6-K 1 a19-12893_16k.htm 6-K

Table of Contents

 

 

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of July 2019

 

Commission File Number: 001-11960

 

AstraZeneca PLC

 

1 Francis Crick Avenue

Cambridge Biomedical Campus

Cambridge CB2 0AA

United Kingdom

 

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

 

Form 20-F x           Form 40-F o

 

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

 

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

 

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

 

Yes o               No x

 

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

 

 

 


Table of Contents

 

AstraZeneca PLC

25 July 2019 07:00 BST

 

H1 2019 Results

Continuing strong top-line performance underpins confidence in sustainable growth

 

First-half Product Sales growth of 12% (17% at CER(1)) to $11,183m included an acceleration in second-quarter Product Sales to $5,718m (+14%, +19% at CER). The second quarter saw every sales region and all three therapy areas deliver an encouraging performance, including:

 

·                      The sustained performance of new medicines(2) (+66%, +72% at CER) to $2,385m

 

·                      Sales growth by therapy area in the quarter: Oncology +51% (+57% at CER) to $2,167m, New CVRM(3) +9% (+13% at CER) to $1,061m and Respiratory +2% (+7% at CER) to $1,252m

 

·                      Sales growth by region in the quarter: total Emerging Markets sales grew by 17% (27% at CER) to $1,947m, with China sales growth of 34% (44% at CER) to $1,166m, ahead of recent trends. US sales increased by 16% to $1,877m; Europe sales returned to growth, increasing by 1% (8% at CER) to $1,047m. Japan sales increased by 30% (34% at CER) to $672m

 

These results were accompanied by further positive pipeline developments, with the second half of the year anticipated to be an exceptionally busy period for the pipeline.

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% change

 

 

 

% change

 

 

 

$m

 

Actual

 

CER

 

$m

 

Actual

 

CER

 

Product Sales

 

11,183

 

12

 

17

 

5,718

 

14

 

19

 

Collaboration Revenue

 

131

 

(59

)

(57

)

105

 

(17

)

(12

)

Total Revenue

 

11,314

 

9

 

14

 

5,823

 

13

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported(4) Operating Profit

 

1,590

 

9

 

12

 

493

 

(35

)

(37

)

Core(5) Operating Profit

 

3,011

 

39

 

44

 

1,361

 

7

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported EPS(6)

 

$0.56

 

3

 

 

$0.09

 

(64

)

(71

)

Core EPS

 

$1.62

 

38

 

40

 

$0.73

 

5

 

1

 

 

Pascal Soriot, Chief Executive Officer, commenting on the results said:

 

“The momentum generated last year continued into the first half, consolidating AstraZeneca’s return to growth based on the strength of our new medicines. Five of these new medicines are anticipated to be blockbusters this year, supporting sales across both Oncology and BioPharmaceuticals. Emerging Markets, the US and Japan all grew strongly, and we delivered an encouraging turnaround in Europe in the second quarter. Selective investment in sustainable growth also continued, particularly in Emerging Markets and in our launch programmes. Additional regulatory approvals for Lynparza in ovarian cancer in the EU and Japan, together with approvals for Breztri and Bevespi in COPD in Japan, illustrated further progress from our pipeline.

 

Accompanying earnings growth this year, we are pleased to upgrade our Product Sales guidance and we are committed to working on our operating leverage and driving cash generation over the long term.”

 

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Financial summary

 

·                  Product Sales increased by 12% in the half (17% at CER) to $11,183m

 

·                  The Reported Gross Margin increased by two percentage points in the half to 80%, partly reflecting the mix of Product Sales and manufacturing efficiencies; the Core Gross Margin increased by one percentage point to 81%

 

·                  Reported Operating Expenses increased by 5% in the half (10% at CER) to $8,238m and represented 73% of Total Revenue (H1 2018: 76%). Core Operating Expenses increased by 1% (5% at CER) to $6,922m and represented 61% of Total Revenue (H1 2018: 67%), demonstrating operating leverage

 

·                  Reported R&D Expenses declined by 1% (an increase of 3% at CER) to $2,622m. Core R&D Expenses declined by 2% (an increase of 2% at CER) to $2,505m

 

·                  Reported SG&A Expenses increased by 9% (14% at CER) to $5,457m; Core SG&A Expenses increased by 3% (7% at CER) to $4,258m, primarily reflecting growth in China, as well as ongoing additional support for new medicines

 

·                 Reported Other Operating Income and Expense declined by 35% in the half (34% at CER) to $706m; Core Other Operating Income and Expense increased by 1% (2% at CER) to $708m; in the second quarter, Core Other Operating Income and Expense declined by 80% to $114m

 

·                  The Reported Operating Margin was stable in the half at 14%; the Core Operating Margin increased by six percentage points (five at CER) to 27%

 

·                  Reported EPS of $0.56 in the half, based on a weighted-average number of shares of 1,289m, represented an increase of 3% (stable at CER); Core EPS increased by 38% (40% at CER) to $1.62. The difference between the Reported and Core performance partly reflected the impact of a favourable $346m legal settlement in H1 2018, recognised as income in Reported Other Operating Income and Expense, as well as the commencement of the amortisation of Lokelma and fair-value adjustments arising on acquisition-related liabilities recognised in Reported SG&A Expense in Q2 2019

 

·                  The Reported Tax Rate was 25% (H1 2018: 19%); the Core Tax Rate was 21% (H1 2018: 19%). The tax rates in the half reflected the geographical mix of profits and the impact of collaboration and divestment activity

 

·                  An unchanged first interim dividend of $0.90 per share

 

·                  The Company today upgrades part of its financial guidance for the year (see page four)

 

Commercial summary

 

Oncology

Sales growth of 52% in the half (58% at CER) to $4,059m, including:

 

·             Tagrisso sales of $1,414m, representing growth of 86% in the half (92% at CER) that was driven by 2018 regulatory approvals in the 1st-line EGFR(7)-mutated (EGFRm) NSCLC(8) setting. There was a sequential quarterly increase of 16% in US sales of Tagrisso from the first to the second quarter, partly reflecting continued underlying demand growth. Japan sales increased by 147% (151% at CER) to $291m

 

·             Imfinzi sales of $633m, representing growth of 244% (248% at CER). While the majority of sales were in the US, Europe sales amounted to $60m (H1 2018: $3m), with Japan sales of $86m ($nil in H1 2018)

 

·             Lynparza sales of $520m, representing growth of 93% (100% at CER), driven by expanded use in the treatment of ovarian and breast cancer in the US and Europe. The performance included growth in Emerging Markets of 228% (267% at CER) to $59m and growth in Japan of 480% (490% at CER) to $58m

 

·             The performance from more-mature Oncology medicines in the half included Faslodex growth of 4% (8% at CER) to $521m and an 8% decline in Iressa sales (3% at CER) to $252m. The Company anticipates increased

 

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challenges for both medicines in the second half, partly reflecting additional generic Faslodex competition in the US and the pricing impact on Iressa from centralised procurement in China

 

·             Oncology sales growth in Emerging Markets of 40% (52% at CER) to $1,048m

 

New CVRM

Sales growth of 12% in the half (16% at CER) to $2,094m, including:

 

·             Brilinta sales of $737m, representing growth of 21% (26% at CER). Patient uptake continued in the treatment of acute coronary syndrome and high-risk post-myocardial infarction

 

·             Farxiga sales of $726m, with growth of 14% (19% at CER), ahead of an anticipated label update in major markets to reflect results from the DECLARE CV outcomes trial

 

