ASTRAZENECA 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

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

For February 2005

Commission File Number: 001-11960

AstraZeneca PLC

15 Stanhope Gate, London W1K 1LN, England

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

Form 20-F   X     Form 40-F      

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

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

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

         Yes           No   X  

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






AstraZeneca PLC

INDEX TO EXHIBITS


1.        Annual Report and Form 20-F Information 2004.
 





SIGNATURES

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

    AstraZeneca PLC
     
     
Date: February 25, 2005   By: /s/ A C N Kemp
   
    Name: A C N Kemp
    Title: Assistant Secretary





Item 1




        AstraZeneca Annual Report and
Form 20-F Information 2004
         











                     
                     
  Contents                  
                     
                     
  The Year in Brief 01   Financial Statements 69   21. Reserves 96  
 

 

 


 
  Dividend for 2004 01   Preparation of the Financial Statements   22. Net cash inflow from trading operations 97  
 

  and Directors’ Responsibilities 70  


 
  Chairman’s Statement 02  

  23. Cash outflow related    
 

  Basis of Consolidation and       to exceptional items 97  
  Chief Executive’s Review 04   Presentation of Financial Information 70  


 
 

 

  24. Disposals of business operations 97  
  Global Market Overview 06   Independent Auditor’s Report to the  


 
 

  Members of AstraZeneca PLC 71   25. Reconciliation of net cash flow    
  Financial Highlights 07  

    to movement in net funds 98  
 

  Group Profit and Loss Account 72  


 
  Board of Directors 08  

  26. Analysis of net funds 98  
 

  Group Statement of Total Recognised Gains  


 
  Strategy 10   and Losses 72   27. Financing 98  
 

 

 


 
  Key Products 10   Group Balance Sheet 74   28. Post-retirement benefits 99  
 

 

 


 
  Operational Review 11   Statement of Group Cash Flow 75   29. Employee costs and share option  
 

 

    plans for employees 104  
  Cardiovascular 12   Accounting Policies 76  


 
 

 

  30. Assets pledged, commitments and  
  Gastrointestinal 15   Notes to the Financial Statements 78     contingent liabilities 109  
 

     


 
  Neuroscience 17   1. Group operating profit 78   31. Leases 118  
 

 

 


 
  Oncology 20   2. Share of turnover and operating profits   32. Statutory and other information 119  
 

    of joint venture 80  


 
  Respiratory and Inflammation 23  


  33. Company information 120  
 

  3. Exceptional items 80  


 
  Infection 25  


  34. Called-up share capital    
 

  4. Net interest 80     of parent company 123  
  Geographic Review 26  


 


 
 

  5. Taxation 81   Principal Subsidiaries 124  
  Development Pipeline 28  


 

 
 

  6. Dividends to shareholders 84   Additional Information for    
  Research and Development 30  


  US Investors 125  
 

  7. Earnings per $0.25 Ordinary Share 84  

 
  Commercialisation and Portfolio    


  Group Financial Record – UK GAAP 136  
  Management 31   8. Segment information 85  

 
 

 


  Group Financial Record – US GAAP 138  
  Supply and Manufacturing 32   9. Tangible fixed assets 87  

 
 

 


  IFRS Restatements 139  
  Other Businesses 33   10. Goodwill and intangible assets 88  

 
 

 


  Shareholder Information 147  
  Main Facilities 33   11. Fixed asset investments 88  

 
 

 


  Risk Factors 155  
  Corporate Responsibility 34   12. Stocks 89  

 
 

 


  AstraZeneca Code of Conduct 158  
  Industry Regulation 35   13. Debtors 89  

 
 

 


  Additional Information 160  
  Intellectual Property 36   14. Short term investments 90  

 
 

 


    inside  
  Financial Review 37   15. Short term borrowings and overdrafts 90   Cross Reference to Form 20-F back cover  
 

 


 

 
  Directors’ Report 52   16. Other creditors 90    
 
 

 


     
  Audit Committee’s Report 58   17. Loans 91        
 

 


       
  Directors’ Remuneration Report 60   18. Financial instruments 91        
 

 


       
        19. Provisions for liabilities and charges 95        
     


       
        20. Reconciliation of movements in shareholders’ funds 95         
       


        
                      
                      
                      
                      
                      
                     

             
 

Trade marks
Trade marks of the AstraZeneca group of companies appear throughout this document in italics. AstraZeneca, the AstraZeneca logotype and the AstraZeneca symbol are all trade marks of the AstraZeneca group of companies.

Use of terms
In this Annual Report and Form 20-F Information 2004, unless the context otherwise requires, ‘AstraZeneca’, ‘the Group’, ‘the Company’, ‘we’, ‘us’ and ‘our’ refer to AstraZeneca PLC and its consolidated entities.

Statements of competitive position
Except as otherwise stated, market information in this Annual Report and Form 20-F Information 2004 regarding the position of our business or products relative to its or their competition is based upon published statistical data for the 12 months ended 30 September 2004, obtained from IMS Health, a leading supplier of statistical data to the pharmaceutical industry. Except as otherwise stated, these market share and industry data from IMS Health have been derived by comparing our sales revenue to

 

competitors’ and total market sales revenues for that period.

Statements of growth rates
Except as otherwise stated, growth rates in this Annual Report and Form 20-F Information 2004 are given at constant exchange rates (CER).

AstraZeneca websites
Information on our websites, including astrazeneca.com and rosuvastatininformation.com, does not form part of this document.

Cautionary statement regarding forward-looking statements
In order to utilise the ‘safe harbour’ provisions of the US Private Securities Litigation Reform Act 1995, we are providing the following cautionary statement: This Annual Report and Form 20-F Information 2004 contains certain forward-looking statements about AstraZeneca. Although we believe our expectations are based on reasonable assumptions, any forward-looking statements may be influenced by factors that could cause actual outcomes and results to be

 

materially different from those predicted. We identify the forward-looking statements by using the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and similar expressions in such statements. These forward-looking statements are subject to numerous risks and uncertainties. Important factors that could cause actual results to differ materially from those contained in forward-looking statements, certain of which are beyond our control, include, among other things: the loss or expiration of patents, marketing exclusivity or trade marks; exchange rate fluctuations; the risk that R&D will not yield new products that achieve commercial success; the impact of competition, price controls and price reductions; taxation risks; the risk of substantial product liability claims; the impact of any failure by third parties to supply materials or services; the risk of delay to new product launches; the difficulties of obtaining and maintaining governmental approvals for products; and the risk of environmental liabilities.

 

©AstraZeneca PLC 2005

 

 


Back to Contents

  AstraZeneca Annual Report and The Year in Brief 01
  Form 20-F Information 2004  




       

The Year in Brief

> Group sales up 9% at constant exchange rates to $21.4 billion – strong sales performance from key growth products (up 30% to $11.2 billion) 
   
> Operating profit up 15% at constant exchange rates to $4.8 billion – EPS pre-exceptional items up 18%
   
> Dividend increased by 18% to $0.94 for the full year
   
> Nexium sales reached $3.9 billion, up 15%
   
> Seroquel sales increased by 33% to just over $2 billion
   
> Symbicort sales totalled $797 million, up 32%
   
> Expanded use of Arimidex in the treatment of early stage breast cancer underpinned 48% increase in sales to $811 million
   
> Crestor sales totalled $908 million despite challenging environment. Sales impacted by allegations regarding the product’s safety. Clinical trials experience and post-marketing surveillance continue to support our belief that the safety profile is in line with other marketed statins
   
> FDA decision not to approve Exanta. In the EU, where Exanta already marketed for acute indications, more data have been requested before approval of use in chronic indication can be considered
   
> Results of ISEL clinical study for Iressa showed no statistically significant increase in survival of overall population. Data suggest survival benefits in patient populations of East Asian origin and non-smokers
   
> R&D investment totalled $3.8 billion. 40% more projects in clinical development (phases 1 and 2) than in 2003. 31 projects in pre-clinical testing (26 in 2003) 
   
> Important strategic alliance with Cambridge Antibody Technology to discover and develop human antibody therapeutics in inflammatory disorders 
   
> Global clinical trials website on track for launch in the first quarter of 2005. This will provide a detailed, publicly available, scientific, non-promotional summary of clinical trials conducted for products approved since AstraZeneca was formed in 1999 
   
> Appointment of Executive Director for Development as part of accelerated significant programme of change to optimise the contribution of our development and regulatory functions 

Continuing Operations before Exceptional Items

            % growth  
    2004   2003   CER  







 
Sales $m   21,426   18,849   +9  







 
Operating profit $m   4,770   4,111   +15  







 
Earnings per share $   2.11   1.78   +18  







 
Group earnings per share $   2.28   1.78   +27  
(statutory FRS 3)              







 

Dividend for 2004

  $   Pence   SEK   Payment date  








 
First interim dividend 0.295   16.0   2.200   20 September 2004  








 
Second interim dividend 0.645   34.3   4.497   21 March 2005  








 
Total dividend 0.940   50.3   6.697      








 

Back to Contents

02 AstraZeneca Annual Report and
Form 20-F Information 2004
Chairman’s Statement

Chairman’s Statement

     

Leading the Board during AstraZeneca’s
 formative years has been an exciting
 journey.’

     
*Abbott Labs, Aventis, BMS, Eli Lilly, GSK, JNJ, Merck, Novartis, Pfizer, Roche, Sanofi-Aventis, Schering, Schering-Plough and Wyeth
Source: Thomson Financial Datastream
         

2004 was a year of both performance and challenge for AstraZeneca and the pharmaceutical industry in general. Worldwide demand for modern medicines continued to grow, driven by the availability of innovative new medicines, demographics and emerging market opportunities. At the same time, these global drivers are being offset by increased pricing pressure, escalating costs in the development and commercialisation of medicine, and a generally more risk-averse environment as regulators seek to strike an appropriate balance in weighing the risks and benefits of innovation.

For AstraZeneca, the year was characterised not only by good sales growth, productivity gains and continued investment in innovation but also by the disappointments of the US FDA decision not to approve our novel anti-clotting agent, Exanta, the failure to demonstrate an overall survival benefit for the lung cancer product, Iressa, and what we consider to be unfounded speculation about the safety of our lipid-lowering medicine, Crestor.

Growth came from our broad range of products, especially the newer products which are largely free of threat from patent expiry. In addition to strong performances from the established markets, good progress continued to be made in emerging markets such as China and Mexico. Since 2001, we have recruited an additional 2,500 staff to strengthen our presence in emerging markets and AstraZeneca is now one of the fastest growing major pharmaceutical companies in the world’s top eight emerging markets: China, Mexico, Brazil, South Korea, India, Poland, Turkey and Taiwan.

AstraZeneca further emphasised its strategic focus on prescription pharmaceuticals

 

during the year with the divestment of its joint venture interest in the seed company, Advanta BV. Of all the major pharmaceutical companies, AstraZeneca is probably the most focused on prescription medicines, our only other businesses being Astra Tech, the medical device company, and Salick Health Care, which delivers services to cancer care centres.

In such a rapidly changing environment, the Board has been monitoring developments carefully to ensure the appropriateness of our corporate strategy. Particular attention has been paid to the regulatory progress and sales performance of our newer products, the overall composition of our product portfolio and the various productivity initiatives that have been pursued. Success in Research and Development is essential to our strategy and it is good to see the emergence of an impressive early development portfolio with 40% more projects in phase 2 clinical trials than this time last year. We also have more new development candidates emerging from Discovery than ever before. As well as new investments in R&D facilities in Sweden, the UK and the US, we announced a £75 million equity investment and R&D collaboration with Cambridge Antibody Technology to discover and develop human antibody therapeutics. This strategic alliance complements last year’s oncology alliance with Abgenix Inc. and brings to over 1,700 the number of active R&D collaborations and agreements we now have in place.

The Board has also reviewed its corporate governance including individual Directors’ performance. A great deal of effort has gone into preparing and implementing the numerous changes required to comply with the increasing demands from external

 

 

bodies. In preparation for the adoption of new international accounting standards in 2005, AstraZeneca was the first FTSE 100 company to make available to shareholders financial information for 2003 and the first half of 2004 prepared in accordance with the new standards.

AstraZeneca’s share price performance, and that of other major pharmaceutical companies, were disappointing in 2004 with the AstraZeneca share price in particular affected by the FDA’s non-approval of Exanta, the challenges facing Crestor and the recent clinical trial results for Iressa.

The composition of the Board is also undergoing some change. On my retirement at the end of the year, the Board confirmed the appointment of Louis Schweitzer as my successor as Non-Executive Chairman of AstraZeneca with effect from 1 January 2005, following his appointment to the Board in March 2004. Louis Schweitzer is a distinguished industrialist with wide international experience and I congratulate him most warmly on his appointment.

Karl von der Heyden, the Chairman of the Audit Committee, retired at the 2004 AGM after more than five years as a Non-Executive Director. I thank him for his contribution to the Company and, in particular, the role he played in the development of the work of the Audit Committee. John Buchanan succeeded Karl as Chairman of the Audit Committee. Most recently, the Board announced the appointment of Dr John Patterson, with effect from 1 January 2005, to the Board as Executive Director responsible for Development, emphasising the importance we place on this activity.

 


Back to Contents

  AstraZeneca Annual Report and
Form 20-F Information 2004
Chairman’s Statement
03

         
         
         
         
         
       

 

 

 

 

 

 
I look forward to playing my part in ensuring AstraZeneca’s future success.’    
         

My six year engagement with AstraZeneca, from the announcement of the proposed merger in December 1998 to my departure as Chairman at the end of 2004, has been an exciting journey. This includes the fast merger with delivery of promised synergies and, not least, the creation of a cross-border, unified culture. The growth of new products and penetration of developing markets helped bridge the inevitable gap caused by patent expirations of mature products. In spite of recent setbacks in product launches, we have a strong product pipeline underpinning further growth ambitions.

I want to thank my Board colleagues for their valuable support and the Company management, spearheaded by Sir Tom McKillop, for their excellent achievements over these years. I also want to thank all employees and wish them and this fine company every success in the future.

Percy Barnevik

 

I am grateful to the AstraZeneca Board for the confidence they have shown in me by electing me as their Chairman. Percy Barnevik as the first Chairman of AstraZeneca has served the Company with distinction. On behalf of the Board, shareholders and AstraZeneca employees, I would like to thank him most warmly for his wise counsel, influence and leadership of the Board.

Since my appointment to the Board in March 2004, I have had the opportunity to get to know my Board colleagues, to meet senior managers in the Company and to get a clear view of the Company’s strong financial performance as well as the strategic opportunities and significant challenges facing AstraZeneca. I have been most impressed with what I have seen of the senior management of the Company led by Sir Tom McKillop. I very much look forward to working closely with him and my Board colleagues and playing my part in ensuring the Company’s future.

 

Following the Company’s strong financial performance in 2004, the Board has recommended a second interim dividend of $0.645, 34.3 pence, SEK4.497 per Ordinary Share bringing the total dividend for the year to $0.94, 50.3 pence, SEK6.697 per Ordinary Share, an increase in dollar terms of 18.2%.

In 2005, we aim to deliver strong financial performance, characterised by top-tier earnings growth and improved shareholder returns, while continuing to build an innovative and valuable pipeline capable of driving shareholder value over the long term.

Louis Schweitzer

 

 


Back to Contents

04 AstraZeneca Annual Report and
Form 20-F Information 2004
Chief Executive’s Review

Chief Executive’s Review

       
         

‘I am confident in the future prospects for
 AstraZeneca, despite the recent
 disappointments.’

 

 

 

 

         

At the start of 2004, the year seemed full of opportunity: AstraZeneca was moving into a new and exciting phase. The excellent foundations created by a successful merger and the subsequent transformation of an ageing product portfolio had set us up for strong growth from our key products. The growth portfolio, including products that were on the range before the merger, such as Seroquel and Arimidex, and newly introduced products, such as Nexium, Crestor, Symbicort and Iressa, provided an excellent opportunity to deliver value to physicians, patients and shareholders alike.

While we made good progress in this respect, building on the success of our gastroenterology, cardiovascular, respiratory, neuroscience and oncology franchises, we also experienced disappointments with Exanta and Iressa and some difficult market conditions with Crestor.

Nexium (2004 sales $3.9 billion) is now recognised as one of the most successful products in our industry and it has continued to grow, both in the important US market and worldwide, despite an increasingly competitive environment. During the year, we added Nexium Intravenous to the product range and the recent, well-publicised problems with the new class of anti-inflammatory drugs, such as Vioxx, offers further opportunities for Nexium, which is approved for the prevention of the gastrointestinal side effects associated with such anti-inflammatory drugs.

 

Seroquel ($2.0 billion) continues to grow strongly and is increasingly recognised by patients and doctors for its outstanding safety and efficacy profile. During 2004, Seroquel became the leading atypical anti-psychotic therapy in the US market based on monthly new prescriptions and made strong progress in other markets. Important new opportunities to extend the use of Seroquel also emerged with the exciting results from clinical studies in the treatment of bipolar depression and the management of agitation in the elderly.

The Company’s leading range of anti-hormonal cancer therapies continued to make a major contribution to the business and there is considerable scope for further growth. In particular, positive five-year data from the landmark ATAC study have established Arimidex as the agent of choice in the adjuvant treatment of breast cancer replacing Nolvadex (tamoxifen) as the new gold standard for treatment.

