What science can do
AstraZeneca
Annual Report and Form 20-F Information 2021
We are a global, science-led, patient-focused
pharmaceutical company. We are tireless
in seeking to realise the potential of...
...what
science
can do.
Front cover and inside
front cover images:
Unlocking the potential of
the complement system.
The dysregulation of
the complement system,
an essential part of the
immune system, is a key
driver of many devastating
diseases. Targeting and
inhibiting the complement
system before it can trigger
tissue damage or destruction
can help restore balance.
We are committed to
continue unlocking the
potential of the complement
system, to discover new
life-changing therapies
for even more patients.
Use of terms:
In this Annual Report,
unless the context
otherwise requires,
‘AstraZeneca’, ‘the Group’,
‘we’, ‘us’ and ‘our’ refer
to AstraZeneca PLC and
its consolidated entities.
In this Annual Report we report on the progress
we made in 2021 in pushing the boundaries of
science to deliver life-changing medicines.
Our Strategic Report
How our disease areas, also known
as therapy areas, and business
performed in delivering our strategic
priorities in 2021.
See our Strategic Report from page 2.
Our Corporate Governance Report
How we are managed and take
decisions, including our report
on Directors’ remuneration.
See our Corporate Governance Report from page 71.
Our Financial Statements
and Additional Information
Detailed information on our nances,
as well as information for shareholders
and readers of this Annual Report.
See our Financial Statements from page 125
and Additional Information from page 210.
Our Supplements
Detailed information on our
Development Pipeline, Patent Expiries
and Key Marketed Products and Risk.
See our website,
www.astrazeneca.com/annualreport2021.
Welcome
Corporate Governance
Chair’s Introduction
72
Corporate Governance Overview
73
Board of Directors
74
Senior Executive Team
76
Corporate Governance Report
77
Nomination and Governance
Committee Report
86
Science Committee Report
88
Sustainability Committee Report
89
Audit Committee Report
90
Directors’ Remuneration Report
98
Financial Statements
Preparation of the Financial
Statements and Directors’
Responsibilities
126
Auditors’ Report
127
Consolidated Statements
134
Group Accounting Policies
138
Notes to the Group Financial
Statements
145
Group Subsidiaries and
Holdings
197
Company Statements
202
Company Accounting Policies
204
Notes to the Company
Financial Statements
206
Group Financial Record
209
Additional Information
Shareholder information
211
Directors’ report
213
Sustainability supplementary
information
216
Task force on Climate-related
Financial Disclosures Statement
217
Trade Marks
223
Glossary
224
Cautionary statement regarding
forward-looking statements
228
Strategic Report
AstraZeneca at a Glance
2
Chair’s Statement
4
Chief Executive Ocer’s Review
5
Healthcare in a Changing World
7
Business Model and
Life-cycle of a Medicine
10
Our Strategy and
Key Performance Indicators
12
Disease Area Review
16
>
Oncology
16
>
BioPharmaceuticals
19
–
Cardiovascular,
Renal & Metabolism
20
–
Respiratory & Immunology
22
>
Rare Disease
24
>
Other Medicines and
COVID-19
27
Business Review
30
Risk Overview
48
Financial Review
52
Financial highlights
Total Revenue*
Up 41% at actual rate of exchange to
$37,417 million (up 38% at CER), comprising
Product Sales of $36,541 million (up 41%;
38% at CER) and Collaboration Revenue
of $876 million (up 20%; 20% at CER)
Net cash ow from operating activities
Up 24% at actual rate of exchange to
$5,963 million
2021
2020
2019
$26,617m
$24,384m
$37,417m
$3
7
.4bn
$5,963m
$4,799m
$2,969m
2021
2020
2019
$6.0bn
Reported operating prot
Down 80% at actual rate of exchange to
$1,056 million (down 70% at CER)
Core operating prot
Up 35% at actual rate of exchange to
$9,928 million (up 41% at CER)
2021
2020
2019
$1,056m
$5,162m
$2,924m
$1.1bn
$9,928m
$7,340m
$6,436m
2021
2020
2019
$9.9bn
Reported EPS
Down 97% at actual rate of exchange to $0.08
(down 84% at CER)
Core EPS
Up 32% at actual rate of exchange to $5.29
(up 37% at CER)
2021
2020
2019
$0.08
$2.44
$1.03
$0
.
08
2021
2020
2019
$5.29
$4.02
$3.50
$5.29
Denotes a scale break. Throughout this Annual Report,
all bar chart scales start from zero. We use a scale break
where charts of a dierent magnitude, but the same unit
of measurement, are presented alongside each other.
For more information in relation to the inclusion of
Reported performance, Core nancial measures and
constant exchange rate (CER) growth rates as used in this
Annual Report, see the Financial Review from page 52
and for more information on the reconciliation between
Reported and Core performance, see the Reconciliation
of Reported to Core results in the Financial Review on
page 56.
* As detailed from page 139, Total Revenue consists of Product Sales and Collaboration Revenue.
Key
For more information
within this Annual Report
For more information, see
www.astrazeneca.com
BV
information independently
assured by Bureau Veritas
This Annual Report is also available on our website,
www.astrazeneca.com/annualreport2021.
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AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Contents
Contents
Inspired by our Values and what science can do,
we are focused on accelerating the delivery of
life-changing medicines that create enduring
value for patients and society.
Our strategic
priorities
Our Strategy and
Key Performance
Indicators, see from
page 12.
Our priorities reect
how we are working
to deliver our growth
through innovation
strategy and achieve
our Purpose of
pushing the
boundaries of science
to deliver life-changing
medicines.
Science and
innovation-led
Development,
see from page 32.
Supplement, see
www.astrazeneca.com/
annualreport2021.
Distinctive R&D
capabilities
We use our
distinctive scientic
capabilities to
deliver a pipeline
of life-changing
medicines.
177
projects in our development pipeline
177
171
167
2021
1
2020
2019
1
Global
R&D centres
Cambridge,
UK
Gaithersburg,
MD, US
Gothenburg,
Sweden
Other R&D centres
andoces
South San Francisco, CA, US
New York, NY, US
New Haven, CT, US
Boston, MA, US
Alderley Park and
Maccleseld, UK
Shanghai, China
Osaka, Japan
A diversied
portfolio with
broad coverage
across primary,
specialty care
and rare disease
(Product Sales)
Oncology
We are leading a
revolution in
oncology to redene
cancer care.
BioPharmaceuticals
Creating a life
without limits for
billions of people
living with chronic
diseases.
Rare Disease
Transforming the
lives of people
aected by rare
diseases and
devastating
conditions.
Other Medicines
We have medicines
and vaccines in other
disease areas that
have an important
impact for patients.
COVID-19
Helping to change
the course of the
pandemic with our
vaccine and a
long-acting antibody.
Disease Area Review,
see from page 16
and Research &
Development, see
from page 32.
$13,048m
36% of total
2020: $10,850m
2019: $8,667m
Sales growth of 20%
(18% at CER)
Cardiovascular,
Renal & Metabolism
$8,020m
22% of total
2020: $7,096m
2019: $6,906m
Sales growth of 13%
(10% at CER)
$3,070m
8% of total
Revenue includes Alexion
sales from 21 July 2021
$2,367m
6% of total
2020: $2,585m
2019: $2,601m
Sales decline of 8%
(10% at CER)
$4,002m
11% of total
2020: $2m
Respiratory &
Immunology
$6,034m
17% of total
2020: $5,357m
2019: $5,391m
Sales growth of 13%
(9% at CER)
1. Accelerate
Innovative
Science
2. Deliver Growth
andTherapy Area
Leadership
3. Be a Great
Place to Work
2
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
AstraZeneca
at a Glance
Global strength, with balanced
presence across regions
(Product Sales)
Our Commercial Regions, see
from page 36.
Product Sales
by Disease Area
Product Sales
by reporting region
Commitment to our people
A focus on inclusion and diversity,
as well as lifelong learning and
development.
People, see from page 41.
83,100
employees
2020: 76,100
2019: 70,600
48.1%
of our senior
roles are lled
by women
87%
of employees
believe strongly in
AstraZeneca’s
future direction
and key priorities
78%
of employees believe
there is eective
collaboration
between teams
Commitment to society
We recognise the interconnection
between our business, the needs
of society and the limitations of
our planet. We are harnessing the
power of science and innovation
to deliver a positive impact to
society, healthcare systems and
the environment through actions
for the long term.
Sustainability, see from page 44.
Priority
1
Access to healthcare
Increasing access to
life-saving treatments,
promoting prevention,
and strengthening
global healthcare
resilience and
sustainability.
Priority
2
Environmental
protection
Accelerating the
delivery of net-zero
healthcare, managing
our environmental
impact, and investing
in nature and
biodiversity.
Priority
3
Ethics and
transparency
Ensuring ethical,
open and inclusive
behaviour across
our organisation
and value chain.
84%
of employees say
they understand their
contributions to our
sustainability
priorities.
GLOBAL
100
202 2
T H E W O R L D ' S M O S T S U S T A I N A B L E C O R P O R A T I O N S
7th overall
A List for Climate
Change and Water
Security
World and Europe
constituent
Global 100 Most
Sustainable
Corporations in
the World 2021
Capital allocation priorities
After providing for reinvestment
in the business, supporting the
progressive dividend policy and
maintaining a strong, investment-
grade credit rating, we keep under
review potential investment in
value-enhancing opportunities.
Financial Review, see from page 52.
Dividends
$3,856m
2020: $3,572m
2019: $3,592m
R&D expenditure
(Reported)
$9,736m
2020: $5,991m
2019: $6,059m
Credit rating
(Standard & Poor’s)
A-
Long term:
Stable outlook
Credit rating
(Moody’s)
A3
Long term:
Negative outlook
Oncology
36
%
BioPharmaceuticals
38%
Rare Disease
8%
Other Medicines
and COVID-19
17
%
Emerging Markets
33
%
US
33%
Europe
21%
Established Rest
of World
13
%
Oncology. See from page 16. Rare Disease. See from page 24.BioPharmaceuticals. See from page 19.
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AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
AstraZeneca at a Glance
$2.87
Full-year dividend of
$2.87 per share (2020: $2.80)
We continued on our strong growth trajectory
in 2021 and have condence in our prospects
for future growth and cash generation.
Continuing the successful implementation
of AstraZeneca’s ‘growth through innovation’
strategy in 2021 ensured we were able to
deliver for patients around the world and,
thereby, our shareholders. More broadly, I am
proud of the role we are playing in contributing
to the health of society and the planet. I am
grateful to Pascal, Senior Executive Team
members and everyone in AstraZeneca,
whose efforts made this all possible.
A landmark year
2021 was a landmark year for the Company as
we continued on our strong growth trajectory,
with industry-leading R&D productivity, thirteen
blockbuster medicines and the acquisition of
Alexion. We also delivered on our promise of
broad and equitable access to our COVID-19
vaccine. The positive news from our pipeline,
including FDA emergency use authorisation
of
Evusheld
and the approval of
Tezspire
,
support the outlook for 2022.
Reflecting increased confidence in future
growth and cash generation, the Board intends
to increase the annualised dividend by $0.10
to $2.90, and has approved a second interim
dividend for 2021 of $1.97, payable in March
2022. This results in a total dividend declared
for 2021 of $2.87.
Alexion acquisition
Our positive outlook also stems, in part,
from our transformative acquisition of Alexion
which completed in July. We are already
seeing the benefits across AstraZeneca in
terms of scientific collaboration and
expanding our Rare Disease business which
is accelerating delivery of our strategy.
Our new Chief Financial Officer, Aradhana
Sarin joined the Board in August from Alexion.
Aradhana is a talented successor to Marc
Dunoyer who stood down from the Board
to become Chief Executive Officer, Alexion
and Chief Strategy Officer, AstraZeneca. I am
grateful to Marc for his significant contribution
and the Board is pleased he is staying on as a
member of the Senior Executive Team (SET).
Also in August and following the Alexion
acquisition, we welcomed Andreas Rummelt
to the Board as a Non-Executive Director.
As a former member of the Board of Alexion,
he has deep knowledge of its rare diseases
business and extensive experience of the
pharmaceutical industry including technical
R&D, manufacturing and quality assurance
expertise.
Meeting global challenges
With the efforts that many, including
AstraZeneca, are making to overcome
COVID-19, it’s time to plan for a world beyond
the pandemic. I believe there are lessons we
can learn about how business, academia
and government, by working together, can
overcome major global challenges such as
the climate crisis and the provision of
sustainable healthcare.
The pandemic is also reinforcing the fact that
companies succeed best when they are truly
part of society, when they are driven by their
purpose; a purpose that is sustained by the
profit we make and our returns to you, our
shareholders. This is at the heart of how
AstraZeneca operates and why I am so
proud of our relentless pursuit of the delivery
of life-saving medicines and our wider
contribution to society and the planet.
Succession planning
I will have served as a Director for ten years by
April 2022. Typically, non-executive directors
would step down after nine years’ tenure, in
line with UK corporate governance best
practice. Last year, the Board asked me
to seek re-election at the AGM to lead the
Board’s oversight of completion of the
acquisition of Alexion. Again this year,
your Board believes it would be in the best
interests of shareholders for me to serve
as Chair for one further year, to facilitate
succession planning and the transition to
a new Chair, and has asked me to seek
re-election at the AGM in April 2022. I am
honoured and happy to accept the Board’s
request again, mindful of my intention to retire
from the Board at the end of the AGM in 2023.
Succession planning for the role of Chair
has continued to be a focus of the Nomination
and Governance Committee’s work during
2021, with a search that is proceeding well
led by Philip Broadley, senior independent
Non-Executive Director, as noted in the
Committee’s report from page 86.
Meeting again
In November, it was a pleasure to be able to
meet in person to celebrate the unveiling of
our Discovery Centre in Cambridge, UK with
HRH The Prince of Wales and guests from
across business, academia and government.
While much can be achieved by working and
meeting virtually, there is also value in being
able to meet in person. For the first time in
two years, we are planning to hold this year’s
AGM in person and I look forward to meeting
as many of you there as possible.
Leif Johansson
Chair
“ Reecting this
increased
condence, the
Board has approved
an increase in the
annualised
dividend.”
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AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Chair’s
Statement
$ 37.4bn
Total Revenue
1
(2020: $26.6bn)
22
Regulatory approvals and
authorisations in major markets
José Baselga: a visionary leader
2021 began, however, on a very sad note
with the untimely death of José Baselga,
my colleague and friend. José was a brilliant
scientist, legendary oncologist and visionary
leader. He had a passion for what he did and
was always chasing the next and best therapies.
He transformed AstraZeneca’s Oncology R&D
and accelerated our innovative science – one
of the drivers behind our success.
During his brilliant career, José changed the
landscape of cancer treatment and thousands
of patients have benefited. It was José’s
passion and determination when he was at
AstraZeneca that drove the development of
our pipeline and the recruitment of many
incredibly talented scientists.
One of the medicines José championed is
Enhertu
. Unprecedented results from our
DESTINY trials during 2021 more than justify
his passion for this unique medicine. The trials
both confirm
Enhertu
’s potential as a new treatment for HER2-positive breast cancer
and open the door to its potential use in
earlier lines of treatment and other HER2
expressing tumours.
Together with patients around the world, all of
us at AstraZeneca owe José a debt of gratitude
and we will continue to build on his legacy.
In 2021, despite the ongoing challenge of the
COVID-19 pandemic, AstraZeneca continued
to advance delivery of our strategy – supplying
our medicines to patients, as well as launching
new ones and expanding into new indications.
It was also an outstanding year for our
pipeline in progressing the next wave of
science and delivering trial results that have
the potential to redefine care.
During the year, we welcomed our colleagues
from Alexion to the Group. With their expertise
in rare diseases, not only is our science base
and drive for growth strengthened, but also,
more importantly, our ability to make a
difference to patients around the world. At the
same time, we contributed to the health of
society and the planet, notably in our efforts
to tackle the biggest public health crisis of our
lifetime and reduce our carbon footprint. All of
this was underpinned by an organisation living
our Values, leading change and transforming
the way we work.
I can only touch on a few of our achievements
in this Review but, taken together, our efforts
ensured we continued to deliver for
shareholders in 2021. Total Revenue grew
by 41% (38% at CER) to $37,417 million,
including COVID-19 vaccine revenues.
Excluding COVID-19 revenue, growth was
26% (23% at CER) and was well balanced
across our disease areas. We saw double-digit
growth in all major regions, including Emerging
Markets despite some headwinds in China.
We also achieved 14 positive Phase III
readouts across nine medicines during the
year, and 22 regulatory approvals and
authorisations in major markets including
five new molecular entities (NME).
2021 was another remarkable year for AstraZeneca
in delivering for patients and one in which we played
a leading role in changing the course of the pandemic.
“
In July, we
completed our
landmark
acquisition of
Alexion which
established our rare
disease capability.”
José Baselga
1959-2021,
Executive Vice-President,
Oncology R&D
1
5
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Chief Executive Ocer’s Review
Chief Executive
Ocer’s Review
A vaccine for the world
Patients have also benefited from
Vaxzevria
,
our COVID-19 vaccine, which was first
approved for emergency supply in the UK
at the end of 2020. Together with our global
partners, we supplied about 2.5 billion vaccine
doses to more than 180 countries during the
year. Of these, approximately two-thirds went
to low- and lower-middle-income countries,
and more than 247 million were delivered to
130 countries through the COVAX Facility in
2021. It is estimated that
Vaxzevria
has so far helped prevent 50 million cases of COVID-19,
five million hospitalisations, and helped save
more than one million lives. It was an honour
to have this achievement recognised when we
jointly received the 2021 Roy Vagelos Pro Bono
Humanum Award for Global Health Equity at
the Prix Galien USA Awards Ceremony.
Vaccines are not easy to manufacture and
scaling up supply brought challenges.
Nevertheless, I am proud of the speed with
which we were able to build twelve regional
supply chains around the world, relying on our
own manufacturing capacity, and sharing our
know-how with more than 20 collaborators.
For the future, we remain committed to
providing broad and equitable global access
to our vaccine.
In addition to delivering our vaccine to the
world, our teams rapidly progressed the
development of
Evushel d
, a long-acting
antibody (LAAB) combination against
COVID-19. It was the first LAAB combination
to demonstrate benefit in both preventing and
treating COVID-19 and received Emergency
Use Authorization from the FDA in December
2021. This authorisation, which has been
followed by similar authorisations in other
countries, underlines the potential of
Evu sheld
to make a significant difference for people
most in need.
Alexion: AstraZeneca Rare Disease
In July, we completed our landmark acquisition
of Alexion which established our rare disease
capability. Rare diseases represent a
significant unmet medical need and we believe
Alexion’s innovative complement-biology
platform and robust pipeline will continue to
pioneer the discovery and development of
medicines for these often devastating
conditions. It represents a high-growth
opportunity and we are already starting to see
the delivery of this potential with
Ultomiris
and
the other medicines in the Alexion portfolio,
supported by developments such as the
acquisition of Caelum Biosciences and their
potentially first-in-class mAb for the treatment
of amyloid light-chain (AL) amyloidosis.
Moreover, the rest of AstraZeneca can benefit
from applying Alexion’s complement-biology
platform across our broader early stage
pipeline and Alexion’s R&D team can take
advantage of the research capabilities
available at AstraZeneca to discover new
treatments for rare diseases. Patients will also
benefit from the opportunity to make existing
and future rare disease medicines available in
many countries where AstraZeneca already
has a strong presence, such as China, where
we have established a Rare Disease Unit.
Bridges are already being built between
Alexion and the rest of AstraZeneca as we
deliver on the full potential of this exciting
addition to our range of capabilities.
Addressing the challenge
of climate change
In addition to understanding what science
can do for patients, AstraZeneca’s team
understands the part we need to play in
securing the future of the planet. We
recognise that the climate crisis is a public
health emergency for which there is no
vaccine, and no one is immune. As part of
our efforts, we are a founding partner of
HRH The Prince of Wales’ Sustainable
Markets Initiative (SMI), a global ‘coalition of
the willing’ who share the vision around the
need to accelerate global progress towards
a sustainable future. As part of that coalition,
we called for coordinated, accelerated action
to tackle climate change ahead of the G7
Leaders’ Summit in Cornwall, UK in June.
Those efforts continued in November at the
26th UN Climate Change Conference in
Glasgow, UK, when I was proud to launch the
SMI Health Systems Taskforce as its Champion.
Our ambition is to accelerate the delivery of
net-zero, patient-centric healthcare.
Unveiling our Discovery Centre
Also in November, it was a privilege to host
HRH The Prince of Wales to unveil our
Discovery Centre (DISC) in Cambridge, UK.
A state-of-the-art R&D facility, DISC can
accommodate more than 2,200 research
scientists and is built to the world’s highest
environmental standards.
DISC is designed to foster collaboration
and develop the next generation of science
leaders. By accelerating AstraZeneca’s
industry-leading levels of productivity, it can
drive the next wave of scientific innovation
and power the next stage of our growth.
Working for inclusion and diversity
The next wave of innovation will only come
from organisations that are both diverse and
inclusive. While there is always room for
improvement, I am proud of the progress we
have made, particularly in ensuring gender
balance in our leadership teams.
I was therefore delighted when Susan
Galbraith and Aradhana Sarin joined the
Senior Executive Team during the year. Susan
was appointed in June to lead Oncology R&D
in succession to José. She is an outstanding
oncologist and leader with a track record of
delivering breakthrough science and
medicines that have transformed care and
improved the lives of patients.
Aradhana assumed the role of Chief Financial
Officer in August following the completion of
the Alexion acquisition. She has more than
20 years of professional experience spanning
operating roles at Alexion and advisory roles
at global financial institutions. Marc Dunoyer,
our previous CFO, has taken over as Alexion’s
CEO and I’d like to pay tribute to him for his
tremendous achievements since he joined
AstraZeneca, and thank him personally for his
outstanding support, which continues in his
role as Chief Strategy Officer.
Indeed, I would like to close by thanking
everyone at AstraZeneca. Without their
continuing and tireless contributions, none
of our many achievements in 2021 would have
been possible and, with them, I have every
confidence in delivering the next chapter in
our success.
Pascal Soriot
Chief Executive Ocer
The Terra Carta Seal recognises global
corporations that are demonstrating their
commitment to, and momentum towards,
thecreation of genuinely sustainable markets.
For more information on our strategy,
see Our Strategy and Key Performance
Indicators from page 12.
6
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Chief Executive Ocer’s
Review
continued
The continued growth of the
healthcare sector presents us with
both challenges and opportunities
that require us to adapt, innovate
and build trust.
Our sector’s traditional focus
on treatment is shifting towards
prevention and early intervention.
Meanwhile, social, economic and
political challenges remain in
meeting unmet medical need.
Impact of global trends
Global trends continue to increase the demand for healthcare.
The COVID-19 pandemic has highlighted challenges and accelerated
healthcare innovation and change.
Global economic recovery followed by slowdown
Increasing burden of chronic disease
Growing and ageing populations
Following a strong rebound in 2021, the global
economy is entering a pronounced slowdown
amid fresh threats from COVID-19 variants
and a rise in inflation, debt, and income
inequality that could endanger the recovery in
emerging and developing economies. Global
growth is expected to decelerate markedly
from 5.5% in 2021 as pent-up demand
dissipates and as fiscal and monetary
support is unwound across the world. This
will coincide with a widening divergence in
growth rates between advanced economies
and emerging and developing economies.
(Source: World Bank)
Non-communicable diseases (NCDs) kill
41 million people each year, equivalent to 71%
of all deaths globally. NCDs disproportionately
affect people in low- and middle-income
countries where more than three quarters
of global NCD deaths occur.
People of all age groups, regions and
countries are affected by NCDs. The risk
factors contributing to NCDs include diet,
smoking and lack of exercise.
(Source: WHO)
People worldwide are living longer. By 2030,
one in six people will be aged 60 years or
over. Between 2015 and 2050, the world’s
population of people aged above 60 will
nearly double to 2.1 billion. While this shift
in distribution towards older ages started
in high-income countries, it is now low- and
middle-income countries that are experiencing
the greatest change. By 2050, two thirds of
the world’s population over 60 years will live
in low- and middle-income countries.
(Source: WHO)
4.1%
Global GDP is
forecast to grow
by 4.1% in 2022,
slowing further
to 3.2% in 2023.
(Source: World Bank)
1bn
There are now more
than one billion
people worldwide
aged 60 and over.
Most of them live
in low- and middle-
income countries.
(Source: WHO)
77%
77% of all NCD
deaths are in low-
and middle-income
countries.
(Source: WHO)
-4%
By 2023, output
in emerging and
developing
economies will
remain 4% below its
pre-pandemic trend.
(Source: World Bank)
426m
The number of
people aged 80 or
older is expected to
triple between 2020
and 2050 to reach
426 million.
(Source: WHO)
15m
More than 15 million
people aged 30–69
years die from NCDs
every year. 85% of
these ‘premature’
deaths occur in
low- and middle-
income countries.
This compares with
some 5.7 million
people who have died
from COVID-19 since
the start of the
pandemic.
(Sources: WHO and
Johns Hopkins)
Healthcare systems are having to meet increasing
demand, a task made more challenging by the
ongoing impact of COVID-19.
7
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Strategic Report
Corporate Governance
Healthcare in a Changing World
Healthcare in a
Changing World
While demographic and other changes are
driving an increased demand for healthcare,
continued advances in science and digital
technologies are driving innovation and
improvements in healthcare. One example
of this is the speed of vaccines development
in response to the COVID-19 pandemic.
At the same time, risks remain. For instance,
increasing demand is putting pressure on
healthcare budgets, exacerbated by the
impact of the pandemic, leading to downward
pressure on pricing. We also face regulatory
challenges and the loss of exclusivity and
genericisation.
These risks are explored further in the Risk Overview
from page 48 and Pricing and value of our medicines from
page 35.
AstraZeneca’s response to the trends we face is explored
further in Strategy and Key Performance Indicators from
page 12.
The pharmaceutical industry has historically
faced challenges in building and maintaining
its reputation and the trust of its stakeholders,
as a result of improper sales and marketing
practices by some companies. However, the
sector has the opportunity to increase public
confidence by delivering on transparent
commitments to ethical practices and good
governance. Initially, the rapid response and
mobilisation of resources to develop a vaccine
in response to COVID-19 contributed to an
increase in trust in scientific and medical
institutions, including the pharmaceutical
industry. However, the widespread sharing
of inaccurate or selective information has
undermined confidence in scientific data,
and trust has, in part, fallen away.
More generally, to be successful,
pharmaceutical companies will need to
be able to respond to the pressures and
demands made on them by patients and
caregivers, health authorities, payers,
policymakers and others.
Climate change affects many determinants of
health: clean air, safe drinking water, sufficient
food and secure shelter. For example, extreme
high air temperatures raise the levels of
pollutants in the air that exacerbate
cardiovascular and respiratory diseases.
Increasingly variable rainfall patterns are
likely to affect the supply of fresh water.
This can compromise hygiene and increase
the risk of diarrhoeal disease, which kills
over 500,000 children below the age of
five every year.
(Source: WHO)
250,000
Between 2030 and
2050, climate change
is expected to cause
approximately
250,000 additional
deaths per year from
malnutrition,
malaria, diarrhoea
and heat stress.
(Source: WHO)
Up to
$4bn
The direct damage
costs to health
(excluding costs in
health-determining
sectors such as
agriculture, water
and sanitation),
is estimated to be
between $2-4 billion
per year by 2030.
(Source: WHO)
Continued impact of COVID-19
The COVID-19 pandemic has driven changes
in health system spending that impact access
to medicines. For example, where hospital
beds were scarce, payers reallocated
resources and prioritised treatments that
could help keep patients out of hospital.
The pandemic also demonstrated that
when needed, healthcare systems can
move quickly to grant rapid access to
innovative new medicines, such as the
COVID-19 vaccines.
94%
94% of countries
reported one or more
disruptions to
essential healthcare
services one year
into the pandemic.
(Source: WHO)
The health impact of climate change
Growing importance of digital in healthcare
Data management in healthcare is moving
beyond storing data, to focusing on extracting
insights on population health management
and value-based care to improve health
outcomes and personalised healthcare.
Innovations in technology are allowing people
to monitor their own health and become active
participants in managing their healthcare. For
example, Internet of Things (IoT) applications
and technologies are influencing patient
engagement strategies and improving patient
interactions with healthcare systems.
$427bn
The digital health
market exceeded
$141.8 billion in 2020
and is estimated to
grow to more than
$426.8 billion by 2027.
(Source: Global
MarketInsights)
38x
The use of
telehealth has
increased 38
times from
pre-COVID-19
levels.
(Source: McKinsey)
8
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Healthcare in a
Changing World
continued
Estimated pharmaceutical sales and market growth to 2025
We expect developing markets,
including Africa, the
Commonwealth of Independent
States (CIS), the Indian
subcontinent and Latin America,
to fuel pharmaceutical growth.
Market growth in China is
expected to remain below
historical levels at a compound
annual growth rate of 4.5%. This
is due to the continued slowdown
of the major hospital sector.
4.2%
$
706bn
N
ort
h
Amer
ica4.3%
$
296bn
EU
6.7%
$
74bn
O
th
er
Eur
op
e
(
Non
-E
U
coun
tri
es;
including UK)
-
0.3%
$
85bn
J
apan
2.8%
$
18bn
Oc
eania
4.5%
$
263bn
Southeast
Asia
and
E
ast Asi
a
12.6%
$
109bn
L
a
tin Am
er
ica
5.7%
$
31bn
A
frica
8.6%
$
37bn
CI
S
4.5%
$
197bn
China
4.9%
$
24bn
Midd
le
Eas
t
10.9%
$
50bn
Indian
sub
co
nti
nent
Estimated pharmaceutical sales – 2025.
Data is based on ex-manufacturer prices
at CER. Source: IQVIA
Estimated pharmaceutical market
growth. Data is based on the compound
annual growth rate from 2020 to 2025.
Source: IQVIA Market Prognosis Global
2021 to 2025
A growing pharmaceutical sector
As a result of increased demand for healthcare, the pharmaceutical
sector continues to grow. Global pharmaceutical sales grew by 7.7%
in 2021. Global healthcare spending is projected to increase at an
annual rate of 4.8% from 2020 to 2025.
Global pharmaceutical sales
In 2021, Established Markets saw
an average revenue increase of
6.4% and Emerging Markets
revenue grew at 11.9%. The US,
Japan, China, Germany and
France are the world’s top five
pharmaceutical markets by 2021
sales. In 2021, the US had 46.8%
of global sales (2020: 46.8%;
2019: 46.5%).
2021
2020
2019
1,101
1,059
1,186
W
orl
d
(
$b
n)$
1,186bn
(+7.7%)
2021
2020
2019
115
115
118
Esta
b
lish
ed R
OW (
$bn
)$
118bn
(+2.0%)
2021
2020
2019
515
493
555
U
S
($b
n)
$
555
bn
(+7.6%)
2021
2020
2019
255
207
285
E
mer
ging
Mar
ke
ts
($bn)$
285bn
(+11.7%)
2021
2020
2019
216
207
228
Eu
rop
e (
$
bn
)
$
228
bn
(+6.0%)
Data based on world market sales using
AstraZeneca Market denitions on page 224.
Changes in data subscriptions, exchange
rates and subscription coverage, as well
as restated IQVIA data, have led to the
restatement of total market values for
prior years. Source: IQVIA, IQVIA Midas
Quantum Q3 2021 (including US data).
Reported values and growth are based
on CER. Value gures are rounded to the
nearest billion and growth percentages
are rounded to the nearest tenth.
9
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Healthcare in a Changing World
I
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Inputs
> Applying our
resources to
meet unmet
medical need
Outputs
> Improved health
> Returns to
shareholders
Our
Purpose
R
e
s
e
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r
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9
Inspired by our Values and what science
can do, we are focused on accelerating the
delivery of life-changing medicines that create
enduring value for patients and society.
We are committed to operating in a way
that recognises the interconnection
between business growth, the needs of
society and the limitations of our planet.
Our Purpose
We push the boundaries of science
to deliver life-changing medicines.
Our Purpose underpins everything we
do. It gives us a reason to come to work
every day. It reminds us why we exist as
a company. It helps us deliver benets to
patients and create value for shareholders.
Our Values
Our Values determine how we work
together and the behaviours that drive
our success. They guide our decision
making and dene our beliefs.
We follow the science.
Pushing the boundaries of science and
working creatively with partners and
collaborators.
We put patients rst.
Striving to understand patients’ needs
and considering them in every decision
we take.
We play to win.
Building high-performing, inclusive
and diverse teams and making the
right choices to win.
We do the right thing.
Employing high ethical standards
when carrying out all aspects of our
business globally.
We are entrepreneurial.
Acting with urgency, bravery,
resilience and taking smart risks.
Our Culture
Our Culture is dened by our shared
Values and Purpose. Accompanying
this, our commitment to sustainability,
performing as an enterprise team,
lifelong learning, and inclusion and
diversity makes us a great place to work.
Business Review, see from page
30
.
Who we are
Why AstraZeneca?
We invest resources to create nancial and
non‑nancial value, bringing benets to our
patients, our world and our business.
We are a global pharmaceutical business with a
science-led and patient-focused value proposition
committed to excellence in the research, development
and commercialisation of prescription medicines.
Our business activities span the
entire life-cycle of a medicine.
What we do to create nancial value
Investment
We invest in the discovery, development,
manufacturing and commercialisation of our
pipeline of innovative prescription medicines.
Revenue generation
We generate revenue from Product
Sales of our existing medicines and new
medicine launches, as well as from our
collaboration activities. Our focus is on
creating medicines that facilitate protable
future revenue generation, while bringing
benets to patients.
Reinvestment
We reinvest in developing the next
generation of innovative medicines and
in our business to provide the platform for
future sources of revenue in the face of
losses of key patents.
We also assess opportunities to invest in
value-enhancing additions to our portfolio.
10
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Business Model
and Life-cycle
of a Medicine
What does our business model require to be successful?
1. Undertake scientic research to
identify potential new medicines.
2. Pre-clinical studies in laboratory
and animals to understand if the
potential medicine is safe to
introduce into humans.
3. Phase I trials with small groups
of healthy human volunteers
(small molecules) or patients
(biologics) to understand how
the potential medicine is
absorbed into the body,
distributed and excreted.
>100m
Our main Disease Area medicines impact
more than 100 million patient lives annually.
In addition, AstraZeneca and our global
partners released for supply some 2.5 billion
Vaxzevria/Covishield
vaccine doses in 2021.
How we add value
Improved health
Continuous scientic innovation
isvitaltoachieving sustainable
healthcare,whichcreates value by:
>
Improving health outcomes and
transforming the lives of patients
who use our medicines.
>
Enabling healthcare systems to
reduce costs and increase eciency.
>
Improving access to healthcare and
healthcare infrastructure.
>
Helping develop the communities
in which we operate through local
employment and partnering.
Financial value
Revenue from our Product Sales and
collaboration activities generates
cash ow, which helps us:
>
Fund our investment in science and
the business to drive long-term value.
>
Follow our progressive dividend policy.
>
Meet our debt service obligations.
Launch phase – duration: 5–15 years
7. Launch new medicine while
continuously monitoring, recording
and analysing reported side eects.
8. Post-launch research and
development to further understand
the benet/risk prole of the medicine
and life-cycle management activities
to understand its full potential.
Post-exclusivity – duration: 20+ years
9. Patent expiry and generic
medicine entry.
4. Phase II trials on small- to
medium-sized groups of patients
to test eectiveness and
tolerability of the medicine and
determine optimal dose.
5. Phase III trials in a larger group
of patients to gather information
about eectiveness and safety
of the medicine and evaluate
the overall benet/risk prole.
6. Seek regulatory approvals for
manufacturing, marketing and
selling the medicine.
Life-cycle of a medicine
Research and development phases – duration: 5–15 years
A talented and diverseworkforce
We need to acquire, retain and develop
a talented and diverse workforce.
48.1%
of our senior roles
are lled bywomen
Commercialisation skills
We need a strong global commercial
presence and skilled people to ensure that
our medicines are available when needed
and that patients have access to them.
>130
countries where we sell our products
A leadership positioninscience
We need to achieve scientic
leadership if we are to deliver
life-changing medicines.
$9.7bn
invested in our
science in 2021
Intellectual property
For our investments to be viable,
we seek to protect new medicines from
being copied for a reasonable period
of time through patent protection.
>90
countries where we
obtained patent protection
Understand our stakeholders
We need to understand the factors
and issues that are most important
to the many dierent groups of
stakeholders with whom we interact.
>118,000
healthcare practitioner enquiries
responded to
A robust supply chain
We need a supply of high-quality
medicines, whether from our own
operations or our spend on the purchase
of goods, services and active
pharmaceutical ingredients.
$22.2bn
spent with suppliers
Eective collaborations
Business development, specically
partnering, supplements and
strengthens our pipeline and our
eorts to achieve scientic leadership.
>1,000
collaborations worldwide
Financial strength
We need to be nancially strong,
including having access to equity and
debt nancing, to bear the nancial risk
of investing in the life-cycle of a medicine
both internally and through acquisitions.
$6.0bn
net cash ow from operating activities
11
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Business Model and Life-cycle of a Medicine
Our acquisition of Alexion enables us to
capitalise on new opportunities, strengths
and synergies as we seek to accelerate
delivery of our strategy.
2021
2020
2019
$0.08
$2.44
$1.03
$0.08
Reported EPS
2021
2020
2019
$5.29
$4.02
$3.50
$5.29
Core EPS
2021
2020
2019
$5,963m
$4,799m
$2,969m
$5,963m
Net cash flow from operating activities
KPI key
Used for remuneration
of Executive Directors
Our KPIs and remuneration
Our KPIs are aligned to our strategic priorities
and are the indicators against which we
measure our productivity and success.
A number of the KPIs used in this section
are used to measure the remuneration of
Executive Directors and allow us to disclose
aggregated targets without disclosing
sensitive commercial information at the
individual KPI level. Any variances between
the KPI and values used in determining
For more information,
see Financial Review from page 52.
Eective delivery of our strategic priorities
will help us achieve our nancial targets.
Our capital allocation priorities include
investing in the business and pipeline,
maintaining a strong, investment-grade
credit rating, potential value-enhancing
business development opportunities, and
supporting the progressive dividend policy,
balancing opportunities for growth with an
appropriate level of cover.
remuneration are explained in the Directors’
Remuneration Report from page 98. Other
indicators used are now included in the
Business Review from page 30.
From 2021, a metric focusing on the delivery
of our Ambition Zero Carbon commitments
is included in our executive incentive
arrangements, which underlines the
importance we place on eliminating our
Scope 1 and Scope 2 greenhouse gas
emissions by 2025.
For more information,
see the Directors’
Remuneration Report
from page 98.
Our strategy is straightforward. We:
>
Are science and innovation led
>
Are focused on our chosen disease
areas: Oncology; BioPharmaceuticals
(comprising Cardiovascular, Renal &
Metabolism (CVRM) and Respiratory &
Immunology (R&I)); and Rare Disease
>
Have a diversied portfolio with broad
coverage across primary, specialty
care and rare disease
>
Have global strength with balanced
presence across regions
>
Have a commitment to people and society
We have three priorities designed to
deliver our strategy:
Achieve Group Financial Targets
1. Accelerate
Innovative Science
2. Deliver Growth
and Therapy
Area Leadership
3. Be a Great
Place to Work
Key Performance Indicators
Cash generation is a key driver of
long-term shareholder returns and
facilitates reinvestment in our
pipeline, which is critical for delivering
new medicines and future value.
Earnings per share (EPS) is an
important profitability metric and
a key driver of shareholder value.
For more information on our Core
measures, see the Financial Review
from page 52.
For details of how Achieve Group
Financial Targets are considered
when calculating the annual bonus,
see page 108.
Actual growth
2021 -97%
2020 +137%
2019 -40%
CER growth
2021 -84%
2020 +142%
2019 -44%
Actual growth
2021 +32%
2020 +15%
2019 +1%
CER growth
2021 +37%
2020 +18%
2019 0%
Actual growth
2021 +24%
2020 +62%
2019 +13%
12
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Our Strategy and
Key Performance
Indicators
2021
2020
2019
32
1
36
2
22
3
32
1
Pipeline progression events
2021
2020
2019
49
1
53
2
63
3
49
1
Regulatory events
1
26 against our Group scorecard for
determining annual bonus. 2021 total
includes Alexion.
2
25 against our Group scorecard for
determining annual bonus.
3
17 against our Group scorecard for
determining annual bonus.
1
37 against our Group scorecard for
determining annual bonus. 2021 total
includes Alexion.
2
43 against our Group scorecard for
determining annual bonus.
3
37 against our Group scorecard for
determining annual bonus.
Our prioritised initiatives
Accelerating the next wave of new molecular
entities (NMEs) and building our capabilities
in immunology and rare diseases.
Pursuing the next wave of disruptive R&D
platforms with new scientific modalities, such
as ProTACs epigenetics, oligonucleotides,
antibody drug conjugates and cell therapies,
as well as new technologies such as OMICs
and knowledge graphs.
Driving R&D productivity through clinical
trial excellence and the use of digital health,
artificial intelligence (AI), data-enabled R&D
that provide new insights, accelerated
processes and an improved patient
experience.
How our strategy responds
toglobaltrends
To ensure we are able to respond to the
increasing burden of chronic disease and
incorporate advances in science and digital
technologies, we are:
>
Developing an R&D culture of inspiring
people with curious minds, harnessing
data and technology, working seamlessly
and inclusively, and always learning
from patients.
>
Focusing on innovative science, a range of
drug modalities, emerging drug platforms
and new technologies in our chosen
disease areas.
>
Driving R&D productivity by focusing on
quality rather than quantity at all stages
of drug discovery and development, and
strengthening our ability to match targeted
medicines to patients who need them most.
>
Transforming our science and leveraging
technology, including the provision of
enhanced data and clinical insights,
as well as digital and AI approaches.
>
Collaborating with academia, governments,
industry, and scientific and patient
organisations to access the best science
and patient insights.
>
Seeking to attract the brightest minds and
creating an environment where science
can thrive.
How we progressed in 2021
Our science
>
Achieved 49 regulatory events: 27 NME
and major life-cycle management (LCM)
submissions and 22 approvals in major
markets (US, EU, China and Japan)
>
Secured 32 pipeline progression events:
9 NME Phase II starts/progressions and
23 NME and major LCM Phase III
investment decision
>
Our pipeline includes 177 projects, of which
161 are in the clinical phase of development.
>
At the end of the year, we had 16 NME
projects in pivotal trials or under regulatory
review covering 16 indications (2020: 10).
>
18 projects were discontinued.
Our sustainability
>
We embed practices into the product
portfolio to drive equitable access to
healthcare, including digital health, clinical
trial diversity, patient centricity, investing
in rare diseases, open innovation and
intellectual property sharing.
Focus for 2022
>
Strengthen R&D bridges between
AstraZeneca and Alexion.
>
Drive innovation opportunities in China
and beyond.
>
Leverage and embed digital advances
across the pipeline.
For more information, see Disease Area Review from
page 16 and Business Review from page 30.
Key Performance Indicators
Our science measures incentivise the
development of NMEs and the maximisation
of the potential of existing medicines.
Pipeline progression events (Phase II NME
starts/progressions and Phase III investment
decisions) measure innovation and
sustainability. Regulatory events (regulatory
submissions and approvals) demonstrate the
advancement of this innovation to patients
and the value to the Group.
For more information on performance against
the Group scorecard, see page 108.
“ We seek to attract the
brightest minds and
create an environment
where science can
thrive.”
13
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Our Strategy and Key Performance Indicators
2021
2020
201
9
$37,417m
$26,617m
$24,384m
$37,417m
T
ota
l Revenue
Our prioritised initiatives
Meeting our growth and profitability goals
through successful innovation and
commercial excellence, as well as completing
the Alexion acquisition.
Transforming healthcare delivery through
a focus on:
>
Impacting and improving the whole patient
experience, from disease prevention and
awareness, diagnosis, treatment,
post-treatment to wellness.
>
Data analytics, omnichannel and
go-to-market models.
>
Innovative value strategies for pricing that
focus on the outcomes our medicines
deliver to patients and healthcare systems.
>
Implementing our plans for ‘smart factories’
and next-generation manufacturing
technologies.
How our strategy responds
toglobaltrends
To ensure we are able to respond to the
increasing demand for healthcare, downward
pressure on prices and increasing control that
people have over their own healthcare, we are:
>
Fostering a patient-focused approach and
embedding patient insights across our
organisation, building integrated therapy
area ecosystem models and establishing
‘health innovation hubs’.
>
Engaging with policymakers to support
improvements in access, coverage, care
delivery, quality of care and patient care
outcomes.
>
Leveraging technology across prevention
and awareness, diagnosis, treatment,
post-treatment and wellness to deliver
better patient outcomes.
>
Partnering with industry, governments
and academia to find ways to bring
new medicines to market more quickly
and efficiently.
>
Collaborating with the funders of
healthcare to increase the use of
value-based pricing solutions.
>
Enabling our Emerging Markets to deliver
better and broader patient access through
faster submission as well as innovative
and targeted equitable pricing strategies
and practices.
>
Pursuing a strong patent strategy that
builds robust patent estates to protect
our pipeline and products while defending
and enforcing patent rights.
How we progressed in 2021
Our growth and leadership
>
Total Revenue, comprising Product Sales
and Collaboration Revenue, increased by
41% (38% at CER) to $37,417 million.
>
Product Sales grew by 41% (38% at CER) to
$36,541 million; Collaboration Revenue
increased by 20% (20% at CER) to $876 million.
>
Oncology Product Sales grew by 20%
(18% at CER) to $13,048 million, while
CVRM increased by 13% (10% at CER)
to $8,020 million. R&I increased by 13%
(9% at CER) to $6,034 million.
>
Following completion of the Alexion
acquisition on 21 July 2021, Rare Disease
medicines generated $3,071 million, 8% of
Total Revenue, growing 8% (9% CER) on
a pro forma, pro rata basis
1
.
>
Total Revenue grew in Emerging Markets
by 41% (36% at CER) to $12,281 million.
In the US, it grew by 38% to $12,228 million
and in Europe by 45% (40% at CER) to
$8,050 million.
Our sustainability
>
Over 31 million people reached through our
flagship access to healthcare programmes.
>
Over 11 million people reached through
patient access programmes.
>
Over 199,000 healthcare workers and
others trained.
Focus for 2022
>
Advance the combined AstraZeneca and
Alexion pipeline.
>
Build our new Vaccines and Immune
Therapies Unit on which we will be
reporting separately from 2022.
>
Advance digital approaches to transform
the patient experience.
“ We engage with
multiple stakeholders
to transform
healthcare delivery,
meet our growth and
protability goals and
deliver better and
broader patient access
to our medicines.”
For more information, see Disease Area
Review from page 16 and Business Review
from page 30.
1
have been calculated on a pro forma, pro rata
basis by comparing post-acquisition revenues
from 21 July 2021 to 31 December 2021 with
the corresponding period in the prior year,
pre-acquisition as previously published by
Alexion. Pro forma, pro rata Total Revenue
growth rates have been presented for 2021
Rare Disease area and constituent medicines,
and do not impact Group totals.
Actual growth
2021 +41%
2020 +9%
2019 +10%
CER growth
2021 +38%
2020 +10%
2019 +13%
Key Performance Indicators
Our Total Revenue measure reflects the
importance of incentivising sustainable
growth in both the short and longer term.
For details of how Total Revenue is
considered when calculating the annual
bonus, see from page 103.
14
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Our Strategy and
Key Performance
Indicators
continued
2021
2020
2019
89%
85
%
86%
85%
Employee belief that AstraZeneca
is a great place to work
¹
2021 83%
2020 93%
2019 86%
Green
Amber
Red
Blue
83%
Sustainability
scorecard performance
²
Our prioritised initiatives
Contributing to the enterprise and being a
great place to work, with a focus on inclusion
and diversity, as well as lifelong learning.
Evolving how we work and collaborate while
continuing to embrace digital ways of working.
Contributing to society by improving access
to healthcare, environmental protection, and
ethics and transparency, as well as delivering
our Ambition Zero Carbon programme.
How our strategy responds
toglobaltrends
To ensure we are able to deliver our strategy,
build trust in AstraZeneca and contribute to
the health of society and the planet, we are:
>
Recruiting the best talent, which underpins
our innovation and growth.
>
Living our Values and engendering a
high-performing team and lifelong learning.
>
Harnessing different perspectives, talents
and ideas in an inclusive way while ensuring
our employees reflect the diversity of the
communities we serve.
>
Empowering employees through our
Code of Ethics to make decisions in the
best interests of the Group and society.
>
Refusing to tolerate bribery or any other
form of corruption.
>
Contributing to society in support of
the United Nations Sustainable
Development Goals.
>
Broadening access to sustainable
healthcare solutions for life-changing
treatment and prevention.
>
Taking bold action on climate, recognising
the interconnection between the health of
people, society and our planet.
How we progressed in 2021
Our people
>
We continue to invest in our people to
ensure we recruit, retain and develop
a talented workforce.
>
In 2021, we delivered a strong performance
across the key priorities of our People and
Sustainability strategies.
>
We continue to score highly in our Pulse
surveys for questions relating to our
Purpose, direction, patient centricity and
employee commitment to our success.
Our sustainability
>
We achieved a ‘Green’ rating for performance
across our three sustainability pillars.
>
We provided $112 million to more than
1,220 non-profit organisations across
74 countries.
>
Our Scope 1 to 3 and long-term net-zero
greenhouse gas emissions reduction
targets were verified by the Science Based
Targets initiative.
>
We maintained 100% of active employees
trained on our Code of Ethics, based on
our Values, expected behaviours and key
policy principles.
Focus for 2022
>
Maintain positive employee engagement.
>
Accelerate digital transformation and
activities to drive productivity.
>
Deliver targeted advances across
sustainability priorities.
For more information, see Our People from page 41
and Sustainability from page 44.
2
A Green rating = more than 70% of our
categories are rated green. Each category
consists of several KPIs. We have 14
priority goals. Achievement of <9 is Red;
9 or 10 is Amber; 11 or 12 is Green; and
13 or 14 is Blue.
1
Source: November Pulse survey for
each year.
Key Performance Indicators
Our Great Place to Work strategy is built
around two priorities: Contribution to the
enterprise and Contribution to society.
Our Contribution to the enterprise KPI is
based on our Pulse survey measure of those
employees who believe that AstraZeneca is
a great place to work.
Our Contribution to society KPI is based on
our Sustainability scorecard. It measures
progress on annual and long-term targets
across our three pillars of sustainability:
Access to healthcare, Environmental
protection, and Ethics and transparency.
“ Our Great Place to
Work strategy is built
around two priorities:
Contribution to the
enterprise and
Contribution to
society.”
15
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Our Strategy and Key Performance Indicators
Oncology
We are leading a revolution
in oncology to redene cancer
care. Our ambition is to follow
the science to discover, develop
and deliver life-changing
treatments that increase the
potential for cure.
For more information,
see Accelerate Innovative
Science from page 31
and Deliver Growth
and Therapy Area
Leadership from
page 35.
2021 overview
>
Performance driven by rapid
and broad market penetration
of our new medicines with 253
market approvals.
>
Tagrisso
(osimertinib) approved in
71 markets as an adjuvant treatment
for early-stage EGFR-mutated
non-small cell lung cancer (NSCLC),
including in the EU and China.
>
Orpathys
(savolitinib) approved in
China for certain NSCLC patients
– rst global regulatory approval,
and
Imnzi
(durvalumab) approved
in China for extensive-stage small
cell lung cancer (ES-SCLC).
>
Lynparza
(olaparib) demonstrated
positive results for the adjuvant
treatment of germline BRCA-
mutated high-risk early breast
cancer in the OlympiA trial.
>
Enhertu
(trastuzumab deruxtecan)
demonstrated positive results for
previously treated patients with
HER2-positive metastatic breast
cancer in DESTINY-Breast03.
>
Positive Phase III trials expanded
our footprint across genitourinary
and gastrointestinal cancers.
>
Initiated 22 trials across
Phases I, II and III.
Product Sales
$13,048m
up 20% (18% at CER)
2020: $10,850m
2019: $8,667m
16
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Disease Area Review
Unmet medical need and world market
Source: IQVIA.
AstraZeneca focuses on specic segments
within this overall disease area market.
Small molecule targeted agents
$48.6bn
Monoclonal antibodies (mAbs)
$33.3bn
Immune checkpoint inhibitors
$31.6bn
Chemotherapy
$26.3bn
Hormonal therapies
$15.8bn
PARP inhibitors
$2.6bn
Other oncology therapies
$0.4bn
$158.6bn
Annual worldwide market value
Disease area world market
(MAT Q3-21)
10m
Cancer is the second leading
cause of death globally with
nearly 10 million people losing
their lives to cancer in 2020.
1 in 2
people will be diagnosed with
some form of cancer during their
lifetime. Costs associated with
cancer place a heavy economic
burden on societies, with an
estimated global total cost of
$1.16 trillion in 2010.
Our strategy in Oncology
We strive to push the boundaries of science
to change the practice of medicine and
transform the lives of patients living with
cancer. With this vision in mind, we focus
on four strategic priorities:
1. Scientific platforms that work in two ways
– targeting cancer cells directly and
activating the immune system. We use
monotherapy and combination approaches
to drive deeper, more durable responses:
a.
Tumour drivers and resistance – targeting
the genetic mutations and resistance
mechanisms that enable cancer cells to
evade treatment, survive and proliferate.
b.
DNA damage response (DDR) – targeting
the DNA repair process to block cancer
cells’ ability to reproduce.
c.
Antibody drug conjugates (ADC) –
delivering highly potent cancer-killing
agents directly to cancer cells via a
linker attached to a targeted antibody.
d.
Epigenetics – identifying changes in how
the genome is expressed in cancer and
developing drugs to target key
vulnerabilities generated by these
changes.
e.
Immuno-oncology (IO) – activating the
body’s own immune system to help
fight cancer.
f.
Cell therapies – harnessing living cells
to target cancer.
2. Advancing treatment in the early stages
of cancer where the greatest opportunity
for cure exists and building expertise and
leadership in key tumour types.
3. Integrating patient-centric innovation into
our programmes through partnerships
that will lead to permanent changes in
healthcare, including blood-based
screening, computational pathology, ctDNA
testing, digital health and data science/AI.
4. Delivering across our global footprint to
make cancer therapies available to every
eligible and appropriate patient.
Full details are given in the Development
Pipeline Supplement on our website,
www.astrazeneca.com/annualreport2021.
Key marketed products
See full product information in Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2021.
Product
Disease
Total Revenue
Commentary
Tagrisso
(osimertinib)
Lung cancer
$5,015m,
up 16%
(13% at CER)
Approved in 64 countries for the adjuvant treatment of
patients with early-stage EGFR-mutated (EGFRm) NSCLC
and in 91 countries for both the 1st- and 2nd-line treatment
of advanced EGFRm NSCLC.
Lynparza
(olaparib)
Ovarian cancer
Breast cancer
Pancreatic cancer
Prostate cancer
$2,748m,
up 23%
(21% at CER)
Approved in 86 countries for the treatment of advanced
ovarian cancer. It has also been approved in 84 countries for
the treatment of gBRCAm, human epidermal growth factor
receptor 2 (HER2)-negative metastatic breast cancer and
in 68 countries for the treatment of gBRCAm metastatic
pancreatic cancer. It is now approved in 70 countries for
the treatment of metastatic castration-resistant prostate cancer.
Imnzi
(durvalumab)
Lung cancer
Bladder cancer
$2,412m,
up 18%
(16% at CER)
Approved in the curative-intent setting of unresectable,
Stage III NSCLC after chemoradiotherapy in 74 countries.
Also approved in ES-SCLC in 63 countries and for previously
treated patients with advanced bladder cancer in 17 countries.
Calquence
(acalabrutinib)
Mantle cell
lymphoma (MCL)
Chronic lymphocytic
leukaemia (CLL)
$1,238m,
up 137%
(136% at CER)
Approved for the treatment of CLL in 70 countries. Also
approved for the treatment of patients with MCL who have
received at least one prior therapy in 34 countries.
Enhertu
(trastuzumab
deruxtecan)
Breast cancer
Gastric cancer
$214m,
up 123%
(123% at CER)
Approved in more than 40 countries for HER2-positive
unresectable, locally advanced or metastatic breast cancer
following two or more prior anti-HER2-based regimens.
Approved in several countries for locally advanced or
metastatic HER2-positive gastric or gastroesophageal junction
adenocarcinoma following a prior trastuzumab-based regimen.
Koselugo
(selumetinib)
Neurobromatosis
type 1 plexiform
neurobromas (PN)
$108m,
up 185%
(186% at CER)
Approved in the US and the EU for the treatment of paediatric
patients two years of age and older with neurobromatosis
type 1 (NF1) who have symptomatic, inoperable PN.
Orpathys
(savolitinib)
Lung cancer
$16m
Approved in China for the treatment of NSCLC with MET
exon 14 skipping alterations.
Other products
Zoladex
(goserelin
acetateimplant)
Prostate cancer
Breastcancer
$966m,
up 3% (down
1% at CER)
Arimidex
(anastrozole)
Breast cancer
$139m,
down 25%
(27% at CER)
Faslodex
(fulvestrant)
Breast cancer
$431m,
down 26%
(27% at CER)
Casodex
/
Cosudex(bicalutamide)
Prostate cancer
$143m,
down 17%
(21% at CER)
Iressa
(getinib)
Lung cancer
$183m,
down 32%
(35% at CER)
Others
$50m,
up 1%
(down 1% at CER)
17
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Disease Area Review / Oncology
2021 review – strategy in action
2021 saw strong growth, underpinned by
positive data news flow across our late-stage
pipeline assets.
Lung cancer
Scientific advances are strengthening the
potential of our medicines to offer cure and
long-term survivorship in lung cancer with
a focus on early detection and precision
medicine. We are leaders in driving a stage
shift at diagnosis, through advocacy for
access to lung cancer screening, biomarker
testing and improved quality care.
>
Tagrisso
has been used to treat more
than half a million patients worldwide with
EGFR-mutated NSCLC.
Tagrisso
continues
to be investigated across stages and
treatment settings, and in combinations
as a potential means to address tumour
mechanisms of resistance.
>
Imfinzi
is being explored in combinations
and beyond its established lung cancer
indications in unresectable Stage III NSCLC
and ES-SCLC. In 2021, we announced
positive results for
Imfinzi
with
tremelimumab in Stage IV NSCLC, and
with novel immunotherapies oleclumab
or monalizumab in unresectable
Stage III NSCLC.
>
Enhertu
continued to show potential as
the first HER2-directed therapy to show
a strong tumour response in patients with
HER2-mutant and HER2-overexpressing
metastatic NSCLC with results from the
DESTINY-Lung01 Phase II trial.
>
Savolitinib received its first global regulatory
approval in China under the brand name
Orpathys
in NSCLC patients with MET exon
14 skipping alterations. Savolitinib is an
oral, potent and highly selective MET
tyrosine kinase inhibitor being investigated
in collaboration with HUTCHMED.
>
Datopotamab deruxtecan, an anti-
trophoblast cell surface antigen 2 (TROP2)-
directed ADC, initiated new trials in lung
cancer: TROPION-Lung08 in patients
whose disease is not driven by actionable
genomic alterations, and TROPION-Lung01,
a Phase III head-to-head trial versus
docetaxel in patients with advanced NSCLC.
Breast cancer
We are expanding into new subtypes of
breast cancer and aiming to bring impactful
therapies where there is more opportunity
for cure.
>
Full results from the OlympiA Phase III trial
showed
Lynparza
reduced the risk of cancer
recurrence by 42% in the adjuvant treatment
of patients with germline BRCA-mutated
high-risk early breast cancer.
>
Full results from the head-to-head
DESTINY-Breast03 Phase III trial showed
Enhertu
reduced the risk of disease
progression or death by 72% in patients
with HER2-positive metastatic breast
cancer versus trastuzumab emtansine
(T-DM1).
Enhertu
was granted Breakthrough
Therapy Designation and Priority Review by
the US FDA in October 2021 and January
2022 respectively, for these patients.
Blood cancers
Calquence
, our next-generation Bruton’s
tyrosine kinase inhibitor (BTKi), is now the
therapy of choice for more than 40% of
patients initiating a BTKi treatment in 1st-line
CLL in the US. Real world safety data is
supported by the data from the ELEVATE-RR
Phase III head-to-head trial in previously
treated CLL, which both show less
cardiovascular toxicity and fewer
discontinuations due to adverse events than
other commonly prescribed BTKi treatments.
Prostate cancer
It is a new era of personalised medicine in
advanced prostate cancer with
Lynparza
monotherapy as a 2nd-line treatment for
certain patients with advanced disease based
on the PROfound Phase III trial. We are now
expanding into the 1st-line setting with
combinations, allowing us to reach a broad
population of patients regardless of biomarker
status and offering hope for people living with
this aggressive disease.
>
Lynparza
in combination with standard-of-
care abiraterone demonstrated a
statistically significant and clinically
meaningful improvement in radiographic
progression-free survival versus abiraterone
alone as a 1st-line treatment for patients
with metastatic castration-resistant
prostate cancer with or without
homologous recombination repair (HRR)
gene mutations in the PROpel Phase III trial.
Gastrointestinal (GI) cancers
With positive results across multiple
medicines and a robust development
programme, GI cancers have become
a new critical area of growth.
>
Enhertu
demonstrated a clinically
meaningful and durable response in
patients with HER2-positive advanced
gastric cancer in the DESTINY-Gastric02
Phase II trial. Additional trials are ongoing
in gastric and colorectal cancers.
>
Positive results from the HIMALAYA
Phase III trial showed a single, high priming
dose of tremelimumab added to
Imfinzi
demonstrated improved overall survival (OS)
versus sorafenib in 1st-line unresectable
hepatocellular carcinoma (HCC).
>
Positive results from the TOPAZ-1 Phase III
trial showed
Imfinzi
plus chemotherapy
improved OS versus chemotherapy alone
in 1st-line advanced biliary tract cancer.
>
We continue to test
Imfinzi
in various
combinations in other GI cancer settings.
Following completion of the Alexion acquisition,
we realigned our portfolio. With effect from
1 January 2022, we moved our rare disease
medicine
Koselugo
from our Oncology
Business Unit to our Alexion Rare Disease
Group. This realignment combines Alexion
and AstraZeneca’s expertise in rare diseases,
in collaboration with MSD, to reach more
patients impacted by the rare disease NF1.
Our robust pipeline across cancers
Our diverse portfolio and pipeline
encompasses molecules and modalities
designed to kill cancer cells preferentially,
at every stage of the disease across multiple
cancer types. We are expanding our discovery
capabilities to explore new targets and rapidly
progress the most promising programmes,
including potential first- and best-in-class
treatments. We are:
>
Investing heavily in IO, including novel
bispecific antibodies and other checkpoint
inhibitors, as well as cell therapies.
>
Advancing next wave DDR assets including
PARP1 selective agents.
>
Accelerating ADCs including our proprietary
asset AZD8205 (B7H4) into the clinic.
>
Exploring combinations focusing on
complementary mechanisms to drive
deeper treatment responses.
Full details are given in the Development Pipeline
Supplement on our website, www.astrazeneca.com/
annualreport2021.
18
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Disease Area Review
Oncology
continued
BioPharmaceuticals
We want to change the lives of billions
of people living with chronic diseases
for the better, enabling them to
live life without limits. We are
addressing some of the biggest
healthcare challenges facing
humankind by following the
science to uncover and target
the drivers of the most common
chronic diseases. Our ambition is
to stop the progress of these often
degenerative, debilitating and
life-threatening conditions, achieve
remission and, one day, cure them.
BioPharmaceuticals is responsible
for Cardiovascular, Renal &
Metabolism and Respiratory
& Immunology.
For more information,
see Accelerate Innovative
Science from page 31
and Deliver Growth
and Therapy Area
Leadership from
page 35.
We have a relentless focus on
developing and delivering
innovative, life-changing medicines
and solutions for the millions
of people aected by the complex
spectrum of cardiovascular, renal
and metabolic (CVRM) diseases –
so they can live life without limits.
Product Sales
$8,020m
up 13% (10% at CER)
2020: $7,096m
2019: $6,906m
Product Sales
$6,034m
up 13% (9% at CER)
2020: $5,357m
2019: $5,391m
Cardiovascular, Renal & Metabolism
Respiratory & Immunology
Our bold ambition is to rewrite the
future of respiratory and immunology
conditions, evolving from pure
symptom control to disease
modication, remission and,
one day, cure.
19
Corporate Governance Additional Information
Financial Statements
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021Disease Area Review / BioPharmaceuticals
Disease Area Review
Our strategy in CVRM
Our ambition is to stop, reverse and cure
CVRM diseases by maximising the value of
our medicines, delivering innovative solutions
and advancing our pipeline to transform
CVRM care. We do this by:
>
Unravelling the underlying causes of these
diseases by identifying novel targets linked
to disease biology to create the next
generation of medicines.
Unmet medical need and worldmarket
CVRM diseases are the leading causes of
death across the globe, killing more than
20 million people each year.
Currently there are:
537m
people living with diabetes.
64m
people living with heart failure (HF).
840m
people living with chronic kidney
disease (CKD).
2021 overview
>
Farxiga
was the primary growth driver
with chronic kidney disease (CKD) added
to the label.
>
Lokelma
secured label extensions to
include patients with hyperkalaemia (HK)
on haemodialysis.
>
Our pipeline remains strong, well balanced
and grows with existing products, LCMs
and multiple NMEs.
>
Driving a precision medicine approach that
enables us to develop diagnostic strategies
and more effective treatments by focusing
on the right patients for a specific therapy.
>
Developing a pipeline that goes beyond
small molecules, mAbs and peptides to
include new modalities such as
oligonucleotides, mRNA and cell therapy,
and also seeks to drive value beyond the
first indication.
>
Pursuing real-world evidence programmes
that improve understanding of disease
epidemiology and burden, treatment
effectiveness and safety, and health
economics.
>
Bringing medicines to market more quickly
through our CVRM Clinical Trials of the
Future programme.
Full details are given in the Development
Pipeline Supplement on our website,
www.astrazeneca.com/annualreport2021.
Key marketed products
See full product information in the Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2021.
Product
Disease
Total Revenue
Commentary
Farxiga
/
Forxiga
(dapagliozin)
Type-2 diabetes
(T2D)
Type-1 diabetes
(T1D)
Heart failure with
reduced ejection
fraction (HFrEF)
Chronic kidney
disease (CKD)
$3,005m,
down 23%
(23% at CER)
Approved in over 100 countries to improve glycaemic
control in adult patients with T2D and for HFrEF in patients
with and without T2D. First-in-class approval for CKD in
patients with and without T2D in the US, EU, UK, Japan
and other countries.
Brilinta
/
Brilique(ticagrelor)
Acute coronary
syndromes (ACS)
$1,472m,
down 8%
(10% at CER)
Approved in over 115 countries for ACS and in 80 countries
for high-risk patients with history of heart attack. Approved
in the US to reduce the risk of a rst heart attack or stroke
in high-risk patients.
Bydureon
(exenatide XR
injectable
suspension)
Type-2 diabetes
$385m,
down 14%
(15% at CER)
Onglyza
(saxagliptin)
Type-2 diabetes
$360m,
down 37%
(26% at CER)
Roxadustat
Anaemia of CKD
$180m,
up 493%
(448% at CER)
Lokelma
(sodium
zirconium
cyclosilicate)
Hyperkalaemia
$175m,
up 130%
(130% at CER)
Approved in 47 countries. Label extensions secured in
45 countries including patients on haemodialysis.
Byetta
(exenatide
injection)
Type-2 diabetes
$55m,
down 25%
(24% at CER)
Other products
Crestor
(rosuvastatin
calcium)
Dyslipidaemia
Hyper-
cholesterolaemia
$1,098m,
down 7%
(10% at CER)
Seloken
/
Toprol-XL
(metoprolol
succinate)
Hypertension
Heart failure
Angina
$953m,
up 16%
(11% at CER)
Atacand
/
Atacand
HCT/Atacand Plus
(candesartan
cilexitil)
Hypertension
Heart failure
$97m,
down 60%
(60% at CER)
Others
$196m,
up 3%
(down 2%
at CER)
Diabetes
$114.2bn
High blood pressure
$37.5bn
Abnormal levels of blood cholesterol
$17.7bn
CKD
$10.4bn
Thrombosis
$7.4bn
CKD associated
$6.5bn
Other CV
$52.2bn
Hyperkalaemia
$0.6bn
$229.6bn
Disease area world market
(MAT Q3-21)
Annual worldwide market value
Cardiovascular, Renal & Metabolism
AstraZeneca focuses on specic segments
within this overall disease area market.
Sales for CKD ($10.4 billion) and CKD-
associated anaemia ($6.5 billion) fall outside
the CVRM total market.
All sales for CKD-associated anaemia
($6.5 billion) fall within the CKD market and
should not be double-counted.
CVRM disease area world market total
excludes sales from the HIF-PHI + ESA market.
20
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Disease Area Review
BioPharmaceuticals
continued
2021 review – strategy in action
Cardiovascular disease
With an ambition to eliminate CV residual risk
and stop disease progression, we are making
a difference for patients with
Brilinta
and
developing a next-generation PCSK9 inhibitor.
In 2021,
Brilinta
received expanded use in the
US beyond cardiovascular disease to patients
with mild-to-moderate stroke. Additionally,
results from ALETHEIA, an observational trial
in patients with a history of heart attack being
treated with
Brilinta
60mg in a real-world
setting, showed bleeding rates remained low
overall and reinforced the role of
Brilinta
in this
patient population.
Positive Phase IIa results from the EPICCURE
trial, the first clinical trial to inject naked mRNA
directly into the heart of patients undergoing
elective coronary artery bypass surgery,
demonstrated that AZD8601 met the primary
endpoint of safety and tolerability in patients
with heart failure.
Phase I results for monthly administered
AZD8233 demonstrated that the therapy
was generally safe and well tolerated and
reduced PCSK9 levels by up to 95% and
LDL-C levels by more than 70% over the
entire dosing interval.
Heart failure
In 2021,
Forxiga
gained another major market
approval in China with continued launches in
HFrEF contributing to strong growth for the
brand in 2021. The large randomised DELIVER
Phase III trial, evaluating
Farxiga
in heart
failure with preserved ejection fraction
(HFpEF), is expected to read out in the first
half of 2022.
HF patients are often prescribed life-saving
renin-angiotensin-aldosterone system
inhibitors, which lead to elevated potassium
levels. These patients have an increased risk
of developing HK, a serious condition
characterised by elevated potassium levels in
the blood associated with cardiovascular,
renal and metabolic diseases, which can be
life threatening if left untreated. For the first
time, a globally recognised cardiology
guideline, the 2021 European Society of
Cardiology-HF guidelines, listed novel K+
binders, including
Lokelma
, as options to
manage HK.
Renal diseases
CKD is a progressive disease that can
eventually lead to end-stage kidney disease
(ESKD), with the potential for dialysis and
serious life-threatening complications. Based
on last year’s ground-breaking DAPA-CKD
Phase III trial results,
Farxiga
was approved
in the US, EU, UK and Japan for the treatment
of CKD in patients with and without T2D.
Roxadustat is an oral hypoxia inducible factor
prolyl hydroxylase (HIF-PH) inhibitor that has
the potential to transform the lives of people
living with anaemia of CKD, both on dialysis
and not on dialysis. Roxadustat is the first
HIF-PH inhibitor currently approved in China,
Japan, Chile, South Korea and in the EU under
the name
Evrenzo
for the treatment of anaemia in CKD in non-dialysis dependent
(NDD) and dialysis-dependent (DD) adult
patients. In the third quarter of 2021, the US
Food and Drug Administration (FDA) issued
a complete response letter (CRL) regarding
the new drug application (NDA) for roxadustat
for the treatment of anaemia of CKD, in both
NDD and DD adult patients. The CRL
requested an additional clinical trial on the
safety of roxadustat. AstraZeneca is working
with its collaborator FibroGen, and the FDA
to evaluate next steps. Roxadustat is also in
clinical development for anaemia associated
with myelodysplastic syndrome and for
chemotherapy-induced anaemia.
People living with CKD are at an increased
risk of developing HK. The evidence
generated from the CRYSTALIZE programme
will provide insights into patient-centric
management of HK with
Lokelma
, including
the Phase III DIALIZE-Outcomes trial to
evaluate the effect of
Lokelma
on arrhythmia-
related CV outcomes in patients on chronic
haemodialysis with recurrent HK. In the fourth
quarter of 2021, AstraZeneca was granted
Fast Track Designation in the US for the
investigation of
Lokelma
in the DIALIZE-
Outcomes trial. The Phase III STABILIZE CKD
trial will evaluate the effect of
Lokelma
on
CKD progression in patients with CKD and
HK or at risk of HK.
To help address the unmet medical need in
CKD, we are exploring the clinical science
behind our medicines with DELIGHT, an
exploratory Phase II/III trial, also part of the
DapaCare programme. The trial evaluates
the potential albuminuria-lowering effect of
Farxiga
in the treatment of CKD and T2D.
ZENITH-CKD, our Phase II trial of zibotentan
and dapagliflozin is underway for the treatment
of CKD patients, reducing mortality and
delaying progression to ESKD. We will also
be exploring ZiboDapa for the treatment of
cirrhosis with features of portal hypertension.
Metabolism
Non-alcoholic steatohepatitis (NASH)
prevalence is growing and is a major public
health burden. The Phase II PROXYMO trial
demonstrated that, on a background of
acceptable safety, cotadutide delivers
significant benefits on hepatic fat fraction
and aminotransferases. It also delivers
improvements in markers of inflammation and
fibrosis in the target population of patients
with biopsy-proven non-cirrhotic NASH with
fibrosis. AZD4831, a myeloperoxidase
inhibitor, has moved into NASH following
strong pre-clinical data demonstrating a
reduction in inflammation and fibrosis in
a diet-induced NASH model.
In 2021, the indication for
Forxiga
was voluntarily removed in the EU for the treatment
of adults with insufficiently controlled T1D.
This decision did not impact the indication
outside the EU and did not impact other
approved
Forxiga
indications within or outside
the EU. This decision follows discussions
with the EMA regarding product information
changes after approval for
Forxiga
5mg for
T1D. This was to address potential confusion
among physicians treating patients with T2D,
HFrEF or CKD. It was not due to any new
safety or efficacy concerns in T1D or any other
indication. In the EU,
Forxi ga
received
approval for the treatment of T2D in the
paediatric population.
Beyond research
We have made a long-term investment
to improve CVRM patient care through
a multi-disciplinary programme called
Accelerate Change Together (ACT). ACT
on HF aims to improve lives by halving HF
hospitalisations and improving five-year
survival rates by 20% by 2024. To date,
approximately 140,000 healthcare providers
and 2.5 million patients have been positively
impacted by the project.
ACT on CKD seeks to transform kidney health
and reduce the number of patients developing
kidney failure by 20% by 2025. Our efforts in
2021 resulted in 11.5 million patients being
screened. ACT programmes have been
implemented in more than 40 countries.
We also invest in programmes to improve
patient access. These include Healthy Heart
Africa, which addresses hypertension and the
increasing burden of CV disease.
For more information, see page 45.
Additionally, we have formed strategic
collaborations with healthcare innovators
to further understand CVRM diseases, with
the aim of harnessing data, new technologies
and digital health to transform the lives of
patients and clinical practice. This year, our
digital health collaborations continued.
Collaborations include:
>
Eko Health and Us2.ai in HF
>
RenalytixAI in CKD
>
the NHS through Imperial College Health
Partners (London, UK) on Discover-NOW,
the Health Data Research Hub for real
world evidence in T2D and HF.
21
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Disease Area Review / BioPharmaceuticals / Cardiovascular, Renal & Metabolism
Asthma
$23.4bn
COPD
$18.7bn
Other
$35.7bn
$77.8bn
Annual worldwide market value
Disease area world market
(MAT Q3-21)
Chronic obstructive pulmonary disease
(COPD)
Our ambition is to eliminate COPD as a
leading cause of death by slowing and
ultimately reversing the progression of
the disease. Our strategy is to:
>
drive broad, early diagnosis and
first-line use of the best therapies
to improve patient outcomes
>
modify disease through investment
in therapies that repair the lung to
halt structural damage and lung
function decline
>
strengthen our ability to monitor
progression
Our strategy in Respiratory
& Immunology
Our aim is to defy the natural course of
disease, drive disease modification and
ultimately remission, so that patients can
live life without limits.
We will realise our ambition by focusing on
three core areas:
>
reaching more patients earlier by driving
broad diagnosis and accelerating access
>
slowing disease progression and driving
remission by targeting core disease drivers
>
achieving greater efficacy through new
modalities and novel combinations.
>
target our medicines through novel,
enhanced diagnostics and endpoints that
enable us to act earlier in the disease.
Asthma
Our ambition in asthma is to eliminate
exacerbations and achieve clinical remission,
even in people with the most severe asthma.
We continue to advance our inhaled portfolio.
This includes establishing our anti-
inflammatory relievers as the backbone of
care across all severities, in addition to
developing novel biologics that deliver disease
control and allow reduction or even elimination
of background medication in severe disease.
Our research pushes the boundaries of
Respiratory & Immunology
Key marketed products
See full product information in the Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2021.
Product
Disease
Total Revenue
Commentary
Symbicort
(budesonide/
formoterol)
Asthma
COPD
$2,728m,
stable at 0%
(down
2% at CER)
Continued global volume and value leadership of the inhaled
corticosteroid/long-acting beta2-agonist (ICS/LABA) class;
decline in the EU and Established Rest of World partially
oset by growth in the US and Emerging Markets. Pricing
pressure is expected to continue in major territories such as
the US, EU, China and Japan.
Fasenra
(benralizumab)
Severe asthma
$1,258m,
up 33%
(31% at CER)
Achieved blockbuster status and consolidated its position as the
leading novel biologic in total and new to brand prescriptions
in severe asthma in key markets around the world.
Pulmicort
(budesonide)
Asthma
$962m,
down 3%
(8% at CER)
In-hospital paediatric use of nebulised
Pulmicort
in Emerging
Markets continued to be signicantly aected by COVID-19
in the rst half of the year and by the implementation of
volume-based procurement for this formulation in China in
the fourth quarter.
Daliresp
/
Daxas
(roumilast)
COPD
$227m,
up 5%
(4% at CER)
Stable sales driven by the US, where a 2021 price increase
oset slightly lower demand.
Breztri
(budesonide/
glycopyrrolate/
formoterol)
COPD
$203m,
up 637%
(623% at CER)
New launches across 14 countries. Sales accelerated in Japan
following Ryotanki lift in the fourth quarter of 2020. Strong
sales and market leadership in China following inclusion on
the National Reimbursement Drug List. Strong performance
in the US, exceeding competitors’ total prescriptions uptake
in the rst six months from launch, on a time-aligned basis.
Bevespi
(glycopyrrolate/
formoterol)
COPD
$54m,
up 12%
(12% at CER)
Launched in 18 countries to date, including Italy in May 2021.
Saphnelo
(anifrolumab)
SLE
$8m
First-in-class approval in the US and Japan for the treatment
of moderate to severe SLE. Recommended for approval in the
EU and under regulatory review for SLE in other countries
worldwide.
Source: IQVIA.
AstraZeneca focuses on specic segments
within this overall disease area market.
Unmet medical need and worldmarket
550m
Nearly 550 million people worldwide live
with chronic respiratory disease.
Up to 10%
of patients with asthma have severe
asthma and account for approximately
50% of asthma-related costs.
1 in 10
Chronic obstructive pulmonary disease is
the third leading cause of death worldwide,
aecting one in 10 people over the age of 40.
5m
At least ve million people worldwide
have a form of lupus, yet only two new
treatments for systemic lupus
erythematosus (SLE) have been
approved in the last 60 years.
2021 overview
>
The respiratory market has been
particularly aected by COVID-19 due
to respiratory physicians focusing on
the pandemic, a reduction in patients
attending hospital visits and self-isolation
reducing exacerbation rates.
>
Despite ongoing challenges created by the
COVID-19 pandemic, our Product Sales
grew by 13% (9% at CER). Key growth
drivers were
Fasenra
(benralizumab),
Symbicort
(budesonide/formoterol) and
Breztri
(budesonide/glycopyrrolate/
formoterol).
>
Tezspire
(tezepelumab) was approved for
the treatment of severe asthma in the US.
>
Saphnelo
(anifrolumab) was approved for
the treatment of SLE in the US, Japan
and also received recommendation for
approval in the EU.
>
PT027 (albuterol/budesonide)
demonstrated positive high-level results
in two Phase III trials in asthma.
22
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Disease Area Review
BioPharmaceuticals
continued
disease control in uncontrolled severe asthma
by combining precision medicines with new
delivery modalities.
Immunology
Our ambition is to disrupt immunology by
focusing on areas of high unmet medical
need in rheumatology, gastroenterology and
dermatology to drive clinical remission and
eventually cure.
We have been targeting a variety of diseases
where type 1 interferon plays a role with recent
approvals in the treatment of SLE and pursuing
programmes in cutaneous lupus erythematosus,
lupus nephritis and myositis. We are also
targeting diseases in gastroenterology, such
as ulcerative colitis and Crohn’s disease,
where IL-23 and Th17 play a role.
We are also advancing immune therapies
where they share common pathways or
biological mechanisms (for example,
eosinophilic/epithelial immune dysfunction
disorders) with respiratory diseases.
Full details are given in the Development Pipeline
Supplement on our website, www.astrazeneca.com/
annualreport2021.
2021 review – strategy in action
Asthma
In 2021,
Symbicort
launched in China as the
first dual-combination therapy approved for
mild, moderate and severe disease. The
anti-inflammatory reliever indication has been
approved in 43 countries.
Our second anti-inflammatory reliever, PT027,
is a potential first-in-class short-acting
beta2-agonist (albuterol)/ICS (budesonide)
rescue treatment for asthma in the US.
Positive high-level results from the MANDALA
and DENALI Phase III trials showed PT027
met all primary endpoints, demonstrating
statistically significant benefits in patients
with asthma versus individual components
albuterol and budesonide.
Breztri
, our triple therapy, is being studied
in asthma, and recruitment in two Phase III
pivotal trials, KALOS and LOGOS, is ongoing.
Fasenra
, our first respiratory biologic, is now
approved in over 65 countries and has
reached more than 100,000 patients with
severe, eosinophilic asthma. Around half
of all patients now self-administer
Fasenra
.
Our patient support programme, Connect
360, increased enrolment by more than
60% in 2021.
In December 2021,
Tezspire
was approved in the US for the add-on maintenance treatment
of adult and paediatric patients aged 12 years
and above with severe asthma – the first and
only biologic for severe asthma to be approved
without phenotypic or biomarker limitations.
Approval was based on results from the
PATHFINDER clinical trial programme,
including positive results from the Phase III
NAVIGATOR trial. This followed the granting of
Priority Review for
Tezspire
for the treatment
of asthma by the FDA in July 2021.
COPD
In January 2022, we initiated two Phase III
trials, OBERON and TITANIA, of tozorakimab
(MEDI3506), an investigational, biologically
differentiated mAb with dual pathway inhibition
targeting IL-33 in patients with COPD.
Immunology
In the second half of 2021,
Saphnelo
was approved in the US for the treatment of adult
patients with moderate to severe SLE who
are receiving standard therapy. It was also
approved in Japan for the treatment of adult
patients with SLE who show insufficient
response to currently available treatment.
These approvals were based on data from the
Saphnelo
clinical development programme,
including two TULIP Phase III trials and the
MUSE Phase II trial. These are the first
regulatory approvals for a type I interferon
receptor antagonist and the only new
treatment approved for SLE in more than
10 years. In December 2021, the European
Medicines Agency’s Committee for Medicinal
Products recommended the approval of
Saphnelo
in the EU as an add-on therapy for
the treatment of adult patients with moderate
to severe, active autoantibody-positive SLE,
despite receiving standard therapy.
Fasenra
is being investigated in eight Phase II
and Phase III trials in eosinophilic diseases
beyond severe asthma, COPD and chronic
rhinosinusitis with nasal polyps. These include
atopic dermatitis, bullous pemphigoid,
chronic spontaneous urticaria, eosinophilic
esophagitis (EoE), eosinophilic gastritis/
eosinophilic gastroenteritis (EG/EGE),
eosinophilic granulomatosis with polyangiitis,
hypereosinophilic syndrome and non-cystic
fibrosis bronchiectasis.
In November 2021, the FDA granted
Fasenra
Orphan Drug Designations (ODDs) for the
treatment of EG and EGE as well as a Fast
Track Designation for EG with or without EGE.
In October 2021, tezepelumab was granted
an ODD by the FDA for the treatment of EoE.
Respiratory infectious diseases
Nirsevimab is the first potential immunisation
to show protection against respiratory
syncytial virus (RSV) in the general infant
population in a Phase III trial and is being
developed by AstraZeneca and Sanofi.
Positive results from the MELODY Phase III
trial, reported in April 2021, showed
nirsevimab met its primary endpoint of a
statistically significant reduction in the
incidence of medically-attended lower
respiratory tract infections caused by RSV
versus placebo in healthy late preterm and
term infants (35 weeks or more) during their
first RSV season.
Nirsevimab builds on the efficacy offered
by the current standard of care,
Synagis
(palivizumab), which is indicated for high-risk
infants and requires up to five monthly
injections to cover a typical RSV season. In
June 2021, results from the MEDLEY Phase II/
III trial evaluating the safety and tolerability of
nirsevimab versus
Synagis
in infants with
chronic lung disease, congenital heart disease
and/or prematurity, and therefore at high risk
of RSV entering their first RSV season,
showed a similar occurrence of treatment
emergent adverse events or treatment
emergent serious adverse events between
the two treatments.
Early science
Compounds in early-stage development
include AZD1402, an inhaled Anticalin
®
protein developed with our collaborator Pieris
Pharmaceuticals for moderate to severe
asthma and a potential first-in-class oral
therapy AZD5718 FLAP, targeting a novel
inflammatory endotype in asthma.
In our early research and development for
immune-mediated diseases, we are focusing
on those with great unmet medical need.
We entered a licensing agreement with F-Star
Therapeutics, Inc., for exclusive access to
novel pre-clinical STING inhibitors to
investigate their potential.
23
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Disease Area Review / BioPharmaceuticals / Respiratory & Immunology
Rare Disease
On 21 July 2021, we completed the
acquisition of Alexion Pharmaceuticals,
Inc. and created Alexion, AstraZeneca
Rare Disease, a new disease area
within our company.
Our mission is to transform the
lives of people aected by rare
diseases and devastating conditions.
By understanding patients’ unique
needs, we can research and develop
innovative medicines, support
access and advocate for the rare
disease community.
For more information,
see Accelerate Innovative
Science from page 31
and Deliver Growth
and Therapy Area
Leadership from
page 35.
2021 overview
>
Rare Disease Total Revenue grew
by 8% (9% at CER) on a pro forma,
pro rata basis
1
.
>
In the US, sales of
Soliris
beneted
from growing use in neurology
indications, generalised myasthenia
gravis (gMG) and neuromyelitis
optica spectrum disorder (NMOSD),
oset by the successful conversion
to
Ultomiris
in haematological
indications paroxysmal nocturnal
haemoglobinuria (PNH) and
atypical haemolytic uraemic
syndrome (aHUS).
>
Acquired Caelum Biosciences and
its lead candidate CAEL-101, a
potential rst-in-class therapy for
light chain (AL) amyloidosis.
>
Reported positive Phase III results
for ALXN1840 in Wilson disease.
>
Reported positive Phase III results
for
Ultomiris
in gMG. As a result,
we led for regulatory approval
in the US, EU and Japan.
>
Secured an expansion of our
approval of
Ultomiris
in the US and EU to include children and
adolescents with PNH.
>
Discontinued CHAMPION-ALS,
the global Phase III trial of
Ultomiris
in adults with amyotrophic lateral
sclerosis (ALS) due to lack of
ecacy in that disease.
Product Sales
$3,070m
Revenue includes Alexion sales
from 21 July 2021.
Disease Area Review
1
calculated on a pro forma, pro rata basis by comparing
post-acquisition revenues from 21 July 2021 to
31 December 2021 with the corresponding period in the
prior year, pre-acquisition as previously published by
Alexion. Pro forma, pro rata Total Revenue growth rates
have been presented for 2021 Rare Disease area and
constituent medicines, and do not impact Group totals.
24
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Our strategy in Rare Disease
Alexion’s pioneering legacy in rare diseases
is rooted in being the first to translate the
complex biology of the complement system
into transformative medicines. By driving
innovative research and development across
new disease targets and modalities, we have
diversified our pipeline into additional rare
diseases over the last several years. Today, as
part of AstraZeneca, we are building bridges
across our scientific platforms with a focus
on bringing more innovative medicines to
people worldwide.
Following the close of the acquisition, we have
evolved our rare disease strategy to focus on
three core priorities:
1.
Accelerate
by creating smart and efficient
strategies to speed access to our
medicines for patients.
2.
Innovate
by investing in science, platforms
and capabilities, including using
AstraZeneca technologies and research
capabilities.
3.
Reach
beyond our current geographic
footprint to as many rare disease patients
as possible.
Unmet medical need and world market
2021 review – strategy in action
Complement
We have continued to grow
Ultomiris
’
leadership position in our three largest
markets – the US, Germany and Japan –
as we establish the medicine as the standard
of care (SoC) for both PNH and aHUS, two
chronic and potentially life-threatening
diseases that can lead to serious health
complications including organ damage.
During 2021, our advancements have ensured
more patients will be able to access
Ultomiris
,
which offers a reduced dosing frequency
compared to
Soliris
.
Ultomiris
was approved
in 2021 for children and adolescents with PNH
in the US and EU, expanding on its previous
approvals for adults.
Additionally, with the approval of
Ultomiris
100mg/ml in Japan and the filing of
Ultomiris
subcutaneous formulation and device
combination in the US, we are making further
advances to lessen the treatment burden
on patients.
Neurology is a key growth area. This is driven
by our clinical development programmes as
well as the increased use of
Soliris
by patients
with gMG, a progressive autoimmune
neuromuscular disease, and NMOSD, an
autoimmune disorder of the central nervous
system that affects the optic nerve and
spinal cord.
We completed enrolment in the Phase III trial
of
Ultomiris
in NMOSD in March 2021 and
expect to have high-level results in 2022.
In July 2021, we reported the high-level results
of our Phase III trial of
Ultomiris
in gMG. The
trial met its primary endpoint of change from
baseline in the myasthenia gravis-activities of
daily living profile total score at week 26. As a
result, we have filed for regulatory approval in
the US, EU and Japan.
We are also exploring the ability to treat
earlier-line patients with gMG with ALXN1720,
an internally discovered potential third-
generation C5 inhibitor. Pending successful
completion of the Phase I trial, we intend to
initiate a Phase III trial in gMG. We launched
a Phase I programme for ALXN1820, an
internally discovered bispecific anti-properdin
minibody.
400 million
people around the world are
aected by a rare disease, half
of whom are children.
>7,000
rare diseases are known to
exist today but only 5% have
treatments.
3 in 10
children with a rare disease
don’t live to see their
fth birthday.
Key marketed products
See full product information in the Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2021.
Product
Disease
Total Revenue
1
Commentary
Soliris
(eculizumab)
PNH
aHUS
gMG
NMOSD
$1,874m >
Approved in nearly 50 countries for treatment of patients
with PNH, including the US, EU and Japan.
>
Approved in 40+ countries for treatment of aHUS,
including the US, EU and Japan.
>
Approved in the US as treatment for gMG in adults who
are anti-acetylcholine receptor antibody positive.
>
Approved in the EU and Japan as treatment for refractory
gMG in adults who are anti-acetylcholine receptor
antibody positive.
>
Approved in the US, EU, Canada and Japan as treatment
for NMOSD in adults who are anti-aquaporin-4 antibody
positive.
Ultomiris
(ravulizumab)
PNH
aHUS
$688m >
Approved in 35+ countries for treatment of adults with
PNH, including the US, EU, Canada and Japan.
>
Approved in the US and EU for treatment of children and
adolescents with PNH.
>
Approved in the US, EU and Japan for treatment of aHUS.
Strensiq
(asfotase alfa)
Hypophosphatasia
(HPP)
$378m
>
Approved in 40+ countries, including the US, EU, Japan
and Canada.
Ondexxya
(andexanet alfa)/
Andexxa
(coagulation factor
Xa (recombinant),
inactivated-zhzo)
Factor Xa inhibitor
reversal agent
$68m >
Approved in the US under the accelerated approval
pathway for adults treated with FXa inhibitors apixaban
and rivaroxaban. Conditional approval in the EU for
adults treated with FXa inhibitors apixaban and
rivaroxaban.
Kanuma
(sebelipase alfa)
Lysosomal acid lipase
deciency (LAL-D)
$62m
>
Approved in 40 countries including the US, EU, Japan
and Canada.
1
Total Revenue includes Alexion sales from 21 July 2021.
25
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Additional Information
Financial Statements
Disease Area Review / Rare Disease
Beyond gMG and NMOSD, we are continuing
efforts to expand the use of our existing
medicines into new diseases. This includes
additional clinical trials of
Soliris
and
Ultomiris
in a number of disease areas where the
complement pathway is thought to play
a role. A full list of ongoing trials can be
found within the Development Pipeline
Supplement on our website,
www.astrazeneca.com/annualreport2021.
We discontinued CHAMPION-ALS, the global
Phase III trial of
Ultomiris
in adults with ALS
in August 2021 due to lack of efficacy in
that disease.
Factor D is a component of the complement
alternative pathway and has a critical role in
multiple complement-mediated rare diseases.
Targeting Factor D can potentially address a
wide range of therapeutic areas of interest
including haematology, nephrology and
ophthalmology.
ALXN2040 and ALXN2050 are investigational,
oral, Factor D inhibitors. A Phase III trial of
ALXN2040 as an add-on therapy for PNH
patients with extravascular haemolysis is
underway. We have initiated a Phase II trial of
ALXN2050 monotherapy in PNH patients and
plan to initiate proof-of-concept studies in
rare renal diseases.
We have also continued to progress our
efforts to expand our rare disease focus
beyond complement with novel assets.
AL amyloidosis
AL amyloidosis is a rare disease in which
misfolded amyloid proteins build up in organs
throughout the body, including the heart and
kidneys, causing significant organ damage
and failure that may ultimately be fatal.
Alexion acquired Caelum Biosciences to
advance and accelerate ongoing Phase III
clinical development of CAEL-101, a potentially
first-in-class fibril-reactive mAb for the
treatment of AL amyloidosis. CAEL-101 is
currently being evaluated in the Cardiac
Amyloid Reaching for Extended Survival
Phase III clinical programme in combination
with SoC therapy in AL amyloidosis. Two
parallel Phase III trials in patients with Mayo
stage IIIa and stage IIIb disease, respectively,
are ongoing.
Transthyretin amyloidosis (ATTR)
ATTR cardiomyopathy (ATTR-CM) is a
systemic, progressive and fatal condition that
leads to progressive heart failure and high rate
of fatality within four years from diagnosis.
Alexion has entered into an exclusive global
collaboration and licence agreement with
Neurimmune AG for NI006, an investigational
human mAb currently in Phase Ib development
for the treatment of ATTR-CM. NI006
specifically targets misfolded transthyretin
and is designed to directly address the
pathology of ATTR-CM by enabling removal
of amyloid fibril deposits in the heart, with the
potential to treat patients with advanced
ATTR-CM. The transaction is expected to
close following satisfaction of customary
closing conditions and regulatory clearances.
Additionally, Alexion holds an exclusive
licence from Eidos Therapeutics to develop
and commercialise ALXN2060 (acoramidis)
in Japan. Alexion is conducting a Phase III
bridging trial of ALXN2060 for patients with
ATTR-CM in Japan.
Wilson disease
Wilson disease is a rare and progressive
genetic condition in which the body’s pathway
for removing excess copper is compromised.
Damage from toxic copper build-up in tissues
and organs leads to liver disease, psychiatric
and/or neurological symptoms.
ALXN1840, a potential new once daily, oral
medicine that we are studying in Wilson
disease, demonstrated approximately three
times greater copper mobilisation than SoC
treatments in the FoCus Phase III trial.
Hypophosphatasia (HPP)
We are progressing our next-generation
alkaline phosphatase enzyme replacement
therapy into clinical trials, with the intention
of helping more people living with HPP.
We launched a Phase I trial for ALXN1850
in adult patients with HPP.
Factor Xa bleeds
In October, Alexion received a Complete
Response Letter from the FDA for its sBLA for
Andexxa
, which extended the indication
to include patients treated with edoxaban or
enoxaparin when reversal of anticoagulation
is needed due to life-threatening or
uncontrolled bleeding.
Following completion of the Alexion
acquisition,
Ondexxya/Andexxa
has moved
to the CVRM portfolio within our
BioPharmaceuticals Business Unit.
26
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Disease Area Review
Rare Disease
continued
Other Medicines
and COVID-19
We have medicines and vaccines
in other disease areas that have
an important impact for patients.
As such, we are selectively
active in the areas of
infection, neuroscience and
gastroenterology, where we
follow an opportunity-driven
approach and often work
through collaborations.
We are working to defeat
the COVID-19 pandemic.
With
Vaxzevria
and
Evusheld
, we are
signicantly contributing
to global public health.
For more information,
see Accelerate Innovative
Science from page 31
and Deliver Growth
and Therapy Area
Leadership from
page 35.
2021 overview
>
Fluenz
Tetra/
FluMist Quadrivalent
performed strongly driven primarily
by heightened focus on increased
vaccination coverage as a means
to further limit the healthcare
burden given the ongoing
COVID-19 pandemic.
>
Through an agreement with
Oxford University in 2020,
Vaxzevria
was developed and
distributed by AstraZeneca. In
2021, AstraZeneca and our global
partners released for supply more
than 2.5 billion doses of COVID-19
vaccine to over 180 countries with
about two thirds of these doses
going to low- and lower-middle-
income countries (LMICs).
Product Sales
$6,369m
up 146% (142% at CER)
2020: $2,587m
2019: $2,601m
27
Corporate Governance
Additional Information
Financial Statements
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021Disease Area Review / Other Medicines and COVID-19
Disease Area Review
Key marketed products
See full product information in the Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2021.
Product
Disease
Total Revenue
Commentary
Other Medicines
Infection
Synagis
(palivizumab)
RSV
$410m,
up 10%
(13% at CER)
Commercial rights to
Synagis
outside the US reverted back
to AstraZeneca on 1 July 2021. Agreement with Sobi for rights
to
Synagis
in US unaected.
Fluenz
Tetra/
FluMist
Quadrivalent
(live attenuated
inuenza vaccine)
Inuenza
$253m,
down 14%
(17% at CER)
Approved in the US, EU, Canada, Israel and Hong Kong.
Daiichi Sankyo holds rights to
FluMist
Quadrivalent in Japan.
Neuroscience
Seroquel
IR/
Seroquel XR
(quetiapine fumarate)
Schizophrenia
Bipolar disease
$92m,
down 21%
(20% at CER)
Divested rights in Europe and Russia in October 2019 and in
the US and Canada in December 2019 to Cheplapharm. Luye
Pharma holds rights to
Seroquel
and Seroquel XR
in the UK,
China and other international markets. There is an agreement
in place with Astellas with respect to the rights to
Seroquel
and
Seroquel XR
in Japan.
Gastroenterology
Nexium
(esomeprazole)
Proton pump
inhibitor to treat
acid-related
diseases
$1,424m,
down 7%
(8% at CER)
Divested European rights to Grünenthal in October 2018.
Losec/
Prilosec
(omeprazole)
Proton pump
inhibitor to treat
acid-related
diseases
$180m,
down 2%
(7% at CER)
In October 2019, divested global commercial rights, excluding
China, Japan, the US and Mexico to Cheplapharm.
COVID-19
Vaxzevria
(ChAdOx1-S
[Recombinant])
COVID-19
$3,981m
Through an agreement with Oxford University in 2020,
Vaxzevria
was developed and distributed by AstraZeneca.
More than 2.5 billion doses have been released for supply
to over 180 countries.
Evusheld
(tixagevimab
co-packaged with
cilgavimab)
COVID-19
$135m
The rst long-acting antibody combination to demonstrate
benet in both prevention and treatment of COVID-19.
Evusheld
is authorised for emergency use for the prevention
of COVID-19 in the US and several other countries.
Our strategy in Other Disease Areas
Our approach in these other disease areas
looks to maximise revenue of on-market
medicines, divest medicines where this
enhances shareholder value and advance the
novel medicine pipeline with collaborations
where appropriate, while preserving a
financial stake in the most promising assets.
For 2022, we will be reporting separately on
our new Vaccines and Immune Therapies Unit.
This will incorporate revenues from
Vaxzevria
,
Evusheld
,
FluMist
,
Synagis
and nirsevimab.
For 2021, these are all included in the Other
Medicines and COVID-19 Disease Area.
Full details are given in the Development Pipeline
Supplement on our website, www.astrazeneca.com/
annualreport2021.
Unmet medical need and world market
390m
The Johns Hopkins Disease Tracker
has recorded more than 390 million
conrmed cases of COVID-19 and more
than 5.7 million deaths globally.
Source: Johns Hopkins COVID-19 Dashboard
https://coronavirus.jhu.edu/map.html
1bn
The WHO estimates that seasonal
inuenza may result in nearly one billion
cases of inuenza and 290,000 to 650,000
deaths each year due to inuenza-related
respiratory diseases.
2021 review – strategy in action
Infection
Seasonal influenza is a serious public health
problem that causes severe illness and death
in high-risk populations.
Fluenz
Tetra /
FluMist
Quadrivalent continues to be licensed in
multiple markets, including the US, Canada,
EU, Israel and Hong Kong, and it remains a
central part of the UK and Finnish paediatric
national influenza vaccination programmes.
For the 2020 to 2021 flu season, nine million
children in the UK were offered
Fluenz
Tetra
as part of the UK’s national immunisation
programme. In addition, we participated in
both the US Centers for Disease Control and
Prevention Vaccine for Children programme
and Vaccine for Adult programme. These are
federally funded programmes that ensure
under or uninsured children and adults have
access to vaccines at little or no cost. We also
have an ongoing agreement with the WHO to
donate and supply stock at reduced prices in
the event of an influenza pandemic.
Respiratory syncytial virus (RSV) is a common
seasonal virus and the most prevalent cause
of lower respiratory tract infection among
infants and young children. Since its initial
approval in 1998,
Synagis
has become the
global standard of care for RSV prevention
and helps protect at-risk babies against RSV.
The lifting of public health measures to
combat COVID-19, including national and
local lockdowns, has led to out-of-season
surges of RSV, creating increased demand
for preventive options like
Synagis
. These
COVID-19 impacts varied across markets.
Source: IQVIA.
AstraZeneca focuses on specic segments within this
overall disease area market.
Gastrointestinal
$15.4bn
Infection
$8.3bn
Vaccines
$7.4bn
$31.1bn
Annual worldwide market value
Disease area world market
(MAT Q3-21)
28
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Disease Area Review
Other Medicines and COVID-19
con tinued
The commercial rights to the sale and
distribution of
Synagis
in more than 80
countries outside the US reverted back to
AstraZeneca on 1 July 2021, following the end
of our agreement with AbbVie. Our agreement
with Sobi for the rights to
Synagis
in the US was unaffected by this reversion.
Neuroscience
We are progressing MEDI7352, a bispecific
molecule that targets nerve growth factor and
tumour necrosis factor alpha, in both painful
diabetic neuropathy in Phase II and
osteoarthritis pain in Phase IIb. Also in Phase I
are MEDI0618, an anti-PAR2 (protease
activated receptor 2) mAb being developed
for osteoarthritis pain and migraine and
AZD4041, a selective orexin 1 receptor
antagonist being developed for opioid use
disorder. This has been awarded a grant
from the US National Institute on Drug Abuse
to progress clinical development.
We continue our collaboration with Takeda
on MEDI1341 for Parkinson’s disease and
multiple system atrophy, which is in Phase I.
We have a collaboration with Eli Lilly on
MEDI1814, an antibody selective for amyloid
beta 1-42 that has completed Phase I as a
potential disease-modifying treatment for
Alzheimer’s disease.
COVID-19
Vaxzevria
Vaxzevria
(ChAdOx1-S [Recombinant],
formerly AZD1222) was co-invented by the
University of Oxford. Through a landmark
agreement in 2020
Vaxzevria
was developed and distributed by AstraZeneca. Under a
sub-license agreement with AstraZeneca,
the vaccine is manufactured and supplied
by the Serum Institute of India under the
name
Covishield
.
Vaxzevria
received its first approval for
emergency use in December 2020 and it has
now been granted a conditional marketing or
emergency use authorisation in 93 countries
worldwide, including an Emergency Use
Listing from the WHO in February 2021, which
accelerated access in more than 140
countries through the COVAX Facility.
In just over a year, AstraZeneca built more
than 12 regional supply chains around
the world, relying on our own manufacturing
capacity, and sharing our know-how with
more than 20 partners. In 2021, AstraZeneca
and our global partners released for supply
2.5 billion vaccine doses to over 180
countries. Approximately two thirds of these
went to LMICs, and more than 247 million
doses have been delivered to 130 countries
through the COVAX Facility in 2021.
The European Commission initiated legal
proceedings against AstraZeneca in April 2021
in relation to the Advance Purchase Agreement
for the COVID-19 vaccine. The parties reached
a settlement in September 2021 which brought
these proceedings to an end.
Vaxzevria
is effective against all severities
of COVID-19 from symptomatic to severe
disease and hospitalisation, and is generally
well tolerated, according to clinical studies
and real-world evidence from tens of millions
of people globally. Over the course of 2021,
the vaccine is estimated to have helped
prevent 50 million COVID-19 cases, five million
hospitalisations, and helped save more than
one million lives.
The SARS-CoV-2 virus which causes COVID-19
has changed over time with the emergence of
new variants including Alpha, Beta, Gamma,
Delta and Omicron. Data from clinical studies
and real-world evidence demonstrate the
effectiveness of two doses of
Vaxzevria
against
Alpha, Beta, Gamma and Delta.
Vaxzevria
has also shown an increased
immune response to the Alpha, Beta, Gamma,
Delta and Omicron variants when used as a
third dose booster, after either two doses of
Vaxzevria
, of an mRNA vaccine or of
CoronaVac (Sinovac Biotech Ltd.).
Vaxzevria
is
already approved as a homologous third dose
booster in several countries.
Regulators around the world have confirmed
that
Vaxzevria
has a favourable benefit-risk
profile. Incidents of thrombosis with
thrombocytopenia (TTS) are very rare and
lower than in those diagnosed with COVID-19,
and following a second dose of
Vaxzevria
are
comparable to the background rate in an
unvaccinated population. Early diagnosis
allows appropriate treatment of these very
rare events.
In 2021, the majority of vaccine product sales
and doses delivered related to pandemic
contracts. AstraZeneca will continue to supply
the vaccine around the world in 2022. We have
moved to an affordable pricing approach that
enables us to maintain broad global access.
This includes a tiered pricing approach
aligned to Gross National Income per capita,
a widely recognised model used by
developers of medicines and vaccines. We
remain committed to supplying the vaccine at
no profit in low-income countries, in line with
our agreement with Oxford University.
In the first half of 2021, AstraZeneca initiated
development of the AZD2816 COVID-19 vaccine
to address the Beta variant. In February 2022,
we reported the positive interim results of the
Phase II/III trial (D7220C00001) and additional
analysis, which demonstrated that AZD2816
generated a similar immune response to
Vaxzevria
against variants, including Omicron.
Given these data, the low circulation of the
Beta variant and the substantial body of
evidence supporting
Vaxzevria
against
current variants, we discontinued the
AZD2816 development programme and will
continue to focus on the supply of
Vaxzevria
around the world.
Evusheld
AstraZeneca’s response to the pandemic
also included the development of
Evusheld
(tixagevimab co-packaged with cilgavimab,
formerly AZD7442), a long-acting antibody
(LAAB) combination against the virus.
Evusheld
is the first LAAB combination to
demonstrate benefit in both prevention and
treatment of COVID-19, as well as the first
antibody therapy to have shown a high level
of protection against symptomatic COVID-19
in a pre-exposure prevention setting, as
demonstrated in the PROVENT prevention
Phase III trial in August 2021.
Evusheld
retains in vitro neutralising activity
against the Omicron variant at a level that may
continue to provide protection to patients,
according to consistent data across multiple
independent preclinical studies, making it one
of only two antibody therapies authorised for
use that showed neutralising activity against
Omicron and against all other tested variants
to date. In vitro activity does not always
correlate with clinical efficacy. AstraZeneca
is continuing to collect further data to better
understand the implications of these data in
clinical practice.
Evusheld
received Emergency Use
Authorization (EUA) from the FDA in
December 2021 for the pre-exposure
prophylaxis (prevention) of COVID-19 in
people with moderate to severe immune
compromise due to a medical condition or
immunosuppressive medications and who
may not mount an adequate immune
response to COVID-19 vaccination, as well
as those individuals for whom COVID-19
vaccination is not recommended. In 2021,
AstraZeneca agreed to supply the US
Government with 700,000
Evusheld
doses,
and in January 2022 the US Government
announced that it had agreed to purchase
500,000 additional doses.
Evusheld
is also
authorised for emergency use for prevention
of COVID-19 in several other countries,
including France.
29
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Additional Information
Financial Statements
Disease Area Review / Other Medicines and COVID-19
Our business is organised to deliver our
strategic priorities sustainably, supporting
scientic innovation and commercial success.
Our business
Our business is organised to deliver our
growth through innovation strategy and
our three strategic priorities. Our R&D
and Commercial functions have been
organised to accelerate decision making
and the launches of new medicines
across our main disease areas.
from pa
ge 52
.
Accelerate Innovative Science
To drive our science, we have disease
area-focused R&D organisations that
are responsible for discovery through
to late-stage development – one each for
Oncology, BioPharmaceuticals (CVRM
and R&I) and Rare Disease. A separate
Vaccines and Immune Therapies Unit
has been created for 2022.
These enable us to follow the science by
accelerating promising early-stage assets
and life-cycle management programmes
in our pipeline and also provide new
opportunities for combinations.
Deliver Growth and Therapy Area Leadership
Our growth is delivered by our Commercial
teams, which comprised around 46,380
employees at the end of 2021. We have an
active presence in some 90 countries and
sold our products in more than 130 countries
in 2021. In most markets, we sell our
medicines through wholly owned local
marketing companies. We also sell through
distributors and local representative oces.
We market our products largely to primary
care and specialty care physicians.
Two commercial units, one for Oncology
and one for BioPharmaceuticals, align
product strategy and commercial delivery
across our US and Europe-Canada regions.
Our International region has commercial
responsibility for Emerging Markets,
including China, as well as Australia and
New Zealand. Japan reports separately.
Our Operations function plays a key role
in developing, manufacturing, testing and
delivering our medicines to our customers.
Our Rare Disease group, in addition to R&D,
also manages the commercial and operations
functions for our rare diseases portfolio in
our Established Markets.
Be a Great Place to Work
For the benet of our employees and our
business, we want AstraZeneca to be a
great place to work. We are building and
developing capabilities and a strong
leadership pipeline. We value diversity and
aim to attract, retain and develop talented
employees who thrive in a vibrant,
high-performing culture with a passion
for people development.
For the benet of society, we want to be
valued and trusted by our stakeholders as a
sustainable source of great medicines over
the long term. We are committed to operating
in a way that recognises the interconnection
between business growth, the needs of
society and the limitations of our planet.
Our sustainability approach
Our ambition is to harness the power of
science and innovation in ways that have
a positive impact on society, patients,
healthcare systems and the environment,
through actions for the long term.
Sustainability strategy
In 2021, we refreshed our sustainability
strategy by conducting a materiality
assessment. The assessment shows which
topics are most important to AstraZeneca
and our stakeholders, helping us to focus for
maximum positive impact. The assessment
resulted in nine focus areas where we can
make the most meaningful impact, grouped
under three interconnected priorities:
>
Access to healthcare:
we are working
towards a future where all people have
access to sustainable healthcare solutions
for life-changing treatment. We are increasing
equitable access to medicines, promoting
disease prevention and strengthening
healthcare system resilience worldwide.
>
Environmental protection:
we aim to
minimise our environmental impact across
all our activities and products. We are
increasingly circular – designing out waste
and pollution, keeping products and
materials in use to maximise resource
efficiency. We are adopting nature-based
solutions to protect, sustainably manage
and restore natural and modified
ecosystems that address societal
challenges, such as the impact of the
climate crisis, and support biodiversity.
30
AstraZeneca Annual Report & Form 20-F Information 2021 Strategic Report
Business
Review
2021
2020
201
9
9
8
8
9
NM
E
Phase II sta
rts/progressio
ns
2021
2020
201
9
27
24
35
27
NME and major LCM submissions
2021
2020
201
9
23
28
14
23
NME and major LCM Phase III
i
nv
estment de
cisi
ons2021
2020
201
9
22
29
28
22
NM
E
a
n
d maj
or LC
M
approv
al
s
>
Ethics and transparency:
we seek to
create positive societal impact and embed
ethical behaviour in all our business
activities, markets and value chain. We do
this by promoting ethical, transparent and
inclusive policies, both within AstraZeneca as
well as across all our partners and suppliers.
Our sustainability approach is centred around
three principles:
>
Systems thinking:
we recognise that our
globalised world binds us together in a
dynamic, complex network of relationships.
We look for opportunities that offer
synergies and address systemic issues.
>
Long-term perspective:
we acknowledge
there are no quick fixes so we must be
proactive and think long term. We anticipate,
avoid or address unintended impacts,
monitoring changes over time and
building resilience.
>
Creating the conditions for lasting
sustainability:
we apply science to go
beyond preventing and addressing any
impacts from our activities to improve
the environment.
Performance indicators
By measuring both Phase II and Phase III pipeline
progressions, we are focused on both near-term and
longer-term delivery. Phase II NME starts ensure the
ongoing robustness and future stability of the pipeline
(and reflect the outcome of nearer-term strategic
investment decisions). Phase III investments measure
assets that will deliver nearer-term value (and reflect
the outcome of longer-term strategic investment
decisions). Submissions and approvals metrics
demonstrate the advancement of this innovation
through filing and approval in our four major markets
(US, EU, China and Japan).
We know that acting sustainably is at the
core of our licence to operate as a company.
Sustainability is an engine for innovation that
helps to future-proof our business against risk
and opens up new opportunities in support
of our strategic objectives. We continue to
embed sustainability within AstraZeneca in
an integrated manner, which recognises that
every scientific or business decision we make
must be aligned with our sustainability
objectives and commitments.
Governance
Our Board and our Senior Executive Team
(SET) review our internal sustainability
scorecard quarterly. In 2021, the Board
established a Sustainability Committee to
monitor the execution of our sustainability
strategy, oversee communication of our
sustainability activities with stakeholders,
and provide input to the Board and other
Board Committees on sustainability matters.
Benchmarking and assurance
We contribute to several key global
environmental, social and governance (ESG)
performance evaluations, recognising the value
of independent third-party assessment and
insights. Our performance is also assessed
independently based on the information and
data we make publicly available.
Bureau Veritas has provided independent
external assurance to a limited level for the
sustainability information contained within
this Annual Report and Form 20-F. Assurance
is in accordance with the International
Standard on Assurance Engagements (ISAE)
3000 (Revised) and ISAE 3410 Assurance
Engagements on Greenhouse Gas Statements.
information on page 216 and the letter of assurance
available on www.astrazeneca.com/sustainability.
Accelerate Innovative Science
We are using our distinctive
scientic capabilities to deliver a
pipeline of life-changing medicines.
Our performance in 2021
>
Invested $9.7 billion in our R&D.
>
With the completion of the Alexion
acquisition, we gained an innovative
complement-biology platform and robust
rare disease pipeline.
>
First major approvals were granted for five
NMEs:
Vaxzevria
,
Orpathys
, Saphnelo
,
Evusheld
and
Tezspire
.
>
177 projects in our pipeline, of which 161
are in the clinical phase of development.
>
15 NME projects in pivotal trials or under
regulatory review (2020: 10).
>
R&D productivity increased to 23% in 2021
versus an industry average of 14%.
>
We published 169 manuscripts in
‘high-impact’ journals.
>
At the end of 2021, 30% of our early
pipeline comprised new drug modalities.
>
Shared anonymised individual patient-level
data from 165 clinical studies with 64
unique research teams.
>
We unveiled our global R&D Discovery
Centre in Cambridge, UK.
31
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Business Review / Accelerate Innovative Science
Research & Development
Our ambition is to transform the lives of
patients with improved outcomes and a
better quality of life, through more effective
treatment and prevention, ultimately working
towards a cure for some of the world’s most
complex diseases.
Throughout 2021, we continued to progress
our science, guided by our 5R framework
(right target, right patient, right tissue, right
safety, right commercial potential) and
focusing on the three key areas of science,
as below. This was bolstered by the addition
of Alexion’s complement expertise and
innovative technology platforms.
Our R&D productivity, defined as progressing
from candidate drug nomination to Phase III
completion, increased to 23% in 2021 versus
an industry average of 14%. Our scientists
published 871 manuscripts with 169 in
‘high-impact’ peer-reviewed journals, each
with an impact factor exceeding 15 (Thomson
Reuters 5yr IF score). The increase in high
impact from 123 in 2020 continues to reflect
the quality and drive to share our science.
Enhancing our understanding of disease
We are advancing our understanding of
disease biology to uncover novel drivers and
insights into the diseases we aim to treat,
hope to prevent and, in the future, even cure.
Selecting the right target remains one of the
most important decisions in the drug discovery
process and our continued investments into
multiple approaches in this area are delivering
to our pipeline. 2021 developments included:
>
Making progress towards our ambition
to analyse two million genomes by 2026.
Our Centre for Genomics Research has
already analysed more than 800,000
exomes/genomes or five petabytes of
genomic data, highlighting novel and
important contributions of rare genetic
variants to some of the most common
diseases. This was reflected in a
Nature
publication reporting the largest exome-
wide genotype-phenotype data set from
nearly 300,000 UK Biobank participants.
>
Adding the first AI-derived targets to our
portfolio, as part of our collaboration with
BenevolentAI. Combining artificial and
human intelligence is helping us find
previously unexplored patterns and draw
better, faster conclusions.
>
Driving deeper disease understanding and
progressing two new targets in Oncology,
the outcome of more than 290 CRISPR
screens conducted by the AstraZeneca-
Cancer Research UK Functional
Genomics Centre.
>
Becoming the co-lead of an international
consortium (PERSIST-SEQ) that will
employ single-cell sequencing to explore
mechanisms of resistance to cancer
treatment. Experts from 15 universities
and biotechnology and pharmaceutical
companies aim to characterise five million
individual cancer cells over five years.
Thereafter, data will be publicly available
to aid cancer research.
>
Collaborating with Tempus on the use of
artificial intelligence to analyse real world
data. The aim is to deepen our
understanding of complex tumour biology
to more accurately predict how new
treatments may help specific patient
populations, and to accelerate clinical trials.
>
Furthering our investment in cell therapy
research by progressing our first armoured
CAR-T programme into development,
initially in hepatocellular carcinoma and
progressing our stem cell therapy for heart
failure into pre-clinical development.
>
Collaborating with Genomenon to use its
AI-driven genomic technology to produce a
complete ‘Genomic Landscape’ for certain
rare diseases and enhance its
Mastermind
Genomic Search Engine used by genetic
testing laboratories and medical centres
worldwide.
Designing the next generation of therapeutics
We are continuing to design new ways to
target the drivers of disease to help us create
the next generation of therapeutics. At the
end of 2021, 30% of our early pipeline
consisted of new drug modalities, including
oligonucleotide, antibody drug conjugate
(ADC), bispecific mini-bodies, and cell therapy
approaches. 70% of our small molecule
chemistry projects now use AI to help
determine the best way to make a molecule
in the shortest time. Developments during
the year included:
>
Adding a new modality – self-amplifying
RNA (saRNA) – through a collaboration
with VaxEquity. The strategic, long-term
research collaboration aims to optimise
and validate VaxEquity’s saRNA platform,
developed at Imperial College London,
and apply it to advance novel therapeutic
programmes.
>
Advancing digital therapeutics. For
example, we are currently testing a pulse
oximeter in four studies to detect early
signs and symptoms of interstitial lung
disease (ILD) in patients being treated for
metastatic breast cancer. The aim is to
enable early intervention where required
and reduce the risk of severe-grade ILD.
>
Building on our complement technology
platform. We are exploring targets in the
complement system beyond C5 and new
modalities to best target complement
dysregulation and offer the optimal therapy
for patients. We are also advancing an
innovative pipeline of complement
inhibitors, including oral small molecules
(Factor D inhibitors) and bispecific
mini-bodies (C5 and properdin inhibitors)
designed for self-administered
subcutaneous injection. We are
collaborating across therapeutic
areas to identify opportunities to expand
complement innovation to indications
beyond rare diseases.
>
Diversifying and expanding our leadership
in rare diseases beyond complement. This
includes progressing our next-generation
alkaline phosphatase enzyme replacement
therapy into clinical trials, with the intention
of helping more people living with
hypophosphatasia.
Pioneering new approaches to drive
success in the clinic
We are adopting a range of cutting-edge
technologies to improve our ability to predict
success of our candidate drugs in the clinic.
2021 developments included:
>
Developing ‘miniature organs’ in
collaboration with NovoHeart to recreate
the mechanical and electrical properties
in a beating mini-heart. We are currently
refining and validating this advanced model
with the aim of using it to evaluate pipeline
compounds next year.
>
Changing how clinical trials are designed,
run and managed. One of our
cardiovascular trials, for example, quickly
identifies heart attack patients via patient
registries and offers them the opportunity
to join the trial via their healthcare
professional. Participation is made more
accessible by aligning study visits and
clinical routine care with data collected
through both routine care and remote
data collection.
>
Using blood-based genetic profiling as a
minimally invasive way of identifying the
right drug for the right patient at the right
time. One of our oncology trials, SERENA-6,
is exploring our next-generation oral
selective estrogen receptor degrader
(SERD) to address endocrine resistance.
In this trial, we are measuring genetic
alterations in circulating tumour DNA
(ctDNA) isolated from blood samples to
inform which patients may benefit from
switching from standard of care therapy
to next-generation SERD therapy. Other
studies in non-small cell lung cancer
(MERMAID-1 and MERMAID-2) are also
using ctDNA to identify patients most at
risk of relapse, and intervene with the
most appropriate treatment regimen.
32
AstraZeneca Annual Report & Form 20-F Information 2021 Strategic Report
Business Review
continued
forced breath) remotely, with supervision
via video to ensure high-quality data. We
are using this method to generate
regulatory quality spirometry in clinical
trials, reducing the patient burden and
allowing us to test more frequently to
increase disease and treatment
understanding.
>
Working with JanaCare to develop an
at-home creatinine monitoring test. Home
monitoring of serum creatinine will allow
for routine and frequent estimations of
glomerular filtration rate, a measure of
kidney function. With a home device, we
can make future trials more patient-centric.
>
Launching the Patient Engagement Center
of Excellence, a cross-functional process
and set of standards for Patient Advocacy
and other teams to follow when interacting
with rare disease patients, caregivers or
patient advocacy groups in the US. The
resulting inputs will help ensure we are
engaging in a patient-centric way. This will
enable us to continue developing innovative
medicines that address unmet medical
needs, ensure we are designing protocols
that include patient-relevant clinical
endpoints, and deliver patient-centric
clinical trials.
>
Collaborating with the UK NHS and GRAIL,
who this year initiated a world-leading study
to screen for cancer in a broad population.
We have committed to a Phase III trial using
circulating tumour DNA to identify the optimal
treatment for early lung cancer patients.
>
Improving patient health outcomes by
combining our innovative new treatments
with evidence-based digital health
solutions, including digital biomarkers,
digital diagnostics and digital therapeutics.
For example, we collaborated with
manufacturers to develop a method for
performing spirometry (measuring how
much air someone can breathe out in one
Development pipeline overview
(as at 10 February 2022)
2021 was another exceptional year for our
science, with our pipeline producing
overwhelmingly positive news for patients.
This included 49 regulatory events, either
submissions or approvals for our medicines
in major markets, including five NME first
approvals. That performance is backed by a
healthy pipeline of high potential medicines,
with a total of 32 pipeline progression events,
either NME Phase II starts or Phase III
investment decisions, indicating our ability
to deliver longer-term sustainable growth.
During 2021, we delivered clinical trial data
and submissions that resulted in 22 approvals
for new medicines in the US, EU, China and
Japan. Our pipeline now includes the Alexion
Rare Disease portfolio and comprises 177
projects, of which 161 are in the clinical phase
of development. We made significant
progress in advancing our late-stage
programmes through regulatory approval with
27 NME or major life-cycle management
(LCM) regulatory submissions in the US, EU,
China and Japan during 2021.
We have 15 NME projects in pivotal trials
or under regulatory review, compared with
10 at the end of 2020. Also in 2021, 20
NMEs progressed to their next phase of
development and 18 projects were
discontinued: nine for poorer than anticipated
safety and efficacy results and nine as a result
of a strategic shift in the environment
or portfolio prioritisation.
Accelerating our pipeline
We are prioritising our investment in specific
programmes, focusing on scientific
innovation. As a result, we had numerous
positive trial readouts in 2021, including the
presentation of scientific rationale that
resulted in eight Regulatory Designations for
Breakthrough Therapy, Priority Review or
Fast Track for new medicines which offer
the potential to address unmet medical need
in certain diseases. We also secured Orphan
Drug Designation for the development of
three medicines to treat very rare diseases.
page 16.
Phase I
32
Phase II
34
Late-stage
development
1
32
Life-cycle
management
projects
2
79
Oncology
47%
Cardiovascular, Renal &
Metabolism
22%
Respiratory & Immunology
9%
Rare Disease
9%
Other Medicines & COVID-19
13%
Oncology
50%
Cardiovascular, Renal &
Metabolism
26%
Respiratory & Immunology
15%
Rare Disease
6%
Other Medicines & COVID-19
3%
Oncology
53%
Cardiovascular, Renal &
Metabolism
9%
Respiratory & Immunology
16%
Rare Disease
13%
Other Medicines & COVID-19
9%
Oncology
59%
Cardiovascular, Renal &
Metabolism
13%
Respiratory & Immunology
18%
Rare Disease
10%
Other Medicines & COVID-19
0%
1
signicant additional indications.
2
where rst indication is already
launched.
33
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Strategic Report
Business Review / Accelerate Innovative Science
Bioethics
BV
‘Bioethics’ refers to the range of ethical issues
that arise from the study and practice of
biological and medical science. It falls under
our ethical business culture sustainability
focus. Our Global Standard on Bioethics sets
out our principles, which apply to all our
scientific activities, whether conducted by
us or by third parties acting on our behalf.
Clinical trial transparency
We believe that transparency enhances the
understanding of how our medicines work
and benefit patients. We publish information
about our clinical research, as well as the
registration and results of our clinical trials –
regardless of whether or not they are
favourable – for all products and all phases.
This includes marketed medicines, drugs in
development and drugs where development
has been discontinued. As at 31 December
2021, AstraZeneca has:
>
Shared anonymised individual patient-level
data from 165 studies with 64 unique
research teams and responded to 263
requests from external researchers using
our portal, www.vivli.org to request our
clinical data and reports to support
additional research.
>
Published 13 complete Anonymized Clinical
Document Packages between Health
Canada’s PRCI process and EMA’s Policy
0070 process.
Since 2015, AstraZeneca has:
>
Published 245 Trial Result Summaries in
easy-to-understand language on the
industry-wide portal www.trialsummaries.com.
