Annual Reports

 
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  • 6-K (Mar 12, 2018)
  • 6-K (Mar 7, 2018)
  • IRANNOTICE (Mar 6, 2018)
  • 6-K (Mar 1, 2018)
  • 6-K (Feb 23, 2018)
  • 6-K (Feb 20, 2018)
AstraZeneca 6-K 2007

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

Date of Reports: 28 February 2007

Commission File Number: 001-11960

AstraZeneca PLC

15 Stanhope Gate, London W1K 1LN, England

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F   X     Form 40-F      

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ______

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

         Yes           No   X  

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-____________






AstraZeneca PLC

INDEX TO EXHIBITS

1.      Annual Review & Summary Financial Statements 2006
   
2.      Corporate Responsibility Summary Report 2006
 

 






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

         
    AstraZeneca PLC 
          
         
         
Date: 6 March 2007 By:  /s/ J W Hoskins
     
    Name:  J W Hoskins
    Title:     Assistant Secretary





Item 1



   
                 
YOUR SHARES AT A GLANCE   DIVIDEND AND PAYMENT DATES        
                 
      DIVIDEND FOR 2006  $ PENCE SEK   PAYMENT DATE 
     





      First interim dividend 0.49 26.6 3.60   18 September 2006
     





      Second interim dividend 1.23 63.0 8.60   19 March 2007
     





      Total 1.72 89.6 12.20    
     





                 
RETURNS TO SHAREHOLDERS   ASTRAZENECA IN BRIEF
DIVIDENDS AND SHARE RE-PURCHASES    
$M    
> WE DISCOVER, DEVELOP, MANUFACTURE AND MARKET PRESCRIPTION PHARMACEUTICALS FOR IMPORTANT AREAS OF HEALTHCARE: CANCER, CARDIOVASCULAR, GASTROINTESTINAL, INFECTION, NEUROSCIENCE, AND
RESPIRATORY AND INFLAMMATION.
   
> BROAD PRODUCT RANGE, INCLUDING MANY WORLD LEADERS AND A NUMBER OF KEY GROWTH PRODUCTS: ARIMIDEX, CRESTOR, NEXIUM, SEROQUEL AND
SYMBICORT.
       
EARNINGS PER SHARE > ACTIVE IN OVER 100 COUNTRIES WITH GROWING PRESENCE IN IMPORTANT EMERGING MARKETS; CORPORATE OFFICE IN LONDON, UK; MAJOR R&D SITES IN
SWEDEN, THE UK AND THE US.
   
> OVER 66,000 EMPLOYEES (58% IN EUROPE, 27% IN THE AMERICAS AND 15% IN ASIA, AFRICA AND AUSTRALASIA).
   
> AROUND 12,000 PEOPLE AT 16 R&D CENTRES IN 8 COUNTRIES.
   
> 27 MANUFACTURING SITES IN 19 COUNTRIES.
   
> WE SPEND OVER $16 MILLION EACH WORKING DAY ON DISCOVERING AND DEVELOPING NEW MEDICINES.
EARNINGS PER SHARE AFTER EXCEPTIONAL ITEMS    
EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS    
       
  STATEMENTS OF GROWTH
RATES, SALES AND
MARKET DATA
  CONTENTS          
CHAIRMAN’S STATEMENT 1   SUMMARY FINANCIAL STATEMENTS  41  
CHIEF EXECUTIVE OFFICER’S REVIEW 2   Independent auditors’ statement 41  
      PATIENTS 6   Consolidated income statement 42  
  Except as otherwise stated, growth rates and sales
in this Annual Review are given at constant exchange
rates (CER) to show underlying performance by
excluding the effects of exchange rate movements.
Market data are given in actual US dollars.
  PRODUCTS 12   Consolidated statement of
   
PEOPLE 20   recognised income and expense 42  
PERFORMANCE 24   Consolidated balance sheet 43  
STRATEGY 26   Consolidated cash flow statement 44  
MEASURING PERFORMANCE 27   Dividends 45  
      SUMMARY FINANCIAL REVIEW 28   Earnings per share 45  
      BOARD OF DIRECTORS 32   Subsequent events 45  
      SUMMARY GOVERNANCE 34   Directors’ emoluments 46  
  Definitions of performance measurements are set
out in the Summary Financial Review.
  SUMMARY DIRECTORS’
REMUNERATION REPORT
37   GROUP FINANCIAL RECORD 47  
    SHAREHOLDER INFORMATION 48  
                 
                 

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CHAIRMAN’S STATEMENT

 

  “ DESPITE A CHALLENGING ENVIRONMENT, STRONG SALES GROWTH OF OUR MAJOR PRODUCTS, PARTICULARLY OUTSIDE EUROPE, COUPLED WITH OUR DETERMINED PURSUIT OF PRODUCTIVITY GAINS HAS DELIVERED ANOTHER OUTSTANDING FINANCIAL PERFORMANCE.”



There were a number of changes to the Non-Executive composition of the Board during the year. Professor Dame Nancy Rothwell was elected at the 2006 AGM. Dame Nancy is currently Vice President for Research at the University of Manchester in the UK and as one of the leading scientists of her generation she brings a valuable perspective to our discussions. John Varley, Group Chief Executive of Barclays Bank plc, was appointed to the Board in July, and his extensive commercial and financial expertise is already bringing considerable benefit to our work. John has joined the Remuneration Committee and he will become Chairman of that Committee when Sir Peter Bonfield steps down from the Board at the 2007 AGM. At that time it is also intended that Michele Hooper, who has been a Non-Executive Director of AstraZeneca PLC since 2003, will become the Senior Independent Director in succession to Sir Peter. Dame Bridget Ogilvie, FRS retired at the 2006 AGM after over nine years’ service as a Non-Executive Director, and I would like to thank her warmly on behalf of the Board for her sustained contribution to both AstraZeneca and, before that, Zeneca.


In 2007, we will strive to continue to meet the needs of patients, reward shareholders and benefit wider society by strengthening our pipeline, driving top-line sales growth and making further productivity improvements, as well as understanding and influencing the changing business environment in which we and our stakeholders operate. You can hear more about the Company’s strategy from David Brennan in the section that follows. David and his management team have my and the Board’s unqualified support for the steps they are taking to address the challenges that AstraZeneca and our industry are facing.

LOUIS SCHWEITZER
CHAIRMAN

     
In 2006, Group sales totalled $26.5 billion (up 11%) with an operating profit of $8.2 billion (up 28%). Our R&D investment increased this year in absolute terms and as a percentage of sales from $3.4 billion to $3.9 billion, reflecting our firm commitment to building the platform for future growth. That investment is focused on life-cycle management of our key marketed products, developing new products with an emphasis on efficiency and effectiveness improvements, and intelligent acquisition and licensing of products and technologies that will supplement our internal efforts. Major investments were also announced during the year in new R&D facilities that will support this strategy, notably in the UK and China.

Whilst AstraZeneca’s share price fluctuated during the year, earnings per share grew by 34% from $2.91 in 2005 to $3.86 in 2006. This reflects the strong growth from our products and careful management of our costs. The Board has recommended a second interim dividend of $1.23 (63.0 pence, SEK 8.60) per Ordinary Share bringing the total dividend for the year to $1.72 (89.6 pence, SEK 12.20), an increase of 32%. The buy-back programmes approved by our shareholders at our Annual General Meeting (AGM), under which we return cash to shareholders in excess of our anticipated requirements for future investment, amounted to $4,147 million in 2006. We are targeting net share re-purchases for 2007 of $4 billion.

On page 40 we report on our total shareholder return relative to the FTSE 100 and to a group of our industry peers.
  The Board conducted its annual formal strategy review and reinforced our commitment to the delivery of sustained revenue growth through an R&D model that delivers new science and innovative products through in-house capabilities and external partnerships, alliances and acquisitions. The strategy review gave full consideration to overall global trends of continued growth in demand for improved healthcare; an ageing population, undiagnosed and unmet medical needs; economic development in emerging markets; sustained downward pressure on prices for medicines and evermore demanding regulatory requirements.

David Brennan has completed his first year as our Chief Executive Officer, and you will see his review of AstraZeneca’s performance during that period, the strategic direction and his vision for the future in the following section of this report. With his distinctive leadership style and strong focus on individual accountabilities at all levels within the Company, he has been quick to make his mark. I thank him, his colleagues on the Senior Executive Team and all our employees, including those who have recently joined the AstraZeneca family through acquisition, for their contribution this year.

In addition to its review of strategy, the Board as part of its regular cycle of meetings also conducted financial and business reviews as well as functional reviews, which this year paid particular attention to risk assessment, compliance, human resources, and safety, health and environmental issues. More about these issues is provided elsewhere in this report and also in the Corporate Responsibility Summary Report 2006.
     
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ASTRAZENECA ANNUAL REVIEW 2006

CHIEF EXECUTIVE OFFICER’S REVIEW

 

    SALES $M   PROFIT $M
    GROWTH   GROWTH
     
         
OUR YEAR IN BRIEF
   
> SALES INCREASED BY 11% TO $26,475 MILLION.
   
> STRONG PERFORMANCE OF FIVE KEY GROWTH PRODUCTS (NEXIUM, SEROQUEL, CRESTOR, ARIMIDEX AND SYMBICORT) WITH COMBINED SALES REACHING $13,318 MILLION, UP 23%.
   
> OPERATING PROFIT INCREASED BY 28% TO $8,216 MILLION. OPERATING MARGIN IMPROVED BY 3.8 PERCENTAGE POINTS TO 31.0% OF SALES.
   
> FREE CASH FLOW OF $6,788 MILLION. SHAREHOLDER RETURNS TOTALLED $5,382 MILLION (DIVIDENDS $2,220 MILLION; NET SHARE RE-PURCHASES $3,162 MILLION).
   
> DIVIDEND INCREASED BY 32% TO $1.72.
   
> EPS UP 34% TO $3.86.
   
> OUR PRODUCT PORTFOLIO NOW INCLUDES 11 MEDICINES EACH WITH ANNUAL SALES OF MORE THAN $1 BILLION.
   
> GOOD SALES GROWTH IN ALL REGIONS, WITH THE US UP 16%, EUROPE UP 6%, JAPAN UP 5% AND REST OF WORLD UP 11%.
   
> BETWEEN 1 DECEMBER 2005 AND 31 JANUARY 2007, THE COMPANY HAS COMPLETED 12 SIGNIFICANT LICENSING AND ACQUISITION PROJECTS AND NINE SIGNIFICANT RESEARCH COLLABORATIONS.

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:

  Strengthening our pipeline of new medicines, from our own research laboratories and by accessing scientific innovation outside AstraZeneca;
   
  Delivering the full potential of all our marketed medicines, through rigorous life-cycle management, excellent customer support; and
   
  Challenging our cost structure to make room for further investment in R&D and externalisation, while increasing access to our medicines.

PATIENTS, PRODUCTS, PEOPLE AND PERFORMANCE
Our business objectives are focused on four core areas – patients, products, people and performance – that we believe are core drivers of success in delivering our strategy.

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
2006 saw some good progress. The Company delivered excellent financial results, with strong sales growth of 11%, enhanced by our continued commitment to improve productivity across the business.

Product performance
In the short to medium term, our growth is expected to continue to be driven by five key products, launched over the last 12 years – Arimidex, Crestor, Nexium, Seroquel and Symbicort. In 2006, these five key growth products together delivered sales of $13.3 billion, up 23% from last year, and overall sales of all our products, including our successful mature brands such as Casodex, Zoladex, Seloken/Toprol-XL, Zomig, Diprivan and Merrem, totalled $26.5 billion.

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


   
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ASTRAZENECA ANNUAL REVIEW 2006

CHIEF EXECUTIVE OFFICER’S REVIEW

 


JONATHAN SYMONDS
CHIEF FINANCIAL OFFICER


JOHN PATTERSON
EXECUTIVE DIRECTOR,
DEVELOPMENT


MARTIN NICKLASSON,
EXECUTIVE VICE-PRESIDENT,
GLOBAL MARKETING


 

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.

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
The growing demand for healthcare means increasing pressure on the budgets of governments and others who pay for it. We must manage the associated downward pressure on the price of our products, whilst continuing to invest in providing medicines that make a difference. During 2006, pricing pressure was particularly strong in Europe, where governments continue to introduce cost-containment measures such as jumbo reference pricing in Germany. In the US, still the world’s largest pharmaceutical market, the Democratic gains in the mid-term election may signal further changes to the pricing environment in that country.

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
There are three linchpins in our strategy to strengthen the pipeline. First, improve the productivity of our own in-house discovery and development efforts. Second, continue to increase the pace with which we evaluate and acquire promising projects from external sources. This is not a short-term stopgap to backfill the pipeline. It represents an important change in mindset. We are making a long-term commitment to step up our access to the world of scientific innovation that resides outside AstraZeneca. The third element is our commitment to establishing AstraZeneca as a major international presence in biopharmaceuticals.

Enhancing in-house discovery and development
During 2006 we continued our drive to improve the efficiency of our internal R&D processes and the effectiveness of our decision-making so that we can quickly eliminate weaker drug candidates and concentrate on the robust, rapid progress of the ones most likely to succeed as significant advances in healthcare. We also reviewed our disease target areas and re-focused our effort to ensure our scientific resources are prioritised on those areas where we believe our skills can make the most difference and where the largest opportunities lie.

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


   
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            DAVID BRENNAN CHAIRS THE SENIOR EXECUTIVE TEAM, THE OTHER MEMBERS OF WHICH ARE SHOWN HERE.  
       
DAVID SMITH   JAN LUNDBERG   BRUNO ANGELICI   TONY BLOXHAM  
EXECUTIVE VICE-PRESIDENT,   EXECUTIVE VICE-PRESIDENT,   EXECUTIVE VICE-PRESIDENT,   EXECUTIVE VICE-PRESIDENT,  
OPERATIONS   DISCOVERY RESEARCH   EUROPE, JAPAN, ASIA PACIFIC AND ROW   HUMAN RESOURCES  
               
               

(formerly AZD2171) for treating cancer, and AGI-1067 and AZD6140 for cardiovascular disease.

Accessing external innovation
Our commitment to keeping up the pace of externalisation to further strengthen our pipeline is reflected in our establishment of a new Strategic Planning and Business Development function, dedicated to finding the best opportunities available and delivering high quality deal execution and alliance management capabilities. In January 2007 we made a significant step in strengthening our late-stage pipeline when we announced a collaboration with Bristol-Myers Squibb Company (BMS) to develop and commercialise two late-stage compounds, discovered by BMS, being studied for the treatment of Type 2 diabetes – an area of high unmet medical need. Together with other recent successes, such as the alliance with Schering AG to co-develop and jointly commercialise a novel breast cancer treatment and the collaboration with Abbott to co-develop and market a combination treatment for mixed dyslipidaemia, it also indicates the progress we have already made towards becoming a preferred partner.

Building our biopharmaceuticals presence
Biopharmaceuticals – medicines derived from biological molecules – have been the fastest-growing segment of the pharmaceuticals market in recent years. While AstraZeneca’s science base already possessed some discovery and development capabilities for new biological medicines, our historic strength has been centred on small molecules. We need to strengthen our capacity to attack new disease targets with small molecules and biologicals in an integrated fashion, across all our therapy areas. Our acquisition of Cambridge Antibody Technology Group plc (CAT) was a significant step towards achieving this aim. CAT’s skills in biopharmaceuticals complement our

own expertise in small molecule science, and provide a foundation for building a future pipeline of new products from both areas of research. We anticipate that from 2010 onwards, one in four AstraZeneca candidate drugs eligible for full development will be biologicals.

These efforts will strengthen our long-term sustainability and help us to withstand the impact of some of the setbacks that we experienced with our pipeline this year. In February 2006, we withdrew our anti-coagulant, Exanta, from the market and halted its development on patient safety grounds. We also stopped late-stage development of Galida, our potential diabetes therapy, and NXY-059, a potential treatment for stroke, because they were not demonstrating sufficient patient benefit. Whilst such decisions are disappointing to make, they are an indication of the challenges associated with delivering a new medicine and reflect our commitment to patient safety and to maintaining a portfolio of only the highest quality, highest potential candidates.

Throughout all of these activities, maintaining our fundamental commitment to corporate responsibility (CR) remains a top priority. More information about our CR commitment, policies and performance in this area is available in our separate Corporate Responsibility Summary Report 2006 or on our website.

THE PEOPLE OF ASTRAZENECA
In my first year as CEO, I have visited many areas of AstraZeneca and have been consistently impressed with the skills, creativity and professionalism of our people around the world. They are our most valuable asset, and without their continued commitment to achieving our goals we would not succeed. I would like to take this opportunity to thank them for their hard work and contribution to driving the continued success of the Company.

LOOKING FORWARD
The pharmaceutical industry operates in an increasingly tough environment. We know that, to continue to be successful in this environment, we must recognise and manage the challenges and actively exploit the many opportunities that rising demand for healthcare and advances in science and technology offer.

Strengthening the pipeline remains our top priority. However, we will also continue to challenge all elements of our business to drive productivity and provide for the increased investment to support achievement of our strategic objectives. As part of this, in February 2007, we announced further plans to improve the efficiency and effectiveness of our supply organisation, which will involve reductions to the workforce. Decisions such as these are not taken lightly and I am very aware of the impact this will have on the people affected and the communities in which we operate. The reductions will be the subject of a full consultation process with works councils, trade unions and other employee representatives, and in accordance with local labour laws, to ensure the process is fair and transparent.

I am confident that, with strong leadership, clear direction and a sense of urgency around delivery, we have a sound platform for continued success. Above all, my aim is to deliver sustained, profitable and responsibly managed growth while ensuring that AstraZeneca continues to make a valuable contribution to global healthcare.

DAVID R BRENNAN
CHIEF EXECUTIVE OFFICER


     
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ASTRAZENECA ANNUAL REVIEW 2006

 

               
    6 WE HAVE A POWERFUL RANGE OF MEDICINES TARGETED AT MEETING PATIENT NEEDS IN SIX IMPORTANT AREAS OF HEALTHCARE – CARDIOVASCULAR, CANCER, GASTROINTESTINAL, INFECTION, NEUROSCIENCE, AND RESPIRATORY AND INFLAMMATION – HELPING TO IMPROVE HEALTH AND QUALITY OF LIFE FOR MILLIONS OF PEOPLE WORLDWIDE.   WE HAVE A TEAM OF OVER
500
CLINICAL DRUG SAFETY
PROFESSIONALS DEDICATED
TO ENSURING THAT WE MEET
OUR COMMITMENT TO DRUG
SAFETY THROUGHOUT A MEDICINE’S LIFE-CYCLE.
 
         
         
  01   AT ASTRAZENECA, WE SHARE A COMMON AIM – TO MAKE OUR BEST
CONTRIBUTION TO THE FIGHT AGAINST DISEASE BY PROVIDING
MEDICINES THAT MAKE THE BIGGEST POSSIBLE DIFFERENCE IN PATIENT
HEALTH DAY BY DAY.
 
  PATIENTS  
   
   
   
   
       
  MEETING THE NEEDS OF PATIENTS
AND THOSE WHO TREAT THEM IS AT THE HEART OF EVERYTHING WE DO.
   
  WE FOCUS OUR RESOURCES ON SIX THERAPY AREAS WHERE WE BELIEVE OUR SKILLS AND EXPERIENCE CAN MAKE THE MOST DIFFERENCE.
   
  THESE AREAS INCLUDE SOME OF THE WORLD’S MOST SERIOUS ILLNESSES AND TOGETHER REPRESENT A MAJOR WORLDWIDE BURDEN OF DISEASE.
     
     
     
     
     
     
     
     
     
     
     
       
       
   
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    WE CONTINUOUSLY TALK  
    TO PATIENTS AND THEIR  
    PHYSICIANS TO UNDERSTAND  
    THEIR CHANGING NEEDS.  
       
       
       
       
             
    OUR FOCUS  
             
    > PROVIDING INNOVATIVE, EFFECTIVE MEDICINES THAT MAKE A DIFFERENCE IN IMPORTANT AREAS OF HEALTHCARE.  
             
    > UNDERSTANDING WHAT PATIENTS NEED AND WHAT THEY VALUE.  
             
    > MAKING ALL OUR MEDICINES WORK TO THEIR FULL POTENTIAL.  
             
    > ENSURING PATIENT SAFETY CONTINUES TO BE A CORE PRIORITY.  
             
    > COMMUNICATING OPENLY ABOUT THE BENEFITS AND RISKS OF OUR MEDICINES.  
             
             
   
   
   
   
   
   
   
   
             
  EVEN AFTER A NEW MEDICINE IS LAUNCHED, WE CONTINUE TO EXPLORE ALL THE WAYS IT CAN BE USED TO GET THE MOST BENEFIT FOR PATIENTS.  
             