·             Bydureon sales of $283m, a decline of 4% (3% at CER), driven by production constraints that are now resolved

 

·              New CVRM sales growth in Emerging Markets of 31% (44% at CER) to $521m

 

Respiratory

Sales growth of 5% in the half (10% at CER) to $2,535m, including:

 

·             A Symbicort sales decline of 10% (6% at CER) to $1,170m, reflecting continued pricing pressure and the impact of managed-market rebates in the US. This was partially offset by positive volumes from US government-buying patterns

 

·             Pulmicort sales growth of 13% (19% at CER) to $716m; the majority of Pulmicort sales were in Emerging Markets. Q2 2019 global sales increased by 16% (23% at CER) to $333m

 

·             Fasenra sales of $296m, representing growth of 244% (249% at CER). New-to-brand prescription data showed that Fasenra was generally the preferred novel-biologic medicine for the treatment of severe asthma during the period, in markets where Fasenra is established, despite being the third such medicine to launch

 

·             Respiratory sales growth in Emerging Markets of 22% (30% at CER) to $956m

 

Emerging Markets

As the Company’s largest region, at 35% of total Product Sales, Emerging Markets sales increased by 15% in the half (24% at CER) to $3,951m, including:

 

·                  A China sales increase of 27% in the half (35% at CER) to $2,408m. Highlights included Oncology sales growth of 58% (68% at CER) to $635m and New CVRM growth of 72% (83% at CER) to $218m

 

·             An ex-China sales increase of 1% in the half (10% at CER) to $1,543m. The performance was negatively impacted by product divestments and developments in Brazil (-25%, -15% at CER). Positive developments, however, included sales of $569m in (non-China) Asia-Pacific (+5%, +9% at CER) and $112m in Russia (+67%, +85% at CER)

 

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Pipeline highlights

 

The following table highlights significant developments in the late-stage pipeline since the prior results announcement:

 

Regulatory approvals

 

·

Lynparza - ovarian cancer (1st line, BRCAm(9)): regulatory approval (EU, JP)

 

·

Qternmet XR - T2D(10): regulatory approval (US)

 

·

Bevespi - COPD(11): regulatory approval (JP)

 

·

Breztri (formerly PT010) - COPD: regulatory approval (JP)

 

 

 

 

Regulatory submissions and/or acceptances

 

·

Lynparza - pancreatic cancer (BRCAm): regulatory submission acceptance (EU)

 

·

Forxiga - T2D CVOT(12): regulatory submission (CN)

 

·

Lokelma - hyperkalaemia: regulatory submission (JP, CN)

 

 

 

 

Major Phase III data readouts or other significant developments

 

·

Imfinzi - SCLC(13): met Phase III primary endpoint

 

·

Imfinzi - SCLC: Orphan Drug Designation (US)

 

·

trastuzumab deruxtecan - breast cancer (3rd line, HER2+): met pivotal Phase II primary endpoint

 

·

Calquence - CLL(14) (relapsed/refractory): met Phase III primary endpoint

 

·

Calquence - CLL (treatment-naïve): met Phase III primary endpoint

 

·

Forxiga - T2D CVOT: positive opinion (EU)

 

·

Farxiga - T1D(15): complete response letter (US)

 

·

Lokelma - hyperkalaemia: priority review (CN)

 

·

roxadustat - anaemia of CKD(16): pooled Phase III CV safety confirmed

 

·

Breztri - COPD: priority review (CN)

 

·

Fasenra - severe asthma (self-administration and auto-injector): positive opinion (EU)

 

Financial priorities, including guidance

 

All measures in this section are at CER and Company guidance is on Product Sales and Core EPS only.

 

All guidance and indications provided assume that the UK’s anticipated exit from the European Union (EU), even in the event of a no-deal exit, proceeds in an orderly manner such that the impact is within the range expected, following the Company’s extensive preparations for such an eventuality.

 

AstraZeneca anticipates strong and sustainable long-term Product Sales growth to be accompanied by operating leverage, leading to an improvement in profitability and cash generation.

 

Product Sales

 

Reflecting the performance in the first half and the return to Product Sales growth in H2 2018, Product Sales in FY 2019 are now expected to increase by a low double-digit percentage; the prior guidance was for a high single-digit percentage increase.

 

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Core EPS

 

As a key part of its long-term growth strategy, the Company is committed to focusing on appropriate cash-generating and value-accretive collaboration activities that reflect the ongoing productivity of the pipeline. Separately, AstraZeneca will, from time to time, also focus its medicine portfolio through divestments.

 

AstraZeneca reiterates its Core EPS guidance of $3.50 to $3.70 over the full year. This guidance includes the anticipation of a lower sum of Collaboration Revenue and Core Other Operating Income and Expense versus the prior year.

 

Variations in performance between quarters can be expected to continue. The Company is unable to provide guidance and indications on a Reported basis because the Company cannot reliably forecast material elements of the Reported result, including the fair-value adjustments arising on acquisition-related liabilities, intangible-asset impairment charges and legal-settlement provisions. Please refer to the section Cautionary Statements Regarding Forward-Looking Statements at the end of this announcement.

 

Operating leverage

 

The Company expects to deliver significant operating leverage over the long term. Encouraging progress was made in the half, with the Reported Operating Margin stable at 14% and the Core Operating Margin increasing by six percentage points (five at CER) to 27%. Core Operating Profit is anticipated to increase in the year by a mid-teens percentage versus FY 2018, ahead of Product Sales.

 

Cash generation

 

In FY 2019, the cash performance is expected to include a number of payments relating to prior business-development transactions; the majority of the value of these payments in the year was settled in the first half. AstraZeneca generated a net cash inflow from operating activities of $491m in the half, compared to an outflow of $75m in H1 2018.

 

Other indications

 

The Company also provides other indications for FY 2019:

 

·                  Capital expenditure is expected to be broadly stable and restructuring expenses are targeted to reduce versus the prior year

 

·                  A Core Tax Rate of 18-22% (FY 2018: 11%)

 

Currency impact

 

If foreign-exchange rates were to remain at the average of rates seen in the period from January to June 2019, it is anticipated that there would be a low single-digit percentage adverse impact on Product Sales and Core EPS. In addition, the Company’s foreign-exchange rate sensitivity analysis is contained within the operating and financial review.

 

Sustainability

 

AstraZeneca’s sustainability ambition is founded on making science accessible and operating in a way that recognises the interconnection between the health of the business, people and the planet and that each of these impact one another. The Company’s sustainability ambition is reinforced by its purpose and values, which are intrinsic to its business model and ensures that the delivery of its strategy broadens access to healthcare, minimises the environmental footprint of its activities and products of medicines and processes and ensures that all business activities are underpinned by the highest levels of ethics and transparency. A full update on the Company’s sustainability progress is shown in the Sustainability section of this announcement.

 


Notes

 

The following notes refer to pages 1-5:

 

1.              Constant exchange rates. These are financial measures that are not accounted for according to generally-accepted accounting principles (GAAP) because they remove the effects of currency movements from Reported results.

 

2.              TagrissoImfinzi, Lynparza, Calquence, Farxiga, Brilinta, Lokelma, Fasenra, Bevespi and Breztri. These new medicines are pillars in the main therapy areas and are important platforms for future growth.

 

3.              New Cardiovascular (CV), Renal and Metabolism, incorporating Diabetes medicines, Brilinta and Lokelma.

 

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4.              Reported financial measures are the financial results presented in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board and adopted by the EU.