These have been translated into relevant
local languages for all sites where a study is
conducted, spanning 59 languages overall.
Research use of human biological samples
The use of human biological samples, such
as solid tissue, biofluids and their derivatives,
plays a vital role in developing a deeper
understanding of human diseases. We are
committed to minimising the use of human
fetal tissue (hFT) by exploring technological
alternatives. Fetal tissue is used to provide
invaluable data to advance novel treatments
for serious diseases of unmet medical need but
only when no other scientifically reasonable
alternative is available. There were no new
approvals in 2021. As at 31 December 2021,
four projects using hFT had progressed and
two projects are ongoing.
Animal research
Technology has not yet advanced to the
stage where all animal use can be eliminated
from research and development. In addition,
some animal studies are required by
international regulators before medicines
progress to human trials. Animal studies
therefore remain a small, but necessary, part
of developing new medicines. Animal use in
research and development varies depending
on many interrelated factors, including our
amount of pre-clinical research, the nature
and complexity of the diseases under
investigation and regulatory requirements.
We believe that without our active and ongoing
commitment to the 3Rs (Replacement,
Reduction and Refinement of animals in
research), our animal use would be much
greater. In 2021, animals were used for
in-house studies 93,511 times (2020: 74,684).
Animals were also used on our behalf for
contract research organisation studies 58,826
times (2020: 51,625). In total, over 95% were
rodents or fish.
Our R&D resources
Our R&D organisation comprises more than
14,000 employees working across our global
sites. We currently have three global R&D
centres: Cambridge, UK; Gaithersburg, MD,
US; and Gothenburg, Sweden, as well as
several additional R&D sites. The acquisition
of Alexion added a Rare Disease R&D Centre
of Excellence in New Haven, CT, US.
Cambridge R&D centre
In 2021, we officially unveiled our new R&D
centre, the Discovery Centre (DISC), at the
heart of the Cambridge Biomedical Campus,
one of Europe’s leading life sciences clusters,
promoting innovation and collaboration.
Our new building is designed to encourage
interaction between our scientists and the
surrounding scientific and medical community.
More than 4,000 AstraZeneca employees are
now located in the Cambridge area, where
our scientists continue to work side-by-side
with colleagues from universities, research
institutions and biotech companies. The new
centre exemplifies how we are making our
science and our business sustainable in
everything we do – from how we discover and
develop new medicines to how we identify
and address their environmental impact.
Project costs incurred to the end of 2021
amounted to c. $1.3 billion (£1 billion) and a
projected spend of c. $0.1 billion (£0.1 billion)
will be incurred during 2022 to complete the
installation of primary laboratory equipment,
furniture and fixtures, and final commissioning
of the building.
Research & Development
2021
2020
2019
Discovery and early-stage
development
38%
36% 36%
Late-stage development
62%
64% 64%
Investing in R&D
In 2021, R&D expenditure was $9,736 million
(2020: $5,991 million; 2019: $6,059 million),
including Core R&D costs of $7,987 million
(2020: $5,872 million; 2019: $5,320 million).
In addition, we spent $27,042 million on
acquiring product rights (such as in-licensing
and, in 2021, $26,455 million of product
rights as part of the Alexion acquisition)
(2020: $1,454 million; 2019: $1,835 million).
We also invested $223 million on the
implementation of our R&D restructuring
strategy (2020: $35 million; 2019: $10 million).
The allocations of spend by early- and
late-stage development are presented in
the R&D spend analysis table below.
34
AstraZeneca Annual Report & Form 20-F Information 2021 Strategic Report
Business Review
continued
Performance indicators
Global Product Sales by geography
2021
2020
2019
Product
Sales
$m
Actual
growth
%
CER
growth
%
Product
Sales
$m
Actual
growth
%
CER
growth
%
Product
Sales
$m
Actual
growth
%
CER
growth
%
Emerging
Markets
12,161
40
36
8,679
6
10
8,165
18
24
US
12,000
39 39
8,638
12 12
7,747
13 13
Europe
7,604
50 44
5,059
16
4,35015
(2)
2
Established
Rest of World
4,776
36 36
3,514
6 6
3,303
17
18
Total
36,541 41
38
25,890
10
11
23,565
12
15
Pricing and value of our medicines
With increasing demand for healthcare,
there is increased pressure on health system
budgets. This includes downward pressure on
pricing and reimbursement in many markets,
including the US and China. This pressure is
heightened by a shift from primary to specialty
care medicines, which comprise a growing
share of AstraZeneca’s portfolio. Pricing for
these products reflects the higher value they
bring to patients and payers, as well as the
smaller patient numbers as a result of
targeted treatment options.
The COVID-19 pandemic has also had an
impact. Healthcare resources have been
reallocated to meet the greatest need with,
for example, payers prioritising treatments
that help keep patients out of hospital. The
pandemic also demonstrated that healthcare
systems can move quickly to grant rapid
access to innovative new medicines, such
as vaccines, which may enable faster
access to promising medicines.
For more information on our broad and equitable supply
of our
Vaxzevria
vaccine, see Other Medicines and
COVID-19 from page 27.
Against this background, and in our
discussions with national, regional and local
stakeholders, we continue to base our pricing
policy based on four principles:
>
Determining the price of our medicines
while considering their full value for
patients, payers and society, and
reflecting factors such as clinical benefit,
cost-effectiveness, improvement to life
expectancy and quality of life.
>
Aiming to ensure the sustainability of both
healthcare systems and our research-led
business model.
>
Working closely with payers and providers
to understand their priorities and ensure
appropriate patient access to our medicines.
>
Pursuing a flexible pricing approach that
reflects the wide variation in global health
systems. For example, we apply Tiered
Pricing Principles, defining price levels
based on a country’s ability to pay.
on our website, www.astrazeneca.com/sustainability.
As part of our approach, we collaborate
with payers to conclude innovative outcomes-
and value-based reimbursement models that
improve patient outcomes. We had concluded
more than 170 such agreements by the end
of 2021. We also offer a number of patient
assistance programmes that help increase
patients’ access to medicines and/or
healthcare, and reduce their out-of-pocket costs.
For more information, see Access to healthcare
on page 44.
Sales and marketing
As outlined in Our Strategy and Key
Performance Indicators from page 12, we are
seeking to transform healthcare delivery with
a focus on patients, as well as innovative
commercial approaches and pricing strategies.
Our approach to pricing, summarised below,
is one that focuses on unlocking the value our
medicines bring to patients. Moreover, our
focus on patient centricity has seen us move
away from a traditional product-centred
approach to one based on improving the
whole patient experience, from driving earlier
diagnosis to improvements in clinical trials.
Through the use of data analytics,
‘omnichannel’ and ‘go-to-market’ models, we
are also working to improve the way in which
we engage with HCPs and other customers.
This includes accelerating the development
of healthcare collaborations to drive changes
in practice that improve patient outcomes.
During 2021, growth was well balanced across
our disease areas, and we saw double-digit
growth in all major regions, including
Emerging Markets despite some headwinds
in China. Following completion of the Alexion
acquisition on 21 July 2021, Rare Disease
medicines generated $3,071 million, 8% of
Total Revenue, growing 8% (9% at CER) on
a pro forma, pro rata basis
1
. Outside the US,
sales of
Soliris
and Ultomiris
were driven by
new country launches.
Deliver Growth and Therapy Area Leadership
We plan to meet our growth and
protability goals through successful
innovation, commercial excellence
and the creation of sustainable
protability.
Our performance in 2021
>
Total Revenue, comprising Product Sales
and Collaboration Revenue, increased
by 41% (38% at CER) to $37,417 million.
>
Growth was well balanced across our
disease areas.
>
In the US, Total Revenue increased by
38% to $12,228 million and in Europe
by 45% (40% at CER) to $8,050 million.
>
Total Revenue in Emerging Markets
increased by 41% (36% at CER) to
$12,281 million, with China growth of
12% (4% at CER) to $6,011 million.
>
We continue to collaborate with payers
to conclude outcomes- and value-based
reimbursement models that improve
patient outcomes and had concluded
more than 170 such agreements by the
end of 2021.
>
Committed to high ethical standards:
105 employees and third parties removed
from their roles for breaches of sales and
marketing regulations or codes.
>
Delivered 110 successful market launches
and achieved 100% of planned new
technology implementation milestones.
>
More than 1,000 collaborations around
the world.
35
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Business Review / Deliver Growth and Therapy Area Leadership
Our commercial regions
US
We have a 3.1% market share of US
pharmaceuticals by sales value and we are
the fourteenth largest prescription-based
pharmaceutical company in the US. Product
Sales increased by 39% in 2021 to $12,000
million, driven primarily by the performance
of our new medicines across Oncology and
BioPharmaceuticals, including
Tagrisso
,
Calquence
,
Farxiga
and
Fasenra
. Product
launches and new indications also contributed
to this growth.
Breztri
was introduced for patients with COPD;
Farxiga
in a new
indication for chronic kidney disease, and
Saphnelo
for systemic lupus erythematosus.
The US healthcare system is complex.
Multiple payers and intermediaries exert
pressure on patient access to branded
medicines through regulatory rebates in
government programmes and voluntary
rebates paid to managed care organisations
and pharmacy benefit managers for
commercially insured patients. Significant
pricing pressure is driven by payer
consolidation, restrictive reimbursement
policies and cost control tools, such as
exclusionary formularies and price protection
clauses. Many formularies employ ‘generic
first’ strategies and/or require physicians to
obtain prior approval for the use of a branded
medicine where a generic alternative exists.
For prescriptions dispensed in the US in 2021,
generics constituted 86.3% of the market by
volume (2020: 85.3%) and 17.2% ($101.0
billion) of the market ($587.7 billion) by value
(2020: 18.7%, $102.2 billion of $546.2 billion).
Ongoing scrutiny of the US pharmaceutical
industry, focused largely on affordability, has
been the basis of multiple policy proposals.
In addition, lawmakers at both the federal
and state levels have sought increased drug
transparency and have proposed and
implemented such policies. Despite this
price scrutiny, we have a diversified product
portfolio in the US. We provide a broad
spectrum of treatments in many different
disease areas, allowing for significant access
to patients in need of our innovative medicines.
In Rare Disease,
Soliris
Total Revenue
amounted to $1,068 million, representing a
pro forma, pro rata
1
increase of 4%. Sales
benefitted from growing use in neurology
indications, gMG and NMOSD, offset by
the successful conversion to
Ultomiris
in
haematological indications, PNH and aHUS.
At $381 million,
Ultomiris
sales grew by 20% on a pro forma, pro rata basis.
Europe
The total European pharmaceutical market
was worth $228 billion in 2021. We have a
2.6% market share of pharmaceutical sales
by value and we are the eleventh largest
prescription-based pharmaceutical company
in Europe (see Market definitions on
page 224). Product Sales increased by 50%
at actual rate of exchange (44% at CER)
to $7,604 million (2020: $5,059 million).
We continued to launch new medicines
and saw sustained performance of our
existing medicines.
Oncology sales grew by 28% (22% at CER),
driven by increased use of
Tagrisso
for the
treatment of 1st-line EGFR-mutated (EGFRm)
NSCLC patients.
Imfinzi
sales reflect a
growing number of reimbursements in SCLC.
Lynparza
saw continued strong performance
in the 1st-line ovarian cancer setting and
launches in breast and prostate cancer.
BioPharmaceutical sales grew by 14% (9% at
CER).
Forxiga
sales growth of 60% (52% at
CER) was driven by type-2 diabetes and new
indications in heart failure and chronic kidney
disease (CKD).
Fasenra
sales increased 41%
(34% at CER) while
Trixeo
was launched in major European markets with more to follow in
2022.
Established Rest of World (ROW)
Japan
The pharmaceutical market in Japan
was worth $85 billion in 2021, remaining
an attractive market for investment in
innovation. We have a 3.7% market share
of pharmaceutical sales by value and we
are the fifth largest prescription-based
pharmaceutical company. The government
introduced a mid-year price control
measurement in April 2021 in order to address
continued pressure on healthcare spend.
Total Product Sales grew by 31% (35% at
CER) to $3,416 million, despite continued
COVID-19 challenges, price cuts and ongoing
generic erosion for
Symbicort
. This included
sales from Rare Disease medicines after the
acquisition of Alexion. The strong
performance was driven by new medicines
including
Tagrisso
,
Imfinzi
, Lynparza
,
Fasenra
,
Breztri
,
Lokelma
and
Forxiga
. Additionally,
Calquence
was introduced for patients with
chronic lymphocytic leukaemia,
Forxiga
for
CKD and
Saphnelo
for systemic lupus
erythematosus. We also recovered the
distribution rights for
Nexium
and Synagis
.
Canada
Product Sales in Canada increased by 28% at
actual rate of exchange (19% at CER) in 2021.
This was primarily driven by strong, sustained
growth of our new medicines, particularly
Tagrisso
,
Lynparza
,
Forxiga
and
Fasenra
.
Declines in
Onglyza
,
Crestor
and
Brilinta
sales, linked to loss of exclusivity, combined
with pricing pressures, partially offset the
growth in innovative medicines.
Australia and New Zealand
Our sales in Australia and New Zealand
increased by 89% at actual rate of exchange
(73% at CER) in 2021. This was primarily due
to growth in key brands such as
Tagrisso
,
Lynparza
,
Fasenra
,
Soliris
and
Forxiga
/
Xigduo
. Calquence
achieved a high level of growth in
its first full year of reimbursement. However,
the overall growth of the business was
constrained by the impact of the
Crestor
and
Atacand
divestments in 2020, as well as the
flat growth of
Symbicort
despite it maintaining
leadership in the LABA/ICS class.
Emerging Markets
With revenues of $12,281 million (2020:
$8,711 million), AstraZeneca was the second
largest multinational pharmaceutical company,
as measured by prescription sales, and the
third fastest-growing top 10 multinational
pharmaceutical company in Emerging
Markets in 2021. Despite the continued impact
of COVID-19 across all geographies, we saw
growth across all major areas. This included
Latin America at 153% (156% at CER), Russia
& Eurasia at 40% (42% at CER), Middle East &
Africa at 16% (20% at CER) and Asia Pacific
at 96% (93% at CER).
China
In China, AstraZeneca is the largest
pharmaceutical company by sales value in
the hospital sector. Sales in 2021 increased
by 12% at actual rate of exchange (4% at
CER) to $5,995 million (2020: $5,345 million).
Forxiga
, roxadustat and
Lokelma
were listed
or renewed in the NRDL.
The implementation of Value Based
Procurement (VBP), which has opened up
more of the hospital volumes to qualifying
generics, has impacted several AstraZeneca
brands including
Crestor
,
Iressa
, Brilinta
,
Nexium Oral
,
Losec Oral
and
Arimidex
. In the
most recent cycle of VBP implementation,
Pulmicort
,
Nexium IV
,
Onglyza
,
Betaloc Oral
and
Casodex
were included. A number of
AstraZeneca brands are expected to be
included in the next VBP cycle with an
estimated implementation during the first
half of 2022.
1
calculated on a pro forma, pro rata basis by comparing
post-acquisition revenues from 21 July 2021 to 31
December 2021 with the corresponding period in the prior
year, pre-acquisition as previously published by Alexion.
Pro forma, pro rata Total Revenue growth rates have been
presented for 2021 Rare Disease area and constituent
medicines, and do not impact Group totals.
36
AstraZeneca Annual Report & Form 20-F Information 2021 Strategic Report
Business Review
continued
In 2021, we identified 13 confirmed breaches
in commercial business units (2020: 14).
Within our commercial business units, there
were 2,477 instances (instances can involve
multiple people) of non-compliance with our
policies by employees and third parties
(2020: 2,113). We removed a total of 105
employees and third parties from their roles
as a result of a breach. Warnings were given
to 2,084 others (2020: 861) and we provided
further guidance or coaching to another
1,895 (2020: 2,099) regarding our policies.
The increase in warnings in 2021 may be
attributed to reclassification of discipline
in some markets and stronger discipline
for equivalent breaches. Every quarter,
our Audit Committee is advised of breach
statistics, serious breaches and
corresponding remediation.
The increase in incidents during the year
continues to be driven by low-impact incidents
and may be attributed to stronger first-line
monitoring, a company environment where
employees feel comfortable raising concerns,
and evolving external regulations and
enforcement priorities (i.e. data privacy globally).
Anti-bribery and anti-corruption
BV
We do not tolerate bribery or any other form
of corruption. Bribery and corruption remain
a business risk and are a focus of our
third-party risk management process and
our business development due diligence
procedures. They are a focus of our
monitoring and audit programmes as well.
We reinforced our commitment to ethical
behaviour through our 2021 annual Code
of Ethics training, which was delivered to
relevant employees and third parties.
Operations
Our manufacturing and supply function has
continued to support our growth by delivering
successful launches, and advancing digital
and new technology capabilities to support
our pipeline.
In 2021, we launched our Operations 2025
plan, which focuses on:
>
efficiently scaling our capabilities to support
the continued growth of our portfolio
>
leveraging the benefits of new
manufacturing technology and digital
innovation
>
taking proactive steps to ensure zero
carbon emissions from our global
operations.
In 2021, we delivered 110 successful market
launches. We achieved 100% of our planned
new technology implementation milestones
and introduced the first two digital solutions
to our eight largest manufacturing sites.
COVID-19 has continued to impact growth
rates in all channels across China and for
AstraZeneca’s Respiratory & Immunology
therapy area. The nebulised brands such as
Pulmicort
,
Fluimucil
and
Bricanyl
were most
heavily impacted as demand, while recovering,
remained well below pre-pandemic levels.
A healthcare investment fund jointly set
up with CICC has progressed with nearly
$200 million paid in and over $50 million
invested to date. In the last quarter of 2021,
Abbisko became the first portfolio company
to complete an IPO on the Hong Kong Stock
Exchange. An internet hospital venture
with Hillhouse Capital, which also includes
in-house pharmacy distribution, commenced
in early 2021 and has made positive initial
progress.
Following the acquisition of Alexion in July 2021,
we established a Rare Disease unit in China.
Healthcare in low- and middle-income
countries (LMICs)
BV
AstraZeneca is committed to equitable
access to healthcare for patients globally. Our
approach includes adapting our programmes
to integrate into local systems and delivering
affordable medicines to patients. Our patient
access programmes in LMICs are tailored to
meet the needs of the healthcare systems,
patients and communities they serve.
We identify barriers to care and contribute
towards health system strengthening
by training providers and addressing gaps
in awareness, education, prevention
and diagnosis.
For more information, see Access to healthcare
from page 44.
Responsible sales and marketing
BV
We are committed to high ethical standards
of sales and marketing, aligned to our Code of
Ethics and compliance framework. We maintain
a robust compliance programme that aims to
ensure compliance with all applicable laws,
regulations and adopted industry codes.
Our compliance programme is delivered by
dedicated compliance professionals who
advise on and monitor adherence to our
Code and policies.
These compliance professionals support our
local managers in ensuring staff meet our
ethical standards. A network of nominated
signatories reviews product promotional
materials and activities to ensure compliance
with applicable regulations and codes of
practice, and to ensure information is accurate
and balanced. Our Internal Audit Services
conducts compliance audits on selected
marketing companies.
“ The COVID-19
pandemic
demonstrated that
healthcare systems
can move quickly
to grant access to
innovative new
medicines.”
37
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Business Review / Deliver Growth and Therapy Area Leadership
Ensuring quality and compliance
We are committed to high ethical standards
and compliance with laws, regulations and
internal policies. We are members of industry
associations including IFPMA, EFPIA and
PhRMA and adhere to their codes.
Managing our supply chain
We need an uninterrupted supply of high-
quality materials along our end-to-end
supply chains. This includes our active
pharmaceutical ingredients (APIs). As most
of our API manufacturing is outsourced,
we place great importance on our global
external sourcing and procurement
organisations and policies, as well as our
integrated risk management processes.
During 2021, we activated our business
continuity plans to ensure continued supply of
medicines to patients and mitigate against any
risk of disruption caused by COVID-19 and the
consequences of the UK leaving the EU. We
have continued to focus on increasing the
availability of dual and multiple sources of raw
materials, maintaining adequate stock levels
and mitigating the effect of increasing pricing
and service fluctuations across raw materials,
services and utilities.
In 2021, Alexion supply chain delivered
strongly on objectives despite disruptions to
the global supply chain related to COVID-19
and several significant climate events.
Working with relevant partners in our supply
chain, we ensured sufficient business
continuity and risk mitigation plans were
activated. These included increasing safety
stock levels for products and critical
components across our business and
distribution centres. We also deployed dual
stocking and forward stocking locations
to ensure product was located closer to our
customers and extended the number of
validated shipping routes globally.
In spite of the challenges faced in 2021, our
teams were able to maintain supply to patients.
Supply chain finance
AstraZeneca has a supply chain finance
programme to support the cash flow of its
external supply base. The programme is
managed by Taulia Inc. (with funding provided
by some of the Group’s relationship banks)
and provides suppliers with visibility of
invoices and payment dates via a dedicated
platform. Suppliers can access this platform
free of charge and have flexibility to select
individual invoices for early payment. On
election of an early payment, a charge is
incurred by the supplier based on the period
of acceleration, central bank interest rate and
the rate agreed between Taulia Inc. and each
supplier. All early payments are processed
by the funders and AstraZeneca settles the
original invoice amount with the funders at
maturity of the original invoice due date.
The programme operates in the US, UK,
Sweden and Germany. As at 31 December
2021, the programme had 389 suppliers
enrolled and a potential early payment
balance of $44 million.
In addition, a separate programme was
established in China in the second half of
2021, delivered through a relationship
bank-led platform. As at December 2021,
there were a small number of suppliers
leveraging that capability.
Responsible supply chain
BV
Every employee and contractor who sources
goods and services on behalf of AstraZeneca
is expected to follow our Global Standard for
the Procurement of Goods and Services. We
monitor compliance through assessments and
improvement programmes and do not work
with anyone who is unable to meet our
standards. Our Global Standard on
Expectations of Third Parties is published on
our website. In 2021, we conducted a total of
37 audits (2020: 48) on high-risk commercial
suppliers (external manufacturing partners)
to ensure appropriate practices and controls.
24% fully met our expectations while 54%
had improvement plans for minor instances
of non-compliance. We had no examples of
high-risk engagements.
Through our Positive Sourcing Programme,
we promote ethical behaviour among our
suppliers. Our ambition is to achieve 100%
ethical spend, ensuring that sustainability
is embedded into end-to-end procurement
processes. We use our responsible sourcing
processes when working with suppliers to
support their sustainability journeys,
innovate together on challenges and
promote supplier diversity.
Our Supplier Diversity Programme aims to
ensure that small and diverse businesses are
part of our supply base and have appropriate
support to be more sustainable. This is in line
with our objectives for growth and innovation.
Our ambition is to expand the programme to
10 countries outside the US by 2025. In 2021,
our programme was launched in Australia,
New Zealand and Poland and is now active in
six countries outside the US, including Brazil,
South Africa and the UK.
Global manufacturing capability
Our principal tablet and capsule formulation
sites are in the UK, Sweden, China, Puerto
Rico and the US, with local/regional supply
sites in Russia, Japan, Indonesia, Egypt,
India, Mexico and Brazil. We also have major
formulation sites for the global supply of
parenteral and/or inhalation products in the
US, Sweden, France, Australia and the UK.
Most of the manufacture of APIs is delivered
through the efficient use of external sourcing,
complemented by internal capability in Sweden.
In September 2021, and in line with our
Operations 2025 plan to invest in new
manufacturing technology, we announced
a $360 million investment to establish a
next-generation API manufacturing facility for
small molecules at our Alexion site in Dublin.
Also in 2021, we completed the exit from our
manufacturing facility at Wedel, Germany.
For biologics, our principal commercial
manufacturing facilities are in the US
(Frederick, MD; Greater Philadelphia, PA), the
UK (Speke) and the Netherlands (Nijmegen),
with capabilities in process development,
manufacturing and distribution of biologics,
including global supply of mAbs and influenza
vaccines. Our new biologics drug product
manufacturing facility in Sweden has been
approved for Good Manufacturing Practices
(GMP) manufacturing, allowing commercial
manufacturing to commence.
Alexion uses both internal manufacturing
facilities and third-party contract
manufacturers to supply clinical and
commercial quantities of our products
and product candidates. Our internal
manufacturing capability is multiproduct
and includes a fill/finish facility at our Athlone,
Ireland site, bulk drug substance, QC and
packaging/labelling facility at our College Park,
Dublin, Ireland site. In 2021, we received
regulatory approval for our new large-scale
drug substance facility located in Dublin and
manufacture and release of commercial drug
substance has commenced. Following a
successful inspection, we expect to receive
regulatory approval for our new small-scale
drug substance facility at our Athlone site in
2022. We also have a production facility
located in Georgia, US.
38
AstraZeneca Annual Report & Form 20-F Information 2021 Strategic Report
Business Review
continued
In 2021, new deals included:
>
Ionis Pharmaceuticals, Inc. (Ionis)
collaboration to develop and commercialise
eplontersen, a liver-targeted antisense
therapy in Phase III development for the
treatment of transthyretin amyloidosis, a
systemic, progressive and fatal condition.
The upfront payment from AstraZeneca to
Ionis was $200 million. AstraZeneca will
make additional conditional payments of up
to $485 million following regulatory
approvals. It will also pay up to $2.9 billion
of sales-related milestones based on sales
thresholds between $500 million and
$6 billion, plus low double-digit to
mid-twenties percentage royalties.
>
Proteros Biostructures GmbH (Proteros)
collaboration to jointly discover novel
small molecules for the treatment of
haematological cancers. AstraZeneca will
provide research funding and Proteros will
be eligible for success-based research,
development and commercial milestone
payments up to $75 million plus tiered
royalties on annual net sales.
>
Regeneron Pharmaceuticals, Inc.
collaboration to research, develop and
commercialise small molecule compounds
directed against the G Protein-Coupled
Receptor 75 (GPR75) target with the
potential to treat obesity and related
co-morbidities. The companies will evenly
split research and development costs and
share equally in any future potential profits.
>
Sierra Oncology, Inc. was granted exclusive
global rights to further develop and
commercialise AZD5153, a clinical BRD4
inhibitor. AstraZeneca received an upfront
payment of $8 million and may also be
eligible for future milestone payments of up
to $208 million plus single-to-low double-
digit royalties on any future AZD5153
product sales.
Divestments
We typically divest medicines that sit outside
our disease areas and can be deployed better
by other companies. This enables us to
redirect resources to our main areas of focus
while ensuring continued or expanded patient
access. 2021 transactions included:
>
Crestor
(rosuvastatin) and associated
medicines in over 30 countries in Europe
divested to Grünenthal GmbH. Rights in
the UK and Spain were not included in
the agreement.
>
Global rights to
Eklira
(aclidinium bromide),
known as
Tudorza
in the US, and Duaklir
(aclidinium bromide/formoterol) transferred
to Covis Pharma B.V. (completed in
January 2022).
The resulting revenue from these activities
supports our R&D investments in our
disease areas.
Third-party contract manufacturers, including
Lonza Group AG and its affiliates (Lonza),
provide bulk drug substance fill/finish, QC
testing, packaging and labelling services.
These partnerships have allowed us to
successfully manufacture, test and pack our
products for worldwide distribution in multiple
locations globally. As our internal capability
grows via investment and access to the
AstraZeneca network, we will optimise our
external network to maximise benefit to our
customers and patients. This optimisation
programme began in 2021.
The Group has 15,800 people in Operations,
including 28 manufacturing sites in
16 countries.
Business development
Our business development and partnering
activities supplement and strengthen our
pipeline and our efforts to achieve scientific
leadership.
We work with academia, governments,
industry, scientific organisations and patient
groups, as well as other pharmaceutical
companies, to access the best science,
stimulate innovation and accelerate the
delivery of new medicines. We currently have
more than 1,000 collaborations worldwide.
Alliances, collaborations and acquisitions
We continue to assess opportunities to make
strategic, value-enhancing additions to our
portfolio and pipeline in our disease areas
through in-licensing, collaborations and
acquisitions.
Over the past three years, we have completed
more than 75 major or strategically important
business development transactions, including
19 in 2021. Three of these were completed on
behalf of Oncology R&D and four on behalf of
BioPharmaceuticals R&D. Seven related to
pre-clinical assets or programmes and 10 to
precision medicine, genomics or access to
genetic data.
“ Despite the
continued impact
of the COVID-19
pandemic, we saw
growth across all
major Emerging
Markets in 2021.”
39
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Business Review / Deliver Growth and Therapy Area Leadership
Performance indicators
BV
88
%
Improved my existing/learned new skills,
or had a development opportunity
2
88%
90%
87%
2021
2020
201
9
48.1
%
In
c
lusion a
nd d
iver
sit
y
3
48.1%
46.9%
45.4%
2021
2020
201
9
2021
2020
2019
89%
91%
89%
89%
Access to healthcare – AstraZeneca
is truly patient-oriented
¹
2021
2020
2019
78%
81%
77%
78%
Performing as an enterprise team
1
Our success depends on recruiting,
retaining and developing talented
people while operating in a
responsible and sustainable way.
Our performance in 2021
>
17,000 external hires. 33% of employees
now have less than two years’ service.
>
6,700 successful hires through employee
referral scheme.
>
Gained 4,000 permanent employees
through the Alexion acquisition.
>
Removal of performance ratings has given
managers opportunity to focus on coaching
and developing their teams.
>
Expanded our Partnership for Health
System Sustainability and Resilience
with the London School of Economics
and World Economic Forum.
>
The Science Based Targets initiative
verified our net-zero targets.
>
HRH The Prince of Wales awarded
AstraZeneca his Terra Carta Seal in
recognition of our efforts to create a
more sustainable future.
>
Reached 31 million people through our
flagship Access to Healthcare programmes.
1
Source: November Pulse full census survey
for each year, based on the percentage of
favourable responses to the question about
‘eective collaboration between teams’.
2
Source: November Pulse full census survey
for each year, based on the percentage of
favourable responses to the statement
‘In the last 12 months, I have improved
my existing skills, or learned new skills,
or had a development opportunity’.
3
Female representation at career level F+
(the most senior 13% of the employee
population).
Contribution to the enterprise
This priority is built on three pillars: performing
as an enterprise team, commitment to lifelong
learning and development, and championing
of inclusion and diversity.
For more information, see People from page 41.
Contribution to society
Our sustainability performance indicators measure the
progress of our environmental, social and governance
practices. They are representative indicators of each
of our three sustainability priorities: broaden access
to healthcare, protect the environment, and ensure
ethical, transparent behaviours.
For more information, see Sustainability from page 44.
1
Source: November Pulse full census survey
for each year, based on the percentage of
favourable responses to the statement
‘AstraZeneca is truly patient-oriented’.
40
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Business Review
continued
The voluntary employee turnover for
AstraZeneca increased in 2021 to 14%
(2020: 10%), while the voluntary turnover rate
for Alexion also increased to 11%, from 7%
in February 2021. The launch of the new exit
survey in May 2021 will help us gain a better
understanding of the reasons for leaving and
enable us to act accordingly to try and reduce
turnover. We will continue to monitor the
AstraZeneca and Alexion combined
resignation rates as mergers and acquisitions
can result in increased turnover levels.
Creating a culture of high performance
We no longer give performance ratings to
employees and have shifted our focus to
coaching, development and contribution to
the organisation. Managers are accountable
for helping to develop individual and team
performance targets. In 2021, we trained
15,000 line managers in our new performance
development approach, focusing on building
coaching capabilities. In our 2021
performance development survey, 77% of
managers who responded felt confident
taking a coaching approach with their team
members and 70% stated they were regularly
practising coaching with their team. Our
recognition platform continues to reward
behaviours that reflect company Values,
drives engagement across teams and ensures
we celebrate our achievements. Following the
launch in 2020, the recognition platform has
continued to be successful with 71% of
employees being rewarded through the
platform in 2021.
Our salary and bonus budgets are distributed
in line with our principles, allowing us to
clearly differentiate reward according to
performance. Following the removal of
performance ratings, we now identify
employees who have made exceptional
contributions throughout the year. We
encourage participation in various employee
share plans, some of which are described in
the Directors’ Remuneration Report from
page 98, and in Note 29 to the Financial
Statements from page 186.
Listening to our workforce
Employee opinion surveys help us measure
employee sentiment and progress in our aim
of being a great place to work. In our most
recent survey (November 2021), we continued
to score highly, achieving an average result of
84% across all questions. Our response rate
also reflects the high levels of engagement
with 91% of all employees choosing to
participate in the survey. We have met or
exceeded three of our scorecard goals
relating to Patient Centricity, Speaking My
Mind and Development.
In 2021, we also continued to track a set of
questions relating to the COVID-19 pandemic
to understand how well we were supporting
our employees through a challenging time.
We received a favourable score of 87% for
‘I am finding ways to balance managing my
family needs while keeping up with my
most important work responsibilities’ and
91% for ‘I am getting the support I need
(from my manager, team, etc.) during this
time’. These high scores demonstrate our
ongoing commitment to the wellbeing of
our employees.
Building a culture of lifelong learning
and development
Employees are encouraged to take ownership
of their own development and leaders are
expected to spend time supporting and
enabling their employees’ development
needs. In 2021, we invested $35 million in
developing a culture of lifelong learning to
support the up-skilling of our people. Learning
for Life is part of our ambition to move from
performance management to performance
development, which focuses on encouraging
people to grow their skills and experience so
they can maximise their potential.
Our global online learning platform provides
employees with access to an extensive
amount of educational resources. Over 78%
of employees have accessed resources since
launching the platform in 2020, with 84% of
these employees returning more than once.
In addition to providing improved online
resources, we offer a range of different
learning programmes that have been
developed to provide more targeted learning
opportunities, as shown in the table below.
Name of
programme
Number of
attendees
Target group
Women as
Leaders
225
Women, Mid-Senior
Level roles
Leading
Enterprise
113
Top 150 Senior Leaders
Leading
Business
818
Senior Managers
Rising Leaders
118
High Potential Mid- Senior Level
Accelerate
52
Mid-Senior Level in
Emerging Markets
Empowerment
350
Women, Mid-Junior Level
Leadership
Labs
499
Second-Line Leaders in
markets
Leading People
947
New First-Line LeadersBrand
Leadership
40
US Women of Color
Leaders
Attendees of our development programmes
are less likely to resign and have higher rates
of promotion. In addition, the programmes
have also enabled more accurate succession
planning. Of the 2019 Women as Leaders
attendees, 32% have since been promoted
into more senior positions. Furthermore, the
resignation rate of these attendees is lower
than the overall target population (5.7% for
Women as Leaders attendees compared with
7.6% for women in mid- to senior-level roles).
Our people
We grow and prosper by recruiting, retaining
and developing talented people. We do that
by being a great place to work, encouraging
and rewarding innovation, entrepreneurship
and high performance.
Performing as an enterprise team
Attracting diverse talent and critical
capabilities
Our graduate and apprentice programmes are
critical to attracting early-career talent and
ensuring we build the capabilities we need to
deliver our future strategic objectives. We also
offer an MBA development programme in our
US Commercial Business, which provides our
future leaders with broad experience through
business rotations.
Our talent scout model continues to
successfully support recruitment activity
across the business. This is supported by our
employee referral scheme, which has become
an increasingly important source of hiring.
In 2021, we hired 6,700 people as a result
of employee referrals.
In 2021, we received over 500,000 job
applications and hired 24,000 employees
(17,000 external and 7,000 internal),
demonstrating our ability to attract key
capabilities and talent throughout the
COVID-19 pandemic. Hiring increases over
recent years have resulted in 33% of our
workforce having less than two years’ service.
A diverse workforce of both new and
longer-serving employees can help foster
a culture of innovation where fresh ideas are
combined with existing business knowledge.
Due to our changing footprint and strategic
objectives, most of the hiring activity has
been in our Emerging Markets, where we
have built new sales teams in recent years.
This growth has been particularly strong in
China, which accounted for over 7,000
external hires in 2021. Performance data
indicates these new recruits are successful
in their positions. However, an increased
footprint in Emerging Markets also brings
challenges such as increased turnover.
In 2021, we also gained an additional 4,000
employees through the acquisition of Alexion.
These new employees have become part of our
new Rare Disease group or embedded across
other functions, such as HR and Finance.
41
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AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Business Review / Be a Great Place to Work
Champions of inclusion and diversity
We believe that building an inclusive culture and
making the most of the strength and diversity of
our people allows us to unlock the innovation
required to deliver life-changing medicines to
the patients who need them most.
In 2021, we expanded our inclusion and
diversity (I&D) learning programmes to further
embed I&D in our day-to-day working
practices. This included mandatory digital
‘conscious inclusion’ training in 10 languages
and a set of techniques that foster a
psychologically safe environment.
For more information, see our website,
www.astrazeneca.com/sustainability.
Our commitments
We include targets on our global scorecard
to increase representation of women in
leadership positions, as well as to increase
the percentage of leaders from Emerging
Markets and Japan that report into our
Senior Executive Team (SET). We also track
employee sentiment on measures of inclusion
twice a year. In the November 2021 survey,
90% of employees answered favourably to the
statement ‘Managers in my function/company
support diversity and inclusion in the
workplace’. This year we launched a voluntary
disclosure campaign to better understand our
global workforce demographics, including
country of origin, disability status (including
visible and invisible disabilities), ethnicity,
race, sex, gender identity and sexual
orientation where globally permissible.
Women comprise 51.8% (approximately
43,000) of our global workforce. With the
appointment of Aradhana Sarin as CFO, there
are five women on our Board (38% of the
total). Following the appointment of Susan
Galbraith as EVP of Oncology R&D, five of
12 SET members are now women (42% of
the total). Across the enterprise, the
representation of women in senior roles
increased to 48.1% in 2021 (2020: 46.9%),
above our target of 47.5%.
In the 2020 Hampton-Alexander review,
published in 2021, we were named as the
highest-ranking pharmaceutical company in
the FTSE 100 for representation of women on
the combined executive committee and their
direct reports, and we moved up from sixth
place to third place in the list of the Top 10
Best Performers. We also retained our
position as one of 380 companies on the
Bloomberg LP Gender-Equality Index 2021,
which distinguishes companies committed
to transparency in gender reporting and
advancing women’s equality.
Our employees come from 169 different
countries. In 2021, 18.4% of employees who
are either members of the SET, or their direct
reports, are from Emerging Markets and
Japan (18.4% at year end 2020) slightly
below our target of 20%.
To support our commitment to racial equity,
we work at every stage of our talent pipeline
to increase and maintain representation. We
are a founding partner of the World Economic
Forum’s Partnering for Racial Justice in
Business initiative, which is focused on
eradicating racism in the workplace and
setting new global standards for racial equity
in business. Within the UK, AstraZeneca is a
signatory of the Race at Work Charter.
We are committed to hiring and promoting
talent ethically and in compliance with
applicable laws. Our Code of Ethics and its
supporting Standards are designed to help
protect against unlawful discrimination on any
grounds (including disability). The Code covers
recruitment and selection, performance
management, career development and
promotion, transfer, training, retraining
(including retraining, if needed, for people
who have become disabled), and reward.
We embrace the unique skills, insights,
and experiences held by individuals with
both seen and unseen disabilities and are
committed to creating a supportive culture by
providing reasonable accommodations during
the interview/hiring process that continue as
needed throughout employees’ careers and
development within AstraZeneca. Our Global
Standard for Inclusion and Diversity sets out
how we foster an inclusive and diverse
workforce where everyone feels valued and
respected because of their individual abilities
and perspectives.
For more information on our Standards and Global
Policy framework, see our website,
www.astrazeneca.com/sustainability.
In 2021, our I&D efforts earned recognition
externally. We featured in:
>
The Times Top 50 Employers for Women
>
Diversity Inc. Top 50 Companies for
Diversity
>
Forbes Best Employer for Diversity
>
Financial Times Diversity Leaders
>
2021 Best Places to Work for LGBTQ
Equality.
Human rights
BV
Our Code of Ethics and Human Rights
Statement commit us to respecting and
promoting international human rights – not
only in our own operations, but also in our
wider spheres of influence, such as our
third-party providers. We are committed to
ensuring that we identify and eliminate, to the
fullest extent practicable, modern slavery or
human trafficking in our supply chains or any
part of our business. We provide assurance
annually to the Audit Committee and our full
statement required under section 54 of the UK
Modern Slavery Act 2015 and Section II (14)
of the Australian Modern Slavery Act 2018
is available on our website,
www.astrazeneca.com.
“ In 2021, we invested
$35 million in
developing a culture
of lifelong learning
to support the
up-skilling of
our people.”
42
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Business Review
continued
Co-located around three
global R&D centres
1. Gaithersburg, MD, US
3,700
2. Cambridge, UK
3,800
3. Gothenburg, Sweden
2,600
1. US
15,900
19%
2. UK
8,800
11%
3. Sweden
6,900
8%
4. Canada
1,100
1%
5. Central and
South America
3,500
4%
6. Middle East
and Africa
1,800
2%
7. Other Europe
11,400
14%
8. Russia
1,600
2%
9. Other Asia
Pacic
7,100
9%
10. China
20,600
25%
11. Japan
3,400
4%
12. Australia and
New Zealand
1,000
1%
4
5
6
7
8
10
11
9
12
2
3
1
By geographical area
Emerging Markets
39
%
Europe
35%
US
19%
Established Rest
of World
7%
All numbers as at 31 December 2021.
83,100
employees
Employees by reporting region
Our global business
We support the principles set out in the
United Nations Universal Declaration of
Human Rights and the International Labour
Organization’s (ILO) standards on child labour
and minimum wages. We have been members
of the United Nations Global Compact on
Human Rights since 2010.
We continue to engage with Slave Free
Alliance (Hope for Justice) and participate in
working groups with peer multinationals to
benchmark our approach to risk identification
and share best practices. We are members
of the Pharmaceutical Supply Chain Initiative
Human Rights and Labour Group, an industry
collaboration supporting responsible supply
chain management principles for ethics,
labour, health, safety, environment and
related management systems.
Employee relations
BV
We seek to follow a global approach to
employee relations, guided by global
employment principles and standards,
local laws and good practice. In July 2019,
we established a Global Function for
Employee Relations.
The purpose of this function is to build and
maintain a positive work environment where
every employee can feel safe, productive,
motivated and able to speak up. The Board
of Directors, in collaboration with our Global
Compliance and Employee Relations functions,
supports our efforts to create a ‘Speak Up’
culture. Our aim is to encourage employees
to express their opinions and to prevent and
detect any behaviour not in line with our
Values, Code of Ethics and Global Standards.
The Audit Committee also checks the sexual
harassment, and harassment and bullying
process activities and cases periodically.
To achieve this objective, we also work to
develop and maintain good relations with
local workforces and work closely with our
recognised national trade unions. We also
regularly consult with employee representatives
or, where applicable, trade unions, who share
our aim of retaining key skills and mitigating
job losses. According to our internal Human
Rights survey carried out in 2020, 75% of our
employees recognise and have a relationship
with trade unions. Where trade unions do not
exist in an area of operation, all those areas
have established arrangements to engage
similarly with their workforce.
Workplace safety and health
BV
We work to promote a safe, healthy, and
energising work environment for our
employees and partners. Our standards apply
globally and are stated in our Code of Ethics
as described on page 47 and available on
www.astrazeneca.com/sustainability. We have
established and monitor a set of safety and
health targets aimed at supporting our
workforce and keeping AstraZeneca among
the sector leaders in performance. In 2021, we
implemented a new Global Safety, Health and
Environment (SHE) Standard that describes
our commitment to, management of and
accountability for SHE. In 2021, we achieved a
40% reduction in the vehicle collision rate and
a 68% reduction in the work-related injury rate
from the 2015 baseline. Sadly, there was one
employee fatality due to a vehicle accident,
and one fatal illness from a potentially
work-related COVID-19 exposure during 2021.
43
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Corporate Governance Additional Information
Financial Statements
Business Review / Be a Great Place to Work
Sustainability
BV
Contributing to society is a fundamental part
of our commitment to make a difference to
people and our strategic ambition to lead in
sustainability, as part of being a great place
to work. During 2021, we were recognised
for our efforts in sustainability across our
strategic priorities. This included:
>
inaugural 2021 Terra Carta Seal award
>
Dow Jones Sustainability Index constituent
>
FTSE4Good Index Series constituent
>
Financial Times 2021 European Climate
Leader for reduction of greenhouse gas
emissions
>
CDP Double A List for Climate Change and
Water Security for the sixth consecutive year
>
Corporate Knights Global 100 Most
Sustainable Corporations in the World
>
Access to Medicine Index 2021 – seventh
out of 20.
Driving the sustainability agenda
During 2021, we increased our engagement
on global sustainability issues with external
stakeholders and on the global policy agenda.
We actively promoted public-private
partnerships to strengthen global health
security and health system resilience in light
of lessons learned from the COVID-19
pandemic. We did this through our
Partnership for Health System Sustainability
and Resilience (PHSSR) with the London
School of Economics and World Economic
Forum (WEF), as well as our long-standing
access to healthcare programmes and
initiatives to strengthen health systems.
We also focused on opportunities to identify
innovative solutions to the climate crisis and
address its impact on global health.
As a founding member of the Prince of Wales’
Sustainable Markets Initiative (SMI) and a
supporter of the Terra Carta Sustainability
Charter, our CEO attended meetings such
as the G7 Leaders’ Summit in Cornwall, UK.
He also hosted an SMI Roundtable focused
on delivering sustainable healthcare. During
the COP26 summit in Glasgow, UK, we were
one of the first companies to be awarded
the inaugural 2021 Terra Carta Seal by
HRH The Prince of Wales. The Seal recognises
companies from around the world who are
driving innovation and leadership in their
industry in tackling climate change. The
Prince of Wales and our CEO, along with
global health leaders, also launched the
SMI Health Systems Taskforce, which our
CEO will champion.
Our climate change targets were verified by
the Science Based Targets initiative (SBTi)
as in line with their new Net-Zero Corporate
Standard, AstraZeneca being one of only
seven companies worldwide at launch and the
only pharmaceutical company.
Access to healthcare
BV
We are working towards a future where
everyone can have access to sustainable
health solutions for life-changing treatment
and care. This includes collaborating with our
partners in support of common goals to
strengthen health system resilience, improve
equitable access to medicines and promote
disease prevention. We innovate and partner
to transform solutions across the patient care
pathway – from prevention, raising awareness,
diagnosis and treatment, to post-treatment
and wellness.
Achievements in 2021
>
Over 199,000 healthcare workers and
others trained since 2010 and over
31 million people reached through Access
to Healthcare programmes. Healthy Heart
Africa conducted over 23 million screenings
for elevated blood pressure and Young
Health Programme (YHP) reached more
than six million young people through
prevention and education programmes in
over 30 countries.
>
Over 11 million people reached through
our patient assistance programmes
(cumulatively), which help patients in
financial difficulty gain access to
AstraZeneca medicines.
Equitable access
We embed practices into the product portfolio
to drive equitable access to healthcare –
including digital health, clinical trial diversity,
patient centricity, investing in rare diseases,
open innovation and intellectual property-
sharing arrangements.
During 2021, we put broad and equitable
access at the heart of our pandemic
response. AstraZeneca and our global
partners released for supply 2.5 billion vaccine
doses to over 180 countries. Approximately
two thirds of these went to low- and lower-
middle-income countries, and more than
247 million doses have been delivered to
130 countries through the COVAX Facility in
2021. In 2021, the majority of vaccine product
sales and doses delivered related to pandemic
contracts. AstraZeneca will continue to supply
the vaccine around the world in 2022. We have
moved to an affordable pricing approach that
enables us to maintain broad global access.
This includes a tiered pricing approach
aligned to Gross National Income per capita,
a widely recognised model used by
developers of medicines and vaccines. We
remain committed to supplying the vaccine at
no profit in low-income countries, in line with
our agreement with Oxford University.
For more information, see Other Medicines and
COVID-19 from page 27.
“Throughouragship
$1 billion Ambition
Zero Carbon
programme, we are
on track to reduce
greenhouse gas
emissions from our
global operations by
98% by 2026 and
halve our entire value
chain footprint by
2030, on the way to
a 90% reduction
by 2045.”
44
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Business Review
continued
interim report. Phase II of the PHSSR also
launched in 2021, with an expansion into
13 new countries and a regional hub in the
Central, Eastern Europe and Baltics area,
which brought the total number of member
countries to more than 30. The PHSSR has
acted as the basis for policy improvements in
many of the countries where it has been active.
Healthy Heart Africa programme
Our Healthy Heart Africa programme is
committed to reducing hypertension and the
burden of cardiovascular disease, aiming to
reach 10 million people with elevated blood
pressure across Africa by 2025. We work with
local and global partners to raise awareness
and offer training, screening and reduced-
cost treatment, as applicable. By the end of
2021, the programme had conducted over
23 million blood pressure screenings and
trained over 9,000 healthcare workers since
launch in 2014. In 2021, the programme
expanded into Côte d’Ivoire, Senegal and
Rwanda.
Young Health Programme
Since 2010, the AstraZeneca Young Health
Programme has worked to help young people
aged 10 to 24 take control of their health,
especially to combat long-term conditions
such as cancer, diabetes, respiratory and
heart disease, and mental health conditions
– referred to as non-communicable diseases.
In collaboration with UNICEF and Plan
International, we support research, advocacy
and education to help young people make
better choices for healthier lives. In 2021,
the programme had reached 1.18 million
youths with health information and trained
73,000 peer educators in 30 countries.
Community investment
BV
We aim to make a positive impact on people
in all the communities where we are present,
supporting programmes to advance patient
health, increase access to care, drive
scientific innovation and build resiliency. Our
Global Standard on External Funding covers
community investment and provides guidance
to ensure a consistent, transparent and ethical
approach around the world, based on local
need. Our activities are focused on healthcare
in the community and supporting science
education. They include financial and
non-financial contributions. In 2021, we
provided $112.9 million to more than 1,220
non-profit organisations across 74 countries.
This includes contributions made by Alexion.
We also donated more than $2.3 billion (2020:
$1.6 billion) of medicines in connection with
patient assistance programmes around the
world, the largest of which is our AZ&Me
programme in the US. This change reflects
an increase in requests for assistance and
growth across our therapeutic areas,
including new indications.
Diversity in clinical trials
It is important that volunteers testing a
potential new medicine appropriately reflect
our potential target patient populations.
We need to demonstrate a medicine’s safety
and efficacy for all those who need it,
whatever their age, sex, ethnicity, overall
health, where they live and their place of
origin. Local clinical trials also increase
understanding and confidence in medicines.
Building on our experience with the COVID-19
vaccine we will work to include more countries
to ensure diverse, global representation.
For more information, see Clinical trials transparency
on page 34.
Rare diseases
Therapies are only available for 5% of more
than 7,000 rare diseases. We believe people
with rare diseases deserve the same attention
and investment into finding therapies as
anyone. We work to help people get
medicines through our patient support and
expanded access programmes, and we are
expanding the geographies where our
medicines are available.
For more information, see Rare Disease from page 24.
Affordability and pricing
We want all patients who need medicines
to have access to them without financial
hardship. We work to expand availability and
accessibility of our life-changing medicines
to people around the world.
We drive accessibility of medicines for
diverse, equitable and inclusive patient groups
through company policy and programming,
including core pricing principles and access
programmes.
For more information, see Pricing and value of our
medicines from page 35.
Health system resilience
We strengthen health systems by advocating
for health system and policy reform. We build
capabilities to address unmet medical need,
improve access to quality healthcare and
provide solutions along a continuum of care
– from prevention, awareness, diagnosis and
treatment to post-treatment and wellness;
and commit to humanitarian relief, grants
and donations.
We also work to advocate for global
healthcare policies that support the unique
needs of the rare disease community.
The Partnership for Health Systems
Sustainability and Resilience (PHSSR)
This partnership is motivated by a shared
commitment to improving population health,
through and beyond the COVID-19 pandemic.
In 2021, we co-led the first PHSSR Summit
with over 50 leading experts from eight pilot
countries. We discussed the future of health
in a post-COVID-19 world and launched the
Product donation programmes
BV
In 2021, we gave $23 million (2020: $27 million)
in product donations for disaster,
humanitarian relief and public health need.
We remain committed to working with health
system stakeholders and payers towards
achieving more systemic solutions.
Environmental protection
BV
We aim to demonstrate global leadership by
minimising our environmental impact across
all our activities and products. Becoming
increasingly circular, we are designing out
waste and pollution, keeping products and
materials in use, and maximising resource
efficiency. We are also adopting nature-based
solutions to protect, sustainably manage and
restore natural and modified ecosystems that
address societal challenges, such as the
impact of the climate crisis and supporting
biodiversity.
Achievements in 2021
>
59% reduction in Scope 1 and 2
greenhouse gas emissions since 2015
>
Over three million trees planted by AZ
Forest by end of 2021
>
17% reduction in water usage since 2015
>
8% reduction in our waste since 2015
>
75% of development projects met resource
efficiency targets at launch in 2021
>
100% safe API discharges for
AstraZeneca sites
>
91% for globally managed first-tier
supplier sites.
As part of our WEF partnership, in 2021 we
contributed to the Alliance of CEO Climate
Leaders and as a Corporate Alliance
supporter of the Trillion Trees reforestation
movement.
Ambition Zero Carbon
We are committed to:
>
Achieving net-zero greenhouse gas (GHG)
emissions by maximising our energy
efficiency, shifting to renewable energy
sources, and investing in nature-based
removals to compensate for any residual
GHG footprint.
>
Building resilience by managing the
physical (sites, supply chain) and
transitional (regulatory, market and product)
risks and opportunities from climate change
in the value chain through adaptation and
business continuity planning.
45
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AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Business Review / Be a Great Place to Work
The climate emergency is a public health
emergency. It is changing our planet
irreversibly, with warming reaching critical
tolerance thresholds for health. Human health
and the health of the planet are deeply
interconnected. We have an opportunity now
to reset how we live and create a more
sustainable world – together and without delay.
Through our flagship $1 billion Ambition Zero
Carbon programme, we are on track to reduce
GHG emissions from our global operations by
98% by 2026 and halve our entire value chain
footprint by 2030 on the way to a 90%
reduction by 2045. Our emission reduction
targets have been verified by the Science
Based Targets initiative and we were one of
the first seven companies worldwide to have
our Scope 1 to 3 and long-term net-zero
targets verified under their new Net-Zero
Corporate Standard. We were also an early
supporter of the UN-backed Race to Zero.
Near-term targets:
>
98% reduction in Scope 1 and 2 GHG
emissions by 2026 from 2015 baseline
>
switching to 100% fully electric vehicle
fleet (EV100) by end of 2025
>
using 100% renewable energy (RE100)
for power and heat by end of 2025
>
doubling energy productivity (EP100)
from 2015 to 2025
>
launching first next-generation respiratory
inhalers with near-zero climate impact
by 2025
>
aligning supplier spend with companies
with approved science-based targets by
end of 2025
>
planting and stewarding over 50 million
trees by end of 2025 as a nature-based
solution to enhance climate, ecological
and community resilience through our
AZ Forest global initiative.
Long-term targets:
>
50% reduction in total Scope 3 emissions
by 2030 and 90% reduction by 2045, from
2019 baseline
>
carbon negative for all residual emissions
from 2030 and science-based net-zero
by 2045
>
transitioning to next-generation respiratory
inhalers with near-zero climate impact.
Product sustainability
We manage the environmental impact of our
products from discovery in the lab through to
the end of a product’s life. To avoid adverse
impacts on the environment and human
health, we evaluate all materials and
processes used to make our products.
We focus on preventing and reducing waste
wherever possible, maximising the utility
of the natural resources we use.
As part of our continued commitment
to transparency in the management of
Pharmaceuticals in the Environment (PiE),
we launched an EcoPharmacoVigilance
dashboard that shows the risks of
pharmaceuticals that reach the environment
principally through patient use. This helps to
monitor any associated risk and ensure the
environmental safety of our life-changing
medicines. With the dashboard, we can look
at real-world environmental risk by comparing
measured environmental concentrations with
defined ‘no effect and safe’ concentrations.
This is the first time an individual
pharmaceutical company has shared this
type of data. This initiative highlights our
progress on water quality and builds on our
established leadership in responsible active
pharmaceutical ingredient discharge
management from our operations.
For more information on our PiE position paper,
see our website,
www.astrazeneca.com/sustainability/environmental-
protection/pharmaceuticals-in-the-environment.html.
In 2021, we launched our internal Product
Sustainability Index to ensure we understand
the environmental impacts across our product
value chains and prioritise improvement
opportunities.
A key product-related element of our
Ambition Zero Carbon strategy is our
commitment to develop the next-generation
respiratory inhalers with near zero global
warming potential (GWP) propellants. During
2021, we progressed a project spanning all
key functions in the business to assess
alternative low-GWP propellant options from
an environmental, technical, regulatory,
medical, non-clinical and commercial
viewpoint to enable a Phase III investment
decision for the lead propellant in the first
half of 2022.
Natural resources
We are committed to:
>
Reducing our impact on the planet
through the efficient, circular use of natural
resources across the value chain to ensure
responsible sourcing, consumption,
production and disposal.
>
Protecting and restoring ecosystems to
improve health outcomes and tackle
environmental drivers of disease, such as
water and air quality, through our focus
on water stewardship and biodiversity.
To drive our climate action initiatives and
meet our environmental targets, we have a
dedicated Natural Resource Efficiency Fund,
which has invested approximately $130 million
in environmental efficiency innovations since
2015. This includes 56 new projects and
nearly $30 million spent in 2021.
Water stewardship
Since 2020, we have collaborated in a water
stewardship partnership with the World Wide
Fund for Nature (WWF) Sweden. Through this
collaboration, in 2021, we championed a
sector-level water risk assessment of the
global pharmaceutical supply chain.
For more information on this assessment, see
wwf.panda.org/wwf_news/?4417966/Diagnosing-
current-and-future-water-risks-facing-the-
pharmaceutical-sector.
This assessment has helped identify sectoral-
level water stewardship opportunities, as well
as potential shared water challenges that may
be strategically relevant in areas of concentrated
pharmaceutical manufacturing.
We also introduced a new water stewardship
pilot, focused on six key sites in water-scarce
areas as these face future water availability
and quality risks. In 2022, we will set locally-
appropriate water targets for these sites and
aim to have long-term contextual water
targets in place by 2025.
Green labs
In 2021, our collaboration with the non-profit
organisation, My Green Lab, continued to
inspire a reduction in the environmental impacts
of our labs. A total of 36 laboratory functions
across 31 sites are involved in the programme.
Of these, 12 received certifications through this
initiative across 11 sites: four sites attained the
highest Green certification level, one Platinum,
six Gold, and one Silver. We aim for all of our
R&D labs to be My Green Labs certified by
2026. For the second consecutive year, we won
the Biotech/Biopharma organisation category
in the International Freezer Challenge, saving
approximately 1,858 kWh/day during the
challenge across the participating sites.
My Green Lab certification has been
recognised by the pharmaceutical sector
as part of the UN Race to Zero.
For more information, see
www.mygreenlab.org/blog-beaker/green-lab-
certication-named-key-player-in-the-un-climate-
changes-race-to-zero.
Building a framework for circularity
1
We are leveraging our experience with LEAN
manufacturing, which includes tools
to enhance efficiency and eliminate waste,
to build a framework for employees to identify
and implement initiatives that contribute
to our environmental targets. For example,
in 2021 a KAIZEN
TM
pilot event was held to
target single-use plastics used in packaging
for one of our products. Using LEAN tools, a
cross-functional team analysed inventory data
to identify options to tackle plastic use and
increase recycling, resulting in opportunities
to eliminate up to 200 tonnes of plastic
annually. This framework will continue to be
scaled up and shared across our network.
1
for durability and recycling, and regenerating natural systems by avoiding non-renewable resources and preserving
or enhancing renewable ones.
46
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Strategic Report
Business Review
continued
Ethics and transparency
BV
We seek to create positive societal impact
and embed ethical behaviour in all our
business activities, markets and value chain.
We do this by promoting ethical, transparent
and inclusive policies within our company as
well as across all our partners and suppliers.
It is important that we can create value
beyond the impact our medicines have on
patients. Building trust by demonstrating
integrity, transparency and fair treatment
is central to everything we do.
Achievements in 2021
>
48.1% of senior middle management roles
and above are held by women
>
72% of all critical manufacturing partners
are rated ‘bronze’ or better by our
sustainability framework (2025 target of 75%)
>
83% of employee survey respondents feel
that AstraZeneca has a ‘Speak Up’ culture.
For more information, see:
> Bioethics, see page 34.
> Champions of inclusion and diversity, see page 42.
> Workplace safety and health, see page 43.
Code of Ethics
We are committed to employing high ethical
standards when carrying out all aspects of
our business globally. Our Code of Ethics
(the Code) is based on our Values, expected
behaviours and key policy principles. It
applies to all Executive and Non-Executive
Directors, officers, employees and temporary
staff, in all companies within our Group
worldwide. The Code empowers employees
to make decisions in the best interests of the
Group and the people we serve, now and in
the long term. It does this by outlining our
commitments in simple terms and focusing
on why these commitments matter. The Code
is at the core of our compliance programme.
It has been translated into approximately 40
languages and guides employees on how to
make the best day-to-day choices and how
to act in a consistent, responsible way,
worldwide. There are two mandatory training
courses dedicated to the Code: one is for
new starters; the second is the annual training
for all employees, reminding them of the key
commitments. In 2021, 100% of all active
employees completed the annual training
on the Code.
The Code includes four high-level Global
Policies covering Science, Interactions,
Workplace and Sustainability. These Global
Policies are complemented by underlying
Global Standards, which define the global
requirements we follow to deliver our business
consistent with the Values, behaviours,
commitments and principles embodied in
our Code and Global Policies. Our Code
and Global Policies, together with relevant
Global Standards and Position Statements,
are published on our website,
www.astrazeneca.com. Our policy framework
also includes additional requirements at the
global, local and business unit level to
support employees in their daily work.
The Code recommends that employees
report possible violations. It also provides
information on how to do so, including via
the AZ Ethics helpline or website, which is
managed by an independent third party.
AZ Ethics is also available to third parties.
Reports can be made anonymously where
desired and where permitted by local law.
Anyone who raises a potential breach in good
faith is fully supported by management.
The majority of cases come to our attention
through management and employee
self-reporting. This can be seen as an
indication that employees are comfortable in
raising their concerns with line managers or
local Human Resources, Legal or Compliance,
as recommended in the Code (and reinforced
in the 2021 Code training). In 2021, 416 reports
of alleged compliance breaches or other ethical
concerns were made through AZ Ethics,
including reports made by any anonymous
route that could be considered whistleblowing
(in 2020, there were 385 reports).
A Finance Code complements the Code
and applies to the CFO, the Group’s principal
accounting officers (including key Finance
staff in all overseas subsidiaries) and all
managers in the Finance function. This
reinforces the importance of the integrity
of the Group’s Financial Statements, the
reliability of the accounting records on which
they are based and the robustness of the
relevant controls and processes.
Non-Financial Information Statement
Under sections 414CA and 414CB of the
Companies Act 2006, as introduced by the
Companies, Partnerships and Groups
(Accounts and Non-Financial Reporting)
Regulations 2016, AstraZeneca is required
to include, in its Strategic Report, a
non-nancialstatementcontainingcertain
information. As required by the Regulations,
the Strategic Report contains information
on the following matters, which include
references to our relevant policies, due
diligence processes and information on
how we are performing against various
measures in these areas:
>
Anti-bribery and anti-corruption,
see page 37.
>
Code of Ethics, see this page.
>
Access to healthcare, see pages 44 to 45.
>
Environmental protection, see pages
45 to 46.
>
Our people, see pages 41 to 43.
>
Human rights, see pages 42 to 43.
Information on the Group’s Principal Risks
is included in Risk Overview (see from
page 48) and information on the
non-nancialkeyperformanceindicators
relevant to our business is included in Key
Performance Indicators (see from page 12).
A description of our business model is
contained in Business Model and Life-cycle
of a Medicine (see from page 10).
47
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Corporate Governance Additional Information
Financial Statements
Business Review / Be a Great Place to Work
Managing risk
Our approach to risk management is designed
to encourage clear decision making on which
risks we take and how we manage these risks.
We strive to embed sound risk management
in our strategy, planning, budgeting and
performance management processes.
The Board defines the Group’s risk appetite.
This enables the Group, in both quantitative
and qualitative terms, to judge the level of risk
it is prepared to take in achieving its overall
objectives. The Board expresses the
acceptable levels of risk for the Group using
three key dimensions. These are: (i) earnings
and cash flow, (ii) return on investment and
(iii) ethics and reputation. Annually, the Group
develops a detailed three-year bottom-up
business plan and 10-year long-range
projection to support the delivery of its
strategy. The Board considers these in
the context of the Group’s risk appetite.
Adjustments are made to the plan or risk
appetite to ensure they remain aligned.
The SET is required by the Board to oversee
and monitor the effectiveness of the risk
management processes implemented by
management. Within each SET function,
leadership teams discuss the risks the
business faces. Quarterly, each SET function
assesses changes to these risks, new and
emerging risks and mitigation plans. These
are assimilated into a Group Risk Report for
the Board, Audit Committee and SET. Global
Compliance, Finance and Internal Audit
Services support SET by advising on policy
and standard setting, monitoring and auditing,
communication and training, as well as
reporting on the adequacy of line management
processes as they apply to risk management.
The Board believes that existing processes
provide it with adequate information on the
risks and uncertainties we face. The Board
has carried out a robust assessment of the
Principal and Emerging risks facing the Group.
The table overleaf provides insight into our
ongoing Principal Risks. It outlines why
effective management of these risks is
important and relevant to our business, how
we are managing them and which risks have
gone up, down or remained static during the
past 12 months. Our Principal Risks are those
risks that are most likely to have a material
impact on our business and are a subset of
the total risk landscape facing the Group.
For more information on these Principal Risks and the
other risks in our risk landscape, see the Risk supplement
at www.astrazeneca.com/annualreport2021.
Emerging risks
Emerging risks are ‘new’ risks that may
challenge us in the future. These risks have
the potential to crystallise at some point in the
future but are unlikely to impact the business
during the next year. The outcome of such
risks is often more uncertain. They may begin
to evolve rapidly or simply not materialise.
We monitor our business activities and
external and internal environments for new,
emerging and changing risks to ensure these
are managed appropriately. Annually, we
combine input from each SET function and
external insight to scan the horizon for
emerging risks. A summary of emerging risks
is presented for assessment to the Audit
Committee and the Board. Emerging risks
continue to be monitored as part of our
ongoing risk management processes
outlined above.
Climate risk
The identification and assessment of climate
risk form part of our existing risk management
processes as described below. ‘Failure to
meet regulatory and ethical expectations
on environmental impact, including climate
change’ is a component of the Group’s
risk landscape.
For more information about our Global Compliance
function, see page 79 and for our Code of Ethics
see page 47.
Task force on Climate-related Financial
Disclosures
We support the Task force on Climate-related
Financial Disclosures (TCFD) framework and
continue to develop our disclosures in line
with its recommendations. We first adopted
the TCFD framework in our 2020 Annual
Report, and continue to apply it to describe
activities conducted in the year to
31 December 2021. Our TCFD Statement
from page 217 therefore summarises the work
undertaken to date to understand the
potential impact of climate change on our
business and outlines future areas of
management focus.
For more information about our TCFD Statement,
see page 217.
We face a diverse range of risks and uncertainties.
Those risks that have the potential to have a material
impact on our Strategic Priorities are our Principal Risks.
“ We strive to embed
sound risk
management in our
strategy, planning,
budgeting and
performance
management
processes.”
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Strategic Report
Risk Overview
Viability statement
In accordance with provision 31 of the
2018 UK Corporate Governance Code,
the Board has determined that a three-year
period to 31 December 2024 constitutes
an appropriate period over which to provide
its viability statement.
The Board considers annually and on a
rolling basis, a three-year bottom-up detailed
business plan. The Board also assesses
the Company’s prospects using a 10-year
long-range projection but, given the inherent
uncertainty involved, believes that the
three-year statement presents readers of
this Annual Report with a reasonable degree
of assurance while still providing a
longer-term perspective.
The three-year detailed business plan
captures risks to the sales and cost forecasts
at a market and SET function level. The plan
is used to perform central net debt and
headroom profile analysis. The following
scenarios have been applied to this analysis
to create a severe but plausible downside
combining a number of the Principal Risks
detailed on pages 50 to 51:
>
Principal Risks
: Pricing, affordability,
access and competitive pressures. Failures
or delays in the quality and execution of the
Group’s commercial strategies.
–
Scenario 1
– Government action on
pricing, higher than anticipated
competition and other commercial
headwinds result in lower than
anticipated growth rates for our
medicines.
–
Scenario 2
– A significant incident leads
to reputational damage in a key market
resulting in an ongoing 10% revenue
reduction in this market.
>
Principal Risk
: Failure or delay in the
delivery of our pipeline or launch of new
medicines.
–
Scenario 3
– Assumes no launches
of new products.
>
Principal Risk:
Failure to maintain supply
of compliant, quality medicines.
–
Scenario 4
– Major equipment failure or
significant regulatory observation at one
of our major manufacturing sites results
in a 12-month supply interruption for one
of our key oncology products.
>
Principal Risks
: Failure in information
technology or cybersecurity. Adverse
outcome of litigation and/or government
investigations.
–
Scenario 5
– Legal or regulatory
non-compliance results in the levy of
a $500 million fine payable in 2023.
In addition, the Board has considered more
stressed scenarios including restrictions on
debt factoring and no access to capital
markets to raise new debt. In each scenario
(or combination of scenarios), the Group is
able to rely on its existing cash, cash
equivalents and short-term fixed income
investments and committed credit facilities.
It may leverage its cost base, reduce capital
expenditure and take other cash management
measures to mitigate the impacts and still have
residual capacity to absorb further shocks.
Based on the results of this analysis, the
Directors have a reasonable expectation
that the Company will be able to continue
in operation and meet its liabilities as they
fall due over the three-year period of their
assessment.
COVID-19 pandemic
The risk ‘failure of critical processes’ (which
can be found in the Risk Supplement at
www.astrazeneca.com/annualreport2021)
incorporates the risk of disruption as a result
of a pandemic. The Board does not consider
this to be a Principal Risk in its own right.
However, the impact of the COVID-19
pandemic on the Group’s operations remains
uncertain and cannot be predicted with
confidence. The extent of any adverse impact
on Group operations will depend on the global
duration, extent and severity of the pandemic.
To the extent that the pandemic adversely
impacts Group operations and/or performance,
the Group expects it to have the effect of
heightening certain risks, including Principal
Risks. This includes those risks relating to
the delivery of the pipeline or launch of new
medicines, the execution of the Group’s
commercial strategy, the manufacturing and
supply of new medicines and reliance on
third-party goods and services.
“ We monitor our
business activities
and external and
internal environments
for new, emerging
risks to ensure these
are managed
appropriately.”
49
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Risk Overview
Risk category and Principal Risks
Context/potential impact Management actions Trend versus prior year
Product pipeline risks
Failure or
delay in the
delivery of our
pipeline or
launch of new
medicines
The development of any pharmaceutical product
candidate is a complex, risky and lengthy process
involving significant resources. A project may fail at
any stage of the process due to a number of factors,
which could adversely affect our future business
and results of operations.
>
Prioritise and accelerate our pipeline.
Strengthen pipeline through acquisitions,
licensing and collaborations.
>
Focus on innovative science in our main
disease areas.
>
Improve R&D productivity.
Failure to
meet
regulatory
or ethical
requirements
for medicine
development
or approval
We are subject to laws and regulations that control
our ability to market our pharmaceutical products.
Delays in regulatory reviews and approvals could
delay our ability to market our products and may
adversely affect our revenue.
>
Quality management systems
incorporating monitoring, training and
assurance activities.
>
Collaborating with regulatory bodies and
advocacy groups to monitor and respond
to changes in the regulatory environment,
including revised processes, timelines
and guidance.
Commercialisation risks
Pricing,
affordability,
access and
competitive
pressures
Operating in more than 100 countries, we are
subject to political, socio-economic and financial
factors around the world. The medicines in our Rare
Disease unit are significantly more expensive than
traditional medicines. Global pressures to reduce
healthcare spending may lead to the implementation
of various controls, reimbursement mechanisms or
cost containment measures, which could adversely
affect our business or financial results.
>
Focus on key products.
>
Demonstrate value of
medicines/health economics.
>
Global footprint.
>
Diversified portfolio.
Global economic and
political conditions
placing downward
pressure on healthcare
pricing and spending,
and therefore on
revenue.
Failure or
delays in the
quality or
execution of
the Group’s
commercial
strategies
A failure to execute our commercial strategies or
achieve the level of sales anticipated for a medicine
could materially impact our business or the result
of operations.
>
Focus on key products.
>
Substantial investment in sales and
marketing activities.
>
Accelerate execution of plans and risk
share through business development and
strategic collaborations and alliances.
Maximising the
commercial potential
of our new products
underpins the success
of our strategy and the
delivery of our short- and
medium-term targets.
Supply chain and business execution risks
Failure to
maintain
supply of
compliant,
quality
medicines
Delays or interruptions in supply can lead to product
shortages, which may result in lost product sales
and adversely affect our reputation and revenues
in a material way.
>
Establishment of new manufacturing
facilities, creating capacity and technical
capability to support new product launches.
>
Contingency plans including dual sourcing,
multiple suppliers and close monitoring
and maintenance of stock levels.
>
Business continuity and resilience
initiatives, disaster and data recovery,
and emergency response plans.
>
Quality management systems.
External factors such as
the COVID-19 pandemic,
geopolitical tensions and
high levels of demand for
certain raw materials
and components place
increased pressure on
supply chains and
distribution networks.
Principal Risks
Strategy key
Science
Deliver Growth and
Therapy Area Leadership
Be a Great Place to Work
Financial Targets
Trend key
Unchanged
50
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Risk Overview
continued
Risk category and Principal Risks
Context/potential impact Management actions Trend versus prior year
Supply chain and business execution risks
contin ued
Failure in
information
technology or
cybersecurity
Significant disruption to our IT systems, including
breaches of data security or cybersecurity, or failure
to comply with applicable laws or regulations may
result in losses or regulatory penalties, which could
harm our reputation and materially affect our
financial condition or results of operations.
>
Cybersecurity framework and dashboard.
>
Disaster and data recovery plans.
>
Strategies to secure critical systems
and processes.
>
Regular cybersecurity and privacy training
for employees.
Growing multi-faceted
cyber threat.
Failure to
attract, develop,
engage and
retain a diverse,
talented and
capable
workforce
The inability to attract and retain highly-skilled
personnel may weaken our succession plans
for critical positions, may adversely affect the
implementation of our strategic objectives and
could ultimately impact our business or results
of operations.
>
Targeted recruitment and retention
strategies deployed including in the
Rare Disease unit.
>
Development of our employees.
>
Evolve our culture.
Strong competition
for talent. Complex
workforce dynamics
as a result of COVID-19
pandemic-related
disruption.
Legal, regulatory and compliance risks
Safety and
efficacy of
marketed
medicines is
questioned
Serious safety concerns or adverse events relating
to our products may lead to product recalls,
seizures, interruption of supply and loss of product
approvals, which could adversely affect patient
access, our reputation and our revenues.
Significant product liability claims could also arise,
which may be costly, divert management attention,
reduce demand for our products and damage
our reputation.
>
Robust processes and systems in place
to manage patient safety and efficacy
trends as well as externally reported risks
through regulatory agencies and other
parties. This includes a comprehensive
pharmacovigilance programme
supplemented by close monitoring
and review of adverse events.
Adverse
outcome of
litigation
and/or
governmental
investigations
Our business operations are subject to a wide
range of laws, rules and regulations around the
world. Any failure to comply with these may result
in AstraZeneca being investigated by relevant
government agencies and authorities and/or in
legal proceedings being filed against us.
Government investigations, litigations, and other legal
proceedings, regardless of their outcome, could be
costly, divert management attention, or damage our
reputation and demand for our products.
Unfavourable resolution of current and similar
future proceedings against us could subject us to
criminal liability, fines, penalties or other monetary
or non-monetary remedies and could adversely
affect our business or results of operations in
a material way.
>
Established compliance framework with
strong ethical and compliance culture.
>
Combined internal and external counsel
management.
IP risks related
to our
products
The pharmaceutical industry is experiencing
pressure from governments and other healthcare
payors to impose limits on IP protections in an
effort to manage healthcare costs. If we are unable
to obtain, defend and enforce IP that protects our
products, we may experience accelerated and
intensified competition from third-parties.
>
Active management of IP rights and
IP litigation.
Economic and nancial risks
Failure to
achieve
strategic
plans or meet
targets or
expectations
Failure to successfully implement our business
strategy, including the effective integration of
Alexion into our Group, may frustrate the
achievement of our targets and materially
damage our brand, business, financial position
or results of operations.
>
Focus on key products and innovative
science in our core disease areas.
>
Direct senior executive-led sponsorship
of the integration of the Rare Disease unit.
>
Strengthen pipeline through acquisitions,
licensing and collaborations.
>
Appropriate capital structure and
balance sheet.
>
Portfolio-driven decision-making process
governed by senior executive-led
committees.
Global economic and
political conditions
placing downward
pressure on healthcare
pricing and spending,
and therefore on
revenue. Securing the
effective integration
of the Rare Disease unit.
51
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Risk Overview
I am delighted to present the 2021 Financial
Review. My first five months as CFO of
AstraZeneca have brought many exciting
highlights, including the transformative impact
of
Vaxzevria
on combatting the pandemic, the
integration of Alexion, 14 positive Phase III
readouts in nine medicines and continued
growth of our products in spite of multiple
challenges. This was only possible through
the hard work and dedication of all our
colleagues across the globe. In all, 2021 has
been a momentous year for this Company and
I look forward to enabling our organisation to
continue to serve patients, advance science
and be a great place to work in 2022.
Strong Total Revenue growth
AstraZeneca achieved Total Revenue of
$37.4 billion in 2021, with growth of 41%
(CER: 38%), including $0.9 billion of
Collaboration Revenue, $3.9 billion of
Vaxzevria
Product Sales
and $3.1 billion
of post-acquisition Alexion sales.
Product Sales grew by 41% (CER: 38%) to
$36.5 billion, with 13
1
blockbuster medicines,
including
Vaxzevria
and the newly acquired
Soliris
. Our continued investment in Oncology
and CVRM medicine launches supported
strong Product Sales growth of 20% (CER:
18%) and 13% (CER: 10%), respectively,
with standout performances from
Tagrisso
($5.0 billion),
Farxiga
($3.0 billion) and Lynparza
($2.3 billion). In the US, we saw
growth of 39%, with Product Sales of
$12.0 billion, 45% of which came from
Oncology, including $1.1 billion from
Calquence
. In Europe, Product Sales
increased by 50% (CER: 44%) to $7.6 billion
and in Emerging Markets, Product Sales
of $12.2 billion continued to accelerate,
with growth of 40% (CER: 36%), including
Vaxzevria
sales of $2.2 billion. Within our
1
Ultomiris’
designation as a blockbuster medicine
includes full-year 2021 Product Sales, inclusive of the
pre-acquisition period.
new Rare Disease portfolio, we recorded
post-acquisition Product Sales of $3.1 billion,
contributing 8% to full-year Total Revenue and
represented pro rata growth of 8% (CER: 9%).
Collaboration Revenue increased by 20%
(CER: 20%) to $0.9 billion and included
$0.4 billion of milestone income from the
ongoing MSD arrangement on
Lynparza
and
Koselugo
.
Investing in future growth
We continue to make investments in the
business to support our strategic objectives.
Reported R&D expenses increased by
62% (CER: 59%) to $9.7 billion, including
$1.5 billion of impairment charges, of which
$1.2 billion relates to the discontinuation of
verinurad. Core R&D expenses increased by
36% (CER: 33%) to $8.0 billion. Increases to
both Core and Reported R&D expenses reflect
our continued investment in our COVID-19
medicines, and in several late-stage Oncology
trials and Phase II clinical development
programmes in BioPharmaceuticals. Reported
Selling, general and administrative expenses
(SG&A) increased by 35% (CER: 32%) to
$15.2 billion. These included the increased
amortisation of intangible assets related to the
Alexion acquisition and restructuring charges
related to supply chain and exit costs for
deprioritised R&D projects. Core SG&A
expenses increased by 19% (CER: 15%) to
$11.1 billion, reflecting our further investment
in Oncology and BioPharmaceutical launches.
Strategic divestments
2021 Reported and Core Other operating
income was $1.5 billion and included
$776 million from the divestment of
AstraZeneca’s share of Viela Bio and
$317 million from the sale of the European
rights (excluding the UK, Israel and Spain)
for
Crestor
, to Grünenthal.
Protability
In 2021, Reported Operating profit declined
by 80% (CER: 70%) to $1.1 billion and Core
Operating profit grew by 35% (CER: 41%) to
$9.9 billion. The increased difference between
Reported and Core Operating profit in the
year is primarily due to items related to the
acquisition of Alexion, increased intangible
asset impairments and restructuring charges,
of which $1.0 billion relates to the Post Alexion
Acquisition Group Review (PAAGR), aimed at
integrating systems, structure and operations
to optimise the global footprint and prioritise
resource allocations and investments,
following the acquisition of Alexion. Reported
Basic earnings per share (EPS) was $0.08
and Core EPS was $5.29.
Our commitment to the ght against
COVID-19
We are very proud of our contribution to
fighting the COVID-19 pandemic and remain
committed to delivering our vaccine. As at
December 2021, AstraZeneca and its
sublicensing partner remain the largest
contributor to the COVAX programme,
having delivered more than 247 million
doses to 130 countries. Globally, AstraZeneca
and its partners have released more than
2.5 billion vaccine doses, for supply in over
180 countries. Approximately two thirds of the
doses have gone to low- and middle-income
countries. We were also delighted to see
Evusheld
receive Emergency Use
Authorisation in the US and other markets
in 2021, for the pre-exposure prevention
of COVID -19.
Aradhana Sarin
Chief Financial Ocer
Exceptional pipeline delivery, the integration
of Alexion and the success of
Vaxzevria
made
2021 a momentous year for AstraZeneca.
Financial Review
“ AstraZeneca achieved
Total Revenue of $37.4
billion in 2021, with
growth of 41% (CER:
38%), including $0.9
billion of Collaboration
Revenue, $3.9 billion
of
Vaxzevria
Product
Sales and $3.1 billion
of post-acquisition
Alexion sales.”
52
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Highlights
Financial performance
Sales platforms
$36.5bn
Reported and Core
(2020: $25.9bn)
Japan
31%
growth
(CER: 35%)
Emerging Markets
40%
growth
(CER: 36%)
Oncology
20%
growth
(CER: 18%)
CVRM
13%
growth
(CER: 10%)
Respiratory &
Immunology
13%
growth
(CER: 9%)
Rare Disease
8%
pro rata growth*
(CER: 9%)
$0.9bn
Reported and Core
(2020: $0.7bn)
$1.1bn
80% decline – Reported
(CER: 70% decline)
$9.9bn
35% growth – Core
(CER: 41%)
$0.10
97% decline – Reported
(CER: 84%)
$5.29
32% growth – Core
(CER: 37%)
Product
Sales
Collaboration
Revenue
Operating
prot
EPS
Summary performance in 2021
Reported
CER
Core
2021
$m
2020
$m
% change
CER
growth
1
$m
Growth
due to
exchange
effects
$m
% change
2021
$m
2020
$m
% change
Product Sales
36,541
25,890
41
9,942
25,890709
38
36,541
41
Collaboration Revenue
876
727
20
147
7272
20
876
20
Total Revenue
37,417
26,617
41
37,41710,089
711
38
26,617
41
Cost of sales
(12,437)
(5,299)
135
(6,542)
(596)123
(9,444)
(5,175)
82
Gross profit
24,980
21,318
17
3,547
115
17
27,973
21,442
30
Operating expenses
(25,416)
(17,684) 7,124)
44
((608)
40
(19,537)
(15,633)
25
Other operating income and expense
1,492
1,528
(2)
(54)
1,53118
(4)
1,492
(3)
Operating profit
1,056
5,162
(80)
(3,631)
(475)
(70)
9,928
7,3 40
35
Net finance expense
(1,257)
(1,219)
3
(21)
(17)
2
(862)
(782)
10
Share of after tax losses of joint ventures and associates
(64)
(27)
137
(36)
(27)(1)
133
(64)
137
(Loss)/profit before tax
(265)
3,916
(107)
(3,688)
(493)
(93)
9,002
6,531
38
Taxation
380
(772)
(149)
1,066
86
(137)
(1,494)
(1,312)
14
Profit after tax
115
3,144
(96)
(2,622)
(407)
(83)
7,508
5,219
44
Basic earnings per share ($)
0.08
2.44
(97)
(2.07)
(0.29)
(84)
5.29
4.02
32
1
Asdetailedonpage55,CERgrowthiscalculatedusingprioryearactualresultsadjustedforcertainexchangerateeects,includinghedging.
P
r
o
d
u
c
t
S
a
l
e
s
C
o
l
l
a
b
o
r
a
t
i
o
n
R
e
v
e
n
u
e
O
p
e
r
a
t
i
n
g
p
r
o
t
E
P
S
* Pro rata growth rates of Rare Disease medicines for the year have been calculated by comparing post-acquisition revenues
from July 2021 with the corresponding prior year pre-acquisition revenues published by Alexion.
53
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Business background and results
overview
The business background is covered in
the Healthcare in a Changing World section
from page 7, the Disease Area Review
from page 16, and the Our Strategy and Key
Performance Indicators section from page 12,
which describe in detail the business
developments of our products.
As described earlier in this Annual Report,
sales of our products are directly influenced
by medical need and are generally paid for
by health insurance schemes or national
healthcare budgets. Our operating results
can be affected by a number of factors other
than the delivery of operating plans and
normal competition.
given in Risk Overview from page 48 and in the Risk
supplement at www.astrazeneca.com/annualreport2021.
Over the longer term, the success of our R&D
is crucial and we devote substantial resources
to this area. The benefits of this investment
are expected to emerge over the long-term
and there is considerable inherent uncertainty
as to the scale and timing of outcomes and
their transition to saleable products.
Measuring performance
Reported and Core performance are referred
to in this Financial Review when reporting on
our performance in absolute terms, but more
often in comparison to earlier years:
>
Reported performance
takes into account
all the factors (including those which we
cannot influence, such as currency
exchange rates) that have affected the
results of our business. The Consolidated
Financial Statements have been prepared
in accordance with UK-adopted IAS and
with the requirements of the Companies Act
2006 as applicable to companies reporting
under those standards. The Consolidated
Financial Statements also comply fully with
IFRS as issued by the IASB and IAS as
adopted by the EU. On 31 December 2020,
EU-adopted IFRS was brought into UK
law and became UK-adopted IAS, with
future changes to IFRS being subject to
endorsement by the UK Endorsement Board.
>
Core performance
measures are adjusted
to exclude certain significant items, using
a set of established principles.
page 55.
Use of non-GAAP performance measures
Core performance measures, EBITDA, Net
debt, CER, Gross profit margin, Operating
profit margin and Ongoing Collaboration
Revenue are non-GAAP performance
measures because they cannot be derived
directly from the Financial Statements.
By disclosing non-GAAP performance and
growth measures, in addition to our Reported
financial information, we are enhancing
investors’ ability to evaluate and analyse the
financial performance and trends of our
ongoing business and the related key
business drivers. The adjustments are made
to our Reported financial information in order
to show non-GAAP performance measures
that illustrate clearly, on a year-on-year or
period-by-period basis, the impact on our
performance of factors such as changes in
revenues and expenses driven by volume,
prices and cost levels relative to such prior
years or periods. These non-GAAP
performance measures are not a substitute
for, or superior to, financial measures
prepared in accordance with GAAP.
As shown in the 2021 Reconciliation of
Reported results to Core results table on
page 56, our reconciliation of Reported
financial information to Core performance
measures includes a breakdown of the items
for which our Reported financial information is
adjusted, and a further breakdown by specific
line item as such items are reflected in our
Reported income statement. This illustrates
the significant items that are excluded from
Core performance measures and their impact
on our Reported financial information, both as
a whole and in respect of specific line items.
Management presents these results
externally to meet investors’ requirements
for transparency and clarity. Core financial
measures are also used internally in the
management of our business performance, in
our budgeting process and when determining
compensation. As a result, Core performance
measures allow investors to differentiate
between different kinds of costs but they
should not be used in isolation.
information in the Summary performance in 2021 table
on page 53, our reconciliation of Core performance
measures to Reported nancial information in the 2021
Reconciliation of Reported results to Core results table
and the Excluded from Core results table on page 56 for
our discussion of comparative growth measures that
reect all factors that aect our business.
Our determination of non-GAAP measures and
our presentation of them within this financial
information, may differ from similarly titled
non-GAAP measures of other companies.
The SET retains strategic management of
the costs excluded from Reported financial
information in arriving at Core financial
measures, tracking their impact on Reported
Operating profit and EPS, with operational
management being delegated on a case-by-
case basis to ensure clear accountability
and consistency for each cost category.
We strongly encourage readers of this
Annual Report not to rely on any single
financial measure but to review our Financial
Statements, including the Notes thereto,
and our other publicly filed reports, carefully
and in their entirety.
54
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
Non-GAAP measures: definitions
Revenue
Constant
exchange rate
(CER) growth
rates
see page 56.
Definition:
Retranslation of the current year’s performance at the previous
year’s average exchange rates, adjusted for other exchange effects,
including hedging.
Why we use them:
CER measures allow us to focus on the changes in
revenues and expenses driven by volume, prices and cost levels relative
to the prior period. Revenues and cost growth expressed in CER allow
management to understand the true local movement in revenues and
costs, in order to compare recent trends and relative return on
investment. CER growth rates can be used to analyse revenues in a
number of ways but, most often, we consider CER growth by products
and groups of products, and by countries and regions.
CER revenue growth can be further analysed by revenue volumes and
selling price. Similarly, CER cost growth helps us to focus on the real local
change in costs so that we can manage the cost base effectively.
Limitations:
CER measures are not always better indicators of
performance. Where countries are subject to high inflation and currencies
that depreciate persistently, adjusting out the effect of foreign exchange
fluctuations could give an overly optimistic view of growth.
Ongoing
Collaboration
Revenue
see page 59.
Definition:
Collaboration Revenue excluding Initial Collaboration Revenue
(which is defined as Collaboration Revenue that is recognised at the point
in time control is transferred). Ongoing Collaboration Revenue comprises,
among other items, milestone payments, profit sharing and royalties.
Why we use it:
This measure provides us with an understanding of the
ongoing value derived from our collaboration arrangements, removing any
distortion driven by the upfront income.
Protability
Core
performance
measures
see page 56.
Core performance measures
are adjusted to exclude certain significant
items. In determining the adjustments to arrive at the Core result, we use
a set of established principles relating to the nature or materiality of
individual items or groups of items, excluding, for example, events which
are (i) outside the normal course of business, (ii) incurred in a pattern that
is unrelated to the trends in the underlying financial performance of our
ongoing business, or (iii) related to major acquisitions, to ensure that
investors’ ability to evaluate and analyse the underlying financial
performance of our ongoing business is enhanced.
for a reconciliation of Reported to Core performance, as well as further details
of the adjustments.
Our Core adjustments are summarised as:
Restructuring costs,
including charges that relate to the impact of our
global restructuring programmes on our capitalised manufacturing
facilities and IT assets. These can take place over a significant period
of time, given the long life-cycle of our business.
Why we use them:
We adjust for these charges and provisions because
they primarily reflect the financial impact of change to legacy
arrangements, rather than the underlying performance of our ongoing
business.
Intangible amortisation and impairments,
including impairment reversals
but excluding any charges relating to IT assets. Intangibles generally arise
from business combinations and individual licence acquisitions.
Why we use them:
We adjust for these charges because their pattern
of recognition is largely uncorrelated with the underlying performance
of the business.
Acquisition of Alexion,
principally comprising acquisition-related costs
related to the acquisition of Alexion.
Why we use them:
We adjust for this item to enable a more meaningful
comparison of the performance of acquired business and products to that
of internally developed products, as well as removing charges whose
pattern of recognition is largely uncorrelated to the underlying
performance of the business.
Other,
principally comprising acquisition-related costs, other than those
associated with Alexion, credits arising from fair value adjustments,
finance charges and fair value movements relating to contingent
consideration on business combinations or asset acquisitions, and costs
for legal settlements
.
Why we use them:
We adjust for these items to enable a more meaningful
comparison of the performance of acquired business and products to that
of internally developed products, as well as removing charges whose
pattern of recognition is largely uncorrelated to the underlying
performance of the business.
It should be noted that some costs excluded from our Core results, such
as intangibles amortisation and finance charges related to contingent
consideration, will recur in future years, and other excluded items such
as impairments and legal settlements costs, along with other
acquisition-related costs, may recur in the future.
Limitations:
Core results exclude significant costs (such as restructuring,
intangible amortisation and impairments, and other acquisition-related
adjustments), but incorporate associated benefits, including Product Sales
arising from business combinations, asset acquisitions and assets which
have been amortised, as well as the benefits resulting from restructuring
activities and, as such, they should not be regarded as a complete picture
of the Group’s financial performance, which is presented in its Reported
results. The exclusion of the adjusting items may result in Core earnings
being materially higher or lower than Reported earnings.
Gross margin
percentage
see page 57.
Definition:
Gross Profit margin, as a percentage, by which Product Sales
exceeds the Cost of sales, calculated by dividing the difference between
the two by the sales figure. The calculation of Reported and Core Gross
Profit margin excludes the impact of Collaboration Revenue and any
associated costs, thereby reflecting the underlying performance of
Product Sales.
Why we use it:
This measure sets out gross profitability of Product Sales
when taking account of only direct Cost of sales. It is a key performance
measure of the contribution to fund operating costs and overall quality
of the business.
Limitations:
Gross margin percentage excludes the impact of
Collaboration Revenue and related costs and therefore should not be
regarded as giving a full picture of revenue performance.
55
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Summary statement of consolidated income
2021 Reconciliation of Reported results to Core results
2021
Reported
$m
Restructuring
costs
$m
Intangible
amortisation
and
impairments
$m
Acquisition
1
of Alexion
$m
Other
2
$m
2021
Core
3
$m
Core 2021 compared with
Core 2020
3
Actual
growth
%
CER
growth
%
Gross profit
24,980
722
66 2,206
(1)
27,973
30 30
Product Sales gross margin %
4
66.0
74.2
Distribution expenses
(446)
– – – –
(446)12
7
Research and development expenses
(9,736)
223
1,496
28
2
(7,987)
36
33
Selling, general and administrative expenses
(15,234)
338
3,584
207
1
(11,104)
19
15
Other operating income and expense
1,492
– – – –
1,492(3)
(4)
Operating profit
1,056 1,283
5,146
2,441
2
419,928
35
Operating margin as a % of Total Revenue
2.8
26.5
Net finance expense
(1,257)
– – –
395
(862)
Taxation
380 (249)
(1,024)
(531)
(1,494)(70)
Basic earnings per share ($)
0.08
0.73
2.91
1.34
0.23
5.29
32
37
2020 Reconciliation of Reported results to Core results
2020
Reported
$m
Restructuring
costs
$m
Intangible
amortisation
and
impairments
$m
Diabetes
Alliance
5
$m
Other
2
$m
2020
Core
3
$m
Core 2020 compared with
Core 2019
3
Actual
growth
%
CER
growth
%
Gross profit
21,318
53
21,44266
– 5
9
10
Product Sales gross margin %
4
79.5
80.0
Distribution expenses
(399)
– – – –
(399)18
19
Research and development expenses
(5,991)
35
84
– –
(5,872)
10 10
Selling, general and administrative expenses
(11, 294)
162
1,657
310
(197)
(9,362)
3 4
Other operating income and expense
1,528
1 2 – –
1,531(2) (2)
Operating profit
5,162
251
1,809
310
(192)
7, 3 4 0
14
17
Operating margin as a % of Total Revenue
19.4
27.6
Net finance expense
(1,219)
– –
228
209
(782)
Taxation
(772)
(50)
(376)
(127)
13
(1,312)
Basic earnings per share ($)
2.44
0.15 1.10
0.31
0.02
4.02
15
18
1
acquisition costs.
2
3
4
GrossmarginasapercentageofProductSalesreectsGrossprotderivedfromProductSales,dividedbyProductSales.
5
this column has been removed with amounts now presented in the Intangible asset amortisation and impairments and the Other columns as applicable.
Operating
margin
percentage
see below.
Definition:
Operating profit as a percentage of Total Revenue.
Why we use it:
This measure sets out profitability derived from operating
activities before the impact of finance costs and tax. It is a key performance
measure of the overall quality of the operations of the business.
Limitations:
Operating margin percentage excludes the impact of financing
costs and therefore should not be regarded as a full picture of revenue
performance.
EBITDA
see page 60.
Definition:
Reported Profit before tax plus net finance expense,
share of after-tax losses of joint ventures and associates, and charges
for depreciation, amortisation and impairment.
Why we use it:
EBITDA allows us to understand our baseline profitability,
removing any ‘non-operational’ expenses and non-cash items that are not
considered by management to be reflective of the underlying performance
of the Group.
Limitations:
EBITDA does not take account of the cost of investment to
generate revenues, hence is not always the best indicator of performance.
Cash ow and liquidity
Net debt
see page 63.
Definition:
Interest-bearing loans and borrowings net of Cash and cash
equivalents, Other investments and Net derivative financial instruments.
Why we use it:
Net debt is a measure that provides valuable additional
information regarding the Group’s net financial liabilities and is a measure
commonly used by investors and rating agencies. It facilitates the tracking
of one of our key financial priorities: deleveraging.
Non-GAAP measures: definitions
continued
56
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
Excluded from Core results
Restructuring costs
>
Restructuring costs totalling $1,283 million (2020: $251 million) mainly comprise those incurred on the PAAGR ($1,030 million) and
the Global Post Pandemic New Ways of Working Programme ($108 million).
Intangible amortisation
and impairments
>
Amortisation totalling $3,080 million (2020: $1,511 million) relating to intangible assets, except those related to IT. This includes
amortisation on intangible assets recognised at fair value on the acquisition of Alexion. Further information on our intangible assets
is contained in Note 10 to the Financial Statements, from page 156.
>
Intangible impairment charges of $2,067 million (2020: $240 million), excluding those related to IT, include the impact of an
impairment charge of $1,172 million recognised on an intangible asset related to the acquisition of Ardea, following the decision
to discontinue the development of verinurad and $469 million recognised on
Bydureon
. Further details relating to intangible asset
impairments are included in Note 10 to the Financial Statements, from page 156.
Acquisition of Alexion
>
Costs associated with our acquisition of Alexion in July 2021 amounting to $2,441 million (2020: $nil), primarily relating to the impact
from the unwind of the fair value adjustment to Alexion inventories at the date of acquisition. The fair value uplift is expected to
unwind through Reported Cost of sales over the 18 months post acquisition in line with revenues, resulting in a lower gross margin
in the first turn of inventory. The impact of this unwind on Cost of sales in the year was $2,198 million.
>
The fair value of replacement employee share awards is higher than both the value of the Alexion awards the employees were
originally granted and the expected value of future awards to those employees. As a result, the Group will recognise an inflated
expense during the remaining vesting period of these awards. This temporary increase in operating expenses, when compared with
the expected expense based on the grant-date value, will be excluded from the Group’s Core results.
>
Other acquisition-related items to be excluded from the Group’s Core results include professional fees, retention bonuses included
in the acquisition agreement and the effect of unwinding other acquisition-related fair value adjustments over time.
Other
>
Other adjustments amounted to $397 million (2020: $17 million).
>
Other adjustments to Reported SG&A expenses were $1 million, including net legal provisions of $48 million (2020: credit of $9 million)
and $14 million (2020: credit of $272 million) net fair value adjustments relating to contingent consideration balances, offset by
$61 million (2020: $nil) of fair value adjustments relating to Other Payables. Further details relating to contingent consideration
balances are contained in Note 20, from page 166 and further details of legal proceedings, ongoing at year end, are contained
within Note 30 to the Financial Statements from page 190.
>
Other adjustments to Net finance expense of $395 million (2020: $209 million) relate to discount unwind charges on liabilities arising
from business combinations.
57
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Sales platforms
2021
Product
Sales
$m
2020
Product
Sales
$m
Actual
growth
%
CER
growth
%
Total sales platform Product Sales
34,215
24,288
39
37
Individual sales platform Product Sales (certain Product Sales are included in more than one sales platform)
Emerging Markets
12,161
8,679
40
36
Japan
3,416
2,600
31
35
Oncology
13,048
10,850
20
18
CVRM
1
8,020
7,096
13
10
Respiratory & Immunology
6,034
5,357
13
9
Rare Disease
3,070
–
– –
Reconciliation to Note 1 Revenue (page 145) as follows:
Sum of individual sales platforms
45,749
34,582
Add: Product Sales not included in sales platforms
2,326
1,170
Less: Product Sales double-counted for Emerging Markets
Oncology
(3,223)
(2,906)
Respiratory & Immunology
(1,749)
(1,599)
CVRM
1
(3,780)
(3,203)
Rare Disease
(196)
–
Less: Product Sales double-counted for Japan
Oncology
(1,665)
(1,514)
Respiratory & Immunology
(284)
(328)
CVRM
1
(363)
(141)
Rare Disease
(274)
–
Total Product Sales
36,541
25,890
1
Revenue
Total Revenue for 2021 was up 41%
(CER: 38%) to $37,417 million, comprising
Product Sales of $36,541 million, up 41%
(CER: 38%), and Collaboration Revenue of
$876 million, an increase of 20% (CER: 20%).
Total Revenue includes Alexion sales from
21 July 2021, which contributed 8% of
Product Sales for the year.
Product Sales
By Geography
Product Sales in Emerging Markets continued
to increase, with growth of 40% (CER: 36%) to
$12,161 million in 2021. China Product Sales
increased by 12% (CER: 4%) to $5,995 million.
Product Sales in ex-China Emerging Markets
increased by 85% in the year (CER: 86%) to
$6,166 million, driven by Oncology medicines
and
Farxiga
. US Product Sales were up 39%
to $12,000 million, reflecting the success of
our Oncology medicines. In Europe, Product
Sales grew by 50% (CER: 44%) to $7,604
million, reflecting a strong performance in
Oncology, which increased by 28% (CER:
22%) in the year. Established Rest of World
Product Sales increased by 36% (CER: 36%)
to $4,776 million, with sales in Japan up 31%
(CER: 35%) to $3,416 million.
By Product
2021 succeeded in delivering 13
2
blockbuster
drugs, including
Vaxzevria
and the newly
acquired
Soliris
. Our largest-selling products in the year
were
Tagrisso
($5,015 million),
Farxiga
($3,000 million),
Symbicort
($2,728 million), Imfinzi
($2,412 million), and
Lynparza
($2,348 million).
Tagrisso
sales grew by 16%
(CER: 13%) reflecting a strong performance
across all markets.
Farxiga
sales increased
by 53% (CER: 49%), with growth across all
markets including an increase of 74% (CER:
70%) in Emerging Markets. Global sales of
Symbicort
were flat in the year (CER: decline
of 2%) with continued growth in the US of
4% offset by declines in Europe and Japan.
Imfinzi
Product Sales grew by 18% (CER:
16%), with recent regulatory approvals and
launches in China and continued growth in
other markets.
Lynparza
Product Sales
delivered a strong performance in all markets,
with launches continuing globally, and
generated total growth of 32% (CER: 30%)
in the year. In addition,
Calquence
achieved
blockbuster status for the first time in 2021,
with sales of $1,238 million, predominantly
in the US.
Following the acquisition of Alexion in 2021,
our new Rare Disease portfolio generated
8% of Product Sales, including $1,874 million
from
Soliris.
Our COVID-19 medicines, including
Evusheld
, delivered Total Product Sales
of $4,002 million, $2,259 million of which
came from Emerging Markets.
Sales platforms
Our sales platforms include products in our
four main disease areas (including for 2021
our newly acquired Rare Disease disease
area), and a focus on Emerging Markets
and Japan. Sales platforms grew by 39%
(CER: 37%), representing 91% of Total
Revenue after removing the effect of certain
Product Sales which are included in more
than one sales platform.
Emerging Markets
Product Sales in Emerging Markets grew
by 40% (CER: 36%) to $12,161 million,
mainly driven by strong performances from
Oncology, CVRM and
Vaxzevria
. Product
Sales in China increased by 12% in 2021
(CER: 4%), representing 49% of Emerging
Markets Product Sales in the year.
Japan
Japan Product Sales grew by 31% (CER: 35%)
to $3,416 million, with Oncology making up
49% of Japan sales with growth of 10%
(CER: 12%).
Oncology
Product Sales of Oncology medicines grew
by 20% (CER: 18%) to $13,048 million in 2021,
$5,015 million of which came from
Tagrisso
(2020: $4,328 million), which continues to be
our leading medicine for the treatment of lung
cancer and had received regulatory approval
in more than 69 countries by the end of 2021.
CVRM
CVRM grew by 13% (CER: 10%) with Product
Sales of $8,020 million, mainly reflecting the
strong performance of
Farxiga
with global
sales of $3,000 million, representing growth
of 53% (CER: 49%) as it continued to be our
largest-selling CVRM medicine.
Respiratory & Immunology
Product Sales of Respiratory & Immunology
medicines grew by 13% (CER: 9%) to
$6,034 million, with growth from
Fasenra
and a sustained performance by
Symbicort
.
Rare Disease
Our newly acquired Rare Disease medicines
achieved post-acquisition sales of
$3,070 million and generated 8% of Product
Sales, including $1,874 million from
Soliris.
2
Ultomiris’
designation as a blockbuster medicine
includes full-year 2021 Product Sales, inclusive of the
pre-acquisition period.
58
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
Collaboration Revenue
Details of our significant business
development transactions which give rise
to Collaboration Revenue are given below:
Nexium
Authorised Generics
In June 2021, AstraZeneca entered into an
agreement with an authorised generic for the
outlicense of the rights to
Nexium
Authorised
Generics in Japan.
>
AstraZeneca has received consideration
of $150 million (16.5 billion Japanese Yen)
from an authorised generic, of which 50%
($75 million) has been recognised as
Collaboration Revenue for 2021, with the
remaining 50% being deferred to the
balance sheet as a financial liability. The
recognition of $75 million as Collaboration
Revenue is contingent upon regulatory
approval (or potential repayment if the
product does not achieve regulatory
approval), which is currently expected
in 2022.
Zoladex
(TerSera)
In March 2017, AstraZeneca entered into an
agreement with TerSera for the commercial
rights to
Zoladex
in the US and Canada.
TerSera paid $250 million upon completion of
the transaction. The Group will also receive
sales-related income totalling up to $70 million
through milestones, as well as recurring
quarterly sales-based payments at a mid-teen
percentage of Product Sales. AstraZeneca
will also manufacture and supply
Zoladex
to
TerSera, providing a further source of ongoing
income from
Zoladex
in the US and Canada.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
Prior to 2021, AstraZeneca recognised
Collaboration Revenue in respect of
sales-related milestones totalling
$70 million.
>
No Collaboration Revenue was recognised
in respect of this agreement in 2021.
Daiichi Sankyo
In March 2019, AstraZeneca announced it
had entered into an alliance with Daiichi
Sankyo to develop and commercialise
Enhertu
for multiple cancer types. In markets
where Daiichi Sankyo is selling the product,
AstraZeneca is entitled to receive a royalty
(in Japan) or a share of costs and income
(in other territories). Royalty income and the
AstraZeneca share of gross margin from sales
made by Daiichi Sankyo are recognised as
Collaboration Revenue.
Enhertu
launched
in the US on 31 December 2019.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
Prior to 2021, AstraZeneca recognised
Collaboration Revenue of $94 million in
relation to AstraZeneca’s share of gross
profits arising from sales made by
Daiichi Sankyo.
>
In 2021, AstraZeneca recognised
Collaboration Revenue of $193 million in
relation to AstraZeneca’s share of gross
profits arising from sales made by
Daiichi Sankyo.
FibroGen
In July 2013, AstraZeneca entered into a
strategic collaboration with FibroGen to
develop and commercialise roxadustat, a
first-in-class oral compound in late-stage
development for the treatment of anaemia
from chronic kidney disease and end-stage
renal disease (ESRD). Under the arrangement,
AstraZeneca agreed to pay FibroGen upfront
and subsequent non-contingent payments
totalling $350 million, as well as potential
development-related milestone payments of
up to $465 million, and potential future
sales-related milestone payments, in addition
to tiered royalty payments on future sales of
roxadustat in the low 20% range. Additional
development milestones will be payable for
any subsequent indications which the
companies choose to pursue.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
Prior to 2021, Collaboration Revenue of
$30 million was recognised in relation to
AstraZeneca’s share of gross profits arising
from sales made by FibroGen.
>
In 2021, Collaboration Revenue of $6 million
was recognised in relation to AstraZeneca’s
share of gross profits arising from sales
made by FibroGen.
Lynparza
/selumetinib (MSD)
In July 2017, the Group announced a global
strategic oncology collaboration with MSD
to co-develop and co-commercialise
AstraZeneca’s
Lynparza
for multiple cancer
types. As part of the agreement, MSD will
pay AstraZeneca up to $8.5 billion in total
consideration, including $1.6 billion upfront,
$750 million for certain licence options and
up to $6.2 billion contingent upon successful
achievement of future regulatory and sales
milestones. Of the upfront payment of
$1.6 billion, $1.0 billion was recognised as
Collaboration Revenue on deal completion in
2017, with the remaining $0.6 billion deferred
to the balance sheet. AstraZeneca books all
Collaboration Revenue of
Lynparza
and
selumetinib; gross profits due to MSD under
the collaboration will be recorded under Cost
of sales.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
Prior to 2021, AstraZeneca recognised
Collaboration Revenue totalling
$2,110 million, comprising $750 million
resulting from the exercise of options,
$1.0 billion in respect of sales-related
milestones and $360 million in respect
of regulatory milestones.
>
In 2021, net sales of
Lynparza
reached the
$2.0 billion annual sales threshold,
triggering a sales-related milestone of $400
million due to AstraZeneca, recognised as
Collaboration Revenue for 2021.
Collaboration Revenue
2021
$m
2020
$m
Initial Collaboration Revenue
Nexium
Authorised Generics
75
–
Total Initial Collaboration Revenue
75
–
Ongoing Collaboration Revenue
Lynparza
/selumetinib (MSD) – milestone
400
460
Enhertu
(Daiichi Sankyo) – share of gross profits
193
94
Roxadustat (FibroGen) – share of gross profits
6
30
Zoladex
(TerSera) – milestone
–
35
Royalty income
138
62
Other
64
46
Total Ongoing Collaboration Revenue
801
727
Total Collaboration Revenue
876
727
59
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Reconciliation of Reported Profit before tax to EBITDA
2021
$m
2020
$m
Actual
growth
%
CER
growth
%
Reported (Loss)/profit before tax
(265)
3,916
n/m
(93)
Net finance expense
1,257
1,219
3 2
Share of after tax losses of joint ventures
and associates
64
27
n/m n/m
Depreciation, amortisation and impairment
6,530
3,149
n/m
99
EBITDA
7,586
8,311
(9)
(6)
Prot before tax
Reported (Loss)/profit before tax decreased
by 107% (CER: 93%) in 2021 to a loss of
$265 million (2020: profit of $3,916 million).
Core Profit before tax increased by 38%
(CER: 43%) to $9,002 million. Pre-tax
adjustments to arrive at Core Profit before
tax amounted to $9,267 million in 2021
(2020: $2,615 million), comprising $8,872
million adjustments to Operating profit
(2020: $2,178 million) and $395 million to
Net finance expense (2020: $437 million).
EBITDA
EBITDA decreased by 9% (CER: 6%) to
$7,586 million in the year (2020: $8,311 million)
and was negatively impacted by the $2,198
million unwind of inventory fair value uplift
recognised on the acquisition of Alexion, as
well as increased restructuring charges arising
from the PAAGR.
Gross prot
Reported Gross profit increased by 17%
(CER: 17%) to $24,980 million. Core Gross
profit increased by 30% (CER: 30%) to
$27,973 million. Reported Gross Profit margin
declined 14 (CER: 13) percentage points to
66.0% due to the impact of restructuring
charges and the unwind of the fair value
adjustment to the Alexion inventory at the date
of acquisition. Core Gross Profit margin
declined six (CER: five) percentage points,
reflecting the equitable supply of
Vaxzevria
,
partially offset by Alexion’s contribution from
July 2021 and growth in Oncology sales.
Operating expenses
Reported Total Operating expenses
increased by 44% (CER: 40%) in the year
to $25,416 million. Core Total Operating
expenses increased by 25% (CER: 22%)
to $19,537 million.
Reported R&D expenses increased by 62%
(CER: 59%) to $9,736 million and Core R&D
expenses increased by 36% (CER: 33%) to
$7,987 million. The increase in both Reported
and Core R&D expenses reflects the Group’s
continued investment in
Vaxzevria
and Evusheld
, as well as investment in several
late-stage Oncology trials and the
advancement of a number of Phase II
clinical development programmes in
BioPharmaceuticals. Reported R&D expenses
also includes intangible asset impairment
charges recognised in the year of $1,464
million, of which $1,172 million related to the
impairment of verinurad.
Reported SG&A expenses increased by 35%
(CER: 32%) to $15,234 million and Core SG&A
expenses increased by 19% (CER: 15%) to
$11,104 million. The increase to Reported
SG&A expenses includes the increased
amortisation of intangible assets related to
the Alexion acquisition. Core SG&A expenses
growth reflects the investment in Oncology
medicine launches, the launch of several new
BioPharmaceutical medicines and further
expansion into Emerging Markets.
Other operating income and expense
Reported and Core Other operating income
and expense in the year was down 2% (CER:
4%) to $1,492 million and includes $776 million
from the divestment of AstraZeneca’s share
in Viela Bio and $317 million from the sale of
the European rights, excluding Israel, Spain
and UK, for
Crestor
to Grünenthal.
In accordance with our Collaboration Revenue
definition in the Group Accounting Policies
from page 138 and the requirements of IFRS
15 ‘Revenue from Contracts with Customers’,
proceeds from these divestments are
recorded as Other operating income and
expense and comprise the majority of Other
operating income and expense for the year.
Operating prot
Reported Operating profit declined by 80%
(CER: 70%) to $1,056 million in the year. The
Reported Operating margin decreased by
17 percentage points (CER: 15 percentage
points) to 3% of Total Revenue. Core
Operating profit grew by 35% (CER: 41%) in
the year to $9,928 million. The Core Operating
profit margin decreased by one percentage
point (CER: increase of one percentage point)
to 27% of Total Revenue.
Net nance expense
Reported Net finance expense increased by
3% (CER: 2%) in the year to $1,257 million.
Core Net finance expense increased by 10%
(CER: 11%) in the year to $862 million. The
increase to both Reported and Core Net
finance expense was driven by lower interest
income on short-term deposits from lower
interest rates and increased financing
costs related to the facilities to fund the
Alexion acquisition.
60
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
EPS
Reported EPS of $0.08 in the year was a
decrease of 97% (CER: 84%). Core EPS
increased by 32% (CER: 37%) to $5.29.
Restructuring
Post Alexion Acquisition Group Review
In conjunction with the acquisition of Alexion,
the enlarged Group has initiated a
comprehensive PAAGR, aimed at integrating
systems, structure and processes, optimising
the global footprint and prioritising resource
allocations and investments. These activities
are expected to be substantially complete by
the end of 2025, with a number of planned
activities having commenced in late 2021.
The identified activities, including those
previously announced regarding the
integration of Alexion, are anticipated to incur
one-time restructuring costs of approximately
$2.1 billion, of which approximately $1.4 billion
are cash costs and $0.7 billion are non-cash
costs, and capital investments of
approximately $0.2 billion. The activities are
anticipated to realise run-rate pre-tax benefits,
before reinvestment, of approximately
$1.2 billion, including previously-announced
Alexion synergies, by the end of 2025. In line
with established practice, restructuring costs
will be excluded from our Core (non-GAAP)
financial measures.
During 2021, the Group has recorded
restructuring charges of approximately
$1.0 billion in relation to the PAAGR. These
costs primarily arise from the rationalisation
of our manufacturing capacity and
footprint, de-prioritisation of various
development projects and re-negotiation
of manufacturing capacity agreements
as well as severance costs.
Taxation
The Reported Tax rate for the year was 143%
and the Core tax rate in the year was 17%.
The income tax paid for the year was
$1,743 million. This was $2,123 million higher
than the Reported tax charge for the year,
which benefited from a net deferred tax credit
of $1,575 million (2020: $199 million), relating
to the acquisition of Alexion, intangible
amortisation and impairments and other
deferred tax items, partially offset by a net
$51 million deferred tax charge reflecting the
change in Dutch and UK income tax rates,
updates to estimates of prior period tax
liabilities following settlements with tax
authorities and on expiry of statute of
limitations and other cash tax timing
differences. Additional information on
these items is contained in Note 4 to the
Financial Statements from page 149.
We pay corporate income taxes, customs
duties, excise taxes, stamp duties, employment
and many other business taxes in all
jurisdictions where applicable. In addition,
we collect and pay employee taxes and
indirect taxes such as value added tax.
Total comprehensive income
Total comprehensive loss/income decreased
by $4,782 million to a loss of $30 million in
2021. Other comprehensive loss for the
period, net of tax, was $145 million, a
decrease of $1,753 million. The decrease was
primarily driven by Foreign exchange arising
on consolidation losses of $483 million (2020:
gains of $443 million), Foreign exchange
arising on designated borrowings in net
investment hedges losses of $321 million
(2020: gains of $573 million), Net losses on
equity investments measured at fair value
through Other comprehensive income of
$187 million (2020: gains of $938 million),
offset by Remeasurement of the defined
benefit pension liability gains of $626 million
(2020: losses of $168 million). A significant
proportion of the prior year Net gains/(losses)
on equity investments measured at fair value
through Other comprehensive income relates
to gains recognised during 2020 from the sale
of AstraZeneca’s full holding in Moderna as
detailed in Note 12 of the Financial Statements
from page 160.
Other programmes
The Group has also continued to progress the
Global Post Pandemic New Ways of Working
programme initiated in 2020 in response to
the changing business environment,
accelerated by the COVID-19 pandemic.
This programme is expected to run until the
end of 2022 and incorporates the increasing
utilisation of digitisation and technology, as
well as the new ways of working that reflect
the size, nature and footprint of commercial
teams, enabling functions, R&D and
operations. $108 million of costs were
incurred under this programme in 2021.
Legacy programmes include: the 2016 plan
to redeploy investment to key disease areas,
particularly Oncology; the phase 3/4 plan
regarding the centralisation of our global
R&D footprint into three strategic centres,
transformation of the IT organisation and
closure of a number of manufacturing
facilities; and the transformation of SG&A
functions (principally Finance and HR).
$145 million of costs were incurred under
legacy programmes in 2021.
The aggregate restructuring charge incurred in
2021 across all our restructuring programmes
was $1,283 million (2020: $251 million). Final
estimates for programme costs, benefits and
headcount impact in all functions are subject
to completion of the requisite consultation in
the various areas.
Our priority, as we undertake these
restructuring initiatives, is to work with our
affected employees on the proposed
changes, acting in accordance with relevant
local consultation requirements and
employment law.
Brexit
The UK left the EU on 31 January 2020 with a
transition period running to 31 December 2020.
In response to the UK referendum outcome,
the Group implemented appropriate actions
to mitigate the potential risk of disruption to
supply chains due to new border processes
(including the additional UK documentation
requirements introduced on 1 January 2022)
and potential port congestion. To date, we
have seen no significant disruption to our
supply chain.
61
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AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Summary cash ows
2021
$m
2020
$m
2019
$m
Net debt brought forward at 1 January
(12,110)
(11,904)
(13,003)
(Loss)/profit before tax
(265)
3,916
1,548
Sum of changes in interest, depreciation, amortisation, impairment
and share of after tax losses on joint ventures and associates
7,851
4,395
5,138
Decrease/(increase) in working capital and short-term provisions
2,021
361
(346)
Tax paid
(1,743)
(1,562)
(1,118)
Interest paid
(721)
(733)
(774)
Gains on disposal of intangible assets
(513)
(1,030) (1,243)
Gains on disposal of joint ventures and associates
(776)
– –
Fair value movements on contingent consideration arising from
business combinations
14
(272)
(614)
Non-cash and other movements
95
(276)
378
Net cash available from operating activities
5,963
4,799
2,969
Disposal of intangibles (net of purchases)
(522)
(694) 595
Acquisition of subsidiaries, net of cash acquired
(9,263)
– –
Net borrowings acquired from subsidiaries
(2,779)
– –
Share-based payments attributable to business combinations
(211)
– –
Payment of contingent consideration from business combinations
(643)
(822) (709)
Other capital (expenditure)/ income (net)
(569)
399
(1,016)
Investments
(13,987)
(1,117) (1,130)
Dividends
(3,856)
(3,572)
(3,592)
Proceeds from the issue of share capital
29
30
3,525
Distributions
(3,827)
(3,542)
(67)
Lease liabilities: IFRS 16
(240)
(207)
(675)
Other movements
(121)
(139)
2
Net debt carried forward at 31 December
(24,322)
(12,110)
(11,904)
Bonds issued in 2021 and 2020
Repayment
dates
Face value
of bond
$m
Net book
value of
bond at
31 December
2021
$m
Bonds issued in 2021:
0.3% USD bond
2023
1,400
1,397
0.7% USD bond
2024
1,600
1,598
1.2% USD bond
2026
1,250
1,245
1.75% USD bond
2028
1,250
1,244
0.375% EUR bond
2029
975
898
2.25% USD bond
2031
750
746
3% USD bond
2051
750
734
Total 2021
7,975
7,8 62
Bonds issued in 2020:
0.7% USD bond
2026
1,200
1,192
1.375% USD bond
2030
1,300
1,291
2.125% USD bond
2050
500
486
Total 2020
3,000
2,969
Cash ow and liquidity – for the year
ended 31 December 2021
Net cash generated from operating activities
was $5,963 million (2020: $4,799 million).
Net investment cash outflows were
$13,987 million (2020: $1,117 million).
Investment cash outflows for 2021 include:
>
an upfront payment of $9,263 million and
$2,779 million in net borrowings in respect
of the acquisition of Alexion,
>
payments of contingent consideration from
business combinations of $643 million
(2020: $822 million), and
>
$1,109 million (2020: $1,645 million) for the
purchase of intangible assets, including
$340 million of regulatory milestones and
a $150 million consideration payment to
Daiichi Sankyo for
Enhertu
, the first staged
upfront payment of $325 million to Daiichi
Sankyo for DS-1062 and an upfront
payment of $200 million to Ionis
Pharmaceuticals, Inc. for eplontersen.
Investment cash inflows include:
>
$587 million from the sale of intangible
assets, mainly driven by $317 million from
the sale of the European rights, excluding
Israel, Spain and UK for
Crestor
to
Grünenthal, and
>
$776 million from the divestment of
AstraZeneca’s share of Viela Bio.
Net cash distributions to shareholders were
$3,827 million (2020: $3,542 million), including
proceeds from the issue of share capital of
$29 million (2020: $30 million) less dividends
paid of $3,856 million (2020: $3,572 million).
Bonds
In May 2021, AstraZeneca issued $7.0 billion
of bonds in the US dollar debt capital markets
with maturities from 2023 to 2051. A further
800 EUR million was issued in June 2021
under the Euro Medium Term Note
programme with a maturity of 2029. In 2021,
AstraZeneca repaid a 500 EUR million 0.250%
bond, which matured in May 2021 and a 750
EUR million 0.875% bond, which matured in
November 2021.
62
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
Net debt
At 31 December 2021, outstanding gross
debt (interest-bearing loans and borrowings)
was $30,781 million (2020: $20,380 million).
Of the gross debt outstanding, $1,893 million
is due within one year (2020: $2,386 million).
On 1 January 2019, the Group adopted IFRS
16, which eliminates the classification of
leases as either operating or finance leases.
The adoption of the new standard resulted
in the initial recognition of Lease liabilities
of $720 million at the start of 2020. Net debt
at 31 December 2021 was $24,322 million,
compared with $12,110 million at the
beginning of the year, primarily due to the
financing of the Alexion acquisition.
At 31 December 2021, Cash and cash
equivalents and liquid investments totalled
$6,398 million (2020: $7,992 million). The
Group has committed bank facilities of
$4,875 million available to manage liquidity.
The commitments mature in April 2025. All
facilities contain no financial covenants and
were undrawn at 31 December 2021. The
Group regularly monitors the credit standing
of the banking group and currently does not
anticipate any issue with drawing on the
committed facilities should this be necessary.
Advances under these facilities currently bear
an interest rate per annum based on the
LIBOR (or other relevant benchmark rate) plus
a margin. The facilities contain arrangements
to switch to alternative risk free rate
benchmarks before June 2023.
In respect of AstraZeneca’s announcement
on 12 December 2020 to acquire Alexion,
the Company entered into $17.5 billion of
committed bank facilities. $13.5 billion of
these facilities were cancelled in June, July
and October 2021 and $4.0 billion were drawn
under the term loan facilities during July 2021.
$1.0 billion of these term loans was
subsequently repaid, using the proceeds
of a new bank term loan.
Financial position – 31 December 2021
All data in this section are on a Reported basis.
Property, plant and equipment
In 2021, Property, plant and equipment
increased by $932 million to $9,183 million,
with the increase primarily due to the assets
acquired on the Alexion acquisition.
Business combinations
On 21 July 2021, AstraZeneca completed the
acquisition of 100% of the issued shares of
Alexion, a US-based global biopharmaceutical
company focused on serving patients affected
by rare diseases for a consideration of
$41,058 million.
The acquisition has been accounted for as
a business combination using the acquisition
method of accounting in accordance with
IFRS 3 ‘Business Combinations’.
from page 178.
No business acquisitions were made in
2020 or 2019.
Goodwill and intangible assets
Goodwill increased by $8,152 million in the
year to $19,997 million, principally on the
acquisition of Alexion. Intangible assets
amounted to $42,492 million at 31 December
2021 (2020: $20,947 million), an increase of
$21,545 million. The increase was largely
due to intangible asset additions with a value
of $27 billion assumed as part of the Alexion
acquisition, offset by amortisation of
$3,143 million (2020: $1,992 million) and
net impairment charges of $2,428 million
(2020: $253 million) including impairments
on verinurad ($1,172 million) and
Bydureon
($469 million).
impairments recorded, are included in Note 10 to the
Financial Statements from page 156.
Summary statement of financial position – 31 December
All data in this section are on a Reported basis.
2021
$m
Movement
$m
2020
$m
Movement
$m
2019
$m
Property, plant and equipment
9,183
932
8,251
563
7,6 8 8
Right-of-use assets
988
322
666
19
647
Goodwill and intangible assets
62,489
29,697
32,792
291
32,501
Assets held for sale
368 368
–
(70)
70
Inventories
8,983
4,959
4,024
831
3,193
Trade and other receivables
10,539
2,797
7,742
1,241
6,501
Net deferred tax (liabilities)/assets
(1,876)
(2,396)
520
292
228
Trade and other payables
(23,871)
(2,002)
(21,869) (1,591)
(20,278)
Provisions
(1,724)
(164)
(1,560)
4
(1,564)Net income tax payable
(253)
510
(763)
313
(1,076)
Retirement benefit obligations
(2,454)
748
(3,202)
(395)
(2,807)
Non-current other investments
1,168
60
1,108
(231)
1,339
Investments in associates and joint
ventures
69
30
39
(19)
58
Net debt
(24,322)
(12,212)
(12,110)
(206)
(11,904)
Net assets
39,287
23,649
15,638
1,042
14,596
Net debt reconciliation
2021
$m
2020
$m
2019
$m
Cash and cash equivalents
6,329
7,8 32
5,369
Other investments
1
69
160
911
Cash and investments
6,398
7,9 92
6,280
Overdraft and short-term borrowings
(387)
(658)
(225)
Lease liabilities
2
(987)
(681)
(675)
Current instalments of loans and borrowings
(1,273)
(1,536)
(1,597)
Loans due after one year
(28,134)
(17,505)
(15,730)
Loans and borrowings
(30,781)
(20,380)
(18,227)
Net derivative financial instruments
61
278
43
Net debt
3
(24,322)
(12,110)
(11,904)
1
$1,108 million) in the Consolidated Statement of Financial Position on page 135.
