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Directors' Report:
Our performance

• Therapy area review
• Geographical review
• In the global community
• Environmental review
• Financial review
  • Measuring performance
  • Business background and major events affecting 2007
  • Results of operations - summary analysis of year to 31 December 2007
  • Financial position, including cash flow and liquidity
  • Acquisition of MedImmune
  • Restructuring and synergy costs
  • Capitalisation and shareholder return
  • Future prospects
  • Financial risk management policies
  • Critical accounting policies and estimates
  • Off-balance sheet transactions, contingent liabilities and commitments
  • Post-employment benefits
  • International accounting transition
  • New accounting standards
  • Sarbanes-Oxley Act section 404
  • Results of operations - summary analysis of year to 31 December 2006
  • Financial position, including cash flow and liquidity - 2006

RESTRUCTURING AND SYNERGY COSTS

During the year, we announced our intention to bring forward productivity initiatives to enhance the long-term efficiency of the business along with the synergies arising as a result of the acquisition of MedImmune. These initiatives are in addition to the programme to improve asset utilisation within our global supply chain announced at the end of 2006. Following the integration of MedImmune, we are now managing all these programmes on a combined basis. The restructuring and synergy costs are expected to be $1,975 million, with estimated annual benefits of $1,400 million targeted by 2010. As of 31 December 2007, the following have been charged to the income statement.

Of the total, $243 million represents accelerated depreciation and other non-cash costs, and $723 million represents cash costs. Over the same period, productivity initiative benefits of $250 million and synergy benefits of $50 million have been realised. Of the remaining $1 billion of cost, we expect approximately two thirds to be incurred in 2008, with the balance in 2009 and 2010. Of the anticipated annual benefits of $1,400 million by 2010, cumulatively two-thirds will be realised in 2008.