AZN-GLOBAL-Annual Report - FullYear 2006 PDF

ANNUAL AND FORM 20-F
INFORMATION
REPORT 2006
CONTENTS
2006 IN BRIEF 1 FINANCIAL STATEMENTS 19. Reserves 120

CHAIRMANS STATEMENT 2 Preparation of the Financial Statements 20. Minority interests 121
CHIEF EXECUTIVE OFFICERS REVIEW 3 and Directors Responsibilities 96 21. Dividends to shareholders 121
FINANCIAL HIGHLIGHTS 6 Directors Responsibilities for, and Report 22. Acquisitions of
on, Internal Control over Financial business operations 121
DIRECTORS REPORT
Reporting 96
Business review 8 23. Disposal of business operations 123
Auditors Reports on the Financial
> Business environment 9 24. Post-retirement benefits 123
Statements and on Internal Control over
> Strategy 11 Financial Reporting (Sarbanes-Oxley Act 25. Employee costs and share
Section 404) 97 option plans for employees 128
> Our resources, skills
and capabilities 12 Independent Auditors Report to the 26. Commitments and
Members of AstraZeneca PLC (Group) 97 contingent liabilities 133
> Measuring performance 15
Consolidated Income Statement 98 27. Leases 146
> Therapy area review
Consolidated Statement of 28. Statutory and other information 146
Cardiovascular medicines 16
Recognised Income and Expense 98 29. Share capital of parent
Gastrointestinal medicines 20
Consolidated Balance Sheet 99 company 147
Neuroscience medicines 23
Consolidated Cash Flow Statement 100 Principal Subsidiaries 148
Oncology medicines 26
Accounting Policies (Group) 101 Additional Information for US Investors 149
Respiratory and
Notes to the Financial Independent Auditors
Inflammation medicines 29
Statements (Group) Report to the Members of
Infection medicines 32 AstraZeneca PLC (Company) 157
1. Operating profit 104
> Geographic review 33 Company Balance Sheet 158
2. Profit on sale of interest
> Research and development 37 Accounting Policies (Company) 159
in joint venture 104
> Development pipeline table 40 Notes to the Financial
3. Finance income and expense 105
> Portfolio management Statements (Company)
4. Taxation 105
and commercialisation 43 1. Fixed asset investments 160
5. Earnings per $0.25 Ordinary
> Supply 44 2. Other debtors 160
Share 107
> Managing risk 45 3. Non-trade creditors 160
6. Segment information 108
> Corporate responsibility 47 4. Loans 160
7. Property, plant and equipment 110
> People 48 5. Reserves 161
8. Intangible assets 111
> Main facilities 49 6. Reconciliation of movements
9. Other investments 112
> Other businesses 49 in shareholders funds 161
10. Inventories 112
> Industry regulation 50 7. Share capital 161
11. Trade and other receivables 113
> Reporting performance 52 8. Commitments and contingent
12. Cash and cash equivalents 113
> Financial review 53 liabilities 162
13. Interest-bearing loans
Governance 71 9. Statutory and other information 162
and borrowings 113
> Board of Directors 71 GROUP FINANCIAL RECORD IFRS 163
14. Financial risk management
> Corporate governance 75 objectives and policies 114 GROUP FINANCIAL RECORD US GAAP 164
> CEO, SET and delegation 15. Financial instruments 115 SHAREHOLDER INFORMATION 165
of authority 77 16. Trade and other payables 118 RISK FACTORS 172
> Other matters 78 17. Provisions for liabilities ADDITIONAL INFORMATION 177
Board of Directors 80 and charges 119 CROSS-REFERENCE TO FORM 20-F 178
DIRECTORS REMUNERATION REPORT 82 18. Statement of changes in equity 119 GLOSSARY 179
Cautionary statement regarding expectations are based on reasonable assumptions, believes, expects, intends and similar
forward-looking statements any forward-looking statements, by their very nature, expressions in such statements. Important factors
The purpose of this Annual Report and Form 20-F involve risks and uncertainties and may be that could cause actual results to differ materially
Information is to provide information to the members influenced by factors that could cause actual from those contained in forward-looking
of the Company. In order, inter alia, to utilise the outcomes and results to be materially different from statements, certain of which are beyond our control,
safe harbour provisions of the US Private those predicted. The forward-looking statements include, among other things, those factors identified
Securities Litigation Reform Act 1995, we are reflect knowledge and information available at the under the heading Risk Factors on pages 172 to 176
providing the following cautionary statement: This date of the preparation of this Annual Report and of this document. Nothing in this Annual Report and
Annual Report and Form 20-F Information contains Form 20-F Information and the Company Form 20-F Information should be construed as
certain forward-looking statements with respect to undertakes no obligation to update these forward- a profit forecast.
the operations, performance and financial condition looking statements. We identify the forward-looking
of the AstraZeneca Group. Although we believe our statements by using the words anticipates, AstraZeneca PLC 1 February 2007
1
ASTRAZENECA IS ONE OF THE WORLDS LEADING PHARMACEUTICAL COMPANIES, WITH A BROAD

RANGE OF MEDICINES DESIGNED TO FIGHT DISEASE IN IMPORTANT AREAS OF HEALTHCARE.
BACKED BY STRONG SCIENCE AND WIDE-RANGING COMMERCIAL SKILLS, WE ARE COMMITTED
TO SUSTAINABLE DEVELOPMENT OF OUR BUSINESS AND THE DELIVERY OF A FLOW OF NEW
MEDICINES THAT MAKE A DIFFERENCE IN THE LIVES OF PATIENTS AND CREATE VALUE FOR OUR
SHAREHOLDERS AND WIDER SOCIETY.
2006 IN BRIEF
> SALES INCREASED BY 11% TO $26,475 MILLION.
> STRONG PERFORMANCE OF FIVE KEY GROWTH
PRODUCTS (NEXIUM, SEROQUEL, CRESTOR, ARIMIDEX
AND SYMBICORT ) WITH COMBINED SALES REACHING
$13,318 MILLION, UP 23%.
> OPERATING PROFIT INCREASED BY 28% TO
$8,216 MILLION. OPERATING MARGIN IMPROVED
BY 3.8 PERCENTAGE POINTS TO 31.0% OF SALES.
> FREE CASH FLOW OF $6,788 MILLION.
SHAREHOLDER RETURNS TOTALLED $5,382 MILLION
(DIVIDENDS $2,220 MILLION; NET SHARE RE-PURCHASES
$3,162 MILLION).
> DIVIDEND INCREASED BY 32% TO $1.72.
> EPS UP 34% TO $3.86.
> OUR PRODUCT PORTFOLIO NOW INCLUDES 11 MEDICINES
EACH WITH ANNUAL SALES OF MORE THAN $1 BILLION.
> GOOD SALES GROWTH IN ALL REGIONS, WITH THE US
UP 16%, EUROPE UP 6%, JAPAN UP 5% AND REST OF
WORLD UP 11%.
> BETWEEN 1 DECEMBER 2005 AND 31 JANUARY 2007,
THE COMPANY HAS COMPLETED 12 SIGNIFICANT
LICENSING AND ACQUISITION PROJECTS AND NINE
SIGNIFICANT RESEARCH COLLABORATIONS.
2 ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2006
CHAIRMANS STATEMENT
DESPITE A CHALLENGING ENVIRONMENT, STRONG SALES GROWTH OF OUR MAJOR PRODUCTS,

PARTICULARLY OUTSIDE EUROPE, COUPLED WITH OUR DETERMINED PURSUIT OF PRODUCTIVITY
GAINS HAS DELIVERED ANOTHER OUTSTANDING FINANCIAL PERFORMANCE.
In 2006, Group sales totalled $26.5 billion alliances and acquisitions. The strategy John Varley, Group Chief Executive of
(up 11%) with an operating profit of $8.2 billion review gave full consideration to overall global Barclays Bank plc, was appointed to the
(up 28%). Our R&D investment increased this trends of continued growth in demand for Board in July, and his extensive commercial
year in absolute terms and as a percentage of improved healthcare; an ageing population, and financial expertise is already bringing
sales from $3.4 billion to $3.9 billion, reflecting undiagnosed and unmet medical needs; considerable benefit to our work. John has
our firm commitment to building the platform economic development in emerging markets; joined the Remuneration Committee and he
for future growth. That investment is focused sustained downward pressure on prices will become Chairman of that Committee when
on life-cycle management of our key marketed for medicines and ever-more demanding Sir Peter Bonfield steps down from the Board
products, developing new products with regulatory requirements. at the 2007 AGM. At that time it is also intended
an emphasis on efficiency and effectiveness that Michele Hooper, who has been a Non-
improvements, and intelligent acquisition David Brennan has completed his first year Executive Director of AstraZeneca PLC since
and licensing of products and technologies as our Chief Executive Officer, and you will 2003, will become the Senior Independent
that will supplement our internal efforts. see his review of AstraZenecas performance Director in succession to Sir Peter.
Major investments were also announced during during that period, the strategic direction
the year in new R&D facilities that will support and his vision for the future in the following Dame Bridget Ogilvie, FRS retired at the 2006
this strategy, notably in the UK and China. section of this report. With his distinctive AGM after over nine years service as a Non-
leadership style and strong focus on Executive Director, and I would like to thank
Whilst AstraZenecas share price fluctuated individual accountabilities at all levels within her warmly on behalf of the Board for her
during the year, earnings per share grew by the Company, he has been quick to make sustained contribution to both AstraZeneca
34% from $2.91 in 2005 to $3.86 in 2006. his mark. I thank him, his colleagues on the and, before that, Zeneca.
This reflects the strong growth from our Senior Executive Team and all our employees,
products and careful management of our costs. including those who have recently joined the In 2007, we will strive to continue to meet the
The Board has recommended a second AstraZeneca family through acquisition, for needs of patients, reward shareholders and
interim dividend of $1.23 (63.0 pence, their contribution this year. benefit wider society by strengthening our
SEK 8.60) per Ordinary Share bringing the pipeline, driving top-line sales growth and
total dividend for the year to $1.72 (89.6 pence, In addition to its review of strategy, the Board making further productivity improvements,
SEK 12.20), an increase of 32%. The buy- as part of its regular cycle of meetings also as well as understanding and influencing the
back programmes approved by our conducted financial and business reviews changing business environment in which we
shareholders at our Annual General Meeting as well as functional reviews, which this year and our stakeholders operate. You can hear
(AGM), under which we return cash to paid particular attention to risk assessment, more about the Companys strategy from
shareholders in excess of our anticipated compliance, human resources, and safety, David Brennan in the section that follows.
requirements for future investment, amounted health and environmental issues. More about David and his management team have my
to $4,147 million in 2006. We are targeting these issues is provided elsewhere in this and the Boards unqualified support for the
net share re-purchases for 2007 of $4 billion. report and also in the Corporate Responsibility steps they are taking to address the challenges
Summary Report 2006. that AstraZeneca and our industry are facing.
On page 90 we report on our total
shareholder return relative to the FTSE 100 There were a number of changes to the
and to a group of our industry peers. Non-Executive composition of the Board
during the year. Professor Dame Nancy
The Board conducted its annual formal strategy Rothwell was elected at the 2006 AGM.
review and reinforced our commitment to the Dame Nancy is currently Vice President for LOUIS SCHWEITZER
delivery of sustained revenue growth through Research at the University of Manchester in Chairman
an R&D model that delivers new science the UK and as one of the leading scientists
and innovative products through in-house of her generation she brings a valuable
capabilities and external partnerships, perspective to our discussions.
3
CHIEF EXECUTIVE OFFICERS REVIEW
AFTER MY FIRST YEAR AS CHIEF EXECUTIVE OFFICER, I AM DELIGHTED TO INTRODUCE AN ANNUAL

REPORT THAT NOT ONLY RECORDS OUR STRONG FINANCIAL PERFORMANCE DURING 2006 BUT ALSO
DEMONSTRATES OUR COMMITMENT TO OVERCOMING THE CHALLENGES THAT WE AND OUR
INDUSTRY FACE IN AN EVER-TOUGHER ENVIRONMENT AND TO CONTINUING TO DELIVER A
PERFORMANCE THAT WILL PLACE US AMONG THE BEST IN THE INDUSTRY.
AstraZeneca is a successful, research-based, PATIENTS, PRODUCTS, PEOPLE With sales of $1.5 billion, up 29% from last
prescription pharmaceutical business. AND PERFORMANCE year, Arimidex is now the leading hormonal
We bring benefit for patients and add value Our business objectives are focused on four breast cancer therapy in the US, Japan and
for our shareholders and wider society through core areas patients, products, people and France. This continued growth is largely based
innovation and the responsible delivery of performance that we believe are core on results from the ATAC study, which showed
medicines in important areas of healthcare. drivers of success in delivering our strategy. Arimidex to be superior to tamoxifen in the
five years after surgery, when the risk of the
The demand for healthcare continues to To bring the most benefit for patients and cancer recurring is at its highest. In June,
grow. People are living longer, populations those who treat them, we must continue to following approval through mutual recognition
are increasing and the emergence of new understand what makes a difference for for a new use, many patients in Europe
economies means that the number of patients them and apply that insight across all of currently receiving tamoxifen can now be
who can benefit from medicines is expanding. our activities to ensure we remain targeted switched to Arimidex.
At the same time, many diseases remain under- on their changing needs. For the future,
diagnosed, sub-optimally treated or do not have we recognise that sustainable long-term Crestor, our highly effective treatment for
effective therapies. Alongside these significant success depends on further strengthening managing cholesterol levels, achieved sales
opportunities for AstraZeneca to make a the flow of new products whether from our of over $2 billion, an increase of 59% over last
difference, we face some tough challenges own laboratories or from outside AstraZeneca. year. Data from two clinical studies (ORION in
including growing pressure on the price of our The continued commitment and energy of 2005 and ASTEROID in 2006) demonstrated
marketed products, higher costs and regulatory our people is vital, and we aim to provide the strong potential for Crestor in the treatment
hurdles for the development of new ones and leadership and support they need to deliver of atherosclerosis. The METEOR study has
an increasingly competitive marketplace, their best contribution to achieving our also now been completed, and the results will
including earlier challenges to our patents. business goals. By keeping our promises in be presented in March 2007. The METEOR
all aspects of our business, and effectively study forms the basis of a submission for an
Our strategy for achieving sustained, industry- managing the associated opportunities and atherosclerosis label made to the Food
leading growth within this environment centres risks, we aim to drive a performance that will and Drug Administration (FDA) and in the
on three key priorities: place us among the best in the industry. EU through the Mutual Recognition
Procedure in January 2007. ASTEROID
> Strengthening our pipeline of new OUR YEAR IN BRIEF and ORION were included in the submission
medicines, from our own research 2006 saw some good progress. The Company as supportive studies.
laboratories and by accessing scientific delivered excellent financial results, with strong
innovation outside AstraZeneca; sales growth of 11%, enhanced by our Nexium, our treatment for acid-related
continued commitment to improve productivity diseases, achieved sales of $5.2 billion.
> Delivering the full potential of all our across the business. During the year, we gained approval for the
marketed medicines, through rigorous additional use of Nexium in children aged
life-cycle management, excellent customer Product performance 12-17 years with gastro-oesophageal reflux
support; and In the short to medium term, our growth is disease, and for a new use in treating patients
expected to continue to be driven by five with the rare gastric acid disorder, Zollinger
> Challenging our cost structure to make key products, launched over the last 12 years Ellison Syndrome.
room for further investment in R&D and Arimidex, Crestor, Nexium, Seroquel and
externalisation, while increasing access Symbicort. In 2006, these five key growth Seroquel, with sales of $3.4 billion, further
to our medicines. products together delivered sales of strengthened its position as the market-leading
$13.3 billion, up 23% from last year, and atypical anti-psychotic therapy in the US and
overall sales of all our products, including our continued to grow strongly elsewhere. Already
successful mature brands such as Casodex, used for the treatment of schizophrenia and
Zoladex, Seloken/Toprol-XL, Zomig, Diprivan bipolar mania, we gained approval during the
and Merrem, totalled $26.5 billion. year in the US for its use in bipolar depression.
Seroquel is the first and only single-agent
medication approved for both mania and
depression in bipolar disorder.
CHIEF EXECUTIVE OFFICERS REVIEW CONTINUED
In December, the European Patent Office As we continue to focus on managing such for cardiovascular disease. You can read
ruled that one of the European substance challenges and building on our leading more about these and the other compounds
patents for Nexium would be rejected. Both positions in established markets, we are also in the therapy area review (pages 16 to 32)
Nexium and Seroquel continue to be the increasing our strength in fast-developing and in our development pipeline table on
subject of patent litigation in the US following markets, such as China. During the year, pages 40 to 42.
the filing of Abbreviated New Drug Applications we announced a $100 million R&D investment
in 2005 and 2006. AstraZeneca continues to over the next three years in China, which Accessing external innovation
have confidence in the intellectual property reflects our commitment to building our Our commitment to keeping up the pace
portfolio protecting Nexium and Seroquel presence in this important market. As part of externalisation to further strengthen our
and will defend and enforce its intellectual of this, I was pleased to hold in 2006 the first pipeline is reflected in our establishment of
property rights protecting both products. AstraZeneca Senior Executive Team meeting a new Strategic Planning and Business
in that country. Development function, dedicated to finding
Symbicort achieved global sales of $1.2 billion the best opportunities available and delivering
in 2006, up 18%. During the year, it was Strengthening our pipeline high quality deal execution and alliance
approved in the US in a pressurised Metered There are three linchpins in our strategy to management capabilities. In January 2007,
Dose Inhaler for maintenance treatment of strengthen the pipeline. First, improve the we made a significant step in strengthening
asthma in patients aged 12 years and above. productivity of our own in-house discovery our late-stage pipeline when we announced
We continue to plan for a US launch for and development efforts. Second, continue a collaboration with Bristol-Myers Squibb
Symbicort around the middle of 2007, although to increase the pace with which we evaluate Company (BMS) to develop and commercialise
achieving this launch timeline is dependent and acquire promising projects from external two late-stage compounds, discovered by
upon successful transfer of technology from sources. This is not a short-term stopgap BMS, being studied for the treatment of Type
development to manufacturing and completion to backfill the pipeline. It represents an 2 diabetes an area of high unmet medical
of validation batches. In addition, Symbicort important change in mindset. We are making need. Together with other recent successes,
SMART was approved for use in adults a long-term commitment to step up our such as the alliance with Schering AG to
through the EU Mutual Recognition Procedure. access to the world of scientific innovation co-develop and jointly commercialise a
that resides outside AstraZeneca. The third novel breast cancer treatment and the
You can read more about our product element is our commitment to establishing collaboration with Abbott to co-develop and
performance in other sections of this report. AstraZeneca as a major international market a combination treatment for mixed
presence in biopharmaceuticals. dyslipidaemia, it also indicates the progress
In our markets we have already made towards becoming
The growing demand for healthcare means Enhancing in-house discovery a preferred partner.
increasing pressure on the budgets of and development
governments and others who pay for it. During 2006, we continued our drive to Building our biopharmaceuticals presence
We must manage the associated downward improve the efficiency of our internal R&D Biopharmaceuticals medicines derived from
pressure on the price of our products, whilst processes and the effectiveness of our biological molecules have been the fastest-
continuing to invest in providing medicines decision-making so that we can quickly growing segment of the pharmaceuticals
that make a difference. During 2006, pricing eliminate weaker drug candidates and market in recent years. While AstraZenecas
pressure was particularly strong in Europe, concentrate on the robust, rapid progress of science base already possessed some
where governments continue to introduce the ones most likely to succeed as significant discovery and development capabilities for
cost-containment measures such as jumbo advances in healthcare. We also reviewed our new biological medicines, our historic strength
reference pricing in Germany. In the US, still disease target areas and re-focused our has been centred on small molecules. We need
the worlds largest pharmaceutical market, effort to ensure our scientific resources are to strengthen our capacity to attack new
the Democratic gains in the mid-term election prioritised on those areas where we believe disease targets with small molecules and
may signal further changes to the pricing our skills can make the most difference and biologicals in an integrated fashion, across
environment in that country. You can read where the largest opportunities lie. all our therapy areas. Our acquisition of
more about this in the Geographic Review Cambridge Antibody Technology Group plc
and Price Regulation sections (pages 33 The results of our drive to improve productivity (CAT) was a significant step towards achieving
and 50). are reflected in the sustained size of the this aim. CATs skills in biopharmaceuticals
early development portfolio. During 2006, complement our own expertise in small
21 candidate drugs were selected for molecule science, and provide a foundation
development (compared with 25 in 2005 and for building a future pipeline of new products
18 in 2004). We have a number of compounds from both areas of research. We anticipate that
in the later stages of development including from 2010 onwards, one in four AstraZeneca
Zactima and Recentin (formerly AZD2171) for candidate drugs eligible for full development
treating cancer, and AGI-1067 and AZD6140 will be biologicals.
CHIEF EXECUTIVE OFFICERS REVIEW 5
These efforts will strengthen our long-term Strengthening the pipeline remains our top
sustainability and help us to withstand the priority. However, we will also continue to
impact of some of the setbacks that we challenge all elements of our business to drive
experienced with our pipeline this year. In productivity and provide for the increased
February 2006, we withdrew our anti- investment to support achievement of our
coagulant, Exanta, from the market and strategic objectives. As part of this, in
halted its development on patient safety February 2007, we announced further plans
grounds. We also stopped late-stage to improve the efficiency and effectiveness of
development of Galida, our potential our supply organisation, which will involve
diabetes therapy, and NXY-059, a potential reductions to the workforce. Decisions such
treatment for stroke, because they were not as these are not taken lightly and I am very
demonstrating sufficient patient benefit. aware of the impact this will have on the
Whilst such decisions are disappointing to people affected and the communities in
make, they are an indication of the challenges which we operate. The reductions will be
associated with delivering a new medicine the subject of a full consultation process
and reflect our commitment to patient safety with works councils, trade unions and other
and to maintaining a portfolio of only the employee representatives, and in accordance
highest quality, highest potential candidates. with local labour laws, to ensure the process
is fair and transparent.
Throughout all of these activities, maintaining
our fundamental commitment to corporate I am confident that, with strong leadership,
responsibility (CR) remains a top priority. More clear direction and a sense of urgency
information about our CR commitment, policies around delivery, we have a sound platform
and performance in this area is available in for continued success. Above all, my aim is
our separate Corporate Responsibility to deliver sustained, profitable and responsibly
Summary Report 2006 or on our website. managed growth while ensuring that
AstraZeneca continues to make a valuable
THE PEOPLE OF ASTRAZENECA contribution to global healthcare.
In my first year as CEO, I have visited
many areas of AstraZeneca and have been
consistently impressed with the skills, creativity
and professionalism of our people around
the world. They are our most valuable asset,
and without their continued commitment to DAVID R BRENNAN
achieving our goals we would not succeed. Chief Executive Officer
I would like to take this opportunity to thank
them for their hard work and contribution to
driving the continued success of the Company.
LOOKING FORWARD
The pharmaceutical industry operates in an
increasingly tough environment. We know
that, to continue to be successful in this
environment, we must recognise and
manage the challenges and actively exploit
the many opportunities that rising demand
for healthcare and advances in science and
technology offer.
FINANCIAL HIGHLIGHTS
SALES $M PRODUCT PERFORMANCE HIGHLIGHTS $M

