Astrazeneca Plc · LSE:AZN
Astrazeneca — Investor Day (March 2010)
159 slides from Astrazeneca's investor day presentation, Mar 16, 2010
Slide 1: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements Forward-Looking In order, among other things, to utilise the 'safe harbour' provisions of the US Private Securities Litigation Reform Act 1995 1995, we e are pro providing iding the follo following ing ca cautionary tionar statement statement
Slide 2: Emerging Markets Investor Day
Emerging Markets Investor Day y 16 March 2010
Slide 3: Emerging markets forecast to contribute ~70% of pharma growth in next 5 years
Emerging markets are forecast to contribute ~70% of pharma growth in the next 5 years Worldwide pharmaceutical sales $130bn $955bn Emerging Markets 70% $55bn Established Markets 30% $765bn 2009E 2014E Emerging g g markets projected p j to grow g at a 12% CAGR from 2009-2014 1 Emerging markets are al
Slide 4: AZ is the fastest growing of top ten pharmacos in BRIC-MT
AZ is the fastest growing of the top ten global pharmacos in BRIC-MT BRIC MT Top 10 MNCs by 2004–09 Rx sales growth in BRIC-MT1 Value growth, CAGR AstraZeneca significantly outgrows the market 23.2% 23 2% Abbott 20.5% Roche 19.2% Novartis 18.0% Bayer 16.8% J h Johnson & JJohnson h 14 8% 14.8% Sanofi
Slide 5: Goal: double-digit growth, emerging markets ~25% of AZ sales by 2014
Our goal is to continue double-digit growth, with emerging markets becoming ~25% of AZ sales by 2014 AZ emerging g g markets revenue g goal $12bn $8bn $4bn $0bn 2009 2014
Slide 6: Our strategy in emerging markets has three elements
Our strategy in emerging markets has three elements Emerging markets strategy A B C Continue to grow Extending our Broaden portfolio to our presence in geographic foot- selectively include the large BRIC-MT print by increasing branded generics markets our involvement in high-growth small and mid-siz
Slide 7: Agenda
Agenda Session 1 1 How AstraZeneca views emerging g g markets Philip p Burchard 2 AstraZeneca performance to date in Bruno Angelici emerging markets Our historical performance 3 AstraZeneca performance to date in Bruno Angelici emerging markets Drivers of AZ success to date Q&A Break Session 2 4 Str
Slide 8: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity Strong g growth g in pharmaceuticals p demand in emerging markets Opportunities pp in all parts p of the world Profitability attractive and sustainable
Slide 9: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity Strong g growth g in pharmaceuticals p demand in emerging markets Opportunities pp in all parts p of the world Profitability attractive and sustainable
Slide 10: Emerging markets dominate in population and economic growth
Emerging markets dominate both in population and economic growth Nominal GDP % CAGR 04-09 14% Asia 3,450m , Middle East, 12% Africa 1,450m Latin 12% America 550m Eastern ~85% of the world’s population 14% Europe 400m lives in emerging markets W Europe / 4% NA America i 750m All real economic growth
Slide 11: Exploding emerging market middle class
Exploding emerging market ‘middle-class’ BRIC population with household income above $5,000 +21% p.a. 2004 2009 2014E 270 million 900 million 1,864 million Source: Economist Intelligence Unit, 2010, China NSBA, Indian NFHS, RAND, Brazil PNAD
Slide 12: GDP growth drives growth in pharmaceuticals spend
GDP growth drives growth in pharmaceuticals spend United States (off scale) GDP/cap 47,369 Pharma spend/cap 954 Pharma spend per capita US$, 2008 France 700 Japan 600 Spain 500 Germany Italy United 400 Kingdom Emerging 300 markets 200 Turkey Brazil Mexico 100 Russian Chi China Federation 0 India 0 1
Slide 13: Disease burden increasingly driven by non-communicable diseases
The disease burden is increasingly driven by non-communicable non communicable diseases 2008 2008 Disease burden in emerging markets, Pharmaceutical market value in EMs1 disease-adjusted life years (DALYs) 17% 45% 55% Communicable 83% Non-communicable Non-communicable disease accounts for … and an e
Slide 14: Unmet medical need is reaching an unprecedented scale
Unmet medical need is reaching an unprecedented scale Number of diabetics 129m Ages 20-79 India and China 81m 55m g established1 Large 45m 2007 2025 1 US, France, UK, Germany, Italy, Spain & Japan. Source: IDF Diabetes Atlas, 2010
Slide 15: Low diagnosis and treatment rates mean latent demand
Given low rate of diagnosis and treatment, there is huge potential to tap into latent emerging market demand Russia = 1 million patients ~45m Russians have dyslipidaemia today1 …thereof, only 1-2m patients receiving statins ~10m additional patients would have access to statins if treatment levels we
Slide 16: China is investing to improve healthcare coverage and access
China is investing to improve healthcare coverage and access China Population covered increasing … … through 3 schemes ~1,400m 1. UBMI – Urban employees - On average 8% of payroll contributed ( 6% b (~6% by employer) l ) - Up to 400% of annual salary reimbursed according to schedule - $42bn of funds
Slide 17: Other governments also improving healthcare access and coverage
Other governments also have initiatives to improve healthcare access and coverage – examples Russia 100m Saudi Arabia 23m 15m 17m 2006 2015 2006 2015 • Government coverage introduced in 2005, • Expansion in public coverage to include all but limited to vulnerable populations workers (including expat
Slide 18: What coverage looks like in practice
What coverage looks like in practice Mexico China Poland Across Mexico: Employed in Shanghai: Across Poland: • Median annual disposable • Regional average annual • Median annual disposable household income ~$3,000 income ~$3,500 household income ~$6,000 • Drug costs for a branded beta- beta • Total
Slide 19: Emerging markets forecast to contribute ~70% of pharma growth in next 5 years
Emerging markets are forecast to contribute ~70% of pharma growth in the next 5 years Worldwide pharmaceutical sales $130bn $955bn Emerging Markets 70% $55bn Established Markets 30% $765bn 2009E 2014E Emerging g g markets projected p j to grow g at a 12% CAGR from 2009-2014 1 Emerging markets are al
