment of bipolar mania has been licensed in 73 countries. Bipolar disorder is now the fastest-growing segment for Seroquel. In October, the US Food and Drug Administration (FDA) approved the new indication for Seroquel in bipolar depression. Seroquel is the first and only single-agent medication approved for both poles (mania and depression) in bipolar disorder. The approval was based on the results of the two BOLDER studies, which highlighted the effectiveness of Seroquel as early as week one in both bipolar disorder type I and II. A boxed warning regarding risk of suicidality in children and adolescents was added to the US bipolar depression labelling for Seroquel. This is consistent with the US label warnings on other anti-depressants. New dosage strengths of Seroquel (50mg and 400mg) were launched in the US in April 2006, providing increased dosing flexibility. In July, a New Drug Application (NDA) was submitted to the FDA seeking approval for the new once-daily, sustained-release (SR) formulation of Seroquel for schizophrenia. Beginning in October, further submissions were made to regulatory authorities in Europe, Canada and other markets. In addition to the convenience of once-daily dosing, the new formulation will offer faster titration and the ability to reach the effective dose range by the second day of dosing. The Seroquel SR data set contains unique data on relapse prevention compared with the immediate-release (IR) formulation. Seroquel SR is also being studied in the new indications of major depressive disorder (MDD) and generalised anxiety disorder (GAD). In February 2006, Teva Pharmaceuticals USA amended its previously submitted Abbreviated New Drug Application for quetiapine fumarate 25mg by adding 100, 200 and 300mg tablets. Further information on our ongoing patent infringement lawsuit against Teva in the US in relation to quetiapine fumarate (the active ingredient in Seroquel) is set out on page141. Zomig is available in a unique range of formulations, offering physicians a choice of ways to provide rapid relief for migraine patients. Zomig is the prescription market leader in Europe. Zomig Nasal Spray delivers fast pain relief and now accounts for 7% of Zomig global sales. Zomig Rapimelt is a melt-in-the-mouth formulation offering patients a convenient, orange-flavoured tablet that can be taken without water whenever a migraine attack strikes. Zomig Rapimelt now accounts for more than 36% of Zomig global sales. Diprivan is the world’s best-selling intravenous general anaesthetic. More than 90% of total Diprivan sales consist of Diprivan EDTA, a microbial-resistant formulation, which is approved in the majority of markets. Naropin obtained approval in the EU and New Zealand for extended use in paediatric patients to include neonates and infants aged below one year old. These are the first approvals that will enable children of this age to benefit from an effective, long-acting local anaesthetic. In July, we sold our range of US branded anaesthetics and analgesic products (including Diprivan and Naropin) to Abraxis BioScience, Inc. and entered into a five-year supply agreement with them for these products. Our product pipeline and life-cycle management efforts are focused on the important areas of psychiatry, analgesia, neurology and anaesthesia. Following the disease area review described on page 38 we took the decision to discontinue discovery work in Parkinson’s disease, multiple sclerosis and neuroprotection in stroke, but current projects in development will continue as planned.
Psychiatry To strengthen our psychiatry pipeline in 2006, we progressed two compounds, AZD2327 and AZD3783, into clinical development for the treatment of anxiety and depression.
Analgesia Our three candidate drugs in development from the collaboration we entered into with NPS Pharmaceuticals, Inc. in March 2001, have been joined by AZD1940 and AZD1386 – potential analgesics from our Montreal discovery laboratories. In August, we announced an exclusive global agreement with Pozen Inc. to co-develop fixed-dose combinations utilising Pozen’s proprietary formulation technology. The initial development is PN-400, a fixed-dose combination of naproxen and esomeprazole, which has the potential to provide chronic pain sufferers with a new treatment that has good efficacy and a low upper gastrointestinal side-effect profile.
Neurology In October, we announced that we were ceasing development of the investigational drug NXY-059 for Acute Ischaemic Stroke, after analysing the results from the second and pivotal Phase III trial, SAINT II. The trial, which recruited approximately 3,200 patients worldwide, did not meet its primary outcome of a statistically significant reduction in stroke-related disability, as assessed by the Modified Rankin Scale. The SAINT II trial did not support the findings from the first, smaller (approximately 1,700 patients) Phase III trial, SAINT I, which did show a positive effect on disability as measured by the Modified Rankin Scale. Both trials were required to show a positive benefit on disability to support a regulatory filing. We will work closely with the SAINT trial’s Steering Committee to analyse the pooled data from the SAINT I and SAINT II trials to ensure the lessons for future stroke research are identified and communicated appropriately via peer-reviewed medical journals and relevant scientific congresses. We plan to work with the SAINT Steering Committee to present the data at the International Stroke Congress in San Francisco in February 2007. NXY-059 was licensed from Renovis, Inc. AZD3102, for the treatment of Alzheimer’s disease, is in pre-clinical development in collaboration with Dyax Corp. As announced by Targacept, Inc. in December, AZD3480, the neuronal nicotinic receptor agent that we licensed from Targacept, has successfully completed the planned evaluation studies and will progress into Phase IIb clinical testing in both Alzheimer’s disease and cognitive disorders in schizophrenia.
