AstraZeneca PLC · LSE:AZN

AstraZeneca — FY2009 Earnings Presentation

53 slides from AstraZeneca's earnings presentation, January 2010

  1. Slide 1: Annual Results 2009

    Astrazeneca Annual Results 2009

  2. Slide 2: David Brennan, CEO

    David Brennan CEO

  3. Slide 3: Today's agenda

    Today’s agenda  2009 Highlights  FY2009 Headline Financial Results  Regional and Key Brand Performance  Strategy Update & Planning Assumptions 2010+  Pipeline Update AstraZeneca Annual Results 2009 3

  4. Slide 4: 2009 Highlights

    2009 Highlights  Strong financial performance  Product launches  Revenue +7% CER  Iressa in EU  Core EPS +23% CER  ONGLYZA  Supply chain excellence  New external collaborations  Restored US Toprol-XL supply  NKTR-118, -119 (Nektar)  H1N1 pandemic vaccine  TC-5214 (Targacept)  Ceftarolin

  5. Slide 5: Headline results: FY2009

    Headline results: FY2009 2009 2008 Actual CER $m $m growth growth Revenue 32,804 31,601 +4% +7% Core Operating Profit 13,621 10,958 +24% +23% Net Finance Expense (736) (463) Core EPS $6.32 $5.10 +24% +23% Restructuring/Synergy ($0.32) ($0.43) MedImmune/Merck amortisation ($0.27) ($0.28) Intangible i

  6. Slide 6: Headline results: FY2009

    Headline results: FY2009 2009 2008 Actual CER $m $m growth growth Revenue 32,804 31,601 +4% +7% Core Operating Profit 13,621 10,958 +24% +23% Net Finance Expense (736) (463) Core EPS $6.32 $5.10 +24% +23% Reported EPS $5.19 $4.20 +24% +22% Dividend $2.30 $2.05 +12% Net Funds/(Debt) 535 (7,174) Astra

  7. Slide 7: Regional revenue performance: FY2009

    Regional revenue performance: FY2009 2009 CER $m growth Revenue 32,804 +7% North America 15,981 +9% US 14,778 +9% excluding Toprol XL/H1N1 13,425 +2% RoW Established Markets 12,471 +4% Western Europe 9,277 +3% Japan 2,341 +7% Other Established 853 +12% RoW Emerging Markets 4,352 +12% AstraZeneca Ann

  8. Slide 8: AZ is displaying strong growth relative to the market

    AZ is displaying strong growth relative to the market % growth Q3’09 MAT vs Q3’08 MAT AZ sales growth 40 Market sales growth 35 31% 30 27% 25% 25 20 16% 15 14% 13% 12% 12% 11% 10 5% 5 4% 4% 4% 2% 0 US & Canada Latin Europe Middle East Asia Pacific China Japan America & Africa Source: IMS Health, Dol

  9. Slide 9: Revenue summary: FY2009

    Revenue summary: FY2009 2009 CER CER $m % $m Nexium 4,959 -1 (73) Seroquel 4,866 +12 521 Crestor 4,502 +29 1,048 Arimidex 1,921 +7 129 Symbicort 2,294 +23 456 Total key brands 18,542 +12 2,081 AstraZeneca Annual Results 2009 9

  10. Slide 10: Strategy Update & Planning Assumptions 2010+

    Strategy Update & Planning Assumptions 2010+

  11. Slide 11: AstraZeneca: 1999

    AstraZeneca: 1999 AstraZeneca in 1999  47,000 employees  Healthcare revenue: $15bn  Only 6% of sales from emerging markets  2 products >$1bn annual sales  55% of sales at risk to patent expiry in the next 5 yrs  Research and Development  1999 spend: $2.5bn  Pipeline of 41 NME’s  No presence

  12. Slide 12: Sales evolution: 1999-2009

    Sales evolution: 1999-2009 ($bn) 35 32.8 CAGR 30 +8% 25 13.6 20 15.0 15 11.0 8.3 6.8 10 5 6.7 0 1999 Facing Expiry Base New 2009 55% Facing Patent Expiry^ ^ Within 5 years AstraZeneca Annual Results 2009 12

  13. Slide 13: AZN: Strong financial performance

    AZN: Strong financial performance 1999-2009 CAGR 500 450 Core EPS +16% 400 Core Op Profit +15% 350 300 250 Sales +8% 200 150 100 50 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: AZ annual reports, implied core margins AstraZeneca Annual Results 2009 13

