What science can do
AstraZeneca
Annual Report and Form 20-F Information 2022
Welcome
Science can...
We are a global, science-led, patient-focused
pharmaceutical company. We are dedicated
to transforming the future of healthcare by
unlocking the power of what science can
do for people, society and the planet.
See what science can do on page 2
Our Supplements
Detailed information on our
Development Pipeline, Patent
Expiries and Key Marketed
Products and Risk.
See our website,
www.astrazeneca.com/annualreport2022.
Key
For more information
within this Annual Report.
For more information,
see www.astrazeneca.com.
BV
Denotes sustainability
information independently
assured by Bureau Veritas.
Front cover image:
Next-generation
therapeutics.
Advancements in
biotechnology have
expanded our toolkit of drug
modalities. This provides
an opportunity to design
therapeutics for disease
mechanisms previously
considered difficult, if not
impossible, to target and
enables our scientists to
pioneer new approaches to
drug discovery.
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.
Denotes a scale break. Throughout this
Annual Report, all bar chart scales start
from zero. We use a scale break where
charts of a different magnitude, but the
same unit of measurement, are presented
alongside each other.
For more information in relation to the
inclusion of Reported performance,
Core financial measures and constant
exchange rate (CER) growth rates as used
in this Annual Report, see the Financial
Review from page 60 and for more
information on the reconciliation between
Reported and Core performance, see the
Reconciliation of Reported results to
Core results in the Financial Review
on page 64.
Corporate Governance
Chair’s Introduction
78
Corporate Governance Overview
79
Board of Directors
80
Senior Executive Team (SET)
82
Corporate Governance Report
83
Nomination and Governance
Committee Report
92
Science Committee Report
94
Sustainability Committee Report
95
Audit Committee Report
96
Directors’ Remuneration Report
104
Financial highlights
Total Revenue
1
Up 19% at actual rate of exchange to
$44,351 million (up 25% at CER), comprising
Product Sales of $42,998 million (up 18%;
24% at CER) and Collaboration Revenue of
$1,353 million (up 54%; 56% at CER)
Net cash flow from operating activities
Up 64% at actual rate of exchange
to $9,808 million
2022
2021
2020
$37,417m
$26,617m
$44,351m
$44.4bn
$9,808m
$5,963m
$4,799m
2022
2021
2020
$
9.8bn
Reported operating profit
Up 256% at actual rate of exchange
to $3,757 million (up 298% at CER)
Core operating profit
Up 34% at actual rate of exchange
to $13,350m (up 42% at CER)
2022
2021
2020
$3,757m
$1,056m
$5,162m
$3.8bn
$13,350m
$9,928m
$7,340m
2022
2021
2020
$
13.4bn
Reported EPS
2
Increase in Reported EPS
to $2.12 (2021: $0.08
2
)
Core EPS
Up 26% at actual rate of exchange
to $6.66 (up 33% at CER)
2022
2021
2020
$2.12
$0.08
$2.44
$
2.12
2022
2021
2020
$6.66
$5.29
$4.02
$
6.66
1
As detailed from page 142, Total Revenue consists of Product Sales and Collaboration Revenue.
2
Reported EPS is up 2,581% at actual rate of exchange to $2.12 (up 4,903% at CER).
Financial Statements
Preparation of the Financial
Statements and Directors’
Responsibilities
130
Directors’ Annual Report on
Internal Controls over Financial
Reporting
130
Auditors’ Report
131
Consolidated Statements
138
Group Accounting Policies
142
Notes to the Group Financial
Statements
149
Group Subsidiaries and
Holdings
199
Company Statements
204
Company Accounting Policies
206
Notes to the Company
Financial Statements
208
Group Financial Record
211
Additional Information
Shareholder information
213
Directors’ Report
215
Sustainability supplementary
information
218
Trade Marks
219
Glossary
220
Cautionary statement regarding
forward-looking statements
224
Strategic Report
Science can…
2
AstraZeneca at a Glance
4
Chair’s Statement
6
Chief Executive Officer’s Review
7
Healthcare in a Changing World
9
Our Purpose, Values and
Business Model
12
Our Strategy and
Key Performance Indicators
14
Therapy Area Review
18
>
Oncology
18
>
BioPharmaceuticals
22
–
Cardiovascular,
Renal & Metabolism
24
–
Respiratory & Immunology
26
–
Vaccines & Immune Therapies
28
>
Rare Disease
30
Business Review
34
EU Taxonomy Disclosure
52
Task Force on Climate-related Financial
Disclosures Summary Statement
53
Risk Overview
56
Financial Review
60
Contents
1
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Contents
Change the way we see the world
Change how we live our lives.
Make us pioneers.
See the full story at www.astrazeneca.com/
what-science-can-do.
From the beginning, science has been at the
front and centre of everything we do, taking
us to places we never thought possible.
This is the limitless adventure of
what science can do. It can...
Science can…
Bring people together to achieve
the impossible
Impel us to take risks, share and
collaborate.
Harness data, technology and AI
to accelerate change.
See the full story at www.astrazeneca.com/
partnering.
2
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
What science can do
Create novel therapies and vaccines
Help people with chronic diseases
live better, healthier lives.
Redefine cancer care.
Pioneer treatments for rare diseases.
Make patients partners in their
own treatment.
See the full story at www.astrazeneca.com/
our-therapy-areas.html.
Make people, societies and
the planet healthier
Make healthcare systems more
sustainable and resilient.
Lead the way to a low-carbon world.
See the full story at www.astrazeneca.com/
sustainability.
Transform the lives of
billions of people
Give more and more of us access
to healthcare.
Inspire us to do incredible things.
See the full story at www.astrazeneca.com/
sustainability.
Scan the QR code
to see our film,
‘Science can…’
3
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Science can…
1. Science and
Innovation
2. Growth and
Therapy Area
Leadership
3. People and
Sustainability
We are transforming the future of
healthcare by unlocking the power
of what science can do for people,
society and the planet.
Our strategic priorities
Our priorities reflect 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
We use our distinctive scientific
capabilities to deliver a pipeline
of life‑changing medicines.
Distinctive R&D capabilities
179
projects in
our development
pipeline
1
15
NMEs in our
late‑stage pipeline
121
NME or major LCM
projects in Phase II
and Phase III
179
177
171
2022
2021
2020
Phase I
Phase II
Late‑stage development
Life‑cycle management projects
1
Includes NME and major LCM projects up to launch in all applicable major markets.
Leading in our Therapy Areas
Focused on areas where we
can make the most meaningful
difference to patients.
Therapy Areas
Oncology
BioPharmaceuticals
Rare Disease
Total Revenue
2
$44.4bn
$44.4bn
$37.4bn
$26.6bn
2022
2021
2020
Broad‑based, diverse
source of business
Diversified portfolio across
primary, specialty care
and rare disease with a
global reach.
Total Revenue
by Therapy Area
Oncology
35%
BioPharmaceuticals
45%
Rare Disease
16%
Other Medicines
4%
Total Revenue
by reporting region
3
US
40%
Emerging Markets
26%
Europe
20%
Established Rest
of World
13%
2
Total Revenue includes revenues from Other Medicines.
See page 33.
3
Due to rounding, the sum of percentages above does not
equal 100%.
4
AstraZeneca Annual Report & Form 20‑F Information 2022
Strategic Report
AstraZeneca
at a Glance
4
9
10
11
8
1
3
6
2
5
7
Commitment to our people
We are empowering our people
to reach their full potential in
a dynamic, inclusive and high-
performing working environment.
For more information,
see from page 44.
83,500
employees
2021: 83,100
2020: 76,100
49.5%
of our senior roles
are filled by women
Employees by reporting region
Europe
38%
Emerging Markets
35%
US
20%
Established Rest
of World
7%
Commitment to society
We are harnessing the power
of Science and Innovation to
deliver a positive impact to
society, healthcare systems
and the environment.
For more information,
see from page 48.
Priority
1
Access to healthcare
Increasing access to
life‑saving treatments,
promoting prevention,
and strengthening
global health system
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.
3rd overall and #1 for
Product Delivery
Double A List for
Climate Change
and Water Security
World and Europe
constituent
Bloomberg Gender‑
Equality Index listing
Global reach and presence
Our R&D organisation has more
than 13,000 employees across our
global sites. We have four strategic
R&D centres: Cambridge, UK;
Boston, MA, US; Gaithersburg,
MD, US; and Gothenburg,
Sweden, as well as seven other
R&D centres and offices.
Global R&D centres
1. Cambridge, UK (HQ)
2. Boston, MA, US
3. Gaithersburg, MD, US
4. Gothenburg, Sweden
28 manufacturing
sites in 16 countries
Other R&D centres and offices
5. San Francisco, CA, US
6. New York, NY, US
7. New Haven, CT, US
8. Alderley Park, UK
9. Macclesfield, UK
10. Shanghai, China
11. Osaka, Japan
Oncology. See from page 18.
Rare Disease. See from page 30.
BioPharmaceuticals. See from page 22.
5
AstraZeneca Annual Report & Form 20‑F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
AstraZeneca at a Glance
As we look ahead, confidence in the years
to come builds on our track record of
success that is demonstrated most clearly
in shareholder returns. In the last decade,
AstraZeneca has delivered a Total
Shareholder Return of 467%, compared
with 85% for the FTSE100 and 366% for
our pharma peers.
Scientific leadership
Underpinning confidence in the future is our
scientific leadership that continues to deliver
life-changing and innovative medicines to
patients. In the last 10 years, we have
launched a remarkable total of 20 new
medicines, including three in 2022 alone. In
2022, we also had 14 blockbuster medicines
(with annual revenues in excess of $1 billion)
and a record 34 approvals of our medicines
in major markets.
Over and above this, I am incredibly proud
of AstraZeneca’s leading role in fighting the
COVID-19 pandemic where we have made,
and continue to make, a real difference.
A great place to work
Central to AstraZeneca’s success has been
its talented, collaborative team and its
efforts to ensure we remain a great place to
work – an inclusive and diverse workplace
where everyone has the potential to develop
and grow. I am grateful for everything they
have achieved and the inspiring relationships
I have established over the years.
I am also grateful for the contribution made by
my fellow Directors, past and present, in their
important role of overseeing the governance
of the Company and delivery of its strategy.
AstraZeneca has also contributed more
broadly to the wellbeing of society. Earlier
this year, I was proud to lead AstraZeneca’s
delegation to the World Economic Forum at
Davos, making the case for health as the
foundation of strong and resilient societies.
Our ground-breaking Ambition Zero Carbon
strategy provides an example of how we are
also contributing to the health of the planet.
Our Chief Executive Officer
Finally, I would like to take this opportunity to
pay tribute to Pascal Soriot, our exceptional
Chief Executive Officer. His leadership of our
science, entrepreneurial skills, ability to
identify and recruit great people and sheer
hard work have underpinned our return to
growth and achievements of the past decade.
It has been a privilege to work with him and it
was only fitting that his contribution to UK life
sciences and leadership in the global
response to the COVID-19 pandemic was
recognised with the award of a knighthood.
I look forward to seeing AstraZeneca continue
to thrive and grow under his leadership.
Leif Johansson
Chair
April 2022 marked my tenth anniversary as a
Director of AstraZeneca and I have served as
Chair since June 2012. In April this year, I will
be standing down from the Board at the
conclusion of our AGM and handing over the
role of Chair to Michel Demaré.
It has been a privilege to chair AstraZeneca
in what has been a remarkable decade for
the Group under the inspiring leadership of
our Chief Executive Officer, Pascal Soriot,
in which we have more than delivered
our strategic goals of achieving scientific
leadership and returning AstraZeneca to
growth, all the while being a great place
to work.
A growing business
Since AstraZeneca returned to growth in the
years after 2018, Total Revenue has doubled
to more than $44 billion in 2022. Reflecting
this financial performance, the Board intends
to declare a second interim dividend of $1.97
per share, making a total dividend declared
for the full year of $2.90.
$2.90
Full‑year dividend of
$2.90 per share (2021: $2.87)
6
AstraZeneca Annual Report & Form 20‑F Information 2022
Strategic Report
“Underpinning confidence in the
future is our scientific leadership
that continues to deliver life‑
changing and innovative
medicines to patients.”
Chair’s
Statement
A remarkable decade in
which to have chaired
AstraZeneca, working
with excellent Board
colleagues and a great
management team.
$44.4bn
Total Revenue (2021: $37.4bn)
72
Regulatory events – submissions
or approvals in major markets
“Our R&D success and
revenue increase in 2022
demonstrate that we are on
track to deliver industry‑
leading revenue growth
through 2025 and beyond,
and have set AstraZeneca
on a path to deliver at least
15 new medicines before
the end of the decade.”
for the treatment of PNH (a rare and
life-threatening blood disorder) in patients
who experience clinically significant
extravascular haemolysis.
In a year of many achievements, no one in
the room at the American Society of Clinical
Oncology annual meeting last June will forget
the standing ovation that greeted the positive
Phase III results for
Enhertu
in advanced
HER2-low breast cancer. This was followed
by its swift approval in the US as the first ever
HER2-directed therapy in this indication and
represents a major advance for patients with
HER2-low metastatic breast cancer.
Our commitment to science was further
demonstrated during the year by our
announcement in April of plans for a new
strategic R&D centre and Alexion
headquarters in Kendall Square, Cambridge,
MA, US. This move will bring together
colleagues from across AstraZeneca and
Alexion in a world-leading life sciences hub.
Of course, pushing boundaries sometimes
means setbacks and we had some life-cycle
management trials during the year that did not
meet their primary objectives. However, 2022
was predominantly a year of scientific
success, including the approval of three new
medicines:
Imjudo
for liver cancer and
non-small cell lung cancer (NSCLC);
Beyfortus
for the prevention of RSV, respiratory syncytial
virus in infants; and
Airsupra
for asthma. We
are also initiating new late-stage trials for
high-potential medicines such as
camizestrant, datopotamab deruxtecan
and volrustomig.
Our R&D success and revenue increase in
2022 demonstrate that we are on track to
deliver industry-leading revenue growth
through 2025 and beyond, and have set
AstraZeneca on a path to deliver at least 15
new medicines before the end of the decade.
2022 was a year of continued strong
performance and execution of our long-term
growth strategy. Total Revenue increased
by 19% (25% at CER) to $44.4 billion, with
$7.1 billion coming from our Rare Disease
portfolio that was incorporated into the
Group’s results from 21 July 2021.
In our therapy areas, Total Revenue for
Oncology increased by 15% (20% at CER);
Cardiovascular, Renal & Metabolism by 13%
(19% at CER); Respiratory & Immunology fell
by 1% but rose 3% at CER; and Rare Disease
rose by 4% (10% at CER).
In the US, Total Revenue was up 47% in 2022
and in Europe it grew by 9% (21% at CER).
While Total Revenue in Emerging Markets fell
by 4% (growth of 1% at CER), largely the
result of the anticipated decline in growth in
China, it grew in Established Rest of World
during the year by 22% (40% at CER).
Pioneers in science
Our success is built on relentlessly pushing
the boundaries of science to deliver life-
changing medicines. In that regard, we made
excellent progress in 2022 with a remarkable
72 regulatory events, either submissions or
approvals for our medicines in major markets,
and 29 pipeline progression events.
During the year, our pioneering science was
evident across all therapy areas. For example,
in BioPharmaceuticals, the DELIVER Phase III
trial established
Forxiga
as the first heart
failure (HF) medicine to demonstrate mortality
benefit across the full ejection fraction range.
This represents a population of patients,
many of whom had previously had no
treatment options.
Building on Alexion’s 30-year history in Rare
Disease, in 2022 we announced the positive
high-level results of the ALPHA Phase III trial
of danicopan, an investigational oral Factor D
inhibitor, as an add-on to
Ultomiris
or
Soliris
The success of
AstraZeneca is built
on being true to our
Purpose and living our
Values to deliver for
people, society and
the planet.
7
AstraZeneca Annual Report & Form 20‑F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Chief Executive Officer’s Review
Chief Executive
Officer’s Review
Patients
As well as requiring us to follow the science,
AstraZeneca’s Values put patients first. In this
regard, our industry-leading growth means
more patients around the world are benefiting
from our medicines and our continued
commitment to innovate for patients and
improve health outcomes – including the use
of data, digital technologies and AI.
I am particularly proud of what we were able
to achieve for patients in Japan in 2022, with a
record-breaking five approvals for our cancer
treatments in one day, and a remarkable total
of 12 medicine approvals for the year. Also in
2022, cancer patients around the world
benefited, not only from
Enhertu
and
Imjudo
,
but also from
Imfinzi
and
Lynparza
which,
taken together, saw eight new indication
launches and 21 major market approvals.
Following last year’s acquisition of Alexion,
by combining resources, we have been able
to bring treatments for rare diseases to
patients in 10 more countries around the
world, including the availability of Alexion’s
first medicine in China,
Soliris
.
We have also remained at the frontline in the
fight against COVID-19, with independent
analysis showing that our vaccine,
Vaxzevria
,
saved more than six million lives in its first
year. Our long-acting antibody combination,
Evusheld
, continues to play an important role
helping to protect those most vulnerable to
COVID-19. However, as the COVID-19 virus
continues to evolve, so too must our
response, and we have commenced a
late-stage trial for our next-generation
COVID-19 long-acting antibody.
We were honoured when
TIME
magazine
announced that
Evusheld
had been named
on its annual list of the Best Inventions, which
features 200 extraordinary innovations
changing our lives. Additionally, our top-three
ranking in the 2022 Access to Medicine Index
is external recognition of our focus on
increasing equitable and affordable access
to our life-changing treatments.
AstraZeneca’s role in society
In addition to helping patients and in line with
our value of doing the right thing, we work to
create healthier societies, collaborating with
partners to tackle major health challenges.
We are working to identify barriers and give
more people equitable access to healthcare.
For example, our Healthy Heart Africa
programme is committed to reducing
hypertension and the burden of
cardiovascular disease. We work with
partners to raise awareness and offer training,
screening and reduced cost treatment,
where applicable. By the end of 2022, the
programme had launched in nine countries
and conducted more than 32 million
screenings for high blood pressure since
launch, with plans for further expansion.
Our Young Health Programme, which helps
young people make informed choices about
their health, provides a further example. So
far, we have reached more than nine million
young people with health information in
39 countries.
Given the multiple challenges facing the
world today, we continue to do all we can to
ensure healthcare systems are more resilient,
effective and sustainable. We used the
opportunities provided by a pandemic-
delayed EXPO 2020 in Dubai to collaborate
across the health, private and academic
sectors to launch multiple initiatives in
support of our science, therapy areas and
a sustainable healthcare network across
the Middle East and Africa.
Our Partnership for Health System
Sustainability and Resilience is a collaboration
with the London School of Economics and the
World Economic Forum (WEF) and continues
its work to strengthen global health systems.
It is now active in more than 30 countries.
At the WEF annual meeting in January 2023,
our Chair, Leif Johansson, led AstraZeneca’s
advocacy for the continued prioritisation of
health as the foundation for strong societies
and economies, as well as the need to
encourage a fundamental re-evaluation
of health as a long-term investment for
the future.
Looking after the planet
We continue to make important progress with
our own science-led Ambition Zero Carbon
strategy. By the end of December 2022, we
had achieved a 59% reduction in our Scope 1
and 2 greenhouse gas emissions compared
to our 2015 baseline. Our efforts include a
partnership with Honeywell to develop a
next-generation respiratory inhaler which will
have a near-zero global warming potential.
We are also playing a leading role in
accelerating change across the health sector,
including through the Sustainable Markets
Initiative (SMI) which was launched by
HM King Charles III in 2021. Ahead of COP27
in 2022, the SMI Health Systems Task Force,
which I am honoured to champion,
announced shared commitments and actions
to reduce emissions in line with the pathway
to limit global warming to 1.5°C and deliver
the transition to net-zero health systems.
My thanks to all AstraZeneca colleagues
In January 2023, after almost 25 years
with AstraZeneca, Katarina Ageborg, our
Executive Vice-President Global Sustainability,
Chief Compliance Officer and President,
AstraZeneca AB in Sweden, retired. I am
grateful to her for the integral role she played
in AstraZeneca becoming a global leader in
sustainability and in our re-emergence as
one of the world’s most innovative
biopharmaceutical companies.
I would like to extend my thanks to all our
84,000 employees for the part they played in
achieving our strong results in 2022. I would
especially like to recognise the efforts of those
who ensured that our medicines reached
patients across the world and contributed
to our support for humanitarian relief.
Our Chair
My particular thanks must go, of course,
to Leif Johansson who has chaired our Board
for the decade in which I have been leading
AstraZeneca. I am grateful to him, not only
for his skilled leadership of the Board but also
for all he has done for AstraZeneca as Chair.
More than that, he has been a great colleague
and friend.
I will miss Leif when he steps down after this
year’s AGM. The last 10 years has shown
what AstraZeneca and its people can achieve.
I am energised at the prospect of working
more closely with Michel Demaré, our new
Chair, and by what more we can do for
people, society and the planet, thereby
earning further returns for shareholders
who have entrusted their funds to us.
Pascal Soriot
Chief Executive Officer
The Terra Carta Seal recognises global
corporations that are demonstrating their
commitment to, and momentum towards,
the creation of genuinely sustainable markets.
For more information on our strategy,
see Our Strategy and Key Performance
Indicators from page 14.
8
AstraZeneca Annual Report & Form 20‑F Information 2022
Strategic Report
2022
2021
2020
1,120
1,036
1,214
W
orld ($bn)
$1,214bn
2022
2021
2020
100
98
106
Esta
blished RoW ($bn)
$
106bn
(+5.7%)
2022
2021
2020
556
516
605
U
S ($bn)
$
605bn
(+8.8%)
2022
2021
2020
267
238
290
E
merging Markets ($bn)
$
290bn
(+8.4%)
2022
2021
2020
196
185
213
Eu
rope ($bn)
$
213bn
(+8.6%)
The external environment presents us
with both challenges and opportunities that
require us to adapt, innovate and build trust.
Healthcare in a
Changing World
The pharmaceutical sector continues to grow against a backdrop of
increasing demand for healthcare. Global pharmaceutical sales grew
by 8.4% in 2022. Global healthcare spending is projected to increase
at an annual rate of 5.7% from 2021 to 2026.
A growing pharmaceutical sector
Global pharmaceutical sales
In 2022, Established Markets saw an average
revenue increase of 8.4% and Emerging
Markets revenue also grew at 8.4%. The US,
Japan, China, Germany and France are the
world’s top five pharmaceutical markets by
2021 sales. In 2022, the US had 49.8% of
global sales (2021: 49.7%).
Data based on world market sales using AstraZeneca Market definitions on page 220. 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 2022 (including US data). Reported values and growth are based on CER. Value figures
are rounded to the nearest billion and growth percentages are rounded to the nearest tenth.
We expect developing markets, including
Africa, the Commonwealth of Independent
States (CIS)¹, 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 2.6%. This is due to
the continued slowdown of the major
hospital sector.
1
Includes Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan,
Turkmenistan, Uzbekistan and excludes Ukraine.
2
Non-EU countries; including the UK.
$1,214bn
(+8.4%)
Estimated pharmaceutical sales 2026.
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 2021 to 2026.
Source: IQVIA Market Prognosis Global
2022–2026.
Other
Europe
2
$82bn
9.9%
Japan
$74bn
0.2%
China
$189bn
2.6%
Oceania
$19bn
4.4%
Southeast Asia
and East Asia
$267bn
3.8%
Middle East
$29bn
5.3%
Africa
$34bn
6.2%
Indian
subcontinent
$52bn
9.4%
CIS
$40bn
8.3%
EU
$295bn
5.4%
North America
$774bn
4.5%
Latin America
$170bn
17.2%
Estimated pharmaceutical sales and market growth to 2026
9
AstraZeneca Annual Report & Form 20-F Information 2022
Additional Information
Financial Statements
Corporate Governance
Strategic Report
Healthcare in a Changing World
Global trends are influencing and shaping the pharmaceutical sector.
Changes can be observed at many levels, for example, in industry
regulations and policies, pricing reforms in the US and China, the use
of digital and artificial intelligence, and changes in the workplace.
Impact of global trends
Over the next two
decades, the geopolitical
environment is expected
to become more
contested, potentially
reaching levels of
intensity not seen
since the Cold War.
The slowdown of
the global economy
will continue to affect
businesses across
the globe.
Together with national
and regional healthcare
services, pharmaceutical
companies play a key role
in prevention, diagnosis
and treatment for patients
with chronic diseases.
It is expected that, over the next two decades,
the geopolitical environment will become
more contested, potentially reaching levels
of intensity not seen since the Cold War.
Additionally, global geopolitical volatility has
fundamentally altered the relationships and
norms that have governed international
economic partnerships and frameworks
since the Second World War. For example,
when Russia invaded Ukraine in early 2022,
it did not take long for the geopolitical
consequences to be felt around the globe.
Responses to other global issues, such as
climate change or the COVID-19 pandemic,
are at risk of being derailed or undermined
as a result. Geopolitical tensions also place
increased pressure on supply chains and
distribution networks.
(Source: Global Trends 2040, March 2021)
Since 2021, the global economy has
experienced a slower recovery than expected,
particularly in major economies such as the
US, Europe, China and Russia. High
governmental debt loads, a slowdown in
global trade, increasing energy prices and
labour shortages have all contributed to
suppressing growth – a trend that can be
observed across the globe. In January 2023,
the International Monetary Fund (IMF) upgraded
its growth forecast for 2023 to 2.9%. This is an
increase from its previous forecast of 2.7%
but still below the historical annual average
of 3.8% between 2000 and 2019.
In addition, inflationary pressures from the rise
in energy prices, consequences of the
pandemic and conflict in Ukraine have led to
higher inflation and, with that, higher nominal
interest rates that are expected to continue.
(Source: IMF)
NCDs, also known as chronic diseases,
are the result of a combination of genetic,
physiological, environmental and behavioural
factors. Cardiovascular diseases account for
most NCD deaths annually (17.9 million
people), followed by cancers (9.3 million),
respiratory diseases (4.1 million), and
diabetes (1.5 million).
(Source: WHO)
Increasing demand for healthcare is putting
pressure on healthcare budgets which,
exacerbated by the impact of the COVID-19
pandemic, is leading to downward pressure
on pricing.
66%
Two thirds of respondents
said geopolitical changes are
pushing their organisation
to re-evaluate strategy.
(Source: Control Risks Global Risk
Survey 2022)
2.9%
Global GDP growth is forecast to
slow from 6.2% in 2021 to 3.4%
in 2022 and 2.9% in 2023.
(Source: IMF)
80%
By 2040, non-communicable
diseases (NCDs) could account
for 80% of deaths in low-income
countries, up from 25% in 1990.
(Source: Global Trends 2040, March 2021)
Economic
Global economic downturn
Societal
Growing burden of chronic diseases
Healthcare in a
Changing World
continued
Political
Greater geopolitical conflict
10
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Artificial intelligence
is transformational
and its broad use has
significant potential
to reshape societies,
economies and
industries.
Climate change, caused
by growing human-
produced concentrations
of greenhouse gases
in the atmosphere,
is intensifying.
AI will improve productivity in the workplace
and challenge existing business models. At
the same time, it will disrupt the labour force
by creating new job fields while eliminating
others. To harness the advantages of AI,
countries and companies will need to focus
on educating and upskilling their workforce.
(Sources: Global Trends 2040, March 2021 and
United Nations)
The impact of climate change – via rising
temperatures and other extreme weather
conditions, rising sea levels and declining
biodiversity – will be felt across the globe,
with the cost and related challenges
disproportionately affecting developing
economies. When converging with
environmental degradation, the risks to food
security, access to water, public health, and
energy supply will intensify. To avoid the
worst impacts, the global temperature needs
to be kept to no more than 1.5°C above
pre-industrial levels. This means GHG
emissions need to be reduced by 45% by
2030, compared to 2010, and to net-zero
by 2050.
(Source: Intergovernmental Panel on Climate Change (IPCC)
Summary for Policymakers of Special Report on Global
Warming of 1.5°C)
While demand for
healthcare is increasing
and science is driving
improvements in
healthcare, risks
remain for the sector.
At the same time as 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. However,
risks remain. In addition to the downward
pressure on pricing, the sector also faces
regulatory challenges and the loss of
exclusivity and genericisation.
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, while earning their
trust. They will also need to develop strategies
for protecting themselves against harmful
misinformation, which will require
collaboration between businesses,
policymakers and other stakeholders to
tackle at scale.
$5.2bn
Investment in AI-enabled drug
discovery more than doubled in
the past five years, exceeding
$5.2 billion at the end of 2021.
(Source: BCG)
14%
Human-produced emissions are
projected to increase 14% by 2030
from 2010 levels, short of the 45%
target reduction.
(Source: Global Trends 2040, March 2021 and
Net-zero Coalition, October 2022)
31%
During the pandemic, public
trust in pharma rose to 31% in
2022, from 25% in 2018. But
there is still room to improve.
(Source: Ipsos Global Trustworthiness
Monitor: Is Trust in Crisis?)
Technological
Artificial intelligence becoming mainstream
Environmental
Climate change accelerating
Outlook
Opportunities and challenges for the sector
These risks are explored further in the Risk
Overview from page 56 and Pricing and
value of our medicines from page 39.
AstraZeneca’s response to the trends we
face is explored further in Our Strategy and
Key Performance Indicators from page 14.
11
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Healthcare in a Changing World
Our business model
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, society and our shareholders.
What our business model requires to be successful
How we add value
Improved health
Continuous scientific innovation is vital to
achieving sustainable healthcare, which
creates value by:
>
Improving health outcomes and
transforming the lives of patients who use
our medicines.
>
Enabling healthcare systems to reduce
costs and increase efficiency.
>
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 flow, 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.
>105m
Our main therapy area medicines impact
more than 105 million patient lives annually.
In addition, AstraZeneca and our global
partners have released for supply more than
three billion
Vaxzevria
/
Covishield
COVID-19
vaccine doses to more than 180 countries.
Ability to acquire, retain and develop
a talented and diverse workforce.
Global commercial presence and skills
that ensure our medicines are available
to patients when needed.
>130
countries where we sell our products
49.5%
of our senior middle management roles
and above are filled by women
A leadership position in science
that enables us to deliver life-changing
medicines.
$9.8bn
invested in our
science in 2022
Patent protection for our intellectual
property for a reasonable period of time to
prevent our new medicines being copied.
>90
countries where we
obtained patent protection
Understanding the issues that are
most important to our many and
varied stakeholders.
>199,000
healthcare practitioner
enquiries responded to
A supply of high-quality medicines,
whether from our own operations or
from suppliers.
$25.1bn
spent with suppliers
Effective collaborations that supplement
and strengthen our pipeline and our
efforts to achieve scientific leadership.
>1,000
collaborations worldwide
Financial strength, including access
to financing and ability to bear the
financial risk of investing in the life-
cycle of a medicine.
$9.8bn
net cash flow from operating activities
We are a global pharmaceutical business with a science-led and patient-focused value
proposition committed to excellence in the research, development, manufacturing and
commercialisation of prescription medicines. We are committed to operating
sustainably, in a way that recognises the interconnection between business growth,
the needs of society and the limitations of our planet. We invest resources to create
financial and non-financial value that benefit patients, society and our business.
Our Values determine how we work together
and the behaviours that drive our success.
They guide our decision making and define
our beliefs.
>
We follow the science.
>
We put patients first.
>
We play to win.
>
We do the right thing.
>
We are entrepreneurial.
Business Review,
see from page 34.
Our Purpose
We push the boundaries of science to
deliver life-changing medicines.
Our Values
Our Purpose, Values
and Business Model
12
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
This is a high-level overview of a medicine’s life-cycle and is illustrative only. It is neither intended to, nor does it, represent the life-cycle of any particular medicine or of every medicine discovered
and/or developed by AstraZeneca, or the probability of success or approval of any AstraZeneca medicine.
I
n
v
e
s
t
m
e
n
t
i
n
d
i
s
c
o
v
e
r
y
,
d
e
v
e
l
o
p
m
e
n
t
,
m
a
n
u
f
a
c
t
u
r
i
n
g
a
n
d
c
o
m
m
e
r
c
i
a
l
i
s
a
t
i
o
n
o
f
p
a
t
e
n
t
-
p
r
o
t
e
c
t
e
d
m
e
d
ic
i
n
e
s
R
e
v
e
n
u
e
g
e
n
e
r
a
t
i
o
n
R
e
i
n
v
e
s
t
m
e
n
t
o
f
r
e
t
u
r
n
s
Inputs
> Applying our
resources to
address unmet
medical need
Outputs
> Improved health
> Returns to
shareholders
Our
Purpose
R
e
s
e
a
r
c
h
a
n
d
d
e
v
e
l
o
p
m
e
n
t
p
h
a
s
e
s
5
–
1
5
y
e
a
r
s
L
a
u
n
c
h
p
h
a
s
e
5
–
1
5
y
e
a
r
s
P
o
s
t
-
e
x
c
l
u
s
i
v
i
t
y
2
0
+
y
e
a
r
s
1
2
3
4
5
6
7
8
9
Life-cycle of a medicine
We create financial value throughout
the life-cycle of a medicine.
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
profitable future revenue generation,
while bringing benefits 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.
1. Undertake scientific
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.
Launch phase – duration: 5–15 years
7. Launch new medicine while
continuously monitoring,
recording and analysing
reported side effects.
8. Post-launch research and
development to further
understand the benefit/risk
profile 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 effectiveness
and tolerability of the
medicine and determine
optimal dose.
5. Phase III trials in a
larger group of patients
to gather information
about effectiveness and
safety of the medicine
and evaluate the overall
benefit/risk profile.
6. Seek regulatory approvals
for manufacturing,
marketing and selling
the medicine.
Research and development phases – duration: 5–15 years
13
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Our Purpose, Values and Business Model
Effective delivery of our strategic priorities
will help us achieve our financial targets.
Our capital allocation priorities include
investing in the business and pipeline,
including potentially value-enhancing
business development opportunities;
maintaining a strong, investment-grade credit
rating; and supporting a progressive dividend
policy, balancing opportunities for growth
and maintaining a strong balance sheet.
Our strategy is straightforward. We:
>
are science and innovation led
>
are focused on our chosen therapy areas:
Oncology; BioPharmaceuticals (comprising
Cardiovascular, Renal & Metabolism
(CVRM), Respiratory & Immunology (R&I)
and Vaccines & Immune Therapies (V&I));
and Rare Disease
>
have a diversified portfolio with broad
coverage across primary care, specialty
care and rare disease
>
have global strength with balanced
presence across regions
>
have a commitment to people, society
and the planet.
We have three priorities designed to deliver our
strategy and achieve our financial targets:
KPI key
Used for remuneration
of Executive Directors
Our Key Performance Indicators
and remuneration
Our KPIs are aligned to our strategic priorities
and are the indicators against which we
measure our productivity and success.
Several 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
remuneration are explained in the Directors’
Remuneration Report from page 104. Other
indicators used are now included in the
Business Review from page 34.
Since 2021, a metric focusing on the delivery
of our Ambition Zero Carbon commitments
has been included in our executive incentive
arrangements. This underlines the importance
we place on reducing GHG emissions from
our global operations and fleet (Scope 1 and 2)
by 98% by 2026 (from a 2015 baseline).
Achieve Group Financial Targets
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 60.
For details of how Achieve Group
Financial Targets are considered
when calculating the annual bonus,
see page 114.
Actual growth
2022 n/m
2021 -97%
2020 +137%
CER growth
2022 n/m
2021 -84%
2020 +142%
Actual growth
2022 +26%
2021 +32%
2020 +15%
CER growth
2022 +33%
2021 +37%
2020 +18%
Actual growth
2022 +64%
2021 +24%
2020 +62%
Our ambition is
to launch 15 new
medicines by 2030.
2. Growth and Therapy
Area Leadership
1. Science and
Innovation
3. People and
Sustainability
Achieve Group
Financial Targets
2022
2021
2020
$2.12
$0.08
$2.44
$2.12
Reported EPS
2022
2021
2020
$6.66
$5.29
$4.02
$6.66
Core EPS
2022
2021
2020
$9,808m
$5,963m
$4,799m
$9,808m
Net cash flow from operating activities
14
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Our Strategy and Key
Performance Indicators
1
25 against our Group scorecard for
determining annual bonus.
2
26 against our Group scorecard for
determining annual bonus.
3
25 against our Group scorecard for
determining annual bonus.
1
50 against our Group scorecard for
determining annual bonus.
2
37 against our Group scorecard for
determining annual bonus.
3
43 against our Group scorecard for
determining annual bonus.
Science & Innovation
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 114.
“Our approach to R&D
and innovation aims
to deliver the quickest
and greatest impact
possible on disease
prevention and
treatment.”
Our focus areas
>
Creating the next generation of therapeutics
using an array of drug modalities, for
example, advanced biologics, nucleotide-
based and cell therapies.
>
Leading in convergence of science,
data and technology.
>
Advancing our pipeline.
How our strategy responds
to global trends
To ensure we are able to respond to the
increasing burden of disease and incorporate
advances in science and digital technologies,
we are:
>
Advancing our understanding of disease
biology to help uncover novel drivers of
disease, through genomics, functional
genomics and knowledge graphs.
>
Progressing an early pipeline consisting of
numerous new drug modalities, including
ADCs, cell therapy, epigenetics, gene
therapy, oligonucleotides, radio-immuno
conjugates (RICs) and self-amplifying RNA
(saRNA).
>
Creating humanised models to better
predict the success of our molecules in
the clinic.
>
Pioneering new approaches to engagement
in the clinic and beyond, incorporating
patient insights to improve experiences
and outcomes.
>
Embedding AI across our R&D activities,
from target identification to clinical trials,
to understand where we can harness
new technologies and further automate
processes.
How we progressed in 2022
>
Achieved 72 regulatory events: 38 NME
and major LCM submissions and 34
approvals in major markets (US, EU,
China and Japan).
>
Secured 29 pipeline progression events:
six NME Phase II starts/progressions and
23 NME and major LCM Phase III
investment decisions.
>
Our pipeline includes 179 projects, of
which 155 are in the clinical phase
of development.
>
At the end of the year, we had 15 NME
projects in pivotal trials or under regulatory
review covering 28 indications (2021: 16).
>
27 projects were discontinued.
Focus for 2023
>
Drive innovation opportunities across our
global R&D sites.
>
Continue transforming the way we discover
and develop new medicines using AI and
machine learning.
>
Continue attracting the brightest minds
to create an environment in which science
thrives.
For more information, see Therapy Area Review from
page 18 and Business Review from page 34.
2022
2021
2020
29
1
32
2
36
3
29
1
Pipeline progression events
2022
2021
2020
72
1
49
2
53
3
72
1
Regulatory events
15
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Our Strategy and Key Performance Indicators
2022
2021
2020
$44,351m
$37,417m
$26,617m
$44,351m
T
otal Revenue
Our focus areas
>
Leveraging our innovative science to
create a more personalised, precise
and accessible healthcare experience.
>
Engaging with the entire healthcare
ecosystem and unlocking visionary
partnerships that drive positive change
and outcomes.
>
Creating industry-leading growth across
our therapy areas and regions.
>
Continuing to implement our Operations
2025 programme.
How our strategy responds
to global trends
To ensure we can 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.
>
Engaging with policymakers to support
improvements in sustainable access,
coverage, care delivery 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 others to adopt value-based pricing
solutions and bring new medicines to
market more quickly.
>
Pursuing a strong patent strategy that
builds robust patent estates to protect our
pipeline and products while defending and
enforcing patent rights.
>
Leveraging the power of digital throughout
our end-to-end supply chain through digital
drug development to accelerate
development lead times.
How we progressed in 2022
>
Total Revenue, comprising Product Sales
and Collaboration Revenue, increased by
19% (25% at CER) to $44,351 million.
>
Collaboration Revenue increased by 54%
(56% at CER) to $1,353 million.
>
Grew Total Revenue across our Therapy
Areas: Oncology 15% (20% at CER) to
$15,539 million; CVRM¹ 13% (19% at CER)
to $9,211 million; and R&I declined 1%
(+3% at CER) to $5,963 million. Our new
V&I unit grew by 1% (8% at CER) to
$4,836 million and Rare Disease¹ grew
by 4% (10% at CER) to $7,053 million.
>
Total Revenue in Emerging Markets
declined by 4% (+1% at CER) to
$11,745 million. In the US, it grew by 47%
to $17,920 million and in Europe grew by
9% (21% at CER) to $8,738 million.
Focus for 2023
>
Deliver sustainable growth by seizing
opportunities open to us in regions,
markets and through targeted business
development opportunities.
>
Continue transforming how we work.
>
Advance digital approaches to transform
the patient experience.
“Our belief in the power
of science is growing
the success of our
Company and helping
us contribute to
transforming the
future of healthcare.”
Growth and Therapy Area Leadership
1
Growth rates on medicines acquired with
Alexion have been calculated on a pro forma
basis compared with the corresponding
period in the prior year.
For more information, see Therapy Area
Review from page 18 and Business Review
from page 34.
Actual growth
2022 +19%
2021 +41%
2020 +9%
CER growth
2022 +25%
2021 +38%
2020 +10%
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 114.
16
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Our Strategy and Key
Performance Indicators
continued
2022
2021
2020
85%
86%
89%
86
%
Employee belief that AstraZeneca
is a great place to work
¹
2022
7/9
2021
10/12
2020
13/14
Green
Amber
Red
7/9
Sustainability
scorecard performance
²
Our focus areas
>
Continuing to make AstraZeneca a great
place to work.
>
Making it easier to work across our Group
to deliver sustainable growth.
>
Ensuring we operate in the smartest way,
increasing the speed of delivery of
medicines to patients through our Future
of Work initiative.
>
Harnessing the power of Science and
Innovation in ways that positively impact
patients, healthcare systems, and the
environment.
>
Progressing our Sustainability strategy
across three integrated priority pillars:
access to healthcare, environmental
protection, and ethics and transparency.
How our strategy responds
to global trends
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:
>
Creating an inclusive and equitable
environment where people belong, using
our diversity as a competitive advantage.
>
Fostering a culture of lifelong learning,
strengthening and evolving our capabilities,
and instilling confidence to challenge
convention and explore possibilities.
>
Simplifying the way we work, driving
productivity, and optimising digital and
technology to deliver a better experience
for our people and better outcomes
for patients.
>
Working towards a future where all people
have access to affordable, sustainable and
innovative healthcare.
>
Playing our part in protecting the planet
by reducing GHG emissions from our global
operations and fleet by 98% by 2026 and
halving our entire value chain footprint
by 2030.
>
Empowering employees through our Code
of Ethics to make decisions in the best
interests of the Group and society.
How we progressed in 2022
>
We continued to invest in our people to
ensure we recruit, retain and develop a
talented workforce.
>
In 2022, we delivered a strong performance
across the key priorities of our People and
Sustainability strategy pillar.
>
We continued to score highly in our Pulse
surveys for questions relating to our
Purpose, direction, patient centricity and
employee commitment to our success.
>
We demonstrated our continued
commitment to working in partnership to
strengthen health systems worldwide.
>
We maintained a leading role in efforts to
address the effects of climate change on
our planet and increasingly on public health
inequalities and disease prevalence.
>
Our Ambition Zero Carbon strategy
delivered further reductions in our GHG
emissions, and we are on track with our
environmental commitments.
Focus for 2023
>
Maintain positive employee engagement.
>
Accelerate digital transformation and
activities to drive productivity.
>
Advance our sustainability priorities,
particularly health equity and health system
resilience, as well as addressing the effects
of the climate crisis on health and
conserving biodiversity.
For more information, see People from page 45 and
Sustainability from page 48.
People and Sustainability
“We continue to make
AstraZeneca a great
place to work while
ensuring we have a
positive impact on
people, society and
the environment.”
Key Performance Indicators
Our People and Sustainability 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. Ratings for this
KPI reflect our success in achieving our
sustainability goals. In 2020, we used 14
priorities and 12 in 2021. Following a materiality
assessment, we updated our strategy around
nine focus areas as the basis for our 2022
scorecard. These reflect the focus areas,
outlined in our Sustainability Report on our
website, www.astrazeneca.com/sustainability,
that guide our sustainability strategy and
where we can have the most positive impact.
2
In 2022, we assessed our performance
against nine focus areas, each made up
of a number of indicators. For a focus
area to be ‘green’, at least 70% of the
indicators within it need to have achieved
its target in 2022. An overall KPI ‘green’
rating requires at least seven individual
indicators rated green; an ‘amber’ rating
shows five or six rated ‘green’; a ‘red’
rating shows four or fewer rated ‘green’.
1
Source: November Pulse survey for
each year.
For more information on our Key
Performance Indicators, including
definitions, methodology and restatements,
see our Sustainability Data Summary at
www.astrazeneca.com/sustainability.
17
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Our Strategy and Key Performance Indicators
We are leading a revolution in oncology to redefine
cancer care. Our ambition is to follow the science
to discover, develop and deliver life-changing
treatments that transform outcomes and increase
the potential for cure.
Epigenetics: DNA undergoing
epigenetic modulation
Oncology
Therapy Area Review
18
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Small molecule targeted agents
$50.9bn
Immune checkpoint inhibitors
$36.6bn
Monoclonal antibodies (mAbs)
$34.3bn
Chemotherapy
$24.5bn
Hormonal therapies
$16.0bn
PARP inhibitors
$3.1bn
Other oncology therapies
$0.5bn
$165.8bn
Annual worldwide market value
Therapy area world market
(MAT Q3-22)
2022 overview
>
Performance driven by rapid and broad
market penetration of our oncology
medicines, with 8 new indication
launches and 21 major market approvals
across four medicines, including
Imfinzi
,
Enhertu
,
Lynparza
and a new medicine
approved for the first time,
Imjudo
2
.
>
Impressive business performance
underpinned by exceptional Total
Revenue growth for
Calquence
and
Enhertu
and strong double-digit growth
for
Tagrisso
,
Lynparza
and
Imfinzi
.
1
Total Revenue from
Koselugo
is included within
Rare Disease for 2022 reporting, previously reported
within Oncology. The comparatives and growth rates
shown for each therapy area have been calculated as
though these changes had been implemented in 2020.
2
Imfinzi
Total Revenue includes revenue of
Imjudo
which
commenced in 2022.
Total Revenue
$15,539m
up 15% (20% at CER)
2021: $13,555m
1
2020: $11,417m
1
Unmet medical need
and world market
20m
Nearly 20 million people were
diagnosed with cancer in 2020
and it remains the second leading
cause of death across the globe.
27.5m
The global burden of cancer
is expected to grow, with an
estimated 27.5 million newly
diagnosed patients and
16.3 million deaths annually
by 2040.
Source: IQVIA.
AstraZeneca focuses on specific segments within this overall therapy
area market. Oncology Therapy Area submarket totals ($165.9bn) do not
sum up exactly to the Therapy Area total ($165.8bn) due to rounding.
Product
Disease
Total Revenue
Commentary
Tagrisso
(osimertinib)
Lung cancer
$5,444m,
up 9%
(15% at CER)
Approved in 94 countries for the adjuvant treatment of patients with early-stage EGFR mutated
(EGFRm) NSCLC and in 99 countries for both the 1st- and 2nd-line treatment of advanced
EGFRm NSCLC.
Lynparza
(olaparib)
Ovarian cancer
Breast cancer
Pancreatic cancer
Prostate cancer
$2,993m,
up 9%
(14% at CER)
Approved in 93 countries as maintenance therapy for platinum-sensitive relapsed ovarian
cancer and 1st-line BRCA-mutated (BRCAm) ovarian cancer, and in 89 countries with
bevacizumab for homologous recombination repair deficient (HRD)-positive advanced ovarian
cancer. Approved in 56 countries for germline BRCAm (gBRCAm), HER2-negative early breast
cancer (approved in the metastatic setting in 92 countries). Approved in 89 countries for
gBRCAm metastatic pancreatic cancer. Approved in 92 countries for homologous
recombination repair (HRR) gene-mutated metastatic castration-resistant prostate cancer
(mCRPC) (BRCAm only in certain countries) and in 31 countries in combination with
abiraterone for the 1st-line treatment of adult patients with mCRPC.
Imfinzi
2
(durvalumab)
Lung cancer
Bladder cancer
Liver cancer
$2,784m,
up 15%
(21% at CER)
Approved in the curative-intent setting of unresectable, Stage III NSCLC after
chemoradiotherapy in 85 countries and in extensive-stage small cell lung cancer in 81
countries. Also approved in combination with gemcitabine and cisplatin as treatment for adult
patients with locally advanced or metastatic biliary tract cancer in three countries, and in
unresectable hepatocellular carcinoma in the US in combination with
Imjudo
.
2
Also approved in
the US in combination with
Imjudo
and platinum-based chemotherapy for NSCLC, and for
previously treated advanced bladder cancer in 10 countries.
Calquence
(acalabrutinib)
Mantle cell
lymphoma (MCL)
Chronic lymphocytic leukaemia
(CLL)
$2,057m,
up 66%
(69% at CER)
Approved in 85 countries for the treatment of CLL and in 43 countries for the treatment of adult
patients with MCL who have received at least one prior therapy.
Enhertu
(trastuzumab deruxtecan)
Breast cancer
Gastric cancer
Lung cancer
$602m,
up 182%
(184% at CER)
Approved in more than 40 countries for HER2-positive metastatic breast cancer following a
(one or more) prior anti-HER2-based regimen. Also approved in more than 30 countries for
HER2-low metastatic breast cancer following chemotherapy and previously treated
HER2-positive advanced gastric cancer. Approved in the US for previously treated HER2-
mutant metastatic NSCLC.
Orpathys
(savolitinib)
Lung cancer
$33m,
up 109%
(106% at CER)
Approved in China for treatment of NSCLC with MET gene alterations.
Other products
Zoladex
(goserelin
acetate implant)
Prostate cancer
Breast cancer
$957m,
down 1%
(up 7% at CER)
Arimidex
(anastrozole)
Breast cancer
$99m,
down 29%
(24% at CER)
Faslodex
(fulvestrant)
Breast cancer
$334m,
down 22%
(14% at CER)
Casodex
/
Cosudex
(bicalutamide)
Prostate cancer
$78m,
down 45%
(40% at CER)
Iressa
(gefitinib)
Lung cancer
$114m,
down 38%
(34% at CER)
Key marketed products
See full product information in the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022.
19
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / Oncology
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 through:
1. Scientific platforms to attack cancer from
multiple angles, including 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
genetic mutations and resistance
mechanisms that enable cancer cells to
survive and proliferate.
b. DNA damage response – targeting the
DNA repair process to block cancer cells
reproducing.
c. Antibody drug conjugates (ADCs) – highly
potent cancer-killing agents delivered
directly to cancer cells via a linker
attached to a targeted antibody.
d. Epigenetics – targeting changes to
genome expression caused by cancer.
e. Immuno-oncology – activating the body’s
own immune system to help fight cancer.
f. Cell therapies – harnessing living cells to
target cancer.
2. Treating cancer earlier where the greatest
opportunity for cure exists and building
expertise and leadership in key tumour types.
3. Collaborating to harness transformational
technologies, including computational
pathology, circulating tumour DNA (ctDNA)
testing, digital health and data science/AI.
4. Leveraging our global footprint – to make
cancer therapies available to every eligible
and appropriate patient.
Lung cancer
Scientific advances are strengthening the
potential of our medicines to offer cure and
long-term survival in lung cancer with a focus
on early detection and precision medicine.
Our comprehensive portfolio includes leading
medicines
Tagrisso
,
Imfinzi
,
Imjudo
,
Enhertu
and
Orpathys
, with a pipeline of potential new
medicines and combinations across diverse
mechanisms of action.
>
Positive Phase III results from the AEGEAN
trial showed
Imfinzi
plus chemotherapy
significantly improved pathologic complete
response in resectable NSCLC. The trial
continues to assess the additional primary
endpoint of event-free survival.
>
Tagrisso
approved in Japan for the adjuvant
treatment of patients with early-stage
EGFRm NSCLC based on the ADAURA
Phase III trial. Updated results from
ADAURA showed
Tagrisso
continued to
prolong the time these patients can live
cancer-free after surgery.
>
Together with Daiichi Sankyo, we are
accelerating Phase III trials in lung and
breast cancers for our TROP2-directed
ADC, datopotamab deruxtecan –
as monotherapy and in combinations –
following promising clinical data and strong
tolerability profile. We are also driving
Phase III trials in breast, endometrial,
gastric, prostate, ovarian and colorectal
cancers.
>
Our novel bispecific antibody, volrustomig
(MEDI5752), simultaneously targets PD-1
and CTLA-4, which has potential to improve
therapeutic benefit and reduce the risk of
toxicity typically associated with CTLA-4
inhibitors. Initial data in late-stage
non-squamous NSCLC shows durable
responses.
Breast cancer
We are aiming to shape clinical practice and
transform outcomes across all subtypes and
stages of breast cancer and ultimately, to
eliminate breast cancer as a cause of death.
Our comprehensive portfolio of medicines
including
Enhertu
,
Lynparza
,
Faslodex
and
Zoladex
and promising compounds in
development leverage different mechanisms
of action to address the biologically diverse
breast cancer tumour environment.
>
For
Enhertu
, positive Phase III results in
advanced HER2-low metastatic breast
cancer led to a rare standing ovation at
the American Society of Clinical Oncology
Annual meeting and swift approval in the
US as the first HER2-directed therapy
for patients with HER2-low metastatic
breast cancer.
>
Lynparza
became the first and only
approved medicine targeting BRCAm in
early breast cancer following US approval
as adjuvant treatment for gBRCAm
HER2-negative high-risk patients based on
the OlympiA Phase III trial.
>
Positive Phase III results for capivasertib
plus
Faslodex
in advanced HR-positive
breast cancer reinforced the opportunity
with this AKT inhibitor for patients who
experience tumour progression on, or
resistance to, available endocrine therapies.
>
Promising Phase II data for our next-
generation, selective estrogen receptor
degrader (SERD), camizestrant, in
advanced ER-positive breast cancer,
demonstrated the potential for camizestrant
to improve on currently available endocrine
therapies for patients with early and
metastatic disease.
Gynaecological/Genitourinary cancers
Our ambition is to establish
Lynparza
plus
abiraterone as the standard of care in 1st-line
mCRPC based on its transformational
efficacy and best-in-class safety profile. In
gynaecological cancers, we aim to maximise
progression-free survival and provide hope of
cure for women with advanced ovarian cancer.
>
Positive results from PROpel Phase III trial
showed
Lynparza
in combination with
abiraterone significantly delayed disease
progression in 1st-line mCRPC, now
approved in the EU based on these results.
US regulatory submission remains under
review following an extension by the FDA in
December 2022.
>
Our next-generation PARP1 selective
inhibitor, AZD5305, is progressing towards
potential registrational trials for prostate
cancer in combination with new hormonal
agents, with data showing good tolerability
at higher doses. AZD5305 is designed to
selectively target PARP1, thereby killing
cancer cells by targeting tumour cell DNA
damage response mechanisms.
2nd
Cancer is the second
leading cause of
death worldwide.
16.3m
By 2040, cancer is expected
to account for 16.3 million
deaths annually across
the globe.
20
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Therapy Area Review
Oncology
continued
Gastrointestinal cancers
With positive results across multiple
medicines and a robust development
programme in many stages and disease
types, gastrointestinal cancers are a critical
new growth area.
>
Imfinzi
in combination with chemotherapy
is the first immunotherapy-based regimen
approved in the US, EU and Japan and a
new standard of care in advanced biliary
tract cancer, a treatment setting with no
major global treatment advance in over
a decade.
>
Imjudo
in combination with
Imfinzi
is now
approved in the US and Japan for patients
with unresectable liver cancer and
recommended for approval in the EU based
on the HIMALAYA Phase III trial.
Blood cancers
In haematology, we are using our six
scientific platforms to develop and test novel
investigational agents designed to target
underlying drivers, resulting in 25,000 patients
treated globally and approvals in 84 countries.
>
A new tablet formulation of
Calquence
,
our next-generation Bruton’s tyrosine
kinase (BTK) inhibitor, is now approved in
the US for all current indications which
allows for co-administration with gastric
acid-reducing agents.
>
Calquence
was approved in Japan as a
1st-line treatment for patients with CLL
(including small lymphocytic lymphoma)
based on findings from the ELEVATE-TN
trial.
>
Building on the success of
Calquence
,
our acquisition of TeneoTwo and its T-cell
engager AZD0486 (TNB-486) aims to
accelerate and diversify our Oncology
pipeline for haematologic malignancies.
For full details, see the Development Pipeline Supplement
on our website, www.astrazeneca.com/annualreport2022.
First clinical data for
AZD0486 shared at
the 2022 American
Society of Hematology
annual meeting
showed early signs
of activity in patients
with relapsed/
refractory B-cell
non-Hodgkin
lymphoma.
Weʼre thinking differently
about the underlying genetic
causes of cancer, defining new
biomarkers and therapeutic
targets that span multiple
tumour types.
21
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / Oncology
We are transforming care for billions of
people living with chronic diseases and
delivering long-lasting immunity. Our
ambition is to intervene earlier to protect
vital organs, slow or reverse disease
progression, and achieve remission for
these often degenerative, debilitating,
and life-threatening conditions, so many
more people can live better, healthier lives.
Severe asthma disease
pathways: the role of epithelial
cytokines and eosinophils.
BioPharmaceuticals
Therapy Area Review
22
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
We have a relentless focus on
developing and delivering innovative,
life-changing medicines and
solutions for the millions of people
affected by the complex spectrum
of cardiovascular, renal and
metabolic diseases.
2022 overview
>
DELIVER Phase III trial showed
Forxiga
significantly reduced the risk of
cardiovascular death or worsening of
heart failure in patients with mildly
reduced or preserved ejection fraction.
>
Lokelma
launched in 23 markets and
achieved global branded market
leadership.
>
Andexxa
received the first approved
reversal agent specifically for Factor Xa
inhibitors in Japan.
>
Eplontersen
met co-primary and
secondary endpoints in interim analysis
of the NEURO-TTRansform Phase III for
ATTRv-PN.
>
Human progenitor cells promote the
formation of new heart tissue following a
heart attack, in new study.
Total Revenue
$9,211m
up 13% (19% at CER)
2021: $8,103m
1
2020: $7,139m
Cardiovascular, Renal & Metabolism
2022 overview
>
Tezspire
approved in the EU and Japan
as an add-on maintenance treatment for
severe asthma with no phenotype or
biomarker limitations.
>
Saphnelo
approved in the EU as an
add-on therapy for the treatment of adult
patients with moderate to severe systemic
lupus erythematosus (SLE).
>
Continued strong growth, across the
portfolio, including from
Breztri
(up 103%
at CER) and
Fasenra
(up 15% at CER).
>
Airsupra
(PT027) approved in the US for
the as-needed treatment or prevention of
bronchoconstriction and to reduce the
risk of exacerbations in people with
asthma aged 18 years and older.
Total Revenue
$5,963m
down 1% (up 3% at CER)
2021: $6,049m
2020: $5,375m
Respiratory & Immunology
Total Revenue
$4,836m
up 1% (8% at CER)
2021: $4,779m
2020: $669m
Vaccines & Immune Therapies
Our ambition is to intervene earlier
to protect vital organs, slow or
reverse disease progression, and
achieve remission for these often
degenerative, debilitating, and
life-threatening conditions.
2022 overview
>
Vaxzevria
approved in the EU as a third
dose booster against COVID-19 received
full marketing authorisation in the EU.
>
Evusheld
long-acting antibody (LAAB)
combination approved in the EU and
Japan for both pre-exposure prophylaxis
and treatment of COVID-19.
>
Beyfortus
approved in the EU for the
prevention of respiratory syncytial virus
(RSV) lower respiratory tract disease
in infants.
>
First patient dosed in the SUPERNOVA
Phase I/III trial of AZD3152 for pre-
exposure prophylaxis of COVID-19.
Our ambition is to develop and
deliver transformative vaccines and
antibodies, providing long-lasting
immunity to millions of people, where
the burden of disease is greatest.
Unmet medical need
and world market
64m
people living with heart
failure (HF) worldwide.
850m
people living with chronic
kidney disease (CKD).
230m
will be affected by non-alcoholic
steatohepatitis by 2030.
Unmet medical need
and world market
Up to 26m
people globally have severe
asthma, with up to 50% of those
treated remaining uncontrolled.
3rd
Chronic obstructive pulmonary
disease (COPD) is the world’s
third leading cause of death.
>5m
people worldwide have a form
of lupus.
Unmet medical need
and world market
>630m
confirmed cases of COVID-19
and more than 6.5 million
deaths globally.
>40%
of those hospitalised with
breakthrough infections
after COVID-19 vaccination
are immunocompromised,
with an increased risk of
inpatient mortality compared
with the general population.
23
AstraZeneca Annual Report & Form 20-F Information 2022
1
Total Revenue from
Andexxa
is included within BioPharmaceuticals:
Cardiovascular, Renal & Metabolism for 2022 reporting, previously reported within Rare Disease.
The comparatives and growth rates shown for each therapy area have been calculated as though these
changes had been implemented in 2020.
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / BioPharmaceuticals
Diabetes
$125.2bn
High blood pressure
$35.5bn
Abnormal levels of blood cholesterol
$17.2bn
Thrombosis
$6.8bn
CKD
$9.9bn
CKD-associated anaemia
$6.0bn
Hyperkalaemia
$0.7bn
Other CV
$50.2bn
$244.3bn
Annual worldwide market value
Therapy area world market
(MAT Q3-22)
Key marketed products
See full product information in the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022
Product
Disease
Total Revenue
Commentary
Farxiga
/
Forxiga
(dapagliflozin)
Type-2 diabetes
(T2D)
Heart failure with
reduced ejection
fraction (HFrEF)
Chronic kidney
disease (CKD)
$4,386m,
up 46%
(56% at CER)
CKD label and HFrEF label approved in over 100
markets each. SGLT2i recognised as foundational
HFrEF treatment by major societies (new AHA/ACC/
HFSA 2022 & ESC/HFA Guidelines).
Brilinta
/
Brilique
(ticagrelor)
Acute coronary
syndromes (ACS)
$1,358m,
down 8%
(4% at CER)
Approved in 123 countries for ACS and in
82 countries for high-risk patients with history
of heart attack. Expansion to new patients in
Emerging Markets.
Lokelma
(sodium zirconium
cyclosilicate)
Hyperkalaemia
$289m,
up 65%
(75% at CER)
Launched in 23 markets, with global branded market
leadership, US total K+ binder market leadership and
EU maintaining branded market leadership.
Roxadustat
Anaemia of CKD
$202m,
up 12%
(17% at CER)
Value and volume market share leadership within
China HIF-PHI + ESA market, helping more than
500,000 patients.
Andexxa/Ondexxya
(andexanet alfa)
1
Factor Xa inhibitor
reversal agent
$160m,
up 12%
(21% at CER)
The first approved reversal agent specifically for
Factor Xa inhibitors. Approved in Japan in 2022.
Other products
Crestor
(rosuvastatin
calcium)
Dyslipidaemia
Hyper-
cholesterolaemia
$1,050m,
down 4%
(up 2% at CER)
Seloken
/
Toprol-XL
(metoprolol
succinate)
Hypertension
Heart failure
Angina
$863m,
down 9%
(4% at CER)
Bydureon
(exenatide XR
injectable
suspension)
T2D
$280m,
down 27%
(26% at CER)
Onglyza
family,
(exenatide,
Qtern
,
Symlin
,
Atacand
and other
established brands)
n/a
$257m,
down 28%
(25% at CER)
1
Growth rates for
Andexxa/Ondexxya
acquired with Alexion have been calculated on a pro forma basis compared with the
corresponding period in the prior year.
Cardiovascular, Renal & Metabolism
Our strategy in CVRM
Our bold ambition is to stop, reverse and
cure CVRM diseases by maximising
our medicines, delivering innovative
solutions and advancing our pipeline.
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
>
advancing our precision medicine strategy
to develop diagnostic strategies and deliver
the right therapy for the right patient
>
driving our
CVRM Clinical Development
of the Future
programme to help bring
medicines to market quicker by shortening
enrolment times, promoting diversity
in clinical trials, and automating and
detecting events earlier through home
monitoring devices
>
investing strongly in research to drive
data that can be incorporated into clinical
practice guidelines to advance patient
outcomes
>
supporting our team of over 5,000 people
across more than 23 functions including
early and late R&D, medical and
commercial.
Full details are given in the Development Pipeline
Supplement on our website, www.astrazeneca.com/
annualreport2022.
2022 review – strategy in action
Our CVRM strategy is focused on four key
disease areas: heart failure (HF), chronic
kidney disease (CKD), cardiovascular disease
(CV) and metabolic liver disease. Our focus
also extends to several rare disease areas,
including transthyretin amyloidosis and factor
Xa inhibitor-related bleeds.
Chronic kidney disease
In CVRM, we remain committed to working
towards halting the progression of CKD and
eliminating progression to kidney failure. In
2022, real world evidence data studies
REVEAL-CKD and INSIDE-CKD were
released, showing alarming prevalence of
undiagnosed Stage III CKD and demonstrating
that
Forxiga
can cut 33% of healthcare costs
by delaying disease progression and reducing
incidence of cardiorenal events, respectively.
These findings reinforce an urgent need for
early screening of CKD and the benefits of
starting treatment earlier.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
Some sales for CKD ($9.9bn) and CKD-
associated anaemia ($6.0bn) fall outside
the CVRM total market. All sales for CKD-
associated anaemia ($6.0bn) fall within
the CKD market and should not be
double-counted.
Therapy Area Review
BioPharmaceuticals
continued
24
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
AstraZeneca CaReMe CKD, one of the
largest real-world studies on the prevalence,
outcomes and cost of CKD in over 2.4 million
CKD patients, was published in June. Findings
highlighted the high disease burden on
patients and healthcare systems and the
urgent need to improve early screening,
diagnosis and treatment.
Hyperkalaemia (HK) remains a key risk
for people living with CKD. As the K+ binder
market grows globally, CVRM is well
positioned with
Lokelma
as the leading
global branded novel K+ binder with
quarter-over-quarter growth.
In September, NLRP3 advanced into Phase I
for the treatment of acute kidney injury (AKI),
which each year affects approximately 13 million
people, resulting in two million deaths.
Heart failure
Our aim is to eliminate HF as first cause of
hospitalisation and to cure HF with reduced
ejection fraction. DELIVER Phase III trial
results, published in August 2022, showed
that
Forxiga
significantly reduced the risk of
CV death or worsening of HF in patients
regardless of ejection fraction. Importantly, in
the pooled analysis of the DAPA-HF and
DELIVER Phase III clinical trials,
Forxiga
demonstrated a reduction in CV death,
making
Forxiga
the first HF treatment to
demonstrate mortality benefit across the full
ejection fraction range. These findings were
simultaneously published in 11 top-tier articles
in peer-reviewed journals including
New England Journal of Medicine,
Nature
Medicine
and
The Lancet
. In November, an
additional data analysis of DELIVER showed
Forxiga
improved symptom burden and
health-related quality of life in patients with
mildly reduced or preserved ejection fraction.
In an encouraging example of our early CVRM
R&D pipeline, a preclinical study published in
May 2022 in
Nature Cell Biology
showed
human ventricular progenitor cells promote
the formation of new heart tissue following a
heart attack with improved cardiac function
and reduced scar tissue in a laboratory
setting. Research continues in this area and
elsewhere in the HF treatment pipeline.
Cardiovascular disease
With an ambition to stop progression of
atherosclerosis caused by dyslipidaemia,
we are making a difference for patients with
Brilinta
expanding to new patient populations
in Emerging Markets (excluding China).
In September, we decided to discontinue the
development of AZD8233 as results from the
Phase IIb SOLANO trial did not meet
pre-specified criteria to demonstrate benefit
significantly above current standard of care for
patients with high-risk hypercholesterolaemia.
In June, our small molecule PCSK9 inhibitor
AZD0780 entered Phase I with a focus on
high-risk primary prevention and secondary
prevention in patients with dyslipidaemia.
Metabolism
Non-alcoholic steatohepatitis (NASH)
prevalence is growing and is a major public
health burden. In July, the first patient was
dosed in the Phase IIb/III PROXYMO-
ADVANCE for cotadutide in non-cirrhotic
NASH. Our precision medicine portfolio in
NASH also advanced with the start of the
Phase I trial for our investigational antisense
oligonucleotide (ASO) AZD7503 17bHSD.
In the fourth quarter of 2022, a Phase I MAD
study on ASO precision medicine AZD2693,
completed in NASH patients homozygous for
the PNPLA3 I148M risk allele, a gene linked to
a significant proportion of NASH cases globally.
Transthyretin amyloidosis (ATTR)
ATTR cardiomyopathy (ATTR-CM) and
polyneuropathy are progressive, systemic
diseases caused by aging or genetic
mutations that result in tissue damage leading
to poor quality of life, which can be fatal
without treatment. In June, eplontersen met
co-primary and secondary endpoints in the
interim analysis of the NEURO-TTRansform
Phase III trial for hereditary transthyretin-
mediated amyloid polyneuropathy (ATTRv-PN).
See Rare Disease on page 30.
Factor Xa-related bleeds
Andexxa
is the first approved reversal agent for
Factor Xa inhibitors, rivaroxaban or apixaban,
providing a major advance in the treatment of
patients hospitalised with life-threatening
bleeding. In March,
Ondexxya
(
Andexxa
) was
approved in Japan for reversal of acute major
bleeds in patients on Factor Xa inhibitors.
17.9m
people die from
cardiovascular diseases
every year – more than
any other chronic disease.
25
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Therapy Area Review / BioPharmaceuticals / Cardiovascular, Renal & Metabolism
Asthma $24.8bn
COPD $19.8bn
Other $37.8bn
$82.4bn
Annual worldwide market value
Therapy area world market
(MAT Q3-22)
Key marketed products
See full product information in the Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2022.
Product
Disease
Total Revenue
Commentary
Symbicort
(budesonide/
formoterol)
Asthma
COPD
$2,538m,
down 7%
(2% at CER)
Retained global market leadership. Only ICS/LABA
approved as mild asthma anti-inflammatory reliever in
46 countries, with regulatory reviews anticipated in
additional countries.
Fasenra
(benralizumab)
Severe asthma
$1,396m,
up 11%
(15% at CER)
Consolidated leadership in severe eosinophilic asthma.