Anaesthesia Details of all compounds in the pipeline in the areas of psychiatry, analgesia, neurology and anaesthesia are contained in the table on page 23. PERFORMANCE 2006
Underlying performance Seroquel sales reached $3,416 million (up 24%). In the US, Seroquel sales were up 24% to $2,486 million. Total prescriptions increased by 12%, well ahead of the market. The Seroquel share of total prescriptions in the US anti-psychotic market increased to 30.2% in December, up 1.7 percentage points over last year. In other markets, sales were up 23%, on good growth in Europe (up 25% to $619 million) and in Asia Pacific (up 15% to $149 million). Zomig sales increased by 13% to $398 million. Zomig sales comparisons in the US for the full year as compared with 2005 are affected by the resumption of full responsibility from MedPointe, Inc. for US commercialisation in April 2005. Sales for Zomig in the US were up 39%, although total prescriptions declined by 6%. Sales of Zomig in other markets were unchanged. The divestment of Diprivan in the US in June led to a 17% decline in sales to $304 million. PERFORMANCE 2005
Underlying performance Seroquel sales reached $2,761 million (up 35%). In the US, Seroquel sales increased 33% to $2,003 million, ahead of prescription growth of 20% as a result of higher realised prices and favourable contract rebate adjustments. Seroquel share of new prescriptions in the US atypical anti-psychotic market increased to 29.8% in December 2005. In other markets, sales for the full year increased by 40% on strong growth in Europe (up 48%), Asia Pacific (up 22%) and Canada (up 29%). Zomig sales declined by 3% to $352 million, as growth in other markets (up 8%) was more than offset by an 18% decline in the US. The US decline was chiefly as a result of lower first-quarter sales following the return of the distribution arrangements from MedPointe, which took effect from 1 April 2005. Diprivan sales in other markets were down 8% to $369 million. US sales declined 44%, chiefly on lower prices as a result of the introduction of another generic product.
WE AIM TO MAINTAIN OUR POSITION AS A WORLD LEADER IN CANCER TREATMENT THROUGH CONTINUED GROWTH OF ARIMIDEX, FURTHER LAUNCHES AND LINE EXTENSIONS OF NEWER PRODUCTS SUCH AS FASLODEX, AND THE SUCCESSFUL INTRODUCTION OF NOVEL THERAPEUTIC APPROACHES CURRENTLY IN THE DEVELOPMENT PIPELINE. did, however, confirm a number of important clinical benefits for Iressa, including tumour shrinkage and a significant improvement in the time to treatment failure. Pre-planned subgroup analyses showed a statistically significant increase in survival with Iressa in patients of Asian ethnicity and in patients who had never smoked.
PRODUCTS Data presented at the European Society of Medical Oncology meeting in September showed that the combination of Arimidex with Herceptin™ (trastuzumab) was synergistic and effective in patients with advanced post-menopausal breast cancer who were both hormone-receptor positive and Her2 Neu positive. These patients are considered to be at higher risk of the cancer spreading. When the two drugs were combined, this was proved more effective than Arimidex alone. These data do not yet form part of the current licence. Arimidex is also approved for the treatment of advanced breast cancer in post-menopausal women based on demonstrated advantages over tamoxifen and megestrol acetate. Faslodex offers an additional hormonal therapy for patients with hormone-sensitive advanced breast cancer, delaying the need for cytotoxic chemotherapy. Due to its novel mode of action, Faslodex offers an effective, well-tolerated additional treatment with the compliance and convenience benefits of a once-monthly injection. Faslodex is now launched in more than 30 markets. It is indicated for the second-line treatment of hormone-receptor positive advanced breast cancer in post-menopausal women. At the San Antonio Breast Cancer Symposium in December, the first results of the EFECT study were presented. This study compared Faslodex with exemestane in patients who had received prior aromatase inhibitor therapy – the first Phase III trial in this patient population. The study showed Faslodex to have similar efficacy to exemestane. Trials are ongoing to further understand the full utility of Faslodex in the treatment of post-menopausal breast cancer. Casodex continued growth has been driven by: the use of Casodex 50mg in advanced prostate cancer; the growth of Casodex 150mg, which is approved for use in locally advanced prostate cancer in over 60 countries; and the growth of Casodex 80mg, which is only available in Japan, where it is approved for all stages of prostate cancer. Zoladex is used for the treatment of prostate cancer (for which it is approved in 105 countries), breast cancer and gynaecological disorders. In non-metastatic prostate cancer, Zoladex is the only luteinising-hormone-releasing hormone (LHRH) agonist shown to improve overall survival both when used in addition to radical prostatectomy and when used in addition to radiotherapy. In breast cancer, Zoladex is widely approved for use in advanced breast cancer in pre-menopausal women. In a number of these countries, Zoladex is also approved for the adjuvant treatment of early stage pre-menopausal breast cancer as an alternative to and/or in addition to chemotherapy. Zoladex offers proven survival benefits for breast cancer patients with a favourable tolerability profile. Iressa is indicated for the treatment of advanced non-small cell lung cancer (NSCLC) in patients who have failed chemotherapy. It is approved in 35 countries. Clinical trials have shown that Iressa is an effective and generally well-tolerated treatment for some patients with advanced NSCLC. Those patients who benefit tend to do so quickly, and sometimes results are dramatic. In 2004, results from the ISEL study, which compared Iressa with placebo in advanced NSCLC patients who had failed prior chemotherapy, failed to reach statistical significance compared with placebo in the overall population and in the subgroup of patients with adenocarcinoma. The ISEL study Following the announcement of the ISEL data, in 2005 we voluntarily withdrew the European submission for Iressa and regulatory authorities in the US and Canada restricted the use of Iressa to those patients already benefiting from the