Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, the information for the 20092010 Form 20-F of AstraZeneca PLC (“AstraZeneca” or the “Company”) set out below is being incorporated by reference from the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated and submitted on March 25, 2010.April 28, 2011.
References below to major headings include all information under such major headings, including subheadings, unless such reference is a reference to a subheading, in which case such reference includes only the information contained under such subheading. Graphs and tabular data are not included unless specifically identified below. Photographs are also not included.
In addition to the information set out below, the information set forth under the headings “Cautionary statement regarding forward-looking statements”, “Inclusion of reported performance, coreCore financial measures and constant exchange rate growth rates”, “Statements of competitive position, growth rates and sales”, “AstraZeneca websites”, “External/third party websites”, “Definitions”, “Use of terms”, “Statements of dates” and “Figures” on the inside front cover, the paragraph regarding trade marks of the AstraZeneca group on the inside back cover, “Cross-reference to Form 20-F” on page 205 and “Glossary” on pages 206217 to 207,219, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
Not applicable.
Not applicable.
The information (including graphs and tabular data) set forth under the headings “Financial Statements—Notes to the Financial Statements—Note 20—Share capital of the Company” on pages 153 and 154, “GroupGroup Financial Record” on page 193204 and the first table that appears under “Additional Information—Shareholder Information”Information—AstraZeneca PLC share listings and prices” on page 199,211, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference. The selected financial data incorporated by reference herein is derived from audited financial statements of the Company and its consolidated entities, prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union and as issued by the International Accounting Standards Board, included in the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010.April 28, 2011.
B. Capitalization and Indebtedness
Not applicable.
C. Reason for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
On March 23, 2010, the US healthcare reform bill was signed into law by President Obama. For further discussion as to the proposed US healthcare reforms, please see the information set forth under the heading “—Principal risks and uncertainties” on the pages referenced above of the Company’s “Annual Report and Form 20-F Information 2009”.
ITEM 4 -4. INFORMATION ON THE COMPANY
A. History and Development of the Company
The information (including tabular data) set forth under the headings “Additional Information—Corporate Information—History and development of the Company” on page 204, “Directors’ Report—Performance—Resources, Skills216, “Business Review—Delivering our strategy—Research and Capabilities—Development—Our resources” on pages 2529 to 30, “—Delivering our strategy—Supply and 32, “Directors’ Report—Reviews—Manufacturing—Our resources” on page 35, “Business Review—Financial Review—Financial position including cash flow and liquidity – 2009—Property, plant and equipment” and “—Cash flow” on pages 39 and 41, respectively, “Directors’ Report—Reviews—Financial Review—Financial position, including cash flow and liquidity – 2008—Property, plant and equipment”, “—Cash flow” and “—2010—Investments, divestments and capital expenditure” on pages 43, 44 and 44, respectively,page 86, “Financial Statements—Notes to the Financial Statements—Note 7—Property, plant and equipment” on page 139153 and “—Note 22—Acquisitions of business operations” on pages 154167 to 156,168, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
B. Business Overview
The information (including graphs and tabular data) set forth under the headings “Introduction—“Overview—Our year in brief” on pages 24 to 3, “Directors’ Report—Performance”5, “—Chairman’s Statement” on pages 126 to 35 and7, “—Reviews”CEO’s Review” on pages 508 to 78,9, “—Our strategy and performance” on pages 10 to 21, “Business Review” on pages 24 to 77, “Additional Information—Development Pipeline” on pages 196206 to 198”210”, “Financial Statements—Notes to the Financial Statements —Note 1—Product revenue information” on page 133, and147, “—Note 6—Segment Information” on pages 137151 to 138152, and “Statements of competitive position, growth rates and sales” on the inside front cover, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
Restructuring InitiativesEuropean Commission approvals FLUENZ for prevention of seasonal influenza in children
As disclosed in the information set forth under the headings referenced above,On February 1, 2011 the Company plansannounced that the European Commission (EC) has granted marketing authorization to implement certain restructuring initiativesFLUENZ Influenza Vaccine (Live Attenuated, Nasal), a nasally administered live attenuated influenza vaccine, for prevention of seasonal influenza for children 24 months to less than 18 years of age. This decision follows the positive opinion from the Committee for Medicinal Products for Human Use (CHMP) on October 22, 2010 and is applicable to the 27 Member States and the 3 European Economic Area countries of the European Union.
It is expected that the FLUENZ vaccine will be initially available in its Researchselect European markets for the 2012-13 influenza season. The EC decision and Development (“R&D”) organizationCHMP positive opinion were reached after a review of data from 201073 global clinical studies and US post-marketing studies of more than 141,000 subjects conducted in 38 countries. Study objectives included clinical safety and tolerability, clinical efficacy and effectiveness, and immunogenicity.
US FDA assigns new PDUFA date for BRILINTA
On February 4, 2011 the Company announced that the US Food and Drug Administration (FDA) has acknowledged receipt of the Company’s reply to the Complete Response Letter (CRL) for the ticagrelor New Drug Application (NDA). Accordingly, the agency has accepted AstraZeneca’s resubmission of the ticagrelor NDA, categorized it as a Class 2 resubmission to the CRL, and set a new Prescription Drug User Fee Act (PDUFA) date of July 20, 2011.
The FDA issued the CRL on December 16, 2010. On January 21, 2011, AstraZeneca announced it had submitted the requested supplementary analyses as part of its ongoing restructuring programs. These R&D initiatives are designed to achieve material efficiency savings in R&D, which will partially mitigate the increase in R&D investment that would be required as projectsCRL response. AstraZeneca remains confident in the current pipelineNDA submission for ticagrelor and will continue working with the FDA to progress totowards completing the more resource intensive, later phasesreview of development.the NDA for ticagrelor.
Through its previously announced restructuring programs,AstraZeneca halts Phase III trial of ZIBOTENTAN in non-metastatic castrate resistant prostate cancer
On February 7, 2011 the Company had realized annualized benefitsannounced that the phase III ENTHUSE Study 15, studying zibotentan monotherapy in patients with non-metastatic castrate resistant prostate cancer (CRPC), will be stopped following the results of US $1.6 billionan early efficacy review by the end of 2009, which are expectedIndependent Data Monitoring Committee. The decision was made after this review indicated that zibotentan monotherapy was unlikely to growmeet its primary efficacy endpoints (progression free survival and overall survival) and therefore unlikely to approximately US $2.4 billion by the end of 2010. These programs have involved job reductions of 12,600 positions and, to the end of 2009, have resulted in the incurrence of US $2.5 billion in restructuring costs.
benefit patients with non-metastatic CRPC.
Through the Company’s next phase of restructuring plans (which includes the R&D initiatives, as well as completion of previously announced programs and some additional initiatives in supply chain, selling, general and administration), it expects to realize a further US $1.9 billion in estimated annual benefits by the end of 2014. Of this, the R&D initiatives are expected to result in approximately US $1 billion of annual savings, of which 50% is estimated to be cost savings and the other 50% cost avoidance.
The Company expects to incur restructuring costs of US $2.0 billion for the next restructuring phase, of which US $1 billion is estimated to be the cost of implementation of the R&D initiatives (approximately 60% of which is estimated to be cash costs).
The Company’s next phase of restructuring, when fully implemented, may involve up to an additional 10,400 reductions in job positions. Based on preliminary estimates, approximately 3,500 of these 10,400 positions may be affected by the implementation of the R&D initiatives, although after taking account of positions retained and
relocated
AstraZeneca felt it was prudent to other sites, investment in new skills and capabilities and further expansion of Biologics activities, the net reduction due to these initiatives may fall to approximately 1,800 positions.
Results of Horizon Study Evaluating RECENTIN
On March 8, 2010, the Company announced the top-line results of a Phase II/III study evaluating RECENTIN (cediranib) compared with Avastin (bevacizumab) in patients with first-line metastatic colorectal cancer (mCRC). This study, HORIZON III, assessed the efficacy of cediranib compared with bevacizumab, both in combination with chemotherapy. Clinical activity was observed in the cediranib arm of the study and there was no statistically significant difference between treatment armstake an early view on the efficacy endpoints examined. However,progress of Study 15 following the efficacyannouncement in September 2010 that ENTHUSE Study 14, evaluating zibotentan monotherapy, did not meet the pre-specified criteria forshow a significant improvement in the primary endpoint of non-inferiorityoverall survival in progression-free survival.patients with metastatic CRPC.
