AstraZeneca Annual Report and Form 20-F Information 2008

North America

US

Despite full generic competition to Toprol-XL and the growth in generic omeprazole, sales in the US increased 1% in 2008 to $13,510 million (2007: $13,366 million). Combined sales of Arimidex, Crestor, Nexium, Seroquel, and Symbicort were up 5% to $8,803 million (2007: $8,414 million) – 65% of our total US sales. AstraZeneca is currently the third largest pharmaceutical company in the US, with a 5.6% share of US prescription pharmaceutical sales. Sales for Aptium Oncology and Astra Tech fell by 2% and rose by 33% to $395 million (2007: $402 million) and $80 million (2007: $60 million), respectively.

Nexium continues to lead the branded proton pump inhibitor (PPI) market for new prescriptions, total prescriptions and total capsules dispensed. Generic pantoprazole showed strong growth after being introduced late in 2007 and together with generic omeprazole captured most of the market growth, resulting in price and share erosion across the entire branded PPI market. In the face of generic pressure, Nexium continued to fare better than its branded competitors with sales in 2008 down 8% to $3,101 million (2007: $3,383 million). During the year, the US Food and Drug Administration (FDA) approved the use of Nexium in children ages one to 11 years old for the short-term treatment of gastroesophageal reflux disease.

Seroquel maintained its strong position as the number one prescribed atypical anti-psychotic on the market, with sales up 5% to $3,015 million (2007: $2,863 million). Seroquel posted total prescription growth of 6.6% with an increase of one million prescriptions, outpacing the rate of market growth for anti-psychotics by almost two points, leading the market in absolute total prescription growth. During the year, the FDA approved Seroquel for the maintenance of bipolar disorder as adjunct therapy to lithium or divalproex. The FDA also approved Seroquel XR for the depressive episodes of bipolar disorder, the manic or mixed episodes associated with bipolar I disorder (as either monotherapy or adjunct therapy to lithium or divalproex), and for maintenance treatment of bipolar disorder as adjunct therapy to lithium or divalproex.

Supplemental new drug applications (sNDAs) were submitted to the FDA for use of Seroquel XR in adult patients for major depressive disorder (MDD) and generalised anxiety disorder (GAD). In December 2008, we received a Complete Response Letter from the FDA related to the MDD submission, while the GAD submission remains under review. We also submitted an sNDA to the FDA for use of Seroquel for treatment of schizophrenia in 13 to 17 year olds and for treatment of acute manic episodes of bipolar I disorder for 10 to 17 year olds. The US Prescribing Information for Seroquel and Seroquel XR is being updated to include new safety information regarding use in children and adolescents. Seroquel and Seroquel XR are not approved currently for use in paediatric patients under 18 years of age.

Crestor sales were up 18% to $1,678 million (2007: $1,424 million) with a total prescription growth of 10.8%, and was the only branded statin to grow in total prescriptions throughout 2008 despite generic pressure. The new indication to slow the progression of atherosclerosis in adult patients with elevated cholesterol, an important differentiator from other products in the cholesterol-lowering market, was successfully introduced and awareness amongst physicians is high. Under the terms of an agreement executed in November 2008, Abbott obtained the non-exclusive right to promote Crestor alongside AstraZeneca in the US (excluding Puerto Rico) increasing Crestor’s profile and share of voice. New data presented in November 2008 from the JUPITER study demonstrated that Crestor 20mg significantly reduced major cardiovascular (CV) events – defined by the study as the combined risk of myocardial infarction, stroke, arterial revascularisation, hospitalisation for unstable angina, or death from CV causes – by 44% compared to placebo among men and women with elevated hsCRP (high-sensitivity C-reactive protein) but low to normal cholesterol levels. hsCRP is a recognised marker of inflammation that is associated with an increased risk of atherosclerotic CV events. The JUPITER results also showed that for patients in the trial taking Crestor, the combined risk of heart attack, stroke or CV death was reduced by nearly half. We expect to file a regulatory submission with the FDA that includes the JUPITER data in the first half of 2009 and, if approved, will begin promotional activities within the approved labelling.