2
the adoption of IFRS 16 on 1 January 2019. See Group Accounting Policies from page 138 and Note 8 on page 155 for
more information.
3
TheequivalentGAAPmeasuretoNetdebtis‘liabilitiesarisingfromnancingactivities’,whichexcludestheamountsfor
cashandoverdrafts,otherinvestmentsandnon-nancingderivativesshownaboveandincludestheAcertaPharmaput
option of $2,458 million (2020: $2,297 million) shown as $920 million in current Other payables and $1,538 million in
non-current Other payables.
63
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Receivables, payables and provisions
Total current and non-current Trade and other
receivables increased by $2,797 million to
$10,539 million in the year, driven by balances
assumed on the acquisition of Alexion.
Total current and non-current Trade and
other payables increased by $2,002 million
in 2021 to $23,871 million. The increase was
mainly driven by the recognition of the
Alexion payables.
Provisions increased by $164 million to
$1,724 million in 2021.
Further details of the charges made against provisions
are contained in Notes 21 and 30 to the Financial
Statements from pages 167 and 189 respectively.
The divestment of the US rights to
Synagis
,
which completed in 2019, includes
$437 million held as a financial liability (2020:
$150 million). AstraZeneca will also receive
$175 million following the submission of the
Biologics Licence Application for MEDI8897
and potential net payments of $110 million
for other MEDI8897 profit-related milestone
payments. A non-contingent payment of
$20 million for MEDI8897 was received
during the year.
Contingent consideration
Some of our past business combinations have
included elements of consideration that are
contingent on future development milestones,
sales milestones and/or royalties. Such future
payment liabilities are held at fair value on the
Consolidated Statement of Financial Position.
The Group’s most significant Contingent
consideration balance relates to our 2014
acquisition of BMS’s interest in our global
diabetes alliance and includes sales-related
royalties up until 2025.
Further details of the current position,
movement in the year and the maximum
future milestones in relation to Contingent
consideration can be found in Note 20 to the
Financial Statements from page 166.
Tax payable and receivable
Net income tax payable has decreased
by $510 million (2020: $313 million) to
$253 million, principally due to cash tax timing
differences and updates to estimates of prior
period tax liabilities following settlements with
tax authorities and on expiry of statute of
limitations. The tax receivable balance of
$663 million (2020: $364 million) principally
relates to cash tax timing differences.
Net deferred tax assets decreased by
$2,396 million (2020: increase of $292 million)
in the year, resulting in a Net deferred tax
liability of $1,876 million, principally due to
the Net deferred tax liability recorded on the
acquisition of Alexion, partially offset by
movements in deferred tax associated with
intangible amortisation and impairments, and
the change in Dutch and UK income tax rates.
Additional information on the movement in deferred tax
balances is contained in Note 4 to the Financial
Statements from page 149.
Defined benefit plan obligations
In terms of the Group’s major defined benefit
plans, approximately 90% of total defined
benefit obligations (or around 71% of net
obligations) are concentrated in the UK, the
US and Sweden. The UK and US plans are
largely legacy arrangements, as they have
been closed to new entrants since 2000.
In line with local regulations, the collectively
bargained Swedish pension plan remains
open to employees born before 1979.
Net defined benefit obligations decreased
by $748 million in 2021 (2020: increase of
$395 million) to $2,454 million. The decrease
was driven by actuarial remeasurements of
$626 million from higher discount rate
assumptions in all major countries, partially
offset by higher future inflation expectations,
which decreased liability valuations, together
with higher than expected investment
performance, which increased asset values.
A further $110 million remeasurement was due
to exchange rate movements, caused by a
strengthening USD against GBP, SEK and
Euro which reduced deficits in USD terms.
Group cash contributions over the year
totalled $174 million.
Over the past few years, the Group has
undertaken several liability management
initiatives to reduce net defined benefit
obligations and manage associated long-term
financial risks.
Further details of our accounting for post-retirement
benet plans are included in Note 22 to the Financial
Statements from page 168.
Commitments and contingencies
We have commitments and contingencies
which are accounted for in accordance with
the accounting policies described in the
Financial Statements in the Group Accounting
Policies section from page 138.
We also have taxation contingencies. These
are described in the Taxation section in the
Critical accounting policies and estimates
section from page 66 and in Note 30 to the
Financial Statements from page 189.
Off-balance sheet transactions and
commitments
We have no off-balance sheet arrangements
and our derivative activities are non-speculative.
The table on this page sets out our minimum
contractual obligations at the year end.
Research and development
collaboration payments
Details of future potential R&D collaboration
payments are also included in Note 30 to
the Financial Statements on page 189. As
detailed in Note 30, payments to our partners
may not become payable due to the inherent
uncertainty in achieving the development
and revenue milestones linked to the future
payments. We may enter into further
collaboration projects in the future that may
include milestone payments and as certain
milestone payments fail to crystallise due to,
for example, development not proceeding,
they may be replaced by potential payments
under new collaborations.
Payments due by period
Less than
1 year
$m
1-3 years
$m
3-5 years
$m
Over
5 years
$m
Total
2021
$m
Total
2020
$m
Bank loans and other
borrowings
1
2,368
10,889
5,561
19,727
38,545
27,783
Lease liabilities
2
233
339 205
210
987
738
Contracted capital
expenditure
– – –
388 388
689
Total
2,601
11,228
5,766
20,325
39,920
29,210
1
Statements from page 180.
2
64
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
Innate Pharma
>
In April 2015, we entered into two oncology
agreements with Innate Pharma: first, a
licence which provides us with exclusive
global rights to co-develop and
commercialise IPH2201 in combination with
Imfinzi
; and, second, an option to license
exclusive global rights to co-develop and
commercialise IPH2201 in monotherapy
and other combinations in certain treatment
areas. We jointly fund Phase II studies with
Innate Pharma and we lead the execution
of these studies. In respect of these
agreements, we made an initial payment
to Innate Pharma of $250 million. The
agreement also includes a Phase III
initiation milestone of $100 million, as well
as additional regulatory and sales-related
milestones. We record all sales and pay
Innate Pharma double-digit royalties on net
sales. The arrangement includes the right
for Innate Pharma to co-promote in Europe
for an equal share of costs and income in
the territory.
>
In October 2018, we exercised our option
over IPH2201 and simultaneously entered
into a further multi-element transaction with
Innate Pharma. Under the agreement, we
paid $50 million to collaborate on, and
acquire an option to license, IPH5201, a
first-in-class anti-CD39 mAb. Additionally,
we paid $20 million to acquire options over
four future programmes currently being
developed by Innate Pharma, and paid
62.6 EUR million to acquire a 9.8% stake in
Innate Pharma. The $100 million option fee
and $50 million premium paid over market
price for the investment in Innate Pharma
have been capitalised as intangible assets.
The payment for future programmes will be
expensed as R&D expenditure over four
years. At the same time, we licensed the EU
and US rights to
Lumoxiti
to Innate Pharma
for $50 million upfront plus future milestone
payments of up to $25 million.
>
In December 2020, Innate Pharma
announced its intention to transfer the
rights of
Lumoxiti
back to AstraZeneca.
AstraZeneca will not be required to refund
the upfront payment but will no longer be
entitled to receive milestone payments
from Innate Pharma.
>
In July 2021, AstraZeneca entered into a
Termination Agreement with Innate Pharma
to finalise the transfer of rights for
Lumoxiti
back to AstraZeneca, with an agreed final
settlement of $6 million. The majority of
transition activities back to AstraZeneca
were completed in 2021.
We determine these business development
transactions to be significant using a range of
factors. We look at the specific circumstances
of the individual arrangement and apply
several quantitative and qualitative criteria.
As we consider business development
transactions to be an extension of our R&D
strategy, the expected total value of
development payments under the transaction
and its proportion of our annual R&D spend,
both of which are proxies for overall R&D
effort and cost, are important elements of
the determination of the significance. Other
quantitative criteria we apply include, without
limitation, expected levels of future sales, the
possible value of milestone payments and
the resources used for commercialisation
activities (for example, the number of staff).
Qualitative factors we consider include,
without limitation, new market developments,
new territories, new areas of research and
strategic implications.
Capitalisation and shareholder return
Capitalisation
The total number of shares in issue at
31 December 2021 was 1,549 million (2020:
1,313 million).
Shareholders’ equity increased by
$23,646 million to $39,268 million at the year
end. Non-controlling interests were $19 million
(2020: $16 million).
Following the approval of
Calquence
in the EU
in November 2020, the minority shareholders
are now considered to have no further
substantive variability in risk and reward
related to their shares as it is considered
highly likely that one of the options will be
exercised, and the price of the options is now
fixed. Therefore, no further amounts of the
consolidated AstraZeneca results have been
attributed to the minority shareholders of
Acerta Pharma and the Non-controlling
interests reserve relating to the minority
shareholders of Acerta Pharma, totalling
$1,401 million, were reclassified into Retained
earnings in 2020, as detailed in Note 26 to the
Financial Statements on page 177. No further
adjustments were made for 2021.
Dividend and share repurchases
The Board has recommended a second
interim dividend of $1.97 (145.3 pence,
18.00 SEK) to be paid on 28 March 2022.
This brings the full-year dividend to
$2.87 (210.1 pence, 25.77 SEK). Against
Reported EPS, the Group had a dividend
cover ratio of 0.03:1 in 2021 (2020: 0.9:1).
Against Core Earnings per share, the Group
had a dividend cover ratio of 1.84:1 in 2021
(2020: 1.44:1). This dividend is consistent
with the progressive dividend policy, by which
the Board intends to maintain or grow the
dividend each year.
The Board regularly reviews its distribution
policy and its overall financial strategy to
continue to strike a balance between the
interests of the business, our financial
creditors and our shareholders. Having
regard for business investment, funding the
progressive dividend policy and meeting our
debt service obligations, the Board currently
believes it is appropriate to continue the
suspension of the share repurchase
programme which was announced in 2012.
Investments, divestments and capital
expenditure
We have completed more than 75 major or
strategically important business development
transactions over the past three years.
In addition to the business development
transactions detailed under Collaboration
Revenue from page 59 of this Financial
Review, the following significant collaborations
remain in the development phase:
Daiichi Sankyo
>
In July 2020, AstraZeneca entered into
a new global development and
commercialisation agreement with Daiichi
Sankyo for DS-1062, their proprietary
trophoblast cell-surface antigen 2 (TROP2)-
directed ADC and potential new medicine
for the treatment of multiple tumour types.
AstraZeneca agreed to pay Daiichi Sankyo
an upfront payment of $1 billion in staged
payments: $350 million was due upon
completion, with $325 million after 12 months
and $325 million after 24 months from the
effective date of the agreement.
AstraZeneca also agreed to pay additional
conditional amounts of up to $1 billion for
the successful achievement of regulatory
approvals and up to $4 billion for sales-
related milestones. The transaction was
accounted for as an intangible asset
acquisition, recognised initially at the
present value of non-contingent
consideration, with any potential future
milestone payments capitalised into the
intangible asset as they are recognised.
The companies will jointly develop and
commercialise DS-1062 worldwide, except
in Japan where Daiichi Sankyo will retain
exclusive rights. AstraZeneca and Daiichi
Sankyo will share equally development and
commercialisation expenses as well as
profits relating to DS-1062 worldwide,
except for Japan where Daiichi Sankyo will
be responsible for such costs and will pay
AstraZeneca mid-single-digit royalties.
Daiichi Sankyo will record sales in the US,
certain countries in Europe and certain
other countries where Daiichi Sankyo has
affiliates. Profits shared with AstraZeneca
from those countries will be recorded as
Collaboration Revenue by AstraZeneca.
AstraZeneca will record Product Sales in
other countries worldwide, for which profits
shared with Daiichi Sankyo will be recorded
within Cost of sales. Daiichi Sankyo will
manufacture and supply DS-1062.
65
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
The Board reviews the level of distributable
reserves of the Parent Company annually
and aims to maintain distributable reserves
that provide adequate cover for dividend
payments. At 31 December 2021 , the Profit
and loss account reserve of $11,563 million
(2020: $10,304 million) was available for
distribution, subject to filing these Financial
Statements with Companies House. When
making a distribution to shareholders, the
Directors determine profits available for
distribution by reference to guidance on
realised and distributable profits under the
Companies Act 2006 issued by the Institute of
Chartered Accountants in England and Wales
and the Institute of Chartered Accountants
of Scotland in April 2017.
The profits of the company have been
received in the form of receivables due from
subsidiaries. The availability of distributable
reserves in the Company is dependent on
those receivables meeting the definition of
qualifying consideration within the guidance,
and in particular on the ability of subsidiaries
to settle those receivables within a reasonable
period of time. The Directors consider that,
based on the nature of these receivables and
the available cash resources of the Group
and other accessible sources of funds, at
31 December 2021 are all (2020: all) of the
Company’s profit and loss reserves were
available for distribution.
on page 176.
Future prospects
As outlined earlier in this Annual Report,
our strategic priorities support delivery of
growth through innovation and our Purpose:
to push the boundaries of science to deliver
life-changing medicines.
In support of this, we made certain choices
around our three strategic priorities:
>
Deliver Growth and Disease Area Leadership
>
Accelerate Innovative Science
>
Be a Great Place to Work.
Performance Indicators from page 12.
Full year 2022: additional commentary
Total Revenue is expected to increase by
a high-teens percentage, and Core EPS is
expected to increase by a mid-to-high
twenties percentage.
Total Revenue from COVID-19 medicines
is anticipated to decline by a low-to-mid
twenties percentage, with an expected
decline in sales of
Vaxzevria
being partially
offset by growth in
Evusheld
sales. The
majority of vaccine revenue in 2022 is
expected to come from initial contracts.
The Gross Profit Margin from the COVID-19
medicines is expected to be lower than the
Company average. Core Operating Expenses
are expected to increase by a low-to-mid
teens percentage, driven in substantial part by
the full year integration of Alexion expenses.
Emerging Markets Total Revenue, including
China, is expected to grow mid-single digits
in 2022. China Total Revenue is expected to
decline by a mid-single digit percentage in
2022, primarily due to continued NRDL and
VBP programmes impacting various
medicines. The Company remains confident in
the longer term outlook for Emerging Markets,
driven by a large market opportunity, broader
patient access and an increased mix of new
medicines. A Core Tax Rate between 18%
and 22% is expected.
AstraZeneca continues to recognise the
heightened risks and uncertainties from the
effects of COVID-19.
This commentary represents management’s
current estimates and is subject to change.
See the Cautionary statement regarding
forward-looking statements on page 228.
Financial risk management
Financial risk management policies
Insurance
Our risk management processes are
described in Risk Overview from page 48.
These processes enable us to identify risks
that can be partly or entirely mitigated through
the use of insurance. We focus our insurance
resources on the most critical areas, or where
there is a legal requirement, and where we
can get the best value for money through
structured and traditional insurance. We
purchase an external multi-line insurance
programme to mitigate against significant
financial loss arising from core business risks.
Taxation
Our approach to managing tax risk is
integrated with our broader business risk
management and compliance framework.
Our approach is to manage tax risks and tax
costs in a manner consistent with applicable
regulatory requirements and with shareholders’
best long-term interests, taking into account
operational, economic and reputational
factors. We manage tax risks in the context
of substantive business transactions.
Treasury
The principal financial risks to which we are
exposed are those arising from liquidity,
interest rates, foreign currency and credit.
We have a centralised treasury function to
manage these risks in accordance with
Board-approved policies. Note 28 to the
Financial Statements from page 180 sets out
the relevant policies and the way we manage
these risks and our capital management
objectives, as well as a sensitivity analysis
of the Group’s exposure to exchange rate
and interest rate movements.
arrangements, please see the Business Review on
page 30.
Critical accounting policies and estimates
The Consolidated Financial Statements
have been prepared in accordance with
UK-adopted IAS and with the requirements
of the Companies Act 2006 as applicable to
companies reporting under those standards.
The Consolidated Financial Statements also
comply fully with IFRS as issued by the IASB
and international accounting standards as
adopted by the European Union. On
31 December 2020, EU-adopted IFRS was
brought into UK law and became UK-adopted
international accounting standards, with
future changes to IFRS being subject to
endorsement by the UK Endorsement Board.
The accounting policies employed are set out
in the Group Accounting Policies section in
the Financial Statements from page 138. In
applying these policies, we make estimates
and assumptions that affect the Reported
amounts of assets and liabilities and
disclosure of contingent assets and liabilities.
The actual outcome could differ from those
estimates. Some of these policies require a
high level of judgement because the areas
are especially subjective or complex.
We believe that the most critical accounting
policies and significant areas of judgement
and estimation are in the following areas and
align with the accounting policies containing
our key accounting judgements and
significant accounting estimates as disclosed
in the Financial Statements from page 138:
>
revenue recognition – see Revenue
Accounting Policy from page 139 and
Note 1 on page 146
>
expensing of internal development
expenses – see Research and Development
Policy from page 140
>
impairment review of Intangible assets –
see Note 10 from page 156
>
useful economic life of Intangible assets –
see Research and Development Policy from
page 140 and Note 10 from page 156
>
business combinations and Goodwill (and
Contingent consideration arising from
business combinations) – see Business
Combinations and Goodwill Policy on
page 142, Note 10 from page 156, Note 20
from page 66 and Note 27 from page 178
>
litigation liabilities – see Litigation and
Environmental liabilities within Note 30
from page 189
>
operating segments – see Note 6 from
page 152
>
employee benefits – see Note 22 from
page 168
>
taxation – see Taxation Accounting Policies
on page 141 and Note 30 on page 189.
66
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
Revenue recognition
Product Sales are recorded at the invoiced
amount (excluding inter-company sales and
value added taxes), less movements in
estimated accruals for rebates and
chargebacks given to managed care and
other customers, which are a particular
feature in the US and are considered to be key
estimates. It is the Group’s policy to offer a
credit note for all returns and to destroy all
returned stock in all markets. Cash discounts
for prompt payments are also discounted
from sales. Sales are recognised when the
control of the goods has been transferred to a
third party, which is usually when title passes
to the customer, either on shipment or on the
receipt of goods by the customer, depending
on local trading terms.
Rebates, chargebacks and returns in the US
When invoicing Product Sales in the US, we
estimate the rebates and chargebacks that
we expect to pay, which are considered to
be estimates. These rebates typically arise
from sales contracts with third-party managed
care organisations, hospitals, long-term care
facilities, group purchasing organisations
and various federal or state programmes
(Medicaid contracts, supplemental rebates,
etc.). They can be classified as follows:
>
Chargebacks, where we enter into
arrangements under which certain parties,
typically hospitals, long-term care facilities,
group purchasing organisations, the
Department of Veterans Affairs, Public
Health Service Covered Entities and the
Department of Defense, are able to buy
products from wholesalers at the lower
prices we have contracted with them. The
chargeback is the difference between the
price we invoice to the wholesaler and the
contracted price charged by the wholesaler
to the other party. Chargebacks are
credited directly to the wholesalers.
>
Regulatory, including Medicaid and other
federal and state programmes, where we
pay rebates based on the specific terms
of agreements with the US Department
of Health and Human Services and with
individual states, which include product
usage and information on best prices and
average market prices benchmarks.
>
Contractual, under which entities such as
third-party managed care organisations are
entitled to rebates depending on specified
performance provisions, which vary from
contract to contract.
The effects of these deductions on our US
pharmaceuticals revenue and the movements
on US pharmaceuticals revenue provisions
are set out on this page.
Gross to Net Product Sales
US pharmaceuticals
2021
$m
2020
$m
2019
$m
Gross Product Sales
23,970
19,255
18,354
Chargebacks
(2,095)
(2,464) (2,429)
Regulatory – Medicaid and state programmes
(1,488)
(1,088) (1,380)
Contractual – Managed care and Medicare
(7,121)
(5,690)
(5,467)
Cash and other discounts
(312)
(281)
(303)
Customer returns
(14)
(198)
(44)
US Branded Pharmaceutical Fee
(57)
(47)
(105)
Other
(883)
(849)
(879)
Net Product Sales
12,000
8,638
7,747
Movements in accruals
US pharmaceuticals
Brought
forward at
1 January
2021
$m
Additions
through
business
combinations
$m
Provision for
current year
$m
Adjustment in
respect of
prior years
$m
Returns and
payments
$m
Carried forward
at 31 December
2021
$m
Chargebacks
178
2
2,117
(21)
(2,095)
181
Regulatory – Medicaid
and state programmes
495
46
1,548
(50)(1,529)
510
Contractual – Managed
care and Medicare
1,937
29
7,204
(83)
(7,056)
2,031
Cash and other
discounts
20
–
313
–(312)
21
Customer returns
253
18
13
–
(88)
196
US Branded
Pharmaceutical Fee
115
–
77
(28)
79(85)
Other
128
4
882
–(860)
154
Total
3,126
99
12,154(182)
3,172(12,025)
Brought
forward at
1 January
2020
$m
Provision for
current year
$m
Adjustment in
respect of
prior years
$m
Returns and
payments
$m
Carried forward
at 31 December
2020
$m
Chargebacks
245
2,572
(28)
(2,611)
178
Regulatory – Medicaid
and state programmes
731
1,269
(93)
(1,412)
495
Contractual – Managed
care and Medicare
1,939
5,796
1,937(127)
(5,671)
Cash and other discounts
19
289
–
(288)
20
Customer returns
180
225
–
253(152)
US Branded
Pharmaceutical Fee
126
92
(51)
(52)
115
Other
145
851
(2)
(866)
128
Total
3,385
11,094
(301)
(11,052)
3,126
Brought
forward at
1 January
2019
$m
Provision for
current year
$m
Adjustment in
respect of
prior years
$m
Returns and
payments
$m
Carried forward
at 31 December
2019
$m
Chargebacks
271
2,458
(29)
(2,455)
245
Regulatory – Medicaid
and state programmes
892
1,477
(97)
(1,541)
731
Contractual – Managed
care and Medicare
1,542
5,613
1,939 (146)
(5,070)
Cash and other discounts
4
303
– (288)
19
Customer returns
361
44
–
(225)
180
US Branded
Pharmaceutical Fee
52
111
(6)
(31)
126
Other
144
879
145–
(878)
Total
3,266
10,885
(278)
(10,488)
3,385
67
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
Accrual assumptions are built up on a
product-by-product and customer-by-
customer basis, taking into account specific
contract provisions coupled with expected
performance, and are then aggregated into a
weighted average rebate accrual rate for each
of our products. Accrual rates are reviewed
and adjusted on an as needed basis. There
may be further adjustments when actual
rebates are invoiced based on utilisation
information submitted to us (in the case of
contractual rebates) and claims/invoices are
received (in the case of regulatory rebates and
chargebacks). We believe that we have made
reasonable estimates for future rebates using
a similar methodology to that of previous
years. Inevitably, however, these estimates
involve assumptions in respect of aggregate
future sales levels, segment mix and
customers’ contractual performance.
Overall adjustments between gross and net
US Product Sales amounted to $11,970 million
in 2021 (2020: $10,617 million) with the
increase driven by an overall increase in our
US Product Sales including the addition of
the Alexion Rare Disease portfolio in 2021.
Cash discounts are offered to customers to
encourage prompt payment. Accruals are
calculated based on historical experience and
are adjusted to reflect actual experience. Our
revenue recognition policy is described within
Group Accounting Policies from page 138.
Industry practice in the US allows wholesalers
and pharmacies to return unused stocks
within six months of, and up to 12 months
after, shelf-life expiry. The customer is
credited for the returned product by the
issuance of a credit note. Returned products
are not exchanged for products from inventory
and once a return claim has been determined
to be valid and a credit note has been issued
to the customer, the returned products are
destroyed. At the point of sale in the US, we
estimate the quantity and value of products
which may ultimately be returned. Our returns
accruals in the US are based on actual
experience. Our estimate is based on the
historical sales and returns information for
established products together with market-
related information, such as estimated shelf
life, product recall, and estimated stock levels
at wholesalers, which we receive via third-
party information services. For newly
launched products, we use rates based on
our experience with similar products or a
pre-determined percentage.
Business combinations and goodwill
(and contingent consideration arising
from business combinations)
Our business model includes investment
in targeted business developments to
strengthen our portfolio, pipeline and
capabilities. These business development
transactions include collaborations, asset
in-licences and business acquisitions.
Each transaction is considered to establish
whether it qualifies as a business combination
by applying the criteria assessment detailed
in IFRS 3 ‘Business Combinations’, after
applying the optional concentration test on
an elective basis. The determination of a
transaction being a business combination or
asset acquisition is considered to be a key
judgement as detailed in the accounting
policy on page 142.
On the acquisition of a business, fair values
are attributed to the identifiable assets and
liabilities and contingent liabilities unless
the fair value cannot be measured reliably,
in which case the value is subsumed into
goodwill.
Attributing fair values is a key judgement.
Goodwill is the difference between the fair
value of the consideration and the fair value
of net assets acquired. Fair value is the price
that would be received to sell an asset or pay
for a liability in an orderly transaction at the
date of acquisition. The price may be directly
observable but, in most cases, is estimated
using valuation techniques which normally
involve predicting future cash flows and
applying a market participant discount rate.
Future contingent elements of consideration,
which may include development and launch
milestones, revenue threshold milestones
and revenue-based royalties, are fair valued
at the date of acquisition using decision-tree
analysis with key inputs including probability
of success, consideration of potential delays
and revenue projections based on the Group’s
internal forecasts. Unsettled amounts of
consideration are held at fair value within
payables with changes in fair value
recognised immediately in the Consolidated
Statement of Comprehensive Income.
Several of our business combinations have
included significant amounts of contingent
consideration. Details of the movements in the
fair value of the contingent consideration in
the year and the range of possible contingent
consideration amounts that may eventually
become payable are contained in Note 10
to the Financial Statements from page 156.
Where not all the equity of a subsidiary is
acquired, the non-controlling interest is
recognised either at fair value or at the
non-controlling interest’s proportionate
share of the net assets of the subsidiary,
on a case-by-case basis. Put options over
non-controlling interests are recognised as a
financial liability measured at amortised cost,
with a corresponding entry in either retained
earnings or against non-controlling interest
reserves on a case-by-case basis.
As detailed on this page, we have significant
investments in goodwill and intangible assets
as a result of acquisitions of businesses and
purchases of assets, such as product
development and marketing rights. Details
of the estimates and assumptions we make
in our annual impairment testing of goodwill
are included in Note 9 to the Financial
Statements on page 156. The Group,
including acquisitions, is considered a single
operating segment for impairment purposes.
No impairment of goodwill was identified.
A significant portion of our investments in
intangible assets and goodwill arose from the
2021 acquisition of Alexion, restructuring of
the joint venture with MSD which commenced
in 1998, the acquisition of MedImmune in
2007 and our 2014 acquisition of BMS’s
interest in the Group’s Diabetes Alliance.
We are satisfied that the carrying values of our
intangible assets as at 31 December 2021 are
fully justified by estimated future cash flows.
The accounting for our Intangible assets is
fully explained in Note 10 to the Financial
Statements from page 156, including details
of the estimates and assumptions we make
in impairment testing of intangible assets.
Litigation and environmental liabilities
In the normal course of business, contingent
liabilities may arise from product-specific and
general legal proceedings, from guarantees or
from environmental liabilities connected with
our current or former sites. Where we believe
that potential liabilities have a less than 50%
probability of crystallising, or where we are
unable to make a reasonable estimate of the
liability, we treat them as contingent liabilities.
These are not provided for, but are disclosed
in Note 30 to the Financial Statements from
page 189.
68
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
In cases that have been settled or
adjudicated, or where quantifiable fines and
penalties have been assessed and which are
not subject to appeal (or other similar forms
of relief), or where a loss is probable and we
are able to make a reasonable estimate of the
loss, we generally indicate the loss absorbed
or make a provision for our best estimate of
the expected loss.
Where it is considered that the Group is
more likely than not to prevail, or in the rare
circumstances where the amount of the legal
liability cannot be estimated reliably, legal
costs involved in defending the claim are
charged to profit as they are incurred. Where
it is considered that we have a valid contract
which provides the right to reimbursement
(from insurance or otherwise) of legal costs
and/or all or part of any loss incurred or for
which a provision has been established and
we consider recovery to be virtually certain,
then the best estimate of the amount
expected to be received is recognised as
an asset.
Assessments as to whether or not to
recognise provisions or assets and of the
amounts concerned usually involve a series
of complex judgements about future events
and can rely heavily on estimates and
assumptions. We believe that the provisions
recorded are adequate based on currently
available information and that any insurance
recoveries recorded will be received.
However, given the inherent uncertainties
involved in assessing the outcomes of these
cases and in estimating the amount of the
potential losses and the associated insurance
recoveries, we could in future periods incur
judgments or insurance settlements that
could have a material adverse effect on our
results in any particular period.
The position could change over time and
there can, therefore, be no assurance that
any losses that result from the outcome of any
legal proceedings will not exceed the amount
of the provisions that have been booked in
the accounts.
Although there can be no assurance regarding
the outcome of legal proceedings, we do not
currently expect them to have a material
adverse effect on our financial position, but
they could significantly affect our financial
results in any particular period.
Sarbanes-Oxley Act section 404
As a consequence of our Nasdaq listing, we
are required to comply with those provisions
of the Sarbanes-Oxley Act applicable to
foreign issuers. Section 404 of the Sarbanes-
Oxley Act requires companies annually to
assess and make public statements about
the quality and effectiveness of their internal
control over financial reporting. As regards
Sarbanes-Oxley Act section 404, our
approach is based on the Committee of
Sponsoring Organizations (COSO) 2013
framework.
Our approach to the assessment has been to
select key transaction and financial reporting
processes in our largest operating units and
a number of specialist areas (e.g. financial
consolidation and reporting, treasury
operations and taxation etc.), so that, in
aggregate, we have covered a significant
proportion of the key lines in our Financial
Statements. Each of these operating units and
specialist areas has ensured that its relevant
processes and controls are documented to
appropriate standards, taking into account,
in particular, the guidance provided by the
SEC. We have also reviewed the structure
and operation of our ‘entity level’ control
environment. This refers to the overarching
control environment, including structure of
reviews, checks and balances that are
essential to the management of a well-
controlled business. Following the acquisition
of Alexion, we have determined to exclude
Alexion from the report on Internal Controls
Over Financial Reporting (ICOFR) for the first
year after acquisition as we understand and
integrate Alexion’s controls within the
AstraZeneca framework.
69
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance Additional Information
Financial Statements
Financial Review
We are committed to being a great place to
work for the global workforce, encouraging
and rewarding innovation, entrepreneurship
and high performance. Details on
engagement with employees can be found
on pages 41 to 43 of the Business Review,
page 92 of the Audit Committee Report
and page 119 to 120 of the Remuneration
Committee Report.
We are committed to employing high ethical
standards when carrying out all aspects of
our business globally. Our Code of Ethics
(the Code) is based on our Values, expected
behaviours and key policy principles. More
information on the Code can be found in the
Business Review on page 47.
AstraZeneca recognises patients as people
rst and puts them at the heart of what we
do. Information on the importance of
patients to the business can be found on
pages 14 and 80, with further information
throughout the Business Review.
Information on interactions with suppliers
is on pages 38, 39, and 80. The
consideration and impact of the Group’s
operations on the environment can be found
on pages 44 to 46 and Ambition Zero Carbon
on page 45. Information on how the Group
has considered other factors, such as
communities, is also set out in Contributing
to society from page 45 and Connecting
with our stakeholders on page 80.
Details of how the Board operates and
matters considered by the Board are set
out in the Corporate Governance Report
from page 83. Examples of how Directors
discharged their section 172(1) duties and
considered stakeholders when making
Principal Decisions during 2021 are set
out on pages 80 and 81. Principal Decisions
are decisions and discussions which are
material or strategic to the Group, but also
those that are signicant to any of our
stakeholder groups.
Section 172(1) statement
When making decisions, the Directors of
consider, in good faith, is most likely to
promote the success of the Company for the
benet of its members as a whole, while also
considering the broad range of stakeholders
who interact with and are impacted by our
business. Throughout the year, while
discharging their duties, section 172(1)
requires a director to have regard, amongst
other matters, to the:
>
likely consequences of any decisions
in the long term
>
interests of the company’s employees
>
need to foster the company’s business
relationships with suppliers, customers
and others
>
impact of the company’s operations on
the community and environment
>
desirability of the company maintaining
a reputation for high standards of
business conduct and
>
need to act fairly as between members
of the company.
In discharging their section 172(1) duties,
the Directors have had regard to the factors
set out above, as well as other factors
relevant to the decision being made. The
Board acknowledges that every decision
made will not necessarily result in a positive
outcome for all stakeholders. By considering
our Purpose and Values, together with our
strategic priorities, the Board aims to ensure
that the decisions made are consistent and
intended to promote the Company’s
long-term success.
The Group engaged with key stakeholders
throughout the year to understand the issues
and factors that are signicant for these
stakeholders, and a number of actions were
taken as a result of this engagement. The
interaction with stakeholders, and the
impact of these interactions, is set out in the
Connecting with our stakeholders section
on pages 80 to 82 and throughout the
Strategic Report.
Strategic Report
The following sections make up the Strategic
Report, which has been prepared in accordance
with the requirements of the Companies Act 2006:
>
AstraZeneca at a Glance
>
Chair’s Statement
>
Chief Executive Ocer’s Review
>
Healthcare in a Changing World
>
Business Model and Life-cycle of a Medicine
>
Our Strategy and Key Performance Indicators
>
Disease Area Review
>
Business Review
>
Risk Overview
>
Financial Review
and has been approved and signed on behalf
of the Board.
A C N Kemp
Company Secretary
10 February 2022
70
AstraZeneca Annual Report & Form 20-F Information 2021
Strategic Report
Financial Review
continued
71
Corporate Governance
Additional Information
Financial Statements
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Chair’s Introduction
72
Corporate Governance Overview
73
Board of Directors
74
Senior Executive Team (SET)
76
Corporate Governance Report
77
Nomination and Governance
Committee Report
86
Science Committee Report
88
Sustainability Committee Report
89
Audit Committee Report
90
Directors’ Remuneration Report
98
Corporate
Governance
Built on strong foundations of good corporate governance,
the Board continued to exercise eective oversight of
AstraZeneca activities.
As in 2020, the pandemic once again tested
our solid governance foundations in 2021.
Although some Directors were able to meet in
person at our offices in London in the second
part of the year, all Board meetings during the
year were held virtually. However, with good
IT support, we continued to collaborate and
discharge our responsibilities effectively in
what was another busy and successful year
for AstraZeneca.
Strategic oversight
Oversight of our strategy and its
implementation is, of course, a key
responsibility of the Board. In 2021, this
included oversight of the completion of the
Alexion acquisition and its integration into
the rest of the Group. In particular, the Audit
Committee held a number of meetings with
the Alexion team to better understand the
business and its risk environment. The
Science Committee undertook an in-depth
review of the Alexion portfolio of medicines
and development pipeline, scientific
capabilities, talent and organisation, while
the Remuneration Committee looked at
reward-related elements of the organisation.
Eective Committees
Given this additional activity, I am grateful
to the Chairs of the Board Committees for
the work they have led and responsibilities
discharged so ably: Michel Demaré for the
Remuneration Committee and Nazneen
Rahman for the Science Committee. I am
particularly grateful to Philip Broadley for his
work with the Audit Committee and as senior
independent Non-Executive Director.
I would also like to acknowledge and thank
Michel Demaré for his work chairing the Ad
Hoc Board Committee on
Vaxzevria
, which
operated from March to October of 2021.
Michel, ably supported by the Committee’s
members – Deborah DiSanzo, Diana Layfield
and Nazneen Rahman – ensured the rest of
the Board and management were fully focused
and supported on all matters relating to our
COVID-19 vaccine during the year, ranging from
safety and efficacy, through manufacturing
and supply to reputational matters.
Sustainability Committee
My thanks also go to Nazneen for agreeing
to chair our newly established Sustainability
Committee, having previously overseen
sustainability matters on behalf of the Board
since January 2021. The Sustainability
Committee was established in October and
met for the first time in December, reflecting
the increasing significance of sustainability
to our business, not least our ambitious
Ambition Zero Carbon programme.
I am grateful to all the members of the Board
for their continued commitment to AstraZeneca
and promoting our success for the benefit of
shareholders and stakeholders more generally.
Leif Johansson
Chair
“ Oversight of our
strategy and its
implementation is
a key responsibility
of the Board.”
72
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Chair’s
Introduction
Governance structure
Attendance in 2021
The Directors are collectively responsible
for the success of the Group. The Board
maintains and periodically reviews a list
of matters that can only be approved by the
Board. Matters that have not been expressly
reserved to the Board in this way are
delegated to the CEO or one of the Board’s
ve Committees. The diagram below
illustrates this governance structure.
The Board’s responsibilities include setting
our strategy and policies, overseeing risk
and corporate governance, and monitoring
progress towards meeting our objectives
and annual plans. It is accountable to our
shareholders for the proper conduct of the
business and our long-term success, and
seeks to represent the interests of all
stakeholders.
The CEO, CFO and Senior Executive Team
(SET) take the lead in developing our
strategy; proposals are reviewed and
constructively challenged by the Board,
before the strategy is nally approved.
Audit
Committee
Report from page 90
Nomination and
Governance Committee
Report from page 86
Remuneration
Committee
Report from page 98
Science
Committee
Report from page 88
Sustainability
Committee
Report from page 89
The Board has delegated some of its powers to the CEO and operates with the assistance of ve Committees:
Board
Corporate Governance Report from page 77
Board Committee membership and meeting attendance in 2021
Board or Committee Chair
Director
Appointment
Date
1
Board
2
Audit
Committee
Remuneration
Committee
Nomination and
Governance
Committee
Science
Committee
Sustainability
Committee
3
Non-Executive Chair and Executive Directors
Leif Johansson
26/04/2012
8/8
5/6
5/5
Pascal Soriot
01/10/2012
8/8
Aradhana Sarin
01/08/2021
3/3
Marc Dunoyer –
stepped down on 1 August 2021
01/11/2013
5/5
Non-Executive Directors
Euan Ashley
01/10/2020
8/8
4/5Philip Broadley
4
27/04/2017
8/8
6/6 6/6
5/5
Michel Demaré
01/09/2019
8/8
5/6
6/6
5/5
Deborah DiSanzo
01/12/2017
7/8
5
6/6
Diana Layfield
01/11/2020
8/8
2/2
6
Sheri McCoy
01/10/2017
8/8
6/6 6/6
1/1
Tony Mok
01/01/2019
8/8
5/5
Nazneen Rahman
01/06/2017
8/8
5/5
5/5
1/1
Andreas Rummelt
01/08/2021
3/3
1/1
Marcus Wallenberg
05/04/1999
7/8
7
4/5
1/1
Geneviève Berger –
retired on 11 May 2021
26/04/2012
4/4
2/2
Graham Chipchase –
retired on 11 May 2021
26/04/2012
4/4
1/1
1
DateofrstappointmentorelectiontotheBoard.
2
AllBoardmeetingsin2021wereheldbyvideoconferenceduetoCOVID-19
restrictions.Forcertainmeetingsinthesecondpartoftheyear,someDirectors
metinpersonattheCompany’soceinLondontoparticipateinBoardmeetings.
3
TheSustainabilityCommitteewasconstitutedon1October2021.
4
PhilipBroadleywasappointedasseniorindependentNon-ExecutiveDirectoron1March2021.
5
DeborahDiSanzomissedoneBoardmeetingduetoillness.
6
DianaLayeldbecameamemberoftheScienceCommitteeon1October2021.
7
MarcusWallenbergmissedoneBoardmeetingduetothemeetingbeingconvenedatshortnotice.
73
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Corporate Governance Overview
Corporate Governance
Overview
<3 years
5
Euan Ashley
Michel Demaré
Diana Layeld
Tony Mok
Andreas Rummelt
3-9 years
4
Deborah DiSanzo
Sheri McCoy
Nazneen Rahman
Philip Broadley
>9 years
2
Leif Johansson
Marcus Wallenberg
Men
8
Women
5
British
4
American
3
Swedish
2
Belgian
1
Canadian
1
French
1
German
1
Gender split of Directors
Directors’ nationalities
Length of tenure of
Non-Executive Directors
Board composition
as at 31 December 2021
Leif Johansson
NG
R
Non-Executive Chair of the Board
Skills and experience:
From 1997-2011,
Leif was CEO of AB Volvo. Leif served
at AB Electrolux as CEO from
1994-1997. He was a Non-Executive
Director of BMS from 1998-2011,
serving on the Audit Committee and
Compensation and Management
Development Committee. Leif was
Chairman of LM Ericsson from
2011-2018. He holds an MSc in
Engineering from Chalmers University
of Technology, Gothenburg.
Other appointments:
Leif holds Board
positions at Autoliv, Inc. and Ecolean
AB. Leif has been a member of the
Royal Swedish Academy of
Engineering Sciences since 1994
(Chairman 2012-2017), is a member
of the European Round Table of
Industrialists (Chairman 2009-2014)
and also of the Council of Advisors,
Boao Forum for Asia.
Michel Demaré
R
A
NG
Non-Executive Director
Skills and experience:
Michel was
previously Vice-Chairman of UBS
Group AG (2010-2019), Chairman of
Syngenta and Syngenta Foundation
for Sustainable Agriculture (2013-2017)
and Chairman of SwissHoldings
(2013-2015). Between 2005 and 2013,
Michel was CFO of ABB Ltd and
interim CEO during 2008. He joined
ABB from Baxter International Inc.,
where he was CFO Europe from
2002-2005. Prior to that, he spent 18
years at The Dow Chemical Company,
serving as CFO of Dow’s Global
Polyolefins and Elastomers division
between 1997-2002.
Other appointments:
Michel is a
Non-Executive Director of Vodafone
Group plc and Louis Dreyfus Int’l
Holding BV, Chairman of IMD Business
School and Chairman of Nomoko AG.
Pascal Soriot
Executive Director and CEO
Skills and experience:
Pascal has a
passion for science and medicine, and
significant experience in established
and emerging markets, together with
a strength of strategic thinking and
execution, a successful track record
of managing change and executing
strategy, and the ability to lead a
diverse organisation. He served as
COO of Roche’s pharmaceuticals
division from 2010-2012 and previously
as CEO of Genentech in San Francisco,
where he led its successful merger
with Roche. Pascal joined the
pharmaceutical industry in 1986 and
has worked in senior roles in major
companies around the world. He is
a Doctor of Veterinary Medicine
(École Nationale Vétérinaire d’Alfort,
Maisons-Alfort) and holds an MBA
from HEC Paris.
Aradhana Sarin
Executive Director and CFO
Skills and experience:
Prior to her
current role, Aradhana was CFO for
Alexion. Aradhana joined Alexion in
2017 and was responsible for driving
strategic growth, financial performance
and business development at Alexion.
She brings operational experience in
biopharma plus more than 20 years
of professional experience at global
financial institutions and has extensive
knowledge of global healthcare
systems, having closed more than 100
transactions across M&A, equity and
debt financing. Before joining Alexion,
Aradhana was Managing Director of
Healthcare Corporate and Investment
Banking at Citi Global Banking, focusing
on clients in the life sciences and
biopharmaceutical sectors. Previously,
she served as Managing Director of
Healthcare Investment Banking at
UBS, and worked at JP Morgan in the
M&A Advisory and Healthcare groups.
Aradhana trained as a medical doctor
in India and spent two years practising
in both India and Africa. She completed
her medical training at the University
of Delhi and received her MBA from
Stanford Business School.
Philip Broadley
A
R
NG
Senior independent Non-Executive Director
Skills and experience:
Philip has
significant financial and international
business experience. He was
previously Group Finance Director of
Prudential plc for eight years and Old
Mutual plc for six years. He has served
as Chairman of the 100 Group of
Finance Directors in the UK and Board
member of Stallergenes Greer plc. He
is a Fellow of the Institute of Chartered
Accountants in England and Wales.
Philip graduated in Philosophy, Politics
and Economics from St Edmund Hall,
Oxford, where he is now a St Edmund
Fellow, and holds an MSc in
Behavioural Science from the London
School of Economics. Until March
2019, Philip was a member of the
Oxford University Audit Committee.
Other appointments:
Philip is Senior
Independent Director of Legal &
General Group plc, where he chairs
the Audit Committee. He is Treasurer
of the London Library and Chairman
of the Board of Governors of
Eastbourne College.
Committee membership key
Committee
Chair
NG
Nomination
and
Governance
A
Audit
Sc
Science
R
Remuneration
Su
Sustainability
74
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Board of Directors
as at 31 December 2021
Euan Ashley
Sc
Non-Executive Director
Skills and experience:
Euan studied
physiology and medicine at Glasgow
University, trained as a junior doctor at
Oxford University Hospitals NHS Trust,
and gained a DPhil in cardiovascular
cellular biology and molecular genetics
at the University of Oxford. In 2002,
Euan moved to Stanford University,
California where his research focuses on
genetic mechanisms of cardiovascular
health and disease. His laboratory
leverages AI and digital health tools,
alongside biotechnology and
technology partners in Silicon Valley,
to advance translational and clinical
research. Euan’s awards include
recognition from the Obama White
House for contributions to
personalised medicine and the
American Heart Association’s Medal
of Honor for precision medicine.
Other appointments:
Associate
Dean and Professor of Biomedical
Data Science and Professor of
Cardiovascular Medicine and Genetics
at Stanford University.
Additional Information
Financial Statements
Nazneen Rahman
Sc
Su
NG
Non-Executive Director
Skills and experience:
Nazneen has
significant scientific, medical and data
analysis experience in rare disease and
cancer genomics. She was Head of the
Division of Genetics and Epidemiology
at the Institute of Cancer Research,
London, and Head of Cancer Genetics
at the Royal Marsden NHS Foundation
Trust for 10 years to 2018. Nazneen
was also founder and Director of the
TGLclinical Genetic Testing Laboratory.
Nazneen qualified in medicine from
Oxford University, and gained a
Certificate of Completion of Specialist
Training in medical genetics and a PhD
in molecular genetics. Nazneen has a
strong commitment to open science
and has garnered numerous awards,
including a CBE in recognition of her
contribution to medical sciences.
Other appointments:
Nazneen is
founder and CEO of YewMaker and
Director of the Sustainable Medicines
Partnership, delivering science-based
solutions to make healthcare more
sustainable.
Deborah DiSanzo
A
Non-Executive Director
Skills and experience:
Deborah is
President of Best Buy Health for Best
Buy Co. Inc. Best Buy Health provides
digital health solutions in active ageing,
virtual care, and consumer health.
Deborah holds an appointment at the
Harvard TH Chan School of Public
Health teaching Artificial Intelligence
in Health. Until December 2018, she
served as General Manager of IBM
Watson Health. Prior to IBM, until 2014,
Deborah held multiple senior executive
positions at Philips Healthcare where
she also served as Chief Executive
Officer. Deborah has been honoured
by multiple organisations as a top
health influencer. She holds an MBA
from Babson College and is a Harvard
University Advanced Leadership
Initiative 2019 Fellow.
Other appointments:
Deborah is
President of Best Buy Health for
Best Buy Co. Inc.
Andreas Rummelt
Su
Non-Executive Director
Skills and experience:
Andreas joined
the Board following the acquisition of
Alexion, where he had been a director
since 2010. Previously he was Group
Head of Technical Operations and
Quality at Novartis, and from 2006
until 2010 served on the Executive
Committee. He was Global CEO of
the Generics Division of Sandoz from
2004 to 2008, having originally joined
in 1985. Andreas earned his PhD in
pharmaceutical sciences from the
University of Erlangen-Nuremberg and
received his executive training in general
management and leadership from IMD
in Lausanne; INSEAD in Fontainebleau;
and Harvard Business School.
Other appointments:
Andreas is
Chairman and Managing Partner of
InterPharmaLink AG and a director
of various privately-held biotech and
pharmaceutical companies. He is a
member of the Scientific Advisory
Committee of the Global Antibiotic
Research and Development
Partnership.
Diana Layeld
Sc
Non-Executive Director
Skills and experience:
Diana has
broad global business experience
which began in the pharmaceutical
and biotech sector. She has held senior
leadership roles in the technology
sector and international banking,
including senior positions at Standard
Chartered Bank, as the CEO of a
start-up technology company, and
in Healthcare and Life Sciences at
McKinsey & Co. Until December 2020,
Diana was a Non-Executive Director
of Aggreko plc. She has a BA from
Oxford University and an MA in Public
Administration and International
Economics from Harvard University.
Other appointments:
Diana is
President, EMEA Partnerships at
Google, driving technology
transformation and is also Vice-
President, ‘Next Billion Users’ &
Product Management, leading the
development of products and services
for future Google users. She is also a
Council Member of the London School
of Hygiene & Tropical Medicine and
Chair of CDC Group plc.
Sheri McCoy
A
R
Su
Non-Executive Director
Skills and experience:
Until February
2018, Sheri was CEO and a Director of
Avon Products, Inc. Prior to joining them
in 2012, she had a distinguished 30-year
career at Johnson & Johnson, latterly
serving as Vice Chairman of the
Executive Committee, responsible for
the Pharmaceuticals and Consumer
business segments. Sheri joined
Johnson & Johnson as an R&D scientist
and subsequently managed businesses
in every major product sector, holding
positions including Worldwide
Chairman, Surgical Care Group and
Division President, Consumer. She
holds a Bachelor of Science degree in
Textile Chemistry from the University of
Massachusetts Dartmouth, a Masters
degree in Chemical Engineering from
Princeton University and an MBA from
Rutgers University in New Jersey, US.
Other appointments:
Sheri serves on
the boards of Stryker, Kimberly-Clark,
Novocure and Laronde. She is also an
industrial adviser for EQT, in connection
with which she chairs Certara, and
serves on the boards of Galderma
and Parexel.
Marcus Wallenberg
Sc
Su
Non-Executive Director
Skills and experience:
Marcus has
international business experience
across various industry sectors,
including the pharmaceutical industry
from his directorship with Astra prior
to 1999.
Other appointments:
Marcus is
Chairman of Skandinaviska Enskilda
Banken AB, Saab AB and FAM AB. He
is a member of the boards of Investor
AB and the Knut and Alice Wallenberg
Foundation.
Tony Mok
Sc
Non-Executive Director
Skills and experience:
Tony is the Li
Shu Fan Medical Foundation endowed
Professor and Chairman of the
Department of Clinical Oncology at the
Chinese University of Hong Kong. His
work includes multiple aspects of lung
cancer research, including biomarker
and molecular targeted therapy in lung
cancer. Tony is a former President of
the International Association for the
Study of Lung Cancer and is on the
Board of Directors of the American
Society of Clinical Oncology. His work
has achieved numerous awards
including the ESMO Lifetime
Achievement Award in 2018 and
Giant of Cancer Care in 2020.
Other appointments:
Tony is a
Non-Executive Director of Hutchison
China MediTech Limited (Chair of
Nomination Committee) and
co-founder and Chairman of Sanomics
Limited (merged with ACT Genomic
Limited since 2021).
75
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Strategic Report
Board of Directors
In addition to the Board of Directors,
the Senior Executive Team, or SET,
is the body through which the CEO
exercises the authority delegated to
him by the Board. The CEO leads the
SET and has executive responsibility
for the management, development and
performance of the business. The CEO,
CFO and SET also take the lead in
developing the strategy for review,
constructive challenge and approval
by the Board as part of the
annual strategy review process.
Further information about SET
members is available on our website,
www.astrazeneca.com.
Pascal Soriot
CEO
Ruud Dobber
Executive Vice-President,
BioPharmaceuticals Business Unit
Je Pott
General Counsel and Chief Human
Resources Ocer
Aradhana Sarin
CFO
David Fredrickson
Executive Vice-President,
Oncology Business Unit
Iskra Reic
Executive Vice-President, Vaccines &
Immune Therapies
Katarina Ageborg
Executive Vice-President, Sustainability
and Chief Compliance Ocer
Pam Cheng
Executive Vice-President,
Operations & Information Technology
Susan Galbraith
Executive Vice-President,
Oncology R&D
Menelas (Mene) Pangalos
Executive Vice-President,
BioPharmaceuticals R&D
Leon Wang
Executive Vice-President,
International and China President
Marc Dunoyer
Chief Executive Ocer, Alexion and
Chief Strategy Ocer, AstraZeneca
76
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Senior Executive Team (SET)
as at 31 December 2021
1. Board leadership and company purpose
A. Board’s role
The Board’s role is to promote the long-term
sustainable success of the Company. The
Directors’ diverse range of skills, experience
and industry knowledge, and ability to
exercise independent and objective
judgement, help the Board to operate
effectively in its oversight of delivery of the
Group’s strategy, generation of shareholder
value and contributions to wider society.
The Board’s effective operation is
underpinned by a sound governance
structure, described on page 73. Through a
programme of regular Board and Committee
meetings, Directors receive information on
AstraZeneca’s financial performance, the R&D
pipeline and critical business issues. The
Board is accountable to our shareholders for
the proper conduct of the business and our
long-term success, and seeks to represent
the interests of all stakeholders.
B. Purpose, culture and strategy
The Board believes that our Purpose, to
push the boundaries of science to deliver
life-changing medicines, positions AstraZeneca
for long-term sustainable success.
Our Code of Ethics and our Values underpin
the behaviours that support our culture.
For more information on our Purpose, our Values and our
Culture, see page 10.
The Board is responsible for setting our
strategy and policies, overseeing risk and
corporate governance, and monitoring
progress towards meeting our objectives and
annual plans. The Board conducts an annual
review of the Group’s overall strategy.
C. Resources and controls
The Board ensures that the necessary
resources are in place to help the Company
meet its objectives and measure its
performance against them.
The Internal Audit Services (IA) and
Compliance functions provide quarterly
reports to the Audit Committee on their
activities and annual reviews of key themes,
processes and systems (including
arrangements for whistleblowing). The Board
has full oversight of these matters by way of
the Audit Committee Chair’s reports to the
Board after each Committee meeting. Board
members are also able to access the
information provided to the Audit Committee.
For more information, see the Audit Committee Report
from page 90.
The Board has a formal system in place for
Directors to declare a conflict, or potential
conflict, of interest.
page 211.
D. Stakeholder engagement
The Board aims to ensure a good dialogue is
maintained with shareholders, so that their
views are understood and considered. The
Board also engages with and considers wider
stakeholder groups, including the workforce,
in its decision making.
More information is set out on pages 80 to 84 and
throughout the Strategic Report. Our section 172(1)
statement is set out on page 70.
E. Workforce policies
Based on our Values, expected behaviours
and key policy principles, the Code of Ethics
empowers our workforce to make decisions
that are in the best interests of the Group,
society and the Company. It is applicable to
all within the Group worldwide, including
the Board.
For more information about our Code of Ethics,
see page 47.
2. Division of responsibilities
F. Chair
Leif Johansson, our Non-Executive Chair,
is responsible for the Board’s overall
effectiveness in directing the Company.
Mr Johansson was first elected to the
Board in April 2012 and was considered to
be independent on his appointment as
Chair in June 2012.
Further information about the Chair’s annual evaluation
is included on page 85 and information about the Chair’s
tenure is included on page 79.
G. Board composition, independence and
division of responsibilities
The composition of the Board is set out on
pages 74 and 75. The majority of the Board
consists of independent Non-Executive
Directors. Directors’ independence is
considered annually by the Board, as
described on page 79.
The Directors are collectively responsible
for the success of the Group. The roles of
the Board, Board Committees, Chair and
CEO are documented, as are the Board’s
reserved powers and delegated authorities.
The Board’s responsibilities and the
governance structure by which it delegates
authority are outlined on the Corporate
Governance Overview on page 73.
The Board maintains a list of matters that are
reserved to, and can only be approved by,
the Board. These include: the appointment,
termination and remuneration of any Director;
approval of the annual budget; approval of
any item of fixed capital expenditure or any
proposal for the acquisition or disposal of
an investment or business which exceeds
$150 million; the raising of capital or loans by
the Company (subject to certain exceptions);
the giving of any guarantee in respect of any
borrowing of the Company; and allotting
shares of the Company. Matters that have
not been expressly reserved to the Board
are delegated to the Committees of the
Board or the CEO.
H. Non-Executive Directors’ role and time
commitment
The Non-Executive Directors exercise
objective judgement in respect of Board
decisions, providing scrutiny and challenge
so as to hold management to account.
Non-Executive Directors offer strategic
guidance and specialist advice based on the
breadth of experience and knowledge they
bring to the Board. Non-Executive Directors
regularly meet without the Executive Directors
or management present.
The Company’s senior independent Non-
Executive Director serves as a sounding
board for the Chair and as an intermediary
for the other Directors when necessary. The
senior independent Non-Executive Director
is also available to shareholders if they have
concerns that contact through the normal
channels of Chair or Executive Directors has
failed to resolve, or for which such contact is
inappropriate. Philip Broadley was appointed
senior independent Non-Executive Director
on 1 March 2021.
As well as their work in relation to formal
Board and Board Committee meetings,
Non-Executive Directors commit time
throughout the year to meetings and
telephone calls with various levels of executive
management and other key stakeholders,
visits to AstraZeneca’s sites throughout the
world (whether in person or virtually) and, for
new Directors, induction sessions and site
visits. Therefore the Board members’ actual
time commitments exceed the minimum
expectation of 15 days a year, particularly for
the Chair and Chairs of Board Committees.
When contemplating taking up additional
appointments, Non-Executive Directors
consult the Chair to ensure thought is
given to any potential impact on their time
commitment to AstraZeneca.
Statement of compliance
Our statement of compliance describes how we applied the principles set out in the 2018 UK Corporate Governance Code (the Code)
for the year ended 31 December 2021. A copy of the Code can be found on the Financial Reporting Council’s website, www.frc.org.uk.
Throughout the accounting period we have complied with all the provisions of the Code other than provision 19, which relates to the
Chair’s tenure. Our approach is described on page 4.
Corporate Governance Report / Compliance with the UK Corporate Governance Code
77
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Corporate Governance Report
Compliance with the UK Corporate Governance Code
Careful consideration is given to the nature
of the potential appointment and the type
of company involved (for example, whether
the company is a public listed company or
privately held), to help assess the likely
time requirement.
The performance of the Non-Executive
Directors is assessed annually as part of the
Board’s performance evaluation, as described
on page 85.
Subject to specific Board approval,
Directors and SET members may accept
external appointments as non-executive
directors of other companies and retain any
related fees paid to them, provided that such
appointments are not considered by the
Board to prevent or reduce the ability of the
executive to perform his or her role within
the Group to the required standard.
I. Company Secretary
The Company Secretary is responsible to the
Chair for ensuring that all Board and Board
Committee meetings are properly conducted,
that the Directors receive appropriate
information prior to meetings to enable them
to make an effective contribution and that
governance requirements are considered and
implemented. The 2021 Board evaluation set
out on page 85 provides details of the
effective operation of the Board.
3. Composition, succession and
evaluation
J. Appointments and succession planning
The Nomination and Governance Committee
and, where appropriate, the full Board,
regularly reviews the composition of the Board
and the status of succession to both SET and
Board-level positions. Directors have regular
contact with, and access to, succession
candidates for SET positions. The Committee
also recognises the importance of diversity
when considering potential appointments.
There is a formal, rigorous and transparent
procedure for appointments to the Board.
The Nomination and Governance Committee
Report details changes in Board composition
during the year, and the appointment and
induction processes, from page 86.
In accordance with Article 66 of the Articles,
all Directors retire at each AGM and may offer
themselves for re-election by shareholders.
The Notice of AGM will give details of those
Directors seeking election or re-election.
K. Skills, experience and knowledge
When the Nomination and Governance
Committee reviews the composition of the
Board and its Committees, it uses a matrix
that records the skills and experience of
current Board members, and compares this
with the skills and experience it believes are
appropriate to the Company’s overall
business and strategic needs, both now
and in the future.
The Committee is also mindful of Directors’
lengths of tenure and the need to refresh
membership over time.
For more information, see the Nomination and
Governance Committee Report from page 86.
L. Board evaluation
In 2021, the Board undertook an internal
Board performance evaluation. More
information on the evaluation process,
including the results and actions taken,
can be found on page 85.
4. Audit, risk and internal control
M. Internal and external audit
The Audit Committee is responsible
for reviewing the relationship and
independence of our external auditor,
PricewaterhouseCoopers LLP. The Committee
maintains a policy for the pre-approval of all
audit services and audit-related services
undertaken by the external auditor, the
principal purpose of which is to ensure that
the independence of the external auditor is
not impaired.
For more information, see page 97 and Note 31 to the
Financial Statements on page 196.
The Audit Committee also reviews the
independence and effectiveness of IA.
For more information, see page 92.
N. Fair, balanced and understandable
assessment
The Board considers this Annual Report,
taken as a whole, to be fair, balanced and
understandable, and provides the information
necessary for shareholders to assess
AstraZeneca’s position and performance,
business model and strategy. The Board’s
assessment is described on page 96.
The Board and the Audit Committee review
the Company’s quarterly financial results
announcements to ensure they present a fair,
balanced and understandable assessment of
the Company’s position and prospects to
shareholders.
O. Risk management
The Board is responsible for the Company’s
risk management system and internal controls,
and their effectiveness. The Board delegates
some responsibilities for risk management
oversight to the Audit Committee, such as
quarterly reviews of the Company’s principal
and key active risks. During 2021, the Directors
continued to review the effectiveness of our
system of controls, risk management
(including a robust assessment of the
emerging and Principal Risks) and high-level
internal control processes. This included an
annual Governance and Assurance Report
to all Directors, which is considered in detail
by the Audit Committee and reviewed by
the Board.
Any areas of concern are highlighted in the
Audit Committee Chair’s update to Directors
at the relevant Board meeting and discussed
by the Board. The Report is based on a full
year end review of the Company’s risk and
control processes (incorporating financial,
operational and compliance controls) and
findings from assurance processes.
The Directors believe that the Group maintains
an effective, embedded system of internal
controls and complies with the FRC’s
guidance entitled ‘Guidance on Risk
Management, Internal Control and Related
Financial and Business Reporting’.
For more information about the ways in which we manage
our business risks, our procedures for identifying our
emerging risks, how we describe our Principal Risks and
uncertainties, and our Viability statement, see Risk
management and controls on the following page, and the
Risk Overview from page 48.
5. Remuneration
P. Remuneration policies and practices
The Remuneration Committee is responsible
for determining, approving and reviewing the
Company’s global remuneration principles
and frameworks, to ensure that they support
the strategy of the Company and are designed
to promote long-term sustainable success.
For more information on the Remuneration Committee’s
work, see page 98.
Q. Developing executive remuneration policy
The Remuneration Committee routinely
reviews the Directors’ Remuneration Policy
and executive remuneration arrangements to
ensure they continue to promote the delivery
of the long-term strategy and support the
Company’s ability to recruit and retain
executive talent to deliver against that
strategy. The Committee also considers
remuneration arrangements in the context
of corporate governance best practice and
arrangements for the wider workforce, and
regularly consults with its major investors
on remuneration proposals. No Director is
involved in determining their own
remuneration arrangements or outcomes.
For more information, see the Directors’ Remuneration
Report, from page 98.
R. Remuneration outcomes and independent
judgement
To ensure it maintains independent judgement
when determining remuneration outcomes,
the Remuneration Committee considers a
range of data including detailed business and
individual performance information. The
Committee also consults with other Board
Committees to utilise their expertise when
determining performance outcomes.
For more information, see the Directors’ Remuneration
Report, from page 98.
78
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Corporate Governance Report
Compliance with the UK Corporate Governance Code
continued
Further information on Directors’
appointments
Mr Johansson was first elected to the Board
in April 2012 and was considered to be
independent on his appointment as Chair
on 1 June 2012. Provision 19 of the Code
recommends a company chair’s tenure should
not extend beyond nine years from their
appointment to the board, although the period
can be extended for a limited time to facilitate
effective succession planning. Acknowledging
that he would have served as a Director for
nine years by 31 December 2021, the Board
believed it would be in the best interests of
shareholders for Mr Johansson to seek
re-election at the 2021 AGM and continue to
serve as Chair, to lead the Board’s oversight
of the acquisition and integration of Alexion.
Our approach for 2022 is explained on page 4.
In December 2021, the Board considered the
independence of the other Non-Executive
Directors for the purposes of the UK
Corporate Governance Code and the Nasdaq
Listing Rules. The Board considers that all
the Non-Executive Directors except Marcus
Wallenberg are independent. Marcus
Wallenberg was appointed as a Director of
Astra in May 1989 and subsequently became
a Director of the Company in 1999. He is a
Non-Executive Director of Investor AB, which
has a 3.33% interest in the issued share
capital of the Company as at 9 February 2022.
For these reasons – his overall length of tenure
and relationship with a significant shareholder
– the Board does not believe that he can be
determined independent under the UK
Corporate Governance Code. However, the
Board believes that he has brought, and
continues to bring, considerable business
experience and makes a valuable contribution
to the work of the Board.
As well as being a Non-Executive Director
of AstraZeneca and Chair of the Board’s
Sustainability Committee, Nazneen Rahman
is the Director of the Sustainable Medicines
Partnership (SMP), a multi-stakeholder,
not-for-profit collaboration with the aim of
advancing the environmental sustainability
of medicines. AstraZeneca is a strategic
collaborator in the SMP. Dr Rahman has
recused herself from acting as the lead
contact for the SMP in its relationship with
AstraZeneca, and this relationship, including
project work and overall programme
management, is handled by other members
of the SMP team.
2021 AGM voting outcomes
At AstraZeneca’s AGM in 2021 some
shareholders expressed concerns about the
number of Sheri McCoy’s other directorships
of listed companies and the potential impact
on her time commitment to AstraZeneca.
The Board believes that Ms McCoy has
brought, and continues to bring, considerable
business experience and knowledge of the
pharmaceutical industry and makes a valuable
contribution to the work of the Board and
Committees of which she is a member, as set
out in the statement on the AGM section of
our website at www.astrazeneca.com. The
Board is satisfied that all Directors, including
Ms McCoy, continue to make effective and
valuable contributions to the Board and
continue to devote sufficient time to
discharging their responsibilities as
Directors of AstraZeneca.
At the AGM in 2021, votes to approve a
new Directors’ Remuneration Policy and
amendments to the AstraZeneca Performance
Share Plan were passed by shareholders,
however a significant portion of shareholders
voted against each resolution. The
Remuneration Committee Chair and
management representatives subsequently
held discussions with our major investors,
and with proxy voting advisory bodies,
to understand the rationale behind those
voting outcomes.
Further information is included in the Directors’
Remuneration Report, on page 101.
Risk management and controls
Global Compliance and Internal Audit
Services (IA)
Global Compliance helps the Group achieve
its strategic priorities by doing business the
right way, with integrity and high ethical
standards. Global Compliance focuses on
delivering a globally aligned approach that
addresses key risk areas across the business,
including those relating to third parties and
anti-bribery/anti-corruption. We do this by
reinforcing compliant behaviours through our
Code of Ethics, our policies, training and
advice and guidance. We also conduct risk
assessment activities and foster a Speak-Up
culture where individuals can raise concerns.
We take all alleged compliance breaches or
concerns seriously. We investigate and take
appropriate disciplinary and remediation
action to address and prevent reoccurrence
though our internal Compliance, HR and Legal
functions and may also engage external
advisers when necessary. Dependent on
breach severity, management and Legal may
be consulted to determine whether the Group
needs to disclose and/or report the findings to
a regulatory or government authority.
Global Compliance provides assurance
insights to the Audit Committee on
compliance matters including compliance
breaches, associated disciplinary actions and
corresponding remediation. Complementing
this, IA carries out a range of audits that
include compliance-related audits and
periodically reviews the assurance activities
of other Group assurance functions.
The results from these activities are reported
to the Audit Committee. Global Compliance
and IA work with specialist compliance
functions throughout our organisation to
share outcomes and to coordinate reporting
on compliance matters.
IA is established by the Audit Committee
on behalf of the Board and acts as an
independent and objective assurance function
guided by a philosophy of adding value to
improve the operations of the Group. The
scope of IA’s responsibilities encompasses,
but is not limited to, the examination and
evaluation of the adequacy and effectiveness
of the Group’s governance, risk management
and internal control processes in relation to
the Group’s defined goals and objectives.
Among others, internal control objectives
considered by IA include:
>
compliance with significant policies, plans,
procedures, laws and regulations
>
consistency of operations or programmes
with established objectives and goals, and
effective performance
>
safeguarding of assets.
Based on its activity, IA is responsible for
reporting significant risk exposures and
control issues identified to the Board and to
senior management, including fraud risks,
governance issues and other matters needed
or requested by the Audit Committee. It may
also evaluate specific operations at the
request of the Audit Committee or
management, as appropriate.
79
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Corporate Governance Report / Other governance information
Corporate Governance Report
Other governance information
Considering the interests of our stakeholders
is fundamental to our Group’s strategy.
The following table identifies our most
strategically significant stakeholders and
summarises the engagement that has been
undertaken by management during 2021.
Patients and patient networks
Payers
Investor community Healthcare professionals
Academic and R&D partners
Commercial collaborators
and partners
Overview
Signicance of
the stakeholder
to the business
Patients are at the heart of
what we do. Ourstakeholders
include individual
patients,care-givers and
patient advocacy
organisations representing the
diverse populations that our
medicines will serve. We listen
to their experiences and
embed these insights into
every aspect of our work to
ensure that the medicines and
services we develop have the
greatest impact on theirlives.
AstraZeneca works closely
with payers, which includes
governments and medical
insurance companies, to
understand the impact of
pricing medicines on public
and private budgets.
Overview
Signicance of
the stakeholder
to the business
The Board and management
maintain regular and
constructive dialogue with
investors to communicate our
strategy. Weprovide objective
information about performance
to enable investors to put a fair
value on the Company and
ensure ourcontinued access
to capital.
Healthcare professionals (HCPs)
are the interface with patients.
They support our business by
providing insights into clinical
trial design and prescribing,
advising patients
on administering medicines,
providing safety reports,
collaborating in clinical studies
and assisting with the ethical
and transparent distribution
of medicines.
We collaborate with academic
institutions andbiotech partners
globally to access the best
science, to stimulate innovation
and to deliver life-changing
medicines to patients.
Partnering is an important
element of our business,
supplementing and
strengthening our pipeline.
Collaborations help us access
disease area expertise through
AstraZeneca and non-
AstraZeneca medicines. By
combining forces, AstraZeneca
and our partners can bring
scientific innovation to patients
around the world more quickly.
Interests
Issues and factors
which are most
important to the
stakeholder group
>
Diverse insights embedded
in the drug development
process.
>
Designing clinical trials that
reflect real-world clinical
practice in a diverse patient
population, are minimally
burdensome to patients
and measure outcomes
they care about most.
>
Ensuring healthcare
systems are designed with
the patient in mind.
>
Providing transparent,
accessible information in
plain, local language.
>
Ensuring the safety,
efficacy and affordable
accessibility of our
medicines.
>
Attracting business
investment.
>
Investment in research and
scientific collaborations.
>
Access to innovative
medicines.
>
Pricing of medicines,
including breakthrough
therapies and the impact
on public budgets.
>
Containment of
reimbursement expenditure.
>
The safety and efficacy of
medicines.
Interests
Issues and factors
which are most
important to the
stakeholder group
>
Financial and commercial
performance.
>
R&D strategy, resource
allocation and pipeline
development.
>
Culture, values and
behaviours.
>
Exposure to geopolitical and
macro-economic risks.
>
Environmental, social and
governance (ESG) matters.
>
Development of medicines
for unmet clinical needs.
>
Education and information on
advances in medical science.
>
Accurate and balanced
information onlicenced
medicines, including
up-to-date safety data.
>
Uninterrupted supply of
qualitymedicines.
>
Ethical and transparent
interactionswith industry.
AstraZeneca had more than
2,000 activecollaborations
ongoing in 2021:
>
To advance innovative
technology andscience.
>
To address key scientific
challenges.
>
To access the next
generation of science
leaders.
>
Shared vision/values.
>
Development and research
of medicines that address
unmet patient and clinical
need.
>
Trust and transparency in
research, disclosures and
relationships with
stakeholders.
>
Willingness to collaborate
with industry peers to
optimise outcomes for
common stakeholders, e.g.
patients, physicians,
policymakers and healthcare
systems.
Engagement
Examples of
engagement
in 2021
>
Engaged people
representing diverse patient
populations at every stage
in ourdevelopment and
clinical trial programmes.
>
Expanded our Patient
Partnership Programmes
into new disease areas.
>
Gathered diverse insights
from patients and patient
stakeholders to co-create
programmes across
business units.
>
Established patient support
and affordability
programmes.
>
Discussions took place
with governments and
policymakers to increase
understanding of the
business model and
regulation of the
pharmaceutical industry,
to support investment in life
sciences and to improve
access to new medicines.
>
Engaged in discussions on
evolving thecurrent
reimbursement system for
medicines in the US.
>
Hosted site visits and tours
at our manufacturing and
R&D facilities for international
and local politicians.
Engagement
Examples of
engagement
in 2021
>
Ongoing communications
including quarterly results
calls, in-person and virtual
meetings and roadshows.
>
Regular events at medical
conferences and periodic
updates on portfolio and
pipeline developments.
>
Provided and supported
HCP educational events.
>
Established HCP advisory
boards.
>
Engaged HCPs as
investigators in clinical trials.
>
Responded to more than
118,000 HCP enquiries and
processed over 60,000
adverse event reports
from HCPs.
>
Sponsored collaborations
and more than 500
studentships (PhD,
post-doctoral and
undergraduate) annually.
>
Worked side-by-side with
academic researchers in
more than 10 dedicated
university laboratories.
>
Shared compound assets
and data for academic
research; more than
35 ongoing or planned
clinical trials and more than
425 pre-clinical studies.
>
Joint seminars, education
sessions and consortia with
research institutions, e.g.
Royal Society, Academy
of Medical Sciences and
Partner of Choice Network.
>
Regular alliance leadership
meetings established
transparent working
relationships with ‘one team’
mentality and approach
across companies.
>
Joint responsibility for
deliverables and outcomes
across functions at all levels.
>
Discussions took place with
key stakeholders, e.g.
regulators, policy makers,
patient groups and the
medical community to inform
strategy, clinical development
and how to best address
unmet needs.
Outcomes
Actions
which resulted
>
Evolved, enhanced and
embedded diverse patient
and patient stakeholder
insights into our work.
>
Increased number of
patient support
programmes.
>
Collaborated with patient
advocacy organisations
on key healthcare system
transformation projects
to bring about tangible
healthcare system change
at a country level.
>
Established working
relationships with key
government stakeholders.
>
Regular meetings,
roundtables and events
organised to increase
understanding about how
governments can support
life-sciences investment and
improve patient access to
new medicines.
Outcomes
Actions
which resulted
>
More access to senior
and next-level/operational
management, including
increased virtual
engagement.
>
Following discussion with
shareholders, streamlined
external-facing materials
to provide increased
transparency.
>
Increased focus on ESG
matters within results
announcements and
shareholder engagements.
>
HCP advisory boards
informed our clinical research
and product strategy.
>
Collaboration in clinical
studies has led to new
products.
>
Exchange of information with
HCPs which supports clinical
decision making.
>
Enabled innovative solutions
though research
collaboration.
>
New technology, new targets
and new biomarkers.
>
Publications.
>
Established capability to offer
studentship and post-
doctoral programmes to
facilitate scientific discovery.
>
Optimisation of outcomes
through combined skillsets and
use of technologies/platforms
to research new medicines,
enabling faster delivery of
medicines to patients.
>
Enhanced speed of
recruitment and completion
of trials with ability to adapt
– multiple trials initiated
across multiple disease/
patient types.
>
Greater collaboration and
relationships with industry
partners and stakeholders.
80
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Corporate Governance Report
Connecting with our stakeholders
Patients and patient networks
Payers
Investor community Healthcare professionals
Academic and R&D partners
Commercial collaborators
and partners
Overview
Signicance of
the stakeholder
to the business
Patients are at the heart of
what we do. Ourstakeholders
include individual
patients,care-givers and
patient advocacy
organisations representing the
diverse populations that our
medicines will serve. We listen
to their experiences and
embed these insights into
every aspect of our work to
ensure that the medicines and
services we develop have the
greatest impact on theirlives.
AstraZeneca works closely
with payers, which includes
governments and medical
insurance companies, to
understand the impact of
pricing medicines on public
and private budgets.
Overview
Signicance of
the stakeholder
to the business
The Board and management
maintain regular and
constructive dialogue with
investors to communicate our
strategy. Weprovide objective
information about performance
to enable investors to put a fair
value on the Company and
ensure ourcontinued access
to capital.
Healthcare professionals (HCPs)
are the interface with patients.
They support our business by
providing insights into clinical
trial design and prescribing,
advising patients
on administering medicines,
providing safety reports,
collaborating in clinical studies
and assisting with the ethical
and transparent distribution
of medicines.
We collaborate with academic
institutions andbiotech partners
globally to access the best
science, to stimulate innovation
and to deliver life-changing
medicines to patients.
Partnering is an important
element of our business,
supplementing and
strengthening our pipeline.
Collaborations help us access
disease area expertise through
AstraZeneca and non-
AstraZeneca medicines. By
combining forces, AstraZeneca
and our partners can bring
scientific innovation to patients
around the world more quickly.
Interests
Issues and factors
which are most
important to the
stakeholder group
>
Diverse insights embedded
in the drug development
process.
>
Designing clinical trials that
reflect real-world clinical
practice in a diverse patient
population, are minimally
burdensome to patients
and measure outcomes
they care about most.
>
Ensuring healthcare
systems are designed with
the patient in mind.
>
Providing transparent,
accessible information in
plain, local language.
>
Ensuring the safety,
efficacy and affordable
accessibility of our
medicines.
>
Attracting business
investment.
>
Investment in research and
scientific collaborations.
>
Access to innovative
medicines.
>
Pricing of medicines,
including breakthrough
therapies and the impact
on public budgets.
>
Containment of
reimbursement expenditure.
>
The safety and efficacy of
medicines.
Interests
Issues and factors
which are most
important to the
stakeholder group
>
Financial and commercial
performance.
>
R&D strategy, resource
allocation and pipeline
development.
>
Culture, values and
behaviours.
>
Exposure to geopolitical and
macro-economic risks.
>
Environmental, social and
governance (ESG) matters.
>
Development of medicines
for unmet clinical needs.
>
Education and information on
advances in medical science.
>
Accurate and balanced
information onlicenced
medicines, including
up-to-date safety data.
>
Uninterrupted supply of
qualitymedicines.
>
Ethical and transparent
interactionswith industry.
AstraZeneca had more than
2,000 activecollaborations
ongoing in 2021:
>
To advance innovative
technology andscience.
>
To address key scientific
challenges.
>
To access the next
generation of science
leaders.
>
Shared vision/values.
>
Development and research
of medicines that address
unmet patient and clinical
need.
>
Trust and transparency in
research, disclosures and
relationships with
stakeholders.
>
Willingness to collaborate
with industry peers to
optimise outcomes for
common stakeholders, e.g.
patients, physicians,
policymakers and healthcare
systems.
Engagement
Examples of
engagement
in 2021
>
Engaged people
representing diverse patient
populations at every stage
in ourdevelopment and
clinical trial programmes.
>
Expanded our Patient
Partnership Programmes
into new disease areas.
>
Gathered diverse insights
from patients and patient
stakeholders to co-create
programmes across
business units.
>
Established patient support
and affordability
programmes.
>
Discussions took place
with governments and
policymakers to increase
understanding of the
business model and
regulation of the
pharmaceutical industry,
to support investment in life
sciences and to improve
access to new medicines.
>
Engaged in discussions on
evolving thecurrent
reimbursement system for
medicines in the US.
>
Hosted site visits and tours
at our manufacturing and
R&D facilities for international
and local politicians.
Engagement
Examples of
engagement
in 2021
>
Ongoing communications
including quarterly results
calls, in-person and virtual
meetings and roadshows.
>
Regular events at medical
conferences and periodic
updates on portfolio and
pipeline developments.
>
Provided and supported
HCP educational events.
>
Established HCP advisory
boards.
>
Engaged HCPs as
investigators in clinical trials.
>
Responded to more than
118,000 HCP enquiries and
processed over 60,000
adverse event reports
from HCPs.
>
Sponsored collaborations
and more than 500
studentships (PhD,
post-doctoral and
undergraduate) annually.
>
Worked side-by-side with
academic researchers in
more than 10 dedicated
university laboratories.
>
Shared compound assets
and data for academic
research; more than
35 ongoing or planned
clinical trials and more than
425 pre-clinical studies.
>
Joint seminars, education
sessions and consortia with
research institutions, e.g.
Royal Society, Academy
of Medical Sciences and
Partner of Choice Network.
>
Regular alliance leadership
meetings established
transparent working
relationships with ‘one team’
mentality and approach
across companies.
>
Joint responsibility for
deliverables and outcomes
across functions at all levels.
>
Discussions took place with
key stakeholders, e.g.
regulators, policy makers,
patient groups and the
medical community to inform
strategy, clinical development
and how to best address
unmet needs.
Outcomes
Actions
which resulted
>
Evolved, enhanced and
embedded diverse patient
and patient stakeholder
insights into our work.
>
Increased number of
patient support
programmes.
>
Collaborated with patient
advocacy organisations
on key healthcare system
transformation projects
to bring about tangible
healthcare system change
at a country level.
>
Established working
relationships with key
government stakeholders.
>
Regular meetings,
roundtables and events
organised to increase
understanding about how
governments can support
life-sciences investment and
improve patient access to
new medicines.
Outcomes
Actions
which resulted
>
More access to senior
and next-level/operational
management, including
increased virtual
engagement.
>
Following discussion with
shareholders, streamlined
external-facing materials
to provide increased
transparency.
>
Increased focus on ESG
matters within results
announcements and
shareholder engagements.
>
HCP advisory boards
informed our clinical research
and product strategy.
>
Collaboration in clinical
studies has led to new
products.
>
Exchange of information with
HCPs which supports clinical
decision making.
>
Enabled innovative solutions
though research
collaboration.
>
New technology, new targets
and new biomarkers.
>
Publications.
>
Established capability to offer
studentship and post-
doctoral programmes to
facilitate scientific discovery.
>
Optimisation of outcomes
through combined skillsets and
use of technologies/platforms
to research new medicines,
enabling faster delivery of
medicines to patients.
>
Enhanced speed of
recruitment and completion
of trials with ability to adapt
– multiple trials initiated
across multiple disease/
patient types.
>
Greater collaboration and
relationships with industry
partners and stakeholders.
81
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Corporate Governance Report / Connecting with our stakeholders
In addition to the principal stakeholders described on pages 80 and 81, the Board considers the following stakeholder groups
important for the business operations and strategic direction of the Company.
Community
Wherever we work in the world, we aim to make a
positive impact on people and the communities in
which they live through our community investment.
Employees
Be a Great Place to Work is a central pillar
of AstraZeneca’s strategy, as described in our
Strategic Report. We need to acquire, retain and
develop a talented and diverse workforce in a
competitive environment. It is vital our employees
are united in pursuit of our Purpose and Values
whilst ensuring we maintain a strong AstraZeneca
culture. The Board’s engagement with the
workforce is described on page 84 and more
information about Be a Great Place to Work
is set out on page 15.
Health authorities
We engage with health authorities globally
regarding the manufacturing, development, review
and approval, and marketing of our products.
Governments
AstraZeneca partners closely with governments
around the world to support healthcare innovation
and research, facilitate access to innovative
treatments, and build resilient and sustainable
healthcare systems.
Multilateral and non-governmental organisations
(NGOs)
AstraZeneca partners with multilateral
organisations and NGOs to deliver science-based
health programming that addresses global health
issues and supports the delivery of the UN
Sustainable Development Goals. AstraZeneca’s
commitment to reduce health inequality has also
been demonstrated by the supply of
Vaxzevria
where 247 million doses were delivered through
the COVAX programme in 2021.
Media
An active and constructive relationship with the
media is important to build trust with each one of
the Company’s key stakeholders by transparently
reporting on the Group’s activities, including the
results of trials and business updates, as well
as seeking to enhance and protect the broader
reputation of the organisation. The media can
influence knowledge of, and sentiment towards,
a company.
Suppliers and third-party providers
AstraZeneca relies on integrated supply chains
and third-party providers to produce and deliver
medicines to patients across the world. During the
global pandemic, supply chains across all sectors
were compromised. Despite this, AstraZeneca
procurement worked closely with our suppliers
to understand any risks to supply of goods and
services, and agree mitigation strategies that have
ensured there has been no disruption to supply.
For more information, see page 38.
How the Board engages with stakeholders
The stakeholder table on pages 80 and 81
sets out management’s main interactions
with certain key stakeholders. Feedback
from these interactions is provided to the
Board in a variety of ways, which allows the
Board to understand the key interests of
stakeholders and consider them in its
decision making process.
The Board undertakes additional direct
engagement with stakeholders to better
understand their interests and concerns,
so these can be factored into its
decision making.
Examples of the Board’s engagement are set
out in the following columns. Information on
how stakeholders and other factors were
considered in the Board’s principal decisions
in 2021 is set out on the following page.
>
During 2021, a number of Directors,
including the Chair, the CEO and the
CFO, met investors at roadshows and
one-on-one meetings.
>
The Chair of the Remuneration
Committee took part in an extensive
consultation, which included 16 of our
largest shareholders as well three proxy
advisers. These engagements provided
an insight into how investors viewed the
Directors’ Remuneration Policy. How
these investor views were considered by
the Remuneration Committee is set out in
the Directors’ Remuneration Report from
page 98.
>
Due to COVID-19 restrictions, the 2021
AGM was a closed meeting. However, all
Directors attended the Company’s virtual
shareholder engagement event in April
2021, which allowed shareholders to
interact with, and ask questions of, the
Board.
>
The Chair of the Board and the Chair of
the Remuneration Committee replied to
an investor letter to all pharmaceutical
companies, which highlighted
AstraZeneca’s commitment to equitable
access to vaccines within the context of
the WHO roadmap.
>
Investor reports and financial analysts’
consensus data are made available to the
Board. Feedback is regularly provided to
the Board by management on their
interactions with investors.
>
The Audit Committee reviewed and fed
into the Company’s response to the UK
Government’s proposals for restoring trust
in audit and corporate governance.
>
The CEO and the CFO, along with other
members of management, met
governmental agencies and regulators
to discuss matters including the pricing
of medicines and equitable access.
>
The CEO attended the G7 and COP26
events, where he met world leaders to
discuss and understand concerns
regarding various sustainability matters,
including the risks arising from climate
change and access to healthcare.
>
The Board’s usual visits to AstraZeneca
sites were not possible during 2021 due
to COVID-19 travel restrictions. Instead,
Directors undertook a number of virtual
engagements including deep dives into
different business areas, site visits and
employee ‘roundtable’ discussions,
which provided insights into the Group’s
operations and employees’ views.
>
The integration of Alexion has been a key
area of Board focus. To better understand
the impact, the Board has received a
number of management reports, which
identify interests of various stakeholders,
including employees, regulators, patients
and investors. The Remuneration
Committee has also undertaken a
thorough review of the existing Alexion
remuneration arrangements.
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Corporate Governance
Corporate Governance Report
Connecting with our stakeholders
continued
Principal Decisions in 2021
Acquisition of Alexion Pharmaceuticals,
Inc. and 2021 Group Funding Plan
During 2021, the Board oversaw the
acquisition of Alexion (the Acquisition), and
approved a number of items connected to
completion of the transaction, for example the
shareholders’ circular and SEC registration
statement ahead of the general meetings of
shareholders to approve the Acquisition,
various financial and accounting reports
and representation letters, various legal
agreements, including relating to stock
exchange listings and debt issuance. Further
details of the Acquisition are on page 6.
The Board considered:
debt and equity
investors; patients; employees; capital
allocation priorities; the success of the
Company; the consequences of the decision
in the long term; and maintaining high
standards of business conduct.
How the Board had regard for these matters:
>
Reviewed the unmet medical need of rare
diseases, the patient benefit and the
high-growth, long-term strategic
opportunity the Acquisition created.
>
Received regular updates from
management on progress of the
Acquisition.
>
Ensured the documentation produced
ahead of shareholders’ votes on the
Acquisition was of a sufficiently high
standard, and could be relied upon by
shareholders, regulators and other
stakeholders.
>
Considered the impact of debt issuances
on the Group’s viability and capital
allocation priorities, alongside the financial
benefits from the Acquisition, including
increased profitability and strengthened
cash flow.
>
Approved the 2021 Group Funding Plan
and issuance of new AstraZeneca shares,
to be used as consideration.
>
Scrutinised integration plans to ensure
there was no disruption to the delivery of
medicines to patients, to employees or to
the operation of the Group.
>
Reviewed management’s engagement with
the workforce to understand employee
interests and concerns throughout the
transaction.
Establishment of a Sustainability
Committee
In October 2021, the Board established
a Sustainability Committee to monitor the
execution of the Company’s sustainability
strategy, oversee the communication of the
Company’s sustainability activities to its
stakeholders, and provide input to the Board
and Board Committees on sustainability
matters, as described on page 89.
The Board considered:
investors;
communities; employees; governments;
regulators; patients; the impact of the
Company’s operations on the community
and environment; the long-term success of
the Company; and maintaining high standards
of business conduct.
How the Board had regard for these matters:
>
Considered feedback received from
shareholders to increase the integration
of ESG into strategy and performance
targets, which had been received during
consultations and other engagements.
>
Recognised the increasing importance of
sustainability matters to our business and
all stakeholders, including patients, current
and potential employees, governments
and regulators, and the expectation that
AstraZeneca should be a good corporate
citizen.
>
Understood the need to have a positive
impact in the areas and environments in
which AstraZeneca operates.
>
Recognised the importance of sustainable
operations to ensure long-term value
creation for investors.
New executive appointments
In August 2021, Aradhana Sarin was
appointed as an Executive Director and CFO
of AstraZeneca. Dr Sarin succeeded Marc
Dunoyer, who stepped down as CFO and
retired from the Board in August 2021.
Mr Dunoyer remained part of the SET in
his new role as CEO, Alexion and Chief
Strategy Officer, AstraZeneca.
The Board considered:
investors;
employees; the long-term success of the
Company; and maintaining high standards of
business conduct.
How the Board had regard for these matters:
>
Reviewed Dr Sarin’s and Mr Dunoyer’s
experience to ensure that they had the skills
required to execute the roles to a high
standard and ensure the delivery of our
strategy.
>
Considered the Board’s skills matrix, as well
as the needs of the SET and the business,
to ensure the appointments would further
strengthen management and help the
Company to deliver its strategic priorities,
in order to deliver value to shareholders,
and promote the success of the Company.
>
Considered the continuity and reassurance
the appointments provided to employees
of the enlarged Group and investors. Both
candidates were known and trusted by
employees and investors, having
demonstrated strong leadership and
expertise in their previous roles.
Appointment of Philip Broadley as senior
independent Non-Executive Director
In March 2021, Philip Broadley succeeded
Graham Chipchase as the senior independent
Non-Executive Director, ahead of Mr Chipchase’s
retirement from the Board in May 2021. The
senior independent Non-Executive Director is
a key role, serving as a sounding board for the
Chair and intermediary for the other Directors
and shareholders when necessary.
The Board considered:
investors; the long-term
success of the Company; and maintaining
high standards of business conduct.
How the Board had regard for these matters:
>
Recognised the importance of ensuring
that the senior independent Non-Executive
Director had the ability to look after the
interests of investors and champion the
highest standards of business conduct.
>
Reviewed Mr Broadley’s experience of
the UK listed company regime and
understanding of the wider governance
and regulatory environment in which
AstraZeneca operates to ensure he had
the appropriate skills and expertise to
fulfil the role.
Ad hoc Board Committee on
Vaxzevria
>
In March 2021, an ad hoc Committee of the
Board was formed to have broad oversight
of the development and supply of
Vaxzevria
,
AstraZeneca’s COVID-19 vaccine. The
Committee completed its work in October
2021; the Board continues to be regularly
updated on development and supply of our
COVID-19 treatments.
The Board considered:
investors;
governments; payers; global partners;
suppliers; communities; the Company’s
reputation; access to healthcare;
maintaining high standards of business
conduct; the need to foster the Company’s
business relationships with suppliers,
customers and other stakeholders.
How the Board had regard for these matters:
>
The Committee supported the Board’s
oversight of
Vax zevria
manufacturing,
supply chain, efficacy and safety,
government relationships and
communications strategy by being able to
meet frequently with key senior executives
over a key period for
Vaxzevria
during 2021.>
When establishing the Committee, the
Board considered the best possible short-
and long-term outcome for citizens and
patients globally, the Company’s
shareholders and other stakeholders
in respect of
Vaxzevria.
Set out below are examples of how key stakeholders, s.172(1) duties and other
matters were considered by the Board when making its Principal Decisions in 2021.
For the s.172(1) statement, see page 70.
Corporate Governance Report
Principal Decisions
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Additional Information
Financial Statements
Corporate Governance
Strategic Report
Corporate Governance Report / Principal Decisions
Engaging with our workforce
AstraZeneca is committed to being a great
place to work. Engagement with employees
is an important element in ensuring an
environment in which all employees are
respected, where openness is valued,
diversity celebrated and every voice heard.
We rely on our global workforce to uphold
our Values, deliver our strategic priorities
and work to sustain and improve short- and
long-term performance. For AstraZeneca,
‘global workforce’ includes our full-time and
part-time employees, fixed-term workers and
external contractors working full- or part-time,
anywhere in the world.
The Directors believe that the Board as a
whole is responsible for gathering views of
the workforce and consequently chose not
to implement any of the three methods of
workforce engagement prescribed in the 2018
UK Corporate Governance Code. Instead, the
Board continues to utilise and develop the
various mechanisms and long-standing
channels of engagement in place across the
Group that enable and facilitate engagement
with the global workforce. These mechanisms
include the Board’s review of the global
workforce Pulse survey and of the Workforce
Culture reports. Board Directors also conduct
site visits, which facilitate understanding
of business operations and provide
opportunities for interactions between
Directors and the workforce, and engagement
with high-potential employees. Due to the
global COVID-19 pandemic, these face-to-
face engagements took place virtually in 2021.
For more information on how individual Committees
interact with the workforce, see the Audit Committee
Report from page 90 and the Directors’ Remuneration
Report from page 98.
Engaging with the wider workforce can
present challenges due to the size of the
workforce and the global footprint, as
well as the variety of roles throughout the
organisation. Virtual engagements have
helped ensure that individual Directors,
as well as Board Committees, have had
the opportunity to meet with a range of
employees from across the global workforce,
and to hear and understand their views.
The channels outlined on this page ensure
that the Board has direct access to the views
of the global workforce; provide meaningful
information and data that the Board can use
when considering the impact of its strategic
decisions on employees; and provide
opportunities for meaningful dialogue.
The Board considers these views and the
potential impacts on the workforce when
it makes key decisions.
For more information, see Be a Great Place to Work,
from page 40.
Workforce culture
During 2021, the Board continued to
periodically review the Workforce Culture
report, which demonstrated how our Values
and behaviours are embedded throughout
all levels of the workforce. Within the report,
there is a summary metrics dashboard,
which is divided into categories reflecting
key aspects of AstraZeneca’s culture
(Performance and Development, Integrity,
Engagement, Reputation, and Sustainability).
Where the Board has concerns that the
culture does not reflect our Values, the Board
seeks assurances from management that
remedial action has been taken and, where
necessary, requests senior management’s
attendance at Board meetings to discuss
corrective actions.
Employee opinion surveys (Pulse)
Twice a year the workforce is invited to take
part in an employee opinion survey, which
seeks employees’ views of the business.
The results are reviewed by management and
trends are monitored. The results are shared
with the Board, which enables the Directors
to understand the views and sentiments of
the workforce. In the November 2021 survey,
Alexion employees were invited to give their
views on working at AstraZeneca across
multiple categories such as Talent &
Development, Sustainability, Inclusion &
Diversity, and Purpose & Values.
87%
of employees stated they believe strongly
in AstraZeneca’s future direction and
key priorities in the November 2021
Pulse survey.
Virtual site visits and engagements with
high-potential employees
The Board, its Committees and individual
Directors have had numerous virtual
interactions to provide exposure to talent and
leadership, provide opportunities for dialogue,
and enable direct insight and understanding
into business operations.
Actions and outcomes
The Board considered the workforce
throughout its principal decisions in 2021.
Directors ensured that, where required,
queries raised during engagements were fed
back to management or discussed by the
Board. The Board received regular updates on
the steps taken by management to create safe
working environments and support the mental
and physical wellbeing of the workforce.
>10
virtual site visits and engagements with
high-potential employees.
Workforce Culture report and Annual
Global Remuneration Overview
The Board was provided with information
outlining progress against a range of metrics
related to workforce culture and engagement.
This information is provided biannually to
enable Directors to monitor trends and, if
required, take action. The Remuneration in the
wider context section from page 119 shows
how the workforce is rewarded in line with
our principles.
91%
of employees took part in the November 2021
Pulse survey.
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Corporate Governance
Corporate Governance Report
Principal Decisions
continued
2021 overview
During the year, the Board conducted the
annual evaluation of its own performance
and that of its Committees and individual
Directors. The 2021 evaluation was carried out
internally, although Lintstock Ltd (Lintstock),
a London-based corporate advisory firm that
provides objective and independent counsel
to leading European companies, provided
software and services for the evaluation
questionnaire. Lintstock has no other
commercial relationship with the Company
or any individual Directors. Based on Board
members’ responses to the web-based
questionnaire covering a wide range of topics,
Lintstock prepared a report which was
discussed by the Board at its meeting in
December 2021, and was used by the Chair
as the basis for individual conversations with
each Board member prior to the full Board
discussion. The Company’s last externally
facilitated Board evaluation occurred in 2020.
As part of each Director’s individual
discussion with the Chair during the Board
evaluation, his or her contribution to the work
of the Board and personal development
needs were considered. Directors’ training
needs are met by a combination of: internal
presentations and updates, and external
speaker presentations, as part of Board and
Board Committee meetings; specific training
sessions on particular topics, where required;
and the opportunity for Directors to attend
external courses at the Company’s expense,
should they wish to do so.
The Board intends to continue to comply with
the UK Corporate Governance Code guidance
that the evaluation should be externally
facilitated at least every three years and
expects to commission the next externally
facilitated review in 2023.
The Nomination and Governance Committee
also reviews the composition of the Board
to ensure that it has the appropriate expertise,
while also recognising the importance of
diversity.
For more information on the Nomination and Governance
Committee’s work, see the Nomination and Governance
Committee Report from page 86.
2021 Outcomes and actions against prior
year recommendations
>
The Board continues to operate effectively
with an atmosphere that enables open and
frank discussion, and its relationship with
management, including the SET, was highly
rated, although the continuing impact of
COVID-19 restrictions on Board dynamics
and management interactions was noted.
>
No significant points were raised regarding
the composition or diversity of the Board,
although both remain active considerations
in annual Board evaluations and the work of
the Nomination and Governance Committee.
>
The Board’s Committees, now supplemented
by the Sustainability Committee, which was
established in October 2021 and therefore not
included in the 2021 evaluation, continue to
operate effectively.
>
Each Director continues to perform
effectively and demonstrate commitment
to his or her role, as does the Chair of the
Board (whose evaluation by all other Board
members, absent the Chair, was led by the
senior independent Non-Executive Director).
>
The continuing COVID-19 restrictions in
2021 hindered efforts to address two
actions arising from the 2020 evaluation –
increasing opportunities for Board
interaction with stakeholders, and
re-assessing the format and cadence
of the annual schedule of Board meetings
– and these remain objectives as
restrictions ease in the future.
>
The Board’s visibility of how certain key
risks are identified and proactively
managed – the other theme arising from the
2020 evaluation – was commented on in the
2021 evaluation as an area for further focus,
drawing on experience from the pandemic
and matters relating to
Vaxzevria
in 2021.>
During 2022, the Board will review the
method used for engagement with the
Company’s workforce to assess whether
improvements can be made, and will
re-introduce more numerous and structured
interactions with employees, as COVID-19
restrictions ease.
>
The evaluation identified the need for
continued education and briefing sessions
to develop further Board members’
knowledge and understanding of rare
diseases and Alexion, AstraZeneca Rare
Disease, acknowledging that the
appointment of two new Board members
from Alexion during 2021 will also help to
underpin the Board’s level of expertise in
this area.
>
The Board’s oversight of succession
planning for the most senior Board roles,
which focused on the roles of CFO and
Chair of the Board in 2021, was highly rated,
but it was recognised that the Board needs
to re-establish a better balance of time
between overseeing SET succession plans,
as well as Board succession, during 2022.
As part of the Board performance
evaluation,Directors were asked
toconsiderthe following areas:
>
Board composition
>
Stakeholder oversight
>
Board dynamics
>
Meeting management and
support
>
Board Committees
>
Pandemic andacquisition
ofAlexion (casestudies)
>
Strategic oversight
>
Risk management and
internalcontrol
>
Succession planning and
peopleoversight
>
Priorities for change
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Additional Information
Financial Statements
Corporate Governance
Strategic Report
Corporate Governance Report / Board performance evaluation
Corporate Governance Report
Board performance evaluation
Composition of the Board
As part of its role, the Nomination and
Governance Committee is responsible for
reviewing the composition of the Board, to
ensure that it has the appropriate expertise
while also recognising the importance of
diversity. The Committee reviews the
composition of the Board using a matrix that
records the skills and experience of current
Board members, comparing this with the skills
and experience it believes are appropriate to
our overall business and strategic needs, both
now and in the future. The matrix is set out
on page 87. Any decisions relating to the
appointment of Directors are made by the
entire Board based on the merits of the
candidates and the relevance of their
background and experience, measured
against objective criteria, with care taken
to ensure that appointees have enough time
to devote to our business.
Inclusion and diversity
Diversity is integrated across our Code
of Ethics and associated workforce policy,
and we promote a culture of diversity,
respect and equal opportunity, where
individual success depends only on personal
ability and contribution. We strive to treat our
employees with fairness, integrity, honesty,
courtesy, consideration, respect, and dignity,
regardless of gender, race, nationality, age,
sexual orientation or other forms of diversity.
The Board is provided each year with a
comprehensive overview of the AstraZeneca
workforce, covering a wide range of metrics
and measures (including trends around gender
diversity, leadership, ethnic diversity and age
profile). The latest Hampton-Alexander
Report, published in February 2021, named
AstraZeneca PLC as one of the top 10 best
performers in the FTSE 100 for representation
of women on the combined executive
committee and their direct reports. For the
year ended 31 December 2021, women
represented 41.8% of the SET and its
leadership teams.
The Board views gender, nationality,
cultural and ethnic diversity among Board
members as important considerations when
reviewing its composition, and has met the
recommendations of the Hampton-Alexander
and Parker Reviews. Considering diversity in
a wider sense, the Board aims to maintain a
balance in terms of the range of experience
and skills of individual Board members, which
includes relevant international business,
pharmaceutical industry and financial
experience, as well as appropriate scientific
and regulatory knowledge. The biographies
of Board members set out on pages 74 and 75
give more information about current Directors
in this respect.
The Board has adopted an Inclusion and
Diversity Policy (the Policy), which is
applicable to the Board and its Committees.
The Policy reinforces the Board’s ongoing
commitment to all aspects of diversity and to
fostering an inclusive environment in which
each Director feels valued and respected.
While the Board appoints candidates based
on merit and assesses Directors against
measurable, objective criteria, the Board
recognises that an effective Board, with a
broad strategic perspective, requires diversity.
The Policy sets out the Board’s aim to
maintain a composition of at least 33%
femaleDirectors and at least one Director
from an ethnic minority background.
ThePolicy provides a commitment to use
atleast one professional search firm, which
has signed up to the ‘Voluntary Code
ofConduct for Executive Search Firms’,
tohelp recruit Directors from a broad,
qualified group of candidates, to increase
diversity of thinking and perspective.
Nomination and
Governance Committee
members
>
Leif Johansson (Chair)
>
Philip Broadley
>
Michel Demaré
>
Nazneen Rahman
The Nomination and Governance
Committee’s terms of reference
are available on our website,
www.astrazeneca.com.
“ The Nomination
and Governance
Committee
recommends to the
Board new Board
appointments and
considers, more
broadly, succession
plans at Board level.”
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Corporate Governance
Nomination and Governance
Committee Report
TheBoard’s approach to inclusion and
diversity continues to yield successful
results.Currently, 36% of the Company’s
Non-Executive Directors are women,
andwomen make up 38% of the full Board.
This meets the Policy’s aim of 33% female
representation on the Board.
The Board’s Inclusion and Diversity Policy can be found
on our website, www.astrazeneca.com.
Information about our approach to diversity in the
organisation below Board level can be found in the
Our People section, from page 41.
Appointments during the year
During 2021, and effective 1 August in each
case, Aradhana Sarin was appointed as an
Executive Director and CFO, succeeding
Marc Dunoyer, and Andreas Rummelt was
appointed as an independent Non-Executive
Director. Dr Sarin was previously EVP, CFO
of Alexion, and Dr Rummelt had been a
member of Alexion’s board since 2010.
The appointment processes were led by
the Committee and involved meetings with
multiple Directors.
Dr Sarin’s previous experience as a CFO,
extensive knowledge of Alexion, global
healthcare systems, capital markets and
strategic transactions were important factors
in the Committee’s decision to recommend
her to the Board for appointment as CFO.
Knowledge of Alexion was similarly a key
factor behind its recommendation to appoint
Dr Rummelt, alongside the additional
industry-specific experience he brings to
the Board, in particular technical R&D,
manufacturing and quality assurance
expertise. The Board approved the
Committee’s recommendations in respect
of these appointments.
Non-Executive Directors’ inductions
and training
Newly appointed Non-Executive Directors
are provided with comprehensive information
about the Group and their role as
Non-Executive Directors. They also typically
participate in tailored induction programmes
that take account of their individual skills
and experience. On his appointment as an
independent Non-Executive Director,
Dr Rummelt commenced an ongoing
induction programme intended to provide
an understanding of the Group, as well as of
his duties as a Director of a listed company.
Dueto COVID-19 restrictions, thisinduction
programme is mainly taking place virtually,
typically by videoconference, until itis
possible to recommence face-to-face
meetings and site visits. Although elements
of his induction will be adjusted for his existing
expertise and Committee membership, key
areas covered during 2021 and continuing
into2022 include:
>
meeting with members of the Board,
SETand other senior management
>
meeting with external legal advisers
>
meeting with the external auditor
>
when possible, visits to various sites
including R&D centres, commercial sites
and operations facilities inthe UK, Sweden,
the US and elsewhere
>
access to a reading room which provides
information on the Group, including
financial performance, pipeline information,
policies including the Global Standard on
Dealing in AstraZeneca Securities and rules
relating to inside information, investor and
analyst reports, and media updates. In
addition, thereading room contains
guidance on directors’ duties and listed
company requirements.
Ongoing training and development
AstraZeneca is committed to developing
a culture of lifelong learning, including for
Directors. At least annually, the Chair
discusses with each Director his or her
contribution to the work of the Board and
personal development needs. Directors’
training needs are met by: acombination
of internal presentations and updates, and
external speaker presentations, as part of
Board and Board Committee meetings;
specific training sessions on particular topics,
where required; and the opportunity for
Directors to attend external courses at the
Company’s expense, should they wish to do
so. In addition, Directors are encouraged to
attend site visits during the year. During these
visits, Directors meet withlocal management
and have tours ofAstraZeneca sites and
facilities, aswellas those of our strategic
partners. Thesesitevisits further Directors’
understanding of theGroup’s business and
operations, aswellas providing an insight
into the particular challenges faced locally.
Additionally, such visits provide Directors
withan opportunity to engage with key
stakeholders. As mentioned elsewhere in
this report, COVID-19 restrictions significantly
curtailed Board members’ ability to travel for
site visits during 2021, but such visits will
recommence when possible.
Succession planning
The Nomination and Governance Committee
considers both planned and unplanned
(unanticipated) succession scenarios, and
met five times in 2021. The Committee split
the majority of its time between succession
planning for Non-Executive Directors,
successfully concluding succession plans
for the role of CFO, and continued routine
succession planning for the roles of Chair of
the Board and CEO. The search firm Spencer
Stuart was engaged to assist the Committee
withitswork. Spencer Stuart periodically
undertakes executive search assignments
forthe Company and has no other connection
with AstraZeneca or its individual Directors.
Our search for a Chair of the Board as part
of routine succession planning is proceeding
well, led by Philip Broadley in his capacity as
senior independent Non-Executive Director,
and he chairs the Committee for this part of
its agendas. We have identified a shortlist of
strong candidates, and meetings between
them and Board members started to take
place in the fourth quarter of 2021.
Corporate governance
The Nomination and Governance Committee
also advises the Board periodically on
significant developments in corporate
governance and the Company’s compliance
with the UK Corporate Governance Code.
Seefrom page 77 for the Company’s
statement of compliance with the UK
Corporate Governance Code during 2021.
Leif Johansson
Chair
Non-Executive Directors’ experience,
as at 31 December 2021
Commercial
Financial Reporting
Management
Sales & Marketing
Tech & Digital
Business
Science
Regulatory
Pre-AZ Pharma
Biologics
Medical Doctor/Physician
Industry-specic
US
Europe
Asia
Geographic
11
5
8
3
5
6
0
8
3
3
8
9
7
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AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Nomination and Governance Committee Report
88
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Activities during the year
The Science Committee held five meetings
in 2021, virtually, as a result of the global
COVID-19 pandemic.
Key areas of focus for the Science
Committeein 2021 included:
>
AstraZeneca R&D strategic science
capabilities:
including digital health,
data science and artificial intelligence,
knowledge graphs, T-cell circuits and
engagers and antibody drug conjugates.
>
Alexion R&D:
providing an in-depth
reviewand introduction for the Science
Committee members of the Alexion
portfolio, its scientific capabilities,
talentand organisation.
>
Corporate scorecard outturn and goal
setting:
providing insight and feedback to
the Remuneration Committee in support of
2021 achievements and 2022 goal setting.
>
In-licensing agreements:
including a
review for the Board of the scientific cases
for a global development and
commercialisation agreement for
eplontersen, a liver-targeted antisense
oligonucleotide (ASO), TTR in Phase III
development with Ionis Pharmaceuticals
and an exclusive global collaboration and
licence agreement with Neurimmune AG
for NI006, an investigational human
monoclonal antibody currently in Phase Ib
development for the treatment of
transthyretin amyloid cardiomyopathy
(ATTR-CM).
Nazneen Rahman
Chair of the Science Committee
Role of the Committee
The Science Committee’s core role is to
provide assurance to the Board regarding the
quality, competitiveness and integrity of the
Group’s R&D activities. This is done by way of
meetings and dialogue with our R&D leaders
and other scientist employees, when
circumstances allow visits to our R&D sites
throughout the world, and review and
assessment of:
>
the approaches we adopt in respect of
our chosen therapy areas
>
the scientific technology and R&D
capabilities we deploy
>
the scientific strategy for maintaining our
pipeline and competitiveness
>
the decision-making processes for R&D
projects and programmes
>
the quality of our scientists, their career
opportunities and talent development
>
benchmarking against industry and
scientific best practice, where appropriate.
The Science Committee periodically reviews
important bioethical issues that we face and
assists in the formulation of, and agrees on
behalf of the Board, appropriate policies in
relation to such issues. It also considers future
trends in medical science and technology. The
Science Committee does not review individual
R&D projects but does review, on behalf of the
Board, the R&D aspects of specific business
development or acquisition proposals and
advises the Board on its conclusions.
“ The Science
Committee’s core
role is to provide
assurance to the
Board regarding
the quality,
competitiveness
and integrity of
the Group’sR&D
activities.”
Science Committee
members
>
Nazneen Rahman (Chair)
>
Euan Ashley
>
Geneviève Berger
1
>
Diana Layeld
2
>
Tony Mok
>
Marcus Wallenberg
>
EVP, Oncology R&D
3
>
EVP, BioPharmaceuticals
R&D
3
1
Boardon 11 May 2021
2
1October2021
3
The full role of the Science Committee is
set out in its terms of reference, available
at www.astrazeneca.com.
Science Committee
Report
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Financial Statements
Corporate Governance
Strategic Report
Sustainability Committee Report
understanding to Board members of
sustainability initiatives, their progress,
who executes them, and how this is done.
Activities during the year
Following a number of introductory meetings
and discussions to develop the role and
operation of the Committee, the full
Committee met formally for the first time in
December 2021. Its considerations included:
>
Sustainability strategy:
an overview of
the materiality refresh undertaken in 2021.
This exercise updated the materiality
assessment undertaken in 2018, to identify
the areas that are of most importance to
AstraZeneca and its stakeholders now,
and continues to guide the strategy. More
information about the materiality refresh
is set out on page 30.
>
Sustainability targets:
consideration
of Ambition Zero Carbon targets for
Performance Share Plan awards.
>
Finance
: an overview of the investment
behind Ambition Zero Carbon and
discussion of initiatives to further reduce
CO
2
emissions over time.
>
Investor relations update:
an update on
investor sentiment and an overview of our
engagement with investors on sustainability
matters over the year.
>
Disclosures:
a review of draft disclosures
relating to sustainability, including the
Sustainability Report and TCFD disclosures.
I look forward to continuing to lead this
Committee and developing its key role in
AstraZeneca’s sustainability governance
framework in 2022.
Nazneen Rahman
Chair of the Sustainability Committee
Chair’s introduction
I took on responsibility for overseeing
sustainability matters on behalf of the
Board from January 2021. This position
was previously held by Geneviève Berger,
Non-Executive Director, who retired from the
Board at the 2021 AGM. Since 2015, this role
had formed a key part of our sustainability
governance framework, providing an
additional conduit between the Board and
sustainability activities in the business, in
addition to the regular direct interactions that
take place between the EVP Sustainability &
Chief Compliance Officer and the Directors at
both Board and Audit Committee meetings.
This year, the existing governance
arrangements have evolved naturally to
reflect the ever-increasing significance of
sustainability to AstraZeneca’s business, and
the increasing time commitment that oversight
of sustainability matters demands – for
example, increased reporting requirements
and delivery of our Ambition Zero Carbon
programme. In October 2021, the Board
constituted a new Board Committee – the
Sustainability Committee – consisting of
myself as Chair, Sheri McCoy, Andreas
Rummelt and Marcus Wallenberg who bring
a breadth of expertise and experience in
sustainability matters.
AstraZeneca’s sustainability strategy will
continue to be developed by the SET and
approved by the full Board. The Sustainability
Committee’s role is to monitor the execution
of that strategy, to oversee the communication
of our sustainability activities with our
stakeholders and to provide input to the
Board and other Board Committees on
sustainability matters as required. Committee
meetings provide an opportunity for Committee
members to interact closely with those
charged with executing our sustainability
strategy, and thereby bring a deeper
“ At AstraZeneca
we are committed
to operating in a
way that recognises
the interconnection
between business
growth, the needs
of society and
the limitations
of our planet.”
Sustainability
Committeemembers
>
Nazneen Rahman (Chair)
>
Sheri McCoy
>
Andreas Rummelt
>
Marcus Wallenberg
Standing attendees at Committee meetings
include the EVP, Sustainability & Chief
Compliance Ocer, the EVP Operations & IT
and the VP Global SHE & Operations
Sustainability.
The full role of the Sustainability
Committee is set out in its terms
of reference, available at
www.astrazeneca.com.
Sustainability
Committee Report
Of particular note in 2021, the Committee
dedicated significant time to:
>
the review of matters related to the
acquisition and integration of Alexion,
including reviewing the shareholder
documents, monitoring the implications on
financial reporting of the combined Group,
and reviewing the risk management and
financial control environments; and
>
monitoring the financial reporting
implications of
Vaxzevria
, the AstraZeneca
COVID-19 vaccine, including supply
agreements and inventory. The Committee
has focused considerable attention on
ensuring a clear understanding of the
impact of vaccine arrangements on the
Group’s financial position and performance,
and ensuring disclosures are appropriate.
We hope shareholders find this Report
useful and informative, and, as ever, welcome
any feedback.
Philip Broadley
Chair of the Audit Committee
Chair’s introduction
Welcome to the Report of the Audit
Committee (the Committee). This Report
describes the work of the Committee and
focuses on the significant matters it
considered during 2021.
With COVID-19 restrictions continuing to
impact Committee members’ ability to meet
in-person, we have carried on meeting
virtually and have worked hard to ensure that
our discussions and dialogue are as effective
as in person meetings, which we look forward
to resuming as soon as practicable. We
believe that this has enabled us to continue to
provide the level of oversight and challenge to
management that is required of the Committee.
Committee meeting agendas through the
year include standing items to ensure the
Committee is fulfilling its regular responsibilities,
as well as ad hoc items that either require the
Committee’s attention or allow the Committee
to gain deeper insight into certain areas of the
business or specific matters. We have also
arranged numerous virtual interactions with
the business outside of formal Committee
meetings to enhance the Committee’s
understanding of the business and provide
valuable insights about the key issues and
challenges relating to the wider organisation.
“
In 2021 the Committee
gave particular attention
to the presentation of
the Alexion acquisition
and accounting for the
production of
Vaxzevria
,
while continuing its
regular oversight of the
Company’s internal
controls and nancial
reporting.”
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Report
Audit Committee members
>
Philip Broadley (Chair)
>
Michel Demaré
>
Deborah DiSanzo
>
Sheri McCoy
Routine attendees at Committee meetings
include: the CFO; the General Counsel; the
EVP Sustainability and Chief Compliance
Ocer; the VP Ethics & Transparency and
Deputy Chief Compliance Ocer; the VP, IA;
the SVP Finance, Group Controller; and the
Company’s external auditor. The Committee,
and separately the Committee Chair, also
meet privately and on an individual basis
with attendees which helps ensure the
eective ow of material information between
the Committee and management. The CEO
and other members of the SET attend when
required by the Committee.
The full role of the Audit Committee is set
out in its terms of reference, available at
www.astrazeneca.com.
Committee overview
Composition of the Committee
In December 2021 the Board determined the
Committee met the UK and US composition
requirements by virtue of Philip Broadley and
Michel Demaré having recent and relevant
financial experience for the purpose of the UK
Corporate Governance Code (the Code), having
competence in accounting and/or auditing for
the purpose of the Disclosure and Transparency
Rules, and being financial experts for the
purposes of the Sarbanes-Oxley Act (SOx).
The Board also determined that all members
of the Committee are independent for the
purposes of the Code and that the Committee
members as a whole have competence
relevant to the sector in which the Company
operates, by virtue of their experience of
working in science-driven, healthcare and/or
pharmaceutical industries or a result of their
tenure with AstraZeneca.
The Committee members’ qualifications, skills
and experience are detailed in their biographies
on pages 74 and 75 and Committee meeting
attendance is shown on page 73.
Role of the Committee
The Committee’s main responsibilities include
monitoring the integrity of financial reporting
and formal announcements relating to financial
performance, reviewing the effectiveness of
internal controls and risk management systems,
and overseeing the external and internal audit
processes. The Committee reports to the Board
the principal matters it considers and any
significant concerns it has or that have been
reported to it. Further detail about the
Committee’s role and work during the year
is set out below.
Activities during the year
Financial reporting
Effective internal controls, appropriate
accounting practices and policies, and the
exercise of experienced judgement by the
Committee and the Board underpin
AstraZeneca’s financial reporting integrity.
The Committee reviewed key elements of the
Financial Statements and the estimates and
judgements contained in the Group’s financial
disclosures, as well as considering the
appropriateness of management’s and the
external auditor’s analysis and conclusions on
judgemental accounting matters. The significant
financial reporting issues considered are
described in detail in the table from page 93.
Further information on the significant accounting
matters considered is included in the Financial
Review under Critical accounting policies,
and estimates from page 66 and within our
Group Accounting policies from page 138.
The Committee also considered the
completeness and accuracy of the Group’s
financial performance against its internal
and external key performance indicators.
The Committee discussed and reviewed the
preparation of the Directors’ Viability
statement and considered the adequacy
of the analysis supporting the assurance
provided by that statement, as well as the
going concern assessment and adoption of
the going concern basis in preparing this
Annual Report and the Financial Statements.
More information on the basis of preparation of Financial
Statements on a going concern basis is set out on
page 213 and in the Financial Statements on page 138.
The Committee considered the external
auditor’s reports on its audit of the Group
Financial Statements, as well as reports from
management, IA, Global Compliance and the
external auditor on the effectiveness of our
system of internal controls and, in particular,
our internal control over financial reporting.
This included consideration of compliance
with applicable provisions of the Sarbanes-
Oxley Act – in particular, the status of
compliance with the programme of internal
controls over financial reporting implemented
pursuant to section 404 of that Act. Following
the acquisition of Alexion, management
recommended excluding Alexion from the
report on Internal Controls Over Financial
Reporting for the year of acquisition,
as allowed by the SEC. The Committee
considered practice in this area, the needs
of various stakeholders and the workload
required. The Committee concurred with
management in taking the exemption, as
management works to understand and
integrate Alexion’s controls with the
AstraZeneca framework.
The Committee also spent significant time
during the year discussing financial reporting
considerations relating to the acquisition of
Alexion, including the purchase price
accounting valuation and potential impacts
on segmental reporting.
The Committee continued to dedicate
significant time to considering the effects
of COVID-19 on the Company’s business,
internal controls and financial reporting.
The Committee is aware of the significance
of vaccine arrangements, and the need to
ensure a clear understanding of the impact
on the Group’s financial position and
performance, given the wide public interest in
vaccine delivery.
reporting issues considered is set out in the table
from page 93.
Risk identification and management
The Committee continued its regular reviews
of the Group’s approach to risk management,
the operation of its risk reporting framework
and risk mitigation. This included
consideration of how the risk management
process was embedded in the Group and the
Committee assuring itself that management’s
accountability for risks was clear and
functioning.
When identifying risks, the Committee
considers the total landscape of risks.
The most significant of these, as measured
through potential impact and probability,
are our Principal Risks. We then consider
those specific risks which are challenging
our business presently, our key active risks.
Finally, we scan the horizon and identify risks
which may challenge us in the future, our
emerging risks. This framework provided the
context for the Committee’s consideration
of the Directors’ Viability statement. The
Directors’ Viability statement is underpinned
by the assurance provided through a ‘stress
test’ analysis under which key profitability,
liquidity and funding metrics are tested
against severe downside scenarios.
Each of these scenarios assumes that the
associated risks crystallise and that
management will take mitigating actions against
those risks. The Committee considered in
detail the validity of each scenario. This
included obtaining additional analysis from
management as to the indirect or unintended
consequences of its proposed mitigating
actions including, for example, assessing
the likely response of a broader range of
stakeholders. The Committee also assessed
whether the proposed mitigations were viable.
The Committee is updated on key active and
emerging risks facing the Company through
quarterly risk management reports from the
CFO. During the year, the Committee
considered the particular risks associated
with operating during the pandemic, including
maintaining manufacture and supply of the
Company’s products in all markets, and the
impact of the acquisition of Alexion on the
landscape of risks.
The Committee’s consideration of risk
management was supported by ‘deep dive’
reviews of key topics and meetings with
teams from within the business, as well as
its consideration of cyber risks, as further
described on page 92.
Further information about the Principal Risks faced by
the Group and the Viability statement is set out in the
Risk Overview section from page 48.
Legal and Compliance
The Committee received quarterly reports
from the General Counsel to monitor the
status of significant litigation matters and
governmental investigations. It also received
quarterly reports of work carried out by IA
and Finance, including the status of follow-up
actions with management. Quarterly reports
from Global Compliance provided oversight of
key compliance incidents (both substantiated
and unsubstantiated), trends arising and the
dispersion of incidents across our business
functions and management hierarchy. The
reports included any corrective actions taken
so that the Committee could assess
the effectiveness of controls, and monitor
and ensure the timeliness of remediation.
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The Committee considered the geographic
presence, reach and capabilities of the IA and
Compliance functions and the appropriateness
of the Group’s resource allocation for these
vital assurance functions.
The Committee’s priorities include overseeing
compliance with AstraZeneca’s Code of
Ethics, and ensuring high ethical standards
and that we operate within the law in all
countries where we operate. During the year,
the Committee reviewed data from reports
made by employees via the AZethics helpline,
online facilities and other routes regarding
potential breaches of the Code of Ethics,
together with the results of enquiries into
those matters.
The Committee continued to monitor and
review the effectiveness of our anti-bribery
and anti-corruption controls across the
Group, prioritising its focus on countries/
regions where we have significant operations
and countries in which doing business is
generally considered to pose higher
compliance risks. The Committee also
discussed the monitoring, review, education
and improvements made to support assurance
that the risk of modern slavery and human
trafficking is eliminated, to the fullest extent
practicable, from AstraZeneca’s supply chain.
For more information on our Code of Ethics, see page 47,
and on Anti-bribery and anti-corruption, see page 79.
Internal audit (IA)
The Committee carried out the annual
effectiveness review of IA by considering
its performance against the internal audit
plan and key activities. In 2021, IA provided
assurance over compliance with significant
policies, plans, procedures, laws and
regulations, as well as risk-based audits
across a broad range of key business
activities, and continued its thematic reporting
to the business. The 2021 audit plan was
aligned to our key active risks and wider risk
taxonomy. IA also operates an emerging risk
process which was used to dynamically adapt
the 2021 audit plan to provide focused,
real-time assurance over new and evolving
risks impacting the Company. This included
a review of the transition planning activities
for the integration of Alexion and an audit over
the controls around vaccine financing. The
Committee noted IA’s continued contributions
in supporting and delivering value to the
business and the Committee during the year.
The Committee supports IA’s continued
efforts to deploy its resources in line with the
shape and size of the overall organisation and
was satisfied with the quality, experience and
expertise of the IA function.
External audit
The Company’s external auditor, PwC,
provided quarterly reports to the Committee
over key audit and accounting matters, and
business processes, internal controls and
IT systems.
The Committee oversaw the conduct,
performance and quality of the external audit,
in particular through its review and challenge
of the coverage of the external auditor’s audit
plan and subsequent monitoring of their
progress against it. The Committee maintained
regular contact with PwC through formal and
informal reporting and discussion throughout
the year, with a continued focus on maintaining
audit efficiency and quality whilst working
arrangements continue to involve an element
of remote working. The Committee also
sought management’s feedback on the
conduct of the audit and considered the
level of and extent to which the auditors
challenged management’s assumptions.
The Committee engaged with the external
auditor in a pilot programme on using Audit
Quality Indicators (AQIs). The external auditor
and the Committee agreed five initial AQIs
to be monitored and reported from 2021.
In addition the Audit Committee Chair met
with certain PwC audit team members during
the year to gain a deeper understanding of the
work performed and audit effort required on
one of the Group’s more significant areas of
estimation, being the Group’s impairment
assessment.
The Committee reviewed audit and non-audit
fees of the external auditor during the year,
including the objectivity and independence of
the external auditor through the application of
the Audit and Non-Audit Services Pre-Approval
Policy, as described further on page 97.
