EX-15.1 9 dp02288_ex15-1.htm

The following information has been given to The Stock Exchange, London and is furnished pursuant to General Instruction B to the General Instructions to Form 6-K:

AstraZeneca PLC Annual Report and Form 20-F Information 2005

  AstraZeneca Annual Report and Form 20-F Information 2005
  Annual Report and
  Form 20-F Information 2005

  2005 in Brief 1   Financial Statements 81   21.  Dividends to shareholders 106  
  Chairman’s Statement 2   Preparation of the Financial Statements     22.  Disposal of business operations 106  
  Chief Executive’s Review 3   and Directors’ Responsibilities 82   23.  Post-retirement benefits 107  
  Financial Highlights 5   Basis of Consolidation and Presentation     24.  Employee costs and share option    
  Business Review 6   of Financial Information 82          plans for employees 111  
  Business Environment 7   Independent Auditors’ Report to the     25.  Commitments and    
  Strategy 9   Members of AstraZeneca PLC (Group) 83          contingent liabilities 116  
  Delivering Strategy 10   Consolidated Income Statement 84   26.  Leases 126  
  Measuring Performance 12   Consolidated Statement     27.  Statutory and other information 127  
  Reporting Performance 13   of Recognised Income and Expense 84   28.  Share capital of parent company 128  
  Therapy Area Review     Consolidated Balance Sheet 85   Principal Subsidiaries 129  
          Cardiovascular Medicines 14   Consolidated Cash Flow Statement 86   Additional Information for US Investors 130  
          Gastrointestinal Medicines 18   Accounting Policies (Group) 87   Explanation of Transition to IFRS 137  
          Neuroscience Medicines 21   Notes to the Financial Statements (Group) 90   Independent Auditors’ Report to the    
          Oncology Medicines 24   1.   Operating profit 90   Members of AstraZeneca PLC (Company) 139  
          Respiratory and     2.   Profit on sale of interest in joint venture 90   Company Balance Sheet 140  
          Inflammation Medicines 27   3.   Finance income and expense 90   Accounting Policies (Company) 141  
          Infection Medicines 30   4.   Taxation 91   Notes to the Financial    
  Geographic Review 31   5.   Earnings per $0.25 Ordinary Share 93   Statements (Company) 142  
  Research and Development 34   6.   Segment information 94   1.   Fixed asset investments 142  
  Development Pipeline 36   7.   Property, plant and equipment 96   2.   Other debtors 142  
  Commercialisation and     8.   Intangible assets 97   3.   Non-trade creditors 142  
  Portfolio Management 38   9.   Other investments 98   4.   Loans 142  
  Supply 39   10.  Inventories 98   5.   Reserves 143  
  Managing Risk 40   11.  Trade and other receivables 98   6.   Reconciliation of movement    
  Corporate Responsibility 41   12.  Cash and cash equivalents 99         in shareholders’ funds 143  
  Main Facilities 43   13.  Interest bearing loans and borrowings 99   7.   Share capital 144  
  Other Businesses 43   14.  Financial risk management     8.   Statutory and other information 144  
  Industry Regulation 43          objectives and policies 99   Group Financial Record – IFRS 145  
  Financial Review 45   15.  Financial instruments 100   Group Financial Record – US GAAP 146  
  Board of Directors 60   16.  Trade and other payables 103   Shareholder Information 147  
  Directors’ Report 62   17.  Provisions for liabilities and charges 103   Risk Factors 154  
  Audit Committee’s Report 68   18.  Statement of changes in equity 104   AstraZeneca Code of Conduct 157  
  Directors’ Remuneration Report 70   19.  Reserves 105   Additional Information 159  
        20.  Minority interests 106   Cross-reference to Form 20-F 160  
  Trade marks   Statements of growth rates  

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: the risk of failure to observe ongoing regulatory oversight; the risk that new products do not perform as we expect; and the risk of environmental liabilities.


©AstraZeneca PLC 2 February 2006

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.   Except as otherwise stated, growth rates in this Annual Report and Form 20-F Information 2005 are given at constant exchange rates (CER).  
    AstraZeneca websites  
Use of terms
In this Annual Report and Form 20-F Information 2005, unless the context otherwise requires, ‘AstraZeneca’, ‘the Group’, ‘the Company’, ‘we’, ‘us’ and ‘our’ refer to AstraZeneca PLC and its consolidated entities.
  Information on our websites, including astrazeneca.com, astrazenecaclinicaltrials.com and rosuvastatininformation.com, does not form part of this document.  
    Cautionary statement regarding forward-looking statements  
Statements of competitive position   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 2005 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  
Except as otherwise stated, market information in this Annual Report and Form 20-F Information 2005 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 2005, 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.    

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  2005 IN BRIEF










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  2 AstraZeneca Annual Report and
Form 20-F Information 2005



AstraZeneca delivered an outstanding financial performance in 2005 with good growth in sales of recently introduced products and good market performance in all continents. Productivity improvements made an important contribution. We have made progress in meeting the challenge of rebuilding our late stage development pipeline. High levels of investment in research were maintained throughout 2005 with new facilities and projects in Sweden, the UK, the US, China and India.

AstraZeneca’s share price performance was strong during 2005 with a 50% increase in absolute terms compared to a rise in the FTSE 100 index of 16.7%. The graph above plots our five year Total Shareholder Return (TSR) against the FTSE 100 index (re-based to 100 at the start of the rolling five year period). We include in our Directors’ Remuneration Report information on the Company’s TSR compared to the TSR of a selected peer group of 12 other pharmaceutical companies.

The Board re-affirmed its policy to increase dividends in line with earnings while maintaining dividend cover in the 2-3 times range. Following a strong earnings performance in 2005, the Board has recommended a second interim dividend of $0.92, £0.518, SEK7.02 per Ordinary Share bringing the total dividend for the year to $1.30, £0.737, SEK10.01 per Ordinary Share, an increase in dollar terms of 38%.

Share buy-back programmes approved by shareholders at our AGM, under which we return cash to shareholders in excess of our anticipated requirements for future investment, amounted to $3,001 million in 2005.

The Board conducted a regular strategy review during the year which confirmed the long term attractiveness of the pharmaceutical industry, with demand for improved healthcare continuing to be driven by an ageing population, undiagnosed and unmet medical needs, technological advances and increased affluence in many emerging markets.

The Board also concluded that the environment in which we operate remains difficult with challenges to the prices of medicines, increasingly high regulatory hurdles for products and greater demands on the accountability of the industry, all combining to impact the introduction and use of medicines. We remain focused on meeting the challenges and maximising the opportunities to deliver sustainable profit growth.

Changes to the composition of the Board were made in 2005. I became Chairman in January and John Patterson joined the Board at the same time as Executive Director responsible for Development.

In March, David Brennan was appointed an Executive Director and in July the Board appointed him as Chief Executive Officer with effect from 1 January 2006 on the retirement of Sir Tom McKillop.

David Brennan has more than 30 years’ experience in the pharmaceutical industry with a strong record of management achievement in the leadership of our North American business. The Board is confident that he will lead the Company and our strong Senior Executive Team with distinction.

On behalf of the Board, I wish to thank Sir Tom McKillop for his outstanding achievement and dedication as AstraZeneca’s first Chief Executive and throughout his whole career at the Company. Through his inspirational leadership, commitment and drive, AstraZeneca has become one of the world’s leading pharmaceutical companies making an important contribution to better healthcare for patients worldwide.

Our Deputy Chairman, Håkan Mogren was appointed a Knight Commander of the British Empire during the year for services to the pharmaceutical industry and to UK-Sweden trade relations. I congratulate him most warmly for this honour.

In addition to our comprehensive review of the Company’s strategy, the Board at its regular meetings conducted financial and functional reviews of the business, with particular attention being paid this year to corporate governance and compliance, safety, health, environment and risk assessment, as well as a review of all group policies and an examination of the performance of the Board itself.

Following an undertaking given to shareholders in 2000 to review the Company’s Executive Remuneration policies after five years, proposals to establish the AstraZeneca Performance Share Plan were tabled and

Total Shareholder Return: AstraZeneca compared with FTSE 100 over five years*

* Source: Thomson Financial Datastream 

approved at the 2005 Annual General Meeting. The Plan introduces longer term incentive opportunities for Senior Executives of the Company accompanied by demanding measures of performance and is designed to support the Company’s objective of delivering superior value to shareholders.

In 2006, we will continue to focus on the top line sales growth of our key products; on delivering the pipeline; on reinforcing it with innovative products both from our own science and from outside the Company when appropriate; and on maintaining the momentum of our productivity improvements. I am confident that we will continue to deliver benefits for patients, rewards for shareholders and value for wider society.



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In 2005 the Company delivered excellent results, substantially ahead of market expectations at the beginning of the year as strong sales growth was enhanced by productivity gains to yield very strong earnings growth. This was especially gratifying given the challenges and uncertainty we faced following some disappointments in 2004. AstraZeneca was put to the test in 2005 and these results show how well we responded. Such an experience will prove of great value in preparing the Company to face new challenges in the future.

AstraZeneca’s strength derives from its outstanding portfolio of products, its global reach and, above all, the creativity and commitment of its employees.

Our marketed product range continues to develop in both strength and depth. AstraZeneca now has ten products each with global sales of over $1 billion. Several of these, products such as Nexium, Seroquel, Crestor, Arimidex and Symbicort, are still enjoying very strong sales evolution and will continue to be the engines for growth in the medium term.

Nexium achieved sales of $4.6 billion in 2005 benefiting from good clinical differentiation and strong branding. In this large and highly competitive market, it was no surprise when we were notified that a manufacturer of generic drugs, Ranbaxy Laboratories Limited, had submitted an Abbreviated New Drug Application (ANDA) for esomeprazole magnesium (the active ingredient in Nexium) in the US. We have full confidence in our intellectual property, which we will continue to defend vigorously and we have filed a lawsuit in the US District Court of New Jersey against Ranbaxy Laboratories for wilful patent infringement.

Seroquel, with $2.8 billion sales in 2005, further strengthened its position as the most prescribed atypical anti-psychotic therapy in the US and continued to grow strongly in other markets. A second phase 3 clinical trial has confirmed earlier results and enabled a supplemental

submission to the US Food and Drug Administration (FDA) in December seeking approval for the treatment of bipolar depression. Approval for use in this significant area of unmet medical need would provide a new opportunity for further sales growth. Late in the year Seroquel was also the subject of a patent challenge in the US, from Teva Pharmaceuticals USA. Once again we will vigorously defend and enforce our intellectual property rights and have filed suit in the US for wilful infringement of the substance patent protecting Seroquel.

Sales in Oncology grew by 12% to $3.8 billion led by sales of Arimidex ($1.2 billion), which became the new gold standard for adjuvant treatment of breast cancer in post-menopausal women. A recent analysis reported at the San Antonio Breast Cancer Symposium in December found Arimidex to be the first aromatase inhibitor to provide a disease-free survival benefit compared with tamoxifen, in the treatment of hormone-sensitive early breast cancer.

Crestor, a highly effective treatment for lowering lipids, achieved sales of $1.3 billion in 2005, an increase of 38%, despite the residual effects of the earlier unfounded allegations in the US about the product’s safety. Patient wellbeing is always our highest priority and we have continued to work with the clinical community and regulators throughout the world to monitor any potential risks associated with the product’s use. In March 2005, after a thorough review, the FDA confirmed that the cholesterol-lowering benefits of Crestor are achieved with a safety profile in line with that of the other marketed members of the statin class. Market share growth has now resumed and in 2006 we look forward to the publication of some important new studies that we hope will help further establish Crestor’s rightful position in cardiovascular medicine.

Symbicort, an inhaled therapy for asthma and chronic obstructive pulmonary disease, continues to win market share reaching sales of $1.0 billion in 2005 based on its efficacy and flexibility in use. The product passed a significant milestone in September when we submitted a New Drug Application (NDA) in the US, the world’s largest market. Approval would provide an excellent opportunity for further sales growth.

Continued success with these five products should provide the platform for future growth, so it is good to be able to report such excellent progress. The longer term future of a research-based company like AstraZeneca, however, has to be built on the quality of its pipeline of development products.

The results of the SAINT I trial with NXY-059, a drug being studied for its ability to limit the disability associated with ischaemic stroke, were complex but encouraging. Stroke is a significant area of unmet medical need and these results were very heartening, as many drugs have failed to show clinical benefit in previous trials. Following discussions with regulators we have approximately doubled the size and made some other changes to the second pivotal study (SAINT II) to ensure the best chance of confirming the efficacy of NXY-059, but this will delay completion until 2007.

Galida, our new diabetes therapy, is approaching the end of a large phase 3 clinical programme. As the results from these studies become available during 2006, we will be better able to judge its potential.

In the second half of 2005, two new, targeted cancer therapies (Zactima and AZD2171) moved into late stage development after achieving good results in early clinical studies. In addition, encouraging results from a substantial phase 2 development programme with AZD6140, an anti-platelet agent for cardiovascular disease, led to this compound also moving into late stage development. We believe that AZD6140 has the potential to offer significant benefits over current therapy in this area.

As well as making good progress with the late stage development projects, we have also enjoyed one of our best years in terms of numbers of new projects entering development. This progress with our own projects is being complemented by a very active programme of in-licensing and research collaborations initiated earlier in 2005. This included important agreements entered into at the end of 2005 with Targacept Inc., AtheroGenics, Inc., and Protherics PLC and for the acquisition of KuDOS Pharmaceuticals Limited. These transactions represent the fruits of a long period of relationship-building with partners.

New products are our life-blood but growth can also be achieved through expanding our market presence geographically. The pharmaceutical market place is evolving in response to the changing shape of the world economy. The developing economies of the world are driving growth in healthcare provision as GDP rises, creating exciting new opportunities for the pharmaceutical industry. AstraZeneca is committed to meeting the needs of the populations in these emerging markets, and we made significant progress during 2005. For instance, we have become the number one, multi-national, prescription drug company in China and we have grown our business there by over 200% over the

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  4 AstraZeneca Annual Report and
Form 20-F Information 2005


past five years. Strong growth is also being achieved in other Asian countries, in Latin America and in Eastern Europe.

In my introduction I mentioned AstraZeneca’s three great sources of strength – our products, our global reach and our people. Every part of the business is being affected by changes that are more profound and are occurring faster than anything I have experienced previously in my career. The companies that win in this environment will be those who anticipate and deliver what will be needed for success and have the courage and ability to move ahead of their competitors. Throughout AstraZeneca we are blessed with outstanding people whose creativity, hard work, determination and teamwork have overcome significant obstacles and shaped the company we have today.

It has been a huge privilege to lead these colleagues and, as I retire from AstraZeneca, I offer all of them my sincere thanks for their magnificent contribution. I also offer my best wishes to the Board, my successor, David Brennan, and his executive team who, I am sure, will guide the Company to even greater success.

Chief Executive*
*   Retired from the Board on 31 December 2005


The strength of our current product range, which now has ten medicines each with annual sales of over $1 billion, is not only an indication of the importance of our products to patients worldwide but is a fitting tribute to the performance of AstraZeneca employees under the passionate leadership of my predecessor, Sir Tom McKillop.

It is now my privilege to lead AstraZeneca and to build upon this record for the future. We are clear where our future lies. AstraZeneca’s chosen path is to discover, develop and effectively commercialise differentiated prescription medicines that make a real contribution to human health and that create sustainable value for our stakeholders and society at large.

We recognise that if we are to succeed in our mission of providing medicines that improve the quality and length of life of people around the world, we must access the innovation potential not only of our own employees but also that from outside the Company. We routinely seek to strengthen our early stage discovery through alliances with external partners. Throughout 2005, strengthening the pipeline has been our number one priority, and more recent licence and business development activities reflect a greater focus on strengthening our later stage pipeline. I am determined that we should continue to utilise our strong financial position to further strengthen our portfolio of medicines with projects that are not only exciting clinical treatments but are commercially viable and offer the opportunity to create sustainable value for our shareholders.