The spectrumStudy 15 is part of adverse events associated with cediranibthe Phase III clinical trial program, ENTHUSE, which was broadly consistent with previous studies. HORIZON III continues with ongoing collection of overall survival data.
This is the first of two pivotal studies of cediranib in first-line mCRC. The other study, HORIZON II, is assessingdeveloped to evaluate the efficacy and safety of cediranib combinedzibotentan in extending survival in men with CRPC. The discontinuation of Study 15 concludes the zibotentan monotherapy program in CRPC. The full data from Study 15 will be published in due course. ENTHUSE Study 33 is a trial using zibotentan in combination with standard chemotherapy vs. chemotherapy alone,in a more advanced metastatic CRPC setting. This trial will continue and datafull results are expected in the coming months. Results from both studies will determine the clinical utility, if any, for cediranib in colorectal cancer and decisions regarding regulatory filing. Data from both of these studies will be submitted to a forthcoming medical meeting in the second half of 2010.2011.
ResultsAstraZeneca and Targacept initiate Phase IIB clinical trial of a Phase III study with cediranib in treating recurrent glioblastoma are also expected in the first half of 2010. Exploratory evaluations of cediranib in other tumors are also ongoing.
Update on the Company’s Arrangements with Merck
Information on the Company’s arrangements with Merck & Co., Inc. (“Merck”) is set forth under the heading “Financial Statements—Notes to the Financial Statements —Note 25—Arrangements with Merck” on pages 166 to 168 of the Company’s “Annual Report and Form 20-F Information 2009” includedTC-5214 as exhibit 15.1 to this Form 20-F dated March 25, 2010, which is incorporated by reference. Capitalized terms used below and not defined have the meanings ascribed to them in Note 25.“switch” monotherapy treatment for MDD
On March 1, 2010,February 7, 2011 the Company and Targacept, Inc. announced the enrolment of the first patient in the Phase IIb clinical trial of TC-5214, a nicotinic channel blocker, as a “switch” monotherapy treatment for patients with major depressive disorder (MDD) who do not respond adequately to initial antidepressant therapy. This study is in addition to the companies’ Phase III RENAISSANCE program for TC-5214 as an adjunctive treatment for MDD. The RENAISSANCE program is designed to support an NDA filing in the US planned for the second half of 2012 and a Marketing Authorization Application (MAA) filing in Europe planned for 2015. AstraZeneca and Targacept are co-developing TC-5214.
In the Phase IIb study, patients with MDD who do not respond adequately, based on predefined criteria, to initial open label treatment with one of six commonly used SSRI or SNRI antidepressants will be switched to receive either one of two fixed doses of TC-5214, the active control duloxetine or placebo. Dosing in this double blind phase of the study is twice daily for eight weeks. The primary outcome measure for the study is change from double-blind baseline at the end of the dosing period for TC-5214 on the Montgomery-Åsberg Depression Rating Scale as compared to placebo. The study is projected to enrol approximately 350 patients into the double blind phase from approximately 75 centers worldwide.
ONGLYZA US label update provides further evidence regarding use in renally impaired adults with Type 2 diabetes
On February 23, 2011 the Company and Bristol-Myers Squibb Company announced that under the provisionsFDA has approved the inclusion of data from two clinical studies in an update to the ONGLYZA (saxagliptin) US Prescribing Information for adult type 2 diabetes patients.
The renal study investigated the safety and efficacy of ONGLYZA in patients with moderate to severe renal impairment or end-stage renal disease (ESRD). The 12-week data showed that ONGLYZA 2.5 mg once daily significantly improved glycosylated hemoglobin (HbA1c) from baseline compared to placebo when added to patients’ current diabetes treatment. In patients with ESRD, ONGLYZA and placebo showed numerically comparable reductions in HbA1c. This finding is inconclusive because the trial was not adequately powered to show efficacy within specific subgroups of renal impairment. The incidence of adverse events was similar between ONGLYZA and placebo.
The data from a separate 52-week study comparing ONGLYZA to titrated glipizide in patients with inadequate glyceamic control on metformin therapy plus diet and exercise showed that ONGLYZA plus metformin provided similar HbA1c reductions from baseline. This conclusion may be limited to patients with baseline HbA1c comparable to those in the trial. ONGLYZA plus metformin also resulted in significantly less confirmed hypoglycaemia, as well as weight loss compared to weight gain versus titrated glipizide plus metformin.
ONGLYZA is indicated as an adjunct to diet and exercise to improve blood sugar (glyceamic) control in adults with type 2 diabetes mellitus in multiple clinical settings. ONGLYZA should not be used for the treatment of type 1 diabetes or for the treatment of diabetic ketoacidosis (dangerously high levels of ketones in the blood or urine).
If used with an insulin secretagogue such as a sulfonylurea, a lower dose of the agreements relatinginsulin secretagogue may be required to reduce the restructuringrisk of the joint venture in the US between the Company and Merck (the “Agreements”), the Company has notified Merck that it will exercise the First Option related to the relinquishmenthypoglycaemia. There have been no clinical studies establishing conclusive evidence of Merck’s rights over the products not covered by the Partial Retirement (which occurred in March 2008),macrovascular risk reduction with ONGLYZA or any other than Nexium and Prilosec and the right to receive contingent payments in respect of the authorized generic version of felodipine. Products covered by the First Option include Entocort, Atacand and Plendil, and certain products still in development, including Brilinta, AZD3355, AZD6765 and AZD2327. The Company expects to consummate this option in April 2010, which will result in the payment to Merck of the Appraised Value of US $647 million. As previously disclosed, in accordance with the Agreements, in 2008 a third party appraisal resulted in a calculation of the Appraised Value, being the net present value of the future contingent payments in respect of all agreement products not covered by the Partial Retirement, other than Prilosec and Nexium. Upon consummation of the First Option, contingent payments will cease on the products covered by the First Option. The Company made contingent payments in respect of the products included in the First Option of US $47 million in 2009. Merck’s continuing contingent payment interest in respect of the authorized generic version of felodipine is the result of Ranbaxy Pharmaceuticals, Inc. becoming the exclusive US distributor of this product. Such contingent payments will continue for the duration of this arrangement.
Under the Agreements a Second Option exists whereby the Company has the option to repurchase Merck’s interests in Prilosec and Nexium in the US. Now that the Company has exercised the First Option, the Second Option is exercisable by the Company in 2012, or in 2017, or if combined annual sales of the two products fall below a minimum amount. The Company’s consummation of the Second Option will end the contingent payments in respect of Prilosec and Nexium and will effectively end the Company’s relationship with, and obligations to, Merck (other than some residual manufacturing arrangements). The exercise price for the Second Option is the net present value of the future annual contingent payments on Prilosec and Nexium as determined at the time ofantidiabetic drug.
exercise. The Company made contingent paymentsONGLYZA becomes first DPP4 inhibitor available for use in respect of Prilosec and Nexium amounting to US $726 millionEurope in 2009.
Consummation of the First Option will give rise to additional amortization expense, associatedType 2 Diabetes patients with intangible assets related to relief from contingent payments to Merck for products covered by the First Option, in the range of US $10 million to US $45 million per annum charged to Cost of Goods Sold, with the amount of the charge dependent on the launch status of the covered pipeline compounds. A further amortization expense of approximately US $60 million per annum will be charged to SG&A, related to the ability to exploit these products and to exploit other opportunities in the Cardiovascular and Neuroscience therapy areas that the Company was previously prevented from doing by Merck’s interest in these products. For the purposes of calculating Core financial measures, the Company will exclude only the amortization expense related to therapy area intangibles (i.e., that charged to SG&A) from the Core financial measures calculations.
AstraZeneca and Rigel Pharmaceuticals Sign Worldwide License Agreement for Fostamatinib Disodiummoderate or severe renal impairment
On February 16, 2010,March 4, 2011 the Company and Rigel Pharmaceuticals, Inc. (“Rigel”)Bristol-Myers Squibb Company announced an exclusive worldwide license agreementthat the European Commission has approved a label update for ONGLYZA® (saxagliptin) in the treatment of adults with type 2 diabetes who have moderate or severe renal impairment. The approved dosage for the global development and commercialization of fostamatinib disodium (R788), Rigel’s late-stage investigational product for rheumatoid arthritis (“RA”) and additional indications. Fostamatinib disodium, which has completedpatient group is a comprehensive Phase II program, is the furthest developed oral Spleen Tyrosine Kinase (“Syk”) inhibitor being evaluated for RA. Inhibiting Syk is thought to block the intracellular signaling of various immune cells implicated in the destruction of bone and cartilage which is characteristic of RA.new once-daily 2.5 mg dose.
