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Exhibit 15.1
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> | Reported performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business as reflected in our Group Financial Statements prepared in accordance with IFRS as adopted by the EU and as issued by the IASB. | |
> | Core financial measures. These are non-GAAP measures because unlike Reported performance they cannot be derived directly from the information in the Group’s Financial Statements. These measures are adjusted to exclude certain significant items, such as charges and provisions related to our global restructuring and synergy programmes, amortisation and impairment of the significant intangibles relating to the acquisition of MedImmune in 2007, the amortisation and impairment of the significant intangibles relating to our current and future exit arrangements with Merck in the US, and other specified items. See the Reconciliation of Reported results to Core results table on page 40 for a reconciliation of Reported to Core performance. |
> | Constant exchange rate (CER) growth rates. These are also non-GAAP measures. These measures remove the effects of currency movements (by retranslating the current year’s performance at the |
previous year’s exchange rates and adjusting for other exchange effects, including hedging). A reconciliation of Reported results adjusted for the impact of currency movements is provided in the Operating profit (2009 and 2008) table on page 39. |
Introduction | 01 |
Contents | ||||
02 | ||||
02 | ||||
04 | ||||
05 | ||||
06 | ||||
08 | ||||
10 | ||||
Performance | ||||
12 | ||||
14 | ||||
18 | ||||
Reviews | ||||
36 | ||||
50 | ||||
55 | ||||
75 | ||||
76 | ||||
77 | ||||
Corporate Governance | ||||
79 | ||||
87 | ||||
101 | ||||
120 | ||||
194 | ||||
196 | ||||
199 | ||||
204 | ||||
205 | ||||
206 | ||||
208 |
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02Introduction| Our year in brief
and operational
information for 2009
Sales growth | ||||
7% | 3% | 7% | ||
2009 | 2008 | 2007 |
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2009 | 2008 | 2007 | ||||||||||
Dividends | 2,977 | 2,739 | 2,641 | |||||||||
Share re-purchases | – | 610 | 4,170 | |||||||||
29% | 23% | |
Crestorup 29% to $4,502 million | Symbicort up 23% to $2,294 million | |
4 | 4 | |
Four major regulatory submissions | In-licensing/acquisition of four | |
late-stage projects | ||
$1.6bn | 6% | |
Annualised savings of $1.6 billion | Top 6% in the sector in the | |
from restructuring | Dow Jones Indexes |
> | Crestorsales were up 29% to $4,502 million;Symbicortup 23% to $2,294 million;Seroquelup 12% to $4,866 million; andArimidexup 7% to $1,921 million.Nexiumsales fell by 1% to $4,959 million andSynagissales fell by 12% to $1,082 million | |
> | Sales ofToprol-XLand H1N1 influenza (swine flu) vaccine in the US accounted for 3 percentage points of the global revenue growth | |
> | Emerging Markets growth was 12%, accounting for 13% of total revenue |
> | Four major regulatory submissions made | |
> | Complete Response Letter submitted for fifth regulatory submission | |
> | In-licensing/acquisition of four late-stage projects | |
> | 89 projects in clinical development |
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04Introduction |Chairman’s Statement
Chairman
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Introduction |CEO’s Review | 05 |
Chief Executive Officer
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06Introduction |AstraZeneca at a glance
Healthcare area | Key product | |
Cardiovascular | Crestor(for managing cholesterol levels) | |
Gastrointestinal | Nexium(for acid reflux) | |
Infection | Synagis(for RSV, a form of respiratory infection in infants) | |
Neuroscience | Seroquel(for schizophrenia, bipolar disorder and major depressive disorder) | |
Oncology | Arimidex(for breast cancer) | |
Respiratory & Inflammation | Symbicort(for asthma and chronic obstructive pulmonary disease) | |
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Introduction |AstraZeneca at a glance | 07 |
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Performance | ||||
12 | ||||
14 | ||||
16 | ||||
18 | ||||
18 | ||||
20 | ||||
22 | ||||
22 | ||||
28 | ||||
31 | ||||
32 | ||||
33 | ||||
Reviews | ||||
36 | ||||
37 | ||||
37 | ||||
38 | ||||
39 | ||||
41 | ||||
42 | ||||
42 | ||||
42 | ||||
43 | ||||
44 | ||||
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49 | ||||
50 | ||||
50 | ||||
52 | ||||
55 | ||||
56 | ||||
60 | ||||
62 | ||||
65 | ||||
68 | ||||
71 | ||||
75 | ||||
76 | ||||
77 |
Corporate Governance | ||||
79 | ||||
79 | ||||
80 | ||||
87 | ||||
87 | ||||
88 | ||||
90 | ||||
92 | ||||
96 | ||||
101 |
questions from an audience of employees at a Town
Hall meeting in Westborough, Massachusetts, US.
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12Directors’ Report |Business Environment
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Directors’ Report | Business Environment | 13 | |
Performance |
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14Directors’ Report |Strategy and Performance
Performance
and our plans for
the future
but I am confident that we can
be among the best performers
in this sector.”
> | focusedin that we will continue to be selective about those areas of the industry in which we choose to compete, targeting those product categories where medical innovation or brand equity continues to enable us to make acceptable levels of returns on our investments | |
> | integratedin that we believe the best way to capture value within this industry is to span the full value chain of discovery, development and commercialisation |
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Directors’ Report | Strategy and Performance | 15 | |
Performance |
> | innovation-drivenin that we believe our technology base will continue to deliver innovative products that patients will want and for which payers will pay | |
> | globalin that we believe we have the ability efficiently and effectively to meet healthcare needs in both Established and Emerging Markets. |
Measuring our performance
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16Directors’ Report |Strategy and Performance
Strategic priority | Initiatives | Objective for three years to end 2010 | ||
Strengthen the pipeline | ||||
To be one of the fastest and most productive companies in the industry through continuous improvement in our in-house R&D. Seek leading science outside AstraZeneca to broaden our research base and further strengthen our pipeline of new products | Accessing the best potential innovative medicines to meet unmet patient need through > small molecule and biologics R&D > externalisation Embedding culture of continuous improvement through > leading-edge science > collaborations > business efficiency | Deliver two new product launches on average per year from 2010 In order to achieve the above ensure we have 10 or more products in Phase III development or registration | ||
development cycle | ||||
Grow the business | ||||
To maintain our position among the industry leaders through a continued focus on driving commercial excellence | Building on leadership positions in existing markets Expanding presence in important emerging markets | Deliver sales growth in line with market growth to provide a return on our investment | ||
Driving high standards of sales force effectiveness, marketing excellence and customer support | ||||
Developing our brands to maximise patient benefit and commercial potential | ||||
Reshape the business | ||||
To create an organisation with the flexibility and financial strength to adapt quickly and effectively within a challenging and rapidly changing business environment | Implementing and expanding restructuring programme | Annual benefits of $2.1 billion from restructuring | ||
Operations’ asset and sourcing strategy | Maintain margins | |||
Delivering continuous improvement across R&D through | Improve R&D unit costs by 15% | |||
> smarter working > business process outsourcing | ||||
G&A strategy | Achieve planned improvement in selling, general and | |||
Marketing, sales and commercial strategies | administrative (SG&A) costs | |||
> Western Europe and Emerging Markets resource optimisation plans | ||||
> North America – customer-driven interactions | ||||
Procurement strategy | Procurement savings | |||
Promote a culture of responsibility and accountability | ||||
To create an organisation that is recognised not only for the skills, experience and quality of its people, but also for the integrity with which it conducts its business | Maintain/improve levels of employee engagement | Upper quartile industry ranking for employee engagement | ||
Strengthening leadership development frameworks | Achieve step change in leadership and management capability | |||
Integrating responsible business considerations into | Ensure that a culture of responsible business, including | |||
everyday business thinking and decision-making | compliance, is embedded across all our activities | |||
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Directors’ Report | Strategy and Performance | 17 | |
Performance |
Measure | 2009 performance summary | |||
Regulatory approvals | Onglyza™ approved in 36 countries; Iressa approved in the EU H1N1 influenza vaccine approved in the US. See Therapy Area Review from page 55 | |||
Projects entering development | 29 projects entering development. See Strengthening the pipeline section on page 24 | |||
Value-creating collaborations and business development activities | Major late-stage in-licensing deals signed with Targacept, Forest and Nektar Agreed to acquire Novexel. See Working with others section from page 22 | |||
Major regulatory submissions | Submissions made forBrilinta, Certriad, Vimovo andOnglyza™/metformin;Zactima submission withdrawn H1N1 influenza vaccine approved in the US. See Therapy Area Review from page 55 | |||
Development cycle times for small molecule and biologics/vaccines | On track to deliver 2010 targets. See Improving productivity section from page 24 | |||
Deliver targeted sales and contribution growth (at CER) | Global sales +7% at CER. See 2009 Results of operations section from page 38 | |||
Successful life-cycle projects | Additional approvals in the US forSeroquel andSeroquel XR; presented results of Crestor JUPITER trials and regulatory submissions made in the US and the EU. See Therapy Area Review from page 55 | |||
Successful launches | Onglyza™ launched in the US and the EU; Iressa launched in the EU Symbicort approved in Japan and launched in January 2010. See Therapy Area Review from page 55 | |||
Commercial collaborations | Four major co-promotion collaborations signed (Abbott, Astellas, UCB and Salix). See Working with others section on page 22 | |||
Cost savings | Annualised benefits of $1.6 billion in 2009. See Strategy and Performance section from page 14 | |||
Gross margin | Target exceeded: core gross margin of 83%. See 2009 Results of operations section from page 38 | |||
Operating profit margin | Core operating profit margin of 41.5%. See 2009 Results of operations section from page 38 | |||
Unit cost metrics | Progress towards target. See Improving productivity section from page 24 | |||
SG&A cost growth rates | Core SG&A growth of 5%. See 2009 Results of operations section from page 38 | |||
Cost savings | Delivered savings of $555 million against a target of $500 million | |||
Levels of employee engagement as measured by our global employee survey (FOCUS) | 86% of our employees completed the FOCUS survey, and employee engagement improved by 2 percentage points from 2008. This is above the industry average. See Engagement and dialogue section on page 34 | |||
Improve senior leadership clarity of direction as measured by our FOCUS survey | 2009 score improved by 3 percentage points over 2008 to 72% favourable. This follows significant efforts to improve the quality and effectiveness of senior leaders’ communication to the organisation. See Engagement and dialogue section on page 34 | |||
Number of confirmed breaches of external sales and marketing regulations or codes | 24 confirmed breaches of external sales and marketing regulations or codes. See Sales and marketing ethics section from page 29 | |||
Greenhouse gas emissions1 | 9% reduction in CO2 emissions. See Climate change section on page 76 | |||
Waste production1, 2 | 8% reduction in total waste production. See Waste management section on page 76 | |||
Rate of accidents with serious injury1 | 2% reduction in accidents with serious injury. See Safety, health and wellbeing section on page 35 | |||
Rate of occupational illness1 | 32% increase in cases of occupational illness. See Safety, health and wellbeing section on page 35 | |||
Ranking in Dow Jones Sustainability Indexes | Positioned in the top 6% in the sector in the Dow Jones World and STOXX (European) Indexes | |||
1 | Data exclude MedImmune. | |
2 | We have replaced our previous ozone depleting potential (ODP) KPI with waste production, as we believe it is now a more meaningful environmental sustainability indicator for AstraZeneca. ODP data continue to be published on our website, astrazeneca.com/responsibility. |
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18Directors’ Report | Resources, Skills and Capabilities
and Capabilities
our strategy
pharmaceutical innovation
> | a world-class R&D function focused on delivering a range of innovative and differentiated medicines that meet unmet medical need and for which customers are prepared to pay | |
> | a sales and marketing activity which is truly global in its approach, listens to customers and focuses on their needs | |
> | a cost-effective supply and manufacturing operation that ensures our customers receive a reliable supply of medicines when they want them. |
> | protect our investment in R&D through a rigorous process of patent protection that optimises our intellectual property | |
> | have access to the best external sources of innovation to complement and build on our internal skills and capabilities. | |
Above all, we cannot achieve our goals without AstraZeneca people and the diverse skills and capabilities that a global workforce |
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Directors’ Report | Resources, Skills and Capabilities | 19 | |
Performance |
94 | 97 | |
First approved in 1997, | Symbicortis approved for | |
Seroquelis now approved | use in 97 countries | |
in 94 countries |
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20Directors’ Report |Resources, Skills and Capabilities
patients is a
fundamental
consideration
not enough – people with
the capabilities to turn that
knowledge into great medicines
is what brings success.”
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Directors’ Report | Resources, Skills and Capabilities | 21 | |
Performance | ||
bring economic as well
as therapeutic benefits.”
We developed the first innovation in influenza vaccines in over 60 years
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22Directors’ Report |Resources, Skills and Capabilities
make a real difference to the health of people around the world.”
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Directors’ Report | Resources, Skills and Capabilities | 23 | ||
Performance |
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24Directors’ Report| Resources, Skills and Capabilities
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Directors’ Report | Resources, Skills and Capabilities | 25 | |
Performance |
# | Partnered product. |
* | Subject to expiry or termination of the applicable waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act. |
+ | Orphan Drug. |
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26Directors’ Report| Resources, Skills and Capabilities
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Directors’ Report | Resources, Skills and Capabilities | 27 | |
Performance |
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28Directors’ Report |Resources, Skills and Capabilities
patients will
want and payers
will pay for
those who pay for our medicines
and the patients who use them
must remain the focus of everything we do.”
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Directors’ Report | Resources, Skills and Capabilities | 29 | |
Performance |
in India in 2009
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30Directors’ Report |Resources, Skills and Capabilities
our sales and marketing
activity is one of our
top priorities.”
research-based pharmaceutical
industry – we recognise it brings
responsibilities as well as privileges.”
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Directors’ Report | Resources, Skills and Capabilities | 31 | ||
Performance |
differentiated
medicines
US patent expiry | ||
Nexium | 20151 | |
Crestor | 2016 | |
Toprol-XL | Expired | |
Atacand | 2012 | |
Symbicort | 2014 (substance combination) | |
Pulmicort Respules | 20192 (formulation) | |
Arimidex | 2010 | |
Zoladex | Expired | |
Seroquel/Seroquel XR | 2012 (substance)/2017 (XR formulation) | |
Synagis | 2015 | |
1 | Licence agreements with Teva and Ranbaxy allow each to launch a generic version in the US from May 2014, subject to regulatory approval. |
2 | A licence agreement with Teva permits their ongoing US sale of a generic version from December 2009. |
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32Directors’ Report |Resources, Skills and Capabilities
efficiency in producing our
medicines, we work harder to
ensure we control the quality
of our products.”
1 | Figures adjusted to reflect the impact of the MedImmune acquisition. |
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Directors’ Report | Resources, Skills and Capabilities | 33 | |
Performance |
Geographical area | % | |||
A UK | 14.3 | |||
B Sweden | 15.3 | |||
C Rest of Europe | 17.5 | |||
D North America | 25.3 | |||
E Latin America | 6.1 | |||
F Africa, Asia and Australasia | 21.5 |
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34Directors’ Report |Resources, Skills and Capabilities
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Directors’ Report | Resources, Skills and Capabilities | 35 | |
Performance |
1 | Data exclude MedImmune. |
2 | With and without days lost. |
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36Directors’ Report |Financial Review
“Revenue growth and operational efficiencies drove a strong cash performance, reducing net debt well ahead of plan.” |
performance and position
Chief Financial Officer
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Directors’ Report |Financial Review | 37 | |
Reviews |
> | Reported performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business as reflected in our Group Financial Statements prepared in accordance with IFRS as adopted by the EU and as issued by the IASB. | |
> | Core financial measures. These are non-GAAP measures because unlike Reported performance they cannot be derived directly from the information in the Group’s Financial Statements. These measures are adjusted to exclude certain significant items, such as charges and provisions related to our global restructuring and synergy programmes, amortisation and impairment of the significant intangibles relating to the acquisition of MedImmune in 2007, the amortisation and impairment of the significant intangibles relating to our current and future exit arrangements with Merck in the US and other specified items. See the Reconciliation of Reported results to Core results table on page 40 for a reconciliation of Reported to Core performance. | |
> | Constant exchange rate (CER) growth rates. These are also non-GAAP measures. These measures remove the effects of currency movements (by retranslating the current year’s performance at previous year’s exchange rates and adjusting for other exchange effects, including hedging). A reconciliation of the Reported results adjusted for the impact of currency movements is provided in the Operating profit (2009 and 2008) table on page 39. | |
> | Gross margin and operating profit margin percentages. These measures set out the progression of key performance margins and demonstrate the overall quality of the business. |
> | Prescription volumes and trends for key products. These measures can represent the real business growth and the progress of individual products better and more immediately than invoiced sales. | |
> | Net Funds/Debt. This represents our interest bearing loans and borrowings, less cash and cash equivalents, current investments and derivative financial instruments. |
events affecting 2009
> | The adverse impact on pharmaceutical prices as a result of the regulatory environment. For instance, although there is no direct governmental control on prices in the US, action from individual state programmes and health insurance bodies is leading to downward pressures 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. |
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38Directors’ Report |Financial Review
> | The risk of generic competition following loss of patent protection or patent expiry or an ‘at risk’ launch by a competitor, with the potential adverse effects on sales volumes and prices, for example, the launch of generic competition to bothEthyolandPulmicort Respulesin 2008. | |
> | 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, together with the rate of sales growth and costs following new product launches. | |
> | 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, pound sterling and Swedish krona. | |
> | Macro factors such as greater demand from an ageing population and increasing requirements of servicing Emerging Markets. |
> | Reported sales of $32,804 million, representing CER sales growth of 7% (Reported: 4%). | |
> | Strong performance in Emerging Markets with CER sales growth of 12% (Reported: 2%). | |
> | Excluded from Core results were specific legal provisions totalling $636 million (which impacted Reported results in the year). $524 million of this has been made in respect of the US Attorney’s Office investigation into sales and marketing practices involvingSeroquel and $112 million relates to average wholesale price litigation. These charges are excluded from Core performance results. | |
> | Operating profit increased by 24% at CER (Reported: 26%). Core operating profit increased by 23% at CER (Reported: 24%). A reconciliation between these measures is included in the Reconciliation of Reported results to Core results table on page 40. | |
> | EPS of $5.19 represented an increase of 22% at CER (Reported: 24%). Core EPS of $6.32 represented an increase of 23% at CER (Reported: 24%). | |
> | Net cash inflow from operating activities increased to $11,739 million (2008: $8,742 million). | |
> | Dividends increased to $2,977 million (2008: $2,739 million). |
> | Net funds at 31 December were $535 million, an improvement of $7,709 million on net debt of $7,174 million in the previous year. | |
> | Total restructuring and synergy costs associated with the global programme to reshape the cost base of the business, were $659 million in 2009 (2008: $881 million). This brings the total restructuring and synergy costs charged to date to $2,506 million. |
analysis of year to 31 December 2009
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Directors’ Report | Financial Review | 39 | |
Reviews |
2009 | 2008 | 2009 compared to 2008 | ||||||||||||||||||||||||||||||
Growth due | ||||||||||||||||||||||||||||||||
CER | to exchange | CER | Reported | |||||||||||||||||||||||||||||
Reported | growth | effects | Reported | growth | growth | |||||||||||||||||||||||||||
$m | $m | $m | $m | % | % | |||||||||||||||||||||||||||
Cardiovascular | 8,376 | 1,737 | (324 | ) | 6,963 | 25 | 20 | |||||||||||||||||||||||||
Gastrointestinal | 6,011 | (157 | ) | (176 | ) | 6,344 | (2 | ) | (5) | |||||||||||||||||||||||
Infection and other | 2,631 | 257 | (77 | ) | 2,451 | 10 | 7 | |||||||||||||||||||||||||
Neuroscience | 6,237 | 566 | (166 | ) | 5,837 | 10 | 7 | |||||||||||||||||||||||||
Oncology | 4,518 | (330 | ) | (106 | ) | 4,954 | (7 | ) | (9) | |||||||||||||||||||||||
Respiratory & Inflammation | 4,132 | 234 | (230 | ) | 4,128 | 6 | – | |||||||||||||||||||||||||
Other businesses | 899 | 10 | (35 | ) | 924 | 1 | (3) | |||||||||||||||||||||||||
Total | 32,804 | 2,317 | (1,114 | ) | 31,601 | 7 | 4 | |||||||||||||||||||||||||
Operating profit (2009 and 2008) | ||||||||||||||||||||||||||||||||
2009 | 2008 | Percentage of sales | 2009 compared to 2008 | |||||||||||||||||||||||||||||
Growth due | ||||||||||||||||||||||||||||||||
CER | to exchange | Reported | Reported | CER | Reported | |||||||||||||||||||||||||||
Reported | growth | effects | Reported | 2009 | 2008 | growth | growth | |||||||||||||||||||||||||
$m | $m | $m | $m | % | % | % | % | |||||||||||||||||||||||||
Sales | 32,804 | 2,317 | (1,114 | ) | 31,601 | 7 | 4 | |||||||||||||||||||||||||
Cost of sales | (5,775 | ) | 540 | 283 | (6,598 | ) | (17.6 | ) | (20.9 | ) | (8 | ) | (12) | |||||||||||||||||||
Gross profit | 27,029 | 2,857 | (831 | ) | 25,003 | 82.4 | 79.1 | 11 | 8 | |||||||||||||||||||||||
Distribution costs | (298 | ) | (37 | ) | 30 | (291 | ) | (0.9 | ) | (0.9 | ) | 13 | 3 | |||||||||||||||||||
Research and development | (4,409 | ) | 298 | 472 | (5,179 | ) | (13.5 | ) | (16.4 | ) | (6 | ) | (15) | |||||||||||||||||||
Selling, general and administrative costs | (11,332 | ) | (945 | ) | 526 | (10,913 | ) | (34.5 | ) | (34.6 | ) | 9 | 4 | |||||||||||||||||||
Other operating income and expense | 553 | 33 | (4 | ) | 524 | 1.7 | 1.7 | 6 | 6 | |||||||||||||||||||||||
Operating profit | 11,543 | 2,206 | 193 | 9,144 | 35.2 | 28.9 | 24 | 26 | ||||||||||||||||||||||||
Net finance expense | (736 | ) | (463 | ) | ||||||||||||||||||||||||||||
Profit before tax | 10,807 | 8,681 | ||||||||||||||||||||||||||||||
Taxation | (3,263 | ) | (2,551 | ) | ||||||||||||||||||||||||||||
Profit for the period | 7,544 | 6,130 | ||||||||||||||||||||||||||||||
Earnings per share ($) | 5.19 | 4.20 | ||||||||||||||||||||||||||||||
and liquidity – 2009
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40Directors’ Report |Financial Review
Restructuring and | Merck & MedImmune | Intangible | ||||||||||||||||||||||
Reported | synergy costs | amortisation | impairments | Legal provisions | 2009 Core | |||||||||||||||||||
2009 | $m | $m | $m | $m | $m | $m | ||||||||||||||||||
Gross margin | 27,029 | 188 | – | – | – | 27,217 | ||||||||||||||||||
Distribution costs | (298 | ) | – | – | – | – | (298 | ) | ||||||||||||||||
Research and development | (4,409 | ) | 68 | – | 7 | – | (4,334 | ) | ||||||||||||||||
Selling, general and administrative costs | (11,332 | ) | 403 | 403 | – | 636 | (9,890 | ) | ||||||||||||||||
Other operating income and expense | 553 | – | 108 | 265 | – | 926 | ||||||||||||||||||
Operating Profit | 11,543 | 659 | 511 | 272 | 636 | 13,621 | ||||||||||||||||||
Net interest | (736 | ) | – | – | – | – | (736 | ) | ||||||||||||||||
Profit before tax | 10,807 | 659 | 511 | 272 | 636 | 12,885 | ||||||||||||||||||
Taxation | (3,263 | ) | (199 | ) | (125 | ) | (82 | ) | (34 | ) | (3,703 | ) | ||||||||||||
Profit for the period | 7,544 | 460 | 386 | 190 | 602 | 9,182 | ||||||||||||||||||
Earnings per share ($) | 5.19 | 0.32 | 0.27 | 0.13 | 0.41 | 6.32 | ||||||||||||||||||
Restructuring and | Merck & MedImmune | Intangible | ||||||||||||||||||||||
Reported | synergy costs | amortisation | impairments | Legal provisions | 2008 Core | |||||||||||||||||||
2008 | $m | $m | $m | $m | $m | $m | ||||||||||||||||||
Gross margin | 25,003 | 405 | – | – | – | 25,408 | ||||||||||||||||||
Distribution costs | (291 | ) | – | – | – | – | (291 | ) | ||||||||||||||||
Research and development | (5,179 | ) | 166 | – | 60 | – | (4,953 | ) | ||||||||||||||||
Selling, general and administrative costs | (10,913 | ) | 310 | 406 | 257 | – | (9,940 | ) | ||||||||||||||||
Other operating income and expense | 524 | – | 120 | 90 | – | 734 | ||||||||||||||||||
Operating profit | 9,144 | 881 | 526 | 407 | – | 10,958 | ||||||||||||||||||
Net interest | (463 | ) | – | – | – | – | (463 | ) | ||||||||||||||||
Profit before tax | 8,681 | 881 | 526 | 407 | – | 10,495 | ||||||||||||||||||
Taxation | (2,551 | ) | (259 | ) | (125 | ) | (121 | ) | – | (3,056 | ) | |||||||||||||
Profit for the period | 6,130 | 622 | 401 | 286 | – | 7,439 | ||||||||||||||||||
Earnings per share ($) | 4.20 | 0.43 | 0.28 | 0.19 | – | 5.10 | ||||||||||||||||||
2009 | 2008 | 2009 compared to 2008 | ||||||||||||||||||||||
Growth due | ||||||||||||||||||||||||
CER | to exchange | CER | Total Core | |||||||||||||||||||||
Core | growth | effects | Core | growth | growth | |||||||||||||||||||
2008 to 2009 Core result | $m | $m | $m | $m | % | % | ||||||||||||||||||
Gross margin | 27,217 | 2,660 | (851 | ) | 25,408 | 10 | 7 | |||||||||||||||||
Distribution costs | (298 | ) | (37 | ) | 30 | (291 | ) | 13 | 3 | |||||||||||||||
Research and development | (4,334 | ) | 150 | 469 | (4,953 | ) | (3 | ) | (13 | ) | ||||||||||||||
Selling, general and administrative costs | (9,890 | ) | (452 | ) | 502 | (9,940 | ) | 5 | (1 | ) | ||||||||||||||
Other operating income and expense | 926 | 194 | (2 | ) | 734 | 26 | 26 | |||||||||||||||||
Operating Profit | 13,621 | 2,515 | 148 | 10,958 | 23 | 24 | ||||||||||||||||||
Net interest | (736 | ) | (463 | ) | ||||||||||||||||||||
Profit before tax | 12,885 | 10,495 | ||||||||||||||||||||||
Taxation | (3,703 | ) | (3,056 | ) | ||||||||||||||||||||
Profit for the period | 9,182 | 7,439 | ||||||||||||||||||||||
Earnings per share ($) | 6.32 | 5.10 | ||||||||||||||||||||||
Table of Contents
Directors’ Report | Financial Review | 41 | |
Reviews |
-1% | +1% | |||||||
UK ($m) | 1,129 | (973 | ) | |||||
US ($m) | 256 | (225 | ) | |||||
Sweden ($m) | 229 | (192 | ) | |||||
Total ($m) | 1,614 | (1,390 | ) | |||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Net (debt)/funds brought forward at 1 January | (7,174 | ) | (9,112 | ) | 6,537 | |||||||
Earnings before interest, tax, depreciation, amortisation and impairment | 13,630 | 11,764 | 9,950 | |||||||||
Movement in working capital and provisions | 1,329 | (210 | ) | (443 | ) | |||||||
Tax paid | (2,381 | ) | (2,209 | ) | (2,563 | ) | ||||||
Interest paid | (639 | ) | (690 | ) | (335 | ) | ||||||
Other non-cash movements | (200 | ) | 87 | 901 | ||||||||
Net cash available from operating activities | 11,739 | 8,742 | 7,510 | |||||||||
Purchase of intangibles (net) | (355 | ) | (2,944 | ) | (549 | ) | ||||||
Other capital expenditure (net) | (824 | ) | (1,057 | ) | (1,076 | ) | ||||||
Acquisitions | – | – | (14,891 | ) | ||||||||
Investments | (1,179 | ) | (4,001 | ) | (16,516 | ) | ||||||
Dividends | (2,977 | ) | (2,739 | ) | (2,641 | ) | ||||||
Net share issues/(re-purchases) | 135 | (451 | ) | (3,952 | ) | |||||||
Distributions | (2,842 | ) | (3,190 | ) | (6,593 | ) | ||||||
Other movements | (9 | ) | 387 | (50 | ) | |||||||
Net funds/(debt) carried forward at 31 December | 535 | (7,174 | ) | (9,112 | ) | |||||||
Comprised of: | ||||||||||||
Cash & short term investments | 11,598 | 4,674 | 6,044 | |||||||||
Loans and borrowings | (11,063 | ) | (11,848 | ) | (15,156 | ) | ||||||
Table of Contents
42Directors’ Report |Financial Review
$ | Pence | SEK | Payment date | |||||||||||||||||
First interim dividend | 0.59 | 36.0 | 4.41 | 14.09.09 | ||||||||||||||||
Second interim dividend | 1.71 | 105.4 | 12.43 | 15.03.10 | ||||||||||||||||
