AstraZeneca PLC · LSE:AZN
AstraZeneca — FY1999 Earnings Presentation
60 slides from AstraZeneca's earnings presentation, 2000
Slide 1: Cautionary statement regarding forward-looking statements
Cautionary statement regarding forward-looking statements In order to utilise the “Safe Harbour” provisions of the United States Private Securities Litigation Reform Act of 1995, AstraZeneca is providing the following cautionary statement. This Preliminary Announcement contains certain forward-looki
Slide 2: AstraZeneca Annual Results 1999
AstraZeneca Annual Results 1999
Slide 3: Agenda
Agenda Introduction and highlights Financial review Product/market review Future prospects Q&A
Slide 4: 1999 Highlights: integration on target
1999 Highlights: integration on target Rapid completion of the merger (6 April) Managed as a single entity (1 June) Organisation and business processes in place Synergies on track Minimal disruption - momentum maintained
Slide 5: 1999 Highlights: business restructuring
1999 Highlights: business restructuring Sale of Specialties completed - Avecia Spin-off of Agrochemicals announced - Syngenta Creation of a leading, global healthcare company, focused on pharmaceuticals
Slide 6: Sales growth (%)
Sales growth (%) 1 7 13 9 Group Continuing Ongoing
Slide 7: Profit growth (%)
Profit growth (%) 20 15 12 Group Continuing Ongoing
Slide 8: Jon Symonds, Chief Financial Officer
Jon Symonds Chief Financial Officer
Slide 9: Financial review
Financial review 2000 reporting structure Healthcare highlights Agrochemicals Cash flow Performance measures
Slide 10: 2000 reporting structure
2000 reporting structure EPS CER $ % Reported EPS pre EI 1.54 14 Specialties discontinued 0.03 Continuing activities 1.51 17 Agrochemicals - to be discontinued 0.10 Ongoing activities 1.41 22
Slide 11: Ongoing activities
Ongoing activities Pharmaceuticals Reported as . . . AstraTech Healthcare Salick Health Care Marlow Foods Stauffer Other Trading Insurance Advanta JV + Associates
Slide 12: Pharmaceuticals sales
Pharmaceuticals sales + 31% + 19% + 18% + 17% + 16% + 10% 1999 1st Half 2nd Half 3rd Quarter 4th Quarter Reported CER
Slide 13: Pharmaceuticals performance: key sales trends
Pharmaceuticals performance: key sales trends US wholesaler stocking patterns Minimal overall Y2K effect Strong Losec®/Prilosec® growth: 24% Underlying growth - excluding US Prilosec®/US Zestril®: 14%
Slide 14: Pharmaceuticals operating profit
Pharmaceuticals operating profit 58% 25% 18% 19% 13% 0% 1999 1st Half 2nd Half 3rd Quarter 4th Quarter Reported CER
Slide 15: Operating margins: full year
Operating margins: full year 1999 1998 Healthcare 23.9% 23.4% Pharmaceuticals 24.3% 23.9% Margin improvement +0.4 Synergy benefits ahead of target Merck contingent payment Write-off of terminated license agreements
Slide 16: Integration and synergy progress
Integration and synergy progress 1999 3 Year programme $m $m Costs 864 1,300 Benefits COGS 10 100 S,G&A 100 750 R&D 20 250 130 1,100 Job reductions 2,800 6,000
Slide 17: Salick restructuring
Salick restructuring Asset write-down and refocus of business - $145 million Estimated cash component - approximately $50 million
Slide 18: Agrochemicals: business developments
Agrochemicals: business developments Formation of Syngenta Agronomic environment - commodity prices - farmer incomes Economic environment - Brazilian devaluation - credit contraction in Latin America/Eastern Europe - South East Asia steadily recovering
Slide 19: Agrochemicals: business performance