GROWTH1
NEXIUM +12% PULMICORT +11%
06 26,475 +11% 06 5,182 06 1,292
05 4,633 05 1,162
05 23,950 +10% 04 3,883 04 1,050
SEROQUEL +24% CASODEX +9%
04 21,426 +9% 06 3,416 06 1,206

05 2,761 05 1,123
04 2,027 04 1,012
CRESTOR +59% SYMBICORT +18%
OPERATING PROFIT $M 1 06 2,028 06 1,184
GROWTH
05 1,268 05 1,006
06 8,216 +28% 04 908 04 797
ARIMIDEX +29% ATACAND +14%
05 6,502 +39% 06 1,508 06 1,110
05 1,181 05 974
04 4,547 +12% 04 811 04 879
SELOKEN/TOPROL-XL +3% ZOLADEX +1%
06 1,795 06 1,008
05 1,735 05 1,004
PROFIT $M 04 1,387 04 917
GROWTH1
06 LOSEC/PRILOSEC -16% MERREM +19%
8,543 +29%
06 1,371 06 604
8,543
05 1,652 05 505
05 04 1,947 04 423
6,667 +41%
6,667
04
4,844 +13% R&D INVESTMENT $M SG&A $M
GROWTH1 GROWTH1
4,625
06 3,902 +16% 06 9,096 +5%
PROFIT BEFORE TAX
PROFIT BEFORE EXCEPTIONAL ITEMS
05 3,379 -4% 05 8,695 +4%

EARNINGS PER ORDINARY SHARE $
GROWTH1
04 3,467 +6% 04 8,268 +6%
06
3.86 +34%
3.86
05
2.91 +41% FREE CASH FLOW2 $M RETURNS TO SHAREHOLDERS
DIVIDENDS AND SHARE RE-PURCHASES $M
2.91
06 6,788 06 6,367
04
2.18 +14%
2.01 05 6,052 05 4,718
EARNINGS PER SHARE AFTER EXCEPTIONAL ITEMS
EARNINGS PER SHARE BEFORE EXCEPTIONAL ITEMS
04 3,932 04 3,590
1
Growth rates represent underlying performance,
which shows growth at constant exchange rates (CER)
by excluding the effects of exchange rate movements.
DIVIDEND FOR 2006
Underlying CER growth is calculated by retranslating
the current year performance at the previous years $ Pence SEK Payment date
exchange rates and adjusting for other exchange effects, First interim dividend 0.49 26.6 3.60 18 September 2006
including hedging.
Second interim dividend 1.23 63.0 8.60 19 March 2007
2
Free cash flow represents net cash flows before
financing activities, and is calculated as: net cash inflow Total 1.72 89.6 12.20
before financing activities, adjusted for acquisitions of
businesses, movements in short term investments and
fixed deposits and disposal of intangible assets.
DIRECTORS
REPORT
BUSINESS REVIEW
ASTRAZENECA IN BRIEF INTRODUCTION CONTENTS

In this section, we have applied the best Business environment 9
> WE DISCOVER, DEVELOP, practice principles of an operating and financial
MANUFACTURE AND MARKET Growing demand for healthcare 9
review and discuss the main trends and factors
PRESCRIPTION PHARMACEUTICALS underlying the development, performance
World markets 9
FOR IMPORTANT AREAS OF and position of AstraZeneca during 2006. Therapy areas 9
HEALTHCARE: CARDIOVASCULAR,
Growing challenges for industry 10
GASTROINTESTINAL, NEUROSCIENCE, To that end, we provide in this business review
ONCOLOGY, RESPIRATORY AND Strategy 11
an overview of AstraZenecas business
INFLAMMATION,AND INFECTION. Our resources, skills and capabilities 12
environment and information about our
> BROAD PRODUCT RANGE, INCLUDING research, development, manufacturing and Our medicines 12
MANY WORLD LEADERS AND sales and marketing activities worldwide, Our research & development 13
A NUMBER OF KEY GROWTH including our 2006 performance in these Our people 13
PRODUCTS: ARIMIDEX, CRESTOR, areas, as seen through the eyes of the Board.
Risk management 14
NEXIUM, SEROQUEL AND SYMBICORT.
We describe the external environment in which Reputation and responsibility 14
> ACTIVE IN OVER 100 COUNTRIES WITH we operate, including the opportunities and Measuring performance 15
GROWING PRESENCE IN IMPORTANT challenges, the market for pharmaceuticals,
EMERGING MARKETS; CORPORATE Therapy area review 16
the competitive and regulatory environment,
OFFICE IN LONDON, UK; MAJOR R&D Cardiovascular medicines 16
and the principal risks and uncertainties.
SITES IN SWEDEN,THE UK AND THE US. Gastrointestinal medicines 20
> OVER 66,000 EMPLOYEES (58% IN We describe our strategy for managing the Neuroscience medicines 23
EUROPE, 27% IN THE AMERICAS opportunities and challenges of our business Oncology medicines 26
AND 15% IN ASIA, AFRICA environment, the resources that we bring
Respiratory and Inflammation medicines 29
AND AUSTRALASIA). to bear and how they are aligned to create
value through achievement of our strategic Infection medicines 32
> AROUND 12,000 PEOPLE AT 16 R&D
objectives, and likely future developments in Geographic review 33
CENTRES IN 8 COUNTRIES.
our business. We also highlight the importance Research and development 37
> 27 MANUFACTURING SITES IN of leadership, effective decision-making and
Pipeline strategy 37
19 COUNTRIES. risk management.
Discovery research 38
> WE SPEND OVER $16 MILLION EACH
Finally, we explain how our progress towards Development 39
WORKING DAY ON DISCOVERING AND
achievement of our objectives is measured. Externalisation 39
DEVELOPING NEW MEDICINES.
Development pipeline table 40
In the therapy area, geographic and financial
reviews, we report on our financial performance Portfolio management and
during 2006 at a global level, in different commercialisation 43
geographic areas and at a product level. Supply 44
We also report in detail on the progress of our Managing risk 45
pipeline and developments in relation to our
Corporate responsibility 47
marketed products (such as new indications,
regulatory filings and clinical trial data). People 48
Main facilities 49
Other businesses 49
Aptium Oncology 49
Astra Tech 49
Industry regulation 50
Product regulation 50
Price regulation 50
Reporting performance 52
Financial review 53
DIRECTORS REPORT 9
Business Review
BUSINESS ENVIRONMENT
AS A GLOBAL, RESEARCH-BASED PHARMACEUTICAL and diabetes (market value $20 billion). High
blood pressure and abnormal levels of blood
COMPANY, WE OPERATE IN AN EVER-CHANGING ENVIRONMENT cholesterol are well known to damage the
THAT PRESENTS BOTH OPPORTUNITIES AND CHALLENGES FOR arterial wall and thereby to lead to
atherosclerosis. The most important and
OUR BUSINESS. frequent manifestations of atherosclerosis
are heart attacks and stroke. Diabetes is
GROWING DEMAND FOR HEALTHCARE Japan is the second largest country for associated with an increased risk for a
There remains a strong fundamental demand pharmaceutical sales at $57 billion (10% of number of serious, sometimes life-
for healthcare that underpins the industrys worldwide sales), with growth of 1% in 2006 threatening complications, including heart
future growth prospects. Specific elements declining from 7% growth in 2005. This was attack, stroke, blindness, kidney disease,
that contribute to this include: largely due to the biennial price revisions nervous system disease and amputations.
enforced by the Japanese Ministry of Health, Heart disease death rates among adults with
> The growing number of people who Labour and Welfare. diabetes are two-to-four times higher than
expect high standards of healthcare, the rates for adults without diabetes. In the
especially among the elderly, who Europe accounts for 29% of the world market US, 21 million people suffer from diabetes
represent a rising proportion of developed and growth slowed to 5% in 2006 (from 6% in and two in five people with diabetes still have
nations populations; and 2005). Growth among major markets within poor cholesterol control, one in three have
Europe ranged from 0% in Belgium to 7% in poor blood pressure control and one in five
> Many diseases are under-diagnosed, Spain, with large countries such as Germany, have poor glucose control.
sub-optimally treated or do not have France and the UK showing growth of 3%,
effective therapies. 4% and 3%, respectively. Gastrointestinal (GI)
The world GI market is valued at $35 billion,
The growing demand for healthcare will be Asia Pacific and Latin America account for 7% of which the proton pump inhibitor market
met not only by existing therapies but also and 4%, respectively, of worldwide sales. represents $23 billion. In the West (ie Europe
by new ones originating from advances in the Notable growth from countries in these regions and North America combined), according to
understanding of the biology of disease and in 2006 came from China (sales of $10.4 billion, different estimates between 10% and 20% of
the application of new technologies. Innovative growth of 13%), Brazil (sales of $8.6 billion, adults suffer from gastro-oesophageal reflux
new products have been launched by the growth of 14%), Korea (sales of $8.3 billion, disease (GERD). The prevalence rate of GERD
industry in recent years, which are changing growth of 13%) and India (sales of $5.4 billion, in Asia is lower but increasing.
therapeutic approaches and are improving growth of 13%), which ranked 9th, 10th, 11th
quality of life for patients. and 15th respectively in world markets. Neuroscience
The world market value in this therapy area
In addition, fast-developing economies such THERAPY AREAS is $108 billion. It comprises psychiatry (market
as China and India are expanding the number According to the World Health Organization value $49 billion), neurology (market value
of patients who can benefit from medicines. (WHO), the greatest burden of disease is in $30 billion), analgesia (market value $25 billion)
This represents a significant opportunity for non-communicable disease. Conditions such and anaesthesia (market value $4 billion).
the industry. as malignant tumours, ischaemic heart disease, The medical need continues to be significant
cerebrovascular disease, chronic obstructive in all of these areas, and at AstraZeneca we
WORLD MARKETS pulmonary disease (COPD), schizophrenia, are targeting areas where new therapies can
The world pharmaceutical market in 2006 bipolar disorder and asthma are significant make a real difference:
was valued at $574 billion. This represents contributors. However, communicable
an increase in constant US dollar terms of 6% diseases are also increasing, due primarily > Depression and anxiety disorders remain
over the previous year, which is lower than in to HIV/AIDS and tuberculosis. under-diagnosed and under-treated, with
2005 (when growth was 7%). The US is by far 15% of the population suffering from major
the largest pharmaceutical market in the world, AstraZenecas skills, experience and resources depression on at least one occasion in
accounting for $267 billion of sales (47% of are focused on the following therapy areas, their lives, schizophrenia affecting around
the worldwide total). US growth rose to 7% which together represent a significant 1% of the population, and 17 million people
in 2006 (from 5% in 2005), despite continuing proportion of the worldwide burden of disease: suffering from bipolar disorder across the
cost-containment pressures and the growing major markets.
use of generic pharmaceuticals. This rise was Cardiovascular (CV)
largely due to the increased uptake of products CV disease claims more lives each year > Alzheimers disease, the most common
following implementation of the Medicare than the next four leading causes of death cause of dementia, affects more than 24
prescription drug benefit scheme in 2006. combined. Globally, CV disease accounts million people worldwide today, with this
for 17 million deaths each year, making it the number predicted to reach 40 million
greatest risk to life for most adults. CV is also by 2020. Further, current therapy is
the single largest therapy area in the global symptomatic and does not significantly
healthcare market, with a world market value modify the course of this progressive
of $137 billion. One in three adults has some neuro-degenerative disorder.
In this Business Environment section, unless
otherwise specified, sector-wide market data form of CV disease, including diseases such as
(ie not specific to AstraZeneca or any of its high blood pressure (market value $48 billion), > Chronic pain, which affects over 20% of
products) are based on MAT (Moving Annual abnormal levels of blood cholesterol (market the population, is a significant medical
Total) Q3 2006 data and the 2005 comparisons value $35 billion), thrombosis including heart need, with pain management the most
are based on MAT Q4 2005 data.
attacks and stroke (market value $17 billion) common reason for seeking medical care.
BUSINESS ENVIRONMENT CONTINUED
Cancer GROWING CHALLENGES FOR INDUSTRY Drug safety