             
             
             
             
             
             
             
   
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ASTRAZENECA ANNUAL REVIEW 2006

PATIENTS

   
     
HELPING PATIENTS
MEET THE CHALLENGE
  our new Symbicort Maintenance and Reliever Therapy (SMART). SMART represents a change in medical practice because it puts asthma sufferers more in control of managing their extremely variable disease. It combines, in a single inhaler, a rapid-acting and long-lasting bronchodilator and a corticosteroid, which provides an important anti-inflammatory effect. Patients take a maintenance dose in line with normal practice to establish asthma control, and then take additional inhalations when they start to get worsening symptoms, to deliver both rapid relief and increased asthma control. The use of a single inhaler (instead of the usual two) simplifies the treatment regime for the patient and reduces the risk of an attack because the underlying inflammation is treated with every inhalation, even when used for symptom relief.

During the year, Symbicort was also approved in the US in a pressurised Metered
   
We have a powerful range of medicines targeted at meeting patient needs in important areas of healthcare. Many of them are world leaders. All of them are designed to be innovative and effective and to offer added patient benefits such as reduced side effects or better ways of taking the treatment. And we don’t stop there. Even after a new medicine is launched, we continue to explore all the ways it can be used to get the most benefit for patients.

Take Symbicort for example. Originally introduced for treating asthma, it is now also used to combat chronic obstructive pulmonary disease – a major threat to life. We also continued to develop Symbicort for the treatment of asthma and during 2006 we received approval in the EU for
 
     
THE HEALTH CHALLENGES    
     
               
  CARDIOVASCULAR     NEUROSCIENCE     GASTROINTESTINAL
               
  Cardiovascular disease claims over 17 million lives worldwide each year – making it the greatest risk to life for most adults. One in three adults have some form of cardiovascular disorder, such as high blood pressure, high cholesterol levels or diabetes.     Around 1% of people are affected by schizophrenia at some time in their life and 15% of people suffer from major depression on at least one occasion. Alzheimer’s disease, the most common cause of dementia, affects more than 24 million people worldwide. Pain management is the most common reason for seeking medical care.     Between 10% and 20% of adults in the western world are estimated to suffer from gastro-oesophageal reflux disease (GERD). The prevalence of GERD in Asia is lower, but increasing.
               
               
               
  CANCER     RESPIRATORY & INFLAMMATION     INFECTION
               
  Cancer is the second greatest cause of death in the developed world and there is evidence of the same trend in the developing world. Breast, prostate and colo-rectal cancers are common in the western world, with gastric and liver cancers being more prevalent in Asia. Globally, lung cancer kills more people than any other cancer type.     100 million people worldwide suffer from asthma, according to WHO estimates. Chronic obstructive pulmonary disease is the fourth greatest cause of death globally. Rheumatoid arthritis and osteoarthritis, severely disabling joint diseases, are also an area of significant need.     Infectious diseases cause more than 11 million deaths each year. The need for antibiotics remains high due to the growing risk of serious infection and increasingly drug-resistant strains. Tuberculosis is one of the leading causes of death from infectious diseases worldwide, claiming over 5,000 lives every day.
               
 
Dose Inhaler (pMDI) for the maintenance treatment of asthma in patients aged 12 years and above. Launch is anticipated in 2007.

When we launched Seroquel, our treatment for schizophrenia, in 1997, both healthcare professionals and patients were quick to recognise the benefits it offered in terms of effective control coupled with a more favourable side-effect profile. We have since developed and launched Seroquel for the treatment of bipolar mania as well as schizophrenia, helping more people around the world to lead normal lives. During 2006, we also gained approval 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.

Since its introduction in the 1990s, our cancer therapy, Arimidex, has had a pioneering role in establishing new standards of breast cancer treatment for postmenopausal women. It has now overtaken the long-established gold standard therapy, tamoxifen, in the US, Japan and France, because of its superior effectiveness in the five years after surgery when the risk of recurrence is at its highest. This level of efficacy, coupled with its known, predictable and manageable side-effect profile, has established Arimidex as one of the leading hormonal breast cancer treatments in the world. During 2006,

 


   
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following approval for a new use, patients in Europe currently receiving tamoxifen can now be switched to Arimidex.

The main symptoms of gastro-oesophageal reflux disease (GERD), often called “heartburn” or “acid reflux”, can significantly affect the sufferer’s quality of life. Left untreated, the disease can cause more serious problems such as stomach ulcers or cancer of the oesophagus. Our range includes two proton pump inhibitors that work on the cells in the stomach that make acid, to reduce the amount of acid produced and released into the stomach. We introduced the world’s first proton pump inhibitor, Losec/Prilosec, in 1988, and have since developed an improved therapy, Nexium. Launched in 2000, Nexium provides healing and symptom relief in more patients and in a shorter period of time than its leading competitors (including our original therapy). During 2006, we broadened the use of Nexium with approval in the US for its additional use in children with GERD aged 12-17 years, and in the EU, US and Australia it was approved for a new use in treating patients with the rare gastric acid disorder, Zollinger Ellison Syndrome.

Improved healthcare means treating the causes of illness as well as the symptoms. Our range includes Crestor, a statin for controlling levels of cholesterol that can contribute to heart disease. Although there are other statins on the market, Crestor is increasingly recognised as being particularly valuable for high-risk patients because of its powerful effect in lowering low-density (“bad” cholesterol) and raising high-density (“good” cholesterol) lipids.

IMPROVING OUR ABILITY TO TARGET INDIVIDUAL NEEDS

Our work also focuses on areas where treatment options are limited and medical needs are not being adequately met. When launched in 2002, Iressa was the first in a new class of targeted anti-cancer drugs to be approved for the treatment of advanced non-small cell lung cancer (NSCLC). Those patients who benefit from Iressa tend to do so quickly and sometimes results are dramatic.

In 2004, the results of a study in advanced NSCLC patients for whom chemotherapy had not worked, showed some improvement in survival. Whilst the results were not statistically significant for the overall study population, they did confirm a number of clinical benefits of Iressa, including tumour shrinkage, and showed a significant increase in survival in patients of Asian ethnicity and in patients who had never smoked.

Following the study, AstraZeneca 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. Progress continues to be made in identifying which patients, in which treatment settings, are most likely to benefit from Iressa. In 2006, the results of a study in a Japanese patient population failed to demonstrate statistical non-inferiority of Iressa for overall survival. However, we do not believe this alters the benefit/risk profile of Iressa in pre-treated Japanese NSCLC patients.


   
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ASTRAZENECA ANNUAL REVIEW 2006

PATIENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
During 2006, we undertook a comprehensive stakeholder engagement exercise across the full range of our key stakeholders to understand better their perception of AstraZeneca and its activities.
 
The feedback from this initiative is helping to inform the development of a more consistent approach to stakeholder engagement and reputation management across the Company. This includes further improving our ability to gain, and consistently capture, the insight that helps us to remain focused on real patient needs.
 

LISTENING AND LEARNING

Understanding the needs of patients and healthcare professionals, and the attitudes of regulators and those who pay for healthcare, is critical to our continued success. We work closely with these groups across all our activities to gain the insight we need to maintain a flow of new, targeted medicines that make a difference for patients and our other stakeholders.

As part of this, we continuously talk to patients and their physicians to understand what they need and want. This includes working with, and supporting patient groups who represent the particular demands of specific health issues, as well as discussing with healthcare professionals the broader range of disease challenges they and their patients face.

We also talk to patients and physicians about what more we can do to help them manage the healthcare challenges, beyond the provision of effective medicines.

For example, people being treated for high cholesterol sometimes find the treatment goals too hard to reach, particularly as their condition does not make them feel unwell. So patients may give up before achieving their goals if they do not get rapid results from a medication. We have therefore re-shaped our communications to address the patient’s emotional as well as medical needs.

By including information about how quickly Crestor can have an effect, we hope to help to encourage people to stay with their treatment and reach their cholesterol targets.

In a different approach to helping patients keep up with their treatment, a small localised trial was recently conducted to assess the use of mobile phone technology and text messaging to remind patients to take their medication. The pilot focused on Seroquel because schizophrenia is a condition where outcomes are critically affected by the levels of treatment adherence. Patients found the text reminders useful in helping them to follow a regular regime and healthcare professionals welcomed the idea. Further trials are underway or planned to further evaluate the system.

CONTINUOUS FOCUS ON PATIENT SAFETY

The safety of the patients who take our medicines is a fundamental consideration throughout all of our activities. Ideally, a medicine would target only the disease that it is meant to treat and would not have any other effect. In reality, however, despite the best efforts of scientists, such a medicine does not yet exist and all medicines have possible side effects that some patients might experience. Healthcare professionals, in consultation with their patients, must therefore weigh the benefits of a medicine against its possible side effects and decide the acceptable level of risk.

We aim to minimise the risks and maximise the benefits of each of our medicines – throughout their life-cycles. In discovery research, where we investigate thousands of compounds for their potential to become a new medicine, only a small number succeed because of the demanding criteria of our selection process, which centres on safety and how the medicine works. During the


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INFORMATION ABOUT OUR CLINICAL TRIALS
IS AVAILABLE VIA OUR DEDICATED WEBSITE
WWW.ASTRAZENECACLINICALTRIALS.COM.
 
 
 
   
   
   
   
   
   
   
   
   
   

development of the highest potential compounds, safety continues to be a priority focus. Safety data from animal studies are required by regulatory authorities before a potential new medicine can be tested in humans, and throughout human testing safety information is continuously collected and evaluated. Getting approval to market a new medicine depends on the regulatory authorities agreeing with us, after their rigorous review of our submissions, that it has an acceptable benefit/risk profile.

Understanding how our medicines are working on a day-to-day basis is also crucial to protecting the safety of the patients who take them. After launch, we continue to monitor all our medicines for any side effects not identified during the development process.

Our decision in 2006 to withdraw our anti-coagulant, Exanta, from the market, and terminate its development, was triggered by new clinical trial data indicating a potential risk of severe liver injury. The data came from a clinical trial to examine the use of Exanta after orthopaedic surgery to prevent venous thromboembolism over 35 days, longer than was currently approved for marketing. In the interests of patient safety, we took Exanta off the market as well as halting its development.

We communicated widely with regulatory authorities and with all prescribers and healthcare professionals to advise them that no new patients should be started on Exanta. We also worked to ensure that, given the media coverage of the withdrawal, our communications included a message to patients that they should not stop taking their tablets without first speaking to their doctor.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       
 

DEDICATED DRUG SAFETY RESOURCES

We have an experienced, in-house team of over 500 clinical drug safety professionals working across AstraZeneca and dedicated to the task of ensuring that we meet our commitment to drug safety throughout the processes described above. Each of our products (whether in development or on the market) has an assigned global drug safety physician who, supported by a team of drug safety scientists, is responsible for that product’s continuous safety surveillance. Drug safety managers in each of our national companies have local responsibility for product safety within their respective countries.

 

ONGOING COMMUNICATION

As part of the process for the approval of new medicines, and beyond, we work with regulators to develop prescribing information that gives healthcare professionals the benefit/risk information they need to make prescribing decisions, including indications for use, dosing recommendations, warnings and contra-indications and what side effects might be experienced. Where appropriate, we also make information available to patients about our medicines and how they should be taken.

We publish, and provide open access to, the findings of AstraZeneca-sponsored clinical trials, whether favourable or unfavourable, together with the latest information about trials currently underway. This information is available via our dedicated website, astrazenecaclinicaltrials.com.

   
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ASTRAZENECA ANNUAL REVIEW 2006

 

                   
                   
                   
                   
    THE NUMBER OF PROJECTS WE HAVE IN OUR DEVELOPMENT PIPELINE
   
                   
                   
                   
                   
                   
                   
    02 THE VALUE THAT WE BRING TO SOCIETY CENTRES ON OUR ABILITY TO DISCOVER,
DEVELOP AND DELIVER PRODUCTS THAT MAKE A MAJOR CONTRIBUTION TO HEALTHCARE.
OUR CONTINUED BUSINESS SUCCESS DEPENDS ON MAINTAINING THE QUALITY OF THAT
CONTRIBUTION WITHIN AN EVER MORE CHALLENGING BUSINESS ENVIRONMENT.
                   
    PRODUCTS
                   
                   
                   
     

 

     
     

THERE IS A GROWING DEMAND FOR HEALTHCARE. PEOPLE ARE LIVING LONGER, POPULATIONS ARE INCREASING AND MANY DISEASES ARE STILL NOT WELL MANAGED. ALONGSIDE THESE OPPORTUNITIES, WE FACE MANY CHALLENGES INCLUDING INCREASING PRESSURE ON THE PRICE OF OUR MEDICINES, HIGHER REGULATORY HURDLES FOR THE DEVELOPMENT OF NEW ONES AND INCREASINGLY TOUGH COMPETITION.

WE KNOW THAT WE MUST MANAGE THE CHALLENGES AND MAKE THE MOST OF THE OPPORTUNITIES TO MAINTAIN A FLOW OF PHARMACEUTICAL ADVANCES THAT MAKE A REAL DIFFERENCE.

 
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
               
               
               
               
               
               
               
   
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  WE HAVE SALES IN OVER
100
COUNTRIES
   

$16M
SPENT ON R&D
EACH WORKING DAY

 
                   
            OUR FOCUS    
                   
            > IMPROVING THE QUALITY AND SPEED OF OUR DISCOVERY AND DEVELOPMENT OF NEW MEDICINES.    
                   
            > ACCESSING EXTERNAL INNOVATION POTENTIAL TO ENHANCE OUR INTERNAL EFFORT.    
    OUR GROWTH IS BEING DRIVEN
BY FIVE KEY PRODUCTS WHICH
PROVIDE THE PLATFORM FOR
CONTINUED SUCCESS WHILST
WE BUILD FOR THE FUTURE.
           
        > PROMOTING EXCELLENCE AND HIGH STANDARDS IN MARKETING TO GET THE MOST VALUE FROM OUR ESTABLISHED BRANDS.    
               
            > INCREASING OUR STRENGTH THROUGH STRATEGIC INVESTMENT IN FAST-DEVELOPING MARKETS.    
    SALES $M            
           
     
           
           
     
                   
            21
CANDIDATE DRUGS
WITH THE POTENTIAL TO BECOME
NEW MEDICINES IDENTIFIED IN 2006.
 
       
             
             
             
                   
                   
             
                   
                   
                   
                   
                   
   
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ASTRAZENECA ANNUAL REVIEW 2006

PRODUCTS

 

R&D INVESTMENT

 
DEVELOPMENT PROJECTS1
 

 

“ MY NUMBER ONE PRIORITY IS TO DELIVER A STREAM OF MEDICINES THAT MEET UNMET PATIENT NEEDS. TO ACHIEVE THIS, WE MUST HAVE AN ORGANISATION THAT IS FIT FOR PURPOSE AND CAPABLE OF DISCOVERING AND DEVELOPING BETTER MEDICINES WITH A VERY STRONG EMPHASIS ON QUALITY AND SAFETY. IN OUR COMPETITIVE WORLD, SPEED IS ALSO VITAL.

IN THE SHORT TERM, OUR BUSINESS NEEDS WILL BE MET THROUGH LIFE-CYCLE MANAGEMENT AND DELIVERY OF OUR PHASE III PROGRAMMES.

IN THE MID-TERM, WE LOOK TO DRIVE OUR PHASE I, PHASE II AND PRE-CLINICAL PROJECTS TOWARDS PROOF OF CONCEPT AND PROOF OF PRINCIPLE AS RAPIDLY AS POSSIBLE, WHILST RECOGNISING THAT WE NEED TO CONTINUE TO ACCESS THE ENORMOUS WORLD OF EXTERNAL SCIENCE.

IN THE LONG TERM, IN ADDITION TO OUR CURRENT CAPABILITIES, WE’RE ALSO SEEKING TO TRANSFORM ASTRAZENECA THROUGH THE USE OF NOVEL BIOMARKERS AND IMAGING AS WELL AS A STRATEGIC MOVE INTO BIOLOGICALS TO BUILD A MAJOR PRESENCE IN THE FAST-GROWING BIOPHARMACEUTICALS SECTOR.”

JOHN PATTERSON FRCP
EXECUTIVE DIRECTOR, DEVELOPMENT


OUR PATH TO INNOVATION

Bringing a new medicine to market is a long, complex, expensive and risky process. It can take 8-12 years of discovery and development involving highly skilled scientists and state-of-the-art equipment, facilities and technologies. Many thousands of compounds are investigated to identify those with the highest potential to become a new medicine. Very few will make it to market because of the demanding criteria we, and our regulators, set for success. Typically, over $800 million is invested in a new medicine before the first dollar of sales is realised.

We have a global research organisation, with around 12,000 people at 16 major centres in eight countries dedicated to the discovery and development of new products that make a difference. In drug discovery, we use leading-edge science and technologies to identify new compounds with high potential as new medicines. In development, we focus on developing better medicines faster. All our scientists work across global and organisational boundaries to share experience, promote best practice and maximise the scientific potential that our size and global reach offer.

FOCUSED ON CONTINUOUS IMPROVEMENT
We want to be among the best in the industry for the quality and speed with which we get new medicines to market, which is why we work continuously to improve the efficiency of our processes so that we can quickly eliminate weaker compounds and concentrate on the robust, rapid progress of the ones most likely to succeed as significant advances in healthcare.

During 2006, we also reviewed our disease target areas and re-focused our efforts, to ensure our scientific resources are best


positioned to enhance our contribution to healthcare and long-term competitiveness. We are still focused on the same therapy areas, but within these areas we have prioritised the diseases where we believe our skills can make the most difference and have withdrawn from those where we believe we have less chance of success. We also established a New Opportunities Team during the year, which is dedicated to reviewing and evaluating appropriate new opportunities beyond our current therapy areas.

The results of our drive to improve productivity are reflected in the growth of our early development portfolio. During 2006, 21 candidate drugs were selected (compared to 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. Details of all the compounds in our pipeline are provided in the table on pages 18 and 19.

EXPANDING OUR
INNOVATION POTENTIAL

In today’s world of rapid scientific progress, no single company can rely exclusively on its own discovery and development and we seek to strengthen our internal capabilities through acquisitions and alliances with external partners whose skills and resources complement our own. We have more than 1,850 R&D collaborations and agreements in place that broaden our base for disease research.

In 2006, we stepped up the pace. 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.


1 Includes New Chemical Entities
and Line Extensions
   
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CANDIDATE DRUG DELIVERY   CAMBRIDGE ANTIBODY
TECHNOLOGY’S SKILLS IN
BIOLOGICAL THERAPEUTICS
COMPLEMENT OUR OWN
EXPERTISE AND STRENGTH IN
SMALL-MOLECULE SCIENCE.
NEW COMPOUNDS IDENTIFIED WITH HIGH POTENTIAL  
TO BE NEW MEDICINES  
 
 
 

 

One such opportunity is biopharmaceuticals – medicines derived from biological molecules, which are usually produced naturally by living organisms in response to disease, for example antibodies. New technologies have opened up the possibility of imitating and improving on the natural response, where it is not itself being effective.

In line with our strategic aim of building a major presence in 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 own expertise and strength in small- molecule science, and provide a foundation for building a future pipeline of new products from both areas of research. We anticipate that from 2010 onwards, one in four AstraZeneca candidate drugs eligible for full development will be biologicals.

Other significant transactions during the year included the alliance with Schering AG to co-develop and jointly commercialise a novel breast cancer treatment and the collaboration with Abbott to co-develop and market a combination treatment for cholesterol. In January 2007, we also announced a worldwide collaboration with Bristol-Myers Squibb Company to develop and commercialise two investigational compounds being studied for the treatment of Type 2 diabetes.

Formed in 2006, our new Strategic Planning and Business Development organisation (SPBD) is designed to further improve the focus, co-ordination and execution of our externalisation activity, specifically the accessing of external research and development technologies, products and collaborations.

TARGETING THE NEEDS

We work across functional boundaries within the Company to ensure that we maintain the quality of our portfolio by effectively prioritising the emerging research opportunities, developing these to meet market needs and maximising the potential of our marketed brands.

To guide our activity, we define at an early stage what we believe the profile of a medicine needs to be to work most effectively in combating a particular disease. These disease ‘target product profiles’ (TPPs) are based on our insight into the needs of patients and others for whom a medicine must do its job, including prescribers and those who pay for healthcare.

When we identify a compound with high potential to become a new medicine, we create a TPP specifically for that candidate drug (CD). This profile is then used throughout the CD’s development, and beyond, to measure its progress against the criteria we, and our regulators, have set for it. This enables us to prioritise our further investments across the full range of CDs in our product pipeline and maintain a focus on those that are most likely to succeed as innovative new medicines.

During 2006, we stopped the development of two products in our pipeline because they failed to meet their TPPs, namely a potential new diabetes therapy and a treatment for stroke. Whilst disappointing to make, decisions such as these are an indication of the challenges associated with delivering a new medicine, and reflect our commitment to maintaining a portfolio of only the highest quality, highest potential candidates.

DRIVING GROWTH
OF OUR MARKETED MEDICINES

In the highly competitive environment in which we work, driving top performance of our products in the marketplace is critical to our success. In the short to medium term, our growth is being driven by five key products, launched over the last 12 years, which provide the platform for our continued success whilst we build for the future through improved internal productivity and accessing external innovation potential.