 

5.              Core financial measures. These are non-GAAP financial measures because, unlike Reported performance, they cannot be derived directly from the information in the Company Financial Statements. See the operating and financial review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

 

6.              Earnings per share.

 

7.              Epidermal growth factor receptor.

 

8.              Non-small cell lung cancer.

 

9.              Breast cancer susceptibility genes 1/2, mutated.

 

10.       Type-2 diabetes.

 

11. Chronic obstructive pulmonary disease.

 

12. CV outcomes trial.

 

13. Small cell lung cancer.

 

14. Chronic lymphocytic leukaemia.

 

15. Type-1 diabetes.

 

16. Chronic kidney disease.

 

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Pipeline: anticipated major news flow

 

Innovation is critical to addressing unmet patient needs and is at the heart of the Company’s growth strategy. The focus on research and development is designed to yield strong and sustainable results from the pipeline.

 

H2 2019

·

Tagrisso - NSCLC (1st line, EGFRm): regulatory decision (CN)

·

Tagrisso - NSCLC (1st line, EGFRm): data readout (final OS(17))

·

Imfinzi - unresectable, Stage III NSCLC (PACIFIC): regulatory decision (CN)

·

Imfinzi + treme - NSCLC (1st line) (NEPTUNE): data readout

·

Imfinzi +/- treme - NSCLC (1st line) (POSEIDON): data readout, regulatory submission

·

Imfinzi +/- treme - small cell lung cancer: regulatory submission

·

Imfinzi +/- treme - head & neck cancer (1st line): data readout

·

Imfinzi +/- treme - bladder cancer (1st line): data readout

·

Lynparza - ovarian cancer (1st line, BRCAm) (SOLO-1): regulatory decision (CN)

·

Lynparza - pancreatic cancer (BRCAm): regulatory submission

·

Lynparza - ovarian cancer (3rd line, BRCAm): regulatory submission (US)

·

Lynparza - ovarian cancer (1st line) (PAOLA-1): data readout, regulatory submission

·

Lynparza - prostate cancer (2nd line, castration-resistant): data readout, regulatory submission

·

trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2(18)-positive): regulatory submission (US)

·

Calquence - CLL: regulatory submission

·

selumetinib - NF1(19): regulatory submission

 

 

·

Farxiga - T2D CVOT: regulatory decision (US, EU)

·

Farxiga - heart failure CVOT: data readout

·

Brilinta - CAD(20)/T2D CVOT: regulatory submission

·

roxadustat - anaemia of CKD: regulatory submission (US)

 

 

·

Symbicort - mild asthma: regulatory submission (CN)

·

Bevespi - COPD: regulatory decision (CN)

·

Fasenra - self-administration and auto-injector: regulatory decision (US)

·

Breztri - COPD: data readout (ETHOS)

 


(17)  Overall survival.

(18)  Human epidermal growth factor receptor 2.

(19)  Neurofibromatosis type 1.

(20)  Coronary artery disease.

 

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H1 2020

·

Imfinzi + treme - NSCLC (1st line) (NEPTUNE): regulatory submission

·

Imfinzi +/- treme - head & neck cancer (1st line): regulatory submission

·

Imfinzi +/- treme - bladder cancer (1st line): regulatory submission

·

Lynparza - breast cancer (BRCAm): regulatory decision (CN)

·

Lynparza + cediranib - ovarian cancer (2nd line): data readout, regulatory submission

·

trastuzumab deruxtecan - advanced/refractory, metastatic gastric cancer (HER2-positive): data readout

 

 

·

Farxiga - heart failure CVOT: regulatory submission

·

Brilinta - stroke (THALES): data readout

·

Lokelma - hyperkalaemia: regulatory decision (JP, CN)

 

 

·

Breztri - COPD: regulatory decision (US, EU, CN)

H2 2020

·

Imfinzi - neo-adjuvant NSCLC: data readout

·

Imfinzi - unresectable, Stage III NSCLC (PACIFIC-2): data readout

·

Imfinzi +/- treme - liver cancer: data readout

 

 

·

Brilinta - stroke (THALES): regulatory submission

·

Epanova - hypertriglyceridaemia CVOT: data readout

·

roxadustat - anaemia of myelodysplastic syndrome: data readout

 

 

·

Fasenra - nasal polyposis: data readout, regulatory submission

·

PT027 - asthma: data readout

·

tezepelumab - severe asthma: data readout

 

 

Conference call

 

A conference call and webcast for investors and analysts will begin at 12pm UK time today. Details can be accessed via astrazeneca.com.

 

Reporting calendar

 

The Company intends to publish its year-to-date and third-quarter financial results on 24 October 2019.

 

About AstraZeneca

 

AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three therapy areas - Oncology, CVRM and Respiratory. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information, please visit astrazeneca.com and follow us on Twitter @AstraZeneca.

 

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Investor Relations

 

 

 

 

 

 

 

 

 

Thomas Kudsk Larsen

 

 

 

+44 203 749 5712

Henry Wheeler

 

Oncology

 

+44 203 749 5797

Christer Gruvris

 

BioPharmaceuticals (CV, metabolism)

 

+44 203 749 5711

Nick Stone

 

BioPharmaceuticals (respiratory, renal)

 

+44 203 749 5716

Josie Afolabi

 

Other medicines

 

+44 203 749 5631

Craig Marks

 

Finance, fixed income

 

+44 7881 615 764

Jennifer Kretzmann

 

Corporate access, retail investors

 

+44 203 749 5824

US toll-free

 

 

 

+1 866 381 7277

 

Media Relations

 

 

 

 

 

 

 

 

 

Gonzalo Viña

 

 

 

+44 203 749 5916

Rob Skelding

 

Oncology

 

+44 203 749 5821

Rebecca Einhorn

 

Oncology

 

+1 301 518 4122 

Matt Kent

 

BioPharmaceuticals

 

+44 203 749 5906

Jennifer Hursit

 

Other

 

+44 7384 799 726

Christina Malmberg Hägerstrand

 

Sweden

 

+46 8 552 53 106

Michele Meixell

 

US

 

+1 302 885 2677

 

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Table of contents

 

 

Page

Operating and financial review

11

Product Sales

14

Product Sales summary

18

Regional Product Sales

23

Financial performance

26

Corporate and business development

36

Sustainability

37

Research and development

39

Condensed consolidated statement of comprehensive income

54

Condensed consolidated statement of comprehensive income

55

Condensed consolidated statement of financial position

56

Condensed consolidated statement of changes in equity

57

Condensed consolidated statement of cash flows

58

Responsibility statement of the directors in respect of the half-yearly financial report

59

Independent review report to AstraZeneca PLC

60

Responsibilities for the interim financial statements and the review

61

Notes to the interim financial statements

62

Shareholder information

76

Cautionary statements regarding forward-looking statements

77

 

 

List of tables

 

 

 