The world market value for cancer therapies Whilst the fundamentals of the world Decisions on acceptable benefit/risk profiles
is $32 billion and growing strongly. Despite pharmaceuticals market remain robust, for medicines have the potential to be positively
dramatic advances in treatment, cancer the industry is facing real challenges. or negatively affected by a number of factors.
remains the second highest cause of death These include pre-clinical data, pre- and post-
in developed countries, and epidemiological Pressure on costs marketing clinical data and regulatory decisions
evidence points to this trend now emerging in Expenditure on healthcare typically represents reflecting societys concerns and aspirations.
the less developed world. At present cancer between 6% and 15% of a countrys Gross For more information, see page 46.
accounts for 7.6 million (or 13%) of all deaths Domestic Product (GDP), with developed
worldwide annually, with these numbers countries towards the top end of that range Competition
projected to continue rising, resulting in an and developing countries spending less. AstraZenecas principal competitors are
estimated 9 million people dying from cancer As a proportion of this, pharmaceutical other international, research-based
in 2015 and 11.4 million dying in 2030. Globally, expenditure is usually between 10% and 20% pharmaceutical and biotechnology companies
lung cancer kills more people than any other and is therefore still less than 2% of GDP in that also sell branded, patent-protected,
tumour type. However, there are significant most countries. prescription medicines. In common with those
differences in the pattern and severity of other companies, following patent expiry,
disease between Asian and Western Nevertheless, healthcare systems, whether our products also compete with generic
populations. Whilst breast, prostate and based on public or private funding, have a finite pharmaceuticals mainly on price, since
colo-rectal cancers are common in the West, ability to pay for treatments. Cost-containment generic manufacturers do not bear the high
gastric and liver cancers are more prevalent remains an ever-present constraint on industry costs of research and development. Nor do
in Asia. For further information about our growth. During 2006, further pricing pressures they typically invest in safety monitoring or
cancer therapies, see page 26. have been placed on the industry through marketing to create the demand that companies
legislation and other means, not only in major such as AstraZeneca do. The industrys
Respiratory & Inflammation established markets, but also in China and intellectual property base is increasingly
The respiratory world market value is $43 billion. India. For more information, see page 50 being challenged by generic companies
The WHO estimates that 100 million people (Price Regulation). seeking an early entry into large markets,
worldwide suffer from asthma and more than which puts pressure on product life-cycles.
twice that from COPD, which is currently the Doctors remain the principal decision makers
fourth leading cause of death in the world regarding which of the available treatments Industry regulation
with further increases in the prevalence and should be prescribed for their patients, but The pharmaceutical industry is one of the most
mortality of the disease predicted for the as the economic burden of funding therapies strictly regulated of all industries. Prescription
coming decades. The inflammatory market increases, payers, including governments, pharmaceutical products are subject to
is estimated to be worth $16 billion, with over health insurers, managed care organisations significant legislation and regulation, the
40% being for the treatment of rheumatoid and employers are increasing their efforts to amount and impact of which are still growing,
arthritis. Biological therapies dominate the influence the choices doctors make. concerning the requirements for establishing
inflammatory market in terms of sales value. safety, efficacy and quality. The degree and
Demonstrating economic benefit scope of these regulations vary according to
Information about the medicines we have Research-based pharmaceutical companies national and regional demands concerning
or are developing in the above disease areas increasingly have to demonstrate the economic the development and commercialisation of
and our 2006 product performance is set out as well as the therapeutic value of their drug products. The processes for regulatory
on pages 29 to 31. medicines to those who pay for healthcare. approval for products are complex, time-
This requires investment, throughout the life- consuming and involve significant expenditure.
Infection cycle of a medicine, in studies to demonstrate In addition to safety and efficacy, regulation
The world market value is $59 billion, with added medical benefit, cost-effectiveness, covers every aspect of the product including
anti-bacterials accounting for $31 billion. cost-benefit and medical outcomes (such as the chemical composition, manufacturing,
Infectious diseases cause more than 11 million survival and quality of life improvements) in quality controls, handling, packaging, labelling,
deaths each year. World demand for antibiotics addition to traditional clinical trials designed distribution, promotion and marketing. After
remains high, due to escalating resistance to establish safety and efficacy. These launch of new medicines, regulatory agencies
and the increased risk of serious infections. research efforts also help to ensure we can require numerous conditions to be met in the
Tuberculosis remains a worldwide threat target our treatments at those patients who safety surveillance, risk management, clinical,
and is newly diagnosed in approximately two will benefit most, a growing expectation of manufacturing and marketing areas. For more
million people every year in India and over payers and of society in general. information, see pages 50 and 51.
eight million people worldwide.
Research and development productivity Reputation
Successful companies will be those that The reputation of the pharmaceutical industry
enhance their productivity in the discovery has been in decline. Contributory factors
and development of new and differentiated include heightened public concern about
medicines designed to meet the growing issues such as drug safety (exacerbated by
demand. The industry is working to improve some high-profile withdrawals of marketed
research productivity through the application medicines in recent years), transparency of
of new technologies. At the same time, our information, sales and marketing practices,
regulators are also setting increasingly high and the cost of medicines.
hurdles for the approval of medicines.
DIRECTORS REPORT 11
Business Review
STRATEGY
ASTRAZENECA IS A SUCCESSFUL GLOBAL RESEARCH-BASED > Realising the full potential of our marketed
products by:
PRESCRIPTION PHARMACEUTICAL COMPANY, AND OUR GOAL
IS TO MAKE A DIFFERENCE IN THE LIVES OF PATIENTS AND Actively managing the lifecycles of each of
our brands to leverage the full therapeutic
CREATE VALUE FOR OUR SHAREHOLDERS AND WIDER and commercial potential of our range.
SOCIETY, THROUGH THE DELIVERY OF INNOVATIVE MEDICINES
Driving high standards of sales force
IN IMPORTANT AREAS OF HEALTHCARE. effectiveness and marketing excellence.
OUR STRATEGY OUR OBJECTIVES Building on our leadership positions in

Our strategy for ensuring that we continue to The objectives that we have identified as existing markets and expanding our
make our best contribution to healthcare and critical drivers of success in delivering our presence in important emerging ones.
deliver sustained, industry-leading, responsibly strategy are focused on four core areas:
managed growth centres on three key priorities: People
Patients > Getting the best from our global
> Strengthening our pipeline of new > Gaining and using insight effectively by: workforce by:
medicines, from our own research
laboratories and by accessing scientific Working closely with patients and their Providing effective leadership with clear
innovation that resides outside healthcare providers to understand what objectives and accountabilities.
AstraZeneca. they need and what they value.
Effectively managing and developing all
> Delivering the full potential of all our Incorporating this insight into all aspects our talent.
marketed medicines, through rigorous of our business decision-making (from
life-cycle management and excellent discovery to marketing and beyond) Promoting a culture of diversity and
customer support. to ensure we remain focused on those inclusion in which people feel valued
healthcare needs that are most relevant. and rewarded for their individual and
> Challenging our cost structure to make This includes targeting our medicines team contribution.
room for the further investment necessary at those patients for whom they are
in these critical activities. most effective. > Making every interaction count by:
Across all of our activities, we will continue > Providing superior customer Ensuring people understand that how
to work closely with all our stakeholders to support through: we do business is just as important
provide medicines that meet patient needs as what we do, and that everyone has
and add value for society, within the scope of Innovative practices that enable patients a responsibility for integrating our core
our existing therapy areas and beyond. and their caregivers to better understand values into their everyday business activity.
their disease and treatment options, and
We have a clear set of objectives for delivering to get the medicines they need and the Performance
this strategy. Through the professionalism and best possible value from them. > Delivering a performance that will place us
commitment of our people, we are determined among the best in the industry, with
to deliver a performance that will place Products a reputation as one of the most forward-
AstraZeneca among the best in the industry. > Strengthening our research platform and thinking and responsible companies by:
pipeline to deliver a flow of innovative,
new products by: Meeting our promises in all aspects of our
business, focusing on our core priorities
Improving further the quality, speed and and on how we deliver them.
productivity of our internal discovery and
development through the use of leading- Effectively managing the opportunities
edge science, alongside a continued focus and risks associated with all our
on driving effective risk management, business activities.
decision-making and efficiency across
all our processes. Rigorously challenging our cost structure
to improve cost-effectiveness and
Accessing attractive external opportunities operational excellence.
to enhance our internal innovation through
partnerships, alliances and acquisitions Ensuring a continuous focus on corporate
that further strengthen our pipeline of governance and compliance.
new products.
Making a strategic move into biologicals

to build a major presence in the fast-
growing biopharmaceuticals sector.
OUR RESOURCES, SKILLS AND CAPABILITIES
WE HAVE WIDE-RANGING RESOURCES, SKILLS AND CAPABILITIES When a new medicine is launched, we may
typically have between eight and 15 years of
ALIGNED TO DELIVERING OUR STRATEGIC OBJECTIVES. TOGETHER patent or data protection in which to generate
WITH THE CLEAR DIRECTION OUR STRATEGY PROVIDES, the income needed to recoup the investment
required to maintain a flow of new medicines
WE BELIEVE ASTRAZENECA IS WELL PLACED TO CONTINUE TO for important areas of healthcare.
DELIVER A STRONG PERFORMANCE IN EACH OF OUR CORE AREAS
We rigorously manage our patent portfolio
OF ACTIVITY AND MAINTAIN BUSINESS SUCCESS OVER TIME. through a team of intellectual property
professionals dedicated to the cost-effective
OUR MEDICINES Intellectual property management and enforcement of intellectual
We have a powerful range of medicines Patents enable information on inventions to property rights for the optimal global protection
targeted at meeting patient needs in the be made widely available and are important of, and legitimate reward from, AstraZenecas
important areas of healthcare discussed earlier. incentives for the continued innovation that innovations and commercial products.
Many of them are world leaders. All of them drives societys progress. Patents do not We vigorously defend our intellectual
are designed to be innovative and more create a monopoly for treating a disease property rights, including taking appropriate
effective and/or to offer added patient benefits other manufacturers are able to develop a infringement action in various courts
such as reduced side effects or better ways different medicine to treat the same condition. throughout the world. See page 136 for
of taking the treatment. Even after a new Also, patents are limited in time and after their details of patent litigation.
medicine is launched, we continue to expiry, competitors (both innovative and
explore all the ways it can be used to get the generic) can legitimately market the same Sales and marketing
most benefit for patients. Underpinning all product. Because patents require the Active in over 100 countries, we have an
our activities is a commitment to developing disclosure and publication of information extensive worldwide sales and marketing
and/or maintaining a continuous dialogue about the patented medicine, they can network. In the majority of key markets,
with patients and other stakeholders to help stimulate competition to innovate improved we sell through wholly-owned local marketing
ensure we gain the insight necessary to alternatives that expand the range of treatment companies. Elsewhere, we sell through
maintain a flow of new medicines that make options which is important because patients distributors or local representative offices.
a difference in healthcare. respond differently to different medicines in Global brand strategy is built and led by
the same class. our Global Marketing (GM) function (formerly
Our portfolio of marketed medicines is highly known as Global Marketing and Business
competitive, with growth in the short to medium Our policy is to apply for appropriate intellectual Development) working in partnership with
term being driven by five key growth products, property protection for all of the inventions and our largest marketing companies. This shared
Arimidex, Crestor, Nexium, Seroquel and innovations that arise from our drug discovery, approach creates a consistent platform on
Symbicort, all launched over the last 12 years. development, manufacturing and other which all our local marketing companies can
Backed by our successful mature brands such business activities. This policy is designed to build according to individual market needs.
as Pulmicort, Zoladex, Seloken/Toprol-XL, provide each of our products with an effective
Diprivan and Merrem, these five key growth portfolio of valid, enforceable patent and other Our products are marketed primarily to
products provide the platform for our intellectual property rights in all significant physicians (both primary care and specialist)
continued success whilst we enhance our markets to protect against unauthorised as well as to other healthcare professionals.
pipeline for the future by improving internal competition during commercialisation. This Marketing efforts are also directed towards
innovation and productivity and accessing shield of intellectual property rights extends explaining the economic as well as the
external innovation potential. to research technologies, for discovering, therapeutic benefits of our products to
manufacturing and delivering products, governments and healthcare buying groups.
We have clearly defined life-cycle in which we invest significant resources.
management programmes for our marketed The adequacy of the patent, design, trade Face-to-face contact is still the single most
products designed to maximise the benefit mark and domain name portfolio for individual effective marketing method, but increasingly
they bring to patients lives and their products is kept under review during product the efforts of our sales forces are being
commercial potential within the timeframe development, clinical evaluation and marketing complemented by our use of the internet
that patent protection is available to us. so that, wherever possible, additional to facilitate and enhance our commercial
protection may be sought for new applications activities. For a few products we also use
and other developments. Our research direct-to-consumer television advertising
operating model allows appropriate intellectual campaigns in the US. A specific focus on sales
property strategies to be formulated and and marketing innovation is driving us to
regularly updated from an early stage in explore new ideas, including implementation
product development. of learning from other industries, to ensure
AstraZeneca is at the forefront in responding
to the rapidly changing external environment.
DIRECTORS REPORT 13
Business Review
As well as building on our leading positions in Development portfolio Product portfolio management
existing key markets such as the US, Japan A core priority is ensuring that our growing One of the greatest challenges facing any
and Europe, we continue to increase our range of candidate drugs (compounds with pharmaceutical company is maintaining the
strength through strategic investment in the the potential to become new medicines) quality of its product portfolio. We work to
fast-growing markets of the future, of which are developed effectively to meet the future ensure that we effectively prioritise emerging
China offers the most outstanding opportunity. needs of patients. We have a wide range of research opportunities (whether from our own
compounds in early development, and a total discovery activities or from external sources),
Supply and manufacturing of 23 projects in Phase I, 20 projects in Phase II develop them to meet market needs and
We currently have some 13,500 people at and 28 projects in Phase III development. Whilst maximise the potential of our marketed brands.
27 manufacturing sites in 19 countries, the majority of projects are small molecule
dedicated to delivering a secure, high quality, candidate drugs, an increasing proportion During 2005 to 2006, to further strengthen our
cost-effective supply of our product range of our early development compounds are effort in these areas, we reviewed and refined
worldwide. Of these 13,500 people, around biopharmaceuticals (see pages 38 and 39 for the way the relevant teams across our
1,300 are employed in active pharmaceutical more information). business work together. The refinements aim
ingredient supply and 11,500 in formulation to improve the connectivity, co-ordination and
and packaging. We operate a small number of Externalisation focus of all the various activities, both internally
sites for the manufacture of active ingredients, In todays world of rapid scientific and and externally focused, that contribute to
complemented by efficient use of outsourcing. technological advance, no company can maintaining a high quality range of
AstraZeneca has active ingredient sites in the rely exclusively on its own discovery and differentiated products that meet patient needs
UK, Sweden and France and a bulk drug development. Where appropriate we seek and add value for our stakeholders. More
purification plant in Germany. Principal to strengthen our internal capabilities details about our Portfolio Management and
formulation sites for tablets and capsules are through acquisitions and alliances with Commercialisation can be found on page 43.
located in the UK, Sweden, Puerto Rico, France, external partners whose skills and resources
Germany and the US. There are also major complement our own and which broaden OUR PEOPLE
formulation sites for the global supply of our base for disease research. Our most important resource is our people.
parenteral and inhalation products in Sweden, With over 66,000 employees, we value the
France and the UK. Packaging is undertaken We continuously monitor new and emerging diversity of skills and abilities that a global
at a large number of locations, both at sciences for opportunities that will help us workforce brings to our business. Within our
AstraZeneca sites and at contractors facilities, to develop the next generation of medicines performance-driven culture, we aim to give our
located close to our marketing companies to that offer better results for patients. One such employees the support they need to develop
ensure rapid and responsive product supply. opportunity is biopharmaceuticals medicines their full potential and to provide a working
derived from biological molecules, which are environment in which they are energised
OUR RESEARCH AND DEVELOPMENT often based on proteins produced naturally and informed. Optimising individual and
Our global research and development (R&D) by living organisms in response to disease, team performance, effectively managing
organisation is therapy area-led with scientific, for example antibodies. New technologies and developing all our talent, communicating
medical, technical input and control provided by have opened up the possibility of producing and fostering our core values and improving
large multi-skilled Discovery and Development effective, potent antibodies in large supply our leadership capability are core priorities,
functions. This offers a number of advantages that can be used to fight disease. As part of alongside a commitment to ensuring the
including sharing of best practice and efficient our expansion into this fast-growing area, safety, health and wellbeing of all our
use of resources across a multi-site, global and building on a successful alliance, during employees worldwide. For more information,
organisation. During 2006, we continued to 2006 we acquired Cambridge Antibody see page 48.
improve our focus on speed and quality of Technology Group plc (CAT) a leading UK-
project delivery and to ensure we fully exploit based biotechnology company. CATs skills Leadership
promising new projects and technology in biological therapeutics complement our Good leadership and effective risk
platforms across and outside the main expertise and strength in small molecule management are key to ensuring our resources
therapy areas. In total we employ around science, and provide a foundation for building and capabilities continue to be focused on
12,000 people at 16 R&D centres in eight a future pipeline of new products from both meeting the challenges, and maximising the
countries comprising eight joint Discovery areas of research. For more information on opportunities, of our business environment.
and Development facilities in the UK, US, CAT research, see page 38 or visit the
Sweden and a new Innovation Centre that will website, cambridgeantibody.com. The Board of Directors: Our Board comprises
be built in China; a further seven sites in the Executive Directors, with direct responsibility
UK, US, Canada, India and France that focus Elsewhere in this report you can read about for business operations, and Non-Executive
only on Discovery; and a facility in Japan for other licences, collaborations and acquisitions Directors, who have responsibility to bring
drug development only. These resources are we have entered into. independent, objective judgement to bear on
complemented by clinical development Board decisions. The Board sets Company
capability at 40 sites around the world. strategy and policies and monitors progress
towards meeting objectives. It conducts an REPUTATION AND RESPONSIBILITY

in-depth strategy review annually. It also We also know that how we do business,
assesses whether or not obligations to as well as what we do, is important to our
shareholders and others are understood reputation among stakeholders and wider
and met, which includes regular reviews of society. Maintaining their trust and confidence
financial performance and critical business in AstraZeneca as a responsible company
issues. See pages 80 and 81 for more means ensuring that wherever we have
information on the Board. a presence or an impact, we live up to our
core values and publicly stated standards
The Senior Executive Team (SET): The SET of ethical behaviour. Backed by our global
is a cross-functional, cross-territorial group, Corporate Responsibility Policy and
established and led by the Chief Executive performance measures, we continue to drive
Officer. It focuses on the day-to-day running the integration of corporate responsibility
of business operations and on Company considerations into everyday business
development. It regularly reviews and makes thinking throughout the Company. This
decisions on all major business issues, save includes providing managers with guidance
those which have been specifically reserved on putting the global standards into practice
for the Board. The SET comprises the three at a local level, as well as communicating with
Executive Directors and six executive vice- our employees to ensure their understanding
presidents, each of whom has a specific of our commitment and how everyone has
area of responsibility in line with our business a part to play in making sure AstraZeneca
structure. See page 77 for more information continues to be welcomed as a valued
on the SET. member of the global community.
RISK MANAGEMENT During 2006, we undertook a comprehensive