Currently approved as an add-on maintenance
treatment for severe eosinophilic asthma in over 75
countries including the US, EU and Japan.
Breztri
/
Trixeo
(budesonide/
glycopyrrolate/
formoterol)
COPD
$398m,
up 96%
(103% at CER)
Approved in more than 45 countries, including the US,
Japan and China. More prominent role of fixed-dose
triple therapies, including mortality reduction benefits
included in 2023 GOLD report.
Saphnelo
(anifrolumab)
Systemic lupus
erythematosus
(SLE)
$116m
(2021: $8m)
Approved in the US, EU, Japan and several other
countries. Regulatory reviews are ongoing in
additional countries.
Tezspire
(tezepelumab)
Severe asthma
$82m
Approved in the US, EU, Japan and several other
countries for severe asthma. Regulatory reviews are
ongoing in additional countries. Included in the 2022
GINA guidelines.
Other products
Pulmicort
(budesonide)
Asthma
$645m,
down 33%
(31% at CER)
Approved in more than 115 countries. 2022 was first
full year of volume-based procurement in China.
Daliresp
/
Daxas
(roflumilast)
COPD
$189m,
down 17%
(16% at CER)
Approved in more than 50 countries, including the US
and EU. Loss of exclusivity in the US in October 2022.
Bevespi
(glycopyrrolate/
formoterol)
COPD
$58m,
up 7%
(9% at CER)
Approved in 44 countries, including the US, EU, Japan
and China.
Respiratory & Immunology
Our strategy in Respiratory &
Immunology
Our ambition is to transform care in
respiratory and immune-mediated
diseases by moving beyond symptom
control to achieve disease modification,
remission and, one day, cures for
millions of patients worldwide.
COPD
We are working to eliminate COPD as a
leading cause of death by modifying the
course of the disease.
Our strategy is to:
>
drive broad, early diagnosis and 1st-line use of
the most effective therapies to improve patient
outcomes by preventing exacerbations before
damage is accrued in the lung
>
invest in therapies and trials that will enable
us to demonstrate true disease
modification, including stopping lung
function decline over time and reversing the
structural damage caused by the disease.
Asthma
Our ambition in asthma is to eliminate
exacerbations and achieve clinical remission,
even in people with the most severe asthma.
Our strategy is to:
>
establish our anti-inflammatory reliever
inhaled portfolio as the backbone of care
across all asthma severities
>
drive towards disease remission through
an industry-leading biologics portfolio
in patients with more severe disease
>
bring forward the next generation of
medicines by combining precision
medicines with new delivery modalities
to achieve clinical remission in patients
who remain uncontrolled in spite of
current therapeutics.
Immunology
Our ambition is to disrupt immunology by
focusing on areas of high unmet medical need
to drive clinical remission and eventually cure.
Our strategy is to:
>
build momentum in rheumatology, winning
in lupus and further expanding into other
indications where type 1 interferon is a
disease driver
>
establish a presence in gastroenterology and
dermatology through a combination of our
mid-stage internal pipeline and external
collaborations, targeting diseases such as
inflammatory bowel disease, atopic
dermatitis and chronic spontaneous urticaria
>
invest in future transformative technologies
with curative potential such as ADCs and
cell therapy.
Full details are given in the Development Pipeline
Supplement on our website,
www.astrazeneca.com/annualreport2022.
2022 review – strategy in action
Asthma
Symbicort
maintained its position as the
leading ICS/LABA globally by volume and
value. Performance has been driven by steady
growth in Emerging Markets and some key
Established RoW markets, offset by generic
erosion in the EU and Japan and continued
price erosion in the US.
In January 2023,
Airsupra
(PT027) was
approved in the US for the as-needed
treatment or prevention of bronchoconstriction
and to reduce the risk of exacerbations in
people with asthma aged 18 years and older,
offering the first and only anti-inflammatory
reliever treatment approach in the US.
Approval was based on results from the
MANDALA and DENALI trials and followed
a positive vote in November 2022 from the
FDA’s Pulmonary-Allergy Drugs Advisory
Committee on the benefit risk assessment
of PT027 in adults.
Breztri
, our triple therapy, is being studied in
asthma in two Phase III pivotal trials, KALOS
and LOGOS, in addition to our current
indication in COPD.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
26
Therapy Area Review
BioPharmaceuticals
continued
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Fasenra
, our first respiratory biologic is now
approved in more than 75 countries and
reached more than 100,000 patients with
severe eosinophilic asthma.
In September 2022,
Tezspire
was approved in
the EU as an add-on maintenance treatment
in patients 12 years and older with severe
asthma who are inadequately controlled with
high-dose ICS plus another medicinal
product. It was also approved in Japan for the
treatment of bronchial asthma in patients with
severe or refractory disease in whom asthma
symptoms cannot be controlled with mid- or
high-dose ICS and other long-term
maintenance therapies.
Tezspire
is the first
and only biologic for severe asthma to be
approved without phenotype or biomarker
limitations. Approval was based on results
from the PATHFINDER clinical trial
programme, including positive results from
the Phase III NAVIGATOR trial.
Compounds in early-stage clinical
development include:
>
elarekibep (AZD1402): an inhaled Anticalin
®
protein being developed in collaboration
with Pieris Pharmaceuticals that inhibits
the interleukin-4 receptor subunit alpha
(IL-4Ra), a clinically validated target in
severe asthma
>
AZD8630: an inhaled fragment antibody
(inhaled biologic) in co-development with
Amgen, that targets thymic stromal
lymphopoietin
>
atuliflapon (AZD5718): a precision medicine
approach in asthma with an oral FLAP
inhibitor that blocks the 5-lipoxygenase
pathway, a clinically validated target which
could offer an alternative for uncontrolled
patients before becoming eligible for
systemic biologics.
COPD
In the first quarter of 2022, the first patients
were enrolled in two Phase III trials (OBERON
and TITANIA) of tozorakimab (MEDI3506).
Other Respiratory
In the fourth quarter of 2022, the first patients
were dosed in the TILIA Phase III trial of
tozorakimab in virally-induced acute
respiratory failure.
Immunology
In February 2022,
Saphnelo
was approved 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.
Saphnelo
is the
first biologic for SLE approved in Europe with
an indication not restricted to patients with a
high degree of disease activity. In May 2022,
the first patients were enrolled in a Phase III
trial (IRIS) of
Saphnelo
in lupus nephritis.
Fasenra
’s life-cycle management programme
includes multiple clinical trials in eosinophilic
diseases beyond the current severe asthma
indication. High-level results from the
MESSINA Phase III trial showed
Fasenra
did
not meet one of two dual-primary endpoints.
Fasenra
demonstrated a statistically
significant improvement in histological
disease remission but not a change in
dysphagia symptoms, compared with placebo
in patients with eosinophilic esophagitis aged
12 years or older. In March 2022, the FDA
issued a Complete Response Letter regarding
the supplemental Biologics License
Application for
Fasenra
for patients with
inadequately controlled chronic rhinosinusitis
with nasal polyps.
Other compounds in early-stage clinical
development include AZD7798, a CCR9-
depleting mAb. CCR9 is the main chemokine
receptor for trafficking lymphocytes to the
small intestine and considered central to the
generation of small bowel inflammation in
Crohn’s Disease.
Over 600m
people worldwide live with
chronic respiratory and
immune-mediated diseases.
27
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / BioPharmaceuticals / Respiratory & Immunology
$9.8bn
Annual worldwide market value
Therapy area world market
(MAT
Q3-22)
Key marketed products
See full product information in the Patent Expiries Supplement on our website,
www.astrazeneca.com/annualreport2022.
Product
Disease
Total Revenue
Commentary
Evusheld
(tixagevimab and
cilgavimab)
COVID-19
$2,184m,
(2021: $135m)
Authorised for pre-exposure prophylaxis (prevention)
of COVID-19 in the US (emergency use), EU, Japan and
many other countries. Approved for the treatment of
COVID-19 in the EU and Japan. US emergency use
authorisation for
Evusheld
revised in January 2023 to
limit its use to when the combined frequency of
non-susceptible variants in the US is ≤90%.
Vaxzevria
(ChAdOx1-S
[Recombinant])
COVID-19
$1,875m,
down 53%
(51% at CER)
More than three billion vaccine doses have been
released for supply to over 180 countries.
Synagis
(palivizumab)
RSV
$578m,
up 41%
(59% at CER)
Available in more than 100 countries outside the US.
Sobi holds the US rights.
Fluenz
Tetra/
FluMist
Quadrivalent
(live attenuated
influenza vaccine)
Influenza
$175m,
down 31%
(20% at CER)
Approved in the US, EU and other countries. Daiichi
Sankyo holds rights to
FluMist
Quadrivalent in Japan.
Beyfortus
(nirsevimab)
RSV
$25m
Approved in the EU. In collaboration with Sanofi. Sobi
has the right to participate in AstraZeneca’s share of
the US profits and losses related to
Beyfortus
.
Vaccines & Immune Therapies
Our strategy in Vaccines &
Immune Therapies
With an initial focus on some of the most
common and debilitating respiratory
diseases, we have a portfolio of medicines
that includes vaccines for COVID-19 and
influenza, long-acting antibodies for
COVID-19 and respiratory syncytial virus
(RSV), and a pipeline of next-generation
therapeutics and scientific platforms.
We are optimising the potential of both
vaccines and antibodies, with a focus on
developing medicines that provide
effective and long-lasting immunity.
Vaccines
We are engineering novel, next-generation
vaccines that have the potential to generate
potent and long-lasting immune responses.
Antibodies
We are pioneering novel approaches to
developing highly-targeted, long-acting
antibodies, using our half-life extension
technology. We have significantly accelerated
the speed at which we are able to identify
potent antibody candidates, screening billions
of antibody candidates in a matter of months.
This complementary approach, with vaccines
providing protection for those able to mount
their own immune response, and antibody
therapies for those who cannot, aims to
ensure that no one is left behind.
Full details are given in the Development Pipeline
Supplement on our website, www.astrazeneca.com/
annualreport2022.
2022 review – strategy in action
Vaxzevria
Vaxzevria
was co-invented by the University
of Oxford. Through a landmark agreement
in 2020,
Vaxzevria
was developed and
distributed by AstraZeneca at cost during
the pandemic. Under a sub-licence agreement
with AstraZeneca, the vaccine is manufactured
and supplied by the Serum Institute of India
under the name
Covishield
.
Vaxzevria
has been granted marketing or
emergency-use authorisation as both a
primary vaccine schedule and as a booster
in multiple countries worldwide. In May 2022,
the EU granted conditional marketing approval
for the use of
Vaxzevria
as a third-dose
booster in adults in both homologous (same
vaccine) or heterologous (mixed vaccine)
settings. In November 2022,
Vaxzevria
was
granted full marketing approval in the EU as
both a primary vaccination series and a
third-dose booster.
To date, AstraZeneca and our global partners
have released over 3.1 billion doses for supply
to over 180 countries. Approximately two
thirds of these doses went to low- and middle-
income countries, and more than 580 million
doses have been delivered to 130 countries
through the COVAX Facility. In July 2022,
Airfinity reported that
Vaxzevria
is estimated
to have helped save more than six million lives
in its first year of use.
The majority of vaccine product sales and
doses delivered related to pandemic contracts.
AstraZeneca will continue to supply the
vaccine around the world as needed, in line
with our agreement with the University of Oxford.
Evusheld
Evusheld
is a long-acting antibody (LAAB)
combination for the pre-exposure prophylaxis
(prevention) and treatment of COVID-19.
Evusheld
is approved and being supplied in
about 50 countries around the world.
Evusheld
is intended to protect those most
vulnerable to COVID-19, including those who
may not be well protected against the virus
from vaccination, such as the
immunocompromised, and those at high risk
for severe COVID-19 hospitalisation and death
if they get infected.
In February 2022, AstraZeneca finalised an
agreement with the US Department of Health
and Human Services for them to purchase an
additional one million units of
Evusheld
.
In March 2022,
Evusheld
was approved for
pre-exposure prophylaxis (prevention) of
COVID-19 in the EU in a broad population of
adults and adolescents aged 12 years and
older weighing at least 40kg. The approval
was based on a review of
Evusheld
data,
including results from the PROVENT Phase III
pre-exposure prophylaxis (prevention) trial
published in the New England Journal of
Medicine in April.
In August 2022,
Evusheld
was granted
Special Approval for Emergency use in Japan
for both pre-exposure prophylaxis (prevention)
and treatment of symptomatic disease caused
by SARS-CoV-2 infection in adults and
adolescents aged 12 years and older weighing
at least 40kg. The approvals were based on
a review of
Evusheld
data, including results
from PROVENT and the TACKLE Phase III
COVID-19 treatment trial published in
The Lancet Respiratory Medicine
in June.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
Therapy Area Review
BioPharmaceuticals
continued
28
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
The Japan government also agreed to
purchase 300,000 units of
Evusheld
.
In September 2022,
Evusheld
was approved
in the EU for the treatment of adults and
adolescents aged 12 years and older
weighing at least 40kg with COVID-19 who
do not require supplemental oxygen and
who are at increased risk of progressing to
severe COVID-19.
In January 2023, the FDA stated that
Evusheld
is not currently authorised for Emergency Use
for pre-exposure prophylaxis (prevention) of
COVID-19 in the US until further notice, due to
the sustained high frequency of circulating
SARS-CoV-2 variants that
Evusheld
does not
retain in vitro neutralisation against. The FDA
will make a determination about reinstating
authorisation of
Evusheld
if the national
prevalence of resistant variants decreases
to 90% or less on a sustained basis.
AZD3152
AZD3152 is an investigational next-generation
long-acting antibody being developed to have
broad neutralising activity across SARS-
CoV-2 strains. In December 2022, the first
participant was dosed in the SUPERNOVA
Phase I/III trial evaluating AZD3152 for
pre-exposure prophylaxis (prevention) of
symptomatic COVID-19. AZD3152 neutralises
all tested SARS-CoV-2 variants in in vitro
studies to date.
Synagis
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.
Synagis
is available for the
prevention of RSV in more than 100 countries
outside the US. Our agreement with Sobi for
the rights to
Synagis
in the US remains ongoing.
Beyfortus
Following an accelerated assessment
procedure,
Beyfortus
(nirsevimab) was
approved in November 2022 in the EU for
the prevention of RSV lower respiratory tract
disease in newborns and infants during their
first RSV season. Following EU approval,
Beyfortus
became the first and only single-
dose RSV preventative option approved for
the broad newborn and infant population.
Approval was based on positive results from
the MELODY Phase III and MEDLEY Phase II/
III trials published in
The New England Journal
of Medicine
in March 2022.
The Biologics License Application for
nirsevimab has been accepted for review
by the FDA for the prevention of RSV lower
respiratory tract disease in newborns and
infants entering or during their first RSV
season and for children up to 24 months of
age who remain vulnerable to severe RSV
disease through their second RSV season.
The FDA has indicated that it will work to
expedite its review.
Beyfortus
is being jointly developed and
commercialised by AstraZeneca and Sanofi.
Fluenz
Tetra/
FluMist
Quadrivalent
Fluenz
Tetra/
FluMist
Quadrivalent is the first
and only commercial intranasal influenza
vaccine offering a needle-free alternative to
traditional vaccines. It is licensed in multiple
countries and remains a central part of the
UK, Irish, Italian and Finnish paediatric
national influenza vaccination programmes,
demonstrating positive and cost-effective
protection of the health of both children and
the wider population. In addition, we are a
global partner to governments in supplying
doses for influenza pandemics.
Nearly
one billion
seasonal influenza cases
may result in 290,000 to
650,000 deaths annually
due to influenza-related
respiratory diseases.
Source: WHO.
29
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Therapy Area Review / BioPharmaceuticals / Vaccines & Immune Therapies
2022 marked the first full year of Alexion,
AstraZeneca Rare Disease, following AstraZeneca’s
acquisition of Alexion Pharmaceuticals, Inc.
on 21 July 2021.
Our mission is to transform the lives of people
affected by rare diseases through the development
and delivery of innovative medicines as well as
supportive technologies and healthcare services.
For more information, see Science and Innovation
from page 35
and Growth and Therapy
Area Leadership from page
39.
Rare Disease
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.
30
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Therapy Area Review
$152.3bn
Annual worldwide market value
Therapy area world market
(MAT Q3-22)
Total Revenue
$7,053m
up 4% (10% at CER)
1
2021: $3,110m
2
2020: $38m
2
Key marketed products
See full product information in the Patent Expiries Supplement on our website, www.astrazeneca.com/annualreport2022.
Product
Disease
Total Revenue
Commentary
Soliris
(eculizumab)
PNH
aHUS
gMG
NMOSD
$3,762m,
down 11%
(5% at CER)
Approved in 50+ countries for treatment of patients with PNH, including the US,
EU and Japan.
Approved in 50+ 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
gMG
$1,965m,
up 34%
(42% at CER)
Approved in 50+ 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 40+ countries for the treatment of aHUS, including the US, EU and Japan for
treatment of aHUS.
Approved in the US and Japan as a treatment for gMG in adults who are anti-acetylcholine
receptor antibody-positive.
Approved in the EU as an add-on to standard therapy for treatment of gMG in adults who are
anti-acetylcholine receptor antibody-positive.
Strensiq
(asfotase alfa)
Hypophosphatasia
(HPP)
$958m,
up 16%
(18% at CER)
Approved in 40+ countries, including the US, EU, Japan and Canada.
Koselugo
(selumetinib)
Neurofibromatosis type 1 (NF1)
plexiform neurofibroma (PN)
$208m,
up 93%
(96% at CER)
Approved in 40+ countries, including the US, EU and Japan.
Kanuma
(sebelipase alfa)
Lysosomal acid lipase deficiency
(LAL-D)
$160m,
up 16%
(19% at CER)
Approved in 40+ countries, including the US, EU, Japan and Canada.
2022 overview
>
Sustained growth in C5 franchise
(
Soliris
and
Ultomiris
), including:
>
Continued conversion to
Ultomiris
in paroxysmal nocturnal
haemoglobinuria (PNH) and atypical
haemolytic uremic syndrome (aHUS).
>
Launch of
Ultomiris
in generalised
myasthenia gravis (gMG) in the US,
Japan and EU as the first and only
long-acting C5 complement inhibitor.
>
Koselugo
approved in Japan for paediatric
patients with plexiform neurofibromas
in neurofibromatosis type 1.
>
Ultomiris
met the primary endpoint in
CHAMPION-NMOSD Phase III trial
in adults with neuromyelitis optica
spectrum disorder (NMOSD).
>
Acquired LogicBio Therapeutics, Inc.,
a pioneering genomic medicine company.
Unmet medical need
and world market
400 million
people around the world are
affected by a rare disease, half of
whom are children.
>7,000
rare diseases are known to exist
today but only 5% have approved
treatment options.
3 in 10
children with a rare disease don’t
live to see their fifth birthday.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
1
Growth rates for medicines acquired with Alexion
have been calculated on a pro forma basis compared
with the corresponding period in the prior year.
2
Total Revenue from
Koselugo
is included within
Rare Disease for 2022 reporting, previously
reported within Oncology, and Total Revenue from
Andexxa
is included within BioPharmaceuticals:
Cardiovascular, Renal & Metabolism for 2022
reporting, previously reported within Rare Disease.
The comparatives and growth rates shown for each
therapy area have been calculated as though these
changes had been implemented in 2020.
31
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / Rare Disease
Our strategy in Rare Disease
We are dedicated to improving the lives
of those living with rare diseases, and the
people who support them, through:
>
continuing our leadership in complement
therapies, by building on our pioneering
legacy of innovation
>
serving more people through diversifying
our portfolio and expanding our geographic
footprint
>
creating smart and efficient strategies to
speed access to our medicines for patients
>
innovating by investing in science and
platforms as well as continuing to leverage
AstraZeneca technologies and research
capabilities.
2022 review – strategy in action
Sustained leadership in complement
Alexion was the first company to translate
the complement system into transformative
medicines. We are continuing that legacy
of leadership across multiple geographies
and disease areas.
Ultomiris
is now the established standard of
care in the US, Germany and Japan for both
PNH and aHUS, two chronic and potentially
life-threatening diseases that can lead to
serious health complications, including organ
damage. We are working with healthcare
systems around the world to enable access
in additional countries.
Approval of subcutaneous administration of
Ultomiris
in the US for the treatment of adults
with PNH or aHUS will give patients a choice
for how they receive their treatment
(submission under review in the EU).
The US, EU and Japan have approved
Ultomiris
for the treatment of adults with gMG,
a progressive autoimmune neuromuscular
disease. We have also seen increased use of
Soliris
by patients with gMG and NMOSD, an
autoimmune disorder of the central nervous
system that affects the optic nerve and
spinal cord.
Full results from the Phase III CHAMPION-
NMOSD trial demonstrated that
Ultomiris
achieved a statistically significant and
clinically meaningful reduction in the risk
of relapse in adults with anti-aquaporin-4
antibody-positive (AQP4 Ab+) NMOSD
compared with the external placebo arm.
Ultomiris
met the primary endpoint of time to
first on-trial relapse as confirmed by an
independent adjudication committee (zero
adjudicated relapses were observed over a
median treatment duration of 73 weeks).
Results demonstrated
Ultomiris
reduced the
risk of relapse in AQP4 Ab+ NMOSD by 98.6%
compared with placebo.
Additional clinical trials of
Ultomiris
are
ongoing in a number of disease areas where
the complement pathway is thought to play a
role, including a Phase III trial in haematopoietic
stem cell transplant-associated thrombotic
microangiopathy and Phase II clinical trial
in dermatomyositis.
We discontinued the Phase III trial of
Soliris
in
Japanese adults with Guillain-Barré syndrome
(GBS) due to lack of efficacy in that disease.
We discontinued our Phase III trial of
Ultomiris
in complement-mediated thrombotic
microangiopathy as a result of a strategic
portfolio prioritisation exercise.
Consistent with our efforts to expand the
availability and use of our existing medicines
into new geographies and diseases, we
have filed for approval of
Ultomiris
in nearly
60 countries globally.
Beyond
Ultomiris
We are advancing a broad development
portfolio across research platforms to inhibit
certain complement system targets, including
C5, Factor D, and Factor P, which enables us
to pursue a range of indications.
C5 inhibition
We are exploring the ability to treat earlier-line
gMG patients with gefurulimab (ALXN1720),
an internally discovered potential third-
generation C5 inhibitor that is being evaluated
in a Phase III trial.
Factor D
Factor D is a component of the complement
alternative pathway and plays 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.
In September 2022, we announced positive
high-level results from our Phase III trial
evaluating danicopan (ALXN2040), an
investigational, oral, Factor D inhibitor, as
add-on therapy to
Ultomiris
or
Soliris
. The
ALPHA Phase III trial for patients with PNH
who experience clinically significant
extravascular haemolysis met the primary
endpoint, demonstrating a statistically
significant improvement compared with
placebo in haemoglobin levels from baseline
to week 12.
A Phase II trial of danicopan in geographic
atrophy, a chronic and progressive eye
disease, is ongoing.
We advanced two Phase II trials of
vemircopan (ALXN2050) as a monotherapy
in PNH, gMG and two rare renal diseases:
proliferative lupus nephritis and
immunoglobulin A nephropathy.
We initiated a Phase I trial of ALXN2080,
potentially our third-generation Factor D
inhibitor.
Factor P
Properdin, or Factor P, is an important regulator
of complement alternative pathway activation
and amplification. A Phase I clinical trial for
ALXN1820, an internally discovered bispecific
anti-properdin VHH antibody, is ongoing. We
are also advancing multiple clinical development
assets as potential treatments for certain rare
nephrology diseases, including ALXN2030, an
investigational siRNA targeting the complement
C3 protein.
Full details are given in the Development Pipeline
Supplement on our website,
www.astrazeneca.com/annualreport2022.
5%
Only 5% of known rare
diseases have approved
treatment options today.
50%
of the 400 million people
affected by a rare disease
worldwide are children.
32
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Therapy Area Review
Rare Disease
continued
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 excess copper build up in
organs and tissues can lead to liver disease,
neurological and psychiatric symptoms.
In June 2022, we announced detailed results from
the positive FoCus Phase III trial of ALXN1840, an
investigational once daily, oral medicine. The trial
met its primary endpoint, demonstrating
approximately three times greater copper
mobilisation from tissues than standard of care
treatments, including in patients who had been
treated previously for an average of 10 years. In
the trial, patients taking ALXN1840 experienced
rapid copper mobilisation, with a response at four
weeks, sustained through 48 weeks.
Hypophosphatasia (HPP)
HPP is a rare, genetic metabolic disease
characterised by impaired bone mineralisation,
muscle weakness and other systemic
manifestations of the disease, which can
lead to death in infants and significant
disability at any age.
We are progressing a Phase I trial for
ALXN1850, our next-generation alkaline
phosphatase enzyme replacement therapy,
in adult patients with HPP.
Neurofibromatosis Type 1 (NF1) Plexiform
Neurofibromas (PN)
NF1 PN is a rare, progressive, genetic
condition impacting multiple body systems
characterised by benign tumours called
plexiform neurofibromas, which develop along
nerve sheaths throughout the body.
In September 2022,
Koselugo
was approved
in Japan for paediatric patients with NF1 PN,
adding to earlier approvals, including in the
US and EU.
Expanding beyond complement
We have continued 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.
CAEL-101, a potentially first-in-class fibril-
reactive mAb for the treatment of AL
amyloidosis, is currently being evaluated in
the Cardiac Amyloid Reaching for Extended
Survival Phase III clinical programme in
combination with standard of care (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 HF and a high rate of
fatality within four years from diagnosis.
In March 2022, we closed an exclusive global
collaboration and licence agreement with
Neurimmune AG to develop and commercialise
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.
Additionally, Alexion holds an exclusive
licence from Eidos Therapeutics, Inc. to
develop and commercialise acoramidis
(ALXN2060) in Japan, and we are conducting
a Phase III bridging trial of acoramidis for
patients with ATTR-CM in Japan.
62 countries
Our Rare Disease medicines
are now approved in 62
countries, including 10 new
countries since July 2021.
Other Medicines
We no longer report Other
Medicines separately. COVID-19-
related vaccine information is now
incorporated under Vaccines &
Immune Therapies in the
BioPharmaceuticals Therapy Area.
The majority of the Total Revenue
within Other Medicines relates to
Nexium
sales of $1,367 million.
In neuroscience, we continue to
progress a number of Phase I and
Phase II trials.
33
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / Rare Disease
A talented team delivering
our strategic priorities
sustainably, supporting
scientific innovation and
commercial success.
Our business is organised to deliver our growth
through innovation strategy and achieve our
purpose of pushing the boundaries of science to
deliver life-changing medicines. Our R&D and
Commercial functions promote accelerated
decision making and the launches of new
medicines across our therapy areas.
Science and
Innovation
We are reinforcing our continued focus on
science and on innovation, from discovery
through development and life-cycle
management, to further our productivity
and outcomes. We have three therapy
area-focused R&D organisations –
Oncology, BioPharmaceuticals (CVRM,
R&I and V&I) and Rare Disease.
Key topics covered
Summary and performance indicators
Research & Development
Development pipeline overview
Bioethics
Growth and Therapy
Area Leadership
We are building on what we are doing to
realise the potential of our pipeline and
medicines to deliver sustainable growth
in each of our therapy areas. We have
Commercial regions that align product
strategy and commercial delivery, while
our Operations function develops,
manufactures and delivers our medicines.
Key topics covered
Summary and performance indicators
Sales and marketing
Our commercial regions
Operations
IT and IS resources
Business development
People and
Sustainability
We are strengthening our commitment to our
people, ensuring that AstraZeneca remains
a great place to work, as well as elevating
our pledge to the planet and society.
Key topics covered
Summary and performance indicators
People
Sustainability
>
Access to healthcare
>
Environmental protection
>
Ethics and transparency
34
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
Discovery and early-stage
development
40%
Late-stage development
60%
Research & Development
2022
2021
2020
6
9
8
6
NM
E Phase II starts/progressions
2022
2021
2020
38
27
24
38
NME and major LCM submissions
2022
2021
2020
23
23
28
23
NME and major LCM Phase III
i
nvestment decisions
2022
2021
2020
34
22
29
34
NM
E and major LCM approvals
Science and Innovation
Performance indicators
By measuring both Phase II and Phase III
pipeline progressions, we focus 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 four major markets (US, EU,
China and Japan).
Research & Development
In 2022, we continued to progress
our science and our pipeline in a
way that reflected our ongoing
commitment to maintaining an
ethical business culture.
Summary and performance indicators
We are using our distinctive
scientific capabilities to deliver a
pipeline of life-changing medicines.
Our performance in 2022
>
Invested $9.8 billion in our R&D.
>
First approvals for 2 NMEs,
Imjudo
and
Beyfortus
.
>
179 pipeline projects, of which 155 are in
the clinical phase of development.
>
R&D productivity was 19% versus the
industry average of 14%.
>
Published 156 manuscripts in ‘high-impact’
journals.
>
Shared pre-clinical data for the first molecule
to incorporate our antibody drug conjugate
linker technology.
>
Generated the world’s first bioengineered
HFpEF miniature human heart models.
>
Announced plans for a new strategic R&D
centre and Alexion corporate headquarters
in Kendall Square, Cambridge, MA, US.
>
Continued the installation of primary
laboratory equipment and commissioning
of our new Discovery Centre (DISC) in
Cambridge, UK.
Our R&D resources
Our R&D organisation has more than 13,000
employees across our global sites. We have
four strategic R&D centres: Cambridge, UK;
Gaithersburg, MD, US; Gothenburg, Sweden;
and Boston, MA, US, as well as seven other
R&D centres and offices.
Our R&D centres
Work continued on The Discovery Centre
(DISC) in Cambridge, UK during 2022 to
complete the installation of primary laboratory
equipment and commissioning of the building
to accommodate our 2,220 research scientists.
The total projected cost remains at circa
$1.4 billion (£1.1 billion).
In April, we announced plans to open a new
site in Kendall Square, Cambridge, MA, US
at the heart of the life sciences and innovation
hub of the greater Boston area. The site will
be a fourth strategic R&D centre for
AstraZeneca, as well as a new US corporate
headquarters for Alexion, our Rare Disease
business. The site will bring together
approximately 1,500 R&D, commercial and
corporate colleagues and is scheduled for
completion in 2026.
Investing in R&D
In 2022, R&D expenditure was $9,762 million
(2021: $9,736 million; 2020: $5,991 million),
including Core R&D costs of $9,500 million
(2021: $7,987 million; 2020: $5,872 million). In
addition, we spent $2,051 million on acquiring
product rights (such as in-licensing) (2021:
$27,042 million; 2020: $1,454 million). We also
invested $111 million on the implementation
of our R&D restructuring strategy (2021: $223
million; 2020: $35 million). Allocations of
spend by early- and late-stage development
are shown in the chart to the left.
Investment in 2022 increased to support
our late-stage assets across Oncology and
BioPharmaceuticals, including eplontersen
(in-licensed from Ionis in 2021) and
Andexxa
in CVRM, and
Enhertu
, camizestrant and
ceralasertib in Oncology. Discovery
investment increased to take advantage of
new technologies, including cell therapy, and
we also acquired Neogene with its expertise
in this area. The Alexion portfolio continues
to evolve with 2022 representing our first full
year of investment. COVID-19 investments
continue as we switch to new treatments
to meet the challenges of new variants.
35
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Science and Innovation
Research & Development
continued
Our ambition is to transform the
lives of patients with improved
outcomes and a better quality of life
by working towards more effective
treatment and prevention, and
ultimately, cures for some of the
world’s most complex diseases.
In 2022, 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
four key areas of transformative science.
Our R&D in 2022
Our R&D productivity, defined as progressing
from candidate drug nomination to Phase III
completion, was 19% in 2022 versus an
industry average of 14%.
Our scientists published 783 manuscripts with
156 in ‘high-impact’ peer-reviewed journals,
each with an impact factor exceeding 15
(Thomson Reuters five-year impact factor
score). The ongoing high impact compared
with 169 in 2021 continues to reflect the
quality of, and drive to share, our science.
Enhancing our understanding of
disease biology
Advancing our understanding of disease
biology is helping uncover novel drivers for the
diseases we aim to treat, prevent and in the
future, cure. Selecting the right target remains
the most important decision in drug discovery.
Creating the next generation
of therapeutics
We continue to design new ways of targeting
the drivers of disease. The diversity of
technologies applied in our early pipeline is
exemplified by the increased number of new
modalities entering clinical development,
including ADCs, bispecific VHH antibodies,
cell and gene therapies, oligonucleotides and
T-cell engagers.
Better predicting clinical success of
our candidate drug molecules
We are adopting a range of cutting-edge
technologies that provide an environment
in which human cells behave more like
they would in the body, generating data
that is more relevant to patients than
previous methods.
2022 developments included:
>
The Functional Genomics Centre
completed its first radiation/CRISPR
screen, which aimed to identify potential
sensitising genes or pathways, and was one
of the largest functional genomics screens
ever run using radiation.
>
With BenevolentAI, adding four novel
AI-generated targets for CKD and idiopathic
pulmonary fibrosis to our drug discovery
2022 developments included:
>
An agreement with Cellular Biomedicine
Group to evaluate an armoured GPC3
targeted CAR-T product in the clinic in solid
tumours, and complementing our own cell
therapy capabilities with Neogene’s
expertise in T-cell receptor therapies.
For more information on Neogene, see Business
Development on page 43.
>
Published pre-clinical research in
Nature
Cell Biology
showing human ventricular
progenitor cells promote the formation of
new heart tissue following a heart attack.
2022 developments included:
>
Developing ‘miniature organs’ in
collaboration with NovoHeart to recreate
the mechanical and electrical properties
in a beating mini-heart. This year, we
successfully generated the world’s first
bioengineered HFpEF miniature human
heart models.
>
New advances in mass spectrometry
imaging, published this year in
Angewandte
Chemie
, enable the imaging of biologics
portfolio. We also expanded the
collaboration to look at systemic lupus
erythematosus and heart failure.
>
Collaborating with Rady Children’s Institute
for Genomic Medicine (RCIGM) to help
accelerate BeginNGS, a tool designed to
screen newborns for genetic diseases
using rapid Whole Genome Sequencing.
We aim to start clinical studies within
the next two years.
>
Collaborating with the Australian
Regenerative Medicine Institute (ARMI) at
Monash University to better understand
how macrophages mediate regeneration
and investigate whether macrophage-
derived signals can be applied as new
therapeutic modalities.
>
Sharing pre-clinical data for AZD8205,
a novel ADC targeting B7-H4, a protein
overexpressed in a range of solid tumours.
This is the first molecule incorporating
AstraZeneca’s proprietary ADC linker
technology.
and drug complexes that were previously
too large to detect.
>
Exploring the potential of computational
pathology in oncology to enhance patient
selection and enable more personalised
treatments. For example, our novel
Quantitative Continuous Scoring approach
helped identify up to 30% more breast
cancer patients suitable for treatment versus
using conventional pathology, opening up a
potential treatment option to more patients.
Pioneering new approaches to engagement
in the clinic
In a typical year, we conduct more than
270 global clinical trials, involving more than
46,000 patients. Through greater use of
digital solutions, digital health technologies
and pioneering approaches, we aim to deliver
the next wave of life-changing medicines.
2022 developments included:
>
Collaborating with GRAIL on companion
diagnostic tests to identify patients with
high-risk, early-stage cancer who could
benefit most from treatment.
>
Developing a remote digital health solution
that monitors patients for stomatitis, which
is now live in six clinical trials.
>
Using COMPex to inform exacerbation
outcomes in clinical trials to better the
patient experience and enable faster
decision making. This is being used as
a primary endpoint for the first time in
the Phase IIa Crescendo study in COPD.
>
Accelerating identification and recruitment
of patients into clinical trials through our
collaboration with Tempus. We recruited
25% of US SERENA-6 clinical trial
participants via this route.
>
Leveraging the Patient Friction Coefficient
to assess the burden of clinical trials on
rare disease patients and their families,
incorporating insights to improve our
trial designs.
Science and Innovation
36
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
Phase I
1
Phase II
1
Late-stage
development
1
Life-cycle management
projects
2
31
Oncology
26%
Cardiovascular, Renal
& Metabolism
29%
Respiratory & Immunology
16%
Vaccine & Immune Therapies
0%
Rare Disease
19%
Other
10%
29
Oncology
41%
Cardiovascular, Renal
& Metabolism
21%
Respiratory & Immunology
17%
Vaccine & Immune Therapies
0%
Rare Disease
14%
Other
7%
38
Oncology
47%
Cardiovascular, Renal
& Metabolism
11%
Respiratory & Immunology
18%
Vaccine & Immune Therapies
8%
Rare Disease
16%
Other
0%
81
Oncology
72%
Cardiovascular, Renal
& Metabolism
10%
Respiratory & Immunology
12%
Vaccine & Immune Therapies
0%
Rare Disease
6%
Other
0%
1
Includes NMEs and additional
indications if the lead is not
yet launched.
1
Includes NMEs and additional
indications if the lead is not
yet launched.
1
Includes NMEs and additional
indications if the lead is not
yet launched.
2
Only includes major LCM projects.
Development pipeline overview
2022 was another exceptional year
for our science, with our pipeline
producing overwhelmingly positive
news for patients. This included 72
regulatory events, either submissions
or approvals for our medicines in
major markets, including two NME
first approvals.
This performance is backed by a healthy
pipeline of high-potential medicines, with a
total of 29 pipeline progression events, either
NME Phase II starts or Phase III investment
decisions, indicating our ability to deliver
longer-term sustainable growth.
Our pipeline comprises 179 projects, of which
155 are in the clinical phase of development.
We have 15 NME projects in pivotal trials or
under regulatory review, compared with 16
at the end of 2021. Also in 2022, 20 NMEs
progressed to their next phase of
development and 27 projects were
discontinued: 12 for poorer than anticipated
safety and efficacy results and 15 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, this has led to
receiving 12 Regulatory Designations for
In 2022, we continued to progress our science,
guided by our 5R framework: right target,
right patient, right tissue, right safety, right
commercial potential.
Breakthrough Therapy, Priority Review or
Fast Track for nine new medicines which offer
the potential to address unmet medical need
in certain diseases. We also secured Orphan
Drug Designation for the development of
two medicines to treat rare diseases.
For more information, see Therapy Area Review from
page 18.
37
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Science and Innovation
Science and Innovation
“Being transparent about our business supports
learning and development for our employees,
suppliers and partners and is fundamental to
meeting the expectations of patients, investors
and broader society.”
Research use of human biological samples
and genomic information
We use human biological samples and
genomic information for research into
better understanding of diseases, improved
diagnosis, and other healthcare improvements,
as well as the research and development of
new medicines. We are committed to
minimising the use of human foetal tissue
(hFT) through scientific advancements.
Permission is granted only when no other
scientifically reasonable alternative is
available, or there is a regulatory requirement.
There were two new hFT approvals in 2022. As
of 31 December 2022, six projects using hFT
had progressed and three projects are ongoing.
Animals in research
Animal studies remain a small, but necessary,
part of developing new medicines and will
continue to be until suitable technological
alternatives become available. Animal studies
are also required by some international
regulators before medicines progress to
human trials. Nonetheless we are committed
to the 3Rs (Replacement, Reduction and
Refinement of animals in research). Animals
were used for in-house studies 100,803 times
in 2022 (93,511 in 2021), and on our behalf
in contract research studies 55,455 times
(58,826 in 2021). In total, over 98% were
rodents or fish.
Clinical trial transparency
We believe that transparency enhances the
understanding of how our medicines work
and benefits patients. We publish information
about our clinical research, as well as the
registration and results of all our interventional
clinical trials and most non-interventional trials
– regardless of whether the results are
favourable – for all products. This includes
completed trials for marketed medicines,
drugs in development and drugs where
development has been discontinued.
As of 31 December 2022, AstraZeneca had:
>
Shared anonymised individual patient-level
data from 228 unique studies.
>
Responded to 313 requests from external
researchers using our portal www.vivli.org
and/or scientific collaborations, to request
our clinical data and reports to support
their research.
>
Published 14 Anonymised Clinical
Document Packages.
>
Published 312 Trial Result Summaries
in accessible language and translated
these into 63 languages for all study
sites on the industry-wide portal
www.trialsummaries.com.
Bioethics
‘Bioethics’ means the ethical issues
arising from the study and practice
of biological and medical science,
which we manage in line with our
commitment to an ethical business
culture. Our Global Standard on
Bioethics sets out our key principles,
which apply to all our scientific
activities, including those conducted
by third parties on our behalf.
For more information, see
www.astrazeneca.com/sustainability/resources.html.
BV
38
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
Key Performance Indicators
Global Total Revenue by geography
2022
2021
2020
Total
Revenue
$m
Actual
growth
%
CER
growth
%
Total
Revenue
$m
Actual
growth
%
CER
growth
%
Total
Revenue
$m
Actual
growth
%
CER
growth
%
Emerging
Markets
11,745
(4)
1
12,281
41
36
8,711
7
10
US
17,920
47
47
12,228
38
38
8,833
13
13
Europe
8,738
9
21
8,050
45
40
5,540
10
9
Established
Rest of World
5,948
22
40
4,858
37
37
3,533
6
5
Total
44,351
19
25
37,417
41
38
26,617
9
10
Growth and Therapy
Area Leadership
Sales and marketing
Our growth is delivered by our
Commercial teams, which comprised
44,790 employees at the end of 2022.
We have an active presence in some
85 countries and sold our products in
approximately 130 countries in 2022.
In most markets, we sell our medicines
through wholly-owned local
marketing companies. We also sell
through distributors and local
representative offices. We market our
products largely to primary and
specialty care physicians.
Summary and performance indicators
We plan to meet our growth
and profitability goals through
innovation, commercial excellence
and the creation of sustainable
profitability.
Our performance in 2022
>
Total Revenue, comprising Product Sales
and Collaboration Revenue, increased by
19% (25% at CER) to $44,351 million.
>
In the US, Total Revenue increased by 47%
to $17,920 million and in Europe by 9%
(21% at CER) to $8,738 million.
>
Total Revenue in Emerging Markets
decreased by 4% (increased by 1% at CER)
to $11,745 million, with a decline in China
of 4% (stable at CER) to $5,792 million.
>
Continued collaboration with payers to
conclude outcomes- and value-based
reimbursement models that improve patient
outcomes and enable access to medicines.
>
Committed to high ethical standards:
147 employees and third parties were
removed from their roles for breaches of
sales and marketing regulations or codes.
>
Delivered 198 successful market launches.
>
Signed 23 major or strategically important
business development transactions.
In 2022, Total Revenue grew by double-digits
in the US and Established Rest of World while
we saw high single-digit growth in Europe.
Product Sales in Emerging Markets declined
4% (CER: growth of 1%), largely the result of
the anticipated decline in growth in China. We
delivered 14 blockbuster drugs during the year.
Pricing and value of our medicines
Increasing demand for healthcare means
increasing pressure on health system
budgets. This includes downward pressure on
pricing and reimbursement in many markets,
heightened by a shift from primary to specialty
care and rare disease medicines, which
comprise a growing share of our portfolio.
This pricing pressure, including from
governments, means we are unable to pass
on the full impact of cost increases brought
about by heightened global rates of inflation
prevalent in 2022.
The COVID-19 pandemic continues to impact
healthcare delivery as providers and hospitals
work to return to pre-pandemic conditions.
For more information on our COVID-19 response,
see Vaccines & Immune Therapies from page 28.
Pricing for our medicines seeks to reflect
the value they bring to patients, payers and
society, and the significant investment
required for targeted treatment options. In our
discussions with national, regional and local
stakeholders, we base our pricing policies on
four principles: sustainability, value, access
and flexibility.
Full details are given in our Sustainability Report on our
website, www.astrazeneca.com/sustainability.
We also collaborate with payers to conclude
innovative outcomes and value-based
reimbursement models that improve patient
outcomes and enable access to medicines
across key therapeutic areas and geographic
regions. 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 49.
39
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Growth and Therapy Area Leadership
US
As the twelfth-largest prescription-based
pharmaceutical company in the US, we have
a 3.4% market share of US pharmaceuticals
by sales value. Total Revenue increased by
47% in 2022 to $17,920 million, driven by the
growth of our brands across Oncology, Rare
Disease and BioPharmaceuticals including
Tagrisso
,
Calquence
,
Lynparza
,
Imfinzi
,
Enhertu
,
Farxiga
and
Breztri
.
Evusheld
was
introduced for immunocompromised patients
to help prevent COVID-19.
In Rare Disease, sales of
Soliris
were
impacted by successful conversion to
Ultomiris
, which was partially offset by
Soliris
growth in NMOSD.
Ultomiris
pro forma
sales¹
grew by 34% (42% at CER) to $1,965 million.
Europe
The total European pharmaceutical
market was worth $213 billion in 2022.
We are the tenth-largest prescription-based
pharmaceutical company in Europe (see
market definitions on page 220) with a 2.9%
market share of pharmaceutical sales by value.
Total Revenue was $8,738 million, up 9% at
actual rate of exchange (21% at CER).
Established Rest of World (RoW)
In 2022, Established Rest of World Product
Sales increased by 22% (40% at CER) to
$5,846 million, with sales in Japan up 17%
(39% at CER) to $4,007 million. More than
$1 billion in sales came from
Vaxzevria
and
Evusheld
. In Rare Disease, pro forma sales¹
of
Soliris
increased by 11% (24% at CER) to
$476 million with a continued expansion of
indications in new markets, and sales of
Ultomiris
grew by 6% (26% at CER) to
$310 million with rapid conversion from
Soliris
in new launch markets.
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.
We continued to launch new medicines and
saw sustained performance of innovative
medicines.
BioPharmaceutical Total Revenue declined by
7% (grew 4% at CER).
Forxiga
revenue grew
60% (81% at CER) driven by new indications
in HF and CKD.
Fasenra
revenue grew by 7%
(20% at CER).
Trixeo
is now launched in more
than 21 markets.
Evusheld
revenue reached
$298 million.
For prescriptions dispensed in the US in 2022,
generics constituted 87.1% of the market by
volume (2021: 86.3%). By value they constituted
15.1% ($97.5 billion) of the market ($644.8 billion).
Ongoing scrutiny of the US pharmaceutical
industry, focused largely on affordability,
continued and has been the basis of multiple
policy proposals. A landmark healthcare law,
the Inflation Reduction Act (IRA) of 2022 was
passed to address affordability concerns.
However, we have a diversified product
portfolio in the US providing a broad spectrum
of treatments in many different therapy areas,
allowing access for patients in need of our
innovative medicines.
Oncology Total Revenue grew by 9%
(21% at CER), driven by strong performance
of
Tagrisso
,
Imfinzi
and
Lynparza
. We also
launched
Calquence
and
Enhertu
with strong
results during the year.
Rare Disease Total Revenue declined by 3%
(grew 9% at CER) to $1,428 million, driven by
a fall in
Soliris
sales offset by conversion of
sales to
Ultomiris
.
Japan
The pharmaceutical market in Japan was
worth $63 billion in 2022, positioning
AstraZeneca as the third-largest prescription-
based pharmaceutical manufacturer with a
4.1% value market share of pharmaceutical
sales by value. The government conducted a
regular price control measurement in April
2022 in order to address continued pressure
on healthcare spend.
Total Revenue grew by 17% (39% at CER) to
$4,110 million, despite continued COVID-19
impacts, price revisions and ongoing generic
erosion for
Symbicort
. The strong
performance was driven by new medicines
including
Tagrisso
,
Imfinzi
,
Lynparza
,
Fasenra
,
Breztri
,
Lokelma
and
Forxiga
. New launches
of
Tezspire
,
Ondexxya
and
Evusheld
also
contributed to the results. Additionally,
we launched new indications of
Tagrisso
and
Lynparza
adjuvant treatment,
Imfinzi
gastrointestinal cancer treatment, and
Calquence
1st-line chronic lymphocytic
leukemia treatment.
Canada
Total Revenue in Canada increased by 51% at
actual rate of exchange (57% at CER) in 2022.
This was primarily driven by strong, sustained
growth of
Tagrisso
,
Lynparza
,
Forxiga
,
Fasenra
and
Evusheld
. Declines for
Onglyza
,
Crestor
and
Brilinta
(linked to LoE), combined with
pricing pressures, partially offset this growth.
Australia and New Zealand
Our Total Revenue in Australia and New
Zealand increased by 8% at actual rate of
exchange (18% at CER) in 2022. This was
primarily due to growth in Oncology,
Respiratory & Immunology and
Forxiga
/
Xigduo
. In addition, we had sales of
Evusheld
in both countries to support their
governments’ response to COVID-19.
Growth and Therapy Area Leadership
Our commercial regions
We strive to meet our growth
and profitability goals through
commercial excellence in each
of our global regions.
“Pricing for our medicines seeks to
reflect the value they bring to patients,
payers and society, and the significant
investment required for targeted
treatment options.”
1
Growth rates for medicines have been calculated on a pro forma basis compared with the corresponding period in the prior year.
40
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
Emerging Markets
With Total Revenue of $11,745 million (2021:
$12,281 million), AstraZeneca was the largest
multinational pharmaceutical company for
Innovative Branded Products, as measured
by prescription sales, and the sixth fastest-
growing top 10 multinational pharmaceutical
company in Emerging Markets in 2022.
Growth drivers included new medicines
across our entire portfolio. We are broadening
access through channel expansion and
external partnerships.
Responsible sales and marketing
BV
As outlined in Code of Ethics on page 51,
we are committed to high ethical standards.
We have dedicated compliance professionals
who advise on and monitor adherence to our
Code and policies, and work with local staff
to ensure we meet our ethical standards.
Nominated signatories review product
promotional materials and activities to ensure
compliance with applicable regulations and
codes of practice, and that information is
accurate and balanced. Group Internal Audit
conducts audits of selected marketing
companies.
Invasion of Ukraine
We were shocked following the Russian
invasion of Ukraine in February 2022 and,
since then, have provided all practical support
possible to ensure the safety, health and
wellbeing of our employees. We have also
committed over $10 million in humanitarian
support. As a healthcare business, we are
doing everything possible to ensure medical
supply chains continue to operate and that
patients in both countries are able to access
our medicines, while complying with sanctions
imposed on Russia.
China
In China, AstraZeneca is the largest
pharmaceutical company in the hospital
sector, as measured by sales value. In 2022,
Total Revenue decreased by 4% at actual rate
of exchange (stable at CER) to $5,792 million
(2021: $6,011 million).
Tagrisso
,
Lynparza
,
Zoladex
,
Breztri
,
Bevespi
and
Linzess
were renewed and
Orpathys
was
listed in the National Reimbursed Drug List
(NRDL).
Since the implementation of VBP, several
AstraZeneca medicines have been impacted.
In the most recent VBP implementation,
Bricanyl neb
,
Losec IV
and
Betaloc ZOK
were
included. We expect additional AstraZeneca
medicines to be included in the next VBP
cycle with an estimated implementation
during 2023.
In 2022, we identified 10 confirmed external
breaches across our commercial business
(2021: 13). There were 2,872 instances
(instances can involve multiple people) of
employee and third-party non-compliance
with our policies (2021: 2,477). A total of 147
employees and third parties were removed
from their role as a result of a breach (2021:
105) and 3,326 received warnings (2021: 2,084).
We brief our Audit Committee quarterly on
breach statistics, serious incidents and
corresponding remediation.
Breaches primarily consist of low-impact
incidents. We continue to foster a speak-up
culture, strong first-line oversight (and related
reporting) as well as targeted second-line
monitoring to identify problems early and
use learnings to improve our programme.
Targeted COVID-19 lockdown restrictions
have continued to impact growth rates and
patient demand for
Pulmicort
,
Forxiga
and
several Oncology medicines.
Following the establishment of a Rare Disease
business,
Soliris
became the first Rare Disease
product available in China in the final quarter
of 2022.
Healthcare in low- and middle-
income countries
BV
AstraZeneca is committed to equitable
access to healthcare. By working in
collaboration, we remove barriers and support
the development and delivery of healthcare,
particularly in low- and middle-income
countries. We also adapt our access
programmes to suit local health systems and
communities, contributing to health system
capacity and resilience through training,
education, prevention and diagnosis.
For more information, see Access to healthcare from
page 49.
Anti-bribery and anti-corruption
BV
We do not tolerate bribery or any other form
of corruption. Preventing bribery and
corruption are a focus of our third-party risk
management and due diligence processes, as
well as our monitoring and audit programmes.
We reinforce our commitment to ethical
business conduct through our annual Code
of Ethics training which is delivered to all
employees and relevant third parties.
41
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Growth and Therapy Area Leadership
Operations
Our manufacturing and supply
function continued to support our
growth and pipeline by delivering
successful launches, maintaining
excellent product supply and
advancing digital and new
technology capabilities.
In 2022, we continued to deliver against our
Operations 2025 plan. The plan focuses on
efficiently scaling our capabilities to support
the growth of our portfolio, leveraging the
benefits of new manufacturing technology and
digital innovation, and taking proactive steps
to deliver our science-based emissions
reduction targets in our global operations.
In 2022, we delivered 198 successful market
launches. We continue to progress our new
technology investments, and scaled five
digital solutions to our eight largest
manufacturing sites. We also achieved a
6.2% reduction in our site operations energy
consumption compared to 2021.
Ensuring quality and compliance
As outlined in our Code of Ethics on page 51,
we are committed to high ethical standards.
As members of the International Federation of
Pharmaceutical Manufacturers & Associations
(IFPMA), the European Federation of
Pharmaceutical Industries and Associations
(EFPIA) and the Pharmaceutical Research and
Manufacturers of America (PhRMA), we
adhere to their codes.
Managing our supply chain
Throughout 2022, we saw further external supply
volatility, driven by the COVID-19 pandemic,
the impact of geopolitical tensions, and rising
global inflation. We continued to activate our
business continuity plans to maintain supply of
medicines to patients and mitigate against any
risk of disruption along our end-to-end supply
chain. We also continued our global efforts to
increase the availability of dual and multiple
sources of raw materials, maintaining adequate
stock levels, reducing end-to-end supply lead
times, and mitigating the effect of increasing
price fluctuations across raw materials,
services and utilities.
Supply chain finance
AstraZeneca has a supply chain finance
programme to support the cash flow of our
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
2022, the programme had 420 suppliers
enrolled and a potential early payment
balance of $67 million. We have a separate
programme in China with 25 suppliers
enrolled and a potential early payment
balance of $1.3 million.
Responsible supply chain
BV
All employees and contractors who source
goods and services on behalf of AstraZeneca
are expected to follow our Global Standard
for Procuring Goods and Services. Through
assessments and improvement programmes,
we monitor our suppliers’ compliance with
our Global Standard on Expectations of
Third Parties and Code of Ethics, which are
published on our website. In 2022, we
conducted 42 audits (2021: 37) on high-risk
commercial suppliers (external manufacturing
partners) to ensure appropriate practices and
controls. Of these, 33% fully met our
expectations while 55% had improvement
plans for minor instances of non-compliance.
There were three audits that indicated a
high risk to AstraZeneca and specific actions
have been taken to mitigate the supply and/or
reputational risks from these engagements.
Through our Positive Sourcing Programme,
we promote ethical behaviour among our
suppliers, aiming to achieve 100% ethical
spend and ensuring sustainability is
embedded throughout our procurement
processes. Our procurement sustainability
approach supports our suppliers’ progress on
sustainability, enables us to innovate together
on challenges and promotes supplier
diversity. Our Supplier Diversity Programme
supports small and diverse businesses to be
more sustainable, with the ambition to expand
the programme to 10 countries outside the
US by 2025. In 2022, our programme was
launched in Sweden and is now also active
in Brazil, South Africa, UK, Australia,
New Zealand and Poland.
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,
France, 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
that is complemented by internal capability
in Sweden. For biologics, our principal
commercial manufacturing facilities are in
the US, Sweden, UK and the Netherlands.
Our network contains capabilities in process
development, drug substance, drug product
manufacturing and distribution, including
global supply of mAbs and influenza vaccines.
In June 2022, we announced our intention
to build an inhalation manufacturing site in
Qingdao, China to support the growth of
our respiratory portfolio in China. This
announcement is based on a Memorandum
of Understanding (MOU), and at this stage
does not represent a legally binding contract.
In September 2022, we announced that we
will cease packing and distribution activities
at our site in Reims, France by the end of
2024. This is driven by a reduction in demand
volumes following the divestment of several
products that the site supports.
In November 2022, we announced the sale of
our West Chester site in Ohio, US, to National
Resilience, Inc. This will enable the continued
supply of AstraZeneca medicines produced
at the site to patients, as well as continued
employment for more than 500 people working
at the site. The sale completed in January
2023, with a phased transition of services.
Alexion has internal manufacturing facilities
and also works with third-party contract
manufacturers to supply clinical and
commercial quantities of our products
and product candidates. Our internal
manufacturing capability includes a fill/finish
facility at our Athlone site and a packaging
and labelling facility at our Dublin site. Our
drug substance manufacturing capabilities are
shared between Athlone and Dublin. We have
a large-scale drug substance facility in Dublin
and, during 2022, we received regulatory
approval for our new small-scale drug
substance facility located in Athlone.
At the end of 2022, we employed 15,035
people at 28 Operations sites in 16 countries.
Growth and Therapy Area Leadership
42
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
Business development
Our business development
organisation works globally to
partner with academia,
governments, pharmaceutical and
biotech companies, and others to
access the best science and push
scientific boundaries.
We assess opportunities to make strategic,
value-enhancing additions to our portfolio
and pipeline in our key therapy areas through
in-licensing, collaborations and acquisitions.
We also divest medicines, typically outside
our core therapy areas, which enables us to
redirect resources to our main areas of focus
while ensuring continued or expanded
patient access.
We currently have approximately 1,000
ongoing collaborations worldwide and have
completed more than 80 major or strategically
important business development transactions
in the past three years, including 23 in 2022,
some of which are summarised below.
In 2022, new deals included:
>
Acquisition of CinCor Pharma, Inc.,
a clinical-stage company, focused on
developing treatments for resistant and
uncontrolled hypertension as well as CKD.
AstraZeneca will pay $26 per share at
closing, plus $10 per share in a contingency
payment payable upon specific regulatory
events, and, if achieved, represents a total
value of approximately $1.8 billion. The
acquisition is expected to close in the first
quarter of 2023.
>
Acquisition of Neogene Therapeutics, Inc.
for an initial payment of $200 million and
up to $120 million in additional contingent
milestone-based and non-contingent
consideration. Neogene is a clinical-stage
company developing the next-generation
T-cell receptor therapies, bringing cell
therapies to patients with solid tumours.
>
Acquisition of TeneoTwo and its Phase I
CD19/CD3 T-cell engager, TNB-486,
currently under evaluation in relapsed and
refractory B-cell non-Hodgkin lymphoma.
AstraZeneca acquired all outstanding
equity of TeneoTwo in exchange for an
upfront payment of $100 million. Under the
terms of the agreement, AstraZeneca will
make additional contingent R&D-related
milestone payments of up to $805 million
and additional contingent commercial-
related milestone payments of up to $360
million to TeneoTwo’s equity holders.
>
Alexion entered into an exclusive worldwide
licensing agreement with Neurimmune AG
for NI006, an investigational human mAb
currently in Phase Ib development for the
treatment of transthyretin amyloid
cardiomyopathy (ATTR-CM). Neurimmune
received an upfront payment of $30 million
and is eligible to receive additional
contingency payments of up to $730 million
and low-to-mid teen royalties on net sales.
>
A worldwide licensing transaction with
RQ Biotechnology Limited for a portfolio of
pre-clinical mAbs targeted against
SARS-CoV2, the virus that causes
COVID-19, contributed to bolstering our
Vaccines & Immune Therapies pipeline.
>
Strategic research collaboration with gene
sequencing company Illumina to combine
strengths in genomic analysis techniques to
improve efficiency in drug target discovery.
IT and IS resources
We continue to harness the power of
platforms, data and AI to accelerate
the pace of change, as well as
personalise healthcare and drive
better patient outcomes.
Technology is opening up possibilities in R&D
and is empowering patients, including the use
of augmented and virtual reality, or extended
reality (XR), to simulate what patients will
experience during a clinical trial or treatment.
We are also using XR to train operators on
complex manufacturing processes, educate
our salesforce and conduct business in a
more sustainable way. The QR code on this
page shows how we are already using XR
to help patients administer their medicines.
We have established an internal centre of
excellence to ensure we remain at the
forefront of these advances.
As outlined in the Audit Committee Report
from page 96, cybersecurity continued to be a
priority in 2022 and was the subject of a deep
dive session with the Chief Digital Officer and
Chief Information Officer and her team.
Additionally, she has met with the Senior
Executive Team, the Board and business
leaders in 2022 to share aspects of ‘being
digital’, with cybersecurity underpinning all
aspects of this.
Our cybersecurity programme is focused
on the following key areas:
>
Ensuring our value streams, critical
business processes and IT infrastructure
can be accessed any time, any place, by
our workforce.
>
Protecting against and detecting threats
to our global ecosystem.
>
Rapidly and decisively responding and
recovering from any cyber events.
Scan the QR code to learn
more about
Lokelma
43
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Growth and Therapy Area Leadership
89
%
Building a culture of lifelong learning
and development
2
89%
88%
90%
2022
2021
2020
49.5
%
Being champions of inclusion
and diversit
y
3
49.5%
48.1%
46.9%
2022
2021
2020
2022
2021
2020
77%
78%
81%
77%
Performing as an enterprise team
1
-59.3%
-58.6%
-58.0%
2022
2021
2020
-59.3
%
Ambition Zero Carbon (progress)
(Scope 1 and 2)
1
2022
2021
2020
44.6m
31.7m
25.0m
4
4.6m
People reached by our Access to
Healthcare programmes
3
2022
2021
2020
83%
83%
84%
83%
% Speak up culture
2
Performance indicators
BV
People – Contribution to the enterprise
This priority is built on three pillars:
performing as an enterprise team,
commitment to lifelong learning and
development, and being champions
of inclusion and diversity.
For more information, see People from page 45.
People and
Sustainability
Summary and performance indicators
Our success depends on
recruiting, retaining and
developing talented people
while operating in a
responsible and sustainable way.
Our performance in 2022
>
Further integrated Alexion employees
through the consolidation of 11 sites.
>
Hired 22,500 employees (7,700 internal
and 14,800 external). 4,720 of these hires
were a direct result of our employee
referral scheme.
>
3,994 attendees across our development
experiences (up 44% since 2021).
>
49.5% of our senior roles are filled
by women.
>
Expanded the Partnership for Health
System Sustainability and Resilience and
progressed in-depth health system
research in 13 Phase 2 countries.
>
Over 10.5 million trees planted in Australia,
Indonesia, Ghana, the US and the UK since
2020 through AZ Forest.
>
Screened more than 750 material suppliers
with a critical role in patient supply to
understand climate vulnerability in the
upstream value chain for 10 selected
medicines.
>
Reached 44.6 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 statement ‘Based on my experience,
I believe there is effective collaboration
between teams across AstraZeneca’.
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 in Senior Middle
Management roles and above (F+, the
most senior 13% of the employee
population).
Performance indicators
BV
Sustainability – Contribution to society
We are tackling some of the biggest issues
of our time, from climate change to access
to healthcare and disease prevention.
For more information, see Sustainability from page 48.
1
Reduction of Scope 1 and 2 GHG
emissions from 2015 baseline year.
The data coverage includes all sites
owned or controlled by AstraZeneca.
3
Cumulative data including current and
historical programmes: Healthy Heart
Africa, Youth Health Programme, and
Healthy Lung Programmes.
2
Based on internal survey which asked
all AstraZeneca employees if they felt
comfortable to speak up/speak my mind
and express my opinion at work.
44
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
In 2023, we will continue this integration
through the consolidation of a further eight
sites and wider policy alignment.
Creating a culture of high performance
Since removing performance ratings in 2021,
our focus has shifted to the coaching,
development and contribution of our
employees. To support managers in
developing their teams, we conducted 555
performance development workshops for
16,500 participants, with 8,000 line managers
attending at least one workshop. The success
of our approach to performance is reflected in
the completion rate of end-of-year insights. In
our latest performance development round,
95.5% of employees and 96.5% of managers
completed year-end insights.
Providing continuous recognition is a crucial
aspect of our performance development
approach. In 2022, 269,000 rewards were given
to 68% of employees through our recognition
platform. Of these awards, 20% were
cross-functional, demonstrating the cohesive
and collaborative nature of our organisation.
Listening to our workforce
Listening to our workforce is important in
ensuring AstraZeneca continues to be a great
place to work and we encourage employees
to speak their minds. In 2022, employees
provided their opinions through various
feedback mechanisms, including onboarding
surveys, exit interviews and our global
employee engagement survey. The results of
our engagement survey are shared with the
Board of Directors, Senior Executive Team,
line managers and the wider workforce to
ensure full transparency.
Performing as an enterprise team
Building diverse talent and critical capabilities
In 2022, we continued to build critical
capabilities needed to achieve our ambitions
through external and internal hiring. We
received over 793,000 job applications and
hired 22,500 employees (7,700 internal and
14,800 external). Of these, 4,720 hires were a
direct result of our employee referral scheme.
Our early talent programmes continued to
provide development opportunities to
employees starting out in their careers and
enabled us to build future leadership
capabilities. We hired 300 employees into our
apprentice, graduate and MBA programmes.
An optimal level of employee turnover ensures
we retain talent while continuing to bring in
fresh and innovative ideas. Voluntary
employee turnover decreased to 11% (2021:
14%). Encouraging internal development is
one way we retain key talent, with 9% of
employees receiving a promotion during 2022.
In 2022, we successfully integrated over 4,000
Alexion employees into AstraZeneca across
the newly formed Rare Disease Therapy Area
and AstraZeneca functions such as HR and IT.
This included:
>
11 sites consolidated and employees
co-located through expansion of the New
Haven site, creation of the Barcelona, Spain
hub and announcement of the new Boston,
MA, US site.
>
Over 30 R&D bridges established to
consolidate Alexion and AstraZeneca
workstreams, including AI & Data Analytics,
Gene Therapy, Protein Engineering and
Precision Medicine.
>
Colleague Connexion Buddy Programme
to build relationships between Alexion and
AstraZeneca employees: approximately
2,350 employees (1,500 Alexion, 850
AstraZeneca) have joined since the
programme launched.
Key highlights:
>
92% participation in global engagement
survey.
>
89% of employees stated they believe
strongly in AstraZeneca’s future direction
and key priorities.
>
89% of employees stated they had at
least one development discussion with
their manager.
>
In exit interviews, more than 90% of
employees who left said they would
consider working at AstraZeneca again.
>
We received an average rating of 4.6 out of
five from successful hires in our Candidate
Experience survey.
Building a culture of lifelong learning
and development
Evolving the capabilities of our employees
remains critical to achieving our ambitions.
We are committed to sustaining a culture of
lifelong learning and development by
encouraging employees to take ownership
of their development through innovative
experiences.
Key 2022 highlights demonstrating our
progress:
>
Invested $37.7 million in the upskilling of our
employees, average spend of $482 per
employee.
>
2,348,892 total learning hours, average of
20.6 hours per employee.
>
64% of employees accessed our global
learning platform.
>
3,994 attendees across our development
experiences (up 44% since 2021).
>
Building diverse future leaders: 67% of our
programme participants are women.
>
89% of employees believe they have
improved their existing skills, learned new
skills or had a development opportunity.
People
We grow and prosper by recruiting,
retaining and developing talented
people. We do that by being a
great place to work that encourages
and rewards innovation,
entrepreneurship and high
performance.
“We’re empowering our people to reach their
full potential in a dynamic, inclusive and
high-performing working environment.”
45
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / People and Sustainability
data available, 35.7% of our workforce identify
as an ethnic minority (2021: 32.9%). In 2022,
we rolled out pay equity training to all line
managers of US-based employees to ensure
equitable reward and compensation.
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 (including, if
needed, for people who have become
disabled), and reward. AstraZeneca embraces
the cognitive differences of neurodivergent
employees and supports employees with both
seen and unseen disabilities in line with their
country-specific laws and regulations. Where
risk assessments can be performed, we will
consider accommodating adjustments to the
working environment that support an inclusive
and safe workplace. 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 2022, our I&D efforts earned recognition
externally. We were featured in:
>
Bloomberg Gender Equality Index 2023
>
Forbes World’s Best Employers 2023
>
Financial Times, Diversity Leaders 2023
>
HRC Corporate Equality Index, 2022 Best
Places to Work for LGBTQ Equality (US)
>
Diversity Inc. Top 50 Companies for
Diversity (US).
Human rights
BV
Our Human Rights policy supports the basic
rights of our employees, such as the right to
health, freedom from slavery and the right to
privacy. 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. To that end, we integrate human
rights considerations into our processes and
practices. We are also committed to ensuring
that there is no 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, which
is available on our website,
www.astrazeneca.com.
The positive impact of our learning culture is
evident both internally and externally. Internally,
it has contributed to improved retention,
increased promotion rates and more accurate
succession planning. Of our 2021 development
experience attendees, 27% were identified as
succession candidates for at least one
position. The resignation rate for employees
who went through a development programme
is 9.2%, compared to 11.6% for AstraZeneca
overall
1
. In addition, attendees of our
acceleration-focused programmes have a
higher promotion rate at 34%, compared to
14% for an equivalent population who had not
participated
2
. Externally, our Talent and
Development function received a number of
external awards during 2022, which recognised
us as a high-performing learning organisation.
Champions of inclusion and diversity
Our global commitment to inclusion and
diversity (I&D) is woven into everything we do
and is reflected in our Values and the
behaviours that underpin them.
For more information, see our website,
www.astrazeneca.com/sustainability/ethics-and-
transparency/inclusion-and-diversity.html.
Our commitments
Women comprise 52.9% (approximately
43,900) of our global workforce. There are five
women on our Board (38% of the total) and,
following the resignation of Katerina Ageborg
in January 2023, four of 11 SET members are
women (36% of the total). The representation
of women in senior middle management
positions increased to 49.5% in 2022, on track
to reach our 2025 target of gender equality.
In the 2021 FTSE Women Leader review
published in 2022, we were named as the
highest-ranking pharmaceutical company in
the FTSE100 for representation of women on
the combined executive committee and their
direct reports. We also retained our position
as one of 418 companies on the Bloomberg
Gender-Equality Index 2023, which
recognises companies committed to
transparency in gender reporting and
advancing women’s equality.