Slide 20: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity Strong g growth g in pharmaceuticals p demand in emerging markets Opportunities pp in all parts p of the world Profitability attractive and sustainable
Slide 21: Local market dynamics vary widely
Local market dynamics vary widely Turkey Extent of medical IIndonesia d i closer to established infrastructure / limited development market levels in much of country country-wide patient access Nature of Mexico insurance Poland largely self-pay “universal” coverage coverage India China relatively si
Slide 22: Opportunity distributed across a large number of markets
The emerging market opportunity is distributed across a large number of markets Emerging g g market p pharma sales,, 2009 Brazil, Russia, Brazil Russia India, India Mexico & Turkey ~$60bn ((~33%) 33%) ~$90bn Small & (~50%) mid-sized EMs ~$30bn (~17%) China There e e is s a lot o more o e than a BRIC
Slide 23: Small and mid-sized markets offer opportunity to build sizeable businesses
Small and mid-sized markets offer the opportunity to build sizeable businesses Example p Latin America (excluding Brazil and Mexico), consists of: • ~25 markets with a total market size of ~$20bn in 2009 • Growing at 10-12%, these could add $11-15bn in absolute growth byy 2014 A large number of smal
Slide 24: Portfolio of markets provides steady, strong growth
While individual markets have ups and downs, the ‘portfolio portfolio of markets markets’ provides steady, steady strong growth Standard deviation of y year-on-year y market g growth rates,, 2003-2009 (%pts) Portfolio of ~20 emerging 2.0 markets Argentina Federation China India Czech Turkey Indonesi
Slide 25: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity Strong g growth g in pharmaceuticals p demand in emerging markets Opportunities pp in all parts p of the world Profitability attractive and sustainable
Slide 26: Brands dominate the market as best proxy for quality
Brands dominate the market as brands are the best proxy for quality Emerging g g market sales1, 2009,, Ex-manufacturer ~$30bn (~17%) ~$180bn ~$50bn (~28%) ~$90bn ( 50%) (~50%) ~$10bn (~5%) Commodity Branded Branded Patented generics generics originals originals Total 1 Across 17 selected markets (Ch
Slide 27: Brand lifecycles are fundamentally different than in established markets
3Brand lifecycles are fundamentally different than in established markets Despite expiry of key patents in most markets, product growth can be sustained Example: Sales by country, % value growth p.a. Brazil – Diprivan China – Losec Turkey – Pulmicort +10% +29% $24m +16% $146m $18m $15 $15m $16m $91m
Slide 28: We see lower pricing in emerging markets
We see lower pricing in emerging markets Indexed volume weighted price, 2009 Branded beta-blockers (excludes fixed-dose combinations) Overall price indexed to EU-51 levels 100 ~50 EU-51 markets Emerging markets2 1 Includes France, Germany, Italy, Spain, UK. 2 Across 12 large emerging markets, all em
Slide 29: Profitability can be attractive if you choose where you compete: China
3However profitability can be attractive if you choose where you compete China Calcium- channel blockers Average unit No. of price premium Pricing Volume Value players in segment High 9% 23% ~18 5-8x Sustained pprice p premiums Medium 22% driven by strong brand 42% ~18 2-4x preference (patented / br
Slide 30: Profitability can be attractive if you choose where you compete: Brazil
3However profitability can be attractive if you choose where you compete Brazil anaesthetics Average unit No. of price premium Pricing Volume Value players in segment High 4% 11% Sustained pprice p premiums Medium 42% ~8 30x driven by strong brand preference (patented / branded originals, branded ge
Slide 31: Lower pricing is partially offset by lower cost
Lower pricing is partially offset by lower cost Fullyy loaded FTE cost for a sales rep p in BRIC-MT Indexed to USA cost, 2008 USA 90-100 EU-51 Brazil 45 55 45-55 Turkey Russia 20-40 Mexico China India 5-15 5 15 1 France, Germany, Italy, Spain, UK. Source: AZ
Slide 32: How this might evolve over the planning period
How this might evolve over the planning period • Several factors are likely y to remain consistent over p planning gpperiod - Stakeholder perceptions of: • high variation in quality of generics • brands convey quality through reputation for manufacturing standards and safety monitoring - Fundamental
Slide 33: Attractive margins in emerging markets
Companies like AstraZeneca can generate attractive margins in emerging markets AZ 2009 pre-R&D operating margin (excluding central costs), indexed to typical established markets 100 72 Typical Typical established emerging markets markets Source:AZ SOURCE: AZ
Slide 34: Our historical performance
Our historical performance
Slide 35: AstraZeneca has been focused on emerging markets
AstraZeneca has been focused on emerging markets We were among g the first to articulate our vision to investors. In 2004, we emphasised: Emerging markets have Clear and focused strategy ANNUAL BUSINESS f emerging for i markets k t REVIEW huge potential for growth Category of market Approach Example
Slide 36: Built a global emerging markets prescription drug business of over $4.4bn
AstraZeneca built a truly global emerging markets prescription drug business of over $4 $4.4bn 4bn 2009 Sales1 Asia-Pacific $1.6bn Latin America $1 1bn $1.1bn CEEMEA2 $1 7bn $1.7bn 1 Actual exchange rate. 2 Central and Eastern Europe, Middle East, and Africa (including Turkey); Source: AZ
Slide 37: AZ is the fastest growing of top ten pharmacos in BRIC-MT
AZ is the fastest growing of the top ten global pharmacos in BRIC-MT BRIC MT Top 10 MNCs by 2004–09 Rx sales growth in BRIC-MT1 Value growth, CAGR AstraZeneca significantly outgrows the market 23.2% 23 2% Abbott 20.5% Roche 19.2% Novartis 18.0% Bayer 16.8% J h Johnson & JJohnson h 14 8% 14.8% Sanofi
Slide 38: BRIC-MT and small and mid-sized markets contributed to growth
Both BRIC-MT and small and mid-sized emerging markets have contributed significantly to our growth Absolute 2004-09 AZ emerging markets sales by brand1 growth CAGR $4.4bn $ $2.5bn $ 18% $3.6bn $ $2 3b $2.3bn $1 2b $1.2bn 16% $1.9bn $ $1.9bn Small and $1.1bn mid-sized mid sized EMs $2 1bn $2.1bn $1 3
Slide 39: Key innovative brands and mature brands played important roles