Chief Executive Officer*
*   Appointed as Chief Executive Officer with effect from1 January 2006

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Dividend for 2005

  $   Pence   SEK   Payment date  

First interim dividend 0.38   21.9   2.99   19 September 2005  

Second interim dividend 0.92   51.8   7.02   20 March 2006  

Total 1.30   73.7   10.01      


1 Growth rates represent underlying performance, which shows growth at constant exchange rates by excluding the effects of exchange rate movements.

Definitions of performance measures are set out in the Financial Review.

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  6 AstraZeneca Annual Report
and Form 20-F Information 2005












In this section, we have applied the best practice principles of the recent Operating and Financial Review regulations and discuss the main trends and factors underlying the development, performance and position of AstraZeneca during 2005.

To that end, we provide in this Business Review an overview of AstraZeneca’s business environment and information about our research, development, manufacturing and sales and marketing activities worldwide, including our 2005 performance in these areas.

We describe the external environment in which we operate, including the opportunities and challenges, the market for prescription pharmaceuticals, the competitive and regulatory environment, and the principal risks and uncertainties.

We describe our strategy for managing the opportunities and challenges of our business environment, the resources that we bring to bear and how they are aligned to create value through achievement of our strategic objectives. We also highlight the importance of leadership, effective decision-making and risk management.

Finally, we explain how our progress towards achievement of our objectives is measured.

In the therapy area and geographic reviews and in the Financial Review, we report on our financial performance during 2005 at a global level, in different geographic areas and at a product level. We also report in detail on the progress of our pipeline and developments in relation to our marketed products (such as new indications, regulatory filings and clinical trial data).

Business environment 7
Growing demand for healthcare 7
World markets 7
Therapy areas 7
Growing challenges for industry 8
   > Pressure on costs 8
   > Demonstrating economic benefit 8
   > Productivity 8
   > Drug safety 8
   > Competition 8
   > Reputation 8
Industry regulation 8
Strategy 9
Delivering strategy 10
Products 10
Pipeline 10
Productive use of resources 11
People 11
Reputation 11
Measuring performance 12
Reporting performance 13
Therapy area review 14
Cardiovascular medicines 14
Gastrointestinal medicines 18
Neuroscience medicines 21
Oncology medicines 24
Respiratory and Inflammation
Infection medicines 30
Geographic review 31
Research and development 34
Development pipeline 36
Commercialisation and
portfolio management
Supply 39
Managing risk 40
Corporate responsibility 41
Main facilities 43
Other businesses 43
Aptium Oncology 43
Astra Tech 43
Industry regulation 43
Financial Review 45

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Business Review 7  


As a global research-based pharmaceutical company, we operate in an ever-changing environment that presents both opportunities and challenges for our business.

There remains a strong fundamental demand for healthcare that underpins 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.

The growing demand for healthcare will be met not only by existing therapies but also by new ones originating from 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.

In addition, fast developing economies such as China are expanding the number of patients who can benefit from medicines. This represents a significant opportunity for the industry.

The world pharmaceutical market in 2005, in terms of the 47 countries whose sales are audited by IMS Health, was valued at $536 billion. This represents an increase in constant US dollar terms of 7% over the previous year and a slowdown in growth over the 2004 levels of 8%. The US is by far the largest market in the world, accounting for $249 billion of sales (47% of the worldwide total). US growth slowed to 6% in 2005, continuing a trend from 2004 when it fell to 8%, largely due to the number of products that have lost patent protection and pressures in the pricing environment. Japan is the second largest country for pharmaceutical sales at $61 billion (11% of worldwide sales) and its growth, in contrast to the US, has risen from 1% in 2004 to 5% in 2005.

Europe accounts for 29% of the world market and maintained a steady growth of 6% in 2005. Growth in individual countries within Europe ranged from 0.2% in the UK to 16% in Greece, with large countries such as Germany, France and Spain showing growth of 7%, 7% and 6%, respectively.

Asia Pacific and Latin America account for 7% and 4%, respectively, of worldwide sales. Notable growth from countries in these regions has come in 2005 from China (sales of $9 billion, growth of 24%), Mexico (sales of $7 billion, growth of 11%), Korea (sales of $7 billion, growth of 16%) and Brazil (sales of $6 billion, growth of 32%), which ranked 9th, 10th, 11th and 12th respectively in world markets.

According to the World Health Organization (WHO), the greatest burden of disease is in non-communicable disease. Conditions such as malignant tumours, ischaemic heart disease, cerebrovascular disease, chronic obstructive pulmonary disease (COPD), schizophrenia, bipolar disorder and asthma are significant contributors. However, communicable diseases are also increasing due primarily to HIV/AIDS and tuberculosis.

AstraZeneca’s skills, experience and resources are focused on the following therapy areas, which together represent the majority of the worldwide burden of disease:

The world market value for cancer therapies is $26 billion and growing strongly. More than 11 million people are diagnosed with cancer every year worldwide; by 2020 this is forecast to reach 16 million. Seven million people die from cancer every year – representing 12.5% of deaths worldwide. Breast cancer is the most prevalent cancer in the world and lung cancer is the most common cause of cancer death.

Cardiovascular (CV)
The single largest therapy area in the global healthcare market with a world market value of $128 billion. 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 $28 billion.

Gastrointestinal (GI)
The world GI market is valued at $30 billion, of which the proton pump inhibitor market represents $23 billion. In the western world, 10-20% of adults have been diagnosed with gastro-oesophageal reflux disease (GERD). The prevalence rate of GERD in Asia is lower but increasing. Irritable bowel syndrome

is a common GI disease that is inadequately treated and inflammatory bowel disease is an area of significant unmet medical need.

The world market value is $57 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.

The world market value in this therapy area is $103 billion. It comprises psychiatry (market value $45 billion), neurology (market value $28 billion), analgesia (market value $26 billion) and anaesthesia (market value $4 billion). Approximately 1% of the population develops schizophrenia during their lifetime – more than 2 million people in the US suffer from the illness in a given year. 17 million people suffer from bipolar disorder in the major markets. Depression and anxiety disorders remain under diagnosed and under treated. Several classes of antidepressants and anxiolytics are available, but there remains a considerable unmet medical need with depression being the most common psychiatric disorder, affecting up to 30% of the population at some time in their life. Migraine is one of the leading causes of disability in the world. Stroke is the second leading cause of death worldwide and the leading cause of adult, long term disability in industrialised countries. Alzheimer’s disease, the most common cause of dementia, affects more than 4.5 million people in the US. Over 46% of adults in the western world suffer from chronic pain. Pain management is the most common reason for seeking medical care. Each year, more than 26 million people in the US undergo medical treatment requiring anaesthesia.

Respiratory & Inflammation
The respiratory world market value is $41 billion. The WHO estimates that 100 million people worldwide suffer from asthma and more than twice that from COPD, which is estimated to be the fourth greatest cause of death globally. The inflammatory market is estimated to be $12 billion with over 40% being for the treatment of rheumatoid arthritis. The value of the inflammatory market is dominated by biological therapies, increased usage of which has more than compensated for the recent withdrawal of Cox-2 inhibitor products.

Information about the medicines we have or are developing for treating these diseases and our 2005 product performance is set out on pages 14 to 30.

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  8 AstraZeneca Annual Report and
Form 20-F Information 2005


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

Pressure on costs
Expenditure on healthcare typically represents between 6% and 15% of a country’s gross domestic product (GDP), with developed nations towards the top end of that range 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 countries.

Nevertheless, healthcare systems, whether based on public or private funding, have a finite ability to pay for treatments. Cost containment remains an ever-present constraint on industry growth. During 2005, further pricing pressures have been placed on the industry through legislation not only in major established markets, but also in China and India. This is felt most acutely within large primary care categories.

Doctors remain the principal decision makers regarding which of the available treatments should be prescribed for their patients, but as the economic burden of funding therapies increases, payers, including governments, health insurers, managed care organisations, employers and patients are increasing their efforts to influence the choices doctors make.

Demonstrating economic benefit
Research-based pharmaceutical companies increasingly have to demonstrate the economic as well as the therapeutic value of their medicines to those who pay for healthcare. This requires investment, throughout the development of a medicine, in studies to demonstrate cost-effectiveness, cost-benefit and outcomes (such as survival and quality of life improvements) in addition to traditional trials designed to establish safety and efficacy.

Successful companies will be those who enhance their productivity in the discovery and development of new and differentiated medicines designed to meet the growing demand. As the industry is working to improve research productivity through application of new technologies, our regulators are also setting increasingly high hurdles for the approval of medicines.

Drug safety
Decisions on acceptable benefit/risk profiles for medicines have the potential to be positively or negatively affected by a number of factors. These include pre- and post-marketing clinical data and regulatory judgements reflecting society’s concerns and aspirations. For more information, see page 41.

AstraZeneca’s principal competitors are other international, research-based pharmaceutical and biotechnology companies that also sell branded, patent-protected, prescription medicines. In common with these other companies, following patent expiry, our products also compete with generic pharmaceuticals – mainly on price, since generic manufacturers do not bear the high costs of research that companies such as AstraZeneca do. The industry’s intellectual property base is increasingly being challenged by generic manufacturers looking to make an early entry into large markets, which puts pressure on product lifecycles.

The reputation of the pharmaceutical industry has been in decline. Contributory factors include heightened public concern about issues such as drug safety (exacerbated by some high profile drug withdrawals in recent years), transparency of information, sales and marketing practices and the cost of medicines.

The pharmaceutical industry is one of the most strictly regulated of all industries. Prescription pharmaceutical products are subject to significant and still increasing legislation and regulation concerning the requirements for establishing safety, efficacy and quality. The degree and scope of these regulations vary according to national and regional demands concerning the development and commercialisation of drug products. The processes for regulatory approval for products are complex, time-consuming and involve significant expenditure. In addition to safety and efficacy, regulation covers every aspect of the product including the chemical composition, manufacturing, quality controls, handling, packaging, labelling, distribution, promotion and marketing. Even after launch of new medicines, regulatory agencies require numerous conditions to be met in the safety surveillance, risk management, clinical, manufacturing and marketing areas. For more information, see pages 43 and 44.

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Business Review 9  


The people of AstraZeneca are dedicated to the discovery, development, manufacturing and marketing of high quality, effective prescription medicines that bring benefit for patients and add value for shareholders and wider society.

We are committed to managing effectively the challenges of our business environment and to maximising the opportunities to deliver sustainable, profitable growth that will place AstraZeneca among the best in the industry.

Our efforts are focused on five main strategic priorities that we have identified as critical drivers for continued success, backed by clear business objectives in each:

Maximise sales growth by:

> Releasing the full potential of our marketed brands throughout their lifecycle.
> Growing our position in existing markets.
> Expanding our presence in key emerging markets.
> Vigorously defending our legitimate intellectual property rights.

Deliver a portfolio of differentiated medicines that meet patient needs by:

> Successfully delivering the next wave of products in development.
> Further improving the productivity and efficiency of our drug discovery and development.
> Strengthening the pipeline through appropriate external targeted acquisition, licensing and partnership opportunities.
> Rigorous management of our portfolio of products in development, to mitigate risks associated with new innovative products.

Effective leadership: Make optimal use of our resources by effectively managing all opportunities and associated risks to our business, whilst monitoring our performance and learning from our experience.

Best practice: Deliver operational excellence in all aspects of our business by:

> Continuing to strengthen our commercial skills in sales force effectiveness, marketing excellence and understanding customer needs.
> Increasing cost-effectiveness and operational efficiency of the supply chain.
> Harmonising and standardising core processes and services.

New practice: Develop new business approaches that meet the needs of customers and stakeholders by:

> Exploring new ways of working within our existing business model.
> Assessing new models for using our resources and skills to create value for customers and profitable business for AstraZeneca.
> Making strategic investments in promising new areas of healthcare.

Within our performance-driven culture, we aim to encourage and support all our people in delivering their best by:

> Providing an environment in which people feel positive and enthusiastic, with a clear understanding of our goals and their role in achieving them.
> Effectively managing and developing all our talent.
> Improving leadership capability to enhance effective decision-making.
> Creating a culture in which people are held accountable not only for what they accomplish, but how they get there.

We aim to maintain the trust and confidence of patients, customers, employees, shareholders, regulators and wider society by:

> Understanding their needs.
> Ensuring that we deliver on our business promises.
> Living up to our core values and publicly stated standards of ethical behaviour, wherever we have a presence or an impact.

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  10 AstraZeneca Annual Report and
Form 20-F Information 2005


This illustration maps our approach to creating value through achievement of our strategic objectives. A high level overview of each aspect of our approach is provided below.

More detail about each of these areas, together with our performance in 2005, is included in the following pages of this Report.

We have a highly competitive portfolio of marketed medicines, designed to meet patient needs in important areas of healthcare. Alongside our successful mature brands such as Seloken/Toprol-XL, Zoladex, Diprivan and Merrem we have a range of important medicines, launched over the last six years, which provide the platform for continued growth in the short to medium term. These growth products include Arimidex, Crestor, Nexium, Seroquel and Symbicort. We have clearly defined lifecycle management programmes for each of our marketed products designed to maximise not just the commercial potential of the brands, but also the benefit they bring to patients’ lives.

Sales and marketing
Active in over 100 countries, we have an extensive worldwide sales and marketing network. In the majority of key markets, we sell through wholly-owned local marketing companies. Elsewhere, we sell through distributors or local representative offices. Global brand strategy is built and led by our Global Marketing and Business Development (GMBD) function working in partnership with our largest marketing companies. This shared approach creates a consistent platform on which all our local marketing companies can build according to individual market needs.

Our products are marketed primarily to physicians (both primary care and specialist) as well as to other healthcare professionals. Marketing efforts are also directed towards explaining the economic as well as the therapeutic benefits of our products to governments and healthcare buying groups.

Personal contact is still the single most effective marketing method, but increasingly the efforts of our sales forces are being complemented by our use of the internet to facilitate and enhance our commercial activities. We also use direct-to-consumer television advertising campaigns in the US.

As well as building on our leading positions in key markets such as the US, Japan and Europe, we continue to increase our strength through strategic investment in the smaller but fast-growing markets of the future, of which China offers the most outstanding opportunity.


Supply and manufacturing
We have some 14,000 people at 27 manufacturing sites in 19 countries, dedicated to delivering a secure, high quality, cost-effective supply of our product range worldwide. Of these 14,000 people, around 1,500 are employed in active pharmaceutical ingredient supply and 11,800 in formulation and packaging. We operate a small number of sites for the manufacture of active ingredients, complemented by efficient use of outsourcing. AstraZeneca has active ingredient sites in the UK, Sweden and France and a bulk drug purification plant in Germany. Principal formulation sites for tablets and capsules are located in 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.

Our scientists share a common goal: to get life-changing new medicines to patients as quickly, safely and efficiently as possible.

Our global research and development organisation is therapy area-led with scientific, medical, technical and ethical input and control provided by large multi-skilled Discovery and Development functions. This offers a number of advantages including sharing of best practice and efficient use of resources across a multi-site, global organisation. During 2005, we reviewed and restructured the organisation to improve our focus on project delivery, decision-making and risk management and to ensure we fully exploit promising new projects and technology platforms across and outside the main therapy areas. In total we employ over 11,900 people at 11 research and development centres in seven countries –


comprising six joint discovery and development facilities in the UK, the US and Sweden; a further four sites in the US, Canada, India and France that focus only on discovery; and a facility in Japan for drug development only. In addition, we are planning to build upon our capability in China. These resources are complemented by clinical development capability at 40 sites around the world.