In another agreement with Abbott, we are investigating the fixed dose combination of the active ingredients in Crestor (rosuvastatin calcium) and Trilipix^™ (fenofibric acid) for the treatment of mixed dyslipidaemia. A Phase III trial in 2008 demonstrated that a combination of rosuvastatin calcium and fenofibric acid delivers greater improvements in treating all three key lipids (LDL, HDL and triglycerides) than the pre-specified monotherapy comparators. Currently, dyslipidaemia affects more than 100 million US residents and has been shown to play a pivotal role in the development of atherosclerosis and consequently, cardiovascular disease. Patients with mixed dyslipidaemia are expected to become more prominent segments of the dyslipidaemic population. Abbott obtained approval of Trilipix^™ in December 2008 as the first and only fibrate labelled for use with a statin.

To maximise the value of Merrem IV during the year we announced an agreement with Cubist, who will provide promotional and scientific affairs support for Merrem IV in the US and Puerto Rico.

Arimidex continued to perform well with sales up 9% to $754 million (2007: $694 million) for the full year. Arimidex continues to be the market leader in new prescriptions for branded hormonal treatments for breast cancer in the US.

In September 2008, an additional six-month period of exclusivity was granted to market Casodex for its licensed advanced prostate cancer indication until 1 April 2009.

Pulmicort Respules, the only inhaled corticosteroid for the treatment of asthma approved in the US for children as young as 12 months, showed strong sales growth with sales up 2% to $982 million (2007: $964 million). On 23 September 2008, the US District Court for the District of New Jersey denied a motion filed by Teva Pharmaceuticals Ltd. for summary judgment of no infringement in the Pulmicort Respules patent litigation. On 19 November 2008, the same court awarded a temporary restraining order against Teva Pharmaceuticals after Teva launched its generic product ‘at risk’ on 18 November 2008. On 25 November 2008, the parties settled the matter and AstraZeneca granted Teva a licence to launch its generic product in late 2009.

In its first full year after launch in June 2007, Symbicort Rapihaler (pMDI) continued to deliver steady growth with sales up 410% to $255 million (2007: $50 million). Widespread physician experience and growing appreciation of the differentiating feature of control plus fast onset has led to the product surpassing a 10% new prescription share of the inhaled corticosteroid/long acting beta agonist market. Symbicort is now prescribed to one in five of all patients that are new to combination therapy.

In 2008, two sNDAs were submitted to the FDA: one for the use of Symbicort in chronic obstructive pulmonary disease and another for its use in paediatric asthma for ages six to 12. In October 2008, the pMDI device was enhanced with an actuation counter.

Synagis is the only FDA-approved monoclonal antibody (MAb) to help protect high-risk babies against severe Respiratory Syncytial Virus (RSV) disease. In its first full year in AstraZeneca, sales in the US were $923 million.

In 2008, distribution agreements continued with Par Pharmaceutical for all available strengths of generic metoprolol succinate. Also, Ranbaxy Pharmaceuticals began distribution of authorised generics of both felodipine and 40mg omeprazole.

Currently, there is no direct government control of prices for commercial prescription drug sales in the US. However, some publicly funded programmes – such as Medicaid and TRICARE (Department of Veterans Affairs) – have statutorily mandated rebates that have the effect of price controls for these programmes. Additionally, pressure on pricing, availability and utilisation of prescription drugs for both commercial and public payers continues to increase, driven by, among other things, an increased focus on generic alternatives. Primary drivers of increased generic use are budgetary policies within healthcare systems and providers, including the use of “generics only” formularies, and increases in patient co-insurance or co-payments. While it is unlikely that there will be widespread adoption of a broad national price control scheme in the near term, there will continue to be increased attention to pharmaceutical prices and their impact on healthcare costs for the foreseeable future.