Our key innovative brands and our mature brand portfolio have played important roles in our success Absolute 2004-09 AZ emerging markets sales by brand1 growth CAGR Brands $4 4b $4.4bn $2 5b $2.5bn 18% $3.6bn $1.7bn $1.3bn 33% $1.2bn Key $1.9bn Examples p innovative $0.4bn brands $2.7bn $1.2bn 13% $
Slide 40: Improving profitability across emerging markets
We have delivered improving profitability across emerging markets AZ 2009 pre-R&D emerging markets operating margin (excluding central costs), t ) indexed i d d tto 2009 margins i iin established t bli h d markets k t 72% 65% Our current emerging markets margins are 55% similar to our Europe busines
Slide 41: Local financial discipline underpins our performance
Local financial discipline underpins our performance The financial discipline p we expect p from our country y leaders… • Pricing discipline - Making price volume decisions that optimise profitability for AZ • Cost discipline - Improving Sales & Marketing effectiveness and efficiency - Ensuring that
Slide 42: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China, the largest Emerging Market opportunity We have been successful at catching up quickly in other markets We have built strong local organisations to successfully y manage g local market dynamics y We support our local organisation
Slide 43: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China, the largest Emerging Market opportunity We have been successful at catching up quickly in other markets We have built strong local organisations to successfully y manage g local market dynamics y We support our local organisation
Slide 44: We invested early in China to capture first-mover advantage
We invested early in China to capture a "first first-mover mover" advantage China Number of sales FTEs in China 2,200 Pfizer (excluding Wyeth) 2,000 Sanofi-Aventis Novartis 1,800 1 600 1,600 1,400 1,200 1,000 800 600 0 2002 03 04 05 06 07 2008 Source: AZ internal analysis
Slide 45: Supported commercial investment with new R&D facilities
And we have supported our commercial investment with new R&D facilities China Rationale to open R&D facilities Shanghai, China1 in emerging markets • Since 2007 • Access to talent • "Innovation Centre China" • Low cost • Focus on translational medicine • Ability to better address local in cancer, a
Slide 46: Leadership position in China
We have captured a leadership position in China China Market share of Rx market, % 2.25 Pfizer Pfizer acquires Sanofi-Aventis Novartis Wyeth – Oct 2009 2.00 1.75 1.50 1.25 1.00 0 2003 04 05 06 07 08 2009 Source: IMS
Slide 47: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China, the largest Emerging Market opportunity We have been successful at catching up quickly in other markets We have built strong local organisations to successfully y manage g local market dynamics y We support our local organisation
Slide 48: Catch-up investment in Romania
Where we have needed to play "catch-up", we have invested effectively Romania We more than tripled our Romanian …enabling sales to almost sales force within 2 years… quadruple S l force Sales f (number ( b off reps)) S l Sales ~ 210 ~$90m ~ 3.5x ~ 4x ~ 60 ~$25m Dec 2006 Dec 2008 2006 2009 Sales rank
Slide 49: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China, the largest Emerging Market opportunity We have been successful at catching up quickly in other markets We have built strong local organisations to successfully y manage g local market dynamics y We support our local organisation
Slide 50: Significant investment with over 14,000 emerging market employees
AZ has invested significantly in emerging markets with over 14,000 14 000 emerging market employees Marketing g Company p y size by y region g in emerging g g markets 2002-09 FTEs ~14,000 +17% ~5 5,000 000 CEEMEA Asia Pac Latin America 2002 2009 Source: AZ Internal
Slide 51: Emerging markets leadership is local and empowered
AstraZeneca emerging markets leadership is local and empowered • Leaders are local with emerging g g markets experience p - ~75% are from the relevant area / market - Average of 6 years of seniority at AZ • Each country maintains an executive team of direct reports across functions • Country leaders
Slide 52: Regional structure enables decision-making close to markets
Our regional structure enables decision-making close to our markets and our customers CEEMEA1 James Ward-Lilley Asia-Pacific Latin at America e ca Ruud Dobber Philip Burchard Our regional leaders are all ex-country leaders with extensive operational experience experience, each managing a business of
Slide 53: Hear from five of our local leaders
You will hear from five of our local leaders today Xudong g Yin Ricardo Alvarez-Tostado Marketing Company President, Marketing Company President, China Mexico Rubens Pedrosa Jerzy y Garlicki Marketing Company President, Marketing Company President, Brazil Poland Maged Gobran Local insight and know-h
Slide 54: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China, the largest Emerging Market opportunity We have been successful at catching up quickly in other markets We have built strong local organisations to successfully y manage g local market dynamics y We support our local organisation
Slide 55: Global commercial capabilities in emerging markets
We bring our global commercial capabilities to bear in emerging markets Marketing Using differentiated insights into customer behaviour to shape our efforts Sales force Effective segmentation and targeting in data poor environments and ability to rapidly build sales force capacity at scale Market ac
Slide 56: Marketing: impact of executing well (Brazil)
Commercial capabilities Marketing: the impact of executing well Brazil AZ invested to gain insight into physician, patient, and caregiver needs • Multiple innovative market research techniques h i used d across B Brazilil AZ recognised the key role of family support pp in reintegrating g g schizophr
Slide 57: Sales force: impact of executing well (Russia)
Commercial capabilities Sales force: The impact of executing well Russia Russia is an extremely data-poor environment with no data on physician prescribing behaviour AstraZeneca doubled its sales force in Russia from 2008 to 2009 • Created a proprietary database and segmentation of physicians • Work