Sales of Iressa ($389 million) grew well in those markets where it is available and, early in the year, exciting science emerged indicating that certain patients with non-small cell lung cancer (NSCLC) carried genetic mutations that appeared to make them particularly sensitive to the beneficial effects of the drug. Disappointingly however, the ISEL study, designed to study the effect of Iressa compared to placebo on survival in refractory NSCLC, failed to meet its primary endpoint of survival in the overall population, although there were statistically significant differences in survival in favour of Iressa in patients of East Asian origin and non-smokers. In the East Asian subgroup there was a near doubling of median survival which is consistent with the positive benefit/risk ratio seen in previous studies in

 

these patients. While sales will continue in all markets where the drug is currently approved, the Company has chosen to suspend promotion in the US until the implications of the ISEL results have been discussed with the regulatory authorities. The application for marketing approval of Iressa in the EU has been withdrawn but we will continue to work with opinion leaders and regulators to determine the most appropriate next steps for this innovative medicine. We are also determined to benefit from this experience with Iressa and apply the learning to the other exciting novel cancer therapies we have in development.

2004 also proved to be a challenging year for two key products in our cardiovascular range.

Crestor, our new lipid-lowering drug, first launched in 2003, has now been approved in 67 countries (launched in 56) and achieved sales of $908 million in 2004. Its ability to control lipid disorders more effectively than any other available statin has been well recognised by prescribers but, during the year, the product was the subject of speculation that questioned its safety profile. Patient safety is the highest priority for AstraZeneca and the Company has worked diligently and transparently to monitor, communicate and mitigate any risk associated with the use of Crestor. We remain confident that the clear benefits of Crestor are achieved with a safety profile in line with that of other marketed members of the class. Our confidence derives from an extensive database involving over 40,000 patients in clinical trials and post-marketing surveillance of more than 15 million prescriptions written and four million patients treated with Crestor.

         

 


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    AstraZeneca Annual Report and   Chief Executive’s Review 05
    Form 20-F Information 2004      






 

Exanta, AstraZeneca’s innovative oral therapy for the treatment of diseases associated with blood clots, was launched in its first markets in 2004 for the prevention of blood clots following orthopaedic surgery. Exanta is the first oral anti-coagulant to be developed for more than 60 years, and its greatest potential is in the chronic prevention of strokes and other events related to blood clots in patients at high risk as a result of the common heart rhythm disorder, atrial fibrillation. During a development programme that involved more than 30,000 patients, we established that the drug had the potential to be an effective alternative to the only existing therapy in this area (warfarin) but also discovered that Exanta had an undesirable impact on the livers of a small percentage of treated patients. Following a review at a public Advisory Committee hearing in Washington in September 2004, the US FDA decided that AstraZeneca had not established a favourable benefit/risk profile for the drug and did not approve it for use in the US market. In Europe, Exanta is already marketed in many countries for the prevention of clots after orthopaedic surgery, but more clinical data will be required before approval for long term use can be considered.

Despite these setbacks, we remain committed to building our future on science and innovation and believe AstraZeneca has the capacity to succeed in an increasingly competitive healthcare market. We are determined to apply the learning from these recent experiences and ensure that we better manage the risks inherent in this strategy to deliver an innovative and valuable pipeline that will sustain the Company over the long term whilst allowing us to return value to our shareholders in the short term.

The appointment of John Patterson to the Board as Executive Director responsible for Development reflects the importance we attach to our ability to convert science into sales. John has immense experience in drug development and will be working to optimise our capabilities in this critical area.

The Company has, since its creation, placed great emphasis on productivity and this will continue, indeed accelerate, to ensure we are at the forefront of our industry as it goes through a period of considerable change.

The problems encountered in 2004 with Iressa, Crestor and Exanta are, themselves, illustrative of issues that are faced by all who are committed to innovation as a source of progress, the enhancement of quality of life and the creation of value. Innovation, in any field, is associated with risk but in healthcare, in particular, where unmet needs in the developed and developing worlds continue to increase, the innovator’s contract with society needs to reflect an appropriate balance of benefit to risk.

I would like to express the Company’s condolences to all those affected by the tsunami disaster. I am sad to report that, to date, three of our employees are still missing. Our deepest sympathies go to their families and friends. The Company immediately contributed $600,000 in cash, made our drugs available where appropriate and has created a fund of $1.5 million to help with reconstruction projects being implemented through our local companies in the affected areas.

Finally, I once again thank my colleagues on the Executive Team for their continuing commitment and support throughout the year and also our employees around the world. Their contribution, their skills and their abilities are the building blocks of our future.

Sir Tom McKillop

Chief Executive


 


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06   AstraZeneca Annual Report and   Global Market Overview
    Form 20-F Information 2004    





Global Market Overview

World markets
In 2004, the world market for pharmaceuticals, as defined by the 46 countries audited by IMS, was valued at $492 billion. Growth for the total market remained at 8% (the same level for 2003) in constant US dollars terms, despite lower growth (9% as compared to 10%) in the US, which accounts for approximately 47% of world sales. The US, Europe and Japan together represent 88% of the world market.

Over the past five years, the US has increased its share of the world market by 3%, in contrast to Europe, where market share has been static at 29%, and Japan, where market share has declined from 15% to 12%. This changing pattern reflects differences in the respective healthcare systems’ approaches to drug use and pricing: the US allows free pricing and tends to adopt innovative products more rapidly compared to Europe and Japan which both enforce price control measures.

Several countries experienced above average growth in 2004. In Europe, Turkey (30%), Greece (19%), Ireland (16%), Spain (10%), and Portugal (10%) outgrew the world market. In Asia, China showed continued strong growth in absolute and percentage terms, reaching $7.2 billion (the ninth largest worldwide market), an increase of 26%. China’s growth along with that of Thailand (16%), Egypt (15%), the Philippines (14%) and Taiwan (12%) show the potential of the region for future sales. In Latin America, Mexico, the tenth largest worldwide market, and Venezuela delivered growth of 10% and 24%, respectively. However, despite good growth in 2004 of 28% and 19%, respectively, Brazil and Argentina remain below their 1999 sales levels.

Pharmaceuticals as part of healthcare
Expenditure on healthcare typically represents between 6% and 15% of a country's gross domestic product (GDP), with developed nations towards the top end and developing nations spending less. As a proportion of this, pharmaceutical expenditure is usually between 10% and 20% and is therefore still less than 2% of GDP in most cases. Pharmaceuticals offer many advantages over other forms of treatment for illness and they are often particularly cost-effective when compared to in-patient care.

Doctors remain the key decision makers as to which treatments should be prescribed for their patients, but as the economic burden of funding therapies increases, payers, including governments, health insurers, managed care organisations, employers and patients, are increasing their influence over the choices doctors make. Pharmaceutical companies are increasingly having to demonstrate the value of their products in terms of health and economic outcomes to a wide variety of customer groups including payers, patients, physicians, regulators and governments. This requires investment throughout the clinical and commercial development of a product, in studies covering cost-effectiveness, cost-benefit and post-approval outcomes in addition to traditional trials designed to prove safety and efficacy.

Growth drivers and limiters
The continued growth of the pharmaceutical industry indicates that the market for the industry is not mature. There is a strong fundamental demand for healthcare that underwrites the industry’s future growth prospects. Specific elements that contribute to this include:

> The growing number of people who expect high standards of healthcare, especially among the elderly, who represent a rising proportion of developed nations’ populations. 
> Many diseases are under diagnosed, sub-optimally treated or do not have effective therapies. 
   

This growing demand will be met not only by existing therapies but also by new ones originating from the advances in the understanding of the biology of disease and the application of new technologies. Innovative new products have been launched in recent years, which are changing therapeutic approaches and are improving quality of life for patients.

Healthcare systems, whether based on public or private funding, have a finite ability to pay for treatments. Cost containment remains an ever-present restraint to growth. During 2004, this has become even more evident with increasing pricing pressures across all major markets, notably the US and Germany. This is felt most within large primary care categories.

Future pharmaceuticals market
Whilst the fundamentals of the world pharmaceuticals market remain robust, the industry is facing real challenges.

Heightened public awareness of drug safety concerns rather than a balanced perspective of benefit/risk, coupled with worries over the cost of medicines, has undermined the reputation of the industry.

Regulators are setting increasingly high hurdles as the industry is working to improve R&D productivity through application of new technologies.

The industry’s intellectual property base is being challenged by generic manufacturers looking to make an early entry into large markets with resultant pressure on life cycles.

Successful companies will be required to enhance their productivity in the discovery and development of new products designed to meet the burgeoning needs of the market.

 


 


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    AstraZeneca Annual Report and   Financial Highlights 07
    Form 20-F Information 2004      






Financial Highlights

Key growth products

Atacand, Arimidex, Casodex, Crestor, Faslodex, Iressa, Nexium, Seroquel, Symbicort, Zomig

*Sales growth in the key product sales table sets out underlying performance which shows growth at constant exchange rates to reflect the volume and price changes of the individual products by excluding the effects of exchange.


 


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08 AstraZeneca Annual Report and   Board of Directors
Form 20-F Information 2004   at 31 December 2004

Board of Directors at 31 December 2004

     
         
   
         
   
         
   
         
     
         
Percy Barnevik*   Sir Tom McKillop   Jonathan Symonds
Non-Executive Chairman   Executive Director – Chief Executive   Executive Director – Chief Financial Officer
         
Håkan Mogren   Sir Peter Bonfield   Jane Henney
Non-Executive Deputy Chairman   Senior Non-Executive Director   Non-Executive Director
         
Louis Schweitzer   Marcus Wallenberg   Michele Hooper
Non-Executive Director**   Non-Executive Director   Non-Executive Director
         
Dame Bridget Ogilvie   John Buchanan   Joe Jimenez
Non-Executive Director   Non-Executive Director   Non-Executive Director
         
    Erna Möller    
    Non-Executive Director    
* Retired from the Board on 31 December 2004
** Appointed Non-Executive Chairman with effect
from 1 January 2005
 

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  AstraZeneca Annual Report   Board of Directors 09
  and Form 20-F Information 2004   at 31 December 2004

 

 

Percy Barnevik (63)
Non-Executive Chairman

Chairman of the Nomination Committee

Appointed as a Director 6 April 1999. Retired from the Board on 31 December 2004. Honorary Chairman of Sandvik AB. Non-Executive Director of General Motors Corporation. Member of the Academies of Engineering Sciences in Sweden and Finland and Honorary Member of the Royal Academy of Engineering, UK. Member of the International Advisory Council of the Federation of Korean Industries and the Investment Council advising the South African Government. Member of the Business Council of American CEOs. Member of the Advisory Board of the Centre for European Reform, UK.

Håkan Mogren (60)
Non-Executive Deputy Chairman
Member of the Nomination Committee

Appointed as a Director 6 April 1999. Formerly CEO and a Director of Astra AB (appointed 18 May 1988). Chairman of Affibody AB and the Sweden-America Foundation. Vice-Chairman of Gambro AB. Member of the Board of Directors of Investor AB, Rémy Cointreau SA, Groupe Danone and Norsk Hydro ASA. Director of the Marianne and Marcus Wallenberg Foundation.

Louis Schweitzer (62)
Non-Executive Director

Appointed as a Director 11 March 2004. Appointed Non-Executive Chairman and Chairman of the Nomination Committee with effect from 1 January 2005. Chairman and Chief Executive Officer of Renault SA since May 1992. President of the Management Board of Renault-Nissan BV since March 2002. Chief Financial Officer and Executive Vice-President 1988-1992 and President and Chief Operating Officer 1990-1992, Renault SA. Non-Executive Director of BNP-Paribas, Electricité de France, Philips Electronics NV, Veolia Environnement and Volvo AB.

Dame Bridget Ogilvie (66)
Non-Executive Director
Member of the Audit Committee
and the Science Committee

Appointed as a Director 1 January 1997. Also has responsibility for overseeing corporate responsibility. Chairman of the Medicines for Malaria Venture and the Association of Medical Research Charities. Trustee of Cancer Research UK. Chairman of the Trustees of the AstraZeneca Science Teaching Trust.

Sir Tom McKillop (61)
Executive Director and Chief Executive
Appointed as a Director 1 January 1996. Non-Executive Director of BP p.l.c. and (until 31 December 2004) Lloyds TSB Group plc. Vice-President of the European Federation of Pharmaceutical Industries and Associations. Pro-Chancellor of the University of Leicester. Chairman of the British Pharma Group and the Northwest Science Council.

Sir Peter Bonfield CBE, FREng (60)
Senior Non-Executive Director
Chairman of the Remuneration
Committee and Member of the
Nomination Committee

Appointed as a Director 1 January 1995. Fellow of the Royal Academy of Engineering. Non-Executive Director of Telefonaktiebolaget LM Ericsson, Mentor Graphics Corporation and Taiwan Semiconductor Manufacturing Company, Ltd. Vice-President of The British Quality Foundation. Member of the Citigroup International Advisory Board. Member of the Sony Corporation Advisory Board. Non-Executive Director, Corporate Board of the Department for Constitutional Affairs.

Marcus Wallenberg (48)
Non-Executive Director

Member of the Audit Committee

Appointed as a Director 6 April 1999. Formerly a Director of Astra AB (appointed 18 May 1989). President and Chief Executive Officer of Investor AB. Non-Executive Vice-Chairman of Saab AB, Skandinaviska Enskilda Banken AB and Telefonaktiebolaget LM Ericsson. Non-Executive Director of Scania AB, Stora Enso Oyj and the Knut and Alice Wallenberg Foundation.

John Buchanan (61)
Non-Executive Director
Chairman of the Audit Committee and Member of the Remuneration Committee

Appointed as a Director 25 April 2002. Executive Director and Group Chief Financial Officer of BP p.l.c. 1996-2002. Member of the UK Accounting Standards Board 1997-2001. Senior Independent Non-Executive Director of BHP Billiton Plc and Non-Executive Director of Vodafone Group Plc.

Erna Möller (64)
Non-Executive Director
Member of the Remuneration

Committee and the Science Committee

Appointed as a Director 6 April 1999. Formerly a Director of Astra AB (appointed 15 May 1995). Executive Director of the Knut and Alice Wallenberg Foundation. Professor of Clinical Immunology and Member of the Nobel Assembly and of the Nobel Committee, Karolinska Institutet. Member of the Royal Swedish Academy of Engineering Sciences and the Royal Swedish Academy of Science.

Jonathan Symonds (45)
Executive Director and Chief Financial
Officer

Appointed as a Director 1 October 1997. Also has overall responsibility for Information Services. Non-Executive Director of Diageo plc. Member of the UK Accounting Standards Board. Chairman of The Hundred Group of Finance Directors in the UK.

Jane Henney (57)
Non-Executive Director
Member of the Audit Committee, the
Nomination Committee and the Science
Committee

Appointed as a Director 24 September 2001. Senior Vice-President & Provost for Health Affairs, University of Cincinnati Medical Center. Commissioner of Food and Drugs 1998-2001 and Deputy Commissioner for Operations 1992-1994, US Food and Drug Administration. Deputy Director, US National Cancer Institute 1980-1995. Non-Executive Director of AmerisourceBergen Corporation and CIGNA Corporation. Member of the Board of Trustees of the Commonwealth Fund and the China Medical Board.

Michele Hooper (53)
Non-Executive Director
Member of the Audit Committee

Appointed as a Director 1 July 2003. President and Chief Executive Officer of Stadtlander Drug Company 1998-1999. Corporate Vice-President and President, International Businesses of Caremark International Inc. 1992-1998. Non-Executive Director of PPG Industries, Inc., Target Corporation and Davita Inc.

Joe Jimenez (45)
Non-Executive Director
Member of the Remuneration
Committee and the Nomination
Committee

Appointed as a Director 1 July 2003. Executive Vice-President of H J Heinz Company and President and Chief Executive Officer of Heinz Europe since 2002. Corporate Vice-President then Senior Vice-President and President of Heinz North America 1998-2002. Non-Executive Director of Blue Nile, Inc.

Other officers of the Company at 31 December 2004 included members of the Senior Executive Team, as set out on page 54, and:

Graeme Musker
Group Secretary and Solicitor

Appointed as Company Secretary 6 June 1993.


 


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10 AstraZeneca Annual Report and   Strategy
Form 20-F Information 2004    

 

Strategy

 

AstraZeneca aims to create enduring value for society and shareholders, by discovering, developing, manufacturing and marketing differentiated medicines that make a real contribution to human health. Our culture is based on innovation, a responsible way of doing business and performance.
 
In response to an environment that is becoming even more challenging, we aspire to deliver a level of productivity that matches the best among our peers. We are committed to delivering sustained financial performance, through growth and productivity, that will place AstraZeneca among the best in the industry.

 

This strategy for sustainable, profitable growth is supported by the following core business priorities, paying heed to the setbacks experienced in 2004:
 
Sales growth
> Release of the full potential of our marketed therapies through resource allocation and investment in projects that will extend their use and bring benefits to new patient populations.
> Further strengthening our commercial skills to drive success in our key markets.
   
