What science can do
AstraZeneca
Annual Report and Form 20-F Information 2023
What science can do
We are a global, science-led, patient-focused
pharmaceutical business, committed to
excellence in the research, development and
commercialisation of prescription medicines.
We aim to transform the lives of patients with
improved outcomes and a better quality of life.
We are using data, digital technologies and artificial intelligence to transform
our business, accelerate our science and maximise our impact for people,
society and the planet.
See what we are doing in this area on page 6.
Our Supplements
Detailed information on our
Development Pipeline, Patent
Expiries of Key Marketed
Products, Risk and Task Force
on Climate-related Financial
Disclosures (TCFD) Statement.
See our website,
www.astrazeneca.com/annualreport2023.
Key
For more information
within this Annual Report.
For more information,
see www.astrazeneca.com.
BV
Denotes sustainability
information independently
assured by Bureau Veritas.
CVRM diseases are complex
and interconnected. It’s by
understanding their
interconnections and
targeting the mechanisms
that drive them that we’ll be
able to detect, diagnose and
treat people earlier and more
effectively, stop disease
progression and, ultimately,
improve and save the lives of
the millions of patients
living with these diseases.
Front cover image:
Cardiovascular, Renal
and Metabolic (CVRM)
diseases.
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.
Welcome
zDenotes 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 52 and for more
information on the reconciliation between
Reported and Core performance, see the
Reconciliation of Reported to Core results
in the Financial Review on page 56.
Corporate Governance
Chair’s Introduction
76
Corporate Governance Overview
77
Board of Directors
78
Senior Executive Team (SET)
80
Corporate Governance Report
81
Nomination and Governance
Committee Report
90
Science Committee Report
92
Sustainability Committee Report
93
Audit Committee Report
94
Directors’ Remuneration Report
102
Remuneration Policy
127
Financial Statements
Preparation of the Financial
Statements and Directors’
Responsibilities
140
Directors’ Annual Report on Internal
Controls over Financial Reporting
140
Auditors’ Report
141
Consolidated Statements
148
Group Accounting Policies
152
Notes to the Group Financial
Statements
160
Group Subsidiaries and Holdings
211
Company Statements
216
Company Accounting Policies
218
Notes to the Company Financial
Statements
220
Group Financial Record
223
Additional Information
Shareholder information
225
Directors’ Report
227
Sustainability supplementary
information
230
Trade Marks
231
Glossary
232
Cautionary statement regarding
forward-looking statements
236
Strategic Report
Chair’s Statement
2
Chief Executive Officer’s Review
3
AstraZeneca at a Glance
5
What science can do: artificial
intelligence
6
Healthcare in a Changing World
7
Our Purpose, Values and
Business Model
10
Our Strategy and
Key Performance Indicators
12
Therapy Area Review
16
>
Oncology
16
>
BioPharmaceuticals
20
–
Cardiovascular,
Renal & Metabolism
22
–
Respiratory & Immunology
24
–
Vaccines & Immune Therapies
26
>
Rare Disease
28
Business Review
32
EU Taxonomy Disclosure
50
Task Force on Climate-related Financial
Disclosures Summary Statement
51
Risk Overview
54
Financial Review
58
Contents
Financial highlights
Total Revenue
1
Up 3% at actual rate of exchange to
$45,811 million (up 6% at CER), comprising
Product Sales of $43,789 million (up 2%; 4%
at CER), Alliance Revenue of $1,428 million
(up 89%; 89% at CER) and Collaboration
Revenue of $594 million (down 1%; 1% at CER)
Net cash flow from operating activities
Up 5% at actual rate of exchange to
$10,345 million
2023
2022
2021
$44,351m
$37,417m
$45,811m
$45.8bn
$10,345m
$9,808m
$5,963m
2023
2022
2021
$
10.3bn
Reported operating profit
Up 118% at actual rate of exchange
to $8,193 million (up 134% at CER)
Core operating profit
Up 9% at actual rate of exchange
to $14,534 million (up 14% at CER)
2023
2022
2021
$8,193m
$3,757m
$1,056m
$8.2bn
$14,534m
$13,350m
$9,928m
2023
2022
2021
$
14.5bn
Reported EPS
Up 81% at actual rate of exchange
to $3.84 (up 96% at CER)
Core EPS
Up 9% at actual rate of exchange
to $7.26 (up 15% at CER)
2023
2022
2021
$3.84
$2.12
$0.08
$
3.84
2023
2022
2021
$7.26
$6.66
$5.29
$
7.26
1
As detailed from page 152, Total Revenue consists of Product Sales, Alliance Revenue and Collaboration Revenue.
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 58.
For the reconciliation between
Reported and Core performance,
see the Reconciliation of Reported
results to Core results in the
Financial Review on page 62.
1
AstraZeneca Annual Report & Form 20-F Information 2023
Contents
Corporate Governance
Additional Information
Financial Statements
Strategic Report
$2.90
Full-year dividend of
$2.90 per share (2022: $2.90)
“Our differentiated and growing
portfolio of approved medicines,
global reach and rich R&D
pipeline give us confidence that
we will continue to grow faster
than the industry over the near
and medium term”
Performance and outlook
As AstraZeneca celebrates its 25th
anniversary, I was pleased we were able
to report another year of strong financial
development and scientific progress, with
double-digit earnings growth, and investment
in exciting areas of science that lay the
foundations for long-term success.
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.
Looking ahead, we expect another year of
strong growth in 2024, driven by continued
adoption of our medicines across geographies.
Our differentiated and growing portfolio of
approved medicines, global reach and rich
R&D pipeline give us confidence that we will
continue to grow faster than the industry over
the near and medium term.
A purpose-driven organisation
In my time as a Director, I have experienced
at first hand the commitment of AstraZeneca
people to delivering our Purpose. And in my
recent experience as Chair, whether at our
Speke site in the UK or Gaithersburg in the
US, our Gothenburg site in Sweden or our
Tokyo office in Japan, I have been extremely
impressed by the enthusiasm for everything
they do. I would like to extend my personal
thanks to everyone in AstraZeneca for all
they have achieved in 2023, as well as to
Pascal, the Senior Executive Team and my
fellow Directors.
Engaging stakeholders and shareholders
The role AstraZeneca has to play in
addressing public health challenges and
promoting innovation and sustainable access
to treatments resonates strongly with
governments and other stakeholders I have
met during the year.
Through the Partnership for Health System
Sustainability and Resilience (PHSSR),
I engaged policymakers, academics and
health leaders across countries to advance
policies strengthening the capacity of health
systems to absorb the impact of future crises,
while effectively responding to today’s
growing burden of diseases. AstraZeneca is
incredibly proud to be a founding member of
the PHSSR, a public-private partnership that
is accelerating the transformation of health
systems around the world. I also valued the
opportunity to deepen AstraZeneca’s
collaborations with patient advocacy groups,
governments and the private sector to
improve equitable health outcomes for all.
Most recently I was proud to lead the
AstraZeneca delegation at the World
Economic Forum where we explored how
to deepen our collaboration with key
stakeholders to ensure healthcare is viewed
as a strategic asset everywhere in the world.
Finally, I have enjoyed meeting shareholders
and understanding what you would like to see
from AstraZeneca. I look forward to meeting
more of you this year and to driving continued
impact for patients.
Michel Demaré
Chair
I was honoured to be appointed to succeed
Leif Johansson as the Chair of AstraZeneca
when he stood down at our Annual General
Meeting in April. Leif brought together a
strong Board, with an impressive and diverse
mix of skills and experience, to oversee our
ambitious pursuit of innovation and success.
Leif and I share the view that a board has
three core roles: maintaining good governance,
oversight of strategy and development of
people. As your new Chair, I look forward to
focusing on these priorities and, building on
my own experience in other organisations,
working with the Board to unlock the full
potential of what AstraZeneca has to offer.
A clear strategy and ambitious goals
AstraZeneca’s achievements and returns to
shareholders are built on the successful
delivery of our Growth Through Innovation
strategy and our strategic priorities. We have
ambitious plans for the future and are
relentless in our focus to push the boundaries
of science to deliver life-changing medicines.
By living our Values and realising our strategic
goals, we aim to transform patient outcomes,
deliver industry-leading revenue growth, and
ensure we remain a great place to work.
Between 2023 and 2030, we aim to launch at
least 15 new medicines and become carbon
negative, thereby making an even bigger
difference for people, society and the planet.
AstraZeneca is focused on
delivering its Purpose and
has ambitious plans for
the future.
2
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Chair’s
Statement
$45.8bn
Total Revenue (2022: $44.4bn)
56
Regulatory events – submissions
or approvals in major markets
“Our vision for health is not
a short-term one. While
maintaining our focus on
discovering new small and
large molecules, we are also
increasing investment behind
new modalities…”
Innovating in science
AstraZeneca has one of the leading
development pipelines in the sector and its
strength in 2023 was evidenced by first
approvals for three new medicines – the first
year in our eight-year goal of launching at
least 15 new molecular entities (NMEs)
between 2023 and 2030.
Airsupra
was approved for the first time in
January 2023 for use as an as-needed
treatment to reduce risk of asthma
exacerbations. In November,
Truqap
in
combination with
Faslodex
was approved for
certain patients with advanced HR-positive
breast cancer. And, right at the end of 2023,
AstraZeneca and Ionis’
Wainua
was approved
for the treatment of the polyneuropathy of
hereditary transthyretin-mediated amyloidosis
in adults. It is the only approved treatment that
can be self-administered with an auto-injector.
The good news continued in January 2024
with first approval of
Voydeya
, a first-in-class
oral, Factor D inhibitor developed as an
add-on to proven standard of care
Ultomiris
or
Soliris
to address the needs of a small
subset of patients with paroxysmal nocturnal
haemoglobinuria.
The broad strength of our pipeline was
exemplified by the fact that we achieved
56 regulatory events during the year, either
submissions or approvals for our medicines
in major markets. Additionally, we recorded
30 pipeline progression events, either NME
Phase II starts or Phase III investment
decisions. Of course, pushing boundaries
sometimes means setbacks and, while we
had some clinical trials during the year that
did not meet their primary objectives, we are
committed to improving health outcomes and
learn from all our trials. Overall, 2023 was
predominantly a year of scientific success and
our pipeline progress indicates our ability to
deliver longer-term sustainable growth.
2023 was a year of strong growth and
execution of our long-term growth strategy as
Total Revenue increased by 3% (6% at CER)
to $45.8 billion. Excluding COVID-19
medicines, Total Revenue increased by 13%
(15% at CER) to $45.5 billion.
Continued growth in our therapy areas
Our ability to grow the business builds on
our broad-based, diverse sources of revenue
across our therapy areas and regions.
In our therapy areas, Total Revenue in 2023
for Oncology increased by 19% (21% at CER);
Cardiovascular, Renal & Metabolism by 15%
(18% at CER); and Respiratory & Immunology
by 7% (10% at CER). Vaccines & Immune
Therapies Total Revenue fell by 72% (71%
at CER) as demand for COVID-19 medicines
fell away, while Rare Disease rose by 10%
(12% at CER).
In our regions, Total Revenue in the US was
up 6% in 2023, in Europe it grew by 10%
(8% at CER) and by 2% (9% at CER) in
Emerging Markets. Total Revenue fell by 14%
(8% at CER) in Established Rest of World.
Excluding COVID-19 medicines, Total
Revenue grew in all regions.
Our financial performance was matched by
our operational performance, with 282
successful on-time launches during the year,
overall supply performance of more than 99%
and zero critical observations reported from
49 external inspections. This represents an
outstanding performance that ensures a
continuous supply of high-quality medicines
to patients.
2023 was a year in
which we continued to
grow the business and
deliver for patients. At
the same time, we are
investing for the future
benefit of people,
society and the planet.
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AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Chief Executive Officer’s Review
Chief Executive
Officer’s Review
Importantly, the science in each of our
therapy areas is making a real difference to
the lives of people around the world. For
example, in Oncology,
Enhertu
, the antibody
drug conjugate we are developing with
Daiichi Sankyo, is approved around the world
for the treatment of HER2-mutated breast,
lung and gastric cancers. In addition, in 2023,
it received not one, but two more US
Breakthrough Therapy Designations for
multiple types of HER2-expressing tumours
and HER2-positive colorectal cancer.
Additionally, in January 2024, it was granted
Priority Review in the US for patients with a
range of metastatic HER2-positive solid
tumours.
These designations demonstrate the impact
regulatory authorities believe
Enhertu
can
have. Dato-DXd is also being developed
with Daiichi Sankyo, and pivotal trial data
announced during the year underlined our
confidence in its potential to replace
conventional chemotherapy for many patients
with advanced lung and breast cancers.
In BioPharmaceuticals, data from the
Forxiga
DELIVER trial was critical in informing a Class
1a recommendation in updated European
Society of Cardiology Heart Failure guidelines.
We have further strengthened our pipeline with
CinCor’s candidate drug, baxdrostat for blood
pressure lowering, with Quell to develop,
manufacture and commercialise engineered
T-regulatory cell therapies for autoimmune-
driven diseases, and with Eccogene’s novel
agent, AZD5004 for the treatment of obesity
and broader cardiometabolic conditions.
Our medicines are now helping patients with
rare diseases in 70 markets – 18 more than
2021. Treatments include
Ultomiris
for multiple
indications, including neuromyelitis optica
spectrum disorder (NMOSD), a progressive
autoimmune disease that impacts the central
nervous system. With no relapses observed in
the pivotal CHAMPION-NMOSD trial,
Ultomiris
marks a significant advance for
these patients. Regulatory reviews are
ongoing, including in the US, and it is already
approved in the EU and Japan.
People, society and the planet
All AstraZeneca’s achievements are down
to the skills and capabilities of its people,
and I am delighted to see that we have a
highly engaged workforce, with 86% believing
that we are a great place to work. I am also
pleased with the progress we are making
in creating an inclusive multinational and
multicultural environment where everyone
belongs, and using this diversity as a
competitive advantage. I am particularly
proud that 50% of our senior roles are
filled by women.
Looking beyond AstraZeneca, 2023 was the
year in which the world recognised that the
climate crisis is a health crisis. This was no
more apparent than at COP28 in Dubai where,
for the first time, health was on the agenda
and AstraZeneca was able to play a leading
role in a dedicated Health Day that discussed
the transition to low-carbon, climate-resilient
health systems.
AstraZeneca is working to decarbonise
healthcare and is doing so in collaboration
with peers, stakeholders and suppliers. Since
2015, there has been a 68% reduction in our
Scope 1 and 2 greenhouse gas (GHG)
emissions and, during 2023, we concluded
agreements in the UK and in the US to use
renewable natural gas, or biomethane, to
supply clean heat to our sites. In addition,
through our power purchase agreement in
Sweden, we are expanding the country’s wind
energy capacity. Also in 2023, we
strengthened our investment in nature-based
solutions by expanding our AZ Forest
programme to include planting and
maintaining 200 million trees across six
continents by 2030. Overall, through our
Ambition Zero Carbon strategy we are on
track to halve our entire value chain Scope 1,
2 and 3 footprint by 2030 and, through AZ
Forest, we aim to become carbon negative
for all residual GHG emissions from 2030
onwards, removing more from the
atmosphere than we emit.
Of course, our greatest contribution to human
health is through our medicines and securing
a future where people have access to
affordable, sustainable healthcare. Through
our access to healthcare programmes, we
have reached more than 66 million people,
while our Partnership for Health System
Sustainability and Resilience is fostering joint
learning and acting as a catalyst to strengthen
health systems in more than 30 countries. We
are not resting there and are advancing a
health equity strategy that will build on our
existing access programmes to enable more
equitable global health outcomes.
Investing in future health
Our vision for health is not a short-term one.
While maintaining our focus on discovering
new small and large molecules, we are also
increasing investment behind new modalities
that we believe have the potential to
revolutionise outcomes for patients. We are
exploring modalities such as cell, gene and
RNA therapies, epigenetics and
oligonucleotides to unlock entirely new
treatment approaches and are excited by
their curative potential.
Our own efforts in these new modalities are
supplemented by external expertise. In 2023,
we announced the proposed acquisition of
biotechnology company, Gracell, to further
our cell therapy ambitions across oncology
and autoimmune diseases, and an agreement
with Cellectis, a clinical-stage biotechnology
company, to accelerate cell therapy as well as
genomic medicine. We also acquired a
portfolio of preclinical rare disease gene
therapies and our proposed acquisition of
Icosavax, focused on developing
differentiated, high-potential vaccines using
an innovative, protein virus-like particle
platform, will build on our expertise in
respiratory syncytial virus.
We operate across the whole life-cycle of a
medicine and, in November, we launched
Evinova, a health-tech business designing and
leveraging digital tools to accelerate
innovation across the life sciences sector, the
delivery of clinical trials as well as better
health outcomes.
As shown throughout this Report, our efforts
to push the boundaries of science are helped
by artificial intelligence and new digital
technologies that allow us to discover and
deliver new treatments faster than ever before
and drive a step-change in the diagnosis,
monitoring and treatment of patients.
Colleagues
In closing, I want to thank all the AstraZeneca
team for the part they have played in an
exceptional year and for what we have
been able to achieve for people, society
and the planet.
Thanks also go to my colleagues on the
Senior Executive Team where, during the year,
we welcomed Sharon Barr, who joined as
Executive Vice President, BioPharmaceuticals
R&D to replace Mene Pangalos, who retires in
2024. Sharon brings outstanding experience
from Alexion and a track record of driving
productivity, innovation and delivery of
medicines. I want to thank Mene for his
remarkable contribution to AstraZeneca and
all he has done to transform how we approach
R&D. In particular, I would like to pay tribute to
the role he played in AstraZeneca’s response
to the COVID-19 pandemic. The quality of the
medicines he has brought to patients, and the
pipeline and capabilities he has built, will be
his legacy for many years to come.
In the year when we said farewell to Leif
Johansson as Chair, I would like to close by
extending my thanks to his successor, Michel
Demaré, who continues to ensure we pursue
our Purpose of pushing the boundaries of
science to deliver life-changing medicines.
Pascal Soriot
Chief Executive Officer
4
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
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.
178
projects in
our development
pipeline
1
17
new molecular
entities (NMEs)
in our late-stage
pipeline
Leading in our Therapy Areas
We are focused on areas where
we can make the most meaningful
difference to patients.
Therapy Areas
Oncology
BioPharmaceuticals
Rare Disease
Total Revenue
2
$45.8bn
$45.8bn
$44.4bn
$37.4bn
2023
2022
2021
Diversified portfolio
and global reach
With a focus on patients, we have
a global reach and a diversified
portfolio of medicines across
primary care, specialty care and
rare diseases.
Total Revenue
by Therapy Area
Oncology
40%
BioPharmaceuticals
40%
Rare Disease
17%
Other Medicines
3%
Total Revenue
by reporting region
US
42%
Emerging Markets
26%
Europe
21%
Established Rest
of World
11%
Positively impacting people,
society and the planet
BV
We are committed to operating
in a way that recognises the
interconnection between business
growth, the needs of society
and the limitations of our planet.
66.4m
people reached
by our access to
healthcare
programmes
67.6%
reduction in Scope 1
and 2 GHG emissions
since 2015
Rating of AA in the
MSCI ESG Ratings
assessment
Top 20% of 2,500 of
the world’s largest
companies and
Europe Index
constituent
123
NME or major
life-cycle
management (LCM)
projects in Phase II
and Phase III
1
Includes NME and major LCM projects up to launch in all applicable major markets.
5
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
AstraZeneca at a Glance
1. Science and
Innovation
2. Growth and
Therapy Area
Leadership
3. People and
Sustainability
We are a global, science-led, patient-focused pharmaceutical
business. We are dedicated to transforming the future of
healthcare by unlocking the power of what science can
do for people, society and the planet.
AstraZeneca
at a Glance
2
Total Revenue includes revenues from Other Medicines.
Science can…
In
research and development (R&D)
,
AI transforms our understanding of
disease biology; drives earlier diagnosis;
and helps us create the next generation
of medicines and pioneer new
approaches in the clinic and beyond.
See page 34.
In
Operations
, AI enhances manufacturing
and supply, enabling us to respond more
pro-actively, drive automation and robotics,
and raise quality standards still further.
See page 40.
In our
therapy areas
and
markets
,
AI helps create new ways of doing
business and build new and more
integrated healthcare systems, helping
healthcare practitioners treat more
patients earlier and empower patients.
See from page 16 and page 41.
Across the
business
, AI enables us to work
more effectively, as well as work seamlessly
with industry and academic partners. We
aim to do so in a way that is responsible,
ethical and transparent for the benefit of
people, society and the planet.
See page 41.
Artificial intelligence (AI) and our ability to process
and understand vast amounts of data is accelerating
innovative science, allowing us to discover and
deliver new medicines faster than ever before.
It helps healthcare professionals diagnose, monitor and treat patients
more personally and precisely, helps patients play an active part in their
own treatment, and enables care to move from disease management to
stopping the progress of disease, long-term remission, and even cure.
For more information on our approach to AI, please see IT and IS resources on page 41.
6
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
What science can do:
artificial intelligence
2023
2022
2021
1,216
1,121
1,332
W
orld ($bn)
$1,332bn
2023
2022
2021
102
97
108
Esta
blished RoW ($bn)
$
108bn
(+5.7%)
2023
2022
2021
608
556
678
U
S ($bn)
$
678bn
(+11.5%)
2023
2022
2021
277
257
299
E
merging Markets ($bn)
$
299bn
(+8.0%)
2023
2022
2021
230
211
248
Eu
rope ($bn)
$
248bn
(+7.8%)
The external environment presents us
with both challenges and opportunities that
require us to adapt, innovate and build trust.
Global pharmaceutical sales
In 2023, average revenue grew 10.0% in
Established Markets and 8.0% in Emerging
Markets. The US, Japan, China, Germany and
France are the world’s top five pharmaceutical
markets by 2022 sales. In 2023, the US had
50.9% (2022: 50.0%) of global sales.
Data based on world market sales using AstraZeneca Market definitions as set out on page 232. 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 Q2 2023 (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 both developed and developing
markets to fuel pharmaceutical growth.
Market growth in China is expected to remain
below historical levels at a compound annual
growth rate of 3.9%, due to the continued
slowdown of the major hospital sector.
1
Non-EU countries; including the UK.
2
Commonwealth of Independent States; includes Armenia,
Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan,
Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan
and excludes Ukraine.
$
1,332
bn
(+9.6%)
Estimated pharmaceutical sales 2027.
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 2022 to 2027.
Source: IQVIA Market Prognosis Global
2023–2027.
Other
Europe
1
$93bn
10.6%
Japan
$73bn
0.3%
China
$190bn
3.9%
Oceania
$21bn
3.9%
Southeast
and East Asia
$270bn
4.8%
Middle East
$32bn
6.6%
Africa
$32bn
5.9%
Indian
subcontinent
$51bn
9.5%
CIS
2
$37bn
6.3%
EU
$335bn
6.2%
North America
$992bn
7.8%
Latin America
$197bn
22.0%
Estimated pharmaceutical sales and market growth to 2027
A growing pharmaceutical sector
The pharmaceutical sector continues to grow against a backdrop of
increasing demand for healthcare. Global pharmaceutical sales grew
by 9.6% in 2023. Global healthcare spending is projected to increase
at an annual rate of 7.8% from 2022 to 2027.
Healthcare in a
Changing World
7
AstraZeneca Annual Report & Form 20-F Information 2023
Healthcare in a Changing World
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Along with others, the pharmaceutical sector faces economic challenges, geopolitical
uncertainty and the challenge of climate change. Rapidly-evolving technologies offer
many benefits, while demographic change is driving an increased demand for healthcare.
Successful organisations are transparent and build trust with their stakeholders.
Impact of global trends
Increasing geopolitical
tensions may weaken the
economic landscape with
broader consequences for
companies.
Economic recovery
remains slow and uneven
after the COVID-19
pandemic and invasion
of Ukraine.
Every country in the
world is experiencing
growth in the number and
proportion of older people.
The war in Ukraine and the COVID-19
pandemic have accelerated a historic shift in
the global order. Also, urgent, short-term risks
are creating economic and geopolitical
changes that may hasten other global threats.
Current crises that divert attention and
resources from medium- to longer-term risks
may increase pressures on natural and human
ecosystems. Some of these risks are close to
a point of no return, but opportunities exist to
shape a more secure future.
Geopolitical tensions, such as conflict in the
Middle East, increase pressure on companies’
supply and distribution networks and may
also have ripple effects over the medium term,
contributing to a potential ‘polycrisis’ of
interrelated environmental, geopolitical and
socioeconomic risks relating to natural
resources supply and demand. Geopolitical
tensions and economic pressures have
already limited, and in some cases reversed,
progress on climate change mitigation, at
least over the short term.
(Source: World Economic Forum (WEF): The Global Risk
Report 2023 18th edition)
These growth projections remain below the
historical (2000-2019) average of 3.8%. For
advanced economies, the expected slowdown
is from 2.6% in 2022 to 1.5% in 2023 and
1.4% in 2024, with stronger than expected US
momentum but weaker than expected growth
in the euro area. Emerging market and
developing economies are projected to have
modestly declining growth, from 4.1% in 2022
to 4.0% in both 2023 and 2024. Forecasts for
global growth over the medium term, at 3.1%,
are at their lowest in decades, and prospects
for countries to catch up to higher living
standards are weak. The likelihood of a hard
economic landing has receded, but the
balance of risks to global growth remains
tilted to the downside.
Global inflation was forecast to decline
steadily, from 8.7% in 2022 to 6.9% in 2023
and 5.8% in 2024 but is not expected to return
to target until 2025 in most countries.
(Source: IMF World Economic Outlook, October 2023)
By 2050, the world’s population of people
aged 60 and older will double, to 2.1 billion.
The number of people aged above 80 is
expected to triple between 2020 and 2050, to
426 million. This places strains on healthcare
systems and reduces the pool of working age
people.
Low- and middle-income countries (LMICs)
are now seeing the greatest population
changes. By 2050, two thirds of the world’s
over 60s will live in LMICs, which are also
disproportionately affected by non-
communicable diseases (NCDs). NCDs kill
41 million people each year, more than three
quarters of these in LMICs.
NCDs represented seven of the 10 leading
causes of death in 2019 or 74% of deaths
globally. Cardiovascular (CV) diseases
account for 17.9 million deaths annually,
followed by cancers (9.3 million), chronic
respiratory diseases (4.1 million) and diabetes
(2.0 million).
(Source: WHO)
Top three
Top CEOs identify digital disruption,
the economy, and geopolitical
uncertainties as the most
important trends.
(Source: McKinsey & Company:
CEO Excellence Survey 2023)
2.9%
Global GDP growth was forecast
to slow from 3.5% in 2022 to
3.0% in 2023 and 2.9% in 2024.
(Source: International Monetary Fund (IMF)
World Economic Outlook, October 2023)
1 in 6
By 2030, 1 in 6 people in the
world will be aged 60 or over.
(Source: World Health Organization (WHO))
Economic
Activity falls short of pre-pandemic path
Societal
Increasing pace of population ageing
Political
Growing geopolitical complexity
8
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Healthcare in a
Changing World
continued
The use of AI has
significant potential
but also risks that must
be managed.
Climate change and
ecosystem degradation
impact human health and
undermine the capacity
of health systems.
AI has the potential to bring significant
benefits to the healthcare sector. For example,
data science and AI can increase productivity
in research, development and manufacturing,
helping new medicines to reach patients more
quickly. For medical professionals, AI can
improve decision making, reduce errors and
costs, personalise care plans and enhance
patient monitoring. AI may also enhance the
quality and accessibility of healthcare
services, especially in remote and
underserved areas.
However, a survey of chief risk officers by
the WEF identified concerns about the
potential harms caused by AI technologies –
deliberately or inadvertently. More than 90%
of respondents wished to see an accelerated
pace of regulation around the development of
these technologies to ensure the benefits can
be realised safely.
(Source: WEF: Chief Risk Officers Outlook July 2023)
Climate change is a threat to human
wellbeing and planetary health. There is a
rapidly closing window of opportunity to
secure a liveable and sustainable future for all.
Without urgent, effective and equitable
mitigation and adaptation actions, climate
change increasingly threatens ecosystems,
biodiversity, and the livelihoods, health and
wellbeing of current and future generations.
(Source: Intergovernmental Panel on Climate Change (IPCC)
Summary for Policymakers of Synthesis Report on Climate
Change 2023)
Demand for healthcare
is increasing and science
is driving improvements
in healthcare, but risks
remain for the sector.
While demographic and other changes are
driving an increased demand for healthcare,
continued advances in science and digital
technologies are driving healthcare innovation
and improvements. But risks remain. In
addition to the downward pricing pressure,
the sector faces regulatory challenges, loss of
exclusivity and genericisation, and increasing
expectations from various stakeholders.
To succeed, pharmaceutical companies must
be able to take advantage of AI and emerging
technologies. They also need to respond to
the demands and expectations, and earn the
trust of patients and caregivers, healthcare
professionals and health authorities, payers,
policymakers and others. They need to
protect themselves against harmful
misinformation and disinformation, which will
require collaboration between businesses,
policymakers and other stakeholders to tackle
at scale.
27x
Investment in AI-enabled drug
discovery is estimated to have
grown 27-fold in the past nine
years, exceeding $60 billion
in 2023.
(Source: Deep Pharma Intelligence)
100,000
2023 brought the highest global
temperatures in more than
100,000 years.
(Source: 2023 report of the Lancet Countdown
on health and climate change)
34%
In a 21-country survey, 34% rated
pharmaceutical companies
trustworthy (31% in 2022), higher
than any other sector. But 22%
still distrust the industry.
(Source: Ipsos Global Trustworthiness Monitor:
Stability in an unstable world)
Technological
Emerging regulatory regimes for AI
Environmental
Climate change accelerating
Outlook
Opportunities and challenges for the sector
These risks are explored further
in the Risk Overview from page
54 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 12.
9
AstraZeneca Annual Report & Form 20-F Information 2023
Healthcare in a Changing World
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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.
>116m
1
Our main therapy area medicines impact
more than 116 million patient lives annually.
Ability to acquire, retain and develop a
talented and diverse workforce.
50.1%
of our senior middle management roles
and above are filled by women
Global commercial presence and skills
that ensure our medicines are available
to patients when needed.
>125
countries where we sell our products
A leadership position in science
that enables us to deliver life-changing
medicines.
$10.9bn
invested in our
science in 2023
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.
$22.2bn
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.
$10.3bn
net cash flow from operating activities
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,
the planet and our shareholders.
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 also 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, the planet 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.
Our Purpose
We push the boundaries of science to
deliver life-changing medicines.
Our Values
Business
Review,
see from
page 32.
10
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Our Purpose, Values
and Business Model
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.
1
The patient numbers reached for AstraZeneca medicines is an estimation of the average number of patients on our medicines in a given year. The calculation is based upon the volume that we
manufacture globally, converted using the number of days of therapy (DoT) and the average patient compliance with their treatment. If a patient is treated by more than one AstraZeneca
product they are double-counted.
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Inputs
> Applying our
resources to
address unmet
medical need
Outputs
> Improved health
> Returns to
shareholders
Our
Purpose
R
e
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e
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r
s
1
2
3
4
5
6
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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. Preclinical 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 R&D 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
11
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Our Purpose, Values and Business Model
KPI key
Used for remuneration
of Executive Directors
2030 Bold Ambition
Our bold aspiration is to be pioneers in
science, lead in our disease areas, and
transform patient outcomes. Between 2023
and 2030, we aim to deliver at least 15 new
medicines, industry-leading growth and be
carbon negative. Our 2030 Bold Ambition
workstreams focus on accelerating our
strategic priorities, exploring new ones and
building for the future.
Our Key Performance Indicators and
remuneration
We measure our productivity and success
against our Key Performance Indicators
(KPIs), which are aligned to our strategic
priorities. Several KPIs in this section are used
to measure the remuneration of Executive
Directors, allowing 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 102. Since 2021, we have
included the delivery of our Ambition Zero
Carbon commitments in our executive
incentive arrangements.
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.
Actual growth
2023 +81%
2022 n/m
2021 -97%
CER growth
2023 +96%
2022 n/m
2021 -84%
Actual growth
2023 +9%
2022 +26%
2021 +32%
CER growth
2023 +15%
2022 +33%
2021 +37%
Actual growth
2023 +5%
2022 +64%
2021 +24%
2023
2022
2021
$3.84
$2.12
$0.08
$3.84
Reported EPS
2023
2022
2021
$7.26
$6.66
$5.29
$7.26
Core EPS
2023
2022
2021
$10,345m
$9,808m
$5,963m
$10,345m
Net cash flow from operating activities
Our ambition is to
launch at least 15
new medicines by
2030. Three were
approved in 2023.
We have three strategic priorities, whose
effective delivery 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 Growth Through Innovation strategy is
built on the fact that AstraZeneca:
>
is science and innovation led
>
is 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
>
is focused on patients and a diversified
portfolio that spans across primary care,
specialty care and rare disease
>
has global strength with a balanced
presence across regions
>
has a commitment to people, society
and the planet.
2. Growth and Therapy
Area Leadership
1. Science and
Innovation
3. People and
Sustainability
Achieve Group
Financial Targets
For more information on our Core
measures, see the Financial
Review from page 58.
For details of how Achieve Group
Financial Targets are considered
when calculating the annual
bonus, see page 111.
12
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Our Strategy and Key
Performance Indicators
1
30 against our Group scorecard for
determining annual bonus.
2
25 against our Group scorecard for
determining annual bonus.
3
26 against our Group scorecard for
determining annual bonus.
1
46 against our Group scorecard for
determining annual bonus.
2
50 against our Group scorecard for
determining annual bonus.
3
37 against our Group scorecard for
determining annual bonus.
Science and 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.
“Our bold aspiration
is to be pioneers in
science, lead in our
disease areas, and
transform patient
outcomes.”
Our focus areas
>
Creating the next generation of
therapeutics using an array of drug
modalities, for example, advanced
biologics, genomic medicines and
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 maximise
advances in science and digital technologies,
we are:
>
Advancing our understanding of disease
biology to help uncover novel drivers of
disease, through multi-omics, functional
genomics and innovations in AI and
machine learning.
>
Progressing an early pipeline consisting
of numerous new drug modalities, including
ADCs, antibodies (e.g. bispecific, inhaled
fragment and cell depleting monoclonal),
cell therapies, genomic medicines,
PROteolysis TArgeting Chimeras
(PROTACs), oligonucleotides and T-cell
engagers.
>
Creating cutting-edge models to generate
data that are more relevant to patients, to
better predict the success of our molecules
in the clinic.
>
Pioneering clinical innovation to design and
deliver patient-centric clinical trials that
improve the patient and site team
experience while optimising the use of data,
digital and AI to improve patient outcomes.
>
Embedding AI across R&D, from target
identification to clinical development, to
deliver medicine to patients faster than
ever before.
How we progressed in 2023
>
Three NME approvals in 2023:
Airsupra
,
Truqap
and
Wainua
.
Voydeya
was approved
in January 2024.
>
Achieved 56 regulatory events: 31 NME
and major LCM submissions and 25
approvals in major markets (US, EU, China
and Japan).
>
Secured 30 pipeline progression events: six
NME Phase II starts/progressions and 24
NME and major LCM Phase III investment
decisions.
>
Our pipeline includes 178 projects, of which
160 are in the clinical phase of
development.
>
At the end of the year, we had 17 NME
projects in pivotal trials or under regulatory
review covering 31 indications.
>
18 projects were discontinued.
>
Launched Evinova, a health-tech business
intended to accelerate innovation across
the life sciences sector, the delivery of
clinical trials and better health outcomes.
2030 Bold Ambition workstreams
Accelerating thinking around our initiatives,
exploring new ones and identifying the best
ways to grow the business:
>
China innovation – collaborating to support
development of innovation in China.
>
Rare cancer – combining the capabilities of
our Oncology and Rare Disease teams.
>
Genomic medicine – collaborating across
our teams to unlock the promise of genomic
medicine and improve the lives of people
living with a rare genetic disease.
>
Cell therapy – scaling our efforts to use
cell therapy to halt and reverse disease.
>
Immune diseases – expanding our
capabilities and platforms to focus on
treating diseases with high unmet
medical need.
2023
2022
2021
30
1
29
2
32
3
30
1
Pipeline progression events
2023
2022
2021
56
1
72
2
49
3
56
1
Regulatory events
For more information, see:
Therapy Area Review from
page 16 and Business Review
from page 32.
2023 Group scorecard
assessment on page 111 for
performance against the Group
scorecard.
13
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Our Strategy and Key Performance Indicators
2023
2022
2021
$45,811m
$44,351m
$37,417m
$45,811m
T
otal Revenue
Our focus areas
>
Delivering industry-leading growth across
our therapy areas and regions.
>
Embracing digital technologies and data to
transform the patient journey, putting them
at the heart of everything we do.
>
Continuing with the next phase of our
Operations 2025 programme, including
implementing next-generation
manufacturing technologies and smart
factory capabilities: Operations 2030.
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.
>
Harnessing the power of digital throughout
our end-to-end supply chain through digital
drug development to accelerate
development lead times.
How we progressed in 2023
>
Total Revenue, comprising Product Sales,
Alliance Revenue and Collaboration
Revenue, increased by 3% (6% at CER) to
$45,811 million. Total Revenue, excluding
COVID-19 medicines
¹
, increased 13%
(15% at CER) to $45,488 million.
>
Alliance Revenue increased by 89%
(89% at CER) to $1,428 million.
>
Collaboration Revenue decreased by 1%
(1% at CER) to $594 million.
>
Grew Total Revenue across our Therapy
Areas: Oncology 19% (21% at CER) to
$18,447 million; CVRM 15% (18% at CER) to
$10,628 million; and R&I grew 7% (10% at
CER) to $6,404 million. Our V&I unit
declined by 72% (71% at CER) to $1,357
million and Rare Disease grew by 10%
(12% at CER) to $7,764 million.
>
Total Revenue in the US grew by 6% to
$19,077 million. In Emerging Markets it grew
by 2% (9% at CER) to $12,025 million and in
Europe grew by 10% (8% at CER) to
$9,611 million.
2030 Bold Ambition workstreams
Accelerating thinking around our initiatives,
exploring new ones and identifying the best
ways to grow the business:
>
Transforming care – supporting health
systems to identify, diagnose and treat
more people living with chronic and rare
diseases, and cancer.
>
US growth – transforming patient outcomes
by accelerating innovation in customer
engagement, expanding participation in
clinical trials and ensuring equitable access
to our medicines.
>
Operations 2030 – bringing our pioneering
scientific innovation to patients through
agile, connected and sustainable supply
chains.
“We have global
strength with a
balanced presence
across regions and a
diversified portfolio.”
Growth and Therapy Area Leadership
1
The COVID-19 medicines are
Vaxzevria
,
Evusheld
, and AZD3152 – the COVID-19 antibody currently in development.
Actual growth
2023 +3%
2022 +19%
2021 +41%
CER growth
2023 +6%
2022 +25%
2021 +38%
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 111.
14
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Our Strategy and Key
Performance Indicators
continued
2023
2022
2021
86%
86%
85%
86%
Employee belief that AstraZeneca
is a great place to work
1
2023
25/27
2022
7/9
2021
10/12
Green
Amber
Red
25/27
Sustainability
scorecard performance
2
Our focus areas
>
Maintaining employee engagement by
continuing to make AstraZeneca a great
place to work.
>
Focusing on 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
medicines to patients through our business
transformation programmes.
>
Playing our part in protecting the planet
by realising our ambition to become carbon
negative for all residual emissions from 2030.
>
Leading the way in our efforts to improve
access to healthcare and build health
system resilience.
>
Harnessing the power of science and
innovation in ways that positively impact
patients, healthcare systems and the
environment.
>
Advancing our sustainability priorities,
particularly health equity and health system
resilience, as well as addressing the effects
of the twin climate and nature crises and
the impact on global health and healthcare.
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 2023
>
We continued to invest in our people to
ensure we recruit, retain and develop a
talented workforce.
>
In 2023, 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 investing in global
collaborations, Group initiatives, and local
partnerships to strengthen health systems.
>
We maintained a leading role in industry
efforts to address the effects of climate
change on our planet and accelerate the
delivery of net-zero healthcare, while
improving health outcomes and reducing
our environmental impact.
>
Our Ambition Zero Carbon strategy
delivered further reductions in our GHG
emissions across our value chain – Scopes
1, 2 and 3 – and we are on track with our
environmental commitments.
2030 Bold Ambition workstreams
Accelerating thinking around our initiatives,
exploring new ones and identifying the best
ways to grow the business:
>
Employee experience – being a great place
to work, where people feel a sense of
community, collaboration and purpose.
>
Sustainability – going ‘beyond climate’ to
drive a nature restoration approach to all we
do, while ensuring that the most vulnerable
people in society have access to our
medicines.
>
Technology – identifying, prioritising and
adopting leading-edge technologies, while
upskilling and empowering our people to
drive productivity.
>
Axial project – rethinking how we manage
our supply chains, manufacturing, customer
experience, financial reporting, financial
planning and people management.
>
Business transformation – smarter, more
innovative ways of working and exploring
how we can become more productive.
People and Sustainability
Key Performance Indicators
BV
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.
Our 2023 scorecard is based on nine
focus areas that guide our
sustainability strategy and show where
we can have the most positive impact.
These are detailed in our
Sustainability Report:
www.astrazeneca.com/sustainability.
2
In 2023, we assessed our performance
against 27 publicly available targets
across our three integrated sustainability
priority pillars. At least 90% of targets
need to be ‘on plan’ to achieve a
scorecard rating of green; at least 70% for
amber; and red signifies any percentage
below this.
1
Source: November Pulse survey for
each year.
“We’re unlocking the
power of what science
can do for people, society
and the
planet.”
For more information, see
People and Sustainability
from page 46.
For more information on our
KPIs, including definitions,
methodology and restatements,
see our Sustainability
Data Summary at
www.astrazeneca.com/
sustainability.
15
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Our Strategy and Key Performance Indicators
Unmet medical need
and world market
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.
Small molecule targeted agents
$56.2bn
Immune checkpoint inhibitors
$45.1bn
Monoclonal antibodies (mAbs)
$40.0bn
Chemotherapy
$23.3bn
Hormonal therapies
$17.7bn
PARP inhibitors
$3.5bn
Other oncology therapies
$1.0bn
$187.0bn
Annual worldwide market value
Therapy area world market
(MAT Q3-23)
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 cures.
Oncology
2023 overview
>
Performance driven by rapid and broad
market penetration of our oncology
medicines with 10 major market
approvals across six medicines, including
Imfinzi
,
Enhertu
,
Lynparza
,
Calquence
,
Imjudo
and a new medicine approved for
the first time,
Truqap
.
>
Nine positive Phase III trial readouts
across tumour types including the first
positive pivotal results for datopotamab
deruxtecan (Dato-DXd) in lung and
breast cancers.
Total Revenue
$18,447m
up 19% (21% at CER)
2022: $15,539m
2021: $13,555m
1
Source: IQVIA.
AstraZeneca focuses on specific segments within this overall therapy area
market. Oncology Therapy Area submarket totals ($186.8bn) do not sum
up exactly to the Therapy Area total ($187.0bn) due to rounding.
1
Total Revenue from
Koselugo
is included within Rare Disease for 2022 and 2023
reporting, previously reported within Oncology. The 2021 comparatives and growth rates
shown for each therapy area have been calculated as though these changes had been
implemented in 2021.
T-cell engager molecule directing a T-cell to a cancer cell
16
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Therapy Area Review
Full details are given in the
Development Pipeline and Patent
Expiries of Key Marketed
Products Supplements on our
website, www.astrazeneca.com/
annualreport2023.
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.
g. Immune engagers – redirecting the
immune system’s T-cells to the tumour
and amplifying that patient’s own
anti-cancer immune response.
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.
Product
Disease
Total Revenue
Commentary
Tagrisso
(osimertinib)
Lung cancer
$5,799m,
up 7%
(9% at CER)
Approved in 101 countries for the adjuvant treatment of patients with early-stage EGFRm
NSCLC and in 99 countries for both the 1st- and 2nd-line treatment of advanced EGFRm
NSCLC.
Imfinzi
2
(durvalumab)
Lung cancer
Bladder cancer
Liver cancer
$4,237m,
up 52%
(55% at CER)
Approved in 87 countries in the curative-intent setting of unresectable, Stage III NSCLC after
chemoradiotherapy (CRT) and in extensive-stage small cell lung cancer (SCLC) in 85 countries.
Also approved in combination with gemcitabine and cisplatin as treatment for patients with
locally advanced or metastatic biliary tract cancer (BTC) in 59 countries, and in unresectable
hepatocellular carcinoma (uHCC) in combination with
Imjudo
in 41 countries (
Imfinzi
monotherapy also approved in certain countries). Also approved in combination with
Imjudo
and
platinum-based chemotherapy for NSCLC in 27 countries, and for previously treated advanced
bladder cancer in some countries.
Lynparza
(olaparib)
Ovarian cancer
Breast cancer
Pancreatic cancer
Prostate cancer
$3,056m,
up 2%
(4% at CER)
Approved in 97 countries as maintenance therapy for platinum-sensitive relapsed ovarian
cancer and 1st-line BRCAm ovarian cancer, and in 94 countries with bevacizumab for
homologous recombination repair deficient (HRD)-positive advanced ovarian cancer. Approved
in 97 countries for gBRCAm, HER2-negative early breast cancer (approved in the metastatic
setting in 80 countries). Approved in 94 countries for gBRCAm metastatic pancreatic cancer.
Approved in 96 countries for homologous recombination repair (HRR) gene-mutated mCRPC
(BRCAm only in certain countries) and in 59 countries with abiraterone for 1st-line mCRPC.
Calquence
(acalabrutinib)
Mantle cell lymphoma (MCL)
Chronic lymphocytic leukaemia
(CLL)
$2,514m,
up 22%
(23% at CER)
Approved in 89 countries for the treatment of CLL and in 46 countries for the treatment of adult
patients with relapsed or refractory MCL who have received at least one prior therapy.
Enhertu
(trastuzumab
deruxtecan)
Breast cancer
Gastric cancer
Lung cancer
$1,283m,
up 113%
(114% at CER)
Approved in more than 55 countries for HER2-positive metastatic breast cancer following one or
more prior anti-HER2-based regimen. Also approved in more than 40 countries for HER2-low
metastatic breast cancer following chemotherapy. Approved in more than 30 countries for
previously treated HER2-mutant metastatic NSCLC and HER2-positive advanced gastric or
gastroesophageal junction adenocarcinoma.
Orpathys
(savolitinib)
Lung cancer
$46m,
up 37%
(44% at CER)
Approved in China and Macau for treatment of locally advanced or metastatic NSCLC with MET
gene alterations.
Truqap
(capivasertib)
Breast cancer
$6m
Approved in the US in combination with
Faslodex
(fulvestrant) for treatment of patients with
hormone receptor (HR)-positive, HER2-negative locally advanced or metastatic breast cancer
with PIK3CA, AKT1 or PTEN gene alterations following disease progression or recurrence.
Other products
Zoladex
(goserelin acetate implant)
Prostate cancer
Breast cancer
$986m,
up 3%
(9% at CER)
Faslodex
(fulvestrant)
Breast cancer
$297m,
down 11%
(6% at CER)
2
Imfinzi
Total Revenue includes revenue of
Imjudo
which commenced in 2022.
Key marketed products
17
AstraZeneca Annual Report & Form 20-F Information 2023
Therapy Area Review / Oncology
Corporate Governance
Additional Information
Financial Statements
Strategic Report
2023 review – strategy in action
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
, along with a promising pipeline
of potential new medicines and combinations
across diverse mechanisms of action.
AstraZeneca lung cancer data were featured
in four plenary presentations at major medical
congresses this year.
>
Positive results from the FLAURA2 Phase III
trial showed
Tagrisso
with the addition of
chemotherapy demonstrated a statistically
significant and clinically meaningful
improvement in progression-free survival
(PFS) versus
Tagrisso
monotherapy in
advanced epidermal growth factor receptor
mutated (EGFRm) non-small cell lung
cancer (NSCLC) and was ultimately granted
Priority Review in the US based on these
results. Furthermore, positive overall
survival results from the ADAURA Phase III
trial showed
Tagrisso
achieved an
unprecedented overall survival benefit for
adjuvant early-stage EGFRm NSCLC,
becoming the first Phase III trial to
demonstrate survival benefit in this setting.
>
We reported positive results from the
TROPION-Lung01 Phase III trial which
showed that Dato-DXd demonstrated a
statistically significant PFS benefit versus
docetaxel in patients with previously treated
locally advanced or metastatic NSCLC, and
a clinically meaningful benefit in those with
non-squamous tumours. We also reported
results from TROPION-Lung02 and
TROPION-Lung04 Phase Ib trials which
showed Dato-DXd in combination with
immunotherapy (pembrolizumab or
Imfinzi
,
respectively), with or without chemotherapy,
demonstrated encouraging responses and
no new safety signals in the 1st-line
advanced NSCLC setting. Dato-DXd is
jointly developed and commercialised with
Daiichi Sankyo.
>
Positive Phase III results from the AEGEAN
Phase III trial showed
Imfinzi
significantly
improved event-free survival in patients with
NSCLC, increasing the time patients lived
without recurrence or progression before
and after surgery, and regulatory
submission was accepted in the US based
on these results. Additionally,
Imfinzi
in
combination with
Imjudo
was approved in
the EU for patients with metastatic NSCLC
based on the POSEIDON Phase III trial. We
also reported that the PACIFIC-2 Phase III
trial for
Imfinzi
concurrently administered
with CRT did not achieve statistical
significance for PFS versus CRT alone in
unresectable, Stage III NSCLC.
>
Enhertu
became the first human epidermal
growth factor receptor 2 (HER2)-directed
therapy approved in the EU for patients with
HER2-mutant advanced NSCLC based on
results from the DESTINY-Lung02 trial.
Enhertu
is jointly developed and
commercialised with Daiichi Sankyo.
>
Our novel immuno-oncology bispecific
development programme continued to
advance with the initiation of the eVOLVE-
Lung02 Phase III trial investigating
volrustomig, which simultaneously targets
PD-1 and CTLA-4, as a 1st-line treatment in
combination with chemotherapy in
metastatic NSCLC.
Breast cancer
We are aiming to redefine clinical practice and
transform outcomes across all subtypes and
stages of breast cancer. Ultimately, it is our
ambition to contribute to eliminating breast
cancer as a cause of death. Our
comprehensive portfolio of approved
medicines, including
Truqap
,
Enhertu
,
Lynparza
,
Faslodex
and
Zoladex
, and
promising breast cancer medicines in
development, including
Imfinzi
, Dato-DXd and
camizestrant, leverage different mechanisms
of action to address the biologically diverse
breast cancer tumour environment.
>
Positive results from the TROPION-
Breast01 Phase III trial showed that
Dato-DXd provided a statistically significant
and clinically meaningful PFS benefit versus
investigator’s choice chemotherapy for
patients with inoperable or metastatic
HR-positive, HER2-low or negative
metastatic breast cancer previously treated
with endocrine-based therapy and at least
one systemic therapy. Updated results from
the BEGONIA Phase Ib/II trial showed that
Dato-DXd in combination with
Imfinzi
demonstrated robust and durable tumour
responses in the 1st-line treatment of
patients with metastatic triple-negative
breast cancer.
>
Our newest Oncology medicine,
Truqap
,
was approved in the US in combination with
Faslodex
as the first AKT-inhibitor for
patients with HR-positive, HER2-negative
locally advanced or metastatic breast
cancer with certain gene alterations
following disease progression or
recurrence, based on the CAPItello-291
Phase III trial. The US regulatory submission
was granted Priority Review in June 2023.
>
Enhertu
was approved in the EU and China
as the first HER2-directed therapy for
patients with HER2-low metastatic breast
cancer based on the DESTINY-Breast04
Phase III trial.
>
Two Phase III trials (CAMBRIA-1 and
CAMBRIA-2) were initiated to investigate
camizestrant, our potential next-generation
selective estrogen receptor (ER) degrader,
as an adjuvant therapy for patients with
ER-positive, HER2-negative early
breast cancer.
Genitourinary/Gynaecological cancers
In genitourinary cancers, we aim to transform
treatment paradigms through the delivery of
innovative treatments to help many more
patients than today, including establishing
Lynparza
plus abiraterone and prednisone as
a standard of care (SoC) in 1st-line metastatic
castration-resistant prostate cancer (mCRPC).
In gynaecological (GYN) cancers, we will
continue to redefine survival expectations,
introducing new medicines beyond ovarian
cancer across multiple GYN tumours,
expanding into endometrial with
Imfinzi
and
into cervical cancer.
>
Positive results from the DUO-O Phase III
trial showed treatment with a combination
of
Lynparza
,
Imfinzi
, chemotherapy and
bevacizumab demonstrated a statistically
significant improvement in PFS versus
chemotherapy plus bevacizumab in patients
with advanced ovarian cancer without
tumour breast cancer gene (BRCA)
mutations. Additionally, results from the
DUO-E Phase III trial showed that
Imfinzi
plus chemotherapy in combination with
Lynparza
reduced the risk of disease
progression or death versus chemotherapy
in advanced or recurrent endometrial
cancer, becoming the first global Phase III
trial of immunotherapy plus poly (ADP-
ribose) polymerase (PARP) inhibition to
demonstrate clinical benefit in this setting.
>
Lynparza
plus abiraterone and prednisone
was approved in the US and Japan for the
treatment of BRCA-mutated (BRCAm)
metastatic castration-resistant prostate
cancer, based on the Phase III PROpel trial.
>
Our next wave of potential new medicines
includes saruparib, a PARP1 selective agent
being investigated in combination with
novel hormonal agents in metastatic
castrate-sensitive prostate cancer
(EvoPAR-Prostate01 Phase III trial), and
volrustomig, a potential new treatment
being tested in advanced cervical cancer
(eVOLVE-Cervical Phase III trial).
Therapy Area Review
Oncology
continued
Over 30m
The global burden of cancer is
expected to grow, with over 30
million newly diagnosed
patients estimated by 2040. Two
thirds of those patients are
expected to be in low-to-middle
income countries.
18
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Gastrointestinal cancers
We have a broad and robust development
programme for the treatment of gastrointestinal
cancers in many stages and disease types,
including several positive results as well as
approvals across multiple medicines.
>
We reported positive high-level results for
the EMERALD-1 Phase III trial which
showed
Imfinzi
, in combination with
transarterial chemoembolisation (TACE)
and bevacizumab, demonstrated a
statistically significant and clinically
meaningful improvement in PFS versus
TACE alone in liver cancer patients eligible
for embolisation. This is the first global
Phase III trial to show improved clinical
outcome for systemic therapy in
combination with TACE in this setting, and
the trial continues to follow the secondary
endpoint of overall survival.
>
Positive results from the MATTERHORN
Phase III trial showed treatment with
Imfinzi
,
in combination with standard of care (SoC)
FLOT neoadjuvant chemotherapy,
significantly improved pathologic complete
response versus neoadjuvant
chemotherapy in gastric and
gastroesophageal junction cancers.
>
Imfinzi
was approved in China for the 1st-line
treatment of adult patients with unresectable
or metastatic BTC in combination with
chemotherapy, based on the TOPAZ-1
Phase III trial, and in the EU in combination
with
Imjudo
for the treatment of patients
with advanced or uHCC, based on the
Phase III HIMALAYA trial.
>
We accelerated our ADC development
programme, entering an exclusive global
licence agreement with KYM Biosciences
to develop AZD0901, a potentially first-in-
class ADC targeting Claudin 18.2, with
interim results showing promising early
clinical efficacy.
>
For our novel bispecific programme we
initiated the ARTEMIDE-Biliary01 Phase III
trial, assessing our novel anti-PD-1/
anti-TIGIT bispecific antibody rilvegostomig,
in combination with chemotherapy, in
patients with biliary tract cancer.
Blood cancers
In haematology, we are using our six scientific
platforms to develop and test novel
investigational agents designed to target
underlying drivers.
Calquence
, our next-
generation BTK inhibitor, has treated 50,000
patients globally with approvals in 89
countries across multiple haematological
diseases.
>
Calquence
was approved for the first time
in China for the treatment of CLL or SLL,
based on the ASCEND global Phase III trial
and a Phase I/II trial in China.
>
The tablet formulation of
Calquence
was
approved in the EU for CLL and is designed
to be co-administered with gastric
acid-reducing agents, allowing greater
patient and physician choice.
>
Promising interim results from a Phase I trial
of AZD0486, a CD19/CD3 next-generation
T-cell engager, demonstrated a high
complete response rate in patients with
relapsed or refractory follicular lymphoma
with a manageable safety profile.
>
We initiated an exclusive global licence with
LaNova Medicines for AZD0305 (LM305), a
GPRC5D ADC, with the aim to accelerate
our entry into multiple myeloma.
Pan-tumour
Together with Daiichi Sankyo, we are
exploring the potential role of HER2-directed
therapies in treating multiple solid tumour
types. Positive results from the DESTINY-
PanTumour02 Phase II trial showed
Enhertu
demonstrated clinically meaningful survival
across multiple HER2-expressing advanced
solid tumours including either biliary tract,
bladder, cervical, endometrial, ovarian or
pancreatic cancers or other tumours. In
January 2024,
Enhertu
was granted Priority
Review in the US for patients with a range of
metastatic HER2-positive solid tumours.
Digital healthcare solutions for early risk
detection of lung cancer
Through our A.Catalyst Network, AstraZeneca
partnered with AI solution provider Qure.ai to use
their AI platform qXR for detecting incidental
lung nodules in routine chest x-rays. The solution
is integrated with medical imaging systems,
providing real-time malignancy risk score
indicating risk of lung cancer that can be referred
for further diagnostics. The technology, which
has been implemented in 29 countries across 335
sites and has analysed more than 1.5 million
chest x-rays (as at December 2023). As part of our
partnership with the World Economic Forum’s
EDISON Alliance, we have committed to
screening five million patients for lung cancer
risk using AI technology.
19
AstraZeneca Annual Report & Form 20-F Information 2023
Therapy Area Review / Oncology
Corporate Governance
Additional Information
Financial Statements
Strategic Report
BioPharmaceuticals
Our ambition is to transform care for billions of people
living with chronic diseases and deliver long-lasting
immunity. We are working to intervene earlier to protect
vital organs, slow or reverse disease progression, and
achieve remission for often degenerative, debilitating
and life-threatening conditions, so many more people
can live better, healthier lives.
The epithelium is the first line of defence in the human
body; interaction between the airway epithelium and
bacteria, viruses, allergens or pollution can result in the
release of epithelial cytokines, driving inflammation.
20
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Therapy Area Review
Unmet medical need
and world market
20 million
deaths per year due to
CVRM diseases.
4 of the 10
top causes of death globally
are due to CVRM diseases.
Unmet medical need
and world market
>40 million
people worldwide have the
immune-mediated diseases we
are targeting, which carry a high
disease burden.
3rd
Chronic obstructive pulmonary
disease (COPD) is the world’s
third leading cause of death.
Unmet medical need
and world market
Up to 4%
of the population is
immunocompromised and is at a
higher risk of hospitalisation from
COVID-19 than the general
population.
One billion
cases of seasonal influenza
annually.
1
Total Revenue from
Andexxa
is included within BioPharmaceuticals: CVRM for 2023 and 2022 reporting,
previously reported within Rare Disease. The 2021 comparatives and growth rates shown for each
therapy area have been calculated as though these changes had been implemented in 2021.
2023 overview
>
Forxiga
, the number one SGLT2 inhibitor
worldwide by volume, expanded its label
from type 2 diabetes (T2D) and chronic
kidney disease (CKD) to address
cardiovascular (CV) death and
hospitalisation for a broader range of
heart failure (HF) populations.
>
Acquisition of CinCor and exclusive
licence agreement with Eccogene
bolstered the cardiorenal pipeline in
hypertension, obesity, T2D and other
cardiometabolic conditions.
>
Eplontersen demonstrated sustained
benefit in Phase III trial for hereditary
transthyretin-mediated amyloid
polyneuropathy (ATTRv-PN) through
85 weeks.
2023 overview
>
Continued strong portfolio growth
despite
Symbicort
patent expiry in the US,
significant portfolio transformation,
where key launch brands (
Breztri
,
Fasenra
,
Tezspire
,
Saphnelo
) represented
circa 50% of the total portfolio at the
year end.
>
Fasenra
met the primary endpoint in the
MANDARA Phase III trial demonstrating
non-inferior rates of remission compared
to mepolizumab in eosinophilic
granulomatosis with polyangiitis (EGPA)
patients.
>
Collaboration with Quell Therapeutics
and proposed acquisition of Gracell
Biotechnologies to boost the Immunology
portfolio.
2023 overview
>
Beyfortus
approved in the US and in
China for the prevention of respiratory
syncytial virus (RSV) lower respiratory
tract disease (LRTD) in infants and RSV
lower respiratory tract infection (LRTI) in
neonates and infants entering or during
their first RSV season, respectively.
>
Supplemental Biologics Licence
Application (sBLA) for the approval of a
self- or caregiver-administered option for
FluMist
Quadrivalent accepted for review
by the FDA.
>
Proposed acquisition of Icosavax bolsters
the pipeline with investigational RSV and
human metapneumovirus (hMPV)
combination vaccine.
>
Emergency Use Authorisation in the US
requested for the investigational
long-acting antibody sipavibart for
pre-exposure prophlylaxis of COVID-19.
Our ambition is to improve care to
save lives for the millions living with
cardiovascular, renal and metabolic
(CVRM) diseases, stop disease
progression and, ultimately, pave the
way to a cure.
Total Revenue
$10,628m
up 15% (18% at CER)
2022: $9,211m
2021: $8,103m
1
Cardiovascular, Renal & Metabolism
Total Revenue
$6,404m
up 7% (10% at CER)
2022: $5,963m
2021: $6,049m
Respiratory & Immunology
Total Revenue
$1,357m
down 72% (71% at CER)
2022: $4,836m
2021: $4,779m
Our ambition is to transform respiratory
and immunology care for patients,
moving beyond symptom control to
disease modification, remission and,
one day, cure.
Our ambition is to develop and deliver
transformative vaccines and antibodies,
providing long-lasting immunity to millions,
and supporting sustainable and resilient
healthcare systems worldwide by reducing
the burden of frequent infectious diseases.
Vaccines & Immune Therapies
21
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / BioPharmaceuticals
Diabetes
$159.3bn
High blood pressure
$37.1bn
Abnormal levels of blood cholesterol
$19.2bn
CKD
$9.4bn
Thrombosis
$6.9bn
CKD-associated anaemia
$5.3bn
Hyperkalaemia
$0.9bn
Other CV
$58.0bn
$286.1bn
Annual worldwide market value
Therapy area world market
(MAT Q3-23)
Key marketed products
Product
Disease
Total Revenue
Commentary
Farxiga
/
Forxiga
(dapagliflozin)
T2D
HF
CKD
$5,997m,
up 37%
(39% at CER)
Forxiga
is the number one prescribed SGLT2i
worldwide by volume. In August,
Forxiga
received a
1st-line recommendation from the 2023 European
Society of Cardiology Treatment Guidelines for HF
across the range of ejection fractions.
Brilinta
/
Brilique
(ticagrelor)
Acute coronary
syndromes (ACS)
$1,324m,
down 2%
(1% at CER)
Brilinta
plus aspirin is currently approved in more than
115 countries for the prevention of atherothrombotic
events in adult patients with ACS and in 80 countries
for the secondary prevention of CV events among
high-risk patients who have experienced a heart attack.
Lokelma
(sodium zirconium
cyclosilicate)
Hyperkalaemia (HK)
$412m,
up 43%
(46% at CER)
Lokelma
is now approved in 56 markets and is market
leader by value and days-of-therapy volume in branded
HK.
Roxadustat
Anaemia of CKD
$276m,
up 37%
(44% at CER)
Andexxa
/
Ondexxya
(andexanet alfa)
Factor Xa (FXa)
inhibitor reversal
agent
$182m,
up 14%
(15% at CER)
In June 2023, the
Andexxa
Phase IV (Annexa-I) trial
stopped early after achieving pre-specified criteria on
haemostatic efficacy versus usual care.
Other products
Crestor
(rosuvastatin
calcium)
Dyslipidaemia
Hyper-
cholesterolaemia
$1,110m,
up 6%
(12% at CER)
Seloken
/
Toprol-XL
(metoprolol
succinate)
Hypertension
HF
Angina
$641m,
down 26%
(20% at CER)
Onglyza
family,
(exenatide,
Qtern
,
Symlin
,
Atacand
and other
established brands)
n/a
$227m,
down 12%
(8% at CER)
Bydureon
(exenatide XR
injectable
suspension)
T2D
$163m,
down 42%
(42% at CER)
Wainua
(eplontersen)
polyneuropathy of
hereditary
transthyretin-
mediated amyloidosis
n/a
On 21 December in the USA,
Wainua
(eplontersen) was
granted its first-ever regulatory approval for the
treatment of adults with polyneuropathy of hereditary
transthyretin-mediated amyloidosis.
Cardiovascular, Renal & Metabolism
Our strategy in CVRM
Our ambition is to improve and save lives
for the millions of people who are living
with the complexities of CVRM diseases.
>
The impact of CVRM diseases on people,
society and our planet is immense and
growing, yet these diseases remain
underdiagnosed, undertreated, and their
interconnections under-recognised.
>
By understanding their interconnections
and targeting the mechanisms that drive
CVRM diseases, we will be able to detect,
diagnose and treat people earlier and more
effectively, stop disease progression and
ultimately pave the way to a cure.
>
AstraZeneca is uniquely positioned to
improve the outcomes of patients living with
CVRM diseases today and tomorrow with
our strong and expanding portfolio and a
broad, deep and innovative pipeline
delivered by a talented, passionate and
diverse team.
>
We are building the leading CVRM business.
2023 review – strategy in action
Our CVRM strategy is focused on four key
areas: CV, renal, HF, and metabolic diseases.
Cardiovascular (CV)
CV disease is the leading cause of death and
is responsible for approximately one third of
all deaths globally. Our ambition is to reduce
CV risk by improving hypertension control and
reducing dyslipidaemia.
>
We continue to make a difference for
patients with
Brilinta
, now approved in more
than 124 countries for atherosclerosis and
in 82 countries for high-risk patients with
history of heart attack.
>
Andexxa
is designed to bind to FXa
inhibitors and rapidly reverse their
anticoagulant effect in patients with major
bleeds. In June, the
Andexxa
Phase IV
(Annexa-I) trial stopped early after achieving
pre-specified efficacy criteria versus usual
care. The results of the trial have been
presented at the World Stroke Congress
and submitted for publication.
>
In February 2023, AstraZeneca completed
the acquisition of CinCor, focused on
developing baxdrostat, an investigational
once-daily medication, for the treatment of
hard-to-treat hypertension.
>
There is also a need for new approaches to
stop progression of atherosclerosis caused
by dyslipidaemia. AZD0780 is an oral
inhibitor (oPCSK9) being developed for
greater ease of use and enhanced
convenience, aiming to drive reduction in
LDL-C levels not achievable by statins alone.
Renal
Nearly 850 million people worldwide, or more
than one in 10 people, are affected by kidney
disease and more than 90% of people with
CKD remain undiagnosed. Our ambition in CKD
is to eliminate progression to kidney failure.
>
Forxiga
is now approved in over 120
markets for the treatment of CKD.
>
In November, results from the real-world
ZORA observational multicountry study
showed that treating HK with the potassium
Source: IQVIA.
AstraZeneca focuses on specific segments within
this overall therapy area market. Sales for CKD
($9.4bn) and CKD-associated anaemia ($5.3bn)
fall outside the CVRM total market. All sales for
CKD-associated anaemia ($5.3bn) fall within
the CKD market and should not be double
counted.
Full details are given in the
Development Pipeline and Patent
Expiries of Key Marketed
Products Supplements on our
website, www.astrazeneca.com/
annualreport2023.
Therapy Area Review
BioPharmaceuticals
continued
22
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
image to be updated
binder
Lokelma
can allow patients with CKD
or HF to maintain their lifesaving ren-in-
angiotensin-aldosterone system inhibitor
(RAASi) therapy which can prevent risk of
progression to end-stage kidney disease.
ZORA also showed patients were 2.5 times
more likely to stay on RAASi therapy when
treated with
Lokelma
versus those not
prescribed a potassium binder.
>
At the American Society of Nephrology
(ASN) 2023, the Phase IIb data for
zibotentan/dapagliflozin was presented
showing significant albuminuria reduction
versus dapagliflozin alone in patients with
CKD and proteinuria, supporting progress
to Ph3 for High Proteinuria CKD.
>
Additional real-world evidence from the
REVEAL-CKD, OPTIMISE-CKD and
IMPACT-CKD studies highlighted the urgent
need to act on the growing global burden
and underdiagnosis of CKD.
>
In September 2023, the Global Patient
Alliance for Kidney Health, a community-led
alliance of 17 patient advocacy
organisations, was launched with financial
sponsorship from AstraZeneca.
>
We have an innovative early pipeline in
renal, with AZD2373 under investigation
as a precision medicine with the aim of
preventing progression to kidney failure for
people genetically at risk of kidney disease
due to two apolipoprotein L1 (APOL1) alleles.
Heart failure (HF)
HF affects nearly 64 million people globally
and is closely linked to other CVRM
conditions. Our ambition is to eliminate HF as
first cause of hospitalisation and cure HF with
reduced ejection fraction.
>
The DELIVER Phase III trial showed that
Forxiga
reduced the risk of CV death or
worsening HF across all left ventricular
ejection fractions (LVEF).
Forxiga
is now
approved for HF across all LVEF in 91
markets including the EU, US, China and
Japan. In August 2023,
Forxiga
received a
1st-line recommendation in the 2023
European Society of Cardiology Treatment
Guidelines for HF across the LVEF spectrum.
>
Transthyretin-mediated amyloid
cardiomyopathy (ATTR-CM) and
polyneuropathy (ATTRv-PN) are progressive
systemic diseases leading to poor quality of
life and eventually death. In September
2023, published results from the NEURO-
TTRansform Phase III trial for eplontersen, a
potential best-in-class, ligand-conjugated
antisense oligonucleotide designed to treat
all types of ATTR, demonstrated sustained
benefit in the treatment of ATTRv-PN
through 85 weeks. Together with our
partner Ionis Pharmaceuticals, we received
the first regulatory approval for
Wainua
(eplontersen) for the treatment of ATTRv-PN
in the US in December 2023 with the EU
and others expected to follow in 2024.
>
Wainua
is also currently being evaluated in
the Phase III CARDIO-TTRansform trial for
ATTR-CM.
>
Our early pipeline is aimed at targeting key
mechanisms in HF, including widespread
inflammation, fibrosis, hypertrophy and
microvascular dysfunction, as a major
priority. Mitiperstat (AZD4831) is an
investigational, oral myeloperoxidase (MPO)
inhibitor intended to be complementary to
SoC for patients diagnosed with HF with
preserved ejection fraction. By targeting
this key disease driver, the aim is to reduce
inflammation and fibrosis, thereby increasing
survival and reducing hospitalisation.
Metabolism
More than 650 million adults are living with
obesity and the prevalence of diabetes is
expected to rise to 783 million by 2045. Our
ambition is to eliminate metabolic
dysfunction-associated steatohepatitis,
(MASH, previously NASH) fibrosis as a leading
cause of liver failure. We also remain
committed to treat beyond haemoglobin A1C
in T2D.
>
Forxiga
continues to help patients with T2D
worldwide with approvals in more than 100
countries. In June 2023,
Xigduo XR
(dapagliflozin and metformin hydrochloride
extended-release) was approved in China
and, in July 2023, Sidapvia (dapagliflozin
and sitagliptin) was approved in Korea, both
for the treatment of adults with T2D.
>
With one of the broadest clinical pipelines in
MASH and cirrhosis, we are investigating
new therapeutic modalities and precision
medicine to target genetic drivers of
disease in MASH to stop or slow disease
progression.
>
In November, AstraZeneca and Eccogene
entered into an exclusive licence agreement
for AZD5004, an investigational oral
once-daily glucagon-like peptide 1 receptor
agonist (GLP-1RA) currently in a US Phase I
clinical trial for the treatment of obesity, T2D
and other cardiometabolic conditions.
For more information on our
commitment in amyloidosis,
see page 30.
Improving diagnosis pathways in
heart failure
In the UK, we partnered with NHS Greater
Glasgow and Clyde, the West of Scotland
Innovation Hub and the University of Glasgow
on PROJECT OPERA, an initiative designed to
enhance digital diagnostic pathways for HF.
In the pilot, PROJECT OPERA led to a reduction
in echocardiogram waiting times to just six
weeks from 12 months. Shorter wait times and
earlier diagnosis can reduce the risk of
hospitalisation and mortality for patients and
avert approximately 8kg of CO₂ emissions per
patient per year. We are now applying these
learnings to other regions, including the rest
of the UK, Spain, France, Germany, Mexico
and China.
23
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / BioPharmaceuticals / Cardiovascular, Renal & Metabolism
Asthma
$25.0bn
COPD
$17.4bn
Other
$46.3bn
$88.8bn
Annual worldwide market value
Therapy area world market
(MAT Q3-23)
Key marketed products
Product
Disease
Total Revenue
Commentary
Symbicort
(budesonide/
formoterol)
Asthma
COPD
$2,362m,
down 7%
(4% at CER)
Retained global market leadership. Only ICS/LABA
approved as an anti-inflammatory reliever in 47
countries, with regulatory reviews anticipated in
additional countries.
Fasenra
(benralizumab)
Severe eosinophilic
asthma
$1,553m,
up 11%
(12% at CER)
Currently approved as an add-on maintenance
treatment for severe eosinophilic asthma in 80
countries including the US, EU and Japan.
Breztri
/
Trixeo
(budesonide/
glycopyrrolate/
formoterol)
COPD
$677m,
up 70%
(73% at CER)
The fastest-growing global triple therapy
1
; approved in
more than 73 countries, including the US, EU, Japan
and China. More prominent role of fixed-dose triple
therapies for early treatment, including mortality
reduction benefits, reflected in 2023 GOLD report.
Tezspire
(tezepelumab)
Severe asthma
$345m,
up 318%
(319% at CER)
Approved in more than 45 countries including the US,
EU and Japan for the treatment of severe asthma
without biomarker or phenotypic limitations.
Regulatory reviews are ongoing in additional
countries.