Development portfolio
A core priority is ensuring that our growing range of candidate drugs (compounds with the potential to become new medicines) are developed effectively to meet the future needs of patients. We have a wide range of compounds in early development, and a total of 17 projects in phase 1, 15 projects in phase 2 and 29 projects in phase 3 development. Whilst the majority of projects are small-molecules, an increasing proportion of our early development compounds are large biological molecules (see pages 36 and 37 for more information).

Partnerships and collaborations
In today’s world of rapid scientific and technological advance, no company can rely exclusively on its own discovery and development.

We work with leading academic centres to broaden the base for disease research and in 2005, entered into more than 200 new collaborations. We have over 1,700 active R&D collaborations and agreements that complement our in-house R&D capabilities.

In 2005, in line with our strategy of strengthening our in-house pipeline through targeted acquisitions, in-licensing and partnerships, we also announced four major deals designed to strengthen our development pipeline. For more details of these activities, see pages 34 and 35.

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Business Review 11  


Effective leadership is key to ensuring that we have the right resources, appropriately aligned to drive delivery of our strategic objectives.

The AstraZeneca Board
Our Board comprises Executive Directors, with direct responsibility for business operations, and Non-Executive Directors, who have responsibility to bring independent, objective judgement to bear on Board decisions. The Board sets Company strategy and policies and monitors progress towards meeting objectives. It conducts an in-depth strategy review annually. It also assesses whether obligations to shareholders and others are understood and met, which includes regular reviews of financial performance and critical business issues. See pages 60 and 61 for more information on the Board.

The Senior Executive Team (SET)
The SET is a cross-functional, cross-territorial group, established and led by the Chief Executive Officer. It focuses on the day-to-day running of business operations and on Company development. It regularly reviews and makes decisions on all major business issues. The SET comprises the three Executive Board Directors and six Executive Vice-Presidents, each of whom has a specific area of responsibility in line with our business structure.

Product portfolio management
Maintaining the quality of our product range and of our new product pipeline requires careful prioritisation both to manage the progression of promising compounds from development to marketplace and to maximise the value of high potential marketed products. Our Global Marketing and Business Development (GMBD) organisation (formerly known as Product Strategy & Licensing), working closely with our research and development community and our major marketing companies, leads the commercial aspects of drug development and co-ordinates global marketing strategy. This includes selecting the right products and projects for investment, developing effective marketing platforms for new product launches and directing the creation and delivery of product marketing strategies that successfully align global and national plans.

In line with our strategy, while we are committed to organic growth, we also vigorously pursue licensing and acquisition opportunities to gain access to new products and/or technologies and to support growth products in a cost-effective manner. For more information on GMBD, see page 38.

Risk management
Our ability to identify and effectively manage the risks to our business is key to our continued success. Our Risk Advisory Group (RAG), led by the Chief Financial Officer and consisting

of representatives from each business function, facilitates much of our work in this area. The RAG assists senior management in identifying and assessing our main business risks in a co-ordinated manner. It focuses in particular on cross-functional risks, linking risk management to business performance reporting and sharing best practice across the organisation to drive continuous improvement. The RAG reports twice a year to the SET and its reports on the Company’s risk profile are reviewed annually by the Board.
For more information, see pages 40 and 41.

Intellectual property
Patents enable information on inventions to be made widely available and are important incentives for the continued innovation that drives society’s progress. Patents do not create a monopoly for treating a disease – other manufacturers are able to develop a different medicine to treat the same condition. Also, patents are limited in time and after their expiry, competitors (both innovative and generic) can legitimately market the same product. Because patents require the disclosure and publication of information about the patented medicine, they can stimulate competition to innovate improved alternatives that expand the range of treatment options – which is important because patients respond differently to different therapies.

Patent protection and other types of marketing exclusivity for our medicines allow us time to generate the revenue we need to continue our research, development, manufacturing and marketing of new medicines. Our policy is to apply for patent and/or other appropriate intellectual property protection for all of the inventions and innovations that arise from our drug discovery, development, manufacturing, marketing and other business activities. This policy is designed to provide each of our products with an effective portfolio of valid, enforceable patent and other intellectual property rights in all significant markets to protect against unauthorised competition during commercialisation. This shield of intellectual property rights extends to those areas of target identification, genomics and other research technologies in which we invest significant resources. The adequacy of the patent, design, trade mark and domain name portfolio for individual products is kept under review during product development, clinical evaluation and marketing so that, wherever possible, additional protection may be sought for new applications and other developments. Our research operating model allows appropriate intellectual property strategies to be formulated and regularly updated from an early stage in product development.

We rigorously manage our patent portfolio through a team of intellectual property

professionals dedicated to the cost-effective management and enforcement of intellectual property rights for the optimal global protection of, and legitimate reward from, AstraZeneca’s innovations and commercial products.

We continue to be a highly cash generative business. Although future operating cash flows may be affected by a number of factors, as outlined in the business background section of the Financial Review on page 45, we believe our cash resources will be sufficient for our present requirements and include sufficient cash for our existing capital programme, share re-purchases and the costs of developing and launching new products.

Physical assets
We own and operate numerous production, marketing and research and development facilities worldwide. We continually review our physical assets such as laboratories, factories and equipment to ensure that they are appropriate to meeting the needs of our business.

Our most important resource is our people. With over 65,000 employees in 45 countries, we value the diversity of skills and abilities that a global workforce brings to our business. Within our performance driven culture, we aim to give our employees the support they need to develop their full potential and to provide a working environment in which they are energised and informed. Optimising individual and team performance, effectively managing and developing all our talent and improving our leadership capability are core priorities, alongside a commitment to ensuring the safety, health and wellbeing of all our employees worldwide.

Our reputation rests on delivering our promises in all aspects of our business. We focus on bringing new medicines to market that make a difference to patients. Only by doing so are we able to deliver the value for our shareholders, which, as a publicly owned company, we have a duty to do.

We also know that how we do business, as well as what we do, is important to our reputation among stakeholders and wider society. Maintaining their trust and confidence in AstraZeneca as a responsible company means ensuring that wherever we have a presence or an impact, we live up to our publicly stated standards of ethical behaviour. For more information about our approach to managing our corporate responsibility and about our performance, policies and principles, see pages 41 and 42 of this Report and also the separate Corporate Responsibility Summary Report 2005.

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  12 AstraZeneca Annual Report and
Form 20-F Information 2005




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

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

A range of financial and non-financial objectives are set each year, which focus on the following key areas:

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

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

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

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

> Sales value growth at constant exchange rates (CER), split between “growth”, “patent expiry” and “base” products (see opposite page).
> Sales growth and US prescription share trends for growth products (see opposite page).
> Market share percentages for growth products.
> New candidate drugs (CDs) (see page 35).
> Number of development projects by phase (see page 35).
> R&D investment in US dollar terms (see page 5).
> Progress against clinical trial milestones.
> Earnings per share (EPS) growth (see page 5).
> Cost growth rates (see page 5).
> Gross margin, costs and operating profit margin percentages (progression over time) (see opposite page).
> Dividends and share re-purchases (see page 5).
> Free cash (see page 5).
> Total shareholder return (TSR) (see page 77).

The performance measures referred to above are measures of our progress in what we do in the business of delivering successful medicines and, thus, shareholder value.

In terms of measuring the way we do business, we have a range of key performance indicators (KPIs), by which we measure our progress in important areas of corporate responsibility (CR). Auditing of compliance is fundamental to ensuring high standards of ethical behaviour, and compliance is integrated into many of the KPIs used to measure our CR progress. More details about these KPIs and our 2005 performance are provided in the separate Corporate Responsibility Summary Report 2005, or on our website.

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

AstraZeneca is listed in the 2006 Dow Jones Sustainability World Index, used by asset managers globally to guide their socially responsible investment. However, whilst we improved our score, we did not regain the place we lost in the previous year in the European Index (Dow Jones STOXX), where competition for places is increasingly fierce.

The AstraZeneca Code of Conduct (see page 157) sets out the high standards we expect from our employees, and with which compliance is mandatory. As part of our commitment under that Code to comply with all applicable laws and codes of practice, we apply all of the principles of good governance in the UK Combined Code of Corporate Governance. The way in which we do so is described in the Directors’ Report (see page 62). We also comply with all of the provisions of the UK Combined Code and our corporate governance practices are generally consistent with the New York Stock Exchange’s corporate governance listing standards (see page 63). Our ‘continuous assurance’ processes, as described on page 65 of the Directors’ Report, are designed to ensure we effectively monitor our compliance with these standards.

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Business Review 13  




The perfomance data shown in the therapy area reviews on pages 14, 18, 21, 24, 27 and 30 and the geographic sales performance in the geographic review on page 31 are shown in both reported and underlying performance. Reported performance takes into account all the factors (including those which we cannot influence, principally currency exchange rates) that have affected the results of our business. Underlying performance shows sales growth at constant exchange rates (CER) to reflect the volume and price changes of the geographic and therapy areas and individual products by excluding the effects of exchange rate movements. A description of the calculation of this measure is set out in the Financial Review on page 45, together with the reasons for its use.

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  14 AstraZeneca Annual Report and
Form 20-F Information 2005













Crestor* (rosuvastatin calcium) is a member of the class of products known as statins.

Atacand # (candesartan cilexetil) is an angiotensin II antagonist for the first line treatment of hypertension and symptomatic heart failure.
Seloken/Toprol-XL (metoprolol succinate) is a once daily tablet for 24 hour control of blood pressure and for use in heart failure and angina.
Exanta (ximelagatran) is a novel oral direct thrombin inhibitor targeted to prevent and treat the formation of blood clots (thrombosis).
Plendil (felodipine) is a calcium antagonist for the treatment of hypertension and angina.
Zestril† (lisinopril dihydrate), an ACE inhibitor, is used for the treatment of a wide range of CV diseases, including hypertension.
* Licensed from Shionogi & Co., Ltd.
# Licensed from Takeda Chemical Industries Ltd.
 Licensed from Merck & Co., Inc.
                                2005 compared to   2004 compared to  
    2005   2004   2003   2004   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   %   %   %   %  



  Seloken/Toprol-XL 1,735   333   15   1,387   78   29   1,280   24   25   6   8  



  Crestor 1,268   338   22   908   753   26   129   38   40   n/m   n/m  



  Atacand 974   68   27   879   75   54   750   8   11   10   17  



  Plendil 360   (103 ) 8   455   (104 ) 19   540   (23 ) (21 ) (20 ) (16 )



  Tenormin 352   (21 ) 5   368     26   342   (5 ) (4 )   8  



  Zestril 332   (118 ) 10   440   (71 ) 33   478   (27 ) (25 ) (15 ) (8 )



  Other 311   (38 ) 9   340   (78 ) 27   391   (12 ) (9 ) (20 ) (13 )



  Total 5,332   459   96   4,777   653   214   3,910   10   12   17   22  





Compound Mechanism Areas under investigation Phase   Estimated filing date  
NCEs     PC 1 2 3   Europe     US  

Galida PPAR agonist diabetes/metabolic           2H 2007 1   2H 2007 1

AGI-1067 anti-atherogenic atherosclerosis           1H 2007     1H 2007  

AZD6140 ADP receptor antagonist arterial thrombosis           >2008     >2008  

AZD7009 anti-arrhythmic IV atrial fibrillation – conversion           2008     2008  

AZD9684 CPU inhibitor thrombosis           >2008     >2008  

AZD0837 thrombin inhibitor thrombosis           >2008     >2008  

AZD2479 reverse cholesterol dyslipidaemia           >2008     >2008  
(Avanir) transport enhancer                      

AZD6610   dyslipidaemia/diabetes           >2008     >2008  

AZD8677   dyslipidaemia/diabetes           >2008     >2008  

AZD8450   dyslipidaemia           >2008     >2008  

AZD6370   diabetes           >2008     >2008  

AZD8593   haemostasis           >2008     >2008  

AZD1175   diabetes/obesity           >2008     >2008  

AZD2207   diabetes/obesity           >2008     >2008  

AZD1305   arrhythmias           >2008     >2008  

AZD1092   diabetes           >2008     >2008  

AZD4121   dyslipidaemia           >2008     >2008  

Line extensions                       

Atacand angiotensin II antagonist diabetic retinopathy           >2008     >2008  

Crestor statin atherosclerosis           1H 2007     1H 2007  

Crestor statin outcomes CHF           >2008     >2008  

Crestor statin outcomes renal           2008     2008  

Seloken/Toprol-XL beta blocker HCTZ combination           Launched     Filed  

Exanta thrombin inhibitor prevention of stroke in AF           Filed 2   Filed 3

Discontinued projects                      

AZD7009   atrial fibrillation – maintenance   We have discontinued these developments as a result of their failure to meet their product target profiles.

AZD7806   dyslipidaemia    

AZD4619   dyslipidaemia    

AZD8294   dyslipidaemia    


Abbreviations used in the pipeline table are explained on page 35.

1 Subject to the results of phase 3 studies and regulatory discussions. 
2 Switched to the EU centralised procedure.  
3 AstraZeneca continues discussions with the FDA but the current assessment is that it is unlikely that a way forward for Exanta registration in the US will be identified. 

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Business Review 15  



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.

Crestor has now been approved in 75 countries and launched in 69, including the US, Canada, Japan and the majority of EU countries.

High cholesterol is increasingly 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, such as Crestor, 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, allowing the majority of patients to reach their LDL-C goals with the 10mg usual starting dose. Additionally, Crestor produces an increase in high density lipoprotein or ‘good’ cholesterol (HDL-C), an effect that is maintained across the 5, 10, 20 and 40mg doses.

An extensive database has been built up of pre- and post-approval clinical trials experience involving more than 55,000 patients and post-marketing surveillance of 40 million prescriptions written and nearly six million patients treated with Crestor since its launch in 2003.

This clinical and post-marketing experience, as well as early data from the ongoing pharmacoepidemiology programme, support the favourable benefit/risk profile of Crestor and confirm that the safety profile is similar to other currently marketed statins. In March 2005, following a thorough analysis of clinical trial safety data and post-marketing data for Crestor, the FDA formally denied the petition brought by Public Citizen, a US consumer interest organisation, in 2004 to remove Crestor from the market, stating that “all of the available evidence ..... indicates that Crestor does not pose a risk of muscle toxicity greater than that of other approved statins ..... [and that w]ith respect to renal toxicity, there is no convincing evidence that Crestor poses a serious risk of renal injury”. The FDA and AstraZeneca are continuing to monitor the safety profile of Crestor.

Our extensive, long term global clinical research initiative (known as the GALAXY programme), which began in 2002, includes studies that investigate cardiovascular risk reduction and patient outcomes with Crestor. The programme is progressing well with over 49,000 patients now involved. Studies are ongoing in important medical areas, including effects on atherosclerosis and evaluating the impact on mortality in heart failure and end-stage renal disease, along with the JUPITER study, the first study of its kind designed to evaluate the effect of statin therapy with Crestor on cardiovascular morbidity and mortality among individuals with average or normal LDL-cholesterol levels (<130mg/dl) and elevated C-reactive protein (CRP) levels (>2.0mg/L). CRP is a protein whose levels increase when there is inflammation in the body. Elevated CRP levels may indicate a risk of future heart attack, even if cholesterol levels are not elevated.

In January 2005, we received formal approval in Japan for Crestor 2.5 – 20mg. Following approval, we initiated a hospital-based post-marketing surveillance programme, which was a condition of approval, prior to a full-scale launch. The programme is progressing well. For more information, see page 33.

Crestor 5mg was approved in the EU in August, fulfilling a commitment made by AstraZeneca at the time of the original EU approval. The introduction of the 5mg dose gives flexibility to physicians and ensures that patients get the optimal start dose. The revised label states that patients can be started on 5 or 10mg depending on their LDL-C levels, cardiovascular risk and potential risk for adverse reactions.