> Enhancing our presence in important new, emerging markets through organic growth and strategic regional investments

 

Step-change in productivity
> Commitment to vigorously improve productivity in pursuit of operational excellence in all our activities, to be among the most efficient and effective companies in our sector. 
   
> Developing new business approaches that will meet the changing needs and expectations of regulators, payers, prescribers and patients. 

 

Strong pipeline and active risk management

> Successful delivery to market of the next wave of differentiated products currently in development.
   
> Rigorous management of our portfolio of products in development, to mitigate
  risks associated with new innovative products and make future growth more robust.
 
> Expansion of the development pipeline through continuously improved in-house discovery processes, complemented by external collaborations and partnerships. 
 
> Pursuit of value-creating investment in significant targeted licensing and acquisition opportunities.
   
Corporate responsibility
> Delivery of our core values through a responsible approach to business.
 

People

> Delivery of optimised performance and sustainable business outcomes through:
> Improved organisational effectiveness.
> Optimised individual and team performance.
> Effective management and development of talent.
> Improved leadership capability.

 

Key Products

  Cardiovascular     Gastrointestinal      Oncology
               
  Atacand1 (candesartan cilexetil) angiotensin II antagonist for hypertension     Losec/Prilosec (omeprazole) proton pump inhibitor for acid-related diseases     Arimidex (anastrozole) aromatase inhibitor for breast cancer
               
  Crestor2 (rosuvastatin calcium) HMG-CoA reductase inhibitor (“statin”) for dyslipidaemia     Nexium (esomeprazole magnesium) proton pump inhibitor for acid-related diseases     Casodex (bicalutamide) anti-androgen for prostate cancer
               
  Exanta (ximelagatran) oral direct thrombin inhibitor for prevention of thrombosis in association with major orthopaedic surgery           Faslodex (fulvestrant) oestrogen receptor antagonist with no agonist effects for breast cancer
               
  Plendil (felodipine) calcium antagonist for hypertension and angina           Iressa (gefitinib) signal transduction inhibitor for non-small cell lung cancer
               
  Seloken/Toprol-XL (metoprolol succinate) beta blocker for hypertension, angina, heart failure and other uses           Nolvadex (tamoxifen citrate) anti-oestrogen for breast cancer
               
  Zestril3 (lisinopril dihydrate) angiotensin converting enzyme inhibitor for hypertension, heart failure and diabetic nephropathy           Zoladex (goserelin acetate) LHRH agonist for prostate and pre-menopausal breast cancer, certain benign gynaecological disorders and assisted reproduction
               
  Respiratory and Inflammation     Neuroscience     Infection
               
  Accolate (zafirlukast) oral leukotriene receptor antagonist for control of asthma     Diprivan (propofol) intravenous general anaesthetic for induction/maintenance of anaesthesia and sedation of intensive care patients     Merrem/Meronem4 (meropenem) ultra broad spectrum injectable antibiotic for serious bacterial infection
               
  Oxis (formoterol) inhaled fast onset long-acting bronchodilator for relief of asthma symptoms     Naropin (ropivacaine) local anaesthetic for surgical anaesthesia and acute pain management      
               
  Pulmicort (budesonide) inhaled anti-inflammatory for asthma control     Seroquel (quetiapine fumarate) atypical anti-psychotic for schizophrenia and other psychotic disorders      
               
  Rhinocort (budesonide) topical nasal anti-inflammatory for control of rhinitis     Xylocaine (lidocaine) local anaesthetic for use in surgery and dentistry      
               
  Symbicort (budesonide/formoterol) inhaled combination of anti-inflammatory and fast onset long-acting bronchodilator in a single inhaler     Zomig (zolmitriptan) for the treatment of acute migraine with or without aura       

1 Licensed from Takeda Chemical Industries Ltd. 2 Licensed from Shionogi & Co., Ltd. 3 Licensed from Merck & Co., Inc. 4 Licensed from Sumitomo Pharmaceuticals Co., Ltd.


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    AstraZeneca Annual Report and   Operational Review 11
Form 20-F Information 2004

Operational Review

The growing demand for new medicines is driven by increasing populations and improved life expectancy as modern medicine supports an ageing population. According to the World Health Organization (www.WHO.int), the greatest burden of disease is in the non-communicable disease sector with diseases such as malignant neoplasms, ischaemic heart disease, cerebrovascular disease, chronic obstructive pulmonary disease, schizophrenia, bipolar disorder and asthma being significant contributors. Communicable diseases are also increasing due primarily to HIV/AIDS and tuberculosis.

AstraZeneca focuses its skills, experience and resources on six therapy areas: Cardiovascular, Gastrointestinal, Neuroscience, Oncology, Respiratory and Inflammation, and Infection which represent the majority of the worldwide burden of disease. We have a broad range of products that meet patient needs in our chosen areas of activity including some significant areas of hitherto unmet medical need. We are committed to delivering new, medically important and commercially successful products to the market every year.

This Operational Review (pages 11 to 36) provides detailed information about our research, development, manufacturing and marketing activities worldwide and our performance in 2004.

Contents Page
Therapy areas:  
  Cardiovascular 12
  Gastrointestinal 15
  Neuroscience 17
  Oncology 20
  Respiratory and Inflammation 23
  Infection 25
Geographic Review 26
Development Pipeline 28
Research and Development 30
Commercialisation and  
Portfolio Management 31
Supply and Manufacturing 32
Main Facilities 33
Other Businesses 33
Corporate Responsibility 34
Industry Regulation 35
Intellectual Property 36

AstraZeneca in brief

>   We spend around $15 million each working day on research and development (total R&D spend in 2004: $3.8 billion)
     
>   We employ 11,900 people in research and development at 11 R&D centres in seven countries: Sweden, the UK, the US, Canada, France, India and Japan
     
>   We focus on continued innovation and maintaining a flow of new medicines that meet patients’ needs
     
>   We have 17 projects in phase 1, 17 projects in phase 2 and 25 projects in phase 3 development, as described on page 30
>   Collaborations with leading academic centres and biotechnology companies, and the in-licensing of innovative products and technologies, complement our in-house capabilities and play a key role in strengthening our portfolio
     
>   We have 30 manufacturing sites in 20 countries
     
>   Around 15,000 people worldwide work in supply and manufacturing, including around 12,400 people in formulation and packaging, and 1,600 in active pharmaceutical ingredient supply
>
We have over 64,000 employees worldwide:
     
 
  
37,000 in Europe
 
  
18,000 in the Americas
 
  
9,000 in Asia, Africa and Australasia
>  Our products are available in over 100 countries
   
>
  
Along with our commitment to competitiveness and high performance, we will continue to be led by our core values to achieve sustainable success


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12 AstraZeneca Annual Report and Operational Review
Form 20-F Information 2004  

 

Cardiovascular (CV)

We are a world leader in
CV medicines, backed by
over 40 years’ experience.
We aim to build on our
strong position, focusing
in the short to medium
term on the growth
segments of hypertension
and heart failure,
dyslipidaemia, thrombosis
and type 2 diabetes.

   Therapy area overview 
     
>   CV world market value: $116 billion – the single largest therapy area in the global healthcare market.
     
>   CV disease accounts for 17 million deaths globally each year, making it the greatest risk to life for most adults. 
     
>   The statin market has a world market value of $26 billion. 
     
     
     
   2004 in brief
     
>   Crestor now approved in 67 markets and launched in 56.
     
>   Crestor world sales $908 million with over four million patients treated and more than 15 million prescriptions written. Clinical trials experience and post-marketing surveillance continue to support our belief that Crestor has a safety profile in line with other marketed statins.
     
>   Seloken/Toprol-XL sales again exceeded $1 billion.
     
>   First launches for Exanta in orthopaedic surgery in 10 countries and approvals in 17.
     
>   The FDA did not approve Exanta for marketing in the US. More data required before approval for long term use in the EU can be considered.
     
>   Approval for Atacand for the heart failure indication in the EU and approvable letter in the US.
     

 

 


Products

Crestor (rosuvastatin calcium) is a member of the class of products known as statins. Further regulatory approvals of Crestor in 2004 mean it has now been approved in 67 countries (most recently, Japan) and launched in 56, including the US, Canada and the majority of the EU countries.

High cholesterol is now recognised as a major health issue. Of those people currently being treated for high cholesterol, only about half reach their cholesterol goal on existing treatments, while the other half have cholesterol levels that remain unhealthy. More effective treatments continue to be required in this area.

In multiple clinical studies, Crestor has been shown to be more effective in lowering low density lipoprotein or ‘bad’ cholesterol (LDL-C) than other prescribed statins, enabling more patients to reach their LDL-C goals. Additionally, Crestor produces an increase in high density lipoprotein or ‘good’ cholesterol (HDL-C), an effect that is maintained across the 5-40mg dose range.

During 2004, Public Citizen, a US consumer interest organisation, continued to raise allegations concerning the safety of Crestor and filed a Citizen’s Petition to ask the FDA to withdraw Crestor from the US market. In November 2004, public comments by Dr David Graham, an FDA employee, also alleged safety concerns about the drug. An extensive database has been built up of pre- and post-approval clinical trials experience involving more than 40,000 patients and post-marketing surveillance of more than 15 million prescriptions written and four million patients treated with Crestor since its launch in 2003. Based on all these data, we continue to believe that Crestor has a safety profile in line with other marketed statins. In September 2004, we launched a publicly available website, rosuvastatininformation.com, where clinical trial and post-marketing data are published in the interests of transparency.

The concerns that the safety allegations created in the minds of patients and physicians had an impact upon the sales performance of Crestor, particularly in the US. Sales in the rest of the world were also affected by these allegations but to a lesser extent and performance in these markets has been largely in line with expectations. A key priority for 2005 is to restore growth in the US market share for

 

 


Crestor. In the US, we are seeing some switches from Crestor to the fixed dose combination of simvastatin and ezetimibe. However, the majority of switches (circa 70%) to that drug from statins have come from atorvastatin or simvastatin (as at 24 December 2004) with only circa 10% of those switches coming from Crestor (source: Verispan). In the rest of the world, it is still too early to assess the impact.

Our extensive, long term global clinical research initiative known as the GALAXY programme, including studies that investigate cardiovascular risk reduction and patient outcomes with Crestor, is now well underway. Over 40,000 patients are involved. Studies are ongoing in important medical areas, including regression of atherosclerosis and in evaluating the reduction in mortality in heart failure and end-stage renal disease. Further clinical studies in high-risk populations have been reported during 2004, showing consistent beneficial lipid effects. In addition, initial results from the first study in the large ongoing pharmacoepidemiology programme, involving over 50,000 patients, are expected to be available in the first half of 2005.

In December 2004, the Pharmaceutical Affairs Council of the Japanese Health Ministry granted conditional approval of Crestor at a 2.5-20mg dose range. The condition to be satisfied requires a Post Marketing Surveillance programme to be carried out in a hospital environment prior to a full-scale launch. Whilst the scope and duration of this programme is yet to be agreed, it is unlikely that significant sales of Crestor will be made in Japan in 2005.

Following the introduction of a new medicine, the evolving experience of the drug by use in regular clinical practice and further clinical studies being completed, the initial label is updated accordingly. During the year, label changes in the EU regarding dosing of Crestor were introduced in order to reinforce proper use of the product. These changes included an emphasis on the starting dose and how to handle patients at risk of class-related side effects. During the year, an application for introduction of a 5mg dose form in the EU was submitted. The European Regulatory Authorities have set up an arbitration process to agree what may be the most appropriate wording on the label for the 5mg dose. AstraZeneca is closely involved in these discussions. 97% of worldwide sales



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    AstraZeneca Annual Report and   Operational Review 13
Form 20-F Information 2004

Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.

Key product performance              
  2004    2003   2002     2004 compared to 2003       2003 compared to 2002    





         Growth           Growth                                  
due to due to
Growth exchange Growth exchange Growth Growth Growth Growth
Sales underlying effects Sales underlying effects Sales underlying reported underlying reported
$m $m $m $m $m $m $m % % % %

   
   
 
Seloken 1,387   78   29   1,280   340   39   901     6   8     38   42  

   
   
 
Crestor 908   753   26   129   122   7         n/m   n/m     n/m   n/m  

   
   
 
Atacand 879   75   54   750   121   60   569     10   17     21   32  

   
   
 
Plendil 455   (104 ) 19   540   25   26   489     (20 ) (16 )   5   10  

   
   
 
Zestril 440   (71 ) 33   478   (446 ) 47   877     (15 ) (8 )   (50 ) (45 )

   
   
 
Tenormin 368     26   342   (53 ) 25   370       8     (15 ) (8 )

   
   
 
Other 340   (78 ) 27   391   (17 ) 45   363     (20 ) (13 )   (4 ) 8  

   
   
 
Total 4,777   653   214   3,910   92   249   3,569     17   22     3   10  

   
   
 

 

by volume were at doses of 20mg or less.        
         

Exanta (ximelagatran) is a novel oral direct thrombin inhibitor targeted to prevent and treat the formation of blood clots (thrombosis). A large clinical development programme, involving around 30,000 patients, provided data to support the regulatory filings for Exanta, including data regarding fixed oral dosing, rapid onset of action, low potential for drug/food and drug/drug interactions and no need for routine blood coagulation monitoring. Exanta was approved for its short term indication by the EU Mutual Recognition Procedure in May 2004 for the prevention of venous thromboembolism (VTE) in patients undergoing elective hip or knee replacement surgery in 17 countries and subsequently launched in 10. The regulatory review in Europe (with France as the Reference Member State) for use of Exanta in the chronic indications (prevention of stroke in patients with atrial fibrillation and treatment of VTE) is ongoing and regulatory submissions have also been made in other parts of the world.

In January 2005, the French Regulatory Authority (AFSSAPS) requested more information before the drug can be considered for approval of long term use for Europe. AFSSAPS has requested further clinical information confirming the efficacy and demonstrating the safety of Exanta in atrial fibrillation to allow a definitive benefit/risk assessment to be made while, for VTE treatment, the authority does not believe the data presented in the single THRIVE Treatment study provide adequate support for this use of Exanta and is proposing to reject this indication. AstraZeneca will now have discussions with AFSSAPS to examine what additional data need to be generated for the atrial

 

fibrillation file to be progressed further. As part of its review process, the FDA held a public Advisory Committee hearing in Washington in September 2004. Following that hearing and its own review of the data, the FDA decided in October 2004 that AstraZeneca had not established a positive benefit/risk profile for Exanta. This was due to safety concerns regarding liver toxicity and cardiac events and also the FDA’s doubts as to whether the clinical trial design and data were adequate to demonstrate the efficacy of the drug. The FDA did not approve Exanta for any of the indications sought (the prevention of stroke in patients with atrial fibrillation, prevention of VTE in patients undergoing knee-replacement surgery, or the long term secondary prevention of VTE following standard treatment of a clot). Discussions are ongoing with the FDA to determine if there is now a realistic prospect of bringing Exanta to the US market. (See Financial Review for financial impacts.)

Atacand (candesartan cilexetil) is an angiotensin II antagonist for the first line treatment of hypertension. The Atacand family of products has been well accepted in the market and competes in the fastest growing sector of the global hypertension market (angiotensin II antagonists – plain and combinations with diuretic). During 2004, regulatory filings for the heart failure indication were submitted in the EU and the US, based on the CHARM programme, a comprehensive clinical study programme in heart failure, showing significant reduction in cardiovascular mortality and hospitalisation for heart failure in patients treated with Atacand. The heart failure indication was approved in the EU in November 2004 and an approvable letter was received from the FDA in the US in December 2004. The FDA Cardiovascular

 

and Renal Drugs Advisory Committee will review the proposed chronic heart failure indication for Atacand at its meeting on 24 February 2005. The clinical programme investigating the effect of Atacand on retinopathy in diabetic patients (DIRECT) continued during 2004.

Seloken/Toprol-XL (metoprolol succinate), a once daily tablet for 24 hour control of blood pressure and for use in heart failure and angina, is the world’s leading product by sales in the beta blocker (plain and combinations with diuretic) class. Patent litigation is progressing in the US against three companies that are challenging AstraZeneca’s patents and seeking FDA approval to sell generic metoprolol succinate. Further information about this litigation is set out on page 115.

Plendil (felodipine) is a calcium antagonist for the treatment of hypertension and angina. Information regarding patent challenges for Plendil is set out on page 114.

Zestril (lisinopril dihydrate), an ACE inhibitor, is used for the treatment of a wide range of CV diseases, including hypertension.

Pipeline
We aim to broaden our CV portfolio in the areas of thromboembolism, dyslipidaemia, type 2 diabetes/metabolic syndrome, atrial fibrillation and vascular disease prevention.

Galida is in phase 3 development and is a PPAR agonist with effects on both the alpha and gamma receptors, thereby offering potential benefits in treating insulin resistance and lipid abnormalities associated with type 2 diabetes and


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14   AstraZeneca Annual Report and
Form 20-F Information 2004
  Operational Review





         
         
         

metabolic syndrome. Stimulation of both the alpha and gamma receptors could also potentially be associated with adverse effects and the clinical studies are being carefully monitored, since the balance of dose dependent benefits and risks will form the basis for final recommendations for the product.