Saphnelo
(anifrolumab)
Systemic lupus
erythematosus
(SLE)
$280m,
up 140%
(141% at CER)
Approved in 61 countries, including the US, EU and
Japan. Included in 2023 European Alliance of
Associations for Rheumatology (EULAR)
recommendations for the management of SLE.
Other products
Pulmicort
(budesonide)
Asthma
COPD
Croup
$713m,
up 11%
(17% at CER)
Approved in more than 115 countries.
Bevespi
(glycopyrrolate/
formoterol)
COPD
$58m,
stable at 0%
(stable at 0% at
CER)
Approved in 46 countries, including the US, EU, Japan
and China.
Daliresp
/
Daxas
(roflumilast)
COPD
$54m,
down 72%
(72% at CER)
Approved in more than 50 countries, including the US
and EU.
1
Global triple therapy market definition:
Breztri
, Enerzair, Trelegy, Trimbow.
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 transforming care
through our broad portfolio.
Our strategy is to:
>
Drive earlier diagnosis and prompt
intervention with the most effective
therapies to reduce mortality by preventing
exacerbations and reducing
cardiopulmonary risk.
>
Advance innovative biology and novel
therapeutic platforms including next-
generation biologics and orals that will
enable us to slow disease progression,
drive disease modification, and reverse the
structural damage caused by the disease.
Asthma
Our ambition in asthma is to eliminate asthma
attacks 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.
>
Drive towards clinical remission with systemic
biologics, and with pre-biologics for those
patients not controlled on current therapies.
>
Introduce new modality therapies and bring
forward precision medicine opportunities.
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:
>
Lead in lupus.
>
Disrupt in established diseases with
suboptimal treatment outcomes through
precision medicine and novel mechanisms
with a combination of our mid-stage internal
pipeline and external collaborations,
targeting diseases such as inflammatory
bowel disease (IBD) and rheumatoid arthritis.
>
Invest in future transformative technologies
with curative potential, such as complex
biologics and cell therapy.
New Respiratory
We are also moving beyond asthma and COPD
to address other respiratory diseases with
significant unmet medical need, including
severe viral lung infection, interstitial lung
disease and idiopathic pulmonary fibrosis (IPF).
2023 review – strategy in action
COPD
Breztri
, our triple inhaled therapy continues to
gain market share, demonstrating strong
volume growth within the growing fixed-dose
combination triple class across major
markets. In October 2023, patients received
their first dose in the ATHLOS Phase III trial
exploring
Breztri
’s ability to improve
parameters that indicate cardiopulmonary
function in COPD.
Breztri
is also being studied
in asthma in two Phase III pivotal trials,
KALOS and LOGOS.
The OBERON and TITANIA Phase III trials of
tozorakimab (anti-IL-33 mAb) are ongoing. In
October 2023, patients received their first
dose in the MIRANDA Phase III trial of
tozorakimab.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
Therapy Area Review
BioPharmaceuticals
continued
Full details are given in the
Development Pipeline and Patent
Expiries of Key Marketed
Products Supplements on our
website, www.astrazeneca.com/
annualreport2023.
24
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Compounds in early-stage clinical
development include:
>
Mitiperstat, a selective MPO inhibitor in
Phase II. A 10-fold increase in MPO (an
enzyme associated with oxidative stress)
concentration is associated with a 40%
increase of risk of a COPD exacerbation.
>
AZD6793, an oral IRAK4 inhibitor that targets
many of the key pathways triggered by
bacterial and viral infections, smoke and other
environmental factors in COPD patients.
Asthma
Symbicort
maintained its position as the
leading inhaled corticosteroid (ICS)/long-
acting beta2-agonist (LABA) globally by
volume. Performance has been driven by
strong growth in Emerging Markets, offset by
generic erosion in the EU, US and Japan.
In January 2024,
Airsupra
launched 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 FDA
approved anti-inflammatory rescue therapy to
treat airway obstruction and inflammation
concomitantly. AstraZeneca entered into a co-
development agreement with Bond Avillion 2
Development in March 2018 for the
development of the then drug candidate
PT027 for asthma in the US.
Fasenra
, our first respiratory biologic has
reached more than 119,000 patients with severe
eosinophilic asthma. In April, we announced
positive results from the MIRACLE Phase III trial,
an efficacy and safety study of
Fasenra
in
patients in Asia with a history of uncontrolled
severe eosinophilic asthma. A Phase III trial in
COPD, RESOLUTE, is also ongoing.
Tezspire
is the first and only biologic approved
for patients with severe asthma with no
phenotype or biomarker limitation within its
approved label.
Tezspire
’s strong performance
continues following approval, gaining market
share and achieving broad labels and
reimbursement globally.
Compounds in early-stage clinical
development for asthma include:
>
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
5-lipoxygenase-activating protein (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.
>
AZD4604, an inhaled JAK1 inhibitor that has
the potential to block the effects of T2-high
pro-inflammatory pathways (IL4/13, TSLP)
and T2-lower pathways (IL6, IL17), many of
which are poorly responsive to ICS in
patients with asthma.
New Respiratory
The TILIA Phase III trial of tozorakimab in
severe viral lower respiratory tract disease is
ongoing.
Other compounds in early-stage clinical
development include:
>
AZD0292, an anti-pseudomonas
aeruginosa mAb for the treatment of
bronchiectasis.
Immunology
Saphnelo
continues to grow rapidly during its
launch phase and in June 2023, was included
in the 2023 EULAR recommendations for the
management of SLE, less than two years after
first launch.
Fasenra
’s life-cycle management programme
includes multiple clinical trials in eosinophilic
diseases beyond the current severe asthma
indication. In September 2023, we announced
positive high-level results from the MANDARA
Phase III trial which showed that
Fasenra
met
the primary endpoint and demonstrated
non-inferior rates of remission compared to
mepolizumab in patients with EGPA who were
receiving oral corticosteroids with or without
stable immunosuppressive therapy. MANDARA
is the first head-to-head trial of biologics in
EGPA, comparing a single injection of
Fasenra
to three injections of mepolizumab, every four
weeks. Full results from the trial were presented
in November 2023 at the American College of
Rheumatology Convergence meeting.
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.
In June 2023, we announced an agreement
with Quell Therapeutics to develop,
manufacture and commercialise engineered
T-regulator (Treg) cell therapies for
autoimmune diseases in order to reset
immune tolerance and drive durable
responses for patients. In 2023, we also
announced the proposed acquisition of
Gracell Biotechnologies.
In June 2023, the clinical development
programme for brazikumab, an anti-IL-23
mAb, in IBD was discontinued.
Decarbonising respiratory care
Chronic respiratory diseases are examples of the growing
health impact of climate change. Poor air quality and
extreme weather pose great risks to people living with
asthma and COPD, and increase the number of people
developing these diseases. We are dedicated to
discovering and developing respiratory medicines that
improve outcomes for patients as well as lowering the
carbon footprint of respiratory care which stems from the
use of medicines, doctor visits and hospital care.
Early detection, diagnosis and disease control to avoid
exacerbations are powerful ways to reduce overall
healthcare resource utilisation and hospitalisations, and
thus the carbon footprint of care. In addition to efforts to
improve outcomes for patients, we are also decarbonising
respiratory care by transitioning to climate-friendly
inhaled medicines, moving our entire portfolio to a
next-generation propellant with near-zero Global
Warming Potential.
25
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / BioPharmaceuticals / Respiratory & Immunology
RT AZ3174--Patient-HCP-2.jpg
$12.3bn
Annual worldwide market value
Therapy area world market
(MAT
Q3-23)
Key marketed products
Product
Disease
Total Revenue
Commentary
COVID-19 mAbs
(tixagevimab and
cilgavimab)
COVID-19
$312m,
down 86%
(85% at CER)
Authorised for pre-exposure prophylaxis (prevention)
of COVID-19 (emergency use) in 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%.
Beyfortus
(nirsevimab)
RSV
$262m,
up 961%
(945% at CER)
(2022: $25m)
Approved in the EU, US, UK, China and Canada. In
collaboration with Sanofi. Sanofi has full commercial
control of
Beyfortus
in the US.
Vaxzevria
(ChAdOx1-S
[Recombinant])
COVID-19
$12m,
down 99%
(99% at CER)
(2022: $1,875m)
More than three billion vaccine doses have been
released for supply to over 180 countries.
Other products
Synagis
(palivizumab)
RSV
$546m,
down 6%
(2% 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
$226m,
up 30%
(22% at CER)
Approved in the US, EU and other countries. Daiichi
Sankyo holds rights to
FluMist
Quadrivalent in Japan.
Vaccines & Immune Therapies
Our strategy in Vaccines &
Immune Therapies
We have a portfolio of medicines that
includes vaccines for COVID-19
and influenza, long-acting antibodies
for COVID-19 and RSV, and a pipeline
of next-generation therapeutics and
scientific platforms. We are optimising
the potential of both vaccines and
antibodies, providing long-lasting
immunity and supporting sustainable
and resilient healthcare systems
worldwide by reducing the burden
of frequent infectious diseases.
Vaccines
We are engineering next-generation vaccines
that have the potential to generate potent and
long-lasting immune responses.
Advancing our ambition in vaccines, in
January 2024 we entered a collaboration
agreement with US-based biotechnology
company Omniose to research vaccines for
serious bacterial diseases, and we will have
exclusive rights to Omniose’s proprietary
bioconjugation platform for up to three years.
Antibodies
We are pioneering novel approaches to
develop 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 potential protection for those able
to mount their own immune response, and
antibody therapies for those who cannot, aims
to ensure quality care for all.
2023 review – strategy in action
Our Vaccines & Immune Therapies strategy
is focused on reducing the burden of
respiratory infections, including RSV, hMPV,
COVID-19 and influenza.
Respiratory syncytial virus
Beyfortus
is a single dose long-acting
antibody (LAAB), developed and
commercialised from an alliance between
AstraZeneca and Sanofi, using AstraZeneca’s
proprietary YTE half-life extension technology.
In April 2023, AstraZeneca, Sobi and Sanofi
updated and simplified their contractual
arrangements relating to the development and
commercialisation of
Beyfortus
in the US.
In July 2023,
Beyfortus
was approved in the
US for the prevention of RSV LRTD in
newborns and infants born during or entering
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. In the US,
Beyfortus
is the first
approved and recommended immunisation to
prevent severe RSV disease in all infants
under eight months by the CDC Advisory
Committee on Immunization Practices.
In January 2024,
Beyfortus
was approved in
China for the prevention of RSV LRTI in
neonates and infants entering or during their
first RSV season and is anticipated to be
available during the upcoming 2024 to 2025
RSV season.
Regulatory applications are currently under
review in Japan and other countries.
Since its initial approval in 1998,
Synagis
has
become a global SoC for RSV prevention and
helps protect at-risk babies against RSV. In
February 2023, new cost-effectiveness
analysis of
Synagis
for the prevention of RSV
infection in otherwise healthy Canadian
infants born at 29-35 weeks’ gestational age,
was presented at the 7th Respiratory
Syncytial Virus Foundation Conference in
Lisbon, Portugal.
Our agreement with Sobi for the rights to
Synagis
in the US remains ongoing.
In December 2023, AstraZeneca announced
an agreement to acquire Icosavax, to bolster
the Vaccines & Immune Therapies pipeline
with a potential first-in-class, Phase III-ready,
combination vaccine against RSV and hMPV,
using an innovative, protein virus-like particle
platform.
COVID-19
AZD3152 is an investigational next-generation
LAAB being developed to potentially protect
vulnerable patients such as the
immunocompromised from COVID-19, given
that they may not have any other non-vaccine
option. In July 2023, AstraZeneca shared
positive high-level results from the Phase I
safety cohort of the ongoing SUPERNOVA
Phase I/III COVID-19 prevention trial, which
showed that AZD3152 was generally
well-tolerated and displayed
pharmacokinetics consistent with
Evusheld
through to day 29. AstraZeneca licensed
AZD3152 from RQ Biotechnology in May 2022.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
Therapy Area Review
BioPharmaceuticals
continued
Full details are given in the
Development Pipeline and
Patent Expiries of Key Marketed
Products Supplements on our
website, www.astrazeneca.com/
annualreport2023.
26
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
image to be updated
In October 2023, AstraZeneca announced
new data from two extensive real-world
evidence studies, which highlighted that
immunocompromised people continue to face
significant and disproportionate burdens from
COVID-19, with substantially higher rates of
severe COVID-19 outcomes compared to the
general population. The INFORM and EPOCH
studies were published in Lancet Regional
Health Europe and Current Medical Research
and Opinion, respectively. Data from INFORM
were presented at the 12th Annual IDWeek
Conference.
Evusheld
is a LAAB combination for the
pre-exposure prophylaxis (prevention) and
treatment of COVID-19. All Product Sales in
2023 were derived from sales of
Evusheld
in
the first quarter.
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. Total Revenue for COVID-19
medicines (
Vaxzevria
and COVID-19 mAbs)
declined significantly in 2023, due to the
fulfilment of
Vaxzevria
contracts.
Emergency Use Authorisation, based on
positive results from the SUPERNOVA
sub-study, was submitted in the US for the
investigational LAAB sipavibart for pre-
exposure prophylaxis of COVID-19 in an
immunocompromised patient population.
The International Immunocompromised
Advocacy Network, an independent,
community-led network of more than 44
patient advocacy organisations, was launched
in October 2023 with initial financial
sponsorship from AstraZeneca.
Influenza
Fluenz
Tetra/
FluMist
Quadrivalent is a live
quadrivalent vaccine, given as an intranasal
spray. It is the first and only commercial
intranasal flu vaccine that offers a needle-free
alternative to traditional flu vaccinations. This
year marked the 20th anniversary since the
first regulatory approval of
FluMist
/
Fluenz
.
In February 2023, AstraZeneca entered into
an agreement with the US Government’s
Department of Defense via the Medical
Chemical, Biological, Radiological and
Nuclear Defense Consortium to develop a
ribonucleic acid (RNA)-based universal
pandemic influenza vaccine. As part of this
agreement, AstraZeneca will receive up to
approximately $80 million over three years to
develop the vaccine from preclinical research
through a Phase I/II clinical study.
In March 2023, Japan’s Ministry of Health,
Labour and Welfare approved
FluMist
Quadrivalent for children aged two to 18
years. Daiichi Sankyo holds rights to
FluMist
Quadrivalent in Japan.
In October 2023, the FDA accepted for review
the Supplemental Biologics Licence
Application (sBLA) for a self- or caregiver-
administration option for
FluMist
Quadrivalent.
For more information on the
proposed Icosavax acquisition,
see Business development on
page 42.
Working to bring medicines to patients faster
Immunobridging is an approach to a clinical trial
used to infer effectiveness of a new drug or
vaccine candidate through an accepted surrogate
measure for efficacy. Immunobridging trials –
which are well-established for testing vaccines
– can help accelerate access to important new
therapies, without compromising tolerability.
AstraZeneca is helping to lead the way with
innovative immunobridging trials to accelerate
access to next-generation monoclonal antibodies
for COVID-19, where alternatives to running large
efficacy trials are especially important given the
rapid pace of viral evolution and the need to
potentially protect those at highest risk for
severe disease.
27
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / BioPharmaceuticals / Vaccines & Immune Therapies
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.
Therapy Area Review
2023 overview
>
Geographic expansion and pipeline
diversification enabling continued C5 leadership
and sustainability of complement franchise.
>
Advancing innovative therapies for non-
complement mediated diseases with limited
scientific progress or few therapeutic options.
>
Strategic collaborations to strengthen next-
generation research capabilities:
–
Accelerating genomic medicine ambition via
acquisition of Pfizer’s preclinical gene therapy
portfolio;
–
Leveraging AI and new technologies to drive
science-led innovation across drug discovery,
clinical diagnostics and patient engagement.
Total Revenue
$7,764m
up 10% (12% at CER)
2022: $7,053m
2021: $3,110m
1
1
Total Revenue from
Koselugo
is included within Rare Disease for 2023 and 2022 reporting, previously reported within Oncology, and Total
Revenue from
Andexxa
is included within BioPharmaceuticals: CVRM for 2023 and 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 2021.
Rare Disease
After more than two full years as Alexion, AstraZeneca
Rare Disease, our medicines are helping patients in 70
countries. As we expand the reach of our medicines, our
growing pipeline of investigational molecules represents
continued innovation on behalf of rare disease patients.
Our mission remains 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.
Unmet medical need
and world market
400m
people around the world are
living with a rare disease.
>10,000
estimated number of rare
diseases; fewer than 10% have
approved treatment options.
For more
information, see:
Science and
Innovation from
page 34.
Growth and Therapy
Area Leadership
from page 38.
Source: IQVIA.
AstraZeneca focuses on specific segments
within this overall therapy area market.
Therapy area world market
(MAT Q3-23)
$158.4bn
Annual worldwide market value
28
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2023
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:
>
Advancing our leadership in complement
therapies, while also building on our
pioneering legacy of innovation to diversify
our portfolio.
>
Collaborating with partners to leverage
promising new modalities, platforms and
technologies.
>
Enhancing science-led innovation across
the enterprise to accelerate drug
development and delivery.
>
Creating smart and efficient strategies that
bring transformative medicines to new
markets, reaching more patients in a
sustainable and equitable way.
Key marketed products
Product
Disease
Total Revenue
Commentary
Soliris
(eculizumab)
Paroxysmal nocturnal
haemoglobinuria (PNH)
Atypical haemolytic uremic
syndrome (aHUS)
Generalised myasthenia gravis
(gMG)
Neuromyelitis optica spectrum
disorder (NMOSD)
$3,145m,
down 16%
(14% at CER)
Approved in more than 50 countries for the treatment of patients with PNH, including the US,
EU, Japan and China.
Approved in more than 50 countries for the treatment of patients with aHUS, including the
US, EU, Japan and China.
Approved in more than 40 countries for the treatment of patients with gMG who are
anti-acetylcholine receptor antibody-positive (AChR Ab+) including the US, EU, Japan
and China.
Approved in more than 45 countries for the treatment of adult patients with NMOSD who are
anti-aquaporin-4 antibody-positive (AQP4 Ab+), including the US, EU, Japan and China.
Ultomiris
(ravulizumab)
PNH
aHUS
gMG
NMOSD
$2,965m,
up 51%
(52% at CER)
Approved in 60 countries for the treatment of patients with PNH, including the US, EU
and Japan.
Approved in 60 countries for the treatment of patients with aHUS, including the US, EU
and Japan.
Approved in more than 55 countries for the treatment of adult patients with gMG who are
AChR Ab+, including the US, EU and Japan.
Approved in more than 40 countries for the treatment of adult patients with NMOSD who
are AQP4 Ab+, including the EU and Japan.
Strensiq
(asfotase alfa)
Hypophosphatasia
(HPP)
$1,152m,
up 20%
(21% at CER)
Approved in more than 50 countries for the treatment of certain patients with HPP, including
the US, EU, Japan and Canada.
Koselugo
(selumetinib)
Neurofibromatosis type 1 (NF1)
Plexiform neurofibromas (PN)
$331m,
up 59%
(60% at CER)
Approved in more than 55 countries, including the US, EU and Japan.
Kanuma
(sebelipase alfa)
Lysosomal acid lipase deficiency
(LAL-D)
$171m,
up 7%
(8% at CER)
Approved in more than 45 countries, including the US, EU and Japan.
Full details are given in the
Development Pipeline and Patent
Expiries of Key Marketed
Products Supplements on our
website, www.astrazeneca.com/
annualreport2023.
29
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / Rare Disease
2023 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 disease areas,
leveraging AstraZeneca’s established footprint
and expanding our global presence through
Centres of Excellence to reach patients with
high unmet medical need.
2023 performance was underpinned by
consistent, durable and strong business
growth, driven by continued patient demand
in gMG, a progressive, neuromuscular disease
which can impact mobility, speech and
breathing, together with launches in new
markets and successful conversion from
Soliris
to
Ultomiris
across shared indications.
The EU and Japan approved our long-acting
C5 inhibitor
Ultomiris
for the treatment of
adults with NMOSD, a progressive
autoimmune disease that impacts the central
nervous system. With no relapses observed in
the pivotal CHAMPION-NMOSD trial,
Ultomiris
marks a significant advance for
NMOSD patients, offering dosing every eight
weeks and the potential to live relapse-free.
Regulatory reviews for
Ultomiris
for the
treatment of NMOSD are ongoing in additional
countries, including the US.
We have further expanded access to our
first-in-class C5 inhibitor
Soliris
for patients
with rare neurological diseases;
Soliris
has the
potential to improve outcomes and quality of
life for these patients and their families.
Soliris
has been approved in the EU and Japan for
certain paediatric patients with refractory
gMG, and was approved in China for the
treatment of certain adults with gMG and
certain adults with NMOSD.
Additional clinical trials of
Ultomiris
are
ongoing in several disease areas where the
complement pathway is thought to play a role,
including Phase III trials in haematopoietic
stem cell transplant-associated thrombotic
microangiopathy and in cardiac surgery-
associated acute kidney injury. Following
review of high-level results, we made the
decision to discontinue a Phase II/III clinical
trial evaluating
Ultomiris
in adults with
dermatomyositis. No new safety findings were
observed, and the safety data are consistent
with the established safety profile of
Ultomiris
.
Beyond
Soliris
and
Ultomiris
We are developing a broad portfolio of
potential medicines that target various
components of the complement system, with
opportunities to pursue indications across a
wide range of therapeutic areas of interest,
including haematology, nephrology, neurology
and ophthalmology.
We are exploring the ability to treat earlier-line
and broader gMG patient populations in a
Phase III trial with gefurulimab (ALXN1720), a
next-generation C5 inhibitor that is self-
administered subcutaneously.
We are also evaluating potential treatments for
certain rare nephrology conditions, including
ALXN2030, an investigational small interfering
RNA targeting the complement C3 protein.
Factor D inhibition
We have a robust portfolio of investigational
medicines that inhibit the complement protein
Factor D, including small molecule oral assets
with potential broad application across
several disease areas.
Voydeya
(danicopan) received the first-ever
regulatory approval in Japan for the treatment
of a subset of adults with PNH to be used in
combination with C5 inhibitor therapy. The
approval of
Voydeya
, a first-in-class, oral,
Factor D inhibitor, was based on the positive
results from the pivotal ALPHA Phase III trial;
results from the 12-week primary evaluation
period of the trial were published in The
Lancet Haematology.
Voydeya
was developed
as add-on to proven SoC
Ultomiris
or
Soliris
to address the needs of the subset of patients
(approximately 10-20%) with PNH who
experience clinically significant extravascular
haemolysis (EVH) while treated with a C5
inhibitor. Regulatory submissions for
Voydeya
are currently under review with multiple global
health authorities.
Alexion is also evaluating
Voydeya
in an
ongoing Phase II trial as a potential
monotherapy for geographic atrophy, a
chronic and progressive eye disease.
Additional investigational, oral Factor D
inhibitors in clinical development are:
>
Vemircopan (ALXN 2050) in ongoing
Phase II clinical trials in a number of
rare diseases.
>
ALXN2080 in an ongoing Phase I trial.
Expanding beyond complement
We have continued to expand our rare disease
focus with novel assets for non-complement
mediated diseases.
Amyloidosis is a group of complex rare
diseases, with varying types and severities.
Alexion and AstraZeneca are advancing the
industry’s largest amyloidosis pipeline, across
a broad range of modalities, to address the
spectrum of patient need across multiple
disease subtypes.
Amyloid light chain (AL) amyloidosis
In AL amyloidosis, misfolded abnormal
proteins build up and form toxic amyloid
deposits in organs throughout the body
(including the heart and kidneys), causing
significant organ damage and failure that may
ultimately be fatal.
Anselamimab (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 (CARES) Phase III clinical
programme in combination with SoC therapy
in AL amyloidosis. Two parallel Phase III trials
in patients with Mayo Stage IIIa and Stage IIIb
disease, respectively, are ongoing.
Transthyretin amyloidosis (ATTR)
ATTR cardiomyopathy (ATTR-CM) is a
systemic, progressive and fatal condition that
leads to HF and a high rate of fatality within
four years from diagnosis.
Alexion holds an exclusive licence from
Neurimmune to develop and commercialise
ALXN2220 (NI006), an investigational mAb
that specifically targets misfolded
transthyretin. ALXN2220 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.
Positive Phase I results were published in the
New England Journal of Medicine
for
ALXN2220 in the treatment of patients with
ATTR-CM and HF, indicating a favourable
safety profile as well as a substantial
reduction of cardiac amyloid deposition over a
12-month period, and a Phase III trial of
ALXN2220 is underway.
Positive high-level results from the Japan
Phase III trial of acoramidis (ALXN2060) in
adults with ATTR-CM showed consistency to
those in the global BridgeBio ATTRibute-CM
Phase III trial, including survival, cardiac-
related hospitalisations and other measures
of improved functions and quality of life at
30 months. Alexion holds an exclusive
licence from BridgeBio’s subsidiary, Eidos
Therapeutics, Inc., to develop and
commercialise acoramidis in Japan; this
trial in Japan was conducted to support
local registration.
70 countries
Our Rare Disease medicines
are now approved in 70
countries.
30
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Therapy Area Review
Rare Disease
continued
Alexion and AstraZeneca are
uniquely positioned to advance
an industry-leading suite of
next-generation genomic
medicines and platforms, with
the objective to develop innovative
therapies with improved safety
and efficacy profiles.
Thousands of diseases – including
80% of known rare diseases – are
believed to be caused by a genetic
mutation. Genomic medicines are
designed to treat or cure these
diseases through the addition,
alteration or inactivation of the
malfunctioning gene. Supported by
recent strategic acquisitions,
investments and collaborations,
Genomic medicine
Accelerating our ambition to become
a leader in genomic medicine and
deliver potentially transformative
medicines to patients.
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 May 2023,
Koselugo
was approved in China
for paediatric patients with NF1 and PNs.
Wilson disease
We announced the difficult decision to
terminate the ALXN1840 programme in Wilson
disease based on review of results from
Phase II mechanistic trials and discussions
with regulatory authorities.
Rare cancers
Rare cancers account for approximately 27%
of cancer deaths and have a lower five-year
survival rate than most common cancers,
representing a significant unmet medical
need. For example, glioblastoma is a rare
brain cancer that is almost always fatal, with a
five-year overall survival rate of less than 10%
following diagnosis. We are partnering with
colleagues across AstraZeneca to follow the
science and identify opportunities where we
can leverage our expertise and infrastructure
to deliver transformative outcomes for patients.
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 completed a Phase I trial in adult patients
with HPP for efzimfotase alfa (ALXN1850), our
next-generation alkaline phosphatase enzyme
replacement therapy. Efzimfotase alfa is
designed to help reduce the treatment burden
for patients via more convenient dosing and
subcutaneous administration. A Phase III trial
has been initiated to evaluate efzimfotase alfa
in adolescent and adult HPP patients who
have not previously been treated with
Strensiq
.
Find more information about our
genomic medicine ambition on our
website, www.astrazeneca.com/
genomic-medicine.
31
AstraZeneca Annual Report & Form 20-F Information 2023
Therapy Area Review / Oncology
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Therapy Area Review / Rare Disease
31
AstraZeneca Annual Report & Form 20-F Information 2023
A talented team delivering our
strategic priorities sustainably,
supporting scientific innovation
and commercial success.
Science and
Innovation
We are focused on science and innovation,
from discovery through to development and
life-cycle management, and on improving
productivity and outcomes for patients.
We have three therapy area-focused
R&D organisations – Oncology,
BioPharmaceuticals and Rare Disease.
Key topics covered
Summary and performance indicators
Research & Development
Bioethics
Development pipeline overview
Growth and Therapy
Area Leadership
We are focused on realising the potential of
our pipeline and medicines that deliver
sustainable growth. Our Commercial regions
align product strategy and commercial
delivery while our Operations function
manufactures and delivers our medicines.
Key topics covered
Summary and performance indicators
Sales and marketing
Operations
IT and IS resources
Business development
People and
Sustainability
We are committed to our people, ensuring
that AstraZeneca remains a great place to
work. We are also enhancing our pledge to
the planet and, through development of our
health equity strategy, to society.
Key topics covered
Summary and performance indicators
People
Sustainability
>
Access to healthcare
>
Environmental protection
>
Ethics and transparency
Our business is organised to deliver our Growth Through Innovation strategy. Our R&D and Commercial functions
promote accelerated decision making and the launches of new medicines across our therapy areas.
32
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Business Review
5
9
6
7
10
8
4
3
1
2
5
9
6
7
10
8
4
3
1
2
US
20%
Emerging Markets
38%
Europe
35%
Established
Rest of World
7%
10%
6%
2%
-14%
Global reach and presence
Strategic R&D
centres
1
1. Gaithersburg, MD, US
2. Boston, MA, US
3. Cambridge, UK (HQ)
4. Gothenburg, Sweden
5. Shanghai, China
Other R&D centres
with discovery
research labs
1
6.
San Francisco, CA, US
7.
Santa Monica, CA, US
8.
New Haven, CT, US
9.
Macclesfield, UK
10. Amsterdam, Netherlands
We are using our distinctive
scientific capabilities to deliver a
pipeline of life-changing medicines.
Our R&D functions enable the
launches of new medicines across
our therapy areas.
We work to meet our goals through
innovation and commercial
excellence. We have an active
presence in 85 countries and sell our
products in more than 125 countries.
Science and Innovation
13,000+
R&D employees
across our global sites
27
Operations sites
in 16 countries
Growth and Therapy
Area Leadership
Operations sites
1
Total Revenue growth by reporting region
2
People and Sustainability
Our success depends on recruiting,
retaining and developing talented
people while operating in a
responsible and sustainable way
to build a healthy future for people,
society and the planet.
Employees by reporting region
50.1%
of our senior roles are
filled by women
89,900
employees
$45.8bn
Total Revenue
1
Inclusive of Alexion and Neogene.
2
Actual growth percentage.
Europe
US
Emerging Markets
Established Rest of World
33
AstraZeneca Annual Report & Form 20-F Information 2023
Business Review / Global reach and presence
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Discovery and early-stage
development
40%
Late-stage development
60%
Research & Development
2023
2022
2021
6
6
9
6
NM
E Phase II starts/progressions
2023
2022
2021
31
38
27
31
NME and major LCM submissions
2023
2022
2021
24
23
23
24
NME and major LCM Phase III
i
nvestment decisions
2023
2022
2021
25
34
22
25
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). Submission
and approval metrics demonstrate the
advancement of this innovation through
filing and approval in four major markets
(US, EU, China and Japan).
Research & Development
In 2023, we continued to progress our
science and our pipeline in a way that
reflected our ongoing commitment to
sustainability and 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 2023
>
Invested $10.9 billion in our R&D.
>
Three first approvals for new medicines:
Airsupra
,
Truqap
and
Wainua
.
Voydeya
was
approved in January 2024.
>
56 regulatory events and 30 pipeline
progressions.
>
178 pipeline projects, of which 160 are in
the clinical phase of development.
>
More than 2,000 people working in our
Discovery Centre in Cambridge, UK.
>
Strategic R&D centre in China.
>
Published 808 manuscripts with 158 in
‘high-impact’ journals.
>
Invested in new modalities such as cell and
gene therapies, epigenetics and
oligonucleotides.
>
Launched Evinova to accelerate innovation.
Our R&D resources
Our strategic R&D centres
The Discovery Centre in Cambridge, UK, is
located in a bioscience hotspot and is now
occupied by more than 2,000 employees
working in drug discovery and development
across our therapy areas. Gaithersburg is our
largest R&D site in the US and our presence in
Maryland contributes to the state’s economy
while supporting the growth of the life
sciences industry. Supporting the entire
life-cycle of our medicines, our Gothenburg
site facilitates interactions between drug,
device, diagnostics and digital health
companies in a growing life science
ecosystem.
In 2026, we plan to begin the phased
occupation of our new strategic R&D centre
and Global Alexion headquarters in Boston.
The centre is located in Kendall Square, at the
heart of one of the world’s top biotech
research and technology innovation centres.
Our centre in Shanghai recognises the
importance of the China market to our future
growth and our focus on bringing Chinese
innovation to the world.
Investing in R&D
In 2023, R&D expenditure was $10,935 million
(2022: $9,762 million; 2021: $9,736 million),
including Core R&D costs of $10,267 million
(2022: $9,500 million; 2021: $7,987 million). In
addition, we spent $2,530 million on acquiring
product rights (such as through in-licensing)
(2022: $2,051 million; 2021: $27,042 million).
We also invested $212 million on the
implementation of our R&D restructuring
strategy (2022: $111 million; 2021: $223
million). Allocations of spend by early- and
late-stage development are shown in the chart
to the left.
2023 investment increased to support our
late-stage portfolio: in Oncology,
camizestrant, volrustomig and our ADC
portfolio; in BioPharmaceuticals,
Breztri
/
Trixeo
and tozorakimab. The Eccogene
agreement exclusively licensed AZD5004,
with spend on the programme and trial
planning. COVID-19 investment continued
with AZD3152 SUPERNOVA trial for
prophylaxis and treatment options.
We also invested in new modalities and
technologies with acquisitions of Pfizer
genomic assets, Neogene and the Cellectis
cell therapy agreement.
Business Review
continued
34
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Our R&D in 2023
In 2023, we continued to progress our
science, focusing on four key areas of
transformative science. Our scientists
published 808 manuscripts with 158 in
‘high-impact’ peer-reviewed journals, each
with an impact factor exceeding 15 (Thomson
Reuters five-year impact factor score). The
ongoing high impact 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 prevent, treat and in
the future, cure. Selecting the right target
remains the most important decision in
drug discovery.
2023 developments included:
>
Demonstrating the power of combining
genomics with proteomics to discover how
rare changes in genes affect plasma
proteins by using data from more than
50,000 individuals in the UK Biobank. This
study, published in
Nature,
is the largest of
its kind.
>
Together with academic and
biopharmaceutical industry partners, we
launched Together For Change, a 10-year
initiative to close the gap on historical
health care inequities, education and
training by building more diversity in genetic
research, accelerating education pathways,
and improving genomic tools for people of
African ancestry.
>
Publishing in several high-impact journals,
including
Nature
, reflecting our progress
in understanding the role that tumour-
associated myeloid cells with
immunosuppressive properties play in
poor patient outcomes and in treatment
resistance in cancer.
>
Establishing a new world-class functional
genomics laboratory with the Medical
Research Council and the Milner
Therapeutics Institute at the University of
Cambridge to accelerate drug discovery
and further the UK’s global genomics
leadership. Innovative collaborations such
as this allow us to share resources and
expertise to advance science for the
benefit of patients.
>
Working with Ad Scientiam to develop
digital biomarkers to improve symptom
tracking for rare neurological and
neuromuscular diseases.
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, antibodies (e.g. bispecific,
inhaled fragment, cell depleting monoclonal),
cell therapies, genomic medicines, PROTACs,
oligonucleotides and T-cell engagers.
2023 developments included:
>
Advancing novel engineered Treg cell
therapies designed to induce durable
immune tolerance as a potential cure for
serious immune-mediated diseases. This is
being explored in type-1 diabetes (T1D) and
inflammatory bowel disease (IBD) in a new
strategic collaboration with Quell
Therapeutics.
>
Demonstrating the strength of our
proprietary ADC technology by advancing
AZD9592 (epidermal growth factor receptor
(EGFR) cMET bispecific) and AZD5335 (FR
)
into the clinic.
>
Advancing our ambition to bring cell
therapies to solid tumours by disclosing
two novel CAR-Ts – AZD0574 (STEAP2) and
AZD6422 (Claudin 18.2) – designed utilising
our innovative armouring technology to
resist the immunosuppressive tumour
microenvironment, and progressing our first
T-cell receptor therapies – NT-125 (fully
individualised) and NT-175 (TP53) – into the
clinic through Neogene.
>
Accelerating our cell therapy and genomic
medicine ambitions in areas of high unmet
medical need across oncology, immunology
and rare diseases, via a collaboration and
investment agreement with Cellectis to
leverage gene editing technologies and
manufacturing capabilities, via the
proposed acquisition of Gracell, which
includes a clinical-stage autologous
BCMA/CD19 CAR-T therapy targeting
haematologic malignancies and autoimmune
diseases and a proprietary cell therapy
manufacturing platform, and via the
acquisition of a portfolio of preclinical
rare disease gene therapies from Pfizer.
Better predicting clinical success
of our candidate drug molecules
We are adopting a range of cutting-edge
technologies, generating data that are more
relevant to patients than previous methods,
to help us predict the clinical effectiveness
of our candidate drug molecules.
2023 developments included:
>
Collaborating with Verge Genomics to more
efficiently identify and validate therapeutic
targets for rare diseases by leveraging
Verge’s AI-enabled platform trained on
patient tissue samples.
>
Under our collaboration with GRAIL, new
data showed the promise of the GRAIL
methylation assay for detecting residual
disease in blood cancer following
treatment, with potential to inform early
intervention strategies.
>
Collaborating with Qureight to leverage
imaging data analytics and AI models to
better understand how patients with rare
and complex lung diseases could respond
to novel drugs.
>
Pioneering the use of Quantitative
Continuous Scoring (QCS), our novel,
fully automated computational pathology
solution, within our clinical trial portfolio. Early
clinical studies have shown that QCS can
identify the right patient populations suitable
for targeted therapies, such as ADCs.
>
Publishing findings in
Advanced Science
that show our ability to develop novel
microphysiological systems that can
combine multiple cell types and reproduce
the structures of functioning organs to
accurately recreate key aspects of kidney
biology in the lab for the first time.
Pioneering new approaches
to engagement in the clinic
We are pioneering clinical innovation to design
and deliver patient-centric clinical trials that
improve the patient and site team experience
while optimising the use of data, digital and AI
to improve patient outcomes in clinical trials
and beyond.
2023 developments included:
>
Publishing in
Nature Medicine
our 6R
framework for implementing digital health
technology in clinical trials based on
qualitative research. This showed how
technology is enabling a shift from the
traditional physical site-based trial model,
reducing the burden on patients and trial
sites and enabling continuous data
collection while driving more innovative
trial designs.
>
Collaborating with existing UK NHS lung
cancer screening programmes, research
sites and investigators to identify COPD
patients eligible for clinical trials. The
initiative also strengthens our
understanding of factors contributing to
resilience and early disease development.
>
Launching Evinova to bring to market digital
health solutions that are science-based,
evidence-led and human-experience
driven. Evinova will prioritise digital
solutions to optimise clinical trial design
and delivery.
For more information on Quell,
Cellectis, Gracell and Pfizer
deals, see Business development
on page 42.
35
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Science and Innovation
Science and Innovation
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 for 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 2023.
To date, eight projects using hFT have been
approved, and three projects are ongoing.
Animals in research
Animal studies remain a small, but necessary
part of discovering, developing and licensing
life-changing medicines.
AstraZeneca is committed to the 3Rs
(Replacement, Reduction and Refinement of
animals in research) and has programmes to
accelerate the development of new approach
methodologies, which have potential to
reduce and eventually replace the need for
animals. We focus on robust experimental
design and analysis to ensure the fewest
animals are needed to achieve scientific
objectives, with our scientists refining
procedures and applying high standards
of animal care.
Animals were needed for in-house studies
122,768 times in 2023 (100,803 in 2022), and
on our behalf in contract research studies
59,690 times (53,377¹ in 2022). In total, over
97% were rodents or fish, with the majority
being mice (84%). The remainder is made up
of rabbits, camelids, ferrets, dogs, pigs,
non-human primates, chickens and sheep.
Dogs and non-human primates make up less
than 1% of the total. AstraZeneca does not
conduct research using wild-caught non-
human primates or great ape species.
AstraZeneca is committed to transparency
and is signatory to the Concordat on
Openness on Animal Research (UK), the
Openness Agreement on Animal Research
and Teaching (Australia/New Zealand) and is
contributing to the U.S. Animal Research
Openness Initiative.
AstraZeneca has an animal welfare assurance
programme that ensures research conducted
by third parties meets our high standards.
Clinical trial transparency
We believe that transparency enhances the
understanding of how our medicines work,
which 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
for all products – regardless of whether the
results are favourable. This includes
completed trials for marketed medicines,
drugs in development and drugs where
development has been discontinued.
As of 31 December 2023, AstraZeneca had:
>
Shared anonymised individual patient-level
data from 270 unique studies.
>
Responded to 364 requests from external
researchers using our portal, www.vivli.org,
and/or scientific collaborations, for our
clinical data and reports to support
their research.
>
Published 23 Anonymised Clinical
Document Packages.
>
Published 401 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 ethical issues
arising from the study and practice
of biological and medical science.
Our key principles are set out in
our Global Standard.
BV
For more information, see
www.astrazeneca.com/
sustainability/resources.html.
Business Review
continued
Driving innovation in clinical trials
We are pioneering new approaches to clinical
trials. By integrating data science, digital health
technology and AI, we focus on clinical
innovation to transform study design, improve
patient outcomes, accelerate timelines, reduce
burdens on patients and trial teams, and
improve environmental sustainability.
1
2022 data has been restated due to system error causing figures to be overstated.
36
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Phase I
1
Phase II
1
Late-stage
development
1
Life-cycle management
projects
2
36
Oncology
42%
Cardiovascular, Renal
& Metabolism
19%
Respiratory & Immunology
17%
Vaccine & Immune Therapies
3%
Rare Disease
11%
Other
8%
27
Oncology
41%
Cardiovascular, Renal
& Metabolism
26%
Respiratory & Immunology
15%
Vaccine & Immune Therapies
0%
Rare Disease
11%
Other
7%
41
Oncology
56%
Cardiovascular, Renal
& Metabolism
12%
Respiratory & Immunology
12%
Vaccine & Immune Therapies
5%
Rare Disease
15%
Other
0%
74
Oncology
72%
Cardiovascular, Renal
& Metabolism
5%
Respiratory & Immunology
16%
Vaccine & Immune Therapies
0%
Rare Disease
7%
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
2023 was another remarkable year for
pipeline development. We achieved 56
regulatory events, either submissions
or approvals for our medicines in
major markets, including three NME
first approvals.
This performance is backed by a healthy
pipeline of high-potential medicines, with a
total of 30 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 178 projects, of which
160 are in the clinical phase of development.
We have 17 NME projects in pivotal trials or
under regulatory review, compared with 15 at
the end of 2022. Also in 2023, 31 NMEs
Green Labs
Through our Green Labs programme and
My Green Lab accreditation, we are reducing
the environmental impact of our lab operations
by engaging scientists and changing mindsets
to design, develop and deliver new medicines
in the most sustainable way.
For more information, see
Therapy Area Review from
page 16.
progressed to their next phase of development
and 18 projects were discontinued: eight for
poorer than anticipated safety or efficacy
results and 10 as a result of a strategic shift
in the environment or portfolio prioritisation.
Accelerating our pipeline
We are prioritising our investment in specific
programmes, focusing on scientific innovation.
As a result, we received 10 Regulatory
Designations (Breakthrough Therapy, Priority
Review or Fast Track) for eight new medicines
that offer potential to address unmet medical
need in certain diseases. We also secured
Orphan Drug Designation for the development
of six medicines to treat rare diseases.
37
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / Science and Innovation
Sales and marketing
Our growth is delivered by our
Commercial teams, which employed
45,888 people at the end of 2023.
During the year, we had an active
presence in 85 countries and sold
our products in more than 125
countries. 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 2023
>
Total Revenue, comprising Product Sales,
Alliance Revenue and Collaboration
Revenue, increased by 3% (6% at CER) to
$45,811 million. Total Revenue excluding
COVID-19 medicines increased by 13%
(15% at CER) to $45,488 million.
>
In the US, Total Revenue increased by 6%
to $19,077 million and in Europe by 10%
(8% at CER) to $9,611 million.
>
Total Revenue in Emerging Markets
increased by 2% (9% at CER) to
$12,025 million, with an increase in China of
1% (7% at CER) to $5,876 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: 296
employees and third parties were removed
from their roles for breaches of sales and
marketing regulations or codes.
>
Delivered 282 successful market launches.
>
Completed more than 20 major or
strategically important business
development transactions.
Our regions
We strive to meet our growth and profitability
goals through commercial excellence in each
of our global reporting regions.
US
As the tenth-largest prescription-based
pharmaceutical company in the US, we have a
3.6% market share of US pharmaceuticals by
sales value. Total Revenue increased by 6% in
2023 to $19,077 million, driven by the
continued growth of our Oncology medicines
and
Farxiga
. Recent launches in heart failure
and chronic kidney disease drove an increase
in market share.
The US healthcare system is complex.
Multiple payers and intermediaries influence
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.
The Inflation Reduction Act (IRA) of 2022 was
passed to address affordability concerns.
Farxiga
has been selected in the first round
of negotiations under the IRA, with the price
taking effect in 2026, which is the same year
we expect to lose exclusivity, and the impact
is therefore expected to be manageable. We
are evaluating our portfolio to understand
timings associated with the potential inclusion
of other medicines in future negotiations. We
have a diversified product portfolio providing
a broad spectrum of treatments in different
therapy areas, allowing access for patients in
need of our innovative medicines.
Europe
The total European pharmaceutical market
was worth $248 billion in 2023. We are the
seventh-largest prescription-based
pharmaceutical company in Europe (see
market definitions on page 232) with a 3.3%
market share of pharmaceutical sales by
value. Total Revenue was $9,611 million, up
10% (8% at CER).
Growth and Therapy
Area Leadership
Key Performance Indicators
Global Total Revenue by geography
2023
2022
2021
Total
Revenue
$m
Actual
growth
%
CER
growth
%
Total
Revenue
$m
Actual
growth
%
CER
growth
%
Total
Revenue
$m
Actual
growth
%
CER
growth
%
US
19,077
6
6
17,920
47
47
12,228
38
38
Emerging
Markets
12,025
2
9
11,745
(4)
1
12,281
41
36
Europe
9,611
10
8
8,738
9
21
8,050
45
40
Established
Rest of World
5,099
(14)
(8)
5,948
22
40
4,858
37
37
Total
45,811
3
6
44,351
19
25
37,417
41
38
38
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Business Review
continued
Established Rest of World (RoW)
Established RoW comprises Japan, Canada,
Australia and New Zealand. In 2023, Total
Revenue decreased by 14% (8% at CER) to
$5,099 million, with sales in Japan down 10%
(3% at CER) to $3,705 million.
Emerging Markets
With Total Revenue of $12,025 million, up 2%
(9% at CER), AstraZeneca was the second-
largest multinational pharmaceutical
company, as measured by prescription sales,
and the fifth fastest-growing top 10
multinational pharmaceutical company in
Emerging Markets in 2023.
In China, AstraZeneca is the largest
pharmaceutical company in the hospital
sector, as measured by sales value. In 2023,
Total Revenue increased by 1% at actual rate
of exchange (7% at CER) to $5,876 million
(2022: $5,792 million). Roxadustat and
Lokelma
were renewed in the National Reimbursement
Drug List (NRDL) and
Xigduo
,
Tagrisso
(ADAURA),
Lynparza
(PAOLA-1),
Calquence
,
Soliris
and
Koselugo
achieved listing for the
first time. Since the implementation of VBP,
several AstraZeneca brands have been
impacted. In the most recent cycles of VBP
implementation,
Faslodex
and
Plendil
were
included. Additional AstraZeneca brands are
expected to be included in future VBP cycles.
There was some impact on demand in the
second half of the year, mainly with oncology
products, following the government anti-
corruption campaign announced in July 2023.
We were shocked following the Russian
invasion of Ukraine in February 2022 and,
since then, have provided practical support to
ensure the safety, health and wellbeing of our
employees. 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.
Healthcare in low- and middle-
income countries
BV
AstraZeneca is committed to building resilient
and sustainable health systems and improving
equitable access to healthcare. By working
collaboratively, we remove barriers to care
and support the development and delivery of
healthcare, particularly in low- and middle-
income countries. We also adapt our
programmes to suit local health systems and
communities, contributing to health system
capacity and resilience through training,
education, prevention and early detection and
diagnosis.
AstraZeneca in Japan
We are the second-largest prescription-based
pharmaceutical manufacturer with a 6.1% value
market share of Innovative Branded
pharmaceutical sales by value, and have gained
recognition as being a great place to work by the
Great Place to Work Institute.
Pricing and value of our medicines
Increasing demand for healthcare means
increasing pressure on health system
budgets. This shift results in price and
reimbursement restrictions in many markets.
These pressures also result in movement from
primary to speciality care, including rare
diseases, which comprise a growing share
of our portfolio. This pricing pressure, coupled
with higher rates of inflation, means that we
are unable to pass on the full impact of
price increases.
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. We 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 by reducing their cost burden.
Responsible sales and marketing
BV
As outlined in the Code of Ethics on page 49,
we are committed to high ethical standards.
Our compliance professionals 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.
In 2023, we identified four confirmed external
breaches across our Commercial business
(2022: 10). There were 3,758 instances
(instances can involve multiple people) of
employee and third-party non-compliance
with our policies (2022: 2,872). A total of 296
employees and third parties were removed
from their role as a result of a breach
(2022: 147) and 2,968 received warnings
(2022: 3,326). 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 culture
where employees can speak their minds,
with strong first-line oversight (and related
reporting) as well as targeted second-line
monitoring to identify concerns early, and
use learnings to improve our programme.
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.
For more information, see Access
to healthcare from page 47.
For more information on our
pricing policies, see our
Sustainability Report on our
website, www.astrazeneca.com/
sustainability.
39
AstraZeneca Annual Report & Form 20-F Information 2023
Business Review / Growth and Therapy Area Leadership
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Operations
Our manufacturing and supply
function continued to support our
growth and pipeline, demonstrating
excellence in product launches,
quality and supply, with focus on
progressive, sustainable processes.
In 2023, we made strong progress against our
Operations 2025 strategy, focused on scaling
our capabilities to support business growth,
leveraging the benefits of new manufacturing
technology and digital innovation:
>
Delivered 282 launches across major markets.
>
Progressed our investments in
manufacturing technologies, new modalities
and digital innovations.
>
Five sites within the network – Nijmegen,
Cairo, Cikarang, Lomas Verdes and
Cotia – have delivered a 98% reduction
in Scope 1 and Scope 2 GHG emissions
(from 2015 baseline) measured against
science-based targets.
Ensuring quality and compliance
As outlined in our Code of Ethics on page 49,
we are committed to high ethical standards.
As members of the International Federation
of Pharmaceutical Manufacturers and
Associations (IFPMA) and the European
Federation of Pharmaceutical Industries
and Associations (EFPIA), we adhere to
their codes.
Managing our supply chain
During 2023, the world environment continued
to be volatile and uncertain. The geopolitical
events, trade sanctions, regulatory changes
and high inflation are types of challenges
that continue to require rapid operational
responses. We continued to successfully
meet our responsibilities to patients ensuring
supply of our life-saving medicines with
robust supply chain operations and reduced
end-to-end supply lead times. We delivered
increased demand and growth opportunities
with flexibility and agility. As the regulatory
environment evolves post COVID-19,
AstraZeneca continues to deliver industry-
leading quality performance. FDA recall data
from 2020 to 2023 showed that AstraZeneca
had zero recalls during this period.
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 2023, the
programme had 432 suppliers enrolled and
a potential early payment balance of
$112 million. We have a separate programme
in China with 29 suppliers enrolled and a
potential early payment balance of $11 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,
including our third-party risk management
system, we monitor supplier compliance with
our published Global Standard on
Expectations of Third Parties and Code of
Ethics. In 2023, we conducted 47 audits (2022:
42) on high-risk commercial suppliers
(external manufacturing partners) to ensure
appropriate practices and controls. Of these,
50% fully met our expectations while 45% had
improvement plans for minor instances of
non-compliance. There were two audits
indicating a high risk to AstraZeneca and
action has been taken to mitigate these
supply and/or reputational risks. We also use
EcoVadis scores to assess and improve
supplier sustainability performance.
Our Sustainable Procurement Programme
embeds responsible sourcing practices and
promotes ethical behaviour, aiming to achieve
100% ethical spend with suppliers who share
our Values. This fosters their progress on
sustainability, enables us to innovate together
and accelerates supplier diversity. Our
Supplier Diversity Programme maximises
opportunities for small and diverse
businesses to be part of our value chain and
supports their growth. In 2023, we reached
our ambition to have active supplier diversity
programmes in 10 countries outside the US by
2025, with Switzerland, Ireland and Canada
joining Brazil, South Africa, the UK, Australia,
New Zealand, Poland and Sweden.
Global manufacturing capability
Our principal tablet and capsule formulation
and packing sites are in the UK, Sweden,
China, Puerto Rico and the US, with local
supply sites in Egypt, India, Japan and Russia,
and regional supply sites in Brazil, Indonesia,
France and Mexico. 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 active
pharmaceutical ingredients (APIs) is delivered
through the efficient use of external sourcing
that is complemented by internal capabilities.
For biologics, our principal commercial
manufacturing facilities are in the US,
Sweden, the 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 January 2023, we finalised the sale of our
West Chester site in Ohio, US, to National
Resilience, Inc. This enabled 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. We continue to pursue
growth opportunities in China. In March 2023,
we announced plans for a new facility in
Qingdao to manufacture pressurised
metered-dose inhalers (pMDIs) for respiratory
products. In May 2023, AstraZeneca leased a
facility in Rockville, Maryland, US. This facility
will be fitted out for cell therapy manufacture
to support clinical and commercial supply. In
October 2023, we announced our intent to exit
our supply site in Bangalore, India.
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 and we have a
large-scale drug substance facility in Dublin.
At the end of 2023, we employed 15,609
people at 27 Operations sites in 16 countries.
Growth and Therapy Area Leadership
40
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Business Review
continued
IT and IS resources
Demonstrating what is possible when
digital technology meets science.
We are already realising the value of our
investments in AI, machine learning and deep
learning to transform the way we work and
accelerate drug discovery. For example, our
patent optimiser tool helps our chemists
identify the best molecules faster to support
patent protection for our scientific
breakthroughs. Our scientists and AI
engineers use these technologies when
solving chemistry, biology, pathology and
clinical business problems.
Our investments in AI and new solutions also
improve how we launch new medicines and
help transform patient outcomes. We are
deploying these technologies to enhance the
healthcare provider experience, expand our
patient assistance programmes and improve
how patients navigate the health ecosystem
to manage their care. For example, our Rare
Disease therapy area uses data and AI to
identify patients, drive early diagnoses and
accelerate their treatment in areas of high
unmet medical need.
We have created a robust, in-house
programme for generative AI, identifying
eight architecture patterns that cover use
cases across AstraZeneca. This framework,
which will be rolled out in 2024, ensures we
are addressing the ethical, data privacy,
legal and procurement requirements needed
to fully leverage this new technology in a
responsible way.
In Operations, we continue to automate our
manufacturing facilities to drive productivity
improvement through optimising material and
information flow, increasing process yields
and driving right first time quality. For
example, one of our global ‘digital lighthouse’
sites in Wuxi, China has already achieved top
decile performance in quality, speed and
performance through the use of an integrated
Lean Digital approach.
We ensure robust governance via the
enterprise data office, which empowers the
enterprise data council to strengthen the
Group’s data governance. This approach
ensures that our data policies and standards
are streamlined, clear and effective.
Our ongoing commitment to training helps our
teams take full advantage of fast-developing
new technologies to deliver innovation at pace
across the organisation. This includes
partnering with our HR and Learning &
Development teams to upskill the entire
organisation to help maximise the benefits of
generative AI. We also invest in talent at our
Global Technology Innovation Centres in
Guadalajara, Mexico and Chennai, India as we
prepare to scale our business for future
growth.
For information on how we
manage cybersecurity risks, see
Risk Overview from page 54.
Accelerating the delivery of enhanced value
in Global Operations
Innovative technology platforms will transform
the way new medicines are developed,
manufactured and launched. Integrating digital
solutions, data science and AI with continuous
manufacturing platforms will enable shorter
lead times, increased productivity and a
reduced environmental impact.
41
AstraZeneca Annual Report & Form 20-F Information 2023
Business Review / Growth and Therapy Area Leadership
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review
continued
Growth and Therapy Area Leadership
Business development
Our Business development teams
pursue opportunities to access the
best science and stimulate innovation.
Business development is an essential
part of our strategy and portfolio
prioritisation process, contributing to
accelerating delivery of new medicines
targeting unmet medical need.
In business development we assess cutting-
edge technologies that can help enhance the
quality, effectiveness and productivity of our
research and translational capabilities across
our key therapy areas. Our wide array of
partnerships also includes key innovations
across precision medicine and genomics and
digital technologies, to deliver medicines to
patients more efficiently.
We currently have more than 1,000 ongoing
collaborations worldwide and completed
more than 20 major, or strategically important,
business development transactions in 2023,
some of which are summarised below.
In 2023, new deals included:
>
The proposed acquisition of clinical-stage
biopharmaceutical company Icosavax
including their lead vaccine candidate,
IVX-A12. This is a potential first-in-class,
Phase III-ready, combination protein
vaccine that targets both RSV and hMPV,
two leading causes of severe respiratory
infection and hospitalisation. The
acquisition will build on AstraZeneca’s
expertise in RSV, strengthening our
Vaccines & Immune Therapies late-stage
pipeline. AstraZeneca will acquire all of
Icosavax’s outstanding shares for a price of
$15.00 per share in cash at closing, plus a
non-tradeable contingent value right for up
to $5.00 per share in cash, payable upon
achievement of a specified regulatory
milestone and a sales milestone for up
to a total consideration of $1.1 billion, if
successful. The transaction is subject to the
satisfaction of the conditions in the merger
agreement and is expected to close in the
first quarter of 2024.
>
A worldwide licensing transaction
(excluding China) with Eccogene to develop
and commercialise AZD5004, a Phase I oral
once-daily GLP-1RA for the treatment of
obesity, type-2 diabetes and other
cardiometabolic conditions. In China,
Eccogene has the right to co-develop and
co-commercialise alongside AstraZeneca.
Eccogene received an upfront payment of
$185 million and is eligible to receive another
$1.825 billion in future development and
commercial milestones and tiered royalties.
>
A collaboration and proposed equity
investment agreement with Cellectis, a
clinical-stage biotechnology company, to
leverage the Cellectis proprietary gene-
editing technologies and manufacturing
capabilities, to accelerate the development
of next-generation therapeutics in areas of
high unmet medical need. Cellectis
received an initial upfront payment of
$25 million and an additional equity
investment of $80 million, at $5.00 per
share, representing approximately 22%
in Cellectis. A further $140 million equity
investment, at $5.00 per share, is
anticipated to close in early 2024, at which
time AstraZeneca will hold a total equity
stake of approximately 44% in Cellectis.
>
A global collaboration, option and licence
agreement with Quell Therapeutics to
develop multiple engineered Treg cell
therapies that have the potential to be
curative in type-1 diabetes and
inflammatory bowel disease indications.
Quell received an upfront payment of $85
million from AstraZeneca, which comprises
a predominant cash payment and an equity
investment. Quell is also eligible to receive
over $2 billion for further development and
commercialisation milestones, if successful,
plus tiered royalties. In addition, Quell retains
an option to co-develop Treg cell therapies
from the type-1 diabetes programme with
AstraZeneca in the US.
>
AstraZeneca purchasing and licensing
assets of Pfizer’s early-stage rare
disease gene therapy portfolio for a total
consideration of up to $1 billion, plus
tiered royalties on sales. The transaction
will help advance next-generation
genomic medicines with the addition
of complementary pipeline assets and
innovative technologies. This includes
several novel adeno-associated virus
capsids effective for delivering
therapeutic gene cargos for gene
therapy and gene editing.
>
A global exclusive licence agreement
with KYM Biosciences for a Phase I ADC
targeting Claudin 18.2, a positive
therapeutic target in gastric cancer. KYM
Biosciences received an upfront payment
of $63 million and is eligible to receive
additional development and sales-related
milestone payments of up to $1.1 billion
and tiered royalties.
>
The proposed acquisition of Gracell
Biotechnologies Inc., a global clinical-stage
biopharmaceutical company developing
innovative cell therapies for the treatment of
cancer and autoimmune diseases. The
acquisition will further AstraZeneca’s cell
therapy ambition and includes the clinical-
stage autologous BCMA/CD19 CAR-T
therapy targeting haematologic
malignancies and autoimmune diseases and
a proprietary cell therapy manufacturing
platform. AstraZeneca will acquire all of
Gracell’s fully diluted share capital through
a merger for a price of $2.00 per ordinary
share in cash at closing (equivalent to
$10.00 per ADS of Gracell) plus a non-
tradable contingent value right of $0.30 per
ordinary share (equivalent to $1.50 per ADS
of Gracell) in cash payable upon
achievement of a specified regulatory
milestone, representing a combined
transaction value of approximately
$1.2 billion. The transaction is expected
to close in the first quarter of 2024.
42
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
-67.6%
-58.7%
-58.0%
2023
2022
2021
-67.6
%
Ambition Zero Carbon
(Scope 1 and 2)
1
2023
2022
2021
66.4m
44.6m
31.7m
66.4
m
People reached by our access to
healthcare programmes
3
2023
2022
2021
83%
83%
83%
83%
% Speak up culture
2
Business Review / People and Sustainability
2023
2022
2021
76%
77%
78%
76%
Performing as an enterprise team
1
88
%
Building a culture of lifelong learning
and development
2
88%
89%
88%
2023
2022
2021
50.1
%
Being champions of inclusion
and diversit
y
3
50.1%
49.5%
48.1%
2023
2022
2021
People and
Sustainability
Our performance in 2023
BV
>
Fully integrated Alexion employees.
>
Hired 25,660 employees (7,727 internal
and 17,933 external).
>
5,290 of these hires were a direct result of
our employee referral scheme.
>
4,401 employees attended a development
programme (an increase in participation of
9% since 2022).
>
50.1% of our senior middle management
roles are filled by women.
>
Announced three ground-breaking
renewable energy initiatives.
>
Reached 66.4 million people through our
flagship access to healthcare programmes.
>
Published 2023 Partnership for Health
System Sustainability and Resilience
(PHSSR) Summary Report and expanded
the programme in Asia-Pacific.
>
Reduced Scope 1 and 2 GHG emissions by
67.6% from 2015 baseline year.
>
Raised AZ Forest commitment to 200
million trees planted and stewarded by
2030 (from 50 million by 2025).
Summary and
performance indicators
Our success depends on
recruiting, retaining and
developing talented people
while operating in a responsible
and sustainable way.
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.
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.
1
Reduction of Scope 1 and 2 GHG
emissions from 2015 baseline year.
The data for 2021 and 2022 has been
restated due to a site divestment and
change in methodology.
3
Cumulative data including current and
historical programmes: Healthy Heart
Africa, Young Health Programme, Healthy
Lung and Phakamisa.
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.
For more information, see People
from page 44 and Sustainability
from page 46.
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 16% of the employee
population).
43
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
An essential element of our performance
development approach is the provision of
continuous recognition. In 2023, 535,979
rewards were distributed to 87% of employees
through our recognition platform. Notably,
24% of these awards were cross-functional,
highlighting the collaborative and cohesive
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 2023, feedback
mechanisms included 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
(SET), line managers and employees to
ensure full transparency.
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 92% 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.
Advancing a culture of lifelong learning
and development
Central to our success is ensuring our
employees, managers and teams have the
potential to develop and grow. We develop
capabilities through targeted and inclusive
development programmes, from early talent
Performing as an enterprise team
Building diverse talent and critical capabilities
In 2023, we successfully completed the
integration of Alexion employees into
AstraZeneca by:
>
Migrating 4,900 employees from Alexion
to AstraZeneca.
>
Transitioning more than 100 employees
from Alexion to AstraZeneca as a result of
portfolio realignments.
>
Launching more than 200 new learning
pathways on Degreed, our training platform.
>
Giving Alexion employees access to our
CatAlyZe recognition platform – with 30,000
awards issued.
>
Holding more than 200 ‘Go-live’ workshops
with HR in support of employees and
managers.
>
Aligning Alexion employees to AstraZeneca
employment benefits and policies in
20 countries.
Creating a culture of high performance
Since the removal of performance ratings in
2021, our primary focus has shifted towards
coaching, development and the contributions
of our employees. To aid managers in
developing their teams, we deliver 80
performance development workshops each
year. So far these have been attended by over
14,000 line managers. The effectiveness of
our performance approach can be seen in the
completion rate of end-of-year insights. In our
2023 performance development cycle, 96% of
employees and 97% of managers successfully
completed their year-end insights promoting
accountability and goal alignment, and
enabling fair and objective evaluation.
to enterprise leaders. Our digital learning
portal supports a continuous learning mindset
that drives a high-performing and innovative
organisation.
Key 2023 highlights demonstrating our
progress:
>
Invested $33.7 million in the upskilling of our
employees, an average spend of $376 per
employee.
>
2,040,956 total learning hours, an average
of 17.7 hours per employee.
>
69% of employees accessed our global
learning platform.
>
4,401 attendees across our development
experiences (up 9% since 2022).
>
88% of employees believe they have
improved their existing skills, learned new
skills or had a development opportunity.
Our development programmes build
capabilities for the future, helping us to unlock
potential, drive innovation and foster an
inclusive culture, building diverse future
leaders.
Of our 2023 development experience
attendees, 21% were identified as succession
candidates for at least one position and 73%
of our programme participants are women.
The resignation rate for employees who went
through a development programme is 8.3%,
compared to 10% for AstraZeneca overall.
Our programmes are designed to support our
People strategy.
During 2023, AstraZeneca received the
prestigious International Coaching Federation
Distinguished Organisation Impact Award,
together with awards for our early talent and
diversity programmes.
People
Attracting, retaining and developing
talented individuals is key to our
growth and success. We achieve this
by cultivating a great place to work
that values and rewards innovation,
entrepreneurship and outstanding
performance.
Unlocking the potential of our people
Our award-winning coaching strategy helps
employees learn, adapt and grow.
People and Sustainability
Business Review
continued
44
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
everyone feels valued and respected because
of their individual abilities and perspectives.
In 2023, our I&D efforts earned recognition
externally. We were featured in:
>
Forbes World’s Top Companies for Women
>
Forbes World’s Best Employers
>
Financial Times, Diversity Leaders
>
Diversity Inc. Top 50 Companies for
Diversity (US)
>
TIME World’s Best Companies.
Human rights
BV
Our human rights principles support the basic
rights of all people, such as the right to health,
freedom from slavery, and privacy. Our Code
of Ethics, Human Rights Statement and
Expectations of Third Parties commit us to
respecting and promoting international human
rights, both within our own operations but also
our wider spheres of influence. This includes
working only with third parties who share our
approach. 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 value chains, or any part of
our business. Our human rights policies are
designed to ensure we consider the impact of
our operations including our interactions with
third parties on human rights. The output
of our work to mitigate human rights risks is
detailed in our Modern Slavery Statement
which is published annually. We provide
assurance annually to the Audit Committee.
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 biennial
Human Rights survey, the most recent of
which was carried out in 2022, 45% of our
countries have a relationship with trade unions.
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.
Women comprise 53.9% (approximately
47,800) of our global workforce. At the end
of 2023, there were six women on our Board
(46.2% of the total). Following the retirement
of Katarina Ageborg in January 2023 and the
appointment of Sharon Barr as Executive
Vice-President, BioPharmaceuticals R&D in
August 2023, five out of 12 SET members
(41.7%) were women at the end of the year.
Mene Pangalos will be retiring in early 2024.
Our employees represent a diverse range of
backgrounds, coming from 179 countries. In
2023, to promote inclusion and diversity, we
have established the Global Inclusion and
Diversity Ambassador Group, which is led by
senior leaders and sponsored by our CEO.
This group reflects the diversity of our global
workforce and organisational structure. They
are responsible for collaborating with local
leaders to customise approaches that address
local needs and drive progress towards our
global inclusion and diversity commitments.
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
data available, 36.7% of our workforce identify
as an ethnic minority (2022: 35.7%). In 2023,
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 (the
Code) 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
Of those countries that do not 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.
We set and monitor our safety and health
targets to support our workforce and aim to
achieve the highest performance standards.
Our work-related injury rate reduced by 59.6%
from the 2015 baseline. AstraZeneca
responded to an increasing collision trend in
2022 by developing a safe driving campaign
and training endorsed by the Commercial
SHE Executive Committee. This campaign
continued into 2023 and has shown a positive
impact on collisions per million kilometres
(CPMK). In 2023, the CPMK was 1.96,
exceeding the 2.5 target for the year and on
course to meet or exceed the target for 2025
of 1.90.
For more information on our
standards and Code of Ethics and
for our full statement detailing
how we work to mitigate the risks
of modern slavery, see our
website, www.astrazeneca.com/
sustainability/resources.html.
45
AstraZeneca Annual Report & Form 20-F Information 2023
Business Review / People and Sustainability
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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 Purpose 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
helping tackle the biggest challenges of our
time, including climate change, biodiversity
loss and global health equity. These challenges
are interdependent and 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 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 as required.
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 2023, we were recognised for our
efforts across all our sustainability priorities,
including:
>
AstraZeneca received a rating of AA (on a
scale of AAA-CCC) in the MSCI ESG
Ratings assessment.
>
Included in Dow Jones Sustainability Index
Top 20% of 2,500 of the world’s largest
companies and in Europe Index.
>
Listed in Financial Times European Climate
Leaders for the third consecutive year.
>
Included in Forbes World’s Top Companies
for Women.
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.
Sustainability strategy
We assess the relevance of our material focus areas through continuous dialogue with our
stakeholders and horizon-scanning for developments. Since 2021, our nine priority focus areas
have been 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.
BV
Driving emissions reductions with clean heat
and renewable energy
The research, development and production of
medicines is an energy intensive process. We are
decarbonising our operations as we transition to net
zero: in the UK and in the US, we will use renewable
natural gas, or biomethane, to supply clean heat to
our sites.
For more information, see:
Our Sustainability Report on
www.astrazeneca.com/
sustainability/resources.html.
The letter of assurance in the
Annual Sustainability Report
section on
www.astrazeneca.com/
sustainability/resources.html.
Board Sustainability Committee
Report on page 93.
Sustainability supplementary
information on page 230.
Business Review
continued
46
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
As we expand the geographies where our rare
disease medicines are available, we continue
to build relationships with patient communities
early in our development programmes to
better understand their needs. We focus on:
increasing clinical trial diversity; developing
improved data collection processes to enhance
our understanding of how rare diseases affect
specific patient populations; improving access
to diagnostic tools; and supporting efforts to
improve the experience of those participating
in our clinical trials. We also supply medicines
for rare diseases through patient support and
access programmes.
Improving access to digital solutions
Through our A.Catalyst Network innovative
partnerships, we are harnessing the latest
technologies to improve patient outcomes,
make healthcare more accessible and
personalised, and drive efficiencies in health
systems. As participants in EDISON Alliance’s
One Billion Lives Challenge, we aim to screen
five million patients for lung cancer risk by
2025, using AI-based technology in
collaboration with Qure.ai.
Affordability and pricing
We are committed to addressing barriers to
access and affordability. Industry, policymakers
and payers need to work together to identify
solutions. Through collaborations, partnerships
and stakeholder coalitions, we are working to
ensure essential and innovative medicines
become more widely available.
Health system resilience
Sustainable healthcare for all requires stronger
health systems to deliver an infrastructure
designed to be resilient, inclusive and
responsive to the needs of the population it
serves. We are investing in ground-breaking
global collaborations, driving multisectoral
policy and action, empowering local
partnerships and fast-tracking innovation to
expand access to higher quality healthcare.
Partnership for Health System Sustainability
and Resilience (PHSSR)
The PHSSR is a non-profit, multisector, global
collaboration with a unified goal of building
more sustainable and resilient health systems,
active in more than 30 countries. PHSSR has
commissioned over 20 research reports to
date, providing independent, evidence-based
recommendations to strengthen health
systems and facilitate cross-border best-
practice sharing, working with national
experts with first-hand experience.
In 2023, PHSSR published its second
Summary Report with insights from
18 countries, and launched research on seven
new Asia-Pacific countries. PHSSR also
established an EU expert advisory group, to
support EU policymakers in improving policies
on prevention and early detection of NCDs. By
fostering joint learning and action through
high-level stakeholder engagement at over
Access to healthcare
BV
We want to secure a future where all people
have access to affordable, sustainable and
innovative healthcare, throughout 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
health system infrastructure and resilience
through global and local partnerships, across
all our focus areas.
Achievements in 2023
>
We reached more than 66 million people
(cumulatively) through access to healthcare
programmes.
>
Healthy Heart Africa trained more than
11,300 healthcare workers (cumulatively)
and conducted more than 47 million
screenings (cumulatively) for elevated blood
pressure.
>
Young Health Programme directly reached
more than 15 million young people
(cumulatively) and trained over 580,000 as
Peer Educators since launch in 2010 in
more than 40 countries.
>
We reached more than 13 million people
(cumulatively) through our patient access
programmes, enabling sustainable access
to AstraZeneca medicines in around 25
countries, most of which were low- and
middle-income countries.
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, from
idea inception to patient care. Our approach is
patient-centric, data-driven and science-led.
We are improving the diversity of clinical trial
participants with strong data foundations,
tools and standards for aligning and tracking
progress, and external partnerships. We work
with industry groups, regulatory agencies, and
local community groups to shape clinical trial
diversity policies for the future, while
delivering for patients today.
Rare diseases
More than 10,000 rare diseases are estimated
to exist today, but fewer than 10% have
approved treatment options. Rare disease
community members face many unique
challenges in pursuing equitable access to
healthcare, such as significant delays in
diagnosis, greater chances of hospitalisation
from preventable conditions, scheduling and
travelling to appointments, and accessing
available treatments.
We believe people with rare diseases deserve
the same attention and investment to find
and access therapies as anyone else.
40 global, regional and national platforms, the
PHSSR catalysed efforts to strengthen health
systems around the world.
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. In 2023, the
programme launched in eight of 10 planned
grant countries, in addition to the existing
nine countries of operation.
Young Health Programme
The multi award-winning Young Health
Programme (YHP) aims to empower young
people to make more informed choices about
their health and catalyse a global, youth-led
advocacy movement, supported by
community programmes and research. It
helps to develop young leaders and is focused
on vulnerable and under-resourced
communities in 40 countries. Through
partnerships with more than 60 non-profit
partners around the world including UNICEF,
the YHP promotes health literacy and policy
action. In 2023, the YHP won the Better
Society Award for Partnership with an
International Charity together with UNICEF.
Community investment
Community investment at AstraZeneca is built
upon the principles of equity, transparency
and partnership, working together to build
healthy and resilient communities. In 2023,
we contributed $115.4 million in financial and
non-financial donations, (including product
donations), to more than 810 non-profit
partners across 76 countries. We also
donated $4.7 billion (2022: $3.1 billion) of
medicines through patient assistance
programmes around the world, the largest
of which is our AZ&Me Prescription Savings
Program in the US.
