Astrazeneca Plc · LSE:AZN

Astrazeneca — FY2006 Earnings Presentation

37 slides from Astrazeneca's earnings presentation, 2007

  1. Slide 1: Cautionary Statement Regarding Forward-Looking Statements

    Cautionary Statement Regarding Forward-Looking Statements In order to utilise the ‘Safe Harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995, AstraZeneca is providing the following cautionary statement. These documents contain forward-looking statements with respe

  2. Slide 2: 2006 priorities

    David Brennan Chief Executive Officer 2006 priorities ƒ Maintain business momentum ƒ Top line growth ƒ Improved productivity ƒ Strong cash generation ƒ Further strengthen the pipeline ƒ Internal and external sources of growth AstraZeneca Annual Results 2006 AstraZeneca Annual Results 2006 2

  3. Slide 3: Headline results FY 06

    Headline results FY 06 2006 2005 Actual CER $m $m growth growth Sales 26,475 23,950 +11% +11% Operating profit 8,216 6,502 +26% +28% Operating margin 31.0% 27.2% +3.8 pts EPS $3.86 $2.91 +33% +34% Dividends $1.72 $1.30 Share repurchase $3,162m $2,858m (Net of shares issued) AstraZeneca Annual Result

  4. Slide 4: Key products MAT growth and FY 2006 key growth drivers

    Key products MAT growth progression @ Actual RoX 14,000 12,000 10,000 8,000 Sales $m 6,000 4,000 2,000 0 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Arimidex® Crestor® Seroquel® Nexium® Symbicort® AstraZeneca Annual Results 2006 FY 2006 sales: Key

  5. Slide 5: Headline results FY 06 by region

    Headline results FY 06 2006 CER $m growth Sales 26,475 +11% North America 13,480 +14% US 12,449 +16% Rest of World 14,026 +7% Established Markets 11,162 +4% Western Europe 8,073 +5% Japan 1,503 +4% Other Established 1,586 -1% Emerging Markets 2,864 +22% AstraZeneca Annual Results 2006 2006 prioritie

  6. Slide 6: Driving Asset Utilisation

    2006 priorities ƒ Maintain business momentum ƒ Top line growth ƒ Improved productivity AstraZeneca Annual Results 2006 Driving Asset Utilisation ƒ 3 year programme ƒ Rationalise production assets ƒ Proposal involves approx 3,000 positions ƒ Subject to works council, trade union and other employee co

  7. Slide 7: Shareholder returns

    2006 priorities ƒ Maintain business momentum ƒ Top line growth ƒ Improved productivity ƒ Strong cash generation AstraZeneca Annual Results 2006 Shareholder returns 2004 2005 2006 $m $m $m Dividends 1,378 1,717 2,220 Net Share Repurchases 2,110 2,858 3,162 Total Distribution 3,488 4,575 5,382 AstraZe

  8. Slide 8: 2006 priorities

    AstraZeneca Annual Results 2006 2006 priorities ƒ Maintain business momentum ƒ Top line growth ƒ Improved productivity ƒ Strong cash generation ƒ Further strengthen the pipeline ƒ Internal and external sources of growth AstraZeneca Annual Results 2006 AstraZeneca Annual Results 2006 8

  9. Slide 9: Externalisation

    Externalisation 2007 2005 ƒ Saxagliptin (BMS) ƒ AGI-1067 (AtheroGenics) ƒ Dapagliflozin ƒ AZD3480 (Targacept) ƒ Arrow Therapeutics ƒ CytoFab™ (Protherics) ƒ KuDOS 2006 ƒ Cambridge Antibody Technology 9 Significant Research ƒ Cubicin® (Cubist) Collaborations ƒ AZD3043 (Theravance) ƒ Abraxane® (Abraxi

  10. Slide 10: Pipeline 2004-2006 and priorities for 2007

    Pipeline 2004 - 2006 120 25 100 25 5 80 18 LCM 25 6 13 Phase III 60 5 23 Phase II 13 17 Phase I 40 17 Pre-clinical 45 49 20 31 0 FY 2004 FY 2005 FY 2006 AstraZeneca Annual Results 2006 Priorities: 2007 ƒ Top line growth ƒ Improved productivity ƒ Further strengthen the pipeline AstraZeneca Annual Res