Our employees come from 177 countries.
In 2022, 17.7% of SET members or their direct
reports are from Emerging Markets and Japan
(2021: 18.4%) and we are on track to reach our
20% target by 2025. Our Global Inclusion and
Diversity Council is chaired by our CEO and
comprises senior and rising leaders who are
representative of our global workforce. Our
Board of Directors and the SET conduct
biannual and quarterly reviews, respectively,
of our workforce composition, covering
gender, ethnicity and age representation. In
the US, where we have more comprehensive
Employee relations
BV
Our Employee Relations function takes a
global approach to employment principles
and standards, local laws and good practice.
Our ambition is to build a positive and safe
working environment for employees through
global policies and processes. To achieve this,
our Employee Relations function works in
partnership with Legal, Compliance, HR and
Employee Representative groups, such as the
European Consultation Committee, works
councils, and unions. According to our internal
Human Rights survey carried out in 2022,
45% of our countries have a relationship with
trade unions. Of those countries that don’t
have a relationship with trade unions, 95% of
them have established arrangements to
engage similarly with their workforce.
Workforce safety and health
BV
We are committed to providing a safe and
healthy working environment for our
employees and partners. Our Global Safety,
Health and Environment (SHE) Standard
describes our commitment to, management
of, and accountability for SHE.
For more information on this standard,
and our Code of Ethics, see our website,
www.astrazeneca.com/sustainability/resources.html.
We set and monitor our safety and health
targets to support our workforce and aim to
achieve the highest performance standards.
In 2022, we reduced the vehicle collision rate
by 49% and the work-related injury rate by
72% from the 2015 baseline. Sadly, an
AstraZeneca driver was involved in a
vehicle accident that resulted in fatal injuries
to a member of the public in the US in
December 2021 (the investigation finalised
in early 2022).
People
continued
People and Sustainability
1
Includes employees who have been through a development experience from 2020-2022.
2
Includes employees who have been through a development experience in 2020 and then received a development opportunity (promotion, talent assignment, assignment) during 2021/2022.
46
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
Co-located around four
global R&D centres
1. Cambridge, UK
4,400
2. Boston, MA, US
1,000
3. Gaithersburg, MD, US
4,087
4. Gothenburg, Sweden
2,800
1. US
16,500
20%
2. UK
10,700
13%
3. Sweden
7,100
8%
4. Canada
1,200
1%
5. Central and
South America
4,000
5%
6. Middle East
and Africa
2,400
3%
7. Other Europe
11,400
14%
8. Russia
2,000
2%
9. Other Asia
Pacific
7,200
9%
10. China
16,500
20%
11. Japan
3,500
4%
12. Australia and
New Zealand
1,000
1%
1
4
2
5
6
7
8
10
11
9
12
1
4
3
3
2
By geographical area
Europe
38%
Emerging Markets
35%
US
20%
Established Rest
of World
7%
83,500
employees
Employees by reporting region
Our global business
1
“Our employees are based in 80 countries and
represent 132 nationalities.”
1
All numbers as at 31 December 2022.
47
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Business Review / People and Sustainability
People and Sustainability
Access to healthcare
Ethics and transparency
Environmental protection
Equitable access
Affordability and pricing
Health system resilience
Ambition Zero Carbon
Product sustainability
Natural resources
Ethical business culture
Inclusion and diversity
Workforce safety and health
Our approach to sustainability
Our ambition to push the boundaries of
science to deliver life-changing medicines is
underpinned by our commitment to contribute
sustainably to people, society and the planet.
As a global business, we are playing our part
by operating ethically and responsibly, and in
helping tackle the biggest challenges of our
time, including climate change, biodiversity
loss and global health equity. We believe
these challenges are interdependent and will
require collaboration to be successfully
addressed, implementing a variety of
approaches across a network of relationships.
By working together to find science-based
solutions, we believe we can drive real change
and build a better future.
Governance
Our sustainability strategy is developed
by the SET, which reviews our internal
sustainability scorecard quarterly, and is
approved by the Board. Our Board
Sustainability Committee monitors the
execution of the sustainability strategy,
overseeing the communication of our activities
with stakeholders, and providing input to the
Board and other Board Committees on
sustainability matters as required.
For more information, see Board Sustainability
Committee Report on page 95.
Overview
We seek to create value beyond the impact
of our medicines by embedding sustainability
into everything we do – from the lab to the
patient – and by supporting health system
resilience to make sustainable healthcare
available to all.
During 2022, we were recognised for our
efforts across all our sustainability priorities,
including:
>
Access to Medicine Index – third overall
out of 20 pharmaceutical companies
>
Bloomberg Gender-Equality Index, for the
fifth consecutive year
>
CDP Double A List for Climate and Water
Security, for the seventh consecutive year.
>
Dow Jones Sustainability Index – World
and Europe constituent
>
FTSE4Good Index Series constituent
>
Listed in Financial Times European
Climate Leaders.
Benchmarking and assurance
We contribute to 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 limited independent
assurance 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 (GHG) Statements.
For more information, see Sustainability supplementary
information on page 218 and the letter of assurance
available in the Annual Sustainability Report section on
www.astrazeneca.com/sustainability/resources.html.
Sustainability strategy
We assess the relevance of our material focus
areas through continuous dialogue with our
stakeholders and horizon-scanning for
emerging topics. Our existing nine focus areas
remained a priority in 2022, grouped under
three interconnected strategic priority pillars:
Sustainability
Sustainability at AstraZeneca means
harnessing the power of science and
innovation, and our global reach to
build a healthy future for people,
society, and the planet.
For more information, see our Sustainability Report on
www.astrazeneca.com/sustainability/resources.html.
BV
“Our future depends on healthy people, a healthy
society and a healthy planet. We believe that these
elements are interconnected, and that together
we must build a sustainable future.”
48
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
COVID-19 vaccine
During 2022, together with our global
partners, we supplied approximately 0.5
billion vaccine doses to more than 80
countries. Of these, approximately 60% went
to low- and middle-income countries (LMICs),
and more than 300 million were delivered to
50 countries through the COVAX Facility. In
2022, analysis published by health analytics
firm Airfinity showed that the AstraZeneca
COVID-19 vaccine helped to save over six
million lives during the period 8 December
2020 to 8 December 2021.
For more information, see Vaccines & Immune Therapies
from page 28.
Improving access to digital solutions
In 2022, we joined the World Economic
Forum’s EDISON Alliance’s 1 Billion Lives
Challenge to improve access to innovative
and scalable digital health solutions by 2025,
with a focus on underserved communities.
Our ambition is to screen five million patients
for lung cancer using AI-based technology,
in partnership with Qure.ai.
Affordability and pricing
We are committed to addressing barriers to
access and affordability. Industry, payers and
policymakers need to work together to identify
solutions. Through collaborations and
stakeholder coalitions we are working to
ensure essential and innovative medicines
become more widely available.
For more information, see Pricing and value of our
medicines on page 39.
Health system resilience
Sustainable healthcare for all requires
investment in strengthening health systems,
to deliver an infrastructure designed to be
responsive to the needs of the population it
serves. Each of our Access to healthcare focus
areas contributes to health system resilience
and we are investing in groundbreaking global
and local collaborations, company initiatives
and fast-tracked innovation to give access to,
and improve the quality of, healthcare for
more people.
Partnership for Health System Sustainability
and Resilience (PHSSR)
Our collaboration with the London School of
Economics and the World Economic Forum
continued its work to strengthen global health
systems, now active in over 30 countries
worldwide. Joined by other global partners
Philips, KPMG, the World Health Organization
Foundation and the Center for Asia-Pacific
Resilience and Innovation, the PHSSR
continues to expand and act as a driver for
policy improvements in the countries where
it is active. During 2022, the partnership’s
in-depth health system research progressed
in 13 Phase 2 countries with main findings
presented at the Global PHSSR Summit in
Access to healthcare
BV
We want to transform healthcare to secure
a future where all people have access to
affordable, sustainable, and innovative
healthcare. This is critical right across the
patient care pathway – from prevention, early
detection and diagnosis to the effective
treatment of disease. We are working to
remove barriers, deliver innovative medicines
and strengthen healthcare infrastructure and
resilience through global and local partnerships.
Achievements in 2022
>
More than 10,600 healthcare workers
trained via Healthy Heart Africa
>
More than 44.6 million people reached
through Access to Healthcare programmes
>
Healthy Heart Africa conducted more than
32 million screenings for elevated blood
pressure
>
Young Health Programme reached more
than 9 million young people through
prevention and education programmes
in more than 39 countries
>
More than 12.8 million people reached
through our patient access programmes,
which enables sustainable access to
AstraZeneca medicines.
Equitable access
Your health should not be determined by who
you are, where you live or where you were
born. We are working to remove barriers to
healthcare and give everyone the chance
to be as healthy as possible.
Diversity in clinical trials
We are committed to designing clinical
programmes with equity at the forefront. Our
approach includes increasing the diversity of
clinical trial participants so that trials better
reflect the patients who may use our
medicines, which ensures we have a robust
and reliable body of evidence.
For more information, see Clinical trial transparency
on page 38.
Rare diseases
There are more than 7,000 known rare
diseases in the world yet only 5% of them
have an approved treatment option. We
believe people with rare diseases deserve the
same attention and investment into finding
therapies as anyone else. We help people
access medicines through our patient support
and expanded access programmes, and we
are expanding the geographies where our
medicines are available.
The Alexion Charitable Foundation (ACF)
seeks to cultivate a sense of belonging,
particularly for those affected by a rare
disease. ACF provides philanthropic funding
through two primary channels, its signature
RARE BELONGING
®
suite of funding priorities
and through Local Needs Grants.
For more information, see Rare Disease from page 30.
November. It covered key themes across
workforce and health service delivery, finance
and governance, and the role of technology in
strengthening health systems.
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, where applicable. By the end of
2022, the programme had conducted over
32 million blood pressure screenings and
trained over 10,600 healthcare workers since
launch in 2014. In 2022, the programme
expanded to Nigeria and Zanzibar and was
identified as a Best Practice in the 2022
Access to Medicine Index. At the end of 2022,
it was agreed to expand to 10 new countries,
starting in 2023.
Young Health Programme
Since 2010, the AstraZeneca Young Health
Programme has helped young people aged
10 to 24 to make informed choices about
their health, to counter the prevalence of
non-communicable diseases, as well as
mental health conditions. In collaboration
with UNICEF and Plan International, we
support research, advocacy, education and
development of young people. By the end of
2022, the programme had reached 9.1 million
young people with health information and
trained 260,191 peer educators in 39 countries
since its launch.
Community investment
We aim to make a positive impact on people
in all the communities where we are present.
Our Global Standard on External Funding
includes community investment and provides
guidance to ensure a consistent, transparent,
and ethical approach around the world, based
on local needs. Our activities are focused on
supporting programmes to advance patient
health, increase access to care, drive scientific
innovation and build resilience, and include
financial and non-financial contributions.
In 2022, we provided $108 million to more
than 1,000 non-profit organisations across
64 countries. We also donated more than
$3.1 billion (2021: $2.3 billion) of medicines
through patient assistance programmes
around the world, the largest of which is our
AZ&Me Prescription Savings programme in
the US.
Product donation programmes
In 2022, we gave $12.1 million (2021:
$23 million) in product donations for disaster,
humanitarian relief and public health need.
We remain committed to working with all
health system stakeholders towards achieving
more systemic solutions.
49
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / People and Sustainability
>
Aligning supplier spend (Scope 3) with
companies with approved science-based
targets by 2025.
>
Planting and stewarding over 50 million trees
by end of 2025 as a nature-based solution,
through our global AZ Forest initiative.
Longer-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.
>
Transition to next-generation respiratory
inhalers with near-zero climate impact.
A transition plan with actionable steps to meet
the targets is disclosed in our Sustainability
Report. Our goal of becoming carbon
negative across our entire value chain by 2030
recognises that total emissions from our value
chain partners are significantly larger than our
own direct operations. We are pledging to
engage our suppliers to reduce their direct
emissions through to 2030 and identify
carbon removal options that will lead to more
carbon dioxide (CO
2
) removed from the
atmosphere than added to it.
For more information, see our Sustainability Report on
www.astrazeneca.com/sustainability/resources.html.
Product sustainability
People and the planet benefit from those
medicines that have the smallest possible
environmental impact, while maintaining
medical efficacy and safety. As technologies
and healthcare systems evolve, so should
solutions to reduce energy, water, material use,
waste and pollution generated from designing,
manufacturing and delivering medicines to
patients. We follow a life-cycle approach that
covers all stages of our products and our
internal Product Sustainability Index ensures
we understand their environmental impacts
and prioritise improvement opportunities.
A key product-related element of our Ambition
Zero Carbon strategy is our commitment to
developing a next-generation pressurised
metered-dose inhaler (pMDI) using the propellant
HFO-1234ze, which has a near-zero global
warming potential, in partnership with Honeywell.
This is a significant innovation given the clinical
need for pMDIs. In 2022, project milestones
achieved included the Phase III investment
decision, initiation of pivotal studies, first delivery
of commercial-grade propellant from Honeywell
and positive regulatory interactions globally.
As part of our commitment to drive thought
leadership and innovation to manage
Pharmaceuticals in the Environment, we lead the
Innovative Medicines Initiative PREMIER project,
a public-private partnership between the
European Commission and EFPIA. One aim is to
develop tools to identify potential environmental
risks of APIs earlier in drug development and
make these tools and data more visible and
accessible to all stakeholders. We also lead our
industry with respect to reporting API emissions
from manufacturing and through our
EcoPharmacoVigilance (EPV) programme.
Natural resources
The conservation and sustainable use of natural
resources, along with the protection and
restoration of ecosystems, is vital to shape a
healthy future and tackle the environmental
drivers of disease. We are committed to
reducing our impact on the planet through the
efficient, circular use of natural resources
across the value chain. This includes
responsible sourcing, consumption, production,
and disposal. We also invest in nature and aim
to protect biodiversity to improve both
environmental and societal health.
Circular economy
‘Circularity’ is a key tool for conserving natural
resources, designing out waste and pollution,
keeping products and materials in use (for
example by designing for durability and
recycling) and avoiding non-renewable
resources. In 2022, we implemented projects to
enable circular use of natural resources within
our sites in Sweden. At our operations site in
Södertälje, recycling condensate and rejected
purified water will deliver savings of 150,000m³
of water annually. Our R&D site in Gothenburg
is recovering and reusing over 95% of liquid
helium, an increasingly scarce natural resource.
Water stewardship
In 2022, we increased the ambition of our 2025
water efficiency target, now aiming to reduce
water use by 20% from 2015 baseline levels,
in support of water security and resilience.
Moving beyond efficiency, we are working in
partnership with our stakeholders, including
the World Wide Fund for Nature Sweden, to
further adopt water stewardship practices in
alignment with the Alliance for Water
Stewardship Standard and to set long-term
contextual targets at high-risk sites by 2025.
AZ Forest
We have AZ Forest activities in Australia,
Indonesia, and the UK, in addition to two
new projects announced in 2022:
>
In Ghana, we committed to planting and
maintaining over three million trees to
support natural forest restoration and
community-led agroforestry.
>
In the US, we committed to planting and
maintaining one million trees, contributing to
the restoration of water quality and wildlife
habitats in the Delaware River Watershed.
Since 2020, AZ Forest has planted more than
10.5 million trees.
Sustainability
continued
BV
Environmental protection
BV
We recognise the connection between healthy
people and a healthy planet. A significant
impact of climate change is increasing levels
of ill health, including a rise in chronic
conditions such as heart disease, stroke, lung
cancer and respiratory disease. We are using
a science-led approach to lower the economic
and environmental burden of healthcare, while
improving health outcomes. We are proactively
managing our environmental impact across all
activities, limiting our use of finite resources,
and investing in nature and biodiversity.
Through our Natural Resource Efficiency
Fund, we have invested approximately
$150 million in environmental efficiency
innovations since 2015. This, together with
other central capital investments, has seen a
further $26.6 million spent in 2022, including
31 new projects.
Achievements in 2022
>
59.3% reduction in Scope 1 and 2 GHG
emissions since 2015
>
14.4% reduction in energy consumption
since 2015
>
More than 10.5 million trees planted by
AZ Forest since 2020
>
18.7% reduction in water usage and
18.6% reduction in our waste since 2015
>
100% safe API discharges for AstraZeneca
sites and 92% safe API discharges for
globally managed first-tier supplier sites
>
97.5% of paper-based product packaging
materials used were supplied from
sustainable sources in 2021, achieving the
2022 target.
Ambition Zero Carbon
Approximately 5% of global GHG emissions
come from the healthcare sector, from mineral
extraction and processing through to use of
medicines and their disposal. We are
accelerating the delivery of net-zero
healthcare and our progress towards net-zero.
We were one of the first companies to have
our net-zero targets across Scope 1, 2 and 3
verified under the Science Based Targets
initiative Net-Zero Corporate Standard.
Near-term targets:
>
98% reduction in Scope 1 and 2 GHG
emissions by 2026 from 2015 baseline,
maximising our transition to electric
vehicles in our road fleet (EV100) by the end
of 2025, and using 100% renewable energy
(RE100) for electricity and heat by 2025.
>
Reducing energy consumption by 10% and
doubling energy productivity (EP100) from
2015 to 2025.
>
Launching first next-generation respiratory
inhalers with near-zero climate impact
by 2025.
People and Sustainability
50
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Business Review
continued
The Code asks employees to report possible
violations and provides information on how to
do so, including via the AZ Ethics helpline or
website. AZ Ethics is also available to third
parties. Reports can be made anonymously
where desired and permitted by local law.
Anyone who raises a potential breach in good
faith is fully supported by management;
retaliation is not tolerated.
The majority of cases come to our attention
through self-reporting to line managers or
local Human Resources, Legal or Compliance.
In 2022, 490 reports of alleged compliance
breaches or other ethical concerns were
made through AZ Ethics, including
anonymous reports that could be considered
whistleblowing (2021: 416).
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.
For more information on our Ethics and transparency
focus areas, see Champions of inclusion and diversity,
and, Workforce safety and health, on page 46.
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 promote ethical, transparent and inclusive
policies internally as well as with our partners
and suppliers. It is important that we create
value beyond the impact of our medicines.
Building trust through integrity, transparency
and fair treatment is central to everything
we do.
Achievements in 2022
>
49.5% of our senior roles are filled
by women.
>
83% of employee survey respondents feel
they can speak their mind at work.
Code of Ethics
We are committed to high ethical standards.
Our Code of Ethics (the Code) embodies our
Values, expected behaviours, principles and
policies. It applies to all Executive and
Non-Executive Directors, officers, employees
and contract staff of our worldwide Group.
The Code empowers employees to make
decisions in the best interests of the Group,
the communities in which we work and the
people we serve. It focuses on why our
commitments matter and 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 choices and act in a consistent,
responsible way. Our mandatory training
reminds employees of our commitments. In
2022, 100% of all active employees
completed annual training on the Code.
The Code includes high-level Global Policies
covering Science, Interactions, Workplace
and Sustainability. These policies are
complemented by Global Standards. We also
have additional global, local and functional
requirements to support employees in their
daily work.
For more information, see our Code, Global Policies
and Position Statements on our website,
www.astrazeneca.com/sustainability/resources.html
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-financial statement containing certain
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 41.
>
Code of Ethics, see 51.
>
Access to healthcare, see page 49.
>
Environmental protection, see page 50.
>
People, see page 45.
>
Human rights, see page 46.
Information on the Group’s Principal Risks
is included in Risk Overview (see from page
56) and information on the non-financial key
performance indicators relevant to our
business is included in Key Performance
Indicators (see from page 14). A description
of our business model is contained in
Business Model and Life-cycle of a Medicine
(see from page 12).
“An ethical business culture is an
imperative against a background of
reputational, legal, regulatory and
long-term sustainability risks, and we
are committed to increasing public
trust in our industry.”
51
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Business Review / People and Sustainability
Assessment
The EU Taxonomy (Regulation (EU) 2020/852)
and associated Delegated Acts represent an
evolving reporting framework and are part of
the EU’s measures towards climate goals. The
EU Taxonomy (Taxonomy) is a classification
system for sustainable economic activities.
An economic activity is Taxonomy-eligible if it
is described in the Taxonomy Delegated Acts.
An economic activity is Taxonomy-aligned if
it makes a substantial contribution to one or
more of the specified environmental
objectives, meets specified Do-No-
Significant-Harm (DNSH) criteria, and is
carried out in compliance with specified
minimum social safeguards.
Information prepared under this disclosure
is consistent with our Consolidated Financial
Statements for the year ended 31 December
2022, and comparatives, prepared under the
basis of preparation detailed in our Group
Accounting Policies on page 142.
Capital expenditure was assessed for
Taxonomy-eligibility on a project basis.
Operating expenditures were assessed for
Taxonomy-eligibility based on the nature of
expense. Taxonomy-alignment assessments
were conducted on an activity level, based on
our Global Standards and Policies. No activity
was assessed as fully Taxonomy-aligned in
2022. Double-counting was avoided by
reconciliation to underlying financial records.
The Taxonomy is still in development by the
EU and company specific assumptions are
required to fulfil the reporting requirements.
Revenue
The Taxonomy-eligible Revenue KPI is
defined as Taxonomy-eligible Revenue
divided by Total Revenue, which corresponds
to ‘Total Revenue’ in our Consolidated
Statement of Comprehensive Income as
detailed on page 138.
The Group’s revenues are wholly derived from
the business of pharmaceuticals, which is not
currently covered by the EU Taxonomy and
therefore cannot be considered for Taxonomy-
eligibility. Consequently our Revenue KPI for the
year ended 31 December 2022 is 0% (2021: 0%).
Capital expenditure
The Taxonomy-eligible capital expenditure
(Capex) KPI is defined as Taxonomy-eligible
Capex divided by Total Capex.
>
Taxonomy-eligible Capex is capex related
to assets or processes associated with
Taxonomy-eligible activities or the purchase
of output from Taxonomy-eligible economic
activities.
>
Total Capex corresponds to the total of the
‘Additions through business combinations’
and ‘Capital expenditure’ movement types
as detailed in Note 7 – Property, plant and
equipment (page 159), the total of the
‘Additions – separately acquired’ and
‘Additions through business combinations’
movement types as detailed in Note 8 –
Leases Right-of-use assets (page 160), and
the total of the ‘Additions – separately
acquired’ and ‘Additions through business
combinations’ movement types as detailed
in Note 10 – Intangible assets (page 161).
The Group’s Taxonomy-eligible Capex KPI for
the year ended 31 December 2022 is 14%
(2021: 2%). The 2021 comparative is low due
to the inclusion of $26,955 million relating to
intangible assets recognised as part of the
acquisition of the Alexion business in the Total
Capex comparative for the year. The eligible
activities are presented in the table below.
Operating expenditure
The Taxonomy-eligible operating expenditure
(Opex) KPI is defined as Taxonomy-eligible
Opex divided by Taxonomy-defined Opex.
>
The Group’s Taxonomy-eligible Opex is
expenses related to assets or processes
associated with Taxonomy-eligible economic
activities or the purchase of output from
Taxonomy-eligible economic activities.
>
The Group’s Taxonomy-defined Opex is the
total of R&D expenses, and other direct
non-capitalised costs that relate to building
renovation measures, short-term leases,
maintenance and repair, and any other
direct expenditures incurred in the
day-to-day servicing of assets of Property,
plant and equipment.
The Group’s Taxonomy-eligible Opex KPI for
the year ended 31 December 2022 is 2%
(2021: 2%). The low proportion is primarily
due to the majority of the Group’s Taxonomy-
defined Opex consisting of Pharmaceutical
R&D expenses of $9,762 million (2021: $9,736
million), which is not currently covered by the
EU Taxonomy. The eligible activities are
presented in the table below.
Taxonomy eligibility and alignment
1
Capex
Opex
2022
2021
2022
2021
Total
Capex
Taxonomy-
eligible
Capex
Taxonomy-
aligned
Capex
Total
Capex
Taxonomy-
eligible
Capex
Total
Opex
Taxonomy-
eligible
Opex
Taxonomy-
aligned
Opex
Total
Opex
Taxonomy-
eligible
Opex
Economic activity
2
$m
%
%
$m
%
$m
%
%
$m
%
6.5 Transport by
motorbikes, passenger
cars and light commercial
vehicles
3,519
2
0
30,462
0
10,076
10,028
7.1 Construction of new
buildings
8
0
2
7.2 Renovation of existing
buildings
2
0
0
7.7 Acquisition and
ownership of buildings
0
0
0
2
0
2
8.1 Data processing,
hosting and related
activities
1
0
0
8.2 Computer
programming, consultancy
and related activities
1
0
0
1
Percentages are subject to rounding.
2
As per EU Taxonomy definition.
52
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
EU Taxonomy Disclosure
BV
Our commitment to climate change
We support the Task Force on Climate-related
Financial Disclosures (TCFD) framework, and
our disclosures are consistent with the four
TCFD recommendations and the 11
recommended disclosures, in line with the
compliance requirements of Listing Rule
9.8.6R(8) of the UK Financial Conduct
Authority. Page 54 sets out the required
disclosures in more details and explains
where further information can be found. To
enable us to cover all required information,
such as methodology and results, we also
refer to other documents outside this
Annual Report.
We have applied the TCFD framework
annually since 2020 and continued to apply
it to describe activities conducted in 2022.
All our business operations worldwide are
in scope, unless otherwise stated. The
framework applies a risk-based approach,
focusing on material risks and opportunities.
For further information relating to our TCFD
disclosures, see our 2022 TCFD Extended report on our
website, www.astrazeneca.com/annualreport2022.
Our CDP response, based on 2021 performance,
provides further information on our approach to climate
change, available at www.cdp.net/en.
Future expansions to medium- and low-risk
areas are indicated by section.
To future-proof the supply of medicines to
patients, over 2020/21 we conducted a broad
physical climate risk screening of our sites,
followed by deep dive assessments at 29
locations (including manufacturing sites, R&D
hubs and IT centres) to understand exposure
risk to extreme weather events, and possible
revenue impact from disruption to business-
critical activities. From 2021, we widened our
approach to screen over 750 suppliers with a
critical role in patient supply, to understand
climate vulnerability in the upstream value
chain for 10 selected medicines. This ensures
all required mitigation measures are in place
or planned, to manage future climate risks
based on a worst-case scenario.
Transition risks and opportunities are
screened for medicines by using Life Cycle
Assessment (LCA) data and carbon intensity.
For further information see our Sustainability Report,
which describes our approach and progress, based on
our sustainability focus areas on our website,
www.astrazeneca.com/sustainability.
For further information see our Sustainability Data
Summary, which provides performance measures and
targets with at least three years of data, where
available, on our website,
www.astrazeneca.com/sustainability.
Highest risks were identified across asthma
and COPD products. Transitioning to
near-zero Global Warming Potential (GWP)
propellants between 2025 and 2030 is part of
our $1 billion Ambition Zero Carbon strategy
to accelerate the decarbonisation of our
business and transform climate risks into
opportunities. Our greenhouse gas (GHG)
emissions reduction targets and progress
are disclosed on pages 50 and 218.
In many cases, mitigation measures are
already in place to address both physical
and transition risks with no material impact
on our business model and climate risk is not
currently considered to be a Principal Risk for
the Group. However, the risk ‘Failure to meet
regulatory expectations on environmental
impact, including climate change’ is a
component of the Group’s risk landscape
within the Annual Report. This TCFD
statement has been shared with our Board
and Audit Committee.
For more information, see the Risk supplement on our
website, www.astrazeneca.com/annualreport2022.
Climate risk summarised
Risk or
opportunity
Time horizon
Short/Mid/Long
Potential impact
How it is managed
Physical
risks
>
Increased extreme heat events and cooling needs impacting
compliance with Good Manufacturing Practice.
>
Heavy rainfall causing local flooding and/or landslides.
>
Water stress affecting access to water used in operations.
>
High winds damaging structures.
Identified risks are addressed in local business continuity
plans or by technical mitigations integrated into site
master plans.
Transition
risks and
opportunities
Healthcare providers increasing demand for products and
services with low GHG footprint, to meet net-zero ambitions.
Transition to near-zero GWP propellants across respiratory
portfolio from 2025 to 2030.
Changes in F-gas regulations and their impact on
respiratory medicines.
We advocate a phased transition of the new EU F-gas
regulation to earliest 2030, if the medicinal exemption is
lifted, to ensure patient safety, and allow time for regulatory
approvals and transition to low or near-zero GWP propellants.
Carbon pricing and future environmental taxation.
Ambition Zero Carbon mitigates future value chain pricing
and taxation exposure.
Supply/demand of renewable energy.
Annual investment of approximately $25 million in natural
resource reduction programme, and collaborations to scale
access to renewable energy in the supply chain.
Change in raw material or sourcing costs.
Supply chain engagements include transition to low-carbon
economy preparedness.
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
53
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Task Force on Climate-related Financial Disclosures Summary Statement
Task Force on Climate-related
Financial Disclosures Summary Statement
BV
TCFD Framework
and recommended disclosures
AstraZeneca current status
Links to more information
on key developments.
Governance
Describe the Board’s oversight of
climate-related risks and opportunities.
Our Board Sustainability Committee was established to monitor the
execution of our sustainability strategy.
page 2
pages 48, 95, and 98
page 8
Describe management’s role in assessing
and managing climate-related risks and
opportunities.
Our CEO is responsible to the Board for the development and performance
of our climate strategy and related risks and opportunities, as part of his
overall responsibilities.
The TCFD Steering Group coordinates management of physical and
transitional climate risks and opportunities.
page 2
page 48
pages 8 and 19
Strategy
Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium, and long term.
Physical risks from climate change are primarily disruption or delays to
manufacturing or distribution, and/or impairment due to failure of cold chain
logistics, and increased liability insurance premiums and reputational
damage – see table on page 53.
Transition risks and opportunities are primarily regulatory and market
changes, and/or pressure and ability to reduce product carbon footprints
and decarbonise our value chain – see table on page 53.
pages 4 to 10
pages 19 to 22
Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning.
We are taking enterprise-wide action to reduce our GHG emissions from
our global operations and fleet by 98% by 2026 (from a 2015 baseline) with a
$1 billion budget. We aim to halve our entire value chain footprint (Scope 3)
by 2030, to achieve a 90% reduction by 2045 (from a 2019 baseline) and
reach our net-zero Science-based targets (SBTs) to fully prepare for a
low-carbon economy. Our transition plan to net-zero is disclosed in our
Sustainability Report as a response to FCA requirement 2021/61 9.8.6F.
pages 4 to 10
pages 19 to 24
Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C
or lower scenario.
We are building resilience against a worst-case scenario (RCP8.5) in our
supply chain by investing in mitigation in at-risk sites, supply chain design,
and inventory levels, to manage interruption risks. No material business
impact from such short-term events is foreseen.
Value chain decarbonisation, with net-zero targets aligned to a 1.5°C
scenario, will secure low-carbon economy resilience and scale opportunities
in progressive markets.
pages 1, 3 and 5
Risk management
Describe the organisation’s processes for
identifying and assessing climate-related
risks.
Climate assessments integrated into overall enterprise risk management,
inform the enterprise of specific risks and opportunities posed by climate
change and/or transition to a low-carbon economy.
pages 1 and 2
pages 56, 57, and 98
pages 19 to 26
Describe the organisation’s processes for
managing climate-related risks.
Identified risks are addressed in local business continuity plans or by
technical mitigations in site master plans. Mid- and long-term financial
planning includes required investments.
Ambition Zero Carbon is reducing our GHG footprint, mitigating some
transition risks, and protecting revenue.
pages 1 2 and 4 to 10
pages 50, 56, 57, and 98
pages 19 to 26
Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
Identified risks are managed locally and escalated to functional and/or
enterprise level if material.
pages 1, 2 and 4 to 6
pages 56, 57 and 98
pages 19 to 26
54
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Key
TCFD Statement
Annual Report
Sustainability Report
Sustainability Data Summary
Task Force on Climate-related
Financial Disclosures Summary Statement
continued
BV
TCFD Framework
and recommended disclosures
AstraZeneca current status
Links to more information
on key developments.
Metrics and targets
Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
GHG footprint and progress towards short- and long-term targets are
reported in line with World Resources Institute GHG Protocol guidance and
disclosed separately in our Sustainability Data Summary
www.astrazeneca.com/sustainability/resources.html
Data in the TCFD report is assured by Bureau Veritas.
page 11
pages 50 and 218
pages 20 and 21
pages 5 to 9
Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 GHG emissions and
the related risks.
GHG footprint and progress towards short-and long-term targets are
reported in line with World Resources Institute GHG Protocol guidance and
disclosed separately in our Sustainability Data Summary
www.astrazeneca.com/sustainability/resources.html
pages 50 and 218
pages 20 and 21
pages 5 to 9
Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
Relevant metrics and KPIs in our Sustainability Data Summary reflect the
extent of decarbonisation and thereby reduced exposure to transition risks,
as well as showing future opportunities.
pages 1 and 2
page 50
pages 20 and 21
pages 5 to 9
55
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Task Force on Climate-related Financial Disclosures Summary Statement
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 Global
Internal Audit 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. 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. The table on
pages 58 and 59 provides insight into these
Principal Risks.
Emerging risks
Emerging risks are ‘new’ risks that have the
potential to crystallise 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 and a summary is presented
to the Audit Committee and Board. Emerging
risks continue to be monitored as part of the
ongoing risk management processes
outlined above.
Climate risk
The identification and assessment of climate
risk form part of our existing risk management
processes. ‘Failure to meet regulatory and
ethical expectations on environmental impact,
including climate change’ is a component of
the Group’s risk landscape but is not currently
considered to be a Principal Risk for the Group.
We support the TCFD framework and
continue to develop our disclosures in line
with its recommendations. Our TCFD
Statement from page 53 summarises the
work undertaken to date to understand the
potential impact of climate change on our
business and outlines future areas of
management focus.
“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.”
56
AstraZeneca Annual Report & Form 20-F Information 2022
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 2025 constitutes an
appropriate period over which to provide its
viability statement.
The Board assesses the Company’s
prospects using a 10-year long-range
projection. It notes the rich and varied
portfolio of medicines in development across
a range of therapy areas and the medicines
currently commercialised in more than 100
markets and concludes that the Company’s
long-term prospects remain strong. The
Board also considers annually and on a
rolling basis, a three-year bottom-up
detailed business plan and, given the
inherent uncertainty involved, believes that
the three-year statement presents readers
of this Annual Report with a reasonable
degree of assurance over the ongoing
viability of the Company 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 58 to 59.
>
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% reduction
in revenue achieved 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 loss of formulation
capability for one of our key oncology
products leading to supply interruption.
>
Principal Risks
: Failure in information
technology or cybersecurity. Adverse
outcome of litigation and/or government
investigations.
–
Scenario 5
– Legal, regulatory, cyber
or other non-compliance results in a
payment of $500 million in 2024.
>
Principal Risk:
Geopolitical and/or
macroeconomic volatility disrupts the
operation of our global business.
–
Scenario 6
– Measures taken to mitigate
the impact of inflation do not deliver to
the extent anticipated and add an
additional $300 million to the 2023
cost base.
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 above), the
Group is able to rely on its existing cash,
cash equivalents and short-term fixed income
investments, committed credit facilities,
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.
“Leadership teams
within each of our
SET functions
discuss the risks to
our business every
quarter, with findings
included in our Group
Risk Report.”
Corporate Governance
Additional Information
Financial Statements
Strategic Report
57
AstraZeneca Annual Report & Form 20-F Information 2022
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
therapy 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
Continuing global pressures to reduce healthcare
spending may lead to cost containment measures
implemented by payers which could have an
adverse effect on our business and financial results.
>
Focus on key products.
>
Demonstrate value of medicines/health
economics.
>
Implement innovative value-based
agreements focused on patient outcomes.
>
Global footprint.
>
Diversified portfolio.
Global economic and
political conditions
placing downward
pressure on healthcare
pricing and spending
and therefore on revenue
and innovation.
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 results.
>
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.
Supply chain and business execution risks
Failure to
maintain
supply of
compliant,
quality
medicines
Supply chain difficulties may result in product
shortages which could lead to lost product sales and
materially affect our reputation and revenues.
>
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.
Geopolitical tensions and
high levels of demand for
certain raw materials and
components place
increased pressure on
supply chains and
distribution networks.
Failure in
information
technology or
cybersecurity
Significant disruption to our IT systems, including
breaches of data security or cybersecurity, or legal
compliance failure 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, impact the implementation of our
strategic objectives, and ultimately result in the
failure of our business operations.
>
Targeted recruitment and retention
strategies deployed, including in the
Rare Disease therapy area.
>
Development of our employees.
>
Evolve our culture.
Principal Risks
Strategy key
Science & Innovation
Growth & Therapy Area
Leadership
People & Sustainability
Achieve Group
Financial Targets
Trend key
Increasing risk
Decreasing risk
Unchanged
New
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2022
58
Risk Overview
continued
Risk category and Principal Risks
Context/potential impact
Management actions
Trend versus prior year
Legal, regulatory and compliance risks
Safety and
efficacy of
marketed
medicines is
questioned
Safety concerns relating to our products may lead
to 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 is subject to a wide range of laws,
rules and regulations around the world. Actual
or perceived failure to comply may result in
AstraZeneca being investigated by government
agencies and authorities and/or in civil legal
proceedings.
Government investigations, litigations, and other
legal proceedings, regardless of outcome, could
be costly, divert management attention, or damage
our reputation and demand for our products.
Unfavourable resolutions could subject us to
enhanced damages, consumer fraud and/or other
monetary or non-monetary penalties, including civil
and criminal governmental actions, and could
materially adversely affect our financial condition
or results of operations.
>
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 payers
to impose limits on IP protections to manage
healthcare costs. If we are unable to obtain,
defend and enforce our IP, we may experience
accelerated and intensified competition.
>
Active management of IP rights and
IP litigation.
Economic and financial risks
Geopolitical
and/or
macro-
economic
volatility
disrupts the
operation of
our global
business
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. Geopolitical tensions may lead to the
imposition or escalation of trade controls, tariffs,
taxes or other restriction to market access, which
may increase our costs or reduce revenues.
>
Focus on key products.
>
Demonstrate value of medicines/health
economics.
>
Diversified portfolio.
A pessimistic global
economic outlook may
increase pressure on
global healthcare
budgets. Geopolitical
tensions, including the
ongoing conflict in
Ukraine, and the rise
of national and regional
interests continue to
challenge global
operations.
Failure to
achieve
strategic
plans or meet
targets or
expectations
Failure to successfully implement our business
strategy 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 therapy 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.
Corporate Governance
Additional Information
Financial Statements
Strategic Report
59
AstraZeneca Annual Report & Form 20-F Information 2022
Risk Overview
It has been a privilege to be part of the
incredible performance at AstraZeneca in 2022.
Not only did my colleagues deliver incredible
commercial, scientific and financial results
but they achieved this in a year of high
volatility – from the conflict in Ukraine and
related sanctions, clinical study and supply
chain disruptions, foreign exchange volatility,
lockdowns in China and the integration of
Alexion to name a few. This was coupled with
several business development transactions. We
started several initiatives focused on continuous
improvement and driving operating leverage.
Total Revenue growth
AstraZeneca achieved Total Revenue of
$44.4 billion in 2022, with growth of 19%
(CER: 25%), including $1.4 billion of
Collaboration Revenue, with $7.1 billion
coming from our Rare Disease portfolio.
Product Sales grew by 18% (CER: 24%) to
$43.0 billion, with 14 blockbuster medicines,
including
Ultomiris
and
Soliris
from our Rare
Disease portfolio. Our continued investment
in Oncology and CVRM medicine launches
supported strong Product Sales growth of
13% (CER: 19%) for both therapy areas, with
standout performances from
Tagrisso
($5.4
billion),
Farxiga
($4.4 billion) and
Imfinzi
($2.8
billion). Within our Rare Disease portfolio,
Soliris
achieved Product Sales of $3.8 billion
but saw a pro rata decline of 11% (CER: 5%)
due to the successful conversion to
Ultomiris
,
which had pro rata growth of 34% (CER: 42%)
to $2.0 billion in the year. In the US, we had
overall growth of 44%, with Product Sales
of $17.3 billion. In Europe, Product Sales
increased by 9% (CER: 22%) to $8.3 billion
and in Established Rest of World Markets
there was growth of 22% (CER: 40%) to
$5.8 billion with over $1 billion being derived
from
Vaxzevria
and
Evusheld
. Emerging Markets
Product Sales declined by 4% (CER: growth
of 1%) to $11.6 billion, with growth in Oncology
and
Farxiga
being more than offset by
declines in
Vaxzevria
and
Pulmicort
.
Collaboration Revenue increased by 54%
(CER: 56%) to $1.4 billion and included
$0.5 billion of alliance revenue in relation to
Enhertu
and $0.4 billion of milestone income
from the ongoing MSD arrangement on
Lynparza
and
Koselugo
.
Profitability
Reported EPS was $2.12 in the year (2021:
$0.08) and Core EPS was $6.66 (2021: $5.29)
driven by improved Gross margin from Total
Revenue growth and the positive mix effects
of the increased contribution from Rare
Disease and Oncology medicines.
Key milestones/approvals
Our continued investment in the pipeline
yielded a number of significant approvals and
milestones in the year, including regulatory
approval for
Enhertu
in gastric and breast
cancer,
Lynparza
in biliary tract cancer and
Farxiga
in chronic heart failure in the EU, as
well as an unprecedented five approvals
achieved in one day in Japan, including
Imfinzi
and
Imjudo
in liver cancer.
While the 2022 results and achievements are
a matter of great pride for me, it is the manner
in which these results were achieved that
makes me truly humbled – by living our values
of following the science, being curious and
entrepreneurial and doing the right thing –
Every Single Day. I look forward to 2023 with
all the opportunities and challenges that it
will bring.
Aradhana Sarin
Chief Financial Officer
“AstraZeneca achieved Total
Revenue of $44.4 billion in
2022, with growth of 19%
(CER: 25%), including $1.4 billion
of Collaboration Revenue, with
$7.1 billion coming from our
Rare Disease portfolio.”
Continued revenue
growth and excellent
pipeline progress
produced a strong
business performance
in 2022.
60
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
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
fi
t
E
P
S
Highlights
Financial performance
Total Revenue: Therapy areas
Total Revenue: Geographical areas
$43.0bn
Reported and Core
(2021: $36.5bn)
Emerging Markets
-4%
decrease
(CER: 1% growth)
CVRM1
13%
growth
(CER: 19%)
US
47%
growth
Oncology
15%
growth
(CER: 20%)
Europe
9%
growth
(CER: 21%)
Respiratory &
Immunology
-1%
decrease
(CER: 3% growth)
Established
RoW
22%
growth
(CER: 40%)
Vaccines & Immune
Therapies
1%
growth
(CER: 8%)
Rare Disease1
4%
growth
(CER: 10%)
Other Medicines
-4%
decrease
(CER: 5% growth)
$1.4bn
Reported and Core
(2021: $0.9bn)
$3.8bn
>3x growth – Reported
(CER: >3x)
$13.4bn
34% growth – Core
(CER: 42%)
$2.12
(2021: $0.08) – Reported
$6.66
(2021: $5.29) – Core
Product
Sales
Collaboration
Revenue
Operating
profit
EPS
Summary performance in 2022
Reported
CER
Core
2022
$m
2021
$m
% Actual
change
CER
growth
2
$m
Growth
due to
exchange
effects
$m
% CER
change
2022
$m
2021
$m
% Actual
change
Product Sales
42,998
36,541
18
8,905
(2,448)
24
42,998
36,541
18
Collaboration Revenue
1,353
876
54
495
(18)
56
1,353
876
54
Total Revenue
44,351
37,417
19
9,400
(2,466)
25
44,351
37,417
19
Cost of sales
(12,391)
(12,437)
–
(530)
576
4
(8,588)
(9,444)
(9)
Gross profit
31,960
24,980
28
8,870
(1,890)
35
35,763
27,973
28
Operating expenses
(28,717)
(25,416)
13
(4,571)
1,270
18
(22,860)
(19,537)
17
Other operating income and expense
514
1,492
(66)
(966)
(12)
(65)
447
1,492
(70)
Operating profit
3,757
1,056
>3x
3,333
(632)
>3x
13,350
9,928
34
Net finance expense
(1,251)
(1,257)
(1)
(60)
66
5
(974)
(862)
13
Share of after tax losses of joint ventures and associates
(5)
(64)
(92)
58
1
(91)
(5)
(64)
(92)
Profit/(loss) before tax
2,501
(265)
>10x
3,331
(565)
>10x
12,371
9,002
37
Taxation
792
380
>2x
739
(327)
>3x
(2,058)
(1,494)
38
Profit after tax
3,293
115
>10x
4,070
(892)
>10x
10,313
7,508
37
Basic earnings per share ($)
2.12
0.08
>10x
2.62
(0.58)
>10x
6.66
5.29
26
1
In 2022, Total Revenue from
Koselugo
is included in Rare Disease (2021: Oncology) and Total Revenue from
Andexxa
is included in BioPharmaceuticals: CVRM (2021: Rare Disease).
The growth rate shown for each therapy area has been calculated as though these changes had been implemented in 2020. This applies throughout the Financial Review.
2
As detailed on page 63, CER growth is calculated using prior year actual results adjusted for certain exchange rate effects, including hedging.
61
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Business background and results
overview
The business background is covered in the
Healthcare in a Changing World section from
page 9, the Therapy Area Review from
page 18, and the Our Strategy and Key
Performance Indicators section from page 14,
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.
Further details of the risks faced by the business are
given in Risk Overview from page 56 and in the Risk
supplement at www.astrazeneca.com/annualreport2022.
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 with 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.
>
Core performance
measures are adjusted
to exclude certain significant items, using a
set of established principles.
For a detailed definition of Core measures, see page 63.
Use of non-GAAP performance measures
Core performance measures, EBITDA, Net
debt, CER, Gross margin and Operating
margin 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 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 2022 Reconciliation of
Reported results to Core results table on
page 64, 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.
Readers should also refer to our Reported financial
information in the Summary performance in 2022 table
on page 61, our reconciliation of Core performance
measures to Reported financial information in the 2022
Reconciliation of Reported results to Core results table
and the Excluded from Core results table on page 64 for
our discussion of comparative growth measures that
reflect all factors that affect our business.
Our determination of non-GAAP measures and
our presentation of them within this Financial
Review, 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.
62
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
Non-GAAP measures: definitions
Revenue
Constant
exchange rate
(CER) growth
rates
Reconciliation,
see page 64.
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.
Profitability
Core
performance
measures
Reconciliation,
see page 64.
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.
See the 2022 Reconciliation of Reported results to Core results table on page 64
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 multiple reporting
periods, 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
resulting from the Alexion business combination.
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, the remeasurement of certain other payables
assumed from the Alexion acquisition (which related to contingent
consideration in Alexion pre-acquisition by AstraZeneca), a one-off
favourable net adjustment to deferred taxes arising from an internal
reorganisation to integrate the Alexion organisation, 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 businesses 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
Reconciliation,
see page 64.
Definition:
Gross 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
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 Total Revenue performance.
63
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Operating
margin
percentage
Reconciliation,
see table 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
Reconciliation,
see page 67.
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 flow and liquidity
Net debt
Reconciliation,
see page 70.
Definition:
Interest-bearing loans and borrowings and Lease liabilities,
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.
2022 Reconciliation of Reported results to Core results
2022
Reported
$m
Restructuring
costs
$m
Intangible
amortisation
and
impairments
$m
Acquisition
of Alexion
$m
Other
1
$m
2022
Core
2
$m
Core 2022 compared with
Core 2021
2
Actual
growth
%
CER
growth
%
Gross profit
31,960
266
32
3,506
(1)
35,763
28
35
Gross margin %
3
71.2
80.0
Distribution expense
(536)
2
–
–
–
(534)
20
28
Research and development expense
(9,762)
111
124
27
–
(9,500)
19
24
Selling, general and administrative expense
(18,419)
405
4,165
38
985
(12,826)
15
21
Other operating income and expense
514
(67)
–
–
–
447
(70)
(69)
Operating profit
3,757
717
4,321
3,571
984
13,350
34
42
Operating margin %
8.5
30.1
Net finance expense
(1,251)
–
–
–
277
(974)
Taxation
792
(165)
(804)
(832)
(1,049)
(2,058)
Basic earnings per share ($)
2.12
0.36
2.27
1.77
0.14
6.66
26
33
2021 Reconciliation of Reported results to Core results
2021
Reported
$m
Restructuring
costs
$m
Intangible
amortisation
and
impairments
$m
Acquisition
of Alexion
$m
Other
1
$m
2021
Core
2
$m
Core 2021 compared with
Core 2020
2
Actual
growth
%
CER
growth
%
Gross profit
24,980
722
66
2,206
(1)
27,973
30
30
Gross margin %
3
66.0
74.2
Distribution expense
(446)
–
–
–
–
(446)
12
7
Research and development expense
(9,736)
223
1,496
28
2
(7,987)
36
33
Selling, general and administrative expense
(15,234)
338
3,584
207
1
(11,104)
19
15
Other operating income and expense
1,492
–
–
–
–
1,492
(3)
(4)
Operating profit
1,056
1,283
5,146
2,441
2
9,928
35
41
Operating margin %
2.8
26.5
Net finance expense
(1,257)
–
–
–
395
(862)
Taxation
380
(249)
(1,024)
(531)
(70)
(1,494)
Basic earnings per share ($)
0.08
0.73
2.91
1.34
0.23
5.29
32
37
1
See Excluded from Core results table below for further details of other adjustments.
2
Each of the measures in the Core columns is a non-GAAP measure.
3
Gross margin as a percentage of Product Sales reflects Gross profit derived from Product Sales, divided by Product Sales.
Non-GAAP measures: definitions
continued
64
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
Excluded from Core results
Restructuring costs
>
Restructuring costs totalling $717 million (2021: $1,283 million) mainly comprise those incurred on the PAAGR (Post Alexion
Acquisition Group Review) of $675 million (2021: $1,030 million).
Intangible amortisation
and impairments
>
Amortisation totalling $4,080 million (2021: $3,080 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 161.
>
Intangible impairment charges were $318 million (2021: $2,067 million), excluding those related to IT. The 2021 charges included 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 161.
Acquisition of Alexion
>
Costs associated with our acquisition of Alexion in July 2021 amounting to $3,571 million (2021: $2,441 million), primarily relating to
the impact from the unwind of the fair value adjustment to Alexion inventories at the date of acquisition. The impact of the fair value
uplift unwind on Cost of Sales is $3,484 million (2021: $2,198 million) in 2022. The majority of the fair value uplift has unwound
through Reported Cost of Sales in line with associated revenues in 2022.
>
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 $1,261 million (2021: $397 million).
>
Other adjustments to Reported SG&A expenses were $985 million, primarily including a charge to net legal provisions of
$775 million in relation to Chugai Pharmaceutical Co. Ltd and $82 million (2021: a credit of $14 million) net fair value adjustments
relating to contingent consideration balances, and $82 million (2021: $61 million) of remeasurement adjustments relating to
Other Payables. Further details relating to contingent consideration balances are contained in Note 20, from page 170 and
further details of legal proceedings, ongoing at 31 December 2022, are contained within Note 30 to the Financial Statements from
page 192.
>
Other adjustments to Net finance expense of $277 million (2021: $395 million) relate to discount unwind charges on liabilities arising
from business combinations.
>
Other adjustments to Taxation of $1,049 million (2021: credit of $70 million) includes a one-time favourable net adjustment of
$876 million to deferred taxes arising from an internal reorganisation to integrate Alexion.
65
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
2022
Product
Sales
$m
2021¹
Product
Sales
$m
Actual
growth
%
CER
growth
%
Product Sales by Therapy Area
Oncology
14,631
12,940
13
19
CVRM
9,188
8,088
13¹
19¹
Respiratory & Immunology
5,765
6,034
(4)
–
Vaccines & Immune Therapies
4,736
4,665
2
8
Rare Disease
7,053
3,110
4¹
,
²
10¹
,
²
Other Medicines
1,625
1,704
(5)
4
Total
42,998
36,541
18
24
1
In 2022, Total Revenue from
Koselugo
is included in Rare Disease (2021: Oncology) and Total Revenue from
Andexxa
is
included in BioPharmaceuticals: CVRM (2021: Rare Disease). The growth rate shown for each therapy area has been
calculated as though these changes had been implemented in 2020. This applies throughout the Financial Review.
2
Growth rates on medicines acquired from Alexion have been calculated on a pro forma basis corresponding to the same
period in the prior year.
2022
Product
Sales
$m
2021
Product
Sales
$m
Actual
growth
%
CER
growth
%
Product Sales by Geographical Area
US
17,254
12,000
44
44
Emerging Markets
11,634
12,161
(4)
1
Europe
8,264
7,604
9
22
Established RoW
5,846
4,776
22
40
Total
42,998
36,541
18
24
Revenue
Total Revenue for 2022 was up 19%
(CER: 25%) to $44,351 million, comprising
Product Sales of $42,998 million, up 18%
(CER: 24%), and Collaboration Revenue
of $1,353 million, an increase of 54%
(CER: 56%).
Product Sales
By Geography
US Product Sales were up 44% to $17,254
million, reflecting the continued growth of
our Oncology medicines and
Farxiga
, which
had growth of 46%, with recent regulatory
approvals driving an increase in in-class
market share. Product Sales in Emerging
Markets declined by 4% (CER: growth of 1%)
to $11,634 million in 2022 with growth in
Oncology and
Farxiga
being more than offset
by declines in
Vaxzevria
and
Pulmicort
.
Product Sales in ex-China Emerging Markets
also decreased by 4% in the year (CER:
growth of 2%) to $5,894 million, driven by a
decline in Asia-Pacific. In Europe, Product
Sales grew by 9% (CER: 22%) to $8,264
million, reflecting a strong performance in
Oncology and
Forxiga
. Established Rest of
World Product Sales increased by 22%
(CER: 40%) to $5,846 million, with sales in
Japan up 17% (CER: 39%) to $4,007 million.
By Product
2022 succeeded in delivering 14 blockbuster
drugs.
Our largest selling products in the year were
Tagrisso
($5,444 million),
Farxiga
($4,381
million),
Soliris
($3,762 million),
Imfinzi
($2,784
million) and
Lynparza
($2,638 million).
Tagrisso
sales grew by 9% (CER: 15%) reflecting a
strong performance from increased use
across all markets.
Farxiga
sales increased
by 46% (CER: 56%), with continued volume
growth across all major regions driven by new
launches.
Soliris
declined by 11% (CER: 5%)
due to the successful conversion to
Ultomiris
.
Imfinzi
Product Sales grew by 15%
(CER: 21%), with increased use worldwide
driven by new patient starts in the US and
increased market penetration in Europe.
Lynparza
Product Sales delivered a strong
performance in all markets, with launches
continuing globally, and generated total
growth of 12% (CER: 18%) in the year.
Calquence
continued its growth with an
increase of 66% (CER: 69%) in the year to
$2,057 million driven by increased patient
market share in the US and Europe.
Within Vaccines & Immune Therapies,
Product Sales remained broadly flat at 2%
(CER: 8%) with growth in
Evusheld
offset
by declines in
Vaxzevria
.
66
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
Collaboration Revenue
Details of our significant business
development transactions which give rise
to Collaboration Revenue are given below.
Enhertu
(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 alliance revenue 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 2022, AstraZeneca recognised
Collaboration Revenue of $287 million
in respect of alliance revenue.
>
In 2022, AstraZeneca recognised
Collaboration Revenue of $519 million
in respect of alliance revenue.
Tezspire
(Amgen)
In 2012, AstraZeneca entered into a
collaboration agreement with Amgen to
co-develop and co-commercialise five
development stage programmes. Of these,
only AMG 157 (tezepelumab) remains in the
collaboration, in addition to a second active
molecule (AZD8630), which was added in
2021. Manufacturing will be undertaken by
Amgen, while commercialisation activity will be
undertaken either jointly, or by AstraZeneca or
Amgen individually, dependent on the market
and on the agreed terms.
AstraZeneca will recognise 100% of the sales
as principal in all markets other than the US,
as well as 100% of the associated cost of
sales. In markets other than the US, where
AstraZeneca is recognising sales, the share of
gross margin payable to Amgen will be shown
as additional cost of sales. In markets where
Amgen is recognising sales, AstraZeneca will
record its share of gross profit as alliance
revenue within Collaboration Revenue.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
In 2022, AstraZeneca recognised
Collaboration Revenue of $79 million
related to alliance revenue.
Lynparza
/
Koselugo
(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, of which $0.1 billion remains
for 2022. AstraZeneca books all Collaboration
Revenue of
Lynparza
and
Koselugo
; amounts
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 2022, AstraZeneca recognised
Collaboration Revenue totalling $2,510
million, comprising $750 million resulting
from the exercise of options, $1,400 million
in respect of sales-related milestones
and $360 million in respect of regulatory
milestones.
>
In 2022,
Lynparza
received EU and FDA
approvals triggering regulatory milestone
payments of $75 million, $175 million and
$105 million to AstraZeneca.
Tralokinumab (Leo Pharma A/S)
In June 2016, AstraZeneca and Leo Pharma
A/S entered into a licence agreement for the
global development and commercialisation
of tralokinumab.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
Prior to 2022, AstraZeneca recognised
Collaboration Revenue of $115 million in
respect of the upfront consideration.
>
In February 2022, the first commercial sale
in the US was made of tralokinumab by
Leo Pharma, triggering the sales-related
milestone of $70 million to fall due to
AstraZeneca. This has been recognised
as Collaboration Revenue.
>
In August 2022, AstraZeneca recognised
Collaboration Revenue of $40 million in
respect of a sales-related payment following
the first European reimbursable sale.
Gross profit
Reported Gross profit increased by 28%
(CER: 35%) to $31,960 million. Core Gross
profit increased by 28% (CER: 35%) to
$35,763 million. Reported Gross margin grew
by five (CER: five) percentage points to 71.2%.
Core Gross margin grew by six (CER: six)
percentage points to 80.0%. Both Reported
and Core Gross margin reflected positive
product mix effects from Rare Disease and
Oncology medicines, negative mix effects
from sales of
Vaxzevria
and pricing pressure
from China. Reported Gross profit was also
impacted by the unwind of the fair value
adjustment to the Alexion inventories at the
date of acquisition.
Operating expenses
Reported Total Operating expenses
increased by 13% (CER: 18%) in the year
to $28,717 million. Core Total Operating
expenses increased by 17% (CER: 23%)
to $22,860 million.
Reported R&D expense remained flat (CER:
grew by 5%) to $9,762 million and Core R&D
expense increased by 19% (CER: 24%) to
$9,500 million. Both Reported and Core R&D
expense were impacted by the Alexion
Collaboration Revenue
2022
$m
2021
$m
Collaboration Revenue
Enhertu
(Daiichi Sankyo) – alliance revenue¹
519
193
Tezspire
(Amgen) – alliance revenue¹
79
–
Lynparza
/
Koselugo
(MSD) – regulatory milestones
355
–
Lynparza
/
Koselugo
(MSD) – sales-related milestone
–
400
Tralokinumab (Leo Pharma A/S) – milestones
110
–
Vaxzevria
royalty income
76
64
Other royalty income
72
124
Other
142
95
Total Collaboration Revenue
1,353
876
1
Alliance revenue (previously referred to as share of gross profits) comprises income arising from collaborative arrangements,
where AstraZeneca is entitled to a share of gross profits, but does not lead on the commercialisation in the territory and so
does not recognise Product Sales. Alliance revenue is included within Collaboration Revenue.
Reconciliation of Reported profit before tax to EBITDA
2022
$m
2021
$m
Actual
growth
%
CER
growth
%
Reported Profit/(loss) before tax
2,501
(265)
>10x
>10x
Net finance expense
1,251
1,257
(1)
5
Share of after tax losses of joint ventures
and associates
5
64
(92)
(91)
Depreciation, amortisation and impairment
5,480
6,530
(16)
(12)
EBITDA
9,237
7,586
22
33
67
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
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.
For more information regarding the AstraZeneca tax policy,
please refer to our website, www.astrazeneca.com/policies.
Total comprehensive income
Total comprehensive income increased by
$2,445 million to a profit of $2,415 million in
2022. Other comprehensive loss, net of tax
was $878 million, an increase of $733 million.
This loss was primarily driven by Foreign
exchange arising on consolidation losses of
$1,446 million (2021: $483 million) and Tax on
items that will not be reclassified to profit or
loss of $216 million (2021: credit of $105 million)
offset by Remeasurement of the defined
benefit pension liability gains of $1,118 million
(2021: $626 million).
EPS
Reported EPS was $2.12 in the year (2021:
$0.08). Core EPS was $6.66 (2021: $5.29).
Restructuring
PAAGR
In conjunction with the acquisition of Alexion
in 2021, the enlarged Group initiated a
comprehensive 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 and during 2022.
During 2022, the Group has refined the scope
and estimates of the planned activities resulting
in an increase to the expected one-time
restructuring costs over the life of the
programme of $0.5 billion, of which $0.3 billion
are non-cash costs, an increase in capital
investments of $0.1 billion, and an increase
to the anticipated annual run-rate pre-tax
benefits by the end of 2025 of $0.7 billion.
In addition, initial financial estimates for the
Group’s planned upgrade of its Enterprise
Resource Planning IT systems have been
completed, resulting in anticipated incremental
capital investments for software assets of $0.6
billion and one-time restructuring cash costs of
$0.3 billion. This investment builds strongly on
the PAAGR and is expected to be substantially
complete by the end of 2030, realising
significant strategic and compliance-related
benefits from transforming core enterprise-wide
processes, harmonising systems architecture
and enabling future digital capabilities.
Consequently, the total programme activities are
now anticipated to incur one-time restructuring
costs of approximately $2.9 billion, of which
approximately $1.9 billion are cash costs and
$1.0 billion are non-cash costs, and capital
investments of approximately $0.9 billion.
acquisition in 2021, recent late-stage
Oncology trials and the advancement of a
number of mid-stage clinical development
programmes in BioPharmaceuticals as well
as continued investment in technology and
capabilities to enhance R&D productivity.
Reported R&D expense also includes
intangible asset impairment charges of
$95 million; a reduction of $1,369 million
from 2021, which included $1,172 million
related to the impairment of verinurad.
Reported Selling, general and administrative
(SG&A) expense increased by 21% (CER:
26%) to $18,419 million and Core SG&A
expense increased by 15% (CER: 21%) to
$12,826 million. Both Reported and Core
SG&A expense were driven by the Alexion
acquisition and market development activity
on recent launches. Reported SG&A expense
was also impacted by the amortisation of
intangible assets related to the Alexion
acquisition and a $775 million legal settlement
with Chugai.
Other operating income and expense
Reported Other operating income and
expense in the year was down 66% (CER:
65%) to $514 million. Core Other operating
income and expense in the year was down
70% (CER: 69%) to $447 million and includes
royalties and disposal proceeds on small
divestments including the divestment of rights
to
Plendil
. 2021 included $776 million income
from the divestment of AstraZeneca’s share in
Viela Bio and $317 million from the divestment
of rights to
Crestor
.
In accordance with our Collaboration Revenue
definition in the Group Accounting Policies
from page 142 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 profit
Reported Operating profit increased by 256%
(CER: 298%) to $3,757 million in the year. The
Reported Operating margin increased by six
percentage points (CER: seven) to 8.5% of
Total Revenue. Core Operating profit grew by
34% (CER: 42%) in the year to $13,350 million.
Net finance expense
Reported Net finance expense decreased by
1% (CER: increased by 5%) in the year to
$1,251 million. Core Net finance expense
increased by 13% (CER: 18%) in the year to
$974 million. Reported and Core Net finance
expense were impacted by financing costs on
debt for the Alexion transaction, and rising
interest rates. Reported Net finance expense
was impacted by a reduction in the discount
unwind on acquisition-related liabilities.
Profit before tax
Reported Profit before tax increased to
$2,501 million (2021: loss of $265 million).
Core Profit before tax increased by 37%
(CER: 46%) to $12,371 million. Pre-tax
adjustments to arrive at Core Profit before
tax amounted to $9,870 million in 2022
(2021: $9,267 million), comprising $9,593
million adjustments to Operating profit
(2021: $8,872 million) and $277 million to Net
finance expense (2021: $395 million).
EBITDA
EBITDA increased by 22% (CER: 33%) to
$9,237 million in the year (2021: $7,586 million)
and was negatively impacted by the
$3,484 million unwind of inventory fair value
uplift recognised on the acquisition of Alexion.
Taxation
The Reported tax rate for the year was -32%
and the Core tax rate in the year was 17%.
The Reported tax rate included a one-time
favourable net adjustment of $876 million to
deferred taxes arising from an internal
reorganisation to integrate the Alexion
organisation, which took place in the third
quarter. The internal legal entity reorganisation
did not result in any corporate income tax
payable, however it did result in a one-off
deferred tax adjustment of $876 million in the
Income Statement and a further $49 million
credit in Other comprehensive income.
Following the reorganisation, it was necessary
to re-measure certain deferred tax balances
to reflect the tax rates applicable on their
reversal as under the revised structure there is
a change in the income flows to the relevant
territories. This adjustment was excluded from
the Core results. The 2022 Reported and Core
tax rates also benefited from IP incentive
regimes, geographical mix of profits and
favourable adjustments to prior year tax
liabilities in a number of major jurisdictions,
many of which were one-time items.
The income tax paid for the year was $1,623
million. This was $831 million higher than the
Reported tax charge for the year, which
benefited from the aforementioned $876
million adjustment arising from the internal
reorganisation, a net deferred tax credit of
$2,428 million (2021: credit of $1,575 million),
relating to the acquisition of Alexion,
intangible amortisation and impairments and
other deferred tax items, partially offset by
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 153.
68
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
Cash flow and liquidity – for the year
ended 31 December 2022
Net cash generated from operating activities
was $9,808 million (2021: $5,963 million). This
primarily reflects an underlying improvement
in business performance, including the
contribution from Alexion for the full year.
Net investment cash outflows were $2,906
million (2021: $13,987 million).
Investment cash outflows for 2022 include:
>
payments of contingent consideration from
business combinations of $772 million
(2021: $643 million), and
>
$1,480 million (2021: $1,109 million) for the
purchase of intangible assets, including
$1,044 million of regulatory milestones, of
which there is a $860 million payment to
Daiichi Sankyo comprising $535 million in
respect of
Enhertu
and $325 million in
respect of DS-1062.
Run-rate pre-tax benefits, before
reinvestment, are now expected to be
approximately $1.9 billion by the end of
2025. In line with established practice,
restructuring costs will be excluded from
our Core (non-GAAP) financial measures.
During 2022, the Group recorded restructuring
charges of approximately $0.7 billion in relation
to the PAAGR (2021: $1.0 billion), bringing the
cumulative charges to date under this
programme to $1.7 billion. Of these costs,
$0.7 billion are non-cash costs arising primarily
from impairments and accelerated depreciation
on affected assets. As at 31 December 2022,
the PAAGR has realised annual run-rate pre-tax
benefits, before reinvestment, of $0.8 billion.
Other programmes
During 2022, the Group has also continued
to execute the planned changes under 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. This programme is now
substantially complete and has delivered
changes that reflect 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. Costs incurred
in 2022 were insignificant (2021: $108 million).
Legacy programmes include: the 2016 plan
to redeploy investment to key therapy 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). Net
costs for legacy programmes in 2022 were
$45 million (2021: $145 million), which included
gains of $78 million that were recorded on the
sale of assets that had previously been
impaired as a result of the restructuring.
The aggregate restructuring charge
incurred in 2022 across all our restructuring
programmes was $717 million (2021: $1,283
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.
Investment cash inflows include:
>
$447 million from the sale of intangible
assets and assets held for sale, mainly
driven by $270 million from the disposal
of assets relating to Almirall.
Net cash distributions to shareholders were
$4,335 million (2021: $3,827 million), including
proceeds from the issue of share capital of
$29 million (2021: $29 million) less dividends
paid of $4,364 million (2021: $3,856 million).
Summary cash flows
2022
$m
2021
$m
2020
$m
Net debt brought forward at 1 January
(24,322)
(12,110)
(11,904)
Profit/(loss) before tax
2,501
(265)
3,916
Sum of changes in interest, depreciation, amortisation,
impairment and share of after tax losses on joint ventures
and associates
6,736
7,851
4,395
Decrease in working capital and short-term provisions
3,757
2,021
361
Tax paid
(1,623)
(1,743)
(1,562)
Interest paid
(849)
(721)
(733)
Gains on disposal of intangible assets
(104)
(513)
(1,030)
Gains on disposal of joint ventures and associates
–
(776)
–
Fair value movements on contingent consideration arising from
business combinations
82
14
(272)
Non-cash and other movements
(692)
95
(276)
Net cash available from operating activities
9,808
5,963
4,799
Purchase of intangibles (net of disposals)
(1,033)
(522)
(694)
Acquisition of subsidiaries, net of cash acquired
(48)
(9,263)
–
Net borrowings acquired from subsidiaries
–
(2,779)
–
Share-based payments attributable to business combinations
(215)
(211)
–
Payment of contingent consideration from business combinations
(772)
(643)
(822)
Other capital (expenditure)/income (net)
(838)
(569)
399
Investments
(2,906)
(13,987)
(1,117)
Dividends
(4,364)
(3,856)
(3,572)
Proceeds from the issue of share capital
29
29
30
Distributions
(4,335)
(3,827)
(3,542)
Repayment of obligations under leases
(244)
(240)
(207)
Payment of Acerta share purchase liability
(920)
–
–
Other movements
(4)
(121)
(139)
Net debt carried forward at 31 December
(22,923)
(24,322)
(12,110)
69
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Bonds issued in 2022
1
and 2021
Repayment
dates
Face value
of bond
$m
Net book
value of
bond at
31 December
2022
$m
Bonds issued in 2021:
0.3% USD bond
2023
1,400
1,399
0.7% USD bond
2024
1,600
1,598
1.2% USD bond
2026
1,250
1,246
1.75% USD bond
2028
1,250
1,245
0.375% EUR bond
2029
975
846
2.25% USD bond
2031
750
747
3% USD bond
2051
750
735
Total 2022
7,975
7,816
1
No bonds were issued in 2022.
Net debt reconciliation
2022
$m
2021
$m
2020
$m
Cash and cash equivalents
6,166
6,329
7,832
Other investments
1
239
69
160
Cash and investments
6,405
6,398
7,992
Overdraft and short-term borrowings
(350)
(387)
(658)
Lease liabilities
(953)
(987)
(681)
Current instalments of loans and borrowings
(4,964)
(1,273)
(1,536)
Loans due after one year
(22,965)
(28,134)
(17,505)
Loans and borrowings
(29,232)
(30,781)
(20,380)
Net derivative financial instruments
(96)
61
278
Net debt
2
(22,923)
(24,322)
(12,110)
1
Other investments exclude non-current investments, which are included within the balance of $1,066 million
(2021: $1,168 million) in the Consolidated Statement of Financial Position on page 139.
2
The equivalent GAAP measure to Net debt is ‘liabilities arising from financing activities’, which excludes the amounts for
cash and overdrafts, other investments and non-financing derivatives shown above and includes the Acerta Pharma share
purchase liability of $1,646 million (2021: $2,458 million) shown as $867 million in current Other payables and $779 million in
non-current Other payables.
Payments due by period
Less than
1 year
$m
1-3 years
$m
3-5 years
$m
Over
5 years
$m
Total
2022
$m
Total
2021
$m
Bank loans and other
borrowings
1
6,142
5,233
6,858
18,156
36,389
38,545
Lease liabilities
228
194
359
172
953
987
Contracted capital
expenditure
–
–
–
502
502
388
Total
6,370
5,427
7,217
18,830
37,844
39,920
1
Bank loans and other borrowings include interest charges payable in the period, as detailed in Note 28 to the Financial
Statements from page 184.
Bonds
No bonds were issued in 2022.
In 2022, AstraZeneca repaid a $250 million
floating rate bond and a $1,000 million 2.375%
fixed bond, both of which matured in June 2022.
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
EUR 800 million was issued in June 2021 under
the Euro Medium Term Note programme with a
maturity of 2029. In 2021, AstraZeneca repaid a
EUR 500 million 0.250% bond, which matured
in May 2021 and a EUR 750 million 0.875%
bond, which matured in November 2021.
Net debt
At 31 December 2022, gross debt (interest-
bearing loans and borrowings) was $29,232
million (2021: $30,781 million). Of the gross
debt outstanding, $5,542 million is due within
one year (2021: $1,893 million). Net debt at
31 December 2022 was $22,923 million,
(2021: $24,322 million).
At 31 December 2022, Cash and cash
equivalents and liquid investments totalled
$6,405 million (2021: $6,398 million).
The Group has committed bank facilities of
$4,875 million available to manage liquidity.
The commitments mature in April 2026.
All facilities contain no financial covenants
and were undrawn at 31 December 2022. The
Group regularly monitors the credit standing
of the banks providing the facilities 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.
Financial position – 31 December 2022
All data in this section are on a Reported basis.
Business combinations
On 16 November 2022, AstraZeneca
completed the acquisition of 100% of the
issued shares of LogicBio Therapeutics, Inc.
(LogicBio) based in Lexington, MA, US.
LogicBio is a clinical-stage genetic medicine
company pioneering genome editing and
gene delivery platforms to address rare and
serious diseases from infancy through
adulthood. The total consideration was
$72 million. $68 million cash was paid on
the completion date, with $4 million of
outstanding options, which will be settled in
cash, recorded in current Trade and other
payables. LogicBio’s results have been
consolidated into the Group’s results from
16 November 2022.
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 acquisitions have been accounted for as
business combinations using the acquisition
method of accounting in accordance with
IFRS 3 ‘Business Combinations’.
For full details of the acquisition, see Note 27 from
page 182.
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 142.
We also have taxation contingencies. These
are described in the Taxation section in the
Critical accounting policies and estimates
section from page 145 and in Note 30 to the
Financial Statements from page 192.
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.
70
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
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 192. 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, failure to obtain regulatory
approval, unfavourable data from key studies,
adverse reactions to the product candidate
or indications of other safety concerns, they
may be replaced by potential payments under
new collaborations.
Investments, divestments and capital
expenditure
We have completed more than 80 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 67 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, its 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.
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
potentially 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 EUR 62.6 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.
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.
71
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Capitalisation and shareholder return
Capitalisation
The total number of shares in issue at
31 December 2022 was 1,550 million
(2021: 1,549 million).
Shareholders’ equity decreased by $2,231
million to $37,037 million at the year end.
Non-controlling interests were $21 million
(2021: $19 million).
Dividend and share repurchases
The Board has recommended a second
interim dividend of $1.97 (162.8 pence, 20.69
SEK) to be paid on 27 March 2023. This brings
the full-year dividend to $2.90 (239.2 pence,
30.18 SEK). Against Reported EPS, the Group
had a dividend cover ratio of 0.74:1 in 2022
(2021: 0.03:1). Against Core Earnings per
share, the Group had a dividend cover ratio of
2.32:1 in 2022 (2021: 1.84:1). 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.
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 2022 , the Profit
and loss account reserve of $7,458 million
(2021: $11,563 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 2022 all (2021: all) of the
Company’s profit and loss reserves were
available for distribution.
For further information regarding Dividends, see Note 25
on page 181.
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:
>
Science and Innovation
>
Growth and Therapy Area Leadership
>
People and Sustainability.
For more information, see Our Strategy and Key
Performance Indicators from page 14.
Full year 2023: additional commentary
Total Revenue is expected to increase by
a low-to-mid single-digit percentage.
Excluding COVID-19 medicines, Total
Revenue is expected to increase by a low
double-digit percentage. Core EPS is
expected to increase by a high single-digit
to a low double-digit percentage.
While challenging to forecast, Total Revenue
from COVID-19 medicines is expected to
decline significantly in 2023, with minimal
revenue from
Vaxzevria
and substantially
lower revenue from COVID-19 antibodies,
including anticipated revenues from
AZD3152, the COVID-19 antibody currently
in development. Total Revenue from China
is expected to return to growth and increase
by a low single-digit percentage in 2023.
Collaboration Revenue and Other operating
income are both expected to increase, driven
by continued growth of our partnered
medicines, success-based milestones,
and certain anticipated transactions. Core
Operating expenses are expected to increase
by a low-to-mid single-digit percentage,
driven by investment in recent launches and
the ungating of new trials. The Core tax rate
is expected to be between 18-22%.
The Company is unable to provide guidance
on a Reported basis because it cannot reliably
forecast material elements of the Reported
result, including any fair value adjustments
arising on acquisition-related liabilities,
intangible asset impairment charges and
legal settlement provisions.
Currency impact
If foreign exchange rates for February to
December 2023 were to remain at the average
rates seen in January 2023, it is anticipated
that 2023 Total Revenue and Core EPS would
both incur a low single-digit adverse impact
versus the performance at CER.
This commentary represents management’s
current estimates and is subject to change.
See the Cautionary statement regarding
forward-looking statements on page 224.
72
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
Financial risk management
Financial risk management policies
Insurance
Our risk management processes are
described in Risk Overview from page 56.
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.
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 184 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.
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. The
accounting policies employed are set out in
the Group Accounting Policies section in
the Financial Statements from page 142.
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 142:
>
revenue recognition – see Revenue
Accounting Policy from page 142 and Note
1 on page 150
>
expensing of internal development
expenses – see Research and Development
Policy from page 144
>
impairment review of Intangible assets –
see Note 10 from page 161
>
useful economic life of Intangible assets –
see Research and development Policy from
page 144
>
business combinations and goodwill –
see Business combinations and goodwill
Policy on page 146 and Note 27 from page
182
>
litigation liabilities – see Litigation and
Environmental liabilities within Note 30 from
page 192
>
operating segments – see Note 6 from
page 157
>
employee benefits – see Note 22 from
page 173
>
taxation – see Tax in Note 30 on page 192.
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.
73
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Gross to Net Product Sales
US pharmaceuticals
2022
$m
2021
$m
2020
$m
Gross Product Sales
32,100
23,970
19,255
Chargebacks
(2,401)
(2,095)
(2,464)
Regulatory – Medicaid and state programmes
(1,879)
(1,488)
(1,088)
Contractual – Managed care and Medicare
(8,821)
(7,121)
(5,690)
Cash and other discounts
(359)
(312)
(281)
Customer returns
(132)
(14)
(198)
US Branded Pharmaceutical Fee
(150)
(57)
(47)
Other
(1,104)
(883)
(849)
Net Product Sales
17,254
12,000
8,638
Movements in accruals
US pharmaceuticals
Brought
forward at
1 January
2022
$m
Provision for
current year
$m
Adjustment in
respect of
prior years
$m
Returns and
payments
$m
Carried forward
at 31 December
2022
$m
Chargebacks
181
2,103
(13)
(2,038)
233
Regulatory – Medicaid and state programmes
510
1,953
(79)
(1,613)
771
Contractual – Managed care and Medicare
2,031
8,971
(141)
(8,435)
2,426
Cash and other discounts
21
359
–
(353)
27
Customer returns
196
112
–
(103)
205
US Branded Pharmaceutical Fee
79
138
16
(96)
137
Other
154
1,036
–
(1,028)
162
Total
3,172
14,672
(217)
(13,666)
3,961
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)
(85)
79
Other
128
4
882
–
(860)
154
Total
3,126
99
12,154
(182)
(12,025)
3,172
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
(127)
(5,671)
1,937
Cash and other discounts
19
289
–
(288)
20
Customer returns
180
225
–
(152)
253
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
74
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Financial Review
continued
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.
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 $14,846
million in 2022 (2021: $11,970 million) with
the increase driven by our US Product Sales.
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 142.
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.
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 (which for 2022 now includes
our Rare Disease therapy area) 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.
75
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
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 51.
AstraZeneca recognises patients as
people first and puts them at the heart of
what we do. Information on the importance
of patients to the business can be found
on pages 16 and 86, with further information
throughout the Business Review.
The consideration and impact of the Group’s
operations on the environment and how the
Group has considered other factors, such as
communities and suppliers, can be found
throughout People and Sustainability from
page 44.
Details of how the Board operates and
matters considered by the Board are set
out in the Corporate Governance Report
from page 89. Examples of how Directors
discharged their duties and considered
stakeholders when making Principal
Decisions during 2022 are set out on pages
89 and 90. Principal Decisions are
decisions and discussions which are
material or strategic to the Group, but also
those that are significant to any of our
stakeholder groups.
Section 172(1) statement
The Board is required to promote the
success of the Company for the shareholders
and wider stakeholders who interact with
and are impacted by our business.
Throughout the year the Directors have had
regard to the factors set out in section 172(1)
(a)-(f), 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 significant for these
stakeholders, and a number of actions were
taken as a result of this engagement. The
interaction and impact of these interactions
are set out in the Connecting with our
stakeholders section on pages 86 to 88 and
throughout the Strategic Report.
We are committed to being a great place to
work for the global workforce. Details on
engagement with employees can be found
on pages 45 to 47 of the Business Review,
page 99 of the Audit Committee Report and
page 123 to 125 of the Remuneration
Committee 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:
>
Science Can…
>
AstraZeneca at a Glance
>
Chair’s Statement
>
Chief Executive Officer’s Review
>
Healthcare in a Changing World
>
Our Purpose, Values and Business Model
>
Our Strategy and Key Performance Indicators
>
Therapy Area Review
>
Business Review
>
EU Taxonomy Disclosure
>
Task Force on Climate-related Financial
Disclosures Summary Statement
>
Risk Overview
>
Financial Review
and has been approved and signed on behalf
of the Board.
A C N Kemp
Company Secretary
9 February 2023
76
AstraZeneca Annual Report & Form 20-F Information 2022
Strategic Report
Contents
Chair’s Introduction
78
Corporate Governance Overview
79
Board of Directors
80
Senior Executive Team (SET)
82
Corporate Governance Report
83
Nomination and Governance
Committee Report
92
Science Committee Report
94
Sustainability Committee Report
95
Audit Committee Report
96
Directors’ Remuneration Report
104
77
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate
Governance
Good corporate governance is one of the
foundations of any well-run, successful and
enduring business. In my time as a Director
and Chair of the AstraZeneca Board, I have
been fortunate to work with excellent Board
colleagues and a great management team to
ensure AstraZeneca is run in a way most likely
to promote its long-term sustainable success.
Corporate governance
One of the roles of the Nomination and
Governance Committee, which I have chaired,
is to review and provide advice to the full
Board on matters of corporate governance.
During my time as Chair, there have been
a number of changes to the Listing Rules
designed to improve the way in which we
operate. 2022 was no different in that
respect as we considered proposed audit
and governance reforms in the UK.
Given AstraZeneca’s focus on inclusion and
diversity as part of its great place to work
efforts, I am pleased that we are able to
report this year, earlier than strictly required,
more information about diversity and inclusion
on our Board and SET. While there is more we
can and will do in this regard, our achievements
thus far were noted externally during 2022
as we were named the highest-ranking
pharmaceutical company in the FTSE 100
for representation of women on the combined
executive committee and their direct reports
in the FTSE Women Leaders Review.
Our new Chair
When I stand down from the Board at the
conclusion of this year’s AGM, I will be
handing over the role of Chair to Michel
Demaré. Mr Demaré’s appointment was
announced after a thorough search led
by Philip Broadley in his role as Senior
independent Non-Executive Director with
the whole Board fully engaged throughout.
I am delighted that Mr Demaré will be succeeding
me as Chair. He is an internationally-respected
leader with extensive experience in strategy,
planning, execution, governance and corporate
stewardship, and a proven track record
leading multinational companies, as well as
experience of the pharmaceutical industry
gained at Baxter and as a member
of the AstraZeneca Board. Mr Demaré and I
are already undertaking a comprehensive
handover process ahead of the AGM.
Board Committees
I would like to thank Mr Broadley for leading
the recruitment process for the Chair so well,
in addition to his longstanding role as Chair
of the Audit Committee and the considerable
responsibility that entails. My thanks also
to Nazneen Rahman for her continued
chairing of the Science and Sustainability
Committees, two important aspects of our
work that continue to be at the heart of
many Board discussions.
Following the appointment of Mr Demaré
as Board Chair-designate, he stood down
as Chair of the Remuneration Committee.
I am grateful to Sheri McCoy who became
Remuneration Committee Chair on 1 December
2022, to continue the good work leading our
scrutiny of this important area. Ms McCoy has
in-depth knowledge of AstraZeneca’s
remuneration arrangements, having been a
member of that Committee since July 2018.
She also became a member of the Nomination
and Governance Committee in December 2022.
Board members
Each of the Board’s Committees performs
an important function but they do so on
behalf of the full Board. It is only in the
full Board where the complete range of
skills and experience, as well as diverse
backgrounds, of Directors, both Executive
and Non-Executive, can be seen at work
in overseeing the delivery of our strategy,
generation of shareholder value and
contribution to wider society.
I am grateful to all of AstraZeneca’s Directors,
past and present for all they have done to
promote our success and I look forward to
seeing the continued development and future
success of AstraZeneca.
Leif Johansson
Chair
“Built on strong foundations
of good corporate governance,
the Board is well-placed
to oversee our future
development and success.”
“I am grateful to all
of AstraZeneca’s
Directors, past
and present, for all
they have done to
promote our success.”
78
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Chair’s
Introduction
Governance structure
Attendance in 2022
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
five 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 finally approved.
Audit
Committee
Report from page 96
Nomination and
Governance Committee
Report from page 92
Remuneration
Committee
Report from page 104
Science
Committee
Report from page 94
Sustainability
Committee
Report from page 95
The Board has delegated some of its powers to the CEO and operates with the assistance of five Committees:
Board
Corporate Governance Report from page 77
Board Committee membership and meeting attendance in 2022
Board or Committee Chair
Director
Appointment
date
1
Board
2
Audit
Committee
Remuneration
Committee
Nomination and
Governance
Committee
Science
Committee
Sustainability
Committee
Non-Executive Chair and Executive Directors
Leif Johansson
26/04/2012
6/6
6/6
7/7
Pascal Soriot
01/10/2012
6/6
Aradhana Sarin
01/08/2021
6/6
Non-Executive Directors
Euan Ashley
01/10/2020
6/6
7/8
Philip Broadley
27/04/2017
6/6
7/7
6/6
7/7
Michel Demaré
01/09/2019
6/6
7/7
5/5
3
3/3
4
Deborah DiSanzo
01/12/2017
6/6
7/7
Diana Layfield
01/11/2020
6/6
8/8
Sheri McCoy
6
01/10/2017
6/6
7/7
5/6
5
2/2
Tony Mok
01/01/2019
6/6
8/8
Nazneen Rahman
01/06/2017
6/6
7/7
8/8
2/2
Andreas Rummelt
01/08/2021
6/6
2/2
Marcus Wallenberg
05/04/1999
6/6
8/8
2/2
1
Date of first appointment or election to the Board.
2
Two Board meetings in 2022 were held by videoconference and four were held in
person at the Company’s sites in London, UK, Cambridge, UK and Boston, MA, US.
3
Michel Demaré recused himself from the Remuneration Committee meeting at
which the fee for the Chair of the Board was reviewed.
4
Michel Demaré recused himself from Nomination and Governance Committee meetings
at which candidates for succession to the role of Chair of the Board were discussed.
5
Sheri McCoy became Chair of the Remuneration Committee on 1 December 2022.
She replaced Michel Demaré, who stepped down as Chair effective 1 December 2022.
6
Sheri McCoy was appointed as a member of the Nomination and Governance Committee
on 1 December 2022.
79
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Overview
Corporate Governance
Overview
<3 years
3
Euan Ashley
Diana Layfield
Andreas Rummelt
3-9 years
6
Philip Broadley
Michel Demaré
Deborah DiSanzo
Sheri McCoy
Tony Mok
Nazneen Rahman
>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 2022
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). Leif is also a
member of the European Round Table
of Industrialists (Chairman 2009-2014),
the Council of Advisors, Boao Forum
for Asia, the board of the Knut and
Alice Wallenberg Foundation and the
Nomination Committee of Investor AB.
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. In July 2022,
AstraZeneca announced that Michel
will succeed Leif Johansson as
Non-Executive Chair of the Board at
the conclusion of the Company’s AGM
in April 2023.
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. Pascal received a
British knighthood for services to UK
life sciences and leadership in the
global response to the COVID-19
pandemic in the Queen’s Birthday
Honours 2022.
Aradhana Sarin
Executive Director and CFO
Skills and experience:
Prior to her
current role, Aradhana was CFO for
Alexion, joining in 2017 and being
responsible for driving strategic
growth, financial performance and
business development. She brings
operational experience in biopharma
plus more than 20 years of professional
experience at global financial institutions
and extensive knowledge of global
healthcare systems. Before joining
Alexion, Aradhana was Managing
Director of Healthcare Corporate and
Investment Banking at Citi Global
Banking. 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.
Other appointments:
Aradhana is on the
Board of Governors of the American
Red Cross.
Philip Broadley
A
R
NG
Senior independent Non-Executive Director
Skills and experience:
Philip was
previously Group Finance Director of
Prudential plc for eight years and Old
Mutual plc for six years. He chaired the
Group Audit Committee of Legal &
General for six years. He has served as
Chairman of the 100 Group of Finance
Directors. 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.
Other appointments:
Philip is Senior
Independent Director of Legal &
General Group plc. 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
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.
80
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Board of Directors
as at 31 December 2022
Nazneen Rahman
Sc
Su
NG
Non-Executive Director
Skills and experience:
Nazneen has
significant scientific, medical and data
analysis experience in rare disease,
cancer genomics and sustainable
healthcare. She qualified in medicine
from Oxford University, is an
accredited specialist in medical
genetics and has a PhD in molecular
genetics. Nazneen was Professor of
Genetics at the Institute of Cancer
Research, Head of Cancer Genetics at
the Royal Marsden NHS Foundation
Trust, and founder and Director of the
TGLclinical Genetic Testing Laboratory
until 2018. In 2020, Nazneen founded
YewMaker to build science-based
sustainable healthcare solutions.
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 CEO
of YewMaker and Director of the
Sustainable Medicines Partnership.
Deborah DiSanzo
A
Non-Executive Director
Skills and experience:
Deborah has
more than 30 years’ experience at
the intersection of healthcare and
technology. She is currently President
of Best Buy Health for Best Buy Co.
Inc. Best Buy Health provides digital
health solutions in active aging, 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 Layfield
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 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 General
Manager, International Search at
Google, leading the development of
Google Search internationally,
including product and engineering.
She was also President, EMEA
Partnerships and Vice-President, ‘Next
Billion Users’. She is the Chair of British
International Investment plc (BII), the
UK’s development finance institution,
and a Council Member of the London
School of Hygiene & Tropical Medicine.
Sheri McCoy
R
A
Su
NG
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 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 BSc in Textile
Chemistry from the University of
Massachusetts, an MSc in Chemical
Engineering from Princeton University
and an MBA from Rutgers University.
Other appointments:
Sheri serves on
the boards of Stryker, Kimberly-Clark,
and Laronde. She is also an industrial
adviser for EQT, and in connection
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 Chair
of Skandinaviska Enskilda Banken AB,
Saab AB and FAM AB. He is Vice-Chair
of Investor AB and Vice-Chair of EQT
AB. Marcus is also Chair of the Royal
Swedish Academy of Engineering
Sciences and a Board member of 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 a past Board member
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 the
Nomination Committee) and a member
of the Scientific Advisory Board of
Prenetics Global Limited.
81
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
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
Jeff Pott1
Chief Compliance Officer, Chief Human
Resources Officer and General Counsel
Aradhana Sarin
CFO
David Fredrickson
Executive Vice-President,
Oncology Business Unit
Iskra Reic
Executive Vice-President,
Vaccines & Immune Therapies
Pam Cheng
1
Executive Vice-President,
Operations, Information Technology and
Sustainability
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
CEO, Alexion and Chief Strategy Officer,
AstraZeneca
1
Responsibilities revised following the retirement of Katarina Ageborg on 9 January 2023.
Katarina Ageborg
Executive Vice-President,
Sustainability and Chief Compliance
Officer; President AstraZeneca AB Sweden
Throughout 2022, Katarina was Executive
Vice-President, Sustainability and Chief
Compliance Officer; President AstraZeneca
AB Sweden. She held that role until
9 January 2023 when she retired.
82
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Senior Executive Team (SET)
as at 31 December 2022
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 2022. 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 85.
Additional information to Swedish
shareholders
The Company is incorporated under the laws
of England and Wales and its shares are listed
on the London Stock Exchange, Nasdaq
Stockholm and the Nasdaq Global Select
Market. In accordance with the Company’s
listing on the London Stock Exchange, it applies
the principles set out in the Code. As a result
of its listing on Nasdaq Stockholm and in
accordance with Swedish regulations, the
Company is required to disclose the material
ways in which its corporate governance
practices differ from those applied by Swedish
companies following the Swedish Code on
Corporate Governance (the Swedish Code).
The Company has made available on its website
www.astrazeneca.com/investor-relations/
corporate-governance.html a summary of the
material ways in which the corporate
governance practices applied by the Company
differ from the principles of the Swedish Code.
In addition, as required by Swedish regulations,
the Company has also made available on its
website a general description of the main
differences in minority shareholders’ rights
between the Company’s place of domicile
(the UK) and Sweden, where the Company’s
shares are also admitted to trading.
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 79. 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 12.
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 Group Internal Audit 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 96 and our Code of Ethics on page 51.
The Board has a formal system in place for
Directors to declare a conflict, or potential
conflict, of interest.
For more information, see Conflicts of interest on
page 213.
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 86 to 90 and
throughout the Strategic Report. Our section 172(1)
statement is set out on page 76.
E. Workforce policies
Based on our Values, expected behaviours
and key policy principles, the Code of Ethics
empowers employees to make decisions in
the best interests of the Group, the Company,
society and the patients we serve. It is applicable
to the Group worldwide, including the Board.
For more information about our Code of Ethics,
see page 51.
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. In February 2022, it was announced
that Mr Johansson intends to retire from the
Board at the conclusion of the 2023 AGM.
Further information about the Chair’s annual evaluation
is included on page 91 and information about the Chair’s
tenure is included on page 85.
G. Board composition, independence and
division of responsibilities
The composition of the Board is set out on
pages 80 and 81. The majority of the Board
consists of independent Non-Executive
Directors. Directors’ independence is
considered annually by the Board, as
described on page 85.
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 79.
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.
Corporate Governance Report / Compliance with the UK Corporate Governance Code
83
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Report
Compliance with the UK
Corporate Governance Code
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. The Chair and
individual Board members ensure that Board
members’ time commitment to the Company is
sufficient to fulfil their duties as Directors and
fully discharge their obligations to shareholders,
particularly in the case of the Chairs of Board
Committees. For the Chair of the Board,
generally, as a basic commitment, it is expected
that they would need to devote about 40% of
their time or the equivalent of not less than 90
days per annum in the fulfilment of their duties.
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. 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 91.
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 2022 Board evaluation set
out on page 91 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 review 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 92.
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 92.
L. Board evaluation
In 2022, 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 91.
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 99 and Note 31 to the
Financial Statements on page 198.
The Audit Committee also reviews the
independence and effectiveness of Group
Internal Audit.
For more information, see page 98.
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 102.
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 2022, 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 56.
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 104.
84
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Corporate Governance Report
Compliance with the UK
Corporate Governance Code
continued
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 104.
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 104.
Further information on Directors’
appointments
Chair of the Board
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 had served as a Director for more than
nine years, the Board believed it would be in
the best interests of shareholders for
Mr Johansson to seek re-election at the 2022
AGM and continue to serve as Chair for one
further year, to facilitate succession planning
and the transition to a new Chair.
During 2022, it was announced that Mr
Johansson would be retiring from the Board
at the conclusion of the Company’s AGM in
2023, and that Michel Demaré had been
appointed as the Chair-designate of the
Board. Mr Demaré’s appointment will take
effect immediately on Mr Johansson’s
retirement. Further information on the Chair’s
succession is included in the Nomination
and Governance Committee Report, from
page 92.
Non-Executive Directors’ independence
In December 2022, the Board considered the
independence of the Non-Executive Directors,
other than the Chair of the Board, for the
purposes of the Code and the Nasdaq
Listing Rules. Taking into account the
recommendations set out in the 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 8 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.
Risk management and controls
Global Compliance and Group Internal
Audit (GIA)
Global Compliance helps the Group achieve
its priorities and do business the right way.
It takes a global approach that addresses
key risk areas, including those related to
third parties and anti-bribery/anti-corruption.
Its work helps us to reinforce compliant
behaviours through our Code of Ethics,
policies, training, advice and guidance. We
also conduct risk assessment activities and
foster a culture where individuals can raise
concerns.
We take alleged compliance breaches or
concerns seriously. We investigate and take
appropriate disciplinary and remediation
action to address and prevent reoccurrence
through internal functions and external
advisers. Depending on breach severity, the
Group may need to disclose and/or report
the incident to a regulatory or government
authority.
Global Compliance provides assurance
insights to the Audit Committee on
compliance matters. GIA carries out a range
of audits and periodically reviews the
assurance activities of other Group functions.
The results from these activities are reported
to the Audit Committee. Global Compliance
and GIA share outcomes and coordinate
reporting on compliance matters throughout
the organisation. GIA 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 operational
control framework of the Group. The scope
of GIA’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 GIA 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, GIA 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.
85
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Report / Compliance with the UK Corporate Governance Code
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 2022.
Patients and patient networks
Payers
Overview
Significance of the
stakeholder to the
business
Patients are at the heart of what
we do. Our stakeholders include
individual patients, caregivers
and patient advocacy
organisations. We listen to their
experiences, embedding these
insights into every aspect of our
work and partner with them to
enable access to high quality,
resilient healthcare systems
ensuring that the medicines and
services we develop have the
greatest impact on their lives.
AstraZeneca works closely
with payers, which includes
governments and medical
insurance companies, to
understand the impact of
pricing medicines on public
and private budgets.
Interests
Issues and factors
which are most
important to the
stakeholder group
>
Diverse insights gathered
and incorporated throughout
the drug development
process to minimise patient
burden and measure
outcomes they care
about most.
>
Ensuring healthcare systems
are designed and delivered
with the patient in mind.
>
Providing transparent,
accessible information.
>
Ensuring the safety, efficacy
and affordable accessibility
of our medicines.
>
Sustainable access to safe
and effective innovative
medicines.
>
Pricing of medicines,
including breakthrough
therapies and impact on
public budgets.
>
Containing reimbursement
expenditure.
>
Attracting business
investment.
>
Investing in research and
scientific collaborations.
Engagement
Examples of
engagement
in 2022
>
Increased number of diverse
patient engagements
throughout drug
development and
commercialisation.
>
Expanded Patient
Partnership Programmes into
diverse patient populations
and new geographies and
therapy areas.
>
Involved patients and
caregivers in co-creation of
multiple programmes.
>
Expanded patient support
and affordability
programmes.
>
Collaborated with patient
advocacy organisations on
key healthcare system
transformation projects,
enabling access to improved
healthcare and medicines
across the globe.
>
Engaged governments and
policymakers to increase
understanding of the
AstraZeneca business
model, to support investment
in life sciences and to
improve access to new
medicines.
>
Engaged in discussions on
evolving the current
reimbursement system for
medicines in the US.
>
Hosted site visits and tours at
our manufacturing and R&D
facilities for international and
local politicians.
Outcomes
Actions
which resulted
>
Delivery of impactful and
actionable insight to drive
patient-focused drug
development and
commercialisation.
>
Increased patient support
through multiple programmes
across therapy areas.
>
Driven global consensus and
brought about tangible
healthcare system changes
at a country level.
>
Established working
relationships with key
government stakeholders.
>
Regular meetings and events
organised to increase
understanding about how
governments can better
support life sciences
investment and improve
patient access to new
medicines.
86
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Corporate Governance
Corporate Governance Report
Connecting with our stakeholders
Investor community
Healthcare professionals
Academic and R&D partners
Commercial collaborators
and partners
Overview
Significance of the
stakeholder to the
business
The Board and management
maintain regular and
constructive dialogue with
investors to communicate our
strategy. We provide objective
information about performance
to enable investors to put a fair
value on the Company and
ensure our continued access
to capital.
Healthcare professionals (HCPs)
are the interface with patients.
They provide 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 and biotech partners
globally to access the best
science, to stimulate innovation
and to deliver life-changing
medicines to patients.
Partnering is an increasingly
important part of our business.
By combining forces,
AstraZeneca and our partners
can accelerate innovative
science to bring life-changing
medicines to patients.
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 medical needs.
>
Education and information on
advances in medical science.
>
Accurate and balanced
information on licensed
medicines, including
up-to-date safety data.
>
Uninterrupted supply of
quality medicines.
>
Ethical and transparent
interactions with industry.
AstraZeneca had more than
2,000 active collaborations
ongoing in 2022:
>
To advance innovative
technology and science.
>
To address key scientific
challenges.
>
To access the next
generation of science
leaders.
>
Shared vision and values.
>
Development of innovative
medicines and improving
access to them.
>
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 2022
>
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.
>
Engaged in HCP educational
events, advisory boards and
in clinical trials.
>
Responded to more than
199,000 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.
>
Openly collaborated with
compound molecules and
data for academic research;
more than 35 ongoing or
completed clinical trials and
more than 650 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 to
enhance collaboration and
create a ‘One Team’ mentality
across organisations.
>
Joint responsibility for
deliverables and outcomes
across functions at all levels.
>
Multiple discussions with
regulators, policy makers,
patient groups and clinicians,
to inform development and
commercial strategy to best
meet patient needs.
Outcomes
Actions
which resulted
>
Maintained access to senior
and next-level/operational
management, including
increased virtual
engagement.
>
Continued to streamline
external-facing materials to
provide increased
transparency, following
discussion with shareholders.
>
Increased focus on ESG
matters within results
announcements and
shareholder engagements.
>
Advisory boards informed
clinical research and product
strategy.
>
Clinical studies have led to
new products.
>
Exchange of information
supported HCP 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.
>
Multiple late-stage trials
initiated across multiple
disease/patient types.
>
Accelerated launch of new
medicines in unique areas.
>
Greater collaboration and
relationships with industry
partners and stakeholders.
87
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Report / Connecting with our stakeholders
In addition to the principal stakeholders described on pages 86 and 87, 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
Successfully acquiring, retaining and developing
a talented and diverse workforce is critical to
achieving our bold ambition. Our employees are a
key part of our strategy and we are committed to
being a great place to work. More information is
included on pages 45 and 46.
Health authorities
We engage regulators globally about the
manufacture, development, review, approval and
marketing of our products.
Governments
AstraZeneca partners closely with governments
around the world to promote health, support
healthcare research and innovation, facilitate
equitable access to innovative care solutions
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 218 million doses were delivered through
the COVAX programme in 2022.
Media
An active and constructive relationship with the
media is important to build trust with 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 reputation of
the organisation.
Suppliers and third-party providers
AstraZeneca relies on a broad network of external
suppliers to support the enterprise-wide spend in
producing and delivering medicines to patients.
Assuring supply of quality product and services is
a key focal point for procurement as well as
managing risk and the alignment of sustainability
goals between AstraZeneca and the third-party
network.
For more information on how the Management and the
Board have considered Modern Slavery, see the Audit
Committee report from page 96, Human Rights on
page 46 and AstraZeneca’s Modern Slavery Act
Statement, which is available on our website,
www.astrazeneca.com.
How the Board engages with stakeholders
The stakeholder table on pages 86 and 87
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 2022 is set out on the following page.
Full Board/Other
>
During 2022, a number of Directors,
including the Chair, the CEO and the CFO,
met investors at roadshows and in
one-on-one meetings.
>
The Senior independent Non-Executive
Director met some of the Company’s
largest shareholders during the
succession process for the role of Chair of
the Board to brief them about the process
and listen to their views.
>
The 2022 AGM was held in person in
London, which allowed shareholders to
interact with, and ask questions of, the
Board. All Directors were present at
the meeting.
>
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 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 COP27 event,
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 held one of its scheduled
meetings during 2022 at Alexion’s site in
Boston, MA, US. During the two-day
meeting, the Board met Alexion
employees, including scientists and
commercial teams.
>
The CEO attended a number of scientific
conferences in 2022 relevant to the
Company’s main areas of R&D and
commercial activity.
>
Members of the Audit Committee visited
various AstraZeneca and Alexion sites in
the UK, US and Ireland. During these
meetings the Non-Executive Directors
met employees and hosted ‘townhall’
meetings, providing an opportunity for
the Directors to engage with and hear the
views of the workforce. For further
information, see the Audit Committee
Report from page 96.
>
Members of the Sustainability Committee
visited the Macclesfield, UK site where
they met employees and co-hosted a
‘townhall’ meeting. In addition,
throughout the year the Committee had
virtual coffee sessions with small groups
of employees working on sustainability
projects. For more information, see the
Sustainability Committee Report from
page 95.
>
Members of the Science Committee
visited the AstraZeneca site in Waltham,
MA, US and attended poster sessions
with scientists from AstraZeneca and
Alexion. This was followed by lunch with
the Directors, with each Science
Committee member hosting a table of
AstraZeneca and Alexion scientists,
including early-career rising stars
nominated by functions.
>
The Chair of the Remuneration Committee
engaged with investors who hold
approximately 50% of the Company’s
issued share capital and with three proxy
advisers through written correspondence
and meetings. These engagements
provided an insight into how investors
viewed the implementation of the
Directors’ Remuneration Policy and
were considered by the Remuneration
Committee, as set out in the Directors’
Remuneration Report from page 104.
>
The CEO, CFO and the Chair, regularly
engaged with employees through in-person
and online events, including ‘Ask Me
Anything’ and ‘Fireside Chat’ sessions.
Employees had the opportunity to ask
questions in advance or during sessions.
>
The Board received briefing sessions on
various global pricing matters, including
the potential impact of the US Inflation
Reduction Act. These briefings included
‘teach-ins’ from management, which
provided information on pricing reforms,
as well as an overview of management’s
engagement with various stakeholders
and an understanding of the stakeholders’
interests.
88
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Corporate Governance Report
Connecting with our stakeholders
continued
Principal Decisions in 2022
Appointment of Michel Demaré as
Chair-designate
In July 2022, the Board appointed Michel
Demaré as Chair-designate. Mr Demaré
will succeed Mr Johansson as Chair upon
Mr Johansson’s retirement from the Board
at the conclusion of the Company’s AGM
in April 2023.
For more information, see the Nomination and
Governance Committee Report from page 92.
The Board considered:
investors; the
long-term success of the Company; and
maintaining high standards of business
conduct.
How the Board had regard to these matters:
>
Engaged with a number of AstraZeneca’s
largest shareholders for them to hear about
the search process and to understand
their views.
>
Considered the Board’s diversity, time
commitments of the candidates and other
relevant UK Corporate Governance Code
provisions, as well as other Board-level
succession planning considerations.
>
Reviewed the experience of potential
candidates and met those who were
shortlisted to evaluate which individuals had
the skills required to support management
in the continued delivery of value to
shareholders, life-changing medicines to
patients, while also maintaining high
standards of business conduct.
>
Considered the continuity and reassurance
the appointment provided to employees,
management and investors and had regard
to the likely consequences of the decision
in the long-term and the interests of those
most affected.
>
Agreed that given Mr Demaré’s proven track
record leading multinational companies and
his extensive business, including
pharmaceutical, governance and leadership
experience, he was the best candidate for
the role.
Endorsement of the Company’s climate
strategy
In July 2022, the Board reviewed and
endorsed the Company’s science-based
climate strategy and the necessary steps
to achieve its commitment.
For more information, see the TCFD Summary Statement
from page 53 and Sustainability from page 48.
The Board considered:
investors; the
Company’s relationship with suppliers; the
impact of the Company’s operations on
communities and the environment; and the
long-term success of the Company.
How the Board had regard for these matters:
>
Engaged with management, and the
Sustainability Committee, to understand
the Company’s overall strategic vision with
regard to sustainability and the various
initiatives underway.
>
Reviewed the Company’s net-zero targets,
as verified by the Science Based Targets
initiative.
>
Considered the necessary collaboration
with partners and suppliers.
>
Considered how the Company would
achieve the ambitious targets, including the
need for and nature of compensatory steps
to achieve the carbon negative by 2030
target, and the effect of initiatives on costs.
>
Discussed the need for verifiable and
auditable data so the Company and
investors could understand performance
against the targets.
API commercialisation facility
investment in Dublin
In September 2022, the Board approved
investment decisions relating to the Company’s
next-generation active pharmaceutical
ingredient (API) manufacturing facility for small
molecules at College Park, Dublin.
The Board considered:
investors; the
Company’s relationship with suppliers; the
impact of the Company’s operations on
communities and the environment; patients;
the long-term success of the Company; and
employees.
How the Board had regard to these matters:
>
Reviewed the Group’s future needs, and
considered how the facility would allow for
late-stage development and early
commercial supply, adoption of state-of-the
art process technology and digital
innovation that was designed to meet the
needs of the pipeline with speed and agility,
to help deliver life-changing medicines to
patients quicker.
>
Recognised that investment would be
required to ensure that AstraZeneca’s
supply network continued to be fit for the
future, to ensure the long-term success of
the Company.
>
Understood the importance of continuing to
introduce more sustainable manufacturing
processes, which would contribute to the
Company’s Ambition Zero Carbon initiative
and reduce the Group’s impact on the
environment.
>
Considered the impact that the investment
would have on the community by providing
a boost to the local economy and to
Ireland’s life-sciences sector, as well as the
potential to create direct and indirect
employment opportunities.
>
Reviewed the financial impact of the
investment on the Group’s viability and
capital allocation priorities, alongside the
need to ensure that the Group had a robust
supply network, which would allow for the
continued delivery of medicines to patients
and delivery of value to shareholders.
Acquisitions to strengthen the pipeline
During 2022, the Board considered, and
approved, a number of acquisitions to
strengthen the Group’s pipeline and
accelerate the development of potentially
life-changing medicines. These included
the acquisition of TeneoTwo, Inc., Neogene
Therapeutics, Inc., and the proposed
acquisition of CinCor Pharma, Inc.
The Board considered:
investors; the
long-term success of the Company;
employees; patients; and maintaining high
standards of business conduct.
How the Board had regard to these matters:
>
Reviewed the unmet medical need and
considered how the acquisitions would
further strengthen the Group’s pipeline.
>
Considered the benefits to patients if
the Group was able to accelerate the
development of novel treatments,
which could potentially deepen clinical
responses and improve patient outcomes.
>
Considered the financial impact of the
acquisitions on the Group’s viability and
capital allocation priorities, alongside the
financial benefits from the acquisitions if
the technologies were successful.
Divestment of West Chester site
During 2022, the Board approved the sale of
the West Chester site in Ohio, US to National
Resilience, Inc.
For more information, see Global Manufacturing
Capability on page 42.
The Board considered:
investors; the
long-term success of the Company;
employees; patients; and maintaining high
standards of business conduct.
How the Board had regard to these matters:
>
Considered the Company’s long-term
strategy to ensure its global supply network
remains fit for the future needs of the
Group’s pipeline and portfolio.
>
Recognised the need to ensure the
continued supply of medicines to patients.
>
Considered the impact that the closure of
the site would have on employees and the
local community, and the importance of
the continued employment of more than
500 people working at the site.
>
Reviewed the financial impact of the
divestment and the potential interruption
that may come from a phased transition
of services.
Set out below are examples of how key stakeholders, Section 172(1) duties and other
matters were considered by the Board when making its Principal Decisions in 2022.
For the Section 172(1) statement, see page 76.
Corporate Governance Report
Principal Decisions
89
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
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 should be responsible for engaging
with and understanding the views of the
workforce. To do this, it uses various
mechanisms and long-standing
communication channels in place across the
Group that enable and facilitate engagement
with the global workforce. These include the
Board’s review of the global workforce Pulse
survey and the biannual Workforce Culture
and Employee Engagement Report; Board
members hosting ‘townhall’ meetings for the
workforce, including Q&A sessions; and
review of data relating to talent, development,
inclusion and diversity initiatives, and online
social media channels. Directors also visit our
sites and carry out virtual engagements,
which facilitate understanding of business
operations and also provide opportunities
for interactions between Directors and the
workforce, including engagement with
high-potential employees. Where required,
issues or concerns raised by the workforce
are fed back to management and discussed
by the Board. Whenever relevant, the Board
considers the views of the workforce and the
potential impact on the workforce when it
makes key decisions.
For more information, see How the Board engages with
stakeholders on page 88, the Audit Committee Report
from page 96 and the Science Committee Report from
page 94.
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 help to
ensure that individual Directors, as well as
Board Committees, have the opportunity to
meet with a range of employees from across
the global workforce, and to hear and
understand their views.
During the year, the Board reviewed the
effectiveness of these engagement
mechanisms and was satisfied that the
arrangements in place continue to be an
effective way of engaging with AstraZeneca’s
global workforce, meeting the requirements of
the 2018 UK Corporate Governance Code, in
that they provide a variety of information and
data that the whole Board can use when
considering the impact of its strategic
decisions on employees, and opportunities
for meaningful dialogue for all Directors.
Employee opinion surveys (Pulse)
Twice a year, employees are invited to take
part in an opinion survey, which seeks their
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.
89%
of employees stated they believe strongly
in AstraZeneca’s future direction and
key priorities in the November 2022
Pulse survey.
Site visits
Directors have visited various Group sites
across the world during 2022 including those
in Ireland, Spain, Sweden, Taiwan, the UK,
and the US. This included visits to two
principal Alexion sites (in Boston, MA, US
and Dublin, Ireland), following the Alexion
acquisition in 2021. The majority of these
were in-person visits, but the engagements
with AstraZeneca’s businesses in Sweden,
Spain and Taiwan were virtual.
Wellbeing
Where appropriate – for example in relation
to Russia’s invasion of Ukraine – the Board
receives regular updates on the steps taken
by management to create safe working
environments and support the mental and
physical wellbeing of the workforce.
Workforce culture
During 2022, the Board reviewed the biannual
Workforce Culture and Employee Engagement
Report, which demonstrated how our Values
and behaviours are embedded throughout all
levels of the workforce. The report contains a
summary metric dashboard which is divided
into categories reflecting AstraZeneca’s
Values and behaviours. 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.
19
engagement events with employees
(including both in-person and virtual).
‘Townhall’ meetings, ‘fireside chats’ and
‘Ask anything’ discussions
Both Non-Executive Directors and Executive
Directors regularly participate in meetings
with sites, or large groups of the workforce
– either virtually or in person. These enable
direct engagement between the Board and
employees, including Q&A sessions.
91%
of employees took part in the November 2022
Pulse survey.
90
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Corporate Governance Report
Principal Decisions
continued
2022 overview
During the year, the Board conducted the
annual evaluation of its own performance
and that of its Committees and individual
Directors. The 2022 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 2022, and was used by
the Chair and Chair-designate 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 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 92.
2022 outcomes and actions against prior
year recommendations
>
The Board continues to operate effectively
with an atmosphere that enables open and
frank discussion. Its relationship with
management, including the CEO, the CFO
and the SET, was highly rated.
>
The composition of the Board was highly
rated, with gender and ethnic diversity
continuing to be areas of focus in the work
of the Nomination and Governance
Committee.
>
All of the Board’s Committees continue
to operate effectively.
>
Each Director continues to perform
effectively and demonstrate commitment
to their role, as does the Chair (whose
evaluation by Board members, absent the
Chair, was led by the Senior independent
Non-Executive Director).
>
The evaluation reconfirmed the importance
of in-person Board meetings and the need
to balance these with selected Board
meetings held virtually.
>
With CFO succession and Chair succession
plans having been successfully completed
recently, the need for the Nomination and
Governance Committee and the full Board
to focus on three main areas as part of their
work during 2023 was identified – Board
succession planning in the period to 2026,
mindful that four current Non-Executive
Directors will reach nine years’ tenure by
then; continued routine CEO succession
planning; and overseeing SET succession
plans.
>
The evaluation highlighted the Board’s wish
to continue to monitor closely geopolitical
developments that have the potential to
affect the Company’s business and also to
continue to assess the practical impact of
the recently introduced drug pricing
legislation in the US.
To address areas highlighted by the 2021
annual Board performance evaluation, various
steps were taken during 2022, including:
>
as COVID-19 restrictions eased, a more
normal pattern of Board interactions
with employees and stakeholders was
re-established, including site visits and
employee engagement events whilst
continuing the use of virtual engagement
channels. More details on engagement
events with employees can be found on
page 90;
>
a Board session which focused on the
Group’s overall risk management
framework and approach to risk
management and mitigation;
>
the Board reviewed the methods in place
for engaging with and understanding the
views of the Company’s workforce, which
was considered to remain effective and
appropriate. More information on how the
Board engage with our workforce can be
found on page 90; and
>
an in-depth Board briefing on the Rare
Disease therapy area during the Board’s
two day visit to Alexion’s site in Boston, US.
As part of the Board performance
evaluation, Directors were asked to
consider the following areas:
>
Board composition
>
Stakeholder oversight
>
Board dynamics
>
Board information
>
Board Committees
>
Strategic oversight
>
Risk oversight
>
Succession planning and people
oversight
>
Priorities for change
91
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Report / Board performance evaluation
Corporate Governance Report
Board performance evaluation
Non-Executive Directors’ experience,
as at 31 December 2022
Commercial
Financial Reporting
Management
Sales & Marketing
Tech & Digital
Business
Science
Regulatory (Pharma)
Pre-AZ Pharma
Biologics
Medical Doctor/Physician
Industry-specific
US
Europe
Asia
Geographic
11
5
8
4
5
7
0
7
3
3
8
9
7
part of the process included Board diversity,
time commitment of candidates, their
potential tenure and relevant UK Corporate
Governance Code provisions, as well as other
Board-level succession planning
considerations. A thorough reference process
was carried out in respect of the Board’s
preferred candidate using two professional
firms. The Board was unanimous in its view
that Mr Demaré was the best candidate for
the role and in its decision to appoint him.
Mr Demaré recused himself from all Board
and Board Committee discussions
concerning his candidacy.
The Board appointed Sheri McCoy as
Chair of the Remuneration Committee
effective 1 December 2022, in succession
to Mr Demaré. She has in-depth knowledge
of AstraZeneca’s remuneration arrangements,
having been a member of that Committee
since July 2018. Ms McCoy also became a
member of the Nomination and Governance
Committee on 1 December 2022.
Inclusion and diversity
The Board views all aspects of diversity
among Board members as important
considerations when reviewing its
composition. The Board also 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, and appropriate scientific and
regulatory knowledge. The biographies of
Board members set out on pages 80 and 81
give more information about current Directors
in this respect.
Committee’s role
The Nomination and Governance Committee
(the Committee) works on behalf of the full
Board to review the composition of the Board
and its Committees and carry out succession
planning for all Board positions, including
taking the lead in the search for and
recruitment of new Directors. The Committee
ensures the Board has an appropriate balance
of expertise, experience and diversity.
A matrix that records the skills and experience
of current Board members is one of the main
tools used by the Committee to do this. The
matrix is shown above.
Decisions relating to the appointment of
Directors are made by the entire Board based
on the Committee’s recommendations, taking
into account the merits of the candidates
and the relevance of their background and
experience, measured against objective
criteria, with care taken to ensure
appointees have enough time to devote
to the Board’s business.
Board and Board Committee changes
during the year
In July 2022, AstraZeneca announced that
Michel Demaré will succeed me as Chair of
the Board at the conclusion of the Company’s
AGM in 2023. Mr Demaré was appointed as a
Non-Executive Director in September 2019.
He was Chair of the Remuneration Committee
until December 2022 (and remains a member
of that Committee) and is currently also a
member of the Audit Committee. Mr Demaré
is an internationally respected leader, with
extensive experience in strategy, planning
and execution, governance and corporate
stewardship, and a proven track record
leading multinational companies, as well as
experience of the pharmaceutical industry
gained at Baxter and during his time on the
AstraZeneca Board.
The process to find and appoint the new Chair
was led by Philip Broadley, in his capacity as
Senior independent Non-Executive Director,
with the whole Board fully engaged in the
process throughout. The search firm,
Spencer Stuart
2
, was appointed to assist the
Committee in its work, which provided access
to the benefits of its extensive international
research base and network. A Chair’s role
profile was agreed by the Board and used
to select a longlist of candidates. Meetings
between shortlisted candidates and Directors
took place over a period of months, both by
videoconference and in person. Mr Broadley
met a selection of our largest shareholders to
inform them about the search process and to
listen to their views. Matters considered as
2
Spencer Stuart is a signatory to the ‘Voluntary Code of Conduct for Executive Search Firms’ and periodically undertakes executive search assignments for the Company and has no other
connection with AstraZeneca or its individual Directors.
Nomination and
Governance Committee
members
> Leif Johansson (Chair)
> Philip Broadley
> Michel Demaré
> Sheri McCoy
1
> Nazneen Rahman
1
Appointed as a member of the Committee
on 1 December 2022.
The Nomination and Governance
Committee’s terms of reference
are available on our website,
www.astrazeneca.com.
“This year the Committee spent
significant time searching for a
new Chair of the Board. After a
robust selection process, I was
delighted when the Board decided
that Michel Demaré should
succeed me and I look forward
to following the continued
development and success of
AstraZeneca after I step down
from the Board in April 2023.”
92
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Nomination and Governance
Committee Report
As well as being considered in decisions about
succession and Board appointments, inclusion
and diversity is integrated across our Code of
Ethics and associated workforce policy. 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 sex, 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).
In the first year of the FTSE Women Leaders
Review published in 2022, which is the third
and successor phase to the Hampton-
Alexander and Davies Reviews, 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. For the year ended
31 December 2022, women represented 42.7%
of the SET and its leadership teams (42.3%
following the retirement of Katarina Ageborg
in January 2023).
Information about our approach to diversity in the
organisation below Board level can be found in People,
from page 45.
Board Inclusion and Diversity Policy
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.
Although the Board appoints candidates
primarily based on merit and the relevance of
their background and experience, measured
against objective criteria, it recognises that
an effective Board, with a broad strategic
perspective, requires diversity. The Policy
provides a commitment to use at least one
professional search firm that has signed up to
the ‘Voluntary Code of Conduct for Executive
Search Firms’, to help recruit Directors from
a broad, qualified group of candidates, to
increase diversity of thinking and perspective.
The Board’s approach to inclusion and
diversity continues to yield successful results.
As at 31 December 2022, 31% of the
Company’s full Board identifies as an ethnic
minority, 36% of the Company’s Non-
Executive Directors are women, and women
make up 38% of the full Board. The information
presented in the following tables was
collected on a self-reporting basis. The Board,
the SET and the Company Secretary were
provided with the prescribed table, and asked to
complete based on how they identify. Although
not yet applicable to the Company, the Board is
mindful of the FCA’s new diversity targets and
while pleased that it has met most of them,
notes that 38% of the Board are women and
so it does not yet meet the 40% requirement.
The make-up of the Board is subject to
fluctuations owing to the necessary expertise
of the Board. However, mindful of the increased
focus on diversity, including the updated
Listing Rule requirements and evolving
recommendations of the FTSE Women
Leaders Review, the Board reviewed the Policy
for 2023 and will be cognisant of the increased
40% recommendation for female representation
on its Board. The updated Policy also sets out
the Board’s aim for at least one of the Chair of
the Board, Chief Executive Officer, Senior
independent Director or Chief Financial Officer
to be a woman, which the Board is pleased to
have already met following the appointment of
Aradhana Sarin as CFO.
The Board’s Inclusion and Diversity Policy can be
read in full on our website, www.astrazeneca.com.
Ongoing training and development
In addition to arranging comprehensive
induction programmes when new Non-
Executive Directors are appointed to the
Board, the Committee recognises the
importance of continuing development and
training opportunities for all Directors. We are
committed to developing a culture of lifelong
learning throughout our organisation. Specific
sessions with internal and external experts are
periodically arranged for the full Board, to
ensure that Directors have access to specialist
knowledge across a broad range of areas to
support their strategic decision making. For
example, this included a deep dive into our
Ambition Zero Carbon targets in July 2022.
At least annually, I discuss with each Director his
or her contribution to the work of the Board
Table 1. Reporting table on sex/gender representation as at 31 December 2022
Number of
Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
Men
8
62%
3
8
62%
Women
5
38%
1
5
38%
Non-binary
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
Table 2. Reporting table on ethnicity representation as at 31 December 2022
Number
of Board
members
Percentage
of the Board
Number of senior
positions on the
Board (CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
White British or other White
(including minority-white groups)
9
69%
3
10
77%
Mixed/Multiple Ethnic Groups
1
8%
–
–
–
Asian/Asian British
3
23%
1
3
23%
Black/African/Caribbean/
Black British
–
–
–
–
–
Other ethnic group, including Arab
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
and personal development needs. In 2022, the
Chair-designate joined me in these discussions
with individual Directors. 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. Directors are
encouraged to visit the Group’s sites, providing
opportunities to meet local management and
tour AstraZeneca facilities. Virtual visits are
arranged, where circumstances such as the
COVID-19 pandemic prevent in-person
interactions. These visits further Directors’
understanding of the Group’s business and
operations, as well as providing an insight
into the particular challenges faced locally
and opportunities to engage directly with
employees and other stakeholders.
Corporate governance
The Committee advises the Board periodically
on significant developments in corporate
governance and the Company’s compliance
with the UK Corporate Governance Code (the
Code). During 2022, this included a briefing on
the proposed audit and governance reforms in
the UK. Further information on our corporate
governance arrangements, including the
Company’s statement of compliance with the
Code during the year, is set out from page 83.
Leif Johansson
Chair of the Nomination and
Governance Committee
93
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Nomination and Governance Committee Report
>
AstraZeneca R&D strategic science
capabilities:
including cell therapy,
epigenetics, PROTACs, genomic medicines,
and delivery strategy covering formulations
and devices. This was supported by further
in-person presentations from AstraZeneca
and Alexion scientists onsite at
AstraZeneca Waltham, MA, US covering
Oncology and Rare Disease.
>
Acquisitions and in-licensing
agreements:
review for the Board of
the scientific case for the acquisition
opportunities, including TeneoTwo, Inc.
for its Phase I CD19/CD3 T-Cell engager
TNB-486 and Neogene. The Committee
also provided feedback and scientific
direction on early-stage business
development opportunities.
>
Alexion R&D:
a deep dive for the Science
Committee members of the Alexion
portfolio, therapy areas, its scientific
capabilities, and opportunities for portfolio
expansion. The Committee had in-person
meetings with Alexion scientists to gain
insight on the ongoing integration with
AstraZeneca.
>
Access to AstraZeneca science and
capabilities:
a review of how
AstraZeneca’s commitment to open
science impacts on three main
communities: patients, researchers and the
wider scientific and business ecosystem.
>
Corporate scorecard outturn and goal
setting:
providing insight and feedback to
the Remuneration Committee in support of
2022 achievements and 2023 goal setting
relating to R&D.
Nazneen Rahman
Chair of the Science Committee
Chair’s introduction
The Science Committee’s (the Committee)
core role is to provide assurance to the Board
regarding the quality, competitiveness and
integrity of the Group’s R&D activities. Our
dialogue with AstraZeneca’s R&D leaders and
other scientist employees, as well as visits to
our R&D sites throughout the world, allows us
to review and assess:
>
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.
We also periodically review important
bioethical issues and assist in the formulation
of appropriate policies in relation to such
issues, agreeing these on behalf of the Board.
The Committee also considers future trends in
medical science and technology, and reviews,
on behalf of the Board, the R&D aspects of
specific business development or acquisition
proposals, advising the Board on its
conclusions.
Activities during the year
The Committee met eight times during 2022,
both virtually and face to face. Our key areas
of focus included:
>
Company strategy and strategic
priorities for R&D:
including key prioritised
science platforms across R&D (Oncology,
BioPharmaceuticals and Rare Disease) and
areas of focus for long-term success,
including Business Development strategy.
Science Committee members
> Nazneen Rahman (Chair)
> Euan Ashley
>
Diana Layfield
> Tony Mok
> Marcus Wallenberg
> EVP, Oncology R&D
1
> EVP, BioPharmaceuticals
R&D
1
> CEO, Alexion
1,2
1
Co-opted member of the Committee.
2
Appointed to the Committee on
5 January 2022.
The full role of the Science Committee is
set out in its terms of reference, available at
www.astrazeneca.com.
“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.”
94
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Science Committee
Report
Our focus areas during the year included:
>
Assessing how sustainability is being
embedded across AstraZeneca’s business,
through large-scale transformation projects
and changes to elements of our operating
model. This included an overview of the
steps underway to build our sustainability
capabilities within Operations, including
embedding sustainability into the product
life-cycle.
>
Reviewing how ongoing and emerging
ESG risks to the business are managed,
with a particular focus on the risks posed
by climate change and mitigation measures.
>
A deep dive focusing on Access to
Healthcare, including core programme
activities and progress, and the role of
Access within AstraZeneca’s enabling
functions. The Committee also considered
the enterprise-wide approach to this pillar
of our sustainability strategy.
>
Offering guidance to management on
AstraZeneca’s plans to develop an
enterprise health equity strategy.
>
A site visit to the Macclesfield campus to
understand how sustainability was being
embraced and incorporated into
AstraZeneca’s Operations function.
>
Supporting the Remuneration Committee
in its consideration of how the delivery of
our ESG priorities is incentivised, and by
reviewing performance against our ESG
remuneration targets.
>
Overseeing engagement with investors on
sustainability-related matters and reviewing
AstraZeneca’s external disclosures and the
sustainability reporting landscape.
Nazneen Rahman
Chair of the Sustainability Committee
Chair’s introduction
The Sustainability Committee (the Committee)
was established in October 2021 to enhance
the Board’s oversight of this key area, and our
core role is:
>
to monitor the execution of AstraZeneca’s
sustainability strategy (which is developed
by the SET and approved by the Board)
>
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.
Sustainability Committee meetings and
other informal interactions with employees
allow Committee members to engage closely
with those charged with executing our
sustainability strategy. This helps us develop
a deeper understanding of sustainability
initiatives, their progress, who executes
them, and how this is done, to share with
the wider Board.
Activities during the year
During 2022, the Committee met twice
formally. In addition, the Committee facilitated
a deep dive session for the full Board focusing
on progress against our Ambition Zero
Carbon targets and Committee members also
visited AstraZeneca’s manufacturing site in
Macclesfield, UK. To enhance our
understanding of the sustainability initiatives
in action at AstraZeneca and hear colleagues’
personal perspectives, Committee members
individually met with a range of employees
involved in workstreams and projects from
across our sustainability strategy.
Sustainability
Committee members
> Nazneen Rahman (Chair)
> Sheri McCoy
> Andreas Rummelt
> Marcus Wallenberg
Standing attendees at Committee meetings
during 2022 included the EVP, Sustainability &
Chief Compliance Officer, 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.
For more information about sustainability at
AstraZeneca, visit www.astrazeneca.com/
sustainability.
“At AstraZeneca, we recognise
that taking action to drive
sustainability is fundamental
for the health of people, society,
and the planet, and sustainability
rightly remains a principal area
of focus for the full Board.”
95
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Sustainability Committee Report
Sustainability
Committee Report
The Committee’s agenda has also been
shaped by global events. We have spent time
assessing the impact of the conflict in Ukraine
on AstraZeneca’s business – in Ukraine, in
Russia and more broadly – and the steps
that have been taken in response, including
actions to comply with relevant sanctions.
AstraZeneca’s business in China has
remained an area of focus due to its
significance to the Group, and the Committee
has taken time to understand the market
environment and healthcare industry trends,
how AstraZeneca is embracing opportunities
in this important market, and how risks are
being proactively managed.
Further deep dive sessions for the Committee
throughout the year were tailored to
correspond with AstraZeneca’s other key
active risks. This allowed the Committee to
continue exploring specific aspects of these
risks in their ‘real world’ business contexts,
in direct dialogue with people in the business
that have responsibility for managing
these risks.
We hope you find this Report useful and
informative, and, as ever, welcome any
feedback.
Philip Broadley
Chair of the Audit Committee
Chair’s introduction
This Report describes the Audit Committee’s
(the Committee) activities and focuses on the
significant matters we considered during 2022.
This year, I was delighted to be able to hold
Committee meetings and interact with other
colleagues in person once again, as COVID-19
restrictions lifted. Of particular note this year,
were the Committee’s visit to AstraZeneca’s
manufacturing site in Macclesfield, UK –
accompanied by the members of the
Sustainability Committee – and my visit to the
Alexion campus in Dublin, Ireland. The hard
work put into developing effective virtual
means of communication has not been
wasted, however, and the Committee’s
annual schedule now includes a good mix
of in-person and virtual interactions. This
allows us to maximise our engagement with
colleagues across the business, deepening
our understanding of the priorities and
challenges facing many different markets
and business areas, and hearing a wide
range of employees’ views directly.
The integration of Alexion into AstraZeneca’s
business has remained a key focus area of
the Committee during the year, and we have
spent valuable time enhancing our knowledge
of the Alexion business, meeting more key
people, and considering further alignment of
accounting policies and judgements as we
integrate this acquisition.
“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.”
Audit Committee members
1
> Philip Broadley (Chair)
> Michel Demaré
> Deborah DiSanzo
> Sheri McCoy
The full role of the Audit Committee is set
out in its terms of reference, available at
www.astrazeneca.com.
1
Routine attendees at Committee meetings
include: the CFO; the Chief Human
Resources Officer and General Counsel;
the EVP Sustainability and Chief
Compliance Officer; the VP Ethics &
Transparency and Deputy Chief
Compliance Officer; the Deputy General
Counsel, BioPharmaceuticals; the VP,
Group Internal Audit; the SVP Finance,
Group Controller & Head of Global
Financial Services; 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 effective
flow of material information between the
Committee and management. The CEO
and other members of the SET attend
when required by the Committee.
96
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Audit Committee
Report
Committee overview
Committee composition
In December 2022, the Board determined
the Committee met the UK, US and Swedish
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,
being financial experts for the purposes of
the Sarbanes-Oxley Act (SOx), and having
expertise in accounting and auditing for
the purposes of the Swedish Corporate
Governance Code and Swedish Companies
Act. The Board 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 as a result of
their tenure with AstraZeneca. The Committee
members’ qualifications, skills and experience
are detailed in their biographies on pages 80
and 81 and meeting attendance is shown
on page 79.
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 information about the Committee’s
role and work during the year is set out in
this Report.
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 100. Further information on the
significant accounting matters considered is
included in the Financial Review under Critical
accounting policies and estimates from page 73
and within our Group Accounting Policies
from page 142. The Committee also
considered the completeness and accuracy
of the Group’s reported 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 215 and in the Financial Statements on page 142.
The Committee considered the external
auditor’s reports on its audit of the Group
Financial Statements, as well as reports from
management, Group Internal Audit (GIA),
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 SOx – in particular, the status
of compliance with the programme of internal
controls over financial reporting implemented
pursuant to section 404 of that Act. Alexion
has been fully integrated into the report on
Internal Controls Over Financial Reporting
since the start of 2022.
The Committee also spent significant time
during the year discussing financial reporting
considerations relating to significant
transactions that occurred in the year,
valuation and presentation of defined benefit
pension arrangements, impairment of
intangible assets and valuation of contingent
consideration, restructuring programmes and
presentation of collaboration revenues among
others. The Committee also reviewed the
rationalisation and simplification of the
Results Announcements and Annual Report
for the year.
Further information on the significant financial reporting
issues considered is set out in the table from page 100.
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 business’s response
to the conflict in Ukraine was identified as a
new key active risk, with the Committee
closely monitoring the potential impact on
AstraZeneca’s business in the region and
more broadly, as well as the steps being
taken in response, including compliance
with relevant sanctions. The Committee also
spent time considering: IT, cyber risk and
data security; and global fiscal and economic
pressures. Both of these key active risks were
deemed to have increased in significance and
likelihood during the year, chiefly driven by
external factors.
The Committee’s consideration of risk
management was supported by deep dive
reviews of topics aligned with AstraZeneca’s
key active risks and meetings with teams
from within the business.
Further information about the Principal Risks faced by
the Group and the Viability statement is set out in
Risk Overview from page 56.
97
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Audit Committee Report
Cyber risk, digital security and information
governance
IT, cyber risk, digital security and information
governance are routinely assessed as part of
AstraZeneca’s standard risk management
framework. IT, cyber risk and data security
was identified as a key active risk throughout
2022 and, as such, is routinely reviewed by
the Committee.
In 2022, a deep dive session with the Chief
Digital Officer & Chief Information Officer
focused on AstraZeneca’s cybersecurity
programmes and the challenges faced,
including the significant increase in activity
linked to the conflict in Ukraine. The deep dive
also provided an update on the integration of
Alexion and the security of its digital systems.
The Committee additionally considered risks
associated with attrition of IT employees,
driven by increased demand for IT capabilities
in all industries following the COVID-19
pandemic.
For further information, see IT and IS resources on
page 43.
Sustainability reporting and climate-related risk
The Committee is responsible for overseeing
sustainability-related disclosures that are
linked to the Financial Statements, which
includes the Task Force on Climate-related
Financial Disclosures (TCFD) Statement and
the EU Taxonomy disclosures in this Annual
Report and in the extended TCFD Statement
published separately. These statements are also
reviewed by the Sustainability Committee, to
support the Committee’s review.
Climate-related risks, including risks of
climate change and transition risks associated
with the goals of the Paris Agreement, are
routinely assessed as part of AstraZeneca’s
standard risk management framework.
Sustainability planning is integrated within our
business operations and planning activities,
with progress on significant climate-related
initiatives, including Ambition Zero Carbon,
continuously monitored. The implications of
sustainability activities is considered for key
financial reporting areas including
impairments, provisioning and contingent
liabilities. In addition, management also
continuously assesses developments in
sustainability regulations that could impact the
Group’s operations as well as regulations over
sustainability reporting across the different
jurisdictions of operations of the Group. The
Committee is kept closely informed about
such regulations that could impact our
financial and sustainability reporting. The
Committee received updates in the current
year regarding the proposed regulations by
US, EU and UK regulators on sustainability
reporting, as well as the required disclosures
under the EU Taxonomy regulations.
Legal and compliance
The Committee received and discussed
quarterly reports from the Legal function to
monitor the status of significant litigation
matters and governmental investigations.
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. The
Committee also received and discussed
regular briefings from Legal and Compliance
on key investigations in China.
The Committee’s priorities include overseeing
compliance with AstraZeneca’s Code of
Ethics, 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 AZ Ethics 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 51,
and on Anti-bribery and anti-corruption, see page 41.
AstraZeneca’s Modern Slavery Act Statement is available
on our website, www.astrazeneca.com.
Internal audit
The Committee also received and discussed
quarterly reports of work carried out by GIA,
including the status of follow-up actions with
management. Separate meetings are
arranged to discuss follow-up actions in more
depth with specific teams, when required by
the Committee.
An independent External Quality Assessment
of GIA was performed in late 2021, and the
Committee considered the findings in 2022.
The Committee was pleased to receive
confirmation that GIA ‘Generally Conforms’
to the Institute of Internal Auditors’ Global
Standards (the highest rating that can be
obtained), and showed leading practice in a
number of areas, including through its quality
assurance programme and use of technology.
The Committee carried out the annual
effectiveness review of GIA in late 2022 by
considering its performance against the
internal audit plan and key activities. In 2022,
GIA 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. Following a period of working
closely together since the acquisition of
Alexion, from 1 April 2022, the Alexion Rare
Disease Unit Internal Audit team was
integrated with GIA, allowing the teams to
align on strategy, processes and reporting.
The combined 2022 audit plan was aligned to
our key active risks and wider risk taxonomy.
GIA also operates an emerging risk process
which was used to adapt the 2022 audit plan
to provide focused, real-time assurance over
new and evolving risks impacting the Group.
This included an audit of the governance
model for the new Vaccines & Immune
Therapies business unit and regular
engagement with key members of the
AstraZeneca response workstreams in
respect of the conflict in Ukraine.
The Committee considered the geographic
presence, reach and capabilities of GIA, as
well as the Compliance function, and the
appropriateness of the Group’s resource
allocation for these vital assurance functions.
The Committee noted the continued
contributions of GIA, and the Legal and
Compliance functions, in supporting and
delivering value to the business and the
Committee during the year. The Committee
supports GIA’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 GIA function.
98
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Audit Committee
Report
continued
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 while
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.
A number of interactions took place between
Committee members and PwC during the
year, outside of formal Committee meetings,
to enhance the Committee’s understanding
of the audit process. These included a full
Committee visit to PwC’s offices in London for
a demonstration of how data and technology
solutions, including AI, are being used in the
AstraZeneca audit; the Committee Chair
meeting with PwC’s US team and
AstraZeneca Finance colleagues when visiting
AstraZeneca’s Wilmington, DE, US office; and
the Committee Chair joining PwC’s Account
Planning Workshop to meet PwC team
members responsible for auditing
AstraZeneca’s global entities.
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 Audit-Related Services
Approval Policy (the Policy), as described
further on page 103. Further information
about the audit and non-audit fees for 2022
is disclosed in Note 31 to the Financial
Statements on page 198.
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, during
deep dive sessions at formal Committee
meetings and as separate engagements.
Committee members undertook a mixture of
in-person and virtual interactions with a wide
range of teams from across the organisation,
including: Information Technology and
Information Security; Operations and
Procurement; Human Resources; the Alexion
campus in Dublin, Ireland; the Alexion Rare
Disease business unit; the US
BioPharmaceuticals Finance team; the
Oncology business unit and R&D Finance
teams; the marketing companies for China,
the Nordics and Baltics, Spain and Taiwan;
the Vaccines & Immune Therapies business
unit; and the manufacturing site in
Macclesfield, UK.
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 consideration
of the proposed governance and audit
reforms in the UK, consultations on additional
sustainability-related reporting requirements
in a number of jurisdictions, and requirements
to disclose further information about diversity
and inclusion on company boards in the UK
from 2023.
The Committee was also briefed on thematic
reviews published by the Financial Reporting
Council (FRC) during the year, including those
on discount rates, Earnings per Share (EPS),
and judgements and estimates.
Ensuring the quality of external financial
reporting to shareholders and other
stakeholders remains paramount to the
Committee. During the year, the Committee
reviewed management’s correspondence with
the Council for Swedish Financial Reporting
Supervision (the Council), following the
Council’s routine review of AstraZeneca’s
Annual Report for the year ended 31
December 2021 (the 2021 Annual Report).
This included questions related to accounting
for impairment of intangible assets and
goodwill, Collaboration Revenue, segmental
reporting, the use of alternative performance
measures and reporting on the acquisition of
Alexion. The Committee was pleased to be
able to provide the additional clarity the
Council required, enabling full closure of the
enquiry with no required changes in reporting.
The Committee was also pleased to note that
certain disclosures in the 2021 Annual Report
relating to the acquisition of Alexion were
highlighted as examples of good practice in
the FRC’s Thematic Review of Business
Combinations, published in September 2022
and to receive notification in December 2022
that the FRC had no questions or queries to
raise following its limited scope review of
AstraZeneca’s 2021 Annual Report.
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 overall results of the evaluation were
positive and there were improvements in
the Committee’s activities related to risk
management and the benefits of linking deep
dives to key active risks was noted as an area
of success to continue for 2023.
99
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Audit Committee Report
Matter considered
Committee’s conclusion and response
Valuation of
intangible assets
See Financial Review
from page 60 and
Note 10 to the Financial
Statements from
page 161.
The Group carries significant intangible assets on its
Consolidated Statement of Financial Position 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 $146 million
arose in relation to launched products, and $172 million
arose in relation to products in development.
The Committee assured itself of the integrity of the Group’s
accounting policy and models for its assessment and
valuation of its intangible assets, including understanding
the key assumptions and sensitivities within those models.
The Committee also considered the internal and external
estimates and forecasts for the Group’s cost of capital
relative to the broader industry, as well as alignment of
methodology for legacy Alexion assets. The Committee
was satisfied that the Group had appropriately accounted
for the identified impairments.
Revenue
recognition
See Financial Review
from page 60 and Note
1 to the Financial
Statements from
page 149.
The US is our largest single market and accounted for
40% of our Total Revenue in 2022. Revenue recognition,
particularly in the US, is affected by rebates, chargebacks,
returns, other revenue accruals and cash discounts.
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.
Alternative
performance
measures (APMs)
See Financial Review
from page 60.
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 2022, the majority of APMs
relating to vaccine activity were discontinued as this activity
was embedded within business as usual in the Vaccines &
Immune Therapies Therapy Area.
Accounting for the acquisition of Alexion in 2021 resulted in
more significant items being classified as non-core, which
continue impacting performance in the current year,
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.
Additionally, an internal reorganisation to further integrate
Alexion resulted in a significant one-off deferred tax impact
being classified as a non-core item.
Management carefully analyses the presentation of various
items to ensure it is fair and balanced, and follows
guidelines issued by the European Securities and Markets
Authority and the SEC, as well as FRC thematic reviews.
The Committee carefully considered management’s
presentation of vaccine performance as part of normal
business in 2022 and deemed it appropriate in light of the
transition from pandemic activity to normalised activities
and establishment of the Vaccines & Immune Therapies
Therapy Area.
The Committee further considered management’s
assessment and recommendation to present the one-off
deferred tax impact arising from the internal reorganisation
following the Alexion acquisition as non-core, and concurred
with management that the presentation was appropriate
due to its significance and nature to enable a better
comparison of performance within and 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.
Significant financial reporting issues considered by the Committee in 2022
100
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Audit Committee
Report
continued
Significant financial reporting issues considered by the Committee in 2022
continued
Matter considered
Committee’s conclusion and response
Litigation and
contingent
liabilities
See Note 30 to the
Financial Statements
from page 192.
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’s and the
external auditor’s assessments of, IP litigation matters,
legal actions, governmental investigations, and other 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 2022, the more
significant included: the continued defence of the
Nexium
and
Prilosec
product liability litigation in the US; the
Ultomiris
IP litigation settlement; and the IP litigations for
Symbicort
and
Enhertu
.
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 153.
AstraZeneca’s
Approach to Taxation,
which was published
in December 2022 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 2022, the Committee undertook a review of the
tax and tax accounting implications of the internal
reorganisation to integrate the Alexion organisation,
including the $876 million credit to the reported Income
statement.
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 from
page 157.
Management has reviewed the developments in the year
and determined the Group continues to operate as a single
segment based on key decisions on resource allocation
and performance monitoring being carried out at a Group
level by the SET.
During the year,
Vaxzevria
activities were normalised
within the Vaccines & Immune Therapies Therapy Area.
Additionally, significant progress has been made to
integrate Alexion into the Group’s business.
The Committee received reports from management
regarding considerations for segmental reporting based on
the current operations and management of the business.
The Committee considered the analysis provided by
management and concurred with management that
presenting AstraZeneca’s performance under one segment
was appropriate.
101
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Audit Committee Report
Matter considered
Committee’s conclusion and response
Retirement benefits
See Financial Review
from page 60 and
Note 22 to the
Financial Statements
from page 173.
Accounting for defined benefit pension and other post-
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 post-retirement benefit obligations are updated every
quarter along with ‘mark-to-market’ asset valuations. 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.
Significant rises in long-term bond yields over the period
resulted in material falls in liability valuations and reduced
deficits. Some post-retirement schemes are in surplus.
The Group applied appropriate guidance in determining the
accounting and presentation of surplus amounts during
the year.
Rapid increases in UK Government bond yields over
September and October created liquidity issues for many
UK defined benefit pension funds who hedge interest rate
risk and were required to post substantial margin to meet
collateral calls. The Group proactively engages with and
provides input to the Trustee. As a result, there is a robust
risk management framework in place for the UK Pension
Fund (the Fund). The Fund operated normally throughout
the period with investment strategy and hedging levels
maintained. No financial support from the Group
was required.
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 noted the overall
improvement in the funding position and material reduction
in deficit over the year. Furthermore, a de-risking of
investment strategy within the Fund was noted to reflect
the improvement in funding position. The Committee was
satisfied that the Group’s contribution policy and actuarial
assumptions used to value liabilities were appropriate
during the year. The Committee has been assured that
corporate activity which may have the potential to
materially impact the strength of the covenant provided to
the Fund is monitored and assessed such that appropriate
stakeholders can be notified when required by the Pension
Scheme Act 2021.
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 reviewed management’s accounting and
presentation of pension balances and concurred with
management’s approach. 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.
The Committee noted that due to careful oversight and
monitoring, the Fund managed well through a period of
volatile financial markets and steep rises in UK Government
bond yields, with no issues and without any recourse to
the Group.
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
(the Committee was updated on matters
considered by the Disclosure Committee
regularly throughout the year). 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 83.
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 84. 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 January 2023 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 2022. 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.
External auditor
PwC is the Company’s external auditor.
In April 2022, PwC was reappointed as the
Company’s auditor for the financial year
ended 31 December 2022, its sixth
consecutive year as auditor, having first
been appointed for the financial year ended
31 December 2017, following a competitive
tender carried out in 2015. Sarah Quinn
became the lead audit partner at PwC with
effect from 1 January 2022, following a
selection process by the Committee that was
designed to identify the best-qualified partner
for the role, to ensure audit quality.
Significant financial reporting issues considered by the Committee in 2022
continued
102
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Audit, audit-related and other assurance
services provided by the external auditor
The Committee maintains the Audit and
Audit-Related Services Approval 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 & Head of
Global Finance Services.
Pre-approved audit services included services
in respect of the annual financial statement
audit (including quarterly and half-year
reviews), attestation opinion under section
404 of the SOx, 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 statement 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 CFO (supported by the SVP Finance,
Group Controller & Head of Global Financial
Services), 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 2022, PwC provided audit services
including interim reviews of the results of the
Group for the period ended 30 June 2022 and
audit-related and other assurance services.
The increase to the statutory audit fee for
2022 is largely driven by inflationary increases,
fees for additional audit procedures in relation
to ISA 315 (Revised) and Alexion’s inclusion
into SOx scope and full year audit, offset by
the removal of non-recurring 2021 audit fees
over the Alexion acquisition. The decrease to
audit-related and other assurance services
is largely driven by $6 million of services
provided in 2021 related to the acquisition
of Alexion and related debt issuance.
Fees for audit-related and other assurance
services amounted to 4% of the fees payable
to PwC for audit services in 2022 (2021: 27%).
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 2022
were 6% (2021: 34%) of average audit fees
over 2019 to 2021. The 2021 percentages
are higher due to the additional audit fee
and other services required in respect of
the Alexion acquisition and associated
debt issuance.
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 with which they
could deliver the relevant services. 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.
$29.3m
$34.9m
2022
2021
Statutory audit fee¹
Audit-related and other assurance services²
Audit/audit-related and other assurance services
1
2021 statutory audit fee excludes $0.3 million in relation to
pre-acquisition Alexion audit fees, recognised in Note 31
to the Financial Statements on page 198.
2
2021 audit-related and other assurance services excludes
$0.7 million in relation to pre-acquisition Alexion
services, recognised in Note 31 to the Financial
Statements on page 198.
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.
As part of the Audit Committee’s assessment
of the quality of the audit, the Committee
focused on the auditor’s effective use of
experts and technology as well as appropriate
challenge of management’s judgements
especially in relation to areas of significant
financial reporting issues (as described in the
table from page 100). Areas that were
reviewed by the Committee included PwC’s
extensive and detailed review of the valuations
and assumptions in the Alexion Legal Entity
Restructuring, assumptions and calculations
over Gross to Net Sales, and challenges to
discount rates that underpin Intangible assets
and Contingent consideration valuations.
The Committee also reviewed PwC’s use of
automated revenue testing on a pilot basis
in the year.
The Committee concluded that the PwC audit
was effective for the financial year ended
31 December 2022. In February 2023, the
Committee recommended to the Board the
reappointment of PwC as the Company’s
auditor for the financial year ending
31 December 2023. Accordingly, a resolution
to reappoint PwC as auditor will be put to
shareholders at the Company’s AGM in
April 2023.
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 acquisition of Alexion
in 2021. 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 2022.
103
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Audit Committee Report
On behalf of the Board, I am pleased to
present AstraZeneca’s Directors’
Remuneration Report for the year ended
31 December 2022. This is my first report
since stepping into the role of Chair of the
Remuneration Committee in December 2022
and I would like to take this opportunity to
thank Michel Demaré for his leadership of
the Committee over the last two years.
2022 was another milestone year for
AstraZeneca with continued progress against
our strategic priorities. Significant advances
have been accomplished for our patients as
we continue to progress the pipeline and
advance the next wave of science. We were
particularly proud to see independent data
assessing that
Vaxzevria
saved over six million
lives during the first year of its rollout, more
than any other COVID-19 vaccine, making an
important societal contribution to the health
crisis around the world, most notably in low-
and middle-income countries due to our
equitable access and pricing strategy.
Key Committee activities in 2022
The Committee was pleased to have received
a high degree of support for the 2021
Directors’ Remuneration Report, with a 92%
vote in favour at the Company’s 2022 AGM.
In 2022, the Committee maintained its
commitment to a period of executive
remuneration stability and our emphasis on
performance-related pay for long-term and
sustainable success continued.
Mr Demaré and I engaged with investors who
held approximately 50% of the Company’s
issued share capital, and with three proxy
advisers, through written correspondence and
meetings. The valuable feedback received
was discussed with the Committee, and was
factored into the Committee’s consideration
of executive remuneration in 2023.
We have sought to be
clear and transparent
in how we link
remuneration of our
executives to the
successful delivery
of our strategy and
shareholder returns.
The Directors’ Remuneration
Report contains the following
sections:
>
Chair’s letter, page 104
>
Remuneration at a glance,
page 108
>
How our performance
measures for 2023 support
the delivery of our strategy,
page 109
>
How the Remuneration
Committee ensures targets
are stretching, page 110
>
Annual Report on
Remuneration, page 111
The global economy is currently in a
volatile period, with high inflation across
many countries in 2022. We recognise that
increasing consumer price pressures directly
impact our colleagues around the world, and
this has been an important focus area for
the Committee in 2022. During 2022, we
conducted additional reviews of market data
and inflation around the world and off-cycle
adjustments to base pay were approved in
both high inflation and hyper inflation
countries, such as Argentina and Turkey. In
some cases, one-off cost of living payments
were made to less senior employees, for
example our manufacturing employees in
the UK (each receiving a one-time lump sum
payment of £1,500 in 2022). Base pay review
budgets in 2023 are anticipated to broadly
align with market move data in each country,
but the distribution of these budgets will be
focused towards high-performing individuals
and those who are paid lower in the market
range for their roles. This dual emphasis on
performance and market competitiveness
is consistent with the reward philosophy
we seek to foster across all levels of the
workforce. The Committee will maintain a
strong focus on ensuring the reward for our
wider workforce remains competitive and fit
for purpose in 2023.
The Committee also reviewed remuneration
in the wider workforce in other ways, with a
spotlight on specific talent segments, to
ensure that reward is equitably differentiated
and aligned to performance. The Committee
was pleased to be able to approve
enhancements to long-term incentive
eligibility on a global basis and spent time
in particular to review Total Reward
arrangements in China to ensure we remain
market competitive there. The Committee
is proud to report that 35% of the wider
workforce now participates in our
share-based incentive schemes.
Remuneration Committee
members
> Sheri McCoy (Chair)
> Philip Broadley
> Michel Demaré
> Leif Johansson
The full role of the Remuneration
Committee is set out in its terms
of reference, available at
www.astrazeneca.com.
“Three-year TSR of 58%
demonstrates another period
of excellent performance for
shareholders, while successfully
delivering the integration of
Alexion and continuing to be
at the forefront of the response
to COVID-19.”
104
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Directors’
Remuneration Report
Dec
12
Dec
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
Dec
20
Dec
21
Dec
22
600
500
400
300
200
100
Over the year, the Committee worked closely
with the Audit Committee, the Science
Committee and the Sustainability Committee
to ensure that the financial, science and ESG
measures, respectively, are appropriate,
suitably stretching and accurately assessed.
AstraZeneca continues to make good
progress and remain on track to reduce our
GHG emissions for global operations (Scope 1
and 2) by 98% by 2026. The Committee was
pleased that our net-zero targets were verified
by the Science Based Targets initative, one
of the first seven companies to do this.
AstraZeneca’s 2022 performance
The Group continued to deliver the next
chapter of the Growth Through Innovation
strategy. The focus, energy and commitment
of the workforce to living our Values has
delivered advances that are transforming care,
fuelling growth, and ensure the Group is a
great place to work whilst making an
important contribution to society.
Science and Innovation:
AstraZeneca
delivered yet another year of outstanding
pipeline results and continued to push the
boundaries of science as the full potential
of medicines was recognised. 29 pipeline
progression events, either NME Phase II
starts or Phase III investment decisions,
were secured in 2022. In addition, there
were an impressive 72 regulatory events,
offering much needed new treatment
options to patients.
For more information, see from page 15 and from page 35.
Growth and Therapy Area Leadership:
Overall, the Company saw robust double-digit
increase in Total Revenue, with growth
coming from Oncology, BioPharmaceuticals,
and Rare Disease. Oncology Total Revenue
increased by 15% (CER: 20%), supported by
continued launches and increased patient
access for
Tagrisso
,
Imfinzi
,
Lynparza
,
Calquence
and
Enhertu
. BioPharmaceuticals
Total Revenue increased by 6% (CER: 12%)
driven by strong
Forxiga
performance and
growth in
Evusheld
. There was a decline in
Total Revenue from
Vaxzevria
during the year
(down by 53% (51% at CER) to $1,875 million),
which was expected as many of the initial
contracts signed during the pandemic were
completed. Rare Disease Total Revenue saw
growth of 4% (CER: 10%), with performance
driven by the durability of the C5 franchise;
Soliris
and
Ultomiris
in neurology indications;
Ultomiris
gMG launch and expansion into new
markets; and continued
Soliris
NMOSD
growth. Throughout the year, collaborations
and acquisitions have further strengthened
the Group’s pipeline.
For more information, see from page 16 and from page 39.
How we have performed in 2022
Total shareholder return (TSR)
2020 to 2022
1
+58%
1
Calculated using a three-month calendar average, from 1 October to 31 December, prior to the start and at the end of the
relevant period.
More information on the TSR peer groups for PSP awards can be found on page 117.
Delivery against strategy – 2022 Group scorecard performance
2
Target
2022
outcome
Science and Innovation: Annual pipeline progression
Pipeline progression events
20
25
Regulatory events
45
50
Growth and Therapy Area Leadership
Total Revenue
$43.4bn
$46.3bn
Achieve Group Financial Targets
Cash flow
$6.8bn
$9.2bn
Core EPS
$6.54
$7.04
2
For details of the Remuneration Committee’s consideration of Group scorecard outcomes and a description of performance
measures, see from page 109.
Further detail of 2022 commercial and scientific performance can be found in the Strategic Report from page 14.
AstraZeneca
Global pharmaceutical peers average
FTSE 100
European pharmaceutical peers
105
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’ Remuneration Report
TSR
People and Sustainability:
In the current
high-inflation climate and with our people
in mind, management and the Committee
closely monitored the global inflation
patterns and other key indicators. Overall,
the approach to address the impact of
inflationary pressures aims to ensure that
any actions taken are not only properly
targeted but are sustainable and affordable
now and in the future.
Strong progress has been made against
AstraZeneca’s People and Sustainability
priorities. The Group refreshed its Global
Inclusion and Diversity (I&D) strategy and
there was a significant focus on advancing
AstraZeneca’s I&D priorities. AstraZeneca
played an important role in COP27 and the
World Economic Forum’s (WEF) Annual
Meeting. Other highlights from the Group’s
social initiatives include the launch of
Accelerating Change Together for Cancer
Care Africa, the expansion of the Healthy
Heart Africa programme and joining WEF’s
EDISON Alliance ‘1 Billion Lives Challenge’ to
improve access to innovative and scalable
digital health solutions by 2025.
For more information, see from page 44.
2022 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 2022, including other achievements
across the enterprise, such as advancing our
People and Sustainability priorities. In that
context, we believe that the payments outlined
below fairly reflect their performance.
Annual bonus – 92% of maximum
When determining bonus outturns, the
Committee considered the formulaic
outcome from the Group scorecard along
with wider business and individual impact
and performance in 2022, including ESG
achievements. The Committee determined
to award an annual bonus equivalent to 92%
of maximum to Mr Soriot and Dr Sarin
(equivalent to 228.75% and 183% of base pay
respectively). Details of the factors considered
to determine the bonuses are provided from
pages 113 to 116.
One half of each Executive Director’s bonus
for 2022 will be deferred into AstraZeneca
shares for three years to ensure further
alignment with shareholder interests.
Long-term incentives (LTIs)
2020 PSP – 97% of maximum
Our approach aims to reward sustainable
outperformance and hence our 2020 award
will vest at the upper end of the possible
range. The three-year performance period
for Performance Share Plan (PSP) awards
granted to our senior leaders in 2020, ended
on 31 December 2022. Awards for all
participants will vest at 97% of maximum,
as shown on page 117 and reflect
overachievement in each and every three-year
target, as well as delivering a three-year TSR
of 58%.
We stand by our pay-for-performance
philosophy and market-competitive
remuneration, and the Committee will continue
to engage regularly with shareholders and other
stakeholders ahead of the implementation of a
new Remuneration Policy in 2024.
Remuneration in 2023
The Committee remains committed to a
period of stability in its approach to Executive
Director remuneration.
Achieved
Science and Innovation: Annual pipeline progression
72%
Growth and Therapy Area Leadership
100%
Achieve Group Financial Targets
100%
Achieved
Achieved
Science and Innovation: First approvals and NME volume
over three years
100%
Growth and Therapy Area Leadership
100%
Achieve Group Financial Targets
100%
Relative TSR
84%
Achieved
2022 Annual bonus scorecard performance
1
2020 PSP performance
Non-Executive Directors’ fees
With effect from 1 May 2023, the fee for the
Chair of the Board will increase to £800,000
per annum, as announced in July 2022.
The Chair’s fee was last increased in January
2018. The revised fee reflects the steady
increase in workload and responsibilities of
the Chair since the last fee increase took
effect in 2018, as well as the increase in the
size and complexity of the Group following
the acquisition of Alexion. Market data on
FTSE 10 and 30 companies’ Chair fees were
considered to ensure that the level of fee is
appropriate. Additionally, from 1 May 2023,
no allowance for office costs will be paid to
the Chair.
Next steps
I hope that you find this Remuneration Report
clear in explaining the implementation of our
Remuneration Policy during 2022. 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 2023.
Our ongoing dialogue with shareholders and
other stakeholders is valued greatly and, as
always, we welcome your feedback on this
Directors’ Remuneration Report.
Sheri McCoy
Chair of the Remuneration Committee
1
When determining bonus outturns, the Committee considered the formulaic outcome from the Group scorecard along with
wider business and individual impact and performance in 2022, including ESG achievements.
106
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Directors’
Remuneration Report
continued
Market positioning of Executive Directors’ on-target remuneration for 2022
Global pharma peers
¹
European pharma peers
²
C
EO
Lower quartile to median
Median to upper quartile
Current position
£9.72m
£8.58m
£6.60m
£16.73m
Global pharma peers
¹
European pharma peers
²
C
FO
Lower quartile to median
Median to upper quartile
Current position
£3.99m
£4.68m
£3.27m
£5.93m
1
Global pharma peer group consists of: AbbVie, Amgen, BMS, Lilly, Gilead, GSK, Johnson&Johnson, MSD, Novartis,
Novo Nordisk, Pfizer, Roche and Sanofi (CEO only).
2
European pharma peer group consists of: Bayer, GSK, Merck KGaA, Novartis, Novo Nordisk, Roche and Sanofi (CEO only).
Remuneration includes base pay, target annual bonus and the expected value of LTI awards. Benchmarking data has been
provided by the Committee’s independent adviser.
107
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’ Remuneration Report
CEO
CFO
2,735
15,323
£5,000
£10,000
£15,000
£0
£’000
Share price appreciation on
long-term incentive awards
PSP
Annual bonus
Fixed Pay
2020 PSP
performance
Achieved
97%
Lapsed
3%
Group scorecard
performance
Achieved
92%
Lapsed
8%
Executive Directors’ realised pay 2022 outcomes
Formulaic outcome of 2022
Group scorecard and 2020 PSP
What our Executive Directors earned
Looking ahead
Executive Directors’ remuneration for 2023
Fixed remuneration
Annual bonus
Long-term incentives
Shareholding
requirement
Post-cessation
requirement
Pascal
Soriot
(CEO)
Base pay:
£1,428,517
Benefits fund
Pension: £157,137
(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:
£914,898
Benefits fund
Pension: £100,639
(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 fixed vs performance-linked (%)
36
%
Short-term
64
%
Long-term
Fixed
12
%
Performance-linked
88
%
Base pay
Benefits fund
Pension
Annual bonus – cash
Annual bonus – shares
PSP
Annual
bonus
(halved)*
PSP
’23
Executive Directors’ variable pay
Performance period
Deferral period
Holding period
’24
’25
’26
’27
*Half of the annual bonus is deferred for three years.
See from page 111 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 fixed vs performance-linked (%)
42
%
Short-term
58
%
Long-term
Fixed
17
%
Performance-linked
83
%
Base salary
Benefits fund
Pension
Annual bonus – cash
Annual bonus – shares
PSP
Based on maximum payout scenarios for the CFO assuming maximum
of 200% and 450% of base pay for annual bonus and PSP respectively.
Fixed pay consists of base pay, benefits fund and pension. Dr Sarin was
appointed as CFO on 1 August 2021, and has no LTI awards which completed
their performance period in 2022. Further information on Executive Directors’
realised pay for 2022 is on page 111.
See from page 113 for further information on the annual bonus
and PSP outcome.
When determining bonus awards, the Committee considered
the formulaic outcome from the Group scorecard along with
wider business and individual impact and performance in
2022, including ESG achievements.
108
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Remuneration
at a glance
Strategic pillar
Strategic pillar
Financial targets
Science and Innovation
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 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 reflect 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 reflects 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 scientific 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, reflecting the importance
of incentivising sustainable growth in both the
short and longer term.
Cash flow
Ensures that we can sustain investment in
our pipeline and Therapy Areas while at the
same time meeting our capital allocation
priorities. Cash flow is included in both the
bonus and the PSP, ensuring a focus on both
short and longer term cash flow generation
and balance sheet strength.
Core EPS
Incentivises operational efficiency and cost
discipline, and remains a key measure of our
profitability and a 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 benefit from. This measure
incentivises outperformance versus our peer
group, and promotes the delivery of long-term
sustainable returns for our shareholders.
Strategic pillar
People and Sustainability
We are committed to people and making
a difference to society. Assessment of
performance against this pillar is captured
through a holistic review of each Executive
Director’s individual performance as part of
the final determination of annual bonus,
including consideration of our progress
against our ESG aspirations:
>
Continuing to make our Company a great
place to work by delivering our inclusion
and diversity strategy and learning and
development programmes.
>
Ensuring we operate in the smartest way
and increase the speed of delivery of our
life-changing medicines to patients
through our Future of Work strategic
initiative.
>
Leading the way in our efforts to improve
access to healthcare and build health
system resilience.
Ambition Zero Carbon
This measure incentivises the
elimination of our Scope 1 and Scope 2
GHG emissions through 2025 with
targets verified 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 2023 performance measures are closely
aligned with our strategic priorities, as shown
below.
For more information about our strategic priorities,
see page 14. For more information about the 2023
performance measures, see pages 116 to 119.
Key
Annual bonus
PSP
KPI
109
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’ Remuneration Report / How our performance measures for 2023 support the delivery of our strategy
How our performance measures for
2023 support the delivery of our strategy
We set stretching targets that incentivise our leaders to deliver exceptional performance, and to drive sustainable results for our patients,
our employees and our shareholders.
2023 targets:
>
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.
>
In real terms, financial performance goals under the 2023 Group Scorecard and PSP would require achievement above prior year outturns
and growth in excess of the average expected of the industry.
Consistent with our approach in prior years we undertake the following robust process to setting annual bonus and PSP targets and
assessing outcomes:
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 and endorsed by the Sustainability Committee.
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 a three-year period. 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. Whilst Total
Revenue and Core EPS targets 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 do not impact
reward outcomes), the Committee also compares targets
against prior plans at constant exchange rates, to ensure that
new targets incentivise ambitious levels of growth. 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 and receives briefings from senior
leaders across AstraZeneca. The science measures are
reviewed and endorsed by the Science Committee, with a focus
on ensuring that the targets will result in long-term sustainable
value creation, and the Committee reviews and approves the full
cohort of opportunities. The ESG metric within the PSP is aligned
to our Ambition Zero Carbon goal and reflects the importance
of eliminating GHG emissions for our Scope 1 and Scope 2
operations by 2025. The Ambition Zero Carbon metric has been
reviewed and endorsed by 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 Company 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. Data for the metrics is taken
from the Group’s financial reports which are reviewed by the
Audit Committee and approved by the Board.
The Science Committee independently considers and informs
the Committee whether science achievements represent a fair
and balanced outcome, reflecting genuine achievements and
pipeline progression. Ambition Zero Carbon outcomes are
validated by the Sustainability Committee. 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, as detailed from page 115, 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.
110
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
How the Remuneration Committee
ensures targets are stretching
Executive Directors’ realised pay for 2022 (single total figure 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 2022,
alongside comparator figures for 2021.
Mr Soriot’s realised pay for 2022 includes the vesting of PSP awards from 2020 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 his reward. £3,057,110 of Mr Soriot’s 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
Other
Total fixed
Annual
bonus
Long-term
incentives
1
Total
variable
Single total
figure
Share price
appreciation
as % of single
total figure
Pascal Soriot
2022
1,367
136
150
–
1,653
3,127
10,543
13,670
15,323
20%
2021
1,327
123
146
–
1,596
3,152
10,993
14,145
15,740
27%
Aradhana Sarin
2,3
2022
876
161
96
–
1,133
1,602
–
1,602
2,735
–
2021
354
6
39
2,019
2,418
595
–
595
3,013
–
1
Long-term incentive values disclosed in 2021 have been recalculated using the average closing share price for the three months ended 31 December 2022. See page 117.
2
Dr Sarin’s 2021 realised pay is for the period following her appointment to the Board of AstraZeneca PLC from 1 August 2021 to 31 December 2021.
3
Dr Sarin’s previous employment contract with Alexion included 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 for 2021. This award was made 50% in cash and 50% in restricted shares. In addition, relocation assistance of £3,430 paid to Dr Sarin in 2021 is included
in the Other column. Further details can be found in our 2021 Annual Report.
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.
The Annual bonus section is set out from page 113 and the Long-term incentives section from page 117. Information about the Executive
Directors’ remuneration arrangements for the coming year, ending 31 December 2023, is highlighted in grey boxes.
The elements within the Executive Directors’ realised pay are colour coded:
>
Fixed Remuneration has a light blue border and is found on pages 112 and 113.
>
Annual bonus has a yellow border and can be found on pages 113 to 116.
>
Long-term incentives has a magenta border and can be found on pages 117 to 119.
Executive Directors’ remuneration
This section of the Directors’ Remuneration Report sets out the Executive Directors’ remuneration for the year ended 31 December 2022,
alongside the remuneration that will be paid to Executive Directors during 2023.
Key:
Audited information
Content contained within the Audited panel
indicates that all the information within has
been subject to audit.
Audited
Planned implementation for 2023
Content contained within a grey box indicates
planned implementation for 2023.
Audited
111
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Annual Report
on Remuneration
2022
2023
£’000
Total taxable
benefits
Taxable
benefits
Pascal Soriot
136
In line with
2022
Aradhana Sarin
161
Lower than
2022
Audited
Taxable benefits
The totals within taxable benefits include the
CEO’s allowance under AstraZeneca’s UK
Flexible Benefits Programme, under which he
can select benefits or take his allowance, or
any proportion remaining after the selection
of benefits, in cash, and value of personal tax
advice provided to each Executive Director in
2022 (£18,403 and £84,944 for the CEO and
CFO respectively).
In addition, during 2022, and in accordance
with our Directors’ Remuneration Policy,
Dr Sarin was provided with support for
relocation expenses incurred during her
move from the US to the UK. This comprised
a relocation allowance for six months’
temporary accommodation in the UK and
reimbursement of shipping and storage
costs. The total assistance provided
during 2022 was £76,202.
2022
2023
£’000
Change
from 2021
Base
pay
Change
from 2022
Base
pay
Pascal Soriot
3%
1,367
4.5%
1,429
Aradhana Sarin
3%
876
4.5%
915
Fixed remuneration
Base pay
When awarding base pay increases, the
Committee considers, among other factors,
base pay increases applied across the UK
employee population. The increase to current
Executive Directors’ base pay for 2023 of
4.5% is below the level of base pay increases
for the wider UK workforce, which are 5% on
average, and 5.5% for employees at less
senior career levels.
Audited
112
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
Annual bonus
Audited
Annual bonus in respect of performance during 2022
Bonus potential
as % of base pay
Bonus
payable in
cash
Bonus
deferred into
shares
Total bonus
awarded
£’000
Target
Maximum
Pascal Soriot
125%
250%
1,563
1,564
3,127
92% max
Aradhana Sarin
100%
200%
801
801
1,602
92% max
2022 Annual bonus
Annual bonuses earned in respect of
performance during 2022 are included in
the realised pay table.
Detailed information on the Committee’s
approach to target setting and assessment
of performance is set out from page 110.
Half of the Executive Directors’ 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.
2022
2023
£’000
Pensionable
base pay
Pension
allowance
Cash in
lieu of
pension
Pension
allowance
Pascal Soriot
1,367
11% of
base pay
150
11% of
base pay
Aradhana Sarin
876
11% of
base pay
96
11% of
base pay
Audited
Pension
The Executive Directors receive a pension
allowance of 11% of base pay, in line with
the wider UK workforce. During 2022, 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 2022 has a prospective entitlement
to a defined benefit pension by reason of
qualifying service.
113
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
2022 Group scorecard assessment
Performance against the 2022 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.
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. Performance between threshold and
maximum is assessed on a pro rata basis. Maximum bonus payouts for the CEO and CFO for 2022 were capped at 250% and 200% of base
pay respectively. 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.
2022 Group scorecard performance measures and metrics
Weighting
Threshold
(0% payout)
Target
(100% payout)
Maximum
(200% payout)
Outcome
Formulaic outcome
(% of target bonus)
Science and Innovation measures
Science and Innovation: Annual pipeline progression
Pipeline progression events
15%
10
20
30
25
23%
Regulatory events
15%
32
45
59
50
20%
Subtotal – Science and Innovation measures
30%
43%
Financial measures
Growth and Therapy Area Leadership
Total Revenue ($bn)
30%
42.1
43.4
44.7
46.3
60%
Achieve Group Financial Targets
Cash flow ($bn)
20%
5.8
6.8
7.8
9.2
40%
Core EPS ($)
20%
6.21
6.54
6.86
7.04
40%
Subtotal – Financial measures
70%
140%
Total
100%
183%
Key:
Bar charts are indicative of 2022 performance; scales do not start from zero.
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 Science
and Innovation strategic priority and these events is included from page 15 of this Annual Report.
A number of further scientific achievements during 2022 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.
Annual bonus
continued
Audited
114
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
Annual bonus
continued
In 2022, the Growth and Therapy Area Leadership measure was based on Total Revenue. The Total Revenue and Core EPS measures are both
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.
Overall assessment
During 2022, the Executive Directors’ individual performance was assessed in the following key areas which align with the Company’s objectives.
Pascal Soriot
Mr Soriot has led AstraZeneca to an outstanding year of double-digit growth across all therapy areas through 2022, with our pipeline delivery now being
recognised as being amongst the strongest in the industry. The Committee considered Mr Soriot’s deep involvement and incisive leadership in delivering
AstraZeneca’s financial and scientific performance in the context of his delivery against his personal objectives and Total Shareholder Return of 32% for 2022,
set out below.
Demonstrating
leadership to support
developments in global
life sciences
In 2022, Mr Soriot continued to demonstrate his thought leadership, his ability to drive global change and his influence on key issues
in healthcare through more than 20 external engagements with world leaders in the US, Asia, the Middle East and Europe.
Highlights included attending COP27, AstraZeneca’s award for Outstanding Achievement for Service to Cancer Science and Medicine
at the American Association for Cancer Research (AACR) Award ceremony and engagements with Chinese government officials on a
variety of topics, including a new state-of-the-art rare disease centre in China.
Leading in
Environmental, Social &
Governance (ESG)
performance
Mr Soriot continued to drive an ambitious sustainability agenda at AstraZeneca and through industry partnerships, exemplified by
his leadership of the cross-healthcare sector SMI Health Systems task force with HM King Charles III, aimed at the decarbonisation
of healthcare. For the seventh year, we were double A listed on the CDP for both climate change and water security and, in 2022,
AstraZeneca formed the Honeywell collaboration to develop next generation respiratory inhalers with up to 99.9% less global warming
potential than propellants currently used in respiratory medicines.
In recognition of his leadership of AstraZeneca’s equitable access approach to COVID-19, Mr Soriot was the only private sector CEO
invited to deliver a high-level address at the United Nations General Assembly (UNGA). Notably, an independent assessment by Airfinity
Limited identified that
Vaxzevria
saved 6.3 million lives in the first year of its delivery, more than any other COVID-19 vaccine.
Mr Soriot ensured that the impact of AstraZeneca’s access to healthcare programmes continue to expand. In 2022, Healthy Heart
Africa (HHA) launched into Rwanda, Nigeria and Zanzibar. HHA has now conducted over 31 million screenings, trained over 10,500
healthcare workers, activated over 1,250 healthcare facilities and identified over 6.2 million elevated blood pressure readings. Progress
on equitable healthcare initiatives overseen by Mr Soriot is also reflected in the increase in AstraZeneca’s position on the Access to
Medicines Index (from seventh in 2021 to third in 2022).
Making AstraZeneca a
great place to work
Mr Soriot continues in his role as Chair of the Global I&D council. In 2022, he oversaw the launch of the refreshed Global Inclusion &
Diversity (I&D) strategy. Our progress was recognised externally, with AstraZeneca being included on the 2022 Bloomberg Gender-
Equality Index, FTSE Women Leaders Review 2022, Human Rights Corporation Corporate Equality Index, the Forbes World’s Best
Employers 2022 and Forbes Top Female Friendly Companies 2022, the Financial Times Diversity Leaders 2023 (EU), 2022 Best Places
to Work for LGBTQ Equality (US) and Diversity Inc. and 2022 Top 50 Companies for Diversity List (US).
Mr Soriot oversaw the further development of AstraZeneca’s culture of lifelong learning in 2022. 78% of our employees participated
in our online learning platform, Degreed, completing approximately 1.22 million learning modules and 20 academies were launched in
55 markets to ensure our employees remain at the forefront of innovation in their respective areas. We expanded ‘Professional Skills at AZ’
into 14 languages along with extending Percipio, our immersive learning platform, to everyone in Degreed. We were proud that AstraZeneca
received external recognition for AstraZeneca’s Learning & Development programmes in the form of 11 independent awards.
Under Mr Soriot’s leadership, in 2022 AstraZeneca launched ‘AZ Together’, the new global employee support fund. The fund provides
a simple, easy and secure way for all employees to make personal donations to financially support colleagues experiencing personal
hardship or who have been affected by extreme events, such as a natural disaster.
115
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Annual bonus
continued
Aradhana Sarin
Throughout 2022, Dr Sarin has continued to successfully deliver simplification and reduction, helping to drive efficiencies and productivity across the business.
The Committee considered Dr Sarin’s success in driving the Company’s strong financial performance, her personal involvement in multiple business development
transactions, and her commitment to environmental, social and governance initiatives, both within AstraZeneca and externally.
Leading in
Environmental, Social
and Governance (ESG)
performance
Dr Sarin continued in her role as a member of the Ambition Zero Carbon Governance Group. As part of this committee, she has
approved several investments in AstraZeneca’s sustainability initiatives which have helped the Company make progress on its
commitment to becoming zero carbon across operations without carbon credits. In order to ensure growth and development in this
area, Dr Sarin has focused on sharing external perspectives from guest speakers in various forums, supporting the Company to reach
its ambition to be carbon negative in the AstraZeneca value chain by 2030.
Dr Sarin’s commitment to AstraZeneca’s mission for science and patients was recognised externally by her being honoured by a patient
organisation (Share the Joy Foundation) for ‘Seeing the Unseen’. She also recently joined the Board of Directors/Governors for the
American Red Cross, the largest non-profit organisation in the US.
Great place to work/
employee engagement
Dr Sarin has undertaken a number of initiatives to increase diversity in the workplace and has advocated for women leaders in senior
positions. She has also been involved in hosting many Network of Women employee resource group events in major AstraZeneca sites
across the globe.
Dr Sarin’s leadership and collaborative way of working is evidenced in the positive engagement of her teams, with 92% of Global
Finance believing AstraZeneca is truly patient orientated, 89% believing they have improved their existing skills or learned new skills,
and 88% believing AstraZeneca is a great place to work.
Creating an enterprise-
wide impact through
Global Business
Services (GBS)
Under Dr Sarin’s leadership, GBS has contributed to shaping a more effective and efficient AstraZeneca by optimising processes and
realising an 8% increase in productivity, the equivalent to freeing up 125,000 hours of work across AstraZeneca. GBS is an essential
partner to the business, enabling AstraZeneca to grow and change at speed.
Over 2022, GBS has supported Commercial to set up the new omnichannel delivery model, resulting in a 40% cost reduction and
30-50% reduction in delivery times for campaigns in Spain, Canada and Italy. Development of advanced reporting and analytics has
contributed to generating $40 million in benefits helping the business to make faster and better decisions.
GBS has scaled automation solutions with more than 150 robots helping the business to save more than 150,000 hours, and has
completed the automation of the clinical end-of-study process which reduced the process lead time by 95% and saved $2 million,
which has been reinvested in R&D’s transformation programme, Redefining Clinical Data Flow.
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.
The Committee determined the bonus outturns for Mr Soriot and Dr Sarin should be 183% of target (or 92% of maximum).
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 2021 was deferred and details of the consequent DBP awards granted in 2022 are shown below. One half of the Executive
Directors’ bonus earned in respect of performance during 2022 has been deferred and the consequent DBP awards are expected to be granted
in March 2023.
Audited
2022 Grant
2023 Grant
Ordinary Shares
granted
Grant date
Grant price
(pence per share)
1
Face value
£’000
2022 Bonus deferred
£’000
Pascal Soriot
17,216
4 March 2022
9154
1,576
1,564
Aradhana Sarin
3,249
4 March 2022
9154
297
801
1
The grant price is the average closing share price over the three dealing days preceding grant.
2023 Group scorecard performance measures and metrics
Measure weighting
Underlying metrics (if applicable)
Metric weighting
2023 target
Science and Innovation: Annual pipeline progression
30%
Pipeline progression events
15%
C
Regulatory events
15%
C
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 2022 target
Target decreased vs 2022 target
Target constant
C
Commercially sensitive
Audited
116
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
Long-term incentives
Long-term incentives included in the Executive Directors’ realised pay for 2022 figure: 2020 PSP
Mr Soriot’s realised pay for 2022 includes the value of his PSP award with performance period ended 31 December 2022. These shares and
dividend equivalents will not be released to Mr Soriot until the awards vest at the end of the holding period.
The value of the shares due to vest has been calculated using the average closing share price over the three-month period ended 31 December
2022 (10656 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 2020 PSP award.
Audited
Long-term incentive awards with performance periods ended 31 December 2022
Value of shares due to vest
Ordinary Shares
granted
1
Performance
outcome
Face value
at time
of grant
2
£’000
Value due to
share price
appreciation
3
£’000
Dividend equivalent
accrued over
performance period
£’000
Long-term
incentives total
£’000
Pascal Soriot
2020 PSP
96,080
97%
6,874
3,057
612
10,543
1
Awards were granted to Mr Soriot on 6 March 2020 and 21 May 2020, to take account of the revised limits for the PSP approved by shareholders at the Company’s 2020 AGM.
2
Calculated using the grant price of 7376 pence for 2020 PSP awards.
3
Calculated using the difference between the grant price and the average closing share price over the three-month period ended 31 December 2022. The average closing share price over the
three-month period ended 31 December 2022 was 10656 pence.
The 2020 PSP award, which was granted to Mr Soriot on 6 March 2020 and 21 May 2020, to take account of the revised limits for the PSP which
were approved by shareholders at the Company’s 2020 AGM, are due to vest and be released on 6 March 2025 and 21 May 2025 on completion
of a further two-year holding period. Performance over the period from 1 January 2020 to 31 December 2022 will result in 97% of the award
vesting, based on the following assessment of performance. The 2020 PSP targets were reviewed in light of the enlarged Group following the
acquisition of Alexion. The Science and Innovation, Growth and Therapy Area Leadership, and Cash flow 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 performance measure.
The Growth and Therapy Area Leadership
target (measuring Total Revenue) is 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 Cash flow measure is assessed using
cumulative net cash flow from operating
activities less capital expenditure, adding back
proceeds from disposal of intangible assets.
AstraZeneca ranked fifth within the TSR peer
group, just below the upper quartile. The TSR
peer group for the 2020 PSP consisted of
AbbVie, Amgen, Astellas, BMS, Daiichi
Sankyo, Eli Lilly, Gilead, GSK, Johnson &
Johnson, MSD, Novartis, Novo Nordisk,
Pfizer, Roche, Sanofi, Takeda.
For more information about the TSR performance
of the Company and the TSR comparator group,
see page 118.
2020 PSP performance measures and metrics
1
Weighting
Threshold
(20%
vesting)
Maximum
(100%
vesting)
Outcome
Payout
Science and Innovation: First approvals and
NME volume over three years
NME Phase III/registrational volume
12%
9
18
18
12%
Regulatory events
18%
12
24
29
18%
Subtotal – Innovative Science
2
30%
30%
Growth and Therapy Area Leadership ($bn)
25%
35.0
41.0
46.0
25%
Cash flow ($bn)
25%
14.0
20.0
20.0
25%
Total shareholder return
20%
Median
UQ
3
5th
17%
Total
2
100%
97%
Key:
Bar charts are indicative of 2020 PSP performance; scales do not start from zero.
1
The Committee reviewed the 2020 PSP targets following the acquisition of Alexion to reflect the impact of the acquisition on
the Company’s results. The Committee is confident 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 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 2020.
2
The subtotal and total reflect the weightings of the individual metrics.
3
UQ = Upper Quartile.
We intend to disclose the 2023 Group scorecard outcome, and details of the performance hurdles and targets, in the 2023 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.
Audited
117
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
PSP awards granted during 2022
During 2022, conditional awards of shares were granted to the Executive Directors with face values equivalent to 650% of base pay for Mr Soriot
and 450% of base pay for Dr Sarin under the PSP. Face value is calculated using the grant price, being the average closing share price over the
three dealing days preceding grant.
Performance will be assessed over the period from 1 January 2022 to 31 December 2024 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)
1
Face value
£’000
End of
performance period
End of
holding period
Pascal Soriot
97,066
4 March 2022
9154
8,885
31 December 2024
4 March 2027
Aradhana Sarin
43,038
4 March 2022
9154
3,940
31 December 2024
4 March 2027
1
The grant price is the average closing share price over the three dealing days preceding grant.
The 2022 PSP performance measures focus on scientific, ESG, commercial and financial performance over the three-year performance period.
The five performance metrics attached to the 2022 PSP awards are detailed below. Twenty per cent 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, Eli Lilly, Gilead, GSK, Johnson & Johnson, Merck KGaA, Moderna, 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%
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
$20.0bn
20% (threshold for payout)
Between $20.0bn and $24.0bn
Pro rata
$24.0bn
75%
Between $24.0bn and $28.5bn
Pro rata
$28.5bn and above
100%
Growth and Therapy Area Leadership (20% of award)
For PSP awards granted in 2022, the 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 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 2024 Directors’ Remuneration Report. This measure is evaluated by reference to budget exchange rates.
Science and Innovation: First approvals and NME volume over three years (30% of award)
Performance is assessed using dual indices which measure NME Phase III/registrational volume and regulatory 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
7
20% (threshold for payout)
14
20% (threshold for payout)
Between 7 and 11
Pro rata
Between 14 and 21
Pro rata
11
75%
21
75%
Between 11 and 14
Pro rata
Between 21 and 28
Pro rata
14
100%
28
100%
Audited
Long-term incentives
continued
Audited
118
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
Long-term incentives
continued
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 through 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.
Emissions
% of award that vests
207 ktCO
2
e
20% (threshold for payout)
Between 207 ktCO
2
e and 181 ktCO
2
e
Pro rata
181 ktCO
2
e
75%
Between 181 ktCO
2
e and 155 ktCO
2
e
Pro rata
155 ktCO
2
e and below
100%
PSP performance measures for 2023 grant
The 2023 PSP measures remain unchanged from the 2022 PSP award.
PSP performance measure
Measure weighting
Underlying metrics (if applicable)
Metric weighting
Threshold
(20%
vesting)
Maximum
(100%
vesting)
Science and Innovation:
First approvals and NME
volume over three years
30%
NME Phase III/registrational volume
12%
10
20
Regulatory events
18%
13
26
Growth and
Therapy Area Leadership
20%
Total Revenue
Commercially sensitive
until end of
performance period
Cash flow
20%
$22.0bn
$31.0bn
Relative TSR
20%
Median
Upper
Quartile
Ambition Zero Carbon
10%
142 ktCO
2
e
91 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 is assessed on both R&D late-stage delivery (approvals) and also future pipeline sustainability (volume).
Disclosing the threshold and maximum hurdles for the 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 118.
Our Ambition Zero Carbon measure is based on our Scope 1 and Scope 2 emissions reductions. Further detail on our commitment can be
found on page 50.
As described on page 110, 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 Company’s Mid-Term Plan. The Committee takes consensus and exchange rates
into account when determining the appropriate level of stretch.
PSP awards are expected to be granted to the Executive Directors in March 2023. 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.
Audited
119
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Non-Executive Directors’ realised pay for 2022 (single total figure of remuneration)
The table sets out all elements of remuneration receivable by the Non-Executive Directors in respect of the year ended 31 December 2022,
alongside comparative figures for the prior year.
2022
Fees
£’000
2021
Fees
£’000
2022
Other
£’000
2021
Other
£’000
2022
Total
£’000
2021
Total
£’000
Leif Johansson
625
625
70
74
695
699
Euan Ashley
110
103
–
–
110
103
Philip Broadley
200
173
–
–
200
173
Michel Demaré
158
148
–
–
158
148
Deborah DiSanzo
120
108
–
–
120
108
Diana Layfield
110
92
–
–
110
92
Sheri McCoy
157
127
–
–
157
127
Tony Mok
110
103
–
–
110
103
Nazneen Rahman
155
131
–
–
155
131
Andreas Rummelt –
appointed 1 August 2021
110
40
–
–
110
40
Marcus Wallenberg
125
107
–
–
125
107
Former Non-Executive Directors
Geneviève Berger –
retired
11 May 2021
–
37
–
–
–
37
Graham Chipchase –
retired
11 May 2021
–
37
–
–
–
37
Total
1,980
1,831
70
74
2,049
1,905
The Chair’s single total figure includes office costs (invoiced in Swedish kronor) of £69,524 for 2022 and £74,000 for 2021.
Non-Executive Directors’ fee structure
The Non-Executive Directors’ fee structure for 2023 is set out in the table below, alongside the structure in place during 2022. 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 2022 with increases to
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.
In July 2022, it was announced that effective 1 May 2023 the fee for the Chair of the Board would be increased to £800,000 per annum. From
1 May 2023, no additional payments will be made to the Chair to reimburse office costs. Prior to this, the Chair’s fee was last increased in January
2018. The Chair-designate did not participate in any decision relating to his own fee. The revised fee reflects the steady increase in workload and
responsibilities of the Chair since the last fee increase took effect in 2018, as well as the increase in the size and complexity of the Group following
the acquisition of Alexion. Market data on FTSE 10 and FTSE 30 companies’ Chair fees were also considered to ensure that the level of fee is
appropriate.
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
2022
£’000
2023
£’000
Chair of the Board
1
625
800
2
Basic Non-Executive Director
95
95
Senior independent Non-Executive Director
40
40
Member of the Audit Committee
25
25
Chair of the Audit Committee
3
45
45
Member of the Remuneration Committee
20
20
Chair of the Remuneration Committee
3
40
40
Member of the Sustainability Committee
15
15
Chair of the Sustainability Committee
3
30
30
Member of the Science Committee
15
15
Chair of the Science Committee
3
30
30
1
The Chair of the Board does not receive any additional fees for chairing, or being a member of, a Committee.
2
The fee for the Chair of the Board will increase to £800,000 per annum with effect from 1 May 2023, as announced in July 2022.
3
The Committee Chairs do not receive additional fees for being a member of the Committee.
Audited
Non-Executive Directors’ remuneration
120
AstraZeneca Annual Report & Form 20-F Information 2022
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
248,855
42,894
319,192
1,197%
Aradhana Sarin
70,154
39,112
62,452
1,149%
1
Holding period shares included are those which are not subject to continued employment.
2
Shares in deferral periods which are subject to continued employment.
3
Holding as at 31 December 2022. Shares subject to deferral and holding periods calculated net of a theoretical 50% tax rate.
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 MSR for 2022 are set out below. Shares that count towards the MSR 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 requirement 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 (£95,000 during 2022) or, in the case of the Chair, approximately equivalent to his
basic annual fee (£625,000 during 2022). All Non-Executive Directors who had served for a period of three years or more as at 31 December 2022
met this expectation, based on the three-month average closing share price for the period ended 31 December 2022 (£106.56).
Directors’ interests as at 31 December 2022
The following table shows the beneficial interests of the Directors (including the interests of their connected persons) in Ordinary Shares as at
31 December 2022.
Executive Directors
Beneficial interest in
Ordinary Shares at
31 December 2022
1
Beneficial interest in
Ordinary Shares at
31 December 2021
1
Pascal Soriot
248,855
293,439
Aradhana Sarin
2
70,154
27,957
Non-Executive Directors
Leif Johansson
39,009
39,009
Euan Ashley
1,150
1,150
Philip Broadley
7,045
7,045
Michel Demaré
2,000
2,000
Deborah DiSanzo
1,000
1,000
Diana Layfield
1,400
1,400
Sheri McCoy
1,736
1,736
Tony Mok
2,000
2,000
Nazneen Rahman
1,017
1,017
Andreas Rummelt
3
27,205
34,790
Marcus Wallenberg
60,028
60,028
1
For the Executive Directors, beneficial interests include shares in holding periods which are not subject to performance measures or continued employment.
2
Aradhana Sarin was appointed on 1 August 2021.
3
Andreas Rummelt was appointed on 1 August 2021.
Key:
2022 MSR
Shares counted towards MSR
1,197%
1,149%
650%
CEO
450%
CFO
121
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
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
31 December 2022
Share scheme interests
Grant date
Shares
outstanding at
1 January 2022
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
08/03/2019
9,849
6287
–
9,849
–
n/a
–
n/a
08/03/2022
1,2
06/03/2020
8,734
7376
–
–
–
n/a
8,734
n/a
06/03/2023
05/03/2021
16,944
6844
–
–
–
n/a
16,944
n/a
05/03/2024
04/03/2022
–
9154
17,216
–
–
n/a
17,216
n/a
04/03/2025
3
PSP
24/03/2017
121,258
4880
–
121,258
–
–
–
31/12/2019
24/03/2022
4,5
23/03/2018
127,600
4853
–
–
–
–
127,600
31/12/2020
23/03/2023
08/03/2019
102,475
6287
–
–
5,124
–
97,351
31/12/2021
08/03/2024
6
06/03/2020
87,346
7376
–
–
–
87,346
–
31/12/2022
06/03/2025
21/05/2020
8,734
7376
–
–
–
8,734
–
31/12/2022
21/05/2025
05/03/2021
106,655
6844
–
–
–
106,655
–
31/12/2023
05/03/2026
14/05/2021
19,391
6844
–
–
–
19,391
–
31/12/2023
14/05/2026
04/03/2022
–
9154
97,066
–
–
97,066
–
31/12/2024
04/03/2027
7
AZIP
28/03/2014
20,677
3904
–
20,677
–
–
–
31/12/2017
01/01/2022
8,9
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
653,567
114,282
151,784
5,124
319,192
291,749
1
Market price on 8 March 2022, the actual date of release, was 8747 pence.
2
An additional 715 Ordinary Shares were released as a result of the reinvestment of dividend equivalents accrued during the deferral period.
3
Award granted following deferral of one half of the annual bonus earned in respect of performance during 2021, see page 116 for further detail.
4
Market price on 24 March 2022, the actual date of release, was 9836 pence.
5
An additional 16,944 Ordinary Shares were released as a result of the reinvestment of dividend equivalents accrued during the performance and holding period.
6
95% of the shares entered the holding period, following assessment of performance over the period to 31 December 2021. The remaining shares lapsed.
7
Details of PSP awards granted during 2022 are shown on page 118.
8
Market price on 10 February 2022, the actual date of release, was 8650 pence.
9
An additional 5,641 Ordinary Shares were released as a result of the reinvestment of dividend equivalents accrued during the performance and holding period.
Aradhana Sarin
Shares outstanding at
31 December 2022
Share scheme interests
Grant/
conversion
date
Shares
outstanding at
1 January 2022
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
1,332
–
1,332
–
n/a
–
n/a
28/02/2022
2
21/07/2021
3,252
–
3,252
–
n/a
–
n/a
28/02/2022
2
21/07/2021
42,284
–
42,284
–
n/a
–
n/a
28/02/2022
2
21/07/2021
4,290
–
4,290
–
n/a
–
n/a
28/02/2022
2
21/07/2021
9,649
–
9,649
–
n/a
–
n/a
28/02/2022
2
21/07/2021
3,252
–
3,252
–
n/a
–
n/a
21/07/2022
3
21/07/2021
4,290
–
4,290
–
n/a
–
n/a
21/07/2022
3
21/07/2021
46,525
–
46,525
–
n/a
–
n/a
21/07/2022
3
21/07/2021
9,649
–
9,649
–
n/a
–
n/a
21/07/2022
3
21/07/2021
4,290
–
–
–
n/a
4,290
n/a
01/02/2023
21/07/2021
9,649
–
–
–
n/a
9,649
n/a
01/02/2023
21/07/2021
9,649
–
–
–
n/a
9,649
n/a
01/02/2023
RSU award
4
13/08/2021
12,276
8209
–
–
–
n/a
12,276
n/a
01/02/2023
DBP
04/03/2022
–
9154
3,249
–
–
n/a
3,249
n/a
04/03/2025
5
PSP
13/08/2021
19,414
8209
–
–
–
19,414
–
31/12/2023
13/08/2026
04/03/2022
–
9154
43,038
–
–
43,038
–
31/12/2024
04/03/2027
Total
179,799
46,287
124,522
0
62,452
39,112
1
The number shown is the number of Ordinary Shares underlying the ADRs. Awards made to replace Dr Sarin’s Alexion incentive share awards, which were outstanding at the time of the
Alexion acquisition, on the same basis as other participants. These outstanding in-flight 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 $17.8 million.
2
Market price of AstraZeneca ADRs on 28 February 2022, the actual date of release, was $60.88.
3
Market price of AstraZeneca ADRs on 29 July 2022, the actual date of release, was $66.23.
4
One-off restricted share award granted to Dr Sarin to compensate her for the forfeiture of her previous contractual severance right entitlements.
5
Award granted following deferral of one half of the annual bonus earned in respect of performance during 2021, see page 116 for further detail.
Audited
122
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
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 2022 and 9 February 2023, there was no change in the interests in Ordinary Shares for current Directors shown in the
tables on pages 121 to 122.
Payments to former Directors
Marc Dunoyer was granted a PSP award in 2020, whilst CFO and Executive Director of AstraZeneca PLC. Mr Dunoyer stepped down as an
Executive Director on 1 August 2021, part way through the 2020 PSP performance period, but remained a member of the SET. Consistent with
other participants in the PSP, performance over the period 1 January 2020 to 31 December 2022 will result in 97% of Mr Dunoyer’s award granted
in 2020 vesting on completion of a further two-year holding period. This represents 21,246 shares vesting when pro-rated to reflect the
performance period during which Mr Dunoyer was an Executive Director (1 January 2020 to 1 August 2021).
Payments for loss of office
During 2022, no payments were made to Directors for loss of office.
Remuneration in the wider context
In our Corporate Governance Report on page 90, 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.
The Committee communicates with, and receives feedback from, employees through a variety of channels, including meetings with high-potential
employees and attending site visits, both virtually and in person. 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 Committee
affecting employees, such as the annual Group scorecard outcomes, are shared with employees through internal communications as well as
through the Directors’ Remuneration Report. Additionally, we publish materials on executive remuneration and its implementation for employees
on our intranet site. 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 reviewing 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 124. People and Sustainability is one of our three strategic priorities, and we explain in our Business
Review from page 34 the role that reward plays in developing a diverse culture that encourages and rewards innovation, entrepreneurship and
high performance. In carrying out its responsibilities and when setting the Directors’ Remuneration Policy, the Committee has taken into account
the principles of the UK Corporate Governance Code and the factors outlined within Provision 40 as described in the table below.
Area
Our approach
Clarity
Remuneration arrangements should be transparent and
promote effective engagement with shareholders and
the workforce.
The Committee believes the remuneration structures under the Directors’ Remuneration Policy,
and those for the wider workforce as set out below, are clearly understood. The Committee regularly
engages with employees and shareholders and considers their feedback when reviewing the
Directors’ Remuneration Policy and implementation.
Simplicity
Remuneration structures should avoid complexity and their
rationale and operation should be easy to understand.
We operate a simple remuneration framework for our executives across both fixed and variable pay
which is, where possible, aligned with the wider workforce. The purpose, structure and strategic
alignment of each element of pay has been clearly laid out in our Directors’ Remuneration Policy.
Risk
Remuneration arrangements should ensure reputational
and other risks from excessive rewards, and behavioural
risks that can arise from target-based incentive plans, are
identified and mitigated.
We seek to ensure alignment with long-term shareholder interests and to mitigate any potential risk
through several mechanisms within our approach to executive remuneration. These include the
two-year holding period under the Performance Share Plan on vesting, 50% mandatory deferral into
shares for three years for any annual bonus award, operation of malus and clawback provisions,
and a shareholding requirement for two years post-cessation of employment.
Predictability
The range of possible values of rewards to individual
directors and any other limits or discretions should be
identified and explained at the time of approving the policy.
The Committee set out under the Directors’ Remuneration Policy approved in May 2021 the range of
possible values under specific performance scenarios.
Proportionality
The link between individual awards, the delivery of strategy
and the long-term performance of the company should be
clear. Outcomes should not reward poor performance.
As set out on page 110, the Committee follows a robust target-setting and assessment process to
ensure variable pay outcomes under the annual bonus and Performance Share Plan are proportional
to our wider performance.
Our Directors’ Remuneration Policy operated as intended in terms of Company performance and
quantums during 2022, supporting the delivery of our strategy and another exceptional year for
AstraZeneca.
Alignment to culture
Incentive schemes should drive behaviours consistent with
company purpose, values and strategy.
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, with alignment between strategy and
reward set out on page 109. For example, alongside the formulaic outcome, our annual bonus scheme
for Executive Directors includes a holistic assessment of their performance and broader ESG factors,
further reinforcing the importance of our Purpose and Values.
Audited
123
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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 inflation, market rates, forecasts of any further market
increases and turnover.
The base pay of our Executive Directors and SET forms 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 contribution each individual makes 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 page 114. 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 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 the 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 117 to 119).
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. 35% of our global employee
population are eligible to receive an award under our Long-term
incentive plans.
PSP awards to Executive Directors and SET are granted under
the same plan as PSP awards granted to Vice-Presidents and
Senior Vice-Presidents. PSP awards to Executive Directors and
SET are subject to a two-year holding period following the
three-year performance period.
124
AstraZeneca Annual Report & Form 20-F Information 2022
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
40% 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 2022 against 2021 (%)
Change in 2021 against 2020 (%)
Change in 2020 against 2019 (%)
Base pay/fees
Benefits
Annual bonus
Base pay/fees
Benefits
Annual bonus
Base pay/fees
Benefits
Annual bonus
Executive Directors
Pascal Soriot
3.0
10.5
-0.8
3.0
1.1
35.9
0.0
-2.7
20.0
Aradhana Sarin
1
147.2
2,753.2
169.3
–
–
–
–
–
–
Non-Executive Directors
Leif Johansson
2
0.0
-6.4
–
0.0
1.4
–
0.0
1.4
–
Euan Ashley
3
6.8
–
–
300.0
–
–
–
–
–
Philip Broadley
15.6
–
–
16.9
–
–
2.8
–
–
Michel Demaré
7.0
–
–
18.7
–
–
247.2
–
–
Deborah DiSanzo
11.1
–
–
0.0
–
–
0.0
–
–
Diana Layfield
4
19.9
–
–
525.6
–
–
0.0
–
–
Sheri McCoy
23.6
–
–
3.0
–
–
–
–
–
Tony Mok
6.8
–
–
0.0
–
–
0.0
–
–
Nazneen Rahman
18.2
–
–
11.0
–
–
0.0
–
–
Andreas Rummelt
5
172.2
–
–
–
–
–
–
–
–
Marcus Wallenberg
17.1
–
–
3.6
–
–
0.0
–
–
Employees
6.0
6.0
19.3
4.9
4.9
44.4
4.1
4.1
-11.6
1
Aradhana Sarin joined the Board of AstraZeneca PLC on 1 August 2021. Percentage changes are based on the totals reported on page 111.
2
Benefits for Leif Johansson are office costs.
3
Euan Ashley was appointed on 1 October 2020.
4
Diana Layfield was appointed on 1 November 2020.
5
Andreas Rummelt was appointed on 1 August 2021.
125
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Remuneration in the wider context
continued
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)
Regulations 2018 (the Regulations).
Year
Method
25th percentile pay ratio
50th percentile pay ratio
75th percentile pay ratio
2022
Option A
230:1
159:1
107:1
2021
Option A
240:1
162:1
106:1
2020
Option A
284:1
197:1
130:1
2019
Option A
280:1
190:1
123:1
2018
Option A
230:1
160:1
103:1
The comparison with UK employees is specified by the Regulations. This group represents approximately 12% 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 111 for 2022). The ratios are based on total pay, which includes base pay, benefits, bonus and long-term
incentive (LTI) awards 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 determined as at 31 December 2022. 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 2022 bonus budget and projected payouts, and anticipated dividends on LTI awards, respectively. No elements
of pay have been excluded from the calculation, which has been determined following the approach of previous years.
CEO
UK employees
25th percentile
50th percentile
75th percentile
Pay data
1
(£’000)
Base pay
Total pay
Base pay
Total pay
Base pay
Total pay
Base pay
Total pay
2022
1,367
15,323
48
67
67
96
88
143
2021
1,327
13,858
43
58
61
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
49
50
71
70
110
1
The prior years’ figures have not been restated for subsequent share price changes (as shown in the CEO realised pay for 2022 table on page 111).
Despite increased CEO realised pay in 2022, primarily driven by higher vesting achievement and share price appreciation under the 2020
Performance Share Plan, a larger bonus budget across the wider UK employee population increased total pay year-on-year and saw pay ratios
fall at the lower and median quartiles and remain broadly consistent at the upper quartile when compared to 2021.
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 LTI, the pay ratio of the CEO compared to the median UK
employee is 51:1, a fall from 57:1 in 2021 as a result of a lower CEO annual bonus award as a percentage of target this year (the ratio excluding
LTI was 53:1 in 2020, and 51:1 in both 2018 and 2019).
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 123.
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
Group’s Consolidated Statement of Comprehensive Income on page 138, or its Consolidated Statement of Cash Flows on page 141.
Further information on the Group’s Accounting Policies can be found from page 142.
2022
2021
Difference
in spend
between
years
$m
Difference
in spend
between
years
%
Total employee remuneration
11,531
10,276
1,255
12.21
Distributions to shareholders: dividends paid
4,364
3,856
508
13.17
126
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
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’. This comparator group will
be used to assess relative TSR performance for PSP awards to be granted in 2023 and 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
Global pharmaceutical peers average
FTSE 100
Dec
12
Dec
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
Dec
20
Dec
21
Dec
22
600
500
400
300
200
100
CEO total remuneration table
Year
CEO
CEO
realised pay
£’000
Annual bonus
payout against
maximum
opportunity
%
LTI vesting
rates against
maximum
opportunity
%
2022
Pascal Soriot
15,323
1
92
97
2021
Pascal Soriot
15,740
2
95
95
2020
Pascal Soriot
15,934
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
7,963
97
78
2014
Pascal Soriot
3,507
94
–
2013
Pascal Soriot
3,344
94
–
1
The 2022 realised pay is shown on page 111.
2
This figure has been revised using the average closing share price over the three-month period to 31 December 2022, as explained on page 117.
3
This figure includes shares awarded to Mr Soriot in 2013 under the AZIP to compensate him for LTI awards from previous employment forfeited on his recruitment as the Company’s CEO.
Governance
Committee membership
During 2022, the Committee members were Sheri McCoy (Chair of the Committee), Philip Broadley, Michel Demaré, and Leif Johansson.
Mr Demaré stepped down as Chair of the Remuneration Committee on 1 December 2022 but remains a member of the Committee. The Deputy
Company Secretary acts as secretary to the Committee. The Committee met six times in 2022 and members’ attendance records are set out on
page 79. During the year, the Committee was materially assisted, except in relation to their own remuneration, by the CEO; the CFO; the SVP
Finance – Group Controller and Global Finance Services; the SVP Group Planning & Finance Business Partnering; the SVP, Global Portfolio/
Project Management and Strategic Planning; the Chief Human Resources Officer and General Counsel; the SVP Reward, Inclusion and Talent
Acquisition; the Senior Director Executive Reward; the Company Secretary; the Deputy Company Secretary; the EVP, Sustainability and Chief
Compliance Officer; 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 2022 was
provided on a time spent basis at a cost to the Company of £178,340, excluding VAT. During 2022, 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.
127
AstraZeneca Annual Report & Form 20-F Information 2022
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Governance
continued
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 clawback 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 29 April 2022, shareholders voted in favour of a resolution to approve the Annual Report on Remuneration for the year
ended 31 December 2021. The Directors’ Remuneration Policy was approved by shareholders at the Company’s AGM on 11 May 2021. The Policy
can be found on the Company’s website, www.astrazeneca.com/annualreport2022.
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 2021 (2022 AGM)
1,109,853,237
92.23
93,486,120
7.77
1,203,339,357
77.66
7,606,290
Ordinary Resolution to approve the Directors’
Remuneration Policy (2021 AGM)
564,935,789
60.19
373,708,277
39.81
938,644,066
71.50
21,415,088
The response to the shareholder vote to approve the Directors’ Remuneration Policy at the 2021 AGM is outlined in the 2021 Directors’
Remuneration Report in our 2021 Annual Report.
Directors’ service contracts and letters of appointment
The notice periods and unexpired terms of Executive Directors’ service contracts at 31 December 2022 are shown in the table below.
Executive Director
Effective date of service contract
Unexpired term at 31 December 2022
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). A resolution to receive and approve the Directors’ Remuneration
Report will be proposed at the AGM on 27 April 2023.
On behalf of the Board
A C N Kemp
Company Secretary
9 February 2023
128
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Annual Report
on Remuneration
continued
Contents
Preparation of the Financial Statements
and Directors’ Responsibilities
130
Directors’ Annual Report on Internal Controls
over Financial Reporting
130
Auditors’ Report
131
Consolidated Statements
138
Group Accounting Policies
142
Notes to the Group Financial Statements
149
Group Subsidiaries and Holdings
199
Company Statements
204
Company Accounting Policies
206
Notes to the Company Financial Statements
208
Group Financial Record
211
Financial
Statements
129
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
130
AstraZeneca Annual Report & Form 20-F Information 2022
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
other jurisdictions.
Directors’ responsibility statement
pursuant to DTR 4
The Directors confirm that to the best
of our knowledge:
>
the Financial Statements, prepared in accordance
with the applicable set of accounting standards,
give a true and fair view 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
and uncertainties that they face.
On behalf of the Board of Directors on 9 February 2023
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.
The Directors assessed the effectiveness of
AstraZeneca’s internal control over financial reporting
as at 31 December 2022 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 2022 and has issued an unqualified
report thereon.
Directors’ Annual Report on Internal
Controls over Financial Reporting
Preparation of the Financial Statements
and Directors’ Responsibilities
131
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Strategic Report
Financial Statements
Report on the audit of the
financial statements
Opinion
In our opinion:
>
AstraZeneca PLC’s Group financial statements
and Company financial statements (the “financial
statements”) give a true and fair view of the state of
the Group’s and of the Company’s affairs as at
31 December 2022 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 as applied in
accordance with the provisions of the Companies
Act 2006;
>
the Company financial statements have been
properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards, including
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
2022 (the “Annual Report”), which comprise: the
Consolidated Statement of Financial Position and the
Company Balance Sheet as at 31 December 2022; the
Consolidated Statement of Comprehensive Income,
the Consolidated Statement of Cash Flows, the
Consolidated and Company Statements of Changes
in Equity for the year then ended; the Group and
Company Accounting Policies; and the Notes to the
Group and Company Financial Statements.
Our opinion is consistent with our reporting to the
Audit Committee.
Separate opinion in relation to international
financial reporting standards as adopted by
the European Union
As explained in the Group Accounting Policies, the
Group, in addition to applying UK-adopted
international accounting standards, has also applied
international financial reporting standards as adopted
by the European Union.
In our opinion, the Group financial statements have
been properly prepared in accordance with
international financial reporting standards (IFRS) as
adopted by the European Union.
Separate opinion in relation to IFRSs as
issued by the IASB
As explained in the Group Accounting Policies,
the Group, in addition to applying UK-adopted
international accounting standards, has also applied
IFRSs as issued by the International Accounting
Standards Board (IASB).
In our opinion, the Group financial statements have
been properly prepared in accordance 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 Company or its
controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
>
We identified 13 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), UK,
Sweden, China (two components), Japan, France,
Germany, South Korea, Thailand as well as the
Company and the AstraZeneca Treasury function.
>
We also identified a further nine 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 one
or more of the following financial statement line
items: revenue, accounts receivable, external
research and development expense, taxation and/
or property, plant and equipment.
>
We also identified five 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
goodwill, intangible assets (excluding software),
certain aspects of the pension obligations, certain
cash and borrowings, taxation, other investments
and litigation matters, as well as the consolidation.
>
The above procedures accounted for 80% of the
Group’s revenue and 83% of the Group’s absolute
profit before tax.
Key audit matters
>
Recognition and measurement of accruals for
Managed Care, Medicaid and Medicare Part D
rebates on US Product Sales (excluding Rare
Diseases) (Group)
>
Impairment assessment of the product, marketing
and distribution rights and other intangibles (Group)
>
Recognition and measurement of legal provisions
and disclosure of contingent liabilities (Group)
>
Recognition, measurement and disclosure of tax
liabilities for uncertain tax treatments (Group)
>
Valuation of defined benefit obligations (in the UK
and Sweden) (Group)
>
Distributable reserves in the Company (Parent)
Materiality
>
Overall Group materiality: $400m (2021: $250m)
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 share purchase
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 Company materiality: $100m (2021: $100m)
based on approximately 0.5% of net assets as
constrained by the allocation of overall Group
materiality.
>
Performance materiality: $300m (2021: $187.5m)
(Group) and $75m (2021: $75m) (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.
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.
Distributable reserves in the Company (Parent) is a
new key audit matter this year. The following key
audit matters from the prior year are no longer
included: Accounting for the acquisition of Alexion
Pharmaceuticals, Inc (Group) as the Alexion purchase
accounting was concluded in 2021; Accounting for
sales, grant income and deferred income relating to
Vaxzevria (Group) as Vaxzevria was no longer a focus
area; and Recognition and measurement of legal
provisions and contingent liabilities in the Parent
Company (Parent) as the Parent Company legal
matters have been resolved. Otherwise, the key
audit matters below are consistent with last year.
Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
Independent auditors’ report to
the members of AstraZeneca PLC
132
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Key audit matter
How our audit addressed the key audit matter
Recognition and measurement of accruals for Managed Care, Medicaid and
Medicare Part D rebates on US Product Sales (excluding Rare Diseases)
(Group)
Refer to the Audit Committee Report, Group Accounting Policies and Notes 1
and 20 in the Group financial statements.
In the US the Group recognises revenue on Product Sales under various
commercial and government mandated contracts and reimbursement
arrangements that include rebates, of which the most significant are Managed
Care, Medicaid and Medicare Part D relating to US Product Sales, excluding
Rare Diseases.
Rebates provided to customers under these arrangements are accounted for
as variable consideration, and recognised as a reduction to revenue, for which
unsettled amounts are accrued. At the time Product Sales are invoiced, rebates
and deductions that the Group expects to pay, are estimated. There is significant
management estimation in determining the accruals in the US. Assumptions
used to estimate the rebates are monitored and adjusted regularly in light of
contractual and legal obligations, historical trends, past experience and
projected market conditions.
The US Rebates, chargebacks, returns and other revenue accruals liability
(excluding Rare Diseases) at 31 December 2022 amounted to $3,822m (2021:
$3,045m), principally consisting of rebates related to Managed Care, Medicaid
and Medicare Part D.
We evaluated the design and tested the operating effectiveness of controls
relating to the recognition and measurement of the accruals for the Managed
Care, Medicaid and Medicare Part D. We determined that we could rely on these
controls for the purposes of our audit.
We:
>
developed an independent estimate of the Managed Care, Medicaid and
Medicare Part D accruals using the terms of the specific rebate programmes
and/or contracts with customers, historical revenue data; market demand and
market conditions in the US; third party information on inventory held by direct
and indirect customers; and the historical trend of actual rebate claims paid;
>
compared our independent estimates to the accruals recorded by
management;
>
assessed the effect of any adjustments to prior years’ accruals in the current
year’s results; and
>
tested actual payments made and rebate claims processed by the Group, and
evaluated those claims for consistency with the contractual and mandated
terms of the Group’s arrangements.
Based on the procedures performed, we considered the accruals to be
reasonable.
We also evaluated the disclosures in Notes 1 and 20 of the Group financial
statements, which we considered appropriate.
Impairment assessment of the product, marketing and distribution rights
and other intangibles (Group)
Refer to the 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 (hereafter referred to as the intangible assets) totalling $38,890m at 31
December 2022 (2021: $42,062m). 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 loss or reversal.
The recoverability of the carrying value of cash generating units (to which the
intangible assets belong) depends on future cash flows and/or the outcome of
research and development (‘R&D’) activities including decisions by the Group to
terminate development. The determination of the recoverable amounts include
significant estimates, which are highly sensitive and depend upon key
assumptions including the outcome of R&D activities, probability of technical
and regulatory success, market volume, share and pricing (to derive peak year
sales), the amount and timing of projected future cash flows and sales erosion
curves following patent expiry. Changes in these assumptions could have an
impact on the recoverable amount of intangible assets.
During 2022, $241m (2021: $2,067m) of net impairment charges were recorded.
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.
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;
>
tested the completeness and accuracy of the models as well as the underlying
data used in the models, which included reconciling the cash flows to the
Board approved Group level budgets and forecasts; 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 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 assist with the evaluation of the
probability of technical and regulatory success.
Based on the procedures performed, we determined that the net impairment
charge of $241m 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.
Recognition and measurement of legal provisions and disclosure of
contingent liabilities (Group)
Refer to the Audit Committee Report, Group Accounting Policies, Notes 21 and
30 in the Group financial statements.
The Group is involved in various legal proceedings, 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. As at 31 December 2022 the Group held provisions of
$161m (2021: $239m) in respect of legal claims and settlements (together, legal
provisions) and disclosed the more significant legal proceedings as contingent
liabilities in Note 30.
There is significant judgement by management when assessing the timing and
likelihood of loss being incurred and whether a legal provision can be reasonably
estimated and recorded or a contingent liability disclosed. Management’s
assessment of the amounts concerned relies heavily on estimates and
assumptions.
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 enquired of internal legal counsel and where appropriate external legal
counsel. We obtained and evaluated letters of audit inquiry with the Group’s
internal and external legal counsel for significant litigation. We have inspected
certain external legal documents. We tested the completeness of management’s
assessment of both the identification of legal proceedings and possible
outcomes of each significant legal claim. We evaluated the reasonableness of
management’s assessment regarding whether an adverse outcome is probable
and estimated reliably.
We evaluated management’s judgement regarding the proceedings set out as
contingent liabilities within Note 30 and that for one matter management was
unable to estimate the possible loss or range of possible losses at this stage.
Based on the procedures performed, for the provisions recorded and contingent
liabilities disclosed, we considered them to be reasonable. We evaluated the
disclosures in Notes 21 and 30 of the Group financial statements and considered
them to be appropriate.
Independent auditors’ report to
the members of AstraZeneca PLC
continued
133
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Strategic Report
Financial Statements
Key audit matter
How our audit addressed the key audit matter
Recognition, measurement and disclosure of tax liabilities for uncertain
tax treatments (Group)
Refer to the Audit Committee Report, Group Accounting Policies and Note 30
in the Group financial statements.
The Group faces a number of audits and reviews in jurisdictions around the
world and, in some cases, is in dispute with tax authorities.
At 31 December 2022 the total net tax liability recognised in respect of uncertain
tax treatments is $830m (2021: $768m).
The Group estimates the potential for additional liabilities where the possibility of
the additional liabilities falling due is more than remote and at 31 December 2022
this was $734m (2021: $646m).
Tax liabilities recognised for uncertain tax treatments require management to
make key judgements with respect to the outcome of current and potential future
tax audits, and actual results could vary from these estimates.
We evaluated the design and tested the operating effectiveness of controls in
respect of the recognition and measurement of uncertain tax treatments. We
determined that we could rely on these controls for the purposes of our audit.
We tested the completeness of management’s assessment of the identification
of tax liabilities and evaluated the management’s process for estimating the
possible outcomes of each tax liability. We obtained the status and results of tax
audits and discussions with the relevant tax authorities. With the assistance of
our local and international tax specialists, we:
>
evaluated management’s assessment of the technical merits of tax treatments
(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;
>
tested the completeness and accuracy of the information used in the
determination of the probability of different outcomes for uncertain tax
treatments and the estimation of the liability for those tax treatments; and
>
evaluated the reasonableness of significant assumptions related to the
outcome of tax audits and assumptions relating to the most likely amount
or expected value depending on the resolution of the uncertainty.
Based on the procedures performed, we considered the tax liabilities to be
reasonable. We considered the disclosures in Note 30 of the Group financial
statements including in respect of the additional liabilities where the possibility
of additional liabilities falling due is more than remote. We are satisfied that these
disclosures are appropriate.
Valuation of defined benefit obligations in the UK and Sweden (Group)
Refer to the Audit Committee Report, Group Accounting Policies and Note 22
in the Group financial statements.
The Group has defined benefit obligations of $8,108m at 31 December 2022
(2021: $13,018m), 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 72% of the Group’s defined benefit obligations.
The valuation of pension plan obligations requires significant estimation in
determining appropriate assumptions such as mortality (for the UK scheme
only), discount rates and inflation levels (for both the UK and Sweden schemes).
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 the assumptions.
We evaluated the design and tested the operating effectiveness of controls in
respect of the assumptions used and accuracy 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 actuarial experts to assess whether the assumptions used in
calculating the defined benefit obligations for the UK and Sweden were
reasonable. Our actuarial experts assisted in developing an independent
expectation of the defined benefit obligations for the UK and Sweden. Our
experts evaluated whether the mortality assumptions (UK scheme only) and the
discount rates and inflation rates (for both the UK and Sweden schemes) were:
>
consistent with the specifics of each plan and where relevant considering
national information;
>
consistent with independently developed estimates; and
>
in line with other companies’ recent external reporting.
We evaluated the calculations prepared by management’s external actuaries
which included testing the completeness and accuracy of the underlying data.
In order to evaluate the reasonableness of management’s estimate, our experts
also compared the independent estimate to management’s estimate.
Based on the procedures performed, we 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.
Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
134
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Key audit matter
How our audit addressed the key audit matter
Distributable reserves in the Company (Parent)
Refer to the Company Statement of Changes in Equity in the Company
financial statements.
The directors review and disclose the level of distributable reserves of the
Company annually and aim to maintain distributable reserves that provide
adequate cover for dividend payments. At 31 December 2022, the Profit and loss
account reserve of $7,458m (2021: $11,563m) was available for distribution,
subject to filing the Company financial statements with Companies House.
There is judgement when determining the profits available for distribution by
reference to guidance on realised and distributable profits in accordance with
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.
We obtained and audited the analysis of distributable reserves which included
agreeing it to the underlying supporting evidence. We assessed the
completeness and existence of transactions included in the Profit and loss
account reserve as at 31 December 2022 through testing the underlying profit
and loss accounts and reviewing Board minutes.
We used our distributable reserves experts to assess whether judgements made
were appropriate and the analysis was aligned with the relevant technical
guidance on the determination of realised profits under the Companies Act 2006.
Based on our procedures, we noted no exceptions and considered the directors’
judgement in determining the profits available for distribution, and the related
disclosures, to be appropriate.
Independent auditors’ report to
the members of AstraZeneca PLC
continued
135
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Strategic Report
Financial Statements
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 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
13 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), UK, Sweden, China (two components),
Japan, France, Germany, South Korea, Thailand as
well as the Company and the AstraZeneca Treasury
function.
We also identified a further nine 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, external research and
development expense, taxation and/or property,
plant and equipment. We also identified five shared
service centres where audit procedures were
performed over certain shared service functions for
transaction processing.
Financial statements – Group
Financial statements – Company
Overall materiality
$400m (2021: $250m).
$100m (2021: $100m).
How we determined it
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 share purchase 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 considerations,
the discount unwind on the Acerta Pharma share purchase liability, material legal
settlements, the unwind of the fair value adjustment to Alexion inventories and the
restructuring costs resulting from the Post Alexion Acquisition Group Review.
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. Our approach and relevant adjustments
are consistent with the prior year.
We have considered the nature of the business of
AstraZeneca PLC (being a holding company for
investment activities) and have determined that net
assets are 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 $200m.
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% (2021:
75%) of overall materiality, amounting to $300m (2021:
$187.5m) for the Group financial statements and $75m
(2021: $75m) for the 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 $20m (Group audit) (2021: $12.5m) and
$20m (Company audit) (2021: $12.5m) 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 areas, including goodwill, intangible
assets (excluding software), certain aspects of the
pension obligations, certain cash and borrowings,
taxation, 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 through a combination of
in person site visits and 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
papers for material reporting components and the
review of the work performed by the component
auditors on the sub-consolidation of Rare Diseases.
We attended meetings with local management
alongside the component auditors for full scope and
other material components.
The impact of climate risk on our audit
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 included 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 Sustainability Committee.
We 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:
Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
136
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the
Group’s and the Company’s ability to continue to
adopt the going concern basis of accounting included:
>
agreeing the underlying cash flow projections to
Board approved Group level budgets and forecasts,
assessing how these forecasts are compiled, and
assessing the accuracy of management’s forecasts;
>
evaluating the key assumptions within
management’s forecasts and ensuring that such
assumptions are consistent with those modelled in
relation to impairments;
>
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 and
performing our own sensitivities.
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 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 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 (TCFD)
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 2022 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 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 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
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 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 and Company 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
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 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.
Independent auditors’ report to
the members of AstraZeneca PLC
continued
137
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Strategic Report
Financial Statements
Responsibilities for the financial 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
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 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, the European Medicines Agency, the UK
Medicines and Healthcare products Regulatory
Agency, China Food and Drug Administration), anti
bribery and competition law (including but not limited
to the Foreign Corrupt Practices Act, the Proceeds of
Crime Act and the provisions set out by the National
Healthcare Security Administration in China) 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 along with
other members of Group legal and external counsel
where applicable, 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, with
the involvement of PwC Forensic specialists;
>
Challenging assumptions made by management
in its significant accounting estimates, in particular
in relation to the 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 disclosure of contingent liabilities,
the recognition and measurement of uncertain tax
treatments, 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, 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 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 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 six years, covering the years ended
31 December 2017 to 31 December 2022.
Other matter
As required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R,
these 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.
Sarah Quinn (Senior Statutory Auditor)
for and on behalf of
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
9 February 2023
Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
Consolidated Statement of Comprehensive Income
for the year ended 31 December
2022
2021
2020
Notes
$m
$m
$m
Product Sales
1
Collaboration Revenue
1
Total Revenue
Cost of sales
(12,391 )
(12,437 )
(5,299 )
Gross profit
Distribution expense
(536 )
(446 )
(399 )
Research and development expense
2
(9,762 )
(9,736 )
(5,991 )
Selling, general and administrative expense
2
(18,419 )
(15,234 )
(11,294 )
Other operating income and expense
2
Operating profit
Finance income
3
Finance expense
3
(1,346 )
(1,300 )
(1,306 )
Share of after tax losses in associates and joint ventures
11
(5 )
(64 )
(27 )
Profit/(loss) before tax
(265 )
Taxation
4
(772 )
Profit for the period
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurement of the defined benefit pension liability
22
(168 )
Net (losses)/gains on equity investments measured at fair value through other comprehensive income
(88 )
(187 )
Fair value movements related to own credit risk on bonds designated as fair value through profit and loss
(1 )
Tax on items that will not be reclassified to profit or loss
4
(216 )
(81 )
Items that may be reclassified subsequently to profit or loss:
Foreign exchange arising on consolidation
23
(1,446 )
(483 )
Foreign exchange arising on designated liabilities in net investment hedges
23
(282 )
(321 )
Fair value movements on cash flow hedges
(97 )
(167 )
Fair value movements on cash flow hedges transferred to profit and loss
(254 )
Fair value movements on derivatives designated in net investment hedges
23
(8 )
(Costs)/gains of hedging
(7 )
(6 )
Tax on items that may be reclassified subsequently to profit or loss
4
(39 )
(1,694 )
(689 )
Other comprehensive (loss)/income for the period, net of tax
(878 )
(145 )
Total comprehensive income/(loss) for the period
(30 )
Profit attributable to:
Owners of the Parent
Non-controlling interests
26
(52 )
Total comprehensive income/(loss) attributable to:
Owners of the Parent
(33 )
Non-controlling interests
26
(52 )
Basic earnings per $0.25
5
$2.12
$0.08
$2.44
Diluted earnings per $0.25
5
$2.11
$0.08
$2.44
Weighted average number of Ordinary Shares in issue (millions)
5
Diluted weighted average number of Ordinary Shares in issue (millions)
5
Dividends declared and paid in the period
25
All activities were in respect of continuing operations.
$m means millions of US dollars.
138
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Consolidated Statement of Financial Position
at 31 December
2022
2021
2020
Notes
$m
$m
$m
Assets
Non-current assets
Property, plant and equipment
7
Right-of-use assets
8
Goodwill
9
Intangible assets
10
Investments in associates and joint ventures
11
Other investments
12
Derivative financial instruments
13
Other receivables
14
Deferred tax assets
4
Current assets
Inventories
15
Trade and other receivables
16
Other investments
12
Derivative financial instruments
13
Intangible assets
10
Income tax receivable
Cash and cash equivalents
17
Assets held for sale
18
Total assets
Liabilities
Current liabilities
Interest-bearing loans and borrowings
19
(5,314 )
(1,660 )
(2,194 )
Lease liabilities
8
(228 )
(233 )
(192 )
Trade and other payables
20
(19,040 )
(18,938 )
(15,785 )
Derivative financial instruments
13
(93 )
(79 )
(33 )
Provisions
21
(722 )
(768 )
(976 )
Income tax payable
(896 )
(916 )
(1,127 )
(26,293 )
(22,594 )
(20,307 )
Non-current liabilities
Interest-bearing loans and borrowings
19
(22,965 )
(28,134 )
(17,505 )
Lease liabilities
8
(725 )
(754 )
(489 )
Derivative financial instruments
13
(164 )
(45 )
(2 )
Deferred tax liabilities
4
(2,944 )
(6,206 )
(2,918 )
Retirement benefit obligations
22
(1,168 )
(2,454 )
(3,202 )
Provisions
21
(896 )
(956 )
(584 )
Other payables
20
(4,270 )
(4,933 )
(6,084 )
(33,132 )
(43,482 )
(30,784 )
Total liabilities
(59,425 )
(66,076 )
(51,091 )
Net assets
Equity
Capital and reserves attributable to equity holders of the Company
Share capital
24
Share premium account
Capital redemption reserve
Merger reserve
Other reserves
23
Retained earnings
23
(574 )
Non-controlling interests
26
Total equity
Pascal Soriot
Aradhana Sarin
Director
Director
139
AstraZeneca Annual Report & Form 20-F Information 2022
Consolidated Statement of Financial Position
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Consolidated Statement of Changes in Equity
for the year ended 31 December
Share
Capital
Total
Non-
Share
premium
redemption
Merger
Other
Retained
attributable
controlling
Total
capital
account
reserve
reserve
reserves
earnings
to owners
interests
equity
$m
$m
$m
$m
$m
$m
$m
$m
$m
At 1 January 2020
Profit for the period
(52 )
Other comprehensive income
1
Transfer to other reserves
2, 3
(22 )
(1,401 )
Transactions with owners
Dividends (Note 25)
(3,668 )
(3,668 )
(3,668 )
Issue of Ordinary Shares
Share-based payments charge for the period (Note 29)
Settlement of share plan awards
(349 )
(349 )
(349 )
Net movement
(22 )
(1,453 )
At 31 December 2020
Profit for the period
Other comprehensive loss
1
(145 )
(145 )
(145 )
Transfer to other reserves
2
(21 )
Transactions with owners
Dividends (Note 25)
(3,882 )
(3,882 )
(3,882 )
Issue of Ordinary Shares
Share-based payments charge for the period (Note 29)
Settlement of share plan awards
(781 )
(781 )
(781 )
Issue of replacement Alexion share awards upon
acquisition (Note 27)
4
Net movement
(3,589 )
At 31 December 2021
Profit for the period
Other comprehensive loss
1
(875 )
(875 )
(3 )
(878 )
Transfer to other reserves
2
(24 )
Transactions with owners
Dividends (Note 25)
(4,485 )
(4,485 )
(4,485 )
Issue of Ordinary Shares
Share-based payments charge for the period (Note 29)
Settlement of share plan awards
(807 )
(807 )
(807 )
Net movement
(2,284 )
(2,231 )
(2,229 )
At 31 December 2022
(574 )
1
Included within Other comprehensive loss of $878 m (2021: loss of $145 m; 2020: income of $1,608 m) is a charge of $7 m (2021: charge of $6 m; 2020: gain of $9 m), relating to Costs of hedging.
2
Amounts charged or credited to Other reserves relate to exchange adjustments arising on goodwill.
3
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).
4
Replacement share awards were issued as part of the acquisition of Alexion in 2021 (see Note 27).
140
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Consolidated Statement of Cash Flows
for the year ended 31 December
2022
2021
2020
Notes
$m
$m
$m
Cash flows from operating activities
Profit/(loss) before tax
(265 )
Finance income and expense
3
Share of after tax losses of associates and joint ventures
11
Depreciation, amortisation and impairment
Increase in trade and other receivables
(1,349 )
(961 )
(739 )
Decrease/(increase) in inventories
(621 )
Increase in trade and other payables and provisions
Gains on disposal of intangible assets
2
(104 )
(513 )
(1,030 )
Gains on disposal of investments in associates and joint ventures
2
(776 )
Fair value movements on contingent consideration arising from business combinations
20
(272 )
Non-cash and other movements
17
(692 )
(276 )
Cash generated from operations
Interest paid
(849 )
(721 )
(733 )
Tax paid
(1,623 )
(1,743 )
(1,562 )
Net cash inflow from operating activities
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired
27
(48 )
(9,263 )
Payments upon vesting of employee share awards attributable to business combinations
27
(215 )
(211 )
Payment of contingent consideration from business combinations
20
(772 )
(643 )
(822 )
Purchase of property, plant and equipment
(1,091 )
(1,091 )
(961 )
Disposal of property, plant and equipment
Purchase of intangible assets
(1,480 )
(1,109 )
(1,645 )
Disposal of intangible assets and assets held for sale
Movement in profit-participation liability
2
Purchase of non-current asset investments
(45 )
(184 )
(119 )
Disposal of non-current asset investments
Movement in short-term investments, fixed deposits and other investing instruments
(114 )
Payments to associates and joint ventures
11
(26 )
(92 )
(8 )
Disposal of investments in associates and joint ventures
Interest received
Net cash outflow from investing activities
(2,960 )
(11,058 )
(285 )
Net cash inflow/(outflow) before financing activities
(5,095 )
Cash flows from financing activities
Proceeds from issue of share capital
Issue of loans and borrowings
Repayment of loans and borrowings
(1,271 )
(4,759 )
(1,609 )
Dividends paid
(4,364 )
(3,856 )
(3,572 )
Hedge contracts relating to dividend payments
(127 )
(29 )
(101 )
Repayment of obligations under leases
(244 )
(240 )
(207 )
Movement in short-term borrowings
(276 )
Payments to acquire non-controlling interests
(149 )
Payment of Acerta Pharma share purchase liability
(920 )
Net cash (outflow)/inflow from financing activities
(6,823 )
(2,203 )
Net increase/(decrease) in Cash and cash equivalents in the period
(1,446 )
Cash and cash equivalents at the beginning of the period
Exchange rate effects
(80 )
(62 )
Cash and cash equivalents at the end of the period
17
141
AstraZeneca Annual Report & Form 20-F Information 2022
Consolidated Statement of Cash Flows
Corporate Governance
Additional Information
Financial Statements
Strategic Report
of financial information
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
Statements on a going concern basis
The Group has considerable financial resources
available. As at 31 December 2022, the Group
has $11.1bn in financial resources (Cash and
cash equivalent balances of $6.2bn and
undrawn committed bank facilities of $4.9bn
available until April 2026 with only $5.5bn of
borrowings due within one year). All facilities
contain no financial covenants and were
undrawn at 31 December 2022. On 2 February
2023, the Group entered into an additional
$2.0bn of two-year committed bank facilities.
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 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
and
Significant Estimates
:
>
revenue recognition – see Revenue
Accounting Policy on page 142
and Note 1 on page 149
>
expensing of internal development
expenses – see Research and
Development Policy on page 144
>
impairment reviews of Intangible assets
– see Note 10 on page 161
>
useful economic life of Intangible assets –
see Research and Development Policy
on page 144
>
business combinations and Goodwill – see
Business Combinations and Goodwill
Policy on page 146
and Note 27
on page 182
>
litigation liabilities – see Litigation and
Environmental Liabilities within Note 30
on page 192
>
operating segments – see Note 6 on
page 157
>
employee benefits – see Note 22 on
page 173
>
taxation – see Note 30 on page 192
.
AstraZeneca has assessed the impact of
the uncertainty presented by the COVID-19
pandemic and the Russia-Ukraine conflict on
the Financial Statements, specifically
considering the impact on key judgements
and significant estimates along with several
other areas of increased risk. No material
accounting impacts relating to COVID-19 or
the Russia-Ukraine conflict 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.
Key Judgements are those judgements
made in applying the Group’s accounting
policies that have a material effect on the
amounts of assets and liabilities recognised
in the financial statements.
A Significant Estimate has a significant
risk of material adjustment to the carrying
amounts of assets and liabilities within the
next financial year.
Financial risk management policies are
detailed in Note 28 to the Financial Statements
from page 184.
AstraZeneca’s management considers the
following to be the most significant accounting
Revenue comprises Product Sales and
Collaboration Revenue.
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 the quantity and value of goods
which may ultimately be returned 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 based upon assumptions
developed using contractual terms, historical
experience and market related information.
The rebates and deductions are recognised
as variable consideration and recorded as a
reduction to revenue with an accrual recorded.
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.
142
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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 certain
Vaccines & Immune Therapies medicines
relating to 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.
Certain arrangements include bill-and-hold
arrangements under which the Group invoices
a customer for a product but retains physical
possession of the product until it is transferred
to the customer at a point in time in the future.
For these types of arrangements, an
assessment is made to determine when the
performance obligation has been satisfied,
which is when control of the product is
transferred to the customer. If the customer
has obtained control of the product even though
that product remains in the Group’s physical
possession, the performance obligation to
transfer a product has been satisfied and
Product Sales are recognised. Control is
considered to have transferred when the
product is segregated as belonging to the
customer, is readily available to be delivered
to the customer and AstraZeneca is unable to
sell the product to another customer.
Collaboration Revenue
Collaboration Revenue includes income from
collaborative arrangements where either the
Group has out-licensed (sold) or has in-licenced
(acquired) certain rights associated with
products, where either AstraZeneca (out-
licences) or the collaborator (in-licences) retains
a significant ongoing economic interest in the
product. Significant interest can include
ongoing supply of finished goods, profit
sharing arrangements or being principal in the
sales of medicines. These collaborations may
include development, manufacturing and/or
commercialisation arrangements with the
collaborator. Income from out-licences may
take the form of upfront fees, milestones and
royalties and income from in-licences may
comprise the sharing of profit arising from
sales made as principal by the collaborator.
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.
Other performance obligations in the contract
might include the supply of product. These
arrangements typically involve the receipt of an
upfront payment, which the contract attributes
to the license of the intangible assets, and
ongoing receipts for supply, 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 account and record revenue on
delivery of that component. Where practicable,
consideration is allocated to performance
obligations on the basis of the standalone
selling price of each performance obligation.
However, where there is a licence of intellectual
property, it is not always possible to establish
a reliable estimate of the standalone selling price
of the licence as they are unique. Therefore, in
these rare situations, the residual approach is
used to determine the consideration attributable
to the licence.
Where fixed 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 as financing income over the
period to the expected date of receipt.
Where control of a right to use licence for 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 a licence 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 Group provides ongoing development
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.
The Group periodically enters into transactions
where it acquires part of the rights to a product
intangible (either on-market or in-process
R&D), but for commercial reasons does not
act as principal in selling the product to the
customer and therefore does not recognise
income from the product in the form of
Product Sales. This may occur where, for
example, a collaboration partner retains the
right to commercialise in a specific territory,
and has sufficient local control over that
commercialisation to book product sale
revenue, while the Group instead receives a
proportion of the value generated by those
product sales, either in the form of a royalty or
143
AstraZeneca Annual Report & Form 20-F Information 2022
Group Accounting Policies
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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 expenditure is charged to profit and
loss in the year in which it is incurred.
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 2022, 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. Such payments may
be made once development or regulatory
milestones are met and may also be made on
the basis of sales volumes once a product is
launched. Development and regulatory
milestone payments are capitalised as the
milestone is triggered. Sales-related payments
are accrued and capitalised with reference to
the latest Group sales forecasts for approved
indications. Assets capitalised are amortised,
on a straight-line basis, over their useful
economic lives from product launch.
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
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 161.
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, with the
products’ expected cash flows risk-adjusted
over their estimated remaining useful economic
life. 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 Operating 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
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
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
The Group accounts for pensions and other
employee benefits (principally healthcare)
under IAS 19 ‘Employee Benefits’. In respect
of defined benefit plans, obligations are
determined using the projected unit credit
method and are discounted to present value
by reference to market yields on high-quality
corporate bonds, while plan assets are
measured at fair value. Given the extent of the
assumptions used to determine the value of
scheme assets and scheme liabilities, 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.
Group Accounting Policies
continued
144
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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 subject to consideration
of the effect any minimum funding requirement
for future service has on the benefit available
as a reduction in future contributions.
Payments to defined contribution plans are
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.
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 there are future taxable
temporary differences or 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
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.
Deferred tax assets and liabilities are offset in
the Consolidated Statement of Financial
Position if, and only if, the taxable entity has a
legally enforceable right to set off current tax
assets and liabilities, and the Deferred tax
assets and liabilities relate to taxes levied by
the same taxation authority on the same
taxable entity.
Liabilities for uncertain tax positions 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.
Liabilities for uncertain tax positions 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
All plans have been classified as equity settled
after assessment. The grant date fair value of
the market-based performance elements of
employee share plan awards is calculated using
a modified Monte Carlo model, with other
elements at market price. In accordance with
IFRS 2 ‘Share-based Payment’, the resulting
cost is recognised in profit on a straight-line
basis over the vesting period of the awards.
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 182) are classified within investing
activities, as they are part of the aggregate
cash flows arising from obtaining control of
The Group’s policy is to depreciate 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 until the asset is available
for use, at which point the asset is transferred
into either Land and buildings or Plant and
equipment, and depreciated over its estimated
useful economic life.
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 useful economic 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
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.
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
145
AstraZeneca Annual Report & Form 20-F Information 2022
Group Accounting Policies
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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
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.
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 182 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 an estimate.
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
A subsidiary is an entity controlled, directly
or indirectly, by AstraZeneca PLC
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
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
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 considered highly probable only
when the appropriate level of management
has committed to the sale.
Group Accounting Policies
continued
146
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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
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
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 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
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
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
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 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
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 of derivatives
not designated in hedging relationships are
recognised in profit or loss.
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 all of the
derivative positions above a predetermined
threshold. Cash collateral received from
counterparties is included within current
Interest-bearing loans and borrowings within the
Consolidated Statement of Financial Position.
Cash collateral pledged to counterparties is
recognised as a financial asset and is included
in current Other investments within the
Consolidated Statement of Financial Position.
In prior years, cash collateral pledged to
counterparties was included in Cash and
cash equivalents. Cash collateral received is
included in Movement in short-term borrowings
within financing activities in the Consolidated
Cash Flow Statement. Cash collateral paid
is included in Movements in short-term
investments within investing activities in the
Consolidated Cash Flow Statement. The cash
flow presentation of cash paid and received
follows the Consolidated Statement of
Financial Position presentation of the financial
asset and financial liability that is recognised
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.
147
AstraZeneca Annual Report & Form 20-F Information 2022
Group Accounting Policies
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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
Provisions are recognised when either a legal
or constructive obligation as a result of a past
event exists at the Consolidated Statement of
Financial Position date, it is probable that an
outflow of economic resources will be required
to settle the obligation and a reasonable
estimate can be made of the amount of the
obligation (the timing or amount of the liability
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 192.
Where it is considered that the Group is more
likely than not to prevail, or in the extremely
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 pre-tax discount
rate where the effect is material.
Restructuring
Restructuring costs are incurred in programmes
that are planned and controlled by the Group
which materially change either the scope of
a business undertaken by the Group, or the
manner in which that business is conducted.
A provision for restructuring costs is recognised
when a detailed formal plan is in place and
has either been announced to those affected
or has started to be implemented. The general
recognition criteria for provisions must also be
met, as described in the Provisions policy.
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 associated with the probability of success
specific to each asset, as well as inflationary
impacts, are discounted to their present value
using a nominal 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
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
and interpretations issued but not
yet adopted
At the date of authorisation of these financial
statements, certain new accounting standards
and 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 – endorsed by the UK Endorsement
Board (UKEB) on 30 November 2022
>
new accounting standard IFRS 17 ‘Insurance
Contracts’, effective for periods beginning
on or after 1 January 2023 – endorsed by
the UKEB on 16 May 2022, and
>
amendments to IAS 1 ‘Presentation of
Financial Statements’ and IFRS 16 ‘Leases’,
effective for periods beginning on or after
1 January 2024 – not endorsed by the UKEB.
These new standards, amendments and
interpretations are not expected to have a
Group Accounting Policies
continued
148
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Notes to the Group Financial Statements
Product Sales
2022
2021
2020
Emerging
Rest of
Emerging
Rest of
Emerging
Rest of
Markets
US
Europe
World
Total
Markets
US
Europe
World
Total
Markets
US
Europe
World
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Oncology:
Tagrisso
1,567
2,007
1,023
847
5,444
1,336
1,780
986
913
5,015
1,208
1,566
748
806
4,328
Imfinzi
287
1,552
544
401
2,784
277
1,245
485
405
2,412
158
1,185
370
329
2,042
Lynparza
488
1,226
655
269
2,638
384
1,087
618
259
2,348
264
876
435
201
1,776
Calquence
45
1,657
286
69
2,057
20
1,089
111
18
1,238
6
511
2
3
522
Enhertu
51
–
21
7
79
12
–
4
1
17
–
–
–
–
–
Orpathys
33
–
–
–
33
16
–
–
–
16
–
–
–
–
–
Zoladex
657
15
133
122
927
619
13
147
169
948
561
5
140
182
888
Faslodex
159
17
55
103
334
167
30
113
121
431
180
55
221
124
580
Iressa
94
9
2
9
114
151
11
5
16
183
221
14
12
21
268
Arimidex
76
–
–
23
99
106
–
4
29
139
147
–
3
35
185
Casodex
53
–
1
24
78
105
–
3
35
143
133
–
3
36
172
Others
27
1
6
10
44
29
–
5
16
50
28
–
4
19
51
3,537
6,484
2,726
1,884
14,631
3,222
5,255
2,481
1,982
12,940
2,906
4,212
1,938
1,756
10,812
Cardiovascular, Renal & Metabolism:
Farxiga
1,665
1,071
1,297
348
4,381
1,195
732
810
263
3,000
686
569
507
197
1,959
Brilinta
286
744
282
46
1,358
328
735
346
63
1,472
461
732
342
58
1,593
Lokelma
20
170
30
69
289
3
115
13
44
175
5
57
4
10
76
Roxadustat
197
–
–
–
197
174
–
–
–
174
–
–
–
–
–
Andexxa
–
77
41
32
150
–
50
18
–
68
–
–
–
–
–
Crestor
794
65
41
148
1,048
775
80
52
189
1,096
748
92
129
211
1,180
Seloken
/
Toprol-XL
839
–
14
9
862
928
1
11
11
951
782
13
16
10
821
Bydureon
3
242
35
–
280
3
321
55
6
385
4
382
53
9
448
Onglyza
121
76
38
22
257
179
88
61
32
360
201
166
58
45
470
Others
194
34
128
10
366
195
52
146
14
407
316
72
119
42
549
4,119
2,479
1,906
684
9,188
3,780
2,174
1,512
622
8,088
3,203
2,083
1,228
582
7,096
Respiratory & Immunology:
Symbicort
608
973
582
375
2,538
609
1,065
670
384
2,728
567
1,022
694
438
2,721
Fasenra
43
906
305
142
1,396
20
790
286
162
1,258
12
603
203
131
949
Breztri
92
239
33
34
398
55
115
7
26
203
14
5
–
9
28
Saphnelo
–
111
2
3
116
–
8
–
–
8
–
–
–
–
–
Tezspire
–
–
2
2
4
–
–
–
–
–
–
–
–
–
–
Pulmicort
462
65
69
49
645
770
72
73
47
962
798
71
73
54
996
Daliresp
/
Daxas
3
176
9
1
189
4
207
15
1
227
4
190
22
1
217
Bevespi
5
42
10
1
58
4
39
11
–
54
1
44
3
–
48
Others
230
143
42
6
421
287
108
185
14
594
203
6
176
13
398
1,443
2,655
1,054
613
5,765
1,749
2,404
1,247
634
6,034
1,599
1,941
1,171
646
5,357
Vaccines & Immune Therapies:
Vaxzevria
729
79
365
625
1,798
2,240
64
1,035
578
3,917
–
–
2
–
2
Evusheld
413
1,067
298
407
2,185
19
–
66
–
85
–
–
–
–
–
Synagis
173
1
213
191
578
35
23
203
149
410
–
47
325
–
372
FluMist
1
21
151
2
175
2
27
222
2
253
1
70
219
5
295
1,316
1,168
1,027
1,225
4,736
2,296
114
1,526
729
4,665
1
117
546
5
669
Rare Disease:
Soliris
301
2,180
805
476
3,762
170
1,068
439
197
1,874
–
–
–
–
–
Ultomiris
38
1,136
481
310
1,965
9
381
169
129
688
–
–
–
–
–
Strensiq
35
769
78
76
958
10
297
36
35
378
–
–
–
–
–
Koselugo
26
162
20
–
208
1
104
3
–
108
–
38
–
–
38
Kanuma
31
77
44
8
160
7
32
20
3
62
–
–
–
–
–
431
4,324
1,428
870
7,053
197
1,882
667
364
3,110
–
38
–
–
38
Other:
Nexium
568
120
46
551
1,285
705
128
62
431
1,326
757
169
71
495
1,492
Others
220
24
77
19
340
212
43
109
14
378
213
78
105
30
426
788
144
123
570
1,625
917
171
171
445
1,704
970
247
176
525
1,918
Product Sales
11,634
17,254
8,264
5,846
42,998
12,161
12,000
7,604
4,776
36,541
8,679
8,638
5,059
3,514
25,890
149
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
1 Revenue
continued
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 and we consider there to be a significant estimate associated with the rebates for Managed Care, Medicaid and Medicare Part D.
The total adjustment in respect of prior year net US Product Sales revenue in 2022 was 1.3% (2021: 1.5%; 2020: 3.5%); this represents the difference
between our prior year estimates for rebates and chargebacks against actual amounts paid for the US business. 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 2022 of 0.5% (2021: 0.4%;
2020: 1.1%) and Managed Care and Medicare of 0.8% (2021: 0.7%; 2020: 1.5%).
The adjustment in respect of the prior year net US Product Sales revenue, excluding the Rare Disease therapy area in 2022, was 1.6% (2021: 1.8%),
with Medicaid and state programmes of 0.6% (2021: 0.5%) and Managed Care and Medicare of 1.1% (2021: 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
2022
2021
2020
$m
$m
$m
Enhertu
: alliance revenue
1
519
193
94
Tezspire
: alliance revenue
1
79
–
–
Roxadustat: alliance revenue
1
5
6
30
Lynparza
/
Koselugo
(MSD) – regulatory milestones
355
–
160
Lynparza
/
Koselugo
(MSD) – sales-related milestones
–
400
300
Tralokinumab: sales milestone
110
–
–
Vaxzevria
: royalties
76
64
–
Other royalty income
72
74
62
Nexium
: sale of rights
62
75
–
Other Collaboration Revenue
75
64
81
1,353
876
727
1
Alliance revenue (previously referred to as share of gross profits) comprises income arising from collaborative arrangements, where AstraZeneca is entitled to a share of gross profits but
does not lead on the commercialisation in the territory and so does not recognise Product Sales. Alliance revenue is included within Collaboration Revenue.
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. $607m of Collaboration Revenue in 2022
(2021: $200m; 2020: $128m) relates to such income. Substantially all other Collaboration Revenue relates to performance obligations satisfied in
Operating profit includes the following significant items:
In 2022, Cost of sales includes a charge of $3,484m (2021: 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 no government grants were recognised within Cost of sales (2021: $290m; 2020: $nil). The grants recognised in 2021 related to
funding of manufactured
Vaxzevria
In 2022, Selling, general and administrative expense includes a charge of $182m (2021: charge of $42m; 2020: credit of $51m) 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 2022, Selling, general and administrative costs includes a credit of $49m (2021: charge of $5m; 2020: credit of $143m) 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 2022, Selling, general and administrative expense also includes a charge of $789m (2021: charge of $48m; 2020: credit of $9m) relating to a number
During the year $113m (2021: $531m; 2020: $222m) of government grants were recognised within Research and development expense. The grants
recognised relate to funding for research and development and related expenses for
Evusheld
of $112m (2021: $222m; 2020: $61m) and
Vaxzevria
Notes to the Group Financial Statements
continued
150
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
2022
2021
2020
$m
$m
$m
Royalty income
59
62
147
Gains on disposal of intangible assets
104
513
1,030
Gains on disposal of investments in associates and joint ventures
–
776
–
Net gains/(losses) on disposal of other non-current assets
112
(4)
25
Impairment of property, plant and equipment
–
–
(12)
Other income
1
439
453
406
Other expense
(200)
(308)
(68)
Other operating income and expense
514
1,492
1,528
1
Other income in 2022 includes $138m of payments from Allergan in respect of the development of brazikumab (2021: $99m; 2020: $107m).
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.
Net gains/(losses) on disposal of other non-current assets in 2022 includes a $125m gain in respect of the Waltham R&D site sale and leaseback in
MA, US (see Note 8).
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, $210m in total has been received related
to the rights to participate in the future cash flows from the US profits or losses for nirsevimab. The full 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/
Restructuring costs
In conjunction with the acquisition of Alexion in 2021, the enlarged Group 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 and during 2022.
The Group has also continued to progress other legacy restructuring programmes.
During 2022, the Group has incurred $717m of restructuring costs, of which $675m resulted from activities that are part of the Post Alexion Acquisition
Group Review, bringing the cumulative charges under this programme to $1,705m. Costs in 2022 included $266m within Cost of sales due to the
rationalisation of our manufacturing capacity and footprint across certain production sites, $152m within Selling, general and administrative expenses
in relation to the transfer of Alexion’s distribution contracts with third parties to AstraZeneca Group companies, and $83m in Selling, general and
administrative expenses related to rationalisation of commercial teams in China.
Total restructuring costs in 2022 include impairment reversal of Property, plant and equipment of $4m (2021: charge of $343m; 2020: charge of $7m)
and impairment reversal of Intangible assets (software development costs) of $17m (2021: charge of $16m; 2020: $nil).
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.
2022
2021
2020
$m
$m
$m
Cost of sales
266
722
53
Distribution expense
2
–
–
Research and development expense
111
223
35
Selling, general and administrative expense
405
338
162
Other operating income and expense
(67)
–
1
Total charge
717
1,283
251
2022
2021
2020
$m
$m
$m
Severance costs
187
217
26
Accelerated depreciation and impairment charges
135
371
17
Other
1
395
695
208
Total charge
717
1,283
251
1
Other costs are those incurred in designing and implementing the Group’s various restructuring initiatives, including costs of integrating systems, structure and processes as part of our
151
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
2 Operating profit
continued
Financial instruments
Included within Operating profit are the following net gains and losses on financial instruments:
2022
2021
2020
$m
$m
$m
Gains/(losses) on forward foreign exchange contracts
150
(21)
(86)
(Losses)/gains on receivables and payables
(203)
(42)
89
Total
(53)
(63)
3
Impairment charges
2022
2021
2020
$m
$m
$m
Finance income
Returns on deposits and equity securities
78
12
41
Fair value gains on debt and interest rate swaps
14
–
4
Discount unwind on other long-term assets
–
–
6
Interest income on income tax balances
3
31
36
Total
95
43
87
Finance expense
Interest on debt, leases and other financing costs
(889)
(774)
(736)
Net interest on post-employment defined benefit plan net liabilities (Note 22)
(29)
(26)
(37)
Net exchange losses
(16)
(20)
(34)
Discount unwind on contingent consideration arising from business combinations (Note 20)
(168)
(226)
(278)
Discount unwind on other long-term liabilities
1
(216)
(248)
(219)
Fair value losses on debt and interest rate swaps
–
(4)
–
Interest expense on income tax balances
(28)
(2)
(2)
Total
(1,346)
(1,300)
(1,306)
Net finance expense
(1,251)
(1,257)
(1,219)
1
Included within Discount unwind on other long-term liabilities is $108m relating to the Acerta Pharma share purchase liability (2021: $161m; 2020: $151m), see Note 20 for further details.
There was no interest capitalised during the year.
Financial instruments
Included within finance income and expense are the following net gains and losses on financial instruments:
2022
2021
2020
$m
$m
$m
Interest and fair value adjustments in respect of debt designated at fair value through profit or loss, net of derivatives
(9)
(5)
(8)
Interest and changes in carrying values of debt designated as hedged items in fair value hedges, net of derivatives
–
(9)
(6)
Interest and fair value changes on fixed and short-term deposits, equity securities, other derivatives and tax balances
54
16
42
Interest on debt, commercial paper, overdrafts and lease liabilities held at amortised cost
(837)
(738)
(660)
The interest rate fair value hedges were closed in 2021. Fair value gain or loss of $nil (2021: loss of $33m; 2020: gain of $33m) on interest rate fair value
hedging instruments and $nil fair value gain or loss (2021: gain of $29m; 2020: loss of $32m) on the related hedged items have been included within
Interest and changes in carrying values of debt designated as hedged items, net of derivatives.
Fair value loss of $25m (2021: loss of $19m; 2020: gain of $2m) on derivatives related to debt instruments designated at fair value through profit or
loss and $26m fair value gain (2021: gain of $19m; 2020: loss of $3m) on debt instruments designated at fair value through profit or loss have been
Notes to the Group Financial Statements
continued
152
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Taxation charge/(credit) recognised in the Consolidated Statement of Comprehensive Income is as follows:
2022
2021
2020
$m
$m
$m
Current tax
Current year
1,823
1,200
981
Adjustment to prior years
(187)
(5)
(10)
Total
1,636
1,195
971
Deferred tax
Origination and reversal of temporary differences
(2,563)
(1,417)
(178)
Adjustment to prior years
135
(158)
(21)
Total
(2,428)
(1,575)
(199)
Taxation (credit)/charge recognised in the profit for the period
(792)
(380)
772
Taxation (charge)/credit recognised in Other comprehensive income is as follows:
2022
2021
2020
$m
$m
$m
Current and deferred tax
Items that will not be reclassified to profit or loss:
Remeasurement of the defined benefit liability
(231)
(117)
36
Equity investments measured at fair value through Other comprehensive income
15
27
(180)
Movement in deferred taxes relating to changes in tax rates
–
195
63
Total
(216)
105
(81)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange arising on designated liabilities in net investment hedges
1
73
43
(61)
Fair value movement on cash flow hedges
2
–
(5)
22
Movement in deferred taxes relating to changes in tax rates
–
8
–
Total
73
46
(39)
Taxation (charge)/credit recognised in Other comprehensive income
(143)
151
(120)
1
Previously reported as Foreign exchange arising on consolidation.
2
Previously reported within Foreign exchange arising on designated liabilities in net investment hedges.
The reported tax rate in the year was (32)% and included a one-time favourable net adjustment of $876m to deferred taxes arising from an internal
reorganisation to integrate the Alexion organisation which took place in the year. The internal legal entity reorganisation did not result in any corporate
income tax becoming payable in the year, however it did result in a one-off deferred tax adjustment of $876m to the income statement and a further
$49m credit included in Other comprehensive income. Following the reorganisation, it was necessary to re-measure certain deferred tax balances
to reflect the tax rates applicable on their reversal, as under the revised structure there is a change in the income flows to the relevant territories.
The 2022 reported tax rate also benefited from Intellectual Property incentive regimes, geographical mix of profits and favourable adjustments to
prior year tax liabilities in a number of major jurisdictions, many of which were one-time items.
The income tax paid for the year was $1,623m.
Taxation has been provided at current rates on the profits earned for the periods covered by the Group Financial Statements. The 2022 prior period
current tax adjustment relates mainly to tax accrual to tax return adjustments and updates to liabilities for uncertain tax positions. 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 liabilities for uncertain tax positions and tax accrual to tax return adjustments.
The 2022 prior period deferred tax adjustments relate mainly to tax accrual to tax return adjustments and updates to liabilities for uncertain tax
positions. 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 liabilities for uncertain tax positions.
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 $5,454m at 31 December
2022, $2,113m 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.
153
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
4 Taxation
continued
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 (Pillar Two) and in 2022, the UK released draft legislation including the intention to bring these into effect
for accounting periods commencing after 31 December 2023. AstraZeneca expects to fall within the global minimum tax framework which requires
calculation of a new measure of effective tax rate by legal entity. It is possible that this may result in top-up taxes in some territories in which
AstraZeneca operates. Whilst the UK released draft legislation that has not been substantively enacted at 31 December 2022, we are continuing
to review the draft rules, and the IASB’s staff paper and initial consideration, published in November 2022, to understand any potential impacts.
Tax reconciliation to UK statutory rate
The table below reconciles the UK statutory tax charge to the Group’s total tax (credit)/charge:
2022
2021
2020
$m
$m
$m
Profit/(loss) before tax
2,501
(265)
3,916
Notional taxation charge at UK corporation tax rate of 19%
475
(50)
744
Differences in effective overseas tax rates
(59)
1
(49)
Deferred tax (credit)/charge relating to change in tax rates
1
(108)
54
138
Unrecognised deferred tax asset
2
68
32
3
Items not deductible for tax purposes
90
208
71
Items not chargeable for tax purposes
–
(163)
(4)
Intellectual Property incentive regimes
3
(265)
–
(35)
Other items
4
(941)
(299)
(65)
Adjustments in respect of prior periods
5
(52)
(163)
(31)
Total tax (credit)/charge for the period
(792)
(380)
772
1
The 2022 item relates to the impact of the US state tax rate change and the impact of the difference in the UK current tax and deferred tax rates during 2022. The 2021 item relates to substantive
enactment of the increase in UK Corporation Tax rate from 19% to 25% effective 1 April 2023 (debit of $12m), the increase in the Dutch Corporate Income Tax rate from 25% to 25.8% effective
1 January 2022 (debit of $39m) and other (debit of $3m). The 2020 item relates to the increase in the 2020 substantively enacted Dutch Corporate Income Tax rate (debit of $151m) and other (debit
of $5m). In 2020, it was substantively enacted that the planned reduction in the Dutch Corporate Income Tax rate to 21.7% from 25% effective 1 January 2021 would not take place. In addition, the
planned reduction in the UK corporation tax rate to 17% was not enacted with the corporation tax rate remaining at 19% (credit of $18m).
2
The 2022 item relates to the derecognition of previously recognised deferred tax assets. The 2021 item includes a $15m debit arising on derecognition of previously recognised deferred tax assets.
The 2020 item includes a $22m credit arising on recognition of previously unrecognised deferred tax assets.
3
Previously reported within Items not deductible for tax purposes.
4
Other items in 2022 relate to the aforementioned one-time favourable net adjustment of $876m to deferred taxes arising from an internal reorganisation to integrate the Alexion organisation which
took place in 2022 and a credit of $65m relating to the reduction of tax liabilities arising from adjustments on expiry of the relevant statute of limitations. Other items in 2021 relate to a net credit of
$299m relating to the reduction of tax liabilities arising from updates to estimates of prior period tax liabilities following settlements with tax authorities and on expiry of the relevant statute
of limitations partially offset by a provision for transfer pricing and other uncertain tax treatments. Other items in 2020 relate to a net credit of $65m relating to the release of tax liabilities
following the expiry of the relevant statute of limitations partially offset by a provision for transfer pricing and other uncertain tax treatments.
5
Further details explaining the adjustments in respect of prior periods are set out on page 153.
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. The Group receives tax incentives in relation to Intellectual Property incentives in certain jurisdictions, resulting in a
reduction to the tax charge in the income statement of $265m in 2022.
Notes to the Group Financial Statements
continued
154
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
The total movement in the net deferred tax balance in the year was $2,195m. The movements are as follows:
Intangibles,
Pension and
Elimination of
Losses and
Accrued
property, plant
post-retirement
unrealised profit
Untaxed
tax credits
expenses
and equipment
1
benefits
on inventory
reserves
2
carried forward
and other
Total
$m
$m
$m
$m
$m
$m
$m
Net deferred tax balance at 1 January 2020
(2,265)
561
1,293
(598)
546
691
228
Income statement
(226)
(64)
444
(92)
136
1
199
Other comprehensive income
(78)
101
–
(1)
–
72
94
Equity
–
–
–
–
–
(16)
(16)
Exchange
(58)
58
70
(110)
32
23
15
Net deferred tax balance at 31 December 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 31 December 2021
(5,480)
553
1,861
(862)
1,518
534
(1,876)
Income statement
4
1,414
(55)
274
38
(126)
883
2,428
Other comprehensive income
72
(231)
–
–
–
16
(143)
Equity
–
–
–
–
–
38
38
Exchange
63
(36)
(111)
108
(134)
(18)
(128)
Net deferred tax balance at 31 December 2022
5
(3,931)
231
2,024
(716)
1,258
1,453
319
1
Includes deferred tax of $281m on contingent consideration liabilities in respect of intangibles.
2
Untaxed reserves relate to taxable profits where the tax liability is deferred to later periods.
3
The deferred tax liability of $4,174m relates to deferred tax on purchase accounting adjustments arising from the acquisition of Alexion (Note 27). Accrued expenses and other includes the
deferred tax on the purchase accounting of inventory.
4
The income statement movement in 2022 includes the aforementioned net adjustment to deferred taxes of $876m arising on the internal legal entity reorganisation to integrate the Alexion organisation,
the majority of which arises on Intangibles, property, plant and equipment.
5
The Group recognises deferred tax assets to the extent that there are either taxable temporary differences or that it is probable that sufficient future taxable profits will arise, against which these
deductible temporary differences can be utilised. The US includes a net deferred tax asset of $283m and the UK includes a net deferred tax asset of $503m as at 31 December 2022 which include
tax losses and other deductible temporary differences. The Group has performed an assessment of recovery of deferred tax assets and for these entities, the Group has forecasted future taxable
profits and considers that it is probable that sufficient future taxable profits will arise against which these deductible temporary differences can be utilised. In arriving at these forecasts, the
Group has reviewed the Group-level budgets and forecasts and the ability of those entities to generate future income from developing and commercialising products, including local tax laws
and the scheduling of reversal of deductible temporary differences. Deferred tax assets are recognised on the basis there is sufficient forecast future taxable profits arising from the performance
of on-market products and pipeline assets, including
Imfinzi
. For the UK, losses are forecast to be utilised within five years. For the US, recognised deferred taxes on losses and other items are
forecast to be utilised within 15 years. It is considered that these sources of income are sufficiently predictable or diversified to support a recognition period in excess of five years. A sensitivity
assessment has been performed which shows that a change in profit of 10% results in an immaterial adjustment to the amount of deferred tax asset recognised. Assessing the availability of
future taxable income to support recognition of deferred tax assets relies upon our Group forecasts and changes in these Group forecasts will impact the recoverability of deferred tax assets.
To the extent that there are neither taxable temporary differences nor sufficient taxable profits, no deferred tax asset is recognised and details of unrecognised deferred tax assets are included
in the table below.
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 credits
expenses
and equipment
benefits
on inventory
reserves
carried forward
and other
Total
$m
$m
$m
$m
$m
$m
$m
Deferred tax assets at 31 December 2020
1,061
690
2,286
–
852
1,130
6,019
Deferred tax liabilities at 31 December 2020
(3,688)
(34)
(479)
(801)
(138)
(359)
(5,499)
Net deferred tax balance at 31 December 2020
(2,627)
656
1,807
(801)
714
771
520
Deferred tax assets at 31 December 2021
1,476
574
1,910
–
1,571
1,735
7,266
Deferred tax liabilities at 31 December 2021
(6,956)
(21)
(49)
(862)
(53)
(1,201)
(9,142)
Net deferred tax balance at 31 December 2021
(5,480)
553
1,861
(862)
1,518
534
(1,876)
Deferred tax assets at 31 December 2022
1,499
276
2,048
–
1,274
1,614
6,711
Deferred tax liabilities at 31 December 2022
(5,430)
(45)
(24)
(716)
(16)
(161)
(6,392)
Net deferred tax balance at 31 December 2022
(3,931)
231
2,024
(716)
1,258
1,453
319
155
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
4 Taxation
continued
Analysed in the Consolidated Statement of Financial Position, after offset of balances within countries, as follows:
2022
2021
2020
$m
$m
$m
Deferred tax assets
3,263
4,330
3,438
Deferred tax liabilities
(2,944)
(6,206)
(2,918)
Net deferred tax balance
319
(1,876)
Unrecognised deferred tax assets
Deferred tax assets (DTA) of $807m (2021: $719m; 2020: $428m) 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 therefrom.
2022
2022
2021
2021
2020
2020
Temporary
Unrecognised
Temporary
Unrecognised
Temporary
Unrecognised
differences
DTA
differences
DTA
differences
DTA
$m
$m
$m
$m
$m
$m
Trading and capital losses expiring:
Within 10 years
104
26
4
1
2
–
More than 10 years
153
32
53
11
–
–
Indefinite
686
163
300
79
234
63
943
221
357
91
236
63
Tax credits and State tax losses expiring:
Within 10 years
115
101
36
More than 10 years
384
441
255
Indefinite
87
86
74
586
628
365
Total
807
719
2022
2021
2020
Profit for the year attributable to equity holders ($m)
3,288
112
3,196
Basic earnings per Ordinary Share
$2.12
$0.08
$2.44
Diluted earnings per Ordinary Share
$2.11
$0.08
$2.44
Weighted average number of Ordinary Shares in issue for basic earnings (millions)
1,548
1,418
1,312
Dilutive impact of share options outstanding (millions)
12
9
1
Diluted weighted average number of Ordinary Shares in issue (millions)
1,560
1,427
1,313
The earnings figures used in the calculations above are post-tax. The weighted average number of Ordinary Shares in issue is calculated by taking
Notes to the Group Financial Statements
continued
156
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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.
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.
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
2022
2021
2020
$m
$m
$m
UK
3,117
3,245
1,741
Rest of Europe
France
1,107
915
653
Germany
1,902
1,486
937
Italy
735
577
431
Spain
738
578
398
Sweden
1,721
2,322
1,026
Others
2,706
1,949
1,391
8,909
7,827
4,836
The Americas
Canada
1,166
772
596
US
17,278
12,047
8,955
Others
1,175
1,203
761
19,619
14,022
10,312
Asia, Africa & Australasia
Australia
571
547
282
China
5,743
6,002
5,345
Japan
3,986
3,395
2,567
Others
2,406
2,379
1,534
12,706
12,323
9,728
Total Revenue
44,351
37,417
26,617
Total Revenue outside of the UK totalled $41,234m for the year ended 31 December 2022 (2021: $34,172m; 2020: $24,876m).
157
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
6 Segment information
continued
Operating profit/(loss)
Profit/(loss) before tax
2022
2021
2020
2022
2021
2020
$m
$m
$m
$m
$m
$m
UK
1,120
(950)
824
272
(1,477)
518
Rest of Europe
2,945
2,999
2,838
2,709
2,682
2,356
The Americas
(954)
(1,936)
758
(1,140)
(2,401)
297
Asia, Africa & Australasia
646
943
742
660
931
745
Continuing operations
3,757
1,056
5,162
2,501
(265)
3,916
Non-current assets
1
Total assets
2022
2021
2020
2022
2021
2020
$m
$m
$m
$m
$m
$m
UK
8,635
7,692
7,900
16,786
16,615
17,851
Rest of Europe
35,093
39,171
15,821
40,669
48,383
19,738
The Americas
25,736
26,570
18,501
32,990
34,301
23,640
Asia, Africa & Australasia
1,089
1,254
1,354
6,038
6,064
5,500
Continuing operations
70,553
74,687
43,576
96,483
105,363
66,729
Assets acquired
2
Net operating assets
3
2022
2021
2020
2022
2021
2020
$m
$m
$m
$m
$m
$m
UK
2,301
810
1,611
3,863
3,239
5,244
Rest of Europe
522
26,527
505
32,726
40,161
10,242
The Americas
421
10,810
286
23,290
24,786
15,697
Asia, Africa & Australasia
51
94
116
1,895
736
607
Continuing operations
3,295
38,241
2,518
61,774
68,922
31,790
1
Non-current assets exclude Deferred tax assets and Derivative financial instruments.
2
Included in Assets acquired are those assets that are expected to be used during more than one period (Property, plant and equipment, Goodwill and Intangible assets) and include those
acquired through business combinations (Note 27).
3
Net operating assets exclude short-term investments, cash, short-term borrowings, loans, Derivative financial instruments, Retirement benefit obligations and non-operating receivables
and payables.
Property, plant and equipment
2022
2021
2020
$m
$m
$m
UK
2,526
2,542
2,227
Ireland
1,040
969
–
Sweden
1,472
1,593
1,755
US
2,176
2,660
2,662
Rest of the world
1,293
1,419
1,607
Continuing operations
8,507
9,183
Geographic markets
The table below shows Product Sales in each geographic market in which customers are located.
2022
2021
2020
$m
$m
$m
UK
996
1,206
611
Rest of Europe
7,503
6,792
4,446
The Americas
20,126
14,893
10,004
Asia, Africa & Australasia
14,373
13,650
10,829
Continuing operations
42,998
36,541
25,890
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 (2021: one; 2020: one) individually represented greater than 10% of Product Sales. The value of Product Sales
Notes to the Group Financial Statements
continued
158
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Assets in
Total property,
Land and
Plant and
course of
plant and
buildings
equipment
construction
equipment
$m
$m
$m
$m
Cost
At 1 January 2020
5,532
7,383
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 31 December 2020
5,851
7,738
2,478
16,067
Additions through business combinations (Note 27)
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 31 December 2021
6,377
7,903
2,728
17,008
Capital expenditure
5
19
1,042
1,066
Transfer of assets into use
226
683
(909)
–
Transferred to Assets held for sale (Note 18)
(434)
(293)
–
(727)
Disposals and other movements
(425)
(146)
28
(543)
Exchange adjustments
(309)
(610)
(236)
(1,155)
At 31 December 2022
5,440
7,556
2,653
15,649
Depreciation and impairment
At 1 January 2020
2,505
4,808
–
7,313
Depreciation charge for the year
227
462
–
689
Impairment (reversal)/charge
(1)
2
12
13
Disposals and other movements
(42)
(606)
(12)
(660)
Exchange adjustments
137
324
–
461
At 31 December 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 31 December 2021
2,877
4,948
–
7,825
Depreciation charge for the year
286
566
–
852
Impairment charge/(reversal)
20
8
(28)
–
Transferred to Assets held for sale (Note 18)
(300)
(277)
–
(577)
Disposals and other movements
(227)
(188)
28
(387)
Exchange adjustments
(167)
(404)
–
(571)
At 31 December 2022
2,489
4,653
–
7,142
Net book value
At 31 December 2020
3,025
2,748
2,478
8,251
At 31 December 2021
3,500
2,955
2,728
9,183
At 31 December 2022
2,951
2,903
2,653
8,507
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 were recognised in Cost of sales. The revised carrying value of the impacted assets is nil,
2022
2021
2020
$m
$m
$m
The net book value of land and buildings comprised:
Freeholds
2,555
2,985
2,583
Leaseholds
396
515
159
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Right-of-use assets
Total right-
Land and
Motor
of-use
buildings
vehicles
Other
assets
$m
$m
$m
$m
Cost
At 1 January 2020
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 31 December 2020
735
272
36
1,043
Additions through business combinations (Note 27)
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 31 December 2021
1,133
321
33
1,487
Additions through business combinations
4
–
–
4
Additions – separately acquired
140
81
14
235
Disposals and other movements
(33)
(58)
(13)
(104)
Exchange adjustments
(62)
(15)
(2)
(79)
At 31 December 2022
1,182
329
32
1,543
Depreciation and impairment
At 1 January 2020
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 31 December 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 31 December 2021
326
154
19
499
Depreciation charge for the year
160
80
6
246
Impairment charge
2
–
–
2
Disposals and other movements
(54)
(50)
(10)
(114)
Exchange adjustments
(23)
(8)
(1)
(32)
At 31 December 2022
411
176
14
601
Net book value
At 31 December 2020
488
155
23
666
At 31 December 2021
807
167
14
988
At 31 December 2022
771
153
18
942
Lease Liability
2022
2021
2020
$m
$m
$m
The present value of lease liabilities is as follows:
Within one year
(228)
(233)
(192)
Later than one year and not later than five years
(549)
(544)
(389)
Later than five years
(176)
(210)
(100)
Total lease liabilities
(953)
(987)
(681)
The interest expense on lease liabilities included within finance costs was $24m (2021: $22m; 2020: $21m).
The total cash outflow for leases in 2022 was $268m (2021: $262m; 2020: $228m).
The discount rates used for calculating the present value of lease liabilities range from 0% to 63%.
The Group has entered into lease contracts that have not yet commenced. The nominal value of estimated future lease payments under these lease
contracts approximates $1,460m as of 31 December 2022. Of this value, $1,349m relates to a property lease in the US which is expected to commence
in 2026 with a lease term of 15 years.
The Group entered into a sale and leaseback agreement in relation to the Waltham R&D site in MA, US in 2022. Prior to the sale, the carrying value
of the Property, plant and equipment was $124m. Cash proceeds of $265m have been received, recorded within Disposal of property, plant and
equipment within the Consolidated Statement of Cash Flows, and a gain on disposal of $125m has been recorded within Other operating income and
expense within the Consolidated Statement of Comprehensive Income. A lease liability and a corresponding right-of-use asset have been
Notes to the Group Financial Statements
continued
160
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
2022
2021
2020
$m
$m
$m
Cost
At 1 January
20,311
12,164
11,982
Additions through business combinations (Note 27)
15
8,287
–
Exchange and other adjustments
(195)
(140)
182
At 31 December
20,131
20,311
12,164
Amortisation and impairment losses
At 1 January
314
319
314
Exchange and other adjustments
(3)
(5)
5
At 31 December
311
314
319
Net book value
At 31 December
19,820
19,997
11,845
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 2022
Product,
Software
marketing and
Other
development
distribution rights
intangibles
costs
Total
$m
$m
$m
$m
Cost
At 1 January 2020
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
7
1,603
At 31 December 2020
42,677
2,642
1,288
46,607
Additions through business combinations (Note 27)
26,455
430
70
26,955
Additions – separately acquired
587
6
119
712
Transferred to Assets held for sale (Note 18)
(1,266)
(47)
–
(1,313)
Disposals
(801)
(402)
(23)
(1,226)
Exchange and other adjustments
(1,062)
(18)
(22)
(1,102)
At 31 December 2021
66,590
2,611
1,432
70,633
Additions through business combinations (Note 27)
–
46
–
46
Additions – separately acquired
2,051
12
105
2,168
Disposals
(57)
(105)
(36)
(198)
Exchange and other adjustments
(1,799)
(122)
(106)
(2,027)
At 31 December 2022
66,785
2,442
1,395
70,622
Amortisation and impairment losses
At 1 January 2020
20,605
2,097
1,549
24,251
Amortisation for year
1,872
59
61
1,992
Impairment charges
405
–
–
405
Impairment reversals
(165)
–
–
(165)
Disposals
(899)
(66)
(636)
(1,601)
Exchange and other adjustments
746
38
(6)
778
At 31 December 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 (Note 18)
(931)
(14)
–
(945)
Disposals
(797)
(402)
(21)
(1,220)
Exchange and other adjustments
(535)
(21)
(26)
(582)
At 31 December 2021
25,276
1,863
1,002
28,141
Amortisation for year
3,899
181
76
4,156
Impairment charges
236
82
–
318
Impairment reversals
(77)
–
(17)
(94)
Disposals
(55)
(105)
(20)
(180)
Exchange and other adjustments
(887)
(76)
(63)
(1,026)
At 31 December 2022
28,392
1,945
978
31,315
Net book value
At 31 December 2020
20,113
514
320
20,947
At 31 December 2021
41,314
748
430
42,492
At 31 December 2022
38,393
497
417
39,307
161
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
10 Intangible assets
continued
2022
2021
2020
$m
$m
$m
Net book value
Current intangible assets
–
105
–
Non-current intangible assets
39,307
42,387
20,947
At 31 December
39,307
42,492
20,947
Other intangibles consist mainly of research and device technologies and the Alexion brand name. Included within Software development costs are
assets currently in development that will commence amortisation when ready for use.
Included within Additions − separately acquired are amounts of $1,135m (2021: $124m; 2020: $835m), 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 31 December 2020
Cost of sales
66
–
–
66
Research and development expense
–
29
–
29
Selling, general and administrative expense
1,806
28
61
1,895
Other operating income and expense
–
2
–
2
Total
1,872
59
61
1,992
Year ended 31 December 2021
Cost of sales
66
–
–
66
Research 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
Year ended 31 December 2022
Cost of sales
32
–
–
32
Research and development expense
–
30
–
30
Selling, general and administrative expense
3,867
151
76
4,094
Total
3,899
181
76
4,156
Net impairment charges are recognised in profit as follows:
Product,
Software
marketing and
Other
development
distribution rights
intangibles
costs
Total
$m
$m
$m
$m
Year ended 31 December 2020
Research and development expense
55
–
–
55
Selling, general and administrative expense
185
–
–
185
Total
240
–
–
240
Year ended 31 December 2021
Research and development expense
1,464
–
–
1,464
Selling, general and administrative expense
603
–
18
621
Total
2,067
–
18
2,085
Year ended 31 December 2022
Research and development expense
95
–
–
95
Selling, general and administrative expense
64
82
(17)
129
Total
159
82
(17)
224
We perform a rigorous impairment trigger assessment for all our intangible assets. 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, as well as inflationary impacts, and form the basis for the
value in use models used for impairment testing.
Notes to the Group Financial Statements
continued
162
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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 post-tax risk-adjusted cash flows are discounted using AstraZeneca’s post-tax
weighted average cost of capital (7% for 2022, 2021 and 2020), which is a nominal rate. 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%. Legacy Alexion assets have been tested for impairment at risk-adjusted post-tax
discount rates ranging between 8.5% to 10.5% as they are integrated into the Group. No impairments have been recognised on these assets.
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 2022, the Group recorded impairment charges of $146m in respect of launched products. Impairment charges recorded against products in
development totalled $172m due to decisions made to terminate the related activities.
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.
Impairment charges recorded against products in development in 2021, 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.
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 $94m were recorded in 2022, including $77m in respect of products in development. No impairment
reversals were recorded in 2021. 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.
When launched products, such as the ones detailed above, are partially impaired, the carrying values of these assets in future periods are particularly
Significant assets
Carrying value
Remaining
amortisation
$m
period
C5 franchise (
Soliris/Ultomiris
) intangible assets arising from the acquisition of Alexion
16,040
5 to 13 years
Intangible assets arising from the acquisition of Acerta Pharma
4,817
10 years
Strensiq, Kanuma
and
Andexxa
intangible assets arising from the acquisition of Alexion
4,583
10 to 16 years
Enhertu
intangible assets acquired from Daiichi Sankyo
2,960
11 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
2,012
9 years
Other intangible assets (DS-1062) acquired from Daiichi Sankyo
1
937
Not amortised
Intangible assets arising from the restructuring of a historical joint venture with MSD
569
4 to 7 years
Farxiga
/
Forxiga
intangible assets acquired from BMS
528
4 years
Intangible assets arising from the acquisition of Pearl Therapeutics
462
6 to 7 years
RSV franchise assets arising from the acquisition of MedImmune
458
3 years
Monalizumab intangible assets acquired from Innate Pharma
1
350
Not amortised
1
Assets in development are not amortised but are tested annually for impairment.
The acquisition of intangible assets relating to DS-1062 in 2020 was assessed under the optional concentration test in IFRS 3 and was determined
163
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
2022
2021
2020
$m
$m
$m
At 1 January
69
39
58
Additions
26
92
8
Share of after tax losses
(5)
(64)
(27)
Exchange and other adjustments
(14)
2
–
At 31 December
76
69
39
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 contributions of $45m and $21m made in 2021 and 2022 respectively.
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 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. In February 2021, AstraZeneca agreed to divest its 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. In 2021,
prior to divestment, the Group provided transitional research and development services to Viela Bio, comprising $nil (2020: $3m) of services provided
directly by the Group and $1m (2020: $15m) 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). Since its establishment, AstraZeneca has contributed $80m in cash to the joint venture entity and has a 27% interest in the joint venture.
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 $135m in cash to the joint venture entity and has a 50% interest in the
joint venture.
On 30 April 2014, AstraZeneca entered into a joint venture agreement with Samsung Biologics Co., Ltd. which resulted in the formation of a joint
venture entity based in the UK, Archigen Biotech Limited (Archigen). On 31 March 2022, Archigen entered a voluntary liquidation process.
All investments are accounted for using the equity method. At 31 December 2022, unrecognised losses in associates and joint ventures totalled
$92m (2021: $73m; 2020: $56m) 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:
2022
2021
2020
$m
$m
$m
Non-current assets
290
215
324
Current assets
300
506
552
Total liabilities
(72)
(99)
(105)
Net assets
518
622
771
Amount attributable to AstraZeneca
91
65
38
Exchange adjustments
(15)
4
1
Carrying value of investments in associates and joint ventures
76
69
39
A joint contractual arrangement was entered into between AstraZeneca and Daiichi Sankyo Company Limited (Daiichi Sankyo) in March 2019 for
the co-development and co-commercialisation of
Enhertu
. Each party shares global pre-tax net income from the collaboration on a 50:50 basis
(with the exception of Japan where Daiichi Sankyo maintains exclusive rights and AstraZeneca receives a royalty). The joint operation is not
Notes to the Group Financial Statements
continued
164
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
2022
2021
2020
$m
$m
$m
Non-current investments
Equity securities at fair value through Other comprehensive income
1,056
1,168
1,108
Fixed income securities at fair value through profit and loss
10
–
–
Total
1,066
1,168
1,108
Current investments
Fixed income securities at fair value through profit and loss
13
16
118
Cash collateral pledged to counterparties
162
–
–
Fixed deposits
64
53
42
Total
239
69
160
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 mainly
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 and Cash collateral pledged to counterparties are
held at amortised cost with carrying value being a reasonable approximation of fair value given their short-term nature.
Cash collateral pledged to counterparties relates to collateral pledged on derivatives entered into to hedge the Group’s risk exposures. In 2022,
following significant foreign currency volatility increasing the collateral requirements, the Group revised its presentation to Other investments.
Prior year amounts of $47m in 2021 and $11m in 2020 are presented within Cash and cash equivalents.
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).
2022
2022
2021
2021
2020
2020
FVPL
FVOCI
FVPL
FVOCI
FVPL
FVOCI
$m
$m
$m
$m
$m
$m
Level 1
13
880
16
1,064
118
891
Level 2
–
–
–
–
–
–
Level 3
10
176
–
104
–
217
Total
23
1,056
16
1,168
118
1,108
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.
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:
2022
2022
2021
2020
FVPL
FVOCI
FVOCI
FVOCI
$m
$m
$m
$m
At 1 January
–
104
217
227
Additions
10
32
1
96
Revaluations
–
50
–
63
Net transfers out
–
(4)
(113)
(103)
Disposals
–
(5)
–
(86)
Impairments and exchange adjustments
–
(1)
(1)
20
At 31 December
10
176
104
217
165
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Non-current
Current
Current
Non-current
assets
assets
liabilities
liabilities
Total
$m
$m
$m
$m
$m
Interest rate swaps related to instruments designated at fair value through profit and loss
45
–
–
–
45
Cross 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
(3)
–
5
Other derivatives
–
48
(30)
–
18
31 December 2020
171
142
(33)
(2)
278
Non-current
Current
Current
Non-current
assets
assets
liabilities
liabilities
Total
$m
$m
$m
$m
$m
Interest rate swaps related to instruments designated at fair value through profit and loss
25
–
–
–
25
Cross 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
31 December 2021
102
83
(79)
(45)
61
Non-current
Current
Current
Non-current
assets
assets
liabilities
liabilities
Total
$m
$m
$m
$m
$m
Interest rate swaps related to instruments designated at fair value through profit and loss
–
1
–
–
1
Cross currency swaps designated in a net investment hedge
55
–
–
(4)
51
Cross currency swaps designated in a cash flow hedge
–
–
–
(160)
(160)
Forward FX designated in a cash flow hedge
2
–
1
(13)
–
(12)
Other derivatives
19
85
(80)
–
24
31 December 2022
74
87
(93)
(164)
(96)
1
Cross currency swaps designated in a fair value hedge refers to a cross currency interest rate swap that hedges a designated euro 300m portion of our euro 750m 0.875% 2021 Non-callable
bond against exposure to movements in the euro:US dollar exchange rate. The swap matured in November 2021 when the related bond matured.
2
Forward FX designated in a cash flow hedge relates to contracts hedging anticipated CNY, EUR, GBP, JPY and SEK transactions occurring in the quarter immediately after the balance
sheet date.
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 $19m (2021: $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:
2022
2021
2020
Derivatives
0.1% to 4.7%
(0.5)% to 3.6%
2022
2021
2020
$m
$m
$m
Prepayments
243
391
395
Accrued income
44
61
56
Retirement benefit scheme surpluses (Note 22)
90
–
–
Other receivables
458
443
269
Non-current other receivables
835
895
720
Prepayments include $nil (2021: $92m; 2020: $121m) in relation to our research collaboration with Moderna. Other receivables include $71m (2021:
Notes to the Group Financial Statements
continued
166
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
2022
2021
2020
$m
$m
$m
Raw materials and consumables
1,422
1,755
1,262
Inventories in process
1,864
5,216
1,331
Finished goods and goods for resale
1,413
2,012
1,431
Inventories
4,699
8,983
4,024
The Group recognised $9,618m (2021: $9,640m; 2020: $3,110m) of inventories as an expense within Cost of sales during the year.
2022
2021
2020
$m
$m
$m
Trade receivables
7,271
6,054
3,829
Less: Expected credit loss provision (Note 28)
(59)
(23)
(23)
7,212
6,031
3,806
Other receivables
1,659
1,808
1,278
Prepayments
1,329
1,512
1,735
Government grants receivable
25
–
53
Accrued income
296
293
150
Trade and other receivables
10,521
9,644
7,022
Trade receivables include $2,470m (2021: $1,865m; 2020: $1,250m) measured at FVOCI classified ‘hold to collect and sell’ as they are due from
customers that the Group has the option to factor, or relate to bank acceptance drafts received in settlement of trade receivables per common
practice in China.
All other financial assets included within Current trade and other receivables are held at amortised cost with carrying value being a reasonable
2022
2021
2020
$m
$m
$m
Cash at bank and in hand
1,411
1,461
1,182
Short-term deposits
4,755
4,868
6,650
Cash and cash equivalents
6,166
6,329
7,832
Unsecured bank overdrafts
(183)
(291)
(286)
Cash and cash equivalents in the cash flow statement
5,983
6,038
7,546
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 is materially the same as amortised cost.
Non-cash and other movements, within operating activities in the Consolidated Statement of Cash Flows, includes:
2022
2021
2020
$m
$m
$m
Share-based payments charge for the period
619
615
277
Settlement of share plan awards
(592)
(570)
(349)
Pension contributions
(205)
(174)
(172)
Pension charges recorded in operating profit
101
136
84
Long-term provision charges recorded in operating profit
87
270
66
Non-cash intangible additions
–
–
(120)
(Gain)/loss on disposal of tangible assets
(112)
4
(25)
Foreign exchange and other
1
(590)
(186)
(37)
Total operating activities non-cash and other movements
(692)
95
(276)
1
Foreign exchange and other includes, among other items, the foreign exchange of intercompany transactions, including dividends, across Group entities and the related impact from hedging
167
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Assets held for sale amount to $150m (2021: $368m; 2020: $nil). Current year assets comprise Property, plant and equipment assets relating to the
West Chester site in Ohio, US. AstraZeneca signed a contract on 29 November 2022 to sell the site to National Resilience, Inc. subject to anti-trust
clearance. The transaction closed on 30 January 2023.
In 2021, Assets held for sale comprised Intangible assets relating to the rights to certain respiratory assets acquired from Almirall and Actavis (including
Tudorza
and
Duaklir
Repayment
2022
2021
2020
dates
$m
$m
$m
Current liabilities
Bank overdrafts
On demand
183
291
286
Other short-term borrowings excluding overdrafts
78
3
84
Collateral received from derivative counterparties
89
93
288
Lease liabilities
228
233
192
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
–
0.3% Callable bond
US dollars
2023
1,399
–
–
2023 Floating bank loan
US dollars
2023
2,000
–
–
Floating rate notes
US dollars
2023
400
–
–
3.5% Callable bond
US dollars
2023
849
–
–
7% Guaranteed debentures
US dollars
2023
294
–
–
Other loans (including commercial paper)
Within one year
22
24
3
Total
5,542
1,893
2,386
Non-current liabilities
Lease liabilities
725
754
489
Floating rate notes
US dollars
2022
–
–
250
2.375% Callable bond
US dollars
2022
–
–
996
0.3% Callable bond
US dollars
2023
–
1,397
–
2023 Floating rate bank loan
US dollars
2023
–
1,998
–
Floating rate notes
US dollars
2023
–
400
400
3.5% Callable bond
US dollars
2023
–
848
847
7% Guaranteed debentures
US dollars
2023
–
320
339
0.75% Callable bond
euros
2024
957
1,014
1,102
0.7% Callable bond
US dollars
2024
1,598
1,598
–
2024 Floating rate bank loan
US dollars
2024
1,998
1,997
–
3.375% Callable bond
US dollars
2025
1,992
1,988
1,985
0.7% Callable bond
US dollars
2026
1,195
1,193
1,192
1.2% Callable bond
US dollars
2026
1,246
1,245
–
3.125% Callable bond
US dollars
2027
746
745
744
1.25% Callable bond
euros
2028
845
896
973
1.75% Callable bond
US dollars
2028
1,245
1,244
–
4% Callable bond
US dollars
2029
995
994
993
0.375% Callable bond
euros
2029
846
898
–
1.375% Callable bond
US dollars
2030
1,293
1,292
1,291
2.25% Callable bond
US dollars
2031
747
746
–
5.75% Non-callable bond
pounds sterling
2031
420
470
475
6.45% Callable bond
US dollars
2037
2,724
2,724
2,722
4% Callable bond
US dollars
2042
988
988
988
4.375% Callable bond
US dollars
2045
981
980
980
4.375% Callable bond
US dollars
2048
737
737
737
2.125% Callable bond
US dollars
2050
487
486
486
3% Callable bond
US dollars
2051
735
734
–
Other loans
US dollars
190
202
5
Total
23,690
28,888
17,994
Total interest-bearing loans and borrowings
1, 2
29,232
30,781
20,380
1
All loans and borrowings above are unsecured apart from $22m (2021: $24m) of current and $181m (2021: $188m) of non-current in 2022, both included within Other loans.
2
The $2bn USD 2023 floating rate bank loan and $2bn USD 2024 floating rate bank loan pay interest linked to 1 month USD LIBOR. The Group has the right to switch these loans to compounded
daily USD Secured Overnight Funding Rate (SOFR) with five days notice. The loans will automatically switch to compounded SOFR on 30 June 2023 if the Group has not already switched
before this date. All other floating rate debt is not impacted by LIBOR reference as it either uses non-LIBOR fixings or will mature before the relevant LIBOR rate is withdrawn.
Notes to the Group Financial Statements
continued
168
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Total loans and
Total loans and
Total loans and
borrowings
borrowings
borrowings
2022
2021
2020
$m
$m
$m
At 1 January
30,781
20,380
18,227
Changes from financing cash flows
Issue of loans and borrowings
–
12,929
2,968
Repayment of loans and borrowings
(1,271)
(4,759)
(1,609)
Movement in short-term borrowings
74
(276)
288
Repayment of obligations under leases
(244)
(240)
(207)
Total changes in cash flows arising on financing activities from borrowings
(1,441)
7,654
1,440
Movement in overdrafts
(85)
31
138
New lease liabilities
253
503
174
Additions through business combinations
5
2,523
–
Exchange
(287)
(378)
363
Other movements
6
68
38
At 31 December
29,232
30,781
20,380
Also included within cash flows arising from financing activities within the Consolidated Statement of Cash Flows is a $920m cash outflow (2021: $nil;
2020: $nil) related to the Acerta Pharma share purchase liability which has a closing liability at 31 December 2022 of $1,646m (2021: $2,458m; 2020:
$2,297m) within Trade and other payables (see Note 20 and Note 26).
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
3
cost
value
value
$m
$m
$m
$m
$m
$m
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 and borrowings due within one year
371
–
614
923
1,908
1,922
Loans and borrowings due after more than one year
–
339
2,075
15,091
17,505
20,936
Total at 31 December 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 and borrowings due within one year
–
–
–
1,369
1,369
1,378
Loans and borrowings due after more than one year
–
320
1,910
25,904
28,134
30,596
Total at 31 December 2021
–
320
1,910
28,551
30,781
33,252
2022
Overdrafts
–
–
–
183
183
183
Lease liabilities due within one year
–
–
–
228
228
228
Lease liabilities due after more than one year
–
–
–
725
725
725
Loans and borrowings due within one year
–
294
–
4,837
5,131
5,105
Loans and borrowings due after more than one year
–
–
1,802
21,163
22,965
21,657
Total at 31 December 2022
–
294
1,802
27,136
29,232
27,898
1
Instruments designated as hedged items in a fair value hedge relationship relate to a designated euro 300m portion of our euro 750m 0.875% 2021 Non-callable bond which matured on
24 November 2021. The accumulated amount of fair value hedge adjustments to the bond was a loss of $10m.
2
Instruments designated at fair value through profit or loss include the US dollar 7% guaranteed debentures repayable in 2023.
3
Instruments designated in cash flow hedges are our euro 500m 0.25% Callable bond which matured in 2021, our euro 900m 0.75% 2024 Callable bond and our euro 800m 1.25% 2028
Callable bond.
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.
169
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
19 Interest-bearing loans and borrowings
continued
A gain of $2m was made during the year on the fair value of bonds designated as fair value through profit or loss, due to increased credit risk. A gain
of $31m 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:
2022
2021
2020
Loans and borrowings
4.3% to 4.9%
0.1% to 0.6%
2022
2021
2020
$m
$m
$m
Current liabilities
Trade payables
2,550
2,824
2,350
Value-added and payroll taxes and social security
468
463
390
Rebates, chargebacks, returns and other revenue accruals
6,078
5,298
4,772
Clinical trial accruals
1,417
1,047
699
Other accruals
5,551
5,649
3,905
Collaboration Revenue contract liabilities
12
12
12
Vaccine contract liabilities
169
1,003
1,616
Deferred government grant income
1
67
253
Contingent consideration
757
849
647
Acerta Pharma share purchase liability (Note 26)
867
920
–
Other payables
1,170
806
1,141
Total
19,040
18,938
15,785
Non-current liabilities
Accruals
37
25
56
Collaboration Revenue contract liabilities
14
26
38
Contingent consideration
1,465
2,016
2,676
Acerta Pharma share purchase liability (Note 26)
779
1,538
2,297
Other payables
1,975
1,328
1,017
Total
4,270
4,933
6,084
Included within Rebates, chargebacks, returns and other revenue accruals are contract liabilities of $87m (2021: $99m; 2020: $77m). The revenue
recognised in the year for contract liabilities is $86m, comprising $74m relating to other revenue accruals and $12m Collaboration Revenue contract
liabilities. The major markets with Rebates, chargebacks, returns and other revenue accruals are the US where the liability at 31 December 2022
amounted to $3,961m (2021: $3,172m; 2020: $3,126m), of which Rare Disease comprises $139m (2021: $127m), and China where the liability at
31 December 2022 amounted to $579m (2021: $814m; 2020: $740m).
Trade payables includes $67m (2021: $44m; 2020: $248m) 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 2022, the payables met the criteria of Trade payables. The supply chain financing programme
operates in the US, UK, Sweden and Germany, and as at 31 December 2022, the programme had 420 suppliers enrolled across these countries.
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 $686m.
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 $100m (2021: $nil; 2020: $146m) resulting from the collaboration
agreement in relation to
Enhertu
entered into in March 2019 and $nil (2021: $324m; 2020: $324m) in relation to DS-1062 entered into in July 2020.
Additionally, included within non-current Other payables are liabilities totalling $1,125m (2021: $100m; 2020: $100m) as a result of the
Enhertu
collaboration agreement and $nil (2021: $nil; 2020: $323m) as a result of the DS-1062 collaboration agreement.
Notes to the Group Financial Statements
continued
170
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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). 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 in
2022 through to 2024, with the first payment of $920m made in 2022. The changes to the terms are reflected in the assumptions used to calculate
the amortised cost of the liability as at 31 December 2022 of $1,646m (2021: $2,458m; 2020: $2,297m). Interest arising from amortising the liability
is included within Finance Expense (see Note 3). The associated cash flows are disclosed as financing activities within the Consolidated
Statement of Cash Flows.
With the exception of Contingent consideration payables of $2,222m (2021: $2,865m; 2020: $3,323m) 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.
Contingent consideration
2022
2021
2020
$m
$m
$m
At 1 January
2,865
3,323
4,139
Settlements
(772)
(643)
(822)
Disposals
1
(121)
–
–
Revaluations
82
14
(272)
Reclassification to Other payables
–
(55)
–
Discount unwind (Note 3)
168
226
278
At 31 December
2,222
2,865
3,323
1
On 4 January 2022, AstraZeneca completed the sale of the global rights to
Tudorza
and
Duaklir
to Covis Pharma GmbH. The divestment resulted in the remaining outstanding Contingent
consideration payable of $121m related to these assets being extinguished on the basis that AstraZeneca is no longer obliged to make such payments to Almirall.
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 $182m in 2022
(2021: an increase of $42m; 2020: a decrease of $51m) 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 which is discounted at 8% and is reviewed against comparable benchmarks on a regular basis.
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.
The contingent consideration balance relating to BMS’s share of Global Diabetes Alliance of $2,124m (2021: $2,544m; 2020: $2,932m) would increase/
decrease by $212m 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
345
1
These contingent consideration liabilities have been designated as the hedge instrument in a net investment hedge of foreign currency risk arising on the Group’s underlying US dollar net
investments held in non-US dollar denominated subsidiaries. Exchange differences on the retranslation of the contingent consideration liability are recognised in Other comprehensive
income to the extent that the hedge is effective. Any ineffectiveness is taken to profit.
The amount of royalties payable under the arrangements is inherently uncertain and difficult to predict, given the direct link to future sales and the
171
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Employee
Other
Severance
Environmental
benefits
Legal
provisions
Total
$m
$m
$m
$m
$m
$m
At 1 January 2020
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)
(295)
(56)
(491)
Reversals
(89)
–
(2)
(14)
(27)
(132)
Exchange and other movements
8
–
33
(1)
45
85
At 31 December 2020
214
100
128
348
770
1,560
Additions through business combinations (Note 27)
–
–
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)
29
(1)
(6)
15
At 31 December 2021
212
90
195
239
988
1,724
Charge for year
227
61
1
830
365
1,484
Cash paid
(223)
(19)
(41)
(814)
(185)
(1,282)
Reversals
(43)
–
(27)
(94)
(98)
(262)
Exchange and other movements
(8)
(1)
15
–
(52)
(46)
At 31 December 2022
165
131
143
161
1,018
1,618
2022
2021
2020
$m
$m
$m
Due within one year
722
768
976
Due after more than one year
896
956
584
Total
1,618
1,724
1,560
Provisions are often subject to substantial uncertainties with regard to the timing and final amounts of any payments. As such, once established,
these amounts remain in Provisions until settlement is reached and uncertainty resolved, with no transfer to Trade and other payables prior to payment.
Severance provisions arise predominantly in connection with global restructuring initiatives, including the Post Alexion Acquisition Group Review,
which involve rationalisation of the global supply chain, the sales and marketing organisation, IT and business support infrastructure, and R&D.
In conjunction with the acquisition of Alexion in 2021, the enlarged Group 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.
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 provisions totalling $131m (2021: $90m; 2020: $100m) 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. 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, which include uncertainty over the ultimate timing
and amount of payment to be made to the executives.
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; the final settlement values and timings are uncertain. Also included in Other
provisions is an amount of $165m (2021: $185m; 2020: $258m), in relation to third-party liability and other risks (including incurred but not yet reported
claims); the claims are considered to be uncertain as to timing and amount. In 2022, charges to Other provisions included $301m in relation to
termination fees and onerous contracts with contract manufacturing organisations and are expected to be settled within the next 12 months. Charges
to Other provisions in 2022 also included $12m (2021: $243m) in relation to the Post Alexion Acquisition Group Review restructuring programme, which
has a closing provision of $143m (2021: $243m), including $95m (2021: $158m) held in non-current provisions expected to be settled over time by 2025.
Notes to the Group Financial Statements
continued
172
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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). In total, over 50 plans in 28 countries are covered.
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 452 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.
With a general improvement in funding solvency over the course of 2022, three of the Group’s defined benefit plans had surplus positions, with three
other plans close to full funding and therefore to surplus. As a result, the Group reviewed its policy on surplus recognition, paying particular attention
to the requirements of IFRIC 14 ‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’. The Group
concluded that in five instances, the surplus would be repayable, while a small surplus in Sweden was derecognised.
Financing Principles and Funding Framework
Eighty eight per cent of the Group’s total DB obligations (or 56% of net obligations) at 31 December 2022 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 changes to these principles during 2022.
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 buyout 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 59% of the Group’s DB obligations at 31 December 2022. The financing principles are modified in
light of the UK regulatory requirements (summarised below) and resulting discussions with the Trustee.
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, to monitor and assess corporate activity, with a focus on the potential impact of
such activity on the ongoing security of these benefits. The Group has developed a framework to ensure it meets its responsibilities under the Act.
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 made significant progress in equalising benefits. Further
details are set out later on in this Note. An estimate of the impact of these changes has already been recognised in 2018 and 2020, and actual
experience is in line with the estimates previously recognised.
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’.
173
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
22 Post-retirement and other defined benefit schemes
continued
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 2020 report. The actuarial valuation as at 31 March 2022 is currently in progress, with a likely timescale for
completion during the second quarter of 2023. However, the value of the Fund’s obligations disclosed at 31 December 2022 incorporates data
from this latest actuarial valuation including updated membership information and demographic assumptions.
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 is required to provide security. A key element of this
security is to grant a charge in favour of the Trustee over land and buildings on the Cambridge Biomedical Campus, required to be effective within
three months of the practical completion of the site, or by 30 June 2023 (whichever is earlier). An extension was granted by the Trustee to this
backstop date in 2022. 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 is capped at £350m.
In relation to deficit recovery contributions, a lump sum contribution of £39m was made in March 2022, with a further £39m contribution due before
31 March 2023. In addition, a contribution of £30m was also made in March 2022, which was a final instalment of a separate 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 was paid in five instalments (with interest) from March 2018 to March 2022. The letter of credit
underwriting these payments reduced in value as each annual payment was made and given all payments have been made, the letter of credit has
now expired.
Substantial progress was made over 2022 in equalising GMP for members of the UK Pension Fund. The method of equalisation adopted was to
convert GMP to simplify the structure and administration of benefits. As at 31 December 2022, a majority of pensioner and dependent members
have had their benefits equalised. Further work will be completed over 2023 to address equalisation for the remaining affected members. As part of
the GMP equalisation project, a Pension Increase Exchange (“PiE”) option has also been provisionally made available to the majority of pensioner
members, at the Group’s discretion. This option provides the member with a choice to opt for a higher pension right away, but with no (or fewer)
inflation linked increases in the future. The PIE option element of the project is currently ongoing and if it proceeds, will not conclude until 2023.
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 IFRIC 14 ‘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 2023 for the UK scheme will be approximately $20m.
Liquidity and liability hedging
Significant increases in UK Government bond yields over September and October created liquidity challenges for many UK defined benefit schemes
with liability hedging portfolios, who needed to post collateral quickly to meet margin calls on derivative holdings. The Group’s UK Pension Fund
was not adversely impacted over this period due to a combination of Group and Trustee oversight and a functioning risk management policy. The
UK Pension Fund did not require any financial support from the Group, was self-sufficient and operated normally throughout this period. The Fund
maintained its investment strategy and funding solvency materially improved over the year. Furthermore, with the UK Pension Fund ahead of its long
term plan, this improvement allowed the Trustee, with support from the Group to de-risk investment strategy ahead of plan, reducing long term
investment risk both to the Group and members in an affordable manner.
United States and Sweden
The US and Sweden plans account for 13% and 16%, respectively, of the Group’s defined benefit obligations. The US and Sweden pension plans
are governed by Fiduciary Bodies with responsibility for the investment 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 2022, when plan obligations were $907m and plan assets were $835m.
This includes obligations in respect of the non-qualified plan which is unfunded. The qualified US pension plan is close to 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. During 2022, the Group submitted the legal documentation required to terminate the plan and move to a full buy-out and settlement
of the liabilities. This process is currently ongoing and if the Group proceeds, it is not expected to complete until midway 2023 at the earliest.
The Swedish defined benefit pension plans were actuarially valued at 31 December 2022, when plan obligations were estimated to amount to
$1,312m and plan assets were $946m. The local Swedish GAAP funding position can influence contribution policy. Over 2022, for the main
pension fund, the Group did not request a reimbursement of benefit payments made throughout the year, which totalled approximately $44m.
On current bases, it is expected that ongoing contributions (excluding those in respect of past service deficit contributions) during the year ending
31 December 2023 for the United States and Sweden will be approximately $55m.
Notes to the Group Financial Statements
continued
174
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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 2022, some 3,393 retired employees and covered dependants currently benefit from
these provisions and some 2,339 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, the Post Retirement Welfare Plan which provides retiree medical benefits has a surplus of $62m. As a result, the investment strategy
has been fully de-risked. The Group has concluded that under current legislation, the surplus would be repayable in the future to subsidise other
medical benefits offered to employees. As such, there are no adjustments required in respect of IFRIC 14 ‘IAS 19 – The limit on a Defined Benefit
Asset, Minimum Funding Requirements and their Interaction’.
The cost of post-retirement benefits other than pensions for the Group in 2022 was $1m (2021: $1m; 2020: $1m). Plan assets were $173m and plan
obligations were $129m at 31 December 2022. 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 2022. 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:
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
1.9%
2.8%
1.8%
1.2%
Discount rate – interest cost
1.9%
2.2%
1.6%
1.0%
Discount rate – service cost
1.9%
n/a
1.9%
1.4%
2022
UK
US
Sweden
Rest of Group
4
Inflation assumption
3.2%
–
1.9%
2.5%
Rate of increase in salaries
–
1
–
3.4%
4.0%
Rate of increase in pensions in payment
3.1%
–
1.9%
2.5%
Discount rate – defined benefit obligation
2
4.9%
5.0%
4.1%
3.7%
Discount rate – interest cost
3
5.0%
4.9%
4.0%
3.8%
Discount rate – service cost
3
4.8%
n/a
4.0%
3.7%
1
Pensionable pay frozen at 30 June 2010 levels following UK fund changes.
2
Group defined benefit obligation as at 31 December 2022 calculated using discount rates based on market conditions as at 31 December 2022.
3
2022 interest costs and service costs calculated using discount rates based on market conditions as at 31 December 2021.
4
Rest of Group reflects the assumptions in Germany as these have the most material impact on the Group.
The weighted average duration of the post-retirement scheme obligations is approximately 12 years in the UK, 10 years in the US, 16 years in
Sweden and 14 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 2022 and male and female members
expected to retire in 2042 (2021: 2021 and 2041 respectively).
Life expectancy assumption for a male member retiring at age 65
Life expectancy assumption for a female member retiring at age 65
Country
2022
2042
2021
2041
2022
2042
2021
2041
UK
22.2
23.2
22.5
23.7
23.8
24.9
23.9
25.2
US
22.0
23.2
21.9
23.2
23.4
25.0
23.3
24.9
Sweden
21.8
23.6
21.9
23.6
23.9
26.0
24.5
25.6
In the UK, the Group updated the mortality tables used, reflecting analysis carried out as part of the latest actuarial valuation and adopted the
CMI 2021 Mortality Projections Model with a 1% long-term improvement rate. Other demographic assumptions were updated based on analysis
carried out as part of the 2022 actuarial valuation including the assumed age gap between members and their partners. The Group assumes that
25% of members (2021: 30%) will transfer out of the defined benefit section of the AstraZeneca Pension Fund at the point of retirement.
In the US and Sweden the Group continues to use the most recently published mortality tables. No update was published in the US in 2022 and
MP-2021 continues to be used, but a new table, DUS21, has been used in Sweden.
175
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
22 Post-retirement and other defined benefit schemes
continued
Risks associated with the Group’s defined benefit pension schemes
The UK defined benefit plan accounts for 59% 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. Approximately 60% of the UK Pension Fund is invested in
growth assets. 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. De-risking of the investment strategy
took place over 2022, as the Fund moved ahead of its long-term target, with
exposure to Growth Assets reducing from approximately 72.5% to 61.0%.
The Trustee has hedged approximately 93% 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 gilt repurchase agreements or “gilt repo”) of appropriate duration,
set to target a hedge ratio of approximately 100% of total assets. This hedge
protects to a large degree against falls in long-term interest rates and the
UK Pension Fund is approximately 98% hedged as a percentage of assets
at the end of 2022. Furthermore, over 2022, the liability hedging benchmark
was moved to a 100% gilt-based hedging strategy to reduce funding basis
risk and almost all net swap exposure was removed. Nonetheless, there
remain 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 gilt repo) and the bonds analysed to set the DBO discount
rate on an accounting basis (AA corporate bonds). As such, there remains
some mismatching risk (albeit less than in previous years) on an accounting
basis should yields on gilts 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 gilt repo. As with
the interest rate hedge, the liability benchmark was changed over 2022 to
facilitate hedging solely with gilts rather than the previous mix of gilts and
swaps. The inflation hedge of the UK Pension Fund protects to some degree
against higher-than-expected inflation increases on the DBO (approximately
93% hedged as a percentage of assets at the end of 2022). There is a
framework in place to gradually increase the level of inflation hedging to
100% of assets over time.
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 $1.9bn of the UK Pension Fund’s liabilities.
A one-year increase in life expectancy would result in a $191m increase in
pension fund obligations, which would be partially offset by a $103m
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 which the Trustee manages with Group input. Some of the major risks
include counterparty risks from using derivatives and collateral management risk (mitigated by using a specialist investment manager to oversee a
diversified range of counterparties of high standing, ensuring positions are collateralised daily and having a robust collateral management policy).
Furthermore, there are operational risks (such as paying out the wrong benefits) and legislative risks (such as the pensions regulator introducing
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 2022, 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.
There has been a material fall in both asset and liability valuations over 2022, predominantly due to significant increases in long-term global bond
yields. This had the impact of lowering liability and asset valuations.
Notes to the Group Financial Statements
continued
176
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Scheme assets
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
–
303
–
–
–
75
–
2,878
–
2,878
Corporate bonds
2
–
–
877
–
–
–
16
–
893
–
893
Derivatives
3
–
(237)
2
(1)
–
259
(1)
–
1
21
22
Investment funds: Listed Equities
4
–
1,427
–
–
–
134
55
6
55
1,567
1,622
Investment funds:
Absolute Return/Multi Strategy
4
–
2,342
–
–
–
647
8
–
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
2022
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
1,931
–
104
–
–
–
60
–
2,095
–
2,095
Corporate bonds
2
–
–
622
–
–
–
11
–
633
–
633
Derivatives
3
–
(608)
(2)
(3)
–
325
(2)
–
(4)
(286)
(290)
Investment funds: Listed Equities
4
–
265
–
–
–
–
49
4
49
269
318
Investment funds:
Absolute Return/Multi Strategy
4
–
1,701
–
–
–
475
6
–
6
2,176
2,182
Investment funds: Corporate Bonds/Credit
4
–
817
–
–
–
144
49
10
49
971
1,020
Cash and cash equivalents
52
415
285
–
–
2
–
4
337
421
758
Other
–
–
–
2
–
–
1
311
1
313
314
Total fair value of scheme assets
5
1,983
2,590
1,009
(1)
–
946
174
329
3,166
3,864
7,030
1
Predominantly developed markets in nature.
2
Predominantly developed markets in nature and investment grade (AAA-BBB).
3
Includes interest rate swaps, inflation swaps, longevity swap, equity total return swaps and other contracts. More detail is given in the section Risks associated with the Group’s defined
benefit pensions on page 176. Valuations are determined by independent third parties.
4
Investment Funds are pooled, commingled vehicles, whereby the pension scheme owns units in the fund, alongside other investors. The pension schemes invest in a number of Investment
Funds, including Listed Equities (primarily developed markets with some emerging markets), Corporate Bonds/Credit (a range of investment-grade and non investment-grade credit) and
Absolute Return/Multi Strategy (multi-asset exposure both across and within traditional and alternative asset classes). The price of the funds is set by independent administrators/custodians
employed by the investment managers and based on the value of the underlying assets held in the fund. Details of pricing methodology is set out within internal control reports provided for
each fund. Prices are updated daily, weekly or monthly depending upon the frequency of the fund’s dealing.
5
Included in scheme assets is less than $1m of the Group’s own assets (2021: $nil). The assets are AstraZeneca corporate debt held by the US qualified plan and amount to 0.05% of the plan’s assets.
Scheme obligations
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)
2022
UK
US
Sweden
Rest of Group
Total
$m
$m
$m
$m
$m
Present value of scheme obligations in respect of:
Active membership
(212)
(54)
(430)
(424)
(1,120)
Deferred membership
(804)
(437)
(369)
(299)
(1,909)
Pensioners
(3,785)
(531)
(513)
(250)
(5,079)
Total value of scheme obligations
(4,801)
(1,022)
(1,312)
(973)
(8,108)
177
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
22 Post-retirement and other defined benefit schemes
continued
Net (deficit)/surplus in the scheme
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)
Included in Non-current other receivables
–
–
–
–
–
Included in Retirement benefit obligations
(608)
9
(1,139)
(716)
(2,454)
(608)
9
(1,139)
(716)
(2,454)
2022
UK
US
Sweden
Rest of Group
Total
$m
$m
$m
$m
$m
Total fair value of scheme assets
4,573
1,008
946
503
7,030
Total value of scheme obligations
(4,801)
(1,022)
(1,312)
(973)
(8,108)
Deficit in the scheme as recognised in the
Consolidated Statement of Financial Position
(228)
(14)
(366)
(470)
(1,078)
Included in Non-current other receivables
–
62
–
28
1
90
Included in Retirement benefit obligations
(228)
(76)
(366)
(498)
(1,168)
(228)
(14)
(366)
(470)
(1,078)
1
Surpluses were recognised in Ireland and Belgium.
Fair value of scheme assets
2022
2021
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
7,333
1,413
1,234
584
10,564
7,179
1,570
1,338
581
10,668
Interest income on scheme assets
123
29
18
5
175
75
27
12
4
118
Expenses
(5)
(2)
–
–
(7)
(7)
–
–
–
(7)
Actuarial gains/(losses)
(1,964)
(295)
(153)
(55)
(2,467)
372
(22)
62
3
415
Exchange and other adjustments
(728)
–
(152)
(34)
(914)
(77)
(5)
(132)
1
(213)
Employer contributions
118
7
43
37
205
122
19
5
28
174
Participant contributions
1
5
–
5
11
2
–
–
2
4
Benefits paid
(305)
(149)
(44)
(39)
(537)
(333)
(176)
(51)
(35)
(595)
Scheme assets’ fair value at end of year
4,573
1,008
946
503
7,030
7,333
1,413
1,234
584
10,564
The actual return on the plan assets was a loss of $2,292m (2021: gain of $533m). The asset loss was driven predominantly by a fall in the value of
the liability hedging portfolio in the UK and to a lesser extent, in the US and Sweden as long term bond yields increased. The asset loss was more
than offset by the fall in the liability value shown in the table below.
Movement in post-retirement scheme obligations
2022
2021
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
(7,941)
(1,404)
(2,373)
(1,300) (13,018)
(8,425)
(1,601)
(2,525)
(1,319) (13,870)
Current service cost
(14)
(1)
(35)
(38)
(88)
(18)
(2)
(69)
(34)
(123)
Past service (cost)/credit
(5)
–
(4)
3
(6)
(4)
–
(1)
–
(5)
Participant contributions
(1)
(4)
–
(5)
(10)
(2)
–
–
(2)
(4)
Benefits paid
305
149
44
39
537
333
176
51
35
595
Interest expense on post-retirement scheme obligations
(132)
(29)
(31)
(12)
(204)
(87)
(28)
(22)
(8)
(145)
Actuarial gains/(losses)
2,243
268
806
268
3,585
199
46
(43)
9
211
Exchange and other adjustments
744
(1)
281
72
1,096
63
5
236
19
323
Present value of obligations in scheme at end of year
(4,801)
(1,022)
(1,312)
(973)
(8,108)
(7,941)
(1,404)
(2,373)
(1,300)
(13,018)
The obligations arise from over 50 plans in 28 countries:
2022
2021
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
1
(4,787)
(851)
(1,310)
(842)
(7,790)
(7,927)
(1,178)
(2,371)
(1,160) (12,636)
Funded – post-retirement healthcare
–
(111)
–
–
(111)
–
(143)
–
–
(143)
Unfunded – pension schemes
1
–
(60)
(2)
(122)
(184)
–
(83)
(2)
(127)
(212)
Unfunded – post-retirement healthcare
(14)
–
–
(9)
(23)
(14)
–
–
(13)
(27)
Total
(4,801)
(1,022)
(1,312)
(973)
(8,108)
(7,941)
(1,404)
(2,373)
(1,300)
(13,018)
1
Includes defined benefit pension schemes and other plans, such as Lump Sum, Long Service Award and DC plans with underpins.
Notes to the Group Financial Statements
continued
178
AstraZeneca Annual Report & Form 20-F Information 2022
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 2022, are set out below.
2022
2021
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
(14)
(1)
(35)
(38)
(88)
(18)
(2)
(69)
(35)
(124)
Past service (cost)/credit
(5)
–
(4)
3
(6)
(4)
–
(1)
–
(5)
Expenses
(5)
(2)
–
–
(7)
(7)
–
–
–
(7)
Total charge to Operating profit
(24)
(3)
(39)
(35)
(101)
(29)
(2)
(70)
(35)
(136)
Finance expense
Interest income on scheme assets
123
29
18
5
175
75
27
12
5
119
Interest expense on post-retirement scheme obligations
(132)
(29)
(31)
(12)
(204)
(87)
(28)
(22)
(8)
(145)
Net interest on post-employment defined benefit plan liabilities
(9)
–
(13)
(7)
(29)
(12)
(1)
(10)
(3)
(26)
Charge before taxation
(33)
(3)
(52)
(42)
(130)
(41)
(3)
(80)
(38)
(162)
Other comprehensive income
Difference between the actual return and the
expected return on the post-retirement scheme assets
(1,964)
(295)
(153)
(55)
(2,467)
372
(22)
62
3
415
Experience gains/(losses) arising on the
post-retirement scheme obligations
55
(16)
(99)
(6)
(66)
(43)
(9)
–
74
22
Changes in financial assumptions underlying the
present value of the post-retirement scheme obligations
2,272
284
896
275
3,727
239
59
(43)
(61)
194
Changes in demographic assumptions
(84)
–
9
(1)
(76)
3
(4)
–
(4)
(5)
Remeasurement of the defined benefit liability
279
(27)
653
213
1,118
571
24
19
12
626
Past service costs include granting early retirement in 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).
2022
2021
$m
$m
Defined contribution schemes
445
428
Defined benefit schemes − current service costs and expenses
95
131
Defined benefit schemes − past service cost
6
5
Pension costs
546
564
Rate sensitivities
The following table shows the US dollar effect of a change in the significant actuarial assumptions used to determine the retirement benefits
obligations in our three main defined benefit pension obligation countries.
2022
2021
+0.5%
-0.5%
+0.5%
-0.5%
Discount rate
UK ($m)
262
(289)
565
(634)
US ($m)
46
(49)
79
(84)
Sweden ($m)
95
(107)
197
(226)
Total ($m)
403
(445)
841
(944)
2022
2021
+0.5%
-0.5%
+0.5%
-0.5%
Inflation rate
1
UK ($m)
(173)
165
(386)
375
US ($m)
n/a
n/a
n/a
n/a
Sweden ($m)
(104)
93
(207)
196
Total ($m)
(277)
258
(593)
571
2022
2021
+0.5%
-0.5%
+0.5%
-0.5%
Rate of increase in salaries
UK ($m)
n/a
n/a
n/a
n/a
US ($m)
n/a
n/a
n/a
n/a
Sweden ($m)
(47)
43
(90)
82
Total ($m)
(47)
43
(90)
82
179
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
22 Post-retirement and other defined benefit schemes
continued
2022
2021
+1 year
−1 year
+1 year
−1 year
Mortality rate
UK ($m)
(191)
2
193
3
(390)
388
US ($m)
(20)
20
(29)
29
Sweden ($m)
(44)
44
(94)
93
Total ($m)
(255)
257
(513)
510
1
Rate of increase in pensions in payment follows inflation.
2
Of the $191m increase, $103m is covered by the longevity swap.
3
Of the $193m decrease, $103m is covered by the longevity swap.
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
Retained earnings
The cumulative amount of goodwill written off directly to reserves resulting from acquisitions, net of disposals, amounted to $591m (2021: $615m;
2020: $636m) using year-end rates of exchange.
At 31 December 2022, 1,671,446 shares, at a cost of $112m, have been deducted from Retained earnings (2021: 3,922,122 shares, at a cost of $239m;
2020: 556,108 shares, at a cost of $51m) 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).
2022
2021
2020
$m
$m
$m
Cumulative translation differences included within Retained earnings
At 1 January
(1,934)
(1,143)
(2,189)
Foreign exchange arising on consolidation
(1,446)
(483)
443
Exchange adjustments on goodwill (recorded against other reserves)
(24)
(21)
22
Foreign exchange arising on designated liabilities in net investment hedges
1
(282)
(321)
573
Fair value movements on derivatives designated in net investment hedges
(8)
34
8
Net exchange movement in Retained earnings
(1,760)
(791)
1,046
At 31 December
(3,694)
(1,934)
(1,143)
1
Foreign exchange arising on designated liabilities in net investment hedges includes $102m in respect of designated bonds and $(384)m in respect of designated contingent consideration and
other liabilities. The change in value of designated contingent consideration liabilities relates to $(369)m in respect of BMS’ share of Global Diabetes Alliance, and $(15)m in respect of Almirall.
The cumulative loss with respect to costs of hedging is $3m (2021: gain of $4m; 2020: gain of $9m) and the loss during the year was $7m (2021: loss
of $6m; 2020: gain of $9m).
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
Allotted, called-up and fully paid
2022
2021
2020
$m
$m
$m
Issued Ordinary Shares ($0.25 each)
387
387
328
Redeemable Preference Shares (£1 each – £50,000)
–
–
–
At 31 December
387
387
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.
Notes to the Group Financial Statements
continued
180
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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
2022
2021
2020
At 1 January
1,549,400,665
1,312,668,724
1,312,137,976
Issue of share capital (business combinations)
–
236,321,411
–
Issue of shares (share schemes)
399,365
410,530
530,748
At 31 December
1,549,800,030
1,549,400,665
1,312,668,724
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 2022 (2021: nil; 2020: nil).
Shares held by subsidiaries
2022
2021
2020
2022
2021
2020
Per share
Per share
Per share
$m
$m
$m
Second interim (March 2022)
$1.97
$1.90
$1.90
3,046
2,490
2,489
First interim (September 2022)
$0.93
$0.90
$0.90
1,440
1,392
1,180
Total
$2.90
$2.80
$2.80
4,486
3,882
3,669
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. Unclaimed dividends of $1m (2021: $nil; 2020: $1m) have been adjusted for in Retained
earnings in 2022.
The 2021 second interim dividend of $1.97 per share was paid on 28 March 2022. The 2022 first interim dividend of $0.93 per share was paid on
12 September 2022.
Reconciliation of dividends charged to equity to cash flow statement:
2022
2021
2020
$m
$m
$m
Dividends charged to equity
4,486
3,882
3,669
Exchange losses on payment of dividend
5
3
4
Hedge contracts relating to payment of dividends (cash flow statement)
(127)
(29)
(101)
Dividends paid (cash flow statement)
4,364
3,856
The Group Financial Statements at 31 December 2022 reflect equity of $21m (2021: $19m; 2020: $16m) and total comprehensive income of $2m
(2021: $3m; 2020: $3m) 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 2022 also reflect total comprehensive losses of $nil (2021: $nil; 2020: $55m)
attributable to the non-controlling interest in Acerta Pharma, resulting in reported total comprehensive income of $2m (2021: income of $3m,
2020: losses of $52m).
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
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.
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
181
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Acquisitions of business operations in 2022
On 16 November 2022, AstraZeneca completed the acquisition of 100% of the issued shares of LogicBio Therapeutics, Inc. (LogicBio) based in
Lexington, MA, US. LogicBio is a clinical-stage genetic medicine company pioneering genome editing and gene delivery platforms to address rare
and serious diseases from infancy through adulthood. The total consideration was $72m. Cash of $68m was paid on the completion date, with $4m
of outstanding options, which will be settled in cash, recorded in current Trade and other payables. Goodwill of $15m, assets of $82m, including $46m
of intangible assets, and liabilities of $25m were recognised on acquisition. LogicBio’s results have been consolidated into the Group’s results from
16 November 2022.
Acquisitions of business operations in 2021
On 21 July 2021, AstraZeneca completed the acquisition of 100% of the issued shares of Alexion Pharmaceuticals, Inc (Alexion), based in Boston, MA,
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 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 was 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 were recorded by AstraZeneca at fair value, with the excess
of the purchase price over the fair value of the identifiable assets and liabilities being recognised as goodwill.
As part of the Alexion acquisition in 2021, we identified the assets (comprising principally launched products and IPR&D 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
Notes to the Group Financial Statements
continued
182
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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 of $23,695m
and products under development of $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 148, the assets were assessed for impairment in the final
quarter of 2022 and 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 vast majority of the fair value uplift has been unwound by 31 December 2022, with the unwind of the remaining inventory fair value
uplift expected in 2023.
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 among 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 $4m (2021: $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 vested and were paid six months after the acquisition, or earlier. In 2022, a cost
of $3m (2021: $24m) has been recorded in the Statement of Comprehensive Income.
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 year, a cost of $257m (2021: $257m) has been
recorded in the Statement of Comprehensive Income ($9m (2021: $9m)) in Cost of sales, $92m (2021: $73m) in Research and development expense
and $156m (2021: $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 Statement of
Cash Flows as the cash payment relates to the settlement of the obligation that arose on the acquisition of Alexion that was included as part of the
consideration for the acquisition.
183
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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.
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.
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 regularly reviews its shareholders’ distribution policy, which comprises a regular cash dividend and potentially a share repurchase
component. No share repurchases have been made since 2012.
The Group’s net debt position (loans and borrowings net of Cash and cash equivalents, Other investments and Derivative financial instruments) has
decreased by $1,399m from a net debt position of $24,322m at the beginning of the year to a net debt position of $22,923m at 31 December 2022.
Gross debt reduced from $30,781m to $29,232m, principally due to the repayment of the $1,000m 2.75% bond and a $250m floating rate note.
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 2022, the Group was assigned short-term credit ratings of P-2 by Moody’s
and A-1 by Standard and Poor’s. The Group’s long-term credit rating was A3 Stable outlook by Moody’s and A Stable outlook by Standard and Poor’s.
In addition to Cash and cash equivalents of $6,166m, short-term fixed income investments of $13m, fixed deposits of $64m, less overdrafts of $183m
at 31 December 2022, the Group has committed bank facilities of $4,875m available to manage liquidity. These committed bank facilities have no
financial covenants and mature in April 2026. The Group regularly monitors the credit standing of the banks providing the facilities 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 2022, the Group has $3,068m outstanding from debt issued under a Euro Medium Term Note programme and $20,651m under an
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
Bonds and
Lease
and other
financial
instruments
instruments
financial
loans
bank loans
liability
payables
instruments
receivable
payable
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
168
2,584
4,591
(60)
67
7
4,598
In two to three years
–
2,101
120
1,658
3,879
(59)
67
8
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
53
722
3,277
(36)
40
4
3,281
In more than five years
–
16,921
108
1,435
18,464
(1,707)
1,652
(55)
18,409
667
27,116
738
23,939
52,460
(12,732)
12,526
(206)
52,254
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)
31 December 2020
666
19,033
681
21,869
42,249
(12,423)
12,145
(278)
41,971
Notes to the Group Financial Statements
continued
184
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Bank
Total
Derivative
Derivative
Total
overdrafts
Trade non-derivative
financial
financial
derivative
and other
Bonds and
Lease
and other
financial
instruments
instruments
financial
loans
bank loans
liability
payables
instruments
receivable
payable
instruments
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Within one year
387
1,981
256
19,007
21,631
(11,766)
11,774
8
21,639
In one to two years
–
5,647
210
2,521
8,378
(55)
66
11
8,389
In two to three years
–
5,242
163
1,669
7,074
(1,060)
1,079
19
7,093
In three to four years
–
2,591
130
862
3,583
(35)
39
4
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
26,504
66,125
(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)
(89)
(2,633)
(2,864)
(36)
7
(29)
(2,893)
31 December 2021
387
29,407
987
23,871
54,652
(14,292)
14,231
(61)
54,591
Bank
Total
Derivative
Derivative
Total
overdrafts
Trade non-derivative
financial
financial
derivative
and other
Bonds and
Lease
and other
financial
instruments
instruments
financial
loans
bank loans
liability
payables
instruments
receivable
payable
instruments
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Within one year
365
5,777
249
19,065
25,456
(12,445)
12,478
33
25,489
In one to two years
–
5,233
208
2,086
7,527
(1,012)
1,078
66
7,593
In two to three years
–
2,608
172
872
3,652
(34)
38
4
3,656
In three to four years
–
2,983
128
595
3,706
(103)
103
–
3,706
In four to five years
–
1,267
84
814
2,165
(32)
35
3
2,168
In more than five years
–
18,156
184
3,177
21,517
(1,436)
1,378
(58)
21,459
365
36,024
1,025
26,609
64,023
(15,062)
15,110
48
64,071
Effect of interest
(15)
(7,982)
–
–
(7,997)
227
(249)
(22)
(8,019)
Effect of discounting, fair values and issue costs
–
(113)
(72)
(3,299)
(3,484)
63
7
70
(3,414)
31 December 2022
350
27,929
953
23,310
52,542
(14,772)
14,868
96
52,638
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
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 2022, 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 2022.
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.
2022
2021
2020
Fixed rate
Floating rate
Total
Fixed rate
Floating rate
Total
Fixed rate
Floating rate
Total
$m
$m
$m
$m
$m
$m
$m
$m
$m
Financial liabilities
Interest-bearing loans and borrowings
Current
2,476
3,066
5,542
1,232
661
1,893
1,357
1,029
2,386
Non-current
21,511
2,179
23,690
23,985
4,903
28,888
17,005
989
17,994
Total
23,987
5,245
29,232
25,217
5,564
30,781
18,362
2,018
20,380
Financial assets
Fixed deposits
64
–
64
53
–
53
42
–
42
Cash collateral pledged to counterparties
–
162
162
–
–
–
–
–
–
Cash and cash equivalents
250
5,916
6,166
–
6,329
6,329
–
7,832
7,832
Total
314
6,078
6,392
53
6,329
6,382
42
7,832
7,874
In addition to the financial assets above, there are $9,546m (2021: $8,765m; 2020: $6,328m) of other current and non-current asset investments
and other financial assets. Of these, $nil receive floating rate interest (2021: $nil; 2020: $nil).
185
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
28 Financial risk management objectives and policies
continued
The Group is also exposed to market risk on other investments.
2022
2021
2020
$m
$m
$m
Equity securities at fair value through Other comprehensive income (Note 12)
1,056
1,168
1,108
Non-current fixed income securities at fair value through profit and loss (Note 12)
10
–
–
Total
1,066
1,168
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 61% of Group external sales in 2022 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 2022, 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. For details of non-US dollar debt in a
designated hedging relationship please see the Hedge accounting section within this Note 28 from page 188.
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.
As at 31 December 2022, the Group operates in three countries designated as hyperinflationary, being Argentina, Venezuela and Turkey. The foreign
exchange risk of these markets has been assessed and deemed to be immaterial.
Transactional
The Group aims to hedge all its forecasted 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 contracts. In addition, external dividend payments in pounds sterling
to UK shareholders and in Swedish krona to Swedish shareholders are fully hedged from announcement date to payment date. 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 cashflow 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 2022,
with all other variables held constant. Based on the composition of our long-term debt portfolio and cash reserves as at 31 December 2022, a 1%
increase in interest rates would result in an additional $52m in interest expense on the debt and an additional $59m interest income on the cash
reserves. The exchange rate sensitivity analysis assumes an instantaneous 10% change in foreign currency exchange rates from their levels at
31 December 2022, with all other variables held constant. The +10% case assumes a 10% strengthening of the US dollar against all other currencies
and the -10% case assumes a 10% weakening of the US dollar.
Each incremental 10% movement in foreign currency exchange rates would have approximately the same effect as the initial 10% detailed in the
table below and each incremental 1% change in interest rates would have approximately the same effect as the 1% detailed in the table below.
Interest rates
Exchange rates
31 December 2020
+1%
-1%
+10%
-10%
Increase/(decrease) in fair value of financial instruments ($m)
1,696
(1,758)
114
(132)
Impact on profit: (loss)/gain ($m)
–
–
(57)
74
Impact on equity: gain/(loss) ($m)
–
–
171
(206)
Interest rates
Exchange rates
31 December 2021
+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) ($m)
–
–
58
(76)
Notes to the Group Financial Statements
continued
186
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Interest rates
Exchange rates
31 December 2022
+1%
-1%
+10%
-10%
Increase/(decrease) in fair value of financial instruments ($m)
1,317
(1,490)
81
(89)
Impact on profit: gain/(loss) ($m)
–
–
26
(15)
Impact on equity: gain/(loss) ($m)
–
–
55
(74)
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
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 2022 were as follows:
Current assets
2022
2021
2020
$m
$m
$m
Cash at bank and in hand
1,411
1,461
1,182
Money market liquidity funds
4,486
4,772
6,602
Other short-term cash equivalents
269
96
48
Total Cash and cash equivalents (Note 17)
6,166
6,329
7,832
Fixed income securities at fair value through profit and loss (Note 12)
13
16
118
Cash collateral pledged to counterparties (Note 12)
162
–
–
Fixed deposits (Note 12)
64
53
42
Total derivative financial instruments (Note 13)
87
83
142
Current assets subject to credit risk
6,492
6,481
8,134
Non-current assets
2022
2021
2020
$m
$m
$m
Derivative financial instruments (Note 13)
74
102
171
Non-current assets subject to credit risk
74
102
171
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.
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 2022 was $89m (2021: $93m;
2020: $288m) and the carrying value of such cash collateral posted by the Group at 31 December 2022 was $162m (2021: $47m; 2020: $11m).
The impairment provision for other financial assets at 31 December 2022 was immaterial.
Trade receivables
Trade receivable exposures are managed locally in the operating units where they arise and credit limits are set as deemed appropriate for the
customer. The Group is exposed to customers ranging from government-backed agencies and large private wholesalers to privately owned pharmacies,
and the underlying local economic and sovereign risks vary throughout the world. Where appropriate, the Group endeavours to minimise risks by
the use of trade finance instruments such as letters of credit and insurance. The Group applies the expected credit loss approach to establish an
allowance for impairment that represents its estimate of expected losses in respect of Trade receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all Trade
receivables. To measure expected credit losses, Trade receivables have been grouped based on shared credit characteristics and the days past due.
The expected loss rates are based on payment profiles over a period of 36 months before 31 December 2022, 31 December 2021 or 31 December
2020 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect current
and forward-looking information on macroeconomic factors affecting the ability of the customer to settle the receivables.
On that basis, the loss allowance was determined as follows:
0-90 days
90-180 days
Over 180 days
31 December 2020
Current
past due
past due
past due
Total
Expected loss rate
0.1%
1.6%
19.4%
60.6%
Gross carrying amount ($m)
3,659
124
21
25
3,829
Loss allowance ($m)
2
2
4
15
23
187
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
28 Financial risk management objectives and policies
continued
0-90 days
90-180 days
Over 180 days
31 December 2021
Current
past due
past due
past due
Total
Expected loss rate
0.1%
1.2%
22.6%
11.0%
Gross carrying amount ($m)
5,617
328
18
91
6,054
Loss allowance ($m)
5
4
4
10
23
0-90 days
90-180 days
Over 180 days
31 December 2022
Current
past due
past due
past due
Total
Expected loss rate
0.03%
0.3%
32.0%
40.6%
Gross carrying amount ($m)
6,791
331
50
99
7,271
Loss allowance ($m)
2
1
16
40
59
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 73% of US sales (2021: three wholesalers accounted for approximately 94%;
2020: three wholesalers accounted for approximately 95%).
The movements of the Group expected credit losses provision are follows:
2022
2021
2020
$m
$m
$m
At 1 January
23
23
21
Net movement recognised in income statement
37
(2)
3
Amounts utilised, exchange and other movements
(1)
2
(1)
At 31 December
59
23
23
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.
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
The following table represents the Group’s continuing designated hedge relationships under IFRS 9.
2020
Other comprehensive income
Fair value
loss
Opening
Fair value
recycled
Closing
Nominal
balance
(gain)/loss
to the
balance
Average
amounts
Carrying
1 January
deferred
Income
31 December
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
USD LIBOR
+ 1.27%
Cross currency interest rate swap – Euro bond
EUR 300m
43
–
–
–
–
2021
1.09
Cash flow hedges – foreign currency and interest rate risk
2, 4, 5
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
6
EUR 450m
(548)
34
51
–
85
2021
n/a
EUR 0.88%
Contingent consideration liabilities and Acerta Pharma
put option liability – AZUK and AZAB USD investments
USD 5,252m
(5,252)
2,053
(642)
–
1,411
–
–
–
Notes to the Group Financial Statements
continued
188
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
2021
Other comprehensive income
Fair value
loss
Opening
Fair value
recycled
Closing
Nominal
balance
(gain)/loss
to the
balance
Average
amounts
Carrying
1 January
deferred
Income
31 December
Average
Average
pay
in local
value
2021
to OCI
statement
2021
maturity
USD FX
interest
currency
$m
$m
$m
$m
$m
year
rate
rate
Cash flow hedges – foreign currency and interest rate risk
2, 4, 5
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)
–
(7)
(12)
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)
(5)
–
(238)
2031
n/a
GBP 5.75%
Foreign currency borrowing – EUR investment
6
EUR 450m
–
85
(47)
–
38
2021
n/a
EUR 0.88%
Foreign currency borrowing – EUR investment
7
EUR 800m
898
–
(50)
–
(50)
2029
n/a
EUR 0.38%
Contingent consideration liabilities and Acerta Pharma share
purchase liability – AZUK and AZAB USD investments
USD 2,658m
(2,658)
1,411
421
–
1,832
–
–
–
2022
Other comprehensive income
Fair value
(gain)/loss
Opening
Fair value
recycled
Closing
Nominal
balance
(gain)/loss
to the
balance
Average
amounts
Carrying
1 January
deferred
Income
31 December
Average
Average
pay
in local
value
2022
to OCI
statement
2022
maturity
USD FX
interest
currency
$m
$m
$m
$m
$m
year
rate
rate
Cash flow hedges – foreign currency and interest rate risk
2, 4, 5
Cross currency interest rate swaps – Euro bonds
EUR 1,700m
(160)
27
118
(111)
34
2026
1.14
USD 2.85%
FX Forwards − short term FX risk
USD 1,126m
(12)
(12)
(14)
38
12
2023
–
–
Net investment hedge – foreign exchange risk
3, 4
Transactions matured pre-2022
–
(527)
–
–
(527)
–
–
–
Cross currency interest rate swap – JPY investment
JPY 58.3bn
55
(62)
7
–
(55)
2029
108.03
JPY 1.53%
Cross currency interest rate swap – CNY investment
CNY 458m
(4)
2
2
–
4
2026
6.68
CNY 4.80%
Foreign currency borrowing – GBP investment
GBP 350m
420
(238)
(50)
–
(288)
2031
n/a
GBP 5.75%
Foreign currency borrowing – EUR investment
7
EUR 800m
846
(50)
(52)
–
(102)
2029
n/a
EUR 0.38%
Contingent consideration liabilities and Acerta Pharma
share purchase liability – AZUK and AZAB USD investments
USD 2,093m
(2,093)
1,832
384
–
2,216
–
–
–
1
Swaps designated in a fair value hedge matured on 24 November 2021 and hedge ineffectiveness during 2022 was $nil (2021: $nil; 2020: gain of $1m).
2
Hedge ineffectiveness recognised on swaps designated in a cash flow hedge during the period was $nil (2021: $nil; 2020: $nil).
3
Hedge ineffectiveness recognised on swaps designated in a net investment hedge during the period was $nil (2021: $nil; 2020: $nil).
4
Fair value movements on cross-currency interest rate swaps in cash flow hedge and net investment hedge relationships are shown inclusive of the impact of costs of hedging.
5
Nominal amount of FX forwards in a cash flow hedge of $1,710m represents the USD equivalent notional of the FX forwards. By currency, the nominal amounts were SEK 8,148m at FX rate
10.4568, JPY 18,963m at 132.15, GBP 455m at 0.8288 and EUR 224m at 0.9389. All FX forwards in a cash flow hedge mature on 25 January 2023.
6
The EUR 450m NIH matured in November 2021, when the hedging instrument, a EUR bond matured.
7
On 3 June 2021, upon issuance of the EUR 800m 0.375% 2029 Non-callable bond, EUR 550m was designated in a net investment hedge of the foreign currency exposure in relation of an equivalent
amount of EUR-denominated net assets. The remaining EUR 250m was subsequently designated in a net investment hedge upon maturity of the EUR 450m bond on 24 November 2021.
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
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.
2022
2021
2020
Employees
UK
9,800
8,900
7,900
Rest of Europe
20,600
18,300
16,600
The Americas
20,900
18,800
17,300
Asia, Africa & Australasia
30,700
33,600
33,000
Continuing operations
82,000
79,600
74,800
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 2022 was 83,500 (2021: 83,100; 2020: 76,100).
189
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
The costs incurred during the year in respect of these employees were:
2022
2021
2020
$m
$m
$m
Wages and salaries
8,656
7,633
6,273
Social security costs
991
886
726
Pension costs
546
564
435
Other employment costs
1,338
1,192
813
Total
11,531
10,275
8,247
Severance costs of $227m are not included above (2021: $238m; 2020: $116m).
The charge for share-based payments in respect of share plans is $619m (2021: $615m; 2020: $277m). 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 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 US, UK and Swedish schemes are described below, other arrangements apply elsewhere.
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 190 participants may be eligible
for awards granted as AstraZeneca ADRs. AstraZeneca ADRs 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.
UK
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 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.
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.
Other bonus and share plans that operate across the Group are described below.
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 ADRs 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.
The AstraZeneca Performance Share Plan
This plan was approved by shareholders in 2020 for a period of 10 years (subsequently amended by approval of shareholders in 2021) and replaces
the 2014 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 Performance Share Plan awards was made in May 2014 under the 2014 AstraZeneca Performance Share Plan. 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 is
subject to the achievement of performance conditions. For awards granted to all participants in 2022, vesting is subject to a combination of measures
focused on science and innovation, revenue growth, financial performance and carbon reduction. 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.
Notes to the Group Financial Statements
continued
29 Employee costs and share plans for employees
continued
190
AstraZeneca Annual Report & Form 20-F Information 2022
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.
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 2022 to make awards to 112 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.
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.
Details of share options outstanding during the year for the main share plans are shown below.