Agrochemicals: business performance Products Amistar® sales reached $415 million - up over 40% Non-selective herbicides maintained prior year sales levels - Touchdown® volume growth over 20% Selective herbicides affected by depressed North and Latin American markets and pricing pressures Geography G
Slide 20: Agrochemicals: 1999 sales and profits
Agrochemicals: 1999 sales and profits Sales Operating profit -5% -5% -21% -26% Reported CER
Slide 21: Agrochemicals: profit trends
Agrochemicals: profit trends Margins 1999 1998 Reported 10.0% 12.9% CER 10.7% - Latin American credit restrictions - biotechnology and manufacturing investments - reduced business levels Restructuring provisions
Slide 22: Cash flow
Cash flow Group operating cash flows $4.7 billion Cash flow picture complicated by: - Specialties proceeds - net $1.6 billion exceptional items and Merck payments - $2.2 billion cash flows of discontinued activities
Slide 23: Strong underlying cash flow: $2 billion
Strong underlying cash flow: $2 billion $bn Trading cash flow 4.3 Capex (1.5) Interest - Tax paid (0.8) Net cash flow before distributions2.0 Dividends (1.2) Share repurchase (0.2) Net cash flow 0.6
Slide 24: Key financial performance measures
Key financial performance measures Operating margin Tax Cash flow 2000 earnings per share
Slide 25: Pharmaceuticals operating margin
Pharmaceuticals operating margin 1999 1999 Change Influences % % Cost of sales 25.8 (1.9) Synergy benefits/Merck royalty/ accounting reclassifications from S,G&A R&D 16.5 0.6 16.5% - 17.5% sales range Distribution 1.5 0.1 S,G&A 32.7 1.7 Synergy benefits/launch costs/ accounting reclassifications to
Slide 26: Pharmaceuticals operating margins: trends
Pharmaceuticals operating margins: trends Synergies in 2000 add around 2% - mostly G & A 2000 investments - launch of Nexium™ in H2 - Phase III programmes 2000 margin increase of at least 1% Thereafter - synergy benefits - launch plans margins move to targeted 27%
Slide 27: Taxation
Taxation Group restructuring has created a more efficient structure Target to bring tax rate down over next 3 years to 27% Cash tax rate should fall in short term
Slide 28: Cash flow
Cash flow Cash flow targets for 2000 - Improve operating cash focus and working capital - Capex target of <10% of sales Increased share buy-back opportunities
Slide 29: Earnings per share: total group
Earnings per share: total group 2000 : consensus range $1.70 - $1.89 : average $1.79 Healthcare growth rate: good double digit
Slide 30: Mergers lose market share
Mergers lose market share % Share % Share Pre-merger Post-merger Aventis 4.28 4 .13 Novartis 4.45 4.34 Glaxo Wellcome 4.82 4.69 Sanofi-Synthelabo 1.13 1.07 P&U 1.82 1.78 Source: IMS Health, MIDAS 33 countries
Slide 31: AstraZeneca grows market share
AstraZeneca grows market share % Share % Share 1998 1999 Aventis 4.3 AstraZeneca 4.3 Novartis 4.2 Aventis 4.2 Glaxo Wellcome 4.2 Merck 4.1 AstraZeneca 4.1 Glaxo Wellcome 4.1 Merck 4.1 Novartis 4.0 BMS 3.8 BMS 3.9 Pfizer 3.7 Pfizer 3.9 J&J 3.5 J&J 3.6 Roche 3.0 Roche 3.1 AHP 3.0 AHP 2.9 Source: IMS H
Slide 32: Geographic performance
Geographic performance Reported sales by region* Sales growth by region USA 48% AstraZeneca* Market** USA +23% +17% Europe +15% +8% ROW Japan +8% +8% 5% TOTAL +18% +10% Japan 11% Europe 36% *AstraZeneca reported 1999 CER **Source: IMS Health MIDAS 33 countries estimated market growth 1999 CER
Slide 33: TA growth (IMS audit)