drug. In the Asia Pacific region, due to the ethnic differences in lung cancer, Iressa has become an established therapy for pre-treated advanced NSCLC, and use of the drug in the first-line advanced setting is now being studied in a large, Phase III, pan-Asian trial known as the IPASS study, which involves 1,212 patients. Progress continues to be made in identifying which patients, in which treatment settings, are most likely to benefit from treatment with Iressa, and we will strive to complete a programme of such work. The Japanese Phase III Study V-15-32 comparing Iressa with docetaxel in NSCLC has now reported. There was no statistically significant difference in overall survival between the two treatments but the study, which was set up to demonstrate statistical non-inferiority, did not meet the primary objective, as the confidence interval did not lie entirely below the pre-defined non-inferiority limit. However, we believe these data have not altered the benefit/risk profile of Iressa in pre-treated Japanese NSCLC patients. Further Phase II trials are ongoing to evaluate the potential benefits of Iressa in NSCLC and other EGF receptor-driven tumours. Abraxane®: In April, we announced an agreement with Abraxis BioScience, Inc. (Abraxis) to co-promote Abraxis’s product Abraxane® in the US. Abraxane® (paclitaxel protein-bound particles for injectable suspension) (albumin-bound) is a novel, albumin-bound formulation of paclitaxel, which was approved by the US Food and Drug Administration (FDA) in January 2005. Abraxane® is indicated for the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy. This agreement gives us access to the key US chemotherapy market and Abraxane® compliments and extends our US oncology product portfolio. Co-promotion started on 1 July.
ONCOLOGY MEDICINES CONTINUED
PIPELINE Zactima (vandetanib) is a once-daily oral anti-cancer therapy that selectively inhibits clinically validated pathways in cancer (vascular endothelial growth factor (VEGF) receptor, EGF receptor), blocking the development of a tumour’s blood supply (anti-angiogenesis) and the growth and survival of the tumour itself. Zactima also inhibits receptor-tyrosine kinase (RET kinase) activity, an important growth driver in certain types of thyroid cancer. The worldwide Phase III second-line NSCLC development programme with Zactima is enrolling patients in the US, Europe, and the rest of the world, including China and Japan. The Phase III studies currently underway involve: docetaxel with and without Zactima; pemetrexed with and without Zactima; Zactima versus erlotinib; and Zactima versus placebo plus best supportive care in patients who have been previously treated with an EGF receptor antagonist. In 2005, promising early data in hereditary medullary thyroid cancer led to orphan drug designation for Zactima by the FDA and the European Medicines Agency (EMEA), as well as fast-track status for regulatory review by the FDA. Orphan drug designation encourages the development of new products that demonstrate promise for the diagnosis, prevention and/or treatment of life-threatening or very serious conditions that are rare and affect relatively few people (not more than five in 10,000 people a year in the EU and fewer than 200,000 people a year in the US). Fast-track designation enables more frequent discussions with the FDA in order to obtain their input into the drug development plan. It also provides the option of submitting the New Drug Application in sections as opposed to simultaneous submission of all components, thereby facilitating and expediting the development and review of new drugs intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs. A Phase II trial has completed recruitment and a randomised study is ongoing. In addition, the anti-cancer activity of Zactima continues to be evaluated in colo-rectal, glioma, head and neck, breast and prostate cancers. Recentin (formerly AZD2171) is a highly potent, selective, orally active inhibitor of VEGF receptor signalling in solid tumours. Recentin inhibits all three VEGF receptors irrespective of activating ligand. Following the decision in 2005 to accelerate the development of Recentin, and the subsequent commencement of the pivotal Phase II/III NSCLC study in November 2005, the pivotal colo-rectal cancer (CRC) programme started in 2006. The programme includes a head-to-head study comparing Recentin plus FolFox with bevacizumab (Avastin™) plus FolFox in first-line CRC. It also includes two other studies in CRC, namely a second-line head-to-head study with bevacizumab and a first-line study involving Recentin with and without chemotherapy. As well as these programmes, the US National Cancer Institute is now recruiting to 15 studies in a number of different tumour settings as part of the Recentin signal search programme. The foundations of our early oncology pipeline are novel compounds that target signalling pathways believed to be pivotal in cancer cell growth, invasion and survival, with two products in Phase II and eight others in Phase I development. AZD6244, a potent MEK inhibitor licensed from Array Biopharma, has now entered Phase II studies across a range of tumours, including malignant melanoma, pancreatic cancer, CRC and NSCLC. The Phase II trials in hormone-resistant prostate cancer for the endothelin A antagonist, AZD4054, are proceeding and will report mature survival data in early 2007. Phase I studies with the poly-ADP-ribose polymerase (PARP) inhibitor AZD2281, part of the KuDOS portfolio, have now completed and Phase II studies will commence in early 2007. The dual-specific Src/Abl kinase inhibitor, AZD0530, has shown dramatic effect on biomarkers of cell motility and bone resorption and is starting Phase II studies in a range of malignancies. This compound has the potential for activity in a wide range of tumours. The following compounds from the early portfolio achieved First Time in Man during the year: AZD4877, a novel inhibitor of cell cycle; AZD7762, a tumour-selective chemo sensitizer; AZD8931, a dual inhibitor of epidermal growth factor receptor (erbB1 and erbB2) signalling pathways. AstraZeneca and Schering AG formed a new alliance in September to co-develop and jointly commercialise AZD4992, Schering AG’s novel SERD (selective estrogen receptor down-regulator) for the treatment of breast cancer.