Table 1: Total Revenue

12

Table 2: Product Sales

12

Table 3: Top-ten medicines by Product Sales

12

Table 4: Collaboration Revenue

13

Table 5: H1 2019 therapy area and medicine performance

14

Table 6: Q2 2019 therapy area and medicine performance

16

Table 7: Regional Product Sales, H1 2019

23

Table 8: Regional Product Sales, Emerging Markets

23

Table 9: Regional Product Sales, US

24

Table 10: Regional Product Sales, Europe

24

Table 11: Regional Product Sales, Established RoW

25

Table 12: H1 2019 Reported Profit and Loss

26

Table 13: H1 2019 reconciliation of Reported Profit Before Tax to EBITDA

28

Table 14: Q2 2019 reconciliation of Reported Profit Before Tax to EBITDA

28

Table 15: H1 2019 Reconciliation of Reported to Core financial measures

29

Table 16: Q2 2019 Reconciliation of Reported to Core financial measures

30

Table 17: Cash Flow

32

Table 18: Debt and capital structure

33

Table 19: Currency sensitivities

34

Table 20: Update from the late-stage pipeline

39

Table 21: Key Tagrisso trials in lung cancer

40

Table 22: Key Imfinzi trials in lung cancer

41

Table 23: Key Imfinzi trials in tumour types other than lung cancer

43

Table 24: Key Lynparza trials

45

Table 25: Key trastuzumab deruxtecan trials

47

Table 26: ASCEND adverse events of interest

48

Table 27: Key Calquence trials in CLL

48

Table 28: Key large CVRM trials

50

 

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Operating and financial review

 

All narrative on growth and results in this section is based on actual exchange rates, unless stated otherwise. Financial figures are in US$ millions ($m), unless stated otherwise. The performance shown in this announcement covers the six-month period to 30 June 2019 (the half or H1 2019) and three-month period to 30 June 2019 (the quarter or Q2 2019) compared to the six-month period to 30 June 2018 (H1 2018) and three-month period to 30 June 2018 (Q2 2018) respectively, unless stated otherwise.

 

Core financial measures, EBITDA, Net Debt, Initial Collaboration Revenue and Ongoing Collaboration Revenue are non-GAAP financial measures because they cannot be derived directly from the Company Condensed Consolidated Financial Statements. Management believes that these non-GAAP financial measures, when provided in combination with Reported results, will provide investors and analysts with helpful supplementary information to understand better the financial performance and position of the Company on a comparable basis from period to period. These non-GAAP financial measures are not a substitute for, or superior to, financial measures prepared in accordance with GAAP. Core financial measures are adjusted to exclude certain significant items, such as:

 

·                  Amortisation and impairment of intangible assets, including impairment reversals but excluding any charges relating to IT assets

 

·                  Charges and provisions related to restructuring programmes, which includes charges that relate to the impact of restructuring programmes on capitalised IT assets

 

·                  Other specified items, principally comprising acquisition-related costs, which include fair-value adjustments and the imputed finance charge relating to contingent consideration on business combinations and legal settlements

 

Details on the nature of Core financial measures are provided on page 76 of the Annual Report and Form 20-F Information 2018. Reference should be made to the reconciliation of Core to Reported financial information and the Reconciliation of Reported to Core financial measures table included in the financial performance section of this announcement.

 

EBITDA is defined as Reported Profit Before Tax after adding back Net Finance Expense, results from Joint Ventures and Associates and charges for Depreciation, Amortisation and Impairment. Reference should be made to the Reconciliation of Reported Profit Before Tax to EBITDA included in the Financial Performance section of this announcement.

 

Net Debt is defined as interest-bearing loans and borrowings and lease liabilities, net of cash and cash equivalents, other investments and net derivative financial instruments. Reference should be made to Note 3 ‘Net Debt’ included in the Notes to the Interim Financial Statements section of this announcement.

 

Ongoing Collaboration Revenue is defined as Collaboration Revenue excluding Initial Collaboration Revenue (which is defined as Collaboration Revenue that is recognised at the date of completion of an agreement or transaction, in respect of upfront consideration). Ongoing Collaboration Revenue comprises, among other items, royalties, milestone revenue and profit-sharing income. Reference should be made to the Collaboration Revenue table in this operating and financial review.

 

The Company strongly encourages investors and analysts not to rely on any single financial measure, but to review AstraZeneca’s financial statements, including the notes thereto and other available Company reports, carefully and in their entirety.

 

Due to rounding, the sum of a number of percentages may not agree to totals.

 

11


Table of Contents

 

Table 1: Total Revenue

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% change

 

 

 

% change

 

 

 

$m

 

Actual

 

CER

 

$m

 

Actual

 

CER

 

Product Sales

 

11,183

 

12

 

17

 

5,718

 

14

 

19

 

Collaboration Revenue

 

131

 

(59

)

(57

)

105

 

(17

)

(12

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

11,314

 

9

 

14

 

5,823

 

13

 

18

 

 

Table 2: Product Sales

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% of

 

% change

 

 

 

% of

 

% change

 

 

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Oncology

 

4,059

 

36

 

52

 

58

 

2,167

 

38

 

51

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals

 

 4,629

 

42

 

 8

 

13

 

2,313 

 

41

 

 5

 

 10

 

New CVRM

 

2,094

 

19

 

12

 

16

 

1,061

 

19

 

9

 

13

 

Respiratory

 

2,535

 

23

 

5

 

10

 

1,252

 

22

 

2

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

2,495

 

22

 

(19

)

(14

)

1,238

 

22

 

(11

)

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

11,183

 

100

 

12

 

17

 

5,718

 

100

 

14

 

19

 

 

Table 3: Top-ten medicines by Product Sales

 

 

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

 

 

% of

 

% change

 

 

 

% of

 

% change

 

Medicine

 

Therapy Area

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Tagrisso

 

Oncology

 

1,414

 

13

 

86

 

92

 

784

 

14

 

86

 

92

 

Symbicort

 

Respiratory

 

1,170

 

10

 

(10

)

(6

)

585

 

10

 

(13

)

(9

)

Nexium

 

Other medicines

 

756

 

7

 

(15

)

(11

)

393

 

7

 

(11

)

(7

)

Brilinta

 

CVRM

 

737

 

7

 

21

 

26

 

389

 

7

 

23

 

28

 

Farxiga

 

CVRM

 

726

 

6

 

14

 

19

 

377

 

7

 

11

 

16

 

Pulmicort

 

Respiratory

 

716

 

6

 

13

 

19

 

333

 

6

 

16

 

23

 

Crestor

 

CVRM

 

645

 

6

 

(11

)

(6

)

310

 

5

 

(8

)

(3

)

Imfinzi

 

Oncology

 

633

 

6

 

n/m

 

n/m

 

338

 

6

 

n/m

 

n/m

 

Faslodex

 

Oncology

 

521

 

5

 

4

 

8

 

267

 

5

 

8

 

12

 

Lynparza

 

Oncology

 

520

 

5

 

93

 

n/m

 

283

 

5

 

89

 

95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

7,838

 

70

 

20

 

25

 

4,059

 

71

 

22

 

27

 

 

12


Table of Contents

 

Table 4: Collaboration Revenue

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% of

 

% change

 

 

 

% of

 

% change

 

 

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Initial Collaboration Revenue

 

 

 

n/m

 

n/m

 

 

 

n/m

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ongoing Collaboration Revenue

 

131

 

100

 

(40

)

(36

)

105

 

100

 

(17

)

(12

)

Royalties

 

32

 

24

 

52

 

60

 

15

 

14

 

19

 

26

 

Milestones/Other

 

99

 

76

 

(49

)

(47

)

90

 

86

 

(21

)

(16

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

131

 

100

 

(59

)

(57

)

105

 

100

 

(17

)

(12

)

 

13


Table of Contents

 

Product Sales

 

The performance of new and legacy medicines is shown below, with a geographical split shown in Note 7.