Product donation programmes
In 2023, we gave $7.5 million (2022:
$12.1 million) in product donations for disaster,
humanitarian relief and public health need.
We are committed to working with all health
system stakeholders to enable the supply of
medicine to patients and to support the
resilience and recovery of healthcare facilities
in vulnerable communities.
For more information, see:
Pricing and value of our
medicines on page 39.
Rare Disease from page 28.
Qure.ai case study on page 19.
47
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Business Review / People and Sustainability
Longer-term targets:
>
50% reduction in total Scope 3 GHG
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
propellant across our portfolio by 2030.
>
Plant and maintain 200 million trees by
2030, through our global AZ Forest initiative.
Our goal of becoming carbon negative across
our value chain from 2030 recognises that
total emissions from value chain partners are
significantly larger than from our own direct
operations. We are embedding net-zero
assessments into our existing and future
product portfolios, engaging our suppliers
to reduce their direct emissions through to
2030 and identifying carbon removal options.
Product sustainability
People and the planet will benefit from those
medicines that have the smallest possible
environmental impact, yet maintain the highest
efficacy and safety standards. As
technologies and healthcare systems evolve,
so should solutions to reduce the use of
energy, water and material, as well as waste
and pollution generated from designing,
manufacturing and delivering medicines to
patients. We are using a data-driven approach
through our Life Cycle Assessment (LCA) and
Product Sustainability Index programmes to
address the largest contributor to our Scope 3
emissions: our product value chains.
In 2023, we continued to focus on the
next-generation propellant transition for pMDI
products in our respiratory portfolio. The new
propellant HFO-1234ze(E) has up to 99.9%
lower GWP than propellants currently used in
respiratory medicines. As essential, life-saving
medicines for millions of respiratory patients
globally, they are strategically important to our
business and a key product-related element
of Ambition Zero Carbon. In 2023, project
milestones achieved included further Phase III
investment decisions, a harmonised, global
development programme, readouts of pivotal
studies and initiation of key registration studies.
As part of our commitment to drive thought
leadership and innovation to manage
pharmaceuticals in the environment, we lead
the Innovative Health Initiative PREMIER
project, a partnership between the European
Commission and the EFPIA. We are
developing tools to identify potential
environmental risks of APIs and make data
more accessible to all stakeholders. In 2023,
PREMIER published an evidence-led
prioritisation of environmental data generation,
aiming to reduce reliance on fish studies.
Natural resources
The conservation and sustainable use of
natural resources and the protection and
restoration of ecosystems are vital for a
healthy future and to tackle the environmental
drivers of disease. We are investing in nature
to benefit planetary and societal health, while
working towards sustainable resource use,
water security and halting and reversing
biodiversity loss.
Our targets aim to decouple water use and
waste generation from business growth and
to minimise environmental impacts from our
supply chain and operations, supported by
efficiency projects, collaboration with suppliers
on responsible sourcing, designing out waste
and pollution, and landscape restoration
targets via AZ Forest.
Circular economy
Adopting circular business approaches and
implementing efficient processes to develop
and produce our medicines are key to reducing
natural resources used in our value chains.
We are leveraging our experience with Lean
manufacturing and embedding best practices,
working with organisations such as My Green
Lab. In 2023, we introduced a new internal
Site Waste Circularity Rate metric to drive
improvements through increased recycling
and the external reuse or repurposing of
waste materials across all our sites.
Water stewardship
We continue to work with key stakeholders,
including our ongoing collaboration with the
World Wide Fund for Nature Sweden. Starting
in 2024, we will invest $5 million per year to
fund nature restoration and water stewardship
projects in the communities where we operate.
AZ Forest
In 2023, we announced an increase in our
investment to $400 million in our global AZ
Forest programme, to plant 200 million trees
by 2030 and ensure their long-term survival.
This includes new or expanded projects in
Brazil, India, Vietnam, Ghana, Rwanda and
Kenya, which will contribute to our climate
action, promote the restoration of biodiversity
and natural habitats, and build community
resilience. The programme is expected to
restore more than 100,000 hectares
worldwide, positively impacting an estimated
80,000 livelihoods and local communities. We
are led by guiding principles that provide a
baseline for project design and a consistent
approach that follows the science. We do not
purchase land for reforestation or own the
trees, but have the rights to carbon
certificates generated by some projects. In
2023, we planted over nine million trees using
locally-appropriate species.
Sustainability
continued
BV
Environmental protection
BV
A healthy environment is critical for human
health and health system resilience, already
impacted by climate change and the
degradation of ecosystems. Science-led
climate action and investments in nature and
biodiversity are vital to improving health
outcomes and proactively managing our
environmental impact.
Through our Natural Resource Efficiency Fund,
we have invested approximately $175 million in
environmental efficiency innovations since
2015. This, together with other central capital
investments, has seen a further $36.6 million
spent in 2023, including 72 new projects.
Achievements in 2023
>
67.6% reduction in Scope 1 and 2 GHG
emissions since 2015.
>
17.5% reduction in energy consumption
since 2015.
>
19.9 million trees planted by AZ Forest
since 2020.
>
19.5% reduction in water usage and 13.2%
reduction in our waste since 2015.
>
99% safe API discharges for AstraZeneca
sites and 94% safe API discharges for
globally managed first-tier supplier sites.
>
97.6% of paper-based product packaging
materials used in 2022 (data collated in
2023) confirmed as supplied from
sustainable sources.
Ambition Zero Carbon
Approximately 5% of global GHG emissions
come from the healthcare sector. We are
accelerating the delivery of net-zero
healthcare and our own progress towards net
zero, as one of the first companies to have our
Scope 1, 2 and 3 targets verified under the
Science-Based Targets initiative Net-Zero
Corporate Standard.
Near-term targets:
>
98% absolute reduction in Scope 1 and 2
GHG emissions by 2026 from 2015 baseline,
maximising transition to electric vehicles in
our road fleet (EV100) by end of 2025 and
using 100% renewable energy (RE100) for
electricity and heat by end of 2025.
>
Reduce energy consumption by 10% and
double energy productivity (EP100) from
2015 to 2025.
>
Launch first next-generation respiratory
inhalers with near-zero climate impact
propellant from 2025.
>
95% of our suppliers by spend covering
purchased goods and services and capital
goods, and 50% of our suppliers by spend
covering upstream transportation and
distribution and business travel, will have
science-based targets (SBTs) by 2025.
People and Sustainability
Business Review
continued
48
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
The Code includes high-level Global Policies
complemented by Global Standards. We also
have additional global, local and functional
requirements to support employees in their
daily work.
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 2023, 470 reports of alleged compliance
breaches or other ethical concerns were
made through AZ Ethics, including
anonymous reports that could be considered
whistleblowing (2022: 490).
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.
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 our medicines have
on patients. We need to ensure that we retain
and increase trust across all our stakeholder
groups in order to continue delivering
life-changing medicines to patients.
Achievements in 2023
>
50.1% of senior middle management roles
are held by women.
>
We have 10 countries with supplier diversity
programmes outside the US.
>
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 2023, 100% of active employees completed
annual training on the Code.
Non-Financial and Sustainability
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, and amended by The
Companies (Strategic Report) (Climate-
related Financial Disclosure) Regulations
2022, AstraZeneca is required to include, in
its Strategic Report, a non‑financial and
sustainability statement containing certain
information. As required by these sections,
the Strategic Report contains our
Climate-related Financial Disclosures (as
defined in section 414CB(2A) – see pages 51
to 53), as well as 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 39
>
Code of Ethics, see page 49
>
Access to healthcare, see page 47
>
Environmental protection, see page 48
>
People, see page 44
>
Human rights, see page 45.
In relation to the areas listed above,
information on the Group’s Principal Risks
is included in Risk Overview (see from
page 54) and information on the
non‑financial key performance indicators
relevant to our business is included in
Key Performance Indicators (see from
page 12). A description of our business
model is contained in Business Model and
Life-cycle of a medicine (see from page 10).
For more information, see:
Our Sustainability Report on
www.astrazeneca.com/
sustainability/resources.html.
Our Code, Global Policies and
Position Statements on our
website, www.astrazeneca.com/
sustainability/resources.html.
Champions of inclusion and
diversity, and Workforce safety
and health, on page 45.
My Green Lab case study on
page 37.
Ethical use of AI
Our Enterprise AI Governance team
aims to ensure that AstraZeneca can
maximise the benefits of AI technologies
in a safe, responsible and ethical way.
Business Review / People and Sustainability
Corporate Governance
Additional Information
Financial Statements
Strategic Report
49
AstraZeneca Annual Report & Form 20-F Information 2023
Assessment
The EU Taxonomy (Regulation (EU) 2020/852)
and associated Delegated Acts represent
an evolving reporting framework. 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 criteria, and is carried out
in compliance with specified minimum social
safeguards. In 2023, the EU adopted the new
Environmental Delegated Act, which includes
pharmaceutical activities.
Information prepared under this disclosure
is consistent with our Consolidated Financial
Statements for the year ended 31 December
2023, and comparatives, prepared under the
basis of preparation detailed in our Group
Accounting Policies on page 152.
Capital expenditure (Capex) was assessed for
Taxonomy-eligibility on a project basis.
Operating expenditures (Opex) 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
2023. Double-counting was avoided by
reconciliation to underlying financial records.
Interpretation of the EU Taxonomy is required
and company-specific assumptions are
required to fulfil the reporting requirements.
Since no activity was assessed as fully
Taxonomy-aligned, we have set out our
required disclosures in a simplified format
below as the prescribed table formats relating
to alignment disclosures are not applicable.
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 148.
The Group’s revenues are wholly derived from
the business of pharmaceuticals, which we
accordingly consider in total for Taxonomy-
eligibility under the activity ‘Manufacture of
medicinal products’. Consequently, our
Taxonomy-eligible Revenue KPI for the
year ended 31 December 2023 is 100%
(2022: 0%). Last year, our business activity
of pharmaceuticals was not covered by the
EU Taxonomy.
Capital expenditure
The Taxonomy-eligible 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. Purchase of
intellectual property, marketing and
distribution rights over medicinal products
is considered in total for Taxonomy-
eligibility under the activity ‘Manufacture of
medicinal products’.
>
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 169), 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 170), and
the total of the ‘Additions – separately
acquired’ and ‘Additions through business
combinations’ movement types as detailed
in Note 10 – Intangible assets (page 172).
The Group’s Taxonomy-eligible Capex KPI for
the year ended 31 December 2023 is 83%
(2022: 14%).
Operating expenditure
The Taxonomy-eligible 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. R&D expenses are
considered in total for Taxonomy-eligibility
under the activity ‘Manufacture of medicinal
products’.
>
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 2023 is 99%
(2022: 2%).
Taxonomy eligibility and alignment
Revenue
Capex
Opex
2023
2022
2023
2022
2023
2022
$m
%
$m
%
$m
%
$m
%
$m
%
$m
%
Taxonomy-aligned activities
No activities were assessed as
Taxonomy-aligned
Taxonomy-eligible but not Taxonomy-
aligned
1.2 Manufacture of medicinal products
45,811
100
n/a
n/a
65
n/a
96
n/a
6.5 Transport by motorbikes, passenger
cars and light commercial vehicles
4
2
–
–
7.1 Construction of new buildings
6
8
–
–
7.2 Renovation of existing buildings
4,918
2
3,519
2
11,380
–
10,076
–
7.7 Acquisition and ownership of
buildings
5
–
3
2
8.1 Data processing, hosting and
related activities
1
1
–
–
8.2 Computer programming,
consultancy and related activities
–
1
–
–
50
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
EU Taxonomy Disclosure
BV
Our commitment to climate change
We support the Task Force on Climate-related
Financial Disclosures (TCFD) framework. As
such, we have made disclosures within the
Annual Report consistent with the four TCFD
recommendations, the 11 recommended
disclosures and all sector guidance, and in
compliance with the requirements of Listing
Rule 9.8.6R(8) of the UK Financial Conduct
Authority (FCA) and in compliance with
sections 414CA and 414CB of the Companies
Act 2006 and amended by The Companies
(Strategic Report) (Climate-related Financial
Disclosure) Regulations 2022. Pages 51 to 53
set out the required disclosures in more detail
and explain where further information can
be found
–
for example methodology and
results
–
including documents outside this
Annual Report.
We have applied the TCFD framework since
2020, initially focusing on the most significant
risks and opportunities, with plans to include
medium- and low-risk areas indicated by
section. All our business operations worldwide
are in scope unless otherwise stated.
To future-proof our business and build
resilience to ensure long-term financial
sustainability and the continued supply of
medicines to patients, we have screened
physical risks from the impacts of climate
change across our operations and strategic
suppliers. These risks are defined by the cost
of interruption and strategic importance, and
our assessment includes climate change-
related hazards arising under three different
scenarios by 2030, 2050 and 2100, including a
worst-case scenario (SSP5-RCP 8.5). We
prioritised screening results according to
business criticality, to identify material sites
for deep dive assessments during 2021 and
2023. We also continued to engage with
strategic partners with a critical role in patient
supply to understand their exposure to
climate-related hazards and their resilience to
climate change.
For medicines, transition risks and
opportunities are screened by using LCA and
carbon intensity data. In 2023, we have
continued to focus on pMDIs in our respiratory
portfolio due to their relative high carbon
intensity. We aim to launch our first next-
generation pMDI from 2025 and complete the
transition to a near-zero Global Warming
Potential (GWP) propellant across our
portfolio by 2030, as part of our Ambition Zero
Carbon strategy to accelerate business
decarbonisation while ensuring people can
access essential medicines.
Mitigation measures are often already in
place to address climate-related risks and
opportunities, including transition to a
low-carbon economy and net-zero healthcare
provision. Physical and transitional climate-
related risks are included within a specific
risk in the Group’s risk landscape ‘Failure to
meet regulatory or ethical expectations on
environmental impact, including climate
change’.
Climate risk summarised
Risk or
opportunity
Time horizon
Short/Mid/Long
Potential impact
How it is managed
Physical
risks
Disruption to own and third-party supplier sites:
>
Increased extreme heat events and cooling
needs impacting compliance with Good
Manufacturing Practice.
>
Heavy rainfall causing local flooding and/or
landslides.
>
High winds damaging structures.
>
Lack of a consistent high-quality water supply.
Identified risks are embedded within planning of nature-based or technical
mitigations, integrated into site master plans and local business continuity
plans.
Climate risks are mitigated through supply chain design and product-level
business continuity management.
Appropriate water management strategies are being established across our
manufacturing sites and the broader supply chain.
Transition
risks and
opportunities
Some healthcare providers are transitioning to
net-zero healthcare systems to meet their own
climate targets, which may alter the demand for
medicinal products based on their carbon footprint.
SBTs and strategy for net-zero emissions by 2045, including transition to
near-zero GWP propellant across our respiratory portfolio from 2025 to 2030.
New EU Fluorinated-gas (F-gas) Regulation and
per- and polyfluoroalkyl substances (PFAS)
restriction proposal presented to the European
Chemicals Agency (ECHA) and potential impact
on our transition to next-generation, near-zero
GWP propellant HFO-1234 ze(E).
We believe the necessary safeguards and sufficient quota will remain
available within the forthcoming EU F-gas Regulation to transition our pMDI
portfolio safely to next-generation, near-zero GWP propellant by 2030.
In response to the ECHA public consultation, we have recommended that
HFO-1234 ze(E) should be excluded from the proposed universal ban to
ensure patient access to essential life-saving pMDI medicines is maintained.
Carbon pricing uncertainty over future
environmental taxation and regulation.
Delivery of the Ambition Zero Carbon strategy mitigates exposure to future
value chain pricing and taxation.
Supply/demand of renewable energy requires
higher investment. Changes in geopolitics can
lead to loss of access.
Investment of approximately $175 million in our natural resource reduction
programme since 2015, including $25.5 million in 2023, and collaborations
with key partners to scale renewable energy sources and secure supply
chain access.
Change in raw material or sourcing costs, as well
as costs related to the transition to low-carbon
technologies.
Ongoing engagement with strategic supply chain partners on their transition
plans to a low-carbon economy and possible impacts on cost.
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
For more information, see:
Our 2023 TCFD Statement on our
website, www.astrazeneca.com/
annualreport2023.
Our CDP response, based on
2023 performance on our
approach to climate change, on
www.cdp.net/en.
Our Sustainability Report: which
describes our overall approach
and progress, on our website,
www.astrazeneca.com/
sustainability/resources.html.
The Risk Supplement on
our website,
www.astrazeneca.com/
annualreport2023.
Our strategy and GHG emissions
reduction targets and progress,
from page 12, and on pages 43
and 48.
51
AstraZeneca Annual Report & Form 20-F Information 2023
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.
The Board Sustainability Committee monitors the execution of our
sustainability strategy, including climate-related matters.
The Board Audit Committee is responsible for overseeing sustainability-
related disclosures that are linked to the Company’s Financial Statements.
pages 2 to 3
pages 46, 93 and 96
page 6
Describe management’s role in assessing
and managing climate-related risks and
opportunities.
Our CEO’s responsibilities to the Board include the development and
performance of our climate strategy and related risks and opportunities.
Our EVP, Global Operations, IT & Chief Sustainability Officer, is responsible
for the overall sustainability strategy and its execution, including Ambition
Zero Carbon and alignment of business priorities with climate risks and
opportunities.
The Ambition Zero Carbon Governance Group is accountable for the delivery
of our Ambition Zero Carbon strategy.
The TCFD Steering Group coordinates management of physical and
transitional climate risks and opportunities.
pages 2 to 3
page 46
pages 6 and 16
Strategy
Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium, and long term.
Physical risks from climate change primarily relate to disruption or delays to
manufacturing and/or distribution, including cold chain logistics, increased
insurance premiums, reputational damage, and other resulting
consequences – see table on page 51.
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 51.
pages 5 to 10
pages 16 to 19
Describe the impact of climate-related
risks and opportunities on the
organisation’s businesses, strategy,
and financial planning.
Taking into account climate-related risks and opportunities, we are taking
enterprise-wide action to reduce GHG emissions from our global operations
and fleet by 98% by 2026 (from a 2015 baseline) with a $1 billion spend
budgeted from 2020. We aim to halve our entire value chain footprint (Scope
3) by 2030, on a pathway to achieve a 90% reduction in emissions by 2045
(from a 2019 baseline). In 2023, we increased our investment in nature-based
solutions to $400 million through AZ Forest, to mitigate our residual
emissions and reach our net-zero SBTs to prepare for a low-carbon
economy, and contribute to community and nature resilience with broader
co-benefits. Our transition plan to net zero is disclosed in our Sustainability
Report as a response to FCA requirement 2021/61 9.8.6F.
pages 5 to 10
pages 16 to 21
Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C
or lower scenario.
We build resilience by addressing the physical and transitional risks and
opportunities across the value chain.
We have used three different climate-related scenarios (RCP 2.6, 4.5 and
8.5). We are building resilience against a worst-case scenario (RCP 8.5) 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 currently 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, 4 and 6
Key
TCFD Statement
Annual Report
Sustainability Report
52
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
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
Risk management
Describe the organisation’s processes
for identifying and assessing climate-
related risks.
Integrated climate assessments inform the enterprise of specific risks and
opportunities posed by climate change and/or transition to a low-carbon
economy. Each business area is responsible for managing identified climate
risks related to its area.
pages 1 to 3 and 5 to 7
pages 54, 55 and 96
pages 16 to 23
Describe the organisation’s processes
for managing climate-related risks.
We have screened and assessed physical risks from climate change across
our operations and strategic suppliers to understand our exposure in the
value chain at a product level.
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.
To understand the financial consequences of transition to a low-carbon
economy, risks and opportunities are assessed both at enterprise and
product levels for examples of medicines where LCA data is available.
Our Ambition Zero Carbon strategy is reducing our GHG footprint, mitigating
some transition risks, and protecting revenue.
pages 1 to 3 and 5 to 10
pages 48, 54, 55 and 96
pages 16 to 23
Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
Identified risks at corporate level are cascaded throughout the organisation.
Business unit management have responsibility for risks in their area. Risks
identified at local level are managed locally and escalated to functional and/
or enterprise level if significant, in line with our established enterprise risk
management framework.
pages 1 to 3 and 5 to 7
pages 54, 55 and 96
pages 16 to 23
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.
Scope 1 and 2 GHG emissions are reported in line with World Resources
Institute GHG Protocol guidance and disclosed in our Sustainability Report
on our website, www.astrazeneca.com/sustainability/resources.html.
page 11
pages 48 and 230
pages 17 to 19 and 32 to 34
Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 GHG emissions
and the related risks.
GHG footprint and progress towards all targets are reported in line with
World Resources Institute GHG Protocol guidance and disclosed in our
Sustainability Report on our website, www.astrazeneca.com/sustainability/
resources.html.
pages 48 and 230
pages 17 to 19 and 32
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 Report show progress on
decarbonisation and reduced exposure to transition risks, as well as showing
future opportunities.
Achieve 98% absolute reduction in Scope 1 and Scope 2 GHG emissions by
2026 from a 2015 baseline.
pages 1 to 2
page 48
pages 17 to 19 and 32
53
AstraZeneca Annual Report & Form 20-F Information 2023
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 the 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 56 and 57 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
Summary Statement from page 51
summarises the work undertaken to date to
understand the potential impact of climate
change on our business and outlines future
areas of management focus.
Cybersecurity risk
Our approach to identifying, assessing and
managing material cybersecurity risks
(including those that result from the use of
third parties in business processes and data
management) is integrated within our
Group-wide approach to managing risk.
Failure in information technology or
cybersecurity has been identified as a
Principal Risk. Mitigations are in place to
manage these risks, and these are monitored,
and their effectiveness regularly reported, for
example, in KPI dashboards provided
to management and the Audit Committee.
Incidents are managed and reported using
the cybersecurity incident management
framework which in turn is connected to
the Group’s crisis management framework.
Cybersecurity risks are overseen by the Audit
Committee, which performs an in-depth
review annually. Its reviews are supported by
senior management, the VP, Group Internal
Audit and other assurance or providers as
required. Cybersecurity risks (including
previous incidents) have not materially
affected our business strategy, results of
operations or financial condition.
“Our Principal Risks
are those risks that are
most likely to have a
material impact on our
business.”
54
AstraZeneca Annual Report & Form 20-F Information 2023
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 2026 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 from
pages 56 to 57.
>
Principal Risks
: Pricing, affordability,
access and competitive pressures; failures
or delays in the quality or 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 2025.
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,
leveraging its cost base, reducing capital
expenditure and taking 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.
“We monitor our
business activities
and external and
internal environments
for new, emerging
and changing risks
to ensure these
are managed
appropriately.”
Full details are given in the
Risk Supplement on our website,
www.astrazeneca.com/
annualreport2023.
55
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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 pharmaceutical product
candidates is a complex, risky and lengthy process
involving significant resources. A project may fail at
any stage of the process due to 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 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
Global economic, political and social pressures
are creating an ever more challenging environment
in which we operate. Global financial pressures
may lead to the implementation of further cost
containment measures by payers which could
have an adverse effect on our business results.
>
Implement pricing, reimbursement and
policy frameworks.
>
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.
Failures 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.
Failure in
information
technology or
cybersecurity
Significant disruption to our IT systems, including
breaches of data security or cybersecurity, or failure
to comply with applicable laws or regulations could
harm our reputation and materially affect our
financial condition or results of operations.
>
Cybersecurity incident management
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 to secure critical skills
and capabilities.
>
Development of our employees.
>
Evolve our culture.
Principal Risks
Strategy key
Science and Innovation
Growth and Therapy Area
Leadership
People and Sustainability
Achieve Group
Financial Targets
Trend key
Increasing risk
Decreasing risk
Unchanged
Strategic Report
AstraZeneca Annual Report & Form 20-F Information 2023
56
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 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 to proceedings against us
could subject us to criminal liability, fines, penalties
or other monetary or non-monetary remedies,
including enhanced damages, require us to make
significant provisions in our accounts relating to legal
proceedings and could materially adversely affect
our business or results of operations.
>
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 intellectual property (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 restrictions to market access, which
may increase our costs or reduce revenues.
>
Focus on key products.
>
Demonstrate value of medicines/health
economics.
>
Diversified portfolio.
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.
>
Strengthen pipeline through acquisitions,
licensing and collaborations.
>
Appropriate capital structure and
balance sheet.
>
Portfolio-driven decision-making process
governed by senior executive-led
committees.
Risk Overview
57
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
2023 represented another year of excellent
performance. We started the year with several
operational uncertainties, including revenues
from our COVID-19 mAbs and certain other
products. Despite some of these risks
materialising, the vast majority of the portfolio
outperformed expectation, leading to an
exceptional year. This speaks to the strength
of our diversified portfolio and geographic
footprint. Our R&D teams are progressing
novel medicines and we continue to enhance
our portfolio though business development
and mergers and acquisitions. At the same
time, we continue to optimise ‘how work is
done’, expanding services offered in our
shared business Centres of Excellence. Our
colleagues across functions remain focused
on quality, reporting, controls, cybersecurity,
and supply, while incorporating a mindset of
continuous improvement.
Total Revenue growth
AstraZeneca achieved Total Revenue of
$45.8 billion in 2023, including $1.4 billion of
Alliance Revenue and $0.6 billion of
Collaboration Revenue with growth of 3%
(CER: 6%). 2023 delivered 13 blockbuster
medicines in total. Excluding COVID-19
medicines, Total Revenue increased by
13% (CER: 15%) in the year.
Product Sales grew by 2% (CER: 4%) to
$43.8 billion, with 12 blockbuster medicines,
including
Ultomiris
,
Soliris
and
Strensiq
from
our Rare Disease portfolio. Our continued
investment in Oncology and CVRM medicine
launches supported sustained Product Sales
growth, with Oncology achieving 17% (CER:
20%) and CVRM achieving 15% (CER: 18%).
Standout performances came once again
from
Farxiga
($6.0 billion),
Tagrisso
($5.8
billion) and
Imfinzi
($4.2 billion). Within our
Rare Disease portfolio,
Soliris
achieved
Product Sales of $3.1 billion but saw a decline
of 16% (CER: 14%) due to the successful
conversion to
Ultomiris
, which had growth of
51% (CER: 52%) to $3.0 billion in the year. In
the US, we had overall growth of 4%, with
Product Sales of $18.0 billion. In Emerging
Markets, Product Sales grew by 1% (CER:
8%) to $11.8 billion, with growth in CVRM and
Tagrisso
. In Europe, Product Sales increased
by 9% (CER: 7%) to $9.0 billion, reflecting
strong performances from Oncology and
Forxiga
and in Established Rest of World
markets, there was a decline of 14% (CER:
8%) to $5.0 billion due to mandatory pricing
reductions of
Tagrisso
in Japan and the drop
off in demand for COVID-19 medicines.
Alliance Revenue increased by 89% (CER:
89%) to $1.4 billion, including $1.0 billion from
Enhertu
, which achieved blockbuster status
for the first time. Collaboration Revenue
declined by 1% (CER: 1%) to $0.6 billion.
Profitability
Reported EPS was $3.84 in the year (2022:
$2.12) and Core EPS was $7.26 (2022: $6.66)
driven by improved Product Sales Gross
Margin from Total Revenue growth and a
decline in sales of lower margin COVID-19
medicines.
“AstraZeneca achieved Total
Revenue of $45.8 billion in 2023,
with growth of 3% (CER: 6%),
including $1.4 billion of Alliance
Revenue and $0.6 billion of
Collaboration Revenue.
Excluding COVID-19 medicines,
Total Revenue increased by 13%
(CER: 15%).”
2023 was a year of
strong business
performance, with
sustained revenue
growth and excellent
pipeline progress.
Key milestones/approvals
Our continued investment in the pipeline
yielded several significant approvals and
milestones in the year, including regulatory
approval in the US for
Truqap
in breast
cancer,
Wainua
(eplontersen) in transthyretin-
mediated amyloid polyneuropathy and
Beyfortus
for the prevention of RSV in infants.
In Japan, in January 2024,
Voydeya
was
approved for the treatment of anaemia due to
extravascular haemolysis.
2023 also afforded me the opportunity to
engage with a number of our stakeholders –
from investors to key opinion leaders and
physicians at congresses, and from
employees to government officials. This
brought to light how special a place
AstraZeneca truly is. Our stakeholders see
AstraZeneca as a company on the forefront of
science with a broad ambition to continuously
improve health, our communities and our
planet. During all my interactions, I have been
impressed with the engagement, energy and
passion of my colleagues and humbled by the
privilege of working with an amazing set of
people. 2024 will bring more change and we
will continue to evolve while remaining true to
our Values.
Aradhana Sarin
Chief Financial Officer
58
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
P
r
o
d
u
c
t
S
a
l
e
s
C
o
ll
a
b
o
r
a
t
i
o
n
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e
v
e
n
u
e
O
p
e
r
a
t
i
n
g
p
r
o
fi
t
E
P
S
A
l
l
i
a
n
c
e
R
e
v
e
n
u
e
Highlights
Financial performance
Total Revenue: Therapy Areas
Total Revenue: Geographical Areas
Emerging Markets
2%
growth
(CER: 9%)
CVRM
15%
growth
(CER: 18%)
US
6%
growth
Oncology
19%
growth
(CER: 21%)
Europe
10%
growth
(CER: 8%)
Rare
Disease
10%
growth
(CER: 12%)
Established RoW
-14%
decrease
(CER: -8%)
Respiratory &
Immunology
7%
growth
(CER: 10%)
Vaccines &
Immune Therapies
-72%
decrease
(CER: -71%)
Other
Medicines
-31%
decrease
(CER: -27%)
Summary performance in 2023
Reported
CER
Core
2023
$m
2022
$m
% Actual
change
CER
growth
2
$m
Growth
due to
exchange
effects
$m
% CER
change
2023
$m
2022
$m
% Actual
change
Product Sales
43,789
42,998
2
1,786
(995)
4
43,789
42,998
2
Alliance Revenue
1,428
755
89
670
3
89
1,428
755
89
Collaboration Revenue
594
598
(1)
(7)
3
(1)
594
598
(1)
Total Revenue
45,811
44,351
3
2,449
(989)
6
45,811
44,351
3
Cost of sales
(8,268)
(12,391)
(33)
4,141
(18)
(34)
(8,011)
(8,588)
(7)
Gross profit
37,543
31,960
17
6,590
(1,007)
21
37,800
35,763
6
Operating expenses
(30,690)
(28,717)
7
(2,305)
332
8
(24,545)
(22,860)
7
Other operating income and expense
1,340
514
>2x
825
1
>2x
1,279
447
>2x
Operating profit
8,193
3,757
>2x
5,110
(674)
>2x
14,534
13,350
9
Net finance expense
(1,282)
(1,251)
2
(16)
(15)
1
(984)
(974)
1
Share of after tax losses of joint ventures and associates
(12)
(5)
>2x
(6)
(1)
>2x
(12)
(5)
>2x
Profit before tax
6,899
2,501
>2x
5,088
(690)
>2x
13,538
12,371
9
Taxation
(938)
792
n/m
(1,855)
125
n/m
(2,291)
(2,058)
11
Profit after tax
5,961
3,293
81
3,233
(565)
96
11,247
10,313
9
Basic earnings per share ($)
3.84
2.12
81
2.09
(0.37)
96
7.26
6.66
9
1
Effective 1 January 2023, the Group has updated the presentation of Total Revenue. For further details of the presentation of Alliance Revenue and Collaboration Revenue, see the Basis of
accounting and preparation of financial information on page 152.
2
As detailed on page 61, CER growth is calculated using prior year actual results adjusted for certain exchange rate effects, including hedging.
$43.8bn
2% growth
(CER: 4%)
$1.4bn
89% growth
(CER: 89%)
$8.2bn
118% growth
(CER: >2x)
$0.6bn
-1% decrease
(CER: -1%)
$14.5bn
9% growth
(CER: 14%)
$3.84
81% growth
(CER: 96%)
$7.26
9% growth
(CER: 15%)
Product
Sales
Alliance
Revenue
1
Operating
profit – Reported
Operating
profit – Core
Collaboration
Revenue
1
EPS –
Reported
EPS –
Core
59
AstraZeneca Annual Report & Form 20-F Information 2023
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 7, the Therapy Area Review from page 16,
and the Our Strategy and Key Performance
Indicators section from page 12, which
describe in detail the business developments
of our products.
As described earlier in this Annual Report,
sales of our products are directly influenced
by medical need and are generally paid for
by health insurance schemes or national
healthcare budgets. Our operating results can
be affected by a number of factors other than
the delivery of operating plans and normal
competition.
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 Accounting Standards 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.
Use of non-GAAP performance measures
Core performance measures, EBITDA, Net
debt, CER, Product Sales Gross Margin
(formerly termed 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 2023 Reconciliation of
Reported results to Core results table on
page 62, 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.
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.
Further details of the risks faced
by the business are given in
Risk Overview from page 54 and
in the Risk Supplement at
www.astrazeneca.com/
annualreport2023.
For a detailed definition of
Core measures, see page 61.
Readers should also refer to our
Reported financial information in
the Summary performance in
2023 table on page 59, our
reconciliation of Core
performance measures to
Reported financial information in
the 2023 Reconciliation of
Reported results to Core results
table and the Excluded from Core
results table on page 63, for our
discussion of comparative
growth measures that reflect all
factors that affect our business.
60
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
Non-GAAP measures: definitions
Revenue
Constant exchange rate
(CER) growth rates
Reconciliation, see
page 62
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 62
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.
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.
Alexion acquisition-related items,
primarily fair value adjustments on
acquired inventories and fair value impact of replacement employee
share awards.
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 specified items,
principally the imputed finance charges and
fair value movements relating to contingent consideration on
business combinations, imputed finance charges and
remeasurement adjustments on certain Other payables arising from
intangible asset acquisitions, legal settlements and remeasurement
adjustments relating to Other payables assumed from the Alexion
acquisition.
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.
Product Sales Gross
Margin
Reconciliation, see
page 62.
Definition:
Product Sales Gross Margin (formerly termed Gross
Margin) is the 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 Product
Sales Gross Margin excludes the impact of Alliance Revenue and
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:
Product Sales Gross Margin percentage excludes the
impact of Alliance Revenue and Collaboration Revenue and related
costs and therefore should not be regarded as giving a full picture of
Total Revenue performance.
61
AstraZeneca Annual Report & Form 20-F Information 2023
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 69.
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.
2023 Reconciliation of Reported results to Core results
2023
Reported
$m
Restructuring
costs
$m
Intangible
amortisation
and
impairments
$m
Acquisition
of Alexion
$m
Other
1
$m
2023
Core
2
$m
Core 2023 compared with
Core 2022
2
Actual
growth
%
CER
growth
%
Gross profit
37,543
109
32
119
(3)
37,800
6
9
Product Sales Gross Margin %
81.1
81.7
Distribution expense
(539)
–
–
–
–
(539)
1
2
Research and development expense
(10,935)
212
447
7
2
(10,267)
8
9
Selling, general and administrative expense
(19,216)
207
3,801
11
1,458
(13,739)
7
9
Other operating income and expense
1,340
(61)
–
–
–
1,279
>2x
>2x
Operating profit
8,193
467
4,280
137
1,457
14,534
9
14
Operating Margin %
17.9
31.7
Net finance expense
(1,282)
–
–
–
298
(984)
Taxation
(938)
(107)
(809)
(32)
(405)
(2,291)
Basic earnings per share ($)
3.84
0.23
2.24
0.07
0.88
7.26
9
15
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
$m
Core 2022 compared with
Core 2021
2
Actual
growth
%
CER
growth
%
Gross profit
31,960
266
32
3,506
(1)
35,763
28
35
Product Sales Gross Margin %
71.2
80.0
Distribution expense
(536)
2
–
–
–
(534)
20
28
Research and development expense
(9,762)
111
124
27
–
(9,500)
19
24
Selling, general and administrative expense
(18,419)
405
4,165
38
985
(12,826)
15
21
Other operating income and expense
514
(67)
–
–
–
447
(70)
(69)
Operating profit
3,757
717
4,321
3,571
984
13,350
34
42
Operating Margin %
8.5
30.1
Net finance expense
(1,251)
–
–
–
277
(974)
Taxation
792
(165)
(804)
(832)
(1,049)
(2,058)
Basic earnings per share ($)
2.12
0.36
2.27
1.77
0.14
6.66
26
33
1
See Excluded from Core results table on following page for further details of other adjustments.
2
Each of the measures in the Core columns is a non-GAAP measure.
Non-GAAP measures: definitions
continued
62
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
Excluded from Core results
Restructuring costs
>
Restructuring costs totalling $467 million (2022: $717 million) mainly comprise those incurred on the Post Alexion Acquisition Group
Review (PAAGR) of $362 million (2022: $675 million).
Intangible amortisation
and impairments
>
Amortisation totalling $3,846 million (2022: $4,080 million) relating to intangible assets, except those related to IT. Further
information on our intangible assets is contained in Note 10 to the Financial Statements from page 172. Intangible impairment
charges were $434 million (2022: $318 million), excluding those related to IT. Further details relating to intangible asset impairments
are included in Note 10 to the Financial Statements from page 172.
Acquisition of Alexion
>
Costs associated with our acquisition of Alexion in July 2021 amounting to $137 million (2022: $3,571 million), primarily relating to
the impact from the unwind of the fair value adjustment to Alexion inventories at the date of acquisition. In 2023, the impact of the
fair value uplift unwind on Cost of sales is $114 million (2022: $3,484 million). The majority of the fair value uplift 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, excluding taxation adjustments, amounted to $1,755 million (2022: $1,261 million).
>
Other adjustments to Reported SG&A expenses were $1,458 million (2022: $985 million), primarily including a charge to legal
provisions of $425 million in relation to
Nexium
and
Losec
/
Prilosec
product liability litigation, $510 million in relation to Bristol-Myers
Squibb Co. and E.R. Squibb & Sons, LLC and $70 million in relation to Alexion shareholder litigation. Other adjustments also include
$549 million (2022: $82 million) net fair value adjustments relating to contingent consideration balances, and a credit of $111 million
(2022: a charge of $82 million) of remeasurement adjustments relating to Other payables. Further details relating to contingent
consideration balances are contained in Note 20 to the Financial Statements from page 181, and further details of legal
proceedings, ongoing at 31 December 2023, are contained within Note 30 to the Financial Statements from page 204.
>
Other adjustments to Net finance expense of $298 million (2022: $277 million) include discount unwind charges on liabilities arising
from business combinations and on liabilities resulting from the
Enhertu
collaboration agreement.
>
Other adjustments to Taxation amounted to $405 million (2022: $1,049 million). Adjustments to Taxation in 2022 included a one-time
favourable net adjustment of $876 million to deferred taxes arising from an internal reorganisation to integrate Alexion.
63
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Product Sales
2023
Product
Sales
$m
2022
Product
Sales
$m
Actual
growth
%
CER
growth
%
Product Sales by Therapy Area
Oncology
17,145
14,631
17
20
CVRM
10,585
9,188
15
18
Rare Disease
7,764
7,053
10
12
Respiratory & Immunology
6,107
5,765
6
8
Vaccines & Immune Therapies
1,012
4,736
(79)
(78)
Other Medicines
1,176
1,625
(28)
(24)
Total
43,789
42,998
2
4
2023
Product
Sales
$m
2022
Product
Sales
$m
Actual
growth
%
CER
growth
%
Product Sales by geographical area
US
17,961
17,254
4
4
Emerging Markets
11,751
11,634
1
8
Europe
9,029
8,264
9
7
Established RoW
5,048
5,846
(14)
(8)
Total
43,789
42,998
2
4
Total Revenue
1
Total Revenue for 2023 was up 3% (CER: 6%)
to $45,811 million, comprising Product Sales
of $43,789 million, up 2% (CER: 4%), Alliance
Revenue
1
of $1,428 million, an increase of
89% (CER: 89%), and Collaboration Revenue
1
of $594 million, a decrease of 1% (CER: 1%).
1
Effective 1 January 2023, the Group has updated the
presentation of Total Revenue. For further details of the
presentation of Alliance Revenue and Collaboration
Revenue, see Basis of accounting and financial information
on page 152.
Product Sales
By geography
US Product Sales were up 4% to $17,961
million, reflecting the continued growth of our
Oncology medicines and
Farxiga
, which had
growth of 35%, with recent launches in HF
and CKD driving an increase in market share.
Product Sales in Emerging Markets grew by
1% (CER: 8%) to $11,751 million in 2023 with
growth in CVRM, Respiratory & Immunology
and
Tagrisso
. Product Sales in ex-China
Emerging Markets remained broadly flat (CER:
growth of 8%) at $5,884 million, with increases
in Oncology and
Farxiga
offset by declines in
COVID-19 medicines. In Europe, Product
Sales grew by 9% (CER: 7%) to $9,029 million,
reflecting a strong performance in Oncology
and
Forxiga
but also reflecting COVID-19
medicines decline. Established Rest of World
Product Sales decreased by 14% (CER: 8%)
to $5,048 million, with sales in Japan down
9% (CER: 1%) to $3,654 million, driven by
decline in COVID-19 medicines partially offset
by increases in Oncology.
By Product
2023 succeeded in delivering 12 blockbuster
drugs.
Our largest selling products in the year were
Farxiga
($5,963 million),
Tagrisso
($5,799 million),
Imfinzi
($4,237 million),
Soliris
($3,145 million),
and
Ultomiris
($2,965 million).
Farxiga
sales
increased by 36% (CER: 39%), with continued
volume growth across all major regions driven
by launches in HF and CKD.
Tagrisso
sales
grew by 7% (CER: 9%) reflecting a strong
performance from increased demand across
all markets.
Imfinzi
Product Sales grew by
52% (CER: 55%), with increased
use worldwide driven by new launches and
established indications.
Soliris
declined
by 16% (CER: 14%) due to the successful
conversion to
Ultomiris
, which increased by
51% (CER: 52%).
Calquence
continued its growth with an
increase of 22% (CER: 23%) in the year to
$2,514 million driven by increased market
penetration globally, including increased new
patient starts in Europe and sustained US
performance.
Within Vaccines & Immune Therapies, Product
Sales declined by 79% (CER: 78%) due to
fulfilment of contracts signed during the
pandemic.
64
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
Alliance Revenue
2023
$m
2022
$m
Alliance Revenue
Enhertu
1,022
523
Tezspire
259
79
Beyfortus
57
–
Vaxzevria
: royalties
–
76
Other royalty income
81
68
Other Alliance Revenue
9
9
Total Alliance Revenue
1,428
755
Alliance Revenue
Alliance Revenue increased in the year by
89% (CER: 89%), to $1,428 million, including
$1,022 million Alliance Revenue from
Enhertu
,
which achieved blockbuster status for the first
time in 2023.
Details of our significant business
development transactions which give rise to
Alliance 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). Share of gross profits and
royalty income from Daiichi Sankyo are
recognised as Alliance Revenue.
Enhertu
launched in the US on 31 December 2019.
Alliance Revenue in respect of this agreement
has been recognised as follows:
>
Prior to 2023, AstraZeneca recognised
$806 million in respect of Alliance Revenue.
>
In 2023, AstraZeneca recognised Alliance
Revenue of $1,022 million leading to
Enhertu
achieving blockbuster status in
the year.
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 (
Tezspire
tezepelumab) remains
in the collaboration. A second active molecule
(AZD8630) 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 the US, where
Amgen is recognising sales, AstraZeneca will
record its share of gross profit as Alliance
Revenue.
Alliance Revenue in respect of this agreement
has been recognised as follows:
>
Prior to 2023, AstraZeneca recognised
$79 million in respect of Alliance Revenue.
>
In 2023, AstraZeneca recognised Alliance
Revenue of $259 million.
Beyfortus
(Sanofi)
In March 2017, AstraZeneca entered into
an alliance with Sanofi to develop and
commercialise
Beyfortus
jointly. Under the
terms of the global agreement, Sanofi made
an upfront payment of €120 million and will
pay up to €495 million upon achievement
of certain development and sales-related
milestones. All costs and profits are shared
equally. The US element of this collaboration
was subject to a participation agreement with
Sobi, effective from January 2019 until April
2023, at which point there was an update
to the contractual relationships between
AstraZeneca, Sobi and Sanofi relating to
the future sales of
Beyfortus
. Alliance Revenue
recognises AstraZeneca’s 50% share of gross
profits on sales of
Beyfortus
in major markets
outside the US.
Alliance Revenue in respect of this agreement
has been recognised as follows:
>
In 2023, AstraZeneca recognised Alliance
Revenue of $57 million.
Collaboration Revenue
Collaboration Revenue decreased in the year
by 1% (CER: 1%) to $594 million.
Details of our significant business
development transactions which give rise
to Collaboration Revenue are given below.
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 less than
$0.1 billion remains for 2023. AstraZeneca
records 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 2023, AstraZeneca recognised
Collaboration Revenue totalling $2,865
million, comprising $750 million resulting
from the exercise of options, $1,400 million
in respect of sales-related milestones and
$715 million in respect of regulatory
milestones.
>
In 2023, AstraZeneca recognised
Collaboration Revenue of $245 million in
respect of regulatory milestones.
Collaboration Revenue
2023
$m
2022
$m
Collaboration Revenue
Lynparza/Koselugo
(MSD): regulatory milestones
245
355
COVID-19 mAbs: licence fees
180
–
Farxiga
: sales milestones
29
–
tralokinumab (Leo Pharma A/S): milestones
20
110
Beyfortus
: regulatory milestones
71
25
Beyfortus
: sales milestones
27
–
Nexium
: sale of rights
–
62
Other Collaboration Revenue
22
46
Total Collaboration Revenue
594
598
65
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Other operating income and expense
Reported Other operating income and expense
in the year was up 161% (CER: 160%) to
$1,340 million. Core Other operating income
and expense in the year was up 186% (CER:
186%) to $1,279 million. For 2023, both
Reported and Core Other operating income
and expense were impacted by a gain of
$712 million on replacement of the contractual
relationship between AstraZeneca, Sobi and
Sanofi with a royalty relationship between
Sanofi and Sobi and income of $241 million on
the disposal of the US rights to
Pulmicort
Flexhaler
.
2022 included royalties and disposal
proceeds on small divestments including the
divestment of rights to
Plendil
.
In accordance with our Collaboration Revenue
definition in the Group Accounting Policies
from page 152, 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 118%
(CER: 134%) to $8,193 million in the year. The
Reported Operating Margin increased by nine
percentage points (CER: 10) to 17.9% of Total
Revenue. Core Operating profit grew by 9%
(CER: 14%) in the year to $14,534 million.
Net finance expense
Reported Net finance expense increased by
2% (CER: 1%) in the year to $1,282 million.
Core Net finance expense increased by 1%
(CER: decreased by 1%) in the year to
$984 million. Reported Net finance expense
was impacted by the discount unwind on
acquisition-related liabilities. Core Net finance
expense increased due to higher interest
received on cash and short-term investments,
broadly offset by higher rates on floating debt
and bond issuances.
Profit before tax
Reported Profit before tax increased to
$6,899 million (2022: $2,501 million). Core
Profit before tax increased by 9% (CER: 15%)
to $13,538 million. Pre-tax adjustments to
arrive at Core Profit before tax amounted to
$6,639 million in 2023 (2022: $9,870 million),
comprising $6,341 million adjustments to
Operating profit (2022: $9,593 million) and
$298 million to Net finance expense (2022:
$277 million).
COVID-19 mAbs (SII)
In June 2023, AstraZeneca entered into a
sub-licence, commercialisation and
manufacturing rights agreement with the
Serum Institute of India Ltd (SII) for
Evusheld
and AZD3152 in India.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
In 2023, AstraZeneca recognised
Collaboration Revenue of $180 million
resulting from licence fees.
Beyfortus
(Sanofi)
Details of this business development
transaction are summarised in the Alliance
Revenue section on page 65.
Collaboration Revenue in respect of this
agreement has been recognised as follows:
>
Prior to 2023, AstraZeneca recognised
Collaboration Revenue totalling $186
million, comprising $127 million resulting
from upfront consideration and $59 million
in respect of regulatory milestones.
>
In 2023, AstraZeneca recognised
Collaboration Revenue of $71 million in
respect of regulatory milestones, and $27
million in respect of sales-related
milestones.
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 2023, AstraZeneca recognised
Collaboration Revenue of $115 million in
respect of the upfront consideration and
$110 million in sales-related milestones.
>
In 2023, AstraZeneca recognised
Collaboration Revenue of $20 million
in respect of sales-related milestones.
Gross profit
Reported Gross profit increased by 17%
(CER: 21%) to $37,543 million. Core Gross
profit increased by 6% (CER: 9%) to $37,800
million. Reported Product Sales Gross Margin
grew by 10 (CER: 10) percentage points to
81.1%. Core Product Sales Gross Margin grew
by two (CER: two) percentage points to 81.7%.
Both Reported and Core Product Sales Gross
Margin reflected positive product mix effects
from Rare Disease and Oncology medicines,
negative product mix effects from rising
contributions of products with share of gross
profit arrangements, and negative geographic
mix effects as Emerging Markets grew as a
proportion of Total Revenue. Reported Gross
Margin was impacted by the fair value
adjustment to Alexion inventories. The fair
value uplift unwind through Cost of sales in
2023 was $114 million (2022: $3,848 million).
Operating expenses
Reported Operating expenses increased by
7% (CER: 8%) in the year to $30,690 million.
Core Operating expenses increased by 7%
(CER: 9%) to $24,545 million.
Reported R&D expense increased by 12%
(CER: 13%) to $10,935 million and Core R&D
expense increased by 8% (CER: 9%) to
$10,267 million. Both Reported and Core R&D
expense were impacted by recent positive
data readouts for several high priority
medicines and increased investment in new
platforms, technologies and capabilities.
Reported R&D expense also includes
intangible asset impairment charges of $417
million; an increase of $322 million from 2022,
which includes $244 million related to the
impairment of the ALXN1840 intangible asset,
following the decision to discontinue this
development programme in Wilson disease.
Reported SG&A expense increased by 4%
(CER: 6%) to $19,216 million and Core SG&A
expense increased by 7% (CER: 9%) to
$13,739 million. Both Reported and Core
SG&A expense increases were driven
primarily by market development activities for
launches. Reported SG&A expense was
impacted by amortisation of intangible assets
related to the Alexion acquisition and other
acquisitions and collaborations. Reported
SG&A expense was also impacted by a $510
million charge to provisions relating to a legal
settlement with Bristol-Myers Squibb and Ono
Pharmaceutical, and a $425 million charge to
provisions for product liability litigations related
to
Nexium
and
Prilosec
. The prior year
Reported SG&A expense was impacted by a
$775 million legal settlement with Chugai
Pharmaceutical Co. Ltd.
66
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
(2022: charge of $216 million) offset by
remeasurement of the defined benefit pension
liability losses of $406 million (2022: gains of
$1,118 million).
EPS
Reported EPS was $3.84 in the year (2022:
$2.12). Core EPS was $7.26 (2022: $6.66).
Restructuring
Post Alexion Acquisition Group Review
(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 2026, with a number of planned
activities having commenced in late 2021
and during 2022 and 2023.
During 2023, the Group identified all remaining
activities and finalised the scope of the
programme. These additional activities,
alongside updated estimates of the existing
planned activities, have resulted in an increase
to the expected one-time restructuring costs
of $0.6 billion, of which an insignificant
amount are non-cash costs, and an increase
in capital investments of $0.7 billion. This
includes the commencement of work on the
planned upgrade of the Group’s Enterprise
Resource Planning IT systems (Axial Project),
which is expected to be substantially
complete by the end of 2030, resulting in
capital investments for software assets of
$0.7 billion and one-time restructuring cash
costs of $0.3 billion, over the full course of the
project. Anticipated annual run-rate pre-tax
benefits have increased by $0.5 billion, and
are expected to be realised by the end of
2026. This excludes significant strategic and
compliance-related benefits resulting from the
Axial Project, as a result of 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 $3.6 billion,
of which approximately $2.5 billion are cash
costs and $1.1 billion are non-cash costs, and
capital investments of approximately $1.6 billion.
EBITDA
EBITDA increased by 47% (CER: 55%) to
$13,580 million in the year (2022: $9,237
million) and was negatively impacted by the
$114 million unwind of inventory fair value
uplift recognised on the acquisition of Alexion.
Taxation
The Reported tax rate for the year was 14%
and the Core tax rate in the year was 17%
and included a favourable adjustment of
$828 million to deferred taxes arising from
a UK Group company undertaking a routine
intragroup purchase of certain intellectual
property which was offset by updates to tax
liabilities following progress of reviews by tax
authorities and administrative appeal
processes, and derecognition of deferred tax
assets following changes to forecast taxable
income of specific subsidiaries.
The income tax paid for the year was
$2,366 million. This was $1,428 million higher
than the Reported tax charge for the year,
which benefited from a net deferred tax credit
of $1,507 million (2022: $2,428 million), relating
to the aforementioned $828 million deferred
tax credit on the intragroup purchase of
certain intellectual property, intangible
amortisation and impairments, and other
deferred tax items, partially offset by updates
to estimates of prior period tax liabilities
following progress of reviews by tax
authorities and administrative appeal
processes, and the timing differences for cash
tax payments. Additional information on these
items is contained in Note 4 to the Financial
Statements from page 164.
We pay corporate income taxes, customs
duties, excise taxes, stamp duties,
employment and many other business taxes
in all jurisdictions in which we operate. We
also collect and pay employee taxes and
other indirect taxes such as value-added tax
in these jurisdictions.
Total comprehensive income
Total comprehensive income increased by
$4,279 million to a profit of $6,694 million in
2023. Other comprehensive income, net of tax
was $733 million, an increase of $1,611 million.
This income was primarily driven by foreign
exchange arising on consolidation gains of
$608 million (2022: losses of $1,446 million)
and tax credits on items that will not be
reclassified to profit or loss of $101 million
Run-rate pre-tax benefits, before reinvestment,
are now expected to be approximately
$2.4 billion by the end of 2026. In line with
established practice, restructuring costs will
be excluded from our Core (non-GAAP)
financial measures.
During 2023, the Group has recorded
restructuring charges of approximately
$0.4 billion in relation to the PAAGR (2022:
$0.7 billion), bringing the cumulative charges
to date under this programme to $2.1 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 2023, the PAAGR has
realised annual run-rate pre-tax benefits,
before reinvestment, of $1.3 billion.
Other programmes
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, 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 2023 and 2022 were insignificant.
Legacy programmes include: the 2016 plan
to redeploy investment to key disease areas,
particularly Oncology; 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 2023 were
$92 million (2022: $45 million).
The aggregate restructuring charge incurred
in 2023 across all our restructuring programmes
was $467 million (2022: $717 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.
For more information regarding
the AstraZeneca tax policy,
see our website,
www.astrazeneca.com/policies.
Reconciliation of Reported Profit before tax to EBITDA
2023
$m
2022
$m
Actual
growth
%
CER
growth
%
Reported Profit before tax
6,899
2,501
>2x
>2x
Net finance expense
1,282
1,251
2
1
Share of after tax losses of joint ventures
and associates
12
5
>2x
>2x
Depreciation, amortisation and impairment
5,387
5,480
(2)
(1)
EBITDA
13,580
9,237
47
55
67
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Bonds issued in 2023 and 2022
1
Repayment
dates
Face value
of bond
$m
Net book
value of
bond at
31 December
2023
$m
Bonds issued in 2023:
3.625% EUR bond
2027
791
829
4.875% USD bond
2028
1,100
1,095
4.9% USD bond
2030
650
645
3.75% EUR bond
2032
791
827
4.875% USD bond
2033
500
497
Total 2023
3,832
3,893
1
No bonds were issued in 2022.
Cash flow and liquidity – for the year
ended 31 December 2023
Net cash generated from operating activities
was $10,345 million (2022: $9,808 million).
This primarily reflects an underlying
improvement in business performance.
Net investment cash outflows were
$4,638 million (2022: $2,906 million).
Investment cash outflows for 2023 include:
>
Payments of contingent consideration from
business combinations of $826 million
(2022: $772 million).
>
$2,417 million (2022: $1,480 million) for the
purchase of intangible assets, including
$780 million for the CinCor asset
acquisition, $300 million to acquire Pfizer’s
preclinical rare disease gene therapy
portfolio, regulatory milestones of
$225 million and sales-related milestones of
$100 million paid to Daiichi Sankyo in
respect of
Enhertu
, and a $185 million
upfront payment under the Eccogene
licence agreement.
Investment cash inflows include:
>
$291 million (2022: $447 million) from the
sale of intangible assets and assets held for
sale, mainly driven by $241 million from the
disposal of US rights to
Pulmicort
Flexhaler
to Cheplapharm.
Net cash distributions to shareholders were
$4,448 million (2022: $4,335 million), including
proceeds from the issue of share capital of
$33 million (2022: $29 million) less dividends
paid of $4,481 million (2022: $4,364 million).
Bonds
In March 2023, AstraZeneca issued
$3.8 billion of bonds. USD bonds with a
notional face value of $2,250 million and EUR
bonds with notional face value of €1,500
million were issued.
No bonds were issued in 2022.
In 2023, AstraZeneca repaid $2,000 million of
floating rate bank loans in March 2023, which
were due to mature in July 2023, a $1,400
million 0.3% callable bond, which matured in
May 2023, $400 million of floating rate notes
and an $850 million 3.5% callable bond, both
of which matured in August 2023, and $287
million of 7% guaranteed debentures, which
matured in November 2023.
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.
Summary cash flows
2023
$m
2022
$m
2021
$m
Net debt brought forward at 1 January
(22,923)
(24,322)
(12,110)
Profit/(loss) before tax
6,899
2,501
(265)
Sum of changes in interest, depreciation, amortisation,
impairment and share of after tax losses on joint ventures
and associates
6,681
6,736
7,851
Decrease in working capital and short-term provisions
300
3,757
2,021
Tax paid
(2,366)
(1,623)
(1,743)
Interest paid
(1,081)
(849)
(721)
Gains on disposal of intangible assets
(251)
(104)
(513)
Gains on disposal of joint ventures and associates
–
–
(776)
Fair value movements on contingent consideration arising from
business combinations
549
82
14
Non-cash and other movements
(386)
(692)
95
Net cash available from operating activities
10,345
9,808
5,963
Purchase of intangibles (net of disposals)
(2,126)
(1,033)
(522)
Acquisition of subsidiaries, net of cash acquired
(189)
(48)
(9,263)
Net borrowings acquired from subsidiaries
–
–
(2,779)
Share-based payments attributable to business combinations
(84)
(215)
(211)
Payment of contingent consideration from business combinations
(826)
(772)
(643)
Other capital expenditure (net)
(1,413)
(838)
(569)
Investments
(4,638)
(2,906)
(13,987)
Dividends
(4,481)
(4,364)
(3,856)
Proceeds from the issue of share capital
33
29
29
Distributions
(4,448)
(4,335)
(3,827)
Repayment of obligations under leases
(268)
(244)
(240)
Payment of Acerta Pharma share purchase liability
(867)
(920)
–
Other movements
289
(4)
(121)
Net debt carried forward at 31 December
(22,510)
(22,923)
(24,322)
68
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
Net debt
Net debt at 31 December 2023 was
$22,510 million (2022: $22,923 million).
At 31 December 2023, gross debt (interest-
bearing loans and borrowings) was
$28,622 million (2022: $29,232 million). Of the
gross debt outstanding, $5,400 million is due
within one year (2022: $5,542 million).
At 31 December 2023, Cash and cash
equivalents and Other investments totalled
$5,962 million (2022: $6,405 million).
The Group had committed bank facilities of
$6,875 million available to manage liquidity at
31 December 2023. $2.0 billion of the
commitments mature in February 2025. The
maturity of the $4,875 million facilities was
extended in February 2024 from April 2026 to
April 2029. All facilities contain no financial
covenants and were undrawn at 31 December
2023. 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 SOFR (Secured
Overnight Financing Rate) plus a margin.
Financial position – 31 December 2023
All data in this section are on a Reported basis.
Acquisitions
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.
Acquisitions treated as Business
combinations
On 16 January 2023, AstraZeneca completed
the acquisition of Neogene, a global clinical-
stage biotechnology company pioneering the
discovery, development and manufacturing of
next-generation T-cell receptor therapies
(TCR-Ts). The purchase price allocation
exercise has completed, with the fair value of
total consideration determined at $267 million.
Intangible assets of $100 million and goodwill
of $158 million were recognised in the
acquisition balance sheet, as well as a cash
outflow of $189 million net of cash acquired.
Future contingent milestones-based
For full details of acquisitions,
see Note 27 to the Financial
Statements from page 193.
consideration and non-contingent
consideration is payable to a maximum of
$120 million. Neogene’s results have been
consolidated into the Group’s results from
16 January 2023.
On 16 November 2022, AstraZeneca completed
the acquisition of 100% of the issued shares of
LogicBio Therapeutics, Inc. (LogicBio), 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.
The acquisitions have been accounted for as
business combinations using the acquisition
method of accounting in accordance with
IFRS 3 ‘Business Combinations’.
Acquisitions treated as asset acquisitions
On 24 February 2023, AstraZeneca completed
the acquisition of 100% of the issued shares
of CinCor, for consideration of $1,268 million,
which included intangible assets acquired of
$780 million, $424 million of cash and cash
equivalents, and $75 million of marketable
securities. Contingent consideration of up to
$496 million could be paid on achievement of
regulatory milestones, and those liabilities will
be recorded when milestones are triggered, or
performance conditions have been satisfied.
In September 2023, AstraZeneca completed
the definitive purchase and licence agreement
for a portfolio of preclinical rare disease gene
therapy programmes and enabling technologies
from Pfizer. The agreement has a total
consideration of up to $1 billion consisting of a
$300 million upfront payment and $700 million
of contingent consideration, plus tiered
royalties on sales.
Commitments and contingencies
We have commitments and contingencies
which are accounted for in line with Group
Accounting Policies and are described in Note
30 to the Financial Statements from page 204.
We also have taxation contingencies. These
are described in this Financial Review, in the
Taxation section in the Critical accounting
policies and estimates section from page 152,
and in Note 30 to the Financial Statements
from page 204.
Net debt reconciliation
2023
$m
2022
$m
2021
$m
Cash and cash equivalents
5,840
6,166
6,329
Other investments
1
122
239
69
Cash and investments
5,962
6,405
6,398
Overdraft and short-term borrowings
(515)
(350)
(387)
Lease liabilities
(1,128)
(953)
(987)
Current instalments of loans and borrowings
(4,614)
(4,964)
(1,273)
Loans due after one year
(22,365)
(22,965)
(28,134)
Loans and borrowings
(28,622)
(29,232)
(30,781)
Net derivative financial instruments
150
(96)
61
Net debt
2
(22,510)
(22,923)
(24,322)
1
Other investments exclude non-current investments, which are included within the balance of $1,530 million (2022: $1,066
million) in the Consolidated Statement of Financial Position on page 149.
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 $833 million (2022: $1,646 million) presented in 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
2023
$m
Total
2022
$m
Bank loans and other
borrowings
1
6,011
5,901
6,052
17,995
35,959
36,389
Lease liabilities
271
443
214
200
1,128
953
Contracted capital
expenditure
288
101
–
979
1,368
502
Total
6,570
6,445
6,266
19,174
38,455
37,844
1
Bank loans and other borrowings include interest charges payable in the period, as detailed in Note 28 to the Financial
Statements from page 195.
69
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
Off balance sheet transactions and
commitments
We have no off balance sheet arrangements
and our derivative activities are non-speculative.
The table on page 69 sets out our minimum
contractual obligations at the year end.
Research and development collaboration
payments
Details of future potential R&D collaboration
payments are also included in Note 30 to the
Financial Statements on page 204. 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 60 major or
strategically important business development
transactions over the past three years.
The following strategic investment was made
in 2023:
Eccogene
>
In November 2023, AstraZeneca and
Eccogene entered into an exclusive licence
agreement for AZD5004, an investigational
oral once-daily GLP-1RA for the treatment
of obesity, type-2 diabetes and other
cardiometabolic conditions. Preliminary
results from the Phase I trial have shown a
differentiating clinical profile for AZD5004,
with good tolerability and encouraging
glucose and body weight reduction across
the dose levels tested compared to
placebo. Under the terms of the agreement,
Eccogene received an initial upfront
payment of $185 million and up to an
additional $1.8 billion in future clinical,
regulatory, and commercial milestones and
tiered royalties. AstraZeneca is granted
exclusive global rights for the development
and commercialisation of AZD5004 for any
indication in all territories except China,
where Eccogene has the right to co-
develop and co-commercialise alongside
AstraZeneca.
In addition to the business development
transactions detailed under Collaboration
Revenue from page 65 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 Dato-DXd, 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 Dato-DXd 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 Dato-DXd 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
Alliance 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 Dato-DXd.
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 €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.
70
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
For further information
regarding Dividends, see Note 25
on page 192.
For more information, see Our
Strategy and Key Performance
Indicators from page 12.
Capitalisation and shareholder return
Capitalisation
The total number of shares in issue at
31 December 2023 was 1,550 million (2022:
1,550 million).
Shareholders’ equity increased by $2,106
million to $39,143 million at the year end.
Non-controlling interests were $23 million
(2022: $21 million).
Dividend and share repurchases
The Board has recommended a second
interim dividend of $1.97 (156.0 pence,
20.65 SEK) to be paid on 25 March 2024.
This brings the full-year dividend to $2.90
(227.8 pence, 30.29 SEK). Against Reported
EPS, the Group had a dividend cover ratio of
1.32:1 in 2023 (2022: 0.74:1). Against Core
EPS, the Group had a dividend cover ratio of
2.50:1 in 2023 (2022: 2.32:1). 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 2023 , the overwhelming
majority of the Profit and loss account reserve
of $17,640 million (2022: all of the Profit and loss
account reserve of $7,458 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 Parent Company have been
received in the form of receivables due from
subsidiaries. The availability of distributable
reserves in the Parent 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 2023, the overwhelming
majority (2022: all) of the Company’s profit
and loss reserves were available for
distribution.
Future prospects
As outlined earlier in this Annual Report, our
strategic priorities support delivery of our
Growth Through Innovation strategy 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.
Full year 2024: additional commentary
Total Revenue is expected to increase by a
low double-digit to low teens percentage.
Core EPS is expected to increase by a low
double-digit to low teens percentage.
Collaboration Revenue is expected to
increase substantially, driven by success-
based milestones and certain anticipated
transactions. Other operating income is
expected to decrease substantially (2023
included a $241m gain on the disposal of
Pulmicort
Flexhaler
US rights, and a $712m
one-time gain relating to updates to
contractual arrangements with Sobi and
Sanofi). The Core Tax rate is expected to be
between 18-22%.
The Group is unable to provide guidance on a
Reported basis because it cannot reliably
forecast material elements of the Reported
results, including any fair value adjustments
arising on acquisition-related liabilities,
intangible asset impairment charges and legal
settlement provisions. Please refer to the
Cautionary statement section regarding
forward-looking statements on page 236.
Currency impact
If foreign exchange rates for February 2024 to
December 2024 were to remain at the average
rates seen in January 2024, it is anticipated
that 2024 Total Revenue and Core EPS for the
year would 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 236.
Financial risk management
Financial risk management policies
Insurance
Our risk management processes are
described in Risk Overview from page 54.
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 195 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.
71
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Financial Review
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
Accounting Standards as issued by the IASB
and IAS as adopted by the EU. The
accounting policies employed are set out in
the Group Accounting Policies section from
page 152. 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 152:
>
Revenue recognition – see Revenue
Accounting Policy from page 152 and
Note 1 on page 161
>
Expensing of internal development
expenses – see Research and Development
Policy from page 154
>
Impairment review of Intangible assets –
see Note 10 on page 174
>
Useful economic life of Intangible assets
– see Research and Development from
page 154
>
Business combinations and Goodwill – see
Business combinations and Goodwill Policy
from page 156 and Note 27 from page 193
>
Litigation liabilities – see Litigation and
Environmental Liabilities within Note 30
on page 204
>
Operating segments – see Note 6 on
page 167
>
Employee benefits – see Note 22 on
page 190
>
Taxation – see Tax in Note 30 from
page 209.
Revenue recognition
Product Sales are recorded at the invoiced
amount (excluding inter-company sales and
value-added taxes), less movements in
estimated accruals for rebates and chargebacks
given to managed care and other customers,
which are a particular feature in the US and
are considered to be key estimates. It is the
Group’s policy to offer a credit note for all
returns and to destroy all returned stock in all
markets. Cash discounts for prompt payments
are also discounted from sales. Sales are
recognised when the control of the goods has
been transferred to a third party, which is usually
when title passes to the customer, either on
shipment or on the receipt of goods by the
customer, depending on local trading terms.
Rebates, chargebacks and returns in the US
When invoicing Product Sales in the US, we
estimate the rebates and chargebacks that
we expect to pay, which are considered to be
estimates. These rebates typically arise from
sales contracts with third-party managed
care organisations, hospitals, long-term care
facilities, group purchasing organisations
and various federal or state programmes
(Medicaid contracts, supplemental rebates,
etc.). They can be classified as follows:
>
Chargebacks, where we enter into
arrangements under which certain parties,
typically hospitals, long-term care facilities,
group purchasing organisations, the
Department of Veterans Affairs, Public
Health Service Covered Entities, and the
Department of Defense, are able to buy
products from wholesalers at the lower
prices we have contracted with them. The
chargeback is the difference between the
price we invoice to the wholesaler and the
contracted price charged by the wholesaler
to the other party. Chargebacks are
credited directly to the wholesalers.
>
Regulatory, including Medicaid and other
federal and state programmes, where we
pay rebates based on the specific terms
of agreements with the US Department
of Health and Human Services and with
individual states, which include product
usage and information on best prices and
average market prices benchmarks.
>
Contractual, under which entities such as
third-party managed care organisations are
entitled to rebates depending on specified
performance provisions, which vary from
contract to contract.
The effects of these deductions on our US
pharmaceuticals revenue and the movements
on US pharmaceuticals revenue provisions
are set out on this page.
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 $18,607 million
in 2023 (2022: $14,846 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 152.
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), so that, in aggregate, we have
covered a significant proportion of the key
lines in our Financial Statements. Each of
these operating units and specialist areas has
ensured that its relevant processes and
controls are documented to appropriate
standards, taking into account, in particular,
the guidance provided by the US Securities
and Exchange Commission (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.
72
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
Gross to Net Product Sales
US pharmaceuticals
2023
$m
2022
$m
2021
$m
Gross Product Sales
36,568
32,100
23,970
Chargebacks
(3,075)
(2,401)
(2,095)
Regulatory – Medicaid and state programmes
(2,417)
(1,879)
(1,488)
Contractual – Managed care and Medicare
(11,035)
(8,821)
(7,121)
Cash and other discounts
(428)
(359)
(312)
Customer returns
(222)
(132)
(14)
US branded pharmaceutical fee
(124)
(150)
(57)
Other
(1,306)
(1,104)
(883)
Net Product Sales
17,961
17,254
12,000
Movements in accruals
US pharmaceuticals
Brought
forward at
1 January
2023
$m
Provision for
current year
$m
Adjustment in
respect of
prior years
$m
Returns and
payments
$m
Carried forward
at 31 December
2023
$m
Chargebacks
233
2,743
(22)
(2,709)
245
Regulatory – Medicaid and state programmes
771
2,468
(59)
(2,194)
986
Contractual – Managed care and Medicare
2,426
11,166
(92)
(10,373)
3,127
Cash and other discounts
27
428
–
(424)
31
Customer returns
205
204
–
(136)
273
US branded pharmaceutical fee
137
133
(5)
(93)
172
Other
162
1,303
–
(1,183)
282
Total
3,961
18,445
(178)
(17,112)
5,116
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
73
AstraZeneca Annual Report & Form 20-F Information 2023
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 49.
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
page 84, 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 the People and Sustainability
section from page 43.
Details of how the Board operates and
matters considered by the Board are set out
in the Corporate Governance Report from
page 75. Details on the Board and SET
composition and gender diversity can be
found on pages 78, 91, and 229. Examples of
how Directors discharged their duties and
considered stakeholders when making
Principal Decisions during 2023 are set out
from page 84. 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 Group 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 84 to 86 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 43 to 45 of the Business Review,
from page 84 of the Corporate Governance
Report, page 97 in the Audit Committee
Report and page 121 to 122 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:
>
Chair’s Statement
>
Chief Executive Officer’s Review
>
AstraZeneca at a Glance
>
What science can do: artificial intelligence
>
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
8 February 2024
74
AstraZeneca Annual Report & Form 20-F Information 2023
Strategic Report
Financial Review
continued
Contents
Chair’s Introduction
76
Corporate Governance Overview
77
Board of Directors
78
Senior Executive Team (SET)
80
Corporate Governance Report
81
Nomination and Governance
Committee Report
90
Science Committee Report
92
Sustainability Committee Report
93
Audit Committee Report
94
Directors’ Remuneration Report
102
Remuneration Policy
127
Corporate
Governance
75
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
It’s a pleasure to be introducing AstraZeneca’s
Corporate Governance Report for the first
time as Chair.
Our Strategic Report provides an update on
how AstraZeneca is delivering its Growth
Through Innovation strategy, including how we
attract, retain and develop talented people as
our employees. This Report reviews
AstraZeneca’s governance and the work of
the Board’s Committees.
I would like to begin by thanking my fellow
Directors for the support they have given me
in my first year as Chair and welcoming Anna
Manz who became a Non-Executive Director
and member of the Audit Committee in
September. She brings extensive cross-sector
business skills and knowledge to the Board,
having held international roles in North
America and Asia Pacific and served as an
executive and non-executive in large, listed
companies.
I also want to recognise the role that all the
Directors play in carrying out their
responsibilities as members of our Board
Committees. I am particularly grateful to the
chairs of the Committees for the diligent and
committed way in which they carry out their
duties, especially Philip Broadley who, in
addition to his important role as Chair of the
Audit Committee, performs the role of our
senior independent Non-Executive Director.
Finally, I would like to thank Euan Ashley who
assumed the role as Chair of the Science
Committee during the year.
I would urge readers to read the reports from
the individual Committee Chairs that give an
indication of the depth and breadth of their
work on behalf of shareholders. This
Governance Report also reports on how we
consider the interests of our stakeholders and
engage with them in determining our strategy.