Our ability to effectively identify and manage stakeholder engagement exercise across the
the risks to our business is also key to our full range of our key stakeholders to understand
continued success. Our Risk Advisory Group better their perception of AstraZeneca and its
(RAG), led by the Chief Financial Officer and activities. The feedback from this initiative
consisting of representatives from each is helping to inform the development of a
business function, assists senior management more consistent approach to stakeholder
in identifying and assessing our main business engagement and reputation management
risks in a co-ordinated manner. It focuses in across the Company. This includes further
particular on cross-functional risks, linking improving our ability to gain, and consistently
risk management to business performance capture, the insight that helps us to remain
reporting and sharing best practice across the focused on real healthcare needs.
organisation to drive continuous improvement.
The RAG reports twice a year to the SET and For more information about our approach
its reports on the Companys risk profile are to managing our corporate responsibility
reviewed annually by the Board and the Audit and about our performance, policies and
Committee. For more information, see pages principles, see page 47 of this report and also
45 and 75. the separate Corporate Responsibility
Summary Report 2006.
DIRECTORS REPORT 15
Business Review
MEASURING PERFORMANCE
THE BOARD AND THE SENIOR EXECUTIVE TEAM (SET) USE MEASURING REPUTATION
The performance measures referred to
A QUARTERLY BUSINESS PERFORMANCE MANAGEMENT (BPM) above are measures of our progress in what
REPORT TO MEASURE OUR PROGRESS IN DELIVERING OUR we do in the business of delivering successful
medicines and, thus, shareholder value.
STRATEGIC OBJECTIVES. As previously mentioned, we also include
reputation and governance objectives within
The report provides Board and SET members PRODUCTS the key areas described above.
with shared insight into current progress Marketed products
against short-term non-financial objectives > Sales value growth at constant exchange In terms of measuring the way we do business,
and current year milestones for longer-term rates, split between key growth, patent we have a range of key performance indicators
strategic goals. expiry and base products (KPIs), by which we measure our progress in
(see page 52). important areas of corporate responsibility
A range of financial and non-financial (CR). Auditing of compliance and external
objectives are set each year. During 2006 > Global sales and US prescription assurance is fundamental to ensuring high
the focus was on the following key areas: share trends for key growth products standards of ethical behaviour, and compliance
(see page 52). is integrated into many of the KPIs used to
> Product performance measure our CR progress. More details
> Pipeline > Market share percentages for key about these KPIs and our 2006 performance
> Productivity and profitability growth products. are provided in the separate Corporate
> Shareholder returns Responsibility Summary Report 2006, or on
> Reputation > Life-cycle delivery. our website.
> Governance
Pipeline We also participate in leading external surveys,
During 2006, we reviewed our BPM framework > New candidate drugs (see page 39). such as the Dow Jones Sustainability Indexes,
with a view to further enhancing our focus which are important means of evaluating our
on our strategic objectives, which are now > Number of development projects by performance and understanding better the
grouped under four areas: Phase (see page 39). demands of sustainable development.
> Patients > R&D investment in US dollar terms AstraZeneca is listed in the 2007 Dow Jones
> Products (see page 6). Sustainability World Index, used by asset
> People managers globally to guide their socially
> Performance > Progress against development milestones. responsible investment. However, whilst
we improved our score, we did not regain the
Reputation and governance objectives have PERFORMANCE place we lost in 2005 in the European Index
been included in all four areas, to reflect the > Earnings per share growth (see page 6). (Dow Jones STOXX), where competition for
importance of integrating consistent behaviours places is increasingly fierce.
across all of our business activities. > Cost growth rates (see page 6).
GOVERNANCE
Shareholder returns have been included in > Gross margin, costs and operating The AstraZeneca Code of Conduct
the Performance area. profit margin percentages (progression (which is available on our website1) sets out
over time) (see page 52). the high standards we expect from our
The means of measuring performance in these employees, and with which compliance is
areas range from quantitative, comparative > Dividends and share re-purchases mandatory. As part of our commitment under
performance measures to more qualitative, (see page 6). that Code to comply with all applicable laws
discursive analysis. and codes of practice, we apply all of the
> Free cash (see page 6). principles of good governance in the 2006
Together, they provide the framework for UK Combined Code on Corporate
consistently monitoring and reporting our > Total shareholder return (see page 90). Governance. The way in which we do so is
progress towards achieving our objectives described on page 75. We also comply with
and, ultimately, delivering enduring As a result of our review of our BPM framework all of the provisions of the UK Combined
shareholder value. in 2006, we are developing new objectives for Code and our corporate governance practices
2007 in relation to Patients and People. We are generally consistent with the New York Stock
Specific measures that our Board and SET use will report on these objectives in due course. Exchanges corporate governance listing
when assessing performance in relation to the standards (see page 75 for a description of
key areas noted above, or that are otherwise any significant differences). Our continuous
judged to be helpful in enabling shareholders assurance processes, as described on page
better to understand and evaluate our business, 75, are designed to ensure we effectively
are described and illustrated throughout this monitor our compliance with these standards.
report. Examples include:
1
astrazeneca.com/article/511624.aspx
CARDIOVASCULAR (CV) MEDICINES
2006 IN BRIEF PERFORMANCE

2006 compared to 2005 compared to
> CRESTOR SALES EXCEEDED 2006 2005 2004 2005 2004
$2 BILLION,WITH OVER 9 MILLION Growth

due to
Growth
due to
PATIENTS TREATED AND ALMOST Growth exchange Growth exchange Growth Growth Growth Growth
Sales underlying effects Sales underlying effects Sales underlying reported underlying reported
72 MILLION PRESCRIPTIONS $m $m $m $m $m $m $m % % % %
WRITTEN SINCE LAUNCH. Crestor 2,028 745 15 1,268 338 22 908 59 60 38 40
> SELOKEN/TOPROL-XL SALES Seloken/Toprol-XL 1,795 62 (2) 1,735 333 15 1,387 3 3 24 25
EXCEEDED $1.7 BILLION, BUT Atacand 1,110 133 3 974 68 27 879 14 14 8 11
OUR PATENT PROTECTION FOR Tenormin 320 (24) (8) 352 (21) 5 368 (7) (9) (5) (4)
TOPROL-XL WAS INVALIDATED BY Zestril 307 (23) (2) 332 (118) 10 440 (7) (8) (27) (25)
A US COURT, A DECISION WHICH IS Plendil 275 (86) 1 360 (103) 8 455 (24) (24) (23) (21)
BEING APPEALED. Other 283 (27) (1) 311 (38) 9 340 (9) (9) (12) (9)
Total 6,118 780 6 5,332 459 96 4,777 15 15 10 12
> IN NOVEMBER, SANDOZ LAUNCHED
ITS 25MG VERSION, AND PAR
PHARMACEUTICAL STARTED
DISTRIBUTING AN AUTHORISED PIPELINE
Compound Mechanism Areas under investigation Phase Estimated filing date
GENERIC VERSION, OF METOPROLOL
SUCCINATE EXTENDED-RELEASE NCEs PC I II III Europe US
TABLETS IN THE US. AGI-1067 Anti-atherogenic atherosclerosis gggg 4Q 20072Q/3Q 2007
AZD6140 ADP receptor antagonist arterial thrombosis gggg >2009 >2009
> EXANTA WAS WITHDRAWN IN Saxagliptin (BMS) dipeptidyl peptidase-4 diabetes gggg >2009 1H 2008
FEBRUARY 2006 FOLLOWING NEW (DPP-4) inhibitor
PATIENT SAFETY DATA. Crestor/ABT-335 statin + fibrate dyslipidaemia ggg 2009
(Abbott) fixed combination
ggg
> APPROVAL OF NEW HEART FAILURE AZD9684 CPU inhibitor thrombosis >2009 >2009
INDICATION FOR ATACAND IN THE US. AZD0837 thrombin inhibitor thrombosis ggg >2009 >2009
> THE DEVELOPMENT PROGRAMME FOR AZD6610 PPAR alpha with dyslipidaemia ggg >2009 >2009
partial gamma
ggg
GALIDA WAS TERMINATED IN MAY. Dapagliflozin (BMS) sodium-glucose diabetes >2009 >2009
> IN JANUARY 2007 WE ANNOUNCED cotransporter-2
(SGLT2) inhibitor
A WORLDWIDE COLLABORATION WITH
BRISTOL-MYERS SQUIBB COMPANY AZD2479 Reverse Cholesterol dyslipidaemia gg >2009 >2009
Transport enhancer
gg
TO DEVELOP AND COMMERCIALISE
AZD1175 diabetes/obesity >2009 >2009
gg
TWO INVESTIGATIONAL COMPOUNDS AZD2207 diabetes/obesity >2009 >2009
gg
BEING STUDIED FOR THE TREATMENT AZD1305 antiarrhythmic arrhythmias >2009 >2009
OF TYPE 2 DIABETES. AZD6370 diabetes g >2009 >2009
AZD8593 haemostasis g >2009 >2009
AZD4121 cholesterol absorption dyslipidaemia g >2009 >2009
MARKETED PRODUCTS inhibitor
Crestor* (rosuvastatin calcium) is a member AZD1283 thrombosis g >2009 >2009
of the class of products known as statins AZD5861 dyslipidaemia g >2009 >2009
AZD1656 diabetes/obesity g >2009 >2009
g
and is used for the treatment of high
cholesterol levels.
Line extensions
Atacand angiotensin II antagonist diabetic retinopathy gggg 2009 2009
gggg
Atacand# (candesartan cilexetil) is an Atacand Plus angiotensin II antagonist 32/12.5 mg, 32/25 mg for 2H 2008
angiotensin II antagonist for the first-line /thiazide diuretic hypertension
treatment of hypertension and Crestor statin atherosclerosis gggg Filed Filed
symptomatic heart failure. Crestor statin outcomes CHF gggg 2H 2008 2H 2008
Crestor statin outcomes End Stage gggg 2009 2009
Seloken/Toprol-XL (metoprolol succinate) Renal Disease
is a once daily tablet for 24-hour control of Seloken/Toprol-XL beta-blocker HCTZ combination gggg Approved
blood pressure and for use in heart failure Discontinued projects
and angina. Exanta prevention of stroke Exanta was withdrawn from the
in AF market in February 2006
AZD1092 diabetes
Plendil (felodipine) is a calcium antagonist
Galida diabetes/metabolic syndrome We have discontinued these other
for the treatment of hypertension and angina. AZD8677 dyslipidaemia/diabetes developments as a result of their failure
to meet their target product profiles.
AZD7009 atrial fibrillation conversion
Zestril (lisinopril dihydrate), an ACE inhibitor, AZD8450 dyslipidaemia
is used for the treatment of a wide range of
Abbreviations in this pipeline table are explained in the Glossary on pages 179 and 180.
CV diseases, including hypertension.
* Licensed from Shionogi & Co., Ltd.
#
Licensed from Takeda Chemical Industries Ltd.
Licensed from Merck & Co., Inc.