Atacand: The family of products to which Atacand belongs 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). Following a unanimous positive vote by the FDA Cardiovascular and Renal Drugs Advisory Committee on 24 February 2005, regulatory approval for the heart failure indication was obtained in the US. This approval was 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 clinical programme investigating the effect of Atacand on retinopathy in diabetic patients (DIRECT) continued during 2005.

Seloken/Toprol-XL is the world’s leading product by sales in the beta blocker (plain and combinations with diuretic) class. The New Drug Application (NDA) for a fixed dose combination product comprising Toprol-XL and hydrochlorothiazide (HCTZ) was submitted to the FDA in October.

Patent litigation has been progressing in the US against three companies that are challenging AstraZeneca’s patents and seeking FDA approval to sell generic metoprolol succinate. On 17 January 2006, summary judgement was entered against AstraZeneca based upon findings that the patents-in-suit are unenforceable (based on the Company’s inequitable conduct in the prosecution of these patents in the US Patent and Trademark Office) and invalid. We disagree with and are disappointed by these conclusions and will appeal. Further information about this litigation is set out on page 123.

In January 2006 we were served with a putative class action anti-trust complaint in the US by Meijer Inc. and Meijer Distribution, Inc. The complaint alleges that AstraZeneca engaged in an “unlawful scheme to maintain illegally [its] monopoly power in the United States for Toprol-XL”. The complaint makes sham litigation claims based on the above patent decision. For more details see page 123.

Exanta: As reported last year, 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 has been approved in 21 countries worldwide in the short term indication for the prevention of venous thromboembolism (VTE) in orthopaedic surgery and has been launched in 12 countries in Europe and Latin America for that indication. In September, we initiated the EXTEND trial to investigate the efficacy and safety of Exanta during extended protection from VTE after hip replacement and hip fracture surgery for up to 35 days after surgery. The EXTEND trial is a double-blind, randomised study of 3,300 elective hip replacement and hip fracture surgery patients comparing Exanta with the low molecular weight heparin (LMWH), enoxaparin.

In 2005, following the review by the French regulatory authority (AFSSAPS) of the Exanta regulatory submission made in December.

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  16 AstraZeneca Annual Reportand
Form 20-F Information 2005



2003, AstraZeneca received a request for more information before the drug can be considered for approval of long term use in Europe. AFSSAPS requested further clinical information regarding the efficacy and safety of Exanta in atrial fibrillation (AF) to allow a definitive benefit/risk assessment to be made. For VTE treatment, AFSSAPS did not believe the data presented in the single THRIVE Treatment study provided adequate support for this use of Exanta. Since then, following discussions with AFSSAPS and the European Medicines Evaluation Agency, the Committee for Medicinal Products for Human Use (CHMP) accepted in December 2005 a new EU submission of Exanta for stroke prevention in AF under the recently revised EU Centralised Procedure.

In 2004, the FDA did not approve Exanta for any of the indications sought (the prevention of stroke in patients with AF, prevention of VTE in patients undergoing knee-replacement surgery, or the long term secondary prevention of VTE following standard treatment of a clot). In 2005 AstraZeneca continued discussions with the FDA but the current assessment is that it is unlikely that a way forward for Exanta registration in the US will be identified.

Galida 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 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 conducted, since the balance between dose-dependent benefits and risks will form the basis for final recommendations for the product.

Phase 2 data presented in 2005 demonstrated that Galida was well tolerated and, in a dose-dependent way, improved glucose control and lipid abnormalities in patients with type 2 diabetes.

During the latter half of 2005, results from two large cardiovascular outcomes trials, PROactive with pioglitazone HCI (a PPAR gamma agonist) and FIELD with fenofibrate (a PPAR alpha agonist) have demonstrated a trend toward reductions of non-fatal cardiovascular events although in both trials, the primary endpoint was not met. In addition, the FDA has issued an approvable letter for the Bristol-Myers Squibb Company compound, muraglitazar, although the cardiovascular safety of this PPAR alpha gamma agonist has been

questioned in a recent publication in the Journal of the American Medical Association, with the authors calling for the benefit/risk profile of muraglitazar to be better established, possibly through a cardiovascular outcomes study prior to regulatory approval. The implications of these external events for the further development and clinical testing of Galida are still being assessed and discussed with the regulatory authorities.

This is therefore a high risk area. We believe that each of the PPAR alpha gamma agonists will have its own, individual glucose/lipid profile as well as benefit/risk profile. The phase 3 clinical programme for Galida has progressed to plan during 2005 and the first data for assessment of the benefit/risk profile of Galida will become available during the first half of 2006. The optimal timing for the submission of a regulatory dossier will be data driven. The estimated date for earliest filing is in the second half of 2007, subject to the results of the phase 3 studies and regulatory discussions.

In addition to Exanta, our further research in thrombosis includes AZD6140, an oral antiplatelet therapy, for which an‘end of phase 2’ meeting with the FDA was held in December 2005 and which entered phase 3 in January 2006. The initial indication would be for acute coronary syndrome.

During the year, the oral formulation for AZD7009, for the maintenance of sinus rhythm after conversion of AF, was discontinued due to non-cardiac adverse events. Proper dose-finding is actively ongoing with the parenteral formulation with the aim to restore normal heart rhythm in patients with AF.

Our CV pipeline is further strengthened by the licensing transaction with AtheroGenics Inc., which we announced in December. This in-licence is for the global development and commercialisation of their anti-inflammatory cardiovascular product candidate, AGI-1067. AGI-1067 is an investigational oral drug for the treatment of atherosclerosis, the underlying disease process that leads to heart attacks and strokes. It is currently in phase 3 in the ARISE trial. ARISE is a multi-national, double-blind, placebo-controlled study designed to assess the benefits of AGI-1067 on top of current standard therapies in patients with coronary heart disease (CHD). Involving more than 6,000 patients in over 250 cardiac centres including the US, Canada, the UK and South Africa, this study evaluates the impact of AGI-1067 on a composite measure of several outcome endpoints including death due to CHD, heart attack, stroke,

revascularisation and hospital admission for unstable angina. The ARISE study is due to report by the end of 2006.

Details of all compounds in the CV pipeline are contained in the table on page 14.

Reported performance
Reported CV sales rose by 12% from $4,777 million in 2004 to $5,332 million in the current year. Strong growth from Crestor and Seloken more than offset the declines in Plendil and Zestril.

Underlying performance
Excluding exchange effects, cardiovascular sales grew by 10%.

Sales of Toprol-XL in the US increased by 32% for the full year to $1,291 million, which was ahead of underlying growth of 23% as a result of the destocking which occurred in 2004. Sales of Seloken in other markets were up 4% for the full year.

Atacand sales in the US were down 8% for the full year to $232 million, in line with the decline in total prescriptions. Increased promotion following regulatory approval for the heart failure indication has stabilised Atacand prescription market share over the second half of 2005. In other markets, Atacand sales were up 14% for the full year to $742 million.

Crestor sales for the full year reached $1,268 million, up 38%. Crestor sales in the US increased by 34% to $730 million for the full year, but were up just 4% against a difficult comparison versus fourth quarter last year. Crestor share of new prescriptions in the US statin market was 6.9% in the week ending 20 January 2006. Market share in the dynamic segment (new and switch patients) was 8.8% in that same week. In other markets, sales for the full year were up 41%, on good growth in Europe (up 44%) and Canada (up 25%). Volume share of the statin market for Crestor in November 2005 was 13.4% in Canada; 11.2% in the Netherlands; 11.7% in Italy; and 6.0% in France.

Plendil sales for the full year were down 23% worldwide as a result of generic competition in the US market, where sales declined by 49% to $84 million. Zestril sales also fell, by 27% from $440 million to $332 million.

Tenormin sales fell by 5% for the year although increased in the largest market, Japan, by 3% to $130 million.

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Business Review 17  

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

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

Sales of Crestor worldwide for the full year reached $908 million. Prescription market share increased in all the major markets and was 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 was 4.4% in France and 8.0% in Italy. In Canada the latest market share of monthly total prescriptions was 12.1%.

In the US, market share progress was 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. Market share of total prescriptions in December 2004 was 28.1%, up 1.9 points versus the previous year. Full year sales growth rate was 7%, which was below estimated underlying growth as a result of net stock movements year on year. Sales of Seloken outside the US were up 3%.

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). Sales in the US were down 4%, 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.

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%.

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.

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  18 AstraZeneca Annual Report
and Form 20-F Information 2005



 2005 IN BRIEF






(esomeprazole magnesium) is the first proton pump inhibitor (PPI) for the treatment of acid-related diseases to offer clinical improvements over other PPIs and other treatments.
  Losec/Prilosec (omeprazole) was the first PPI, and is used for the short and long term treatment of acid-related diseases.
  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.
                                2005 compared to   2004 compared to  
        2005       2004    2003   2004   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   %   %   %   %  



  Nexium 4,633   702   48   3,883   479   102   3,302   18   19   15   18  



  Losec/Prilosec 1,652   (339 ) 44   1,947   (764 ) 146   2,565   (17 ) (15 ) (30 ) (24 )



  Other 70   (19 ) 1   88   7   5   76   (21 ) (20 ) 9   16  



  Total 6,355   344   93   5,918   (278 ) 253   5,943   5   7   (4 )  



Compound Mechanism   Areas under investigation   Phase   Estimated filing date  
NCEs       PC 1 2 3   Europe   US  

AZD9056 ion channel blocker   inflammatory bowel disease             >2008   >2008  

AZD3355 inhibitor of transient lower   GERD             >2008   >2008  
  oesophageal sphincter                        
  relaxations (TLESR)                        

AZD9343 inhibitor of transient lower   GERD             >2008   >2008  
  oesophageal sphincter                        
  relaxations (TLESR)                        

AZD9272     GERD             >2008   >2008  

AZD8081     functional GI disease             >2008   >2008  

AZD6538     GERD             >2008   >2008  

Line extensions                          

Nexium proton pump inhibitor   NSAID GI side effects –             Promotable1   Filed  
      symptom resolution                    

Nexium proton pump inhibitor   NSAID GI side effects –             Launched   Filed  
      ulcer healing                    

Nexium sachet proton pump inhibitor   GERD             Q4 2006   Filed  

Nexium proton pump inhibitor   peptic ulcer bleeding             >2008 > 2008  

Nexium proton pump inhibitor   extra-oesophageal             >2008 > 2008  
      reflux disease                    

Discontinued projects                        

AZD7371     functional GI disease           We have discontinued these developments as a result of their failure to meet their target product profiles.  

AZD0865     acid-related GI disease            

AZD5745     acid-related GI disease            



Abbreviations used in the pipeline table are explained on page 35.

1 Authorities stated these symptoms were already captured within the GERD label. Text stating “No clinical interaction with naproxen or rofecoxib” was approved.

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Business Review 19  


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.

Nexium has been evaluated in clinical studies involving 73,000 patients in over 60 countries and offers very effective acid inhibition. In the treatment of reflux oesophagitis, it 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 gastro-oesophageal reflux disease (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 340 million patient treatments had been administered by the end of 2005.

The parenteral form of Nexium, used when oral administration is not applicable for the treatment of GERD, has now been approved in 68 countries including the US. During the year, further approvals have been granted in Europe for Nexium for healing and prevention of ulcers, associated with NSAID (non-steroidal anti-inflammatory drug) therapy. Nexium is also approved in the US for the reduction in the occurrence of gastric ulcers associated with continuous NSAID therapy in patients at risk of developing gastric ulcers. A regulatory filing for use of Nexium in paediatric GERD patients aged 12 years and above was submitted in Q4 in the US and the EU. We also filed an application for a formulation of delayed release granules for oral suspension of Nexium in the US in December.

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. In October 2005, we received a notice from Ranbaxy Pharmaceuticals, Inc. of an Abbreviated New Drug Application (ANDA) filed with the FDA for esomeprazole magnesium delayed-release capsules, 20mg and 40mg, containing Paragraph IV certifications of invalidity and/or non-infringement with respect to Nexium. In November 2005, AstraZeneca commenced patent infringement litigation in the US District Court for the District of New Jersey against Ranbaxy and its affiliates in response to its Paragraph IV certifications regarding Nexium. Further information is set out on page 121.

In January 2006, AstraZeneca received a notice from IVAX Pharmaceuticals Inc. that IVAX Corporation has submitted an ANDA for esomeprazole magnesium delayed-release capsules, 20mg and 40mg. AstraZeneca is evaluating IVAX’s notice and continues to have full confidence in its intellectual property protecting Nexium. For more details see page 122.

Losec/Prilosec: Patients have benefited from over 800 million treatments with Losec/Prilosec since launch. Continued strong sales growth of Losec/Omepral was seen in Japan in 2005.

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 119 and 120.

In June, the European Commission notified us of its decision to impose fines totalling 60 million for alleged infringements of European competition law relating to certain omeprazole intellectual property and regulatory rights. AstraZeneca has appealed to the Court of First Instance. Details of this litigation are set out on page 121.

Entocort maintained its growth during 2005, based on its increasing acceptance as first line therapy for mild to moderate, active Crohn’s disease.

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, inflammatory bowel disease (IBD) and functional gastrointestinal disorders (FGD), such as irritable bowel syndrome (IBS) and functional dyspepsia.

AZD3355 and AZD9343 are reflux inhibitors in phase 1 for the treatment of GERD through a new targeted approach that inhibits transient relaxations of the lower oesophageal sphincter. This treatment will thus aim to prevent gastro-oesophageal reflux from occurring whereas PPIs are aimed at reducing the acid content of regurgitation.

Details of all compounds in the GI pipeline are contained in the table on page 18.

Reported performance
Gastrointestinal sales grew by 7% to $6,355 million in 2005 from $5,918 million in the previous year. The slowing in the decline of Losec sales and the continued strong performance of Nexium accounted for this growth.

Underlying performance
After excluding the effects of exchange, Gastrointestinal sales rose by 5%.

In the US, Nexium sales for the full year increased by 15% to $3,125 million. Nexium market share of total prescriptions in the US PPI market was 30.3% in December, up 3.2 percentage points versus December 2004. Strong growth in dispensed tablets (up 14%) was partially offset by lower realised prices resulting from performance-based contracts and Medicaid. Nexium was the only branded PPI to gain market share in 2005. Sales of Nexium in other markets reached $1,508 million for the full year (up 25%) on a 2 point gain in market share.

Losec/Prilosec sales were down 17% for the full year to $1,652 million. In the US sales were $264 million, a fall of 28%. In other markets, Losec sales declined 15%, although sales increased by 25% in Japan and by 16% in China.

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  20 AstraZeneca Annual Report and
Form 20-F Information 2005



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) reflected stock movements. Nexium share of total prescriptions in the US PPI market was 27.1% in December 2004. Sales of Nexium outside the US were up 29% on a strong performance in all major markets. Strong volume growth was the driver behind the increase.

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

Outside the US, sales of Losec were also down by 16% for the year. Sales grew 24% in Japan.

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Business Review 21  











Seroquel (quetiapine fumarate) is an atypical anti-psychotic drug and is a first line, first choice treatment for a broad range of symptoms of schizophrenia and manic episodes in bipolar disorder.

Zomig (zolmitriptan) is for the treatment of migraine with or without aura.

Naropin (ropivacaine) is the world’s 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.

Diprivan (propofol), an intravenous anaesthetic, is used in the induction and maintenance of anaesthesia, light sedation for diagnostic procedures and for intensive care sedation.