The Audit Committee has a key role in
monitoring the integrity of our financial
reporting and management of risk. Cyber risk
and cyber security have been, and continue to
be, a particular focus of their activity in recent
years. During 2023, the Audit Committee as
well as the Sustainability Committee, had an
important role considering the potential and
enacted regulations by the US, EU and UK on
sustainability reporting, as well as the ongoing
assessments of double materiality topics for
AstraZeneca under EU regulations, to ensure
that we are prepared for new sustainability
reporting regulations which you will see
reflected in AstraZeneca’s 2024 Annual
Report. The Sustainability Committee also
reviewed progress against our Ambition Zero
Carbon targets and programmes.
Euan and the Science Committee had a
particularly busy year in reviewing our R&D
strategy and science capabilities as well as
studying the scientific case for the numerous
acquisitions and licensing opportunities that
were undertaken during 2023.
A particular responsibility of the Remuneration
Committee in 2023 was to review and update
our Remuneration Policy, which can be found
from page 127 and will be proposed for
approval by our shareholders at the AGM in
April. In doing so, we are introducing some
changes the Board believes are in the best
interests of the Group and its shareholders,
and which will incentivise management to
deliver our ambitious strategy.
Good governance underpins any successful
enterprise and I look forward to continuing my
role in ensuring that AstraZeneca’s future
growth and prospects are accompanied and
enabled by good governance overseen by a
skilled and diverse Board of Directors.
Michel Demaré
Chair
“Good governance underpins
any successful enterprise...”
“This Report reviews
AstraZeneca’s
governance and the
work of the Board’s
Committees.”
76
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Chair’s
Introduction
Governance structure
Attendance in 2023
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 SET take the lead in
developing our strategy; proposals are
reviewed and constructively challenged by
the Board, before the strategy is approved.
Audit
Committee
Report from page 94
Science
Committee
Report from page 92
Nomination and
Governance Committee
Report from page 90
Remuneration
Committee
Report from page 102
Sustainability
Committee
Report from page 93
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 2023
Board or Committee Chair
Director
Appointment
date
1
Board
2,8
Audit
Committee
Remuneration
Committee
Nomination and
Governance
Committee
Science
Committee
Sustainability
Committee
Non-Executive Chair and Executive Directors
Michel Demaré
3
01/09/2019
8/8
4/4
6/6
6/6
Leif Johansson
4
26/04/2012
2/2
1/1
4/4
Pascal Soriot
01/10/2012
8/8
Aradhana Sarin
01/08/2021
8/8
Non-Executive Directors
Euan Ashley
5,8
01/10/2020
7/8
5/6
9/9
Philip Broadley
27/04/2017
8/8
7/7
6/6
6/6
Deborah DiSanzo
8
01/12/2017
7/8
7/7
Diana Layfield
8
01/11/2020
7/8
9/9
Sheri McCoy
8
01/10/2017
7/8
6/7
6/6
6/6
2/2
Tony Mok
8
01/01/2019
7/8
9/9
Nazneen Rahman
6
01/06/2017
8/8
3/4
6/6
9/9
2/2
Andreas Rummelt
01/08/2021
8/8
2/2
Marcus Wallenberg
8
05/04/1999
7/8
5/9
2/2
Anna Manz
7
01/09/2023
4/4
2/2
1
Date of first appointment or election to the Board.
2
Four Board meetings in 2023 were held by videoconference and four were held in
person at the Company’s sites in London, UK; Tokyo, Japan; and Gaithersburg,
MD, US.
3
Michel Demaré succeeded Leif Johansson as Non-Executive Chair of the Board
and Chair of the Nomination and Governance Committee on 27 April 2023.
4
Leif Johansson retired as Non-Executive Chair of the Board and as a Director on
27 April 2023.
5
Euan Ashley succeeded Nazneen Rahman as Chair of the Science Committee and became a member
of the Nomination and Governance Committee on 1 June 2023.
6
Nazneen Rahman became a member of the Remuneration Committee on 1 May 2023.
7
Anna Manz joined the Board and the Audit Committee on 1 September 2023.
8
One ad hoc videoconference Board meeting in 2023 was called at short notice. Due to this and the
timing of the meeting, several Board members’ prior commitments or their time zone prevented them
from attending. They received and reviewed the papers for the meeting and their comments were
relayed to the Chair ahead of the meeting.
77
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Overview
Corporate Governance
Overview
0-3 years
2
Andreas Rummelt
Anna Manz
6 years plus
5
Marcus Wallenberg
Philip Broadley
Deborah DiSanzo
Sheri McCoy
Nazneen Rahman
3-6 years
4
Euan Ashley
Michel Demaré
Tony Mok
Diana Layfield
Men 7
Women 6
British 5
American 3
Swedish 1
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 2023
Michel Demaré
NG
R
Non-Executive Chair of the Board
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
to 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 and 2002.
Other appointments:
Michel is a
Non-Executive Director of Vodafone
Group plc and Louis Dreyfus Int’l
Holding BV and Chairman of IMD
Business School.
Pascal Soriot
Executive Director and CEO
Skills and experience:
Pascal brings
a passion for science and medicine,
significant experience in established
and emerging markets, 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 and, prior to
that, as CEO of Genentech. Pascal has
worked in senior management roles
in several major companies around
the world. He is a Doctor of Veterinary
Medicine and holds an MBA from
HEC Paris. In 2022, Pascal received a
knighthood for services to life sciences
and leadership in the global response
to the COVID-19 pandemic.
Other appointments:
Pascal is on
the Board of Sustainable Markets
Initiative Limited.
Aradhana Sarin
Executive Director and CFO
Skills and experience:
Before joining
AstraZeneca, Aradhana was CFO
for Alexion, 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. This
includes tenures at Citi Global Banking,
UBS, and JP Morgan. 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 and an independent
director of Anheuser-Busch InBev.
Philip Broadley
A
NG
R
Senior independent Non-Executive Director
Skills and experience:
Philip was
previously Group Finance Director
of Prudential and Old Mutual. He has
served as chairman of the 100 Group
of Finance Directors and as a member
of the Takeover Panel. He is a Fellow of
the Institute of Chartered Accountants
in England and Wales. Philip graduated
in Philosophy, Politics and Economics
from the University of Oxford, where he
is a St Edmund Fellow, and holds an
MSc in Behavioural Science from LSE.
Other appointments:
Philip serves
as a Non-Executive Director of
Legal & General and Non-Executive
Director of Lancashire Holdings
where he will assume the role of Chair
following its 2024 AGM. 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
NG
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,
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,
to advance translational and clinical
research. Euan’s awards include
recognition from the White House for
contributions to personalised medicine
and the American Heart Association’s
Medal of Honor for precision medicine.
Other appointments:
Euan is Associate
Dean and Professor of Biomedical
Data Science and Professor of
Cardiovascular Medicine and
Genetics at Stanford University.
Deborah DiSanzo
A
Non-Executive Director
Skills and experience:
Deborah has
more than 30 years’ experience in
healthcare and technology. She is
currently President of Best Buy Health,
which provides digital health solutions
in active aging, virtual care and
consumer health. Deborah teaches
Artificial Intelligence in Health at the
Harvard TH Chan School of Public
Health. Until December 2018, she
served as General Manager of IBM
Watson Health. Prior to IBM, Deborah
held multiple senior executive positions
at Philips Healthcare where she also
was 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.
78
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Board of Directors
as at 31 December 2023
Nazneen Rahman
Sc
Su
NG
R
Non-Executive Director
Skills and experience:
Nazneen has
significant experience in rare disease
and 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.
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 at
Novartis Pharma AG. where he served
on the Executive Committee from 2006
to 2010. He had been Group Head of
Technical Operations and Quality from
2009 until 2010. He was Global CEO
of Sandoz, the Generics Division of
Novartis 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 Partner of
InterPharmaLink AG since 2011 and
a director of various privately-held
biotech and pharmaceutical
companies.
Sheri McCoy
R
A
NG
Su
Non-Executive Director
Skills and experience:
Until February
2018, Sheri was CEO and a Director
of Avon Products, Inc. and, prior to
that, had a 30-year career at Johnson
& Johnson (J&J), latterly serving as
Vice-Chairman of the Executive
Committee, responsible for the
Pharmaceuticals and Consumer
business segments. Sheri joined J&J
as an R&D scientist and subsequently
managed businesses in every major
product sector. She holds a BSc in
Textile Chemistry from the University
of Massachusetts Dartmouth, 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 Sail Biomedicines. She is also
an industrial adviser for EQT, and in
connection serves on the boards
of Galderma, Parexel and is Chair
of Dechra.
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 the
Past President of the International
Association for the Study of Lung
Cancer and a past Board member
of the American Society of Clinical
Oncology. He has achieved numerous
awards including the European Society
for Medical Oncology (ESMO) Lifetime
Achievement Award, Giant of Cancer
Care, and the Bronze Bauhinia Star.
Other appointments:
Tony is
Non-Executive Director of HUTCHMED
(China) Limited, member of the
Scientific Advisory Board of Prenetics
Global Limited and serves on the board
of Insighta.
Leif Johansson
NG
R
Formerly Non-Executive Chair of
the Board (retired in April 2023)
Anna Manz
A
Non-Executive Director
Skills and experience:
Anna joined
London Stock Exchange in 2020
as CFO, ahead of its acquisition of
Refinitiv. Prior to this, she was an
Executive Director and the CFO of
Johnson Matthey Plc and, before
that, spent 17 years at Diageo plc
in a number of senior finance roles.
She brings extensive expertise in
accounting, corporate finance and
M&A, as well as experience of
business diversification, transformation
and strategy. Anna was previously a
Non-Executive Director of ITV plc and
served on its Audit Committee and
Remuneration Committee during
most of that period.
Other appointments:
Anna will step
down from her role at London Stock
Exchange in 2024 to join Nestlé S.A.
as CFO and a member of Nestlé’s
Executive Board.
Diana Layfield
Sc
Non-Executive Director
Skills and experience:
Diana has broad
global business experience including 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 and was also President, EMEA
Partnerships and Vice-President, ‘Next
Billion Users’. She is the Chair of British
International Investment plc and a
Council Member of the London School
of Hygiene & Tropical Medicine.
79
AstraZeneca Annual Report & Form 20-F Information 2023
Board of Directors
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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.
SET members who sit on the Board:
>
Pascal Soriot
CEO
>
Aradhana Sarin
CFO
Sharon Barr
Executive Vice-President,
BioPharmaceuticals R&D
Sharon joined in 2021 and is
responsible for discovery through
to late-stage development across
CVRM and Respiratory & Immunology.
Previously, Sharon was SVP, Head of
Research and Product Development
of Alexion. Sharon undertook a PhD
in molecular biology from NYU and
a postdoctoral fellowship at
Stanford University.
Ruud Dobber
Executive Vice-President,
BioPharmaceuticals Business Unit
Ruud is responsible for the CVRM,
Respiratory & Immunology,
neuroscience and infection business
units. Ruud joined AstraZeneca in
1997 and held various executive roles
externally before this. Ruud was
previously a research scientist in
immunology and ageing, holding
a doctorate in immunology from the
University of Leiden.
Jeff Pott
Chief Human Resources Officer, Chief
Compliance Officer and General Counsel
Jeff is responsible for all aspects of
AstraZeneca’s People strategy and
leads our HR, Compliance, and Legal
and IP functions. Jeff joined in 1995,
before which he specialised in
pharmaceutical product liability
and antitrust litigation. He holds a
Bachelor’s degree from Wheaton
College and a Juris Doctor Degree
from Villanova University.
David Fredrickson
Executive Vice-President,
Oncology Business Unit
Dave is responsible for driving growth
and maximising the commercial
performance of the AstraZeneca global
Oncology portfolio. Before joining
AstraZeneca, Dave worked at Roche/
Genentech, where he served in several
functions and leadership positions.
Dave is a graduate of Georgetown
University in Washington DC.
Iskra Reic
Executive Vice-President,
Vaccines & Immune Therapies
Iskra is Head of the Vaccines & Immune
Therapies business unit. Established in
2021, during AstraZeneca’s industry-
leading response to the COVID-19
pandemic, Vaccines & Immune
Therapies is focused on developing
transformative vaccines and immune
therapies to prevent infectious
diseases globally. Iskra trained as a
doctor of Dental Surgery at the Medical
University of Zagreb and has an MBA
from the IEDC-Bled School of
Management.
Pam Cheng
Executive Vice-President,
Global Operations, IT and Chief
Sustainability Officer
Pam joined in 2015, after 18 years with
Merck/MSD in Global Manufacturing.
Pam has also worked for Universal Oil
Products, Union Carbide Corporation
and GAF Chemicals. She holds
Bachelor’s and Master’s degrees in
chemical engineering from Stevens
Institute of Technology and an MBA
from Pace University.
Susan Galbraith
Executive Vice-President,
Oncology R&D
Susan has global accountability for
Oncology R&D from discovery through
to late-stage development.
Susan joined AstraZeneca in 2010,
having previously worked at BMS.
She graduated in medicine from
Cambridge University, has a PhD from
the University of London and qualified
as a Clinical Oncologist in 2001.
Leon Wang
Executive Vice-President,
International and China President
Leon is responsible for driving
sustainable growth across the
International region, including China.
China is now AstraZeneca’s
third-largest market, and AstraZeneca
is its largest pharmaceutical company.
Leon holds an EMBA from China
Europe International Business School,
and a BA from Shanghai International
Studies University.
Marc Dunoyer
CEO, Alexion and Chief Strategy Officer,
AstraZeneca
Marc served as AstraZeneca’s Chief
Financial Officer until 2021. Previously,
he served as Global Head of Rare
Diseases at GSK and (concurrently)
Chairman, GSK Japan. He holds an
MBA from HEC Paris and a Bachelor
of Law degree from Paris University.
Menelas (Mene) Pangalos
Executive Vice-President
(formerly Executive Vice-President,
BioPharmaceuticals R&D and SET
member 2013-2023)
Mene will retire from
AstraZeneca in early 2024.
Katarina Ageborg
Formerly Executive Vice-President,
Sustainability and Chief Compliance
Officer; President AstraZeneca
AB Sweden
Katarina retired in January 2023.
Further information about SET
members is available on our
website, www.astrazeneca.com.
See Board of Directors
biographies from page 78.
80
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Senior Executive Team (SET)
as at 31 December 2023
Statement of compliance
Our statement of compliance below describes
how we applied the principles in the 2018 UK
Corporate Governance Code (the Code) for the
year ended 31 December 2023. A copy of the
Code can be found on the Financial Reporting
Council’s (FRC) website, www.frc.org.uk.
Throughout the accounting period we have
complied with all the provisions of the Code
other than provision 21, which relates to the
Board’s annual performance evaluation.
Our approach to the Board’s performance
evaluation for 2023 is described on page 89.
Additional information for
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 the US. 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 Corporate Governance
Code (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 77. Through
a programme of regular Board and Board
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.
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.
The Board has a formal system in place for
Directors to declare a conflict, or potential
conflict, of interest.
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.
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.
2. Division of responsibilities
F. Chair of the Board
Michel Demaré, our Non-Executive Chair,
is responsible for the Board’s overall
effectiveness in directing the Company.
Mr Demaré was first appointed to the
Board in 2019 and was considered to be
independent on his appointment as Chair
in April 2023.
G. Board composition, independence and
division of responsibilities
The composition of the Board is set out on
pages 78 and 79. The majority of the Board
consists of independent Non-Executive
Directors. Directors’ independence is
considered annually by the Board, as
described on page 83.
The Directors are collectively responsible for
the success of the Group. The roles of the
Board, Board Committees, Chair, senior
independent Non-Executive Director 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 in the Corporate Governance
Overview on page 77.
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 $300 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
and holding management to account.
Non-Executive Directors offer strategic
guidance and specialist advice based on their
breadth of experience and knowledge. The
Non-Executive Directors regularly meet
without the Executive Directors or other
management present.
Corporate Governance Report / Compliance with the UK Corporate Governance Code
For more information on:
Our Purpose, our Values and our
Business Model, see page 10.
Our Code of Ethics, see page 49.
Our resources and controls, see
the Audit Committee Report from
page 94.
Conflicts of interest, see page 225.
Stakeholder engagement, see
pages 84 to 86 and throughout
the Strategic Report. Our section
172(1) statement is set out on
page 74.
The Board’s performance
evaluation, see page 89.
81
AstraZeneca Annual Report & Form 20-F Information 2023
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. For significant
additional appointments, the full Board would
typically be involved in this process.
In 2023, Aradhana Sarin was appointed as
an independent director of Anheuser-Busch
InBev and Philip Broadley was appointed as a
Non-Executive Director and Chair-designate
of Lancashire Holdings Limited. These
appointments were considered and approved
by the Board on the basis that they would not
prevent or reduce the ability of either to
perform their roles for AstraZeneca to the
required standard.
The performance of the Non-Executive
Directors is assessed annually as part of the
Board’s performance evaluation, as described
on page 89.
Subject to specific Board approval, Executive
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 2023 Board performance
evaluation set out on page 89 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 90.
In accordance with Article 66 of the Articles of
Association of the Company (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
Board membership over time.
L. Board evaluation
In 2023, 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 89.
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 (PwC). 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. A tender
of audit services will be conducted in 2024
with any change taking effect from 2027.
More information can be found on page 101.
The Audit Committee also reviews the
independence and effectiveness of Group
Internal Audit.
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 100.
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 2023, 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.
For more information on:
The Nomination and Governance
Committee Report, see from
page 90.
External audit, see page 96
and Note 31 to the Financial
Statements, on page 210.
Internal Audit, see page 96.
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 54.
The Remuneration Committee’s
work, see page 102.
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Corporate Governance
Corporate Governance Report
Compliance with the UK
Corporate Governance Code
continued
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’.
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.
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.
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.
Further information on Directors’
appointments
Chair of the Board
Mr Demaré was appointed as Chair of
the Board at the conclusion of the 2023 AGM,
following Mr Johansson’s retirement, and he
was considered independent upon appointment.
Non-Executive Directors’ independence
In December 2023, 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 7 February 2024.
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 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)
Through our compliance programme and
three lines of defence risk management
framework (line management; Risk and
Compliance functions; 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 and
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.
For more information on the
Remuneration Committee, see
the Directors’ Remuneration
Report, from page 102.
83
AstraZeneca Annual Report & Form 20-F Information 2023
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 2023.
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 among
others, 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
2023
>
Increased number of diverse
patient engagements
throughout drug
development and
commercialisation.
>
Patient Partnership Program
expanded into new disease
areas and evolved across
novel initiatives to support
end-to-end patient
engagement.
>
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
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.
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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 non-profit R&D
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
macroeconomic risks.
>
ESG matters.
>
Development of medicines
for unmet medical need.
>
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
1,500 active academic
collaborations during 2023:
>
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 2023
>
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.
>
Receptions hosted by the
Chair of the Board.
>
Engaged in HCP educational
events, advisory boards and
in clinical trials.
>
Responded to more than
199,000 HCP enquiries and
processed over 100,000
adverse event reports from
HCPs.
>
We support more than 900
early career positions in R&D
globally, including graduates,
placement students,
sponsored PhDs, and
postdoctoral researchers.
>
Worked side-by-side with
academic researchers in
dedicated university
laboratories.
>
Through our Open Innovation
programme, we openly share
molecules, data and
challenges with academic
researchers; we currently
have four ongoing clinical
trials, over 100 pre-clinical
studies and three new
collaborative research
projects aimed at addressing
key scientific challenges.
>
Joint seminars, education
sessions and consortia with
research institutions, e.g.
Royal Society 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.
>
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.
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AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Corporate Governance Report / Connecting with our stakeholders
In addition to the principal stakeholders described on pages 84 and 85, 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.
We aim to advance patient health, increase access
to care, drive science innovation and build healthy
and resilient communities for all.
Employees
Successfully acquiring, retaining and developing a
talented and diverse workforce is critical to
achieving our 2030 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 44 and 45.
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 inequity has also been demonstrated
by donations to support patients in medically
underserved communities and humanitarian settings
through disaster relief efforts.
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 key trials
and business updates, as well as seeking to
enhance and protect the reputation of the
organisation.
Suppliers and third-party providers
AstraZeneca collaborates with a broad range of
partners to support the development, manufacturing
and delivery of life-changing medicines to patients
across the world. Data led and technology driven,
the Global Procurement function facilitates
collaboration with diverse and ethical suppliers,
pursuing some of the most ambitious sustainability
targets in the industry to dramatically reduce carbon
emissions throughout the supply chain.
How the Board engages with stakeholders
The stakeholder table on pages 84 and 85
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 2023 is set out on the following page.
Full Board/Other
>
During 2023, a number of Directors,
including the Chair, the CEO and the CFO,
met investors at roadshows and in
one-on-one meetings.
>
The Chair hosted receptions focused on
shareholder engagement, including events
in the UK and Sweden.
>
The 2023 AGM was held in London, which
allowed those shareholders able to attend
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 Chair also
hosted an annual reception focused on
investor engagement.
>
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 Board held one of its scheduled
meetings during 2023 at AstraZeneca’s site
in Tokyo, Japan and another at its site in
Gaithersburg, MD, US. During the meetings,
the Board met employees, including
scientists and commercial teams, and
hosted ‘townhall’ meetings. During the
visits, the Chair also met with external
stakeholders, including patient advocacy
groups, NGOs and US government staff
and officials through a series of meetings
and roundtable discussions.
>
The CEO attended a number of scientific
conferences in 2023, relevant to the
Company’s main areas of R&D and
Commercial activity.
>
Members of the Audit Committee visited
the Speke, UK site where they met with the
site leadership team, branding team,
AstraZeneca Speke graduates and
apprentices and hosted a ‘townhall’
meeting. The Committee also visited the
AstraZeneca and Alexion UK marketing
company site in 2023.
>
The CEO and senior leaders met with 15
governments and engaged at 40 events at
COP28, highlighting the interconnection
between climate action, health resilience
and equity, and demonstrating the action at
scale the Company is taking on this agenda.
>
The Chair of the Audit Committee took part
in the following visits during 2023: a virtual
visit to the AstraZeneca marketing company
in Taiwan; in-person visits to the Gulf
Cooperation Council (GCC) cluster in Dubai
to meet with the MEA area leadership and
GCC leadership teams; visit to the Chennai
Global Innovation & Technology Centre which
included meetings with the site leadership
team and an employee ‘townhall’ meeting;
and finally, a visit to the AstraZeneca India
marketing company which also included
meetings with senior leadership and an
employee ‘townhall’ meeting.
>
Members of the Science Committee visited
the AstraZeneca site in Cambridge, UK for
a two-day meeting which included a lab
visit to the Functional Genomics Centre on
the first day. This was followed by a poster
session with UK scientists from
AstraZeneca and one-to-one meetings with
global R&D leaders. In the evening, Science
Committee members had informal
discussions with meeting presenters from
R&D. The second day included a lunch with
the Directors, with each Science Committee
member hosting a table of AstraZeneca
scientists, including rising stars nominated
by functions.
>
The Chair of the Remuneration Committee
met with investors who hold approximately
50% of the Company’s issued share capital
and with three proxy advisers to discuss the
proposals for the 2024 Directors’
Remuneration Policy and its implementation
for the Executive Directors in 2024. For
further information, see the Remuneration
Report on page 102.
>
The CEO, CFO and the Chair, regularly
engaged with employees through in-person
and online events, including ‘Ask me
anything’ and ‘fireside chats’ sessions.
Employees had the opportunity to ask
questions in advance or during sessions.
For more information on how the
Management and the Board have
considered Modern Slavery,
see the Audit Committee report
from page 94, Human Rights
on page 45 and AstraZeneca’s
Modern Slavery Act Statement,
which is available on our website,
www.astrazeneca.com.
86
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Corporate Governance
Corporate Governance
Corporate Governance Report
Connecting with our stakeholders
continued
Principal Decisions in 2023
2023 Group Funding Plan
In January 2023, the Board reviewed and
approved the Group’s 2023 funding plan.
The Board considered:
investors; and the
long-term success of the Company.
How the Board had regard to these matters:
>
Reviewed the expected funding
requirements for the year ahead as well as
the medium- and long-term funding and
liquidity prospects.
>
Discussed the Group’s capital allocation
priorities, the long-term strategy and the
measures required to deliver the strategy,
including investment in the pipeline and
potential external acquisitions to further
strengthen the pipeline. The Board
considered the benefit of these investments
for patients and investors, alongside the
potential impact of acquiring debt.
>
Considered the Group’s liquidity position
and the expectations of investors regarding
the progressive dividend policy.
Board Committees’ composition
and succession planning
During 2023, the Board reviewed and made
the following appointments:
>
Appointment of Michel Demaré as Chair of
the Nomination and Governance Committee.
>
Appointment of Nazneen Rahman as a
member of the Remuneration Committee.
>
Appointment of Euan Ashley as Chair of the
Science Committee.
>
Appointment of Euan Ashley as a member
of the Nomination and Governance
Committee.
>
Appointment of Anna Manz as a Non-
Executive Director and member of the
Audit Committee.
The Board considered:
investors; the long-term
success of the Company; and maintaining
high standards of business conduct.
How the Board had regard for these matters:
>
Engaged with a number of AstraZeneca’s
largest shareholders for them to hear about
the search processes 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 and life-changing medicines
to patients, while also maintaining high
standards of business conduct.
>
Considered the succession requirements of
the Board, the length of tenure of the
current Non-Executive Directors and the
independence requirements as set out in
the UK Corporate Governance Code, and
the importance of ensuring a smooth and
orderly transition.
>
Considered the continuity and reassurance
the appointments provided to management
and investors, and had regard to the likely
consequences of the decision in the
long term and the interests of those
most affected.
Acquisitions and collaborations
to strengthen the pipeline
During 2023, the Board considered, and
approved, a number of transactions to
strengthen the Group’s pipeline and
accelerate the development of potentially
life-changing medicines. These included the
acquisition of CinCor Pharma; the acquisition
of a rare disease gene therapy portfolio and
technologies from Pfizer; the research and
collaboration agreement with Quell
Therapeutics; the approval of the equity
investment and global research and
collaboration agreement in cell and gene
therapy with Cellectis; the approval of the
in-licensing of AZD5004 from Eccogene; the
acquisition of Gracell Biotechnologies; and
the acquisition of Icosavax.
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 transactions 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
transactions on the Group’s viability and
capital allocation priorities, alongside the
financial benefits from the acquisitions if the
technologies were successful.
Divestment of
Pulmicort Flexhaler
in the US
During 2023, the Board approved the
divestment of
Pulmicort Flexhaler
in the US
to Cheplapharm.
The Board considered:
investors; the
long-term success of the Company; patients;
and maintaining high standards of
business conduct.
How the Board had regard to these matters:
>
Considered the Company’s long-term
strategy, the status of
Pulmicort
intellectual
property in the US and the potential impact
this may have on revenue, as well as the
investment required in the pipeline to
ensure the development of further life-
changing medicines.
>
Recognised the importance in ensuring that
appropriate arrangements were in place to
ensure the continued supply of medicines
to patients.
>
Considered the financial benefit of the
divestment and how this could be
reinvested, to further benefit patients
and shareholders.
Settlement of patent litigation
In July 2023, the Board approved the
settlement of the patent litigation with
Bristol-Myers Squibb and related parties
relating to
Imfinzi
and
Imjudo
.
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:
>
Reviewed the financial impact of the
settlement and the potential benefits and
risks of continuing with the litigation.
>
Considered the settlement value compared
to the cost of continued litigation and the
potential size of damages which were
being sought.
>
The time and efforts required from
management in continuing to defend the
litigation and the potential distraction this
could create.
Board’s reserved powers and delegation
of authority to the CEO
In May 2023, the Board reviewed its reserved
powers and delegation of authority to the
CEO, and made the following changes:
Set out below are examples of how key stakeholders, Section 172(1) duties and other matters are considered by the Board when making its
Principal Decisions in 2023.
Corporate Governance Report
Principal Decisions
For the Section 172(1) statement,
see page 74.
For more information on funding,
see Note 28 to the Financial
Statements from page 195.
For more information on
committees’ composition and
succession planning, see the
Nomination and Governance
Committee Report from page 90.
For more information on
acquisitions and collaborations,
see Business development from
page 42.
For more information on patent
litigation, see Patent litigation in
Note 30 to the Financial
Statements from page 204.
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Additional Information
Financial Statements
Strategic Report
Corporate Governance Report / Principal Decisions
>
Increased the CEO’s limit for business
development transactions.
>
Introduced a new reserved power covering
significant restructuring programmes.
>
Introduced a new reserved power covering
the settlement of major litigation.
>
Introduced new references to approving
material capital structure changes
(including reductions of capital and share
buybacks) and approving any changes to
AstraZeneca PLC’s stock exchange listings
or status as a public limited company.
The Board considered:
the long-term
success of the Company and the need to
maintain high standards of business conduct.
How the Board has regard for these matters:
>
Considered that decisions should be made
efficiently and at the appropriate level within
the Company.
>
Considered the results of a high-level
benchmarking exercise carried out in
respect of those FTSE 20 companies that
publish this information.
>
Considered the Group’s total revenue,
operating profits and net cash flow from
operating activities which have increased
significantly since the last review.
>
Considered the governance implications of
potential changes, particularly that the
change would reduce the number of
projects reviewed by the Science
Committee prior to Board approval. The
Board agreed that the Science Committee
would be free, if it wished, to continue to be
briefed on relevant transactions with a value
exceeding the previous threshold but below
the newly approved threshold.
>
Considered the overall Group materiality
threshold applied by AstraZeneca’s
auditors, PwC, in its audit work when
setting the new thresholds.
>
Considered comparisons with peers and
best practice.
>
Reviewed updates to the proposed role of the
Board (including adding a reference to the
Board’s role to safeguard and enhance
AstraZeneca’s reputation), the Chair and CEO.
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. In addition to
in-person engagements, virtual engagements
help to ensure that individual Directors, as
well as Board and Board Committees, have
the opportunity to meet with a range of
employees from across the global workforce,
and to hear and understand their views.
The Board believes that this alternative
approach continues to be the best model of
engagement for the Group and ensures that
the Board has access to the views of the
workforce regardless of location and provides
meaningful information and data that the
Board can use when considering the impact
of strategic decisions on employees.
Additionally, the chosen mechanisms allow all
Directors to engage with a wider cross-
section of the global workforce.
Workforce culture
During 2023, 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.
92%
of employees took part in the November 2023
Pulse survey.
‘Townhall’ meetings, ‘fireside chats’ and
‘Ask me 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, such as
the Chair ‘fireside chat’. During the year,
among other events, the Board hosted
in-person ‘townhall’ meetings for employees
in Japan and US sites, which were also
broadcast to other sites in the region to
increase reach and participation.
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 2023 Pulse survey.
Site visits
During 2023, Directors visited various Group
sites across the world, including those in
India, Dubai, Japan, the US, the UK and the
Alexion campus in Dublin, Ireland. The
majority of visits were in person but, to
maximise engagement opportunities,
some were virtual, including those to the
AstraZeneca businesses in the Nordics,
Spain and Taiwan.
>10
AstraZeneca Group sites around the world
visited by Directors during 2023.
Wellbeing
Where appropriate – for example in relation to
recent humanitarian events – 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.
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. Consequently, the Board has
chosen not to implement any of the three
methods set out in the Code. Instead, 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.
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Corporate Governance
Corporate Governance Report
Principal Decisions
continued
2023 overview
The UK Corporate Governance Code states
that there should be an annual evaluation of
the performance of the board, its committees,
the chair and individual directors and that, for
larger listed companies such as AstraZeneca,
this should be externally-facilitated at least
every three years. The Company was due to
have an externally-facilitated evaluation
in 2023.
The Board elected to postpone the externally-
facilitated review until 2024 and instead run an
internal performance evaluation in 2023. This
was considered to be a proportionate
approach in light of the change in Chair during
the year. Given the 27 April 2023 effective date
of appointment of Michel Demaré as Board
Chair, the Board concluded that it would be a
better use of time and resources for the next
externally-facilitated annual performance
review to take place in 2024, so that at least
the first 12 to 18 months of the Board’s work
under the new Chair could be taken into
account.
The internal evaluation was run via a web-
based survey covering a wide range of topics
that were broadly similar to topics from
previous evaluations. A report was prepared
using the answers to this survey which was
discussed by the Board at its meeting in
December 2023, and was used by the Chair
as the basis for individual conversations with
each Board member prior to the full
Board discussion.
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 90.
2023 outcomes and actions against prior
year recommendations
>
The Board continues to operate effectively
with an atmosphere that enables candid
discussion. Its relationship with
management, including the CEO, CFO and
SET, was highly rated.
>
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 composition of the Board was
highly rated.
>
The Board has a good understanding of
the views and requirements of its key
stakeholders.
>
All of the Board’s Committees continue
to operate effectively.
>
The Board’s contribution to strategy
development, oversight of the R&D pipeline
and effectiveness in monitoring and
considering key external developments
were highly rated. The Board oversees
risk effectively.
Succession planning and people oversight
continues to be a key area of focus. Key
priorities for 2024 included strategy, financial
performance and capital allocation,
monitoring the R&D pipeline, market-specific
and geopolitical issues, and Board and SET
succession planning. To address areas
highlighted by the 2022 annual Board
performance evaluation, various steps were
taken during 2023, including:
>
The re-establishment – following the
COVID-19 pandemic – of a strong
programme of in-person Board meetings,
including site visits, balanced with some
Board meetings being held virtually to
reduce the Board’s carbon footprint and the
need for Directors to undertake
intercontinental travel.
>
Focusing the Nomination and Governance
Committee’s work regarding Non-Executive
Director succession planning on addressing
the needs of the Board in the period to
2026, when four current Non-Executive
Directors will reach nine years’ tenure, with
the appointment of Anna Manz in
September 2023 being the first tangible
outcome of this work.
>
Continued routine work by the Nomination
and Governance Committee to plan for
future CEO succession, including reviews of
both internal and external potential
candidate options.
>
Arranging a session to enable the Board to
review how management was approaching
drug pricing legislation in the US.
As part of the Board performance
evaluation, Directors were asked to
consider the following areas:
>
Board composition
>
Stakeholder oversight
>
Board dynamics
>
Board Committees
>
Strategic oversight
>
Risk oversight
>
Succession planning and
people oversight
>
Priorities for change
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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 2023
Finance
Management
Sales & Marketing
Tech & Digital
Business
Science
Pre-AZ Pharma
Medical Doctor/Physician
Industry-specific
UK
US
Europe
Geographic
6
8
4
5
6
7
3
4
3
3
Asia
1
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 78 and 79 give more information about
current Directors in this respect.
The Board has adopted an Inclusion and
Diversity Policy (the Policy), which is
applicable to the Board and its Committees.
The Policy reinforces the Board’s ongoing
commitment to all aspects of diversity and to
fostering an inclusive environment in which
each Director feels valued and respected.
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 2023, 31% of the
Company’s full Board identifies as an ethnic
minority, 45% of the Company’s Non-
Executive Directors are women, and women
make up 46% of the full Board. The
information presented in the following tables
was collected on a self-reporting basis. The
Board, SET and Company Secretary were
provided with the prescribed table, and asked
to complete based on how they identify. The
Board is pleased that the Company meets the
On behalf of the Nomination and Governance
Committee (the Committee), I am pleased to
present the Committee’s report on its
activities during 2023.
Committee’s role
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 in the charts to the left.
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
Following the retirement of Leif Johansson
from the Board at the end of the AGM on
27 April 2023, I was appointed Chair of the
Board. In addition, I also assumed the role of
Chair of this Committee. Further details about
the Chair succession process are set out in
the 2022 annual report.
In April, the Board appointed Euan Ashley as
Chair of the Science Committee, in
succession to Nazneen Rahman, effective
1 June 2023, with Nazneen remaining a
member of the Science Committee. Euan was
appointed as a member of the Nomination
and Governance Committee, effective the
same date. The Board appointed Nazneen
Rahman as a member of the Remuneration
Committee, effective 1 May 2023.
In May, the Board appointed Anna Manz as a
Non-Executive Director and a member of the
Audit Committee with effect from 1 September
2023. The appointment process was led by
the Committee and involved Anna meeting
with multiple Directors. Anna brings extensive
cross-sector business skills and knowledge to
the Board, having held international roles in
North America and Asia-Pacific and served as
an executive and non-executive in large, listed
companies. Anna’s significant financial and
strategic leadership experience, including in
areas such as risk, treasury and accounting,
will enable her to fully contribute to the work
of our Audit Committee.
Nomination and
Governance Committee
members
>
Michel Demaré (Chair)
(from 27 April 2023)
>
Leif Johansson (Chair)
(until 27 April 2023)
>
Philip Broadley
>
Sheri McCoy
>
Nazneen Rahman
>
Euan Ashley
1
1
Appointed as a member of the Committee
on 1 June 2023.
“The Nomination and Governance
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.”
The Nomination and Governance
Committee’s terms of reference
are available on our website,
www.astrazeneca.com.
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Committee Report
updated diversity policy targets as specified
in the FCA’s Policy Statement on Diversity and
inclusion on company boards and executive
management, which was published in
April 2022:
>
46% of the Board are women, above the
target of at least 40%.
>
Following the appointment of Aradhana
Sarin as CFO, the Company meets the
policy target that at least one of the Chair
of the Board, Chief Executive Officer, senior
independent Non-Executive Director or
Chief Financial Officer be a woman.
>
The Board satisfies the target of at least
one member of the Board being from a
non-white ethnic minority background.
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
for the organisation as a whole. We were
named 2nd ranking Healthcare company in
the FTSE 100 for women on boards and in
leadership in the FTSE Women Leaders
Review. For the year ended 31 December
2023, following the retirement of Katarina
Ageborg in January 2023 and Sharon Barr’s
appointment as Executive Vice-President,
BioPharmaceuticals R&D in August 2023,
women represented 43% of the SET and its
leadership teams.
Ongoing training and development
On her appointment as an independent
Non-Executive Director, Anna Manz
commenced an ongoing tailored induction
programme to provide an understanding of
the Group and which reflects Anna’s existing
expertise and Committee membership. Key
areas of the induction programme include:
>
Meetings with members of the Board, SET
and other senior management.
>
Meeting with external legal advisers.
>
Meeting with the external auditors.
>
Access to a digital reading room which
provides information on the Group,
including financial performance, pipeline
information, key Company policies, investor
and analyst reports, media updates and
guidance on directors’ duties and listed
company requirements.
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 year Board
members participated in a roundtable event
with key external experts in the areas of lung
cancer and ATTR during the Board meeting in
Tokyo, Japan to discuss the latest science
and clinical research in those areas.
At least annually, I discuss with each Director
his or her contribution to the work of the
Board and personal development needs.
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
also arranged to allow further interactions with
employees and sites. These visits further
Directors’ understanding of the Group’s
business and operations, as well as provide
an insight into the particular challenges faced
locally and opportunities to engage directly
with employees and other stakeholders.
Table 1. Reporting table on sex/gender representation as at 31 December 2023
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
7
54%
3
7
54%
Women
6
46%
1
6
46%
Non-binary
–
–
–
–
–
Not specified/prefer not to say
–
–
–
–
–
Table 2. Reporting table on ethnicity representation as at 31 December 2023
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
9
69%
Mixed/Multiple Ethnic Groups
1
8%
–
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
–
–
–
–
–
Succession planning
The Committee considers both planned and
unplanned (unanticipated) succession
scenarios. The Committee split the majority of
its time on this topic in 2023 between
succession planning for Non-Executive
Directors, successfully concluding the
recruitment of Anna Manz in September and
continued routine succession planning for the
role of CEO, which included desktop research
relating to potential external candidates and
reviewing the strengths and areas of
development for potential internal candidates.
Korn Ferry and Lygon Group assisted the
Committee with its succession planning work
this year. Korn Ferry undertakes executive
search assignments for the Company but has
no other connection with AstraZeneca or its
individual Directors.
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.
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 81.
Michel Demaré
Chair of the Nomination and
Governance Committee
The Board’s Inclusion and
Diversity Policy can be read
in full on our website,
www.astrazeneca.com.
Information about our approach
to diversity in the organisation
below Board level can be found in
People, from page 45.
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Additional Information
Financial Statements
Strategic Report
Nomination and Governance Committee Report
>
AstraZeneca R&D strategic science
capabilities:
including multi-omics and
bioinformatics, and AI and computational
strategies. This was supported by further
in-person presentations from AstraZeneca
scientists on site at Cambridge, UK
covering across all R&D areas.
>
Acquisitions and in-licensing
agreements:
review for the Board the
scientific case for acquisition and licensing
opportunities, including:
–
Acquisition of CinCor Pharma, Inc.,
adding baxdrostat (CIN-107) to the
cardiorenal portfolio.
–
Exclusive global licence agreement with
KYM Biosciences, for CMG901, a
potential first-in-class ADC targeting
Claudin 18.2.
–
Acquisition of Neogene Therapeutics
Inc., a global clinical-stage biotechnology
company pioneering the discovery,
development and manufacturing of
next-generation TCR-Ts.
–
Purchase and licence agreement for a
portfolio of pre-clinical gene therapy
programmes and enabling technologies
from Pfizer Inc.
>
R&D in China:
The Committee had an
in-person meeting with AstraZeneca China
R&D and Business Development leadership
to discuss external R&D landscape,
innovation opportunities and future plans.
>
Clinical Trials Operations strategies:
a
review of Clinical Operations focusing on
challenges and opportunities driven by
internal changes and external factors.
>
Corporate scorecard outturn and goal
setting:
providing insight and feedback to
the Remuneration Committee in support of
2023 achievements and 2024 goal setting
relating to R&D.
Euan Ashley
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 nine times during 2023,
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 and external trends impacting
R&D investment.
Science Committee members
>
Euan Ashley (Chair) (from
1 June 2023)
>
Nazneen Rahman (Chair until
1 June 2023)
>
Diana Layfield
>
Tony Mok
>
Marcus Wallenberg
>
EVP, Oncology R&D
1
>
EVP, BioPharmaceuticals R&D
1
>
CEO, Alexion
1
1
Co-opted member of the Committee.
“The Science Committee’s core
role is to provide assurance to
the Board regarding the quality,
competitiveness and integrity of
the Group’s R&D activities.”
The full role of the Science
Committee is set out in its
terms of reference, available at
www.astrazeneca.com.
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Report
and a briefing paper relating to the rollout of
electronic patient information leaflets.
Our focus areas during the year included:
>
How numerous regulations, including the
IFRS Sustainability Disclosure Standards,
European Sustainability Reporting
Standards and Corporate Sustainability
Reporting Directive (CSRD), would impact
the Company’s reporting on sustainability
matters and the measures being taken to
ensure the Company has a single source of
sustainability-related data.
>
The establishment and oversight of a new
Sustainability Steering Committee
comprised of representatives from Finance,
Sustainability, Compliance, HR and
Government Affairs which will be
accountable to both the Committee and
the Audit Committee to ensure consistency
over all aspects of sustainability across
the business.
>
The establishment and development of a
health equity strategy which aims to build
on existing access to healthcare
programmes to enable more equitable
health outcomes across the globe.
>
Oversight of the conduct of the CSRD
double materiality assessment.
>
Supporting the Remuneration Committee in
its consideration of how the delivery of our
ESG priorities is incentivised, and reviewing
performance against our ESG remuneration
targets relating to AZC.
>
Overseeing engagement with investors on
sustainability-related matters and reviewing
AstraZeneca’s external disclosures.
Nazneen Rahman
Chair of the Sustainability Committee
Chair’s introduction
The Sustainability Committee (the Committee)
continued its important work during 2023 to
oversee the execution of the Company’s
sustainability strategy. In addition to this
important function, the Committee’s other
roles are:
>
To oversee the Company’s disclosures
relating to sustainability and communication
of our sustainability activities with our
stakeholders.
>
To monitor developments and best practice
and provide input to the Board and other
Board Committees on sustainability matters
as required.
>
To advise the Remuneration Committee on
the Company’s performance against
sustainability metrics and targets.
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 2023, the Committee met twice
formally. In addition, the Committee facilitated
a deep dive session for the full Board focusing
on developments in laws and regulations
relating to sustainability reporting and
progress against our Ambition Zero Carbon
(AZC) targets and programmes. To enhance
our understanding of the sustainability
initiatives in action at AstraZeneca and hear
colleagues’ personal perspectives, the
Committee invited employees to its meetings
who were involved in workstreams and
projects from across our sustainability
strategy. This included hearing from R&D
scientists in Macclesfield, UK about their work
to recover and reuse solvents which are a
material contributor to our carbon footprint
Sustainability
Committee members
>
Nazneen Rahman (Chair)
>
Sheri McCoy
>
Andreas Rummelt
>
Marcus Wallenberg
Standing attendees at Committee meetings
during 2023 included the EVP, Operations,
IT and Sustainability and VP, Global SHE
and Operations Sustainability.
“The Sustainability Committee
continued its important work
during 2023 to oversee the
execution of the Company’s
sustainability strategy.”
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.
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Sustainability
Committee Report
The Committee also spent considerable time
keeping ourselves updated on developments
in the reporting and regulatory environment,
including the proposed governance and audit
reforms in the UK, SEC updated interpretations
on non-GAAP measures reporting, and
sustainability-related reporting.
This year, we continued our approach of a
combination of in-person and virtual Committee
meetings and interactions with colleagues
from across the organisation. Of particular
note this year were the Committee’s in-person
visits to AstraZeneca’s manufacturing site in
Speke, UK, and to the AstraZeneca and
Alexion UK marketing companies. I also made
in-person visits to the marketing companies in
India and the Gulf Cooperation Cluster (GCC)
in Dubai and a visit to the Global Innovation
and Technology Centre in Chennai, India.
These interactions, along with the in-depth
sessions I refer to above, have allowed
Committee members to maximise our
engagement with colleagues across the
business, deepen our understanding of the
priorities and challenges facing many different
markets and business areas, and hear a wide
range of employees’ views directly.
We hope you find the Committee’s Report
useful and informative, and, as ever,
I welcome any feedback.
Philip Broadley
Chair of the Audit Committee
The Committee continues to apply
appropriate challenge to the Company’s
management; for example, the Committee
challenged the timing of recognition of
provisioning for certain legal items and their
presentation as non-core items. This matter
was subject to robust discussions and
scrutiny from the Committee before it was
satisfied with management’s approach.
The Committee’s agenda continues to be
driven by the Company’s key active risks and
key strategic programmes which are
considered at every Committee meeting, and
inform the Committee’s agenda of in-depth
sessions which, this year, have included
sessions on:
>
Our Operations function, as we continue
to evolve our supply chain capabilities.
>
Our IT/IS function, to gain a better
understanding of how we seek to mitigate
cybersecurity threats.
>
The China market environment and
healthcare industry trends, the
enforcement environment, and how risks
are being proactively managed.
>
How the Company seeks to mitigate the
impact of inflationary pressures across
the business.
>
Organisational activities to support the
Company’s 2030 Bold Ambition.
These sessions allowed the Committee to
continue exploring specific aspects of risks in
their ‘real world’ business contexts, in direct
dialogue with people in the business that
have responsibility for managing these risks.
Chair’s introduction
On behalf of the Audit Committee
(the Committee) I am pleased to present
the Committee’s report on its activities and
the significant matters we considered
during 2023.
In 2023, following his election as Chair of
the Board, Michel Demaré stepped down
as a member of the Committee immediately
following the AGM in April. My thanks go to
Michel for his valuable contributions to the
Committee’s work over the past few years.
We also welcomed Anna Manz as a member
of the Committee following her appointment
to the Board in September. Anna brings
wide-ranging, international experience from
a number of industries, and has already
begun to make effective contributions to
the work of the Committee.
The Committee believes that it has carried
out its responsibilities effectively throughout
the year, and to a high standard, providing
independent oversight. It has had good
support from AstraZeneca personnel and
PwC, the Company’s auditors.
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’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
2
>
Deborah DiSanzo
>
Sheri McCoy
>
Anna Manz
3
2
Member of the Committee until
27 April 2023.
3
Appointed as a member of the Committee
on 1 September 2023.
1
Routine attendees at Committee meetings include: the CFO; the Chief Human Resources Officer; Chief Compliance Officer
and General Counsel; 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 Finance 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.
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The full role of the Audit
Committee is set out in its terms
of reference, available at
www.astrazeneca.com.
Committee overview
Committee composition
In December 2023, the Board determined the
Committee met the UK, US and Swedish
composition requirements by virtue of Philip
Broadley and Anna Manz 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, 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 78 and 79 and meeting
attendance is shown on page 77.
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 Audit
Committee 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’s activities in this area in
2023 included:
>
Reviewing 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 98. Further information
on the significant accounting matters
considered is included in the Financial
Review under Critical accounting policies
and estimates from page 72 and within our
Group Accounting Policies from page 152.
>
Considering the completeness and
accuracy of the Group’s reported financial
performance against its internal and
external key performance indicators.
>
Reviewing the preparation of the Directors’
Viability statement and considering 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.
>
Reviewing quarterly updates from both
management and PwC on the programme
of activities relating to control over financial
reporting and the effectiveness of testing
that has been performed across the internal
control environment.
>
Considering 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 Sarbanes-
Oxley Act – in particular, the status of
compliance with the programme of internal
controls over financial reporting
implemented pursuant to section 404 of
that Act.
>
Discussing financial reporting
considerations in relation to significant
transactions that occurred in the year, the
valuation and presentation of the defined
benefit pension arrangements, impairment
of intangible assets, restructuring
programmes and the presentation of
collaboration and alliance revenues. The
Committee also reviewed developments in
sustainability reporting requirements and
the Company’s activities, governance
frameworks and approach in compliance
with enacted and emerging regulations in
relation to sustainability.
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 the manner in which the risk
management process was embedded in the
Group such that the Committee could be
assured that management’s accountability for
risks was clear and functioning effectively.
The Company’s risk framework, described
further from page 54, provides the context for
the Committee to consider the Directors’
Viability statement which 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 a
quarterly risk management report from the
CFO. The likelihood of each of the risks
materialising and its potential impact was
monitored by the Committee and the reports
from the CFO enabled the Committee to track
the trend applicable to each risk compared to
the previous quarter. The composition and
profile of these risks informs the Committee’s
agenda of in-depth sessions. For example, an
upward trend, in terms of the likelihood and
potential impact of the risk, was noted for the
key active risk relating to IT, cyber risk and
data security, therefore the Committee spent
additional time with representatives from the
IT function to understand those risks and the
actions being undertaken to mitigate them.
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More information on the basis of
preparation of Financial
Statements on a going concern
basis is set out on page 227 and
in the Financial Statements on
page 152.
Further information on the
significant financial reporting
issues considered is set out in the
table from page 98.
Further information about the
Principal Risks faced by the
Group and the Viability statement
is set out in Risk Overview from
page 54.
Cyber risk, digital security and information
governance
Our approach to identifying, assessing and
managing material cybersecurity risks
(including those that result from the use of
third parties in business processes and data
management) is integrated within our
Group-wide approach to managing risk.
Failure in information technology or
cybersecurity has been identified as a
Principal Risk. Mitigations are in place to
manage these risks, and these are monitored,
and their effectiveness regularly reported, for
example in KPI dashboards provided to
management and the Committee. Incidents
are managed and reported using the
cybersecurity incident management
framework which in turn is connected to the
Group’s crisis management framework.
Cybersecurity risks are overseen by the
Committee, who perform an in-depth review
annually. Their reviews are supported by
senior management, the VP, Group Internal
Audit (GIA) and other assurance or providers
as required. Cybersecurity risks (including
previous incidents) have not materially
affected our business strategy, results of
operations or financial condition.
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 TCFD Summary Statement and
the EU Taxonomy disclosures in this Annual
Report and the extended TCFD Statement
published separately. These statements are
also reviewed by the Sustainability Committee,
to support the Committee’s review.
The Committee received updates in the
current year regarding the proposed and/or
enacted regulations by the US, EU, UK and
the International Sustainability Standards
Board (ISSB) on sustainability reporting, as
well as the ongoing assessment of potential
double materiality topics for the Company
under EU regulations.
Legal and Compliance
The Committee’s activities in this area
included reviewing:
>
Quarterly reports from the Legal function to
monitor the status of significant litigation
matters and governmental investigations.
>
Quarterly reports from Global Compliance
to provide oversight of key compliance
incidents (both substantiated and
unsubstantiated), possible trends and the
dispersion of incidents across our business
functions and management hierarchy. The
reports included corrective actions taken so
that the Committee could assess the
effectiveness of controls, and monitor and
ensure timely remediation.
>
Reporting on compliance with
AstraZeneca’s Code of Ethics to ensure
high ethical standards and that
AstraZeneca operates within the law in all
countries where we operate.
>
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
possible, from AstraZeneca’s supply chain.
Internal Audit
The Committee reviewed GIA’s activities,
including:
>
Reviewing quarterly reports of work carried
out by GIA, including the status of follow-up
actions with management. In 2023, 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. The 2023 audit
plan was aligned to our key active risks and
wider risk taxonomy. Separate meetings are
arranged to discuss follow-up actions in
more depth with specific teams, when
required by the Committee.
>
Carrying out the annual effectiveness
review of GIA in late 2023 by considering its
performance against the internal audit plan
and key activities.
>
Approving the 2024 internal audit plan,
which is aligned to our key active risks and
wider risk taxonomy.
>
Considering the geographic presence,
reach and capabilities of GIA and the
appropriateness of the Group’s resource
allocation for this vital assurance function.
The Committee noted the continued
contributions of GIA 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.
An independent External Quality Assessment
of GIA is performed every five years and was
last performed in 2021.
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 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. The Committee also
sought management’s feedback on the
conduct of the audit and considered the level
of and extent to which the auditors challenged
management’s assumptions. The Committee
also received a formal letter and report from
the Financial Reporting Council (FRC)
following the joint FRC and Public Company
Accounting Oversight Board (PCAOB)
inspection of PwC’s 2022 audit of
AstraZeneca. The FRC’s inspection was rated
as “Good” (the highest rating possible) and
there were no ‘Key’ or ‘Other’ findings.
The FRC also recognised a number of areas
of good practice in relation to the conduct of
the audit.
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 including the Committee
Chair joining PwC’s Account Planning
Workshop to meet face-to-face with PwC
team members responsible for auditing
AstraZeneca’s global entities.
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continued
For further information, see IT
and IS resources on page 41.
For more information on our Code
of Ethics, see page 49, and on
Anti-bribery and anti-corruption,
see page 39.
AstraZeneca’s Modern Slavery
Act Statement is available on our
website, www.astrazeneca.com.
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, as described further on
page 100.
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; Global
Business Services; the AstraZeneca and
Alexion marketing companies in the UK;
the Speke, UK manufacturing site; and the
marketing companies for the GCC and India.
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, SEC updates on clawbacks
and non-GAAP reporting, consultations on
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 FRC during the year,
including those on fair-value-measurement
and climate-related metrics and targets.
Ensuring the quality of external financial
reporting to shareholders and other
stakeholders remains paramount to the
Committee. This includes its assessment of
the annual reports to ensure that, taken as a
whole, they are fair, balanced and
understandable (for which the process is
described on page 100). External validation of
the Annual Report is an important indicator of
the quality of our reporting. The Committee
was pleased with the feedback from the FRC
that it received in 2023 on the 2022
Annual Report:
>
The FRC undertook a routine corporate
reporting review of the 2022 Annual Report
and did not raise any questions or queries
that required further correspondence,
which the Committee consider a reflection
of the quality financial reporting and
compliance undertaken by AstraZeneca.
The FRC highlighted some areas where
reporting could be further enhanced which
management and the Committee have
considered in preparing this Annual Report.
>
The FRC also reviewed our reporting in the
context of the 2018 UK Corporate
Governance Code and raised no significant
points in this respect.
>
In the FRC’s 2022/2023 Annual Review of
Corporate Governance Reporting, the FRC
highlighted the following aspects of the
2022 Annual Report as examples of best
practice: (i) how the impact of
AstraZeneca’s learning culture contributed
positively to retention and promotion rates
and more accurate succession planning;
and (ii) how AstraZeneca’s strategy and
KPIs in relation to scientific measures are
linked to remuneration.
>
The FRC Lab’s report on business
model-focused reporting highlighted our
‘Life-cycle of a medicine’ text and diagram
in the 2022 Annual Report (an updated
version of which appears on page 11 of this
Annual Report) as a best practice example
of how an issuer can better meet investor
needs, particularly for a reader who is not a
pharmaceutical expert.
Committee performance
The Committee conducted the annual
evaluation of its own performance, referring to
the Committee-specific results of a Board
performance review survey prepared by the
Company Secretary’s team. The results were
reported to and discussed with the
Committee and the Board. The overall results
of the survey were positive and noted the
Committee’s efforts and focus.
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Additional Information
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Further information about the
audit and non-audit fees for 2023
is disclosed in Note 31 to the
Financial Statements on
page 210.
Matter considered
Committee’s conclusion and response
Valuation of intangible
assets
See Financial Review
from page 58 and
Note 10 to the
Financial Statements
from page 172.
The Group carries significant intangible assets on its
Consolidated Statement of Financial Position arising from the
acquisition of businesses and intellectual property (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 these
products (the headroom). Products will be identified as ‘at risk’
because the headroom is small or, for medicines in
development, there is a significant potentially adverse event
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 $17 million arose in
relation to launched products, and $417 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. The Committee was satisfied that the Group
had appropriately accounted for the identified impairments.
Revenue recognition
See Financial Review
from page 58 and
Note 1 to the
Financial Statements
from page 160.
The US is our largest single market and accounted for 42% of
our Total Revenue in 2023. Revenue recognition, particularly in
the US, is affected by rebates, chargebacks, returns, other
revenue accruals and cash discounts.
In 2023, a new category of revenue termed Alliance Revenue
was included on the face of the Statement of Comprehensive
Income, and comparative information re-presented. Alliance
Revenue includes profit shares, revenue shares or royalties from
defined collaborative arrangements, and was previously a
sub-category of Collaboration Revenue.
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 of the overall gross-to-net deductions.
The Committee was consulted on the proposed update to
presentation of Alliance and Collaboration Revenues, and
aligned on the usefulness of enhanced disclosures of Alliance
Revenues for better visibility and reflect differences in revenue
profiles for Alliance and Collaboration Revenues. The
Committee also discussed the accounting considerations for
key milestones in Collaboration Revenue.
Alternative performance
measures (APMs)
See Financial Review
from page 58.
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.
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 and
amortisation of allocated fair value of purchased intangible
assets. The fair value uplift of inventory was fully unwound in
the year, hence the amortisation of intangibles will remain the
material non-core item from the acquisition transaction. There
were some significant one-off legal settlements in the year
which were classified as non-core items in line with the
Group’s policy.
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 the non-core items and noted that the
presentation was consistent with prior years for the items.
The Committee further considered management’s assessment
and recommendation to present the $1,020 million legal
provision costs as non-core items, and concurred with
management that the presentation was appropriate due to their
significance and consistent with classification in prior years.
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.
Litigation and
contingent liabilities
See Note 30 to the
Financial Statements
from page 204.
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, antitrust law, and
sales and marketing practices.
In the current period, net legal provisions of $1,020 million were
recorded for three legal proceedings within non-core items once
the criteria for recognising a provision were met.
Of the matters the Committee considered in 2023 the more
significant included: the settlements in the
Nexium
and
Prilosec
product liability litigation, the
Imfinzi
patent litigation and the
Alexion shareholder litigation.
The Committee carefully considered the timing of recognition
and presentation of these provisions and concurred with
management’s assessment. The Committee was also satisfied
that the Group was effectively managing its litigation risks
including seeking appropriate remedies and continuing to
defend its IP rights vigorously.
Significant financial reporting issues considered by the Committee in 2023
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continued
Significant financial reporting issues considered by the Committee in 2023
continued
Matter considered
Committee’s conclusion and response
Tax charges and liabilities
See Note 4 to the
Financial Statements
from page 164.
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 2023, the Committee considered the tax accounting
implications of a UK Group company’s intragroup purchase of
certain intellectual property as well as developments in certain
uncertain tax positions in the year. The Committee considered
the analysis provided by management and concurred with the
presentation and reporting of these items.
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 167.
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.
There were no significant changes in the Group’s business
during the year, with the Alexion integration continuing as
envisioned.
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.
Retirement benefits
See Financial Review
from page 58 and Note
22 to the Financial
Statements from
page 183.
Accounting for defined benefit pension and other post-
retirement benefits remains an important area of focus. The
present value of these liabilities is sensitive to changes in
long-term interest rates, future inflation and mortality
expectations. The assumptions used to value the liabilities for
the Group’s main post-retirement benefit obligations are
updated every quarter along with asset valuations.
The Group is cognisant of the wider regulatory environment and
local requirements around funding levels and contributions. In
May 2023, the triennial actuarial valuation as at 31 March 2022
for the UK defined benefit pension scheme was agreed with
AstraZeneca Pensions Trustee Limited (the Trustee of the UK
pension scheme) and submitted to the Pensions Regulator. In
December 2023, the Group enacted a charge over the
Company’s Cambridge Biomedical Campus site, to provide
long-term security to the AstraZeneca Pension Fund.
Guaranteed Minimum Pensions (GMP) equalisation is now
largely complete and most UK retirees were offered flexibility
to reshape their benefit through a Pension Increase Exchange
option.
In May 2023, the Group executed a buy-out of its qualified US
Defined Benefit Pension Plan with an external insurer. All Plan
liabilities have been discharged and the Plan has been
wound-up.
The Committee was satisfied that the Group’s contribution
policy and actuarial assumptions used to value liabilities were
appropriate during the year. The Committee monitors the
funding level of the Group’s defined benefit obligations on a
quarterly basis, alongside key developments. The Committee
also received a separate update from the Global Pensions team
covering key activities over the year.
The Committee was reassured by the Group’s engaged and
balanced approach to managing the risks associated with its
defined benefit obligations, noting the completion of the
actuarial valuation ahead of the statutory deadline. The
Committee reviewed and concurred with management’s
accounting and presentation of pension balances.
The Committee is cognisant of the need to adhere to local
funding regulations and noted the security provided by the
Group, which underwrites obligations to members.
The Committee was satisfied with the progress made on GMP
equalisation, noting the additional flexibility offered.
The Committee was satisfied with the process and outcome of
the US buy-out, noting that it reduces long-term financial risk to
the Group and provides security to participants.
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Corporate Governance
Additional Information
Financial Statements
Strategic Report
Audit Committee Report
Fair, balanced and
understandable assessment
As in previous years, at the instruction of the
Board, the Committee undertook an
assessment of this Annual Report to ensure
that, taken as a whole, it is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the
Company’s position and performance,
business model and strategy. The Committee
reviewed the Company’s governance
structure and assurance mechanisms for the
preparation of this Annual Report and, in
particular, the contributor and SET member
verification process. The Committee received
an early draft of this 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 AstraZeneca’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 81.
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 82. 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 2024 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 as at 31 December 2023. 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 2023, PwC was reappointed as the
Company’s auditor for the financial year
ended 31 December 2023, its seventh
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
continued as the lead audit partner at PwC
for 2023 following her appointment in
January 2022.
Audit, audit-related and other assurance
services provided by the external auditor
The Committee maintains the Audit and
Audit-Related Services Approval Policy (the
Policy) for the pre-approval of all audit
services, audit-related services and other
assurance services undertaken by the
external auditor. The principal purpose of the
Policy is to ensure that the independence of
the external auditor is not impaired.
The pre-approval procedures permit certain
audit and audit-related services to be
performed by the external auditor, subject to
annual fee limits agreed with the Committee
in advance. Pre-approved audit and
audit-related services below the clearly trivial
threshold (within the overall annual fee limit)
are subject to case-by-case approval by the
SVP Finance, Group Controller & 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 Sarbanes-Oxley Act, statutory
audits for subsidiary entities, and other
procedures to be performed by the
independent auditor in order to form an
opinion on the Group’s Consolidated Financial
Statements. The pre-approved audit-related
services, which the Committee believes are
services reasonably related to the
performance of the audit or review of the
Company’s Financial Statements, included
certain services required by law or regulation,
such as financial 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 Finance
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 2023, PwC provided audit services
including interim reviews of the results of the
Group for the period ended 30 June 2023 and
audit-related and other assurance services.
The increase to the statutory audit fee for
2023 is largely driven by inflationary increases.
Fees for audit-related and other assurance
services amounted to 6% of the fees payable
to PwC for audit services in 2023 (2022: 4%).
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 2023
were 7% (2022: 6%) of average audit fees over
2020 to 2022 (2022: 2019 to 2021).
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.
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Corporate Governance
Audit Committee
Report
continued
$30.1m
$29.3m
2023
2022
Audit/audit-related and other assurance services
Statutory audit fee
Audit-related and other assurance services
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 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 98). Areas that were reviewed by
the Committee included PwC’s extensive and
detailed review of the valuations and
assumptions related to defined benefit
pension valuations and the UK group
company intragroup purchase of certain IP,
assumptions and calculations over Gross to
Net Product Sales, legal settlements in the
year, intangible asset assumptions used in
cashflow modelling, and the recognition and
measurement of uncertain tax liabilities.
The Committee concluded that the PwC audit
was effective for the financial year ended
31 December 2023. In February 2024, the
Committee recommended to the Board the
reappointment of PwC as the Company’s
auditor for the financial year ending
31 December 2024. Accordingly, a resolution
to reappoint PwC as auditor will be put to
shareholders at the Company’s AGM in
April 2024.
In order to comply with UK legal requirements
regarding the auditor’s tenure and audit
tendering, the external audit must be put out
to tender before the 2027 financial year. In late
2023, the Committee decided to commence
the tender process for the audit mandate for
the 2027 financial year. This will ensure
sufficient time to carry out the process and,
in the event that a new auditor is appointed,
clear any conflicts and ensure a new auditor
builds up the necessary knowledge and
business familiarity to ensure the delivery of
an effective audit. PwC is eligible to re-tender
for the audit and has indicated its willingness
to be one of the firms included in the tender.
The Committee will lead the tender process
and has approved an inclusive, competitive
and transparent process by which the tender
will be conducted to determine a high-quality
audit delivery provider.
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 2023.
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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 2023.
At the beginning of the year, we announced
the launch of our inspiring new 2030 Bold
Ambition. Since launch, significant progress
has already been made towards delivering
on our stretching target of 15 new medicines
by 2030, including the approvals of
Truqap,
Wainua
and
Airsupra
. With strong revenue
growth in 2023 and over 30 Phase III clinical
trials underway (10 of these expected to
have blockbuster potential), it is clear that
AstraZeneca’s remarkable performance
trajectory is set to continue to deliver value
to shareholders in the years to come.
Key Committee activities in 2023
The Committee was pleased to have received
a high degree of support for the 2022
Directors’ Remuneration Report, with a 94%
vote in favour at the Company’s 2023 AGM.
An important area of focus for the Committee
this year has been reviewing the current
Directors’ Remuneration Policy (the Policy),
which is required to be put to shareholders at
the 2024 AGM.
In the period since our Policy was last
approved in 2021, we are proud that
AstraZeneca has continued to grow and
prosper under our CEO’s leadership –
delivering excellent returns for shareholders,
and consistently positioned first or second in
the FTSE 100, materially larger in size than
other UK listed companies. As a major global
organisation, operating within the highly
competitive global pharmaceuticals sector, the
Committee is very aware of the challenges of
providing competitive executive remuneration
which balances the genuine pay pressures
from a talent market heavily influenced by US
practice, and the expectations of UK investors
and the corporate governance environment.
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 102
>
Remuneration at a glance,
page 106
>
How our performance
measures for 2024 support
the delivery of our strategy,
page 107
>
How the Remuneration
Committee ensures targets
are stretching, page 108
>
Annual Report on
Remuneration, page 109
>
Directors’ Remuneration
Policy, page 127
During 2023, I spent time meeting with
investors who hold over 50% of the
Company’s issued share capital to discuss
the Committee’s proposals for the 2024
Policy. The valuable feedback received was
discussed with the Committee, and was
factored into the Committee’s consideration of
both executive remuneration in 2024 and the
Policy which will be put to shareholders for
approval at the 2024 AGM. The new proposals
are summarised later in this letter, and our
new Policy can be found from page 127.
AstraZeneca has a well-established high
performance culture, and we are committed
to delivering and rewarding excellent
performance. Over the year, the Committee has
worked closely with its independent advisor
and the Audit, Science and Sustainability
Committees to ensure that the financial,
science and ESG measures in our incentive
plans are appropriate, suitably stretching and
accurately assessed in order to enable the
Company to achieve the 2030 Bold Ambition
and Growth Through Innovation strategy.
In addition to overseeing the reward
arrangements in relation to our Senior
Executive Team (SET), including those for the
appointment of Sharon Barr as EVP,
BioPharmaceuticals R&D, we continue to look
further into total reward of the wider workforce
and are supportive of the Company’s efforts
to ensure reward decisions are equitable by
career level, geography and gender. The
Committee is pleased that 35% of the
employee population are eligible to participate
in AstraZeneca share plans so that employees
can share in the Company’s performance and
align with the experience of shareholders. We
are proud that AstraZeneca remains
committed to paying a living wage for all
employees globally.
Remuneration Committee
members
>
Sheri McCoy (Chair)
>
Philip Broadley
>
Michel Demaré
>
Leif Johansson
1
>
Nazneen Rahman
2
1
Retired from the Board on 27 April 2023.
2
Appointed as a member of the Committee
on 1 May 2023.
“With the approval of three new
medicines, over 30 Phase III
clinical trials under way and
industry-leading revenue
growth in 2023, it is clear that
AstraZeneca’s remarkable
performance trajectory is set
to continue to deliver value
to shareholders in the years
to come.”
The role of the Remuneration
Committee is set out in its terms
of reference, available at
www.astrazeneca.com.
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Corporate Governance
Directors’
Remuneration Report
500
400
300
200
100
Dec
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
Dec
20
Dec
21
Dec
22
Dec
23
AstraZeneca’s 2023 performance
Science and Innovation:
2023 saw another
year of exceptional performance as we
continued to expand and rapidly advance our
high-quality portfolio. The scientific progress
is essential for our patients who stand to
benefit from our medicines and we are
delighted that not only did we deliver 30
pipeline progression events, either NME
Phase II starts or Phase III investment
decisions, but we were also able to exceed
our goal for regulatory events by delivering 46
over the year. AstraZeneca also continued to
invest for the future and build our scientific
leadership, with highlights including the
agreement with Quell Therapeutics and
proposed acquisition of Gracell
Biotechnologies to advance cell therapies
across oncology and autoimmune diseases
and the new licensing agreement with
Eccogene for a novel once daily oral GLP-
1RA, adding an exciting early asset with
potential as a next-generation treatment for
cardiometabolic diseases, diabetes and
obesity to the CVRM portfolio.
Growth and Therapy Area Leadership:
In 2023, the commercial and regulatory teams
have made great progress driving a 3%
(constant exchange rate (CER): 6%) growth in
Total Revenue, despite a decline of $3,736
million from COVID-19 medicines. Excluding
COVID-19 medicines, Total Revenue
increased by 13% (CER: 15%). Oncology Total
Revenue increased by 19% (CER: 21%) to
$18,447 million following approvals of
Imfinzi
for biliary tract cancer and
Imfinzi
plus
Imjudo
for liver and lung cancers.
Tagrisso
,
Imfinzi
,
Lynparza
and
Calquence
were once again all
stand out performers. Within BioPharmaceuticals,
there was strong growth in all non-COVID-19
therapy areas. CVRM Total Revenue was up
15% (CER: 18%) to $10,628 million driven by
Forxiga
,
Lokelma
, roxadustat and
Andexxa
.
Respiratory & Immunology Total Revenue was
$6,404 million, an increase of 7% (CER: 10%).
Rare Disease Total Revenue grew by 10%
(CER: 12%) to $7,764 million, largely driven by
Ultomiris
(up 51% (CER: 52%)), along with
marked contribution from
Strensiq
,
Koselugo
and
Kanuma
as they expand into new markets.
People and Sustainability:
We continue to
strive to be a great place to work. We have
continued to invest in developing our leaders
and nurturing a culture of lifelong learning. In
2023, over 11,000 employees have
participated in an immersive development
experience and over 1.2 million self-guided
learning modules have been completed in our
learning platform Degreed. Inclusion and
diversity remains an important priority; in 2023
the Company has focused on embedding
equity into our talent processes, building
inclusive leadership capabilities and engaging
our global workforce through quarterly Power
of Diversity programming, such as our
spotlight on building cultural intelligence. We
have continued to make progress to increase
the percentage of women at senior levels,
How we have performed in 2023
Total shareholder return (TSR)
2021 to 2023
1
+40%
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.
Delivery against strategy – 2023 Group scorecard performance
2
Target
2023
outcome
Science and Innovation: Annual pipeline progression
Pipeline progression events
25
30
Regulatory events
35
46
Growth and Therapy Area Leadership
Total Revenue
$43.9bn
$44.8bn
Achieve Group Financial Targets
Cash flow
$9.3bn
$9.5bn
Core EPS
$6.89
$7.13
2
For details of the Committee’s consideration of Group scorecard outcomes and a description of performance measures, see
from page 111.
AstraZeneca
Global pharmaceutical peers average
FTSE 100
European pharmaceutical peers average
More information on the TSR
peer groups for PSP awards can
be found on page 115.
Further detail of 2023 commercial
and scientific performance can be
found in the Strategic Report
from page 12.
advancing to 50.1%, and have strong
cultural diversity in our executive cohort,
with 40 countries of origin represented in
executive levels.
Sustainability is increasingly embedded into
everything we do. The expansion of AZ
Forest, raising our commitment to plant and
ensure the long-term survival of over 200
million trees by 2030, will contribute to
Ambition Zero Carbon and remove around
30 million tonnes of carbon dioxide from the
atmosphere. Our ground-breaking partnership
to deliver renewable natural gas to our US
research and manufacturing sites will provide
a source of clean heat which will contribute to
our science-based target of reducing Scope 1
and 2 emissions (operations and fleet) by 98%
by 2026, whilst also contributing to the circular
economy. We celebrated AstraZeneca being
ranked number 1 among pharmaceutical
companies for climate action in a new STAT
Report, and we were proud of our strong
presence at Climate Week and the UN
General Assembly as we continued to drive
change at scale.
2023 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 2023, including
other achievements across the enterprise,
such as advancing our People and
Sustainability priorities. In that context, the
Committee believes that the payments
outlined below fairly reflect their performance.
Annual bonus – 79.5% 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 2023, including ESG
achievements. The Committee determined to
award an annual bonus equivalent to 79.5% of
maximum to Mr Soriot and Dr Sarin (equivalent
to 198.75% and 159% of base pay
respectively), in line with the Group scorecard
outcome. Details of the factors considered to
determine the bonuses are provided from
page 111.