Total | 2.30 | 141.4 | 16.84 | |||||||||||||||||
Summary of shareholder distributions | ||||||||||||||||||||
Shares | Dividend | Dividend | Shareholder | |||||||||||||||||
re-purchased | Cost | per share | cost | distributions | ||||||||||||||||
(million) | $m | $ | $m | $m | ||||||||||||||||
2000 | 9.4 | 352 | 0.7 | 1,236 | 1,588 | |||||||||||||||
2001 | 23.5 | 1,080 | 0.7 | 1,225 | 2,305 | |||||||||||||||
2002 | 28.3 | 1,190 | 0.7 | 1,206 | 2,396 | |||||||||||||||
2003 | 27.2 | 1,154 | 0.795 | 1,350 | 2,504 | |||||||||||||||
2004 | 50.1 | 2,212 | 0.94 | 1,555 | 3,767 | |||||||||||||||
2005 | 67.7 | 3,001 | 1.3 | 2,068 | 5,069 | |||||||||||||||
2006 | 72.2 | 4,147 | 1.72 | 2,649 | 6,796 | |||||||||||||||
2007 | 79.9 | 4,170 | 1.87 | 2,740 | 6,910 | |||||||||||||||
2008 | 13.6 | 610 | 2.05 | 2,971 | 3,581 | |||||||||||||||
2009 | – | – | 2.30 | 3,336 | 1 | 3,336 | ||||||||||||||
Total | 371.9 | 17,916 | 13.075 | 20,336 | 38,252 | |||||||||||||||
analysis of year to 31 December 2008
Table of Contents
Directors’ Report | Financial Review | 43 | |
Reviews |
2008 | 2007 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||
CER | Growth due to | CER | Reported | |||||||||||||||||||||||||||||
Reported | growth | exchange effects | Reported | growth | growth | |||||||||||||||||||||||||||
$m | $m | $m | $m | % | % | |||||||||||||||||||||||||||
Cardiovascular | 6,963 | 29 | 248 | 6,686 | – | 4 | ||||||||||||||||||||||||||
Gastrointestinal | 6,344 | (275 | ) | 176 | 6,443 | (4 | ) | (2) | ||||||||||||||||||||||||
Infection and other1 | 2,451 | 706 | 31 | 1,714 | 41 | 43 | ||||||||||||||||||||||||||
Neuroscience | 5,837 | 346 | 151 | 5,340 | 6 | 9 | ||||||||||||||||||||||||||
Oncology | 4,954 | (109 | ) | 244 | 4,819 | (2 | ) | 3 | ||||||||||||||||||||||||
Respiratory & Inflammation | 4,128 | 278 | 139 | 3,711 | 7 | 11 | ||||||||||||||||||||||||||
Other businesses | 924 | 54 | 24 | 846 | 6 | 9 | ||||||||||||||||||||||||||
Total | 31,601 | 1,029 | 1,013 | 29,559 | 3 | 7 | ||||||||||||||||||||||||||
1IncludesSynagisandFluMistwhich were acquired in June 2007. | ||||||||||||||||||||||||||||||||
Operating profit (2008 and 2007) | ||||||||||||||||||||||||||||||||
2008 | 2007 | Percentage of sales | 2008 compared to 2007 | |||||||||||||||||||||||||||||
CER | Growth due to | Reported | Reported | CER | Reported | |||||||||||||||||||||||||||
Reported | growth | exchange effects | Reported | 2008 | 2007 | growth | growth | |||||||||||||||||||||||||
$m | $m | $m | $m | % | % | % | % | |||||||||||||||||||||||||
Sales | 31,601 | 1,029 | 1,013 | 29,559 | 3 | 7 | ||||||||||||||||||||||||||
Cost of sales | (6,598 | ) | 38 | (217 | ) | (6,419 | ) | (20.9 | ) | (21.7 | ) | (1 | ) | 3 | ||||||||||||||||||
Gross profit | 25,003 | 1,067 | 796 | 23,140 | 79.1 | 78.3 | 5 | 8 | ||||||||||||||||||||||||
Distribution costs | (291 | ) | (39 | ) | (4 | ) | (248 | ) | (0.9 | ) | (0.8 | ) | 16 | 17 | ||||||||||||||||||
Research and development | (5,179 | ) | (88 | ) | 71 | (5,162 | ) | (16.4 | ) | (17.5 | ) | 2 | – | |||||||||||||||||||
Selling, general and administrative costs | (10,913 | ) | (433 | ) | (116 | ) | (10,364 | ) | (34.6 | ) | (35.1 | ) | 4 | 5 | ||||||||||||||||||
Other operating income and expense | 524 | (188 | ) | (16 | ) | 728 | 1.7 | 2.5 | (26 | ) | (28) | |||||||||||||||||||||
Operating profit | 9,144 | 319 | 731 | 8,094 | 28.9 | 27.4 | 4 | 13 | ||||||||||||||||||||||||
Net finance expense | (463 | ) | (111 | ) | ||||||||||||||||||||||||||||
Profit before tax | 8,681 | 7,983 | ||||||||||||||||||||||||||||||
Taxation | (2,551 | ) | (2,356 | ) | ||||||||||||||||||||||||||||
Profit for the period | 6,130 | 5,627 | ||||||||||||||||||||||||||||||
Earnings per share ($) | 4.20 | 3.74 | ||||||||||||||||||||||||||||||
and liquidity – 2008
Table of Contents
44Directors’ Report |Financial Review
and capital expenditure
Insurance
Table of Contents
Directors’ Report | Financial Review | 45 | |
Reviews |
and estimates
> | Revenue recognition | |
> | Research and development | |
> | Goodwill and intangible assets | |
> | Litigation | |
> | Post-retirement benefits | |
> | Taxation | |
> | Segmental reporting. |
> | Chargebacks, where we enter into arrangements under which certain parties, typically hospitals, the Department of Veterans Affairs and the Department of Defense, are able to buy products from wholesalers at the lower prices we have contracted with them. The chargeback is the difference between the price we invoice to the wholesaler and the contracted price charged by the wholesaler. Chargebacks are paid directly to the wholesalers. | |
> | Regulatory, including Medicaid and other federal and state programmes, where we pay rebates based on the specific terms of agreements in individual states, which include product usage and information on best prices and average market prices benchmarks. |
> | Contractual, under which entities such as third party managed-care organisations, long-term care facilities and group purchasing organisations are entitled to rebates depending on specified performance provisions, which vary from contract to contract. |
Table of Contents
46Directors’ Report |Financial Review
2009 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||||||
$m | $m | $m | $m | |||||||||||||||||||||||||||||
Gross sales | 22,641 | 20,029 | 18,456 | 16,577 | ||||||||||||||||||||||||||||
Chargebacks | (1,841 | ) | (1,726 | ) | (1,130 | ) | (975 | ) | ||||||||||||||||||||||||
Regulatory – US government and state programmes | (1,357 | ) | (1,005 | ) | (732 | ) | (532 | ) | ||||||||||||||||||||||||
Contractual – Managed-care and group purchasing organisation rebates | (4,753 | ) | (3,658 | ) | (3,179 | ) | (2,413 | ) | ||||||||||||||||||||||||
Cash and other discounts | (428 | ) | (390 | ) | (356 | ) | (329 | ) | ||||||||||||||||||||||||
Customer returns | (187 | ) | (48 | ) | (18 | ) | (46 | ) | ||||||||||||||||||||||||
Other | (196 | ) | (167 | ) | (145 | ) | (256 | ) | ||||||||||||||||||||||||
Net sales | 13,879 | 13,035 | 12,896 | 12,026 | ||||||||||||||||||||||||||||
Movement in provisions | ||||||||||||||||||||||||||||||||
Adjustment | Carried forward | |||||||||||||||||||||||||||||||
Brought forward | Provision for | in respect | Returns | at 31 December | ||||||||||||||||||||||||||||
at 1 January 2009 | current year | of prior years | and payments | 2009 | ||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | ||||||||||||||||||||||||||||
Chargebacks | 359 | 1,947 | (106 | ) | (1,804 | ) | 396 | |||||||||||||||||||||||||
Regulatory – US government and state programmes | 520 | 1,373 | (16 | ) | (1,102 | ) | 775 | |||||||||||||||||||||||||
Contractual – Managed-care and group purchasing organisation rebates | 1,084 | 4,732 | 20 | (4,389 | ) | 1,447 | ||||||||||||||||||||||||||
Cash and other discounts | 39 | 428 | – | (426 | ) | 40 | ||||||||||||||||||||||||||
Customer returns | 77 | 194 | (2 | ) | (93 | ) | 177 | |||||||||||||||||||||||||
Other | 57 | 198 | (2 | ) | (194 | ) | 59 | |||||||||||||||||||||||||
Total | 2,136 | 8,871 | (106 | ) | (8,009 | ) | 2,895 | |||||||||||||||||||||||||
Adjustment | Carried forward | |||||||||||||||||||||||||||||||
Brought forward | Provision for | in respect | Returns | at 31 December | ||||||||||||||||||||||||||||
at 1 January 2008 | current year | of prior years | and payments | 2008 | ||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | ||||||||||||||||||||||||||||
Chargebacks | 186 | 1,745 | (19 | ) | (1,553 | ) | 359 | |||||||||||||||||||||||||
Regulatory – US government and state programmes | 428 | 997 | 8 | (913 | ) | 520 | ||||||||||||||||||||||||||
Contractual – Managed-care and group purchasing organisation rebates | 900 | 3,622 | 36 | (3,474 | ) | 1,084 | ||||||||||||||||||||||||||
Cash and other discounts | 38 | 390 | – | (389 | ) | 39 | ||||||||||||||||||||||||||
Customer returns | 85 | 48 | – | (56 | ) | 77 | ||||||||||||||||||||||||||
Other | 53 | 167 | – | (163 | ) | 57 | ||||||||||||||||||||||||||
Total | 1,690 | 6,969 | 25 | (6,548 | ) | 2,136 | ||||||||||||||||||||||||||
Additions in | Adjustment | Carried forward | ||||||||||||||||||||||||||||||
Brought forward | respect of | Provision for | in respect | Returns | at 31 December | |||||||||||||||||||||||||||
at 1 January 2007 | MedImmune | current year | of prior years | and payments | 2007 | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
Chargebacks | 92 | 2 | 1,115 | 15 | (1,038 | ) | 186 | |||||||||||||||||||||||||
Regulatory – US government and state programmes | 314 | 69 | 769 | (37 | ) | (687 | ) | 428 | ||||||||||||||||||||||||
Contractual – Managed-care and group purchasing organisation rebates | 635 | 5 | 3,100 | 79 | (2,919 | ) | 900 | |||||||||||||||||||||||||
Cash and other discounts | 29 | 1 | 356 | – | (348 | ) | 38 | |||||||||||||||||||||||||
Customer returns | 160 | 1 | 19 | (1 | ) | (94 | ) | 85 | ||||||||||||||||||||||||
Other | 47 | – | 153 | – | (147 | ) | 53 | |||||||||||||||||||||||||
Total | 1,277 | 78 | 5,512 | 56 | (5,233 | ) | 1,690 | |||||||||||||||||||||||||
Table of Contents
Directors’ Report | Financial Review | 47 | |
Reviews |
and intangible assets
Table of Contents
48Directors’ Report |Financial Review
> | AstraZeneca and Her Majesty’s Revenue & Customs (HMRC) have made a joint referral to the UK Court in respect of transfer pricing between our UK operation and one of our overseas operations for the years 1996 to date as there continues to be a material difference between the Group’s and HMRC’s positions. An additional referral in respect of controlled foreign company aspects of the same case was made during 2008. Absent a negotiated settlement, litigation is set to commence in 2010. | |
> | AstraZeneca has applied for an advance pricing agreement in relation to intra-group transactions between the UK and the US which is being progressed through competent authority proceedings under the relevant double tax treaty. |
Table of Contents
Directors’ Report | Financial Review | 49 | |
Reviews |
Less than 1 year | 1-3 years | 3-5 years | Over 5 years | Total | ||||||||||||||||
$m | $m | $m | $m | $m | ||||||||||||||||
Bank loans and other borrowings | 2,512 | 2,769 | 834 | 12,209 | 18,324 | |||||||||||||||
Operating leases | 132 | 128 | 80 | 131 | 471 | |||||||||||||||
Contracted capital expenditure | 739 | – | – | – | 739 | |||||||||||||||
Total | 3,383 | 2,897 | 914 | 12,340 | 19,534 | |||||||||||||||
and commitments
Table of Contents
50Directors’ Report |Geographical Review
> | Significant growth continues to be delivered by key products:Arimidex(7%),Crestor(29%),Seroquel(12%) andSymbicort(23%).Nexiumgrowth of 9% outside the US. |
> | Despite a continually challenging environment, including pressure from generic medicines, combined sales ofArimidex,Crestor,Nexium,SeroquelandSymbicortwere up 10% in the US to 66% of our total US sales. |
> | In North America, despite several key mergers (Merck/Schering-Plough, Pfizer/Wyeth), AstraZeneca maintained its position as the second largest pharmaceutical company in Canada. In the US, AstraZeneca is now the third largest pharmaceutical company. In the US, AstraZeneca grew its audited sales faster than any other pharmaceutical company in the top 10. |
> | Solid sales performance outside the US, up 6%. |
> | Strong brand performance in our Western Europe markets but intense competition and governmental controls over healthcare expenditure. |
> | Emerging Markets delivered strong sales growth, up 12% with Emerging Europe sales up 7% and Emerging Asia Pacific sales (including China) up 15%. |
> | Live attenuated H1N1 influenza (swine flu) vaccine approved. AstraZeneca contracted with the US Department of Health and Human Services to supply 42 million doses of live attenuated H1N1 influenza vaccine at $389 million. |
> | For the first time, the seasonal influenza vaccine,FluMist, sold out of its approximately 10 million dose supply. |
Table of Contents
Directors’ Report | Geographical Review | 51 | |
Reviews |
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
US | 14,778 | 1,268 | – | 13,510 | 142 | 2 | 13,366 | 9 | 9 | 1 | 1 | |||||||||||||||||||||||||||||||||
Canada | 1,203 | 37 | (109 | ) | 1,275 | 95 | 35 | 1,145 | 3 | (6 | ) | 8 | 11 | |||||||||||||||||||||||||||||||
North America | 15,981 | 1,305 | (109 | ) | 14,785 | 237 | 37 | 14,511 | 9 | 8 | 2 | 2 | ||||||||||||||||||||||||||||||||
Western Europe | 9,277 | 257 | (723 | ) | 9,743 | 55 | 573 | 9,115 | 3 | (5 | ) | 1 | 7 | |||||||||||||||||||||||||||||||
Japan | 2,341 | 142 | 242 | 1,957 | 73 | 223 | 1,661 | 7 | 20 | 4 | 18 | |||||||||||||||||||||||||||||||||
Australasia | 853 | 98 | (88 | ) | 843 | 107 | 21 | 715 | 12 | 1 | 15 | 18 | ||||||||||||||||||||||||||||||||
Other Established Markets | 12,471 | 497 | (569 | ) | 12,543 | 235 | 817 | 11,491 | 4 | (1 | ) | 2 | 9 | |||||||||||||||||||||||||||||||
Emerging Europe | 1,091 | 87 | (211 | ) | 1,215 | 102 | 85 | 1,028 | 7 | (10 | ) | 10 | 18 | |||||||||||||||||||||||||||||||
China | 811 | 168 | 16 | 627 | 136 | 54 | 437 | 27 | 29 | 31 | 43 | |||||||||||||||||||||||||||||||||
Emerging Asia Pacific | 780 | 52 | (74 | ) | 802 | 72 | (19 | ) | 749 | 6 | (3 | ) | 10 | 7 | ||||||||||||||||||||||||||||||
Other Emerging | 1,670 | 208 | (167 | ) | 1,629 | 247 | 39 | 1,343 | 13 | 3 | 18 | 21 | ||||||||||||||||||||||||||||||||
Emerging Markets | 4,352 | 515 | (436 | ) | 4,273 | 557 | 159 | 3,557 | 12 | 2 | 16 | 20 | ||||||||||||||||||||||||||||||||
Total Sales | 32,804 | 2,317 | (1,114 | ) | 31,601 | 1,029 | 1,013 | 29,559 | 7 | 4 | 3 | 7 | ||||||||||||||||||||||||||||||||
> | Promotes market competition that leads to improved health outcomes | |
> | Ensures patient safety is maintained or enhanced | |
> | Expands coverage for the uninsured | |
> | Fosters and rewards innovation | |
> | Provides protection for intellectual property. |
Table of Contents
52Directors’ Report |Geographical Review
Table of Contents
Directors’ Report | Geographical Review | 53 | |
Reviews |
Table of Contents
54Directors’ Report |Geographical Review
Latin America
Table of Contents
Directors’ Report | Therapy Area Review | 55 | |
Reviews |
1 | IncludesSynagisandFluMistwhich were acquired in June 2007. |
Table of Contents
56Directors’ Report |Therapy Area Review
> | Onglyza™ has been launched in the US, Canada, Mexico, Germany, the UK and Denmark and has been approved in Argentina, Brazil, India and all other EU countries. |
> | Crestorsales up 29% to $4.5 billion.Crestorapproval has broadened to every EU country with launches in Germany and Spain in 2009. |
> | Crestorwas approved in the US for the treatment of paediatric patients from 10 to 17 years of age with heterozygous familial hypercholesterolemia based on the PLUTO study. This study fulfilled our paediatric exclusivity obligations, which resulted in Paediatric Exclusivity being granted in July, which will provide an additional six months of exclusivity to marketCrestorin the US. |
> | Crestorfilings were submitted in the US and the EU as well as other markets seeking an outcomes indication and labelling based on the JUPITER study which demonstrated a significant reduction in major cardiovascular (CV) events (44% compared to placebo) in men (over 50) and women (over 60) with elevated high-sensitivity C-reactive protein but low/normal cholesterol levels. |
> | The parties concluded discovery in theCrestorconsolidated ANDA patent litigations filed in the US District Court for the District of Delaware. The actions involve eight generic drug manufacturers challenging the patent covering the active ingredient forCrestor. The Court decided numerous pre-trial motions, including a denial of AstraZeneca’s and the licensor’s (Shionogi) motion for summary judgment in respect of alleged inequitable conduct. The Court amended the pre-trial schedule, re-setting the beginning trial date to 22 February 2010. |
> | In Canada, previously reported Patented Medicines (Notice of Compliance) Regulations proceedings in respect ofCrestorcontinued and others were commenced in response to Notices of Allegation from further generic manufacturers. |
> | Atacandsales up 5% to $1.4 billion. |
> | Toprol-XLUS sales up 227% for the full year. |
> | MAA filed forBrilinta/Brilique(ticagrelor) in October and an NDA in November. |
> | In December, AstraZeneca and BMS submitted an NDA for the once-daily fixed-dose combination of Onglyza™ (saxagliptin) and metformin. |
> | US submission forCertriad, a fixed-dose combination ofCrestor(rosuvastatin calcium) and Abbott’s Trilipix™ (fenofibric acid), for the treatment of mixed dyslipidaemia. |
> | An NDA forAxanum, a single capsule ofNexiumand aspirin, was filed in April. |
1 | Licensed from Shionogi & Co. Ltd. |
2 | Licensed from Takeda Chemicals Industries Ltd. |
3 | Licensed from Merck & Co., Inc. |
4 | Co-developed and co-commercialised with Bristol-Myers Squibb Company. |
and dyslipidaemia
1 | European cardiovascular disease statistics, 2008 edition, Steven Allenderet al, British Foundation Health Promotion Research Group. |
2 | National Heart, Lung, and Blood Institute. Fact Book, Fiscal Year 2008, hlbi.nih.gov/about/factbook/ FactBookFinal.pdf. |
Table of Contents
Directors’ Report | Therapy Area Review | 57 | |
Reviews |
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
Seloken/Toprol-XL1 | 1,443 | 677 | (41 | ) | 807 | (667 | ) | 36 | 1,438 | 84 | 79 | (46 | ) | (44) | ||||||||||||||||||||||||||||||
Crestor | 4,502 | 1,048 | (143 | ) | 3,597 | 714 | 87 | 2,796 | 29 | 25 | 26 | 29 | ||||||||||||||||||||||||||||||||
Atacand | 1,436 | 67 | (102 | ) | 1,471 | 123 | 61 | 1,287 | 5 | (2 | ) | 10 | 14 | |||||||||||||||||||||||||||||||
Plendil | 241 | (20 | ) | (7 | ) | 268 | (18 | ) | 15 | 271 | (7 | ) | (10 | ) | (7 | ) | (1) | |||||||||||||||||||||||||||
Tenormin | 296 | (15 | ) | (2 | ) | 313 | (17 | ) | 22 | 308 | (5 | ) | (5 | ) | (6 | ) | 2 | |||||||||||||||||||||||||||
Zestril | 184 | (40 | ) | (12 | ) | 236 | (72 | ) | 13 | 295 | (17 | ) | (22 | ) | (24 | ) | (20) | |||||||||||||||||||||||||||
Onglyza™ | 11 | 11 | – | – | – | – | – | n/m | n/m | n/m | n/m | |||||||||||||||||||||||||||||||||
Other | 263 | 9 | (17 | ) | 271 | (34 | ) | 14 | 291 | 3 | (3 | ) | (12 | ) | (7) | |||||||||||||||||||||||||||||
Total | 8,376 | 1,737 | (324 | ) | 6,963 | 29 | 248 | 6,686 | 25 | 20 | – | 4 | ||||||||||||||||||||||||||||||||
1Includes sales of the authorised generic ofToprol-XLto Par Pharmaceutical Companies, Inc. |
(MAT/Q3/09)
Market sectors | $bn | |||
A High blood pressure | 51.1 | |||
B Abnormal levels of blood cholesterol | 35.4 | |||
C Diabetes | 28.5 | |||
D Thrombosis | 23.0 | |||
E Other | 21.7 |
in the global healthcare market.
Worldwide market value of $160 billion
marketed products
Table of Contents
58Directors’ Report |Therapy Area Review
Our key marketed products
In the pipeline
1 | The collaboration for saxagliptin excludes Japan. |
Table of Contents
Directors’ Report | Therapy Area Review | 59 | |
Reviews |
In the pipeline
Table of Contents
60Directors’ Report |Therapy Area Review
> | Sales ofNexium$5 billion, down 1%. |
> | Nexiumoral and intravenous was approved in the EU and other markets for the short-term maintenance of haemostasis and prevention of re-bleeding in patients following therapeutic endoscopy for acute bleeding gastric or duodenal ulcers. |
> | An sNDA forNexiumwas submitted for risk reduction of peptic ulcers associated with low-dose acetylsalicylic acid therapy in patients at risk. |
> | Losec/Prilosecsales $946 million, declining in the EU and the US due to continuing generic erosion. Overall sales down 10%; Japan sales increased 8%; China sales increased 21%. |
> | A Danish court issued an injunction against sales of generic esomeprazole magnesium by Sandoz A/S (Sandoz). The injunction prohibits Sandoz from selling, offering for sale or marketing the pharmaceutical products ‘Esomeprazole Sandoz’ and other pharmaceutical products containing esomeprazole magnesium with an optical purity of equal or greater to 99.8% enantionmeric excess in Denmark. |
> | AstraZeneca filed applications in Austria seeking interlocutory injunctions to restrain Hexal Pharma GmbH and 1A Pharma GmbH, both companies in the Sandoz group, from marketing products containing generic esomeprazole magnesium in Austria. |
> | AstraZeneca initiated legal proceedings in Portugal to suspend approvals for Sandoz’s generic esomeprazole. In October the court granted AstraZeneca a preliminary injunction against Sandoz, suspending the efficacy of the marketing and price approvals for Sandoz’s generic esomeprazole. The decision has been appealed by the Portuguese authorities. |
> | In January 2010, AstraZeneca settled USNexiumpatent litigation against Teva Pharmaceuticals Ltd (Teva Pharma) and affiliates. AstraZeneca has granted Teva Pharma a licence to enter the US market with its generic esomeprazole, subject to regulatory approval, on 27 May 2014, or earlier in certain circumstances. Teva Pharma conceded validity/enforceability of all patents in Teva Pharma’s USNexiumpatent litigations and that Teva Pharma’s proposed generic esomeprazole would infringe six USNexiumpatents. |
> | Patent litigation continuing in the US against other generic manufacturers following an ANDA relating toNexium. |
> | In Canada, Patented Medicines (Notice of Compliance) Regulations proceedings involving Apotex relating toNexiumcontinued. A hearing is scheduled to commence on 31 May 2010. |
Table of Contents
Directors’ Report | Therapy Area Review | 61 | |
Reviews |
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
Nexium | 4,959 | (73 | ) | (168 | ) | 5,200 | (121 | ) | 105 | 5,216 | (1 | ) | (5 | ) | (2 | ) | – | |||||||||||||||||||||||||||
Losec/Prilosec | 946 | (105 | ) | (4 | ) | 1,055 | (156 | ) | 68 | 1,143 | (10 | ) | (10 | ) | (14 | ) | (8) | |||||||||||||||||||||||||||
Other | 106 | 21 | (4 | ) | 89 | 2 | 3 | 84 | 24 | 19 | 2 | 6 | ||||||||||||||||||||||||||||||||
Total | 6,011 | (157 | ) | (176 | ) | 6,344 | (275 | ) | 176 | 6,443 | (2 | ) | (5 | ) | (4 | ) | (2) | |||||||||||||||||||||||||||
(MAT/Q3/09)
Market sectors | $bn | |||
A PPI | 26.0 | |||
B Other | 13.0 |
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62Directors’ Report |Therapy Area Review
> | Synagissales of $1.1 billion; in the US $782 million. |
> | Merrem/Meronemsales of $872 million, up 5%. |
> | H1N1 influenza (swine flu) vaccine successfully developed and delivered to the US Department of Health and Human Services (HHS) (sales $389 million). |
> | FluMistsales of $145 million. |
> | Filed formal regulatory reply to the motavizumab Complete Response Letter. |
> | In-licence of ceftaroline from Forest outside the US, Canada and Japan. |
> | Acquired the infection research company Novexel (completion of the acquisition is subject to the expiry or termination of the applicable waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act). |
> | Expanded collaboration with Forest to include two antibiotic development programmes: ceftazidime/NXL-104 (CAZ104) and ceftaroline/ NXL-104 (CEF104). |
1 | Licensed from Dainippon Sumitomo Pharma Co., Ltd. |
2 | Licensed from Cubist Pharmaceuticals, Inc. |
Table of Contents
Directors’ Report | Therapy Area Review | 63 | |
Reviews |
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
Merrem | 872 | 44 | (69 | ) | 897 | 97 | 27 | 773 | 5 | (3 | ) | 13 | 16 | |||||||||||||||||||||||||||||||
Synagis1 | 1,082 | (148 | ) | – | 1,230 | 612 | – | 618 | (12 | ) | (12 | ) | n/m | n/m | ||||||||||||||||||||||||||||||
FluMist1 | 145 | 41 | – | 104 | 51 | – | 53 | 39 | 39 | n/m | n/m | |||||||||||||||||||||||||||||||||
H1N1 influenza vaccine | 389 | 389 | – | – | – | – | – | n/m | n/m | n/m | n/m | |||||||||||||||||||||||||||||||||
Other | 143 | (69 | ) | (8 | ) | 220 | (54 | ) | 4 | 270 | (31 | ) | (35 | ) | (20 | ) | (19) | |||||||||||||||||||||||||||
Total | 2,631 | 257 | (77 | ) | 2,451 | 706 | 31 | 1,714 | 10 | 7 | 41 | 43 | ||||||||||||||||||||||||||||||||
1 | Acquired in June 2007. |
(MAT/Q3/09)
Market sectors | $bn | |||
A Anti-bacterials | 35.2 | |||
B Anti-virals | 22.1 | |||
C Others | 20.6 |
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64Directors’ Report |Therapy Area Review
Table of Contents
Directors’ Report | Therapy Area Review | 65 | |
Reviews |
> | TotalSeroquelsales up 12% to $4.9 billion. |
> | Seroquelhas been granted Paediatric Exclusivity in the US as a result of studies conducted in children and adolescents, which will provide an additional six months of exclusivity to marketSeroquelin the US. |
> | In December, the FDA approvedSeroquel XRas an adjunctive treatment to anti-depressants in adults with major depressive disorder (MDD). AstraZeneca also received a Complete Response Letter for itsSeroquel XRsubmission for MDD as acute and maintenance monotherapy in adults and for acute therapy in the elderly. |
> | In September,Seroquel XRandSeroquelwere approved under the European Mutual Recognition Procedure for the prevention of recurrence in bipolar disorder. |
> | In December, the FDA approvedSeroquelfor the treatment of schizophrenia in adolescents 13 to 17 years of age as monotherapy, and for the acute treatment of manic episodes associated with bipolar I disorder in children and adolescents 10 to 17 years of age, both as monotherapy and as an adjunct to lithium or divalproex. |
> | The EU submission forSeroquel XRfor the treatment of MDD received a negative opinion in May but has been referred to the CHMP and the outcome is anticipated in the first quarter of 2010. |
> | Seroquel XRsubmissions for generalised anxiety disorder (GAD) received a Complete Response Letter from the FDA in February 2009 (adult population) and in September (elderly population). |
> | Global development and licence agreement with Targacept for Targacept’s late-stage compound TC-5214. |
> | In-licence of NKTR-118 and NKTR-119 from Nektar. |
> | AstraZeneca established several neuroscience research collaborations in 2009, amongst which is a collaboration with Jubilant in the areas of chemical lead generation and lead optimisation to support our efforts in analgesia and neurology. |
> | The US Court of Appeals affirmed a Summary Judgment Motion granted to AstraZeneca in the patent infringement actions commenced against two generic drug manufacturers in the US following the filing of ANDAs relating toSeroquel. |
> | Three consolidated ANDA patent infringement lawsuits, previously filed in the US against Handa, Accord and Biovail, proceed in discovery. The three ANDAs seek approval to market generic copies ofSeroquel XRbefore the expiry of its patents. |
> | Personal injury actions in the US and Canada involvingSeroquelare being defended vigorously, with successful results to date in the US. |
> | Agreement in principle reached with the US Attorney’s Office to settle claims relating toSeroquelsales and marketing practices and to make a payment of $524 million (including interest). Final settlement is subject to negotiation of a civil settlement agreement and a corporate integrity agreement. Other litigation and government investigations regarding sales and marketing practices are being defended vigorously. |
1 | WHO ranking 2008, disease burden measured by disability adjusted life years. |
2 | Brookmeyer Ret al, Alzheimer’s & Dementia 2007; Arthritis Foundation, American Chronic Pain Foundation, Reforming Chinese Healthcare through Public-Private Partnership, Swiss Re May 2007. |
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66Directors’ Report |Therapy Area Review
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
Seroquel | 4,866 | 521 | (107 | ) | 4,452 | 346 | 79 | 4,027 | 12 | 9 | 9 | 11 | ||||||||||||||||||||||||||||||||
Diprivan | 290 | 18 | (6 | ) | 278 | (3 | ) | 18 | 263 | 6 | 4 | (1 | ) | 6 | ||||||||||||||||||||||||||||||
Zomig | 434 | 2 | (16 | ) | 448 | (3 | ) | 17 | 434 | – | (3 | ) | (1 | ) | 3 | |||||||||||||||||||||||||||||
Local anaesthetics | 599 | 27 | (33 | ) | 605 | 13 | 35 | 557 | 4 | (1 | ) | 2 | 9 | |||||||||||||||||||||||||||||||
Other | 48 | (2 | ) | (4 | ) | 54 | (7 | ) | 2 | 59 | (4 | ) | (11 | ) | (12 | ) | (8 | ) | ||||||||||||||||||||||||||
Total | 6,237 | 566 | (166 | ) | 5,837 | 346 | 151 | 5,340 | 10 | 7 | 6 | 9 | ||||||||||||||||||||||||||||||||
(MAT/Q3/09)
Market sectors | $bn | |||
A Psychiatry | 56.7 | |||
B Neurology | 40.1 | |||
C Analgesia | 29.9 | |||
D Anaesthesia | 4.9 |
totals $132 billion
(pain control)
Our key marketed products
Table of Contents
Directors’ Report | Therapy Area Review | 67 | |
Reviews |
In the pipeline
3 | Decision Resources 2008. |
Table of Contents
68Directors’ Report |Therapy Area Review
Oncology
> | Arimidexsales up 7% to $1.9 billion and continues to be the leading branded hormonal therapy for early breast cancer in the US, Japan, Spain, the UK and France. |
> | Zoladexsales $1.1 billion, flat from the previous year. |
> | Casodexsales $0.8 billion, down 34%, following expiry of patents in all major territories. |
> | Iressawas approved in the EU for the treatment of adults with locally advanced or metastatic non-small cell lung cancer (NSCLC) with activating mutations of the epidermal growth factor receptor-tyrosine kinase (EGFR-TK). |
> | Faslodex500mg has been shown to be more efficacious thanFaslodex250mg at treating breast cancer and regulatory submissions to change the dose have been made in the EU and the US, together with the first filing in Japan. |
> | Withdrawal of the US and the EU regulatory submissions forZactimain NSCLC in October but clinical studies continue in a number of other types of cancer. |
> | Registration studies ongoing forRecentinin first line colorectal cancer and recurrent glioblastoma multiforme and NSCLC. |
> | Registration studies ongoing for zibotentan (ZD4054) in castrate resistant prostate cancer. |
> | Olaparib (AZD2281) is in ongoing Phase II studies for the treatment of certain types of breast and ovarian cancer. Olaparib will progress to Phase III development in breast cancer with genetic DNA repair deficits. |
> | Teva Parenteral Medicines (Teva Par) has challenged our patents forFaslodex. In January 2010, AstraZeneca filed a patent infringement action against Teva Par in the US District Court for the District of Delaware. |
Table of Contents
Directors’ Report | Therapy Area Review | 69 | |
Reviews |
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
Casodex | 844 | (424 | ) | 10 | 1,258 | (161 | ) | 84 | 1,335 | (34 | ) | (33 | ) | (12 | ) | (6 | ) | |||||||||||||||||||||||||||
Arimidex | 1,921 | 129 | (65 | ) | 1,857 | 69 | 58 | 1,730 | 7 | 3 | 4 | 7 | ||||||||||||||||||||||||||||||||
Zoladex | 1,086 | – | (52 | ) | 1,138 | (31 | ) | 65 | 1,104 | – | (5 | ) | (3 | ) | 3 | |||||||||||||||||||||||||||||
Iressa | 297 | 20 | 12 | 265 | 8 | 19 | 238 | 8 | 12 | 3 | 11 | |||||||||||||||||||||||||||||||||
Faslodex | 262 | 26 | (13 | ) | 249 | 25 | 10 | 214 | 10 | 5 | 12 | 16 | ||||||||||||||||||||||||||||||||
Nolvadex | 88 | – | 3 | 85 | (5 | ) | 7 | 83 | – | 4 | (6 | ) | 2 | |||||||||||||||||||||||||||||||
Abraxane™ | – | (64 | ) | – | 64 | 2 | – | 62 | (100 | ) | (100 | ) | 3 | 3 | ||||||||||||||||||||||||||||||
Ethyol | 15 | (13 | ) | – | 28 | (15 | ) | – | 43 | (46 | ) | (46 | ) | n/m | n/m | |||||||||||||||||||||||||||||
Other | 5 | (4 | ) | (1 | ) | 10 | (1 | ) | 1 | 10 | (40 | ) | (50 | ) | (10 | ) | – | |||||||||||||||||||||||||||
Total | 4,518 | (330 | ) | (106 | ) | 4,954 | (109 | ) | 244 | 4,819 | (7 | ) | (9 | ) | (2 | ) | 3 | |||||||||||||||||||||||||||