During 2004, the FDA and other regulatory authorities reviewed all development products in this class of drugs and the FDA has required that carcinogenicity studies be completed before initiation of clinical studies lasting more than six months. Galida has completed these carcinogenicity studies. The FDA has further required that two year clinical studies be completed for the New Drug Application and these are now underway for Galida. The estimated date for regulatory filings is now in 2007.

Our further research in thrombosis includes AZD6140, an oral anti-platelet therapy which is in phase 2. AZD0837 (thrombosis) and AZD9684 (a carboxy peptidase-U inhibitor for thrombosis) are in phase 2. Novel research in atrial fibrillation includes AZD7009, a new anti-arrhythmic in phase 2 that works predominantly on the atria to restore and maintain normal heart rhythm (sinus rhythm) in patients with atrial fibrillation. AZD7806, AZD4619 and AZD6610 (in the dyslipidaemia area) are in phase 1. AZD8294, AZD8677, AZD8450 and AZD6370 for the treatment of metabolic disorders (diabetes mellitus and dyslipidaemia), are all in pre-clinical development.

We have discontinued the development of AZD0303 for thrombosis as a result of its failure to meet the target product profile.

Performance 2004
Reported performance
CV sales grew by 22%, rising by $867 million from $3,910 million in 2003 to $4,777 million in 2004. This growth was driven by the first full year’s sales of Crestor.

Underlying performance
Excluding exchange effects of $214 million, CV sales grew by 17%.

Sales of Crestor worldwide for the full year reached $908 million, compared with $129 million in 2003. Sales in Europe were $231 million. Prescription market share has increased in all the major markets and is now 10.3% in the Netherlands, and 3.8% in the

UK. Crestor was launched in the spring of 2004 in France and Italy. Based on the latest weekly data, value share of the statin market for Crestor is 4.4% in France and 8.0% in Italy. Sales in Canada for the full year were $98 million, and the latest market share of monthly total prescriptions for Crestor was 12.1%.

In the US, market share progress has been more volatile, as a result of episodic media coverage of challenges to the safety profile of Crestor as discussed above. Sales for the year were $543 million. In the week ending 14 January 2005, Crestor share of new prescriptions was 6.0%. Market share in the dynamic segment (new and switch patients) was 8.2%.

Prescriptions for Toprol-XL in the US increased by 18% for the full year, twice the rate of growth in the beta-blocker market, and sales reached $977 million. Market share of total prescriptions in December 2004 was 28.1%, up 1.9 points versus last year. Full year sales growth rate was 7%, which is still below estimated underlying growth as a result of net stock movements year on year. Sales of Seloken outside the US were up 3% for the year at $410 million.

More than 70% of sales of Atacand come from markets outside the US. In these markets sales continued to show good growth (up 18% for the year) with sales increasing to $627 million, driven primarily by volume gains in Europe. Sales in the US at $252 million were down 4% for the full year, in line with prescription trends.

The rate of decline in Zestril sales reduced in 2004, with revenues falling by 15%. Falls were seen in all regions, with US sales down 29% at $69 million. Outside the US sales were $371 million, an underlying fall of 12%.

Plendil sales also fell in 2004, again in all regions. In particular, sales declined in the US in the second half of the year to end down 30% at $166 million.

Tenormin worldwide sales were flat in 2004 compared to 2003. Growth in the US was offset by declines in Europe; sales elsewhere were broadly unchanged.

Performance 2003
Reported performance
Reported growth for CV was 10% with sales of $3,910 million, an increase of $341 million from $3,569 million, notwithstanding the erosion of Zestril sales following patent expiry.

Underlying performance
Excluding exchange effects of $249 million, CV underlying sales growth was $92 million or 3%.

Global sales of Seloken/Toprol-XL exceeded $1 billion for the first time, on continued strong growth in the US (up 47%), where market share of total beta blocker prescriptions of Seloken/Toprol-XL reached 26.2% in December 2003. Despite destocking in the last quarter, wholesaler stocks remained higher than normal at the year end.

Atacand sales increased by 28% in the US, and by 18% in the markets outside the US. US sales growth exceeded growth in total prescriptions, indicating some increase in wholesaler stocks.

Crestor sales were $129 million, including $62 million in the US. The early launch markets for Crestor included the Netherlands, Canada and the UK. In the US, Crestor was launched in mid-September. In the week ending 16 January 2004, Crestor share of new prescriptions in the US statin market was 4.6% and the dynamic share of new statin treatments (new and switch therapy only) was 13.7%.

Lisinopril, the active ingredient in Zestril, lost patent protection in most major markets during 2002 with significant sales erosion taking place during 2003. In the US, generic lisinopril held an 80% share of sales by the end of 2003.

Plendil sales rose by 5% to $540 million. Growth in the US was offset by lower sales in the rest of the world.



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    AstraZeneca Annual Report and
Form 20-F Information 2004
  Operational Review 15






           

Gastrointestinal (GI)

We aim to maintain our number one position in GI treatments through continued market penetration for Nexium worldwide, coupled with high quality innovation and productivity in the research and development of new GI therapies.

Therapy area overview
   
> World PPI market value: $21 billion.
   
> In the western world, 40% of adults regularly experience heartburn and 10-20% have gastro-oesophageal reflux disease (GERD). The prevalence rate of GERD in Asia is lower but increasing.
   
> Helicobacter pylori (H.pylori) is the major cause of peptic ulcer disease and is a risk factor for gastric cancer. The prevalence rate of H.pylori infection in the western world is 40% but declining.
   
> Irritable bowel syndrome (IBS) is a common gastrointestinal disease which is inadequately treated. The prevalence rate in the population is 20%.
   
> Inflammatory bowel disease (IBD) is an area of significant unmet medical need.
   
2004 in brief
   
> Global sales of Nexium were $3,883 million.
   
> Nexium confirmed as the most successful US pharmaceuticals launch with in excess of $3.5 billion sales in 30 months.
   
> Nexium parenteral is approved in 47 countries and approval of Nexium for healing and prevention of ulcers associated with NSAID therapy has been granted in the first 11 EU countries.
   
> Global sales of Losec $1,947 million with continued strong sales growth in Japan.

Products
Nexium (esomeprazole magnesium) is the first proton pump inhibitor (PPI) to offer clinical improvements over other PPIs (such as Losec/Prilosec,lansoprazole and pantoprazole) and other treatments. Nexium has been evaluated in clinical studies involving 73,000 patients in over 60 countries. It offers more effective acid inhibition than all other PPIs and, in the treatment of reflux oesophagitis, provides healing and symptom relief in more patients and in a shorter period of time than Losec/Prilosec, lansoprazole or pantoprazole. It is an effective, long term therapy for patients with GERD, with or without oesophagitis. For the treatment of active peptic ulcer disease, seven day Nexium triple therapy (in combination with two antibiotics for the eradication of H.pylori) heals most patients without the need for follow up anti-secretory therapy.

Nexium is used to treat a wide range of patients with acid-related disorders, including both newly diagnosed and also patients switched from other therapies such as omeprazole, other PPIs and H2-receptor antagonists.

Nexium was first launched in Sweden in August 2000 and it is now available in approximately 100 markets, including the US, Canada and all European countries. It has been well received by patients and physicians alike and close to 250 million patient treatments had been administered by the end of 2004.

First regulatory approval and launch of parenteral Nexium were achieved in 2003. The parenteral form of Nexium was approved through the Mutual Recognition Procedure (MRP) in Europe in December 2003 for when oral administration is not applicable for the treatment of GERD. Subsequent approvals have been obtained during 2004 and parenteral Nexium is now approved in 47 countries. Regulatory filings of Nexium for healing and prevention of ulcers, associated with NSAID (non-steroidal anti-inflammatory drug) therapy were made in January 2004. The application was approved through the MRP in Europe in September 2004 and subsequent, national approvals have been obtained in 11 EU countries to date. Approval for the reduction in the occurrence of gastric ulcers associated with continuous NSAID therapy in patients at risk of developing gastric ulcers was granted in the US in November 2004.

In March 2004, Dr Reddy’s Laboratories Ltd. opened a Drug Master File with the FDA relating to the active ingredient of Nexium, esomeprazole magnesium. However, AstraZeneca is not aware of the filing of an Abbreviated New Drug Application relating to esomeprazole magnesium.

Losec/Prilosec (omeprazole), the first PPI, became established in the short and long term treatment of acid-related diseases in the 1980s and 1990s. Patients have benefited from over 780 million treatments with Losec/Prilosec since launch. Continued strong sales growth of Losec/Omepral was seen in Japan in 2004.

Patent protection for omeprazole, the active ingredient in Losec/Prilosec, has expired. In a small number of countries, including some major markets, patent term extensions or supplementary protection certificates have been granted for the active ingredient. Further information about the status of omeprazole patents and patent litigation, including details of generic omeprazole launches, is set out on pages 112 and 113.

In July 2003, the European Commission served a Statement of Objections on AstraZeneca, referring to alleged infringements of European competition law relating to certain omeprazole intellectual property and regulatory rights, details of which are set out on page 113.

Entocort (budesonide) is a locally acting corticosteroid for the treatment of IBD with better tolerability than other corticosteroids and greater efficacy than aminosalicylic acid medicines. Entocort maintained its growth during 2004, based on its increasing acceptance as first line therapy for mild to moderate, active Crohn’s disease. In 2004, Entocort was approved for paediatric use in nine countries, representing the first such use for a Crohn’s disease therapy worldwide.

Pipeline
In addition to exploring new areas of clinical use for Nexium and further strengthening the scope of its use in current areas, we focus on developing novel approaches to treating GERD, peptic ulcer disease, IBD and other gastrointestinal diseases, such as IBS and functional dyspepsia.

AZD0865 is a compound in a new class, potassium-competitive acid blockers



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16   AstraZeneca Annual Report and
Form 20-F Information 2004
  Operational Review





         
Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.  

 

Key product performance                                          
          2004           2003   2002     2004 compared to 2003     2003 compared to 2002  
 
 
 
   
   
 
          Growth           Growth                          
          due to           due to                          
      Growth   exchange       Growth   exchange         Growth   Growth     Growth   Growth  
  Sales   underlying   effects   Sales   underlying   effects   Sales     underlying   reported     underlying   reported  
  $m   $m   $m   $m   $m   $m   $m     %   %     %   %  














   


   


 
Nexium 3,883   479   102   3,302   1,225   99   1,978     15   18     62   67  














   


   


 
Losec/Prilosec 1,947   (764 ) 146   2,565   (2,259 ) 201   4,623     (30 ) (24 )   (49 ) (45 )














   


   


 
Other 88   7   5   76   8   5   63     9   16     13   21  














   


   


 
Total 5,918   (278 ) 253   5,943   (1,026 ) 305   6,664     (4 )     (16 ) (11 )














   


   


 

(P-CABs), that has potential to provide faster, more effective and reliable inhibition of gastric acid secretion than PPIs in the treatment of acid-related diseases, such as GERD. It is currently in phase 2.

AZD3355 and AZD9343, now in clinical development, are reflux inhibitors offering a potential breakthrough in the treatment of GERD through a new, targeted approach (other than inhibition of acid secretion), namely inhibition of transient relaxations of the lower oesophageal sphincter.

AZD7371 is being evaluated in clinical studies for the treatment of functional GI diseases and is in phase 2.

AZD8081, for the treatment of functional GI diseases, and AZD5745, for the treatment of acid-related diseases, are both in pre-clinical development.

Performance 2004
Reported performance
GI performance in 2004 was broadly the same as 2003, with sales falling by only $25 million.

Underlying performance
On an underlying basis, GI sales fell by 4% ($278 million) as declines in Losec/Prilosec exceeded growth in Nexium.

In the US, dispensed tablet volume for Nexium increased by 20% for the year. As the impact of price was broadly neutral, reported sales growth of 10% (up to $2,716 million) reflects stock movements. Nexium share of total prescriptions in the US PPI market was 27.1% in December 2004. The increase of 1.8 points in market share versus 2003 outpaced all other PPI products. Sales of Nexium outside the US were $1,167 million for the full year, up 29% on a strong performance in all major markets. Sales in Europe reached $873 million (up 26%) as volume growth was offset in part by pricing pressures. Strong

volume growth was also the driver behind the 41% increase in the rest of the world.

US sales for Prilosec for the full year at $366 million were down 58% in line with the decline in prescriptions.

Outside the US, sales of Losec were $1,581 million, down 16% for the year. Full year sales increased 24% in Japan to $185 million. Sales in Europe declined by 25%, principally through volume, to $855 million.

Performance 2003
Reported performance
Reported sales in the GI therapy area fell by 11% to $5,943 million as increases in Nexium sales were offset by declines in
Losec/Prilosec sales.

Underlying performance
Exchange effects on sales in 2003 amounted to $305 million. As a consequence, the underlying sales decline at 16%, was higher than reported.

Global sales performance for Nexium was strong, particularly in the US where total prescriptions for Nexium overtook those for Losec/Prilosec during the year. Sales of Nexium in the US for the full year increased by 62% to $2,477 million. Total prescriptions for Nexium were up 46% and its share of total prescriptions in the US PPI market grew by nearly five percentage points over the course of the year, to 25.3%.

Sales of Nexium outside the US increased by 60% for the full year, with excellent growth in the major markets in Europe, particularly France, Germany and the UK, and a strong performance in Australia.

Losec/Prilosec sales were down by 49% for the year. The 70% decline in the US was broadly in line with the prescription trend. At the end of the year Losec/Prilosec brand share of total omeprazole prescriptions in

the US was 27.4% as four more generic versions of omeprazole entered the market and Proctor & Gamble launched the first over-the-counter (OTC) version of the brand, Losec/Prilosec OTC. Outside the US, sales fell by 16%, although there was strong growth in Japan where sales increased by 39% from $92 million to $138 million.



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    AstraZeneca Annual Report and   Operational Review 17
    Form 20-F Information 2004  

 
 

Neuroscience

We aim to deliver a range of life-changing medicines in the three key areas of psychiatry, analgesia and neurology and to maintain our world leading position in anaesthesia.

Therapy area overview
   
> Neuroscience world market value: over $98 billion, growing at 11% per annum. 
   
Psychiatry (market value: $42 billion)
> More than six million people suffer from schizophrenia and 17 million suffer from bipolar disorder in the major markets. 
   
Neurology (market value: $25 billion) 
> Migraine is one of the leading causes of disability in the world. Stroke is the second leading cause of death and the leading cause of adult disability in industrialised countries. Alzheimer’s disease, the most common cause of dementia, affects more than 4.5 million people in the US. 
   
Analgesia (market value: $28 billion)
> Over 46% of adults in the western world suffer from chronic pain. Pain management is the most common reason for seeking medical care. 
   
Anaesthesia (market value: $3 billion)
> Each year more than 26 million people in the US undergo medical treatment requiring anaesthesia. 
   
2004 in brief 
> Seroquel sales grew by an underlying 33% to $2 billion.
> Seroquel successfully launched in Europe and the US for the treatment of acute manic episodes in bipolar disorder with strong market share growth.
> Seroquel achieved market leadership in the US (number one atypical by monthly new prescriptions).
> Ground-breaking data on Seroquel in bipolar depression presented in May (BOLDER study).
Cerovive phase 3 (SAINT) trials continue as planned.
> Anaesthesia portfolio sales exceeded $1 billion. 

Products
Seroquel (quetiapine fumarate) is an atypical anti-psychotic drug for the treatment of schizophrenia and acute manic episodes in bipolar disorder. It is a first line, first choice treatment for a broad range of symptoms. It delivers excellent efficacy and unique patient tolerability, including placebo-like effects on extrapyramidal symptoms and prolactin across the dose range, thus offering high patient acceptance.

This unique profile has led to the increased use of Seroquel, substantially exceeding world market growth. In September 2004, Seroquel became the market leading atypical in the US in terms of monthly new prescriptions. In Europe, Seroquel is growing two to three times faster than the atypical market, with key countries, such as Italy and Germany showing excellent market share gains.

The launch of Seroquel for the treatment of bipolar mania in over 40 countries has been highly successful, with strong market share growth. Physician feedback regarding key patient benefits, including rapid onset (four days), unique patient tolerability and no emergent depression has been extremely encouraging.

Approval was received in July 2004 from the FDA for new labelling to include 12-week data in the treatment of acute mania associated with bipolar disorder. This makes Seroquel the first product in its class to include monotherapy efficacy and safety data beyond three weeks in its label for acute bipolar mania.

Seroquel is not currently approved for the treatment of bipolar depression or agitation associated with dementia.

The results of the BOLDER study were presented at a meeting in May 2004 of the American Psychiatric Association, the world’s largest psychiatry congress. BOLDER was a study of Seroquel monotherapy for the treatment of bipolar depression. The study results indicated that Seroquel was effective in treating depressive episodes associated with bipolar I and II disorders and a range of depressive and anxiety symptoms associated with bipolar disorder.

The STAR trial data were announced in July 2004 at the International Conference on

Alzheimer’s Disease and Related Disorders, a leading Alzheimer’s disease conference. The results of this study indicated that Seroquel was effective in the treatment of agitation associated with dementia in elderly patients residing in long term care facilities.