Slide 58: Market access: impact of executing well (Romania)
Commercial capabilities Market access: The impact of executing well Romania AstraZeneca recognised a significant patient segment not receiving adequate treatment for their asthma/COPD AZ invested extensively in Patient Assistance Programmes ahead of Symbicort reimbursement • Patient Assistance Progr
Slide 59: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China, the largest Emerging Market opportunity We have been successful at catching up quickly in other markets We have built strong local organisations to successfully y manage g local market dynamics y We support our local organisation
Slide 60: Diverse portfolio tailored to local needs
Our diverse portfolio has allowed us to tailor our market offering according to local needs Top p5p products,, % of 2009 total in-country y AstraZeneca sales1 Brazil China Poland 15% 18% 23% 15% 16% 19% 12% 14% 18% 10% 8% 6% 8% 8% 6% • The shape and composition of our portfolio varies considerably a
Slide 61: Leadership positions where we play
Across our markets, we have built leadership positions where we play AZ rank in therapeutic p segment g by y country y1, 2009 Ranked 1st, 2nd or 3rd Other position China Brazil Russia Turkey Mexico India MENA2 Poland South Africa 4 1 6 2 1 1 15 1 1 9 3 13 8 13 2 1 2 2 3 2 1 1 4 1 2 2 1 1 1 2 3 3 1 1
Slide 62: Highly successful portfolio of brands
Across emerging markets we have a highly successful portfolio of brands AZ p product sales in emerging g g markets,, 20091 $513m $464m $335m2 $298m $286m $282m $275m $254m $210m 1 Actual exchange rates. 2 Includes sales of AZ branded metoprolol succinate (e.g. Seloken ZOK) and metoprolol tartrate (e
Slide 63: We have a strong platform for future success
Conclusion Emerging g g markets are a sustainable and growing g g opportunity pp y Our key drivers of success will continue to support growth • We were 1st to invest in China • We have been successful at catching up quickly • We have built strong local organisations • Our global capabilities support
Slide 64: Slide 64
Slide 65: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity
Slide 66: Goal: double-digit growth, emerging markets ~25% of AZ sales by 2014
Our goal is to continue double-digit growth, with emerging markets becoming ~25% of AZ sales by 2014 AZ emerging g g markets revenue g goal $12bn $8bn $4bn $0bn 2009 2014
Slide 67: Our strategy in emerging markets has three elements
Our strategy in emerging markets has three elements Emerging markets strategy A B C Continue to grow Extending our Broaden portfolio to our presence in geographic foot- selectively include the large BRIC-MT print by increasing branded generics markets our involvement in high-growth small and mid-siz
Slide 68: Executing our strategy will create double-digit growth
Executing our strategy will create double-digit growth C B A 2009 Growth in Growth in small Branded 2014 BRIC-MT and mid-sized generics markets
Slide 69: We will grow our presence in the largest emerging markets
We will grow our presence in the largest emerging markets A G Grow our strong t portfolio tf li off existing i ti brands b d • Drive increased share Continue to grow • Expand E d our coverage our presence in (geographic, customers & channels) the large BRIC-MT markets Launch AstraZeneca’s highly g y
Slide 70: Pipeline a large source of growth in emerging markets
Our highly relevant pipeline will be a large source of growth in emerging markets Examples Lifecycle management on our core Crestor – JUPITER results innovative brands Seroquel XR Faslodex 500mg Key AZ launches with emerging market relevance Brilinta / Brilique Onglyza Vimovo Dapagliflozin E Emergin
Slide 71: Two of our most important markets
Now let us consider two of our most important markets Xudong Yin Marketing Company President, China China Rubens Pedrosa Marketing Company President, Brazil Brazil
Slide 72: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity
Slide 73: Emerging Markets Investor Day: China
Emerging Markets Investor Day China March 16, 2010
Slide 74: China is the single largest emerging market opportunity
China is the single largest emerging market opportunity China Rx market sales Constant exchange rate ~$80bn +20% ~$30bn Sales rank among world ~$10bn h pharma markets k t … 9th 5th 3d 3rd 2004 2009 2014 … and catching up to 8th 4th 2nd Source: IMS Global Market Prognosis, June 2009
Slide 75: Reasons to believe in sustainable market growth
Reasons to believe in sustainable market growth Economic g growth Growing g health burden and large increases in middle class Healthcare reform driving large Significant expansion expansion of insurance coverage of medical infrastructure
Slide 76: AstraZeneca is the #2 pharma company in China
AstraZeneca is the #2 pharma company in China Rx market share,, 2009,, % 0 0.5 1.0 1.5 2.0 2.5 Pfizer/Wyeth AstraZeneca hospital demand sales in China Bayer grew 31% from 2008 g to 2009, outpacing Sanofi-Aventis market growth Yangzijiang Roche Ke Lun Shandong Qilu Hengrui Novartis Source: IMS
Slide 77: Consistent above-market growth in China
AstraZeneca has seen consistent above-market growth in China AstraZeneca sales in China1 $811m +32% $437m $203 $203m 2004 2007 2009 1 Actual exchange rates. Source: AZ internal data
Slide 78: A strong culture of In China, for China
AstraZeneca: A strong culture of "In In China, China for China China" Yi X Yin Xudong d F d i k Ch Fredrick Chu Sh h Shuhwa Y Yang Marketing Company General Manager Finance, Commercial & President Hong Kong Administration Years with AZ: 7 Years with AZ: 3 Years with AZ: 5 Experience: Sales, Sales Ex
Slide 79: Strong business presence across China
We have a strong business presence across China People Geographic coverage • 2000+ 000 sales sa es reps eps added • 5 Regions eg o s since 2003 • 22 Branches • Rigorous semi-annual • 45 Offices talent review to all 3,000+ employees • Covering 300 cities, with 200 being g the focus • Heavy investment
Slide 80: Investments in manufacturing and R&D
We have supported this with investments in manufacturing and R&D Manufacturing • Additional $10 m invest- ed to increase capacity • New site opened • Further $35m • Plant approved for China • Further in Wuxi following invested to meet and export to EU and $100m investment of growing demand countries