  14. Slide 14: AstraZeneca: 2009

    AstraZeneca: 2009 AstraZeneca in 1999 AstraZeneca in 2009  47,000 employees  63,000 employees  Healthcare revenue: $15bn  Healthcare revenue: $32.8bn  Only 6% of sales from  Emerging markets = 13% of sales emerging markets  10 products >$1bn annual sales  2 products >$1bn annual sales  >50%

  15. Slide 15: Strategy Update & Planning Assumptions 2010+

    Strategy Update & Planning Assumptions 2010+

  16. Slide 16: Our vision

    Our vision  AstraZeneca is a focused, integrated, innovation-driven, global, Rx-based biopharmaceutical business AstraZeneca Annual Results 2009 16

  17. Slide 17: Our vision

    Our vision AstraZeneca is Focused Integrated Innovation-driven Global AstraZeneca Annual Results 2009 17

  18. Slide 18: Our vision

    Our vision  AstraZeneca is a focused, integrated, innovation-driven, global, Rx-based biopharmaceutical business  Research based Pharma is an attractive business for the long-term  Sector can grow at least in line with real GDP growth long term  The sector’s best players will earn attractive ret

  19. Slide 19: Strategic priorities

    Strategic priorities “MAKING THE MOST MEANINGFUL DIFFERENCE TO PATIENT HEALTH THROUGH GREAT MEDICINES” Change Strengthen Grow Reshape our behaviour the pipeline the business the business and our culture MANAGE FOR LONG-TERM SHAREHOLDER VALUE OUR VALUES AstraZeneca Annual Results 2009 19

  20. Slide 20: Strategic priorities

    Strategic priorities “MAKING THE MOST MEANINGFUL DIFFERENCE TO PATIENT HEALTH THROUGH GREAT MEDICINES” Pipeline Business Business Culture & Growth Shape Behaviour  Increase output  Growth of current  Implement asset  Innovation Avg. 2 NMEs/yr products strategy & LEAN Drive productivity  Succes

  21. Slide 21: Simon Lowth, Chief Financial Officer

    Simon Lowth Chief Financial Officer

  22. Slide 22: Key planning assumptions

    Key planning assumptions  Pharma sector can grow at least in line with real GDP, which will grow over the planning horizon  Downward pressures from government interventions in the marketplace continue, including various proposals in US healthcare reform  No further “step-change” in evolution of t

  23. Slide 23: Grow the Business

    Grow the Business Strategic Initiatives Grow market share of key brands that retain exclusivity: Planning assumptions  Crestor 2010-2014  Seroquel XR  Symbicort  Revenue in the range of $28 to $34bn per annum over the period Successfully commercialise recent launches and the next wave.  Risk ad

  24. Slide 24: Reshape the Business

    Reshape the Business Strategic Initiatives Maintain gross margin >80%  Complete asset strategy & API outsourcing  Drive LEAN Sigma Improve Sales & Marketing effectiveness and efficiency Planning assumptions 2010-2014  New channels and approaches  Technology investment  Core pre-R&D operating 

  25. Slide 25: Cash generation and investment

    Cash generation and investment  Business focus on cash flow generation  Achieving revenue and Core pre-R&D margins in planning range  Delivering restructuring programmes  Tight management of working capital, tax & interest  Reinvest 40 to 50% of after-tax pre-R&D cash flow to drive future growt

  26. Slide 26: Strong cash generation: 1999-2009

    Strong cash generation: 1999-2009 ($bn) 100 90 Reinvestment of 45% of 80 Operating cash flow 24.4 (excluding major acquisitions) 70 60 12.8 50 86.5 14.5 40 30 2.7 16.2 Div 20 10 18.1 2.2 SBB 0.5 0.5 0 -10 1999 Pre-R&D After Tax Capex Acquisitions Merck Distributed Other 2009 Net Post Tax R&D* & Paym

  27. Slide 27: Invest in value-creating innovation

    Invest in value-creating innovation Strategic Initiatives  Reprioritisation of target disease areas* Planning assumptions 2010-2014  Reorganisation and process improvement in development  2 NMEs per annum on average  Site consolidation*  Material efficiency savings in R&D  Partial mitigation f