OnceONGLYZA will be the agreementfirst dipeptidyl peptidase-4 (DPP-4) inhibitor in Europe available for type 2 diabetes patients with moderate or severe renal impairment. ONGLYZA is effective, the Company will make an upfront paymentindicated in adult patients with type 2 diabetes mellitus to Rigel of US $100 millionimprove glycaemic control in combination with up to an additional US $345 million payable if specified development, regulatorymetformin, sulphonylurea, or thiazolidinedione, when each treatment alone, with diet and first commercial sale milestones are achieved. Rigel will also be eligible to receive up to an additional US $800 million of specified sales-related milestone payments if the product achieves considerable levels of commercial success, as well as significant stepped double-digit royalties on net sales worldwide. The Company is responsible for all development, regulatory filings, manufacturing and global commercialization activities in all licensed indications under the contract. Effectiveness of the agreement is contingent on expiration or termination of the waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.exercise, does not provide adequate glycaemic control.
The Company will design a global phase III program, anticipatedThis label update was granted on the basis of clinical data submitted to begin in the second half of 2010, with the goal of filing new drug applications with the US Food and Drug Administration (the “FDA”) and the European Medicines Agency (EMEA)from a 12-week, multi-centre, randomized, double-blind, placebo-controlled study to evaluate the treatment effect of ONGLYZA 2.5 mg once daily compared with placebo in 2013. Fostamatinib disodium is being developed as a next generation oral RA therapy170 patients with Type 2 diabetes and renal impairment (creatinine clearance [CrCl] <50 mL/min). In this study, 98.2% of the patients were treated with other antihyperglycaemic medication. The results of the study, which are described in the Summary of Product Characteristics (SmPc), demonstrated that ONGLYZA 2.5 mg was safe and effective, compared with placebo, in adults with type 2 diabetes who have failedmoderate or severe renal impairment.
AstraZeneca to respond adequatelydiscontinue production of PULMICORT ® pMDI
On March 7, 2011 the Company announced that it will discontinue the production of PULMICORT® (budesonide) 100 and 200 µg/dose HFA pMDI (pressurized metered dose inhaler) due to complex manufacturing issues related to technical aspects of the device, which prevents the ongoing manufacture of the product. This issue is not related to the active ingredient, budesonide, or any other AstraZeneca product.
The manufacturing decision took effect immediately; however, patients can continue using the PULMICORT pMDI 100 and 200 µg strength until their current supply is finished.
PULMICORT pMDI is manufactured using product-specific processes and components, the combination of which is not used with any other AstraZeneca respiratory products; therefore, this is a traditional disease modifying anti-rheumatic drug (DMARD)unique issue to PULMICORT pMDI.
AstraZeneca is working closely with the appropriate regulatory authorities and healthcare professionals (HCPs), and is informing manufacturers of similar asthma medications, where appropriate, to ensure all patients continue to receive the appropriate alternative treatment.
Other AstraZeneca respiratory products, including PULMICORT® Turbuhaler®, PULMICORT® Respules® and PULMICORT® Flexhaler® are not affected because they use different devices or device components. Other AstraZeneca pMDI products such as methotrexate, where a TNF biologic add-on treatment would currently be considered. Under the terms of the agreement, the Company willSYMBICORT® budesonide/formoterol fumarate dihydrate) pMDI and VANNAIR© (budesonide/formoterol) are also receive exclusive rights to Rigel’s portfolio of oral Syk inhibitors, as well as for additional indications for fostamatinib disodium beyond RA.not affected.
FDA Approves New Indicationaccepts NDA for CRESTORDapagliflozin for treatment of Type 2 diabetes
On February 9, 2010,March 8, 2011 the Company and Bristol-Myers Squibb Company announced that the approvalFDA has accepted for review an NDA for dapagliflozin, an investigational compound for the treatment of adults with type 2 diabetes mellitus. An MAA for dapagliflozin has also been validated by the European Medicines Agency (EMA). The NDA and MAA submissions for dapagliflozin were filed in December 2010. The PDUFA goal date for the FDA of CRESTOR (rosuvastatin calcium) to reduce the risk of stroke, myocardial infarction (heart attack) and arterial revascularization procedures in individuals without clinically evident coronary heart disease but with an increased risk of cardiovascular disease (“CVD”) based on age (men ≥50 and women ≥60), high-sensitivity C-reactive protein (hsCRP) ≥ 2 mg/L, and the presence of at least one additional CVD risk factor, such as hypertension, low HDL-C, smoking, or a family history of premature coronary heart disease.is October 28, 2011.
The US and European submissions included data of up to two years in duration from a global development program involving approximately 6,000 individuals in 40 clinical studies. In accordance with FDA approval was based onguidelines, the US application also includes data fromassessing the JUPITER (Justification for the Usecardiovascular safety of statinsdapagliflozin in Primary prevention: an Intervention Trial Evaluating Rosuvastatin) study which evaluated the impact of CRESTOR 20 mg on reducing major cardiovascular (CV) events in a previously unstudied population. In JUPITER, CRESTOR significantly reduced the relative risk of heart attack by 54%, stroke by 48%, and arterial revascularization by 46% comparedadults with placebo.
type 2 diabetes.
AstraZeneca initiates phase III clinical program evaluating NKTR-118 for treatment of opioid-induced constipation
On March 15, 2011 the Company announced enrolment of the first patient in the Phase III clinical program for NKTR-118, an oral peripherally-acting opioid antagonist being investigated for the treatment of opioid-induced constipation. The Phase III clinical program is designed to investigate the safety and efficacy of NKTR-118 as a medicine to relieve opioid induced constipation, a common side effect of prescription opioids when used for chronic pain management. NKTR-118 is part of the exclusive worldwide license agreement announced on September 21, 2009 between AstraZeneca and Nektar Therapeutics.
The Phase III clinical program will consist of two 12-week, randomized, placebo-controlled efficacy studies (with approximately 630 randomized patients each) and an open-label, randomized, long-term safety study with a “usual care” comparator arm. The 12-week efficacy studies will compare response rate among placebo and two different doses of NKTR-118 with primary endpoint at 4 weeks. There is a three month safety extension following one of the two 12-week studies.
The long-term safety study will include patients from the 12-week treatment in the efficacy studies, as well as new patients not previously enrolled. All patients will be randomly assigned to open-label treatment of either NKTR-118 or physician’s choice (usual care) of laxative regimen. Safety assessments will also be collected throughout the trials.
The first regulatory filings based on the program are planned for 2013.
FDA approves orphan drug vandetanib
On April 7, 2011 the Company announced that the FDA has approved the orphan drug vandetanib for the treatment of medullary thyroid cancer that cannot be removed by surgery or that has spread to other parts of the body. Vandetanib is a kinase inhibitor indicated for the treatment of symptomatic or progressive medullary thyroid cancer in patients with unresectable (non-operable) locally advanced or metastatic disease.