Slide 81: Our strategy going forward
Our strategy going forward Begin to establish leadership Solidify leadership with new in “Broad Market” Drive growth with current products • Capitalise on health core brands • Additional sales force reforms with strategies to • Increasing productivity capacity in top cities reach a greater share of
Slide 82: Boosted growth following NRDL listing
We have successfully boosted growth in the past following NRDL listing Sales 1 NRDL listing Ɩ Ɩ Ɩ Ɩ Ɩ Ɩ Ɩ 2003 04 05 06 07 08 2009 1 Oral formulation. Source: AZ
Slide 83: Our strategy going forward
Our strategy going forward Begin to establish leadership Solidify leadership with new in “Broad Market” Drive growth with current products • Capitalise on health core brands • Additional sales force reforms with strategies to • Increasing productivity capacity in top cities reach a greater share of
Slide 84: Core portfolio has high growth and potential driven by brand loyalty
Our core portfolio has enjoyed high growth and still has high growth potential driven by brand loyalty AZ product growth Segment growth Sales in China 2009* CAGR, 2004-09** CAGR, 2004-09** $146m 19% 32% $130m 22% 25% $117m 24% 26% $66m 73% 32% $65m 34% 30% $62m 55%1 36% $56m 48% 40% $24m 31% 28% $22
Slide 85: Industry leading customer segmentation and targeting
Industry leading customer segmentation and targeting capability enables AZ to continue to increase productivity Proprietary customer insights Industry leading productivity – increasing at >10% a year • We profiled 250,000 doctors out Sales rep productivity 1st half 2009 of 1.3m in China, building a
Slide 86: Expanding coverage into an additional 100 cities
We are expanding our coverage into an additional 100 cities to extend the value of these core brands Core coverage Increasing coverage (~200 cities) (~100 cities) • High frequency visits to doctors • Investing in sales force to increase by sales reps coverage and sales rep frequency Coupled with a h
Slide 87: Success enhanced by newly reimbursed products
AZ China’s success will be enhanced by newly reimbursed products AZ has had success in getting Our products are in large markets reimbursement for four key brands with high growth • Update to National Reimbursement Total market 2009, $m Drug List (NRDL) initiated in 2009 CAGR 04-09 by government 32%
Slide 88: Capabilities to launch new brands in China
AZ has built capabilities to launch our new highly relevant brands in China 1 1-2 2 years after major established markets Pipeline products Segment value1, Patient need 2009 $300 500 $300-500m >100m estimated to have heart disease in China $300-500m 40m diabetics with further 20m pre-diabetic patien
Slide 89: Local insights allow launches with maximum impact
Strong local customer insights allow us to launch new products with maximum impact AZ tailored its Symbicort strategy Symbicort share in China based on China-specific insights Therapeutic segment sales, 2009 • Innovative and proprietary market research approaches across multiple cities and physician
Slide 90: Healthcare reform creating opportunity in the Broad Market
Healthcare reform is creating an opportunity in the “Broad Broad Market” Market The ggovernment is committed to investing g$$125bn to support pp healthcare reform between 2009 and 2011, which includes • $64bn to expand basic healthcare insurance • $38bn to build and upgrade community / rural hospita
Slide 91: Driven by government investment in insurance
In part driven by government investment in insurance Segment size Annual funds collected for insurance $154bn +22% $42bn $21bn UBMI (Urban employed) Population covered 138m 200m 315m +43% $24bn UCMS (Urban residents not $0bn $2bn covered by UBMI) Population covered 0m 117m 300m Government +45% funde
Slide 92: Strategy in the Broad Market
Our strategy in the “Broad Market” will enable us to access more of the market Core coverage Increasingg coverage g Broad Market (~200 cities) (~100 cities) (~360 cities) • High frequency visits to • Investing in sales • AZ exploring best doctors by sales reps force to increase operating model to co
Slide 93: Our aspiration in China
Our aspiration in China • Drive g growth with current core brands • Solidify leadership position in China Rx with new products • Establish profitable leadership position in the broad market
Slide 94: Emerging Markets Investor Day: Brazil
Emerging Markets Investor Day Brazil March 16, 2010
Slide 95: Brazil is a high-growth market with strong fundamentals
Brazil is a high-growth market with strong fundamentals Brazil market sales constant ~$25bn $25b exchange rate 8%+ Growth in the ~$17bn $ prescription (ethical) drug segment is ~$10bn expected to continue to outpace p overall market growth through 2014 Sales rank among world pharma markets … 11th 10
Slide 96: Reasons to believe in sustainable market growth
Reasons to believe in sustainable market growth • GDP-growth g boosting g household incomes and leading to middle class growth • Primarily out out-of-pocket of pocket payment for medicines with patients willing to pay for innovation, quality, and services • Targeted increases in government spend on
Slide 97: GDP growth fuelling expansion of the middle class
GDP growth fuelling expansion of the middle class % of Households 30 15 to 20 million new consumers 20 b became middle iddl class during the last decade 10 2010 2002 0 0 10 20 30 40 50 60 70 Household ouse o d income co e $ '000 Source: Economist Intelligence Unit, 2010
Slide 98: AstraZeneca is #7 multinational pharma company in Brazil
AstraZeneca is the #7 multi-national pharmaceutical company in Brazil but has significantly increased its rank Rx market share, 2009, % Growth rate, Local player 2004-09 % 2004-09, 0 1 2 3 4 5 6 7 8 Novartis 28% EMS 38% Sanofi-Aventis 19% Roche 30% Aché Labs 17% Pfizer 14% Medley 32% Eurofarma 33% A
Slide 99: Consistent above-market growth in Brazil
AstraZeneca has seen consistent above-market growth in Brazil AstraZeneca sales in Brazil1 $457m ~30% 30% p.a. $330m We have grown consistently at twice the market, which averaged 10-12% growth per year $134m over the same period 2004 2007 2009 1 Actual exchange rate. Source: AZ internal
Slide 100: AstraZeneca Brazil has built a strong local organisation
AstraZeneca Brazil has built a strong local organisation Rubens Pedrosa Thomaz Bonatto Sergio Pompilio Jose E. Neves Marketing Company President CFO Legal and Corporate Medical Director Communications Director Years with AZ: 3 Years with AZ: 13 Years with AZ: 12 Years with AZ: 2 Jerson Fibra Jeroen
Slide 101: Our strategy going forward
Our strategy going forward Launch selected branded generics Introduce AstraZeneca’s and local in-licensed new global launch Grow our business in products products public reimbursement Drive share and existing Branded innovative brands Ceftaroline generics Vimovo Dapag- liflozin
Slide 102: Capabilities allow us to continue our momentum
Our capabilities allow us to continue our momentum We have improved our …to boost our sales of Crestor segmentation and targeting… Number of GPs Average details per Crestor sales visited i it d ffor C Crestor t visited i it d GP per year ~9,000 +29% ~120 $67m -25% ~90 90 ~6,500 +208% $22m $ % of all
Slide 103: Successfully entered the growing public segment
We have successfully entered the growing public segment The government is investing to cover …and AZ has already achieved success a limited set of major diseases… positioning products for reimbursement • Coverage for a targeted set of chronic • Positioned Seroquel for public diseases including cance
Slide 104: Pipeline products suited to patient needs in Brazil
Our pipeline products are well-suited for patient needs in Brazil Pipeline products Segment value1, Patient need 2009 $150 200 $150-200m 32% of all deaths in Brazil attributable to cardiovascular disease $250-300m About 8 million people in Brazil have diabetes diabetes. An additional 1.5 million are
Slide 105: Launching locally relevant in-licenses and branded generics
AstraZeneca is also launching locally relevant in- licenses and branded generics Cimzia is an exciting local opportunity We are also launching a selective branded in Brazil generics portfolio… • AstraZeneca in-licensed Cimzia from UCB You will hear more detail on our branded as a Brazil-specific opp
Slide 106: Our aspiration in Brazil
Our aspiration in Brazil • Enter the top 10 in the next 5 years and continue to outgrow the market • Drive increased share in our existing brands - Leverage our strong commercial capabilities - Grow G our targeted t t d access to t public bli reimbursement • Launch AZ’s new brands as well as branded
Slide 107: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity
Slide 108: Our strategy in emerging markets has three elements
Our strategy in emerging markets has three elements A B C Continue to grow Extending our Broaden portfolio to our presence in geographic foot- selectively include the large BRIC-MT print by increasing branded generics markets our involvement in high-growth small and mid-size markets
Slide 109: Beyond BRIC-MT, AZ sees many important markets
Beyond BRIC-MT, AZ sees many important markets 2009 Rx market value Market value CAGR 2004 09 2004-09 GDP per capita, 2009 (PPP) Poland $6.9bn Thailand 7.0% $3.0bn $17,989 14.9% $7,998 $ , Romania $2.8bn Philippines 19.0% $2.3bn $11,755 8.5% Venezuela V l $ $3,536 $4.8bn Algeria 24.2% $2.3bn Indones
Slide 110: Small and mid-sized markets could add $60bn in 5 years
Small and mid-sized markets outside BRIC-MT are material and could add $60bn in the 5 years Emerging g g markets incremental sales forecast 2009-14 +10-12% p.a. ~$150bn ~$90bn If growth continues at historical rates (10-12% (10 12% per annum), small and mid-sized markets will add $60bn in Small and
Slide 111: Upside potential in small and mid-sized markets
We believe we have significant upside potential in small and mid-sized mid sized markets Middle East / North Africa (MENA) Maged Gobran Area Vice President, Middl E Middle East/North /N h AfAfrica i
Slide 112: Emerging Markets Investor Day: Middle East / North Africa
Emerging Markets Investor Day Middle East / North Africa (MENA) March 16, 2010
Slide 113: MENA: a collection of small and mid-sized markets
Middle East & North Africa (MENA) – a collection of small and mid-sized mid sized markets Tunisia Syria Lebanon Iraq q Morocco West Bank Kuwait Jordan Bahrain Algeria Qatar Libya Egypt gyp UAE Oman Saudi Arabia Yemen 17 markets, ~300 million population
Slide 114: Small and mid-sized markets contribute significant growth
Together small and mid-sized markets can contribute significant growth AstraZeneca sales in MENA1 $336m • ~3 times market growth +29% p.a. • Fastest growing pharmaco $210m i MENA in • ~$250m added 2004-09 $95 $95m 2004 2007 2009 1 Actual exchange rates. 17 markets as shown. Source: AZ internal data
Slide 115: Growth in MENA possible with empowered local leaders
Growth in small and mid-sized markets like MENA is possible with empowered local leaders Tarek Rabah Mohamed Makhlouf Mehdi Ferdjioui j President Gulf President Saudi Arabia Country Manager Algeria Lebanese / Canadian Egyptian Algerian Worked in Gulf and Brazil Worked in UAE, Egypt, Worked in Algeri
Slide 116: Our strategy going forward
Our strategy going forward Expand our market coverage Introduce AZ’s new global launch products Example – Algeria Drive share in our currently marketed pportfolio Example p – Saudi Arabia Example – Saudi Arabia
Slide 117: Saudi Arabia is an attractive market with high growth
Saudi Arabia is an attractive market with high growth Saudi Arabia Saudi Arabia Rx market sales Key y growth g drivers • Strong economic fundamentals and natural resource wealth $4.3-5.2bn $4.3 5.2bn • Increasing unmet medical need – especially cardio-metabolic $2.9bn • Growth in private insurance c
Slide 118: Tailored approach to three market segments in Saudi Arabia
In Saudi Arabia, we have tailored our approach to the three different segments of the market Saudi Arabia Traditional focus of AZ Saudi Arabia Expanding our business in Saudi Arabia Private physicians & clinics Institutions Ministry of Health % of market value – 61% % of market value – 22% % of mark
Slide 119: More than doubled our sales in Saudi Arabia
We have more than doubled our sales in Saudi Arabia Saudi Arabia AZ sales in Saudi Arabia $97m +20% $39m 2004 2009 Source: AstraZeneca
Slide 120: Major brands have significant momentum
Our major brands have significant momentum Saudi Arabia Sales in Saudi Arabia of our top brands* AZ product growth Segment growth 2009 CAGR, 2004-09** CAGR, 2004-09** $22 $22m 20% 15% $22m 22% 20% $10m 29% 14% $9m 17% 16% $8m 39%1 19% 1 2005-09 growth. Source: *AstraZeneca **IMS
Slide 121: Pipeline products suited to patient needs across Saudi Arabia
Our pipeline products are well-suited to patient needs across Saudi Arabia Saudi Arabia Pipeline Segment value1, Patient need products 2009 $50 150 $50-150m 30% off d deaths th are related l t d tto h heartt disease or atherosclerosis $100-300m Out of the top 10 countries for diabetes prevalence wor
Slide 122: We have the infrastructure for growth
We have the infrastructure for growth Field force targeting g g Public p payor y teams private market (MoH + Institutions) Portfolio • Strong g momentum in • Almost all p products now current portfolio on formulary • Upcoming line extensions • New global product launches • New global product launche
Slide 123: Algeria is an attractive market with high growth
Algeria is an attractive market with high growth Algeria Algerian g Rx market sales Key y growth g drivers • Large population (~35m) with $3.3–4.0bn $3.3 4.0bn universal health care coverage • Expected 4-5% GDP growth supported by large oil and gas reserves $2.3bn • However, clear government policy
Slide 124: #10 pharma company in Algeria after 3 years
We are the #10 pharma company in Algeria despite opening local organisation only 3 years ago We have built a solid foundation in Algeria today with AZ sales in Algeria a limited portfolio • Established local office 2007 $34m • Launched limited portfolio: - Oncology products - Atacand and Symbicort -
Slide 125: Expanding local presence and launching key products in Algeria
In Algeria we continue to expand our local presence and will be launching key products AZ will now introduce 5-10 of Our products are in large markets its large global brands in the with high growth next 3 years Total market 2009 Brands have seen very strong performance in other markets CAGR 04-09 ~
Slide 126: Expanding local organisation to support product launches
In Algeria we continue to expand our local presence and organisation to support key product launches Supported pp with expanded p Explore p local manufacturing g options p organisation Expected benefits from local Number of reps manufacturing presence • Mitigate risk from import restrictions +200 30
Slide 127: MENA: potential of small and medium sized markets
MENA – an example of the potential of small and medium sized markets medium-sized • Small and mid-size markets can aggregate up to form a material business • We have significant untapped potential in some large markets • We have a portfolio and pipeline that is incredibly relevant to the MENA region
Slide 128: AstraZeneca believes emerging markets are a sustainable opportunity
AstraZeneca believes emerging g g markets are a sustainable opportunity
Slide 129: Our strategy in emerging markets has three elements
Our strategy in emerging markets has three elements A B C Continue to grow Extending our Broaden portfolio to our presence in geographic foot- selectively include the large BRIC-MT print by increasing branded generics markets our involvement in high-growth small and mid-size markets
Slide 130: Brands dominate the market as best proxy for quality
Brands dominate the market as brands are the best proxy for quality Emerging g g market sales1, 2009,, Ex-manufacturer ~$30bn (~17%) ~$180bn ~$50bn (~28%) ~$90bn ( 50%) (~50%) ~$10bn (~5%) Commodity Branded Branded Patented generics generics originals originals Total 1 Projected from 17 selected mar
Slide 131: Why we can succeed in branded generics
Why we believe we can succeed in branded generics We are well p positioned for success / profitability p y • We have the capabilities needed - AstraZeneca is a world leader across emerging and established markets at building brands • We will follow a highly focused branded generics strategy - String
Slide 132: Strategy focused on where we can compete profitably
Our strategy is focused on where we can compete profitably We focus on p products where we can… • Leverage AZ infrastructure, sales force, strength, and presence • Focus on quality as a primary factor in customer product selection • Differentiate our product through dosage, formulation, combinations
Slide 133: Highly selective initial portfolio of ~100 molecules
We have chosen a highly selective initial portfolio of ~100 molecules Molecules to be launched as branded g generics,, number of molecules by TA ~30-40 ~20-30 ~20-30 ~15-25 15 25 ~10-20 ~5-15 CNS CV1 Oncology GI Respiratory Other2 Aligned to areas of AstraZeneca expertise 1 Including Diabetes; 2 Mos
Slide 134: Expanding relationship with Torrent for branded generics
We will expand our relationship with Torrent to support the ramp-up ramp up of our branded generics business • Torrent has a p proven ability y to manufacture to AstraZeneca’s high g standards and a strong track record in a wide range of products • We have a license and supply contract with Torrent
Slide 135: Two examples of our BGx country strategy
Let us show you two examples of our BGx country strategy Jerzy Garlicki Marketing Company President, Poland Poland Ricardo Alvarez-Tostado Marketing Company President, Mexico M i Mexico
Slide 136: Emerging Markets Investor Day: Branded Generics (BGx)
Emerging Markets Investor Day Branded Generics (BGx) March 16, 2010
Slide 137: Poland is a growing market with government as primary payer
Poland is a growing market with the government serving as the primary payer Poland Rx market sales Constant exchange rate ~$10bn ~10% p.a. • Government is the primary i payer ~$7bn • Patients make significant co-pays p y for drugs g listed ~$5bn for reimbursement • Physicians are largest influencers
Slide 138: Consistent above-market growth in Poland
AstraZeneca has seen consistent above-market growth in Poland AstraZeneca sales in Poland1 $133m • AZ currently tl ranked k d ~14% p.a. as #9 MNC in Poland (2009), up from #14 in 2004 • Largest products in Poland $68m are Zoladex, Pulmicort, Seloken and Symbicort • Sales force of 300+ FTEs across ~1
Slide 139: Poland has a large BGx market of ~$4.6bn