(MAT/Q3/09)
Market sectors | $bn | |||
A Chemotherapy | 18.2 | |||
B Monoclonal antibodies | 14.4 | |||
C Hormonal therapies | 8.8 | |||
D Small molecule TKIs | 7.2 |
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70Directors’ Report |Therapy Area Review
Table of Contents
Directors’ Report | Therapy Area Review | 71 | |
Reviews |
Respiratory & Inflammation
> | TotalSymbicortsales $2.3 billion, up 23%. |
> | SymbicortpMDI licensed for long-term maintenance treatment of asthma in the US. The chronic obstructive pulmonary disease (COPD) indication was approved by the FDA in February 2009. An additional programme for paediatric asthma indication has been submitted to the FDA and a Complete Response Letter was received in April. AstraZeneca has responded to the Complete Response Letter with a proposed programme to address the FDA questions. |
> | Outside the US,Symbicort SMARTis now approved for use in managing asthma in 96 countries. |
> | Outside the US,Symbicort Turbuhaleris now approved for the treatment of COPD in 96 countries. |
> | In October,Symbicort Turbuhalerwas approved in Japan for the treatment of adult asthma and it was launched in Japan in January 2010. AstraZeneca and Astellas have entered into an agreement for the co-promotion ofSymbicort Turbuhalerin Japan. |
> | TotalPulmicortsales of $1,310 million and is now approved in 116 countries. |
> | With settlement of AstraZeneca’sPulmicort Respulespatent infringement litigation against Teva in November 2008, Teva obtained an exclusive licence to sell genericPulmicort Respulesin the US from 15 December 2009 on payment of royalties to AstraZeneca. Teva launched its licensed product in December. AstraZeneca sales ofPulmicort Respulescontinue despite Teva’s entry. |
> | Following FDA approval of Apotex’s generic version ofPulmicort Respulesin March 2009, AstraZeneca obtained a preliminary injunction against Apotex, Inc. and Apotex Corp. (Apotex) preventing an at-risk launch of the product until further order of the Court. Apotex appealed the decision. Other patent infringement litigation in relation toPulmicort Respulesagainst Breath Limited continues. |
Table of Contents
72Directors’ Report |Therapy Area Review
2009 | 2008 | 2007 | 2009 compared to 2008 | 2008 compared to 2007 | ||||||||||||||||||||||||||||||||||||||||
Growth due | Growth due | |||||||||||||||||||||||||||||||||||||||||||
CER | to exchange | CER | to exchange | CER | Reported | CER | Reported | |||||||||||||||||||||||||||||||||||||
Sales | growth | effect | Sales | growth | effect | Sales | growth | growth | growth | growth | ||||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | % | % | % | % | ||||||||||||||||||||||||||||||||||
Pulmicort | 1,310 | (155 | ) | (30 | ) | 1,495 | 7 | 34 | 1,454 | (10 | ) | (12 | ) | – | 3 | |||||||||||||||||||||||||||||
Symbicort | 2,294 | 456 | (166 | ) | 2,004 | 346 | 83 | 1,575 | 23 | 14 | 22 | 27 | ||||||||||||||||||||||||||||||||
Rhinocort | 264 | (47 | ) | (11 | ) | 322 | (41 | ) | 9 | 354 | (15 | ) | (18 | ) | (12 | ) | (9 | ) | ||||||||||||||||||||||||||
Oxis | 63 | – | (8 | ) | 71 | (21 | ) | 6 | 86 | – | (11 | ) | (24 | ) | (17 | ) | ||||||||||||||||||||||||||||
Accolate | 66 | (6 | ) | (1 | ) | 73 | (4 | ) | 1 | 76 | (8 | ) | (10 | ) | (5 | ) | (4 | ) | ||||||||||||||||||||||||||
Other | 135 | (14 | ) | (14 | ) | 163 | (9 | ) | 6 | 166 | (9 | ) | (17 | ) | (5 | ) | (2 | ) | ||||||||||||||||||||||||||
Total | 4,132 | 234 | (230 | ) | 4,128 | 278 | 139 | 3,711 | 6 | – | 7 | 11 | ||||||||||||||||||||||||||||||||
(MAT/Q3/09)
Market sectors | $bn | |||
A Asthma | 17.1 | |||
B COPD | 9.8 | |||
C Rhinitis | 7.3 | |||
D Other | 19.8 |
key marketed products
Table of Contents
Directors’ Report | Therapy Area Review | 73 | |
Reviews |
Table of Contents
74Directors’ Report |Therapy Area Review
Table of Contents
Directors’ Report | Other Businesses | 75 | |
Reviews |
Other Businesses
Table of Contents
76Directors’ Report |Environmental Sustainability
Environmental Sustainability
1 | Data exclude MedImmune. |
2 | The 2008 and 2007 figures have been revised due to improved data capture. |
3 | We have replaced the ozone depleting potential (ODP) KPI with waste production as we believe this is now a more meaningful KPI. ODP data continue to be published on our website, astrazeneca.com/responsibility. |
Table of Contents
Directors’ Report | In the Global Community | 77 | |
Reviews |
Table of Contents
78Directors’ Report |In the Global Community
Table of Contents
Directors’ Report | Risk | 79 | |
Corporate Governance |
Table of Contents
80Directors’ Report |Risk
> | Failure to obtain the required regulatory or marketing approvals for the product candidate or the facilities in which it is manufactured. | |
> | Unfavourable data from key studies. | |
> | Adverse reactions to the product candidate or indications of other safety concerns. | |
> | Failure of R&D to develop new product candidates. | |
> | Failure to demonstrate adequately cost-effective benefits to regulators. | |
> | The emergence of competing products. |
Table of Contents
Directors’ Report | Risk | 81 | |
Corporate Governance |
of our externalisation strategy may
be unsuccessful
> | In conjunction with our agreement to acquire Novexel (subject to expiry or termination of the applicable waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act), an agreement with Forest to co-develop and co-commercialise ceftazidime and ceftaroline, next generation anti-infectives | |
> | Worldwide licensing agreement with Nektar granting AstraZeneca rights to a late-stage product for the treatment of opioid-induced constipation together with rights to an early programme to deliver products for the treatment of pain without constipation side effects | |
> | Collaboration with Merck to investigate a novel combination anti-cancer regimen | |
> | Collaboration with Targacept for the global development and commercialisation of Targacept’s late-stage compound TC-5214 | |
> | Agreement with Cancer Research Technology Limited and The Institute of Cancer Research (UK) to discover and develop potential new anti-cancer drugs. |
business execution risks
> | Inability to manufacture sufficient quantities of the product candidate for development or commercialisation activities in a timely and cost-efficient manner | |
> | Excessive costs of, or difficulty in, manufacturing | |
> | Erosion of patent term and other intellectual property rights, and infringement of those rights and the intellectual property rights owned by third parties | |
> | Failure to show value or a differentiated profile for our products. |
Table of Contents
82Directors’ Report |Risk
in emerging markets
of intellectual property rights
covering competing products
Table of Contents
Directors’ Report | Risk | 83 | |
Corporate Governance |
and price reductions
Table of Contents
84Directors’ Report |Risk
for goods and services
business practices
Table of Contents
Directors’ Report | Risk | 85 | |
Corporate Governance |
rules and regulations
and safety liabilities
economic downturn
Table of Contents
86 Directors’ Report | Risk
substantial investments
Table of Contents
Directors’ Report | Business Organisation and Corporate Governance | 87 | |
Corporate Governance |
and Corporate Governance
and responsibilities
and Executive Directors
A Independent Non-Executive Directors1 | 8 | |||
B Executive Directors | 2 | |||
C Non-Independent Non-Executive Director1 | 1 | |||
D Non-Executive Chairman | 1 | |||
1 As determined by the Board in accordance with the Combined Code. |
Non-Executive Directors
A 0-3 years | 3 | |||
B 3-6 years | 2 | |||
C 6-9 years | 4 | |||
D 9+ years | 1 |
of Directors
A Male | 9 | |||
B Female | 3 |
Non-Executive Directors
A UK | 4 | |||
B Rest of Europe | 4 | |||
C US | 2 |
Table of Contents
88Directors’ Report |Board of Directors
Nomination and Governance Committee
and Remuneration Committee Member
Table of Contents
Directors’ Report | Board of Directors | 89 | |
Corporate Governance |
Audit Committee Member and Nomination
and Governance Committee Member
Science Committee Member
Audit Committee Member
Table of Contents
90Directors’ Report |Senior Executive Team
Table of Contents
Directors’ Report | Senior Executive Team | 91 | |
Corporate Governance |
and Marketing Organisation (until 31 December)
Discovery Research
and Corporate Affairs
President, MedImmune and Executive
Vice-President, Commercial Operations
1 | Changes affecting the positions of Bruno Angelici and Tony Zook in 2010 are described in the Reserved matters and delegation of authority section on page 92. |
Table of Contents
92Directors’ Report |Business Organisation and Corporate Governance
delegation of authority
Number of meetings attended/(number of meetings Director was eligible to attend in 2009) | ||||||||||||||||
Nomination and | ||||||||||||||||
Audit | Remuneration | Governance | ||||||||||||||
Name | Board | Committee | Committee | Committee | ||||||||||||
Bo Angelin | 8 | (8) | – | – | – | |||||||||||
David Brennan | 8 | (8) | – | – | – | |||||||||||
John Buchanan | 5 | (8) | 3 | (4) | 3 | (6) | – | |||||||||
Jean-Philippe Courtois | 7 | (8) | 4 | (4) | – | – | ||||||||||
Jane Henney | 7 | (8) | 3 | (4) | – | 2 | (2) | |||||||||
Michele Hooper | 8 | (8) | 4 | (4) | – | 2 | (2) | |||||||||
Simon Lowth | 8 | (8) | – | – | – | |||||||||||
Rudy Markham | 7 | (8) | 4 | (4) | – | – | ||||||||||
Håkan Mogren1 | 1 | (2) | – | – | 0 | (1) | ||||||||||
John Patterson2 | 1 | (1) | – | – | – | |||||||||||
Nancy Rothwell | 6 | (8) | – | 6 | (6) | – | ||||||||||
Louis Schweitzer | 8 | (8) | – | 6 | (6) | 2 | (2) | |||||||||
John Varley | 8 | (8) | – | 6 | (6) | 2 | (2) | |||||||||
Marcus Wallenberg | 6 | (8) | – | – | – | |||||||||||
1 | Håkan Mogren retired from the Board on 30 April 2009. |
2 | John Patterson retired from the Board on 31 March 2009. |
Table of Contents
Directors’ Report | Business Organisation and Corporate Governance | 93 | |
Corporate Governance |
Audit | Remuneration | Governance | Science | |||||||
Name | Committee | Committee | Committee | Committee | Independent1 | |||||
Bo Angelin | x | x | x | ü | ü | |||||
David Brennan | x | x | x | x | – | |||||
John Buchanan | Chair | ü | x | x | ü | |||||
Jean-Philippe Courtois | ü | x | x | x | ü | |||||
Jane Henney | ü | x | ü | ü | ü | |||||
Michele Hooper2 | ü | x | ü | x | ü | |||||
Simon Lowth | x | x | x | x | – | |||||
Rudy Markham | ü | x | x | x | ü | |||||
Håkan Mogren3 | x | x | ü | x | x | |||||
John Patterson4 | x | x | x | ü | – | |||||
Nancy Rothwell | x | ü | x | Chair | ü | |||||
Louis Schweitzer | x | ü | Chair | x | –5 | |||||
John Varley | x | Chair | ü | x | ü | |||||
Marcus Wallenberg | x | x | x | x | x | |||||
1 | As determined by the Board for Combined Code purposes. |
2 | Michele Hooper is the senior independent Non-Executive Director. |
3 | Håkan Mogren retired from the Board on 30 April 2009. |
4 | John Patterson retired from the Board on 31 March 2009. |
5 | Louis Schweitzer was considered independent by the Board upon his appointment as Chairman; in accordance with the Combined Code, the test of independence is not appropriate to the Chairman after his appointment. |
> | John Patterson, Executive Director, Development retired from the Board on 31 March 2009. | |
> | Håkan Mogren, Non-Executive Deputy Chairman, retired from the Board on 30 April 2009. |
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> | Matters relating to the audit plans of the external auditor and GIA as well as oversight of the work of the Global Compliance function. | |
> | The Group’s overall framework for internal control over financial reporting and for other internal controls and processes. | |
> | The Group’s overall framework for risk management, particularly financial risks. | |
> | The accounting policies and practices of the Group. | |
> | The annual and quarterly financial reporting carried out by the Group. |
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Corporate Governance |
> | The Group’s financial disclosures were reviewed and various accounting matters considered. | |
> | Reports were received from the external auditor concerning its audit of the Financial Statements of the Group and from management, GIA, Global Compliance and the external auditor on the effectiveness of the Group’s system of internal controls and, in particular, its internal control over financial reporting. This included review and discussion of the results of the Group’s ‘continuous assurance’ and annual ‘letter of assurance’ processes (described further below in the UK corporate governance requirements section from page 96). The Audit Committee also reviewed quarterly activity reports of audit work carried out by GIA and the status of follow-up actions with management as well as reports from the Global Compliance function. | |
> | The systems and processes that management has developed pertaining to risk identification, classification and mitigation. | |
> | Continuing work to comply with the applicable provisions of the Sarbanes-Oxley Act. In particular, the Audit Committee regularly reviewed the status of compliance with the programme of internal controls over financial reporting implemented pursuant to section 404 of the Sarbanes-Oxley Act; further information about this is set out in the Sarbanes-Oxley Act section 404 section on page 49. | |
> | Data about calls made by employees via the AZethics telephone lines and other routes regarding potential breaches of the Code of Conduct together with the results of enquiries into these matters. | |
> | The succession of the Vice-President, GIA. | |
> | Accounting issues relevant to litigation and taxation matters. | |
> | Reports from the Group Treasury function and, in particular, the Group’s liquidity and cash position and the appropriateness of its cash management policies in the context of the current economic situation. | |
> | Other reports concerning the GIA, Global Compliance and Finance functions, including the internal audit plan and progress and plans of the Global Compliance Officer. |
> | The amount of audit and non-audit fees of the external auditor throughout 2009. The Audit Committee was satisfied throughout the year that the objectivity and independence of the external auditor were not in any way impaired by the nature of the non-audit work undertaken by the external auditor during the year, the level of non-audit fees charged for such work or any other facts or circumstances. Further information about the audit and non-audit fees for the year is disclosed in Note 27 to the Financial Statements on page 185. | |
> | A review and assessment of the Audit Committee’s performance which concluded that such performance was satisfactory. |
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governance requirements
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Corporate Governance |
> | Significant holders of the Company’s shares (contained in the Shareholder Information section from page 199). | |
> | Articles (contained in the Corporate Information section on page 204). | |
> | Amendments to the Company’s Articles (contained in the Corporate Information section on page 204). |
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> | The processes for ensuring that key business risks are effectively managed. | |
> | The financial and operational controls that help to ensure that the Group’s assets are properly safeguarded from losses, including fraud. | |
> | The controls that help to ensure the reliability and integrity of management information systems. | |
> | The processes for ensuring compliance with policies and procedures, external legislation and regulation. | |
> | On anad hocbasis, whether value for money is obtained (in terms of efficient use of the Group’s resources). |
Disclosure Committee
Group conducts business
> | AstraZeneca UK Limited: Albania, Algeria, Angola, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Chile, Costa Rica, Croatia, Cuba, Georgia, Ghana (scientific office), Ireland, Jordan, Kazakhstan, Kenya (scientific office), Macedonia, Romania, Russia, Serbia and Montenegro, Slovenia and Ukraine. | |
> | AstraZeneca AB: Egypt (scientific office), Latvia, Saudi Arabia (scientific office) and Slovakia. | |
> | AstraZeneca Export and Trading AB: Estonia, Lithuania, Romania and the United Arab Emirates. | |
> | AstraZeneca Singapore Pte Limited: Cambodia and Vietnam. |
dividends for 2009
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Corporate Governance |
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Directors’ Report | Directors’ Remuneration Report | 101 | |
Corporate Governance |
Non-Executive Director
Chairman of the Remuneration Committee
Remuneration
Report
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> | The eligibility, structure, award/grant levels, performance metrics and targets, costs and final vesting levels under LTI plans for Directors, other SET members and the Company Secretary. | |
> | Annual bonus payments for Executive Directors, other SET members and senior executives below SET level. | |
> | The pension entitlements of Executive Directors and other SET members. | |
> | The Chairman of the Board’s remuneration (which is approved by the other members of the Committee and the senior independent Non-Executive Director). | |
> | Any single payment or award over $1 million. | |
> | Shareholding guidelines for Executive Directors and other SET members. | |
> | The contractual terms and conditions of, and any potential or actual payments arising on termination to, Executive Directors, other SET members and the Company Secretary so as to ensure that they are fair to the individual and the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised. |
> | The strategic review of the remuneration and incentive framework for Executive Directors and other SET members. This has represented a considerable proportion of the Committee’s activities and focus during the course of the year. As part of its review, the Committee has undertaken a significant consultation with major shareholders and institutional investor organisations. |
> | A review of the terms of senior executives’ remuneration packages on appointment, promotion and termination. | |
> | The assessment of Company and individual performance against performance targets to determine the level of executive bonuses for 2008 and to set executive bonus performance targets for 2009. | |
> | The approval of awards made under the Group’s main LTI plans: the AstraZeneca Performance Share Plan (PSP); the AstraZeneca Share Option Plan (SOP); and the AstraZeneca Pharmaceuticals LP Restricted Stock Unit Award Plan (RSU Plan) to SET members and other participants. | |
> | A review of the Company’s governance arrangements for global compensation matters. | |
> | A benchmarking review of the Committee’s activities and policies against institutional investor guidelines. | |
> | A review of the pension entitlements of Executive Directors and other SET members. | |
> | A review of the impact on compensation policies and practices of the current economic environment, including ensuring the appropriate degree of risk adjustment to aggregate and individual compensation decisions. | |
> | The preparation, review and approval of this Report. |
> | When the PSP was approved by shareholders at the AGM in early 2005 (following the last full-scale review of executive remuneration), the Committee undertook to review its operation within a period of five years, and to take into account the views of the Company’s shareholders and the needs of the business at that time. |
> | Shareholder approval to operate the SOP expires during May 2010. This provided the Company with a natural opportunity to review the current approach to remuneration, pay policies and incentive structures and to consider how these may best be developed to support the business strategy going forward. | |
> | The Committee is aware that the subject of executive remuneration is much on the minds of shareholders and that, since its last review, a great deal has changed both in the general market and the corporate governance landscape and in the shape of, and strategic challenges faced by, the global pharmaceutical industry. |
> | All aspects of executive remuneration should be developed in the context of shareholder views on ‘best practice’ and be designed to help AstraZeneca create sustainable growth in shareholder value by the successful implementation of strategy. | |
> | Reward structures and performance measures should support a strong performance culture enabling delivery of the business strategy, where all employees have a clear understanding of the Group’s objectives, how their work will impact those objectives and how they will benefit from delivering high levels of performance. | |
> | Base pay and total compensation positioning against the market should be appropriate to attract and develop high-calibre talent and SET remuneration should continue to be referenced to competitive levels of remuneration in the relevant local markets. |
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Corporate Governance |
> | A clear desire in the business, supported by the Committee, to move towards a longer-term framework which will strengthen alignment with the inherently long-term nature of pharmaceutical drug development. | |
> | Revised LTI structures, designed to provide a clear focus for the business to outperform our industry peers over time, to deliver operational efficiency and to engender a strong sense of stewardship that will deliver long-term sustainable shareholder value. |
> | 50% of the award will be based on relative TSR against a selected peer group of global pharmaceutical companies, of which: |
– | 25% of the maximum award will vest for performance at the median of the peer group; and | ||
– | 75% of the maximum award will vest for upper quartile performance; the Committee will retain its existing discretion to determine the amount of vesting for performance significantly above upper quartile, up to 100% of the maximum award. |
> | 50% of the award will vest subject to the achievement of a free cash flow target, which will operate as a cumulative cash flow target over a three-year performance period. |
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Component of remuneration | Role within the remuneration framework | Summary of Policy | Applies to | |||
Base salary (fixed) | Base fixed remuneration. | Based on conditions in the relevant geographic market and recognising the value of an individual’s sustained personal performance and contribution to the business, taking account of the market rate for an individual’s skills and experience. Benchmarked against external comparators. | All employees | |||
Pension arrangements (fixed) | Provision of retirement benefits. | Benchmarked against the relevant local employment market. | All employees | |||
Benefits (fixed) | Provision of standard non-cash employment benefits, such as healthcare, insurances and, for certain employees, facilitated car purchase arrangements. | Cost-effective and compatible with relevant welfare arrangements and local market norms. | All employees | |||
Short-term bonus (variable) | An annual cash incentive opportunity determined by reference to Group, functional and individual performance, measured over a single financial year of the Company and taking into account external expectations of performance. | Differs by market, but the Group performance measures ensure that all eligible employees receive an element of reward based on the Company’s overall financial performance. The functional goals are agreed by the Committee at the start of the year and are derived from the business scorecard, the key elements of which are set out in the Strategy, objectives and 2009 performance table from page 16, and are monitored as part of the quarterly business review (QBR) process. Individual goals are based on annual objectives, which are linked to functional goals. | All eligible employees | |||
Deferred bonus plan (variable) | Aligns SET members’ interests with those of shareholders. | SET members must defer a proportion of their short-term bonus (currently one-third of pre-tax bonus for Executive Directors and one-sixth for other SET members) into Ordinary Shares or ADSs for a three-year period. | SET members | |||
LTI plans (variable) – for more information on these plans see the LTI plans section from page 107 | Long-term equity incentive awards to provide individual executives and employees with total compensation opportunities that are competitive against local market practice, for the achievement of operational excellence, strong financial performance and actions that are closely aligned with the interests of shareholders. Subject to shareholder approval, the primary LTI plans in which SET members participate from 2010 will be the PSP and the AZIP. | AstraZeneca Performance Share Plan. AstraZeneca Investment Plan (from 2010, subject to shareholder approval). Share Option Plan (final awards made in 2009). Global Restricted Share Plan (from 2010, replacing existing restricted stock unit plans). | | SET members and other senior executives SET members Senior management and SET members Eligible employees globally | ||
Other share plans | ‘All employee’ share participation arrangements, including some that are tax-approved, for example in the UK. | Examples include the Share Incentive Plan and Savings-Related Share Option Plan (UK)1. | Eligible employees | |||
Shareholding guidelines | Aligning SET members’ interests with those of shareholders. | The current expectation is for SET members to hold shares with a value equivalent to their base salary. From 2010, the CEO will be expected to hold shares equivalent to 200% of base salary and the CFO and other SET members will be expected to hold 125% of base salary in shares. | SET members | |||
Overall approach | When assessing the overall value of a SET member’s remuneration the Committee considers, both separately and in aggregate, each component of the SET member’s total remuneration. | |||||
1 Further information on these plans is provided in Note 24 to the Financial Statements from page 161. |
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Corporate Governance |
Fixed | % | Variable | % | |||||||
A Base Salary | 22 | B Bonus | 22 | |||||||
C PSP | 42 | |||||||||
D AZIP | 14 |
Fixed | % | Variable | % | |||||||
A Base Salary | 29 | B Bonus | 26 | |||||||
C PSP | 34 | |||||||||
D AZIP | 11 |
Annual salary in 2009 | Annual salary in 2010 | Increase | |||||||||
Executive Director | £ | £ | % | ||||||||
David Brennan | 972,900 | 972,900 | – | ||||||||
John Patterson1 | 540,000 | n/a | n/a | ||||||||
Simon Lowth | 550,000 | 620,000 | 13 | ||||||||
1 | John Patterson retired from the Board on 31 March 2009. |
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pension arrangements
related remuneration
1 | The 401(k) savings plan is a qualified plan to which eligible employees may make salary-deferral contributions on a post-tax and/or pre-tax basis. Employers may also make matching or non-elective contributions to the plan. There is a supplementary non-qualified plan in place for all eligible employees whose earnings exceed specific limits. |
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Corporate Governance |
> | 60% by reference to EPS, cash flow targets and the objectives in each of the strategic priority areas identified by the Board for the business, the key elements of which are set out in the Strategy, objectives and 2009 performance table from page 16 and which are monitored as part of the QBR against targets set by the Committee at the beginning of the year and taking into account external expectations of performance; and | |
> | 40% by reference to individual measures and initiatives which link to the business objectives relevant to the individual’s functional accountability (or, in the case of the CEO, the average of these individual outcomes). |
> | Strengthen the pipeline | |
> | Grow the business | |
> | Reshape the business | |
> | Promote a culture of responsibility and accountability. |
Bonus range for 2010 | ||||
Executive Director | % | |||
David Brennan | 0–180 | |||
Simon Lowth | 0–150 | |||
Short-term bonus (delivered as a combination of cash and shares, | ||||||||
as shown in the Directors’ emoluments in 2009 section from page 111)1 | ||||||||
Executive Director | £000% | of salary | ||||||
David Brennan | 1,751 | 180 | ||||||
John Patterson2 | 187 | 138 | ||||||
Simon Lowth | 825 | 150 | ||||||
1 | Bonuses for Executive Directors are not pensionable. |
2 | John Patterson’s bonus for 2009 was considered by the Committee in January 2010 and his bonus was based on his eligible earnings for the period in 2009 prior to his retirement on 31 March 2009. |
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The Committee is responsible for setting the policy for the way in which the PSP should operate, including agreeing performance targets, identifying which employees should be invited to participate in the PSP and the level of Share Awards. Participation is highly selective and tends only to include senior employees on the basis of their performance. Share Awards are not pensionable and may not generally be assigned or transferred.
> | Share Awards in 2007: the TSR performance for Schering-Plough Corporation and Wyeth Inc. was adjusted from a date a week before the announcement of the relevant corporate action to the end of the relevant performance period so as to track the TSR of the acquiring companies (Merck in the case of Schering-Plough and Pfizer Inc. in the case of Wyeth Inc.). | |
> | Share Awards in 2008 and 2009: Schering-Plough Corporation and Wyeth Inc. were removed from the peer group thus reducing the size of the peer group to 10 companies (excluding AstraZeneca). |
For these awards, AstraZeneca’s TSR will be compared with the TSR for the 10 companies remaining in the peer group in respect of the relevant performance period. |
TSR ranking | Vesting percentage | |||
of the Company | (%) | |||
Below median | 0 | |||
Median | 25 | |||
Upper quartile | 75 | |||
Between median and upper quartile | Pro rata | |||
Significantly above upper quartile | Up to 100 | |||
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Corporate Governance |
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Option Scheme
retention of fees
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Corporate Governance |
Date of | Unexpired term at | Notice | ||||||||||
Executive Director1 | service contract | 31 December 2009 | period | |||||||||
David Brennan | 1 January 2006 | 12 months | 12 months | |||||||||
Simon Lowth | 5 November 2007 | 12 months | 12 months | |||||||||
1Neither of the Executive Directors has any provision in their service contracts giving them a right to liquidated damages or an automatic entitlement to a bonus for the duration of their notice period. |
Effective date of | ||||
Non-Executive Director1, 2 | appointment | |||
Bo Angelin | 24 July 2007 | |||
John Buchanan | 25 April 2002 | |||
Jean-Philippe Courtois | 18 February 2008 | |||
Jane Henney | 24 September 2001 | |||
Michele Hooper | 1 July 2003 | |||
Rudy Markham | 12 September 2008 | |||
Dame Nancy Rothwell | 27 April 2006 | |||
Louis Schweitzer | 11 March 2004 | |||
John Varley | 26 July 2006 | |||
Marcus Wallenberg | 6 April 1999 | |||