TA growth (IMS audit) AstraZeneca Market CV +12% +9% Oncology (hormones) +12% +9% Respiratory +9% +9% CNS +99%+15% GI +19% +7% Source: IMS Health, MIDAS 33 countries pharmacy and hospital MAT Q3 99, CER
Slide 34: Losec sales development 1988 - 1999
Losec® sales development 1988 - 1999 6000 5000 4000 $m 3000 2000 1000 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Slide 35: Maintenance of Losec sales
Maintenance of Losec® sales 120% 100% Losec® 80% Zantac® 60% 40% 20% Expiry 1 2 3 Quarterly MAT Source: based on IMS Health data Expressed as a % of the quarterly MAT cash value at time of Patent Expiry (includes: Germany, Australia, Denmark, Canada, South Africa, Malaysia, Hong Kong & Singapore)
Slide 36: Losec defence: key initiatives
Losec® defence: key initiatives Dedicated team in place Intellectual property - ‘nest of patents’ Regulatory action Formulations Clinical commitment
Slide 37: Nexium
Nexium™ NDA/MAA filed 4Q 1999 Good progress with reviews First launches 2H 2000 - USA early 2001 Pre-marketing programme underway Data presented at DDW Conference, May 2000 Analyst teleconference with team
Slide 38: Publications
Publications Pharmacokinetics / metabolism Dose response Clinical efficacy Safety/tolerability Comparator studies Quality of life ‘On demand’ treatment H. pylori eradication
Slide 39: CV: league table
CV: league table Sales ShareGrowth $m % % Merck 6,742 14.4 +4 Pfizer 3,868 8.2 +10 Warner-Lambert 3,650 7.8 +57 AstraZeneca 3,122 6.6 +12 BMS 2,537 5.4 +7 Novartis 2,343 5.0 +12 Hoechst 1,806 3.8 -2 Bayer 1,483 3.2 +9 Source: IMS Health MIDAS MAT Q3 99 33 countries pharmacy and hospital excluding ma
Slide 40: CV: growth of major AstraZeneca brands
CV: growth of major AstraZeneca brands ACE-inhibitors Beta-blockers Zestril® +13% (+5%) Seloken® +14% (+9%) Calcium antagonists AT1-receptor blockers Plendil® +10% (+3%) Atacand® +496% (+72%) Source: IMS Health MIDAS 33 countries pharmacy and hospital MAT Q3/99 growth in CER, ( ) = represents class
Slide 41: CV: current brands key contributions
CV: current brands key contributions ACE-inhibitors Beta-blockers • ATLAS approvals • CHF approvals in • paediatrics in US most countries • STOP II • HOPE Calcium AT1-receptor antagonists blockers • HOT • SCOPE • CHARM • Atacand® Plus
Slide 42: Respiratory
Respiratory Growth in line with market Accolate® - paediatrics and Japan Oxis® Turbuhaler® +107% - approval of ‘as needed’ European filing for Symbicort® - Dec 1999 Improving Pulmicort® supply US launches of Pulmicort® Respules® and Rhinocort® Aqua™
Slide 43: Oncology: Casodex
Oncology: Casodex® No 1 anti-androgen in the 300 world with 45% market share 250 Casodex® Fastest growing hormonal therapy for prostate 200 flutamide cancer +41% Sales $m 150 Launched in Japan First monotherapy launches 100 CPA chlormadinore 50 nilutamide 1994 1995 1996 1997 1998 MAT Q3 99 Source: I
Slide 44: Oncology: Arimidex
Oncology: Arimidex® No 1 aromatase inhibitor with 58% market Arimidex® share 58% 1999 sales +19% CER First line breast cancer data presented in 1999 Arimidex® adjuvant ATAC- aminoglutethimide trial results expected 2% 2001 formestane 4% fadrozole 9% letrozole 27% Source: IMS Health MAT Q3/99 (actual
Slide 45: Oncology: Nolvadex
Oncology: Nolvadex® Nolvadex® - decline has been reversed in the USA through usage in earlier disease segments 600 580 560 Sales $m 540 520 500 480 1995 1996 1997 1998 1999
Slide 46: CNS: Seroquel US market share performance
TRx share (%) D ec 1 2 3 4 5 6 7 8 -9 7 Fe b- 98 Source: Scott Levin Ap r -9 8 Ju n- 98 Au g- 98 O ct -9 8 D ec -9 8 Fe b- 99 Ap r -9 9 Ju n- 99 Au g- 99 O ct -9 9 D ec CNS: Seroquel® US market share performance -9 9
