H1 2018 Results
\nStrong performances from new medicines and Emerging Markets underpin the return to growth in 2018
\nOver the first half, the strong sales growth from new medicines (+75%, +69% at CER1) and the continued strength
\nof the Emerging Markets business (+14%, +10% at CER) were offset by the impact from the loss of Crestor
\nexclusivity in Europe and Japan. In line with expectations, an improved performance is anticipated in the second
\nhalf, notably Product Sales, where guidance is reiterated for a low single-digit percentage increase over the full
\nyear at CER. Important news flow from the pipeline is expected to continue beyond the rest of the year.
\nFinancial Highlights
\nH1 2018 Q2 2018
\n$m % change $m % change
\nActual CER Actual CER
\nTotal Revenue 10,333 (1) (5) 5,155 2 (1)
\nProduct Sales 10,015 2 (2) 5,030 2 (1)
\nExternalisation Revenue 318 (53) (54) 125 14 14
\nReported Operating Profit2 1,459 (21) (20) 763 (17) (20)
\nCore Operating Profit3 2,161 (33) (34) 1,265 (18) (22)
\nReported Earnings Per Share (EPS) $0.54 (32) (34) $0.27 (27) (38)
\nCore EPS $1.17 (37) (39) $0.69 (21) (26)
\n\u2022 Product Sales increased by 2% (down by 2% at CER) to $10,015m. New medicines4 generated more than
\n$1bn in additional sales at CER in the half
\n\u2022 The Reported Gross Margin declined by three percentage points to 78.6%, reflecting the favourable impact
\nof manufacturing variances realised in H1 2017 and the agreement on Lynparza with MSD5; the Core Gross
\nMargin fell by three percentage points to 80.0%
\n\u2022 Productivity gains and cost discipline continued with prioritised and targeted investment in new medicines
\nand additional investment in China
\no Total Reported Operating Expenses increased by 3% (down by 1% at CER) to $7,814m. Total Core
\nOperating Expenses increased by 6% (2% at CER) to $6,877m.
\no Reported R&D costs declined by 6% (9% at CER) to $2,641m; Core R&D costs declined by 2% (5% at
\nCER) to $2,558m, driven by efficiency savings. Reported SG&A costs increased by 8% (3% at CER) to
\n$5,008m; Core SG&A costs increased by 11% (7% at CER) to $4,154m
\n\u2022 Externalisation Revenue declined by 53% (54% at CER) to $318m. Reported Other Operating Income &
\nExpense increased by 29% (28% at CER) to $1,086m; Core Other Operating Income & Expense declined by
\n27% to $704m, with the difference between the Reported and Core performance reflecting a legal settlement.
\nThe Company continues to anticipate a significant level of externalisation activities in H2 2018
\n\u2022 An unchanged first interim dividend of $0.90 per share
\n\u2022 Restructuring costs reduced to $187m (H1 2017: $496m). Capital expenditure reduced to $486m (H1 2017:
\n$549m). The Company continues to anticipate declines in restructuring costs and capital expenditure over
\nthe full year
\n\u2022 FY 2018 guidance reiterated and unchanged
\n2
\nPascal Soriot, Chief Executive Officer, commenting on the results said:
\n\u201cThe performance in the first half demonstrated that we remain firmly on track to return our company to Product
\nSales growth in 2018. Our new medicines performed strongly and have established themselves as major drivers
\nof Product Sales, including Lynparza, Tagrisso and Imfinzi in Oncology, Brilinta and Farxiga in CVRM and
\nFasenra in Respiratory. Emerging Markets, led by China, delivered double-digit growth.
\nThe pipeline also continued to deliver: in Oncology, strong results were achieved by Lynparza in first-line ovarian
\ncancer and Imfinzi showed an overall-survival benefit for patients in earlier-stage lung cancer, while a number of
\napprovals were granted, including for Lokelma in hyperkalaemia. AstraZeneca\u2019s rich pipeline and sharp
\ncommercial focus make us confident that we have in place the right conditions for our return to growth this year.\u201d
\nCommercial Highlights
\nNew medicines generated more than $1bn in additional sales at CER in the half compared to H1 2017. Product
\nSales highlights were:
\n\u2022 Oncology: sales growth of 42% in the half (37% at CER) to $2,664m, including:
\n– Lynparza sales of $269m, growth of 132% (124% at CER), driven by expanded use in the treatment of
\novarian cancer and a new approval for the use in the treatment of breast cancer. A very strong start in
\nJapan, following the medicine\u2019s launch in Q2 2018
\n– Tagrisso sales of $760m, growth of 89% (82% at CER) reflecting increased use in the treatment of 2ndline
\nEGFR6 T790M-mutated7 NSCLC8 and the newly-approved use in the 1st-line EGFR-mutated
\n(EGFRm) setting as a new standard of care (SoC)
\n– Imfinzi sales of $184m (Q2 2018: $122m), reflecting ongoing launches for the treatment of unresectable,
\nStage III NSCLC, where the number of new-patient starts continued to grow
\n\u2022 New CVRM9: 12% growth (9% at CER) to $1,874m, including:
\n– Brilinta sales of $609m, growth of 23% (18% at CER) due to continued market penetration in acute
\ncoronary syndrome and high-risk periprocedural myocardial infarction (HR PMI)
\n– Farxiga sales of $639m, growth of 40% (36% at CER) as the medicine consolidated its blockbuster status
\n– Bydureon sales of $294m, a decline of 2% (3% at CER). An encouraging BCise device launch was
\nreflected in an increase in Q2 2018 sales of 6% (5% at CER) to $155m
\n\u2022 Respiratory: 6% growth (stable at CER) to $2,407m, including:
\n– A Symbicort sales decline in the half of 6% (10% at CER) to $1,306m, as competitive class pressures in
\nthe US continued. Symbicort, however, delivered a significantly-improved sequential US performance in
\nQ2 2018
\n– Pulmicort sales growth of 12% in the half (6% at CER) to $633m. Q2 2018 growth of 27% (20% at CER)
\nto $287m, reflecting the normalisation of supply in China
\n– Fasenra sales of $86m (Q2 2018: $65m) further consolidating its leadership position among novel biologic
\nasthma medicines
\n\u2022 Emerging Markets: the largest region by Product Sales, with growth of 14% (10% at CER) to $3,424m,
\nincluding:
\n– A China sales increase of 33% (24% at CER) to $1,893m. Underpinned by the launch of Tagrisso,
\nOncology sales in China grew by 57% (46% at CER) to $403m
\n– An ex-China sales decline of 3% to $1,531m. A robust result, impacted by divested Product Sales and
\nadverse performances in the Middle East, Africa and Russia
\n3
\nPipeline Highlights
\nThe table below highlights significant developments in the late-stage pipeline since the prior results
\nannouncement:
\nRegulatory
\nApprovals
\n– Lynparza – breast cancer (JP)
\n– Tagrisso – lung cancer (1st line) (EU)
\n– Imfinzi – unresectable, Stage III NSCLC (JP)
\n– Lokelma – hyperkalaemia (US)
\nRegulatory
\nSubmissions and\/or
\nAcceptances
\n– Forxiga – type-1 diabetes (JP)
\n– Forxiga combination with Onglyza and metformin – type-2 diabetes (EU)
\n– Bydureon – type-2 diabetes CVOT10 (US)
\nMajor Phase III
\nData Readouts or
\nOther Major
\nDevelopments
\n– Lynparza – ovarian cancer (1st line): primary PFS11 endpoint met
\n– Imfinzi – unresectable, Stage III NSCLC: primary OS12 endpoint met
\n– selumetinib – thyroid cancer: did not meet primary endpoint
\n– Bydureon BCise – type-2 diabetes; new device: positive CHMP13 opinion
\n– Fasenra – COPD14: did not meet primary endpoints
\n– lanabecestat – Alzheimer’s disease: termination of Phase III programme
\nGuidance
\nGuidance for FY 2018 is reiterated and unchanged. All measures in this section are at CER. Company guidance
\nis on Product Sales and Core EPS only:
\nProduct Sales A low single-digit percentage increase
\nCore EPS $3.30 to $3.50
\nVariations in performance between quarters can be expected to continue. The Company is unable to provide
\nguidance and indications on a Reported basis because the Company cannot reliably forecast material elements
\nof the Reported result, including the fair-value adjustments arising on acquisition-related liabilities, intangibleasset
\nimpairment charges and legal-settlement provisions. Please refer to the section \u2018Cautionary Statements
\nRegarding Forward-Looking Statements\u2019 at the end of this announcement.
\nAdditional Commentary
\nOutside of guidance, the Company provides indications for FY 2018 vs. the prior year:
\n\u2022 The sum of Externalisation Revenue and Other Operating Income & Expense is anticipated to decline vs. the
\nprior year. As part of its long-term growth strategy, the Company remains committed to focusing on
\nappropriate cash-generating and value-accretive externalisation activities that reflect the ongoing productivity
\nof the pipeline. It is also committed to the continued management of its portfolio through divestments and to
\nincreasing the focus, over time, on its three main therapy areas
\n\u2022 Core R&D costs in FY 2018 are anticipated to be in the range of a low single-digit percentage decline to
\nstable. This expectation includes the favourable impact on development costs from the MSD collaboration
\n\u2022 The Company maintains its focus on reducing operational and infrastructure costs. Total Core SG&A costs
\nare expected to increase by a low to mid single-digit percentage in FY 2018, reflecting targeted support for
\nmedicine launches, including Imfinzi in Oncology and Fasenra in Respiratory, as well as additional investment
\nin China. The Company also anticipates declines in restructuring costs and capital expenditure in FY 2018
\nvs. the prior year
\n\u2022 A Core Tax Rate of 16-20% (FY 2017: 14%)
\n4
\nCurrency Impact
\nBased only on average exchange rates in the six months to 30 June 2018 and the Company\u2019s published currency
\nsensitivities, the Company anticipates a favourable low single-digit percentage impact from currency movements
\non Product Sales and Core EPS in FY 2018. Details on currency sensitivities are contained within the Operating
\nand Financial Review.
\nSustainability
\nAstraZeneca is committed to being a valued and trusted partner to its stakeholders over the long term. There is
\na distinct connection between maintaining a strong business and making a positive impact to a fairer, safer and
\nhealthier world. AstraZeneca is dedicated to pushing the boundaries of science to deliver sustainable health that
\ntransforms the lives of patients around the world.
\nAstraZeneca\u2019s sustainability ambition is founded on making science accessible and operating in a way that
\nrecognises the interconnection between business growth, the needs of society and the limitations of the planet.
\nThe Company\u2019s sustainability ambition is reinforced by its purpose and values, which are intrinsic to its business
\nmodel, and ensures that the delivery of its strategy broadens access to medicines, minimises the environmental
\nfootprint of medicines and processes and ensures that all business activities are underpinned by the highest
\nlevels of ethics and transparency.
\nA full update on the Company\u2019s year-to-date sustainability progress is shown in the Sustainability Update section
\nof this announcement.
\nNotes
\nThe following notes refer to pages 1-3:
\n1. Constant exchange rates. These are non-GAAP financial measures because they remove the effects of
\ncurrency movements from Reported results.
\n2. Reported financial measures are the financial results presented in accordance with International Financial
\nReporting Standards.
\n3. Core financial measures. These are non-GAAP financial measures because, unlike Reported performance,
\nthey cannot be derived directly from the information in the Group Financial Statements. See the Operating
\nand Financial Review for a definition of Core financial measures and a reconciliation of Core to Reported
\nfinancial measures.
\n4. Lynparza, Tagrisso, Imfinzi, Calquence, Brilinta, Farxiga, Lokelma, Bevespi and Fasenra.
\n5. Merck & Co., Inc., Kenilworth, NJ, US, known as MSD outside the US and Canada.
\n6. Epidermal growth factor receptor.
\n7. Substitution of threonine (T) with methionine (M) at position 790 of exon 20 mutation.
\n8. Non-small cell lung cancer.
\n9. New Cardiovascular, Renal and Metabolism, incorporating Brilinta, Diabetes medicines and Lokelma.
\n10. Cardiovascular outcomes trial.
\n11. Progression-free survival.
\n12. Overall survival.
\n13. Committee for Medicinal Products for Human Use, the European Medicines Agency’s (EMA) committee with
\nresponsibility for human medicines.
\n14. Chronic obstructive pulmonary disease.
\nThe performance shown in this announcement covers the six-month period to 30 June 2018 (the half or H1 2018)
\nand the three-month period to 30 June 2018 (the second quarter or Q2 2018) compared to the six-month period
\nto 30 June 2017 (H1 2017) and the three-month period to 30 June 2017 (Q2 2017) respectively, unless stated
\notherwise. All commentary in the Operating and Financial Review relates to the half, unless stated otherwise.
\n5
\nPipeline – Forthcoming Major News Flow
\nInnovation is critical to addressing unmet patient needs and is at the heart of the Company\u2019s growth strategy. The
\nfocus on research and development is designed to yield strong results from the pipeline.
\nH2 2018
\nLynparza – ovarian cancer (1st line): regulatory submission15
\nTagrisso – lung cancer (1st line): regulatory decision (JP)
\nImfinzi – unresectable, Stage III NSCLC: regulatory decision (EU)
\nImfinzi +\/- treme – lung cancer (1st line) (MYSTIC): data readout (final OS), regulatory submission
\nImfinzi +\/- treme – head & neck cancer (1st line): data readout
\nImfinzi +\/- treme – head & neck cancer (2nd line): data readout
\nmoxetumomab pasudotox – hairy cell leukaemia (3rd line): regulatory decision (US)
\nFarxiga – type-2 diabetes CVOT: data readout
\nBydureon autoinjector – type-2 diabetes: regulatory decision (EU)
\nroxadustat – anaemia: data readout
\nDuaklir – COPD: regulatory submission acceptance (US)
\nBevespi – COPD: regulatory decision (EU); regulatory submission (JP)
\nPT010 – COPD: regulatory submission
\nanifrolumab – lupus: data readout
\nH1 2019
\nLynparza – breast cancer: regulatory decision (EU)
\nLynparza – pancreatic cancer: data readout
\nselumetinib – NF-1: regulatory submission
\nImfinzi +\/- treme – head & neck cancer (1st line): regulatory submission
\nImfinzi +\/- treme – head & neck cancer (2nd line): regulatory submission
\nImfinzi + treme – lung cancer (NEPTUNE): data readout
\nBrilinta – CAD16 \/ type-2 diabetes CVOT: data readout
\nFarxiga – type-2 diabetes CVOT: regulatory submission
\nLokelma – hyperkalaemia: regulatory submission (JP)
\nroxadustat – anaemia: regulatory submission (US)
\nanifrolumab – lupus: regulatory submission
\nH2 2019
\nLynparza – pancreatic cancer: regulatory submission
\nLynparza – ovarian cancer (1st line) (PAOLA-1): data readout
\nTagrisso – lung cancer (1st line): data readout (final OS)
\nImfinzi + treme – lung cancer (NEPTUNE): regulatory submission
\nImfinzi +\/- treme – lung cancer (1st line) (POSEIDON): data readout, regulatory submission
\nImfinzi +\/- treme – small-cell lung cancer: data readout, regulatory submission
\nImfinzi +\/- treme – bladder cancer (1st line): data readout, regulatory submission
\nCalquence – CLL17: data readout, regulatory submission
\nBrilinta – CAD18 \/ type-2 diabetes CVOT: regulatory submission
\nFarxiga – type-1 diabetes: regulatory decision (EU, JP)
\n15 Regarding \u2018regulatory submission\u2019, the Company will generally communicate based on regulatory submission acceptance in the US and
\nthe EU and regulatory submission in Japan.
\n16 Coronary artery disease.
\n17 Chronic lymphocytic leukaemia.
\n18 Coronary artery disease.
\n6
\nConference Call
\nA live presentation, conference call and webcast for investors and analysts, hosted by management, will begin at
\n12:30pm UK time today. Details can be accessed via astrazeneca.com.
\nReporting Calendar
\nThe Company intends to publish its year-to-date and third-quarter financial results on 8 November 2018.
\nAbout AstraZeneca
\nAstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development
\nand commercialisation of prescription medicines, primarily for the treatment of diseases in three therapy areas –
\nOncology, CVRM and Respiratory. AstraZeneca operates in over 100 countries and its innovative medicines are
\nused by millions of patients worldwide.
\nFor more information, please visit astrazeneca.com and follow us on Twitter @AstraZeneca.
\nInvestor Relations
\nThomas Kudsk Larsen
\n+44 203 749 5712
\nJosie Afolabi +44 203 749 5631
\nCraig Marks Finance; Fixed Income; M&A +44 7881 615 764
\nHenry Wheeler Oncology +44 203 749 5797
\nMitchell Chan Oncology; Other +1 240 477 3771
\nChrister Gruvris Brilinta; Diabetes +44 203 749 5711
\nNick Stone Respiratory; Renal +44 203 749 5716
\nJennifer Kretzmann Retail Investors +44 203 749 5824
\nUS toll free +1 866 381 7277
\nMedia Relations
\nGonzalo Vi\u00f1a UK\/Global +44 203 749 5916
\nKaren Birmingham UK\/Global +44 203 749 5634
\nRob Skelding UK\/Global +44 203 749 5821
\nMatt Kent UK\/Global +44 203 749 5906
\nJacob Lund Sweden +46 8 553 260 20
\nMichele Meixell US +1 302 885 2677
\n7
\nTable Of Contents And List Of Tables
\nPage
\nOperating And Financial Review 8
\nProduct Sales 12
\nProduct Sales Summary 13
\nRegional Product Sales 18
\nFinancial Performance 20
\nCorporate And Business Development Update 28
\nSustainability Update 29
\nResearch And Development Update 32
\nCondensed Consolidated Statement Of Financial Position 45
\nCondensed Consolidated Statement Of Cash Flows 47
\nResponsibility Statement of the Directors in Respect of the Half-Yearly Financial Report 48
\nIndependent Review Report to AstraZeneca PLC 49
\nNotes To The Interim Financial Statements 51
\nShareholder Information 64
\nCautionary Statements Regarding Forward-Looking Statements 65
\nTable 1: Total Revenue 9
\nTable 2: Product Sales 9
\nTable 3: Breakdown Of Externalisation Revenue 9
\nTable 4: Initial Externalisation Revenue 10
\nTable 5: Ongoing Externalisation Revenue 10
\nTable 6: Externalised And Divested Medicines 10
\nTable 7: Ongoing Externalisation Revenue Agreements 11
\nTable 8: Therapy Area And Medicine Performance 12
\nTable 9: Regional Product Sales 18
\nTable 10: H1 2018 Reported Profit And Loss 20
\nTable 11: Q2 2018 Reported Profit And Loss 21
\nTable 12: Reconciliation Of Reported Profit Before Tax To EBITDA 22
\nTable 13: H1 2018 Reconciliation Of Reported To Core Financial Measures 22
\nTable 14: Q2 2018 Reconciliation Of Reported To Core Financial Measures 23
\nTable 15: Cash Flow 25
\nTable 16: Debt And Capital Structure 26
\nTable 17: Currency Sensitivities 26
\nTable 18: Environmental Protection Targets 30
\nTable 19: Update From The Late-Stage Pipeline 32
\nTable 20: Lynparza Study 08 in prostate cancer; rPFS by HRR status 33
\nTable 21: Key Lynparza Combination Trials 34
\nTable 22: Ongoing Key IO Lung Cancer Late-Stage Trials 36
\nTable 23: Key IO Non-Lung Cancer Late-Stage Trials 37
\nTable 24: Major Ongoing Cardiovascular Outcomes Trials 39
\n8
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nOperating And Financial Review
\nAll narrative on growth and results in this section is based on actual exchange rates, unless stated otherwise.
\nFinancial figures are in US$ millions ($m). The performance shown in this announcement covers the six-month
\nperiod to 30 June 2018 (the half or H1 2018) and the three-month period to 30 June 2018 (the second quarter or
\nQ2 2018) compared to the six-month period to 30 June 2017 (H1 2017) and the three-month period to 30 June
\n2017 (Q2 2017) respectively, unless stated otherwise. All commentary in the Operating and Financial Review
\nrelates to the half, unless stated otherwise.
\nCore financial measures, EBITDA, Net Debt, Initial Externalisation Revenue and Ongoing Externalisation
\nRevenue are non-GAAP financial measures because they cannot be derived directly from the Group Condensed
\nConsolidated Financial Statements. Management believes that these non-GAAP financial measures, when
\nprovided in combination with Reported results, will provide investors and analysts with helpful supplementary
\ninformation to better understand the financial performance and position of the Company on a comparable basis
\nfrom period to period. These non-GAAP financial measures are not a substitute for, or superior to, financial
\nmeasures prepared in accordance with GAAP. Core financial measures are adjusted to exclude certain significant
\nitems, such as:
\n\u2022 Amortisation and impairment of intangible assets, including impairment reversals but excluding any charges
\nrelating to IT assets
\n\u2022 Charges and provisions related to global restructuring programmes, which includes charges that relate to the
\nimpact of global restructuring programmes on capitalised IT assets
\n\u2022 Other specified items, principally comprising acquisition-related costs, which include fair-value adjustments
\nand the imputed finance charge relating to contingent consideration on business combinations, legal
\nsettlements and foreign-exchange gains and losses on certain non-structural intra-group loans
\nDetails on the nature of Core financial measures are provided on page 68 of the Annual Report and Form 20-F
\nInformation 2017. Reference should be made to the reconciliation of Core to Reported financial information and
\nthe Reconciliation of Reported to Core Financial Measures table included in the Financial Performance section
\nof this announcement.
\nEBITDA is defined as Reported Profit Before Tax after adding back Net Finance Expense, results from Joint
\nVentures and Associates and charges for depreciation, amortisation and impairment. Reference should be made
\nto the Reconciliation of Reported Profit Before Tax to EBITDA included in the Financial Performance section of
\nthis announcement.
\nNet Debt is defined as interest-bearing loans and borrowings net of cash and cash equivalents, other investments
\nand net derivative financial instruments. Reference should be made to the Reconciliation of Interest-Bearing
\nLoans and Borrowings to Net Debt included in the Cash Flow and Balance Sheet section of this announcement.
\nOngoing Externalisation Revenue is defined as Externalisation Revenue excluding Initial Externalisation Revenue
\n(which is defined as Externalisation Revenue that is recognised at the date of completion of an agreement or
\ntransaction, in respect of upfront consideration). Ongoing Externalisation Revenue comprises, among other items,
\nroyalties, milestone revenue and profit-sharing income. Reference should be made to the Breakdown of
\nExternalisation Revenue table in this Operating and Financial Review.
\nThe Company strongly encourages investors and analysts not to rely on any single financial measure, but to
\nreview AstraZeneca\u2019s financial statements, including the notes thereto, and other available Company reports,
\ncarefully and in their entirety.
\n9
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nTable 1: Total Revenue
\nH1 2018 Q2 2018
\n$m % change $m % change
\nActual CER Actual CER
\nTotal Revenue 10,333 (1) (5) 5,155 2 (1)
\nProduct Sales 10,015 2 (2) 5,030 2 (1)
\nExternalisation Revenue 318 (53) (54) 125 14 14
\nTable 2: Product Sales
\nH1 2018 Q2 2018
\n$m % of
\ntotal19
\n% change $m % of
\ntotal
\n% change
\nActual CER Actual CER
\nOncology 2,664 27 42 37 1,434 29 44 40
\nNew CVRM 1,874 19 12 9 974 19 12 9
\nRespiratory 2,407 24 6 – 1,226 24 12 7
\nOther 3,070 31 (22) (25) 1,396 28 (29) (32)
\nTotal 10,015 100 2 (2) 5,030 100 2 (1)
\nTable 3: Breakdown Of Externalisation Revenue
\nOngoing Externalisation Revenue of $216m represented 68% of total Externalisation Revenue in the half (H1
\n2017: $228m, 34%). The Company anticipates that Ongoing Externalisation Revenue will grow as a proportion
\nof Externalisation Revenue over time. A breakdown of Externalisation Revenue is shown below:
\nH1 2018 Q2 2018
\n$m % of
\ntotal20
\n% change
\n$m % of
\ntotal
\n% change
\nActual CER Actual CER
\nRoyalties 21 7 (75) (76) 13 10 (66) (66)
\nMilestones\/Other21 195 61 36 37 112 90 n\/m n\/m
\nOngoing Externalisation Revenue 216 68 (5) (4) 125 100 n\/m n\/m
\nInitial Externalisation Revenue 102 32 (77) (79) – – n\/m n\/m
\nTotal Externalisation Revenue 318 100 (53) (54) 125 100 14 14
\n19 Due to rounding, the sum of therapy area percentages may not agree to the total.