In 2006, these five growth drivers (Arimidex, Crestor, Nexium, Seroquel and Symbicort) together delivered sales of $13.3 billion, up 23% from last year, and overall sales of all our products, including our successful mature brands such as Zoladex, Seloken/Toprol-XL, Casodex, Zomig and Merrem, totalled $26.5 billion (up 11%). The individual performance of each of our biggest selling brands is shown on page 13.

THINKING GLOBALLY, ACTING LOCALLY
We are proud of our global capabilities, but know that a local touch makes all the difference.

Active in over 100 countries, we have an extensive worldwide sales and marketing network dedicated to building strong relationships in local markets and responding quickly and effectively to our customers’ changing needs. We sell mostly through our own national companies and our products are marketed mainly to doctors and other healthcare professionals. This starts with face-to-face contact with our sales representatives – still the single most effective marketing method.


   
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ASTRAZENECA ANNUAL REVIEW 2006

PRODUCTS

 

  DURING THE YEAR, WE OPENED A NEW $60 MILLION CANCER RESEARCH FACILITY AND A NEW $16 MILLION BIOLOGY UNIT IN THE UK, BUILDING ON OUR STRONG RESEARCH BASE THERE. WE ALSO ANNOUNCED A $100 MILLION R&D INVESTMENT OVER THE NEXT THREE YEARS IN CHINA, INCLUDING THE CONSTRUCTION OF A DEDICATED INNOVATION CENTRE THAT WILL FOCUS INITIALLY ON CANCER.
   
   
   
   
   
   
   
 

downward pressure on the price of our products whilst continuing to make the investment needed to maintain a flow of new medicines.

When setting the price of a medicine, we take into consideration its full value to patients, to those who pay for healthcare and to society in general. Our pricing also takes account of the fact that, as a publicly owned company, we have a duty to ensure that we continue to deliver a return on investment for our shareholders. We balance many different factors, including ensuring appropriate patient access, in our global pricing policy, which provides the framework for optimising the profitability of our products in a sustainable way.

INTELLECTUAL PROPERTY

Our policy is to apply for appropriate intellectual property protection for all of the inventions and innovations that arise from our drug discovery, development, manufacturing and other business activities. This policy is designed to provide each of our products with an effective portfolio of valid, enforceable patent and other intellectual property rights in all significant markets to protect against unauthorised competition during commercialisation.

When a new medicine is launched, we typically have between eight and 15 years of patent protection in which to recoup our investment in providing medicines for important areas of healthcare. When our intellectual property protection expires, other companies can begin selling generic versions of our medicines at lower costs, because they do not need to bear the high costs of research that we do.

 
 
 
 
 
       
       

We believe our sales forces are among the best, and we continue to promote best practice and high performance through global training programmes designed to ensure appropriate scientific knowledge, as well as to drive sales force effectiveness and marketing excellence.

To complement the work of our sales forces, we use a wide range of communication tools, including the internet, which plays an increasingly important role in informing healthcare professionals and othsers about AstraZeneca’s medicines and the diseases they treat. We also use direct-to-consumer television advertising in the US where it is an approved and accepted practice.

Whatever the channel of contact, we are committed to delivering high standards of ethical practice in all our sales and marketing activities worldwide, backed by global and national codes of practice and rigorous monitoring processes. You can read more about this in our separate Corporate Responsibility Summary Report 2006, or on our website.

Making sure that our customers get fast, efficient and secure delivery of our products, whenever and wherever they need them, is another priority for us. Our supply chains are structured to be flexible and responsive, with 27 manufacturing sites in 19 countries worldwide dedicated to meeting local needs.

 

Driving success in key markets is a top priority. Alongside building on our leading positions in established markets such as the US, Japan and Europe, we continue to increase our strength through strategic investment in fast-developing markets, such as China.

During 2006, we announced a $100 million investment over the next three years in the establishment of the AstraZeneca Innovation Centre in China. The Centre will work on translational science by developing knowledge about Chinese patients, biomarkers and genetics. The initial therapy area focus will be cancer. We are also expanding our research capabilities in China by increasing further the number of scientific collaborations with local Chinese organisations and through our plan to establish a China Clinical Pharmacology Unit.

PRODUCT PRICING

Medicines usually represent only between 10% and 20% of a country’s total expenditure on healthcare and less than 2% of GDP in most countries. Nevertheless, the growing demand worldwide means increasing pressure on budgets for those who pay for healthcare – including governments, health insurers, managed care organisations, employers and patients. Our ongoing challenge is to manage the associated

 
   
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    90%
OVER 90% OF NEW MEDICINES COME FROM RESEARCH-BASED INDUSTRY. NO ONE ELSE
HAS THE COMBINATION OF SKILLS, EXPERIENCE AND RESOURCES TO DO ALL THAT IS NEEDED
TO DELIVER REAL PHARMACEUTICAL ADVANCES.
       
       

BRINGING ECONOMIC BENEFITS

Our medicines offer economic advantages as well as therapeutic benefits, and in our discussions with those who pay for healthcare, we include explanation of these advantages to ensure the full value of our medicines is understood. This requires investment, throughout the development of a medicine, in studies to demonstrate cost-effectiveness, cost-benefit and outcomes (such as survival and quality of life improvements) in addition to traditional studies designed to establish safety and efficacy.

Effective treatments can help to save healthcare costs by reducing the need for more expensive care, such as hospital stays or surgery. For example, a 2002 study in the US found that for each additional $1 spent on newer medicines, $6.17 could be saved on total healthcare expenditure (including a saving of $4.44 in hospital costs)*.

There are productivity benefits too. The use of innovative medicines that reduce the incidence of disease, or enable better disease management, means less time off work or away from school or other daily activities – helping patients to lead normal, productive lives.

As well as our products, our business activities in general also contribute to the economic development of the communities in which we operate, through local employment and wages, taxes, community support and the purchase of materials and services that are sourced locally and nationally. We are beginning to contribute in a similar way as we expand our presence in emerging economies through investment in facilities, collaborations with local partners and clinical trial programmes as well as employing people from the local community.

* Frank R. Lichtenberg: “Benefits and Costs of Newer Drugs: An Update”, National Bureau of Economic Research, Cambridge, MA. June 2002.

OUR PRODUCT RANGE

     
  CANCER  
  Arimidex (anastrozole) is a leading aromatase inhibitor for the treatment of breast cancer.  
  Casodex (bicalutamide) is a leading anti-androgen therapy for the treatment of prostate cancer.  
  Faslodex (fulvestrant) is an oestrogen receptor antagonist for the treatment of breast cancer.  
  Iressa (gefitinib) is an EGFR-TKI that acts to block signals for cancer cell growth and survival in NSCLC.  
  Nolvadex (tamoxifen citrate) remains a widely prescribed breast cancer treatment.  
  Zoladex (goserelin acetate implant) is a LHRH agonist for treating prostate and breast cancer.  
  Abraxane® (paclitaxel protein-bound particles for injectable suspension), an albumin-bound formulation for treating breast cancer, owned by and co-promoted in the US with, Abraxis BioScience, Inc.  
     
     
     
  CARDIOVASCULAR  
  Atacand1 (candesartan cilexetil) is an angiotensin II antagonist for treating hypertension and heart failure.  
  Crestor2 (rosuvastatin calcium) is a statin for treating cholesterol levels.  
  Plendil (felodipine) is a calcium antagonist for the treatment of hypertension and angina.  
  Seloken/Toprol-XL (metoprolol succinate) is a once daily treatment for high blood pressure, heart failure and angina.  
  Zestril3 (lisinopril dihydrate) is an ACE inhibitor, for treating a wide range of CV diseases, including hypertension.  
     
     
     
  GASTROINTESTINAL  
  Entocort (budesonide) is a locally acting corticosteroid for the treatment of inflammatory bowel disease.  
  Losec/Prilosec (omeprazole) was the first proton pump inhibitor (PPI) and is used to treat acid-related diseases.  
  Nexium (esomeprazole magnesium) is a PPI for the treatment of acid-related diseases.  
     
     
     
  INFECTION  
  Merrem/Meronem4 (meropenem) is an intravenous carbapenem antibiotic for the treatment of serious, hospital-acquired infections.  
     
     
     
  NEUROSCIENCE  
  Diprivan (propofol) is used intravenously for the induction and maintenance of anaesthesia and for intensive care sedation.  
  Naropin (ropivacaine) is the world’s best selling, long-acting local anaesthetic.  
  Seroquel (quetiapine fumarate) is an atypical anti-psychotic drug for schizophrenia, bipolar mania and, in the US, bipolar depression.  
  Xylocaine (lidocaine) is still the world’s most widely used local anaesthetic after 50 years on the market.  
  Zomig (zolmitriptan) is for the treatment of migraine with or without aura.  
     
     
     
  RESPIRATORY AND INFLAMMATION  
  Accolate (zafirlukast) is an oral leukotriene receptor antagonist for the treatment of asthma.  
  Oxis (formoterol) is a fast- and long-acting beta-agonist therapy for asthma and COPD.  
  Pulmicort (budesonide) is a corticosteroid anti-inflammatory inhalation drug for treating asthma.  
  Pulmicort Respules (budesonide inhalation suspension) is a nebulised corticosteroid for children as young as 12 months.  
  Rhinocort (budesonide) is a nasal steroid treatment for allergic rhinitis, perennial rhinitis and nasal polyps.  
  Symbicort (budesonide/formoterol) is a treatment for asthma and COPD with superior efficacy and easily adjustable dosing.  
     
     
1 Licensed from Takeda Chemical Industries Ltd.
2 Licensed from Shionogi & Co., Ltd.
3 Licensed from Merck & Co., Inc.
4 Licensed from Sumitomo Pharmaceuticals Co., Ltd.

   
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ASTRAZENECA ANNUAL REVIEW 2006

PRODUCTS

OUR DEVELOPMENT PIPELINE

      Estimated filing date  
     


 
Therapy Area Areas under investigation Compound Europe   US  
PHASE III: LINE EXTENSIONS          
Cancer first-line advanced breast cancer Faslodex >2009   >2009  





 
adjuvant Faslodex >2009   >2009  






 
Cardiovascular diabetic retinopathy Atacand 2009   2009  





 
32/12.5 mg, 32/25 mg for hypertension Atacand Plus 2H 2008   n/a  





 
atherosclerosis Crestor Filed   Filed  





 
outcomes CHF Crestor 2H 2008   2H 2008  





 
outcomes End Stage Renal Disease Crestor 2009   2009  





 
HCTZ combination Seloken/Toprol-XL n/a   Approved  






 
Gastrointestinal NSAID GI side effects – symptom resolution Nexium Promotable 1 Filed  





 
NSAID GI side effects – ulcer healing Nexium Launched   Filed  





 
peptic ulcer bleeding Nexium 1H 2008   1H 2008  





 
GERD Nexium sachet formulation Filed   Approved  





 
low dose aspirin associated peptic ulcer Nexium low dose aspirin combination >2009   >2009  






 
Neuroscience schizophrenia Seroquel SR Filed   Filed  





 
bipolar maintenance Seroquel 4Q 2007   2Q 2007  





 
bipolar depression Seroquel 4Q 2007   Approved  





 
generalised anxiety disorder Seroquel SR 2H 2008   1H 2008  





 
major depressive disorder Seroquel SR 2H 2008   1H 2008  





 
bipolar mania Seroquel SR 1H 2008   1H 2008  





 
bipolar depression Seroquel SR 1H 2008   1H 2008  






 
Respiratory and Inflammation Symbicort Maintenance and Reliever Therapy          
(SMART) for asthma Symbicort Turbuhaler Approved   n/a  





 
asthma Symbicort pMDI Filed 2 Approved 3





 
COPD Symbicort pMDI Filed 2 1H 2008  
PHASE III: NEW CHEMICAL ENTITIES          
Cancer NSCLC Zactima 2H 2008   2H 2008  





 
NSCLC and CRC Recentin (formerly AZD2171)4 >2009   >2009  






 
Cardiovascular atherosclerosis AGI-1067 4Q 2007   2Q/3Q 2007  





 
arterial thrombosis AZD6140 >2009   >2009  





 
diabetes saxagliptin (BMS) >2009   1H 2008  
PHASE II: LINE EXTENSIONS          
Cancer breast cancer Iressa >2009   >2009  






 
Gastrointestinal extra-oesophageal reflux disease Nexium >2009 5 >2009 5
PHASE II: NEW CHEMICAL ENTITIES          
Cancer medullary thyroid cancer Zactima 2H 2008   2H 2008  





 
prostate cancer ZD4054 >2009   >2009  





 
solid tumours AZD5896; AZD6244 (ARRY-142886) >2009   >2009  





 
hairy cell leukaemia CAT-3888 >2009   >2009  






 
Cardiovascular dyslipidaemia Crestor/ABT-335 (Abbott) n/a   >2009  





 
dyslipidaemia AZD6610 >2009   >2009  





 
thrombosis AZD9684; AZD0837 >2009   >2009  





 
diabetes dapagliflozin (BMS) >2009   >2009  






 
Gastrointestinal inflammatory bowel disease AZD9056 >2009   >2009  





 
GERD AZD3355 >2009   >2009  






 
Infection severe sepsis Cytofab™ >2009   >2009  






 
Neuroscience signs and symptoms of OA and RA PN-400 (Pozen) >2009   2009  





 
cognitive disorders in schizophrenia AZD3480 >2009   >2009  





 
Alzheimer’s disease AZD3480 >2009   >2009  






 
Respiratory and Inflammation rheumatoid arthritis (RA) AZD9056 >2009   >2009  





 
asthma AZD1981 >2009   >2009  






 
   
1 Authorities stated these symptoms were already captured within the GERD label. Text stating “No clinical interaction with naproxen or rofecoxib” was approved.
2 To be supplemented in 2008 with data supporting two additional strengths.
3 US approval based on 12 years and above.
4 This compound is in Phase II/III development.
5 Project Extraesophagael reflux disease (reflux asthma) will be completed but will not result in a regulatory filing.
   
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      Estimated filing date  
     

Therapy Area Areas under investigation Compound Europe   US  
PHASE I: NEW CHEMICAL ENTITIES          
Cancer solid tumours and haematological malignancles AZD0530; AZD1152 >2009   >2009  





 
solid tumours AZD4769; AZD4877; AZD1689; AZD8931; AZD7762 >2009   >2009  





 
breast cancer AZD2281 >2009   >2009  






 
Cardiovascular dyslipidaemia AZD2479 >2009   >2009  





 
diabetes/obesity AZD1175; AZD2207 >2009   >2009  





 
arrhythmias AZD1305 >2009   >2009  






 
Neuroscience neuropathic pain AZD9272 >2009   >2009  





 
anxiety and depression AZD2327; AZD3783 >2009   >2009  





 
multiple sclerosis AZD5094 >2009   >2009  





 
Alzheimer’s disease AZD1080 >2009   >2009  






 
Respiratory and Inflammation rheumatoid arthritis AZD5672; AZD6703 >2009   >2009  





 
COPD AZD4818; AZD5904 >2009   >2009  





 
asthma CAT-354; AZD1744 >2009   >2009  
PRE-CLINICAL: NEW CHEMICAL ENTITIES          
Cancer solid tumours AZD9935; AZD0424, AZD5180; AZD1845; AZD8830; >2009   >2009  
AZD9468; AZD2932; CAT-5001; AZD6918    





 
  AZD4922 >2009   >2009  





 
solid tumours and haematological malignancies AZD3646 >2009   >2009  





 
haematological malignancies CAT-8015 >2009   >2009  






 
Cardiovascular diabetes AZD6370 >2009   >2009  





 
haemostasis AZD8593 >2009   >2009  





 
dyslipidaemia AZD4121; AZD5861 >2009   >2009  





 
thrombosis AZD1283 >2009   >2009  





 
diabetes/obesity AZD1656; AZD3988 >2009   >2009  






 
Gastrointestinal GERD AZD2066 >2009   >2009  





 
functional GI disease AZD5329 >2009   >2009  






 
Infection infection AZD5099 >2009   >2009  






 
Neuroscience Alzheimer’s disease AZD3102; AZD0328 >2009   >2009  





 
neuropathic pain AZD6538 >2009   >2009  





 
multiple sclerosis AZD8797 >2009   >2009  





 
nociceptive and neuropathic pain AZD1940 >2009   >2009  





 
Parkinson’s disease AZD3241 >2009   >2009  





 
analgesia AZD2066; AZD1386; AZD7903 >2009   >2009  





 
anxiety AZD6280 >2009   >2009  





 
schizophrenia AZD2624 >2009   >2009  





 
short-acting anaesthetic AZD3043 >2009   >2009  






 
Respiratory and Inflammation COPD AZD6067; AZD7928; AZD1236; AZD5069; AZD9668 >2009   >2009  





 
osteoarthritis (OA) AZD6357; AZD6605 >2009   >2009  





 
asthma AZD2392; AZD3825; AZD9215; AZD1678; AZD8848; >2009   >2009  
AZD8075    





 
rheumatoid arthritis CAM-3001 >2009   >2009  





 
asthma/COPD AZD3199 >2009   >2009  






 

 

     
Therapy Area   Compound
DISCONTINUED LINE EXTENSIONS
Cancer Faslodex (second-line after aromatase inhibitor failure)

Iressa (head and neck cancer)

Cardiovascular Exanta (prevention of stroke in AF)
DISCONTINUED NEW CHEMICAL ENTITIES
Cardiovascular Galida; AZD1092; AZD8677; AZD7009; AZD8450



Gastrointestinal AZD9343; AZD6538; AZD8081; AZD9272; AZD9335



Neuroscience NXY-059; AZD9272; AZD9335; AZD7512



Respiratory and Inflammation AZD3778; AZD2914; AZD8955; AZD9056; AZD8309;
AZD3342



Comments
Exanta was withdrawn from the market in February 2006. All other project discontinuations were as a result of their failure to meet their target product profiles.

As disclosure of compound information is balanced by the business need to maintain confidentiality, information in relation to some compounds listed here has not been disclosed at this time.


   
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ASTRAZENECA ANNUAL REVIEW 2006

 

       
  WE WORK TO ENSURE
EVERYONE HAS CLEAR
OBJECTIVES AND
ACCOUNTABILITIES
ALIGNED WITH OUR
BUSINESS TARGETS.

66,800
EMPLOYEES
WORLDWIDE

       
       
       
     
03   OURS IS AN EXCITING AND DYNAMIC BUSINESS – AND A
DEMANDING ONE. WE BELIEVE THAT IF WE ARE TO EXPECT
PEOPLE’S CONTINUED ENERGY AND COMMITMENT TO
ACHIEVING OUR BUSINESS OBJECTIVES, WE MUST PROVIDE
THE RIGHT ENVIRONMENT FOR THAT TO HAPPEN.
     
PEOPLE
 
 
 
 
 
     
   

WE WANT OUR PEOPLE TO FEEL
POSITIVE AND ENTHUSIASTIC
ABOUT WHAT THEY ARE DOING,
WITH A CLEAR SENSE OF PURPOSE,
CONFIDENCE IN THEIR ABILITY
TO MEET THE CHALLENGES AND
PRIDE IN ASTRAZENECA AND THEIR
CONTRIBUTION TO OUR SUCCESS.

THIS MEANS PROVIDING INSPIRING
AND EFFECTIVE LEADERSHIP,
OPEN LINES OF COMMUNICATION,
EXCELLENT LEARNING AND
DEVELOPMENT OPPORTUNITIES,
AND AN INCLUSIVE CULTURE
IN WHICH INDIVIDUAL SUCCESS
DEPENDS SOLELY ON PERSONAL
MERIT AND PERFORMANCE.

 
     
     
   
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  84%  
     
  OF OUR EMPLOYEES RECOGNISE ASTRAZENECA’S COMMITMENT TO THE HEALTH AND WELLBEING OF ITS STAFF.  
       
    OUR FOCUS
     
  > BEING A COMPANY THAT PEOPLE ARE PROUD
TO WORK FOR.
     
  > PROVIDING EFFECTIVE LEADERSHIP WITH
CLEAR OBJECTIVES AND ACCOUNTABILITIES.
     
      > ENCOURAGING AND SUPPORTING PEOPLE IN DELIVERING THEIR BEST WITHIN A CULTURE
OF DIVERSITY AND EQUAL OPPORTUNITY.
         
      > PROVIDING OPEN LINES OF COMMUNICATION.
         
      > ENSURING EVERYONE UNDERSTANDS THAT EVERY INTERACTION COUNTS.
         
      > PROMOTING A SAFE AND ENERGISING WORKPLACE.
         
             
  WE BELIEVE WHAT
WE DO IS IMPORTANT.
WE ALSO BELIEVE
THAT HOW WE DO IT
IS JUST AS IMPORTANT.
       