C. Organizational Structure
The information (including tabular data) set forth under the headings “Directors’“Corporate Governance—Corporate Governance Report—Corporate Governance—Business Organisation and Corporate Governance—Other matters—Subsidiaries and principal activities” on page 98117 and “Financial Statements—Principal Subsidiaries” on page 186,197, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
D. Property, Plants and Equipment
The information (including tabular data) set forth under the headings “Directors’ Report—Reviews—“Business Review—Delivering our strategy—Research and Development—Our resources” on pages 29 to 30, “—Delivering our strategy—Supply and Manufacturing—Our resources” on page 35, “Business Review—Financial Review—Financial position including cash flow and liquidity – 2009—2010—Property, plant and equipment” and “—Financial position including cash flow and liquidity – 2008—2009—Property, plant and equipment”, on pages 3985 and 43,89, respectively, “Directors’ Report—Corporate“Corporate Governance—Risk—Principal risks and uncertainties—Legal, regulatory and compliance risks—Environmental/occupational health and safety liabilities” on page 85,102, “Financial Statements—Notes to the Financial Statements—Note 7—Property, plant and equipment” on page 153, “—Note 25—Commitments and contingent liabilities—Environmental costs and liabilities” on page 168, “—Note 7—Property, plant180 and equipment” on page 139 and ‘Additional“Additional Information—Corporate Information—Articles—Property” on page 204,216, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
ITEM 4A -4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5 -5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The information (including graphs and tabular data) set forth under the headings “Directors’ Report—Performance—Business Environment—World pharmaceutical markets” on page 13, “Directors’ Report—Reviews—“Business Review—Financial Review” on pages 3678 to 49, “—Reviews—93, “Business Review—Geographical Review” on pages 5070 to 54, “—Reviews—74, “Business Review—Therapy Area Review—Sales by Therapy Area” (comprising(consisting of tabular data only)data) on page 55, “—Reviews—50,“—Therapy Area Review—Our financial performance” (comprising(consisting of tabular data only)data) on pages 53, 57, 61, 63, 66, 6959, 62, 65 and 72,68, “—Reviews—Therapy
Area Review—Financial performance 2009/2008”2010/2009” on pages 59, 61, 64, 67, 7055, 57, 60, 63, 66 and 74, “Directors’ Report—Performance—Resources, Skills and Capabilities—69, “Business Review—Other Businesses—Our financial performance” (consisting of tabular data) on page 75, “Business Review—Delivering our strategy—Research and Development” on pages 2226 to 27, “Directors’30, “Corporate Governance—Corporate Governance Report—CorporateBusiness organization—Portfolio Investment Board (PIB)” on page 116, “Corporate Governance—Risk—Principal risks and uncertainties—Commercialization and business execution risks—Competition, price controls and price reductions” on page 83,pages 99 to 100, “Financial Statements—Notes to the Financial Statements—Note 14—Interest-bearing loans and borrowings” on page 144,158, “—Note 15—Financial risk management objectives and policies” on pages 144 to 146, “—Note 16—Financial instruments” on pages 146158 to 152,161, “—Note 19—Capital and reserves—Other reserves” on page 153166, “—Note 23—Financial risk management objectives and policies” on pages 168 to 172 and “—Note 25—Commitments and contingent liabilities” on pages 166178 to 184,195, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
On March 23, 2010, the US healthcare reform bill was signed into law by President Obama. Developments in Legal Proceedings
For further discussion as toinformation in respect of material legal proceedings in which the proposed US healthcare reforms,Company is currently involved, including those discussed below, please see the information set forth under the heading “—Competition, price controls“Financial Statements—Notes to the Financial Statements—Note 25—Commitments and price reductions”contingent liabilities” on page 83 referenced abovepages 178 to 195 of the Company’s “Annual Report and Form 20-F Information 2009”.
AstraZeneca Reaches Agreement with UK Tax Authorities over Transfer Pricing
Subsequent to approval of the Company’s financial statements for the year ended December 31, 2009 on January 28, 2010, on February 23, 2010 AstraZeneca entered into an agreement with HM Revenue & Customs in the UK (“HMRC”) to settle a long-running transfer pricing dispute and certain other outstanding UK tax matters. The material elements of the transfer pricing dispute are set forth under the headings “Directors’ Report—Reviews—Financial Review—Critical accounting policies and estimates—Taxation” on pages 48 and 49 and “Financial Statements—Notes to the Financial Statements —Note 25—Tax” on page 184, in each case of the Company’s
“Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010, incorporated by reference.
The settlement will resultApril 28, 2011. Unless noted below or in the Group paying £505 million to resolve all claims made by HMRC in relation to the transfer pricing dispute for the 15-year period from 1996 to the end of 2010. Of this, £450 million (US $720 million at December 31, 2009 exchange rates) is estimated for accounting purposes as being in respect of periods prior to December 31, 2009. As a result of this settlement, the joint referral of this issue to the UK Tax Court by the Company and HMRC, as disclosed in Note 25 of the Financial Statements in Company’s “Annual’s “Annual Report and Form 20-F Information 2009”2010”, no provisions have been established in respect of the claims discussed below.
Atacand
Patent litigation – Canada
As previously disclosed, in December 2010, AstraZeneca received a second Notice of Allegation from Teva Canada Limited (Teva) in respect of Canadian Atacand substance patent no. 2,040,955 (the ‘955 patent) and formulation patent no. 2,083,305 (the ‘305 patent) listed on the Canadian Patent Register for Atacand. Teva has confirmed it will await the expiry of the ‘955 patent. AstraZeneca did not commence an application in response.
In March 2011, AstraZeneca received a Notice of Allegation from Apotex Inc. (Apotex) in respect of the ‘955 and ‘305 patents listed on the Canadian Patent Register for Atacand. Apotex has confirmed it will await the expiry of the ‘955 patent. AstraZeneca did not commence an application in response.
Patent litigation – Brazil
As previously disclosed, in October 2010, AstraZeneca filed an infringement action with a request for an interlocutory injunction against Sandoz do Brasil Industria Farmaceutica Ltda (Sandoz) in the Central Court of São Paolo. The Court denied the request for an interlocutory injunction. AstraZeneca appealed the decision and in February 2011, the Court of Appeal upheld the lower court’s decision to deny the request for an interlocutory injunction. The main infringement action continues.
Patent litigation – EU
As previously disclosed, in Portugal, a request was filed with the Lisbon Administrative Court of First Instance in December 2009 seeking a preliminary injunction to suspend the marketing authorizations for generic candesartan cilexetil granted to Sandoz Farmacêutica Limitada (Sandoz). The Court denied the preliminary injunction. The decision was appealed and the Court of Appeal ordered the Court of First Instance to hold a hearing. After a hearing in February 2011 the Lisbon Administrative Court of First Instance granted the request for a preliminary injunction and ordered the suspension of the marketing authorizations granted to Sandoz until October 24, 2012, i.e. the date of expiry of the supplementary protection certificate. This decision can be appealed.
Atacand Plus (candesartan cilexetil/hydrochlorothiazide)
Patent litigation – Canada
As previously disclosed, in April 2010, AstraZeneca received a Notice of Allegation from Pharmascience Inc. (PMS) in respect of the Atacand Plus formulation patent no. 2,083,305 (the ‘305 patent) listed on the Canadian Patent
Register for Atacand Plus. AstraZeneca commenced a proceeding in response in June 2010. In February 2011, AstraZeneca discontinued its application.
As previously disclosed, in December 2010, AstraZeneca received a Notice of Allegation from PMS in respect of the Atacand Plus combination patent no. 2,125,251 (the ‘251 patent). AstraZeneca commenced an application in response in February 2011.
In January 2011, AstraZeneca received two Notices of Allegation from Teva Canada Limited (Teva) in respect of the ‘251 and the ‘305 patents. Teva has agreed to await the expiry of the ‘955 patent. AstraZeneca commenced applications in response in March 2011.
Crestor (rosuvastatin calcium)
Patent litigation – US
US Patent No. RE37,314 (the ‘314 patent)
As previously disclosed, in June 2010, the US District Court for the District of Delaware found the ‘314 patent valid and enforceable and infringed by the eight generic defendants. The defendants appealed the decision to the Court of Appeals for the Federal Circuit. AstraZeneca and Shionogi Seiyaku Kabushiki Kaisha filed a comprehensive responsive brief in March 2011. The defendants filed reply briefs and briefing is now complete. A date for oral argument has not been set.
505(b)(2) New Drug Application for rosuvastatin zinc tablets (the ‘314 patent) and US Patent Nos. 6,858,618 (the ‘618 patent) and 7,030,152 (the ‘152 patent)
As previously disclosed, in October 2010, AstraZeneca and Shionogi Seiyaku Kabushiki Kaisha commenced a patent infringement action in the US District Court for the District of Delaware against Watson Laboratories, Inc. (Watson) for infringement of the ‘314 patent. In March 2011, the Court entered an order based on a stipulation which precludes Watson from re-litigating the invalidity and unenforceability issues currently pending before the Federal Circuit in the Crestor appeal involving the ‘314 patent. The Court has set a case-schedule for discovery and other litigation events, including a trial date in May 2012. On April 19, 2011, in this case, AstraZeneca moved to amend the complaint to add The Brighams & Women’s Hospital as a co-plaintiff and add claims of infringement of the ‘618 and ‘152 method patents.