DIRECTORS REPORT 17
Business Review
WE ARE A WORLD LEADER IN CV MEDICINES, BACKED BY Atacand: The family of products to which
Atacand belongs has been well accepted
OVER 40 YEARS EXPERIENCE. WE AIM TO BUILD ON OUR in the market and competes in the fastest
STRONG POSITION, FOCUSING ON THE GROWTH SEGMENTS growing sector in terms of value of the global
hypertension market (angiotensin II antagonists
OF DYSLIPIDAEMIA, THROMBOSIS, TYPE 2 DIABETES, plain and combinations with diuretic). A 32mg
ATHEROSCLEROSIS AND ATRIAL FIBRILLATION. dose is available to support the use of Atacand
in hypertension and congestive heart failure
(CHF). Launches of the 32mg dosage strength
PRODUCTS designed to address important unanswered outside the US continued, and this strength
Crestor has now been approved in 84 questions in statin research by investigating is now available in most major markets.
countries and launched in 74, including links between optimal lipids control, The clinical programme investigating the
the US, Canada, Japan and the majority of atherosclerosis and cardiovascular morbidity effect of Atacand (up to 32mg dosage) on
EU countries. and mortality. So far, a number of the studies retinopathy normotensive in diabetic patients
have been completed and we have seen data (DIRECT) continued during 2006.
Dyslipidaemia is increasingly recognised as from two completed atherosclerosis studies:
a major health issue. Of those people currently the ORION study, which in 2005 examined Seloken/Toprol-XL is the worlds leading
being treated for high cholesterol, only about the potential for Crestor to shrink the lipid- product by sales in the beta-blocker (plain
half reach their cholesterol goal on existing rich necrotic core of plaques and so improve and combinations with diuretic) class.
treatments, whilst the other half remain at their stability; and the ASTEROID study, which
higher cardiovascular risk. More effective in 2006 demonstrated that Crestor has As reported last year, on 17 January 2006
treatments, such as Crestor, continue to be significant effects on coronary atherosclerosis. summary judgment was entered against
required in this area. The METEOR study has been completed and AstraZeneca in the ongoing patent litigation
will be presented at the American College of in the US involving three companies
In multiple clinical studies, Crestor has been Cardiology meeting in March 2007. METEOR challenging AstraZenecas patents and seeking
shown to be highly effective in lowering is a placebo-controlled, long-term study in FDA approval to sell metoprolol succinate
low-density lipoprotein cholesterol or bad low-risk patients and forms the basis of a (the generic name for Seloken/Toprol-XL).
cholesterol (LDL-C), allowing the majority submission for an atherosclerosis label made The Court found that the patents-in-suit are
of patients to reach their LDL-C goals with to the Food and Drug Administration (FDA) invalid and unenforceable. We disagree with
the 10mg usual starting dose. Additionally, and in the EU through the Mutual Recognition and are disappointed by these conclusions
Crestor produces an increase in high-density Procedure in January 2007. ASTEROID and and have appealed to the US Court of Appeals
lipoprotein cholesterol or good cholesterol ORION were included in the submission as for the Federal Circuit. The appeal has been
(HDL-C), an effect that is observed across supportive studies. The outcomes studies fully briefed and argued and a decision of the
the 5, 10, 20 and 40mg doses. within the GALAXY programme will begin to Federal Circuit is expected in 2007. Further
deliver results in 2008. information about this litigation is set out on
We have an extensive database of pre- page 142.
and post-approval clinical trials experience The large Crestor post-marketing
involving more than 70,000 patients treated surveillance (PMS) programme in Japan In November, Sandoz (formerly Eon) launched
with Crestor and post-marketing surveillance has been successfully completed. An interim its 25mg metoprolol succinate product in the
involving more than 9.1 million patients report received a positive response from the US and we announced that we had entered
treated with Crestor since its launch in 2003. Pharmaceutical and Medical Devices Agency into a supply and distribution agreement
These data and data from the ongoing (a unit within the Japanese regulator), leading with Par Pharmaceutical Companies, Inc.
pharmacoepidemiology programme support to a full launch of Crestor in Japan in September to distribute an authorised generic version
the favourable benefit/risk profile of Crestor 2006. Promotional activities in Japan increased of metoprolol succinate extended-release
and confirm that the safety profile is in line in September with an expansion of the number tablets in the US. Currently, the authorised
with other marketed statins. of sales representatives to 1,350 from generic product will be distributed only in the
AstraZeneca and 1,350 from Shionogi 25mg dosage strength. The signing of this
Crestor provides significant reductions in (who co-market the drug in Japan). agreement does not affect the availability of
LDL-C, with the additional benefits of raising These representatives are calling on more our branded Toprol-XL. We will continue to
HDL-C and lowering triglycerides. At its usual than 30,000 healthcare professionals and manufacture Toprol-XL and to make it available
10mg starting dose, Crestor has been shown we have reported commercial sales for in the US. The timing of any approval or entry
to reduce LDL-C by up to 52% and to bring 8 Crestor in Japan in the second half of 2006. to the market of other proposed generic
out of 10 patients to their LDL-C goal. products is hard to predict, and consequently
Other launches of Crestor in 2006 included the 2007 financial contribution from sales of
Our extensive, long-term global clinical Australia and South Africa. Toprol-XL in the US is difficult to forecast with
research programme (known as the GALAXY any degree of certainty.
programme), which began in 2002, includes Since June, several companies have
studies that investigate the effect of Crestor launched generic forms of simvastatin in the Exanta: In February 2006, we announced
on cardiovascular risk reduction and patient US, which will increase competition in the that we were withdrawing the anti-coagulant
outcomes with Crestor. The programme cholesterol treatment market. We believe the Exanta (melagatran/ximelagatran) from the
involves over 50,000 patients in over 50 impact on Crestor will be modest. market and terminating its development.
countries. The GALAXY programme was This decision was triggered by new patient
CARDIOVASCULAR (CV) MEDICINES CONTINUED
safety data from a clinical trial in orthopaedic drug of its type. The results from the pivotal appropriate through scientific presentation,
surgery involving patients treated for a 35-day ARISE trial, which are expected in early 2007, publication in peer-reviewed scientific journals
period for venous thromboembolic events will characterise both the safety and efficacy or via the Companys Clinical Trials Website
(VTE) prophylaxis, longer than was currently of AGI-1067. Only when these results are (astrazenecaclinicaltrials.com), once the final
approved for marketing. The new data available and have been fully evaluated can analyses have been completed.
indicated a potential risk of severe liver injury, a meaningful assessment be made of the
with a new observation of rapid onset of signs balance of risk and benefit for AGI-1067 and We remain committed to the development of
and symptoms in the weeks following the of the potential for regulatory approval and novel treatments for diabetes and related
end of treatment. This was an observation clinical use. metabolic and CV diseases. See more in
that had not previously been made in relation relation to diabetes in the Early Development
to Exanta. It indicated that regular liver AZD6140 is being investigated as a reversible Activities section below.
function monitoring might not mitigate the oral adenosine diphosphate (ADP) antagonist
possible risk. to prevent more thrombotic events than Early Development Activities
are prevented with currently available Activities that are currently in the early
Exanta was previously marketed in 12 countries thienopyridine therapies in patients afflicted development phase up to dose-finding
for up to 11 days use in prevention of VTE with Acute Coronary Syndrome (ACS). in humans are focused on four main
in patients undergoing elective hip or knee areas: diabetes/obesity; atherosclerosis
replacement surgery. ACS encompasses a range of clinical (dyslipidaemia and other approaches to
conditions that include unstable angina, treatment of atherosclerosis); thrombosis-
PIPELINE ST segment elevation MI (STEMI) and related diseases; and atrial fibrillation.
Our pipeline includes life-cycle management non-ST segment elevation MI. Despite
initiatives for approved products mentioned many advances, ACS still accounts for Diabetes/Obesity
above, as well as development compounds about 2.5 million hospital admissions Following the closure of the Galida project
across the whole discovery and development worldwide annually and is a major cause of in 2006, our focus is now on new, non-PPAR-
cycle. morbidity and mortality. There remains a need related targets. Two projects have been moved
to develop products that offer improvements into Phase I clinical testing and several
AGI-1067 is an anti-atherosclerotic agent over the current standard of care. compounds are in pre-clinical development.
being studied for the treatment of patients
with coronary artery disease (CAD), which AZD6140 is currently being evaluated in In January 2007, we made a significant step
is the subject of licence, collaboration and PLATO, a single, large, event-driven, head- in strengthening our late-stage pipeline when
co-promotion agreements between to-head outcomes study, which began in we announced a worldwide (apart from Japan)
AstraZeneca and AtheroGenics, Inc. October. PLATO is designed to demonstrate collaboration with Bristol-Myers Squibb
the superior efficacy of AZD6140 over Company (BMS) to develop and commercialise
Existing cardiovascular treatments are effective clopidogrel in the reduction of CV death, two investigational compounds being studied
at reducing risk, but morbidity and mortality myocardial infarction and stroke in patients for the treatment of Type 2 diabetes. Both
associated with CV disease remain high. with ACS. PLATO is expected to run in 40 compounds were discovered by BMS.
There is a need for new treatments that can countries with over 1,000 centres and aims to Saxagliptin, a once-daily oral dipeptidyl
provide further CV morbidity and mortality recruit 18,000 patients. If successful, peptidase-4 (DPP-4) inhibitor, is currently
benefits, over and above those already AZD6140 could represent an important in Phase III development. Upon successful
provided by the current standard of care. treatment option for patients and physicians. completion of the development programme,
the companies plan to file for US regulatory
Current treatments are focused on treating Galida: In May, AstraZeneca announced approval of saxagliptin during the first half of
the risk factors that contribute to plaque that it was discontinuing the development 2008. Dapagliflozin (previously referred to
growth in the vessel wall. Studies conducted of its dual peroxisome proliferator-activated as BMS-512148), an oral sodium-glucose
to date indicate that AGI-1067 appears to have receptor (PPAR) alpha and gamma agonist cotransporter-2 (SGLT2) inhibitor, is currently
effects on the oxidative-inflammatory process Galida (tesaglitazar), which was being evaluated in Phase IIb development.
in the vascular wall, thereby potentially more for the treatment of the glucose and lipid
directly influencing the disease process that abnormalities associated with Type 2 diabetes. On 1 February 2007, we announced an
leads to atherosclerotic plaque. exclusive global licensing and research
The decision was based on our interpretation of collaboration agreement with Palatin
AGI-1067 is being evaluated in a Phase III clinical data from the completed and ongoing Technologies, Inc. The collaboration is
clinical trial called ARISE (Aggressive Reduction Phase II and Phase III studies. AstraZeneca, aimed at discovering, developing and
of Inflammation Stops Events). ARISE is in consultation with health authorities and commercialising small molecule compounds
a double-blind, placebo-controlled study leading medical experts in the field, judged that target melanocortin receptors and have
designed to assess the safety and efficacy of that the overall benefit/risk profile of Galida potential in treating obesity, diabetes and
AGI-1067 on top of current standard therapies was unlikely to offer patients significant metabolic syndrome.
in reducing CV morbidity and mortality in advances over currently available therapy.
patients with CAD. The study involves more Atherosclerosis
than 6,000 patients in over 250 cardiac centres All primary efficacy endpoints were met in the In order to provide effective therapy for all
in Canada, South Africa, the UK and the US. Phase III trials and there were no immediate patients with any type of dyslipidaemia,
The science in this area is challenging: the safety concerns for patients. In line with our new projects are underway to discover and
mode of action of AGI-1067 is novel and, commitment to transparency, we will make develop medicines to be used as monotherapy
if successful, AGI-1067 would be the first all Galida clinical trial data available as or in combination with statins (such as Crestor).
DIRECTORS REPORT 19
Business Review
The cholesterol absorption inhibitor project Atrial fibrillation (AF) were taken in respect of pipeline inventory in
aims to provide additional LDL-C reduction During 2005, we discontinued development the marketplace with the effect that sales are
when an absorption inhibitor is used in of the oral formulation of AZD7009 (for the now being recognised as prescriptions are
combination with a statin. Our development maintenance of sinus rhythm after conversion written. Sales of Seloken in other markets
compound (AZD4121) is expected to enter of AF) due to non-cardiac adverse events. were down 7% for the full year to $413 million.
clinical development during 2007. AZD6610 New clinical results from a dose-finding study
is a PPAR alpha compound with partial effect with short-term intravenous administration Atacand sales in the US were up 12% to
on gamma receptors and is in Phase II of AZD7009 were delivered during 2006. $260 million with new prescriptions up 7%.
clinical testing for the treatment of combined However, due to non-cardiac adverse events, In other markets, Atacand sales were up
dyslipidaemia (LDL-C and trygliceride a decision to stop further development 14% to $850 million.
elevation with low levels of HDL-C). was taken during the summer. Continued
work in the area has focused on a follow-up Plendil sales were down 24% as a result of
Patients with various mixed dyslipidaemias compound, AZD1305, where efficacy can generic competition in the US market, where
are expected to become more prominent be anticipated to be similar to AZD7009, Plendil sales declined by 71% to $24 million.
segments of the dyslipidaemic population, but with an aim to provide a better side-effect
due to increased prevalence of metabolic profile. AZD1305 is in Phase I. PERFORMANCE 2005
syndrome and diabetes. In July we signed Reported performance
an agreement with Abbott Laboratories to Details of all compounds in the CV pipeline Reported CV sales rose by 12% from
co-develop and co-promote a cholesterol are contained in the table on page 16. $4,777 million in 2004 to $5,332 million
treatment in the US to treat three important in 2005. Strong growth from Crestor and
blood lipids LDL-C, HDL-C and triglycerides PERFORMANCE 2006 Seloken/Toprol-XL more than offset the
in a single pill. The fixed-dose combination Reported performance declines in Plendil and Zestril.
therapy will combine Crestor with either ABT CV sales were up by 15% on a reported
335, a next-generation fenofibrate currently basis, rising from $5,332 million in 2005 to Underlying performance
under development by Abbott, or Abbotts $6,118 million in the current year. The strong Excluding exchange effects, CV sales grew
currently marketed fenofibrate, TriCor. performance of Crestor was the principal by 10%.
Final selection between the two programmes driver of growth.
will be based upon data generated from the Crestor sales for the full year reached
initial studies, with an anticipated regulatory Underlying performance $1,268 million, up 38%. Crestor sales in the
submission to the FDA in 2009. Excluding exchange effects, CV sales grew US increased by 34% to $730 million for the
by 15%. Annual sales for Crestor exceeded full year. In the week ending 20 January 2006,
Thrombosis $2 billion for the first time in 2006 and, since share of new prescriptions in the US statin
In the anti-coagulation area our focus is on launch in early 2003, more than 70 million market was 6.9%. Market share in the
AZD0837, an oral direct thrombin inhibitor in prescriptions have been written. Crestor dynamic segment (new and switch patients)
Phase II testing. Three months treatment of sales in the US were up 57% to $1,148 million was 8.8% in that same week. In other
patients with atrial fibrillation indicated that for the year. New prescriptions for statins in markets, sales for the full year were up 41%,
the liver signal seen with Exanta is not seen the US were up 18%; Crestor new prescriptions on good growth in Europe (up 44%) and
with AZD0837 treatment. Work is ongoing to were up 58%. Crestor new prescription Canada (up 25%). Volume share of the statin
develop an extended-release formulation in market share in December 2006 was 9.6%, market for Crestor in November 2005 was
order to reduce peak/trough variability and a 2.7 percentage point increase over the last 13.4% in Canada; 11.2% in the Netherlands;
provide an opportunity for once-daily dosing. year, and this represented the largest share 11.7% in Italy; and 6.0% in France.
gain recorded by a branded statin in 2006.
In the anti-platelet area AZD1283 has been Beginning in January 2007, new prescription Sales of Toprol-XL in the US increased by
selected for pre-clinical development. market data will be distorted by the launch of 32% for the full year to $1,291 million, which
The aim is to develop an effective anti-platelet multiple generic simvastatin products. In other was ahead of underlying growth of 23% as
drug with markedly reduced bleeding risk. markets Crestor sales increased by 61% on a result of the de-stocking which occurred in
AZD9684 has been tested in a proof-of- good growth in Europe (up 56%) and in Asia 2004. Sales of Seloken in other markets were
principle study with patients with diagnosed Pacific following launch in Australia and Japan up 4% for the full year.
acute pulmonary embolism. Data indicate in the second half. Volume share of the statin
that the compound enhances the endogenous market for Crestor is now 17.4% in Canada; Atacand sales in the US were down 8% for
fibrinolytic system. Due to its short half-life, 11.5% in the Netherlands; 19.3% in Italy; and the full year to $232 million, in line with the
the compound needs to be given parenterally 12.9% in France. decline in total prescriptions. Increased
to treat acute thrombosis-related CV events. promotion following regulatory approval for
Sales of Toprol-XL in the US were up 7% for the the heart failure indication stabilised Atacand
In 2006 we entered into an agreement with full year to $1,382 million. Total prescriptions prescription market share over the second
the Australian company Cerylid Biosciences in the US increased by 10% versus last year. half of 2005. In other markets, Atacand sales
to acquire kinase inhibitors that have the The November launch of Sandozs 25mg were up 14% for the full year to $742 million.
potential to deliver a very effective anti-platelet metoprolol succinate product in the US
therapy with minimal risk for bleeding was followed by an announcement that we Plendil sales for the full year were down 23%
complications. The aim is to start a lead had entered into a supply and distribution worldwide as a result of generic competition
optimisation pre-clinical project in early 2007. agreement with Par Pharmaceutical to in the US market, where sales declined by
distribute an authorised generic version of 49% to $84 million. Zestril sales also fell,
the same 25mg dosage strength in the US by 27% from $440 million to $332 million.
market. As a consequence, adjustments
GASTROINTESTINAL (GI) MEDICINES

> SALES OF NEXIUM EXCEEDED 2006 2005 2004 2005 2004
$5 BILLION FOR THE FIRST TIME. Growth

due to
Growth
due to
Growth exchange Growth exchange Growth Growth Growth Growth
> NEXIUM RECEIVED APPROVAL IN Sales underlying effects Sales underlying effects Sales underlying reported underlying reported
THE US FOR THE TREATMENT OF $m $m $m $m $m $m $m % % % %
CHILDREN AGED 12-17 YEARS OLD Nexium 5,182 555 (6) 4,633 702 48 3,883 12 12 18 19
WITH GERD AS WELL AS THE Losec/Prilosec 1,371 (266) (15) 1,652 (339) 44 1,947 (16) (17) (17) (15)
TREATMENT OF PATIENTS WITH Other 78 8 - 70 (19) 1 88 11 11 (21) (20)
ZOLLINGER ELLISON SYNDROME. Total 6,631 297 (21) 6,355 344 93 5,918 4 4 5 7
> NEXIUM SACHET 20MG AND 40MG

FORMULATION RECEIVED APPROVAL
IN THE US. PIPELINE
> WE COMMENCED LITIGATION
NCEs PC I II III Europe US
ggg
AGAINST TEVA/IVAX IN THE US FOR AZD9056 ion channel inflammatory bowel disease >2009 >2009
INFRINGEMENT OF OUR PATENTS IN blocker (P2X7)
RELATION TO ESOMEPRAZOLE AZD3355 inhibitor of transient lower GERD ggg >2009 >2009
MAGNESIUM. oesophageal sphincter
relaxations (TLESR)
g
> THE EUROPEAN PATENT OFFICE AZD2066 GERD >2009 >2009
g
RULED THAT ONE OF THE EUROPEAN AZD5329 functional GI disease >2009 >2009
SUBSTANCE PATENTS FOR NEXIUM Line extensions
WOULD BE REJECTED. Nexium proton pump inhibitor NSAID GI side effects gggg Promotable 1
Filed
symptom resolution
gggg Launched
> LOSEC/PRILOSEC SALES WERE
Nexium proton pump inhibitor NSAID GI side effects Filed
$1.4 BILLION WITH CONTINUED ulcer healing
STRONG SALES GROWTH IN JAPAN. Nexium proton pump inhibitor peptic ulcer bleeding gggg 1H 2008 1H 2008
Nexium sachet proton pump inhibitor GERD gggg Filed Approved
formulation
gggg
MARKETED PRODUCTS
Nexium low dose proton pump inhibitor low dose aspirin associated >2009 >2009
Nexium (esomeprazole) is the first proton aspirin combination peptic ulcer
ggg
pump inhibitor (PPI) for the treatment Nexium proton pump inhibitor extra-oesophageal >20092 >20092
of acid-related diseases to offer clinical reflux disease
improvements over other PPIs and Discontinued projects
other treatments. AZD9343 GERD
AZD6538 GERD We have discontinued these
Losec/Prilosec (omeprazole) was the first AZD8081 functional GI disease developments as a result of their failure
PPI, and is used for the short-term and AZD9272 GERD
long-term treatment of acid-related diseases. AZD9335 GERD
1
Authorities stated these symptoms were already captured within the GERD label. Text stating No clinical interaction
Entocort (budesonide) is a locally with naproxen or rofecoxib was approved.
acting corticosteroid for the treatment 2
Project Extraesophageal reflux disease (reflux asthma) will be completed but will not result in a regulatory filing.
of inflammatory bowel disease (IBD) with Abbreviations in this pipeline table are explained in the Glossary on pages 179 and 180.
better tolerability than other corticosteroids
and greater efficacy than aminosalicylic
acid medicines.
DIRECTORS REPORT 21
Business Review
WE AIM TO MAINTAIN OUR LEADING POSITION IN GI 2006. Although Dr. Reddys filed an
Abbreviated New Drug Application in August
TREATMENTS THROUGH CONTINUED MARKET PENETRATION 2006, Dr. Reddys did not challenge three
FOR NEXIUM WORLDWIDE, EXPLORING NEW AREAS OF patents with exclusivity expiring in November
2017 and August 2015. Dr. Reddys cannot
CLINICAL USE FOR NEXIUM AND FURTHER BROADENING market generic esomeprazole magnesium in
ITS USE IN CURRENT APPROVED INDICATIONS, COUPLED the US until the end of the exclusivity afforded
by those patents. Details of our ongoing
WITH HIGH QUALITY INNOVATION AND PRODUCTIVITY IN litigation for wilful patent infringement by
THE RESEARCH AND DEVELOPMENT OF NEW THERAPIES Ranbaxy, IVAX/Teva are set out on page 140.
IN THE GERD AREA. The rejection of the AstraZeneca European
substance patent relating to Nexium should
PRODUCTS The parenteral form of Nexium, which is not have any substantive impact on our ability
Nexium has been evaluated in clinical studies used in the EU when oral administration is to uphold and enforce our Nexium patents in
involving around 80,000 patients in over 60 not applicable for the treatment of GERD the US. We have several US patents covering
countries and offers very effective acid and upper GI side effects induced by NSAIDs Nexium, all of which can be differentiated from
inhibition. In the treatment of reflux oesophagitis, (non-steroidal anti-inflammatory drugs), has the rejected European patent.
it provides healing and symptom relief in more now been approved in 86 countries, including
patients than Losec/Prilosec, lansoprazole or the US and all EU countries. Losec/Prilosec: Patients have benefited from
pantoprazole. It is an effective, long-term therapy over 840 million treatments with Losec/Prilosec
for patients with gastro-oesophageal reflux Nexium is approved in Europe for healing and since its launch in 1988. Continued strong
disease (GERD), with or without oesophagitis. prevention of ulcers associated with NSAID sales growth of Losec/Omepral was seen in
For the treatment of active peptic ulcer disease, therapy. In the US, Nexium is approved for the Japan in 2006.
seven-day Nexium triple therapy (in combination reduction in the occurrence of gastric ulcers
with two antibiotics for the eradication of associated with continuous NSAID therapy in Patent protection for omeprazole, the active
H.pylori) heals most patients without the need patients at risk of developing gastric ulcers. ingredient in Losec/Prilosec, has expired.
for follow-up anti-secretory therapy. In the US, (The first patent expiration was in Germany
Nexium received approval in 2006 for the In December 2006, the European Patent in 1999.) In a small number of countries,
treatment of children aged 12-17 years old Office (EPO) ruled that one of the European including some major markets, patent term
with GERD, and the Nexium sachet 20mg substance patents for Nexium would be extensions or supplementary protection
and 40mg formulation received approval as rejected, following an appeal from the German certificates have been granted for the active
an alternative to oral capsules. Also in 2006, generic manufacturer ratiopharm. The original ingredient. Further information about the status
Nexium was approved in the US, EU and patent expiry for this patent was 2014. of omeprazole patents and patent litigation,
Australia for the treatment of patients with including details of generic omeprazole
the rare gastric acid disorder Zollinger Whilst disappointed with the EPO decision, launches, is set out on pages 137 to 139.
Ellison Syndrome. AstraZeneca has confidence in the intellectual
property portfolio protecting Nexium. Our appeal to the Court of First Instance
Nexium is used to treat a wide range of This portfolio includes process, method of regarding the European Commission
patients with acid-related disorders, including use and additional substance patents with decision to impose fines totalling 60 million
patients that are newly diagnosed, as well as expiration dates ranging from 2009 through to ($75 million) for alleged infringements of
those that are switched from other therapies 2019. The process patent is under opposition European competition law relating to
such as omeprazole, other PPIs and H2- with the EPO and an Opposition Division certain omeprazole intellectual property
receptor antagonists. oral hearing is scheduled for October 2007 and regulatory rights is still pending. Details
(postponed from the original hearing date of this appeal are set out on page 139.
Nexium was first launched in Sweden in March 2007). In addition to these patents,
in August 2000 and is now available in Nexium has data exclusivity valid to 2010 in Entocort continued its progress during 2006,
approximately 100 markets, including the major European markets. based on its increasing acceptance as first-
US, Canada and all EU countries. It has been line therapy for mild to moderate active Crohns
well received by patients and physicians alike In the US, we commenced patent litigation disease. It is approved in 44 countries.
and close to 539 million patient treatments against generic manufacturers Ranbaxy
had been administered by the end of 2006. Laboratories in 2005 and IVAX in January
GASTROINTESTINAL (GI) MEDICINES CONTINUED
PIPELINE Sales of Nexium in other markets reached