\n20 Due to rounding, the sum of category percentages may not agree to totals.
\n21 May include, inter alia, option income and profit-sharing income.
\n10
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nTable 4: Initial Externalisation Revenue
\nA breakdown of Initial Externalisation Revenue in the half is shown below:
\nTable 5: Ongoing Externalisation Revenue
\nA breakdown of Ongoing Externalisation Revenue in the half is shown below:
\nTable 6: Externalised And Divested Medicines
\nSeveral AstraZeneca medicines were externalised or divested after H1 2017, thus adversely impacting the
\nProduct Sales performance:
\n22 H1 2018 Product Sales here comprise sales made to partners under manufacturing and supply agreements.
\nMedicine Partner Region $m
\nCrestor Almirall, S.A. Spain 61
\nOther 41
\nTotal 102
\nMedicine Partner Region $m
\nLynparza MSD – milestone revenue (regulatory milestone) Global 70
\nLynparza MSD – milestone revenue (sales-related milestone) Global 100
\nOther 46
\nTotal 216
\nCompletion Medicine Region
\nH1 201822 H1 2017 Difference
\nAdverse
\nImpact on
\nH1 2018
\nProduct Sales
\n$m $m $m
\nOctober 2017 Anaesthetics Global 32 159 (127)
\nJanuary 2018 Crestor Spain 4 44 (40)
\nTotal 36 203 (167) 2%
\n11
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nTable 7: Ongoing Externalisation Revenue Agreements
\nExamples of transactions that include Ongoing Externalisation Revenue are shown below:
\nCompletion Medicine Partner Region Externalisation Revenue
\nJuly 2017 Lynparza MSD Global
\n\u2022 Initial $1.0bn revenue
\n\u2022 Up to $0.75bn for certain licence
\noptions, including $0.25bn paid in
\nQ4 2017
\n\u2022 Up to $6.15bn in regulatory and
\nsales milestones
\nMarch 2017 MEDI8897 Sanofi Pasteur, Inc. Global
\n\u2022 Initial \u20ac120m revenue
\n\u2022 Up to \u20ac495m in sales and
\ndevelopment-related milestones
\nMarch 2017 Zoladex TerSera Therapeutics
\nLLC (TerSera)
\nUS and
\nCanada
\n\u2022 Initial $250m revenue
\n\u2022 Up to $70m in sales-related
\nmilestones
\n\u2022 Mid-teen percentage royalties on
\nsales
\n12
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nProduct Sales
\nThe performance of new and legacy medicines is shown below, with a geographical split shown in Notes 6 & 7.
\nTable 8: Therapy Area And Medicine Performance
\nTherapy Area Medicine
\nH1 2018 Q2 2018
\n$m % of
\ntotal23
\n% change
\n$m % of
\ntotal
\n% change
\nActual CER Actual CER
\nOncology
\nTagrisso 760 8 89 82 422 8 82 77
\nIressa 275 3 5 (1) 143 3 4 (1)
\nLynparza 269 3 n\/m n\/m 150 3 n\/m n\/m
\nImfinzi 184 2 n\/m n\/m 122 2 n\/m n\/m
\nCalquence 20 – n\/m n\/m 12 – n\/m n\/m
\nLEGACY:
\nFaslodex 501 5 8 5 247 5 – (3)
\nZoladex 376 4 4 (1) 192 4 8 4
\nArimidex 111 1 5 – 57 1 6 2
\nCasodex 104 1 (5) (11) 52 1 (4) (9)
\nOthers 64 1 14 11 37 1 23 23
\nTotal Oncology 2,664 27 42 37 1,434 29 44 40
\nCVRM
\nBrilinta 609 6 23 18 316 6 16 13
\nFarxiga 639 6 40 36 340 7 36 34
\nOnglyza 255 3 (16) (19) 126 3 (16) (18)
\nBydureon 294 3 (2) (3) 155 3 6 5
\nByetta 60 1 (33) (35) 29 1 (33) (35)
\nSymlin 16 – (36) (36) 7 – (36) (36)
\nLEGACY:
\nCrestor 727 7 (39) (42) 338 7 (40) (42)
\nSeloken\/Toprol-XL 373 4 2 (2) 173 3 (4) (7)
\nAtacand 137 1 (7) (10) 66 1 (8) (10)
\nOthers 158 2 (12) (17) 73 1 (19) (23)
\nTotal CVRM 3,268 33 (8) (11) 1,623 32 (9) (11)
\nRespiratory
\nSymbicort 1,306 13 (6) (10) 672 13 (5) (8)
\nPulmicort 633 6 12 6 287 6 27 20
\nFasenra 86 1 n\/m n\/m 65 1 n\/m n\/m
\nDaliresp\/Daxas 83 1 (10) (12) 45 1 (6) (8)
\nTudorza\/Eklira 73 1 3 (3) 39 1 15 12
\nDuaklir 50 – 43 29 22 – 38 31
\nBevespi 13 – n\/m n\/m 8 – n\/m n\/m
\nOthers 163 2 23 15 88 2 35 28
\nTotal Respiratory 2,407 24 6 – 1,226 24 12 7
\n23 Due to rounding, the sum of individual medicine percentages may not agree to totals.
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\nTherapy Area Medicine
\nH1 2018 Q2 2018
\n$m % of
\ntotal23
\n% change
\n$m % of
\ntotal
\n% change
\nActual CER Actual CER
\nOther
\nNexium 890 9 (16) (19) 442 9 (26) (28)
\nSynagis 250 2 (17) (17) 26 1 (63) (63)
\nLosec\/Prilosec 145 1 7 (1) 76 2 12 4
\nSeroquel XR 129 1 (20) (23) 76 2 (20) (21)
\nMovantik\/Moventig 52 1 (16) (16) 24 – (25) (25)
\nOthers 210 2 (41) (44) 103 2 (52) (53)
\nTotal Other 1,676 17 (19) (22) 747 15 (30) (33)
\nTotal Product
\nSales 10,015 100 2 (2) 5,030 100 2 (1)
\nSpecialty-care medicines comprise all Oncology medicines and Fasenra. At 27% of total Product Sales, specialtycare-
\nmedicine sales grew by 46% in the half (41% at CER) to $2,750m. In H1 2017, speciality-care medicines
\ncomprised 19% of total Product Sales.
\nProduct Sales Summary
\nONCOLOGY
\nProduct Sales of $2,664m; an increase of 42% (37% at CER). Oncology Product Sales represented 27% of total
\nProduct Sales, up from 19% in H1 2017.
\nLynparza
\nBy the end of the half, Lynparza was approved in over 50 countries for the treatment of ovarian cancer. Launches
\nin breast cancer took place in the US and Japan during the period and the indication was under regulatory review
\nin Europe. Product Sales of Lynparza amounted to $269m, an increase of 132% (124% at CER). The strong
\nperformance was geographically spread; it was, however, particularly noticeable in the US.
\nUS sales grew by 198% to $149m, with continued sequential quarter on quarter growth of 26% to $83m in Q2
\n2018; the performance in the half reflected continued growth in both the ovarian and breast indications, as well
\nas the H2 2017 launch of Lynparza tablets and regulatory approval as a 2nd-line treatment for ovarian cancer,
\nregardless of BRCA24 status. In the half, the Company announced the approval of Lynparza in the US as a
\ntreatment for patients with germline BRCA-mutated (BRCAm) breast cancer. At the end of the half, Lynparza
\nremained the leading medicine in the poly ADP ribose polymerase (PARP)-inhibitor class in the US, as measured
\nby total prescription volumes.
\nSales in Europe increased by 50% (36% at CER) to $87m, this was driven by encouraging levels of
\nreimbursement, a number of successful launches, higher BRCA-testing rates and an increased level of
\npenetration across all countries. On 8 May 2018, the Company announced that the EMA had approved Lynparza
\ntablets (300mg twice daily) as a 2nd-line treatment for patients with ovarian cancer, regardless of BRCA status.
\nJapan sales of $10m in the half followed the initial launch in April 2018 in ovarian cancer; Lynparza was approved
\nas a treatment for BRCAm, metastatic breast cancer on 2 July 2018, a targeted chemotherapy-sparing option.
\nIn July 2017, AstraZeneca and MSD announced a global strategic oncology collaboration to co-develop Lynparza
\nand the potential medicine selumetinib for multiple cancer types as monotherapies and in combinations. The
\nintegration of development and commercial activities is progressing well, with both companies promoting
\nLynparza.
\n24 A BRCA mutation is a mutation in either of the BRCA1 and BRCA2 genes, which are tumour-suppressor genes.
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\nLung Cancer
\nTagrisso
\nBy the end of the half, Tagrisso was approved in a number of markets, including Brazil, the US, the EU, Russia,
\nAustralia, Canada and Egypt, for the treatment of 1st-line EGFRm NSCLC; a number of additional regulatory
\nreviews were also underway. In the 2nd-line setting, Tagrisso has now been approved and launched in more than
\n75 countries, including in the US, Europe, Japan and China, for patients with EGFR T790M-mutated NSCLC.
\nProduct Sales of $760m represented growth of 89% (82% at CER), partly driven by increased testing rates and
\nthe aforementioned US approval in the 1st-line setting. Continued growth was also delivered in the 2nd-line
\nindication in other countries.
\nSales in the US grew by 89% to $341m, with sequential growth in the second quarter of 32% to $194m, reflecting
\na rapid uptake in the 1st-line setting that followed the April 2018 approval of Tagrisso as a 1st-line treatment of
\npatients with metastatic EGFRm NSCLC. Tagrisso achieved market leadership in new patient starts for the 1stline
\ntreatment of patients with EGFRm NSCLC in the US.
\nWithin Emerging Markets, Tagrisso sales grew by 298% (280% at CER) to $159m, with notable growth in China
\nwhere the medicine was approved in March 2017 as a 2nd-line treatment for patients with EGFR T790M-mutated
\nNSCLC. Asia-Pacific has a relatively high prevalence of patients with an EGFR mutation at 30-40% compared to
\n10-15% in western markets.
\nIn Europe, sales of $139m represented growth of 83% (63% at CER), driven by positive reimbursement decisions,
\nfurther growth in testing rates and strong levels of demand. Sequentially, sales were stable as increased volumes
\nwere offset by adjustments to access agreements, some with retrospective effect, as the medicine reached more
\npatients in each country. Following EU regulatory approval on 8 June 2018 for the initial treatment of patients with
\nEGFRm NSCLC, Tagrisso launched in select EU countries, including in France and Germany and reimbursement
\nnegotiations are underway elsewhere.
\nSales of Tagrisso in Japan increased by 15% (11% at CER) to $118m (Q2 2018: $69m), reflecting focused
\nactivities to maximise testing and utilisation rates in the 2nd-line indication. A regulatory decision on Tagrisso as
\na 1st-line treatment for EGFRm NSCLC is expected in Japan in the second half of the year.
\nImfinzi
\nImfinzi is currently approved for the treatment of patients with unresectable, Stage III NSCLC whose disease has
\nnot progressed following concurrent platinum-based chemotherapy and radiation therapy (CRT) and for the 2ndline
\ntreatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer).
\nIn unresectable, Stage III NSCLC, Imfinzi is approved in the US, Japan, Canada, Switzerland, India and Brazil.
\nOther regulatory reviews are ongoing, and an EU regulatory decision is anticipated in the second half of the year.
\nGlobal Product Sales amounted to $184m (Q2 2018: $122m) with unresectable, Stage III NSCLC representing
\nthe majority of Imfinzi sales. The US represented the vast majority of the global sales; with $5m in sales recorded
\nin other markets following approvals and launches. The number of new and continuing US patient infusions in the
\nunresectable, Stage III NSCLC indication remained strong; additional regulatory approvals are anticipated in H2
\n2018.
\nIressa
\nProduct Sales of $275m; an increase of 5% (down by 1% at CER). Emerging Markets sales increased by 15%
\n(8% at CER) to $148m. China sales increased by 27% (17% at CER) to $95m; Iressa was included on the National
\nReimbursement Drug List (NRDL) in 2017. Sales in the US declined by 18% to $14m and increased in Europe
\nby 13% (2% at CER) to $61m.
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\nOther Oncology Medicines
\nCalquence
\nProduct Sales of $20m; Calquence was approved and launched in the US on 31 October 2017. The medicine
\ndelivered a promising performance in the half, with demand predominantly based on the use in relapsed\/refractory
\n(R\/R) mantle cell lymphoma (MCL).
\nLegacy: Faslodex
\nProduct Sales of $501m; an increase of 8% (5% at CER) that reflected volume growth.
\nEmerging Markets sales grew by 31% (30% at CER) to $71m. China sales grew by 100% (82% at CER) to $22m.
\nUS sales increased by 7% to $259m, mainly reflecting a continued strong uptake of the combination with the
\nCDK4\/6 class, a medicine approved for the treatment of hormone-receptor-positive breast cancer.
\nEurope sales declined by 11% (21% at CER) to $118m, reflecting the impact of generic entrants in certain
\ncountries. In June 2017, a label extension, based upon the FALCON trial in the 1st-line setting was approved in
\nJapan, where sales grew by 56% (50% at CER) to $50m, despite the impact of the biennial price cut implemented
\non 1 April 2018.
\nLegacy: Zoladex
\nProduct Sales of $376m; an increase of 4% (down by 1% at CER).
\nEmerging Markets sales increased by 20% (17% at CER) to $202m. Sales in Europe increased by 1% (down by
\n9% at CER) to $68m. In the Established Rest Of World (ROW) region, sales declined by 10% (13% at CER) to
\n$103m, driven by the effects of increased competition. On 31 March 2017, the Company completed an agreement
\nwith TerSera for the sale of the commercial rights to Zoladex in the US and Canada.
\nCVRM
\nNew CVRM sales grew by 12% (9% at CER) to $1,874m, reflecting strong performances from Brilinta and Farxiga,
\nafter each attained blockbuster-sales status in FY 2017. Total CVRM sales, which includes Crestor and other
\nlegacy medicines, declined by 8% (11% at CER) to $3,268m, comprising 33% of total Product Sales.
\nBrilinta
\nProduct Sales of $609m; an increase of 23% (18% at CER).
\nEmerging Markets sales of Brilinta grew by 22% (17% at CER) to $148m, partly reflecting the benefits of inclusion
\non the NRDL in China in 2017.
\nUS sales of Brilinta, at $259m, represented an increase of 20%. The performance, reflecting volume growth, was
\ndriven primarily by an increase in the number of patients initiated on Brilinta in the hospital and an increase in
\nvolume of 90-day prescriptions. Furthermore, Brilinta continued to deliver increasing levels of market share in the
\nhalf. US sales growth in Q2 2018 slowed to 13%, with sales of $144m reflecting the impact of affordability
\nprogrammes.
\nSales of Brilique in Europe increased by 27% (14% at CER) to $172m, reflecting indication leadership across a
\nnumber of markets; sales were also bolstered by the inclusion within HR PMI guidelines by the European Society
\nof Cardiology in 2017. Improvements were delivered across the major markets; Brilique gained further
\nreimbursement in key countries in its HR PMI indication with the 60mg dose.
\nFarxiga
\nProduct Sales of $639m; an increase of 40% (36% at CER). Farxiga consolidated its global leadership position
\nwithin the sodium-glucose co-transporter 2 (SGLT2) inhibitor class.
\nEmerging Markets sales increased by 57% (59% at CER) to $157m, reflecting ongoing launches and improved
\nlevels of patient access. In March 2017, Forxiga became the first SGLT2-inhibitor medicine to be approved in
\nChina, with encouraging levels of access and performance.
\nUS sales increased by 29% to $266m. The performance in H1 2017 was adversely impacted by the Company\u2019s
\nlevel of participation in affordability programmes; subsequent changes to the Company\u2019s approach to these
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\nprogrammes, however, helped to deliver a much-improved performance in H1 2018. Despite slowing growth in
\nthe US, the SGLT2 class continued to be scientifically underpinned by growing evidence around cardiovascular
\nbenefits, including data from the CVD-REAL series of studies (first published in May 2017), showing a statistically
\nsignificant reduced rate of hospitalisation for heart failure and death from any cause compared to other type-2
\ndiabetes medicines.
\nSales in Europe increased by 45% (28% at CER) to $152m. In Japan, sales grew by 40% (35% to CER) to $28m.
\nOno Pharmaceutical Co., Ltd is a partner and records in-market sales.
\nOnglyza
\nProduct Sales of $255m, a decline of 16% (19% at CER). The performance reflected adverse pressures on the
\ndipeptidyl peptidase-4 (DPP-4) class and an acceleration of ongoing diabetes-market dynamics, where patients
\nare moving to medicines and classes of medicines with documented CV benefits. Given the significant future
\npotential of Farxiga, the Company continues to prioritise commercial support for Farxiga.
\nSales in Emerging Markets increased by 29% (24% at CER) to $81m. After the addition onto the NRDL in China
\nin 2017, sales grew there by 136% (121% at CER) to $33m, driving the Emerging Market sales growth. Sales in
\nEurope declined by 10% (17% at CER) to $47m, reflecting the broader trend of a shift away from the DPP-4 class.
\nBydureon
\nProduct Sales of $294m; a decline of 2% (3% at CER). An encouraging BCise device launch in the US was
\nreflected in an increase in Q2 2018 sales of 6% (5% at CER) to $155m.
\nSales in the US declined by 4% to $234m, reflecting pricing headwinds that offset an encouraging performance
\nfrom the aforementioned BCise launch. Favourable sales volumes were driven by continued growth in the
\nglucagon-like peptide-1 class, at the expense of insulin, for more-advanced forms of type-2 diabetes. Bydureon
\nsales in Europe increased by 2% (down by 10% at CER) to $43m; a regulatory decision on the device in the EU,
\nhowever, is anticipated in the second half of the year.
\nLegacy: Crestor
\nProduct Sales of $727m; a decline of 39% (42% at CER).
\nSales in China grew by 33% (23% at CER) to $238m, a result of underlying demand. Market growth in statin
\nusage, AstraZeneca\u2019s commercial strength in China and the Company\u2019s successful strategy of broader coverage
\nin China also continued to favourably impact sales.
\nUS sales declined by 41% to $90m, reflecting the ongoing impact of multiple Crestor generic medicines. In
\nEurope, sales declined by 69% (72% at CER) to $111m, reflecting the impact of the entry of generic Crestor
\nmedicines in various countries in 2017. AstraZeneca expects these impacts to begin to recede in the second half
\nof 2018.
\nIn Japan, where Shionogi Co. Ltd is a partner, sales declined by 71% (72% at CER) to $76m, reflecting the impact
\nof the entry of multiple Crestor competitors in the market in the second half of 2017. AstraZeneca expects this
\nimpact to recede in the second half of 2018. The decline also reflected actions by the Japanese government to
\nfocus further on incentives to increase the adoption of generic medicines.
\nRESPIRATORY
\nProduct Sales of $2,407m; increased by 6% (stable at CER) in the half, following a challenging performance in
\nthe first quarter. Respiratory Product Sales represented 24% of total Product Sales, a one percentage point
\nincrease vs. H1 2017.
\nSymbicort
\nProduct Sales of $1,306m; a decline of 6% (10% at CER). Symbicort continued to lead the global market by
\nvolume within the inhaled corticosteroid (ICS)\/Long-Acting Beta Agonist (LABA) class.
\nEmerging Markets sales grew by 13% (10% at CER) to $241m, partly reflecting growth in China of 34% (24% at
\nCER) to $119m. In contrast, US sales declined by 21% to $439m, reflecting continued pricing pressure and the
\ntiming of government buying, partly mitigated by market-share gains. The performance was in line with
\nexpectations, with challenging pricing pressure expected to continue.
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\nIn Europe, sales increased by 3% (down by 8% at CER) to $411m; the performance reflected the level of
\ncompetition from other branded and Symbicort-analogue medicines. Symbicort, however, continued to retain its
\nclass-leadership position and stabilise its volume market share in the class, with some markets achieving volume
\ngrowth. In Japan, where Astellas Pharma Co. Ltd Helps as a promotional partner, sales were stable (down by
\n3% at CER) to $100m, despite the impact of the biennial price cut implemented on 1 April 2018.
\nPulmicort
\nProduct Sales of $633m; an increase of 12% (6% at CER).
\nEmerging Markets represented 76% of global sales and increased by 22% (15% at CER) to $482m. In China,
\nsales grew by 25% (16% at CER) to $401m, despite a temporary supply constraint in the first quarter. The growth
\nin the half reflected higher demand, strong underlying volume growth and AstraZeneca\u2019s delivery of over 15,000
\nnebulisation centres in China.
\nSales in the US and Europe declined by 24% to $59m and increased by 4% (down by 6% at CER) to $50m,
\nrespectively, a consequence of the medicine\u2019s legacy status there.
\nFasenra
\nProduct Sales of $86m (Q2 2018: $65m).
\nIn November 2017, the Company was granted approval for Fasenra in the US as a treatment for patients with
\nsevere, eosinophilic asthma; the approval was followed immediately by the launch of the medicine. US sales
\namounted to $67m. New-to-brand prescription data showed that Fasenra, a novel biologic medicine, tracked
\nahead of prior biologic-medicine launches in its class in asthma, despite being third to market. Initial feedback
\nfrom physicians and patients has been particularly encouraging, citing a rapid onset of action and convenience
\nof dosing.
\nIn Europe and Japan, AstraZeneca was granted regulatory approval in January 2018 on a similar basis to that in
\nthe US. In Europe, a number of launches were executed in the half, including in Germany, Denmark and Sweden.
\nSales in Japan amounted to $11m in the half, following its launch in the second quarter.
\nDaliresp\/Daxas
\nProduct Sales of $83m; a decline of 10% (12% at CER). US sales, representing 81% of global sales, declined by
\n15% to $67m, driven by a reduced level of adoption of the medicine. It is the only oral, selective, long-acting
\ninhibitor of phosphodiesterase-4, an inflammatory enzyme associated with COPD. Sales in Europe increased by
\n56% (44% at CER) to $14m.
\nTudorza\/Eklira
\nProduct Sales of $73m; an increase of 3% (down by 3% at CER).
\nSales in the US were stable at $29m. On 17 March 2017, AstraZeneca announced that it had entered a strategic
\ncollaboration with Circassia Pharmaceuticals plc (Circassia) for the development and commercialisation of
\nTudorza in the US. Circassia began its promotion of Tudorza in the US in May 2017, where AstraZeneca books
\nProduct Sales.
\nSales in Europe were stable (down by 11% at CER) to $38m, impacted by the decline of the overall long-acting
\nmuscarinic antagonist (LAMA) monotherapy class.
\nDuaklir
\nProduct Sales of $50m; an increase of 43% (29% at CER). Duaklir, the Company\u2019s first inhaled dual
\nbronchodilator medicine, is now available for patients in over 25 countries, with almost all sales emanating from
\nEurope. The global LAMA\/LABA class continued to grow, albeit below expectations.
\nBevespi
\nProduct Sales of $13m; launched in the US in Q1 2017. Prescriptions in the period tracked in line with other
\nLAMA\/LABA launches. The overall class in the US, however, continued to grow more slowly than previously
\nanticipated. Bevespi was the first medicine launched using the Company\u2019s proprietary co-suspension technology.