  11. Slide 11: AstraZeneca R&D

    AstraZeneca Annual Results 2006 AstraZeneca R&D John Patterson - Executive Director, Development AstraZeneca Annual Results 2006 11

  12. Slide 12: Building the pipeline and disease area focus

    At the June 2006 AZ Business Review ƒ Building the Pipeline is my #1 Priority: ƒ Short term ƒ Drive Life Cycle Management and deliver Phase III ƒ Mid term ƒ Deliver pre-clinical, phase I & II to proof of concept ƒ Enhance through Externalisation ƒ Long term ƒ Transform through ƒ Biomarkers & imaging

  13. Slide 13: Performance: Quality on time

    Performance: “Quality on time” Quality PERFORMANCE Cost Speed AstraZeneca Annual Results 2006 Speed example: Lead Optimisation Remove Waiting Time – Achieve Flow Time Synthesis Assay Analysis & Decision CURRENT PROCESS IMPROVED PROCESS Median time for pilot projects reduced from 24 months to 6 month

  14. Slide 14: Speed, Quality and Cost

    Speed ƒ Goal: Median project delivery 8 years ƒ In 2006 we delivered a 50% increase in projects achieving FTIM ƒ 12 in 2006 vs 8 in 2005 ƒ Pre-clinical development times 10% faster ƒ Significant improvements in early portfolio performance, e.g. ƒ Accelerated study start-up times ƒ Turnaround times f

  15. Slide 15: AZ Pipeline February 2006

    AZ Pipeline February 2006 AZD4877 AZD4818 AZD1744 AZD3783 AZD8931 AZD1305 AZD2327 AZD6703 AZD5672 AZD9056 Merrem™ AZD5904 AZD2207 AZD5904 AZD3778 Exanta™ Iressa™ AZD1080 AZD1175 AZD7762 AZD8955 Faslodex™ Crestor™ AZD9335 AZD1092 AZD8081 AZD7009 Seloken™/ Nexium™ Toprol X-L™ AZD3646 AZD2914 AZD8450 A

  16. Slide 16: AZ Pipeline February 2006 - withdrawals

    AZ Pipeline February 2006 - withdrawals AZD4877 AZD4818 AZD1744 No change AZD3783 AZD8931 AZD1305 AZD2327 AZD6703 AZD5672 Merrem™ AZD5904 AZD2207 AZD5904 AZD1080 AZD1175 AZD7762 Crestor™ Seloken™/ Nexium™ Toprol X-L™ AZD3646 AZD6244 Symbicort™ (ARRY-142886) AZD9684 Seroquel™ SR Turbuhaler™ AZD6357 A

  17. Slide 17: AZ Pipeline February 2007 - progressions

    AZ Pipeline February 2007 - progressions Progression No change AZD6244 (ARRY-142886) AZD1981 AZD1305 AZD1744 AZD3355 Merrem™ Crestor™ AZD5904 AZD5672 AZD6610 Seloken™/ Nexium™ Toprol X-L™ AZD3646 AZD4818 AZD8931 AZD9684 Symbicort™ Seroquel™ SR Turbuhaler™ AZD6357 AZD0424 AZD7928 AZD4877 AZD6703 AZD3

  18. Slide 18: Pipeline 2004-2006 and Phase III projects

    Pipeline 2004 - 2006 120 120 106 25 100 91 25 5 80 18 LCM 25 6 13 Phase III 60 5 23 Phase II 13 17 Phase I 40 17 Pre-clinical 45 49 20 31 0 FY 2004 FY 2005 FY 2006 AstraZeneca Annual Results 2006 Phase III projects ƒ AZD6140 ƒ PLATO started ƒ Over 170 centres ƒ AGI-1067 Cardiovascular ƒ ARISE result

  19. Slide 19: Saxagliptin & Dapagliflozin; Drive Life Cycle Management

    Saxagliptin & Dapagliflozin Saxagliptin ƒ Once daily oral dipeptidyl peptidase-IV (DPP-IV) inhibitor ƒ Ongoing Phase III studies ƒ As monotherapy ƒ In combination with metformin, sulfonylureas and TZDs ƒ Impact on insulin secretion ƒ First Phase III data expected at ADA June 2007 Dapagliflozin ƒ Ora