Abbreviated New Drug Applications for rosuvastatin calcium tablets (the ‘618 and ‘152 patents)
In 2010, AstraZeneca and The Brighams & Women’s Hospital, AstraZeneca’s licensor of the ‘152 patent (together the Plaintiffs), filed ten patent infringement actions involving Crestor in the US District Court for the District of Delaware, based on the ‘152 patent and the ‘618 patent. As previously disclosed in December 2010, the Court dismissed nine of the infringement actions for lack of subject-matter jurisdiction. In January 2011, the Plaintiffs appealed the dismissals to the Federal Circuit. The Plaintiffs also asked the District Court to stay the remaining action against Sandoz Inc. pending the outcome of the appeals. In March 2011, the Plaintiffs filed an opening brief in the Federal Circuit.
Palmetto Pharmaceuticals, LLC v. AstraZeneca Pharmaceuticals LP (Infringement Suit)
AstraZeneca Pharmaceuticals LP v. Palmetto Pharmaceuticals, LLC (Declaratory Judgment suit)
On April 5, 2011, Palmetto Pharmaceuticals, LLC (Palmetto) filed a patent infringement suit in the US District Court for the District of South Carolina asserting that AstraZeneca’s sales of Crestor induce infringement of Palmetto’s US patent no. 6,465,516 (the ‘516 patent), for which an Ex Parte Reexamination Certificate was issued on 5 April 2011.
On April 7, 2011, AstraZeneca filed a declaratory judgment action in the US District Court for the District of Delaware against Palmetto seeking a judgment of non-infringement and invalidity of Palmetto’s ‘516 patent.
On April 26, 2011, Astrazeneca filed a motion seeking dismissal or, alternatively, summary judgement of non-infringement in Palmetto’s patent infringement suit in the District of South Carolina.
Patent litigation – Canada
As previously disclosed, in February 2010, AstraZeneca received a Notice of Allegation from Pharmascience Inc. (PMS) in respect of Crestor substance patent no. 2,072,945 (the ‘945 patent) and formulation patent no. 2,313,783
(the ‘783 patent). AstraZeneca commenced an application in response in April 2010. A 4-day hearing will commence January 9, 2012.
As previously disclosed, in August 2010, AstraZeneca received a Notice of Allegation from Mylan Pharmaceuticals ULC (Mylan) in respect of the ‘945 and ‘783 patents and formulation patent 2,315,141 listed on the Canadian Patent Register for Crestor. In April 2011, AstraZeneca reached a comprehensive settlement resolving the litigation and as part of the agreement, Mylan may enter the Canadian market in April 2012, or earlier in certain circumstances.
Patent litigation – EU
In Portugal, in February and March 2011, the Appeal Court confirmed the preliminary injunctions to suspend the marketing authorizations granted to Teva Pharma Lda and Sandoz Farmaceutica Lda and dismissed the appeal. The suspension of the marketing authorizations will be withdrawn.maintained until a decision is rendered within the main administrative action.
Patent litigation – Brazil
AstraZeneca filed an administrative action against the administrative body ANVISA for a preliminary injunction for immediate suspension of the decision to grant market approval of Germed Farmacêutica Ltda’s (Germed) generic rosuvastatin and to revoke the marketing approval. The preliminary injunction was partially granted on March 4, 2011. On March 15, 2011 the preliminary injunction was dismissed by the court of first instance. AstraZeneca has appealed the decision. On March 18, 2011, AstraZeneca filed a patent infringement action against Germed with a request for a preliminary injunction. On March 31, 2011 the court denied AstraZeneca’s request. AstraZeneca appealed the decision and on April 14, 2011 the Reporting Judge of the Appeal Court rejected the request. AstraZeneca is awaiting the decision by the panel of the Appeal Court.
Iressa
Both the Osaka and Tokyo courts have issued decisions regarding the Iressa product liability litigation (the details of which have been previously disclosed). On February 25, 2011, the Osaka District Court issued its decision, dismissing one claim, and ordering AstraZeneca to pay approximately $670,000 for the remaining three claims, plus interest. AstraZeneca is appealing the Osaka decision. On March 23, 2011, the Tokyo District Court issued its decision dismissing one Iressa claim and ordering AstraZeneca and the Japanese Ministry of Health, Labour and Welfare to pay approximately $192,000 on the remaining two claims, plus interest. AstraZeneca is appealing the Tokyo decision.
Nexium (esomeprazole magnesium)
Patent litigation – US
Abbreviated New Drug Applications (ANDAs)
As previously disclosed, in January 2011, AstraZeneca entered into an agreement to settle the litigation with Dr Reddy’s Laboratories Ltd and Dr Reddy’s Laboratories Inc (together DRL), a prior ANDA filer. As a result of the DRL settlement and entry of a consent judgment, all of the DRL ANDA litigation was dismissed.
As to the remaining ANDA filers, as previously disclosed, in 2008, AstraZeneca received a Paragraph IV Certification notice-letter from Sandoz Inc. (Sandoz) stating that Sandoz had submitted an ANDA for approval to market esomeprazole magnesium delayed-release capsules. In 2009, AstraZeneca commenced patent infringement litigation in the US District Court for the District of New Jersey. In 2009, the Court stayed the Sandoz patent infringement litigation. In view of the settlement with DRL in January 2011, the Court referred the matter back to Magistrate Judge Bongiovanni for scheduling and further proceedings. On April 26, 2011, the magistrate judge entered an order staying for one month the case-schedule that she entered for this case on April 14, 2011.
In addition, as previously disclosed, in 2009, AstraZeneca received a Paragraph IV Certification notice-letter from Lupin Limited (Lupin) stating that Lupin had submitted an ANDA for approval to market esomeprazole magnesium delayed-release capsules. In October 2009, AstraZeneca commenced patent infringement litigation against Lupin in the US District Court for the District of New Jersey. In March 2010, the Court stayed the Lupin
patent infringement litigation. In view of the settlement with DRL in January 2011, the Court has also referred the Lupin matter back to Magistrate Judge Bongiovanni for scheduling and further proceedings.
505(b)(2) New Drug Application for esomeprazole strontium capsules
As previously disclosed, in December 2010, AstraZeneca received a Paragraph IV Certification notice-letter from Hanmi USA Inc. (Hanmi) stating that it had submitted a New Drug Application under section 505(b)(2) for FDA approval to market 20 and 40mg esomeprazole strontium capsules. Hanmi alleges non-infringement or invalidity of 11 patents listed in the FDA’s Orange Book with reference to Nexium. AstraZeneca commenced a patent infringement action against Hanmi in the United States District Court for the District of New Jersey in February 2011.
Patent litigation – Canada
As previously disclosed, AstraZeneca commenced a patent infringement action against Apotex Inc. (Apotex) in October 2010. Trial is set to begin in September 2013. In response to indications in the Canadian market that Apotex launched its generic esomeprazole magnesium product on March 7, 2011, AstraZeneca brought a motion for interim and interlocutory injunctions on March 11, 2011 to prevent such sales pending determination of the patent infringement action between the parties. On April 19, 2011 the Canadian Federal Court conducted a hearing on the motion. The Court reserved judgment.
In March 2011, Apotex served AstraZeneca with a claim for damages pursuant to Section 8 of the Patented Medicines (Notice of Compliance) Regulations. Astrazeneca is considering its response.
Patent Litigation – EU: 10-year countries
In the UK, Consilient Health Limited (Consilient) was granted approval for a generic esomeprazole product manufactured by Krka, d.d., Novo Mesto (Krka) in Slovenia. AstraZeneca initiated infringement proceedings against both companies in September 2010. Consilient and Krka have agreed not to launch their product pending the outcome of the main infringement case and AstraZeneca has undertaken to be liable for losses of the defendants and third parties if the injunction is lifted at a later date. The trial will start on January 23, 2012.
In the UK, in October 2010 AstraZeneca was served an invalidity case in which Ranbaxy (UK) Ltd (Ranbaxy UK) claimed that the Nexium esomeprazole magnesium patent (EP 1020461) and the esomeprazole magnesium trihydrate patent (EP 0984957) are invalid in the UK. Ranbaxy UK further requested the court to confirm that its generic esomeprazole product does not infringe either patent if launched in the UK. In March 2011 AstraZeneca filed suit against Ranbaxy UK claiming that its generic esomeprazole product infringes the Nexium esomeprazole magnesium patent (EP 1020461). The trial of the non-infringement part will commence on June 7, 2011. The invalidity part has been stayed pending the non-infringement trial.