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




                                2005 compared to   2004 compared to  
            2005           2004   2003     2004     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 2,761   710   24   2,027   496   44   1,487   35   36   33   36  



  Diprivan 369   (136 ) 5   500   24   18   458   (27 ) (26 ) 5   9  



  Zomig 352   (11 ) 7   356   (12 ) 19   349   (3 ) (1 ) (3 ) 2  



  Local Anaesthetics 511   (44 ) 13   542   41   35   466   (8 ) (6 ) 8   16  



  Other 66   (6 ) 1   71   (7 ) 5   73   (8 ) (7 ) (10 ) (3 ) 



  Total 4,059   513   50   3,496   542   121   2,833   15   16   19   23  



Compound Mechanism   Areas under investigation          Phase   Estimated filing date  


NCEs         PC 1 2 3   Europe   US  

NXY-059 (previously free radical   stroke             1H 2007   1H 2007  
Cerovive) trapping agent                        

AZD3480 (TC-1734) NNR agonist   cognitive disorders             >2008   >2008  

AZD9272     neuropathic pain             >2008   >2008  

AZD3102     Alzheimer’s disease              >2008   >2008  

AZD1080     Alzheimer’s disease              >2008   >2008  

AZD2327     anxiety              >2008   >2008  

AZD5904     multiple sclerosis              >2008   >2008  

AZD6538     neuropathic pain              >2008   >2008  

AZD8797     multiple sclerosis              >2008   >2008  

AZD3783     anxiety and depression              >2008   >2008  

AZD1940     nociceptive and              >2008   >2008  
      neuropathic pain                    

AZD9335     neuropathic pain              >2008   >2008  

AZD3241     Parkinson’s disease              >2008   >2008  

Line extensions                          

Seroquel SR D2/5HT2   schizophrenia             3Q 2006   3Q 2006  

Seroquel     bipolar maintenance             2H 2007   1H 2007  

Seroquel     bipolar depression             1H 2007   Filed  

Seroquel SR     generalised anxiety             2008   2H 2007  

Seroquel SR     major depressive             2008   2008  

Discontinued projects                        

AZD7371     overactive bladder     We have discontinued these
developments as a result
of their failure to meet their
target product profiles.

AZD8129 (AR-A2)     depression/anxiety      

AZD4282     neuropathic pain      


Abbreviations used in the pipeline table are explained on page 35.

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  22 AstraZeneca Annual Report and
Form 20-F Information 2005



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

Seroquel offers a well-established benefit/risk profile with proven efficacy and unique patient tolerability. This includes placebo-like effects in the licensed indications on extrapyramidal symptoms and prolactin across the dose range in schizophrenia and bipolar mania.

This profile has led to the increased use of Seroquel, substantially exceeding market growth in all markets commercialised by AstraZeneca. Seroquel is the market-leading atypical anti-psychotic in the US in terms of monthly new and total prescriptions. In Europe, Seroquel continues to grow two to three times faster than the atypical market, with key countries, such as Italy and Germany showing excellent market share gains.

Seroquel for the treatment of bipolar mania has now been licensed in 73 countries and is highly successful, with strong market share growth.

In the BOLDER I study, the results of which were published in the American Journal of Psychiatry in July, patients treated with Seroquel showed a statistically significant decrease in depressive episodes associated with bipolar disorder compared with patients receiving placebo and more than half of the Seroquel-treated patients achieved criteria for remission. Results from the similarly designed BOLDER II study in October confirmed the landmark results seen in BOLDER I.

This enabled a supplemental NDA (sNDA) submission to the FDA in December seeking approval for the indication of treatment of depressive episodes of bipolar disorder, which would further differentiate Seroquel within its class. If Seroquel receives FDA approval, it will be the first atypical to demonstrate efficacy at both poles in bipolar disorder. Seroquel would be the first monotherapy treatment available in the US for the treatment of depressive episodes of bipolar disorder. This would position Seroquel uniquely in market segments for which no other single agent anti-psychotic has an approved indication.

New dosage strengths of Seroquel 50mg and 400mg were approved in the US, which will enable greater flexibility in achieving recommended dosing and more convenient titration of dose.

In the US, a boxed warning relating to an increased risk of death in treatment of dementia-related psychosis in elderly patients was added to the labels of the class of atypical anti-psychotics, including Seroquel. (The atypical anti-psychotics are not approved for the treatment of dementia-related psychosis).

In September, Teva filed an Abbreviated New Drug Application (ANDA) in relation to quetiapine fumarate (the active ingredient in Seroquel) and in November, AstraZeneca filed a patent infringement lawsuit against Teva in the US. Further information is set out on page 122.

Zomig is available in a unique range of formulations to provide rapid migraine relief and is the prescription market leader in Europe. We resumed full responsibility from MedPointe, Inc. for the marketing, sale and distribution of Zomig in the US in April 2005.

Zomig Nasal Spray is a formulation that delivers fast pain relief and now accounts for 6% of Zomig sales.

Zomig Rapimelt is a rapidly dispersible formulation offering patients a convenient, orange-flavoured, melt-in-the-mouth tablet that now accounts for more than 35% of Zomig sales. The 5mg tablet is now approved and launched in most EU countries.

Diprivan is the world’s best selling intravenous anaesthetic. More than 90% of total Diprivan sales consist of Diprivan EDTA, a microbial-resistant formulation, which is approved in the majority of markets.

A second generic propofol product containing benzyl alcohol (microbial additive) was introduced by Bedford Laboratories in the US in mid-2005.

We are developing a sustained release (SR) formulation of Seroquel to expand the treatment options available for patients. Clinical trial results from a global registration programme for schizophrenia are scheduled to be available

in the third quarter of 2006. A further expansion of the opportunities for Seroquel commenced recently with clinical programmes for generalised anxiety disorder (GAD) and major depressive disorders (MDD). These programmes also use the SR formulation but are not dependent upon the SR schizophrenia programme referred to above. They are targeted for filings in late 2007 and 2008.

In pain control, our research focus is nociceptive pain (caused by tissue damage) and neuropathic pain (caused by nerve damage).

There are now three candidate drugs in development from our collaboration with NPS Pharmaceuticals Inc.

We have development programmes in stroke, multiple sclerosis, Parkinson’s disease and Alzheimer’s disease.

NXY-059 (previously known as Cerovive), licensed from Renovis, Inc., is a neuroprotectant with free radical trapping properties. It is under development for the treatment of acute ischaemic stroke, a disease with substantial need for new, effective therapies. Pre-clinical data show that NXY-059 preserves neurological function and brain tissue even when given after a substantial delay following the onset of ischaemia (measured in hours) that can readily be carried over into the design of clinical trials.

The development of neuroprotectants for stroke is 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 NXY-059 given within six hours of the onset of symptoms. Results from the SAINT I trial in May 2005 showed a statistically significant and clinically relevant reduction in disability on the primary endpoint, the modified Rankin Scale. However, applying the pre-specified analysis for the trial, no statistical

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Business Review 23  


difference was noted in neurological recovery. The SAINT II trial was expanded to include 3,200 patients following analysis of the results from the SAINT I trial and after consultation with regulators, with the aim of ensuring appropriate statistical power on the primary endpoint to detect at least the magnitude of improvement seen in the SAINT I trial. The statistical analysis of neurological status in SAINT II was adjusted to reflect lessons from the analysis of SAINT I. Regulatory filings in Europe and the US are currently planned for the first half of 2007 in light of the expanded size of the SAINT II study.

The CHANT (Cerebral Haemorrhage And NXY Treatment) trial assessing the safety and tolerability of NXY-059 in intracerebral haemorrhagic (as opposed to ischaemic) stroke that was initiated in 2004, has completed recruitment. Initial read-out of the results is expected to be available in the first quarter of 2006. The outcome of CHANT is intended to help determine whether NXY-059 can be used in clinical practice without the need first to test patients to establish whether they have suffered an ischaemic or haemorraghic stroke.

AstraZeneca has made the decision that Cerovive should be known as NXY-059, its code number, until it has been verified that key regulatory authorities have no objections to a new alternative trademark.

AZD3102, for the treatment of Alzheimer’s disease, is being developed in collaboration with Dyax Corp. and is one of our first ventures in the science of human monoclonal antibodies.

Our Neurology pipeline is further strengthened by the licensing and research collaboration agreement with Targacept Inc., which we announced in December 2005. This exclusive global agreement aims to develop and commercialise AZD3480 (TC-1734), a development compound in phase 2, for the treatment of cognitive disorders. The research collaboration also allows for the development of other compounds that act on neuronal nicotinic receptors (NNRs).

Details of all compounds in the pipeline in the areas of psychiatry, analgesia and neurology are contained in the table on page 21.

Reported performance

Sales in the Neuroscience therapy area rose by 16% in 2005, up to $4,059 million from $3,496 million in 2004. Seroquel was the principal driver of performance, recording a 36% increase in sales.

Underlying performance
On a constant exchange rate basis, Neuroscience sales grew by 15%.

Seroquel sales reached $2,761 million for the full year (up 35%), including $2,003 million in the US. Seroquel value share of the global atypical anti-psychotic market increased nearly 2.7 percentage points in the 12 months ended 30 September 2005. In the US, Seroquel sales increased 33% for the full year, ahead of prescription growth of 20% as a result of higher realised prices and favourable contract rebate adjustments. Seroquel share of new prescriptions in the US atypical anti-psychotic market increased to 29.8% in December 2005, up 2.2 percentage points over 2004. In other markets, sales for the full year increased by 40% on strong growth in Europe (up 48%), Asia Pacific (up 22%) and Canada (up 29%).

Zomig sales for the full year declined by 3% to $352 million, as growth in other markets (up 8%) was more than offset by an 18% decline in the US. The US decline was chiefly as a result of lower first quarter sales following the return of the distribution arrangements from MedPointe, which took effect from 1 April 2005.

Diprivan sales in other markets were down 8% for the full year to $369 million. US sales declined 44%, chiefly on lower prices as a result of the introduction of another generic product.

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%.

Seroquel exceeded $2 billion in annual sales for the first time with sales in the US for the full year 2004 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.

Zomig performance in the full year reflected the 10% decline in the US (down to $147 million), 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) more than compensated for declines in Europe. Local anaesthetics enjoyed growth in all markets.

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  24 AstraZeneca Annual Report and
Form 20-F Information 2005










  Arimidex (anastrozole) is the world’s leading aromatase inhibitor by value.
  Faslodex (fulvestrant) is an oestrogen receptor antagonist, with no agonist effects, that down-regulates the oestrogen receptor.
  Casodex (bicalutamide) is the world’s leading anti-androgen therapy by value for the treatment of prostate cancer.
  Zoladex (goserelin acetate implant), available in one month and three month depots, is the world’s second largest LHRH agonist by value.
  Iressa (gefitinib) is an epidermal growth factor receptor-tyrosine kinase inhibitor (EGFR-TKI) that acts to block signals for cancer cell growth and survival.
  Nolvadex (tamoxifen citrate) remains a widely prescribed breast cancer treatment.
                                2005 compared to   2004 compared to  
            2005           2004   2003   2004   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   %   %   %   %  



  Casodex 1,123   97   14   1,012   92   66   854   10   11   11   19  



  Arimidex 1,181   354   16   811   249   43   519   44   46   48   56  



  Zoladex 1,004   65   22   917   (13 ) 61   869   7   9   (1 ) 6  



  Iressa 273   (118 ) 2   389   147   14   228   (31 ) (30 ) 65   71  



  Faslodex 140   39   2   99   21   1   77   39   41   28   29  



  Nolvadex 114   (21 ) 1   134   (54 ) 10   178   (16 ) (15 ) (31 ) (25 )



  Other 10   (5 ) 1   14   (5 ) 1   18   (36 ) (29 ) (28 ) (22 )



  Total 3,845   411   58   3,376   437   196   2,743   12   14   16   23  




Compound   Mechanism   Areas under investigation   Phase   Estimated filing date  


NCEs           PC 1 2 3   Europe   US  

Zactima (ZD6474)   VEGF/EGF TKI inhibitor   NSCLC             >2008   >2008  
    with RET kinase activity                        

AZD2171   VEGF signalling inhibitor   NSCLC and CRC             >2008   >2008  

Zactima (ZD6474)   VEGF/EGF TKI inhibitor   medullary thyroid cancer             >2008   >2008  
    with RET kinase activity                        

ZD4054   endothelin A receptor   prostate cancer             >2008   >2008  

Patrin(KuDOS)   AGT inhibitor   solid tumours             >2008   >2008  

AZD0530   SRC kinase inhibitor   solid tumours and             >2008   >2008  
        haematological malignancies                    

AZD6244 (ARRY-   MEK inhibitor   solid tumours             >2008   >2008  

AZD1152   aurora kinase inhibitor   solid tumours and             >2008   >2008  
        haematological malignancies                    

AZD4769       solid tumours             >2008   >2008  

KU59436   PARP inhibitor   breast cancer             >2008   >2008  

AQ4N (KuDOS)   hypoxia activated   solid tumours             >2008   >2008  

AZD9935   VEGFR-TKI   solid tumours             >2008   >2008  

AZD0424   SRC kinase inhibitor   solid tumours             >2008   >2008  

AZD8931       solid tumours             >2008   >2008  

AZD4877       solid tumours             >2008   >2008  

AZD7762       solid tumours             >2008   >2008  

AZD5180       solid tumours             >2008   >2008  

AZD1845       solid tumours             >2008   >2008  

AZD8330       solid tumours             >2008   >2008  

AZD3646       solid tumours and             >2008   >2008  
        haematological malignancies                    

Line extensions                            

Faslodex   oestrogen receptor   second line after             2008   2008  
    antagonist   aromatase inhibitor                    

Faslodex   oestrogen receptor   first line advanced breast             >2008   >2008  
    antagonist   cancer                    

Faslodex   oestrogen receptor   adjuvant             >2008   >2008  

Iressa   EGFR-TK inhibitor   head and neck cancer             2H   1H  
                      2007   2007  

Iressa   EGFR-TK inhibitor   breast cancer             >2008   >2008  

Discontinued projects                        

AZD3841       solid tumours                    

AZD3409       solid tumours                    

We have discontinued these
developmentsas a result
of their failure to meet their
target product profiles.
AZD5438       solid tumours  

ZD6126       solid tumours  

AZD4440       solid tumours  

Discontinued line extension                      

Iressa       colo-rectal cancer                    

Abbreviations used in the pipeline table are explained on page 35.                    

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Business Review 25  


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

Arimidex continues to grow strongly, as it replaces tamoxifen as the preferred adjuvant treatment for post-menopausal women with hormone-receptor positive invasive early breast cancer. The large-scale ATAC study, first reported in December 2001 and 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. In December 2005, new data were presented at the San Antonio Breast Cancer Symposium that showed that Arimidex provides post-menopausal women with hormone-receptor positive invasive early breast cancer a better chance of surviving, compared with continued tamoxifen. The results of the latest studies show that by replacing tamoxifen with Arimidex, post-menopausal women being treated for hormone-receptor positive invasive early breast cancer may almost halve the likelihood of their disease returning and reduce their risk of dying by nearly a third. Survival is the ultimate goal in the treatment of early breast cancer and, to date, Arimidex is the only treatment in its class (aromatase inhibitors) to provide women with this potential benefit over tamoxifen.

Arimidex is also approved for the treatment of advanced breast cancer in post-menopausal women based on demonstrated advantages over tamoxifen and megestrol acetate.

Faslodex offers 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 with the compliance and convenience benefits of a once monthly injection. Faslodex is now launched in 28 markets. It is indicated for the second line treatment of hormone-receptor positive, advanced breast cancer in post-menopausal women. Trials are ongoing to further investigate Faslodex in the treatment of post-menopausal breast cancer.