Further information about the audit and non-audit fees for
2021 is disclosed in Note 31 to the Financial Statements
on page 196.
Cybersecurity and information governance
The Committee receives annual presentations
from the Chief Digital Officer and Chief
Information Officer and her team. In 2021,
the Committee reviewed the top cyber risks
facing AstraZeneca and the effectiveness of
our procedures to defend our IT systems
against increased levels and new forms of
attack from external agents. The Committee
also considered steps being taken to reduce
the risk of technology disruption at
AstraZeneca sites.
Engagement with employees and other
stakeholders
The Committee regularly interacts with
members of management below the SET and
seeks wider engagement with the Group’s
employees and other stakeholders. Due to
COVID-19 travel restrictions and social
distancing measures, the Committee
undertook a series of virtual interactions
with a wide range of teams from across the
organisation. The Committee also arranged
‘deep dive’ reviews of key topics and
interactions to follow up on certain IA findings,
to better understand identified areas for
improvement and interrogate the business’s
response to those findings.
In 2021, these interactions and reviews
involved Committee members meeting with
representatives from the following teams:
IT/IS, Operations, Alexion corporate functions
(finance, accounting, tax, treasury, internal
audit, compliance and legal); the Canadian
marketing company; the Italian marketing
company; the Malaysian marketing company;
the Oncology Business Unit; Procurement;
and the Turkish marketing company. The
breadth of these interactions is crucial as it
enhances the Committee’s understanding of
the business and provides valuable insights
into the key issues and challenges relating to,
and current and emerging risks associated
with, our activities in these areas. The
Committee welcomes the opportunity to
engage directly with employees in these
meetings which provide an opportunity to
gauge employee sentiment and hear their
views directly. The Committee also uses
these interactions to communicate the
importance it attaches to compliance and
our ‘Speak Up’ culture.
Reporting and regulatory environment
The Committee has kept abreast of
developments in the reporting and regulatory
environment. This has included updates on
the Task Force for Climate-related Financial
Disclosures framework and AstraZeneca’s
priorities in preparation for compliance,
alongside consideration of reporting
implications. The Committee also oversaw
AstraZeneca’s response to the consultation
on the BEIS White Paper on Restoring Trust
in Audit and Corporate Governance, and
considered the Company’s 2020 Annual
Report disclosures in light of the Financial
Reporting Council’s (FRC) review of how
issuers had incorporated the new corporate
governance disclosures within their 2019
annual reports, as well as considering the
observations set out in a number of thematic
reviews issued by the FRC during 2021.
Committee performance
The Committee conducted the annual
evaluation of its own performance, with each
Committee member and other attendees
responding to a questionnaire prepared by a
third party. The results were reported to and
discussed with the Committee and the Board.
The Committee was rated very highly overall.
Meetings were seen to be well structured,
organised and managed. There was a high
level of engagement from the Committee
members. The Committee was seen to benefit
from excellent technical skills, very in-depth
discussions and strong leadership from the
highly-skilled Chair. The Committee’s effective
adaptation to virtual meetings was also noted.
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continued
Matter considered Committee’s conclusion and response
Acquisition
accounting
See Financial Review
from page 52 and Note 27
to the Financial Statements
from page 178.
AstraZeneca completed the acquisition of Alexion in July
2021 for total consideration of $41.1 billion.
At the date of acquisition, AstraZeneca has undertaken
a fair valuation of the identifiable assets and liabilities
acquired, the consideration paid and the resultant goodwill
and recorded the necessary accounting entries in
accordance with IFRS 3 Business Combinations.
Furthermore, from the date of acquisition onwards,
AstraZeneca has consolidated Alexion’s results into the
Group’s financial reporting utilising data transfer processes
and financial controls that were thoroughly tested and
validated pre-close.
The Committee received regular reports from management
during the year providing updates on the transition planning
and day one financial readiness for the acquisition. In
particular, the Committee focused on securing a stable
and controlled financial transition, on ensuring an effective
control environment irrespective of the SOx exemption
being applied to Alexion controls, and ongoing delivery
of external reporting commitments.
The Committee considered the approach to the purchase
accounting valuation and concurred with management
on the areas of estimation or judgement. The Committee
reviewed the final acquisition accounting and disclosures
and considered management’s proposed subsequent
treatment of intangible asset amortisation, fair value uplift
of inventory and presentation of future acquisition-related
costs under our policy for Core financial measures.
Vaccine and other
COVID-19 activities’
accounting
Accounting Policies
from page 138.
AstraZeneca continued to enter into arrangements with
government bodies, certain vaccine alliances, and external
contract manufacturers as part of the Group’s
determination to develop and supply
Vaxzevria
, the
AstraZeneca COVID-19 vaccine. AstraZeneca has supplied
a significant proportion of contracted volumes in the year,
realising product sales of $3,917 million over the year.
Some of these government arrangements included grants
or advanced funding to support both research and
development costs and the establishment of supply chains.
Each government and alliance arrangement required a
thorough and considered assessment to determine
different performance obligations and ensure appropriate
accounting treatment.
During the last quarter of the year AstraZeneca
commenced supply of
Vaxzevria
on commercial terms as it transitioned the vaccine activities towards business
as usual, with moderate profitability. Product Sales of
$1,781 million in the last quarter came from a blend of
early pandemic (not-for-profit) contracts and recent orders.
In the year, the majority of doses delivered related to
pandemic (not-for-profit) contracts.
The Committee is aware of the significance of vaccine
arrangements, and of the wider public interest in vaccine
accounting, and so focused considerable attention on
ensuring a clear understanding of the impact on the
Group’s financial position and performance.
The Committee was presented with a detailed assessment
of areas of increased risk conducted by management and
has been provided with updates throughout the year.
The Committee receives quarterly updates on the status
(and any financial reporting implications) of vaccine
arrangements and transactions.
The Committee also discussed and challenged the
applicable accounting principles applied, which were
assessed to be appropriate.
The Committee recognised management’s proactive
assessment and continual close monitoring of the
COVID-19 pandemic on the areas of increased risk, as
noted in the Group’s Accounting Policies from page 138.
The Committee also reviewed the disclosures that have
been included in this Annual Report relating to the vaccine
supply arrangements and concluded these to be appropriate.
Signicant nancial reporting issues considered by the Committee in 2021
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Signicant nancial reporting issues considered by the Committee in 2021
continued
Matter considered Committee’s conclusion and response
Alternative
performance
measures (APMs)
See Financial Review
from page 52.
AstraZeneca reports APMs to provide helpful
supplementary information to the IFRS measures to
enable a better understanding of the Group’s financial
performance and position. In 2021, APMs were further set
out to report the impact of vaccine activity separate from
the rest of the business.
The acquisition of Alexion resulted in more significant
items being classified as non-core, especially relating to
the unwind of fair value uplift of inventory, amortisation of
allocated fair value of purchased intangible assets and
share-based payment charges. These items, coupled with
material impairments booked during the year, resulted in
an IFRS quarterly loss and a Core quarterly profit.
Management carefully analyses the presentation of
various items to ensure it is fair and balanced, and follows
guidelines issued by ESMA and the SEC, as well as FRC
thematic reviews.
The Committee carefully considered management’s
presentation of vaccine performance at a revenue level and
deemed it appropriate in light of the regulatory and investor
focus on vaccine performance.
The Committee further considered management’s
assessment and recommendation to present identified
Alexion items as non-core, and concurred with
management that the presentation was consistent with
previous precedent and enabled a better comparison
of performance across periods.
The Committee reviewed proposed disclosures for
non-GAAP items in line with the various regulatory
guidance, and concurred with management that the
presentation enabled additional helpful guidance.
Valuation of
intangible assets
See Financial Review
from page 52 and
Note 10 to the
Financial Statements
from page 156.
The Group carries significant intangible assets on its
balance sheet arising from the acquisition of businesses
and IP rights to medicines in development and on the
market. Each quarter, the CFO reports on the carrying
value of the Group’s intangible assets as well as the
specific assets identified as at risk of impairment. In
respect of intangible assets that are identified as at risk of
impairment, the Committee receives information on the
difference between the carrying value and management’s
current estimate of discounted future cash flows for ‘at risk’
products (the headroom). Products will be identified as ‘at
risk’ because the headroom is small or, for example, in the
case of a medicine in development, there is a significant
development milestone such as the publication of clinical
trial results which could significantly alter management’s
forecasts for the product. The reviews also cover the
impact on any related contingent consideration arising
from previous business combinations.
The Committee considered the impairment reviews of the
Group’s intangible assets. Impairments of $1,492 million
arising from the portfolio prioritisation of strategic projects
were considered in the third quarter, with the key product
being Ardea’s impairment of $1,172 million due to the
decision to discontinue development of verinurad.
The Committee assured itself of the integrity of the Group’s
accounting policy and models for its assessment and
valuation of its intangible assets, and related headroom,
including understanding the key assumptions and
sensitivities within those models, along with the internal
and external estimates and forecasts for the Group’s cost
of capital relative to the broader industry. The Committee
was satisfied that the Group had appropriately accounted
for the identified impairments.
Revenue
recognition
See Financial Review
from page 52 and
Note 1 to the Financial
Statements from
page 145.
The US is our largest single market and sales accounted for
32.8% of our Product Sales in 2021. Revenue recognition,
particularly in the US, is affected by rebates, chargebacks,
returns, other revenue accruals and cash discounts.
Following the Alexion acquisition, these revenue
adjustments include items related to Rare Disease products.
The Committee pays attention to management’s estimates
of these items, its analysis of any unusual movements and
their impact on revenue recognition.
The Committee receives regular reports from management
and the external auditor on this complex area. The US
market remains highly competitive with diverse marketing
and pricing strategies adopted by the Group and its peers.
The Committee recognised the close monitoring and
control by management and the continuous drive to
improve the accuracy in forecasting for managed market
rebates and excise fees, which has supported a
stabilisation of the overall gross-to-net deductions.
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Report
continued
Matter considered Committee’s conclusion and response
Litigation and
contingent
liabilities
See Note 30 to the
Financial Statements
from page 189.
AstraZeneca is involved in various legal proceedings
considered typical to its business and the pharmaceutical
industry as a whole, including litigation and investigations
relating to product liability, commercial disputes,
infringement of IP rights, the validity of certain patents,
anti-trust law, and sales and marketing practices.
The Committee was regularly informed by the General
Counsel of, and considered management and the external
auditor’s assessments of, IP litigation, actions, governmental
investigations, and claims that might result in fines or
damages against the Group, to assess whether provisions
should be taken and, if so, when and in what amount.
Of the matters the Committee considered in 2021, the more
significant included: the European Commission Vaccine
Litigation; the continued defence of the
Nexium
and
Prilosec
product liability litigation in the US; the Array and
Amplimmune commercial litigations; and patent challenges
relating to
Symbicort
,
Tagrisso
,
Enhertu
,
Farxiga
and
Ultomiris
in the US.
The Committee was satisfied that the Group was effectively
managing its litigation risks including seeking appropriate
remedies and continuing to defend its IP rights vigorously.
Tax charges
and liabilities
See Note 4 to the
Financial Statements
from page 149.
Approach to Taxation,
which was published
in December 2021 and
covers its approach to
governance, risk
management and
compliance, tax
planning, dealing with
tax authorities and the
level of tax risk the
Group is prepared to
accept, can be found
on our website,
www.astrazeneca.com.
The Group has business activities around the world and
incurs a substantial amount and variety of business taxes.
AstraZeneca pays corporate income taxes, customs duties,
excise taxes, stamp duties, employment and many other
business taxes in all jurisdictions where due. In addition,
we collect and pay employee taxes and indirect taxes such
as value-added tax. The taxes the Group pays and collects
represent a significant contribution to the countries and
societies in which we operate. Tax risk can arise from
unclear laws and regulations as well as differences in
their interpretation.
The Committee reviews the Group’s approach to tax,
including governance, risk management and compliance,
tax planning, dealings with tax authorities and the level of
tax risk the Group is prepared to accept.
During 2021, the Committee undertook a review of
Alexion’s tax affairs and the tax implications of integrating
it into the Group. In addition at its December meeting, the
Committee considered the potential impact of US tax
reform on the Group which would arise should substantive
enactment occur.
The Committee was satisfied with the Group’s practices
regarding tax liabilities, including, most notably, its
response to developments in the corporate income tax
environment.
Segmental
reporting
See the Key Judgement
within Note 6 to the
Financial Statements
on pages 152.
The nature of the Group’s business changed during the
year, with material sales of
Vaxzevria
and the acquisition
of Alexion.
The Group has carried out significant
Vaxzevria
transactions in the period, and externally reported
performance excluding the impact of these transactions
to align to guidance issued. The acquisition of Alexion
resulted in the addition of the Rare Disease Area to
AstraZeneca’s portfolio, with the Alexion CEO joining
the SET and reporting to the CEO.
Management has reviewed both changes in the year and
determined they do not result in a separate segment based
on key decisions on resource allocation and performance
monitoring being carried out at a Group level by the SET.
The Committee received reports from management
regarding considerations for segmental reporting arising
from significant changes in the business.
The Committee considered the analysis provided by
management related to the reporting of vaccines and
acquisition of Alexion, and concurred with management
that presenting AstraZeneca’s performance under one
segment was appropriate.
Signicant nancial reporting issues considered by the Committee in 2021
continued
95
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Audit Committee Report
Fair, balanced and understandable
assessment
As in previous years, at the instruction of
the Board, the Committee undertook an
assessment of this Annual Report to ensure
that, taken as a whole, it is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Company’s position and performance,
business model and strategy. The Committee
reviewed the Company’s governance
structure and assurance mechanisms for the
preparation of the Annual Report and, in
particular, the contributor and SET member
verification process. The Committee received
an early draft of the Annual Report to review
its proposed content and the structural
changes from the prior year and to undertake
a review of the reporting for the year, following
which the Committee members provided their
individual and collective feedback. In addition,
in accordance with its terms of reference,
the Committee (alongside the Board) took
an active part in reviewing the Company’s
quarterly announcements and considered the
Company’s other public disclosures which are
managed through its Disclosure Committee.
To aid its review further, the Committee also
received a summary of the final Annual
Report’s content, including the Company’s
successes and setbacks during the year and
an indication of where they were disclosed
within the document.
The processes described above allowed the
Committee to provide assurance to the Board
to assist it in making the statement required
of it under the Code, which is set out from
page 78.
Internal controls
Information on the Company’s internal
controls is included in the Audit, Risk and
Internal Control section in the Corporate
Governance Report on page 78.
Following the acquisition of Alexion
Pharmaceuticals, Inc., the Committee
concurred with management’s
recommendation that the Company exclude
this business from its assessment of the
effectiveness of internal control over financial
reporting as at 31 December 2021, in
accordance with SEC Staff Guidance, as
described on page 126. The Committee
received regular updates to help ensure an
effective control environment, irrespective
of the Alexion SOx exemption.
During the period covered by this Annual
Report there was no change in our internal
control over financial reporting that occurred
that has materially affected, or is reasonably
likely to materially affect, our internal control
over financial reporting.
At the February 2022 Committee meeting,
the CFO presented the conclusions of the
evaluation by the CEO and CFO of the
effectiveness of our disclosure controls and
procedures that is required by Item 15(a) of
Form 20-F at 31 December 2021. Based on
their evaluation, the CEO and the CFO
concluded that, as at that date, the Company
maintained an effective system of disclosure
controls and procedures. During the year the
Committee was also updated on the matters
considered by the Disclosure Committee
each quarter.
External auditor
PwC is the Company’s external auditor.
In May 2021, PwC was reappointed as the
Company’s auditor for the financial year
ended 31 December 2021, its fifth consecutive
year as auditor, having first been appointed for
the financial year ended 31 December 2017,
following a competitive tender carried out in
2015. After five years in the role, Richard
Hughes will step down as the lead audit
partner at PwC on the conclusion of the 2021
audit, in line with partner rotation requirements.
We thank Richard for his conduct of the audit
during his tenure. Richard will be replaced
by Sarah Quinn. The selection process for
the new lead audit partner was designed to
identify the best qualified partner for the
role, to ensure audit quality. A short list
of candidates was identified following
discussions between the Committee and
PwC. The candidates were then interviewed
by the Audit Committee Chair and the CFO.
The Committee made the final selection
based on feedback from those interviews
as well as an assessment of the candidates’
experience and expertise. We look forward
to working with Ms Quinn, who has extensive
knowledge of our industry and of UK and US
reporting requirements, and who we believe
will continue to ensure the quality of the audit.
Signicant nancial reporting issues considered by the Committee in 2021
continued
Matter considered Committee’s conclusion and response
Retirement benefits
See Financial Review
from page 52 and
Note 22 to the
Financial Statements
from page 168.
Accounting for defined benefit pension and other
retirement benefits is an important area of focus. The
Group recognises that the present value of these liabilities
is sensitive to changes in long-term interest rates, future
inflation and mortality expectations. As a result, the
assumptions used to value the liabilities for the Group’s
main retirement benefit obligations are updated every
quarter. Similarly, ‘mark-to-market’ asset valuations are
also procured. This enables an updated funding level to
be calculated each quarter. The Group is cognisant of the
wider regulatory environment and local requirements
around funding levels and contributions.
The UK Pension Scheme Act 2021 came into force on
1 October 2021 and a section of the Act focuses on the
funding of and security provided to UK defined benefit
pension schemes with additional requirements placed
on corporate sponsors.
The Committee monitors the funding level of the Group’s
defined benefit obligations on a quarterly basis and the
funding requirements in each case, alongside key
developments.
The Committee reviews the Group’s global funding
objective and key activities, engagement with local
fiduciary bodies, and comparisons of funding solvency
relative to the wider market.
The Committee was satisfied that the Group’s contribution
policy and actuarial assumptions used to value liabilities
were appropriate during the year.
The Committee was reassured by the Group’s engaged
and balanced approach to managing the risks associated
with the funding of its defined benefit obligations.
The Committee is cognisant of the need to adhere to local
funding regulations and best practice and to the security
provided by the Group, which underwrites obligations to
members. In the UK, the Committee is aware that the
Group has developed a framework to ensure compliance
with the UK Pension Scheme Act 2021 and will monitor
implementation in 2022.
96
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Audit Committee
Report
continued
Non-audit services and safeguards
The Committee maintains the Audit and
Non-Audit Services Pre-Approval Policy
(the Policy) for the pre-approval of all audit
services, audit-related services and other
assurance services undertaken by the
external auditor. The principal purpose of
the Policy is to ensure that the independence
of the external auditor is not impaired.
The pre-approval procedures permit certain
audit and audit-related services to be
performed by the external auditor, subject to
annual fee limits agreed with the Committee in
advance. Pre-approved audit and audit-related
services below the clearly trivial threshold
(within the overall annual fee limit) are subject
to case-by-case approval by the SVP Finance,
Group Controller.
Pre-approved audit services included
services in respect of the annual financial
statement audit (including quarterly and
half-year reviews), attestation opinions under
section 404 of the Sarbanes-Oxley Act,
statutory audits for subsidiary entities, and
other procedures to be performed by the
independent auditor in order to form an
opinion on the Group’s consolidated Financial
Statements. The pre-approved audit-related
services, which the Committee believes are
services reasonably related to the
performance of the audit or review of the
Company’s Financial Statements, included
certain services required by law or regulation,
such as financial statements, audits of
employee benefit plans and capital market
transactions. The Policy prohibits any tax
services. Audit-related services included the
assurance in relation to tax regulatory
certificates required to be issued by the
external auditor.
The Committee reviewed and provided
approval for PwC to perform non-audit
services totalling $6.1 million in relation to
supporting the issuance of the Shareholder
Circular and US F-4 filings, as well as EMTN
debt issuance, in preparation for the Alexion
transaction. These services included capital
markets technical advice, private opinions on
working capital, private diligence reports on
working capital, profit forecasts and Financial
Position and Prospects procedures, and
public opinions on SIR5000 GAAP
reconciliation.
The CFO (supported by the SVP Finance,
Group Controller), monitors the status of all
services being provided by the external
auditor. Authority to approve work exceeding
the pre-agreed annual fee limits and for any
individual service above the clearly trivial
threshold is delegated to the Chair of the
Committee together with one other
Committee member in the first instance.
A standing agenda item at Committee
meetings covers the operation of the
pre-approval procedures and regular reports
are provided to the full Committee.
All services other than the pre-approved audit
and audit-related services, require approval
by the Committee on a case-by-case basis.
In 2021, PwC provided audit services including
interim reviews of the results of the Group for
the periods ended 31 March 2021 and 30 June
2021 and audit-related and other assurance
services in relation to the acquisition of
Alexion and the associated debt issuance.
$34.9m
$20.3m
2021
2020
Statutory audit fee
¹
Audit-related and other assurance services
²
Audit/non-audit services
1
2021 statutory audit fee excludes $0.3m (2020: $nil), in
relation to pre-acquisition Alexion audit fees, recognised
in Note 31 to the Financial Statements on page 196.
2
2021 audit-related and other assurance services excludes
$0.7m (2020: $nil), in relation to pre-acquisition Alexion
services, recognised in Note 31 to the Financial Statements
on page 196.
The increase to the statutory audit fee for
2021 is largely driven by the inclusion of
post-acquisition Alexion audit fees. The
increase to audit-related and other assurance
services is largely driven by services
performed by PwC in the year, in relation to
the acquisition of Alexion and the associated
debt issuance.
Fees for audit-related and other assurance
services amounted to 27% of the fees payable
to PwC for audit services in 2021 (2020: 6%).
The Committee is mindful of the 70%
non-audit services fee cap under EU
regulation, together with the overall proportion
of fees for audit and audit-related services in
determining whether to pre-approve such
services. Fees for audit-related and other
assurance services payable to PwC in 2021
were 34% of average audit fees over 2018 to
2020. The increase to these percentages is
primarily driven by the additional services
required in respect of the Alexion acquisition.
PwC were better placed than any alternative
provider to provide these services in terms of
their familiarity with the Company’s business,
skills, capability and efficiency. All such
services were either within the scope of the
pre-approved services set out in the Policy
or were presented to Committee members
for pre-approval and all such services were
permitted by the FRC Ethical Standard.
Further information on the fees paid to PwC for audit,
audit-related and other services is provided in Note 31
to the Financial Statements on page 196.
Assessing external audit effectiveness
In accordance with its normal practice, the
Committee considered the performance of
PwC and its compliance with the
independence criteria under the relevant
statutory, regulatory and ethical standards
applicable to auditors. The Committee
assessed PwC’s effectiveness principally
against four key factors, namely: judgement;
mindset and culture; skills, character and
knowledge; and quality control. As part of that
assessment, it also took account of the views
of senior management within the Finance
function and regular Committee attendees.
The Committee concluded that the PwC audit
was effective for the financial year ended
31 December 2021.
In February 2022, the Committee
recommended to the Board the reappointment
of PwC as the Company’s auditor for the
financial year ending 31 December 2022.
Accordingly, a resolution to reappoint PwC
as auditor will be put to shareholders at the
Company’s AGM in April 2022.
The external audit will be put out to tender in
or before the 2027 financial year, in order to
comply with UK legal requirements regarding
the auditor’s tenure and audit tendering. The
Committee reviews the effectiveness of PwC
as the external auditor on an annual basis and
may choose to commence a tender earlier if
it deems this to be in the best interests of the
Company’s shareholders.
The Committee does not believe that
tendering the audit at this time would be
in the best interests of shareholders and is
cognisant of the scale and complexity of the
AstraZeneca Group, particularly following the
recent acquisition of Alexion. A sufficiently
long transition period would be required to
ensure a new auditor built up the necessary
knowledge and business familiarity to ensure
the delivery of an effective audit and
consequently any plans to tender the
external audit should allow time for an
orderly transition.
Regulation
The Committee considers that the Company
has complied with the Competition and
Markets Authority’s Statutory Audit Services
for Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014 in respect of its
financial year commencing 1 January 2021.
97
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Audit Committee Report
We have sought to be clear and transparent in how we link
remuneration of our executives to successful delivery of our
strategy, our response to the pandemic and shareholder returns.
On behalf of the Board, I am pleased
to present AstraZeneca’s Directors’
Remuneration Report for the year ended
31 December 2021.
2021 has been a transformational year for
AstraZeneca. The Company delivered strong
financial performance and completed the
acquisition of Alexion, further supporting its
strategic ambitions and strengthening its
financial position. In addition, AstraZeneca,
together with its partners, released for supply
2.5 billion doses of
Vaxzevria
to over 180
countries and launched
Evusheld
, the only
long-acting antibody with Phase III data
demonstrating benefit in both the prevention
and treatment of COVID-19.
Key Committee activities in 2021
At the Company’s 2021 AGM, the Board put a
new Remuneration Policy forward for approval
by shareholders for the second consecutive
year. The Committee acknowledges that
seeking approval for a revised Policy at two
consecutive AGMs was an unusual step,
however we are still convinced that doing
so was in the best interests of the Company
and its shareholders over the long term. The
Committee was pleased that the resolutions
were approved. However, the Committee also
recognised that shareholder support for the
2021 Policy was lower than the previous year’s
(2021: 60%; 2020: 95%). Following the AGM,
I undertook an extensive consultation process
to listen to shareholders’ and proxies’
feedback. Further detail on the 2021
consultations and the steps taken by the
Committee to address concerns, can be
found later in this letter. I would like to thank
those that took part in the extensive
consultation for their constructive feedback.
The Directors’ Remuneration
Report contains the following
sections:
>
Chair’s letter page 98
>
Remuneration at a glance
page 102
>
How our performance
measures for 2022 support
the delivery of our strategy
page 103
>
How the Remuneration
Committee ensures targets
are stretching page 104
>
Annual Report on
Remuneration page 105
“ Three year TSR of
59% demonstrates
another period of
excellent performance
for shareholders,
while successfully
delivering the Alexion
acquisition and being
at the forefront of
the response to
COVID-19.”
Appointment of the new CFO
On 1 August 2021, Marc Dunoyer stepped
down as CFO and Executive Director of
AstraZeneca PLC and took on a new role
as CEO, Alexion and Chief Strategy Officer,
AstraZeneca, while remaining a member of
the Senior Executive Team. Following an
extensive search, Aradhana Sarin, CFO of
Alexion prior to the acquisition, was appointed
as CFO and Executive Director of AstraZeneca
from 1 August 2021, based in the UK. The
Committee carefully considered the terms of
our new CFO’s remuneration arrangements.
In designing a competitive remuneration
package, the Committee focused on current
market benchmarks, and took into account
Dr Sarin’s existing reward at Alexion in the US
(which included the existence of contractual
change of control severance arrangements
that Dr Sarin was entitled to choose as an
alternative to accepting the CFO role in the UK).
Dr Sarin’s 2021 remuneration arrangements,
as set out from page 105 of the Annual
Report on Remuneration, are aligned to our
pay-for-performance philosophy and
market-competitive remuneration. It allowed
us to act quickly and decisively to secure a
strong candidate to succeed Mr Dunoyer as
CFO. The short- and long-term incentive
opportunities are consistent with the 2021
Policy, and base pay is in line with relevant
benchmarks. The on-target pay positioning
for the new CFO, as set out on page 101,
is around the upper quartile of our European
peer group, which appropriately reflects
AstraZeneca’s relative size within this group.
98
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Directors’
Remuneration
Report
Remuneration Committee
members
>
Michel Demaré (Chair)
>
Philip Broadley
>
Leif Johansson
>
Sheri McCoy
The full role of the Remuneration
Committee is set out in its terms
of reference, available on our website,
www.astrazeneca.com.
AstraZeneca
Global pharma peers average
European pharma peers average
FTSE 100
Dec
11
Dec
12
Dec
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
Dec
20
Dec
21
450
400
350
300
250
200
150
100
Review of targets and performance
measures following the acquisition
of Alexion
Following the acquisition of Alexion, which
completed in July 2021, the Committee
reviewed the targets for the 2021 annual
bonus scorecard and the 2019 Performance
Share Plan (PSP) performance measures.
Where required, the existing ambitious targets
were increased mid-year to reflect the impact
of the Alexion acquisition on the Company’s
results and the economics of the transaction
approved by the Board. Before approving the
amendments to the existing targets, the
Committee had additional sessions with
management to understand and challenge the
proposals. We are confident that the revised
targets are of equivalent level of stretch, and
will continue to incentivise our leaders to
deliver exceptional performance.
The process of setting stretching targets
is extensive, robust and iterative, involving
multiple interactions with management, the
Board and the Committee (which includes
three members of the Audit Committee).
Further details on this process are set out
on page 104.
As the Chair of the Committee, I also
attended the Science Committee’s meeting
at which the Science targets were reviewed
to ensure I fully understand the assumptions
and scenarios which form the foundations of
their recommendations. I will work with the
recently-established Sustainability Committee
next year in a similar manner to ensure that
proposed ESG measures and targets are
both appropriate and suitably stretching.
2021 Performance
Growth and Therapy Area Leadership
Revenue growth has been strong throughout
2021 and well balanced across all disease
areas, with double-digit growth in all major
regions, including Emerging Markets. We
achieved these results despite COVID-19
continuing to impact the diagnosis and
treatment of other diseases in some markets
and sustained pricing pressures in China.
Our strong pipeline progress has underpinned
the transition to long-term sustainable growth
with five of our medicines crossing new
blockbuster thresholds.
In July 2021, the Group completed the
acquisition of Alexion, which represents
a significant step forward in progressing
our strategic and financial development
and supports the Company’s transition to
long-term sustainable growth. Alexion will
help to accelerate expansion into immunology
and rare disease, further sustain industry-
leading double-digit revenue growth and
improve our profitability and cash flow. Given
Alexion’s pipeline, expertise in immunology
and strong research platforms, the acquisition
will accelerate the combined Group’s strategic
ambitions – driving innovation and the speed
of delivery of the next wave of science and
accelerating the development of medicines
to help more patients around the world.
For more information on Rare Disease, see page 24.
Accelerate Innovative Science
AstraZeneca delivered unprecedented
pipeline results as we continued to realise the
full potential of our medicines and advance
the next wave of science, with return on
investment in our pipeline continuing to
outperform our peers. We secured 32 pipeline
progression events, either NME Phase II starts
or Phase III investment decisions in 2021, of
which 26 count towards the annual bonus
outcome. Three key highlights from the
pipeline delivery include: new NME Approval
for
Saphnelo
, the first type I interferon
receptor agonist for systemic lupus
erythematosus (SLE), which is the only new
medicine to be approved in over 10 years;
the breakthrough data with
Enhertu
showing
enormous promise in breast cancer treatment
with data presented in September 2021
demonstrating that DESTINY-Breast03
showed a remarkable 72% reduction in the
risk of disease progression or death for
How we have performed in 2021
Total shareholder return (TSR)
2019 to 21
1
+59%
1
relevant period.
More information on the TSR peer groups for PSP awards can be found on page 122.
Delivery against strategy – 2021 Group scorecard performance
2
Target
2021
outcome
Deliver Growth and Therapy Area Leadership
Total Revenue
$33.1bn
$34.7bn
Innovative Science: Annual pipeline progression
Pipeline progression events
22
26
Regulatory events
31
37
Achieve Group Financial Targets
Cash flow
$5.6bn
$6.3bn
Core EPS
$5.25
$5.34
2
measures, see from page 108.
AstraZeneca
Global pharmaceutical peers average
FTSE 100
European pharmaceutical peers
Enhertu
compared to the current standard of
care (trastuzumab emtansine or T-DM1); and
Farxiga
approved for chronic kidney disease,
significantly reducing risk of death by 31%.
In response to shareholder feedback, the
Committee has agreed a new naming
convention in relation to the science measures
in the annual bonus scorecard and the PSP, to
more clearly delineate the difference between
the two types of measure, which assess
different aspects of the scientific pipeline.
You will see throughout this report that the
Accelerate Innovative Science measure under
the bonus scorecard is now called ‘Innovative
Science: Annual pipeline progression’ and the
Accelerate Innovative Science measure under
the PSP is now called ‘Innovative Science:
First approvals and NME volume over three
years’. There is no change to the underlying
performance metrics, this name change is
for clarification only.
Great Place to Work
Ensuring that AstraZeneca is a great place
to work continued to be a top priority during
2021. AstraZeneca focused on protecting staff
in the face of the continuing global pandemic,
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AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Directors’ Remuneration Report
EBITDA
TSR
implementing principles to support the health
and safety of employees upon the return to
the workplace; and ensuring the safety of our
patients, and their continued access to care
and medicines. The Company made no staff
redundant as a consequence of the pandemic
and did not take advantage of furlough
arrangements or government support in
any country.
AstraZeneca has continued to contribute to
society. We continue to make good progress
on our sustainability strategy and have
established a Board Committee to monitor the
execution of that strategy. The launch of the
Sustainability Committee was an important
next step in advancing and delivering our
sustainability goals and underlines our
commitment to change. I look forward to
working with the Sustainability Committee
in future when reviewing the performance
against the existing Ambition Zero Carbon
measure within the 2021 PSP and when
considering potential further ESG measures.
We also drove change beyond our Company
by playing a central role at COP26, to address
the climate crisis and promote a green recovery
during and post the pandemic. Our efforts were
recognised, with HRH The Prince of Wales
naming our Company as one of the first
holders of his Terra Carta Seal.
Despite these challenging times, employee
engagement continued to be high with 85%
of employees believing AstraZeneca is a
great place to work. Employees also believe
AstraZeneca’s response to the COVID-19
pandemic has been very positive, reflecting
our collective pride in efforts to change the
course of the pandemic and provide support
and information to employees as we navigate
this period.
In particular, employees recognise
AstraZeneca’s contribution to society with
our work on
Vaxzevria
and with the launch of
Evusheld
. During 2021, 2.5 billion doses of
the vaccine were released for supply to over
180 countries, approximately two thirds of
which went to low- and lower-middle-income
countries. More than 300 million doses were
delivered to 130 countries through the COVAX
Facility. Until October 2021, AstraZeneca
supplied
Vaxzevria
on a not-for-profit basis.
From the fourth quarter of 2021, we have
moved to an affordable pricing model under
which AstraZeneca remains committed to
providing broad and equitable global access
to the vaccine. This includes a tiered pricing
approach aligned to Gross National Income
per capita, which is a widely recognised and
implemented model used by developers of
medicines and vaccines. We remain committed
to supplying the vaccine at no profit to
low-income countries, in line with our
agreement with the University of Oxford.
Our Executive Directors’ roles in leading
our response to the pandemic has been
considered by the Committee when reviewing
their performance against their individual
goals, as highlighted from page 109.
For more information on our actions in relation
to COVID-19, see page 29.
Improving our diversity and inclusion remains
paramount and we have continued to drive
change within the organisation by hosting
educational events such as the Power of
Diversity Week and celebrating the power
and potential of girls as showcased in our
#GirlsBelongHere campaign. Significant
progress towards meeting our ambition of
having women represent 50% of our senior
roles by 2025 was made over the last year
– 48.1% as at year end 2021.
2021 remuneration outcome
The Committee always seeks to ensure that
the remuneration of our Executive Directors
and our wider workforce reflects the
underlying performance of the business.
When approving outcomes, we therefore
considered the Group scorecard along with
wider business and individual performance
over 2021, including other achievements
across the enterprise, such as the completion
of the acquisition of Alexion, advancing our
Great Place to Work priorities and ESG goals.
In that context, we believe that the payments
outlined below fairly reflect performance.
Achieved
Innovative Science: Annual pipeline progression
73%
Deliver Growth and Therapy Area Leadership
100%
Achieve Group Financial Targets
79%
Achieved
Achieved
Innovative Science: First approvals and NME volume over
three years
100%
Deliver Growth and Therapy Area Leadership
100%
Achieve Group Financial Targets – Cash flow
100%
EBITDA
75%
Relative TSR
100%
Achieved
2021 Annual bonus scorecard performance
1
2019 PSP performance
Annual bonus
When determining bonus outturns, the
Committee considered the formulaic outcome
from the Group scorecard along with wider
business and individual impact and
performance in 2021, including ESG
achievements. The Committee determined
to award an annual bonus equivalent to 95%
of maximum (237.5% of base pay) to
Pascal Soriot. This is in line with the
approach to differentiate bonus awards for
individuals in the wider workforce that have
made an exceptional contribution in 2021.
The Committee determined to award annual
bonuses equivalent to 84% of maximum
(168% of base pay) to Dr Sarin and
Mr Dunoyer respectively. Bonuses awarded
to Dr Sarin and Mr Dunoyer were pro-rated
in relation to their services provided as CFO
during the year. Details of the factors
considered to determine the bonuses are
provided from pages 107 to 111.
One half of each Executive Director’s bonus
for 2021 will be deferred into AstraZeneca
shares for three years to ensure further
alignment with shareholder interests.
Long-term incentives (LTI)
2019 PSP – 95% of maximum
Our approach aims to reward sustainable
outperformance and hence our 2019 award
will vest at the upper end of the possible
range. The three-year performance period
for Performance Share Plan (PSP) awards
granted to Executive Directors in 2019 ended
on 31 December 2021. Awards will vest at
95% of maximum, as shown on page 112 and
reflect overachievement in each and every
three-year target, as well as delivering a
three-year TSR of 59%.
1
along with wider business and individual impact and performance in 2021, including ESG achievements.
100
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Corporate Governance
Directors’ Remuneration
Report
continued
Response to voting at the 2021 AGM
At AstraZeneca’s 2021 AGM, the shareholder
votes to approve the Directors’ Remuneration
Policy and to amend the rules of the 2020 PSP
were passed with majorities of 60.19% and
61.72% respectively. Since the AGM, on
behalf of the Committee, I have met with 16
of the Company’s largest shareholders,
representing approximately 40% of the share
register, as well as three proxy advisors,
to understand their concerns in relation to
these two resolutions and to discuss
future remuneration.
I spoke with the majority of AstraZeneca’s
largest investors, who remain overwhelmingly
supportive of our Executive Directors and the
Company’s strategic ambition. Shareholders
also recognise that our Remuneration Policy
appropriately aligns executive pay with
performance, and highlighted the importance
of the Committee’s ongoing commitment to
stretching performance targets. They also
emphasised the need to remain competitive in
the global talent market, and expect the Board
to take the necessary measures to position
AstraZeneca accordingly. However, a
common concern raised by those who voted
against the resolutions was that we had
sought approval for a new Remuneration
Policy at two consecutive AGMs, and in a
challenging period because of the pandemic.
A minority also expressed concern around
the scale of the CEO’s total remuneration
opportunity in the UK context, albeit
recognising the global dimension of the
CEO’s role. There was also satisfaction that
the pension contributions of the Executive
Directors have been aligned with the wider
UK workforce, thereby resulting in a lower
fixed compensation and higher leverage of
the pay-for-performance component.
In response to concerns raised by some
shareholders, we are committed to a period
of stability in our approach to executive
remuneration, and confirm our intention that
the 2021 Policy will remain in effect until 2024.
We have not made any material changes to
the structure of executive reward in 2022, with
the only adjustment being an increase in the
Executive Directors’ base pay, in line with
base pay increases for wider UK workforce.
Market positioning of Executive Directors’ on-target remuneration for 2021
Global pharma peers
¹
European pharma peers
²
C
EO
Lower quartile to median
Median to upper quartile
Current position
£7.98m
£8.15m£6.74m
£13.62m
Global pharma peers
¹
European pharma peers
²
C
FO
Lower quartile to median
Median to upper quartile
Current position
£3.77m
£3.92m£3.86m
£4.82m
1
Novo Nordisk, Pzer, Roche and Sano.
2
Remuneration includes base pay, target annual bonus and the expected value of Long-term Incentive (LTI) awards.
Benchmarking data has been provided by the Committee’s independent adviser.
We remain committed to our pay-for-
performance philosophy and market-
competitive remuneration, as demonstrated
by the arrangements for Aradhana Sarin on
her appointment as an Executive Director and
CFO. Additionally, we will continue to focus on
setting stretching performance targets and
have included detail on page 104 around how
further stretch has been built into our targets
following the acquisition of Alexion. We will
continue to improve the transparency and
quality of disclosures in our Directors’
Remuneration Report.
The Committee will continue to engage
regularly with shareholders and other
stakeholders.
Non-Executive Directors’ fees
With effect from January 2022, four elements
of the Non-Executive Directors’ fee structure
have increased. These changes reflect the
steady increase in workload and
responsibilities of the Non-Executive Directors
since the last fee increases at AstraZeneca
took effect four years ago in January 2018,
as well as the increase in size and complexity
of the Group following the acquisition of
Alexion. No Board member participated in
any decision relating to their own fees.
Further detail is provided on page 116.
Next steps
I hope that you find this Remuneration Report
clear in explaining the implementation of our
Remuneration Policy during 2021, and the
meaningful and thorough response we have
made to address investor feedback following
the 2021 AGM. We trust that we have provided
the information you need to be able to support
this Remuneration Report at the Company’s
AGM in April 2022.
Our ongoing dialogue with shareholders and
other stakeholders is valued greatly and, as
always, we welcome your feedback on this
Directors’ Remuneration Report.
Michel Demaré
Chair of the Remuneration Committee
101
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Directors’ Remuneration Report
CEO
CFO
£
3,013
£
13,858
£5,000 £10,000 £15,000
£0
£’000
Share price appreciation on
long-term incentive awards
PSP
Annual bonus
Other
Fixed Pay
2019 PSP
performance
Achieved
95%
Lapsed
5%
Group scorecard
performance
Achieved
84%
Lapsed
16%
Executive Directors’ realised pay 2021 outcomes Formulaic outcome of 2021
Group scorecard and 2019 PSP
Executive Directors’ remuneration for 2022
Fixed remuneration
Annual bonus
Long-term incentives
Shareholding
guideline
Post-cessation
guideline
Pascal
Soriot
(CEO)
Base pay:
£1,367, 0 02
Benefits fund
Pension: £150,370
(equivalent to 11% of
base pay)
Max: 250%
base pay
Target: 125%
base pay
Deferred: 50% for
three years
Max: 650% base pay
Performance period:
three years
Holding period:
two years
Holding
requirement:
650% base pay
Holding
requirement:
shares up to 650%
base pay for two
years post-
cessation
Aradhana
Sarin
(CFO)
Base pay:
£875,500
Benefits fund
Pension: £96,305
(equivalent to 11% of
base pay)
Max: 200%
base pay
Target: 100%
base pay
Deferred: 50% for
three years
Max: 450%
base pay
Performance period:
three years
Holding period:
two years
Holding
requirement:
450% base pay
Holding
requirement:
shares up
to 450%
base pay
for two years
post-cessation
CEO xed vs performance-linked (%)
36
%
Short-term
64
%
Long-term
Fixed
12
%
Performance-linked
88
%
Base salary
Benets fund
Pension
Annual bonus – cash
Annual bonus – shares
PSP
Annual
Bonus
PSP
’22
Executive Directors’ pay at risk
Performance period
Deferral period
Holding period
’23 ’24 ’25
’26
See from page 105 for further details on plan design.
Based on maximum payout scenarios for the CEO assuming maximum of
250% and 650% of base pay for annual bonus and PSP respectively.
CFO xed vs performance-linked (%)
41
%
Short-term
59
%
Long-term
Fixed
15
%
Performance-linked
85
%
Base salary
Benets fund
Pension
Annual bonus – cash
Annual bonus – shares
PSP
Based on maximum payout scenarios for the CFO assuming maximum
of 200% and 450% for annual bonus and PSP respectively.
What our Executive Directors earned
Looking ahead
Fixed pay consists of base pay, benets fund and pension.
Further information on Executive Directors’ realised pay
for 2021 is on page 105.
See from page 105 for further information on the annual bonus
and PSP outcome.
When determining bonus outturns, the Committee considered
the formulaic outcome from the Group scorecard along with
wider business and individual impact and performance in
2021, including ESG achievements. For the CEO this resulted
in a bonus outturn of 95% of maximum.
102
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Remuneration
at a glance
Strategic pillar Strategic pillar
Financial targets
Accelerate
Innovative Science
Deliver Growth and
Therapy Area Leadership
Achieve Group
Financial Targets
Remuneration performance measures Remuneration performance measure Remuneration performance measures
Science indices
Our science measures incentivise the
development of new molecular entities
(NMEs) and the maximisation of the potential
of existing medicines.
Bonus performance is assessed on pipeline
progressions through Phase II and Phase III
clinical trials. These reect the outcome of
nearer-term strategic investment decisions,
whereas in contrast PSP performance is
assessed on the volume of NMEs in Phase III
and the registration stage, which reects the
outcome of longer-term strategic investment
decisions.
Additionally, we measure regulatory
submissions and approvals for bonus, and
regulatory approvals for PSP to drive the
conversion of scientic progress into
commercial revenue over the short term
(bonus) and the longer term (PSP).
Together, these science measures incentivise
innovation and sustainable success along the
length and breadth of the pipeline, leading to
commercial growth.
Total Revenue
Our Total Revenue measure is included in the
bonus and the PSP, reecting the importance
of incentivising sustainable growth in both
the short and longer term.
Cash ow
Ensures that we can sustain investment in
our pipeline and therapy areas while at the
same time meeting our capital allocation
priorities. Cash ow is included in both the
bonus and the PSP, so as to motivate a focus
on the importance of both short and longer
term cash ow generation and balance
sheet strength.
Core EPS
Incentivises operational eciency and
cost discipline, remains a key measure
of our protability and is a key focus for
our investors.
Total shareholder return (TSR)
Assessed relative to our peer group of
companies, the measure rewards positive
performance that our shareholders also
directly benet from. This measure
incentivises outperformance versus our peer
group, and promotes the delivery of long-term
sustainable returns for our shareholders.
Strategic pillar
Be a Great Place to Work
Being a Great Place to Work is critical to
delivering our ambition. Assessment of
performance against this pillar is captured
through a holistic review of each Executive
Director’s individual performance as part
of the nal determination of annual bonus,
including consideration of our progress
against our ESG aspirations through:
>
Contribution to the enterprise – their
achievement of embedding a culture
oflife-long learning and development,
and performing as an enterprise team,
as well as advancement of our inclusion
and diversity strategy.
>
Contribution to society – their delivery
across access to healthcare, environmental
protection, ethics and transparency to lead
in sustainability.
Ambition Zero Carbon
This measure incentivises the
elimination of our Scope 1 and Scope 2
greenhouse gas (GHG) emissions by 2025
with targets veried in line with the
science of climate change, where we will
innovate to avoid, reduce and substitute
to become zero carbon.
AstraZeneca aims to continue to deliver great
medicines to patients while maintaining cost
discipline and a flexible cost base, driving
operating leverage and increased cash
generation. To incentivise and reward delivery
of great performance over the short and
longer term, the Committee carefully
considers the balance of science, financial
and ESG measures between the annual
bonus and PSP.
Our focus on incentivising innovative science
aligns with our patient-centric culture, as we
strive to push the boundaries of science to
deliver life-changing medicines to patients.
The 2022 performance measures are closely
aligned with our strategic priorities, as
shown below.
For more information about our strategic priorities,
see page 12. For more information about the 2022
performance measures, see pages 111 to 115.
103
Additional Information
Financial Statements
Corporate Governance
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / How our performance measures for 2022 support the delivery of our strategy
Key
Annual bonus
PSP
KPI
How our performance measures for
2022 support the delivery of our strategy
We set stretching targets that incentivise our leaders to deliver exceptional performance, to drive sustainable results for our patients, our
employees and our shareholders. Following the acquisition of Alexion, the Committee reviewed the suitability of existing performance targets
for our in-flight annual bonus and long-term incentive (LTI) plans in light of the enlarged Group.
The Committee reviewed performance targets in September 2021 and approved increases to targets to ensure they remained stretching and
continued to incentivise strong performance. See page 108 for details on the 2021 scorecard targets, and page 112 for the 2019 PSP.
We take the following robust process to setting annual bonus and PSP targets:
Stage 1 –
Target setting
Science targets are based on a cohort of scientific opportunities
specified at the start of the performance period. Opportunities
represent potential achievements through the pipeline, from an
early stage where our scientists work to discover new molecules,
through to ultimately obtaining approvals and getting new
medicines to patients. Rewarding success at each stage
recognises the importance of creating and maintaining a
long-term sustainable pipeline. Stretch of proposed targets is
reviewed by the Science Committee taking into account factors
such as the expected Net Present Value of the pipeline and the
anticipated financial contribution it will make, past performance,
the external regulatory environment, and internal resourcing
and efficiencies. Targets for realisation of these opportunities
are ambitious.
Proposed targets for the Ambition Zero Carbon measure are
reviewed by the Sustainability Committee.
Deliver Growth and Therapy Area Leadership and Achieve
Group Financial Targets metrics align with the Company’s
Mid Term Plan (MTP), which sets out the financial framework
for delivering our ambitious strategy over the short- and
medium-term. The MTP process includes detailed business
reviews, during which plans and efficiencies of each unit are
challenged, leading to a proposed MTP for the Board to review
and challenge. The Committee sets targets based on the
Board-approved MTP, considering consensus expectations,
independent analytics and anticipated challenges and
opportunities. This range of data is used by the Committee to
ensure the stretching nature of performance targets is robustly
tested. Additionally, the PSP TSR measure is designed to
reward strong performance relative to our peers.
Stage 2 –
Committee review
and approval of
targets
The Committee thoroughly reviews and challenges targets
proposed by management.
The Committee is provided with considerable supporting
material for each metric. For science measures, the Committee
reviews and approves the full cohort of opportunities and
receives briefings from senior science leaders within the
business. These targets are set with oversight of the Science
Committee, with a focus on ensuring that the targets will result
in long-term sustainable value creation underlying the delivery
of the LRP. The target in relation to our ESG metric in the PSP
is determined with the input of our Sustainability Committee.
Committee members participate in the full Board discussions
on the strategy, MTP and budget, which form the basis for the
targets. The Committee considers how proposed financial
targets align with the MTP and budget; prior years’ outcomes
(in absolute terms and against target); how the ambition has
changed from the prior MTP and budget; external guidance
the business has provided or plans to give; consensus from
external financial analysts and factors it may be impacted by;
and the underlying assumptions. Statistical analysis conducted
by the Committee’s independent adviser is also used to assess
the proposals. This includes an assessment of historical levels
of performance volatility.
Stage 3 –
Performance
assessment
At the end of the period, final performance against each metric
is assessed. Outcomes are calculated based on performance
against each weighted metric. Each performance measure is
assessed on a standalone basis, so that underperformance
against one measure cannot be compensated for by
overperformance against another.
The Science Committee independently considers and informs
the Committee whether science achievements represent a fair
and balanced outcome, reflecting genuine achievements and
pipeline progression. Apart from Cash flow, which is set at
actual rates of exchange, financial metrics are set at budget
rates of exchange and evaluated at those rates at year end,
which means they are not directly comparable year-on-year.
The Committee is, however, provided with data to allow it to
conduct year-on-year analyses.
Stage 4 –
Determination of
Executive Directors’
bonuses
For annual bonus, the fairness of the formulaic Group scorecard
outcome is considered in the context of overall business
performance and the experience of shareholders. Such
considerations include TSR performance and each Executive
Director’s personal impact on the delivery of the strategy, wider
ESG performance and other organisational achievements, such
as inclusion and diversity targets and the realisation of
technology-based milestones. Each year there are important
individual deliverables beyond the scorecard metrics which
are taken into account when determining individual bonuses.
Having considered the Group scorecard outcome, overall
business performance, the experience of shareholders and
individual performance, the Committee carefully determines
a final bonus outcome for each Executive Director that is
considered fair and appropriate for the year’s performance
and is in the best interests of shareholders.
“ We set stretching targets that
incentivise our leaders to deliver
exceptional performance, to drive
sustainable results for our patients,
our employees and our shareholders.”
2022 targets
>
Financial performance goals under the 2022 Group
scorecard and PSP would require growth in excess
of the average expected of the industry, and above
prior year outturns.
>
The Committee has reviewed the proposed targets
against internal and external forecasts, including
market consensus, and is comfortable that the level
of stretch promotes exceptional performance.
104
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Corporate Governance
How the Remuneration Committee
ensures targets are stretching
Audited
Executive Directors’ realised pay for 2021 (single total gure of remuneration)
The table below sets out all elements of take-home pay receivable by the Executive Directors in respect of the year ended 31 December 2021,
alongside comparator figures for 2020.
Dr Sarin joined the Board of AstraZeneca PLC as CFO on 1 August 2021. In line with reporting regulations, the realised pay for Dr Sarin reflects
the remuneration received in respect of services rendered as an Executive Director during the year ended 31 December 2021 (1 August 2021 –
31 December 2021).
Mr Dunoyer stepped down as CFO and Executive Director of AstraZeneca PLC on 1 August 2021. In line with the reporting regulations, the
realised pay for Mr Dunoyer reflects remuneration received in respect of services rendered as an Executive Director during the year ended 31
December 2021 (1 January 2021 – 1 August 2021). Mr Dunoyer did not receive any payments in respect of his stepping down from the Board.
Mr Soriot’s and Mr Dunoyer’s realised pay for 2021 includes the vesting of PSP awards from 2019 following the three-year performance period.
These shares are subject to a further two-year holding period. The significant increase in AstraZeneca’s share price over the period of grant to vest
has provided a significant increase in value of the equity components of their reward. £2,370,923 of Mr Soriot’s and £1,126,512 of Mr Dunoyer’s
2021 realised pay is attributable to share price increases. The benefit of the increased share price has also been experienced by shareholders.
The Committee did not exercise any discretion in relation to the Long-term incentive outcomes or the formulaic outcome of the Group scorecard.
£’000
Base
pay
Taxable
benefits
Pension
Total fixed
Annual
bonus
Long-term
incentives
1
Total
variable
Other
2
Single total
figure
Share price
appreciation
as % of
single figure
total
Pascal Soriot
2021
1,327
123
1,596146
3,152 9,110
12,262
–
13,858
17%
2020
1,289
121
1,668258
2,319
11,947
14,266
–
15,934
31%
Aradhana Sarin
3,4
2021
354 399
6
39595
–
5952,019
3,013
–
2020
– – – – – – – – – –
Marc Dunoyer
2021
5
460
53
51
564
772
4,328
5,101
–
5,665
20%
2020
765
79
5,676184
1,028 1,240
6,916
–
7,944
29%
1
2
remuneration’. Where share awards have vested and been released to Executive Directors during 2021, the dividend equivalents accrued during the deferral or holding period of these awards,
which were reinvested as shares, are shown in the footnotes to the Executive Directors’ share plan interests on pages 118–119.
3
4
5
The following sections provide further detail on the figures in the above table, including the underlying calculations and assumptions and the
Committee’s performance assessments for variable remuneration. Mr Dunoyer stepped down from the Board on 1 August 2021 and the
information below reflects the period for which he was an Executive Director (1 January 2021 – 1 August 2021). The information below for Dr Sarin
reflects the remuneration payable to her in respect of the period for which she has been CFO and Executive Director of AstraZeneca PLC
(1 August 2021 – 31 December 2021).
The Annual bonus section is set out from page 107 and the Long-term incentives section from page 112. Information about the Executive
Directors’ remuneration arrangements for the coming year, ending 31 December 2022, is highlighted in grey boxes.
This section of the Remuneration Report sets out the Executive Directors’ remuneration for the year ended 31 December 2021, alongside the
remuneration that will be paid to Executive Directors during 2022.
The elements within the Executive Directors’ realised pay are colour coded:
>
Fixed Remuneration has a light blue border and is found on page 106
>
Other items in the nature of remuneration have a purple border and can be found on page 107
>
Annual bonus has a yellow border and can be found on pages 107 to 111
>
Long-term incentives has a magenta border and can be found on pages 112 to 115
Key:
Audited information
Content contained within the Audited panel
indicates that all the information within has
been subject to audit.
Audited
Executive Directors’ remuneration
Planned implementation for 2022
Content contained within a grey box indicates
planned implementation for 2022.
105
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Additional Information
Financial Statements
Corporate Governance
Strategic Report
Annual Report
on Remuneration
Audited
2021
2022
£’000
Total taxable
benefits
Taxable
benefits
Pascal Soriot
123
In line with
2021
Aradhana Sarin –
appointed to the Board on 1 August 2021
6
In line with
2021
Marc Dunoyer –
stepped down from the Board on 1 August 2021
53
n/a
Audited
Taxable benefits
The Executive Directors may select benefits
within AstraZeneca’s UK Flexible Benefits
Programme and may choose to take their
allowance, or any proportion remaining after
the selection of benefits, in cash.
2021
2022
£’000
Change
from 2020
Base
pay
Change
from 2021
Base
pay
Pascal Soriot
3%
1,327
3%1,367
Aradhana Sarin –
appointed to the Board on 1 August 2021
n/a
354
3%876
Marc Dunoyer –
stepped down from the Board on 1 August 2021
3% n/a
460
n/aFixed remuneration
Base pay
When awarding base pay increases, the
Committee considers, among other factors,
base pay increases applied across the UK
employee population. The current Executive
Directors’ base pay for 2022 will increase in
line with the UK all-employee base pay
increase budget at 3%.
2021
2022
£’000
Pensionable
base pay
Pension
allowance
Cash in
lieu of
pension
Pension
allowance
Pascal Soriot
1,327
11% of
base pay
146
11% of
base pay
Aradhana Sarin –
appointed to the Board on 1 August 2021
354
11% of
base pay
39
11% of
base pay
Marc Dunoyer –
stepped down from the Board on 1 August 2021
460
11% of
base pay
51
n/a
Audited
Pension
The Executive Directors receive a pension
allowance of 11% of base pay, in line with
the wider UK workforce. During 2021, the
Executive Directors took their pension
allowance as a cash alternative to participation
in a defined contribution pension scheme.
None of the Executive Directors who served
during 2021 has a prospective entitlement
to a defined benefit pension by reason of
qualifying service.
106
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
Audited
Annual bonus
Audited
Annual bonus in respect of performance during 2021
Bonus potential
as % of base pay
Bonus
payable in
cash
Bonus
deferred into
shares
Total bonus
awarded
£’000
Target
Maximum
Pascal Soriot
125%
250%
1,576 1,576
3,152
95% max
Aradhana Sarin –
appointed to the Board on 1 August 2021
100%
200%
298
1
298
1
595
84% max
Marc Dunoyer –
stepped down from the Board on 1 August 2021
100%
200%
386 386
772
84% max
2021 Annual bonus
Annual bonuses earned in respect of
performance during 2021 are included in the
realised pay table.
The annual bonuses shown for Mr Dunoyer
and Dr Sarin are in respect of the time during
which each served as an Executive Director
of AstraZeneca PLC during 2021.
Detailed information on the Committee’s
approach to target setting and assessment
of performance is set out on page 104.
Half of the Executive Director’s pre-tax bonus
is compulsorily deferred into Ordinary Shares
which are released three years from the date
of deferral, ordinarily subject to continued
employment. Bonuses are not pensionable.
1
Other remuneration
Other items in the nature of remuneration
Dr Sarin’s previous employment contract
with Alexion includes an entitlement to cash
severance arrangements, which would have
been triggered at the date of closing of the
acquisition of Alexion. In order to secure Dr
Sarin’s services and compensate her for the
forfeiture of these contractual entitlements,
an award of £2,015,540 was made to Dr Sarin
in August 2021 and is included in the Other
column. This award was made 50% in cash and
50% in restricted shares. The cash element
is subject to repayment in the case of her
voluntary cessation of employment within 18
months of appointment. The 50% made by way
of restricted shares was granted to Dr Sarin on
13 August 2021, as a one-off restricted share
award over 12,276 Ordinary Shares. The face
value of the award was £1,007,736, calculated
using a grant price of 8,209 pence per share,
being the average closing share price over the
three dealing days preceding grant. The award
will vest 18 months after her appointment and
will lapse in the case of her voluntary cessation
of employment prior to vesting. For further
information on this share award, please see
page 123.
Dr Sarin was provided with assistance with
her relocation from the US to the UK. The
benefits offered were in line with the Group’s
standard relocation policy which is offered to
the wider workforce, comprising six months’
temporary accommodation in the UK,
removals and storage costs, and reimbursement
of expenses associated with home sale and
purchase (stamp duty, legal fees and survey
costs). The total assistance provided during
2021 was £3,430.
£’000
2021
Relocation
assistance
One-off award
Total Other items
in the nature of
remuneration
Pascal Soriot
n/a n/a
–
Aradhana Sarin –
appointed to the Board on 1 August 2021
3
2,016
2,019
Marc Dunoyer –
stepped down from the Board on 1 August 2021
n/a n/a
–
107
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
2021 Group scorecard assessment
Performance against the 2021 Group scorecard is set out below.
The Group scorecard is used in the determination of bonus payouts for all AstraZeneca employees. Each metric within the scorecard is assessed
on a standalone basis and has a defined payout range. As noted on page 99, the 2021 scorecard targets were reviewed in light of the enlarged
Group following the acquisition of Alexion. Accelerate Innovative Science (now renamed Innovative Science: Annual pipeline progression), Total
Revenue, Cash flow and Core EPS targets were all adjusted upward in line with the Committee’s approach of ensuring performance targets
should not be made materially more or less stretching as a result of the transaction and to continue to incentivise strong delivery.
Performance below the specified threshold level for a metric will result in 0% payout for that metric. 100% of target bonus will pay out for
on-target performance, and 200% of target bonus will pay out for performance at or above maximum. Maximum bonus payouts for the current
CEO and CFO for 2021 were capped at 250% and 200% of base pay respectively. Mr Dunoyer’s maximum payout for the period during which
he was CFO and an Executive Director was capped at 200% of his base pay for the period for which he served as CFO and an Executive Director
of AstraZeneca. The payout range for each metric is capped in line with each Executive Director’s maximum bonus opportunity to ensure
underperformance against one metric cannot be compensated for by overachievement against another. The table below shows the scorecard
formulaic outcomes for the CEO and CFO as a percentage of target bonus.
Annual bonus
continued
Audited
2021 Group scorecard performance measures and metrics
1
Weighting
Threshold
for payout
Target
Maximum
Outcome
Formulaic outcome
(% of target bonus)
Science measures
Innovative Science: Annual pipeline progression
Pipeline progression events
15%
11
22
33
26
20%
Regulatory events
15%
22
31
41
37
24%
Subtotal – Science measures
30%
44%
Financial measures
Total Revenue ($bn)
30%
32.1 33.1 34.1
34.7
60%
Cash ow ($bn)
20%
4.8
5.6
6.5 6.3
34%
Core EPS ($)
20%
5.04 5.25 5.46 5.34
29%
Subtotal – Financial measures
70%
63%
Total
2
100%
168%
Key:
1
the increases applied to the targets during that review ensured that they remained ambitious and stretching. The Company does not intend to disclose the original performance targets, set prior
to the acquisition, as the adjustment to the targets relates to a single disease area (Rare Disease), which is therefore commercially sensitive.
2
Pipeline progression events include Phase II starts and progressions, and NME and life-cycle management positive Phase III investment decisions.
Regulatory events include NME and major life-cycle management regional submissions and approvals. Further detail on our Accelerate Innovative
Science strategic priority and these events is included from page 13 of this Annual Report.
A number of further scientific achievements during 2021 have not been taken into account in the formulaic Group scorecard outcome, as they were
additional to the cohort set at the start of the year. These have instead been considered and reflected in the Committee’s final bonus determination.
108
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Corporate Governance
Annual Report
on Remuneration
continued
Annual bonus
continued
In 2021, Deliver Growth and Therapy Area Leadership measured Total Revenue, excluding revenue from
Vaxzevria
until October 2021, when it was supplied on a not-for-profit basis. This target was set and evaluated at budget exchange rates at the beginning of the year and evaluated at those
rates at the end of the performance period, so that any beneficial or adverse movements in currency, which are outside the Company’s control,
do not impact reward outcomes. The Cash flow measure is set and evaluated at the actual exchange rate and is evaluated by reference to net
cash flow from operating activities less capital expenditure adding back proceeds from disposal of intangible assets, to be fully transparent with
all elements easily derived from the Group IFRS cash flow statement. The Core EPS and Total Revenue measures are evaluated by reference
to budget exchange rates, so that any beneficial or adverse movements in currency, which are outside the Company’s control, do not impact
reward outcomes.
Overall assessment
During 2021, the Executive Directors’ individual performance was assessed in the following key areas which align with the Company’s objectives.
Pascal Soriot
2021 was another truly exceptional year for AstraZeneca under Mr Soriot’s leadership. Along with the delivery of the financial and scientific performance in another
unprecedented year, the Committee considered Mr Soriot’s strong leadership and response through the continued COVID-19 pandemic in addition to his excellent
performance against his personal objectives.
COVID-19 response
In 2021, Mr Soriot continued to work tirelessly with multiple Government policy makers, Ministers of Health and Heads of State around
the world in order to secure production and delivery of AstraZeneca’s COVID-19 vaccine,
Vaxzevria
.
Importantly, Mr Soriot ensured AstraZeneca was the first pharmaceutical company to sign up to COVAX, and within a year of the first
dose of the vaccine rolling off the production line, together with our partners we released over 2.5 billion doses of
Vaxzevria
to more than 180 countries across seven continents. Challenges were faced early on due to the complexities involved in manufacturing
vaccines which led to delays in the number of doses available for delivery to EU member states against original estimates. However, a
settlement was reached, under which AstraZeneca committed to deliver 200 million doses on an agreed schedule over the second half
of 2021 and first quarter of 2022. To date, AstraZeneca’s vaccine is estimated to have helped prevent 50 million COVID-19 cases, five
million hospitalisations, and helped save more than one million lives.
Mr Soriot has also reinforced the Group’s commitment to continuing the fight against COVID-19 with the launch of a new Vaccines &
Immune Therapies Unit. With continued strong demand for AstraZeneca’s vaccines, as well as
Evusheld
, the only long-acting antibody
with Phase III data demonstrating benefit in both the prevention and treatment of COVID-19, and with a focus on helping the most
vulnerable people, Mr Soriot has cemented AstraZeneca’s position as an industry leader in the pandemic response.
Demonstrating
leadership to support
developments in global
life sciences
Throughout 2021, Mr Soriot demonstrated his influence and respected position as a world leader on key issues in healthcare through
his multiple engagements with senior external stakeholders.
Highlights included participation in the World Economic Forum Davos Dialogues, the World Health Assembly and notably also the
G7 Leaders’ Summit where Mr Soriot was the only business leader and only healthcare executive to be invited to attend.
Leading in
Environmental, Social &
Governance (ESG)
performance
Under Mr Soriot’s leadership, AstraZeneca has continued to demonstrate commitment to its ESG practice, and to maintain a leadership
position externally across the industry with its sustainability strategy delivery. In 2021, Mr Soriot launched the cross-healthcare sector
SMI Health Systems task force with HRH The Prince of Wales and global health leaders to accelerate the delivery of net-zero
patient-centric healthcare. Mr Soriot is the Chair for this task force.
In recognition of the Company’s efforts, AstraZeneca was awarded the Terra Carta seal at COP26 by HRH The Prince of Wales as part
of the Sustainable Markets Initiative (SMI). AstraZeneca is also one of only seven companies worldwide (and the only pharmaceutical) to
have its climate targets verified by the Science Based Targets initiative (SBTi).
AstraZeneca was double A listed on CDP for the sixth year running, and since launching Healthy Heart Africa we have now conducted
over 22 million blood pressure screenings.
Making AstraZeneca a
Great Place to Work
Mr Soriot continues to oversee and drive accountability for AstraZeneca’s I&D strategy throughout the organisation as Chair of
AstraZeneca’s global I&D council.
The Group’s progress was recognised externally in 2021, with AstraZeneca’s inclusion on the 2021 Bloomberg Gender-Equality Index,
Diversity Inc’s 2021 Top 50 companies for diversity and Top 50 companies for LGBT employees, the Financial Times 2021 Leaders in
Diversity, Forbes 2021 World’s Top Female-Friendly Companies and the Time Top 50 employers for women.
For the second year running, AstraZeneca earned the maximum score of one hundred on the Human Rights Campaign Index, resulting
in a designation as one of the 2021 Best Places to Work for LGBTQIA+ Equality. The Group also launched pilots of the Clinical Trial
Diversity Index. This Index will help AstraZeneca to make data driven decisions that improve trial diversity while providing data we need
to show the benefit of our medicines in diverse patient populations.
We continued to accelerate our Great Place to Work ambition of building a culture of lifelong learning, through development
programmes aimed at rising leaders from the Emerging Markets, women leaders, senior leaders and the launch of functional learning
academies. Fifteen thousand line managers participated in training to develop their coaching capabilities, underpinning a successful
transition to our new performance development approach, with the removal of performance ratings for the first time in 2021.
The impact of these development interventions and our continued focus on building a learning culture was reflected in the November
Pulse survey, with 90% of employees taking time to complete the survey. 85% of employees believe that AstraZeneca is a Great Place
to Work and 88% believe they had an opportunity to improve their existing skills and learn new skills.
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Additional Information
Financial Statements
Corporate Governance
Strategic Report
Annual bonus
continued
Aradhana Sarin
Leading in
Environmental, Social
and Governance (ESG)
performance
Since being appointed as CFO, Dr Sarin has become a member of the Ambition Zero Carbon Governance Group. This group holds
responsibility for monitoring the progress on Ambition Zero Carbon – AstraZeneca’s commitment to become zero carbon by 2025
across operations (sites and fleet) without carbon credits, and carbon negative in the AstraZeneca value chain by 2030. As a leader on
this committee and in close partnership with Corporate Affairs and Global Government Affairs and Policy teams, Dr Sarin has helped
the Governance Group establish a leadership position for AstraZeneca externally.
Alexion integration
In her short time as CFO, Dr Sarin has demonstrated strong leadership along with the ability to quickly identify efficiencies and
improvements. These qualities have been integral to the programme of work to integrate Alexion and secure the anticipated synergies
arising from the acquisition.
Creating an enterprise-
wide impact through
Global Business
Services (GBS)
Under Dr Sarin’s leadership for the second half of the year, in 2021 a total of over 200,000 hours were freed up, and GBS delivered more
than $160 million in benefits with over $20 million saved through process optimisation and innovation.
In the second half of the year GBS expanded the scope of its services in procurement, tax, learning and digital solutions, expanding
automation, process mining and analytics and AI. Significant changes were made in the operating model to further unlock the potential
of the function and reinforce process standardisation.
Marc Dunoyer
Mr Dunoyer held the role of CFO and Executive Director of AstraZeneca in 2021 until he stepped down from the Board with effect from 1 August 2021 to take on
his new role as CEO, Alexion and Chief Strategy Officer, AstraZeneca. As CFO, his exceptional global financial leadership enabled AstraZeneca to have another
successful year in unprecedented times.
Alexion acquisition
Mr Dunoyer’s leadership in the first half of 2021 delivered the successful completion of the Alexion transaction in July 2021. This
milestone achievement accelerated AstraZeneca’s strategic and financial journey, adding Rare Disease as a third growth engine
alongside Oncology and BioPharmaceuticals.
Leading in
Environmental, Social
and Governance (ESG)
performance
In 2021, Mr Dunoyer continued as Executive Sponsor of AstraZeneca’s award-winning, global philanthropy initiative: the Young Health
Programme (YHP). Led by Mr Dunoyer, YHP expanded into seven new countries in 2021. It reached more than four million young people
and trained more than 60,000 healthcare practitioners. Through its partnership with UNICEF, YHP developed five global learning
modules and a Youth Advocacy Guide to increase youth involvement.
Japan
In 2021, Mr Dunoyer played a critical role in leading AstraZeneca Japan through another year of strong performance and growth,
becoming the largest pharmaceutical company in Japan in 2021, up from 5th in 2020.
Significant approvals obtained during the year included
Calquence
for chronic lymphocytic leukemia,
Forxiga
in chronic heart failure
and chronic kidney disease and
Saphnelo
for systemic lupus erythematosus. Throughout the year AstraZeneca Japan successfully
launched
Breztri
and was the market leader in
Tagrisso
(which in 2021 achieved more than 100 billion YEN in annual sales),
Imfinzi
,
Lynparza
,
Nexium
,
Fasenra
,
Forxiga
and
Lokelma
.
Under Mr Dunoyer’s leadership, and one year after launch, AstraZeneca has the largest open innovation ecosystem in Japan. Over the
year, 15 innovation projects were initiated to develop healthcare solutions that have the potential to transform disease management and
patient outcomes.
Creating an enterprise-
wide impact through
Global Business
Services (GBS)
In the first half of 2021, under Mr Dunoyer’s leadership, GBS contributed successfully to transforming interactions with healthcare
practitioners through support to virtual and hybrid meetings, fostering a culture of lifelong learning by supporting the delivery and the
management of digital learning, and standardising and automating adverse events reporting, product quality complaints and medical
information requests.
Final determination of Executive Directors’ bonuses
In determining the annual bonus outturn for Executive Directors, the Remuneration Committee considers the formulaic Group scorecard outcome,
as well as the overall business performance, shareholder experience and the personal contribution of the individual Executive. A description of
the Executive Directors’ personal achievements is detailed above.
In consideration of his exceptional leadership and personal contribution – particularly in relation to AstraZeneca’s COVID-19 response and the
successful integration of Alexion – the Committee determined the bonus outturn for Mr Soriot should be 190% of target (or 95% of maximum).
This amounted to 237.5% of base pay. This is in line with the approach to differentiate bonus awards for individuals in the wider workforce that
have made an exceptional contribution in 2021.
The Committee determined the bonus outturn for Dr Sarin should be 168% of target (or 84% of maximum, 168% of base pay) and, for the period
which he served as an Executive Director, the bonus outturn for Mr Dunoyer should be 168% of target (or 84% of maximum, 168% of base pay).
110
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Corporate Governance
Annual Report
on Remuneration
continued
Deferred Bonus Plan
A proportion of each Executive Director’s pre-tax annual bonus is compulsorily deferred under the Deferred Bonus Plan (DBP). In respect of the
bonus deferred, the Executive Director is granted a conditional award over shares. No further performance conditions apply to DBP shares, but
release at the end of the three-year deferral period is ordinarily subject to continued employment. One half of the bonus earned in respect of
performance during 2020 was deferred and details of the consequent DBP awards granted in 2021 are shown below. One half of the Executive
Directors’ bonus earned in respect of performance during 2021 has been deferred and the consequent DBP awards are expected to be granted
in March 2022.
Audited
2021 Grant 2022 Grant
Ordinary Shares
granted
Grant date
Grant price
(pence per share)
1
Face value
£’000
2021 Bonus deferred
£’000
Pascal Soriot
16,944
5 March 2021
6844
1,160
1,576
Aradhana Sarin
2
n/a n/a n/a n/a
298
Marc Dunoyer
9,057
5 March 2021
6844
620
386
1
2
bonus in respect of the 2021 nancial year, will be deferred to shares expected to be granted in March 2022.
2022 Group scorecard performance measures and metrics
Measure weighting
Underlying metrics (if applicable)
Metric weighting 2022 target
Innovative Science: Annual pipeline progression
30%
Pipeline progression events
15%
C
Regulatory events
15%
C
Deliver Growth and Therapy Area Leadership
30%
Total Revenue
30%C
Achieve Group Financial Targets
40%
Cash flow
20%C
Core EPS
20%
C
Key
Target increased vs 2021 target
Target decreased vs 2021 target
Target constant
C
Commercially sensitive
We intend to disclose the 2022 Group scorecard outcome, and details of the performance hurdles and targets, in the 2022 Directors’
Remuneration Report following the end of the performance period. The performance targets are currently considered to be commercially
sensitive as prospective disclosure may prejudice the Company’s commercial interests. Executive Directors’ individual contribution will be
assessed by reference to individual goals in line with the Company’s objectives for the year.
Annual bonus
continued
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AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Long-term incentives
Long-term incentives included in the Executive Directors’ realised pay for 2021 figure: 2019 PSP
Mr Soriot’s and Mr Dunoyer’s realised pay for 2021 includes the value of PSP awards with performance period ended 31 December 2021.
These shares and dividend equivalents will not be released to the Directors until the awards vest at the end of their respective holding periods.
The values of the shares due to vest have been calculated using the average closing share price over the three-month period ended 31 December
2021 (8722 pence). The table below provides a breakdown showing the face value of these shares at the time they were granted, the value that is
attributable to share price appreciation since grant and the value of dividend equivalents accrued on these shares over the relevant performance
period. Further information about the individual awards and performance assessments follows the table.
Dr Sarin was appointed to the Board in August 2021 and therefore does not have a 2019 PSP award.
Audited
Long-term incentive awards with performance periods ended 31 December 2021
Value of shares due to vest
Ordinary Shares
granted
Performance
outcome
Face value
at time
of grant
1
£’000
Value due to
share price
appreciation
2
£’000
Dividend equivalent
accrued over
performance period
£’000
Long-term
incentives total
£’000
Pascal Soriot
2019 PSP
102,475
95%
6,120
2,371
619
9,110
Marc Dunoyer
2019 PSP
48,690
95%
2,908
1,127
294
4,328
1
2
The 2019 PSP awards granted on 8 March 2019 are due to vest and be released on 8 March 2024 on completion of a further two-year holding
period. Performance over the period from 1 January 2019 to 31 December 2021 will result in 95% of the award vesting, based on the following
assessment of performance. As noted on page 99, the 2019 PSP targets were reviewed in light of the enlarged Group following the acquisition of
Alexion. The Innovative Science, Deliver Growth and Therapy Area Leadership and EBITDA targets were all increased in line with the Committee’s
approach of ensuring performance targets are not materially more or less stretching as a result of the transaction and to continue to incentivise
strong delivery. No amendments were made to the TSR or Cash flow performance measures.
2019 PSP performance measures and metrics
1
Weighting
Threshold
(20%
vesting)
Maximum
(100%
vesting)
Outcome
Payout
Innovative Science: First approvals and NME
volume over three years
NME Phase III/registrational volume
8%
7
13
15
100%
Regulatory events
12%
10
19
100%26
Subtotal – Innovative Science
2
20%
100%
Leadership ($bn)
20%
25.0
30.0
31.0
100%
20%
10.0
14.0
15.5
100%
EBITDA ($bn)
20%
19.0
24.0 22.0
75%
Total shareholder return
20%
Median
UQ
3
UQ
100%
Total
2
100%
95%
Key:
1
the Company’s results. The Committee is condent that the increases applied to the targets during that review ensured that
they remained ambitious and stretching. The Company does not intend to disclose the original Deliver Growth and Therapy
Area Leadership target, set prior to the acquisition, as the adjustment to the target relates to a single disease area (Rare
Disease), which is therefore commercially sensitive. The other original targets were disclosed in the Company’s Annual
Report for the year ended 31 December 2019.
2
3
The Deliver Growth and Therapy Area
Leadership target (measuring aggregate
Product Sales of the Oncology, New CVRM,
Respiratory, Japan and Emerging Markets
sales platforms, previously referred to as
growth platforms) and EBITDA target are set
at budget exchange rates at the beginning
of the performance period and evaluated at
those rates at the end of the performance
period, so that any beneficial or adverse
movements in currency, which are outside
the Company’s control, do not impact
reward outcomes.
The EBITDA measure is assessed using
cumulative Reported EBITDA, excluding
non-cash movements on fair value of
contingent consideration on business
combinations and gains on disposals
of intangible assets.
The Cash flow measure is assessed using
cumulative net cash flow from operating
activities less capital expenditure adding back
proceeds from disposal of intangible assets
and movement in profit participation liability.
AstraZeneca ranked fifth within the TSR peer
group, in the upper quartile.
Company and the TSR comparator group, see page 122.
112
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
PSP awards granted during 2021
During 2021, conditional awards of shares were granted to the Executive Directors with face values equivalent to 650% of base pay for Pascal
Soriot and 450% of base pay for Dr Sarin under the PSP. Dr Sarin’s award was pro-rated to reflect that she took up her role as CFO part way
through the year. Face value is calculated using the grant price, being the average closing share price over the three dealing days preceding grant.
The 14 May 2021 grant, following the approval of the policy at the 2021 AGM, was made at the same share price as the 5 March 2021 grant.
Mr Dunoyer received a conditional award whilst he was CFO and Executive Director with a face value equivalent to 450% of his base pay.
Mr Dunoyer stepped down from the Board on 1 August 2021 but remains an employee of AstraZeneca and therefore his in-flight incentive
awards will continue to run their course.
Performance will be assessed over the period from 1 January 2021 to 31 December 2023 against the measures outlined below to determine
the proportion of the award that vests. A further two-year holding period will then apply before vesting, which is scheduled to occur on the fifth
anniversary of grant.
Ordinary
Shares
granted
Grant
date
Grant price
(pence per
share)
Face value
£’000
End of
performance period
End of
holding period
Pascal Soriot
106,655
5 March 2021
6844
7, 2 9 9
31 December 2023
5 March 2026
Pascal Soriot
1
19,391
14 May 2021
6844
1,327
31 December 2023
14 May 2026
Marc Dunoyer
51,828
5 March 2021
6844
3,547
31 December 2023
5 March 2026
Aradhana Sarin
19,414
13 August 2021
8209
1,594
31 December 2023
13 August 2026
1
2021 AGM.
The 2021 PSP performance measures focus on scientific, ESG, commercial and financial performance over the three-year performance period.
The 2021 PSP performance measure targets were reviewed in light of the enlarged Group following the acquisition of Alexion and adjustments
were made in line with the Committee’s approach of ensuring performance targets should not be made materially more or less stretching as a
result of the transaction and to continue to incentivise strong delivery.
The five performance metrics attached to the 2021 PSP awards are detailed below with targets shown as adjusted by the Committee following its
review on completion of the Alexion acquisition, as described on page 99. Twenty percent of the award will vest if the threshold level of
performance is achieved; the maximum level of performance must be achieved under each measure for 100% of the award to vest.
Relative total shareholder return (TSR) (20% of award)
TSR performance is assessed against a predetermined peer group of global pharmaceutical companies and consists of AbbVie, Amgen, Astellas,
BMS, Daiichi Sankyo, Gilead, GSK, Johnson & Johnson, Lilly, MSD, Novartis, Novo Nordisk, Pfizer, Roche, Sanofi and Takeda. The rank which the
Company’s TSR achieves over the performance period will determine how many shares will vest under this measure.
TSR ranking of the Company % of award that vests
Median
20% (threshold for payout)
Between median and upper quartile
Pro rata
Upper quartile
100%
Audited
Long-term incentives
continued
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Additional Information
Financial Statements
Corporate Governance
Strategic Report
Long-term incentives
continued
Net Cash flow (20% of award)
The Cash flow measure is assessed using cumulative net cash flow from operating activities less capital expenditure adding back proceeds
from disposal of intangible assets. The level of vesting under this measure is based on a scale between a threshold target and an upper target.
Cash flow % of award that vests
$19.0bn
20% (threshold for payout)
Between $19.0bn and $23.0bn
Pro rata
$23.0bn
75%
Between $23.0bn and $27.0bn
Pro rata
$27.0bn and above
100%
Deliver Growth and Therapy Area Leadership (20% of award)
For PSP awards granted in 2021, the Deliver Growth and Therapy Area Leadership metric is Total Revenue. Disclosing the threshold and
maximum hurdles for this measure could be construed to constitute financial guidance, which is not the Company’s intention. The Deliver Growth
and Therapy Area Leadership (Total Revenue) measure is thus considered to be commercially sensitive and will be disclosed following the end of
the performance period, in the 2023 Directors’ Remuneration Report. This measure is evaluated by reference to budget exchange rates.
Innovative Science: First approvals and NME volume over three years (30% of award)
Performance is assessed using dual indices which measure regulatory and pipeline progression events, allowing disclosure of targets at the
beginning of the performance period.
NME Phase III/registrational volume
(12% of award) % of award that vests Regulatory events (18% of award) % of award that vests
9
20% (threshold for payout)
13
20% (threshold for payout)Between 9 and 14
Pro rata
Between 13 and 20Pro rata
14
75%
20
75%Between 14 and 18
Pro rata
Between 20 and 26Pro rata
18
100%
26
100%Ambition Zero Carbon (10% of award)
This measure reflects the importance of eliminating greenhouse gas (GHG) emissions from our Scope 1 and Scope 2 operations by 2025.
Reductions are measured against our 2015 baseline, and calculated in line with the World Resources Institute/World Business Council for
Sustainable Development GHG Protocol methodology for accounting and reporting of our emissions footprint. As part of the adjustment of 2021
targets to reflect the impact of the Alexion acquisition, described on page 99, the Ambition Zero Carbon target has been expressed in ktCO
2
e
(kilotonnes of carbon dioxide equivalent) rather than as a percentage change from our 2015 baseline. Expressing the target and our performance
in ktCO
2
e is intended to be more transparent and understandable, thereby more clearly reflecting the impact we want to have on society.
Emissions (ktCO
2
e)
% of award that vests
272 ktCO
2
e
20% (threshold for payout)
Between 272 ktCO
2
e and 246ktCO
2
e
Pro rata
246 ktCO
2
e
75%
Between 246 ktCO
2
e and 220 ktCO
2
e
Pro rata
220 ktCO
2
e and below
100%
Audited
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AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
Long-term incentives
continued
PSP performance measures for 2022 grant
The 2022 PSP measures remain unchanged from the 2021 PSP award.
PSP performance measure
Measure weighting
Underlying metrics (if applicable)
Metric weighting
Threshold
(20%
vesting)
Maximum
(100%
vesting)
Innovative Science: First
approvals and NME volume over
three years
30%
NME Phase III/registrational volume
12%
7
14
Regulatory events
18%
14
28
Deliver Growth and
Therapy Area Leadership
20%
Total Revenue
Commercially sensitive
until end of
performance period
Cash flow
20%
$20.0bn
$28.5bn
Relative TSR
20%
Median
Upper
Quartile
Ambition Zero Carbon
10%
207 ktCO
2
e
155 ktCO
2
e
Regulatory events measure NME and major life-cycle management approvals (taking into account the first approval over the performance
period). NME Phase III/registrational volume measures the total NME pipeline volume at the end of the performance period. These two items
ensure that management are assessed on both R&D late-stage delivery (approvals) and also future pipeline sustainability (volume). The name
of the Innovative Science measure has been updated, however the underlying metrics remain unchanged.
Disclosing the threshold and maximum hurdles for the Deliver Growth and Therapy Area Leadership (Total Revenue) measure could be
construed to constitute financial guidance, which is not the Company’s intention. The Total Revenue measure is thus considered to be
commercially sensitive and will be disclosed following the end of the performance period.
The Total Revenue measure is evaluated by reference to budget exchange rates such that beneficial or adverse movements in currency, which
are outside the Company’s control, do not impact reward outcomes. The Cash flow measure is evaluated using net cumulative cash flow from
operating activities less capital expenditure adding back proceeds from disposal of intangible assets. The companies in the TSR comparator
group are shown on page 122. As 2021 saw AstraZeneca enter a new chapter in its Growth Through Innovation Strategy, with the acquisition of
Alexion and the emergence of the Vaccines & Immune Therapies Unit, the Committee reviewed the composition of the TSR peer group. This
review considered size (revenue and market capitalisation), portfolio comparison and geographic presence, with the Committee determining
that Merck KGaA and Moderna be added to the peer group for the 2022 PSP award.
Our Ambition Zero Carbon measure is based on our Scope 1 and Scope 2 emissions reductions. Further detail on our commitment can be
found from page 45.
As described on page 104, the Committee takes into account a wide range of data to ensure that the stretching nature of PSP hurdles is
robustly tested and that financial targets are aligned with the business’s Mid Term Plan. The Committee will take consensus into account when
determining the appropriate level of stretch.
PSP awards are expected to be granted to the Executive Directors in March 2022. The PSP award to be granted to Dr Sarin will be equivalent
to 450% of base pay. The PSP award to be granted to Mr Soriot will be equivalent to 650% of base pay.
115
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Non-Executive Directors’ realised pay for 2021 (total single gure of remuneration)
The table sets out all elements of remuneration receivable by the Non-Executive Directors in respect of the year ended 31 December 2021,
alongside comparative figures for the prior year.
2021
Fees
£’000
2020
Fees
£’000
2021
Other
£’000
2020
Other
£’000
2021
Total
£’000
2020
Total
£’000
Leif Johansson
625
625
74
73
699
698
Euan Ashley –
appointed 1 October 2020
103
26
–
103–
26
Philip Broadley
173
148
–
148–
173
Michel Demaré
148
125
–
125–
148
Deborah DiSanzo
108
108
–
108–
108
Diana Layfield –
appointed 1 November 2020
92
15
–
92–
15
Sheri McCoy
127
123
–
123–
127
Tony Mok
103
103
–
103–
103
Nazneen Rahman
131
118
–
118–
131
Andreas Rummelt –
appointed 1 August 2021
40
–
40–
––
Marcus Wallenberg
107
103
–
103–
107
Former Non-Executive Directors
Geneviève Berger –
retired
11 May 2021
37
110
––
37110
Graham Chipchase –
retired
11 May 2021
37
141
––
37141
Total
1,831
1,745
74
1,90573
1,818
The Chair’s single total figure includes office costs (invoiced in Swedish krona) of £74,000 for 2021 and £73,000 for 2020.
Payments to former Directors
During 2021, no payments were made to former Directors.
Payments for loss of office
During 2021, no payments were made to Directors for loss of office. Marc Dunoyer stepped down from the Board in August 2021, however has
remained an employee of AstraZeneca and therefore his in-flight incentive awards will continue to run their course.
Non-Executive Directors’ fee structure
The Non-Executive Directors’ fee structure for 2022 is set out in the table below, alongside the structure in place during 2021. Fees for the
Non-Executive Directors (other than the Chair of the Board) are determined by the Chair and the Executive Directors. The fee structure is
reviewed, but not necessarily increased every two years. Non-Executive Directors’ fees were last changed in January 2018, with increases
to the Chair’s fee, the basic Board fee for other Non-Executive Directors and Science Committee fees.
With effect from January 2022, the basic Board fee for Non-Executive Directors, the senior independent Non-Executive Director’s fee, and fees
for membership of the Audit Committee and the Remuneration Committee have been increased as shown in the table below. No Board member
participated in any decision relating to their own fees.
As part of the latest review, the increased size and complexity of the AstraZeneca Group following the Alexion acquisition was taken into account
together with the increase in the Board’s and its key Committees’ workloads and responsibilities since 2018. Market data on FTSE 10 companies’
non-executive directors fees were also considered, in addition to data from FTSE 30 companies, to ensure that the level of fees do not hinder the
recruitment of Directors of the right experience and calibre for a Group of our scale in a global market.
Further information on the Non-Executive Directors’ fee structure can be found within the Remuneration Policy on the Company’s website,
www.astrazeneca.com.
Non-Executive Director fees
2021
£’000
2022
£’000
Chair of the Board
1
625
625
Basic Non-Executive Director
88
95
Senior independent Non-Executive Director
30
40
Member of the Audit Committee
20
25
Chair of the Audit Committee
2
45
45
Member of the Remuneration Committee
15
20
Chair of the Remuneration Committee
2
40
40
Member of the Sustainability Committee
3
15
15
Chair of the Sustainability Committee
2,3
30
30
Member of the Science Committee
15
15
Chair of the Science Committee
2
30
30
Non-Executive Director responsible for overseeing sustainability matters on behalf of the Board
3
7.5
N/A
1
2
3
Audited
Non-Executive Directors’ remuneration
116
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
Directors’ shareholdings
Audited
Position against minimum shareholding requirement (MSR) as a percentage of base pay
Beneficially owned
shares and shares in
a holding period
1
Shares in
deferral period
2
Shares subject
to performance
conditions
Value of shares
counted towards
MSR as a % of
base pay
3
Pascal Soriot
293,439
35,527
324,6011,076%
Aradhana Sarin
27,957
160,385
19,414
1,104%
1
2
3
Shares subject to performance conditions are not included in the value of shares counted towards MSR.
Minimum shareholding requirements
The CEO and CFO are each required to build a shareholding to satisfy their respective minimum shareholding requirements (MSR), each within
five years of their dates of appointment. The minimum shareholding requirements for 2021 are set out below. Shares that count towards these
minimum shareholding requirements are shares beneficially held by the Executive Director and their connected persons and share awards that
are not subject to further performance conditions. Share awards included are DBP shares in deferral periods, and PSP and AstraZeneca
Investment Plan (AZIP) shares in holding periods, on a net of tax basis. Dr Sarin’s one-off restricted share award and the awards made to replace
her in-flight Alexion incentive awards are also included on a net-of-tax basis.
A further post-employment shareholding requirement applies to Executive Directors. For two years following cessation of employment, Executive
Directors are required to hold shares to the value of the shareholding guideline that applied at the cessation of their employment; or, in cases
where the individual has not had sufficient time to build up shares to meet their guideline, the actual level of shareholding at cessation. The
post-cessation requirement will be maintained through self-certification, with the Committee keeping this approach under review.
Non-Executive Directors are encouraged to build up, over a period of three years, a shareholding in the Company with a value approximately
equivalent to the basic annual fee for a Non-Executive Director (£88,000 during 2021) or, in the case of the Chair, approximately equivalent to his
basic annual fee (£625,000 during 2021). All Non-Executive Directors who had served for a period of three years or more as at 31 December 2021
substantially met this expectation, based on the three-month average closing share price for the period ended 31 December 2021.
Directors’ interests as at 31 December 2021
The following table shows the beneficial interests of the Directors (including the interests of their connected persons) in Ordinary Shares as at
31 December 2021.
Executive Directors
Beneficial interest in
Ordinary Shares at
31 December 2021
1
Beneficial interest in
Ordinary Shares at
31 December 2020
1
Pascal Soriot
293,439
358,272
Aradhana Sarin
2
27,957
–
Marc Dunoyer
3
363,688
294,875
Non-Executive Directors
Leif Johansson
39,009
39,009
Euan Ashley
4
1,150
1,150
Philip Broadley
7,045
7,04 5
Michel Demaré
2,000
2,000
Deborah DiSanzo
1,000
1,000
Diana Layfield
5
1,400
1,400
Sheri McCoy
1,736
1,736
Tony Mok
2,000
1,000
Nazneen Rahman
1,017
1,017
Andreas Rummelt
6
34,790
–
Marcus Wallenberg
60,028
60,028
1
2
3
4
5
6
Key:
2021 MSR Shares counted towards MSR
1,076%
1,104%
650%
CEO
450%
CFO
117
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Directors’ shareholdings
continued
Executive Directors’ share plan interests
The following tables set out the Executive Directors’ interests in Ordinary Shares under the Company’s share plans.
Pascal Soriot
Shares outstanding at
31December2021
Share scheme interests
Grant date
Shares
outstanding at
1 January 2021
Grant
price
(pence)
Shares
granted
in year
Shares
released
in year
Shares
lapsed
in year
Shares
subject to
performance
Shares
in deferral/
holding
period
Performance
period end
Vesting and
release date
DBP
23/03/2018
13,157
23/03/20214853
13,157–
–
n/a
–
n/a
1,2
08/03/2019
9,849
6287
– – –
n/a
9,849
n/a
08/03/2022
06/03/2020
8,734
06/03/20237376
– – –
n/a
8,734
n/a
05/03/2021
– –
6844
–16,944
n/a
16,944
n/a
05/03/2024
3
PSP
24/03/2016
102,473
24/03/20213923
102,473–
–
– –
31/12/2018
4,5
24/03/2017
121,258
24/03/20224880
– – –
–
121,258
31/12/2019
23/03/2018
128,889
4853
– –
1,289
–
127,6 0 0
31/12/2020
23/03/2023
6
08/03/2019
102,475
6287
– – –
102,475
–
31/12/2021
08/03/2024
06/03/2020
87,3 4 6
7376
– – –
87,3 46
–
31/12/2022
06/03/2025
21/05/2020
8,734
7376
– – –
8,734
–
31/12/2022
21/05/2025
05/03/2021
–
6844
106,655
–
– 106,655
–
31/12/2023
05/03/2026
7
14/05/2021
–
6844
19,391
–
– 19,391
–
31/12/2023
14/05/2026
7
AZIP
11/0 6/2013
89,960
3297
89,960–
–
– –
31/12/2016
01/01/2021
8,9
28/03/2014
20,677
3904
– – –
–
20,677
31/12/2017
01/01/2022
27/03/2015
13,095
4762
– – –
–
13,095
31/12/2018
01/01/2023
24/03/2016
10,809
3923
– – –
–
10,809
31/12/2019
01/01/2024
Total
717,456
142,990
205,590
1,289
324,601
328,966
1
2
3
4
5
6
7
8
9
Aradhana Sarin
Shares outstanding at
31December2021
Share scheme interests
Grant/
conversion
date
Shares
outstanding at
1 August 2021
Grant
price
(pence)
Shares
granted
in period
Shares
released
in period
Shares
lapsed
in period
Shares
subject to
performance
Shares
in deferral/
holding
period
Performance
period end
Vesting and
release date
Alexion incentive shares
1
21/07/2021
4,589.5
1
– 4,589.5 –
n/a
–
n/a
12/11/20 21
2
21/07/2021
1,331.5
1
– – –
n/a
1,331.5
n/a
28/02/2022
21/07/2021
3,252
1
– – –
n/a
3,252
n/a
21/07/2022
21/07/2021
3,252
1
– – –
n/a
3,252
n/a
28/02/2022
21/07/2021
42,284
1
– – –
n/a
42,284
n/a
28/02/2022
21/07/2021
4,289.5
1
– – –
n/a
4,289.5
n/a
01/02/2023
21/07/2021
4,289.5
1
– – –
n/a
4,289.5
n/a
21/07/2022
21/07/2021
46,525
1
– – –
n/a
46,525
n/a
21/07/2022
21/07/2021
4,290
1
– – –
n/a
4,290
n/a
28/02/2022
21/07/2021
9,648.5
1
– – –
n/a
9,648.5
n/a
01/02/2023
21/07/2021
9,649
1
– – –
n/a
9,649
n/a
01/02/2023
21/07/2021
9,649
1
– – –
n/a
9,649
n/a
21/07/2022
21/07/2021
9,649
1
– – –
n/a
9,649
n/a
28/02/2022
RSU award
13/08/2021
– –
01/02/20238209
– 12,276
n/a
12,276
n/a
3
PSP
13/08/2021
–
8209
19,414
–
–19,414 –
31/12/2023
13/08/2026
Total
152,669
31,690
04,589.5
19,414
160,385
1
in-ight awards were converted to awards over AstraZeneca ADRs in accordance with the terms of the Merger Agreement, using the average of the volume-weighted averages of the trading
price of AstraZeneca ADRs on the Nasdaq from 13 July to 19 July 2021 inclusive ($58.2622). The face value of the converted awards was $17.8m. The number shown is the number of Ordinary
Shares underlying the ADRs.
2
3
Audited
118
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
Directors’ shareholdings
continued
Marc Dunoyer
Shares outstanding at
1 August2021
Share scheme interests
Grant date
Shares
outstanding at
1 January 2021
Grant
price
(pence)
Shares
granted
in period
Shares
released
in period
Shares
lapsed
in period
Shares
subject to
performance
Shares
in deferral/
holding
period
Performance
period end
Vesting and
release date
DBP
23/03/2018
7,0 37 37
23/03/20214853
7,0–
–
n/a
–
n/a
1,2
08/03/2019
4,874
6287
– – –
n/a
4,874
n/a
08/03/2022
06/03/2020
–4,323
7376
n/a
4,323
n/a
06/03/2023
05/03/2021
–6844
– 9,057
n/a
9,057
n/a
05/03/2024
3
PSP
24/03/2016
42,739
24/03/20213923
42,739–
–
– –
31/12/2018
4,5
24/03/2017
57,655
24/03/20224880
– – –
–
57,65 5
31/12/2019
23/03/2018
61,240
4853
– –
613
–
60,627
31/12/2020
23/03/2023
6
08/03/2019
48,690
6287
– – –
48,690
–
31/12/2021
08/03/2024
06/03/2020
–41,501
7376
41,501
–
31/12/2022
06/03/2025
05/03/2021
–6844
–51,828
51,828
–
31/12/2023
05/03/2026
7
AZIP
01/08/2013
8,176
3302
8,176–
–
– –
31/12/2016
01/01/2021
8,9
28/03/2014
–8,709
3904
–
8,709
31/12/2017
01/01/2022
27/03/2015
5,734
4762
– – –
–
5,734
31/12/2018
01/01/2023
24/03/2016
4,508
3923
– – –
–
4,508
31/12/2019
01/01/2024
Total
295,186
60,885
57,952
613
142,019
155,4871
2
3
4
5
6
7
8
9
No Director or senior executive beneficially owns, or has options over, 1% or more of the issued share capital of the Company, nor do they have
different voting rights from other shareholders. None of the Directors has a beneficial interest in the shares of any of the Company’s subsidiaries.
Between 31 December 2021 and 10 February 2022, there was no change in the interests in Ordinary Shares for current Directors shown in the
tables on pages 117 to 119.
Remuneration in the wider context
In our Corporate Governance Report on page 84, we explain in detail how the Board has chosen to engage with AstraZeneca’s workforce, and
how important engagement with our employees is if we are to be a great place to work and continue to deliver outstanding performance. The
Directors believe that the Board as a whole should continue to take responsibility for gathering the views of the workforce. Consequently, instead
of implementing one of the three methods for workforce engagement prescribed in the 2018 UK Corporate Governance Code, the Board chose
to enhance and develop the long-standing channels of engagement which already exist in the organisation to ensure that the Board continues
to understand the global workforce’s views on a wide variety of topics, including matters relating to remuneration.
In light of the challenging conditions in a COVID-19 year, Directors’ (including members of the Remuneration Committee) in-person engagement
was replaced with virtual interactions. The Committee communicates with, and receives feedback from, employees through a variety of channels,
including virtual meetings with high potential employees in the business and attending virtual site visits. This allows the Committee to
communicate with employees on remuneration matters where appropriate. Remuneration Committee members review wide-ranging data on
reward across our global workforce, as well as broader information on workforce trends and culture, which is also provided to the full Board.
The Committee receives in-depth reports throughout the year on colleague pay, benefits, incentives, performance management approach and
broader talent policies at AstraZeneca to ensure that the Committee is informed of wider workforce remuneration when making executive pay
decisions. Decisions of the Remuneration Committee affecting employees, such as the annual Group scorecard outcomes, are communicated to
employees through internal communications as well as through the Remuneration Report. In the event that more significant changes to workforce
remuneration are proposed, active engagement with employee representative groups provides feedback to help the Committee understand the
impact upon the broader workforce.
When considering executive remuneration, the Committee takes into consideration our global workforce, looking to ensure the global total
reward offering is competitive, compelling and aligned to our business performance, while supporting a culture where everyone feels valued and
included, as outlined in the table on page 120. Being a great place to work is one of our three strategic priorities. We explain in our Business
Review from page 40 the role that reward plays in developing a diverse culture that encourages and rewards innovation, entrepreneurship and
high performance.
119
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
In carrying out its responsibilities, the Committee has taken into account the principles outlined in the UK Corporate Governance Code. The
Committee believes that the remuneration structures in place are aligned to the Company’s culture and values and ensure the successful delivery
of our strategy, as set out on page 103. The Committee believes the remuneration structures under the Directors’ Remuneration Policy, and those
for the wider workforce as set out below, are simple, clearly understood and proportionate. The Committee also regularly engages with
shareholders, as set from page 98, and considers their feedback when reviewing the Directors’ Remuneration Policy and implementation. For
example, as outlined on page 99, the Committee amended the names of the Innovative Science measures in response to investor feedback, to
provide additional clarity and ensure that the measures are easily understood. Employees are also provided with updates.
Summary of remuneration structure for employees below the Board
Element
Policy features for the wider workforce
Comparison with Executive Director
and Senior Executive Team (SET) remuneration
Base pay
Our base pay is the basis for a competitive total reward package
for all employees, and we review base pay annually. This review
takes account of country budget, relevant market comparators,
the skills, capabilities, knowledge and experience of each
individual, relative to peers within the Company and individual
contribution.
In setting the budget each year, we consider affordability as well
as assessing how employee base pay is currently positioned
relative to market rates, forecasts of any further market increases
and turnover.
The base pay of our Executive Directors and SET form the basis
of their total remuneration, and we review their base pay annually.
The primary purpose of the review is to ensure base pay remains
competitive and reflects the value of the individual to the
organisation.
Pensions and benefits
We offer market-aligned wellbeing benefit packages reflecting
market practice in each country in which we operate.
Where appropriate, we offer elements of personal benefit choice
to our employees.
The benefit packages of our Executive Directors and SET are
broadly aligned with the wider workforce of the country in which
they are employed. Pension allowances for current UK Executive
Directors are in line with the wider UK workforce.
Annual bonus
With the exception of our sales representatives receiving
sales-related incentives, our global workforce participates in the
same annual cash bonus plan as the Executive Directors and
SET, with the same Group scorecard performance measures
outlined on pages 108 and 111. Achievement against the
scorecard creates a bonus pool from which all awards are made.
For employees within our commercial organisation, the
country-level share of the global bonus pool also takes into
account country performance against KPIs.
Individual outcomes are based on manager assessment of
contribution against individual objectives and peers. Awards are
based on a 0-200% target range.
The ranges for Executive Directors and the SET align with the
wider workforce at 0-200% of target. Half of any award to an
Executive Director under the plan is subject to deferral into shares
subject to a three-year holding period. One sixth of any award to
SET under the plan is deferred into shares subject to a three-year
holding period.
Long-term
incentives
The PSP is operated with a three-year performance period for
employees at Vice-President and Senior Vice-President level,
with the same performance measures that apply to Executive
Director and SET PSP awards (outlined on pages 112 to 115).
A proportion of our workforce below Vice-President level is
eligible to be considered for other long-term incentive awards,
such as restricted stock awards.
PSP awards to Executive Directors and SET are granted under
the same plan as PSP awards granted to Vice-Presidents. PSP
awards to Executive Directors and SET are subject to a two-year
holding period following the three-year performance period.
Remuneration in the wider context
continued
120
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
Change in Director remuneration compared to other employees
In the table below, as per the requirements of the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations
2019, changes to the base pay (or fees), taxable benefits and annual bonus of Directors are compared to employees for the previous financial
year. The regulations require comparison between the remuneration of each Director and that of all employees of the parent company on a
full-time equivalent basis. As AstraZeneca PLC has no direct employees, and in line with our disclosure approach in prior years to changes in
employee remuneration, the selected comparator group is comprised of employees in the UK, US and Sweden who represent approximately
30% of our total employee population. We consider that this group is representative of the Group’s major science, business and enabling units.
These employee populations are also well balanced in terms of seniority and demographics.
Change in 2021 against 2020 (%)
Change in 2020 against 2019 (%)
Base pay/fees
Benefits
Annual bonus
Base pay/fees
Benefits
Annual bonus
Executive Directors
Pascal Soriot
3.0%
1.1%
35.9%0.0%
-2.7%
20.0%
Aradhana Sarin
1
– – –
– – –
Marc Dunoyer
2
-39.9%
-32.5%
-37.7%
0.0% 25.0%
29.6%
Non-Executive Directors
Leif Johansson
3
0.0%
1.4%
–
0.0%
1.4%
–
Euan Ashley
4
300.0%
– –
– – –
Geneviève Berger
5
-66.2%
– –
0.0%
– –
Philip Broadley
16.9%
– –
2.8%
– –
Graham Chipchase
6
-73.9%
– –
-10.8%
– –
Michel Demaré
18.7%
– –
247. 2%
– –
Deborah DiSanzo
0.0%
– –
0.0%
– –
Diana Layfield
7
525.6%
– –
0.0%
– –
Sheri McCoy
3.0%
– –
– – –
Tony Mok
0.0%
– –
0.0%
– –
Nazneen Rahman
11.0%
– –
0.0%
– –
Andreas Rummelt
8
– – –
–Marcus Wallenberg
3.6%
– –
0.0%
– –
Employees
4.9% 4.9%
44.4%
4.1% 4.1%
-11.6%
1
2
3
4
5
6
7
8
CEO and employee pay ratios
The table below sets out the ratios of the CEO’s realised pay to the equivalent pay for the lower quartile, median and upper quartile UK employees
(calculated on a full-time equivalent basis). The ratios have been calculated in accordance with the Companies (Miscellaneous Reporting)
Requirements 2018 (the Regulations).
Year
1
Method
25th percentile pay ratio
50th percentile pay ratio 75th percentile pay ratio
2021
Option A
240:1
162:1
106:12020
Option A
284:1
197:1
130:1
2019
Option A
190:1280:1
123:1
2018
Option A
230:1
160:1
103:1
1
The comparison with UK employees is specified by the Regulations. This group represents approximately 10% of our total employee population.
The Regulations provide flexibility to adopt one of three methods of calculation; we continue to use Option A which is a calculation based on all
UK employees on a full-time equivalent basis as we consider this to be the most appropriate method of comparison and in line with the calculation
of CEO’s realised pay (shown on page 105 for 2021). The ratios are based on total pay, which includes base pay, benefits, bonus and long-term
incentives (LTI) with all elements adjusted on a full-time equivalent basis if required. Our calculations are in line with the single figure methodology
for UK employees where possible, with quartile data as determined as at 31 December 2021. Calculations for UK employees are based on actual
base pay and benefits data for the year, with estimates only used for annual bonus outcomes and LTI dividend equivalent payments. These
estimates are based on the 2021 bonus budget and projected payouts, and anticipated dividend equivalent payments on LTI awards, respectively.
No elements of pay have been excluded from the calculation, which has been determined following the approach of previous years.
Remuneration in the wider context
continued
121
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
CEO and employee pay ratios
continued
CEO
UK employees
25th percentile
50th percentile 75th percentile
Pay data
1
(£’000)
Base pay
Total pay
Base pay
Total payBase pay
Total payBase pay
Total pay2021
1,327
13,858
43
5861
86 86
130
2020
1,289
15,447
41
54
60
78
82
119
2019
1,289
14,330
38
51
53
75
71
117
2018
1,251
11,356
36
4950
71
70
110
1
The 2021 CEO pay ratios were lower across all quartiles when compared to 2020, primarily due to a lower LTI performance outcomes and share
price appreciation. Additionally, 2021 saw a fall in fixed pay as pension contributions for the CEO were reduced to align with the wider UK
workforce.
Given the Committee’s focus on ensuring CEO pay is performance driven, the majority of the single figure is comprised of variable pay and
therefore may vary significantly year-on-year due to annual bonus and PSP outcomes, as well as share price movements. The Committee
therefore also considers the CEO pay ratio without the LTI impact. When excluding the LTI, the pay ratio of the CEO compared to the median
UK employee is 57:1, an increase on 53:1 in 2020, and 51:1 in both 2018 and 2019. This change is due to a higher annual bonus award in 2021
for the CEO, in line with the approach to differentiate awards for individuals in the wider workforce that have made an exceptional contribution
during the year.
The Committee remains mindful of the debate on executive pay and seeks to ensure that when determining the remuneration of the CEO it finds
the right balance when rewarding performance in a highly competitive global executive talent market. It believes the median ratio is consistent
with the pay and progression policies for UK employees, which ensures our total reward offering is competitive and compelling, and aligned to
individual and business performance as set out on page 120.
Relative importance of spend on pay
The table below shows the remuneration paid to all employees in the Group, including the Executive Directors, and expenditure on shareholder
distributions through dividends. The figures have been calculated in accordance with the Group Accounting Policies and drawn from either the
Company’s Consolidated Statement of Comprehensive Income on page 134, or its Consolidated Statement of Cash Flows on page 137.
Further information on the Group’s Accounting Policies can be found from page 138.
2021
$m
2020
$m
Difference
in spend
between
years
$m
Difference
in spend
between
years
%
Total employee remuneration
10,276
8,247
2,029
24.60
Distributions to shareholders: dividends paid
3,856
3,572
284
7.95
Total shareholder return (TSR)
The graph below compares the TSR performance of the Company over the past 10 years with the TSR of the FTSE 100 Index. This graph is
re-based to 100 at the start of the relevant period. As a constituent of the FTSE 100, this index represents an appropriate reference point for the
Company. To provide shareholders with additional context we have also included a ‘Pharmaceutical peers average’, reflecting the TSR of our
comparator group which is used to assess relative TSR performance for PSP awards granted in 2019. It consisted of AbbVie, Amgen, Astellas,
BMS, Celgene, Daiichi Sankyo, Gilead, GSK, Johnson & Johnson, Eli Lilly, MSD, Novartis, Novo Nordisk, Pfizer, Roche, Sanofi, Shire and Takeda.
Where a comparator company delisted during the 2019 performance period as a result of an acquisition, TSR performance has been assessed
up unto the point of de-listing. The TSR comparator group for PSP awards to be granted in 2022 consists of AbbVie, Amgen, Astellas, BMS,
Daiichi Sankyo, Eli Lilly, Gilead, GSK, Johnson & Johnson, Merck KGaA, Moderna, MSD, Novartis, Novo Nordisk, Pfizer, Roche, Sanofi and
Takeda. CEO remuneration over the same 10-year period is shown after the TSR graph.
TSR over a 10-year period
AstraZeneca
Pharmaceutical peers average
FTSE 100
Dec
11
100
150
200
250
300
350
400
450
Dec
12
Dec
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
Dec
20
Dec
21
122
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
CEO total remuneration table
Year
CEO
CEO
realised pay
£’000
Annual bonus
payout against
maximum
opportunity
%
LTI vesting
rates against
maximum
opportunity
%
2021
Pascal Soriot
13,858
1
95 95
2020
Pascal Soriot
15,934
2
90
99
2019
Pascal Soriot
15,307
83
90
2018
Pascal Soriot
12,868
83
79
2017
Pascal Soriot
10,429
87
81
2016
Pascal Soriot
14,342
3
54
95
2015
Pascal Soriot
7,9 63
97
78
2014
Pascal Soriot
3,507
94
–
2013
Pascal Soriot
3,344
94
–
2012
Pascal Soriot –
appointed with eect from 1 October 2012
3,693
4
68
–
2012
Simon Lowth –
acted as interim CEO from June to September 2012 inclusive
3,289
86
38
5
2012
David Brennan –
ceased to be a Director on 1 June 2012
4,147
6
–
7
38
1
2
3
4
both in respect of his previous employment.
5
6
7
would be awarded and also that there should be no bonus award relating to his contractual notice period.
Grant of Restricted Stock Units under Listing Rule 9.4.2
The Directors’ Remuneration Policy (the Policy) specifically permits the Company to introduce a one-off share award under Listing Rule 9.4.2
(LR9.4.2) as part of recruitment arrangements for Executive Directors. The Committee was satisfied that the circumstances of Dr Sarin’s
recruitment and, in particular, the forfeiture of contractual severance arrangements that she would otherwise have been entitled to with Alexion,
were sufficiently unusual such that a one-off share award would meet the requirements of LR9.4.2.
Details of the award (as required by the terms of LR9.4.2) are as follows:
Ordinary
Shares
granted
Grant
date
Grant price
(pence per
share)
Vesting date
Aradhana Sarin
12,276
13 August 2021
8209
1 February 2023The award will normally only vest to the extent that Dr Sarin remains employed by AstraZeneca through to the vesting date. If Dr Sarin leaves
employment before that date and is not a good leaver, the award will lapse. If she is a good leaver, her award will vest on the date she ceases
employment, pro-rated for the period that she was in employment. The circumstances in which Dr Sarin would be a good leaver include if she
leaves by reason of death, ill health, injury or at the discretion of the Remuneration Committee. The award will vest on a change of control of
AstraZeneca subject to pro-rating for the period through to the change of control.
The number of shares under the award, the basis for determining Dr Sarin’s entitlement to shares, the terms of the award relating to adjustment
on any capitalisation issue, rights issue or open offer, subdivision or consolidation or reduction of capital or any other variation of capital cannot
be altered to the advantage of Dr Sarin without the prior approval of shareholders in a general meeting (except for minor amendments to benefit
the administration of the award, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory
treatment for Dr Sarin or AstraZeneca).
The award is not pensionable and may only be satisfied by shares purchased on the market. No shares may be issued or transferred from
treasury to satisfy the award.
Remuneration in the wider context
continued
123
AstraZeneca Annual Report & Form 20-F Information 2021Directors’ Remuneration Report / Annual Report on Remuneration
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Governance
Committee membership
During 2021, the Committee members were Michel Demaré (Chair of the Committee), Leif Johansson, Sheri McCoy and Philip Broadley. The
Deputy Company Secretary acts as secretary to the Committee. The Committee met six times in 2021 and members’ attendance records are set
out on page 73. During the year, the Committee was materially assisted, except in relation to their own remuneration, by the CEO; the CFO; the
VP Finance Group Controller; the SVP, Global Portfolio/Project Management and Strategic Planning; the EVP, Human Resources and General
Counsel; the SVP, Reward and Inclusion; the Senior Director Executive Reward; the Company Secretary; the Deputy Company Secretary; EVP,
Sustainability and Chief Compliance Officer; the Non-Executive Director responsible for overseeing sustainability matters on behalf of the Board;
and the Non-Executive Directors forming the Science and Sustainability Committees. The Committee’s independent adviser attended all
Committee meetings.
Independent adviser to the Committee
The Committee reappointed Willis Towers Watson (WTW) as its independent adviser. WTW were first appointed in September 2018, following
a tender process undertaken in 2018. The tender process involved submission of written proposals, followed by shortlisted candidates being
interviewed by both Committee members and members of the Company’s management. WTW’s service to the Committee during 2021 was
provided on a time spent basis at a cost to the Company of £169,950, excluding VAT. During 2021, WTW also provided pensions advice and
administration, and advice and support to management including market data to assist in the annual employee pay review and global pay survey
data. WTW have no other connection with the Company or individual Directors. The Committee reviewed the potential for conflicts of interest
related to WTW and judged that there were no conflicts. WTW is a member of the Remuneration Consultants’ Group, which is responsible for
the stewardship and development of the voluntary code of conduct in relation to executive remuneration consulting in the UK. The principles
on which the code is based are transparency, integrity, objectivity, competence, due care and confidentiality. WTW adheres to the code.
Malus and clawback
The Remuneration Committee regularly reviews the Company’s approach to malus and clawback and market practice in this area, and our
Directors’ Remuneration Policy outlines the trigger events and the time periods these provisions may apply to. As a condition of annual bonus
and Performance Share Plan awards, the Committee seeks active acceptance of the malus and clawback terms applicable each year before any
payment or grant is made to an individual. Additionally, the Committee’s practice is to fully document and evidence any application of malus or
clawback to show that it has not acted arbitrarily, capriciously or irrationally in making any determination. This allows the Committee to:
>
reduce the amount of bonus or PSP payable, or claw-back some or all of any award in the circumstances and periods as set out within our Policy
>
cancel bonus eligibility
>
prevent vesting of the PSP and/or DBP awards by holding the shares in AstraZeneca’s LTI nominee platform to prevent transactions.
Shareholder voting at the AGM
At the Company’s AGM on 11 May 2021, shareholders voted in favour of a resolution to approve the Directors’ Remuneration Policy and
Annual Report on Remuneration for the year ended 31 December 2020. The Policy can be found on the Company’s website,
www.astrazeneca.com/annualreport2021.
Resolution
Votes for
% for
Votes against % against
Total votes cast
% of Issued
Share
Capital voted
Withheld
votes
Ordinary Resolution to approve the Annual Report on
Remuneration for the year ended 31 December 2020
915,909,189
95.42
43,957,696
4.58
959,866,885
73.12
1,662,608
Ordinary Resolution to approve the Directors’
Remuneration Policy
564,935,789
60.19
373,708,27739.81
938,644,066
71.50
21,415,088The response to the shareholder vote to approve the Directors’ Remuneration Policy at the 2021 AGM is outlined in the Remuneration Committee
Chair’s letter on page 101.
Directors’ service contracts and letters of appointment
The notice periods and unexpired terms of Executive Directors’ service contracts at 31 December 2021 are shown in the table below.
Executive Director
Effective date of service contract Unexpired term at 31 December 2021
Notice period
Pascal Soriot
15 December 2016
12 months 12 months
Aradhana Sarin
1 August 2021
12 months 12 months
None of the Non-Executive Directors has a service contract but each has a letter of appointment. In accordance with the Company’s Articles,
following their appointment, all Directors must retire at each AGM and may present themselves for re-election. The Chair of the Board may
terminate his appointment at any time, on three months’ notice. None of the other Non-Executive Directors has a notice period or any provision
in their letters of appointment giving them a right to compensation upon early termination of appointment.
Basis of preparation of this Directors’ Remuneration Report
This Directors’ Remuneration Report has been prepared in accordance with the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 (as amended) (the 2013 Regulations). As required by the 2013 Regulations, a resolution to approve the
Annual Report on Remuneration will be proposed at the AGM on 29 April 2022.
On behalf of the Board
A C N Kemp
Company Secretary
10 February 2022
124
AstraZeneca Annual Report & Form 20-F Information 2021
Corporate Governance
Annual Report
on Remuneration
continued
Financial
Statements
Preparation of the Financial Statements
and Directors’ Responsibilities
126
Auditors’ Report
127
Consolidated Statements
134
Group Accounting Policies
138
Notes to the Group
Financial Statements
145
Group Subsidiaries and Holdings
197
Company Statements
202
Company Accounting Policies
204
Notes to the Company Financial
Statements
206
Group Financial Record
209
Key
KJ
SE
125
Corporate Governance Additional Information
Financial Statements
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
The Directors are responsible for preparing this Annual
Report and Form 20-F Information and the Group and
Parent Company Financial Statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare
Financial Statements for each financial year. Under
that law the Directors have prepared the Group
Financial Statements in accordance with UK-adopted
International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable
to companies reporting under those standards and
Parent Company Financial Statements in accordance
with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure Framework”,
and applicable law). In preparing the Group Financial
Statements, the Directors have also elected to comply
with International Financial Reporting Standards issued
by the International Accounting Standards Board
(IASB) and International Accounting Standards as
adopted by the European Union.
Under company law, the Directors must not approve
the Financial Statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and Parent Company and of their profit or
loss for that period. In preparing each of the Group and
Parent Company Financial Statements, the Directors
are required to:
>
select suitable accounting policies and
then apply them consistently
>
make judgements and estimates that are
reasonable and prudent
>
for the Group Financial Statements,
state whether they have been prepared in
accordance with UK-adopted International
Accounting Standards
>
for the Parent Company Financial Statements,
state whether FRS 101 has been followed, subject
to any material departures disclosed and explained
in the Parent Company Financial Statements
>
prepare the Financial Statements on the going
concern basis unless it is inappropriate to presume
that the Group and the Parent Company will
continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Parent Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the Parent Company and enable
them to ensure that its Financial Statements comply
with the Companies Act 2006. They have general
responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Directors’ Report,
Strategic Report, Directors’ Remuneration Report,
Corporate Governance Report and Audit Committee
Report that comply with that law and those regulations.
The Directors are responsible for the maintenance
and integrity of the corporate and financial information
included on our website. Legislation in the UK
governing the preparation and dissemination of
Financial Statements may differ from legislation in
otherjurisdictions.
Directors’ responsibility statement
pursuant to DTR 4
The Directors confirm that to the best
ofourknowledge:
>
the Financial Statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fairview of the assets, liabilities,
financial position and profit or loss of the Company
and the undertakings included in the consolidation
taken as a whole
>
the Directors’ Report includes a fair review of the
development and performance of the business
and the position of the issuer and the undertakings
included in the consolidation taken as a whole,
together with a description of the principal risks
anduncertainties that they face.
On behalf of the Board of Directors on 10February 2022
Pascal Soriot
Director
The Directors are responsible for establishing and
maintaining adequate internal control over financial
reporting. AstraZeneca’s internal control over
financial reporting is designed to provide reasonable
assurance over the reliability of financial reporting
and the preparation of consolidated financial
statements in accordance with generally accepted
accounting principles.
Due to its inherent limitations, internal control over
financial reporting may not prevent or detect
misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risks
that controls may become inadequate because of
changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.
As disclosed in Note 27, the Company completed its
acquisition of Alexion Pharmaceuticals, Inc. during
2021. In accordance with SEC Staff Guidance
permitting a company to exclude an acquired business
from management’s assessment of the effectiveness
of internal control over financial reporting for the year in
which the acquisition is completed, the Company has
excluded this business from its assessment of the
effectiveness of internal control over financial reporting
as at 31 December 2021. This entity is included within
our 2021 Consolidated Financial Statements and
constituted approximately 9% of Total assets
(excluding goodwill and intangible assets resulting
from the acquisition) as at 31 December 2021 and
approximately 8% of Total Revenue for the year
ended 31 December 2021.
The Directors assessed the effectiveness of
AstraZeneca’s internal control over financial reporting
as at 31December 2021 based on the criteria set forth
by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated
Framework (2013). Based on this assessment, internal
control over financial reporting is effective.
PricewaterhouseCoopers LLP, an independent
registered public accounting firm, has audited the
effectiveness of internal control over financial reporting
as at 31 December 2021 and has issued an unqualified
report thereon.
Directors’ Annual Report on Internal
Controls over Financial Reporting
126
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Preparation of the Financial Statements
andDirectors’ Responsibilities
Additional InformationStrategic Report
Report on the audit of the
nancial statements
Opinion
In our opinion:
>
AstraZeneca PLC’s Group Financial Statements
and Parent Company Financial Statements (the
“financial statements”) give a true and fair view
of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2021 and of
the Group’s profit and the Group’s cash flows for
the year then ended;
>
the Group Financial Statements have been properly
prepared in accordance with UK-adopted
international accounting standards;
>
the Parent Company Financial Statements have
been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards,
comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
>
the financial statements have been prepared in
accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included
within the Annual Report and Form 20-F Information
2021 (the “Annual Report”), which comprise: the
Consolidated Statement of Financial Position as at
31 December 2021; the Consolidated Statement of
Comprehensive Income, the Consolidated Statement
of Changes in Equity, and the Consolidated Statement
of Cash Flows for the year then ended; the Group
Accounting Policies; the Notes to the Group Financial
Statements; the Parent Company Balance Sheet as at
31 December 2021; the Parent Company Statement of
Changes in Equity for the year then ended; the Parent
Company Accounting Policies; and the Notes to the
Parent Company Financial Statements.
Our opinion is consistent with our reporting to the
Audit Committee.
Separate opinion in relation to international
financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002
as it applies in the European Union and in
relation to IFRSs as issued by the IASB
As explained in the Group Accounting Policies to the
Group Financial Statements, the Group, in addition
to applying UK-adopted international accounting
standards, has also applied international financial
reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union
and international financial reporting standards (IFRSs)
as issued by the International Accounting Standards
Board (IASB).
In our opinion, the Group Financial Statements
have been properly prepared in accordance with
international financial reporting standards adopted
pursuant to Regulation (EC) No 1606/2002 as it
applies in the European Union and with IFRSs as
issued by the IASB.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities under ISAs
(UK) are further described in the Auditors’
responsibilities for the audit of the financial statements
section of our report. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which
includes the FRC’s Ethical Standard, as applicable
to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with
these requirements.
To the best of our knowledge and belief, we declare
that non-audit services prohibited by the FRC’s Ethical
Standard were not provided.
Other than those disclosed in note 31, we have
provided no non-audit services to the Group in the
period under audit.
Our audit approach
Overview
Audit scope
>
We identified 14 reporting components which
required a full scope audit of their complete financial
information, either due to their size or risk
characteristics. These components are the principal
operating units in the US (two components which
includes the newly acquired Alexion rare diseases
component), UK (two components), Sweden, China
(two components), Japan, France, Germany, South
Korea, Turkey as well as the Parent Company and
AstraZeneca Treasury.
>
We also identified a further 12 reporting
components which had one or more individual
balances that were considered significant to the
Group’s Financial Statements. For these
components our work was solely focussed on the
audit of one or more of the following financial
statement line items: revenue, accounts receivable,
inventory, cash and cash equivalents, non-current
interest-bearing loans and borrowings, research
and development expense, taxation and/or
property, plant and equipment.