PERFORMANCE 2006
Underlying performance In the US, sales of Arimidex were up 29% to $614 million. Total prescriptions increased by 21%. Arimidex share of total prescriptions for hormonal treatments for breast cancer was 37.5% in December, up 2.7 percentage points during the year. In other markets, Arimidex sales grew by 29% due to an increase in sales in Europe (up 30%) and Asia Pacific (up 27%) on strong volumes. Casodex sales increased by 9% to $1,206 million. In the US, sales were up 23% to $295 million. Sales in other markets were up 5%, with sales in Japan up 10% to $286 million. Iressa sales in markets outside the US increased by 10%. Sales in the Asia Pacific region were up 15% to $207 million. Worldwide sales of Faslodex were up 32% to $186 million, largely due to the 74% increase in Europe. Sales in the US were up 12%. Zoladex sales exceeded $1 billion for the second year in a row with declines in the US offset by growth elsewhere. We have recorded revenue of $18 million from Abraxane®.
PERFORMANCE 2005
Underlying performance Casodex sales in the US increased by 3% to $239 million. Sales in other markets were up 11%, with Japan accounting for nearly half of this growth. Arimidex sales increased 44% to $1,181 million. Arimidex value share of the market for hormonal treatments for breast cancer reached 50% in October 2005. In the US, sales of Arimidex were up 59%. In other markets, sales were up 35% on excellent growth in Europe (up 35%) and Japan (up 27%). Iressa sales were down 31%, chiefly as a result of the 63% decline in the US. Iressa sales in Asia Pacific increased 7% as sales in China and other markets more than offset a 15% decline in Japan. Sales for Faslodex reached $140 million (up 39%) as a result of good growth in Europe since marketing approval in March 2004. Sales in the US were up 11%. Zoladex sales increased 7% to $1,004 million, as good sales growth in other markets (up 13%) offset a 23% decline (from both volume and price effects) in the US.
RESPIRATORY AND INFLAMMATION (R&I) MEDICINES CONTINUED
The first European approvals (in Finland, Latvia, Germany, Austria and Denmark) for a more environmentally friendly HFA-based Pulmicort pMDI were received in 2006. Pulmicort Respules is the first and only nebulised corticosteroid in the US for children as young as 12 months. Sales have grown strongly as a result of high medical need in the age group combined with the product’s beneficial profile, which together have strengthened the product’s position as the inhaled corticosteroid of choice for the treatment of children under five with asthma. In September, Pulmicort Respules was approved and launched in Japan for the maintenance treatment of paediatric asthma and as prophylactic therapy in children aged six months or over and less than five years of age. Information on AstraZeneca’s ongoing patent infringement action against IVAX in the US in relation to a budesonide inhalation suspension is set out on page141. Oxis is a beta-agonist therapy with a fast onset and long-acting clinical effect for the relief of asthma symptoms. Oxis is added to the treatment regime when corticosteroid treatment alone is not adequate. Oxis is also indicated for symptom relief in COPD. During 2006, all drugs classified as “long-acting beta agonists” were required to include safety precautions in their prescribing information such as “not to be used in asthma without concurrent steroid treatment”. Rhinocort is a treatment for allergic rhinitis (hay fever). It combines powerful efficacy with rapid onset of action and minimal side effects and is available as a once-daily treatment in the Rhinocort Aqua (nasal spray) and the Turbuhaler dry powder inhaler forms. PIPELINE We focus on developing new therapies for currently unmet medical needs in COPD, asthma, rheumatoid arthritis and osteoarthritis.