In Germany, in December 2010 the court rejected AstraZeneca’s request for preliminary injunctions to prevent Krka, d.d., Novo Mesto, TAD Pharma GmbH, Abz-Pharma GmbH, CT Artzneimittel GmbH, ratiopharm GmbH, Teva GmbH, Hexal AG and Sandoz Pharmaceuticals GmbH from marketing and selling generic esomeprazole products in Germany. The decision was published in March 2011. AstraZeneca has decided not to appeal.
In Italy, in the Court of Turin, EG s.p.a. (a company in the Stada group) (EG) filed a law suit in June 2010 claiming the Nexium esomeprazole magnesium patent (EP 1020461) as invalid in Italy. These proceedings are in early stages. AstraZeneca has added a counterclaim of infringement against EG and in February 2011, AstraZeneca filed a request for and received a preliminary injunction against EG. The injunction was revoked in April 2011.
In February and March 2011, in the District Court of Trieste, AstraZeneca was granted preliminary injunctions against Teva Italia s.r.l., ratiopharm GmbH, ratiopharm Italia s.r.l., Doc Generici s.r.l., Sandoz Pharmaceuticals GmbH, Sandoz s.p.a. and Mylan s.p.a. The generic companies appealed and in March 2011 the injunctions were revoked. In February and March 2011 in Milan, generic companies including Mylan s.p.a., Sandoz s.p.a., Crinos s.p.a., Ranbaxy Italia s.p.a., Zentiva ks and Zentiva Italia s.r.l. initiated preliminary proceedings for declaratory judgments of non-infringement regarding esomeprazole magnesium patent (EP 1020461). Initial hearings are scheduled for May 2011. In February in Trieste, Mylan s.p.a. filed law suits claiming the Nexium esomeprazole magnesium patent (EP 1020461) and Nexium formulation patent (EP 0984773) as invalid in Italy. Separate hearings are set for July 13, 2011 and July 15, 2011 respectively.
In France, ratiopharm GmbH and Laboratoire ratiopharm S.A. (together ratiopharm) filed a law suit against AstraZeneca in August 2010 claiming the Nexium esomeprazole magnesium patent (EP 1020461) as invalid in France. ratiopharm has since withdrawn this law suit. Ethypharm S.A. filed a law suit against AstraZeneca in August 2010 claiming the Nexium esomeprazole magnesium patent (EP 1020461) and a cloud-point formulation patent (EP 1124539) as invalid in France. The next hearing in these cases will be in June 2011. In February 2011, Mylan S.A.S. filed a law suit against AstraZeneca claiming the Nexium esomeprazole magnesium patent (EP 1020461) as invalid in France. In April 2011, AstraZeneca filed a patent infringement suit against Ethypharm S.A. for infringement of the Nexium esomeprazole magnesium patent (EP1020461) and the Nexium process patent (EP 0773940) and requested a preliminary injunction against Ethypharm S.A. A preliminary injunction hearing is scheduled for May 2011.
Patent Litigation – EU: 6-year countries
In Denmark, in 2010, the court granted AstraZeneca preliminary injunctions preventing Sandoz from continuing to sell the product based on infringement of the Nexium esomeprazole magnesium patent (EP 1020461) and the Nexium process patent (EP 0773940). The injunctions were upheld by the Appeal Court in February 2011.
In Austria, in February 2011, the court denied AstraZeneca’s request for preliminary injunction to prevent ratiopharm Arzneimittel Vertriebs-GmbH from marketing and selling generic esomeprazole magnesium product in Austria. AstraZeneca has appealed this decision.
In Finland in March 2011, AstraZeneca initiated a declaratory action requesting the District Court of Helsinki to confirm that Krka Sverige AB and ratiopharm GmbH would infringe a patent relating to esomeprazole if they were to commercialise generic esomeprazole magnesium products in Finland. AstraZeneca initiated a similar declaratory action against Ranbaxy (UK) Limited in December 2009 and the trial has been scheduled for May 25 and 26 2011.
In Spain, AstraZeneca’s request for a preliminary injunction against Sandoz Farmacéutica S.A., Bexal Farmacéutica S.A., and Acost Comercial Genericpharma, S.L. (all in the Sandoz group) was initially granted by the court but revoked in July 2010 after a hearing. AstraZeneca has appealed this ruling and awaits the appellate decision. Separately, in AstraZeneca’s main patent infringement action against Sandoz Farmacéutica S.A., Bexal Farmacéutica S.A., and Acost Comercial Genericpharma, S.L., trial is scheduled for September 2011.
In Ireland, in August 2010, AstraZeneca initiated a main action against Krka, d.d., Novo Mesto and Pinewood Laboratories Ltd claiming that the sale and marketing of their generic esomeprazole magnesium products infringes the Nexium esomeprazole magnesium patent (EP 1020461). The defendants have filed a counter action claiming that EP 1020461 is invalid in Ireland.
In Lithuania and Estonia in March 2011, the Appeal Courts upheld the interlocutory injunctions against Krka, d.d., Novo Mesto to restrain this company from commercializing generic magnesium esomeprazole product in Lithuania and Estonia.
Patent litigation – Norway
In Norway, in July 2008 Hexal AG, Sandoz AS and Sandoz A/S initiated an invalidity case regarding two esomeprazole-related patents. In December 2009, the Court of Oslo invalidated a formulation patent but upheld a substance patent related to esomeprazole. In March 2011 the Appeal Court confirmed the decision from the Court of Oslo.
Patent Proceedings
As previously disclosed, the European Patent Office (EPO) published the grant of two patents that relate to Nexium (EP 1020461) and Nexium i.v. (EP1020460) in July 2009. The period for filing Notices of Opposition to the grant of these new patents expired in April 2010. Thirteen Notices of Opposition have been filed in relation to EP 1020461 and six Notices of Opposition in relation to EP 1020460. The EPO has now issued summonses to attend oral hearing proceedings relating to both sets of oppositions. Oral proceedings relating to EP 1020461 will be held on June 7, 8 and 9, 2011. Oral proceedings relating to EP 1020460 will be held on June 30 and July 1, 2011.
Pulmicort Respules (budesonide inhalation suspension)
In January 2011, the Court of Appeals for the Federal Circuit denied Apotex Group’s petition for an en banc rehearing of their appeal of the preliminary injunction entered by the US District Court for the District of New Jersey.
In March 2011, the Court ordered the patent case against Sandoz, Inc. to be consolidated with the already consolidated actions against Breath Ltd. (now Watson Pharmaceuticals, Inc.) and the Apotex Group. A new scheduling order for the consolidated cases was subsequently entered by the Court. No trial date has been set.
Seroquel (quetiapine fumarate)
Sales and marketing practices
In March 2011, AstraZeneca completed a previously announced settlement in principle to resolve Seroquel-related consumer protection and deceptive trade practice claims under state law with 37 states and Washington, DC as part of the National Association of Attorneys General for $68.5 million in the aggregate (as to which AstraZeneca previously had established a provision).
As previously disclosed, the states of Alaska, Arkansas, Mississippi, Montana, New Mexico, South Carolina and Utah have sued AstraZeneca under various state laws generally alleging that AstraZeneca made false and/or misleading statements in connection with the marketing and promotion of Seroquel. In February 2011, the state of Utah filed an amended complaint after a federal judge had dismissed its complaint in December 2010.
In March 2011, the US Court of Appeals for the Eleventh Circuit affirmed the November 2008 dismissal by the Seroquel Multi-District Litigation (MDL) court of a putative nationwide class action lawsuit brought on behalf of all individual and non-governmental third-party payers of Seroquel, which had alleged that AstraZeneca promoted Seroquel for off-label uses and misled class members into believing that Seroquel was superior to lower-cost alternative medicines.
Product liability
As of March 31, 2011, approximately 26,085 claims have been settled in principle.
As of March 31, 2011, AstraZeneca was aware of approximately 2,600 Seroquel US product liability claims that have not been settled in principle. The majority of these remaining claims are pending in the New Jersey, New York and California state courts, although some claims are pending in a handful of other state courts and in the federal MDL.