 

Table 5: H1 2019 therapy area and medicine performance

 

 

 

 

 

H1 2019

 

 

 

 

 

 

 

% of 

 

% change

 

Therapy Area

 

Medicine

 

$m

 

total

 

Actual

 

CER

 

Oncology

 

Tagrisso

 

1,414

 

13

 

86

 

92

 

 

Imfinzi

 

633

 

6

 

n/m

 

n/m

 

 

Lynparza

 

520

 

5

 

93

 

n/m

 

 

Iressa

 

252

 

2

 

(8

)

(3

)

 

Calquence

 

64

 

1

 

n/m

 

n/m

 

 

Legacy:

 

 

 

 

 

 

 

 

 

 

Faslodex

 

521

 

5

 

4

 

8

 

 

Zoladex

 

391

 

3

 

4

 

11

 

 

Arimidex

 

111

 

1

 

 

7

 

 

Casodex

 

105

 

1

 

1

 

7

 

 

Others

 

48

 

 

(25

)

(23

)

 

Total Oncology

 

4,059

 

36

 

52

 

58

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals: CVRM

 

Farxiga

 

726

 

6

 

14

 

19

 

 

Brilinta

 

737

 

7

 

21

 

26

 

 

Onglyza

 

269

 

2

 

5

 

10

 

 

Bydureon

 

283

 

3

 

(4

)

(3

)

 

Byetta

 

55

 

 

(8

)

(5

)

 

Symlin

 

15

 

 

(6

)

(6

)

 

Legacy:

 

 

 

 

 

 

 

 

 

 

Crestor

 

645

 

6

 

(11

)

(6

)

 

Seloken/Toprol-XL

 

393

 

4

 

5

 

14

 

 

Atacand

 

106

 

1

 

(21

)

(16

)

 

Others

 

143

 

1

 

(10

)

(6

)

 

BioPharmaceuticals: total CVRM

 

3,372

 

30

 

3

 

8

 

 

14


Table of Contents

 

 

 

 

 

H1 2019

 

 

 

 

 

 

 

% of 

 

% change

 

Therapy Area

 

Medicine

 

$m

 

total

 

Actual

 

CER

 

BioPharmaceuticals: Respiratory

 

Symbicort

 

1,170

 

10

 

(10

)

(6

)

 

Pulmicort

 

716

 

6

 

13

 

19

 

 

Fasenra

 

296

 

3

 

n/m

 

n/m

 

 

Daliresp/Daxas

 

104

 

1

 

25

 

27

 

 

Tudorza/Eklira

 

33

 

 

(55

)

(52

)

 

Duaklir

 

37

 

 

(26

)

(20

)

 

Bevespi

 

20

 

 

54

 

54

 

 

Others

 

159

 

3

 

(2

)

4

 

 

BioPharmaceuticals: total Respiratory

 

2,535

 

23

 

5

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

Nexium

 

756

 

7

 

(15

)

(11

)

 

Losec/Prilosec

 

144

 

1

 

(1

)

6

 

 

Synagis

 

149

 

1

 

(40

)

(40

)

 

Seroquel XR/IR

 

69

 

1

 

(70

)

(68

)

 

Movantik/Moventig

 

47

 

 

(10

)

(10

)

 

Others

 

52

 

 

(53

)

(49

)

 

Total other medicines

 

1,217

 

11

 

(27

)

(24

)

 

 

Total Product Sales

 

11,183

 

100

 

12

 

17

 

 

Specialty-care medicines comprise all Oncology medicines and Fasenra. At 39% of Product Sales (H1 2018: 27%), specialty-care medicine sales increased by 58% in the half (64% at CER) to $4,355m.

 

15


Table of Contents

 

Table 6: Q2 2019 therapy area and medicine performance

 

 

 

 

 

Q2 2019

 

 

 

 

 

 

 

% of 

 

% change

 

Therapy Area

 

Medicine

 

$m

 

total

 

Actual

 

CER

 

Oncology

 

Tagrisso

 

784

 

14

 

86

 

92

 

 

Imfinzi

 

338

 

6

 

n/m

 

n/m

 

 

Lynparza

 

283

 

5

 

89

 

95

 

 

Iressa

 

118

 

2

 

(17

)

(13

)

 

Calquence

 

35

 

1

 

n/m

 

n/m

 

 

Legacy:

 

 

 

 

 

 

 

 

 

 

Faslodex

 

267

 

5

 

8

 

12

 

 

Zoladex

 

197

 

3

 

3

 

10

 

 

Arimidex

 

60

 

1

 

5

 

14

 

 

Casodex

 

57

 

1

 

10

 

17

 

 

Others

 

28

 

 

(24

)

(24

)

 

Total Oncology

 

2,167

 

38

 

51

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals: CVRM

 

Farxiga

 

377

 

7

 

11

 

16

 

 

Brilinta

 

389

 

7

 

23

 

28

 

 

Onglyza

 

116

 

2

 

(8

)

(4

)

 

Bydureon

 

141

 

2

 

(9

)

(8

)

 

Byetta

 

25

 

 

(14

)

(10

)

 

Symlin

 

8

 

 

14

 

14

 

 

Legacy:

 

 

 

 

 

 

 

 

 

 

Crestor

 

310

 

5

 

(8

)

(3

)

 

Seloken/Toprol-XL

 

168

 

3

 

(3

)

5

 

 

Atacand

 

56

 

1

 

(14

)

(9

)

 

Others

 

68

 

1

 

(7

)

(4

)

 

BioPharmaceuticals: total CVRM

 

1,658

 

29

 

2

 

7

 

 

16


Table of Contents

 

 

 

 

 

Q2 2019

 

 

 

 

 

 

 

% of 

 

% change

 

Therapy Area

 

Medicine

 

$m

 

total

 

Actual

 

CER

 

BioPharmaceuticals: Respiratory

 

Symbicort

 

585

 

10

 

(13

)

(9

)

 

Pulmicort

 

333

 

6

 

16

 

23

 

 

Fasenra

 

167

 

3

 

n/m

 

n/m

 

 

Daliresp/Daxas

 

56

 

1

 

24

 

24

 

 

Tudorza/Eklira

 

13

 

 

(71

)

(69

)

 

Duaklir

 

17

 

 

(23

)

(14

)

 

Bevespi

 

10

 

 

25

 

25

 

 

Others

 

71

 

1

 

(13

)

7

 

 

BioPharmaceuticals: total Respiratory

 

1,252

 

22

 

2

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

Nexium

 

393

 

7

 

(11

)

(7

)

 

Losec/Prilosec

 

68

 

1

 

(11

)

(4

)

 

Synagis

 

96

 

2

 

n/m

 

n/m

 

 

Seroquel XR/IR

 

32

 

1

 

(76

)

(74

)

 

Movantik/Moventig

 

22

 

 

(8

)

(8

)

 

Others

 

30

 

1

 

(36

)

(26

)

 

Total Other medicines

 

641

 

11

 

(14

)

(10

)

 

 

Total Product Sales

 

5,718

 

100

 

14

 

19

 

 

17


Table of Contents

 

Product Sales summary

 

Oncology

 

Product Sales of $4,059m; an increase of 52% (58% at CER). Oncology Product Sales represented 36% of total Product Sales, up from 27% in H1 2018.

 

Oncology: lung cancer

 

Tagrisso

 

Tagrisso has been approved and launched in 84 countries, including the US, in Europe, Japan and China for the 2nd-line treatment of patients with Stage IV EGFR T790M(21)-mutated NSCLC. By the end of the half, Tagrisso had been approved in 74 countries, including the US, in Europe and Japan for the 1st-line treatment of patients with EGFRm NSCLC; a number of additional regulatory reviews are also underway.

 

Product Sales in the half of $1,414m represented growth of 86% (92% at CER), partly driven by regulatory approvals and reimbursements in the 1st-line setting. Continued growth was also delivered in the 2nd-line indication in other countries, including in Europe and in Emerging Markets.