Our pipeline includes the life-cycle $1,655 million for the full year (up 10%) as
management initiatives for approved products good volume growth in France and Italy
mentioned above, as well as development helped mitigate the significant price erosion in
compounds across the whole discovery and Germany. As a result, Europe sales improved
development cycle. by 6% to $1,166 million, whilst Asia Pacific
revenues increased by 14% to $195 million,
In addition to exploring new areas of clinical driven by Japan and China.
use for Nexium and further broadening the
scope of its use in current areas, we focus Losec/Prilosec sales were down 16% to
on developing novel approaches to treating $1,371 million. Prilosec sales were down
GERD by inhibition of reflux with or without 12% in the US and Losec sales in other
concomitant treatment of gastro- markets were down 17%. Sales in Japan
oesophageal hypersensitivity. were up 7% at $227 million, whilst sales in
China were flat.
During the year, AZD3355 and AZD9343
were tested in humans. Based on its better PERFORMANCE 2005
profile, AZD3355 was selected to enter Reported performance
Phase II testing in patients for the treatment Gastrointestinal sales grew by 7% to
of GERD. $6,355 million in 2005 from $5,918 million
in the previous year. The slowing in the
Following the disease area review described on decline of Losec/Prilosec sales and the
page 38 we took the decision to discontinue continued strong performance of Nexium
discovery work in other areas of GI. accounted for this growth.
Details of all compounds in the GI pipeline are Underlying performance

contained in the table on page 20. After excluding the effects of exchange,
GI sales rose by 5%.
PERFORMANCE 2006
Reported performance In the US, Nexium sales increased by 15%
Gastrointestinal sales grew by 4% to to $3,125 million. Nexium market share of
$6,631 million, up from $6,355 million in 2005. total prescriptions in the US PPI market was
The performance of Nexium (particularly in 30.3% in December 2005. Strong growth in
the US) more than compensated for the dispensed tablets (up 14%) was partially
continued decline in Losec/Prilosec sales. offset by lower realised prices resulting from
performance-based contracts and Medicaid.
Underlying performance Nexium was the only branded PPI to gain
After excluding the effects of exchange, market share in 2005. Sales of Nexium in
GI sales grew by 4%. other markets reached $1,508 million for the
full year (up 25%) on a 2 percentage point
In the US, Nexium sales increased by 13% gain in market share.
to $3,527 million. Dispensed tablet volume
for Nexium increased by 17%; all other PPI Losec/Prilosec sales were down 17%
class brands in aggregate declined by 4%. to $1,652 million. In the US, sales were
Nexium volume growth more than offset $264 million, a fall of 28%. In other markets,
lower realised prices from contracted sales. Losec sales declined 15% overall, although
sales increased by 25% in Japan and by 16%
in China.
DIRECTORS REPORT 23
Business Review
NEUROSCIENCE MEDICINES

> SEROQUEL GLOBAL SALES 2006 2005 2004 2005 2004
GREW 24% TO $3.4 BILLION. Growth

due to
Growth
due to
> SEROQUEL 50MG AND 400MG Sales underlying effects Sales underlying effects Sales underlying reported underlying reported
NEW TABLET STRENGTHS $m $m $m $m $m $m $m % % % %
LAUNCHED IN THE US. Seroquel 3,416 655 - 2,761 710 24 2,027 24 24 35 36

Zomig 398 47 (1) 352 (11) 7 356 13 13 (3) (1)
> SEROQUEL APPROVED FOR BIPOLAR Diprivan 304 (62) (3) 369 (136) 5 500 (17) (18) (27) (26)
DEPRESSION IN THE US IN OCTOBER. Local Anaesthetics 529 24 (6) 511 (44) 13 542 5 4 (8) (6)
> REGULATORY PACKAGE FOR Other 57 (8) (1) 66 (6) 1 71 (12) (14) (8) (7)
SEROQUEL SR FORMULATION Total 4,704 656 (11) 4,059 513 50 3,496 16 16 15 16
SUBMITTED IN THE US, EUROPE

AND REST OF WORLD.
PIPELINE
> NXY-059 DEVELOPMENT Compound Mechanism Areas under investigation Phase Estimated filing date
TERMINATED FOLLOWING
RESULTS FROM SAINT II TRIAL. NCEs PC I II III Europe US
PN-400 (Pozen) naproxen + signs and symptoms of OA ggg >2009 2009
> US ANAESTHETIC AND ANALGESIC esomeprazole and RA
PRODUCTS DIVESTED TO ABRAXIS AZD3480 neuronal nicotinic cognitive disorders in ggg >2009 >2009
BIOSCIENCE, INC. IN JULY. receptor agonist schizophrenia
AZD3480 neuronal nicotinic Alzheimers disease ggg >2009 >2009
> AZD3480 TO PROGRESS receptor agonist
INTO PHASE IIB CLINICAL AZD9272 glutamate receptor neuropathic pain gg >2009 >2009
TESTING IN ALZHEIMERS DISEASE modulator
AND COGNITIVE DISORDERS AZD2327 enkephalinergic anxiety and depression gg >2009 >2009
IN SCHIZOPHRENIA. receptor modulator
AZD5904 enzyme inhibitor multiple sclerosis gg >2009 >2009
AZD1080 Alzheimers disease gg >2009 >2009
MARKETED PRODUCTS AZD3783 anxiety and depression gg >2009 >2009
Seroquel (quetiapine fumarate) is an AZD3102 Alzheimers disease g >2009 >2009
atypical anti-psychotic drug. It is indicated AZD6538 neuropathic pain g >2009 >2009
for schizophrenia in 87 markets and bipolar AZD8797 multiple sclerosis g >2009 >2009
mania in 73 markets and in the US has the AZD1940 nociceptive and g >2009 >2009
neuropathic pain
g
additional indication for bipolar depression.
AZD3241 Parkinsons disease >2009 >2009
g
Its overall clinical efficacy and tolerability
AZD2066 analgesia >2009 >2009
g
profile has made it the leading atypical anti-
AZD6280 anxiety >2009 >2009
g
psychotic in the US. AZD1386 analgesia >2009 >2009
AZD2624 schizophrenia g >2009 >2009
Zomig (zolmitriptan) is for the treatment AZD0328 Alzheimers disease g >2009 >2009
of migraine with or without aura. AZD3043 GABA-A receptor short-acting anaesthetic g >2009 >2009
modulator
Diprivan (propofol), an intravenous general AZD7903 analgesia g >2009 >2009
Line extensions
gggg
anaesthetic, is used in the induction and
Seroquel SR D2/5HT2 antagonist schizophrenia Filed Filed
gggg
maintenance of anaesthesia, light sedation
Seroquel D2/5HT2 antagonist bipolar maintenance 4Q 2007 2Q 2007
gggg
for diagnostic procedures and for intensive
Seroquel D2/5HT2 antagonist bipolar depression 4Q 2007 Approved
gggg
care sedation.
Seroquel SR D2/5HT2 antagonist generalised anxiety disorder 2H 2008 1H 2008
Seroquel SR D2/5HT2 antagonist major depressive disorder gggg 2H 2008 1H 2008
Naropin (ropivacaine) is the worlds best- Seroquel SR D2/5HT2 antagonist bipolar mania gggg 1H 2008 1H 2008
selling, long-acting local anaesthetic. Seroquel SR D2/5HT2 antagonist bipolar depression gggg 1H 2008 1H 2008
With its safety and mobility profile, it is Discontinued projects
replacing the previous standard treatment NXY-059 stroke
We have discontinued these
of bupivacaine in major markets. AZD9272 anxiety
developments as a result of their failure
AZD9335 neuropathic pain to meet their target product profiles.
Xylocaine (lidocaine) continues to be the AZD7512 depression and anxiety
worlds most widely used short-acting local
anaesthetic after more than 50 years on Abbreviations in this pipeline table are explained in the Glossary on pages 179 and 180.
the market.
NEUROSCIENCE MEDICINES CONTINUED
WE AIM TO STRENGTHEN OUR POSITION IN THE NEUROSCIENCE PIPELINE

Our pipeline includes the life-cycle
MARKET, THROUGH FURTHER GROWTH OF SEROQUEL AND THE management initiatives for approved
SUCCESSFUL INTRODUCTION OF A RANGE OF LIFE-CHANGING products mentioned above, as well as
development compounds across the whole
MEDICINES IN AREAS OF SIGNIFICANT MEDICAL NEED. discovery and development cycle.
PRODUCTS dose range by the second day of dosing. Our product pipeline and life-cycle
Seroquel offers a well-established benefit/risk The Seroquel SR data set contains unique management efforts are focused on the
profile, with proven efficacy across a range data on relapse prevention compared with important areas of psychiatry, analgesia,
of symptoms in schizophrenia and bipolar the immediate-release (IR) formulation. neurology and anaesthesia. Following the
disorder and has an advantageous tolerability Seroquel SR is also being studied in the new disease area review described on page 38
profile. This includes placebo-like effects indications of major depressive disorder (MDD) we took the decision to discontinue discovery
on extrapyramidal symptoms across the and generalised anxiety disorder (GAD). work in Parkinsons disease, multiple
dose range in the licensed indications of sclerosis and neuroprotection in stroke, but
schizophrenia and bipolar mania. In addition In February 2006, Teva Pharmaceuticals USA current projects in development will continue
there is no elevation of prolactin. amended its previously submitted Abbreviated as planned.
New Drug Application for quetiapine fumarate
This profile has led to the increased use of 25mg by adding 100, 200 and 300mg tablets. Psychiatry
Seroquel, exceeding market growth in all Further information on our ongoing patent In psychiatry, we continue to expand
markets commercialised by AstraZeneca. infringement lawsuit against Teva in the US the opportunities for Seroquel. Clinical
Seroquel is the market-leading atypical anti- in relation to quetiapine fumarate (the active programmes for GAD and MDD using the
psychotic in the US in terms of monthly new ingredient in Seroquel) is set out on page141. Seroquel SR formulation are underway.
and total prescriptions. In Europe, Seroquel An additional clinical programme with
continues to grow two to three times faster Zomig is available in a unique range of Seroquel SR was initiated in bipolar disorder
than the atypical market by value. Seroquel formulations, offering physicians a choice in December. Filings for all these programmes
for the treatment of bipolar mania has been of ways to provide rapid relief for migraine are anticipated in 2008.
licensed in 73 countries. Bipolar disorder is patients. Zomig is the prescription market
now the fastest-growing segment for Seroquel. leader in Europe. To strengthen our psychiatry pipeline in
2006, we progressed two compounds,
In October, the US Food and Drug Zomig Nasal Spray delivers fast pain relief and AZD2327 and AZD3783, into clinical
Administration (FDA) approved the new now accounts for 7% of Zomig global sales. development for the treatment of anxiety
indication for Seroquel in bipolar depression. and depression.
Seroquel is the first and only single-agent Zomig Rapimelt is a melt-in-the-mouth
medication approved for both poles formulation offering patients a convenient, Analgesia
(mania and depression) in bipolar disorder. orange-flavoured tablet that can be taken In pain control, our research focus is nociceptive
The approval was based on the results of the without water whenever a migraine attack pain (caused by tissue damage) and
two BOLDER studies, which highlighted the strikes. Zomig Rapimelt now accounts for neuropathic pain (caused by nerve damage).
effectiveness of Seroquel as early as week more than 36% of Zomig global sales. We will expand our research capabilities in
one in both bipolar disorder type I and II. the area of chronic pain by building on the
A boxed warning regarding risk of suicidality Diprivan is the worlds best-selling phage and ribosome technologies owned by
in children and adolescents was added to the intravenous general anaesthetic. More than Cambridge Antibody Technology Group plc.
US bipolar depression labelling for Seroquel. 90% of total Diprivan sales consist of Diprivan
This is consistent with the US label warnings EDTA, a microbial-resistant formulation, Our three candidate drugs in development
on other anti-depressants. which is approved in the majority of markets. from the collaboration we entered into with
NPS Pharmaceuticals, Inc. in March 2001,
New dosage strengths of Seroquel (50mg Naropin obtained approval in the EU and have been joined by AZD1940 and AZD1386
and 400mg) were launched in the US in April New Zealand for extended use in paediatric potential analgesics from our Montreal
2006, providing increased dosing flexibility. patients to include neonates and infants aged discovery laboratories.
below one year old. These are the first approvals
In July, a New Drug Application (NDA) was that will enable children of this age to benefit In August, we announced an exclusive global
submitted to the FDA seeking approval for from an effective, long-acting local anaesthetic. agreement with Pozen Inc. to co-develop
the new once-daily, sustained-release (SR) fixed-dose combinations utilising Pozens
formulation of Seroquel for schizophrenia. In July, we sold our range of US branded proprietary formulation technology. The initial
Beginning in October, further submissions anaesthetics and analgesic products (including development is PN-400, a fixed-dose
were made to regulatory authorities in Diprivan and Naropin) to Abraxis BioScience, combination of naproxen and esomeprazole,
Europe, Canada and other markets. In Inc. and entered into a five-year supply which has the potential to provide chronic pain
addition to the convenience of once-daily agreement with them for these products. sufferers with a new treatment that has good
dosing, the new formulation will offer faster efficacy and a low upper gastrointestinal
titration and the ability to reach the effective side-effect profile.
DIRECTORS REPORT 25
Business Review
Neurology Anaesthesia PERFORMANCE 2005