>
We also identified four shared service centres
where audit procedures were performed over
certain shared service functions for transaction
processing. Audit procedures were performed
centrally in relation to various Group functions,
including the accounting for the acquisition of
Alexion Pharmaceuticals Inc., goodwill, intangible
assets (excluding software), pensions, certain cash
and borrowings, other investments and litigation
matters, as well as the consolidation.
>
The above procedures accounted for 87% of the
Group’s revenue and 74% of the Group’s absolute
profit before tax.
Key audit matters
>
Recognition and measurement of accruals
for certain rebates in the US excluding rare
diseases (Group)
>
Assessment of the recoverability of the carrying
value of intangible assets (excluding goodwill
and software development costs) (Group)
>
Recognition and measurement of legal provisions
and contingent liabilities in both the Group and the
Parent Company (Group and Parent Company)
>
Recognition and measurement of uncertain tax
positions (Group)
>
Valuation of the Group’s defined benefit
obligations (Group)
>
Accounting for the acquisition of Alexion
Pharmaceuticals, Inc – valuation of the acquired
intangible assets, inventory and contingent
liabilities (Group)
>
Accounting for sales, grant income and deferred
income relating to Vaxzevria (Group).
Materiality
>
Overall Group materiality: US$250m (2020:
US$200m) based on 5% of profit before tax after
adding back intangible asset impairment charges
(Note 10), fair value movements and discount
unwind on contingent consideration (Note 20), the
discount unwind on the Acerta Pharma put option
liability (Note 3), material legal settlements (Note 21),
the unwind of the fair value adjustment to Alexion
inventories (Note 2) and restructuring charges
relating to the Post Alexion Acquisition Group
Review (Note 2).
>
Overall Parent Company materiality: US$100m
(2020: US$100m) based on approximately 0.5% of
net assets as constrained by the allocation of overall
Group materiality.
>
Performance materiality: US$187.5m (Group) and
US$75m (Parent Company).
The scope of our audit
As part of designing our audit, we determined
materiality and assessed the risks of material
misstatement in the financial statements. In particular,
we looked at where the directors made subjective
judgements, for example in respect of significant
accounting estimates that involved making
assumptions and considering future events that are
inherently uncertain.
Key audit matters
Key audit matters are those matters that, in the
auditors’ professional judgement, were of most
significance in the audit of the financial statements of
the current period and include the most significant
assessed risks of material misstatement (whether or
not due to fraud) identified by the auditors, including
those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team.
These matters, and any comments we make on the
results of our procedures thereon, were addressed in
the context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by
our audit.
The accounting for the acquisition of Alexion
Pharmaceuticals Inc is a new key audit matter this
year. The impact of COVID-19 key audit matter has
been refined to address the accounting for Vaxzevria,
the COVID-19 vaccine. Otherwise, the key audit
matters below are consistent with last year.
127
Corporate Governance
Financial Statements
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
Independent auditors’ report to
the members of AstraZeneca PLC
Independent auditors’ report to
the members of AstraZeneca PLC
continued
Key audit matter How our audit addressed the key audit matter
Recognition and measurement of accruals for certain rebates in the US
(excluding rare diseases) (Group)
Refer to Audit Committee Report, Group Accounting Policies and Notes 1
and 20 in the Group Financial Statements
In the US the Group sells to customers under various commercial and
government mandated contracts and reimbursement arrangements that
include rebates, of which the most significant are Medicare Part D,
Managed Care and Medicaid.
Rebates provided to customers under these arrangements are accounted for
as variable consideration, and recognised as a reduction in revenue, for which
unsettled amounts are accrued. Management has determined an accrual of
$3,172m to be necessary at 31 December 2021 (2020: $3,126m) related to all
US product sales rebates, chargebacks, returns and other revenue accruals
for US product sales (which includes an immaterial amount for rare diseases).
There is significant measurement uncertainty involved in developing certain
of these accruals, as the reserves are based on assumptions developed using
contractual and mandated terms with customers, historical experience, and
market related information in the US. Changes in these estimates (individually
or in combination) can have a significant financial impact.
We evaluated the design and tested the operating effectiveness of controls
relating to the assumptions used to estimate the accruals for the Medicare
Part D, Managed Care and Medicaid rebate arrangements. We determined
that we could rely on these controls for the purposes of our audit.
We:
>
obtained management’s calculations for the accruals for the Medicare Part D,
Managed Care and Medicaid rebate arrangements;
>
developed an independent expectation of these accruals using the terms of
the specific rebate programmes, third party information on prices and market
conditions in the US and the historical trend of actual rebate claims paid;
>
compared the independent estimate to management’s estimates recorded by
the Group;
>
considered the historical accuracy of the Group’s estimates in previous years
and the effect of any adjustments to prior years’ accruals in the current year’s
results; and
>
tested rebate claims processed by the Group, including evaluating those
claims for consistency with the contractual and mandated terms of the
Group’s arrangements.
Based on the procedures performed, we did not identify any material
misstatements in the accruals.
We also evaluated the disclosures in Notes 1 and 20, which we considered
appropriate.
Assessment of the recoverability of the carrying value of intangible assets
(being product, marketing and distribution rights and other intangible assets
excluding goodwill and software development costs) (Group)
Refer to Audit Committee Report, Group Accounting Policies and Note 10 in the
Group Financial Statements
The Group has product, marketing and distribution rights and other intangible
assets excluding goodwill and software development costs (hereafter referred
to as the intangible assets) totalling $42,062m at 31 December 2021 (2020:
$20,627m). Those intangible assets under development and not available for use
are tested annually for impairment and other intangible assets are tested when
there is an indication of impairment.
The recoverability of the carrying values of cash generating units (to which the
intangible assets belong) depends on future cash flows and/or the outcome of
research and development activities including decisions by the Company to
terminate development. The determination of the recoverable amounts include
significant estimates, which are highly sensitive and depend upon key
assumptions including the probability of technical and regulatory success, and
the amount and timing of projected future cash flows (in particular peak year
sales and sales erosion curves). Changes in these assumptions could have an
impact on the recoverable amount of intangible assets. For one material asset
(Ardea) management determined that there was no recoverable value as the
Company has taken the decision to terminate development of verinurad.
During 2021, $2,085m (2020: $240m) of impairment charges were recorded
(of which $1,464m (2020: $55m) was recorded in Research and development
expenses and $621m (2020: $185m) within Selling, general and administrative
costs). There is limited headroom in the recoverable amount calculation for those
partially impaired assets and they are inherently sensitive to any variations in
assumptions, which could give rise to future impairments.
We evaluated the design and tested the operating effectiveness of controls over
management’s assessment of the impairment of intangible assets. We determined
that we could rely on these controls for the purposes of our audit.
We selected assets or cash generating units to be in scope based on our risk
assessment which considers the materiality of the carrying value, whether the
assets had been previously impaired in the last three years and/or whether there
have been events in the year which may indicate an impairment trigger. For those
assets or cash generating units in the scope of our audit we:
>
tested management’s process for assessing whether there is an indication
of impairment and the process for determining the recoverable amount;
>
evaluated the appropriateness of the methodology used in the impairment
models;
>
tested the completeness and accuracy of the models as well as the underlying
data used in the models, including reconciling the cash flows to the Board
approved Medium and Long Term Plans; and
>
evaluated the significant assumptions used by management in determining
future cash flows, including the probability of technical and regulatory
success, peak year sales and sales erosion curves.
In evaluating the reasonableness of management’s assumptions we:
>
compared significant assumptions (including management’s probability of
technical and regulatory success, peak year sales assumptions and sales
erosion curves) to external data and benchmarks; and
>
performed a retrospective comparison of forecasted revenues and costs
to actual past performance.
We utilised our in-house valuation experts to assess the valuation techniques
used and to assist with the evaluation of certain key assumptions for higher risk
assets (primarily the probability of technical and regulatory success).
As a result of our work, we determined that the net impairment charge of
$2,085m recorded for intangible assets was reasonable.
We considered the disclosures in Note 10 of the Group Financial Statements.
We are satisfied that these disclosures are appropriate.
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Financial Statements
Additional InformationStrategic Report
Key audit matter How our audit addressed the key audit matter
Recognition and measurement of provisions and contingent liabilities for
legal proceedings in both the Group and the Parent Company (Group and
Parent Company)
Refer to Audit Committee Report, Group Accounting Policies, Notes 21 and 30
in the Group Financial Statements
Refer to Company Accounting Policies and Note 5 in the Parent Company
Financial Statements
The Group is engaged in a number of legal proceedings, including patent
litigation, product liability, commercial litigation, and government investigations/
proceedings. At 31 December 2021 the Group held provisions of $239m (2020:
$348m) in respect of legal claims and settlements (together, legal provisions) and
disclosed the more significant legal proceedings as contingent liabilities in Note
30 of the Group Financial Statements. The Parent Company is also named in
certain of these legal proceedings, as disclosed in Note 5 in the Parent Company
Financial Statements.
There is significant judgement by management when assessing the likelihood
of a loss being incurred, in determining whether a reasonable estimate can be
made for the loss or range of loss for each legal proceeding and whether a legal
provision needs to be recorded or a contingent liability disclosed.
We evaluated the design and tested the operating effectiveness of controls in
respect of the recognition and measurement of legal proceedings and related
disclosures. We determined that we could rely on these controls for the
purposes of our audit.
We obtained and evaluated letters of audit inquiry with the Group’s internal and
external legal counsel.
We tested the completeness of management’s assessment of both the
identification of legal proceedings and possible outcomes of each significant
legal proceeding. This included assessment of whether the Parent Company
was named as a party to these legal proceedings.
We evaluated management’s judgement that each of the proceedings set out in
Note 30 represents a contingent liability and that for one matter management is
unable to estimate the possible loss or range of possible losses at this stage.
For the provisions recorded and contingent liabilities disclosed, we consider
them to be appropriate.
We evaluated the disclosures in Notes 21 and 30 of the Group Financial
Statements and Note 5 in the Parent Company Financial Statements and
considered them to be appropriate.
Recognition and measurement of uncertain tax positions (Group)
Refer to Audit Committee Report, Group Accounting Policies and Note 30 in the
Group Financial Statements
The Group operates in a complex multinational tax environment and is subject
to a range of tax risks, leading to uncertain tax positions which arise in the
normal course of business, including transaction related tax matters, transfer
pricing arrangements and a number of audits and reviews with tax authorities,
and in some cases is in dispute with tax authorities.
At 31 December 2021 the Group recorded accruals of $768m (2020: $1,014m) in
respect of these uncertain tax positions. As disclosed in Note 30, accruals can
be built up over a long period of time but the ultimate resolution of tax exposures
usually occurs at a point in time. Given the inherent uncertainties in management’s
assessments of the outcomes of these exposures, there could, in future periods,
be adjustments to these accruals that have a material positive or negative effect
on the results in any particular period.
We evaluated the design and tested the operating effectiveness of controls in
respect of the identification, recognition and measurement of uncertain tax
positions. We determined that we could rely on these controls for the purposes
of our audit.
We tested the completeness of management’s assessment of both the
identification of tax contingencies and the possible outcomes of each significant
matter. We also evaluated the status and results of tax audits and enquiries with
the relevant tax authorities.
With the assistance of our local and international tax specialists, we tested the
information used in the determination of the probability of different outcomes for
tax contingencies and the estimation of the liability for those tax contingencies
by jurisdiction, including management’s assessment of the technical merits of
tax positions (including where relevant evaluating any advice received from the
Group’s external advisors) and estimates of the amount of tax benefit expected
to be sustained.
We noted that the assumptions and judgements that are required to determine
the accruals mean that there is a range of possible outcomes. However, from the
evidence obtained, we considered the level of provisioning to be acceptable in
the context of the Group Financial Statements taken as a whole.
We considered the disclosures in Note 30 of the Group Financial Statements.
We are satisfied that these disclosures are appropriate.
Valuation of the Group’s defined benefit obligations (Group)
Refer to Audit Committee Report, Group Accounting Policies and Note 22 in the
Group Financial Statements
The Group has defined benefit obligations of $13,018m at 31 December 2021
(2020: $13,870m), which is significant in the context of the overall balance sheet.
The Group’s most significant schemes are in the UK and Sweden, which
comprise 79% of the Group’s defined benefit obligations.
The valuation of pension plan obligations requires estimation in determining
appropriate assumptions such as mortality, discount rates and inflation levels.
Movements in these assumptions can have a material impact on the
determination of the defined benefit obligations. Management uses external
actuaries to assist in determining these material assumptions.
We evaluated the design and tested the operating effectiveness of controls in
respect of the determination of the Group’s most significant defined benefit
obligations. We determined that we could rely on these controls for the purposes
of our audit.
We used our actuarial experts to assess whether the assumptions used in
calculating the defined benefit obligations for the UK and Sweden were
reasonable.
Our actuarial experts evaluated whether mortality assumptions, discount rates
and inflation rates were:
>
consistent with the specifics of each plan and where relevant considering
national information;
>
consistent with independently developed ranges;
>
in line with other companies’ recent external reporting; and
>
in line with the requirements of IAS 19.
We evaluated the calculations prepared by management’s external actuaries to
assess the impact of the assumptions used on the Group Financial Statements.
Based on our procedures, we noted no exceptions and considered
management’s key assumptions to be within reasonable ranges.
We assessed the appropriateness of the related disclosures in Note 22 of the
Group Financial Statements and considered them to be reasonable.
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Key audit matter How our audit addressed the key audit matter
Accounting for the acquisition of Alexion Pharmaceuticals, Inc. – valuation
of the acquired intangible assets, inventory and contingent liabilities
Refer to Audit Committee Report, Group Accounting Policies and Note 27 in the
Group Financial Statements
As described in Note 27 to the consolidated financial statements, on 21 July
2021 the Company acquired Alexion Pharmaceuticals, Inc. for consideration of
$41,058m. The Company has recorded the assets and liabilities acquired at fair
value which included the recognition of $26,855m of intangible assets and
$6,769m of inventory. Attributing fair values to assets acquired and liabilities
assumed as part of business combinations is considered to be a key judgement.
The purchase price allocation was performed with assistance from an
independent valuer specialist to advise on the valuation techniques and key
assumptions in the valuation, in particular in respect of the valuation of the
intangible assets and inventory.
The intangible assets were fair valued using the multi-period excess earnings
method, which uses a number of estimates regarding the amount and timing of
future cash flows. There is significant estimation required in determining the fair
value of the intangible assets in relation to the expected future cash flows to be
generated, which is highly sensitive to a change in those assumptions. The key
assumptions include the probability of technical and regulatory success (PTRS)
and the amount and timing of projected future cash flows (in particular peak year
sales and sales erosion curves).
The fair value of inventory also involves estimation and was calculated as the
estimated selling price less estimated costs to complete and sell the inventory,
the associated margins on those activities and holding costs.
The fair value of contingent liabilities was $76m, relating to various claims and
disputes in each case where there is a possible, but not probable, future financial
exposure, and involve an assessment of the likelihood of a number of scenarios
in relation to those matters. There is judgement by management when assessing
the likelihood of a loss being incurred and in determining the fair value of
acquired contingent liabilities including a reasonable estimate of the loss or
range of loss for each claim.
We evaluated the design and tested the operating effectiveness of controls
implemented by the Group relating to the accounting for the acquisition of
Alexion Pharmaceuticals, Inc. We determined that we could rely on these
controls for the purposes of our audit.
For each of intangible assets, inventory and contingent liabilities we:
>
tested management’s process and methodology (including assessing the
competency and objectivity of management’s specialists) for determining the
fair values,
>
utilised our in-house valuation experts to evaluate the appropriateness of the
valuation techniques used by management’s specialists; and
>
tested the completeness and accuracy of the models as well as the underlying
data used in the determination of the fair value.
For the fair value of the intangible assets acquired we evaluated the
reasonableness of the significant assumptions used by management and their
specialists in determining PTRS and the amount and timing of projected future
cash flows (in particular peak year sales and sales erosion curves). In making this
evaluation we:
>
compared significant assumptions (including management’s PTRS, peak year
sales assumptions and sales erosion curves) to historical market data,
benchmarking and other external data (where appropriate);
>
used our in-house valuation experts to assist in the evaluation of the
methodology and certain significant assumptions (including the PTRS); and
>
performed a retrospective comparison of forecasted revenues to actual past
performance for launched products.
In order to assess the reasonableness of the fair value of the inventory, we
utilised our in-house valuation experts to evaluate the appropriateness of the
valuation techniques and underlying assumptions. We also assessed whether
the assumptions relating to the costs to complete and sell the inventory and the
associated margins were consistent with evidence obtained from other areas
of the acquisition accounting.
For the fair value of the contingent liabilities we also tested the completeness of
management’s assessment of both the identification of legal claims and disputes
and whether these meet the definition of a liability to be recorded under IFRS 3.
We determined that the fair values ascribed to the acquired intangible assets,
inventory and contingent liabilities were reasonable.
We assessed the appropriateness of the disclosures in Note 27 of the Group
Financial Statements and considered them to be reasonable.
Accounting for sales, grant income and deferred income relating to
Vaxzevria (Group)
Refer to Audit Committee Report, Group Accounting Policies and Notes 1, 2 and
20 in the Group Financial Statements
In 2020, the Group entered into an arrangement with the University of Oxford
for the global development, production and supply of the COVID-19 vaccine,
Vaxzevria
. The Group has recorded revenue of $3,917m, collaboration revenue
of $64m and government grant income of $531m (which relates to both Vaxzevria
and Evusheld) in the year ended 31 December 2021. Certain advance sales
agreements have been entered into and the Group has recognised vaccine
contract liabilities of $1,003m and deferred government grant income of $67m.
We evaluated the design and tested the operating effectiveness of controls in
respect of the accounting for
Vaxzevria
. We determined that we could rely on these controls for the purposes of our audit.
We read the underlying funding and supply contracts based on our risk
assessment which included consideration of the materiality of the individual
contract. We assessed management’s accounting analysis including where
there was both supply and grant income. For revenue recognised we tested
transactions, on a sample basis as part of our overall revenue testing to
supporting evidence. For vaccine contract liabilities we vouched upfront
funding to bank statements for material arrangements. For grant income
we satisfied ourselves that income did not exceed related costs.
Based on the procedures performed we consider the accounting treatment
for sales of Vaxzevria and related grant income and deferred income to
be appropriate.
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Financial Statements
Independent auditors’ report to
the members of AstraZeneca PLC
continued
Additional InformationStrategic Report
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion
on the financial statements as a whole, taking into
account the structure of the Group and the Parent
Company, the accounting processes and controls,
and the industry in which they operate.
In establishing the overall approach to the Group audit,
we determined the type of work that needed to be
performed by us, as the Group engagement team, or
component auditors within PwC UK and other PwC
network firms operating under our instruction. Where
the work was performed by component auditors, we
determined the level of involvement we needed to have
in the audit work in these territories to be able to
conclude whether sufficient appropriate audit
evidence had been obtained as a basis for our opinion
on the Group Financial Statements as a whole.
The Group operates in over 100 countries and the size
of operations within each territory varies. We identified
14 reporting components which required a full scope
audit of their complete financial information, either due
to their size or risk characteristics. These components
are the principal operating units in the US (two
components which includes the newly acquired
Alexion Pharmaceuticals Inc. component), UK (two
components), Sweden, China (two components),
Japan, France, Germany, South Korea, Turkey as well
as the Parent Company and AstraZeneca Treasury.
We also identified a further 12 reporting components
which had one or more individual balances that were
considered significant to the Group’s Financial
Statements. For these components our work was solely
focussed on the audit of one or more of the following
financial statement line items: revenue, accounts
receivable, inventory, research and development
expense, taxation and/or property, plant and equipment.
We also identified four shared service centres where
audit procedures were performed over certain shared
service functions for transaction processing.
Financial statements – Group Financial statements – Parent Company
Overall materiality
US$250m (2020: US$200m).
US$100m (2020: US$100m).
How we determined it
Based on 5% of profit before tax after adding back intangible asset impairment
charges (Note 10), fair value movements and discount unwind on contingent
consideration (Note 20), the discount unwind on the Acerta Pharma put option
liability (Note 3), material legal settlements (Note 21), the unwind of the fair value
adjustment to Alexion inventories (Note 2) and restructuring charges relating to
the Post Alexion Acquisition Group Review (Note 2).
Approximately 0.5% of net assets as constrained
by the allocation of overall Group materiality.
Rationale for
benchmark applied
The reported profit of the Group can fluctuate due to intangible asset impairment
charges, fair value and discount unwind movements on contingent consideration,
the discount unwind on the Acerta Pharma put option liability, material legal
settlements and the unwind of the fair value adjustment to Alexion inventories. In
2021, the restructuring costs resulting from the Post Alexion Acquisition Group
Review resulted in a significant fluctuation to the Group’s reported profit.
These amounts are prone to year on year volatility and are not necessarily
reflective of the operating performance of the Group and as such they have been
excluded from the benchmark amount.
We have considered the nature of the business
of AstraZeneca PLC (being holding company
investment activities) and have determined that net
assets is an appropriate basis for the calculation
of the overall materiality level.
For each component in the scope of our group audit
we allocated a materiality that is less than our overall
Group materiality. The range of materiality allocated
across components was between $20m and $150m.
We use performance materiality to reduce to an
appropriately low level the probability that the
aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the
scope of our audit and the nature and extent of our
testing of account balances, classes of transactions
and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2020:
75%) of overall materiality, amounting to US$187.5m
(2020: US$150m) for the Group Financial Statements
and US$75m (2020: US$75m) for the Parent Company
financial statements.
In determining the performance materiality, we
considered a number of factors – the history of
misstatements, risk assessment and aggregation risk,
and the effectiveness of controls – and concluded
that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit Committee that we would
report to them misstatements identified during our
audit above US$12.5m (Group audit) (2020: US$10m)
and US$12.5m (Parent Company audit) (2020:
US$10m) as well as misstatements below those
amounts that, in our view, warranted reporting for
qualitative reasons.
Audit procedures were performed centrally in relation
to various Group functions, including the accounting
for the acquisition of Alexion Pharmaceuticals Inc.,
goodwill, intangible assets (excluding software),
pensions, certain cash and borrowings, other
investments and litigation matters, as well as the
consolidation. Our Group engagement team’s
involvement in the audits of the reporting components
was performed primarily by virtual meetings and tools
and included regular meetings with component
auditors, reviews of the component auditors’ planned
response to significant risks, the review of auditor
working paper reviews for material reporting
components and the review of the work performed by
the component auditors on the sub-consolidation of
Alexion. We attended meetings with local management
alongside the component auditors for all full scope and
other material components.
In planning and executing our audit, we considered
the potential impact of climate change on the Group’s
business and the financial statements. The Group has
set out its intention – as part of the Ambition Zero
Carbon programme – to achieve net-zero greenhouse
gas emissions by maximising energy efficiency,
shifting to renewable energy sources and investing
in nature-based removals to compensate for any
residual GHG footprint.
As a part of our audit we made enquiries of
management to understand the extent of the potential
impact of the physical and transitional climate change
risk on the Group Financial Statements. We also
discussed the climate change initiatives and
commitments from Ambition Zero Carbon and other
initiatives to reduce CO
2
emissions, and the impact
these have on the Group including on future cash flow
forecasts. This includes the commitment to develop
next-generation respiratory inhalers with near-zero
global warming potential propellants for the pMDI
inhaled medicines portfolio.
Management considers that the impact of climate
change does not give rise to a material financial
statement impact. With the assistance of our climate
change experts, we evaluated management’s risk
assessment and understood the Group’s governance
processes including the newly formed Sustainability
Committee. We reviewed relevant Board and Audit
Committee papers related to climate change and
performed an audit risk assessment of how the impact
of the Group’s commitments in respect of climate
change including Ambition Zero Carbon may affect
the financial statements and our audit.
We challenged the extent to which climate change
considerations including the expected cash flows from
the initiatives and commitments had been reflected,
where appropriate, in management’s impairment
assessment process, going concern assessment and
viability assessment. We found that climate change
impacts are included within management’s forecasts
although the initiatives and commitments did not have
a material impact including on our key audit matters.
We assessed the consistency of other information
disclosed in the Annual Report with the Group
Financial Statements, and with our knowledge
obtained from the audit.
Materiality
The scope of our audit was influenced by our
application of materiality. We set certain quantitative
thresholds for materiality. These, together with
qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial
statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in
aggregate on the financial statements as a whole.
Based on our professional judgement, we determined
materiality for the financial statements as a whole
as follows:
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Conclusions relating to going concern
Our evaluation of the directors’ assessment of the
Group’s and the Parent Company’s ability to continue
to adopt the going concern basis of accounting
included:
>
agreeing the underlying cash flow projections to
Board approved Medium and Long Term Plans,
assessing how these forecasts are compiled, and
assessing the accuracy of management’s forecasts;
>
evaluating the key assumptions within
management’s forecasts;
>
considering liquidity and available financial
resources;
>
assessing whether the stress testing performed by
management appropriately considered the principal
risks facing the business; and
>
evaluating the feasibility of management’s mitigating
actions in the stress testing scenarios.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group’s and the Parent
Company’s ability to continue as a going concern
for a period of at least twelve months from when
the financial statements are authorised for issue.
In auditing the financial statements, we have
concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate.
However, because not all future events or conditions
can be predicted, this conclusion is not a guarantee
as to the Group’s and the Parent Company’s ability
to continue as a going concern.
In relation to the directors’ reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation
to the directors’ statement in the financial statements
about whether the directors considered it appropriate
to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described
in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information
in the Annual Report other than the financial
statements and our auditors’ report thereon. The
directors are responsible for the other information
which includes reporting based on the Task Force
on Climate-related Financial Disclosures
recommendations. Our opinion on the financial
statements does not cover the other information and,
accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this
report, any form of assurance thereon.
In connection with our audit of the financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or
material misstatement, we are required to perform
procedures to conclude whether there is a material
misstatement of the financial statements or a material
misstatement of the other information. If, based on the
work we have performed, we conclude that there is a
material misstatement of this other information, we are
required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’
Report, we also considered whether the disclosures
required by the UK Companies Act 2006 have
been included.
Based on our work undertaken in the course of the
audit, the Companies Act 2006 requires us also to
report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the
course of the audit, the information given in the
Strategic Report and Directors’ Report for the year
ended 31 December 2021 is consistent with the
financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of the
Group and Parent Company and their environment
obtained in the course of the audit, we did not identify
any material misstatements in the Strategic Report and
Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration
Report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’
statements in relation to going concern, longer-term
viability and that part of the corporate governance
statement relating to the Company’s compliance with
the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities
with respect to the corporate governance statement
as other information are described in the Reporting
on other information section of this report.
Based on the work undertaken as part of our audit,
we have concluded that each of the following elements
of the corporate governance statement, included
within the Corporate Governance Report is materially
consistent with the financial statements and our
knowledge obtained during the audit, and we have
nothing material to add or draw attention to in
relation to:
>
The directors’ confirmation that they have carried
out a robust assessment of the emerging and
principal risks;
>
The disclosures in the Annual Report that describe
those principal risks, what procedures are in place
to identify emerging risks and an explanation of how
these are being managed or mitigated;
>
The directors’ statement in the financial statements
about whether they considered it appropriate to
adopt the going concern basis of accounting in
preparing them, and their identification of any
material uncertainties to the Group’s and Parent
Company’s ability to continue to do so over a period
of at least twelve months from the date of approval
of the financial statements;
>
The directors’ explanation as to their assessment of
the Group’s and Parent Company’s prospects, the
period this assessment covers and why the period
is appropriate; and
>
The directors’ statement as to whether they have a
reasonable expectation that the company will be
able to continue in operation and meet its liabilities
as they fall due over the period of its assessment,
including any related disclosures drawing attention
to any necessary qualifications or assumptions.
Our review of the directors’ statement regarding the
longer-term viability of the Group was substantially
less in scope than an audit and only consisted of
making inquiries and considering the directors’
process supporting their statement; checking that the
statement is in alignment with the relevant provisions
of the UK Corporate Governance Code; and
considering whether the statement is consistent with
the financial statements and our knowledge and
understanding of the Group and Parent Company and
their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of
our audit, we have concluded that each of the following
elements of the corporate governance statement is
materially consistent with the financial statements and
our knowledge obtained during the audit:
>
The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced
and understandable, and provides the information
necessary for the members to assess the Group’s
and Parent Company’s position, performance,
business model and strategy;
>
The section of the Annual Report that describes
the review of effectiveness of risk management and
internal control systems; and
>
The section of the Annual Report describing the
work of the Audit Committee.
We have nothing to report in respect of our
responsibility to report when the directors’ statement
relating to the company’s compliance with the Code
does not properly disclose a departure from a relevant
provision of the Code specified under the Listing Rules
for review by the auditors.
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Financial Statements
Independent auditors’ report to
the members of AstraZeneca PLC
continued
Additional InformationStrategic Report
Responsibilities for the nancial
statements and the audit
Responsibilities of the directors for the
financial statements
As explained more fully in the Preparation of the
Financial Statements and Directors’ Responsibilities,
the directors are responsible for the preparation of the
financial statements in accordance with the applicable
framework and for being satisfied that they give a true
and fair view. The directors are also responsible for
such internal control as they determine is necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due
to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the directors either intend to
liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole are
free from material misstatement, whether due to fraud
or error, and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities,
including fraud, is detailed below.
Based on our understanding of the Group and
industry, we identified that the principal risks of
non-compliance with laws and regulations related to
patent protection, product safety (including but not
limited to the US Food and Drug Administration
regulation), anti bribery and competition law (including
but not limited to the Foreign Corrupt Practices Act)
and tax legislation, and we considered the extent to
which non-compliance might have a material effect on
the financial statements. We also considered those
laws and regulations that have a direct impact on the
financial statements such as the Companies Act 2006.
We evaluated management’s incentives and
opportunities for fraudulent manipulation of the
financial statements (including the risk of override of
controls) and determined that the principal risks were
related to journal entries to manipulate financial results
and potential management bias in accounting
estimates. The Group engagement team shared this
risk assessment with the component auditors so that
they could include appropriate audit procedures in
response to such risks in their work. Audit procedures
performed by the Group engagement team and/or
component auditors included:
>
Evaluation and testing of the design and operating
effectiveness of management’s controls to prevent
and detect irregularities;
>
Discussions with VP Group Internal Audit, the
Deputy Chief Compliance Officer, the Head of
Global Investigations and the Group’s General
Counsel and Deputy General Counsels, including
consideration of known or suspected instances of
non-compliance with laws and regulations and fraud;
>
Assessment of matters reported on the Group’s
whistleblowing helpline and the results of
management’s investigation of such matters;
>
Challenging assumptions made by management
in its significant accounting estimates, in particular
in relation to the accounting for the acquisition of
Alexion Pharmaceuticals, Inc., recognition and
measurement of certain rebate accruals in the US
(excluding rare diseases), the impairment of
intangible assets (excluding goodwill and
software development costs), the recognition and
measurement of legal provisions and contingent
liabilities, the recognition and measurement of
uncertain tax positions, and the valuation of the
defined benefit obligations (see related key audit
matters above); and
>
Identifying and testing the validity of journal entries,
in particular any journal entries posted with unusual
account combinations, journals posted by senior
management and consolidation journals.
There are inherent limitations in the audit procedures
described above. We are less likely to become aware
of instances of non-compliance with laws and
regulations that are not closely related to events and
transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete
populations of certain transactions and balances,
possibly using data auditing techniques. However,
it typically involves selecting a limited number of items
for testing, rather than testing complete populations.
We will often seek to target particular items for testing
based on their size or risk characteristics. In other
cases, we will use audit sampling to enable us to draw
a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been
prepared for and only for the company’s members
as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other
person to whom this report is shown or into whose
hands it may come save where expressly agreed by
our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
>
we have not obtained all the information and
explanations we require for our audit; or
>
adequate accounting records have not been kept by
the Parent Company, or returns adequate for our
audit have not been received from branches not
visited by us; or
>
certain disclosures of directors’ remuneration
specified by law are not made; or
>
the Parent Company financial statements and the
part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting
records and returns.
We have no exceptions to report arising from
this responsibility.
Appointment
Following the recommendation of the Audit
Committee, we were appointed by the members on
27 April 2017 to audit the financial statements for the
year ended 31 December 2017 and subsequent
financial periods. The period of total uninterrupted
engagement is five years, covering the years ended
31 December 2017 to 31 December 2021.
Other required reporting
As required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R,
these Group Financial Statements form part of the
ESEF-prepared annual financial report filed on the
National Storage Mechanism of the Financial Conduct
Authority in accordance with the ESEF Regulatory
Technical Standard (ESEF RTS). This auditors’ report
provides no assurance over whether the annual
financial report has been prepared using the single
electronic format specified in the ESEF RTS.
Richard Hughes (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
10 February 2022
133
Corporate Governance
Financial Statements
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
Consolidated Statement of Comprehensive Income
for the year ended 31December
2021
2020
2019
Notes
$m
$m $m
Product Sales
1 36,541 25,890 23,565
Collaboration Revenue
1 876 727 819
Total Revenue 37,417 26,617 24,384
Cost of sales
(12,437 )
(5,299 )
(4,921 )
Gross profit 24,980 21,318 19,463
Distribution costs (339 )
(446 )
(399 )
Research and development expense
2
(9,736 )
(5,991 )
(6,059 )
Selling, general and administrative expense
2
(15,234 )
(11,294 )
(11,682 )
Other operating income and expense
2 1,492 1,528 1,541
Operating profit 1,056 5,162 2,924
Finance income
3 43 87 172
Finance expense
3
(1,300 )
(1,306 )
(1,432 )
Share of after tax losses in associates and joint ventures
11
(64 )
(27 )
(116 )
(Loss)/profit before tax 3,916 1,548
(265 )
Taxation
4 380
(772 )
(321 )
Profit for the period 115 3,144 1,227
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of the defined benefit pension liability
22 626
(168 )
(364 )
Net (losses)/gains on equity investments measured at fair value through other comprehensive income 938
(187 )
(28 )
Fair value movements related to own credit risk on bonds designated as fair value through profit and loss –
(1 )
(5 )
Tax on items that will not be reclassified to profit or loss
4 105 21
(81 )
(376 )
Items that may be reclassified subsequently to profit or loss:
Foreign exchange arising on consolidation
23 443 40
(483 )
Foreign exchange arising on designated borrowings in net investment hedges
23 573
(321 )
(252 )
Fair value movements on cash flow hedges 180
(167 )
(101 )
Fair value movements on cash flow hedges transferred to profit and loss 208 52
(254 )
Fair value movements on derivatives designated in net investment hedges
23 34 8 35
(Costs)/gains of hedging 9
(6 )
(47 )
Tax on items that may be reclassified subsequently to profit or loss
4 46 38
(39 )
(689 ) 920
(235 )
Other comprehensive (loss)/income for the period, net of tax 1,608
(145 )
(611 )
Total comprehensive (loss)/income for the period
(30 ) 4,752 616
Profit attributable to:
Owners of the Parent 112 3,196 1,335
Non-controlling interests 3
26
(52 )
(108 )
Total comprehensive (loss)/income attributable to:
Owners of the Parent 4,804 723
(33 )
Non-controlling interests 3
26
(52 )
(107 )
Basic earnings per $0.25
5
$0.08
$2.44
$1.03
Diluted earnings per $0.25
5
$0.08
$2.44
$1.03
Weighted average number of Ordinary Shares in issue (millions)
5 1,418 1,312 1,301
Diluted weighted average number of Ordinary Shares in issue (millions)
5 1,427 1,313 1,301
Dividends declared and paid in the period
25 3,882 3,668 3,579
All activities were in respect of continuing operations.
$m means millions of US dollars.
134
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Consolidated Statement of Financial Position
at 31December
2021
2020
2019
Notes
$m
$m $m
Assets
Non-current assets
Property, plant and equipment 7 9,183 8,251 7,688
Right-of-use assets
8 988 666 647
Goodwill
9 19,997 11,845 11,668
Intangible assets
10 42,387 20,947 20,833
Investments in associates and joint ventures
11 69 39 58
Other investments
12 1,168 1,108 1,401
Derivative financial instruments
13 102 171 61
Other receivables
14 895 720 740
Deferred tax assets
4 4,330 3,438 2,718
Current assets
Inventories
15 8,983 4,024 3,193
Trade and other receivables
16 9,644 7,022 5,761
Other investments
12 69 160 849
Derivative financial instruments
13 83 142 36
Intangible assets
10 105 – –
Income tax receivable 663 364 285
Cash and cash equivalents
17 6,329 7,832 5,369
Assets held for sale
18 368 – 70
Total assets 105,363 66,729 61,377
Liabilities
Current liabilities
Interest-bearing loans and borrowings
19
(1,660 )
(2,194 )
(1,822 )
Lease liabilities
8
(233 )
(192 )
(188 )
Trade and other payables
20
(18,938 )
(15,785 )
(13,987 )
Derivative financial instruments
13
(79 )
(33 )
(36 )
Provisions
21
(768 )
(976 )
(723 )
Income tax payable
(916 )
(1,127 )
(1,361 )
(22,594 )
(20,307 )
(18,117 )
Non-current liabilities
Interest-bearing loans and borrowings
19
(28,134 )
(17,505 )
(15,730 )
Lease liabilities
8
(754 )
(489 )
(487 )
Derivative financial instruments
13
(45 )
(2 )
(18 )
Deferred tax liabilities
4
(6,206 )
(2,918 )
(2,490 )
Retirement benefit obligations
22
(2,454 )
(3,202 )
(2,807 )
Provisions
21
(956 )
(584 )
(841 )
Other payables
20
(4,933 )
(6,084 )
(6,291 )
(43,482 )
(30,784 )
(28,664 )
Total liabilities
(66,076 )
(51,091 )
(46,781 )
Net assets 39,287 15,638 14,596
Equity
Capital and reserves attributable to equity holders of the Company
Share capital
24 387 328 328
Share premium account 35,126 7,971 7,941
Capital redemption reserve 153 153 153
Merger reserve 448 448 448
Other reserves
23 1,444 1,423 1,445
Retained earnings
23 1,710 5,299 2,812
Non-controlling interests
26 19 16 1,469
Total equity 39,287 15,638 14,596
The Financial Statements from pages 134 to 201 were approved by the Board and were signed on its behalf by
Pascal Soriot
Aradhana Sarin
Director Director
10 February 2022
135
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Consolidated Statement of Financial Position
Additional InformationStrategic Report Corporate Governance
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 31December
Share
Capital Total
Non-
Share
premium
redemption
attributableMerger
RetainedOther
controlling
Total
capital
account
reserve reserve reserves
earnings equity
to owners
interests$m $m $m $m $m $m $m $m $m
At 1January 2019 317 4,427 153 448 1,440 5,683 12,468 1,576 14,044
Adoption of new accounting standards
1
Profit for the period – – – – – 1,335 1,335 1,227
(108 )
Other comprehensive loss
2
(612 )
(612 )
(611 )
Transfer to other reserves
3
(5 )
Transactions with owners
Dividends – – – – – –
(3,579 )
(3,579 )
(3,579 )
Issue of Ordinary Shares 11 3,514 – – – – 3,525 – 3,525
Share-based payments charge for the period (Note29) – – – – – 259 259 – 259
Settlement of share plan awards – – – – – –
(323 ) (323 )
(323 )
Net movement 11 3,514 – – 5 659 552
(2,871 )
(107 )
At 31December 2019 328 7,941 153 448 1,445 2,812 13,127 1,469 14,596
Profit for the period – – – – – 3,196 3,196 3,144
(52 )
Other comprehensive income
2
Transfer to other reserves
3, 4
(22 )
(1,401 )
Transactions with owners
Dividends – – – – – –
(3,668 )
(3,668 )
(3,668 )
Issue of Ordinary Shares – 30 – – – – 30 – 30
Share-based payments charge for the period (Note29) – – – – – 277 277 – 277
Settlement of share plan awards – – – – – –
(349 ) (349 )
(349 )
Net movement – 30 – – 2,487 2,495 1,042
(22 )
(1,453 )
At 31Decemb 328 7,971 153 448 1,423 5,299 15,622 16 15,638
er 2020
Profit for the period – – – – – 112 112 3 115
Other comprehensive loss
2
(145 )
(145 )
(145 )
Transfer to other reserves
3
(21 )
Transactions with owners
Dividends – – – – – –
(3,882 )
(3,882 )
(3,882 )
Issue of Ordinary Shares 59 27,155 – – – – 27,214 – 27,214
Share-based payments charge for the period (Note29) – – – – – 615 615 – 615
Settlement of share plan awards – – – – – –
(781 )
(781 )
(781 )
Issue of replacement Alexion share awards upon
acquisition (Note27)
5
Net movement
6
(3,589 )
At 31December 2021 387 35,126 153 448 1,444 1,710 39,268 19 39,287
1
The Group adopted IFRIC 23 ‘Uncertainty over Income Tax Treatments’ from 1 January 2019. The cumulative effect of initially applying the interpretation was recognised as a decrease to
income tax payable of $51 m and to trade and other payables of $3 m, and a corresponding adjustment to the opening balance of Retained earnings of $54 m.
2
Included within Other comprehensive loss of $145 m (2020: income of $1,608 m; 2019: loss of $611 m) is a charge of $6 m (2020: gain of $9 m; 2019: charge of $47 m), relating to Costs of hedging.
3
Amounts charged or credited to other reserves relate to exchange adjustments arising on goodwill.
4
The non-controlling interests reserve relating to the minority shareholders of Acerta Pharma, totalling $1,401 m, was reclassified into Retained earnings in 2020 (see Note 26).
5
Replacement share awards were issued as part of the acquisition of Alexion in 2021 (see Note 27).
6
As part of the acquisition of Alexion in July 2021, a pre-existing non-controlling interest in Caelum Biosciences was recognised (Note 27). This was valued at $150 m, the agreed exercise
p
rice for the exclusive option to acquire the remaining equity. The option was exercised on 28 September 2021 and the acquisition of Caelum Biosciences closed shortly thereafter on 5
October 2021.
136
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Consolidated Statement of Cash Flows
for the year ended 31December
2021
2020
2019
Notes
$m
$m $m
Cash flows from operating activities
(Loss)/profit before tax 3,916 1,548
(265 )
Finance income and expense
3 1,257 1,219 1,260
Share of after tax losses of associates and joint ventures
11 64 27 116
Depreciation, amortisation and impairment 6,530 3,149 3,762
Increase in trade and other receivables
(961 )
(739 )
(898 )
Decrease/(increase) in inventories 1,577
(621 )
(316 )
Increase in trade and other payables and provisions 1,405 1,721 868
Gains on disposal of intangible assets
2
(513 )
(1,030 )
(1,243 )
Gains on disposal of investment in associates and joint ventures
2 – –
(776 )
Fair value movements on contingent consideration arising from business combinations
20 14
(272 )
(614 )
Non-cash and other movements
17 95 378
(276 )
Cash generated from operations 8,427 7,094 4,861
Interest paid
(721 )
(733 )
(774 )
Tax paid
(1,743 )
(1,562 )
(1,118 )
Net cash inflow from operating activities 5,963 4,799 2,969
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
27 – –
(9,263 )
Payments upon vesting of employee share awards attributable to business combinations – –
(211 )
Payment of contingent consideration from business combinations
20
(643 )
(822 )
(709 )
Purchase of property, plant and equipment
(1,091 )
(961 )
(979 )
Disposal of property, plant and equipment 13 106 37
Purchase of intangible assets
(1,109 )
(1,645 )
(1,481 )
Disposal of intangible assets 587 951 2,076
Movement in profit-participation liability
2 20 40 150
Purchase of non-current asset investments
(184 )
(119 )
(13 )
Disposal of non-current asset investments 9 1,381 18
Movement in short-term investments, fixed deposits and other investing instruments 96 745 194
Payments to associates and joint ventures
11
(92 )
(8 )
(74 )
Disposal of investments in associates and joint ventures 776 – –
Interest received 34 47 124
Net cash outflow from investing activities
(11,058 )
(285 )
(657 )
Net cash (outflow)/inflow before financing activities (5,095 ) 4,514 2,312
Cash flows from financing activities
Proceeds from issue of share capital 29 30 3,525
Issue of loans and borrowings 12,929 2,968 500
Repayment of loans and borrowings
(4,759 )
(1,609 )
(1,500 )
Dividends paid
(3,856 )
(3,572 )
(3,592 )
Hedge contracts relating to dividend payments 4
(29 )
(101 )
Repayment of obligations under leases
(240 )
(207 )
(186 )
Movement in short-term borrowings 288
(276 )
(516 )
Payments to acquire non-controlling interests – –
(149 )
Net cash inflow/(outflow) from financing activities 3,649
(2,203 )
(1,765 )
Net (decrease)/increase in Cash and cash equivalents in the period 2,311 547
(1,446 )
Cash and cash equivalents at the beginning of the period 7,546 5,223 4,671
Exchange rate effects 12 5
(62 )
Cash and cash equivalents at the end of the period 6,038 7,546 5,223
17
137
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Consolidated Statement of Cash Flows
Additional InformationStrategic Report Corporate Governance
Financial Statements
Group Accounting Policies
Basis of accounting and preparation
of nancial information
The Consolidated Financial Statements have
been prepared under the historical cost
convention, modified to include revaluation
to fair value of certain financial instruments
as described below, in accordance with
UK-adopted International Accounting Standards
and with the requirements of the Companies
Act 2006 as applicable to companies reporting
under those standards. The Consolidated
Financial Statements also comply fully with
International Financial Reporting Standards
(IFRSs) as issued by the International
Accounting Standards Board (IASB) and
International Accounting Standards as
adopted by the European Union.
The Consolidated Financial Statements are
presented in US dollars, which is the Company’s
functional currency.
In preparing their individual financial
statements, the accounting policies of
some overseas subsidiaries do not conform
with IASB issued IFRSs. Therefore, where
appropriate, adjustments are made in
order to present the Consolidated Financial
Statements on a consistent basis.
UK-adopted International
AccountingStandards
On 31 December 2020, EU-adopted IFRS
was brought into UK law and became
UK-adopted International Accounting
Standards, with future changes to IFRS
being subject to endorsement by the UK
Endorsement Board. The Consolidated
Financial Statements transitioned to UK-
adopted International Accounting Standards
for financial periods beginning 1 January
2021. This change constitutes a change in
accounting framework. However, there is
no impact on recognition, measurement or
disclosure in the period reported as a result
of the change in framework.
IFRS9, IFRS7
The replacement of benchmark interest rates
such as LIBOR and other interbank offered
rates (IBORs) is a priority for global regulators.
Phase 2 amendments to IFRS 9 ‘Financial
Instruments’ and IFRS 7 ‘Financial Instruments:
Disclosures’ were issued in August 2021 and
have been adopted by the Group for 2021
reporting. As at 31 December 2021, the
Group held instruments totalling $1,439m
that reference USD LIBOR but will either have
matured or will have their last LIBOR fixings
set before the relevant USD LIBORs cease
publication on 30 June 2023. These instruments
include floating rate bonds, interest rate swaps
and other arrangements. The Group also
has $4bn of term bank loans that currently
reference US LIBOR but these agreements
have a mandatory switch from US LIBOR to
an alternative risk free rate on 30 June 2023,
should the Group not elect to do so before
that date.
Basis for preparation of Financial
Statements on a going concern basis
The Group has considerable financial
resources available. As at 31 December 2021,
the Group has $11.2bn in financial resources
(cash and cash equivalent balances of $6.3bn
and undrawn committed bank facilities of
$4.9bn available until April 2025 with only
$1.9bn of borrowings due within one year).
All facilities contain no financial covenants
and were undrawn at 31 December 2021.
The Directors have considered the impact of
COVID-19 on AstraZeneca’s operations and
mitigations to these risks. Overall, the impact
of these items would heighten certain risks,
such as those relating to the delivery of the
pipeline or launch of new medicines, the
execution of AstraZeneca’s commercial
strategy, the manufacturing and supply of
medicines and reliance on third-party goods
and services. The Group is continuously
monitoring, and mitigating where possible,
impacts of these risks.
The Group’s revenues are largely derived
from sales of medicines covered by patents,
which provide a relatively high level of
resilience and predictability to cash inflows,
although government price interventions
in response to budgetary constraints are
expected to continue to adversely affect
revenues in some of our significant markets.
The Group, however, anticipates new
revenue streams from both recently launched
medicines and those in development, and the
Group has a wide diversity of customers and
suppliers across different geographic areas.
Consequently, the Directors believe that, overall,
the Group is well placed to manage its business
risks successfully. Accordingly, they continue
to adopt the going concern basis in preparing
the Annual Report and Financial Statements.
Estimates and judgements
The preparation of the Financial Statements in
conformity with generally accepted accounting
principles requires management to make
estimates and judgements that affect the
reported amounts of assets and liabilities at
the date of the Financial Statements and the
reported amounts of revenues and expenses
during the reporting period. Actual results
could differ from those estimates.
The accounting policy descriptions set out the
areas where judgements and estimates need
exercising, the most significant of which
include the following Key Judgements
KJ
and Significant Estimates
SE
:
>
revenue recognition – see Revenue
Accounting Policy on page 139
KJ
and Note 1 on page 145
SE
>
expensing of internal development
expenses – see Research and
Development Policy on page 140
KJ
>
impairment reviews of Intangible assets –
see Note 10 on page 156
SE
>
useful economic life of Intangible assets –
see Research and Development Policy on
page 140
KJ
and Note 10 on page 156
SE
>
business combinations and Goodwill
(and Contingent consideration arising from
business combinations) – see Business
Combinations and Goodwill Policy on
page 142
KJ
, Note 10 on page 156
KJ
,
Note 20 on page 166
SE
and Note 27 on
page 178
SE
>
litigation liabilities – see Litigation and
Environmental Liabilities within Note 30
on page 189
KJ
>
operating segments – see Note 6 on
page 152
KJ
>
employee benefits – see Note 22 on
page 168
SE
>
taxation – see Taxation Policy on page 141
KJ
and Note 30 on page 189
KJ
SE
.
AstraZeneca has assessed the impact of
the uncertainty presented by the COVID-19
pandemic on the Financial Statements,
specifically considering the impact on key
judgements and significant estimates along
with several other areas of increased risk.
A detailed assessment has been performed,
focusing on the following areas:
>
recoverable value of goodwill, intangible
assets and property, plant and equipment
>
impact on key assumptions used to
estimate contingent consideration liabilities
>
key assumptions used in estimating the
Group’s defined benefit pension obligations
>
basis for estimating clinical trial accruals
>
key assumptions used in estimating rebates
and chargebacks for US Product Sales
>
valuations of unlisted equity investments
>
expected credit losses associated with
changes in credit risk relating to trade
and other receivables
>
net realisable value of inventories
>
fair value of certain financial instruments
>
recoverability of deferred tax assets
>
effectiveness of hedge relationships.
No material accounting impacts relating to
the areas assessed above were recognised
in the year.
The Group will continue to monitor these areas
of increased judgement, estimation and risk
for material changes.
The Group has assessed the impact of
climate risk on its financial reporting. The
impact assessment was primarily focused
on the valuation and useful lives of intangible
assets and the identification and valuation of
provisions and contingent liabilities, as these
are judged to be the key areas that could
be impacted by climate risks. No material
accounting impacts or changes to judgements
or other required disclosures were noted.
138
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Financial risk management policies are detailed
in Note 28 to the Financial Statements from
page 180.
AstraZeneca’s management considers the
following to be the most important accounting
policies in the context of the Group’s operations.
Revenue
Revenue comprises Product Sales and
Collaboration Revenue.
Product Sales are revenues arising from
contracts with customers. Collaboration
Revenue arises from other contracts, however,
the recognition and measurement principles
of IFRS 15 ‘Revenue from Contracts with
Customers’ are applied as set out below.
Revenue excludes inter-company revenues
and value-added taxes.
Product Sales
Product Sales represent net invoice
value less estimated rebates, returns and
chargebacks, which are considered to be
variable consideration and include significant
estimates. Sales are recognised when the
control of the goods has been transferred to a
third party. This is usually when title passes to
the customer, either on shipment or on receipt
of goods by the customer, depending on local
trading terms. In markets where returns are
significant, estimates of returns are accounted
for at the point revenue is recognised. Revenue
is not recognised in full until it is highly probable
that a significant reversal in the amount of
cumulative revenue recognised will not occur.
Rebates are amounts payable or credited
to a customer, usually based on the quantity
or value of Product Sales to the customer for
specific products in a certain period. Product
sales rebates, which relate to Product Sales
that occur over a period of time, are normally
issued retrospectively.
At the time Product Sales are invoiced,
rebates and deductions that the Group
expects to pay, are estimated. These rebates
typically arise from sales contracts with
government payers, third-party managed
care organisations, hospitals, long-term care
facilities, group purchasing organisations
and various state programmes.
For the markets where returns are significant,
we estimate the quantity and value of goods
which may ultimately be returned at the point
of sale. Our returns accruals are based on
actual experience over the preceding 12
months for established products together with
market-related information such as estimated
stock levels at wholesalers and competitor
activity which we receive via third-party
information services. For newly launched
products, we use rates based on our
experience with similar products or
a predetermined percentage.
When a product faces generic competition,
particular attention is given to the possible
levels of returns and, in cases where the
circumstances are such that the level of
Product Sales are considered highly probable
to reverse, revenues are only recognised when
the right of return expires, which is generally on
ultimate prescription of the product to patients.
The methodology and assumptions used to
estimate rebates and returns are monitored
and adjusted regularly in the light of contractual
and legal obligations, historical trends, past
experience and projected market conditions.
Once the uncertainty associated with returns
is resolved, revenue is adjusted accordingly.
Under certain collaboration agreements
which include a profit sharing mechanism,
our recognition of Product Sales depends on
which party acts as principal in sales to the end
customer. In the cases where AstraZeneca
acts as principal, we record 100% of sales
to the end customer.
Contracts relating to the supply of
Vaxzevria
during the COVID-19 pandemic include
conditions whereby payments are receivable
from customers in advance of the delivery
of product. Such amounts are held on the
balance sheet as contract liabilities until the
related revenue is recognised, generally upon
product delivery. Certain of these contracts
contain further provisions that restrict the use
of inventory manufactured in specified supply
chains to specified customers, resulting in an
enforceable right to payment as the activities
are performed. Under IFRS 15, such contracts
require revenue to be recognised over time
using an appropriate and reasonably
measurable method to measure progress.
Revenue is recognised on these contracts
based on the proportion of product delivered
compared to the total contracted volumes.
Collaboration Revenue
Collaboration Revenue includes income from
collaborative arrangements where either the
Group has sold certain rights associated
with those products, but retains a significant
ongoing economic interest or has acquired
a significant interest from a third party.
Significant interest can include ongoing
supply of finished goods, participation in
sharing of profit arrangements or direct
interest from sales of medicines.
These arrangements may include development
arrangements, commercialisation arrangements
and collaborations. Income may take the
form of upfront fees, milestones, profit
sharing and royalties and includes sharing
of profit arising from sales made as principal
by a collaboration partner.
KJ
Timing of recognition of clinical and
regulatory milestones is considered to be
a key judgement. There can be significant
uncertainty over whether it is highly probable
that there would not be a significant reversal
of revenue in respect of specific milestones
if these are recognised before they are
triggered due to them being subject to the
actions of third parties. In general, where
the triggering of a milestone is subject to the
decisions of third parties (e.g. the acceptance
or approval of a filing by a regulatory
authority), the Group does not consider
that the threshold for recognition is met
until that decision is made.
Where Collaboration Revenue arises from
the licensing of the Group’s own intellectual
property, the licences we grant are typically
rights to use intellectual property which do
not change during the period of the licence
and therefore related non-conditional revenue
is recognised at the point the license is
granted and variable consideration as soon
as recognition criteria are met. Those licences
are generally unique and therefore when
there are other performance obligations in
the contract, the basis of allocation of the
consideration makes use of the residual
approach as permitted by IFRS 15.
These arrangements typically involve the
receipt of an upfront payment, which the
contract attributes to the license of the
intangible assets, and ongoing receipts,
which the contract attributes to the sale of the
product we manufacture. In cases where the
transaction has two or more components, we
account for the delivered item (for example,
the transfer of title to the intangible asset) as a
separate unit of accounting and record revenue
on delivery of that component, provided that
we can make a reasonable estimate of the fair
value of the undelivered component.
Where non-contingent amounts are payable
over one year from the effective date of
a contract, an assessment is made as to
whether a significant financing component
exists, and if so, the fair value of this
component is deferred and recognised over
the period to the expected date of receipt.
Where control of a right to use an intangible
asset passes at the outset of an arrangement,
revenue is recognised at the point in time
control is transferred. Where the substance
of an arrangement is that of a right to access
rights attributable to an intangible asset,
revenue is recognised over time, normally on a
straight-line basis over the life of the contract.
Where the fair market value of the undelivered
component (for example, a manufacturing
agreement) exceeds the contracted price
for that component, we defer an appropriate
element of the upfront consideration and
amortise this over the performance period.
However, where the fair market value of the
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Financial Statements
undelivered component is equal to or lower
than the contracted price for that component,
we treat the whole of the upfront amount as
being attributable to the delivered intangible
assets and recognise that part of the revenue
upon delivery. No element of the contracted
revenue related to the undelivered component
is ordinarily allocated to the sale of the intangible
asset. This is because the contracted revenue
relating to the undelivered component is
contingent on future events (such as sales)
and cannot be recognised until either receipt
of the amount is highly probable or where
the consideration is received for a licence of
intellectual property, on the occurrence of
the related sales.
Where the Group provides ongoing services,
revenue in respect of this element is recognised
over the duration of those services. Where the
arrangement meets the definition of a licence
agreement, sales milestones and sales royalties
are recognised when achieved by applying the
royalty exemption under IFRS 15. All other
milestones and sales royalties are recognised
when considered it is highly probable there
will not be a significant reversal of cumulative
income. The determination requires estimates
to be made in relation to future Product Sales.
Where Collaboration Revenue is recorded and
there is a related Intangible asset that is licensed
as part of the arrangement, an appropriate
amount of that Intangible asset is charged to
Cost of sales based on an allocation of cost
or value to the rights that have been licenced.
Cost of sales
Cost of sales are recognised as the
associated revenue is recognised. Cost of
sales include manufacturing costs, royalties
payable on revenues recognised, movements
in provisions for inventories, inventory
write-offs and impairment charges in relation
to manufacturing assets. Cost of sales also
includes co-collaborator sharing of profit
arising from collaborations, and foreign
exchange gains and losses arising from
business trading activities.
Research and development
Research expenditure is charged to profit
and loss in the year in which it is incurred.
KJ
Internal development expenditure is
capitalised only if it meets the recognition
criteria of IAS 38 ‘Intangible Assets’. This
is considered a key judgement. Where
regulatory and other uncertainties are such
that the criteria are not met, the expenditure
is charged to profit and loss and this is
almost invariably the case prior to approval
of the drug by the relevant regulatory
authority. Where, however, recognition
criteria are met, Intangible assets are
capitalised and amortised on a straight-line
basis over their useful economic lives from
product launch. At 31 December 2021, no
amounts have met the recognition criteria.
Payments to in-license products and
compounds from third parties for new research
and development projects (in process research
and development) generally take the form
of upfront payments, milestones and royalty
payments. Where payments made to third
parties represent consideration for future
research and development activities, an
evaluation is made as to the nature of the
payments. Such payments are expensed if they
represent compensation for sub-contracted
research and development services not
resulting in a transfer of intellectual property.
By contrast, payments are capitalised if they
represent compensation for the transfer of
identifiable intellectual property developed at the
risk of the third party. Development milestone
payments relating to identifiable intellectual
property are capitalised as the milestone is
triggered. Any upfront or milestone payments
for research activities where there is no
associated identifiable intellectual property
are expensed. Assets capitalised are
amortised, on a straight-line basis, over their
useful economic lives from product launch.
KJ
The determination of useful economic
life is considered to be a key judgement.
On product launch, the Group makes
a judgement as to the expected useful
economic life with reference to the expiry
of associated patents for the product,
expectation around the competitive
environment specific to the product and
our detailed long-term risk-adjusted sales
projections compiled annually across the
Group and approved by the Board.
The useful economic life can extend beyond
patent expiry dependent upon the nature
of the product and the complexity of the
development and manufacturing process.
Significant sales can often be achieved
post patent expiration.
Intangible assets
Intangible assets are stated at cost less
amortisation and impairments. Intangible
assets relating to products in development
are subject to impairment testing annually.
All Intangible assets are tested for impairment
when there are indications that the
carrying value may not be recoverable. The
determination of the recoverable amounts
include key estimates which are highly
sensitive to, and depend upon, key
assumptions as detailed in Note 10 to the
Financial Statements from page 156.
Impairment reviews have been carried out on
all Intangible assets that are in development
(and not being amortised), all major intangible
assets acquired during the year and all other
intangible assets that have had indications of
impairment during the year. Recoverable
amount is determined as the higher of value
in use or fair value less costs to sell using a
discounted cash flow calculation, where the
products’ expected cash flows are risk-adjusted
over their estimated remaining useful economic
life. The determination of the recoverable
amounts include significant estimates which
are highly sensitive and depend upon key
assumptions as detailed in Note 10 to the
Financial Statements from page 156.
Sales forecasts and specific allocated costs
(which have both been subject to appropriate
senior management review and approval) are
risk-adjusted and discounted using appropriate
rates based on our post-tax weighted average
cost of capital or for fair value less costs to
sell, a required rate of return for a market
participant. Our weighted average cost of
capital reflects factors such as our capital
structure and our costs of debt and equity.
Any impairment losses are recognised
immediately in profit. Intangible assets relating
to products which fail during development
(or for which development ceases for other
reasons) are also tested for impairment and
are written down to their recoverable amount
(which is usually nil).
If, subsequent to an impairment loss being
recognised, development restarts or other
facts and circumstances change indicating
that the impairment is less or no longer exists,
the value of the asset is re-estimated and its
carrying value is increased to the recoverable
amount, but not exceeding the original value,
by recognising an impairment reversal in
Operating profit.
Government grants
Government grants are recognised in the
Consolidated Statement of Comprehensive
Income so as to match with the related
expenses that they are intended to compensate.
Where grants are received in advance of the
related expenses, they are initially recognised
in the Consolidated Statement of Financial
Position under Trade and other payables as
deferred income and released to net off
against the related expenditure when incurred.
Each contract is assessed to determine whether
there are both grant elements and supply of
product which need to be separated. In each
case, the contracts set out the specified terms
for the supply of the product and the provisions
for funding for certain costs, primarily research
and development associated with the IP. It is
considered whether there are any conditions for
the funding to be refunded. The consideration
in the contract is allocated between the grant
and supply elements. The standalone selling
price for the supply of products is determined
by reference to observed prices with other
customers. The amount allocated as a
government grant is determined by reference
to the specific agreed costs and activities
identified in the contract as not directly
attributable to the supply of product.
Government grants are recorded as an offset
to the relevant expense in the Consolidated
Statement of Comprehensive Income and are
capped to match the relevant costs incurred.
Group Accounting Policies
continued
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Financial Statements
Joint arrangements and associates
The Group has arrangements over which it
has joint control and which qualify as joint
operations or joint ventures under IFRS 11
‘Joint Arrangements’. For joint operations, the
Group recognises its share of revenue that it
earns from the joint operations and its share of
expenses incurred. The Group also recognises
the assets associated with the joint operations
that it controls and the liabilities it incurs under
the joint arrangement. For joint ventures and
associates, the Group recognises its interest in
the joint venture or associate as an investment
and uses the equity method of accounting.
Employee benets
The Group accounts for pensions and other
employee benefits (principally healthcare)
under IAS 19 ‘Employee Benefits’ and
recognises all actuarial gains and losses
immediately through Other comprehensive
income. In respect of defined benefit plans,
obligations are measured at discounted present
value while plan assets are measured at fair
value. Given the extent of the assumptions
used to determine these values, these are
considered to be significant estimates. The
operating and financing costs of such plans
are recognised separately in profit, current
service costs are spread systematically over
the lives of employees and financing costs are
recognised in full in the periods in which they
arise. Remeasurements of the net defined
benefit pension liability, including actuarial
gains and losses, are recognised immediately
in Other comprehensive income.
Where the calculation results in a surplus to
the Group, the recognised asset is limited to
the present value of any available future
refunds from the plan or reductions in future
contributions to the plan. Payments to defined
contribution plans are recognised in profit as
they fall due.
Taxation
The current tax payable is based on taxable
profit for the year. Taxable profit differs
from reported profit because taxable profit
excludes items that are either never taxable or
tax deductible or items that are taxable or tax
deductible in a different period. The Group’s
current tax assets and liabilities are calculated
using tax rates that have been enacted or
substantively enacted by the reporting date.
KJ
Deferred tax is provided using the
balance sheet liability method, providing for
temporary differences between the carrying
amounts of assets and liabilities for financial
reporting purposes and the amounts used
for taxation purposes. Deferred tax assets
are recognised to the extent that it is
probable that future taxable profit will be
available against which the asset can be
utilised. This requires judgements to be
made in respect of the availability of
future taxable income.
No deferred tax asset or liability is recognised
in respect of temporary differences associated
with investments in subsidiaries and branches
where the Group is able to control the timing
of reversal of the temporary differences and
it is probable that the temporary differences
will not reverse in the foreseeable future.
The Group’s Deferred tax assets and liabilities
are calculated using tax rates that are expected
to apply in the period when the liability is
settled or the asset realised based on tax
rates that have been enacted or substantively
enacted by the reporting date.
Accruals for tax contingencies require
management to make judgements of potential
exposures in relation to tax audit issues. Tax
benefits are not recognised unless the tax
positions will probably be accepted by the tax
authorities. This is based upon management’s
interpretation of applicable laws and regulations
and the expectation of how the tax authority
will resolve the matter. Once considered
probable of not being accepted, management
reviews each material tax benefit and reflects
the effect of the uncertainty in determining
the related taxable result.
Accruals for tax contingencies are measured
using either the most likely amount or the
expected value amount depending on which
method the entity expects to better predict
the resolution of the uncertainty.
Further details of the estimates and
assumptions made in determining our recorded
liability for transfer pricing contingencies and
other tax contingencies are included in Note 30
to the Financial Statements from page 189.
Share-based payments
All plans have been classified as equity settled
after assessment. The grant date fair value of
employee share plan awards is calculated
using a Monte Carlo model. In accordance with
IFRS 2 ‘Share-based Payment’, the resulting
cost is recognised in profit over the vesting
period of the awards, being the period in
which the services are received. The value of
the charge is adjusted to reflect expected and
actual levels of awards vesting, except where
the failure to vest is as a result of not meeting
a market condition. Cancellations of equity
instruments are treated as an acceleration
of the vesting period and any outstanding
charge is recognised in profit immediately.
Cash outflows relating to the vesting of share
plans for our employees are recognised within
operating activities, as they relate to employee
remuneration. The cash flows relating to
replacement awards issued to employees as
part of the Alexion acquisition (see Note 27
from page 178) are classified within investing
activities, as they are part of the aggregate
cash flows arising from obtaining control of
the subsidiary.
Property, plant and equipment
The Group’s policy is to write off the
difference between the cost of each item
of Property, plant and equipment and its
residual value over its estimated useful
life on a straight-line basis. Assets under
construction are not depreciated.
Reviews are made annually of the
estimated remaining lives and residual
values of individual productive assets, taking
account of commercial and technological
obsolescence as well as normal wear and tear.
It is impractical to calculate average asset lives
exactly. However, the total lives range from
approximately 10 to 50 years for buildings,
and three to 15 years for plant and equipment.
All items of Property, plant and equipment
are tested for impairment when there are
indications that the carrying value may not
be recoverable. Any impairment losses are
recognised immediately in operating profit.
Borrowing costs
The Group has no borrowing costs with
respect to the acquisition or construction
of qualifying assets. All other borrowing costs
are recognised in profit as incurred and in
accordance with the effective interest
rate method.
Leases
The Group’s lease arrangements are principally
for property, most notably a portfolio of office
premises and employee accommodation, and
for a global car fleet, utilised primarily by our
sales and marketing teams.
The lease liability and corresponding
right-of-use asset arising from a lease are
initially measured on a present value basis.
Lease liabilities include the net present value
of the following lease payments:
>
fixed payments, less any lease
incentives receivable
>
variable lease payments that depend on an
index or a rate, initially measured using the
index or rate as at the commencement date
>
the exercise price of a purchase option if
the Group is reasonably certain to exercise
that option
>
payments of penalties for terminating the
lease, if the lease term reflects the Group
exercising that option, and
>
amounts expected to be payable by the
Group under residual value guarantees.
Right-of-use assets are measured at cost
comprising the following:
>
the amount of the initial measurement
of lease liability
>
any lease payments made at or before
the commencement date less any lease
incentives received
>
any initial direct costs, and
>
restoration costs.
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Judgements made in calculating the
lease liability include assessing whether
arrangements contain a lease and determining
the lease term. Lease terms are negotiated on
an individual basis and contain a wide range
of different terms and conditions. Property
leases will often include an early termination
or extension option to the lease term. Fleet
management policies vary by jurisdiction
and may include renewal of a lease until a
measurement threshold, such as mileage, is
reached. Extension and termination options
have been considered when determining
the lease term, along with all facts and
circumstances that may create an economic
incentive to exercise an extension option, or
not exercise a termination option. Extension
periods (or periods after termination options)
are only included in the lease term if the
lease is reasonably certain to be extended
(or not terminated).
The lease payments are discounted using
incremental borrowing rates, as in the majority
of leases held by the Group the interest rate
implicit in the lease is not readily identifiable.
Calculating the discount rate is an estimate
made in calculating the lease liability. This rate
is the rate that the Group would have to pay to
borrow the funds necessary to obtain an asset
of similar value to the right-of-use asset in
a similar economic environment with similar
terms, security and conditions. To determine
the incremental borrowing rate, the Group
uses a risk-free interest rate adjusted for
credit risk, adjusting for terms specific to the
lease including term, country and currency.
The Group is exposed to potential future
increases in variable lease payments that are
based on an index or rate, which are initially
measured as at the commencement date, with
any future changes in the index or rate excluded
from the lease liability until they take effect.
When adjustments to lease payments based
on an index or rate take effect, the lease
liability is reassessed and adjusted against
the right-of-use asset.
Lease payments are allocated between
principal and finance cost. The finance cost
is charged to the Consolidated Statement of
Comprehensive Income over the lease period
so as to produce a constant periodic rate of
interest on the remaining balance of the
liability for each period.
Payments associated with short-term leases
of Property, plant and equipment and all
leases of low-value assets are recognised
on a straight-line basis as an expense in the
Consolidated Statement of Comprehensive
Income. Short-term leases are leases with a
lease term of 12 months or less. Low-value
leases are those where the underlying asset
value, when new, is $5,000 or less and
includes IT equipment and small items
of office furniture.
Contracts may contain both lease and
non-lease components. The Group allocates
the consideration in the contract to the lease
and non-lease components based on their
relative standalone prices.
Right-of-use assets are generally depreciated
over the shorter of the asset’s useful life and
the lease term on a straight-line basis. If the
Group is reasonably certain to exercise a
purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful
life. It is impractical to calculate average asset
lives exactly. However, the total lives range
from approximately 10 to 50 years for
buildings, and three to 15 years for motor
vehicles and other assets.
There are no material lease agreements under
which the Group is a lessor.
Business combinations and goodwill
In assessing whether an acquired set of
assets and activities is a business or an asset,
management will first elect whether to apply
an optional concentration test to simplify the
assessment. Where the concentration test is
applied, the acquisition will be treated as the
acquisition of an asset if substantially all of
the fair value of the gross assets acquired
(excluding cash and cash equivalents,
deferred tax assets, and related goodwill)
is concentrated in a single asset or group
of similar identifiable assets.
Where the concentration test is not applied,
or is not met, a further assessment of whether
the acquired set of assets and activities is a
business will be performed.
KJ
The determination of whether an
acquired set of assets and activities is a
business or an asset can be judgemental,
particularly if the target is not producing
outputs. Management uses a number of
factors to make this determination, which
are primarily focused on whether the
acquired set of assets and activities include
substantive processes that mean the set is
capable of being managed for the purpose
of providing a return. Key determining
factors include the stage of development
of any assets acquired, the readiness
and ability of the acquired set to produce
outputs and the presence of key
experienced employees capable of
conducting activities required to develop
or manufacture the assets. Typically, the
specialised nature of many pharmaceutical
assets and processes is such that until
assets are substantively ready for
production and promotion, there are not the
required processes for a set of assets and
activities to meet the definition of a business
in IFRS 3.
On the acquisition of a business, fair values
are attributed to the identifiable assets and
liabilities. Attributing fair values is a key
judgement; refer to Note 27 to the Financial
Statements on page 178 for additional details
of the 2021 acquisition. Contingent liabilities
are also recorded at fair value unless the fair
value cannot be measured reliably, in which
case the value is subsumed into goodwill.
Where fair values of acquired contingent
liabilities cannot be measured reliably, the
assumed contingent liability is not recognised
but is disclosed in the same manner as other
contingent liabilities. Where the Group fully
acquires, through a business combination,
assets that were previously held in joint
operations, the Group has elected not to uplift
the book value of the existing interest in the
asset held in the joint operation to fair value at
the date full control is taken.
Where not all of the equity of a subsidiary
is acquired, the non-controlling interest is
recognised either at fair value or at the
non-controlling interest’s proportionate
share of the net assets of the subsidiary,
on a case-by-case basis. Put options over
non-controlling interests are recognised
as a financial liability, with a corresponding
entry in either Retained earnings or against
non-controlling interest reserves on a
case-by-case basis.
The timing and amount of future contingent
elements of consideration is considered a
significant estimate; see Note 20 from
page 166. Contingent consideration, which
may include development and launch
milestones, revenue threshold milestones
and revenue-based royalties, is fair valued
at the date of acquisition using decision-tree
analysis with key inputs including probability
of success, consideration of potential delays
and revenue projections based on the Group’s
internal forecasts. Unsettled amounts of
consideration are held at fair value within
payables with changes in fair value
recognised immediately in profit.
Goodwill is the difference between the fair
value of the consideration and the fair value
of net assets acquired.
Goodwill arising on acquisitions is capitalised
and subject to an impairment review, both
annually and when there is an indication that
the carrying value may not be recoverable.
The Group’s policy up to and including 1997
was to eliminate Goodwill arising upon
acquisitions against reserves. Under IFRS 1
‘First-time Adoption of International Financial
Reporting Standards’ and IFRS 3 ‘Business
Combinations’, such Goodwill will remain
eliminated against reserves.
Group Accounting Policies
continued
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Financial Statements
Subsidiaries
A subsidiary is an entity controlled, directly
or indirectly, by AstraZeneca PLC. Control
is regarded as the exposure or rights to the
variable returns of the entity when combined
with the power to affect those returns. Control
is normally evidenced by holding more than
50% of the share capital of the company,
however other agreements may be in place that
result in control where they give AstraZeneca
finance decision-making authority over the
relevant activities of the company.
The financial results of subsidiaries are
consolidated from the date control is obtained
until the date that control ceases.
Inventories
Inventories are stated at the lower of cost and
net realisable value. The first in, first out or
an average method of valuation is used. For
finished goods and work in progress, cost
includes directly attributable costs and certain
overhead expenses (including depreciation).
Selling expenses and certain other overhead
expenses (principally central administration
costs) are excluded. Net realisable value is
determined as estimated selling price less all
estimated costs of completion and costs to
be incurred in selling and distribution.
Write-downs of inventory occur in the general
course of business and are recognised
in Cost of sales for launched or approved
products and in Research and development
expense for products in development.
Assets held for sale
Non-current assets are classified as Assets
held for sale when their carrying amount is
to be recovered principally through a sale
transaction and a sale is considered highly
probable. A sale is usually considered highly
probable only when the appropriate level of
management has committed to the sale.
Assets held for sale are stated at the lower
of carrying amount and fair value less costs
to sell. Where there is a partial transfer of
a non-current asset to held for sale, an
allocation of value is made between the
current and non-current portions of the
asset based on the relative value of the two
portions, unless there is a methodology that
better reflects the asset to be disposed of.
Assets held for sale are not depreciated
or amortised.
Trade and other receivables
Financial assets included in Trade and other
receivables are recognised initially at fair
value. The Group holds the Trade receivables
with the objective to collect the contractual
cash flows and therefore measures them
subsequently at amortised cost using the
effective interest rate method, less any
impairment losses.
Trade receivables that are subject to debt
factoring arrangements are derecognised
if they meet the conditions for derecognition
detailed in IFRS 9 ‘Financial Instruments’.
Trade and other payables
Financial liabilities included in Trade and other
payables are recognised initially at fair value.
Subsequent to initial recognition they are
measured at amortised cost using the effective
interest rate method. Contingent consideration
payables are held at fair value within Level 3 of
the fair value hierarchy as defined in Note 12
on page 160 of the Financial Statements.
Financial instruments
The Group’s financial instruments include
Lease liabilities, Trade and other receivables
and payables, liabilities for contingent
consideration and put options under business
combinations, and rights and obligations
under employee benefit plans which are
dealt with in specific accounting policies.
The Group’s other financial instruments include:
>
Cash and cash equivalents
>
Fixed deposits
>
Other investments
>
Bank and other borrowings
>
Derivatives.
Cash and cash equivalents
Cash and cash equivalents comprise cash in
hand, current balances with banks and similar
institutions, and highly liquid investments
with maturities of three months or less when
acquired. They are readily convertible into
known amounts of cash and are held at
amortised cost under the hold to collect
classification, where they meet the hold to
collect ‘solely payments of principal and
interest’ test criteria under IFRS 9. Those not
meeting these criteria are held at fair value
through profit and loss. Cash and cash
equivalents in the Consolidated Statement of
Cash Flows include unsecured bank overdrafts
at the balance sheet date where balances often
fluctuate between a cash and overdraft position.
Fixed deposits
Fixed deposits, principally comprising funds
held with banks and other financial institutions,
are initially measured at fair value, plus direct
transaction costs, and are subsequently measured
at amortised cost using the effective interest rate
method at each reporting date. Changes in
carrying value are recognised in the Consolidated
Statement of Comprehensive Income.
Other investments
Investments are classified as fair value through
profit or loss (FVPL), unless the Group makes
an irrevocable election at initial recognition for
certain non-current equity investments to
present changes in Other comprehensive
income (FVOCI). If this election is made, there
is no subsequent reclassification of fair value
gains and losses to profit and loss following
the derecognition of the investment.
Bank and other borrowings
The Group uses derivatives, principally
interest rate swaps, to hedge the interest
rate exposure inherent in a portion of its fixed
interest rate debt. In such cases the Group will
either designate the debt as fair value through
profit and loss when certain criteria are met or
as the hedged item under a fair value hedge.
If the debt instrument is designated as fair
value through profit or loss, the debt is initially
measured at fair value (with direct transaction
costs being included in profit as an expense)
and is remeasured to fair value at each
reporting date with changes in carrying value
being recognised in profit (along with changes
in the fair value of the related derivative), with
the exception of changes in the fair value of
the debt instrument relating to own credit risk
which are recorded in Other comprehensive
income in accordance with IFRS 9. Such a
designation has been made where this
significantly reduces an accounting mismatch
which would result from recognising gains
and losses on different bases.
If the debt is designated as the hedged item
under a fair value hedge, the debt is initially
measured at fair value (with direct transaction
costs being amortised over the life of the debt)
and is remeasured for fair value changes in
respect of the hedged risk at each reporting
date with changes in carrying value being
recognised in profit (along with changes in the
fair value of the related derivative).
If the debt is designated in a cash flow hedge,
the debt is measured at amortised cost
(with gains or losses taken to profit and direct
transaction costs being amortised over the
life of the debt). The related derivative is
remeasured for fair value changes at each
reporting date with the portion of the gain or
loss on the derivative that is determined to
be an effective hedge recognised in Other
comprehensive income. The amounts that
have been recognised in Other comprehensive
income are reclassified to profit in the same
period that the hedged forecast cash flows
affect profit. The reclassification adjustment is
included in Finance expense in the Consolidated
Statement of Comprehensive Income.
Other interest-bearing loans are initially
measured at fair value (with direct transaction
costs being amortised over the life of the loan)
and are subsequently measured at amortised
cost using the effective interest rate method
at each reporting date. Changes in carrying
value are recognised in the Consolidated
Statement of Comprehensive Income.
143
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Group Accounting Policies
Additional InformationStrategic Report Corporate Governance
Financial Statements
Derivatives
Derivatives are initially measured at fair value
(with direct transaction costs being included
in profit as an expense) and are subsequently
remeasured to fair value at each reporting
date. Changes in carrying value are
recognised in the Consolidated Statement
of Comprehensive Income.
Foreign currencies
Foreign currency transactions, being
transactions denominated in a currency other
than an individual Group entity’s functional
currency, are translated into the relevant
functional currencies of individual Group
entities at average rates for the relevant monthly
accounting periods, which approximate to
actual rates.
Monetary assets and liabilities arising from
foreign currency transactions are retranslated
at exchange rates prevailing at the reporting
date. Exchange gains and losses on loans
and on short-term foreign currency
borrowings and deposits are included within
Finance expense. Exchange differences on
all other foreign currency transactions are
recognised in Operating profit in the individual
Group entity’s accounting records.
Non-monetary items arising from foreign
currency transactions are not retranslated in the
individual Group entity’s accounting records.
In the Consolidated Financial Statements,
income and expense items for Group entities
with a functional currency other than US dollars
are translated into US dollars at average
exchange rates, which approximate to actual
rates, for the relevant accounting periods.
Assets and liabilities are translated at the
US dollar exchange rates prevailing at the
reporting date. Exchange differences arising
on consolidation are recognised in Other
comprehensive income.
If certain criteria are met, non-US dollar
denominated loans or derivatives are
designated as net investment hedges of
foreign operations. Exchange differences
arising on retranslation of net investments,
and of foreign currency loans which are
designated in an effective net investment
hedge relationship, are recognised in Other
comprehensive income in the Consolidated
Financial Statements. Foreign exchange
derivatives hedging net investments in foreign
operations are carried at fair value. Effective
fair value movements are recognised in
Other comprehensive income, with any
ineffectiveness taken to profit. Gains and
losses accumulated in the translation reserve
will be recycled to profit and loss when the
foreign operation is sold.
Litigation and environmental liabilities
AstraZeneca is involved in legal disputes, the
settlement of which may involve cost to the
Group. Provision is made where an adverse
outcome is probable and associated costs,
including related legal costs, can be estimated
reliably. In other cases, appropriate disclosures
are included. Determining the timing of
recognition of when an adverse outcome is
probable is considered a key judgement, refer
to Note 30 to the Financial Statements on
page 189.
Where it is considered that the Group is
more likely than not to prevail, or in the rare
circumstances where the amount of the legal
liability cannot be estimated reliably, legal
costs involved in defending the claim are
charged to the Consolidated Statement of
Comprehensive Income as they are incurred.
Where it is considered that the Group has
a valid contract which provides the right to
reimbursement (from insurance or otherwise)
of legal costs and/or all or part of any loss
incurred or for which a provision has been
established, the best estimate of the amount
expected to be received is recognised as an
asset only when it is virtually certain.
AstraZeneca is exposed to environmental
liabilities relating to its past operations,
principally in respect of soil and groundwater
remediation costs. Provisions for these costs
are made when there is a present obligation
and where it is probable that expenditure on
remedial work will be required and a reliable
estimate can be made of the cost. Provisions
are discounted at the relevant risk free rate
where the effect is material.
Impairment
The carrying values of non-financial assets,
other than Inventories and Deferred tax assets,
are reviewed at least annually to determine
whether there is any indication of impairment.
For Goodwill, Intangible assets under
development and for any other assets where
such indication exists, the asset’s recoverable
amount is estimated based on the greater of
its value in use and its fair value less cost to
sell. In assessing the recoverable amount, the
estimated future cash flows, adjusted for the
risks specific to each asset, are discounted to
their present value using a discount rate that
reflects current market assessments of the
time value of money, the general risks affecting
the pharmaceutical industry and other risks
specific to each asset. For the purpose of
impairment testing, assets are grouped
together into the smallest group of assets that
generates cash inflows from continuing use
that are largely independent of the cash
flows of other assets. Impairment losses are
recognised immediately in the Consolidated
Statement of Comprehensive Income.
International accounting transition
On transition to using adopted IFRSs in
the year ended 31 December 2005, the
Group took advantage of several optional
exemptions available in IFRS 1 ‘First-time
Adoption of International Financial Reporting
Standards’. The major impacts which are of
continuing importance are detailed below:
>
Business combinations – IFRS 3 ‘Business
Combinations’ has been applied from
1 January 2003, the date of transition, rather
than being applied fully retrospectively.
As a result, the combination of Astra and
Zeneca is still accounted for as a merger,
rather than through purchase accounting.
If purchase accounting had been adopted,
Zeneca would have been deemed to have
acquired Astra.
>
Cumulative exchange differences –
the Group chose to set the cumulative
exchange difference reserve at
1 January 2003 to nil.
Applicable accounting standards
andinterpretations issued but not
yetadopted
At the date of authorisation of these financial
statements, certain amendments were in
issue relating to the following standards
and interpretations but not yet adopted by
the Group:
>
amendments to IAS 12 ‘Income Taxes’,
IAS 8 ‘Accounting Policies, Changes in
Accounting Estimates and Errors’, IAS 1
‘Presentation of Financial Statements’
and IFRS Practice Statement 2 ‘Making
materiality judgements’, effective for
periods beginning on or after 1 January
2023 – not endorsed by the UK
Endorsement Board (UKEB);
>
amendments to IAS 37 ‘Provisions,
Contingent Liabilities and Contingent
Assets’, IAS 16 ‘Property, Plant and
Equipment’ and IFRS 3 ‘Business
Combinations’, effective for periods
beginning on or after 1 January 2022 –
not endorsed by the UKEB;
>
amendments to IAS 1 ‘Presentation of
Financial Statements’, effective for periods
beginning on or after 1 January 2024 –
not endorsed by the UKEB; and
>
amendments to IFRS 16 ‘Leases’, effective
for periods beginning on or after 1 April 2021
– endorsed by the UKEB on 12 May 2021.
These amendments and interpretations are
not expected to have a significant impact on
the Group’s net results.
Group Accounting Policies
continued
144
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
1 Revenue
Product Sales
2021
2020
2019
Emerging
Rest of
Emerging
Rest of
Emerging
Rest ofMarkets
US
Europe
World
Total
Markets
US
Europe
World
Total
Markets
TotalUS
Europe
World
$m $m $m $m $m
$m $m $m $m $m $m $m $m $m $m
Oncology:
Tagrisso
1,336 1,780
986
913 5,015
1,208
1,566
748
806
474 4,328
762
1,268
685
3,189
Imfinzi
277
1,245
485
405
2,412
158
1,185
370
329
2,042
30
1,041
179
219
1,469
Lynparza
384
1,087
618
259
2,348
264
876
435
201
1,776
133
626
287
152
1,198
Calquence
20
1,089
111
1,238 18
6 3 –
511
2 522
2 162
– 164
Koselugo
1 –
104
3 108
– – – – – –
38
– 38
–Enhertu
12
– 4 1
17
– – – – – – – – – –
Orpathys
16
– – –
16 – – – – – – – – – –
Zoladex
619
13
147
169
948
561
5
140
7 182
888
492
135
179
813Faslodex
167
30
113
121
431
180
55
221
124
580
198
892 328
229
137
Iressa
151
11
5
16
183
221
14
21 12
268
286
17
70
50
423
Casodex
105
– 3
35
143
133
– 3
36
– 172
127
16
57
200
Arimidex
106
– 4
29
139
147
– 3
35
– 185
152
28
45
225
Others
29
– 5
16
50
28
– 4 5
19
– 51
29
60
94
3,223
5,359
2,484
1,982
13,048
2,906
4,250
1,938 1,756 1,584
10,850
1,423 2, 211
3,449
8,667
Cardiovascular, Renal & Metabolism:
Farxiga
1,195
732
810
263
3,000
686
569
507
197
1,959
471
1,543 537 373
162
Brilinta
328
735
346
63
1,472
461
732
342
58
1,593
462
710
351
58
1,581
Bydureon
3
321
6 55
385
4 382
53
9 448
11
459
66
13
549
Onglyza
179
88
61
32
360
201
166
58
45
470
176
230
70
51
527
Byetta
12
26
11
55 6
8
37
9 14
68
12
68 19
11 110
Other Diabetes
18
22
17
2
59
7 40 9 2
25
2 13
47
1 52
Lokelma
3
115
13
44
175
5 –
57
4 10
– 76
13
1 14
Roxadustat
174
– – –
174 – – – – – – – – – –
Crestor
775
80
52
189
1,096
748
92
129
211
1,180
806
104
148
220
1,278
Seloken
/
Toprol-XL
928
1
11 11
951
782
13
16
10
821
686
37
25
12
760
Atacand
28
4
65
– 97
175
10
35
23
243
160
12
30
19
221
Others
137
–
53
6 196
126
–
57
8 191 193
(1)
59
20
271
3,780
2,124
1,494
622
8,020
3,203
2,083
1,228
582
7,096
2,978
2,209
1,151
568
6,906
Respiratory & Immunology:
Symbicort
609
1,065
670
384
2,728
567
1,022
694
438
2,721
547
829
678
441
2,495
Fasenra
20
790
286
162
1,258
12
603
203
131
949
5 482
118
99
704
Pulmicort
770
72
73
47
962
798
71
73
54
996
85 1,190
110
81
1,466
Daliresp
/
Daxas
4
207
1 15
227
4
190
1 22
217
4 184
1 26
215
Breztri
55
115
26 7
203
14
5 – 9 – – 2 2
28
–Bevespi
4
39
– 11
54
1 – –
44
3 48
– 42
– 42
Saphnelo
– 8 – – 8
– – – – – – – – – –
Others
287
108
185
14
594
203
6
204 176
6 13
398
241
16
467
1,749
2,404
1,247
634
6,034
1,599 1,653
1,941
1,987 1,171
646
5,357
1,107
644
5,391
Rare Disease:
Soliris
170
1,068
439
197
1,874
– – – – – – – – – –
Ultomiris
9
381
169
129
688
– – – – – – – – – –
Strensiq
10
297
36
35
378
– – – – – – – – – –
Andexxa
–
50
– 18
68
– – – – – – – – – –
Kanuma
7
32
3 20
62
– – – – – – – – – –
196
1,828
682
364
3,070
– – – – – – – – – –
Other:
Nexium
705
128
62
431
1,326
757
169
71
495
1,492
748
1,483 218
63
454
Synagis
35
23
203
149
410
– 358
47
– 325
372
– 46
– 312
FluMist
2
27
2 222
253
1
70
5 219
295
– 20
– 93
113
Losec
/
Prilosec
152
1
26
1 180
152
6
20
5 183
179
10
49
25
263
Seroquel
XR
/IR
46
12
29
5
92
55
17
29
16
117
50
34
88
19 191
Others
14
30
54
8
106
6
55
9 56
126 12
9 108
64
193
954 596
221
596 2,367
971
364
720
530 2,585
436 989
669
507
2,601
COVID-19:
Vaxzevria
2,240
64
1,035
578
3,917
– – 2 – 2 – – – – –
Evusheld
19
–
66
– 85
– – – – – – – – – –
2,259
64
1,101
578
4,002
– – 2 – 2 – – – – –
Product Sales
12,161
12,000
7,604
4,776
36,541
8,679
8,638 5,059
3,514
25,890
8,165
7,747
4,350
3,303
23,565
145
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
SE
Rebates and chargebacks in the US
The major market where estimates are seen as significant is the US. When invoicing Product Sales in the US, we estimate the rebates and
chargebacks we expect to pay. The adjustment in respect of prior year net US Product Sales revenue in 2021 was 1.5% (2020: 3.5%; 2019: 3.6%).
The most significant of these relate to the Medicaid and state programmes with an adjustment in respect of prior year net US Product Sales revenue
in 2021 of 0.4% (2020: 1.1%; 2019: 1.3%) and Managed Care and Medicare of 0.7% (2020: 1.5%; 2019: 1.9%).
The adjustment in respect of the prior year net US Product sales revenue, excluding the Rare Disease disease area in 2021 was 1.8%, with Medicaid
and state programmes of 0.5% and Managed Care and Medicare of 0.8%.
These values demonstrate the level of sensitivity; further meaningful sensitivity is not able to be provided due to the large volume of variables that
contribute to the overall rebates, chargebacks, returns and other revenue accruals.
Collaboration Revenue
2021
2020
2019
$m
$m $m
Royalty income
138
62 62
Global co-development and commercialisation of
Lynparza
and
Koselugo
with MSD
400
460
610
Transfer of rights to
Zoladex
in the US and Canada to TerSera –
35
–
Enhertu
: share of gross profits
193
94
–
Roxadustat: share of gross profits
6
30
–
Nexium
: sale of rights
75
– –
Licence agreement for
Crestor
in Spain with Almirall
–
– 39
Co-development and commercialisation of MEDI8897 with Sanofi
–
–
34
Grant of authorised generic rights to various medicines in Japan
–
–
19
Other collaboration revenue 55
64
46 876
727
819
Collaboration Revenue includes some income that does not arise from the satisfaction of performance obligations, in particular profit share
entitlements arising from product sales made by collaborators who have licenced intellectual property to AstraZeneca. $200m of Collaboration
Revenue in 2021 (2020: $128m; 2019: $nil) relates to such income. Substantially all other Collaboration Revenue relates to performance obligations
satisfied in prior periods.
2 Operating prot
Operating profit includes the following significant items:
Cost of sales
In 2021, Cost of sales includes a charge of $2,198m in relation to the release, in line with sales, of fair value uplift to inventory that was recognised
under IFRS 3 ‘Business Combinations’ upon the acquisition of Alexion (see Note 27).
During the year $290m (2020: $nil) of government grants were recognised within Cost of sales. Substantially all of the grants recognised relate to
funding of manufactured
Vaxzevria
product for the US government, which expired prior to being accepted by the FDA. Historically, AstraZeneca
did not receive any substantial government grants prior to the commencement of these programmes in 2020.
Selling, general and administrative expense
In 2021, Selling, general and administrative expense includes a charge of $42m (2020: credit of $51m; 2019: credit of $516m) resulting from
changes in the fair value of contingent consideration arising from the acquisition of the diabetes alliance from BMS. These adjustments reflect
revised estimates for future sales performance for the products acquired and, as a result, revised estimates for future royalties payable.
In 2021, Selling, general and administrative expense also includes a charge of $5m (2020: credit of $143m; 2019: credit of $58m) resulting from changes
in the fair value of contingent consideration arising from the acquisition of Almirall’s respiratory business. These adjustments reflect revised estimates
for future sales performance for the products acquired and, as a result, revised estimates for future milestones payable.
In 2021, Selling, general and administrative expense also includes a charge of $48m (2020: credit of $9m; 2019: charge of $610m) relating to a
number of legal proceedings including settlements in various jurisdictions in relation to several marketed products.
Research and development expense: Government grants
During the year $531m (2020: $222m) of government grants were recognised within Research and development expense. Substantially all of
the grants recognised relate to funding for research and development and related expenses for
Vaxzevria
$309m; (2020: $161m) and AZD7442 $222m;( 2020: $61m). Historically, AstraZeneca did not receive any substantial government grants prior to the commencement of these
programmes in 2020.
Notes to the Group Financial Statements
continued
1 Revenue
continued
146
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Other operating income and expense
2021
2020
2019
$m
$m $m
Royalties
Income
63
149 146
Amortisation
(1)
(2)
(4)
Gains on disposal of intangible assets
513
1,030 1,243
Gains on disposal of investments in associates and joint ventures
776
– –
Net (losses)/gains on disposal of other non-current assets
(4)
25
(21)
Impairment of property, plant and equipment
–
(12)
–
Other income
1
453
406
285
Other expense
(308)
(68)
(108)
Other operating income and expense
1,492
1,528
1,541
Royalty amortisation relates to intangible assets recorded in respect of income streams acquired with MedImmune.
Gains on disposal of intangible assets in 2021 includes $317m on disposal of rights to
Crestor
in over 30 countries in Europe, except in the UK and Spain.
Gains on disposal of intangible assets in 2020 includes $350m on disposal of global rights excluding US, India and Japan to established hypertension
medicines to Atnahs Pharma, $400m on disposal of rights in over 70 countries to
Atacand
to Cheplapharm and $120m on the sale of an FDA Priority
Review Voucher.
Gains on disposal of intangible assets in 2019 includes $515m on disposal of US rights to
Synagis
to Sobi, $243m on disposal of rights to Losec
globally excluding China, Japan, the US and Mexico to Cheplapharm, $181m on disposal of rights to
Arimidex
and Casodex
in Europe and certain additional countries to Juvisé Pharmaceuticals and $213m on disposal of commercialisation rights to
Seroquel
and
Seroquel XR
in Europe, Russia,
US and Canada to Cheplapharm.
Gains on disposal of investments in associates and joint ventures in 2021 relates to the disposal of the 26.7% ownership in Viela Bio, as part of the
acquisition of Viela by Horizon Therapeutics plc. AstraZeneca received cash proceeds and profit of $776m upon closing, with the profit recorded
as Other operating income.
As part of the total consideration received in respect of the agreement to sell US rights to
Synagis
in 2019, $150m related to the rights to participate in the future cash flows from the US profits or losses for nirsevimab. A further $40m was received in 2020 and $20m in 2021. The total amount
has been recognised as a financial liability as the Group has not fully transferred the risks and rewards of the underlying cash flows arising from
nirsevimab to Sobi. This liability is presented in Other payables within Non-current liabilities. The associated cash flow is presented within investing
activities as the Group has received the cash in exchange for agreeing to transfer future cash flows relating to an intangible asset. In 2021, as a
result of the Probability of Technical/Regulatory Success unwind, an increase of $114m to the Profit Participation Liability has been recorded in
Other operating expense.
Restructuring costs
In conjunction with the acquisition of Alexion, the enlarged Group has initiated a comprehensive Post Alexion Acquisition Group Review, aimed at
integrating systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments. These activities
are expected to be substantially complete by the end of 2025, with a number of planned activities having commenced in late 2021. The Group has
also continued to progress other legacy restructuring programmes, including the Global Post-Pandemic New Ways of Working programme that
was initiated in 2020 in response to the changing business environment, accelerated by the COVID-19 pandemic.
During 2021, the Group has incurred $1,283m of restructuring costs, of which $1,030m resulted from activities that are part of the Post Alexion
Acquisition Group Review. These included $449m within Cost of sales due to the rationalisation of our manufacturing capacity and footprint across
certain production sites, $161m within Research and development expense and $81m in Cost of sales due to the de-prioritisation of various
development projects within the enlarged Group’s pipeline, $144m within Cost of sales in relation to the renegotiation of manufacturing capacity
agreements with third parties and $98m, recognised principally in Selling, general and administrative expense, of severance payments and the
associated costs of compensating those Alexion employees whose roles were eliminated due to duplication with existing AstraZeneca roles.
Total restructuring costs in 2021 included impairments of property, plant and equipment ($343m) and impairments of software intangibles ($16m).
The tables below show the costs that have been charged in respect of restructuring programmes by cost category and type. Severance provisions
are detailed in Note 21.
2021
2020
2019
$m
$m $m
Cost of sales
722
53
73
Research and development expense
223
35
101
Selling, general and administrative expense
338
162
173
Other operating income and expense
–
1 –
Total charge
1,283
251
347
147
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
2021
2020
2019
$m
$m $m
Severance costs
217
26
137
Accelerated depreciation and impairment charges
1
371
17
(67)
Other
2
695
208
277
Total charge
1,283
251
347
Financial instruments
Included within Operating profit are the following net gains and losses on financial instruments:
2021
2020
2019
$m
$m $m
Losses on forward foreign exchange contracts
(21)
(86)
(112)
(Losses)/gains on receivables and payables
(42)
89
66
Total
(63)
3
(46)
Impairment charges
Details of impairment charges for 2021, 2020 and 2019 are included in Notes 7 and 10.
3 Finance income and expense
2021
2020
2019
$m
$m $m
Finance income
Returns on fixed deposits and equity securities
1
1 1
Returns on short-term deposits
11
40
122
Fair value gains on debt and interest rate swaps
–
4 7
Discount unwind on other long-term assets
–
6
20
Interest income on income tax balances
31
36
22
Total
43
87
172
Finance expense
Interest on debt and commercial paper
(700)
(669)
(698)
Interest on overdrafts, lease liabilities and other financing costs
(74)
(67)
( 74)
Net interest on post-employment defined benefit plan net liabilities (Note22)
(26)
(37)
(53)
Net exchange losses
(20)
(34)
(30)
Discount unwind on contingent consideration arising from business combinations (Note20)
(226)
(278)
(356)
Discount unwind on other long-term liabilities
1
(248)
(219)
(213)
Fair value losses on debt and interest rate swaps
(4)
– –
Interest expense on income tax balances
(2)
(2)
(8)
Total
(1,300)
(1,306) (1,432)
Net finance expense
(1,257)
(1,219)
(1,260)
Financial instruments
Included within finance income and expense are the following net gains and losses on financial instruments:
2021
2020
2019
$m
$m $m
Interest and fair value adjustments in respect of debt designated at fair value through profit or loss, net of derivatives
(5)
(8)
(12)
Interest and changes in carrying values of debt designated as hedged items in fair value hedges, net of derivatives
(9)
(6)
(10)
Interest and fair value changes on fixed and short-term deposits, equity securities, other derivatives and tax balances
16
42
110
Interest on debt, commercial paper, overdrafts and lease liabilities held at amortised cost
(738)
(660)
(662)
Fair value loss of $33m (2020: gain of $33m; 2019: loss of $5m) on interest rate fair value hedging instruments and $29m fair value gain (2020: loss
of $32m; 2019: gain of $8m) on the related hedged items have been included within Interest and changes in carrying values of debt designated
as hedged items, net of derivatives. All fair value hedge relationships were effective during the year.
Fair value loss of $19m (2020: gain of $2m; 2019: gain of $4m) on derivatives related to debt instruments designated at fair value through profit or
loss and $19m fair value gain (2020: loss of $3m; 2019: loss of $4m) on debt instruments designated at fair value through profit or loss have been
included within Interest and fair value adjustments in respect of debt designated at fair value through profit or loss, net of derivatives.
Notes to the Group Financial Statements
continued
2 Operating prot
continued
148
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
4 Taxation
Taxation recognised in the Consolidated Statement of Comprehensive Income is as follows:
2021
2020
2019
$m
$m $m
Current tax expense
Current year
1,200
981
1,243
Adjustment to prior years
(5)
(10)
66
Total
1,195
971
1,309
Deferred tax expense
Origination and reversal of temporary differences
(1,417)
(178)
(875)
Adjustment to prior years
(158)
(21)
(113)
Total
(1,575)
(199)
(988)
Taxation recognised in the profit for the period
(380)
772
321
Taxation relating to components of Other comprehensive income is as follows:
2021
2020
2019
$m
$m $m
Current and deferred tax
Items that will not be reclassified to profit or loss:
Remeasurement of the defined benefit liability
(117)
36
81
Net losses/(gains) on equity investments measured at fair value through other comprehensive income
27
(180)
(60)
Deferred tax (credit)/charge relating to change of tax rates
195
63
–
Total
105
(81)
21
Items that may be reclassified subsequently to profit or loss:
Foreign exchange arising on consolidation
57
(61)
34
Foreign exchange arising on designated borrowings in net investment hedges
(19)
22
4
Deferred tax charge relating to change of tax rates
8
– –
Total
46
(39)
38
Taxation relating to components of other comprehensive income
151
(120)
59
The reported tax rate in the year was 143% and reflected the favourable one-off impacts of the non-taxable divestment of the investment in Viela
Bio and a reduction of tax liabilities arising from updates to estimates of prior period tax liabilities following settlements with tax authorities and on
expiry of statute of limitations partially offset by a tax charge on recalculation of deferred tax balances following substantive enactment of Dutch
and UK Corporation Tax rate increases.
The income tax paid for the year was $1,743m.
Taxation has been provided at current rates on the profits earned for the periods covered by the Group Financial Statements. The 2021 prior period
current tax adjustment relates mainly to tax accrual to tax return adjustments. The 2020 prior period current tax adjustment relates mainly to net
reductions in provisions for tax contingencies and tax accrual to tax return adjustments. The 2019 prior period current tax adjustments relate mainly
to net increases in provisions for tax contingencies and tax accrual to tax return adjustments.
The 2021 prior period deferred tax adjustments relate mainly to tax accrual to tax return adjustments and updates to estimates of prior period
tax liabilities following settlements with tax authorities. The 2020 prior period deferred tax adjustments relate mainly to tax accrual to tax return
adjustments offset by net increases in provisions for tax contingencies. The 2019 prior period deferred tax adjustments relate mainly to tax accrual
to return adjustments.
To the extent that dividends remitted from overseas subsidiaries, joint ventures and associates are expected to result in additional taxes,
appropriate amounts have been provided for. Unremitted earnings or differences in the carrying value and tax basis of investments may be liable
to additional taxes if distributed as dividends or on a liquidation event. Deferred tax is provided for such differences in relation to Group entities where
management is intending to remit earnings in the foreseeable future. The aggregate amount of gross temporary differences associated with
investments in subsidiaries, partnerships and branches for which deferred tax liabilities have not been recognised totalled approximately $5,597m
at 31 December 2021 (2020: $2,270m; 2019: $1,779m), $3,095m of which has a corresponding deductible temporary difference of the same gross
value which is not recognised as it is not probable of reversing in the foreseeable future but on which different tax rates apply. Prior years’ amounts
have been adjusted to reflect only those unremitted earnings that would be subject to additional taxes.
Factors affecting future tax charges
As a Group with worldwide operations, AstraZeneca is subject to several factors that may affect future tax charges, principally the levels and mix of
profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms. In 2021, the UK Government enacted
legislation to increase the main rate of UK statutory Corporation Tax to 25% effective 1 April 2023. In December 2021, the OECD issued model
rules for a new global minimum tax framework and the UK has announced the intention to bring these into effect from 2023. Whilst the overarching
framework has been published, we are awaiting the legislation and detailed guidance to assess the full implications upon AstraZeneca.
149
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Additional InformationStrategic Report Corporate Governance
Financial Statements
Tax reconciliation to UK statutory rate
The table below reconciles the UK statutory tax charge to the Group’s total tax (credit)/charge:
2021
2020
2019
$m
$m $m
(Loss)/profit before tax
(265)
3,916
1,548
Notional taxation charge at UK corporation tax rate of 19%
(50)
744
294
Differences in effective overseas tax rates
1
(49) (49)
Deferred tax charge relating to change in tax rates
1
54
138
39
Unrecognised deferred tax asset
2
32
3
(16)
Items not deductible for tax purposes
208
36
92
Items not chargeable for tax purposes
(163)
(4)
(13)
Other items
3
(299)
(65)
21
Adjustments in respect of prior periods
4
(163)
(31)
(47)
Total tax (credit)/charge for the year
(380)
772
321
AstraZeneca is domiciled in the UK but operates in other countries where the tax rates and laws are different to those in the UK. The impact on
differences in effective overseas tax rates on the Group’s overall tax charge is noted above. Profits arising from our manufacturing operation in
Puerto Rico are granted special status and are taxed at a reduced rate compared with the normal rate of tax in that territory under a tax incentive
grant continuing until 2031.
Deferred tax
The total movement in the net deferred tax balance in the year was $2,396m. The movements are as follows:
Intangibles,
Pension and
Elimination of
Losses and
Accrued
property,plant
post-retirement
unrealised profit
Untaxed
tax creditsexpenses
& equipment
1
benefits
on inventory
reserves
2
carried forward
and other
Total
$m $m $m $m $m $m $m
Net deferred tax balance at 1January 2019
(3,368)
495
980
(557)
1,008
(907) 535
Income statement
1,055
(9)
312
(63)
(480)
173
988
Other comprehensive income
34
79
– – –
(30)
83
Equity
– – – – –
12 12
Exchange
14
(4)
1
22
1 18
52
Net deferred tax balance at 31December 2019
(2,265)
561
1,293
691 (598)
546
228
Income statement
(226)
(64)
444
(92)
136
1
199
Other comprehensive income
(78)
101
–
(1)
– 72
94
Equity
– – – – –
(16) (16)
Exchange
(58)
58
23 70
(110)
32
15
Net deferred tax balance at 31December 2020
(2,627)
656
1,807
(801)
714
771
520
Income statement
782
(166)
(59)
(139)
307
850
1,575
Other comprehensive income
52
83
– – –
40
175
Equity
– – – – –
14 14
Additions through business combinations
3
(3,744)
13
166
–
507
(1,116) (4,174)
Exchange
57
(33) (53)
78
(10)
(25)
14
Net deferred tax balance at 31December 2021
4
(5,480)
553
1,861
534 (862)
1,518 (1,876)
Notes to the Group Financial Statements
continued
4 Taxation
continued
150
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
The net deferred tax balance, before the offset of balances within countries, consists of:
Intangibles,
Pension and
Elimination of
Losses and
Accrued
property,plant
post-retirement
unrealised profit
Untaxed
tax creditsexpenses
& equipment
benefits
on inventoryreserves
carried forward
and other
Total
$m $m $m $m $m $m $m
Deferred tax assets at 31December 2019
1,091
591
1,543 –
608
959
4,792
Deferred tax liabilities at 31December 2019
(3,356)
(30)
(250)
(598)
(62)
(268)
(4,564)
Net deferred tax balance at 31December 2019
(2,265)
561
1,293
691 (598)
546
228
Deferred tax assets at 31December 2020
1,061
690
2,286
–
852
1,130
6,019
Deferred tax liabilities at 31December 2020
(3,688)
(34)
(479)
(801) (138)
(359)
(5,499)
Net deferred tax balance at 31December 2020
(2,627)
656
1,807
(801)
714
771
520
Deferred tax assets at 31December 2021
1,476 1,735
574
1,910 –
1,571 7, 266
Deferred tax liabilities at 31December 2021
(6,956)
(21)
(49)
(1,201) (862)
(53)
(9,142)
Net deferred tax balance at 31December 2021
(5,480)
553
1,861
534 (862)
1,518 (1,876)
Analysed in the Consolidated Statement of Financial Position, after offset of balances within countries, as follows:
2021
2020
2019
$m
$m $m
Deferred tax assets
4,330
3,438
2,718
Deferred tax liabilities
(6,206)
(2,918)
(2,490)
Net deferred tax balance
(1,876)
520
228
Unrecognised deferred tax assets
Deferred tax assets (DTA) of $719m (2020: $428m; 2019: $441m) have not been recognised in respect of deductible temporary differences because
it is not probable that future taxable profit will be available against which the Group can utilise the benefits there from.
2021 2021
2020 2020
2019 2019
Temporary Unrecognised
Temporary
Unrecognised
TemporaryUnrecognised
differences
DTA
differences
DTA
differencesDTA
$m $m
$m $m $m $m
Trading and capital losses expiring:
Within 10 years
4 1
2 –
33
9More than 10 years
53
11
– – 1 –
Indefinite
300
79
234
63
218
62
357
91
236
63
252
71
Tax credits and State tax losses expiring:
Within 10 years
101
36
44
More than 10 years
441
255 259
Indefinite
86
74
67
628
365
370
Total
719
428
441
5 Earnings per $0.25 Ordinary Share
2021
2020
2019
Profit for the year attributable to equity holders ($m)
112
3,196
1,335
Basic earnings per Ordinary Share
$0.08
$2.44
$1.03
Diluted earnings per Ordinary Share
$0.08
$2.44
$1.03
Weighted average number of Ordinary Shares in issue for basic earnings (millions)
1,418
1,312 1,301
Dilutive impact of share options outstanding (millions)
9
1 –
Diluted weighted average number of Ordinary Shares in issue (millions)
1,427
1,313 1,301
The earnings figures used in the calculations above are post-tax.
151
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
6 Segment information
Following the acquisition of Alexion, the Group has reviewed its assessment of reportable segments under IFRS 8 ‘Operating Segments’ and
concluded that the Group continues to have one reportable segment.
KJ
This determination is considered to be a Key Judgement and this judgement has been taken with reference to the following factors:
1 The level of integration across the different functions of the Group’s pharmaceutical business:
AstraZeneca is engaged in a single business activity of pharmaceuticals and the Group does not have multiple operating segments. AstraZeneca’s
functional activities take place (and are managed) globally on a highly integrated basis. These individual functional areas are not managed separately.
2 The identification of the Chief Operating Decision Maker (CODM) and the nature and extent of the financial information reviewed by the CODM:
The SET, established and chaired by the CEO, is the vehicle through which the CEO exercises the authority delegated to him from the Board for the
management, development and performance of AstraZeneca as a whole. It is considered that the SET is AstraZeneca’s Chief Operating Decision
Making body (as defined by IFRS 8). The operation of the SET is principally driven by the management of the Commercial operations, R&D,
manufacturing and supply and enabling functions. All significant operating decisions are undertaken by the SET. While members of the SET have
responsibility for implementation of decisions in their respective areas, operating decision making is at SET level as a whole. Where necessary, these
are implemented through cross-functional sub-committees that consider the Group-wide impact of a new decision. For example, product launch
decisions would be initially considered by the SET and, on approval, passed to an appropriate sub team for implementation. The ability of the
enterprise to develop, produce, deliver and commercialise a wide range of pharmaceutical products are central to the SET decision-making process.
In assessing performance, the SET reviews financial information on an integrated basis for the Group as a whole, substantially in the form of, and
on the same basis as, the Group’s IFRS Financial Statements. The high upfront cost of discovering and developing new products, coupled with
the relatively insignificant and stable unit cost of production, means that there is not the clear link that exists in many manufacturing businesses
between the revenue generated on an individual product sale and the associated cost and hence margin generated on a product. Consequently,
the profitability of individual drugs or classes of drugs is not considered a key measure of performance for the business and is not monitored by
the SET. The focus of additional financial information reviewed is at brand sales and gross margin level within specific geographies. Expenditure
analysis is completed for the science units, operations and enabling functions; there is no allocation of these centrally managed group costs to
the individual product or brands. The bonus of SET members’ continues to be derived from the Group scorecard outcome as discussed in our
Directors’ Remuneration Report.
3 How resources are allocated:
Resources are allocated on a Group-wide basis according to need. In particular, capital expenditure, in-licensing, and R&D resources are
allocated between activities on merit, based on overall therapeutic considerations and strategy under the aegis of the Group’s Early Stage
Product Committees and Late Stage Product Committees.
Geographic areas
The following table shows information for Total Revenue by geographic area and material countries. The additional tables show the Operating profit
and Profit before tax made by companies located in that area, together with Non-current assets, Total assets, assets acquired, net operating assets,
and Property, plant and equipment owned by the same companies. Product Sales by geographic market are included in the area/country where
the legal entity resides and from which those sales were made.
Total Revenue
2021
2020
2019
$m
$m $m
UK
3,245
1,741
1,822
Rest of Europe
France
915
653
578
Germany
1,486
937
704
Italy
577
431
396
Spain
578
398
359
Sweden
2,322
1,026
834
Others
1,949
1,391 1,291
7,827
4,836
4,162
The Americas
Canada
772
596
466
US
12,047
8,955
8,047
Others
1,203
761
814
14,022
10,312
9,327
Asia, Africa & Australasia
Australia
547
282
266
China
6,002
5,345
4,867
Japan
3,395
2,567
2,522
Others
2,379
1,534
1,418
12,323
9,728
9,073
Total Revenue
37,417
26,617
24,384
Total Revenue outside of the UK totalled $34,172m for the year ended 31 December 2021 (2020: $24,876m; 2019: $22,562m).
Notes to the Group Financial Statements
continued
152
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Operating profit/(loss)
(Loss)/profit before tax
2021
2020
20212019
2020
2019
$m
$m $m
$m$m $m
UK
(950)
824
466
(1,477)
518
93
Rest of Europe
2,999
2,838
1,502
2,682
2,356
1,006The Americas
(1,936)
758
(8)
(2,401)
297
(474)
Asia, Africa & Australasia
943
742
964
745 931
923
Continuing operations
1,056
5,162
2,924
(265)
3,916
1,548
Non-current assets
1
Total assets
2021
2020
20212019
2020
2019
$m
$m $m
$m$m $m
UK
7,692
7,9 0 0
6,874
16,615
17,8 51
15,302
Rest of Europe
39,171
15,821 15,245
48,383
19,738
18,182
The Americas
26,570
18,501
19,663
34,301
23,640
23,380
Asia, Africa & Australasia
1,254
1,354 1,253
6,064
5,500
4,513
Continuing operations
74,687
43,576
43,035
105,363
66,729
61,377
Assets acquired
2
Net operating assets
3
2021
2020
20212019
2020
2019
$m
$m $m
$m$m $m
UK
810
1,611
2,255
3,239
5,244
4,206
Rest of Europe
26,527
505
386
40,161
10,242
9,201
The Americas
10,810
286
236
24,786
15,697 15,929
Asia, Africa & Australasia
94
116
120
736
607
1,432
Continuing operations
38,241
2,518
2,997
68,922
31,790
30,768
Property, plant and equipment
2021
2020
2019
$m
$m $m
UK
2,542
2,227
1,920
Ireland
969
– –
Sweden
1,593
1,755 1,488
US
2,660
2,662
2,758
Rest of the world
1,419
1,607 1,522
Continuing operations
9,183
8,251
7,688
Geographic markets
The table below shows Product Sales in each geographic market in which customers are located.
2021
2020
2019
$m
$m $m
UK
1,206
611
458
Rest of Europe
6,792
4,446
3,891
The Americas
14,893
10,004
9,032
Asia, Africa & Australasia
13,650
10,829
10,184
Continuing operations
36,541
25,890
23,565
Product Sales are recognised when control of the goods has been transferred to a third party. A significant proportion of this is upon delivery of the
products to wholesalers. One wholesaler (2020: one; 2019: one) individually represented greater than 10% of Product Sales. The value of Product
Sales to this wholesaler was $4,862m (2020: $3,321m; 2019: $3,078m).
153
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Additional InformationStrategic Report Corporate Governance
Financial Statements
7 Property, plant and equipment
Assets in
Total property,
Land and
Plant and
plant andcourse of
buildings equipment
construction
equipment$m $m $m $m
Cost
At 1January 2019
5,366
7,096
2,177
14,639
Capital expenditure
8
48 940
996
Transfer of assets into use
403
620
– (1,023)
Disposals and other movements
(236)
(324)
(11)
(571)
Exchange adjustments
(9)
(57)
3
(63)
At 31December 2019
5,532
7,3 8 3
2,086
15,001
Capital expenditure
10
42
874
926
Transfer of assets into use
137
462
(599)
–
Disposals and other movements
(48)
(615)
(18)
(681)
Exchange adjustments
220
466
135
821
At 31December 2020
5,851
7,738
2,478
16,067
Additions through business combinations (Note27)
542
339
254
1,135
Capital expenditure
9
31
1,112 1,152
Transfer of assets into use
236
611
(847)
–
Disposals and other movements
(92)
(469)
(200)
(761)
Exchange adjustments
(169)
(347)
(69)
(585)
At 31December 2021
6,377
7,903 8
2,728
17,00Depreciation and impairment
At 1January 2019
2,504
4,714
–
7,218
Depreciation charge for the year
209
438
–
647
Impairment (reversal)/charge
(67)
14
–
(53)
Disposals and other movements
(120)
(313)
–
(433)
Exchange adjustments
(21)
(45)
–
(66)
At 31December 2019
2,505
4,808
–
7,313
Depreciation charge for the year
227
462
–
689
Impairment (reversal)/charge
(1)
2
13 12
Disposals and other movements
(42)
(606)
(12)
(660)
Exchange adjustments
137
324
–
461
At 31December 2020
2,826
4,990
–
7,816
Depreciation charge for the year
231
493
–
724
Impairment (reversal)/charge
(1)
121
223
343
Disposals and other movements
(74)
(428)
(223)
(725)
Exchange adjustments
(105)
(228)
–
(333)
At 31December 2021
2,877
4,948
–
7,825
Net book value
At 31December 2019
3,027
2,575
2,086
7,6 88
At 31December 2020
3,025
2,748
2,478
8,251
At 31December 2021
3,500
2,955
2,728
9,183
Impairment charges in 2021 totalling $343m were recognised for Plant and equipment and Assets in course of construction due to the rationalisation
of our manufacturing capacity and footprint across certain production sites as a result of restructuring programmes, including the Post Alexion
Acquisition Group Review (see Note 2). These charges have been recognised in Cost of sales. The revised carrying value of the impacted assets
is nil, under fair value less costs to sell.
Impairment charges in 2019 were recognised for Land and buildings and Plant and equipment as a result of the announcement of the closure of the
Wedel manufacturing site and the cessation of specific operations in Algeria. These charges were recognised in Cost of sales in 2019. Impairment
reversals were recognised in 2019 of $23m in relation to the Longmont, Colorado manufacturing site (sold in March 2019) and the Boulder, Colorado
manufacturing site of $70m (sold in May 2020). These assets had been fully impaired during 2018.
Included within other movements in 2019 is a transfer of $70m from Land and buildings to Assets held for sale in relation to the Boulder
manufacturing site.
2021
2020
2019
$m
$m $m
The net book value of land and buildings comprised:
Freeholds
2,985
2,583 2,657
Leaseholds
515
442
370
Notes to the Group Financial Statements
continued
154
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
8 Leases
Right-of-use assets
Total right-
Land and
Motor
of-use
buildings
vehicles
Other
assets$m $m $m $m
Cost
At 1January 2019
– – – –
Opening balance
580
124
18
722
Additions – separately acquired
85 85
3
173
Disposals and other movements
(44)
(7)
1
(50)
Exchange adjustments
6 – – 6
At 31December 2019
627
202
22
851
Additions – separately acquired
87
89
15
191
Disposals and other movements
–
(27)
(2)
(29)
Exchange adjustments
21
8 1
30
At 31December 2020
735
272
36
1,043
Additions through business combinations (Note27)
255
8 –
263
Additions – separately acquired
145
98
2
245
Disposals and other movements
25
(44) (4)
(23)
Exchange adjustments
(27)
(13)
(1)
(41)
At 31December 2021
1,133
321
33
1,487
Depreciation and impairment
At 1January 2019
– – – –
Depreciation charge for the year
130
70
7
207
Impairment charge
4 – – 4
Disposals and other movements
(3)
(6)
1
(8)
Exchange adjustments
1 – – 1
At 31December 2019
132
64
8
204
Depreciation charge for the year
131
75
9
215
Disposals and other movements
(24)
(26)
(4)
(54)
Exchange adjustments
8 4 –
12
At 31December 2020
247
117
13
377
Depreciation charge for the year
144
85
6
235
Disposals and other movements
(54)
(42)
–
(96)
Exchange adjustments
(11)
(6)
–
(17)
At 31December 2021
326
154
19
499
Net book value
At 31December 2019
495
138
14
647
At 31December 2020
488
155
23
666
At 31December 2021
807
167
14
988
Lease Liability
2021
2020
2019
$m
$m $m
The present value of lease liabilities is as follows:
Within one year
(233)
(192)
(188)
Later than one year and not later than five years
(544)
(389)
(368)
Later than five years
(210)
(100)
(119)
Total lease liabilities
(987)
(681)
(675)
The interest expense on lease liabilities included within finance costs was $22m (2020: $21m; 2019: $22m). The expense relating to short-term
leases was $4m (2020: $2m; 2019: $1m). The expense relating to leases of Low-value assets that are not shown above as short-term leases was
$1m (2020: $1m; 2019: $1m). The expense relating to variable lease payments not included in lease liabilities was $4m (2020: income of $1m;
2019: $nil). Income recognised from subleasing was $3m (2020: $7m; 2019: $4m).
The total cash outflow for leases in 2021 was $262m (2020: $228m; 2019: $208m).
155
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
9 Goodwill
2021
2020
2019
$m
$m $m
Cost
At 1January
12,164
11,982
12,022
Additions through business combinations (Note27)
8,287
– –
Exchange and other adjustments
(140)
182
(40)
At 31December
20,311
12,16 4
11,982
Amortisation and impairment losses
At 1January
319
314
315
Exchange and other adjustments
(5)
5
(1)
At 31December
314
319
314
Net book value
At 31December
19,997
11,845 11,668
Goodwill is tested for impairment at the operating segment level, this being the level at which goodwill is monitored for internal management purposes.
As detailed in Note 6, the Group does not have multiple operating segments and is engaged in a single business activity of pharmaceuticals.
Recoverable amount is determined on a fair value less costs to sell basis using the market value of the Company’s outstanding Ordinary Shares.
Our market capitalisation is compared to the book value of the Group’s net assets and this indicates a significant surplus at 31 December 2021
(and 31 December 2020 and 31 December 2019). No goodwill impairment was identified.
10 Intangible assets
Product,
Software
marketing and
Other
development
distribution rights
intangibles
costs
Total
$m $m $m $m
Cost
At 1January 2019
39,136
2,526
1,839
43,501
Additions – separately acquired
1,835
99
67
2,001
Disposals
(35)
–
(151)
(186)
Exchange and other adjustments
(282)
24
(232) 26
At 31December 2019
40,654
2,649
1,781
45,084
Additions – separately acquired
1,454
2
136
1,592
Disposals
(970)
(66) (636)
(1,672)
Exchange and other adjustments
1,539
57
1,603 7
At 31December 2020
42,677 2,642
1,288
46,607
Additions through business combinations (Note27)
26,455
430
26,955 70
Additions – separately acquired
587
6
119
712
Transferred to Assets held for sale (Note18)
(1,266)
(47)
(1,313) –
Disposals
(801)
(402)
(23)
(1,226)
Exchange and other adjustments
(1,062)
(18)
(22)
(1,102)
At 31December 2021
66,590
2,611
1,432
70,633
Amortisation and impairment losses
At 1January 2019
17,9 07
2,035
1,600 21,542
Amortisation for year
1,808
52
1,928 68
Impairment charges
1,034
– 2
1,036Impairment reversals
(3)
– –
(3)Disposals
(29)
–
(147)
(176)
Exchange and other adjustments
(112)
10
26
(76)
At 31December 2019
20,605
2,097
1,549
24,251
Amortisation for year
1,872
59
1,992 61
Impairment charges
405 – – 405
Impairment reversals
(165)
– –
(165)Disposals
(899)
(66) (636)
(1,601)
Exchange and other adjustments
746
38 (6)
778
At 31December 2020
22,564
2,128
968
25,660
Amortisation for year
2,908
172
63
3,143
Impairment charges
2,067
–
18
2,085
Transferred to Assets held for sale (Note18)
(931)
(14)
–
(945)
Disposals
(797)
(402)
(21)
(1,220)
Exchange and other adjustments
(535)
(21)
(26)
(582)
At 31December 2021
25,276
1,863 1,002
28,141
Net book value
At 31December 2019
20,049
552
20,833 232
At 31December 2020
20,113 20,947
514
320At 31December 2021
41,314
748
430
42,492
Notes to the Group Financial Statements
continued
156
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
2021
2020
2019
$m
$m $m
Net book value
Current intangible assets –
105
–Non-current intangible assets
42,387
20,947 20,833
At 31December
42,492
20,947 20,833
Other intangibles consist mainly of research and device technologies and the Alexion brand name.
Included within Additions − separately acquired are amounts of $124m (2020: $835m; 2019: $1,093m), relating to deferred payments and other
non-cash consideration for the acquisition of Product, marketing and distribution rights, which are not reflected in the current year Consolidated
Statement of Cash Flows. Disposals include amounts related to fully depreciated assets that are no longer in use by the Group.