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\nOTHER
\nProduct Sales of $1,676m; a decline of 19% (22% at CER). Other Product Sales represented 17% of total Product
\nSales, down from 21% in H1 2017.
\nNexium
\nProduct Sales of $890m; a decline of 16% (19% at CER). Emerging Markets sales were stable (down by 3% at
\nCER) to $343m. Sales in the US declined by 45% to $187m in the half. Sales in Europe increased by 2% (down
\nby 9% at CER) at $122m. In Japan, where Daiichi Sankyo Company, Limited is a partner, sales declined by 2%
\n(6% at CER) to $205m, reflecting the biennial price cut implemented on 1 April 2018.
\nSynagis
\nProduct Sales of $250m; a decline of 17%. US sales declined by 25% to $125m and continued to be impacted
\nby the prevailing guidelines from the American Academy of Pediatrics Committee on Infectious Diseases. Product
\nSales to AbbVie Inc., responsible for the commercialisation of Synagis in over 80 countries outside the US,
\ndeclined by 6% to $125m.
\nSeroquel XR
\nProduct Sales of $129m; a decline of 20% (23% at CER). Sales of Seroquel XR in the US, where several
\ncompetitors launched generic Seroquel XR medicines from November 2016, declined by 36% to $49m. Sales of
\nSeroquel XR in Europe declined by 23% (30% at CER) to $33m, also reflecting the impact of generic-medicine
\ncompetition. On 8 May 2018, the Company announced that it had entered into an agreement with Luye Pharma
\nGroup, Ltd. (Luye Pharma) for the sale and licence of the rights to Seroquel and Seroquel XR in the UK, China
\nand other markets.
\nRegional Product Sales
\nTable 9: Regional Product Sales
\nH1 2018 Q2 2018
\n$m % of
\ntotal25
\n% change
\n$m % of
\ntotal
\n% change
\nActual CER Actual CER
\nEmerging Markets26 3,424 34 14 10 1,659 33 15 12
\nChina 1,893 19 33 24 868 17 37 26
\nEx. China 1,531 15 (3) (3) 791 16 (2) –
\nUS 3,102 31 3 3 1,615 32 6 6
\nEurope 2,154 22 (5) (14) 1,033 21 (10) (17)
\nEstablished ROW 1,3 35 13 (11 ) (14 ) 72 3 14 (13 ) (15 )
\nJapan 917 9 (14) (17) 518 10 (16) (18)
\nCanada 244 2 3 (2) 118 2 4 –
\nOther Established ROW 174 2 (8) (11) 87 2 (10) (11)
\nTotal 10,0 15 10 0 2 (2 ) 5,0 30 10 0 2 (1 )
\nEmerging Markets
\nProduct Sales of $3,424m; an increase of 14% (10% at CER). Q2 2018 sales of $1,659m represented an increase
\nof 15% (12% at CER).
\n25 Due to rounding, the sum of region or country percentages may not agree to totals.
\n26 Emerging Markets comprises all remaining Rest of World markets, including Brazil, China, India, Mexico, Russia and Turkey.
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\nChina sales grew by 33% (24% at CER) to $1,893m in the half, comprising 55% of total Emerging Markets sales.
\nIn Q2 2018, China sales increased by 37% (26% at CER) to $868m. Onglyza and Iressa were included on the
\nNRDL in China in 2017, as were Brilinta, Faslodex and Seroquel XR; the benefits of these inclusions were felt in
\nthe half. The performance of new medicines was also encouraging, with Tagrisso as the main contributor.
\nEmerging Markets sales excluding China, however, declined by 3% to $1,531m, partly driven by the
\naforementioned impact from externalisation activities, as well as the decline in Middle East & Africa sales of 14%
\nto $499m. Russia sales declined by 42% (41% at CER) to $67m.
\nUS
\nProduct Sales of $3,102m; an increase of 3%. Q2 2018 sales increased by 6% to $1,615m.
\nThe performance reflected the success of new medicines, including Lynparza, Tagrisso, Imfinzi and Fasenra.
\nOncology sales in the US grew by 91% to $964m and sales of Fasenra in the US amounted to $67m in the half
\n(Q2 2018: $48m). Strong sales of Farxiga and Brilinta contrasted with the impact of continued competitive intensity
\non sales of Symbicort, which declined by 21% to $439m. Symbicort delivered an improved performance in the
\nsecond quarter, with sales in the US down by 14% to $256m.
\nEurope
\nProduct Sales of $2,154m; a decline of 5% (14% at CER), reflecting the impacts of the entry of generic Crestor
\nmedicines in various markets in 2017. AstraZeneca expects these impacts to begin to recede in the second half
\nof 2018.
\nThe new medicines delivered an encouraging performance in the half. Oncology sales in Europe grew by 21%
\n(9% at CER) to $505m, partly driven by Tagrisso sales growth of 83% (63% at CER) to $139m; Tagrisso was
\napproved for the treatment of patients in the 1st-line EGFRm setting on 8 June 2018. Lynparza sales of $87m
\nrepresented growth of 50% (36% at CER), partly benefitting from the approval on 8 May 2018 for use as a tabletbased
\ntreatment for platinum-sensitive ovarian cancer, regardless of BRCA status. Brilique sales growth of 27%
\n(14% at CER) to $172m was accompanied by Forxiga sales growth of 45% (28% at CER) to $152m. Fasenra
\nwas successfully launched in several European countries, with a strong initial uptake.
\nEstablished ROW
\nProduct Sales of $1,335m; a decline of 11% (14% at CER).
\nJapan sales declined by 14% (17% at CER) to $917m, reflecting the impact of the entry of generic Crestor
\nmedicines in 2017. AstraZeneca expects these impacts to recede in the second half of 2018. Crestor sales in
\nJapan declined by 71% (72% at CER) to $76m. Excluding sales of Crestor, Japan sales increased by 4% (stable
\nat CER) to $841m. The performance was also impacted by the aforementioned biennial price cut.
\nAs seen in other regions, new medicines delivered an encouraging performance in Japan. Tagrisso is currently
\napproved as a treatment in EGFR T790M-mutated NSCLC and sales increased by 15% (11% at CER) to $118m,
\nreflecting focused activities to maximise testing and utilisation rates in the 2nd-line indication. On 19 January
\n2018, the Company announced that Lynparza tablets, approved as maintenance treatment for women with
\nplatinum-sensitive relapsed ovarian cancer regardless of BRCAm status, were approved in Japan and the
\nmedicine was launched in April 2018. On 2 July 2018, the Company announced that Lynparza was approved for
\nuse in patients with unresectable or recurrent BRCAm, human epidermal growth factor receptor 2 (HER2)
\nnegative breast cancer who have received prior chemotherapy.
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\nFinancial Performance
\n________________________________________________________________________________________
\nTable 10: H1 2018 Reported Profit And Loss
\nReported
\nH1 2018 H1 2017 % change
\n$m $m Actual CER
\nTotal Revenue 10,333 10,456 (1) (5)
\nProduct Sales 10,015 9,783 2 (2)
\nExternalisation Revenue 318 673 (53) (54)
\nCost of Sales (2,146) (1,844) 16 12
\nGross Profit 8,187 8,612 (5) (8)
\nGross Margin27 78.6% 81.5% -3 -3
\nDistribution Expense (165) (149) 10 5
\n% Total Revenue 1.6% 1.4% – –
\nR&D Expense (2,641) (2,802) (6) (9)
\n% Total Revenue 25.6% 26.8% +1 +1
\nSG&A Expense (5,008) (4,658) 8 3
\n% Total Revenue 48.5% 44.5% -4 -4
\nOther Operating Income & Expense 1,086 839 29 28
\n% Total Revenue 10.5% 8.0% +2 +3
\nOperating Profit 1,4 59 1,8 42 (21 ) (20 )
\n% Total Revenue 14.1% 17.6% -3 -3
\nNet Finance Expense (640) (742) (14) (7)
\nJoint Ventures and Associates (33) (26) 26 26
\nProfit Before Tax 786 1,074 (27) (29)
\nTaxation (151) (116)
\nTax Rate 19% 11%
\nProfit After Tax 635 958 (34) (35)
\nEarnings Per Share $0. 54 $0. 80 (32 ) (34 )
\n27 Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 Cost
\nof Sales included $nil of costs relating to externalisation activities (H1 2017: $41m), which are excluded from the calculation of Gross Margin.
\nMovements in Gross Margin are expressed in percentage points.
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\nTable 11: Q2 2018 Reported Profit And Loss
\nReported
\nQ2 2018 Q2 2017 % change
\n$m $m Actual CER
\nTotal Revenue 5,155 5,051 2 (1)
\nProduct Sales 5,030 4,940 2 (1)
\nExternalisation Revenue 125 111 14 14
\nCost of Sales (1,012) (950) 7 9
\nGross Profit 4,143 4,101 1 (3)
\nGross Margin28 79.9% 80.8% -1 -2
\nDistribution Expense (84 ) (72 ) 16 12
\n% Total Revenue 1.6% 1.4% – –
\nR&D Expense (1,362) (1,349) 1 (1)
\n% Total Revenue 26.4% 26.7% – –
\nSG&A Expense (2,551) (2,358) 8 4
\n% Total Revenue 49.5% 46.7% -3 -2
\nOther Operating Income & Expense 617 603 2 2
\n% Total Revenue 12.0% 11.9% – –
\nOperating Profit 76 3 92 5 (17 ) (20 )
\n% Total Revenue 14.8% 18.3% -4 -4
\nNet Finance Expense (332) (420) (21) (2)
\nJoint Ventures and Associates (19) (13) 43 43
\nProfit Before Tax 412 492 (16) (30)
\nTaxation (93) (46)
\nTax Rate 23% 9%
\nProfit After Tax 319 446 (28) (40)
\nEarnings Per Share $0. 27 $0. 38 (27 ) (38 )
\n28 Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. Q2 2018 Cost
\nof Sales included $nil of costs relating to externalisation activities (Q2 2017: $3m), which are excluded from the calculation of Gross Margin.
\nMovements in Gross Margin are expressed in percentage points.
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\nTable 12: Reconciliation Of Reported Profit Before Tax To EBITDA29
\nH1 2018
\n$m
\n% change
\nActual CER
\nReported Profit Before Tax 786 (27) (29)
\nNet Finance Expense 640 (14) (7)
\nJoint Ventures and Associates 33 26 26
\nDepreciation, Amortisation and Impairment 1,393 9 6
\nEBITDA 2,8 52 (8 ) (10 )
\nTable 13: H1 2018 Reconciliation Of Reported To Core Financial Measures
\nReported Restructuring
\nIntangible
\nAsset
\nAmortisation &
\nImpairments
\nDiabetes
\nAlliance Other30 Core31
\nCore
\n% change
\n$m $m $m $m $m $m Actual CER
\nGross Profit 8,187 55 92 – – 8,334 (5) (8)
\nGross Margin32 78.6% – – – – 80.0% -3 -3
\nDistribution
\nExpense (165) – – – – (165) 10 5
\nR&D Expense (2,641) 58 25 – – (2,558) (2) (5)
\nSG&A
\nExpense (5,008) 84 695 213 (138) (4,154) 11 7
\nOther
\nOperating
\nIncome &
\nExpense
\n1,086 (10) 2 – (374) 704 (27) (27)
\nOperating
\nProfit 1,459 187 814 213 (512) 2,161 (33) (34)
\n% Total
\nRevenue 14.1% – – – – 20.9% -10 -10
\nNet Finance
\nExpense (640) – – 168 103 (369) 3 (1)
\nTaxation (151) (39) (163) (81) 103 (331) (37) (36)
\nEarnings Per
\nShare $0.54 $0.12 $0.51 $0.24 $(0.24) $1.17 (37) (39)
\n29 EBITDA is a non-GAAP financial measure. See the Operating and Financial Review for the definition of EBITDA.
\n30 Other adjustments include fair-value adjustments relating to contingent consideration on business combinations (see Note 4), discount
\nunwind on acquisition-related liabilities (see Note 4) and provision movements related to certain legal matters (see Note 5).
\n31 Each of the measures in the Core column in the above table are non-GAAP financial measures. See the Operating and Financial Review
\nfor related definitions.
\n32 Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. H1 2018 Cost
\nof Sales included $nil of costs relating to externalisation activities (H1 2017: $41m), which are excluded from the calculation of Gross Margin.
\nMovements in Gross Margin are expressed in percentage points.
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\nTable 14: Q2 2018 Reconciliation Of Reported To Core Financial Measures
\nReported Restructuring
\nIntangible
\nAsset
\nAmortisation
\n&
\nImpairments
\nDiabetes
\nAlliance Other33 Core34
\nCore
\n% change
\n$m $m $m $m $m $m Actual CER
\nGross Profit 4,143 23 47 – – 4,213 1 (3)
\nGross
\nMargin35 79.9% – – – – 81.3% -1 -2
\nDistribution
\nExpense (84) – – – – (84) 15 11
\nR&D
\nExpense (1,362) 31 13 – – (1,318) 3 1
\nSG&A
\nExpense (2,551) 48 346 106 (75) (2,126) 12 8
\nOther
\nOperating
\nIncome &
\nExpense
\n617 (10) 1 – (28) 580 (7) (8)
\nOperating
\nProfit 763 92 407 106 (103) 1,265 (18) (22)
\n% Total
\nRevenue 14.8% – – – – 24.5% -6 -7
\nNet Finance
\nExpense (332) – – 84 50 (198) 9 6
\nTaxation (93) (19) (83) (40) 31 (204) (25) (21)
\nEarnings
\nPer Share $0.27 $0.06 $0.25 $0.13 $(0.02) $0.69 (21) (26)
\nProfit And Loss Commentary
\nGross Profit
\nReported Gross Profit declined by 5% (8% at CER) to $8,187m; Core Gross Profit declined by 5% (8% at CER)
\nto $8,334m. The declines partly reflected the favourable impact of manufacturing variances realised in H1 2017,
\nas well as the lower level of Externalisation Revenue.
\nThe calculation of Reported and Core Gross Margin excludes the impact of Externalisation Revenue, thereby
\nreflecting the underlying performance of Product Sales. The Reported Gross Margin declined by three percentage
\npoints to 78.6%; the Core Gross Margin declined by three percentage points to 80.0%. The movements were a
\nresult of the aforementioned favourable impact of manufacturing variances realised in H1 2017 and the inclusion
\n33 Other adjustments include fair-value adjustments relating to contingent consideration on business combinations (see Note 4), discount
\nunwind on acquisition-related liabilities (see Note 4) and provision movements related to certain legal matters (see Note 5).
\n34 Each of the measures in the Core column in the above table are non-GAAP financial measures. See the Operating and Financial Review
\nfor related definitions.
\n35 Gross Margin, as a percentage of Product Sales, reflects Gross Profit derived from Product Sales, divided by Product Sales. Q2 2018 Cost
\nof Sales included $nil of costs relating to externalisation activities (Q2 2017: $3m), which are excluded from the calculation of Gross Margin.
\nMovements in Gross Margin are expressed in percentage points.
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\nof the profit share on the collaboration with MSD, as well as the effect of losses of exclusivity on Crestor sales in
\nEurope and Japan, partly offset by the impact of Oncology sales.
\nOperating Expenses
\nReported R&D costs declined by 6% (9% at CER) to $2,641m, with the Company continuing to focus on resource
\nprioritisation and productivity.
\nCore R&D costs declined by 2% (5% at CER) to $2,558m, reflecting productivity improvements across every
\ntherapy area and the favourable impact on development costs from the MSD collaboration. Targeted investment
\nin the Company\u2019s R&D programme is a consistent priority; the level of activity was unchanged in the half and
\nCore R&D costs represented 25% of Total Revenue.
\nReported SG&A costs increased by 8% (3% at CER) to $5,008m. Investment focused on commercial and
\nmedical-affairs support for launches and extensions of the new medicines. These include Lynparza, Tagrisso,
\nImfinzi, Calquence and Fasenra; additional investment was also added to support sales growth in China.
\nIntangible Asset Amortisation and Impairment charges of $346m, recorded within Reported SG&A Costs, partly
\nreflected the impact of recent regulatory approvals granted for acquired medicines.
\nCore SG&A costs increased by 11% (7% at CER) to $4,154m, reflecting the aforementioned investments. H1
\n2017 was also a period when the Company delivered its lowest level of Core SG&A investment for a number of
\nyears; comparisons will be more favourable in the second half of this year.
\nOther Operating Income & Expense
\nWhere AstraZeneca does not retain a significant ongoing interest in medicines or potential new medicines, income
\nfrom divestments is reported within Other Operating Income & Expense in the Company\u2019s financial statements.
\nReported Other Operating Income & Expense increased by 29% (28% at CER) to $1,086m and included:
\n\u2022 $527m, reflecting an agreement with Luye Pharma for the rights to Seroquel and Seroquel XR in the UK,
\nChina and other international markets
\n\u2022 $346m, resulting from a legal settlement
\n\u2022 $63m, representing a gain on the spin-out of six potential new medicines from MedImmune\u2019s early-stage
\ninflammation and autoimmunity programme into an independent biotech company, as announced on 28
\nFebruary 2018
\nCore Other Operating Income & Expense declined by 27% to $704m, with the difference to Reported Other
\nOperating Income & Expense reflecting the aforementioned legal settlement.
\nOperating Profit
\nReported Operating Profit declined by 21% (20% at CER) to $1,459m, driven by the aforementioned declines in
\nTotal Revenue and the Reported Gross Margin, as well as the increase in Reported SG&A costs. The Reported
\nOperating Profit margin declined by three percentage points to 14% of Total Revenue. Core Operating Profit
\ndeclined by 33% (34% at CER) to $2,161m, driven by the aforementioned factors, as well as the timing of
\ndivestments in FY 2018. The Core Operating Profit margin declined by 10 percentage points to 21% of Total
\nRevenue.
\nNet Finance Expense
\nReported Net Finance Expense declined by 14% (7% at CER) to $640m, reflecting an adverse foreign exchange
\nimpact in the comparative period and reduced levels of discount unwind on Acerta Pharma B.V. (Acerta Pharma)
\nliabilities. Excluding the discount-unwind on acquisition-related liabilities and the adverse foreign exchange impact
\nin the comparative period, Core Net Finance Expense increased by 3% (down by 1% at CER) to $369m.
\nProfit Before Tax
\nReported Profit Before Tax declined by 27% (29% at CER) to $786m, reflecting the lower level of Externalisation
\nRevenue, the lower Reported Gross Margin and the increase in Reported SG&A costs.
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\nStatements
\nTaxation
\nThe Reported and Core Tax rates for the half were 19%. The net cash tax paid for the half was $288m,
\nrepresenting 37% of Reported Profit Before Tax. The Reported and Core Tax rates for the comparative period
\nwere 11% and 19% respectively. The net cash tax paid for the comparative period was $336m, which was 31%
\nof Reported Profit Before Tax.
\nEarnings Per Share (EPS)
\nReported EPS of $0.54 represented a decline of 32% (34% at CER). The performance reflected a decline in Total
\nRevenue, the Reported Gross Margin and increased Reported SG&A costs. Core EPS declined by 37% (39% at
\nCER) to $1.17, impacted by the aforementioned factors as well as the decline in Core Other Operating Income &
\nExpense.
\nDividends
\nThe Board has recommended an unchanged first interim dividend of $0.90 (68.4 pence, 7.92 SEK) per Ordinary
\nShare.
\nTable 15: Cash Flow
\nThe Company saw a net cash outflow from operating activities of $75m in the half, compared with an inflow of
\n$338m in H1 2017, due primarily to the reduction in Reported Operating Profit. The increase in the movement of
\nworking-capital and short-term provisions partly reflected the release of provisions related to legal settlements as
\nwell as launch support for new medicines.
\nNet cash inflows from investing activities were $177m, compared with outflows of $351m in H1 2017. The
\ndifference partly reflected movements in short-term investments and fixed deposits, as well as a reduction in
\ncapital expenditure. The cash payment of contingent consideration in respect of the BMS share of the global
\nDiabetes alliance amounted to $151m.
\nNet cash outflows from financing activities were $481m in the half, compared to inflows of $146m in H1 2017; the
\ndifference reflected new long-term loans in the earlier period.
\nCapital Expenditure
\nCapital expenditure amounted to $486m in the half, compared to $549m in H1 2017, which included the
\ninvestment in the new global headquarters in Cambridge, UK, as well as strategic biotech manufacturing capacity
\nin Sweden. AstraZeneca anticipates a reduction in capital expenditure over the full year vs. FY 2017.
\nH1 2018 H1 2017 Change
\n$m $m $m
\nReported operating profit 1,459 1,842 (383)
\nDepreciation, amortisation and impairment 1,393 1,274 119
\n(Increase)\/decrease in working capital and short-term
\nprovisions (1,440) (1,044) (396)
\n(Gains)\/losses on disposal of intangible assets (593) (596) 3
\nNon-cash and other movements (310) (468) 158
\nInterest paid (296) (334) 38
\nTax paid (288) (336) 48
\nNet cash (outflow)\/inflow from operating activities (75 ) 33 8 (41 3)
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\nTable 16: Debt And Capital Structure
\nAt 30 Jun 2018 At 31 Dec 2017 At 30 Jun 2017
\n$m $m $m
\nCash and cash equivalents 2,978 3,324 5,239
\nOther investments 881 1,300 1,121
\nCash and short-term investments 3,859 4,624 6,360
\nOverdrafts and short-term borrowings (2,8 18) (84 5) (1,1 59)
\nFinance leases – (5) (18)
\nCurrent instalments of loans (1,397) (1,397) (1,756)
\nLoans due after one year (15,452) (15,560) (16,792)
\nInterest-bearing loans and borrowings
\n(Gross Debt) (19,667) (17,807) (19,725)
\nNet derivatives 46 5 50 4 35 3
\nNet Debt (15,343) (12,679) (13,012)
\nCapital Allocation
\nThe Board\u2019s aim is to continue to strike a balance between the interests of the business, financial creditors and
\nthe Company\u2019s shareholders. After providing for investment in the business, supporting the progressive dividend
\npolicy and maintaining a strong, investment-grade credit rating, the Board will keep under review potential
\ninvestment in immediately earnings-accretive, value-enhancing opportunities.
\nForeign Exchange
\nThe Group\u2019s transactional currency exposures on working-capital balances, which typically extend for up to three
\nmonths, are hedged where practicable using forward foreign-exchange contracts against the individual Group
\nCompanies\u2019 reporting currency. In addition, the Group\u2019s external dividend payments, paid principally in pounds
\nsterling and Swedish krona, are fully hedged from announcement to payment date. Foreign-exchange gains and
\nlosses on forward contracts for transactional hedging are taken to profit.
\nTable 17: Currency Sensitivities
\nThe Company provides the following currency-sensitivity information:
\nAverage Exchange
\nRates vs. USD
\nAnnual Impact Of 5%
\nStrengthening in
\nExchange Rate vs. USD
\n($m)36
\nCurrency Primary Relevance FY 2017 H1 201837 % change Product
\nSales
\nCore
\nOperating
\nProfit
\nEUR Product Sales 0.89 0.83 +7 +135 +59
\nJPY Product Sales 112.18 108.76 +3 +94 +64
\nCNY Product Sales 6.75 6.37 +6 +180 +97
\n36 Based on best prevailing assumptions around currency profiles.
\n37 Based on average daily spot rates between 1 January and 30 June 2018.
\n27
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\nStatements
\nAverage Exchange
\nRates vs. USD
\nAnnual Impact Of 5%
\nStrengthening in
\nExchange Rate vs. USD
\n($m)36
\nCurrency Primary Relevance FY 2017 H1 201837 % change Product
\nSales
\nCore
\nOperating
\nProfit
\nSEK Operating Expenses 8.54 8.39 +2 +4 -67
\nGBP Operating Expenses 0.78 0.73 +7 +24 -76
\nOther38 +86 +43
\nRelated-Party Transactions
\nThere have been no significant related-party transactions in the period.