 

Sales in the US increased by 64% in the half to $559m. With a high penetration rate, Tagrisso is now established as the standard of care (SoC) in the 1st-line setting, following regulatory approval in 2018. There was a 16% sequential quarterly increase in US sales of Tagrisso within the half, partly reflecting continued underlying demand growth.

 

In Emerging Markets, Tagrisso sales increased by 107% in the half (121% at CER) to $329m, with notable growth in China, where the medicine was added to the National Reimbursement Drug List (NRDL) with effect from January 2019 in the 2nd-line setting. The Asia-Pacific region has a relatively high prevalence of lung-cancer patients with an EGFR mutation; at c.30-40% of the total, this contrasts with c.10-15% in the Western Hemisphere.

 

In Europe, sales of $212m in the half represented an increase of 53% (64% at CER), driven by emerging use in the 1st-line setting as more countries gained reimbursement, as well as continued strong levels of demand in the 2nd-line setting. Sales of Tagrisso in Japan increased by 147% in the half (151% at CER) to $291m, reflecting the increasing use of Tagrisso as a 1st-line treatment, where Tagrisso has reached a very high penetration rate.

 

Imfinzi

 

Imfinzi is approved in 49 countries, including the US, in Europe and Japan for the treatment of patients with unresectable, Stage III NSCLC whose disease has not progressed following platinum-based chemoradiation therapy (CRT). It is also approved for the 2nd-line treatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer) in 10 countries, including the US.

 

Global Product Sales of Imfinzi increased by 244% in the half (248% at CER) to $633m, of which $473m were in the US, almost entirely for the treatment of unresectable, Stage III NSCLC. Sales of $86m in Japan ($nil in H1 2018) reflected strong demand, supported by higher CRT and treatment rates. Sales in Europe of $60m (H1 2018: $3m) followed recent regulatory approvals and launches; additional regulatory decisions are expected in due course.

 

Iressa

 

Product Sales in the half of $252m; a decline of 8% (3% at CER).

 

Emerging Markets sales increased by 11% in the half (18% at CER) to $164m; Iressa entered the NRDL in China in 2017 and was included in the China ‘4+7’ pilot tender scheme in 2018. This scheme, focused on centralised procurement, centres on 11 major cities (four municipalities and seven provincial cities). Given the growing use of Tagrisso, sales of Iressa declined by 43% to $8m in the US and by 25% (20% at CER) to $46m in Europe. Japan sales amounted to $31m, reflecting a decline of 34% (32% at CER).

 


(21) Substitution of threonine (T) with methionine (M) at position 790 of exon 20 mutation.

 

18


Table of Contents

 

Oncology: Lynparza

 

By the end of the half, Lynparza was approved in 64 countries for the treatment of ovarian cancer. Launches for the treatment of metastatic breast cancer took place in the US and Japan in 2018 and regulatory approval was granted in the EU in April 2019. Lynparza has now been approved in 40 countries for the treatment of metastatic breast cancer.

 

Product Sales of Lynparza amounted to $520m in the half, an increase of 93% (100% at CER). The strong performance was geographically spread, with launches continuing in Emerging Markets and the Established Rest of World region (RoW). Ongoing MSD(22) co-promotion efforts also contributed to sales.

 

US sales increased by 76% to $262m, driven by the launch in the 1st-line BRCAm ovarian cancer indication at the end of 2018 and increased demand that reflected continued growth in the treatment with Lynparza of patients suffering from ovarian or breast cancer. Lynparza remained the leading US medicine in the poly ADP ribose polymerase (PARP)-inhibitor class, as measured by total prescription volumes and in both ovarian and breast cancer.

 

The Company received approval during the period for the 1st-line BRCAm ovarian cancer indication in both Europe and Japan, as well as approval for BRCAm breast cancer in Europe. Sales in Europe increased by 51% (61% at CER) to $131m, driven by increasing levels of reimbursement and BRCA-testing rates; sales also benefitted from clinical-trial supply. The Company continues to implement a number of launches in the broad, 2nd-line, maintenance ovarian-cancer indication, regardless of BRCA-mutation status.

 

Following the initial launch in April 2018, Japan sales of Lynparza, as a treatment for 2nd-line maintenance ovarian cancer and BRCAm breast cancer, amounted to $58m. Emerging Markets sales of $59m reflected the regulatory approval of Lynparza as a 2nd-line maintenance treatment of patients with ovarian cancer by the China National Medical Products Administration (NMPA), resulting in the subsequent launch of Lynparza in China, the first PARP inhibitor to be approved in the country.

 

Oncology: haematology and other Oncology medicines

 

Calquence

 

Product Sales in the half of $64m; an increase of 220%. The overwhelming majority of sales were in the US.

 

Calquence was approved and launched in the US in October 2017. The medicine delivered a promising performance in the half, with c.45% of new patients now treated with Calquence in the approved indication of 2nd-line mantle cell lymphoma (MCL). At the end of 2018, the first regulatory approvals outside the US for the treatment of patients with MCL were granted.

 

Legacy: Faslodex

 

Product Sales in the half of $521m; an increase of 4% (8% at CER).

 

Emerging Markets sales of Faslodex increased by 35% in the half (49% at CER) to $96m. US sales declined by 3% to $251m, reflecting the launch of a generic Faslodex medicine in the second quarter; additional generic competition is expected. Europe sales declined by 7% (stable at CER) to $110m, driven by the continued impact of generic medicines in certain countries. In Japan, sales increased by 22% (24% at CER) to $61m.

 

Legacy: Zoladex

 

Product Sales in the half of $391m; an increase of 4% (11% at CER).

 

Emerging Markets sales of Zoladex increased by 16% (27% at CER) to $235m. Sales in Europe declined by 4% (up by 1% at CER) to $65m. In the Established RoW region, sales declined by 16% (13% at CER) to $87m, driven by the effects of increased competition.

 


(22)  Merck & Co., Inc., Kenilworth, NJ, US, known as MSD outside the US and Canada.

 

19


Table of Contents

 

BioPharmaceuticals: CVRM

 

Total CVRM sales, which include Crestor and other legacy medicines, increased by 3% in the half (8% at CER) to $3,372m and represented 30% of total Product Sales (H1 2018: 33%).

 

New CVRM sales increased by 12% in the half (16% at CER) to $2,094m, reflecting strong performances from Farxiga and Brilinta. New CVRM sales represented 19% of Product Sales (H1 2018: 19%).

 

CVRM: Diabetes

 

Farxiga

 

Product Sales in the half of $726m; an increase of 14% (19% at CER).

 

Emerging Markets sales of Forxiga increased by 31% (45% at CER) to $206m, fuelled by growth in China. US sales increased by 2% to $270m, impacted by changes in formulary access for competitor medicines. AstraZeneca anticipates a potential label update in the second half in the US and the EU to reflect results from the DECLARE CVOT.

 

Sales in Europe increased by 17% (26% at CER) to $178m. In Japan, sales to the collaborator, Ono Pharmaceutical Co., Ltd, which records in-market sales in Japan, increased by 32% to $37m.

 

Onglyza

 

Product Sales in the half of $269m; an increase of 5% (10% at CER).

 

The performance was partly driven by favourable prior year gross-to-net adjustments in the US, where sales increased by 22% in the half to $120m. Sales in Emerging Markets increased by 7% (16% at CER) to $87m, driven by the performance in China. Europe sales declined by 23% (17% at CER) to $36m, highlighting the broader trend of a shift away from the dipeptidyl peptidase-4 inhibitor class. Given the significant future potential of Farxiga, the Company continues to prioritise commercial support over Onglyza.