Casodex: The continued growth of Casodex has been driven by the use of Casodex 50mg in advanced prostate cancer and through the growth of Casodex 150mg, which is approved for use in early prostate cancer (EPC) in over

60 countries. Results for the third analysis of the EPC trial programme were presented in October and confirmed the role of Casodex 150mg as an excellent treatment option for men with locally advanced prostate cancer (which is a segment of early prostate cancer). Casodex conferred a reduced risk of disease progression – in men treated adjuvant to radiotherapy this has now resulted in a 35% reduction in the risk of death. However, for men with localised disease (i.e. confined to the prostate), this analysis showed no significant benefit in either disease progression or survival. Following regulatory submission of the results from the third analysis, the EPC indications are under review in several markets.

Zoladex is used for the treatment of prostate cancer (for which it is approved in 105 countries), breast cancer and gynaecological disorders. In EPC, Zoladex is the only luteinising-hormone releasing hormone (LHRH) agonist shown to improve overall survival when used in addition to either radical prostatectomy or radiotherapy. In breast cancer, Zoladex is widely approved for use in advanced breast cancer in pre-menopausal women. In a number of these countries, Zoladex is also approved for the adjuvant treatment of early stage pre-menopausal breast cancer as an alternative to and/or in addition to chemotherapy. Zoladex offers proven survival benefits for breast cancer patients with a favourable tolerability profile.

Iressa is indicated for the treatment of non-small cell lung cancer (NSCLC) in patients who have failed chemotherapy. Clinical trials and case studies have shown that Iressa is an active and generally well-tolerated treatment for some patients with lung cancer. Those patients who do benefit tend to do so quickly and sometimes results are dramatic.

Results from the ISEL study in 2004 showed that, while Iressa produced some improvement in survival, it failed to reach statistical significance compared with placebo in the overall population of advanced NSCLC patients and in the subgroup of patients with adenocarcinoma. However, the ISEL study confirmed a number of important clinical benefits for Iressa, including tumour shrinkage and a significant improvement in time to treatment failure.

Following the announcement of the ISEL study, AstraZeneca consulted regulatory agencies in the 36 countries where Iressa is approved. The label has since been revised in the US and now indicates that Iressa is only to be used in patients who are benefiting or have benefited from Iressa. The Japanese Ministry of Health, Labour and Welfare has not restricted the label and all 36 regulatory approvals remain, although the licence is suspended in one country (Switzerland).

Progress is being made in identifying those patients who are most likely to benefit from treatment with Iressa. Pre-planned subgroup analyses from the ISEL study demonstrated that patients of Asian ethnicity and those who had never smoked were the clinical subgroups most likely to benefit from Iressa treatment. In addition, analysis of the biomarker data from the ISEL study suggests that NSCLC patients who have tumours with a high epidermal growth factor receptor (EGFR) gene copy number have a higher likelihood of tumour shrinkage and increased survival when treated with Iressa compared to placebo. This analysis appears consistent with other reported literature.

We continue to believe that Iressa has a place in the treatment of advanced NSCLC and potentially other tumour types, and we continue to strive to complete a programme of work to confirm which patients in which treatment settings are most likely to benefit.

Further phase 2 and 3 trials are underway and planned to evaluate the potential benefits of Iressa in NSCLC and other EGFR-driven tumours such as head, neck and breast cancers.

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

Zactima (also known as ZD6474) is a unique once-daily oral multi-targeted anti-cancer therapy that selectively inhibits key signalling pathways involved in tumour growth, including VEGF, EGF and also RET kinase.

The results of two phase 2 studies in advanced NSCLC with Zactima (trials 003 and 006) were presented at the 11th World Conference on Lung Cancer in July. Both studies met their primary endpoints of prolonging progression-free survival in patients with advanced NSCLC.

Phase 3 studies evaluating the anti-tumour activity and impact on survival of Zactima in advanced NSCLC have been initiated. As well as showing promise in NSCLC, Zactima was granted orphan drug and fast track designation by the FDA for the investigation of medullary thyroid cancer. In December, Zactima received a positive opinion from the Committee for Orphan Medicinal Products (COMP) recommending Zactima for orphan drug designation for the treatment of patients with medullary thyroid cancer in the EU.Orphan drug designation was designed to encourage the development of products that demonstrate promise for the diagnosis, prevention and/or treatment of life-threatening or very serious conditions that are rare and

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  26 AstraZeneca Annual Report and
Form 20-F Information 2005


affect relatively few people (not more than five in 10,000 persons a year in the EU and fewer than 200,000 persons a year in the US). Fast track designation enables partnering with the FDA by providing opportunities to meet more regularly in order to obtain the FDA’s input into the drug development plan. It also enables a rolling submission of the NDA, thereby facilitating and expediting the development and review of new drugs intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs.

A phase 2 trial in hereditary medullary thyroid cancer is ongoing, and the anti-cancer activity of Zactima continues to be evaluated in other tumour types.

In 2005, based on the increasing evidence of the effectiveness of VEGF signalling inhibitors and encouraging pre-clinical and early phase 1 clinical data across a range of solid tumours, we decided to accelerate AZD2171 into phase 2/3 development for NSCLC and colo-rectal cancer and, in November, a pivotal phase 2/3 study in NSCLC commenced.

AZD5180 is the first candidate drug to enter pre-clinical development as a result of our collaboration with Abgenix Inc. This collaboration, which aims to discover fully human monoclonal antibodies for the treatment of cancer, has entered its third year.

Our oncology pipeline is further strengthened by the acquisition, announced in December, of KuDOS Pharmaceuticals Limited, a privately-owned UK biotechnology company, focused on the discovery and development of oncology therapies based on the inhibition of DNA repair.

This transaction provides AstraZeneca with a widely-recognised expert group and technology platform in an area of research that complements our existing capabilities in oncology. The DNA repair platform includes several different approaches towards inhibition of enzymes involved in the responses to various types of DNA damage. DNA repair inhibitors have the potential to kill cancer cells either as standalone therapy or by enhancing the efficacy of chemo- and radio-therapies.

The acquisition brings with it clinical and pre-clinical compounds and programmes, such as KU59436, an oral poly-ADP-ribose polymerase (PARP) enzyme inhibitor, which is currently in phase 1.

Details of all compounds in the oncology pipeline are contained in the table on page 24.

Reported performance
Oncology sales increased by 14% to reach $3,845 million in 2005, compared to $3,376 milion in 2004. Other than Iressa and Nolvadex, there was growth in all major products, particularly Arimidex.

Underlying performance
Excluding the effects of exchange, oncology sales grew by 12%.

Casodex sales in the US increased by 3% for the full year to $239 million. Total prescriptions were 3% lower than last year. Sales in other markets were up 11% for the full year, with Japan accounting for nearly half of this sales growth.

Arimidex sales increased 44% to $1,181 million for the full year. Arimidex value share of the market for hormonal treatments for breast cancer reached 50% in October, a share more than twice that of its closest competitor. In the US, sales of Arimidex were up 59% for the full year. Total prescriptions increased by 40% versus last year, on a 7.1 percentage point increase in market share. In other markets, full year sales were up 35% on excellent growth in Europe (up 35%) and Japan (up 27%).

Iressa sales were down 31% for the full year, chiefly as a result of the 63% decline in the US. Iressa sales in Asia Pacific increased 7% for the full year, as sales in China and other markets more than offset a 15% sales decline in Japan.

Sales for Faslodex for the full year reached $140 million (up 39%) as a result of good growth in Europe since marketing approval in March 2004. Sales in the US were up 11% for the year.

Zoladex sales for the full year increased 7% to $1,004 million, as good sales growth in other markets (up 13%) more than offset a 23% decline (from both volume and price effects) in the US.

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, particularly in Japan. Reflecting the maturity of the market in advanced prostate cancer, underlying performance in the US was essentially unchanged.

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. 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 percentage points over 2003. Outside the US, sales of Arimidex were up 46% for the year at $511 million.

Iressa sales reached $389 million for the full year (up 65%), including $136 million in Japan. 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, revenue from sales made in the latter half of the quarter was not recognised. 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 and Europe were mitigated by a strong performance in Japan.

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.

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

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Business Review 27  


2005 IN BRIEF  






  Symbicort (budesonide/formoterol) is an innovative and effective asthma and COPD treatment that offers superior efficacy with easily adjustable dosing.  
  Pulmicort (budesonide) is a corticosteroid anti-inflammatory inhalation drug that helps prevent symptoms and improves the control of asthma.  
  Pulmicort Respules (budesonide inhalation suspension) is the first and only nebulised corticosteroid in the US for children as young as 12 months.  
  Oxis (formoterol) is a beta-agonist therapy for asthma and COPD.  
  Rhinocort (budesonide) is a nasal steroid treatment for allergic rhinitis (hay fever), perennial rhinitis and nasal polyps.  
  Accolate (zafirlukast) is an oral leukotriene receptor antagonist for the treatment of asthma.  
                                2005 compared to   2004 compared to  
            2005           2004   2003   2004   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   %   %   %   %  

  Pulmicort 1,162   96   16   1,050   40   42   968   9   11   4   8  

  Symbicort 1,006   179   30   797   176   72   549   22   26   32   45  

  Rhinocort 387   21   5   361   (11 ) 8   364   6   7   (3 ) (1 )

  Oxis 91   (14 ) 4   101   (28 ) 9   120   (14 ) (10 ) (24 ) (16 )

  Accolate 72   (45 ) 1   116   7   2   107   (39 ) (38 ) 6   8  

  Other 155   (7 ) 4   158   (8 ) 13   153   (5 ) (2 ) (5 ) 3  

  Total 2,873   230   60   2,583   176   146   2,261   9   11   8   14  

Compound Mechanism Areas under investigation   Phase Estimated filing date  


NCEs     PC 1 2 3   Europe   US  

AZD9056 ion channel blocker rheumatoid arthritis   >2008 >2008

AZD9056 ion channel blocker COPD   >2008 >2008

AZD8955 collagenase inhibitor osteoarthritis   >2008 >2008

AZD3778 chemokine receptor rhinitis   >2008 >2008

AZD8309 chemokine receptor rheumatoid arthritis       >2008 >2008

AZD8309 chemokine receptor COPD       >2008 >2008

AZD3342 protease inhibitor COPD       >2008 >2008

AZD1981 asthma       >2008 >2008

AZD6067 protease inhibitor COPD     >2008 >2008

AZD6703 rheumatoid arthritis     >2008 >2008

AZD6357 osteoarthritis     >2008 >2008

AZD7928 COPD     >2008 >2008

AZD2914 COPD     >2008 >2008

AZD2392 asthma/rhinitis     >2008 >2008

AZD1744 asthma/rhinitis     >2008 >2008

AZD5672 rheumatoid arthritis     >2008 >2008

AZD3825 asthma     >2008 >2008

AZD1236 COPD     >2008 >2008

AZD4818 COPD     >2008 >2008

AZD5069 COPD     >2008 >2008

AZD9668 COPD     >2008 >2008

AZD9215 asthma     >2008 >2008

AZD1678 asthma     >2008 >2008

AZD6605 osteoarthritis     >2008 >2008

Line extensions  

Symbicort Turbuhaler inhaled steroid/fast onset, SMART         Filed
  long-acting ß2agonist                    

Symbicort pMDI inhaled steroid/fast onset, asthma         Filed 1 Filed
  long-acting ß2agonist                    

Symbicort pMDI inhaled steroid/fast onset, COPD         Filed 1 2008
  long-acting ß2agonist                    

Discontinued projects  

AZD3778 asthma  

We have discontinued these
AZD9056   osteoarthritis developments as a result

of their failure to meet their
AZD2098 asthma target product profiles.

AZD0902 rheumatoid arthritis          

Abbreviations used in the pipeline table are explained on page 35.

1 To be supplemented in 2008 with data supporting two additional strengths.

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  28 AstraZeneca Annual Report and
Form 20-F Information 2005


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 COPD, rheumatoid arthritis and osteoarthritis.

Symbicort is an innovative treatment that provides rapid, effective control of asthma whilst allowing doctors the opportunity to individualise treatment to meet the needs of the patient through adjustable dosing. This enables doctors to tailor a patient’s treatment to address day-to-day triggers of asthma in a single inhaler for all situations, thereby achieving greater efficacy than with fixed doses. It is the only combination product currently on the market that offers these benefits.

Symbicort is currently marketed in the Turbuhaler dry powder device, which is approved in 93 countries and launched in more than 70. Symbicort is not yet approved for sale in the US, although as described below, a US regulatory submission has been filed for Symbicort in a pressurised Metered Dose Inhaler (pMDI).

2005 saw the publication of two key studies, STAY and COSMOS, which reinforced the advantage of the new asthma treatment concept, Symbicort Maintenance and Reliever Therapy (SMART). STAY showed that this new approach, which uses Symbicort Turbuhaler, was more effective than fixed dose Symbicort. COSMOS demonstrated that the SMART concept was more effective than fixed dose fluticasone dipropionate/salmeterol. This concept is being pioneered by Symbicort and it allows patients the flexibility to intervene at the first signs of symptoms to prevent deterioration, thereby reducing the risk of an asthma attack. This treatment concept, which represents a change from current medical practice, is possible with Symbicort as it contains formoterol, a bronchodilator which is both rapid-acting and long-lasting, coupled

with the corticosteroid budesonide to provide an important anti-inflammatory effect. If approved, SMART would make asthma treatment more effective and simpler for both the physician and the patient.

In late 2004, the EU regulatory application for SMART (previously called Symbicort Single inhaler Therapy) was withdrawn to allow more data to be submitted. On the basis of additional data from further ongoing studies, including in total 13,000 patients with mild to moderate asthma, an EU mutual recognition variation procedure for SMART began in September 2005.

Symbicort is also approved for use in chronic obstructive pulmonary disease (COPD) where trial data have shown it reduces exacerbation rates compared to a long-acting bronchodilator alone.

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.

In September, AstraZeneca received a notice from IVAX Pharmaceuticals Inc. that IVAX had submitted an Abbreviated New Drug Application to the FDA for a budesonide inhalation suspension. In October, AstraZeneca filed a patent infringement action against IVAX in the US. Further information is set out on page 122.

Oxis is a therapy with a fast onset and long-acting clinical effect for the relief of asthma symptoms. Oxis is added to the treatment regime when corticosteroid treatment alone is not adequate.

Rhinocort combines powerful efficacy with rapid onset of action and minimal side effects and is available as a once daily treatment in the Rhinocort Aqua (nasal spray) and the Turbuhaler dry powder inhaler forms.

We focus on developing new approaches with novel mechanisms of action for currently unmet medical needs in COPD, asthma, rheumatoid arthritis and osteoarthritis.

In September 2005, we submitted an NDA to the FDA for approval of Symbicort for the maintenance treatment of asthma, in patients aged 12 years and above. The Symbicort NDA submission is based on 27 phase 1, 2 and 3 trials designed to assess the efficacy and safety of Symbicort in a pMDI. The NDA submission seeks approval for two strengths of Symbicort (80/4.5 and 160/4.5 micrograms). The FDA review is ongoing.

During 2005, regulatory authorities in the UK expressed a number of concerns about the EU submission for the pMDI product and in particular its ability to match the posology of the approved Turbuhaler product. Further work is planned to address these concerns, and the filing will be supplemented in 2008 with data to support two additional strengths of the pMDI product.

Details of all compounds in the R&I pipeline are contained in the table on page 27.

Since November 2004, excellent progress has been made in the alliance with Cambridge Antibody Technology plc (CAT). CAT and AstraZeneca are working on six discovery projects: one pre-existing CAT discovery programme adopted into the alliance and five new programmes, all of which had progressed to lead identification stage on schedule by June 2005. Selection of the next targets for alliance discovery projects is already underway and during the next year, both companies intend to commence a further five programmes.