1None of the letters of appointment applicable to Non-Executive Directors confers upon them any right to compensation payable on early termination of their appointment. | |
2Pursuant to the Articles, the continued appointment of each Non-Executive Director is subject to their election or re-election at each AGM. |
£ | ||||
Basic Fee | 60,000 | |||
Senior independent Non-Executive Director | (an additional) 25,000 | |||
Membership of the Audit Committee or the Remuneration Committee | 15,000 | |||
Chairman of the Audit Committee or the Remuneration Committee | (an additional) 20,000 | |||
Membership of the Science Committee | 10,000 | |||
Chairman of the Science Committee | (an additional) 7,000 | |||
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Salary | Bonus | Bonus | Taxable | Other payments | Total | Total | Total | |||||||||||||||||||||||||
and fees | Cash | Shares1 | benefits | and allowances | 2009 | 2008 | 2007 | |||||||||||||||||||||||||
Name | £000 | £000 | £000 | £000 | £000 | £000 | £000 | £000 | ||||||||||||||||||||||||
Louis Schweitzer | 325 | – | – | – | – | 325 | 303 | 260 | ||||||||||||||||||||||||
David Brennan | 9733 | 1,167 | 584 | 26 | 4362 | 3,186 | 2,506 | 2,150 | ||||||||||||||||||||||||
Simon Lowth | 550 | 550 | 275 | 8 | 434 | 1,4268 | 1,304 | 172 | ||||||||||||||||||||||||
Bo Angelin | 70 | – | – | – | – | 70 | 63 | 21 | ||||||||||||||||||||||||
John Buchanan | 110 | – | – | – | – | 110 | 96 | 69 | ||||||||||||||||||||||||
Jean-Philippe Courtois | 75 | – | – | – | – | 75 | 58 | – | ||||||||||||||||||||||||
Jane Henney | 85 | – | – | – | – | 85 | 76 | 57 | ||||||||||||||||||||||||
Michele Hooper | 100 | – | – | – | – | 100 | 90 | 64 | ||||||||||||||||||||||||
Rudy Markham | 75 | – | – | – | – | 75 | 23 | – | ||||||||||||||||||||||||
Nancy Rothwell | 92 | – | – | – | – | 92 | 80 | 54 | ||||||||||||||||||||||||
John Varley | 95 | – | – | – | – | 95 | 83 | 56 | ||||||||||||||||||||||||
Marcus Wallenberg | 60 | – | – | – | – | 60 | 53 | 40 | ||||||||||||||||||||||||
Former Directors | ||||||||||||||||||||||||||||||||
John Patterson6 | 135 | 187 | – | 3 | 1215 | 4468 | 1,081 | 982 | ||||||||||||||||||||||||
Håkan Mogren7 | 33 | – | – | – | – | 33 | 100 | 100 | ||||||||||||||||||||||||
Others | – | – | – | – | – | – | – | 463 | ||||||||||||||||||||||||
Total | 2,778 | 1,904 | 859 | 37 | 600 | 6,178 | 5,916 | 4,488 | ||||||||||||||||||||||||
Salary | Bonus | Bonus | Taxable | Other payments | Total | Total | Total | |||||||||||||||||||||||||
and fees | Cash | Shares1 | benefits | and allowances | 2009 | 2008 | 2007 | |||||||||||||||||||||||||
Name | $000 | $000 | $000 | $000 | $000 | $000 | $000 | $000 | ||||||||||||||||||||||||
Louis Schweitzer | 504 | – | – | – | – | 504 | 567 | 520 | ||||||||||||||||||||||||
David Brennan | 1,5083 | 1,808 | 905 | 40 | 6762 | 4,937 | 4,692 | 4,300 | ||||||||||||||||||||||||
Simon Lowth | 852 | 852 | 426 | 12 | 674 | 2,2098 | 2,442 | 345 | ||||||||||||||||||||||||
Bo Angelin | 108 | – | – | – | – | 108 | 118 | 42 | ||||||||||||||||||||||||
John Buchanan | 170 | – | – | – | – | 170 | 180 | 138 | ||||||||||||||||||||||||
Jean-Philippe Courtois | 116 | – | – | – | – | 116 | 109 | – | ||||||||||||||||||||||||
Jane Henney | 132 | – | – | – | – | 132 | 142 | 114 | ||||||||||||||||||||||||
Michele Hooper | 155 | – | – | – | – | 155 | 169 | 128 | ||||||||||||||||||||||||
Rudy Markham | 116 | – | – | – | – | 116 | 43 | – | ||||||||||||||||||||||||
Nancy Rothwell | 143 | – | – | – | – | 143 | 150 | 108 | ||||||||||||||||||||||||
John Varley | 147 | – | – | – | – | 147 | 155 | 113 | ||||||||||||||||||||||||
Marcus Wallenberg | 93 | – | – | – | – | 93 | 99 | 80 | ||||||||||||||||||||||||
Former Directors | ||||||||||||||||||||||||||||||||
John Patterson6 | 209 | 290 | – | 5 | 1885 | 6928 | 2,024 | 1,965 | ||||||||||||||||||||||||
Håkan Mogren7 | 51 | – | – | – | – | 51 | 187 | 200 | ||||||||||||||||||||||||
Others | – | – | – | – | – | – | – | 929 | ||||||||||||||||||||||||
Total | 4,304 | 2,950 | 1,331 | 57 | 931 | 9,573 | 11,077 | 8,982 | ||||||||||||||||||||||||
1 These figures represent that portion of the 2009 bonuses required to be deferred into Shares to be held for a three-year period, as explained in the Bonus share deferral requirements section on page 107. | |
2 Relates to relocation allowances, a car allowance and cash payments in respect of dividends accrued on vesting of LTI share plan awards. | |
3 This figure includes a sum of $83,000/£54,000 in respect of member contributions to the AstraZeneca Executive Deferred Compensation Plan which were paid into the plan by means of a salary sacrifice (see the Defined contribution arrangements section on page 113 for further details). | |
4 Relates to remaining cash following selection of benefits within AstraZeneca’s UK flexible benefits programme. | |
5 Relates to cash payments in respect of dividends accrued on vesting of LTI share plan awards and remaining cash following selection of benefits within AstraZeneca’s UK flexible benefits programme. | |
6 Part-year only as ceased to be a Director on 31 March 2009. | |
7 Part-year only as ceased to be a Director on 30 April 2009. | |
8 Does not include a cash allowance received in lieu of pension (see the Defined contribution arrangements section on page 113 for further details). |
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Corporate Governance |
GBP/USD | ||||
2009 | 0.645 | |||
2008 | 0.534 | |||
2007 | 0.500 | |||
David | John | David | John | |||||||||||||
Brennan | Patterson | Brennan | Patterson | |||||||||||||
£000 | £000 | $000 | $000 | |||||||||||||
Defined benefit arrangements | ||||||||||||||||
1. Accrued pension at 1 January 2009 | 822 | 365 | 1,275 | 566 | ||||||||||||
2. Increase in accrued pension during year as a result of inflation | – | – | – | – | ||||||||||||
3. Adjustment to accrued pension as a result of salary increase relative to inflation | 77 | – | 119 | – | ||||||||||||
4. Increase in accrued pension as a result of additional service | 16 | – | 25 | – | ||||||||||||
5. Accrued pension at 31 December 2009 | 915 | 365 | 1,419 | 566 | ||||||||||||
6. Employee contributions during 2009 | – | – | – | – | ||||||||||||
7. Transfer value of accrued pension at 31 December 2008 | 11,249 | 8,288 | 17,441 | 12,850 | ||||||||||||
8. Transfer value of accrued pension at 31 December 20091 | 12,850 | 9,124 | 19,922 | 14,146 | ||||||||||||
9. Change in transfer value during the period less employee contributions | 1,600 | 836 | 2,481 | 1,296 | ||||||||||||
10. Age at 31 December 2009 | 564/12 | 612/12 | 564/12 | 612/12 | ||||||||||||
11. Pensionable service (years) at 31 December 2009 | 34 | 3310/12 | 34 | 3310/12 | ||||||||||||
1 The transfer value of John Patterson’s accrued pension is calculated as at 6 April 2009, the date on which he retired from the AstraZeneca Pension Fund. |
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(for the 2007 award)%
(for the 2008 award)%
(for the 2009 award)%
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Corporate Governance |
Beneficial interest in Ordinary Shares at | Change to | Beneficial interest in Ordinary Shares at | ||||||||||
Name | 1 January 2009 or (if later) appointment date | beneficial interest | 31 December 2009 or (if earlier) resignation date | |||||||||
Louis Schweitzer | 4,000 | 1,356 | 5,356 | |||||||||
Håkan Mogren1 | 62,164 | – | 62,164 | |||||||||
David Brennan | 112,848 | 15,5272 | 128,3753 | |||||||||
Simon Lowth | 850 | – | 850 | |||||||||
John Patterson4 | 8,640 | 20,877 | 29,517 | |||||||||
Bo Angelin | 500 | 287 | 787 | |||||||||
John Buchanan | 2,500 | – | 2,500 | |||||||||
Jean-Philippe Courtois | 500 | 2,135 | 2,635 | |||||||||
Jane Henney | 500 | 287 | 787 | |||||||||
Michele Hooper | 500 | 1,200 | 1,700 | |||||||||
Rudy Markham | 1,137 | 283 | 1,420 | |||||||||
Nancy Rothwell | 500 | 287 | 787 | |||||||||
John Varley | 500 | – | 500 | |||||||||
Marcus Wallenberg | 67,264 | – | 67,264 | |||||||||
1 Part-year only as ceased to be a Director on 30 April 2009. | |
2 This figure represents the difference between the net number of ADSs acquired by David Brennan from the vestings of his 2006 Share Awards under the PSP and the AstraZeneca Deferred Bonus Plan and the net reduction in his notional beneficial interest in ADSs held within the unitised stock plans (see separate tables and footnotes below). | |
3 The total number of Ordinary Shares and ADSs in which David Brennan has an interest (including potential interests in unreleased shares held in Company plans as detailed in the tables below) has increased in 2009 by 67,968 to 576,790 as at 31 December 2009. | |
4 Part-year only as ceased to be a Director on 31 March 2009. |
Unitised stock plan | ADSs held at 1 January 2009 | Net ADSs acquired/(disposed) during 2009 | ADSs held at 31 December 2009 | |||||||||
AstraZeneca Executive Deferral Plan | 40,940 | (5,034 | )1 | 35,906 | ||||||||
AstraZeneca Executive Deferred Compensation Plan | 32,003 | (32,003 | )1 | – | ||||||||
AstraZeneca Savings and Security Plan | 7,700 | 403 | 8,103 | |||||||||
1 These figures relate to scheduled distributions in February 2009. |
Table of Contents
116Directors’ Report |Directors’ Remuneration Report
Award price | Price on vesting date | |||||||||||||||||||||||
Number of shares | pence | pence | Grant date1 | Vesting date1 | Performance period1 | |||||||||||||||||||
David Brennan | ||||||||||||||||||||||||
2006 Share Award | 73,109 | 2975 | 2287 | 24.03.06 | 24.03.09 | 01.01.06 – 31.12.08 | ||||||||||||||||||
2006 Share Award – Part 2 | 19,092 | 2848 | 2604 | 19.05.06 | 19.05.09 | 01.01.06 – 31.12.08 | ||||||||||||||||||
2007 Share Award | 107,051 | 2744 | 30.03.07 | 30.03.10 | 01.01.07 – 31.12.09 | |||||||||||||||||||
2008 Share Award | 161,546 | 1882 | 28.03.08 | 28.03.11 | 01.01.08 – 31.12.10 | |||||||||||||||||||
Total at 1 January 2009 | 360,798 | |||||||||||||||||||||||
Partial vesting of 2006 Share Award2 | (65,067 | )3 | 2287 | |||||||||||||||||||||
Partial lapse of 2006 Share Award | (8,042 | ) | ||||||||||||||||||||||
Partial vesting of 2006 Share Award – Part 22 | (16,992 | )4 | 2604 | |||||||||||||||||||||
Partial lapse of 2006 Share Award – Part 2 | (2,100 | ) | ||||||||||||||||||||||
2009 Share Award | 133,347 | 2280 | 27.03.09 | 27.03.12 | 01.01.09 – 31.12.11 | |||||||||||||||||||
Total at 31 December 2009 | 401,944 | |||||||||||||||||||||||
John Patterson | ||||||||||||||||||||||||
2006 Share Award | 32,319 | 2975 | 2287 | 24.03.06 | 24.03.09 | 01.01.06 – 31.12.08 | ||||||||||||||||||
2007 Share Award | 36,785 | 2744 | 30.03.07 | 30.03.10 | 01.01.07 – 31.12.09 | |||||||||||||||||||
2008 Share Award | 57,385 | 1882 | 28.03.08 | 28.03.11 | 01.01.08 – 31.12.10 | |||||||||||||||||||
Total at 1 January 2009 | 126,489 | |||||||||||||||||||||||
Partial vesting of 2006 Share Award2 | (28,764 | )5 | 2287 | |||||||||||||||||||||
Partial lapse of 2006 Share Award | (3,555 | ) | ||||||||||||||||||||||
Pro-rata forfeiture of 2007 Share Award | (12,183 | )6 | ||||||||||||||||||||||
Pro-rata forfeiture of 2008 Share Award | (38,047 | )6 | ||||||||||||||||||||||
Total at 31 March 2009 | 43,940 | 7 | ||||||||||||||||||||||
Simon Lowth | ||||||||||||||||||||||||
2007 Share Award | 15,554 | 2210 | 16.11.07 | 16.11.10 | 01.01.07 – 31.12.09 | |||||||||||||||||||
2008 Share Award | 58,448 | 1882 | 28.03.08 | 28.03.11 | 01.01.08 – 31.12.10 | |||||||||||||||||||
Total at 1 January 2009 | 74,002 | |||||||||||||||||||||||
2009 Share Award | 54,276 | 2280 | 27.03.09 | 27.03.12 | 01.01.09 – 31.12.11 | |||||||||||||||||||
Total at 31 December 2009 | 128,278 | |||||||||||||||||||||||
1 UK date convention applies. | |
2 Share Awards granted in 2006 vested in 2009 at 89% based on the outcome of the performance conditions and targets (which are set out in the AstraZeneca Performance Share Plan section from page 108). | |
3 Following certain mandatory tax deductions, David Brennan became beneficially interested in a net number of 38,389 Ordinary Shares. | |
4 Following certain mandatory tax deductions, David Brennan became beneficially interested in a net number of 10,025 Ordinary Shares. | |
5 Following certain mandatory tax deductions, John Patterson became beneficially interested in a net number of 16,970 Ordinary Shares. | |
6 In accordance with the PSP rules. | |
7 The remaining 24,602 Shares of the 2007 Share Award and 19,338 Shares of the 2008 Share Award will vest on the relevant scheduled vesting date subject to the achievement of the performance conditions measured over the whole of the relevant performance period (as set out in the AstraZeneca Performance Share Plan – Performance conditions section on page 108). |
Table of Contents
Directors’ Report | Directors’ Remuneration Report | 117 | |
Corporate Governance |
Award price | Price on vesting date | |||||||||||||||||||
Number of shares | pence | pence | Grant date1 | Vesting date1 | ||||||||||||||||
David Brennan | ||||||||||||||||||||
2006 Award | 6,352 | 2639 | 2415 | 24.02.06 | 24.02.09 | |||||||||||||||
2007 Award | 12,014 | 2911 | 23.02.07 | 23.02.10 | ||||||||||||||||
2008 Award | 16,810 | 1999 | 25.02.08 | 25.02.11 | ||||||||||||||||
Total at 1 January 2009 | 35,176 | |||||||||||||||||||
Vesting of 2006 Award | (6,352 | )2 | 2415 | |||||||||||||||||
2009 Award | 17,992 | 2400 | 25.02.09 | 25.02.12 | ||||||||||||||||
Total at 31 December 2009 | 46,816 | |||||||||||||||||||
John Patterson | ||||||||||||||||||||
2006 Award | 6,623 | 2639 | 2415 | 24.02.06 | 24.02.09 | |||||||||||||||
2007 Award | 5,600 | 2911 | 23.02.07 | 23.02.10 | ||||||||||||||||
2008 Award | 7,810 | 1999 | 25.02.08 | 25.02.11 | ||||||||||||||||
Total at 1 January 2009 | 20,033 | |||||||||||||||||||
Vesting of 2006 Award | (6,623 | )3 | 2415 | |||||||||||||||||
2009 Award | 7,256 | 2400 | 25.02.09 | 25.02.12 | ||||||||||||||||
Total at 31 March 2009 | 20,666 | 4 | ||||||||||||||||||
Simon Lowth | ||||||||||||||||||||
2008 Award | 1,340 | 1999 | 25.02.08 | 25.02.11 | ||||||||||||||||
Total at 1 January 2009 | 1,340 | |||||||||||||||||||
2009 Award | 9,775 | 2400 | 25.02.09 | 25.02.12 | ||||||||||||||||
Total at 31 December 2009 | 11,115 | |||||||||||||||||||
1 UK date convention applies. | |
2 Following certain mandatory tax deductions, David Brennan became beneficially interested in a net number of 3,747 Ordinary Shares. | |
3 Following certain mandatory tax deductions, John Patterson became beneficially interested in a net number of 3,907 Ordinary Shares. | |
4 In accordance with the plan rules on leavers, John Patterson’s 2007, 2008 and 2009 awards will vest on the relevant scheduled vesting date. |
Table of Contents
118Directors’ Report |Directors’ Remuneration Report
Number of Ordinary | Exercise price per | First day | Last day | |||||||||||||
Shares under option1 | Ordinary Share2 | exercisable3, 4 | exercisable3, 4 | |||||||||||||
Håkan Mogren At 1 January 2009 | 244,896 | 2848p | 13.12.02 | 24.03.13 | ||||||||||||
– market price above option price | 139,530 | 2499p | 13.12.02 | 24.03.13 | ||||||||||||
– market price at or below option price | 105,366 | 3309p | 23.08.03 | 27.03.12 | ||||||||||||
At 30 April 2009 | 5 | 244,896 | 2848p | 13.12.02 | 24.03.13 | |||||||||||
– market price above option price | 65,551 | 2231p | 25.03.06 | 24.03.13 | ||||||||||||
– market price at or below option price | 179,345 | 3073p | 13.12.02 | 27.03.12 | ||||||||||||
David Brennan At 1 January 2009 – options over Ordinary Shares | 432,959 | 2410p | 24.03.09 | 27.03.18 | ||||||||||||
– market price above option price (Ordinary Shares) | 322,318 | 2226p | 30.03.10 | 27.03.18 | ||||||||||||
– market price at or below option price (Ordinary Shares) | 110,641 | 2949p | 24.03.09 | 18.05.16 | ||||||||||||
Granted 27 March 2009 (Ordinary Shares) | 160,016 | 2280p | 27.03.12 | 26.03.19 | ||||||||||||
At 31 December 2009 – options over Ordinary Shares | 592,975 | 2375p | 24.03.09 | 26.03.19 | ||||||||||||
– market price above option price (Ordinary Shares) | 505,244 | 2271p | 19.05.09 | 26.03.19 | ||||||||||||
– market price at or below option price (Ordinary Shares) | 87,731 | 2975p | 24.03.09 | 23.03.16 | ||||||||||||
At 1 January 2009 – options over ADSs | 355,246 | $45.22 | 16.03.03 | 23.03.15 | ||||||||||||
– market price above option price (ADSs) | 110,987 | $40.35 | 24.03.08 | 23.03.15 | ||||||||||||
– market price at or below option price (ADSs) | 244,259 | $47.44 | 16.03.03 | 25.03.14 | ||||||||||||
At 31 December 2009 – options over ADSs | 355,246 | $45.22 | 16.03.03 | 23.03.15 | ||||||||||||
– market price above option price (ADSs) | 210,255 | $42.91 | 26.03.07 | 23.03.15 | ||||||||||||
– market price at or below option price (ADSs) | 144,991 | $48.58 | 29.03.04 | 27.03.12 | ||||||||||||
Simon Lowth At 1 January 2009 | 88,803 | 1951p | 16.11.10 | 27.03.18 | ||||||||||||
– market price above option price | 88,803 | 1951p | 16.11.10 | 27.03.18 | ||||||||||||
– market price at or below option price | – | n/a | n/a | n/a | ||||||||||||
Granted 27 March 2009 | 65,131 | 2280p | 27.03.12 | 26.03.19 | ||||||||||||
At 31 December 2009 | 153,934 | 2090p | 16.11.10 | 26.03.19 | ||||||||||||
– market price above option price | 153,934 | 2090p | 16.11.10 | 26.03.19 | ||||||||||||
– market price at or below option price | – | n/a | n/a | n/a | ||||||||||||
John Patterson At 1 January 2009 | 305,396 | 2544p | 25.03.02 | 27.03.18 | ||||||||||||
– market price above option price | 213,606 | 2279p | 25.03.02 | 27.03.18 | ||||||||||||
– market price at or below option price | 91,790 | 3163p | 23.08.03 | 23.03.16 | ||||||||||||
Lapsed | (2,916 | ) | 2674p | 25.03.02 | 24.03.09 | |||||||||||
At 31 March 2009 | 6 | 302,480 | 2543p | 16.03.03 | 27.03.18 | |||||||||||
– market price above option price | 122,213 | 1991p | 24.03.08 | 27.03.18 | ||||||||||||
– market price at or below option price | 180,267 | 2917p | 16.03.03 | 29.03.17 | ||||||||||||
1 Vesting is subject to satisfying the relevant performance conditions set out in each of the relevant share option plans. Further information on the performance conditions applicable to SOP is set out in the AstraZeneca Share Option Plan – Performance conditions section on page 109. As a Save-As-You-Earn scheme, the AstraZeneca Savings-Related Share Option Plan is not subject to any performance conditions. Awards granted under the Zeneca Plan are no longer subject to any performance conditions. | |
2 Exercise prices are weighted averages. | |
3 First and last exercise dates of groups of options, within which period there are shorter exercise periods. | |
4 UK date convention applies. | |
5 Håkan Mogren ceased to be a Director on 30 April 2009. | |
6John Patterson ceased to be a Director on 31 March 2009. |
Table of Contents
Directors’ Report | Directors’ Remuneration Report | 119 | |
Corporate Governance |
Gains made by Directors | Gains made by the | |||||||
on the exercise of share options | highest paid Director | |||||||
Year | $ | $ | ||||||
2009 | – | – | ||||||
2008 | 1,764.96 | – | ||||||
2007 | 783,858.08 | – | ||||||
During 2009, the market price of Ordinary Shares or ADSs was as follows: | ||||||||
Ordinary Share/ADS market price | Range of the Ordinary Share/ADS | |||||||
Stock Exchange | as at 31 December 2009 | market price during 2009 | ||||||
London | 2910.5p | 2147p to 2947p | ||||||
Stockholm | 307.00 SEK | 261.50 SEK to 356.00 SEK | ||||||
New York | $46.94 | $30.24 to $47.54 | ||||||
Company Secretary
Table of Contents
Table of Contents
Table of Contents
122Financial Statements
and Directors’ Responsibilities
> | Select suitable accounting policies and then apply them consistently. | |
> | Make judgements and estimates that are reasonable and prudent. | |
> | For the Group Financial Statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU. |
> | For the Parent Company Financial Statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Parent Company Financial Statements. | |
> | Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company will continue in business. |
> | The Financial Statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole. | |
> | The Directors’ Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face. |
Director
Internal Control over Financial Reporting
Table of Contents
Financial Statements | 123 |
and on Internal Control over Financial Reporting
(Sarbanes-Oxley Act Section 404)
Members of AstraZeneca PLC
of directors and auditors
financial statements
> | Give a true and fair view of the state of the Group’s affairs as at 31 December 2009 and of its profit for the year then ended. | |
> | Have been properly prepared in accordance with IFRSs as adopted by the EU. | |
> | Have been prepared in accordance with the requirements of the Companies Act 2006 and Article 4 of the IAS Regulation. |
as issued by the IASB
by the Companies Act 2006
to report by exception
> | Certain disclosures of Directors’ Remuneration specified by law are not made. | |
> | We have not received all the information and explanations we require for our audit. |
> | The Directors’ Statement, set out on pages 128 and 129, in relation to going concern. | |
> | The part of the corporate governance statement relating to the Company’s compliance with the nine provisions of the June 2008 Combined Code specified for our review. |
Senior Statutory Auditor
Statutory Auditor
Chartered Accountants
8 Salisbury Square, London, EC4Y 8BB
Table of Contents
124Financial Statements
for the year ended 31 December
2009 | 2008 | 2007 | ||||||||||||||
Notes | $m | $m | $m | |||||||||||||
Revenue | 1 | 32,804 | 31,601 | 29,559 | ||||||||||||
Cost of sales | (5,775 | ) | (6,598 | ) | (6,419 | ) | ||||||||||
Gross profit | 27,029 | 25,003 | 23,140 | |||||||||||||
Distribution costs | (298 | ) | (291 | ) | (248 | ) | ||||||||||
Research and development | (4,409 | ) | (5,179 | ) | (5,162 | ) | ||||||||||
Selling, general and administrative costs | 2 | (11,332 | ) | (10,913 | ) | (10,364 | ) | |||||||||
Other operating income and expense | 2 | 553 | 524 | 728 | ||||||||||||
Operating profit | 2 | 11,543 | 9,144 | 8,094 | ||||||||||||
Finance income | 3 | 462 | 854 | 959 | ||||||||||||
Finance expense | 3 | (1,198 | ) | (1,317 | ) | (1,070 | ) | |||||||||
Profit before tax | 10,807 | 8,681 | 7,983 | |||||||||||||
Taxation | 4 | (3,263 | ) | (2,551 | ) | (2,356 | ) | |||||||||
Profit for the period | 7,544 | 6,130 | 5,627 | |||||||||||||
Other Comprehensive Income: | ||||||||||||||||
Foreign exchange arising on consolidation | 388 | (1,336 | ) | 492 | ||||||||||||
Foreign exchange differences on borrowings forming net investment hedges | (68 | ) | 291 | (40 | ) | |||||||||||
Gain/(loss) on cash flow hedge in connection with debt issue | 1 | 1 | (21 | ) | ||||||||||||
Net available for sale gains/(losses) taken to equity | 2 | 2 | (9 | ) | ||||||||||||
Actuarial loss for the period | (569 | ) | (1,232 | ) | (113 | ) | ||||||||||
Income tax relating to components of Other Comprehensive Income | 4 | 192 | 368 | 33 | ||||||||||||
Other Comprehensive Income for the period, net of tax | (54 | ) | (1,906 | ) | 342 | |||||||||||
Total Comprehensive Income for the period | 7,490 | 4,224 | 5,969 | |||||||||||||
Profit attributable to: | ||||||||||||||||
Owners of the Parent | 7,521 | 6,101 | 5,595 | |||||||||||||
Non-controlling interests | 23 | 29 | 32 | |||||||||||||
Total Comprehensive Income attributable to: | ||||||||||||||||
Owners of the Parent | 7,467 | 4,176 | 5,934 | |||||||||||||
Non-controlling interests | 23 | 48 | 35 | |||||||||||||
Basic earnings per $0.25 Ordinary Share | 5 | $5.19 | $4.20 | $3.74 | ||||||||||||
Diluted earnings per $0.25 Ordinary Share | 5 | $5.19 | $4.20 | $3.73 | ||||||||||||
Weighted average number of Ordinary Shares in issue (millions) | 5 | 1,448 | 1,453 | 1,495 | ||||||||||||
Diluted weighted average number of Ordinary Shares in issue (millions) | 5 | 1,450 | 1,453 | 1,498 | ||||||||||||
Dividends declared and paid in the period | 21 | 3,026 | 2,767 | 2,658 | ||||||||||||
Table of Contents
Financial Statements | 125 |
at 31 December
2009 | 2008 | 2007 | ||||||||||||||
Notes | $m | $m | $m | |||||||||||||
Assets | ||||||||||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment | 7 | 7,307 | 7,043 | 8,298 | ||||||||||||
Goodwill | 8 | 9,889 | 9,874 | 9,884 | ||||||||||||
Intangible assets | 9 | 12,226 | 12,323 | 11,467 | ||||||||||||
Derivative financial instruments | 16 | 262 | 449 | 117 | ||||||||||||
Other investments | 10 | 184 | 156 | 182 | ||||||||||||
Deferred tax assets | 4 | 1,292 | 1,236 | 1,044 | ||||||||||||
31,160 | 31,081 | 30,992 | ||||||||||||||
Current assets | ||||||||||||||||
Inventories | 11 | 1,750 | 1,636 | 2,119 | ||||||||||||
Trade and other receivables | 12 | 7,709 | 7,261 | 6,668 | ||||||||||||
Other investments | 10 | 1,484 | 105 | 91 | ||||||||||||
Derivative financial instruments | 16 | 24 | – | – | ||||||||||||
Income tax receivable | 2,875 | 2,581 | 2,251 | |||||||||||||
Cash and cash equivalents | 13 | 9,918 | 4,286 | 5,867 | ||||||||||||
23,760 | 15,869 | 16,996 | ||||||||||||||
Total assets | 54,920 | 46,950 | 47,988 | |||||||||||||
Liabilities | ||||||||||||||||
Current liabilities | ||||||||||||||||
Interest-bearing loans and borrowings | 14 | (1,926 | ) | (993 | ) | (4,280 | ) | |||||||||
Trade and other payables | 17 | (8,687 | ) | (7,178 | ) | (6,968 | ) | |||||||||
Derivative financial instruments | 16 | (90 | ) | (95 | ) | (31 | ) | |||||||||
Provisions | 18 | (1,209 | ) | (600 | ) | (387 | ) | |||||||||
Income tax payable | (5,728 | ) | (4,549 | ) | (3,552 | ) | ||||||||||
(17,640 | ) | (13,415 | ) | (15,218 | ) | |||||||||||
Non-current liabilities | ||||||||||||||||
Interest-bearing loans and borrowings | 14 | (9,137 | ) | (10,855 | ) | (10,876 | ) | |||||||||
Derivative financial instruments | 16 | – | (71 | ) | – | |||||||||||
Deferred tax liabilities | 4 | (3,247 | ) | (3,126 | ) | (4,119 | ) | |||||||||
Retirement benefit obligations | 23 | (3,354 | ) | (2,732 | ) | (1,998 | ) | |||||||||
Provisions | 18 | (477 | ) | (542 | ) | (633 | ) | |||||||||
Other payables | 17 | (244 | ) | (149 | ) | (229 | ) | |||||||||
(16,459 | ) | (17,475 | ) | (17,855 | ) | |||||||||||
Total liabilities | (34,099 | ) | (30,890 | ) | (33,073 | ) | ||||||||||
Net assets | 20,821 | 16,060 | 14,915 | |||||||||||||
Equity | ||||||||||||||||
Capital and reserves attributable to equity holders of the Company | ||||||||||||||||
Share capital | 20 | 363 | 362 | 364 | ||||||||||||
Share premium account | 19 | 2,180 | 2,046 | 1,888 | ||||||||||||
Capital redemption reserve | 19 | 94 | 94 | 91 | ||||||||||||
Merger reserve | 19 | 433 | 433 | 433 | ||||||||||||
Other reserves | 19 | 1,392 | 1,405 | 1,378 | ||||||||||||
Retained earnings | 19 | 16,198 | 11,572 | 10,624 | ||||||||||||
20,660 | 15,912 | 14,778 | ||||||||||||||
Non-controlling interests | 19 | 161 | 148 | 137 | ||||||||||||
Total equity | 19 | 20,821 | 16,060 | 14,915 | ||||||||||||
David R Brennan | Simon Lowth | |
Director | Director |
Table of Contents
126Financial Statements
for the year ended 31 December
Share | Capital | Non- | ||||||||||||||||||||||||||||||||||
Share | premium | redemption | Merger | Other | Retained | controlling | Total | |||||||||||||||||||||||||||||
capital | account | reserve | reserve | reserves | earnings | Total | interests | equity | ||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | ||||||||||||||||||||||||||||
At 1 January 2007 | 383 | 1,671 | 71 | 433 | 1,398 | 11,348 | 15,304 | 112 | 15,416 | |||||||||||||||||||||||||||
Profit for the period | – | – | – | – | – | 5,595 | 5,595 | 32 | 5,627 | |||||||||||||||||||||||||||
Other comprehensive income | – | – | – | – | – | 339 | 339 | 3 | 342 | |||||||||||||||||||||||||||
Transfer to other reserves1 | – | – | – | – | (20 | ) | 20 | – | – | – | ||||||||||||||||||||||||||
Transactions with owners | ||||||||||||||||||||||||||||||||||||
Dividends | – | – | – | – | – | (2,658 | ) | (2,658 | ) | – | (2,658 | ) | ||||||||||||||||||||||||
Issue of Ordinary Shares | 1 | 217 | – | – | – | – | 218 | – | 218 | |||||||||||||||||||||||||||
Re-purchase of Ordinary Shares | (20 | ) | – | 20 | – | – | (4,170 | ) | (4,170 | ) | – | (4,170 | ) | |||||||||||||||||||||||
Share-based payments | – | – | – | – | – | 150 | 150 | – | 150 | |||||||||||||||||||||||||||
Transfer from non-controlling interests to payables | – | – | – | – | – | – | – | (10 | ) | (10 | ) | |||||||||||||||||||||||||
Net movement | (19 | ) | 217 | 20 | – | (20 | ) | (724 | ) | (526 | ) | 25 | (501 | ) | ||||||||||||||||||||||
At 31 December 2007 | 364 | 1,888 | 91 | 433 | 1,378 | 10,624 | 14,778 | 137 | 14,915 | |||||||||||||||||||||||||||
Profit for the period | – | – | – | – | – | 6,101 | 6,101 | 29 | 6,130 | |||||||||||||||||||||||||||
Other comprehensive income | – | – | – | – | – | (1,925 | ) | (1,925 | ) | 19 | (1,906 | ) | ||||||||||||||||||||||||
Transfer to other reserves1 | – | – | – | – | 27 | (27 | ) | – | – | – | ||||||||||||||||||||||||||
Transactions with owners | ||||||||||||||||||||||||||||||||||||
Dividends | – | – | – | – | – | (2,767 | ) | (2,767 | ) | – | (2,767 | ) | ||||||||||||||||||||||||
Issue of Ordinary Shares | 1 | 158 | – | – | – | – | 159 | – | 159 | |||||||||||||||||||||||||||
Re-purchase of Ordinary Shares | (3 | ) | – | 3 | – | – | (610 | ) | (610 | ) | – | (610 | ) | |||||||||||||||||||||||
Share-based payments | – | – | – | – | – | 176 | 176 | – | 176 | |||||||||||||||||||||||||||
Transfer from non-controlling interests to payables | – | – | – | – | – | – | – | (11 | ) | (11 | ) | |||||||||||||||||||||||||
Dividend paid by subsidiary to non-controlling interest | – | – | – | – | – | – | – | (26 | ) | (26 | ) | |||||||||||||||||||||||||
Net movement | (2 | ) | 158 | 3 | – | 27 | 948 | 1,134 | 11 | 1,145 | ||||||||||||||||||||||||||
At 31 December 2008 | 362 | 2,046 | 94 | 433 | 1,405 | 11,572 | 15,912 | 148 | 16,060 | |||||||||||||||||||||||||||
Profit for the period | – | – | – | – | – | 7,521 | 7,521 | 23 | 7,544 | |||||||||||||||||||||||||||
Other comprehensive income | – | – | – | – | – | (54 | ) | (54 | ) | – | (54 | ) | ||||||||||||||||||||||||
Transfer to other reserves1 | – | – | – | – | (13 | ) | 13 | – | – | – | ||||||||||||||||||||||||||
Transactions with owners | ||||||||||||||||||||||||||||||||||||
Dividends | – | – | – | – | – | (3,026 | ) | (3,026 | ) | – | (3,026 | ) | ||||||||||||||||||||||||
Issue of Ordinary Shares | 1 | 134 | – | – | – | – | 135 | – | 135 | |||||||||||||||||||||||||||
Share-based payments | – | – | – | – | – | 172 | 172 | – | 172 | |||||||||||||||||||||||||||
Transfer from non-controlling interests to payables | – | – | – | – | – | – | – | (9 | ) | (9 | ) | |||||||||||||||||||||||||
Dividend paid by subsidiary to non-controlling interest | – | – | – | – | – | – | – | (1 | ) | (1 | ) | |||||||||||||||||||||||||
Net movement | 1 | 134 | – | – | (13 | ) | 4,626 | 4,748 | 13 | 4,761 | ||||||||||||||||||||||||||
At 31 December 2009 | 363 | 2,180 | 94 | 433 | 1,392 | 16,198 | 20,660 | 161 | 20,821 | |||||||||||||||||||||||||||
1 Amounts charged or credited to other reserves relate to exchange adjustments arising on goodwill. |
Table of Contents
Financial Statements | 127 |
for the year ended 31 December
2009 | 2008 | 2007 | ||||||||||||||
Notes | $m | $m | $m | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Profit before tax | 10,807 | 8,681 | 7,983 | |||||||||||||
Finance income and expense | 3 | 736 | 463 | 111 | ||||||||||||
Depreciation, amortisation and impairment | 2,087 | 2,620 | 1,856 | |||||||||||||