     
     
OUR CORE VALUES GEOGRAPHIC LOCATION OF OUR EMPLOYEES
     
   
             
             
             
   
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ASTRAZENECA ANNUAL REVIEW 2006

PEOPLE

 

         
  WE ENCOURAGE ALL OUR
PEOPLE TO SHARE THEIR
KNOWLEDGE AND IDEAS
ACROSS FUNCTIONAL AND
TERRITORIAL BOUNDARIES.
   
   
  And because our business is based on innovation, we also encourage people to be continuously creative, to question assumptions and systems, to challenge each other and build on fresh insights to find new and better ways of doing things. Within our culture, “we have always done it this way” is the best reason to think again.

Our continuing goal is to ensure that diversity is appropriately supported in our workforce and reflected in our leadership. Diversity and talent management are included in our SET objectives and we have a set of minimum standards that support global alignment in the integration of diversity and inclusion into our Human Resources processes. During 2006, our focus continued to be on ensuring diversity is appropriately reflected in our senior management teams. As an indicator, 33% of the 79 senior managers reporting to the SET are women (compared with 22% of 88 senior managers in 2005).

ONGOING DIALOGUE

We know that the sharing of information is essential to maintaining people’s confidence in AstraZeneca and their commitment to its objectives. As well as face-to-face meetings, we use a wide range of communications media to ensure our people are kept up-to-date with business developments and are clear about what these mean for them.

Feedback is very important to us and opportunities for giving feedback are built into all levels of communication. In addition, our Code of Conduct outlines the procedures for employees to raise integrity concerns, including a global confidential telephone helpline number.

       
LEADING THE WAY   STRENGTHENING CAPABILITIES  
       

Good leadership is critical to stimulating the high-level of performance that is essential to our continued success in a changing and increasingly challenging environment.

We know that simply setting high-level performance targets is not enough. Actions must be identified and accountability assigned at the right levels to ensure that these actions are implemented.

The AstraZeneca Board sets the Group strategy and policies, agrees the business objectives and monitors progress towards meeting them. This includes regular reviews of financial performance and critical business issues. (More information about our Board members can be found on pages 32 and 33.)

Led by the Chief Executive Officer, our Senior Executive Team (SET) is a cross-functional, cross-territorial group that focuses on the day-to-day running of the business, making decisions on major business issues and leading the delivery of our business targets.

For our 66,800 employees worldwide, we work to ensure that everyone has clear objectives and accountabilities, aligned with our high-level business targets. Optimising performance is a priority and managers are responsible for working with their teams to develop performance targets against which individual and team contribution are measured and rewarded.

 

To help them deliver their best, we encourage and support all our people in developing their capabilities to the full with a range of high quality learning and development opportunities.

Backed by a set of core principles and common processes that ensure a consistent approach, our managers are responsible for identifying and developing all the talent in their teams.

We also have a range of global training programmes designed to strengthen leadership capabilities, enhance core management skills and help our leaders develop good working relationships across the organisation. These programmes are complemented by local initiatives, which include functional or country-specific aspects of leadership development.

VALUING DIFFERENCES

We believe that AstraZeneca gains great creative strength and energy from the diversity of backgrounds and skills that our global workforce offers. We encourage all our people to share their knowledge and ideas across functional and territorial boundaries, and to build high performance teams within an inclusive culture that recognises and values all the ways in which we are different.

 
         
   
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We also use a two-yearly, global, web-based survey to track levels of employee engagement and identify areas that need more attention. In 2006, we conducted our fourth such survey, which generated the highest response rate to date (86%), reflecting people’s continued confidence in it as a trusted feedback mechanism. The scores, which were widely communicated to employees, improved across all categories compared with the last survey in 2004 and exceeded the pharmaceutical industry benchmark in most cases. Areas of positive feedback included employee health, safety, information sharing and communication (in particular, immediate managers being more open to feedback). Our people rate the Company highly on the ethical standards that are applied to its external dealings. Overall, engagement levels are strong, but the survey highlighted the need for further improvement in some aspects of leadership and performance management. Initiatives focused on these areas have already begun – including increased clarity on accountabilities being integrated into management frameworks.

Diversity was also a feature of the survey. Results showed that, overall, 63% of our staff

 

 

 

 

 

 

believe that management supports equal opportunity for all employees – above the Global High Performance Norm, and 69% of women and 70% of men said they had not encountered any bias or discrimination towards themselves or others in AstraZeneca. The survey results also included a functional and geographic breakdown of these overall figures, which has enabled us to identify areas where further improvements are needed.

PROMOTING A SAFE, HEALTHY WORKPLACE

Providing a safe workplace and promoting the health and wellbeing of all our people has always been a core priority for AstraZeneca. As we continue to expand and change our activities, we are strengthening and adjusting our commitment, building on our traditional programmes that focus on workplace behaviours and attitudes, coupled with new approaches to managing stress and helping employees understand their personal health risks.

At the start of 2006, we introduced new Company-wide objectives and associated targets for 2010 for safety, health and wellbeing that aim to drive continuous improvement in our performance. Our new key performance indicator (KPI) for safety, health and wellbeing combines the frequency rates for accidents resulting in fatal and serious injuries and new cases of occupational illness into one KPI, with an overall target of a 50% reduction in the combined rates by 2010, compared with a 2001/2002 reference point.

We also encourage and support a healthy work/life balance, which we know is essential to the continued wellbeing of our employees worldwide.

EVERY INTERACTION COUNTS

We believe what we do is important. We also believe how we do it is just as important to our stakeholders and wider society. Only by working responsibly can we earn the trust and confidence that make such a vital contribution to our corporate reputation and our licence to do business.

This means making every interaction, both inside and outside the Company, count towards building our individual and collective trustworthiness.

We are working hard to ensure that our high-level values are translated into consistent and appropriate actions and behaviour worldwide. Backed by our global Corporate Responsibility Policy and performance measures, we continue to drive the integration of corporate responsibility considerations into everyday business thinking throughout the Company.

This includes providing managers with guidance on putting the global standards into practice at a local level, as well as communicating with our employees to ensure their understanding of our commitment and how everyone has a part to play in making sure AstraZeneca continues to be welcomed as a valued member of the global community.

You can read more about our commitment to corporate responsibility and our performance in our separate Corporate Responsibility Summary Report 2006, or on our website.


   
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ASTRAZENECA ANNUAL REVIEW 2006

 

             
  GROSS MARGIN   R&D AND SG&A COSTS   OPERATING PROFIT MARGIN  
  $M   $M   $M  
             
       
     
     
     
     
  04 OUR MEDICINES ARE DESIGNED TO BRING BENEFIT FOR PATIENTS AND ADD VALUE FOR
WIDER SOCIETY. THE FINANCIAL SUCCESS THAT FLOWS FROM US GETTING THIS RIGHT
ENABLES ASTRAZENECA TO FULFIL OUR DUTY AS A PUBLICLY OWNED COMPANY AND
DELIVER THE RETURN ON INVESTMENT THAT OUR SHAREHOLDERS EXPECT.
  PERFORMANCE
   
   
   
         
   

OUR RESOURCES, SKILLS AND CAPABILITIES WORLDWIDE ARE ALIGNED TO DELIVERING BENEFIT FOR PATIENTS AND WIDER SOCIETY, AND CREATING ENDURING VALUE FOR OUR SHAREHOLDERS.

WE REMAIN FIRMLY COMMITTED TO DELIVERING THESE OBJECTIVES, BACKED BY A CLEAR STRATEGY FOR DRIVING SUCCESS IN A FAST- CHANGING GLOBAL ENVIRONMENT AND A FRAMEWORK FOR CONSISTENTLY MONITORING AND MEASURING OUR PROGRESS.

   
           
           
           
           
           
   
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      OPERATING PROFIT
$M
   
           
  “ WE BELIEVE THAT THE MOMENTUM IN SALES AND PROFIT GROWTH ESTABLISHED OVER THE LAST TWO YEARS, CAN BE MAINTAINED THROUGH LIFE-CYCLE OPPORTUNITIES DESCRIBED ELSEWHERE IN THIS REPORT AND CONTINUED IMPROVEMENT IN PRODUCTIVITY. LONG TERM, PERFORMANCE WILL BE DRIVEN BY THE DELIVERY OF NEW MEDICINES TO THE MARKET FROM WITHIN OUR RESEARCH PIPELINE OR FROM EXTERNAL SOURCES.   OUR FOCUS
   
>

DRIVING TOP-TIER FINANCIAL PERFORMANCE BY MEETING OUR PROMISES IN ALL ASPECTS OF OUR BUSINESS.

   
> DELIVERING SUSTAINABLE, PROFITABLE GROWTH THAT WILL PLACE ASTRAZENECA
AMONG THE BEST IN THE INDUSTRY.
           
  OVER THE FIVE YEARS TO THE END OF 2006, WE HAVE ACHIEVED A COMPOUND ANNUAL GROWTH IN SALES OF JUST OVER 10% AND EPS GROWTH OF OVER 17%. WE ACCOMPLISHED THIS WHILST FACING PATENT EXPIRATIONS ON PRODUCTS WHOSE SALES WERE NEARLY HALF THE COMPANY SALES AT THAT TIME.   > RIGOROUS COST MANAGEMENT AND SUSTAINED PRODUCTIVITY IMPROVEMENTS.
   
> ASSESSING PROGRESS THROUGHCONSISTENT MEASURING AND MONITORING OF PERFORMANCE.
           
WE KNOW WHAT IT WILL TAKE TO CONTINUE TO DELIVER A STRONG PERFORMANCE. NEW PRODUCTS ARE CRITICAL, BUT IN THE SHORT TERM MANY OF THE INGREDIENTS FOR CONTINUING OUR MOMENTUM CAN BE FOUND IN OUR CURRENT PRODUCT RANGE AND PLANS:      
           
  > EFFECTIVE LIFE-CYCLE MANAGEMENT AND COMMERCIAL EXCELLENCE IN SUPPORT OF OUR FIVE KEY GROWTH PRODUCTS, TO DRIVE OUR TOP LINE.      
           
  > ALONG WITH GOOD TOP-LINE GROWTH, TO EXERCISE CONTINUED DISCIPLINE IN RESOURCE ALLOCATION AND MORE AGGRESSIVE COST MANAGEMENT, AIMED AT FURTHER MARGIN EXPANSION, WHILST ACCOMMODATING AN INCREASED INVESTMENT IN RESEARCH AND DEVELOPMENT.      
           
  > TO PUT OUR STRONG CASH FLOW TO WORK FOR SELECTIVE GEOGRAPHICAL EXPANSION AND STRENGTHENING THE PIPELINE, WHILST ALSO GENERATING COMPETITIVE CASH RETURNS TO SHAREHOLDERS.”      
           
  JONATHAN SYMONDS CBE
CHIEF FINANCIAL OFFICER
     
         
   
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ASTRAZENECA ANNUAL REVIEW 2006

 

STRATEGY

OUR STRATEGY
AstraZeneca is a successful global research-based prescription pharmaceutical company, and our goal is to make a difference in the lives of patients and create value for our shareholders and wider society, through the delivery of innovative medicines in important areas of healthcare.

Our strategy for ensuring that we continue to make our best contribution to healthcare and deliver sustained, industry-leading, responsibly managed growth centres on three key priorities:

> Strengthening our pipeline of new medicines, from our own research laboratories and by accessing scientific innovation that resides outside AstraZeneca.
   
> Delivering the full potential of all our marketed medicines, through rigorous life-cycle management and excellent customer support.
   
> Challenging our cost structure to make room for the further investment necessary in these critical activities.

Across all of our activities, we will continue to work closely with all our stakeholders to provide medicines that meet patient needs and add value for society, within the scope of our existing therapy areas and beyond.

We have a clear set of objectives for delivering this strategy. Through the professionalism and commitment of our people, we are determined to deliver a performance that will place AstraZeneca among the best in the industry.

OUR OBJECTIVES
The objectives that we have identified as critical drivers of success in delivering our strategy are focused on four core areas:

PATIENTS
> Gaining and using insight effectively by:
  Working closely with patients and their healthcare providers to understand what they need and what they value.
   
  Incorporating this insight into all aspects of our business decision-making (from discovery to marketing and beyond) to ensure we remain focused on those healthcare needs that are most relevant. This includes targeting our medicines at those patients for whom they are most effective.
   
> Providing superior customer support through:
   
  Innovative practices that enable patients and their caregivers to better understand their disease and treatment options, and to get the medicines they need and the best possible value from them.
   
PRODUCTS
> Strengthening our research platform and pipeline to deliver a flow of innovative, new products by:
   
  Improving further the quality, speed and productivity of our internal discovery and development through the use of leading- edge science, alongside a continued focus on driving effective risk management, decision-making and efficiency across all our processes.
   
  Accessing attractive external opportunities to enhance our internal innovation through partnerships, alliances and acquisitions that further strengthen our pipeline of new products.
   
  Making a strategic move into biologicals to build a major presence in the fast-growing biopharmaceuticals sector.
> Realising the full potential of our marketed products by:
   
  Actively managing the life-cycles of each of our brands to leverage the full therapeutic and commercial potential of our range.
   
  Driving high standards of sales force effectiveness and marketing excellence.
   
  Building on our leadership positions in existing markets and expanding our presence in important emerging ones.
   
PEOPLE
> Getting the best from our global workforce by:
   
  Providing effective leadership with clear objectives and accountabilities.
   
  Effectively managing and developing all our talent.
   
  Promoting a culture of diversity and inclusion in which people feel valued and rewarded for their individual and team contribution.
   
> Making every interaction count by:
   
  Ensuring people understand that how we do business is just as important as what we do, and that everyone has a responsibility for integrating our core values into their everyday business activity.
   
PERFORMANCE
> Delivering a performance that will place us among the best in the industry, with a reputation as one of the most forward- thinking and responsible companies by:
   
  Meeting our promises in all aspects of our business, focusing on our core priorities and on how we deliver them.
   
  Effectively managing the opportunities and risks associated with all our business activities.
   
  Rigorously challenging our cost structure to improve cost-effectiveness and operational excellence.
   
  Ensuring a continuous focus on corporate governance and compliance.
   

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MEASURING PERFORMANCE

The Board and the Senior Executive Team (SET) use a quarterly business performance management (BPM) report to measure our progress in delivering our strategic objectives.

The report provides Board and SET members with shared insight into current progress against short-term non-financial objectives and current year milestones for longer-term strategic goals.

A range of financial and non-financial objectives are set each year. During 2006 the focus was on the following key areas:

> Product performance
> Pipeline
> Productivity and profitability
> Shareholder returns
> Reputation
> Governance

During 2006, we reviewed our BPM framework with a view to further enhancing our focus on our strategic objectives, which are now grouped under four areas:

> Patients
> Products
> People
> Performance

Reputation and governance objectives have been included in all four areas, to reflect the importance of integrating consistent behaviours across all of our business activities.

Shareholder returns have been included in the performance area.

The means of measuring performance in these areas range from quantitative, comparative performance measures to more qualitative, discursive analysis.

Together, they provide the framework for consistently monitoring and reporting our progress towards achieving our objectives and, ultimately, delivering enduring shareholder value.

Specific measures that our Board and SET use when assessing performance in relation to the key areas noted above, or that are otherwise judged to be helpful in enabling shareholders better to understand and evaluate our business, are described and illustrated throughout this Annual Review. Examples include:

PRODUCTS
 
MARKETED PRODUCTS
> Sales value growth at constant exchange rates (see page 31).
> Global sales for key growth products (see page 13).
> Market share percentages for key growth products.
> Life-cycle delivery.
 
PIPELINE
> New candidate drugs (see page 15).
> Number of development projects by Phase (see page 14).
> R&D investment in US dollar terms (see page 14).
> Progress against development milestones.
 
PERFORMANCE
   
> Earnings per share growth (see inside front cover).
> Cost growth rates.
> Gross margin, costs and operating profit margin percentages (progression over time) (see page 24).
> Dividends and share re-purchases (see inside front cover).
> Free cash.
> Total shareholder return (see page 40).

As a result of our review of our BPM framework in 2006, we are developing new objectives for 2007 in relation to Patients and People. We will report on these objectives in due course.

MEASURING REPUTATION

The performance measures referred to above are measures of our progress in what we do in the business of delivering successful medicines and, thus, shareholder value. As previously mentioned, we also include reputation and governance objectives within the key areas described above.

In terms of measuring the way we do business, we have a range of key performance indicators (KPIs), by which we measure our progress in important areas of corporate responsibility (CR). Auditing of compliance and external assurance is fundamental to ensuring high standards of ethical behaviour, and compliance is integrated into many of the KPIs used to measure our CR progress. More details about these KPIs and our 2006 performance are provided in the separate Corporate Responsibility Summary Report 2006, or on our website.

We also participate in leading external surveys, such as the Dow Jones Sustainability Indexes, which are important means of evaluating our performance and understanding better the demands of sustainable development.

AstraZeneca is listed in the 2007 Dow Jones Sustainability World Index, used by asset managers globally to guide their socially responsible investment. However, whilst we improved our score, we did not regain the place we lost in 2005 in the European Index (Dow Jones STOXX), where competition for places is increasingly fierce.

GOVERNANCE

The AstraZeneca Code of Conduct (which is available on our website) sets out the high standards we expect from our employees, and with which compliance is mandatory. As part of our commitment under that Code to comply with all applicable laws and codes of practice, we apply all of the principles of good governance in the UK Combined Code on Corporate Governance. We also comply with all of the provisions of the UK Combined Code and our corporate governance practices are generally consistent with the New York Stock Exchange’s corporate governance listing standards. Our continuous assurance processes are designed to ensure we effectively monitor our compliance with these standards.


 

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ASTRAZENECA ANNUAL REVIEW 2006

 

SUMMARY FINANCIAL REVIEW

INTRODUCTION

The purpose of this Summary Financial Review is to provide a balanced and comprehensive analysis, including the key business factors and trends, of the financial performance of the business during 2006, the financial position as at the end of the year and the main business factors and trends which could affect the future financial performance of the business.

Over 97% of our sales are made in the prescription pharmaceuticals sector, which tends to be relatively insensitive to general economic circumstances in the short term. It is more directly influenced by medical needs and is generally financed by health insurance schemes or national healthcare budgets.

Our operating results in both the short and long term can be affected by a number of factors other than normal competition:
> The risk of generic competition following loss of patent exclusivity or patent expiry, with the potential adverse effects on sales volumes and prices, for example, the launch of generic competition to Toprol-XL 25mg in November 2006.
> The timings of new product launches, which can be influenced by national regulators and the risk that such new products do not succeed as anticipated.
> The rate of sales growth and costs following new product launches.
> The adverse impact on pharmaceutical prices as a result of the regulatory environment. Although there is no direct governmental control on prices in the US, pressures from individual state programmes and health insurance bodies are leading to downward forces on realised prices.
In other parts of the world, there are a variety of price and volume control mechanisms and retrospective rebates based on sales levels that are imposed by governments.
> Currency fluctuations. Our functional and reporting currency is the US dollar, but we have substantial exposures to other currencies, in particular the euro, Japanese yen, sterling and Swedish krona.

Over the longer term, the success of our research and development is crucial, and we devote substantial resources to this area. The benefits of this investment emerge over the long term and inherently there is considerable uncertainty as to whether it will generate future products.

The most significant features of our financial results in 2006 are as follows:
   
> Sales growth on an underlying basis of 11% to $26,475 million.
> Sustained strong sales performances from our five key growth products to $13,318 million (over 50% of sales), an increase of 23%.
> Operating profit of $8,216 million, with an operating margin improvement of 3.8 percentage points to 31.0%.
> 11 products in the portfolio with annual sales in excess of $1 billion compared to two products five years ago.
> Free cash flow of $6,788 million, up by $736 million.
> Earnings per share growth of 34% to $3.86.
> Strengthening of the R&D portfolio through 12 significant licensing and acquisition projects and with nine significant research collaborations between December 2005 and January 2007.
> Investment in R&D has increased by an underlying 16% to $3,902 million. This reflects both an increase in underlying activity and the effects of acquisitions.

Over the five years to the end of 2006, we have achieved a compound annual growth in sales of just over 10% and EPS growth of 17%. We accomplished this whilst facing patent expirations on products whose sales represented almost half our turnover at that time.

We believe that the momentum in sales and profit growth established over the last two years can be maintained through life-cycle opportunities and continued improvement in productivity. Long term, performance will be driven by the delivery of new medicines to the market from within our research pipeline or from external sources.

MEASURING PERFORMANCE

We use specific measures when assessing our performance in key areas as discussed below. Some of the financial measures use information derived at constant exchange rates (CER), in particular, growth rates in sales and costs, operating profit and, as a consequence, earnings per share. CER removes the effects of currency movements, which allows us to focus on the changes in sales and expenses driven by volume, prices and cost levels relative to the prior period.

> Sales and cost growth expressed in CER allows management to understand the true local movement in sales and costs, in order to compare recent trends and relative return on investment.
> Earnings per share growth in CER demonstrates not only the profitability of the business (based on profit after tax) but also the management of our capital structure (particularly through the share re-purchase programme).

Other measures used are not influenced so directly, or indeed at all, by the effects of exchange rates.