Amortisation charges are recognised in profit as follows:
Product,
Software
marketing and
Other
development
distribution rights
intangibles
costs
Total
$m $m $m $m
Year ended 31December 2019
Cost of sales
87
– –
87Research and development expense
–
29
– 29
Selling, general and administrative expense
1,721
19
1,808 68
Other operating income and expense
– 4 – 4
Total
1,808
52
1,928 68
Year ended 31December 2020
Cost of sales
66
– –
66Research and development expense
–
29
– 29
Selling, general and administrative expense
1,806
28
1,895 61
Other operating income and expense
– 2 – 2
Total
1,872
59
1,992 61
Year ended 31December 2021
Cost of sales
66
– –
66Research and development expense
–
33
– 33
Selling, general and administrative expense
2,842
138
63
3,043
Other operating income and expense
– 1 – 1
Total
2,908
172
63
3,143
Net impairment charges/(reversals) are recognised in profit as follows:
Product,
Software
marketing and
Other
development
distribution rights
intangibles
costs
Total
$m $m $m $m
Year ended 31December 2019
Research and development expense
609
– –
609Selling, general and administrative expense
425
– 2
427
Other operating income and expense
(3)
– –
(3)Total
1,031
– 2
1,033Year ended 31December 2020
Research and development expense
55
– –
55Selling, general and administrative expense
185
– –
185Total
240
– –
240Year ended 31December 2021
Research and development expense
1,464
– –
1,464Selling, general and administrative expense
603
–
18
621
Total
2,067
–
18
2,085
157
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
Impairment charges and reversals
Intangible assets under development and not available for use are tested annually for impairment and other intangible assets are tested when there
is an indication of impairment loss or reversal. Where testing is required, the recoverable amount of the assets is estimated in order to determine the
extent of the impairment loss or reversal. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates
the recoverable amount of the Cash Generating Unit (CGU) to which it belongs. The Group considers that as the intangible assets are linked to
individual products and that product cash flows are considered to be largely independent of other product cash flows, the CGU for intangibles is
at the product level. Group level budgets and forecasts include forecast capital investment and operational impacts related to sustainability projects,
and form the basis for the value in use models used for impairment testing.
An asset’s recoverable amount is determined as the higher of an asset’s or CGU’s fair value less costs to sell or value in use, in both cases using
discounted cash flow calculations where the asset’s expected post-tax cash flows are risk-adjusted over their estimated remaining period of
expected economic benefit. Where the value in use approach is used, the risk-adjusted cash flows are discounted using AstraZeneca’s post-tax
weighted average cost of capital (7% for 2021, 2020 and 2019). There is no material difference in the approach taken to using pre-tax cash flows
and a pre-tax rate compared to post-tax cash flows and a post-tax rate, as required by IAS 36. Where fair value less costs to sell is used to
determine recoverable value, the discount rate is assessed with reference to a market participant; this is not usually materially different to the
AstraZeneca post-tax weighted average cost of capital rate of 7%.
SE
The estimates used in calculating the recoverable amount are considered significant estimates, highly sensitive and depend on assumptions
specific to the nature of the Group’s activities including:
>
outcome of R&D activities
>
probability of technical and regulatory success
>
market volume, share and pricing (to derive peak year sales)
>
amount and timing of projected future cash flows
>
sales erosion curves following patent expiry.
For assets held at fair value less costs to sell, we make appropriate adjustments to reflect market participant assessments.
In 2021, the Group recorded impairment charges of $603m in respect of launched products, including
Bydureon
($469m, revised carrying amount
of $50m) under value in use model, roxadustat ($121m, revised carrying amount of $215m) under value in use model and other launched products
totalling $13m. As these assets have been impaired in the current year, there is limited headroom in the recoverable amount calculation and they
are inherently sensitive to any changes in assumptions, which could give rise to future impairments.
Impairment charges recorded against products in development, based on fair value less costs to sell, totalled $1,464m, principally Ardea ($1,172m)
which was fully impaired following the decision to discontinue development of verinurad. The remaining impairments relate to full impairments of
various products in development, due to either management’s decision to discontinue development as part of a Group-wide portfolio prioritisation
review, or due to the outcome of research activities.
In 2020, the Group recorded impairment charges of $350m in respect of launched products, including
Duaklir
($200m, revised carrying amount
of $210m) under fair value less costs to sell,
Bydureon
($102m, revised carrying amount of $581m) under value in use model, and other launched
products totalling $48m. The fair value less costs to sell valuation model for
Duaklir
was based on discounted cash flows, and was categorised at Level 3 in the fair value hierarchy. Key assumptions in this model were forecast future revenue and costs of production. Impairment charges
recorded against products in development totalled $55m.
In 2019, the Group recorded impairment charges of $425m in respect of launched products
Bydureon
($154m, revised carrying amount of $747m)
under value in use model,
Qtern
($89m, revised carrying amount of $233m) under value in use model, Eklira
/
($84m, revised carrying amount Tudorza
of $192m) under value in use model,
FluMist
($52m, revised carrying amount of $172m) under fair value less costs to sell and $46m relating to other launched products. Impairment charges recorded against products in development related to
Epanova
($533m) and other intangible assets ($76m).The Group has performed an assessment on assets which have had impairments recorded in previous periods to determine if any reversals of
impairments were required. Impairment reversals of $165m were recorded in 2020 in respect of launched products, including
FluMist
($147m,
revised carrying amount of $300m, driven by expanded vaccination efforts increasing global demand), and other launched products of $18m.
No impairment reversals were recorded against launched products in 2021 or 2019.
No impairment reversals were recorded against products in development in 2021 (2020: $nil; 2019: $3m).
Sensitivities
When launched products, such as the ones detailed above, are partially impaired, the carrying values of these assets in future periods are
particularly sensitive to changes in forecast assumptions, including those assumptions set out above, as the asset is impaired down to its
recoverable amount.
SE
Were the useful economic lives to be adjusted to reduce them all by one year, the net book value would be reduced by $868m. If the useful
economic lives were to be extended by one year, the net book value would increase by $481m.
Notes to the Group Financial Statements
continued
10 Intangible assets
continued
158
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Significant assets
Carrying value
Remaining
amortisation
$m
period
C5 franchise (
Soliris/Ultomiris
) intangible assets arising from the acquisition of Alexion
17,724
6 to 15 years
Intangible assets arising from the acquisition of Acerta Pharma
5,299
11 years
Strensiq, Kanuma
and
Andexxa
intangible assets arising from the acquisition of Alexion
5,019
11 to 17 years
Intangible asset products in development arising from the acquisition of Alexion
1
2,760
Not amortised
Intangible assets arising from the acquisition of ZS Pharma
2,381
10 years
Enhertu
intangible assets acquired from Daiichi Sankyo
1,684
12 years
Other intangible assets (DS-1062) acquired from Daiichi Sankyo
1
1,050
Not amortised
Farxiga
/
Forxiga
intangible assets acquired from BMS
739
5 years
Intangible assets arising from the restructuring of a historical joint venture with MSD
666
5 to 8 yearsIntangible assets arising from the acquisition of Pearl Therapeutics
611
7 to 8 years
RSV franchise assets arising from the acquisition of MedImmune
611
4 years
Monalizumab intangible assets acquired from Innate Pharma
1
340
Not amortised
The acquisition of intangible assets relating to DS-1062 in 2020 was assessed under the optional concentration test in IFRS 3 and was determined
to be an asset acquisition, as substantially all of the value of the gross assets acquired was concentrated in a single asset.
KJ
In assessing whether the intangible assets and associated processes acquired from Daiichi Sankyo in 2019 were a business, we determined
that they were not at a stage of readiness to be able to obtain regulatory approval and manufacture and commercialise at scale. The transaction
was treated as an asset acquisition.
11 Investments in associates and joint ventures
2021
2020
2019
$m
$m $m
At 1January
39
58
89
Additions
92
8
74
Share of after tax losses
(64)
(27)
(116)
Exchange and other adjustments
2
–
11
At 31December
69
39
58
On 29 January 2021, AstraZeneca entered into an agreement with IHP Holdings Limited to create and run an online platform (iHospital) offering
consultations with physicians, repeat prescriptions and e-pharmacy in China. The agreement resulted in the formation of a new entity, IHP HK
Holdings Limited. AstraZeneca contributed $30m in initial funds and holds a 50% interest in the associate entity.
On 1 December 2020, AstraZeneca and China International Capital Corporation (CICC) entered into an agreement to set up a Global Healthcare
Industrial Fund to drive healthcare system innovation by leveraging local capital and accelerating China-related innovation incubation. The agreement
resulted in the formation of a new entity, Wuxi AstraZeneca-CICC Venture Capital Partnership (Limited Partnership). AstraZeneca holds a 22%
interest in the associate entity and contributed $1m in initial funds in 2020, with a further contribution of $45m made in 2021.
On 23 September 2021, AstraZeneca entered into an agreement with VaxEquity Limited to collaborate and develop self-amplifying RNA technology
with the aim of generating treatments for target diseases. AstraZeneca has contributed $14m in initial funds and holds a 40% interest in the
associate entity.
On 23 February 2018, AstraZeneca entered into an agreement with a consortium of investors to form a new, US-domiciled standalone company
called Viela Bio. This agreement was to divest a number of assets in MedImmune’s non-core inflammation and autoimmunity portfolio to Viela Bio,
including MEDI-551, which is an advanced Phase IIb/III asset, and a number of other clinical and pre-clinical assets. AstraZeneca contributed $142m
in initial funds and held an initial 45% interest in the joint venture. Viela Bio completed an IPO on 7 October 2019 with AstraZeneca investing $8m.
After the IPO, AstraZeneca’s holding was reduced to 29%. In May 2020, Viela Bio completed a follow-on financing reducing AstraZeneca’s holding
to 26.7% with one member on a board size of seven. Given the shareholding and board representation, the investment was treated as an associate.
In February 2021, AstraZeneca agreed to divest its 26.7% ownership in Viela Bio, as part of the acquisition of Viela Bio by Horizon Therapeutics plc.
AstraZeneca received cash proceeds and profit of $776m upon closing with the profit recorded as Other operating income. Prior to divestment,
the Group provided transitional research and development services to Viela Bio, comprising $nil (2020: $3m; 2019: $13m) of services provided
directly by the Group and $1m (2020: $15m; 2019: $24m) of passed-through third-party costs incurred by the Group on behalf of Viela Bio.
On 27 November 2017, AstraZeneca entered into a joint venture agreement with Chinese Future Industry Investment Fund (FIIF), to discover, develop
and commercialise potential new medicines to help address unmet medical needs globally, and to bring innovative new medicines to patients in
China more quickly. The agreement resulted in the formation of a joint venture entity based in China, Dizal (Jiangsu) Pharmaceutical Co., Limited
(Dizal). AstraZeneca contributed $55m in initial funds and held an initial 48% interest in the joint venture. An additional contribution of $25m was
made in 2019. In July 2020, Dizal completed a follow-on financing reducing AstraZeneca’s holding to 30%. Dizal completed an IPO in December
2021, reducing AstraZeneca’s holding to 27% with two members on a board size of eleven. Given the shareholding and board representation, the
investment continues to be treated as an associate.
159
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
On 1 December 2015, AstraZeneca entered into a joint venture agreement with Fujifilm Kyowa Kirin Biologics Co., Ltd. to develop a biosimilar using
the combined capabilities of the two parties. The agreement resulted in the formation of a joint venture entity based in the UK
Limited (Centus). Since its establishment, AstraZeneca has contributed $130m in cash to the joint venture entity and has a 50% interest in the
joint venture. At the end of the year Centus had net assets of $4m, of which AstraZeneca’s share is $2m, and the investment is held at $nil value.
On 30 April 2014, AstraZeneca entered into a joint venture agreement with Samsung Biologics Co., Ltd. to develop a biosimilar using the combined
capabilities of the two parties. The agreement resulted in the formation of a joint venture entity based in the UK, Archigen Biotech Limited (Archigen).
Since its establishment, AstraZeneca has contributed $131m in cash to the joint venture entity and has a 50% interest in the joint venture. At the
end of the year Archigen had net assets of $3m, of which AstraZeneca’s share is $2m, and the investment is held at $nil value.
All investments are accounted for using the equity method. At 31 December 2021, unrecognised losses in associates and joint ventures totalled
$73m (2020: $56m; 2019: $3m) which have not been recognised due to the investment carrying value reaching $nil value.
Aggregated summarised financial information for the associate and joint venture entities is set out below:
2021
2020
2019
$m
$m $m
Non-current assets
215
324
298
Current assets
506
552
447
Total liabilities
(99)
(105)
(89)
Net assets
622
771
656
Amount attributable to AstraZeneca
65
38
64
Exchange adjustments
4
1
(6)
Carrying value of investments in associates and joint ventures
69
39
58
12 Other investments
2021
2020
2019
$m
$m $m
Non-current investments
Equity securities at fair value through Other comprehensive income
1,168
1,108
1,339
Fixed income securities at fair value through profit and loss
– –
62
Total
1,168
1,10 8
1,401
Current investments
Fixed income securities at fair value through profit and loss
16
118 811
Fixed deposits
53
42
38Total
69
160
849
Other investments held at fair value through Other comprehensive income include equity securities which are not held for trading and which the
Group has irrevocably elected at initial recognition to recognise in this category. Other investments held at fair value through profit and loss comprise
fixed income securities that the Group holds to sell.
The fair value of listed investments is based on year end quoted market prices. Fixed deposits are held at amortised cost with carrying value being
a reasonable approximation of fair value given their short-term nature.
Fair value hierarchy
The table below analyses equity securities and bonds, contained within Other investments and carried at fair value, by valuation method. The different
levels have been defined as follows:
>
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
>
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices)
>
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2021 2021
2020 2020
2019 2019
FVPL
FVOCI
FVPL
FVOCI
FVPLFVOCI
$m $m
$m $m $m $m
Level 1
16
1,064
118
891
873
1,112
Level 2
– –
– – – –
Level 3
–
104
–
217
– 227
Total
16
1,168
118
1,10 8
873
1,339
During 2020, AstraZeneca sold a proportion of its equity portfolio receiving consideration of $1,381m, a large proportion of which related to the
disposal of its full holding in Moderna Therapeutics, Inc. All related gains were accounted through Other comprehensive income.
Notes to the Group Financial Statements
continued
10 Intangible assets
continued
160
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Equity securities that are analysed at Level 3 include investments in private biotech companies. In the absence of specific market data, these
unlisted investments are held at fair value based on the cost of investment and adjusting as necessary for impairments and revaluations on new
funding rounds, which approximates to fair value. Movements in Level 3 investments are detailed below:
2021
2020
2019
FVOCI
FVOCI FVOCI
$m
$m $m
At 1January
217
227
166
Additions
1
96
5
Revaluations
–
63
56
Net transfers (out)/in
(113)
(103)
2
Disposals
–
(86)
(5)
Impairments and exchange adjustments
(1)
20
3
At 31December
104
217
227
Assets are transferred in or out of Level 3 on the date of the event or change in circumstances that caused the transfer.
13 Derivative nancial instruments
Non-current
Current Current
Non-currentassets assets
liabilities liabilities
Total
$m $m $m $m $m
Interest rate swaps related to instruments designated at fair value through profit and loss
43
– – –
43Cross currency swaps designated in a net investment hedge
4 – –
(1)
3Cross currency swaps designated in a cash flow hedge
4 – –
(17)
(13)
Cross currency swaps designated in a fair value hedge
1
10
– – –
10Other derivatives
– –
36
– (36)
31December 2019
61
36
(36)
(18)
43
Non-current
Current Current
Non-currentassets assets
liabilities liabilities
Total
$m $m $m $m $m
Interest rate swaps related to instruments designated at fair value through profit and loss
45
– – –
45Cross currency swaps designated in a net investment hedge
19
– –
(2)
17
Cross currency swaps designated in a cash flow hedge
107
43
– –
150
Cross currency swaps designated in a fair value hedge
1
– –
43
– 43
Forward FX designated in a cash flow hedge
2
– 8 5
(3)
–Other derivatives
–
48
– (30)
18
31December 2020
171
142
(33)
(2)
278
Non-current
Current Current
Non-currentassets assets
liabilities liabilities
Total
$m $m $m $m $m
Interest rate swaps related to instruments designated at fair value through profit and loss
25
– – –
25Cross currency swaps designated in a net investment hedge
62
– –
(2)
60
Cross currency swaps designated in a cash flow hedge
– – –
(43) (43)
Forward FX designated in a cash flow hedge
2
– –
13
– 13
Other derivatives
15
70
(79)
– 6
31December 2021
102
83
(79)
(45)
61
All derivatives are held at fair value and fall within Level 2 of the fair value hierarchy as defined in Note 12, except for an equity warrant which falls
within Level 3 (valued at $15m, held within Non-current assets). None of the derivatives have been reclassified in the year.
The fair value of interest rate swaps and cross currency swaps is estimated using appropriate zero coupon curve valuation techniques to discount
future contractual cash flows based on rates at the current year end.
The fair value of forward foreign exchange contracts and currency options are estimated by cash flow accounting models using appropriate yield
curves based on market forward foreign exchange rates at the year end. The majority of forward foreign exchange contracts for existing transactions
had maturities of less than one month from year end.
The interest rates used to discount future cash flows for fair value adjustments, where applicable, are based on market swap curves at the reporting
date, and were as follows:
2021
2020
2019
Derivatives
(0.5)% to 3.6%
(0.5)% to 2.4% (0.5)% to 2.7%
161
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
14 Non-current other receivables
2021
2020
2019
$m
$m $m
Prepayments
391
395
392
Accrued income
61
56
10
Other receivables
443
269
338
Non-current other receivables
895
720
740
Prepayments include $92m (2020: $121m; 2019: $125m) in relation to our research collaboration with Moderna. Other receivables include
$nil (2020: $nil; 2019: $118m) of outstanding payments relating to the out-licence of
Duaklir
and
Tudorza
to Circassia in 2017 and $44m (2020: $56m; 2019: $53m) owed by FibroGen for promotional activity in China pursuant to the roxadustat collaboration.
15 Inventories
2021
2020
2019
$m
$m $m
Raw materials and consumables
1,755
1,262
830
Inventories in process
5,216
1,331 1,272
Finished goods and goods for resale
2,012
1,431 1,091
Inventories
8,983
4,024
3,193
The Group recognised $9,640m (2020: $3,110m; 2019: $2,708m) of inventories as an expense within Cost of sales during the year.
Inventory write-offs in the year amounted to $552m (2020: $149m; 2019: $231m).
16 Current trade and other receivables
2021
2020
2019
$m
$m $m
Amounts due within one year
Trade receivables
6,054
3,829
3,606
Less: Amounts provided for doubtful debts (Note28)
(23)
(23)
(21)
6,031
3,806 3,585
Other receivables
1,808
1,278 1,083
Prepayments
1,512
1,735
865
Government grants receivable
–
53
–Accrued income
293
150
228
Trade and other receivables
9,644
7,022
5,761
Trade receivables includes $1,865m (2020: $1,250m; 2019: $892m) measured at FVOCI classified ‘hold to collect and sell’ as they are due from
customers that the Group has the option to factor.
All other financial assets included within current Trade and other receivables are held at amortised cost with carrying value being a reasonable
approximation of fair value.
Notes to the Group Financial Statements
continued
162
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
17 Cash and cash equivalents
2021
2020
2019
$m
$m $m
Cash at bank and in hand
1,461
1,182
755
Short-term deposits
4,868
6,650 4,614
Cash and cash equivalents
6,329
7, 8 3 2
5,369
Unsecured bank overdrafts
(291)
(286)
(146)
Cash and cash equivalents in the cash flow statement
6,038
7,5 4 6
5,223
The Group holds $nil (2020: $nil; 2019: $1m) of Cash and cash equivalents which is required to meet insurance solvency, capital and
security requirements.
AstraZeneca invests in constant net asset value funds and low volatility net asset value funds with same day access for subscription and redemption.
These investments fail the ‘solely payments of principal and interest’ test criteria under IFRS 9. They are therefore measured at fair value through
profit and loss, although the fair value will be materially the same as amortised cost.
Non-cash and other movements, within operating activities in the Consolidated Statement of Cash Flows, includes:
2021
2020
2019
$m
$m $m
Changes in fair value of put option (Acerta Pharma)
–
–
172
Share-based payments charge for the period
615
277
259
Settlement of share plan awards
(570)
(349)
(323)
Pension contributions
(174)
(172)
(175)
Pension charges recorded in operating profit
136
84
59
Long-term provision charges recorded in operating profit
270
66
506
Non-cash intangible additions
–
(120)
–
Foreign exchange and other
(182)
(62)
(120)
Total operating activities non-cash and other movements
95
(276)
378
18 Assets held for sale
Assets held for sale of $368m (2020: $nil; 2019: $70m) comprise intangible assets relating to the rights to certain respiratory assets acquired from
Almirall and Actavis (including
Tudorza
and Duaklir
). AstraZeneca agreed to dispose of the global rights to Tudorza
and Duaklir
to Covis Pharma
GmbH on 1 November 2021 with completion of the transaction subject to certain closing conditions and regulatory clearances. The associated
contingent consideration liability of $126m is held within current Other payables at 31 December 2021 (see Note 20). The transaction closed and
control of the assets transferred on 4 January 2022.
In 2019, Assets held for sale comprised tangible assets relating to the Boulder Manufacturing Centre, which was subsequently sold in May 2020.
163
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Additional InformationStrategic Report Corporate Governance
Financial Statements
19 Interest-bearing loans and borrowings
Repayment
2021
2020
2019
dates
$m
$m $m
Current liabilities
Bank overdrafts
On demand
291
286
146
Other short-term borrowings excluding overdrafts
3
84
8
Bank collateral
93
288
71
Lease liabilities
233
192
188
2.375% Callable bond
US dollars
2020
–
–
1,597
0.25% Callable bond
euros
2021
–
614
–
0.875% Non-callable bond
euros
2021
–
919
–
Floating rate notes US dollars
2022
250
– –
2.375% Callable bond
US dollars
2022
999
– –
Other loans (including commercial paper)
Within one year
24
3 –
Total
1,893
2,386
2,010
Non-current liabilities
Lease liabilities
754
489
487
0.25% Callable bond
euros
2021
–
–
559
0.875% Non-callable bond
euros
2021
–
–
837
Floating rate notes US dollars
2022
–
250 250
2.375% Callable bond
US dollars
2022
–
996 996
0.3% Callable bond
US dollars
2023
1,397
– –
2023 Floating bank loan US dollars
2023
1,998
– –
Floating rate notes US dollars
2023
400
400 400
3.5% Callable bond
US dollars
2023
846 848
847
7% Guaranteed debentures
US dollars
2023
320
339
335
0.75% Callable bond
euros
2024
1,014
1,10 2
1,003
0.7% Callable bond
US dollars
2024
1,598
– –
2024 Floating bank loan US dollars
2024
1,997
– –
3.375% Callable bond
US dollars
2025
1,988
1,985 1,983
0.7% Callable bond
US dollars
2026
1,193
1,192
–
1.2% Callable bond
US dollars
2026
1,245
– –
3.125% Callable bond
US dollars
2027
745
744 743
1.25% Callable bond
euros
2028
896
973
885
1.75% Callable bond
US dollars
2028
1,244
– –
4% Callable bond
US dollars
2029
994
993
992
0.375% Callable bond
euros
2029
898
– –
1.375% Callable bond
US dollars
2030
1,292
1,291
–
2.25% Callable bond
US dollars
2031
746
– –
5.75% Non-callable bond
pounds sterling
2031
470
475
457
6.45% Callable bond
US dollars
2037
2,724
2,722 2,721
4% Callable bond
US dollars
2042
988
988
987
4.375% Callable bond
US dollars
2045
980
980 980
4.375% Callable bond
US dollars
2048
737
737 737
2.125% Callable bond
US dollars
4862050
486
–
3% Callable bond
US dollars
2051
734
– –
Other loans US dollars
202
5
19
Total
28,888
17,9 9 4
16,217
Total interest-bearing loans and borrowings
1, 2
30,781
20,380
18,227
164
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
continued
Total
Total Total
loans and
loans and loans and
borrowings
borrowings borrowings
2021
2020
2019
$m
$m $m
At 1January
20,380
18,227
19,113
Adoption of new accounting standards – Lease liabilities
–
–
720
Changes from financing cash flows
Issue of loans and borrowings
12,929
2,968
500
Repayment of loans and borrowings
(4,759)
(1,609) (1,500)
Movement in short-term borrowings
(276)
288
(516)
Repayment of obligations under leases
(240)
(207)
(186)
Total changes in cash flows arising on financing activities from borrowings
7,65 4
1,440
(1,702)
Movement in overdrafts
31
138 (13)
New lease liabilities
503
174
173
Additions through business combinations
2,523
– –
Exchange
(378)
363
(62)
Other movements
68
38
(2)
At 31December
30,781
20,380
18,227
Set out below is a comparison by category of carrying values and fair values of all the Group’s interest-bearing loans and borrowings:
Instruments in a
Instruments Instruments
Total
fair value hedge
designated
designated in
Amortised
carrying
Fair
relationship
1
at fair value
2
cash flow hedge
cost
value value
$m $m $m $m $m $m
2019
Overdrafts
– – –
146 146 146
Lease liabilities due within one year
– – –
188 188 188
Lease liabilities due after more than one year
– – –
487 487 487
Loans due within one year
– – –
1,676 1,676
1,684
Loans due after more than one year
339
335
2,447
12,609
15,730
18,044
Total at 31December 2019
339
335
2,447
15,106
18,227
20,549
2020
Overdrafts
– – –
286 286 286
Lease liabilities due within one year
– – –
192 192 192
Lease liabilities due after more than one year
– – –
489 489 489
Loans due within one year
371
–
614
923
1,908 1,922
Loans due after more than one year
–
339
2,075
15,091
17,5 0 5
20,936
Total at 31December 2020
371
339
2,689
16,981
20,380
23,825
2021
Overdrafts
– – –
291 291 291
Lease liabilities due within one year
– – –
233 233 233
Lease liabilities due after more than one year
– – –
754 754 754
Loans due within one year
– – –
1,369 1,369
1,378Loans due after more than one year
–
320
1,910
25,904
28,134
30,596
Total at 31December 2021
–
320
1,910
28,551
30,781
33,252
The fair value of fixed-rate publicly traded debt is based on year end quoted market prices; the fair value of floating rate debt is nominal value,
as mark-to-market differences would be minimal given the frequency of resets. The carrying value of loans designated at fair value through profit
or loss is the fair value; this falls within the Level 1 valuation method as defined in Note 12. For loans designated in a fair value hedge relationship,
carrying value is initially measured at fair value and remeasured for fair value changes in respect of the hedged risk at each reporting date. All other
loans are held at amortised cost. Fair values, as disclosed in the table above, are all determined using the Level 1 valuation method as defined in
Note 12, with the exception of overdrafts and lease liabilities, where fair value approximates to carrying values.
During the year, changes to credit risk caused minimal changes to the fair value of bonds designated at fair value through profit or loss. A gain of
$29m has been made on these bonds since designation due to increased credit risk. Under IFRS 9, the Group records the component of fair value
changes relating to the component of own credit risk through Other comprehensive income. Changes in credit risk had no material effect on any
other financial assets and liabilities recognised at fair value in the Group Financial Statements. The change in fair value attributable to changes in
credit risk is calculated as the change in fair value not attributable to market risk. The amount payable at maturity on bonds designated at fair value
through profit or loss is $287m.
The interest rates used to discount future cash flows for fair value adjustments, where applicable, are based on market swap curves at the reporting
date, and were as follows:
2021
2020
2019
Loans and borrowings
0.1% to 0.6%
(0.5)% to 0.1% (0.5)% to 1.6%
165
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
20 Trade and other payables
2021
2020
2019
$m
$m $m
Current liabilities
Trade payables
2,824
2,350
1,774
Value-added and payroll taxes and social security
463
390
323
Rebates, chargebacks, returns and other revenue accruals
5,298
4,772
4,410
Clinical trial accruals
1,047
699
736
Other accruals
5,649
3,905
4,026
Collaboration Revenue contract liabilities
12
12
28
Vaccine contract liabilities
1,003
1,616
–
Deferred government grant income
67
253
–
Contingent consideration
849
647
897
Acerta Pharma share purchase liability (Note26)
920
– –
Other payables
806
1,141
1,793
Total
18,938
15,785
13,987
Non-current liabilities
Accruals
25
56
34
Collaboration Revenue contract liabilities
26
38
50
Contingent consideration
2,016
2,676
3,242
Acerta Pharma share purchase/put option liability (Note26)
1,538
2,297
2,146
Other payables
1,328
1,017
819
Total
4,933
6,084
6,291
Included within Rebates, chargebacks, returns and other revenue accruals are contract liabilities of $99m (2020: $77m; 2019: $97m). The revenue
recognised in the year for contract liabilities is $70m, comprising $58m relating to other revenue accruals and $12m Collaboration Revenue contract
liabilities. Significant markets where Rebates, chargebacks, returns and other revenue accruals are seen relate to the US where the liability at
31 December 2021 amounted to $3,172m (2020: $3,126m; 2019: $3,385m) and China where the liability at 31 December 2021 amounted to
$814m (2020: $740m; 2019: $452m).
Trade payables includes $44m (2020: $248m; 2019: $492m) due to suppliers that have signed up to a supply chain financing programme, under
which the suppliers can elect on an invoice-by-invoice basis to receive a discounted early payment from the relationship bank rather than being
paid in line with the agreed payment terms. If the option is taken, the Group’s liability is assigned by the supplier to be due to the relationship bank
rather than the supplier. The value of the liability payable by the Group remains unchanged. The Group assesses the arrangement against indicators
to assess if debts, which vendors have sold to the funder under the supplier financing scheme, continue to meet the definition of trade payables
or should be classified as borrowings. At 31 December 2021, the payables met the criteria of Trade payables.
Vaccine contract liabilities relate to amounts received from customers, primarily government bodies, in advance of supply of product. Substantially
all of the Vaccine contract liabilities are expected to be recognised as revenue during the next financial year. The revenue recognised in the year
related to Vaccine contract liabilities held at the beginning of the year was $1,389m.
Deferred government grant income relates to government grants received or receivable but for which the related expenses have not been incurred.
Included within current Other payables are liabilities to Daiichi Sankyo totalling $nil (2020: $146m; 2019: $795m) resulting from the collaboration
agreement in relation to
Enhertu
entered into in March 2019 and $324m (2020: $324m; 2019: $nil) in relation to DS-1062 entered into in July 2020.
Additionally, included within non-current Other payables are liabilities totalling $100m (2020: $100m; 2019: $241m) as a result of the
Enhertu
collaboration agreement and $nil (2020: $323m; 2019: $nil) as a result of the DS-1062 collaboration agreement.
In November 2020,
Calquence
received marketing approval in the EU, which removed all remaining conditionality in respect of the Acerta Pharma
put and call options regarding the non-controlling interest; the option was exercised in April 2021 (see Note 26). Based on the latest assessment
of the expected timing and amount of the Acerta Pharma put option redemption, no remeasurement was required in 2021 or in 2020. In 2019,
remeasurement of the liability resulted in an increase in the liability for the year before the effect of interest costs, with the remeasurement taken
to Selling, general and administrative expense (see Note 2). In October 2019, an amendment to the share purchase and option agreement (SPOA)
with the sellers of Acerta Pharma (originally entered into in December 2015) came into effect, changing certain terms of the SPOA on both the timing
and also reducing the maximum consideration that would be required to be made to acquire the remaining outstanding shares of Acerta Pharma
if the options were exercised. The payments will be made in similar annual instalments commencing at the earliest from 2022 through to 2024.
The changes to the terms have been reflected in the assumptions used to calculate the amortised cost of the liability as at 31 December 2021 of
$2,458m (2020: $2,297m; 2019: $2,146m). Interest arising from amortising the liability is included within Finance expense (see Note 3). The associated
cash flows will be disclosed as financing activities within the Consolidated Statement of Cash Flows.
With the exception of Contingent consideration payables of $2,865m (2020: $3,323m; 2019: $4,139m) which are held at fair value within Level 3
of the fair value hierarchy as defined in Note 12, all other financial liabilities are held at amortised cost with carrying value being a reasonable
approximation of fair value.
166
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
continued
Contingent consideration
2021
2020
2019
$m
$m $m
At 1January
3,323
4,139 5,106
Settlements
(643)
(822) (709)
Revaluations
14
(272)
(614)
Reclassification to Other payables
(55)
– –
Discount unwind (Note3)
226
278
356
At 31December
2,865
3,323
4,139
Contingent consideration arising from business combinations is fair valued using decision-tree analysis, with key inputs including the probability
of success, consideration of potential delays and the expected levels of future revenues.
Revaluations of Contingent consideration are recognised in Selling, general and administrative expense and include an increase of $42m in 2021
(2020: a decrease of $51m; 2019: a decrease of $516m) based on revised milestone probabilities, and revenue and royalty forecasts, relating to
the acquisition of BMS’s share of the Global Diabetes Alliance. Discount unwind on the liability is included within Finance expense (see Note 3).
The discount rate used for the Contingent consideration balances range from 3% to 9%. The most significant Contingent consideration balance
is the Global Diabetes Alliance and this is discounted at 8%.
Management has identified that reasonably possible changes in certain key assumptions, including the likelihood of achieving successful trial
results, obtaining regulatory approval, the projected market share of the therapy area and expected pricing for launched products, may cause
the calculated fair value of the above contingent consideration to vary materially in future years.
SE
The contingent consideration balance relating to BMS’s share of Global Diabetes Alliance of $2,544m (2020: $2,932m; 2019: $3,300m)
would increase/decrease by $254m with an increase/decrease in sales of 10% as compared with the current estimates.
The maximum development and sales milestones payable under outstanding Contingent consideration arrangements arising on business
combinations are as follows:
Nature of
Maximum future milestones
Acquisitions
Year
contingent consideration
$m
Spirogen
2013
Milestones
180
Amplimmune
2013
Milestones 150
Almirall
1
2014
Milestones and royalties
420
The amount of royalties payable under the arrangements is inherently uncertain and difficult to predict, given the direct link to future sales and
the range of outcomes. The maximum amount of royalties payable in each year is with reference to net sales.
21 Provisions
Employee
Other
Severance
Environmental
Totalbenefits
provisionsLegal
$m $m $m $m $m $m
At 1January 2019
226
97
119
891 198
251
Charge for year
158
31
18 618
236
1,061
Cash paid
(115)
(338) (39)
(13)
(147)
(24)
Reversals
(30)
(1)
–
(28)
(17)
(76)
Exchange and other movements
2 8 6 1 9
26
At 31December 2019
241
96
130
642
455
1,564
Transfers in
– – – –
258 258
Charge for year
116
34
15
16
95
276
Cash paid
(62)
(30)
(48)
(56) (295)
(491)
Reversals
(89)
–
(2)
(14)
(27)
(132)
Exchange and other movements
8 –
33 85
(1)
45At 31December 2020
214
100
128
348
770
1,560
Additions through business combinations (Note27)
– –
41
73
27
141
Charge for year
238 23
46
109
456
872
Cash paid
(172)
(32)
(49)
(285) (84)
(622)
Reversals
(62)
– –
(5)
(175)
(242)
Exchange and other movements
(6)
(1)
(6) 29
(1) 15
At 31December 2021
212
90
195
239
988
1,724
2021
2020
2019
$m
$m $m
Due within one year
768
976
723
Due after more than one year
956
584
841
Total
1,724
1,560 1,564
167
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
Severance provisions arise predominantly in connection with global restructuring initiatives which involve rationalisation of the global supply chain,
the sales and marketing organisation, IT and business support infrastructure, and R&D.
During 2021, in conjunction with the acquisition of Alexion, the enlarged Group has initiated a comprehensive Post Alexion Acquisition Group Review,
aimed at integrating systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments. The
Group has also continued to progress other legacy restructuring programmes, including the Global Post-Pandemic New Ways of Working programme
that was initiated in 2020 in response to the changing business environment, accelerated by the COVID-19 pandemic.
Employee costs in connection with the initiatives are recognised in severance provisions when a detailed formal plan has been communicated to
those employees affected. Final severance costs are often subject to the completion of the requisite consultations on the areas impacted, with the
majority of the cost expected to be paid within one year. AstraZeneca endeavours to support employees affected by restructuring initiatives to seek
alternative roles within the organisation. Where the employee is successful, any severance provisions will be released.
Details of the Environmental and Legal provisions totalling $90m (2020: $100m; 2019: $96m) and $239m (2020: $348m; 2019: $642m), respectively,
and ongoing matters are provided in Note 30. The legal issues are often subject to substantial uncertainties with regard to the timing and final
amounts of any payments. As such, once established these provisions remain in Provisions until settlement is reached and uncertainty resolved,
with no transfer to Trade and other payables prior to payment. A significant proportion of the total legal provision relates to matters settled, but
not paid, in previous periods. These uncertainties can also cause reversal in previously established provisions once final settlement is reached.
The majority of Employee benefit provisions relate to Executive Deferred Compensation Plans.
Other provisions comprise amounts relating to specific contractual or constructive obligations and disputes. Included within Other provisions are
amounts associated with long-standing product liability settlements that arose prior to the merger of Astra and Zeneca, which given the nature
of the provision, the amounts are expected to be settled over many years. Also included in Other provisions is an amount of $185m (2020: $258m;
2019: $nil), in relation to third-party liability and other risks (including incurred but not yet reported claims) arising on the Group’s captive insurance
arrangements. The Group revised its presentation of these provisions in 2020; prior to this, the balance had been presented within current Other
payables. The claims are considered to be uncertain as to timing and amount and therefore treatment as a provision was deemed more appropriate.
Charges to Other provisions in 2021 include $243m in relation to the Post Alexion Acquisition Group Review restructuring programme.
No provision has been released or applied for any purpose other than that for which it was established.
22 Post-retirement and other dened benet schemes
Background
This section predominantly covers defined benefit arrangements like post-retirement pension and medical plans which make up the vast bulk of
the Group’s liabilities. However, it also incorporates other benefits which fall under IAS 19 rules and which require an actuarial valuation, including
but not limited to: Lump Sum plans, Long Service Awards and defined contribution pension plans which have some defined benefit
characteristics (e.g. a minimum guaranteed level of benefit).
The Group and most of its subsidiaries offer retirement plans which cover the majority of employees. The Group’s policy is to provide defined
contribution (DC) orientated pension provision to its employees unless otherwise compelled by local regulation. As a result, many of these retirement
plans are DC, where the Group contribution and resulting charge is fixed at a set level or is a set percentage of employees’ pay. However, several
plans, mainly in the UK, the US and Sweden, are defined benefit (DB), where benefits are based on employees’ length of service and linked to
their salary. The major DB plans are largely legacy arrangements as they have been closed to new entrants since 2000, apart from the collectively
bargained Swedish plan (which is still open to employees born before 1979). During 2010, following consultation with its UK employees’ representatives,
the Group introduced a freeze on pensionable pay at 30 June 2010 levels for DB members of the UK Pension Fund. The number of active members
in the Fund continues to decline and is now 497 employees. In November 2017, the Group closed the qualified and non-qualified US DB pension
plans to future accrual (and removed any salary link) from 31 December 2017.
The major DB plans are funded through separate, fiduciary-administered assets. The cash funding of the plans, which may from time to time
involve special Group payments, is designed, in consultation with independent qualified actuaries, to ensure that the assets are sufficient to meet
future obligations as and when they fall due. The funding level is monitored by the Group and local fiduciaries, who take into account the strength
of the Group’s covenant, local regulation, cash flows, and the solvency and maturity of the pension scheme.
Financing Principles and Funding Framework
Ninety per cent of the Group’s total DB obligations (or 71% of net obligations) at 31 December 2021 are in schemes within the UK, the US and
Sweden. In these countries, the pension obligations are funded in line with the Group’s financing principles, as disclosed in prior years. There
were no fundamental changes to these principles during 2021.
The Group has developed a long-term funding framework to implement these principles. This framework targets either full funding on a low-risk
funding measure or buy-out with an external insurer as the pension funds mature, with affordable long-term de-risking of investment strategy
along the way. Unless local regulation dictates otherwise, this framework determines the cash contributions payable.
UK
The UK Pension Fund represents approximately 61% of the Group’s DB obligations at 31 December 2021. The financing principles are modified
in light of the UK regulatory requirements (summarised below) and resulting discussions with the Trustee.
21 Provisions
continued
168
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
continued
Role of Trustee and Regulation
The UK Pension Fund is governed and administered by a corporate Trustee which is legally separate from the Group. The Trustee Directors
are comprised of representatives appointed by both the employer and employees and include an independent professional Trustee Director.
The Trustee Directors are required by law to act in the interest of all relevant beneficiaries and are responsible in particular for investment strategy
and the day-to-day administration of the benefits. They are also responsible for jointly agreeing with the employer the level of contributions due
to the UK Pension Fund.
The UK pensions market is regulated by The Pensions Regulator whose statutory objectives and regulatory powers are described on its website,
www.thepensionsregulator.gov.uk.
The Pension Scheme Act 2021 became effective in the UK from 1 October 2021. A section of this Act places additional legal requirements on
companies who sponsor UK defined benefit pension schemes, with a focus on the ongoing security of these benefits. The Group has considered
the implications of the Act and developed a framework to ensure it meets its responsibilities on an ongoing basis.
There have been two UK High Court Rulings relating to Guaranteed Minimum Pensions (GMP) equalisation in 2018 and 2020. Following the
publication of guidance around implementation in 2021, the Trustee, with input from the Group, has begun the process of equalising benefits,
with implementation likely to be in 2023. An estimate of the impact of these changes has already been recognised in 2018 and 2020.
Funding requirements
UK legislation requires that DB pension schemes are funded prudently. On a triennial basis, the Trustee and the Group must agree on a set of
assumptions used to value the liabilities as a part of an actuarial valuation. Together with the asset valuation, this facilitates the calculation of a
funding level and of the contributions required (if any) to ensure the UK Pension Fund is fully funded over an appropriate time period and on a
suitably prudent measure. The technical provisions assumptions used to value the liabilities for the triennial actuarial valuation are usually set more
prudently than the assumptions used to prepare an accounting valuation of the liabilities, which are set under IAS 19 rules to be a ‘best estimate’.
The last full actuarial valuation of the UK Pension Fund was carried out by a qualified actuary as at 31 March 2019. It was finalised in June 2020
and in early 2021, the Pensions Regulator acknowledged the outcome and no issues were raised. The funding assumptions used in this actuarial
valuation were set out in the Group’s prior year report. The next actuarial valuation is due to take place as at 31 March 2022, with a likely timescale
for completion in early to mid-2023.
Aspects of the triennial actuarial valuation are governed by a long-term funding agreement, effective since October 2016 and which sets out a path
to full funding on a low-risk measure. Under this agreement, if a deficit exists, the Group will grant a charge in favour of the Trustee over land and
buildings on the Cambridge Biomedical Campus, effective upon practical completion of the site, or from 30 September 2022 (whichever is earlier).
This charge is not currently in force. When effective, the charge would only crystallise in the event of the Group’s insolvency. This charge will provide
long-term security in respect of future UK Pension Fund contributions and will be worth up to £350m.
In relation to deficit recovery contributions, a lump sum contribution of £39m was made in March 2021, with a further £39m contribution due before
31 March 2022. In addition, a contribution of £29m was also made in March 2021, with a final contribution of £30m due before 31 March 2022,
in relation to part payment of the deferred contribution explained below.
During 2017, the Group provided a letter of credit to the Trustee, to underwrite the deferral of an additional deficit recovery contribution of
approximately £126m which was due in 2017. This contribution will be paid in five instalments (with interest) from March 2018 to March 2022 and
to date, four instalments have been paid. The letter of credit underwriting these payments will reduce in value as each annual payment is made.
Under the governing documentation of the UK Pension Fund, any future surplus in the Fund would be returnable to the Group by refund assuming
gradual settlement of the liabilities over the lifetime of the Fund. In particular, the Trustee has no unilateral right to wind up the Fund without Company
consent nor does it have the power to unilaterally use surplus to augment benefits prior to wind-up. As such, there are no adjustments required in
respect of IFRIC14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’.
On current bases, it is expected that ongoing contributions (excluding those in respect of past service deficit contributions) during the year ending
31 December 2022 for the UK scheme will be approximately $19m.
United States and Sweden
The US and Sweden plans account for 11% and 18%, respectively, of the Group’s defined benefit obligations. The US and Sweden pension plans
are governed by Fiduciary Bodies with responsibility for the investment policies of the assets. These plans are funded in line with the Group’s
financing principles and local regulations.
The US defined benefit pension plans were actuarially revalued at 31 December 2021, when plan obligations were $1,257m and plan assets were
$1,198m. This includes obligations in respect of the non-qualified plan which is unfunded. The qualified US pension plan is fully funded on an IAS 19
basis and has a positive funding balance on the local statutory measure. As such, no contributions are required, and the investment strategy is
largely de-risked.
The Swedish defined benefit pension plans were actuarially valued at 31 December 2021, when plan obligations were estimated to amount to
$2,373m and plan assets were $1,234m. It should be noted that the Swedish plans have a funding surplus on the local GAAP accounting basis
and this influences contribution policy. A deficit recovery contribution of $39m is expected to be paid in 2022.
On current bases, it is expected that ongoing contributions (excluding those in respect of past service deficit contributions) during the year ending
31 December 2022 for the United States and Sweden will be approximately $10m.
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Other defined benefit plans
The Group provides benefit plans other than pensions which have to be reported under IAS 19. These include Lump Sum plans, Long Service Awards
and defined contribution pension plans which have a guaranteed minimum benefit. However, the largest category of these ‘other’ non-pension plans
are healthcare benefits.
In the US, and to a lesser extent in certain other countries, the Group’s employment practices include the provision of healthcare and life assurance
benefits for eligible retired employees. As at 31 December 2021, some 2,831 retired employees and covered dependants currently benefit from these
provisions and some 1,691 current employees will be eligible on their retirement. The Group accrues for the present value of such retiree obligations
over the working life of the employee. In practice, these benefits will be funded with reference to the financing principles.
In the US, there was a change to the level of benefit provision for members aged 65 and over within the Group’s healthcare plans, effective from
1 January 2021. The changes were communicated to the membership in September 2020 and resulted in an estimated liability reduction of $64m
which was recognised as a past service credit for the year ending 31 December 2020. Following these changes, the plans became fully funded
on an IAS 19 basis and are projected to have a small surplus. As a result, the investment strategy has been fully de-risked.
The cost of post-retirement benefits other than pensions for the Group in 2021 was $1m (2020: $1m; 2019: $3m). Plan assets were $215m and plan
obligations were $170m at 31 December 2021. These benefit plans have been included in the disclosure of post-retirement benefits under IAS 19.
Financial assumptions
Qualified independent actuaries have updated the actuarial valuations under IAS 19 for the major defined benefit schemes operated by the
Group to 31 December 2021. The assumptions used may not necessarily be borne out in practice, due to the inherent financial and demographic
uncertainty associated with making long-term projections. These assumptions reflect the changes which have the most material impact on the
results of the Group and were as follows:
2020
UK
US
Sweden
Rest of Group
4
Inflation assumption
2.9%
–
1.5% 1.6%
Rate of increase in salaries
–
1
–
3.0%
3.1%
Rate of increase in pensions in payment
2.8%
–
1.5% 1.6%
Discount rate – defined benefit obligation
1.4%
2.5%
1.2% 0.7%
Discount rate – interest cost
1.1%
1.8% 1.0%
0.5%
Discount rate – service cost
1.4% 1.7% 1.2%
0.8%
2021
UK
US
Sweden
Rest of Group
4
Inflation assumption
3.3%
–
2.3% 2.2%
Rate of increase in salaries
–
1
–
3.8%
3.7%
Rate of increase in pensions in payment
3.1%
–
2.3%
2.2%
Discount rate – defined benefit obligation
2
1.9% 1.2%
2.8%
1.8%Discount rate – interest cost
3
1.9% 1.0%
2.2%
1.6%Discount rate – service cost
3
1.9%
n/a
1.9% 1.4%
The weighted average duration of the post-retirement scheme obligations is approximately 16 years in the UK, 11 years in the US, 19 years in
Sweden and 17 years for the Rest of the Group (including Germany).
Demographic assumptions
The mortality assumptions are based on country-specific mortality tables. These are compared to actual experience and adjusted where sufficient
data are available. Additional allowance for future improvements in life expectancy is included for all major schemes where there is credible data
to support a continuing trend.
The table below illustrates life expectancy assumptions at age 65 for male and female members retiring in 2021 and male and female members
expected to retire in 2041 (2020: 2020 and 2040 respectively).
Life expectancy assumption for a male member retiring at age 65 Life expectancy assumption for a female member retiring at age 65
Country
2021
2041
2020 2040 2040
2021
20202041
UK
22.5
23.7
22.4
23.7
23.9
25.2
23.9
25.1
US
21.9
23.2
21.8
24.5
23.3
24.9
23.2
26.1
Sweden
21.9
23.6
21.9
23.6
24.5
25.6
24.5
25.6
In the UK, the Group adopted the CMI 2020 Mortality Projections Model with a 1% long-term improvement rate. No other demographic assumptions
have changed since they were updated in 2019 following the actuarial valuation. The Group has continued to assume that 30% of members
(2020: 30%) will transfer out of the defined benefit section of the AstraZeneca Pension Fund at the point of retirement.
22 Post-retirement and other dened benet schemes
continued
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Notes to the Group Financial Statements
continued
The assumption used for the US plans was updated in 2021 to use the mortality tables (MP-2021) that were published during the year.
Risks associated with the Group’s defined benefit pension schemes
The UK defined benefit plan accounts for 61% of the Group’s defined benefit obligations and exposes the Group to a number of risks, the most
significant of which are:
Risk
Description
Mitigation
Volatile asset
returns
The Defined Benefit Obligation (DBO) is calculated using a discount rate
set with reference to AA-rated corporate bond yields; asset returns that
differ from the discount rate will create an element of volatility in the
solvency ratio. The UK Pension Fund holds a significant proportion
of assets (around 72.5%) in a growth portfolio. Although these growth
assets are expected to outperform AA-rated corporate bonds in the
long term, they can lead to volatility and mismatching risk in the
short term. The allocation to growth assets is monitored to ensure it
remains appropriate given the UK Pension Fund’s long-term objectives.
In order to mitigate investment risk, the Trustee invests in a suitably
diversified range of asset classes, return drivers and investment
managers. The investment strategy will evolve to further improve
the expected risk/return profile as opportunities arise.
The Trustee has hedged approximately 75% of unintended non-sterling,
overseas currency risk within the UK Pension Fund assets.
Changes in
bond yields
A decrease in corporate bond yields will increase the present value placed
on the DBO for accounting purposes.
The interest rate hedge of the UK Pension Fund is implemented via holding
gilts and swaps of appropriate duration and set at approximately 96% of
total assets and protects to some degree against falls in long-term interest
rates (approximately 91% hedged at the end of 2020).
There are some differences in the bonds and instruments held by the UK
Pension Fund to hedge interest rate risk on the statutory and long-term
funding basis (gilts and swaps) and the bonds analysed to set the DBO
discount rate on an accounting basis (AA corporate bonds). As such,
there remains some mismatching risk on an accounting basis should
yields on gilts and swaps diverge compared to AA corporate bonds.
Inflation risk
The majority of the DBO is indexed in line with price inflation (mainly
inflation as measured by the UK Retail Price Index (RPI) but also for some
members a component of pensions is indexed by the UK Consumer Price
Index (CPI)) and higher inflation will lead to higher liabilities (although, in
most cases, this is capped at an annual increase of 5%). It was confirmed
in November 2020, the intention to align RPI with Consumer Price Index
including Housing (CPIH) from 2030. Other things being equal, this will
lead to lower liability valuations.
The UK Pension Fund holds RPI index-linked gilts and derivative
instruments such as swaps. The inflation hedge of the UK Pension Fund
is set at approximately 76% of total assets and protects to some degree
against higher-than-expected inflation increases on the DBO (approximately
83% hedged at the end of 2020). There is a framework in place to gradually
increase the level of inflation hedging to 100% of assets over time, via a
combination of liability management exercises and additional market-
based hedging.
Life
expectancy
The majority of the UK Pension Fund’s obligations are to provide benefits
for the life of the member, so increases in life expectancy will result in an
increase in the liabilities.
The UK Pension Fund entered into a longevity swap during 2013 which
provides hedging against the longevity risk of increasing life expectancy
over the next 75 years for around 10,000 of the UK Pension Fund’s
current pensioners and covers $2.4bn of the UK Pension Fund’s
liabilities. A one-year increase in life expectancy would result in a $390m
increase in pension fund obligations, which would be partially offset by a
$203m increase in the value of the longevity swap and hence the pension
fund assets. The impact of the COVID-19 pandemic on long-term mortality
assumptions is not yet known. The Group will conduct a mortality review
once robust data is available.
Other risks
There are a number of other risks of administering the UK Pension Fund including counterparty risks from using derivatives (mitigated by using
a specialist investment manager to oversee a diversified range of counterparties of high standing and ensuring positions are collateralised daily).
Furthermore, there are operational risks (such as paying out the wrong benefits) and legislative risks (such as the government increasing the
burden on companies through new legislation). These are mitigated so far as possible via the governance structure in place which oversees
and administers the pension funds.
The Group’s pension plans in the US and Sweden also manage these key risks, where they are relevant, in a similar way, with the local fiduciary
bodies investing in a diversified manner and employing a framework to hedge interest rate risk.
Local fiduciary boards are aware of Environmental, Social and Governance (ESG) risks as they pertain to investment policy, and where local
regulation allows, have policies in place to monitor and manage such risks and comply with local legislation and disclosure requirements.
Assets and obligations of defined benefit schemes
The assets and obligations of the defined benefit schemes operated by the Group at 31 December 2021, as calculated in accordance with IAS 19,
are shown below. The fair values of the schemes’ assets are not intended to be realised in the short term and may be subject to significant change
before they are realised. The present value of the schemes’ obligations is derived from cash flow projections over long periods and is therefore
inherently uncertain.
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Scheme assets
2020
UK
US
Sweden
Rest of Group
Total
Quoted
Unquoted
QuotedUnquoted
QuotedUnquoted
QuotedUnquoted
QuotedUnquoted
Total
$m $m $m $m $m $m $m $m $m $m $m
Government bonds
1
1,929
– – –
321
– 52
– 2,302
– 2,302
Corporate bonds
2
– – – –
878
– 30
– 908
– 908
Derivatives
3
– – – – 1
(170)
– 333
1 163 164
Investment funds: Listed Equities
4
–
1,771
– 93
90
119
5 72
165
1,985
2,150
Investment funds:
Absolute Return/MultiStrategy
4
–
2,463
–
72
– 668
– 12
12
3,203
3,215
Investment funds: Corporate Bonds/Credit
4
–
969
– 80
– 211 311
39
1, 12
39 1,272
Cash and cash equivalents – 7 – 4
64
– 153
31
95
164
259
Other
– – – 5 – –
(1)
355
(1) 360
359
Total fair value of scheme assets
5
1,993
5,186
1,323 247
–
1,338
205
376
3,521
7,147
10,668
2021
UK
US
Sweden
Rest of Group
Total
Quoted Unquoted Quoted Unquoted Quoted Unquoted Quoted Unquoted Quoted Unquoted
Total
$m $m $m $m $m $m $m $m $m $m $m
Government bonds
1
2,500
– – – 2,878 – 2,878
303
– 75
–Corporate bonds
2
– – – –
877
– 16
– 893
– 893
Derivatives
3
– (237) 2 1
(1)
– 259
– (1)
21
22
Investment funds: Listed Equities
4
– – –
1,427
– 134
6 55
55
1,567 1,622
Investment funds:
Absolute Return/Multi Strategy
4
– – – – 8
2,342
– 647
8 2,989
2,997
Investment funds: Corporate Bonds/Credit
4
– – –
1,006
– 192
53
11
53 1,209 1,262
Cash and cash equivalents
34
261
227
– – 2 – 2
261
265
526
Other
– – – 5 – – 1
358
1 363
364
Total fair value of scheme assets
5
2,534
4,799
1,409
4 –
1,234 207
377
4,150
6,414
10,564
Scheme obligations
2020
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
Present value of scheme obligations in respect of:
Active membership
(598)
(99)
(953)
(468)
(2,118)
Deferred membership
(1,887)
(787)
(783)
(504)
(3,961)
Pensioners
(5,940)
(715)
(789)
(347)
(7,791)
Total value of scheme obligations
(8,425)
(1,601)
(2,525)
(1,319) (13,870)
2021
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
Present value of scheme obligations in respect of:
Active membership
(532)
(81)
(926)
(523)
(2,062)
Deferred membership
(1,709)
(693)
(718)
(465)
(3,585)
Pensioners
(5,700)
(630)
(729)
(312)
(7,371)
Total value of scheme obligations
(7,941)
(1,404)
(2,373)
(1,300)
(13,018)
22 Post-retirement and other dened benet schemes
continued
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Financial Statements
Notes to the Group Financial Statements
continued
Net deficit in the scheme
2020
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
Total fair value of scheme assets
7,179
1,570
1,338
581
10,668
Total value of scheme obligations
(8,425)
(1,601)
(2,525)
(1,319) (13,870)
Deficit in the scheme as recognised in the
Consolidated Statement of Financial Position
(1,246)
(31)
(1,187)
(738)
(3,202)
2021
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
Total fair value of scheme assets
7,333
1,413
1,234
584
10,564
Total value of scheme obligations
(7,941)
(1,404)
(2,373)
(1,300)
(13,018)
Deficit in the scheme as recognised in the
Consolidated Statement of Financial Position
(608)
9
(1,139)
(716)
(2,454)
Fair value of scheme assets
2021
2020
UK
US
Sweden
Rest of Group
Total
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
$m $m $m $m $m
At beginning of year
7,179
1,570 1,338
581
10,668
6,464
1,506
1,123
512
9,605
Interest income on scheme assets
75
27
12
4
118
111
39
14
5
169
Expenses
(7)
– – –
(7) (6)
(2)
–
(1)
(9)
Actuarial gains/(losses)
372
(22)
62
3
415
501
148
27 84
760
Exchange and other adjustments
(77)
(5)
(132)
1
(213)
299
–
162
38
499
Employer contributions
122
19
5
28
174
131
14
2
25
172
Participant contributions
2 – – 2 4
2 – – 2 4
Benefits paid
(333)
(176)
(51)
(35)
(595)
(323)
(135)
(47)
(27)
(532)
Scheme assets’ fair value at end of year
7,333
1,413
1,234
584
10,564
7,179
1,570
1,338
581
10,668
The actual return on the plan assets was a gain of $533m (2020: gain of $929m).
Movement in post-retirement scheme obligations
2021
2020
UK
US
Sweden
Rest of Group
Total
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
$m $m $m $m $m
Present value of obligations in scheme at beginning of year
(8,425)
(1,601)
(2,525)
(1,319)
(13,870)
(7,580)
(1,592)
(2,160)
(1,080) (12,412)
Current service cost
(18)
(2)
(69)
(34) (123)
(18)
(1)
(59)
(26)
(104)
Past service (cost)/credit
(4)
–
(1)
– (5)
(9)
64
(2)
(24)
29
Participant contributions
(2)
– –
(2) (4)
(2)
– –
(2) (4)
Benefits paid
333
176
35 51
595
323
135
47
27
532
Interest expense on post-retirement scheme obligations
(87)
(28) (22)
(8)
(145)
(130)
(40)
(26)
(10)
(206)
Actuarial gains/(losses)
199
46
(43)
9
211
(637)
(167)
(28)
(96)
(928)Exchange and other adjustments
63
5
236
19
323
(372)
–
(297) (108)
(777)
Present value of obligations in scheme at end of year
(7,941)
(1,404)
(2,373)
(1,300)
(13,018)
(8,425)
(1,601)
(2,525)
(1,319) (13,870)
The obligations arise from the following plans:
2021
2020
UK
US
Sweden
Rest of Group
Total
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
$m $m $m $m $m
Funded – pension schemes
(7,927)
(1,178)
(2,371)
(1,160) (12,636)
(8,405)
(1,335)
(2,525)
(603)
(12,868)
Funded – post-retirement healthcare
– –
(143)
– (143)
– –
(169)
– (169)
Unfunded – pension schemes
–
(83)
(2)
(127) (212)
–
(97)
– (696)
(793)
Unfunded – post-retirement healthcare
(14)
– –
(13)
(27)
(20)
– –
(20) (40)
Total
(7,941)
(1,404)
(2,373)
(1,300)
(13,018)
(8,425)
(1,601)
(2,525)
(1,319) (13,870)
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Financial Statements
Consolidated Statement of Comprehensive Income disclosures
The amounts that have been charged to the Consolidated Statement of Comprehensive Income, in respect of defined benefit schemes for the
year ended 31 December 2021, are set out below.
2021
2020
UK
US
Sweden
Rest of Group
Total
UK
US
Sweden
Rest of Group
Total
$m $m $m $m $m
$m $m $m $m $m
Operating profit
Current service cost
(18)
(2)
(69) (35)
(124)
(18)
(1)
(59)
(26)
(104)
Past service (cost)/credit
(4)
–
(1)
– (5)
(9)
64
(2)
(24)
29
Expenses
(7)
– – –
(7) (6)
(2)
–
(1)
(9)
Total (charge)/credit to Operating profit
(29) (2)
(70)
(35)
(136)
(33)
61
(61) (51)
(84)
Finance expense
Interest income on scheme assets
75
27
12
5
119
111
39
14
5
169
Interest expense on post-retirement scheme obligations
(87)
(28) (22)
(8)
(145)
(130)
(40)
(26)
(10)
(206)
Net interest on post-employment defined benefit plan liabilities
(12)
(1)
(10)
(3)
(26)
(19)
(1) (12)
(5)
(37)
(Charge)/credit before taxation
(41)
(3)
(80)
(38) (162)
(52)
60
(73)
(56)
(121)
Other comprehensive income
Difference between the actual return and the
expected return on the post-retirement scheme assets
372
(22)
62
3
415
501
148
27 84
760
Experience (losses)/gains arising on the
post-retirement scheme obligations
(43)
(9)
–
74
22
43
(19)
(24)
(17) (17)
Changes in financial assumptions underlying the
present value of the post-retirement scheme obligations
239
59
(43)
(61)
194
(649)
(160)
(4)
(79)
(892)
Changes in demographic assumptions
3
(4)
– (4)
(5)
(31) 12
– –
(19)
Remeasurement of the defined benefit liability
571
626 24
19
12
(136)
(19)
56
(69)
(168)
Past service costs include granting early retirement in the UK and Sweden. Past service cost in 2020 includes a credit of $64m relating to the
change in coverage of the US healthcare plans. In addition, the freeze of the Netherlands pension plan effective from 1 January 2021 yielded a
past service credit, taken in 2020, of $7m. The past service cost in 2020 also includes costs predominantly related to enhanced pensions in early
retirement in the UK and Sweden.
Total Group pension costs in respect of defined contribution and defined benefit schemes during the year are set out below (see Note 29).
2021
2020
$m
$m
Defined contribution schemes
428
351
Defined benefit schemes − current service costs and expenses
131
113
Defined benefit schemes − past service credit
5
(29)
Pension costs
564
435
SE
Rate sensitivities
The following table shows the US dollar effect of a change in the significant actuarial assumptions used to determine the retirement benefits obligations
in our three main defined benefit pension obligation countries.
2021
2020
Discount rate
+0.5% -0.5%
+0.5% -0.5%
UK ($m)
565
(634)
610
(687)
US ($m)
79 (84)
93
(99)
Sweden ($m)
197
(226)
214
(246)
Total ($ m)
841
(944)
917
(1,032)
2021
2020
Inflation rate
1
+0.5% -0.5%
+0.5% -0.5%
UK ($m)
(386)
375
(396)
378
US ($m)
n/a n/a
n/a n/a
Sweden ($m)
(207)
196
(245)
216
Total ($ m)
(593)
571
(641)
594
2021
2020
Rate of increase in salaries
+0.5% -0.5%
+0.5% -0.5%
UK ($m)
n/a n/a
n/a n/a
US ($m)
n/a n/a
n/a n/a
Sweden ($m)
(90)
82
(62) 70
Total ($ m)
(90)
82
(62) 70
22 Post-retirement and other dened benet schemes
continued
174
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
continued
2021
2020
Mortality rate
+1 year
−1 year
+1 year −1 year
UK ($m)
(390)
2
388
3
(396)
395
US ($m)
(29)
29
(32)
32
Sweden ($m)
(94)
93
(106)
96
Total ($ m)
(513)
510
(534)
523
The sensitivity to the financial assumptions shown above has been estimated taking into account the approximate duration of the liabilities and
the overall profile of the plan membership.
The inflation sensitivity allows for the impact of a change in inflation on salary increases and pension increases (where these assumptions are
inflation-linked).
The salary increase sensitivity reflects the impact of an increase of only salary relative to inflation.
The sensitivity to the life expectancy assumption is estimated based on a revised mortality assumption that extends/reduces the current life
expectancy by one year for a particular age.
23 Reserves
Retained earnings
The cumulative amount of goodwill written off directly to reserves resulting from acquisitions, net of disposals, amounted to $615m (2020: $636m;
2019: $614m) using year-end rates of exchange.
At 31 December 2021, 3,922,122 shares, at a cost of $239m, have been deducted from Retained earnings (2020: 556,108 shares, at a cost of $51m;
2019: 907,239 shares, at a cost of $37m) to satisfy future vesting of employee share plans.
There are no significant statutory or contractual restrictions on the distribution of current profits of subsidiaries; undistributed profits of prior years
are, in the main, permanently employed in the businesses of these companies. The undistributed income of AstraZeneca companies overseas might
be liable to overseas taxes and/or UK taxation (after allowing for double taxation relief) if they were to be distributed as dividends (see Note 4).
2021
2020
2019
$m
$m $m
Cumulative translation differences included within Retained earnings
At 1January
(1,143)
(2,189)
(2,007)
Foreign exchange arising on consolidation
(483)
443
40
Exchange adjustments on goodwill (recorded against other reserves)
(21)
22
(5)
Foreign exchange arising on designated borrowings in net investment hedges
1
(321)
573
(252)
Fair value movements on derivatives designated in net investment hedges
34
8
35
Net exchange movement in Retained earnings
(791)
1,046
(182)
At 31December
(1,934)
(1,143) (2,189)
The cumulative gain with respect to costs of hedging is $4m (2020: $9m; 2019: $nil) and the loss during the year was $6m (2020: gain of $9m;
2019: loss of $47m).
The balance remaining in the foreign currency translation reserve from net investment hedging relationships for which hedge accounting no
longer applied is a gain of $527m.
Other reserves
The Other reserves arose from the cancellation of £1,255m of share premium account by the Company in 1993 and the redenomination of share
capital of $157m in 1999. The reserves are available for writing off goodwill arising on consolidation and, subject to guarantees given to preserve
creditors at the date of the court order, are available for distribution.
175
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
24 Share capital
Allotted,called-up and fully paid
2021
2020
2019
$m
$m $m
Issued Ordinary Shares ($0.25 each)
387
328 328
Redeemable Preference Shares (£1 each – £50,000)
–
– –
At 31December
387
328 328
The Redeemable Preference Shares carry limited class voting rights and no dividend rights. This class of shares is capable of redemption at par
at the option of the Company on the giving of seven days’ written notice to the registered holder of the shares.
The Company does not have a limited amount of authorised share capital.
The movements in the number of Ordinary Shares during the year can be summarised as follows:
No. of shares
2021
2020
2019
At 1January
1,312,668,724
1,312,137,976
1,267,039,436
Issue of shares (share placing)
–
–
44,386,214
Issue of share capital (business combinations)
236,321,411
– –
Issue of shares (share schemes)
410,530
530,748
712,326
At 31December
1,549,400,665
1,312,668,724
1,312,137,976
Share issues
Issue of share capital (business combinations) represents share capital issued as part of the acquisition of Alexion (see Note 27).
Share repurchases
No Ordinary Shares were repurchased by the Company in 2021 (2020:nil; 2019:nil).
Shares held by subsidiaries
No shares in the Company were held by subsidiaries in any year.
25 Dividends to shareholders
2021
2020
20212019
2020
2019
Per share
Per share Per share
$m
$m $m
Second interim (March 2021)
$1.90
$1.90 $1.90
2,490
2,489 2,403
First interim (September 2021)
$0.90
$0.90 $0.90
1,392
1,180 1,180
Total
$2.80
$2.80 $2.80
3,882
3,669
3,583
The Company has exercised its authority in accordance with the provisions set out in the Company’s Articles of Association, that the balance of
unclaimed dividends outstanding past 12 years be forfeited. $nil (2020: $1m; 2019: $4m) of unclaimed dividends have been adjusted for in
Retained earnings in 2021.
The 2020 second interim dividend of $1.90 per share was paid on 29 March 2021. The 2021 first interim dividend of $0.90 per share was paid on
13 September 2021.
Reconciliation of dividends charged to equity to cash flow statement:
2021
2020
2019
$m
$m $m
Dividends charged to equity
3,882
3,669
3,583
Exchange losses on payment of dividend
3
4 5
Hedge contracts relating to payment of dividends (cash flow statement)
(29)
(101)
4
Dividends paid (cash flow statement)
3,856
3,572
3,592
176
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
continued
26 Non-controlling interests
The Group Financial Statements at 31 December 2021 reflect equity of $19m (2020: $16m; 2019: $13m) and total comprehensive income of
$3m (2020: $3m; 2019: $4m) attributable to the non-controlling interests in AstraZeneca Pharma India Limited, P.T. AstraZeneca Indonesia and
Beijing Falikang Pharmaceutical (China) Co. Limited.
In addition to the non-controlling interests in AstraZeneca Pharma India Limited, P.T. AstraZeneca Indonesia and Beijing Falikang Pharmaceutical
(China) Co. Limited, the Group Financial Statements at 31 December 2021 also reflect equity of $nil (2020: $nil; 2019: $1,456m) and total
comprehensive losses of $nil (2020: $55m; 2019: $111m) attributable to the non-controlling interest in Acerta Pharma, resulting in reported total
comprehensive income of $3m (2020: losses of $52m; 2019: losses of $107m).
In February 2016, AstraZeneca acquired a 55% controlling stake in Acerta Pharma where the non-controlling interest was subject to put and
call options. The put option gave rise to a liability (see Note 20). The ability of the parties to exercise their respective put and call options, as well
as the timing and amount of exercise, was dependent on certain conditions, the last of which was based on regulatory outcomes of
Calquence
(acalabrutinib) in the EU. In November 2020,
Calquence
received marketing approval in the EU, which removed all remaining conditionality in respect of the options. From November 2020, the minority shareholders were considered to have no further substantive variability in risk and
reward related to their shares as it was considered highly likely that one of the options would be exercised, and the price of the options was
fixed. Therefore, from November 2020, no further amounts of the consolidated AstraZeneca result were attributed to the minority shareholders of
Acerta Pharma. The Non-controlling interests reserve relating to the minority shareholders of Acerta Pharma, totalling $1,401m, was reclassified
into Retained earnings (see Consolidated Statement of Changes in Equity) in 2020. AstraZeneca exercised its option to acquire the remaining
45% of shares in Acerta Pharma in April 2021.
The following summarised financial information, for Acerta Pharma and its subsidiaries, prior to full consolidation in 2020, is presented on
a standalone basis since the acquisition date, and before the impact of Group-related adjustments, some of which are incorporated into
the calculation of the loss attributable to the non-controlling interests:
2019
$m
Total Revenue
–
Loss after tax
(422)
Other comprehensive income
–
Total comprehensive loss
(422)
2019
$m
Non-current assets
157
Current assets
475
Total assets
632
Current liabilities
(310)
Non-current liabilities
(267)
Total liabilities
(577)
Net assets
55
2019
$m
Net cash outflow from operating activities
(13)
Net cash inflow from investing activities
7
Net cash inflow from financing activities
7
Increase in cash and cash equivalents in the year
1
As part of the acquisition of Alexion in July 2021, a pre-existing non-controlling interest in Caelum Biosciences was recognised (Note 27).
This was valued at $150m, the agreed upon exercise price for the exclusive option to acquire the remaining equity. The option was exercised
on 28 September 2021 and the acquisition of Caelum Biosciences closed shortly thereafter on 5 October 2021.
177
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
27 Acquisition of business operations
On 21 July 2021, AstraZeneca completed the acquisition of 100% of the issued shares of Alexion Pharmaceuticals, Inc. (Alexion), based in
Boston, Massachusetts, US. Alexion is a global biopharmaceutical company focused on serving patients and families affected by rare diseases
and devastating conditions through the discovery, development and commercialisation of life-changing medicines.
At closing, Alexion shareholders received 2.1243 AstraZeneca American Depository Shares (ADSs) and $60 in cash for each of their Alexion
shares. Unvested Alexion employee share awards were converted to equivalent AstraZeneca share awards. The fair value of the purchase
consideration was $41,058m, comprising AstraZeneca ADSs of $27,196m, cash of $13,349m and replacement employee share awards of $513m.
The Group has funded the cash element of the acquisition with $8bn of new long-term debt, issued in May and June 2021, $4bn of term loans
drawn in July 2021 under the $17.5bn committed bank facilities entered into in December 2020 to secure the acquisition financing, and existing
cash balances. The Group cancelled the remaining $13.5bn of the facilities in June, July and October 2021. Loans and borrowings of $2.3bn
acquired with Alexion were repaid in full shortly following completion of the acquisition.
The acquisition has been accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3
‘Business Combinations’ and consequently the Alexion assets acquired, and liabilities assumed, have been recorded by AstraZeneca at fair
value, with any excess of the purchase price over the fair value of the identifiable assets and liabilities being recognised as goodwill.
KJ
As part of the Alexion acquisition in 2021, we identified the assets (comprising principally launched products and post pre-clinical stage) and
liabilities acquired. Attributing fair values to assets acquired and liabilities assumed as part of business combinations is considered to be a key
judgement. The purchase price allocation was performed with assistance from an independent valuer to advise on the valuation techniques and
key assumptions in the valuation, in particular in respect of the valuation of the intangible assets and inventory.
The fair values assigned to the Alexion business combination in 2021 were:
Fair value
$m
Non-current assets
Property, plant and equipment
1,135
Right-of-use assets
263
Intangible assets
26,855
Other non-current assets
301
28,554
Current assets
Inventories
6,769
Trade and other receivables
2,096
Intangible assets
100
Cash and cash equivalents
4,086
13,051
Current liabilities
Interest-bearing loans and borrowings
(2,336)
Trade and other payables
(1,192)
Other current liabilities
(40)
(3,568)
Non-current liabilities
Lease liabilities
(228)
Deferred tax liabilities
(4,191)
Other non-current liabilities
(697)
(5,116)
Total net assets acquired 32,921
Less: non-controlling interests
(150)
Goodwill
8,287
Total fair value of consideration
41,058
Less: fair value of equity consideration
(27,196)
Less: fair value of replacement employee share awards
(513)
Less: cash and cash equivalents acquired
(4,086)
Net cash outflow
9,263
178
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Notes to the Group Financial Statements
continued
The estimated fair value and useful lives of intangible assets were as follows:
Fair value
Useful lives
$m
Years
Launched products – C5 franchise (
Soliris
/
Ultomiris
)
18,480
6 to 15
Launched products –
Strensiq
,
Kanuma
,
Andexxa
5,215
11 to 17
Products in development
2,760
Not amortised
Other intangibles
500
5 to 10
26,955
The fair value attributed to intangible assets was $26,955m and primarily represents intellectual property rights over launched products
$23,695m and products under development $2,760m. These were fair valued using the multi-period excess earnings method, which uses a
number of estimates regarding the amount and timing of future cash flows. The key assumptions in the cash flows are PTRS, peak year sales and
revenue erosion curves. In accordance with the Group’s policy on impairment assessments as set out on page 144, the assets were assessed
for impairment in Q4 2021. Future milestones have been included in the valuation of the intangible assets (as a deduction of cash flows).
The fair value of inventory, which includes raw materials, work in progress and finished goods related to the launched products was estimated at
$6,769m, an uplift of $5,635m on the carrying value prior to the acquisition. The fair value adjustment relates only to work in progress and finished
goods and was calculated as the estimated selling price less costs to complete and sell the inventory, associated margins on these activities and
holding costs. The fair value adjustment is expected to amortise over approximately the first 18 months post-acquisition, in line with revenues.
Property, plant and equipment principally comprises the manufacturing facilities in Dublin and Athlone, Ireland and was fair valued using a cost
approach. The estimated fair value of $1,135m represents an uplift of $111m over carrying value.
The estimated fair value of contingent liabilities was $76m, relating to various claims and disputes in each case where there is a possible, but not
probable, future financial exposure, and involve an assessment of the likelihood of a number of scenarios in relation to those matters. This amount
has been included within other non-current liabilities of $697m.
The estimated fair value of trade and other receivables was $2,096m, which approximated the contractual cash flows.
The net deferred tax position reflected an adjustment of $5,215m related to the deferred tax impact of the fair value uplifts on intangible assets,
inventories, property, plant and equipment and contingent liabilities as described above.
Goodwill amounting to $8,287m was recognised on acquisition and is underpinned by a number of elements, which individually could not be
quantified. Most significant amongst these is the premium attributable to a pre-existing, well positioned business in the innovation intensive,
high growth rare diseases market with a highly skilled workforce and established reputation. Other important elements include the potential
unidentified products that future research and development may yield and the core technological capabilities and knowledge base of the
company. Goodwill is not expected to be deductible for tax purposes.
Non-controlling interests reflect Alexion’s pre-existing minority equity interest in Caelum Biosciences and have been valued at $150m, the agreed
upon exercise price for the exclusive option to acquire the remaining equity. The option was exercised on 28 September 2021 and the acquisition
of Caelum Biosciences closed shortly thereafter on 5 October 2021 (Note 26).
Alexion’s results have been consolidated into the Group’s results from 21 July 2021. For the period from acquisition to 31 December 2021,
before reflecting the fair value adjustments arising on the acquisition, Alexion’s Total Revenues were $3,071m and Profit after tax was $889m.
If the acquisition had taken effect at the beginning of the reporting period in which the acquisition occurred (1 January 2021), on a pro forma
basis, after reflecting the fair value adjustments arising on the acquisition, the Total Revenue of the combined Group for the year ended
31 December 2021 would have been $41,132m and the Loss after tax would have been $1,152m. This pro forma information does not purport
to represent the results of the combined Group that actually would have occurred had the acquisition taken place on 1 January 2021 and
should not be taken to be representative of future results.
Total acquisition-related costs of $171m have been incurred by the Group, which include advisory, legal and other professional fees. These costs
are presented in the Statement of Comprehensive Income within Selling, general and administrative expense.
The terms of the acquisition include a retention bonus plan for legacy Alexion employees whereby up to $50m may be used for retention bonus
awards to employees at the level of Vice President or below. These bonuses will vest and be payable six months after the acquisition, or earlier.
In the period since acquisition, a cost of $24m has been recorded in the Statement of Comprehensive Income ($2m in Cost of sales, $9m in
Research and development expense and $13m in Selling, general and administrative expense).
Upon completion of the acquisition, all unvested Alexion employee share awards were converted into AstraZeneca restricted stock awards that
continue to have, and shall be subject to, the same terms and conditions as applied in the corresponding Alexion awards immediately prior to
completion. Alexion Performance Stock Plan (PSU) awards that included performance-based vesting conditions were converted using the greater
of the original target level and Alexion’s assessment of the level of achievement immediately prior to completion (subject to a limit of 175 per cent.
for the awards granted in 2019 and a limit of 150 per cent. for the awards granted in 2020). In the period since acquisition, a cost of $257m has
been recorded in the Statement of Comprehensive Income ($9m in Cost of sales, $73m in Research and development expense and $175m in
Selling, general and administrative expense). Payments made to the Employee Benefit Trust upon vesting of share awards recognised as part
of the consideration for the acquisition of Alexion are recognised within investing activities in the Group’s Consolidated Statement of Cash Flows.
179
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
28 Financial risk management objectives and policies
The Group’s principal financial instruments, other than derivatives, comprise bank overdrafts, loans and other borrowings, lease liabilities, current
and non-current investments, cash and short-term deposits. The main purpose of these financial instruments is to manage the Group’s funding
and liquidity requirements. The Group has other financial assets and liabilities such as trade receivables and trade payables, which arise directly
from its operations.
The principal financial risks to which the Group is exposed are those of liquidity, interest rate, foreign currency and credit. Each of these is managed
in accordance with Board-approved policies. These policies, together with the Group’s approach to capital management, are set out below.
Hedge accounting
The Group uses foreign currency borrowings, foreign currency forwards and swaps, currency options, interest rate swaps and cross-currency
interest rate swaps for the purpose of hedging its foreign currency and interest rate risks. The Group may designate certain financial instruments
as fair value hedges, cash flow hedges or net investment hedges in accordance with IFRS 9. Hedge effectiveness is determined at the inception
of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between
the hedged item and hedging instrument. Sources of hedge effectiveness will depend on the hedge relationship designation but may include:
>
a significant change in the credit risk of either party to the hedging relationship
>
a timing mismatch between the hedging instrument and the hedged item
>
movements in foreign currency basis spread for derivatives in a fair value hedge
>
a significant change in the value of the foreign currency denominated net assets of the Group in a net investment hedge.
The hedge ratio for each designation will be established by comparing the quantity of the hedging instrument and the quantity of the hedged item to
determine their relative weighting; for all of the Group’s existing hedge relationships the hedge ratio has been determined as 1:1. Designated hedges
are expected to be effective and therefore the impact of ineffectiveness on profit is not expected to be material. The accounting treatment for fair
value hedges and debt designated as fair value through profit or loss is disclosed in the Group Accounting Policies section from page 138.
The following table represents the Group’s continuing designated hedge relationships under IFRS 9:
2019
Other comprehensive income
Fair value
loss
Opening
Fair value
recycled
Closing
Nominal
balance
(gain)/loss
balanceto the
Average
amounts
Carrying
1January
deferred
31Decemberincome
Average Average
pay
in local
value
2019
to OCI
statement
2019
maturity
USD FX
interest
currency
$m $m $m $m $m
year
rate rate
Fair value hedge – foreign currency and interest rate risk
1
USD LIBOR
+ 1.27%
Cross currency interest rate swap – Euro bond EUR 300m
10
– – – –
2021
1.09
Cash flow hedges – foreign currency and interest rate risk
2, 4
Cross currency interest rate swaps – Euro bonds
EUR 2,200m
(13)
(92)
114
(52) (30)
2025
1.14
USD 2.69%
Net investment hedge – foreign exchange risk
3, 4
Transactions matured pre 2019
– –
(356)
– (356)
–
––
Cross currency interest rate swap – JPY investment
5
JPY 58.5bn – –
(213)
4 (209)
2019
78.01
JPY 0.35%
Cross currency interest rate swap – JPY investment
JPY 58.3bn 4 –
(4)
– (4)
2029
108.03
JPY 1.53%
Cross currency interest rate swap – CNY investment CNY 458m
(1)
4 1
(3)
–2026
6.68
CNY 4.80%
Foreign currency borrowing – GBP investment GBP 350m
(457)
(265)
14
–
(251)
2031
n/a
GBP 5.75%
Foreign currency borrowing – EUR investment EUR 450m
(498)
44
(10)
–
34
2021
n/a
EUR 0.88%
Contingent consideration liabilities and Acerta Pharma
putoption liability – AZUK and AZAB USD investments
USD 5,583m
(5,583)
1,805
248
–
2,053
–
––
Notes to the Group Financial Statements
continued
180
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
2020
Other comprehensive income
Fair value
loss
Opening
Fair value
recycled
Closing
Nominal
balance
(gain)/loss
balanceto the
Average
amounts
Carrying
1January
deferred
31Decemberincome
Average Average
pay
in local
value
2020
to OCI
statement
2020
maturity
USD FX
interest
currency
$m $m $m $m $m
year
rate rate
Fair value hedge – foreign currency and interest rate risk
1
Cross currency interest rate swap – Euro bond EUR 300m
43
– – – –
2021
1.09
USD LIBOR
+ 1.27%
Cash flow hedges – foreign currency and interest rate risk
2, 4, 6
Cross currency interest rate swaps – Euro bonds
EUR 2,200m
150
(30)
(163)
239
46
2025
1.14
USD 2.69%
FX Forwards − short term FX risk
USD 618m
5 – –
(20)
– 15
(5)
2021
Net investment hedge – foreign exchange risk
3, 4
Transactions matured pre 2020
– – – –
(565)
– (565)
–Cross currency interest rate swap – JPY investment
JPY 58.5bn
19
– (4)
(15)
(19)
2029
108.03
JPY 1.53%
Cross currency interest rate swap – CNY investment CNY 458m
(2)
1 1 – 2
2026
6.68
CNY 4.80%
Foreign currency borrowing – GBP investment GBP 350m
(475)
(251)
18
–
(233)
2031
n/a
GBP 5.75%
Foreign currency borrowing – EUR investment EUR 450m
(548)
34
51
–
85
2021
n/a
EUR 0.88%
Contingent consideration liabilities and Acerta Pharma
putoption liability – AZUK and AZAB USD investments
USD 5,252m
(5,252)
2,053
(642) – –
1,411
–
–2021
Other comprehensive income
Fair value
gain
Opening
Fair value
recycled
Closing
Nominal
balance
(gain)/lossto the
Averagebalance
amounts
Carrying 1January
deferred
income
31December
Average Average
pay
in local
value
2021
to OCI
statement
2021
maturity
USD FX
interest
currency
$m $m $m $m $m
year
rate rate
Fair value hedge – foreign currency and interest rate risk
1
Cross currency interest rate swap – Euro bond
– – – – – – – – –
Cash flow hedges – foreign currency and interest rate risk
2, 4, 6
Cross currency interest rate swaps – Euro bonds
EUR 1,700m
(43)
46
182
(201)
27
2026
1.14
USD 2.85%
FX Forwards − short term FX risk
USD 1,220m
12
(5)
(12) –
(7)
2022
– –
Net investment hedge – foreign exchange risk
3, 4
Transactions matured pre 2021
– – – –
(565)
– (565)
–Cross currency interest rate swap – JPY investment
JPY 58.3bn
62
(19)
(43)
–
(62)
2029
108.03
JPY 1.53%
Cross currency interest rate swap – CNY investment
CNY 458m
(2)
2 – – 2
2026
6.68
CNY 4.80%
Foreign currency borrowing – GBP investment
GBP 350m
470
(233)
GBP 5.75% (5)
(238) –
2031
n/a
Foreign currency borrowing – EUR investment
7
EUR 450m
–
EUR 0.88% 85
– (47)
38
2021
n/a
Foreign currency borrowing – EUR investment
8
EUR 800m
898
–
(50)
– (50)
2029
n/a
EUR 0.38%
Contingent consideration liabilities and Acerta Pharma
sharepurchase liability – AZUK and AZAB USD investments
USD 2,658m
(2,658)
1,411
421
– – –
1,832
–
Key controls applied to transactions in derivative financial instruments are to use only instruments where good market liquidity exists, to revalue
all financial instruments regularly using current market rates and to sell options only to offset previously purchased options or as part of a risk
management strategy. The Group is not a net seller of options, and does not use derivative financial instruments for speculative purposes.
The Group held no options during the reporting period.
Capital management
The capital structure of the Group consists of Shareholders’ equity (Note 24), Debt (Note 19), Other current investments (Note 12) and Cash
(Note 17). For the foreseeable future, the Board will maintain a capital structure that supports the Group’s strategic objectives through:
>
managing funding and liquidity risk
>
optimising shareholder return
>
maintaining a strong, investment-grade credit rating.
181
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
The Group utilises factoring arrangements for selected trade receivables. These factoring arrangements qualify for full derecognition of the
associated trade receivables under IFRS 9. Amounts due on invoices that have not been factored at year end, from customers that are subject
to factoring arrangements, are disclosed in Note 16.
Funding and liquidity risk are reviewed regularly by the Board and managed in accordance with policies described below.
The Board’s distribution policy comprises a regular cash dividend and, subject to business needs, a share repurchase component. The Board
regularly reviews its shareholders’ return strategy, and, in 2012, decided to suspend share repurchases in order to retain strategic flexibility.
The Group’s net debt position (loans and borrowings net of Cash and cash equivalents, Other investments and Derivative financial instruments)
has increased from a net debt position of $12,110m at the beginning of the year to a net debt position of $24,322m at 31 December 2021.
The increase in net debt was principally due to the acquisition of Alexion.
Liquidity risk
The Board reviews the Group’s ongoing liquidity risks annually as part of the planning process and on an ad hoc basis. The Board considers
short-term requirements against available sources of funding, taking into account forecast cash flows. The Group manages liquidity risk by
maintaining access to a number of sources of funding which are sufficient to meet anticipated funding requirements. Specifically, the Group
uses US and European commercial paper, bank loans, committed bank facilities and cash resources to manage short-term liquidity and manages
long-term liquidity by raising funds through the capital markets. At 31 December 2021, the Group was assigned short-term credit ratings of P-2
by Moody’s and A-2 by Standard and Poor’s. The Group’s long-term credit rating was A3 Negative outlook by Moody’s and A- Stable outlook by
Standard and Poor’s.
In addition to Cash and cash equivalents of $6,329m, short-term fixed income investments of $16m, fixed deposits of $53m, less overdrafts of
$291m at 31 December 2021, the Group has committed bank facilities of $4,875m available to manage liquidity. The commitments mature in
April 2025. None of the above facilities contain any financial covenants. The Group regularly monitors the credit standing of the banking group
and currently does not anticipate any issue with drawing on the committed facilities should this be necessary. Advances under these facilities
currently bear an interest rate per annum based on US dollar LIBOR (or other relevant benchmark rate) plus a margin. The facilities contain
arrangements to switch to alternative risk free rate benchmarks before June 2023.
At 31 December 2021, the Group has $3,278m outstanding from debt issued under a Euro Medium Term Note programme and $21,908m under a
SEC-registered programme. The funds made available under these facility agreements may be used for the general corporate purposes of the Group.
The maturity profile of the anticipated future contractual cash flows including interest in relation to the Group’s financial liabilities, on an undiscounted
basis and which, therefore, differs from both the carrying value and fair value, is as follows:
Bank
Total
Derivative Derivative
Total
overdrafts
Trade non-derivative financial financial
derivative
and other
Lease
and otherfinancial
instruments instruments
financialloans
Bonds
payablesliability
instruments
receivable
1
payable
instruments
Total
$m $m $m $m $m $m $m $m $m
Within one year
234
2,207
205 14,054
16,700
(11,956) 11,985
16,729 29
In one to two years
14
1,970
158
1,769 3,911
(955)
3,932 976
21
In two to three years
–
1,810
117 1,811
3,738
(54) 67
13 3,751
In three to four years
–
2,068
79
1,592
3,739
(54) 67
3,752 13
In four to five years
–
1,479
50
1,652 3,181
1,079 (1,051)
28
3,209
In more than five years
–
15,906
6 128
1,052 1,654
17,08 6
(1,648) 17,0 9 2
248
25,440
737
21,930
48,355
(15,718) 15,828
110
48,465
Effect of interest
(1)
(8,038)
– –
(8,039) 409
(488)
(79)
(8,118)
Effect of discounting, fair values and issue costs
(3)
(94)
(62)
(54) (1,619) (1,778)
(20)
(74)
(1,852)
31December2019
244
17,3 08
675
20, 311
38,538
(15,329) 15,286
(43)
38,495
Bank
Total
Derivative Derivative
Total
overdrafts
Trade non-derivative financial financial
derivative
and other
Lease
and otherfinancial
instruments instruments
financialloans
Bonds
payablesliability
instruments
payablereceivable
instruments
Total
$m $m $m $m $m $m $m $m $m
Within one year
667
2,136
207
15,812
18,822
(9,719)
9,620
(99)
18,723
In one to two years
–
1,839
7 168
2,584
4,591
(60)
67
4,598
In two to three years
–
2,101
8 120
1,658
3,879
(59)
67
3,887
In three to four years
–
1,617
82
1,728
3,427
(1,151)
1,080
(71) 3,356
In four to five years
–
2,502
4 53
722
3,277
(36)
40
3,281
In more than five years
–
16,921
108
1,435 1,652
18,464
(1,707) (55)
18,409
667
27,116
738
23,939
52,460
(12,732) 12,526
52,254 (206)
Effect of interest
– –
(7,974)
– (7, 974)
379
(405)
(26)
(8,000)
Effect of discounting, fair values and issue costs
(1)
(109)
(57) (2,070)
(2,237)
(70)
24
(46)
(2,283)
31December2020
666
19,033
681
21,869
42,249
(12,423)
12,145
(278)
41,971
Notes to the Group Financial Statements
continued
28 Financial risk management objectives and policies
continued
182
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Bank
Total
Derivative Derivative
Totaloverdrafts Trade
non-derivative
financial financial
derivative
and other
Lease
and otherfinancial
instruments instruments
financialloans
Bonds
liability
payables
receivableinstruments
payable
instruments
Total
$m $m $m $m $m $m $m $m $m
Within one year
387
1,981
256
21,631 19,007
(11,766) 11,774
8
21,639
In one to two years
–
5,647 210
8,378 2,521
(55)
66
11
8,389
In two to three years
–
5,242
163
1,669
7,074
(1,060) 1,079
19
7,0 93
In three to four years
–
2,591
4 130
862
3,583
(35)
39
3,587
In four to five years
–
2,970
96
233
3,299
(118) 111
(7)
3,292
In more than five years
–
19,727
221
2,212
22 ,160
(1,521)
1,480
(41)
22,119
387
38,158
1,076
66,125 26,504
(14,555)
14,549
(6)
66,119
Effect of interest
–
(8,609)
– –
(8,609) 299
(325)
(26) (8,635)
Effect of discounting, fair values and issue costs
–
(142)
7 (89)
(2,633) (2,864)
(36)
(29) (2,893)
31December2021
387
29,407
987 23,871
54,652
(14,292)
14,231
(61)
54,591
Where interest payments are on a floating rate basis, it is assumed that rates will remain unchanged from the last business day of each year
ended 31 December.
The Group has $2bn of bank loans that mature in July 2023 and $2bn of bank loans that mature in July 2024, which the Group can repay
before maturity at face value. Other than that, it is not expected that the cash flows in the maturity profile could occur significantly earlier or at
significantly different amounts, with the exception of $2,865m of contingent consideration held within Trade and other payables (see Note 20).
Market risk
Interest rate risk
The Group maintains a Board approved mix of fixed and floating rate debt and uses underlying debt, interest rate swaps and forward rate
agreements to manage this mix.
At 31 December 2021, interest rate swaps with a notional value of $288m are fair valued through profit or loss and this has effectively converted
the 7% guaranteed debentures payable in 2023 to floating rates. No new interest rate swaps were entered into during 2021.
The majority of surplus cash is currently invested in US dollar liquidity funds and investment-grade fixed income securities.
The interest rate profile of the Group’s interest-bearing financial instruments are set out below. In the case of current and non-current financial
liabilities, the classification includes the impact of interest rate swaps which convert the debt to floating rate.
2021
2020
2019
Fixed rate
Floating rate
Total
Fixed rate
Floating rate
Total
Fixed rate
TotalFloating rate
$m $m $m
$m $m $m $m $m $m
Financial liabilities
Interest-bearing loans and borrowings
Current
1,232
661
1,893 1,357
1,029
2,386
1,785 225
2,010
Non-current
23,985 4,903
28,888
17, 0 05 9 9 4
989
17, 14,893
1,324
16,217
Total
25,217
5,564
30,781
18,362 2,018
20,380
18,227 16,678
1,549
Financial assets
Fixed deposits
53
–
53 42
–
42 38
–
38Cash and cash equivalents
–
– 6,329 6,329
7, 8 32 7, 8 3 2
– 5,369 5,369
Total
53
6,329
6,382
42
7,832 7, 874
38
5,369
5,407
In addition to the financial assets above, there are $8,765m (2020: $6,328m; 2019: $6,765m) of other current and non-current asset investments
and other financial assets. Of these, $nil receive floating rate interest (2020: $nil; 2019: $111m).
The Group is also exposed to market risk on equity securities, which represent non-controlling interests in third-party biotech companies.
2021
2020
2019
$m
$m $m
Equity securities at fair value through Other comprehensive income (Note12)
1,168
1,10 8
1,339
Total
1,168
1,108
1,339
183
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
Foreign currency risk
The US dollar is the Group’s most significant currency. As a consequence, the Group results are presented in US dollars and exposures are
managed against US dollars accordingly.
Translational
Approximately 68% of Group external sales in 2021 were denominated in currencies other than the US dollar, while a significant proportion
of manufacturing, and research and development costs were denominated in pounds sterling and Swedish krona. Surplus cash generated by
business units is substantially converted to, and held centrally in, US dollars. As a result, operating profit and total cash flow in US dollars will
be affected by movements in exchange rates.
This currency exposure is managed centrally, based on forecast cash flows. The impact of movements in exchange rates is mitigated significantly
by the correlations which exist between the major currencies to which the Group is exposed and the US dollar. Monitoring of currency exposures
and correlations is undertaken on a regular basis and hedging is subject to pre-execution approval.
As at 31 December 2021, before the impact of derivatives, 2% of interest-bearing loans and borrowings were denominated in pounds sterling
and 9% were denominated in euros. Where there is non-US dollar debt and an underlying net investment of that amount in the same currency,
the Group applies net investment hedging. Exchange differences on the retranslation of debt designated as net investment hedges are
recognised in Other comprehensive income to the extent that the hedge is effective. Any ineffectiveness is taken to profit.
The Group holds cross-currency swaps to hedge against the impact of fluctuations in foreign exchange rates. Fair value movements on the
revaluation of the cross-currency swaps are recognised in Other comprehensive income to the extent that the hedge is effective, with any
ineffectiveness taken to profit.
Foreign currency risk arises when the Group has inter-company funding and investments in certain subsidiaries operating in countries with exchange
controls or where there is risk of significant future currency devaluation. One indicator of potential foreign currency risk is where a country is officially
designated as hyperinflationary. As at 31 December 2021, the Group operates in two countries designated as hyperinflationary, being Argentina
and Venezuela.
The foreign exchange risk to the Group from Argentina and Venezuela has been assessed and deemed to be immaterial.
Transactional
The Group aims to hedge all its forecast major transactional currency exposures on working capital balances, which typically extend for up to
three months. Where practicable, these are hedged using forward foreign exchange. In addition, the Group’s external dividend, which is paid
principally in pounds sterling and Swedish krona, is fully hedged from announcement to payment date. Foreign exchange gains and losses on
forward contracts transacted for transactional hedging are taken to profit. Foreign exchange gains and losses on forward contracts transacted
for transactional hedging are taken to profit or to Other comprehensive income if the contract is in a designated cash flow hedge.
Sensitivity analysis
The sensitivity analysis set out below summarises the sensitivity of the market value of our financial instruments to hypothetical changes in
market rates and prices. The range of variables chosen for the sensitivity analysis reflects our view of changes which are reasonably possible over
a one-year period. Market values are the present value of future cash flows based on market rates and prices at the valuation date. For long-term
debt, an increase in interest rates results in a decline in the fair value of debt.
The sensitivity analysis assumes an instantaneous 100 basis point change in interest rates in all currencies from their levels at 31 December 2021,
with all other variables held constant. Based on the composition of our long-term debt portfolio as at 31 December 2021, a 1% increase in interest
rates would result in an additional $54m in interest expense being incurred per year due to new floating rate debt issued during the year. The
exchange rate sensitivity analysis assumes an instantaneous 10% change in foreign currency exchange rates from their levels at 31 December
2021, with all other variables held constant. The +10% case assumes a 10% strengthening of the US dollar against all other currencies and the
-10% case assumes a 10% weakening of the US dollar.
Each incremental 10% movement in foreign currency exchange rates would have approximately the same effect as the initial 10% detailed in the
table below and each incremental 1% change in interest rates would have approximately the same effect as the 1% detailed in the table below.
Interest rates
Exchange rates
31December2019
+1%
-1%
+10%-10%
Increase/(decrease) in fair value of financial instruments ($m)
1,417
(1,521)
(4)
(36)
Impact on profit: (loss)/gain ($m)
– –
(174)
172
Impact on equity: gain/(loss) ($m)
– –
170
(208)
Interest rates
Exchange rates
31December2020
+1%
-1%
+10%-10%
Increase/(decrease) in fair value of financial instruments ($m)
1,696
(1,758)
114
(132)
Impact on profit: (loss)/gain ($m)
– –
(57)
74
Impact on equity: gain/(loss) ($m)
– –
171
(206)
Notes to the Group Financial Statements
continued
28 Financial risk management objectives and policies
continued
184
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Interest rates Exchange rates
31December2021
+1%
-1%
+10%-10%
Increase/(decrease) in fair value of financial instruments ($m)
1,978
(2,106)
82
(85)
Impact on profit: gain/(loss) ($m)
– –
24 (9)
Impact on equity: gain/(loss) ($m)
– –
58
(76)
Credit risk
The Group is exposed to credit risk on financial assets, such as cash investments, derivative instruments, and Trade and other receivables.
The Group is also exposed in its Net asset position to its own credit risk in respect of the 2023 debentures which are accounted for at fair value
through profit or loss. Under IFRS 9, the effect of the losses and gains arising from own credit risk on the fair value of bonds designated at fair
value through profit or loss are recorded in Other comprehensive income.
Financial counterparty credit risk
The majority of the AstraZeneca Group’s cash is centralised within the Group treasury entity and is subject to counterparty risk on the principal
invested. The level of the Group’s cash investments and hence credit risk will depend on the cash flow generated by the Group and the timing of
the use of that cash. The credit risk is mitigated through a policy of prioritising security and liquidity over return and, as such, cash is only invested
in high credit-quality investments. Counterparty limits are set according to the assessed risk of each counterparty and exposures are monitored
against these limits on a regular basis.
The Group’s principal financial counterparty credit risks at 31 December 2021 were as follows:
Current assets
2021
2020
2019
$m
$m $m
Cash at bank and in hand
1,461
1,182
755
Money market liquidity funds
4,772
6,602
4,110
Collateralised repurchase agreement
–
–
400
Other short-term cash equivalents
96
48
104
Total Cash and cash equivalents (Note17)
6,329
7, 8 32
5,369
Fixed income securities at fair value through profit and loss (Note12)
16
118 811
Fixed deposits (Note12)
53
42
38
Total derivative financial instruments (Note13)
83
142
36
Current assets subject to credit risk
6,481
8,134
6,254
Non-current assets
2021
2020
2019
$m
$m $m
Fixed income securities at fair value through profit and loss (Note12)
–
–
62
Derivative financial instruments (Note13)
102
171
61
Non-current assets subject to credit risk
102
171
123
The majority of the Group’s cash is invested in US dollar AAA rated money market liquidity funds. The money market liquidity fund portfolios
are managed by five external third-party fund managers to maintain an AAA rating. The Group’s investments represent no more than 10% of
each overall fund value. There were no other significant concentrations of financial credit risk at the reporting date.
The short-term repurchase agreements were fully collateralised investments. The Group closed out its repurchase agreements during 2020.
The value of the cash deposited in repurchase agreements at 31 December 2021 was $nil (2020: $nil; 2019: $401m).
The fixed income securities were managed by four external third-party fund managers. During 2020, the securities were sold and re-invested
in money market funds. The long-term rating of these securities was BBB- or better.
All financial derivatives are transacted with commercial banks, in line with standard market practice. The Group has agreements with some bank
counterparties whereby the parties agree to post cash collateral, for the benefit of the other, equivalent to the market valuation of the derivative
positions above a predetermined threshold. The carrying value of such cash collateral held by the Group at 31 December 2021 was $93m (2020: $288m;
2019: $71m) and the carrying value of such cash collateral posted by the Group at 31 December 2021 was $47m (2020: $11m; 2019: $10m).
The impairment provision for other financial assets at 31 December 2021 was immaterial.
Trade receivables
Trade receivable exposures are managed locally in the operating units where they arise and credit limits are set as deemed appropriate for
the customer. The Group is exposed to customers ranging from government-backed agencies and large private wholesalers to privately owned
pharmacies, and the underlying local economic and sovereign risks vary throughout the world. Where appropriate, the Group endeavours to
minimise risks by the use of trade finance instruments such as letters of credit and insurance. The Group applies the expected credit loss
approach to establish an allowance for impairment that represents its estimate of expected losses in respect of Trade receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all Trade
receivables. To measure expected credit losses, Trade receivables have been grouped based on shared credit characteristics and the days past due.
The expected loss rates are based on payment profiles over a period of 36 months before 31 December 2021, 31 December 2020 or 31 December
2019 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the customer to settle the receivables.
185
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
On that basis, the loss allowance was determined as follows:
0-90 days
90-180 days
Over 180 days31December 2019 past due past due
Current
past dueTotal
Expected loss rate
0.1%
0.8%
2.0% 44.0%
Gross carrying amount ($m)
3,178
312
82
34
3,606
Loss allowance ($m)
2 2 2
15
21
0-90 days
90-180 days
Over 180 days31December 2020 past due past due
Current
past dueTotal
Expected loss rate
0.1%
1.6%
19.4%
60.6%
Gross carrying amount ($m)
3,659
124
21
25
3,829
Loss allowance ($m)
2 2 4
15
23
0-90 days
90-180 days
Over 180 days31December 2021
Current
past due past due past due
Total
Expected loss rate
0.1%
1.2%
22.6%
11.0%
Gross carrying amount ($m)
5,617
328
18
91
6,054
Loss allowance ($m)
5 4 4
10
23
Trade receivables are written off where there is no reasonable expectation of recovery.
Impairment losses on Trade receivables are presented as net impairment losses within Operating profit, any subsequent recoveries are credited
against the same line.
In the US, sales to three wholesalers accounted for approximately 94% of US sales (2020: three wholesalers accounted for approximately 95%;
2019: three wholesalers accounted for approximately 94%).
The movements of the Group expected credit losses provision are as follows:
2021
2020
2019
$m
$m $m
At 1January
23
21
38
Net movement recognised in income statement
(2)
3
(13)
Amounts utilised, exchange and other movements
2
(1)
(4)
At 31December
23
23
21
Given the profile of our customers, including large wholesalers and government-backed agencies, no further credit risk has been identified
with the Trade receivables not past due other than those balances for which an allowance has been made. The income statement credit or charge
is recorded in Operating profit.
29 Employee costs and share plans for employees
Employee costs
The monthly average number of people, to the nearest hundred, employed by the Group is set out in the table below. In accordance with the Companies
Act 2006, this includes part-time employees.
2021
2020
2019
Employees
UK
8,900
7,9 0 0 7,40 0
Rest of Europe
18,300
16,600
15,500
The Americas
18,800
17,3 0 0
16,600
Asia, Africa & Australasia
33,600
33,000
27,80 0
Continuing operations
79,600
74,800
67,30 0
Geographical distribution described in the table above is by location of legal entity employing staff. Certain staff will undertake some or all of their
activity in a different location.
The number of people employed by the Group at the end of 2021 was 83,100 (2020: 76,100; 2019: 70,600).
The costs incurred during the year in respect of these employees were:
2021
2020
2019
$m
$m $m
Wages and salaries
7,633
6,273
5,648
Social security costs
886
726
658
Pension costs
564
435 491
Other employment costs
1,192
813
771
Total
10,275
8,247
7,568
Severance costs of $238m are not included above (2020: $116m; 2019: $158m).
The Directors believe that, together with the basic salary system, the Group’s employee incentive schemes provide competitive and market-related
packages to motivate employees. They should also align the interests of employees with those of shareholders, as a whole, through long-term
share ownership in the Company. The Group’s current UK, Swedish and US schemes are described below; other arrangements apply elsewhere.
Notes to the Group Financial Statements
continued
28 Financial risk management objectives and policies
continued
186
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Bonus plans
The AstraZeneca UK Performance Bonus Plan
Employees of participating AstraZeneca UK companies are invited to participate in this bonus plan, which rewards strong individual performance.
Bonuses are paid in cash.
The AstraZeneca Executive Annual Bonus Scheme
This scheme is a performance bonus scheme for Directors and senior employees who do not participate in the AstraZeneca UK Performance
Bonus Plan. Annual bonuses are paid in cash and reflect both corporate and individual performance measures. The Remuneration Committee
has discretion to reduce or withhold bonuses if business performance falls sufficiently short of expectations in any year such as to make the
payment of bonuses inappropriate.
The AstraZeneca Deferred Bonus Plan
This plan was introduced in 2006 and is used to defer a portion of the bonus earned under the AstraZeneca Executive Annual Bonus Scheme into
Ordinary Shares in the Company for a period of three years. The plan currently operates only in respect of Executive Directors and members of
the SET (with awards granted as AstraZeneca ADSs for members of SET employed within the US). Awards of shares under this plan are typically
made in March each year, the first award having been made in February 2006.
Sweden
In Sweden, an all-employee performance bonus plan is in operation, which rewards strong individual performance. Bonuses are paid 50% into
a fund investing in AstraZeneca equities and 50% in cash. The AstraZeneca Executive Annual Bonus Scheme, the AstraZeneca Performance
Share Plan and the AstraZeneca Global Restricted Stock Plan all operate in respect of relevant AstraZeneca employees in Sweden.
US
In the US, there are two all-employee short-term or annual performance bonus plans in operation to differentiate and reward strong individual
performance. Annual bonuses are paid in cash. There is also one senior staff long-term incentive scheme, under which 129 participants may be
eligible for awards granted as AstraZeneca ADSs. AstraZeneca ADSs necessary to satisfy the awards are purchased in the market or funded via
a share trust. The AstraZeneca Performance Share Plan and the AstraZeneca Global Restricted Stock Plan operate in respect of relevant
employees in the US.
Share plans
The charge for share-based payments in respect of share plans is $615m (2020: $277m; 2019: $259m). Payments made to the Employee Benefit
Trust upon vesting of share awards are recognised within operating cash flows, reflecting the substance of the arrangement in place between the
group and the Trust. The plans are equity settled.
The AstraZeneca UK All-Employee Share Plan
The Company offers UK employees the opportunity to buy Partnership Shares (Ordinary Shares). Employees may invest up to £150 a month to
purchase Partnership Shares in the Company at the current market value. In 2010, the Company introduced a Matching Share element, the first
award of which was made in 2011. Currently one Matching Share is awarded for every four Partnership Shares purchased. Partnership Shares
and Matching Shares are held in the HM Revenue & Customs (HMRC)-approved All-Employee Share Plan. At the Company’s AGM in 2002,
shareholders approved the issue of new shares for the purposes of the All-Employee Share Plan.
The AstraZeneca 2014 Performance Share Plan
This plan was approved by shareholders in 2014 for a period of 10 years and replaces the AstraZeneca Performance Share Plan. Generally, awards
can be granted at any time, but not during a closed period of the Company. The first grant of awards was made in May 2014. Awards granted under
the plan vest after three years, or in the case of Executive Directors and members of the SET, after an additional two-year holding period, and
can be subject to the achievement of performance conditions. For awards granted to all participants in 2021, vesting is subject to a combination
of measures focused on scientific leadership, revenue growth and financial performance. The Remuneration Committee has responsibility for
agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated, including agreeing performance
targets and which employees should be invited to participate.
Ordinary Shares
WAFV
1
ADR Shares
WAFV
1
’000
pence
’000$
Outstanding at 1January 2019
2,682
2295 6,963
15.65
Granted
1,018 21.06
3147
1,978Forfeited
(350)
2317
(1,900)
16.80
Exercised
(491)
1983
(1,835)
14.17
Outstanding at 31December 2019
2,859
2649
5,206
17.80
Granted
932
3702
1,767
24.02
Forfeited
(191)
3088
(478)
19.57
Cancelled
(3) 2234
– –
Exercised
(552)
2426
(1,704)
15.43
Outstanding at 31December 2020
3,045
2985
4,791
20.76
Granted
1,275
2485
2,082
17.18
Forfeited
(220)
3005
(494)
20.53
Cancelled
(9)
3653
– –
Exercised
(632) 2332
(1,201)
17.40
Outstanding at 31December 2021
3,459
2919
5,178
20.12
187
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Group Financial Statements
Additional InformationStrategic Report Corporate Governance
Financial Statements
The AstraZeneca Investment Plan
This plan was introduced in 2010 and approved by shareholders at the 2010 AGM. The final grant of awards under this plan took place in March 2016.
Awards granted under the plan vest after eight years and are subject to performance conditions measured over a period of four years.
The AstraZeneca Global Restricted Stock Plan
This plan was introduced in 2010. This plan provides for the grant of restricted stock unit (RSU) awards to selected below SET-level employees
and is used in conjunction with the AstraZeneca Performance Share Plan to provide a mix of RSUs and performance shares. Awards typically
vest on the third anniversary of the date of grant and are contingent on continued employment with the Company. The Remuneration Committee
has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated.
Ordinary Shares
WAFV
ADR Shares
WAFV
’000
pence
’000$
Outstanding at 1January 2019
1,001
4598
31.57 10,493
Granted
759
6313
3,885
42.06
Forfeited
(115)
5438
(1,199)
35.44
Cancelled
– –
(1)
32.39
Exercised
(317)
4028
(3,408)
28.82
Outstanding at 31December 2019
1,328
5640
9,770
36.22
Granted
689
7408
3,671
47.71
Forfeited
(113)
6204
(1,077)
41.08
Cancelled
–
7280
(9)
36.93
Exercised
(278)
4929
(3,180)
31.47
Outstanding at 31December 2020
1,626
6471
9,175
41.89
Granted
902
6893
4,509
47.75
Forfeited
(158)
6865
(1,254)
45.77
Cancelled
(1)
7244
(8)
45.89
Exercised
(341)
4980
(2,881)
35.11
Outstanding at 31December 2021
2,028
6879
9,541
46.19
The AstraZeneca Restricted Share Plan
This plan was introduced in 2008 and provides for the grant of restricted share awards to key employees, excluding Executive Directors.
Awards are made on an ad hoc basis with variable vesting dates. The plan has been used four times in 2021 to make awards to 111 employees.
The Remuneration Committee has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan
should be operated.
Ordinary Shares
WAFV
ADR Shares
WAFV
’000
pence
’000$
Outstanding at 1January 2019
92
4952
1,062
30.79
Granted
105
6894
176
43.91
Forfeited
(7)
5907
(141)
31.17
Cancelled
– –
(2)
28.19
Exercised
(14)
5244
(446)
30.12
Outstanding at 31 December 2019
176
6051
649
34.70
Granted
80
7931
295
52.92
Forfeited
(6)
7168
(79)
39.26
Exercised
(89)
5166
(359)
31.05
Outstanding at 31 December 2020
161
7434
506
47. 2 0
Granted
139
7415
481
53.96
Forfeited
(18)
7562
(42)
44.73
Exercised
(27)
7643
(182)
41.87
Outstanding at 31December 2021
255
7393
763
52.88
The AstraZeneca Extended Incentive Plan
This plan was introduced in 2018 and provides for the grant of awards to key employees, excluding Executive Directors. Awards are made on an
ad hoc basis and 50% of the award will normally vest on the fifth anniversary of grant, with the balance vesting on the tenth anniversary of grant.
The award can be subject to the achievement of performance conditions. The Remuneration Committee has responsibility for agreeing any
awards under the plan and for setting the policy for the way in which the plan should be operated, including agreeing performance targets
(if any) and which employees should be invited to participate.
Ordinary Shares
WAFV
ADR Shares
WAFV
’000
pence
’000$
Outstanding at 1January 2019
238
5239
65
38.46
Granted
44
7301
– –
Outstanding at 31 December 2019
282
5563
65
38.46
Granted
18
8386
– –
Outstanding at 31 December 2020
300
5730
65
38.46
Granted
– –
175
56.83
Forfeited
(18)
8386
(45)
38.46
Outstanding at 31December 2021
282
5563
195
54.92
Notes to the Group Financial Statements
continued
29 Employee costs and share plans for employees
continued
188
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Alexion employee share award plan
Alexion employee share awards were converted into AstraZeneca restricted stock awards that continue to have, and shall be subject to, the same
terms and conditions as applied in the corresponding Alexion awards immediately prior to completion.
Ordinary Shares
WAFV
ADR Shares
WAFV
’000
pence
’000$
Outstanding at 1January 2021
– – – –
Granted
– –
20,189
57.54
Forfeited
– –
(838)
57.54
Exercised
– –
(4,131)
57.54
Outstanding at 31December 2021
– –
15,220
57.54
The fair values for the market-based performance conditions of the AstraZeneca 2014 Performance Share Plan were determined using a modified
version of the Monte Carlo model. This method incorporated market inputs in addition to expected dividends. The fair values of all other plans are
set using the market price at the point of award. The grant date fair values of share awards disclosed in this section do not take account of service
and non-market related performance conditions.
30 Commitments and contingent liabilities
2021
2020
2019
Commitments
$m
$m $m
Contracts placed for future capital expenditure on Property, plant and equipment and
software development costs not provided for in these financial statements
388
689
396
Guarantees and contingencies arising in the ordinary course of business, for which no security has been given, are not expected to result in any
material financial loss.
Research and development collaboration payments
The Group has various ongoing collaborations, including in-licensing and similar arrangements with development partners. Such collaborations
may require the Group to make payments on achievement of stages of development, launch or revenue milestones, although the Group generally
has the right to terminate these agreements at no cost. The Group recognises research and development milestones as an intangible asset once
it is committed to payment, which is generally when the Group reaches set trigger points in the development cycle. Revenue-related milestones
are recognised as intangible assets on product launch at a value based on the Group’s long-term revenue forecasts for the related product. The
table below indicates potential development and revenue-related payments that the Group may be required to make under such collaborations.
Years 5
Total
Under 1 year Years 1 and 2 Years 3 and 4
and greater
$m $m $m $m $m
Future potential research and development milestone payments
12,764
1,047 1,958
3,382
6,377
Future potential revenue milestone payments
17,769
68
420
1,452
15,829
The table includes all potential payments for achievement of milestones under ongoing research and development arrangements. Revenue-related
milestone payments represent the maximum possible amount payable on achievement of specified levels of revenue as set out in individual contract
agreements, but exclude variable payments that are based on unit sales (e.g. royalty-type payments) which are expensed as the associated sale
is recognised. The table excludes any payments already capitalised in the Financial Statements for the year ended 31 December 2021.
The future payments we disclose represent contracted payments and, as such, are not discounted and are not risk-adjusted. As detailed in the
Risk section from page 48, the development of any pharmaceutical product candidate is a complex and risky process that may fail at any stage
in the development process due to a number of factors (including items such as failure to obtain regulatory approval, unfavourable data from key
studies, adverse reactions to the product candidate or indications of other safety concerns). The timing of the payments is based on the Group’s
current best estimate of achievement of the relevant milestone.
Environmental costs and liabilities
The Group’s expenditure on environmental protection, including both capital and revenue items, relates to costs that are necessary for implementing
internal systems and programmes, and meeting legal and regulatory requirements for processes and products. This includes investment to conserve
natural resources and otherwise minimise the impact of our activities on the environment.
They are an integral part of normal ongoing expenditure for carrying out the Group’s research, manufacturing and commercial operations and are
not separated from overall operating and development costs. There are no known changes in legal, regulatory or other requirements resulting in
material changes to the levels of expenditure for 2019, 2020 or 2021.
In addition to expenditure for meeting current and foreseen environmental protection requirements, the Group incurs costs in investigating and
cleaning up land and groundwater contamination. In particular, AstraZeneca has environmental liabilities at some currently or formerly owned,
leased and third-party sites.
In the US, Zeneca Inc., and/or its indemnitees, have been named as potentially responsible parties (PRPs) or defendants at a number of sites where
Zeneca Inc. is likely to incur future environmental investigation, remediation, operation and maintenance costs under federal, state, statutory or
common law environmental liability allocation schemes (together, US Environmental Consequences). Similarly, Stauffer Management Company LLC
(SMC), which was established in 1987 to own and manage certain assets of Stauffer Chemical Company acquired that year, and/or its indemnitees,
have been named as PRPs or defendants at a number of sites where SMC is likely to incur US Environmental Consequences.
189
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Additional InformationStrategic Report Corporate Governance
Financial Statements
AstraZeneca has also given indemnities to third
parties for a number of sites outside the US.
These environmental liabilities arise from legacy
operations that are not currently part of the
Group’s business and, at most of these
sites, remediation, where required, is either
completed or in progress. AstraZeneca has
made provisions for the estimated costs of
future environmental investigation, remediation,
operation and maintenance activity beyond
normal ongoing expenditure for maintaining
the Group’s R&D and manufacturing capacity
and product ranges, where a present obligation
exists, it is probable that such costs will be
incurred and they can be estimated reliably.
With respect to such estimated future costs,
there were provisions at 31 December 2021
in the aggregate of $90m (2020: $100m;
2019: $96m), mainly relating to the US.
Where we are jointly liable or otherwise have
cost-sharing agreements with third parties,
we reflect only our share of the obligation.
Where the liability is insured in part or in
whole by insurance or other arrangements for
reimbursement, an asset is recognised to the
extent that this recovery is virtually certain.
It is possible that AstraZeneca could incur
future environmental costs beyond the extent
of our current provisions. The extent of such
possible additional costs is inherently difficult to
estimate due to a number of factors, including:
(i) the nature and extent of claims that may be
asserted in the future; (ii) whether AstraZeneca
has or will have any legal obligation with
respect to asserted or unasserted claims;
(iii) the type of remedial action, if any, that
may be selected at sites where the remedy
is presently not known; (iv) the potential for
recoveries from or allocation of liability to
third parties; and (v) the length of time that
the environmental investigation, remediation
and liability allocation process can take.
As per our accounting policy on page 144,
Provisions for these costs are made when
there is a present obligation and where it is
probable that expenditure on remedial work
will be required and a reliable estimate can be
made of the cost. Notwithstanding and subject
to the foregoing, we estimate the potential
additional loss for future environmental
investigation, remediation, remedial operation
and maintenance activity above and beyond
our provisions to be, in aggregate, between
$99m and $165m (2020: $95m and $158m;
2019: $86m and $143m) which relates mainly
to the US.
Legal proceedings
AstraZeneca is involved in various legal
proceedings considered typical to its business,
including actual or threatened litigation and
actual or potential government investigations
relating to employment matters, product
liability, commercial disputes, pricing, sales
and marketing practices, infringement of IP
rights, and the validity of certain patents
and competition laws. The more significant
matters are discussed below.
Most of the claims involve highly complex
issues. Often these issues are subject to
substantial uncertainties and, therefore, the
probability of a loss, if any, being sustained
and/or an estimate of the amount of any loss
is difficult to ascertain.
Unless specifically identified below that
a provision has been taken, AstraZeneca
considers each of the claims to represent a
contingent liability and discloses information
with respect to the nature and facts of the
cases in accordance with IAS 37.
There is one matter, which is considered
probable that an outflow will be required,
but for which we are unable to make an
estimate of the possible loss or range of
possible losses at this stage.
We do not believe that disclosure of the
amounts sought by plaintiffs, if known, would
be meaningful with respect to these legal
proceedings. This is due to a number of factors,
including (i) the stage of the proceedings (in
many cases trial dates have not been set)
and the overall length and extent of pre-trial
discovery; (ii) the entitlement of the parties to
an action to appeal a decision; (iii) clarity as
to theories of liability, damages and governing
law; (iv) uncertainties in timing of litigation;
and (v) the possible need for further legal
proceedings to establish the appropriate
amount of damages, if any.
While there can be no assurance regarding
the outcome of any of the legal proceedings
referred to in this Note 30, based on
management’s current and considered view
of each situation, we do not currently expect
them to have a material adverse effect on our
financial position including within the next
financial year. This position could of course
change over time, not least because of the
factors referred to above.
In cases that have been settled or adjudicated,
or where quantifiable fines and penalties have
been assessed and which are not subject to
appeal (or other similar forms of relief), or where
a loss is probable and we are able to make a
reasonable estimate of the loss, we generally
indicate the loss absorbed or make a provision
for our best estimate of the expected loss.
Where it is considered that the Group is more
likely than not to prevail, legal costs involved
in defending the claim are charged to profit
as they are incurred.
Where it is considered that the Group has
a valid contract which provides the right to
reimbursement (from insurance or otherwise)
of legal costs and/or all or part of any loss
incurred or for which a provision has been
established, and we consider recovery to be
virtually certain, the best estimate of the
amount expected to be received is recognised
as an asset.
KJ
Assessments as to whether or not to
recognise provisions or assets, and of the
amounts concerned, usually involve a series
of complex judgements about future events
and can rely heavily on estimates and
assumptions. AstraZeneca believes that
the provisions recorded are adequate based
on currently available information and that
the insurance recoveries recorded will be
received. However, given the inherent
uncertainties involved in assessing the
outcomes of these cases, and in estimating
the amount of the potential losses and the
associated insurance recoveries, we could
in the future incur judgments or insurance
settlements that could have a material adverse
effect on our results in any particular period.
IP claims include challenges to the Group’s
patents on various products or processes
and assertions of non-infringement of patents.
A loss in any of these cases could result in loss
of patent protection on the related product.
The consequences of any such loss could be
a significant decrease in Product Sales, which
could have a material adverse effect on our
results. The lawsuits filed by AstraZeneca for
patent infringement against companies that
have filed abbreviated new drug applications
(ANDAs) in the US, seeking to market generic
forms of products sold by the Group prior to
the expiry of the applicable patents covering
these products, typically also involve
allegations of non-infringement, invalidity
and unenforceability of these patents by the
ANDA filers. In the event that the Group is
unsuccessful in these actions or the statutory
30-month stay expires before a ruling is
obtained, the ANDA filers involved will also have
the ability, subject to FDA approval, to introduce
generic versions of the product concerned.
AstraZeneca has full confidence in, and
will vigorously defend and enforce, its IP.
Over the course of the past several years,
including in 2021, a significant number
of commercial litigation claims in which
AstraZeneca is involved have been resolved,
particularly in the US, thereby reducing
potential contingent liability exposure arising
from such litigation. Similarly, in part due to
patent litigation and settlement developments,
greater certainty has been achieved regarding
possible generic entry dates with respect
to some of our patented products. At the
same time, like other companies in the
pharmaceutical sector and other industries,
AstraZeneca continues to be subject to
government investigations around the world.
Patent litigation
Calquence
US patent proceedings
In February 2022, in response to Paragraph IV
notices from multiple ANDA filers, AstraZeneca
filed patent infringement lawsuits in the US
District Court for the District of Delaware.
Notes to the Group Financial Statements
continued
30 Commitments and contingent liabilities
continued
190
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
In its complaint, AstraZeneca alleged that
a generic version of
Calquence
, if approved
and marketed, would infringe patents listed
in the US FDA Orange Book with reference
to
Calquence
that are owned or licensed by
AstraZeneca. No trial date has been set.
Tagrisso
US patent proceedings
In February 2020, in response to Paragraph IV
notices from multiple ANDA filers, AstraZeneca
filed patent infringement lawsuits in the US
District Court for the District of Delaware. In its
complaint, AstraZeneca alleged that a generic
version of
Tagrisso
, if approved and marketed,
would infringe a US Orange Book-listed
Tagrisso
patent. In the fourth quarter of
2021, AstraZeneca entered into settlement
agreements with Zydus Pharmaceuticals (USA)
Inc. and Cadila Healthcare Limited (collectively,
Zydus) and MSN Laboratories Pvt. Ltd. and
MSN Pharmaceuticals Inc. (collectively, MSN),
resolving all US patent litigation with Zydus and
MSN relating to
Tagrisso
. The trial with the
remaining defendant, Alembic Pharmaceuticals
Limited, is scheduled for May 2022.