\nPrincipal Risks and Uncertainties
\nIt is not anticipated that the nature of the principal risks and uncertainties that affect the business, and which are
\nset out on pages 63 to 65 of the Annual Report and Form 20-F Information 2017, will change in respect of the
\nsecond six months of the financial year. Further information on our key risk management and assurance
\nprocesses are set out on pages 210 to 220 of the Annual Report and Form 20-F Information 2017. The potential
\nimpact of Brexit continues to be treated as an integral part of the Principal Risks rather than as a stand-alone risk
\nas summarised on page 63 of the Annual Report and 20-F Information 2017. Further information on our key risk
\nmanagement and assurance processes are set out on pages 210 to 220 of the Annual Report and 20-F
\nInformation 2017.
\nIn summary, the principal risks and uncertainties listed in the Annual Report and 20-F Information 2017 are:
\na) Product pipeline and intellectual property risks
\nFailure or delay in delivery of pipeline and new products; failure to meet quality, regulatory and ethical drug
\napproval and disclosure requirements; failure to secure and protect product intellectual property.
\nb) Commercialisation risks
\nCompetitive pressures including externally driven demand, pricing and access; failures or delays in quality
\nexecution of commercial strategies.
\nc) Supply chain and business execution risks
\nFailure to maintain supply of compliant, quality product; failure of information technology and data security and
\nprivacy; failure to deliver gains from productivity initiatives; failure to attract, develop, engage and retain talented
\nand capable employees at all levels.
\nd) Legal, regulatory and compliance risks
\nSafety and efficacy of marketed products is questioned; adverse outcome of defence of product, pricing and
\npractices litigation; failure to meet regulatory and ethical expectations on commercial practices, including bribery
\nand corruption, and scientific exchanges.
\ne) Economic and financial risks
\nFailure to achieve strategic plans and meet targets and expectations.
\n38 Other important currencies are AUD, BRL, CAD, KRW and RUB.
\n28
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\nInterim Financial Research & Development Sustainability
\nStatements
\nCorporate And Business Development Update
\na) Divestment Of Seroquel And Seroquel XR
\nOn 8 May 2018, AstraZeneca announced that it had entered into an agreement with Luye Pharma for the sale
\nand licence of the rights to Seroquel and Seroquel XR in the UK, China and other international markets. Seroquel,
\nused primarily to treat schizophrenia and bipolar disorder, has lost its compound patent protection globally; the
\nSeroquel XR formulation patents have also expired in the vast majority of its markets. The transaction completed
\nin Q2 2018.
\nLuye Pharma will pay $538m in consideration, including $260m that was received upon completion. The total
\nconsideration, adjusted for time value, was recorded in Q2 2018 in Other Operating Income & Expense within the
\nCompany\u2019s financial statements. AstraZeneca will continue to manufacture and supply Seroquel and Seroquel
\nXR to Luye Pharma during a transition period.
\nSeroquel generated sales of $85m in FY 2017 in the markets covered by this agreement, while Seroquel XR
\ngenerated $63m.
\nb) Divestment Of Atacand In Europe
\nOn 24 July 2018, AstraZeneca announced that it had agreed to sell the commercial rights to Atacand (candesartan
\ncilexetil) and Atacand Plus (fixed-dose combination of candesartan cilexetil and hydrochlorothiazide) in Europe
\nto Cheplapharm Arzneimittel GmbH (Cheplapharm). Atacand is a prescription medicine for the treatment of heart
\nfailure and hypertension. The agreement is expected to complete in the third quarter of 2018. AstraZeneca will
\ncontinue to manufacture and supply Atacand and Atacand Plus under a supply agreement and will continue to
\ncommercialise the medicines in all markets where it still holds the rights.
\nCheplapharm will pay AstraZeneca $200m on completion of the agreement, plus a time-bound payment of $10m
\nand sales-contingent milestones. The present value of the upfront and time-bound payment is expected to be
\nreported as Other Operating Income in the Company\u2019s financial statements. In FY 2017, global Product Sales for
\nAtacand and Atacand Plus were $300m, including $86m in Europe.
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\nSustainability Update
\nAstraZeneca\u2019s sustainability ambition has three priority areas39, aligned with the Company\u2019s purpose and
\nbusiness strategy:
\n\u2022 Access to Healthcare
\n\u2022 Environmental Protection
\n\u2022 Ethics and Transparency
\nRecent developments and progress against the priorities are reported below:
\na) Access To Healthcare
\nDuring the period, the Company signed a Memorandum of Understanding (MoU) with the Saudi Ministry of
\nHealth (the MoH) to launch the Healthy Lung programme in The Kingdom of Saudi Arabia (KSA). Healthy Lung
\nin Saudi Arabia aims to enhance the management and increase public awareness of asthma and chronic
\nobstructive pulmonary disease (COPD), ultimately to reduce the number of cases and related deaths. Under the
\nMoU, the Company will work together with the MoH to drive a series of activities to raise awareness of the
\nprevalence of respiratory diseases in KSA.
\nDuring the period, to mark World Hypertension Day on 17 May 2018, the Healthy Heart Africa (HHA) programme
\npartnered with the ministries of health in both Kenya and Ethiopia to raise awareness of the dangers of high blood
\npressure (hypertension) and the need to adopt healthier lifestyles. Activities took place in both countries under
\nthe global theme of \u2018Check Your Pressure\u2019, which was celebrated through a series of events, including free bloodpressure
\nscreenings and speeches by cardiologists, government officials, HHA partners as well as the HHA team.
\nAt the core of the work in the Young Health Programme (YHP) is a commitment to ensure young people have a
\nvoice in identifying health threats and needs, as well as planning and delivering solutions. During the period, the
\nCompany commenced a campaign entitled \u2018Step Into My World\u2019. This series of films featured interviews with
\nyoung people involved in the YHP programme in India, Spain and Kenya describing the challenges they face and
\nwhy involvement in the YHP can help.
\nOn 25 May 2018, AstraZeneca submitted data on its access to healthcare activities to the Access to Medicines
\nIndex (ATMI), following the last submission in 2016 when the Company climbed eight positions and entered into
\nthe top 10. The ATMI analyses 20 of the world\u2019s largest research-based pharmaceutical companies and how they
\nmake medicines, vaccines and diagnostics more accessible in low and middle-income countries.
\nb) Environmental Protection
\nOn 18 April 2018, AstraZeneca published a paper in a peer-reviewed journal, Science of the Total Environment,
\nfocusing on developing sustainable solutions to inadequate sanitation and the resulting spread of infectious
\ndiseases and antimicrobial resistance (AMR) via contaminated water. Unfortunately, wastewater connection and
\ntreatment are not universal in many developing and emerging countries, especially in rural and peri-urban
\nlocations that are remote from central sewers. The paper describes the process optimisation of low-cost, scalable
\nsolutions to maximise the removal of total nitrogen and antibiotic resistance genes from domestic wastewater to
\nprotect environmental and human health. The results obtained from these laboratory-based studies are now being
\nvalidated in Malaysia with the construction of a pilot plant to treat peri-urban wastewaters. This paper, \u2018Cooptimization
\nof sponge-core bioreactors for removing total nitrogen and antibiotic resistance genes from domestic
\nwastewater\u2019, is one of 13 published in peer-reviewed scientific journals relating to environmental protection in the
\nfirst half of 2018, with the aim of furthering scientific development to address the challenges of pharmaceuticals
\nin the environment.
\n39 These priorities were determined, along with a set of nine foundational areas, through a materiality assessment with external and internal
\nstakeholders, respectively. Combined, they ensure the maximum possible benefit to patients, the Company, broader society and the planet.
\nAstraZeneca\u2019s sustainability priorities, foundations and commitments align with the United Nation\u2019s Sustainable Development Goals (SDG),
\nand in particular SDG three for \u2018Good Health\u2019.
\n30
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\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nDuring the period, the Company was recognised by the Science Based Targets (SBT) initiative as one of over
\n100 global companies, and one of the first companies in the FTSE 350, to have environmental targets approved
\nby SBT. The initiative is a partnership between the Carbon Disclosure Project, World Resources Institute, the
\nWorld Wide Fund for Nature and the UN Global Compact. Only targets that meet strict criteria are approved.
\nImportantly, companies setting science-based targets must seek to not only reduce emissions in their own
\noperations, but also within their value chains, which can move entire industries toward more efficient and greener
\nsupply chains. The Company further showcased its environmental protection commitments to support World Earth
\nDay on 22 April 2018.
\nTable 18: Environmental Protection Targets40
\nTarget Plan Year Q1 2018 Performance40
\nLead the industry to manage
\nPharmaceuticals in the Environment 2025
\nOn Plan: Ecopharmacovigilence (EPV) spatial
\nenvironmental risk map updates have been
\ncommissioned and product specific concentration
\n(measured vs. predicted safe) distributions are being
\ndeveloped. These will form the basis for a first published
\nEPV report.
\nEnsure 90% of API41 syntheses meet
\nresource-efficiency targets at launch 2025 Not Yet Started: Update anticipated Q3 2018.
\nDevelop resource-efficiency targets
\nfor biologic products 2025
\nOn Plan: Benchmarking of biologics process resource
\nefficiency data through American Chemical Society
\nGreen Chemistry Institute Pharmaceutical Roundtable
\n(ACS GCIPR)
\nDevelop a product sustainability
\nindex and pilot approach 2019
\nOn Plan: Project launched to develop a product
\nenvironmental sustainability rating system which will be
\npiloted internally prior to external publication in 2019.
\nAchieve SBT for greenhouse-gas
\nemissions 2025
\nLagging: (AstraZeneca\u2019s operational footprint has
\nincreased 6% vs. Q1 2015.)
\nScope 1 and 2 emissions -11%
\nScope 3 emissions +12%42
\n100% renewable power consumption
\nglobally by 2025; interim ambition of
\n100% in the US and Europe by 2020
\n2025 On Plan: 60% of sites already powered by renewable
\nenergy.
\nReduce energy consumption by 10%
\nagainst a 2015 baseline 2025 On Plan: Energy consumption -2% compared with 2015.
\nExpand the number of \u2018green fleet\u2019
\nvehicles 2025
\nOn Plan: Established a \u2018Green Mobility\u2019 charter, with a
\nnumber of European locations already implementing
\n\u2018green fleet\u2019 vehicles, such as Sweden and Poland.
\nMaintain water usage as our
\nbusiness grows against a 2015
\nbaseline
\n2025
\nOn Plan: Water use -15% vs. 2015.
\nWater audits and efficiency project ( help with nursing paper writing from experts with MSN & DNP degrees)s have driven large
\nreductions and cost savings.
\nReduce waste 10% below the 2015
\nbaseline 2025
\nOn Plan: Waste generated -7% vs. 2015 (Hazardous
\nwaste generated 3% vs. 2015; and Non-hazardous
\nwaste -11% vs. 2015)
\n40 Data reported as of 31 March 2018 due to reporting lag.
\n41 Active pharmaceutical ingredient.
\n42 Scope 3 increase is a result of growing emissions from pressurised metered dose inhalers (pMDI) up 43% since 2015. Investigating
\nimplementation of lower impact propellants.
\n31
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nc) Ethics And Transparency
\nThe Company commenced a project ( help with nursing paper writing from experts with MSN & DNP degrees) to replace the use of Horseshoe Crab blood in medicines development. Over
\n600,000 horseshoe crabs are captured each year to donate around 30% of their blood, which is used in required
\nregulatory testing. Although there are welfare procedures in harvesting the blood, between 10-30% of donor crabs
\ndie in the process. AstraZeneca is exploring viable alternatives to support the longevity of this vulnerable species.
\nAstraZeneca, together with GlaxoSmithKline, Teva Pharmaceutical Industries Ltd. and Takeda launched the
\nResponsible Health Initiative (RHI) in response to the need to improve the social, ethical, and environmental
\nimpact within supply chains. Powered by sustainability-specialist software platform EcoVadis, the RHI aims to
\ncreate synergies between companies active in the healthcare and pharmaceutical sector to raise standards and
\nimprove sustainability performance across the industry.
\nDuring the period, the Company was featured in an article in the Wall Street Journal, \u2018Companies Find Value in
\nCombining Compliance, Sustainability\u2019. The article featured AstraZeneca\u2019s work to leverage synergies and better
\nmanage risk from combining the compliance and sustainability functions in the organisational structure.
\nOther Developments
\nDuring the period, the Company entered into a new partnership with the University of Cambridge to fund new
\nresearch on global sustainability challenges. One of nine founding organisations, The Prince of Wales Global
\nSustainability Fellowship Programme with the Cambridge Institute for Sustainability Leadership (CISL) aims to
\nattract academics from around the world to identify breakthrough solutions to meet the UN Sustainable
\nDevelopment Goals (SDGs). AstraZeneca\u2019s research scope will focus on SDG3: Good health and wellbeing. The
\nresearch will explore how world health systems, seeing increasing strain on resources due to an overall rise in
\nnon-communicable diseases (NCDs), can deliver higher standards of care to a growing and ageing population.
\nOn 21 May 2018, at the 71st World Health Assembly (WHA), AstraZeneca announced a new sustainability project ( help with nursing paper writing from experts with MSN & DNP degrees)
\nin partnership with the Cambridge Institute for Sustainability Leadership. The pilot will see the introduction of
\nportable bio digesters to Dunga Beach on Lake Victoria in Kenya, which will allow the local community to process
\norganic waste into valuable clean energy. It will study the impact on the environment and local economy and
\nprovide potential insight into the effect of clean cooking on respiratory health.
\nIn addition, AstraZeneca hosted two side-meetings at the WHA ahead of the UN High Level Meeting on noncommunicable
\ndiseases (NCDs) in September 2018. On 21 May 2018, the Company hosted a panel focused on
\nDriving Novel Partnerships Throughout the NCD Life-Cycle. For AstraZeneca, the event was hosted by Executive
\nVice President for Sustainability, Katarina Ageborg, engaging over 90 representatives from industry, civil society,
\nacademia, multilaterals and governments. On 22 May 2018, the Company welcomed policy makers, civil society,
\nresearch experts and journalists to a second YHP event – Turning The Tide On NCDs: Why We Need To Focus
\nOn Youth. The discussion focused on two important pieces of research commissioned by the YHP, which
\nhighlighted how critical it is for the world health community to focus on adolescence, if the rising global death toll
\nfrom NCDs is to be stemmed.
\nIn July, the Company commenced a sustainability materiality assessment working with specialist advisory BSR.
\nAstraZeneca last conducted a materiality assessment in 2015; the 2018 refresh will guide future strategy and
\ncapability build. Initial input was sought from the Sustainability Advisory Board and from employees through virtual
\nfocus groups with a cross-section of business units and geographies. These insights will additionally support a
\nrobust employee engagement programme around sustainability.
\n32
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\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nResearch And Development Update
\nA comprehensive data pack comprising AstraZeneca\u2019s pipeline of medicines in human trials can be found in the
\nclinical-trials appendix available on astrazeneca.com. Highlights of developments in the Company\u2019s late-stage
\npipeline since the prior results announcement are shown below:
\nTable 19: Update From The Late-Stage Pipeline
\nRegulatory
\nApprovals 4
\n– Lynparza – breast cancer (JP)
\n– Tagrisso – lung cancer (1st line) (EU)
\n– Imfinzi – unresectable, Stage III NSCLC (JP)
\n– Lokelma – hyperkalaemia (US)
\nRegulatory
\nSubmissions and\/or
\nAcceptances
\n3
\n– Forxiga – type-1 diabetes (JP)
\n– Forxiga combination with Onglyza and metformin – type-2 diabetes (EU)
\n– Bydureon – type-2 diabetes CVOT (US)
\nMajor Phase III
\nData Readouts or
\nOther Major
\nDevelopments
\n6
\n– Lynparza – ovarian cancer (1st line): primary PFS endpoint met
\n– Imfinzi – unresectable, Stage III NSCLC: primary OS endpoint met
\n– selumetinib – thyroid cancer: did not meet primary endpoint
\n– Bydureon BCise – type-2 diabetes; new device: positive CHMP opinion
\n– Fasenra – COPD: did not meet primary endpoints
\n– lanabecestat – Alzheimer’s disease: termination of Phase III programme
\nNew Molecular
\nEntities
\nand Major Lifecycle
\nMedicines in Phase
\nIII Trials or Under
\nRegulatory Review
\n12
\nOncology
\n– Lynparza – multiple cancers43
\n– Tagrisso – lung cancer43
\n– Imfinzi – multiple cancers43
\n– Calquence – blood cancers
\n– moxetumomab pasudotox – leukaemia43
\n– tremelimumab – multiple cancers
\n– selumetinib – NF-144
\n– savolitinib – kidney cancer
\nCVRM
\n– roxadustat – anaemia43
\nRespiratory
\n– PT010 – COPD \/ asthma
\n– tezepelumab – severe, uncontrolled asthma
\nOther
\n– anifrolumab – lupus
\nTotal Projects in
\nClinical Pipeline 130
\n43 Under regulatory review. The table shown above as at today.
\n44 Phase II data, with potential for registration.
\n33
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\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nONCOLOGY
\nAstraZeneca has a deep-rooted heritage in Oncology and offers a new generation of medicines that have the
\npotential to transform patients\u2019 lives and the Company\u2019s future. At least six Oncology medicines are expected to
\nbe launched between 2014 and 2020, of which Lynparza, Tagrisso, Imfinzi and Calquence are already benefitting
\npatients. An extensive pipeline of small-molecule and biologic medicines is in development and the Company is
\ncommitted to advancing Oncology medicines, primarily focused on the treatment of patients with lung, ovarian,
\nbreast and blood cancers.
\nIn June 2018, the Company presented further evidence of its progress at the American Society of Clinical
\nOncology (ASCO) annual meeting in Chicago, US. This was illustrated by seven \u2018Best of ASCO\u2019 presentations
\nand 14 oral presentations from a total of 91 accepted abstracts. These presentations highlighted AstraZeneca\u2019s
\nfour scientific platforms: Immuno-Oncology (IO), DNA Damage Response, Anti-Drug Conjugates, and Tumour
\nDrivers and Resistance.
\na) Lynparza (multiple cancers)
\nOn 27 June 2018, AstraZeneca announced positive results from the randomised, double-blinded, placebocontrolled,
\nPhase III SOLO-1 trial of Lynparza tablets. Patients with BRCAm, advanced ovarian cancer, treated
\nwith 1st-line Lynparza maintenance therapy, had a statistically-significant and clinically-meaningful improvement
\nin PFS compared to placebo. The safety and tolerability profile of Lynparza was consistent with previous trials.
\nBased upon these data, AstraZeneca and MSD have initiated discussions with health authorities regarding
\nregulatory submissions.
\nDuring the period, the Company announced that Japan\u2019s Pharmaceuticals and Medical Devices Agency (PMDA)
\nhad approved the chemo-sparing regimen of Lynparza tablets as a monotherapy for patients with unresectable
\nor recurrent BRCAm, HER2 negative breast cancer who have received prior chemotherapy. The ability to offer
\nan alternative to chemotherapy treatment for patients with metastatic breast cancer is an important factor as
\npatients are expected to receive multiple lines of chemotherapy during the course of their disease.
\nAt the aforementioned ASCO meeting, data from an \u2018all-comers\u2019 trial assessing Lynparza in combination with
\nabiraterone as a treatment for patients with metastatic castration-resistant prostate cancer (mCRPC) was
\nselected as one of the \u2018Best of ASCO\u2018 presentations. The trial showed an improvement in median radiological
\nprogression-free survival (rPFS), compared to abiraterone monotherapy, an SoC in mCRPC.
\nStudy 08 was a randomised, double-blinded, multi-centre Phase II trial, comparing Lynparza in combination with
\nabiraterone (n=71) to abiraterone monotherapy (n=71) in patients with previously-treated mCRPC, regardless of
\nhomologous recombination repair (HRR) mutation status. Median rPFS was 13.8 months with Lynparza and
\nabiraterone, compared to 8.2 months with abiraterone alone (hazard ratio (HR) 0.65; 95% CI 0.44-0.97; p=0.034).
\nPre-specified exploratory subgroup analyses demonstrated an rPFS improvement in patients, regardless of HRR
\nstatus (see Table 17). Study 08 was not powered for subgroup analyses and secondary endpoints.
\nTable 20: Lynparza Study 08 in prostate cancer; rPFS by HRR status
\nMedian rPFS
\n(months)
\nHR 95% CI Lynparza +
\nabiraterone Abiraterone
\nOverall (n=142) 13.8 8.2 0.65 0.44-0.97
\nHRR mutation (n=21) 17.8 6.5 0.74 0.26-2.12
\nWild-type HRR (n=35) 15.0 9.7 0.52 0.24-1.15
\nPartially-characterised HRR status (n=86)45 13.1 6.4 0.67 0.40-1.13
\nThe safety profile of Lynparza and abiraterone was generally manageable, with no detrimental impact on quality
\nof life, compared to abiraterone alone.
\n45 Those patients whose plasma and blood samples both tested negative for HRR mutations, but for whom no valid tumour test result was
\navailable.
\n34
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\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nTable 21: Key Lynparza Combination Trials
\nName Phase Population Design Timelines Status
\nPAOLA-146 III Stage IV, 1st-line
\novarian cancer
\nLynparza
\nmaintenance +
\nbevacizumab vs.
\nbevacizumab
\nmaintenance
\nFPCD47 Q2
\n2015
\nLPCD48 Q2
\n2018
\nFirst data
\nanticipated
\nH2 2019
\nRecruitment
\ncompleted
\nDuO-O III Stage IV, 1st-line
\novarian cancer Lynparza + Imfinzi –
\nPlanning
\n(announced at
\nthe SGO 2018
\nannual meeting)
\nMEDIOLA I\/II
\nAdvanced, 2nd-line
\ngBRCAm49 ovarian
\ncancer
\nStage IV, 1st to 3rd-line
\ngBRCAm, HER2-
\nnegative breast cancer
\nStage IV, 2nd-line small
\ncell lung cancer
\nStage IV, 2nd-line
\ngastric cancer
\nLynparza + Imfinzi FPCD Q2
\n2016
\nRecruitment
\nongoing
\nInitial data from
\nlung, breast,
\nprostate and
\novarian-cancer
\ncohorts
\npresented in
\n2017 and 2018
\nVIOLETTE II
\nStage IV, advanced,
\ntriple-negative breast
\ncancer:
\n-HRRm50 (BRCA)
\n-HRRm (non-BRCA)
\n-Non-HRRm
\nLynparza + ATR
\n(AZD6738)
\nLynparza + WEE1
\n(AZD1775)
\nLynparza
\nFPCD Q2
\n2018
\nRecruitment
\nongoing
\nPROpel III
\nStage IV, advanced,
\ncastration-resistant
\nprostate cancer
\nLynparza +
\nabiraterone vs.
\nabiraterone
\n–
\nPlanning
\n(announced at
\nthe ASCO 2018
\nannual meeting)
\n46 Conducted by the ARCAGY\/Groupe d\u2019Investigateurs National des Etudes des Cancers Ovariens et du sein.
\n47 First patient commenced dosing.
\n48 Last patient commenced dosing.
\n49 Germline BRCAm.
\n50 Homologous Recombination Repair mutated.
\n35
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\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nName Phase Population Design Timelines Status
\nBAYOU II
\nStage IV, 1st line cisplatinum
\nchemotherapyineligible
\nurothelial
\nbladder cancer
\nLynparza + Imfinzi
\nvs. Imfinzi
\nFPCD Q1
\n2018
\nRecruitment
\nongoing
\nb) Tagrisso (lung cancer)
\nOn 8 June 2018, AstraZeneca announced that the EMA had granted marketing authorisation for Tagrisso as a
\nmonotherapy for the 1st-line treatment of adult patients with locally-advanced or metastatic EGFRm NSCLC; the
\napproval followed the positive opinion, published in April 2018, from the CHMP. The approval was based on
\nresults from the 1st-line NSCLC Phase III FLAURA trial, which showed that the length of patients\u2019 PFS nearly
\ndoubled when treated with Tagrisso, compared to patients treated with current SoC, namely earlier-generation
\nEGFR tyrosine kinase inhibitors.