The development of Symbicort for COPD and paediatric asthma in the US is on track, with submissions scheduled for the first half of 2008 and late 2007 respectively. The development of two new strengths of the pMDI product is also on track, with submission of additional data to supplement the filing in the EU scheduled for the second half of 2008. As discussed in more detail on page 38, we acquired Cambridge Antibody Technology Group plc (CAT) during the year. The existing alliance with CAT had established a strong portfolio in R&I diseases, which continued to make good progress. Together, we are now working on 11 discovery projects in R&I diseases. The first compounds are expected to move into development in 2007. In addition to forming the foundation for our biopharmaceuticals strategy, the acquisition of CAT added CAT-354 (in Phase I trials for asthma) and CAM-3001 to the R&I pipeline. In September, we announced we had entered into a three-year partnership with Dynavax Technologies Corporation (Dynavax) to pursue opportunities in the field of Toll-like receptor 9 (TLR-9) for use in asthma and COPD. Dynavax has unique competence in generating immunostimulatory sequences that activate TLR-9, and the alliance will enable us to expand our portfolio of small molecules and biologicals. On 1 February 2007, we announced a major discovery alliance with Argenta Discovery Limited aimed at identifying improved bronchodilators to treat COPD. A team of scientists from each company will collaborate in order to identify long-acting muscarinic (M3) antagonists (LAMAs) and dual acting muscarinic antagonist-ß2 agonist (MABA) candidate drugs. Details of all compounds in the R&I pipeline are contained in the table on page 29. PERFORMANCE 2006 Underlying performance Sales of Symbicort increased by 18% to $1,184 million on continued market growth and share gains in Europe, where sales were $1,018 million. Sales in other markets reached $166 million. Worldwide sales of Pulmicort were up 11% to $1,292 million. Once again, the primary driver for growth was Pulmicort Respules in the US, where sales were up 24%. Volume growth in the US was approximately 10%, with price changes, managed care rebate adjustments and inventory movements also contributing to the sales growth. Pulmicort sales in the rest of the world were $457 million. Rhinocort sales were down 7% to $360 million, chiefly on sales of Rhinocort Aqua in the US market (down 9%). PERFORMANCE 2005 Underlying performance Symbicort sales reached $1,006 million. Sales growth was 22% as market share continues to increase in the fast-growing combination product segment of the asthma and COPD markets. Over 80% of Symbicort sales were made in Europe in 2005. Sales of Pulmicort were up 9% as the 18% growth in the US (fuelled by a 28% increase in Pulmicort Respules) to $682 million more than offset a 2% decline in other markets. Rhinocort sales were up 6% chiefly on sales of Rhinocort Aqua in the US (up 7%), where price changes and managed care rebate adjustments more than offset the 10% decline in total prescriptions. Rhinocort sales in the US were $277 million.
GEOGRAPHIC REVIEW CONTINUED
In November, Sandoz (formerly Eon Labs Manufacturing, Inc., one of the parties to the above litigation), launched a 25mg dosage strength of generic metoprolol succinate extended-release tablets. Subsequently, we announced that we had entered into a supply and distribution agreement with Par Pharmaceutical, and Par began distribution of an authorised generic version of the 25mg dosage strength of metoprolol succinate extended-release tablets in the US. The signing of this agreement does not affect the availability of AstraZeneca’s branded Toprol-XL. AstraZeneca will continue to manufacture and make Toprol-XL available in the US in all dosage strengths. Arimidex continued to perform well with sales up 29% (+29% reported) to $614 million for the full year. In the second half of the year, Arimidex became the market leader in total and new prescriptions for hormonal treatments for breast cancer in the US market, surpassing tamoxifen for the first time. Pulmicort Respules, the only inhaled corticosteroid for the treatment of asthma approved in the US for children as young as 12 months, has experienced strong sales growth of 24% over the previous year. In June, we filed a Citizen’s Petition with the FDA raising our concern regarding the bioequivalence testing, product quality and labelling changes that would be, in its view, necessary for approval of any follow-on budesonide inhalation suspension, such as that filed by IVAX Pharmaceuticals Inc. in September 2005. An NDA was filed in September 2005 for Symbicort pMDI for the long-term maintenance treatment of asthma in patients aged 12 years and above for two strengths (80/4.5 and 160/4.5 micrograms). This application was approved in 10 months (July 2006) within the Prescription Drug User Fee Act (PDUFA) timeline, only the third inhalation product within the pulmonary division to achieve approval within a 10-month period. Since the FDA approval, we have been preparing for US launch and the first pivotal trial data were unveiled in an abstract at the American College of Asthma, Allergy and Immunology in November. We continue to plan for a US launch around the middle of 2007, although achieving this launch timeline is dependent upon successful transfer of technology from development to manufacturing and completion of validation batches. Medicare Part D Prescription Drug Benefit Enrolment data from the Centers for Medicare and Medicaid Services (CMS) show that two providers enrolled 44% of the Part D enrolees into their plans. Three-quarters of the Part D enrolees are enrolled in plans offered by 12 providers. According to CMS, competition among private plans reduced beneficiary and government costs by 35% in 2006, with similar savings expected in 2007. CMS has found that, on average, Medicare beneficiaries in the plans with the lowest prices could save up to 23% off the prices they would have paid without coverage, and some could save up to 56%. As part of our commitment to helping patients get the medicines they need, including those who are enrolled in, or who are eligible for, a Medicare Part D prescription drug plan, the Company gave a significant grant of $10 million that helped produce the My Medicare Matters™ outreach and education initiative. Thanks to this support, during the first open enrolment period, My Medicare Matters™ educators worked side-by-side with thousands of community-based groups to provide one-on-one help sessions to more than 210,000 individuals in 44 regions within the US, helping to make My Medicare Matters™ the most recognised Part D outreach initiative among these community groups. Our brands currently have extensive access on Medicare Part D formularies and are widely available to Medicare beneficiaries. Whilst payer mix varies by brand, between 20% and 30% of total prescriptions for our major in-line brands are currently paid for by Part D plans. Driven primarily by both the success of our contracting strategy and prescription volume growth in the Medicare segment, AstraZeneca has, on balance, realised a positive financial impact as a result of Medicare Part D. Over time, however, the success of the programme will depend, in large measure, on beneficiary satisfaction (including access to medicines), the effect of the coverage gap (a period of no insurance coverage in which beneficiaries must pay the full amount out of pocket), whether employers shift retirees to Part D and whether there will be attempts to modify or amend the programme.