Slide 47: CNS: Seroquel US market share performance
CNS: Seroquel® US market share performance 8 Sales in 7 1999 of $232 million, +254% CER Sales effort 6 doubled in USA TRx share (%) 5 European MR approval in Dec 1999 4 Further3 global roll-out expected during 2000 2 1 99 8 8 9 9 8 99 98 7 8 9 98 99 -9 -9 -9 -9 9 -9 -9 -9 g- g- b- b- n- n- ct ct r r
Slide 48: CNS: Zomig 1999 performance vs competitors
CNS: Zomig® 1999 performance vs competitors Sales Growth Over Time 160 140 Zomig® 120 Sales $M 100 naratriptan 80 60 rizatriptan 40 20 0 Q2/98 Q4/98 Q2/97 Q3/97 Q4/97 Q1/98 Q3/98 Q1/99 Q2/99 Q3/99 Source: IMS Health MIDAS MAT Q3/99 actual exchange rates Countries = USA, France, Germany, Italy, UK Ma
Slide 49: CNS: Zomig 1999 performance vs competitors
CNS: Zomig® 1999 performance vs competitors Sales Growth Over Time 160 140 Zomig® Sales in 1999 of $189 million, +88% CER 120 Sales $M 100 Rapimelt80™ and nasal formulations to add value naratriptan 60 rizatriptan New DTC 40 campaign 20 0 Q2/98 Q4/98 Q2/97 Q3/97 Q4/97 Q1/98 Q3/98 Q1/99 Q2/99 Q3/99 S
Slide 50: Diprivan market share vs key competitors
Diprivan® market share vs key competitors 35 Diprivan® 30 25 midazolam Market % 20 15 sevoflurane 10 5 desflurane isoflurane Q3/94 Q3/95 Q3/96 Q3/97 Q3/98 Q3/99 Source: IMS Health (33 countries pharmacy and hospital)
Slide 51: Realising the value of today's products
Realising the value of today’s products Diprivan® Seroquel® Arimidex® Losec® Nolvadex® Casodex® Plendil® Tenormin® Zoladex® Atacand® Pulmicort® Seloken® Zomig® Xylocaine® Prilosec® Zestril® Oxis®
Slide 52: High TA growth ambitions
High TA growth ambitions Market position in 10 years GI #1 CV #1 RITA (Respiratory) #2 Oncology #1 Pain control #1 CNS 10% Market share Infection In serious hospital Top 3 infection
Slide 53: A future rich with opportunity
A future rich with opportunity Nexium™ The first meaningful improvement over Losec® ZD4522 A truly competitive challenger to Lipitor® Thrombin First major advance in treatment of Inhibitor thromboembolism for 50 years Viozan™ A major advance in the treatment of COPD An opportunity to change the para
Slide 54: Analysts predict a wide spectrum of outcomes
Analysts predict a wide spectrum of outcomes 7 Operating profit 6 $bn 5 4 3 1998 1999 2000 2001 2002 2003 2004 2005
Slide 55: Many possible outcomes
Many possible outcomes Key variables Generic omeprazole timing? Nexium™ label and market uptake? Super-statin market share? Success with development projects?
Slide 56: A scenario
A scenario Generic omeprazole in the US - late 2001 Nexium™ achieves expected superiority label Super-statin gains 20% market share Industry attrition rates for other products
Slide 57: Our approach
Our approach Create enduring value Range of outcomes and strategies Performance driven culture Clear milestones and newsflow
Slide 58: GI milestones
GI milestones Nexium™ presentations at DDW, USA 21-24 May 2000 Nexium™ first Nexium™ US launch Prilosec® paediatric markets launches early 2001 extension Oct 2001 2H 2000 2000 2001 2002 Prilosec® US paediatric programme on schedule Prilosec® US substance Losec® Europe substance and on-going patent e
Slide 59: Clear focus
Clear focus AstraZeneca?
Slide 60: Value targets
Value targets Short term: in 2000 double digit sales and earnings growth Mid term: manage a smooth transition to the new drivers of growth Long term: enduring shareholder value growth matching the peer group of leading pharmaceutical companies