\nDuring the period the Company commenced the Phase III LAURA trial assessing the effects of Tagrisso following
\nchemoradiation in patients with unresectable, Stage III EGFRm NSCLC.
\nc) Imfinzi (lung and other cancers)
\nDuring the period, the US FDA accepted a supplemental Biologics License Application to update the dosing
\nregimen for all indications of Imfinzi to a more convenient infusion schedule of 1,500mg, fixed-dose, once every
\nfour weeks, or, for patients weighing less than 30kg, a 20mg\/kg dose every four weeks. Imfinzi is currently
\napproved in the US at 10mg\/kg administered as 60-minute intravenous infusion every two weeks for the treatment
\nof certain patients with locally-advanced or metastatic urothelial carcinoma or unresectable, Stage III NSCLC.
\nThe submitted data suggested that there are no clinically-significant differences anticipated in efficacy or safety
\nbetween every two weeks and every four weeks or the flat dosing, compared to the weight-based dosing. A
\nregulatory decision is anticipated in the final quarter of the year.
\nThe Company continues to advance multiple monotherapy trials of Imfinzi and combination trials of Imfinzi with
\ntremelimumab and other potential new medicines:
\nLung Cancer
\nDuring the period, the Company was granted approvals for Imfinzi in Japan, Switzerland, India and Brazil for the
\ntreatment with Imfinzi of patients with unresectable, Stage III NSCLC, whose disease had not progressed
\nfollowing concurrent platinum-based chemoradiotherapy (CRT). CRT, followed by monitoring for disease
\nprogression, has been the SoC in this setting for over two decades and multiple trials have failed to improve upon
\nthis. The approvals of Imfinzi were based on positive PFS data from the Phase III PACIFIC trial, in which Imfinzi
\ndemonstrated an improvement in median PFS of 11.2 months compared to placebo, representing a 48% reduction
\nin relative risk of progression or death in all patients, regardless of PD-L1 status. A regulatory submission, based
\non the PACIFIC trial data, is currently under review in the EU, where the Company anticipates a regulatory
\ndecision in the second half of the year.
\nDuring the period, the Company announced that Imfinzi had met the second and final primary endpoint from the
\nPhase III PACIFIC trial in patients with unresectable, Stage III NSCLC, demonstrating an OS benefit which was
\nboth statistically significant and clinically meaningful. These positive OS data provided compelling evidence of
\nthe durable responses that Imfinzi can offer in this earlier stage of lung cancer, where patients are treated with
\ncurative intent. Five-year OS rates are currently 15-20% in Stage III NSCLC; Imfinzi has the potential to
\nsubstantially improve these numbers.
\n36
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nTable 22: Ongoing Key IO Lung Cancer Late-Stage Trials
\nName Phase Population Design Timelines Status
\nStage I, II & III (treatment with curative intent)
\nADJUVANT
\n(BR.31)51 III Stage Ib-IIIa
\nNSCLC
\nImfinzi vs.
\nplacebo
\nFPCD Q1 2015
\nFirst data anticipated
\n2019+
\nRecruitment ongoing
\nPACIFIC III Unresectable,
\nStage III NSCLC
\nImfinzi vs.
\nplacebo post
\nCRT
\nFPCD Q2 2014
\nLPCD Q2 2016
\nRecruitment
\ncompleted
\nPFS and OS primary
\nendpoints both met
\nPACIFIC2 III Unresectable,
\nStage III NSCLC
\nPlatinum-based
\nconcurrent CRT
\n+\/- Imfinzi
\nFPCD Q2 2018
\nFirst data anticipated
\n2019+
\nRecruitment ongoing
\nStage IV (metastatic disease)
\nPEARL III Stage IV, 1st line
\nNSCLC (Asia)
\nImfinzi vs. SoC
\nchemotherapy
\nFPCD Q1 2017
\nFirst data anticipated
\n2019+
\nRecruitment ongoing
\nMYSTIC III Stage IV, 1st line
\nNSCLC
\nImfinzi, Imfinzi +
\ntreme vs. SoC
\nchemotherapy
\nFPCD Q3 2015
\nLPCD Q3 2016
\nFinal OS data
\nanticipated H2 2018
\nRecruitment
\ncompleted
\nPFS primary
\nendpoint not met
\nNEPTUNE III Stage IV, 1st line
\nNSCLC
\nImfinzi + treme
\nvs. SoC
\nchemotherapy
\nFPCD Q4 2015
\nLPCD Q2 2017
\nFirst data anticipated
\nH1 2019
\nRecruitment
\ncompleted
\nPOSEIDON III Stage IV, 1st line
\nNSCLC
\nImfinzi + SoC,
\nImfinzi + treme
\n+ SoC vs. SoC
\nchemotherapy
\nFPCD Q2 2017
\nFirst data anticipated
\nH2 2019
\nRecruitment ongoing
\nCASPIAN III
\nStage IV, 1st line
\nsmall-cell lung
\ncancer
\nImfinzi + SoC,
\nImfinzi + treme
\n+ SoC vs. SoC
\nchemotherapy
\nFPCD Q1 2017
\nLPCD Q2 2018
\nFirst data anticipated
\nH2 2019
\nRecruitment
\ncompleted
\n51 Conducted by the National Cancer Institute of Canada.
\n37
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nOther Cancers
\nTable 23: Key IO Non-Lung Cancer Late-Stage Trials
\nName Phase Population Design Timelines Status
\nStage I, II & III (non-metastatic disease)
\nPOTOMAC III
\nNon-muscle
\ninvasive bladder
\ncancer
\nImfinzi + SoC
\nBCG52 vs. SoC
\nBCG
\nFPCD Q3
\n2018
\nFirst data
\nanticipated
\n2019+
\nRecruitment
\nongoing
\nStage IV (metastatic disease)
\nDANUBE III
\nStage IV, 1st line
\ncisplatin
\nchemotherapyeligible\/
\nineligible bladder
\ncancer
\nImfinzi, Imfinzi +
\ntreme vs. SoC
\nchemotherapy
\nFPCD Q4
\n2015
\nLPCD Q1 2017
\nFirst data
\nanticipated H2
\n2019
\nRecruitment
\ncompleted
\nKESTREL III
\nStage IV, 1st line
\nhead and neck
\nsquamous cell
\ncarcinoma
\n(HNSCC, head
\nand neck cancer)
\nImfinzi, Imfinzi +
\ntreme vs. SoC
\nFPCD Q4
\n2015
\nLPCD Q1
\n2017
\nFirst data
\nanticipated H2
\n2018
\nRecruitment
\ncompleted
\nEAGLE III Stage IV, 2ndline
\nHNSCC
\nImfinzi, Imfinzi +
\ntreme vs. SoC
\nFPCD Q4
\n2015
\nLPCD Q3
\n2017
\nFirst data
\nanticipated H2
\n2018
\nRecruitment
\ncompleted
\nHIMALAYA III
\nStage IV, 1st line
\nhepatocellular
\ncarcinoma (liver
\ncancer)
\nImfinzi, Imfinzi +
\ntreme (two dosing
\nregimens) vs.
\nsorafenib
\nFPCD Q4
\n2017
\nFirst data
\nanticipated
\n2019+
\nRecruitment
\nongoing
\n52 Bacillus Calmette-Guerin.
\n38
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nd) Calquence
\nAt the aforementioned ASCO meeting, the Company presented new data for Calquence from the Phase II clinical
\ntrial (WM-001) of patients with treatment-na\u00efve (TN) and R\/R Waldenstr\u00f6m macroglobulinemia (WM). Calquence
\ndemonstrated an objective response rate of 93% in both TN and R\/R patients and the median duration of
\nresponse, PFS and OS were not reached after a median follow up of over two years. The two-year PFS rate was
\n90% in TN patients and 82% in R\/R patients. A tolerable safety profile was demonstrated with Calquence therapy
\nin patients with WM.
\nIn R\/R MCL, a regulatory submission was made for Calquence in Canada with other countries underway aimed
\nin extending the regulatory approval in the US granted on 31 October 2017.
\ne) Selumetinib
\nDuring the period, AstraZeneca and MSD reported that the selumetinib ASTRA trial in differentiated thyroid cancer
\n(DTC) did not meet its primary endpoint. The ASTRA trial is a randomised, double-blinded, Phase III trial in highrisk
\nDTC. Trial results demonstrated that treatment with a short course of selumetinib and single dose adjuvant
\nradioactive iodine therapy did not meet its primary endpoint of improvement in complete remission rate compared
\nto placebo. The full data will be presented at a forthcoming medical meeting.
\nAt the aforementioned ASCO meeting, the Company, along with the US National Cancer Institute, presented
\ninitial Phase II data from the ongoing SPRINT trial, evaluating selumetinib as monotherapy in paediatric patients
\nwith NF-1 and plexiform neurofibromas. The data demonstrated a sustained reduction in tumour burden for
\npatients treated with selumetinib and an encouraging improvement in patient-reported outcomes, such as pain
\nand motor function. Partial responses (tumour-volume declines from baseline of \u226520%) were observed in 36 of
\nthe 50 children (72%).
\nCVRM
\nCardiovascular (CV), renal and metabolic diseases are key areas of focus as the Company sets the challenge to
\nbetter understand how its portfolio of medicines might be used to help address multiple risk factors or comorbidities.
\nToday, AstraZeneca is delivering life-changing results in the main CV-disease areas and their
\ncomplications. The Company is investing in science to demonstrate CV and mortality benefits, by slowing the
\nunderlying progression of CV-related diseases and protecting the organs of the CV system. Ultimately,
\nAstraZeneca is looking to do more than just slow CV-related disease, by modifying or even halting the natural
\ncourse of the disease itself and regenerate organs. The net result is a strong, continued commitment to new
\nCVRM-treatment options that have the potential to deliver improved outcomes to hundreds of millions of patients.
\nAt the American Diabetes Association congress in June 2018, the Company presented 45 abstracts, including
\nseven late-breaking data disclosures, such as first pre-clinical and clinical data for MEDI0382 (a novel
\noxyntomodulin-like peptide) for patients with type-2 diabetes. In a double-blinded Phase IIa trial, 51 patients with
\ntype-2 diabetes were randomised (1:1) to receive 200 \u03bcg of MEDI0382 subcutaneously, or placebo, daily. Results
\nafter six weeks of treatment demonstrated that MEDI0382 significantly improved glycaemic control and reduced
\nbody weight, compared to placebo. A separate exploratory analysis of the Phase IIa trial evaluated the effects of
\nMEDI0382 on hepatic fat content in overweight patients with type-2 diabetes. Results of the analysis
\ndemonstrated that patients treated with MEDI0382 showed a significant relative reduction from baseline in hepatic
\nfat content vs. placebo (-39.1% vs. -19.5%; p=0.0172). MEDI0382 is currently in Phase IIb testing; expected
\nresults in the second half of the year will inform a potential Phase III initiation decision.
\na) Brilinta (CV disease)
\nDuring the period, results from a new real-world analysis of more than 45,000 heart-attack survivors was
\npublished in Heart, suggesting that treatment with Brilinta plus low-dose aspirin, compared to clopidogrel plus
\nlow-dose aspirin, was associated with an 18% reduction of risk (adjusted hazard ratio (HR 0.82 (0.70 to 0.97))
\nover one year for the composite endpoint of death, heart attack or stroke, in patients with moderate kidney disease
\n(as defined by estimated glomerular filtration rate of 30-60ml\/min). The results from PRACTICAL, an analysis of
\ndata from the ongoing SWEDEHEART registry, provided real-world evidence that patients who survived a heart
\nattack (also known as myocardial infarction (MI)) and have moderate kidney disease, had a lower risk of
\nexperiencing future CV events when treated with Brilinta rather than clopidogrel, an older and generic medicine.
\nb) Farxiga (diabetes)
\nIn May 2018, AstraZeneca announced that it had submitted a supplemental new drug application (sNDA) to
\nJapan\u2019s PMDA for the use of Forxiga as an oral adjunct treatment to insulin in adults with type-1 diabetes. The
\nsNDA was based on Phase III data from the DEPICT (Dapagliflozin Assessment in Patients
\nwith Inadequately Controlled Type 1 Diabetes) clinical programme for Forxiga in type-1 diabetes and a dedicated
\n39
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\nResearch & Development Sustainability Development Interim Financial
\nStatements
\ntrial in Japanese patients. Results showed that Forxiga, when given as an oral adjunct treatment to insulin in
\npatients with inadequately-controlled type-1 diabetes, demonstrated significant and clinically-meaningful
\nreductions from baseline in HbA1c53, weight and total daily insulin dose at 24 and 52 weeks, compared to placebo,
\nat both 5mg and 10mg doses.
\nDuring the period, the Company received US FDA and EMA regulatory submission acceptances for Farxiga,
\nbased on the DERIVE trial. DERIVE is a Phase III trial, designed to evaluate the clinical efficacy and safety of
\nFarxiga in patients with type-2 diabetes and moderate renal impairment (chronic kidney disease (CKD) Stage
\n3A). On 19 July 2018, the Company received EU acceptance of the regulatory submission for the triple
\ncombination therapy (Farxiga + Onglyza + metformin) for the potential treatment of type-2 diabetes.
\nc) Bydureon (type-2 diabetes)
\nDuring the period, the Company received US FDA regulatory submission acceptance for Bydureon, based on the
\nCV outcomes trial, EXSCEL. This Phase IIIb\/IV trial (EXenatide Study of Cardiovascular Event Lowering)
\ncompared the effect of once-weekly Bydureon (exenatide extended-release) vs. placebo, when added to usual
\ntype-2 diabetes treatments, on the risk of a major adverse cardiac event (MACE), a composite endpoint of time
\nto first occurrence of CV death, non-fatal myocardial infarction (MI) or nonfatal stroke, in adults with type-2
\ndiabetes at a wide range of CV risk. The trial met its primary safety objective of non-inferiority for MACE. Fewer
\nCV events were observed in the Bydureon arm of the trial; the efficacy objective of a superior reduction in MACE,
\nhowever, did not reach statistical significance.
\nIn June 2018, AstraZeneca announced that the CHMP had adopted a positive opinion, recommending inclusion
\nof Bydureon BCise device (2mg prolonged-release suspension for injection) as a new formulation within the
\nmarketing authorisation for Bydureon for the treatment of type-2 diabetes. The CHMP recommendation was
\nbased on the clinical trials DURATION-NEO-1 and NEO-2. DURATION-NEO-1 was a 28-week, randomised,
\nopen-label, comparator-controlled trial (n=375), which showed that once-weekly Bydureon demonstrated an
\nHbA1c reduction of 1.4% vs. 1.0% for twice-daily Byetta (exenatide) injection at 28 weeks (baseline HbA1c 8.5%
\nand 8.4%, respectively). Additionally, Bydureon administered once weekly via the BCise device demonstrated a
\nmean weight reduction of 1.5kg as monotherapy, vs. a reduction of 1.9kg (baseline was 97kg), when combined
\nwith certain oral, antidiabetic medicines.
\nTable 24: Major Ongoing Cardiovascular Outcomes Trials
\nMajor ongoing CVRM outcomes trials are highlighted in the following table:
\nMedicine Trial Mechanism Population Primary Endpoint(s) Timeline
\nFarxiga DECLARE SGLT2
\ninhibitor
\nc.17,00054 patients
\nwith type-2
\ndiabetes
\nSuperiority for MACE
\nor
\nsuperiority for the
\ncomposite endpoint of CV
\ndeath or hospitalisation for
\nheart failure
\nData
\nanticipated
\nH2 2018
\n(final
\nanalysis)
\nFarxiga DAPA-HF SGLT2
\ninhibitor
\nc.4,500 patients
\nwith HF55
\nTime to first occurrence of
\nCV death or hHF or an
\nurgent HF visit
\nFPCD
\nQ1 2017
\nData
\nanticipated
\n2019+
\n53 A marker used to measure long-term blood sugar (glucose) levels.
\n54 Includes c.10,000 patients who have had no prior index event and c.7,000 patients who have suffered an index event.
\n55 Heart failure.
\n40
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\nStatements
\nMedicine Trial Mechanism Population Primary Endpoint(s) Timeline
\nFarxiga DAPA-CKD SGLT2
\ninhibitor
\nc.4,000 patients
\nwith CKD
\nTime to first occurrence of
\n\u226550% sustained decline in
\neGFR56 or reaching
\nESRD57 or CV death or
\nrenal death
\nFPCD
\nQ1 2017
\nData
\nanticipated
\n2019+
\nBrilinta THEMIS
\nP2Y12
\nreceptor
\nantagonist
\nc.19,000 patients
\nwith type-2
\ndiabetes
\nand CAD
\nwithout a history of
\nMI or stroke
\nComposite of
\nCV death, non-fatal MI
\nand non-fatal stroke
\nData
\nanticipated
\nH1 2019
\nBrilinta THALES
\nP2Y12
\nreceptor
\nantagonist
\nc.13,000 patients
\nwith acute
\nischaemic stroke or
\ntransient ischaemic
\nattack
\nPrevention of the
\ncomposite of subsequent
\nstroke and death at 30 days
\nData
\nanticipated
\n2019+
\nEpanova STRENGTH
\nOmega-3
\ncarboxylic
\nacids
\nc.13,000 patients
\nwith mixed
\ndyslipidaemia
\nTime to first occurrence of
\nCV death, non-fatal MI or
\nnon-fatal stroke
\nData
\nanticipated
\n2019+
\nd) Lokelma (hyperkalaemia)
\nIn May 2018, the US FDA approved Lokelma (sodium zirconium cyclosilicate), formerly ZS-9, for the treatment of
\nadult patients with hyperkalaemia, a serious condition characterised by elevated potassium levels in the blood
\nassociated with CV, renal and metabolic diseases.
\nThe risk of hyperkalaemia increases significantly for patients with CKD and for those who take common
\nmedications for HF, such as renin-angiotensin-aldosterone system (RAAS) inhibitors, which can increase levels
\nof potassium in the blood. To help prevent the recurrence of hyperkalaemia, RAAS-inhibitor therapy is often
\nmodified or discontinued, which can compromise cardio-renal outcomes and increase the risk of death.
\nThe Company expects a broad commercial launch of Lokelma to begin in early 2019, once appropriate levels of
\ninventory are available. Lokelma is manufactured through a proprietary, complicated manufacturing process at a
\ndedicated production facility.
\ne) Roxadustat (anaemia)
\nDuring the period, the ALPINE Phase III clinical-trial programme for roxadustat completed patient enrolment. The
\nprogramme, sponsored by FibroGen, Inc. (FibroGen) and its partners Astellas, Inc. (Astellas) and AstraZeneca,
\nhas now enrolled approximately 9,000 patients across seven clinical trials. ALPINE was designed to support the
\nUS regulatory submission for roxadustat as a treatment for anaemia associated with CKD in both dialysisdependent
\n(DD) and non-dialysis-dependent (NDD) CKD patients. AstraZeneca is conducting two large trials,
\nROCKIES and OLYMPUS, to support efficacy and CV safety in DD and NDD CKD patients, respectively. Topline
\ndata from these trials is anticipated in H2 2018 with a pooled safety analysis anticipated to be available in H1
\n2019.
\n56 Estimated glomerular filtration rate.
\n57 End-stage renal disease.
\n41
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\nStatements
\nOn 31 May 2018, Astellas and FibroGen announced that the fourth Japanese Phase III trial for roxadustat had
\nmet its primary endpoint. This trial evaluated the efficacy and safety of roxadustat compared to erythropoietin
\n(darbepoetin alfa) in haemodialysis-dependent CKD patients with anaemia and previously treated with
\nerythropoietin. Average haemoglobin (Hb) levels were effectively maintained at 10.99 g\/dL at weeks 18 to 24 in
\nroxadustat-treated haemodialysis patients previously treated with erythropoietin. The primary efficacy endpoint of
\nchange in average Hb levels from baseline to weeks 18 to 24 was -0.04 g\/dL and -0.03 g\/dL in the roxadustattreated
\ngroup and in the darbepoetin-treated group, respectively. Roxadustat was well tolerated and the safety
\nprofile was consistent with that observed in previous trials both in DD and NDD.
\nDuring the period, the first patient was randomised into a Phase II\/III trial in China to evaluate roxadustat for the
\ntreatment of anaemia in patients with non-transfusion-dependent, myelodysplastic syndrome (MDS). A Phase III
\nUS\/EU trial in transfusion-dependent MDS patients is also currently recruiting.
\nRESPIRATORY
\nAstraZeneca\u2019s Respiratory focus is aimed at transforming the treatment of asthma and COPD through combined
\ninhaled therapies, biologics for the unmet medical needs of specific patient populations and an early pipeline
\nfocused on disease modification.
\nThe growing range of medicines includes up to four anticipated launches between 2017 and 2020; of these,
\nBevespi and Fasenra are already benefitting patients. The capability in inhalation technology spans both
\npressurised, metered-dose inhalers and dry-powder inhalers to serve patient needs, as well as the innovative
\nAerosphere Delivery Technology, a focus of AstraZeneca\u2019s future-platform development for respiratory-disease
\ncombination therapies.
\nDuring the period, AstraZeneca attended the American Thoracic Society (ATS) 2018 International Congress,
\nin San Diego, US. The Company presented 60 accepted abstracts, including five oral presentations that
\nfocused on key areas of unmet need in asthma and COPD. Highlights included the results from two Phase
\nIII trials, SYGMA 1 and SYGMA 2, of Symbicort Turbuhaler (budesonide\/formoterol) in mild asthma, which
\nwere presented as late-breaking abstracts. Additionally, eight abstracts were also presented, including one
\nlate-breaking abstract that underscored the growing body of evidence on Fasenra and the role of this new
\nmedicine for patients with severe, eosinophilic asthma.
\na) Tudorza (COPD)
\nIn June 2018, the Company and its partner, Circassia, submitted an sNDA for Tudorza to the US FDA. The
\nsubmission was based on the results from the ASCENT trial, which fulfilled a post-approval commitment to
\nconduct a randomised, controlled trial to evaluate the risk of MACE with Tudorza as a treatment for patients with
\nCOPD.
\nThe trial achieved its co-primary endpoints for safety (MACE) and efficacy (exacerbation reduction). It is
\nanticipated that the US label will be updated accordingly.
\nb) Duaklir (COPD)
\nIn May 2018, AstraZeneca and Circassia submitted a New Drug Application (NDA) to the US FDA for Duaklir for
\nthe maintenance treatment of patients with COPD and reduction of exacerbations. The NDA included data from
\nthree Phase III trials, including the AMPLIFY trial, which demonstrated statistically-significant and clinicallymeaningful
\nimprovements in lung function for the combination of aclidinium bromide\/formoterol twice-daily,
\ncompared with the combination\u2019s individual components of either aclidinium bromide or formoterol.
\nc) Fasenra (COPD)
\nOn 30 May 2018, the Company announced top-line results from the Phase III TERRANOVA trial, the second
\nof two pivotal Phase III trials for Fasenra in patients with moderate to very severe COPD. The trial did not
\nmeet the primary endpoint of a statistically-significant reduction of exacerbations. This followed the prior
\nannouncement that the first pivotal Phase III trial, GALATHEA, did not meet its primary endpoint.
\nThe safety and tolerability findings in GALATHEA and TERRANOVA were consistent with those observed
\nin previous trials with Fasenra. A full Assessment of the data is ongoing, and the Company anticipates
\nsubmission of the results for presentation at a forthcoming medical meeting. The Company does not
\ncurrently intend to make a regulatory submission.