In September 2021, Puma Biotechnology,
Inc. and Wyeth LLC filed a patent infringement
lawsuit in the US District Court for the District
of Delaware against AstraZeneca relating to
Tagrisso
. Neither a case schedule, nor a trial
date have been set yet.
Patent proceedings outside the US
In Russia in October 2021, AstraZeneca filed a
lawsuit in the Arbitration Court of the Moscow
Region against Axelpharm, LLC to prevent it
from obtaining authorisation to market a
generic version of
Tagrisso
prior to the
expiration of AstraZeneca’s patents covering
Tagrisso
. The lawsuit also names the Ministry
of Health of the Russian Federation as a third
party. Neither a case schedule, nor a trial date
have been set.
Faslodex
Patent proceedings outside the US
In Japan, in April 2021, AstraZeneca received
notice from the Japan Patent Office that Sandoz
K.K. filed a Request for Invalidation of the
Faslodex
formulation patent. In October 2021,
AstraZeneca received notice that Sun Pharma
Japan Ltd. requested to intervene in the
Request for Invalidation brought by Sandoz
K.K seeking invalidation of the
Faslodex
formulation patent. The Japan Patent Office
has permitted the intervention. AstraZeneca
is defending the challenged patent.
Farxiga
/
Forxiga
US patent proceedings
In 2018, in response to Paragraph IV notices,
AstraZeneca initiated ANDA litigation against
Zydus Pharmaceuticals (USA) Inc. (Zydus) in
the US District Court for the District of Delaware
(the District Court). In May 2021, trial against
Zydus proceeded in the District Court. In
October 2021, the District Court issued a
decision finding the asserted claims of
AstraZeneca’s US Patent No. 6,515,117 as
valid and infringed by Zydus’s proposed
ANDA product.
Patent proceedings outside the US
In Canada, in January 2021, Sandoz
Canada Inc. served three Notices of Allegation
on AstraZeneca alleging invalidity and/or
non-infringement of all three patents listed
on the Canadian Patent Register in relation
to
Forxiga
. AstraZeneca commenced litigation
in response. A trial date has been set for
October 2022 with closing argument in
December 2022.
In February 2021, Teva Canada Limited served
a Notice of Allegation on AstraZeneca alleging
invalidity and/or non-infringement of all three
patents listed on the Canadian Patent Register
in relation to
Forxiga
. AstraZeneca commenced
litigation in response. A trial date has been
set for October 2022 with closing argument
in December 2022.
Brilinta
US patent proceedings
In 2015 and subsequently, in response
to Paragraph IV notices from ANDA filers,
AstraZeneca filed patent infringement
lawsuits in the US District Court for the
District of Delaware (the District Court) relating
to patents listed in the FDA Orange Book with
reference to
Brilinta
. In 2020, AstraZeneca
entered into three separate settlements and
the District Court entered consent judgments
to dismiss each of the corresponding litigations.
Additional proceedings are ongoing in the
District Court. No trial date has been set.
Roxadustat
US patent proceedings
In April 2021, Akebia Therapeutics, Inc.
and Otsuka America Pharmaceutical, Inc.
served AstraZeneca with a complaint seeking
a declaration of invalidity and non-infringement
for several of FibroGen, Inc’s (FibroGen)
method of use patents related to HIF
prolylhydroxylase inhibitors. AstraZeneca
is the exclusive licensee of FibroGen in the
United States. AstraZeneca filed a motion
to dismiss in June 2021.
Patent proceedings outside the US
In Canada, in May 2018, Akebia Therapeutics,
Inc. filed an impeachment action in the
Federal Court of Canada alleging invalidity of
several of FibroGen, Inc.’s (FibroGen) method
of use patents related to HIF prolylhydroxylase
inhibitors. AstraZeneca is the exclusive
licensee of FibroGen in Canada. AstraZeneca
and FibroGen were defending the action.
The parties have resolved the action.
Symbicort
US patent proceedings
AstraZeneca is involved in ongoing ANDA
litigation with Mylan Pharmaceuticals Inc.
(Mylan) and Kindeva Drug Delivery L.P.
(Kindeva) brought in the US District Court
for the Northern District of West Virginia
(the District Court). In the action, AstraZeneca
alleges that the defendants’ generic versions
of
Symbicort
, if approved and marketed,
would infringe various AstraZeneca patents.
In September 2020, Mylan and Kindeva
stipulated to patent infringement to the extent
that the asserted patent claims are found to
be valid and enforceable, but reserved the
right to seek a vacatur of the stipulation if the
US Court of Appeals for the Federal Circuit
(the Federal Circuit) reverses or modifies the
District Court’s claim construction. In March
2021, the District Court decided in favour
of AstraZeneca and determined that the
asserted patent claims were not invalid or
unenforceable. Mylan and Kindeva appealed
to the Federal Circuit. In December 2021, the
Federal Circuit affirmed the decision by the
District Court determining that the asserted
patent claims were nonobvious. However, the
Federal Circuit reversed the District Court’s
claim construction decision, vacated the
stipulated judgment of infringement by Mylan
and Kindeva and remanded the matter back
to the District Court for determination of
whether their ANDA product infringes the
asserted patent claims under the Federal
Circuit’s claim construction. In January 2022,
AstraZeneca filed a Combined Petition for
Panel Rehearing and Rehearing En Banc
with the Federal Circuit.
Daliresp
US patent proceedings
In 2015 and subsequently, in response
to Paragraph IV notices from ANDA filers,
AstraZeneca filed patent infringement lawsuits
in the US District Court for the District of New
Jersey (the District Court) relating to patents
listed in the FDA Orange Book with reference
to
Daliresp
. In 2020, AstraZeneca entered into
a settlement and the District Court entered a
consent judgment to dismiss the corresponding
litigation. Additional proceedings are ongoing
in the District Court. No trial date has been set.
Movantik
US patent proceedings
In March 2020, Aether Therapeutics, Inc. filed
a patent infringement lawsuit in the US District
Court for the District of Delaware against
AstraZeneca, Nektar Therapeutics and Daiichi
Sankyo, Inc., relating to
Movantik
. A trial has been set for March 2023.
Onglyza
Patent proceedings outside the US
In Canada, in November 2019, Sandoz Canada
Inc. sent a Notice of Allegation to AstraZeneca
challenging the validity of Canadian substance
Patent No. 2402894 (expiry March 2021)
(the ‘894 patent) and formulation Patent No.
2568391 (expiry May 2025) related to
Onglyza
.
AstraZeneca commenced an action in
response related to the ‘894 patent in January
2020. In October 2021, the parties reached an
agreement to resolve the dispute. This matter
is now concluded.
191
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Additional InformationStrategic Report Corporate Governance
Financial Statements
Enhertu
US patent proceedings
In October 2020, Seagen Inc. (Seagen) filed
a complaint against Daiichi Sankyo Company,
Limited in the US District Court for the Eastern
District of Texas alleging that
Enhertu
infringes
US Patent No. 10,808,039 (the ‘039 patent).
AstraZeneca Pharmaceuticals LP co-
commercialises
Enhertu
with Daiichi Sankyo,
Inc. (Daiichi Sankyo) in the US. In July 2021,
AstraZeneca Pharmaceuticals LP and
AstraZeneca UK Limited intervened in the
Texas action in support of Daiichi Sankyo.
A claim construction hearing took place in
August 2021 and a trial has been scheduled
for April 2022.
On 23 December 2020, AstraZeneca and Daiichi
Sankyo filed a post-grant review petition with
the US Patent and Trademark Office alleging,
inter alia, that the ‘039 patent is invalid for lack
of written description and enablement. In
January 2021, AstraZeneca and Daiichi Sankyo
filed a second post-grant review petition with
the US Patent and Trademark Office extending
its challenge to additional claims in the ‘039
patent. In June 2021, the US Patent and
Trademark Office declined to institute the
post-grant reviews. AstraZeneca and Daiichi
Sankyo have requested a rehearing of their
post-grant review petitions.
In August 2021, AstraZeneca Pharmaceuticals
LP and Daiichi Sankyo filed an action against
Andrew Hirshfeld, acting in his official capacity
as Under Secretary of Commerce, and the US
Patent and Trademark Office in the US District
Court for the Eastern District of Virginia seeking
judicial review of the US Patent Office’s
discretionary authority to deny institution
of post-grant review proceedings.
Ultomiris
US patent proceedings
In November 2018, Chugai Pharmaceutical Co.,
Ltd. (Chugai) filed a lawsuit against Alexion
in the Delaware District Court alleging that
Ultomiris
infringes a US patent held by Chugai.
Upon issuance of another US patent in
November 2019, Chugai filed a second lawsuit
in the same court alleging that
Ultomiris
also
infringes the second patent. The two lawsuits
were consolidated. Trial scheduled to occur
in January 2022 has been postponed until
February 2022 due to COVID-19.
Patent proceedings outside the US
In Japan, in December 2018, Chugai
Pharmaceutical Co., Ltd (Chugai) filed a
lawsuit in the Tokyo District Court against
Alexion Pharma GK in Japan and alleges that
Ultomiris
infringes two Japanese patents held
by Chugai. Chugai’s complaints seek
unspecified damages and certain injunctive
relief. In March 2020, the Supreme Court of
Japan dismissed Chugai’s appeal against an
earlier IP High Court of Japan decision which
held that one of the Chugai patents-in-suit is
invalid. Subsequently, Chugai filed a correction
to the claims of this patents-in-suit and Alexion
has countered that the corrected claims are
still invalid and not infringed. In all cases,
Alexion has denied the charges and countered
that the patents are neither valid nor infringed.
In October 2021 the Japanese Patent Office
invalidated four Chugai patents, including those
asserted in the Tokyo District Court Case.
Chugai has appealed the patent office decision.
Product liability litigation
Farxiga
and
Xigduo
XR
In several jurisdictions in the US, AstraZeneca
has been named as a defendant in lawsuits
involving plaintiffs claiming physical injury,
including Fournier’s Gangrene and necrotising
fasciitis, from treatment with
Farxiga
and/or
Xigduo
XR. A majority of these claims are filed
in Delaware state court and remain pending.
One case, filed in state court in Minnesota,
is scheduled for trial in January 2023.
Byetta
/
Bydureon
In the US, Amylin Pharmaceuticals, LLC
(a wholly owned subsidiary of AstraZeneca)
and AstraZeneca are among multiple
defendants in various lawsuits filed in federal
and state courts involving claims of physical
injury from treatment with
Byetta
and/or
Bydureon
. The lawsuits allege several types
of injuries including pancreatic cancer and
thyroid cancer. A multidistrict litigation was
established in the US District Court for the
Southern District of California (the District
Court) in regard to the alleged pancreatic
cancer cases in federal courts. Further, a
coordinated proceeding has been established
in Superior Court in Los Angeles, California
(the California Court) in regard to the various
lawsuits in California state courts. In October
and December 2020, the District Court and the
California Court jointly heard oral argument on
renewed motions filed by Defendants seeking
summary judgment and dismissal of all claims
alleging pancreatic cancer. In March and April
2021, the District Court and the California
Court respectively granted the Defendants’
motions, and dismissed all cases alleging
pancreatic cancer with prejudice. Plaintiffs
have dismissed the appeal as to Amylin
Pharmaceuticals, LLC and AstraZeneca.
The other claims in both courts, including
those alleging thyroid cancer, remain pending.
Onglyza
and
Kombiglyze
In the US, AstraZeneca is defending various
lawsuits alleging heart failure, cardiac injuries,
and/or death from treatment with
Onglyza
or
Kombiglyze
. In February 2018, the Judicial
Panel on Multidistrict Litigation ordered the
transfer of various pending federal actions to
the US District Court for the Eastern District of
Kentucky (District Court) for consolidated
pre-trial proceedings with the federal actions
pending in the District Court. In the previously
disclosed California State Court coordinated
proceeding, AstraZeneca submitted its motion
for summary judgment in December 2021.
Nexium
and
Losec
/
Prilosec
US proceedings
In the US, AstraZeneca is defending various
lawsuits brought in federal and state courts
involving multiple plaintiffs claiming that they
have been diagnosed with various injuries
following treatment with proton pump inhibitors
(PPIs), including
Nexium
and
Prilosec
. The vast
majority of those lawsuits relate to allegations
of kidney injuries. In particular, in May 2017,
counsel for a group of such plaintiffs claiming
that they have been diagnosed with kidney
injuries filed a motion with the Judicial Panel
on Multidistrict Litigation (JPML) seeking the
transfer of any currently pending federal court
cases as well as any similar, subsequently
filed cases to a coordinated and consolidated
pre-trial multidistrict litigation (MDL)
proceeding. In August 2017, the JPML granted
the motion and consolidated the pending
federal court cases in an MDL proceeding
in federal court in New Jersey for pre-trial
purposes. A trial in the MDL previously
scheduled for January 2022 has been
rescheduled to October 2022. In addition to
the MDL cases, there are cases filed in several
state courts around the US; a trial in Delaware
state court previously scheduled for February
2022 is being rescheduled.
In addition, AstraZeneca has been defending
lawsuits involving allegations of gastric cancer
following treatment with PPIs. One such claim
is filed in the US District Court for the Middle
District of Louisiana, where the court has
scheduled a trial for November 2022.
Canada proceedings
In Canada, in July and August 2017,
AstraZeneca was served with three putative
class action lawsuits. Two of the lawsuits have
been dismissed, one in 2019 and one in 2021.
The third lawsuit, filed in Saskatchewan, seeks
authorisation to represent individual residents
in Canada who allegedly suffered kidney
injuries from the use of proton pump inhibitors,
including
Nexium
and
Losec
.
Commercial litigation
Amplimmune
In the US, in June 2017, AstraZeneca was
served with a lawsuit filed by the stockholders’
agents for Amplimmune, Inc. (Amplimmune) in
Delaware State Court that alleged, among other
things, breaches of contractual obligations
relating to a 2013 merger agreement between
AstraZeneca and Amplimmune. A trial of
the matter was held in February 2020 and
post-trial oral argument was heard in August
2020. In November 2020, the Delaware Court
of Chancery decided in AstraZeneca’s favour
and subsequently entered a Final Judgment as
to all pending claims in favour of AstraZeneca.
In December 2020, the plaintiffs filed an
appeal to the Delaware Supreme Court. In
October 2021, the Delaware Supreme Court
affirmed the Delaware Court of Chancery’s
decision. This matter is now concluded.
Notes to the Group Financial Statements
continued
30 Commitments and contingent liabilities
continued
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Array BioPharma
In December 2017, AstraZeneca was served
with a complaint filed in New York State court
by Array BioPharma, Inc. (Array) alleging
breaches of contractual obligations relating
to a 2003 collaboration agreement between
AstraZeneca and Array. In June 2020, an
appeal court denied AstraZeneca’s motion
for an early dismissal of the case, allowing
the case to continue towards trial. No trial
date has been set.
Ocimum lawsuit
In the US, in December 2017, AstraZeneca
was served with a complaint filed by Ocimum
Biosciences, Ltd. (Ocimum) in the Superior
Court for the State of Delaware that alleged,
among other things, breaches of contractual
obligations and misappropriation of trade
secrets, relating to a now terminated 2001
licensing agreement between AstraZeneca
and Gene Logic, Inc. (Gene Logic), the rights
to which Ocimum purports to have acquired
from Gene Logic. In February 2021, the
Delaware Supreme court affirmed the grant of
AstraZeneca’s motion for summary judgment.
This matter is now concluded.
Seroquel XR
(Antitrust Litigation)
In the US in 2019, AstraZeneca was named in
several related complaints brought in the US
District Court for the Southern District of New
York (the Court), including several putative
class action lawsuits that were purportedly
brought on behalf of classes of direct
purchasers or end payors of
Seroquel XR
,
that allege AstraZeneca and generic drug
manufacturers violated antitrust laws when
settling patent litigation related to
Seroquel X
R.
In August 2020, the Court granted AstraZeneca’s
motions to transfer all such lawsuits to the US
District Court for the District of Delaware.
AstraZeneca has filed motions to dismiss the
complaints, which remain pending.
Anti-Terrorism Act Civil Lawsuit
In the US, in October 2017, AstraZeneca and
certain other pharmaceutical and/or medical
device companies were named as defendants
in a complaint filed in federal court in the
District of Columbia (the District Court) by US
nationals (or their estates, survivors, or heirs)
who were killed or wounded in Iraq between
2005 and 2013. The plaintiffs allege that the
defendants violated the US Anti-Terrorism
Act and various state laws by selling
pharmaceuticals and medical supplies to
the Iraqi Ministry of Health. In July 2020, the
District Court granted AstraZeneca’s and the
other defendants’ motion and dismissed the
lawsuit, and the plaintiffs appealed to the DC
Circuit Court of Appeals (the Appellate Court).
In January 2022, a panel of the Appellate
Court reversed the dismissal and remanded
the case back to the District Court. AstraZeneca
and the other defendants have filed petitions
requesting en banc review by the entire
Appellate Court.
AZD1222 Securities litigation
In January 2021, putative securities class
action lawsuits were filed in the US District
Court for the Southern District of New York
against AstraZeneca PLC and certain officers,
on behalf of purchasers of AstraZeneca
publicly traded securities during the period
21 May 2020 through 20 November 2020.
The Court appointed co-lead plaintiffs in April
2021 and they filed an Amended Complaint
in July 2021 on behalf of purchasers of
AstraZeneca publicly traded securities during
the period 15 June 2020 through 29 January
2021. The Amended Complaint alleges that
defendants made materially false and
misleading statements in connection with
the development of AZD1222, AstraZeneca’s
vaccine for the prevention of COVID-19.
In September 2021, AstraZeneca moved
to dismiss the Amended Complaint.
Definiens
In Germany, in July 2020, AstraZeneca received
a notice of arbitration filed with the German
Institution of Arbitration from the sellers of
Definiens AG (the Sellers) regarding the 2014
Share Purchase Agreement (SPA) between
AstraZeneca and the Sellers. The Sellers
claim they are owed approximately $140m
in earn-outs under the SPA. AstraZeneca
disputes the claims of the Sellers. An oral
hearing is scheduled for July 2022.
Alexion shareholder litigation
In March 2021, several shareholders of
Alexion Pharmaceuticals, Inc. (Alexion) filed
individual lawsuits against Alexion, its
management, and/or AstraZeneca and
affiliates in federal district court in New York.
The complaints generally alleged that the
preliminary registration statement filed with
the SEC on 19 February 2021, omitted certain
allegedly material information in connection
with AstraZeneca’s proposed acquisition of
Alexion (the Acquisition), and one of the
complaints further alleged that the Alexion
directors breached their fiduciary duties in
connection with the Acquisition and that
AstraZeneca and the other entity defendants
aided and abetted the alleged breaches. In
May 2021, all such complaints were withdrawn
and dismissed. This matter is now concluded.
PARP inhibitor royalty dispute
In October 2012, Tesaro, Inc. (now wholly
owned by GlaxoSmithKline plc, ‘GSK’)
entered into two worldwide, royalty-bearing
patent license agreements with AstraZeneca
related to GSK’s product niraparib. In May
2021, AstraZeneca filed a lawsuit against
Tesaro in the Commercial Court of England
and Wales alleging that GSK has failed to pay
all of the royalties due on niraparib sales
under our license agreements. While a case
schedule has not yet been set, trial is
anticipated in H2 2022.
Portola shareholder litigation
In connection with Alexion’s July 2020
acquisition of Portola Pharmaceuticals, Inc.
(Portola), Alexion assumed litigation to which
Portola is a party. In January 2020, putative
securities class action lawsuits were filed in
the US District Court for the Northern District
of California against Portola and certain
officers and directors, on behalf of purchasers
of Portola publicly traded securities during the
period 8 January 2019 through 26 February 2020.
The third amended complaint alleges that
defendants made materially false and/or
misleading statements or omissions about
the demand for
Andexxa
, usage of Andexxa
by hospitals and healthcare organisations,
and about Portola’s accounting for its return
reserves. In August 2021, the court denied in
part defendants’ motion to dismiss the case.
A trial date has been set for December 2022.
Shareholder litigation – Alexion (US)
In December 2016, putative securities class
action lawsuits were filed in the US District
Court for the District of Connecticut (the
District Court) against Alexion and certain
officers and directors, on behalf of purchasers
of Alexion publicly traded securities during the
period 30 January 2014 through 26 May 2017.
The amended complaint alleges that
defendants engaged in securities fraud,
including by making misrepresentations and
omissions in its public disclosures concerning
Alexion’s
Soliris
sales practices, management
changes, and related investigations. In August
2021, the District Court issued a decision
denying in part Defendants’ motion to dismiss
the matter.
Syntimmune
In connection with Alexion’s prior acquisition
of Syntimmune, Inc. (Syntimmune), a
clinical-stage biotechnology company
developing an antibody therapy targeting
the FcRn, in the US, in December 2020,
Alexion was served with a lawsuit filed by the
stockholders’ representative for Syntimmune
in Delaware State Court that alleged,
among other things, breaches of contractual
obligations relating to the 2018 merger
agreement. The stockholders’ representative
alleges that Alexion failed to meet its
obligations under the merger agreement
to use commercially reasonable efforts to
achieve the milestones, and the plaintiff has
requested payment of all milestone obligations.
Alexion also filed a claim for breach of the
representations in the 2018 merger agreement
regarding unusable drug product and
drug substance that Alexion acquired from
Syntimmune. Trial in the matter is scheduled
for November 2022.
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Government investigations/proceedings
Toprol-XL
Louisiana Attorney General litigation
In July 2020, the Louisiana First Circuit Court
of Appeals (the Appellate Court) reversed
and remanded a Louisiana state trial court
(the Trial Court) ruling that had granted
AstraZeneca’s motion for summary judgment
and dismissed a state court complaint,
brought by the Attorney General for the State of
Louisiana (the State), alleging that AstraZeneca
engaged in unlawful monopolisation and
unfair trade practices in connection with the
enforcement of its
Toprol-XL
patents. In
August 2020, AstraZeneca petitioned the
Louisiana Supreme Court (the Supreme Court)
to review the decision of the Appellate Court
and reinstate the Trial Court’s summary
judgment ruling. In April 2021, the Supreme
Court granted a motion to dismiss all of the
State’s claims with prejudice and vacate the
decisions of the Trial Court and Appellate
Court. This matter is now closed.
Vermont US Attorney Investigation
In April 2020, AstraZeneca received a Civil
Investigative Demand from the US Attorney’s
Office in Vermont and the Department of
Justice, Civil Division, seeking documents
and information relating to AstraZeneca’s
relationships with electronic health-record
vendors. AstraZeneca is co-operating with
this enquiry.
US 340B Litigations and Proceedings
AstraZeneca is involved in several matters
relating to its contract pharmacy recognition
policy under the 340B Drug Pricing Program
in the US. In 2020, three lawsuits were filed by
covered entities and advocacy groups against
the US Department of Health and Human
Services, the US Health Resources and
Services Administration as well as other
US government agencies and their officials.
The complaints allege, among other things,
that these agencies should enforce an
interpretation of the governing statute for
the 340B Drug Pricing Program that would
require drug manufacturers participating in
the program to offer their drugs for purchase
at statutorily capped rates to an unlimited
number of contract pharmacies. AstraZeneca
has sought to intervene in the lawsuits. Two of
the three cases are currently stayed pending
further proceedings and the third case has
been dismissed. Administrative Dispute
Resolution proceedings have also been
initiated against AstraZeneca before the US
Health Resources and Services Administration.
In February 2021, AstraZeneca received a
Civil Investigative Subpoena from the Attorney
General’s Office for the State of Vermont
seeking documents and information relating to
AstraZeneca’s contract pharmacy recognition
policy under the 340B Drug Pricing Program.
AstraZeneca has cooperated with the inquiry.
In January 2021, AstraZeneca filed a separate
lawsuit in federal court in Delaware alleging
that an Advisory Opinion issued by the
Department of Health and Human Services
violates the Administrative Procedure Act.
In June 2021, the Court found in favour of
AstraZeneca, invalidating the Advisory Opinion.
Prior to the Court’s ruling, however, in May
2021, the US government issued new and
separate letters to AstraZeneca (and other
companies) asserting that our contract
pharmacy policy violates the 340B statute.
In July 2021, AstraZeneca amended the
complaint to include allegations challenging
the letter sent in May. In September 2021, the
US government issued a follow-up letter to
AstraZeneca (and other companies) asserting
that it has referred the matter to the Office
of Inspector General for further review
and consideration. In October 2021, oral
arguments were held before the federal
court in Delaware challenging the letters sent
in May and September.
In September 2021, AstraZeneca was served
with a class-action antitrust complaint filed in
federal court in New York by Mosaic Health
on behalf of a purported class. The complaint
alleges that AstraZeneca conspired with
Sanofi-Aventis U.S., LLC, Eli Lilly and
Company, Lilly USA, LLC, and Novo Nordisk
Inc. to restrict access to 340B discounts in the
diabetes market through contract pharmacies.
US Congressional
In January 2019, AstraZeneca received a
letter from the US House of Representatives
Committee on Oversight and Reform
(Committee) seeking information related to
pricing practices for
Crestor
. Similar letters
were sent to 11 other pharmaceutical
manufacturers. AstraZeneca cooperated with
the inquiry and produced certain responsive
information. In December 2021, the
Committee issued a final report culminating
the Committee’s pharmaceutical pricing
investigation. AstraZeneca’s products are not
the subject of the findings in the final report.
European Commission claim
regardingAZD1222
In April 2021 and May 2021, the European
Commission (acting on behalf of the European
Union and its member states) initiated two
separate legal proceedings against
AstraZeneca AB in the Court of First Instance
in Brussels. Both proceedings related to an
Advance Purchase Agreement between the
parties dated 27 August 2020 (the APA) for the
supply of AZD1222. The allegations include
claims that AstraZeneca has failed to meet
certain of its obligations under the APA and
the European Commission was seeking,
among other things, a Court order to compel
AstraZeneca to supply a specified number of
doses before the end of the second quarter
of 2021. In June 2021, the Court issued a
decision in the first proceeding finding that
AstraZeneca did not meet its Best
Reasonable Efforts obligation in the APA
because AstraZeneca did not use all of the
manufacturers listed in the APA to supply
the member states. The Court ordered
AstraZeneca to provide an additional 50
million doses of vaccine by the end of
September 2021, which AstraZeneca
exceeded by the end of June 2021. The Court
denied the remainder of the Commission’s
claims and requested relief.
In September 2021, the parties reached an
agreement to resolve the dispute. This matter
is now concluded.
COVID-19 Vaccine Supply and Manufacturing
Inquiries
In June 2021, Argentina’s Federal Criminal
Prosecutor’s Office (the Prosecutor) contacted
AstraZeneca Argentina seeking documents
and electronic records in connection with a
local criminal investigation relating to the
public procurement and supply of
Vaxzevria
in
that country. In October 2021, the Prosecutor
filed a submission with the presiding court
requesting dismissal of the criminal
investigation. The request remains pending.
Tagrisso
In India, in June 2021, the National
Pharmaceutical Pricing Authority (NPPA)
issued a demand notice (Demand Notice) to
AstraZeneca Pharma India Limited (AZPIL),
regarding the pricing of
Tagrisso
. The NPPA
has alleged that AZPIL has overcharged
Tagrisso
, claiming approximately $21m plus
interest. AZPIL has challenged the Demand
Notice in the Delhi High Court.
Turkish Ministry of Health matter
In Turkey, in July 2020, the Turkish Ministry
of Health initiated an investigation regarding
payments to healthcare providers by Alexion
Turkey and former employees and consultants.
The investigation arose from Alexion’s
disclosure of a civil settlement with the US
Securities & Exchange Commission (SEC)
in July 2020 fully resolving the SEC’s
investigation into possible violations of the
FCPA. Alexion neither admitted nor denied
any wrongdoing in connection with the
settlement but paid $21.5 million to the
SEC, consisting of amounts attributable to
disgorgement, civil penalties, and pre-
judgment interest. AstraZeneca is cooperating
with the investigation by the Turkish agency.
In September 2021, the Ministry of Health
completed its draft investigation report,
and referred the matter to the Ankara Public
Prosecutor’s Office with a recommendation
for further proceedings against certain
former employees.
Notes to the Group Financial Statements
continued
30 Commitments and contingent liabilities
continued
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Financial Statements
Canadian pricing matter
In October 2017, Alexion filed proceedings in
the Federal Court of Canada to seek judicial
review of a determination by the Canadian
Patented Medicine Prices Review Board
(PMPRB) that Alexion had excessively priced
Soliris
in a manner inconsistent with the
Canadian pricing rules and guidelines. In its
decision, the PMPRB ordered Alexion to
decrease the price of
Soliris
to an upper limit based upon pricing in certain other countries
and to forfeit excess revenues for the period
between 2009 and 2017. In May 2019, the
Federal Court dismissed Alexion’s application.
Alexion appealed the decision to the Canadian
Federal Court of Appeal. On 29 July 2021, the
Federal Court of Appeal of Canada issued its
judgment allowing the appeal, reversing the
PMPRB’s decision and remitting the matter to
the PMPRB for re-determination with costs to
AstraZeneca. In September 2021, the Attorney
General of Canada sought leave to appeal the
decision to the Supreme Court of Canada.
Pursuant to an order made by the Federal Court
of Canada, as of August 2021, AstraZeneca
has placed approximately $71.4m in escrow
pending the final resolution of all appeals in this
matter.
Brazilian operations investigation
In May 2017, Brazilian authorities seized
records and data from Alexion’s São Paulo,
Brazil offices as part of an investigation being
conducted into Alexion’s Brazilian operations.
AstraZeneca are cooperating with this inquiry.
Brazilian tax assessment matter
In connection with an ongoing matter, in
August 2019, the Brazilian Federal Revenue
Service provided a Notice of Tax and
Description of the Facts (the Tax Assessment)
to two Alexion subsidiaries (the Brazil
Subsidiaries), as well as to two additional
entities, a logistics provider utilized by
Alexion and a distributor. The Tax Assessment
focuses on the importation of
Soliris
vials
pursuant to Alexion’s free drug supply to
patients program (referred to as Global
Access to Medicines, or GATM) in Brazil. In
September 2019, the Brazil Subsidiaries filed
defences to the Tax Assessment disputing the
basis for liability under the Tax Assessment,
based on, among others, the following: in
connection with the operation of GATM,
during the period from September 2014 to
June 2019: (i) the importers responsible for
the importation of the GATM
Soliris
vials into
Brazil were correctly identified and (ii) the
correct customs value was utilised for the
purpose of importing the GATM
Soliris
vials provided to the patients free of
charge. Alexion prevailed in the first level of
administrative appeals in the Brazilian federal
administrative proceeding system based on
a deficiency in the Brazil Tax Assessment.
The decision was subject to an automatic
(ex officio) appeal to the second level of the
administrative courts, which is pending.
There are three separate levels of
administrative appeals within the Brazilian
federal administrative proceeding system and,
if the outcome of these administrative appeals
is unfavourable, the final decision of the
federal administrative proceeding system can
be disputed to the federal court systems in
Brazil (at this time, AstraZeneca intends to
appeal the Tax Assessment if it is not
overturned in the course of administrative
appeals). Given the early stage of these
proceedings, AstraZeneca is unable to predict
the duration, scope or outcome of this matter,
but we expect that a final resolution will take
three years or more. While it is possible that
a loss related to the Tax Assessment may be
incurred, given its ongoing nature, we cannot
reasonably estimate the potential magnitude
of any such possible loss or range of loss, or
the cost of the ongoing administrative appeals
(and potential appeals to the federal court
system) of the Tax Assessment. Any
determination that any aspects of the
importation of free of charge medications into
Brazil as set forth in the Tax Assessment are
not, or were not, in compliance with existing
laws or regulations could result in the imposition
of fines, civil penalties and, potentially criminal
penalties, and/or other sanctions against the
Group, and could have an adverse impact on
the Group’s Brazilian operations.
Additional government inquiries
As is true for most, if not all, major
prescription pharmaceutical companies,
AstraZeneca is currently involved in multiple
inquiries into drug marketing and pricing
practices. In addition to the investigations
described above, various law enforcement
offices have, from time to time, requested
information from the Group. There have been
no material developments in those matters.
Tax
SE
AstraZeneca considers whether it is
probable that a taxation authority will accept
an uncertain tax treatment. If it is concluded
that it is not probable that the taxation authority
will accept an uncertain tax treatment, where
tax exposures can be quantified, an accrual is
made based on either the most likely amount
method or the expected value method
depending on which method management
expects to better predict the resolution of the
uncertainty. Accruals can be built up over a
long period of time, but the ultimate resolution
of tax exposures usually occurs at a point in
time, and given the inherent uncertainties in
assessing the outcomes of these exposures
(which sometimes can be binary in nature),
we could, in future periods, experience
adjustments to these accruals that have a
material positive or negative effect on our
results in any particular period. Details of
the movements in relation to material tax
exposures are discussed below.
KJ
AstraZeneca faces a number of audits
and reviews in jurisdictions around the world
and, in some cases, is in dispute with the tax
authorities. The issues under discussion are
often complex and can require many years
to resolve. Accruals for tax contingencies
require management to make key judgements
with respect to the ultimate outcome of
current and potential future tax audits, and
actual results could vary from these estimates.
Transfer pricing and other international
taxcontingencies
The total net accrual included in the Group
Financial Statements to cover the worldwide
exposure to transfer pricing audits is
$77m (2020: $287m; 2019: $140m), a decrease
of $210m compared with 2020 mainly as
a result of reduction of tax liabilities arising
from updates to estimates of prior period
tax liabilities following settlements with tax
authorities. These positions can be complex
and judgemental. Therefore in determining
the accrual, management has assessed their
expectation of the ultimate resolution of the
uncertainty, including settlement or litigation.
Management continues to believe that
AstraZeneca’s positions on all its transfer
pricing and other international tax audits and
disputes are robust, and that AstraZeneca
is appropriately provided, including
consideration of whether corresponding
relief will be available under Mutual
Agreement procedures or unilaterally.
HMRC communicated to the Group that they
do not consider that the Group is a beneficiary
of state aid following the European
Commission’s (EC) decision on the state aid
review of UK Controlled Foreign Company
Group Financing Exemption therefore this
matter is now closed.
For transfer pricing and other international
tax matters where AstraZeneca and the
tax authorities are in dispute, AstraZeneca
estimates the potential for additional liabilities
above the amount provided where the
possibility of the additional liabilities falling
due is more than remote, to be up to $48m
(2020: $251m; 2019: $76m) including
associated interest. Management believes
that it is unlikely that these additional liabilities
will arise. It is possible that some of these
contingencies may change in the future
to reflect progress in tax authority reviews,
to the extent that any tax authority challenge
is concluded, or matters lapse including
following expiry of the relevant statutes of
limitation resulting in a reduction in the tax
charge in future periods.
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Other tax contingencies
Included in the tax accrual is $691m (2020: $727m; 2019: $887m) relating to a number of other tax contingencies, a decrease of $36m mainly due
to releases of tax contingencies following the expiry of the relevant statute of limitations and on the conclusion of tax authority review and exchange
rate effects, partially offset by the inclusion of provisions for tax contingencies relating to Alexion. The majority of the accrual relates to tax
contingencies which are estimated using the expected value method and depend on AstraZeneca’s assessment of the likelihood of the approach
taken by the tax authorities and could change in the future to reflect progress in tax authority reviews, the extent that any tax authority challenge is
concluded, or matters lapse including following expiry of the relevant statutes of limitation resulting in a reduction in the tax charge in future periods.
For these other tax contingencies, AstraZeneca estimates the potential for additional liabilities above the amount provided where the possibility
of the additional liabilities falling due is more than remote, to be up to $598m (2020: $517m; 2019: $327m) including associated interest. It is
possible that some of these contingencies may reduce in the future if any tax authority challenge is concluded or matters lapse following
expiry of the relevant statutes of limitation, resulting in a reduction in the tax charge in future periods.
Timing of cash flows and interest
It is not possible to estimate the timing of tax cash flows in relation to each outcome. It is anticipated that tax payments may be required in relation
to a number of significant disputes which may be resolved over the next one to two years. AstraZeneca considers the accruals set out above
to appropriately reflect the expected value of any final settlement. Some of the items discussed above are not currently within the scope of tax
authority audits and may take longer to resolve.
Included within other receivables and payables is a net amount of interest arising on tax contingencies of $85m (2020: $82m; 2019: $90m).
31 Statutory and other information
2021
2020
2019
$m
$m $m
Fees payable to PricewaterhouseCoopers LLP and its associates:
Group audit fee
10.5
6.3
3.9
Fees payable to PricewaterhouseCoopers LLP and its associates for other services:
The audit of subsidiaries pursuant to legislation
15.2
10.8
8.3
Attestation under s404 of Sarbanes-Oxley Act 2002
2.0
2.0 2.0
Audit-related assurance services
4.5
0.7
0.3
Other assurance services
3.4
0.2
0.1
Fees payable to PricewaterhouseCoopers Associates in respect of the Group’s pension schemes:
The audit of subsidiaries’ pension schemes
0.3
0.3 0.3
35.9
20.3
14.9
$0.4m of fees payable in 2021 are in respect of the Group audit and audit of subsidiaries related to prior years (2020: $0.8m in respect of the
2019 Group audit and audit of subsidiaries).
$0.3m of audit fees and $0.7m of Audit-related and Other assurance services relate to pre-acquisition fees incurred by Alexion.
Included in Audit-related and Other assurance services are $6.1m of services provided in relation to the acquisition of Alexion and related
debt issuance.
Related party transactions
The Group had no material related party transactions which might reasonably be expected to influence decisions made by the users of these
Financial Statements.
Key management personnel compensation
Key management personnel are defined for the purpose of disclosure under IAS 24 ‘Related Party Disclosures’ as the members of the Board
and the members of the SET.
2021
2020
2019
$’000
$’000 $’000
Short-term employee benefits
32,985
29,126
31,329
Post-employment benefits
1,378
1,602 1,766
Share-based payments
45,234
27,666
19,210
79,597
58,394
52,305
Total remuneration is included within employee costs (see Note 29).
32 Subsequent events
On 4 January 2022, AstraZeneca completed the sale of the global rights to
Tudorza
and Duaklir
to Covis Pharma GmbH for an upfront payment of $270m, which will be recorded within Other operating income and expense. The intangible assets of $368m associated with this transaction
were classified as Assets held for sale as at 31 December 2021 (Note 18).
Notes to the Group Financial Statements
continued
30 Commitments and contingent liabilities
continued
196
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Group Subsidiaries and Holdings
Wholly owned subsidiaries
Algeria
AAPM Sarl
100
%
20 Zone Macro-Economique, Hydra,
DarElMedina, Algiers, Algeria
Argentina
AstraZeneca S.A.
100
%
Nicolas de Vedia 3616, Piso 8, Ciudad
Autónoma de Buenos Aires, Argentina
Alexion Pharma Argentina SRL
100
%
Avenida Leandro N. Alem 592 Piso 6,
Buenos Aires, Argentina
Australia
AstraZeneca Holdings Pty Limited
100
%
AstraZeneca PTY Limited
100
%
66 Talavera Road, Macquarie Park,
NSW2113, Australia
Alexion Pharmaceuticals Australasia Pty Ltd
100
%
Building A Suite 401 Level 4,
20Rodborough Road, Frenchs Forest,
NSW2086, Australia
Austria
AstraZeneca Österreich GmbH
100
%
Landstraßer Hauptstraße 1A, A-1030 Wien,
Österreich
Alexion Pharma Austria GmbH
100
%
Donau-City-Straße 7, 30. Stock, DC Tower,
Vienna 1220, Austria
Belgium
AstraZeneca S.A. / N.V.
100
%
Alfons Gossetlaan 40 bus 201 at 1702
Groot-Bijgaarden, Belgium
Alexion Pharma Belgium Sprl
100
%
Alexion Services Europe Srl
100
%
de Meeûssquare 37 Bruxelles 1000 Belgium
Bermuda
Alexion Bermuda Holding ULC
100
%
Alexion Bermuda Limited
100
%
Canon’s Court, 22 Victoria St., Hamilton,
Bermuda
Brazil
AstraZeneca do Brasil Limitada
100
%
Rod. Raposo Tavares, KM 26, 9, Cotia, Brazil
Alexion Farmacêutica América Latina
Serviços de Administração de Vendas Ltda.
100
%
Alexion Farmacêutica Brasil Importação
eDistribuição de Produtos e Serviços de
Administração de Vendas Ltda
100
%
Avenida Dr. Chucri Zaidan, 1240,
15thfloor,Morumbi Corporate Golden
Tower, São Paulo, SP, 04711-130, Brazil
Bulgaria
AstraZeneca Bulgaria EOOD
100
%
36 Dragan Tzankov Blvd., District Izgrev,
Sofia, 1057, Bulgaria
Canada
AstraZeneca Canada Inc.
1
100
%
Suite 5000, 1004 Middlegate Road, Ontario,
L4Y 1M4, Canada
Alexion Pharma Canada Corporation
100
%
1300-1969 ST, Upper Water, Halifax,
NSB3J3R7, Canada
Cayman Islands
AZ Reinsurance Limited
100
%
18 Forum Lane, 2nd Floor, Camana Bay,
Grand Cayman, P.O. BOX 69, Cayman Islands
Chile
AstraZeneca S.A.
100
%
AstraZeneca Farmaceutica Chile Limitada
100
%
Av. Isidora Goyenechea 3477, 2nd Floor,
LasCondes, Santiago, Chile
China
AstraZeneca Pharmaceuticals Co., Limited
100
%
No. 2, Huangshan Road, Wuxi,
JiangsuProvince, China
AstraZeneca (Wuxi) Trading Co. Ltd
100
%
Building E, Huirong Plaza, Jinghui Road
East, Xinwu District, Wuxi, Jiangsu Province,
China
AstraZeneca Investment (China) Co., Ltd
100
%
199 Liangjing Road, China (Shanghai) Pilot
Free Trade Zone, Shanghai, China
AstraZeneca Pharmaceutical (China) Co. Ltd
100
%
No. 9 Medical Avenue, Jiangsu Province,
Taizhou, China
AstraZeneca Pharmaceutical (Beijing)
Co.,Ltd
100
%
1F, Building No.4, No.8 Courtyard,
No.1Kegu Street, Beijing Economic-
Technological Development Area,
Beijing100176, China
In accordance with section 409 of the
Companies Act 2006 a full list of subsidiaries,
partnerships, associates, joint ventures and
joint arrangements, the country of incorporation,
registered office address, and the effective
percentage of equity owned as at 31 December
2021 are disclosed below. Unless otherwise
stated the share capital disclosed comprises
ordinary shares which are indirectly held by
AstraZeneca PLC.
Unless otherwise stated the accounting year
ends of subsidiaries are 31 December. The
Group Financial Statements consolidate the
Financial Statements of the Company and its
subsidiaries at 31 December 2021.
AstraZeneca (Guangzhou) Pharmaceutical
Consulting Co., Ltd.
100
%
Room 406-178, No. 1, Yichuang Street,
(China-Singapore Guangzhou Knowledge
City) Huangpu District, Guangzhou City,
China
AstraZeneca Investment Consulting
(Wuxi)Co., Ltd
100
%
Room 808, 8F, Building 99-2 Linghu Avenue,
Xinwu District, Wuxi, Jiangsu, China
AstraZeneca Pharmaceutical
(Hangzhou)Co., Ltd
100
%
12F & 14F, Building 1, Shuli Plaza, 758 Fei
Jia Tang Road, Gongshu District, Hangzhou,
Zhejiang Province, China
AstraZeneca Global R&D (China) Co., Ltd
100
%
16F, 88 Xizang North Road, Jing’an District,
Shanghai, China
AstraZeneca Pharmaceutical (Chengdu)
Co., Ltd.
100
%
10th Floor, Building 11 (Building E11),
No.366, Hemin Street, Chengdu High-tech
Zone, China (Sichuan) Pilot Free Trade Zone
AstraZeneca Pharmaceutical
(Shanghai)Co., Ltd
100
%
B1F, 8F & 9F, 88 Xizang North Road,
Jing’an District, Shanghai, China
Alexion Pharmaceuticals (Shanghai)
Company Limited
100
%
Room 702, Level, No. 1539 West Nanjing
Road, Jing’an District, Shangai, China
Colombia
AstraZeneca Colombia S.A.S.
100
%
Carrera 7 No. 71-21, Torre A, Piso 19,
Bogota, D.C., Colombia
Alexion Pharma Colombia S.A.S.
100
%
Carrera 9 No. 115 – 06 /30 Edificio Tierra
Firme Oficina 2904 Bogota D.C., Colombia
Costa Rica
AstraZeneca CAMCAR Costa Rica, S.A.
100
%
Escazu, Guachipelin, Centro Corporativo
Plaza Roble, Edificio Los Balcones,
Segundo Nivel, San Jose, Costa Rica
Croatia
AstraZeneca d.o.o.
100
%
Radnicka cesta 80, 10000 Zagreb, Croatia
Czech Republic
AstraZeneca Czech Republic, s.r.o.
100
%
U Trezorky 921/2, 158 00 Prague 5,
CzechRepublic
Alexion Pharma Czech s.r.o.
100
%
Novodvorská 994/138, Braník, 142 00
Prague, Czech Republic
Additional InformationStrategic Report Corporate Governance
Financial Statements
At 31December 2021
Group Interest
At 31December 2021
Group Interest
At 31December 2021
Group Interest
197
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Group Subsidiaries and Holdings
Denmark
AstraZeneca A/S
100
%
World Trade Center Ballerup, Borupvang 3,
DK- 2750 Ballerup, Denmark
Egypt
AstraZeneca Egypt for Pharmaceutical
Industries SAE
100
%
6th of October City, 6th Industrial Zone,
Plot2, Giza, Egypt
AstraZeneca Egypt LLC
100
%
47 St. 270 New Maadi, Maddi, Cairo, Egypt
Drimex LLC
100
%
Plot 133, Banks’ District, 5th Settlement,
New Cairo, Cairo, Egypt
Estonia
AstraZeneca Eesti OÜ
100
%
Valukoja 8, Ülemiste City, Tallinn 11415,
Estonia
Finland
AstraZeneca OY.
100
%
Itsehallintokuja 4, Espoo, 02600, Finland
France
AstraZeneca S.A.S.
100
%
Tour Carpe Diem-31, Place des Corolles,
92400 Courbevoie, France
AstraZeneca Dunkerque Production SCS
100
%
224 Avenue de la Dordogne,
59640Dunkerque, France
AstraZeneca Reims Production
100
%
Chemin de Vrilly Parc, Industriel de la
Pompelle, 51100, Reims, France
Alexion Europe S.A.S.
100
%
Alexion Pharma France S.A.S.
100
%
103-105 Rue Anatole France 92300
Levallois-Perret
Germany
AstraZeneca Holding GmbH
100
%
AstraZeneca GmbH
100
%
Tinsdaler Weg 183, Wedel, D-22880, Germany
Sofotec GmbH
100
%
Benzstrasse 1-3, 61352, Bad Homburg v.d.
Hohe, Germany
AstraZeneca Computational
PathologyGmbH
2
100
%
Bernhard-Wicki-Straße 5, 80636, Munich,
Germany
Portola FRG GmbH
100
%
Fraunhoferstraße 12Planegg 82152Germany
Alexion Pharma Germany GmbH
100
%
Landsberger Straße 300, 80687 Munich,
Germany
Greece
AstraZeneca S.A.
100
%
Agisilaou 6-8 str., Marousi-Athens, 15123,
Greece
Hong Kong
AstraZeneca Hong Kong Limited
100
%
Unit 1 – 3, 11/F., 18 King Wah Road,
NorthPoint, Hong Kong
Hungary
AstraZeneca Kft
100
%
1st floor, 4 building B, Alíz str., Budapest,
1117, Hungary
India
AstraZeneca India Private Limited
3
100
%
Block A, Neville Tower, 11th Floor,
Ramanujan IT SEZ, Taramani, Chennai,
Tamil Nadu, PIN 600113, India
Alexion Business Services Private Limited
100
%
9th Floor, Platina, G BlockPlot No. C-59,
Bandra-Kurla Complex Bandra (East),
Mumbai 400051 India
Iran
AstraZeneca Pars Company
100
%
Suite 1, 1st Floor No. 39, Alvand Ave.,
Argantin Sq., Tehran 1516673114, Iran
Ireland
AstraZeneca Pharmaceuticals (Ireland)
Designated Activity Company
100
%
4th Floor, South Bank House, Barrow Street,
Dublin, 4, Republic of Ireland
Alexion Pharma Holding UC
100
%
Alexion Pharma International Operations UC
100
%
Alexion Pharma Development UC
100
%
College Business & Technology Park,
Blanchardstown Road, North Dublin 15,
Ireland
Israel
AstraZeneca (Israel) Ltd
100
%
6 Hacharash St., Hod Hasharon, 4524075,
Israel
Alexion Pharma Israel Ltd
100
%
4 Weizmann Str., Tel-Aviv-Jaffa, Israel
Italy
Simesa SpA
100
%
AstraZeneca SpA
100
%
Viale Decumano 39 20157 Milan, Italy
Alexion Pharma Italy Srl
100
%
Via Melchiorre Gioia 8 Milano 20124, Italy
Japan
AstraZeneca K.K.
100
%
Grand Front Osaka Tower B, 3-1, Ofuka-cho,
Kita-ku, Osaka, 530-0011, Japan
Alexion Pharma GK
100
%
Ebisu First Square, 18-14, Ebisu 1-chome,
Shibuya-ku, Tokyo, Japan
Kenya
AstraZeneca Pharmaceuticals Limited
100
%
L.R. No.1/1327, Avenue 5, 1st Floor,
RoseAvenue, Nairobi, Kenya
Latvia
AstraZeneca Latvija SIA
100
%
Skanstes iela 50, Riga, LV-1013, Latvia
Lithuania
AstraZeneca Lietuva UAB
100
%
Spaudos g., Vilnius, LT-05132, Lithuania
Luxembourg
AstraZeneca Luxembourg S.A.
100
%
Rue Nicolas Bové 2A – L-1253 Luxembourg
Malaysia
AstraZeneca Asia-Pacific Business
Services Sdn Bhd
100
%
12th Floor, Menara Symphony, No. 5 Jalan
Prof, Khoo Kay Kim, Seksyen 13, 46200
Petaling Jaya, Selangor Darul Ehsan, Malaysia
AstraZeneca Sdn Bhd
100
%
Nucleus Tower, Level 11 & 12, No. 10 Jalan
PJU 7/6, Mutiara Damansara, 47800 Petaling
Jaya, Selangor Darul Ehsan, Malaysia
Mexico
AstraZeneca Health Care Division,
S.A.deC.V.
100
%
AstraZeneca, S.A. de C.V.
100
%
Av. Periferico Sur 4305 interior 5, Colonia
Jardines en la Montaña, Mexico City,
Tlalpan Distrito Federal, CP 14210, Mexico
Alexion Pharma Mexico S. de R.L. de C.V.
100
%
Paseo de los Tamarindos 90 Torre 1piso 6
– ACol. Bosques de la Lomas CP 05120
D.FMexico
Morocco
AstraZeneca Maroc SARLAU
100
%
92 Boulevard Anfa ETG 2, Casablanca 20000,
Morocco
The Netherlands
AstraZeneca B.V.
100
%
AstraZeneca Continent B.V.
100
%
AstraZeneca Gamma B.V.
100
%
AstraZeneca Holdings B.V.
100
%
AstraZeneca Jota B.V.
100
%
AstraZeneca Rho B.V.
100
%
AstraZeneca Sigma B.V.
100
%
AstraZeneca Treasury B.V.
100
%
AstraZeneca Zeta B.V.
100
%
Alexion Holding B.V.
100
%
Alexion Pharma Foreign Holdings, B.V.
100
%
Prinses Beatrixlaan 582, 2595BM,
TheHague, The Netherlands
AstraZeneca Nijmegen B.V.
100
%
Lagelandseweg 78, 6545 CG Nijmegen,
TheNetherlands
Acerta Pharma B.V.
100
%
Aspire Therapeutics B.V.
100
%
Kloosterstraat 9, 5349 AB, Oss,
TheNetherlands
Financial Statements
At 31December 2021
Group Interest
At 31December 2021
Group Interest
At 31December 2021
Group Interest
Group Subsidiaries and Holdings
continued
198
AstraZeneca Annual Report & Form 20-F Information 2021
Portola Netherlands B.V.
100
%
Prins Bernhardplein 200 JB Amsterdam
1097, The Netherlands
Alexion Pharma Netherlands B.V.
100
%
Herengracht 282 Amsterdam 1016 BX,
The Netherlands
New Zealand
AstraZeneca Limited
100
%
Pharmacy Retailing (NZ) Limited
t/aHealthcare Logistics, 58 Richard Pearse
Drive, Mangere, Auckland, 1142,
NewZealand
Nigeria
AstraZeneca Nigeria Limited
100
%
11A, Alfred Olaiya Street, Awuse Estate,
OffSalvation Street, Opebi, Ikeja, Lagos,
Nigeria
Norway
AstraZeneca AS
100
%
Fredrik Selmers vei 6 NO-0663 Oslo, Norway
Pakistan
AstraZeneca Pharmaceuticals
Pakistan(Private) Limited
4
100
%
Office No. 1, 2nd Floor, Sasi Arcade, Block
7, Main Clifton Road, Karachi, Pakistan
Panama
AstraZeneca CAMCAR, S.A.
100
%
Bodega #1, Parque Logistico MIT,
CarreteraHacia Coco Solo, Colon, Panama
Peru
AstraZeneca Peru S.A.
100
%
Calle Las Orquídeas No. 675, Int. 802,
Edificio Pacific Tower, San Isidro, Lima, Peru
Philippines
AstraZeneca Pharmaceuticals (Phils.) Inc.
100
%
16th Floor, Inoza Tower, 40th Street,
Bonifacio Global City, Taguig 1634, Philippines
Poland
AstraZeneca Pharma Poland Sp.z.o.o.
100
%
Postepu 14, 02-676, Warszawa, Poland
Portugal
Astra Alpha Produtos Farmaceuticos Lda
100
%
AstraZeneca Produtos Farmaceuticos Lda
100
%
Novastra Promoção e Comércio
Farmacêutico Lda
100
%
Novastuart Produtos Farmaceuticos Lda
100
%
Stuart-Produtos Farmacêuticos Lda
100
%
Zeneca Epsilon – Produtos
FarmacêuticosLda
100
%
Zenecapharma Produtos Farmaceuticos,
Unipessoal Lda
100
%
Rua Humberto Madeira, No 7, Queluz de
Baixo, 2730-097, Barcarena, Portugal
Puerto Rico
IPR Pharmaceuticals, Inc.
100
%
Road 188, San Isidro Industrial Park,
Canóvanas, Puerto Rico 00729
Romania
AstraZeneca Pharma S.R.L.
100
%
12 Menuetului Street, Bucharest Business
Park, Building D, West Wing, 1st Floor,
Sector 1, Bucharest, 013713, Romania
Russia
AstraZeneca Industries, LLC
100
%
249006, 1st Vostochniy proyezd, 8,
Dobrinovillage, Borovskiy district,
RussianFederation
AstraZeneca Pharmaceuticals, LLC
100
%
Building 1, 21 First Krasnogvardeyskiy lane,
floor 30, Moscow, Russia
Alexion Pharma OOO LLC
100
%
4th Lesnoy Pereulok, Floor 5, Office 529,
Moscow, 125047, Russian Federation.
Singapore
AstraZeneca Singapore Pte Limited
100
%
10 Kallang Avenue #12-10, Aperia Tower 2,
339510, Singapore
South Africa
AstraZeneca Pharmaceuticals (Pty) Limited
100
%
17 Georgian Crescent West, Northdowns
Office Park, Bryanston, 2191, South Africa
South Korea
AstraZeneca Korea Co. Ltd
100
%
21st Floor, Asem Tower, 517, Yeongdong-
daero, Gangnam-gu, Seoul, 06164,
South Korea
Alexion Pharma Korea LLC
100
%
41 FL., 152 Teheran-ro (Yeoksam-dong
Gangnam Finance Center), Gangnam-gu,
Seoul, South Korea
Spain
AstraZeneca Farmaceutica
HoldingSpain,S.A.
100
%
AstraZeneca Farmaceutica Spain S.A.
100
%
Fundación AstraZeneca
100
%
Laboratorio Beta, S.A.
100
%
Laboratorio Lailan, S.A.
100
%
Laboratorio Tau S.A.
100
%
Parque Norte, Edificio Álamo, C/Serrano
Galvache no 56., 28033 Madrid, Spain
Alexion Pharma Spain S.L.
100
%
Av Diagonal Num. 601 P.1 Barcelona 08028,
Spain
Sweden
Astra Export & Trading Aktiebolag
100
%
Astra Lakemedel Aktiebolag
100
%
AstraZeneca AB
100
%
AstraZeneca Biotech AB
100
%
AstraZeneca BioVentureHub AB
100
%
AstraZeneca Holding Aktiebolag
5
100
%
AstraZeneca International
HoldingsAktiebolag
6
100
%
AstraZeneca Nordic AB
100
%
AstraZeneca Pharmaceuticals Aktiebolag
100
%
AstraZeneca Södertälje 2 AB
100
%
Stuart Pharma Aktiebolag
100
%
Tika Lakemedel Aktiebolag
100
%
SE-151 85 Södertälje, Sweden
Aktiebolaget Hassle
100
%
Symbicom Aktiebolag
6
100
%
431 83 MoIndal, Sweden
Astra Tech International Aktiebolag
100
%
Box 14, 431 21 MoIndal, Sweden
Alexion Pharma Nordics Holding AB
100
%
Alexion Pharma Nordics AB
100
%
TTM Europe Development AB
100
%
Wilson Therapeutics AB
100
%
Wilson Therapeutics Incentive AB
100
%
Kungsgatan 3, 111 43 Stockholm, Sweden
Switzerland
AstraZeneca AG
100
%
Neuhofstrasse 34, 6340 Baar, Switzerland
Spirogen Sarl
6
100
%
Rue du Grand-Chêne 5, CH-1003 Lausanne,
Switzerland
Portola Schweiz GmbH
100
%
c/o Tom Schaffner Schärer Rechtsanwälte
Hintere Bahnhofstrasse 6, 5000 Aarau,
Switzerland
Alexion Pharma GmbH
100
%
Giesshübelstrasse 30, Zürich, 8045,
Switzerland
Taiwan
AstraZeneca Taiwan Limited
100
%
21st Floor, Taipei Metro Building 207,
TunHwa South Road, SEC 2 Taipei, Taiwan
Alexion Pharma Taiwan Ltd
100
%
Room 1153, 11F, No.1, SongZhi Rd Taipei,
11047 Taiwan
Thailand
AstraZeneca (Thailand) Limited
100
%
Asia Centre 19th floor, 173/20, South
Sathorn Rd, Khwaeng Thungmahamek,
Khet Sathorn, Bangkok, 10120, Thailand
Tunisia
AstraZeneca Tunisie SaRL
100
%
Lot No. 1.5.5 les jardins du lac, bloc B les
berges du lac Tunis, Tunisia
Turkey
AstraZeneca Ilac Sanayi ve Ticaret Limited
Sirketi
100
%
YKB Plaza, B Blok, Kat:3-4, Levent/
Besiktas, Istanbul, Turkey
Zeneca Ilac Sanayi Ve Ticaret Anonim
Sirketi
100
%
Büyükdere Cad., Y.K.B. Plaza, B Blok, Kat:4,
Levent/Besiktas, Istanbul, Turkey
Alexion Ilac Ticaret Limited Sirketi
100
%
Içerenköy Mahallesi Umut Sok. AND Ofis
Sit. No. 1012/73 Atasehir Istanbul, Turkey
Ukraine
AstraZeneca Ukraina LLC
100
%
54 Simi Prakhovykh street, Kiev, 01033,
Ukraine
Additional InformationStrategic Report Corporate Governance
Financial Statements
At 31December 2021
Group Interest
At 31December 2021
Group Interest
At 31December 2021
Group Interest
199
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Group Subsidiaries and Holdings
United Arab Emirates
AstraZeneca FZ-LLC
100
%
P.O. Box 505070, Block D, Dubai
HealthcareCity, Oud Mehta Road, Dubai,
United Arab Emirates
Alexion Pharma Middle East FZ-LLC
100
%
Dubai Science Park, 501, Floor 5, EIB
Building No. 2, Dubai, United Arab Emirates
United Kingdom
Ardea Biosciences Limited
100
%
Arrow Therapeutics Limited
100
%
Astra Pharmaceuticals Limited
100
%
AstraPharm
6
100
%
AstraZeneca China UK Limited
100
%
AstraZeneca Death In Service
TrusteeLimited
100
%
AstraZeneca Employee
ShareTrustLimited
100
%
AstraZeneca Finance Limited
100
%
AstraZeneca Intermediate
HoldingsLimited
5
100
%
AstraZeneca Investments Limited
100
%
AstraZeneca Japan Limited
100
%
AstraZeneca Nominees Limited
100
%
AstraZeneca Quest Limited
100
%
AstraZeneca Share Trust Limited
100
%
AstraZeneca Sweden Investments Limited
100
%
AstraZeneca Treasury Limited
6
100
%
AstraZeneca UK Limited
100
%
AstraZeneca US Investments Limited
5
100
%
AZENCO2 Limited
100
%
AZENCO4 Limited
100
%
Cambridge Antibody Technology
GroupLimited
100
%
KuDOS Horsham Limited
100
%
KuDOS Pharmaceuticals Limited
100
%
Zenco (No. 8) Limited
100
%
Zeneca Finance (Netherlands) Company
100
%
1 Francis Crick Avenue, Cambridge
Biomedical Campus, Cambridge, CB2 0AA,
United Kingdom
MedImmune Limited
100
%
Milstein Building, Granta Park, Cambridge,
CB21 6GH, United Kingdom
MedImmune U.K. Limited
100
%
Plot 6, Renaissance Way, Boulevard Industry
Park, Liverpool, L24 9JW, United Kingdom
Syntimmune Limited
100
%
21 Holborn Viaduct, London, EC1A 2DY,
United Kingdom
Alexion Pharma UK Limited
100
%
Portola Pharma UK Limited
100
%
3 Furzeground Way, Stockley Park, Uxbridge,
Middlesex, UB11 1EZ, UnitedKingdom
United States
Amylin Ohio LLC
7
100
%
Amylin Pharmaceuticals, LLC
7
100
%
AstraZeneca Collaboration Ventures, LLC
7
100
%
AstraZeneca Pharmaceuticals LP
8
100
%
Atkemix Nine Inc.
100
%
Atkemix Ten Inc.
100
%
BMS Holdco, Inc.
100
%
Corpus Christi Holdings Inc.
100
%
Omthera Pharmaceuticals, Inc.
100
%
Optein, Inc.
100
%
Stauffer Management Company LLC
7
100
%
Zeneca Holdings Inc.
100
%
Zeneca Inc.
100
%
Zeneca Wilmington Inc.
5
100
%
AstraZeneca Finance LLC
100
%
AstraZeneca Finance and Holdings Inc.
5
100
%
1800 Concord Pike, Wilmington, DE 19803,
United States
ZS Pharma Inc.
100
%
1100 Park Place, Suite 300, San Mateo,
CA94403, United States
AlphaCore Pharma, LLC
7
100
%
333 Parkland Plaza, Suite 5, Ann Arbor,
MI48103, United States
AZ-Mont Insurance Company
100
%
76 St Paul Street, Suite 500, Burlington,
VT05401, United States
Definiens Inc.
100
%
1808 Aston Avenue, Suite 190, Carlsbad,
CA92008, United States
MedImmune, LLC
7
100
%
MedImmune Ventures, Inc.
100
%
One MedImmune Way, Gaithersburg,
MD20878, United States
Pearl Therapeutics, Inc.
100
%
200 Cardinal Way, Redwood City, CA 94063,
United States
Caelum Biosciences Inc.
100
%
1200 Florence Columbus Road, Bordentown,
NJ 08505, United States
Alexion Services Latin America Inc.
100
%
600 Brickell Ave, Miami, FL 33131,
UnitedStates
Portola USA, Inc.
100
%
Portola Pharmaceuticals LLC
100
%
270 East Grand Avenue,South San
Francisco, CA 94080, United States
Achillion Pharmaceuticals, Inc.
100
%
Alexion Delaware Holding LLC
100
%
Alexion Holding LLC
100
%
Alexion Pharma LLC
100
%
Alexion Pharmaceuticals, Inc.
100
%
Syntimmune, Inc.
100
%
Alexion US Holdings LLC
100
%
Alexion US1 LLC
100
%
Savoy Therapeutics Corp
100
%
Wilson Therapeutics USA, Inc.
100
%
121 Seaport Boulevard, Boston, MA 02210,
United States
Acerta Pharma LLC
7
100
%
121 Oyster Point Boulevard, South San
Francisco, CA 94080, United States
Cider Merger Sub, Inc.
100
%
1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801,
United States
Uruguay
AstraZeneca S.A.
100
%
Yaguarón 1407 of 1205, 11.100, Montevideo,
Uruguay
Venezuela
AstraZeneca Venezuela S.A.
100
%
Gotland Pharma S.A.
100
%
Av. La Castellana, Torre La Castellana,
Piso5, Oficina 5-G, 5-H, 5-I, Urbanización
La Castellana, Municipio Chacao, Estado
Bolivariano de Miranda, Venezuela
Vietnam
AstraZeneca Vietnam Company Limited
100
%
18th Floor, A&B Tower, 76 Le Lai, Ben Thanh
Ward, District 1, Ho Chi Minh City, Vietnam
Financial Statements
At 31December 2021
Group Interest
At 31December 2021
Group Interest
At 31December 2021
Group Interest
Group Subsidiaries and Holdings
continued
200
AstraZeneca Annual Report & Form 20-F Information 2021
Subsidiaries where the effective interest
is less than 100%
India
AstraZeneca Pharma India Limited
3
75
%
Block N1, 12th Floor, Manyata Embassy
Business Park, Rachenahalli, Outer Ring
Road, Bangalore-560 045, India
Indonesia
P.T. AstraZeneca Indonesia
95
%
Perkantoran Hijau Arkadia Tower F,
3rdFloor, JI. T.B. Simatupang Kav. 88,
Jakarta, 12520, Indonesia
Joint Ventures
Hong Kong
WuXi MedImmune
BiopharmaceuticalCo.,Limited
50
%
Room 1902, 19/F, Lee Garden One,
33Hysan Avenue, Causeway Bay, Hong Kong
IHP HK Holdings Limited
50
%
Unit 5805, 58/F., Two International Finance
Centre 8 Finance Street, Central, Hong Kong
United Kingdom
Archigen Biotech Limited
9
50
%
Centus Biotherapeutics Limited
9
50
%
1 Francis Crick Avenue, Cambridge
Biomedical Campus, Cambridge, CB2 0AA,
United Kingdom
United States
Montrose Chemical Corporation
ofCalifornia
50
%
Suite 380, 600 Ericksen Ave N/E,
BainbridgeIsland, United States
Significant Holdings
Australia
Armaron Bio Ltd
10
24.60
%
MPR Group, HWT Tower, Level 19, 40 City Rd,
Southbank, VIC 3006, Australia
China
Dizal (Jiangsu) Pharmaceutical Co., Ltd.
11
26.95
%
199 Liangjing Rd, Zhangjiang Hi-Tech Park,
Pudong District, Shanghai, China, 201203
Wuxi AstraZeneca-CICC Venture Capital
Partnership(Limited Partnership)
22.13
%
Room 808, 8F, Building 99-2 Linghu Avenue,
Xinwu District, Wuxi, Jiangsu, China
United Kingdom
Apollo Therapeutics LLP
7
25
%
Stevenage Biosciences Catalyst,
GunnelsWood Road, Stevenage,
Hertfordshire, SG12FX, United Kingdom
VaxEquity
14
40
%
The Mansion, Chesterford Research Park,
Little Chesterford, Essex, CB10 1XL,
UnitedKingdom
United States
C.C. Global Chemicals Company
8
37.5
%
PO Box 7, MS2901, Texas, TX76101-0007,
United States
Associated Holdings
France
Medetia SAS
9
10
%
Institute Imagine 24, Boulevard du
Montparnasse 75015, Paris, France
Sweden
Swedish Orphan Biovitrum AB (publ)
9.9
%
Tomtebodavägen 23A, Stockholm, Sweden
Ondosis
6
19.9
%
BioVentureHub, Pepparedsleden 1, 431 83
Mölndal, Sweden
United Kingdom
Circassia Pharmaceuticals PLC
17
%
Northbrook House, Robert Robinson Avenue,
Oxford Science Park, Oxford, OX44GA,
United Kingdom
United States
AbMed Corporation
12
18
%
68 Cummings Park Drive, Woburn,
MA01801, United States
Aristea Therapeutics, Inc.
13
11.85
%
122770 High Bluff Drive, #380, San Diego,
CA 92130, United States
Baergic Bio, Inc.
19.95
%
2 Gansevoort Street, 9th Floor, New York,
NY 10014, United States
Employee Benefit Trust
The AstraZeneca Employee Benefit Trust
Additional InformationStrategic Report Corporate Governance
Financial Statements
At 31December 2021
Group Interest
At 31December 2021
Group Interest
At 31December 2021
Group Interest
201
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Group Subsidiaries and Holdings
Company Balance Sheet
at 31December
AstraZeneca PLC
2021
2020
Notes
$m
$m
Fixed assets
Fixed asset investments
1
65,624
33,268
Other receivables
–
4
65,624
33,272
Current assets
Debtors – other
9
26
Debtors – amounts owed by Group undertakings
6,321
7,011
6,330
7,0 37
Creditors: Amounts falling due within one year
Other payables
3
(198)
(192)
Interest-bearing loans and borrowings
2
(1,249)
(1,535)
(1,447)
(1,727)
Net current assets
4,883
5,310
Total assets less current liabilities
70,507
38,582
Creditors: Amounts falling due after more than one year
Amounts owed to Group undertakings
2
(283)
(283)
Interest-bearing loans and borrowings
2
(20,781)
(17,161)
Other payables
3
(32)
– (21,096)
(17,444)
Net assets
49,411
21,138
Capital and reserves
Called-up share capital
4
387
328
Share premium account
35,126
7,971
Capital redemption reserve
153
153
Other reserves
2,182
2,382
Profit and loss account
11,563
10,304
Shareholders’ funds
49,411
21,138
$m means millions of US dollars.
The Company’s profit for the year was $5,141m (2020: $1,974m).
The Company Financial Statements from pages 202 to 208 were approved by the Board and were signed on its behalf by
Pascal Soriot
Aradhana Sarin
Director Director
10 February 2022
Company’s registered number 02723534
Financial Statements
202
AstraZeneca Annual Report & Form 20-F Information 2021
Company Statement of Changes in Equity
for the year ended 31December
Share
Capital
Share
premium
redemption
Other
Profit and
Total
capital
account
reserve reserves
1
loss account
2
equity
$m $m $m $m $m $m
At 1January 2020
328
7,941
153
2,441
11,998
22,861
Total comprehensive income for the period
Profit for the period
– – – –
1,974 1,974
Total comprehensive income for the period
– – – –
1,974 1,974
Transactions with owners, recorded directly in equity
Dividends
– – – –
(3,668) (3,668)
Capital contributions for share-based payments
– – –
(59)
– (59)
Issue of Ordinary Shares
– – –
30
– 30
Total contributions by and distributions to owners
–
30
– (59)
(3,668)
(3,697)
At 31December 2020
328
7,971
153
2,382
10,304
21,138
Total comprehensive income for the period
Profit for the period
– – – –
5,141 5,141
Total comprehensive income for the period
– – – –
5,141 5,141
Transactions with owners, recorded directly in equity
Dividends
– – – –
(3,882) (3,882)
Capital contributions for share-based payments
– – –
(200)
– (200)
Issue of Ordinary Shares
59
27,155
– – –
27,214Total contributions by and distributions to owners
59
27,155
–
(200)
(3,882)
23,132
At 31December 2021
387
35,126
153
2,182 11,563 49,411
Additional InformationStrategic Report Corporate Governance
Financial Statements
203
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Company Statements
Company Accounting Policies
Basis of presentation of
nancialinformation
These financial statements were prepared
in accordance with FRS 101 ‘Reduced
Disclosure Framework’.
In preparing these financial statements, the
Company applied the recognition, measurement
and disclosure requirements of International
Financial Reporting Standards as adopted by
the UK (UK-adopted International Accounting
Standards), but made amendments where
necessary in order to comply with the
Companies Act 2006 and to take advantage
of FRS 101 disclosure exemptions.
In these financial statements, the Company
has applied the exemptions available under
FRS 101 in respect of the following disclosures:
>
Statement of Cash Flows and related notes
>
disclosures in respect of transactions with
wholly owned subsidiaries
>
disclosures in respect of
capital management
>
the effects of new but not yet effective IFRSs
>
disclosures in respect of the compensation
of Key Management Personnel.
As the Group Financial Statements (presented
on pages 134 to 201) include the equivalent
disclosures, the Company has also taken the
exemptions under FRS 101 available in respect
of the following disclosures:
>
IFRS 2 ‘Share-based Payment’ in respect
of Group settled share-based payments
>
certain disclosures required by IFRS 13
‘Fair Value Measurement’ and the
disclosures required by IFRS 7
‘Financial Instruments: Disclosures’.
No individual profit and loss account is
prepared as provided by section 408 of
the Companies Act 2006.
UK-adopted International
AccountingStandards
On 31 December 2020, EU-adopted IFRS was
brought into UK law and became UK-adopted
International Accounting Standards, with future
changes to IFRS being subject to endorsement
by the UK Endorsement Board. In preparing
these financial statements in accordance with
FRS 101, the Company Financial Statements
transitioned to UK-adopted International
Accounting Standards (as described above)
on 1 January 2021. There is no impact on
recognition, measurement or disclosure in
the period reported as a result of this change.
Basis of accounting
The Company Financial Statements are
prepared under the historical cost convention
and on a going concern basis, in accordance
with the Companies Act 2006.
The following paragraphs describe the main
accounting policies, which have been
applied consistently.
Estimates and judgements
The preparation of the Company Financial
Statements in conformity with generally
accepted accounting principles requires
management to make estimates and
judgements that affect the reported amounts
of assets and liabilities at the date of the
Financial Statements and the reported
amounts of revenues and expenses during
the reporting period. Actual results could
differ from those estimates. There are no
key judgements or significant estimates.
Foreign currencies
Profit and loss account items in foreign
currencies are translated into US dollars at
average rates for the relevant accounting
periods. Monetary assets and liabilities are
translated at exchange rates prevailing at
the date of the Company Balance Sheet.
Exchange gains and losses on loans and on
short-term foreign currency borrowings and
deposits are included within net Finance
expense. Exchange differences on all other
foreign currency transactions are recognised
in Operating profit.
Taxation
The current tax payable is based on taxable
profit for the year. Taxable profit differs
from reported profit because taxable profit
excludes items that are either never taxable
or tax deductible or items that are taxable
or tax deductible in a different period. The
Company’s current tax assets and liabilities
are calculated using tax rates that have been
enacted or substantively enacted by the
reporting date.
Deferred tax is provided using the balance
sheet liability method, providing for temporary
differences between the carrying amounts of
assets and liabilities for financial reporting
purposes and the amounts used for taxation
purposes. Deferred tax assets are recognised
to the extent that it is probable that taxable
profit will be available against which the asset
can be utilised. This requires judgements to
be made in respect of the availability of future
taxable income.
No deferred tax asset or liability is recognised
in respect of temporary differences
associated with investments in subsidiaries
and branches where the Company is able to
control the timing of reversal of the temporary
differences and it is probable that the
temporary differences will not reverse
in the foreseeable future.
The Company’s deferred tax assets and
liabilities are calculated using tax rates that
are expected to apply in the period when the
liability is settled or the asset realised based
on tax rates that have been enacted or
substantively enacted by the reporting date.
Accruals for tax contingencies require
management to make judgements of potential
exposures in relation to tax audit issues.
Tax benefits are not recognised unless the
tax positions will probably be accepted by the
authorities. This is based upon management‘s
interpretation of applicable laws and regulations
and the expectation of how the tax authority
will resolve the matter. Once considered
probable of not being accepted, management
reviews each material tax benefit and reflects
the effect of the uncertainty in determining the
related taxable result.
Accruals for tax contingencies are measured
using either the most likely amount or the
expected value amount depending on which
method the Company expects to better
predict the resolution of the uncertainty.
Financial Statements
204
AstraZeneca Annual Report & Form 20-F Information 2021
Investments
Fixed asset investments, including investments
in subsidiaries, are stated at cost and reviewed
for impairment if there are indications that the
carrying value may not be recoverable.
Debtors
Amounts owed by Group undertakings are
recognised initially at fair value. Subsequent
to initial recognition they are measured at
amortised cost using the effective interest
method, less any impairment losses.
The recoverability of these balances has been
assessed in accordance with IFRS 9 and no
impairment has been identified. The amounts
owed by Group undertakings are considered
to have low credit risk, due to timely payment
of interest and settlement of principal amounts
on agreed due dates, limiting the loss
allowance to 12-month expected credit losses.
Amounts owed by Group undertakings are
written off where there is no reasonable
expectation of recovery. Impairment losses
are presented as net impairment losses within
Operating profit, any subsequent recoveries
are credited against the same line.
Other payables
Liabilities included in Other payables are
recognised initially at fair value. Subsequent
to initial recognition they are re-measured at
fair value using an expected credit loss model.
Share-based payments
The issuance by the Company to employees
of its subsidiaries of a grant of awards over
the Company’s shares, represents additional
capital contributions by the Company to its
subsidiaries. An additional investment in
subsidiaries results in a corresponding
increase in shareholders’ equity. The additional
capital contribution is based on the fair
value of the grant issued, allocated over the
underlying grant’s vesting period, less the
market cost of shares charged to subsidiaries
in settlement of such share awards.
Financial instruments
Interest-bearing loans are initially measured
at fair value (with direct transaction costs
being amortised over the life of the loan)
and are subsequently measured at amortised
cost using the effective rate method at each
reporting date. Changes in carrying value are
recognised in profit.
Litigation
Through the normal course of business, the
AstraZeneca Group is involved in legal disputes,
the settlement of which may involve cost to
the Company. Provision is made where an
adverse outcome is probable and associated
costs can be estimated reliably. In other
cases, appropriate descriptions are included.
Additional InformationStrategic Report Corporate Governance
Financial Statements
205
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Company Accounting Policies
Notes to the Company Financial Statements
1 Fixed asset investments
Investments in subsidiaries
Shares
Loans
Total
$m $m $m
At 1January 2020
15,861 15,664
31,525
Additions during the year
–
2,971 2,971
Transfer to Debtors – amounts owed by Group undertakings
–
(1,451) (1,451)
Capital reimbursement
(44)
–
(44)Exchange
–
254 254
Amortisation
–
13 13
At 31December 2020
15,817
17,451
33,268
Additions during the year
33,745
290
34,035
Transfer to Debtors – amounts owed by Group undertakings
–
(1,249) (1,249)
Capital reimbursement
(13)
–
(13)Exchange
–
(172) (172)
Amortisation
–
13 13
Disposals and other movements
32
(290) (258)
At 31December 2021
49,581
16,043
65,624
Loans to subsidiaries consists of bonds which are issued externally and are issued back to Group undertakings with comparable terms on
interest rates and are repayable on maturity, details of which are disclosed in Note 2. The recoverability of these inter-company loans has been
assessed in accordance with IFRS 9 with no impairment identified. The inter-company balances are considered to have low credit risk due to
timely payment of interest and settlement of principal amount on agreed due dates, limiting the loss allowance to 12-month expected credit
losses. In 2021, there have been no credit losses (2020: $nil).
Included within Additions during the year of inter-company loans, are the distribution in specie received from subsidiary undertakings in the
form of a loan receivable from Group companies for $290m. The loan was settled during the year and recorded as disposed in the same year.
The other movements include $32m representing fair value of a guarantee provided to Group companies as explained in Notes 2 and 3.
2 Loans and borrowings
Repayment
2021
2020
dates
$m
$m
Amounts due within one year
Interest-bearing loans and borrowings (unsecured)
0.25% Callable bond
euros
2021
–
614
0.875% Non-callable bond
euros
2021
–
921
Floating rate notes US dollars
2022
250
–
2.375% Callable bond
US dollars
2022
999
–
1,249
1,535
Amounts due after more than one year
Amounts owed to Group undertakings (unsecured)
7.2% Loan US dollars
2023
283
283
Interest-bearing loans and borrowings (unsecured)
Floating rate notes US dollars
2022
–
250
2.375% Callable bond
US dollars
2022
–
996
Floating rate notes US dollars
2023
400
400
0.3% Callable bond
US dollars
2023
1,397
–
3.5% Callable bond
US dollars
2023
848
847
0.75% Callable bond
euros
2024
1,014
1,102
2024 Floating bank loan US dollars
2024
1,997
–
3.375% Callable bond
US dollars
2025
1,988
1,985
0.7% Callable bond
US dollars
2026
1,193
1,192
3.125% Callable bond
US dollars
2027
745
744
1.25% Callable bond
euros
2028
896
973
0.375% Callable bond
euros
2029
898
–
4% Callable bond
US dollars
2029
994
993
1.375% Callable bond
US dollars
2030
1,292
1,291
5.75% Non-callable bond
pounds sterling
2031
470
475
6.45% Callable bond
US dollars
2037
2,724
2,722
4% Callable bond
US dollars
2042
988
988
4.375% Callable bond
US dollars
2045
980
980
4.375% Callable bond
US dollars
2048
737
737
2.125% Callable bond
US dollars
4862050
486
3% Callable bond
US dollars
2051
734
–
Total amounts due after more than one year
21,064
17,444
Total loans and borrowings
22,313
18,979
Financial Statements
206
AstraZeneca Annual Report & Form 20-F Information 2021
2021
2020
$m
$m
Loans and borrowings are repayable:
After five years from balance sheet date
11,944
11,581
From two to five years
6,192
4,617
From one to two years
2,928
1,246
Within one year
1,249
1,535
Total unsecured
22,313
18,979
All bonds are issued with fixed interest rates with the exception of two bonds, the 2022, the 2023 floating rate notes and the $2bn USD 2024 floating
rate loan. The $2bn USD 2024 floating rate loan pays interest linked to 1 month LIBOR. As the loan is held at amortised cost, changes in interest
rates and the credit rating of the Company do not have any effect on the Company’s net assets. The other two floating rate notes are not impacted
by LIBOR reference as they either use non-LIBOR fixings or will mature before the withdrawal of relevant LIBOR rate.
In addition, the Company acts as guarantor for bonds issued by its wholly owned subsidiaries, AstraZeneca Finance LLC and AstraZeneca Finance
and Holdings Inc. AstraZeneca Finance LLC is the issuer of $1,600m 0.700% Notes due 2024, $1,250m 1.200% Notes due 2026, $1,250m 1.750%
Notes due 2028 and $750m 2.250% Notes due 2031 (the ‘AstraZeneca Finance Notes’). AstraZeneca Finance and Holdings Inc. has a $2bn bank
loan due 2023. Each series of AstraZeneca Finance Notes has been fully and unconditionally guaranteed by the Company. Each of the guarantees
by the Company is full and unconditional and joint and several.
The guarantee by the Company of the AstraZeneca Finance Notes is the senior unsecured obligation of the Company and ranks equally with all of
the Company’s existing and future senior unsecured and unsubordinated indebtedness. Each guarantee by the Company is effectively subordinated
to any secured indebtedness of the Company to the extent of the value of the assets securing such indebtedness. The AstraZeneca Finance Notes
are structurally subordinated to indebtedness and other liabilities of the subsidiaries of the Company, none of which guarantee the AstraZeneca
Finance Notes.
3 Other payables
2021
2020
$m
$m
Amounts due within one year
Other creditors
187
185
Deferred income
4
–
Amounts owed to Group undertakings
7 7
198 192
Amounts due after more than one year
Other creditors
32
–
32
–
Non-current other creditors include an amount representing the fair value of the guarantee provided by the Company to its subsidiary for the bonds
issued externally as explained in Note 2. As at 31 December 2021, the fair value of the guarantee was $32m (2020: $nil).
4 Called-up share capital
Details of share capital movements in the year are included in Note 24 to the Group Financial Statements.
5 Contingent liabilities
The Company has guaranteed the external borrowing of a subsidiary in the amount of $286m (2020: $286m), and no amount of undrawn borrowing
facility of a subsidiary was guaranteed (2020: $17.5bn) in relation to the acquisition of Alexion.
Vermont US Attorney Investigation
In the US, in April 2020, AstraZeneca received a Civil Investigative Demand from the US Attorney’s Office in Vermont and the Department of Justice,
Civil Division, seeking documents and information relating to AstraZeneca’s relationships with electronic health-record vendors. AstraZeneca is
co-operating with this enquiry.
AZD1222 Securities Litigation
In January 2021, putative securities class action lawsuits were filed in the US District Court for the Southern District of New York against
AstraZeneca PLC and certain officers, on behalf of purchasers of AstraZeneca publicly traded securities during the period 21 May 2020 through
20 November 2020. The Court appointed co-lead plaintiffs in April 2021 and they filed an Amended Complaint in July 2021 on behalf of purchasers
of AstraZeneca publicly traded securities during the period 15 June 2020 through 29 January 2021. The Amended Complaint alleges that
defendants made materially false and misleading statements in connection with the development of AZD1222, AstraZeneca’s vaccine for the
prevention of COVID-19. In September 2021, AstraZeneca moved to dismiss the Amended Complaint.
Additional InformationStrategic Report Corporate Governance
Financial Statements
207
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Notes to the Company Financial Statements
Alexion Shareholder Litigation
In March 2021, several shareholders of Alexion Pharmaceuticals, Inc. (Alexion) filed individual lawsuits against Alexion, its management, and/or
AstraZeneca and affiliates in federal district court in New York. The complaints generally allege that the preliminary registration statement filed with
the SEC on 19 February 2021, omitted certain allegedly material information in connection with AstraZeneca’s proposed acquisition of Alexion
(the Acquisition), and one of the complaints further alleges that the Alexion directors breached their fiduciary duties in connection with the
Acquisition and that AstraZeneca and the other entity defendants aided and abetted the alleged breaches. In May 2021, all such complaints
were withdrawn and dismissed. This matter is now closed.
US Congressional
In January 2019, AstraZeneca received a letter from the US House of Representatives Committee on Oversight and Reform (Committee) seeking
information related to pricing practices for
Crestor
. Similar letters were sent to 11 other pharmaceutical manufacturers. AstraZeneca cooperated
with the inquiry and produced certain responsive information. In December 2021, the Committee issued a final report culminating the
Committee’s pharmaceutical pricing investigation. AstraZeneca’s products are not the subject of the findings in the final report.
6 Statutory and other information
The Directors of the Company were paid by another Group company in 2021 and 2020.
7 Subsequent events
No subsequent events having material impact on the financial statements were identified after the balance sheet date.
Financial Statements
5 Contingent liabilities
continued
Notes to the Company Financial Statements
continued
208
AstraZeneca Annual Report & Form 20-F Information 2021
Group Financial Record
2017
2018
2019
2020
2021
For the year ended 31December
$m $m $m $m
$m
Revenue and profits
Product Sales
20,152
21,049
23,565
25,890
36,541
Collaboration Revenue
2,313
1,041
819
727
876
Cost of sales
(4,318)
(4,936)
(4,921)
(5,299)
(12,437)
Distribution costs
(310)
(331)
(339) (399)
(446)
Research and development expense
(5,757)
(5,932)
(6,059)
(5,991)
(9,736)
Selling, general and administrative expense
(10,233)
(10,031)
(11,682) (11,294)
(15,234)
Other operating income and expense
1,830
2,527
1,528 1,541
1,492
Operating profit
3,677
3,387
2,924
5,162
1,056
Finance income
113
138
172
87
43
Finance expense
(1,508) (1,306)
(1,419)
(1,432) (1,300)
Share of after tax losses in associates and joint ventures
(55)
(113) (116)
(27)
(64)
Profit/(loss) before tax
2,227
1,993 1,548
3,916
(265)
Taxation
641
57
(321)
(772)
380
Profit for the period
2,868
2,050
1,227
3,144
115
Other comprehensive income/(loss) for the period, net of tax
639
(1,059)
(611)
1,608 (145)
Total comprehensive income/(loss) for the period
3,507
991
616
4,752
(30)
Profit attributable to:
Owners of the Parent
3,001
2,155
1,335
3,196
112
Non-controlling interests
(133)
(105) (108)
(52)
3
Earnings per share
Basic earnings per $0.25 Ordinary Share
$2.37
$1.70 $1.03
$2.44
$0.08
Diluted earnings per $0.25 Ordinary Share
$2.37
$1.70 $1.03
$2.44
$0.08
Dividends
$2.80 $2.80 $2.80
$2.80
$2.80
2017
2018
2019
2020
2021
At 31December
$m $m $m $m
$m
Statement of Financial Position
Property, plant and equipment, right-of-use assets, goodwill and intangible assets
45,628
41,087
40,836
41,709 72,555
Other non-current assets
2,387 2,038
1,594
2,260 2,234
Deferred tax assets
2,189
2,379
2,718
3,438
4,330
Current assets
13,150
15,591 15,563
19,544
26,244
Total assets 63,354
60,651
61,377
66,729
105,363
Current liabilities
(16,383) (16,292)
(18,117)
(20,307)
(22,594)
Deferred tax liabilities
(3,995)
(3,286)
(2,490)
(2,918)
(6,206)
Other non-current liabilities
(26,334)
(27,029)
(26,174)
(27,866) (37,276)
Net assets
16,642 14,044
14,596
15,638
39,287
Share capital
317 317
328 328
387
Reserves attributable to equity holders of the Company
14,643
12,151 12,799
15,294
38,881
Non-controlling interests
1,682 1,576 1,469
16
19
Total equity and reserves
16,642 14,044
14,596
15,638
39,287
2017
2018
2019
2020
2021
For the year ended 31December
$m $m $m $m
$m
Cash flows
Net cash inflow/(outflow) from:
Operating activities
3,578
2,618
2,969
4,799
5,963
Investing activities
(2,328)
963
(657)
(285)
(11,058)
Financing activities
(2,936)
(2,044)
(1,765)
(2,203) 3,649
(1,686)
1,537
547
2,311
(1,446)
Additional InformationStrategic Report Corporate Governance
Financial Statements
209
AstraZeneca Annual Report & Form 20-F Information 2021Financial Statements / Group Financial Record
Additional
Information
Shareholder information
211
Directors’ report
213
Sustainability supplementary
information
216
Task force on Climate-related Financial
Disclosures Statement
217
Trade Marks
223
Glossary
224
Cautionary statement regarding forward-
looking statements
228
Additional Information
210
AstraZeneca Annual Report & Form 20-F Information 2021
This section of the Annual Report contains
information for shareholders that is required
by regulation in the UK. Further information
that may be of use to shareholders is available
on the Shareholder information page of our
website at www.astrazeneca.com. Additional
information required by SEC regulations is
included in AstraZeneca’s Form 20-F filing for
2021, which is available on the SEC website at
www.sec.gov.
The principal markets for trading in
AstraZeneca shares are the London Stock
Exchange, Nasdaq Stockholm and the
Nasdaq Global Select Market (Nasdaq).
AstraZeneca shares were listed on Nasdaq
on 25 September 2020, prior to which they
were listed on the New York Stock Exchange.
Ordinary Shares of $0.25 each in AstraZeneca
PLC are listed on the London Stock Exchange
and the shareholder register is maintained by
Equiniti Limited, the Ordinary Share registrar.
Shares listed on Nasdaq Stockholm are
issued under the Euroclear Services
Agreement by Euroclear Sweden AB, the
Swedish Central Securities Depositary.
Shares listed on Nasdaq are in the form
of American Depositary Shares (ADSs),
evidenced by American Depositary Receipts
(ADRs) issued by the Company’s ADR
depositary, Deutsche Bank Trust Company
Americas (Deutsche Bank). Two ADSs are
equivalent to one Ordinary Share. Before
27 July 2015, the ratio was one ADS per one
Ordinary Share. Shares are listed on all three
markets under the stock symbol AZN.
Ordinary Share registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
UK
Tel (Freephone in UK): +44 (0)800 389 1580
Tel (outside UK): +44 (0)121 415 7033
Swedish Central Securities Depositary
Euroclear Sweden AB
PO Box 191
SE-101 23 Stockholm
Sweden
Tel: +46 (0)8 402 9000
ADR depositary
Deutsche Bank Trust Company Americas
c/o American Stock Transfer & Trust
Company, LLC
6201 15th Avenue
Brooklyn NY 11219
USA
Tel (toll free in the US): +1 (888) 697 8018
Tel (outside US): +1 (718) 921 8137
db@astfinancial.com
Annual General Meeting (AGM)
The 2022 AGM will be held on 29 April 2022
and further details will be set out in the Notice
of Meeting. If you hold shares listed in
Stockholm or hold ADRs, information relating
to voting and attendance will be included in
the relevant Notice of AGM. If you hold your
shares through a nominee, your nominee
provider will be able to advise you of their
arrangements in relation to voting and
attendance.
Dividends
Dividend dates for 2022 are shown in the
financial calendar below. A first interim
dividend is normally announced in July/August
and paid in September and a second interim
dividend is normally announced in January/
February and paid in March. Dividends are
paid in GBP, SEK and USD, depending on
where the eligible shares are listed.
For further information on dividends declared, see the
Shareholder information section of our website,
www.astrazeneca.com.
Financial calendar
Event
Provisional date
Second interim
dividend for 2021
Ex-dividend date
24 February 2022
Record date
25 February 2022
Payment date
28 March 2022
Announcement of
first quarter results
for 2022
29 April 2022
Annual General
Meeting (AGM)
29 April 2022
Announcement of
second quarter and
half-year results for 2022
29 July 2022
First interim
dividend for 2022
Ex-dividend date
11 August 2022
Record date
12 August 2022
Payment date
12 September 2022
Announcement of
third quarter results
for 2022
10 November 2022
Financial year end
31 December 2022
Related party transactions
During the period 1 January 2022 to
31 January 2022, there were no transactions,
loans, or proposed transactions between the
Company and any related parties which were
material to either the Company or the related
party, or which were unusual in their nature or
conditions (see also Note 31 to the Financial
Statements on page 196).
Conicts of interest
The Articles enable the Directors to authorise
any situation in which a Director has an
interest that conflicts or has the potential to
conflict with the Company’s interests and
which would otherwise be a breach of the
Director’s duty, under Section 175 of the
Companies Act 2006. The Board has a formal
system in place for Directors to declare such
situations to be considered for authorisation
by those Directors who have no interest in the
matter being considered.
In deciding whether to authorise a situation,
the non-conflicted Directors must act in the
way they consider, in good faith, would be
most likely to promote the success of the
Company, and they may impose limits or
conditions when giving the authorisation, or
subsequently, if they think this is appropriate.
Situations considered by the Board and
authorisations given are recorded in the
Board minutes and in a register of conflicts
maintained by the Company Secretary and
are reviewed annually by the Board. The Board
believes that this system operates effectively.
Shareholder fraud warning
Shareholders of AstraZeneca and many other
companies have reported receiving unsolicited
calls and correspondence relating to their
shareholdings and investment matters.
Shareholders are advised to be very cautious
of any unsolicited approaches and to note that
reputable firms authorised by the Financial
Conduct Authority (FCA) are very unlikely to
make such approaches. Such approaches
are likely to be part of a ‘boiler room scam’
attempting to defraud shareholders.
Shareholders are advised to familiarise
themselves with the information on
scams available on the FCA website,
www.fca.org.uk/consumers and within the
FAQs in the Investors section of our website,
www.astrazeneca.com.
Any suspected scams or fraudulent
approaches should be reported to the FCA
via its website and to AstraZeneca’s Ordinary
Share registrar, using the contact details on
this page.
211
Additional Information
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Strategic Report Corporate Governance
Shareholder information
Shareholder information
Issued share capital, shareholdings and share prices
At 31 December 2021, the Company had 74,520 registered holders of 1,549,400,665 Ordinary Shares. There were 167,902 holders of Ordinary
Shares held under the Euroclear Services Agreement, representing 10.9% of the issued share capital of the Company and 1,700 registered
holders of ADSs, representing 19.0% of the issued share capital of the Company.
Information on the Company’s share price, including historical closing prices and volumes, and an interactive share price graph can be found on the Investor Relations page on our website,
www.astrazeneca.com.
Ordinary Shares in issue
2021
2020
2019
Ordinary Shares in issue – millions
At year end
1,549
1,313 1,312
Weighted average for year
1,418
1,312 1,301
Stock market closing price per Ordinary Share (London Stock Exchange)
Highest (pence)
9444.0
9320.0
7808.0
Lowest (pence)
6794.0
6221.0
5325.0
At year end (pence)
8678.0
7324.0
7607. 0
Analysis of shareholdings as a percentage of issued share capital at 31 December
Number of Ordinary Shares
1
2021
%
2020
%
2019
%
1 – 250
0.3
0.4 0.4
251 – 500
0.3
0.4
0.5
501 – 1,000
0.4
0.5 0.5
1,001 – 5,000
0.6
0.7 0.7
5,001 – 10,000
0.2
0.2 0.2
10,001 – 50,000
1.1
1.1
1.0
50,001 – 1,000,000
1.1
11. 2 11.2
Over 1,000,000
96.0
85.5 85.5
1
US holdings
At 31 January 2022, the proportion of Ordinary Shares represented by ADSs was 19.0% of the issued share capital of the Company. At 31 January
2022, there were 74,257 registered holders of Ordinary Shares, of which 646 were based in the US and there were 1,696 record holders of ADRs,
of which 1,672 were based in the US.
Exchange controls and other limitations aecting security holders
There are no governmental laws, decrees or regulations in the UK restricting the import or export of capital or affecting the remittance of
dividends, interest or other payments to non-resident holders of Ordinary Shares or ADRs.
There are no limitations under English law or the Articles on the right of non-resident or foreign owners to be the registered holders of, or to
exercise voting rights in relation to, Ordinary Shares or ADRs or to be registered holders of notes or debentures of the Company or its wholly
owned subsidiaries, Zeneca Wilmington Inc. and AstraZeneca Finance LLC.
212
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Shareholder information
continued
The Directors’ Report includes information
required to be given in accordance with the
Companies Act 2006.
Relevant information below, which is
contained elsewhere in the Annual Report,
is incorporated by cross reference herein.
Subsidiaries and principal activities
The Company is the holding company for
a group of subsidiaries whose principal
activities are described in this Annual Report.
The Group’s subsidiaries and their locations
are set out in Group Subsidiaries and Holdings
in the Financial Statements from page 197.
Branches and countries in which the
Group conducts business
In accordance with the Companies Act
2006, we disclose below countries of our
representative, scientific or branch offices
outside the UK established through
various subsidiaries of the Company:
Algeria, Angola, Costa Rica, Cuba, Denmark,
Egypt, Georgia, Ghana, Jordan, Kazakhstan,
Lebanon, Norway, Portugal, Romania, Russia,
Saudi Arabia, Serbia, Slovakia, Slovenia,
Syria, Ukraine, United Arab Emirates, United
States (a branch effective 1 January 2022),
Vietnam, Yemen.
Disclosure of information to auditors
The Directors who held office at the date of
approval of this Annual Report confirm that,
so far as they are each aware, there is no
relevant audit information of which the
Company’s auditors are unaware; and each
Director has taken all the steps that he or she
ought to have taken as a Director to make
himself or herself aware of any relevant audit
information and to establish that the Company’s
auditors are aware of that information.
Going concern accounting basis
Information on the business environment in
which AstraZeneca operates, including the
factors underpinning the industry’s future
growth prospects, is included in the Strategic
Report. Details of the product portfolio of the
Group are contained in the Strategic Report
(in the Disease Area Review from page 16).
For information on patent expiry dates for
key marketed products, see the Patent
Expiries Supplement on our website,
www.astrazeneca.com/annualreport2021.
Our approach to product development is
covered in detail with additional information
by disease area in the Strategic Report.
For information on our development
pipeline, see the Development Pipeline
Supplement on our website,
www.astrazeneca.com/annualreport2021.
The financial position of the Group, its cash
flows, liquidity position and borrowing
facilities are described in the Financial Review
from page 52. In addition, Note 28 to the
Financial Statements from page 180 includes
the Group’s objectives, policies and
processes for managing capital; financial risk
management objectives; details of its financial
instruments and hedging activities; and its
exposures to credit, market and liquidity risk.
Further details of the Group’s cash balances
and borrowings are included in Notes 17 and
19 to the Financial Statements from page 163.
Having assessed the Principal Risks and other
matters considered in connection with the
Viability statement on page 49, the Board
considers it appropriate to adopt the going
concern basis of accounting in preparing the
Annual Report and Financial Statements.
Shares
For more information, see Issued share capital,
shareholdings and share prices on page 212.
A shareholders’ resolution was passed at
the 2021 AGM authorising the Company to
purchase its own shares. The Company did
not purchase any of its own shares in 2021.
On 31 December 2021, the Company did
not hold any shares in treasury.
Rights, preferences and restrictions
attaching to shares
As at 31 December 2021, the Company had
1,549,400,665 Ordinary Shares and 50,000
Redeemable Preference Shares in issue. The
Ordinary Shares represent 99.98% and the
Redeemable Preference Shares represent
0.02% of the Company’s total share capital
(these percentages have been calculated by
reference to the 8am WM/Reuters USD/GBP
exchange rate on 31 December 2021).
As agreed by the shareholders at the
Company’s AGM held on 29 April 2010, the
Articles were amended with immediate effect
to remove the requirement for the Company to
have an authorised share capital, the concept
of which was abolished under the Companies
Act 2006. Each Ordinary Share carries the right
to vote at general meetings of the Company.
The rights and restrictions attaching to the
Redeemable Preference Shares differ from
those attaching to Ordinary Shares as follows:
>
The Redeemable Preference Shares carry
no rights to receive dividends.
>
The holders of Redeemable Preference
Shares have no rights to receive notices of,
attend or vote at general meetings except
in certain limited circumstances. They have
one vote for every 50,000 Redeemable
Preference Shares held.
>
On a distribution of assets of the Company,
on a winding-up or other return of capital
(subject to certain exceptions), the holders of
Redeemable Preference Shares have priority
over the holders of Ordinary Shares to
receive the capital paid up on those shares.
>
Subject to the provisions of the Companies
Act 2006, the Company has the right to
redeem the Redeemable Preference Shares
at any time on giving not less than seven
days’ written notice.
There are no specific restrictions on the transfer
of shares in the Company, which is governed
by the Articles and prevailing legislation.
The Company is not aware of any agreements
between holders of shares that may result in
restrictions on the transfer of shares or that
may result in restrictions on voting rights. The
Company is also not aware of any arrangements
under which financial rights are held by a
person other than the holder of the shares.
Action necessary to change the rights
of shareholders
In order to vary the rights attached to any
class of shares, the consent in writing of the
holders of three quarters in nominal value of
the issued shares of that class or the sanction
of a special resolution passed at a general
meeting of such holders is required.
Changes in share capital
Changes in the Company’s Ordinary Share
capital during 2021, including details of the
allotment of new shares under the Company’s
share plans and as partial consideration for
the Alexion acquisition, are given in Note 24
and Note 27 to the Financial Statements from
page 176.
Employee share trust ownership rights
The trustee of the AstraZeneca Employee
Benefit Trust (the EBT, the Trustee) will not
exercise voting rights attached to shares
held in the EBT (Shares). Any decision as to
acceptance or rejection of an offer for Shares
subject to subsisting awards would be made
by the Trustee, having regard to the interests
of award holders.
213
Additional Information
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Strategic Report Corporate Governance
Directors’ Report
Directors’ Report
Directors’, officers’ and SET shareholdings
At 31 January 2022, the total amount of the
Company’s voting securities owned by
Directors and officers of the Company
and other SET members was:
Title of class
Amount
owned
Percentage
of class
Ordinary Shares
614,738
0.04
Options to purchase securities from
registrant or subsidiaries
(a) At 31 January 2022, options outstanding
to subscribe for Ordinary Shares were:
Number of shares
Subscription
price (pence)
Normal
expiry date
1,212,060
3597-6903
2022-2027
The weighted average subscription price of
options outstanding at 31 January 2022 was
6035 pence. All options were granted under
Company employee share schemes.
(b) Included in paragraph (a) are options
granted to officers of the Company and SET
members as follows:
Number of shares
Subscription
price (pence)
Normal
expiry date
526
6839
2024
(c) During 2021, no options were held
by Directors.
During the period 1 January 2022 to
31 January 2022, no Director was granted
or exercised any options.
Distributions to shareholders – dividends
for 2021
Details of our distribution policy are set out in
the Financial Review from page 52 and Notes
24 and 25 to the Financial Statements from
page 176.
The Company’s dividend for 2021 of $2.87
(210.1 pence, SEK 25.77) per Ordinary Share
is estimated to amount to, in aggregate, a total
dividend payment to shareholders of $4,445
million. Two employee share trusts, AstraZeneca
Employee Benefit Trust and AstraZeneca
Share Retention Trust, waived their rights to
a dividend on the Ordinary Shares they hold
and instead received nominal dividends.
Articles of Association
AstraZeneca PLC’s current Articles were
adopted by shareholders at the Company’s
AGM held on 18 May 2018. Any amendment
to the Articles requires the approval of
shareholders by a special resolution at a
general meeting of the Company.
Objects
The Company’s objects are unrestricted.
Directors
The Board has the authority to manage the
business of the Company, for example,
through powers to allot and repurchase its
shares, subject where required to shareholder
resolutions. Subject to certain exceptions,
Directors do not have power to vote at Board
meetings on matters in which they have a
material interest.
The quorum for meetings of the Board is a
majority of the full Board, of whom at least
four must be Non-Executive Directors. In the
absence of a quorum, the Directors do not
have power to determine compensation
arrangements for themselves or any member
of the Board.
The Board may exercise all the powers of the
Company to borrow money. Variation of these
borrowing powers would require the passing
of a special resolution of the Company’s
shareholders.
All Directors must retire from office at the
Company’s AGM each year and may present
themselves for election or re-election.
Directors are not prohibited, upon reaching
a particular age, from submitting themselves
for election or re-election.
For more information on the Directors, see Board
of Directors on pages 74 and 75.
General meetings
AGMs require 21 clear days’ notice to
shareholders. Subject to the Companies Act
2006, other general meetings require 14 clear
days’ notice.
For all general meetings, a quorum of two
shareholders present in person or by proxy,
and entitled to vote on the business transacted,
is required unless each of the two persons
present is a corporate representative of the
same corporation, or each of the two persons
present is a proxy of the same shareholder.
Major shareholdings
At 31 December 2021, the following persons had disclosed an interest in the issued Ordinary Share capital of the Company in accordance with
the requirements of rules 5.1.2 or 5.1.5 of the UK Listing Authority’s Disclosure Guidance and Transparency Rules.
Changes in the percentage ownerships disclosed by major shareholders are set out below. Major shareholders do not have different voting rights.
Number of Ordinary Shares disclosed as a percentage of issued share capital at:
Shareholder
Date of the latest
disclosure to
the Company
1
Number of
Ordinary Shares
disclosed
Date of the latest
disclosure to
the Company
31 December
2019
31 December
2020
31 December
2021
31 January
2022
BlackRock, Inc.
4 December 2009
100,885,181
6.96
7.69 7.69
6.51
6.51
Investor AB
3 April 2019
51,5 87,810
3.93 3.93 3.93 3.33
3.33
The Capital Group Companies, Inc.
17 July 2018
63,802,495
5.04
4.86 4.86
4.12
4.12
Wellington Management Group LLP
2
21 July 2020
65,120,892
4.96
5.89
3
4.96 4.20
4.20
Wellington Management Company LLP
2
21 July 2020
6 5,118,411
4.96
5.88
4
4.96 4.20
4.20
1
or decrease arises unless the holding passes a notiable threshold in accordance with rules 5.1.2 or 5.1.5 of the UK Listing Authority’s Disclosure Guidance and Transparency Rules.
2
percentage notied by Wellington Management Company LLP was included within the aggregate shareholding percentage notied by Wellington Management Group LLP.
3
4
So far as the Company is aware, no other person held a notifiable interest in the issued Ordinary Share capital of the Company. No changes to
major shareholdings were disclosed to the Company between 31 December 2021 and 31 January 2022.
So far as the Company is aware, it is neither directly nor indirectly owned or controlled by one or more corporations or by any government.
The Company does not know of any arrangements, the operation of which might result in a change in the control of the Company.
214
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Directors’ Report
continued
Shareholders and their duly appointed proxies
and corporate representatives are entitled to
be admitted to general meetings.
Limitations on the rights to own shares
There are no limitations on the rights to
own shares.
Gender diversity
Directors of the
Company’s subsidiaries*
Men
262 (61%)
Women
170 (39%)
Total
432
Senior Executive Team*
Men
7 (58%)
Women
5 (42%)
Total
12
All numbers as at 31 December 2021.
*
For the purposes of section 414C(8)(c)(ii) of the Companies
Act 2006, ‘Senior Managers’ are the Senior Executive Team
(SET), the Directors of all of the subsidiaries of the Company
and other individuals holding named positions within those
subsidiaries.
Stakeholder engagement
The discussion on stakeholder engagement and
the impact of these interactions is contained
in Connecting with our Stakeholders from
page 80 and throughout the Strategic Report.
This includes engagement with our
employees, suppliers and other stakeholders,
as well as the impact of our operations on the
community and environment.
Information on how we encourage employee
involvement in the Company’s performance
is set out in Our people on page 41. Details
of some of the employee share plans are
described in the Directors’ Remuneration
Report from page 98, and in Note 29 to the
Financial Statements from page 186. All
employees are provided with information on
matters of concern to them through regular
meetings and updates on the Group’s intranet
and internal social media. Townhall meetings
and Q&A sessions are hosted regularly by
members of senior management, including
the SET, including global and targeted
broadcasts on internal social media. During
2021, these broadcasts included business
updates, as well as information on the
Group’s response to the COVID-19 pandemic
and working arrangements. In addition,
information about the Group’s quarterly
results is shared with employees. These
updates inform employees of the financial
and economic factors which affect the
performance of the Company.
Political donations
Neither the Company nor its subsidiaries
made any EU political donations or incurred
any EU political expenditure in 2021 and they
do not intend to do so in the future in respect
of which shareholder authority is required, or
for which disclosure in this Annual Report is
required, under the Companies Act 2006.
However, to enable the Company and its
subsidiaries to continue to support interest
groups or lobbying organisations concerned
with the review of government policy or law
reform without inadvertently breaching the
Companies Act 2006, which defines political
donations and other political expenditure in
broad terms, a resolution will be put to
shareholders at the 2022 AGM, similar to that
passed at the 2021 AGM, to authorise the
Company and its subsidiaries to:
>
make donations to political parties or
independent election candidates
>
make donations to political organisations
other than political parties
>
incur political expenditure, up to an
aggregate limit of $250,000.
Corporate political contributions in the US are
permitted in defined circumstances under the
First Amendment of the US Constitution and
are subject to both federal and state laws and
regulations. In 2021, the Group’s US legal
entities made contributions amounting in
aggregate to $1,142,200 (2020: $1,016,550) to
national political organisations, state-level
political party committees and to campaign
committees of various state candidates. No
corporate donations were made at the federal
level and all contributions were made only
where allowed by US federal and state law.
We publicly disclose details of our corporate
US political contributions, which can be found
on our website, www.astrazeneca-us.com/
sustainability/corporate-transparency.
The annual corporate contributions budget
is reviewed and approved by the US Vice-
President, Corporate Affairs and the President
of our US business to ensure robust
governance and oversight. US citizens or
individuals holding valid green cards
exercised decision making over the
contributions and the funds were not provided
or reimbursed by any non-US legal entity.
Such contributions do not constitute political
donations or political expenditure for the
purposes of the Companies Act 2006 and
were made without any involvement of
persons or entities outside the US.
Signicant agreements
There are no significant agreements to which
the Company is a party that take effect, alter
or terminate on a change of control of the
Company following a takeover bid. There are
no persons with whom we have contractual or
other arrangements, who are deemed by the
Directors to be essential to our business.
Use of nancial instruments
The Notes to the Financial Statements,
including Note 28 from page 180,
include further information on our use
of financial instruments.
Insurance and indemnities
The Company maintained Directors’ and
officers’ liability insurance cover throughout
2021. The Directors are also able to obtain
independent legal advice at the expense of
the Company, as necessary, in their capacity
as Directors.
The Company has entered into a deed of
indemnity in favour of each Board member
since 2006. These deeds of indemnity are still
in force and provide that the Company shall
indemnify the Directors to the fullest extent
permitted by law and the Articles, in respect
of all losses arising out of, or in connection
with, the execution of their powers, duties and
responsibilities as Directors of the Company
or any of its subsidiaries. This is in line with
current market practice and helps us attract
and retain high-quality, skilled Directors.
Compliance requirements under
Listing Rule 9.8.4
The only matter to report is the shareholder
waiver of dividends on page 214.
Directors’ Report
The Directors’ Report, which has been
prepared in accordance with the requirements
of the Companies Act 2006, comprises the
following sections:
>
Chair’s Statement
>
Chief Executive Officer’s Review
>
Disease Area Review
>
Business Review
>
Risk Overview
>
Financial Review: Financial risk
management
>
Corporate Governance: including the
Corporate Governance Overview,
Corporate Governance Report, Nomination
and Governance Committee Report,
Science Committee Report, Sustainability
Committee Report and Audit Committee
Report
>
Directors’ responsibility statement
>
Shareholder information
>
Sustainability supplementary information
and has been approved by the Board and
signed on its behalf.
On behalf of the Board
A C N Kemp
Company Secretary
10 February 2022
215
Additional Information
AstraZeneca Annual Report & Form 20-F Information 2021
Financial Statements
Strategic Report Corporate Governance
Directors’ Report
External assurance
Bureau Veritas has provided independent
external assurance to a limited level on the
following sustainability information
contained within this Annual Report:
>
Commitment to society, see page 3.
>
Key Performance Indicators, including
Our sustainability and Be a Great Place
to Work, see pages 12 to 15.
>
Our sustainability approach, including
Sustainability strategy, see pages 30
and 31.
>
Bioethics, including Clinical trial
transparency, Research use of human
biological samples and Animal research,
see page 34.
>
Healthcare in low- and middle-income
countries, see page 37.
>
Responsible sales and marketing,
see page 37.
>
Anti-bribery and anti-corruption,
see page 37.
>
Responsible supply chain, see page 38.
>
Human rights, see page 42.
>
Employee relations, see page 43.
>
Workplace safety and health,
see page 43.
>
Sustainability, including Driving the
sustainability agenda, see page 44.
>
Access to healthcare, including Equitable
access, Aordability and pricing, Health
system resilience, see pages 44 and 45.
>
Environmental protection, including
Ambition Zero Carbon, Product
sustainability, Natural resources, see
pages 45 and 46.
>
Ethics and transparency, see page 47.
>
Greenhouse gas reporting, see page 216
>
Task Force on Climate-related Financial
Disclosures Statement, see pages 217
to 222.
BV
Used throughout this Annual Report
to denote the sustainability information
listed above, which has been
independently assured by
Bureau Veritas.
Based on the evidence provided and subject
to the scope, objectives and limitations
dened in the full assurance statement,
nothing has come to the attention of Bureau
Veritas causing them to believe that the
sustainability information contained within
this Annual Report is materially misstated.
Bureau Veritas is a professional services
company that has a long history of providing
independent assurance services in
environmental, health, safety, social and
ethical management and disclosure.
The full assurance statement, which
includes Bureau Veritas’ scope of work,
methodology, overall opinion, and
limitations and exclusions, is available
on our website, www.astrazeneca.com.
Greenhouse gas (GHG) reporting
BV
We have reported on all of the emission
sources required under the Quoted
Companies GHG Emissions (Directors’
Reports) Regulations 2013. These sources fall
within our consolidated Financial Statements.
We do not have responsibility for any emission
sources that are not included in our
consolidated Financial Statements.
Global GHG emissions data for the period 1 January 2021 to 31 December 2021
1
Tonnes CO
2
e
2021
2020
2019
Emissions from:
Scope 1: Combustion of fuel and operation of facilities
2,5
245,882
240,052
269,647
Scope 2 (Market-based): Electricity (net of market instruments),
heat, steam and cooling purchased for own use
3,5
21,135
32,218
138,261
Scope 2 (Location-based): Electricity, heat, steam and cooling
purchased for own use
3,5
207,005
228,727
248,054
Company’s chosen intensity measurement: Scope 1 + Scope 2 (Market-
based) emissions reported above normalised to million US dollar revenue
7
8
14
Scope 3 Total: Emissions from all 15 GHG Protocol Scope 3 Categories
6,581,749
5,985,733
5,716,412
Scope 3 intensity measurement: Scope 3 emissions from all 15 GHG
Protocol Scope 3 Categories normalised to million US dollar revenue
161
183
195
MegaWatt hours (MWh)
Total energy consumption
4,5
1,737,124
1,699,480
1,848,804
1
Regularreviewofthedataiscarriedouttoensureaccuracy,consistencyandreectmajorbusinesschanges.Thishasledto
changesinthedatafrompreviousyears.Themajorityofadjustmentsmadearenotmaterialindividually,exceptfor(i)Scope3
category1purchasedgoodsandservices(methodologyupdatetotransitionfromaglobalemissionsfactordatabasefor
estimatingemissionsbasedonspend,toacountry-baseddatabase,therebyimprovingaccuracy,methodupdatesapplied
tocurrentandpreviousyears);and(ii)Scope1,2and3emissionsfromAlexionthatwasacquiredduring2021(reporting
boundaryexpansiontoincludetheacquiredbusiness,calculatetheemissionsacrossallscopesinaconsistentmanner,
andintegratetopreviousyearsreporting).
2
IncludedinthissectionareGHGsfromdirectfuelcombustion,processandengineeringemissionsatoursitesandfromfuel
useinourvehicleeet.
3
GHGsfromimportedelectricityarecalculatedusingtheGHGProtocolScope2Guidance(January2015)requiringdual
reportingusingtwoemissionsfactorsforeachsite–Market-basedandLocation-based.Ourcorporateemissionsreporting
andtargetsfollowtheMarket-basedapproach.
4
Theaggregateof:(i)theannualquantityofenergyconsumedfromactivitiesforwhichtheCompanyisresponsible,including
thecombustionoffuelatafacilityortheoperationofanyfacilityand(ii)theannualquantityofenergyconsumedresulting
fromthepurchaseofelectricity,heat,steamorcoolingbytheCompanyforitsownuse.
5
UndertheCompanies(Directors’Report)andLimitedLiabilityPartnerships(EnergyandCarbonReport)Regulations2018,
theCompanyneedstodisclosewhatproportionofthisgurerelatestoenergyuseintheUKandoshorearea.For2021,
theproportionoftotalglobalenergyandemissionsoriginatingfromAstraZeneca’sUKandoshoreareafootprintwereas
follows:energyuse371GWh(21%);Scope1siteenergyandroadeetemissions60ktCO
2
e(24%);Scope2siteimported
energyemissionsusingMarket-basedaccounting0ktCO
2
e(0%);Scope2siteimportedenergyemissionsusingLocation-
basedaccounting12ktCO
2
e(6%).
For more information, see Environmental protection from page 45.
For more information, see our 2021 Sustainability Report on our website, www.astrazeneca.com/sustainability.
We have used the GHG Protocol Corporate
Accounting and Reporting Standard (revised
edition). Emission factors for electricity have
been derived from the International Energy
Agency, USEPA eGRID, US Green-e and the
Association of Issuing Bodies databases and
for all other fuels and emission sources from
the 2006 IPCC Guidelines for National
Greenhouse Gas Inventories.
During 2021, the acquisition of Alexion was
completed and Scopes 1, 2 and 3 emissions
data has been integrated to our reported
footprint for 2021 and all previous years
to 2015.
216
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Sustainability
supplementaryinformation
Our commitment to climate change
The COVID-19 pandemic has demonstrated
the need to build resilience across society,
economies and healthcare systems globally.
In similar ways to the pandemic, the threat
that climate change poses also places
societies at higher risk financially, socially
and environmentally, with many of its impacts
disproportionately affecting vulnerable
communities and emerging economies still
struggling to recover from the pandemic. The
climate crisis also poses risks to public health,
with rising global temperatures increasing the
prevalence of respiratory and cardiovascular
disease, changes in water-borne illnesses,
allergen distribution and concentration, as
well as mental health effects. Health system
resilience across the entire value chain, from
disease prevention to treatment, has never
been more important.
The commitments we have made through
our flagship $1 billion Ambition Zero Carbon
programme ensure that we are playing our
part in tackling the climate crisis as well as
the opportunities that transitioning to a
low-carbon economy could mean for our
business.
We support the Task Force on Climate-related
Financial Disclosures (TCFD) framework and
we have made disclosures consistent with
the four TCFD recommendations and the 11
recommended disclosures. The bullet point
list on Page 222 set outs the required
disclosures and explains where in this Annual
Report (or other relevant document) the
various disclosures can be found. We first
adopted the TCFD framework in our 2020
Annual Report, and continue to apply it this
year to describe activities conducted in the
year to 31 December 2021.
All our business operations worldwide are in
scope, unless otherwise stated. The framework
has been introduced with a risk-based
approach focusing on the most material risks
and opportunities. Future priorities to broaden
the scope to medium- and low-risk areas are
indicated in each section.
For further information relating to our TCFD disclosures,
see our website www.astrazeneca.com.
Our Carbon Disclosure Project (CDP) response provides
further disclosures (2020 performance) on our approach
to climate change and is available at www.cdp.net/en.
Climate change and our strategy for
physical risks
Understanding the potential impact of future
climate scenarios, together with proactive
mitigation, intervention plans and targeted
investment, will future proof our business and
build resilience to ensure our long-term
financial sustainability and continued supply
of medicines to patients. It is critical to
understand the physical climate change risks
to our workforce, local communities, our
assets and supply to patients. Working in a
preventive way, we want to minimise reactive
behaviour and minimise interruptions from
extreme weather events across our operations
and value chain.
In 2020, we screened climate impacts across
our operations and in 2021 we added our
strategic suppliers (defined by cost of
interruption and strategic role to AstraZeneca)
to assess what a worst-case scenario
(Representative Concentration Pathway (RCP)
8.5) will look like in 2030, 2050 and 2100. In
addition, two more optimistic scenarios (RCP
2.6 and 4.5) were modelled. By combining the
results of the climate assessments with
business criticality, we prioritised 12 potentially
‘at risk’ sites for further assessment in 2021.
For further information, see the scenario table on
page 218.
Physical climate assessments will be
expanded in 2022 and 2023 to include a
deep-dive analysis of all strategic sites
irrespective of risk. We will also focus on
strategic upstream and downstream partners
to understand their resilience to climate
change e.g. bulk drug manufacturing, batch/
QA/QC testing, distribution centres etc.
As the work progresses, we will increase our
knowledge base with regard to the potential
financial impact of extreme weather events,
and appropriate mitigation and intervention
plans. Financial impacts, such as stranded
assets, cost of interruptions of supply, and
capital investments, will be further assessed
and, where material, they will be disclosed.
Climate change and our strategy for
transition risks and opportunities
The nature of the risks and opportunities we
face depends not only on the physical aspects
of climate change, but also regulatory and
commercial changes in the markets in which
we operate, pressures to reduce the carbon
footprints of specific medicines, and our
ability to shape a culture of climate action
focused on de-carbonising our value chain.
To respond to the identified climate risks and
opportunities, we are taking enterprise-wide
actions, and are committed to:
>
Achieving net-zero greenhouse gas (GHG)
emissions by maximising our energy
efficiency, shifting to renewable energy
sources, and investing in nature-based
removals to compensate for any residual
GHG footprint.
>
Building resilience by managing the
physical (sites, supply chain) and
transitional (regulatory, market and product)
risks and opportunities from climate change
in the value chain through adaptation and
business continuity planning.
Through our Ambition Zero Carbon programme
we are on track to reduce GHG emissions from
our global operations by 98% by the beginning
of 2026 and halve our entire value chain
footprint by 2030, on the way to a 90%
reduction by 2045. Our emission reduction
targets have been verified by the Science
Based Targets initiative and we were one of the
first seven companies worldwide to have our
net-zero, science-based Scopes 1 to 3 targets
verified under their new Net-Zero Corporate
Standard. We were also an early supporter
of the UN-backed Race to Zero.
Near-term targets
>
achieve 98% reduction in Scope 1 and
Scope 2 GHG emissions by the beginning
of 2026 from 2015 baseline
>
switch to a 100% fully electric vehicle fleet
(EV100) by the end of 2025
>
use 100% renewable energy (RE100) for
power and heat by the end of 2025
>
double energy productivity (EP100) from
2015 to 2025
>
launch first next-generation respiratory
inhalers with near-zero climate impact
>
align supplier spend to companies with
approved science-based targets by end
of 2025
>
plant and steward over 50 million trees by
end of 2025 as a nature-based solution to
enhance climate, ecological and community
resilience through our AstraZeneca Forest
Global Initiative.
Long-term targets
>
achieve 50% reduction in total Scope 3
emissions by 2030 and 90% reduction
by 2045, from 2019 baseline
>
become carbon negative for all residual
emissions from 2030 and science-based
net-zero by 2045
>
transition to next-generation respiratory
inhalers with near-zero climate impact
by 2030.
Recognising that the healthcare system
represents approximately 4% of global GHG
emissions, AstraZeneca continues to identify
and exploit opportunities to deliver patient-
centric, net-zero healthcare. In 2021,
AstraZeneca established the Sustainable
Healthcare Round Table under HRH The Prince
of Wales’ Sustainable Markets Initiative (SMI).
This SMI Sustainable Healthcare Round Table
was launched at COP26 and focuses on the
environmental and clinical benefits that can be
delivered through digital health, proactive
supply chain management and taking a patient
care pathways approach that integrates clinical
and environmental considerations to accelerate
the provision of net-zero healthcare.
Governance
In October 2021, the Board established the
Sustainability Committee to monitor the
execution of our sustainability strategy, oversee
communication of our sustainability activities
with stakeholders and provide input to the
Board and other Committees on sustainability
matters. The members of the Committee are
Nazneen Rahman (Chair of the Committee),
Sheri McCoy, Andreas Rummelt and Marcus
Wallenberg. The launch of the Sustainability
BV
217
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Strategic Report Corporate Governance
Task Force on Climate-related Financial Disclosures Statement
Task Force on Climate-related
Financial Disclosures Statement
Committee is an important next step in
advancing and delivering our sustainability
goals. The Sustainability Committee met once
in December 2021 for an update on progress
regarding our Climate Strategy and TCFD.
For more information on the Sustainability Committee
and other Committees, see from page 86.
Our CEO is responsible to the Board for the
management, development and performance
of our business, including AstraZeneca’s
Ambition Zero Carbon and climate-related
risks and opportunities. Reporting to the
CEO, the Executive Vice-President (EVP),
Sustainability and Chief Compliance Officer
(CCO), is responsible for the delivery of
AstraZeneca’s sustainability strategy,
including our climate-related strategy.
A number of strategic groups have been
established to support delivery of our
sustainability and climate strategies:
>
In 2020, we established an Ambition Zero
Carbon Governance Group with executive-
level ownership, accountable for the
delivery of our Ambition Zero Carbon
programme. The group includes
AstraZeneca’s CEO; CFO; the EVP for
Sustainability and CCO; and EVP for
Operations and IT. The Ambition Zero
Carbon Governance Group met six times
in 2021.