We have eight development programmes, AZD3043, a novel, short-acting intravenous Reported performance
of which three are in clinical evaluation, in anaesthetic/sedative agent, was licensed from Sales in the Neuroscience therapy area rose
Alzheimers disease and specific segments Theravance, Inc. in May. AZD3043 is in late by 16% in 2005, up to $4,059 million from
of other neuro-degeneration diseases, pre-clinical development and we will undertake $3,496 million in 2004. Seroquel was the
multiple sclerosis and Parkinsons disease. the clinical development of the compound. principal driver of performance, recording
If the project succeeds and if regulatory approval a 36% increase in sales.
In October, we announced that we were is received, AstraZeneca will manufacture
ceasing development of the investigational and commercialise this compound. Underlying performance
drug NXY-059 for Acute Ischaemic Stroke, On a constant exchange rate basis,
after analysing the results from the second Details of all compounds in the pipeline in Neuroscience sales grew by 15%.
and pivotal Phase III trial, SAINT II. The trial, the areas of psychiatry, analgesia, neurology
which recruited approximately 3,200 patients and anaesthesia are contained in the table on Seroquel sales reached $2,761 million
worldwide, did not meet its primary outcome page 23. (up 35%). In the US, Seroquel sales
of a statistically significant reduction in stroke- increased 33% to $2,003 million, ahead
related disability, as assessed by the Modified PERFORMANCE 2006 of prescription growth of 20% as a result
Rankin Scale. The SAINT II trial did not Reported performance of higher realised prices and favourable
support the findings from the first, smaller Neuroscience sales grew by 16% to contract rebate adjustments. Seroquel share
(approximately 1,700 patients) Phase III trial, $4,704 million in 2006 from $4,059 million of new prescriptions in the US atypical
SAINT I, which did show a positive effect on in 2005 with growth in all geographic areas, anti-psychotic market increased to 29.8%
disability as measured by the Modified Rankin driven chiefly by Seroquel. in December 2005. In other markets, sales
Scale. Both trials were required to show for the full year increased by 40% on strong
a positive benefit on disability to support Underlying performance growth in Europe (up 48%), Asia Pacific
a regulatory filing. After excluding exchange effects of $11 million, (up 22%) and Canada (up 29%).
underlying growth was 16%.
We will work closely with the SAINT trials Zomig sales declined by 3% to $352 million,
Steering Committee to analyse the pooled data Seroquel sales reached $3,416 million (up as growth in other markets (up 8%) was more
from the SAINT I and SAINT II trials to ensure 24%). In the US, Seroquel sales were up than offset by an 18% decline in the US.
the lessons for future stroke research are 24% to $2,486 million. Total prescriptions The US decline was chiefly as a result of lower
identified and communicated appropriately increased by 12%, well ahead of the market. first-quarter sales following the return of the
via peer-reviewed medical journals and The Seroquel share of total prescriptions in distribution arrangements from MedPointe,
relevant scientific congresses. We plan to the US anti-psychotic market increased to which took effect from 1 April 2005.
work with the SAINT Steering Committee to 30.2% in December, up 1.7 percentage
present the data at the International Stroke points over last year. In other markets, sales Diprivan sales in other markets were down
Congress in San Francisco in February 2007. were up 23%, on good growth in Europe 8% to $369 million. US sales declined 44%,
NXY-059 was licensed from Renovis, Inc. (up 25% to $619 million) and in Asia Pacific chiefly on lower prices as a result of the
(up 15% to $149 million). introduction of another generic product.
AZD3102, for the treatment of Alzheimers
disease, is in pre-clinical development in Zomig sales increased by 13% to $398 million.
collaboration with Dyax Corp. Zomig sales comparisons in the US for the
full year as compared with 2005 are affected
As announced by Targacept, Inc. in December, by the resumption of full responsibility from
AZD3480, the neuronal nicotinic receptor MedPointe, Inc. for US commercialisation
agent that we licensed from Targacept, has in April 2005. Sales for Zomig in the US were
successfully completed the planned evaluation up 39%, although total prescriptions declined
studies and will progress into Phase IIb by 6%. Sales of Zomig in other markets
clinical testing in both Alzheimers disease were unchanged.
and cognitive disorders in schizophrenia.
The divestment of Diprivan in the US in June
led to a 17% decline in sales to $304 million.
ONCOLOGY MEDICINES

> ARIMIDEX SALES GREW 29% TO 2006 2005 2004 2005 2004
$1.5 BILLION NOW THE LEADING Growth

due to
Growth
due to
HORMONAL BREAST CANCER THERAPY Growth exchange Growth exchange Growth Growth Growth Growth
IN THE US, JAPAN AND FRANCE. $m $m $m $m $m $m $m % % % %
> CASODEX GROWTH CONTINUED Arimidex 1,508 338 (11) 1,181 354 16 811 29 28 44 46
IN BOTH EARLY AND ADVANCED Casodex 1,206 104 (21) 1,123 97 14 1,012 9 7 10 11
PROSTATE CANCER. Zoladex 1,008 17 (13) 1,004 65 22 917 1 - 7 9

Iressa 237 (30) (6) 273 (118) 2 389 (11) (13) (31) (30)
> ZOLADEX SALES AGAIN EXCEEDED Faslodex 186 45 1 140 39 2 99 32 33 39 41
$1 BILLION, 20 YEARS AFTER Nolvadex 89 (22) (3) 114 (21) 1 134 (19) (22) (16) (15)
FIRST APPROVAL. Other 28 18 10 (5) 1 14 180 180 (36) (29)
> ZACTIMA PHASE III NSCLC Total 4,262 470 (53) 3,845 411 58 3,376 12 11 12 14
TRIALS CONTINUE.
> RECENTIN (FORMERLY AZD2171) PIPELINE
PIVOTAL CRC CLINICAL TRIAL
PROGRAMME STARTED.
gggg
> AGREEMENT TO CO-PROMOTE Zactima VEGF/EGF TKI inhibitor NSCLC 2H 2008 2H 2008
ABRAXANE WITH ABRAXIS with RET kinase activity
BIOSCIENCE, INC. IN THE US. Recentin (AZD2171)1 VEGF signalling inhibitor NSCLC and CRC gggg >2009 >2009
(VEGFR-TKI)
ggg
> ALLIANCE WITH SCHERING AG TO
Zactima VEGF/EGF TKI inhibitor medullary thyroid cancer 2H 2008 2H 2008
CO-DEVELOP A NOVEL SERD TO with RET kinase activity
ggg
TREAT BREAST CANCER. ZD4054 endothelin A receptor prostate cancer >2009 >2009
antagonist
AZD5896 AGT inhibitor solid tumours ggg >2009 >2009
MARKETED PRODUCTS AZD6244 MEK inhibitor solid tumours ggg >2009 >2009
Arimidex (anastrozole) is the worlds (ARRY-142886)
leading aromatase inhibitor by value and CAT-3888 recombinant hairy cell leukaemia ggg >2009 >2009
immunotoxin hairy cell
volume for the treatment of breast cancer.
AZD0530 SRC kinase inhibitor solid tumours and gg >2009 >2009
haematological malignancies
gg
Faslodex (fulvestrant) is an oestrogen
AZD1152 aurora kinase inhibitor solid tumours and >2009 >2009
receptor antagonist for the treatment of haematological malignancies
gg
breast cancer, with no known agonist effects, AZD4769 solid tumours >2009 >2009
that down-regulates the oestrogen receptor. AZD2281 PARP inhibitor breast cancer gg >2009 >2009
AZD4877 solid tumours gg >2009 >2009
Casodex (bicalutamide) is the worlds leading AZD1689 hypoxia activated solid tumours gg >2009 >2009
anti-androgen therapy by value and volume cytotoxic
for the treatment of prostate cancer. AZD8931 solid tumours gg >2009 >2009
AZD7762 solid tumours gg >2009 >2009
Zoladex (goserelin acetate implant), in one- AZD9935 VEGF signalling inhibitor solid tumours g >2009 >2009
(VEGFR-TKI)
g
and three-month depots, is the worlds
AZD0424 SRC kinase inhibitor solid tumours >2009 >2009
g
second largest LHRH agonist by value for
AZD5180 anti-angiogenic solid tumours >2009 >2009
g
the treatment of prostate cancer, breast AZD1845 solid tumours >2009 >2009
cancer and certain benign gynaecological AZD8330 solid tumours g >2009 >2009
disorders. AZD3646 solid tumours and g >2009 >2009
haematological malignancies
Iressa (gefitinib) is an epidermal growth AZD9468 solid tumours g >2009 >2009
factor receptor-tyrosine kinase inhibitor AZD2932 solid tumours g >2009 >2009
(EGFR-TKI) that acts to block signals for AZD4992 g >2009 >2009
CAT-8015 recombinant immunotoxin haematological malignancies g >2009 >2009
g
cancer cell growth and survival in NSCLC.
CAT-5001 recombinant immunotoxin solid tumours >2009 >2009
Nolvadex (tamoxifen citrate) remains a

AZD6918 solid tumours g >2009 >2009
Line extensions
gggg
widely prescribed breast cancer treatment. Faslodex oestrogen receptor first-line advanced >2009 >2009
antagonist breast cancer
Abraxane (paclitaxel protein-bound Faslodex oestrogen receptor adjuvant gggg >2009 >2009
particles for injectable suspension) (albumin- antagonist
bound), owned by Abraxis BioScience, Inc., Iressa EGFR-TK inhibitor breast cancer ggg >2009 >2009
is a novel, albumin-bound formulation of Discontinued projects
paclitaxel for the treatment of breast cancer. Faslodex second-line after aromatase We have discontinued these
inhibitor failure developments as a result of their failure
Abraxane is co-promoted in the US under
an agreement with Abraxis BioScience, Inc. Iressa head and neck
1
This compound is in Phase II/III development.
DIRECTORS REPORT 27
Business Review
WE AIM TO MAINTAIN OUR POSITION AS A WORLD LEADER did, however, confirm a number of important
clinical benefits for Iressa, including tumour
IN CANCER TREATMENT THROUGH CONTINUED GROWTH OF shrinkage and a significant improvement in
ARIMIDEX, FURTHER LAUNCHES AND LINE EXTENSIONS OF the time to treatment failure. Pre-planned
subgroup analyses showed a statistically
NEWER PRODUCTS SUCH AS FASLODEX, AND THE SUCCESSFUL significant increase in survival with Iressa
INTRODUCTION OF NOVEL THERAPEUTIC APPROACHES in patients of Asian ethnicity and in patients
who had never smoked.
CURRENTLY IN THE DEVELOPMENT PIPELINE.
Following the announcement of the ISEL data,
PRODUCTS study were presented. This study compared in 2005 we voluntarily withdrew the European
Arimidex continues to grow strongly on the Faslodex with exemestane in patients who had submission for Iressa and regulatory authorities
basis of the ATAC five-year treatment data. received prior aromatase inhibitor therapy the in the US and Canada restricted the use of
In several key markets, it has already replaced first Phase III trial in this patient population. The Iressa to those patients already benefiting
tamoxifen as the preferred primary adjuvant study showed Faslodex to have similar efficacy from the drug. In the Asia Pacific region, due
treatment for post-menopausal women with to exemestane. Trials are ongoing to further to the ethnic differences in lung cancer, Iressa
hormone-receptor positive invasive early understand the full utility of Faslodex in the has become an established therapy for pre-
breast cancer. In 2006, Arimidex exceeded treatment of post-menopausal breast cancer. treated advanced NSCLC, and use of the
two million patient years of clinical experience drug in the first-line advanced setting is now
and is now the leading hormonal therapy in Casodex continued growth has been driven being studied in a large, Phase III, pan-Asian
the US, Japan and France. In June, Arimidex by: the use of Casodex 50mg in advanced trial known as the IPASS study, which
was approved in Europe for a new switch prostate cancer; the growth of Casodex involves 1,212 patients.
indication for patients who have already 150mg, which is approved for use in locally
received two to three years of tamoxifen. This advanced prostate cancer in over 60 countries; Progress continues to be made in identifying
was based on results from three collaborative and the growth of Casodex 80mg, which is which patients, in which treatment settings,
group trials: ABCSG-8, ARNO and ITA, which only available in Japan, where it is approved are most likely to benefit from treatment
showed the benefits of switching to Arimidex for all stages of prostate cancer. with Iressa, and we will strive to complete
rather than continuing on tamoxifen. Arimidex a programme of such work.
is the first and only aromatase inhibitor Zoladex is used for the treatment of prostate
indicated as both primary adjuvant and cancer (for which it is approved in 105 The Japanese Phase III Study V-15-32
switch therapy. countries), breast cancer and gynaecological comparing Iressa with docetaxel in NSCLC
disorders. In non-metastatic prostate cancer, has now reported. There was no statistically
Data presented at the European Society of Zoladex is the only luteinising-hormone- significant difference in overall survival between
Medical Oncology meeting in September releasing hormone (LHRH) agonist shown the two treatments but the study, which was
showed that the combination of Arimidex with to improve overall survival both when used in set up to demonstrate statistical non-inferiority,
Herceptin (trastuzumab) was synergistic and addition to radical prostatectomy and when did not meet the primary objective, as the
effective in patients with advanced post- used in addition to radiotherapy. In breast confidence interval did not lie entirely below
menopausal breast cancer who were both cancer, Zoladex is widely approved for use in the pre-defined non-inferiority limit. However,
hormone-receptor positive and Her2 Neu advanced breast cancer in pre-menopausal we believe these data have not altered the
positive. These patients are considered to be at women. In a number of these countries, benefit/risk profile of Iressa in pre-treated
higher risk of the cancer spreading. When the Zoladex is also approved for the adjuvant Japanese NSCLC patients.
two drugs were combined, this was proved treatment of early stage pre-menopausal
more effective than Arimidex alone. These data breast cancer as an alternative to and/or in Further Phase II trials are ongoing to evaluate
do not yet form part of the current licence. addition to chemotherapy. Zoladex offers the potential benefits of Iressa in NSCLC and
Arimidex is also approved for the treatment of proven survival benefits for breast cancer other EGF receptor-driven tumours.
advanced breast cancer in post-menopausal patients with a favourable tolerability profile.
women based on demonstrated advantages Abraxane: In April, we announced an
over tamoxifen and megestrol acetate. Iressa is indicated for the treatment of agreement with Abraxis BioScience, Inc.
advanced non-small cell lung cancer (NSCLC) (Abraxis) to co-promote Abraxiss product
Faslodex offers an additional hormonal in patients who have failed chemotherapy. Abraxane in the US. Abraxane (paclitaxel
therapy for patients with hormone-sensitive It is approved in 35 countries. Clinical trials protein-bound particles for injectable
advanced breast cancer, delaying the need have shown that Iressa is an effective and suspension) (albumin-bound) is a novel,
for cytotoxic chemotherapy. Due to its novel generally well-tolerated treatment for some albumin-bound formulation of paclitaxel,
mode of action, Faslodex offers an effective, patients with advanced NSCLC. Those which was approved by the US Food and
well-tolerated additional treatment with the patients who benefit tend to do so quickly, Drug Administration (FDA) in January 2005.
compliance and convenience benefits of and sometimes results are dramatic. Abraxane is indicated for the treatment of
a once-monthly injection. Faslodex is now breast cancer after failure of combination
launched in more than 30 markets. It is In 2004, results from the ISEL study, which chemotherapy for metastatic disease or
indicated for the second-line treatment of compared Iressa with placebo in advanced relapse within six months of adjuvant
hormone-receptor positive advanced breast NSCLC patients who had failed prior chemotherapy. This agreement gives us
cancer in post-menopausal women. chemotherapy, failed to reach statistical access to the key US chemotherapy
significance compared with placebo in the market and Abraxane compliments and
At the San Antonio Breast Cancer Symposium overall population and in the subgroup of extends our US oncology product portfolio.
in December, the first results of the EFECT patients with adenocarcinoma. The ISEL study Co-promotion started on 1 July.
ONCOLOGY MEDICINES CONTINUED
PIPELINE the subsequent commencement of the pivotal $614 million. Total prescriptions increased by
Our pipeline includes life-cycle management Phase II/III NSCLC study in November 2005, 21%. Arimidex share of total prescriptions for
initiatives for approved products mentioned the pivotal colo-rectal cancer (CRC) programme hormonal treatments for breast cancer was
above, as well as compounds across the started in 2006. The programme includes 37.5% in December, up 2.7 percentage points
whole discovery and development cycle. a head-to-head study comparing Recentin during the year. In other markets, Arimidex
plus FolFox with bevacizumab (Avastin) plus sales grew by 29% due to an increase in sales
Zactima (vandetanib) is a once-daily oral anti- FolFox in first-line CRC. It also includes two in Europe (up 30%) and Asia Pacific (up 27%)
cancer therapy that selectively inhibits clinically other studies in CRC, namely a second-line on strong volumes.
validated pathways in cancer (vascular head-to-head study with bevacizumab and
endothelial growth factor (VEGF) receptor, a first-line study involving Recentin with and Casodex sales increased by 9% to
EGF receptor), blocking the development of without chemotherapy. As well as these $1,206 million. In the US, sales were up 23%
a tumours blood supply (anti-angiogenesis) programmes, the US National Cancer Institute to $295 million. Sales in other markets were up
and the growth and survival of the tumour is now recruiting to 15 studies in a number of 5%, with sales in Japan up 10% to $286 million.
itself. Zactima also inhibits receptor-tyrosine different tumour settings as part of the
kinase (RET kinase) activity, an important Recentin signal search programme. Iressa sales in markets outside the US increased
growth driver in certain types of thyroid cancer. by 10%. Sales in the Asia Pacific region were
The foundations of our early oncology pipeline up 15% to $207 million. Worldwide sales of
The worldwide Phase III second-line NSCLC are novel compounds that target signalling Faslodex were up 32% to $186 million, largely
development programme with Zactima is pathways believed to be pivotal in cancer cell due to the 74% increase in Europe. Sales in
enrolling patients in the US, Europe, and the growth, invasion and survival, with two products the US were up 12%.
rest of the world, including China and Japan. in Phase II and eight others in Phase I
The Phase III studies currently underway development. AZD6244, a potent MEK inhibitor Zoladex sales exceeded $1 billion for the
involve: docetaxel with and without Zactima; licensed from Array Biopharma, has now entered second year in a row with declines in the US
pemetrexed with and without Zactima; Phase II studies across a range of tumours, offset by growth elsewhere. We have recorded
Zactima versus erlotinib; and Zactima versus including malignant melanoma, pancreatic revenue of $18 million from Abraxane.
placebo plus best supportive care in patients cancer, CRC and NSCLC. The Phase II trials
who have been previously treated with an in hormone-resistant prostate cancer for the PERFORMANCE 2005
EGF receptor antagonist. endothelin A antagonist, AZD4054, are Reported performance
proceeding and will report mature survival data Oncology sales increased by 14% to reach
In 2005, promising early data in hereditary in early 2007. Phase I studies with the poly-ADP- $3,845 million in 2005, compared with
medullary thyroid cancer led to orphan drug ribose polymerase (PARP) inhibitor AZD2281, $3,376 million in 2004.
designation for Zactima by the FDA and the part of the KuDOS portfolio, have now
European Medicines Agency (EMEA), as well completed and Phase II studies will Underlying performance
as fast-track status for regulatory review by the commence in early 2007. The dual-specific Excluding the effects of exchange, Oncology
FDA. Orphan drug designation encourages the Src/Abl kinase inhibitor, AZD0530, has shown sales grew by 12%.
development of new products that demonstrate dramatic effect on biomarkers of cell motility
promise for the diagnosis, prevention and/or and bone resorption and is starting Phase II Casodex sales in the US increased by 3% to
treatment of life-threatening or very serious studies in a range of malignancies. This $239 million. Sales in other markets were up
conditions that are rare and affect relatively few compound has the potential for activity in a 11%, with Japan accounting for nearly half of
people (not more than five in 10,000 people a wide range of tumours. The following this growth.
year in the EU and fewer than 200,000 people compounds from the early portfolio achieved
a year in the US). Fast-track designation enables First Time in Man during the year: AZD4877, Arimidex sales increased 44% to $1,181 million.
more frequent discussions with the FDA in order a novel inhibitor of cell cycle; AZD7762, Arimidex value share of the market for hormonal
to obtain their input into the drug development a tumour-selective chemo sensitizer; AZD8931, treatments for breast cancer reached 50%
plan. It also provides the option of submitting a dual inhibitor of epidermal growth factor in October 2005. In the US, sales of Arimidex
the New Drug Application in sections as receptor (erbB1 and erbB2) signalling pathways. were up 59%. In other markets, sales were up
opposed to simultaneous submission of all 35% on excellent growth in Europe (up 35%)
components, thereby facilitating and expediting AstraZeneca and Schering AG formed a new and Japan (up 27%).
the development and review of new drugs alliance in September to co-develop and jointly
intended to treat serious or life-threatening commercialise AZD4992, Schering AGs novel Iressa sales were down 31%, chiefly as a result
conditions and that demonstrate the potential SERD (selective estrogen receptor down- of the 63% decline in the US. Iressa sales in
to address unmet medical needs. A Phase II trial regulator) for the treatment of breast cancer. Asia Pacific increased 7% as sales in China
has completed recruitment and a randomised and other markets more than offset a 15%
study is ongoing. In addition, the anti-cancer PERFORMANCE 2006 decline in Japan.
activity of Zactima continues to be evaluated Reported performance
in colo-rectal, glioma, head and neck, breast Oncology sales increased by 11% to Sales for Faslodex reached $140 million (up
and prostate cancers. $4,262 million in 2006 principally due to the 39%) as a result of good growth in Europe
continued strong Arimidex performance. since marketing approval in March 2004.
Recentin (formerly AZD2171) is a highly potent, Sales in the US were up 11%.
selective, orally active inhibitor of VEGF receptor Underlying performance
signalling in solid tumours. Recentin inhibits all Excluding the effects of exchange, Oncology Zoladex sales increased 7% to $1,004 million,
three VEGF receptors irrespective of activating sales grew by 12%. as good sales growth in other markets (up
ligand. Following the decision in 2005 to 13%) offset a 23% decline (from both volume
accelerate the development of Recentin, and In the US, sales of Arimidex were up 29% to and price effects) in the US.
DIRECTORS REPORT 29
Business Review
RESPIRATORY AND INFLAMMATION (R&I) MEDICINES