Increase in trade and other receivables | (256 | ) | (1,032 | ) | (717 | ) | ||||||||||
Decrease in inventories | 6 | 185 | 442 | |||||||||||||
Increase/(decrease) in trade and other payables and provisions | 1,579 | 637 | (168 | ) | ||||||||||||
Other non-cash movements | (200 | ) | 87 | 901 | ||||||||||||
Cash generated from operations | 14,759 | 11,641 | 10,408 | |||||||||||||
Interest paid | (639 | ) | (690 | ) | (335 | ) | ||||||||||
Tax paid | (2,381 | ) | (2,209 | ) | (2,563 | ) | ||||||||||
Net cash inflow from operating activities | 11,739 | 8,742 | 7,510 | |||||||||||||
Cash flows from investing activities | ||||||||||||||||
Acquisitions of business operations | 22 | – | – | (14,891 | ) | |||||||||||
Movement in short term investments and fixed deposits | (1,371 | ) | 1 | 894 | ||||||||||||
Purchase of property, plant and equipment | (962 | ) | (1,095 | ) | (1,130 | ) | ||||||||||
Disposal of property, plant and equipment | 138 | 38 | 54 | |||||||||||||
Purchase of intangible assets | (624 | ) | (2,944 | ) | (549 | ) | ||||||||||
Disposal of intangible assets | 269 | – | – | |||||||||||||
Purchase of non-current asset investments | (31 | ) | (40 | ) | (35 | ) | ||||||||||
Disposal of non-current asset investments | 3 | 32 | 421 | |||||||||||||
Interest received | 113 | 149 | 358 | |||||||||||||
Payments made by subsidiaries to non-controlling interests | (11 | ) | (37 | ) | (9 | ) | ||||||||||
Net cash outflow from investing activities | (2,476 | ) | (3,896 | ) | (14,887 | ) | ||||||||||
Net cash inflow/(outflow) before financing activities | 9,263 | 4,846 | (7,377 | ) | ||||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from issue of share capital | 135 | 159 | 218 | |||||||||||||
Re-purchase of shares | – | (610 | ) | (4,170 | ) | |||||||||||
Issue of loans | – | 787 | 9,692 | |||||||||||||
Repayment of loans | (650 | ) | – | (1,165 | ) | |||||||||||
Dividends paid | (2,977 | ) | (2,739 | ) | (2,641 | ) | ||||||||||
Movement in short term borrowings | (137 | ) | (3,959 | ) | 4,117 | |||||||||||
Net cash (outflow)/inflow from financing activities | (3,629 | ) | (6,362 | ) | 6,051 | |||||||||||
Net increase/(decrease) in cash and cash equivalents in the period | 5,634 | (1,516 | ) | (1,326 | ) | |||||||||||
Cash and cash equivalents at beginning of the period | 4,123 | 5,727 | 6,989 | |||||||||||||
Exchange rate effects | 71 | (88 | ) | 64 | ||||||||||||
Cash and cash equivalents at the end of the period | 13 | 9,828 | 4,123 | 5,727 | ||||||||||||
Table of Contents
128Financial Statements
Policies
of financial information
Table of Contents
Financial Statements | 129 |
Table of Contents
130Financial Statements
Table of Contents
Financial Statements | 131 |
> | Cash and cash equivalents | |
> | Fixed deposits | |
> | Other investments | |
> | Loans and borrowings | |
> | Derivatives. |
Table of Contents
132Financial Statements
> | Business combinations – IFRS 3 ‘Business Combinations’ has been applied from 1 January 2003, the date of transition, rather than being applied fully retrospectively. As a result, the combination of Astra and Zeneca is still accounted for as a merger, rather than through purchase accounting. If purchase accounting had been adopted, Zeneca would have been deemed to have acquired Astra. |
> | Cumulative exchange differences – the Group chose to set the cumulative exchange difference reserve at 1 January 2003 to zero. |
and interpretations issued
but not yet adopted
> | Contingent consideration will be measured at fair value, with subsequent changes to the fair value being recognised in profit. | |
> | Transaction costs, other than share and debt issue costs, will be expensed as incurred. | |
> | Any pre-existing interest in the acquiree will be measured at fair value with the gain or loss recognised in profit. | |
> | Any non-controlling (minority) interest will be measured at either fair value, or at its proportionate interest in the identifiable assets and liabilities of the acquiree, on a transaction-by-transaction basis. |
> | Amendments to IFRIC 14 ‘Prepayments of a Minimum Funding Requirement’. | |
> | IFRIC 17 ‘Distributions of Non-cash Assets to Owners’. | |
> | IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’. |
Table of Contents
Financial Statements | 133 |
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Gastrointestinal: | ||||||||||||
Nexium | 4,959 | 5,200 | 5,216 | |||||||||
Losec/Prilosec | 946 | 1,055 | 1,143 | |||||||||
Others | 106 | 89 | 84 | |||||||||
Total Gastrointestinal | 6,011 | 6,344 | 6,443 | |||||||||
Cardiovascular: | ||||||||||||
Crestor | 4,502 | 3,597 | 2,796 | |||||||||
Seloken/Toprol-XL | 1,443 | 807 | 1,438 | |||||||||
Atacand | 1,436 | 1,471 | 1,287 | |||||||||
Zestril | 184 | 236 | 295 | |||||||||
Plendil | 241 | 268 | 271 | |||||||||
Onglyza™ | 11 | – | – | |||||||||
Others | 559 | 584 | 599 | |||||||||
Total Cardiovascular | 8,376 | 6,963 | 6,686 | |||||||||
Respiratory: | ||||||||||||
Symbicort | 2,294 | 2,004 | 1,575 | |||||||||
Pulmicort | 1,310 | 1,495 | 1,454 | |||||||||
Rhinocort | 264 | 322 | 354 | |||||||||
Oxis | 63 | 71 | 86 | |||||||||
Others | 201 | 236 | 242 | |||||||||
Total Respiratory | 4,132 | 4,128 | 3,711 | |||||||||
Oncology: | ||||||||||||
Arimidex | 1,921 | 1,857 | 1,730 | |||||||||
Casodex | 844 | 1,258 | 1,335 | |||||||||
Zoladex | 1,086 | 1,138 | 1,104 | |||||||||
Iressa | 297 | 265 | 238 | |||||||||
Faslodex | 262 | 249 | 214 | |||||||||
Nolvadex | 88 | 85 | 83 | |||||||||
Abraxane™ | – | 64 | 62 | |||||||||
Ethyol | 15 | 28 | 43 | |||||||||
Others | 5 | 10 | 10 | |||||||||
Total Oncology | 4,518 | 4,954 | 4,819 | |||||||||
Neuroscience: | ||||||||||||
Seroquel | 4,866 | 4,452 | 4,027 | |||||||||
Local anaesthetics | 599 | 605 | 557 | |||||||||
Zomig | 434 | 448 | 434 | |||||||||
Diprivan | 290 | 278 | 263 | |||||||||
Others | 48 | 54 | 59 | |||||||||
Total Neuroscience | 6,237 | 5,837 | 5,340 | |||||||||
Infection and Other: | ||||||||||||
Merrem | 872 | 897 | 773 | |||||||||
Synagis | 1,082 | 1,230 | 618 | |||||||||
FluMist | 145 | 104 | 53 | |||||||||
H1N1 Influenza Vaccine | 389 | – | – | |||||||||
Other Products | 143 | 220 | 270 | |||||||||
Total Infection and Other | 2,631 | 2,451 | 1,714 | |||||||||
Aptium Oncology | 393 | 395 | 402 | |||||||||
Astra Tech | 506 | 529 | 444 | |||||||||
Total | 32,804 | 31,601 | 29,559 | |||||||||
Table of Contents
134Financial Statements
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Royalties | ||||||||||||
Income | 255 | 288 | 236 | |||||||||
Amortisation | (79 | ) | (84 | ) | – | |||||||
Impairment | (150 | ) | (91 | ) | – | |||||||
Net gain on disposal of property, plant and equipment | 8 | 6 | 9 | |||||||||
Gains on disposal of product rights | 170 | – | – | |||||||||
Net gain/(loss) on disposal of other intangible assets | 1 | (17 | ) | (1 | ) | |||||||
Gains on divestments of non-core products | 216 | 118 | 192 | |||||||||
Impairment of intangible assets relating to future licensing and contractual income | (115 | ) | – | – | ||||||||
Other income | 265 | 304 | 310 | |||||||||
Other expense | (18 | ) | – | (18 | ) | |||||||
Other operating income and expense | 553 | 524 | 728 | |||||||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Cost of sales | 188 | 405 | 415 | |||||||||
Research and development | 68 | 166 | 73 | |||||||||
Selling, general and administrative costs | 403 | 310 | 478 | |||||||||
Total charge | 659 | 881 | 966 | |||||||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Severance costs | 262 | 499 | 678 | |||||||||
Accelerated depreciation and impairment | 148 | 219 | 203 | |||||||||
Other | 249 | 163 | 85 | |||||||||
Total charge | 659 | 881 | 966 | |||||||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Finance income | ||||||||||||
Returns on fixed deposits and equity securities | 20 | 15 | 52 | |||||||||
Returns on short-term deposits | 22 | 127 | 298 | |||||||||
Expected return on post-employment defined benefit plan assets | 388 | 584 | 573 | |||||||||
Fair value gains on debt, interest rate swaps and investments | 1 | 128 | 36 | |||||||||
Net exchange gains | 31 | – | – | |||||||||
Total | 462 | 854 | 959 | |||||||||
Table of Contents
Financial Statements | 135 |
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Finance expense | ||||||||||||
Interest on debt and commercial paper | (542 | ) | (664 | ) | (513) | |||||||
Interest on overdrafts and other financing costs | (18 | ) | (50 | ) | (9) | |||||||
Interest on post-employment defined benefit plan liabilities | (493 | ) | (589 | ) | (539) | |||||||
Fair value charges on debt, interest rate swaps and investments | (145 | ) | (2 | ) | (6) | |||||||
Net exchange losses | – | (12 | ) | (3) | ||||||||
Total | (1,198 | ) | (1,317 | ) | (1,070) | |||||||
Net finance expense | (736 | ) | (463 | ) | (111) | |||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Current tax expense | |||||||||||
Current year | 2,854 | 2,946 | 1,890 | ||||||||
Adjustment for prior years | 251 | 130 | 261 | ||||||||
3,105 | 3,076 | 2,151 | |||||||||
Deferred tax expense | |||||||||||
Origination and reversal of temporary differences | 98 | (486 | ) | 379 | |||||||
Adjustment to prior years | 60 | (39 | ) | (174) | |||||||
158 | (525 | ) | 205 | ||||||||
Taxation recognised in the profit for the period | 3,263 | 2,551 | 2,356 | ||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Current and deferred tax | |||||||||||
Foreign exchange arising on consolidation | 16 | 20 | 32 | ||||||||
Actuarial loss for the period | 158 | 340 | 35 | ||||||||
Share-based payments | 17 | 9 | (8) | ||||||||
Deferred tax impact of reduction in UK tax rate | – | – | (28) | ||||||||
Other | 1 | (1 | ) | 2 | |||||||
Taxation relating to components of other comprehensive income | 192 | 368 | 33 | ||||||||
Table of Contents
136Financial Statements
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Profit before tax | 10,807 | 8,681 | 7,983 | ||||||||
Notional taxation charge at UK corporation tax rate of 28% (28.5% for 2008, 30% for 2007) | 3,026 | 2,474 | 2,395 | ||||||||
Differences in effective overseas tax rates | (212 | ) | (8 | ) | (105) | ||||||
Deferred tax credit relating to reduction in Swedish, UK and other tax rates1 | – | (70 | ) | (57) | |||||||
Unrecognised deferred tax asset | 2 | (7 | ) | (1) | |||||||
Items not deductible for tax purposes | 156 | 119 | 70 | ||||||||
Items not chargeable for tax purposes | (20 | ) | (48 | ) | (33) | ||||||
Adjustments in respect of prior periods | 311 | 91 | 87 | ||||||||
Total tax charge for the year | 3,263 | 2,551 | 2,356 | ||||||||
1 The 2008 item relates to the reduction in the Swedish statutory corporation tax rate from 28% to 26.3% effective from 1 January 2009. The majority of the 2007 item relates to the reduction in the UK statutory corporation tax rate from 30% to 28%. |
Pension | Inter- | Losses and | |||||||||||||||||||||||||||||||||||||||||
Property, | and post- | company | Deferred | tax credits | |||||||||||||||||||||||||||||||||||||||
plant and | Intangible | retirement | inventory | Untaxed | Accrued | Share | capital | carried | |||||||||||||||||||||||||||||||||||
equipment | assets | benefits | transfers | reserves1 | expenses | schemes | gains | forward | Other | Total | |||||||||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||||||||
Deferred tax assets at 1 January 2007 | 37 | 2 | 604 | 853 | – | 323 | 113 | – | 57 | 28 | 2,017 | ||||||||||||||||||||||||||||||||
Deferred tax liabilities at 1 January 2007 | (502 | ) | (819 | ) | – | – | (881 | ) | – | – | (99 | ) | – | (55 | ) | (2,356) | |||||||||||||||||||||||||||
Net deferred tax balance at 1 January 20072 | (465 | ) | (817 | ) | 604 | 853 | (881 | ) | 323 | 113 | (99 | ) | 57 | (27 | ) | (339) | |||||||||||||||||||||||||||
Taxation expense | (130 | ) | 201 | (99 | ) | (71 | ) | (225 | ) | 190 | (45 | ) | 12 | (96 | ) | 58 | (205) | ||||||||||||||||||||||||||
Other comprehensive income | – | – | 8 | – | – | – | (8 | ) | – | – | – | – | |||||||||||||||||||||||||||||||
Acquisition of subsidiary undertaking3 | 3 | (2,973 | ) | – | 58 | – | 74 | – | – | 369 | (29 | ) | (2,498) | ||||||||||||||||||||||||||||||
Exchange | (35 | ) | (5 | ) | 15 | 46 | (65 | ) | 11 | 2 | (1 | ) | – | (1 | ) | (33) | |||||||||||||||||||||||||||
Net deferred tax balance at 31 December 2007 | (627 | ) | (3,594 | ) | 528 | 886 | (1,171 | ) | 598 | 62 | (88 | ) | 330 | 1 | (3,075) | ||||||||||||||||||||||||||||
Deferred tax assets at 31 December 2007 | 66 | 59 | 531 | 907 | – | 611 | 62 | – | 330 | 71 | 2,637 | ||||||||||||||||||||||||||||||||
Deferred tax liabilities at 31 December 2007 | (693 | ) | (3,653 | ) | (3 | ) | (21 | ) | (1,171 | ) | (13 | ) | – | (88 | ) | – | (70 | ) | (5,712) | ||||||||||||||||||||||||
Net deferred tax balance at 31 December 20072 | (627 | ) | (3,594 | ) | 528 | 886 | (1,171 | ) | 598 | 62 | (88 | ) | 330 | 1 | (3,075) | ||||||||||||||||||||||||||||
Taxation expense | 122 | 375 | 24 | 55 | (119 | ) | 37 | 43 | – | 12 | (24 | ) | 525 | ||||||||||||||||||||||||||||||
Other comprehensive income | – | – | 340 | – | – | – | 9 | – | – | (1 | ) | 348 | |||||||||||||||||||||||||||||||
Exchange | 168 | 130 | (113 | ) | (35 | ) | 199 | (37 | ) | (14 | ) | 24 | (7 | ) | (3 | ) | 312 | ||||||||||||||||||||||||||
Net deferred tax balance at 31 December 2008 | (337 | ) | (3,089 | ) | 779 | 906 | (1,091 | ) | 598 | 100 | (64 | ) | 335 | (27 | ) | (1,890) | |||||||||||||||||||||||||||
Deferred tax assets at 31 December 2008 | 136 | 42 | 786 | 935 | – | 598 | 100 | – | 335 | 45 | 2,977 | ||||||||||||||||||||||||||||||||
Deferred tax liabilities at 31 December 2008 | (473 | ) | (3,131 | ) | (7 | ) | (29 | ) | (1,091 | ) | – | – | (64 | ) | – | (72 | ) | (4,867) | |||||||||||||||||||||||||
Net deferred tax balance at 31 December 2008 | (337 | ) | (3,089 | ) | 779 | 906 | (1,091 | ) | 598 | 100 | (64 | ) | 335 | (27 | ) | (1,890) | |||||||||||||||||||||||||||
Taxation expense | 175 | 232 | (61 | ) | 17 | (303 | ) | (146 | ) | 5 | – | (100 | ) | 23 | (158) | ||||||||||||||||||||||||||||
Other comprehensive income | – | – | 140 | – | – | – | 17 | – | – | – | 157 | ||||||||||||||||||||||||||||||||
Exchange | (46 | ) | (36 | ) | 54 | 29 | (80 | ) | 18 | 7 | (7 | ) | (4 | ) | 1 | (64) | |||||||||||||||||||||||||||
Net deferred tax balance at 31 December 2009 | (208 | ) | (2,893 | ) | 912 | 952 | (1,474 | ) | 470 | 129 | (71 | ) | 231 | (3 | ) | (1,955) | |||||||||||||||||||||||||||
Deferred tax assets at 31 December 2009 | 266 | 47 | 918 | 968 | – | 553 | 129 | – | 231 | 34 | 3,146 | ||||||||||||||||||||||||||||||||
Deferred tax liabilities at 31 December 2009 | (474 | ) | (2,940 | ) | (6 | ) | (16 | ) | (1,474 | ) | (83 | ) | – | (71 | ) | – | (37 | ) | (5,101) | ||||||||||||||||||||||||
Net deferred tax balance at 31 December 2009 | (208 | ) | (2,893 | ) | 912 | 952 | (1,474 | ) | 470 | 129 | (71 | ) | 231 | (3 | ) | (1,955) | |||||||||||||||||||||||||||
2009 | 2008 | 2007 | |||||||||
Analysed in the Statement of Financial Position, after offset of balances within countries, as: | $m | $m | $m | ||||||||
Deferred tax assets | 1,292 | 1,236 | 1,044 | ||||||||
Deferred tax liabilities | (3,247 | ) | (3,126 | ) | (4,119) | ||||||
Net deferred tax balance | (1,955 | ) | (1,890 | ) | (3,075) | ||||||
1 Untaxed reserves relate to taxable profits where the tax liability is deferred to later periods. |
2 During 2008, the Group carried out a review of its deferred tax balances resulting in a reclassification of a deferred tax liability of $284m from property, plant and equipment to intangible assets as at 31 December 2007 ($328m as at 1 January 2007). |
3 The deferred tax liability of $2,498m relates to MedImmune and other acquisitions. |
Table of Contents
Financial Statements | 137 |
2009 | 2008 | 2007 | |||||||||
Profit for the financial year attributable to equity holders ($m) | 7,521 | 6,101 | 5,595 | ||||||||
Basic earnings per Ordinary Share | $5.19 | $4.20 | $3.74 | ||||||||
Diluted earnings per Ordinary Share | $5.19 | $4.20 | $3.73 | ||||||||
Weighted average number of Ordinary Shares in issue for basic earnings (millions) | 1,448 | 1,453 | 1,495 | ||||||||
Dilutive impact of share options outstanding (millions) | 2 | – | 3 | ||||||||
Diluted weighted average number of Ordinary Shares in issue (millions) | 1,450 | 1,453 | 1,498 | ||||||||
Revenue | |||||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
UK | |||||||||||
External | 1,809 | 1,910 | 1,981 | ||||||||
Intra-Group | 9,056 | 8,460 | 6,506 | ||||||||
10,865 | 10,370 | 8,487 | |||||||||
Continental Europe | |||||||||||
Belgium | 353 | 380 | 387 | ||||||||
France | 1,880 | 1,945 | 1,806 | ||||||||
Germany | 1,197 | 1,225 | 1,164 | ||||||||
Italy | 1,012 | 1,145 | 1,111 | ||||||||
Spain | 742 | 832 | 840 | ||||||||
Sweden | 1,070 | 1,135 | 985 | ||||||||
Others | 2,622 | 2,696 | 2,291 | ||||||||
Intra-Group | 4,944 | 3,895 | 4,123 | ||||||||
13,820 | 13,253 | 12,707 | |||||||||
The Americas | |||||||||||
Canada | 1,188 | 1,269 | 1,145 | ||||||||
US | 14,994 | 13,657 | 13,404 | ||||||||
Others | 1,113 | 1,155 | 872 | ||||||||
Intra-Group | 1,962 | 1,169 | 786 | ||||||||
19,257 | 17,250 | 16,207 | |||||||||
Asia, Africa & Australasia | |||||||||||
Australia | 790 | 763 | 631 | ||||||||
Japan | 2,214 | 1,861 | 1,585 | ||||||||
China | 811 | 627 | 403 | ||||||||
Others | 1,009 | 1,001 | 954 | ||||||||
Intra-Group | 80 | 78 | 56 | ||||||||
4,904 | 4,330 | 3,629 | |||||||||
Continuing operations | 48,846 | 45,203 | 41,030 | ||||||||
Intra-Group eliminations | (16,042 | ) | (13,602 | ) | (11,471) | ||||||
32,804 | 31,601 | 29,559 | |||||||||
Table of Contents
138Financial Statements
Operating profit | Profit before tax | ||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
Profit from | $m | $m | $m | $m | $m | $m | |||||||||||||||||
UK | 3,124 | 2,907 | 2,060 | 2,813 | 2,612 | 1,828 | |||||||||||||||||
Continental Europe | 4,809 | 3,136 | 2,894 | 4,821 | 3,233 | 2,964 | |||||||||||||||||
The Americas | 3,265 | 2,705 | 2,734 | 2,832 | 2,440 | 2,781 | |||||||||||||||||
Asia, Africa & Australasia | 345 | 396 | 406 | 341 | 396 | 410 | |||||||||||||||||
Continuing operations | 11,543 | 9,144 | 8,094 | 10,807 | 8,681 | 7,983 | |||||||||||||||||
Non-current assets1 | Total assets | ||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
$m | $m | $m | $m | $m | $m | ||||||||||||||||||
UK | 3,810 | 3,524 | 4,808 | 17,092 | 9,870 | 12,574 | |||||||||||||||||
Continental Europe | 3,966 | 3,674 | 4,709 | 6,706 | 6,275 | 7,400 | |||||||||||||||||
The Americas | 21,354 | 21,762 | 19,887 | 28,397 | 28,290 | 25,775 | |||||||||||||||||
Asia, Africa & Australasia | 476 | 436 | 427 | 2,725 | 2,515 | 2,239 | |||||||||||||||||
Continuing operations | 29,606 | 29,396 | 29,831 | 54,920 | 46,950 | 47,988 | |||||||||||||||||
Assets acquired2 | Net operating assets3 | ||||||||||||||||||||||
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
$m | $m | $m | $m | $m | $m | ||||||||||||||||||
UK | 537 | 440 | 929 | 4,473 | 4,234 | 5,043 | |||||||||||||||||
Continental Europe | 643 | 295 | 624 | 4,094 | 3,683 | 4,972 | |||||||||||||||||
The Americas | 711 | 3,252 | 17,858 | 19,186 | 21,033 | 19,742 | |||||||||||||||||
Asia, Africa & Australasia | 79 | 67 | 48 | 1,707 | 1,732 | 1,510 | |||||||||||||||||
Continuing operations | 1,970 | 4,054 | 19,459 | 29,460 | 30,682 | 31,267 | |||||||||||||||||
1Non-current assets exclude deferred tax assets and derivative financial instruments. |
2Included in ‘assets acquired’ are those assets that are expected to be used during more than one period (property, plant and equipment, goodwill and intangible assets). |
3‘Net operating assets’ exclude short-term investments, cash, short-term borrowings, loans, retirement benefit obligations and non-operating receivables and payables. |
Property, plant and equipment | |||||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
UK | 1,901 | 1,750 | 2,490 | ||||||||
Sweden | 1,700 | 1,722 | 2,204 | ||||||||
US | 2,386 | 2,200 | 1,915 | ||||||||
Rest of the world | 1,320 | 1,371 | 1,689 | ||||||||
Continuing operations | 7,307 | 7,043 | 8,298 | ||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
UK | 1,057 | 994 | 1,003 | ||||||||
Continental Europe | 9,286 | 9,937 | 9,138 | ||||||||
The Americas | 17,096 | 15,945 | 15,459 | ||||||||
Asia, Africa & Australasia | 5,365 | 4,725 | 3,959 | ||||||||
Continuing operations | 32,804 | 31,601 | 29,559 | ||||||||
Table of Contents
Financial Statements | 139 |
Total property, | |||||||||||||||
Land and | Plant and | Assets in course | plant and | ||||||||||||
buildings | equipment | of construction | equipment | ||||||||||||
$m | $m | $m | $m | ||||||||||||
Cost | |||||||||||||||
At 1 January 2007 | 5,082 | 9,363 | 463 | 14,908 | |||||||||||
Capital expenditure | 53 | 304 | 812 | 1,169 | |||||||||||
Additions through business combinations | 302 | 122 | 176 | 600 | |||||||||||
Transfer of assets into use | 151 | 470 | (621 | ) | – | ||||||||||
Disposals and other movements | (23 | ) | (555 | ) | (16 | ) | (594) | ||||||||
Exchange adjustments | 254 | 470 | 28 | 752 | |||||||||||
At 31 December 2007 | 5,819 | 10,174 | 842 | 16,835 | |||||||||||
Capital expenditure | 49 | 239 | 825 | 1,113 | |||||||||||
Transfer of assets into use | 275 | 404 | (679 | ) | – | ||||||||||
Disposals and other movements | (123 | ) | (558 | ) | (25 | ) | (706) | ||||||||
Exchange adjustments | (803 | ) | (1,725 | ) | (100 | ) | (2,628) | ||||||||
At 31 December 2008 | 5,217 | 8,534 | 863 | 14,614 | |||||||||||
Capital expenditure | 8 | 209 | 750 | 967 | |||||||||||
Transfer of assets into use | 218 | 388 | (606 | ) | – | ||||||||||
Disposals and other movements | (400 | ) | (937 | ) | (20 | ) | (1,357) | ||||||||
Exchange adjustments | 293 | 609 | 42 | 944 | |||||||||||
At 31 December 2009 | 5,336 | 8,803 | 1,029 | 15,168 | |||||||||||
Depreciation | |||||||||||||||
At 1 January 2007 | 1,656 | 5,799 | – | 7,455 | |||||||||||
Charge for year | 227 | 849 | – | 1,076 | |||||||||||
Impairment | 39 | 65 | 2 | 106 | |||||||||||
Disposals and other movements | (3 | ) | (498 | ) | (1 | ) | (502) | ||||||||
Exchange adjustments | 96 | 306 | – | 402 | |||||||||||
At 31 December 2007 | 2,015 | 6,521 | 1 | 8,537 | |||||||||||
Charge for year | 247 | 812 | – | 1,059 | |||||||||||
Impairment | 91 | 32 | – | 123 | |||||||||||
Disposals and other movements | (120 | ) | (529 | ) | (2 | ) | (651) | ||||||||
Exchange adjustments | (303 | ) | (1,192 | ) | (2 | ) | (1,497) | ||||||||
At 31 December 2008 | 1,930 | 5,644 | (3 | ) | 7,571 | ||||||||||
Charge for year | 219 | 674 | – | 893 | |||||||||||
Impairment | 44 | 6 | – | 50 | |||||||||||
Disposals and other movements | (343 | ) | (859 | ) | (4 | ) | (1,206) | ||||||||
Exchange adjustments | 117 | 434 | 2 | 553 | |||||||||||
At 31 December 2009 | 1,967 | 5,899 | (5 | ) | 7,861 | ||||||||||
Net book value | |||||||||||||||
At 31 December 2007 | 3,804 | 3,653 | 841 | 8,298 | |||||||||||
At 31 December 2008 | 3,287 | 2,890 | 866 | 7,043 | |||||||||||
At 31 December 2009 | 3,369 | 2,904 | 1,034 | 7,307 | |||||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
The net book value of land and buildings comprised: | |||||||||||
Freeholds | 3,369 | 3,287 | 3,804 | ||||||||
Table of Contents
140Financial Statements
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Cost | |||||||||||
At 1 January | 10,211 | 10,225 | 1,430 | ||||||||
Additions through business combinations | – | – | 8,757 | ||||||||
Exchange adjustments | 17 | (14 | ) | 38 | |||||||
At 31 December | 10,228 | 10,211 | 10,225 | ||||||||
Amortisation and impairment losses | |||||||||||
At 1 January | 337 | 341 | 333 | ||||||||
Exchange adjustments | 2 | (4 | ) | 8 | |||||||
At 31 December | 339 | 337 | 341 | ||||||||
Net book value at 31 December | 9,889 | 9,874 | 9,884 | ||||||||
Table of Contents
Financial Statements | 141 |
Product, marketing | Software | |||||||||||||||
and distribution rights | Other intangibles | development costs | Total | |||||||||||||
$m | $m | $m | $m | |||||||||||||
Cost | ||||||||||||||||
At 1 January 2007 | 4,173 | 910 | 786 | 5,869 | ||||||||||||
Additions – through business combinations | 6,946 | 1,477 | – | 8,423 | ||||||||||||
Additions – separately acquired | 299 | 33 | 178 | 510 | ||||||||||||
Disposals | (52 | ) | (82 | ) | – | (134 | ) | |||||||||
Exchange adjustments | 183 | 47 | 12 | 242 | ||||||||||||
At 31 December 2007 | 11,549 | 2,385 | 976 | 14,910 | ||||||||||||
Additions – separately acquired | 2,743 | 20 | 178 | 2,941 | ||||||||||||
Disposals | – | (33 | ) | (30 | ) | (63 | ) | |||||||||
Exchange adjustments | (770 | ) | (197 | ) | (133 | ) | (1,100 | ) | ||||||||
At 31 December 2008 | 13,522 | 2,175 | 991 | 16,688 | ||||||||||||
Additions – separately acquired | 764 | 46 | 193 | 1,003 | ||||||||||||
Disposals | (200 | ) | (1 | ) | – | (201 | ) | |||||||||
Exchange adjustments | 267 | 84 | 28 | 379 | ||||||||||||
At 31 December 2009 | 14,353 | 2,304 | 1,212 | 17,869 | ||||||||||||
Amortisation and impairment losses | ||||||||||||||||
At 1 January 2007 | 1,859 | 443 | 460 | 2,762 | ||||||||||||
Amortisation for year | 364 | 112 | 78 | 554 | ||||||||||||
Disposals | (52 | ) | (81 | ) | – | (133 | ) | |||||||||
Impairment | 98 | 22 | – | 120 | ||||||||||||
Exchange adjustments | 104 | 32 | 4 | 140 | ||||||||||||
At 31 December 2007 | 2,373 | 528 | 542 | 3,443 | ||||||||||||
Amortisation for year | 529 | 182 | 96 | 807 | ||||||||||||
Disposals | – | (9 | ) | (10 | ) | (19 | ) | |||||||||
Impairment | 516 | 91 | 24 | 631 | ||||||||||||
Exchange adjustments | (357 | ) | (104 | ) | (36 | ) | (497 | ) | ||||||||
At 31 December 2008 | 3,061 | 688 | 616 | 4,365 | ||||||||||||
Amortisation for year | 481 | 162 | 86 | 729 | ||||||||||||
Disposals | (67 | ) | – | – | (67 | ) | ||||||||||
Impairment | 93 | 273 | 49 | 415 | ||||||||||||
Exchange adjustments | 159 | 25 | 17 | 201 | ||||||||||||
At 31 December 2009 | 3,727 | 1,148 | 768 | 5,643 | ||||||||||||
Net book value | ||||||||||||||||
At 31 December 2007 | 9,176 | 1,857 | 434 | 11,467 | ||||||||||||
At 31 December 2008 | 10,461 | 1,487 | 375 | 12,323 | ||||||||||||
At 31 December 2009 | 10,626 | 1,156 | 444 | 12,226 | ||||||||||||
Product, marketing | Software | |||||||||||||||
and distribution rights | Other intangibles | development costs | Total | |||||||||||||
$m | $m | $m | $m | |||||||||||||
Year ended 31 December 2007 | ||||||||||||||||
Selling, general and administrative costs | 364 | 27 | 78 | 469 | ||||||||||||
Other operating income and expense | – | 85 | – | 85 | ||||||||||||
364 | 112 | 78 | 554 | |||||||||||||
Year ended 31 December 2008 | ||||||||||||||||
Cost of sales | 39 | – | – | 39 | ||||||||||||
Research and development | 10 | – | – | 10 | ||||||||||||
Selling, general and administrative costs | 480 | 35 | 96 | 611 | ||||||||||||
Other operating income and expense | – | 147 | – | 147 | ||||||||||||
529 | 182 | 96 | 807 | |||||||||||||
Year ended 31 December 2009 | ||||||||||||||||
Cost of sales | 48 | – | – | 48 | ||||||||||||
Selling, general and administrative costs | 433 | 27 | 86 | 546 | ||||||||||||
Other operating income and expense | – | 135 | – | 135 | ||||||||||||
481 | 162 | 86 | 729 | |||||||||||||
Table of Contents
142Financial Statements
Product, marketing | Software | |||||||||||||||
and distribution rights | Other intangibles | development cost | Total | |||||||||||||
$m | $m | $m | $m | |||||||||||||
Year ended 31 December 2007 | ||||||||||||||||
Research and development | 98 | 22 | – | 120 | ||||||||||||
Year ended 31 December 2008 | ||||||||||||||||
Cost of sales | 115 | – | – | 115 | ||||||||||||
Research and development | 144 | – | – | 144 | ||||||||||||
Selling, general and administrative costs | 257 | – | 24 | 281 | ||||||||||||
Other operating income and expense | – | 91 | – | 91 | ||||||||||||
516 | 91 | 24 | 631 | |||||||||||||
Year ended 31 December 2009 | ||||||||||||||||
Research and development | 93 | 7 | – | 100 | ||||||||||||
Selling, general and administrative costs | – | 1 | 49 | 50 | ||||||||||||
Other operating income and expense | – | 265 | – | 265 | ||||||||||||
93 | 273 | 49 | 415 | |||||||||||||
Carrying value | Remaining amortisation | |||||||||||
Description | $m | period | ||||||||||
Intangible assets arising from joint venture with Merck1 | Product, marketing and distribution rights | 227 | 4 and 8 years | |||||||||
Advance payment1 | Product, marketing and distribution rights | 516 | 9 years | |||||||||
Partial retirement (non-refundable deposit)1 | Product, marketing and distribution rights | 1,656 | Not amortised | |||||||||
Partial retirement1 | Product, marketing and distribution rights | 792 | 12-18 years | |||||||||
Intangible assets arising from the acquisition of CAT2 | Product, marketing and distribution rights | 409 | 6 and 11 years | |||||||||
Intangible assets arising from the acquisition of KuDOS2 | Product, marketing and distribution rights | 285 | Not amortised | |||||||||
RSV franchise assets arising from the acquisition of MedImmune3 | Product, marketing and distribution rights | 4,884 | 16-22 years | |||||||||
Intangible assets arising from the acquisition of MedImmune3 | Licensing and contractual income | 720 | 2-10 years | |||||||||
Intangible assets arising from the acquisition of MedImmune3 | Product, marketing and distribution rights | 637 | 22 years | |||||||||
Intangible assets arising from the collaboration with BMS4 | Product, marketing and distribution rights | 416 | 13-14 years | |||||||||
1 These assets are associated with the restructuring of the joint venture with Merck & Co., Inc. Further information can be found in Note 25. |
2 Assets in development are not amortised but are tested annually for impairment. |
3 An allocation of the cost of these assets to Therapy Area is given in Note 22. |
4 These assets arise from the collaboration agreement with BMS for Onglyza™. |
Table of Contents
Financial Statements | 143 |
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Non-current investments | |||||||||||
Equity securities available for sale | 184 | 156 | 182 | ||||||||
184 | 156 | 182 | |||||||||
Current investments | |||||||||||
Equity securities held for trading | 18 | 51 | 31 | ||||||||
�� | |||||||||||
Fixed deposits | 1,466 | 54 | 60 | ||||||||
1,484 | 105 | 91 | |||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Raw materials and consumables | 445 | 409 | 579 | ||||||||
Inventories in process | 726 | 631 | 806 | ||||||||
Finished goods and goods for re-sale | 579 | 596 | 734 | ||||||||
1,750 | 1,636 | 2,119 | |||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Amounts due within one year | |||||||||||
Trade receivables | 5,863 | 5,657 | 5,415 | ||||||||
Less: Amounts provided for doubtful debts (Note 16) | (81 | ) | (99 | ) | (89) | ||||||
5,782 | 5,558 | 5,326 | |||||||||
Other receivables | 1,170 | 978 | 593 | ||||||||
Prepayments and accrued income | 580 | 552 | 510 | ||||||||
7,532 | 7,088 | 6,429 | |||||||||
Amounts due after more than one year | |||||||||||
Other receivables | 27 | 44 | 54 | ||||||||
Prepayments and accrued income | 150 | 129 | 185 | ||||||||
177 | 173 | 239 | |||||||||
7,709 | 7,261 | 6,668 | |||||||||
Provision for doubtful debts | |||||||||||
Balance at beginning of year | 99 | 89 | 52 | ||||||||
Income statement (credit)/charge | (20 | ) | 23 | 34 | |||||||
Amounts utilised, exchange and other movements | 2 | (13 | ) | 3 | |||||||
Balance at end of year | 81 | 99 | 89 | ||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Cash at bank and in hand | 1,077 | 1,039 | 1,403 | ||||||||