\n42
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\nStatements
\nOTHER
\na) Lanabecestat (Alzheimer\u2019s disease)
\nDuring the period, the Company and Eli Lilly and Company (Lilly) announced the discontinuation of the global
\nPhase III clinical trials of lanabecestat, an oral beta secretase cleaving enzyme (BACE) inhibitor, for the treatment
\nof Alzheimer\u2019s disease. The decision was based on recommendations by an independent data monitoring
\ncommittee (IDMC), which concluded that both the AMARANTH trial, in early Alzheimer\u2019s disease and the
\nDAYBREAK-ALZ trial, in dementia of mild Alzheimer\u2019s disease, were unlikely to meet their primary endpoints
\nupon completion and therefore should be stopped for futility. As a result of this decision, the related AMARANTH
\nextension trial was also discontinued. The IDMC recommendation to stop the trials was not based on safety
\nconcerns. The Company and Lilly BACE alliance for lanabecestat remains in place and the companies are
\nworking with the clinical-trial sites involved to implement the discontinuations.
\nFor more details on the development pipeline, including regulatory submission\/acceptances,
\nplease refer to the latest Clinical Trials Appendix available on astrazeneca.com
\n43
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\nReview
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\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nCondensed Consolidated Statement Of Comprehensive Income
\nFor the half year ended 30 June 2018
\n$m
\n2017
\n$m
\nProduct Sales 10,015 9,783
\nExternalisation Revenue 318 673
\nTotal Revenue 10,333 10,456
\nCost of sales (2,146) (1,844)
\nGross profit 8,187 8,612
\nDistribution costs (165) (149)
\nResearch and development expense (2,641) (2,802)
\nSelling, general and administrative costs (5,008) (4,658)
\nOther operating income & expense 1,086 839
\nOperating profit 1,459 1,842
\nFinance income 78 39
\nFinance expense (718) (781)
\nShare of after tax losses in associates and joint ventures (33) (26)
\nProfit before tax 786 1,074
\nTaxation (151) (116)
\nProfit for the period 635 958
\nOther comprehensive income
\nItems that will not be reclassified to profit or loss
\nRemeasurement of the defined benefit pension liability 187 (271)
\nFair value movements on equity investments 156 –
\nFair value movements related to own credit risk on bonds designated as fair
\nvalue through profit or loss
\n(2) –
\nTax on items that will not be reclassified to profit or loss (67) 71
\n274 (200)
\nItems that may be reclassified subsequently to profit or loss
\nForeign exchange arising on consolidation (284) 377
\nForeign exchange arising on designating borrowings in net investment hedges (516) 383
\nFair value movements on cash flow hedges (16) 127
\nFair value movements on cash flow hedges transferred to profit or loss 69 (200)
\nFair value movements on derivatives designated in net investment hedges (2) (35)
\nAmortisation of loss on cash flow hedge – 1
\nFair value movements on equity investments – (94)
\nTax on items that may be reclassified subsequently to profit or loss 55 (70)
\n(694) 489
\nOther comprehensive (loss)\/income for the period, net of tax (420) 289
\nTotal comprehensive income for the period 215 1,247
\nProfit attributable to:
\nOwners of the Parent 690 1,014
\nNon-controlling interests (55) (56)
\n635 958
\nTotal comprehensive income attributable to:
\nOwners of the Parent 270 1,303
\nNon-controlling interests (55) (56)
\n215 1,247
\nBasic earnings per $0.25 Ordinary Share $0.54 $0.80
\nDiluted earnings per $0.25 Ordinary Share $0.54 $0.80
\nWeighted average number of Ordinary Shares in issue (millions) 1,267 1,266
\nDiluted weighted average number of Ordinary Shares in issue (millions) 1,267 1,266
\n44
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nCondensed Consolidated Statement Of Comprehensive Income
\nFor the quarter ended 30 June
\nUnreviewed58
\n2018
\n$m
\nUnreviewed58
\n2017
\n$m
\nProduct Sales 5,030 4,940
\nExternalisation Revenue 125 111
\nTotal Revenue 5,155 5,051
\nCost of sales (1,012) (950)
\nGross profit 4,143 4,101
\nDistribution costs (84) (72)
\nResearch and development expense (1,362) (1,349)
\nSelling, general and administrative costs (2,551) (2,358)
\nOther operating income & expense 617 603
\nOperating profit 763 925
\nFinance income 43 28
\nFinance expense (375) (448)
\nShare of after tax losses in associates and joint ventures (19) (13)
\nProfit before tax 412 492
\nTaxation (93) (46)
\nProfit for the period 319 446
\nOther comprehensive income
\nItems that will not be reclassified to profit or loss
\nRemeasurement of the defined benefit pension liability 160 (272)
\nFair value movements on equity investments 38 –
\nFair value movements related to own credit risk on bonds designated as fair
\nvalue through profit or loss
\n(1) –
\nTax on items that will not be reclassified to profit or loss (40) 72
\n157 (200)
\nItems that may be reclassified subsequently to profit or loss
\nForeign exchange arising on consolidation (451) 223
\nForeign exchange arising on designating borrowings in net investment hedges (417) 283
\nFair value movements on cash flow hedges (117) 120
\nFair value movements on cash flow hedges transferred to profit or loss 149 (161)
\nFair value movements on derivatives designated in net investment hedges 44 (5)
\nAmortisation of loss on cash flow hedge – 1
\nFair value movements on equity investments – 56
\nTax on items that may be reclassified subsequently to profit or loss 35 (94)
\n(757) 423
\nOther comprehensive (loss)\/income for the period, net of tax (600) 223
\nTotal comprehensive income for the period (281) 669
\nProfit attributable to:
\nOwners of the Parent 350 477
\nNon-controlling interests (31) (31)
\n319 446
\nTotal comprehensive income attributable to:
\nOwners of the Parent (250) 700
\nNon-controlling interests (31) (31)
\n(281) 669
\nBasic earnings per $0.25 Ordinary Share $0.27 $0.38
\nDiluted earnings per $0.25 Ordinary Share $0.27 $0.38
\nWeighted average number of Ordinary Shares in issue (millions) 1,267 1,266
\nDiluted weighted average number of Ordinary Shares in issue (millions) 1,267 1,267
\n58 The Q2 2018 and Q2 2017 information in respect of the three months ended 30 June 2018 and 30 June 2017 respectively included in the
\ninterim financial statements has not been reviewed by PricewaterhouseCoopers LLP.
\n45
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nCondensed Consolidated Statement Of Financial Position
\nAt 30 Jun
\n2018
\n$m
\nAt 31 Dec
\n2017
\n$m
\nAt 30 Jun
\n2017
\n$m
\nASSETS
\nNon-current assets
\nProperty, plant and equipment 7,514 7,615 7,079
\nGoodwill 11,717 11,825 11,774
\nIntangible assets 24,887 26,188 27,465
\nDerivative financial instruments 459 504 336
\nInvestments in associates and joint ventures 157 103 86
\nOther investments 1,089 933 989
\nOther receivables 738 847 967
\nDeferred tax assets 2,334 2,189 2,125
\n48,895 50,204 50,821
\nCurrent assets
\nInventories 3,118 3,035 2,901
\nTrade and other receivables 5,257 5,009 4,348
\nOther investments 799 1,230 998
\nDerivative financial instruments 33 28 26
\nIncome tax receivable 264 524 786
\nCash and cash equivalents 2,978 3,324 5,239
\n12,449 13,150 14,298
\nTotal assets 61,344 63,354 65,119
\nLIABILITIES
\nCurrent liabilities
\nInterest-bearing loans and borrowings (4,215) (2,247) (2,933)
\nTrade and other payables (10,913) (11,641) (10,072)
\nDerivative financial instruments (23) (24) (6)
\nProvisions (777) (1,121) (1,070)
\nIncome tax payable (1,273) (1,350) (1,576)
\n(17,201) (16,383) (15,657)
\nNon-current liabilities
\nInterest-bearing loans and borrowings (15,452) (15,560) (16,792)
\nDerivative financial instruments (4) (4) (3)
\nDeferred tax liabilities (3,740) (3,995) (4,944)
\nRetirement benefit obligations (2,209) (2,583) (2,534)
\nProvisions (391) (347) (406)
\nOther payables (8,075) (7,840) (9,371)
\n(29,871) (30,329) (34,050)
\nTotal liabilities (47,072) (46,712) (49,707)
\nNet assets 14,272 16,642 15,412
\nEQUITY
\nCapital and reserves attributable to equity holders of the Company
\nShare capital 317 317 316
\nShare premium account 4,409 4,393 4,374
\nOther reserves 2,040 2,029 2,033
\nRetained earnings 5,879 8,221 6,930
\n12,645 14,960 13,653
\nNon-controlling interests 1,627 1,682 1,759
\nTotal equity 14,272 16,642 15,412
\n46
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nCondensed Consolidated Statement Of Changes in Equity
\nShare
\ncapital
\n$m
\nShare
\npremium
\naccount
\n$m
\nOther
\nreserves59
\n$m
\nRetained
\nearnings
\n$m
\nTotal
\nattributable
\nto owners
\n$m
\nNoncontrolling
\ninterests
\n$m
\nTotal
\nequity
\n$m
\nAt 1 Jan 2017 316 4,351 2,047 8,140 14,854 1,815 16,669
\nProfit for the
\nperiod – – – 1,014 1,014 (56) 958
\nOther
\ncomprehensive
\nincome
\n– – – 289 289 – 289
\nTransfer to other
\nreserves – – (14) 14 – – –
\nTransactions
\nwith owners:
\nDividends – – – (2,404) (2,404) – (2,404)
\nIssue of Ordinary
\nShares – 23 – – 23 – 23
\nShare-based
\npayments charge
\nfor the period
\n– – – 109 109 – 109
\nSettlement of
\nshare plan
\nawards
\n– – – (232) (232) – (232)
\nNet movement – 23 (14) (1,210) (1,201) (56) (1,257)
\nAt 30 Jun 2017 316 4,374 2,033 6,930 13,653 1,759 15,412
\nShare
\ncapital
\n$m
\nShare
\npremium
\naccount
\n$m
\nOther
\nreserves
\n$m
\nRetained
\nearnings
\n$m
\nTotal
\nattributable
\nto owners
\n$m
\nNoncontrolling
\ninterests
\n$m
\nTotal
\nequity
\n$m
\nAt 1 Jan 2018 317 4,393 2,029 8,221 14,960 1,682 16,642
\nAdoption of new
\naccounting
\nstandards60
\n– – – (91) (91) – (91)
\nProfit for the
\nperiod – – – 690 690 (55) 635
\nOther
\ncomprehensive
\nincome
\n– – – (420) (420) – (420)
\nTransfer to other
\nreserves – – 11 (11) – – –
\nTransactions
\nwith owners:
\nDividends – – – (2,402) (2,402) – (2,402)
\nIssue of Ordinary
\nShares – 16 – – 16 – 16
\nShare-based
\npayments charge
\nfor the period
\n– – – 105 105 – 105
\nSettlement of
\nshare plan
\nawards
\n– – – (213) (213) – (213)
\nNet movement – 16 11 (2,342) (2,315) (55) (2,370)
\nAt 30 Jun 2018 317 4,409 2,040 5,879 12,645 1,627 14,272
\n59 Other reserves include the capital redemption reserve and the merger reserve.
\n60 The Group adopted IFRS 15 \u2018Revenue from Contracts with Customers\u2019 from 1 January 2018. See Note 1.
\n47
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nCondensed Consolidated Statement Of Cash Flows
\nFor the half year ended 30 June
\n2018
\n$m
\n2017
\n$m
\nCash flows from operating activities
\nProfit before tax 786 1,074
\nFinance income and expense 640 742
\nShare of after tax losses in associates and joint ventures 33 26
\nDepreciation, amortisation and impairment 1,393 1,274
\nIncrease in working capital and short-term provisions (1,440) (1,044)
\nGains on disposal of intangible assets (593) (596)
\nNon-cash and other movements (310) (468)
\nCash generated from operations 509 1,008
\nInterest paid (296) (334)
\nTax paid (288) (336)
\nNet cash (outflow)\/inflow from operating activities (75) 338
\nCash flows from investing activities
\nMovement in short-term investments and fixed deposits 415 (112)
\nPurchase of property, plant and equipment (486) (549)
\nDisposal of property, plant and equipment 12 57
\nPurchase of intangible assets (207) (167)
\nDisposal of intangible assets 638 728
\nPurchase of non-current asset investments (14) (131)
\nDisposal of non-current asset investments 20 14
\nPayments to joint ventures (171) (6)
\nPayment of contingent consideration from business combinations (151) (260)
\nInterest received 121 75
\nNet cash inflow\/(outflow) from investing activities 177 (351)
\nNet cash inflow\/(outflow) before financing activities 102 (13)
\nCash flows from financing activities
\nProceeds from issue of share capital 16 23
\nIssue of loans – 1,992
\nDividends paid (2,363) (2,368)
\nHedge contracts relating to dividend payments (47) (32)
\nRepayment of obligations under finance leases – (10)
\nMovement in short-term borrowings 1,913 541
\nNet cash (outflow)\/inflow from financing activities (481) 146
\nNet (decrease)\/increase in cash and cash equivalents in the period (379) 133
\nCash and cash equivalents at the beginning of the period 3,172 4,924
\nExchange rate effects (27) (79)
\nCash and cash equivalents at the end of the period 2,766 4,978
\nCash and cash equivalents consist of:
\nCash and cash equivalents 2,978 5,239
\nOverdrafts (212) (261)
\n2,766 4,978
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\nStatements
\nResponsibility Statement of the Directors in Respect of the Half-Yearly
\nFinancial Report
\nWe confirm that to the best of our knowledge:
\n\u2022 the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial
\nReporting as adopted by the European Union and as issued by the International Accounting Standards Board;
\n\u2022 the half-yearly management report includes a fair review of the information required by:
\n(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that
\nhave occurred during the first six months of the financial year and their impact on the condensed set
\nof financial statements; and a description of the principal risks and uncertainties for the remaining six
\nmonths of the year; and
\n(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have
\ntaken place in the first six months of the current financial year and that have materially affected the
\nfinancial position or performance of the enterprise during that period; and any changes in the related
\nparty transactions described in the last annual report that could do so.
\nThe Board
\nThe Board of Directors that served during all or part of the six-month period to 30 June 2018 and their respective
\nresponsibilities can be found on the Leadership team section of astrazeneca.com.
\nApproved by the Board and signed on its behalf by
\nPascal Soriot
\nChief Executive Officer
\n26 July 2018
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\nStatements
\nIndependent Review Report to AstraZeneca PLC
\nReport on the condensed consolidated interim financial statements
\nOur Conclusion
\nWe have reviewed AstraZeneca PLC’s condensed consolidated interim financial statements (the \u2018interim financial
\nstatements\u2019) in the half-yearly financial report of AstraZeneca PLC for the 6-month period ended 30 June 2018.
\nBased on our review, nothing has come to our attention that causes us to believe that the interim financial
\nstatements are not prepared, in all material respects, in accordance with International Accounting Standard 34,
\n\u2018Interim Financial Reporting\u2019, as adopted by the European Union and as issued by the International Accounting
\nStandards Board (IASB) and the Disclosure Guidance and Transparency Rules sourcebook of the United
\nKingdom\u2019s Financial Conduct Authority.
\nWhat We Have Reviewed
\nThe interim financial statements comprise:
\n\u2022 the Condensed Consolidated Statement of Financial Position as at 30 June 2018;
\n\u2022 the Condensed Consolidated Statement of Comprehensive Income for the period then ended;
\n\u2022 the Condensed Consolidated Statement of Cash Flows for the period then ended;
\n\u2022 the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
\n\u2022 the explanatory notes to the interim financial statements.
\nThe interim financial statements included in the half-yearly financial report have been prepared in accordance
\nwith International Accounting Standard 34, \u2018Interim Financial Reporting\u2019, as adopted by the European Union and
\nas issued by the IASB and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom\u2019s
\nFinancial Conduct Authority.
\nAs disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied
\nin the preparation of the full annual financial statements of the Group is applicable law and International Financial
\nReporting Standards (IFRSs) as adopted by the European Union and as issued by the IASB.
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\nResponsibilities for the interim financial statements and the review
\nOur Responsibilities And Those Of The Directors
\nThe half-yearly financial report, including the interim financial statements, is the responsibility of, and has been
\napproved by, the directors. The directors are responsible for preparing the half-yearly financial report in
\naccordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom\u2019s Financial
\nConduct Authority.
\nOur responsibility is to express a conclusion on the interim financial statements in the half-yearly financial report
\nbased on our review. This report, including the conclusion, has been prepared for and only for the company for
\nthe purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United
\nKingdom\u2019s Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or
\nassume responsibility for any other purpose or to any other person to whom this report is shown or into whose
\nhands it may come save where expressly agreed by our prior consent in writing.
\nWhat A Review Of Interim Financial Statements Involves
\nWe conducted our review in accordance with International Standard on Review Engagements (UK and Ireland)
\n2410, \u2018Review of Interim Financial Information Performed by the Independent Auditor of the Entity\u2019 issued by the
\nAuditing Practices Board for use in the United Kingdom. A review of interim financial information consists of
\nmaking enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical
\nand other review procedures.
\nA review is substantially less in scope than an audit conducted in accordance with International Standards on
\nAuditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all
\nsignificant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
\nWe have read the other information contained in the half-yearly financial report and considered whether it contains
\nany apparent misstatements or material inconsistencies with the information in the interim financial statements.
\nPricewaterhouseCoopers LLP
\nChartered Accountants
\nLondon
\n26 July 2018
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\nNotes To The Interim Financial Statements
\n1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
\nThese unaudited condensed consolidated interim financial statements (interim financial statements) for the six months ended
\n30 June 2018 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union
\n(EU) and as issued by the International Accounting Standards Board (IASB).
\nThe annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU and as issued by
\nthe IASB. Except as noted below, the interim financial statements have been prepared applying the accounting policies and
\npresentation that were applied in the preparation of the Group\u2019s published consolidated financial statements for the year ended
\n31 December 2017.
\nIFRS 9 \u2018Financial Instruments\u2019 is effective for accounting periods beginning on or after 1 January 2018 and replaces existing
\naccounting standards. It is applicable to financial assets and liabilities, and introduces changes to existing accounting
\nconcerning classification and measurement, impairment (introducing an expected-loss method), hedge accounting, and on
\nthe treatment of gains arising from the impact of own credit risk on the measurement of liabilities held at fair value. The Group
\nearly adopted the treatment of fair value changes arising from changes in own credit risk from 1 January 2017 and has adopted
\nthe remainder of the standard from 1 January 2018. The principal impact is that equity investments previously classified as
\navailable for sale have been re-categorised on initial application and the Group has elected to record fair value movements
\non certain non-current equity investments in other comprehensive income from 1 January 2018. There is no future recycling
\nof such gains and losses to profit or loss. Fair value movements on other equity investments are recorded in profit. Given the
\ngeneral quality and short-term nature of the trade receivables, there is no material impact on the introduction of an expectedloss
\nimpairment method. Other changes include classifying factored receivables and investments in money market funds at
\nfair value through profit and loss but these changes have not had a material measurement impact. The Group\u2019s existing
\nhedging arrangements have been assessed as compliant with the new rules.
\nIFRS 15 \u2018Revenue from Contracts with Customers\u2019 is effective for accounting periods beginning on or after 1 January 2018
\nand replaces existing accounting standards. It provides enhanced detail on the principle of recognising revenue to reflect the
\ntransfer of goods and services to customers at a value which the Company expects to be entitled to receive. The standard
\nalso updates revenue disclosure requirements.
\nThe standard has not had a material impact on the revenue streams from the supply of goods and associated rebates and
\nreturns provisions. The timing of the recognition of product sales and the basis for the estimates of sales deductions under
\nIAS 18 are consistent with those adopted under IFRS 15.
\nThe previous accounting for externalisation transactions under IAS 18 includes an analysis of the performance obligations
\nunder the arrangement and upfront revenue recognition requires the transfer of substantive rights, for example a licence to
\nuse the intellectual property and an appropriate allocation of revenue to the remaining performance obligations. While the
\nbasis for such allocation is different in IFRS 15, the impact of the adoption of the new standard on the historical allocations is
\nnot material. The licences we grant are typically rights to use the intellectual property, which does not change during the period
\nof the licence. Those licences are generally unique and therefore the basis of allocation of revenue to performance obligations
\nmakes use of the residual approach as permitted by IFRS 15. The related sales milestones and royalties to these licences
\nqualify for the royalty exemption available under IFRS 15 and will continue to be recognised as the underlying sales are made.
\nFurthermore, there is no material change to the assessment of whether the performance obligations are distinct from applying
\nthe new standard.
\nThe Group has retrospectively applied the standard from 1 January 2018 recognising the cumulative effect of initially applying
\nthe standard as an increase to trade and other payables of $133m to defer externalisation revenue previously recognised, an
\nincrease to trade and other receivables of $20m to recognise externalisation revenue previously not recognised, a total related
\ntax adjustment of $22m and a corresponding net adjustment to the opening balance of retained earnings of $91m. There is
\nno restatement to prior periods as permitted in the transition rules for IFRS 15. The impact of initial application in H1 2018 as
\ncompared with H1 2017 is the recognition of additional Externalisation Revenue of $14m in H1 2018. Earnings per share
\nincreased by $0.01.
\nLegal proceedings
\nThe information contained in Note 5 updates the disclosures concerning legal proceedings and contingent liabilities in the
\nGroup\u2019s Annual Report and Form 20-F Information 2017.
\nGoing concern
\nThe Group has considerable financial resources available. As at 30 June 2018 the Group has $1.8bn in financial resources
\n(cash balances of $3.0bn and undrawn committed bank facilities of $3.0bn which are available until April 2022, with only
\n$4.2bn of debt due within one year). The Group\u2019s revenues are largely derived from sales of products which are covered by
\npatents which provide a relatively high level of resilience and predictability to cash inflows, although the revenue is expected
\nto continue to be significantly impacted by the expiry of patents over the medium term. In addition, government price
\ninterventions in response to budgetary constraints are expected to continue to adversely affect revenues in many of the mature
\nmarkets. However, we anticipate new revenue streams from both recently launched medicines and products in development,
\nand the Group has a wide diversity of customers and suppliers across different geographic areas. Consequently, the Directors
\nbelieve that, overall, the Group is well placed to manage its business risks successfully.
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\nOn the basis of the above paragraph, the going concern basis has been adopted in these interim financial statements.
\nFinancial information
\nThe comparative figures for the financial year ended 31 December 2017 are not the Company\u2019s statutory accounts for that
\nfinancial year. Those accounts have been reported on by the Group\u2019s auditors and have been delivered to the registrar of
\ncompanies; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention
\nby way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498(2) or (3) of the
\nCompanies Act 2006.
\n2 RESTRUCTURING COSTS
\nProfit before tax for the half year ended 30 June 2018 is stated after charging restructuring costs of $187m ($496m for the
\nhalf year ended 30 June 2017). These have been charged to profit as follows:
\nH1 2018
\n$m
\nH1 2017
\n$m
\nUnreviewed61
\nQ2 2018
\n$m
\nUnreviewed61
\nQ2 2017
\n$m
\nCost of sales 55 81 23 43
\nResearch and development expense 58 142 31 38
\nSelling, general and administrative costs 84 197 48 103
\nOther operating income and expense (10) 76 (10) –
\nTotal 187 496 92 184
\n61 The Q2 2018 and Q2 2017 information in respect of the three months ended 30 June 2018 and 30 June 2017 respectively included in the
\ninterim financial statements has not been reviewed by PricewaterhouseCoopers LLP.
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\n3 NET DEBT
\nThe table below provides an analysis of net debt and a reconciliation of net cash flow to the movement in net debt.
\nThe Group monitors net debt as part of its capital management policy as described in Note 26 of the Annual Report and Form
\n20-F Information 2017. Net debt is a non-GAAP financial measure.