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Directors’ Remuneration Report
Corporate Governance
Additional Information
Financial Statements
Strategic Report
One half of each Executive Director’s bonus
for 2023 will be deferred into AstraZeneca
shares for three years to ensure further
alignment with shareholder interests.
Long-term incentives (LTIs)
2021 PSP – 88% of maximum
Our approach aims to reward sustainable
outperformance and as a result of three very
strong years, our 2021 award will vest towards
the upper end of the possible range. The
three-year performance period for
Performance Share Plan (PSP) awards
granted to our senior leaders in 2021, ended
on 31 December 2023. Awards for all
participants will vest at 88% of maximum,
as shown on page 115 and reflects strong
performance across all measures, as well as
delivering a three-year TSR of 40%.
Policy review and remuneration in 2024
The Policy is due for renewal and we will be
seeking shareholder approval for a new
version of the Policy at the Company’s AGM
on 11 April 2024. The new Policy is intended to
remain in effect for three years from the date
of the AGM.
During 2023, the Committee reviewed the
Policy to ensure that it continues to be aligned
with corporate governance best practice and
promotes the delivery of long-term
shareholder value. In shaping the new Policy,
we have taken into account the perspectives
of shareholders gathered from consultation
undertaken during 2023. I met 26 of
AstraZeneca’s largest shareholders and three
proxy advisors to discuss our proposals, and
was pleased with the level of engagement,
feedback and support received.
The purpose of the new Policy is to:
>
Incentivise the delivery of the Company’s
2030 Bold Ambition and Growth Through
Innovation strategy.
>
Continue to emphasise the importance
the Committee places on performance-
related pay.
>
Retain and motivate incumbent Executive
Directors to deliver against our strategy.
>
Ensure that sufficient headroom exists to
deliver market competitive performance
based reward to our executives and down
through the organisation.
In developing the new Policy proposals, the
Committee noted that AstraZeneca has
changed and grown significantly since the
introduction of the 2021 Policy. The Company
is more complex, with the integration of
Alexion and the addition of successful new
therapy areas in Rare Diseases and Vaccines
& Immune Therapies. TSR of 40% has been
delivered in this period, and Total Revenue
has increased from $26.6 billion in 2020 to
$45.8 billion at the end of 2023.
We face increasing external talent market
pressure as our employees are rightly viewed as
market-leading talent. Notably, we experience
pay compression challenges under the 2021
Policy, which does not provide sufficient
headroom to deploy appropriately leveraged
pay for performance compensation across our
most senior leadership levels. Independent
benchmarking of reward demonstrates that our
current remuneration policy risks limiting our
ability to compete for key roles below the Board,
with heads of R&D being the most highly
compensated roles in the industry below CEO
level. 40% of our senior leaders are based in the
US and over 40% of our revenue derives from
the US. The Committee is acutely aware that we
must be able to compete for the best talent in
the US market.
The Committee recognises that US pay
practices differ from the UK, and in particular
that US companies may offer a combination
of time-based restricted stock, performance-
based stock, and sometimes market value
options to executive directors. At AstraZeneca
we firmly believe that executive pay should be
clearly aligned to performance and therefore
we are not proposing to alter the design of our
incentive plans (annual bonus and PSP) in
principle. However, in order to address the
challenges of pay compression, and to
provide a more competitive package for senior
executives, we are proposing an increase to
the maximum total incentive opportunity
under our Policy, as set out below. The
recommended changes will be accompanied
by the Committee’s continued commitment to
setting stretching targets, aligning to the
delivery of the 2030 Bold Ambition.
I believe that the proposed Policy reflects our
current market position but, more importantly,
should set us up for success over the next
Achieved
Science and Innovation: Annual pipeline progression
85%
Growth and Therapy Area Leadership
87%
Achieve Group Financial Targets
71%
Achieved
Achieved
Science and Innovation: First approvals and NME volume
over three years
90%
Growth and Therapy Area Leadership
100%
Achieve Group Financial Targets
88%
Relative TSR
68%
Ambition Zero Carbon (AZC)
100%
Achieved
2023 Annual bonus scorecard performance
1
2021 PSP performance
three-year cycle of the Policy. It will further
engage our executive leadership in the
conversion of the strength of our pipeline to
commercial success, delivering industry-leading
growth and our ambition of launching 15 new
medicines by 2030 off the back of our planned
material financial investment in future pipeline
and partnerships. The importance of retaining
and motivating our incumbent Executive
Directors and senior leadership team in order
to drive our 2030 Bold Ambition has been a
key theme in consultation discussions with
our shareholders. We seek to be competitive
with comparable European pharma market
peers and our proposals aim to reflect the
performance, market capitalisation and future
ambition of the Company in that context.
Proposed changes to the Policy and how it
will be implemented are summarised below
and in more detail on page 127. The Policy is
set out from page 128. The Committee would
like to highlight that the key proposed changes
are strictly linked to performance-related pay.
>
No Policy changes are proposed in relation
to base pay increases (which will not
exceed the average of the relevant wider
workforce) or pension arrangements
(which are already in line with the relevant
wider workforce).
>
We propose to increase the target annual
bonus opportunity for the CEO, Mr Soriot,
to 150% of base pay, resulting in a new
maximum bonus of 300% of base pay
(currently 250%), in line with the median target
bonus opportunity of his global peer group.
>
Target annual bonus for the CFO, Dr Sarin,
remains unchanged at 100% of base pay,
with a maximum bonus opportunity of
200% of base pay.
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 2023, including ESG achievements.
104
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Corporate Governance
Directors’
Remuneration Report
continued
>
Half of any earned bonus will be deferred
into shares for three years.
>
For awards under the PSP our proposal is
to increase the maximum award under the
Policy to 850% of base pay from the current
650%, subject to appropriately stretching
performance targets. This new maximum
would apply to Mr Soriot in 2024 provided
that it is approved by shareholders.
>
Dr Sarin’s 2024 PSP opportunity would
increase to 550% of base pay (from 450%).
>
At the same time, in light of feedback
received from investors, the minimum
shareholding requirement for each of our
Executive Directors will increase to match
their maximum variable pay opportunity,
being 1,150% base pay for Mr Soriot, and
750% base pay for Dr Sarin.
The Committee recognises that these
proposals are material if viewed in a UK
context. However, the changes are necessary
to increase the competitiveness of the
performance-related pay opportunity in the
context of the global and European pharma
market. Given the size, complexity and global
reach of AstraZeneca, the Committee does
not consider the constituents of the FTSE 100
to be an appropriate group against which to
benchmark remuneration. Our approach is to
1
Global pharma peer group consists of: AbbVie, Amgen, BMS, Eli Lilly, Gilead, GSK, Johnson & Johnson, Merck, 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.
look at remuneration opportunity amongst the
European and global pharma peers with
whom we compete for talent and compare
performance and to determine a Policy which
is highly weighted towards pay for
performance. The charts below show our
Executive Directors’ on-target and maximum
opportunity relative to our defined comparator
groups. Our proposed changes will bring
Mr Soriot to the lower quartile of our global
peer group, but will better reflect
AstraZeneca’s relative position within the
European peer group, moving up one position
in the global and European rankings for target
compensation and two positions at maximum
(due to the higher proportion of pay at risk
compared with peers). The increased PSP
opportunity for Dr Sarin will bring her
compensation into line with the global median
of her peers. The importance of being able to
offer our impactful and talented CEO a
competitive remuneration package, has been
a key area of interest raised by shareholders
in consultation discussions.
The Committee is not proposing to make any
changes to the choice of performance metrics
and their weightings for the Annual bonus or
the PSP in 2024, as feedback from our
shareholders is that the metrics successfully
align pay with performance outcomes. Given
the proposed increase in quantum, the
Committee has rigorously reviewed the
stretch in performance targets for 2024 to
ensure they are appropriate and
commensurate with delivery of excellent
shareholder value.
The Board considers that the proposed
changes will enable our remuneration
framework to be more competitive as we
focus on the delivery of our 2030 Bold
Ambition for our patients and shareholders.
The emphasis on performance-related pay
ensures that outcomes are fully aligned with
shareholder interests as we address the need
to attract and retain outstanding talent.
The Committee took shareholders’ feedback
into account on the proposed changes to the
Policy, and we would like to take this
opportunity to thank all those who took part
for their constructive engagement and
support for our proposals.
Non-Executive Directors’ fees
With effect from January 2024, certain of the
Non-Executive Directors’ fees have been
increased. This reflects the continuing
increase in workload and responsibilities of
non-executive directors of large, global,
complex, publicly listed companies, including
the importance of the Science Committee and
the Sustainability Committee to the Board’s
work and the workloads of these Committees.
AstraZeneca Non-Executive Directors’ fees
have not been increased since January 2022.
No Board member participated in any
decisions relating to their own fees. Further
detail is provided on page 118.
Next steps
I hope that you find this Remuneration Report
clear in explaining the 2024 Policy proposals
and the implementation of our Policy during
2023. We trust that we have provided the
information you need to be able to support the
resolution to be put to shareholders on the
new Policy and this Remuneration Report at
the Company’s AGM in April 2024.
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
Market positioning of Executive Directors’ on-target remuneration
Global pharma peers
¹
European pharma peers
²
C
EO
Global pharma peers
¹
European pharma peers
²
C
FO
Market positioning of Executive Directors’ maximum remuneration
Global pharma peers
¹
European pharma peers
²
C
EO
Global pharma peers
¹
European pharma peers
²
C
FO
Lower quartile to median
Median to upper quartile
Current position
2024 proposal
£8.97m
£6.62m
£16.51m
£10.20m
£4.15m
£4.66m
£3.61m
£5.73m
£10.38m
£28.43m
£15.05m
£13.91m
£6.56m
£7.83m
£6.29m
£9.49m
105
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Directors’ Remuneration Report
Corporate Governance
Additional Information
Financial Statements
Strategic Report
CEO
CFO
4,410
16,853
£5,000
£10,000
£15,000
£0
£’000
Share price appreciation on
long-term incentive awards
PSP
Annual bonus
Fixed pay
2021 PSP
performance
Achieved
88%
Lapsed
12%
Group scorecard
performance
Achieved
79.5%
Lapsed
20.5%
Executive Directors’ realised pay 2023 outcomes
Formulaic outcome of 2023
Group scorecard and 2021 PSP
What our Executive Directors earned
Looking ahead
Executive Directors’ remuneration for 2024
Fixed remuneration
Annual bonus
Long-term incentives
Shareholding
requirement
Post-cessation
shareholding
requirement
Pascal
Soriot
(CEO)
Base pay:
£1,485,658
Benefits fund
Pension: £163,422
(equivalent to 11% of
base pay)
Max: 300%
base pay
Target: 150%
base pay
Deferred: 50% for
three years
Max: 850%
base pay
Performance period:
three years
Holding period:
two years
Holding
requirement:
1,150% base pay
Holding
requirement:
1,150% base pay
for two years
post-cessation
Aradhana
Sarin
(CFO)
Base pay:
£951,494
Benefits fund
Pension: £104,664
(equivalent to 11% of
base pay)
Max: 200%
base pay
Target: 100%
base pay
Deferred: 50% for
three years
Max: 550%
base pay
Performance period:
three years
Holding period:
two years
Holding
requirement:
750% base pay
Holding
requirement:
750%
base pay
for two years
post-cessation
CEO fixed vs performance-linked (%)
33
%
Short-term
67
%
Long-term
Fixed
9
%
Performance-linked
91
%
Base pay
Benefits fund
Pension
Annual bonus – cash
Annual bonus – shares
PSP
Annual
bonus
(halved)*
PSP
’24
Executive Directors’ variable pay
Performance period
Deferral period
Holding period
’25
’26
’27
’28
*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
300% and 850% of base pay for annual bonus and PSP respectively.
CFO fixed vs performance-linked (%)
36
%
Short-term
64
%
Long-term
Fixed
13
%
Performance-linked
87
%
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 550% of base pay for annual bonus and PSP respectively.
Fixed pay consists of base pay, benefits fund and pension. Further information
on Executive Directors’ realised pay for 2023 is on page 109.
See from page 110 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
2023, including ESG achievements.
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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 (detailed on
pages 112 and 113) 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 2024 performance measures are closely
aligned with our strategic priorities, as
shown below.
Key
Annual bonus
PSP
KPI
For more information about our
strategic priorities, see page 12.
For more information about the
2024 performance measures, see
from page 111.
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Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’ Remuneration Report / How our performance measures for 2024 support the delivery of our strategy
How our performance measures for
2024 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. 2024 targets:
>
The Committee has reviewed the proposed targets against internal and external forecasts, including market consensus and peer group
performance, and is comfortable that the level of stretch promotes truly exceptional performance in line with the delivery of our 2030 Bold Ambition.
>
In real terms, financial performance goals under the 2024 Group scorecard and PSP would require achievement above prior year outturns
and growth in excess of the average expected of the industry, particularly when taking the significant capital investment expected to be made
during the performance period.
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. The outlook for the delivery of the pipeline is
increasingly challenging given the rising proportion of new
modalities and innovation, representing previously
untested science.
Proposed targets for the Ambition Zero Carbon measure are
reviewed and endorsed by the Sustainability Committee and
exceed the 1.5°C Paris Agreement glide path. Our decarbonisation
ambitions are increasingly challenging to deliver in the context of
broader enterprise growth, particularly the higher supply
volumes required to fulfil demand for our medicines.
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. Where
consensus figures do not align with internal forecasts, the
Committee seeks to understand why a difference exists (such
as differences in assumed capital expenditure). 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, working in partnership with the
Science and Sustainability Committees to ensure targets are
stretching and robust.
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 in our Scope 1 and Scope 2
operations through 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 112, 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.
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Corporate Governance
How the Remuneration Committee
ensures targets are stretching
Executive Directors’ realised pay for 2023 (single total figure of remuneration)
The table below sets out all elements of realised pay receivable by the Executive Directors in respect of the year ended 31 December 2023,
alongside comparator figures for 2022. This includes the vesting of PSP awards from 2021 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 the Executive Directors with a significant increase in value of the equity components of their reward. £3,945,583 of Mr Soriot’s and
£374,506 of Dr Sarin’s 2023 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 LTI 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
2023
1,429
140
157
–
1,726
2,839
12,288
15,127
16,853
23%
2022
1,367
136
150
–
1,653
3,127
10,305
13,432
15,085
19%
Aradhana Sarin
2023
915
46
101
–
1,062
1,455
1,893
3,348
4,410
8%
2022
876
161
96
–
1,133
1,602
–
2
1,602
2,735
–
1
Long-term incentive values disclosed in 2022 have been recalculated using the average closing share price for the three months ended 31 December 2023. See page 114.
2
Dr Sarin was appointed as CFO on 1 August 2021, and had no LTI awards which completed their performance period in 2022.
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 110 and the Long-term incentives section from page 114. Information about the Executive
Directors’ remuneration arrangements for the coming year, ending 31 December 2024, 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 page 110.
>
Annual bonus has a yellow border and can be found on pages 110 to 114.
>
Long-term incentives (LTI) has a magenta border and can be found on pages 114 to 117.
Executive Directors’ remuneration
This section of the Directors’ Remuneration Report sets out the Executive Directors’ remuneration for the year ended 31 December 2023,
alongside the remuneration that will be paid to Executive Directors during 2024.
Key:
Audited information
Content contained within the Audited panel
indicates that all the information within has
been subject to audit.
Audited
Planned implementation for 2024
Content contained within a grey box indicates
planned implementation for 2024.
Audited
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Corporate Governance
Additional Information
Financial Statements
Strategic Report
Annual Report
on Remuneration
Annual bonus
Annual bonus in respect of performance during 2023
Bonus potential
as % of base pay
Bonus
payable in
cash
Bonus
deferred into
shares
Total bonus
awarded
£’000
Target
Maximum
Pascal Soriot
125%
250%
1,419
1,420
2,839
79.5% max
Aradhana Sarin
100%
200%
727
728
1,455
79.5% max
2023 Annual bonus
Annual bonuses earned in respect of
performance during 2023 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 112.
Half of the Executive Directors’ pre-tax bonus
is compulsorily deferred into Ordinary Shares
which are released three years from the date
of deferral. Bonuses are not pensionable.
2023
2024
£’000
Total taxable
benefits
Taxable
benefits
Pascal Soriot
140
In line with
2023
Aradhana Sarin
46
In line with
2023
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 (£115,660
taken as cash). The value of personal tax
advice provided to each Executive Director in
2023 was £18,687 and £45,120 for the CEO
and CFO respectively.
2023
2024
£’000
Change
from 2022
Base
pay
Change
from 2023
Base
pay
Pascal Soriot
4.5%
1,429
4%
1,486
Aradhana Sarin
4.5%
915
4%
951
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 2024 will
increase in line with the UK all-employee base
pay increase budget at 4%.
2023
2024
£’000
Pensionable
base pay
Pension
allowance
Cash in lieu of
pension
Pension
allowance
Pascal Soriot
1,429
11% of
base pay
157
11% of
base pay
Aradhana Sarin
915
11% of
base pay
101
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 2023, the
Executive Directors took their pension
allowance as a cash alternative to participation
in a defined contribution pension scheme.
Neither of the Executive Directors has a
prospective entitlement to a defined benefit
pension by reason of qualifying service.
Audited
Audited
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Corporate Governance
Annual Report
on Remuneration
continued
2023 Group scorecard assessment
Performance against the 2023 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 2023 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.
2023 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%
13
25
38
30
21%
Regulatory events
15%
25
35
46
46
30%
Subtotal – Science and Innovation measures
30%
51%
Financial measures
Growth and Therapy Area Leadership
Total Revenue ($bn)
30%
42.6
43.9
45.2
44.8
52%
Achieve Group Financial Targets
Cash flow ($bn)
20%
7.9
9.3
10.7
9.5
23%
Core EPS ($)
20%
6.55
6.89
7.24
7.13
34%
Subtotal – Financial measures
70%
57%
Total
100%
159%
Key:
Bar charts are indicative of 2023 performance; scales do not start from zero.
Due to rounding, the total formulaic outcome differs from the arithmetic total of the individual metric outcomes disclosed above.
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 12 of this Annual Report.
Audited
Annual bonus
continued
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Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
In 2023, 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 2023, the Executive Directors’ individual performance was assessed in the following key areas which align with the Company’s objectives.
Pascal Soriot
Mr Soriot has skillfully steered AstraZeneca through another successful year. Commercial execution across all therapy areas and regions was very strong,
underpinned by robust manufacturing and supply. Scientific performance in 2023 saw several significant positive read outs and regulatory approvals, including the
launch of three new medicines that will contribute to the delivery of the Company’s 2030 Bold Ambition:
Airsupra
,
Truqap
and
Wainua
. Mr Soriot continues to lead
the Company to drive Growth Through Innovation in science, with over a third of our pipeline now representing new modalities in 2023, reinforcing the
transformative potential of our industry leading pipeline. Mr Soriot also oversaw the identification and signing of a number of impactful business development
transactions during the year, including the licensing of a novel GLP-1 asset from Eccogene for obesity, the transaction with CinCor and proposed acquisition of
Gracell Biotechnologies, which are expected to further accelerate delivery in cell therapy and oncology.
Throughout 2023, Mr Soriot maintained a strong financial position for AstraZeneca, delivering yet another year of growth in revenue and profitability. The
Committee also considered Mr Soriot’s leadership across other dimensions of performance:
Demonstrating
leadership to support
developments in global
life sciences
Mr Soriot has continued to drive change through a diverse set of external engagements with world leaders including senior government
officials from the US, Canada, China and Sweden, enhancing strategic partnerships and catalysing innovation, demonstrating his
thought leadership, his ability to drive global change and his influence on key issues.
He was the only private sector CEO to deliver a keynote speech at Climate Week in the presence of HM King Charles III and delivered a
key note speech on Public – Private Partnerships for Healthcare Climate Action at COP28 in Dubai. He also attended both the American
Society of Clinical Oncology (ASCO) and the European Society for Medical Oncology (ESMO) where he had the opportunity to engage
with the scientific community, highlighting pivotal data that strengthens our confidence that we will replace conventional chemotherapy
for many patients with advanced lung and breast cancers.
Leading in
Environmental, Social &
Governance (ESG)
performance
Mr Soriot continued to advocate for an uncompromising sustainability agenda at AstraZeneca exemplifying, through his leadership,
the essential role of ESG within AstraZeneca’s strategy and also the important role global leaders have in the direction of global
decarbonisation, demonstrated by his leadership of the SMI Health Systems; and advancing climate action through his leadership and
involvement in an industry collaboration to increase renewable energy to the industry’s supply base. His efforts have been recognised
at COP28 and by TIME magazine which named Mr Soriot in its inaugural TIME100 Climate.
Under Mr Soriot’s leadership, in 2023 AstraZeneca has improved or maintained its position on the ESG disclosures listings we report
on, including receiving a Gold score from Ecovadis (previously Silver) and a step-up in the Corporate Sustainability Assessment (CSA)
position to 4th in the sector.
In 2023, AstraZeneca embarked on an extensive expansion of AZ Forest including forest protection and biodiversity for a cumulative
200 million trees. It is estimated that AZ Forest will remove around 30 million tonnes of carbon dioxide from the atmosphere over 30
years, demonstrating our commitment to environmental conservation, made possible by Mr Soriot’s leadership.
Healthy Heart Africa (HHA) continued to expand, launching in eight new countries. Over 43 million screenings have been conducted
since the programme began, and 11,390 healthcare professionals trained. In total, over 66 million people have been reached by Access
to Healthcare programmes.
Making AstraZeneca a
great place to work
Mr Soriot has continued to highlight the importance of having a truly diverse workforce, striving to drive a business with an inclusive
and equitable environment where people feel that they belong, where they feel valued for the contribution they make, and empowered
to push boundaries and innovate. Our Inclusion & Diversity (I&D) strategy, “The Power of Diversity” remained a key focus with topics
including Clinical Trial Diversity, Cultural Intelligence, and spotlighting the work of our Employee Resource Groups (ERGs). AstraZeneca
celebrated global I&D recognition days throughout the year including International Women’s Day, Neurodiversity Celebration Week,
World Day for Cultural Diversity, Pride Month, International Day of the Girl and International Day for Persons with Disabilities.
Our progress was recognised externally on the 2023 Bloomberg Gender-Equality Index, Human Rights Corporation Corporate Equality
Index, TIME World’s Best Companies, Forbes World’s Best Employers, Forbes World’s Top Companies for Women and Financial Times
Leader in Diversity.
Mr Soriot’s emphasis on leaders as coaches of our employees, and support for investments in lifelong learning has been key to
providing our people with opportunities to perform, stretch, grow and take charge of their development. In 2023 AstraZeneca received
several external, highly-respected awards for internal talent management programmes, including ‘Diversity by Design’ which won the
Healthcare Businesswomen’s Association (HBA) Advancement. Commitment. Engagement. (ACE) Award and, alongside the
Empowerment programme, also contributed to making AstraZeneca the Learning & Development winner of the Personnel Today
Awards 2023.
Annual bonus
continued
Audited
112
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Corporate Governance
Annual Report
on Remuneration
continued
Aradhana Sarin
Dr Sarin continued to demonstrate her skills as a leader across the enterprise, helping to elevate a high-performance culture and driving efficiencies
and simplification.
Performance delivery
Under Dr Sarin’s leadership, the finance function continued to deliver strong performance and made significant steps in tax planning
for the future, along with debt refinancing for the business building in additional flexibility to help support future business development.
Dr Sarin was personally involved in the strategic and finance review for five major business development transactions, including CinCor,
Pfizer Gene Therapy Portfolio, Eccogene, Icosavax and the proposed acquisition of Gracell Biotechnologies, along with providing
guidance on negotiations, resulting in attractive terms for AstraZeneca.
Creating an enterprise-
wide impact through
Global Business
Services (GBS)
Under Dr Sarin’s guidance, GBS has maintained a pivotal role in AstraZeneca’s transformation. Aligned to the Future of Work, Dr Sarin
has emphasised the need for simplifying, standardising, and scaling services so that AstraZeneca can deliver more medicines, faster
and to more patients.
Guided by Dr Sarin’s leadership, significant advances have been made creating efficiencies through clever use of new technology; the
introduction of a transformational programme for data management which replaces multiple processes and uses integrated analytics
that optimise process performance, and automated checks to ensure that data is right the first time; a new initiative on vendor demand
which is transforming the way we search, find and buy goods and services; and an app developed and deployed which assists teams in
Oncology Breast Cancer enabling them to make study co-location decisions – allowing studies to progress faster and removing
complexities faced by Clinical Operations teams. All of these developments will help AstraZeneca to grow and change at speed.
Great place to work/
employee engagement
Dr Sarin continued to strive for increased diversity in the workplace. In June, she became the executive sponsor of AstraZeneca’s
Network of Women.
Dr Sarin supported several I&D recognition days including World Day for Cultural Diversity and Dialogue, International Women’s Day
and International Day of the Girl, for which she hosted a discussion panel focussing on the work of the Young Health Programme in
driving greater equity for women and girls around the world.
Dr Sarin’s leadership style and positive influence on the team was reflected with Pulse scores showing that 90% of employees in the
Finance function would recommend AstraZeneca as a great place to work and 91% believing that managers are committed to diversity
and inclusion.
Final determination of Executive Directors’ bonuses
In determining the annual bonus outturn for Executive Directors, the Committee considers the formulaic Group scorecard outcome, as well as the
overall business performance, shareholder experience and the personal contribution of the individual Executive Director. A description of the
Executive Directors’ personal achievements is detailed above.
Given the contributions made by both Mr Soriot and Dr Sarin in 2023 as outlined above, the Committee determined the bonus outturns for both
Executive Directors should be 159% of target (or 79.5% of maximum), in line with the formulaic Group scorecard outcome.
Deferred Bonus Plan (DBP)
Half of each Executive Director’s pre-tax annual bonus is ordinarily deferred under the 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. One half of the bonus earned in
respect of performance during 2022 was deferred and details of the consequent DBP awards granted in 2023 are shown below. One half of the
Executive Directors’ bonus earned in respect of performance during 2023 has been deferred and the consequent DBP awards are expected to be
granted in March 2024.
Audited
2023 Grant
2024 Grant
Ordinary Shares
granted
Grant date
Grant price
(pence per share)
1
Face value
£’000
2023 Bonus deferred
£’000
Pascal Soriot
14,448
4 March 2023
10821
1,563
1,420
Aradhana Sarin
7,403
4 March 2023
10821
801
728
1
The grant price is the average closing share price over the three dealing days preceding grant.
2024 Group scorecard performance measures and metrics
Measure weighting
Underlying metrics (if applicable)
Metric weighting
2024 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 2023 target
Target decreased vs 2023 target
Target constant
C
Commercially sensitive
Audited
Annual bonus
continued
Audited
113
AstraZeneca Annual Report & Form 20-F Information 2023
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Long-term incentives
Long-term incentives included in the Executive Directors’ realised pay for 2023 figure: 2021 PSP
The Executive Directors’ realised pay for 2023 includes the value of PSP award with performance period ended 31 December 2023. These shares
and dividend equivalents will not be released to the Executive Directors’ 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
2023 (10401 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.
Audited
Long-term incentive awards with performance periods ended 31 December 2023
Value of shares due to vest
Ordinary Shares
granted
Performance
outcome
Face value
at time
of grant
£’000
Value due to
share price
appreciation
1
£’000
Dividend equivalent
accrued over
performance period
£’000
Long-term
incentives total
£’000
Pascal Soriot
2021 PSP
126,046
2
88%
7,591
3
3,946
751
12,288
Aradhana Sarin
2021 PSP
19,414
4
88%
1,402
5
375
116
1,893
1
Calculated using the difference between the grant price and the average closing share price over the three-month period ended 31 December 2023. The average closing share price over the
three-month period ended 31 December 2023 was 10401 pence.
2
Awards were granted to Mr Soriot on 5 March 2021 and 14 May 2021, to take account of the revised limits for the PSP approved by shareholders at the Company’s 2021 AGM.
3
Calculated using the grant price of 6844 pence for the CEO’s 2021 PSP awards.
4
Dr Sarin’s award was granted on 13 August 2021, following her appointment as CFO on 1 August 2021. Her award was pro-rated to reflect that she took up the role part way through 2021.
5
Calculated using the grant price of 8209 pence, being the average closing share price over the three dealing days preceding the CFO grant.
The 2021 PSP awards granted to Mr Soriot on 5 March 2021 and 14 May 2021, to take account of the revised limits for the PSP which were
approved by shareholders at the Company’s 2021 AGM, are due to vest and be released on 5 March 2026 and 14 May 2026 on completion
of a further two-year holding period. The 2021 PSP award was granted to Dr Sarin on 13 August 2021 following her appointment as CFO on
1 August 2021. The award made to Dr Sarin was pro-rated to reflect that she took up the role part way through 2021. Her award is due to vest on
13 August 2026 on completion of a further two-year holding period. Performance over the period from 1 January 2021 to 31 December 2023
will result in 88% of the awards vesting, based on the following assessment of performance. The 2021 PSP targets were reviewed in light of
the enlarged Group following the acquisition of Alexion. The Science and Innovation, Growth and Therapy Area Leadership, Ambition Zero
Carbon and Cash flow targets were all amended 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 continue to incentivise strong delivery. No amendments were made to the TSR
performance measure.
We intend to disclose the 2024 Group scorecard outcome and details of the performance hurdles and targets in the 2024 Directors’
Remuneration Report following the end of the performance period. The performance targets are currently considered to be commercially
sensitive as prospective disclosure may prejudice the Company’s commercial interests. Executive Directors’ individual contribution will be
assessed by reference to individual goals in line with the Company’s objectives for the year.
Annual bonus
continued
Audited
114
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Corporate Governance
Annual Report
on Remuneration
continued
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.
For more information on Ambition Zero
Carbon see page 48 and our TCFD
Supplement, which is available on
www.astrazeneca.com/annualreport2023.
AstraZeneca ranked sixth within the TSR peer
group. The TSR peer group for the 2021 PSP
consisted of AbbVie, Amgen, Astellas, BMS,
Daiichi Sankyo, Eli Lilly, Gilead, GSK, Johnson
& Johnson, MSD, Novartis, Novo Nordisk,
Pfizer, Roche, Sanofi and Takeda.
2021 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
16
11%
Regulatory events
18%
13
26
24
17%
Subtotal – Science and Innovation
2
30%
28%
Growth and Therapy Area Leadership ($bn)
20%
40.5
47.5
49.0
20%
Cash flow ($bn)
20%
19.0
27.0
25.0
18%
Total shareholder return
20%
Median
UQ
3
6th
14%
Ambition Zero Carbon
10%
272 ktCO
2
e
220 ktCO
2
e
207.4ktCO
2
e
10%
Total
2
100%
88%
Key:
Bar charts are indicative of 2021 PSP performance; scales do not start from zero.
Due to rounding, the total outcome differs from the arithmetic total of the individual metric outcomes disclosed above
1
The Committee reviewed the 2021 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.
PSP awards granted during 2023
During 2023, 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 2023 to 31 December 2025 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
85,808
4 March 2023
10821
9,285
31 December 2025
4 March 2028
Aradhana Sarin
38,046
4 March 2023
10821
4,117
31 December 2025
4 March 2028
1
The grant price is the average closing share price over the three dealing days preceding grant.
The 2023 PSP performance measures focus on scientific, ESG, commercial and financial performance over the three-year performance period.
The five performance metrics attached to the 2023 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%
Long-term incentives
Audited
115
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Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
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
$22.0bn
20% (threshold for payout)
Between $22.0bn and $26.0bn
Pro rata
$26.0bn
75%
Between $26.0bn and $31.0bn
Pro rata
$31.0bn and above
100%
Growth and Therapy Area Leadership (20% of award)
For PSP awards granted in 2023, 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 2025 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
10
20% (threshold for payout)
13
20% (threshold for payout)
Between 10 and 15
Pro rata
Between 13 and 20
Pro rata
15
75%
20
75%
Between 15 and 20
Pro rata
Between 20 and 26
Pro rata
20
100%
26
100%
Ambition Zero Carbon (10% of award)
This measure reflects the importance of eliminating greenhouse gas (GHG) emissions from our Scope 1 and Scope 2 operations 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
142 ktCO
2
e
20% (threshold for payout)
Between 142 ktCO
2
e and 116 ktCO
2
e
Pro rata
116 ktCO
2
e
75%
Between 116 ktCO
2
e and 91 ktCO
2
e
Pro rata
91 ktCO
2
e and below
100%
Audited
Long-term incentives
continued
116
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Annual Report
on Remuneration
continued
Long-term incentives
continued
PSP performance measures for 2024 grant
The 2024 PSP measures remain unchanged from the 2023 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%
14
28
Regulatory events
18%
16
32
Growth and
Therapy Area Leadership
20%
Total Revenue
Commercially sensitive
until end of
performance period
Cash flow
20%
$23.0bn
$33.0bn
Relative TSR
20%
Median
Upper
Quartile
Ambition Zero Carbon
10%
26 ktCO
2
e
13 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 125.
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. Capital expenditure is expected to increase by more than 50% during the performance period, driven by
investment in several major manufacturing capabilities such as API, inhaled products, monoclonal antibodies and cell therapy.
Our Ambition Zero Carbon measure is based on our Scope 1 and Scope 2 emissions reductions from our 2015 baseline. Further detail on our
commitment can be found on page 148.
As described on page 107, 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 2024. The PSP award to be granted to Dr Sarin will be equivalent to
550% of base pay. The PSP award to be granted to Mr Soriot will be equivalent to 650% of base pay. Subject to the approval of our proposed
Directors’ Remuneration Policy and amended rules of the PSP at the Company’s AGM on 11 April 2024, a further PSP award will be granted to
Mr Soriot equivalent to 200% of base pay, bringing Mr Soriot’s total PSP award for 2024 in line with the maximum opportunity under the Policy.
For more information about
How our performance measures
for 2024 support the delivery of
our strategy, and How the
Remuneration Committee
ensures targets are stretching,
see pages 107 and 108.
117
AstraZeneca Annual Report & Form 20-F Information 2023
Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Non-Executive Directors’ realised pay for 2023 (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 2023,
alongside comparative figures for the prior year.
2023
Fees
£’000
2022
Fees
£’000
2023
Other
£’000
2022
Other
£’000
2023
Total
£’000
2022
Total
£’000
Michel Demaré
1
584
158
–
–
584
158
Euan Ashley
119
110
–
–
119
110
Philip Broadley
200
200
–
–
200
200
Deborah DiSanzo
120
120
–
–
120
120
Diana Layfield
110
110
–
–
110
110
Anna Manz
40
–
–
–
40
–
Sheri McCoy
175
157
–
–
175
157
Tony Mok
110
110
–
–
110
110
Nazneen Rahman
160
155
–
–
160
155
Andreas Rummelt
110
110
–
–
110
110
Marcus Wallenberg
125
125
–
–
125
125
Former Non-Executive Directors
Leif Johansson –
retired
27 April 2023
203
625
22
70
225
695
Total
2,056
1,980
22
70
2,078
2,049
1
Michel Demaré was appointed Chair of the Board from 27 April 2023.
Leif Johansson retired from the Board on 27 April 2023. Mr Johansson’s single total figure includes office costs (invoiced in Swedish kronor) of
£21,955 for the period in 2023 during which he was Chair of the Board and £69,524 for 2022. From 1 May 2023, the Chair of the Board did not
receive office costs.
Non-Executive Directors’ fee structure
The Non-Executive Directors’ fees effective from January 2024 are set out in the table below, alongside the fees applicable during 2023. Fees for
the Non-Executive Directors (other than the Chair of the Board) are determined by the Chair and the Executive Directors. No Board member
participated in any decisions relating to their own fees.
The fee structure is reviewed, but not necessarily increased every two years. The Non-Executive Directors’ fees have not been increased since
January 2022. The Chair’s fee was separately reviewed in July 2022 and increased with effect from May 2023. It is next due for review in 2024.
With effect from January 2024, increases have been made to the basic Board fee for Non-Executive Directors (excluding the Chair), the senior
independent Non-Executive Director’s fee, the Chairs’ fees for Board Committees (excluding the Nomination and Governance Committee in
respect of which no additional fees are paid), as well as the fees for membership of the Science Committee and the Sustainability Committee.
In the latest review, the overall size and complexity of the AstraZeneca Group was considered, together with the continuing increase in workload,
responsibilities, and time commitment for non-executive directors of global, publicly listed companies, in part driven by changes in the corporate
governance and regulatory landscape in multiple jurisdictions. The fees for the Chairs of the Science Committee and the Sustainability
Committee, as well as membership fees for these Committees, have been increased to reflect the contribution of these Committees to the
sustained future growth of the Company.
The latest review also considered independently-sourced market data for FTSE 30 and FTSE 10 companies, to ensure that the level of
AstraZeneca’s fees do not hinder the recruitment of Directors of the right experience and calibre for a Group of our scale in a global market.
Non-Executive Director fees
2023
£’000
2024
£’000
Chair of the Board
1
800
2
800
Basic Non-Executive Director
95
115
Senior independent Non-Executive Director
40
48
Member of the Audit Committee
25
25
Chair of the Audit Committee
3
45
50
Member of the Remuneration Committee
20
20
Chair of the Remuneration Committee
3
40
45
Member of the Sustainability Committee
15
20
Chair of the Sustainability Committee
3
30
45
Member of the Science Committee
15
20
Chair of the Science Committee
3
30
45
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 increased 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
118
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Annual Report
on Remuneration
continued
Directors’ shareholdings
Position against the 2023 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
363,489
48,608
308,920
2,130%
Aradhana Sarin
82,514
10,652
100,498
1,018%
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 2023. 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.
Audited
Audited
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 or, if the MSR is increased at any time, within five years of that increase. The MSR for 2023 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.
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 2023) or, in the case of the Chair, approximately equivalent to his
basic annual fee (£800,000 during 2023). All Non-Executive Directors who had served for a period of three years or more as at 31 December 2023
met this expectation, based on the three-month average closing share price for the period ended 31 December 2023 (10,401 pence).
Directors’ interests as at 31 December 2023
The following table shows the beneficial interests of the Directors (including the interests of their connected persons) in Ordinary Shares as at
31 December 2023.
Executive Directors
Beneficial interest in
Ordinary Shares at
31 December 2023
1
Beneficial interest in
Ordinary Shares at
31 December 2022
1
Pascal Soriot
363,489
248,855
Aradhana Sarin
82,514
70,154
Non-Executive Directors
Leif Johansson
2
39,009
39,009
Michel Demaré
3
6,000
2,000
Euan Ashley
1,150
1,150
Philip Broadley
7,045
7,045
Deborah DiSanzo
1,000
1,000
Diana Layfield
1,400
1,400
Anna Manz
4
487
n/a
Sheri McCoy
1,736
1,736
Tony Mok
2,000
2,000
Nazneen Rahman
1,017
1,017
Andreas Rummelt
27,205
27,205
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. Shares in a holding period are
included on a gross basis.
2
Leif Johansson’s beneficial interests are shown as at 27 April 2023, when he retired as Chair of the Board.
3
Michel Demaré was appointed Chair of the Board on 27 April 2023.
4
Anna Manz was appointed on 1 September 2023.
Key:
2023 MSR
Shares counted towards MSR
2,130%
1,018%
650%
CEO
450%
CFO
Further information on the
Non-Executive Directors’ fee
structure can be found within the
current Remuneration Policy on
the Company’s website,
www.astrazeneca.com.
119
AstraZeneca Annual Report & Form 20-F Information 2023
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 2023
Share scheme interests
Grant date
Shares
outstanding at
1 January 2023
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
06/03/2020
8,734
7376
–
8,734
–
n/a
–
n/a
06/03/2023
1,2
05/03/2021
16,944
6844
–
–
–
n/a
16,944
n/a
05/03/2024
04/03/2022
17,216
9154
–
–
–
n/a
17,216
n/a
04/03/2025
04/03/2023
–
10821
14,448
–
–
n/a
14,448
n/a
04/03/2026
3
PSP
23/03/2018
127,600
4853
–
127,600
–
–
–
31/12/2020
23/03/2023
4,5
08/03/2019
97,351
6287
–
–
–
–
97,351
31/12/2021
08/03/2024
06/03/2020
87,346
7376
–
–
2,621
–
84,725
31/12/2022
06/03/2025
6
21/05/2020
8,734
7376
–
–
263
–
8,471
31/12/2022
21/05/2025
6
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
97,066
9154
–
–
–
97,066
–
31/12/2024
04/03/2027
04/03/2023
–
10821
85,808
–
–
85,808
–
31/12/2025
04/03/2028
7
AZIP
27/03/2015
13,095
4762
–
13,095
–
–
–
31/12/2018
01/01/2023
8,9
24/03/2016
10,809
3923
–
–
–
–
10,809
31/12/2019
01/01/2024
Total
610,941
100,256
149,429
2,884
308,920
249,964
1
Market price on 6 March 2023, the actual date of release, was 10784 pence.
2
An additional 661 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 2022, see page 113 for further detail.
4
Market price on 23 March 2023, the actual date of release, was 10976 pence.
5
An additional 17,092 Ordinary Shares were released as a result of the reinvestment of dividend equivalents accrued during the performance and holding period.
6
97% of the shares entered the holding period, following assessment of performance over the period to 31 December 2022. The remaining shares lapsed.
7
Details of PSP awards granted during 2023 are shown on page 115.
8
Market price on 9 February 2023, the actual date of release, was 10752 pence.
9
An additional 3,046 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 2023
Share scheme interests
Grant/
conversion
date
Shares
outstanding at
1 January 2023
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
Alexion incentive shares
1
21/07/2021
4,290
–
4,290
–
n/a
–
n/a
01/02/2023
2
21/07/2021
9,649
–
9,649
–
n/a
–
n/a
01/02/2023
2
21/07/2021
9,649
–
9,649
–
n/a
–
n/a
01/02/2023
2
RSU award
3
13/08/2021
12,276
8209
–
12,276
–
n/a
–
n/a
01/02/2023
4,5
DBP
04/03/2022
3,249
9154
–
–
–
n/a
3,249
n/a
04/03/2025
04/03/2023
–
10821
7,403
–
–
n/a
7,403
n/a
04/03/2026
6
PSP
13/08/2021
19,414
8209
–
–
–
19,414
–
31/12/2023
13/08/2026
04/03/2022
43,038
9154
–
–
–
43,038
–
31/12/2024
04/03/2027
04/03/2023
–
10821
38,046
–
–
38,046
–
31/12/2025
04/03/2028
7
Total
101,565
45,449
35,864
0
100,498
10,652
1
The number shown is the number of Ordinary Shares underlying the American Depositary Receipts (ADRs). Two ADRs are equivalent to one Ordinary Share. Awards made to replace
Dr Sarin’s Alexion incentive share awards, which were outstanding at the time of the Alexion acquisition, were done so on the same basis as other participants. The 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 9 February 2023, the actual date of release, was $64.36.
3
One-off restricted share award granted to Dr Sarin to compensate her for the forfeiture of her previous contractual severance right entitlements.
4
Market price of Ordinary Shares on 9 February 2023, the actual date of release, was 10572 pence.
5
An additional 286 Ordinary Shares were released as a result of the reinvestment of dividend equivalents accrued during the vesting period.
6
Award granted following deferral of one half of the annual bonus earned in respect of performance during 2022, see page 113 for further detail.
7
Details of PSP awards granted during 2023 are shown on page 115.
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 2023 and 8 February 2024, there was no change in the interests in Ordinary Shares for current Directors shown in the
table above.
Audited
120
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Annual Report
on Remuneration
continued
Payments to former Directors
Marc Dunoyer was granted a PSP award in 2021, whilst in the position of CFO and Executive Director of AstraZeneca PLC. Mr Dunoyer stepped
down as an Executive Director on 1 August 2021, part way through the 2021 PSP performance period, but remained a member of the SET.
Consistent with other participants in the PSP, performance over the period 1 January 2021 to 31 December 2023 will result in 88% of Mr
Dunoyer’s award granted in 2021 vesting on completion of a further two-year holding period. This represents 8,868 shares vesting when pro-rated
to reflect the performance period during which Mr Dunoyer was an Executive Director (1 January 2021 to 1 August 2021).
Payments for loss of office
During 2023, no payments were made to Directors for loss of office.
Remuneration in the wider context
In our Corporate Governance Report on page 81, 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. 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 122. People and Sustainability is one of our three strategic priorities, and we explain in our Business
Review from page 43 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 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 both the current and proposed 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 PSP on vesting, 50% mandatory deferral into shares for three years
for any annual bonus award, operation of malus and clawback provisions as summarised in our
Directors’ Remuneration Policy, 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 proposed Directors’ Remuneration Policy (and our current 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 108, the Committee follows a robust target-setting and assessment process
to ensure variable pay outcomes under the annual bonus and PSP are proportional to our
wider performance.
Our Directors’ Remuneration Policy operated as intended in terms of Company performance
and quantums during 2023, 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
performance culture and values and ensure the successful delivery of our strategy, with alignment
between strategy and reward set out on page 107. 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
121
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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 111. Achievement against the scorecard
creates a bonus pool from which all awards are made.
For employees within our commercial organisation, the
country-level share of the global bonus pool also takes into
account country performance against KPIs.
Individual outcomes are based on manager assessment of
contribution against individual objectives and peers. Awards are
based on a 0-200% target range.
The ranges for Executive Directors and the SET align with the
wider workforce at 0-200% of target. Half of any award to an
Executive Director under the plan is subject to deferral into shares
subject to a three-year holding period. One sixth of any award to
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 from page 115).
A proportion of our workforce below this 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 the SET are granted
under the same plan as PSP awards granted to Vice-Presidents
and Senior Vice-Presidents. PSP awards to Executive Directors
and the SET are subject to a two-year holding period following
the three-year performance period.
122
AstraZeneca Annual Report & Form 20-F Information 2023
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 2023 against 2022 (%)
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
Base
pay/fees
Benefits
Annual
bonus
Executive Directors
Pascal Soriot
4.5
3.1
-9.2
3.0
10.5
-0.8
3.0
1.1
35.9
0.0
-2.7
20.0
Aradhana Sarin
1
4.5
-71.6
-9.2
147.2
2,753.2
169.3
–
–
–
–
–
–
Non-Executive Directors
Leif Johansson
2
-67.5
-216.7
–
0.0
-6.4
–
0.0
1.4
–
0.0
1.4
–
Michel Demaré
3
268.9
–
–
7.0
–
–
18.7
–
–
247.2
–
–
Euan Ashley
4
8.0
–
–
6.8
–
–
300.0
–
–
–
–
–
Philip Broadley
0.0
–
–
15.6
–
–
16.9
–
–
2.8
–
–
Deborah DiSanzo
0.0
–
–
11.1
–
–
0.0
–
–
0.0
–
–
Diana Layfield
5
0.0
–
–
19.9
–
–
525.6
–
–
0.0
–
–
Anna Manz
6
–
–
–
–
–
–
–
–
–
–
–
–
Sheri McCoy
11.7
–
–
23.6
–
–
3.0
–
–
0.0
–
–
Tony Mok
0.0
–
–
6.8
–
–
0.0
–
–
0.0
–
–
Nazneen Rahman
3.0
–
–
18.2
–
–
11.0
–
–
0.0
–
–
Andreas Rummelt
7
0.0
–
–
172.2
–
–
–
–
–
–
–
–
Marcus Wallenberg
0.0
–
–
17.1
–
–
3.6
–
–
0.0
–
–
Employees
7.0
7.0
3.2
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 109.
2
Benefits for Leif Johansson are office costs. Mr Johansson retired from the Board on 27 April 2023.
3
Michel Demaré was appointed Chair of the Board on 27 April 2023.
4
Euan Ashley was appointed on 1 October 2020.
5
Diana Layfield was appointed on 1 November 2020.
6
Anna Manz was appointed on 1 September 2023.
7
Andreas Rummelt was appointed on 1 August 2021.
123
AstraZeneca Annual Report & Form 20-F Information 2023
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
2023
Option A
271:1
182:1
121:1
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 109 for 2023). 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 2023. 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 equivalents.
These estimates are based on the 2023 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
2023
1,429
16,853
46
62
65
92
88
139
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 2023 table on page 109).
The pay ratios at each quartile were higher in 2023 when compared to last year, due to a combination of significant share price appreciation over
the performance period of the CEO’s 2021 Performance Share Plan award (representing 23% of the overall single figure), which was granted at a
higher face value than the 2020 award (650% of base pay versus 550%), and a lower overall bonus pool for employees in 2023 based on
Scorecard performance impacting total pay.
Given the Committee’s focus on ensuring CEO pay is performance-driven (and as demonstrated again this year), 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 52:1 – in line with the trend across prior years.
2018
2019
2020
2021
2022
2023
50th percentile ratio excluding LTI
51:1
51:1
53:1
57:1
51:1
52:1
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 121.
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 148, or its Consolidated Statement of Cash Flows on page 151.
Further information on the Group’s Accounting Policies can be found from page 152.
2023
2022
Difference
in spend
between
years
$m
Difference
in spend
between
years
%
Total employee remuneration
12,335
11,531
804
7
Distributions to shareholders: dividends paid
4,481
4,364
117
3
124
AstraZeneca Annual Report & Form 20-F Information 2023
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 and our global
pharmaceutical peers. This graph is re-based to 100 at the start of the relevant period. These indices represent appropriate reference points for
AstraZeneca reflecting our primary listing as a constituent of the FTSE 100 and a comparison against our global pharmaceutical peers. The
pharmaceutical comparator group is also used to assess relative TSR performance for PSP awards to be granted in 2024 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
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
Dec
20
Dec
21
Dec
22
Dec
23
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
%
2023
Pascal Soriot
16,853
1
79.5
88
2022
Pascal Soriot
15,085
2
92
97
2021
Pascal Soriot
15,740
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
–
1
The 2023 realised pay is shown on page 109.
2
This figure has been revised using the average closing share price over the three-month period to 31 December 2023, as explained on page 109.
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
The Committee members as at 31 December 2023 were Sheri McCoy (Chair of the Committee), Philip Broadley, Nazneen Rahman and Michel
Demaré. Ms Rahman joined the Committee on 1 May 2023. Leif Johansson was also a member of the Committee until he retired from the Board
on 27 April 2023. The Deputy Company Secretary acts as secretary to the Committee. The Committee met six times in 2023 and members’
attendance records are set out on page 77. 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 & Head of Global Finance Services; the SVP, Group Planning & Finance Business
Partnering; the SVP, Global Portfolio/Project Management and Strategic Planning; the VP, Global SHE & Operations Sustainability; the Chief
Human Resources Officer, Chief Compliance Officer and General Counsel; the SVP, Reward, Inclusion and Talent Acquisition; the Senior Director
Executive Reward; the Company Secretary; the Deputy Company Secretary; 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 2023 was
provided on a time spent basis at a cost to the Company of £252,322, excluding VAT. During 2023, 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.
125
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Directors’ Remuneration Report / Annual Report on Remuneration
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Governance
continued
Malus and clawback
The Committee regularly reviews the Company’s approach to malus and clawback and market practice in this area, and our Global Standard on
Malus and Clawback sets out 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
Global Standard on Malus and Clawback.
>
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 27 April 2023, shareholders voted in favour of a resolution to approve the Annual Statement of the Chair of the
Remuneration Committee and the Annual Report on Remuneration for the year ended 31 December 2022. 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 Statement of the Chair
of the Remuneration Committee and the Annual Report on
Remuneration for the year ended 31 December 2022 (2023 AGM)
1,195,261,107
94.23
73,125,360
5.77
1,268,386,467
81.84
850,827
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 2023 are shown in the table below.
Executive Director
Effective date of service contract
Unexpired term at 31 December 2023
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 11 April 2024.
On behalf of the Board
A C N Kemp
Company Secretary
8 February 2024
126
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Annual Report
on Remuneration
continued
Changes to Remuneration Policy and its implementation
The table below summarises the main proposed changes to the Directors’ Remuneration Policy (the Policy), the intended changes to
implementation of the Policy in 2024 and the rationale for each change.
The full Policy that shareholders will be asked to approve is set out from page 128.
2024 Policy Summary
Element
Proposed change to Policy
Implementation in 2024
Rationale for change
Base pay
No change.
Increase for CEO or CFO in line with the workforce.
Pension
No change.
Pension allowance of 11% of base pay, aligned with
the wider UK workforce.
Annual bonus
Increase maximum opportunity
from 250% to 300% of base
pay.
Any shares awarded under the
Deferred Bonus Plan (DBP) will
now ordinarily be retained in the
event of a resignation of an
Executive Director and vest at
the end of the relevant deferral
period, with the Committee
retaining its discretion to lapse
awards on resignation should it
deem it necessary to do so.
CEO bonus:
>
Target: 150% of base pay (2023: 125%)
>
Max: 300% of base pay (2023: 250%)
CFO bonus:
>
Target: 100% of base pay (No change)
>
Max: 200% of base pay (No change)
Increased maximum opportunity to bring
AstraZeneca in line with relevant market pay levels,
reflecting the size, scope and ambition of the
Company, enabling market competitive opportunities
underpinned by exceptional performance.
Simplifies the operation of the DBP and aligns
Executive Directors with the treatment of deferred
shares for the other members of the Senior Executive
Team (SET). The Committee currently has discretion
to allow awards to be retained by an Executive
Director following their resignation, but the default
treatment under the previous Policy is for any awards
to lapse.
Performance Share
Plan (PSP)
Increase maximum opportunity
from 650% to 850% of base
pay.
Increase CEO PSP award from 650% to 850% of
base pay.
Increase CFO PSP award from 450% to 550% of
base pay.
Recognition of CEO’s and CFO’s criticality to
future business success and delivery of our 2030
Bold Ambition.
Continuing to close the gap to market pay levels and
address the pay compression issue within the
competitive global and European pharmaceutical
talent pool.
Increased weighting on long-term performance and
further shareholder alignment with a greater
emphasis on variable pay, reflecting the size, scope
and ambition of the Company, enabling market
competitive opportunities underpinned by
exceptional performance.
Shareholding
requirements
Increase shareholding requirements to mirror the
maximum value of their variable pay opportunity
(annual bonus and long-term incentives):
>
Shareholding requirement for CEO increases
from 650% to 1,150% of base pay
>
Shareholding requirement for CFO increases
from 450% to 750% of base pay
Executive Directors will have a period of five years
to build a shareholding to meet this requirement.
For two years following cessation of employment,
Executive Directors are required to hold shares to
the value of their 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.
Ensures further alignment with shareholders during
and post-employment.
127
AstraZeneca Annual Report & Form 20-F Information 2023
Directors’ Remuneration Report / Remuneration Policy
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’
Remuneration Policy
Remuneration Policy
This section sets out the Policy proposed for approval by shareholders at the Company’s AGM on 11 April 2024. Subject to shareholder approval,
the Policy is intended to remain in effect for three years from the 2024 AGM. The previous page summarises how the new Policy differs from the
Policy which was approved by shareholders at the 2021 AGM.
Setting the Policy
The Remuneration Committee (the Committee) is responsible for setting overall remuneration policy and makes decisions about specific
remuneration arrangements in the broader context of employee remuneration throughout the Group. The Committee reviews remuneration data
for the wider workforce at several points during the year, including ratios of average employee pay to senior executive pay; bonus and base pay
data; as well as gender and geographical data in relation to base pay and variable compensation. This includes a workforce remuneration review
to understand the ways in which reward is differentiated by contribution across the population.
Remuneration for all roles within the organisation is benchmarked against that for comparable roles in similar organisations and in the employee’s
local market. Executive Directors’ remuneration is benchmarked against global and European pharmaceutical peer groups. In reviewing the base
pay of Executive Directors, the Committee considers the overall level of any base pay increases being awarded to employees in the Executive
Director’s local market in the relevant year. In setting, reviewing and implementing the Policy, the Committee seeks independent advice and
ensures that no Director makes decisions relating to their own remuneration. The Committee connects with the Audit Committee to ensure that
the Group’s remuneration policies and practices achieve the right balance between appropriate incentives to reward good performance,
management of risk, and the pursuit of the Company’s strategic objectives.
The Board as a whole takes responsibility for gathering the views of AstraZeneca’s workforce, and does so through multiple channels of
engagement. While the Committee does not consult employees specifically when setting the Policy, the Company engages with employees,
either on a Group-wide basis or in the context of smaller focus groups, to solicit feedback generally on a wide range of matters, including pay.
Details of our approach to executive remuneration and its implementation are available to employees on our intranet site, Nucleus. Many
employees are also shareholders in the Company and therefore have the opportunity to vote on the Policy at the 2024 AGM.
In all aspects of its work, the Committee considers both the external environment in which the Company operates and the guidance issued by
organisations representing institutional shareholders. It consults the Company’s major investors on general and specific remuneration matters
and provides opportunities for representatives of those investors to meet the Chair of the Committee and other Committee and Board members.
It is the Company’s policy to seek input from major shareholders on an ad hoc basis when significant changes to remuneration arrangements are
proposed. A thorough consultation process was undertaken as this Policy was developed, with investors’ feedback on the Committee’s proposals
influencing the final Policy. The Company’s shareholders are encouraged to attend the AGM and any views expressed will be considered by
Committee members.
Legacy arrangements
The Committee may approve remuneration payments and payments for loss of office on terms that differ to the terms in the Policy where the
terms of the payment were agreed before the Policy came into effect or were agreed at a time when the relevant individual was not a Director of
the Company (provided that, in the opinion of the Committee, the agreement was not entered into in consideration for the individual becoming a
Director of the Company). This includes the exercise of any discretion available to the Committee in connection with such payments. For these
purposes, payments include the Committee satisfying awards of variable remuneration, including share awards, in line with the terms agreed at
the time the award was granted.
Minor amendments
The Committee may make minor amendments to the arrangements for Directors described in the Policy without shareholder approval for
regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation.
128
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Remuneration Policy
continued
Fixed elements of remuneration: base pay, benefits and pension
Base pay
Purpose and link to strategy
Operation
Maximum opportunity
Intended to be sufficient to
attract, retain and develop
high-calibre individuals
When setting base pay, the Committee gives consideration to a
number of factors, including (but not limited to):
>
recognition of the value of an individual’s personal performance
and contribution
>
the individual’s skills and experience
>
internal relativities
>
conditions in the relevant external market
Base pay is normally reviewed annually with any change usually taking
effect from 1 January.
While there is no formal maximum, any increase in
base pay will normally be in line with the percentage
increase awarded to the employee population within
the individual’s country location.
A higher increase may be made if the Committee
considers it appropriate, for example to reflect:
>
an increase in the scope and/or responsibility of the
individual’s role; or
>
development of the individual within the role.
Benefits
Purpose and link to strategy
Operation
Maximum opportunity
Intended to provide a market-
competitive benefits package
sufficient to attract, retain and
develop high-calibre individuals
UK Executive Directors may be provided with a fund, the value of
which is based on a range of benefits, including private medical
provision for themselves, partner and children; life assurance;
company car; additional holidays; and other additional benefits made
available by the Company from time to time that the Committee
considers appropriate based on the Executive Director’s
circumstances. A Director may choose to take a proportion or the
entirety of the fund as cash.
Non UK-based Executive Directors will receive a range of benefits (or a
fund of equivalent value) comparable to those typically offered in their
local market. Depending on local market practices, they may be able
to elect to take the fund as cash or elect to take one or more of these
benefits and take the balance as cash.
At its discretion, the Committee may consider support towards
reasonable costs associated with relocation and/or provide an
allowance towards reasonable fees for professional services such as
legal, tax, property and financial advice. The Company may also fund
the cost of a driver and car for Executive Directors and any expenses
deemed to be taxable which are reasonably incurred in the course of
the Company’s business, together with any taxes thereon.
The Company provides directors’ and officers’ liability insurance and
an indemnity to the fullest extent permitted by law and the
Company’s Articles.
The maximum value of the benefits available will be
equivalent to the cost to the Company of the suite of
benefits available in the local market at the time.
The value of the support towards the costs of
relocation, professional fees and other costs will be the
reasonable costs associated with the Executive
Director’s particular circumstances.
The maximum value of the directors’ and officers’
liability insurance and third-party indemnity insurance is
the cost at the relevant time.
While the Committee has not set an overall level of
benefit provision, the Committee keeps the benefit
policy and benefit levels under review.
Pension
Purpose and link to strategy
Operation
Maximum opportunity
Provision of retirement benefits
to attract, retain and develop
high-calibre individuals
UK-based Executive Directors receive a pension allowance based on a
percentage of base pay, which the Director may elect to pay into a
pension scheme (or an equivalent arrangement) or take as cash.
Non UK-based Executive Directors will receive an allowance for the
purpose of providing retirement benefits in line with local market
practice. A non UK-based Executive Director may be offered the
opportunity to elect to take some or all of the allowance as cash.
The maximum pension allowance that may be provided
to UK-based Executive Directors shall be capped at a
level in line with the pension arrangements of other
UK employees.
The maximum value that may be provided to non
UK-based Executive Directors will be aligned with
employees in the relevant local market.
129
AstraZeneca Annual Report & Form 20-F Information 2023
Directors’ Remuneration Report / Remuneration Policy
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Variable elements of remuneration: annual bonus and Long-term incentive (LTI)
Annual bonus and Deferred Bonus Plan (DBP)
Purpose and link to strategy
Operation
Maximum opportunity
The annual bonus incentivises
and rewards short-term
performance against Group
targets and individual objectives
that are closely aligned to the
Company’s strategy
The deferred share element
of the annual bonus is designed
to align Executive Directors’
interests with those of
shareholders
Annual bonus awards are conditional on performance. Performance is
measured over one year and the bonus, if awarded, is paid after the
year end. Normally, half of the bonus is delivered in cash and half is
delivered in shares, which are deferred for three years under the DBP.
DBP awards may consist of Ordinary Shares or American Depositary
Shares (ADSs) depending on the country in which the Director is
based. In line with the approach for other employees, a Director may
be offered the opportunity to elect to defer part of their cash bonus
into pension.
Stretching Group targets are set annually by the Committee based on
the key strategic priorities for the year. The performance targets form a
Group scorecard, which is closely aligned to the Company’s strategy,
and are currently designed to reward scientific, commercial and
financial delivery. Performance is assessed in relation to each
performance target on a standalone basis. A threshold level of
performance is specified; if performance falls below this level, there
will be no payout for that proportion of the award.
Payout levels are determined by the Committee after the year end,
based on performance against the Group scorecard targets as well as
each Executive Director’s individual performance. The Committee may
use its discretion to ensure that a fair and balanced outcome is
achieved, taking into account the overall performance of the Company
and the experience of shareholders.
On vesting of the deferred shares, additional shares (or cash)
equivalent in value to the dividends that would have been paid during
the deferral period will be awarded to the Director. These additional
shares (or cash) may be calculated on a cumulative dividend
reinvestment basis or otherwise.
Malus and clawback provisions apply to the annual bonus and shares
awarded under the DBP, as set out within the AstraZeneca Global
Standard on Malus and Clawback. The triggers whereby the
Committee has the discretion to apply malus and/or clawback include:
a) serious misconduct;
b) material misstatement or restatement of the audited results of the
Group; or
c) AstraZeneca suffering:
i) significant reputational damage;
ii) a material adverse effect on its financial position; or
iii) a material adverse effect on its business opportunities and
prospects for sustained performance or profitability.
The maximum annual bonus amount that can be
awarded is equivalent to 300% of base pay.
130
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Remuneration Policy
continued
Long-term incentive (LTI): Performance Share Plan (PSP)
Purpose and link to strategy
Operation
Maximum opportunity
The PSP is designed to align
the variable pay of Executive
Directors with the successful
execution of the Company’s
strategy over the longer term
PSP awards are conditional awards and may be granted over Ordinary
Shares or ADSs depending on the country in which the Director is
based. Vesting is dependent on the achievement of stretching
performance targets and continued employment, as further described
in the Treatment of LTI and Deferred Bonus Plan awards on cessation
of employment section on page 136.
Stretching performance targets are set by the Committee at the
beginning of the relevant performance period. Performance measures
are closely aligned to the Company’s strategy and are currently
designed to reward scientific, ESG, commercial and financial success.
The Committee will consult with major shareholders in advance if it
proposes any material changes to the PSP performance measures.
When selecting the performance measures for each award, the
Committee weights the performance measures as it considers
appropriate, taking into account strategic priorities. The Committee’s
intention is to exercise appropriate judgement both when setting
performance targets and assessing formulaic outcomes, in particular
so that the experience of shareholders over time is taken into account.
Performance is normally assessed over a three-year period
commencing on 1 January in the year of grant. Shares are subject to a
two-year holding period following the performance period, so vesting
takes place on the fifth anniversary of grant. During the holding period,
no further performance measures apply.
Typically, 20% of the proportion of a PSP award linked to a
performance measure will vest on achievement of the threshold
level of performance and 100% will vest if the maximum level of
performance is achieved in full. For relative measures (such as
relative total shareholder return (TSR)) the threshold performance will
be performance at or above median, and maximum performance
will usually be set as achievement of performance at the upper
quartile level of the peer group. Where a performance measure
permits, there will be further vesting points between threshold and
maximum vesting levels.
The Committee may (acting fairly and reasonably) adjust or waive a
performance target if an event occurs that causes it to believe that the
performance target is no longer appropriate.
Additional shares (or cash) equivalent in value to the dividends that
would have been paid on the vesting shares during the performance
and holding periods will be awarded to the Director. These additional
shares (or cash award) may be calculated on a cumulative dividend
reinvestment basis or otherwise.
Malus and clawback provisions apply to all PSP awards, as set out
within the AstraZeneca Global Standard on Malus and Clawback.
The triggers whereby the Committee has the discretion to apply malus
and/or clawback include:
a) serious misconduct;
b) material misstatement or restatement of the audited results of
the Group; or
c) AstraZeneca suffering:
i) significant reputational damage;
ii) a material adverse effect on its financial position; or
iii) a material adverse effect on its business opportunities and
prospects for sustained performance or profitability.
The maximum market value of shares that may be
awarded under the PSP in respect of any year is
equivalent to 850% of the participant’s annual base pay
at the date of grant.
131
AstraZeneca Annual Report & Form 20-F Information 2023
Directors’ Remuneration Report / Remuneration Policy
Corporate Governance
Additional Information
Financial Statements
Strategic Report
UK Employee Share Plans
Share Incentive Plan (SIP)
Purpose and link to strategy
Operation
Maximum opportunity
Encouraging employee share
ownership
The Company operates an HM Revenue & Customs (HMRC)-
approved SIP whereby UK employees, including Executive Directors,
may elect to save a regular amount to be used to purchase shares.
The Company currently grants one matching share in respect of every
four shares purchased by the participant.
Participants may contribute up to £150 per month from
pre-tax pay or such other maximum amount as
determined by the Company within the parameters of
applicable legislation.
Save As You Earn Share Option Scheme (SAYE)
Purpose and link to strategy
Operation
Maximum opportunity
Encouraging employee share
ownership
The Company operates an HMRC-approved SAYE whereby UK
employees, including Executive Directors, may save a regular amount
over three or five years and are granted options to purchase shares at
the end of the saving period. A maximum discount of 20% to the
market price prevailing at the date of the commencement of the
scheme applies to the option price.
Participants may save up to £500 per month from
post-tax pay or such other maximum amount as
determined by the Company within the parameters of
applicable legislation.
The maximum opportunity available to participants in a
non UK-based all-employee share scheme will be
determined by the Company within the parameters of
applicable legislation.
Differences in remuneration policy for other employees
The Company’s approach to determining and reviewing the base pay of the Executive Directors and the employee population as a whole is the
same. On an annual basis, the base pay for individual roles are reviewed in the context of the external market. AstraZeneca participates in annual
global compensation surveys, which provide benchmarking data for all roles within the organisation, ensuring a robust base pay review process
for all roles. The Company seeks to provide an appropriate range of competitive benefits, including healthcare and pension, to all employees
(including Executive Directors) in the context of their local market.
Employees globally may be eligible for LTI awards in the form of the PSP and/or restricted stock units depending on their level and market. The
occupants of senior roles in the Company are currently eligible for PSP awards – these are the leaders who have the ability to directly influence
the execution of the Company’s strategic goals. A proportion of each Senior Executive Team (SET) member’s annual bonus is deferred into shares
under the DBP. An LTI award may be used for the same purpose as described above on the recruitment of employees, or for employees other
than Directors, for retention.
132
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Remuneration Policy
continued
Remuneration scenarios for Executive Directors
The charts below illustrate how much the current Executive Directors could receive under different performance scenarios in 2024.
Dividend equivalents payable in respect of PSP awards are not included in the scenarios. To compile the charts, the following assumptions have
been made:
Minimum remuneration
>
Base pay is that applicable in 2024.
>
Taxable benefits are those included in the Executive Directors’ realised pay table for 2023, as set out in the table on
page 106.
>
Pension value is 11% of base pay.
Base pay
£’000
Taxable benefits
£’000
Pension
£’000
Total
£’000
Pascal Soriot (CEO)
1,486
140
163
1,789
Aradhana Sarin (CFO)
951
46
105
1,102
Remuneration for performance
in line with the Company’s
expectations
>
Annual bonus payout is equivalent to 150% of 2024 base pay for Pascal Soriot and 100% of 2024 base pay for Aradhana Sarin.
>
PSP share award vesting at 425% of 2024 base pay for Pascal Soriot and 275% of 2024 base pay for Aradhana Sarin
(representing 50% of the face value of the PSP award).
Maximum remuneration
>
Annual bonus payout equivalent to 300% of 2024 base pay for Pascal Soriot and 200% of 2024 base pay for Aradhana Sarin.
>
PSP share award vesting at 850% of 2024 base pay for Pascal Soriot and 550% of 2024 base pay for Aradhana Sarin
(representing 100% of the face value of the PSP award).
Share price appreciation
>
The potential impact of share price appreciation on PSP award values in the maximum remuneration scenario is illustrated,
assuming a 50% increase on the share price at grant.
Minimum
In line
Maximum
100
17
22
61
24
67
9
18
50
25
7
Share price appreciation
Fixed remuneration
Annual bonus
Long-term incentive
Share price appreciation
£1,789m
£10,331m
£18,874m
£25,188m
Pascal Soriot (%)
Minimum
In line
Maximum
100
24
20
56
23
64
13
18
48
24
10
Share price appreciation
Fixed remuneration
Annual bonus
Long-term incentive
Share price appreciation
£1,102m
£4,670m
£8,238m
£10,855m
Aradhana Sarin (%)
Approach to recruitment remuneration for Executive Directors
On the recruitment of a new Executive Director, the Committee seeks to pay no more than is necessary to attract and retain the best candidate
available, within the limits of our approved Policy. The Committee will offer a remuneration package that it considers appropriate in the particular
circumstances of the recruitment, giving due regard to the interests of the Company’s shareholders and taking into account factors such as
typical market practice, existing arrangements for the other Executive Directors, internal relativities and market positioning.
The pharmaceutical industry is global, and future Executive Directors might be recruited from organisations with pay structures and practices that
differ from AstraZeneca’s usual Policy. The Committee believes that it is in the interests of shareholders for it to retain an element of flexibility in its
approach to recruitment to enable it to attract the best candidates; however, this flexibility is limited.
The Committee may find it necessary to compensate a new recruit for forfeiture of entitlements as a consequence of the recruit leaving their
previous employment to join AstraZeneca. There is no limit to the value of such compensation arrangements, however the Committee will
rigorously consider the appropriate value so as not to pay more than the compensation being forfeited. The Committee will seek to offer a
package weighted towards equity in the Company, and will usually seek to use the PSP as the primary vehicle for buy-out awards where possible;
however, the precise nature of the compensation arrangement will depend on the type of entitlement being forfeited. The arrangement might
therefore comprise a combination of cash, share awards granted under the PSP (subject to the Policy maximum), and other restricted shares. The
Committee may introduce a one-off arrangement as permitted under Listing Rule 9.4.2 in order to deliver a restricted share award. Malus and
clawback provisions would normally apply to buy-out awards, for the same reasons as detailed under the DBP and PSP.
Restricted share awards will only be granted as part of the recruitment arrangements to compensate for loss of remuneration opportunities
suffered on leaving previous employment.
The Committee considers whether the lost incentives were subject to performance targets and their probability of vesting. The normal approach
is to seek broadly to mirror the timing of vesting and application of performance targets of the compensation being forfeited. For example, a
buy-out award may be granted without performance conditions where the foregone compensation was not subject to performance testing,
however the Committee may apply appropriate performance measures if it considers it appropriate.
The Committee may allow a restricted share award to vest in tranches at different dates. If no performance targets are attached to a
compensatory award, it will vest in full if the individual remains in employment on the vesting date. On vesting, additional shares (or cash)
equivalent in value to the dividends that would have been paid during the vesting period will be awarded to the Director. These additional shares
(or cash) may be calculated on a cumulative dividend reinvestment basis or otherwise.
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Directors’ Remuneration Report / Remuneration Policy
Corporate Governance
Additional Information
Financial Statements
Strategic Report
All other aspects of a new recruit’s compensation opportunity will be subject to the maximum variable pay stated in the Policy table. In the case of
Group employees who are promoted internally to the position of Executive Director, the Committee expects to honour all remuneration
arrangements entered into before the promotion.
The Company may reimburse the costs of financial planning, legal and tax advice and reasonable costs incurred on recruitment, including
relocation support.
Service contracts for Executive Directors
Save as noted below, it is not intended that service contracts for new Executive Directors will contain terms that are materially different from those
summarised below or contained in the Policy. The contractual obligations below are applicable to each of the current Executive Directors unless
stated otherwise. Copies of the Executive Directors’ service contracts can be inspected at the Company’s Registered Office.
Notice period
The service contracts of Executive Directors do not have a fixed term but the Company may terminate employment by giving not
less than 12 months’ written notice. The Company may agree on appointment that any notice given by the Company will not
expire prior to the second anniversary of the commencement date of the Executive Director’s appointment. Executive Directors
may terminate their employment on 12 months’ written notice.
Payments in lieu of notice
The Company may terminate an Executive Director’s contract at any time with immediate effect and pay a sum in lieu of notice.
This sum will consist of (i) the base pay that they would have been entitled to receive during the notice period and, (ii) the cost to
the Company of funding the benefit arrangements for this period, including the Company’s contribution in respect of pension.
Garden leave
The Company has the right to place the Executive Director on ‘garden leave’.
Summary termination
The Company may terminate employment summarily in particular defined circumstances, such as gross misconduct, with no
further payment.
Payments in lieu of holiday
If, on termination, the Executive Director has exceeded their accrued holiday entitlement, the value of this excess may be
deducted by the Company from any sums payable. If the Executive Director has unused holiday entitlement, the Committee has
discretion to require the Executive Director to take such unused holiday during any notice period or make a payment in lieu of it
calculated in the same way as the value of any excess holiday.
Directors’ and officers’
liability insurance
Directors’ and officers’ liability insurance and an indemnity, to the fullest extent permitted by law and the Company’s Articles,
is provided for the duration of an Executive Director’s employment and for a minimum of five years following termination.
Principles of payment for loss of office for Executive Directors
The Company does not make additional payments for loss of office, other than, as appropriate, payments in lieu of notice as described above, or
payments in respect of damages if the Company terminates an Executive Director’s service contract in breach of contract (taking into account, as
appropriate, the Director’s responsibility to mitigate any losses). The Committee has discretion to award payments in certain circumstances, as
set out on the following page, depending on the nature of the termination and the Executive Director’s performance. The LTI plans are governed
by plan rules, which define how individual awards under those plans should be treated upon termination of employment and corporate activity,
including sale of a business outside the Group. The treatment of awards in these circumstances will be determined according to the rules and
subject to Committee discretion. Aside from the reasons relating to corporate activity, generally, awards under LTI plans will be allowed to vest for
those Executive Directors who leave the Company in circumstances such as ill health, injury, disability, redundancy or retirement, or any other
reason the Committee considers appropriate, or where employment terminates by reason of the Executive Director’s death (see the table on
page 136 for further information). Awards that are allowed to vest will typically be pro-rated for time, subject to the Committee’s discretion. In
addition to any payment in lieu of notice, the individual components of remuneration and other payments which may be payable on loss of office
are set out on the following pages, subject to the terms of any applicable bonus rules or share plan rules. No awards will vest where an individual
has been dismissed for cause.
134
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Remuneration Policy
continued
Annual bonus
At the discretion of the Committee, an Executive Director may receive a bonus for the performance year in which they leave the Company.
Typically, this sum will reflect a bonus pro-rated for the part of the year in which they worked. This will depend on the circumstances, including an
assessment of performance against the scorecard and the Executive Director’s performance in the relevant period and the circumstances of their
departure, and may be in such proportion of cash and/or shares as the Committee will determine. The deferred share element of previous
bonuses granted, and any deferred share element of the bonus awarded in respect of the departing year, may still vest for the benefit of the
departing Executive Director at the end of the period of deferral. The Committee has the discretion to accelerate and/or retain the deferral period
and allow shares to vest for the benefit of the Executive Director on their departure and/or in accordance with the vesting schedule as the case
may be.
LTI plans
The LTI plan rules envisage circumstances under which some, all or none of the shares held under LTI plans will vest in connection with departure.
The exact timing and number of shares vesting will depend on the circumstances, including the reason for leaving (as set out in the table on the
next page) and may be subject to Committee discretion, depending on what it considers to be fair and reasonable in the circumstances.
Restricted share awards
The treatment on termination will depend upon the terms of the individual Executive Director’s awards on recruitment. The Committee has
discretion to determine the treatment at the time of departure based on what it considers to be fair and reasonable in the circumstances.
Non-statutory redundancy payments
Executive Directors are not entitled to non-statutory redundancy payments.
Pension allowance and other benefits
Pension allowance and other benefits for Executive Directors will be payable up to the termination date and/or as part of a payment in lieu of
notice as described on page 134.
Payments in relation to statutory rights
The amount considered reasonable to pay by the Committee in respect of statutory rights may be included in the overall termination payment.
Payments required by law
The Committee reserves the right to make any other payments in connection with an Executive Director’s cessation of office or employment
where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation),
or by way of settlement of any claim arising in connection with the cessation of an Executive Director’s office or employment.
Mitigation
The departing Executive Director will be required to mitigate their loss by using reasonable efforts to secure new employment.
Professional fees
The Company may pay an amount considered reasonable by the Committee in respect of fees for legal and tax advice, and outplacement
support for the departing Executive Director.
135
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Directors’ Remuneration Report / Remuneration Policy
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Treatment of LTI and Deferred Bonus Plan awards on cessation of employment
Plan
Termination by mutual agreement (broadly in
circumstances of ill-health, injury, disability,
redundancy or retirement and in the case of death and
certain corporate events, e.g. sale of a business outside
the Group)
Other leaver scenarios
Deferred Bonus Plan
(Annual bonus)
Awards will vest at the end of the relevant deferral period,
unless the Committee decides otherwise.
In the case of dismissal for gross misconduct, the awards will
lapse. In other circumstances, the shares will be retained in full
and vest at the end of the deferral period, unless the
Committee decides otherwise.
PSP
Where cessation of employment occurs within three years of
the date of grant, awards will vest, pro rata, to the time elapsed
between the date of grant of the award and the date of
cessation of employment, after the end of the performance
period, to the extent that the performance target(s) measured
over the performance period has been met.
However, the Committee has discretion to permit the award to
vest immediately on cessation of employment to the extent that
the performance target(s) has, in the opinion of the Committee,
been satisfied from the date of grant to the date of cessation
of employment.
However, if the Committee believes that exceptional
circumstances warrant this, it may exercise its discretion to
vest the award on another basis.
Where cessation of employment occurs during any holding
period, the award will vest in respect of all the shares that
continue to be subject to the award as soon as practicable
following the cessation of employment. However, the
Committee has discretion to require the award to vest only at
the end of the holding period.
Where cessation of employment occurs within three years of
the date of grant, ordinarily awards will lapse unless the
Committee exercises its discretion to preserve all or part of an
award and apply the default treatment for leavers by mutual
agreement as described in this table. This discretion will not be
exercised in the case of dismissal for gross misconduct.
Where cessation of employment occurs during any holding
period, the award will vest in respect of all the shares that
continue to be subject to the award as soon as practicable
following the cessation of employment. However, the
Committee has discretion to require the award to vest only at
the end of the holding period. This discretion will not be
exercised in the case of dismissal for gross misconduct and
the award will lapse on termination.
Restricted shares
In relation to awards granted at the time of the Executive
Director’s recruitment to the Company in compensation for any
awards or bonuses forfeited at their previous employer, the
award will vest on the date their employment ceases. The
Committee will, in its discretion, determine the proportion of
shares which vests, and (unless exceptional circumstances
apply) take into account the period elapsed between the date
of grant and the date of cessation of employment.
Ordinarily awards will lapse unless the Committee exercises its
discretion to preserve all or part of an award.
136
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Remuneration Policy
continued
Remuneration Policy for Non-Executive Directors
Non-Executive Directors, including the Chair, receive annual Board fees. With the exception of the Chair, Non-Executive Directors receive
additional fees for membership and for holding the position of Chair of a Board Committee or senior independent Non-Executive Director.
Non-Executive Directors are not eligible for performance-related bonuses or to participate in any of the Company’s share-based incentive plans.
No pension contributions are made on their behalf. The annual Board fees applicable to Non-Executive Directors are set out in the Annual Report
on Remuneration. Changes to these fees in future years will be set out in the corresponding year’s Annual Report on Remuneration. The remuneration
of Non-Executive Directors (excluding the Chair) is determined by the Chair and the Executive Directors. The remuneration of the Chair is
determined by the other members of the Committee and the senior independent Non-Executive Director.
Annual Board fees
Purpose and link to strategy
Operation
Maximum opportunity
Intended to attract, retain and
develop high-calibre individuals
Board fees for Non-Executive Directors are subject to periodic
review and may be increased in the future to ensure that they
remain sufficient to attract high-calibre individuals while
remaining fair and proportionate. Although Non-Executive
Directors currently receive their fees in cash, the Company may
pay part or all of their fees in the form of shares.
Non-Executive Directors are eligible to receive a base fee and
additional fees where appropriate to reflect any additional
time commitment or duties (e.g. being the Chair of a
Committee). The fee structure is set out in the Annual Report
on Remuneration.
The aggregate ordinary remuneration of the Non-Executive
Directors shall not exceed the maximum specified in Articles
88 and 89 of the Company’s Articles, as approved by the
Company’s shareholders.
As at the date of this Policy, the maximum aggregate
remuneration is £3,000,000 per annum and any Non-Executive
Director who serves on any Board Committee may be paid
such extra remuneration as the Board may determine.
Benefits
Purpose and link to strategy
Operation
Maximum opportunity
Intended to attract and retain
high-calibre individuals
The Company provides directors’ and officers’ liability
insurance and an indemnity to the fullest extent permitted by
law and the Company’s Articles and may also reimburse the
costs of financial planning and tax advice.
The maximum amount payable in respect of these costs
and the cost of insurance will be the reimbursement of the
Non-Executive Directors’ benefits grossed up for any tax
payable by the individual.
Other costs and expenses
Purpose and link to strategy
Operation
Maximum opportunity
Intended to reimburse
individuals for legitimately
incurred costs and expenses
The Committee has the discretion to reimburse contributions
by the Company to office costs of the Chair and other
Non-Executive Directors in circumstances where such
payments are deemed proportionate and reasonable.
The Company will pay for all travel (including travel to the
Company’s offices), hotel and other expenses reasonably
incurred by Non-Executive Directors (and any associated
tax thereon) in the course of the Company’s business,
e.g., professional fees such as secretarial support, and
reimbursement for domestic security arrangements such as
lights and alarms following a security assessment.
There are no contractual provisions for clawback or malus of
other costs and expenses.
The maximum amounts payable in respect of these costs and
expenses will be the reimbursement of the Non-Executive
Directors’ costs and expenses grossed up for any tax payable
by the individual.
137
AstraZeneca Annual Report & Form 20-F Information 2023
Directors’ Remuneration Report / Remuneration Policy
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Letters of appointment
None of the Non-Executive Directors has a service contract but each has a letter of appointment. The terms and conditions of appointment of
Non-Executive Directors may be viewed on the Governance page of the AstraZeneca website, at www.astrazeneca.com. 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 Company
is mindful of the director independence provisions of the 2018 UK Corporate Governance Code and, in this regard, a Non-Executive Director’s
overall tenure will not normally exceed nine years. The Chair 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 letter of appointment giving them a right to compensation upon early
termination of appointment.
On behalf of the Board
A C N Kemp
Company Secretary
8 February 2024
138
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Remuneration Policy
continued
Contents
Preparation of the Financial Statements
and Directors’ Responsibilities
140
Directors’ Annual Report on Internal Controls
over Financial Reporting
140
Auditors’ Report
141
Consolidated Statements
148
Group Accounting Policies
152
Notes to the Group Financial Statements
160
Group Subsidiaries and Holdings
211
Company Statements
216
Company Accounting Policies
218
Notes to the Company Financial Statements
220
Group Financial Record
223
Financial
Statements
139
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
140
AstraZeneca Annual Report & Form 20-F Information 2023
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 IFRS Accounting Standards as 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 8 February 2024
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 2023 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 2023 and has issued an unqualified
report thereon.
Directors’ Annual Report on Internal
Controls over Financial Reporting
Preparation of the Financial Statements
and Directors’ Responsibilities
141
AstraZeneca Annual Report & Form 20-F Information 2023
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 2023 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
2023 (the “Annual Report”), which comprise: the
Consolidated Statement of Financial Position and the
Company Balance Sheet as at 31 December 2023; 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
Accounting Standards as adopted by the
European Union
As explained in the Group Accounting Policies to the
financial statements, the Group, in addition to applying
UK-adopted international accounting standards, has
also applied International Accounting Standards as
adopted by the European Union.
In our opinion, the Group financial statements have
been properly prepared in accordance with
International Accounting Standards as adopted by
the European Union.
Separate opinion in relation to IFRS
Accounting Standards as issued by the IASB
As explained in the Group Accounting Policies to the
financial statements, the Group, in addition to applying
UK-adopted international accounting standards, has
also applied IFRS Accounting Standards as issued by
the International Accounting Standards Board (IASB).
In our opinion, the Group financial statements have
been properly prepared in accordance with IFRS
Accounting Standards 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 eight 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), the UK,
Sweden, China (two components) and Ireland, as
well as the Company. One or more individual
balances for certain of these reporting components
were audited by our team based in Poland (for
research and development and inventory) and our
team in Malaysia (property, plant and equipment),
as these are the locations where the accounting
records reside.
>
We also included Japan and Germany as two
additional 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
revenue, accounts receivable and journals testing.
>
We also identified five shared service centres where
audit procedures were performed over certain
shared service functions for IT general controls and
transaction processing. Audit procedures were
performed centrally in relation to various balances
and activities accounted for and managed centrally
including: goodwill, intangible assets (excluding
software), pension obligations, centralised cash,
borrowings and financial instruments, taxation,
other investments and litigation matters, as well as
the consolidation.
>
The above procedures accounted for 72% of the
Group’s revenue and 72% 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: $440m (2022: $400m)
based on approximately 5% of profit before tax
after adding back intangible asset impairment
charges (Note 10), fair value movements and
discount unwind on contingent consideration and
other payables assumed from the Alexion
acquisition (Note 20), the discount unwind on the
Acerta Pharma share purchase liability (Note 3), the
discount unwind on certain other payables arising
from intangible asset acquisitions (Note 3), material
legal net 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: $110m (2022: $100m)
based on 0.2% of net assets as constrained by the
allocation of overall Group materiality.
>
Performance materiality: $330m (2022: $300m)
(Group) and $82.5m (2022: $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.
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
142
AstraZeneca Annual Report & Form 20-F Information 2023
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.
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 2023 amounted to $4,926m (2022:
$3,822m), 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.
We utilised our in-house experts with specialised skills and knowledge to assist
in assessing the compliance of the Group’s Medicaid rebate policies against the
regulatory policies, and subsequently evaluating the Group’s calculation of the
Medicaid drug rebate.
Based on the procedures performed, we considered the accruals to be
reasonable. We evaluated the disclosures in Notes 1 and 20 of the Group
financial statements, and considered them to be 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 $37,587m at 31
December 2023 (2022: $38,890m). 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 the Group’s intangible assets.
During 2023, $434m (2022: $241m) of net impairment charges were
recorded (of which $417m (2022: $95m) was recorded in Research and
development expenses and $17m (2022: $146m) within Selling, general
and administrative costs).
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 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 recorded for intangible assets was reasonable. We evaluated the
disclosures in Note 10 of the Group financial statements, and considered them
to be 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 2023 the Group held provisions of
$1,016m (2022: $161m) 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 if a contingent liability needs to be 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 enquiry 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.
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
143
AstraZeneca Annual Report & Form 20-F Information 2023
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 2023 the total net tax liability recognised in respect of uncertain
tax treatments is $1,336m (2022: $830m). 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 2023 this was $679m (2022: $734m).
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, reviews and disputes with tax authorities, 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 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 evaluated the disclosures in Note 30 of the Group financial
statements, and considered them to be 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 $7,907m at 31 December 2023
(2022: $8,108m), 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 86% 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 evaluated the disclosures
in Note 22 of the Group financial statements, and considered them to
be appropriate.
Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
144
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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 2023, the overwhelming
majority of the Profit and loss account reserve of $17,640m (31 December 2022:
all of $7,458m) 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.
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.
We assessed whether there is qualifying consideration in determining whether
the Profit and loss account reserve is distributable.
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
145
AstraZeneca Annual Report & Form 20-F Information 2023
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.
The Group operates in over 100 countries and the size
of operations within each territory varies. 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.
We identified eight reporting components which
required a full scope audit of their complete financial
information, either due to their financial significance to
the Group or specific risk characteristics. These
components are the principal operating units in the US
(two components), China (two components), the UK,
Sweden, and Ireland, as well as the Company.
We also identified a further two reporting components
which both had individual financial statement line item
balances that were considered significant to the
Group’s financial statements. For these components
our work was solely focussed on the audit of revenue
and accounts receivable. The two components also
performed journal testing in support of an overall
Group significant risk.
Within our overall Group scope we performed
procedures at five of AstraZeneca’s Shared Service
Centres (SSCs); Warsaw, Kuala Lumpur, Delhi, Cluj and
San Jose. The testing procedures performed at the
SSCs included controls testing and IT general controls
testing. In addition to the work performed by the SSCs
a number of centralised audit procedures were
Financial statements – Group
Financial statements – Company
Overall materiality
$440m (2022: $400m).
$110m (2022: $100m).
How we determined it
Approximately 5% of profit before tax after adding back intangible asset
impairment charges (Note 10), fair value movements and discount unwind on
contingent consideration and other payables assumed from the Alexion
acquisition (Note 20), the discount unwind on the Acerta Pharma share purchase
liability (Note 3), the discount unwind on certain other payables arising from
intangible asset acquisitions (Note 3), material legal net 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)
0.2% of net assets as constrained by the allocation
of overall Group materiality
Rationale for
benchmark applied
The reported profit of the Group can fluctuate due to intangible asset impairment
charges, fair value and discount unwind movements on contingent consideration,
the discount unwind on the Acerta Pharma share purchase liability, the discount
unwind on certain other payables arising from intangible asset acquisitions,
material legal net 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.
performed by the Group audit team. These procedures
primarily related to the audit of goodwill, intangible
assets (excluding software), pension obligations,
centralised cash, borrowings and financial
instruments, taxation, other investments, litigation
matters, and the Group consolidation.
Our Group engagement team’s involvement in the
oversight of the reporting components and SSCs was
continuous throughout the audit process. As part of
our cycle of in person oversight we visited; China and
the US (covering both components in each country),
Sweden and Ireland and were in regular contact with
our UK component team in Cambridge. We also visited
the SSCs in Poland and India.
In addition to these on site visits, regular virtual
meetings with the component auditors were held,
whereby we performed reviews of the component
auditors’ planned response to significant risks, and
reviewed the component auditors working papers. The
work that is performed at the SSCs is overseen by the
Group engagement team, and follows the same review
and oversight process as the components. Alongside
our team oversight we attended meetings with local
management.
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 CO2 emissions, and the impact
these have on the Group including on future cash flow
forecasts. This includes the committed investment to
the ‘AZ Forest’ through 2030 and the continued
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:
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146
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Financial Statements
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 $45m and $250m.
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% (2022: 75%%) of overall materiality,
amounting to $330m (2022: $300m) for the Group
financial statements and $82.5m (2022: $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 $22m (Group audit) (2022: $20m) and
$22m (Company audit) (2022: $20m) as well as
misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
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.
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 2023 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, included within
the Corporate Governance Overview, Corporate
Governance Report, Nomination and Governance
Committee Report, Science Committee Report,
Sustainability Committee Report and Audit Committee
Report is materially consistent with the financial
statements and our knowledge obtained during the
audit, and we have nothing material to add or draw
attention to in relation to:
>
The directors’ confirmation that they have carried
out a robust assessment of the emerging and
principal risks;
>
The disclosures in the Annual Report that describe
those principal risks, what procedures are in place
to identify emerging risks and an explanation of how
these are being managed or mitigated;
>
The directors’ statement in the financial statements
about whether they considered it appropriate to
adopt the going concern basis of accounting in
preparing them, and their identification of any
material uncertainties to the Group’s and
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
147
AstraZeneca Annual Report & Form 20-F Information 2023
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
section, 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),
antibribery 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 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
and tax legislation. 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;
>
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 seven years, covering the years ended
31 December 2017 to 31 December 2023.
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
8 February 2024
Financial Statements / Independent auditors’ report to the members of AstraZeneca PLC
Consolidated Statement of Comprehensive Income
for the year ended 31 December
2023
2022
2021
Notes
$m
$m
$m
Product Sales
1
Alliance Revenue
1
Collaboration Revenue
1
Total Revenue
Cost of sales
(8,268 )
(12,391 )
(12,437 )
Gross profit
Distribution expense
(539 )
(536 )
(446 )
Research and development expense
2
(10,935 )
(9,762 )
(9,736 )
Selling, general and administrative expense
2
(19,216 )
(18,419 )
(15,234 )
Other operating income and expense
2
Operating profit
Finance income
3
Finance expense
3
(1,626 )
(1,346 )
(1,300 )
Share of after tax losses in associates and joint ventures
11
(12 )
(5 )
(64 )
Profit/(loss) before tax
(265 )
Taxation
4
(938 )
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
(406 )
Net gains/(losses) 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 or loss
(6 )
Tax on items that will not be reclassified to profit or loss
4
(216 )
(33 )
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
(145 )
Fair value movements on derivatives designated in net investment hedges
23
(8 )
Costs of hedging
(19 )
(7 )
(6 )
Tax on items that may be reclassified subsequently to profit or loss
4
(12 )
(1,694 )
(689 )
Other comprehensive income/(expense) for the period, net of tax
(878 )
(145 )
Total comprehensive income/(expense) for the period
(30 )
Profit attributable to:
Owners of the Parent
Non-controlling interests
26
Total comprehensive income/(expense) attributable to:
Owners of the Parent
(33 )
Non-controlling interests
26
Basic earnings per $0.25
5
$3.84
$2.12
$0.08
Diluted earnings per $0.25
5
$3.81
$2.11
$0.08
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.
148
AstraZeneca Annual Report & Form 20-F Information 2023
Financial Statements
Consolidated Statement of Financial Position
at 31 December
2023 | 2022 | 2021 | ||
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 | ( | ( | ( |
Lease liabilities | 8 | ( | ( | ( |
Trade and other payables | 20 | ( | ( | ( |
Derivative financial instruments | 13 | ( | ( | ( |
Provisions | 21 | ( | ( | ( |
Income tax payable | ( | ( | ( | |
( | ( | ( | ||
Non-current liabilities | ||||
Interest-bearing loans and borrowings | 19 | ( | ( | ( |
Lease liabilities | 8 | ( | ( | ( |
Derivative financial instruments | 13 | ( | ( | ( |
Deferred tax liabilities | 4 | ( | ( | ( |
Retirement benefit obligations | 22 | ( | ( | ( |
Provisions | 21 | ( | ( | ( |
Other payables | 20 | ( | ( | ( |
( | ( | ( | ||
Total liabilities | ( | ( | ( | |
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 | ( | ||
Non-controlling interests | 26 | |||
Total equity |
Pascal Soriot
Aradhana Sarin
Director
Director
Consolidated Statement of Financial Position
149
AstraZeneca Annual Report & Form 20-F Information 2023
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 2021
Profit for the period
Other comprehensive expense
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)
3
Net movement
(3,589 )
At 31 December 2021
Profit for the period
Other comprehensive expense
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 )
Profit for the period
Other comprehensive income
1
Transfer to other reserves
2
(4 )
Transactions with owners
Dividends (Note 25)
(4,487 )
(4,487 )
(4,487 )
Dividends paid to non-controlling interests (Note 25)
(4 )
(4 )
Issue of Ordinary Shares
Share-based payments charge for the period (Note 29)
Settlement of share plan awards
(708 )
(708 )
(708 )
Net movement
(4 )
At 31 December 2023
1
Included within Other comprehensive income of $733 m (2022: expense of $878 m; 2021: expense of $145 m) is a charge of $19 m (2022: charge of $7 m; 2021: charge of $6 m), relating to Costs
of hedging.
2
Amounts charged or credited to Other reserves relate to exchange adjustments arising on goodwill.
3
Replacement share awards were issued as part of the acquisition of Alexion in 2021 (see Note 27).
150
AstraZeneca Annual Report & Form 20-F Information 2023
Financial Statements
for the year ended 31 December
2023 | 2022 | 2021 | ||
Notes | $m | $m | $m | |
Cash flows from operating activities | ||||
Profit/(loss) before tax | ( | |||
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 | ( | ( | ( | |
(Increase)/decrease in inventories | ( | |||
Increase in trade and other payables and provisions | ||||
Gains on disposal of intangible assets | 2 | ( | ( | ( |
Gains on disposal of investments in associates and joint ventures | 2 | ( | ||
Fair value movements on contingent consideration arising from business combinations | 20 | |||
Non-cash and other movements | 17 | ( | ( | |
Cash generated from operations | ||||
Interest paid | ( | ( | ( | |
Tax paid | ( | ( | ( | |
Net cash inflow from operating activities | ||||
Cash flows from investing activities | ||||
Acquisition of subsidiaries, net of cash acquired | 27 | ( | ( | ( |
Payments upon vesting of employee share awards attributable to business combinations | 27 | ( | ( | ( |
Payment of contingent consideration from business combinations | 20 | ( | ( | ( |
Purchase of property, plant and equipment | ( | ( | ( | |
Disposal of property, plant and equipment | ||||
Purchase of intangible assets | ( | ( | ( | |
Disposal of intangible assets | ||||
Movement in profit-participation liability | 2 | |||
Purchase of non-current asset investments | ( | ( | ( | |
Disposal of non-current asset investments | ||||
Movement in short-term investments, fixed deposits and other investing instruments | ( | |||
Payments to associates and joint ventures | 11 | ( | ( | ( |
Disposal of investments in associates and joint ventures | ||||
Interest received | ||||
Net cash outflow from investing activities | ( | ( | ( | |
Net cash inflow/(outflow) before financing activities | ( | |||
Cash flows from financing activities | ||||
Proceeds from issue of share capital | ||||
Issue of loans and borrowings | ||||
Repayment of loans and borrowings | ( | ( | ( | |
Dividends paid | ( | ( | ( | |
Hedge contracts relating to dividend payments | ( | ( | ( | |
Repayment of obligations under leases | ( | ( | ( | |
Movement in short-term borrowings | ( | |||
Payments to acquire non-controlling interests | ( | |||
Payment of Acerta Pharma share purchase liability | ( | ( | ||
Net cash (outflow)/inflow from financing activities | ( | ( | ||
Net (decrease)/increase in Cash and cash equivalents in the period | ( | ( | ||
Cash and cash equivalents at the beginning of the period | ||||
Exchange rate effects | ( | ( | ( | |
Cash and cash equivalents at the end of the period | 17 |
Consolidated Statement of Cash Flows
151
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
of financial information
have been prepared under the historical cost
convention, modified to include revaluation to
fair value of certain financial instruments and
pension plan assets and liabilities 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 IFRS
Accounting Standards 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
New accounting requirements
Other than noted below, amendments to
accounting standards issued by the IASB and
adopted in the year ended 31 December 2023
did not have a material impact on the result or
financial position of the Group.
IAS 12
On 23 May 2023, the IASB issued an
amendment to IAS 12 ‘Income Taxes’ to clarify
how the effects of the global minimum tax
framework should be accounted for and
disclosed effective 1 January 2023. This was
endorsed by the UK Endorsement Board on
19 July 2023 and has been adopted by the
Group for 2023 reporting. The Group has
applied the exemption to recognising and
disclosing information about deferred tax
assets and liabilities related to Pillar 2
income taxes.
Alliance and Collaboration Revenue
Effective 1 January 2023, the Group has
updated the presentation of Total Revenue on
the face of the Statement of Comprehensive
Income to include Alliance Revenue as a
separate element to Collaboration Revenue.
Alliance Revenue, previously reported within
Collaboration Revenue, comprises income
related to sales made by collaboration partners,
where AstraZeneca is entitled to a share of
gross profits, share of revenues or royalties,
which are recurring in nature while the
collaboration arrangement remains in place.
Alliance Revenue does not include Product
Sales where AstraZeneca is leading
commercialisation in a territory.
Collaboration Revenue arising from
collaborative arrangements where the Group
retains a significant ongoing economic interest
and receives upfront amounts and event-
triggered milestones, which arise from the
licensing of intellectual property, will continue
to be reported as Collaboration Revenue. In
collaboration arrangements either AstraZeneca
or the collaborator acts as principal in sales to
the end customer. Where AstraZeneca acts as
principal, AstraZeneca records 100% of sales
to the end customer within Product Sales. The
updated presentation reflects the increasing
importance of income arising from share of
gross profit arrangements where collaboration
partners are responsible for booking revenues
in some or all territories.
The comparative revenue reported in the
years to 31 December 2022 and 31 December
2021 has been retrospectively adjusted to
reflect the new split of Total Revenue, resulting
in Alliance Revenue being reported for the
year to 31 December 2022 of $755m and to
31 December 2021 of $388m, however the
combined total of Alliance Revenue and
Collaboration Revenue is equal to the
previously reported Collaboration Revenue
total for each prior year.
Statements on a going concern basis
The Group has considerable financial resources
available. As at 31 December 2023, the Group
has $12.7bn in financial resources (Cash and
cash equivalent balances of $5.8bn and
undrawn committed bank facilities of $6.9bn,
of which $2.0bn are available until February
2025 and the remaining $4.9bn are available
until April 2026, (in February 2024 these
facilities were extended to April 2029), with only
$5.4bn of borrowings due within one year).
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 from page 152
and
Note 1 on page 161
>
expensing of internal development expenses
– see Research and Development Policy
from page 154
>
impairment reviews of Intangible assets
– see Note 10 on page 174
>
useful economic life of Intangible assets –
see Research and Development Policy
from page 154
>
business combinations and Goodwill –
see Business Combinations and Goodwill
Policy from page 156
and Note 27 from
page 193
>
litigation liabilities – see Litigation and
Environmental Liabilities within Note 30
on page 204
>
operating segments – see Note 6 on
page 167
>
employee benefits – see Note 22 on
page 190
>
taxation – see Note 30 from page 209
.
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 195.
AstraZeneca’s management considers the
following to be the material accounting policies
Revenue comprises Product Sales, Alliance
Revenue 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. 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.
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. 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. In the cases where
AstraZeneca does not act as principal, we
record the share of gross profits received
within Alliance Revenue.
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
reason for the bill-and-hold arrangement is
substantive, the product can be identified
separately as belonging to the customer, the
product is ready for physical transfer to the
customer and AstraZeneca is unable to use
or sell the product to another customer.
Alliance Revenue
Alliance Revenue comprises income arising
from the ongoing operation of collaborative
arrangements related to sales made by
collaboration partners, where AstraZeneca
is entitled to a share of gross profits, share
of revenues or royalties, which are recurring
in nature while the collaboration agreement
remains in place. Alliance Revenue does not
include Product Sales where AstraZeneca
is leading commercialisation in a territory,
or reimbursement for AstraZeneca-incurred
expenses such as R&D or promotion
costs, which arise from the license of
intellectual property.
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
Sales, while the Group instead receives a
proportion of the value generated by those
Product Sales, either in the form of a royalty,
a share of gross profits or a share of revenues.
Where the arrangement meets the definition
of a licence agreement, share of gross profits,
share of revenues and sales royalties are
recognised when achieved by applying the
royalty exemption under IFRS 15. All other
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.
Collaboration Revenue
Collaboration Revenue includes income arising
from entering into collaborative arrangements
where the Group has out-licensed (sold) certain
rights associated with products and where
AstraZeneca 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 and milestones.
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 licence is
granted and variable consideration as soon
as recognition criteria are met.
Group Accounting Policies
continued
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, in the form of an
upfront fee, 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 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
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 2023, 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 at the present value of expected
future cash flows. 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
accumulated 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 172.
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 indicators 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 match the relevant
Other operating income and expense
Other operating income and expense is
generated from activities outside of the
Group’s normal course of business, which
includes Other income from divestments of or
full out-license of assets and businesses
including royalties and milestones where the
Group does not retain a significant continued
interest. 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 it is
considered highly probable that there will not
be a significant reversal of cumulative income.
The determination requires estimates to be
made in relation to future Product Sales.
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
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.
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 liabilities are recognised
unless they arise from the initial recognition
(other than in a business combination) of assets
and liabilities in a transaction that affects
neither the taxable profit nor the accounting
profit. Deferred tax liabilities are not recognised
to the extent they arise from the initial
recognition of non-tax deductible goodwill.
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 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 liabilities relating to assets
recognised because of a business combination
which may qualify for intellectual property
incentives are measured at the relevant
statutory tax rate. 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
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
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 193) 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
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.
Group Accounting Policies
continued
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 from page 193 for additional
details. 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 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
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.
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 neither 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
method, less any impairment, based on
expected credit 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 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 or loss. Cash and cash
equivalents in the Consolidated Statement
of Cash Flows include unsecured bank
overdrafts at the balance sheet date where
balances often fluctuate between a cash and
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 method at each reporting
date. Changes in carrying value are
recognised in the Consolidated Statement
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 or loss following the
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 FVPL when certain
criteria are met or as the hedged item under
a fair value hedge.
Group Accounting Policies
continued
If the debt instrument is designated as FVPL,
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 method at each
reporting date. Changes in carrying value are
recognised in the Consolidated Statement of
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.
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
Foreign currency transactions, being
transactions denominated in a currency other
than an individual Group entity’s functional
currency, are translated into the relevant
functional currencies of individual Group
entities at average rates for the relevant
monthly accounting periods, which
approximate to actual rates.
Monetary assets and liabilities arising from
foreign currency transactions are retranslated
at exchange rates prevailing at the reporting
date. Exchange gains and losses on loans and
on short-term foreign currency borrowings
and deposits are included within Finance
expense. Exchange differences on all other
foreign currency transactions are recognised
in Operating profit in the individual Group
entity’s accounting records.
Non-monetary items arising from foreign
currency transactions are not retranslated in the
individual Group entity’s accounting records.
In the Consolidated Financial Statements,
income and expense items for Group entities
with a functional currency other than US
dollars are translated into US dollars at
average exchange rates, which approximate
to actual rates, for the relevant accounting
periods. Assets and liabilities are translated at
the US dollar exchange rates prevailing at the
reporting date. Exchange differences arising
on consolidation are recognised in Other
comprehensive income.
If certain criteria are met, non-US dollar-
denominated loans or derivatives are
designated as net investment hedges of foreign
operations. Exchange differences arising on
retranslation of net investments, and of foreign
currency loans which are designated in an
effective net investment hedge relationship, are
recognised in Other comprehensive income in
the Consolidated Financial Statements. Foreign
exchange derivatives hedging net investments
in foreign operations are carried at fair value.
Effective fair value movements are recognised
in Other comprehensive income, with any
ineffectiveness taken to profit. Gains and
losses accumulated in the translation reserve
will be recycled to profit and loss when the
Provisions are recognised when there is either
a legal or constructive present obligation as a
result of a past event, it is probable that an
outflow of economic resources will be required
to settle the obligation and a reliable estimate
can be made of the amount of the obligation.
If the effect of the time value of money is
material, provisions are discounted at the
relevant pre-tax discount rate. Where provisions
are discounted, the increase in the provision
resulting from the passage of time is recognised
Litigation and environmental liabilities
AstraZeneca is involved in legal disputes, the
settlement of which may involve cost to the
Group. A provision is made where an adverse
outcome is probable and associated costs,
including related legal costs, can be estimated
reliably. 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 from page 204.
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 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.
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
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 1 ‘Presentation of
Financial Statements’, effective for periods
beginning on or after 1 January 2024 –
endorsed by the UK Endorsement Board
(UKEB) on 21 July 2023
>
amendments to IFRS 16 ‘Leases’, effective
for periods beginning on or after 1 January
2024 – endorsed by the UKEB on
11 May 2023
>
amendments to IAS 7 ‘Statement of Cash
Flows’ and IFRS 7 ‘Financial Instruments:
Disclosures’, effective for periods beginning
on or after 1 January 2024 – endorsed by
the UKEB on 28 November 2023
>
amendments to IAS 21 ‘The Effects of
Changes in Foreign Exchange Rates’,
effective for periods beginning on or
after 1 January 2025 – not endorsed by
the UKEB.
These new standards, amendments and
interpretations are not expected to have a
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Group Accounting Policies
159
Notes to the Group Financial Statements
Product Sales | |||||||||||||||
2023 | 2022 | 2021 | |||||||||||||
Emerging | Rest of | Emerging | Rest of | Emerging | Rest of | ||||||||||
US | Markets | Europe | World | Total | US | Markets | Europe | World | Total | US | Markets | Europe | World | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | $m | |
Oncology: | |||||||||||||||
Tagrisso | 2,276 | 1,621 | 1,120 | 782 | 5,799 | 2,007 | 1,567 | 1,023 | 847 | 5,444 | 1,780 | 1,336 | 986 | 913 | 5,015 |
Imfinzi | 2,317 | 360 | 758 | 802 | 4,237 | 1,552 | 287 | 544 | 401 | 2,784 | 1,245 | 277 | 485 | 405 | 2,412 |
Lynparza | 1,254 | 542 | 734 | 281 | 2,811 | 1,226 | 488 | 655 | 269 | 2,638 | 1,087 | 384 | 618 | 259 | 2,348 |
Calquence | 1,815 | 98 | 493 | 108 | 2,514 | 1,657 | 45 | 286 | 69 | 2,057 | 1,089 | 20 | 111 | 18 | 1,238 |
Enhertu | – | 169 | 60 | 32 | 261 | – | 51 | 21 | 7 | 79 | – | 12 | 4 | 1 | 17 |
Orpathys | – | 44 | – | – | 44 | – | 33 | – | – | 33 | – | 16 | – | – | 16 |
Truqap | 6 | – | – | – | 6 | – | – | – | – | – | – | – | – | – | – |
Zoladex | 14 | 687 | 133 | 118 | 952 | 15 | 657 | 133 | 122 | 927 | 13 | 619 | 147 | 169 | 948 |
Faslodex | 31 | 142 | 28 | 96 | 297 | 17 | 159 | 55 | 103 | 334 | 30 | 167 | 113 | 121 | 431 |
Others | 6 | 165 | 6 | 47 | 224 | 10 | 250 | 9 | 66 | 335 | 11 | 391 | 17 | 96 | 515 |
7,719 | 3,828 | 3,332 | 2,266 | 17,145 | 6,484 | 3,537 | 2,726 | 1,884 | 14,631 | 5,255 | 3,222 | 2,481 | 1,982 | 12,940 | |
Cardiovascular, Renal & Metabolism: | |||||||||||||||
Farxiga | 1,451 | 2,211 | 1,881 | 420 | 5,963 | 1,071 | 1,665 | 1,297 | 348 | 4,381 | 732 | 1,195 | 810 | 263 | 3,000 |
Brilinta | 744 | 285 | 271 | 24 | 1,324 | 744 | 286 | 282 | 46 | 1,358 | 735 | 328 | 346 | 63 | 1,472 |
Lokelma | 214 | 50 | 58 | 90 | 412 | 170 | 20 | 30 | 69 | 289 | 115 | 3 | 13 | 44 | 175 |
roxadustat | – | 271 | – | – | 271 | – | 197 | – | – | 197 | – | 174 | – | – | 174 |
Andexxa | 75 | – | 62 | 45 | 182 | 77 | – | 41 | 32 | 150 | 50 | – | 18 | – | 68 |
Crestor | 55 | 862 | 52 | 138 | 1,107 | 65 | 794 | 41 | 148 | 1,048 | 80 | 775 | 52 | 189 | 1,096 |
Seloken / Toprol-XL | 1 | 621 | 11 | 7 | 640 | – | 839 | 14 | 9 | 862 | 1 | 928 | 11 | 11 | 951 |
Onglyza | 49 | 131 | 32 | 15 | 227 | 76 | 121 | 38 | 22 | 257 | 88 | 179 | 61 | 32 | 360 |
Bydureon | 133 | 3 | 27 | – | 163 | 242 | 3 | 35 | – | 280 | 321 | 3 | 55 | 6 | 385 |
Others | 30 | 152 | 109 | 5 | 296 | 34 | 194 | 128 | 10 | 366 | 52 | 195 | 146 | 14 | 407 |
2,752 | 4,586 | 2,503 | 744 | 10,585 | 2,479 | 4,119 | 1,906 | 684 | 9,188 | 2,174 | 3,780 | 1,512 | 622 | 8,088 | |
Respiratory & Immunology: | |||||||||||||||
Symbicort | 726 | 753 | 549 | 334 | 2,362 | 973 | 608 | 582 | 375 | 2,538 | 1,065 | 609 | 670 | 384 | 2,728 |
Fasenra | 992 | 64 | 355 | 142 | 1,553 | 906 | 43 | 305 | 142 | 1,396 | 790 | 20 | 286 | 162 | 1,258 |
Breztri | 383 | 161 | 81 | 52 | 677 | 239 | 92 | 33 | 34 | 398 | 115 | 55 | 7 | 26 | 203 |
Saphnelo | 260 | 2 | 8 | 10 | 280 | 111 | – | 2 | 3 | 116 | 8 | – | – | – | 8 |
Tezspire | – | 1 | 48 | 37 | 86 | – | – | 2 | 2 | 4 | – | – | – | – | – |
Pulmicort | 28 | 575 | 68 | 42 | 713 | 65 | 462 | 69 | 49 | 645 | 72 | 770 | 73 | 47 | 962 |
Bevespi | 34 | 6 | 17 | 1 | 58 | 42 | 5 | 10 | 1 | 58 | 39 | 4 | 11 | – | 54 |
Daliresp / Daxas | 42 | 3 | 8 | 1 | 54 | 176 | 3 | 9 | 1 | 189 | 207 | 4 | 15 | 1 | 227 |
Others | 82 | 206 | 30 | 6 | 324 | 143 | 230 | 42 | 6 | 421 | 108 | 287 | 185 | 14 | 594 |
2,547 | 1,771 | 1,164 | 625 | 6,107 | 2,655 | 1,443 | 1,054 | 613 | 5,765 | 2,404 | 1,749 | 1,247 | 634 | 6,034 | |
Vaccines & Immune Therapies: | |||||||||||||||
COVID-19 mAbs | – | 6 | 12 | 114 | 132 | 1,067 | 413 | 298 | 407 | 2,185 | – | 19 | 66 | – | 85 |
Vaxzevria | – | 10 | 2 | – | 12 | 79 | 729 | 365 | 625 | 1,798 | 64 | 2,240 | 1,035 | 578 | 3,917 |
Beyfortus | 87 | – | 19 | – | 106 | – | – | – | – | – | – | – | – | – | – |
Synagis | (1) | 195 | 175 | 177 | 546 | 1 | 173 | 213 | 191 | 578 | 23 | 35 | 203 | 149 | 410 |
FluMist | 23 | 1 | 188 | 4 | 216 | 21 | 1 | 151 | 2 | 175 | 27 | 2 | 222 | 2 | 253 |
109 | 212 | 396 | 295 | 1,012 | 1,168 | 1,316 | 1,027 | 1,225 | 4,736 | 114 | 2,296 | 1,526 | 729 | 4,665 | |
Rare Disease: | |||||||||||||||
Soliris | 1,734 | 424 | 670 | 317 | 3,145 | 2,180 | 301 | 805 | 476 | 3,762 | 1,068 | 170 | 439 | 197 | 1,874 |
Ultomiris | 1,750 | 71 | 668 | 476 | 2,965 | 1,136 | 38 | 481 | 310 | 1,965 | 381 | 9 | 169 | 129 | 688 |
Strensiq | 937 | 40 | 89 | 86 | 1,152 | 769 | 35 | 78 | 76 | 958 | 297 | 10 | 36 | 35 | 378 |
Koselugo | 195 | 59 | 53 | 24 | 331 | 162 | 26 | 20 | – | 208 | 104 | 1 | 3 | – | 108 |
Kanuma | 85 | 29 | 49 | 8 | 171 | 77 | 31 | 44 | 8 | 160 | 32 | 7 | 20 | 3 | 62 |
4,701 | 623 | 1,529 | 911 | 7,764 | 4,324 | 431 | 1,428 | 870 | 7,053 | 1,882 | 197 | 667 | 364 | 3,110 | |
Other: | |||||||||||||||
Nexium | 115 | 578 | 53 | 199 | 945 | 120 | 568 | 46 | 551 | 1,285 | 128 | 705 | 62 | 431 | 1,326 |
Others | 18 | 153 | 52 | 8 | 231 | 24 | 220 | 77 | 19 | 340 | 43 | 212 | 109 | 14 | 378 |
133 | 731 | 105 | 207 | 1,176 | 144 | 788 | 123 | 570 | 1,625 | 171 | 917 | 171 | 445 | 1,704 | |
Product Sales | 17,961 | 11,751 | 9,029 | 5,048 | 43,789 | 17,254 | 11,634 | 8,264 | 5,846 | 42,998 | 12,000 | 12,161 | 7,604 | 4,776 | 36,541 |
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 2023 was 1.0% (2022: 1.3%; 2021: 1.5%); 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 2023 of 0.3% (2022: 0.5%;
2021: 0.4%) and Managed Care and Medicare of 0.5% (2022: 0.8%; 2021: 0.7%).
The adjustment in respect of the prior year net US Product Sales revenue, excluding the Rare Disease therapy area in 2023, was 1.4% (2022: 1.6%;
2021: 1.8%), with Medicaid and state programmes of 0.4% (2022: 0.6%; 2021: 0.5%) and Managed Care and Medicare of 0.7% (2022: 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. These variables include assumptions in respect of aggregate
future sales levels, segment mix and customers’ contractual performance, and in addition for Managed Care, US Medicaid and Medicare Part D, the
channel inventory levels, and assumptions related to lag time. These 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 AstraZeneca (in the case of contractual rebates) and claims/invoices are
received (in the case of regulatory rebates and chargebacks).
Alliance Revenue
2023 | 2022 | 2021 | |
$m | $m | $m | |
Enhertu | 1,022 | 523 | 197 |
Tezspire | 259 | 79 | – |
Beyfortus | 57 | – | – |
Vaxzevria : royalties | – | 76 | 64 |
Other royalty income | 81 | 68 | 70 |
Other Alliance Revenue | 9 | 9 | 57 |
1,428 | 755 | 388 |
Collaboration Revenue
2023 | 2022 | 2021 | |
$m | $m | $m | |
Lynparza : regulatory milestones | 245 | 355 | – |
Lynparza : sales milestones | – | – | 400 |
COVID-19 mAbs: licence fees | 180 | – | – |
Farxiga : sales milestones | 29 | – | – |
tralokinumab: sales milestones | 20 | 110 | – |
Beyfortus : regulatory milestones | 71 | 25 | – |
Beyfortus : sales milestones | 27 | – | – |
Nexium : sale of rights | – | 62 | 75 |
Other Collaboration Revenue | 22 | 46 | 13 |
594 | 598 | 488 |
Operating profit includes the following significant items:
In 2023, Cost of sales includes a charge of $114m (2022: charge of $3,484m) 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, $nil government grants were recognised within Cost of sales (2022: $nil; 2021: $290m). The grants recognised in 2021 related to
funding of manufactured
Vaxzevria
In 2023, Selling, general and administrative expense includes a charge of $520m (2022: charge of $182m; 2021: charge of $42m) 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 2023, Selling, general and administrative expense also includes a charge of $1,013m (2022: charge of $789m; 2021: charge of $48m) relating to
During the year $74m (2022: $113m; 2021: $531m) of government grants were recognised within Research and development expense. The grants
recognised relate to funding for Research and development and related expenses for COVID-19 mAbs of $nil (2022: $112m; 2021: $222m) and
Vaxzevria
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Notes to the Group Financial Statements
161
2 Operating profit
continued
2023 | 2022 | 2021 | |
$m | $m | $m | |
Royalty income | 107 | 59 | 62 |
Gains on disposal of intangible assets | 251 | 104 | 513 |
Gains on disposal of investments in associates and joint ventures | – | – | 776 |
Net gains/(losses) on disposal of other non-current assets | 41 | 112 | (4) |
Update to the contractual relationships for Beyfortus (nirsevimab) | 712 | – | – |
Other income 1 | 393 | 439 | 453 |
Other expense | (164) | (200) | (308) |
Other operating income and expense | 1,340 | 514 | 1,492 |
1
Other income in 2023 includes $75m of income from Allergan Plc. in respect of the development of brazikumab (2022: $138m; 2021: $99m).
Gains on disposal of intangible assets in 2023 includes $241m on disposal of commercial rights to
Pulmicort
Flexhaler
to Cheplapharm in the US.
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.
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 Bio 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, $400m in total has been received related
to the rights to participate in the future cash flows from the US profits or losses for
Beyfortus
(nirsevimab), with $190m cash inflows in 2023 primarily
relating to a cash receipt from Sobi following achievement of a regulatory milestone. At 31 December 2022, the full amount of $522m was recognised
as a financial liability within non-current Other payables (the Profit Participation Liability) as the Group had not fully transferred the risks and rewards
of the underlying cash flows arising from
Beyfortus
to Sobi. All associated cash flows have been 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 2023, the contractual relationship
between AstraZeneca and Sobi relating to future sales of
Beyfortus
in the US was replaced by a royalty relationship between Sanofi and Sobi.
As a result, the Profit Participation Liability was extinguished and derecognised from the Consolidated Statement of Financial Position, with a gain
of $712m recorded in Other operating income and expense. In 2021, as a result of the Probability of Technical/Regulatory Success unwind, an
Restructuring costs
During 2023, the Group has incurred $467m of net restructuring costs, of which $362m resulted from activities that are part of the Post Alexion
Acquisition Group Review (PAAGR), bringing the cumulative charges under this programme to $2,067m. Costs in 2023 included $109m within Cost
of sales due to the rationalisation of our manufacturing capacity and footprint across certain production sites, $207m within Selling, general and
administrative expense in relation to HR, Finance, IT & other integration costs as well as some severance costs, $212m within Research and
development expense in relation to the transformation of clinical, regulatory and other R&D data and systems, partially offset by income of $61m
in Other operating income and expense generated from the disposal of assets impacted by the restructuring.
In conjunction with the acquisition of Alexion in 2021, the enlarged Group initiated the PAAGR; a global restructuring programme aimed at integrating
systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments. During 2023, the Group has
identified all remaining activities and finalised the scope of the programme. This includes the commencement of work on the planned upgrade of
the Group’s Enterprise Resource Planning IT systems (Axial Project), which is expected to be substantially complete by the end of 2030. The Group
has also continued to progress other legacy restructuring programmes.
Total restructuring costs in 2023 includes an impairment charge to Property, plant and equipment of $7m (2022: reversal of $4m; 2021: charge of
$343m), impairment of Right-of-use assets of $13m (2022: $nil; 2021: $nil) and no impairment of Intangible assets (software development costs)
(2022: reversal $17m; 2021: charge of $16m).
The tables below show the costs that have been charged in respect of restructuring programmes by cost category and type. Severance provisions
are detailed in Note 21.
2023 | 2022 | 2021 | |
$m | $m | $m | |
Cost of sales | 109 | 266 | 722 |
Distribution expense | – | 2 | – |
Research and development expense | 212 | 111 | 223 |
Selling, general and administrative expense | 207 | 405 | 338 |
Other operating income and expense | (61) | (67) | – |
Total charge | 467 | 717 | 1,283 |
2023 | 2022 | 2021 | |
$m | $m | $m | |
Severance costs | 57 | 187 | 217 |
Accelerated depreciation and impairment charges | 68 | 135 | 371 |
Other 1 | 342 | 395 | 695 |
Total charge | 467 | 717 | 1,283 |
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 the PAAGR,
Included within Operating profit are the following net gains and losses on financial instruments:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Gains/(losses) on forward foreign exchange contracts | 42 | 150 | (21) |
Losses on receivables and payables | (260) | (203) | (42) |
Total | (218) | (53) | (63) |
Impairment charges
2023 | 2022 | 2021 | |
$m | $m | $m | |
Finance income | |||
Returns on deposits and equity securities | 291 | 78 | 12 |
Fair value gains on debt and interest rate swaps | 43 | 14 | – |
Interest income on income tax balances | 10 | 3 | 31 |
Total | 344 | 95 | 43 |
Finance expense | |||
Interest on debt, leases and other financing costs | (1,132) | (889) | (774) |
Net interest on post-employment defined benefit plan net liabilities (Note 22) | (38) | (29) | (26) |
Net exchange losses | (34) | (16) | (20) |
Discount unwind on contingent consideration arising from business combinations (Note 20) | (132) | (168) | (226) |
Discount unwind on other long-term liabilities 1 | (200) | (216) | (248) |
Fair value losses on debt and interest rate swaps | (3) | – | (4) |
Interest expense on income tax balances | (87) | (28) | (2) |
Total | (1,626) | (1,346) | (1,300) |
Net finance expense | (1,282) | (1,251) | (1,257) |
1
Included within Discount unwind on other long-term liabilities is $55m relating to the Acerta Pharma share purchase liability (2022: $108m; 2021: $161m) and the discount unwind of other
payables of $100m (2022: $nil; 2021: $nil) that have arisen from intangible asset additions, see Note 20 for further details.
There was no interest capitalised during the year.
Included within finance income and expense are the following net gains and losses on financial instruments:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Interest and fair value adjustments in respect of debt designated at fair value through profit or loss, net of derivatives | 13 | (9) | (5) |
Interest and changes in carrying values of debt designated as hedged items in fair value hedges, net of derivatives | – | – | (9) |
Interest and fair value changes on fixed and short-term deposits, equity securities, other derivatives and tax balances | 177 | 54 | 16 |
Interest on debt, commercial paper, overdrafts and lease liabilities held at amortised cost | (1,004) | (837) | (738) |
The interest rate fair value hedges were closed in 2021. Fair value gain or loss of $nil (2022: $nil; 2021: loss of $33m) on interest rate fair value hedging
instruments and $nil fair value gain or loss (2022: $nil; 2021: gain of $29m) on the related hedged items have been included within Interest and changes
in carrying values of debt designated as hedged items in fair value hedges, net of derivatives.
Fair value loss of $1m (2022: loss of $25m; 2021: loss of $19m) on derivatives related to debt instruments designated at FVPL and $7m fair value gain
(2022: gain of $26m; 2021: gain of $19m) on debt instruments designated at FVPL have been included within Interest and fair value adjustments in
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Notes to the Group Financial Statements
163
Notes to the Group Financial Statements
continued
Taxation charge/(credit) recognised in the Consolidated Statement of Comprehensive Income is as follows:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Current tax | |||
Current year | 2,417 | 1,823 | 1,200 |
Adjustment to prior years | 28 | (187) | (5) |
Total | 2,445 | 1,636 | 1,195 |
Deferred tax | |||
Origination and reversal of temporary differences | (1,473) | (2,563) | (1,417) |
Adjustment to prior years | (34) | 135 | (158) |
Total | (1,507) | (2,428) | (1,575) |
Taxation charge/(credit) recognised in the profit for the year | 938 | (792) | (380) |
Taxation credit/(charge) recognised in Other comprehensive income is as follows:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Current and deferred tax | |||
Items that will not be reclassified to profit or loss: | |||
Remeasurement of the defined benefit liability | 102 | (231) | (117) |
Equity investments measured at fair value through Other comprehensive income | (1) | 15 | 27 |
Movement in deferred taxes relating to changes in tax rates | – | – | 195 |
Total | 101 | (216) | 105 |
Items that may be reclassified subsequently to profit or loss: | |||
Foreign exchange arising on designated liabilities in net investment hedges | (24) | 73 | 43 |
Fair value movement on cash flow hedges | 12 | – | (5) |
Movement in deferred taxes relating to changes in tax rates | – | – | 8 |
Total | (12) | 73 | 46 |
Taxation credit/(charge) recognised in Other comprehensive income | 89 | (143) | 151 |
The reported tax rate in the year was 14% and included a favourable adjustment of $828m to deferred taxes arising from a UK group company
undertaking a routine intragroup purchase of certain intellectual property. This intragroup purchase resulted in additional amortisable tax basis in
the UK which can be fully utilised against forecast UK taxable profits. Deferred tax has been recognised on this additional tax basis in the year.
This is offset by updates to tax liabilities following progress of reviews by tax authorities and administrative appeal processes and derecognition
of deferred tax assets following changes to forecast taxable income of specific subsidiaries.
The income tax paid for the year was $2,366m.
Taxation has been provided at current rates on the profits earned for the years covered by the Group Financial Statements. The 2023 prior year
current tax adjustment relates mainly to tax accrual to tax return adjustments and updates to provisions for tax contingencies. The 2022 prior
year current tax adjustment relates mainly to tax accrual to tax return adjustments and updates to provisions for tax contingencies. The 2021
prior year current tax adjustment relates mainly to tax accrual to tax return adjustments.
The 2023 prior year deferred tax adjustment relates mainly to tax accrual to tax return adjustments and adjustments to the recognition of deferred
tax assets. The 2022 prior year deferred tax adjustments relate mainly to tax accrual to tax return adjustments and updates to provisions for tax
contingencies. The 2021 prior year deferred tax adjustments relate mainly to tax accrual to tax return adjustments and updates to estimates of
prior year tax liabilities following settlements with tax authorities.
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 $7,565m at 31 December
2023, $3,221m 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.
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. On 11 July 2023, Finance (No.2)
Act 2023 was enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a
multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. A Pillar 2 Effective Tax Rate (ETR) is calculated
for every jurisdiction in which the Group operates and Pillar 2 Income Taxes will arise when the Pillar 2 ETR is less than 15%. Pillar 2 Income Taxes
could be payable in the UK, or the local jurisdiction if it has introduced a Qualifying Domestic Minimum top-up Tax. AstraZeneca is continuing to
monitor potential impacts as further guidance is published by the OECD and territories implement legislation to enact the rules. Management has
performed an assessment of the impact of the UK’s Pillar 2 rules based on our 2023 data and no Pillar 2 Income Taxes are expected to arise for
most jurisdictions in which the Group operates. It is anticipated that AstraZeneca may, in some jurisdictions, incur additional tax liabilities, but the
effect on the reported tax charge is reasonably estimated to be immaterial.
The Group has applied the exemption under the IAS 12 ‘Income Taxes’ amendment for recognising and disclosing information about deferred tax
assets and liabilities related to top-up income taxes.
Tax reconciliation to UK statutory rate
The table below reconciles the UK statutory tax charge to the Group’s total tax charge/(credit):
2023 | 2022 | 2021 | |
$m | $m | $m | |
Profit/(loss) before tax | 6,899 | 2,501 | (265) |
Notional taxation charge at UK corporation tax rate of 23.5% (2022: 19%; 2021: 19%) | 1,621 | 475 | (50) |
Differences in effective overseas tax rates 1 | (224) | (59) | 1 |
Deferred tax (credit)/charge relating to change in tax rates 2 | (66) | (108) | 54 |
Unrecognised deferred tax asset 3 | 341 | 68 | 32 |
Items not deductible for tax purposes | 46 | 90 | 208 |
Items not chargeable for tax purposes | – | – | (163) |
Intellectual Property incentive regimes 4 | (367) | (265) | – |
Other items 5 | (406) | (941) | (299) |
Adjustments in respect of prior years 6 | (7) | (52) | (163) |
Total tax charge/(credit) for the year | 938 | (792) | (380) |
1
Includes the impact of the reversal of a $1.9bn deferred tax liability that was recognised in a previous business combination (31 December 2023: $0.9bn) and originated in goodwill. Some of this
liability reverses in an innovation incentive regime and gives rise to a post-acquisition benefit to the tax charge that is not material year-on-year. Determining the cumulative post-acquisition
benefit over the life of the asset involves estimates and judgements as the amount of income that qualifies for the IP incentive regime varies. The actual tax rates applied over the life of the
asset are expected to be a blend between the Dutch statutory tax rate and intellectual property incentive regime rate.
2
The 2023 item relates to the impact of the difference in the UK current and deferred tax rates during 2023. 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 mainly relates to substantive enactment of the increase in UK Corporation Tax rate from 19% to 25%
effective 1 April 2023 and the increase in the Dutch Corporate Income Tax rate from 25% to 25.8% effective 1 January 2022.
3
This includes the derecognition of deferred tax assets where it is no longer probable that there will be sufficient forecast future profits to utilise the assets.
4
Previously reported within the line Items not deductible for tax purposes.
5
Other items in 2023 include a favourable adjustment of $828m to deferred taxes arising from a UK company undertaking an intragroup purchase of certain intellectual property (see page 164
for more information) offset by a charge of $422m mainly relating to updates to tax liabilities following progress of reviews by tax authorities, administrative appeal processes and adjustments
arising on expiry of the relevant statute of limitations (see Note 30 for more details). Other items in 2022 includes 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 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 year 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 contingencies.
6
Further details explaining the adjustments in respect of prior years are set out on page 164.
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 intellectual property incentives in certain jurisdictions, resulting in a reduction to the tax charge in
the income statement of $367m in 2023.
4 Taxation
continued
Notes to the Group Financial Statements
continued
The total movement in the net deferred tax balance in the year was $1,555m. The movements are as follows:
Intangibles, | Pension and | Elimination of | Losses and | |||||
Property, plant | post-retirement | unrealised profit | Untaxed | tax credits | Accrued | |||
and equipment 1 | benefits | on inventory | reserves 2 | carried forward | expenses | Other | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | |
Net deferred tax balance at 1 January 2021 | (2,627) | 656 | 1,807 | (801) | 714 | 660 | 111 | 520 |
Income statement | 782 | (166) | (59) | (139) | 307 | 697 | 153 | 1,575 |
Other comprehensive income | 52 | 83 | – | – | – | – | 40 | 175 |
Equity | – | – | – | – | – | 4 | 10 | 14 |
Additions through business combinations 3 | (3,744) | 13 | 166 | – | 507 | (1,263) | 147 | (4,174) |
Exchange | 57 | (33) | (53) | 78 | (10) | (13) | (12) | 14 |
Net deferred tax balance at 31 December 2021 | (5,480) | 553 | 1,861 | (862) | 1,518 | 85 | 449 | (1,876) |
Income statement 4 | 1,414 | (55) | 274 | 38 | (126) | 778 | 105 | 2,428 |
Other comprehensive income | 72 | (231) | – | – | – | – | 16 | (143) |
Equity | – | – | – | – | – | – | 38 | 38 |
Exchange | 63 | (36) | (111) | 108 | (134) | 17 | (35) | (128) |
Net deferred tax balance at 31 December 2022 | (3,931) | 231 | 2,024 | (716) | 1,258 | 880 | 573 | 319 |
Income statement 4 | 1,518 | (69) | 426 | 96 | (308) | (23) | (133) | 1,507 |
Other comprehensive income | (16) | 106 | – | – | – | – | (23) | 67 |
Equity | – | – | – | – | – | – | (21) | (21) |
Additions | (24) | – | – | – | 50 | – | (1) | 25 |
Exchange | (38) | 15 | (64) | (40) | 106 | 32 | (34) | (23) |
Net deferred tax balance at 31 December 2023 5 | (2,491) | 283 | 2,386 | (660) | 1,106 | 889 | 361 | 1,874 |
1
Includes deferred tax assets of $507m on liabilities in respect of intangibles and $188m on lease liabilities in respect of right-of-use assets.
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 includes the deferred
tax on the purchase accounting of inventory.
4
The Income statement movement in 2023 includes $828m arising from a UK company undertaking an intragroup purchase of certain intellectual property (see page 164 for further details).
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 $142m and the UK includes a net deferred tax asset of $1,723m as at 31 December 2023
which includes tax losses and other deductible temporary differences. The Group has performed an assessment of recovery of deferred tax assets and for these respective 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 these
recognition periods. 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 | |||||
Property, plant | post-retirement | unrealised profit | Untaxed | tax credits | Accrued | |||
and equipment | benefits | on inventory | reserves | carried forward | expenses | Other | Total | |
$m | $m | $m | $m | $m | $m | $m | $m | |
Deferred tax assets at 31 December 2021 | 1,476 | 574 | 1,910 | – | 1,571 | 1,117 | 618 | 7,266 |
Deferred tax liabilities at 31 December 2021 | (6,956) | (21) | (49) | (862) | (53) | (1,032) | (169) | (9,142) |
Net deferred tax balance at 31 December 2021 | (5,480) | 553 | 1,861 | (862) | 1,518 | 85 | 449 | (1,876) |
Deferred tax assets at 31 December 2022 | 1,499 | 276 | 2,048 | – | 1,274 | 1,005 | 609 | 6,711 |
Deferred tax liabilities at 31 December 2022 | (5,430) | (45) | (24) | (716) | (16) | (125) | (36) | (6,392) |
Net deferred tax balance at 31 December 2022 | (3,931) | 231 | 2,024 | (716) | 1,258 | 880 | 573 | 319 |
Deferred tax assets at 31 December 2023 | 1,883 | 313 | 2,386 | – | 1,141 | 1,011 | 488 | 7,222 |
Deferred tax liabilities at 31 December 2023 | (4,374) | (30) | – | (660) | (35) | (122) | (127) | (5,348) |
Net deferred tax balance at 31 December 2023 | (2,491) | 283 | 2,386 | (660) | 1,106 | 889 | 361 | 1,874 |
Analysed in the Consolidated Statement of Financial Position, after offset of balances within countries, as follows:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Deferred tax assets | 4,718 | 3,263 | 4,330 |
Deferred tax liabilities | (2,844) | (2,944) | (6,206) |
Net deferred tax balance | 1,874 | 319 | (1,876) |
Unrecognised deferred tax assets
Deferred tax assets (DTA) of $1,251m (2022: $807m; 2021: $719m) 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.
2023 | 2023 | 2022 | 2022 | 2021 | 2021 | |
Temporary | Unrecognised | Temporary | Unrecognised | Temporary | Unrecognised | |
differences | DTA | differences | DTA | differences | DTA | |
$m | $m | $m | $m | $m | $m | |
Temporary differences expiring: | ||||||
Within 10 years | 87 | 22 | 104 | 26 | 4 | 1 |
More than 10 years | 153 | 32 | 153 | 32 | 53 | 11 |
Indefinite | 2,788 | 595 | 686 | 163 | 300 | 79 |
3,028 | 649 | 943 | 221 | 357 | 91 | |
Tax credits and State tax losses expiring: | ||||||
Within 10 years | 152 | 115 | 101 | |||
More than 10 years | 363 | 384 | 441 | |||
Indefinite | 87 | 87 | 86 | |||
602 | 586 | 628 | ||||
Total | 1,251 | 807 | 719 |
2023 | 2022 | 2021 | |
Profit for the year attributable to equity holders ($m) | 5,955 | 3,288 | 112 |
Basic earnings per Ordinary Share | $3.84 | $2.12 | $0.08 |
Diluted earnings per Ordinary Share | $3.81 | $2.11 | $0.08 |
Weighted average number of Ordinary Shares in issue for basic earnings (millions) | 1,549 | 1,548 | 1,418 |
Dilutive impact of share options outstanding (millions) | 13 | 12 | 9 |
Diluted weighted average number of Ordinary Shares in issue (millions) | 1,562 | 1,560 | 1,427 |
The earnings figures used in the calculations above are post-tax. The weighted average number of Ordinary Shares in issue is calculated by taking
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
of these 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.
6 Segment information
continued
Notes to the Group Financial Statements
continued
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 | |||
2023 | 2022 | 2021 | |
$m | $m | $m | |
UK | 3,368 | 3,117 | 3,245 |
Rest of Europe | |||
France | 1,152 | 1,107 | 915 |
Germany | 2,099 | 1,902 | 1,486 |
Italy | 813 | 735 | 577 |
Spain | 847 | 738 | 578 |
Sweden | 1,704 | 1,721 | 2,322 |
Others | 3,110 | 2,706 | 1,949 |
9,725 | 8,909 | 7,827 | |
The Americas | |||
Canada | 967 | 1,166 | 772 |
US | 18,121 | 17,278 | 12,047 |
Others | 1,683 | 1,175 | 1,203 |
20,771 | 19,619 | 14,022 | |
Asia, Africa & Australasia | |||
Australia | 390 | 571 | 547 |
China | 5,872 | 5,743 | 6,002 |
Japan | 3,640 | 3,986 | 3,395 |
Others | 2,045 | 2,406 | 2,379 |
11,947 | 12,706 | 12,323 | |
Total Revenue | 45,811 | 44,351 | 37,417 |
Total Revenue outside of the UK totalled $42,443m for the year ended 31 December 2023 (2022: $41,234m; 2021: $34,172m).
| Operating profit/(loss) | Profit/(loss) before tax | |||||
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |
$m | $m | $m | $m | $m | $m | |
UK | 665 | 1,120 | (950) | (577) | 272 | (1,477) |
Rest of Europe | 4,885 | 2,945 | 2,999 | 4,999 | 2,709 | 2,682 |
The Americas | 1,495 | (954) | (1,936) | 1,328 | (1,140) | (2,401) |
Asia, Africa & Australasia | 1,148 | 646 | 943 | 1,149 | 660 | 931 |
Continuing operations | 8,193 | 3,757 | 1,056 | 6,899 | 2,501 | (265) |
| Non-current assets 1, 2 | Total assets | |||||
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |
$m | $m | $m | $m | $m | $m | |
UK | 8,626 | 8,208 | 7,310 | 19,616 | 16,786 | 16,615 |
Rest of Europe | 32,905 | 34,301 | 38,286 | 40,638 | 40,669 | 48,383 |
The Americas | 26,524 | 25,425 | 26,333 | 34,754 | 32,990 | 34,301 |
Asia, Africa & Australasia | 910 | 929 | 1,078 | 6,111 | 6,038 | 6,064 |
Continuing operations | 68,965 | 68,863 | 73,007 | 101,119 | 96,483 | 105,363 |
Assets acquired 3 | Net operating assets 4 | |||||
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |
$m | $m | $m | $m | $m | $m | |
UK | 812 | 2,301 | 810 | 5,275 | 3,863 | 3,239 |
Rest of Europe | 1,770 | 522 | 26,527 | 32,920 | 32,726 | 40,161 |
The Americas | 1,925 | 421 | 10,810 | 22,746 | 23,290 | 24,786 |
Asia, Africa & Australasia | 117 | 51 | 94 | 1,405 | 1,895 | 736 |
Continuing operations | 4,624 | 3,295 | 38,241 | 62,346 | 61,774 | 68,922 |
1
Non-current assets exclude Deferred tax assets and Derivative financial instruments.
2
The Group has revised the presentation of Non-current assets to exclude certain financial assets and post-employment benefit assets which previously had been included in this disclosure.
This resulted in a decrease in 2022 of $1,690m and in 2021 of $1,680m.
3
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).
4
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 | |||
2023 | 2022 | 2021 | |
$m | $m | $m | |
UK | 2,831 | 2,526 | 2,542 |
Ireland | 1,164 | 1,040 | 969 |
Sweden | 1,678 | 1,472 | 1,593 |
US | 2,371 | 2,176 | 2,660 |
Rest of the world | 1,358 | 1,293 | 1,419 |
Continuing operations | 9,402 | 8,507 | 9,183 |
Geographic markets
The table below shows Product Sales in each geographic market in which customers are located.
2023
2022
2021
$m
$m
$m
UK
978
996
1,206
Rest of Europe
8,201
7,503
6,792
The Americas
20,855
20,126
14,893
Asia, Africa & Australasia
13,755
14,373
13,650
Continuing operations
43,789
42,998
36,541
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 (2022: one; 2021: one) individually represented greater than 10% of Product Sales. The value of Product
Assets in | Total Property, | |||
Land and | Plant and | course of | plant and | |
buildings | equipment | construction | equipment | |
$m | $m | $m | $m | |
Cost | ||||
At 1 January 2021 | 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) | – |
Transfer of 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 |
Additions through business combinations (Note 27) | 2 | 10 | – | 12 |
Capital expenditure | 9 | 43 | 1,402 | 1,454 |
Transfer of assets into use | 959 | 1,158 | (2,117) | – |
Disposals and other movements | (6) | (255) | (11) | (272) |
Exchange adjustments | 65 | 192 | 118 | 375 |
At 31 December 2023 | 6,469 | 8,704 | 2,045 | 17,218 |
Depreciation and impairment | ||||
At 1 January 2021 | 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 |
Depreciation charge for the year | 241 | 492 | – | 733 |
Impairment charge | 4 | 4 | – | 8 |
Disposals and other movements | (13) | (220) | – | (233) |
Exchange adjustments | 44 | 122 | – | 166 |
At 31 December 2023 | 2,765 | 5,051 | – | 7,816 |
Notes to the Group Financial Statements
continued
Assets in | Total Property, | |||
Land and | Plant and | course of | plant and | |
buildings | equipment | construction | equipment | |
$m | $m | $m | $m | |
Net book value | ||||
At 31 December 2021 | 3,500 | 2,955 | 2,728 | 9,183 |
At 31 December 2022 | 2,951 | 2,903 | 2,653 | 8,507 |
At 31 December 2023 | 3,704 | 3,653 | 2,045 | 9,402 |
of our manufacturing capacity and footprint across certain production sites as a result of restructuring programmes, including the PAAGR (see
2023 | 2022 | 2021 | |
$m | $m | $m | |
The net book value of land and buildings comprised: | |||
Freeholds | 2,976 | 2,555 | 2,985 |
Leaseholds | 728 | 396 | 515 |
Right-of-use assets
Total | ||||
Land and | Motor | Right-of-use | ||
buildings | vehicles | Other | assets | |
$m | $m | $m | $m | |
Cost | ||||
At 1 January 2021 | 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 (Note 27) | 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 |
Additions through business combinations (Note 27) | 8 | – | – | 8 |
Additions – separately acquired | 220 | 219 | 5 | 444 |
Disposals and other movements | (71) | (57) | (2) | (130) |
Exchange adjustments | 13 | 4 | 1 | 18 |
At 31 December 2023 | 1,352 | 495 | 36 | 1,883 |
Depreciation and impairment | ||||
At 1 January 2021 | 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 |
Depreciation charge for the year | 170 | 98 | 7 | 275 |
Impairment charge | 14 | – | – | 14 |
Disposals and other movements | (53) | (61) | (2) | (116) |
Exchange adjustments | 7 | 2 | – | 9 |
At 31 December 2023 | 549 | 215 | 19 | 783 |
Net book value | ||||
At 31 December 2021 | 807 | 167 | 14 | 988 |
At 31 December 2022 | 771 | 153 | 18 | 942 |
At 31 December 2023 | 803 | 280 | 17 | 1,100 |
7 Property, plant and equipment
continued
Lease liabilities
2023 | 2022 | 2021 | |
$m | $m | $m | |
The present value of lease liabilities is as follows: | |||
Within one year | (271) | (228) | (233) |
Later than one year and not later than five years | (657) | (549) | (544) |
Later than five years | (200) | (176) | (210) |
Total lease liabilities | (1,128) | (953) | (987) |
The interest expense on lease liabilities included within Finance expense was $33m (2022: $24m; 2021: $22m).
The total cash outflow for leases in 2023 was $301m (2022: $268m; 2021: $262m).
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 $1,615m as of 31 December 2023. Of this value, $1,348m relates to a property lease in the US which is expected to commence
in 2026 with a lease term of 15 years.
In 2022 the Group entered into a sale and leaseback agreement in relation to the Waltham R&D site in MA, US. Prior to the sale, the carrying value
of the Property, plant and equipment was $124m. Cash proceeds of $265m were received, recorded within Disposal of property, plant and equipment
within the Consolidated Statement of Cash Flows, and a gain on disposal of $125m was recorded within Other operating income and expense
within the Consolidated Statement of Comprehensive Income. A lease liability and a corresponding right-of-use asset were recorded of $28m and
2023 | 2022 | 2021 | |
$m | $m | $m | |
Cost | |||
At 1 January | 20,131 | 20,311 | 12,164 |
Additions through business combinations (Note 27) | 158 | 15 | 8,287 |
Exchange and other adjustments | 72 | (195) | (140) |
At 31 December | 20,361 | 20,131 | 20,311 |
Amortisation and impairment losses | |||
At 1 January | 311 | 314 | 319 |
Exchange and other adjustments | 2 | (3) | (5) |
At 31 December | 313 | 311 | 314 |
Net book value | |||
At 31 December | 20,048 | 19,820 | 19,997 |
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 2023
Notes to the Group Financial Statements
continued
Product, | Software | |||
marketing and | Other | development | ||
distribution rights | intangibles | costs | Total | |
$m | $m | $m | $m | |
Cost | ||||
At 1 January 2021 | 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 |
Additions through business combinations (Note 27) | 65 | 35 | – | 100 |
Additions – separately acquired | 2,530 | 200 | 170 | 2,900 |
Disposals | (669) | – | (14) | (683) |
Exchange and other adjustments | 496 | 30 | 24 | 550 |
At 31 December 2023 | 69,207 | 2,707 | 1,575 | 73,489 |
Amortisation and impairment losses | ||||
At 1 January 2021 | 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 |
Amortisation for year | 3,771 | 75 | 80 | 3,926 |
Impairment charges | 434 | – | – | 434 |
Disposals | (667) | – | (12) | (679) |
Exchange and other adjustments | 336 | 41 | 27 | 404 |
At 31 December 2023 | 32,266 | 2,061 | 1,073 | 35,400 |
Net book value | ||||
At 31 December 2021 | 41,314 | 748 | 430 | 42,492 |
At 31 December 2022 | 38,393 | 497 | 417 | 39,307 |
At 31 December 2023 | 36,941 | 646 | 502 | 38,089 |
2023 | 2022 | 2021 | |
$m | $m | $m | |
Net book value | |||
Current intangible assets | – | – | 105 |
Non-current intangible assets | 38,089 | 39,307 | 42,387 |
At 31 December | 38,089 | 39,307 | 42,492 |
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 $625m (2022: $1,135m; 2021: $124m), 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 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 |
Year ended 31 December 2023 | ||||
Cost of sales | 32 | – | – | 32 |
Research and development expense | – | 28 | – | 28 |
Selling, general and administrative expense | 3,739 | 47 | 80 | 3,866 |
Total | 3,771 | 75 | 80 | 3,926 |
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 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 |
Year ended 31 December 2023 | ||||
Research and development expense | 417 | – | – | 417 |
Selling, general and administrative expense | 17 | – | – | 17 |
Total | 434 | – | – | 434 |
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.
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 (7.5% for 2023, 7% for 2022 and 2021) 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 of 7.5%. Intangible assets have been tested for impairment
under the value in use basis at risk-adjusted post-tax discount rates ranging between 7.5% to 9.5%.
Notes to the Group Financial Statements
continued
10 Intangible assets
continued
Key assumptions and significant estimates used in calculating the recoverable amounts are highly sensitive and 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.
Whilst the intangible assets portfolio is generally exposed to significant impairment risk within the next financial year, no sensitivities have been
disclosed since no specific asset has been identified as having a significant risk of a material impairment arising from reasonably possible changes
in key assumptions.
For assets held at fair value less costs to sell, we make appropriate adjustments to reflect market participant assessments.
In 2023, the Group recorded impairment charges of $17m in respect of launched products. Impairment charges recorded against products in
development totalled $417m, including $244m related to ALXN1840 which was fully impaired following the decision to discontinue development.
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.
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. No impairment reversals were recorded in 2023. Impairment reversals of $94m were recorded in 2022, including $77m
in respect of products in development. No impairment reversals were recorded in 2021.
When launched products are partially impaired, the carrying values of these assets in future periods are particularly sensitive to changes in forecast
Significant assets
Carrying value | Remaining amortisation | |
$m | period | |
C5 franchise ( Soliris / Ultomiris ) intangible assets arising from the acquisition of Alexion | 14,356 | 4 to 12 years |
Intangible assets arising from the acquisition of Acerta Pharma | 4,335 | 9 years |
Strensiq , Kanuma , Andexxa intangible assets arising from the acquisition of Alexion | 4,147 | 9 to 15 years |
Enhertu intangible assets acquired from Daiichi Sankyo | 2,831 | 10 years |
Intangible asset products in development arising from the acquisition of Alexion 1 | 2,489 | Not amortised |
Intangible assets arising from the acquisition of ZS Pharma Inc. | 1,838 | 8 years |
Other intangible assets acquired from Daiichi Sankyo 1 | 989 | Not amortised |
Baxdrostat intangible asset acquired from CinCor Pharma, Inc. 1 | 780 | Not amortised |
Airsupra intangible asset | 524 | 11 years |
Intangible assets arising from the restructuring of a historical joint venture with MSD | 472 | 3 to 6 years |
Farxiga / Forxiga intangible assets acquired from BMS | 426 | 3 years |
Intangible assets arising from the acquisition of Pearl Therapeutics, Inc | 412 | 5 to 6 years |
Monalizumab intangible assets acquired from Innate Pharma 1 | 370 | Not amortised |
RSV franchise assets arising from the acquisition of MedImmune | 305 | 2 years |
Rare disease portfolio assets acquired from Pfizer 1 | 300 | Not amortised |
1
Assets in development are not amortised but are tested annually for impairment.
The intangible asset baxdrostat recognised on acquisition of CinCor Pharma, Inc. in 2023 was assessed under the optional concentration test
in IFRS 3 and was determined to be an asset acquisition, as substantially all of the value of the gross assets acquired was concentrated in this
single asset.
The acquisition of Pfizer’s pre-clinical rare disease gene therapy portfolio in 2023 was assessed under IFRS 3 and the transaction was treated as
Financial Statements
AstraZeneca Annual Report & Form 20-F Information 2023
174
2023 | 2022 | 2021 | |
$m | $m | $m | |
At 1 January | 76 | 69 | 39 |
Additions | 80 | 26 | 92 |
Share of after tax losses | (12) | (5) | (64) |
Exchange and other adjustments | 3 | (14) | 2 |
At 31 December | 147 | 76 | 69 |
On 1 November 2023, AstraZeneca entered into an agreement with Cellectis, a clinical-stage biotechnology company, to accelerate the development
of next generation therapeutics in areas of high unmet medical need, including oncology, immunology and rare diseases. Under the terms of the
agreement, AstraZeneca contributed $80m in funds and holds a 22% interest in the associate entity.
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 27
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 $1m 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 26 April 2023, Centus entered a voluntary liquidation process.
All investments are accounted for using the equity method. At 31 December 2023, unrecognised losses in associates and joint ventures totalled
$140m (2022: $92m; 2021: $73m) 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:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Non-current assets | 424 | 290 | 215 |
Current assets | 362 | 300 | 506 |
Total liabilities | (287) | (72) | (99) |
Net assets | 499 | 518 | 622 |
Amount attributable to AstraZeneca | 85 | 91 | 65 |
Goodwill | 52 | – | – |
Exchange adjustments | 10 | (15) | 4 |
Carrying value of investments in associates and joint ventures | 147 | 76 | 69 |
Joint contractual arrangements were entered into between AstraZeneca and Daiichi Sankyo Company Limited (Daiichi Sankyo); in March 2019 for
the co-development and co-commercialisation of
Enhertu
and in July 2020 for the co-development and co-commercialisation of Dato-DXd. 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 structured through a separate legal entity, and it operates from AstraZeneca
Notes to the Group Financial Statements
continued
2023 | 2022 | 2021 | |
$m | $m | $m | |
Non-current investments | |||
Equity securities at fair value through Other comprehensive income | 1,530 | 1,056 | 1,168 |
Fixed income securities at fair value through profit or loss | – | 10 | – |
Total | 1,530 | 1,066 | 1,168 |
Current investments | |||
Fixed income securities at fair value through profit or loss | 20 | 13 | 16 |
Cash collateral pledged to counterparties | 102 | 162 | – |
Fixed deposits | – | 64 | 53 |
Total | 122 | 239 | 69 |
Other investments held at FVOCI 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 FVPL 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’.
In 2021 amounts of $47m 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).
2023 | 2023 | 2022 | 2022 | 2021 | 2021 | |
FVPL | FVOCI | FVPL | FVOCI | FVPL | FVOCI | |
$m | $m | $m | $m | $m | $m | |
Level 1 | 20 | 1,217 | 13 | 880 | 16 | 1,064 |
Level 2 | – | – | – | – | – | – |
Level 3 | – | 313 | 10 | 176 | – | 104 |
Total | 20 | 1,530 | 23 | 1,056 | 16 | 1,168 |
Assets are transferred in or out of each Level on the date of the event or change in circumstances that caused the transfer.
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:
2023 | 2023 | 2022 | 2022 | 2021 | |
FVPL | FVOCI | FVPL | FVOCI | FVOCI | |
$m | $m | $m | $m | $m | |
At 1 January | 10 | 176 | – | 104 | 217 |
Additions | – | 127 | 10 | 32 | 1 |
Revaluations | 3 | 14 | – | 50 | – |
Net transfers out from Level 3 to Level 1 | – | – | – | (4) | (113) |
Disposals | (13) | (8) | – | (5) | – |
Impairments and exchange adjustments | – | 4 | – | (1) | (1) |
At 31 December | – | 313 | 10 | 176 | 104 |
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 or loss 1 | 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 or loss 1 | – | 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) |
Non-current | Current | Current | Non-current | ||
assets | assets | liabilities | liabilities | Total | |
$m | $m | $m | $m | $m | |
Cross currency swaps designated in a net investment hedge | 100 | – | – | (1) | 99 |
Cross currency swaps designated in a cash flow hedge | 116 | – | (30) | (37) | 49 |
Forward FX designated in a cash flow hedge 2 | – | 19 | (4) | – | 15 |
Other derivatives | 12 | 97 | (122) | – | (13) |
31 December 2023 | 228 | 116 | (156) | (38) | 150 |
1
Interest rate swaps related to instruments designated at fair value through profit or loss matured in 2023.
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 $12m (2022: $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:
2023 | 2022 | 2021 | |
Derivatives | 0.1% to 5.3% | 0.1% to 4.7% | (0.5)% to 3.6% |
2023 | 2022 | 2021 | |
$m | $m | $m | |
Prepayments | 274 | 243 | 391 |
Accrued income | 52 | 44 | 61 |
Retirement benefit scheme surpluses (Note 22) | 92 | 90 | – |
Other receivables | 385 | 458 | 443 |
Non-current other receivables | 803 | 835 | 895 |
Prepayments include $nil (2022: $nil; 2021: $92m) in relation to our research collaboration with Moderna. Other receivables include $51m (2022: $71m;
2023 | 2022 | 2021 | |
$m | $m | $m | |
Raw materials and consumables | 1,531 | 1,422 | 1,755 |
Inventories in process | 2,325 | 1,864 | 5,216 |
Finished goods and goods for resale | 1,568 | 1,413 | 2,012 |
Inventories | 5,424 | 4,699 | 8,983 |
The Group recognised $6,038m (2022: $9,618m; 2021: $9,640m) of inventories as an expense within Cost of sales during the year.
Inventory write-downs in the year amounted to $574m (2022: $479m; 2021: $552m), principally arising from the reassessment of usage or demand
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Notes to the Group Financial Statements
177
Notes to the Group Financial Statements
continued
2023 | 2022 | 2021 | |
$m | $m | $m | |
Trade receivables | 8,452 | 7,271 | 6,054 |
Less: Expected credit loss provision (Note 28) | (45) | (59) | (23) |
8,407 | 7,212 | 6,031 | |
Other receivables | 1,639 | 1,659 | 1,808 |
Prepayments | 1,617 | 1,329 | 1,512 |
Government grants receivable | 11 | 25 | – |
Accrued income | 452 | 296 | 293 |
Trade and other receivables | 12,126 | 10,521 | 9,644 |
Trade receivables include $1,977m (2022: $2,470m; 2021: $1,865m) 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
2023 | 2022 | 2021 | |
$m | $m | $m | |
Cash at bank and in hand | 1,325 | 1,411 | 1,461 |
Short-term deposits | 4,515 | 4,755 | 4,868 |
Cash and cash equivalents | 5,840 | 6,166 | 6,329 |
Unsecured bank overdrafts | (203) | (183) | (291) |
Cash and cash equivalents in the cash flow statement | 5,637 | 5,983 | 6,038 |
AstraZeneca invests in constant net asset value funds, low-volatility net asset value funds and short-term variable 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 FVPL, 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:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Share-based payments charge for the period | 579 | 619 | 615 |
Settlement of share plan awards | (650) | (592) | (570) |
Pension contributions | (188) | (205) | (174) |
Pension charges recorded in operating profit | 55 | 101 | 136 |
Long-term provision charges recorded in operating profit | 460 | 87 | 270 |
(Gain)/loss on disposal of tangible assets | (41) | (112) | 4 |
Update to the contractual relationships for Beyfortus (nirsevimab) | (729) | – | – |
Foreign exchange and other 1 | 128 | (590) | (186) |
Total operating activities non-cash and other movements | (386) | (692) | 95 |
1
Foreign exchange and other includes, among other items, the foreign exchange of inter-company transactions, including dividends, across Group entities and the related impact from hedging
Assets held for sale amount to $nil (2022: $150m; 2021: $368m).
In 2022, Assets held for sale comprised Property, plant and equipment assets relating to the West Chester site in Ohio, US. 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 plc.
(including
Tudorza
and
Duaklir
Financial Statements
AstraZeneca Annual Report & Form 20-F Information 2023
178
Repayment | 2023 | 2022 | 2021 | ||
dates | $m | $m | $m | ||
Current liabilities | |||||
Bank overdrafts | On demand | 203 | 183 | 291 | |
Other short-term borrowings excluding overdrafts | 97 | 78 | 3 | ||
Collateral received from derivative counterparties | 215 | 89 | 93 | ||
Lease liabilities | 271 | 228 | 233 | ||
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 | – |
0.75% Callable bond | euros | 2024 | 995 | – | – |
0.7% Callable bond | US dollars | 2024 | 1,600 | – | – |
2024 Floating rate bank loans | US dollars | 2024 | 2,000 | – | – |
Other loans (including commercial paper) | Within one year | 19 | 22 | 24 | |
Total | 5,400 | 5,542 | 1,893 | ||
Non-current liabilities | |||||
Lease liabilities | 857 | 725 | 754 | ||
0.3% Callable bond | US dollars | 2023 | – | – | 1,397 |
2023 Floating bank loan | US dollars | 2023 | – | – | 1,998 |
Floating rate notes | US dollars | 2023 | – | – | 400 |
3.5% Callable bond | US dollars | 2023 | – | – | 848 |
7% Guaranteed debentures | US dollars | 2023 | – | – | 320 |
0.75% Callable bond | euros | 2024 | – | 957 | 1,014 |
0.7% Callable bond | US dollars | 2024 | – | 1,598 | 1,598 |
2024 Floating bank loans | US dollars | 2024 | – | 1,998 | 1,997 |
3.375% Callable bond | US dollars | 2025 | 1,994 | 1,992 | 1,988 |
0.7% Callable bond | US dollars | 2026 | 1,196 | 1,195 | 1,193 |
1.2% Callable bond | US dollars | 2026 | 1,248 | 1,246 | 1,245 |
3.625% Callable bond | euros | 2027 | 829 | – | – |
3.125% Callable bond | US dollars | 2027 | 747 | 746 | 745 |
4.875% Callable bond | US dollars | 2028 | 1,095 | – | – |
1.25% Callable bond | euros | 2028 | 879 | 845 | 896 |
1.75% Callable bond | US dollars | 2028 | 1,246 | 1,245 | 1,244 |
4% Callable bond | US dollars | 2029 | 995 | 995 | 994 |
0.375% Callable bond | euros | 2029 | 881 | 846 | 898 |
4.9% Callable bond | US dollars | 2030 | 645 | – | – |
1.375% Callable bond | US dollars | 2030 | 1,294 | 1,293 | 1,292 |
2.25% Callable bond | US dollars | 2031 | 747 | 747 | 746 |
5.75% Non-callable bond | pound sterling | 2031 | 444 | 420 | 470 |
3.75% Callable bond | euros | 2032 | 827 | – | – |
4.875% Callable bond | US dollars | 2033 | 497 | – | – |
6.45% Callable bond | US dollars | 2037 | 2,725 | 2,724 | 2,724 |
4% Callable bond | US dollars | 2042 | 989 | 988 | 988 |
4.375% Callable bond | US dollars | 2045 | 981 | 981 | 980 |
4.375% Callable bond | US dollars | 2048 | 738 | 737 | 737 |
2.125% Callable bond | US dollars | 2050 | 487 | 487 | 486 |
3% Callable bond | US dollars | 2051 | 735 | 735 | 734 |
Other loans | US dollars | 146 | 190 | 202 | |
Total | 23,222 | 23,690 | 28,888 | ||
Total interest-bearing loans and borrowings 1, 2 | 28,622 | 29,232 | 30,781 |
1
All loans and borrowings above are unsecured. In previous years, there were current (2022: $22m; 2021: $24m) and non-current (2022: $181m; 2021: $188m) secured loans, both included
within Other loans.
2
The $2bn USD 2024 floating rate bank loans pay interest rate based on compounded daily USD Secured Overnight Funding Rate (SOFR).
19 Interest-bearing loans and borrowings
continued
Notes to the Group Financial Statements
continued
Total | Total | Total | |
loans and | loans and | loans and | |
borrowings | borrowings | borrowings | |
2023 | 2022 | 2021 | |
$m | $m | $m | |
At 1 January | 29,232 | 30,781 | 20,380 |
Changes from financing cash flows | |||
Issue of loans and borrowings | 3,816 | – | 12,929 |
Repayment of loans and borrowings | (4,942) | (1,271) | (4,759) |
Movement in short-term borrowings | 161 | 74 | (276) |
Repayment of obligations under leases | (268) | (244) | (240) |
Total changes in cash flows arising on financing activities from borrowings | (1,233) | (1,441) | 7,654 |
Movement in overdrafts | 20 | (85) | 31 |
New lease liabilities | 444 | 253 | 503 |
Additions through business combinations | – | 5 | 2,523 |
Exchange | 187 | (287) | (378) |
Other movements | (28) | 6 | 68 |
At 31 December | 28,622 | 29,232 | 30,781 |
Also included within cash flows arising from financing activities within the Consolidated Statement of Cash Flows is a $867m cash outflow (2022:
outflow of $920m; 2021: $nil) related to the Acerta Pharma share purchase liability which has a closing liability at 31 December 2023 of $833m
(2022: $1,646m; 2021: $2,458m) within Trade and other payables (see Note 20).
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 | Instruments | Total | |||
designated | designated in | Amortised | carrying | Fair | |
at fair value 1 | cash flow hedge 2 | cost | value | value | |
$m | $m | $m | $m | $m | |
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 |
2023 | |||||
Overdrafts | – | – | 203 | 203 | 203 |
Lease liabilities due within one year | – | – | 271 | 271 | 271 |
Lease liabilities due after more than one year | – | – | 857 | 857 | 857 |
Loans and borrowings due within one year | – | 995 | 3,931 | 4,926 | 4,887 |
Loans and borrowings due after more than one year | – | 2,535 | 19,830 | 22,365 | 21,769 |
Total at 31 December 2023 | – | 3,530 | 25,092 | 28,622 | 27,987 |
1
Instruments designated at FVPL include the US dollar 7% guaranteed debentures which matured on 15 November 2023.
2
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, our euro 750m 3.625% 2027 Callable
bond, our euro 800m 1.25% 2028 Callable bond, and our euro 750m 3.75% 2032 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 FVPL 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.
A loss of $6m was made during the year on the fair value of bonds designated as FVPL. A gain of $25m has been made on these bonds since
designation. 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 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:
2023 | 2022 | 2021 | |
Loans and borrowings | n/a to n/a 1 | 4.3% to 4.9% | 0.1% to 0.6% |
1
2023 | 2022 | 2021 | |
$m | $m | $m | |
Current liabilities | |||
Trade payables | 3,267 | 2,550 | 2,824 |
Value-added and payroll taxes and social security | 492 | 468 | 463 |
Rebates, chargebacks, returns and other revenue accruals | 7,817 | 6,078 | 5,298 |
Clinical trial accruals | 1,424 | 1,417 | 1,047 |
Other accruals | 6,112 | 5,551 | 5,649 |
Collaboration Revenue contract liabilities | 7 | 12 | 12 |
Vaccine contract liabilities | 142 | 169 | 1,003 |
Deferred government grant income | – | 1 | 67 |
Contingent consideration | 966 | 757 | 849 |
Acerta Pharma share purchase liability (Note 26) | 833 | 867 | 920 |
Other payables | 1,314 | 1,170 | 806 |
Total | 22,374 | 19,040 | 18,938 |
Non-current liabilities | |||
Accruals | 36 | 37 | 25 |
Collaboration Revenue contract liabilities | 7 | 14 | 26 |
Contingent consideration | 1,171 | 1,465 | 2,016 |
Acerta Pharma share purchase liability (Note 26) | – | 779 | 1,538 |
Other payables | 1,446 | 1,975 | 1,328 |
Total | 2,660 | 4,270 | 4,933 |
Included within Rebates, chargebacks, returns and other revenue accruals are contract liabilities of $102m (2022: $87m; 2021: $99m). The revenue
recognised in the year from opening contract liabilities is $88m, comprising $76m 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
2023 amounted to $5,116m (2022: $3,961m; 2021: $3,172m), of which Rare Disease comprises $190m (2022: $139m; 2021: $127m), and China where
the liability at 31 December 2023 amounted to $567m (2022: $579m; 2021: $814m).
Trade payables includes $123m (2022: $67m; 2021: $44m) 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 2023, the payables met the criteria of Trade payables. The supply chain financing programme operates
in the US, UK, Sweden, China and Germany, and as at 31 December 2023, the programme had 461 suppliers enrolled across these countries.
Vaccine contract liabilities relate to amounts received from customers, primarily government bodies, in advance of supply of product.
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 $199m (2022: $100m; 2021: $nil) resulting from the collaboration
agreement in relation to
Enhertu
entered into in March 2019 and $nil (2022: $nil; 2021: $324m) in relation to Dato-DXd entered into in July 2020.
Additionally, included within non-current Other payables are liabilities totalling $774m (2022: $1,125m; 2021: $100m) as a result of the
Enhertu
collaboration agreement and $464m (2022: $nil; 2021: $nil) as a result of the
Airsupra
collaboration agreement.
In November 2020,
Calquence
received marketing approval in the EU, which removed all remaining conditionality in respect of the Acerta Pharma
put and call options regarding the non-controlling interest; the option was exercised in April 2021 (see Note 26). The payments will be made in similar
annual instalments in 2022 through to 2024, with the first payment of $920m made in 2022 and the second payment of $867m made in 2023, with
a closing liability as at 31 December 2023 of $833m (2022: $1,646m; 2021: $2,458m). 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 $2,137m (2022: $2,222m; 2021: $2,865m) 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
2023 | 2022 | 2021 | |
$m | $m | $m | |
At 1 January | 2,222 | 2,865 | 3,323 |
Additions through business combinations | 60 | – | – |
Settlements | (826) | (772) | (643) |
Disposals | – | (121) | – |
Revaluations | 549 | 82 | 14 |
Reclassification to Other payables | – | – | (55) |
Discount unwind (Note 3) | 132 | 168 | 226 |
At 31 December | 2,137 | 2,222 | 2,865 |
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 $520m in 2023
(2022: an increase of $182m; 2021: an increase of $42m) 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 5% to 8%. 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 $1,945m (2022: $2,124m; 2021: $2,544m) would increase/
decrease by $195m 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, Inc. | 2013 | Milestones | 150 |
Almirall 1 | 2014 | Milestones and royalties | 345 |
Neogene | 2023 | Milestones | 110 |
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
Employee | Other | |||||
Severance | Environmental | benefits | Legal | provisions | Total | |
$m | $m | $m | $m | $m | $m | |
At 1 January 2021 | 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 |
Charge for year | 123 | 21 | 22 | 1,102 | 245 | 1,513 |
Cash paid | (87) | (41) | (14) | (219) | (404) | (765) |
Reversals | (28) | (3) | (3) | (23) | (143) | (200) |
Exchange and other movements | 3 | 4 | 20 | (5) | (33) | (11) |
At 31 December 2023 | 176 | 112 | 168 | 1,016 | 683 | 2,155 |
2023 | 2022 | 2021 | |
$m | $m | $m | |
Due within one year | 1,028 | 722 | 768 |
Due after more than one year | 1,127 | 896 | 956 |
Total | 2,155 | 1,618 | 1,724 |
Provisions are often subject to substantial uncertainties with regard to the timing and final amounts of any payments. Once established, these amounts
remain in Provisions even after settlement is reached and uncertainty resolved, with no transfer to Trade and other payables prior to payment. This
is to provide more transparent disclosure of subsequent movements in brought forward and carried forward balances. Settled legal claims included
within provisions are held at amortised cost with carrying value being a reasonable approximation of fair value.
Severance provisions arise predominantly in connection with global restructuring initiatives, including the PAAGR, 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 the PAAGR; a global restructuring programme, aimed at integrating
systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments. This includes the commencement
of work on the planned upgrade of the Group’s Enterprise Resource Planning IT systems (Axial Project). 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 $112m (2022: $131m; 2021: $90m) and ongoing matters are provided in Note 30. These uncertainties
can also cause reversal in previously established provisions once final settlement is reached.
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, $616m (2022: $30m; 2021: $15m) due within one year and $372m (2022: $92m; 2021: $105m) due after more than one year
1
,
relates to matters settled, but not paid, in previous periods, further details are provided in Note 30.
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 $163m (2022: $165m; 2021: $185m), 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. Charges to Other provisions in 2023 included $87m (2022: $12m;
2021: $243m) in relation to the PAAGR restructuring programme, which has a closing provision of $49m (2022: $143m; 2021: $243m), including $8m
(2022: $95m; 2021: $158m) held in non-current provisions expected to be settled over time by 2025. In 2022, charges to Other provisions included
$301m in relation to termination fees and onerous contracts with contract manufacturing organisations, the vast majority of which was settled in 2023.
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 and Sweden, are defined benefit (DB), where benefits are based on employees’ length of service and 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 400 employees.
The major DB plans are funded through separate, fiduciary-administered assets. The cash funding of the plans, which may from time to time involve
payments from the Group, 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 plan.
1
The profile of future payments of legal provisions due after one year is as follows; in one to two years $180m (2022: $22m; 2021: $14m), in two to three years $159m (2022: $21m; 2021: $17m),
in three to four years $10m (2022: $9m; 2021: $22m), in four to five years $9m (2022: $9m; 2021: $9m), and in more than five years $14m (2022: $31m; 2021: $43m).
22 Post-retirement and other defined benefit schemes
continued
Financing Principles and Funding Framework
Eighty six per cent of the Group’s total DB obligations (or 66% of net obligations) at 31 December 2023 are in schemes within the UK and Sweden.
In these countries, the pension obligations are funded in line with the Group’s financing principles, as disclosed in prior years.
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 65% of the Group’s DB obligations at 31 December 2023. 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 industry 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 maintains 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 now completed the equalisation of benefits for the vast
majority of pensioner members, with the project expected to complete in 2024. Further details are set out later 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.
In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees II Limited) ruled that certain historical amendments for contracted-
out defined benefit schemes were invalid if they were not accompanied by the correct actuarial confirmation. The judgment is subject to appeal.
The Trustee and Group are monitoring developments and will consider if there are any implications for the UK Pension Fund, if the ruling is upheld.
Funding requirements
UK legislation requires that an actuarial valuation is completed for all DB pension schemes every three years, which compares the schemes’
liabilities to its assets. As part of the triennial valuation process, the Trustee and the Group must agree on a set of assumptions to value the liabilities
and determine 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 assumptions used to value the liabilities for the triennial actuarial valuation are required to be prudent, whereas the assumptions
used to prepare an IAS 19 accounting valuation are required to be ‘best estimate’.
The last full actuarial valuation of the UK Pension Fund was carried out by a qualified actuary as at 31 March 2022 and finalised in May 2023, ahead
of the statutory deadline.
Under the funding assumptions used to set the statutory funding target, the key assumptions from the actuarial valuation as at 31 March 2022 (shown
as a single-equivalent rate) were as follows: salary increases at 0% per annum (as a result of pensionable pay levels being frozen in 2010); pension
increases at 3.64% per annum; and discount rate at 3.03% per annum. The resulting valuation of the Fund’s liabilities on that basis was £5,951m
($7,820m) compared to a market valuation of assets at 31 March 2022 of £5,604m ($7,364m).
Aspects of the triennial actuarial valuation are governed by a long-term funding agreement, effective since October 2016, 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. This security takes the form
of a charge in favour of the Trustee over all land and buildings on the Group’s Cambridge Biomedical Campus site. This charge was enacted in
December 2023, and provides long-term security to the Trustee in respect of the Group’s future deficit recovery contributions. The value of the
charge is currently £317m ($404m) and it is capped at £350m ($446m). The value of the charge will vary and is expected to reduce over time, before
falling away. Under the terms of the charge, the Trustee can only exercise its right over the ownership of the site in a Group insolvency event.
In relation to deficit recovery contributions, a lump sum contribution of £39m ($48m) was made in March 2023, with a further annual contribution
of £39m ($50m) due before 31 March 2024, and each year up to March 2028.
Further progress was made over 2023 in equalising GMP for members of the UK Pension Fund. The method of equalisation converts GMP to non-
GMP pension to simplify the structure and administration of benefits. As at 31 December 2023, almost all pensioner and dependent members have
had their benefits equalised and, for non-pensioner members, a process will be in place in 2024 to equalise their benefits at their point of retirement.
As part of the project, a Pension Increase Exchange (‘PiE’) option was also made available to the majority of pensioner members, at the Group’s
discretion. This option provided the member with a choice to opt for a higher pension right away, but with no, or fewer, inflation-linked increases
in the future. Take-up of this option resulted in a reduction to expected future liabilities and a $16m past service credit was taken to the income
statement in March 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 2024 for the UK scheme will be approximately $18m.
United States
In May 2023, AstraZeneca Pharmaceuticals LP agreed a buy-out of its qualified US Defined Benefit Pension Plan with an external insurer. All Plan
liabilities (approximately $840m) have now been discharged (via a mix of cash payments to participants and purchase of insured annuities), with an
impact of $1.7m on the income statement and a net Group cash contribution of approximately $25m. The Plan is wound up and the Trust is closed.
The transaction will be completed in 2024, pending approval of Group annuity contracts from State Regulators.
There are three remaining immaterial US post-retirement benefit plans and therefore from 2024, these will not be individually disclosed.
Sweden
The Swedish plans account for 20% of the Group’s defined benefit obligations. They 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 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 2023, for the main pension fund
the Group did not request a reimbursement of benefit payments made throughout the year as the funding level was below 100% on the Swedish
GAAP basis. The benefit payments over 2023, totalling approximately $47m, are therefore regarded as Group contributions.
On current bases, it is expected that ongoing contributions (excluding those in respect of past service deficit contributions) during the year ending
31 December 2024 for Sweden will be approximately $53m.
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 2023, some 2,673 retired employees and covered dependents currently benefit from
these provisions and some 2,133 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 $66m. 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.
The cost of post-retirement benefits other than pensions for the Group in 2023 was $1m (2022: $1m; 2021: $1m). Plan assets were $161m and plan
obligations were $114m at 31 December 2023. These benefit plans have been included in the disclosure of post-retirement benefits under IAS 19.
Notes to the Group Financial Statements
continued
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 2023. 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:
2022 | ||||
UK | US | Sweden | Rest of Group 1 | |
Inflation assumption | 3.2% | – | 1.9% | 2.5% |
Rate of increase in salaries | – 2 | – | 3.4% | 4.0% |
Rate of increase in pensions in payment | 3.1% | – | 1.9% | 2.5% |
Discount rate – defined benefit obligation | 4.9% | 5.0% | 4.1% | 3.7% |
Discount rate – interest cost | 5.0% | 4.9% | 4.0% | 3.8% |
Discount rate – service cost | 4.8% | n/a | 4.0% | 3.7% |
2023 | ||||
UK | US | Sweden | Rest of Group 1 | |
Inflation assumption | 3.1% 3 | – | 1.6% | 2.2% |
Rate of increase in salaries | – 2 | – | 3.1% | 3.7% |
Rate of increase in pensions in payment | 2.9% | – | 1.6% | 2.2% |
Discount rate – defined benefit obligation 4 | 4.6% | 4.7% | 3.3% | 3.3% |
Discount rate – interest cost 5 | 4.6% | 4.7% | 3.3% | 3.3% |
Discount rate – service cost 5 | 4.5% | n/a | 3.3% | 3.3% |
1
Rest of Group reflects the assumptions in Germany as these have the most material impact on the Group.
2
Pensionable pay frozen at 30 June 2010 levels following UK fund changes.
3
The UK inflation assumption includes an allowance for some UK inflation experience over 2023.
4
Group defined benefit obligation as at 31 December 2023 calculated using discount rates based on market conditions as at 31 December 2023.
5
2023 interest costs and service costs calculated using discount rates based on market conditions as at 31 December 2022.
The weighted average duration of the post-retirement scheme obligations is approximately 11 years in the UK, 16 years in Sweden and 13 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 2023 and male and female members
expected to retire in 2043 (2022: 2022 and 2042 respectively).
Life expectancy assumption for a male member retiring at age 65 | Life expectancy assumption for a female member retiring at age 65 | |||||||
Country | 2023 | 2043 | 2022 | 2042 | 2023 | 2043 | 2022 | 2042 |
UK | 22.1 | 23.1 | 22.2 | 23.2 | 23.7 | 24.8 | 23.8 | 24.9 |
US | 22.2 | 24.6 | 22.0 | 23.2 | 23.3 | 26.2 | 23.4 | 25.0 |
Sweden | 21.8 | 23.6 | 21.8 | 23.6 | 23.9 | 26.0 | 23.9 | 26.0 |
In the UK, the Group adopted the CMI 2022 Mortality Projections Model with a 1% long-term improvement rate. No other demographic assumptions
have changed since they were updated in 2022 following the actuarial valuation. The Group has continued to assume that 25% of members
(2022: 25%) will transfer out of the defined benefit section of the AstraZeneca Pension Fund at the point of retirement.
In the US and Sweden, the mortality assumptions are unchanged from 2022.
Risks associated with the Group’s defined benefit pension schemes
The UK defined benefit plan accounts for 65% 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 |
Asset | The Defined Benefit Obligation (DBO) is calculated using a discount rate | In order to mitigate investment risk, the Trustee invests in a suitably |
pricing risk | set with reference to AA-rated corporate bond yields; asset returns that | diversified range of asset classes, return drivers and investment managers. |
differ from the discount rate will create an element of volatility in the | The investment strategy will evolve to further improve the expected risk/return | |
solvency ratio. Approximately 45% of the UK Pension Fund is allocated | profile as opportunities arise. De-risking of the investment strategy took | |
to growth assets. Although these growth assets are expected to | place over 2023, as the Fund moved ahead of its long-term target, with the | |
outperform AA-rated corporate bonds in the long term, they can lead to | benchmark allocation to Growth Assets reducing from 62.5% to 47.5%. | |
volatility and mismatching risk in the short term. The allocation to growth | ||
| assets is monitored to ensure it remains appropriate given the UK Pension | The Trustee has hedged approximately 92% of unintended non-sterling, | |
Fund’s long-term objectives. | overseas currency risk within the UK Pension Fund assets. | |
Interest | A decrease in corporate bond yields will increase the present value | The interest rate hedge of the UK Pension Fund is predominantly implemented |
rate risk | placed on the DBO for accounting purposes. | via holding gilts (and gilt repurchase agreements or ‘gilt repo’) of appropriate |
duration. 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 2023 (versus target of 100%). 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 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 | The UK Pension Fund holds RPI index-linked gilts and gilt repo. The inflation |
inflation as measured by the UK Retail Price Index (RPI) but also for | hedge of the UK Pension Fund protects to some degree against higher-than- | |
some members a component of pensions is indexed by the UK | expected inflation increases on the DBO (approximately 100% hedged as a | |
Consumer Price Index (CPI)) and higher inflation will lead to higher | percentage of assets at the end of 2023). Over 2023, work was carried out | |
liabilities (although, in the vast majority of cases, this is capped at an | by the Trustee to improve the accuracy of the hedge to LPI linked liabilities. | |
annual increase of 5%, known as Limited Price Indexation or LPI). | ||
Life | The majority of the UK Pension Fund’s obligations are to provide | In 2013 the Trustee entered into a longevity swap to hedge against the risk |
expectancy | benefits for the life of the member, so increases in life expectancy | of increasing life expectancy over the next 75 years. The swap currently |
will result in an increase in the liabilities. | covers approximately 8,000 of the UK Pension Fund’s pensioners, equivalent | |
to $2.4bn of Pension fund liability. A one-year increase in life expectancy | ||
would result in a $214m increase in pension fund obligations, which would | ||
be partially offset by a $108m increase in the value of the longevity swap | ||
and hence the pension fund assets. | ||
Cash flow and | The UK Pension Fund is maturing and cash flow negative. Assets | The Trustee invests in a diversified portfolio of highly liquid assets to |
liquidity risk | are liquidated to meet benefit outgo and potentially from time to time, | manage sequencing risk and operates a collateral management policy, |
to supplement the collateral pool required to post margin for | maintaining a minimum liquidity ‘buffer’ above recommended regulatory | |
derivative holdings. | guidelines, which can be quickly supplemented in an orderly manner. | |
There is a risk of the Trustee requesting liquidity support from the Group | Over 2023, in addition to the Growth and Liability Hedging portfolios, | |
to meet margin calls or expenditure, if the liquidity position of the UK | the Trustee allocated 7% of assets to a new, cash flow driven investment | |
Pension Fund is not effectively monitored and managed. | portfolio, consisting of investment grade corporate bonds. The purpose of | |
this portfolio is to generate income to help meet the Fund’s benefit outgo. | ||
The portfolio is expected to grow over time as further de-risking occurs. |
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 (mitigated by using a specialist investment manager to oversee a diversified range of counterparties
of high standing and ensuring positions are collateralised daily). Furthermore, there are operational risks (such as paying out the wrong benefits)
and legislative risks (such as the UK government 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 Sweden also manage these key risks, where relevant, in a similar way, with the local fiduciary bodies investing in a
diversified manner and employing a framework to hedge interest rate risk where practicable.
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. The Trustee of the
UK Pension Fund published its inaugural Task Force for Climate-related Disclosures (TCFD) report in October 2023.
Assets and obligations of defined benefit schemes
The assets and obligations of the defined benefit schemes operated by the Group at 31 December 2023, 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.
Scheme assets
| 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/(liabilities) 5 | 1,983 | 2,590 | 1,009 | (1) | – | 946 | 174 | 329 | 3,166 | 3,864 | 7,030 |
| 2023 | |||||||||||
| 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 | 2,383 | – | 61 | – | – | – | 51 | – | 2,495 | – | 2,495 |
Corporate bonds 2 | 373 | – | 94 | – | – | – | 6 | – | 473 | – | 473 |
Derivatives 3 | – | (532) | – | – | – | 440 | – | – | – | (92) | (92) |
Investment funds: Listed Equities 4 | – | 321 | – | – | – | – | 53 | 3 | 53 | 324 | 377 |
Investment funds: | |||||||||||
Absolute Return/Multi Strategy 4 | – | 1,131 | – | – | – | 461 | 5 | 8 | 5 | 1,600 | 1,605 |
Investment funds: Corporate Bonds/Credit 4 | – | 667 | – | – | – | 165 | 48 | – | 48 | 832 | 880 |
Cash and cash equivalents | 53 | 363 | 5 | – | – | 2 | – | 3 | 58 | 368 | 426 |
Other | – | – | – | – | – | – | (1) | 316 | (1) | 316 | 315 |
Total fair value of scheme assets 5 | 2,809 | 1,950 | 160 | – | – | 1,068 | 162 | 330 | 3,131 | 3,348 | 6,479 |
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 187. 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
None of the Group’s own assets were included in the scheme assets (2022: $1m). The assets held in 2022 were AstraZeneca corporate debt held by the US qualified plan and amounted to 0.05%
of the plan’s then assets.
Scheme obligations
| 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) |
| 2023 | |||||
UK | US | Sweden | Rest of Group | Total | |
$m | $m | $m | $m | $m | |
Present value of scheme obligations in respect of: | |||||
Active membership | (233) | (45) | (553) | (442) | (1,273) |
Deferred membership | (853) | (2) | (443) | (294) | (1,592) |
Pensioners | (4,075) | (107) | (606) | (254) | (5,042) |
Total value of scheme obligations | (5,161) | (154) | (1,602) | (990) | (7,907) |
Net (deficit)/surplus in the scheme
| 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) | |
| 2023 | |||||
UK | US | Sweden | Rest of Group | Total | |
$m | $m | $m | $m | $m | |
Total fair value of scheme assets | 4,759 | 160 | 1,068 | 492 | 6,479 |
Total value of scheme obligations | (5,161) | (154) | (1,602) | (990) | (7,907) |
(Deficit)/surplus in the scheme as recognised in the | |||||
Consolidated Statement of Financial Position | (402) | 6 | (534) | (498) | (1,428) |
Included in Non-current other receivables | – | 66 | – | 26 1 | 92 |
Included in Retirement benefit obligations | (402) | (60) | (534) | (524) | (1,520) |
(402) | 6 | (534) | (498) | (1,428) | |
1
Surpluses were recognised in Ireland and Belgium.
Fair value of scheme assets
| 2023 | 2022 | |||||||||
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 | 4,573 | 1,008 | 946 | 503 | 7,030 | 7,333 | 1,413 | 1,234 | 584 | 10,564 |
Interest income on scheme assets | 229 | 22 | 38 | 11 | 300 | 123 | 29 | 18 | 5 | 175 |
Expenses | (9) | (1) | – | (1) | (11) | (5) | (2) | – | – | (7) |
Actuarial (losses)/gains | (59) | 2 | 37 | (45) | (65) | (1,964) | (295) | (153) | (55) | (2,467) |
Exchange and other adjustments | 262 | (1) | 48 | 20 | 329 | (728) | – | (152) | (34) | (914) |
Employer contributions | 65 | 35 | 46 | 42 | 188 | 118 | 7 | 43 | 37 | 205 |
Participant contributions | 1 | 4 | – | 7 | 12 | 1 | 5 | – | 5 | 11 |
Benefits paid | (303) | (68) | (47) | (45) | (463) | (305) | (149) | (44) | (39) | (537) |
Settlements | – | (841) | – | – | (841) | – | – | – | – | – |
Scheme assets’ fair value at end of year | 4,759 | 160 | 1,068 | 492 | 6,479 | 4,573 | 1,008 | 946 | 503 | 7,030 |
The actual return on the plan assets was a gain of $235m (2022: loss of $2,292m).
Movement in post-retirement scheme obligations
| 2023 | 2022 | |||||||||
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 | (4,801) | (1,022) | (1,312) | (973) | (8,108) | (7,941) | (1,404) | (2,373) | (1,300) | (13,018) |
Current service cost | (6) | (2) | (13) | (35) | (56) | (14) | (1) | (35) | (38) | (88) |
Past service credit/(cost) | 12 | – | (2) | 2 | 12 | (5) | – | (4) | 3 | (6) |
Participant contributions | (1) | (4) | – | (7) | (12) | (1) | (4) | – | (5) | (10) |
Benefits paid | 303 | 68 | 47 | 45 | 463 | 305 | 149 | 44 | 39 | 537 |
Interest expense on post-retirement scheme obligations | (239) | (22) | (50) | (27) | (338) | (132) | (29) | (31) | (12) | (204) |
Actuarial (losses)/gains | (155) | (12) | (202) | 28 | (341) | 2,243 | 268 | 806 | 268 | 3,585 |
Exchange and other adjustments | (274) | 1 | (70) | (34) | (377) | 744 | (1) | 281 | 72 | 1,096 |
Settlements | – | 839 | – | 11 | 850 | – | – | – | – | – |
Present value of obligations in scheme at end of year | (5,161) | (154) | (1,602) | (990) | (7,907) | (4,801) | (1,022) | (1,312) | (973) | (8,108) |
The obligations arise from over 50 plans in 28 countries:
| 2023 | 2022 | |||||||||
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 | (5,151) | – | (1,599) | (868) | (7,618) | (4,787) | (851) | (1,310) | (842) | (7,790) |
Funded – post-retirement healthcare | – | (94) | – | – | (94) | – | (111) | – | – | (111) |
Unfunded – pension schemes 1 | – | (60) | (3) | (113) | (176) | – | (60) | (2) | (122) | (184) |
Unfunded – post-retirement healthcare | (10) | – | – | (9) | (19) | (14) | – | – | (9) | (23) |
Total | (5,161) | (154) | (1,602) | (990) | (7,907) | (4,801) | (1,022) | (1,312) | (973) | (8,108) |
1
Includes defined benefit pension schemes and other plans, such as lump sum, long service awards and DC plans with underpins.
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 2023, are set out below.
| 2023 | 2022 | |||||||||
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 | (6) | (2) | (13) | (35) | (56) | (14) | (1) | (35) | (38) | (88) |
Past service credit/(cost) | 12 | – | (2) | 2 | 12 | (5) | – | (4) | 3 | (6) |
Expenses | (9) | (1) | – | (1) | (11) | (5) | (2) | – | – | (7) |
Total charge to Operating profit | (3) | (3) | (15) | (34) | (55) | (24) | (3) | (39) | (35) | (101) |
Finance expense | ||||||||||
Interest income on scheme assets | 229 | 22 | 38 | 11 | 300 | 123 | 29 | 18 | 5 | 175 |
Interest expense on post-retirement scheme obligations | (239) | (22) | (50) | (27) | (338) | (132) | (29) | (31) | (12) | (204) |
Net interest on post-employment defined benefit plan liabilities | (10) | – | (12) | (16) | (38) | (9) | – | (13) | (7) | (29) |
Charge before taxation | (13) | (3) | (27) | (50) | (93) | (33) | (3) | (52) | (42) | (130) |
Other comprehensive income | ||||||||||
Difference between the actual return and the expected return | ||||||||||
on the post-retirement scheme assets | (59) | 2 | 37 | (45) | (65) | (1,964) | (295) | (153) | (55) | (2,467) |
Experience (losses)/gains arising on the post-retirement | ||||||||||
scheme obligations | (25) | (2) | (67) | (13) | (107) | 55 | (16) | (99) | (6) | (66) |
Changes in financial assumptions underlying the present value | ||||||||||
of the post-retirement scheme obligations | (142) | (10) | (135) | 44 | (243) | 2,272 | 284 | 896 | 275 | 3,727 |
Changes in demographic assumptions | 12 | – | – | (3) | 9 | (84) | – | 9 | (1) | (76) |
Remeasurement of the defined benefit liability | (214) | (10) | (165) | (17) | (406) | 279 | (27) | 653 | 213 | 1,118 |
Past service cost includes 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).
2023 | 2022 | |
$m | $m | |
Defined contribution schemes | 482 | 445 |
Defined benefit schemes − Current service cost and Expenses | 67 | 95 |
Defined benefit schemes − Past service (credit)/cost | (12) | 6 |
Pension costs | 537 | 546 |
Rate sensitivities
The following table shows the US dollar effect of a change in the significant actuarial assumptions used to determine the retirement benefits obligations
in our three main defined benefit pension obligation countries.
| 2023 | 2022 | |||
+0.5% | −0.5% | +0.5% | −0.5% | |
Discount rate | ||||
UK ($m) | 269 | (308) | 262 | (289) |
US ($m) | 4 | (4) | 46 | (49) |
Sweden ($m) | 109 | (123) | 95 | (107) |
Total ($m) | 382 | (435) | 403 | (445) |
| 2023 | 2022 | |||
+0.5% | −0.5% | +0.5% | −0.5% | |
Inflation rate 1 | ||||
UK ($m) | (189) | 184 | (173) | 165 |
US ($m) | n/a | n/a | n/a | n/a |
Sweden ($m) | (116) | 104 | (104) | 93 |
Total ($m) | (305) | 288 | (277) | 258 |
| 2023 | 2022 | |||
+0.5% | −0.5% | +0.5% | −0.5% | |
Rate of increase in salaries | ||||
UK ($m) | n/a | n/a | n/a | n/a |
US ($m) | n/a | n/a | n/a | n/a |
Sweden ($m) | (46) | 42 | (47) | 43 |
Total ($m) | (46) | 42 | (47) | 43 |
| 2023 | 2022 | |||
+1 year | −1 year | +1 year | −1 year | |
Mortality rate | ||||
UK ($m) | (214) 2 | 212 3 | (191) | 193 |
US ($m) | (2) | 2 | (20) | 20 |
Sweden ($m) | (51) | 51 | (44) | 44 |
Total ($m) | (267) | 265 | (255) | 257 |
1
Rate of increase in pensions in payment follows inflation.
2
Of the $214m increase, $108m is covered by the longevity swap.
3
Of the $212m decrease, $106m is covered by the longevity swap.
In consideration of current market conditions, additional sensitivities have been calculated for the UK and Sweden schemes for 2023. The effect
on retirement benefit obligations of a 1.0% change in assumption is as follows: $525m (UK) and $210m (Sweden) if the discount rate is increased;
$(634)m (UK) and $(254)m (Sweden) if the discount rate is decreased; $(384)m (UK) and $(240)m (Sweden) if the inflation rate is increased; and
$363m (UK) and $201m (Sweden) if the inflation rate is decreased.
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
Retained earnings
The cumulative amount of goodwill written off directly to reserves resulting from acquisitions, net of disposals, amounted to $595m (2022: $591m;
2021: $615m) using year end rates of exchange.
At 31 December 2023, 1,580,137 shares, at a cost of $129m, have been deducted from Retained earnings (2022: 1,671,446 shares, at a cost of $112m;
2021: 3,922,122 shares, at a cost of $239m) 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).
2023 | 2022 | 2021 | |
$m | $m | $m | |
Cumulative translation differences included within Retained earnings | |||
At 1 January | (3,694) | (1,934) | (1,143) |
Foreign exchange arising on consolidation | 608 | (1,446) | (483) |
Exchange adjustments on goodwill (recorded against other reserves) | 4 | (24) | (21) |
Foreign exchange arising on designated liabilities in net investment hedges 1 | 24 | (282) | (321) |
Fair value movements on derivatives designated in net investment hedges | 44 | (8) | 34 |
Net exchange movement in Retained earnings | 680 | (1,760) | (791) |
At 31 December | (3,014) | (3,694) | (1,934) |
1
Foreign exchange arising on designated liabilities in net investment hedges includes $(57)m in respect of designated bonds and $81m in respect of designated contingent consideration and
other liabilities. The change in value of designated contingent consideration liabilities relates to $82m in respect of BMS’ share of Global Diabetes Alliance.
The cumulative loss with respect to costs of hedging is $22m (2022: loss of $3m; 2021: gain of $4m) and the loss during the year was $19m (2022:
loss of $7m; 2021: loss of $6m).
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. For further detail relating to hedging balances, please see the Hedge accounting section within Note 28, from page 200.
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 | |||
2023 | 2022 | 2021 | |
$m | $m | $m | |
Issued Ordinary Shares ($0.25 each) | 388 | 387 | 387 |
Redeemable Preference Shares (£1 each – £50,000) | – | – | – |
At 31 December | 388 | 387 | 387 |
The Redeemable Preference Shares carry limited class voting rights and no dividend rights. This class of shares is capable of redemption at par at
the option of the Company on the giving of seven days’ written notice to the registered holder of the shares.
The Company does not have a limited amount of authorised share capital.
The movements in the number of Ordinary Shares during the year can be summarised as follows:
No. of shares | |||
2023 | 2022 | 2021 | |
At 1 January | 1,549,800,030 | 1,549,400,665 | 1,312,668,724 |
Issue of share capital (business combinations) | – | – | 236,321,411 |
Issue of shares (share schemes) | 362,596 | 399,365 | 410,530 |
At 31 December | 1,550,162,626 | 1,549,800,030 | 1,549,400,665 |
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 2023 (2022: nil; 2021: nil).
Shares held by subsidiaries
2023 | 2022 | 2021 | 2023 | 2022 | 2021 | |
Per share | Per share | Per share | $m | $m | $m | |
Second interim (March 2023) | $1.97 | $1.97 | $1.90 | 3,047 | 3,046 | 2,490 |
First interim (September 2023) | $0.93 | $0.93 | $0.90 | 1,440 | 1,440 | 1,392 |
Total | $2.90 | $2.90 | $2.80 | 4,487 | 4,486 | 3,882 |
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 $nil (2022: $1m; 2021: $nil) have been adjusted for in Retained
earnings in 2023.
The 2022 second interim dividend of $1.97 per share was paid on 27 March 2023. The 2023 first interim dividend of $0.93 per share was paid on
11 September 2023.
Reconciliation of dividends charged to equity to cash flow statement:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Dividends charged to equity | 4,487 | 4,486 | 3,882 |
Exchange losses on payment of dividend | 5 | 5 | 3 |
Hedge contracts relating to payment of dividends (cash flow statement) | (19) | (127) | (29) |
Dividends paid to non-controlling interests | 4 | – | – |
Net movement of unclaimed dividends in the year | 4 | – | – |
Dividends paid (cash flow statement) | 4,481 | 4,364 | 3,856 |
Financial Statements
AstraZeneca Annual Report & Form 20-F Information 2023
192
The Group Financial Statements at 31 December 2023 reflect equity of $23m (2022: $21m; 2021: $19m) and total comprehensive income of $6m
(2022: $2m; 2021: $3m) attributable to the non-controlling interests in AstraZeneca Pharma India Limited, P.T. AstraZeneca Indonesia, Beijing Falikang
Pharmaceutical (China) Co. Limited, and AstraZeneca Algeria Pharmaceutical Industries SPA.
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). 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
Acquisitions of business operations in 2023
On 16 January 2023, AstraZeneca completed the acquisition of Neogene Therapeutics Inc. (Neogene), a global clinical-stage biotechnology company
pioneering the discovery, development and manufacturing of next-generation T-cell receptor therapies (TCR-Ts). The purchase price allocation exercise
has completed, with the fair value of total consideration determined at $267m. Intangible assets of $100m and goodwill of $158m were recognised
in the acquisition balance sheet, as well as a cash outflow of $189m net of cash acquired. Future contingent milestones-based and non-contingent
consideration is payable to a maximum of $120m. Neogene’s results have been consolidated into the Group’s results from 16 January 2023.
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 Depositary 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.
Notes to the Group Financial Statements
continued
27 Acquisition of business operations
continued
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 |
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 the probability of technical and regulatory
success, peak year sales and revenue erosion curves. In accordance with the Group’s policy on impairment assessments as set out on page 159,
the assets were assessed for impairment in the final quarter of 2023, 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. As at 31 December 2023, the fair value uplift has been fully unwound.
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 $5m (2022: $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 and
Finance 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. In 2023, $nil costs were recorded in the Statement of Comprehensive Income (2022: $3m;
2021: $24m). These bonuses vested and were paid six months after the acquisition, or earlier.
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% for the
awards granted in 2019 and a limit of 150% for the awards granted in 2020). In the year, a cost of $48m (2022: $257m; 2021: $257m) has been
recorded in the Statement of Comprehensive Income, $nil (2022: $9m; 2021: $9m) in Cost of sales, $16m (2022: $92m; 2021: $73m) in Research
and development expense and $32m (2022: $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
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 and bank acceptance drafts discounting for selected trade receivables. These 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 these arrangements, are disclosed in Note 16.
Funding and liquidity risk are reviewed regularly by the Board and managed in accordance with the 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 from a net debt position of $22,923m at the beginning of the year to a net debt position of $22,510m at 31 December 2023.
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 2023, the Group was assigned short-term credit ratings of P-1 by Moody’s and A-1 by
Standard and Poor’s. The Group’s long-term credit rating was A2 Stable outlook by Moody’s and A Stable outlook by Standard and Poor’s.
In addition to Cash and cash equivalents of $5,840m, short-term fixed income investments of $20m, less overdrafts of $203m at 31 December 2023,
the Group has committed bank facilities of $6,875m available to manage liquidity. These committed bank facilities have no financial covenants.
$2,000m mature in February 2025. The maturity of the $4,875m facilities was extended in February 2024 from April 2026 to April 2029. 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 SOFR (Secured Overnight
Financing Rate) plus a margin.
At 31 December 2023, the Group has $4,855m outstanding from debt issued under a Euro Medium Term Note programme and $19,959m under a
SEC-registered programme. The funds made available under these facility agreements may be used for the general corporate purposes of the Group.
The maturity profile of the anticipated future contractual cash flows including interest in relation to the Group’s financial liabilities, on an undiscounted
basis and which, therefore, differs from both the carrying value and fair value, is as follows:
Bank | Total | Derivative | Derivative | Total | |||||
overdrafts | Trade non-derivative | financial | financial | derivative | |||||
and other | 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 |
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 | 542 | 5,469 | 313 | 22,401 | 28,725 | (11,302) | 11,366 | 64 | 28,789 |
In one to two years | – | 2,764 | 261 | 1,482 | 4,507 | (100) | 114 | 14 | 4,521 |
In two to three years | – | 3,137 | 208 | 788 | 4,133 | (164) | 179 | 15 | 4,148 |
In three to four years | – | 2,230 | 138 | 625 | 2,993 | (924) | 883 | (41) | 2,952 |
In four to five years | – | 3,822 | 88 | 12 | 3,922 | (949) | 971 | 22 | 3,944 |
In more than five years | – | 17,995 | 271 | 35 | 18,301 | (1,507) | 1,340 | (167) | 18,134 |
542 | 35,417 | 1,279 | 25,343 | 62,581 | (14,946) | 14,853 | (93) | 62,488 | |
Effect of interest | (27) | (8,270) | – | – | (8,297) | 589 | (644) | (55) | (8,352) |
Effect of discounting, fair values and issue costs | – | (168) | (151) | (309) | (628) | 44 | (46) | (2) | (630) |
31 December 2023 | 515 | 26,979 | 1,128 | 25,034 | 53,656 | (14,313) | 14,163 | (150) | 53,506 |
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 2024 which the Group can repay before maturity at face value. Other than that, it is not expected
that the cash flows in the maturity profile could occur significantly earlier or at significantly different amounts, with the exception of $2,137m of
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.
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.
| 2023 | 2022 | 2021 | |||||||
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 | |||||||||
Current | 2,885 | 2,515 | 5,400 | 2,476 | 3,066 | 5,542 | 1,232 | 661 | 1,893 |
Non-current | 23,222 | – | 23,222 | 21,511 | 2,179 | 23,690 | 23,985 | 4,903 | 28,888 |
Total | 26,107 | 2,515 | 28,622 | 23,987 | 5,245 | 29,232 | 25,217 | 5,564 | 30,781 |
Financial assets | |||||||||
Fixed deposits | – | – | – | 64 | – | 64 | 53 | – | 53 |
Cash collateral pledged to counterparties | – | 102 | 102 | – | 162 | 162 | – | – | – |
Cash and cash equivalents | – | 5,840 | 5,840 | 250 | 5,916 | 6,166 | – | 6,329 | 6,329 |
Total | – | 5,942 | 5,942 | 314 | 6,078 | 6,392 | 53 | 6,329 | 6,382 |
In addition to the financial assets above, there are $11,288m (2022: $9,546m; 2021: $8,765m) of other current and non-current asset investments and
other financial assets.
The Group is also exposed to market risk on other investments.
2023 | 2022 | 2021 | |
$m | $m | $m | |
Equity securities at fair value through Other comprehensive income (Note 12) | 1,530 | 1,056 | 1,168 |
Non-current fixed income securities at fair value through profit or loss (Note 12) | – | 10 | – |
Total | 1,530 | 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 60% of Group external sales in 2023 were denominated in currencies other than the US dollar, while a significant proportion of
manufacturing, and research and development costs were denominated in pound 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 2023, before the impact of derivatives, 2% of interest-bearing loans and borrowings were denominated in pound sterling and
16% 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 200.
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 2023, 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 pound 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 cash flow hedge.
Sensitivity analysis
The sensitivity analysis set out below summarises the sensitivity of the market value of our financial instruments to hypothetical changes in market
rates and prices. The range of variables chosen for the sensitivity analysis reflects our view of changes which are reasonably possible over a one-year
period. Market values are the present value of future cash flows based on market rates and prices at the valuation date. For long-term debt, an
increase in interest rates results in a decline in the fair value of debt.
The sensitivity analysis assumes an instantaneous 100 basis point change in interest rates in all currencies from their levels at 31 December 2023,
with all other variables held constant. Based on the composition of our long-term debt portfolio and cash reserves as at 31 December 2023, a 1%
increase in interest rates would result in an additional $25m in interest expense on the debt and an additional $58m interest income on the cash
reserves. The exchange rate sensitivity analysis assumes an instantaneous 10% change in foreign currency exchange rates from their levels at
31 December 2023, with all other variables held constant. The +10% case assumes a 10% strengthening of the US dollar against all other currencies
and the -10% case assumes a 10% weakening of the US dollar.
Each incremental 10% movement in foreign currency exchange rates would have approximately the same effect as the initial 10% detailed in the
table below and each incremental 1% change in interest rates would have approximately the same effect as the 1% detailed in the table below.
Interest rates | Exchange rates | |||
31 December 2021 | +1% | −1% | +10% | −10% |
Increase/(decrease) in fair value of financial instruments ($m) | 1,978 | (2,106) | 82 | (85) |
Impact on profit: gain/(loss) ($m) | – | – | 24 | (9) |
Impact on equity: gain/(loss) ($m) | – | – | 58 | (76) |
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) ($m) | – | – | 55 | (74) |
Interest rates | Exchange rates | |||
31 December 2023 | +1% | −1% | +10% | −10% |
Increase/(decrease) in fair value of financial instruments ($m) | 1,361 | (1,534) | 196 | (212) |
Impact on profit: gain/(loss) ($m) | – | – | 134 | (128) |
Impact on equity: gain/(loss) ($m) | – | – | 62 | (83) |
The Group is exposed to credit risk on financial assets, such as cash investments, derivative instruments, and Trade and other receivables. The
Group was also exposed in its Net asset position to its own credit risk in respect of the 2023 debentures which are accounted for at FVPL. Under
IFRS 9, the effect of the losses and gains arising from own credit risk on the fair value of bonds designated at FVPL are recorded in Other
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 2023 were as follows:
Current assets
2023 | 2022 | 2021 | |
$m | $m | $m | |
Cash at bank and in hand | 1,325 | 1,411 | 1,461 |
Money market liquidity funds | 4,425 | 4,486 | 4,772 |
Other short-term cash equivalents | 90 | 269 | 96 |
Total Cash and cash equivalents (Note 17) | 5,840 | 6,166 | 6,329 |
Fixed income securities at fair value through profit or loss (Note 12) | 20 | 13 | 16 |
Cash collateral pledged to counterparties (Note 12) | 102 | 162 | – |
Fixed deposits (Note 12) | – | 64 | 53 |
Total derivative financial instruments (Note 13) | 116 | 87 | 83 |
Current assets subject to credit risk | 6,078 | 6,492 | 6,481 |
Non-current assets
2023 | 2022 | 2021 | |
$m | $m | $m | |
Derivative financial instruments (Note 13) | 228 | 74 | 102 |
Non-current assets subject to credit risk | 228 | 74 | 102 |
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 six 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 2023 was $215m (2022: $89m;
2021: $93m) and the carrying value of such cash collateral posted by the Group at 31 December 2023 was $102m (2022: $162m; 2021: $47m).
The impairment provision for other financial assets at 31 December 2023 was immaterial.
Trade receivables
Trade receivable exposures are managed locally in the operating units where they arise and credit limits are set as deemed appropriate for the
customer. The Group is exposed to customers ranging from government-backed agencies and large private wholesalers to privately owned pharmacies,
and the underlying local economic and sovereign risks vary throughout the world. Where appropriate, the Group endeavours to minimise risks by
the use of trade finance instruments such as letters of credit and insurance. The Group applies the expected credit loss approach to establish an
allowance for impairment that represents its estimate of expected losses in respect of Trade receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance to Trade
receivables. To measure expected credit losses, Trade receivables have been grouped based on shared credit characteristics and the days past due.
The expected loss rates are based on payment profiles over a period of 36 months before 31 December 2023, 31 December 2022 or 31 December
2021 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the customer to settle the receivables.
On that basis, the loss allowance was determined as follows:
0-90 days | 90-180 days | Over 180 days | |||
31 December 2021 | Current | past due | past due | past due | Total |
Expected loss rate | 0.1% | 1.2% | 22.6% | 11.0% | |
Gross carrying amount ($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 ($m) | 2 | 1 | 16 | 40 | 59 |
0-90 days | 90-180 days | Over 180 days | |||
31 December 2023 | Current | past due | past due | past due | Total |
Expected loss rate | 0.01% | 0.3% | 0.8% | 15.0% | |
Gross carrying amount ($m) | 7,709 | 342 | 121 | 280 | 8,452 |
Loss allowance ($m) | 1 | 1 | 1 | 42 | 45 |
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 80% of US sales (2022: three wholesalers accounted for approximately 73%;
2021: three wholesalers accounted for approximately 94%).
The movements of the Group expected credit losses provision are follows:
2023 | 2022 | 2021 | |
$m | $m | $m | |
At 1 January | 59 | 23 | 23 |
Net movement recognised in income statement | (14) | 37 | (2) |
Amounts utilised, exchange and other movements | – | (1) | 2 |
At 31 December | 45 | 59 | 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
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
The following table represents the Group’s continuing designated hedge relationships under IFRS 9.
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 1, 3, 4 | |||||||||
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 2, 3 | |||||||||
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 5 | EUR 450m | – | 85 | (47) | – | 38 | 2021 | n/a | EUR 0.88% |
Foreign currency borrowing – EUR investment 6 | 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 1, 3, 4 | |||||||||
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 2, 3 | |||||||||
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 6 | 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 | – | – | – |
2023 | |||||||||
| 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 | 2023 | to OCI | statement | 2023 | 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 3,200m | 49 | 34 | (210) | 139 | (37) | 2027 | 1.10 | USD 3.80% |
FX Forwards − short-term FX risk | USD 2,009m | 15 | 12 | (33) | 6 | (15) | 2024 | – | – |
Net investment hedge – foreign exchange risk 3, 4 | |||||||||
Transactions matured pre-2023 | – | (527) | – | – | (527) | – | – | – | |
Cross currency interest rate swap – JPY investment | JPY 58.3bn | 100 | (55) | (45) | – | (100) | 2029 | 108.03 | JPY 1.53% |
Cross currency interest rate swap – CNY investment | CNY 458m | (1) | 4 | (3) | – | 1 | 2026 | 6.68 | CNY 4.80% |
Foreign currency borrowing – GBP investment | GBP 350m | 444 | (288) | 24 | – | (264) | 2031 | n/a | GBP 5.75% |
Foreign currency borrowing – EUR investment 7 | EUR 800m | 881 | (102) | 33 | – | (69) | 2029 | n/a | EUR 0.38% |
Contingent consideration liabilities and Acerta Pharma share | |||||||||
purchase liability – AZUK and AZAB USD investments | USD 1,937m | (1,937) | 2,216 | (81) | – | 2,135 | – | – | – |
1
Swaps designated in a fair value hedge matured on 24 November 2021 and hedge ineffectiveness during 2023 was $nil (2022: $nil; 2021: $nil).
2
Hedge ineffectiveness recognised on swaps designated in a cash flow hedge during the period was $nil (2022: $nil; 2021: $nil).
3
Hedge ineffectiveness recognised on swaps designated in a net investment hedge during the period was $nil (2022: $nil; 2021: $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 $2,009m represents the USD equivalent notional of the FX forwards. By currency, the nominal amounts were SEK 9,778m at FX rate
9.9869, JPY 24,351m at 141.4050, GBP 428m at 0.7844 and EUR 228m at 0.9036. All FX forwards in a cash flow hedge mature on 25 January 2024.
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
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.
2023 | 2022 | 2021 | |
Employees | |||
UK | 10,700 | 9,800 | 8,900 |
Rest of Europe | 23,000 | 20,600 | 18,300 |
The Americas | 22,400 | 20,900 | 18,800 |
Asia, Africa & Australasia | 30,300 | 30,700 | 33,600 |
Continuing operations | 86,400 | 82,000 | 79,600 |
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 2023 was 89,900 (2022: 83,500; 2021: 83,100).
The costs incurred during the year in respect of these employees were:
2023 | 2022 | 2021 | |
$m | $m | $m | |
Wages and salaries | 9,341 | 8,656 | 7,633 |
Social security costs | 1,100 | 991 | 886 |
Pension costs | 537 | 546 | 564 |
Other employment costs | 1,357 | 1,338 | 1,192 |
Total | 12,335 | 11,531 | 10,275 |
Severance costs of $123m are not included above (2022: $227m; 2021: $238m).
The charge for share-based payments in respect of share plans is $579m (2022: $619m; 2021: $615m). 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 employee short-term performance bonus plans in operation to differentiate and reward strong individual performance.
Performance bonuses are paid in cash. The AstraZeneca Performance Share Plan and the AstraZeneca Global Restricted Share Plan operate in
respect of relevant employees in the US. AstraZeneca ADRs necessary to satisfy the awards are purchased on the market or funded via a trust.
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 2023, 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 eligible to participate.
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
The Global Restricted Stock Plan (GRSP) 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
share units (PSUs). 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 unit (RSU) awards to key employees, excluding Executive Directors.
Awards are made on an ad hoc basis with variable vesting dates. The plan has been used five times in 2023 to make awards to 305 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 | The AstraZeneca | The AstraZeneca | The AstraZeneca | |||||
Performance Share Plan | Global Restricted Stock Plan | Restricted Share Plan | Extended Incentive Plan | |||||
Ordinary | ADR | Ordinary | ADR | Ordinary | ADR | Ordinary | ADR | |
Shares | Shares | Shares | Shares 1 | Shares | Shares | Shares | Shares | |
‘000 | ‘000 | ‘000 | ‘000 | ‘000 | ‘000 | ‘000 | ‘000 | |
Outstanding at 1 January 2021 | 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 |
Granted | 976 | 2,071 | 1,185 | 6,343 | 208 | 436 | 71 | 95 |
Forfeited | (148) | (437) | (187) | (1,417) | (20) | (59) | (8) | – |
Cancelled | – | – | – | (3) | – | – | – | (34) |
Exercised | (813) | (1,470) | (570) | (2,738) | (86) | (288) | (107) | (9) |
Outstanding at 31 December 2023 | 3,645 | 5,888 | 2,897 | 13,868 | 335 | 767 | 215 | 247 |
1
Shares issued to Alexion employees under the GRSP are covered under the Alexion employee share award below.
| The AstraZeneca | The AstraZeneca | The AstraZeneca | The AstraZeneca | |||||
Performance Share Plan | Global Restricted Stock Plan | Restricted Share Plan | Extended Incentive Plan | |||||
WAFV 1 | WAFV | WAFV | WAFV | WAFV | WAFV | WAFV | WAFV | |
pence | $ | pence | $ | pence | $ | pence | $ | |
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 | – | – |
WAFV of 2023 grants | 9929 | 59.95 | 10822 | 65.38 | 11135 | 65.37 | 11748 | 74.78 |
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 shares outstanding at 31 December 2021, 8,627,000 were exercised and 980,000 were forfeited during
2022. 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 shares
being issued with a grant date fair value of $65.62, that vested in 2023. During 2023, 2,060,000 shares vested, 531,000 were forfeited/cancelled
and the closing balance of these awards as of 31 December 2023 was 3,022,000.
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
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Notes to the Group Financial Statements
203
Notes to the Group Financial Statements
continued
2023 | 2022 | 2021 | |
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 | 1,368 | 502 | 388 |
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 | 10,971 | 1,256 | 3,798 | 1,764 | 4,153 |
Future potential revenue milestone payments | 20,195 | 43 | 491 | 2,400 | 17,261 |
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 2023 which have
been capitalised with reference to the latest Group sales forecasts for approved indications.
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 54, the development of any pharmaceutical product candidate is a complex and risky process that may fail at any stage
in the development process due to a number of factors (including items such as failure to obtain regulatory approval, unfavourable data from key
studies, adverse reactions to the product candidate or indications of other safety concerns). The timing of the payments is based on the Group’s
current best estimate of achievement of the relevant milestone.
Environmental costs and liabilities
The Group’s expenditure on environmental protection, including both capital and revenue items, relates to costs that are necessary for implementing
internal systems and programmes, and meeting legal and regulatory requirements for processes and products. This includes investment to conserve
natural resources and otherwise minimise the impact of our activities on the environment.
They are an integral part of normal ongoing expenditure for carrying out the Group’s research, manufacturing and commercial operations and are
not separated from overall operating and development costs. There are no known changes in legal, regulatory or other requirements resulting in
material changes to the levels of expenditure for 2021, 2022 or 2023.
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 2023 in the aggregate of $112m (2022: $131m; 2021: $90m), 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: (1) the nature and extent of claims that may be asserted in the
future; (2) whether AstraZeneca has or will have any legal obligation with respect to asserted or unasserted claims; (3) the type of remedial action,
if any, that may be selected at sites where the remedy is presently not known; (4) the potential for recoveries from or allocation of liability to third
parties; and (5) the length of time that the environmental investigation, remediation and liability allocation process can take. As per our accounting
policy on page 158, 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 $114m and $191m (2022: $113m and $188m; 2021: $99m and $165m) which relates mainly to the US.
Legal proceedings
AstraZeneca is involved in various legal
proceedings considered typical to its
business, including actual or threatened
litigation and actual or potential government
investigations relating to employment matters,
product liability, commercial disputes, pricing,
sales and marketing practices, infringement of
IP rights, and the validity of certain patents
and competition laws. The more significant
matters are discussed below.
Most of the claims involve highly complex
issues. Often these issues are subject to
substantial uncertainties and, therefore, the
probability of a loss, if any, being sustained
and/or an estimate of the amount of any loss
is difficult to ascertain.
We do not believe that disclosure of the
amounts sought by plaintiffs, if known, would
be meaningful with respect to these legal
proceedings. This is due to a number of
factors, including (i) the stage of the
proceedings (in many cases trial dates have
not been set) and the overall length and extent
of pre-trial discovery; (ii) the entitlement of the
parties to an action to appeal a decision; (iii)
clarity as to theories of liability, damages and
governing law; (iv) uncertainties in timing of
litigation; and (v) the possible need for further
legal proceedings to establish the appropriate
amount of damages, if any.
While there can be no assurance regarding
the outcome of any of the legal proceedings
referred to in this Note 30, based on
management’s current and considered view of
each situation, we do not currently expect
them to have a material adverse effect on our
financial position including within the next
financial year. This position could of course
change over time, not least because of the
factors referred to above.
In cases that have been settled or
adjudicated, or where quantifiable fines and
penalties have been assessed and which are
not subject to appeal (or other similar forms of
relief), or where a loss is probable and we are
able to make a reasonable estimate of the
loss, we generally indicate the loss absorbed
or make a provision for our best estimate of
the expected loss.
Where it is considered that the Group is more
likely than not to prevail, legal costs involved
in defending the claim are charged to profit as
they are incurred.
Where it is considered that the Group has a
valid contract which provides the right to
reimbursement (from insurance or otherwise)
of legal costs and/or all or part of any loss
incurred or for which a provision has been
established, and we consider recovery to be
virtually certain, the best estimate of the
amount expected to be received is recognised
as an asset.
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 2023, 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
for which a provision has been taken
Imfinzi
and
Imjudo
US and ROW patent proceedings
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
infringed several of their patents.
In March 2022, Bristol-Myers Squibb Co. and
E.R. Squibb & Sons, LLC filed a lawsuit in the
US District Court for the District of Delaware
(District Court) against AstraZeneca alleging
that AstraZeneca’s marketing of
Imfinzi
infringed several of their patents. In April 2023,
Bristol-Myers Squibb Co., E.R. Squibb & Sons,
LLC, Tasuku Honjo, Ono Pharmaceutical Co.,
Ltd., and the Dana-Farber Cancer Institute Inc.
filed a separate lawsuit in the District Court
against AstraZeneca alleging that AstraZeneca’s
marketing of
Imfinzi
infringed another of
their patents.
In January 2023, Bristol-Myers Squibb Co.
and E.R. Squibb & Sons, LLC filed a lawsuit
in the District Court against AstraZeneca
alleging that AstraZeneca’s marketing of
Imjudo
infringed two of their patents.
In July 2023, AstraZeneca entered into a global
settlement agreement with Bristol-Myers
Squibb Co., E.R. Squibb & Sons, LLC, and
Ono Pharmaceutical Co., Ltd. that resolves
all patent disputes between the companies
relating to
Imfinzi
and
Imjudo
. In June 2023,
a provision was taken totaling $510m.
These matters are now concluded.
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 (Daiichi Sankyo) in the US District Court
for the Eastern District of Texas (District Court)
alleging that
Enhertu
infringes a Seagen patent.
AstraZeneca 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 wilfulness. In October 2023,
the District Court entered an amended final
judgment that requires Daiichi Sankyo to pay
Seagen a royalty of 8% on US sales of
Enhertu
from April 1, 2022, through November 4, 2024, in
addition to the past damages previously awarded
by the Court. AstraZeneca and Daiichi Sankyo
have appealed the District Court’s decision.
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. requested reconsideration of the
decision not to institute review of the patent.
In February 2023, the USPTO reinstituted the
PGR proceeding. An oral hearing took place in
August 2023. In January 2024, the USPTO
issued a decision that Seagen’s patent is
unpatentable, invalidating all claims asserted
against
Enhertu
. The USPTO’s decision
does not overturn the Texas District Court’s
decision unless and until the USPTO’s decision
is affirmed on appeal by the US Court of
Appeals for the Federal Circuit. No such appeal
has been filed.
Faslodex
Patent proceedings outside the US
In 2021 in Japan, AstraZeneca received notice
from the Japan Patent Office (JPO) that Sandoz
K.K. (Sandoz) 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 July 2023, the JPO
issued a final decision upholding various claims
of the challenged patent and determining that
other patent claims were invalid. In August
2023, Sandoz appealed the JPO decision to
the Japan IP High Court.
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.
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 (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 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 of certain
Calquence
patent
claims. AstraZeneca has asserted claims for
patent infringement against Sandoz and
other defendants in the US ANDA litigation.
In August 2023, the US Patent Trial and
Appeal Board issued a decision denying
institution of inter partes review.
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 (District Court) relating to patents listed
in the FDA Orange Book with reference to
Daliresp
. In 2022, AstraZeneca entered into a
settlement agreement and the District Court
entered a consent judgment to dismiss the
corresponding litigation. Additional ANDA
challenges are pending.
Farxiga
US patent proceedings
In May 2021, AstraZeneca proceeded to trial
against ANDA filer Zydus Pharmaceuticals (USA)
Inc. (Zydus) in the US District Court for the
District of Delaware (District Court). 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
decision. Zydus’s appeal has been dismissed.
In December 2023, AstraZeneca initiated
ANDA litigation against Sun Pharmaceutical
Industries Ltd. and Sun Pharmaceutical
Industries, Inc. in the District Court. No trial
date has been set.
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.
Lynparza
US patent proceedings
In December 2022, AstraZeneca received a
Paragraph IV notice from an ANDA filer relating
to patents listed in the FDA Orange Book with
reference to
Lynparza
. In February 2023,
in response to the Paragraph IV notice,
AstraZeneca, MSD International Business
GmbH, and the University of Sheffield initiated
ANDA litigation against Natco Pharma Limited
(Natco) in the US District Court for the District
of New Jersey. In the complaint, AstraZeneca
alleged that Natco’s generic version of
Lynparza
,
if approved and marketed, would infringe patents
listed in the FDA Orange Book with reference
to
Lynparza
. No trial date has been scheduled.
In December 2023, AstraZeneca received a
Paragraph IV notice from an ANDA filer relating
to patents listed in the FDA Orange Book
with reference to
Lynparza
. In February 2024,
in response to the Paragraph IV notice,
AstraZeneca, MSD International Business
GmbH, and the University of Sheffield initiated
ANDA litigation against Sandoz Inc. (Sandoz)
in the US District Court for the District of New
Jersey. In the complaint, AstraZeneca alleged
that Sandoz’s generic version of
Lynparza
, if
approved and marketed, would infringe patents
listed in the FDA Orange Book with reference
to
Lynparza
. No trial date has been scheduled.
Soliris
US patent proceedings
In January 2024, Alexion initiated patent
infringement litigation against Samsung
Bioepis Co. Ltd. in the US District Court
for the District of Delaware alleging that
Samsung’s biosimilar eculizumab product,
for which Samsung is currently seeking
FDA approval, will infringe six
Soliris
-related
patents. No trial date has been scheduled.
Five of the six asserted patents are also the
subject of inter partes review proceedings
before the US Patent and Trademark Office.
Tagrisso
Patent proceedings outside the US
In Russia, in August 2023, AstraZeneca filed
lawsuits in the Arbitration Court of the
Moscow Region (Court) against the Ministry
of Health of the Russian Federation and
Axelpharm LLC related to Axelpharm’s
improper use of AstraZeneca’s information
to obtain authorisation to market a generic
version of
Tagrisso
. In December 2023, the
Court dismissed the lawsuit against the
Ministry of Health of the Russian Federation.
In January 2024, AstraZeneca filed an appeal,
which is pending. The lawsuit against
Axelpharm remains pending before the Court.
In Russia, in November 2023, Axelpharm LLC
filed a compulsory licensing action against
AstraZeneca in the Arbitration Court of the
Moscow Region (Court) related to a patent
that covers
Tagrisso
. The lawsuit remains
pending before the Court.
Legal proceedings brought against AstraZeneca
which have been concluded
Movantik
US patent proceedings
AstraZeneca has resolved by settlement
agreement the previously disclosed patent
infringement lawsuit brought by Aether
Therapeutics, Inc. in the US District Court for the
District of Delaware against AstraZeneca, Nektar
Therapeutics and Daiichi Sankyo, Inc., relating
to
Movantik
. This matter is now concluded.
Legal proceedings brought by AstraZeneca
which have been concluded
Symbicort
US patent proceedings
In February 2023, AstraZeneca resolved
by settlement agreement the previously
disclosed ANDA litigations with Mylan
Pharmaceuticals Inc. and Kindeva Drug
Delivery L.P. (together, defendants). In those
actions, AstraZeneca alleged that the
defendants’ generic versions of
Symbicort
,
if approved and marketed, would infringe
various AstraZeneca patents. This matter is
now concluded.
Tagrisso
Patent proceedings outside the US
In Russia, in October 2021, AstraZeneca
filed a lawsuit in the Arbitration Court of the
Moscow Region (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. This matter is now concluded.
Product liability litigation
Legal proceedings brought against AstraZeneca
for which a provision has been taken
Nexium
and
Losec
/
Prilosec
US proceedings
AstraZeneca has been defending lawsuits
brought in federal and state courts involving
claims that plaintiffs have been diagnosed with
various injuries following treatment with proton
pump inhibitors (PPIs), including
Nexium
and
Prilosec
. Most of the lawsuits alleged kidney
injury. In August 2017, the pending federal court
cases were consolidated in a multidistrict
litigation (MDL) proceeding in the US District
Court for the District of New Jersey for
pre-trial purposes. In addition to the MDL
cases, there were cases alleging kidney injury
filed in Delaware and New Jersey state courts.
In addition, AstraZeneca has been defending
lawsuits involving allegations of gastric cancer
following treatment with PPIs, including one
such claim in the US District Court for the
Middle District of Louisiana (Louisiana
District Court).
In October 2023, AstraZeneca resolved all
pending claims in the MDL, as well as all
pending claims in Delaware and New Jersey
state courts, for $425m, for which a provision
has been taken. The only remaining case is
the one pending in the Louisiana District
Court. The Court in that case has postponed
trial, which was previously scheduled to begin
in April 2024. No new trial date has been set.
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
Farxiga
and
Xigduo
XR
US proceedings
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. In September 2023,
the parties resolved by settlement agreement
one case, filed in state court in Minnesota,
previously scheduled for trial in October 2023.
All remaining claims are filed in Delaware state
court and remain pending.
Nexium
and
Losec
/
Prilosec
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 August 2022, the US District
Court for the Eastern District of Kentucky,
presiding over the consolidated federal cases,
granted AstraZeneca’s motion for summary
judgment, which plaintiffs have appealed to
the US Court of Appeals for the Sixth Circuit.
In the California state court proceeding, the
trial court granted summary judgment for
AstraZeneca, which the California appellate
court affirmed. The California Supreme Court
has declined further review, so the California
state court proceeding has concluded.
Commercial litigation
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
340B Antitrust Litigation
US proceedings
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 (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 AstraZeneca’s motion
to dismiss the Complaint. In February 2024,
the District Court denied Plaintiffs’ request to
file a new amended complaint and entered an
order closing the matter.
Anti-Terrorism Act Civil Lawsuit
US proceedings
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 the US District Court for
the District of Columbia (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 to dismiss the lawsuit, which
the DC Circuit Court of Appeals (the Appellate
Court) reversed in January 2022. In February
2023, the Appellate Court denied a request for
en banc review. In June 2023, AstraZeneca
and the other defendants filed a petition for
review by the United States Supreme Court.
Caelum Trade Secrets Litigation
US proceedings
AstraZeneca has been defending a matter
filed by the University of Tennessee Research
Foundation in the US District Court for the
Eastern District of Tennessee (District Court)
related to CAEL-101. In October 2023,
AstraZeneca filed a motion for summary
judgment on all claims and awaits a decision by
the District Court. Trial is currently scheduled
for September 2024.
Definiens
Germany proceedings
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
took place in March 2023 and final post-hearing
written briefs were submitted in June 2023. In
December 2023, the arbitration panel made a
final award of $46.43m in favour of the Sellers.
AstraZeneca is considering its options.
Employment Litigation
US proceedings
In December 2022, AstraZeneca was served
with a lawsuit filed by seven former employees
in the US District Court for the District of
Delaware (District Court) asserting age, religion,
and disability discrimination claims related to
AstraZeneca’s vaccination requirement. In March
2023, AstraZeneca filed a motion to dismiss the
religious and disability discrimination claims and
a motion to strike the class and collective claims.
That motion is fully briefed and the parties are
awaiting a decision by the District Court.
Pay Equity Litigation
US proceedings
AstraZeneca was defending a putative class
and collective action matter in the US District
Court for the Northern District of Illinois (District
Court) brought by three named plaintiffs, who
are former AstraZeneca employees. 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. In January 2023, the District Court granted
AstraZeneca’s motion to dismiss plaintiffs’
complaint. In March 2023, plaintiffs filed a
Second Amended Complaint. AstraZeneca
moved to dismiss the Second Amended
Complaint in April 2023. The motion to dismiss
was denied in October 2023, and the parties
are proceeding with discovery.
Seroquel XR
(Antitrust Litigation)
US proceedings
In 2019, AstraZeneca was named in several
related complaints brought in the US District
Court for the Southern District of New York
(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 to dismiss, 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. Trial is currently
scheduled for May 2025.
Syntimmune
US proceedings
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. A trial was held
in July 2023 and a decision is expected in 2024.
Viela Bio, Inc. Shareholder Litigation
US proceedings
In February 2023, AstraZeneca was served with
a lawsuit filed in Delaware state court against
AstraZeneca and certain officers (collectively,
defendants), on behalf of a putative class
of Viela Bio, Inc. (Viela) shareholders. The
complaint alleges that defendants breached
their fiduciary duty to Viela shareholders in the
course of Viela’s 2021 merger with Horizon
Therapeutics, plc. In May 2023, AstraZeneca
filed a motion to dismiss, which is now fully
briefed and pending before the Court.
Legal proceedings brought by AstraZeneca
considered to be contingent assets
PARP Inhibitor Royalty Dispute
UK proceedings
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 was transferred to the Chancery
Division and a trial took place in March 2023.
In April 2023, the court issued a decision in
AstraZeneca’s favour. GSK has been granted
permission to appeal, and the appellate
hearing was held in January 2024.
Legal proceedings brought against AstraZeneca
which have been concluded
Alexion Shareholder Litigation
US proceedings
In December 2016, putative securities class
action lawsuits were filed in the US District
Court for the District of Connecticut (District
Court) against Alexion and certain officers and
directors (collectively, defendants), on behalf of
purchasers of Alexion publicly traded securities
during the period 30 January 2014 through
26 May 2017. The amended complaint alleged
that defendants engaged in securities fraud,
including by making misrepresentations and
omissions in their 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. The Court granted plaintiffs’ motion
for class certification in April 2023. In August
2023, the parties reached a settlement in
principle of this matter. In September 2023,
the court granted preliminary approval of the
class settlement. A provision was taken in
September 2023. The court granted final
approval of the class settlement in December
2023, and the matter is now concluded.
AZD1222 Securities Litigation
US proceedings
In January 2021, putative securities class action
lawsuits were filed in the US District Court for
the Southern District of New York (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. In May 2023, the US Court of
Appeals for the Second Circuit affirmed the
dismissal. The matter is now concluded.
Portola Shareholder Litigation
US proceedings
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 (collectively, defendants), on
behalf of purchasers of Portola publicly traded
securities during the period 8 January 2019
through 26 February 2020. The operative
complaints alleged 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. In March 2023, the
court granted final approval of the settlement.
The matter is now concluded.
Government investigations/proceedings
Legal proceedings brought against AstraZeneca
considered to be contingent liabilities
340B Qui Tam
US proceedings
In July 2023, AstraZeneca was served with an
unsealed civil lawsuit brought by a qui tam
relator on behalf of the United States, several
states, and the District of Columbia in the
US District Court for the Central District
of California. The complaint alleges that
AstraZeneca violated the US False Claims Act
(FCA) and state-law analogues. In September
2023, AstraZeneca filed a motion to dismiss
the relator’s claims. In response, the relator
filed a First Amended Complaint. In December
2023, AstraZeneca filed a motion to dismiss
the First Amended Complaint.
340B Administrative Proceedings
US proceedings
In September 2023, the Arkansas Insurance
Department sent AstraZeneca an administrative
complaint concerning compliance with
Arkansas’s 340B Statute, which requires
manufacturers to recognize an unlimited number
of contract pharmacies.
Previously disclosed Administrative Dispute
Resolution proceedings against AstraZeneca
remain pending before the US Health Resources
and Services Administration.
Brazilian Tax Assessment Matter
Brazil proceedings
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. In March 2023, the second level of the
administrative courts issued a decision to
remand the matter to the first level of
administrative courts for a determination on
the merits.
Texas Qui Tam
US proceedings
In December 2022, AstraZeneca was served
with an unsealed civil lawsuit brought by qui tam
relators on behalf of the State of Texas in Texas
state court, which alleges that AstraZeneca
engaged in unlawful marketing practices. In
March 2023, AstraZeneca filed a motion to
dismiss and a motion to transfer venue. In
response, relators filed an Amended Petition.
In May 2023, AstraZeneca filed a motion to
dismiss the Amended Petition and renewed its
motion to transfer venue. In September 2023,
the Texas state court denied AstraZeneca’s
motion to transfer venue and motion to dismiss.
Trial is currently scheduled for October 2024.
Turkish Ministry of Health Matter
Turkey proceedings
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 US Foreign Corrupt Practices
Act. 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.
US Congressional Inquiry
US proceedings
In January 2024, AstraZeneca received a letter
from the US Senate Committee on Health,
Education, Labor and Pensions (HELP
Committee) seeking information related to
AstraZeneca’s inhaled Respiratory products.
AstraZeneca intends to cooperate with
the inquiry.
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 continues to cooperate
with this enquiry.
Legal proceedings brought by AstraZeneca
considered to be contingent assets
Inflation Reduction Act Litigation
US proceedings
In August 2023, AstraZeneca filed a lawsuit in
federal court in Delaware challenging aspects
of the drug price negotiation provisions of the
Inflation Reduction Act and the implementing
guidance and regulations promulgated by the
US Department of Health and Human Services.
Louisiana 340B Litigation
US proceedings
In August 2023, AstraZeneca filed a lawsuit
against the State of Louisiana alleging that
the Louisiana’s 340B statute, which requires
manufacturers to recognize an unlimited
number of contract pharmacies, is preempted
on several grounds and violates the Contracts
Clause of the U.S. Constitution. AstraZeneca
and the State of Louisiana have moved for
summary judgment on AstraZeneca’s claims.
Legal proceedings brought against AstraZeneca
which have been concluded
COVID-19 Vaccine Supply and
Manufacturing Inquiries
Brazil proceedings
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. In October 2023, the pending
appeal was dismissed. No further appeal was
made. This matter is now concluded.
Legal proceedings brought by AstraZeneca
which have been concluded
US 340B Litigation
US proceedings
In January 2021, AstraZeneca filed a lawsuit in
the US District Court for the District of Delaware
(District Court) 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. However, in May 2021, prior to the
District Court’s ruling, the US Government
issued new and separate letters to AstraZeneca
(and other companies) asserting that
AstraZeneca’s contract pharmacy policy violates
the 340B statute. AstraZeneca amended the
complaint to include allegations challenging the
letter sent in May 2021, 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’s decision
in AstraZeneca’s favour. Final judgment was
entered in favour of AstraZeneca in May 2023
and this matter is now concluded.
Other
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.
Management does not believe a significant
risk of material change to uncertain tax
positions exists in the next 12 months.
The total net tax liability recognised in the Group
Financial Statements in respect of uncertain
tax positions is $1,336m (2022: $830m; 2021:
$768m). The net tax liability consists of $1,241m
(2022: $632m; 2021: $702m) included within
income tax payable, $441m (2022: $291m;
2021: $(33)m) included within deferred tax
asset, partially offset by $9m (2022: $(20)m;
2021: $(17)m) included within deferred tax
liabilities, and $337m (2022: $113m; 2021:
additional $82m) 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 $401m
(2022: $260m; 2021: $77m). The increase in the
net tax liability for uncertain tax positions relating
to transfer pricing of $141m compared with 2022
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.
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 $386m (2022: $245m;
2021: $48m) including associated interest.
Management believes that it is unlikely that these
additional liabilities will arise. It is possible that
some of these contingencies may change in the
future to reflect progress in tax authority reviews,
to the extent that any tax authority challenge is
concluded or matters lapse including following
expiry of the relevant statutes of limitation
resulting in a reduction in the tax charge in
future periods. 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.
Other uncertain tax treatments
Included in the net tax liability is $935m (2022:
$570m; 2021: $691m) relating to a number of
other uncertain tax treatments. The increase
of $365m in the net tax liability relating to the
other uncertain tax treatments mainly relates
to an update to tax liabilities following progress
of reviews by tax authorities and administrative
appeal processes. The liability includes tax
liabilities in respect of uncertain tax treatments
which are estimated using the most likely
amount method and the expected value method
and depend on AstraZeneca’s assessment of
the likelihood of the approach taken by the tax
authorities. This 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 $293m (2022: $209m;
2021: $273m) including 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.
AstraZeneca does not believe there are any
significant other uncertain tax treatments
where the possibility of the additional liabilities
falling due is more than remote (2022: $280m;
2021: $325m) including associated interest.
The Group is currently under audit in several
countries and the timing of any resolution of
these audits is uncertain.
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
31 Statutory and other information
2023 | 2022 | 2021 | |
$m | $m | $m | |
Fees payable to PricewaterhouseCoopers LLP and its associates: | |||
Group audit fee | 10.2 | 9.9 | 10.5 |
Fees payable to PricewaterhouseCoopers LLP and its associates for other services: | |||
The audit of subsidiaries pursuant to legislation | 15.0 | 15.1 | 15.2 |
Attestation under s404 of Sarbanes-Oxley Act 2002 | 3.3 | 3.1 | 2.0 |
Audit-related assurance services | 1.1 | 0.7 | 4.5 |
Other assurance services | 0.2 | 0.2 | 3.4 |
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 |
30.1 | 29.3 | 35.9 |
$0.7m of fees payable in 2023 are in respect of the Group audit and audit of subsidiaries related to prior years (2022: $0.6m 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.
2023 | 2022 | 2021 | |
$’000 | $’000 | $’000 | |
Short-term employee benefits | 38,636 | 38,632 | 32,985 |
Post-employment benefits | 1,354 | 1,388 | 1,378 |
Share-based payments | 58,242 | 56,297 | 45,234 |
98,232 | 96,317 | 79,597 |
AstraZeneca Annual Report & Form 20-F Information 2023
Financial Statements
210
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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 2023 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 2023.
At 31 December 2023 | Group Interest |
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% |
Olga Cossettini 363, 3° floor, 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% |
A-1120 Wien, Rechte Wienzeile 223 | |
Tür 16.1, 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 |
At 31 December 2023 | Group Interest |
Brazil | |
AstraZeneca do Brasil Limitada | 100% |
Rod. Raposo Tavares, KM 26, 9, Cotia, Brazil | |
Alexion Farmacêutica América Latina | 100% |
Serviços de Administração de Vendas Ltda. | |
Alexion Serviços e Farmacêutica | 100% |
do Brasil Ltda. | |
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 | |
1 | |
AstraZeneca Canada Inc. | 100% |
Suite 5000, 1004 Middlegate Road, | |
Mississanga, ON, L4Y 1M4, Canada | |
Alexion Pharma Canada Corporation | 100% |
1300-1969 ST Upper Water, Halifax, | |
NS, B3J 3R7, Canada | |
Cayman Islands | |
AZ Reinsurance Limited | 100% |
18 Forum Lane, 2nd Floor, Camana Bay, | |
Grand Cayman, P.O. Box 69, Cayman Islands | |
Grey Wolf Merger Sub | 100% |
PO Box 309, Ugland House, Grand Cayman, | |
KY1-1104, 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 | 100% |
(Beijing) Co., Ltd | |
1F, Building No. 4, No. 8 Courtyard, | |
No. 1 Kegu Street, Beijing Economic- | |
Technological Development Area, | |
Beijing 100176, China |
At 31 December 2023 | Group Interest |
AstraZeneca (Guangzhou) Pharmaceutical | 100% |
Co., Ltd | |
Room 406-178, No. 1, Yichuang Street, | |
(China-Singapore Guangzhou Knowledge City) | |
Huangpu District, Guangzhou City, China | |
AstraZeneca Investment Consulting | 100% |
(Wuxi) Co., Ltd | |
Room 808, 8F, Building 99-2 Linghu Avenue, | |
Xinwu District, Wuxi, Jiangsu, China | |
AstraZeneca Pharmaceutical (Hangzhou) | 100% |
Co., Ltd | |
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) | 100% |
Co., Ltd | |
10th Floor, Building 11 (Building E11), No. 366, | |
Hemin Street, Chengdu High-tech Zone, | |
China (Sichuan) Pilot Free Trade Zone, China | |
AstraZeneca Pharmaceutical (Shanghai) | 100% |
Co., Ltd | |
B1F, 8F & 9F, 88 Xizang North Road, | |
Jing’an District, Shanghai, China | |
Alexion Pharmaceuticals (Shanghai) | 100% |
Company Limited | |
Room 702, No. 1539 West Nanjing Road, | |
Jing’an District, Shanghai, China | |
AstraZeneca Pharmaceutical | 100% |
Manufacturing (Qingdao) Co., Ltd. | |
AstraZeneca Pharmaceutical (Qingdao) | 100% |
Co., Ltd. | |
Room 806, Building 2, No. 82 Juxianqiao | |
Road, High-tech Zone, Qingdao City, | |
Shandong Province, 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 No. 115 - 06 /30 Edificio Tierra | |
Firme Oficina 2904 Bogotá 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 |
Group Subsidiaries and Holdings
continued
At 31 December 2023 | Group Interest |
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 | |
Denmark | |
AstraZeneca A/S | 100% |
Johanne Møllers Passage 1, Dk-1799 | |
Copenhagen V, Denmark | |
Egypt | |
AstraZeneca Egypt for Pharmaceutical | 100% |
Industries SAE | |
6th of October City, 6th Industrial Zone, | |
Plot 2, Giza, Egypt | |
AstraZeneca Egypt LLC | 100% |
47 St. 270 New Maadi, 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% |
Keilaranta 18, 02150 Espoo, Finland | |
France | |
AstraZeneca SAS | 100% |
Tour Carpe Diem-31, Place des Corolles, | |
92400 Courbevoie, France | |
AstraZeneca Reims Production SAS | 100% |
Chemin de Vrilly Parc, Industriel de la | |
Pompelle, Reims, 51100, France | |
AstraZeneca Dunkerque Production SCS | 100% |
224 Avenue de la Dordogne, | |
59640 Dunkerque, France | |
Alexion Europe SAS | 100 % |
Alexion Pharma France SAS | 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 | 100% |
2 | |
Pathology GmbH | |
Bernhard-Wicki-Straße 5, 80636, | |
Munich, Germany | |
Alexion Pharma Germany GmbH | 100% |
Landsberger Straße 300, 80687, | |
Munich, Germany |
At 31 December 2023 | Group Interest |
Greece | |
AstraZeneca S.A. | 100% |
Agisilaou 6-8 Marousi, Athens, Greece | |
Hong Kong | |
AstraZeneca Hong Kong Limited | 100% |
Unit 1 – 3, 11/F., China Taiping Finance Centre, | |
18 King Wah Road, North Point, Hong Kong | |
Hungary | |
AstraZeneca Kft | 100% |
1st floor, 4 building B, Alíz str., Budapest, | |
1117, Hungary | |
India | |
3 | |
AstraZeneca India Private Limited | 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 Block Plot 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) | 100% |
Designated Activity Company | |
4th Floor, South Bank House, Barrow Street, | |
Dublin, 4, Republic of Ireland | |
Alexion Pharma Holding Limited | 100% |
Alexion Pharma International | 100% |
Operations Limited | |
Alexion Pharma Development Limited | 100% |
AstraZeneca Ireland 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 |
At 31 December 2023 | Group Interest |
Kazakhstan | |
AstraZeneca Kazakhstan LLP | 100% |
Office 101, 77 Kunayev Street, | |
Almaty 050000, Kazakhstan | |
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 | 100% |
Services Sdn Bhd | |
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, | 100% |
S.A. de C.V. | |
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 - A Col., 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 |
Strategic Report
Corporate Governance
Financial Statements
Additional Information
At 31 December 2023 | Group Interest |
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 200 JB Amsterdam 1097, | |
The Netherlands | |
Alexion Holding B.V. | 100% |
Alexion Pharma Foreign Holdings B.V. | 100% |
Alexion Pharma Netherlands B.V. | 100% |
Prinses Beatrixlaan 582, 5895 BM, | |
The Hague, The Netherlands | |
Neogene Therapeutics B.V. | 100% |
Science Park 106, 1098 XG Amsterdam, | |
The Netherlands | |
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 | 100% |
4 | |
(Private) Limited | |
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 |
At 31 December 2023 | Group Interest |
Portugal | |
Astra Alpha Produtos Farmacêuticos Lda | 100% |
AstraZeneca Produtos Farmacêuticos Lda | 100% |
Novastra Promoção e Comércio | 100% |
Farmacêutico Lda | |
Novastuart Produtos Farmacêuticos Lda | 100% |
Stuart-Produtos Farmacêuticos Lda | 100% |
Zeneca Epsilon – Produtos | 100% |
Farmacêuticos Lda | |
Zenecapharma Produtos Farmacêuticos, | 100% |
Unipessoal Lda | |
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% |
Bucharest, 1A Tipografilor Street, | |
MUSE Offices, 2nd and 3rd Floor, | |
District 1, 013714, 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 | |
Saudi Arabia | |
AstraZeneca Continent – | 100% |
Regional Headquarter | |
Al-Nakhlah Tower, Floor 13th Ath Thumamah | |
Road, Al Sahafa District., P.O. Box 42150, | |
Riyadh, Kingdom of Saudi Arabia | |
AstraZeneca Trading Company | 100% |
125 Prince Sultan, 2086 Ar Rawdah District, | |
23435, Jeddah, Kingdom of Saudi Arabia | |
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 |
At 31 December 2023 | Group Interest |
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 | |
Gangnam Finance Center), | |
Gangnam-gu, Seoul, Republic of Korea | |
Spain | |
AstraZeneca Farmaceutica Holding | 100% |
Spain, S.A. | |
AstraZeneca Farmaceutica Spain S.A. | 100% |
Laboratorio Beta, S.A. | 100% |
Laboratorio Lailan, S.A. | 100% |
Laboratorio Tau, S.A. | 100% |
Fundación AstraZeneca | 100% |
Calle del Puerto de Somport, 21-23, 28050, | |
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% |
5 | |
AstraZeneca Holding Aktiebolag | 100% |
AstraZeneca International Holdings | 100% |
6 | |
Aktiebolag | |
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% |
6 | |
Symbicom Aktiebolag | 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% |
Evinova AG | 100% |
Neuhofstrasse 34, 6340 Baar, Switzerland | |
6 | |
Spirogen Sarl | 100% |
Rue du Grand-Chêne 5, CH-1003 | |
Lausanne, Switzerland | |
Alexion Pharma GmbH | 100% |
Giesshübelstrasse 30, | |
Zürich 8045, Switzerland |
Group Subsidiaries and Holdings
AstraZeneca Annual Report & Form 20-F Information 2023
213
Group Subsidiaries and Holdings
continued
At 31 December 2023 | Group Interest |
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, No. 1, SongZhi Rd, | |
Taipei 11047, Taiwan | |
Thailand | |
AstraZeneca (Thailand) Limited | 100% |
Asia Centre 19th floor, 173/20, | |
South Sathorn Rd, Khwaeng | |
Thungmahamek, Khet Sathorn, | |
Bangkok, 10120, Thailand | |
Tunisia | |
AstraZeneca Tunisie SaRL | 100% |
Lot n°1.5.5 les jardins du lac, | |
bloc B les berges du lac Tunis, Tunisia | |
Turkey | |
AstraZeneca Ilac Sanayi ve Ticaret | 100% |
Limited Sirketi | |
YKB Plaza, B Blok, Kat:3-4, Levent/Besiktas, | |
Istanbul, Turkey | |
Zeneca Ilac Sanayi ve Ticaret | 100% |
Anonim Sirketi | |
Büyükdere Cad., Y.K.B. Plaza, B Blok, Kat:4, | |
Levent/Bes ¸iktas ¸, Istanbul, Turkey | |
Alexion Ilac Ticaret Limited Sirketi | 100% |
Içerenköy Mahellisi Umut SK. and | |
Ofis Sit. No: 10 12/73 Atas ¸ehir, | |
Istanbul 10-12/73, Turkey | |
Ukraine | |
AstraZeneca Ukraina LLC | 100% |
54 Simi Prakhovykh street, Kyiv, | |
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 | |
United Kingdom | |
Ardea Biosciences Limited | 100% |
Arrow Therapeutics Limited | 100% |
Astra Pharmaceuticals Limited | 100% |
6 | |
AstraPharm | 100% |
AstraZeneca China UK Limited | 100% |
AstraZeneca Death In Service | 100% |
Trustee Limited | |
AstraZeneca Employee Share Trust Limited | 100% |
AstraZeneca Finance Limited | 100% |
5 | |
AstraZeneca Intermediate Holdings Limited | 100% |
AstraZeneca Investments Limited | 100% |
AstraZeneca Japan Limited | 100% |
AstraZeneca Nominees Limited | 100% |
AstraZeneca Quest Limited | 100% |
AstraZeneca Share Trust Limited | 100% |
At 31 December 2023 | Group Interest |
AstraZeneca Sweden Investments Limited | 100% |
6 | |
AstraZeneca Treasury Limited | 100% |
AstraZeneca UK Limited | 100% |
5 | |
AstraZeneca US Investments Limited | 100% |
AZENCO2 Limited | 100% |
AZENCO4 Limited | 100% |
Cambridge Antibody Technology | 100% |
Group Limited | |
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 | |
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 | |
Ardea Biosciences, Inc. | 100% |
7 | |
Amylin Ohio LLC | 100% |
7 | |
Amylin Pharmaceuticals, LLC | 100% |
7 | |
AstraZeneca Collaboration Ventures, LLC | 100% |
7 | |
AstraZeneca Finance LLC | 100% |
AstraZeneca Finance and Holdings Inc. | 100% |
8 | |
AstraZeneca Pharmaceuticals LP | 100% |
Atkemix Nine Inc. | 100% |
Atkemix Ten Inc. | 100% |
BMS Holdco, Inc. | 100% |
Cincor Pharma Inc. | 100% |
Corpus Christi Holdings Inc. | 100% |
Isochrone Merger Sub Inc. | 100% |
Neogene Therapeutics, Inc. | 100% |
Omthera Pharmaceuticals, Inc. | 100% |
Optein, Inc. | 100% |
7 | |
Stauffer Management Company LLC | 100% |
Zeneca Holdings Inc. | 100% |
Zeneca Inc. | 100% |
5 | |
Zeneca Wilmington 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 | |
7 | |
AlphaCore Pharma, LLC | 100% |
333 Parkland Plaza, Suite 5, Ann Arbor, | |
MI 48103, United States |
At 31 December 2023 | Group Interest |
AZ-Mont Insurance Company | 100% |
100 Bank Street, Suite 630, Burlington, VT | |
05401, United States | |
7 | |
MedImmune, LLC | 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% |
Alexion US1 LLC | 100% |
Alexion US Holdings LLC | 100% |
LogicBio Therapeutics, Inc. | 100% |
Savoy Therapeutics Corp | 100% |
Syntimmune, Inc. | 100% |
TeneoTwo, Inc. | 100% |
121 Seaport Boulevard, Boston, MA 02210, | |
United States | |
7 | |
Acerta Pharma LLC | 100% |
121 Oyster Point Boulevard, | |
South San Francisco, CA 94080, | |
United States | |
LogicBio Securities Corporation | 100% |
65 Hayden Avenue, Lexington, MA 92421, | |
United States | |
Alexion Holding LLC | 100% |
100 College Street, New Haven, CT 06510, | |
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 |
AstraZeneca Annual Report & Form 20-F Information 2023
Financial Statements
214
Strategic Report
Corporate Governance
Financial Statements
Additional Information
At 31 December 2023 | Group Interest |
Subsidiaries where the effective interest | |
is less than 100% | |
Algeria | |
AstraZeneca Algeria Pharmaceutical | 49% |
Industries SPA | |
N° 20, Micro Zone d’Activité Hydra, | |
Centre des Affaires Dar El Madina, Bloc A, | |
6th Floor, Hydra, Algiers, Algeria | |
China | |
Beijing Falikang Pharmaceutical (China) | 49% |
Co. Ltd | |
No. 69 Fushi Road, Haidian District, Beijing, | |
100143, China | |
India | |
3 | |
AstraZeneca Pharma India Limited | 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 | 50% |
Co., Limited (in liquidation) | |
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 | |
Centus Biotherapeutics Limited | 50% |
(in liquidation) | |
c/o Cork Gully LLP, 40 Villiers Street, | |
London, WC2N 6NJ, United Kingdom | |
Ireland | |
Centus Biotherapeutics Europe Limited | 50% |
(in liquidation) | |
6th Floor, South Bank House, Barrow Street, | |
Dublin 4, Republic of Ireland | |
United States | |
Montrose Chemical Corporation | 50% |
of California | |
Suite 380, 600 Ericksen Ave N/E, | |
Bainbridge Island, United States |
At 31 December 2023 | Group Interest |
Significant Holdings | |
China | |
Dizal (Jiangsu) Pharmaceutical Co., Ltd. | 26.69% |
199 Liangjing Rd, Zhangjiang Hi-Tech Park, | |
Pudong District, Shanghai, 201203, China | |
Wuxi AstraZeneca-CICC Venture Capital | 22.13% |
Partnership (Limited Partnership) | |
Room 808, 8F, Building 99-2 Linghu Avenue, | |
Xinwu District, Wuxi, Jiangsu, 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 | |
Cellectis S.A. | 22.35% |
8, rue de la Croix Jarry, 75013 Paris, France | |
Israel | |
AION Labs Innovation Lab Ltd. | 19.23% |
4 Oppenheimer Street, Building B, Rehovot, | |
7670104, Israel | |
CombinAble.AI Ltd. | 11.25% |
5 Oppenheimer Street, Building B, Rehovot, | |
7670104, Israel | |
TenAces Biosciences Ltd. | 12.50% |
6 Oppenheimer Street, Building B, Rehovot, | |
7670104, Israel | |
Sweden | |
Swedish Orphan Biovitrum AB (publ) | 9.89% |
Tomtebodavägen 23A, Stockholm, Sweden | |
OnDosis AB | 19.90% |
GoCo House, 5 tr, Gemenskapens gata 9, | |
431 53 Mölndal, Sweden | |
CCRM Nordic AB | 19.90% |
CCRM Nordic AB, c/o GU Ventures AB, | |
Erik Dahlbergsgatan 11 A, | |
411 26 Göteborg, Sweden |
At 31 December 2023 | Group Interest |
United Kingdom | |
Niox Group plc | 16.89% |
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 | |
Baergic Bio, Inc. | 19.95% |
1111 Kane Concourse, Suite 301 Bay Harbor | |
Islands, FL 33154, United States | |
Regio Biosciences | 19.54% |
| United States | 668 Stoney Hill Road, #2, Yardley, PA 19067, |
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
Group Subsidiaries and Holdings
AstraZeneca Annual Report & Form 20-F Information 2023
215
at 31 December
AstraZeneca PLC
2023 | 2022 | ||
Notes | $m | $m | |
Fixed assets | |||
Fixed asset investments | 1 | 64,189 | 63,555 |
64,189 | 63,555 | ||
Current assets | |||
Debtors – other | 4 | 4 | |
Debtors – amounts owed by Group undertakings | 10,928 | 2,608 | |
10,932 | 2,612 | ||
Creditors: Amounts falling due within one year | |||
Other payables | 2 | (216) | (194) |
Amounts owed to Group undertakings | 3 | – | (283) |
Interest-bearing loans and borrowings | 3 | (2,995) | (2,648) |
(3,211) | (3,125) | ||
Net current assets/(liabilities) | 7,721 | (513) | |
Total assets less current liabilities | 71,910 | 63,042 | |
Creditors: Amounts falling due after more than one year | |||
Interest-bearing loans and borrowings | 3 | (16,741) | (17,939) |
Other payables | 2 | (21) | (23) |
(16,762) | (17,962) | ||
Net assets | 55,148 | 45,080 | |
Capital and reserves | |||
Called-up share capital | 4 | 388 | 387 |
Share premium account | 35,188 | 35,155 | |
Capital redemption reserve | 153 | 153 | |
Other reserves | 1,779 | 1,927 | |
Profit and loss account | 17,640 | 7,458 | |
Shareholders’ funds | 55,148 | 45,080 |
$m means millions of US dollars.
The Company’s profit for the year was $14,669m (2022: $380m).
The Company Financial Statements from pages 216 to 222 were approved by the Board and were signed on its behalf by
Pascal Soriot
Aradhana Sarin
Director
Director
8 February 2024
Company’s registered number 02723534
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 2022 | 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 |
Total comprehensive income for the period | ||||||
Profit for the period | – | – | – | – | 14,669 | 14,669 |
Total comprehensive income for the period | – | – | – | – | 14,669 | 14,669 |
Transactions with owners, recorded directly in equity | ||||||
Dividends | – | – | – | – | (4,487) | (4,487) |
Capital contributions for share-based payments | – | – | – | (148) | – | (148) |
Issue of Ordinary Shares | 1 | 33 | – | – | – | 34 |
Total contributions by and distributions to owners | 1 | 33 | – | (148) | (4,487) | (4,601) |
At 31 December 2023 | 388 | 35,188 | 153 | 1,779 | 17,640 | 55,148 |
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 2023 is $(62)m (31 December 2022: $86m) in respect of cumulative share-based payment awards, which are not available for distribution.
2
At 31 December 2023, the overwhelming majority of the Profit and loss account reserve of $17,640m (31 December 2022: all of $7,458m) 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 2023, the overwhelming majority
(31 December 2022: all) of the Company’s profit and loss reserves were available for distribution.
Company Accounting Policies
Basis of presentation of
financial information
The Company is a private limited company,
limited by shares, incorporated and domiciled
in England & Wales. The registered address is
1 Francis Crick Avenue, Cambridge Biomedical
Campus, Cambridge, CB2 0AA.
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 148 to 210) 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 liabilities are recognised
unless they arise from the initial recognition
(other than in a business combination) of
assets and liabilities in a transaction that
affects neither the taxable profit nor the
accounting profit. Deferred tax liabilities are
not recognised to the extent they arise from
the initial recognition of non-tax deductible
goodwill. 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.
The Company has applied the exemption
under the IAS 12 ‘Income Taxes’ amendment
for recognising and disclosing information
about deferred tax assets and liabilities related
to top-up income taxes.
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.
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 remeasured at
either amortised cost using the effective
interest 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 interest 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. A provision is made where an
adverse outcome is probable and associated
costs, including related legal costs, can be
estimated reliably. In other cases, appropriate
Company Accounting Policies
219
AstraZeneca Annual Report & Form 20-F Information 2023
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 2022
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
Additions during the year
–
1,588
1,588
Transfer to Debtors – amounts owed by Group undertakings
–
(991)
(991)
Capital reimbursement
(131)
–
(131)
Exchange
–
158
158
Amortisation
–
12
12
Other movements
(2)
–
(2)
At 31 December 2023
49,059
15,130
64,189
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 3. 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 2023, there
have been no credit losses (2022: $nil).
The other movements comprise $2m representing revaluation of carrying value of a guarantee provided to Group companies as explained in
Notes 2 and 3.
2 Other payables
2023
2022
$m
$m
Amounts falling due within one year
Other creditors
214
184
Deferred income
2
3
Amounts owed to Group undertakings
–
7
216
194
Amounts falling due after more than one year
Other creditors
21
23
21
23
Other creditors due after more than one year include an amount representing the carrying 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 2023, the carrying value of the guarantee was $21m (2022: $23m).
220
AstraZeneca Annual Report & Form 20-F Information 2023
Financial Statements
3 Loans and borrowings
Repayment
2023
2022
dates
$m
$m
Amounts due within one year
Amounts owed to Group undertakings (unsecured)
7.2% Loan
US dollars
2023
–
283
Interest-bearing loans and borrowings (unsecured)
0.3% Callable bond
US dollars
2023
–
1,399
Floating rate notes
US dollars
2023
–
400
3.5% Callable bond
US dollars
2023
–
849
0.75% Callable bond
euros
2024
995
–
2024 Floating rate bank loans
US dollars
2024
2,000
–
Total amounts due within one year
2,995
2,931
Amounts due after more than one year
Interest-bearing loans and borrowings (unsecured)
0.75% Callable bond
euros
2024
–
957
2024 Floating rate bank loans
US dollars
2024
–
1,998
3.375% Callable bond
US dollars
2025
1,994
1,992
0.7% Callable bond
US dollars
2026
1,196
1,195
3.625% Callable bond
euros
2027
829
–
3.125% Callable bond
US dollars
2027
747
746
1.25% Callable bond
euros
2028
879
845
4% Callable bond
US dollars
2029
995
995
0.375% Callable bond
euros
2029
881
846
1.375% Callable bond
US dollars
2030
1,294
1,293
5.75% Non-callable bond
pound sterling
2031
444
420
3.75% Callable bond
euros
2032
827
–
6.45% Callable bond
US dollars
2037
2,725
2,724
4% Callable bond
US dollars
2042
989
988
4.375% Callable bond
US dollars
2045
981
981
4.375% Callable bond
US dollars
2048
738
737
2.125% Callable bond
US dollars
2050
487
487
3% Callable bond
US dollars
2051
735
735
Total amounts due after more than one year
16,741
17,939
Total loans and borrowings
19,736
20,870
2023
2022
$m
$m
Loans and borrowings are repayable:
After five years from balance sheet date
11,096
11,051
From two to five years
3,651
3,933
From one to two years
1,994
2,955
Within one year
2,995
2,931
Total unsecured
19,736
20,870
All borrowings are issued with fixed interest rates, with the exception of the $2bn USD 2024 floating rate loans, which transitioned from LIBOR to
a rate based on compounded daily USD Secured Overnight Funding Rate (SOFR) during the year.
In addition, the Company acts as guarantor for bonds issued by its wholly owned subsidiaries, AstraZeneca Finance LLC and AstraZeneca Finance
and Holdings Inc.. AstraZeneca Finance LLC is the issuer of $1,600m 0.700% Notes due 2024, $1,250m 1.200% Notes due 2026, $1,250m 1.750%
Notes due 2028, $1,100m 4.875% Notes due 2028, $650m 4.900% Notes due 2030, $750m 2.250% Notes due 2031, and $500m 4.875% Notes due
2033 (the ‘AstraZeneca Finance Notes’) and AstraZeneca Finance and Holdings Inc., had a $2bn bank loan which was repaid during 2023. Each series
of AstraZeneca Finance Notes has been fully and unconditionally guaranteed by the Company. Each of the guarantees issued 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.
Notes to the Company Financial Statements
221
AstraZeneca Annual Report & Form 20-F Information 2023
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 $nil (2022: $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 (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. In May 2023, the US Court of Appeals for the Second Circuit
affirmed the dismissal. The matter is now concluded.
6 Statutory and other information
The Directors of the Company were paid by another Group company in 2023 and 2022.
7 Subsequent events
There were no material subsequent events.
222
AstraZeneca Annual Report & Form 20-F Information 2023
Financial Statements
Group Financial Record
2019
2020
2021
2022
2023
For the year ended 31 December
$m
$m
$m
$m
$m
Revenue and profits
Product Sales
23,565
25,890
36,541
42,998
43,789
Alliance Revenue
62
190
388
755
1,428
Collaboration Revenue
757
537
488
598
594
Cost of sales
(4,921)
(5,299)
(12,437)
(12,391)
(8,268)
Distribution expense
(339)
(399)
(446)
(536)
(539)
Research and development expense
(6,059)
(5,991)
(9,736)
(9,762)
(10,935)
Selling, general and administrative expense
(11,682)
(11,294)
(15,234)
(18,419)
(19,216)
Other operating income and expense
1,541
1,528
1,492
514
1,340
Operating profit
2,924
5,162
1,056
3,757
8,193
Finance income
172
87
43
95
344
Finance expense
(1,432)
(1,306)
(1,300)
(1,346)
(1,626)
Share of after tax losses in associates and joint ventures
(116)
(27)
(64)
(5)
(12)
Profit/(loss) before tax
1,548
3,916
(265)
2,501
6,899
Taxation
(321)
(772)
380
792
(938)
Profit for the period
1,227
3,144
115
3,293
5,961
Other comprehensive income/(expense) for the period, net of tax
(611)
1,608
(145)
(878)
733
Total comprehensive income/(expense) for the period
616
4,752
(30)
2,415
6,694
Profit attributable to:
Owners of the Parent
1,335
3,196
112
3,288
5,955
Non-controlling interests
(108)
(52)
3
5
6
Earnings per share
Basic earnings per $0.25 Ordinary Share
$1.03
$2.44
$0.08
$2.12
$3.84
Diluted earnings per $0.25 Ordinary Share
$1.03
$2.44
$0.08
$2.11
$3.81
Dividends
$2.80
$2.80
$2.80
$2.90
$2.90
Group Financial Record
223
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Contents
Shareholder information
225
Directors’ Report
227
Sustainability supplementary
information
230
Trade Marks
231
Glossary
232
Cautionary statement regarding
forward-looking statements
236
Additional
Information
224
AstraZeneca Annual Report & Form 20-F Information 2023
Additional Information
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
2023, 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
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 Equiniti 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
adr@equiniti.com
Annual General Meeting (AGM)
The 2024 AGM will be held on 11 April 2024
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 participation 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 participation.
Dividends
Dividend dates for 2024 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.
Financial calendar
Event
Provisional date
Second interim
dividend for 2023
Ex-dividend date
22 February 2024
Record date
23 February 2024
Payment date
25 March 2024
Annual General
Meeting (AGM)
11 April 2024
Announcement of
first quarter results
for 2024
25 April 2024
Announcement of
second quarter and
half-year results for 2024
25 July 2024
First interim
dividend for 2024
Ex-dividend date
8 August 2024
Record date
9 August 2024
Payment date
9 September 2024
Announcement of
third quarter results
for 2024
12 November 2024
Financial year end
31 December 2024
Related party transactions
During the period 1 January 2024 to 31
January 2024, 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 210).
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.
For further information on
dividends declared, see the
Shareholder information
section of our website,
www.astrazeneca.com.
225
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Shareholder information
Shareholder information
Issued share capital, shareholdings and share prices
At 31 December 2023, the Company had 66,385 registered holders of 1,550,162,626 Ordinary Shares. There were 168,456 holders of Ordinary
Shares held under the Euroclear Services Agreement, representing 10.4% of the issued share capital of the Company and 1,595 registered
holders of ADSs, representing 18.7% of the issued share capital of the Company.
Ordinary Shares in issue
2023
2022
2021
Ordinary Shares in issue – millions
At year-end
1,550
1,550
1,549
Weighted average for year
1,549
1,548
1,418
Stock market closing price per Ordinary Share (London Stock Exchange)
Highest (pence)
12294
11440
9444
Lowest (pence)
9900
8282
6794
At year end (pence)
10600
11218
8678
Analysis of shareholdings as a percentage of issued share capital at 31 December
Number of Ordinary Shares
1
2023
%
2022
%
2021
%
1-250
0.3
0.3
0.3
251-500
0.3
0.3
0.3
501-1,000
0.4
0.4
0.4
1,001-5,000
0.5
0.5
0.6
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
11.3
1.1
1.1
Over 1,000,000
85.9
96.1
96.0
1
Includes Euroclear and ADR holdings.
US holdings
At 31 January 2024, the proportion of Ordinary Shares represented by ADSs was 18.7% of the issued share capital of the Company. At 31 January
2024, there were 66,104 registered holders of Ordinary Shares, of which 609 were based in the US and there were 1,588 record holders of ADRs,
of which 1,571 were based in the US.
Exchange controls and other limitations affecting security holders
Other than certain economic sanctions, which may be in force from time to time, 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.
Other than certain economic sanctions, which may be in force from time to time, 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.
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 section on our website,
www.astrazeneca.com.
226
AstraZeneca Annual Report & Form 20-F Information 2023
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 211.
Branches and countries in which the
Group conducts business
In accordance with the Companies Act 2006,
we disclose below countries of our
representative, scientific or branch offices
outside the UK established through various
subsidiaries of the Company:
Algeria, Angola, Costa Rica, Cuba, Denmark,
Egypt, Georgia, Ghana, Jordan, Lebanon,
Norway, Portugal, Romania, Russia, Saudi
Arabia, Serbia, Slovakia, Slovenia, Syria,
Ukraine, United Arab Emirates, the US
and Vietnam.
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 16).
For information on patent expiry dates for key
marketed products, see the Patent Expiries of
Key Marketed Products Supplement on our
website, www.astrazeneca.com/
annualreport2023. 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/annualreport2023.
The financial position of the Group, its cash
flows, liquidity position and borrowing
facilities are described in the Financial Review
from page 58. In addition, Note 28 to the
Financial Statements from page 195 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 178.
Having assessed the Principal Risks and other
matters considered in connection with the
Viability statement on page 55, the Board
considers it appropriate to adopt the going
concern basis of accounting in preparing the
Annual Report and Financial Statements.
Shares
A shareholders’ resolution was passed at the
2023 AGM authorising the Company to
purchase its own shares. The Company did
not purchase any of its own shares in 2023.
On 31 December 2023, the Company did not
hold any shares in treasury.
Rights, preferences and restrictions
attaching to shares
As at 31 December 2023, the Company had
1,550,162,626 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 29 December 2023).
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 2023, 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 192.
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.
During 2023, a further employee benefit
trust was established for the benefit of
employees based in Canada (the Canada
EBT). The trustees of the Canada EBT will not
exercise voting rights attached to shares held
in the Canada EBT.
For more information on shares,
see Issued share capital,
shareholdings and share prices
on page 226.
227
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Directors’ Report
Directors’ Report
Directors’, officers’ and SET shareholdings
At 31 January 2024, 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
804,434
0.05%
Options to purchase securities from
registrant or subsidiaries
(a) At 31 January 2024, options outstanding to
subscribe for Ordinary Shares were:
Number of shares
Subscription
price (pence)
Normal
expiry date
1,176,592
3597-9064
2023-2029
The weighted average subscription price of
options outstanding at 31 January 2024 was
7086 pence. All options were granted under
Company employee share schemes.
(b) None of the options included in paragraph
(a) have been granted to officers of the
Company and SET members.
(c) During 2023, no options were held
by Directors.
During the period 1 January 2024 to
31 January 2024, no Director was granted
or exercised any options.
Distributions to shareholders –
dividends for 2023
Details of our distribution policy are set out
in the Financial Review from page 58 and
Note 28 to the Financial Statements from
page 195.
The Company’s dividend for 2023 of $2.90
(227.8 pence, 30.29 SEK) per Ordinary Share
is estimated to amount to, in aggregate,
a total dividend payment to shareholders of
$4,494 million. Two employee share trusts,
AstraZeneca EBT and AstraZeneca Share
Trust Limited, waived their rights to a dividend
on the Ordinary Shares they hold and instead
received nominal dividends.
Articles of Association
AstraZeneca PLC’s current Articles were
adopted by shareholders at the Company’s
AGM held on 27 April 2023. Any amendment
to the Articles requires the approval of
shareholders by a special resolution at a
general meeting of the Company.
Objects
The Company’s objects are unrestricted.
Directors
The Board has the authority to manage the
business of the Company, for example,
through powers to allot and repurchase its
shares, subject where required to shareholder
resolutions. Subject to certain exceptions,
Directors do not have power to vote at Board
meetings on matters in which they have a
material interest.
The quorum for meetings of the Board is a
majority of the full Board, of whom at least
four must be Non-Executive Directors. In the
absence of a quorum, the Directors do not
have power to determine compensation
arrangements for themselves or any member
of the Board.
The Board may exercise all the powers of
the Company to borrow money. Variation of
these borrowing powers would require the
passing of a special resolution of the
Company’s shareholders.
All Directors must retire from office at the
Company’s AGM each year and may present
themselves for election or re-election.
Directors are not prohibited, upon reaching
a particular age, from submitting themselves
for election or re-election.
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 2023, 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
2021
31 December
2022
31 December
2023
31 January
2024
BlackRock, Inc.
4 December 2009
100,885,181
6.96
6.51
6.51
6.51
6.51
Investor AB
3 April 2019
51,587,810
3.93
3.33
3.33
3.33
3.33
The Capital Group Companies, Inc.
17 July 2018
63,802,495
5.04
4.12
4.12
4.12
4.12
Wellington Management Group LLP
2
21 July 2020
65,120,892
4.96
4.20
4.20
4.20
4.20
Wellington Management Company LLP
2
21 July 2020
65,118,411
4.96
4.20
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 2023 and 31 January 2024.
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.
For more information on dividend
distribution, the AGM and results
announcements, see Financial
calendar on page 225.
For more information on the
Directors, see Board of Directors
on pages 78 and 79.
228
AstraZeneca Annual Report & Form 20-F Information 2023
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
(60%) 237
Women
(40%) 161
Total
398
Senior Executive Team*
Men
(58%) 7
Women
(42%) 5
Total
12
All numbers as at 31 December 2023.
*
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. Individuals on multiple boards
are counted once.
Stakeholder engagement
The discussion on stakeholder engagement
and the impact of these interactions is
contained in Connecting with our
stakeholders from page 84 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 43. Details of some of the employee
share plans are described in the Directors’
Remuneration Report from page 102, and in
Note 29 to the Financial Statements from
page 201. 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 2023, 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. 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 Group.
Political donations
Neither the Company nor its subsidiaries
made any EU political donations or incurred
any EU political expenditure in 2023 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 2024 AGM, similar to that
passed at the 2023 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 2023, the Group’s US
legal entities made contributions amounting
in aggregate to $1,687,650 (2022: $1,316,950)
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 195,
include further information on our use
of financial instruments.
Insurance and indemnities
The Company maintained directors’ and
officers’ liability insurance cover throughout
2023. 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 228.
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
8 February 2024
229
AstraZeneca Annual Report & Form 20-F Information 2023
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:
>
Positively impacting people, society and
the planet see page 5.
>
People and Sustainability, Key
Performance Indicators, see page 15.
>
Bioethics, including Clinical trial
transparency, Research use of human
biological samples and genomic
information, and Animals in research,
see page 36.
>
Healthcare in low- and middle-income
countries, see page 39.
>
Responsible sales and marketing, see
page 39.
>
Anti-bribery and anti-corruption, see
page 39.
>
Responsible supply chain, see page 40.
>
People and Sustainability, see page 43.
>
Human rights, see page 45.
>
Employee relations, see page 45.
>
Workforce safety and health, see page 45.
>
Sustainability, including Overview, Our
approach to sustainability, Governance,
Benchmarking and assurance, and
Sustainability strategy, see page 46.
>
Access to healthcare, including Equitable
access, Affordability and pricing, and
Health system resilience, see page 47.
>
Environmental protection, including
Ambition Zero Carbon, Product
sustainability, and Natural resources,
see page 48.
>
Ethics and transparency, including Code
of Ethics, see page 49.
>
EU Taxonomy Disclosure, see page 50.
>
Task Force on Climate-related Financial
Disclosures Summary Statement, see
pages 51 to 53. See our full TCFD
Statement on our website,
www.astrazeneca.com/annualreport2023.
>
GHG reporting, see this page.
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/
sustainability/resources.html.
GHG reporting
BV
We have reported on all of the emission sources required under the Streamlined Energy and
Carbon Reporting (SECR). 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 2023 to 31 December 2023
1
Tonnes CO
2
e
2023
2022
2021
Emissions from:
Scope 1: Combustion of fuel and operation of facilities
2,5
180,898
237,703
239,468
Scope 2 (Market-based): Electricity (net of market instruments),
heat, steam and cooling purchased for own use
3,5
19,940
18,491
21,135
Scope 2 (Location-based): Electricity, heat, steam and cooling
purchased for own use
3,5
183,332
180,403
189,395
Company’s chosen intensity measurement: Scope 1 + Scope 2
(Market-based) emissions reported above normalised to million
US dollar revenue
4.38
5.78
6.39
Scope 3 Total: Emissions from all 15 GHG Protocol Scope 3 Categories
6,736,878
6,167,415
5,925,850
Scope 3 intensity measurement: Scope 3 emissions from all 15 GHG
Protocol Scope 3 Categories normalised to million US dollar revenue
147.06
139.06
145.41
MegaWatt hours (MWh)
Total energy consumption
4,5
1,511,334
1,568,815
1,667,765
1
Regular review of the data is carried out to ensure accuracy, consistency and reflect major business change. This has led to
changes in data in previous years. The majority of the adjustments made are not material individually, except for (i) Scope 1:
Combustion of fuel and operations facilities, (ii) Scope 2 (Location-based): Electricity, heat, steam and cooling purchased for
own use, (iii) Company’s chosen intensity measurement: Scope 1 + Scope 2 (Market-based) emissions reported above
normalised to million US dollar revenue, as a result of a divestment in manufacturing facility, update to using IPCC AR5
Global Warming Potentials (GWPs) from IPCC AR4 GWPs for calculating process, fugitive and solvent emissions and
reporting of fuel volume in US & EUCAN to represent business activity. Additionally (iv) Total energy consumption data that
has also changed. For (v) most material changes are: Scope 3 Category 1 purchased goods and services (methodology
updated to exclude spend based emissions associated with royalty payments); (vi) Scope 3 Category 8 upstream leased assets
(methodology updated to calculate GHG emissions in leased office space based on internal benchmark for office space energy
consumption from mixed-use space); (vii) Scope 3 Category 11 use of sold products (methodology update to reflect IPCC AR5
GWPs from AR4 GWPs for calculating emissions associated with the patient use of sold inhalation products); and (viii) Scope
3 Category 12 end of life treatment of sold products (methodology updated to reflect GHG emissions accounted for in Scope 3
Category 11 use of sold products and remove double counting of GHG emissions).
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 2023, the
proportion of total global energy and emissions originating from AstraZeneca’s UK and offshore area footprint were as
follows: energy use 295 GWh (20%); Scope 1 site energy and road fleet emissions 28 ktCO
2
e (14%); Scope 2 site imported
energy emissions using Market-based accounting 0 ktCO
2
e (0%) and Scope 2 site imported energy emissions using
Location-based accounting 17 ktCO
2
e (9%). In the period covered by the report AstraZeneca has installed LED lighting,
upgraded chillers, improved controls for heating, ventilation and air conditioning systems, continued improvements for the
combined heat and power plant, and maintained ISO 50001 certification at the Macclesfield facility, UK. At the manufacturing
site in Liverpool, UK new efficient electric steam boilers have been installed.
230
AstraZeneca Annual Report & Form 20-F Information 2023
Additional Information
Sustainability
supplementary information
For more information,
see Environmental protection
from page 48.
For more information, see our
Sustainability Report on our
website, www.astrazeneca.com/
sustainability.
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
Daliresp
Lokelma
Strensiq
Andexxa
Daxas
Lumoxiti
Symbicort
Arimidex
1
Epanova
Lynparza
Symbicort Turbuhaler
Atacand
2
Evusheld
Movantik
Symlin
Atacand HCT
Farxiga
Moventig
Synagis
5
Atacand Plus
2
Fasenra
Nexium
Tagrisso
BCise
Faslodex
Ondexxya
Toprol-XL
Betaloc
Fluenz
Onglyza
Trixeo
Bevespi Aerosphere
FluMist
Orpathys
Trixeo Aerosphere
Breztri
Forxiga
Plendil
3
Truqap
Breztri Aerosphere
Genuair
Prilosec
Turbuhaler
Brilinta
Imfinzi
Pulmicort
Ultomiris
Brilique
Imjudo
Pulmicort Flexhaler
Vaxzevria
Bydureon
Iressa
Qtern
Vimovo
6
Byetta
Kanuma
Saphnelo
Voydeya
Calquence
Kombiglyze
Seloken
Wainua
Casodex
1
Komboglyze
Seroquel
4
Xigduo
Cosudex
Koselugo
Seroquel XR
4
Zoladex
Crestor
Losec
4
Soliris
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 Inc. 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 Group, 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
231
AstraZeneca Annual Report & Form 20-F Information 2023
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
Dominican Republic
Kazakhstan
Panama
Tunisia*
Argentina
Ecuador*
Kuwait
Peru
Turkey
Aruba*
Egypt
Lebanon*
Philippines
Ukraine
Bahamas*
El Salvador
Libya*
Qatar*
United Arab Emirates
Bahrain*
Georgia*
Malaysia
Russia
Uruguay*
Barbados*
Guatemala
Maldives
Saudi Arabia
Uzbekistan
Belarus*
Honduras
Mexico
Singapore
Venezuela*
Brazil
Hong Kong
Mongolia
South Africa
Vietnam*
Brunei
India
Morocco*
South Korea
Yemen*
Cambodia
Indonesia
Nicaragua
Sri Lanka*
Chile
Iran*
Oman*
Sudan*
China
Iraq*
Other Africa*
Taiwan
Colombia
Jamaica*
Pakistan*
Thailand
Costa Rica
Jordan
Palestine*
Trinidad and Tobago*
*
Q3 2023 IQVIA, IQVIA Midas Quantum Q3 2023 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 2023 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 Botswana, Ghana, Kenya, Mauritius, Namibia and Nigeria.
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
232
AstraZeneca Annual Report & Form 20-F Information 2023
Additional Information
Glossary
The following abbreviations and expressions have the meanings given
below when used in this Annual Report:
Acerta
– Acerta Pharma B.V.
ADC(s)
– antibody drug conjugate(s).
ADRs
– American Depositary Receipts.
ADSs
– American Depositary Shares.
AGM
– Annual General Meeting of the Company.
AI
– artificial intelligence.
AKT1
– serine/threonine protein kinase 1.
Alexion
– Alexion Pharmaceuticals, Inc.
Almirall
– Almirall, S.A.
Amgen
– Amgen Inc.
Annual Report
– this Annual Report and Form 20-F Information 2023.
API
– active pharmaceutical ingredient.
Articles
– the Articles of Association of the Company.
Astra
– Astra AB, being the company with whom the Company merged
in 1999.
AstraZeneca
– the Company and its subsidiaries.
ATTR
– Transthyretin amyloidosis.
ATTR-CM
– Transthyretin-mediated amyloid cardiomyopathy.
biologic(s) or biologic medicine(s)
– a class of drugs that are
produced in living cells.
BMS
– Bristol-Myers Squibb Company.
Board
– the Board of Directors of the Company.
BRCA
– BReast CAncer gene.
BRCAm
– BRCA-mutated.
Bureau Veritas
– Bureau Veritas UK Limited.
Capex
– Capital expenditure.
CAR-T
– therapeutic chimeric antigen receptor.
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.
CinCor
– CinCor Pharma, Inc.
CKD
– chronic kidney disease.
Claudin 18.2
– a positive therapeutic target in gastric cancer.
CLL
– chronic lymphocytic leukaemia.
Code of Ethics
– the Group’s Code of Ethics, see page 49.
Company or Parent Company
– AstraZeneca PLC (formerly Zeneca
Group PLC (Zeneca)).
COPD
– chronic obstructive pulmonary disease.
COVID-19
– the official WHO name for the disease caused by the 2019
novel coronavirus.
CRT
– chemoradiotherapy.
CTLA-4
– cytotoxic T-lymphocyte-associated antigen-4.
CV
– cardiovascular.
CVRM
– Cardiovascular, Renal & Metabolism.
Daiichi Sankyo
– Daiichi Sankyo, Inc. or a company within the Daiichi
Sankyo group of companies.
Dato-DXd
– datopotamab deruxtecan.
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.
F-gas
– fluorinated greenhouse gases include: hydrofluorocarbons
(HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).
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.
FRC
– the UK Financial Reporting Council.
FX
– foreign exchange.
GAAP
– Generally Accepted Accounting Principles.
gBRCAm
– germline BRCA1/2 mutations.
GHG
– greenhouse gas.
GIA
– the Group’s Internal Audit function.
Gracell
– Gracell Biotechnologies Inc.
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.
GSK
– GlaxoSmithKline plc.
GWP
– Global Warming Potential.
233
AstraZeneca Annual Report & Form 20-F Information 2023
Corporate Governance
Additional Information
Financial Statements
Strategic Report
Glossary
HCPs
– healthcare professionals.
HER2
– human epidermal growth factor receptor 2.
HF
– heart failure.
HK
– hyperkalaemia.
HRR
– homologous recombination repair.
IAS
– International Accounting Standards.
IASB
– International Accounting Standards Board.
Icosavax
– Icosavax, Inc.
IFN
– interferons.
IFRS
– International Financial Reporting Standards or International
Financial Reporting Standard, as the context requires.
Innate Pharma
– Innate Pharma S.A.
IP
– intellectual property.
IQVIA
– IQVIA Solutions HQ Limited.
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 Assessment.
LCM projects
– significant life-cycle management projects (as
determined by potential revenue generation), or line extensions.
mAb
– monoclonal antibody, a biologic that is specific, meaning it
binds to and modulates one particular antigen.
major market
– US, Europe, Japan and China.
MASH
– metabolic dysfunction-associated steatohepatitis, previously
NASH.
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
– neuromyelitis optica spectrum disorder.
NSCLC
– non-small cell lung cancer.
OECD
– the Organisation for Economic Co-operation and
Development.
operating profit
– sales, less cost of sales, less operating costs, plus
operating income.
Opex
– Operating expenditure.
oPCSK9
– oral proprotein convertase subtilisin/kexin type 9.
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 paediatric extensions).
PARP
– an oral poly (ADP-ribose) polymerase.
PD-1
– programmed cell death protein 1.
PD-L1
– an anti-programmed death-ligand 1.
PFAS
– per- and polyfluoroalkyl substances.
Pfizer
– Pfizer, Inc.
PFS
– progression-free survival. The length of time during and after the
treatment of a disease, such as cancer, that a patient lives with the
disease without it getting worse.
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.
PIK3CA
–
phosphatidylinositol-4,5-bisphosphate 3-kinase, catalytic
subunit alpha.
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.
234
AstraZeneca Annual Report & Form 20-F Information 2023
Additional Information
Glossary
continued
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 a Supplementary Protection Certificate.
PTEN
–
phosphatase and tensin homolog.
Pulse survey
– an AstraZeneca employee opinion survey, which seeks
employees’ views of the business.
PwC
– PricewaterhouseCoopers LLP.
Quell
– Quell Therapeutics, Inc.
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 US.
Redeemable Preference Share
– a redeemable preference share of
£1 each in the share capital of the Company.
RCPs
– Representative Concentration Pathways.
RNA
– ribonucleic acid.
Roche
– F. Hoffmann-La Roche AG.
RoW
– rest of world.
RSV
– respiratory syncytial virus.
Sanofi
– Sanofi S.A./Sanofi Pasteur, Inc.
Sarbanes-Oxley Act
– the US Sarbanes-Oxley Act of 2002.
SBTs
– science-based targets.
sBLA
– supplemental Biologics License Application.
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
– selling, general and administrative expenses.
SLE
– Systemic lupus erythematosus.
siRNA
– small interfering RNA.
Sobi
– Swedish Orphan Biovitrum AB.
SGLT2
–
sodium-glucose cotransporter 2.
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.
T2D
– type 2 diabetes.
TCFD
– Task Force on Climate-related Financial Disclosures.
TCR-T
– T-cell receptor therapies.
Total Revenue
– the sum of Product Sales, Collaboration Revenue and
Alliance Revenue.
Treg
–
T-regulator.
TROP2
– trophoblast cell-surface antigen 2.
TSLP
– thymic stromal lymphopoietin.
TSR
– total shareholder return, being the total return on a share over a
period of time, including dividends reinvested.
uHCC
–
unresectable hepatocellular carcinoma.
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, as amended, 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.
V&I
– Vaccines & Immune Therapies.
VBP
– value-based procurement.
Viela Bio
– Viela Bio, Inc.
WHO
– World Health Organization, the United Nations’ specialised
agency for health.
YTE
– A technology that introduces the so-called YTE (amino acid)
mutation into the antibody, which prolongs the antibody’s half-life.
235
AstraZeneca Annual Report & Form 20-F Information 2023
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 ability of the Group and Icosavax to
complete the transactions contemplated by
the merger agreement with Icosavax,
including the parties’ ability to satisfy the
conditions to the consummation of the
tender offer contemplated thereby and the
other conditions set forth in the merger
agreement with Icosavax
>
the ability of the Group and Gracell to
complete the transactions contemplated by
the merger agreement with Gracell,
including the parties’ ability to satisfy the
conditions set forth in the merger
agreement with Gracell
>
the Group’s statements about the expected
timetable for completing the acquisitions of
Icosavax and Gracell
>
The Group’s and Icosavax’s beliefs and
expectations and statements about the
benefits sought to be achieved in the
Group’s pending acquisition of Icosavax
>
the Group’s and Gracell’s beliefs and
expectations and statements about the
benefits sought to be achieved in the
Group’s proposed acquisition of Gracell
>
the potential effects of the acquisition of
Icosavax on both the Group and Icosavax
and of the acquisition of Gracell on both the
Group and Gracell
>
the possibility of any termination of the
merger agreement with Icosavax or of the
merger agreement with Gracell
>
the expected benefits and success of
IVX-A12 and any combination product or
GC012F and any combination product
>
the possibility that any milestone related to
any contingent value right will not be achieved
the risk of failure or delay in delivery of
pipeline or launch of new medicines
>
the risk of failure to meet regulatory or
ethical requirements for medicine
development or approval
>
the risk of failures or delays in the quality
or execution of the Group’s commercial
strategies
>
the risk of pricing, affordability, access and
competitive pressures
>
the risk of failure to maintain supply
of compliant, quality medicines
>
the risk of illegal trade in our Group’s 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
>
intellectual property-related risks to the
Group’s 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 impact that global and/or geopolitical
events 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
>
the risk of failure in financial control or the
occurrence of fraud
>
the risk of unexpected deterioration in the
Group’s financial position.
Certain of these factors are discussed in more
detail, without limitation, in the Risk
Supplement available on our website,
www.astrazeneca.com/annualreport2023,
and reproduced in AstraZeneca’s Form 20-F
filing for 2023, 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 2023
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 2023; 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 55 countries contained
in the IQVIA database, which amounted to
approximately 94% (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 (TCFD)
Statement, see our website,
www.astrazeneca.com/annualreport2023.
236
AstraZeneca Annual Report & Form 20-F Information 2023
Additional Information
Important information for
readers of this Annual Report
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This Annual Report is also available on our website,
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