Short term deposits | 8,841 | 3,247 | 4,464 | ||||||||
Cash and cash equivalents | 9,918 | 4,286 | 5,867 | ||||||||
Unsecured bank overdrafts | (90 | ) | (163 | ) | (140) | ||||||
Cash and cash equivalents in the cash flow statement | 9,828 | 4,123 | 5,727 | ||||||||
Table of Contents
144Financial Statements
Repayment | 2009 | 2008 | 2007 | ||||||||||||||||
dates | $m | $m | $m | ||||||||||||||||
Current liabilities | |||||||||||||||||||
Bank overdrafts | On demand | 90 | 163 | 140 | |||||||||||||||
Floating rate note | US dollars | 2009 | – | 650 | – | ||||||||||||||
4.625% Non-callable bond | Euros | 2010 | 1,073 | – | – | ||||||||||||||
5.625% Non-callable bond | Euros | 2010 | 717 | – | – | ||||||||||||||
Other loans | Within one year | 46 | 180 | 4,140 | |||||||||||||||
1,926 | 993 | 4,280 | |||||||||||||||||
Non-current liabilities | |||||||||||||||||||
Floating rate note | US dollars | 2009 | – | – | 649 | ||||||||||||||
4.625% Non-callable bond | Euros | 2010 | – | 1,053 | 1,099 | ||||||||||||||
5.625% Non-callable bond | Euros | 2010 | – | 702 | – | ||||||||||||||
5.4% Callable bond | US dollars | 2012 | 1,805 | 1,823 | 1,765 | ||||||||||||||
5.4% Callable bond | US dollars | 2014 | 821 | 789 | 767 | ||||||||||||||
5.125% Non-callable bond | Euros | 2015 | 1,072 | 1,051 | 1,099 | ||||||||||||||
5.9% Callable bond | US dollars | 2017 | 1,818 | 1,896 | 1,768 | ||||||||||||||
7% Guaranteed debentures | US dollars | 2023 | 346 | 324 | 323 | ||||||||||||||
5.75% Non-callable bond | Pounds sterling | 2031 | 558 | 501 | 691 | ||||||||||||||
6.45% Callable bond | US dollars | 2037 | 2,717 | 2,716 | 2,715 | ||||||||||||||
9,137 | 10,855 | 10,876 | |||||||||||||||||
> | Managing funding and liquidity risk. | |
> | Optimising shareholder return. | |
> | Maintaining a strong investment-grade credit rating. |
Table of Contents
Financial Statements | 145 |
Interest rate risk
Table of Contents
146Financial Statements
Non-current assets | Current assets | Current liabilities | Non-current liabilities | Total | ||||||||||||||||
$m | $m | $m | $m | $m | ||||||||||||||||
Designated in a fair-value hedge | 135 | – | – | – | 135 | |||||||||||||||
Related to instruments designated at fair value through profit or loss | 127 | – | – | – | 127 | |||||||||||||||
Other derivatives | – | 24 | (90 | ) | – | (66 | ) | |||||||||||||
31 December 2009 | 262 | 24 | (90 | ) | – | 196 | ||||||||||||||
Non-current assets | Current assets | Current liabilities | Non-current liabilities | Total | ||||||||||||||||
$m | $m | $m | $m | $m | ||||||||||||||||
Designated in a fair-value hedge | 229 | – | – | – | 229 | |||||||||||||||
Related to instruments designated at fair value through profit or loss | 220 | – | – | – | 220 | |||||||||||||||
Other derivatives | – | – | (95 | ) | (71 | ) | (166 | ) | ||||||||||||
31 December 2008 | 449 | – | (95 | ) | (71 | ) | 283 | |||||||||||||
Non-current assets | Current assets | Current liabilities | Non-current liabilities | Total | ||||||||||||||||
$m | $m | $m | $m | $m | ||||||||||||||||
Designated in a fair-value hedge | 49 | – | – | – | 49 | |||||||||||||||
Related to instruments designated at fair value through profit or loss | 68 | – | – | – | 68 | |||||||||||||||
Other derivatives | – | – | (31 | ) | – | (31 | ) | |||||||||||||
31 December 2007 | 117 | – | (31 | ) | – | 86 | ||||||||||||||
Table of Contents
Financial Statements | 147 |
Instruments | Other | ||||||||||||||||||||||||||||||
Instruments in a | designated | derivatives | Available | Held for | Amortised | Total | |||||||||||||||||||||||||
hedge relationship1 | at fair value2 | at fair value3 | for sale | trading | cost | carrying value | Fair value | ||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | ||||||||||||||||||||||||
2009 | |||||||||||||||||||||||||||||||
Cash and cash equivalents | – | – | – | – | – | 9,918 | 9,918 | 9,918 | |||||||||||||||||||||||
Overdrafts | – | – | – | – | – | (90 | ) | (90 | ) | (90) | |||||||||||||||||||||
Loans due within one year | – | – | – | – | – | (1,836 | ) | (1,836 | ) | (1,867) | |||||||||||||||||||||
Loans due after more than one year | (1,629 | ) | (1,167 | ) | – | – | – | (6,341 | ) | (9,137 | ) | (9,832) | |||||||||||||||||||
Derivative financial instruments | 135 | 127 | (66 | ) | – | – | – | 196 | 196 | ||||||||||||||||||||||
Other investments | – | – | – | 184 | 18 | 1,466 | 1,668 | 1,668 | |||||||||||||||||||||||
Other financial assets | – | – | – | – | – | 6,979 | 6,979 | 6,979 | |||||||||||||||||||||||
Other financial liabilities | – | – | – | – | – | (8,872 | ) | (8,872 | ) | (8,872) | |||||||||||||||||||||
2008 | |||||||||||||||||||||||||||||||
Cash and cash equivalents | – | – | – | – | – | 4,286 | 4,286 | 4,286 | |||||||||||||||||||||||
Overdrafts | – | – | – | – | – | (163 | ) | (163 | ) | (163) | |||||||||||||||||||||
Loans due within one year | – | – | – | – | – | (830 | ) | (830 | ) | (830) | |||||||||||||||||||||
Loans due after more than one year | (1,727 | ) | (1,113 | ) | – | – | – | (8,015 | ) | (10,855 | ) | (11,238) | |||||||||||||||||||
Derivative financial instruments | 229 | 220 | (166 | ) | – | – | – | 283 | 283 | ||||||||||||||||||||||
Other investments | – | – | – | 156 | 50 | 54 | 260 | 260 | |||||||||||||||||||||||
Other financial assets | – | – | – | – | – | 6,580 | 6,580 | 6,580 | |||||||||||||||||||||||
Other financial liabilities | – | – | – | – | – | (7,239 | ) | (7,239 | ) | (7,239) | |||||||||||||||||||||
2007 | |||||||||||||||||||||||||||||||
Cash and cash equivalents | – | – | – | – | – | 5,867 | 5,867 | 5,867 | |||||||||||||||||||||||
Overdrafts | – | – | – | – | – | (140 | ) | (140 | ) | (140) | |||||||||||||||||||||
Loans due within one year | – | – | – | – | – | (4,140 | ) | (4,140 | ) | (4,140) | |||||||||||||||||||||
Loans due after more than one year | (1,544 | ) | (1,090 | ) | – | – | – | (8,242 | ) | (10,876 | ) | (11,235) | |||||||||||||||||||
Derivative financial instruments | 49 | 68 | (31 | ) | – | – | – | 86 | 86 | ||||||||||||||||||||||
Other investments | – | – | – | 182 | 31 | 60 | 273 | 273 | |||||||||||||||||||||||
Other financial assets | – | – | – | – | – | 5,973 | 5,973 | 5,973 | |||||||||||||||||||||||
Other financial liabilities | – | – | – | – | – | (7,057 | ) | (7,057 | ) | (7,057) | |||||||||||||||||||||
1 Includes borrowings and derivatives designated as hedged items in fair-value hedge relationships with respect to interest rate risk. |
2 Includes borrowings designated at fair value through profit or loss and related derivatives. |
3 Derivatives not designated in hedge relationships or related to financial instruments designated at fair value through profit or loss. |
> | Cash and overdrafts – held on the Statement of Financial Position at amortised costs. Fair value approximates to carrying value. | |
> | Loans due within one year and after more than one year – the fair value of fixed-rate publicly traded debt is based on year-end quoted market prices; the fair value of floating rate debt is nominal value, as mark to market differences would be minimal given the frequency of resets. The carrying value of loans designated at fair value through profit or loss is the fair value. For loans designated in a fair-value hedge relationship, carrying value is initially measured at fair value and remeasured for fair-value changes in respect of the hedged risk at each reporting date. All other loans are held at amortised cost. | |
> | Derivative financial instruments – consists of interest rate swaps (included in designated as fair value through profit or loss if related to debt designated at fair value, or instruments in a hedge relationship as a fair-value hedge or other derivatives), forward foreign exchange contracts and foreign currency option contracts (included in other derivatives). All derivatives are held at fair value. |
– | Interest rate swaps – the fair value is estimated using appropriate zero coupon curve valuation techniques to discount future contractual cash flows based on rates current at year end. | ||
– | Forward foreign exchange contracts – the majority of contracts for existing transactions had maturities of six months or less from year end. The fair value of forward foreign exchange contracts is estimated by discounting the future contractual cash flows using appropriate yield curves based on market forward foreign exchange rates at the year end. | ||
– | Foreign currency option contracts – the fair value of option contracts is estimated using Black-Scholes valuation techniques. |
Table of Contents
148Financial Statements
> | Other investments – held on the Statement of Financial Position at fair value. These include equity securities held on the Statement of Financial Position as other investments (Note 10). The fair value of listed investments is based on year end quoted market prices. For unlisted investments, carrying values approximate fair value. | |
> | Other financial assets and other financial liabilities – held on the Statement of Financial Position at amortised costs with carrying value being a reasonable approximation of fair value. |
2009 | 2008 | 2007 | ||||||||||
Derivatives | 2.0% to 4.6% | 3.8% to 4.6% | 4.3% to 5.1% | |||||||||
Loans and borrowings | 2.0% to 4.6% | 3.8% to 4.6% | 4.3% to 5.1% | |||||||||
> | Level 1: | quoted prices (unadjusted) in active markets for identical assets or liabilities. |
> | Level 2: | inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie, as prices) or indirectly (ie, derived from prices). |
> | Level 3: | inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
$m | $m | $m | $m | ||||||||||||
31 December 2009 | |||||||||||||||
Equity securities available for sale | 41 | – | 143 | 184 | |||||||||||
Equity securities held for trading | 18 | – | – | 18 | |||||||||||
Derivative assets | – | 286 | – | 286 | |||||||||||
Assets | 59 | 286 | 143 | 488 | |||||||||||
Borrowing designated at fair value through profit or loss | (1,167 | ) | – | – | (1,167) | ||||||||||
Derivative liabilities | – | (90 | ) | – | (90) | ||||||||||
Liabilities | (1,167 | ) | (90 | ) | – | (1,257) | |||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Included in operating profit | |||||||||||
Gains/(losses) on forward foreign exchange contracts | 114 | (399 | ) | (59) | |||||||
(Losses)/gains on receivables and payables | (141 | ) | 391 | 74 | |||||||
Losses on investments designated at fair value through profit or loss | – | – | (1) | ||||||||
Losses on available for sale current investments | (18 | ) | (25 | ) | (21) | ||||||
(45 | ) | (33 | ) | (7) | |||||||
Included in finance income and expense | |||||||||||
Interest and fair value adjustments in respect of debt designated at fair value through profit or loss, net of derivatives | (169 | ) | 87 | (22) | |||||||
Interest and changes in carrying values of debt designated as hedged items, net of derivatives | (35 | ) | (64 | ) | (28) | ||||||
Interest and fair value changes on fixed and short-term deposits and equity securities | 43 | 140 | 344 | ||||||||
Interest on debt, overdrafts and commercial paper held at amortised cost | (501 | ) | (609 | ) | (436) | ||||||
Exchange gains/(losses) on financial assets and liabilities | 31 | (12 | ) | (3) | |||||||
(631 | ) | (458 | ) | (145) | |||||||
Included in other comprehensive income | |||||||||||
Foreign exchange differences on borrowings forming net investment hedges | (68 | ) | 291 | (40) | |||||||
Gain/(loss) on cash flow hedge in connection with debt issue | 1 | 1 | (21) | ||||||||
Available for sale gains/(losses) taken to equity | 2 | 2 | (9) | ||||||||
(65 | ) | 294 | (70) | ||||||||
Table of Contents
Financial Statements | 149 |
Bank | Total | Total | |||||||||||||||||||||||||||||
overdrafts | Trade | non-derivative | derivative | ||||||||||||||||||||||||||||
and other | and other | financial | Interest | Currency | financial | ||||||||||||||||||||||||||
loans | Bonds | payables | instruments | rate swaps | swaps | instruments | Total | ||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | ||||||||||||||||||||||||
Within one year | 139 | 2,373 | 8,687 | 11,199 | (117 | ) | 89 | (28 | ) | 11,171 | |||||||||||||||||||||
In one to two years | – | 523 | 185 | 708 | (117 | ) | – | (117 | ) | 591 | |||||||||||||||||||||
In two to three years | – | 2,246 | – | 2,246 | (116 | ) | – | (116 | ) | 2,130 | |||||||||||||||||||||
In three to four years | – | 429 | – | 429 | (86 | ) | – | (86 | ) | 343 | |||||||||||||||||||||
In four to five years | – | 405 | – | 405 | (64 | ) | – | (64 | ) | 341 | |||||||||||||||||||||
In more than five years | – | 12,209 | – | 12,209 | (239 | ) | – | (239 | ) | 11,970 | |||||||||||||||||||||
139 | 18,185 | 8,872 | 27,196 | (739 | ) | 89 | (650 | ) | 26,546 | ||||||||||||||||||||||
Effect of interest | (3 | ) | (7,467 | ) | – | (7,470 | ) | 739 | – | 739 | (6,731) | ||||||||||||||||||||
Effect of discounting, fair values and issue costs | – | 209 | – | 209 | (262 | ) | 1 | (261 | ) | (52) | |||||||||||||||||||||
31 December 2009 | 136 | 10,927 | 8,872 | 19,935 | (262 | ) | 90 | (172 | ) | 19,763 | |||||||||||||||||||||
Bank | Total | Total | |||||||||||||||||||||||||||||
overdrafts | Trade | non-derivative | derivative | ||||||||||||||||||||||||||||
and other | and other | financial | Interest | Currency | financial | ||||||||||||||||||||||||||
loans | Bonds | payables | instruments | rate swaps | swaps | instruments | Total | ||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | ||||||||||||||||||||||||
Within one year | 345 | 1,271 | 7,178 | 8,794 | (60 | ) | – | (60 | ) | 8,734 | |||||||||||||||||||||
In one to two years | – | 2,335 | 61 | 2,396 | (60 | ) | 66 | 6 | 2,402 | ||||||||||||||||||||||
In two to three years | – | 465 | – | 465 | (59 | ) | – | (59 | ) | 406 | |||||||||||||||||||||
In three to four years | – | 2,241 | – | 2,241 | (59 | ) | – | (59 | ) | 2,182 | |||||||||||||||||||||
In four to five years | – | 424 | – | 424 | (46 | ) | – | (46 | ) | 378 | |||||||||||||||||||||
In more than five years | – | 12,478 | – | 12,478 | (163 | ) | – | (163 | ) | 12,315 | |||||||||||||||||||||
345 | 19,214 | 7,239 | 26,798 | (447 | ) | 66 | (381 | ) | 26,417 | ||||||||||||||||||||||
Effect of interest | (2 | ) | (7,956 | ) | – | (7,958 | ) | 447 | – | 447 | (7,511) | ||||||||||||||||||||
Effect of discounting, fair values and issue costs | – | 247 | – | 247 | (449 | ) | 5 | (444 | ) | (197) | |||||||||||||||||||||
31 December 2008 | 343 | 11,505 | 7,239 | 19,087 | (449 | ) | 71 | (378 | ) | 18,709 | |||||||||||||||||||||
Bank | Total | Total | |||||||||||||||||||||||||||||
overdrafts | Trade | non-derivative | derivative | ||||||||||||||||||||||||||||
and other | and other | financial | Interest | Currency | financial | ||||||||||||||||||||||||||
loans | Bonds | payables | instruments | rate swaps | swaps | instruments | Total | ||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | ||||||||||||||||||||||||
Within one year | 4,305 | 619 | 6,968 | 11,892 | – | – | – | 11,892 | |||||||||||||||||||||||
In one to two years | – | 1,259 | 89 | 1,348 | – | – | – | 1,348 | |||||||||||||||||||||||
In two to three years | – | 1,679 | – | 1,679 | – | – | – | 1,679 | |||||||||||||||||||||||
In three to four years | – | 532 | – | 532 | – | – | – | 532 | |||||||||||||||||||||||
In four to five years | – | 2,255 | – | 2,255 | – | – | – | 2,255 | |||||||||||||||||||||||
In more than five years | – | 13,356 | – | 13,356 | (25 | ) | – | (25 | ) | 13,331 | |||||||||||||||||||||
4,305 | 19,700 | 7,057 | 31,062 | (25 | ) | – | (25 | ) | 31,037 | ||||||||||||||||||||||
Effect of interest | (25 | ) | (8,857 | ) | – | (8,882 | ) | 25 | – | 25 | (8,857) | ||||||||||||||||||||
Effect of discounting, fair values and issue costs | – | 33 | – | 33 | (117 | ) | – | (117 | ) | (84) | |||||||||||||||||||||
31 December 2007 | 4,280 | 10,876 | 7,057 | 22,213 | (117 | ) | – | (117 | ) | 22,096 | |||||||||||||||||||||
Table of Contents
150Financial Statements
Interest rate risk
2009 | 2008 | 2007 | |||||||||||||||||||||||||||||||||
Total | Fixed rate | Floating rate | Total | Fixed rate | Floating rate | Total | Fixed rate | Floating rate | |||||||||||||||||||||||||||
$m | $m | $m | $m | $m | $m | $m | $m | $m | |||||||||||||||||||||||||||
Financial liabilities | |||||||||||||||||||||||||||||||||||
Interest-bearing loans and borrowings | |||||||||||||||||||||||||||||||||||
Current | 1,926 | 1,790 | 136 | 993 | – | 993 | 4,280 | – | 4,280 | ||||||||||||||||||||||||||
Non-current | 9,137 | 6,340 | 2,797 | 10,855 | 8,015 | 2,840 | 10,876 | 7,594 | 3,282 | ||||||||||||||||||||||||||
11,063 | 8,130 | 2,933 | 11,848 | 8,015 | 3,833 | 15,156 | 7,594 | 7,562 | |||||||||||||||||||||||||||
Financial assets | |||||||||||||||||||||||||||||||||||
Fixed deposits | 1,466 | – | 1,466 | 54 | – | 54 | 60 | – | 60 | ||||||||||||||||||||||||||
Cash and cash equivalents | 9,918 | – | 9,918 | 4,286 | – | 4,286 | 5,867 | – | 5,867 | ||||||||||||||||||||||||||
11,384 | – | 11,384 | 4,340 | – | 4,340 | 5,927 | – | 5,927 | |||||||||||||||||||||||||||
Translational
GBP | SEK | EUR | AUD | JPY | CAD | ||||||||||||||||||
2009 | $m | $m | $m | $m | $m | $m | |||||||||||||||||
Gross exposure | (124 | ) | (811 | ) | 556 | 75 | 197 | 43 | |||||||||||||||
Forward exchange contracts | 124 | 811 | (556 | ) | (75 | ) | (197 | ) | (43) | ||||||||||||||
Net exposure | – | – | – | – | – | – | |||||||||||||||||
2008 | |||||||||||||||||||||||
Gross exposure | (676 | ) | (444 | ) | 505 | 57 | 166 | 49 | |||||||||||||||
Forward exchange contracts | 690 | 445 | (512 | ) | (52 | ) | (166 | ) | (24) | ||||||||||||||
Net exposure | 14 | 1 | (7 | ) | 5 | – | 25 | ||||||||||||||||
2007 | |||||||||||||||||||||||
Gross exposure | (536 | ) | (476 | ) | 627 | 24 | 168 | 57 | |||||||||||||||
Forward exchange contracts | 530 | 494 | (627 | ) | (24 | ) | (168 | ) | (57) | ||||||||||||||
Net exposure | (6 | ) | 18 | – | – | – | – | ||||||||||||||||
Table of Contents
Financial Statements | 151 |
Interest rates | Exchange rates | ||||||||||||||
+1% | -1% | +10% | -10% | ||||||||||||
Increase/(decrease) in fair value of financial instruments | 602 | (709 | ) | 137 | (137) | ||||||||||
Impact on profit: gain/(loss) | – | – | (134 | ) | 134 | ||||||||||
Impact on equity: gain/(loss) | – | – | 271 | (271) | |||||||||||
Interest rates | Exchange rates | ||||||||||||||
+1% | -1% | +10% | -10% | ||||||||||||
Increase/(decrease) in fair value of financial instruments | 587 | (706 | ) | 217 | (217) | ||||||||||
Impact on profit: gain/(loss) | – | – | (57 | ) | 57 | ||||||||||
Impact on equity: gain/(loss) | – | – | 274 | (274) | |||||||||||
Interest rates | Exchange rates | ||||||||||||||
+1% | -1% | +10% | -10% | ||||||||||||
Increase/(decrease) in fair value of financial instruments | 666 | (779 | ) | 165 | (165) | ||||||||||
Impact on profit: gain/(loss) | – | – | (37 | ) | 37 | ||||||||||
Impact on equity: gain/(loss) | – | – | 202 | (202) | |||||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
US | 2,229 | 2,032 | 1,961 | ||||||||
UK | 482 | 459 | 425 | ||||||||
Sweden | 245 | 226 | 260 | ||||||||
Euro zone countries | 762 | 833 | 901 | ||||||||
Other European countries | 295 | 257 | 247 | ||||||||
Japan | 950 | 955 | 771 | ||||||||
Other countries | 819 | 796 | 761 | ||||||||
5,782 | 5,558 | 5,326 | |||||||||
Table of Contents
152Financial Statements
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Not past due | 5,542 | 5,262 | 4,930 | ||||||||
Overdue but renegotiated | – | 3 | 120 | ||||||||
Past due 0-90 days | 65 | 106 | 79 | ||||||||
Past due 90-180 days | 75 | 60 | 99 | ||||||||
Past due > 180 days | 100 | 127 | 98 | ||||||||
5,782 | 5,558 | 5,326 | |||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Movements in provisions for trade receivables | |||||||||||
Balance at beginning of year | 99 | 89 | 52 | ||||||||
Income statement (credit)/charge | (20 | ) | 23 | 34 | |||||||
Amounts utilised, exchange and other movements | 2 | (13 | ) | 3 | |||||||
Balance at end of year | 81 | 99 | 89 | ||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Current liabilities | |||||||||||
Trade payables | 2,316 | 1,940 | 1,983 | ||||||||
Value added and payroll taxes and social security | 342 | 371 | 434 | ||||||||
Rebates and chargebacks | 2,618 | 1,963 | 1,514 | ||||||||
Other payables | 1,038 | 1,026 | 865 | ||||||||
Accruals | 2,373 | 1,878 | 2,172 | ||||||||
8,687 | 7,178 | 6,968 | |||||||||
Non-current liabilities | |||||||||||
Other payables | 244 | 149 | 229 | ||||||||
Severance | Environmental | Employee benefits | Legal | Other provisions | Total | ||||||||||||||||||
$m | $m | $m | $m | $m | $m | ||||||||||||||||||
At 1 January 2007 | 31 | 95 | 109 | – | 131 | 366 | |||||||||||||||||
Charge for year | 620 | 48 | 4 | 25 | 33 | 730 | |||||||||||||||||
Cash paid | (25 | ) | (32 | ) | (23 | ) | – | (25 | ) | (105) | |||||||||||||
Exchange and other movements | 17 | – | 10 | – | 2 | 29 | |||||||||||||||||
At 31 December 2007 | 643 | 111 | 100 | 25 | 141 | 1,020 | |||||||||||||||||
Charge/(credit) for year | 469 | 37 | (23 | ) | – | 164 | 647 | ||||||||||||||||
Cash paid | (405 | ) | (39 | ) | (1 | ) | – | (12 | ) | (457) | |||||||||||||
Exchange and other movements | (88 | ) | 21 | 8 | – | (9 | ) | (68) | |||||||||||||||
At 31 December 2008 | 619 | 130 | 84 | 25 | 284 | 1,142 | |||||||||||||||||
Charge for year | 309 | 6 | 12 | 636 | 101 | 1,064 | |||||||||||||||||
Cash paid | (341 | ) | (23 | ) | – | (13 | ) | (34 | ) | (411) | |||||||||||||
Reversals | (89 | ) | – | – | – | (28 | ) | (117) | |||||||||||||||
Exchange and other movements | 13 | (1 | ) | (1 | ) | – | (3 | ) | 8 | ||||||||||||||
At 31 December 2009 | 511 | 112 | 95 | 648 | 320 | 1,686 | |||||||||||||||||
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
Due within one year | 1,209 | 600 | 387 | ||||||||
Due after more than one year | 477 | 542 | 633 | ||||||||
1,686 | 1,142 | 1,020 | |||||||||
Table of Contents
Financial Statements | 153 |
2009 | 2008 | 2007 | |||||||||
Cumulative translation differences included within retained earnings | $m | $m | $m | ||||||||
Balance at beginning of year | 1,323 | 2,414 | 1,945 | ||||||||
Foreign exchange arising on consolidation | 388 | (1,355 | ) | 489 | |||||||
Exchange adjustments on goodwill (recorded against other reserves) | 13 | (27 | ) | 20 | |||||||
Foreign exchange on borrowings | (68 | ) | 291 | (40) | |||||||
Net exchange movement in retained earnings | 333 | (1,091 | ) | 469 | |||||||
Balance at end of year | 1,656 | 1,323 | 2,414 | ||||||||
Authorised | Allotted, called-up and fully paid | ||||||||||||||
2009 | 2009 | 2008 | 2007 | ||||||||||||
$m | $m | $m | $m | ||||||||||||
Issued Ordinary Shares ($0.25 each) | 363 | 363 | 362 | 364 | |||||||||||
Unissued Ordinary Shares ($0.25 each) | 237 | – | – | – | |||||||||||
Redeemable Preference Shares (£1 each – £50,000) | – | – | – | – | |||||||||||
600 | 363 | 362 | 364 | ||||||||||||
No. of shares (million) | |||||||
2009 | 2008 | ||||||
At 1 January | 1,447 | 1,457 | |||||
Issues of shares | 4 | 4 | |||||
Re-purchase of shares | – | (14) | |||||
At 31 December | 1,451 | 1,447 | |||||
Table of Contents
154Financial Statements
2009 | 2008 | 2007 | 2009 | 2008 | 2007 | ||||||||||||||||||
Per share | Per share | Per share | $m | $m | $m | ||||||||||||||||||
Final | $1.500 | $1.350 | $1.230 | 2,171 | 1,967 | 1,885 | |||||||||||||||||
Interim | $0.590 | $0.550 | $0.520 | 855 | 800 | 773 | |||||||||||||||||
$2.090 | $1.900 | $1.750 | 3,026 | 2,767 | 2,658 | ||||||||||||||||||
Table of Contents
Financial Statements | 155 |
Fair value | |||||||||||
Book value | adjustment | Fair value | |||||||||
$m | $m | $m | |||||||||
Non-current assets | |||||||||||
Intangible assets | 193 | 7,882 | 8,075 | ||||||||
Property, plant and equipment | 523 | 70 | 593 | ||||||||
Other | 550 | (17 | ) | 533 | |||||||
1,266 | 7,935 | 9,201 | |||||||||
Current assets | 1,439 | 115 | 1,554 | ||||||||
Current liabilities | (326 | ) | 39 | (287) | |||||||
Additional obligations related to convertible debt and share options | – | (1,724 | ) | (1,724) | |||||||
Non-current liabilities | |||||||||||
Interest-bearing loans and borrowings | (1,165 | ) | – | (1,165) | |||||||
Other payables | (73 | ) | – | (73) | |||||||
Deferred tax assets/(liabilities) | 314 | (2,694 | ) | (2,380) | |||||||
(924 | ) | (2,694 | ) | (3,618) | |||||||
Total assets acquired | 1,455 | 3,671 | 5,126 | ||||||||
Goodwill | 8,757 | ||||||||||
Total consideration for outstanding shares | 13,883 | ||||||||||
Additional payments related to convertible debt, share options and other acquisition obligations | 1,770 | ||||||||||
Total consideration | 15,653 | ||||||||||
Fair value | |||||||||||
Book value | adjustment | Fair value | |||||||||
$m | $m | $m | |||||||||
Non-current assets | |||||||||||
Intangible assets | – | 347 | 347 | ||||||||
Property, plant and equipment | 7 | – | 7 | ||||||||
7 | 347 | 354 | |||||||||
Current assets | 12 | – | 12 | ||||||||
Current liabilities | (19 | ) | – | (19) | |||||||
Non-current liabilities | |||||||||||
Other payables | (9 | ) | – | (9) | |||||||
Deferred tax liabilities | – | (118 | ) | (118) | |||||||
(9 | ) | (118 | ) | (127) | |||||||
Total assets acquired | (9 | ) | 229 | 220 | |||||||
Goodwill | – | ||||||||||
Total consideration | 220 | ||||||||||
Table of Contents
156Financial Statements
MedImmune | Other | Total | ||||||||||
$m | $m | $m | ||||||||||
Total consideration | 15,653 | 220 | 15,873 | |||||||||
Cash and cash equivalents included in undertaking acquired | (979 | ) | (3 | ) | (982 | ) | ||||||
Net cash consideration | 14,674 | 217 | 14,891 | |||||||||
Value at 31 December 2009 | Value at 31 December 2008 | |||||||||||||||||||||||
UK | Rest of Group | Total | UK | Rest of Group | Total | |||||||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||||||
Scheme assets | ||||||||||||||||||||||||
Equities | 2,309 | 1,241 | 3,550 | 1,461 | 960 | 2,421 | ||||||||||||||||||
Bonds | 2,279 | 903 | 3,182 | 1,935 | 772 | 2,707 | ||||||||||||||||||
Others | 265 | 258 | 523 | 439 | 281 | 720 | ||||||||||||||||||
Total fair value of assets | 4,853 | 2,402 | 7,255 | 3,835 | 2,013 | 5,848 | ||||||||||||||||||
Present value of scheme obligations | (7,055 | ) | (3,591 | ) | (10,646 | ) | (5,029 | ) | (3,591 | ) | (8,620 | ) | ||||||||||||
Past service cost not yet recognised | – | 37 | 37 | – | 40 | 40 | ||||||||||||||||||
Deficit in the scheme as recognised in the Statement of Financial Position | (2,202 | ) | (1,152 | ) | (3,354 | ) | (1,194 | ) | (1,538 | ) | (2,732 | ) | ||||||||||||
Table of Contents
Financial Statements | 157 |
> | The Group has a fundamental belief in funding the benefits it promises to employees. | |
> | The Group considers its pension arrangements in the context of its broader capital structure. In general it does not believe in committing excessive capital for funding whilst it has better uses of capital within the business nor does it wish to generate surpluses. | |
> | The pension funds are not part of the Group’s core business. Pension funds may take rewarded risks with the investments underlying the funding, subject to adequate controls and the expected rewards outweighing the risks. | |
> | The Group recognises that deciding to hold certain investments may cause volatility in the funding position. The Group would not wish to amend its contribution level for relatively small deviations from its preferred funding level, because it is expected that there will be short-term volatility, but it is prepared to react appropriately to more significant deviations. | |
> | In the event that local regulations require an additional level of financing, the Group would consider the use of alternative methods of providing this that do not require immediate cash funding but help mitigate exposure of the pension arrangement to the credit risk of the Group. |
> | The US defined benefits programme was actuarially revalued at 31 December 2009, when plan obligations were $1,834m and plan assets were $1,412m. This includes obligations in respect of the non-qualified plan which is largely unfunded. | |
> | The Swedish defined benefits programme was actuarially revalued at 31 December 2009, when plan obligations were estimated to amount to $1,191m and plan assets were $687m. | |
> | The German defined benefits programme was actuarially revalued at 31 December 2009, when plan obligations amounted to $237m and plan assets were $27m. |
Table of Contents
158Financial Statements
2009 | 2008 | |||||||||||||||
UK | Rest of Group | UK | Rest of Group | |||||||||||||
Inflation assumption | 3.5 | % | 2.3 | % | 2.8 | % | 2.2 | % | ||||||||
Rate of increase in salaries | 4.5 | % | 3.4 | % | 3.8 | % | 3.4 | % | ||||||||
Rate of increase in pensions in payment | 3.5 | % | 0.9 | % | 2.8 | % | 0.8 | % | ||||||||
Discount rate | 5.5 | % | 5.0 | % | 6.2 | % | 4.6 | % | ||||||||
Long-term rate of return expected at 31 December | ||||||||||||||||
Equities | 8.0 | % | 8.1 | % | 7.9 | % | 7.7 | % | ||||||||
Bonds | 5.5 | % | 5.2 | % | 5.2 | % | 4.9 | % | ||||||||
Others | 6.5 | % | 4.8 | % | 6.0 | % | 3.5 | % | ||||||||
Rate of increase in medical costs | 10.0 | % | 10.0 | % | 10.0 | % | 10.0 | % | ||||||||
Life expectancy assumption for a male member retiring at age 65 | ||||||||||||||||
Country | 2009 | 2029 | 2008 | 2028 | ||||||||||||
UK | 23.8 | 25.8 | 23.8 | 25.8 | ||||||||||||
US | 19.6 | 21.1 | 19.6 | 21.1 | ||||||||||||
Sweden | 20.4 | 22.4 | 20.4 | 22.4 | ||||||||||||
Germany | 17.7 | 20.5 | 17.7 | 20.5 | ||||||||||||
Effect of change in medical cost assumption increase/(decrease) | ||||||||||||||||
2009 | 2008 | |||||||||||||||
+1% | -1% | +1% | –1% | |||||||||||||
Current service and interest cost of net periodic post-employment medical costs ($m) | 4 | (3 | ) | 4 | (3 | ) | ||||||||||
Accumulated post-employment benefit obligation for medical costs ($m) | 32 | (28 | ) | 28 | (28 | ) | ||||||||||
Table of Contents
Financial Statements | 159 |
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
UK | ||||||||||||||||||||
Present value of obligations ($m) | (7,055 | ) | (5,029 | ) | (7,644 | ) | (7,352 | ) | (6,309 | ) | ||||||||||
Fair value of plan assets ($m) | 4,853 | 3,835 | 6,310 | 6,078 | 5,314 | |||||||||||||||
Deficit in the scheme ($m) | (2,202 | ) | (1,194 | ) | (1,334 | ) | (1,274 | ) | (995 | ) | ||||||||||
Experience adjustments on: | ||||||||||||||||||||
Scheme assets | ||||||||||||||||||||
Amount ($m) | 293 | (1,185 | ) | (185 | ) | (259 | ) | 636 | ||||||||||||
Percentage of scheme assets | 6.0% | 30.9% | 2.9% | 4.3% | 12.0% | |||||||||||||||
Scheme obligations | ||||||||||||||||||||
Amount ($m) | (1,218 | ) | 972 | 114 | 71 | (539 | ) | |||||||||||||
Percentage of scheme obligations | 17.3% | 19.3% | 1.5% | 1.0% | 8.5% | |||||||||||||||
Rest of Group | ||||||||||||||||||||
Present value of obligations ($m) | (3,591 | ) | (3,591 | ) | (3,348 | ) | (3,109 | ) | (2,995 | ) | ||||||||||
Fair value of plan assets ($m) | 2,402 | 2,013 | 2,644 | 2,493 | 2,284 | |||||||||||||||
Deficit in the scheme ($m) | (1,189 | ) | (1,578 | ) | (704 | ) | (616 | ) | (711 | ) | ||||||||||
Experience adjustments on: | ||||||||||||||||||||
Scheme assets | ||||||||||||||||||||
Amount ($m) | 180 | (700 | ) | (24 | ) | 55 | 63 | |||||||||||||
Percentage of scheme assets | 7.5% | 34.8% | 0.9% | 2.2% | 2.8% | |||||||||||||||
Scheme obligations | ||||||||||||||||||||
Amount ($m) | 176 | (319 | ) | (18 | ) | 25 | (195 | ) | ||||||||||||