Canada We maintained our market position as the second largest pharmaceutical company in Canada. Crestor maintained its number two market ranking and was the fastest-growing statin in both new and total prescriptions (41% and 33% respectively), supported by the Crestor Healthy Changes Support Program, which helps patients to understand better and improve the management of their cholesterol and to develop a healthier lifestyle. Seroquel remains the leader in new and total prescriptions within the atypical anti-psychotics market. Atacand continues to outperform the anti-hypertensive market, with new prescription growth of over 21%, compared with market growth of only 10%.
Several of our marketed products received regulatory approval for new indications or label changes: Nexium to heal and reduce the risk
of gastric ulcers associated with NSAID therapy (non-steroidal anti-inflammatory drugs); and Faslodex, whose Product Monograph was updated with clinical trial
findings regarding use in patients with mild to moderate hepatic impairment. However, the Product Monograph for Zomig tablets,
In November, the Supreme Court of Canada (SCC) reversed an earlier Federal Court of Appeal decision that had quashed the marketing approval for the generic omeprazole capsule product of Apotex Inc. (Apotex). The SCC had permitted Apotex to sell its product pending the resolution of the appeal. As a result of the November decision, Apotex can now continue to sell its omeprazole capsules in Canada. For more details of this and other litigation in Canada, see page 138.
REST OF THE WORLD
Europe The good sales performance was underpinned by strong underlying volume growth for our key brands, partly offset by the impact of government interventions, with Crestor (+56%, +56% reported), Arimidex (+30%, +29% reported), Seroquel (+25%, +24% reported), Symbicort (+18%, +17% reported) and Nexium (+6%, +5% reported) all increasing their market shares in most countries. Overall our sales in France ($1,642 million) were maintained at the same level as 2005 (reported down 1%), maintaining our sales ranking of fourth. We saw good sales growth for our key growth products (+19%, +18% reported), especially Crestor and Nexium, both of which gained significant market share from competitors, although this was partially offset by the continuing decline of patent-expired products. In Germany sales of $1,165 million were down 4% (down 5% reported) compared with 2005. This was a result of a combination of price reductions and increased pressure on physicians to write generic prescriptions in place of branded or newer patented products, which particularly affected sales of Nexium. Our specialty care drugs, Arimidex and Seroquel, however, showed good growth. In the UK, sales were $850 million, driven by Arimidex (+78%, +77% reported), which benefited from approval for use with switch patients previously receiving tamoxifen. Symbicort (+41%, +41% reported) and Seroquel (+34%, +34% reported) also performed strongly. In Italy, sales were up $113 million to $1,265 million, which represents growth of 11% (+10% reported). The performance of Crestor continued the momentum gained in 2005 (+58%, +58% reported) and Arimidex (+29%, +29% reported) remains the market leader in the aromatase inhibitor market by sales. Nexium sales were up 31% (reported +28%) and the approval for risk reduction of NSAID-associated stomach ulcers in 2005 continued to drive sales. In Spain, sales of $745 million were driven by Nexium (+67%, +67% reported), Symbicort (+19%, +18% reported) and Seroquel (+20%, +20% reported). Strong sales were recorded in Central and Eastern Europe, particularly in Russia, where the pharmaceutical market continued to benefit from the introduction of a federal reimbursement list for pharmaceuticals in 2005. See page 50 (Industry Regulation) for a discussion of government cost-containment measures in Europe and their impact on our business.
Japan Casodex (+10%, +3% reported) and Iressa (+6%, flat reported), together with Losec (+7%, flat reported) and Seroquel (+4%, down 2% reported). The planned interim analysis for the Crestor Post-Marketing Surveillance (PMS) study was submitted to the regulatory authorities in September and, based on its findings, and together with Shionogi & Co. Ltd., we started the full-scale launch of Crestor ahead of schedule on 25 September.