As of March 31, 2011, legal defense costs of approximately $743 million have been incurred in connection with Seroquel-related product liability claims. As previously disclosed, AstraZeneca settled its claims against several of its insurers for a substantial part of those legal defense costs.
As previously disclosed, disputes continue with other insurers about the availability of coverage under certain insurance policies for legal defense costs and potential damages amounts. As of March 31, 2011, out of the legal defense costs of $743 million mentioned above, AstraZeneca believes that approximately $128 million is covered by these other insurance policies.
Patent litigation – Brazil
As previously disclosed, in January 2006 AstraZeneca filed a lawsuit before the Federal Courts of Rio de Janeiro seeking judicial declaration extending the term of one of its patents from 2006 to 2012. In March 2011, the Federal Courts of Rio de Janeiro denied AstraZeneca’s request for an extension. AstraZeneca has decided not to appeal.
Seroquel XR
Patent litigation – US
As previously disclosed, in December 2010, Torrent Pharmaceuticals Ltd. (Torrent) filed a Motion for Clarification and Reconsideration of the decision by the US District Court for the District of New Jersey interpreting claims of the Seroquel XR formulation patent (US patent no. 5,948,437). In February 2011, the Court denied Torrent’s motion.
As previously disclosed, in July 2010, AstraZeneca received a Paragraph IV Certification notice-letter from Osmotica Pharmaceutical Corporation (Osmotica) indicating that it was seeking approval to market generic versions of 200, 300 and 400mg Seroquel XR tablets before the expiration of US Patent No. 5,948,437 (the ‘437 patent). In August 2010, AstraZeneca filed a law suit in the US District Court for the District of New Jersey against Osmotica. In April 2011, AstraZeneca received another Paragraph IV Certification notice-letter from Osmotica indicating that it was seeking approval to market generic versions of 50 and 150mg Seroquel XR tablets before the expiration of the ‘437 patent.
As previously disclosed, in October 2010 AstraZeneca received a Paragraph IV Certification notice-letter from Mylan Pharmaceuticals Inc. (Mylan) indicating that it was seeking approval to market generic versions of 200mg Seroquel XR tablets before the expiration of the ‘437 patent. In October 2010, AstraZeneca filed a lawsuit in the US District Court for the District of New Jersey against Mylan. In April 2011, AstraZeneca received another Paragraph IV Certification notice-letter from Mylan indicating that it was seeking approval to market generic versions of 50, 150, 300 and 400 mg Seroquel XR tablets before expiration of the ‘437 patent.
Patent litigation – EU
In the UK, Teva UK Limited and Teva Pharmaceuticals Limited (together, Teva) issued revocation proceedings against AstraZeneca in December 2010. Teva claims that the formulation patent for Seroquel XR (EP 0907364) is invalid in the UK. Similar revocation actions were filed by Accord Healthcare Limited, Intas Pharmaceuticals Limited, Hexal AG and Sandoz Ltd in March and April 2011.
In Hungary, AstraZeneca was notified that Teva Pharmaceuticals Limited and Teva Gyógyszergyár Zrt (together Teva) had filed a request for nullity of the Hungarian formulation patent for Seroquel XR with the Hungarian Patent Office in January 2011. Teva claims that Hungarian patent no. 225 152 should be declared null and void. AstraZeneca is preparing its response.
In Germany, Teva Deutschland GmbH (Teva) issued revocation proceedings against AstraZeneca in February 2011. Teva claims that the formulation patent for Seroquel XR (EP 0907364) is invalid in Germany. AstraZeneca filed its response in March 2011.
Synagis (palivizumab)
As previously disclosed, this matter concerned MedImmune’s action seeking a declaratory judgment that the Queen patents owned by PDL BioPharma, Inc. (PDL) are invalid and/or not infringed by either Synagis and/or motavizumab, and that no further royalties are owed under a patent license that MedImmune and PDL signed in 1997. The matter was settled in February 2011 with PDL agreeing to pay MedImmune $92.5 million ($65 million in February 2011 and $27.5 million in February 2012). In addition, PDL agreed to the release of approximately $9 million in escrow to MedImmune. MedImmune will pay no further royalties to PDL relative to Synagis.
Vimovo (fixed-dose combination of naproxen and esomeprazole)
In April 2010, the FDA approved Vimovo for marketing in the US. Vimovo was co-developed by POZEN Inc. (Pozen) and AstraZeneca via a collaboration agreement originating in August 2006. AstraZeneca commenced marketing of Vimovo in the US in the third quarter of 2010. Seven patents are listed in the FDA’s Orange Book referencing Vimovo.
In March 2011, the FDA’s web-site reported a filing of a first Abbreviated New Drug Application (ANDA) containing Paragraph IV Certifications and seeking approval to market generic copies of the 375/20 mg and 500/20 mg doses of Vimovo.
On March 14, 2011, AstraZeneca received a Paragraph IV Certification Notice-letter in respect of Vimovo from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd. (together, DRL). DRL certified under Paragraph IV in its ANDA that US Patent No. 6,926,907 (the ‘907 patent) is invalid, unenforceable, and/or not infringed. AstraZeneca licenses the ‘907 patent from Pozen and, with a February 2023 expiry, the patent is the last expiring of the seven Orange Book listed patents. On April 21, 2011, AstraZeneca and Pozen sued DRL in the US District Court for the District of New Jersey.
Zomig (zolmitriptan)
Patent litigation – Canada
In April 2011, AstraZeneca received a Notice of Allegation from Apotex Inc. (Apotex) in respect of Canadian Zomig product-by-process patent no. 2,572,508 listed on the Canadian Patent Register for Zomig. Apotex did not address the listed 2,064,815 substance patent (the ‘815 patent), which expires in June 2011. Therefore, Apotex cannot receive a marketing approval before expiration of the ‘815 patent. AstraZeneca is evaluating the allegations.
Other Commercial Litigation
Dr. George Pieczenik v. AstraZeneca Pharmaceuticals LP, AstraZeneca LP, et al
On March 23, 2011, the District Court granted the defendants’ joint motion to dismiss the plaintiff's claims with prejudice. On March 24, 2011 the plaintiff filed a pro forma Notice of Appeal from the order granting dismissal of the patent infringement and Racketeering Institution and Corrupt Organisation Act claims and denying the motion for recusal.
Resonant Biotechnologies, LLC v. AstraZeneca LP, et al.
In April 2011, AstraZeneca LP, a number of AstraZeneca entities (collectively AstraZeneca) and multiple other entities were named in a patent infringement lawsuit filed in the United States District Court for the District of Delaware. Plaintiff purports to be the exclusive licensee of US patent no. 6,218,194 (the ‘194 Patent) which is titled “Analytical Methods And Apparatus Employing An Optical Sensor Device With Refractive Index Modulation.” Specific to AstraZeneca, Plaintiff alleges that AstraZeneca infringes the ‘194 patent “by using the Corning Epic® system”, described in the complaint as a “high-throughput label-free screening device.” Plaintiff seeks monetary relief. AstraZeneca is considering its response.
Network Signatures, Inc. v. AstraZeneca Pharmaceuticals LP
In April 2011, AstraZeneca Pharmaceuticals LP was named in a patent infringement law suit filed in the United States District Court for the Central District of California. The plaintiff purports to have title to United States Patent No. 5,511,122 (the ‘122 patent) entitled “Intermediate Network Authentication.” The plaintiff alleges that AstraZeneca’s use of “digital certificates and digital signatures implemented through the use of public key infrastructure to facilitate communication with its employees and customers” infringes the ‘122 patent. The plaintiff seeks monetary and injunctive relief. AstraZeneca is considering its response.
Other Pricing Litigation
Average Wholesale Price Litigation
In February 2011, the US District Court for the District of Massachusetts granted final approval of two previously announced settlements that resolve class action law suits brought by Massachusetts-only and multi-state classes of payers of Zoladex for $13 million and $90 million, respectively (which amounts have been paid by AstraZeneca).
340B Class Action Litigation
In March 2011, the US Supreme Court reversed a decision of the US Court of Appeals for the Ninth Circuit and held that covered entities under the 340B program do not have enforceable rights to sue as third party beneficiaries of the Pharmaceutical Pricing Agreement, thereby dismissing this case and entitling AstraZeneca, and the other defendants, to judgment as a matter of law.