  28. Slide 28: Restructuring Programme

    Restructuring Programme 2007-2009 Programme Cost Headcount Impact 2007-2009 $m 2007-2009 Global Supply Chain (1,003) 4,250 SG&A (1,216) 6,750 R&D (288) 1,600 Total (2,506) 12,600 Annual benefits Benefits to date Latest view 2009 $m 2010 $m Total 1,600 2,300 AstraZeneca Annual Results 2009 28

  29. Slide 29: Restructuring and synergies: 2006-2009

    Restructuring and synergies: 2006-2009 Global Emerging Supply Chain SG&A R&D AstraTech Biologics Markets -1,000 -4,600 -3,000 -5,000 -7,000 -9,000 -11,000 -13,000 2006-2009 headcount movements are shown on a Full Time Equivalent basis and include AZ employees and contractors AstraZeneca Annual Resul

  30. Slide 30: Restructuring Programme

    Restructuring Programme 2010-2014 Programme Cost Headcount Impact 2010-2014 $m 2010-2014 Global Supply Chain (340) 2,240 SG&A (600) 4,540 R&D (1,060) 3,620* Total (2,000) 10,400 Annual Benefits Latest view 2014 $m Total 1,900 * Of which 3500 related to new programme: balance from previously announce

  31. Slide 31: Guidance for 2010 (Core basis)

    Guidance for 2010 (Core basis) Revenue Up to a mid single-digit decline at CER Core Pre-R&D Margin Near top of mid-term planning range Net Finance Expense ~$550m Tax Rate ~29% Core EPS Range $5.75 to $6.15* *Based on Jan 2010 avg Fx rates AstraZeneca Annual Results 2009 31

  32. Slide 32: Shareholder distribution policy

    Shareholder distribution policy  Full year 2009 dividend $2.30 (up 12 percent)  Progressive dividend policy  Maintain or grow dividend each year  Annual dividend to reflect earnings prospects over entire cycle, not just one year in isolation  Cover may vary, with target of an average of 2-times

  33. Slide 33: Anders Ekblom, EVP Development

    Anders Ekblom Executive Vice President, Development

  34. Slide 34: Agenda

    Agenda  AstraZeneca R&D strategy  Review of 2009 R&D performance  Update on key late stage projects and overall pipeline AstraZeneca Annual Results 2009 34

  35. Slide 35: A changing landscape....

    A changing landscape.... Challenges  Pricing and market access  Tougher regulatory environment  Generic threat and patent expiry Opportunities  Breakthroughs in science  Ageing patient populations  Unmet medical needs AstraZeneca Annual Results 2009 35

  36. Slide 36: ....requires continuous R&D evolution

    ....requires continuous R&D evolution Our R&D strategy  Enhance key capabilities  Focused Disease Area strategy  Effective and flexible R&D operating model AstraZeneca Annual Results 2009 36

  37. Slide 37: Investing in capabilities to drive productivity

    Investing in capabilities to drive productivity Top priorities for investment Personalised healthcare / translational medicine Impact Predictive sciences / medicine Probability of success Clinical trial design and interpretation Cycle time Innovative scientists and culture Cost / launch Integrated p

  38. Slide 38: With a focus on prioritised disease areas

    With a focus on prioritised disease areas Criteria Attractiveness rating Prevalence: Population with disease High attractiveness Future willingness to pay: Increased or sustained Based on level of unmet need, high investment competitive intensity (e.g., order to market, generics), pricing, and Mediu

  39. Slide 39: Strengthened R&D operating model

    Strengthened R&D operating model Discovery and early development Late-stage Development Biologics focused Innovative Medicines Units Internal and Global external Medicines Market opportunities Development Small molecule focused Innovative Medicines Units Strategic Governance Portfolio Investment Boa

  40. Slide 40: Successful delivery of new products

    Successful delivery of new products... 6 key regulatory approvals in the last 12 months Global ONGLYZA launched in EU and US; approved in 36 countries US H1N1 vaccine in the US ($453m government contract) Seroquel XR MDD approved Symbicort COPD approved EU Iressa launched in EU Asia Symbicort launch

  41. Slide 41: ...supported by additional significant submissions...

    ...supported by 6 additional significant submissions... Filed in US and EU Jupiter data filed in US and EU Certriad Filed in US Filed in US and EU ONGLYZA metformin once daily combination - filed in US Faslodex 500mg filed in US, EU and Japan AstraZeneca Annual Results 2009 41