>
In 2020, a TCFD steering group was
also established with cross-functional
membership (Corporate Affairs, Investor
Relations, Finance Risk and Reporting,
R&D, Operations and Global Sustainability)
to identify and proactively manage the
physical and transition risks and
opportunities posed to AstraZeneca
by climate change. In 2021, members of the
group undertook training on climate change
and principles for future climate scenarios.
The outcomes from the specialist groups are
reported regularly to the Board. The Audit
Committee was updated on progress in April
and the Sustainability Committee was
updated in December 2021. The TCFD
steering group met eight times in 2021 with
a focus on the (i) execution of climate risk
assessments at priority sites in AstraZeneca’s
supply chain, (ii) mapping of transition risks
and opportunities, (iii) integrating the
management of climate risks and
opportunities within the current governance
structure and (iv) how to structure the TCFD
Disclosure in the annual reporting process.
Execution
At a site level, the execution of roadmaps to
deliver against our climate strategy and to
manage the physical risks posed by climate
change are led by the accountable site lead,
executing control measures (technical or
organisational) as an integrated part of their
existing risk management system.
On a commercial level, each franchise lead
is accountable for integrating transition risks
in their strategies and financial forecasts for
each brand. By managing the risks posed by
a low-carbon economy and healthcare
system, each business can unlock potential
opportunities to support the transition to a
low-carbon, patient-centric healthcare
system.
Remuneration
In 2021, to incentivise delivery of our
environmental, social and governance
priorities, delivery of our Ambition Zero Carbon
commitment was included in our executive
incentive arrangements for the Performance
Share Plan (PSP), with a weighting of 10%.
This underlines the importance we place on
reducing our Scope 1 and Scope 2 GHG
emissions by 98% by 2026.
For more information, see Directors’ Remuneration Report
from page 98.
Physical risks and temperature scenarios
by 2100
Transition risks & opportunities and scenarios used
+2°C (RCP 2.6)
>
RCP 2.6 lays out a pathway and
emissions trajectory that is generally
aligned with the objectives of the Paris
Agreement to limit global warming to
well below 2°C, preferably to 1.5°C by
2100, compared to pre-industrial levels.
>
1.65°C (IEA WEO
Sustainable
Development
Scenario (SDS) –
equivalent to
RCP 2.6).
>
The IEA WEO SDS was used as the primary low-carbon future scenario
within the Climate Financial Driver Analysis (CFDA). Renewable Electricity
Generation and Transport Oil Demand figures were used from the SDS. As
a ‘well below 2°C’ pathway, the SDS represents a gateway to the outcomes
targeted by the Paris Agreement. The SDS is based on a surge in clean
energy policies and investment that puts the energy system on track for
key Sustainable Development Goals (SDGs).
>
1.5°C (IEA WEO
Net-Zero Emissions
by 2050 scenario
(NZE) – equivalent to
RCP 1.9).
>
Within the CFDA, sensitivity analysis was carried out using carbon prices
from the IEA NZE emissions scenario, to ascertain the impact that carbon
prices higher than in Stated Policies Scenario (STEPS) would have. The NZE
is a normative IEA scenario that shows a narrow but achievable pathway for
the global energy sector to achieve net-zero CO
2
emissions by 2050, with
advanced economies reaching NZE in advance of others.
+2.5°C (RCP 4.5)
>
RCP 4.5 is an intermediate scenario
with emissions peaking in 2040 and
falling rapidly thereafter until 2080.
>
2.5°C (IEA WEO
Stated Policies
Scenario – STEPS)
– equivalent to
RCP 4.5.
>
The IEA WEO STEPS was used as the primary high carbon future scenario
within the CFDA. Carbon prices from STEPS were used as the primary
carbon price regime. Renewable Electricity Generation and Transport Oil
Demand figures were also used. STEPS provides a more conservative
benchmark for the future, because it does not take it for granted that
governments will reach all announced goals.
+4°C (RCP 8.5)
>
RCP 8.5 is a worst-case scenario
consistent with no policy changes to
reduce emissions, where CO
2
concentrations in the atmosphere are
roughly doubled by 2050 and continue
on that path until 2100.
>
4°C (IEA WEO
business as usual)
equivalent to RCP 8.5.
>
This high emissions ‘business as usual’ scenario was not modelled in detail
but is expected to give rise to more significant physical impacts and delayed
but more uncertain/disruptive transition, potentially leading to higher overall
costs and representing failure to implement stated policies.
Time horizons
>
Present day, 2030, 2050, 2100.
>
Present day, 2025, 2030, 2035 and 2040.
218
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Task force on Climate-related
Financial Disclosures Statement
continued
Identifying and managing climate risk
and opportunity
To inform the wider enterprise risk
management process of any specific risks
and opportunities posed by climate change
and/or the transition to a low-carbon
economy, we have integrated climate
assessments into the overall enterprise
risk management process.
Our overall approach to risk management and a summary
of our Principal Risks can be found from page 48.
Scope and denitions
Scenario analysis helps us to understand
the potential impact of climate change on
our business to inform our business strategy
and financial planning. In line with the TCFD
guidance, we decided to use a low/medium/
high case scenario based on Representative
Concentration Pathway shared by The
Intergovernmental Panel on Climate Change.
For more information, see the table on page 218.
Assessment of physical risks
In 2020, working with environmental resource
management experts, ERM Group, Inc. (ERM),
we conducted a screening study of two future
climate scenarios to explore our physical
climate-related risks (floods, water scarcity,
extreme heat, cyclones and wildfires). These
scenarios were applied to material AstraZeneca
sites with predictions out from 2020 to 2030,
2050 and 2100. The evaluated sites included
all business-critical operations sites, R&D
hubs, IT centres and other strategic hubs.
The outcome of these screening studies was
combined with a revenue-based assessment
for each site to identify mid- to long-term
risks. A similar study was conducted in 2021
to cover Alexion R&D and Operations sites,
and their strategic suppliers with support
from AECOM Limited. This has now been
integrated into the AstraZeneca approach
to assessing physical climate risks at sites.
During 2021, we extended our access to
climate scenario data by using Jupiter, Inc.
for screening of risks from climate hazards
to all AstraZeneca sites in future scenarios
(RCP 2.6, 4.5 and 8.5). We also used the
WWF Water Risk Filter to assess site risks for
droughts in water stressed areas and how
these could be amplified by climate change.
For further information relating to the screening
assessments for material sites, see our website
www.astrazeneca.com.
Priorities for 2022 include:
>
Identify opportunities to take collective
actions in hot spot regions, together with
stakeholders, including peers, to manage
water stress in a systemic way.
In 2021, we conducted a deep dive at 12 sites
with high business criticality and potential
exposure to climate change impacts in a
worst-case scenario (RCP 8.5) by 2030 and
2050. The assessments cover:
>
inventory of hazards
>
risk analysis
>
risk evaluation
>
identification of mitigation measures.
Global Subject Matter Experts coordinated
these assessments together with local
representation from Manufacturing, Facilities
Management, Safety, Health and Environment
and the Risk Management Network. Where
appropriate, the risk mitigation measures and
interventions were escalated to site
management and captured on the local risk
register. Measures and actions to address
these risks are included in the site master
plans and business continuity plans as they
are developed, and captured under the
mid- and long-term financial planning for that
site and function.
Priorities for 2022/23 include all material sites
in scope for the initial climate risk screening
and the Alexion sites will be subject to detailed
site level physical climate impact assessments.
During 2021, we included nearly 350 strategic
suppliers in a screening assessment for physical
climate risks. Suppliers with a 12 month cost of
interruption of more than $200 million and with a
critical role in patient supply will be prioritised for
further assessment in 2022.
In 2021, we included vulnerability to climate
change as a formal decision criteria for the
establishment of future internal or external
manufacturing capacity.
Assessment of transition risks and
opportunities
To meet the Paris Agreement commitments
to be net-zero and restrict global warming to
1.5ºC, we need to take a product, company
and healthcare system perspective to
proactively manage the risks and
opportunities posed by the transition to a
low-carbon economy and healthcare system.
To deliver our 2030 carbon negative ambition,
our products as well as our business will need
to become carbon neutral. However, we also
need to recognise that, given the limited
period of exclusivity we have for innovative
medicines, the GHG footprint of our current
portfolio of products will not fully reflect our
2030 footprint. Many innovative treatments
that will make up our 2030 portfolio are still
in development and we can prioritise
sustainability and efficiency in design, both
in terms of process and product design, as
well as the supplier network for manufacture
and delivery. That means we are responsible
for our choices in raw material sourcing,
manufacture and formulation of APIs, along
with device and packaging selection.
In November 2021, we launched a supplier-
focused Power Purchase Agreement (PPA)
programme (Energize) with peers in the
pharmaceutical industry to accelerate access
to renewable power for our suppliers.
We believe our patients and society will
require products that have the smallest
possible environmental impact, without
sacrificing medical efficacy or safety. As
technologies and healthcare systems evolve,
so too should circular solutions to:
>
design out waste and pollution
>
keep products and materials in use
>
regenerate natural systems.
For this to happen, our scientists embrace
carbon neutral design, migrate away from
fossil fuels (where possible) and embrace a
circular mindset to use materials (minimise by
design, reuse, recycle, recover). To help our
scientists prioritise what environmental
aspects to focus on, we use life-cycle
assessments to look at the environmental
impact of our products. The GHG footprint for
most medicines lies in our upstream supply
chain; the exception is for the respiratory
pMDI portfolio where the GHG footprint lies
with the patient use.
As the wider healthcare system looks to
deliver patient-centric net-zero healthcare,
this will present some risks for AstraZeneca
to manage, as well as some opportunities to
deliver better patient and societal outcomes
with a lower GHG footprint for the healthcare
sector. AstraZeneca is part of the Scope 3
emissions of healthcare providers; we are
part of their purchased goods and services
footprint. Some healthcare providers have
already set out their net-zero ambitions. For
example, the NHS has established targets to
procure medicines only from suppliers with
climate targets aligned with, or more
ambitious than their own, and they have goals
to reduce the footprint of respiratory products
by 50% over the next seven years. Therefore,
the transition to next-generation propellants
with a near-zero global warming potential
within our Ambition Zero Carbon strategy is
not only reducing our GHG footprint, it is also
mitigating some of the transition risks we face
in the market and will protect our revenue.
To better understand the financial
consequences of the transition into a
low-carbon economy to our business,
we started to work with ERM. Risks and
opportunities were assessed at an enterprise
level and product-specific level for the top 10
brands where life-cycle assessment (LCA)
data is available, representing approximately
50% of Total Revenue with examples from
all our disease areas.
219
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Additional Information
Financial Statements
Strategic Report Corporate Governance
Task Force on Climate-related Financial Disclosures Statement
Risk or opportunity
Time horizon
Short/Mid/Long
Potential impact
How it is managed
Physical risks
Increased frequency
ofextreme weather
andclimate-related
natural disasters.
>
Detailed site-level climate risk assessments have
now been conducted at 12 sites (Wuxi, Södertälje,
Maihara, Chennai, Westchester, Guadalajara,
Gothenburg, Cairo, Canovanas, Mount Vernon,
Bensalem and Taizhou) to verify the screening
results from 2020. Outcomes indicate potential for:
>
increased exposure to extreme heat events and
an increased need for cooling to maintain GMP
compliance
>
heavy rainfall causing local flooding and/or
inducing landslides
>
high wind events that can damage site
structures.
>
Potential risks relate primarily to disruption or
delays in a single manufacturing site, product
distribution, and/or product impairment due to
broken cold chain logistics, along with associated
increased liability insurance premiums and
reputational damage. However, investment in
at-risk sites, the design of our supply chains and
levels of inventory held mean that we do not
currently foresee a material business impact
arising from these short-term events.
>
Three case studies underpin this conclusion by
exemplifying some typical risks, the consequences
and associated mitigations: Södertälje in Sweden,
Maihara in Japan and Canovanas in Puerto Rico.
For more information, see
www.astrazeneca.com/sustainability/resources.html
>
We will continue to expand our site assessments
and business impact assessments in 2022.
>
Identified risks have been addressed in the local business
continuity plans or planning of technical mitigations
integrated into the site master plans. Any investments
required are integrated into the normal mid- and long-term
financial planning process. Mitigation examples include
increased cooling capacity to cover periods of extreme heat,
drainage systems to handle increased volumes of
precipitation or strengthening of building resilience to stand
up against increased wind speed.
>
Business resilience has been increased to mitigate our
exposure to extreme weather events like hurricane Maria at
Canovanas (Puerto Rico, 2017), an extended period of heat
in Södertälje (Sweden, 2018) and water scarcity in Chennai
(India, 2019).
>
For example, our site in Canovanas has taken proactive
steps to increase its resilience and mitigate the risks posed
to our business operations by installing its own heat and
power plant to reduce reliance on the local power network
complemented with on-site solar panels and emergency
generators ($12 million) and renovations of the two main
manufacturing and warehouse buildings to comply with
the latest building code ($9 million).
>
In 2021, physical risks have been mapped in the broader
supply chain based on location and then matched with
climate scenarios of RCP 2.6, 4.5 and 8.5. Suppliers with
high criticality (cost of 12 month interruption more than
$200 million) and exposure to significant future climate
hazards will be contacted in 2022 to ensure that they build
climate resilience within their business continuity plans.
>
Climatic risk assessments have been included in the site
evaluation criteria for investment in new operations in 2021.
Transition risks and opportunities
Increased demand for
sustainable low Global
Warming Potential
(GWP) products and
services from healthcare
providers in some
countries may result
inthe potential for
greensubstitution
ofmedicinal products
with a highGWP
(e.g. anaesthetics and
respiratory products).
Business opportunities
will exist with increased
future demand for low
GWP alternatives and
where earlier diagnosis
and clinical intervention
can reduce the carbon
footprint of healthcare
pathways.
>
Some healthcare providers and professionals are
actively looking to substitute medicinal products
based on their GHG footprint to reduce their own
Scope 3 footprint, as part of their net-zero targets.
>
One example is NHS England and its target for
net-zero by 2045, with an ambition to reach an
80% reduction by 2036 to 2039. This could impact
market access and revenue in some countries for
high GWP products where alternatives with a
lower GHG footprint exist. Future revenue from our
pMDI inhaled medicines portfolio could be ‘at risk’
should substitution become widespread before
the transition to our next-generation near-zero
GWP pMDIs. These risks are currently low, limited
to a few countries, and any impact is likely to occur
in a timeframe when we have lost exclusivity for
some ‘at risk’ brands.
>
Transitioning to low GWP respiratory products as
part of AstraZeneca Ambition Zero Carbon, and
understanding the positive impacts that disease
prevention, digital, early diagnosis and clinical
intervention can have on the carbon footprint of
specific patient care pathways, will provide
business opportunities to improve the standard
of care and clinical outcomes with a lower
environmental footprint.
>
As part of our $1 billion AstraZeneca Ambition Zero Carbon
commitment, we will transition to near-zero GWP propellants
across our asthma and COPD products between 2025
and 2030.
>
AstraZeneca has life-cycle assessments (LCAs) in place for key
brands (respiratory and wider) that includes the GHG footprint
to help assess and manage risks and target interventions to
reduce the environmental footprint of our products.
>
In 2021, we have also launched an internal Product
Sustainability Index (PSI) to proactively assess and manage
the environmental footprint of our products. The PSI captures
GHG and water intensity metrics per product, per patient and
per annum, as well as measures of % renewable power and
resource efficiency used to make that product.
>
Patients whose treatment is optimised are more likely to
have a lower climate impact overall, through reduced reliever
pMDI use and fewer unscheduled healthcare interventions.
We are working with academics and healthcare agencies
to understand the environmental impact of respiratory care
pathways for patients with controlled and uncontrolled
asthma and the opportunities for improved clinical care
with a lower environmental footprint. The output of these
environmental and clinical studies was communicated at
scientific conferences and via peer-reviewed literature
in 2021.
>
Early diagnosis and clinical intervention can provide business
opportunities to improve the standard of care and clinical
outcomes with a lower environmental footprint. In 2021, at
COP26,
AstraZeneca launched the Sustainable Healthcare
Round Table under HRH The Prince of Wales’ Sustainable
Markets Initiative (SMI). The initiative focuses on the
environmental and clinical benefits that can be delivered
through digital health, proactive supply chain management
and taking a patient care pathways approach that integrates
clinical and environmental considerations to accelerate the
provision of net-zero healthcare.
Key
Low risk
Medium risk
High risk
Opportunity
Time horizon for impact
Short-term: 1–3 years
Mid-term: 3–7 years
Long-term: 7–25 years
220
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Task Force on Climate-related
Financial Disclosures Statement
continued
Risk or opportunity
Time horizon
Short/Mid/Long
Potential impact
How it is managed
Transition risks and opportunities
continued
Review of the US, EU,
UK and other national
F-Gas Regulations and
their impact on
respiratory medicines
used to treat asthma and
COPD.
>
The US and EU F-Gas reviews carry the potential
risk that some F-gases used in pMDI-based
respiratory products could be subject to emission
restrictions from which they are currently exempt
(EU: 70% phase down target by 2030). The loss of
the medicinal exemption, or lack of a long-term
phased transition, could prevent or limit availability
of products in our pMDI-inhaled medicines portfolio
should these restrictions apply before the transition
to our next-generation near-zero GWP pMDIs.
>
Inhaler device selection is a critical consideration
as patient need or preference for a specific device
type will influence adherence to treatment which in
turn impacts clinical outcomes. Failure to maintain
a patient-centric approach in the short- to
mid-term could result in unnecessary adverse
respiratory events and hospitalisations that could
come with an increased GHG footprint.
>
Patient advocacy assesses both clinical and
environmental outcomes:
>
As part of the $1 billion AstraZeneca Ambition Zero
Carbon commitment, AstraZeneca will transition to low
GWP propellants in its asthma and COPD products
between 2025 and 2030.
>
We are advocating a phased transition period to at least
2030 if the medicinal exemption is lifted to ensure patient
safety and provide sufficient time for the regulatory
approval and transition to alternative low GWP propellants.
Carbon pricing and
future environmental
taxation.
>
There is uncertainty over the future environmental
policy and fiscal landscape in many countries
where we operate. We anticipate increased
regulation and other developments related to
carbon pricing, broader adjustment taxes, and
broader environmental taxation over the medium
to long term.
>
Carbon pricing based on the IEA Net-Zero
economy forecast which follows the 1.5ºC
warming pathway ($130/tCO
2
by 2030).
>
Our AstraZeneca Ambition Zero Carbon commitment will
help to mitigate some exposure to future carbon pricing
and environmental taxation for our operations and our
wider value chain. Managed correctly, this presents a
commercial opportunity where peers have yet to establish
a path to deep decarbonisation and net-zero.
>
We are being positive advocates for science-based targets
to address climate change across our industry and supply
chain via trade associations and networks. We continue to
monitor regulatory and market developments in carbon
pricing to inform our strategy.
Supply-demand of
renewable energy
(power and heat).
>
Access to clean heat alternatives to natural
gas e.g. biomethane generally requires
higher investment.
>
Participation in renewable energy programmes
and adoption of energy efficiency measures to
reduce operating costs and exposure to future
fossil fuel price/carbon price increases.
>
AstraZeneca invests approximately $25 million per annum
in natural resource reduction programmes, including those
that improve energy efficiency. Absolute natural resource
reductions, including those that reduce our GHG emissions,
are a primary metric alongside return on investment. Since
2015, we have invested $130 million and delivered a 9%
reduction in energy use and 59% reduction in our GHG
emissions. This reduces our exposure to incremental costs
associated with some renewable alternatives.
>
Renewable power implemented by 2020 at all sites with
a 2% premium. In 2021, the premium increased to 3.5%.
>
We joined the Renewable Thermal Collaborative in 2020
to unlock opportunities for renewable biomethane in the
US and UK markets to prepare for a transition by 2025.
>
Project started with peers in pharmaceutical industry
(Energize) to enable access to renewable energy in supply
chains with a start in the US and the EU, and plans to
expand into less mature markets.
Change in raw material
or sourcing cost.
>
Costs associated with new low-carbon technology
as the business needs to comply with expected
new and emerging legislation for lower emissions
technology (and meet stakeholder expectations
for proactively decreasing emissions).
>
Similar increased operational costs in the supply
chain may also have an effect on pricing and costs
of raw materials including packaging.
>
There could be a significant risk associated with
increased costs for using high carbon transport
modes.
>
More efficient buildings will reduce costs;
improved facilities management will lead to lower
costs for repair and replacements.
>
Use of lower-emission sources of energy will
reduce costs and will reduce exposure to fossil
fuel and carbon price changes.
>
Use of more efficient production and distribution
processes will reduce operational and logistical
costs from using more efficient processes.
>
Carbon costs are properly factored into engineering
feasibility, options appraisal and capital expenditure
decision making. Engagement with contract manufacturing
organisations (CMOs) and other supply chain partners
covers issues such as their transition to the low-carbon
economy.
>
Ensuring the early opportunities for gaining regulatory
approvals for new and emerging transport modes and
technologies so that logistics continuity is maintained.
>
Ensuring the costing for drugs considers potential
increases associated with transition risks (such as cost
of fuels and changes to approval mechanisms).
>
Many of the risks associated with incremental cost
exposure are not unique to AstraZeneca. They will also
be faced by our peers and the wider healthcare sector.
>
Engagement ensuring that sustainable performance is
positively recognised within procurement is being explored.
Key
Low risk
Medium risk
High risk
Opportunity
Time horizon for impact
Short-term: 1–3 years
Mid-term: 3–7 years
Long-term: 7–25 years
221
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Additional Information
Financial Statements
Strategic Report Corporate Governance
Task Force on Climate-related Financial Disclosures Statement
In 2021, we have focused on a pMDI product
in our respiratory portfolio due to its relative
high carbon intensity, strategic importance
to the business, and being the initial focus for
the next-generation propellant transition as
part of our Ambition Zero Carbon strategy.
In an initial Climate Financial Driver Analysis,
risks and opportunities were identified during
the transition phase where the current
propellant will be substituted to a low-carbon
alternative by end of 2025. The financial
implications of transitioning to next-generation
propellants are included in our financial
forecasts, which inform our impairment
assessments.
Priorities for 2022 include:
>
Define a methodology for ensuring that the
climate risks associated with the franchise
are fully integrated into business planning.
>
Determine the transition risks for other high
carbon intensity products based on the
pilot assessment.
>
Consolidate into Climate Financial Driver
Analysis report (quantitative) to be included
in the annual reporting process for 2022.
>
Initiate work to understand carbon intensity
for Alexion products, their potential
exposure to transition risks, and identify
potential opportunities where their use can
reduce the environmental footprint of
existing healthcare pathways.
>
Conduct a study on how climate change
impacts different disease areas and any
future needs from patient groups.
Outcome of the physical and transitional
assessments
In many cases mitigation measures are
already in place to address the risks and
opportunities presented by climate change,
including those posed by the transition to a
low-carbon economy and the provision of
net-zero healthcare.
For more information, see the Risk supplement available
on our website, www.astrazeneca.com/annualreport2021.
As a result of the analysis, the risk
‘Failure to meet regulatory expectations on
environmental impact, including climate
change’ is managed as a standalone risk to
the Group’s risk landscape. Based on current
assessments, climate risk is not expected
to have a material impact on our current
business model. Therefore climate change
is not seen as a Principal Risk for the Group
and is not disclosed as a Principal Risk
in the earlier Risk Overview section. This
TCFD statement has been shared with
the Board and Audit Committee.
For more information, see our Sustainability
Reportavailable on our website,
www.astrazeneca.com/sustainability.
Monitoring our progress
The climate emergency is a public health
emergency. It is changing our planet
irreversibly, with warming reaching critical
tolerance thresholds for health. Human health
and the health of the planet are deeply
interconnected. We have an opportunity
now to reset how we live and create a more
sustainable world – together and without delay.
We report on our GHG emissions and
progress towards mid- and long-term targets
in line with the World Resources Institute
GHG Protocol guidance for defining and
calculating our GHG footprint, which is
disclosed separately in the Sustainability
Data Summary Report.
Full details of our GHG footprint are disclosed in
our Sustainability Data Summary Report 2021,
www.astrazeneca.com/sustainability/resources.html
The performance report is reflecting how well
we have been able to decarbonise the business
and by that, reduce exposure to transition
risks and unlock future opportunities for the
Company and the wider healthcare sector.
During 2021, we were recognised for our
efforts in sustainability across our strategic
priorities. This included the following:
>
Inaugural 2021 Terra Carta Seal award
>
Dow Jones Sustainability Index constituent
>
FTSE4Good Index Series constituent
>
Financial Times 2021 European Climate
Leader for reduction of GHG emissions
>
CDP Double A List for Climate and Water
Security for the sixth consecutive year
>
Corporate Knights Global 100 Most
Sustainable Corporations in the World.
For more information, see our Sustainability Report
available on our website, www.astrazeneca.com/
sustainability.
The bullet points below provide an
explanation of where in this Annual Report
(or other relevant document or location in
respect of supplementary information) the
various TCFD recommended disclosures
can be found:
>
Governance
>
Is the Board’s oversight of
climate-related risks and
opportunities described? Pages 73,
89, 90 and 217. Sustainability Report
pages 8 and 19.
>
Is management’s role in assessing
and managing climate-related risks
and opportunities disclosed? Pages 6,
15, and 217. Sustainability Report
pages 8 and 19.
>
Strategy
>
Are climate-related risks and
opportunities the organisation has
identied over the short, medium and
long term disclosed? Pages 8, 30,
45 to 46, 220 to 221. Sustainability
Report pages 20 to 22. Sustainability
Data Summary pages 5 to 8.
>
Is the impact of the climate-related
risks and opportunities on the
organisation’s business, strategy,
and nancial planning described?
Pages 48, 217, 219, 220 to 222.
>
Is the resilience of the organisation’s
strategy described, taking into
consideration dierent climate-related
scenarios, including a 2°C or lower
scenario? Pages 48, 218 and
www.astrazeneca.com/sustainability/
resources.html
>
Risk management
>
Are the organisation’s processes
for identifying and assessing
climate-related risks described?
Pages 48, 91, 217 to 222.
Sustainability Report pages 8 and 19.
>
Is the organisation’s process for
managing climate-related risks
disclosed? Pages 217 to 222. Risk
Supplement page 5. Sustainability
Report pages 8 and 19.
>
Is it described how the organisation’s
process for identifying and managing
climate-related risks is integrated into
the organisation’s overall risk
management? Pages 217 to 222.
Sustainability Report pages 8 and 19.
>
Metrics and Targets
>
Is there disclosure of the metrics
used by the organisation to assess
climate-related risks and opportunities
in line with its strategy and risk
management process? Pages 48
and 90.
>
Does the organisation disclose its
Scope 1, Scope 2 and, if appropriate,
Scope 3 greenhouse gas (GHG)
emissions, and related risks?
Page 216. Sustainability Report
pages 20 to 22. Sustainability Data
Summary pages 5 to 7.
>
Does the organisation describe
the targets used to manage
climate-related risks and
opportunities and performance
against targets? Pages 45 to 46, 48
and 216. Sustainability Report
pages 20 to 22. Sustainability Data
Summary pages 5 to 8.
For more information, see our
Sustainability Report and Sustainability
Data Summary available on our website,
www.astrazeneca.com/sustainability.
222
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Additional Information
Task Force on Climate-related
Financial Disclosures Statement
continued
AstraZeneca, the AstraZeneca logotype, and the AstraZeneca symbol are all trade marks of the Group.
The following medicine names which appear in italics in this Annual Report are trade marks of the Group:
Trade mark
Andexxa
Daliresp
Losec
4
Soliris
Arimidex
1
Daxas
Lokelma
Strensiq
Atacand
2
Epanova
Lumoxiti
Symbicort
Atacand HCT
Evusheld
Lynparza
Symbicort Turbuhaler
Atacand Plus
2
Farxiga
Movantik
Symlin
BCise
Fasenra
Moventig
Synagis
4
Bevespi Aerosphere
Faslodex
Nexium
Tagrisso
Breztri
Fluenz
Ondexxya
Toprol-XL
Breztri Aerosphere
FluMist
Onglyza
Turbuhaler
Brilinta
Forxiga
Orpathys
Ultomiris
Brilique
Genuair
Prilosec Vaxzevria
Bydureon
Imnzi
Pulmicort
Vimovo
5
Byetta
Iressa Qtern
Xigduo
Calquence
Kanuma
Saphnelo
Zoladex
Casodex
1
Kombiglyze
Seloken
Cosudex
Komboglyze
Seroquel
3
Crestor
Koselugo
Seroquel XR
3
1
AstraZenecadivestedthesetrademarksinanumberofEuropean,AfricanandothermarketstoJuviséPharmaceuticalseective19December2019.
2
AstraZenecadivestedthesetrademarksinEuropetoCheplapharmeective28September2018,andinmorethan70othermarketseective31December2020.
3
AstraZenecadivestedthesetrademarksinEuropeandRussiatoCheplapharmeective13December2019.
4
Eective25January2019,AstraZenecasolditsrightsto
Synagis
intheUStoSobi,akaSwedishOrphanBiovitrumAB(publ).AbbVietransferreditsownershiprightstothistrademarktoMedImmuneLLC,eective1July2021.
5
AstraZenecadivestedtheglobalrights(excludingtheUSandJapan)forthistrademarktoGrünenthal,eective3December2018.
The following medicine names, which appear in italics in this Annual Report, are trade marks licensed to the Group by the entities set out below:
Trade mark
Licensor or Owner
Anticalin
Pieris AG
Duaklir
Almirall, S.A.
Eklira
Almirall, S.A.
Enhertu
Daiichi Sankyo Company, Limited
Linzess
Ironwood Pharmaceuticals, Inc.
Tezspire
Amgen, Inc.
Tudorza
Almirall, S.A.
The following medicine names, which appear in italics in this Annual Report, are not owned by or licensed to the Group and are owned by the
entities set out below:
Trade mark
Owner
messenger RNA Therapeutics
Moderna
Covushield
Serum Institute of India
223
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Strategic Report Corporate Governance
Trade Marks
Trade Marks
Market denitions
Region
Country
US
US
Europe
Albania*
Czech Republic
Luxembourg*Hungary
Serbia and Montenegro*
Austria*
Denmark
Iceland*
Malta*
Slovakia*
Belgium
Estonia*
Ireland
NetherlandsSlovenia*
Bosnia and Herzegovina*
Finland
Israel*
Norway
Spain
Bulgaria*
France
PolandItaly
Sweden
Croatia
Germany
Latvia*
Portugal
Switzerland
Cyprus*
Greece
Lithuania*
Romania
UK
Established ROW
Australia
Canada
Japan
New Zealand
Emerging Markets
Algeria
Costa Rica
Iraq*
Pakistan*
Syria*
Argentina
Cuba* Jamaica*
Palestine*
Taiwan
Aruba*
Dominican Republic*
Jordan
Panama
Thailand
Bahamas*
Ecuador*
Kazakhstan
Peru
Trinidad and Tobago*
Bahrain*
Egypt
Kuwait*
Philippines
Tunisia*
Barbados*
El Salvador
Lebanon*
Qatar*
Turkey
Belarus*
Georgia* Libya*
Russia
Ukraine
Belize*
Guatemala
Malaysia
Saudi Arabia
United Arab Emirates
Bermuda*
Honduras Mexico Singapore
Uruguay*
Brazil
Hong Kong
Morocco*
South Africa
Venezuela*
Chile
India
Nicaragua
South Korea
Vietnam
China
Indonesia
Oman*
Sri Lanka*
Yemen*
Colombia
Iran*
Other Africa*
Sudan*
* Q3 2021 IQVIA, IQVIA Midas Quantum Q3 2021 data are not available or AstraZeneca does not subscribe for IQVIA quarterly data for these countries. The above table is not an exhaustive list
of all the countries in which AstraZeneca operates, and excludes countries with revenue in 2021 of less than $1 million.
Established Markets means US, Europe and Established ROW.
North America means US.
Other Established ROW means Australia and New Zealand.
Other Emerging Markets means all Emerging Markets except China.
Other Africa includes Angola, Botswana, Ethiopia, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, Eswatini, Tanzania, Uganda, Zambia
and Zimbabwe.
Asia Area comprises India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand and Vietnam.
US equivalents
Terms used in this Annual Report
US equivalent or brief description
Accruals
Accrued expenses
Called-up share capital
Issued share capital
Creditors
Liabilities/payables
Debtors
Receivables and prepaid expenses
Earnings
Net income
Employee share schemes Employee stock benefit plans
Fixed asset investments Non-current investments
Freehold
Ownership with absolute rights in perpetuity
Loans
Long-term debt
Prepayments
Prepaid expenses
Profit
Income
Share premium account
Additional paid-in capital or paid-in surplus (not distributable)
Short-term investments
Redeemable securities and short-term deposits
224
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Glossary
The following abbreviations and expressions have the meanings
given below when used in this Annual Report:
AbbVie
– AbbVie Inc.
Acerta Pharma
– Acerta Pharma B.V.
Actavis
– Actavis plc.
ADC
– antibody drug conjugate(s).
ADRs
– American Depositary Receipts.
ADSs
– American Depositary Shares.
AGM
– an Annual General Meeting of the Company.
AI
– artificial intelligence.
Alexion
– Alexion Pharmaceuticals, Inc.
Almirall
– Almirall, S.A.
Amgen
– Amgen Inc.
Amplimmune
– Amplimmune, Inc.
ANDA
– an abbreviated new drug application, which is a marketing
approval application for a generic drug submitted to the FDA.
Annual Report
– this Annual Report and Form 20-F Information 2021.
API
– active pharmaceutical ingredient.
Ardea
– Ardea Biosciences, Inc.
Articles
– the Articles of Association of the Company.
Astellas
– Astellas Pharma Inc.
Astra
– Astra AB, being the company with whom the Company
merged in 1999.
AstraZeneca
– the Company and its subsidiaries.
AstraZeneca HealthCare Foundation
– a Delaware, US not-for-profit
corporation and a 501(c)(3) entity, separate from AstraZeneca
Pharmaceuticals, organised for charitable purposes, including to
promote public awareness and education of healthcare issues and
support eligible non-profit organisations in alignment with its mission.
The Foundation has received $30 million in contributions to date from
AstraZeneca to support the
Connections for Cardiovascular Health
SM
programme.
Atnahs
– Atnahs Pharma UK Ltd.
biologic(s) or biologic medicine(s)
– a class of drugs that are
produced in living cells.
BMS
– Bristol-Myers Squibb Company.
Board
– the Board of Directors of the Company.
Bureau Veritas
– Bureau Veritas UK Limited.
Caelum
–
Caelum Biosciences, Inc.
CDP (formerly the Carbon Disclosure Project)
– a not-for-profit
organisation that runs the global disclosure system for investors,
companies, cities, states and regions to manage their environmental
impacts.
CEO
– the Chief Executive Officer of the Company.
CER
– constant exchange rates.
CFO
– the Chief Financial Officer of the Company.
Cheplapharm
– Cheplapharm Arzneimittel GmbH.
Circassia
– Circassia Pharmaceuticals PLC
CKD
– chronic kidney disease.
CLL
– chronic lymphocytic leukaemia.
Code of Ethics
– the Group’s Code of Ethics, see page 47.
Company or Parent Company
– AstraZeneca PLC (formerly Zeneca
Group PLC (Zeneca)).
Complement-biology platform
– capabilities to translate the
biology of the complement system, a part of the immune system
comprised of proteins that is essential to the body’s defence against
infection, into innovative medicines that target and inhibit the
dysregulated complement system cascade that is a key driver
of many devastating diseases.
COPD
– chronic obstructive pulmonary disease.
COVAX
– the vaccines pillar of the Access to COVID-19 Tools (Act)
Accelerator. COVAX is co-led by CEPI, the Coalition for Epidemic
Preparedness Innovations; Gavi, the Vaccines Alliance; and the WHO,
working in collaboration with developed and developing country
vaccine manufacturers, UNICEF, the World Bank and others.
COVID-19
– the official WHO name for the disease caused by
the 2019 novel coronavirus.
Covis
– Covis Pharma B.V.
CV
– cardiovascular.
CVRM
– Cardiovascular, Renal & Metabolism.
Daiichi Sankyo
– Daiichi Sankyo, Inc. or a company within
the Daiichi Sankyo group of companies.
DDR
– DNA damage response.
Definiens
– Definiens AG.
Director
– a director of the Company.
DOJ
– the United States Department of Justice.
DTR
– UK Disclosure Guidance and Transparency Rules.
earnings per share (EPS)
– profit for the year after tax and
non-controlling interests, divided by the weighted average
number of Ordinary Shares in issue during the year.
EBITDA
– Reported Profit before tax plus net finance expense,
share of after tax losses of joint ventures and associates and
charges for depreciation, amortisation and impairment.
EFPIA
– European Federation of Pharmaceutical Industries and
Associations.
EGFR
– epidermal growth factor receptor.
EMA
– European Medicines Agency.
ESG
– environmental, social and governance.
ESMO
– European Society for Medical Oncology.
EVP
– Executive Vice-President.
EU
– the European Union.
225
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Strategic Report
Corporate Governance
Glossary
FDA
– the US Food and Drug Administration, which is part of the
US Department of Health and Human Services Agency, which is the
regulatory authority for all pharmaceuticals (including biologics and
vaccines) and medical devices in the US.
FibroGen
– FibroGen, Inc.
FRC
– the UK Financial Reporting Council.
GAAP
– Generally Accepted Accounting Principles.
GHG
– greenhouse gas.
GLP1
– glucagon-like peptide-1.
gross margin
– the margin, as a percentage, by which sales exceed
the cost of sales, calculated by dividing the difference between the
two by the sales figure.
Group
– AstraZeneca PLC and its subsidiaries.
Grünenthal
– Grünenthal Group.
GSK
– GlaxoSmithKline plc.
GWP
– global warming potential.
HCPs
– healthcare practitioners.
HF
– heart failure.
HMRC
– Her Majesty’s Revenue & Customs, the UK tax authority.
HTA
– health technology assessment.
IA
– the Group’s Internal Audit Services function.
IAS
– International Accounting Standards.
IASB
– International Accounting Standards Board.
ICS
– inhaled oral corticosteroid.
IFPMA
– International Federation of Pharmaceutical Manufacturers
and Associations.
IFRS
– International Financial Reporting Standards or International
Financial Reporting Standard, as the context requires.
Innate Pharma
– Innate Pharma S.A.
IO
– immuno-oncology.
IP
– intellectual property.
IQVIA
– IQVIA Solutions HQ Limited.
Ironwood
– Ironwood Pharmaceuticals, Inc.
IS
– information services.
ISAs
– International Standards on Auditing.
IT
– information technology.
KPI
– key performance indicator.
krona or SEK
– references to the currency of Sweden.
Kyowa Kirin
– Kyowa Kirin International plc, a subsidiary of Kyowa
Hakko Kirin Co., Ltd.
LABA
– long-acting beta2-agonist.
LAMA
– long-acting muscarinic antagonist.
LCM projects
– significant life-cycle management projects (as
determined by potential revenue generation), or line extensions.
Lilly
– Eli Lilly and Company.
Luye Pharma
– Luye Pharma Group.
mAb
– monoclonal antibody, a biologic that is specific, meaning
it binds to and attacks one particular antigen.
major market
– US, Europe, Japan and China.
MAT
– moving annual total.
MedImmune
– MedImmune, LLC (formerly MedImmune, Inc.).
mRNA
– Messenger RNA.
MI
– myocardial infarction.
Moderna
– Moderna Therapeutics, Inc.
MSD
– Merck & Co., Inc., which is known as Merck in the US and
Canada, and MSD in other territories.
n/m
– not meaningful.
Nasdaq
– Nasdaq Global Select Market.
Nasdaq Stockholm
– previously the Stockholm Stock Exchange.
New Medicines
– Roxadustat,
Koselugo, Enhertu
,
Tagrisso
,
Imfinzi
,
Lynparza
,
Calquence
,
Farxiga
, Brilinta
, Lokelma
,
Fasenra
,
Bevespi
and
Breztri
.
NME
– new molecular entity.
Novartis
– Novartis Pharma AG.
NRDL
– National Reimbursement Drug List, China.
NSCLC
– non-small cell lung cancer.
NYSE
– the New York Stock Exchange.
OECD
– the Organisation for Economic Co-operation and Development.
OMICs
– refers to a field of study in biology ending in ‘omics’,
such as genomics, proteomics or metabolomics.
operating profit
– sales, less cost of sales, less operating costs,
plus operating income.
Ordinary Share
– an ordinary share of $0.25 each in the share capital
of the Company.
Orphan Drug
– a drug that has been approved for use in a relatively
low-incidence indication (an orphan indication) and has been rewarded
with a period of market exclusivity; the period of exclusivity and the
available orphan indications vary between markets.
Paediatric Exclusivity
– in the US, a six-month period of exclusivity
to market a drug which is awarded by the FDA in return for certain
paediatric clinical studies using that drug. This six-month period runs
from the date of relevant patent expiry. Analogous provisions are
available in certain other territories (such as European Supplementary
Protection Certificate (SPC) paediatric extensions).
226
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Glossary
continued
PARP
– an oral poly ADP-ribose polymerase.
PD -L1
– an anti-programmed death-ligand 1.
Pearl Therapeutics
– Pearl Therapeutics, Inc.
PFS
– progression-free survival. The length of time during and after
the treatment of a disease, such as cancer, that a patient lives with the
disease without it getting worse.
PhRMA
– Pharmaceutical Research and Manufacturers of America.
Phase I
– the phase of clinical research where a new drug or treatment
is tested in small groups of people (20 to 80) to check that the drug can
achieve appropriate concentrations in the body, determine a safe
dosage range and identify side effects. This phase includes healthy
volunteer studies.
Phase II
– the phase of clinical research which includes the controlled
clinical activities conducted to evaluate the effectiveness of the drug in
patients with the disease under study and to begin to determine the
safety profile of the drug. Phase II studies are typically conducted in
small- or medium-sized groups of patients and can be divided into
Phase IIa studies, which tend to be designed to assess dosing
requirements, and Phase IIb studies, which tend to assess safety
and efficacy.
Phase III
– the phase of clinical research which is performed to gather
additional information about effectiveness and safety of the drug, often
in a comparative setting, to evaluate the overall benefit/risk profile of
the drug. Phase III studies usually include between several hundred
and several thousand patients.
Pieris Pharmaceuticals
– Pieris Pharmaceuticals, Inc.
pMDI
– pressurised metered-dose inhaler.
pound sterling, £, GBP or pence
– references to the currency of the UK.
primary care
– general healthcare provided by physicians who
ordinarily have first contact with patients and who may have continuing
care for them.
Proof-of-Concept
– data demonstrating that a candidate drug results
in a clinical change on an acceptable endpoint or surrogate in patients
with the disease.
ProTACs
– a proteolysis targeting chimera, which is a
heterobifunctional small molecule composed of two active domains
and a linker capable of removing specific unwanted proteins.
PTE
– Patent Term Extension, an extension of up to five years in the
term of a US patent relating to a drug which compensates for delays
in marketing resulting from the need to obtain FDA approval. The
analogous right in the EU is an SPC.
Pulse Survey
– an AstraZeneca employee opinion survey, which seeks
employees’ views of the business.
PwC
– PricewaterhouseCoopers LLP.
R&D
– research and development.
R&I
– Respiratory & Immunology.
Rare Disease
– the EU defines a disease or condition as rare if it
affects fewer than 1 in 2,000 people within the general population and
in the US, the Orphan Drug Act defines a rare disease as a disease or
condition that affects less than 200,000 people in the United States.
Redeemable Preference Share
– a redeemable preference share
of £1 each in the share capital of the Company.
Regulatory Exclusivity
– any of the IP rights arising from generation
of clinical data and includes Regulatory Data Protection, Paediatric
Exclusivity and Orphan Drug status.
RNA
– ribonucleic acid.
Roche
– F. Hoffmann-La Roche AG.
ROW
– rest of world.
RSV
– respiratory syncytial virus.
RWE
– Real-World Evidence.
SABA
– short-acting beta2-agonist.
Samsung Biologics
– Samsung Biologics Co., Ltd.
sales platforms
– previously referred to as Growth Platforms,
consisting of Emerging Markets, Japan, Oncology, CVRM, Respiratory
& Immunology, Oncology and Rare Disease.
Sanofi
– Sanofi S.A./Sanofi Pasteur, Inc.
Sarbanes-Oxley Act
– the US Sarbanes-Oxley Act of 2002.
SEC
– the US Securities and Exchange Commission, the governmental
agency that regulates the US securities industry and stock markets.
SEK
– Swedish krona (or kronor).
SET
– Senior Executive Team.
SG&A costs
– selling, general and administrative costs.
Sobi
– Swedish Orphan Biovitrum AB.
SPC
– supplementary protection certificate.
specialty care
– specific healthcare provided by medical specialists
who do not generally have first contact with patients.
Spirogen
– Spirogen Sàrl.
SoC
– standard of care. Treatment that is accepted by medical experts
as a proper treatment for a certain type of disease and that is widely
used by healthcare professionals.
Takeda
– Takeda Pharmaceutical Company Limited.
TCFD
– Task Force on Climate-related Financial Disclosures.
TerSera
– TerSera Therapeutics LLC.
Total Revenue
– the sum of Product Sales and Collaboration Revenue.
TSR
– total shareholder return, being the total return on a share over
a period of time, including dividends reinvested.
UK
– United Kingdom of Great Britain and Northern Ireland.
UK Corporate Governance Code
– the UK Corporate Governance
Code published by the FRC in July 2018 that sets out standards of
good practice in corporate governance for the UK.
US
– United States of America.
US dollar, US$, USD or $
– references to the currency of the US.
Vaxzevria
– COVID-19 Vaccine AstraZeneca.
VBP
– value-based procurement.
Viela Bio
– Viela Bio, Inc.
WHO
– World Health Organization, the United Nations’ specialised
agency for health.
ZS Pharma
– ZS Pharma, Inc.
227
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Financial Statements
Strategic Report
Corporate Governance
Glossary
Cautionary statement regarding
forward-looking statements
The purpose of this Annual Report is to
provide information to the members of the
Company. The Company and its Directors,
employees, agents and advisers do not
accept or assume responsibility to any other
person to whom this Annual Report is shown
or into whose hands it may come and any
such responsibility or liability is expressly
disclaimed. In order, among other things, to
utilise the ‘safe harbour’ provisions of the US
Private Securities Litigation Reform Act of
1995 and the UK Companies Act 2006, we are
providing the following cautionary statement:
This Annual Report contains certain forward-
looking statements with respect to the
operations, performance and financial
condition of the Group, including, among
other things, statements about expected
revenues, margins, earnings per share or
other financial or other measures. Forward-
looking statements are statements relating to
the future which are based on information
available at the time such statements are
made, including information relating to risks
and uncertainties. Although we believe that
the forward-looking statements in this Annual
Report are based on reasonable assumptions,
the matters discussed in the forward-looking
statements may be influenced by factors that
could cause actual outcomes and results to
be materially different from those predicted.
The forward-looking statements reflect
knowledge and information available at the
date of the preparation of this Annual Report
and the Company undertakes no obligation
to update these forward-looking statements.
We identify the forward-looking statements
by using the words ‘anticipates’, ‘believes’,
‘expects’, ‘intends’ and similar expressions
in such statements. Important factors that
could cause actual results to differ materially
from those contained in forward-looking
statements, certain of which are beyond our
control, include, among other things:
>
the risk of failure or delay in delivery of
pipeline or launch of new medicines
>
the risk of failure to meet regulatory or
ethical requirements for medicine
development or approval
>
the risk of failures or delays in the quality or
execution of the our commercial strategies
>
the impact of pricing, affordability and
competitive pressures
>
the risk of failure to maintain supply of
compliant, quality medicines
>
the risk of illegal trade in our medicines
>
the impact of reliance on third-party goods
and services
>
the risk of failure in information technology
or cybersecurity
>
the risk of failure of critical processes
>
the risk of failure to collect and manage
data in line with legal and regulatory
requirements and strategic objectives
>
the risk of failure to attract, develop,
engage and retain a diverse, talented
and capable workforce
>
the risk of failure to meet regulatory or
ethical expectations on environmental
impact, including climate change
>
the risk of the safety and efficacy of
marketed medicines being questioned
>
the risk of adverse outcome of litigation
and/or governmental investigations
>
the risks related to IP protection of
our products
>
the risk of failure to achieve strategic
plans or meet targets or expectations
>
the risk of failure in financial control or
the occurrence of fraud
>
the risk of unexpected deterioration in
our financial position
>
the impact that the COVID-19 global
pandemic may have or continue to have
on these risks, on the Group’s ability to
continue to mitigate these risks, and on
the Group’s operations, financial results
or financial condition.
Certain of these factors are discussed in
more detail, without limitation, in the Risk
Supplement (at www.astrazeneca.com/
annualreport2021) and reproduced in
AstraZeneca’s Form 20-F filing for 2021
(available on the SEC website www.sec.gov).
Nothing in this Annual Report should be
construed as a profit forecast.
Inclusion of Reported performance,
Core nancial measures and constant
exchange rate growth rates
AstraZeneca’s determination of non-GAAP
measures together with our presentation of
them within our financial information may
differ from similarly titled non-GAAP
measures of other companies.
Statements of competitive position,
growth rates and sales
In this Annual Report, except as otherwise
stated, market information regarding the
position of our business or products relative
to its or their competition is based upon
published statistical sales data for the 12
months ended 30 September 2021 obtained
from IQVIA, a leading supplier of statistical
data to the pharmaceutical industry.
Unless otherwise noted, for the US, dispensed
new or total prescription data and audited
sales data are taken, respectively, from IQVIA
National Prescription Audit and IQVIA National
Sales Perspectives for the 12 months ended
31 December 2021; such data are not
adjusted for Medicaid and similar rebates.
Except as otherwise stated, these market
share and industry data from IQVIA have been
derived by comparing our sales revenue with
competitors’ and total market sales revenues
for that period, and except as otherwise
stated, growth rates are given at CER.
For the purposes of this Annual Report, unless
otherwise stated, references to the world
pharmaceutical market or similar phrases are
to the 50 countries contained in the IQVIA
database, which amounted to approximately
93% (in value) of the countries audited by
IQVIA. Changes in data subscriptions,
exchange rates and subscription coverage,
as well as restated IQVIA data, have led to
the restatement of total market values for
prior years.
AstraZeneca websites
Information on or accessible through our
websites, including www.astrazeneca.com,
and www.astrazenecaclinicaltrials.com and
on any websites referenced in this Annual
Report, does not form part of and is not
incorporated into this Annual Report.
External/third-party websites
Information on or accessible through any
third-party or external website does not form
part of and is not incorporated into this
Annual Report.
Figures
Figures in parentheses in tables and in the
Financial Statements are used to represent
negative numbers.
Supplements
For detailed information on our Development
Pipeline, Patent Expiries and Key Marketed
Products, and Risk, see our website,
www.astrazeneca.com/annualreport2021.
228
AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Important information for
readers of this Annual Report
A
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[Section]Additional Information
Financial Statements
Strategic Report
Corporate Governance
Page Heading
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Superunion, London.
www.superunion.com
Board photography
Marcus Lyon
SET photography
Scott Nibauer
Graham Carlow
Philip Mynott
Ossi Piispanen
This Annual Report is printed on
Heaven 42 which is Forest Stewardship
Council
®
(FSC
®
)-certied virgin bre. This
product is made of material from
well-managed, FSC
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Pureprint is a CarbonNeutral
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AstraZeneca Annual Report & Form 20-F Information 2021
Additional Information
Registered oce and
corporate headquarters
AstraZeneca PLC
1 Francis Crick Avenue
Cambridge Biomedical Campus
Cambridge CB2 0AA
UK
Tel: +44 (0)20 3749 5000
www.astrazeneca.com/annualreport2021
What science can do
AstraZeneca
Development Pipeline as at 10 February 2022
References to Notes and page numbers, and capitalised terms not dened in this supplement can be found in AstraZeneca’s Annual
Report and Form 20-F Information 2021 at www.astrazeneca.com/annualreport2021.
AstraZeneca-sponsored or -directed trial
New Molecular Entities (NMEs) and significant indications
Regulatory submission dates shown for assets in Phase III and beyond. As disclosure of compound information is balanced by the business need
to maintain confidentiality, information in relation to some compounds listed here has not been disclosed at this time.
Phase I
Compound Mechanism
Area Under Investigation
Oncology
AZD0466
BCL2/xL
PP
haematological malignancies
AZD1390
ATM inhibitor
glioblastoma
AZD2936
PD1/TIGIT bispecific mAb
PP
solid tumours
AZD4573
CDK9 inhibitor
haematological malignancies
AZD5991
MCL1 inhibitor
haematological malignancies
AZD7648
DNAPK
PP
haematological and solid tumours
AZD7789
PD1/TIM3 bispecific mAb solid tumours
AZD8205
B7-H4 TOP1i ADC
solid tumours
AZD8701 +/-
Imfinzi
FOXP3 +/- PD-L1PP
solid tumours
Imfinzi
+ adavosertib
PD-L1 mAb + Wee1 inhibitor
PP
solid tumours
IPH5201
CD39
PP
solid tumours
MEDI1191
IL12 mRNA
PP
solid tumours
MEDI5752 + Lenvatinib
PD-1/CTLA-4 bispecific mAb + VEGF
advanced renal cell carcinoma
MEDI9253
rNDV IL12
solid tumours
Tagrisso
+ (
Koselugo
or savolitinib)
TATTON
EGFR inhibitor + (MEK inhibitor or MET inhibitor)
PP
advanced EGFRm non-small cell lung cancer
CVRM
AZD2373
Podocyte health
nephropathy
AZD2693
NASH resolution
non-alcoholic steatohepatitis
AZD3366
CD39L3
cardiovascular disease
AZD3427
Relaxin ThP
cardiovascular disease
AZD5462
Relaxin mimetic
cardiovascular disease
AZD7503
ASO
non-alcoholic steatohepatitis
MEDI8367
avb8
chronic kidney disease
Respiratory & Immunology
AZD4604
Inhaled JAK1 inhibitor
asthma
AZD5055
Porcupine inhibitor
idiopathic pulmonary fibrosis
AZD8630
Inhaled TSLP mAb
asthma
Rare Disease
AL XN1720
anti-C5 bispecific minibody
generalised myasthenia gravis
ALXN1820
anti-properdin bispecific
haematology
ALXN1850
next-generation asfotase alfa
hypophosphatasia
Other
AZD4041
orexin 1 receptor antagonist
PP
opioid use disorder
MEDI0618
PAR2 antagonist mAb
osteoarthritis pain
MEDI1341
alpha synuclein mAb
PP
Parkinson’s disease
MEDI1814
amyloid beta mAb
PP
Alzheimer’s disease
Phase II
Compound Mechanism
Area Under Investigation
Oncology
adavosertib
Wee1 inhibitor
PP
ovarian cancer, solid tumours, uterine serous cancer
AZD0171 +
Imfinzi
+ CTx
anti-LIF mAb + PD-L1 mAb + CTx1L metastatic pancreatic ductal adenocarcinoma
AZD4573 +
Calquence
CDK9 inhibitor + BTK inhibitorhaematological malignancies
AZD5305
PARP1Sel
solid tumours
camizestrant
selective oestrogen receptor degrader
oestrogen receptor +ve breast cancer
capivasertib
AKT inhibitor
PP
prostate cancer
ceralasertib
ATR inhibitor
solid tumours
Imfinzi
(platform)
COAST
PD-L1 mAb + multiple novel oncology therapies
PP
non-small cell lung cancer
Imfinzi
(platform)
HUDSON
PD-L1 mAb + multiple novel oncology therapies post IO non-small cell lung cancer
Imfinzi
(platform)
NeoCOAST
PD-L1 mAb + multiple novel oncology therapies
PP
non-small cell lung cancer
Key
PP
Partnered product
1
Development Pipeline
Development Pipeline
as at 10 February 2022
Compound Mechanism
Area Under Investigation
Imfinzi
+ FOLFOX + bevacizumab
COLUMBIA 1
PD-L1 mAb + CTx + VEGF
1st-line metastatic microsatellite-stable colorectal cancer
Imfinzi
+
Lynparza
ORION
PD-L1 mAb + PARP inhibitor
PP
1st-line metastatic non-small cell lung cancer
Imfinzi
+ monalizumab
PD-L1 mAb + NKG2a mAb
PP
solid tumours
MEDI5752
PD-1/CTLA-4 bispecific mAb
solid tumours
oleclumab + CTx or
Imfinzi
+
oleclumab + CTx
CD73 mAb + CTx or PD-L1 mAb + CD73 mAb + CTx
metastatic pancreatic cancer
Post-1L
Tagrisso
(platform)
ORCHARD
EGFR inhibitor + multiple novel oncology therapies
EGFRm non-small cell lung cancer
Tagrisso
+ savolitinib
SAVANNAH
EGFR inhibitor + MET inhibitor
PP
advanced EGFRm non-small cell lung cancer
CVRM
AZD4831
myeloperoxidase
heart failure with a preserved ejection fraction
AZD5718
FLAP
coronary artery disease/chronic kidney disease
AZD8233
hypercholesterolemia
cardiovascular disease
AZD8601
VEGF-A
PP
cardiovascular disease
AZD9977 + heart failure with chronic kidney disease
Farxiga/Forxiga
MR modulator + SGLT2 inhibitorcotadutide
GLP-1/glucagon dual agonist
type-2 diabetes, obesity and NASH, diabetic kidney disease
MEDI6570
LOX-1 mAb
cardiovascular disease
tozorakimab
IL-33 m A b
diabetic kidney disease
zibotentan +
Farxiga/Forxiga
ZENITH-CKD
ETA antagonist + SGLT2
chronic kidney disease
Respiratory & Immunology
AZD1402
Inhaled IL-4Ra
PP
asthma
AZD7986
DPP1
PP
chronic obstructive pulmonary disease
brazikumab
EXPEDITION
IL-23 mAb
ulcerative colitis
navafenterol
MABA
PP
chronic obstructive pulmonary disease
tozorakimab
IL-33 m A b
COPD/atopic dermatitis/asthma/COVID-19
Rare Disease
ALXN2050
oral factor D inhibitor
paroxysmal nocturnal haemoglobinuria
danicopan (ALXN2040)
factor D inhibitor
geographic atrophy
Other
MEDI7352
NGF/TNF bispecific mAb
osteoarthritis pain and painful diabetic neuropathy
Phase III/Pivotal Phase II/Registration (listed until launched in all applicable major regions)
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Oncology
camizestrant +
CDK4/6i
SERENA-6
selective
oestrogen
receptor
degrader +
CDK4/6
inhibitors
1L HR+ HER2- ESR1m breast cancer
2023+ 2023+ 2023+
camizestrant +
palbociclib
SERENA-4
selective
oestrogen
receptor
degrader +
CDK4/6
inhibitor
1st-line HR+ HER2- breast cancer
2023+ 2023+ 2023+ 2023+
capivasertib +
abiraterone
CAPItello-281
AKT inhibitor
+ abiraterone
PTEN deficient metastatic hormone sensitive
prostate cancer
PP
2023+ 2023+ 2023+ 2023+
capivasertib + CTx
CAPItello-290
AKT inhibitor
+ CTx
1st-line metastatic triple negative breast
cancer
PP
2023 2023 2023 2023+
capivasertib +
fulvestrant
CAPItello-291
AKT inhibitor
+ fulvestrant
2nd-line and beyond in AI resistant locally
advanced (inoperable) or metastatic breast
cancer
PP
2023 2023 2023 2023+
capivasertib +
fulvestrant +
palbociclib
CAPItello-292
AKT inhibitor
+ fulvestrant +
CDK4/6
inhibitor
1st-line triplet in early relapse/ET resistant
locally advanced (inoperable) or metastatic
breast cancer
PP
2023+ 2023+ 2023+ 2023+
datopotamab
deruxtecan
TROPION-Lung01
TROP2
targeting
antibody drug
conjugate
2L+ NSCLC without actionable genomic
mutations
PP
2023 2023 2023 2023+
datopotamab
deruxtecan#
TROPION-Breast01
TROP-2
targeting
antibody drug
conjugate
2-3L HR+ HER2- breast cancer
PP
2023+ 2023+ 2023+ 2023+
Phase II
continu ed
2
Development Pipeline
Development Pipeline
continued
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Imfinzi
+/-
tremelimumab +
CTx
POSEIDON
PD-L1 mA b
+/- CTLA-4
mAb + CTx
1st-line non-small cell lung cancer
PP
Accepted Accepted
Submitted
2023+
Imfinzi
+
tremelimumab
HIMAL AYA
PD-L1 mAb +
CTLA-4 mAb
1st-line hepatocellular carcinoma
PP
H1 2022
(Orphan Drug
Designation)
H1 2022
(Orphan
designation)
H1 2022
2023+
Imfinzi
+
tremelimumab +
SoC
NILE
PL-L1 mAb +
CTLA-4 mAb
+ SoC
1st-line urothelial cancer
PP
2023 2023 2023 2023+
Imfinzi
+/-
tremelimumab +
CRT
ADRIATIC
PD-L1 mA b
+/- CTLA-4
mAb + CRT
1st-line limited-stage small-cell lung cancer
PP
2023 2023 2023 2023
Koselugo/
selumetinib
SPRINT
MEK inhibitor
paediatric neurofibromatosis type-1
PP
Launched
(Priority
Review,
Breakthrough
Therapy,
Orphan Drug
Designation)
Launched
(Breakthrough
Therapy,
Orphan
designation)
Submitted
(Orphan
Drug)
H2 2022
Lynparza
+
Imfinzi
+
bevacizumab
DuO-O
PARP inhibitor
+ PD-L1 mAb
+ VEGF
inhibitor
1st-line ovarian cancer
PP
2023+ 2023+ 2023+ 2023+
Lynparza
+
Imfinzi
DuO-E
PARP inhibitor
+ PD-L1 mAb
1st-line endometrial cancer
PP
2023+ 2023+ 2023+ 2023+
monalizumab +
cetuximab
INTERLINK-1
NKG2a mAb +
EGFR mAb
2L+ relapsed metastatic head and neck
squamous cell cancer
PP
2023+ 2023+ 2023+
N/A
savolitinib +
Imfinzi
SAMETA
MET inhibitor
+ PD-L1 mAb
1st-line papillary renal cell carcinoma
PP
2023+ 2023+ 2023+
CVRM
eplontersen
ligand-
conjugated
antisense
patients with hereditary transthyretin-
mediated amyloid polyneuropathy
PP
H2 2022
(Orphan Drug
Designation)
eplontersen
ligand-
conjugated
antisense
patients with hereditary or wild-type
transthyretin-mediated amyloid
cardiomyopathy
PP
2023+
(Orphan Drug
Designation)
2023+
roxadustat
OLYMPUS
ROCKIES
hypoxia-
inducible
factor prolyl
hydroxylase
inhibitor
anaemia in chronic kidney disease/end-stage
renal disease
PP
Launched
Respiratory & Immunology
brazikumab
INTREPID
IL-23 mAb
Crohn’s disease
2023+ 2023+ 2023+ 2023+
Fasenra
CALIMA SIROCCO
ZONDA BISE BORA
GREGALE
MIRACLE
IL-5R mAb
severe uncontrolled asthma
PP
Launched Launched Launched
2023
PT027
ICS/SABA
asthma
PP
H1 2022
Saphnelo
TULIP 1 & TULIP 2
AZALEA (China)
Type I IFN
receptor mAb
systemic lupus erythematosus
PP
Launched
(Fast Track,
Orphan Drug
Designation)
Accepted
Launched
2023+
Tezspire
(tezepelumab)
NAVIGATOR
DIRECTION
TSLP mAb severe uncontrolled asthma
PP
Launched
(Priority
Review)
Accepted Accepted
2023+
Rare Disease
acoramidis
(ALXN2060)
oral TTR
stabilizer
transthyretin amyloid cardiomyopathy
PP
2023
ALXN1840
bis-choline
tetra-
thiomolybdate
Wilson disease
H2 2022
(Orphan Drug
Designation)
H2 2022
(Orphan
designation)
H2 2022
CAEL-101
fibril-reactive
mAb
AL amyloidosis
2023+
(Fast Track,
Orphan Drug
Designation)
2023+
(Orphan
designation)
2023+
danicopan
(ALXN2040)
factor D
inhibitor
paroxysmal nocturnal haemoglobinuria with
extravascular haemolysis
2023
(Orphan Drug
Designation)
2023
(Orphan
designation)
2023
Phase III/Pivotal Phase II/Registration (listed until launched in all applicable major regions)
continued
3
Development Pipeline
Development Pipeline
continued
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Other and COVID-19
Evusheld
(A ZD7442)
COVID-19
LAAB
combination
prevention and treatment of COVID-19
Prophylaxis
FDA
Emergency Use
Authorisation
submission
approved
Approved
(Emergency
Use)
H1 2022 H1 2022
H2 2022
nirsevimab
RSV mA b-Y TE
passive RSV immunisation
PP
H2 2022
(Fast Track
Designation,
Breakthrough
Therapy
Designation)
H1 2022
(PRIME)
2023
2023
(Breakthrough
Therapy
Designation)
Vaxzevria
SARS-CoV-2
COVID vaccine
PP
EMA and Japan
Conditional
Marketing
Authorisation
H1 2022
Launched Launched
Significant Life-cycle Management
Regulatory submission dates shown for assets in Phase III and beyond. Projects in Phase III unless otherwise noted.
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Oncology
Calquence
ASCEND
BTK inhibitor
relapsed/refractory chronic lymphocytic
leukaemia
PP
Launched
(Breakthrough
Therapy,
Orphan Drug
Designation)
Launched Launched
2023
Calquence
ELEVATE-TN
BTK inhibitor
1st-line chronic lymphocytic leukaemia
PP
Launched
(Breakthrough
Therapy,
Orphan Drug
Designation)
Launched
H2 2022
2023+
Calquence
+
R-CHOP
ESCALADE
BTK inhibitor
+ R-CHOP
1st-line diffuse large B cell lymphoma
2023+ 2023+ 2023+ 2023+
Calquence
+
venetoclax +
obinutuzumab
AMPLIFY
BTK inhibitor
+ BCL-2
inhibitor +
anti-CD20
mAb
1st-line chronic lymphocytic leukaemia
PP
2023+ 2023+
N/A
2023+Calquence
ECHO
BTK inhibitor
1st-line mantle cell lymphoma
PP
2023
(Orphan Drug
Designation)
2023 2023 2023+
Enhertu
DESTINY-Breast02
HER2
targeting
antibody drug
conjugate
HER2-positive, unresectable and/or
metastatic breast cancer pre-treated with
prior standard of care HER2 therapies,
including T-DM1
PP
H2 2022 H2 2022
N/A N/A
Enhertu
DESTINY-Breast03
HER2
targeting
antibody drug
conjugate
HER2-positive, unresectable and/or
metastatic breast cancer subjects previously
treated with trastuzumab and taxane
PP
Accepted
(Breakthrough
Therapy
Designation,
Priority
Review)
Accepted
Submitted
H1 2022
Enhertu
DESTINY-Breast04
HER2
targeting
antibody drug
conjugate
HER2-low, unresectable and/or metastatic
breast cancer subjects
PP
H1 2022 H1 2022 H1 2022
H2 2022
Enhertu
DESTINY-Breast05
HER2
targeting
antibody drug
conjugate
HER2-positive post-neoadjuvant high-risk
breast cancer
PP
2023+ 2023+ 2023+
Enhertu
DESTINY-Breast06
HER2
targeting
antibody drug
conjugate
post-ET HER2-low/HR+ breast cancer 2L
PP
2023+ 2023+ 2023+ 2023+
Enhertu
(platform)
DESTINY-Breast07
HER2
targeting
antibody drug
conjugate
HER2+ breast cancer
PP
Phase II
Enhertu
(platform)
DESTINY-Breast08
HER2
targeting
antibody drug
conjugate
HER2-low breast cancer
PP
Phase I
Enhertu
DESTINY-Breast09
HER2
targeting
antibody drug
conjugate
1st-line HER2-positive breast cancer
PP
2023+ 2023+ 2023+ 2023+
Enhertu
DESTINY-Breast11
HER2
targeting
antibody drug
conjugate
neoadjuvant HER2-positive breast cancer
PP
Phase III/Pivotal Phase II/Registration (listed until launched in all applicable major regions)
continued
4
Development Pipeline
Development Pipeline
continued
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Enhertu
DESTINY-Gastric01
HER2
targeting
antibody drug
conjugate
HER2-overexpressing advanced gastric or
gastroesophageal junction adenocarcinoma
patients who have progressed on two prior
treatment regimens
PP
Phase II.
EU submission
includes data
from Gastric02
Approved
(Priority
Review,
Breakthrough
Therapy,
Orphan Drug
Designation)
Accepted
Approved
2023+
Enhertu
DESTINY-Gastric04
HER2
targeting
antibody drug
conjugate
2nd-line HER2-positive gastric
PP
2023+ 2023+ 2023+ 2023+
Enhertu
DESTINY-Lung01
HER2 targeting
antibody drug
conjugate
HER2-over-expressing or -mutated,
unresectable and/or metastatic non-small cell
lung cancer
PP
Phase II
Breakthrough
Therapy
Designation
Enhertu
DESTINY-Lung04
HER2
targeting
antibody drug
conjugate
1st-line non-small cell lung cancer
PP
2023+ 2023+ 2023+ 2023+
Enhertu
DESTINY-
PanTumour 01
HER2
targeting
antibody drug
conjugate
HER2-expressing solid tumours
PP
Phase II
Enhertu
DESTINY-
PanTumour02
HER2
targeting
antibody drug
conjugate
HER2-expressing solid tumours
PP
Phase II
Imfinzi
PEARL
PD-L1 mA b
1st-line metastatic non-small cell lung cancer
PP
H2 2022 H2 2022 H2 2022 H2 2022
Imfinzi
+ CRT
PACIFIC-2
PD-L1 mAb +
CRT
locally-advanced (Stage III) non-small cell
lung cancer
PP
H2 2022 H2 2022 H2 2022
Imfinzi
post-SBRT
PACIFIC-4
PD-L1 mA b
post-SBRT
Stage I/II non-small cell lung cancer
PP
2023+ 2023+ 2023+ 2023+
Imfinzi
+ CRT
PACIFIC-5 (China)
PD-L1 mAb +
CRT
locally-advanced (Stage III) non-small cell
lung cancer
PP
2023
Imfinzi
+ CTx
neoadjuvant
AEGEAN
PD-L1 mAb +
CTx
locally-advanced (Stage II-III) non-small cell
lung cancer
PP
2023 2023 2023 2023+
Imfinzi
+ CTx
MERMAID -1
PD-L1 mAb +
CTx
Stage II-III adjuvant non-small cell lung
cancer
2023+ 2023+ 2023+ 2023+
Imfinzi
MERMAID-2
PD-L1 mA b
Stage II-III premetastatic non-small cell
lung cancer
2023+ 2023+ 2023+ 2023+
Imfinzi
+ CRT
KUNLUN
PD-L1 mAb +
CRT
locally advanced oesophageal squamous cell
carcinoma
PP
2023+ 2023+ 2023+ 2023+
Imfinzi
+ CTx
TOPA Z-1
PD-L1 mAb +
CTx
1st-line biliary tract cancer
PP
H1 2022
(Orphan Drug
Designation)
H1 2022 H1 2022 H1 2022
Imfinzi
+ FLOT
MATTERHORN
PD-L1 mAb +
CTx
neo-adjuvant/adjuvant gastric cancer
PP
2023+ 2023+ 2023+ 2023+
Imfinzi
+ VEGF +
TACE
EMERALD-1
PD-L1 mAb +
VEGF + TACE
locoregional hepatocellular carcinoma
PP
H2 2022 H2 2022 H2 2022
2023
Imfinzi
+ VEGF
EMERALD-2
PD-L1 mAb +
VEGF
adjuvant hepatocellular carcinoma
PP
2023 2023 2023 2023
Imfinzi
CALLA
PD-L1 mA b
locally-advanced cervical cancer
PP
H2 2022 H2 2022 H2 2022 H2 2022
Imfinzi
+ CTx
NIAGARA
PD-L1 mAb +
CTx
muscle invasive bladder cancer
PP
2023 2023 2023
N/A
Imfinzi
+ EV +/-
treme
VOLGA
PD-L1 +
nectin-4
targeting
antibody drug
conjugate
+/- CTLA4
muscle invasive bladder cancer
2023+ 2023+ 2023+
N/A
Imfinzi
POTOMAC
PD-L1 mA b
non muscle invasive bladder cancer
PP
2023+ 2023+ 2023+
N/A
Imfinzi
(platform)
MAGELLAN
PD-L1 mAb +
multiple novel
oncology
therapies
+/- CTx
1st-line metastatic non-small cell lung cancer
PP
Phase II
Imfinzi
(platform)
BEGONIA
PD-L1 mA b
with paclitaxel
and multiple
novel
oncology
therapies
1st-line metastatic triple negative
breast cancer
PP
Phase II
Lynparza
OlympiA
PARP inhibitor
germline breast cancer gene adjuvant
breast cancer
PP
Accepted
(Priority
Review)
Accepted
Submitted
(Orphan
Drug
Designation)
2023
Lynparza
(basket)
MK-7339-002/
LYNK002
PARP inhibitor
homologous recombination repair
gene mutation
PP
Phase II
Significant Life-cycle Management
continued
5
Development PipelineDevelopment Pipeline
Development Pipeline
continued
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Lynparza
+
abiraterone
PROpel
PARP inhibitor
+ NHA
prostate cancer
PP
H1 2022
Accepted
H1 2022
2023+
Lynparza
LYNK-0 0 3
PARP inhibitor
platinum sensitive 1st-line colorectal cancer
PP
2023 2023 2023 2023
Lynparza
#
MONO-OLA1
PARP inhibitor
1st-line breast cancer gene wild-type
ovarian cancer
PP
2023+ 2023+ 2023+ 2023+
Tagrisso
LAURA
EGFR inhibitor
Stage III EGFRm non-small cell lung cancer
2023 2023 2023 2023
Tagrisso
+ CTx
FLAURA2
EGFR inhibitor
+ CTx
1st-line advanced EGFRm non-small cell
lung cancer
2023 2023 2023+
Tagrisso
+/- CTx
neoadjuvant
NeoADAURA
EGFR inhibitor
+/- CTx
Stage II/III resectable EGFRm NSCLC
2023+ 2023+ 2023+ 2023+
Tagrisso
ADAURA
EGFR inhibitor
adjuvant EGFRm non-small cell lung cancer
Launched
(Breakthrough
Therapy
Designation,
Priority
Review)
Approved
Submitted
Launched
CVRM
Brilinta/Brilique
THALES
P2Y12
receptor
antagonist
acute ischaemic stroke or transient
ischaemic attack
Launched
N/A
Accepted
Bydureon BCise
(autoinjector)
GLP-1
receptor
agonist
type-2 diabetes
Launched Launched
N/A
H2 2022
Farxiga/Forxiga
DAPA-CKD
SGLT-2
inhibitor
renal outcomes and cardiovascular mortality
in patients with chronic kidney disease
Launched
(Fast Track
Breakthrough
Therapy
Designation)
Launched
Launched
(Priority
Review)
Accepted
Farxiga/Forxiga
DAPA-MI
SGLT-2
inhibitor
prevention of heart failure and
cardiovascular (CV) death following
a myocardial infarction
2023+ 2023+
N/A N/A
Farxiga/Forxiga
DELIVER
SGLT-2
inhibitor
worsening heart failure or CV death in patients
with chronic heart failure (HFpEF)
H2 2022 H2 2022 H2 2022 H2 2022
Lokelma
DIALIZE-Outcomes
potassium
binder
CV outcomes in patients on chronic
haemodialysis with hyperkalaemia
2023+
(Fast Track)
2023+
N/A
2023+Lokelma
STABILIZE-CKD
potassium
binder
hyperkalaemia in chronic kidney disease
2023+ 2023+ 2023+ 2023+
roxadustat
hypoxia-
inducible
factor prolyl
hydroxylase
inhibitor
anaemia in myelodysplastic syndrome
PP
2023+ 2023+
roxadustat
hypoxia-
inducible
factor prolyl
hydroxylase
inhibitor
chemotherapy induced anaemia
PP
Phase II
Xigduo XR/Xigduo
SGLT-2
inhibitor/
metformin
FDC
type-2 diabetes
Launched Launched
H1 2022
Respiratory & Immunology
Breztri/Trixeo
(PT010)
KALOS
LAGOS
LABA/LAMA/
ICS
asthma
2023+ 2023+ 2023+ 2023+
Fasenra
RESOLUTE
IL-5R mAb
chronic obstructive pulmonary disease
PP
2023+ 2023+ 2023+
Fasenra
ARROYO
IL-5R mAb
chronic spontaneous urticaria
Phase II
Fasenra
FJORD
IL-5R mAb
bullous pemphigoid
2023+ 2023+ 2023+ 2023+
Fasenra
HILLIER
IL-5R mAb
atopic dermatitis
Phase II
Fasenra
MAHALE
IL-5R mAb
non-cystic fibrosis bronchiectasis
2023+ 2023+ 2023+
Fasenra
MANDARA
IL-5R mAb
eosinophilic granulomatosis with polyangiitis
2023 2023 2023 2023+
Fasenra
MESSINA
IL-5R mAb
eosinophilic esophagitis
2023 2023 2023
Fasenra
NATRON
IL-5R mAb
hypereosinophilic syndrome
2023 2023 2023 2023+
Fasenra
OSTRO
ORCHID (China/
Japan)
IL-5R mAb
nasal polyps
PP
Accepted
2023+ 2023+
Saphnelo
Type I IFN
receptor mAb
lupus nephritis
PP
Phase II
Significant Life-cycle Management
continued
6
Development Pipeline
Development Pipeline
continued
Compound Mechanism
Area Under Investigation
Estimated Filing Acceptance
Additional information
US
EU
JapanChina
Saphnelo
TULIP-SC
Type I IFN
receptor mAb
systemic lupus erythematosus
(subcutaneous)
PP
2023+ 2023+ 2023+
Tezspire
(tezepelumab)
TSLP mAb
chronic obstructive pulmonary disease
PP
Phase II
Tezspire
(tezepelumab)
WAYPOINT
TSLP mAb nasal polyps
PP
2023+ 2023+ 2023+ 2023+
Rare Disease
Andexxa
(ALXN2070)
anti-factor Xa
reversal
urgent surgery
Phase II
Andexxa
(ALXN2070)
anti-factor Xa
reversal
acute major bleed
Launched
(Accelerated
approval)
Launched
Accepted
(Orphan
drug)
Ultomiris
(ALXN1210)
anti-
complement
C5 mAb
dermatomyositis
Phase II/III
Ultomiris
(ALXN1210)
anti-
complement
C5 mAb
generalised myasthenia gravis
Accepted
(Priority
Review)
Accepted Accepted
Ultomiris
(ALXN1210)
anti-
complement
C5 mAb
neuromyelitis optica spectrum disorder H2 2022 H2 2022 H2 2022
Ultomiris
(ALXN1210)
anti-
complement
C5 mAb
haematopoietic stem cell transplant–
associated thrombotic microangiopathy
2023+
(Orphan Drug
Designation)
2023+ 2023+
Ultomiris
(ALXN1210)
anti-
complement
C5 mAb
subcutaneous, paroxysmal nocturnal
haemoglobinuria and atypical haemolytic
uraemic syndrome
Accepted
(Orphan Drug
Designation)
H1 2022
Ultomiris
(ALXN1210)
anti-
complement
C5 mAb
complement-mediated thrombotic
microangiopathy
2023+ 2023+
Significant Life-cycle Management
continued
7
Development Pipeline
Development Pipeline
continued
What science can do
AstraZeneca
Patent Expiries of Key Marketed Products 2021
References to Notes and page numbers, and capitalised terms not dened in this supplement can be found in AstraZeneca’s
Annual Report and Form 20-F Information 2021 at www.astrazeneca.com/annualreport2021.
Patents covering our products are, or may be, challenged by third parties. Generic products may be launched ‘at risk’ and our patents may be
revoked, circumvented or found not to be infringed. The expiry dates shown below include granted SPC/PTE and/or Paediatric Exclusivity periods
(as appropriate). In Europe, the exact SPC situation may vary by country as different Patent Offices grant SPCs at different rates. Expiry dates in
mulberry relate to new molecular entity patents, the remaining dates relate to other patents. The expiry dates of relevant regulatory data
exclusivity periods are not represented in the table below. A number of our products are subject to generic competition in one or more markets.
parties. Details of material challenges by third parties can be found in Note 30 to the Financial Statements from page 189.
Key marketed
products
Description
USChina
EU
1
Japan
US
Product Sales ($m)
Aggregate Product
Sales Ex-US
($m)
2021
2020
20212019
2020
2019
Oncology
Calquence
(acalabrutinib)
A selective inhibitor of Bruton’s tyrosine
kinase indicated for the treatment of chronic
lymphocytic leukaemia (CLL) and mantle cell
lymphoma (MCL) and in development for the
treatment of multiple B-cell malignancies.
2026
–
2032
,
2032–2036
2032,
2036
2032
,
2036
2
2032
1,089
511
162
149
11
2
Enhertu
3
(trastuzumab
deruxtecan)
A HER2-directed antibody drug conjugate
(ADC) indicated for the treatment of
unresectable or metastatic HER2-positive
breast cancer following two or more prior
anti-HER2 based regimens, and locally
advanced or metastatic HER2-positive gastric
or gastroesophageal junction adenocarcinoma
following a prior trastuzumab-based regimen.
2033 2033 2033
–
2035–
20354
–
– –
17
– –
Faslodex
(fulvestrant)
An injectable oestrogen receptor antagonist,
used for the treatment of hormone receptor
positive advanced breast cancer that has
progressed following treatment with prior
endocrine therapy.
2021
5
expired
2021
2025–2026
30
55
328
401
525564
Imfinzi
(durvalumab)
A human monoclonal antibody that blocks
PD-L1 interaction with PD-1 and CD80 on
T-cells, countering the tumour’s immune-
evading tactics and inducing an immune
response. It is currently indicated for the
treatment of unresectable Stage III non-small
cell lung cancer (NSCLC), extensive-stage small
cell lung cancer and previously treated patients
with advanced bladder cancer.
2031
2030 2030 2033
1,245
1,185
1,041
1,167
857
428
Iressa
(gefitinib)
An epidermal growth factor receptor-tyrosine
kinase inhibitor (EGFR-TKI) that acts to block
signals for cancer cell growth and survival in
advanced NSCLC.
expired
6
2023 2023 2023
11
14
17
172
254
406
Koselugo
(selumetinib)
An inhibitor of mitogen-activated protein
kinases 1 and 2 (MEK1/2). MEK1/2 proteins
are upstream regulators of the extracellular
signal-related kinase (ERK) pathway. Both MEK
and ERK are critical components of the
RAS-regulated RAF-MEK-ERK pathway, which
is often activated in different types of cancers.
2023
,
2023–2026
2023
,
2026–2029
2023
,
2026–2029
2023
,
2023–2029
104
38
– –
4
–Lumoxiti
(moxetumomab
pasudotox-tdfk)
A CD22-directed cytotoxin and a first-in-class
treatment in the US for adult patients with
relapsed or refractory hairy cell leukaemia.
2022
–
2024
,
2031–2032
2031
2022
,
2031
2031
1
1 –
–– –
Lynparza
7
(olaparib)
An oral poly ADP-ribose polymerase (PARP)
inhibitor that blocks DNA damage response
(DDR) in cells/tumours harbouring a deficiency
in homologous recombination repair, such as
mutations in BRCA1 and/or BRCA2. It is
indicated for platinum-sensitive relapsed
ovarian cancer, regardless of BRCA status,
1st-line maintenance treatment of BRCA-
mutated (BRCAm) advanced ovarian cancer, for
germline BRCAm (gBRCAm) HER2-negative,
metastatic breast cancer and for gBRCAm
metastatic pancreatic cancer.
2022
–
2024
,
2028
*,
2024–2031
2021
–
2024
,
2024–2029
2021
–
2029
,
2024–2029
2021
–
2029
,
2024–2034
1,087
876
1,261626
900
572
1
Patent Expiries of Key Marketed Products
Patent Expiries of Key
Marketed Products
Key marketed
products
Description
USChina
EU
1
Japan
US
Product Sales ($m)
Aggregate Product
Sales Ex-US
($m)
2021
2020
20212019
2020
2019
Orpathys
(savolitinib)
An oral, potent and highly selective MET TKI
that blocks atypical activation of the MET
receptor tyrosine kinase pathway.
2030 2030 2030 2030
–
– –
16
– –
Tagrisso
(osimertinib)
An EGFR-TKI indicated for the adjuvant
treatment of patients with early-stage
EGFR-mutated NSCLC and for locally advanced
or metastatic EGFR-mutated NSCLC.
2032
,
2035
2032 2032
,
2035
2034
,
2035
1,780
1,566 1,268
3,235
2,762
1,921
Zoladex
8
(goserelin
acetate implant)
A luteinising hormone-releasing hormone
(LHRH) agonist used to treat prostate cancer,
breast cancer and certain benign
gynaecological disorders.
2022
2021 2021 2021
13
5 7
935
883
806
CVRM
Brilinta
/
Brilique
(ticagrelor)
An oral P2Y12 platelet inhibitor for acute
coronary syndromes (ACS) (ticagrelor 90mg)
or continuation therapy in high-risk patients
(ticagrelor 60mg) with a history of myocardial
infarction (MI). An oral P2Y12 platelet inhibitor
for the prevention of atherothrombotic events in
adult patients with acute coronary syndromes
(ACS) or high-risk patients with history of
myocardial infarction (MI), high-risk patients
with coronary artery disease (CAD) or stroke.
2024
9
,
2021–2036
2021
10
2024
,
2021
2023
–
2024
,
2025–2030
735
732
737710
861
871
Bydureon
/
Bydureon
BCise
(exenatide XR
injectable
suspension)
An injectable glucagon-like peptide-1 (GLP-1)
receptor agonist available as a single-dose tray,
a single-dose pen or auto-injector device
indicated for use in adults with type-2 diabetes.
2022–2028,
2031
11
2021–2028,
2029
11
2021–2028,
2029
11
2021–2028,
2029
11
321
382
459
64
66
90
Byetta
(exenatide
injection)
An injectable GLP-1 receptor agonist indicated
for adults with type-2 diabetes.
expired expired
2021
expired26
37
68
30
31
42
Crestor
(rosuvastatin
calcium)
A statin for dyslipidaemia and
hypercholesterolaemia.
2021–2022
12
2021
expired
2023
80
92
104
1,016
1,088
1,174
Farxiga
/
Forxiga
(dapagliflozin)
A sodium-glucose cotransporter 2 (SGLT-2
inhibitor) indicated for adult patients with type-2
diabetes or in adults with or without type-2
diabetes with heart failure with reduced ejection
fraction or chronic kidney disease.
2025
,
2025–2040
2023
,
2028
2027
2024
–
2025
,
2028
644
456
434
1,770
1,049
748
Komboglyze
/
Kombiglyze
XR
13
(saxagliptin/
metformin)
Combines saxagliptin and metformin
as either
Komboglyze
– for type-2 diabetes, or
Kombiglyze
XR – an extended release tablet
for type-2 diabetes.
2023
,
2025
2021
,
2025
2021
–
2026
,
2025
4
32
56
–
92
82
87
Lokelma
(sodium
zirconium
cyclosilicate)
An insoluble, non-absorbed sodium zirconium
silicate, formulated as a powder for oral
suspension, that acts as a highly selective
potassium-removing agent for the treatment
of hyperkalaemia.
2032–2035 2033–2034 2032
14
2032–2037
115
57
13
60
19
1
Onglyza
(saxagliptin)
An oral dipeptidyl peptidase 4 (DPP-4) inhibitor
for type-2 diabetes.
2023
,
2028
2021
,
2025
2024
,
2025
4
56
110
230
179
222
209
Roxadustat
15
An oral hypoxia-inducible factor prolyl
hydroxylase inhibitor (HIF-PHI) indicated for
the treatment of anaemia from chronic
kidney disease.
2024
,
2024–2034
2024
,
2024–2033
4 4
–
– –
174
– –
Qtern
(dapagliflozin/
saxagliptin)
A once-daily oral treatment combination of
dapagliflozin and saxagliptin indicated for use
in adults with type-2 diabetes.
2025
,
2025–2029
2023
2027
2024
–
2025
4
5 6
3722
12
Xigduo
/
Xigduo
XR
(dapagliflozin/
metformin)
Combines dapagliflozin and metformin as either
Xigduo
– to improve glycaemic control in adults
with type-2 diabetes who are inadequately
controlled on metformin alone or
Xigduo
XR –
an extended release tablet for adults with
type-2 diabetes who are inadequately
controlled on metformin alone.
2025
,
2025–2030
2023
2028
2024
2025–
,
2030
88
113
103
498
340
257
2
Patent Expiries of Key Marketed Products
Patent Expiries of Key
Marketed Products
c ontinued
Key marketed
products
Description
USChina
EU
1
Japan
US
Product Sales ($m)
Aggregate Product
Sales Ex-US
($m)
2021
2020
20212019
2020
2019
Respiratory &
Immunology
Bevespi
Aerosphere
(glycopyrrolate/
formoterol)
A combination of a long-acting muscarinic
antagonist (LAMA) and a long-acting
beta2-agonist (LABA) used for the long-term
maintenance treatment of airflow obstruction
in COPD.
2030–2031 2030 2030 2030–2034
39
44
4215
4 –
Breztri
Aerosphere
(PT010)
(budesonide/
glycopyrrolate/
formoterol)
A fixed-dose triple combination of an inhaled
corticosteroid (ICS), a LAMA and a LABA,
used for the long-term maintenance treatment
of COPD.
2030–2031 2030 2030 2030–2034
115
5 –
88
23
2Daliresp
/
Daxas
(roflumilast)
An oral phosphodiesterase-4 inhibitor for
adults with severe COPD to decrease their
number of exacerbations.
2023–2024 2023 2023
expired
207
190
184
20
27
31
Duaklir/Brimica
16
(aclidinium/
formoterol)
A fixed-dose combination of a LAMA and a
LABA for the maintenance treatment of COPD.
2025
,
2022–2029
2022–2027
2025
,
2022–2029
2025
,
2021–2029
–
– 3
77
69
74
Fasenra
(benralizumab)
A monoclonal antibody for add-on maintenance
treatment of patients with severe asthma aged
12 years and older, and with an eosinophilic
phenotype, which directly targets and depletes
eosinophils by recruiting natural killer cells and
inducing apoptosis (programmed cell death).
2024
,
2028–2034
2021
,
2028
2025
,
2028–2034
2025
,
2034
790
603
482
468
346
222
Pulmicort
(budesonide)
An inhaled corticosteroid for maintenance
treatment of asthma.
expired expired expired expired
72
71
110
890
925
1,356
Saphnelo
(anifrolumab)
A first-in-class fully human monoclonal antibody
for moderate to severe systemic lupus
erythematosus (SLE) that binds to subunit 1 of
the type I IFN receptor, blocking the activity of
type I IFNs. Type I IFNs such as IFN-alpha,
IFN-beta and IFN-kappa are cytokines involved
in regulating the inflammatory pathways
implicated in SLE.
2025–2029
,
2033–2036
2025–2029 2025–2029
,
2036
2025–2029
,
2033–2036
8
– –
–– –
Symbicort
(budesonide/
formoterol)
A combination of an inhaled corticosteroid and
a fast-onset LABA to treat asthma and/or COPD
either as
Symbicort
Turbuhaler
or
Symbicort
pMDI (pressurised metered-dose inhaler).
2022–
2029
17
expired
18
expired
18
expired
18
1,065
1,022
1,663829
1,699
1,666
Tudorza/Eklira/
Bretaris
16
(aclidinium)
A LAMA for the maintenance treatment
of COPD.
2025
,
2022–2029
2022–2027
2025
,
2022–2029
2025
,
2021–2029
18
6 2
44
54
70
Rare Disease
Soliris
(eculizumab)
A C5 inhibitor for the treatment of paroxysmal
nocturnal haemoglobinuria, atypical haemolytic
uraemic syndrome, generalised myasthenia
gravis and neuromyelitis optica spectrum
disorder.
2027
19
,
2025–2029
2027
20
2027
,
2029
1,068
– –
806
– –
Ultomiris
(ravulizumab)
A long-acting C5 inhibitor for the treatment of
paroxysmal nocturnal haemoglobinuria and
atypical haemolytic uraemic syndrome.
2035
,
2036–2042
2035
,
2036–2042
2035
,
2036–2042
2035
,
2036–2042
381
– –
307
– –
Strensiq
(asfotase alfa)
A targeted enzyme replacement therapy for
patients with hypophosphatasia.
2025
–
2029
,
2035–2038
2025
–
2031
,
2036
2028
,
2035–2036
297
– –
81
– –
Kanuma
(sebelipase alfa)
A recombinant form of the human LAL enzyme,
the enzyme replacement therapy is for the
treatment of lysosomal acid lipase deficiency.
2031 2031 2031
,
2026–2037
2031
32
– –
30
– –
Andexxa/
Ondexxya
(andexanet alfa)
A factor Xa inhibitor reversal agent.
2028
,
2030–2037
2028
,
2030–2035
2028
,
2030–2037
2028
,
2030–2035
50
– –
18
– –
3
Patent Expiries of Key Marketed Products
Patent Expiries of Key
Marketed Products
c ontinued
Key marketed
products
Description
USChina
EU
1
Japan
US
Product Sales ($m)
Aggregate Product
Sales Ex-US
($m)
2021
2020
20212019
2020
2019
Other
Fluenz
Tetra/
FluMist
Quadrivalent
(live attenuated
influenza vaccine)
A live attenuated vaccine indicated for active
immunisation for the prevention of influenza
disease caused by influenza A subtype viruses
and type B viruses contained in the vaccine.
2025–2026
2025 2025 2025
21
27
70
20
226
225
93
Linzess
(linaclotide)
A guanylate cyclase-C agonist for the treatment
of irritable bowel syndrome with constipation
(IBS-C) in adults.
4
2024,
2029
4 4
–
– –
–– –
Nexium
23
(esomeprazole)
A proton pump inhibitor used to treat
acid-related diseases.
expired expired expired expired
128
169
218
1,19 8
1,323 1,265
Synagis
(palivizumab)
A humanised mAb used to prevent serious
lower respiratory tract disease caused by
respiratory syncytial virus (RSV) in paediatric
patients at high risk of acquiring RSV disease.
2023
22
expired
2023 2023
23
47
46
387
325
312
Vaxzevria
(ChAdOx1-S
[Recombinant])
An adenoviral vector vaccine, based on a
weakened version of the common cold virus,
for active immunisation against COVID-19.
2032 2032 2032 2032
64
– – –
3,853
2Evusheld
(tixagevimab
co-packaged
with cilgavimab)
A combination of two long-acting antibodies,
developed for the prevention and treatment of
COVID-19.
–
– –
85
– –
*
Date represents expiry of a pending SPC/PTE and/or Paediatric Exclusivity period.
1
Expiry in major EU markets, which includes the UK.
2
The patent is the subject of a pending opposition proceeding at the European Patent Oce (EPO).
3
AstraZeneca has recorded $193m of Collaboration Revenue in relation to this Product in 2021 as per Note 1 on page 146 and recorded $94m of Collaboration Revenue in relation to this
Product in 2020.
4
AstraZeneca does not have commercialisation rights.
5
Settled with various generic companies for licensed entry dates of 25 March 2019 or later.
6
In the US,
Iressa
has seven years’ Orphan Drug exclusivity to 13 July 2022.7
In addition to any product sales, AstraZeneca has also recorded $400m of Collaboration Revenue in relation to this Product in 2021 as per Note 1 on page 146 and recorded $460m of
Collaboration Revenue in relation to this Product in 2020.
8
Rights licensed to TerSera in the US. In addition to any product sales, AstraZeneca has also recorded $35m of Collaboration Revenue in relation to this Product in 2020 as per Note 1 on
page 146.
9
Separate settlements with ANDA challengers for a licensed entry date corresponding to the expiry of US Patent No. RE46,276, subject to regulatory approval.
10
The patent was invalidated during invalidation proceedings at the CNIPA. The patentee has appealed that decision.
11
Patent expiry date relates to
BCise
.
12
A settlement agreement in the US permitted Watson Laboratories, Inc. and Actavis, Inc. (together, Watson) to begin selling its generic version of
Crestor
and its rosuvastatin zinc product
from 2 May 2016.
13
Komboglyze
/
Kombiglyze
XR revenue is included in the
Onglyza
revenue gure.
14
The patent is the subject of a pending opposition proceeding at the EPO. The patentee successfully defended the patent in that proceeding, but the opponents have appealed.
15
AstraZeneca has recorded $6m of Collaboration Revenue in relation to this Product in 2021 as per Note 1 on page 146 and recorded $30m of Collaboration Revenue in relation to this
Product in 2020.
16
Rights to
Duaklir/Brimica
and Tudorza
/
sold to Covis Pharma GmbH.Eklira/Bretaris
17
Patent expiry information relates to the
Symbicort
pMDI product, including any granted Paediatric Exclusivity term.18
Patent expiry information relates to the
Symbicort
Turbuhaler
product.
19
Settled with biosimilar manufacturer Amgen for a licensed entry date of March 2025, or later, subject to regulatory approval.
20
The patent was revoked during opposition proceedings at the EPO. The patentee has appealed that decision.
21
Rights licensed to Daiichi Sankyo Company, Ltd.
22
Rights sold to Swedish Orphan Biovitrum AB (publ).
23
AstraZeneca has recorded $75m of Collaboration Revenue in relation to this Product in 2021 as per Note 1 on page 146.
4
Patent Expiries of Key Marketed Products
Patent Expiries of Key
Marketed Products
c ontinued
What science can do
AstraZeneca
Risk Supplement 2021
References to Notes and page numbers, and capitalised terms not dened in this supplement, can be found in AstraZeneca’s Annual
Report and Form 20-F Information 2021 at www.astrazeneca.com/annualreport2021.
Risks and uncertainties
In this section, we describe the risks and uncertainties that we consider material to our business, in that they may have a significant effect on our
financial condition, results of operations, and/or reputation.
These risks are not listed in any particular order of priority. We believe that the forward-looking statements about AstraZeneca, identified by
words such as ‘anticipates’, ‘believes’, ‘expects’ and ‘intends’, and that include, among other things, future prospects in the Financial Review on
page 52, are based on reasonable assumptions. However, forward-looking statements involve inherent risks and uncertainties such as those
summarised below. They relate to events that may occur in the future, that may be influenced by factors beyond our control and that may have
actual outcomes materially different from our expectations. Therefore, other risks, unknown or not currently considered material, could have a
material adverse effect on our financial condition, results of operations and/or reputation.
Product pipeline risks
Impact
Failure or delay in the delivery of our pipeline or launch of new medicines
Our continued success depends on the development and successful launch of
innovative new drugs.
The development of pharmaceutical product candidates is a complex, risky and
lengthy process involving significant resources. A project may fail at any stage of the
process due to various factors, including: failure to obtain the required regulatory or
marketing approvals, unfavourable clinical efficacy data, safety concerns, failure to
demonstrate adequate cost-effective benefits to regulatory authorities and/or payers,
and the emergence of competing products.
Disease Area Review from page 16.
Launch activities may be delayed by a number of factors, including: adverse findings
in pre-clinical or clinical studies, regulatory demands, price negotiation, large-scale
natural disasters or global pandemics, competitor activity and technology transfer.
In addition to developing products in-house, we continue to expand our portfolio
through licensing arrangements and strategic collaborations which may not ultimately
be successful.
Failure or delay in development of new product candidates could
damage the reputation of our R&D capabilities, and materially
adversely affect our future business and results of operations. See also
Failure to achieve strategic plans or meet targets or expectations on
page 51.
Delays to launches can lead to excess expenses in the manufacture
of pre-launch product stocks, marketing materials and sales force
training. For the launch of products that are seasonal in nature, delays
in regulatory approvals or manufacturing may delay launch to the next
season which, in turn, may significantly reduce the return on costs
incurred in preparing for the launch for that season. Furthermore,
in immuno-oncology in particular, speed to market is critical given the
large number of clinical trials being conducted by competitors. Delay
of launch can also erode the term of patent exclusivity.
Competition from other pharmaceutical companies means that we may
have to pay a significant premium over book or market values for our
acquisitions. Failure to complete collaborative projects in a timely,
cost-effective manner may limit our ability to access a greater portfolio
of products, IP, technology and shared expertise. In many cases we
make milestone payments in advance of the commercialisation of the
products, with no assurance of recouping costs.
Failure to meet regulatory or ethical requirements for medicine development or approval
We are subject to laws and regulations that control our ability to market our
pharmaceutical products. Our development programmes must meet many standards
in order to prove that our products are safe, effective and of high quality. These
standards vary by country and region. Health authorities, such as the FDA in the US
and the EMA in the EU, can refuse to grant approval for our products, or they may
require us to conduct additional clinical trials or scientific testing for our products,
or provide additional data before they will approve our products for marketing. The EU
Clinical Trials Regulation, which is intended to create a favourable environment for
conducting clinical trials while maintaining high standards for patient safety, came into
application on 31 January 2022. EMA expects pharmaceutical companies to submit
product data in Identification of Medicinal Products (IDMP) format, presenting a
significant challenge to the industry as the requirements are complex.
Many factors influence a health authority’s decision to approve or reject a marketing
application for a pharmaceutical product. These include: advances in science and
technology; new laws, regulations and policies; different standards for evaluating
safety and effectiveness by health authorities; and input from the general public and
public interest groups.
Delays in regulatory approvals could impact our ability to market our
products and may adversely affect our revenue. In addition, post-
approval requirements, including additional clinical trials, could result
in increased costs. We seek to manage these risks, but policymaking
by governments and health authorities is unpredictable at times, and
unforeseen circumstances, such as public health emergencies, may
strain health authority resources. These factors may delay the approval
of our products.
Following approval, a health authority may require us to conduct additional clinical
trials or scientific testing to address concerns raised after our products have been used
by patients in the marketplace.
New data may impact a product’s approval status or lead to labelling
changes that may limit the use of a product.
While we support transparency efforts to make clinical trial data more
publicly accessible, inappropriate or incorrect independent analyses
may damage a product’s integrity and our Company’s reputation.
Risk
1
Risk
Commercialisation risks
Impact
Failures or delays in the quality or execution of the Group’s commercial strategies
The successful launch of a new pharmaceutical product involves substantial
investment in sales and marketing activities, launch stocks and other areas. We may
ultimately be unable to achieve commercial success for various reasons, including:
difficulties in manufacturing sufficient quantities of the product candidate for development
or commercialisation in a timely manner; the impact of price control measures imposed
by governments and healthcare authorities; the outcome of negotiations with
third-party payers; erosion of IP rights, including infringement by third parties; failure
to show a differentiated product profile and changes in prescribing habits.
Failure to execute our commercial strategies or failure to achieve the
level of sales anticipated to recoup launch and development investment,
could materially adversely impact our business or results of operations.
The ability to successfully carry out business in emerging markets can be more
challenging than in established markets. Such challenges may include: volatility
in economic or political climates; inadequate protection against crime (including
counterfeiting, corruption and fraud) and inadvertent breaches of local and
international law.
Failure to leverage potential opportunities or appropriately manage
risks in emerging markets, may materially adversely affect our
reputation, business or results of operations.
The commercialisation of biologics and rare disease therapies is often more complex
than for small molecule pharmaceutical products, primarily due to differences in the
mode of administration, technical aspects of the product, and rapidly changing
distribution and reimbursement environments.
Failure to effectively commercialise biologics and rare disease
therapies could prevent us realising the full value of a significant
proportion of our pipeline, as well as result in delays to launch
and material write-offs.
Pricing, aordability, access and competitive pressures
Operating in more than 100 countries, we are subject to political, socio-economic
and financial factors around the world. A sustained global economic downturn may
adversely impact our business.
Global pressures to reduce healthcare spending mean many of our key markets
experience the implementation of various controls, reimbursement mechanisms
or cost-containment measures for pharmaceutical products, including:
>
drug pricing system reforms
>
restrictive reimbursement policies
>
payer consolidation in the US
>
price transparency
>
reference pricing
>
expedited approval of generic drugs and introduction of policies which encourage
generic utilisation
>
cost transparency.
A summary of the principal aspects of price regulation and how pricing pressures are
affecting our business in our most important markets is set out in the Impact section
to the right.
Geopolitical tensions and the escalation of trade disputes may lead to sanctions,
such as the unilateral imposition of tariffs, or non-tariff barriers.
Price control measures could have a relatively high impact on our Rare Disease
portfolio, given higher annual prices of orphan medicines and small patient populations.
Deterioration of, or lack of improvement in, socio-economic conditions,
could adversely affect supply and/or distribution in affected countries,
and the ability or willingness of customers to purchase our medicines,
putting pressure on price and/or volumes. This could adversely affect
our business or results of operations – for example, those health
systems most severely impacted by downturn may seek alternative
ways to settle their debts at a discount. Other customers may cease
to trade, which may result in losses from writing off debts, or a
reduction in demand for products.
A downturn may exacerbate pressure from governments and other
healthcare payers on medicine prices and volumes of sales, and may
cause a slowdown in growth, or sales decline, in some markets.
For example, in the US, any future changes to the Affordable Care Act
(ACA), or any significant spending reductions or cost controls affecting
Medicare, Medicaid or other publicly funded or subsidised health
programmes, could adversely affect our business and financial results.
Additionally, in the US, consolidation and integration of drug
distributors, retail pharmacy chains, private insurers, managed care
organisations and other purchasing organisations may continue to
have an effect on pharmaceutical manufacturers, including
AstraZeneca.
Another example of commercial pressure is pricing control in China;
119 medicines, including AstraZeneca medicines, were added to the
National Reimbursement Drug List (NRDL) in March 2021, with an
average price reduction of 51%. Volume-based procurement (VBP)
was also expanded in 2021, placing downward pressure on the price
of medicines that have lost exclusivity and are facing local competition
from Generic Quality Consistency Evaluation (GQCE)-validated products.
In Europe, governments continue to implement and expand price
control measures for medicines. The EU has also committed to
introducing a joint health technology assessment (HTA) review, which
may delay reimbursement decisions.
In other markets, there has been a trend towards rigorous and
consistent application of pricing regulations, including reference
pricing and group purchasing.
The implementation of tariffs or non-tariff barriers may increase the
cost to supply medicines, or reduce the volumes sold in markets,
adversely impacting our financial results.
2
Risk
Risk
continued
Supply chain and business execution risks
Impact
Failure to maintain supply of compliant, quality medicines
Manufacturing and supply difficulties, delays and interruptions, including:
>
Product demand significantly in excess of what has been forecasted, or supply chain
disruptions (e.g. due to natural disasters, COVID-19), may lead to supply shortages.
>
Delays in construction of new facilities or the expansion of existing facilities to support
future demand for our products, including new types of medicine.
>
The inability to supply products due to a product quality failure (including a failure
to manufacture in accordance with Good Manufacturing Practices (GMP) or other
regulations) or regulatory compliance action, such as licence withdrawal, product
recall or product seizure.
>
Reliance on third-party suppliers for active ingredients, packaging components etc.
Difficulties with manufacturing and supply, forecasting, distribution or
third-party suppliers, may result in product shortages, which may lead
to lost product sales and materially adversely affect our reputation and
revenues. Even slight variations in components or any part of the
manufacturing process may lead to a product that is non-compliant
and does not meet quality standards. This could lead to recalls,
spoilage, product shortage, regulatory action and/or reputational harm.
In the event of insolvency of third-party suppliers, it would be difficult
to substitute in a timely manner or at all.
Illegal trade in the Group’s medicines
The illegal trade of our pharmaceutical products, including counterfeiting, tampering,
theft and illegal diversion (where products are found in a market where we did not send
them and where they are not approved to be sold) may lead to a loss of public
confidence in the integrity of our medicines.
Illegal trade could materially adversely affect our reputation, financial
performance, and pose a direct risk to patient safety. In addition,
concern about this issue may cause some patients to stop taking their
medicines, with consequent risks to their health.
If we are found liable for breaches in our supply chain, authorities may
take action, financial or otherwise, that could restrict the distribution of
our products.
Reliance on third-party goods and services
We spend approximately $20 billion each year with trade suppliers. The spend
supports the length of our value chain from discovery to manufacture and
commercialisation of our medicines.
Many of our business-critical operations, including certain R&D processes, IT systems,
HR, finance, tax and accounting services, are outsourced to third-party providers.
We are therefore heavily reliant on these third parties, not just to deliver timely and
high-quality goods and services, but also to comply with applicable laws and
regulations and adhere to our ethical business expectations of third-party providers.
The failure of suppliers to deliver timely goods and services, and to the
required level of quality, or the failure of suppliers to cooperate with
each other, could materially adversely affect our financial condition or
results of operations. Any breach of security, whether physical, cyber
or data related, or failure of these third parties to operate in a way that
is consistent with laws or regulations, may lead to regulatory penalties,
materially affect the results of operations and adversely impact our
reputation.
Failure to successfully manage either the integration of outsourced
services or the transition process of insourcing services from
third parties may lead to business disruption.
3
Risk
Risk
continued
Supply chain and business execution risks
continued
Impact
Failure in information technology or cybersecurity
We are dependent on effective IT systems to support critical business functions. They
provide an essential means of safeguarding and communicating data, including critical
or strictly confidential information, the confidentiality and integrity of which we rely
upon. We must ensure personal data that we or our third-party providers manage is
protected and complies with increasingly stringent global privacy laws. Examples of
strictly confidential information that we hold includes clinical trial records, personal
information, intellectual property, R&D data, and compliance information. The size and
complexity of our IT systems, cloud utilisation, and third-party vendors we engage,
continue to increase significantly. As a result, such systems are potentially vulnerable
to service interruptions and security breaches from attacks by malicious third parties or
intentional or inadvertent actions by our employees or vendors. Significant changes in
the business footprint or in the implementation of the IT strategy could lead to a
temporary loss of capability.
Any significant disruption to these IT systems (including breaches of
data security or cybersecurity, failure to integrate new and existing
IT systems) or failure to comply with additional requirements under
applicable laws, could harm our reputation and materially adversely
affect our financial condition or results of operations. While we invest
heavily in the protection of our data and IT, we may be unable to
prevent breakdowns or breaches which could result in disclosure of
confidential information, damage to our reputation, regulatory penalties
or sanctions or financial loss. The inability to back up and restore data
effectively could lead to permanent loss of data that could in turn result
in non-compliance with applicable laws and regulations, and otherwise
harm our business.
We increasingly use the internet, digital content, social media, mobile applications,
the Internet of Things (IoT), artificial intelligence, and other forms of new technology
to process our data and communicate internally and externally.
The accessibility and instantaneous nature of interactions with such
media may exacerbate the risk of unauthorised data loss from
AstraZeneca. This could lead to the unauthorised or unintentional
public disclosure of confidential information which may damage our
reputation, adversely affect our business or results of operations, and
expose us to legal risks and/or additional legal obligations. Similarly,
the involuntary public disclosure of commercially sensitive information
could adversely affect our business or results of operations. In
addition, negative posts, or comments about us (or, for example, the
safety of our products) on social media websites or other digital
channels, could harm our reputation, brand image or goodwill.
Privacy legislation in various jurisdictions includes obligations to report data protection
breaches, whether intentional or inadvertent, to regulators and affected individuals
within expedited timeframes.
Expedited reporting, often before the nature and impact of a data
breach can be fully understood, could cause reputational damage
and a loss of public trust that may be disproportionate to the extent
of the breach.
We and our vendors could be susceptible to third-party or internal attacks on
our information security systems. Such attacks are of ever-increasing levels of
sophistication and are made by groups and individuals with a wide range of motives
and expertise, including organised criminal groups, ‘hacktivists’, nation states,
employees and others. Occasionally we experience intrusions, including as a
result of computer-related malware.
Although we maintain cybersecurity insurance, there can be no
guarantee that our insurance coverage limits will protect against any
future claim or that such insurance proceeds will be paid to us in a
timely manner.
Failure of critical processes
Unexpected events and/or events beyond our control could result in the failure of
critical processes within the Company or at third parties on whom we are reliant.
The business faces threats to business continuity from many directions. Examples
of material threats include:
>
Disruption to our business or the global markets if there is instability in a particular
geographic region, including as a result of war, terrorism, pandemics, armed conflicts,
riots, unstable governments, civil insurrection or social unrest.
>
Natural disasters in areas of the world prone to extreme weather events, which may
increase in frequency or severity as a result of climate change, and such phenomena
as earthquakes.
>
Cyber threats similar to those detailed in the ‘Failure in information technology or
cybersecurity’ section above.
Crystallisation of such material threats may heighten certain other
risks, such as those relating to the delivery of the pipeline or launch
of new medicines or the manufacture and supply of medicines, and
may lead to loss of revenue and have an adverse impact on our
financial results.
4
Risk
Risk
continued
Supply chain and business execution risks
continued
Impact
Failure to collect and manage data in line with legal and regulatory requirements and strategic objectives
AstraZeneca is obliged to meet legal, regulatory and ethical requirements when it
collects, shares and utilises personal information and is required to operate a privacy
framework, deploying people, processes and technology to manage and mitigate
privacy risks. The COVID-19 pandemic has exacerbated privacy risks, changing practices
relating to the collection and sharing of sensitive health data, including our employees’
health data, and accelerated third-party due diligence of COVID-19 related suppliers.
Failure to demonstrate how AstraZeneca meets these obligations could
cause reputational damage, significant regulatory sanctions, reduced
ability to utilise personal data for scientific and business purposes and
prevent access to wider industry data-sharing initiatives. Given the
evolving external and internal data environment it is important that
AstraZeneca ensures that there is a consistent level of engagement of
senior data ownership and stewardship across the different business
areas, aligned to the data risk profile.
Evolving third-party relationships beyond the traditional vendor/supplier model and
the increased use of digital solutions and applications represents privacy challenges.
In addition, there is increasing regulatory interest in emerging technologies, including
a move towards regulations relating to the utilisation of Artificial Intelligence (AI) and
data other than personal data. This will require appropriate updates to AstraZeneca’s
approach and capabilities in these areas.
Partnerships with entities such as smaller biotech companies and
start-ups in hubs and emerging markets, potentially with less mature
privacy regulations and varying ethical standards, may impact our
ability to demonstrate compliance with core privacy requirements. In
addition, greater reliance on third-parties means less direct oversight
of day-to-day conduct and compliance, with a need for enhanced
third-party risk management.
We continue to see regulatory developments that impact the ability for personal
data to be shared freely across international borders. Recent examples include data
localisation requirements in China’s new personal information law, alongside new
EU regulatory guidance further limiting the ability to transfer personal data from the
EU to the rest of the world.
Responding to these developments in the short term will require
additional controls around personal information transfers, including the
use of contractual commitments with third-parties and the deployment
of additional technical measures. Long term we may see a trend to
more local data storage and access including regional data centres.
Failure to attract, develop, engage and retain a diverse, talented and capable workforce
We rely heavily on recruiting and retaining talented employees with a diverse range
of skills and capabilities to meet our strategic objectives.
There is intense competition for well-qualified individuals, as the supply of people with
certain skills or in specific geographic regions may be limited.
The inability to attract and retain highly-skilled personnel may weaken
our succession plans for critical positions in the medium term, may
materially adversely affect the implementation of our strategic objectives,
and could ultimately impact our business or results of operations.
The successful delivery of our business objectives is dependent on high levels of
engagement and commitment of the workforce, particularly as employees return to
working in office locations following the pandemic. In addition, we need to effectively
integrate Alexion employees to ensure they are engaged and committed to the
AstraZeneca business priorities.
Failure to engage effectively with our employees could lead to business
disruption in our day-to-day operations, reduce levels of productivity
and/or increase levels of voluntary turnover, all of which could ultimately
materially adversely affect our business or results of operations.
Legal, regulatory and compliance risks
Impact
Failure to meet regulatory or ethical expectations on environmental impact, including climate change
Environmental issues will become more material in the marketplace as the wider
healthcare system embraces net-zero climate targets.
The environmental targets and performance of our business will come under increased
scrutiny by investors, governments and non-governmental organisations.
Environmental considerations are starting to become embedded in the public
procurement of goods and services, including medicinal products and devices.
Specific intermediates used to manufacture medicines, or those used as excipients
or propellants, are coming under increased regulation and some may be subject to
time-limited exemptions or potential phase-out.
The physical impacts of climate change could impact the resilience of our business
operations and supply chain.
Investors will increasingly target companies with strong Environmental,
Social and Governance (ESG) performance. We continue to see an
increased requirement to disclose our ESG strategy, targets and
performance. This includes a requirement to quantify the impact of
specific ESG issues on our business and associated mitigation plans
(e.g. the impact of climate change through TCFD and CDP).
Failure to maximise the sustainability credentials of our business,
products and the processes used to make our medicines could
expose us to increased regulatory risk, and put us at a commercial
disadvantage relative to our peers. This could adversely impact our
financial results.
Failure to proactively manage the physical risks associated with climate
change could impact the resilience of our operations and supply chain.
This could result in supply interruptions, loss of stock and adversely
impact our financial results.
5
Risk
Risk
continued
Legal, regulatory and compliance risks
continued
Impact
Safety and ecacy of marketed medicines is questioned
Our ability to accurately assess, prior to launch, the eventual safety or efficacy of a new
product once in broader clinical use can only be based on data available at that time,
which is inherently limited due to relatively short periods of product testing and
relatively small clinical study patient samples.
Any unforeseen safety concerns or adverse events relating to our products, or failure to
comply with laws, rules and regulations relating to provision of appropriate warnings
concerning the dangers and risks of our products that result in injuries, could expose
us to large product liability damages claims, settlements and awards, particularly in the
US. Adverse publicity relating to the safety of a product, or of other competing
products, may increase the risk of product liability claims.
Statements from page 189.
Serious safety concerns or adverse events relating to our products
could lead to product recalls, seizures, loss of product approvals,
declining sales and interruption of supply, and could materially
adversely impact patient access, our reputation and financial revenues.
Significant product liability claims could also arise which could be
costly, divert management attention, or damage our reputation and
demand for our products.
Unfavourable resolution of such current and similar future product
liability claims could subject us to enhanced damages, consumer fraud
and/or other claims, including civil and criminal governmental actions.
This could require us to make significant provisions in our accounts
relating to legal proceedings, and could materially adversely affect our
financial condition or results of operations, particularly where such
circumstances are not covered by insurance.
position on page 7 of the Risk Supplement.
Adverse outcome of litigation and/or governmental investigations
We may be subject to various legal proceedings and governmental investigations.Our
many business operations are subject to a wide range of laws, rules and regulations
from around the world. Any failure to comply with these applicable laws, rules and
regulations may result in AstraZeneca being investigated by relevant governmental
agencies and authorities and/or subject to legal proceedings brought by private
citizens. Relevant authorities have wide-ranging administrative powers to deal with any
failure to comply with continuing regulatory oversight and this could affect us, whether
such failure is our own or that of our contractors or external partners. In particular, the
manufacturing, marketing, exportation, promotional, clinical, pharmacovigilance, and
pricing practices of pharmaceutical manufacturers, as well as the manner in which
manufacturers interact with regulatory agencies, purchasers, prescribers and patients,
are subject to extensive regulation, litigation and governmental investigation. Moreover,
such laws, rules and regulations are subject to change.
Many companies, including AstraZeneca, have been subject to legal
claims asserted by federal and state governmental authorities and
private payers and consumers, which have resulted in substantial
expense and other significant consequences. Governmental
investigations or proceedings could result in us becoming subject to
civil or criminal sanctions and/or being forced to pay fines or damages.
Civil litigation, particularly in the US, is inherently unpredictable and
unexpectedly high awards for damages can result from an adverse
result. In many cases, litigation adversaries may claim enhanced
damages in extremely high amounts.Government investigations,
litigations, and other legal proceedings, regardless of their outcome,
could be costly, divert management attention, or damage our
reputation and demand for our products.Note 30 to the Financial
Statements from page 189 describes the material legal proceedings in
which we are currently involved. Unfavourable resolution of current and
similar future proceedings against us could subject us to criminal
liability, fines, penalties or other monetary or non-monetary remedies,
including enhanced damages, require us to make significant provisions
in our accounts relating to legal proceedings and could materially
adversely affect our business or results of operations.
IP-related risks to our products
IP protection provides the foundation for continued investment in developing innovative
medicines to improve patient health. However,the pharmaceutical industry is
experiencing pressure from governments and other healthcare payers to impose limits
on IP protections in an effort to manage healthcare costs. Additionally, policymakers
are progressively leveraging regulations to expedite the approval of generic drugs and
encourage generic drug utilisation. These policies may drive accelerated utilisation of
generic alternatives to our products following expiry or loss of our IP rights. We also
recognise increasing use of compulsory licensing in some countries in which we operate.
We are subject to numerous patent challenges relating to various products or
processes and assertions of non-infringement of our patents. A loss in any of these
challenges could result in loss of patent protection on the covered product, and a risk
to the revenue generated by the product. We also face the risk that our products may
be found to infringe patents owned or licensed by third parties and be subject to
monetary damages, or compelled to cease sales of the infringing product, resulting in
a potential risk to revenue.
These challenges threaten the value of our investment in pharmaceutical development.
from page 189.
Following expiry of our IP rights, or if we are unable to obtain, defend
and enforce IP that protects our products, we may experience
accelerated and intensified competition from third parties. Also, if our
products are found to infringe a third-party patent, we may be subject
to monetary damages or compelled to cease sales of the infringing
product. These negative outcomes could have an adverse, material
impact on our financial results.
6
Risk
Risk
continued
Economic and nancial risks
Impact
Failure to achieve strategic plans or meet targets or expectations
From time to time, we communicate our business strategy, our targets or performance
expectations (for example, the expectations described in Future prospects in the
Financial Review on page 66). All such statements are of a forward-looking nature and
based on assumptions and judgements, all of which are subject to significant inherent
risks and uncertainties.
Following the acquisition of Alexion in July 2021, we may experience difficulties in
integrating geographically separated organisations, systems and facilities, and
personnel with different organisational cultures.
There can be no guarantee that our financial targets or expectations
will materialise. Actual results may deviate materially and adversely
from any target or expectation.
Any failure to successfully implement our business strategy may
frustrate the achievement of our targets, which may therefore materially
damage our brand, business, financial position or results of operations.
Failure to effectively integrate Alexion into the Group may delay the
realisation of anticipated benefits from the acquisition, incur higher
than anticipated costs of integration, or result in ongoing operational
inefficiencies which may adversely impact the results of operations.
Furthermore, our reported results of operations may be negatively
impacted from acquisition-related charges, amortisation of expenses
related to intangibles, charges for the implementation of long-term
assets, or previously unknown or unidentified contingent liabilities.
Failure in nancial control or the occurrence of fraud
Effective internal controls assist in the provision of reliable Financial Statements and
the detection and prevention of fraud. Testing of internal controls provide only limited
assurance over the accuracy of Financial Statements and may not prevent or detect
misstatements or fraud.
Significant resources may be required to remediate any deficiency in
internal controls. Any such deficiency may trigger related investigations
and may result in fines being levied against individual directors or
officers. Serious fraud may lead to prosecution of senior management.
Unexpected deterioration in the Group’s nancial position
Product sales in countries other than the US are predominantly in currencies other than
the US dollar, including the Chinese renminbi, the euro, Japanese yen and pound sterling.
A number of our existing or future commercial agreements, such as borrowings,
derivative financial instruments and commercial contracts, utilise or may utilise various
London Interbank Offered Rates (LIBOR), or other similar rates as benchmark reference
rates. These rates are the subject of ongoing regulatory reform, the result of which
is expected to see some or all of them partially or fully replaced by alternative
reference rates.
The majority of our cash investments are managed centrally and are invested in AAA
credit-rated institutional money market funds, collateralised bank deposits, fixed
income securities in government, and financial and non-financial securities. This means
our credit exposure is a mix of US, EU and rest of world sovereign default risk, financial
institution and non-financial institution default risk.
Currency fluctuations can significantly affect our results of operations,
which are reported in US dollars. Movements in exchange rates against
the US dollar may materially adversely affect our financial condition or
results of operations.
This may result in potential adjustments or renegotiations being
necessary to our agreements. While different alternative reference
rates are developing, there is a risk that we fail to renegotiate or adjust
our agreements. This could have an adverse effect on the cost, cash
flows, value, return on and trading market of (as appropriate) our
borrowings, derivative financial instruments and other agreements.
In a sustained economic downturn, financial institutions may cease to
trade and there can be no guarantee that we will be able to access
monies owed to us.
Our consolidated balance sheet contains significant investments in intangible assets,
including goodwill. The pharmaceutical business is high risk, and we invest in a large
number of projects in an effort to develop a successful portfolio of approved products.
Our ability to realise value on these investments depends on regulatory approvals,
market acceptance, competition and legal developments.
We expect that some of our intangible assets will become impaired in
the future. Impairment losses may materially adversely affect our
financial condition or results of operations.
Notes 9 and 10 to the Financial Statements from page 156.
Our defined benefit post-retirement obligations (the most significant of which are for
the UK, Sweden and US) can materially change in value, but are largely backed by
invested assets.
Solvency levels could fall, leading to higher contributions if there are:
falls in assets; increases in liability valuations (driven by falls in bond
yields, increases in future inflation or lower than expected mortality);
or changes in regulations. A material increase in deficit may cause
credit agencies to downgrade our rating, negatively affecting our
ability to borrow.
7
Risk
Risk
continued
Economic and nancial risks
continued
Impact
Unexpected deterioration in the Group’s nancial position
continued
We maintain relevant insurance coverage for risks arising within the Group.
Financial liabilities arising where we do not have insurance coverage,
or where an insurer successfully denies coverage, could materially
adversely affect our financial condition.
investigations on page 6 of this Risk Supplement.
Revenue authorities can make conflicting claims as to the profits to be taxed in
individual countries. The Organisation for Economic Co-operation and Development
(OECD) has introduced a number of changes under the Base Erosion and Profit Shifting
(BEPS) Action Plans which are now being progressively implemented by tax authorities
around the world.
In December 2021, the OECD published the Global Anti-Base Erosion (GloBE) rules,
setting out the framework the 130 countries which are members of the Inclusive
Framework are expected to introduce from 2023, which taxes profits of large groups
at a minimum rate of 15% in each country in which they operate. It is also considering
further potential actions, which would potentially include allocating taxing rights over
a higher proportion of profits to end market jurisdictions, and is now seeking
a consensus amongst the Inclusive Framework members on those changes.
The resolution of tax disputes regarding the profits to be taxed in
individual territories can result in a reallocation of profits or losses
between jurisdictions, or even double taxation, and an increase or
decrease in related tax costs, and has the potential to affect our cash
flows, EPS and post-tax earnings. Claims, regardless of their merits or
their outcome, are costly, divert management attention and may
adversely affect our reputation.
If tax treaties are withdrawn or amended, this could materially
adversely affect our financial condition or results of operations, as
could a negative outcome of a tax dispute or a failure by tax authorities
to agree to eliminate double taxation. Changes to the application of tax
treaties or the availability of the EU arbitration convention following
Brexit could also result in adverse consequences, such as those
described above.
management policies and Note 30 to the Financial Statements from page 195
for details of current tax disputes.
Changes in tax regimes could result in a material impact on the
Group’s cash tax liabilities and tax charge, resulting in either an
increase or a reduction in financial results. Specific OECD BEPS
recommendations that we expect to impact the Group include changes
to patent box regimes, restrictions of interest deductibility, global
minimum tax rate and revised transfer pricing guidelines allocating
more profits to end user markets.
8
Risk
Risk
continued