AstraZeneca Annual Report and Form 20-F Information 2008

Established Rest of World

Sales in our Established Rest of World Markets increased by 2% (+9% reported), with good growth from Crestor, Seroquel and Symbicort and our oncology products, together with Synagis, offsetting declines in sales of our proton pump inhibitors in Western Europe.

WESTERN EUROPE

In Western Europe, we saw a flat market with overall growth of 1% (+7% reported). This reflected decreasing sales in France (down 1%, +7% reported), Germany (down 2%, +6% reported), Italy (down 6%, +2% reported) and Spain (down 8%, -1% reported), partly offset by strong growth in the UK (up 8%, +2% reported). Sales in established European markets were mainly impacted by the loss of patent/marketing exclusivity on Casodex, by government initiatives to contain drug expenditures and by the loss of sales due to an ageing portfolio of mature brands. These impacts were partly offset by continued strong performance of key products (mainly Crestor and Seroquel).

We have continued with our programme of resource management in Western Europe and reduced costs by $159 million and headcount by 618 during 2008.

Overall our sales in France were down 1% (+7% reported) to $1,922 million (2007: $1,794 million). The strong performance of Crestor and Nexium, which gained significant market share from competitors, was offset by the loss of patent/marketing exclusivity expiry for Casodex.

In Germany, sales were down 2% (+6% reported) to $1,307 million (2007: $1,233 million), mainly due to the Casodex patent/marketing exclusivity expiry and the government restriction on access to Nexium leading to a reduction in sales of 34% over last year. Seroquel continued to grow well with 27% growth (+38% reported) reaching 29.5% of the market for atypical anti-psychotics.

In the UK, sales were up 8% (+2% reported) to $1,020 million (2007: $1,004 million) driven by Symbicort (+34%, +25% reported), Seroquel (+32%, +22% reported), and Arimidex (+8%, +1% reported). Many of our other brands also performed well with Merrem (+13%, +6% reported) being of particular note. Competition remained intense but our key brands gained market share in their respective segments. Especially strong were Seroquel and Symbicort achieving gains of 2.4 and 1.3 percentage points respectively. The UK Government and pharmaceutical industry have entered into ‘terms of reference’ discussions concerning potential changes to the pricing and reimbursement scheme. The impact of these changes is likely to be $90 million in 2009.

In Italy, Crestor performed strongly increasing its sales by 12% (+22% reported). The specialty care brands also showed good growth with Seroquel increasing sales by 19% (+28% reported) with 32.9% of the market for atypical anti-psychotics and Arimidex increasing sales by 12% (+21% reported) with 32.0% of the market for aromatase inhibitors and tamoxifen. However, overall sales declined by 6% (+2% reported) to $1,323 million (2007: $1,294 million) as a result of reference pricing at the regional level on PPIs and measures to control their prescribing by physicians, combined with Casodex patent/marketing exclusivity expiry.

In Spain, sales were down 8% (-1% reported) to $863 million (2007: $868 million) due to Symbicort (-7%, +1% reported) and generic competition for Casodex and Arimidex.

Synagis sales outside the US are undertaken through a subsidiary of Abbott Laboratories with revenue of $307 million ($169 million in the seven months from June to December 2007). We estimate that about 36% of sales arise in Western Europe, about 32% in Japan and over 7% in Canada. Strong growth has been recorded in Latin America in 2008.

Most governments in Europe directly intervene to control the price and reimbursement of medicines. The decision-making power of prescribers in Europe has been eroded in favour of a diverse range of payers. While the systems to control pharmaceutical spending vary, they all have had a noticeable negative impact on the uptake and availability of innovative medicines. Several governments have imposed price reductions and increased the use of generic medicines as part of healthcare expenditure control. Several countries are applying strict tests of cost-effectiveness of medicines, which has reduced access of European patients to medicines in areas of high unmet need. These and other measures all contribute to an increasingly tough environment for branded pharmaceuticals in Europe. However, the anticipated radical change in the UK pharmaceutical system towards direct government control of prices was abandoned. Parallel trading of branded pharmaceuticals continues to challenge the European pharmaceutical market; a report commissioned for the EU Commission acknowledged this and also highlighted the negative impact of parallel trading on patient safety.

In January 2008 AstraZeneca, together with several other companies, was the subject of an unannounced inspection simultaneous with the launch by the EU Commission (Commission) of a Sectoral Inquiry (Inquiry) into the pharmaceutical industry. The Inquiry relates to the introduction of innovative and generic medicines and covers commercial and other practices, including the use of patents. On 28 November 2008 the Commission published its preliminary report. The report does not identify wrongdoing by any individual companies but is stated to provide a factual basis for further consideration. The Commission has stated that it will commence individual investigations where there are indications that competition rules have been breached. The preliminary report focuses on a number of issues relating to competition in the EU, referring to strategies which the Commission believes pharmaceutical companies use to block or delay generic entry. Such strategies include: patent filings and enforcement; patent settlement agreements and other agreements; interventions before national regulatory authorities; and life-cycle management strategies.

A final report is expected in Spring 2009. AstraZeneca has been co-operating fully with the Commission and participating in European Federation for Pharmaceutical Industries and Associations activities.

JAPAN

In Japan, we were the fifth fastest-growing company amongst the top 15 pharmaceutical companies, maintaining our market ranking of number 12 in 2008. Strong volume growth from key products offset the biennial government review of downward drug prices to deliver sales up 4% (+18% reported) to $1,957 million (2007: $1,661 million). The key drivers of growth being the continued success of Crestor (+93%, +118% reported), the continued growth of Losec (+5%, +18% reported) and the increased penetration of Seroquel (+10%, +24% reported).

In Japan, there is formal central government control of prices by the Ministry of Health, Labour and Welfare (MHLW) and the pricing and reimbursement system has remained largely stable in the last few years. As expected, pharmaceuticals were subject to price reductions in April 2008. The long-term objective of the Japanese government is to raise generic volume share from 18.7% in 2007 to 30% by 2012; recent reforms have supported this goal by making substitution of a generic product for a branded product easier.

In 2008, the MHLW continued their push towards the acceptance of non-Japanese Asian data as part of the regulatory approval package for Japanese patients. Despite increasing budgetary pressures associated with an ageing population, they also publicly recognised the importance of the pharmaceutical industry and their own drive to reward innovation better in the future.

OTHER ESTABLISHED REST OF WORLD

In Australia and New Zealand, we delivered a strong sales performance with sales up by 15% (+18% reported) to $843 million (2007: $715 million). Both our primary care and specialist care portfolios continued to grow, driven mainly by sales growth for Crestor, Atacand and Nexium in primary care and by Seroquel and Arimidex in specialist care. On a CER basis, these five brands, Arimidex, Crestor, Seroquel, Atacand and Nexium, grew by 33% (+37% reported).

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