  42. Slide 42: ...and filling our late stage pipeline with new opportunities

    ...and filling our late stage pipeline with new opportunities Cancer: Olaparib, a novel PARP inhibitor, to start Phase III in mid 2010 in gBRCA-deficient breast cancer Infection: Ceftaroline, a next generation cephalosporin, positive efficacy and safety profile shown in Phase III trials Novexel acqu

  43. Slide 43: Olaparib - Phase III in advanced breast cancer starting mid 2010

    Olaparib - Phase III in advanced breast cancer starting mid 2010 Olaparib Olaparib 400mg BD in advanced 100 gBRCA breast cancer  Randomized phase III in 80 BRCA 1 advanced gBRCA breast cancer 60 BRCA 2 will commence mid 2010 40 Increasing tumour  Broader trial program exploring 20 shrinkage the fu

  44. Slide 44: New approach for the treatment of Major Depressive Disorder (MDD)

    New approach for the treatment of Major Depressive Disorder (MDD) TC-5214  Estimated that over 40million people with Early Onset of Effect by Two Weeks and MDD by 2018* Increasing Improvement over Duration of Trial TC-5214 Phase 2 Results  Majority of patients who are treated with 1st line therapy

  45. Slide 45: NKTR-118 addresses a significant medical problem

    NKTR-118 addresses a significant medical problem NKTR-118  Constipation is a common and potentially debilitating adverse effect associated with opioid analgesic use  Opioid analgesics are commonly used for managing moderate to severe pain  40 to 90% of patients taking opioids for chronic pain man

  46. Slide 46: Anti-infective portfolio that covers a broad spectrum of opportunities

    Anti-infective portfolio that covers a broad spectrum of opportunities Ceftaroline Spectrum of Activity Resistant Gram+ Gram+ Gram– Resistant Gram– Ceftaroline Ceftaroline + NXL104 Ceftazidime + NXL104 H. influenzae ESBL MRSA S. aureus P. E. coli producing MDRSP S. pneumoniae aeruginosa K. pneumonia

  47. Slide 47: Dapagliflozin: Phase III data presented in 2009

    Dapagliflozin: Phase III data presented in 2009 was the start of the story Dapagliflozin T2D treatment Diet and exercise paradigm Oral anti-diabetic Oral anti-diabetic Monotherapy medication plus Insulin alone medication(s) insulin  H2H vs. SU  Add-on insulin +/- OAD clinical studies  Monotherapy

  48. Slide 48: Recentin development programme represents a significant opportunity

    Recentin development programme represents a significant opportunity Recentin CRC HORIZON III 1st line CRC Phase II / III FF+ Avastin vs FF + RECENTIN HORIZON II RECENTIN 1st line CRC Phase III FOLFOX or XELOX +/- RECENTIN targeting submission in Q4 2010 GBM REGAL Recurrent GBM Phase III Lomustine+/-

  49. Slide 49: Pipeline growth reaching steady state

    Pipeline growth reaching steady state 144 146 137 14 23 11 24 120 91 106 10 10 25 34 25 20 31 25 5 5 6 18 13 13 41 44 34 17 17 23 31 45 42 46 43 49 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 Pre-clinical Phase I Phase II Phase III/Reg LCM AstraZeneca Annual Results 2009 49

  50. Slide 50: Late stage portfolio is maturing

    Late stage portfolio is maturing Filed 2009 Potential Filings 2010 Filing Opportunities 2011-14 Vimovo Recentin CRC TC-5214 AZD6765 Certriad Recentin rGBM NKTR-118 AZD6244 Brilinta Dapagliflozin Dapa / Metformin FDC AZD1152 ONGLYZA / Metformin Axanum Ceftaroline Zibotentan CAZ104 FDC Olaparib CytoFa

  51. Slide 51: Conclusions

    Conclusions  2009 has been an important year for delivery of potentially successful new products  4 exciting new late stage products added to the pipeline  Significant number of potential new regulatory filings over the period 2010-2014  Proposed strategic changes to R&D will help us focus on th

  52. Slide 52: David Brennan, CEO

    David Brennan CEO

  53. Slide 53: Annual Results 2009

    Astrazeneca Annual Results 2009

AstraZeneca — FY2009 Earnings Presentation on 6ix