In March 2005, AstraZeneca and Sumitomo Pharmaceuticals expanded the existing pre-clinical research collaboration in the respiratory disease area. In May 2005, AstraZeneca and Schering AG entered into in a research

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Business Review 29  


collaboration and cross-licensing agreement in the area of selective glucocorticoid receptor agonists. Under the terms of the three year agreement, AstraZeneca will have an exclusive, worldwide licence to develop and market compounds for rheumatoid and respiratory diseases while Schering AG will have an exclusive, worldwide licence for all other indications.

Reported performance

Continued growth from Symbicort drove the increase in reported sales for R&I, which grew by 11% from $2,583 million in 2004 to $2,873 million in 2005.

Underlying performance
On a constant exchange rate basis, sales in R&I increased by 9%.

Symbicort sales for the full year reached $1,006 million. Sales growth was 22% for the full year, as market share continues to increase in the fast growing combination product segment of the asthma and COPD markets. Over 80% of Symbicort sales were made in Europe in 2005 – the US pMDI regulatory filing was made on 23 September 2005.

Sales of Pulmicort were up 9% for the full year, as the 18% growth in the US (fuelled by a 28% increase in Pulmicort Respules) to $682 million more than offset a 2% decline in other markets.

Rhinocort sales were up 6% for the full year, chiefly on sales of Rhinocort Aqua in the US (up 7%), where price changes and managed care rebate adjustments more than offset the 10% decline in total prescriptions. Rhinocort sales in the US were $277 million.

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).

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 for Pulmicort. Sales of Pulmicort in the US rose 13%, more than compensating for the 9% decline in Europe.

Sales for Rhinocort were down 3% for the year 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%).

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  30 AstraZeneca Annual Report
and Form 20-F Information 2005







  Merrem/Meronem* (meropenem) is an intravenous carbapenem antibiotic for the treatment of serious, hospital-acquired infections.

Abbreviations used in the pipeline table are explained on page 35.

* Licensed from Sumitomo Pharmaceuticals Co., Ltd.

                                2005 compared to   2004 compared to  
            2005           2004   2003    2004   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   %   %   %   %  



  Merrem 505   67   15   423   53   24   346   15   19   15   22  



  Other 102   (16 ) 2   116   (20 ) 6   130   (14 ) (12 ) (16 ) (11 )



  Total 607   51   17   539   33   30   476   9   13   7   13  




Compound   Mechanism   Areas under investigation   Phase   Estimated filing date  


NCEs           PC 1 2 3   Europe   US  

CytoFab   anti-TNF-alpha   severe sepsis             >2008   >2008  
(Protherics)   polyclonal anti-body                        

Line extensions                            

Merrem   carbapenem antibiotic   skin and soft tissue                    
        infections                 Launched  

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.   Work dedicated to finding a new treatment for tuberculosis continues at our R&D facility in Bangalore, India. Tuberculosis remains a worldwide threat and is newly diagnosed in approximately two million people every year in India and over eight million people worldwide. For more information on our tuberculosis programme in India, see the separate Corporate Responsibility Summary Report 2005.
Our R&D facility in Boston, US is progressing a range of projects using state-of-the-art structural and genomic-based technologies to deliver innovative anti-bacterial agents to the infection pipeline.   PERFORMANCE 2005
  Reported performance
  Infection sales grew by 13% to $607 million from $539 million in 2004, with Merrem sales increasing by 19%.
Our infection pipeline is further strengthened by the global development and commercialisation agreement for Protherics plc’s anti-sepsis product CytoFab, which we announced in December. Sepsis is a life-threatening condition resulting from uncontrolled severe infections, which affects an estimated three million people a year worldwide. AstraZeneca will be responsible for the further development of CytoFab, an anti-TNF-alpha polyclonal anti-body fragment (Fab) product, as a treatment for TNF-alpha mediated diseases in man, with an initial target indication of severe sepsis. Current plans are to start the pivotal phase 3 study for CytoFabin the US and EU in 2007, following completion of improvements to the current manufacturing process.    
  Underlying performance
  After excluding the effects of exchange, infection sales grew by 9%. Underlying growth of 15% from Merrem, with sales of $505 million, was the principal driver of this growth.
  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.

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Business Review 31  










                                2005 compared to   2004 compared to  
            2005           2004   2003   2004   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   %   %   %   %  



  US 10,771   1,140     9,631   883   1   8,747   12   12   10   10  



  Europe 8,463   598   216   7,649   204   736   6,709   8   11   3   14  



  Japan 1,527   114   (17 ) 1,430   130   111   1,189   8   7   11   20  



  ROW 3,189   290   183   2,716   362   150   2,204   15   21   17   23  



  Total 23,950   2,142   382   21,426   1,579   998   18,849   10   12   9   14  



NORTH AMERICA   Early in 2005, Seroquel became the number one prescribed atypical anti-psychotic on the market, surpassing the long time market leader, risperidone. Seroquel posted yearly prescription growth of 20% and two million added prescriptions. In the US, a boxed warning relating to an increased risk of death in treatment of dementia-related psychosis in elderly patients was added to the labels of the class of atypical anti-psychotics, including Seroquel. (The atypical anti-psychotics are not approved for the treatment of dementia-related psychosis.) The Company also submitted an sNDA to the FDA seeking approval for a new indication for Seroquel for the treatment of patients with depressive episodes associated with bipolar disorder.
Reflecting our commitment to attain market leadership in a highly competitive and challenging environment, sales for AstraZeneca US rose by 12% from $9,631 million to $10,771 million. The combined sales of Nexium, Seroquel, Crestor, Toprol-XL and Arimidex were $7,625 million, which represented 71% of our total US sales. AstraZeneca is currently the fifth largest pharmaceutical company in the US with our sales representing a 5% share of US prescription pharmaceutical sales. Sales for Aptium Oncology (previously Salick Health Care) and Astra Tech rose by 10% and 53% in 2005 to $335 million and $29 million respectively.  
Nexium leads the PPI market for both total prescriptions and capsules dispensed. Nexium achieved a 30.3% prescription market share, with growth of 12%, ahead of any other branded PPI. Virtually no price erosion was seen until the fourth quarter. This was achieved despite an increasingly challenging market, with increases in discounting and rebating due to the availability of Prilosec OTC and generic omeprazole, the advent of Medicare contracting and competitive pressures. In 2006 and beyond, the above challenges are likely to exert increasing pressure on Nexium pricing. Safety concerns regarding NSAID and Cox-2 inhibitors have led to a significant decrease in prescription NSAID use, which further affected PPI market growth.   Sales of Crestor were $730 million despite the residual effects of the earlier unfounded allegations concerning its safety, which slowed the uptake of the product in the US. We remain confident that Crestor offers greater LDL-cholesterol lowering with a safety profile in line with other marketed statins, a view based on extensive clinical trial and post-marketing data. Adjustments to managed care formularies ahead of the imminent entry of generic simvastatin into the US arket, the introduction of the Medicare Part D drug benefit and the competitive impact of combination statin therapies are changing the dynamics of the US statin market. It is not possible to quantify the impact on Crestor at this time.
During 2005, the Company filed two sNDAs with the FDA for Nexium: paediatric GERD patients aged 12 years and above and Zollinger-Ellison syndrome. An NDA was also filed for a formulation of delayed-release granules for oral suspension.    

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  32 AstraZeneca Annual Report and
Form 20-F Information 2005


Sales of Toprol-XL were $1.3 billion and in the fourth quarter of 2005, Toprol-XL surpassed Norvascin total prescriptions to become the most prescribed branded anti-hypertensive in the US. In addition, Toprol-XL maintained its position in the US as the most prescribed product by cardiologists across all classes (including hypertensives). The NDA for a fixed dose combination product comprising Toprol-XL and hydrochlorothiazide was submitted to the FDA in October 2005. Patent litigation has been progressing against three companies seeking FDA approval to sell generic metoprolol succinate. On 17 January 2006, summary judgement was entered against AstraZeneca. We will appeal. Further information is set out on page 123.

In January 2006 we were served with a putative class action anti-trust complaint in the US by Meijer Inc. and Meijer Distribution, Inc. The complaint makes sham litigation claims based on the above patent decision. For more details see page 123.

Atacand received approval for a new indication for heart failure in May following the positive recommendation of an FDA Advisory Committee.

Arimidex, the leading aromatase inhibitor, continued its strong growth trajectory, bolstered by the positive results of the ATAC trial published in late 2004.

Pulmicort Respules, the only inhaled corticosteroid approved in the US for children as young as 12 months, has experienced strong sales growth of greater than 20% over the previous year.

An NDA was filed in September for Symbicort, a combination of budesonide and formoterol. This application is for maintenance treatment of asthma in patients aged 12 years and above for two strengths (80/4.5 and 160/4.5 micrograms).

The sales organisation continued to improve its productivity and focus during 2005. The sales force effectiveness programme put into place over the last two years continues to bring value to both pharmaceutical sales specialists and customers. AstraZeneca has continued to improve its reputation among pharmacy benefits managers, ranking number one in two major syndicated surveys.

In the US, fee for service agreements were implemented with 30 wholesalers with the aim of helping to manage stock and service in the trade channel. The agreements have been highly effective in managing demand and stabilising inventory. These replace the previous agreements known as inventory

management agreements, which were reported on last year.

The Medicare Prescription Drug Benefit (the Benefit) became effective on 1 January 2006. AstraZeneca is fully committed to the success of the Benefit. The mechanism for delivering the Benefit via the private market system is developing. The Center for Medicare and Medicaid Services has announced that there will be sufficient Medicare Advantage –Prescription Drug Plans (MA-PDs) and Prescription Drug Plans (PDPs) in each of the regions to deliver the Benefit. AstraZeneca has completed negotiations of contracts with MA-PDs and PDPs, and is encouraged with its current level of projected access in this new market segment. AstraZeneca expects the effect of the Benefit to be broadly neutral in the short term. The eventual effect of the Benefit on AstraZeneca’s business will be variable across our portfolio, but will be the cumulative result of the outcome of key variables such as:

> The number of Medicare Eligible Individuals (MEIs) who sign up for the Benefit.
> The degree and timing of population shifts of MEIs from existing drug benefit plans (i.e. either employer or independent coverage plans).
> The distribution of covered lives amongst plans.
> The number of Medicare beneficiaries with access to AstraZeneca medicines.
> The extent of additional demand resulting from beneficiaries without current or sufficient prescription drug coverage.
> Ultimately, the beneficiary satisfaction level with the Benefit and the benefit providers.

For more information on US price regulation, see also page 44.

With the implementation of the Benefit, AstraZeneca is fully committed to supporting education and outreach initiatives for this vulnerable population, so that they have the necessary information to make an informed decision on this important personal healthcare choice. This is being implemented through several initiatives, including a grant to the National Council on the Aging (NCOA) that will enable NCOA and related entities to undertake a major national effort designed to help people with Medicare understand the new Medicare prescription drug coverage (Part D) and be prepared to make the enrolment decision that they believe is right for them.

The issues of cross-border movement of products into the US and coverage for the non-Medicare eligible uninsured will continue to be debated among state and federal elected officials, the media and special interest groups during 2006. Specifically with regard to state activity, the industry could see an increase in threats of price control and additional efforts to regulate sales and marketing activity. We also expect additional focus by the FDA on drug safety, risk communication and direct-to-consumer advertising.

During 2005, three products (Crestor, Nexium and Seroquel) achieved $100 million in annual sales for the first time. Total sales for the year were $976 million, an underlying growth of 2% (reported 11%). AstraZeneca maintained its market position as the second largest pharmaceutical company in Canada. Crestor maintained its number two market ranking, supported by the recently launched Crestor Healthy Changes Support Program which helps patients to understand better and improve the management of their cholesterol and to develop a healthier lifestyle. The ATAC clinical study was a key driver of strong growth for Arimidex in 2005. Seroquel became the leader in new prescriptions in the atypical market in the fourth quarter. Several new indications for our marketed products were approved. Seroquel was approved for the treatment of bipolar mania disorder in late 2004. Atacand, one of AstraZeneca Canada’s key growth products, received regulatory approval for the treatment of symptomatic heart failure. Merrem received its eighth indication for the treatment of complicated skin and skin structure infections, and Crestor also received approval for the 5mg dose. In line with our continued efficiency drive, we launched a new Siebel-based customer contact and information management system to support improved field force and organisational efficiency in customer interactions.

In May 2005, the Canadian Federal Court of Appeal quashed Apotex’s marketing approval for a generic omeprazole capsule product. The Supreme Court of Canada granted Apotex leave to appeal and allowed Apotex to continue selling its omeprazole capsules pending that appeal. For more details, see page 120.

We secured business partnerships designed to reinvigorate several important established AstraZeneca products. We entered into a sales and distribution agreement with Theramed Corporation for the promotion of Plendil and Rhinocort. We also entered into agreements with partners for the promotion of Zestoretic and Imdur to ensure they maintain a significant place in their respective markets.

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Business Review 33  


Sales in the rest of the world performed strongly, up 9% to $12,203 million on an underlying basis (+12% on a reported basis). On an underlying basis, key growth products (Nexium, Crestor, Symbicort, Seroquel and Arimidex) were up 31% against 2004 (reported growth 34%). Sales in emerging markets were up a healthy 19% on an underlying basis (24% on a reported basis). This increase was underpinned by continued investments in sales and marketing initiatives.

Sales in Europe were up 8% (reported +11%) to $8,463 million, with strong underlying demand in Germany, the UK and Central and Eastern Europe (CEE). With a 5% market share, we were ranked as the fifth largest prescription drug company.

Nexium (underlying +24%, reported +27%), Symbicort (underlying +21%, reported +24%), Crestor (underlying +44%, reported +47%), Arimidex (underlying +35%, reported +38%) and Seroquel (underlying +48%, reported +51%) all performed strongly, each one of them taking significant market share from competitors. Excluding sales of patent-expired products ($1,059 million, down 21% on an underlying basis and 19% on a reported basis), sales in Europe were up an underlying 14% (reported 17%).

Widespread government pricing controls continued to slow the overall rate of market growth in Europe, although the impact was less severe than in 2004.

Our sales in France were up an underlying 1% (reported 4%), giving us a ranking of fourth. We continued to see good sales growth in our key growth products (+32% underlying, +35% reported), which minimised the ongoing effect of Losec patent expiry.

Germany enjoyed a very strong year, with sales of $1,223 million. Good growth in the German market as a whole (+20% underlying, 23% reported) was affected during the year by a reduction in the special rebate on sales of non-reference priced products (from 16% to 6%) as well as new reference price groups. Our recently launched products enjoyed strong momentum and have gained market share, with Symbicort now the leading brand (in volume terms) and Nexium the number one prescribed PPI (in volume terms) (IMS Health, VIP) since the first quarter in 2005.

In Italy, sales were $1,152 million. Following launch in 2004, Crestor continued to be a key driver for growth (+94% underlying, +98% reported). Casodex (+3% underlying, +6% reported), our third biggest product, and Arimidex (+31% underlying, +33% reported) are market leaders in the anti-androgens market and aromatase inhibitors market respectively. Nexium sales were up 16% on an underlying basis (reported 19%) and the approval for risk reduction of NSAID-associated stomach ulcers earlier in 2005 is expected to continue to drive future sales.

In the UK, sales were $757 million, driven primarily by Symbicort (+75% underlying, +77% reported) and Seroquel (+14% underlying, +16% reported). Arimidex benefited from expanded use into adjuvant breast cancer.

In Spain, sales were $730 million, driven by Nexium (+82% underlying, +88% reported) and Seroquel (+40% underlying, +42% reported).

In June 2005, the European authorities approved wider use of Arimidex to include the adjuvant treatment of post-menopausal women with hormone receptor positive early invasive breast cancer.

Strong sales were recorded in CEE (+29% underlying, +37% reported), particularly in Russia, where the pharmaceutical market benefited from the introduction of a federal reimbursement list for pharmaceuticals.