 

Bydureon

 

Product Sales of $283m; a decline of 4% (3% at CER).

 

Sales were adversely impacted by production constraints that are now resolved. US sales of $234m were stable in the period where favourable sales volumes were driven by continued growth in the glucagon-like peptide-1 class, at the expense of insulin, for more-advanced T2D patients. Bydureon sales in Europe declined by 21% (19% at CER) to $34m.

 

CVRM: other medicines

 

Brilinta

 

Product Sales of $737m; an increase of 21% (26% at CER).

 

Patient uptake continued in the treatment of acute coronary syndrome and high-risk post-myocardial infarction. Emerging Markets sales of Brilinta increased by 47% (58% at CER) to $217m. US sales of Brilinta, at $321m, represented an increase of 24%, driven primarily by increasing levels of demand in both hospital and retail settings, as well as a lengthening in the average-weighted duration of treatment, reflecting the growing impact of 90-day prescriptions. Sales of Brilique in Europe declined by 1% in the half (up by 7% at CER) to $171m.

 

Lokelma

 

Product Sales of $2m, predominantly in the US, where Lokelma was recently launched.

 

Lokelma is approved in the US and EU for the treatment of hyperkalaemia, a serious condition characterised by elevated potassium levels in the blood associated with CV, renal and metabolic diseases. Launches in a number of other markets are expected soon.

 

Legacy: Crestor

 

Product Sales of $645m; a decline of 11% (6% at CER).

 

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Sales in China declined by 2% (up by 5% at CER) to $234m; the CER growth came despite the impact from the aforementioned ‘4+7’ pilot tender scheme. US sales declined by 40% to $54m, underlining the ongoing effect of generic Crestor medicines. In Europe, sales declined by 32% (27% at CER) to $75m, reflecting a similar impact that began in Europe in 2017. In Japan, where AstraZeneca collaborates with Shionogi Co. Ltd, sales increased by 12% (14% at CER) to $85m. This followed a period of decline resulting from the entry of multiple generic Crestor medicines in the Japan market at the end of 2017.

 

BioPharmaceuticals: Respiratory

 

Product Sales of $2,535m; an increase of 5% (10% at CER). Respiratory represented 23% of total Product Sales (H1 2018: 24%).

 

Symbicort

 

Product Sales in the half of $1,170m; a decline of 10% (6% at CER).

 

Symbicort continued to lead the global market by volume within the inhaled corticosteroid (ICS) / long-acting beta agonist (LABA) class. Emerging Markets sales of Symbicort increased by 9% (18% at CER) to $263m. In contrast, US sales declined by 13% to $382m, reflecting continued pricing pressure and the impact of managed-market rebates. This was partially offset by positive volumes from government-buying patterns.

 

In Europe, sales declined by 14% in the half (7% at CER) to $354m, reflecting price competition from other branded and Symbicort-analogue medicines, plus government pricing interventions. Symbicort, however, continued to retain its class-leadership position, with volume growth achieved in a number of markets.

 

In Japan, sales declined by 33% (32% at CER) to $67m following destocking by Astellas Pharma Co. Ltd (Astellas). In January 2019, AstraZeneca and Astellas announced that the sale and distribution of Symbicort, conducted by Astellas in Japan was to be transferred back to AstraZeneca and that the co-promotion conducted by Astellas and AstraZeneca will be terminated on 30 July 2019. The Company will solely distribute and promote the medicine in Japan from 31 July 2019. In addition, during the period, the first generic Symbicort medicine received regulatory approval, and multiple generic Symbicort medicines are anticipated to enter the Japanese market in due course.

 

Pulmicort

 

Product Sales in the half of $716m; an increase of 13% (19% at CER).

 

Emerging Markets, where sales increased by 20% (27% at CER) to $576m, represented 80% of global sales of Pulmicort. China, making up the overwhelming majority of Pulmicort sales in Emerging Markets, delivered a particularly strong double-digit performance, strengthened by higher demand and underpinned by the impact of AstraZeneca’s support to build capacity in over 17,000 nebulisation centres.

 

Sales in the US and Europe declined by 5% to $56m and by 12% (6% at CER) to $44m, respectively, a consequence of the medicine’s legacy status.

 

Fasenra

 

Product Sales of $296m, an increase of 244% (249% at CER).

 

Sales in the US increased by 210% to $208m in the half. New-to-brand prescription data showed that Fasenra was the preferred novel-biologic medicine for the treatment of severe asthma during the period, despite being the third medicine to enter the market.

 

In Europe and Japan, AstraZeneca was granted regulatory approval in January 2018 on a similar basis to that in the US. In Europe, sales of $45m in the half represented an increase of 463% (488% at CER), which included strong sales in Germany. Sales in Japan increased by 245% (255% at CER) to $38m, following its launch in the second quarter of 2018. In addition, Fasenra led the novel severe asthma biologic-medicine class by new patient share in Germany and Japan during the period.

 

Daliresp/Daxas

 

Product Sales in the half of $104m; an increase of 25% (27% at CER).

 

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US sales, representing 86% of the global total, increased by 33% to $89m, driven by favourable affordability-programme changes and inventory movements. It is the only oral, selective, long-acting inhibitor of phosphodiesterase-4, an inflammatory enzyme associated with COPD.

 

Duaklir

 

Product Sales in the half of $37m; a decline of 26% (20% at CER).

 

Duaklir, the Company’s first inhaled dual bronchodilator medicine, is now available for patients in over 25 countries. In the first half, the overwhelming majority of sales were in Europe, where sales declined by 23% (19% at CER) to $36m, predominately as a result of the performance in Germany.

 

In Q1 2019, the medicine received US regulatory approval. As part of the collaboration agreement announced in March 2017, Circassia Pharmaceuticals plc (Circassia) will be responsible for the commercialisation of Duaklir in the US, with AstraZeneca continuing to manufacture and supply the medicine. Circassia expects to launch the medicine in the US in H2 2019.

 

Bevespi

 

Product Sales in the half of $20m; an increase of 54%.

 

Bevespi saw prescriptions in the period track in line with other LAMA/LABA launches; the class in the US, however, continued to grow more slowly than anticipated previously. Bevespi was the first medicine launched using the Company’s proprietary Aerosphere delivery technology.

 

Other medicines (outside the main therapy areas)

 

Product Sales of $1,217m in the half; a decline of 27% (24% at CER), partly reflecting the recent divestment of US rights to Synagis and the divestment of the prescription medicine rights to Nexium in Europe to Grünenthal GmbH. Other Product Sales represented 11% of total Product Sales, down from 17% in H1 2018.

 

Nexium

 

Product Sales in the half of $756m; a decline of 15% (11% at CER).

 

Emerging Markets sales of Nexium increased by 8% (15% at CER) to $369m. In Europe, sales declined by 74% to $32m reflecting the aforementioned divestment. Sales in the US declined by 36% to $119m and in Japan, where AstraZeneca collaborates with Daiichi Sankyo Company, Limited (Daiichi Sankyo), sales increased by 1% (3% at CER) to $207m.