Other Anti-trust Litigation and Investigations
Drug importation anti-trust litigation
As previously disclosed, in August 2004, Californian retail pharmacy plaintiffs filed an action in the Superior Court of California alleging a conspiracy by AstraZeneca and approximately 15 other pharmaceutical manufacturer defendants to set the price of drugs sold in California at or above the Canadian sales price for those same drugs and otherwise restrict the importation of pharmaceuticals into the US.
In March 2011, the Superior Court of California granted the defendants’ motion for summary judgment on grounds that the plaintiffs failed to prove their allegations of a conspiracy and that the defendants were entitled to judgment as a matter of law. In April 2011, the plaintiffs appealed the decision to the Court of Appeal of the State of California.
Other Actual and Threatened Government Investigations and Related Litigation
Foreign Corrupt Practices Act
As previously disclosed, AstraZeneca has received inquiries from the US Department of Justice and the Securities and Exchange Commission in connection with an investigation into Foreign Corrupt Practices Act issues in the pharmaceutical industry across several countries. AstraZeneca is co-operating with these inquiries and is investigating, among other things, sales practices, internal controls, certain distributors, and interactions with healthcare providers, institutions, and other government officials. AstraZeneca is investigating inappropriate conduct in certain countries, including China. AstraZeneca's investigations are ongoing and additional governmental authorities could become involved. It is not currently possible to predict the scope, duration or outcome of these matters, which could involve the payment of fines or other penalties.
Tax
Transfer pricing and other international tax contingencies
On March 28, 2011 AstraZeneca announced that HM Revenue & Customs in the UK and the US Internal Revenue Service had agreed the terms of an Advance Pricing Agreement regarding transfer pricing arrangements for AstraZeneca’s US business covering the 13 year period from 2002 to the end of 2014. The Company also announced that an agreement had been reached on a related valuation matter arising on integration of the legacy Astra and legacy Zeneca US businesses in 2000 following the global AstraZeneca merger in 1999. The provision for theUS transfer pricing disputeand related valuation matters is included ina substantial proportion of the total net accrual for transfer pricing provisionand other international tax contingencies of US $2,327$2,310 million disclosed under “Directors’ Report—Reviews—Financial Review—Critical accounting policies and estimates—Taxation” and in Note 25 ofthe heading “Financial Statements—Notes to the Financial Statements, in each caseStatements—Note 25—Commitments and contingent liabilities” on page 195 of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated April 28, 2011, incorporated by reference.
Based on the pages referenced above. The effectabove mentioned agreements, AstraZeneca now expects to pay a net amount of this settlement and developments in other$1.1 billion to resolve all US transfer pricing and related valuation matters is a reduction infor the accrual for tax contingenciesperiod from 2000 to the end of US $1942010 and $540 million which hasof provisions have been creditedreleased to incomeearnings in the first quarter of 20102011. The net amount payable of $1.1 billion reflects expected US tax payments and a total net transfer pricing provisionupdated estimates of US $2,165 million (including the US $720 million resulting from the settlement). The potential for reasonably possible additional losses has also reduced from US $575 million to US $450 million.corresponding tax refunds in other jurisdictions.
ITEM 6 -6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The information set forth under the headings “Directors’ Report—Corporate“Corporate Governance—Business OrganisationBoard of Directors and Corporate Governance—Senior Executive Team—Board of Directors at 31 December” and “—Board of Directors and Senior Executive Team—Senior Executive Team at 31 December” on pages 88106 and 89,107, and pages 90 and 91,page 108, respectively, “Directors’ Report—Corporate“Corporate Governance—Directors’ Remuneration Report—Remuneration and terms of employment for Executive Directors and other SET members—Variable performance-related remuneration—Policy on external appointments and retention of fees” on page 110128 and “—Directors’ Remuneration Report—Directors’ emoluments in 2009—2010—Directors’ remuneration-US dollars” (last sentence only) on page 113,130, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
B. Compensation
The information (including graphs and tabular data) set forth under the headings “Directors’ Report—Corporate“Corporate Governance—Directors’ Remuneration Report” on pages 101119 to 119,134, “Financial Statements—Notes to the Financial Statements—Note 23—18—Post-retirement benefits” on pages 156162 to 161,166, “—Note 24—Employee costs and share option plans for employees” on pages 161173 to 165177 and “—Note 27—Statutory and other information—Key management personnel compensation”, on page 185,196, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
C. Board Practices
The information (including tabular data) set forth under the headings “Directors’ Report—Corporate“Corporate Governance—Business OrganisationBoard of Directors and Corporate Governance—Senior Executive Team—Board of Directors at 31 December” on pages 88 and 89, “—Senior Executive Team at 31 December” on pages 90106 and 91, “—Operation of the Board”107, and page 108, respectively, “Corporate Governance—Corporate Governance Report—Leadership” on pages 92 and 93, —Board109 to 110, “—Board effectiveness” on pages 110 to 111, “—Board Committee membership” (including(consisting of tabular data) on page 112, “—Audit Committee” on pages 113 to 114, “—Remuneration Committee”, “—Nomination and Governance Committee” and “—Directors”Science Committee”, each on page 93,115, “—Operation of Board Committees”Business organization—Compliance and Group Internal Audit (GIA)” on pages 94 to 96, “—Principal corporate governance requirements—UK corporate governance requirements” on pages 96 to 97116 and “—US corporate governance requirements” on page 97, “Directors’ Report—Corporate117, “Corporate Governance—Directors’ Remuneration Report—Variable performance-related remuneration—Service contracts” and “—Non-Executive Directors”, each on page 110,128, and “—Directors’ Remuneration Report—Audit—Details of Executive Directors’ service contracts at 31 December 2009”2010” and “—Non-Executive Directors’ terms and conditions” (consisting of tabular data), each on page 111,129, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
D. Employees
E. Share Ownership
The information (including graphs and tabular data) set forth under the headings “Financial Statements—Notes to the Financial Statements—Note 24—Employee costs and share option plans for employees” on pages 161173 to 165, “Directors’177, “Corporate Governance—Corporate Governance Report—CorporateOther matters—Directors’ shareholdings” on page 117, “Corporate Governance—Directors’ Remuneration Report—Directors’ interests in shares” on pages 115132 to 119,134, and “Additional Information—Shareholder Information—Major shareholdings” on pages 200 and 201 and “—Options to purchase securities from registrant or subsidiaries” on page 201,213, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
A. Major Shareholders
The information set forth under the heading “Additional Information—Shareholder Information—Major shareholdings” (including tabular data) on pages 200 and 201212 to 213 of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
B. Related Party Transactions
The information set forth under the headings “Financial Statements—Notes to the Financial Statements—Note 27—Statutory and Other Information—Related party transactions” on page 185196 and “Additional Information—Shareholder Information—Related party transactions” on page 201,213, in each case of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
C. Interests of Experts and Counsel
Not applicable.
A. Consolidated Statements and Other Financial Information
The information (including graphs and tabular data) set forth under the headings “Directors’ Report—Reviews—Financial Review—Capitalisation and shareholder return—Dividend and share re-purchases” on page 42, “Directors’ Report—Corporate Governance—Business Organisation and Corporate Governance—Other matters—Distributions to shareholders and dividends for 2009” on page 98, “Financial Statements” on pages 124138 to 185196 (including the information set forth under the subheading “Notes to the Financial Statements”), “Financial Statements—Principal Subsidiaries” on page 186, “Group197, “Financial Statements—Group Financial Record” on page 193, and204, “Additional Information—Shareholder Information” on pages 199211 to 203,215, “Business Review—Financial Review—Capitalization and shareholder return—Dividend and share repurchases” on page 87 and “Corporate Governance—Corporate Governance Report—Other matters—Distributions to shareholders and dividends for 2010” on page 117, in each case of the Company’s “Annual Report and
Other than as disclosed herein, since the date of the annual consolidated financial statements included in this Form 20-F dated March 25, 2010,April 28, 2011, no significant change has occurred.
A. Offer and Listing Details
The information (including graphs and tabular data) set forth under the heading “Additional Information—Shareholder Information”Information—AstraZeneca PLC share listings and prices” on page 199pages 211 to 212 of the Company’s “Annual Report and Form 20-F Information 2009”2010” included as exhibit 15.1 to this Form 20-F dated March 25, 2010April 28, 2011 is incorporated by reference.
In addition, the table below sets forth, for the periods indicated, the reported high and low share prices of AstraZeneca PLC, on the following bases: