ASTRAZENECA OUTLINES STRATEGY TO RETURN TO GROWTH AND ACHIEVE SCIENTIFIC LEADERSHIP

21 March 2013

AstraZeneca will today outline its strategy to return to growth and achieve
scientific leadership. Results of the annual strategy review will be presented
at AstraZeneca’s Investor Day briefing in New York.

Chief Executive Officer, Pascal Soriot said: “AstraZeneca is committed to
delivering great medicines to patients through innovative science and excellence
in development and commercialisation. Our vision is clear – to be a global
biopharmaceutical company with a focused portfolio in core therapy areas,
underpinned by distinctive science and a growing late-stage pipeline, with sound
financials offering attractive returns for investors. We see no case for
diversification.

“In setting out our strategy today, we are making an unambiguous commitment to
concentrate our efforts and resources on our priority growth platforms and our
priority pipeline projects. As we focus, accelerate and transform our business
we know that our success will ultimately be measured by the quality of
execution. I’m confident that we have set out on the right path to return to
growth and achieve scientific leadership, and I’m equally confident that our
people possess the talent, determination and focus to deliver for patients as
well as our shareholders.”

AstraZeneca’s strategic priorities are:

  · Driving our on-market growth platforms to return to growth as we move
through a period of patent expiries and revenue declines;
  · Progressing the Phase II pipeline, that has the potential to double Phase
III asset volume by 2016, and deliver on the promise of our biologics portfolio;
  · Launching a steady flow of specialty care products, balancing the company’s
historic strength in primary care;
  · Rebuilding the R&D engine through innovation and distinctive science
supported by co-location of our teams and better access to globally recognised
science clusters;
  · Dramatically simplifying the business, improving productivity and building a
culture that supports long-term success;
  · Leveraging business development and acquisitions to deliver upside to the
company’s base plan and to strengthen the pipeline further.

At the Investor Day briefing, Pascal Soriot and members of AstraZeneca’s senior
leadership will set out the strategy implementation plan.

Achieving scientific leadership

AstraZeneca is committed to executing a focused innovation-driven global
biopharmaceuticals strategy, exploiting our unique combination of strengths in
large and small molecules, immunotherapies and protein engineering technologies.

Our research and development efforts will be more focused. In large and small
molecule R&D, we will concentrate our scientific efforts and the weight of our
investment, including business development, on three core therapy areas:

  · Respiratory, Inflammation & Autoimmunity
  · Cardiovascular & Metabolic Disease
  · Oncology

We will continue to be active in Infection & Vaccines and in Neuroscience,
though our investments will be more opportunity-driven.

Within our chosen therapy areas, we will tighten our disease focus. This
approach is designed to improve our likelihood of success while allowing us to
meet our goal of funding our growing portfolio of late stage assets on a broadly
flat R&D spend to 2016.

By accelerating development of several new molecular entities (NMEs) we believe
our Phase III pipeline has the potential to double in size by 2016. Acceleration
of these key assets, combined with our ongoing efforts to progress a strong
Phase II biologics pipeline into late stage development, will create a portfolio
more weighted towards specialty care, balancing our traditional strengths in
primary care. We are also increasing our investment in life cycle management to
support key on-market and late stage pipeline products such as Brilinta,
FORXIGATM, BYDUREONTM and lesinurad.

We will transform the way we carry out research and development. To help achieve
sustainable scientific leadership and improve pipeline productivity, we will
reshape our footprint and evolve our operating model. As announced on 18March
2013, we will increase our proximity to bioscience clusters and bring our
research, development and commercial people together in three strategic R&D
centres. These proposals will make it easier for our researchers to collaborate
with external partners and with each other. The creation of autonomous biologics
and small molecules biotech units is designed to improve innovation and
accelerate decision-making. Additionally, we will increase our emphasis on novel
biology and personalised healthcare and we will continue to partner with leading
academic institutions to increase our understanding of disease biology.

Today’s announcements of the collaboration with the Swedish medical university
Karolinska Institutet and the agreement with Moderna Therapeutics underline the
company’s commitment to advance knowledge of disease physiology, assess new drug
targets and apply novel therapeutics in our core therapy areas.

Return to growth

By maximizing the potential of the assets in our hands today we will navigate a
period of revenue decline during which some of our major products are scheduled
to lose exclusivity. Through this organic strategy we will target a return to
growth.

We will focus investment and resources on five key growth platforms:

  · Ensuring Brilinta reaches the patients who can benefit, capturing the multi
-billion dollar potential of this important medicine;
  · Working with our partner, BMS, to achieve a leading position in the non
-insulin diabetes market;
  · Investing to drive growth in our emerging markets, of which China offers the
biggest single opportunity. We are targeting annual high single digit revenue
growth in our emerging markets;
  · Maximising the potential of our on-market respiratory portfolio, which
continues to grow in key markets, and accelerate our pipeline of respiratory
projects;
  · Capturing the potential from our established brands and new launches in
Japan, the world’s second largest pharmaceutical market and one that is showing
steady growth.

Given the number of variables – including the dynamics of the global economy and
government austerity measures, regulatory challenges and pricing pressure
alongside the transition of our own portfolio – we do not think it is meaningful
to provide a specific value or timings for long-term revenues. Based on our
focused investment in key growth platforms and our pipeline, we believe we can
significantly exceed current market consensus for 2018 revenues of $21.5
billion.

Through accelerated business development we will seek to deliver upside to our
base plan while supporting our long-term pipeline aspirations. There will be a
more intense focus to the business development efforts of our small molecule and
biologics biotech units on early stage academic and biotech alliances. We will
continue to in-license to strengthen the pipeline, focusing predominately on the
three core therapy areas, while we will seek partnerships and bolt-on
acquisitions to support the late-stage and on-market portfolio to accelerate
revenues.

Simplification and productivity

Transforming how we work is crucial to delivering our strategy. We are committed
to dramatically simplifying our organisation and our processes, while creating
an innovative environment. Co-location on a more focused footprint will support
that aim, as will increasing autonomy to accelerate and improve decision making.

We will continue to drive productivity improvements across the company, removing
complexity and creating additional headroom to invest in growing our business
and ensuring returns to our shareholders.

Today we are announcing restructuring of our SG&A activities that will lead to a
global reduction in headcount of approximately 2,300. The majority of this
headcount impact is related to programmes under way or already communicated to
affected employees.

We are combining this SG&A restructuring with two previously announced
programmes. These comprise the headcount reduction of 1,600 related to the
proposed R&D footprint changes announced on 18 March 2013, and the balance of
the Phase 3 restructuring programme announced in February 2012, which amounts to
1,150 roles. The total combined Phase 4 programme entails an estimated global
headcount reduction of about 5,050 over the 2013-2016 period.

The combined programme of changes is estimated to incur $2.3 billion in one-time
restructuring charges to the P&L, of which $1.7 billion are expected to be cash
costs. Benefits of approximately $800 million per annum are expected by 2016.

Financial objectives and capital allocation

At the Investor Day briefing, we will lay out our financial objectives and
capital allocation policy, including:

  · Maintaining strong Core pre-R&D margins with a target range of 48% to 52%;
  · An expectation that up to 50% of the post-tax, pre-R&D cashflow from our on
-market portfolio will be reinvested in R&D, external collaborations and in
-licensing, as well as capital investment;
  · A commitment to maintain our progressive dividend policy under which we hold
or grow the dividend per share with a target cover of two times core earnings
over the investment cycle;
  · Allocating the balance of cashflows to fund additional value-creating
business development and bolt-on acquisitions;
  · Returning cash through share repurchases over time if no value-creating
business development opportunities arise.

As previously stated, in adopting a progressive dividend policy, by which the
Board intends to maintain or grow the dividend each year, AstraZeneca’s Board
recognises that some earnings fluctuations are to be expected as the revenue
base transitions through a period of exclusivity losses and new product
launches. The Board’s view is that the annual dividend will not just reflect the
financial performance of a single year taken in isolation, but reflects its view
of the earnings prospects for the Group over the entirety of the investment
cycle.

Long-term incentives
The company is proposing to review its long-term incentive performance metrics
to maximise alignment with the strategy of returning to growth and achieving
scientific leadership. The company’s Remuneration Committee will consult the
Group’s largest investors about its thinking in this area before any long term
incentive awards are made in 2013 and will take those views into account before
reaching its final decision. Further information about new performance metrics
would be made available at the company’s AGM.

– ENDS –

NOTES TO EDITORS

AstraZeneca Investor Day
AstraZeneca’s Investor Day briefing for institutional investors and analysts
will take place from 08:00 EDT/12:00 GMT to 16:00 EST/20:00 GMT. Details of the
webcast and how to access the presentations are available on
www.astrazeneca.com/Investors and info.astrazenecaevents.com.

About AstraZeneca
AstraZeneca is a global, innovation-driven biopharmaceutical business that
focuses on the discovery, development and commercialisation of prescription
medicines, primarily for the treatment of cardiovascular, metabolic,
respiratory, inflammation, autoimmune, oncology, infection and neuroscience
diseases. AstraZeneca operates in over 100 countries and its innovative
medicines are used by millions of patients worldwide. For more information
please visit: www.astrazeneca.com

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