Poland has a large BGx market estimated at ~$4.6bn Total Rx sales1, 2009 Branded generics • ~75% of the market 37% by value is branded Commodity andd off-patent ff t t 4% generics • Only 4% of the market Patented 22% % byy value is unbranded originals 37% Branded originals 1 Categorisation based on
Slide 140: Why Poland provides a sustainable BGx market
Why AZ believes Poland provides a sustainable BGx market • Physicians y strongly gyp prefer branded p products;; p preferences unlikely to shift significantly in next 3-5 years • Unprompted switching at pharmacies occurs rarely (<5%) • BGx market expected to grow at 5-6% through 2015 • Branded gener
Slide 141: Initial ~25 molecule portfolio a material uplift for AZ Poland
Our initial product portfolio of ~25 molecules over 2 years will represent a material uplift for AZ Poland Number of Therapy py Area molecules Rationale Anti-infectives Support AZ’s Meronem positioning for hospital tenders AstraZeneca Poland 2014 revenues (%) Cardiovascular Build on AZ’s leadership
Slide 142: Proof of concept in Poland
We have ‘proof of concept’ in Poland Pliva had little success with a generic version …With success coming only after partnering with off T Torasemide… id AZ on a branded b d d generic i • Menarini first launched Trifas in 2000 • By 2006, market underdeveloped with Menarini in Poland underpromoting T
Slide 143: Success of an AstraZeneca promoted branded generic in Poland
Success of an AstraZeneca promoted branded generic in Poland Torasemide sales,, 2004-09,, $m $ Diuver • Diuver is the leader in Trifas Torasemide with 37% sales share in therapeutic AstraZeneca begins segment exclusive promotion of Diuver • Entire Torasemide market has grown >5x since AZ launch • Ha
Slide 144: Emerging Markets Investor Day: Branded Generics (BGx)
Emerging Markets Investor Day Branded Generics (BGx) March 16, 2010
Slide 145: Mexico is a growing market with self-paying patients
Mexico is a growing market with patients typically self paying for medicines self-paying Mexico Rx market sales Constant exchange rate CAGR ~$13bn ~6% • Market primarily patient out-of-pocket t f k t paymentt ~10bn • Government spending on health limited to p poorest ~$7bn populations and social sec
Slide 146: AstraZeneca has been highly successful in Mexico
AstraZeneca has been highly successful in Mexico AstraZeneca sales in Mexico1 • AstraZeneca is the fastest growing of the top 20 companies from 2001 to 2009 moving from rank #17 in $334m 2001 to rank #8 in 2009 • AZ are leaders in key therapeutic $261m segments including: $206m − Losec and Nexium fo
Slide 147: Mexico has highest branded generics prices among large emerging markets
Mexico has the highest prices for branded generics among large Emerging Markets Retail p price comparison p across Emerging g g Markets1, Index Mexico Russia Brazil Poland Turkey 1 Sample size includes 19 large BGx products. Source: IMS; AZ analysis
Slide 148: Initial BGx portfolio a material uplift for AZ Mexico
Using the AZ criteria and approach, our initial BGx portfolio will represent a material uplift for AZ Mexico Number of Th Therapy A Area molecules l l R ti Rationale l Cardiovascular Build on AZ’s leadership in CV Leverage reputation and relationships with GPs, Internal Medicine, and Diabetes Endocr
Slide 149: Example product: diabetes fixed dose combination
Example product Diabetes fixed dose combination Product overview Why AstraZeneca can win • Diabetes product prescribed heavily • AstraZeneca has high recognition with by GPs (~70% of all scripts) and GPs and internists due to strong internists (~20%) primary care brands (e (e.g. g Nexium, Nexium Cre
Slide 150: Positioning branded generics: Mexico oral anti-diabetics
Example product – We understand how to successfully position branded generics Mexico oral anti-diabetics Average unit No. of price premium Pricing Volume Value players in segment High 8% 37% ~16 16 8-10x We can successfully y and profitably position Medium 13% our branded generic anti-diabetic in th
Slide 151: Key takeaways on our branded generics plan
Key takeaways on our branded generics plan • We are taking g a selective approach pp in branded g generics,, focused on the markets and products where we can compete profitably • Our plan will create a material business amounting to 10-15% of our emerging markets business by 2014 • We have the capab
Slide 152: Our strategy in emerging markets has three elements
Our strategy in emerging markets has three elements Emerging markets strategy A B C Continue to grow Extending our Broaden portfolio to our presence in geographic foot- selectively include the large BRIC-MT print by increasing branded generics markets our involvement in high-growth small and mid-siz
Slide 153: Goal: double-digit growth, emerging markets ~25% of AZ sales by 2014
Our goal is to continue double-digit growth, with emerging markets becoming ~25% of AZ sales by 2014 AZ emerging g g markets revenue g goal $12bn $8bn $4bn $0bn 2009 2014
Slide 154: Q&A
Slide 155: Emerging Markets Investor Day
Emerging Markets Investor Day y 16 March 2010
Slide 156: Drivers of AstraZeneca success to date
Drivers of AstraZeneca success to date We were 1st to invest in China,, the largest g Emerging g g Market opportunity pp y We have been successful at catching up quickly in other markets We have built strong local organisations to successfully manage local market dynamics We support our local organi
Slide 157: Our strategy in emerging markets has three elements
Our strategy in emerging markets has three elements Emerging markets strategy A B C Continue to grow Extending our Broaden portfolio to our presence in geographic foot- selectively include the large BRIC-MT print by increasing branded generics markets our involvement in high-growth small and mid-siz
Slide 158: Emerging markets forecast to contribute ~70% of pharma growth in next 5 years
Emerging markets are forecast to contribute ~70% of pharma growth in the next 5 years Worldwide pharmaceutical sales $130bn $955bn Emerging Markets 70% $55bn Established Markets 30% $765bn 2009E 2014E Emerging g g markets projected p j to grow g at a 12% CAGR from 2009-2014 1 Emerging markets are al
Slide 159: Emerging Markets Investor Day
Emerging Markets Investor Day y 16 March 2010