In November 2004, AstraZeneca submitted a regulatory application to the French health authorities for a licence to market Seroquel in France for the treatment of schizophrenia and acute manic episodes associated with bipolar disorder. AstraZeneca received approval in Canada to market Seroquel as a monotherapy for the acute management of manic episodes associated with bipolar disorder.

In January 2004, Dr Reddy’s Laboratories Ltd. opened a Drug Master File with the FDA relating to quetiapine, the active ingredient in Seroquel. However, AstraZeneca is not aware of the filing of an Abbreviated New Drug Application relating to quetiapine.

Zomig (zolmitriptan) is indicated for the treatment of migraine with or without aura. It offers migraine sufferers rapid, reliable relief of headache pain and other migraine symptoms and is well tolerated. Available in over 80 countries, it is the leading second-generation triptan and Zomig is available in a unique range of formulations to provide rapid migraine relief. Zomig is the prescription market leader in Europe.

Zomig Nasal Spray is a formulation that delivers fast pain relief. The nasal spray has been successfully launched in Europe and the US. Launch in Japan is expected in 2005.

Zomig Rapimelt is a rapidly dispersible formulation offering patients a convenient, orange flavoured melt-in-the-mouth tablet that now accounts for more than 30% of Zomig sales. The 5mg tablet is now approved and launched in several EU countries.

Diprivan (propofol), the world’s best selling intravenous anaesthetic, is used in the induction and maintenance of anaesthesia and for intensive care sedation. More than 90% of total Diprivan sales consist of Diprivan EDTA, a microbial resistant formulation, which is approved in the majority of markets.



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18   AstraZeneca Annual Report and   Operational Review
  Form 20-F Information 2004    

Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.    
 

 

 Key product performance                
2004
               
2003
       
2002
            2003 compared to 2002             2004 compared to 2003





        Growth         Growth                      
        due to         due to          
    Growth   exchange     Growth   exchange   Growth Growth Growth Growth
Sales   underlying   effects Sales   underlying   effects Sales underlying reported underlying reported
$m   $m   $m $m   $m   $m $m % % % %

   
   
Seroquel   2,027   496   44   1,487   304   38   1,145     33   36     27   30

   
   
Diprivan   500   24   18   458   (7 ) 22   443     5   9     (2 ) 3

   
   
Zomig   356   (12 ) 19   349   (3 ) 24   328     (3 ) 2     (1 ) 6

   
   
Local anaesthetics   542   41   35   466     34   432     8   16       8

   
   
Other   71   (7 ) 5   73   (5 ) 8   70     (10 ) (3 )   (7 ) 4

   
   
Total   3,496   542   121   2,833   289   126   2,418     19   23     12   17

   
   
             
             

Naropin (ropivacaine) is the best selling, long-acting local anaesthetic. With its improved safety and mobility profile, it is replacing the previous standard treatment of bupivacaine in major markets.

Xylocaine (lidocaine) continues to be the world’s most widely used local anaesthetic after 50 years on the market.

We divested the marketing authorisations for the manufacture and sale of Mysoline to Acorus Therapeutics Ltd. in July 2004. This allowed the continued supply of Mysoline to patients in countries where it was previously sold by AstraZeneca.

Pipeline
We are focused on unmet medical needs in three key areas.

Psychiatry
A sustained release formulation of Seroquel is being developed as part of a strategic approach to expand the treatment options available for patients.

AZD8129 (previously AR-A2) is a novel 5HT1B antagonist in phase 2 for the treatment of depression and anxiety. The portfolio has been expanded by the nomination of AZD2327, as a candidate drug in pre-clinical development with a novel mechanism of action for treating anxiety.

We have discontinued the development of AZD5455 and the granules formulation of Seroquel as a result of their failure to meet the target product profiles.

The collaboration with Shanghai Jiaotong University, established in 2001, continues to progress well and has identified several genetic variants that may predispose certain populations to schizophrenia.

Analgesia
In pain control, our research focus is nociceptive pain (caused by tissue damage) and neuropathic pain (caused by nerve damage). Our pipeline includes AZD4282, an NMDA antagonist in phase 1 for the treatment of neuropathic pain.

Our collaboration with NPS Pharmaceuticals continues to progress well, with early and late phase pre-clinical projects on metabotropic glutamate receptors, covering all major neuroscience disease indications. AZD9272 and AZD6538, targeting neuropathic pain, are the first two candidate drugs from the collaboration to be nominated.

Neurology
Cerovive, licensed from Renovis, Inc., is a neuroprotectant with free radical trapping properties under development for the treatment of acute ischaemic stroke, a disease with substantial unmet medical need for new effective therapies. Pre-clinical data show that Cerovive preserves neurologic function and brain tissue even when given at substantial delay following the onset of ischaemia.

The development of neuroprotectants for stroke is known to be a highly challenging area of drug development. It is difficult to achieve controlled clinical trial conditions in a setting where patients have just suffered a stroke and require immediate emergency care. It is also technically difficult. Our two pivotal SAINT (Stroke – Acute Ischaemic –NXY Treatment) trials were designed to mitigate the technical risks by aligning time to treatment and dosing in accordance with pre-clinical efficacy results. The SAINT trials compare the efficacy and safety of a placebo with a 72-hour intravenous infusion of Cerovive given within six hours of the onset of symptoms. Recruitment for the SAINT I trial being conducted in Europe, Asia, Australia, New Zealand and South Africa was completed in November 2004.

In October 2004, an independent data monitoring board recommended that the SAINT trials should continue as planned based on a review of the first 1,000 treated patients with three months’ follow up of stroke outcomes. Read out of the SAINT I trial is expected in the second quarter of 2005.

The CHANT (Cerebral Haemorrhage And NXY Treatment) trial assessing safety and tolerability in intracerebral haemorrhagic stroke was initiated in 2004.

AZD7371 is in phase 2 for overactive bladder, a highly prevalent condition and an unsatisfied market. We have discontinued the development of ZD0947 as a result of its failure to meet the target product profile.

AZD1080 is a new candidate drug for the treatment of Alzheimer’s disease, a core strategic focus of our research. AZD3102 is being developed in collaboration with Dyax Corp. and is one of the first ventures for AstraZeneca in human monoclonal antibodies. We have discontinued the development of AZD0328 and AZD2858 as a result of their failure to meet the target product profile.

AZD5904 is a new candidate drug for the treatment of multiple sclerosis. We have discontinued the development of AZD4750 as a result of its failure to meet the target product profile.

Performance 2004
Reported performance
Neuroscience sales in 2004 grew by $663 million from $2,833 million in 2003 to $3,496 million, an increase of 23%.

Underlying performance
After excluding exchange effects of $121 million, underlying growth was 19%.



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  AstraZeneca Annual Report and
Form 20-F Information 2004
Operational Review 19

 

 

Seroquel sales reached a new milestone in 2004, exceeding $2 billion in annual sales for the first time. Sales growth is well ahead of the atypical anti-psychotic class in most major markets, fuelled by successful launches of the bipolar mania indication.

Seroquel sales in the US for the full year were up 33% at $1,504 million, in line with prescription growth of 30%. In December 2004, new prescription share reached 27.5%, a class leading increase of 4.6 points over December 2003.

Seroquel sales outside the US increased 36% for the year to $523 million. For the year sales were up 45% in Europe ($331 million in 2004 compared to $209 million in 2003), up 44% in Canada ($74 million in 2004 compared to $48 million in 2003), and grew 13% in Asia Pacific (rising to $107 million in 2004 from $87 million in 2003).

Zomig performance in the full year reflects the 10% decline in the US (down from $163 million in 2003 to $147 million in the current year), partially offset by slight growth (up 2% to $209 million) in the rest of the world.

Diprivan sales worldwide increased by 5%; growth of 15% in the US (sales of $264 million, up from $230 million in 2003) more than compensated for declines in Europe. Local anaesthetics enjoyed growth in all markets, particularly in the US (up to $131 million from $106 million) and Europe (increasing 9% to $217 million from $181 million).

Performance 2003
Reported performance
Reported growth for Neuroscience was 17%, with sales up $415 million to $2,833 million in 2003.

Underlying performance
In the US, sales grew strongly by 14% to $1.7 billion. In the rest of the world sales also grew strongly by 10% to deliver global sales of $2.8 billion and a combined growth of 12% worldwide.

In the US, Seroquel sales reached $1,134 million for the year, an increase of 22%. Total prescriptions for Seroquel in the US were up 34%. The share of total prescriptions for Seroquel in the US anti-psychotic market reached a new high at 21.2% in December 2003.

Sales of Seroquel in markets outside the US increased 45% for the year. Sales in Europe were up 40%, and sales in Japan rose 67%. Zomig sales for the year fell by 1% to $349 million (global market share remains at 16%); growth was 7% outside the US, whilst sales were down 8% in the US.

Sales of Diprivan worldwide, at $458 million, fell by 2%. The rate of decline since patent expiry has slowed.



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20 AstraZeneca Annual Report and Operational Review
Form 20-F Information 2004

 

Oncology

We aim to maintain our position as a world leader in cancer treatment through further launches of newer products such as Faslodex, the successful introduction of novel approaches currently in the pipeline and continued growth for Casodex, Arimidex and Zoladex.

 

 

 

 

Therapy area overview 
   
> World market value for cancer therapies: $22 billion and growing strongly.
   
> In 2004, over 10 million people were diagnosed with cancer; by 2020 this is forecast to reach 15 million. 
   
> Six million people die from cancer every year - representing 12% of deaths worldwide. 
   
2004 in brief
   
> Rapid uptake in sales of Iressa continued until disappointing ISEL data in December led to comprehensive reassessment of Iressa including withdrawal of MAA in Europe.
   
> Faslodex now available in the EU.
   
> Casodex approved for use in EPC in over 60 countries.
   
> ATAC data showed Arimidex is significantly more effective than tamoxifen in prolonging disease-free survival of post-menopausal women with early breast cancer.

 

Products
Casodex (bicalutamide) is the world’s leading anti-androgen therapy for the treatment of prostate cancer. The growth of Casodex has continued mainly through a renewed interest in the potential benefits of combination use of Casodex 50mg with Zoladex and other luteinising-hormone releasing hormone (LHRH) agonists. Casodex 150mg is approved for use in early prostate cancer (EPC) in over 60 countries and applications for the EPC indications are under review in several other markets. During 2004, the German regulatory authority did not agree a revised indication for Casodex 150mg, which is now no longer available in that country though 50mg remains on the market. Elsewhere, sales of Casodex 150mg continue to grow.

Zoladex (goserelin acetate) available in one month and three month depots, is the world’s second largest LHRH agonist by value. It is used for the treatment of prostate cancer, breast cancer and gynaecological disorders. It is approved for the treatment of prostate cancer in 105 countries. In EPC, Zoladex is the only LHRH agonist shown to improve overall survival when used in addition to either radical prostatectomy or radiotherapy. In breast cancer, Zoladex is approved in 24 countries for the adjuvant treatment of early stage pre-menopausal breast cancer as an alternative to and/or in addition to chemotherapy. It is also widely approved for use in advanced breast cancer in pre-menopausal women. Zoladex offers proven survival benefits for breast cancer patients with a favourable tolerability profile.

Iressa (gefitinib) is a highly researched, first in class, new type of anti-cancer agent (epidermal growth factor receptor-tyrosine kinase inhibitor (EGFR-TKI)) that acts to block signals for cancer cell growth and survival. It is indicated for the treatment of non-small cell lung cancer (NSCLC) in patients who have failed chemotherapy. Patients with NSCLC generally have a short survival time and their quality of life is seriously impaired. Previously published clinical trials with Iressa, used alone in patients treated for advanced NSCLC who have failed chemotherapy, reported that up to 50% of patients may experience benefit (including tumour shrinkage in 12-18% of patients). Over 40% of these patients were reported to experience early symptomatic improvement in the symptoms of lung cancer, such as cough, breathlessness

and chest pain. It has consistently demonstrated good tolerability and is not associated with the typical side effects of chemotherapy.

However, preliminary results from the recently reported ISEL clinical study (which compared Iressa, when used alone, to placebo in patients with advanced NSCLC, who had failed chemotherapy,) showed that, whilst there was a statistically significant improvement in tumour shrinkage (objective response rate) and time to treatment failure, the difference in favour of increased survival with Iressa treatment failed to reach statistical significance compared to placebo in the overall population.

Prospective subgroup analyses from the ISEL study did show statistically significant differences in survival in favour of Iressa in patients of East Asian origin and non-smokers. In the East Asian subgroup, there was a near doubling of median survival, which supports the positive benefit/risk ratio observed in previous studies in these patients.

In 2004, two publications appeared, describing how patients who had dramatically responded to Iressa had a genetic alteration (mutation) in the EGF Receptor (EGFR) within the tumour cells, the biological target for the drug. These mutations appear to be a predictor of tumour response to Iressa. The publication of these data sparked great scientific and clinical interest in the drug, and may explain why the response rates observed in the ISEL study in patients from East Asian origin, and non-smokers were relatively high. We will be working to better understand the ISEL outcome in the context of further analysis of survival data, secondary endpoints, EGFR status and other biomarkers.

Iressa is currently approved in 35 countries, including the US and Japan. AstraZeneca is now actively consulting with regulatory authorities to determine the impact of the ISEL data. It is possible that some regulatory authorities may require AstraZeneca to withdraw its marketing authorisation for Iressa. In January 2005, after consultation with the European Medicines Evaluations Agency we withdrew the European Marketing Authorisation Application (MAA) for Iressa because the ISEL survival results did not meet the


 


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    AstraZeneca Annual Report and   Operational Review  21
Form 20-F Information 2004

         
Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.    
         
         
                         
  Key product performance        
       2004             2003    2002        2004 compared to 2003   2003 compared to 2002  
       


     

 
       Sales
$m
        Growth
underlying
$m
      Growth
due to
exchange
effects
$m
     Sales
$m
        Growth
underlying
$m
      Growth
due to
exchange
effects
$m
         Sales
$m
            Growth
underlying
%
        Growth
reported
%
        Growth
underlying
%
        Growth
reported
%
     
 
     
     
 
  Casodex 1,012   92   66   854   140   70   644       11   19       22   33  
 
     
     
 
  Zoladex 917   (13 ) 61   869   6   69   794       (1 ) 6         9  
 
     
     
 
  Arimidex 811   249   43   519   152   36   331       48   56       46   57  
 
     
     
 
  Iressa 389   147   14   228   152   9   67       65   71       227   240  
 
     
     
 
  Nolvadex 134   (54 ) 10   178   (314 ) 12   480       (31 ) (25 )     (66 ) (63 )
 
     
     
 
  Faslodex 99   21   1   77   42     35       28   29       120   120  
 
     
     
 
  Other 14   (5 ) 1   18   (1 ) 1   18       (28 ) (22 )     (6 )  
 
     
     
 
  Total 3,376   437   196   2,743   177   197   2,369       16   23       8   16  
 
     
     
 
         

approval requirements in Europe. The submission of a new MAA will be considered after evaluation of the full ISEL data and new emerging studies.

In the US, we have voluntarily suspended promotion of Iressa. AstraZeneca has urged physicians to consider other treatment options in the recurrent NSCLC population, in light of positive survival data with other agents, including another oral EGFR inhibitor. AstraZeneca intends to continue to make Iressa available for those patients whose physicians feel they are benefiting from the drug.

Based on the total data available for Iressa, we continue to believe that it has a place in the management of NSCLC and potentially other tumour types, providing substantial benefits for some patients in clinical practice and a favourable tolerability profile. New studies will report in the first half of 2005, which will provide further information on the efficacy and safety of Iressa and will further influence our thinking on the future of Iressa. In the US, we anticipate a rapid reduction in new prescriptions. While commercial prospects have certainly been reduced in Western markets, the positive results in patients of East Asian origin offer the prospects of a continuing successful business in these important markets. (See Financial Review for financial impacts.)

Arimidex (anastrozole) is the world’s leading aromatase inhibitor. Arimidex continues to grow strongly as it replaces tamoxifen as the preferred adjuvant treatment for post-menopausal women with early breast cancer. The large-scale ATAC study, first reported in December 2001 and then most recently updated in December 2004, showed that Arimidex is significantly

 

more effective in prolonging disease-free survival and has important tolerability benefits compared with tamoxifen. Further data from the ATAC study presented in December 2004 also showed that women switching from tamoxifen to Arimidex suffered fewer recurrences of their early breast cancer than those who stayed on tamoxifen throughout the standard five-year course of treatment. Arimidex is also approved for the treatment of advanced breast cancer in post-menopausal women based on demonstrated advantages over tamoxifen and megestrol acetate.

Faslodex (fulvestrant) is a new type of endocrine therapy, an oestrogen receptor antagonist, with no agonist effects, that down-regulates the oestrogen receptor. Faslodex offers patients with hormone-sensitive, advanced breast cancer more hormonal options before having to resort to expensive and poorly tolerated cytotoxic chemotherapy. Due to its novel mode of action, Faslodex offers an effective, well tolerated additional treatment for patients, with the compliance and convenience benefits of a once monthly injection. Following the EU approval in March 2004, Faslodex is now available in Europe, as well as the US, Brazil and Argentina for the second line treatment of hormone receptor positive, advanced breast cancer in post-menopausal women.

Nolvadex (tamoxifen citrate) remains a widely prescribed breast cancer treatment.