In Japan, strong growth from Casodex (+16% underlying, +15% reported), Zoladex (+15% underlying, +14% reported), Losec (+25% underlying, +23% reported) and Arimidex (+27% underlying, +25% reported) drove overall sales up an underlying 8% (7% reported) to $1,527 million. Iressa sales declined by 15%, following the publication of the ISEL trial result. We again grew ahead of the market in 2005 (+8% against +5%) and we were ranked 14th. Since the launch of Crestor in April, we have initiated, together with Shionogi & Co. Ltd., a post-marketing surveillance programme at specific medical institutions in accordance with Ministry of Health, Labour & Welfare requirements. The programme started around April 2005 and is expected to take 18 to 24 months. Significant sales of Crestor in Japan are not anticipated before completion of this programme. An interim report is due in the second half of 2006, which will determine the subsequent course of the programme and thereafter the full-scale launch schedule.

Asia Pacific (excluding Japan)
We delivered another strong year in Asia Pacific, with sales up 15% to $1,386 million (reported 20%). AstraZeneca was ranked fourth and was the fastest growing among the top 10 pharmaceutical companies.

Sales in the largest market in the region, Australia, were $504 million, driven by a 36% increase in sales of recently launched products (excluding an exchange benefit of 8%), which more than offset declining sales of Losec. In China, of the 24 multi-nationals surveyed by the Hong Kong Association of the Pharmaceutical Industry, we are the largest prescription drug company (third ranking overall) and with underlying growth of 33% (reported 34%), we are one of the fastest growing pharmaceutical companies.

On an underlying basis, sales in South Korea were up 23% (38% reported) to $137 million, driven by a strong performance of our recently launched products. Sales in Taiwan increased by 8% on an underlying basis (14% reported), in a market where growth was significantly inhibited by government policies. In South East Asia, we enjoyed average underlying growth of 17% with particular success in Thailand (30%).

Latin America
Sales in the Latin America region increased by 17% on an underlying basis (reported 25%) to $579 million, driven by Brazil, Venezuela and Mexico. Sales in the rest of Latin America were up 20%. Merrem remained our best selling product (+16%), while sales of Crestor (+27%) and Nexium (+34%) continued to be very dynamic.

In Mexico, the largest market in the region, sales reached $233 million. In Brazil, we achieved underlying growth of 18% and Nexium is the brand leader in a highly fragmented market.

Middle East & Africa
Underlying sales growth in the Middle East was 10% (reported 17%), driven by strong sales of Nexium, Symbicort and Atacand.

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  34 AstraZeneca Annual Report and
Form 20-F Information 2005


We remain committed to sustainable development of our business and the continued delivery of new, medically important and differentiated medicines.

In 2005, our research and development investment totalled $3.4 billion ($3.5 billion in 2004, $3 billion in 2003). The results of the strong drive to increase productivity are becoming evident in the sustained size of the early development portfolio: during 2005, another 25 candidate drugs (CDs) were selected (18 in 2004 and 15 in 2003).

In Development, we aim to successfully turn CDs into marketed medicines, as well as acquiring new projects through in-licensing and acquisition to supplement in-house Discovery efforts where appropriate. At the end of 2005, there were 45 projects in the pre-clinical phase and 17, 15 and 29 projects in clinical phases 1, 2 and 3 respectively.

In 2005, our continued commitment to R&D included investments in laboratory facilities in Sweden, the UK and the US and at the Bangalore site in India. Training and development of our employees is an integrated and continuous process.

During 2005, we changed the way we manage and prioritise our portfolio, both at the early development stage and when a project reaches the point when it requires input from our Global Marketing and Business Development (GMBD) teams.

In Discovery, our 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 in our chosen areas of activities. This work is supported by other specialised Discovery groups in Safety Assessment and Process R&D who also support the projects in their progress through Development and lifecycle management. 2005 saw the formation of three global discovery functions: Discovery Enabling Capabilities & Science, Discovery Information and Development Drug Metabolism Pharmacokinetics, each supporting all research areas. They provide skills platforms in compound management, structural chemistry, bio-imaging, transgenics, pathway analysis, protein science, and information science and informatics.

Improving productivity in Discovery remains a core priority. Our strategic initiatives are directly aligned to improving the quality of biological targets and chemical leads, so that we can eliminate, at an earlier stage, those compounds that are unlikely to make it through clinical development. For example, collaboration between clinical medicine and basic science (Discovery Medicine) continues to help us gain a better understanding of human diseases and the suitability of future medicines to prevent and treat those diseases. Alongside continued investment in improved lead generation capability, we are introducing, where possible, high throughput testing of safety and drug metabolism/pharmacokinetics much earlier into the process, so that CDs chosen for development are more likely to succeed. We have also made changes so that all CDs in future will undergo formal one-month toxicology studies before being accepted into development. This should both reduce early attrition and speed up progress towards human exposure. In 2005, this process was applied to some of the 25 new CDs.

People in our Development organisation specialise in clinical research, regulatory affairs and pharmaceutical development. They work globally in project delivery-focused 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 2005 was the continuing progression of the early development portfolio, which resulted in the initiation of new phase 3 projects for each of Zactima, AZD2171 and AZD6140. The phase 3 programme for Galida continued to progress well and for NXY-059 (previously known as Cerovive), following the positive results of SAINT I, the SAINT II study was expanded to improve the likelihood of confirming the findings of SAINT I. We also supported regulatory submissions or approvals for new uses that broaden the claims or geographic coverage of Nexium, Symbicort, Arimidex and Seroquel.

Progression of the early development portfolio has resulted in three projects achieving “positive proof of principle” in clinical studies in 2005 and eight new projects entering human testing.

In 2005, the Executive Director of Development, who was appointed in January 2005, oversaw the implementation of a change programme to enhance project delivery and improve

Development’s interfaces with the Discovery and GMBD organisations. A new Development Projects function has been established to support project management and leadership of our global product teams. We have streamlined our R&D operating model to achieve clearer roles, responsibilities and improved portfolio review and decision-making. A Development Productivity Improvement programme should help us to make better use of our assets and deliver more projects with the same resources. We are continuing to invest in China and, in 2005, a number of projects for accelerated clinical development in China were identified.

As a company whose success is built on leading-edge science, it is essential that we continuously monitor new capabilities and identify opportunities that will help us to develop the next generation of medicines that offer better results for patients. Biological molecules present such an opportunity and, during the last few years, have been the fastest growing segment of the pharmaceutical market. Biological molecules are usually produced naturally by living organisms in response to disease – for example, anti-bodies. New technologies have opened up the possibility of imitating and improving on the natural response, where it is not itself being effective. As part of a comprehensive biopharmaceutical strategy, we are determined to secure a significant share of this market by building on the two collaborations described below. By playing an active role in the development of these new technologies, we aim to bring new medicines based on them to patients as early as possible.

To complement our in-house R&D capabilities, over 200 new collaborations have been entered into in 2005 with leading academic centres and biotechnology companies, bringing the total number of active R&D collaborations and agreements to more than 1,700.

As reported earlier, in 2003 and 2004 we entered into two significant collaborations with, respectively, Abgenix Inc. and Cambridge Antibody Technology. These collaborations are aimed at discovering human monoclonal anti-body drug candidates and expanding the range of disease mechanisms and targets that they can address. The Cambridge Antibody Technology collaboration is for respiratory and inflammation targets, whilst the collaboration with Abgenix Inc. is for cancer targets.

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Business Review 35  


(In December, Abgenix announced that it was to be acquired by Amgen.) We are reviewing all aspects of our research, operations and commercialisation process to ensure that the Company can meet the challenges of bringing these new biological medicines to market for the benefit of patients as quickly and effectively as possible.

In line with our strategy of pursuing targeted acquisition, licensing and partnership opportunities where appropriate, we have entered into a number of significant externalisation transactions to strengthen our mid- to late-stage pipeline in some of our key therapy areas:

> Cardiovascular: reverse cholesterol transport enhancers collaboration with Avanir (including AZD2479 in phase 1); and AGI-1067 (phase 3), an investigational oral drug for the treatment of atherosclerosis, with AtheroGenics Inc.
> Respiratory and Inflammation: disassociated steroids with Schering AG – selective glucocorticoid receptor agonists (SEGRAs).
> Oncology: Anti-cancer target protein kinase B (Akt), with Astex Therapeutics; and acquisition of KuDOS Pharmaceuticals Limited, which will extend the Oncology pipeline to include inhibitors of DNA repair.
> Infection: CytoFab(phase 2), polyclonal antibody for the treatment of severe sepsis, with Protherics.
> Neuroscience: neuronal nicotinic receptor compounds to improve cognitive recognition in Alzheimer’s disease and schizophrenia with Targacept, including TC-1734 (phase 2).

Further details are provided in the respective therapy area sections. This externalisation activity supplements and complements our internal ongoing Discovery and Development projects and processes.

  The following glossary is used for the pipeline tables in the therapy areas on pages 14, 18, 21, 24, 27 and 30 and in the Development Pipeline on pages 36 and 37.
  5HT 5-hydroxytryptamine (serotonin)
  5HT1B 1B subtype of 5HT receptor
  5HT2 2 subtype of 5HT receptor
  ADP adenoside diphosphate
  AF atrial fibrillation
  AGT 06-alkylguanineDNA-alkyltransferase
  CHF congestive heart failure
  COPD chronic obstructive pulmonary disease
  CPU carboxy peptidase-U
  CRC colo-rectal cancer
  D2 2 subtype of dopamine receptor
  EGFR-TKI epidermal growth factor receptor-tyrosine
    kinase inhibitor
  GERD gastro-oesophageal reflux disease
  GI gastrointestinal
  H half year
  HCTZ hydrochlorothiazide
  IBAT ilial bile acid transport
  IV intravenous
  MEK mitogen activated (extra-cellular
    signal-regulated kinase) kinase
  MI myocardial infarction
  NCE new chemical entity
  NNR neuronal nicotinic receptor
  NSAID non-steroidal anti-inflammatory drug
  NSCLC non-small cell lung cancer
  PARP poly-ADP-ribose polymerase
  PC pre-clinical: candidate drug accepted
    for development but not yet administered
    to man
  pMDI pressurised metered dose inhaler
  PPAR peroxisome proliferator-activated receptor
  Q quarter
  SMART Symbicort Maintenance and
    Reliever Therapy
  SRS sarcoma
  TLESR transient lower oesophageal sphincter
  VEGFR-TKI vascular endothelial cell growth factor
    receptor-tyrosine kinase inhibitor
  VTE venous thromboembolism
  >2008 not earlier than 2009

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  36 AstraZeneca Annual Report and
Form 20-F Information 2005


        Estimated filing date
Therapy area Compound Mechanism Areas under investigation Europe US

 CV AZD8450   dyslipidaemia >2008 >2008

 CV AZD6370   diabetes >2008 >2008

 CV AZD8593   haemostasis >2008 >2008

 CV AZD1175   diabetes/obesity >2008 >2008

 CV AZD2207   diabetes/obesity >2008 >2008

 CV AZD1305   arrhythmias >2008 >2008

 CV AZD1092   diabetes >2008 >2008

 CV AZD4121   dyslipidaemia >2008 >2008

 GI AZD8081   functional GI disease >2008 >2008

 GI AZD6538   GERD >2008 >2008

 Neuroscience AZD3102   Alzheimer’s disease >2008 >2008

 Neuroscience AZD1080   Alzheimer’s disease >2008 >2008

 Neuroscience AZD2327   anxiety >2008 >2008

 Neuroscience AZD5904   multiple sclerosis >2008 >2008

 Neuroscience AZD6538   neuropathic pain >2008 >2008

 Neuroscience AZD8797   multiple sclerosis >2008 >2008

 Neuroscience AZD3783   anxiety and depression >2008 >2008

 Neuroscience AZD1940   nociceptive and neuropathic pain >2008 >2008

 Neuroscience AZD9335   neuropathic pain >2008 >2008

 Neuroscience AZD3241   Parkinson’s disease >2008 >2008

 Oncology AZD9935 VEGFR-TKI solid tumours >2008 >2008

 Oncology AZD0424 SRC kinase inhibitor solid tumours >2008 >2008

 Oncology AZD8931   solid tumours >2008 >2008

 Oncology AZD4877   solid tumours >2008 >2008

 Oncology AZD7762   solid tumours >2008 >2008

 Oncology AZD5180 (Abgenix)   solid tumours >2008 >2008

 Oncology AZD1845   solid tumours >2008 >2008

 Oncology AZD8330   solid tumours >2008 >2008

 Oncology AZD3646   solid tumours and haematological malignancies >2008 >2008

 R&I AZD6067 protease inhibitor COPD >2008 >2008

 R&I AZD6703   rheumatoid arthritis >2008 >2008

 R&I AZD6357   osteoarthritis >2008 >2008

 R&I AZD7928   COPD >2008 >2008

 R&I AZD2914   COPD >2008 >2008

 R&I AZD2392   asthma/rhinitis >2008 >2008

 R&I AZD1744   asthma/rhinitis >2008 >2008

 R&I AZD5672   rheumatoid arthritis >2008 >2008

 R&I AZD3825   asthma >2008 >2008

 R&I AZD1236   COPD >2008 >2008

 R&I AZD4818   COPD >2008 >2008

 R&I AZD5069   COPD >2008 >2008

 R&I AZD9668   COPD >2008 >2008

 R&I AZD9215   asthma >2008 >2008

 R&I AZD1678   asthma >2008 >2008

 R&I AZD6605   osteoarthritis >2008 >2008

 PHASE 1: NCEs         

 CV AZD2479 (Avanir) reverse cholesterol transport enhancer dyslipidaemia >2008 >2008

 CV AZD6610   dyslipidaemia/diabetes >2008 >2008

 CV AZD8677   dyslipidaemia/diabetes >2008 >2008

 GI AZD3355 TLESR GERD >2008 >2008

 GI AZD9343 TLESR GERD >2008 >2008

 GI AZD9272   GERD >2008 >2008

 Neuroscience AZD9272   neuropathic pain >2008 >2008

 Oncology AZD0530 SRC kinase inhibitor solid tumours and haematological malignancies >2008 >2008

 Oncology AZD6244 (ARRY-142886) MEK inhibitor solid tumours >2008 >2008

 Oncology AZD1152 aurora kinase inhibitor solid tumours and haematological malignancies >2008 >2008

 Oncology AZD4769   solid tumours >2008 >2008

 Oncology KU59436 (KuDOS) PARP inhibitor breast cancer >2008 >2008

 Oncology AQ4N (KuDOS) hypoxia activated cytotoxic solid tumours >2008 >2008

Abbreviations used in the above tables are explained on page 35.

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Business Review 37  


        Estimated filing date
Therapy area Compound Mechanism Areas under investigation Europe US

 R&I AZD8309 chemokine receptor antagonist rheumatoid arthritis >2008 >2008

 R&I AZD8309 chemokine receptor antagonist COPD >2008 >2008

 R&I AZD3342 protease inhibitor COPD >2008 >2008

 R&I AZD1981   asthma >2008 >2008

 PHASE 2: NCEs          

 CV AZD7009 anti-arrhythmic IV atrial fibrillation – conversion 2008 2008

 CV AZD9684 CPU inhibitor thrombosis >2008 >2008

 CV AZD0837 thrombin inhibitor thrombosis >2008 >2008

 GI AZD9056 ion channel blocker inflammatory bowel disease >2008 >2008

 Neuroscience AZD3480 (TC-1734 Targacept) NNR agonist cognitive disorders >2008 >2008

 Oncology Zactima (ZD6474) VEGF/EGF TKI inhibitor with RET kinase activity medullary thyroid cancer >2008 >2008

 Oncology Patrin(KuDOS) AGT inhibitor solid tumours