\nAt 1 Jan
\n2018
\n$m
\nCash
\nFlow
\n$m
\nNon-cash
\n& Other
\n$m
\nExchange
\nMovements
\n$m
\nAt 30 Jun
\n2018
\n$m
\nLoans due after one year (15,560) –
\n6 102 (15,452)
\nFinance leases due after one
\nyear – –
\n– – –
\nTotal long-term debt (15,560) – 6 102 (15,452)
\nCurrent instalments of loans (1,397) – – – (1,397)
\nCurrent instalments of finance
\nleases (5) – 5 – –
\nCommercial paper (180) (1,980) – – (2,160)
\nBank Collateral (513) 67 – – (446)
\nOther short-term borrowings
\nexcluding overdrafts – – – – –
\nOverdraft (152) (63) – 3 (212)
\nTotal current debt (2,247) (1,976) 5 3 (4,215)
\nGross borrowings (17,807) (1,976) 11 105 (19,667)
\nNet derivative financial
\ninstruments 504 47
\n(86) – 465
\nNet Borrowings (17,303) (1,929)
\n(75) 105 (19,202)
\nCash and cash equivalents 3,324 (316) – (30) 2,978
\nOther investments – current 1,230 (415) (16) – 799
\nOther investments – noncurrent
\n70 –
\n12 – 82
\nCash and investments 4,624 (731)
\n(4) (30) 3,859
\nNet funds \/ (debt) (12,679) (2,660) (79) 75 (15,343)
\nNon-cash movements in the period include fair value adjustments.
\nOther investments – non-current are included within the balance of $1,089m (31 December 2017: $933m) in the Statement of Financial
\nPosition.
\nThe equivalent GAAP measure to net debt is \u2018liabilities arising from financing activities\u2019 which excludes the amounts for cash and overdrafts,
\nother investments and non-financing derivatives shown above and includes the Acerta put option liability of $1.9bn shown in non-current
\nother payables.
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\n4 FINANCIAL INSTRUMENTS
\nAs detailed in the Group\u2019s most recent annual financial statements, the principal financial instruments consist of derivative
\nfinancial instruments, other investments, trade and other receivables, cash and cash equivalents, trade and other payables,
\nand interest-bearing loans and borrowings.
\nOther than changes resulting from the Group\u2019s adoption of IFRS 9 \u2018Financial Instruments\u2019 from 1 January 2018, as detailed in
\nNote 1, there have been no changes of significance to the categorisation or fair value hierarchy classification of our financial
\ninstruments from those detailed in the Notes to the Group Financial Statements in the Company\u2019s Annual Report and Form
\n20-F Information 2017.
\nThe Group holds certain equity investments that are categorised as Level 3 in the fair value hierarchy and for which fair value
\ngains of $71m have been recognised in H1 2018. These are presented in Fair value gains on equity investments in the
\nCondensed Consolidated Statement of Comprehensive Income.
\nFinancial instruments measured at fair value include $1,866m of other investments, $1,287m of loans, and $465m of
\nderivatives as at 30 June 2018. The total fair value of interest-bearing loans and borrowings at 30 June 2018 which have a
\ncarrying value of $19,667m in the Condensed Consolidated Statement of Financial Position, was $20,346m. Contingent
\nconsideration liabilities arising on business combinations have been classified under Level 3 in the fair value hierarchy and
\nmovements in fair value are shown below:
\nDiabetes
\nAlliance
\n2018
\nOther
\n2018
\nTotal
\n2018
\nTotal
\n2017
\n$m $m $m $m
\nAt 1 January 4,477 1,057 5,534 5,457
\nSettlements (151) – (151) (260)
\nRAssessments – 38 38 (71)
\nDiscount unwind 168 40 208 205
\nAt 30 June 4,494 1,135 5,629 5,331
\nA description of the methods and assumptions used in our valuation approach for financial instruments, and an analysis of
\nthe key sensitivities, is included in Notes 11, 12, 17 and 18 to the Financial Statements in our Annual Report on Form 20-F
\nInformation 2017.
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\n5 LEGAL PROCEEDINGS AND CONTINGENT LIABILITIES
\nAstraZeneca is involved in various legal proceedings considered typical to its business, including litigation and investigations
\nrelating to product liability, commercial disputes, infringement of intellectual property rights, the validity of certain patents, antitrust
\nlaw and sales and marketing practices. The matters discussed below constitute the more significant developments since
\npublication of the disclosures concerning legal proceedings in the Company’s Annual Report and Form 20-F Information 2017
\n(the Disclosures). Unless noted otherwise below or in the Disclosures, no provisions have been established in respect of the
\nclaims discussed below.
\nAs discussed in the Disclosures, for the majority of claims in which AstraZeneca is involved it is not possible to make a
\nreasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of the proceedings. In these
\ncases, AstraZeneca discloses information with respect only to the nature and facts of the cases but no provision is made.
\nIn cases that have been settled or adjudicated, or where quantifiable fines and penalties have been assessed and which are
\nnot subject to appeal, or where a loss is probable and we are able to make a reasonable estimate of the loss, we record the
\nloss absorbed or make a provision for our best estimate of the expected loss.
\nThe position could change over time and the estimates that we have made and upon which we have relied in calculating these
\nprovisions are inherently imprecise. There can, therefore, be no assurance that any losses that result from the outcome of any
\nlegal proceedings will not exceed the amount of the provisions that have been booked in the accounts. The major factors
\ncausing this uncertainty are described more fully in the Disclosures and herein.
\nAstraZeneca has full confidence in, and will vigorously defend and enforce, its intellectual property.
\nMatters previously disclosed in respect of the first quarter of 2018 and to 18 May 2018
\nPatent litigation
\nCalquence (acalabrutinib)
\nUS patent proceedings
\nAs previously disclosed, in November 2017, Pharmacyclics LLC (Pharmacyclics, a company in the AbbVie group) filed a
\npatent infringement lawsuit in the District Court of Delaware (the District Court) against Acerta Pharma and AstraZeneca. A
\ntrial has been scheduled for June 2020. In April 2018, AstraZeneca and Acerta Pharma filed a complaint in the District Court
\nagainst Pharmacyclics and AbbVie, Inc. alleging that their medicine, Imbruvica, infringes a US patent owned by Acerta
\nPharma.
\nBrilinta (ticagrelor)
\nUS patent proceedings
\nAs previously disclosed, in 2015, in response to Paragraph IV notices from multiple abbreviated new drug application (ANDA)
\nfilers, AstraZeneca filed patent infringement lawsuits in the US District Court for the District of Delaware (the District Court)
\nrelating to patents listed in the FDA Orange Book with reference to Brilinta. In the first quarter of 2018, AstraZeneca entered
\ninto separate settlements with a number of the ANDA filers and the District Court entered consent judgments to dismiss several
\nof the litigations. AstraZeneca continues to litigate in the District Court against additional ANDA filers. Trial may be scheduled
\nas soon as late August 2018.
\nFarxiga (dapagliflozin)
\nUS patent proceedings
\nIn May 2018, AstraZeneca initiated ANDA litigation against Zydus Pharmaceuticals (USA) Inc. (Zydus) in the US District Court
\nfor the District of Delaware. In its complaint, AstraZeneca alleges that Zydus\u2019 generic version of Farxiga, if approved and
\nmarketed, would infringe AstraZeneca\u2019s US Patents Nos. 6,414,126 and 6,515,117. AstraZeneca has also filed a further action
\nin the US District Court for the District of New Jersey.
\nCrestor (rosuvastatin calcium)
\nPatent proceedings outside the US
\nAs previously disclosed, in Australia, AstraZeneca has taken a provision in respect of damages claims from generic entities
\nand the Commonwealth of Australia in relation to alleged losses suffered in connection with AstraZeneca\u2019s enforcement of
\nCrestor patents which were subsequently found invalid. In February 2018, AstraZeneca settled the claim from Apotex Pty Ltd
\n(and other related Apotex entities). The claims from all generic entities have now been settled. The claim from the
\nCommonwealth of Australia remains outstanding.
\nPulmicort Respules (budesonide inhalation suspension)
\nUS patent proceedings
\nAs previously disclosed, in February 2015, the US District Court for the District of New Jersey (the District Court) determined
\nthat the asserted claims of US Patent No. 7,524,834, which covered Pulmicort Respules, were invalid following challenges
\nbrought by Apotex, Inc. and Apotex Corp., Breath Limited, Sandoz, Inc. and Watson Laboratories, Inc. (together, the Generic
\nChallengers). In May 2015, the US Court of Appeals for the Federal Circuit affirmed the District Court\u2019s decision. Since 2009,
\nvarious injunctions were issued in this matter. Damages claims based on those injunctions have been filed by the Generic
\nChallengers. No trial for the damages claims is currently scheduled. A provision has been taken.
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\nDaliresp (roflumilast)
\nUS patent proceedings
\nAs previously disclosed, in 2015, in response to Paragraph IV notices from multiple ANDA filers, AstraZeneca filed patent
\ninfringement lawsuits in the US District Court for the District of New Jersey (the District Court) relating to patents listed in the
\nFDA Orange Book with reference to Daliresp. From January through April 2018, AstraZeneca entered into separate
\nsettlements with a number of the ANDA filers and the District Court entered consent judgments to dismiss each of the
\nremaining litigations.
\nLosec\/Prilosec (omeprazole)
\nPatent proceedings outside the US
\nAs previously disclosed, in Canada, in 2004, AstraZeneca brought proceedings against Apotex Inc. (Apotex) for infringement
\nof several patents related to Losec. In February 2015, the Federal Court of Canada (the Federal Court) found that Apotex had
\ninfringed the Losec formulation patent (Canadian Patent No. 1,292,693). In July 2017, after a reference to account for Apotex\u2019s
\nprofits earned as a result of the infringement, the Federal Court issued its decision describing how the quantification of monies
\nowed to AstraZeneca should proceed. Apotex appealed. In February 2018, AstraZeneca and Apotex entered into a settlement
\nagreement, under which Apotex agreed to pay AstraZeneca CAD 435 million (USD 352 million), concluding all Losec patent
\nlitigation in Canada.
\nProduct liability litigation
\nOnglyza (saxagliptin) and Kombiglyze (saxagliptin and metformin)
\nAs previously disclosed, in the US, AstraZeneca is defending various lawsuits alleging heart failure, cardiac injuries, and\/or
\ndeath from treatment with Onglyza or Kombiglyze. In February 2018, the Judicial Panel on Multidistrict Litigation ordered the
\ntransfer of various pending federal actions to the Eastern District of Kentucky (the District) for consolidated pretrial proceedings
\nwith the federal actions pending in the District. The previously disclosed California state court coordinated proceeding remains
\npending in California.
\nCommercial litigation
\nTelephone Consumer Protection Act litigation
\nAs previously disclosed, in the US, in December 2016, AstraZeneca and several other entities were served with a complaint
\nfiled in the US District Court for the Southern District of Florida that alleges, among other things, violations of the Telephone
\nConsumer Protection Act caused by the sending of unsolicited advertisements by facsimile. This matter has been dismissed.
\nToprol-XL (metoprolol succinate)
\nAs previously disclosed, in the US, in February 2016, a Louisiana state court (the Trial Court) dismissed a civil lawsuit that
\nwas filed by the Attorney General for the State of Louisiana (the State) against AstraZeneca, which alleged unlawful
\nmonopolisation and unfair trade practices in connection with enforcement of patents for Toprol-XL. The State appealed the
\nTrial Court\u2019s dismissal. In April 2018, the Louisiana Court of Appeals for the First Circuit (the Appellate Court) reversed the
\ndismissal and remanded the case back to the Trial Court for further proceedings. In May 2018, AstraZeneca filed a writ with
\nthe Louisiana Supreme Court seeking review of the Appellate Court’s decision.
\nMatters disclosed in respect of the second quarter of 2018 and to 26 July 2018
\nPatent litigation
\nFaslodex (fulvestrant)
\nUS patent proceedings
\nAs previously disclosed, AstraZeneca has filed patent infringement lawsuits in the US District Court for the District of New
\nJersey (the District Court) relating to four patents listed in the FDA Orange Book with reference to Faslodex after receiving a
\nnumber of Paragraph IV notices relating to multiple ANDAs seeking FDA approval to market generic versions of Faslodex,
\nprior to the expiration of AstraZeneca\u2019s patents. In July 2016, AstraZeneca settled one of these, the lawsuit brought against
\nSandoz, Inc (Sandoz), and the District Court entered a consent judgment, which included an injunction preventing Sandoz
\nfrom launching a generic fulvestrant product until March 2019, or earlier in certain circumstances. In 2016 and 2017,
\nAstraZeneca resolved the lawsuits against all of the additional ANDA filers, and the District Court also entered consent
\njudgments ending those lawsuits. In June and July 2018, AstraZeneca received Paragraph IV notices from two new ANDA
\nfilers seeking FDA approval to market generic versions of Faslodex, prior to the expiration of AstraZeneca\u2019s patents.
\nAstraZeneca filed patent infringement lawsuits against both new ANDA filers.
\nPatent proceedings outside the US
\nIn France, in June 2018, the Commercial Court of Nanterre denied AstraZeneca\u2019s request for a preliminary injunction against
\nSandoz SAS (Sandoz) to prevent a potential launch of its generic Faslodex in France. Additionally, in June 2018, Sandoz
\nserved AstraZeneca with an invalidation writ against European Patent Nos. EP 2,266,573, EP 1,250,138 and EP 1,272,195.
\nIn Italy, in February 2015, Actavis Group Ptc ehf and Actavis Italy S.p.A. filed an action alleging that AstraZeneca\u2019s European
\nPatent No. EP1 ,250,138 (the \u2018138 patent) was invalid. In July 2018, the Court of Turin determined that the \u2018138 patent is
\ninvalid.
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\nAs previously disclosed, in May 2017, the Opposition Division of the European Patent Office revoked European Patent No.
\nEP 2,266,573. AstraZeneca appealed the decision and the appeal has been scheduled for January 2019.
\nBrilinta (ticagrelor)
\nPatent proceedings outside the US
\nAs previously disclosed, in China, in 2017, Shenzhen Salubris Pharmaceuticals Co., Ltd. filed an action in the Chinese State
\nIntellectual Property Office (SIPO) in relation to Chinese Patent No. ZL99815926.3 (the Ticagrelor Patent) claiming the active
\ningredient in Brilinta, ticagrelor, was invalid. In October 2017, the Patent Reexamination Board of SIPO subsequently issued
\na decision invalidating the Ticagrelor Patent. AstraZeneca appealed the invalidation decision to the Beijing Intellectual
\nProperty Court and an oral hearing took place in July 2018. The decision of the Beijing Intellectual Property Court is awaited.
\nFarxiga (dapagliflozin)
\nUS patent proceedings
\nAs previously disclosed, in May 2018, AstraZeneca initiated ANDA litigation against Zydus Pharmaceuticals (USA) Inc.
\n(Zydus) in the US District Court for the District of Delaware. In its complaint, AstraZeneca alleged that Zydus\u2019 generic
\nversion of Farxiga, if approved and marketed, would infringe AstraZeneca\u2019s US Patents Nos. 6,414,126 and 6,515,117. In
\nJune 2018, Zydus filed a counter-claim alleging that AstraZeneca\u2019s US Patents Nos. 7,851,502; 7,919,589; 8,221,786;
\n8,361,972; 8,501,698; 8,685,934; and 8,716,251, which are listed in the FDA Orange Book for Farxiga, are invalid and\/or not
\ninfringed.
\nOnglyza (saxagliptin) and Kombiglyze (saxagliptin and metformin)
\nUS patent proceedings
\nAs previously disclosed, in February 2017, the US District Court for the District of Delaware (the District Court) issued a
\ndecision upholding the validity of US Patent No. RE44,186 (the \u2019186 patent), listed in the FDA Orange Book with reference to
\nOnglyza and\/or Kombiglyze XR. In August 2017, the US Patent and Trademark Office (USPTO) issued a decision in an inter
\npartes review upholding the challenged claims of the \u2019186 patent. Mylan Pharmaceuticals Inc. (Mylan) appealed the District
\nCourt\u2019s decision and the USPTO\u2019s decision to the US Court of Appeals for the Federal Circuit. In May 2018, AstraZeneca and
\nMylan settled these two appeals. The matter is now closed.
\nCrestor (rosuvastatin calcium)
\nPatent proceedings outside the US
\nAs previously disclosed, in Australia, AstraZeneca had taken a provision in respect of damages claims from generic entities
\nand the Commonwealth of Australia in relation to alleged losses suffered in connection with AstraZeneca\u2019s enforcement of
\nCrestor patents which were subsequently found invalid. As previously disclosed, all claims from the generic entities have
\nbeen settled. In May 2018, AstraZeneca settled the claim from the Commonwealth of Australia and as a result, all of the
\nclaims related to this matter have now been resolved.
\nPulmicort Respules (budesonide inhalation suspension)
\nUS patent proceedings
\nAs previously disclosed, in February 2015, the US District Court for the District of New Jersey (the District Court) determined
\nthat the asserted claims of US Patent No. 7,524,834, which covered Pulmicort Respules, were invalid following challenges
\nbrought by Apotex, Inc. and Apotex Corp., Breath Limited, Sandoz, Inc. and Watson Laboratories, Inc. (together, the Generic
\nChallengers). In May 2015, the US Court of Appeals for the Federal Circuit affirmed the District Court\u2019s decision. Since 2009,
\nvarious injunctions were issued in this matter. Damages claims based on those injunctions were filed by the Generic
\nChallengers. In June 2018, AstraZeneca and the Generic Challengers settled these claims. The matter is now closed.
\nNexium (esomeprazole magnesium)
\nPatent proceedings outside the US
\nAs previously reported, in Canada, in July 2014, the Federal Court of Canada found the Nexium substance patent (Canadian
\nPatent No. 2,139,653 (the \u2018653 patent)) invalid and not infringed by Apotex Inc. In July 2015, AstraZeneca\u2019s appeal was
\ndismissed. AstraZeneca was granted leave to appeal to the Supreme Court of Canada (the Supreme Court). In June 2017,
\nthe Supreme Court granted AstraZeneca\u2019s appeal and found the \u2018653 patent valid. Apotex appealed the Supreme Court\u2019s
\ndecision. AstraZeneca commenced proceedings to collect damages. In June 2018, the parties settled all outstanding
\nproceedings. The matter is now closed.
\nProduct liability litigation
\nNexium (esomeprazole magnesium) and Losec\/Prilosec (omeprazole)
\nAs previously disclosed, in the US, AstraZeneca is defending various lawsuits involving multiple plaintiffs claiming that they
\nhave been diagnosed with kidney injuries following treatment with proton pump inhibitors, including Nexium and Prilosec and,
\nin August 2017, pending federal court cases were consolidated in a multidistrict litigation (MDL) proceeding in federal court in
\nNew Jersey for pre-trial purposes. An initial trial date has been scheduled in the MDL for September 2020.
\nSeroquel (quetiapine fumarate)
\nIn June 2018, AstraZeneca was named in a lawsuit filed in Illinois involving one plaintiff alleging Brugada Syndrome from
\ntreatment with Seroquel.
\n58
\nOperating & Financial
\nReview
\nCorporate & Business
\nResearch & Development Sustainability Development Interim Financial
\nStatements
\nCommercial litigation
\nNexium settlement anti-trust litigation
\nAs previously disclosed, AstraZeneca was a defendant in a multidistrict litigation class action and individual lawsuit alleging
\nthat AstraZeneca\u2019s settlements of certain patent litigation in the US relating to Nexium violated US anti-trust law and various
\nstate laws. As previously disclosed, a trial in the US District Court for the District of Massachusetts returned a verdict in favour
\nof AstraZeneca, and the federal appeals for this verdict were subsequently concluded. As previously disclosed, two lawsuits
\nwith similar allegations were filed in Pennsylvania state court by various indirect purchasers of Nexium. These cases had been
\nstayed pending the outcome of the federal court litigation, but AstraZeneca was informed in June 2018 that both matters were
\nadministratively closed by the state court. This matter is accordingly concluded.
\nOther legal matters
\nIraq Ministry of Health litigation\/anti-corruption probe
\nAs previously disclosed, in the US, in October 2017, AstraZeneca and certain other pharmaceutical and\/or medical device
\ncompanies were named as defendants in a complaint filed in federal court in the District of Columbia by US nationals (or their
\nestates, survivors, or heirs) who were killed or wounded in Iraq between 2005 and 2009 (the Lawsuit). The plaintiffs allege
\nthat the defendants violated the US Anti-Terrorism Act and various state laws by selling pharmaceuticals and medical supplies
\nto the Iraqi Ministry of Health. In addition, AstraZeneca has received an inquiry from the US Department of Justice in
\nconnection with an anti-corruption investigation relating to activities in Iraq, including interactions with the Iraqi government
\nand certain of the same matters alleged in the Lawsuit.
\n59
\n6 PRODUCT SALES ANALYSIS \u2013 H1 2018
\nThe table below provides an analysis of year-on-year Product Sales, with Actual and CER growth rates reflecting year-on-year growth.
\nWorld Emerging Markets US Europe Established ROW
\nH1 2018
\n$m Actual
\n%
\nCER
\n% H1 2018
\n$m Actual
\n%
\nCER
\n% H1 2018
\n$m Actual
\n% H1 2018
\n$m Actual
\n%
\nCER
\n% H1 2018
\n$m Actual
\n%
\nCER
\n%
\nOncology
\nTagrisso 760 89 82 159 n\/m n\/m 341 89 139 83 63 121 13 9
\nIressa 275 5 (1) 148 15 8 14 (18) 61 13 2 52 (15) (18)
\nLynparza 269 n\/m n\/m 18 n\/m n\/m 149 n\/m 87 50 36 15 n\/m n\/m
\nImfinzi 184 n\/m n\/m 3 n\/m n\/m 178 n\/m 3 n\/m n\/m – – –
\nCalquence 20 n\/m n\/m – – – 20 n\/m – – – – – –
\nLegacy:
\nFaslodex 501 8 5 71 31 30 259 7 118 (11) (21) 53 56 50
\nZoladex 376 4 (1) 202 20 17 3 (79) 68 1 (9) 103 (10) (13)
\nArimidex 111 5 – 71 25 19 – n\/m 15 (12) (18) 25 (14) (17)
\nCasodex 104 (5) (11) 59 5 (4) – – 11 – – 34 (21) (23)
\nOthers 64 14 11 16 23 15 – – 3 – – 45 13 10
\nTotal Oncology 2,664 42 37 747 43 37 964 91 505 21 9 448 4 –
\nCVRM
\nBrilinta 609 23 18 148 22 17 259 20 172 27 14 30 20 16
\nFarxiga 639 40 36 157 57 59 266 29 152 45 28 64 39 35
\nOnglyza 255 (16) (19) 81 29 24 98 (38) 47 (10) (17) 29 (3) (7)
\nBydureon 294 (2) (3) 7 40 40 234 (4) 43 2 (10) 10 11 11
\nByetta 60 (33) (35) 4 (20) (60) 32 (45) 16 (11) (11) 8 – –
\nSymlin 16 (36) (36) – – – 16 (36) – – – – – –
\nLegacy:
\nCrestor 727 (39) (42) 424 9 4 90 (41) 111 (69) (72) 102 (64) (66)
\nSeloken\/Toprol-XL 373 2 (2) 328 13 9 26 (13) 12 (71) (71) 7 17 17
\nAtacand 137 (7) (10) 76 (11) (11) 10 (17) 41 (2) (12) 10 25 25
\nOthers 158 (12) (17) 109 (1) (7) (2) n\/m 38 (22) (27) 13 (35) (35)
\nTotal CVRM 3,268 (8) (11) 1,334 14 10 1,029 (7) 632 (25) (33) 273 (38) (40)
\nRespiratory
\nSymbicort 1,306 (6) (10) 241 13 10 439 (21) 411 3 (8) 215 (1) (5)
\nPulmicort 633 12 6 482 22 15 59 (24) 50 4 (6) 42 2 (2)
\nFasenra 86 n\/m n\/m – – – 67 n\/m 8 n\/m n\/m 11 n\/m n\/m
\nDaliresp\/Daxas 83 (10) (12) 1 (67) n\/m 67 (15) 14 56 44 1 – –
\nTudorza\/Eklira 73 3 (3) – – – 29 – 38 – (11) 6 50 50
\nDuaklir 50 43 29 1 n\/m n\/m – – 47 38 24 2 n\/m n\/m
\nBevespi 13 n\/m n\/m – – – 13 n\/m – – – – – –
\nOthers 163 23 15 61 30 17 1 (50) 75 23 16 26 18 14
\nTotal Respiratory 2,407 6 – 786 19 13 675 (10) 643 9 (2) 303 6 2
\nOther
\nNexium 890 (16) (19) 343 – (3) 187 (45) 122 2 (9) 238 (6) (9)
\nSynagis 250 (17) (17) – – – 125 (25) 125 (6) (6) – – –
\nLosec\/Prilosec 145 7 (1) 88 26 16 4 (50) 36 (5) (13) 17 (15) (15)
\nSeroquel XR 129 (20) (23) 40 25 22 49 (36) 33 (23) (30) 7 (30) (30)
\nMovantik\/Moventig 52 (16) (16) 1 n\/m n\/m 51 (18) – – – – – –
\nOthers 210 (41) (44) 85 (60) (54) 18 57 58 (30) (51) 49 (11) (20)
\nTotal Other 1,676 (19) (22) 557 (15) (16) 434 (34) 374 (10) (19) 311 (8) (12)
\nTOTAL PRODUCT SALES 10,015 2 (2) 3,424 14 10 3,102 3 2,154 (5) (14) 1,335 (11) (14)
\n60
\n7 PRODUCT SALES ANALYSIS \u2013 Q2 2018 (Unreviewed*)
\nThe table below provides an analysis of year-on-year Product Sales, with Actual and CER growth rates reflecting year-on-year growth.