Pipeline
Further trials are underway to evaluate the potential benefits of
Iressa in other EGFR driven tumours such as head, neck and breast cancers. The clinical trial programme in lung cancer is under review in light of the recent developments described in detail above.

 

Signalling processes, which are critical to cancer cell division and survival, are the targets of a number of AstraZeneca’s novel compounds designed with a different biological effect in mind, including anti-angiogenesis, anti-proliferation and anti-invasion.

ZD6474 is a novel, orally active, anti-cancer agent that selectively inhibits two key cancer pathways: tumour blood vessel development (through VEGFR inhibition) and tumour cell growth and survival (through EGFR inhibition). ZD6474 is scheduled to complete phase 2 clinical trials during 2005.

AZD2171 is an anti-angiogenic agent in phase 1 that targets the growth of blood vessels of tumours. AZD9935 is another anti-angiogenic in pre-clinical development.

ZD6126 is a vascular targeting agent. Phase 2 clinical trials were stopped due to cardiac events. Pre-clinical work is now in progress to re-examine its potential. AZD4440, another vascular targeting agent, is in pre-clinical development. ZD4054 is an endothelin antagonist in phase 2 that works by targeting the endothelin A receptor, inhibiting tumour cell proliferation. ZD4054, which is being evaluated in clinical trials for the treatment of hormone-resistant prostate cancer, has recently been granted fast track designation by the FDA.

AZD0530 and AZD0424, anti-invasives in phase 1 and pre-clinical respectively, are designed to prevent tumours from spreading. AZD3409 is a prenylation inhibitor in phase 1 designed to inhibit the proliferation of cancer cells. AZD5438 is a novel selective cyclin dependent kinase inhibitor in phase 1 targeted at proliferating


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22   AstraZeneca Annual Report and   Operational Review
Form 20-F Information 2004    

         
         
         
         
         

tumour cells. AZD1152, an aurora kinase inhibitor designed to target cell division in proliferating tumours, is now in pre-clinical development. AZD6244 (ARRY142886), in phase 1 development, is a selective MEK inhibitor targeting proliferating tumour cells.

AZD4769, an anti-proliferative agent, is in pre-clinical development for solid tumours including NSCLC.

AZD3841 and AZD8931, both anti-proliferative agents, are in pre-clinical development for solid tumours.

The collaboration with Abgenix Inc., which aims to discover fully human monoclonal antibodies for the treatment of cancer, has entered its second year. This arrangement is complementary to our major activity in small molecules and is allowing us to tackle a broader range of targets. It is anticipated the collaboration will contribute candidate drugs to the development pipeline by 2006.

Performance 2004
Reported performance
Oncology sales increased by 23% rising $633 million from $2,743 million in 2003 to $3,376 million in 2004.

Underlying performance
After eliminating the effects of exchange of $196 million, the underlying sales growth rate was 16%.

Casodex sales outside the US were up 11% for the year totalling $780 million. Sales in Japan continue to grow strongly to $240 million, up 24% for the year. Reflecting the maturity of the market in advanced prostate cancer, underlying performance in the US was essentially unchanged with sales for the year up 9% to $232 million.

Arimidex had another year of excellent sales growth, with sales up 48% to $811 million as a result of increased use in the adjuvant treatment of early breast cancer. The growing importance of aromatase inhibitors such as Arimidex to this patient population was affirmed in the recently updated treatment guidelines published by ASCO. As the only aromatase inhibitor indicated for primary adjuvant treatment (approved now in 80 countries) Arimidex is well positioned to benefit from continued adoption of these treatment guidelines in clinical practice. Sales in the US for Arimidex for the full year were up 52% at $300 million, in line with

 

estimated underlying growth. New prescription market share for aromatase inhibitors plus tamoxifen reached 29.0% in December 2004 up 7.5 points over last year. We now estimate that more than 50% of newly diagnosed patients are receiving Arimidex. Outside the US, sales of Arimidex were up 46% for the year at $511 million. Full year sales were up 48% in Europe ($358 million), and increased 41% in Japan ($100 million).

Iressa sales reached $389 million for the full year (up 65%), including $176 million in the US (up 73%) and $136 million in Japan (an increase of 24%). However, fourth quarter sales in the US for Iressa were $17 million (down 65%) – in view of the regulatory uncertainties and the increased probability of returns of unused product, we have not recognised the revenue from sales made in the latter half of the quarter. Until the situation stabilises, revenue from Iressa sales in the US will be recognised on confirmed patient usage rather than wholesaler shipment.

Zoladex sales remained substantially unchanged. Declines in the US ($152 million) and Europe ($386 million), down 13% and 9% respectively, were mitigated by a strong performance in Japan (up 16% to $231 million).

The rate of fall in Nolvadex sales slowed to 31%; sales in the US were negligible although in Europe and Japan revenue declines were less pronounced (falling by 11% to $119 milion).

Faslodex sales increased by 28% to reach $99 million. Launches in Europe contributed to the majority of this increase.

Performance 2003
Reported performance
Oncology’s reported sales growth was 16% as revenues grew by $374 million to $2,743 million.

Underlying performance
Oncology sales grew by 8% to $2,743 million with growth from Casodex, Arimidex and Iressa offsetting the decline in Nolvadex.

Casodex sales outside the US increased by 23%, driven by good growth in Europe (up 20%) and Japan (up 28%). Growth in Europe and Japan was driven by the expanding use of Casodex in early stage

 

disease. In the US the underlying demand was broadly unchanged with Casodex share of total prescriptions in this market being 83% in December 2003 – growth of 18% is principally a reflection of wholesaler destocking in 2002.

Sales of Arimidex increased by 47% in the US and by 45% in the rest of the world, including a 61% increase in Japan.

Sales of Iressa reached $228 million during the year including sales in Japan of $101 million. Iressa sales in the US since launch in May 2003 totalled $102 million.

Faslodex sales of $77 million reflect a steady increase in usage for the treatment of advanced breast cancer in the US market.

Underlying sales of Zoladex were maintained at $869 million. Sales of Nolvadex declined by 66% following patent expiry in the US in February 2003.

 


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    AstraZeneca Annual Report and   Operational Review 23
Form 20-F Information 2004

Respiratory and Inflammation (R&I)

We aim to build on our leading position in asthma treatment through the growth of key products, particularly Symbicort, new indications and market launches and the successful introduction of novel approaches to other areas of inflammatory disease such as chronic obstructive pulmonary disease (COPD) and rheumatoid arthritis.

 

 

Therapy area overview 
   
> R&I world market value: $37 billion. 
   
> The World Health Organization estimates that 100 million people worldwide suffer from asthma and that COPD is the fourth greatest cause of death globally. 
   
2004 in brief
   
> Clinical data confirm efficacy and safety of Symbicort as an adjustable maintenance treatment for asthma.
   
> The regulatory submission in Europe for Symbicort as a single inhaler treatment of asthma was withdrawn to allow more data to be submitted. Approvals have been gained in two markets outside Europe.
   
> Regulatory application for Symbicort pMDI formulation submitted in Europe for asthma and COPD in July.
   
> Symbicort US filing scheduled for the second or third quarter of 2005.

Products
Symbicort
(budesonide/formoterol) is an innovative and effective asthma treatment that offers superior efficacy with easily adjustable dosing. This will enable doctors to tailor a patient’s treatment of this variable disease with a single inhaler for all situations; for baseline therapy, for increasing the dose during worsening attacks as well as for acute situations, thereby achieving greater efficacy than with fixed doses. It is a combination of the inhaled corticosteroid, budesonide, and the fast onset, long-acting bronchodilator, formoterol, in the Turbuhaler dry powder inhaler. Symbicort Turbuhaler is approved in 90 countries and launched in more than 70. Phase 3 trials in asthma are complete in the US.

On 15 January 2005 results from the STAY trial (one of the largest asthma studies ever conducted) were published in the American Journal of Respiratory and Critical Care Medicine. Data revealed for the first time that Symbicort Single inhaler Therapy (SiT), a new asthma treatment concept which develops Symbicort adjustable maintenance dosing, offers superior control in the main measures of asthma management compared to traditional Symbicort fixed dose, including a significant 45% reduction in the frequency of severe exacerbations.

In Europe, in November 2004, we withdrew our regulatory application for Symbicort SiT to allow more data to be submitted. We expect to submit a Symbicort SiT regulatory filing in Europe in the second half of 2005 containing additional data from further ongoing studies, including in total 13,000 patients with mild to moderate asthma.

A file for Symbicort pressurised metered dose inhaler (pMDI) in asthma and COPD was submitted to EU regulatory authorities in July 2004.

Pulmicort (budesonide) is a corticosteroid anti-inflammatory inhalation drug that helps prevent symptoms and improves the control of asthma. Pulmicort remains one of the world’s leading asthma medicines and is available in several forms, including the Turbuhaler dry powder inhaler, a pressurised metered dose inhaler and the Respules suspension for the treatment of children.

Pulmicort Respules (budesonide inhalation suspension) is the first and only nebulised

corticosteroid in the US for children as young as 12 months. It has grown strongly as a result of its beneficial profile and it has strengthened its position as the inhaled corticosteroid of choice for the treatment of children under five with asthma. A regulatory application for Pulmicort Respules was filed in Japan in October 2004.

Oxis (formoterol) is a beta-agonist asthma therapy with a fast onset and long-acting clinical effect for the relief of asthma symptoms when corticosteroid treatment is not adequate.

Rhinocort (budesonide) is a nasal steroid treatment for allergic rhinitis (hay fever), perennial rhinitis and nasal polyps. It combines powerful efficacy with rapid onset of action and minimal side effects and is available as a once daily treatment in the Rhinocort Aqua pMDI and the Turbuhaler dry powder inhaler forms.

Accolate (zafirlukast) is an oral leukotriene receptor antagonist for the treatment of asthma available in most markets.

Pipeline
US development of the Symbicort pMDI is progressing and the phase 3 clinical programme in asthma is complete. Following a pre-NDA meeting with the FDA in the fourth quarter of 2004, a New Drug Application for this formulation is now targeted for the second or third quarter of 2005, although the FDA has identified some issues associated with the inhaler that require the generation of additional chemistry and manufacturing data or possible modification of the device in order to achieve approval.

Seven new compounds have entered pre-clinical development, targeted at COPD (AZD7928 and AZD2914), asthma and rhinitis (AZD2392 and AZD1744), osteoarthritis (AZD6357) and rheumatoid arthritis (AZD6703 and AZD5672). In addition, AZD0902 is in pre-clinical development for rheumatoid arthritis. The respiratory pre-clinical portfolio comprises AZD2098 and AZD1981 for asthma as well as AZD6067 for COPD.

Compounds currently in clinical development include AZD3778 for asthma and rhinitis and AZD3342 for COPD. AZD8955 is in clinical development for osteoarthritis and AZD8309 for rheumatoid



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24 AstraZeneca Annual Report and Operational Review
Form 20-F Information 2004  

         
Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.    
         
         
                         
  Key product performance        
       2004             2003    2002        2004 compared to 2003   2003 compared to 2002  
       


     

 
       Sales
$m
        Growth
underlying
$m
      Growth
due to
exchange
effects
$m
     Sales
$m
        Growth
underlying
$m
      Growth
due to
exchange
effects
$m
         Sales
$m
            Growth
underlying
%
        Growth
reported
%
        Growth
underlying
%
        Growth
reported
%
     
 
     
     
 
  Pulmicort 1,050   40   42   968   101   55   812       4   8       12   19  
 
     
     
 
  Symbicort 797   176   72   549   180   70   299       32   45       61   84  
 
     
     
 
  Rhinocort 361   (11 ) 8   364   56   9   299       (3 ) (1 )     19   22  
 
     
     
 
  Accolate 116   7   2   107   (40 ) 3   144       6   8       (28 ) (26 )
 
     
     
 
  Oxis 101   (28 ) 9   120   (14 ) 14   120       (24 ) (16 )     (12 )  
 
     
     
 
  Other 158   (8 ) 13   153   (8 ) 17   144       (5 ) 3       (6 ) 6  
 
     
     
 
  Total 2,583   176   146   2,261   275   168   1,818       8   14       15   24  
 
     
     
 
                     

arthritis as well as COPD. AZD9056, a P2X7 ion-channel blocker, is in phase 2 clinical development for rheumatoid arthritis and osteoarthritis as well as in phase 1 for COPD. All five compounds currently in clinical development for various indications are based on novel mechanisms of actions.

We have discontinued the development of AZD0902 for the indication of COPD as a result of its failure to meet the target product profile.

In December 2004, AstraZeneca and Cambridge Antibody Technology entered into in a five-year discovery alliance to generate monoclonal antibody therapeutics principally in inflammatory disorders, including respiratory diseases.
For AstraZeneca, this collaboration provides access to leading technology for the generation of fully human monoclonal antibodies for application across all relevant disease areas, working alongside a leading company in the field.

Performance 2004
Reported performance
R&I sales grew by 14% from $2,261 million to $2,583 million, an increase of $322 million, principally as a result of higher sales of Symbicort.

Underlying performance
R&I underlying growth was $176 million, with sales up 8%.

Symbicort sales were up 32% to $797 million in the year on share gains in the fast growing combination product segments of the asthma and COPD markets. The majority of Symbicort sales were in Europe (up 29% to $701 million). Sales elsewhere rose by 65% to $96 million.

More than 40% of global Pulmicort sales

came from the sales of Pulmicort Respules in the US. A 17% increase in US Pulmicort Respules sales resulted in a 4% increase in worldwide sales (to $1,050 million) for Pulmicort. Sales of Pulmicort in the US rose 13% to $576 million, more than compensating for the 9% decline in Europe (sales of $364 million).

Sales for Rhinocort were down 3% for the year to $361 million as a result of a broadly flat performance for the US market for inhaled nasal steroids in general, including Rhinocort Aqua.

The increase in Accolate sales was driven by price increases in the US (sales up 18% to $84 million).

Performance 2003
Reported performance
Reported growth for R&I was 24%. Sales increased from $1,818 million to $2,261 million.

Underlying performance
After excluding exchange effects of $168 million, R&I sales grew by 15% during 2003.

Symbicort sales for the full year increased 61% to $549 million, as the product gained share in the rapidly growing market for fixed combination asthma treatments.

Pulmicort sales for the full year increased by 12% as a result of growth in the US market (up 41%). Pulmicort Respules accounts for most of this growth, with total prescriptions in the US market up 32%.

Rhinocort sales in the US were up 27% accounting for almost all of the global growth of 19%. Growth in Rhinocort Aqua (58%) continued to more than offset the sales lost from the discontinuation of the Rhinocort Nasal Inhaler formulation.



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    AstraZeneca Annual Report and   Operational Review 25
Form 20-F Information 2004

 
Infection   Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.
     
     
We aim to build a franchise in the treatment of infectious diseases by increasing sales of Merrem and by exploiting our traditional, structural and genomic-based Discovery technologies to bring new products to market.    
     

 

   Key product performance                                       
        2004       2003 2002   2004 compared to 2003 2003 compared to 2002
   
 

 

     Sales
$m
   Growth
underlying
$m
  Growth
due to exchange
effects
$m
   Sales
$m
   Growth
underlying
$m
  Growth
due to exchange
effects
$m
 Sales
$m
   Growth
underlying
%
   Growth
reported
%
 Growth
underlying
%
   Growth
reported
%
 


     
     
 
  Merrem 423   53   24   346   46   15   285       15   22       16   21  
 


     
     
 
  Other 116   (20 ) 6   130   (36 ) 11   155       (16 ) (11 )     (24 ) (17 )
 


     
     
 
  Total 539   33   30   476   10   26   440       7   13       2   8  
 


     
     
 
                                                       

 

 
Therapy area overview 
   
> Infection world market value: $53 billion. 
   
> Infectious diseases cause more than 11 million deaths each year. 
   
> World demand for antibiotics remains high due to escalating resistance and the increased risk of serious infections. 
   
 
2004 in brief
   
> Steady underlying growth for Merrem in the US (8%), Europe (14%) and globally (15%).
   
> Supplementary New Drug Application filed in the US for treating skin and skin structure infections.

Products
Merrem/Meronem (meropenem) is an intravenous carbapenem antibiotic for the treatment of serious, hospital-acquired infections. A Supplementary New Drug Application was filed in the US in July 2004 aimed at securing an indication for skin and skin structure infections in 2005.

Pipeline
Our R&D facility in Boston, US is progressing a range of projects using traditional, structural and genomic-based technologies to deliver innovative antibacterial agents to the infection pipeline.

Work continues at our new R&D facility opened in Bangalore, India which is dedicated to finding a new treatment for tuberculosis. Tuberculosis remains a worldwide threat and is newly diagnosed in approximately two million people every year in India and over eight million people worldwide.

Performance 2004
Reported performance
Infection sales growth was 13% as revenues rose by $63 million to $539 million.

Underlying performance
Excluding exchange effects of $30 million, underlying sales in Infection increased by $33 million, 7%.

The performance of the therapy area was driven by Merrem sales, particularly in Europe with growth of 14% to $221 million.

Performance 2003
Reported performance
Sales grew by 8% on a reported basis, rising from $440 million to $476 million.