> Gross margin and operating profit margin percentages, which set out the progression of key performance margins and demonstrate the overall quality of the business.
> Prescription volumes and trends for key growth products, which can represent the underlying business growth and the progress of individual products better and more immediately than invoiced sales.
> The performance of the business excluding the contribution of Toprol-XL in the US, as sales are increasingly difficult to predict given uncertainties as to the timing of generic approval and launch.
> Free cash flow, which represents net cash flows before financing activities, and is calculated as: net cash inflow before financing activities, adjusted for acquisitions of businesses, movements in short term investments and fixed deposits, and disposal of intangible assets.
> Total shareholder return measures the returns we provide to our shareholders and reflects share price movements assuming reinvestment of dividends and is used in comparison to the performance of peer group companies.

RESULTS OF OPERATIONS

All figures are quoted in CER unless otherwise indicated.

SALES
Sales for the full year increased 11% with good sales growth in all regions (US up 16%; Europe up 6%; Japan up 5%; Rest of World up 11%). This growth was driven by volume improvements that were partially offset by price reductions (particularly in the US and parts of Europe). Toprol-XL has faced generic competition in the US from November 2006. Excluding Toprol-XL US sales ($1,382 million in 2006 and $1,291 million in 2005), growth was 11%.


 

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Our portfolio now has 11 brands with annual sales of greater than $1 billion. The combined sales of five key growth products (Arimidex, Crestor, Nexium, Seroquel and Symbicort) grew by 23% to $13,318 million and now account for just over 50% of our total sales (up from 45% in 2005).

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%. 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 sales were down 16% to $1,371 million with declines of 12% in the US and 17% elsewhere.

In Cardiovascular, sales grew by 15%. Crestor sales exceeded $2 billion, 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 launch in Japan. Seloken/Toprol-XL sales increased by 3%. US sales growth was restricted to 7% by the launch in November of generic Toprol-XL 25mg and our move to recognising revenue conservatively as prescriptions are written (as opposed to on shipment). 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%. Symbicort sales were the main driver of this growth and increased by 18%. US launch of Symbicort is planned for 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% whilst Rhinocort sales declined by 7%.

Sales in the Oncology portfolio grew by 12%. Arimidex sales increased by 29%. Casodex sales grew by 9% on strong performances outside the US and Zoladex sales exceeded $1 billion for the second year in a row. Iressa sales fell by 11% as growth in Asia Pacific went some way to offset declines in the US.

Neuroscience sales grew by 16%. Seroquel sales exceeded $3 billion, 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%.

In the US, sales were up 16% for the full year. Sales growth for Nexium, Seroquel, Arimidex and Crestor amounted to $1,441 million, whilst there were declines in products such as Prilosec. Adjusting sales to exclude Toprol-XL sales from both 2006 and 2005, growth was 11%.

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 in Germany, where doctors have been encouraged to prescribe generics.

Sales in Japan were up 5% as a result of good growth for Casodex and Arimidex, together with the launch of Crestor. Sales in China were up 19% on strong growth in all the major therapeutic areas, particularly Oncology.

OPERATING MARGIN AND RETAINED PROFIT

Operating margin increased by 3.8 percentage points from 27.2% to 31.0% . Excluding the effects of currency and other income, underlying margin increased 2.9 percentage points for the full year.

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 0.3 percentage points. Excluding the prior year costs for the early termination of the MedPointe Zomig US distribution agreement and manufacturing provisions and the 2006 provisions made in respect of Toprol-XL, NXY-059 and manufacturing efficiencies, underlying margin improved by 1.5 percentage points.

Research and development expenditure was up 16% and increased by 0.6 percentage points to 14.7% of sales. Selling, general and administrative cost increases were restricted to a 5% increase over last year, 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

gains from the divestment of non-core products in the US and Scandinavia.

The net interest and dividend income increase over 2005 is primarily attributable to higher average investment balances and yields.

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). We estimate that Toprol-XL contributed earnings per share of 50 cents. Excluding Toprol-XL, earnings per share growth would be 36%.

FINANCIAL POSITION, INCLUDING CASH FLOW AND LIQUIDITY

The net book value of our assets increased from $13,691 million to $15,416 million. The net profit was distributed through share repurchases of $4,147 million and dividends of $2,217 million. Share issues amounted to $985 million.

Additions and exchange effects ($1,511 million in total) more than offset depreciation and impairments of $1,003 million and disposals, leading to a $468 million increase in the net book value of property, plant and equipment. The significant increase in the value of goodwill and intangibles was primarily due to the expansion of our externalisation programme, described in more detail below. Inventories fell by just over 7% due to continuation of the work to reduce our inventory levels. Receivables grew $783 million, due to exchange together with increases in trade debtors in the US and UK. There was an underlying increase in payables and provisions of $499 million arising principally from higher payables in the US (due to increased volumes of purchases from Merck), the deferred income from the disposal of non-core products in the US and exchange effects.


 

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ASTRAZENECA ANNUAL REVIEW 2006

SUMMARY FINANCIAL REVIEW CONTINUED

 

CASH FLOW
We continue to be a highly cash generative business. Subject to the factors outlined on page 28, we believe our cash resources will be sufficient for our present requirements and include sufficient cash for our existing capital programme, share re-purchases and any costs of launching new products, as well as the potential buy-out of Merck’s interests in 2008.

Cash generated from operating activities in the year was $7,693 million, $950 million higher than in 2005. An increase in profit before tax of $1,876 million was offset by a $224 million increase in working capital requirements and a $563 million increase in tax paid.

Cash outflows from investing activities were $272 million in the year compared to $1,182 million in 2005. Excluding funds transferred between long-term deposits and liquid cash, underlying cash flows associated with investing activities were an outflow of $1,392 million in 2006 compared with $691 million in 2005, with the increase due to the acquisition of Cambridge Antibody Technology, KuDOS Pharmaceuticals and other intangible assets as a result of new collaboration deals.

Free cash flow for the year was $6,788 million compared to $6,052 million in 2005.
Shareholder returns of $5,382 million, comprising net share re-purchases of $3,162 million and $2,220 million dividend payments, and a net $1,148 million cash outflow from acquisitions (net of cash acquired), resulted in an overall increase in net funds of $1,135 million.

INVESTMENTS, DIVESTMENTS AND CAPITAL EXPENDITURE
Our commitment to strengthening our product pipeline through pursuing external opportunities (in addition to the sustained investment in internal discovery and development) resulted in two major acquisitions and several other significant licensing agreements and collaborations.

During the year we acquired KuDOS Pharmaceuticals ($206 million to access several oncology products) and Cambridge Antibody Technology ($1,116 million to provide a foundation for building the biologics pipeline). The non-core intangible assets arising from the Humira royalty stream acquired with Cambridge Antibody Technology was subsequently disposed for $661 million.

These acquisitions were complemented by significant major licensing and collaboration agreements, including four major agreements with AtheroGenics (a novel anti-atherosclerotic

SALES BY GEOGRAPHIC AREA
          Underlying
  2006   2005   growth
  $m   $m   %






US 12,449   10,771   16






Europe 8,903   8,463   6






Japan 1,503   1,527   5






ROW 3,620   3,189   11






TOTAL 26,475   23,950   11






 
SUMMARY OF SHAREHOLDER RETURNS
  Shares       Dividend   Total dividend   Total shareholder  
  re-purchased   Cost   per share   cost   returns  
  (million)   $m   $   $m   $m  










 
1999 4.4   183   0.700   1,242   1,425  










 
2000 9.4   352   0.700   1,236   1,588  










 
2001 23.5   1,080   0.700   1,225   2,305  










 
2002 28.3   1,190   0.700   1,206   2,396  










 
2003 27.2   1,154   0.795   1,350   2,504  










 
2004 50.1   2,212   0.940   1,555   3,767  










 
2005 67.7   3,001   1.300   2,068   5,069  










 
2006 72.2   4,147   1.720   2,649 * 6,796 *










 
TOTAL 282.8   13,319   7.555   12,531   25,850  










 
* Total dividend cost estimated based upon number of shares in issue at 31 December 2006.
   

agent for coronary disease), Protherics (an anti-sepsis product), Targacept (a neuronal nicotinic partial agonist for cognitive disorders) and Pozen (to develop and commercialise a combination product comprising esomeprazole and naproxen). In addition to these four, we have entered into agreements with Schering AG, Array, Kinacia, Dynavax, Cubist and Argenta capitalising around $70 million in intangibles. We have also entered into an arrangement with Abbott to co-develop and co-promote a single pill, fixed dose combination of Crestor and an Abbott fenofibrate. All these agreements include provisions for further payments over and above the initial signing or upfront fees, depending on certain development and sales milestones. In June 2006, we entered into a co-promotion agreement in respect of Abraxane® in the US. An upfront signing fee of $200 million was capitalised as an intangible and to date we have earned $18 million in alliance revenue from the arrangement.

Subsequent to the year end, we entered into two collaboration agreements with Bristol-Myers Squibb Company (BMS) and Palatin Technologies Inc. The collaboration with BMS is to develop and commercialise two investigational compounds being studied for the treatment of Type 2 diabetes whilst the collaboration with Palatin is aimed at discovering and commercialising treatments for obesity, diabetes and metabolic syndrome. We also entered into an agreement to purchase the entire share capital of Arrow Therapeutics

 

Ltd., a company focused on the discovery and development of anti-viral therapies.

CAPITALISATION AND SHAREHOLDER RETURN

The Board intends to continue its practice of growing dividends in line with earnings (maintaining dividend cover in the two to three times range) whilst substantially distributing the balance of cash flow via share re-purchases. The Board firmly believes that the first call on free cash flow is business need and, having fulfilled that, will return surplus cash to shareholders. In 2007, the Board intends to re-purchase shares at a cost of $4 billion; this may be increased if there are substantial cash inflows from new share issues.

We have re-purchased and cancelled 72.2 million shares in 2006 at a cost of $4,147 million. The total number of shares re-purchased since the buy-back programmes began in 1999 is 282.8 million (15.9% of our initial share capital post mergers) at a cumulative cost of $13,319 million. At 31 December 2006, the number of shares in issue was 1,532 million.

We paid the second interim dividend of $0.92 in respect of 2005 on 20 March 2006 and a first interim dividend for 2006 on 18 September 2006 of $0.49 per Ordinary Share. A second interim dividend for 2006 of $1.23 per Ordinary Share has been declared.

     

 

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FUTURE PROSPECTS

The strong financial performance delivered over the past three years has stemmed from good top-line growth and disciplined management of costs. Going forward, we remain committed to maintaining a competitive financial performance during this period, when as well as the industry we face the challenges posed by patent expirations and pricing pressures from government and private sector payers. Strengthening the pipeline, by enhancing the productivity of our internal discovery and development and continued pursuit of external opportunities, remains our number one priority. Alongside this, we will continue to challenge all elements of our business, so as to free up the resources necessary to continue to build a new product pipeline capable of sustaining growth over the long term.

Consistent with this, we have taken a further step in our drive to improve productivity, announcing a programme to improve asset utilisation in our global supply chain. Over the next three years we plan to rationalise production assets, anticipating accounting provisions of approximately $500 million (of which approximately $300 million will be cash) and the reduction of approximately 3,000 positions.

Subject to the factors identified in the introduction, we anticipate that continued sales momentum from our key product franchises should result in sales growth in the high single digits at CER in 2007. Tight management of costs should allow for significant growth in R&D investment whilst producing double digit earnings per share growth. The effects of US Toprol-XL sales and contribution are excluded from these anticipated prospects.

SARBANES-OXLEY ACT SECTION 404

Under section 404 of the US Sarbanes-Oxley Act we are required to report on the effectiveness of our internal control over financial reporting. For the year ending 31 December 2006, we have assessed our internal control over financial reporting as effective. KPMG Audit plc have audited our assessment and issued an unqualified report thereon.

PRODUCT SALES

          Underlying  
  2006   2005   growth  
CANCER $m   $m   %  






 
Arimidex  1,508   1,181   29  






 
Casodex  1,206   1,123   9  






 
Zoladex  1,008   1,004   1  






 
Iressa  237   273   (11 )






 
Faslodex  186   140   32  






 
Nolvadex  89   114   (19 )






 
Other 28   10   180  






 
TOTAL 4,262   3,845   12  






 
           
CARDIOVASCULAR          
Crestor  2,028   1,268   59  






 
Seloken/Toprol-XL  1,795   1,735   3  






 
Atacand  1,110   974   14  






 
Tenormin  320   352   (7 )






 
Zestril  307   332   (7 )






 
Plendil  275   360   (24 )






 
Other 283   311   (9 )






 
TOTAL 6,118   5,332   15  






 
           
GASTROINTESTINAL          
Nexium  5,182   4,633   12  






 
Losec/Prilosec  1,371   1,652   (16 )






 
Other 78   70   11  






 
TOTAL 6,631   6,355   4  






 
           
INFECTION          
Merrem  604   505   19  






 
Other 73   102   (28 )






 
TOTAL 677   607   11  






 
           
NEUROSCIENCE          
Seroquel  3,416   2,761   24  






 
Zomig  398   352   13  






 
Diprivan  304   369   (17 )






 
Local Anaesthetics 529   511   5  






 
Other 57   66   (12 )






 
TOTAL  4,704   4,059   16  






 
           
RESPIRATORY AND INFLAMMATION          
Pulmicort  1,292   1,162   11  






 
Symbicort  1,184   1,006   18  






 
Rhinocort  360   387   (7 )






 
Oxis  88   91   (3 )






 
Accolate  81   72   13  






 
Other 146   155   (6 )






 
TOTAL 3,151   2,873   10  






 

   
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ASTRAZENECA ANNUAL REVIEW 2006

BOARD OF DIRECTORS

 

         
   
LOUIS SCHWEITZER (64)
Non-Executive Chairman
Chairman of the Nomination Committee

Appointed as a Director 11 March 2004. Non-Executive Chairman of Renault SA since April 2005. Chairman and Chief Executive Officer of Renault SA 1992-2005. President of the Management Board of Renault-Nissan BV 2002-2005. Chief Financial Officer and Executive Vice-President 1988-1992 and President and Chief Operating Officer 1990-1992, Renault SA. Non-Executive Director of BNP-Paribas, Electricité de France, Veolia Environnement, Volvo AB and L’Oréal. Vice-Chairman of the Supervisory Board of Philips Electronics NV.
  DAVID R BRENNAN (53)
Executive Director and Chief Executive Officer
Appointed as a Director 14 March 2005. Appointed Chief Executive Officer with effect from 1 January 2006. Member of the Executive Board of the Pharmaceutical Research and Manufacturers of America (PhRMA). Board member of the European Federation for Pharmaceutical Industries and Associations (EFPIA). Executive Vice-President, North America, AstraZeneca PLC 2001-2005. Chairman of the Board of the Southeastern Chapter of the American Heart Association 2004-2006.
  JONATHAN SYMONDS CBE (47)
Executive Director and Chief Financial Officer
Appointed as a Director 1 October 1997. Also has overall responsibility for Strategic Planning & Business Development, Information Services and Global Purchasing. Non-Executive Director of Diageo plc. Former member of the UK Accounting Standards Board (August 2003 – August 2006). Joint Chairman of the Business Tax Forum. Member of the Advisory Board of Oxford University Centre for Business Taxation.
         
   
MARCUS WALLENBERG (50)
Non-Executive Director
Appointed as a Director 6 April 1999. Formerly a Director of Astra AB (appointed 18 May 1989). Stepped down from the Audit Committee on 31 December 2005. Chairman of Skandinaviska Enskilda Banken AB. Chairman of Saab AB. Vice-Chairman Telefonaktiebolaget LM Ericsson. Non-Executive Director of Electrolux AB, Stora Enso Oyj and the Knut and Alice Wallenberg Foundation. Chairman of International Chamber of Commerce (ICC).
  ERNA MÖLLER (66)
Non-Executive Director
Member of the Remuneration Committee and the Science Committee
Appointed as a Director 6 April 1999. Formerly a Director of Astra AB (appointed 15 May 1995). Executive Director of the Knut and Alice Wallenberg Foundation. Professor of Clinical Immunology and Vice-Chairman of the Nobel Assembly, Karolinska Institutet. Member of the Royal Swedish Academy of Engineering Sciences and the Royal Swedish Academy of Science.
  JOHN VARLEY (50)
Non-Executive Director
Member of the Remuneration Committee

Appointed as a Director 26 July 2006. Executive Director of Barclays Bank plc and Barclays plc since 1998 and Group Chief Executive since 2004. Director of Ascot Authority Holdings since 2001. President of the Employers’ Forum on Disability and member of the International Advisory Panel of the Monetary Authority of Singapore. Treasurer and Trustee of St. Dunstan’s, Trustee of Thornton Smith Plevins Young People’s Trust and Chairman of Business Action on Homelessness.
         
     
JOHN BUCHANAN (63)
Non-Executive Director
Chairman of the Audit Committee and Member of the Remuneration Committee.

Appointed as a Director 25 April 2002. Executive Director and Group Chief Financial Officer of BP p.l.c. 1996-2002. Member of the UK Accounting Standards Board 1997-2001. Senior Independent Director of BHP Billiton Plc. Deputy Chairman of Vodafone Group Plc. Chairman of Smith & Nephew plc.
  JOE JIMENEZ (47)
Non-Executive Director
Member of the Remuneration Committee and the Nomination Committee

Appointed as a Director 1 July 2003. Executive Vice-President of H J Heinz Company and President and Chief Executive Officer of Heinz Europe 2002-2006. Corporate Vice-President then Senior Vice-President and President of Heinz North America 1998-2002. Non-Executive Director of Blue Nile, Inc.
   
   
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JOHN PATTERSON FRCP (58)
Executive Director, Development
Appointed as a Director 1 January 2005. Fellow of the Royal College of Physicians. Director of the British Pharma Group. Non-Executive Director of Cobham plc. Non-Executive Director of Amersham plc 2001-2004. President of the Association of the British Pharmaceutical Industry 2002-2004. Member of the Supervisory Board of the UK Medicines Control Agency 1990-1994. Executive Vice-President, Product Strategy & Licensing and Business Development, AstraZeneca PLC 1999-2004.
  HÅKAN MOGREN KBE (62)
Non-Executive Deputy Chairman Member of the Nomination Committee
Appointed as a Director 6 April 1999. Formerly Chief Executive Officer and a Director of Astra AB (appointed 18 May 1988). Member of the Board of Directors of Investor AB, Rémy Cointreau SA, Groupe Danone and Norsk Hydro ASA. Director of the Marianne and Marcus Wallenberg Foundation. Member of the Royal Swedish Academy of Engineering Sciences.
  MICHELE HOOPER (55)
Non-Executive Director
Member of the Audit Committee

Appointed as a Director 1 July 2003. President and Chief Executive Officer of Stadtlander Drug Company 1998-1999. Corporate Vice-President and President, International Businesses of Caremark International Inc. 1992-1998. Non-Executive Director of PPG Industries, Inc. Non-Executive Director of Warner Music Group, Inc.
         
   
PROFESSOR DAME NANCY ROTHWELL (51)
Non-Executive Director
Chairman of the Science Committee

Appointed as a Director 27 April 2006. Also has responsibility for overseeing Corporate Responsibility. MRC Research Professor and Vice-President for Research at the University of Manchester. Trustee of Cancer Research UK and the Campaign for Medical Progress, Chair of the Research Defence Society, Chair of the Wellcome Trust Public Engagement Strategy Panel. Council member of the Biotechnology and Biological Sciences Research Council. Prior appointments include: President of the British Neuroscience Association and Council member of the Medical Research Council.
  JANE HENNEY (59)
Non-Executive Director
Member of the Audit Committee, the Nomination Committee and the Science Committee

Appointed as a Director 24 September 2001. Currently Senior Vice-President and Provost for Health Affairs, University of Cincinnati Medical Academic Health Center, appointed April 2003. Prior appointments include: Deputy Director, US National Cancer Institute; Vice-Chancellor of Health, University of Kansas Medical Center; Deputy Commissioner for Operations, US Food and Drug Administration; and Commissioner of Food and Drugs, US Food and Drug Administration. Non-Executive Director of AmerisourceBergen Corporation and CIGNA Corporation. Other board appointments include The Commonwealth Fund, China Medical Board, OMERIS and BIO/START.
  SIR PETER BONFIELD CBE, FRENG (62)
Senior Non-Executive Director
Chairman of the Remuneration Committee and Member of the Nomination Committee

Appointed as a Director 1 January 1995. Fellow of the Royal Academy of Engineering. Non-Executive Director of Telefonaktiebolaget LM Ericsson, Mentor Graphics Corporation, Taiwan Semiconductor Manufacturing Company, Ltd., Sony Corporation, Japan and Actis Capital LLP. Vice-President of The British Quality Foundation. Member of the Citigroup International Advisory Board. Member of the Sony Corporation Advisory Board. Chairman of NXP Supervisory Board. Non-Executive Director, Corporate Board of the Department for Constitutional Affairs.
         