Asia Pacific (excluding Japan) South Korea growth (+29%, +38% reported) was driven by the successful launch of Crestor and continued development of Atacand and Iressa. In China, the growth and expansion strategy of the past four years has continued to provide strong returns. AstraZeneca is the largest multinational pharmaceutical company in the prescription market in China, as surveyed by the Hong Kong Association of the Pharmaceutical Industry, with one of the highest growth rates. Investments in a large field force covering extensive areas of China allow AstraZeneca to ensure our products reach Chinese patients. In 2006, AstraZeneca also announced the establishment of the Innovation Centre, China (ICC). This investment in Chinese research and discovery science is aimed at creating new opportunities in the area of lung cancer, hepatocellular carcinoma cancer (HCC), gastric/oesophageal cancer and pre-menopausal breast cancer. The ICC will also establish collaborations with major medical centres in China. Strong gains were also seen in India and Thailand, where market dynamics are continuing to be positive.
GEOGRAPHIC REVIEW CONTINUED
In Australia, we are ranked third in the market in terms of sales, with high volume growth of key brands such as Arimidex,
Seroquel,
Latin America The Latin America region has experienced improved political and economic stability. This has led to us investing significantly in further development of our key growth products and in the fast-growing markets. As a result, they showed strong performance with sales of $219 million, which is up 53% versus last year (+58% reported). Nexium took over the number one position for Latin America with sales of $94 million (up 48%, +51% reported). Crestor enjoyed a strong year with sales of $57 million (up 82%, +88% reported). Mexico continued to be our largest market in the region, with sales of $286 million (up 23%, +23% reported). Our share in the prescription market moved up to 3% and we moved up to eleventh position in the rankings. Crestor is the market leader in terms of volume and second in terms of value. The over-the-counter (OTC) business increased $7 million to $30 million (up 32%, +31% reported), with particularly strong sales of Losec OTC ($21 million). In Brazil, sales were $247 million with an underlying growth of 17% (+30% reported). The best-selling brand was Zoladex with sales of $37 million. The performance of other markets in the region was strong, particularly for Venezuela, Central America and the Caribbean.
Middle East and Africa Our new manufacturing site in Egypt was inaugurated in December. It is AstraZeneca’s first manufacturing facility in the Middle East and demonstrates our commitment to invest in the region and our confidence in Egypt. The plant will have a capacity of 250 million tablets and represent a $32 million investment.
The performance data shown in the therapy area reviews on pages 16, 20, 23, 26, 29 and 32 and the geographic sales performance in the geographic review on page 33 are shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange rate movements. Underlying CER growth is calculated by retranslating the current year performance at the previous year’s exchange rates and adjusting for other exchange effects, including hedging.
FINANCIAL REVIEW CONTINUED
The Gastrointestinal portfolio grew for the second year in a row, up 4% as Nexium growth more than offset the continuing decline in Losec/Prilosec. Nexium sales increased by 12% to $5,182 million. Sales in the US were up 13% to $3,527 million on continued strong volume growth offset by lower price realisation. Nexium sales in other markets increased 10%, as good volume growth in France and Italy helped mitigate the significant price erosion in Germany. Losec/Prilosec sales were down 16% to $1,371 million with declines of 12% in the US and 17% elsewhere. In Cardiovascular, sales grew by 15% to $6,118 million. Crestor sales exceeded $2 billion, reaching $2,028 million, up 59%. Sales in the US were up 57% to $1,148 million. Crestor share of new prescriptions in the US statin market was 9.6% in December 2006 (compared with 6.9% at the beginning of 2006). Sales in other markets increased by 61% on good growth in Europe and the second half launch in Japan. Seloken/Toprol-XL sales increased by 3% to $1,795 million. US sales growth was restricted to 7% by the launch in November of generic Toprol-XL 25mg by Sandoz (formerly Eon Labs) and our move to recognising revenue conservatively as prescriptions are written (as opposed to on shipment). Sales were $1,382 million in the US. The performances of Crestor and Seloken/Toprol-XL more than offset declines in Zestril and Plendil, down by 7% and 24%, respectively. Respiratory and Inflammation sales increased by 10% to $3,151 million. Symbicort sales were the main driver of this growth and increased 18% to $1,184 million. Sales of Symbicort arise principally in Europe – the Company continues to plan for a US launch around the middle of 2007, although achieving this launch timeline is dependent upon successful transfer of technology and completion of the required validation batches. Elsewhere in the therapy area, Pulmicort sales rose by 11% with annual sales of $1,292 million, whilst Rhinocort sales declined to $360 million, down by 7%. Sales in the Oncology portfolio grew by 12% to $4,262 million. Arimidex sales increased 29% to $1,508 million, with growth rates in the US (up to $614 million) and other markets the same. Casodex sales grew by 9% to $1,206 million on strong performances outside the US and Zoladex sales exceeded $1 billion for the second year in a row, again on good performance outside the US. Iressa sales fell by 11% to $237 million, a slower decline than in 2005, as growth in Asia Pacific went some way to offset declines in the US. Neuroscience sales grew by 16% to $4,704 million. Seroquel sales exceeded $3 billion to reach $3,416 million (up 24%). In the US, Seroquel share of new prescriptions in the anti-psychotic market increased to over 30% in December. Sales in other markets increased by 23%. We discuss the performances of the therapy areas and the individual products in those areas in more detail in the relevant sections of the Business Review.