Percentage of scheme obligations | 4.9% | 8.9% | 0.5% | 0.8% | 6.5% | |||||||||||||||
Total | ||||||||||||||||||||
Present value of obligations ($m) | (10,646 | ) | (8,620 | ) | (10,992 | ) | (10,461 | ) | (9,304 | ) | ||||||||||
Fair value of plan assets ($m) | 7,255 | 5,848 | 8,954 | 8,571 | 7,598 | |||||||||||||||
Deficit in the scheme ($m) | (3,391 | ) | (2,772 | ) | (2,038 | ) | (1,890 | ) | (1,706 | ) | ||||||||||
Experience adjustments on: | ||||||||||||||||||||
Scheme assets | ||||||||||||||||||||
Amount ($m) | 473 | (1,885 | ) | (209 | ) | (204 | ) | 699 | ||||||||||||
Percentage of scheme assets | 6.5% | 32.2% | 2.3% | 2.4% | 9.2% | |||||||||||||||
Scheme obligations | ||||||||||||||||||||
Amount ($m) | (1,042 | ) | 653 | 96 | 96 | (734 | ) | |||||||||||||
Percentage of scheme obligations | 9.8% | 7.6% | 0.9% | 0.9% | 7.9% | |||||||||||||||
2009 | 2008 | |||||||||||||||
UK | Rest of Group | UK | Rest of Group | |||||||||||||
$m | $m | $m | $m | |||||||||||||
Funded | (7,026 | ) | (3,159 | ) | (5,004 | ) | (3,025 | ) | ||||||||
Unfunded | (29 | ) | (432 | ) | (25 | ) | (566 | ) | ||||||||
Total | (7,055 | ) | (3,591 | ) | (5,029 | ) | (3,591 | ) | ||||||||
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160Financial Statements
2009 | 2008 | |||||||||||||||||||||||
UK | Rest of Group | Total | UK | Rest of Group | Total | |||||||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||||||
Operating profit | ||||||||||||||||||||||||
Current service cost | (96 | ) | (126 | ) | (222 | ) | (146 | ) | (107 | ) | (253 | ) | ||||||||||||
Past service cost | (53 | ) | (24 | ) | (77 | ) | (86 | ) | (28 | ) | (114 | ) | ||||||||||||
Settlements and curtailments | – | – | – | 19 | 28 | 47 | ||||||||||||||||||
Total charge to operating profit | (149 | ) | (150 | ) | (299 | ) | (213 | ) | (107 | ) | (320 | ) | ||||||||||||
Finance expense | ||||||||||||||||||||||||
Expected return on post-retirement scheme assets | 261 | 127 | 388 | 398 | 187 | 585 | ||||||||||||||||||
Interest on post-retirement scheme obligations | (330 | ) | (163 | ) | (493 | ) | (416 | ) | (172 | ) | (588 | ) | ||||||||||||
Net return | (69 | ) | (36 | ) | (105 | ) | (18 | ) | 15 | (3 | ) | |||||||||||||
Charge before taxation | (218 | ) | (186 | ) | (404 | ) | (231 | ) | (92 | ) | (323 | ) | ||||||||||||
Other comprehensive income | ||||||||||||||||||||||||
Difference between the actual return and the expected return on the post-retirement schemes’ assets | 293 | 180 | 473 | (1,185 | ) | (700 | ) | (1,885 | ) | |||||||||||||||
Experience gains/(losses) arising on the post-retirement schemes’ obligations | 105 | (67 | ) | 38 | 78 | 4 | 82 | |||||||||||||||||
Changes in assumptions underlying the present value of the post-retirement schemes’ obligations | (1,323 | ) | 243 | (1,080 | ) | 894 | (323 | ) | 571 | |||||||||||||||
Actuarial (losses)/gains recognised | (925 | ) | 356 | (569 | ) | (213 | ) | (1,019 | ) | (1,232 | ) | |||||||||||||
Movement in post-retirement scheme obligations | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
UK | Rest of Group | Total | UK | Rest of Group | Total | |||||||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||||||
Present value of obligation in schemes at beginning of year | (5,029 | ) | (3,591 | ) | (8,620 | ) | (7,644 | ) | (3,348 | ) | (10,992 | ) | ||||||||||||
Current service cost | (96 | ) | (126 | ) | (222 | ) | (146 | ) | (107 | ) | (253 | ) | ||||||||||||
Past service cost | (53 | ) | (21 | ) | (74 | ) | (86 | ) | (28 | ) | (114 | ) | ||||||||||||
Participant contributions | (31 | ) | (3 | ) | (34 | ) | (43 | ) | (3 | ) | (46 | ) | ||||||||||||
Benefits paid | 295 | 200 | 495 | 375 | 112 | 487 | ||||||||||||||||||
Other finance expense | (330 | ) | (163 | ) | (493 | ) | (416 | ) | (172 | ) | (588 | ) | ||||||||||||
Expenses | 6 | – | 6 | 8 | – | 8 | ||||||||||||||||||
Actuarial (loss)/gain | (1,218 | ) | 176 | (1,042 | ) | 972 | (319 | ) | 653 | |||||||||||||||
Settlements and curtailments | – | – | – | 19 | 28 | 47 | ||||||||||||||||||
Exchange | (599 | ) | (63 | ) | (662 | ) | 1,932 | 246 | 2,178 | |||||||||||||||
Present value of obligations in schemes at end of year | (7,055 | ) | (3,591 | ) | (10,646 | ) | (5,029 | ) | (3,591 | ) | (8,620 | ) | ||||||||||||
Fair value of scheme assets | ||||||||||||||||||||||||
2009 | 2008 | |||||||||||||||||||||||
UK | Rest of Group | Total | UK | Rest of Group | Total | |||||||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||||||
At beginning of year | 3,835 | 2,013 | 5,848 | 6,310 | 2,644 | 8,954 | ||||||||||||||||||
Expected return on plan assets | 261 | 127 | 388 | 398 | 187 | 585 | ||||||||||||||||||
Expenses | (6 | ) | – | (6 | ) | (8 | ) | – | (8 | ) | ||||||||||||||
Actuarial gains/(losses) | 293 | 180 | 473 | (1,185 | ) | (700 | ) | (1,885 | ) | |||||||||||||||
Exchange | 430 | 17 | 447 | (1,583 | ) | (161 | ) | (1,744 | ) | |||||||||||||||
Employer contributions | 304 | 262 | 566 | 235 | 152 | 387 | ||||||||||||||||||
Participant contributions | 31 | 3 | 34 | 43 | 3 | 46 | ||||||||||||||||||
Benefits paid | (295 | ) | (200 | ) | (495 | ) | (375 | ) | (112 | ) | (487 | ) | ||||||||||||
At end of year | 4,853 | 2,402 | 7,255 | 3,835 | 2,013 | 5,848 | ||||||||||||||||||
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Financial Statements | 161 |
2009 | 2008 | 2007 | |||||||||
$m | $m | $m | |||||||||
At 1 January | (1,371 | ) | (479 | ) | (401) | ||||||
Actuarial losses | (569 | ) | (1,232 | ) | (113) | ||||||
Deferred tax | 140 | 340 | 35 | ||||||||
At 31 December | (1,800 | ) | (1,371 | ) | (479) | ||||||
Employees | 2009 | 2008 | 2007 | |||||||||
UK | 10,600 | 11,000 | 11,800 | |||||||||
Continental Europe | 21,200 | 23,100 | 25,600 | |||||||||
The Americas | 19,800 | 20,900 | 20,200 | |||||||||
Asia, Africa & Australasia | 12,300 | 11,100 | 10,300 | |||||||||
Continuing operations | 63,900 | 66,100 | 67,900 | |||||||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Salaries | 4,713 | 5,080 | 5,217 | |||||||||
Social security costs | 644 | 743 | 858 | |||||||||
Pension costs | 516 | 497 | 449 | |||||||||
Other employment costs | 560 | 596 | 584 | |||||||||
6,433 | 6,916 | 7,108 | ||||||||||
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162Financial Statements
Table of Contents
Financial Statements | 163 |
Shares | WAFV1 | |||||||
’000 | pence | |||||||
Shares awarded in June 2005 | 312 | 1121 | ||||||
Shares awarded in March 2006 | 280 | 1486 | ||||||
Shares awarded in May 2006 | 19 | 1424 | ||||||
Shares awarded in March 2007 | 1,611 | 1372 | ||||||
Shares awarded in August 2007 | 68 | 1217 | ||||||
Shares awarded in November 2007 | 16 | 1105 | ||||||
Shares awarded in March 2008 | 1,338 | 941 | ||||||
Shares awarded in August 2008 | 14 | 1326 | ||||||
Shares awarded in March 2009 | 1,190 | 1140 | ||||||
Shares awarded in August 2009 | 8 | 1424 | ||||||
Units | WAFV1 | |||||||
’000 | $ | |||||||
Units awarded in March 2007 | 755 | 26.90 | ||||||
Units awarded in November 2007 | 270 | 21.56 | ||||||
Units awarded in March 2008 | 1,313 | 18.88 | ||||||
Units awarded in March 2009 | 1,283 | 16.70 | ||||||
Shares | WAFV1 | |||||||
’000 | $ | |||||||
Shares awarded in March 2007 | 38 | 25.86 | ||||||
Shares awarded in March 2008 | 2,094 | 18.88 | ||||||
Shares awarded in August 2008 | 20 | 24.46 | ||||||
Shares awarded in March 2009 | 2,288 | 16.70 | ||||||
Shares awarded in August 2009 | 6 | 23.18 | ||||||
Units | WAFV1 | |||||||
’000 | $ | |||||||
Units awarded in March 2008 | 130 | 18.88 | ||||||
Units awarded in March 2009 | 177 | 16.70 | ||||||
Shares | WAFV1 | |||||||
’000 | pence | |||||||
Shares awarded in March 2008 | 51 | 941 | ||||||
Shares awarded in May 2008 | 35 | 2210 | ||||||
Units | WAFV1 | |||||||
’000 | $ | |||||||
Units awarded in August 2009 | 9 | 23.22 | ||||||
Units awarded in September 2009 | 22 | 22.31 | ||||||
1Weighted average fair value. |
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164Financial Statements
(a) | 90% of the arithmetical average of the middle-market quotations for an Ordinary Share on the London Stock Exchange on three consecutive dealing days shortly before the date on which invitations to apply for options are issued (provided that no such day may fall before the Company last announced its results for any period) or such other dealing day or days falling within the six-week period for the issue of invitations, as the Directors may decide; and | |
(b) | the nominal value of an Ordinary Share (unless the option is expressed to relate only to existing Ordinary Shares). |
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Financial Statements | 165 |
AstraZeneca Share Option Plan | 1994 Scheme | SAYE Schemes | ||||||||||||||||||||||
Options | WAEP1 | Options | WAEP1 | Options | WAEP1 | |||||||||||||||||||
’000 | pence | ’000 | pence | ’000 | pence | |||||||||||||||||||
Movements during 2007 | ||||||||||||||||||||||||
Options granted | 7,312 | 2737 | – | – | 1,074 | 2164 | ||||||||||||||||||
Options exercised | (2,770 | ) | 2648 | (321 | ) | 2426 | (1,327 | ) | 1785 | |||||||||||||||
Options forfeited | (1,706 | ) | 2745 | (95 | ) | 2603 | (238 | ) | 2528 | |||||||||||||||
Weighted average fair value of options granted during the year | 682 | 616 | ||||||||||||||||||||||
At 31 December 2007 | ||||||||||||||||||||||||
Options outstanding | 42,560 | 2451 | 1,490 | 2364 | 2,720 | 2226 | ||||||||||||||||||
Movements during 2008 | ||||||||||||||||||||||||
Options granted | 14,858 | 1887 | – | – | 483 | 2398 | ||||||||||||||||||
Options exercised | (2,577 | ) | 2204 | (99 | ) | 2620 | (675 | ) | 2062 | |||||||||||||||
Options forfeited | (2,273 | ) | 2622 | (106 | ) | 2594 | (388 | ) | 2291 | |||||||||||||||
Weighted average fair value of options granted during the year | 404 | 499 | ||||||||||||||||||||||
At 31 December 2008 | ||||||||||||||||||||||||
Options outstanding | 52,568 | 2978 | 1,285 | 2934 | 2,140 | 2304 | ||||||||||||||||||
Movements during 2009 | ||||||||||||||||||||||||
Options granted | 15,246 | 2281 | – | – | 351 | 2563 | ||||||||||||||||||
Options exercised | (2,275 | ) | 2213 | (317 | ) | 2670 | (286 | ) | 2258 | |||||||||||||||
Options forfeited | (3,141 | ) | 2604 | (51 | ) | 2688 | (169 | ) | 2340 | |||||||||||||||
Weighted average fair value of options granted during the year | 423 | 425 | ||||||||||||||||||||||
At 31 December 2009 | ||||||||||||||||||||||||
Options outstanding | 62,398 | 2601 | 917 | 2734 | 2,036 | 2349 | ||||||||||||||||||
Range of exercise prices | 1882 to | 2164 to | ||||||||||||||||||||||
3934 | 2714 | 3001 | ||||||||||||||||||||||
Weighted average remaining contractual life | 2,240 days | 75 days | 1,086 days | |||||||||||||||||||||
Options exercisable | 29,376 | 2737 | 917 | 2714 | 105 | 2658 | ||||||||||||||||||
1Weighted average exercise price. |
2009 | 2008 | 2007 | ||||||||||
Average share price (pence) | 2651 | 2295 | 2599 | |||||||||
Weighted average exercise price (pence) | ||||||||||||
AstraZeneca Share Option Plan | 2281 | 1887 | 2737 | |||||||||
SAYE schemes | 2563 | 2398 | 2164 | |||||||||
Expected volatility (%) | 25.0 | 25.0 | 25.0 | |||||||||
Dividend yield (%) | 4.0 | 3.4 | 2.6 | |||||||||
Risk-free interest rate (%) | 3.7 | 4.3 | 4.8 | |||||||||
Expected lives: AstraZeneca Share Option Plan (years) | 6.0 | 6.0 | 6.0 | |||||||||
Expected lives: SAYE schemes (years) | 4.2 | 4.0 | 4.3 | |||||||||
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166Financial Statements
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Commitments | ||||||||||||
Contracts placed for future capital expenditure not provided for in these accounts | 739 | 332 | 571 | |||||||||
> | A payment to Merck in the event of a business combination between Astra and a third party in order for Merck to relinquish certain claims to that third party’s products. | |
> | Annual contingent payments. | |
> | Termination arrangements which cause Merck to relinquish its interests in AstraZeneca’s products and activities in stages, some of which are mandatory and others optional. |
> | the Advance Payment; | |
> | the Partial Retirement; | |
> | the True-Up; | |
> | the Loan Note Receivable; | |
> | the First Option; | |
> | the Second Option. |
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Financial Statements | 167 |
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168Financial Statements
> | Currently, from the substantial freedom over products acquired or discovered post-merger. | |
> | On occurrence of each stage of such arrangements, from enhanced contributions from, and substantial freedom over, those products that have already been launched (for example,Pulmicort,Symbicort,RhinocortandAtacand), and those that are in development. | |
> | Economic benefits include relief from contingent payments, anticipated cost savings from cessation of manufacturing arrangements and other cost efficiencies, together with the strategic advantages of increased freedom to operate. |
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Financial Statements | 169 |
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170Financial Statements
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Financial Statements | 171 |
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172Financial Statements
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Financial Statements | 173 |
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174Financial Statements
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Financial Statements | 175 |
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176Financial Statements
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Financial Statements | 177 |
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178Financial Statements
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Financial Statements | 179 |
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180Financial Statements
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Financial Statements | 181 |
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182Financial Statements
US secondary wholesalers
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Financial Statements | 183 |
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184Financial Statements
> | AstraZeneca and HMRC have made a joint referral to the UK Court in respect of transfer pricing between our UK and one of our overseas operations for the years 1996 to date as there continues to be a material difference between the Group’s and HMRC’s positions. An additional referral in respect of controlled foreign company aspects of the same case was made during 2008. Absent a negotiated settlement, litigation is set to commence in 2010. | |
> | AstraZeneca has applied for an advance pricing agreement in relation to intra-group transactions between the UK and the US which is being progressed through competent authority proceedings under the relevant double tax treaty. |
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Financial Statements | 185 |
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Operating leases | 198 | 206 | 210 | |||||||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Obligations under leases comprise: | ||||||||||||
No later than one year | 132 | 101 | 103 | |||||||||
Rentals due after more than one year: | ||||||||||||
Later than five years | 131 | 145 | 184 | |||||||||
Later than one year and not later than five years | 208 | 212 | 195 | |||||||||
339 | 357 | 379 | ||||||||||
471 | 458 | 482 | ||||||||||
2009 | 2008 | 2007 | ||||||||||
$m | $m | $m | ||||||||||
Fees payable to KPMG Audit Plc and its associates: | ||||||||||||
Group audit fee | 2.4 | 3.2 | 3.6 | |||||||||
Fees payable to KPMG Audit Plc and its associates for other services: | ||||||||||||
The audit of subsidiaries pursuant to legislation | 6.6 | 7.1 | 6.1 | |||||||||
Other services pursuant to legislation | 2.9 | 3.3 | 3.6 | |||||||||
Taxation | 1.0 | 0.9 | 1.1 | |||||||||
All other services | 0.7 | 1.7 | 0.7 | |||||||||
Fees payable to KPMG Audit Plc in respect of the Group’s pension schemes: | ||||||||||||
The audit of subsidiaries’ pension schemes | 0.5 | 0.6 | 0.6 | |||||||||
14.1 | 16.8 | 15.7 | ||||||||||
2009 | 2008 | 2007 | ||||||||||
$000 | $000 | $000 | ||||||||||
Short-term employee benefits | 20,784 | 21,973 | 31,525 | |||||||||
Post-employment benefits | 2,080 | 2,290 | 2,072 | |||||||||
Termination benefits | 3,639 | – | – | |||||||||
Share-based payments | 12,547 | 13,210 | 11,515 | |||||||||
39,050 | 37,473 | 45,112 | ||||||||||
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186Financial Statements
Percentage of voting | ||||||||||
At 31 December 2009 | Country | share capital held | Principal activity | |||||||
UK | ||||||||||
AstraZeneca UK Limited | England | 100 | Research and development, manufacturing, marketing | |||||||
AstraZeneca Treasury Limited | England | 100 | Treasury | |||||||
Continental Europe | ||||||||||
NV AstraZeneca SA | Belgium | 100 | Marketing | |||||||
AstraZeneca Dunkerque Production SCS | France | 95 | Manufacturing | |||||||
AstraZeneca SAS | France | 100 | Research, manufacturing, marketing | |||||||
AstraZeneca GmbH | Germany | 100 | Development, manufacturing, marketing | |||||||
AstraZeneca Holding GmbH | Germany | 100 | Manufacturing, marketing | |||||||
AstraZeneca SpA | Italy | 100 | Marketing | |||||||
AstraZeneca Farmaceutica Spain SA | Spain | 100 | Marketing | |||||||
AstraZeneca AB | Sweden | 100 | Research and development, manufacturing, marketing | |||||||
AstraZeneca BV | The Netherlands | 100 | Marketing | |||||||
The Americas | ||||||||||
AstraZeneca Canada Inc. | Canada | 100 | Research, marketing | |||||||
AZ Reinsurance Limited | Cayman Islands | 100 | Insurance and reinsurance underwriting | |||||||
IPR Pharmaceuticals Inc. | Puerto Rico | 100 | Development, manufacturing, marketing | |||||||
AstraZeneca LP | US | 99 | Research and development, manufacturing, marketing | |||||||
AstraZeneca Pharmaceuticals LP | US | 100 | Research and development, manufacturing, marketing | |||||||
Zeneca Holdings Inc. | US | 100 | Manufacturing, marketing | |||||||
MedImmune, LLC | US | 100 | Research and development, manufacturing, marketing | |||||||
Asia, Africa & Australasia | ||||||||||
AstraZeneca Pty Limited | Australia | 100 | Development, manufacturing, marketing | |||||||
AstraZeneca Pharmaceuticals Co., Limited | China | 100 | Research and development, manufacturing, marketing | |||||||
AstraZeneca KK | Japan | 80 | Manufacturing, marketing | |||||||
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Financial Statements | 187 |
Members of AstraZeneca PLC
of directors and auditors
the financial statements
> | Give a true and fair view of the state of the Company’s affairs as at 31 December 2009. | |
> | Have been properly prepared in accordance with UK Generally Accepted Accounting Practice. | |
> | Have been prepared in accordance with the requirements of the Companies Act 2006. |
by the Companies Act 2006
> | The part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. | |
> | The information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the Parent Company Financial Statements. |
to report by exception
> | Adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us. | |
> | The Parent Company Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or | |
> | Certain disclosures of Directors’ Remuneration specified by law are not made; or | |
> | We have not received all the information and explanations we require for our audit. |
Senior Statutory Auditor
Statutory Auditor
Chartered Accountants
8 Salisbury Square, London, EC4Y 8BB
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188Financial Statements
2009 | 2008 | ||||||||||
At 31 December | Notes | $m | $m | ||||||||
Fixed assets | |||||||||||
Fixed asset investments | 1 | 25,230 | 26,727 | ||||||||
Current assets | |||||||||||
Debtors – other | 1 | 1 | |||||||||
Debtors – amounts owed by Group undertakings | 8,966 | 8,217 | |||||||||
8,967 | 8,218 | ||||||||||
Total assets | 34,197 | 34,945 | |||||||||
Creditors: Amounts falling due within one year | |||||||||||
Non-trade creditors | 2 | (252 | ) | (414) | |||||||
Interest bearing loans and borrowings | 3 | (1,790 | ) | (650) | |||||||
(2,042 | ) | (1,064) | |||||||||
Net current assets | 6,925 | 7,154 | |||||||||
Total assets less current liabilities | 32,155 | 33,881 | |||||||||
Creditors: Amounts falling due after more than one year | |||||||||||
Amounts owed to Group undertakings | 3 | (283 | ) | (283) | |||||||
Interest bearing loans and borrowings | 3 | (8,582 | ) | (10,255) | |||||||
(8,865 | ) | (10,538) | |||||||||
Net assets | 23,290 | 23,343 | |||||||||
Capital and reserves | |||||||||||
Called-up share capital | 6 | 363 | 362 | ||||||||
Share premium account | 4 | 2,180 | 2,046 | ||||||||
Capital redemption reserve | 4 | 94 | 94 | ||||||||
Other reserves | 4 | 2,922 | 2,743 | ||||||||
Profit and loss account | 4 | 17,731 | 18,098 | ||||||||
Shareholders’ funds | 5 | 23,290 | 23,343 | ||||||||
David R Brennan | Simon Lowth | |
Director | Director |
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Financial Statements | 189 |
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190Financial Statements
Investments in subsidiaries | |||||||||||
Shares | Loans | Total | |||||||||
$m | $m | $m | |||||||||
Cost and net book value at 1 January 2009 | 16,188 | 10,539 | 26,727 | ||||||||
Transfer to current assets | – | (1,757 | ) | (1,757) | |||||||
Capital contribution – UITF 44 | 179 | – | 179 | ||||||||
Exchange | – | 76 | 76 | ||||||||
Amortisation | – | 5 | 5 | ||||||||
Cost and net book value at 31 December 2009 | 16,367 | 8,863 | 25,230 | ||||||||
2009 | 2008 | |||||||
$m | $m | |||||||
Amounts due within one year | ||||||||
Short term borrowings (unsecured) | 12 | 173 | ||||||
Other creditors | 226 | 228 | ||||||
Amounts owed to Group undertakings | 14 | 13 | ||||||
252 | 414 | |||||||
Repayment | 2009 | 2008 | ||||||||||
dates | $m | $m | ||||||||||
Amounts due within one year | ||||||||||||
Interest bearing loans and borrowings (unsecured) | ||||||||||||
US dollars | ||||||||||||
Floating Rate Note | 2009 | – | 650 | |||||||||
Euros | ||||||||||||
4.625% Non-callable bond | 2010 | 1,073 | – | |||||||||
5.625% Non-callable bond | 2010 | 717 | – | |||||||||
1,790 | 650 | |||||||||||
Amounts due after more than one year | ||||||||||||
Amounts owed to subsidiaries (unsecured) | ||||||||||||
US dollars | ||||||||||||
7.2% Loan | 2023 | 283 | 283 | |||||||||
Interest bearing loans and borrowings (unsecured) | ||||||||||||
US dollars | ||||||||||||
5.4% Callable bond | 2012 | 1,744 | 1,742 | |||||||||
5.4% Callable bond | 2014 | 748 | 748 | |||||||||
5.9% Callable bond | 2017 | 1,743 | 1,742 | |||||||||
6.45% Callable bond | 2037 | 2,717 | 2,716 | |||||||||
Euros | ||||||||||||
4.625% Non-callable bond | 2010 | – | 1,053 | |||||||||
5.625% Non-callable bond | 2010 | – | 702 | |||||||||
5.125% Non-callable bond | 2015 | 1,072 | 1,051 | |||||||||
Pounds sterling | ||||||||||||
5.75% Non-callable bond | 2031 | 558 | 501 | |||||||||
8,582 | 10,255 | |||||||||||
2009 | 2008 | |||||||
$m | $m | |||||||
Loans or instalments thereof are repayable: | ||||||||
After five years from balance sheet date | 6,373 | 7,041 | ||||||
From two to five years | 2,492 | 1,742 | ||||||
From one to two years | – | 1,755 | ||||||
Within one year | 1,790 | 650 | ||||||
Total unsecured | 10,655 | 11,188 | ||||||
Table of Contents
Financial Statements | 191 |
Share | Capital | Other | Profit and | 2009 | 2008 | |||||||||||||||||||
premium account | redemption reserve | reserves | loss account | Total | Total | |||||||||||||||||||
$m | $m | $m | $m | $m | $m | |||||||||||||||||||
At beginning of year | 2,046 | 94 | 2,743 | 18,098 | 22,981 | 22,582 | ||||||||||||||||||
Profit for the year | – | – | – | 2,658 | 2,658 | 3,436 | ||||||||||||||||||
Dividends | – | – | – | (3,026 | ) | (3,026 | ) | (2,767 | ) | |||||||||||||||
Gain on cash flow hedge in anticipation of debt issue | – | – | – | 1 | 1 | 1 | ||||||||||||||||||
Share-based payment | – | – | 179 | – | 179 | 178 | ||||||||||||||||||
Share re-purchases | – | – | – | – | – | (607 | ) | |||||||||||||||||
Share premium | 134 | – | – | – | 134 | 158 | ||||||||||||||||||
At end of year | 2,180 | 94 | 2,922 | 17,731 | 22,927 | 22,981 | ||||||||||||||||||
Distributable reserves at end of year | – | – | 1,841 | 17,731 | 19,572 | 18,787 | ||||||||||||||||||
2009 | 2008 | |||||||
$m | $m | |||||||
At beginning of year | 23,343 | 22,946 | ||||||
Net profit for the financial year | 2,658 | 3,436 | ||||||
Dividends | (3,026 | ) | (2,767 | ) | ||||
Gain on cash flow hedge in anticipation of debt issue | 1 | 1 | ||||||
Share-based payment | 179 | 178 | ||||||
Issue of AstraZeneca PLC Ordinary Shares | 135 | 159 | ||||||
Re-purchase of AstraZeneca PLC Ordinary Shares | – | (610 | ) | |||||
Net (decrease)/increase in shareholders’ funds | (53 | ) | 397 | |||||
Shareholders’ funds at end of year | 23,290 | 23,343 | ||||||
Authorised | Allotted, called-up and fully paid | |||||||||||
2009 | 2009 | 2008 | ||||||||||
$m | $m | $m | ||||||||||
Issued Ordinary Shares ($0.25 each) | 363 | 363 | 362 | |||||||||
Unissued Ordinary Shares ($0.25 each) | 237 | – | – | |||||||||
Redeemable Preference Shares (£1 each – £50,000) | – | – | – | |||||||||
600 | 363 | 362 | ||||||||||
Table of Contents
192Financial Statements
No. of shares | |||||||||
(million) | $m | ||||||||
At 1 January 2009 | 1,447 | 362 | |||||||
Issues of shares | 4 | 1 | |||||||
At 31 December 2009 | 1,451 | 363 | |||||||
Table of Contents
Financial Statements | 193 |
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
For the year ended 31 December | $m | $m | $m | $m | $m | |||||||||||||||
Revenue and profits | ||||||||||||||||||||
Revenue | 23,950 | 26,475 | 29,559 | 31,601 | 32,804 | |||||||||||||||
Cost of sales | (5,356 | ) | (5,559 | ) | (6,419 | ) | (6,598 | ) | (5,775 | ) | ||||||||||
Distribution costs | (211 | ) | (226 | ) | (248 | ) | (291 | ) | (298 | ) | ||||||||||
Research and development | (3,379 | ) | (3,902 | ) | (5,162 | ) | (5,179 | ) | (4,409 | ) | ||||||||||
Selling, general and administrative costs | (8,695 | ) | (9,096 | ) | (10,364 | ) | (10,913 | ) | (11,332 | ) | ||||||||||
Other operating income and expense | 193 | 524 | 728 | 524 | 553 | |||||||||||||||
Operating profit | 6,502 | 8,216 | 8,094 | 9,144 | 11,543 | |||||||||||||||
Finance income | 665 | 888 | 959 | 854 | 462 | |||||||||||||||
Finance expense | (500 | ) | (561 | ) | (1,070 | ) | (1,317 | ) | (1,198 | ) | ||||||||||
Profit before tax | 6,667 | 8,543 | 7,983 | 8,681 | 10,807 | |||||||||||||||
Taxation | (1,943 | ) | (2,480 | ) | (2,356 | ) | (2,551 | ) | (3,263 | ) | ||||||||||
Profit for the period | 4,724 | 6,063 | 5,627 | 6,130 | 7,544 | |||||||||||||||
Other comprehensive income for the period, net of tax | (1,122 | ) | 931 | 342 | (1,906 | ) | (54 | ) | ||||||||||||
Total comprehensive income for the period | 3,602 | 6,994 | 5,969 | 4,224 | 7,490 | |||||||||||||||
Profit attributable to: | ||||||||||||||||||||
Equity holders of the Company | 4,706 | 6,043 | 5,595 | 6,101 | 7,521 | |||||||||||||||
Minority interests | 18 | 20 | 32 | 29 | 23 | |||||||||||||||
Earnings per share | ||||||||||||||||||||
Earnings per $0.25 Ordinary Share (basic) | $2.91 | $3.86 | $3.74 | $4.20 | $5.19 | |||||||||||||||
Earnings per $0.25 Ordinary Share (diluted) | $2.91 | $3.85 | $3.73 | $4.20 | $5.19 | |||||||||||||||
Dividends | $1.025 | $1.410 | $1.750 | $1.900 | $2.09 | |||||||||||||||
Return on revenues | ||||||||||||||||||||
Operating profit as a percentage of revenues | 27.2 | % | 31.0 | % | 27.4 | % | 28.9 | % | 35.2 | % | ||||||||||
Ratio of earnings to fixed charges | 85.6 | 92.7 | 15.6 | 13.5 | 19.9 | |||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
At 31 December | $m | $m | $m | $m | $m | |||||||||||||||
Statement of Financial Position | ||||||||||||||||||||
Property, plant and equipment, goodwill and intangible assets | 9,697 | 11,657 | 29,649 | 29,240 | 29,422 | |||||||||||||||
Other investments | 306 | 146 | 299 | 605 | 446 | |||||||||||||||
Deferred tax assets | 1,117 | 1,220 | 1,044 | 1,236 | 1,292 | |||||||||||||||
Current assets | 13,720 | 16,909 | 16,996 | 15,869 | 23,760 | |||||||||||||||
Total assets | 24,840 | 29,932 | 47,988 | 46,950 | 54,920 | |||||||||||||||
Current liabilities | (6,839 | ) | (9,447 | ) | (15,218 | ) | (13,415 | ) | (17,640 | ) | ||||||||||
Non-current liabilities | (4,310 | ) | (5,069 | ) | (17,855 | ) | (17,475 | ) | (16,459 | ) | ||||||||||
Net assets | 13,691 | 15,416 | 14,915 | 16,060 | 20,821 | |||||||||||||||
Share capital | 395 | 383 | 364 | 362 | 363 | |||||||||||||||
Reserves attributable to equity holders | 13,202 | 14,921 | 14,414 | 15,550 | 20,297 | |||||||||||||||
Minority equity interests | 94 | 112 | 137 | 148 | 161 | |||||||||||||||
Total equity and reserves | 13,691 | 15,416 | 14,915 | 16,060 | 20,821 | |||||||||||||||
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
For the year ended 31 December | $m | $m | $m | $m | $m | |||||||||||||||
Cash flows | ||||||||||||||||||||
Net cash inflow/(outflow) from: | ||||||||||||||||||||
Operating activities | 6,743 | 7,693 | 7,510 | 8,742 | 11,739 | |||||||||||||||
Investing activities | (1,182 | ) | (272 | ) | (14,887 | ) | (3,896 | ) | (2,476 | ) | ||||||||||
Financing activities | (4,572 | ) | (5,366 | ) | 6,051 | (6,362 | ) | (3,629 | ) | |||||||||||
989 | 2,055 | (1,326 | ) | (1,516 | ) | 5,634 | ||||||||||||||
Table of Contents
196 | ||||
199 | ||||
204 | ||||
205 | ||||
206 | ||||
208 |
Table of Contents
Table of Contents
196Additional Information
Estimated filing date | ||||||||||
Therapy area | Compound | Mechanism | Areas under investigation | MAA | NDA | |||||
Phase I projects | ||||||||||
Cardiovascular | AZD6482 | PI3K-beta inhibitor | thrombosis | |||||||
AZD4017 | 11BHSD inhibitor | diabetes/obesity | ||||||||
AZD6714 | GK activator | diabetes | ||||||||
AZD8329 | 11BHSD inhibitor | diabetes/obesity | ||||||||
AZD7687 | diacylglycerol acyl transferase –1 inhibitor | diabetes/obesity | ||||||||
Gastrointestinal | AZD2066 | metabotropic glutamate receptor 5 antagonist | GERD | |||||||
AZD2516 | metabotropic glutamate receptor 5 antagonist | GERD | ||||||||
Infection | MEDI-534 | RSV/PIV-3 vaccine | RSV/PIV prophylaxis | |||||||
MEDI-560 | PIV-3 vaccine | intranasal immunisation | ||||||||
MEDI-550 | pandemic influenza virus vaccine | pandemic influenza vaccine | ||||||||
MEDI-557 | YTE – extended half-life RSV MAb | RSV prophylaxis | ||||||||
MEDI-559 | RSV vaccine | RSV prophylaxis | ||||||||
AZD5847 | Oxazolidinone anti-bacterial inhibitor | tuberculosis | ||||||||
AZD9742 | BTGT4 IV | MRSA | ||||||||
CEF104 1# | beta lactamase inhibitor/cephalosporin | MRSA | ||||||||
Neuroscience | AZD3241 | myeloperoxidase (MPO) inhibitor | Parkinson’s disease | |||||||
AZD6280 | GABA receptor subtype partial agonist | anxiety | ||||||||
AZD2516 | metabotropic glutamate receptor 5 antagonist | chronic neuropathic pain | ||||||||
AZD3043# | GABA-A receptor modulator | short acting sedative and anaesthetic | ||||||||
AZD8418 | glutamatergic modulator | schizophrenia | ||||||||
AZD2423 | chemokine antagonist | chronic neuropathic pain | ||||||||
Oncology | AZD4769 | EGFR tyrosine kinase inhibitor | solid tumours | |||||||
AZD8931 | erbB kinase inhibitor | solid tumours | ||||||||
AZD7762 | CHK1 kinase inhibitor | solid tumours | ||||||||