         
         
        Other officers of the Company at 31 December 2006 included members of the Senior Executive Team, as set out on pages 4 and 5, and:
         
        GRAEME MUSKER
        Group Secretary and Solicitor
Appointed as Company Secretary

6 June 1993.
   
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ASTRAZENECA ANNUAL REVIEW 2006

SUMMARY GOVERNANCE

 

BOARD OF DIRECTORS

Details of members of the Board at 31 December 2006 are set out on pages 32 and 33.

BOARD COMPOSITION, PROCESSES AND RESPONSIBILITIES

The Board comprises Executive and Non-Executive Directors. In the view of the Board, the majority of Board members are, for the purposes of the UK Combined Code on Corporate Governance and the corporate governance standards of the New York Stock Exchange, independent Non-Executive Directors.

All Directors are collectively responsible for the success of the Company. However, Executive Directors have direct responsibility for business operations, whereas the Non-Executive Directors have a responsibility to bring independent, objective judgement to bear on Board decisions. This includes constructively challenging management and helping to develop the Company’s strategy. The Non-Executive Directors scrutinise the performance of management and have various responsibilities concerning the integrity of financial information, internal controls and risk management. To help maintain a strong executive presence on the Board, in addition to the Executive Directors attending, members of the Senior Executive Team (SET) routinely attend Board meetings on a rotational basis. At the end of every Board meeting, the Company’s Non-Executive Directors meet without the Executive Directors present.

There is an established procedure operated by the Nomination Committee for the appointment of new directors to the Board. Appointments are based on the merits of the candidates, who are measured against objective criteria. All of the Directors retire at each Annual General Meeting (AGM) and may offer themselves for re-election by shareholders. The Board reviews annually the status of succession to senior positions, including those at Board level, and ensures it has regular contact with, and access to, succession candidates.

The Board sets the Company’s strategy and policies and monitors progress towards meeting its objectives. To this end, it conducts a formal strategy review annually. The Board also assesses whether its obligations to the

Company’s shareholders and others are understood and met. This includes regular reviews of the Company’s financial performance and critical business issues.

At the December 2006 Board meeting, the Chairman reported to the Board on his conversations with each Non-Executive Director about his or her individual performance and that of the Board as a whole, which took place during the fourth quarter of 2006. The Non-Executive Directors reviewed the performance of the Chief Executive Officer (CEO) and other Executive Directors in their absence. In addition, the Board, under the chairmanship of the Senior Independent Director, reviewed the performance of the Chairman in his absence, during that same December Board meeting.

The Company maintained directors’ and officers’ liability insurance cover throughout 2006. In early 2006, the Company entered into a deed of indemnity in favour of each Board member. Under Article 134 of the Company’s Articles of Association, the current Directors and officers were already indemnified in accordance with the Companies Act 1985. However, consistent with recent changes to the Companies Act 1985, and in the interests of retaining high quality, skilled individuals, current market practice is for companies to enter into a separate deed of indemnity in favour of each director. As at the date of this report, these deeds of indemnity are still in force and provide that the Company shall indemnify the Directors, to the extent permitted by law and the Company’s Articles of Association, in respect of all losses arising out of, or in connection with, the execution of their powers, duties and responsibilities, as directors of the Company or any of its subsidiaries.

The Board held six scheduled meetings and one other meeting in 2006. Five of the Board meetings were held in London, one in Södertälje and one by teleconference.

BOARD CHANGES

As reported last year, David Brennan became CEO with effect from 1 January 2006.

At the AGM on 27 April 2006, Dame Bridget Ogilvie, a Non-Executive Director, stepped down from the Board. Dame Bridget served the Company as a Non-Executive Director for nine years and worked as a member of various Board committees including, most

recently, the Audit Committee and the Science Committee.

Professor Dame Nancy Rothwell and John Varley were appointed as Non-Executive Directors with effect from 27 April 2006 and 26 July 2006, respectively.

ELECTION AND RE-ELECTION OF DIRECTORS

All of the Directors will retire under Article 65 of the Company’s Articles of Association at the AGM in April 2007. The Notice of AGM will give details of those Directors presenting themselves for election or re-election at the AGM. Sir Peter Bonfield and Erna Möller intend to step down as Directors of the Company at the 2007 AGM.

BOARD COMMITTEES

The current members of the Audit Committee are John Buchanan (Chairman of the Committee), Jane Henney and Michele Hooper. Dame Bridget Ogilvie was also a valued member of the Committee until she stepped down as a Director with effect from 27 April 2006.

The current members of the Remuneration Committee are Sir Peter Bonfield (Chairman of the Committee), John Buchanan, Joe Jiminez, Erna Möller and (since 26 July 2006) John Varley. Sir Peter Bonfield and Erna Möller will step down at the AGM in 2007, and Sir Peter’s role as Chairman of the Committee will be assumed by John Varley.

The current members of the Nomination Committee are Louis Schweitzer (Chairman of the Committee), Håkan Mogren, Sir Peter Bonfield, Jane Henney and Joe Jiminez.

The current members of the Science Committtee are Jane Henney, Erna Möller, Dame Nancy Rothwell (who succeeded Dame Bridget Ogilvie as Chairman of the Committee after Dame Bridget stepped down during 2006) (all Non-Executive Directors), Jan Lundberg, John Patterson and Christopher Reilly.


 

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CORPORATE GOVERNANCE

UK COMBINED CODE ON CORPORATE GOVERNANCE
The Board has prepared this report with reference to the UK Combined Code on Corporate Governance published in July 2003 by the Financial Reporting Council, as amended in June 2006, and related guidance.

The Company is applying all the main and supporting principles of good governance in the Combined Code. The Company is complying with all of the provisions of the Combined Code.

INTERNAL CONTROLS AND MANAGEMENT OF RISK
The Board has overall responsibility for the Company’s system of internal controls, which aims to safeguard shareholders’ investments and the Company’s assets, and to ensure that proper accounting records are maintained and that the financial information used within the business and for publication is accurate, reliable and fairly presents the financial position of the Company and the results of its business operations. The Board is also responsible for reviewing the effectiveness of the system of internal controls. The system is designed to provide reasonable (not necessarily absolute) assurance of effective operations and compliance with laws and regulations. For more information, refer to the paragraphs relating to the US Sarbanes-Oxley Act of 2002 below.

TURNBULL REPORT GUIDANCE
Since the publication in September 1999 by the Institute of Chartered Accountants in England and Wales of the Turnbull Report, ‘Internal Control: Guidance for Directors on the Combined Code’, the Directors have continued to review the effectiveness of the Group’s system of controls, risk management and the Company’s high level internal control arrangements. These reviews have included an assessment of internal controls, and in particular internal financial controls, supported by management assurance of the maintenance of control, and reports from the Group Internal Audit function, as well as the external auditor on matters identified in the course of its statutory audit work.

Underpinning these reviews is an annual ‘letter of assurance’ process by which responsible managers confirm the adequacy of their systems of internal financial and non-financial controls, their compliance with Company policies and relevant laws and regulations (including the industry’s regulatory requirements), and confirm they have reported

any control weaknesses through the Company’s continuous assurance process.

The Directors believe that the Company maintains an effective, embedded system of internal controls and complies with the Turnbull Report guidance.

GROUP RISK AND CONTROL POLICY/ RISK ADVISORY GROUP
Through the adoption by the Board of a Group Risk & Control Policy and supporting standards, the Company has sought to confirm and formalise the drive to manage business risks as a key element of all activities.

Supporting line management activities is a dedicated risk management team who help to ensure key risks are identified and communicated appropriately. The outputs of this team are reviewed by the Risk Advisory Group (RAG), which comprises senior representatives from each business function. The RAG considers new and emerging risks as well as risks across different parts of the organisation. It also plays an important role in promoting continuous improvement in the management of risk by sharing best practice throughout the organisation. It is chaired by the Chief Financial Officer and reports twice a year to the SET. The RAG’s reports on the Company’s risk profile are reviewed by both the Audit Committee and the Board.

THE US SARBANES-OXLEY ACT OF 2002
AstraZeneca PLC American Depositary Shares (ADSs) are traded on the New York Stock Exchange (NYSE) and, accordingly, the Company is subject to the reporting and other requirements of the US Securities and Exchange Commission (SEC) applicable to foreign issuers. The US Sarbanes-Oxley Act (the Act) came into force at the end of July 2002. As a result of its NYSE listing, the Company is subject to those provisions of the Act applicable to foreign issuers. Section 404 of this legislation requires companies to include in their annual report filed with the SEC a report by management stating its responsibility for establishing internal control over financial reporting and to assess annually the effectiveness of such internal control. In addition, the external auditor is required to attest to, and report on management’s assessment. As a foreign issuer that qualifies as a large accelerated filer, AstraZeneca is first required to comply with section 404 in respect of its financial year ended 31 December 2006.

The Company has complied with those provisions of the Act applicable to foreign issuers. The Board believes that, prior to the Act coming into force, the Company

already had a sound corporate governance framework, good processes for the accurate and timely reporting of its financial position and results of operations, and an effective and robust system of internal controls. Consequently, the Company’s approach to compliance with the Act has principally involved the development and adjustment of its existing corporate governance framework and associated processes concerning reporting, internal controls and other relevant matters.

The Directors’ assessment of the effectiveness of the internal control over financial reporting is set out on page 31 (Summary Financial Review).

THE NEW YORK STOCK EXCHANGE
The Company, as a foreign issuer with ADSs listed on the NYSE, has reviewed the corporate governance practices required to be followed by US companies under the NYSE’s listing standards and its practices are generally consistent with those standards.

CODE OF CONDUCT

The policy of the Company is to require all of its subsidiaries, and all employees, to observe high ethical standards of integrity and honesty and to act with due skill, care, diligence and fairness in the conduct of business. The Company’s management seeks to reinforce the standards outlined in the Code of Conduct throughout the business. In particular, all employees are required to comply with the letter and spirit of the Code of Conduct and with the standards detailed by the Company in support of it. The Code of Conduct is available on the Company’s website: astrazeneca.com.

CHIEF EXECUTIVE OFFICER, SENIOR EXECUTIVE TEAM AND DELEGATION OF AUTHORITY

The CEO has been delegated authority from, and is responsible to, the Board for directing and promoting the profitable operation and development of the Company, consistent with the primary aim of enhancing long-term shareholder value in relation to all matters save those which have been specifically reserved for the Board.

The CEO is responsible to the Board for the management and performance of the Company’s businesses within the framework of Company policies, reserved powers and routine reporting requirements. He is obliged


   
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ASTRAZENECA ANNUAL REVIEW 2006

SUMMARY GOVERNANCE CONTINUED

 

to refer certain major matters back to the Board. The roles of the Board, the Board’s committees, the Chairman, the CEO and the SET are documented, as are the Company’s delegated authorities and reserved powers, the means of operation of the business and the roles of corporate functions.     No. of shares      
    (million)   $m  
 



 
  At 1 January 2006 1,581   395  
 



 
  Issues of shares 23   6  
 



 
  Re-purchase of shares (72 ) (18 )
 



 
  At 31 December 2006 1,532   383  
 



 
             

The CEO has established and chairs the SET. While the CEO retains full responsibility for the authority delegated to him by the Board, the SET is the vehicle through which he exercises that authority in respect of the Company’s business (including Aptium Oncology and Astra Tech). The members of the SET are shown on pages 4 and 5. The SET normally meets once a month to consider and decide major business issues. It also usually reviews those matters that are of a size or importance to require the attention of, or that are reserved to, the Board before such matters are submitted to the Board for review and decision.

DISCLOSURE POLICY AND DISCLOSURE COMMITTEE

The Company’s Disclosure Policy provides a framework for the handling and disclosure of inside information and other information of interest to shareholders and the investment community. It also defines the role of the Disclosure Committee. Led by the Chief Financial Officer, the Disclosure Committee meets regularly to assist and inform the decisions of the CEO concerning inside information and its disclosure.

DISCLOSURE OF INFORMATION TO AUDITORS

The Directors who held office at the date of approval of the 2006 Directors’ Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company’s auditors are unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.

CHANGES IN SHARE CAPITAL

Changes in the Company’s Ordinary Share capital during 2006 are shown in the table below:

RETURNS TO SHAREHOLDERS

The Company’s stated distribution policy comprises both a regular cash dividend and a share re-purchase component, which provides a flexible means of returning value to shareholders, while allowing the Company to manage its capital structure more efficiently over time.

Shareholders have different preferences, and the Board believes the combination of regular cash dividends and share buyback programmes enables it to balance the interests of all shareholder groups.

The Board continually reviews its shareholders’ return strategy, and in 2006 re-stated its intention to grow dividends in line with earnings growth, while ensuring the dividend remains covered by at least two times earnings.

The Board also firmly believes the first call on free cash flow is investment in the business, after which surplus cash should be returned to the shareholders. Accordingly, in 2007 the Board intends to return $4 billion of funds to shareholders via a share re-purchase programme. Should there be additional cash inflow during 2007 from the issue of shares in respect of employees exercising share options, the Board will consider extending the re-purchase programme to include this additional amount.

During 2006, the Company purchased 72.2 million of its own Ordinary Shares with a nominal value of $0.25 each for cancellation, at an aggregate cost of $4.1 billion. Also during 2006, 23.5 million shares were issued in respect of employee share plans for a total consideration of $1.0 billion. The net number of shares repurchased in 2006 was therefore 48.7 million, which represents 3.1% of the Company’s issued share capital at 1 January 2006.

Since the Company began its share re-purchase programmes in 1999, a total of 282.8 million Ordinary Shares have been purchased for cancellation at an aggregate cost of $13.3 billion. This represents approximately 15.9% of the Company’s total

issued share capital at the time the repurchase programme commenced in 1999 (See table on page 30).

The Company continues to maintain robust controls in respect of all aspects of the share re-purchase programme to ensure compliance with English law and the FSA’s Listing Rules, Disclosure Rules and Prospectus Rules. In particular, the Company’s Disclosure Committee meets to ensure that the Company does not purchase its own shares during prohibited periods. At the 2007 AGM, the Company will seek a renewal of its current permission from shareholders to purchase its own shares.

CREDITOR PAYMENT POLICY

It is not Company policy formally to comply with the Confederation of British Industry’s code of practice on the prompt payment of suppliers. It is, however, Company policy to agree to appropriate payment terms with all suppliers when agreeing to the terms of each transaction, to ensure that those suppliers are made aware of the terms of payment and, subject to their compliance, abide by the terms of payment. The total amount of money owed by AstraZeneca PLC’s subsidiaries to trade creditors at the balance sheet date was equivalent to 74 days’ average purchases.

ANNUAL GENERAL MEETING

The Company’s 2007 AGM will be held on Thursday 26 April 2007. The principal meeting place will be in London. There will be a simultaneous satellite meeting in Stockholm.

EXTERNAL AUDITOR

A resolution will be proposed at the 2007 AGM for the re-appointment of KPMG Audit Plc, London as auditor of the Company.

On behalf of the Board
G H R MUSKER
GROUP SECRETARY AND SOLICITOR
1 February 2007


   
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SUMMARY DIRECTORS’ REMUNERATION REPORT

 

This is a summary of the Directors’ Remuneration Report that has been prepared in accordance with the Directors’ Remuneration Report Regulations 2002 (the “Regulations”). As required by the Regulations, a resolution to approve the Directors’ Remuneration Report will be proposed at the Annual General Meeting (AGM) on Thursday 26 April 2007.

The members of the Remuneration Committee are Sir Peter Bonfield (Chairman of the Committee), John Buchanan, Joe Jimenez, Erna Möller and (since 26 July 2006) John Varley. They are all Non-Executive Directors. Sir Peter Bonfield and Erna Möller do not intend to submit themselves for re-election as Directors at the AGM in 2007, and Sir Peter’s role as Chairman of the Committee will be assumed by John Varley.

OVERALL REMUNERATION POLICY AND PURPOSE

In determining the level of Directors’ remuneration, the Remuneration Committee considers the policies, practices and other factors that relate to all employees, as set out below.

In general, the Company is committed to maintaining a dynamic performance culture, in which every employee is clear about the Company’s objectives, and knows how their work impacts on those objectives and that they will benefit from achieving high levels of performance. It is against this background that the specific remuneration of the Executive Directors and other members of the Senior Executive Team (SET) is considered in the deliberations of the Board and the Remuneration Committee.

 

Consistent with its approach during the year, the Board has confirmed that the Company’s overall remuneration policy and purpose going forward will continue to be:

  > Attract and retain people of the quality necessary to sustain the Company as one of the best pharmaceutical companies in the world.
  > Motivate them to achieve the level of performance necessary to create sustained growth in shareholder value.
 
In order to achieve this, remuneration policy and practice are designed to:
> Closely align individual and team reward with business performance at each level.
> Encourage employees to perform to their fullest capacity.
> Encourage employees to align their interests with those of shareholders.
> Support managers’ responsibility to achieve business performance through people and to recognise superior performance, in the short and longer term.
> Be as locally focused and flexible as is practicable and beneficial.
> Be as internally consistent as is practicable and beneficial, taking due account of market need.
> Be competitive and cost-effective in each of the relevant employment markets.
 
The cost and value of the components of the remuneration package are considered as a whole and are designed to:
> Ensure a proper balance of fixed and variable performance-related components, linked to short- and longer-term objectives.
> Reflect market competitiveness.

EXECUTIVE DIRECTORS’ REMUNERATION

In 2006, for each Executive Director, the individual components were:

> Annual salary – the actual salary for each Executive Director determined by the Remuneration Committee on behalf of the Board and established in sterling.All Executive Directors’ terms and conditions are UK-based, apart from David Brennan’s pension (including health insurance) arrangements, which are described below.
     
  For 2007, the Executive Directors’ revised annual salaries are as follows:
  David Brennan £940,000 (an increase of 8.05% over his 2006 salary);
  John Patterson £504,692 (an increase of 3.50% over his 2006 salary); and
  Jonathan Symonds £600,000 (an increase of 8.15% over his 2006 salary).
 
> Short-term bonus:
  The Chief Executive Officer was eligible for an annual bonus related to performance against the criteria described below.The bonus payable was on a scale of 0-180% of salary, with 90% of salary payable for the achievement of target performance. The bonus was not pensionable. David Brennan’s bonus for 2006 amounts to £1,049,220 (120.6% of salary). For 2007, the bonus range will be the same.
  The Chief Financial Officer and the Executive Director, Development were each eligible for an annual bonus related to performance against the criteria described below. The bonus payable was on a scale of 0-150% of salary, with 75% of salary payable for the achievement of
 

target performance. The bonus was not pensionable. Jonathan Symonds’ bonus for 2006 amounted to £566,936 (102.2% of salary). John Patterson’s bonus for 2006 amounted to £489,124 (100.3% of salary). For 2007, the bonus range for each of them will be the same.

   

The performance criteria for determining the annual bonus for Executive Directors (and other SET members) are as follows:

50% by reference to earnings per share.
25% by measures relating to the individual’s particular area of responsibility (or, in the case of the Chief Executive Officer, the average of these individual outcomes for the other members of the SET).
25% by a balance of qualitative and quantitative measures that address the quality of business performance (discussed below under “Performance targets and measurement”).

There is a requirement for SET members to defer a portion of their bonus earned into shares for a period of three years. The portion currently deferred into shares is one third of the pre-tax bonus for Executive Directors and one sixth for all other SET members.

> Longer-term incentives
  Executive Directors are also rewarded for improvement in the share price performance of the Company over a period of years by the grant of share options under the AstraZeneca Share Option Plan. The grant of such options is determined by the Remuneration Committee, as are the performance targets that apply and whether they apply to the grant and/or exercise of options.
  In 2006, Executive Directors (and other members of the SET) were also eligible to participate in the AstraZeneca Performance Share Plan described below.
> An expectation to hold shares equivalent to one-times annual salary, and to retain the net number of shares acquired under the AstraZeneca Share Option Plan for at least six months after the option is exercised.
> Other customary benefits (such as a car and health benefits) are also made available through participation in the Company’s flexible benefits arrangements.
> Pension arrangements, as described below.

   
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ASTRAZENECA ANNUAL REVIEW 2006

SUMMARY DIRECTORS’ REMUNERATION REPORT CONTINUED

PERFORMANCE TARGETS AND MEASUREMENTS

In respect of the above short-term bonuses for 2006, relevant factors included strong financial results ahead of expectations and excellent progress in key areas. Earnings per share increased by 34% compared to 2005; global sales increased by 11% overall and by 23% for key growth products; operating profit increased by 28% and R&D investment by 16% (all at constant exchange rates).

The development pipeline was strengthened and now comprises 120 projects (compared with 106 a year earlier), including 95 new chemical entities and 25 life-cycle management projects. Significant externalisation activity included six significant licence and acquisition transactions signed during the calendar year, among them the acquisition of Cambridge Antibody Technology Group plc. Good progress was made in life-cycle management, with nine submissions and nine approvals in the US or EU, including the submissions for Crestor (atherosclerosis) and Seroquel SR (schizophrenia) in both the EU and US. These achievements were underpinned by a continuing emphasis on cost discipline, improved productivity and performance management. Bonus outcomes for 2006 reflected overall corporate and relevant functional performance in 2006 against clear objectives in relation to:

> financial performance;
> progress in R&D;
> risk management;
> executive development and succession;
> corporate governance and social responsibility; and
> reputation.