In the current political climate, policymakers are likely to consider healthcare reform a top priority. The reauthorisation of the State Childrens’ Health Insurance Program (SCHIP), a joint federal-state programme to expand healthcare coverage (including prescription drug coverage) for qualifying children, is poised to be one of the first healthcare reform proposals debated in the 111th Congress. A sustained focus on containing prescription drug costs is also likely, which could include proposals to allow the government to negotiate Medicare Part D prices directly with the pharmaceutical industry, increase manufacturers’ Medicaid drug rebate payments under the Medicaid drug rebate statute, and/or expand Medicaid rebates for patients who qualify for both Medicaid and Medicare (so-called ‘dual eligibles’). Additionally, there could be efforts to pass legislation implementing comparative effectiveness research requirements and/or legislation allowing for the commercial importation of drugs into the US from selected countries by certain individual consumers, pharmacies and drug wholesalers. Finally, proposals that would require disclosure of payments to healthcare professionals (eg for speaker contracts) are also being considered at the state and federal levels.

In its third year of operation, the Medicare Part D prescription drug programme maintained high levels of enrollment and beneficiary satisfaction, achieved prescription volume growth similar to other mature markets and provided access to our medicines for a large segment of the patient population. Through the AZ&Me Prescription Savings Programme for Patients with Medicare Part D, AstraZeneca provides prescription access to financially needy Medicare D beneficiaries. Although difficult to quantify, Medicare Part D has had an indirect effect on pricing in the broader US market. Despite the pricing challenges, overall access in key accounts was maintained or improved in 2008. It is difficult to predict fully the longer-term effects of this initiative on our business.

We continue to support My Medicare Matters, a community based outreach and education programme, in partnership with the National Council on Aging. Funding from AstraZeneca also supports MyMedicareCommunity.org, an on-line community for grass roots organisations serving people with Medicare. During 2007 and 2008, we supported a pilot grant programme focused on testing new approaches to finding and enrolling eligible people in the Medicare’s Low-Income Subsidy (LIS) programme. Over 40,000 LIS applications were submitted as a result of these demonstration projects.

Additionally, AstraZeneca has been providing patient assistance to the uninsured for 30 years and, in the last six years, has provided more than $3 billion in savings to more than one million patients in the US and Puerto Rico. Last year alone, we provided more than $612 million in savings to approximately 440,000 people without drug coverage (approximately 2.7 million prescriptions).

CANADA

Despite the entry of the generic forms of Seroquel IR, sales in Canada increased by 8% (+11% reported) to $1,275 million (2007: $1,145 million). Combined sales of Crestor, Nexium, Seroquel and Atacand were up 18% to over $864 million (2007: $713 million) with Crestor, Seroquel and Nexium among the top 20 prescription products in Canada by sales.

We remain the second largest brand name pharmaceutical company in Canada. Crestor maintained its number two ranking in the statin market and was the fastest-growing product in both new and total prescription segments (25.9% and 32.0% growth respectively). Crestor is also the third largest product in Canada by sales. Together, Seroquel XR and Seroquel IR remain the leaders in new and total prescriptions within the atypical anti-psychotics market. Atacand continues to outperform the anti-hypertensive market, with total prescription growth of over 15.0% compared with market growth of only 7.4%. Several key regulatory approvals were achieved in Canada in 2008. Canada was the first country in which we gained regulatory approval for Seroquel XR for the treatment of bipolar mania, with Seroquel XR and Seroquel IR also approved for the treatment of bipolar depression (approvals were received eight months and five months respectively ahead of standard Health Canada review timelines). In addition, a new tablet strength for Atacand (32mg) was approved by Health Canada.

Organisational efficiencies were gained with the closure of the Canadian packaging plant and transfer of product packaging to the Newark, Delaware facility, and further efficiencies were obtained through the movement to common North American technology platforms.

The Canadian government has instituted a Health Technology Assessment appraisal system through their Common Drug review process which rejects almost six out of 10 new medications. The Patented Medicine Prices Review Board has the role of setting the maximum non-excessive price in the market. For patients to gain optimal access to medicines, they then need to be listed on provincial formularies. This long process means patients in Canada can typically wait over two years following the regulatory approval for access to be granted.

The different provinces have adopted different approaches to pharmaceutical funding, from one end of the continuum in Quebec with more open access to more restricted access, therapeutic substitution and price tendering on the horizon in British Colombia. The trend in Canada indicates provinces will increase their access restrictions and drive prices down while the complex reimbursement system will continue to result in access delays.

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