The AstraZeneca
Performance Share Plan
The AstraZeneca
Global Restricted Stock Plan
The AstraZeneca
Restricted Share Plan
The AstraZeneca
Extended Incentive Plan
Ordinary
Shares
ADR
Shares
Ordinary
Shares
ADR
Shares
1
Ordinary
Shares
ADR
Shares
Ordinary
Shares
ADR
Shares
’000
’000
’000
’000
’000
’000
’000
’000
Outstanding at 1 January 2020
2,859
5,206
1,328
9,770
176
649
282
65
Granted
932
1,767
689
3,671
80
295
18
–
Forfeited
(191)
(478)
(113)
(1,077)
(6)
(79)
–
–
Cancelled
(3)
–
–
(9)
–
–
–
–
Exercised
(552)
(1,704)
(278)
(3,180)
(89)
(359)
–
–
Outstanding at 31 December 2020
3,045
4,791
1,626
9,175
161
506
300
65
Granted
1,275
2,082
902
4,509
139
481
–
175
Forfeited
(220)
(494)
(158)
(1,254)
(18)
(42)
(18)
(45)
Cancelled
(9)
–
(1)
(8)
–
–
–
–
Exercised
(632)
(1,201)
(341)
(2,881)
(27)
(182)
–
–
Outstanding at 31 December 2021
3,459
5,178
2,028
9,541
255
763
282
195
Granted
1,059
2,339
1,237
6,478
75
216
–
–
Forfeited
(132)
(570)
(190)
(1,627)
(25)
(136)
(23)
–
Cancelled
–
–
–
(3)
–
–
–
–
Exercised
(756)
(1,223)
(606)
(2,706)
(72)
(165)
–
–
Outstanding at 31 December 2022
3,630
5,724
2,469
11,683
233
678
259
195
1
Shares issued to Alexion employees under the GRSP are covered under the Alexion employee share award below.
The AstraZeneca
Performance Share Plan
The AstraZeneca
Global Restricted Stock Plan
The AstraZeneca
Restricted Share Plan
The AstraZeneca
Extended Incentive Plan
WAFV
1
WAFV
WAFV
WAFV
WAFV
WAFV
WAFV
WAFV
pence
$
pence
$
pence
$
pence
$
WAFV of 2020 grants
6664
43.24
7408
47.71
7931
52.92
8386
–
WAFV of 2021 grants
6012
41.56
6893
47.75
7415
53.96
–
56.83
WAFV of 2022 grants
8328
55.73
9167
61.21
9894
63.35
–
–
1
Weighted average fair value.
Alexion employee share award plan
At acquisition in 2021, 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. The fair value at the
grant date was $57.54 and of the 15,220,000 ADR shares outstanding at 31 December 2021, 8,627,000 were exercised during 2022 and 980,000
were forfeited. During 2022, Alexion employees had the option to defer awards due to vest in July 2022 until February 2023 when they would also
receive an additional vest equivalent to 15% of the shares deferred. As a result, 1,780,000 shares were deferred, resulting in an additional 267,000
ADR shares being issued under the Global Restricted Stock Plan, under original Alexion terms and conditions, with a grant date fair value of $65.62.
The weighted average fair value for awards granted under the AstraZeneca Performance Share Plan is primarily based on the market price at the point
of grant adjusted for the market-based performance elements which are valued using a modified version of the Monte Carlo method. The fair values
of all other plans are set using the market price at the point of award. These awards are settled in equity including dividends accumulated from the
191
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
2022
2021
2020
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
502
388
689
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
11,729
1,320
2,662
2,698
5,049
Future potential revenue milestone payments
17,499
65
368
1,859
15,207
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 2022.
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 56, 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.
Notes to the Group Financial Statements
continued
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 2020, 2021 or 2022.
In addition to expenditure for meeting current
and foreseen environmental protection
requirements, the Group incurs costs in
investigating and cleaning up legacy 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.
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 2022 in the
aggregate of $131m (2021: $90m; 2020: $100m),
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
148, 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 $113m
and $188m (2021: $99m and $165m; 2020: $95m
and $158m) 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
192
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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.
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 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.
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 2022, 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
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
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. in the US. After trial in April 2022, the jury
found that the patent was infringed and
awarded Seagen $41.82m in past damages.
In July 2022, the District Court entered final
judgment and declined to enhance damages
on the basis of willfulness. The parties await
consideration of post-trial motions.
In December 2020 and January 2021,
AstraZeneca and Daiichi Sankyo, Inc. filed
post-grant review (PGR) petitions with the US
Patent and Trademark Office (USPTO) alleging,
inter alia, that the Seagen patent is invalid for
lack of written description and enablement.
The USPTO initially declined to institute the
PGRs, but, in April 2022, the USPTO granted
the rehearing requests, instituting both PGR
petitions. Seagen subsequently disclaimed all
patent claims at issue in one of the PGR
proceedings. In July 2022, the USPTO reversed
its institution decision and declined to institute
the other PGR petition. AstraZeneca and Daiichi
Sankyo, Inc. have requested reconsideration of
the decision not to institute review of the patent.
Imfinzi
US patent proceedings
In March 2022, Bristol-Myers Squibb Co. and
E.R. Squibb & Sons, LLC filed a lawsuit in US
District Court for the District of Delaware against
AstraZeneca alleging that AstraZeneca’s
marketing of
Imfinzi
infringes several of their
patents. Trial has been scheduled for April 2024.
Patent proceedings outside the US
In February 2022, in Japan, Ono Pharmaceuticals
filed a lawsuit in Tokyo District Court, Civil
Division against AstraZeneca alleging that
AstraZeneca’s marketing of
Imfinzi
in Japan
infringes several of their patents.
Imjudo
US patent proceedings
In January 2023, Bristol-Myers Squibb Co. and
E.R. Squibb & Sons, LLC filed a lawsuit in US
District Court for the District of Delaware
against AstraZeneca alleging that AstraZeneca’s
marketing of
Imjudo
infringes two of their patents.
Tagrisso
US patent proceedings
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
. Trial has been scheduled for May 2024.
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
. Trial has
been scheduled for March 2023.
193
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
30 Commitments, contingent liabilities and contingent assets
continued
Legal proceedings brought against
AstraZeneca which have been concluded
Roxadustat
US patent proceedings
In April 2021, Akebia Therapeutics, Inc. (Akebia)
and Otsuka America Pharmaceutical, Inc.
(Otsuka) 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. In April 2022, this matter was
dismissed and is now concluded.
Ultomiris
US patent proceedings
In November and December of 2018, Chugai
Pharmaceutical Co., Ltd. (Chugai) filed lawsuits
against Alexion in the Delaware District Court
as well as in Tokyo District Court, alleging that
Ultomiris
infringed US and Japanese patents
held by Chugai. In March 2022, Alexion entered
into a settlement agreement with Chugai for
$775m that resolved all patent disputes between
the two companies related to
Ultomiris
. This
matter is now concluded.
Legal proceedings brought by AstraZeneca
considered to be contingent assets
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 2022, AstraZeneca entered into
several 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.
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. In its
complaint, AstraZeneca alleges 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.
Trial has been scheduled for March 2025.
In February 2023, Sandoz Inc. filed a petition
for inter partes review with the US Patent
and Trademark Office (USPTO) of certain
Calquence
patent claims in US Patent No.
10,272,083 (the ‘083 patent). AstraZeneca has
asserted claims for infringement of the ‘083
patent against Sandoz and other defendants
in the US ANDA litigation. AstraZeneca is
considering its response to Sandoz’s petition
before the USPTO.
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 2022, AstraZeneca entered
into a settlement and the District Court
entered a consent judgment to dismiss the
corresponding litigation. Additional ANDA
challenges are pending.
Faslodex
Patent proceedings outside the US
In 2021 in Japan, AstraZeneca received notice
from the Japan Patent Office (JPO) that Sandoz
K.K. and Sun Pharma Japan Ltd. (Sun) were
seeking to invalidate the
Faslodex
formulation
patent. AstraZeneca defended the challenged
patent, and Sun withdrew from the JPO patent
challenge. In May 2022, the JPO held the hearing
in the matter and issued its preliminary decision
in September 2022 upholding various claims
of the challenged patent and determining that
other patent claims were invalid. A final JPO
decision is forthcoming.
Tagrisso
Patent proceedings outside the US
In Russia in October 2021, AstraZeneca filed a
lawsuit in the Arbitration Court of the Moscow
Region (the Court) 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. In March 2022, the Court dismissed
the lawsuit. In June 2022, the dismissal was
affirmed on appeal. In January 2023, the
dismissal was affirmed on further appeal.
AstraZeneca is considering its option.
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 and
in October 2021, the District Court issued
a decision finding the asserted claims of
AstraZeneca’s patent as valid and infringed
by Zydus’s ANDA product. In August 2022,
Zydus appealed the District Court’s decision.
In November 2022, Zydus’s appeal was
dismissed. Additional ANDA challenges
are pending.
Lokelma
US patent proceedings
In August 2022, in response to Paragraph IV
notices, AstraZeneca initiated ANDA litigation
against multiple generic filers in the US District
Court for the District of Delaware. Trial has
been scheduled for March 2025.
Symbicort
US patent proceedings
AstraZeneca is involved in ongoing ANDA
litigations 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 actions, AstraZeneca
alleges that the defendants’ generic versions
of
Symbicort
, if approved and marketed,
would infringe various AstraZeneca patents.
In one of those matters, in November 2022,
the District Court determined that the asserted
patent was invalid. In November 2022,
AstraZeneca appealed that decision to the
United States Court of Appeals for the Federal
Circuit (the Federal Circuit). With respect to
the other matter, following a stipulation of
infringement and validity by Mylan and Kindeva
that was subject to certain appeal issues, in
December 2022, the District Court issued a Final
Judgment in favour of AstraZeneca. In December
2022, Mylan and Kindeva appealed the Final
Judgment to the Federal Circuit. Both appeals
are scheduled to be heard in March 2023.
Lynparza
US patent proceedings
In December 2022, AstraZeneca received a
Paragraph IV notice letter from an ANDA filer
relating to patents listed in the FDA Orange
Book with reference to
Lynparza
. AstraZeneca
is reviewing the notice letter.
Legal proceedings brought by AstraZeneca
which have been concluded
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 alleges 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 and April
2022, AstraZeneca entered into settlement
agreements with Zydus Pharmaceuticals
(USA) Inc., Cadila Healthcare Limited, MSN
Laboratories Pvt. Ltd., MSN Pharmaceuticals
Inc. and Alembic Pharmaceuticals Limited.
These settlements resolve all US patent litigation
between the parties relating to
Tagrisso
.
Product liability litigation
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
Farxiga
and
Xigduo
XR
US proceedings
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 October 2023.
Notes to the Group Financial Statements
continued
194
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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 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 District Court in New
Jersey for pre-trial purposes. A bellwether trial
has been scheduled for June 2023, with
subsequent bellwether trials scheduled for July
and September 2023. In addition to the MDL
cases, there are cases filed in several state
courts around the US; a case that was
previously set to go to trial in Delaware state
court was dismissed in October 2022.
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 and was scheduled to go
to trial in January 2023. That case has been
postponed and a new trial date has not yet
been set.
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 seeks authorisation to represent
individual residents in Canada who allegedly
suffered kidney injuries from the use of proton
pump inhibitors, including
Nexium
and
Losec
.
Onglyza
and
Kombiglyze
US proceedings
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 (the District Court) for consolidated
pre-trial proceedings with the federal actions
pending in the District Court. In the California
State Court coordinated proceeding,
AstraZeneca’s motion for summary judgment
was granted in March 2022. The District Court
granted AstraZeneca’s motion for summary
judgment in August 2022. Plaintiffs are in the
process of appealing both decisions.
Legal proceedings brought against AstraZeneca
which have been concluded
Byetta
/
Bydureon
US proceedings
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) for cases in California state courts. In
March and April 2021, the District Court and
the California Court respectively granted the
Defendants’ summary judgment motions,
dismissing all cases alleging pancreatic cancer
with prejudice. All remaining claims in both
courts, including those alleging thyroid cancer,
have since been dismissed. This matter is
now concluded.
Commercial litigation
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
Alexion Shareholder Litigation (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. Plaintiffs’ motion
for class certification, which Alexion opposed
in April 2022, remains 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 US District Court for 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, which were denied
in February 2023.
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 (the District
Court) against AstraZeneca PLC and certain
officers, on behalf of purchasers of AstraZeneca
publicly traded securities during a period later
amended to cover 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 2022, the District Court granted
AstraZeneca’s motion to dismiss the Amended
Complaint with prejudice, disallowing any
further amendments. Plaintiffs have appealed
this decision.
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
that they are owed approximately $140m in
earn-outs under the SPA. The arbitration
hearing has been scheduled for March 2023.
Employment Litigation (US)
In December 2022, AstraZeneca was served
with a lawsuit filed by seven former employees
in the US District Court for the District of
Delaware asserting age, religion, and disability
discrimination claims related to AstraZeneca’s
COVID-19 vaccine mandate. These claims are
pled on a single-plaintiff and class action basis.
Equity Litigation (US)
AstraZeneca was defending a putative class
and collective action matter in the US District
Court for the Northern District of Illinois brought
by three named plaintiffs, who are former
AstraZeneca pharmaceutical sales
representatives. The case involved claims under
the federal and Illinois Equal Pay Acts, with the
plaintiffs alleging they were paid less than male
employees who performed substantially similar
and/or equal work. The plaintiffs sought various
damages on behalf of themselves and the
putative class and/or collective, including
without limitation backpay, liquidated damages,
compensatory and punitive damages,
attorneys’ fees, and interest. In January 2023,
the District Court granted AstraZeneca’s
motion to dismiss plaintiffs’ complaint.
195
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
30 Commitments, contingent liabilities and contingent assets
continued
Portola Shareholder Litigation
In the US, 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 operative complaints allege that
defendants made materially false and/or
misleading statements or omissions with
regard to
Andexxa
. In June 2022, the parties
reached a settlement in principle of this
matter, which is subject to court approval.
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 District 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 US antitrust laws when settling patent
litigation related to
Seroquel XR
. In July 2022, in
response to AstraZeneca’s motion, the District
Court dismissed all claims relating to the
settlement with one of the generic manufacturers
but denied the motion with respect to all claims
relating to the second generic manufacturer
and allowed those claims to proceed.
Syntimmune
In connection with Alexion’s prior acquisition of
Syntimmune, Inc., (Syntimmune) 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. Alexion also
filed a claim for breach of the representations
in the 2018 merger agreement.
Legal proceedings brought against AstraZeneca
which have been concluded
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 May 2022, the parties resolved
this dispute. This matter is now concluded.
Legal proceedings brought by AstraZeneca
considered to be contingent assets
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 GSK in the Commercial
Court of England and Wales alleging that GSK
has failed to pay all of the royalties due on
niraparib sales under the license agreements.
The case has been transferred to the Chancery
Division and the trial has been scheduled for
March 2023.
Government investigations/proceedings
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
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
utilised by Alexion and a distributor. The Tax
Assessment focuses on the importation of
Soliris
vials pursuant to Alexion’s free drug
supply to patients programme in Brazil.
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.
COVID-19 vaccine supply and
manufacturing inquiries
In February 2022, a Brazilian Public Prosecutor
filed a lawsuit against several defendants
including the Brazilian Federal Government,
AstraZeneca, and other COVID-19 vaccine
manufacturers. In April 2022, a Brazilian Court
issued an order dismissing the lawsuit. An
appeal is pending.
Turkish Ministry of Health matter
In Turkey, in July 2020, the Turkish Ministry
of Health (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 $21.5m civil
settlement with the US Securities & Exchange
Commission (SEC) in July 2020 fully resolving
the SEC’s investigation into possible violations
of the FCPA. 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.
Texas Qui Tam
US proceedings
In December 2022, AstraZeneca was served with
an unsealed civil lawsuit brought by a qui tam
relator on behalf of the State of Texas in Texas
state court, which alleges that AstraZeneca
engaged in unlawful marketing practices.
Vermont US Attorney investigation
US proceedings
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 cooperating with
this enquiry.
Legal proceedings brought against AstraZeneca
which have been concluded
Brazilian operations investigation
In May 2017, Brazilian authorities seized records
and data from Alexion’s Brazil offices as part of
an investigation being conducted into Alexion’s
Brazilian operations. AstraZeneca cooperated
with this enquiry. The prosecutor
recommended discontinuance in September
2022 after determining that there was
insufficient evidence to support a legal claim.
The judicial authority approved discontinuance
of the investigation, without any further
enforcement action, in November 2022. 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, and that
request was granted by the court in February
2022. This matter is now closed.
Legal proceedings brought by AstraZeneca
which have been concluded
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 June 2022,
the parties resolved this matter. This matter is
now concluded.
Notes to the Group Financial Statements
continued
196
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Other
US 340B litigations and proceedings
US proceedings
AstraZeneca is involved in several matters
relating to its contract pharmacy recognition
policy under the 340B Drug Pricing Program in
the US. AstraZeneca has sought to intervene in
three lawsuits against several US government
agencies and their officials relating to the
appropriate interpretation of the governing
statute for the 340B Drug Pricing Program.
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.
As previously disclosed, in January 2021,
AstraZeneca filed a separate lawsuit in the
US District Court for the District of Delaware
alleging that an Advisory Opinion issued by
the Department of Health and Human Services
violates the Administrative Procedure Act.
In June 2021, the District Court found in favour
of AstraZeneca, invalidating the Advisory
Opinion. Prior to the District 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. AstraZeneca amended the complaint to
include allegations challenging the letter sent in
May, and in February 2022, the District Court
ruled in favour of AstraZeneca invalidating those
letters sent by the US Government. In January
2023, the Court of Appeals affirmed the District
Court decision in AstraZeneca’s favour.
In September 2021, AstraZeneca was served
with a class-action antitrust complaint filed in
the US District Court for the Western District of
New York (the District Court) by Mosaic Health
alleging a conspiracy to restrict access to
340B discounts in the diabetes market through
contract pharmacies. In September 2022, the
District Court granted Defendants’ motion to
dismiss the Complaint. Plaintiffs are now
seeking leave to amend their complaint.
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
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, a tax liability is recognised
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. Tax liabilities
for uncertain tax treatments can be built up over
a long period of time but the resolution of such
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 the
liabilities recognised in respect of uncertain tax
treatments that have a material positive or
negative effect on our results in any particular
period. Details of the movements in relation to
material uncertain tax treatments are
discussed below.
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. Tax liabilities recognised for uncertain
tax treatments require management to make
key judgements with respect to the outcome
of current and potential future tax audits, and
actual results could vary from these estimates.
The total net tax liability recognised in the Group
Financial Statements in respect of uncertain
tax positions is $830m (2021: $768m; 2020:
$1,014m). The net tax liability consists of $632m
(2021: $702m; 2020: $852m) included within
income tax payable, $20m (2021: $17m; 2020:
$nil) included within deferred tax liability and
$291m (2021: $(33)m; 2020: $76m) included
within deferred tax asset, partially offset by
$113m (2021: additional $82m; 2020: additional
$86m) included within income tax receivable.
Transfer pricing
The net tax liability included in the Group
Financial Statements to cover the worldwide
exposure to uncertain tax treatments is $260m
(2021: $77m; 2020: $287m). These matters can
be complex and judgemental. The liability
includes uncertain tax treatments 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 transfer pricing matters, including items
under tax audit, AstraZeneca estimates the
potential for additional tax liabilities above the
amount provided where the possibility of the
additional liabilities falling due is more than
remote, to be up to $245m (2021: $48m; 2020:
$251m) including associated interest.
There were no uncertain tax treatments
relating to transfer pricing which give rise to
potential for additional tax liabilities where the
possibility of the additional liabilities falling
due is more than remote.
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. Management continues to
believe that AstraZeneca’s positions on all its
transfer pricing positions, audits and disputes
are robust, and that AstraZeneca has recognised
appropriate tax balances, including
consideration of whether corresponding relief
will be available under Mutual Agreement
procedures or unilaterally.
The increase in the net tax liability for uncertain
tax positions relating to transfer pricing of $183m
compared with 2021 is mainly as a result of an
increase of tax liabilities arising from updates
to estimates of prior period tax liabilities
following progression of tax authority reviews.
Other uncertain tax treatments
Included in the net tax liability is $570m (2021:
$691m; 2020: $727m) relating to a number of
other uncertain tax treatments. The decrease
of $121m in the net tax liability relating to the
other uncertain tax treatments mainly relates to
releases of tax liabilities following the expiry of
the relevant statute of limitations and exchange
rate effects. The majority of the liability relates
to tax liabilities in respect of uncertain tax
treatments 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 liabilities in respect of
uncertain tax treatments, 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 $209m
(2021: $273m; 2020: $293m) including
197
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Group Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
associated interest. It is possible that some
of these liabilities 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.
For uncertain tax treatments relating to other
tax matters for which no tax liability has been
recognised, AstraZeneca estimates the potential
for additional tax liabilities where the possibility
of the additional liabilities falling due is more
than remote to be up to $280m (2021: $325m;
2020: $224m) including associated interest.
Timing of cash flows and interest
The Group is currently under audit in several
countries and the timing of any resolution of
these audits is uncertain.
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 tax liabilities
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 payables is a net amount
of interest arising on tax contingencies of
Notes to the Group Financial Statements
continued
31 Statutory and other information
2021
2020
$m
$m
$m
Fees payable to PricewaterhouseCoopers LLP and its associates:
Group audit fee
9.9
10.5
6.3
Fees payable to PricewaterhouseCoopers LLP and its associates for other services:
The audit of subsidiaries pursuant to legislation
15.1
15.2
10.8
Attestation under s404 of Sarbanes-Oxley Act 2002
3.1
2.0
2.0
Audit-related assurance services
0.7
4.5
0.7
Other assurance services
0.2
3.4
0.2
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
29.3
35.9
20.3
$0.6m of fees payable in 2022 are in respect of the Group audit and audit of subsidiaries related to prior years (2021: $0.4m in respect of the Group
audit and audit of subsidiaries related to prior years).
$0.3m of 2021 Group audit fees and $0.7m of 2021 Audit-related assurance services and Other assurance services relate to pre-acquisition fees
incurred by Alexion.
Included in the 2021 Audit-related assurance services and Other assurance services are $6.1m of services provided in relation to the acquisition
The Group had no material related party transactions which might reasonably be expected to influence decisions made by the users of these
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.
2022
2021
2020
$’000
$’000
$’000
Short-term employee benefits
38,632
32,985
29,126
Post-employment benefits
1,388
1,378
1,602
Share-based payments
56,297
45,234
27,666
96,317
79,597
58,394
On 9 January 2023, it was announced that AstraZeneca had entered into a definitive agreement to acquire CinCor Pharma, Inc. (CinCor), a US-based
clinical-stage biopharmaceutical company, focused on developing novel treatments for resistant and uncontrolled hypertension as well as chronic
kidney disease. On 23 January 2023, AstraZeneca initiated a tender offer to acquire all of CinCor’s outstanding shares for a price of $26 per share in
cash at closing, plus a non-tradable contingent value right of $10 per share in cash payable upon a specified regulatory submission of a baxdrostat
product. Combined, the upfront and maximum potential contingent value payments represent, if achieved, a transaction value of approximately $1.8bn.
As part of the transaction, AstraZeneca will acquire the cash and marketable securities on CinCor’s balance sheet, which totalled approximately
$522m as of 30 September 2022. The transaction is expected to close in the first quarter of 2023.
On 16 January 2023, AstraZeneca completed the acquisition of Neogene Therapeutics Inc. (Neogene). AstraZeneca acquired all outstanding equity
of Neogene for a total consideration of up to $320m, on a cash and debt free basis. This includes an initial payment of $200m on deal closing, and
a further up to $120m in both contingent milestones-based and non-contingent consideration.
On 30 January 2023, AstraZeneca completed the sale of its West Chester site in Ohio, US, to National Resilience, Inc. On completion of the sale, the
Property, plant and equipment assets associated with this transaction of $150m which were recorded as Assets held for sale as at 31 December
2022 have been disposed of, with no net impact recorded in the Consolidated Statement of Comprehensive Income.
30 Commitments, contingent liabilities and contingent assets
continued
198
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Group Subsidiaries and Holdings
Wholly owned subsidiaries
Algeria
AAPM SARL
100%
Number 20, Micro-Economic Zone,
Hydra Business Center, Dar El Medina,
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%
Alexion Pharmaceuticals Australasia Pty Ltd
100%
66 Talavera Road, Macquarie Park,
NSW 2113, Australia
LogicBio Australia Pty Limited
100%
Level 40, 2-26 Park Street, Sydney,
NSW 2000, Australia
Austria
AstraZeneca Österreich GmbH
100%
Landstraßer Hauptstraße 1A, A-1030
Wien, Austria
Alexion Pharma Austria GmbH
100%
Donau-City-Straße 7, 30. Stock, DC Tower,
Vienna 1220, Austria
Portola Österreich GmbH (in liquidation)
100%
Mooslackengasse 17, 1190 Wien, 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 Sprl
100%
de Meeûssquare 37, Bruxelles 1000,
Belgium
Bermuda
Alexion Bermuda Holding ULC
100%
Alexion Bermuda Limited
100%
Alexion Bermuda Partners LP
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 Serviços e Farmacêutica do
Brasil Ltda
100%
Av. Dr Chucri Zaidan, 1240, 15° andar, CEP
04711-130, Ed. Morumbi Corporate – Golden
Tower Vila São Francisco, São Paulo, Brazil
Bulgaria
AstraZeneca Bulgaria EOOD
100%
1057 Sofia, Izgrev Region, 36 Dragan
Tsankov Blvrd, 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,
NS B3J3R7, 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,
Las Condes, Santiago, Chile
China
AstraZeneca Pharmaceutical Co., Limited
100%
No. 2, Huangshan Road, Wuxi,
Jiangsu Province, 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.1 Kegu Street, Beijing Economic-
Technological Development Area,
Beijing 100176, China
In accordance with section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates, joint ventures and joint arrangements,
the place of incorporation, registered office address, and the effective percentage of equity owned as at 31 December 2022 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 2022.
AstraZeneca (Guangzhou)
Pharmaceutical 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, China
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 , No 1539 West Nanjing Road,
Jing'an District, Shangai, China
Colombia
AstraZeneca Colombia S.A.S.
100%
Av Carrera 9 No. 101-67 Office 601, Bogotá,
110231, Colombia
Alexion Pharma Colombia S.A.S.
100%
Carrera 9 # 115 - 06 /30 Edificio Tierra Firme
Oficina 2904 Bogota D.C., Colombia
Costa Rica
AstraZeneca CAMCAR Costa Rica, S.A.
100%
San José, Escazú, Roble Corporate Center,
5to piso, 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,
Czech Republic
Alexion Pharma Czech s.r.o.
100%
Novodvorská 994/138, Braník, 142 00
Prague, Czech Republic
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
199
AstraZeneca Annual Report & Form 20-F Information 2022
Group Subsidiaries and Holdings
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Group Subsidiaries and Holdings
continued
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
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,
Plot 2, 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%
Harju maakond, Tallinn, Lasnamäe linnaosa,
Valukoja tn 8/1, 11415, Estonia
Finland
AstraZeneca OY.
100%
Itsehallintokuja 4, Espoo, 02600, Finland
France
AstraZeneca S.A.S
100%
AstraZeneca Reims Production SAS
100%
Tour Carpe Diem-31, Place des Corolles,
92400 Courbevoie, France
AstraZeneca Dunkerque Production SCS
100%
224 Avenue de la Dordogne,
59640 Dunkerque, France
Alexion Europe S.A.S.
100%
Alexion Pharma France S.A.S.
100%
103-105 Rue Anatole France 92300
Levallois-Perret, France
Germany
AstraZeneca Holding GmbH
100%
AstraZeneca GmbH
100%
Friesenweg 26, 22763, Hamburg, Germany
Sofotec GmbH
100%
Benzstrasse 1-3, 61352, Bad Homburg v.d.
Hohe, Germany
AstraZeneca Computational
Pathology GmbH
2
100%
Bernhard-Wicki-Straße 5, 80636,
Munich, Germany
Portola FRG GmbH
100%
Fraunhoferstraße 12, Planegg,
82152, Germany
Alexion Pharma Germany GmbH
100%
Landsberger Straße 300, 80687
Munich, Germany
Greece
AstraZeneca S.A.
100%
Agisilaou 6-8 Marousi, Athens, Greece
Hong Kong
AstraZeneca Hong Kong Limited
100%
Unit 1 – 3, 11/F., 18 King Wah Road,
North Point, 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 Limited
100%
Alexion Pharma International
Operations Limited
100%
Alexion Pharma Development Limited
100%
College Business & Technology Park
Blanchardstown Road North Dublin 15,
Republic of Ireland
Israel
AstraZeneca (Israel) Ltd
100%
Atirei Yeda 1, Building O-Tech 2, POB 8044,
Kfar Saba, 4464301, Israel
Alexion Pharma Israel Ltd
100%
4 Weizmann Str., Tel-Aviv-Jaffa, Israel
Italy
Simesa SpA
100%
AstraZeneca SpA
100%
Alexion Pharma Italy Srl
100%
Viale Decumano 39, 20157, Milan, 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,
Rose Avenue, 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. de C.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 1 piso 6
- ACol., Bosques de la Lomas, CP 05120
D.F, Mexico
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%
Prinses Beatrixlaan 582, 2595BM,
The Hague, The Netherlands
AstraZeneca Nijmegen B.V.
100%
Lagelandseweg 78, 6545 CG Nijmegen,
The Netherlands
Acerta Pharma B.V.
100%
Aspire Therapeutics B.V.
100%
Kloosterstraat 9, 5349 AB, Oss,
The Netherlands
Portola Netherlands B.V.
100%
Prins Bernhardplein 200JB
Amsterdam 1097, The Netherlands
Alexion Pharma Netherlands B.V.
100%
Herengracht 282 Amsterdam 1016BX,
The Netherlands
Alexion Holding B.V.
100%
Alexion Pharma Foreign Holdings, B.V.
100%
Prinses Beatrixlaan 582, 5895 BM,
The Hague, The Netherlands
200
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
New Zealand
AstraZeneca Limited
100%
Pharmacy Retailing (NZ) Limited
t/a Healthcare Logistics, 58 Richard Pearse
Drive, Mangere, Auckland, 1142, New Zealand
Nigeria
AstraZeneca Nigeria Limited
100%
11A, Alfred Olaiya Street, Awuse Estate,
Off Salvation Street, Opebi, Ikeja,
Lagos, Nigeria
Norway
AstraZeneca AS
100%
Karvesvingen 7, 0579 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,
Carretera Hacia Coco Solo, Colon, Panama
Peru
AstraZeneca Peru S.A.
100%
Calle Las Orquídeas N° 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%
Alexion 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
Farmacêuticos Lda
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, 00729, Puerto Rico
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%
8 1st Vostochniy lane, Dobrino village,
Borovskiy district, Kaluga region 249006,
Russian Federation
AstraZeneca Pharmaceuticals, LLC
100%
Building 1, 21 First Krasnogvardeyskiy lane,
floor 30,rooms 13 and 14, Moscow, 123112,
Russian Federation
Alexion Pharma OOO LLC
100%
Building 1, 21 First Krasnogvardeyskiy lane,
floor 29, Moscow, 123112, 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,
Republic of Korea
Alexion Pharma Korea LLC
100%
41 FL.,152 Teheran-ro (Yeoksam-dong
Gangam Finance Center), Gangnam-gu,
Seoul, Republic of Korea
Spain
AstraZeneca Farmaceutica
Holding Spain, S.A.
100%
AstraZeneca Farmaceutica Spain S.A.
100%
Laboratorio Beta, S.A.
100%
Laboratorio Lailan, S.A.
100%
Laboratorio Tau S.A.
100%
Fundación AstraZeneca
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
Holdings Aktiebolag
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%
Kungsgatan 3, Stockholm 111 43, 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 (in liquidation)
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,
Tun Hwa South Road, SEC 2 Taipei, Taiwan
Alexion Pharma Taiwan Ltd
100%
Room 1153, 11F, No1, 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 n°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 Sk. and Ofi SIT.
No: 1012/73 Atasehir Istanbul 10-12/73 Turkey
Ukraine
AstraZeneca Ukraina LLC
100%
54 Simi Prakhovykh street, Kiev, 01033,
Ukraine
United Arab Emirates
AstraZeneca FZ-LLC
100%
P.O. Box 505070, Block D, Dubai
Healthcare City, 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
201
AstraZeneca Annual Report & Form 20-F Information 2022
Group Subsidiaries and Holdings
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Group Subsidiaries and Holdings
continued
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
Trustee Limited
100%
AstraZeneca Employee
Share Trust Limited
100%
AstraZeneca Finance Limited
100%
AstraZeneca Intermediate
Holdings Limited
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
Group Limited
100%
KuDOS Horsham Limited
100%
KuDOS Pharmaceuticals Limited
100%
Zenco (No. 8) Limited
100%
Zeneca Finance (Netherlands) Company
100%
MedImmune Limited
100%
1 Francis Crick Avenue, Cambridge
Biomedical Campus, Cambridge, CB2 0AA,
United Kingdom
100%
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 (in liquidation)
100%
3 Furzeground Way, Stockley Park, Uxbridge,
Middlesex UB11 1EZ United Kingdom
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
7
100%
AstraZeneca Finance and Holdings Inc.
100%
Namor Merger Sub, Inc
9
100%
Ardea Biosciences, Inc
100%
1800 Concord Pike, Wilmington, DE 19803,
United States
ZS Pharma Inc.
100%
1100 Park Place, Suite 300, San Mateo,
CA 94403, United States
AlphaCore Pharma, LLC
7
100%
333 Parkland Plaza, Suite 5, Ann Arbor,
MI 48103, United States
AZ-Mont Insurance Company
100%
76 St Paul Street, Suite 500, Burlington,
VT 05401, United States
MedImmune, LLC
7
100%
MedImmune Ventures, Inc.
100%
One MedImmune Way, Gaithersburg,
MD 20878, 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,
United States
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 Pharma LLC
100%
Alexion Pharmaceuticals, Inc.
100%
Syntimmune, Inc.
100%
Alexion US1 LLC
100%
Savoy Therapeutics Corp
100%
Wilson Therapeutics USA, Inc.
100%
TeneoTwo, Inc
100%
LogicBio Therapeutics, Inc
100%
121 Seaport BoulevardBoston,
MA 02210, United States
Acerta Pharma LLC
7
100%
121 Oyster Point Boulevard, South San
Francisco, CA 94080, United States
LogicBio Securities Corporation
100%
65 Hayden Avenue, Lexington, MA 92421,
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,
Piso 5, 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
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
202
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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,
3rd Floor, JI. T.B. Simatupang Kav. 88,
South Jakarta, 12520, Indonesia
Joint Ventures
China
WuXi MedImmune Biopharmaceutical
Co., Limited (in liquidation)
50%
Room 1902, 19/F, Lee Garden One,
33 Hysan Avenue, Causeway Bay, Hong Kong
IHP HK Holdings Limited
50%
Unit 5805, 58/F., Two International Finance
Centre 8 Finance Street, Central, China
United Kingdom
Archigen Biotech Limited (in liquidation)
50%
Centus Biotherapeutics Limited
50%
1 Francis Crick Avenue, Cambridge
Biomedical Campus, Cambridge, CB2 0AA,
United Kingdom
Ireland
Centus Biotherapeutics Europe Limited
(in liquidation)
50%
6th Floor, South Bank House, Barrow Street,
Dublin 4, Republic of Ireland
United States
Montrose Chemical Corporation
of California
50%
Suite 380, 600 Ericksen Ave N/E,
Bainbridge Island, United States
Significant Holdings
China
Dizal (Jiangsu) Pharmaceutical Co., Ltd.
26.95%
199 Liangjing Rd, Zhangjiang Hi-Tech Park,
Pudong District, Shanghai, 201203, China
Wuxi AstraZeneca-CICC Venture Capital
Partnership (Limited Partnership)
22.13%
Room 808, 8F, Building 99-2 Linghu Avenue,
Xinwu District, Wuxi, Jiangsu, China
Beijing Falikang Pharmaceutical
(China) Co. Ltd
49%
No. 69 Fushi Road, Haidian District,
Beijing, 100143, China
United Kingdom
VaxEquity
40%
Lab 4 Cambridge Science Park, Unit 204
Milton Road, Cambridge CB4 0GZ,
United Kingdom
United States
C.C. Global Chemicals Company
37.50%
PO Box 7, MS2901, Texas, TX76101-0007,
United States
Associated Holdings
France
Medetia SAS
10%
Institute Imagine 24, Boulevard du
Montparnasse 75015, Paris, France
Israel
AION Labs
19.23%
Oppenheimer 4 Rehovot, 7670104, Israel
Sweden
Swedish Orphan Biovitrum AB (publ)
9.90%
Tomtebodavägen 23A, Stockholm, Sweden
Ondosis
19.30%
BioVentureHub, Pepparedsleden 1, 431 83
Mölndal, Sweden
United Kingdom
Niox Group plc
16.97%
Hayakawa Building, Edmund Halley Road,
Oxford Science Park, Oxford, OX4 4GB,
United Kingdom
United States
AbMed Corporation
18%
68 Cummings Park Drive,
Woburn, MA 01801, United States
Aristea Therapeutics, Inc.
11.85%
122770 High Bluff Drive, #380,
San Diego, CA 92130, United States
Baergic Bio, Inc.
19.95%
1111 Kane Concourse, Suite 301
Bay Harbor Islands, FL 33154, United States
Regio Biosciences
19.95%
2277 Research Blvd, Suite 225,
Rockville, MD 20850, United States
Employee Benefit Trust
The AstraZeneca Employee Benefit Trust
1
Ownership held in ordinary and class B special shares.
2
Ownership held in common shares, preferred shares 2003, preferred shares 2003 ex (A), preferred shares 2003 ex (B), preferred shares Series D, preferred shares Series E and preferred
shares Series F.
3
Accounting year end is 31 March.
4
Accounting year end is 30 June.
5
Directly held by AstraZeneca PLC.
6
Ownership held in Ordinary A shares and Ordinary B shares.
7
Ownership held as membership interest.
8
Ownership held as partnership interest.
9
With effect from 13 January 2023, Namor Merger Sub Inc. was merged with and into Neogene Therapeutics, Inc., with Neogene Therapeutics, Inc. being the surviving corporation.
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
At 31 December 2022
Group Interest
203
AstraZeneca Annual Report & Form 20-F Information 2022
Group Subsidiaries and Holdings
Corporate Governance
Additional Information
Financial Statements
Strategic Report
at 31 December
AstraZeneca PLC
2022
2021
Notes
$m
$m
Fixed assets
Fixed asset investments
1
63,555
65,624
63,555
65,624
Current assets
Debtors – other
4
9
Debtors – amounts owed by Group undertakings
2,608
6,321
2,612
6,330
Creditors: Amounts falling due within one year
Other payables
2
(194)
(198)
Amounts owed to Group undertakings
3
(283)
–
Interest-bearing loans and borrowings
3
(2,648)
(1,249)
(3,125)
(1,447)
Net current (liabilities)/assets
(513)
4,883
Total assets less current liabilities
63,042
70,507
Creditors: Amounts falling due after more than one year
Amounts owed to Group undertakings
3
–
(283)
Interest-bearing loans and borrowings
3
(17,939)
(20,781)
Other payables
2
(23)
(32)
(17,962)
(21,096)
Net assets
45,080
49,411
Capital and reserves
Called-up share capital
4
387
387
Share premium account
35,155
35,126
Capital redemption reserve
153
153
Other reserves
1,927
2,182
Profit and loss account
7,458
11,563
Shareholders’ funds
45,080
49,411
$m means millions of US dollars.
The Company’s profit for the year was $380m (2021: $5,141m).
The Company Financial Statements from pages 204 to 210 were approved by the Board and were signed on its behalf by
Pascal Soriot
Aradhana Sarin
Director
Director
9 February 2023
Company’s registered number 02723534
204
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Company Statement of Changes in Equity
for the year ended 31 December
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 1 January 2021
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
–
–
–
27,214
Total contributions by and distributions to owners
59
27,155
–
(200)
(3,882)
23,132
At 31 December 2021
387
35,126
153
2,182
11,563
49,411
Total comprehensive income for the period
Profit for the period
–
–
–
–
380
380
Total comprehensive income for the period
–
–
–
–
380
380
Transactions with owners, recorded directly in equity
Dividends
–
–
–
–
(4,485)
(4,485)
Capital contributions for share-based payments
–
–
–
(255)
–
(255)
Issue of Ordinary Shares
–
29
–
–
–
29
Total contributions by and distributions to owners
–
29
–
(255)
(4,485)
(4,711)
At 31 December 2022
387
35,155
153
1,927
7,458
45,080
1
The Other reserves arose from the cancellation of £1,255m share premium by the Company in 1993 and the redenomination of share capital of $157m in 1999. Included within Other reserves
at 31 December 2022 is $86m (31 December 2021: $341m) in respect of cumulative share-based payment awards, which are not available for distribution.
2
At 31 December 2022, the Profit and loss account reserve of $7,458m (31 December 2021: $11,563m) 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 2022, all (31 December 2021: all) of the Company’s profit and
205
AstraZeneca Annual Report & Form 20-F Information 2022
Company Statement of Changes in Equity
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Company Accounting Policies
Basis of presentation of
financial information
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 138 to 203) 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.
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
Foreign currency transactions, being
transactions denominated in a currency other
than the Company’s functional currency, are
translated into US dollars 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.
Non-monetary items arising from foreign
currency transactions are not retranslated in
the Company’s accounting records.
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 there are future taxable
temporary differences or 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 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.
Liabilities for uncertain tax positions 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.
Liabilities for uncertain tax positions 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.
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 amount
on agreed due dates, limiting the loss allowance
to 12-month expected credit losses.
206
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
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
either amortised cost using the effective
interest rate method or at fair value using an
expected credit loss model.
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.
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.
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, including related legal costs, can be
estimated reliably. In other cases, appropriate
disclosures are included.
207
AstraZeneca Annual Report & Form 20-F Information 2022
Company Accounting Policies
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Notes to the Company Financial Statements
1 Fixed asset investments
Investments in subsidiaries
Shares
Loans
Total
$m
$m
$m
At 1 January 2021
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 31 December 2021
49,581
16,043
65,624
Transfer to Debtors – amounts owed by Group undertakings
–
(1,531)
(1,531)
Capital reimbursement
(380)
–
(380)
Exchange
–
(161)
(161)
Amortisation
–
12
12
Disposals and other movements
(9)
–
(9)
At 31 December 2022
49,192
14,363
63,555
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 2022, there
have been no credit losses (2021: $nil).
The other movements comprise $9m representing revaluation of fair value of a guarantee provided to Group companies as explained in Notes 2
and 3.
2 Other payables
2022
2021
$m
$m
Amounts due within one year
Other creditors
184
187
Deferred income
3
4
Amounts owed to Group undertakings
7
7
194
198
Amounts due after more than one year
Other creditors
23
32
23
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 3. As at 31 December 2022, the fair value of the guarantee was $23m (2021: $32m).
208
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
3 Loans and borrowings
Repayment
2022
2021
dates
$m
$m
Amounts due within one year
Amounts owed to Group undertakings (unsecured)
7.2% Loan
2023
283
–
Interest-bearing loans and borrowings (unsecured)
Floating rate notes
US dollars
2022
–
250
2.375% Callable bond
US dollars
2022
–
999
0.3% Callable bond
US dollars
2023
1,399
–
Floating rate notes
US dollars
2023
400
–
3.5% Callable bond
US dollars
2023
849
–
2,931
1,249
Amounts due after more than one year
Amounts owed to Group undertakings (unsecured)
7.2% Loan
US dollars
2023
–
283
Interest-bearing loans and borrowings (unsecured)
Floating rate notes
US dollars
2023
–
400
0.3% Callable bond
US dollars
2023
–
1,397
3.5% Callable bond
US dollars
2023
–
848
0.75% Callable bond
euros
2024
957
1,014
2024 Floating rate bank loan
US dollars
2024
1,998
1,997
3.375% Callable bond
US dollars
2025
1,992
1,988
0.7% Callable bond
US dollars
2026
1,195
1,193
3.125% Callable bond
US dollars
2027
746
745
1.25% Callable bond
euros
2028
845
896
4% Callable bond
US dollars
2029
995
994
0.375% Callable bond
euros
2029
846
898
1.375% Callable bond
US dollars
2030
1,293
1,292
5.75% Non-callable bond
pounds sterling
2031
420
470
6.45% Callable bond
US dollars
2037
2,724
2,724
4% Callable bond
US dollars
2042
988
988
4.375% Callable bond
US dollars
2045
981
980
4.375% Callable bond
US dollars
2048
737
737
2.125% Callable bond
US dollars
2050
487
486
3% Callable bond
US dollars
2051
735
734
Total amounts due after more than one year
17,939
21,064
Total loans and borrowings
20,870
22,313
2022
2021
$m
$m
Loans and borrowings are repayable:
After five years from balance sheet date
11,051
11,944
From two to five years
3,933
6,192
From one to two years
2,955
2,928
Within one year
2,931
1,249
Total unsecured
20,870
22,313
All borrowings are issued with fixed interest rates with the exception of two borrowings, the 2023 floating rate notes and the $2bn USD 2024 floating
rate loan pay interest linked to 1 month LIBOR. The Company has the right to switch these loans to compounded daily USD Secured Overnight Funding
Rate (SOFR) with five days notice. The loans will automatically switch to compounded SOFR on 30 June 2023 if the Group has not already switched
before this date. All other floating rate debt is not impacted by LIBOR references it either uses non-LIBOR fixing or will mature before the relevant
LIBOR rate is withdrawn.
In addition, the Company acts as guarantor for bonds and loans 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”) and AstraZeneca Finance and Holdings Inc. has a $2bn
bank loan due 2023. Each series of AstraZeneca Finance Notes and the bank loan has been fully and unconditionally guaranteed by the Company.
Each of the guarantees by AstraZeneca PLC is full and unconditional and joint and several.
The guarantee by AstraZeneca PLC of the AstraZeneca Finance Notes is the senior unsecured obligation of AstraZeneca PLC and ranks equally with
all of AstraZeneca PLC’s existing and future senior unsecured and unsubordinated indebtedness. Each guarantee by AstraZeneca PLC is effectively
subordinated to any secured indebtedness of AstraZeneca PLC 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 AstraZeneca PLC, none of which guarantee
the AstraZeneca Finance Notes.
209
AstraZeneca Annual Report & Form 20-F Information 2022
Notes to the Company Financial Statements
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Notes to the Company Financial Statements
continued
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 (2021: $286m).
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 cooperating 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 (the District Court)
against AstraZeneca PLC and certain officers, on behalf of purchasers of AstraZeneca publicly traded securities during a period later amended to
cover 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 2022, the District Court
granted AstraZeneca’s motion to dismiss the Amended Complaint with prejudice, disallowing any further amendments. Plaintiffs have appealed
this decision.
6 Statutory and other information
The Directors of the Company were paid by another Group company in 2022 and 2021.
7 Subsequent events
On 2 February 2023, the Group entered into an additional $2.0bn of two-year committed bank facilities.
210
AstraZeneca Annual Report & Form 20-F Information 2022
Financial Statements
Group Financial Record
2018
2019
2020
2021
2022
For the year ended 31 December
$m
$m
$m
$m
$m
Revenue and profits
Product Sales
21,049
23,565
25,890
36,541
42,998
Collaboration Revenue
1,041
819
727
876
1,353
Cost of sales
(4,936)
(4,921)
(5,299)
(12,437)
(12,391)
Distribution expense
(331)
(339)
(399)
(446)
(536)
Research and development expense
(5,932)
(6,059)
(5,991)
(9,736)
(9,762)
Selling, general and administrative expense
(10,031)
(11,682)
(11,294)
(15,234)
(18,419)
Other operating income and expense
2,527
1,541
1,528
1,492
514
Operating profit
3,387
2,924
5,162
1,056
3,757
Finance income
138
172
87
43
95
Finance expense
(1,419)
(1,432)
(1,306)
(1,300)
(1,346)
Share of after tax losses in associates and joint ventures
(113)
(116)
(27)
(64)
(5)
Profit/(loss) before tax
1,993
1,548
3,916
(265)
2,501
Taxation
57
(321)
(772)
380
792
Profit for the period
2,050
1,227
3,144
115
3,293
Other comprehensive income/(loss) for the period, net of tax
(1,059)
(611)
1,608
(145)
(878)
Total comprehensive income/(loss) for the period
991
616
4,752
(30)
2,415
Profit attributable to:
Owners of the Parent
2,155
1,335
3,196
112
3,288
Non-controlling interests
(105)
(108)
(52)
3
5
Earnings per share
Basic earnings per $0.25 Ordinary Share
$1.70
$1.03
$2.44
$0.08
$2.12
Diluted earnings per $0.25 Ordinary Share
$1.70
$1.03
$2.44
$0.08
$2.11
Dividends
$2.80
$2.80
$2.80
$2.80
$2.90
211
AstraZeneca Annual Report & Form 20-F Information 2022
Group Financial Record
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Shareholder information 213
Directors’ report 215
Sustainability supplementary
information 218
Trade Marks 219
Glossary 220
Cautionary statement regarding
forward-looking statements 224
Additional
Information
Additional Information
212
AstraZeneca Annual Report & Form 20-F Information 2022
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
2022, 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 2023 AGM will be held on 27 April 2023
and further details will be set out in the Notice
of Meeting. If you hold shares listed on
Nasdaq 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 2023 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 2022
Ex-dividend date
23 February 2023
Record date
24 February 2023
Payment date
27 March 2023
Announcement of
first quarter results
for 2023
27 April 2023
Annual General
Meeting (AGM)
27 April 2023
Announcement of
second quarter and
half-year results for 2023
28 July 2023
First interim
dividend for 2023
Ex-dividend date
10 August 2023
Record date
11 August 2023
Payment date
11 September 2023
Announcement of
third quarter results
for 2023
9 November 2023
Financial year end
31 December 2023
Related party transactions
During the period 1 January 2023 to
31 January 2023, 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 198).
Conflicts 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.
213
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Shareholder information
Shareholder information
Issued share capital, shareholdings and share prices
At 31 December 2022, the Company had 68,771 registered holders of 1,549,800,030 Ordinary Shares. There were 165,574 holders of Ordinary
Shares held under the Euroclear Services Agreement, representing 10.2% of the issued share capital of the Company and 1,653 registered
holders of ADSs, representing 19.4% 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
2022
2021
2020
Ordinary Shares in issue – millions
At year end
1,550
1,549
1,313
Weighted average for year
1,548
1,418
1,312
Stock market closing price per Ordinary Share (London Stock Exchange)
Highest (pence)
11440
9444
9320
Lowest (pence)
8282
6794
6221
At year end (pence)
11218
8678
7324
Analysis of shareholdings as a percentage of issued share capital at 31 December
Number of Ordinary Shares
1
2022
%
2021
%
2020
%
1 – 250
0.3
0.3
0.4
251 – 500
0.3
0.3
0.4
501 – 1,000
0.4
0.4
0.5
1,001 – 5,000
0.5
0.6
0.7
5,001 – 10,000
0.2
0.2
0.2
10,001 – 50,000
1.1
1.1
1.1
50,001 – 1,000,000
1.1
1.1
11.2
Over 1,000,000
96.1
96.0
85.5
1
Includes Euroclear and ADR holdings.
US holdings
At 31 January 2023, the proportion of Ordinary Shares represented by ADSs was 19.4% of the issued share capital of the Company. At 31 January
2023, there were 68,434 registered holders of Ordinary Shares, of which 623 were based in the US and there were 1,649 record holders of ADRs,
of which 1,631 were based in the US.
Exchange controls and other limitations affecting 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.
214
AstraZeneca Annual Report & Form 20-F Information 2022
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 199.
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 of 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, Vietnam and 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 Therapy Area Review from page 18).
For information on patent expiry dates for
key marketed products, see the Patent
Expiries Supplement on our website,
www.astrazeneca.com/annualreport2022.
Our approach to product development is
covered in detail with additional information
by therapy area in the Strategic Report. For
information on our development pipeline,
see the Development Pipeline Supplement
on our website, www.astrazeneca.com/
annualreport2022.
The financial position of the Group, its cash
flows, liquidity position and borrowing
facilities are described in the Financial Review
from page 60. In addition, Note 28 to the
Financial Statements from page 184 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 167.
Having assessed the Principal Risks and other
matters considered in connection with the
Viability statement on page 57, 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 214.
A shareholders’ resolution was passed at
the 2022 AGM authorising the Company to
purchase its own shares. The Company did
not purchase any of its own shares in 2022.
On 31 December 2022, the Company did not
hold any shares in treasury.
Rights, preferences and restrictions
attaching to shares
As at 31 December 2022, the Company had
1,549,800,030 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 2022).
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 2022, including details of the
allotment of new shares under the Company’s
share plans, are given in Note 24 to the
Financial Statements from page 180.
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.
215
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’ Report
Directors’ Report
Directors’, officers’ and SET shareholdings
At 31 January 2023, 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
545,338
0.04
Options to purchase securities from
registrant or subsidiaries
(a) At 31 January 2023, options outstanding to
subscribe for Ordinary Shares were:
Number of shares
Subscription
price (pence)
Normal
expiry date
1,126,431
3597-9064
2023-2028
The weighted average subscription price of
options outstanding at 31 January 2023 was
7131 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 2022, no options were held by
Directors.
During the period 1 January 2023 to
31 January 2023, no Director was granted
or exercised any options.
Distributions to shareholders –
dividends for 2022
Details of our distribution policy are set out
in the Financial Review from page 60 and
Note 28 to the Financial Statements from
page 184.
The Company’s dividend for 2022 of $2.90
(239.2 pence, SEK 30.18) per Ordinary Share
is estimated to amount to, in aggregate,
a total dividend payment to shareholders of
$4,493 million. Two employee share trusts,
AstraZeneca Employee Benefit Trust and
AstraZeneca Share Trust Limited, waived
their rights to a dividend on the Ordinary
Shares they hold and instead received
nominal dividends.
For more information, see Financial calendar on
page 213.
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. The Company is proposing to
update its Articles and will include details of
the proposed amendments in the 2023 AGM
Notice of Meeting.
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 80 and 81.
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 2022, 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
2020
31 December
2021
31 December
2022
31 January
2023
BlackRock, Inc.
4 December 2009
100,885,181
6.96
7.69
6.51
6.51
6.51
Investor AB
3 April 2019
51,587,810
3.93
3.93
3.33
3.33
3.33
The Capital Group Companies, Inc.
17 July 2018
63,802,495
5.04
4.86
4.12
4.12
4.12
Wellington Management Group LLP
2
21 July 2020
65,120,892
4.96
4.96
4.20
4.20
4.20
Wellington Management Company LLP
2
21 July 2020
65,118,411
4.96
4.96
4.20
4.20
4.20
1
Since the date of disclosure to the Company, the interest of any person listed above in Ordinary Shares may have increased or decreased. No requirement to notify the Company of any
increase or decrease arises unless the holding passes a notifiable threshold in accordance with rules 5.1.2 or 5.1.5 of the UK Listing Authority’s Disclosure Guidance and Transparency Rules.
2
The Company was notified at the time of the disclosure that Wellington Management Company LLP was a subsidiary of Wellington Management Group LLP and that the shareholding
percentage notified by Wellington Management Company LLP was included within the aggregate shareholding percentage notified by Wellington Management Group LLP.
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 2022 and 31 January 2023.
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.
216
AstraZeneca Annual Report & Form 20-F Information 2022
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
234 (62%)
Women
141 (38%)
Total
375
Senior Executive Team*
Men
7 (58%)
Women
5 (42%)
Total
12
All numbers as at 31 December 2022.
*
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 86 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 People and Sustainability from
page 17. Details of some of the employee
share plans are described in the Directors’
Remuneration Report from page 104, and in
Note 29 to the Financial Statements from
page 189. 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 2022, these broadcasts
provided updates on the business, including
pipeline developments and leadership
changes, as well as the Group’s response to
global issues such as climate change and the
Russia-Ukraine conflict. 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 2022 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 2023 AGM, similar to
that passed at the 2022 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 2022, the Group’s US legal
entities made contributions amounting in
aggregate to $1,316,950 (2021: $1,142,200)
to national political organisations, state-level
political party committees and to campaign
committees of various state candidates. No
corporate political 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.
Significant 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 financial instruments
The Notes to the Financial Statements,
including Note 28 from page 184,
include further information on our use
of financial instruments.
Insurance and indemnities
The Company maintained Directors’ and
officers’ liability insurance cover throughout
2022. 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 216.
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
>
Therapy 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
9
February 2023
217
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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 5.
>
Bioethics, including Clinical trial
transparency, Research use of human
biological samples and Animal research,
see page 38.
>
Healthcare in low- and middle-income
countries, see page 41.
>
Responsible sales and marketing,
see page 41.
>
Anti-bribery and anti-corruption,
see page 41.
>
Responsible Supply Chain, see page 42.
>
Performance indicators, Sustainability,
see page 44.
>
Human rights, see page 46.
>
Employee relations, see page 46.
>
Workforce safety and health, see page 46.
>
Sustainability, including our approach
to sustainability, Governance,
Benchmarking and assurance and
Sustainabilty strategy see page 48.
>
Access to healthcare, including Equitable
access, Affordability and pricing, Health
system resilience, see page 49.
>
Environmental protection, including
Ambition Zero Carbon, Product
sustainability, Natural resources,
see page 50.
>
Ethics and transparency, including
Code of ethics, see page 51.
>
EU Taxonomy, see page 52.
>
Task Force on Climate-related Financial
Disclosures Summary Statement, see
pages 53 to 55. See our full TCFD
statement on our website, www.
astrazeneca.com/annualreport2022.
>
GHG reporting, see page 218.
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
defined 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.
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 2022 to 31 December 2022
1
Tonnes CO
2
e
2022
2021
2020
Emissions from:
Scope 1: Combustion of fuel and operation of facilities
2,5
245,117
246,705
239,459
Scope 2 (Market-based): Electricity (net of market instruments),
heat, steam and cooling purchased for own use
3,5
18,491
21,135
32,218
Scope 2 (Location-based): Electricity, heat, steam and cooling
purchased for own use
3,5
195,126
207,003
228,727
Company’s chosen intensity measurement: Scope 1 + Scope 2
(Market-based) emissions reported above normalised to million US
dollar revenue
5.94
7.00
8.00
Scope 3 Total: Emissions from all 15 GHG Protocol Scope 3 Categories
6,388,133
6,017,727
5,689,936
Scope 3 intensity measurement: Scope 3 emissions from all 15 GHG
Protocol Scope 3 Categories normalised to million US dollar revenue
144.04
147.66
174.07
MegaWatt hours (MWh)
Total energy consumption
4,5
1,636,031
1,740,519
1,699,868
1
Regular review of the data is carried out to ensure accuracy, consistency and reflect major business changes. This has led to
changes in the data from previous years. The majority of adjustments made are not material individually, except for (i) Scope 3
category 1 purchased goods and services (methodology update to transition relevant procurement spend categories from a
spend based emissions database to product life cycle assessment (LCA) data, thereby improving accuracy; Additional small
improvements have been made to spend based methodology emission factors in this category; (ii) Scope 3 Category 9
downstream transportation and distribution (methodology update to use production data and updated assumptions to account
for the footprint associated with patient travel). High uncertainty of this category means further review is ongoing to improve
the methodology; (iii) Scope 3 Category 12 end of life treatment of sold products (methodology update to transition from spend
based approach to emissions calculated using production and LCA data).
2
Included in this section are GHGs from direct fuel combustion, process and engineering emissions at our sites and from fuel
use in our vehicle fleet.
3
GHGs from imported electricity are calculated using the GHG Protocol Scope 2 Guidance (January 2015) requiring dual
reporting using two emissions factors for each site – Market-based and Location-based. Our corporate emissions reporting
and targets follow the Market-based approach. 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.
4
The aggregate of: (i) the annual quantity of energy consumed from activities for which the Company is responsible, including
the combustion of fuel at a facility or the operation of any facility and (ii) the annual quantity of energy consumed resulting
from the purchase of electricity, heat, steam or cooling by the Company for its own use.
5
Under the Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018,
the Company needs to disclose what proportion of this figure relates to energy use in the UK and offshore area. For 2022,
the proportion of total global energy and emissions originating from AstraZeneca’s UK and offshore area footprint were as
follows: energy use 371 GWh (21%); Scope 1 site energy and road fleet emissions 60 ktCO
2
e (24%); Scope 2 site imported
energy emissions using Market-based accounting 0 ktCO
2
e (0%); Scope 2 site imported energy emissions using Location-
based accounting 12 ktCO
2
e (6%). In the period covered by the report AstraZeneca has installed LED lighting, implemented
cooling tower improvements on the combined heat and power plant, and maintained ISO50001 at its Macclesfield, UK,
manufacturing facility.
For more information, see Environmental protection from page 50.
For more information, see our Sustainability Report on our website, www.astrazeneca.com/sustainability.
218
AstraZeneca Annual Report & Form 20-F Information 2022
Additional Information
Sustainability
supplementary information
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
Airsupra
Crestor
Koselugo
Seroquel XR
4
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
5
Betaloc
Faslodex
Nexium
Tagrisso
Bevespi Aerosphere
Fluenz
Ondexxya
Toprol-XL
Breztri
FluMist
Onglyza
Trixeo
Breztri Aerosphere
Forxiga
Orpathys
Trixeo Aerosphere
Brilinta
Genuair
Plendil
3
Turbuhaler
Brilique
Imfinzi
Prilosec
Ultomiris
Bydureon
Imjudo
Pulmicort
Vaxzevria
Byetta
Iressa
Qtern
Vimovo
6
Calquence
Kanuma
Saphnelo
Xigduo
Casodex
1
Kombiglyze
Seloken
Zoladex
Cosudex
Komboglyze
Seroquel
4
1
AstraZeneca divested these trade marks in a number of European, African and other markets to Juvisé Pharmaceuticals effective 19 December 2019.
2
AstraZeneca divested these trade marks in Europe to Cheplapharm effective 28 September 2018, and in more than 70 other markets effective 31 December 2020.
3
Effective 18 May 2022, AstraZeneca divested
Plendil
in 35 markets to Glenwood.
4
AstraZeneca divested these trade marks in Europe and Russia to Cheplapharm effective 13 December 2019.
5
Effective 25 January 2019, AstraZeneca sold its rights to
Synagis
in the US to Sobi. AbbVie transferred its ownership rights to this trademark to MedImmune LLC, effective 1 July 2021.
6
AstraZeneca divested the global rights (excluding the US and Japan) for this trade mark to Grünenthal, effective 3 December 2018.
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
Beyfortus
Sanofi Pasteur Inc.
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
Covishield
Serum Institute of India
219
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Trade Marks
Trade Marks
Market definitions
1
Region
Country
US
US
Europe
Austria*
Estonia*
Ireland
Netherlands
Slovenia*
Belgium
Finland
Israel*
Norway
Spain
Bulgaria*
France
Italy
Poland
Sweden
Croatia
Germany
Latvia*
Portugal
Switzerland
Cyprus*
Greece
Lithuania*
Romania
UK
Czech Republic
Hungary
Luxembourg*
Serbia and Montenegro*
Denmark
Iceland*
Malta*
Slovakia*
Established RoW
Australia
Canada
Japan
New Zealand*
Emerging Markets
Algeria
Colombia
Iraq*
Nigeria*
Sri Lanka*
Angola*
Costa Rica
Jamaica*
Oman*
Sudan*
Argentina
Cuba*
Jordan
Other Africa*
Syria*
Aruba*
Dominican Republic
Kazakhstan
Pakistan*
Taiwan
Bahamas*
Ecuador*
Kenya*
Palestine*
Thailand
Bahrain*
Egypt
Kuwait
Panama
Trinidad and Tobago*
Barbados*
El Salvador
Lebanon*
Paraguay
Tunisia*
Belize*
Georgia*
Libya*
Peru
Turkey
Bermuda*
Ghana*
Malaysia
Philippines
Ukraine
Botswana*
Guatemala
Maldives
Qatar*
United Arab Emirates
Brazil
Honduras
Mauritius*
Russia
Uruguay*
Brunei
Hong Kong
Mexico
Saudi Arabia
Uzbekistan
Cambodia
India
Mongolia
Singapore
Venezuela*
Chile
Indonesia
Morocco*
South Africa
Vietnam*
China
Iran*
Nicaragua
South Korea
Yemen*
*
Q3 2022 IQVIA, IQVIA Midas Quantum Q3 2022 data are not available or AstraZeneca does not subscribe for IQVIA quarterly data for these countries.
1
The above table is not an exhaustive list of all the countries in which AstraZeneca operates, and excludes countries with revenue in 2022 of less than $1 million.
Established Markets means US, Europe and Established RoW.
North America means US.
Other Emerging Markets means all Emerging Markets except China.
Other Africa includes Ethiopia, Mozambique, Namibia, 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
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
Trade Payables
Accounts payable
Trade Receivables
Accounts receivable
220
AstraZeneca Annual Report & Form 20-F Information 2022
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.
Allergan
– Allergan Plc.
Almirall
– Almirall, S.A.
Amgen
– Amgen Inc.
Amplimmune
– Amplimmune, Inc.
Annual Report
– this Annual Report and Form 20-F Information 2022.
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.
Atnahs
– Atnahs Pharma UK Ltd.
ATTR
– Transthyretin amyloidosis.
biologic(s) or biologic medicine(s)
– a class of drugs that are
produced in living cells.
Baxter
– Baxter International Inc.
BMS
– Bristol-Myers Squibb Company.
Board
– the Board of Directors of the Company.
BRCA
– BReast CAncer gene.
BRCAm
– BRCA-mutated.
Bureau Veritas
– Bureau Veritas UK Limited.
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.
CKD
– chronic kidney disease.
CLL
– chronic lymphocytic leukaemia.
Code of Ethics
– the Group’s Code of Ethics, see page 51.
Company or Parent Company
– AstraZeneca PLC (formerly
Zeneca Group PLC (Zeneca)).
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.
CV
– cardiovascular.
CVRM
– Cardiovascular, Renal & Metabolism.
Daiichi Sankyo
– Daiichi Sankyo, Inc. or a company within
the Daiichi Sankyo group of companies.
Director
– a director of the Company.
DTR
– UK Disclosure Guidance and Transparency Rules.
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.
EGFRm
– EGFR-mutated.
EPS
– earnings per share: profit for the year after tax and
non-controlling interests, divided by the weighted average
number of Ordinary Shares in issue during the year.
ESG
– environmental, social and governance.
ESMO
– European Society for Medical Oncology.
EVP
– Executive Vice-President.
EU
– the European Union.
221
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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.
FX
– foreign exchange.
GAAP
– Generally Accepted Accounting Principles.
GHG
– greenhouse gas.
GIA
– the Group’s Internal Audit function.
Gilead
– Gilead Sciences Ltd.
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.
HK
– hyperkalaemia.
Honeywell
– Honeywell International Inc.
IAS
– International Accounting Standards.
IASB
– International Accounting Standards Board.
ICAEW
– Institute of Chartered Accoutants in England and Wales.
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.
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.
LABA
– long-acting beta2-agonist.
LAMA
– long-acting muscarinic antagonist.
LCA
– Life-Cycle Assessement.
LCM projects
– significant life-cycle management projects (as
determined by potential revenue generation), or line extensions.
Lilly
– Eli Lilly and Company.
LoE
– Loss of Exclusivity.
LMICs
– low- and middle-income countries.
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.
mCRPC
– metastatic castration-resistant prostate cancer.
MedImmune
– MedImmune, LLC (formerly MedImmune, Inc.).
MET
– tyrosine kinase receptor.
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.
Neogene
– Neogene Therapeutics Inc.
NME
– new molecular entity.
NMOSD
– neuromyelitus optica spectrum disorder
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.
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).
PARP
– an oral poly ADP-ribose polymerase.
PD-L1
– an anti-programmed death-ligand 1.
Pearl Therapeutics
– Pearl Therapeutics, Inc.
Pfizer
– Pfizer, Inc.
222
AstraZeneca Annual Report & Form 20-F Information 2022
Additional Information
Glossary
continued
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.
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.
RICs
–
radio-immuno conjugates.
RNA
– ribonucleic acid.
Roche
– F. Hoffmann-La Roche AG.
ROW
– rest of world.
RSV
– respiratory syncytial virus.
SABA
– short-acting beta2-agonist.
Sanofi
– Sanofi S.A./Sanofi Pasteur, Inc.
Sarbanes-Oxley Act
– the US Sarbanes-Oxley Act of 2002.
Scope 1
– Combustion of fuel and operation of facilities.
Scope 2
– (Market-based): Electricity (net of market instruments),
heat, steam and cooling purchased for own use.
Scope 3
–
(Location-based): Electricity, heat, steam and cooling
purchased for own use.
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
– the Senior Executive Team.
SG&A costs
– selling, general and administrative costs.
siRNA
– small interfering RNA.
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.
SVP
– Senior Vice-President.
Takeda
– Takeda Pharmaceutical Company Limited.
TCFD
– Task Force on Climate-related Financial Disclosures.
TeneoTwo
– TeneoTwo, Inc.
TerSera
– TerSera Therapeutics LLC.
Total Revenue
– the sum of Product Sales and Collaboration Revenue.
TROP2
– trophoblast cell-surface antigen 2.
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.
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.
223
AstraZeneca Annual Report & Form 20-F Information 2022
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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 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 IT 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 available on our website,
www.astrazeneca.com/annualreport2022,
and reproduced in AstraZeneca’s Form 20-F
filing for 2022, 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 financial 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 2022 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 2022; 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 92% (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 of Key Marketed
Products, Risk and Task Force on Climate-
related Financial Disclosures Statement,
see our website,
www.astrazeneca.com/annualreport2022.
224
AstraZeneca Annual Report & Form 20-F Information 2022
Additional Information
Important information for
readers of this Annual Report
Design and production
Superunion, London.
www.superunion.com
Board photography
Marcus Lyon
Igor Emmerich
SET photography
Scott Nibauer
Graham Carlow
Philip Mynott
Ossi Piispanen
This Annual Report is printed on Revive
Silk 100 paper, manufactured from FSC
®
Recycled certified fibre derived from 100%
pre and post-consumer waste and Carbon
Balanced with the World Land Trust.
Printed in the UK by Pureprint using its
pure
print
®
environmental printing
technology, and vegetable inks were used
throughout. Pureprint is a CarbonNeutral
®
company. Both the manufacturing mill
and the printer are registered to the
Environmental Management System
ISO14001 and are FSC
®
chain-of-custody
certified.