During 2006, we reviewed our Business Performance Management framework, with a view to further enhancing our focus on our strategic objectives. Bonus outcomes for 2007 will reflect overall corporate and relevant functional performance against clear objectives in relation to:

> patients;
> products;
> people; and
> performance.

More information about these objectives is set out on pages 26 and 27.

PENSION ARRANGEMENTS

The Chief Executive Officer is a member of the AstraZeneca US Defined Benefit Pension Plan, under a schedule applicable to legacy Astra

Merck employees. Benefits for members of this plan are delivered on a tax-qualified basis, with accrued benefits that exceed specific limits under the plan’s formula and the US Tax Code being delivered through a supplementary, non-qualified pension plan (accruals in respect of the UK service being booked in the UK accounts). The normal pension age under both plans is 65. The tax-qualified plan has unreduced, early retirement benefits payable at age 62, or earlier if:

> combined age and service at retirement equals or exceeds 85; and
> at 1 July 1996, combined age and service was equal to or exceeded 60; and
> the member was categorised as a non- highly compensated employee.

Similar early retirement terms apply to the supplementary, non-qualified plan, as it relates to highly compensated employees.

On death in retirement, there is a pension payable to the surviving spouse or other dependent if the member so elects prior to retirement.

In the UK, certain changes to the tax treatment of pensions took effect from 6 April 2006. The Remuneration Committee considered the impact those changes may have on UK Executive Directors’ pension arrangements. The Remuneration Committee endorsed the offer of a cash allowance in lieu of future pension, offered annually and payable at the election of each individual UK Executive Director. The cash allowance is consistent with the cost of the alternative gross pension benefit.

The Executive Director, Development has elected to remain a member of the Company’s main UK defined benefit pension plan for the option year 2006/7 rather than take the cash allowance. The normal pension age under this plan is 62. However, a member’s accrued pension is available from age 60 without any actuarial reduction. In addition, the accrued pension is available, unreduced, from age 57 if the Company consents to a request for early retirement and from age 50 if the retirement is at the Company’s request. On death in retirement, the accrued pension is guaranteed payable for the first five years of retirement and then reduces to two-thirds of this amount should there be a surviving spouse or other dependant.

The Chief Financial Officer benefits from a pension promise equivalent to membership of the defined benefit pension plan that applies to the Executive Director, Development. The composition of the promise originates

from the application of the statutory earnings cap, which has now been removed following the April 2006 tax changes to the treatment of pensions in the UK. The equivalent pension promise remains unchanged. It is delivered through a combination of:

> Annual payment by the Company of 26% of base salary. The Company contribution in 2006 for Jonathan Symonds in respect of the pension element was £172,000. This payment represents three months at the pre-April rate of 50% and nine months at the new rate.
> To the extent this payment does not provide equivalence to the UK defined benefit pension plan, the Company makes up the difference.

ASTRAZENECA PERFORMANCE SHARE PLAN

2006 was the second year of operation of the AstraZeneca Performance Share Plan (the “Plan”).

GRANT AND VESTING OF AWARDS
The Plan provides for the grant of performance share awards (“Awards”) in respect of Ordinary Shares in AstraZeneca PLC (“Shares”) (which may be delivered in the form of American Depositary Shares in the US). Save in exceptional circumstances, which are prescribed in the Plan rules or at the discretion of the Remuneration Committee, vesting of Awards is contingent on the satisfaction of specified performance targets and continued employment with the AstraZeneca Group. Awards are not pensionable and may not be assigned or transferred (except on a participant’s death, when they may be assigned to the participant’s personal representatives).

BASIS OF PARTICIPATION
The Remuneration Committee is responsible for agreeing any Awards under the Plan and for setting the policy for the way in which the Plan should be operated, including agreeing performance targets and which employees should be invited to participate in the Plan.

Generally, Awards can be granted at any time, but not during a close period of the Company. As reported last year, the first grant of Awards was made on 29 June 2005 (the “2005 Award”). In 2006, grants of Awards were made on 24 March and 19 May (the “2006 Award”). Details of these grants are shown in the table on page 40.

PERFORMANCE PERIOD
In the case of the 2005 Award, the performance target relates to the three-year period


 
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commencing on 1 January 2005. For the 2006 Award, the performance target relates to the three-year period commencing on 1 January 2006.

PERFORMANCE TARGETS
For both Awards, the performance targets are the Company’s Total Shareholder Return (“TSR”) over the relevant three-year period compared with the TSR of a selected peer group of 12 other pharmaceutical companies for the same period. These companies are: Abbott Laboratories, Bristol-Myers Squibb, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Pfizer, Roche, Sanofi-Aventis, Schering-Plough and Wyeth.

TSR looks at share price increase and dividends re-invested in respect of a notional number of shares, from the beginning of the relevant performance period to the end of it, and ranks the companies in the selected comparator group by reference to the TSR achieved over that period. The rank which the Company’s TSR achieves over the performance period will determine how many Shares will vest under the relevant Award, as per the vesting schedule shown in the table below:

TSR ranking Vesting percentage
of the Company of Shares under Award


Below median 0%


Median 30%


Upper quartile 100%


Between median and upper quartile Pro rata


To alleviate any short-term volatility, the return index is averaged in the TSR calculations for each company over the three months prior to the start and end of the relevant performance period.

The Remuneration Committee has the discretion to award Shares up to a further 25% over and above the Shares subject to the Award, if the Company’s TSR performance is substantially better than that of the upper quartile of the comparator group.

The Remuneration Committee may vary or waive these performance targets to take account of events that lead the Remuneration Committee, acting fairly and reasonably, to believe the performance targets to be no longer appropriate.

PERFORMANCE UNDER THE ASTRAZENECA PERFORMANCE SHARE PLAN IN 2006
The graphs overleaf show, for each Award, how the Company’s TSR performance has compared with the TSR for the companies in the comparator group from the first day of the relevant performance period to 31 December

DETAILS OF EXECUTIVE DIRECTORS’ SERVICE CONTRACTS AT 31 DECEMBER 2006

      Unexpired term at  
Executive Director Date of service contract   31 December 2006 Notice period





David R Brennan 1 January 2006   One year One year





Jonathan Symonds 20 May 1998   One year One year





John Patterson 1 January 2005   One year One year





       

2006 and how the Company ranks against those other companies on this basis.

EXECUTIVE DIRECTORS’ SERVICE CONTRACTS

The details of the Executive Directors’ individual service contracts are set out in the table above. If an Executive Director’s service contract is terminated, the Company may, depending upon the circumstances, be liable to provide compensation to the Executive Director equivalent to the salary and benefits which he would have received during the contractual notice period plus, in the case of the Executive Director, Development, the unreduced pension entitlement described on page 38. For current Executive Directors, it is the Company’s expectation that any such liability would be calculated on the basis of one year’s base salary, target bonus and other benefits. The Company’s policy in the event of the termination of an Executive Director’s service contract is to avoid any liability to the Executive Director in excess of his contractual entitlement and to aim to ensure that any liability is mitigated to the fullest extent possible.

POSITION OF THE NON-EXECUTIVE DIRECTORS

None of the Non-Executive Directors has a service contract. They are not eligible for performance-related bonuses nor the grant of share options. No pension contributions are made on their behalf. The fees payable to the Non-Executive Directors are set by a committee of the Board comprising the Executive Directors.

DIRECTORS’ EMOLUMENTS IN 2006

The aggregate remuneration, excluding pension contributions and the value of share options and performance share plan awards, paid to or accrued for all Directors and officers of the Company for services in all capacities

during the year ended 31 December 2006 was £12 million ($21 million). Remuneration of individual Directors is set out on page 46 in sterling and US dollars.

TOTAL SHAREHOLDER RETURN

The Regulations require the inclusion in the Directors’ Remuneration Report of a graph showing TSR over a five-year period in respect of a holding of the Company’s shares, plotted against TSR in respect of a hypothetical holding of shares of a similar kind and number by reference to which a broad equity market index is calculated. The Company is a member of the FTSE 100 Index and consequently, for the purposes of this graph which is set out overleaf, we have selected the FTSE 100 Index as the appropriate index. This graph is re-based to 100 at the start of the rolling five-year period.

DIRECTORS’ INTERESTS IN PERFORMANCE SHARE PLAN AWARDS

Directors’ interests in shares or American Depositary Shares (ADSs) of AstraZeneca PLC that are the subject of awards under the AstraZeneca Performance Share Plan or the AstraZeneca US Executive Performance Share Plan are not included in the table of Directors’ emoluments on page 46 but are shown in the tables overleaf. References to “target number of shares” are to the maximum number of shares that would vest if the vesting percentage were 100%.

On behalf of the Board
G H R MUSKER

GROUP SECRETARY AND SOLICITOR

1 February 2007

       

 


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ASTRAZENECA ANNUAL REVIEW 2006

SUMMARY DIRECTORS’ REMUNERATION REPORT CONTINUED

TSR – ASTRAZENECA COMPARED WITH FTSE 100 OVER FIVE YEARS*   TSR – ASTRAZENECA COMPARED WITH PEER GROUP 1 JAN 2005 TO 31 DEC 2006 (FOR THE 2005 AWARD)*  

TSR – ASTRAZENECA COMPARED WITH PEER GROUP 1 JAN 2006 TO 31 DEC 2006 (FOR THE 2006 AWARD)*

   

* Source: Thomson Financial Datastream

  * Source: Thomson Financial Datastream   * Source: Thomson Financial Datastream

DIRECTORS’ AND FORMER DIRECTORS’ INTERESTS IN PERFORMANCE SHARE PLAN AWARDS

                           
        Target number              
    Awards held (target number of Shares)     of Shares     Monetary value          
    At 1 Jan 2006 or   At 31 Dec 2006 or   the subject   of Awards          
Award and performance period   appointment date   resignation date   of Awards   (£) 1    Date of grant   Vesting date  













 
David R Brennan                          
2006 Award: 1 Jan 06 – 1 Jan 09     73,109   73,109  2 2,174,993   24.03.06   24.03.09  













 
2006 Award: 1 Jan 06 – 1 Jan 09     19,092   19,092 3 543,740   19.05.06   19.05.09  













 
Total     92,201   92,201   2,718,733          













 
John Patterson                          
2005 Award: 1 Jan 05 – 1 Jan 08   41,945   41,945   41,945  4 939,987   29.06.05   29.06.08  













 
2006 Award: 1 Jan 06 – 1 Jan 09     32,319   32,319  2 961,490   24.03.06   24.03.09  













 
Total   41,945   74,264   74,264   1,901,477          













 
Jonathan Symonds                          
2005 Award: 1 Jan 05 – 1 Jan 08   47,723   47,723   47,723  4  1,069,472   29.06.05   29.06.08  













 
2006 Award: 1 Jan 06 – 1 Jan 09     41,646   41,646  2  1,238,968   24.03.06   24.03.09  













 
Total   47,723   89,369   89,369   2,308,440          













 
Sir Tom McKillop5                          
2005 Award: 1 Jan 05 – 1 Jan 08   104,417   104,417   104,417  4 2,339,985   29.06.05   29.06.08  













 
Total   104,417  6  104,417  6  104,417   2,339,985          













 
   
1 The relevant target percentage of the Director’s salary was divided by the price per share at date of grant to calculate the target number of Shares.
2 Share price at date of grant was 2975p.
3 Share price at date of grant was 2848p.
4 Share price at date of grant was 2241p.
5 Ceased to be a Director on 31 December 2005.
6 To be pro-rated as described on page 74 of the 2005 Directors’ Remuneration Report.

The interests of David Brennan at 31 December 2006 in ADSs of AstraZeneca PLC that are the subject of awards under the AstraZeneca US Executive Performance Share Plan (established in 2000) are not included in the above table but are shown below. One ADS equals one Ordinary Share. The number of ADSs to which Mr Brennan may become unconditionally entitled on the vesting date will be determined by reference to AstraZeneca’s total shareholder return compared to that of other companies in the US Pharmaceutical Human Resources Association over the three-year performance period.

                        Monetary              
                Initial monetary   Awards vested   value of              
            Awards made   value of   during 2006   awards vested   Awards       Date on  
    Awards held (target number of ADSs)   (target number   awards made   (number   during 2006   expired   Date   which award  
    At 1 Jan 2006   At 31 Dec 2006   of ADSs)   ($)   of ADSs)   ($)   during 2006   of award   may vest  



















 
David R Brennan   33,104     33,104   1,163,937  1 31,780   1,643,979  2 1,324   25.03.03   25.03.06  



















 
    28,826   28,826   28,826   1,344,156  3       26.03.04   26.03.07  



















 
    27,877   27,877   27,877   1,124,837 4       24.03.05   24.03.08  



















 
Total:   89,807   56,703   89,807   3,632,930   31,780   1,643,979   1,324          



















 
   
1 The award price was $35.16.
2 The closing price of an ADS on 25 March 2006 (the date of vesting) was $51.73.
3 The award price was $46.63.
4 The award price was $40.35.
   
   
40

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SUMMARY FINANCIAL STATEMENTS

These Summary Financial Statements are a summary of information in the Group’s Financial Statements, Directors’ Report and Directors’ Remuneration Report and do not contain sufficient information to allow for as full an understanding of the results and state of affairs of the Group as would be provided by the full Group Financial Statements, Directors’ Report and Directors’ Remuneration Report. Shareholders requiring more detailed information have the right to obtain, free of charge, a copy of the Group’s last full Annual Report and Form 20-F Information, available from the Secretary at the registered office of the Company.

The Summary Financial Statements on pages 42 to 46 were approved by the Board of Directors on 1 February 2007 and were signed on its behalf by:

DAVID R BRENNAN   JONATHAN SYMONDS
DIRECTOR   DIRECTOR

INDEPENDENT AUDITORS’ STATEMENT

AUDITORS’ STATEMENT TO THE MEMBERS OF ASTRAZENECA PLC, PURSUANT TO SECTION 251 OF THE COMPANIES ACT 1985.
We have examined the Summary Financial Statements set out on pages 42 to 46. This statement is made solely to the Company’s members, as a body, in accordance with section 251 of the Companies Act 1985. Our work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in such a statement and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our work, for this statement, or for the opinions we have formed.

RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Directors are responsible for preparing the Annual Review 2006 in accordance with applicable law.

Our responsibility is to report to you our opinion on the consistency of the Summary Financial Statements within the Annual Review 2006 with the full annual Financial Statements, the Directors’ Report and the Directors’ Remuneration Report, and its compliance with the relevant requirements of section 251 of the Companies Act 1985 and the regulations made thereunder.

We also read the other information contained in the Annual Review 2006 and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the Summary Financial Statements.

 

 

BASIS OF OPINION
We conducted our work in accordance with Bulletin 1999/6 ‘The auditor’s statement on the summary financial statement’ issued by the Auditing Practices Board. Our report on the Group’s full annual Financial Statements describes the basis of our audit opinion on those Financial Statements and the Directors’ Remuneration Report.

OPINION
In our opinion the Summary Financial Statements are consistent with the full annual Financial Statements, the Directors’ Report and the Directors’ Remuneration Report of AstraZeneca PLC for the year ended 31 December 2006 and comply with the applicable requirements of section 251 of the Companies Act 1985, and the regulations made thereunder.

1 February 2007

KPMG Audit Plc
Chartered Accountants
Registered Auditor
8 Salisbury Square
London EC4Y 8BB


   
  41

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ASTRAZENECA ANNUAL REVIEW 2006

CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER

 

  2006   2005   2004  
  $m   $m   $m  






 
Sales 26,475   23,950   21,426  






 
Cost of sales (5,559 ) (5,356 ) (5,193 )






 
Distribution costs (226 ) (211 ) (177 )






 
Research and development (3,902 ) (3,379 ) (3,467 )






 
Selling, general and administrative costs (9,096 ) (8,695 ) (8,268 )






 
Other operating income and expense 524   193   226  






 
Operating profit 8,216   6,502   4,547  






 
Profit on sale of interest in joint venture     219  






 
Finance income 888   665   532  






 
Finance expense (561 ) (500 ) (454 )






 
Profit before tax 8,543   6,667   4,844  






 
Taxation (2,480 ) (1,943 ) (1,161 )






 
Profit for the period 6,063   4,724   3,683  






 
Attributable to:            
Equity holders of the Company 6,043   4,706   3,664  






 
Minority interests 20   18   19  






 
Basic earnings per $0.25 Ordinary Share $3.86   $2.91   $2.18  






 
Diluted earnings per $0.25 Ordinary Share $3.85   $2.91   $2.18  






 
Weighted average number of Ordinary Shares in issue (millions) 1,564   1,617   1,673  






 
Diluted weighted average number of Ordinary Shares in issue (millions) 1,570   1,618   1,675  






 
Dividends declared and paid in the period 2,217   1,676   1,408  






 

All activities were in respect of continuing operations.

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31 DECEMBER

  2006   2005   2004  
  $m   $m   $m  






 
Profit for the period 6,063   4,724   3,683  






 
       Foreign exchange and other adjustments on consolidation 922   (1,052 ) 744  






 
       Available for sale (losses)/gains taken to equity (20 ) (10 ) 31  






 
       Actuarial loss for the period (108 ) (35 ) (179 )






 
       Tax on items taken directly to reserves 137   (25 ) 416  






 
  931   (1,122 ) 1,012  






 
Total recognised income and expense for the period 6,994   3,602   4,695  






 
Attributable to:            
Equity holders of the Company 6,970   3,595   4,690  






 
Minority interests 24   7   5  






 

Tax on items taken directly to reserves in 2004 includes a credit of $357m in respect of foreign exchange losses in 2000.

$m means millions of US dollars.

42  

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CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER

 

  2006   2005   2004  
  $m   $m   $m  






 
Assets            
Non-current assets            






 
Property, plant and equipment 7,453   6,985   8,097  






 
Intangible assets 4,204   2,712   3,050  






 
Other investments 119   256   262  






 
Deferred tax assets 1,220   1,117   1,218  






 
  12,996   11,070   12,627  






 
Current assets            
Inventories 2,250   2,206   3,020  






 
Trade and other receivables 5,561   4,778   4,620  






 
Other investments 657   1,624   1,198  






 
Income tax receivable 1,365   183   120  






 
Cash and cash equivalents 7,103   4,979   4,067  






 
  16,936   13,770   13,025  






 
Total assets 29,932   24,840   25,652  






 
Liabilities            
Current liabilities            
Interest bearing loans and borrowings (136 ) (90 ) (142 )






 
Trade and other payables (6,334 ) (5,466 ) (5,478 )






 
Income tax payable (2,977 ) (1,283 ) (967 )






 
  (9,447 ) (6,839 ) (6,587 )






 
Non-current liabilities            
Interest bearing loans and borrowings (1,087 ) (1,111 ) (1,127 )






 
Deferred tax liabilities (1,559 ) (1,112 ) (1,328 )






 
Retirement benefit obligations (1,842 ) (1,706 ) (1,761 )






 
Provisions (327 ) (309 ) (266 )






 
Other payables (254 ) (72 ) (86 )






 
  (5,069 ) (4,310 ) (4,568 )






 
Total liabilities (14,516 ) (11,149 ) (11,155 )






 
Net assets 15,416   13,691   14,497  






 
Equity            
Capital and reserves attributable to equity holders of the Company  
Share capital 383   395   411  






 
Share premium account 1,671   692   550  






 
Capital redemption reserve 71   53   36  






 
Merger reserve 433   433   433  






 
Other reserves 1,398   1,345   1,384  






 
Retained earnings 11,348   10,679   11,590  






 
  15,304   13,597   14,404  






 
Minority equity interests 112   94   93  






 
Total equity 15,416   13,691   14,497  






 

The Summary Financial Statements on pages 42 to 46 were approved by the Board of Directors on 1 February 2007 and were signed on its behalf by:

DAVID R BRENNAN   JONATHAN SYMONDS
DIRECTOR   DIRECTOR
   
  43

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ASTRAZENECA ANNUAL REVIEW 2006

CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER

  2006   2005   2004  
  $m   $m   $m  






 
Cash flows from operating activities       
Profit before tax 8,543   6,667   4,844  






 
Finance income and expense (327 )  (165 ) (78 )






 
Profit on sale of interest in joint venture     (219 )






 
Depreciation, amortisation and impairment 1,345   1,327   1,268  






 
Increase in trade and other receivables (470 )  (502 ) (207 )






 
Decrease in inventories 158   596   129  






 
Increase in trade and other payables 420   238   11  






 
Other non-cash movements 263   220   384  






 
Cash generated from operations 9,932   8,381   6,132  






 
Interest paid (70 )  (32 ) (69 )






 
Tax paid (2,169 )  (1,606 ) (1,246 )






 
Net cash inflow from operating activities  7,693   6,743   4,817  






 
Cash flows from investing activities       
Acquisitions of business operations (1,148 )     






 
Disposal of business operations     355  






 
Movement in short term investments and fixed deposits 1,120   (491 ) 1,855  






 
Purchase of property, plant and equipment (794 )  (810 ) (1,063 )






 
Disposal of property, plant and equipment 35   87   35  






 
Purchase of intangible assets (545 )  (157 ) (215 )






 
Disposal of intangible assets 661      






 
Purchase of non-current asset investments (17 )  (12 ) (117 )






 
Disposal of non-current asset investments 68      






 
Interest received 352   206   119  






 
Payments made by subsidiaries to minority interests (4 )  (5 ) (5 )






 
Dividends received     6  






 
Net cash (outflow)/inflow from investing activities  (272 )  (1,182 ) 970  






 
Net cash inflow before financing activities  7,421   5,561   5,787  






 
Cash flows from financing activities       
Proceeds from issue of share capital 985   143   102  






 
Re-purchase of shares (4,147 )  (3,001 ) (2,212 )






 
Loans received     746  






 
Loan repayment     (21 )






 
Dividends paid (2,220 )  (1,717 ) (1,378 )






 
Movement in short term borrowings 16   3   2  






 
Net cash outflow from financing activities  (5,366 )  (4,572 ) (2,761 )






 
Net increase in cash and cash equivalents in the period  2,055   989   3,026  






 
Cash and cash equivalents at beginning of the period 4,895   3,927   872  






 
Exchange rate effects 39   (21 ) 29  






 
Cash and cash equivalents at the end of the period  6,989   4,895   3,927  






 
             
44  

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DIVIDENDS

    2006   2005   2004              
    Per   Per   Per   2006   2005   2004  
    share   share   share   $m   $m   $m  













 
Final, paid March 2006   $0.920   $0.645   $0.540   1,453   1,061   914  













 
Interim, paid September 2006   $0.490   $0.380   $0.295   764   615   494  













 
    $1.410   $1.025   $0.835   2,217   1,676   1,408  













 

The second interim dividend, to be confirmed as final, is $1.23 per share and $1,885m in total. This will be payable on 19 March 2007.