Geographical Analysis Revenue from outside the US now accounts for 53% of our sales. In Europe, sales increased by 6% for the full year, with good volume growth partially offset by lower realised prices. Sales for the five key growth products combined grew by 21%. However, performance was hindered by declines in Germany, where doctors have been encouraged to prescribe generics. Sales in Japan increased by 5% as a result of good growth for Casodex and Arimidex together with the launch of Crestor. Sales in China were up 19% to $328 million on the back of strong growth in all the major therapeutic areas, particularly Oncology. We discuss the geographic performances in more detail in the appropriate sections of the Business Review on pages 33 to 36.
Operating Margin and Retained Profit Gross margin increased by 1.4 percentage points to 79.0% of sales. Slightly lower payments to Merck (4.7% of sales) benefited gross margin by 0.1 percentage points whilst currency and royalties reduced gross margin by 0.1 percentage points and 0.2 percentage points, respectively. Excluding the prior year costs for the early termination of the MedPointe Zomig US distribution agreement and manufacturing provisons (in total $137 million) and the 2006 provisions made in respect of Toprol-XL, NXY-059 and manufacturing efficiencies (in total $215 million), underlying margin improved by 1.5 percentage points. Research and development expenditure was up 16% to $3,902 million (14% excluding the Cambridge Antibody Technology investment) and increased by 0.6 percentage points to 14.7% of sales. Selling, general and administrative cost increases were restricted to 5% over the last year, reaching $9,096 million and adding 2.0 percentage points to operating margin. Higher net other income and expense increased operating margin by 1.1 percentage points due principally to higher royalties, plus the $109 million gain recognised in the first half of the year from the divestment of the US anaesthetics and analgesic products to Abraxis BioSciences Inc., and the disposal of non-core products in Scandinavia ($32 million) in the final quarter. Included within cost of sales is the movement in fair value of financial instruments used to manage our transactional currency exposures; the loss for the year, net of an exchange gain on the underlying exposures, was $11 million. Other fair value movements of $5 million are charged elsewhere in operating profit. Net interest and dividend income for the year was $327 million (2005 $165 million). The increase over 2005 is primarily attributable to higher average investment balances and yields. The reported amounts include $43 million (2005 $15 million) arising from employee benefit fund assets and liabilities reported under IAS 19, “Employee Benefits”. The effective tax rate for the twelve months was 29.0% (2005 29.1%) . The decrease compared to 2005 is the net effect of tax benefits arising from a different geographical mix of profits, tax deductions relating to share-based payments and the recognition of deferred tax assets in respect of tax credit carry forwards, offset by an increase in tax provisions principally in relation to global transfer pricing issues. Earnings per share increased by 34% from $2.91 in 2005 to $3.86 for the current year. We estimate that the share re-purchase scheme has added 6 cents to earnings per share (after taking account of interest income foregone). In 2006, Toprol-XL contributed US sales of $1,382 million and earnings per share of 50 cents. Since the timing of approval and launch
DEFINITIONS AND INTERPRETATION Except where otherwise indicated, figures included in this report relating to pharmaceutical product market sizes and market shares are obtained from syndicated industry sources, primarily IMS Health (IMS), a market research firm internationally recognised by the pharmaceutical industry. The 2006 market share figures included in this report are based primarily on data obtained from an online IMS database. IMS data may differ from that compiled by the Group with respect to its own products. Of particular significance in this regard are the following: (1) AstraZeneca publishes its financial results on a financial year and quarterly interim basis, whereas IMS issues its data on a monthly and quarterly basis; (2) the online IMS database is updated quarterly and uses the average exchange rates for the relevant quarter; (3) IMS data from the US is not adjusted for Medicaid and similar state rebates; and (4) IMS sales data are compiled using actual wholesaler data and data from statistically representative panels of retail and hospital pharmacies, which data are then projected by IMS to give figures for national markets. References to prevalence of disease have been derived from a variety of sources and are not intended to be indicative of the current market or any potential market for AstraZeneca’s pharmaceutical products since, among other things, there may be no correlation between the prevalence of a disease and the number of individuals who are treated for such a disease.
GLOSSARY
The following abbreviations and expressions have the following meanings when used in this report:
Cognitive disorders – The
class of disorders consisting of significant impairment of cognition or memory
that represents a marked deterioration from a previous level of functioning. High-throughput screening – The
process of using automated tests to search quickly through large numbers of substances
for desired binding or activity characteristics.
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