  20. Slide 20: Crestor and Seroquel

    Crestor™ ƒ Atherosclerosis submission ƒ METEOR results EXPLORER: % LDL- C Reduction From Baseline to Week 6 ƒ ASTEROID RSV 40mg RSV 40mg +EZ 10mg 0 ƒ ORION % LDL-C Reduction -10 -20 -30 ƒ EXPLORER data -40 -50 -60 -57 ƒ Crestor™ in combination -70 -80 -70 *** ABT-335 and rosuvastatin FDC ***p<0.001

  21. Slide 21: Symbicort and Biologicals

    Symbicort™ EU/ROW ƒ Symbicort™ SMART 27 approvals including EU ƒ GINA guidelines US ƒ Symbicort™ Adult Asthma NDA ƒ LCM in Paeds and COPD Japan ƒ Asthma TBH JNDA AstraZeneca Annual Results 2006 Biologicals ƒ Operating model – complete ƒ Investment in expansion – started ƒ Cambridge site expanded ƒ C

  22. Slide 22: Externalisation

    Externalisation AZD3480 AZD3043 Crestor/ABT- 335 AZD1656 AZD2066 CAT-8015 Dapagliflozin In-House AZD5861 AZD8075 AZD5099 CAT-3888 AZD7903 AZD4992 CAT-5001 PN-400 AZD9468 AZD0328 AZD6918 AZD6244 Seroquel™ SR (ARRY-142886) AZD1386 AZD2624 AZD2932 CAT-354 Atacand AZD1981 Seroquel™ SR Plus™ AZD2066 AZD3

  23. Slide 23: 2006 – A year of delivery

    2006 – A year of delivery ƒ Speed, Quality, Cost ƒ 120 projects in pipeline ƒ 325 new collaborations strengthening our pipeline ƒ 3 acquisitions strengthening our R&D capabilities ƒ 11 regulatory submissions and 10 approvals ƒ Focused disease area strategy ƒ Build 5 new areas, Maintain 13 core areas

  24. Slide 24: Agenda and 2006 Scorecard

    Agenda ƒ 2006 headline results ƒ Review of longer term trends ƒ Sales, products and operating performance ƒ Cash flow and shareholder returns AstraZeneca Annual Results 2006 2006 Scorecard Target Outcome Sales growth towards double digit (CER) +11% 9 Operating leverage - Margin possibly 30% 31% 9 -

  25. Slide 25: Operating Margin: 2006 underlying results excluding Toprol-XL

    2006: underlying results excluding Toprol-XL™ Reported Excluding Toprol-XL™ Sales (million) $26,475 +11% CER $25,093 +11% CER Gross Margin 79.0% +1.4pp 78.7% +1.5pp Operating Margin 31.0% +3.8pp 28.4% +3.9pp EPS $3.86 +34% CER $3.36 +36% CER AstraZeneca Annual Results 2006 AZ Business Review: a remi

  26. Slide 26: Operating leverage maintained

    Operating leverage maintained 25% ABR 20% MAT Growth vs Prior Year Sales 15% +11% 10% EPS +34% 5% Costs +8% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 Total Sales: Inc Toprol XL™ - MAT Growth R&D/ SG&A - MAT Growth AstraZeneca Annual Results 2006 Sales trends maintained: Q4 sales exceed $

  27. Slide 27: Our geographic performance is a competitive advantage

    Our geographic performance is a competitive advantage Emerging Markets 11% CER US $m growth Other Established 47% 6% US 12,449 16% Japan 6% ROW 14,026 7% Established Markets 11,162 4% Emerging Markets 2,864 22% Western Europe 30% AstraZeneca Annual Results 2006 Key products MAT growth progression @

  28. Slide 28: Nexium and Seroquel

    Nexium™ FY 06 Sales: $5,182m +12% ƒ US volume growth FY 06: 5500 5000 ƒ Nexium™ +17% ROW 4500 ƒ All other PPI brands -4% 4000 $1,655m +10% 3500 ƒ Omeprazole +54% 3000 ƒ Strong US formulary position US 2500 for 2007 $3,527m +13% 2000 1500 ƒ Good volume growth in 1000 France and Italy 500 ƒ Price eros