On payment of the dividends, exchange losses of $3m (2005 losses of $41m, 2004 gains of $30m) arose. These exchange gains and losses are included in finance income and expense.

EARNINGS PER SHARE

    2006   2005   2004  







 
Profit for the financial year before exceptional items ($m) 6,043 4,706 3,378  







 
Exceptional items after tax ($m)       286  







 
Profit for the financial year ($m)   6,043   4,706   3,664  







 
Earnings per Ordinary Share before exceptional items   $3.86   $2.91   $2.01  







 
Earnings per Ordinary Share on exceptional items       $0.17  







 
Earnings per Ordinary Share   $3.86   $2.91   $2.18  







 
Diluted earnings per Ordinary Share before exceptional items   $3.85   $2.91   $2.01  







 
Diluted earnings per Ordinary Share on exceptional items       $0.17  







 
Diluted earnings per Ordinary Share   $3.85   $2.91   $2.18  







 
Weighted average number of Ordinary Shares in issue for basic earnings (millions)   1,564   1,617   1,673  







 
Dilutive impact of share options outstanding (millions)   6   1   2  







 
Diluted weighted average number of Ordinary Shares in issue (millions)   1,570   1,618   1,675  







 

There are no options, warrants or rights outstanding in respect of unissued shares except for employee share option schemes. The earnings figures used in the calculations above are unchanged for diluted earnings per Ordinary Share. Earnings per Ordinary Share before exceptional items in 2004 exclude the effect of two items – the profit after tax on the sale of an interest in a joint venture of $228m and tax relief of $58m in respect of an agreement with the US tax authority to allow a part of the Zoladex settlement recognised in 2002 as deductible.

SUBSEQUENT EVENTS

Subsequent to year end, we entered into two collaboration agreements with Bristol-Myers Squibb Company and Palatin Technologies Inc. for initial consideration of $100 million and $10 million respectively. These amounts will be capitalised as intangible assets in 2007. The collaboration with Bristol-Myers Squibb is to develop and commercialise two investigational compounds being studied for the treatment of Type 2 diabetes. We also entered into an agreement to purchase the total share capital of Arrow Therapeutics Ltd for $150m. Arrow Therapeutics Ltd is a privately owned UK biotechnology company focused on the discovery and development of anti-viral therapies.

  45

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ASTRAZENECA ANNUAL REVIEW 2006

DIRECTORS’ EMOLUMENTS IN 2006

The aggregate remuneration, excluding pension contributions and the value of share options and performance share plan awards, paid to or accrued for all Directors and officers of the Company for services in all capacities during the year ended 31 December 2006 was £12 million ($21 million). Remuneration of individual Directors is set out below in sterling and US dollars. All salaries, fees, bonuses and other benefits for Directors are established in sterling.

          Bonuses                      
  Salary  


  Taxable       Total   Total   Total  
  and fees   Cash   Shares 1 benefits   Other   2006   2005   2004  
Sterling £’000   £’000   £’000   £’000   £’000   £’000   £’000   £’000  
















 
Louis Schweitzer 260           260   260   31 2
















 
David R Brennan 942   699   350   1   671   2,663   819 3 N/A  
















 
John Patterson 483   326   163   14   21   1,007   1,049   N/A  
















 
Jonathan Symonds 598   378   189   6   5   1,176   1,269   970  
















 
Sir Peter Bonfield 82           82   82   76  
















 
John Buchanan 69           69   69   61  
















 
Jane Henney 57           57   57   54  
















 
Michele Hooper 49           49   49   43  
















 
Joe Jimenez 49           49   49   43  
















 
Håkan Mogren 100           100   100   479 4
















 
Erna Möller 57           57   57   54  
















 
Dame Bridget Ogilvie5  18           18   57   54  
















 
Dame Nancy Rothwell6  30           30      
















 
John Varley7  21           21      
















 
Marcus Wallenberg 40           40   49   46  
















 
Former Directors                                
















 
Others8             2,289   2,115  
















 
Total 2,855   1,403   702   21   697   5,678   6,255   4,026  
















 

 

          Bonuses                      
  Salary  


  Taxable       Total   Total   Total  
  and fees   Cash   Shares 1 benefits   Other   2006   2005   2004  
US Dollars $’000   $’000   $’000   $’000   $’000   $’000   $’000   $’000  
















 
Louis Schweitzer 475 475 476 56 2
















 
David R Brennan 1,720   1,278   639   2   1,226   4,865   1,499 3 N/A  
















 
John Patterson 883   596   298   25   37   1,839   1,918   N/A  
















 
Jonathan Symonds 1,093   691   345   11   9   2,149   2,321   1,764  
















 
Sir Peter Bonfield 150           150   150   138  
















 
John Buchanan 126           126   126   111  
















 
Jane Henney 104           104   104   98  
















 
Michele Hooper 89           89   90   78  
















 
Joe Jimenez 89           89   90   78  
















 
Håkan Mogren 183           183   183   871 4
















 
Erna Möller 104           104   104   98  
















 
Dame Bridget Ogilvie5  34           34   104   98  
















 
Dame Nancy Rothwell6  56           56      
















 
John Varley7  39           39      
















 
Marcus Wallenberg 73           73   90   84  
















 
Former Directors                                
















 
Others8              4,191   3,847  
















 
Total 5,218   2,565   1,282   38   1,272   10,375   11,446   7,321  
















 
   
1 These figures represent that portion of the 2006 bonus required to be deferred into shares to be held for a three-year period.
2 Part year only.
3 Part year only as only appointed as a Director on 14 March 2005.
4 Comprises compensation payment of £450,000 ($818,000) and part-year Non-Executive Director’s fee of £29,000 ($53,000).
5 Part year only as ceased to be a Director on 27 April 2006.
6 Part year only as appointed as a Director on 27 April 2006.
7 Part year only as appointed as a Director on 26 July 2006.
8 This comprises Sir Tom McKillop’s 2005 total of £2,253,000 ($4,125,000) plus Åke Stavling’s final payment of £36,000 ($66,000).
 
46  

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GROUP FINANCIAL RECORD

    2003   2004   2005   2006  
FOR THE YEAR ENDED 31 DECEMBER   $m   $m   $m   $m  









 
Turnover and profits                  
Sales 18,849   21,426   23,950   26,475  









 
Cost of sales   (4,463 ) (5,193 ) (5,356 ) (5,559 )









 
Distribution costs   (162 ) (177 ) (211 ) (226 )









 
Research and development   (3,012 ) (3,467 ) (3,379 ) (3,902 )









 
Selling, general and administrative costs   (7,393 ) (8,268 ) (8,695 ) (9,096 )









 
Other operating income and expense   188   226   193   524  









 
Operating profit   4,007   4,547   6,502   8,216  









 
Profit on sale of interest in joint venture     219      









 
Finance income   381   532   665   888  









 
Finance expense   (311 ) (454 ) (500 ) (561 )









 
Profit before tax   4,077   4,844   6,667   8,543  









 
Taxation   (1,033 ) (1,161 ) (1,943 ) (2,480 )









 
Profit for the period   3,044   3,683   4,724   6,063  









 
Attributable to:                  
Equity holders of the Company   3,022   3,664   4,706   6,043  









 
Minority interests   22   19   18   20  









 
Earnings per share                  
Earnings per $0.25 Ordinary Share before exceptional items   $1.77   $2.01   $2.91   $3.86  









 
Earnings per $0.25 Ordinary Share (basic)   $1.77   $2.18   $2.91   $3.86  









 
Earnings per $0.25 Ordinary Share (diluted)   $1.77   $2.18   $2.91   $3.85  









 
Dividends   $0.725   $0.835   $1.025   $1.410  









 
Return on sales                  
Operating profit as a percentage of sales   21.3%   21.2%   27.2%   31.0%  









 
Ratio of earnings to fixed charges (IFRS)   100.4   93.6   85.6   92.7  









 
                   
                   
    2003   2004   2005   2006  
AT 31 DECEMBER   $m   $m   $m   $m  









 
Balance sheet                  
Property, plant and equipment and intangible assets   10,574   11,147   9,697   11,657  









 
Other investments   133   262   256   119  









 
Deferred tax assets   1,261   1,218   1,117   1,220  









 
Current assets   11,593   13,025   13,770   16,936  









 
Total assets   23,561   25,652   24,840   29,932  









 
Current liabilities   (6,558 ) (6,587 ) (6,839 ) (9,447 )









 
Non-current liabilities   (3,828 ) (4,568 ) (4,310 ) (5,069 )









 
Net assets   13,175   14,497   13,691   15,416  









 
Capital and reserves attributable to equity holders   13,086   14,404   13,597   15,304  









 
Minority equity interests   89   93   94   112  









 
Total equity and reserves   13,175   14,497   13,691   15,416  









 
                   
    2003   2004   2005   2006  
FOR THE YEAR ENDED 31 DECEMBER   $m   $m   $m   $m  









 
Cash flows                  
Net cash inflow/(outflow) from:                  









 
Operating activities   3,368   4,817   6,743   7,693  









 
Investing activities   (852 ) 970   (1,182 ) (272 )









 
Financing activities   (2,674 ) (2,761 ) (4,572 ) (5,366 )









 
    (158 ) 3,026   989   2,055  









 
   
  47

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ASTRAZENECA ANNUAL REVIEW 2006

SHAREHOLDER INFORMATION

ASTRAZENECA   2002   2003   2004   2005   2006  











 
Ordinary Shares in issue – millions                      
At year end   1,719   1,693   1,645   1,581   1,532  











 
Weighted average for year   1,733   1,709   1,673   1,617   1,564  











 
Stock market price – per $0.25 Ordinary Share                      
Highest (pence)   3625   2868   2749   2837   3529  











 
Lowest (pence)   1799   1820   1863   1861   2574  











 
At year end (pence)   2220   2680   1889   2829   2744  











 
       

Percentage analysis at 31 December 2006 of issued share capital

     
By size of account   2006  
No. of shares   %  



 
1 – 250   0.5  



 
251 – 500   0.7  



 
501 – 1,000   0.9  



 
1,001 – 5,000   1.3  



 
5,001 – 10,000   0.2  



 
10,001 – 50,000   1.0  



 
50,001 – 1,000,000   12.3  



 
over 1,000,000   83.1  



 
Issued share capital   100.0  



 
       
 

Includes VPC and ADR holdings

At 31 December 2006, AstraZeneca PLC had 137,137 registered holders of 1,532,245,608 Ordinary Shares of $0.25 each. At 31 December 2006, there were approximately 100,000 holders of American Depositary Receipts (ADRs) representing 10.48% of the issued share capital and 157,000 holders of shares held under the VPC Services Agreement representing 23.32% of the issued share capital. The ADRs, each of which is equivalent to one Ordinary Share, are issued by JPMorgan Chase Bank.

2006 DIVIDEND                  
    $   Pence   SEK   Payment date  









 
First interim dividend   0.49   26.6   3.60   18 September 2006  









 
Second interim dividend   1.23   63.0   8.60   19 March 2007  









 
Total   1.72   89.6   12.20      









 

DIVIDEND PAYMENTS
The record date for the second interim dividend for 2006, payable on 19 March 2007 (in the UK, the US and Sweden), is 9 February 2007. Shares trade ex-dividend on the London and Stockholm Stock Exchanges from 7 February 2007 and ADRs trade ex-dividend on the New York Stock Exchange from the same date. Dividends will normally be paid as follows:

First interim: Announced in July and paid in September.
Second interim: Announced in January/February and paid in March.

The record date for the first interim dividend for 2007, payable on 17 September 2007 (in the UK, the US and Sweden), is 10 August 2007.

FINANCIAL CALENDAR 2007



 
26 April 2007 Annual General Meeting and announcement of first quarter 2007 results  


 
26 July 2007 Announcement of second quarter and half year 2007 results  


 
1 November 2007 Announcement of third quarter and nine months 2007 results  


 
   
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HOW TO OBTAIN THE FULL ANNUAL REPORT AND FORM 20-F INFORMATION

The Company publishes an Annual Report and Form 20-F Information and, for investors not needing the full detail of that document, this Annual Review. Both documents are available on our website, astrazeneca.com. The Annual Review is sent to all shareholders on the date of publication, unless they have elected to receive the full Annual Report and Form 20-F Information by writing to the Company’s registrars. Alternatively, shareholders may elect to receive notification by e-mail of the publication of financial reports by registering with Shareview. Printed copies can be obtained by writing to the Company Secretary.

SHAREVIEW

AstraZeneca’s shareholders with internet access may visit shareview.co.uk and register their details to create a portfolio. Shareview is a free and secure on-line service from the Company’s registrars, Lloyds TSB Registrars, which gives access to shareholdings including balance movements, indicative share prices and information about recent dividends.

TRADE MARKS

Trade marks of the AstraZeneca group of companies appear throughout this document in italics. AstraZeneca, the AstraZeneca logotype and the AstraZeneca symbol are all trade marks of the AstraZeneca group of companies. Trade marks of companies other than AstraZeneca appear with a ® or ™ sign.

USE OF TERMS

In this Annual Review, unless the context otherwise requires, ‘AstraZeneca’, ‘the Group’, ‘the Company’, ‘we’, ‘us’ and ‘our’ refer to AstraZeneca PLC and its consolidated entities.

 

STATEMENTS OF COMPETITIVE POSITION

Except as otherwise stated, market information in this Annual Review regarding the position of our business or products relative to its or their competition is based upon published statistical data for the 12 months ended 30 September 2006, obtained from IMS Health, a leading supplier of statistical data to the pharmaceutical industry. Except as otherwise stated, these market share and industry data from IMS Health have been derived by comparing our sales revenue to competitors’ and total market sales revenues for that period. For the purposes of this Annual Review, references to the world pharmaceuticals market or similar phrases are to 52 countries contained in IMS Health’s MIDAS Quantum database, which amount to approximately 95% (in value) of the countries audited by IMS Health.

SHAREGIFT

AstraZeneca welcomes and values all of its shareholders, no matter how many or how few shares they own. However, shareholders who have only a small number of shares whose value makes it uneconomic to sell them, either now or at some stage in the future, may wish to consider donating them to charity through ShareGift, an independent charity share donation scheme. One feature of the scheme is that there is no gain or loss for UK capital gains tax purposes on gifts of shares through ShareGift and it may now also be possible to obtain UK income tax relief on the donation. Further information about ShareGift can be found on its website, sharegift.org, or by contacting ShareGift on 020 7337 0501 or at 46 Grosvenor Street, London W1K 3HN. More information about the UK tax position on gifts of shares to ShareGift can be obtained from HM Revenue & Customs, whose website address is hmrc.gov.uk. The share transfer form needed to make a donation may be obtained from the Company’s registrars, Lloyds TSB Registrars, whose address can be found on the back cover of this document. ShareGift is administered by The Orr Mackintosh Foundation, registered charity number 1052686.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The purpose of this Annual Review is to provide information to the members of the Company. In order, inter alia, to utilise the ‘safe harbour’ provisions of the US Private Securities Litigation Reform Act 1995, we are providing the following cautionary statement: This Annual Review contains certain forward-looking statements with respect to the operations, performance and financial condition of the AstraZeneca Group. Although we believe our expectations are based on reasonable assumptions, any forward-looking statements, by their very nature, involve risks and uncertainties and may be influenced by factors that could cause actual outcomes and results to be materially different from those predicted. The forward-looking statements reflect knowledge and information available at the date of the preparation of this Annual Review and the Company undertakes no obligation to update these forward-looking statements. We identify the forward-looking statements by using the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and similar expressions in such statements. Important factors that could cause actual results to differ materially from those contained in forward-looking statements, certain of which are beyond our control, include, among other things: the loss or expiration of patents, marketing exclusivity or trade marks; the risk of substantial adverse litigation/government investigation claims and insufficient insurance coverage; exchange rate fluctuations; the risk that R&D will not yield new products that achieve commercial success; the risk that strategic alliances will be unsuccessful; the impact of competition, price controls and price reductions; taxation risks; the risk of substantial product liability claims; the impact of any failure by third parties to supply materials or services; the risk of failure to manage a crisis; the risk of delay to new product launches; the difficulties of obtaining and maintaining regulatory approvals for products; the risk of failure to observe ongoing regulatory oversight; the risk that new products do not perform as we expect; the risk of environmental liabilities; the risks associated with conducting business in emerging markets; the risk of reputational damage; and the risk of product counterfeiting. Nothing in this Annual Review should be construed as a profit forecast.

 
             
             

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  The paper used in this review is made using pulp from sawmill residues, forest thinnings and wood from PEFC certified sustainable forests. All mill broke is recycled and accounts for up to 25% of the total fibre content. Pulps are Elemental Chlorine Free (ECF) and the manufacturing mill holds ISO 14001 and EMAS environmental management accreditations.      

CONTACT INFORMATION

REGISTERED OFFICE
AND CORPORATE HEADQUARTERS ADDRESS
AstraZeneca PLC
15 Stanhope Gate
London W1K 1LN
UK

Tel: +44 (0)20 7304 5000
Fax: +44 (0)20 7304 5151

INVESTOR RELATIONS CONTACTS
UK: as above or e-mail
IR@astrazeneca.com

Sweden:
AstraZeneca AB
SE-151 85 Södertälje
Sweden
Tel: +46 (0)8 553 260 00
Fax: +46 (0)8 553 290 00

or e-mail
IR@astrazeneca.com

US:
Investor Relations
AstraZeneca Pharmaceuticals LP
1800 Concord Pike
PO Box 15438
Wilmington
DE 19850-5438
US
Tel: +1 (302) 886 3000
Fax: +1 (302) 886 2972

REGISTRAR AND TRANSFER OFFICE
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA
UK
Tel (freephone in the UK): 0800 389 1580
Tel (outside the UK): +44 121 415 7033

SWEDISH SECURITIES REGISTRATION CENTRE
VPC AB
PO Box 7822

SE-103 97 Stockholm
Sweden
Tel: +46 (0)8 402 9000

US DEPOSITARY
JPMorgan Chase Bank
JPMorgan Service Center
PO Box 3408
South Hackensack
NJ 07606-3408
US
Tel (toll free in the US): 888 697 8018
Tel (outside the US): +1 (201) 680 6630

       
       
       
       
         
           
 

Designed by Addison Corporate Marketing Ltd.

 

© AstraZeneca PLC 1 February 2007

  ASTRAZENECA.COM
           
           
           




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  CONTENTS                  
                       
                       
  MESSAGE FROM OUR CEO 2   Pharmaceuticals in the Environment 15   Priority Action Planning 26  
  PATIENTS 4   Sales and Marketing 16   Stakeholder Dialogue 27  
  Patient Safety 6   Supporting Economic Development 17   Evaluating Performance 29  
  Access to Medicines 7   PEOPLE 18   Governance and Compliance 29  
  In the Developing World 8   Human Rights 20   Environmental Performance 30  
  PRODUCTS 10   Safety, Health and Wellbeing 20   Working with Suppliers 32  
  Animal Research 12   Diversity 23   Integrating CR around the World 33  
  Clinical Trials