 

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Table of Contents

 

Regional Product Sales

 

Table 7: Regional Product Sales, H1 2019

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% of 

 

% change

 

 

 

% of 

 

% change

 

 

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Emerging Markets

 

3,951

 

35

 

15

 

24

 

1,947

 

34

 

17

 

27

 

China

 

2,408

 

22

 

27

 

35

 

1,166

 

20

 

34

 

44

 

Ex-China

 

1,543

 

14

 

1

 

10

 

781

 

14

 

(1

)

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

US

 

3,663

 

33

 

18

 

18

 

1,877

 

33

 

16

 

16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Europe

 

2,029

 

18

 

(6

)

1

 

1,047

 

18

 

1

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Established RoW

 

1,540

 

14

 

16

 

19

 

847

 

15

 

17

 

21

 

Japan

 

1,173

 

10

 

28

 

31

 

672

 

12

 

30

 

34

 

Canada

 

225

 

2

 

(8

)

(3

)

111

 

2

 

(6

)

(2

)

Other Established RoW

 

142

 

1

 

(18

)

(11

)

64

 

1

 

(26

)

(20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

11,183

 

100

 

12

 

17

 

5,718

 

100

 

14

 

19

 

 

Table 8: Regional Product Sales, Emerging Markets

 

Product Sales of $3,951m in the half; an increase of 15% (24% at CER), continuing the strong performance seen in prior periods. New medicines represented 21% of Emerging Markets sales (H1 2018: 14%). Notable performances included Tagrisso ($329m, +107%, 121% at CER), Farxiga ($206m, +31%, +45% at CER), Brilinta ($217m, 47%, 58% at CER). Ex-China Emerging Market sales increased by 1% (10% at CER) to $1,543m.

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% of 

 

% change

 

 

 

% of 

 

% change

 

 

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Oncology

 

1,048

 

27

 

40

 

52

 

558

 

29

 

45

 

57

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals

 

2,404

 

61

 

13

 

22

 

1,139

 

58

 

16

 

25

 

CVRM

 

1,448

 

37

 

9

 

18

 

701

 

36

 

10

 

19

 

Respiratory

 

956

 

24

 

22

 

30

 

438

 

22

 

26

 

36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

499

 

13

 

(11

)

(7

)

250

 

13

 

(14

)

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Emerging Markets

 

3,951

 

100

 

15

 

24

 

1,947

 

100

 

17

 

27

 

 

China sales, comprising 61% of total Emerging Markets sales, increased by 27% in the half (35% at CER) to $2,408m. New medicines delivered particularly encouraging sales growth, supported by strong performances from Pulmicort, Seloken, Nexium and Symbicort. New medicines represented 17% of China sales, up from 9% in H1 2018.

 

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Table of Contents

 

Table 9: Regional Product Sales, US

 

Product Sales in the half of $3,663m; an increase in the half of 18%. New medicines represented 59% of US Product Sales, up from 42% in H1 2018. The performance reflected, in particular, the success of the new Oncology medicines, including TagrissoImfinzi and Lynparza, Brilinta in New CVRM, plus the strong performance of Fasenra in Respiratory.

 

 

 

H1 2019

 

Q2 2019

 

 

 

$m

 

% of total

 

% change

 

$m

 

% of total

 

% change

 

Oncology

 

1,621

 

44

 

68

 

851

 

45

 

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals

 

1,841

 

51

 

8

 

937

 

50

 

 

CVRM

 

1,085

 

30

 

5

 

527

 

28

 

(1

)

Respiratory

 

756

 

21

 

12

 

410

 

22

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

201

 

5

 

(54

)

89

 

5

 

(37

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total US

 

3,663

 

100

 

18

 

1,877

 

100

 

16

 

 

Table 10: Regional Product Sales, Europe

 

Product Sales in the half of $2,029m; a decline of 6% (up by 1% at CER). This partly reflected adverse continued pricing pressures, the impact of the divestment of the prescription medicine rights to Nexium in H2 2018 and declining sales of Crestor. New medicines represented 39% of Product Sales, up from 26% in H1 2018.

 

In Q2 2019, however, the sales performance was more encouraging. Oncology delivered particularly strong growth, with Tagrisso and Lynparza, representing 53% of Oncology sales in Europe, growing by 60% (73% at CER) to $112m and by 47% (60% at CER) to $66m, respectively. This performance was augmented by the successes of Brilinta and Forxiga in New CVRM and Fasenra in Respiratory.

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% of 

 

% change

 

 

 

% of 

 

% change

 

 

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Oncology

 

650

 

32

 

29

 

37

 

336

 

32

 

31

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals

 

1,127

 

56

 

(12

)

(6

)

559

 

53

 

(10

)

(4

)

CVRM

 

566

 

28

 

(10

)

(5

)

283

 

27

 

(8

)

(1

)

Respiratory

 

561

 

28

 

(13

)

(7

)

276

 

26

 

(13

)

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

252

 

12

 

(33

)

(28

)

152

 

15

 

(1

)

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Europe

 

2,029

 

100

 

(6

)

1

 

1,047

 

100

 

1

 

8

 

 

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Table of Contents

 

Table 11: Regional Product Sales, Established RoW

 

Product Sales in the half of $1,540m; an increase of 16% (19% at CER). New medicines represented 40% of Established RoW sales, up from 18% in H1 2018. The performance during the half reflected, in particular, the successes of TagrissoImfinzi and Forxiga.

 

 

 

H1 2019

 

Q2 2019

 

 

 

 

 

% of 

 

% change

 

 

 

% of 

 

% change

 

 

 

$m

 

total

 

Actual

 

CER

 

$m

 

total

 

Actual

 

CER

 

Oncology

 

740

 

48

 

65

 

69

 

422

 

50

 

65

 

70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BioPharmaceuticals

 

535

 

35

 

(7

)

(4

)

275

 

32

 

(10

)

(7

)

CVRM

 

273

 

18

 

 

3

 

147

 

17

 

(1

)

2

 

Respiratory

 

262

 

17

 

(14

)

(11

)

128

 

15

 

(18

)

(15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other medicines

 

265

 

17

 

(14

)

(10

)

150

 

18

 

(6

)

(3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Established RoW

 

1,540

 

100

 

16

 

19

 

847

 

100

 

17

 

21

 

 

Japan sales, comprising 76% of total Established RoW, increased by 28% (31% at CER) to $1,173m. Crestor sales in Japan increased by 12% (14% at CER) to $85m and represented 7% of Japan sales. New medicines represented 42% of Japan sales, up from 18% in H1 2018, particularly reflecting the strong performance of Tagrisso as a 1st-line treatment for patients with EGFRm NSCLC, following regulatory approval in this setting in the third quarter of 2018.

 

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Financial performance

 

Table 12: H1 2019 Reported Profit and Loss

 

 

 

Reported

 

 

 

H1 2019

 

H1 2018

 

% change

 

 

 

$m

 

$m

 

Actual

 

CER

 

Product Sales

 

11,183

 

10,015

 

12

 

17

 

Collaboration Revenue

 

131

 

318

 

(59

)

(57

)

Total Revenue

 

11,314

 

10,333

 

9

 

14

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

(2,192

)

(2,146

)

2

 

7

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

9,122

 

8,187

 

11

 

16

 

Gross Margin

 

80.4

%

78.6

%

+2

 

+2

 

 

 

 

 

 

 

 

 

 

 

Distribution Expense

 

(159

)

(165

)

(4

)

3

 

% Total Revenue

 

1.4

%

1.6

%

 

 

R&D Expense

 

(2,622

)

(2,641

)

(1

)

3

 

% Total Revenue

 

23.2

%

25.6

%

+2

 

+2

 

SG&A Expense

 

(5,457

)

(5,008

)

9

 

14

 

% Total Revenue

 

48.2

%

48.5

%

 

 

Other Operating Income & Expense

 

706

 

1,086