  29. Slide 29: Crestor and Arimidex

    Crestor™ FY 06 Sales: $2,028m +59% ƒ US statin market NRx’s +17% 2200 ƒ Crestor™ US NRx’s + 58% 2000 1800 ROW ƒ US NRx share change 2006: 1600 $880m +61% ƒ Crestor™ +2.7 pts 1400 ƒ Vytorin™ +2.0 pts 1200 US ƒ Lipitor™ -8.5 pts 1000 $1,148m +57% ƒ Improved Medicare formulary 800 position for 2007 600

  30. Slide 30: Symbicort and Operating Margin

    Symbicort™ FY 06 Sales: $1,184m +18% ƒ Market growth and share gains 1400 in Europe 1200 ƒ Symbicort™ Maintenance and Reliever Therapy (SMART) 1000 EU approval Oct 06 ƒ Sweden launched Nov 06 800 ƒ EU roll out during 2007 600 ƒ US approval for adult asthma July 06 400 ƒ Continue to plan for launch 2

  31. Slide 31: Sources of 2006 margin improvement

    Sources of 2006 margin improvement Percentage point change vs comparative PY period 2006 FY Q4 Gross Margin +1.5 +0.1 SG&A +2.0 +3.6 Other Income +1.1 +0.6 +4.6 +4.3 R&D -0.6 -1.3 Other - +0.1 CER Movement +4.0 +3.1 FX -0.2 -1.1 Reported Movement +3.8 +2.0 AstraZeneca Annual Results 2006 Other Opera

  32. Slide 32: Gross Margin

    Gross Margin ABR 80% Margin 79% 2006 79.0% 2005 77.6% Gross Margin 78% 2004 75.8% 77% 76% 75% 74% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 Gross Margin Qtly Gross Margin MAT AstraZeneca Annual Results 2006 Driving Asset Utilisation ƒ 3 year programme ƒ Rationalise production assets ƒ Propo

  33. Slide 33: SG&A and R&D trends and outlook

    SG&A and R&D trends SG&A R&D 42% 18% 41% ABR ABR 17% 40% 39% SG&A: Sales % R&D: Sales % 16% 38% 37% 15% 36% 35% 14% 34% 33% 13% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2004 2005 2006 2004 2005 2006 SG&A: Sales % Qtly SG&A: Sales % MAT R&D: Sales % Qtly R&D: Sales % MA

  34. Slide 34: Operating Targets for 2007

    Operating Targets for 2007 (excluding Toprol-XL™) 2006 2007 Target ƒ Sales $25,093m high single digit CER growth ƒ Operating Margin 28.4% increase of up to 1.5 pts R&D mid-teens (incl BMS R&D costs) SG&A low single digits Other income half to two thirds of 2006 ƒ EPS $3.36 range of $3.80 to $4.05 (e

  35. Slide 35: Investments in the pipeline; Underlying Cash Generation

    Investments in the pipeline ƒ 2006 Externalisation $m CAT and KuDOS acquisitions 1,148 Humira™ royalty divestment (661) Intangible up fronts / milestones 415 902 ƒ 2007 Commitments ƒ Actual spend and milestone commitments already approach $500m AstraZeneca Annual Results 2006 Underlying Cash Generat

  36. Slide 36: Shareholder Returns and Distribution policy

    Shareholder Returns 2004 2005 2006 $m $m $m Dividends 1,378 1,717 2,220 Gross share buy back 2,212 3,001 4,147 Gross Distribution 3,590 4,718 6,367 Share issues (102) (143) (985) Net Distribution 3,488 4,575 5,382 AstraZeneca Annual Results 2006 Distribution policy ƒ Full distribution policy commenc

  37. Slide 37: Conclusions

    Conclusions ƒ Strong top line and outstanding capability ƒ Productivity remains at the core of our operating model ƒ Strong cash flow supports pipeline investment and shareholder returns ƒ Internal R&D productivity and externalisation will make a difference AstraZeneca Annual Results 2006 AstraZenec

AstraZeneca — FY2006 Earnings Presentation on 6ix