\n* The Q2 2018 information in respect of the three months ended 30 June 2018 included in the interim financial statements has not been reviewed by PricewaterhouseCoopers LLP.
\nWorld Emerging Markets US Europe Established ROW
\nQ2 2018
\n$m Actual
\n%
\nCER
\n% Q2 2018
\n$m Actual
\n%
\nCER
\n% Q2 2018
\n$m Actual
\n% Q2 2018
\n$m Actual
\n%
\nCER
\n% Q2 2018
\n$m Actual
\n%
\nCER
\n%
\nOncology
\nTagrisso 422 82 77 88 n\/m n\/m 194 n\/m 70 71 54 70 4 1
\nIressa 143 4 (1) 77 13 7 6 (33) 31 11 – 29 (9) (13)
\nLynparza 150 n\/m n\/m 10 n\/m n\/m 83 n\/m 45 36 30 12 n\/m n\/m
\nImfinzi 122 n\/m n\/m 3 n\/m n\/m 116 n\/m 3 n\/m n\/m – – –
\nCalquence 12 n\/m n\/m – – – 12 n\/m – – – – – –
\nLegacy:
\nFaslodex 247 – (3) 32 19 19 125 2 59 (25) (32) 31 63 58
\nZoladex 192 8 4 101 25 23 2 (67) 34 (3) (14) 55 (2) (5)
\nArimidex 57 6 2 36 29 29 – n\/m 7 (22) (33) 14 (7) (13)
\nCasodex 52 (4) (9) 28 8 (4) – – 5 – – 19 (17) (17)
\nOthers 37 23 23 9 50 50 – – 2 – – 26 18 18
\nTotal Oncology 1,434 44 40 384 42 37 538 112 256 10 1 256 8 6
\nCVRM
\nBrilinta 316 16 13 72 18 15 144 13 86 23 13 14 8 –
\nFarxiga 340 36 34 88 52 57 139 26 78 42 25 35 30 30
\nOnglyza 126 (16) (18) 41 24 21 49 (37) 24 (4) (8) 12 (14) (21)
\nBydureon 155 6 5 7 75 125 123 6 20 – (20) 5 (17) (17)
\nByetta 29 (33) (35) (1) n\/m n\/m 17 (39) 9 (10) (10) 4 (20) (20)
\nSymlin 7 (36) (36) – – – 7 (36) – – – – – –
\nLegacy:
\nCrestor 338 (40) (42) 186 (1) (4) 44 7 46 (72) (74) 62 (62) (64)
\nSeloken\/Toprol-XL 173 (4) (7) 155 13 9 8 (58) 6 (71) (71) 4 – –
\nAtacand 66 (8) (10) 39 (5) (2) 3 (50) 19 (10) (19) 5 25 25
\nOthers 73 (19) (23) 49 (6) (10) (2) n\/m 18 (31) (38) 8 (33) (33)
\nTotal CVRM 1,623 (9) (11) 636 11 9 532 (1) 306 (26) (33) 149 (40) (42)
\nRespiratory
\nSymbicort 672 (5) (8) 113 12 10 256 (14) 199 – (9) 104 (3) (6)
\nPulmicort 287 27 20 212 45 37 30 (19) 23 5 (5) 22 5 –
\nFasenra 65 n\/m n\/m – – – 48 n\/m 6 n\/m n\/m 11 n\/m n\/m
\nDaliresp\/Daxas 45 (6) (8) (1) n\/m n\/m 38 (7) 7 75 75 1 – –
\nTudorza\/Eklira 39 15 12 (1) n\/m n\/m 18 29 18 – (11) 4 n\/m n\/m
\nDuaklir 22 38 31 1 n\/m n\/m – – 20 33 13 1 – –
\nBevespi 8 n\/m n\/m – – – 8 n\/m – – – – – –
\nOthers 88 35 28 24 26 11 6 n\/m 44 33 30 14 8 –
\nTotal Respiratory 1,226 12 7 348 30 24 404 3 317 9 – 157 8 5
\nOther
\nNexium 442 (26) (28) 161 (4) (7) 87 (57) 61 3 (5) 133 (19) (22)
\nSynagis 26 (63) (63) – n\/m n\/m (9) n\/m 35 (41) (41) – – –
\nLosec\/Prilosec 76 12 4 42 20 9 3 – 20 – (5) 11 10 10
\nSeroquel XR 76 (20) (21) 22 29 35 33 (38) 17 (19) (29) 4 – –
\nMovantik\/Moventig 24 (25) (25) 1 n\/m n\/m 23 (28) – – – – – –
\nOthers 103 (52) (53) 65 (40) (44) 4 (90) 21 (54) (54) 13 (28) (22)
\nTotal Other 747 (30) (33) 291 (12) (15) 141 (59) 154 (25) (29) 161 (18) (20)
\nTOTAL PRODUCT SALES 5,030 2 (1) 1,659 15 12 1,615 6 1,033 (10) (17) 723 (13) (15)
\n61
\n8 SEQUENTIAL QUARTERLY PRODUCT SALES \u2013 2018 (Unreviewed*)
\nThe table below provides an analysis of sequential quarterly Product Sales, with Actual and CER growth rates reflecting quarter-on-quarter growth.
\n* The sequential quarterly product sales information included in the interim financial statements has not been reviewed by PricewaterhouseCoopers LLP.
\nQ1 2018
\n$m Actual
\n%
\nCER
\n% Q2 2018
\n$m Actual
\n%
\nCER
\n% Q3 2018
\n$m Actual
\n%
\nCER
\n% Q4 2018
\n$m Actual
\n%
\nCER
\n%
\nOncology
\nTagrisso 338 11 10 422 25 25
\nIressa 132 2 (1) 143 8 8
\nLynparza 119 19 18 150 26 26
\nImfinzi 62 n\/m n\/m 122 98 98
\nCalquence 8 n\/m n\/m 12 51 50
\nLegacy:
\nFaslodex 254 7 5 247 (3) (2)
\nZoladex 184 (2) (4) 192 4 5
\nArimidex 54 (5) (7) 57 6 6
\nCasodex 52 (4) (6) 52 – (2)
\nOthers 27 (7) (20) 37 37 50
\nTotal Oncology 1,230 10 8 1,434 17 17
\nCVRM
\nBrilinta 293 (2) (4) 316 8 9
\nFarxiga 299 (10) (11) 340 14 15
\nOnglyza 129 (28) (29) 126 (2) (2)
\nBydureon 139 (5) (5) 155 12 11
\nByetta 31 (35) (38) 29 (7) (3)
\nSymlin 9 (31) (31) 7 (22) (22)
\nLegacy:
\nCrestor 389 (35) (36) 338 (13) (12)
\nSeloken\/Toprol-XL 200 19 18 173 (14) (13)
\nAtacand 71 (3) (3) 66 (8) (8)
\nOthers 85 6 4 73 (13) (11)
\nTotal CVRM 1,645 (15) (17) 1,623 (1) –
\nRespiratory
\nSymbicort 634 (16) (17) 672 6 6
\nPulmicort 346 (7) (8) 287 (17) (17)
\nDaliresp\/Daxas 38 (28) (30) 45 19 22
\nTudorza\/Eklira 34 (19) (21) 39 15 15
\nDuaklir 28 22 17 22 (22) (19)
\nFasenra 21 n\/m n\/m 65 n\/m n\/m
\nBevespi 5 (38) (38) 8 61 60
\nOthers 75 (12) (20) 88 17 16
\nTotal Respiratory 1,181 (11) (13) 1,226 4 4
\nOther
\nNexium 448 5 3 442 (1) (1)
\nSynagis 224 (4) (4) 26 (89) (88)
\nLosec\/Prilosec 69 – (4) 76 10 11
\nSeroquel XR 53 (51) (51) 76 44 42
\nMovantik\/Moventig 28 (7) (7) 24 (14) (14)
\nOthers 107 (36) (37) 103 (4) (5)
\nTotal Other 929 (15) (16) 747 (20) (20)
\nTOTAL PRODUCT SALES 4,985 (9) (11) 5,030 1 1
\n62
\n9 SEQUENTIAL QUARTERLY PRODUCT SALES \u2013 2017 (Unreviewed*)
\nThe table below provides an analysis of sequential quarterly Product Sales, with Actual and CER growth rates reflecting quarter-on-quarter growth.
\n* The sequential quarterly product sales information included in the interim financial statements has not been reviewed by PricewaterhouseCoopers LLP.
\nQ1 2017
\n$m Actual
\n%
\nCER
\n% Q2 2017
\n$m Actual
\n%
\nCER
\n% Q3 2017
\n$m Actual
\n%
\nCER
\n% Q4 2017
\n$m Actual
\n%
\nCER
\n%
\nOncology
\nTagrisso 171 16 19 232 36 34 248 7 5 304 23 22
\nIressa 124 5 8 137 10 9 137 – (1) 130 (5) (6)
\nLynparza 57 (8) (6) 59 4 2 81 37 33 100 23 22
\nImfinzi – – – 1 n\/m n\/m – – – 18 n\/m n\/m
\nCalquence – – – – – – – – – 3 n\/m n\/m
\nLegacy:
\nFaslodex 214 (4) (3) 248 16 15 241 (3) (5) 238 (1) (1)
\nZoladex 185 (21) (12) 178 (4) (5) 185 4 2 187 1 1
\nCasodex 56 (7) (2) 54 (4) (3) 51 (6) (9) 54 6 6
\nArimidex 52 (9) (7) 54 4 4 54 – (2) 57 6 6
\nOthers 26 (10) (3) 30 15 7 29 (3) (3) 29 – 3
\nTotal Oncology 885 (5) – 993 12 11 1,026 3 1 1,120 9 9
\nCVRM
\nBrilinta 224 (5) (4) 272 21 20 284 4 3 299 5 5
\nFarxiga 207 (13) (13) 250 21 20 285 14 11 332 16 16
\nOnglyza 154 3 3 150 (3) (3) 127 (15) (17) 180 42 42
\nBydureon 153 8 8 146 (5) (5) 128 (12) (14) 147 15 15
\nByetta 46 (16) (16) 43 (7) (7) 39 (9) (9) 48 23 23
\nSymlin 14 – – 11 (21) (21) 10 (9) (9) 13 30 30
\nQtern – – – – – – – – – 5 n\/m n\/m
\nLegacy:
\nCrestor 631 – 3 560 (11) (12) 580 4 2 594 2 2
\nSeloken\/Toprol-XL 186 4 6 181 (3) (4) 160 (12) (14) 168 5 4
\nAtacand 75 (7) (6) 72 (4) (5) 80 11 8 73 (9) (6)
\nOthers 89 3 12 90 1 (3) 80 (11) (12) 80 – (4)
\nTotal CVRM 1,779 (2) – 1,775 – (1) 1,773 – (2) 1,939 9 9
\nRespiratory
\nSymbicort 677 (9) (7) 706 4 3 668 (5) (7) 752 13 12
\nPulmicort 337 17 19 226 (33) (33) 242 7 5 371 53 51
\nDaliresp\/Daxas 44 7 10 48 9 9 53 10 8 53 – (2)
\nTudorza\/Eklira 37 3 6 34 (8) (8) 37 9 6 42 14 14
\nDuaklir 19 – – 16 (16) (15) 21 31 18 23 10 10
\nBevespi 1 (67) (50) 3 n\/m n\/m 4 33 33 8 100 100
\nOthers 66 (20) (19) 66 – (4) 67 2 4 85 27 30
\nTotal Respiratory 1,181 (2) (1) 1,099 (7) (8) 1,092 (1) (3) 1,334 22 21
\nOther
\nNexium 461 (6) (4) 595 29 28 469 (21) (22) 427 (9) (9)
\nSynagis 230 (24) (24) 70 (70) (70) 153 n\/m n\/m 234 53 53
\nLosec\/Prilosec 68 15 18 68 – (3) 66 (3) (6) 69 5 5
\nSeroquel XR 67 (43) (42) 95 42 38 62 (35) (36) 108 74 66
\nMovantik\/Moventig 30 15 15 32 7 7 30 (6) (6) 30 – –
\nFluMist\/Fluenz – n\/m n\/m – – – 20 n\/m n\/m 58 190 175
\nOthers 142 (42) (41) 213 50 51 191 (10) (11) 168 (12) (12)
\nTotal Other 998 (24) (22) 1,073 8 7 991 (8) (9) 1,094 10 10
\nTOTAL PRODUCT SALES 4,843 (8) (6) 4,940 2 1 4,882 (1) (3) 5,487 12 12
\n63
\n10 SEQUENTIAL QUARTERLY PRODUCT SALES \u2013 2016 (Unreviewed*)
\nThe table below provides an analysis of sequential quarterly Product Sales, with Actual and CER growth rates reflecting quarter-on-quarter growth.
\n* The sequential quarterly product sales information included in the interim financial statements has not been reviewed by PricewaterhouseCoopers LLP.
\nQ1 2016
\n$m Actual
\n%
\nCER
\n% Q2 2016
\n$m Actual
\n%
\nCER
\n% Q3 2016
\n$m Actual
\n%
\nCER
\n% Q4 2016
\n$m Actual
\n%
\nCER
\n%
\nOncology
\nTagrisso 51 183 200 92 80 82 133 45 44 147 11 11
\nIressa 135 5 5 135 – (2) 125 (7) (8) 118 (6) (4)
\nLynparza 44 22 22 54 23 23 58 7 7 62 7 9
\nLegacy:
\nFaslodex 190 3 3 211 11 9 207 (2) (2) 222 7 9
\nZoladex 178 (10) (8) 204 15 8 199 (2) (2) 235 18 11
\nArimidex 57 (5) (5) 62 9 7 56 (10) (13) 57 2 5
\nCasodex 62 (2) (6) 63 2 – 62 (2) (5) 60 (3) (2)
\nOthers 21 (22) (22) 27 29 12 27 – 4 29 7 –
\nTotal Oncology 738 3 3 848 15 12 867 2 2 930 7 7
\nCVRM
\nBrilinta 181 4 5 214 18 16 208 (3) (2) 236 13 15
\nFarxiga 165 9 10 211 28 26 220 4 4 239 9 9
\nOnglyza 211 10 12 191 (9) (11) 169 (12) (11) 149 (12) (11)
\nBydureon 135 (13) (16) 156 16 14 145 (7) (6) 142 (2) (1)
\nByetta 62 (14) (14) 76 23 21 61 (20) (19) 55 (10) (10)
\nSymlin 5 (64) (64) 10 n\/m n\/m 11 10 10 14 27 27
\nLegacy:
\nCrestor 1,156 (13) (13) 926 (20) (21) 688 (26) (26) 631 (8) (7)
\nSeloken\/Toprol-XL 185 16 11 189 2 – 185 (2) (2) 178 (4) (2)
\nAtacand 71 (17) (15) 89 25 22 74 (17) (19) 81 9 14
\nOthers 121 (9) (16) 106 (12) (11) 84 (21) (19) 86 2 –
\nTotal CVRM 2,292 (7) (7) 2,168 (5) (7) 1,845 (15) (15) 1,811 (2) (1)
\nRespiratory
\nSymbicort 749 (13) (12) 803 7 6 697 (13) (13) 740 6 8
\nPulmicort 310 13 14 239 (23) (23) 224 (6) (6) 288 29 31
\nDaliresp\/Daxas 31 (3) (3) 40 29 29 42 5 5 41 (2) (2)
\nTudorza\/Eklira 39 (17) (17) 48 23 21 47 (2) – 36 (23) (23)
\nDuaklir 13 8 8 17 31 31 14 (18) (18) 19 36 43
\nBevespi – – – – – – – – – 3 n\/m n\/m
\nOthers 65 – (3) 79 22 18 86 9 12 83 (3) 1
\nTotal Respiratory 1,207 (6) (6) 1,226 2 1 1,110 (9) (9) 1,210 9 10
\nOther
\nNexium 463 (18) (18) 562 21 20 516 (8) (9) 491 (5) (4)
\nSynagis 244 (11) (11) 27 (89) (89) 104 n\/m n\/m 302 n\/m n\/m
\nLosec\/Prilosec 75 (3) (4) 70 (7) (9) 72 3 4 59 (18) (17)
\nSeroquel XR 202 (16) (16) 225 11 11 190 (16) (16) 118 (38) (37)
\nMovantik\/Moventig 17 13 13 23 35 35 25 9 9 26 4 4
\nFluMist\/Fluenz 5 (97) (97) 6 20 20 26 n\/m n\/m 67 n\/m n\/m
\nOthers 322 (15) (7) 314 (2) (4) 270 (14) (16) 246 (9) (8)
\nTotal Other 1,328 (24) (22) 1,227 (8) (9) 1,203 (2) (3) 1,309 9 10
\nTOTAL PRODUCT SALES 5,565 (10) (10) 5,469 (2) (3) 5,025 (8) (8) 5,260 5 6
\n64
\nShareholder Information
\nAnnouncement of nine months and third quarter 2018 results 8 November 2018
\nFuture dividends will normally be paid as follows:
\nFirst interim Announced with half-year and second-quarter results and paid in September
\nSecond interim Announced with full-year and fourth-quarter results and paid in March
\nThe record date for the first interim dividend for 2018, payable on 10 September 2018, will be 10 August
\n2018. The ex-dividend date will be 9 August 2018.
\nTrademarks of the AstraZeneca group of companies and of companies other than AstraZeneca appear
\nthroughout this document in italics. AstraZeneca, the AstraZeneca logotype and the AstraZeneca symbol
\nare all trademarks of the AstraZeneca group of companies. Trademarks of companies other than
\nAstraZeneca that appear in this document include Duaklir, Eklira, and Tudorza, trademarks of Almirall,
\nS.A.; Epanova, a trademark of Chrysalis Pharma AG.; Imbruvica, owned by Pharmacyclics, Inc., Johnson
\n& Johnson or Janssen Pharmaceutica NV (depending on geography); Synagis, owned by AstraZeneca
\nor AbbVie Inc. (depending on geography).
\nInformation on or accessible through AstraZeneca\u2019s websites, including astrazeneca.com, does not form
\npart of and is not incorporated into this announcement.
\nAddresses for Correspondence
\nRegistered Office
\n1 Francis Crick
\nAvenue
\nCambridge Biomedical
\nCampus
\nCambridge
\nCB2 0AA
\nUK
\nRegistrar and
\nTransfer Office
\nEquiniti Limited
\nAspect House
\nSpencer Road
\nLancing
\nWest Sussex
\nBN99 6DA
\nUK
\nSwedish Central
\nSecurities
\nDepository
\nEuroclear Sweden AB
\nPO Box 191
\nSE-101 23 Stockholm
\nSweden
\nUS Depositary
\nCitibank Shareholder
\nServices
\nPO Box 43077
\nProvidence
\nRI 02940-3077
\nUSA
\nTel: +44 (0)20 3749
\n5000
\nTel (Freephone in UK):
\n0800 389 1580
\nTel (outside UK):
\n+44 (0)121 415 7033
\nTel: +46 (0)8 402 9000 Tel: (toll free in the US)
\n+1 (888) 697 8018
\nTel: (outside the US)
\n+1 (781) 575 4555
\ncitibank@shareholdersonline.
\ncom
\n65
\nCautionary Statements Regarding Forward-Looking Statements
\nIn order, among other things, to utilise the ‘safe harbour’ provisions of the US Private Securities
\nLitigation Reform Act 1995, we are providing the following cautionary statement:
\nThis document contains certain forward-looking statements with respect to the operations,
\nperformance and financial condition of the Group, including, among other things, statements about
\nexpected revenues, margins, earnings per share or other financial or other measures. Although we
\nbelieve our expectations are based on reasonable assumptions, any forward-looking statements, by
\ntheir very nature, involve risks and uncertainties and may be influenced by factors that could cause
\nactual outcomes and results to be materially different from those predicted. The forward-looking
\nstatements reflect knowledge and information available at the date of preparation of this document
\nand AstraZeneca undertakes no obligation to update these forward-looking statements. We identify
\nthe forward-looking statements by using the words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’ and
\nsimilar expressions in such statements. Important factors that could cause actual results to differ
\nmaterially from those contained in forward-looking statements, certain of which are beyond our
\ncontrol, include, among other things: the loss or expiration of, or limitations to, patents, marketing
\nexclusivity or trademarks, or the risk of failure to obtain and enforce patent protection; effects of
\npatent litigation in respect of IP rights; the impact of any delays in the manufacturing, distribution and
\nsale of any of our products; the impact of any failure by third parties to supply materials or services;
\nthe risk of failure of outsourcing; the risks associated with manufacturing biologics; the risk that R&D
\nwill not yield new products that achieve commercial success; the risk of delay to new product
\nlaunches; the risk that new products do not perform as we expect; the risk that strategic alliances
\nand acquisitions, including licensing and collaborations, will be unsuccessful; the risks from
\npressures resulting from generic competition; the impact of competition, price controls and price
\nreductions; the risks associated with developing our business in emerging markets; the risk of illegal
\ntrade in our products; the difficulties of obtaining and maintaining regulatory approvals for products;
\nthe risk that regulatory approval processes for biosimilars could have an adverse effect on future
\ncommercial prospects; the risk of failure to successfully implement planned cost reduction measures
\nthrough productivity initiatives and restructuring programmes; the risk of failure of critical processes
\naffecting business continuity; economic, regulatory and political pressures to limit or reduce the cost
\nof our products; failure to achieve strategic priorities or to meet targets, expectations, guidance or
\nindications; the risk of substantial adverse litigation\/government investigation claims and insufficient
\ninsurance coverage; the risk of substantial product liability claims; the risk of failure to adhere to
\napplicable laws, rules and regulations; the risk of failure to adhere to applicable laws, rules and
\nregulations relating to anti-competitive behaviour; the impact of increasing implementation and
\nenforcement of more stringent anti-bribery and anti-corruption legislation; taxation risks; exchange
\nrate fluctuations; the risk of an adverse impact of a sustained economic downturn; political and socioeconomic
\nconditions; the risk of environmental liabilities; the risk of occupational health and safety
\nliabilities; the risk associated with pensions liabilities; the impact of failing to attract and retain key
\npersonnel and to successfully engage with our employees; the risk of misuse of social medial
\nplatforms and new technology; and the risk of failure of information technology and cybercrime.
\nNothing in this document, or any related presentation \/ webcast, should be construed as a profit
\nforecast.<\/p>\n","protected":false},"excerpt":{"rendered":"
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