Underlying performance
Sales of Merrem grew steadily by a further 16% for the year to $346 million. Growth was largely attributable to sales outside the US, which were up 19% to $283 million. In the US, sales grew by 7% to $63 million.



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26 AstraZeneca Annual Report and Operational Review
Form 20-F Information 2004  



Geographic Review

US
While the US remained the world’s largest market for pharmaceuticals, 2004 illustrated both the rewards and risks inherent in such a complex and dynamic operating environment. Our pharmaceutical sales rose by 10% in 2004 from $8,449 million to $9,308 million, reflecting our continuing commitment to driving growth in this important market. The US represents 45% of our total sales. AstraZeneca is currently the fifth largest pharmaceutical company in the US with our sales representing a 5% share of US prescription pharmaceutical sales. Nexium, Seroquel, Toprol-XL and Crestor, with combined sales of $5.7 billion, continue to underpin our sales performance in this highly competitive market. Sales from Salick Health Care and Astra Tech rose by 9% in 2004 to $323 million.

Nexium is now approaching market leadership in total prescriptions and achieved market leadership in capsules dispensed in December 2004. During 2004, discounting and rebating increased in the prescription proton pump inhibitor market, driven mainly by the launch of Prilosec OTC (over-the-counter), generic omeprazole and competitive pressures. However, Nexium was not significantly impacted due to its superior clinical profile. Prilosec OTC had a significant impact on the omeprazole molecule but branded PPI’s (including Nexium) were only modestly impacted.

Toprol-XL became the most prescribed drug among cardiologists and Seroquel continued to gain share in the atypical anti-psychotic market, overtaking risperidone as the leading atypical agent measured in new prescriptions during the third quarter of 2004. In its seventh year on the market, Seroquel had its best year yet in terms of absolute growth in market share and sales volume. Other key growth products, including Arimidex and Pulmicort Respules, outperformed the market in both sales and prescription growth.

Sales of Crestor were $543 million. Crestor is the most effective statin at lowering LDL-C, with the advantage of a significant increase in HDL-C. We continue to believe that its safety profile is in line with that of other marketed statins, a view based on extensive clinical trial and post-marketing data. However, during 2004, Crestor continued to face what we consider to be unfounded allegations concerning its safety

(as described on page 12) which slowed the uptake of the product in the US. In September 2004, AstraZeneca launched the publicly available website rosuvastatininformation.com, which contains clinical trial and post-marketing data on Crestor.

In the US, Inventory Management Agreements (IMA) were implemented with 15 wholesalers with the intent to help manage stock in the trade channel. This reduced stock volatility and, by the end of the year, stocks were close to target levels.

As explained in more detail on page 13, in October 2004, the FDA did not approve Exanta due primarily to safety concerns. Discussions are ongoing with the FDA to determine if there is now a realistic prospect of bringing Exanta to the US market.

Despite increased cost pressures and the challenging market environment, the number of sales representatives in the industry remained relatively constant during the year. During 2004, AstraZeneca continued to work on both the effectiveness and efficiency of our sales organisation which resulted in improving the number and quality of interactions with key target audiences across all of our key brands. Throughout the year, we used the flexibility and size of our contract sales team to match our resources to the changing needs of our portfolio. Other initiatives included providing broadband to all selling staff and upgrading their hand-held technology to remain competitive with the best practices in the industry. For the third consecutive year, AstraZeneca was recognised with the industry’s ‘Representative of the Year’ award by ‘Pharmaceutical Representative’ magazine, after an intense competition across the pharmaceutical field.

In October 2004, we completed the implementation of mySAP, new financial software, providing the organisation with a solid technical foundation for driving efficiency and effectiveness throughout the business. This system replaced 42 legacy systems to enhance and streamline core business processes, improve integration of information and create a single platform, allowing AstraZeneca to achieve a uniform process across all sites for supply planning, quality assurance, purchasing and more.

In November 2003, the US Congress passed bipartisan legislation to add a prescription drug benefit to the Medicare programme. This new legislation is the first major change to Medicare in nearly 40 years. Immediate effects of the law in 2004 were changes to Medicare reimbursement for physician-administered products under Medicare Part B, and the launch of prescription drug discount cards as an interim measure until the full drug benefit takes place in 2006. We are actively participating in the current discount card programmes extending access to our products to Medicare recipients who are utilising the cards. The terms of the final regulations to be implemented to roll out the full benefit in 2006 and market forces will ultimately determine the full effect of this legislation on our business.

We anticipate that the issue of cross-border movement of products into the US and coverage for the uninsured will remain contentious among state and federal elected officials, the media and special interest groups during 2005. We will continue to provide free and discounted medicines to qualifying patients through our patient assistance programmes.

Canada
In 2004, we improved our market ranking in Canada to second with sales in excess of C$1 billion (US$876 million). Overall growth in excess of 13% outperformed the market, which grew at 10%. This growth was due to the strong performance of the growth brands, including Nexium (+36%), Seroquel (+44%), Crestor (+296%), Symbicort (+48%) and Atacand (+26%). Crestor and Nexium, in particular, reached milestones with sales in excess of C$100 million each and Crestor is now the second largest product in the statin market. Despite a court ruling that allowed early market entry of generic omeprazole, AstraZeneca Canada commands 52% of the PPI market because of the non-interchangeability of Losec, combined with the success of Nexium. We may see the interchangeability of Losec in 2005. Approval of Arimidex for early breast cancer treatment further supports our leadership position in oncology with a 19% market share.

In support of our efforts to enhance profitability of mature brands, we entered into a partnership with P&G Pharmaceuticals Canada Inc. in late 2004, to manage the promotion and marketing of all Zomig formulations.



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  AstraZeneca Annual Report and
Form 20-F Information 2004
    Operational Review  27





   
Sales growth is shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange. A description of the calculation of this measure is set out in the Financial Review on page 38, together with the reasons for its use.  
   
Key product performance                              
  2004   2003   2002   2004 compared to 2003   2003 compared to 2002  
 
 
 
   
   
 
          Growth           Growth                          
          due to           due to                          
      Growth   exchange       Growth   exchange         Growth   Growth     Growth   Growth  
  Sales   underlying   effects   Sales   underlying   effects   Sales     underlying   reported     underlying   reported  
  $m   $m   $m   $m   $m   $m   $m     %   %     %   %  














   


   


 
US 9,631   883   1   8,747   (608 ) 4   9,351     10   10     (6 ) (6 )














   


   


 
Europe 7,649   204   736   6,709   75   939   5,695     3   14     2   18  














   


   


 
Japan 1,430   130   111   1,189   129   83   977     11   20     14   22  














   


   


 
ROW 2,716   362   150   2,204   294   92   1,818     17   23     16   21  














   


   


 
Total 21,426    1,579   998   18,849    (110 ) 1,118   17,841     9   14       6  














   


   


 
                                                 

Europe
With a market share of 5%, we were ranked as the fifth largest prescription drug company in Europe. Our sales growth (+3%) was driven by Crestor (now launched in most countries and progressing well), Nexium (+26%), Symbicort (+29%), Arimidex (+48%) and Seroquel (+45%), all of which gained significant market shares and more than offset the expected impact of patent expiries.

Widespread government actions continued to slow the overall rate of market growth in Europe. These included price-related initiatives (price cuts, reference pricing and maximum reimbursed prices), regulations to encourage generic substitution and industry-specific taxes.

Sales in France of $1,597 million gave us a market ranking of fourth (taking into account the Sanofi-Aventis merger). Good performances from Nexium (+31%), Symbicort (+28%), Arimidex (+102%) and Crestor ensured that we maintained sales at 2003 levels, despite the impact from Losec patent expiry.

In Germany, sales growth of 2% was driven by Nexium, Symbicort and Seroquel. Effective January 2004, the government increased the mandatory rebate on patent-protected products from 6% to 16%, which led to a flat market growth. Crestor is still subject to ongoing regulatory review and with discussions on the reference pricing of statins continuing, we will not make any decision regarding a future launch until the outcome is known.

In the UK, pharmaceutical sales grew by 9% driven by Nexium (+29%), Symbicort (+26%), Seroquel (+70%) and Crestor.

In Italy, the highly successful launch of Crestor, capturing a market share of 9% (monthly market share figure for November

2004 including licensee sales), contributed to underlying sales growth of 5%.

In Spain, Symbicort, Arimidex, Casodex and Seroquel helped drive sales up by 5%.

At 7%, our sales growth in Central and Eastern Europe exceeded overall market growth. Commercial investments in Russia and the Czech Republic expanded our businesses there.

Late in 2004, we received approval through the European Mutual Recognition Procedure for new uses of both Atacand (chronic heart failure) and Nexium (healing of gastric ulcers and, for patients at risk, the prevention of gastric and duodenal ulcers, associated with NSAID drug therapy).

Japan
We were the second fastest growing major pharmaceutical company in 2004, ending the year ranked 13. Sales reached $1,430 million, up from $1,189 million, driven by the strongly performing oncology portfolio of Arimidex, Casodex, Zoladex and Iressa, together with good growth from Losec. Overall, underlying sales grew by 11% despite the impact of the biennial government price cut which limited market growth to 2%.

In December 2004, the Pharmaceuticals Affairs Council of the Japanese Health Ministry granted conditional approval of Crestor with a dose range of 2.5-20mg, as described on page 12.

Asia Pacific (excluding Japan)
Overall sales grew by an impressive underlying rate of 18% to $1,155 million and the region represents an area of high growth potential. In Australia, the largest market in the region, sales of $450 million gave us a ranking of fourth among prescription drug companies. In China, we are the largest

multi-national prescription drug company (third ranking overall), and with growth of 30%, we are one of the fastest growing pharmaceutical companies (source: the Hong Kong Association of the Pharmaceutical Industry). In South Korea and Taiwan, we gained further momentum following targeted investment in these markets. In South East Asia, we enjoyed average underlying growth of 22%.

Products driving growth in the region were Nexium (+45%), Iressa (+209%), Atacand (+41%), Symbicort (+77%) and Seroquel (+43%). Crestor has made a good start, gaining significant market share in a number of countries.

Latin America
We are the fastest growing major pharmaceutical company in the region, with underlying growth of 27%. In Mexico, the largest market in the region, sales reached $206 million, with growth of 19%. In Brazil we achieved underlying growth of 34% and we gained further momentum in Venezuela with underlying growth of 66%. In each of Argentina, Colombia, Chile, Uruguay and Peru our growth significantly out-stripped overall market growth.

Nexium showed a very strong performance across the region with sales growing by 40%. Crestor has now been launched in all markets in Latin America, has already achieved a market share of 17% in Mexico and is making rapid gains in Brazil, Venezuela, Argentina and Colombia.

Middle East
During 2004 we approved an investment of $40 million for the construction of a tablet manufacturing plant in Egypt. This investment is part of our expansion strategy and commitment to emerging markets. The plant will make products in our cardiovascular, oncology and neuroscience portfolios.



Back to Contents

28 AstraZeneca Annual Report and   Operational Review
Form 20-F Information 2004  




 

Development Pipeline at 27 January 2005

   Compound   Mechanism   Areas under investigation Phase     Estimated filing date  
         
   
 
            PC   1   2   3     MAA   NDA  
                                   
Cardiovascular                                    


















 
NCEs                                    
Exanta   thrombin inhibitor   prevention of VTE                     Launched   Filed*  





 
 
 
 
 



 
Exanta SC formulation   thrombin inhibitor (sc)   prevention of VTE                     Launched   >2007  





 
 
 
 
 



 
Galida   PPAR agonist   diabetes /metabolic syndrome                     2007   2007  





 
 
 
 
 



 
AZD6140   ADP receptor antagonist   arterial thrombosis                     >2007   >2007  





 
 
 
 
 



 
AZD7009   anti-arrhythmic IV   AF – conversion                     >2007   >2007  





 
 
 
 
 



 
AZD7009   anti-arrhythmic oral   AF – maintenance                     >2007   >2007  





 
 
 
 
 



 
AZD9684   CPU inhibitor   thrombosis                     >2007   >2007  





 
 
 
 
 



 
AZD0837   thrombin inhibitor   thrombosis                     >2007   >2007  





 
 
 
 
 



 
AZD7806   IBAT inhibitor   dyslipidaemia                     >2007   >2007  





 
 
 
 
 



 
AZD4619       dyslipidaemia                     >2007   >2007  





 
 
 
 
 



 
AZD6610       dyslipidaemia/diabetes                     >2007   >2007  





 


 
 
 



 
AZD8294       dyslipidaemia                     >2007   >2007  





 
 
 
 
 



 
AZD8677       dyslipidaemia/diabetes                     >2007   >2007  





 
 
 
 
 



 
AZD8450       dyslipidaemia                     >2007   >2007  





 
 
     
 



 
AZD6370       diabetes                     >2007   >2007  





 
 
 
 
 



 
Line Extensions                                    



















Atacand   angiotensin II antagonist   CHF outcomes (CHARM study)                     Approved   Filed  





 
 
 
 
 



 
        diabetic retinopathy                     >2007   >2007  





 
 
 
 
 



 
Crestor   statin   atheroma                     2H 2006   2H 2006  





 
 
 
 
 



 
        outcomes CHF                     >2007   >2007  





 
 
 
 
 



 
        outcomes renal                     2007   2007  





 
 
 
 
 



 
Seloken/Toprol-XL   beta blocker   HCTZ combination                         3Q 2005  





 
 
 
 
 



 
Exanta   thrombin inhibitor   prevention of stroke in AF                     Filed   Filed*  





 
 
 
 
 



 
        treatment of VTE                     Filed   >2007  





 
 
 
 
 



 
        arterial/post MI                     >2007   >2007  





 
 
 
 
 



 
*Discussions are ongoing with the FDA to determine if there is now a realistic prospect of bringing Exanta to the US market. The NDA file remains open.  
                                     
Gastrointestinal                                    


















 
NCEs                                    
AZD0865   P-CAB   acid-related GI disease                     2007   2007  


















 
AZD7371       functional GI disease                     >2007   >2007  


















 
AZD3355   inhibitor of TLESR   GERD                     >2007   >2007  


















 
AZD9343   inhibitor of TLESR   GERD                     >2007   >2007  


















 
AZD5745       acid-related GI disease                     >2007   >2007  


















 
AZD8081       functional GI disease                     >2007   >2007  
Line Extensions                                    



















Nexium   proton pump inhibitor   NSAID GI side effects – symptom resolution                     Promotable*   Filed  





 
 
 
 
 



 
        parenteral formulation                     Launched   Filed  





 
 
 
 
 



 
        NSAID GI side effects – ulcer prevention                     Launched   Launched  





 
 
 
 
 



 
        NSAID GI side effects – ulcer healing                     Launched   Filed  





 
 
 
 
 



 
        extra-oesophageal reflux disease                     >2007   >2007  
*Authorities stated these symptoms were already captured within the GERD label. Text stating “No clinical interaction with naproxen or rofecoxib” was approved.  
                                     
Infection                                    


















 
Line Extensions                                    
Merrem    carbapenem antibiotic   skin and soft tissue infections                         Filed  
                                     
Neuroscience                                    


















 
NCEs                                    
Cerovive   free radical trapping agent   stroke                     2H 2006   2H 2006  





 
 
 
 
 



 
AZD7371       overactive bladder                     >2007   >2007  





 
 
 
 
 



 
 AZD8129 (AR-A2)   5HT1Bantagonist   anxiety/depression                     >2007   >2007  





 
 
 
 
 



 
AZD4282   NMDA antagonist   neuropathic pain                     >2007   >2007  





 
 
 
 
 



 
AZD3102       Alzheimer’s disease                     >2007   >2007  





 
 
 
 
 



 
AZD1080       Alzheimer’s disease                     >2007   >2007  





 
 
 
 
 



 
AZD9272       neuropathic pain                     >2007   >2007  





 
 
 
 
 



 
AZD2327       anxiety                     >2007   >2007  





 
 
 
 
 



 
AZD5904       multiple sclerosis                     >2007   >2007  





 
 
 
 
 



 
AZD6538       neuropathic pain                     >2007   >2007  
Line Extensions                                    



















Seroquel   D2/5HT2 antagonist   sustained release                     1H 2006   1H 2006  





 
 
 
 
 



 
        bipolar maintenance                     2007   2007  





 
 
 
 
 



 
        bipolar depression                     2007   1H 2006  

 


Back to Contents

    AstraZeneca Annual Report and   Operationall Review 29
Form 20-F Information 2004

 

Compound   Mechanism   Areas under investigation   Phase   Estimated filing date  
           
   
 
            PC   1   2   3     MAA   NDA  
Oncology                                
















 
NCEs                                    
                                     
Iressa   EGFR-TKI   NSCLC                     Withdrawn   Launched  


















 
ZD6474   angiogenesis inhibitor (VEGFR-TKI)   solid tumours                     >2007   >2007  


















 
ZD4054   endothelin A receptor antagonist   solid tumours                     >2007   >2007  


















 
AZD2171   angiogenesis inhibitor (VEGFR-TKI)   solid tumours                     >2007   >2007  


















 
AZD3409   farnesyl-transferase inhibitor   solid tumours                     >2007   >2007  


















 
AZD0530   SRC kinase inhibitor   solid tumours and haematological malignancies                     >2007   >2007  


