AZD8330# (ARRY-424704) | MEK inhibitor | solid tumours | ||||||||
CAT-8015 | recombinant immunotoxin | haematological malignancies | ||||||||
AZD8055 | TOR kinase inhibitor | range of tumours | ||||||||
MEDI-573 | IGF | solid tumours | ||||||||
MEDI-575 | PDGFR-alpha | solid tumours | ||||||||
AZD1480 | JAK2 inhibitor | myeloproliferative diseases /solid tumours | ||||||||
AZD4547 | FGFR tyrosine kinase inhibitor | solid tumours | ||||||||
MEDI-547# | EphA2 conjugate | solid tumours | ||||||||
AZD2014 | MTOR inhibitor | solid tumours | ||||||||
AZD6244 | MEK/AKT inhibitor | solid tumours | ||||||||
(ARRY-142886)/MK2206# | ||||||||||
Respiratory & | CAM-3001# | anti-GM-CSFR | rheumatoid arthritis | |||||||
Inflammation | AZD8566 | CCR5 | COPD | |||||||
AZD8075 | CRTh2 antagonist | asthma/COPD | ||||||||
AZD5985 | CRTh2 antagonist | asthma/COPD | ||||||||
AZD2551 | protease inhibitor | COPD | ||||||||
AZD5423 | iSEGRA | COPD | ||||||||
AZD5122 | CXCR2 | COPD | ||||||||
AZD8683 | Muscarinic antagonist | COPD | ||||||||
AZD5069 | CXCR2 | COPD | ||||||||
MEDI-546# | anti-IFNaR MAb | scleroderma | ||||||||
1Subject to expiry or termination of the applicable waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act. |
#Partnered product. |
Table of Contents
Additional Information | 197 |
Estimated filing date | ||||||||||||||
Therapy area | Compound | Mechanism | Areas under investigation | MAA | NDA | |||||||||
Phase II projects | ||||||||||||||
Cardiovascular | AZD0837 | direct thrombin inhibitor | thrombosis | |||||||||||
AZD6370 | GK activator | diabetes | ||||||||||||
AZD1656 | GK activator | diabetes | 2015 | 2015 | ||||||||||
Gastrointestinal | Lesogaberan (AZD3355) | GABAB agonist | GERD | 2013 | 2013 | |||||||||
AZD1386 | vanilloid receptor antagonist | GERD | ||||||||||||
Infection | CytoFab™# | anti-TNF-alpha polyclonal antibody | severe sepsis | 2014 | 2014 | |||||||||
AZD7295 | NS 5A inhibitor | hepatitis C | 2015 | 2015 | ||||||||||
MEDI-3250 | flu vaccine (quadravalent) | seasonal influenza | ||||||||||||
CAZ1041# | beta lactamase inhibitor/cephalosporin | serious infections | 2012 | n/a | ||||||||||
Neuroscience | AZD3480# | Alpha4/beta2 neuronal nicotinic receptor agonist | ADHD | |||||||||||
AZD6765 | NMDA receptor antagonist | MDD | 2013 | 2013 | ||||||||||
AZD2327 | enkephalinergic receptor modulator | anxiety and depression | ||||||||||||
AZD2066 | metabotropic glutamate receptor 5 antagonist | chronic neuropathic pain | ||||||||||||
AZD8529 | glutamatergic modulator | schizophrenia | ||||||||||||
NKTR-118# | oral peripherally-acting opioid antagonist | opioid-induced constipation | 2013 | 2013 | ||||||||||
TC-5214# | nicotinic ion channel blocker | MDD | 2014 | 2012 | ||||||||||
TC-5619# | Alpha7 neuronal nicotinic receptor agonist | cognitive disorders in schizophrenia | ||||||||||||
AZD7268 | enkephalinergic receptor modulator | depression/anxiety | ||||||||||||
AZD1446# | Alpha4/beta2 neuronal nicotinic receptor agonist | Alzheimer’s disease/ADHD | ||||||||||||
Oncology | Recentin | VEGFR tyrosine kinase inhibitor | NSCLC | 2013 | 2013 | |||||||||
AZD6244# (ARRY-142886) | MEK inhibitor | solid tumours | 2014 | 2014 | ||||||||||
Olaparib | PARP inhibitor | gBRCA breast cancer | 2012 | 2012 | ||||||||||
Olaparib | PARP inhibitor | serious ovarian cancer | 2014 | 2014 | ||||||||||
AZD1152 | aurora kinase inhibitor | haematological malignancies | 2012 | 2012 | ||||||||||
Respiratory & | AZD1981 | CRTh2 receptor antagonist | asthma/COPD | |||||||||||
Inflammation | MEDI-528# | anti-IL-9 antibody | asthma | |||||||||||
CAT-354 | anti-IL-13 antibody | asthma | ||||||||||||
AZD9668 | neutrophil elastase inhibitor | COPD | 2014 | 2014 | ||||||||||
AZD1236 | matrix metallo-proteinase inhibitor | COPD | ||||||||||||
AZD3199 | iLABA | asthma/COPD | ||||||||||||
MEDI-563# | anti-IL-5R antibody | asthma | ||||||||||||
MEDI-545# | anti-IFN-alpha antibody | SLE, myositis | ||||||||||||
AZD9164 | LAMA | COPD | ||||||||||||
AZD8848 | Toll-like receptor-7 agonist | asthma | ||||||||||||
Estimated filing date | ||||||||||||||
Therapy area | Compound | Mechanism | Areas under investigation | MAA | NDA | |||||||||
Phase II line extensions | ||||||||||||||
Infection | Motavizumab# | humanised MAb binding to RSV F protein | early and late treatment of RSV in paediatrics >1 yr | 2015 | ||||||||||
Estimated filing date | ||||||||||||||
Therapy area | Compound | Mechanism | Areas under investigation | MAA | NDA | |||||||||
Phase III projects | ||||||||||||||
Cardiovascular | Onglyza™# | DPP-4 inhibitor | diabetes | Launched | Launched | |||||||||
Brilinta/Brilique | ADP receptor antagonist | arterial thrombosis | Filed | Filed | ||||||||||
Certriad# | statin + fibrate fixed combination | dyslipidaemia | Filed | |||||||||||
Dapagliflozin# | SGLT2 inhibitor | diabetes | Q4 2010 | Q4 20102 | ||||||||||
Infection | Motavizumab# | humanised MAb binding to RSV F protein | RSV prevention | Q4 2010 | Filed | |||||||||
Ceftaroline# | affinity to penicillin-binding proteins | pneumonia/skin infections | Q3 2010 | n/a | ||||||||||
Neuroscience | Vimovo# | naproxen + esomeprazole | signs and symptoms of OA, RA | Filed | Filed | |||||||||
and ankylosing spondylitis | ||||||||||||||
Oncology | Zactima | VEGFR/EGFR tyrosine kinase inhibitor | medullary thyroid cancer – orphan | Q3 2010 | Q3 2010 | |||||||||
with RET kinase activity | ||||||||||||||
Recentin | VEGFR tyrosine kinase inhibitor | CRC | Q4 2010 | Q4 2010 | ||||||||||
Recentin | VEGFR tyrosine kinase inhibitor | recurrent glioblastoma – orphan | Q4 2010 | Q4 2010 | ||||||||||
Zibotentan (ZD4054) | endothelin A receptor antagonist | castrate resistant prostate cancer | H1 2011 | H1 2011 | ||||||||||
1Subject to expiry or termination of the applicable waiting period under the US Hart-Scott-Rodino Antitrust Improvements Act. |
2Timing subject to CV event rate. |
#Partnered product. |
Table of Contents
Estimated filing date | ||||||||||
Therapy area | Compound | Mechanism | Areas under investigation | MAA | NDA | |||||
Phase III line extensions | ||||||||||
Cardiovascular | Crestor | statin | outcomes in subjects with elevated CRP | Filed | Filed | |||||
Onglyza™/ | DPP-4 inhibitor + biguanide FDC | diabetes | Q3 2010 | Filed | ||||||
metformin FDC# | ||||||||||
Dapagliflozin/ | SGLT2 inhibitor + biguanide FDC | diabetes | H2 2011 | H2 2011 | ||||||
metformin FDC# | ||||||||||
Gastrointestinal | Nexium | proton pump inhibitor | peptic ulcer bleeding | Launched | Filed | |||||
Axanum | proton pump inhibitor + low dose aspirin FDC | low dose aspirin associated peptic ulcer | Q3 20103 | Filed | ||||||
Infection | FluMist | live, attenuated, intranasal influenza virus vaccine | influenza | Filed | Launched | |||||
MEDI-3414 | H1N1 influenza | pandemic flu prevention | Launched | |||||||
Neuroscience | Seroquel | D2/5HT2 antagonist | bipolar maintenance | Launched | Launched | |||||
Seroquel XR | D2/5HT2 antagonist | MDD | Filed | Approved | ||||||
Seroquel XR | D2/5HT2 antagonist | GAD | Filed | Filed | ||||||
Oncology | Iressa | EGFR tyrosine kinase inhibitor | NSCLC | Launched | TBD | |||||
Faslodex | oestrogen receptor antagonist | 1st line advanced breast cancer | ||||||||
Faslodex | oestrogen receptor antagonist | high dose (500mg) 2nd line | Filed | Filed | ||||||
advanced breast cancer | ||||||||||
3Previously, submission was indication only. Now covers fixed-dose combination. | ||||||||||
#Partnered product. | ||||||||||
Therapy area | Compound | Areas under investigation | ||||||||
Discontinued projects | ||||||||||
Cardiovascular | AZD1305 | arrhythmias | ||||||||
Infection | AZD9639 | RSV treatment | ||||||||
CMV Vaccine | cytomegalovirus | |||||||||
Neuroscience | AZD5904 | multiple sclerosis | ||||||||
AZD6088 | chronic neuropathic pain | |||||||||
AZD1386 | chronic neuropathic pain | |||||||||
AZD7325 | anxiety | |||||||||
AZD4694 | Alzheimer’s disease PET diagnostic | |||||||||
AZD1940 | nociceptive and neuropathic pain | |||||||||
AZD2624 | schizophrenia | |||||||||
Oncology | Saracatinib | solid tumours | ||||||||
Zactima | NSCLC | |||||||||
AZD6918 | solid tumours | |||||||||
MEDI-538 | leukaemia/lymphoma | |||||||||
AZD4877 | haematological malignancies | |||||||||
Respiratory & | AZD9056 | RA | ||||||||
Inflammation | AZD5672 | RA | ||||||||
During 2009, AstraZeneca reclassified into pre-clinical development, the EBV vaccine which appeared in Phase II of the Development Pipeline table in the 2008 Annual Report and Form 20-F Information. AstraZeneca has out-licensed the development of the pneumococcal vaccine which appeared in Phase I of the Development Pipeline table in the 2008 Annual Report and Form 20-F Information. | ||||||||||
Therapy area | Compound | Areas under investigation | ||||||||
Discontinued line extensions | ||||||||||
Oncology | Faslodex | adjuvant | ||||||||
Respiratory & | Symbicort pMDI EU | asthma | ||||||||
Inflammation | Symbicort pMDI EU | COPD | ||||||||
Unit Dose Budesonide | asthma | |||||||||
Table of Contents
Additional Information | 199 |
2005 | 2006 | 2007 | 2008 | 2009 | |||||||||||||||
Ordinary Shares in issue – millions | |||||||||||||||||||
At year end | 1,581 | 1,532 | 1,457 | 1,447 | 1,451 | ||||||||||||||
Weighted average for year | 1,617 | 1,564 | 1,495 | 1,453 | 1,448 | ||||||||||||||
Stock market price – per Ordinary Share | |||||||||||||||||||
Highest (pence) | 2837 | 3529 | 2984 | 2888 | 2947 | ||||||||||||||
Lowest (pence) | 1861 | 2574 | 2093 | 1748 | 2147 | ||||||||||||||
At year end (pence) | 2829 | 2744 | 2164 | 2807 | 2910.5 | ||||||||||||||
By size of account | 2009 | ||
No. of shares | % | ||
1 – 250 | 0.5 | ||
251 – 500 | 0.7 | ||
501 – 1,000 | 0.8 | ||
1,001 – 5,000 | 1.1 | ||
5,001 – 10,000 | 0.2 | ||
10,001 – 50,000 | 1.1 | ||
50,001 – 1,000,000 | 13.0 | ||
Over 1,000,0001 | 82.6 | ||
Issued share capital | 100.0 | ||
1Includes VPC and ADR holdings. |
> | For shares listed on the LSE the reported high and low middle market closing quotations are derived from the Daily Official List. | |
> | For shares listed on the SSE the high and low closing sales prices are as stated in the Official List. | |
> | For ADSs listed on the NYSE the reported high and low sales prices are as reported by Dow Jones (ADR quotations). |
Ordinary LSE | ADS | Ordinary SSE1 | |||||||||||||||||||||||
High | Low | High | Low | High | Low | ||||||||||||||||||||
(pence) | (pence) | (US$) | (US$) | (SEK) | (SEK) | ||||||||||||||||||||
2008 | – Quarter 1 | 2345.0 | 1748.0 | 45.70 | 35.50 | 296.5 | 211.5 | ||||||||||||||||||
– Quarter 2 | 2289.0 | 1981.0 | 44.57 | 39.36 | 268.0 | 235.5 | |||||||||||||||||||
– Quarter 3 | 2766.0 | 2130.0 | 49.85 | 43.42 | 321.5 | 255.5 | |||||||||||||||||||
– Quarter 4 | 2888.0 | 2075.0 | 44.76 | 34.10 | 340.5 | 253.5 | |||||||||||||||||||
2009 | – Quarter 1 | 2947.0 | 2147.0 | 41.60 | 30.24 | 331.0 | 261.5 | ||||||||||||||||||
– Quarter 2 | 2728.0 | 2276.0 | 45.01 | 33.40 | 351.0 | 279.5 | |||||||||||||||||||
– July | 2878.0 | 2644.0 | 47.54 | 43.01 | 356.0 | 336.0 | |||||||||||||||||||
– August | 2869.0 | 2722.5 | 47.31 | 45.24 | 338.0 | 326.0 | |||||||||||||||||||
– September | 2856.0 | 2691.0 | 46.02 | 43.91 | 333.0 | 305.0 | |||||||||||||||||||
– October | 2830.0 | 2742.0 | 46.19 | 43.64 | 323.1 | 308.0 | |||||||||||||||||||
– November | 2778.0 | 2690.5 | 46.38 | 44.34 | 319.0 | 310.1 | |||||||||||||||||||
– December | 2930.0 | 2753.0 | 47.00 | 45.35 | 339.5 | 315.0 | |||||||||||||||||||
1Principally held in bearer form. |
Table of Contents
Date of | Percentage | |||||||||||
disclosure | of issued | |||||||||||
Shareholder | Number of shares | to Company1 | share capital | |||||||||
BlackRock, Inc. | 100,885,181 | 8 Dec 2009 | 6.94 | % | ||||||||
Invesco Limited | 72,776,277 | 6 Oct 2009 | 5.01 | % | ||||||||
Axa SA | 56,991,117 | 3 Feb 2009 | 3.92 | % | ||||||||
Investor AB | 51,587,810 | 3 Feb 2009 | 3.55 | % | ||||||||
Legal & General Investment Management Limited | 67,398,874 | 3 Feb 2009 | 4.64 | % | ||||||||
1 | Since the date of disclosure to the Company, the interest of any person listed above in Ordinary Shares may have increased or decreased. No requirement to notify the Company of any increase or decrease would have arisen unless the holding moved up or down through a whole number percentage level. The percentage level may increase (on the cancellation of shares following a re-purchase of shares under the Company’s share re-purchase programme) or decrease (on the issue of new shares under any of the Company’s share plans). |
Percentage of issued share capital | |||||||||||||||
Shareholder | 28 Jan 2010 | 29 Jan 2009 | 31 Jan 2008 | 31 Jan 2007 | |||||||||||
BlackRock, Inc. | 6.94% | – | – | – | |||||||||||
Invesco Limited | 5.01% | – | – | – | |||||||||||
Axa SA | 3.92% | 4.90% | 4.87% | – | |||||||||||
Investor AB | 3.55% | 4.38% | 4.36% | 4.14% | |||||||||||
Legal & General Investment Management Limited | 4.64% | 4.09% | 4.06% | 3.43% | |||||||||||
Capital Research and Management Company | – | 4.92% | 4.89% | 11.70% | |||||||||||
Wellington Management Co., LLP | – | 4.18% | 4.16% | 3.95% | |||||||||||
Barclays PLC | – | 4.26% | 4.24% | 4.03% | |||||||||||
> | In the US | 781 | ||
> | Total | 124,757 |
> | In the US | 2,298 | ||
> | Total | 2,319 |
Table of Contents
Additional Information | 201 |
Percentage | ||||||||
Title of class | Amount owned | of class | ||||||
Ordinary Shares | 300,474 | 0.02 | % | |||||
Subscription price | ||||||||
Number of shares | pence | Normal expiry date | ||||||
63,251,333 | 1882 – 3487 | 2010 – 2019 | ||||||
(b) | Included in paragraph (a) are options granted to Directors and officers of the Company as follows: |
Subscription price | ||||||||
Number of shares | pence | Normal expiry date | ||||||
2,324,523 | 1882 – 3487 | 2010 – 2019 | ||||||
(c) | Included in paragraph (b) are options granted to individually named Directors. Details of these option holdings at 31 December 2009 are shown in the Share options table on page 118. |
First interim: | Announced in July and paid in September. | |
Second interim: | Announced in January and paid in March. |
Table of Contents
of dividends
Table of Contents
Additional Information | 203 |
SEK/US$ | US$/GBP | ||||||
Average rates (profit and loss account, cash flow) | |||||||
1995 | 7.1100 | 1.5796 | |||||
1996 | 6.7000 | 1.5525 | |||||
1997 | 7.6225 | 1.6386 | |||||
1998 | 7.9384 | 1.6603 | |||||
1999 | 8.2189 | 1.6247 | |||||
End of year spot rates (balance sheet) | |||||||
1995 | 6.6500 | 1.5500 | |||||
1996 | 6.8400 | 1.6900 | |||||
1997 | 7.8500 | 1.6600 | |||||
1998 | 8.0400 | 1.6600 | |||||
1999 | 8.5130 | 1.6185 | |||||
SEK/US$ | US$/GBP | ||||||
Average rates (income statement, cash flow) | |||||||
2007 | 6.7692 | 2.0003 | |||||
2008 | 6.5130 | 1.8728 | |||||
2009 | 7.6552 | 1.5496 | |||||
End of year spot rates (balance sheet) | |||||||
2007 | 6.4051 | 1.9932 | |||||
2008 | 7.7740 | 1.4437 | |||||
2009 | 7.1636 | 1.6072 | |||||
Table of Contents
Information
of the Company
> | The Redeemable Preference Shares carry no rights to receive dividends. |
> | The holders of Redeemable Preference Shares have no rights to receive notices of, attend or vote at general meetings except in certain limited circumstances. They have one vote for every 50,000 Redeemable Preference Shares held. |
> | On a distribution of assets of the Company, on a winding-up or other return of capital (subject to certain exceptions), the holders of Redeemable Preference Shares have priority over the holders of Ordinary Shares to receive the capital paid up on those shares. |
> | Subject to the provisions of the Companies Act 2006, the Company has the right to redeem the Redeemable Preference Shares at any time on giving not less than seven days’ written notice. |
Table of Contents
Additional Information | 205 |
Item | Page | |||||
3 | Key Information | |||||
A. | Selected financial data | |||||
Financial highlights | 2 | |||||
Group Financial Record | 193 | |||||
Additional Information – Shareholder Information | 199 | |||||
D. | Risk factors | |||||
Directors’ Report – Principal risks and uncertainties | 80 | |||||
4 | Information on the Company | |||||
A. | History and development of the company | |||||
Additional Information – History and development of the Company | 204 | |||||
Directors’ Report – Our resources | 25,32 | |||||
Financial Review – Investments, divestments and capital expenditure | 44 | |||||
Note 7 – Property, plant and equipment | 139 | |||||
Note 22 – Acquisitions of business operations | 154 | |||||
B. | Business overview | |||||
Directors’ Report | 10 | |||||
Note 6 – Segment information | 137 | |||||
Note 1 – Product revenue information | 133 | |||||
Statements of competitive position, | inside front | |||||
growth rates and sales | cover | |||||
C. | Organisational structure | |||||
Directors’ Report – Subsidiaries and principal activities | 98 | |||||
Principal Subsidiaries | 186 | |||||
D. | Property, plant and equipment | |||||
Directors’ Report – Our resources | 25,32 | |||||
Additional Information – Property | 204 | |||||
Note 7 – Property, plant and equipment | 139 | |||||
Directors’ Report – Environmental/ occupational health and safety liabilities | 85 | |||||
5 | Operating and Financial Review and Prospects | |||||
A-F. | Directors’ Report | 10 | ||||
Financial Review | 36 | |||||
Note 14 – Interest-bearing loans and borrowings | 144 | |||||
Note 16 – Financial instruments | 146 | |||||
Note 19 – Capital and reserves – Retained earnings | 153 | |||||
Note 25 – Commitments and contingent liabilities | 166 | |||||
6 | Directors, Senior Management and Employees | |||||
A. | Directors and senior management | |||||
Directors’ Report – Board of Directors at 31 December | 88 | |||||
Directors’ Report – Senior Executive Team at 31 December | 90 | |||||
Directors’ Report – Directors’ remuneration – US dollars | 112 | |||||
Directors’ Report – Policy on external appointments and retention of fees | 110 | |||||
Item | Page | |||||
B. | Compensation | |||||
Directors’ Report – Directors’ Remuneration Report | 101 | |||||
Note 23 – Post-retirement benefits | 156 | |||||
Note 24 – Employee costs and share option plans for employees | 161 | |||||
Note 27 – Statutory and other information | 185 | |||||
C. | Board practices | |||||
Directors’ Report – Board of Directors at 31 December | 88 | |||||
Directors’ Report – Senior Executive Team at 31 December | 90 | |||||
Directors’ Report – Board Committee membership | 93 | |||||
Directors’ Report – Operation of Board Committees | 94 | |||||
Directors’ Report – Directors’ Remuneration Report | 101 | |||||
D. | Employees | |||||
Directors’ Report – People | 33 | |||||
Directors’ Report – Our resources | 25,32 | |||||
Note 24 – Employee costs and share option plans for employees | 161 | |||||
E. | Share ownership | |||||
Directors’ Report – Directors’ interests in shares | 115 | |||||
Directors’ Report – Directors’ shareholdings | 99 | |||||
Additional Information – Major shareholdings | 200 | |||||
Note 24 – Employee costs and share option plans for employees | 161 | |||||
7 | Major Shareholders and Related Party Transactions | |||||
A. | Major shareholders | |||||
Additional Information – Major shareholdings | 200 | |||||
B. | Related party transactions | |||||
Additional Information – Related party transactions | 201 | |||||
Note 27 – Statutory and other information – Related party transactions | 185 | |||||
8 | Financial Information | |||||
A. | Consolidated statements and other financial information | |||||
Financial Review – Dividend and share re-purchases | 42 | |||||
Directors’ Report – Distributions to shareholders and dividends for 2009 | 98 | |||||
Financial Statements (excluding Directors’ responsibilities on page 122 and Auditor’s opinion on page 123) | 120 | |||||
Additional Information – Shareholder Information | 199 | |||||
B. | Significant changes | |||||
Note 27 – Statutory and other information | 185 | |||||
9 | The Offer and Listing | |||||
A4. | Price history of listed stock | |||||
Additional Information – Shareholder Information | 199 | |||||
C. | Markets | |||||
Additional Information – Shareholder Information | 199 | |||||
Item | Page | |||||
10 | Additional Information | |||||
B. | Memorandum and Articles of Association | |||||
Additional Information – Articles | 204 | |||||
D. | Exchange controls and other limitations affecting security holders | |||||
Additional Information – Exchange controls and other limitations affecting security holders | 203 | |||||
E. | Taxation | |||||
Financial Review – Taxation | 48 | |||||
Additional Information – Taxation for US residents | 202 | |||||
Additional Information – UK and US income taxation of dividends | 202 | |||||
Additional Information – Taxation on capital gains | 202 | |||||
Additional Information – Passive Foreign Investment Company (PFIC) rules | 202 | |||||
Additional Information – UK inheritance tax | 202 | |||||
Additional Information – UK stamp duty reserve tax and stamp duty | 203 | |||||
H. | Documents on display | |||||
Additional Information – Documents on display | 202 | |||||
11 | Quantitative and Qualitative Disclosures about Market Risk | |||||
Financial Review – Financial risk management | 44 | |||||
Note 15 – Financial risk management objectives and policies | 144 | |||||
Note 16 – Financial instruments | 146 | |||||
15 | Controls and Procedures | |||||
Directors’ Report – Principal corporate governance requirements | 96 | |||||
Directors’ Report – Audit Committee | 94 | |||||
Financial Statements – Directors’ Responsibilities for, and Report on, Internal Control over Financial Reporting | 122 | |||||
16 | [Reserved] | |||||
A. | Audit Committee financial expert | |||||
Directors’ Report – Audit Committee | 94 | |||||
Directors’ Report – Board Committee membership | 93 | |||||
B. | Code of ethics | |||||
Directors’ Report – Code of Conduct | 97 | |||||
C. | Principal accountant fees and services | |||||
Directors’ Report – Audit Committee | 94 | |||||
Note 27 – Statutory and other information | 185 | |||||
E. | Purchases of equity securities by the issuer and affiliated purchasers | |||||
Note 20 – Share capital of the Company – Share re-purchases | 154 | |||||
G. | Corporate governance | |||||
Directors’ Report – Principal corporate governance requirements | 96 | |||||
18 | Financial Statements | |||||
Financial Statements (excluding Directors’ responsibilities on page 122 and Auditor’s opinion on page 123) | 120 | |||||
Table of Contents
North America | Rest of World | |||||||||||||
Other Established Markets | Emerging Markets | |||||||||||||
Western Europe | Japan | Australasia | Emerging Europe | China | Emerging Asia Pacific | Other Emerging | ||||||||
US | Austria | Japan | Australia | Albania* | China | Bangladesh* | Egypt | |||||||
Canada | Belgium | New Zealand | Belarus* | Cambodia* | Gulf States | |||||||||
Denmark | Bosnia-Herzegovina* | Hong Kong | Latin America | |||||||||||
Finland | Bulgaria* | India | Lebanon | |||||||||||
France | Croatia* | Indonesia* | Maghreb | |||||||||||
Germany | Czech Republic | Laos* | Saudi Arabia | |||||||||||
Greece | Estonia* | Malaysia | South Africa | |||||||||||
Holland | Georgia* | Philippines | ||||||||||||
Iceland* | Hungary* | Singapore | ||||||||||||
Ireland | Kazakhstan* | South Korea | ||||||||||||
Italy | Latvia* | Sri Lanka* | ||||||||||||
Luxembourg* | Lithuania* | Taiwan | ||||||||||||
Norway | Macedonia* | Thailand | ||||||||||||
Portugal | Poland | Vietnam* | ||||||||||||
Spain | Romania* | |||||||||||||
Sweden | Russia* | |||||||||||||
Switzerland | Serbia/Montenegro* | |||||||||||||
UK | Slovakia | |||||||||||||
Slovenia* | ||||||||||||||
Turkey | ||||||||||||||
Ukraine* | ||||||||||||||
Latin America includes Argentina, Brazil, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Peru and Venezuela.
Gulf States includes Bahrain*, Dubai*, Kuwait*, Oman*, Qatar* and UAE.
Maghreb means Algeria, Morocco and Tunisia*.
*IMS Health data is not available or AstraZeneca does not subscribe for IMS Health data for these countries.
The above table is not an exhaustive list of all the countries in which AstraZeneca operates.
Terms used in this Annual Report | ||
and Form 20-F Information | US equivalent or brief description | |
Accruals | Accrued expenses | |
Allotted | Issued | |
Bank borrowings | Payable to banks | |
Called-up share capital | Issued share capital | |
Creditors | Liabilities/payables | |
Current instalments of loans | Long-term debt due within one year | |
Debtors | Receivables and prepaid expenses | |
Earnings | Net income | |
Finance lease | Capital lease | |
Fixed asset investments | Non-current investments | |
Freehold | Ownership with absolute rights in perpetuity | |
Interest payable | Interest expense | |
Interest receivable | Interest income | |
Loans | Long-term debt | |
Prepayments | Prepaid expenses | |
Profit | Income | |
Profit and loss account | Income statement/consolidated statement of income | |
Reserves | Retained earnings | |
Share premium account | Premiums paid in excess of par value of Ordinary Shares | |
Short term investments | Redeemable securities and short-term deposits | |
Statement of recognised income and expense | Statement of comprehensive income | |
Table of Contents
Additional Information | 207 |
Table of Contents
2009 performance summary | 15, 16 | ||
Accounting policies | 45, 128, 189 | ||
Acquisitions | 22, 154 | ||
Annual general meeting | 93, 94, 98, 99, 100, 101, 104 | ||
Aptium Oncology, Inc. | 50, 75 | ||
Articles of association | 93, 96, 99, 110, 202, 203, 204 | ||
Astra Tech AB | 50, 75 | ||
AstraZeneca PLC financial statements | 188 | ||
AstraZeneca PLC balance sheet | 188 | ||
Audit Committee | 79, 92, 93, 94, 97 | ||
Biologics | 12, 13, 19, 80, 81 | ||
Board | 79, 87 | ||
Branches | 98 | ||
Capital and reserves | 153 | ||
Capitalisation | 42 | ||
Cardiovascular | 6, 19, 39, 43, 56, 196 | ||
Cash and cash equivalents | 143 | ||
Chairman’s statement | 4 | ||
Chief Executive Officer’s review | 5 | ||
Combined Code | 95, 96 | ||
Commitments and contingent liabilities | 166 | ||
Company history | 199, 204 | ||
Competition | 13, 83 | ||
Compliance and Group Internal Audit | 97 | ||
Consolidated statement of cash flows | 127 | ||
Consolidated statement of changes in equity | 126 | ||
Consolidated statement of comprehensive income | 124 | ||
Consolidated statement of financial position | 125 | ||
Directors’ interest in shares | 115 | ||
Directors’ responsibility statement | 122 | ||
Dividends | 3, 42, 98, 154, 201, 202 | ||
Earnings per ordinary share | 2, 137 | ||
Emerging markets | 3, 7, 12, 14, 16, 18, 25, 28, | ||
29, 32, 36, 51, 53, 82, 206 | |||
Employee costs and share options for employees | 161 | ||
Environmental sustainability | 16, 76 | ||
Established markets | 7, 12, 14, 28, 29, 50, 51, 52, 206 | ||
Ethics (including stem cell research and animal research) | 26, 29 | ||
Executive directors’ and Senior Executive Team’s remuneration and terms of employment | 105 | ||
Financial highlights | 2 | ||
Finance income and expense | 134 | ||
Financial instruments | 100, 146 | ||
Financial position 2008 | 43 | ||
Financial position 2009 | 39 | ||
Financial risk management | 44, 144 | ||
Form 20-F | 97, 205 | ||
Gastrointestinal | 6, 39, 43, 58, 60, 75, 196 | ||
Global community | 77 | ||
Glossary | 206 | ||
Goodwill | 39, 43, 47, 140 | ||
Group financial record | 193 | ||
Group financial statements | 124 | ||
Growth drivers | 12 | ||
Independent auditor’s report | 123, 187 | ||
Infection | 6, 19, 39, 43, 62, 196 | ||
Inflammation | see Respiratory & Inflammation | |||
Intangible assets | 39, 43, 47, 141 | |||
Intellectual property | 31, 81, 82 | |||
Interest-bearing loans and borrowings | 144 | |||
Inventories | 40, 44, 143 | |||
Key performance indicators | 14, 16, 26, 29, 35 | |||
Leases | 185 | |||
Litigation | 47, 56, 60, 65, 68, 71, 82, 84, 85, 166 | |||
Major events affecting 2009 | 37 | |||
Managing risk | 33, 79 | |||
Medicines | 8, 18, 55 | |||
Neuroscience | 6, 19, 39, 43, 65, 196 | |||
Nomination and Governance Committee | 92, 93, 95 | |||
North America | 6, 12, 28, 29, 50, 206 | |||
Oncology | 6, 23, 39, 43, 68, 75, 196 | |||
Operating profit | 2, 16, 36, 134 | |||
Operational overview | 3 | |||
Other investments | 143 | |||
Outsourcing | 16, 23, 26, 84 | |||
Patents | see Intellectual property | |||
Patient safety | 20 | |||
People | 25, 29, 32, 33 | |||
Pipeline | 3, 6, 14, 16, 22, 24, 25, 196 | |||
Political donations | 99 | |||
Portfolio Investment Board | See R&D Executive Committee | |||
Post-retirement benefits | 48, 156 | |||
Pricing | 12, 21, 51, 52, 53, 83 | |||
Principal risks and uncertainties | 80 | |||
Product revenue information | 133 | |||
Property, plant and machinery | 39, 43, 139, 204 | |||
Provisions for liabilities and charges | 152 | |||
R&D Executive Committee | 15, 20, 92 | |||
Regulatory requirements | 13 | |||
Related party transactions | 201 | |||
Remuneration Committee | 92, 93, 95, 101 | |||
Research and development | 6, 12, 14, 16, 22, 47 | |||
Respiratory & Inflammation | 6, 19, 39, 43, 71, 196 | |||
Rest of world | 52, 206 | |||
Restructuring | 14, 16, 34, 36, 37, 41, 83 | |||
Results of operations 2008 | 42 | |||
Results of operations 2009 | 38 | |||
Safety, health and wellbeing | 35 | |||
Sales and marketing | 16, 28 | |||
Sales by therapy area | 39, 43, 55, 57, 61, 63, 66, 69, 72 | |||
Statutory and other information | 185 | |||
Science Committee | 92, 93, 96 | |||
Segment information | 137 | |||
Senior Executive Team (SET) | 49, 79, 90, 92 | |||
Share capital | 99, 153, 199, 204 | |||
Share re-purchase | 3, 42, 98, 199 | |||
Shareholder communications | 99 | |||
Strategy | 14 | |||
Subsidiaries | 98, 186 | |||
Supply and manufacturing | 32 | |||
Taxation | 41, 44, 48, 86, 135 | |||
Taxation information for shareholders | 202, 203 | |||
Trade and other payables | 40, 44, 152 | |||
Trade and other receivables | 40, 44, 143 | |||
Trade marks | 82, inside back cover | |||
Transactions with directors | 113 | |||
UK corporate governance | 96 | |||
US corporate governance | 97 | |||
Working with others | 6, 22 | |||
World markets | 12 | |||
Table of Contents
Table of Contents
Registered Office and | Swedish Central Securities Depository | |
corporate headquarters | Euroclear Sweden AB | |
AstraZeneca PLC | PO Box 7822 | |
15 Stanhope Gate | SE-103 97 Stockholm | |
London W1K 1LN | Sweden | |
UK | Tel: +46 (0)8 402 9000 | |
Tel: +44 (0)20 7304 5000 | ||
Fax: +44 (0)20 7304 5151 | US Depositary | |
JPMorgan Chase & Co | ||
Investor relations | PO Box 64504 | |
E-mail: | St Paul | |
ir@astrazeneca.com | MN 55164-0504 | |
UK: as above | US | |
Sweden: | Tel (toll free in the US): | |
AstraZeneca AB | 800 990 1135 | |
SE-151 85 Södertälje | Tel (outside the US): | |
Sweden | +1 (651) 453 2128 | |
Tel: +46 (0)8 553 260 00 | E-mail: jpmorgan.adr@wellsfargo.com | |
Fax: +46 (0)8 553 290 00 | ||
US: | Our website | |
Investor relations | This Annual Report is also available | |
AstraZeneca Pharmaceuticals LP | on our website, astrazeneca.com/ | |
1800 Concord Pike | annualreport2009 | |
PO Box 15437 | ||
Wilmington | ||
DE 19850-5437 | ||
US | ||
Tel: +1 (302) 886 3000 | ||
Fax: +1 (302) 886 2972 | ||
Registrar | ||
Equiniti Limited | ||
Aspect House | ||
Spencer Road | ||
Lancing | ||
West Sussex BN99 6DA | ||
UK | ||
Tel (freephone in the UK): | ||
0800 389 1580 | ||
Tel (outside the UK): | ||
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