 
AZD5438   selective cyclin dependent kinase inhibitor   solid tumours                     >2007   >2007  


















 
AZD6244   MEK inhibitor   solid tumours                     >2007   >2007  


















 
ZD6126   vascular targeting agent   solid tumours                     >2007   >2007  


















 
AZD4440   vascular targeting agent   solid tumours                     >2007   >2007  


















 
AZD9935   angiogenesis inhibitor (VEGFR-TKI)   solid tumours                     >2007   >2007  


















 
AZD0424   SRC kinase inhibitor   solid tumours                     >2007   >2007  


















 
AZD1152   aurora kinase inhibitor   solid tumours and haematological malignancies                     >2007   >2007  


















 
AZD4769       solid tumours                     >2007   >2007  


















 
AZD3841       solid tumours                     >2007   >2007  


















 
AZD8931       solid tumours                     >2007   >2007  


















 
Line Extensions                                


















 
Faslodex   oestrogen receptor antagonist   1st line advanced breast cancer                     >2007   >2007  


















 
 Iressa   EGFR-TKI   head and neck cancer*                     2H 2006   2H 2006  


















 
      breast cancer*                     >2007   >2007  


















 
      colorectal cancer*                     >2007   >2007  


















 
* Under review                                
                                     
Respiratory and Inflammation                                


















 
NCEs                                    
                                     
AZD9056   ion channel blocker   rheumatoid arthritis                     >2007   >2007  


















 
AZD9056   ion channel blocker   osteoarthritis                     >2007   >2007  


















 
AZD8309   chemokine receptor antagonist   rheumatoid arthritis                     >2007   >2007  


















 
AZD8955   collagenase inhibitor   osteoarthritis                     >2007   >2007  


















 
AZD8309   chemokine receptor antagonist   COPD                     >2007   >2007  


















 
AZD3778   chemokine receptor antagonist   asthma/rhinitis                     >2007   >2007  


















 
AZD9056   ion channel blocker   COPD                     >2007   >2007  


















 
AZD3342   protease inhibitor   COPD                     >2007   >2007  


















 
AZD6067   protease inhibitor   COPD                     >2007   >2007  


















 
AZD2098       asthma                     >2007   >2007  


















 
AZD1981       asthma                     >2007   >2007  


















 
AZD0902   ion channel blocker   rheumatoid arthritis                     >2007   >2007  


















 
AZD6703       rheumatoid arthritis                     >2007   >2007  


















 
AZD6357       osteoarthritis                     >2007   >2007  


















 
AZD7928       COPD                     >2007   >2007  


















 
AZD2914       COPD                     >2007   >2007  


















 
AZD2392       asthma/rhinitis                     >2007   >2007  


















 
AZD1744       asthma/rhinitis                     >2007   >2007  


















 
AZD5672       rheumatoid arthritis                     >2007   >2007  


















 
 Line Extensions                                


















 
Symbicort Turbuhaler
  inhaled steroid/fast onset,                                
    long-acting beta2 agonist   single therapy for asthma                     2H 2005      


















 
Symbicort pMDI
  inhaled steroid/fast onset,                             2Q/3Q  
    long-acting beta2 agonist   asthma                     Filed   2005 *


















 
        COPD                     Filed   2007  


















 
* The FDA has identified some issues associated with the inhaler that require the generation of additional chemistry and manufacturing data or possible modification of the device in order to achieve approval.
 
Comments – As disclosure of compound information is balanced by the business need to maintain confidentiality, information in relation to some compounds listed here has not been disclosed at this time.
 
Compounds in development are displayed by phase.
 
Abbreviations: IV – intravenous TLESR – transient lower oesophageal sphincter
5HT – 5-hydroxytryptamine (serotonin) MAA – marketing authorisation application (Europe) relaxations
5HT1B (– 1B subtype of 5HT receptor) MEK – mitogen activated (extra-cellular signal-regulated VEGFR-TKI – vascular endothelial cell growth factor
5HT2 (– 2 subtype of 5HT receptor) kinase) kinase receptor-tyrosine kinase inhibitor
ADP – adenoside diphosphate MI – myocardial infarction VTE – venous thromboembolism
AF – atrial fibrillation NCE – new chemical entity >2007 – not earlier than 2008
CHF – congestive heart failure NDA – new drug application (US)  
COPD – chronic obstructive pulmonary disease NMDA – N-methyl-D-aspartate Discontinued projects:
CPU – carboxy peptidase-U NSAID – non-steroidal anti-inflammatory drug AZD4750 – multiple sclerosis
D2 (– 2 subtype of dopamine receptor) NSCLC – non-small cell lung cancer AZD5455 – anxiety
EGFR-TKI – epidermal growth factor receptor-tyrosine P-CAB – potassium-competitive acid blocker AZD0328 – Alzheimer's disease
kinase inhibitor PC – pre-clinical: candidate drug accepted for Seroquel – granules
GERD – gastro-oesophageal reflux disease development but not yet administered to man AZD2858 – Alzheimer's disease
GI – gastrointestinal pMDI – pressurised metered dose inhaler ZD0947– overactive bladder
H – half year PPAR – peroxisome proliferator-activated receptor AZD0902 – COPD
HCTZ – hydrochlorothiazide Q – quarter AZD0303 – thrombosis
IBAT – ilial bile acid transport sc – subcutaneous  
     

Back to Contents

30 AstraZeneca Annual Report and Operational Review
Form 20-F Information 2004  

 

Research and Development (R&D)

 

R&D continues to focus on improving the productivity and efficiency of new drug discovery and development. We are simplifying our processes and continually review our plans and decision-making. We have streamlined portfolio reviews and target our strategic investment on areas directly linked to increased quality and output of new products.

In Discovery, we aim to increase the output of high quality candidate drugs (CDs) with a lower risk of failure in development. In Development, we aim to develop better drugs faster.

The consequences of the strong drive to increase productivity are becoming evident in the size of the early development portfolio. During 2004, 18 CDs were selected (15 in 2003 and 11 in 2002). At the end of 2004, there were 31 projects in the pre-clinical phase and 17, 17 and 25 projects in clinical phases 1, 2 and 3 respectively.

AstraZeneca employs around 11,900 people in R&D. We have six major joint discovery and development facilities in the UK, the US and Sweden; a further four sites in the US, Canada, India and France, which focus only on discovery, and a facility in Japan for development only. These resources are complemented by clinical development at 43 sites around the world. In 2004, our R&D investment totalled $3.8 billion.

R&D remains an integrated, project-driven organisation. Our approach is therapy arealed with scientific, medical, technical and ethical input and control being provided by large, multi-skilled Discovery and Development organisations. This offers a number of advantages including sharing of best practice in terms of science and technology and efficient use of resources across a multi-site, global organisation.

Global knowledge expertise is recognised as a key competitive advantage for AstraZeneca. An R&D information and knowledge management initiative has introduced a knowledge sharing system, initially directed towards supporting our global R&D staff and their internal partners.

We remain focused on meeting our objectives of delivering new, medically important and commercially successful products to the market every year.

Discovery
In Discovery our highly skilled scientists work together across boundaries to exchange ideas, to promote best practice and to maximise the opportunities that are offered by our size and global reach. We focus on finding novel medicines for targeted unmet medical needs. This is supported by other specialised Discovery groups in Safety Assessment, Process R&D and Global Science & Information who also support the projects in their progress through Development and lifecycle management.

Our core priority is to support increased productivity in R&D. This includes improving the quality of biological targets and chemical leads, so that we can expect reduced later stage clinical product attrition. Discovery-Medicine (the partnership between clinical medicine and basic science) is embedded in the organisation. There are many examples where this initiative has helped us gain a better understanding of human diseases and the suitability of future drugs to prevent and treat those diseases. We also continue to introduce, earlier in the process, more stringent and, where possible, high throughput testing of safety and drug metabolism/pharmacokinetics, so that CDs chosen for development are more likely to succeed.

Our Global Science & Information group supports all research areas with skills in compound management, structural chemistry, bio-imaging, transgenics, protein science and information science and informatics.

We continue to invest in R&D facilities. New or upgraded laboratory facilities were opened in 2004 in Sweden, the UK and the US. Ongoing training and development of our highly skilled employees continue.

Development
People in our Development organisation specialise in clinical research, regulatory affairs and pharmaceutical development. They work globally in therapy area-led product teams that bring together all the relevant functional skills and experience needed for the robust, rapid progress of new medicines and the management of development risks.

Our focus in 2004 was to progress regulatory filings for Exanta, to support the continued launches of Crestor and Iressa, and to make regulatory submissions for new uses that broaden the claims or

geographic coverage of Nexium, Symbicort and Atacand. In 2004, the phase 3 programmes for Cerovive and Galida have continued to progress as planned. Progression of the early development portfolio has resulted in six projects achieving “positive proof of principle” in clinical studies during 2004.

To enhance productivity during 2004, we continued to focus on simplifying the processes for delivery of clinical trial data while maintaining the flexibility of a global organisation. A new clinical organisational structure was announced in October 2004 to support implementation of these new working practices. We have also continued to progress the operation of e-based clinical and regulatory systems that significantly increase the speed of access to data worldwide and reduce regulatory file preparation and submission timelines. In January 2005, following a year where there have been a number of disappointments, a new Executive Director was appointed with responsibility for Development as part of an accelerated significant programme of change to review our pipeline and optimise the contribution of our Development and Regulatory functions.

Collaborations
To complement our in-house R&D capabilities, over 250 new collaborations have been entered into in 2004 with leading academic centres and biotechnology companies, bringing the total number of active R&D collaborations and agreements to more than 1,700.

We entered into a strategic alliance with Cambridge Antibody Technology (CAT) with the aim of discovering and developing human antibody therapeutics in inflammatory disorders. The five year collaboration includes a minimum of 25 programmes to be initiated in the discovery phase and following the completion of the phase, CAT and AstraZeneca may each elect to continue funding programmes into development.

Other examples of external collaborations include those with Abgenix Inc., Sumitomo Pharmaceuticals Co. Ltd., NeoGenesis Pharmaceuticals, Inc., Cytokinetics, Inc., Biosignal Inc., Array Biopharma Inc., Astex Technology Ltd, BG Medicine (Beyond Genomics Inc.), Dyax Corp., Shanghai Jiaotong University, Procardis, Griffith University, the University of Dundee and Institut Curie.



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    AstraZeneca Annual Report and   Operational Review 31
Form 20-F Information 2004

 

Commercialisation and Portfolio Management

 

AstraZeneca continues to have one of the most competitive portfolios of marketed products in the pharmaceutical industry. Maintaining the quality of this portfolio and of our development pipeline of new products requires careful prioritisation both to manage the progression of promising compounds from development to market place and to maximise the value of high potential marketed products. We are committed to organic growth, but in common with other leading pharmaceutical companies, our licensing activities seek to bring in new products and/or technologies and to support growth products in a cost-effective manner.

Product Strategy & Licensing (PS&L), while working closely with R&D and our major marketing companies, leads the commercial aspects of drug development and co-ordinates global market strategy. This includes selecting the right products and projects for investment, developing effective marketing platforms in time for new product launches and directing the creation and delivery of product marketing strategies that successfully align global and national plans.

To ensure the success of our medicines, we aim to address unmet medical needs, find novel solutions, minimise technical risk and maximise commercial opportunity. We have clearly defined lifecycle management programmes for all our products, which maximise not just the commercial potential of the brands, but also the value they bring to patients’ lives. In addition, our customer base has broadened over the past year and our marketing programmes have widened accordingly to take account of every aspect of building global brands. This includes working with, among others, patient advocacy groups, caregivers, opinion leaders and pharmacists.

Target product profiles (TPPs) for each new product are clearly defined at a very early stage in Discovery in order to set parameters for R&D activity and to help shape the marketing strategy. The profile is based on our insight into the needs in the market place and the drivers behind recommending, prescribing, paying for and taking the medication. Among the factors considered in developing a TPP are product features and benefits, medical and health outcomes information, market positioning, demonstration of value and the competitive environment. At each major stage in

development, the product is tested against this target profile and is only prioritised for further investment if it meets or exceeds the target.

Where appropriate, we exploit internet strategy and marketing technologies to facilitate and enhance our commercial activities. Growing numbers of doctors and patients actively seek information from us via the internet and, where allowed, we are able to share knowledge, best practice and expertise via this channel.

Direct and timely communication via the internet facilitates some of the important goals for the organisation such as supporting our sales efforts; augmenting our brands; maintaining and building longer term relationships; and ensuring appropriate use of our products. Internet services continue to grow in diversity and value to our customer groups, requiring us to monitor and evaluate new techniques and technology to achieve our business objectives and ensure ongoing competitiveness. AstraZeneca is recognised as one of the industry leaders for online marketing and communication to customers.

We have undertaken a number of consumer initiatives to increase disease awareness and fully recognise the importance of patients and patient groups in making healthcare choices across the globe. Drug and disease physician and patient education modules developed across our therapy areas have been deployed internally and externally to great effect and we continue to seek to leverage these resources across a wider group of stakeholders, particularly where first-in-class products are reaching our markets and demand for such education is high.

Internet-enabled processes have brought efficiency and effectiveness gains across R&D and commercial activities, facilitating the rapid sharing and distribution of information within and outside the organisation. Additionally, a number of internet-enabled sourcing projects are enhancing our purchasing practices and delivering clear, measurable value.

As part of our commitment to exploring all the ways in which we can bring benefit to patients, we are expanding our thinking beyond medicines to include a focus on ways in which we can help them get access

to the information and services they need. This includes IT collaborations that will aim to deliver innovative channels for providing patients with information about their treatment and/or their disease. Through closer partnership with patients, we aim to build our understanding of their needs and how we can best respond.

Our products are marketed primarily to physicians (both general and specialist) as well as to other healthcare professionals. Marketing efforts are also directed towards explaining the value and the therapeutic benefits of our products to governments and healthcare buying groups, for example, managed care organisations in the US, trust hospitals and budget-holding medical groups in the UK and other organisations which pay for healthcare costs in various countries. In the US, we invest a significant amount of money in direct-to-consumer (DTC) advertising campaigns for certain of our products (notably Nexium and Crestor). These DTC efforts are part of a comprehensive and, we believe, valuable campaign to educate consumers about certain conditions and potential treatment options. Research among physicians supports our view that DTC advertising provides this educational value to consumers.

AstraZeneca’s principal competitors are other international, research-based pharmaceutical and biotechnology companies which also sell branded, patent-protected, prescription pharmaceuticals.

Following patent expiry, our products also compete with generic pharmaceuticals. Competition with generic pharmaceuticals is principally on price since generic pharmaceutical companies typically incur only limited R&D costs compared to those of research-based companies such as AstraZeneca.

Our ability to maintain and enhance our competitive position in our chosen therapy areas depends mainly on our development of new, innovative, cost-effective products from our R&D and in-licensing activities, the manufacture and supply of products to high quality standards and the effective marketing of products to our global customer groups.



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32 AstraZeneca Annual Report and Operational Review
Form 20-F Information 2004  

         
         
         
         
Supply and Manufacturing    
         
         

With 30 manufacturing sites in 20 countries and around 15,000 employees worldwide, our Operations organisation provides secure, high quality, cost-effective supply of AstraZeneca’s product range globally. We measure our performance using four key metrics: customer service, supply capability, cost efficiency and licence to operate.

Customer service
The fast and effective introduction of new products is key to success. Our supply chains are designed to maximise flexibility. For example, the global roll-out of Crestor continued, European Exanta launches were supported, and all major markets completed the launch of Zoladex Safesystem which is designed to protect against needlestick injuries when handling the injectable Zoladex therapy. With a few temporary exceptions, major products and line extensions were successfully supported with supplies available to meet market demand.

Supply capability
Our strategy remains to operate a small number of sites for the manufacture of active ingredients and combine it with effective use of outsourcing. AstraZeneca has active ingredient sites in the UK, Puerto Rico, Sweden and France and a bulk drug purification plant in Germany. Around 1,600 people are employed in active pharmaceutical ingredient supply.

Principal formulation sites for tablets and capsules are in six countries - the UK, Sweden, Puerto Rico, France, Germany and the US. There are also major formulation sites for the global supply of parenteral and inhalation products in Sweden, France and the UK. Packaging is undertaken at a large number of locations, both at AstraZeneca sites and at contractors’ facilities, located close to our marketing companies to ensure rapid and responsive product supply. Around 12,400 people are employed in formulation and packaging.

Process improvements, additional capacity investments and the effective use of external contractors ensure the secure and effective supply of our products. As part of our overall risk management, we carefully consider the timing of investment to ensure that secure supply chains are in place for our products.

Capital expenditure on supply and manufacturing facilities totalled $352 million

  in 2004. New plant authorised included formulation capacity for Symbicort in France, for Pulmicort in the US and for Nexium and Seloken/Toprol-XL in Sweden.

AstraZeneca’s global purchasing policies and processes together with our business interruption risk management (BIRM) process are aimed at ensuring the supply of raw materials and other key supplies, all of which are purchased from a range of suppliers. The BIRM process systematically examines a range of risk scenarios to global supply, such as disasters that remove supply capability or the unavailability of key raw materials and ensures that these risks are mitigated by the implementation of contingency plans, including the