> SYMBICORT ACHIEVED SALES 2006 2005 2004 2005 2004
OF $1.2 BILLION (UP 18%). Growth

due to
Growth
due to
> PULMICORT CONTINUED TO Sales underlying effects Sales underlying effects Sales underlying reported underlying reported
SHOW STRONG PERFORMANCE $m $m $m $m $m $m $m % % % %
WITH STEADY GROWTH. Pulmicort 1,292 132 (2) 1,162 96 16 1,050 11 11 9 11

Symbicort 1,184 182 (4) 1,006 179 30 797 18 18 22 26
> IN JULY,THE FDA APPROVED Rhinocort 360 (27) 387 21 5 361 (7) (7) 6 7
SYMBICORT IN A PRESSURISED Oxis 88 (3) 91 (14) 4 101 (3) (3) (14) (10)
METERED DOSE INHALER (PMDI) Accolate 81 9 72 (45) 1 116 13 13 (39) (38)
FOR MAINTENANCE TREATMENT Other 146 (9) 155 (7) 4 158 (6) (6) (5) (2)
OF ASTHMA IN PATIENTS AGED Total 3,151 284 (6) 2,873 230 60 2,583 10 10 9 11
12 YEARS AND ABOVE.
> IN OCTOBER, SYMBICORT SMART,
A NEW APPROACH TO MANAGING PIPELINE
ASTHMA USING SYMBICORT AS BOTH Compound Mechanism Areas under investigation Phase Estimated filing date
A MAINTENANCE AND RELIEVER
ggg
THERAPY WAS APPROVED FOR USE IN AZD9056 ion channel rheumatoid arthritis >2009 >2009
ADULTS THROUGH THE EU MUTUAL blocker (P2X7)
RECOGNITION PROCEDURE. AZD1981 asthma ggg >2009 >2009
AZD5672 rheumatoid arthritis gg >2009 >2009
gg
> IN SEPTEMBER,WE ENTERED INTO
AZD6703 rheumatoid arthritis >2009 >2009
gg
A PARTNERSHIP WITH DYNAVAX AZD4818 COPD >2009 >2009
gg
TECHNOLOGIES CORPORATION TO CAT-354 anti-IL-13 antibody asthma >2009 >2009
DEVELOP A TLR-9 AGONIST FOR AZD5904 COPD gg >2009 >2009
ASTHMA AND COPD. AZD1744 asthma gg >2009 >2009
AZD6067 protease inhibitor COPD g >2009 >2009
AZD6357 osteoarthritis g >2009 >2009
g
MARKETED PRODUCTS AZD7928 COPD >2009 >2009
Symbicort (budesonide/formoterol) is an AZD2392 asthma g >2009 >2009
innovative and effective asthma and COPD AZD3825 asthma g >2009 >2009
treatment that offers superior efficacy with AZD1236 COPD g >2009 >2009
flexible dosing. AZD5069 COPD g >2009 >2009
AZD9668 COPD g >2009 >2009
Pulmicort (budesonide) is a corticosteroid AZD9215 asthma g >2009 >2009
AZD1678 asthma g >2009 >2009
g
anti-inflammatory inhalation drug that helps
AZD8848 asthma >2009 >2009
g
prevent symptoms and improves the
AZD8075 asthma >2009 >2009
g
control of asthma.
AZD6605 osteoarthritis >2009 >2009
CAM-3001 rheumatoid arthritis g >2009 >2009
Pulmicort Respules (budesonide inhalation AZD3199 asthma/COPD g >2009 >2009
suspension) is the first and only nebulised Line extensions
corticosteroid in the US for children as Symbicort inhaled steroid/fast Symbicort Maintenance and gggg Approved
young as 12 months. Turbuhaler onset, long-acting Reliever Therapy for asthma
2 agonist (SMART)
Oxis (formoterol) is a fast- and long-acting Symbicort pMDI inhaled steroid/fast asthma gggg Filed1 Approved2
onset, long-acting
beta-agonist therapy for asthma and COPD. 2 agonist
Rhinocort (budesonide) is a nasal steroid Symbicort pMDI inhaled steroid/fast COPD gggg Filed1 1H 2008
onset, long-acting
treatment for allergic rhinitis (hay fever), 2 agonist
perennial rhinitis and nasal polyps. Discontinued projects
AZD3778 indication rhinitis
Accolate (zafirlukast) is an oral AZD2914 COPD
leukotriene receptor antagonist for AZD8955 OA We have discontinued these
the treatment of asthma. AZD9056 COPD developments as a result of their failure
AZD8309 RA
AZD8309 COPD
AZD3342 COPD
1
To be supplemented in 2008 with data supporting two additional strengths.
2
US approval based on 12 years and above.
RESPIRATORY AND INFLAMMATION (R&I) MEDICINES CONTINUED
WE AIM TO BUILD ON OUR STRONG POSITION IN ASTHMA The first European approvals (in Finland,
Latvia, Germany, Austria and Denmark) for
TREATMENT THROUGH THE GROWTH OF KEY PRODUCTS, a more environmentally friendly HFA-based
PARTICULARLY SYMBICORT, NEW INDICATIONS AND MARKET Pulmicort pMDI were received in 2006.
LAUNCHES AND THE SUCCESSFUL INTRODUCTION OF NOVEL Pulmicort Respules is the first and only
APPROACHES TO OTHER AREAS OF INFLAMMATORY DISEASE nebulised corticosteroid in the US for children as
young as 12 months. Sales have grown strongly
SUCH AS SEVERE CHRONIC OBSTRUCTIVE PULMONARY DISEASE as a result of high medical need in the age
(COPD), RHEUMATOID ARTHRITIS AND OSTEOARTHRITIS. group combined with the products beneficial
profile, which together have strengthened the
products position as the inhaled corticosteroid
PRODUCTS The SMILE study was published in The Lancet of choice for the treatment of children under
Symbicort is an innovative treatment that in August. This study (which involved 3,394 five with asthma. In September, Pulmicort
provides rapid, effective control of asthma patients) was designed to evaluate the Respules was approved and launched in Japan
and COPD. contribution of the as-needed budesonide for the maintenance treatment of paediatric
part of Symbicort SMART in preventing asthma and as prophylactic therapy in children
In July, the Food and Drug Administration asthma exacerbations. All patients were aged six months or over and less than five
(FDA) approved Symbicort in the US in a given Symbicort as maintenance therapy years of age.
pressurised Metered Dose Inhaler (pMDI) for and either terbutaline, formoterol or Symbicort
maintenance treatment of asthma in patients as reliever. The results show that the as- Information on AstraZenecas ongoing patent
aged 12 years and above. We continue to needed budesonide part of Symbicort SMART infringement action against IVAX in the US in
plan for a US launch around the middle of is effective in reducing exacerbations of all relation to a budesonide inhalation suspension
2007, although achieving this launch timeline types as well as in improving day-to-day is set out on page141.
is dependent upon successful transfer of symptom control compared to traditional
technology from development to manufacturing reliever therapy with bronchodilators alone. Oxis is a beta-agonist therapy with a fast
and completion of validation batches. onset and long-acting clinical effect for the
Preliminary data from the COMPASS study relief of asthma symptoms. Oxis is added to
Outside the US, Symbicort is marketed in the were published as an abstract at the European the treatment regime when corticosteroid
Turbuhaler dry powder device and is approved Respiratory Society meeting in September. treatment alone is not adequate. Oxis is also
in over 90 countries and launched in more This double-blind study demonstrated that indicated for symptom relief in COPD. During
than 70. the Symbicort SMART concept was more 2006, all drugs classified as long-acting beta
effective in reducing all forms of exacerbations agonists were required to include safety
In October, Symbicort SMART, a new than both double the usual maintenance precautions in their prescribing information
approach to managing asthma using dose of Symbicort plus a separate reliever such as not to be used in asthma without
Symbicort as both a maintenance and reliever medication and salmeterol/fluticasone at concurrent steroid treatment.
therapy was approved for use in adults through its most frequently prescribed fixed dose
the EU Mutual Recognition Procedure. (50/250 g twice daily) plus a separate Rhinocort is a treatment for allergic rhinitis
Symbicort SMART has been approved for reliever medication. (hay fever). It combines powerful efficacy with
use in over 25 countries and enables patients rapid onset of action and minimal side effects
to take control of their asthma simply using Symbicort is also approved in many countries and is available as a once-daily treatment in
just one inhaler for both maintenance and relief for use in patients with COPD, where trial data the Rhinocort Aqua (nasal spray) and the
of asthma symptoms. This treatment concept, have shown it reduces exacerbation rates Turbuhaler dry powder inhaler forms.
which represents a change from current compared to a long-acting bronchodilator.
medical practice, is possible with Symbicort PIPELINE
as it contains formoterol, a bronchodilator Pulmicort remains one of the worlds leading Our pipeline includes the life-cycle
which is both rapid-acting and long-lasting, asthma medicines and is available in several management initiatives for approved products
coupled with the corticosteroid budesonide forms, including the Turbuhaler dry powder mentioned above, as well as development
to provide an important anti-inflammatory inhaler, a pMDI and Pulmicort Respules compounds across the whole discovery and
effect. With Symbicort SMART, patients suspension for the treatment of children development cycle.
receive a maintenance dose in line with normal and infants.
practice to establish asthma control, and then We focus on developing new therapies for
take additional inhalations as needed if The current Pulmicort Turbuhaler has been currently unmet medical needs in COPD,
symptoms occur, to provide both rapid relief technically modified to improve dosing asthma, rheumatoid arthritis and osteoarthritis.
and increased asthma control. This means properties (dose uniformity) and to introduce
that the underlying inflammation is treated a dose counter. The enhanced version was
with every inhalation, even when Symbicort approved by the FDA in July.
is used for symptom relief, which leads to
a reduced risk of having an asthma attack.
DIRECTORS REPORT 31
Business Review
The development of Symbicort for COPD Sales of Symbicort increased by 18% to

and paediatric asthma in the US is on track, $1,184 million on continued market growth
with submissions scheduled for the first and share gains in Europe, where sales
half of 2008 and late 2007 respectively. were $1,018 million. Sales in other markets
The development of two new strengths of the reached $166 million.
pMDI product is also on track, with submission
of additional data to supplement the filing in Worldwide sales of Pulmicort were up 11% to
the EU scheduled for the second half of 2008. $1,292 million. Once again, the primary driver
for growth was Pulmicort Respules in the US,
As discussed in more detail on page 38, where sales were up 24%. Volume growth in
we acquired Cambridge Antibody Technology the US was approximately 10%, with price
Group plc (CAT) during the year. The existing changes, managed care rebate adjustments
alliance with CAT had established a strong and inventory movements also contributing
portfolio in R&I diseases, which continued to the sales growth. Pulmicort sales in the
to make good progress. Together, we are rest of the world were $457 million.
now working on 11 discovery projects in
R&I diseases. The first compounds are Rhinocort sales were down 7% to $360 million,
expected to move into development in 2007. chiefly on sales of Rhinocort Aqua in the US
In addition to forming the foundation for our market (down 9%).
biopharmaceuticals strategy, the acquisition
of CAT added CAT-354 (in Phase I trials for PERFORMANCE 2005
asthma) and CAM-3001 to the R&I pipeline. Reported performance
Continued growth from Symbicort drove
In September, we announced we had entered the increase in reported sales for R&I, which
into a three-year partnership with Dynavax grew by 11% from $2,583 million in 2004 to
Technologies Corporation (Dynavax) to pursue $2,873 million in 2005.
opportunities in the field of Toll-like receptor 9
(TLR-9) for use in asthma and COPD. Dynavax Underlying performance
has unique competence in generating On a constant exchange rate basis, sales in
immunostimulatory sequences that activate R&I increased by 9%.
TLR-9, and the alliance will enable us to expand
our portfolio of small molecules and biologicals. Symbicort sales reached $1,006 million. Sales
growth was 22% as market share continues
On 1 February 2007, we announced a major to increase in the fast-growing combination
discovery alliance with Argenta Discovery product segment of the asthma and COPD
Limited aimed at identifying improved markets. Over 80% of Symbicort sales were
bronchodilators to treat COPD. A team of made in Europe in 2005.
scientists from each company will collaborate
in order to identify long-acting muscarinic Sales of Pulmicort were up 9% as the 18%
(M3) antagonists (LAMAs) and dual acting growth in the US (fuelled by a 28% increase
muscarinic antagonist-2 agonist (MABA) in Pulmicort Respules) to $682 million more
candidate drugs. than offset a 2% decline in other markets.
Details of all compounds in the R&I pipeline Rhinocort sales were up 6% chiefly on sales
are contained in the table on page 29. of Rhinocort Aqua in the US (up 7%), where
price changes and managed care rebate
PERFORMANCE 2006 adjustments more than offset the 10% decline
Reported performance in total prescriptions. Rhinocort sales in the
Sales in the R&I therapeutic area grew by 10% US were $277 million.
from $2,873 million in 2005 to $3,151 million
in 2006. Pulmicort and Symbicort were the
major contributors to this growth.
Underlying performance
On a constant exchange rate basis, sales in
R&I increased by 10%.
INFECTION MEDICINES
MARKETED PRODUCTS
WE AIM TO BUILD A FRANCHISE IN THE TREATMENT OF Merrem/Meronem* (meropenem)
INFECTIOUS DISEASES BY INCREASING SALES OF MERREM is an intravenous carbapenem anti-
bacterial for the treatment of serious,
AND BY EXPLOITING OUR TRADITIONAL, STRUCTURAL AND hospital-acquired infections.
GENOMIC-BASED DISCOVERY TECHNOLOGIES TO BRING * Licensed from Sumitomo Pharmaceuticals Co., Ltd.
NEW PRODUCTS TO MARKET.

> MERREM SALES OF $604 MILLION. 2006 2005 2004 2005 2004
Growth Growth
> STEADY UNDERLYING GROWTH due to
Growth exchange
due to
Growth exchange Growth Growth Growth Growth
FOR MERREM IN THE US (33%), Sales underlying effects Sales underlying effects Sales underlying reported underlying reported
EUROPE (18%) AND GLOBALLY $m $m $m $m $m $m $m % % % %
(20%), DESPITE THE NEED TO Merrem 604 96 3 505 67 15 423 19 20 15 19
RESTRICT SUPPLY DURING Other 73 (29) - 102 (16) 2 116 (28) (28) (14) (12)
MANUFACTURING DISRUPTIONS. Total 677 67 3 607 51 17 539 11 12 9 13
> WORK DEDICATED TO FINDING

A NEW TREATMENT FOR
TUBERCULOSIS CONTINUES AT OUR PIPELINE
R&D FACILITY IN BANGALORE, INDIA.
ggg
> AGREEMENT TO DEVELOP AND CytoFab anti-TNF-alpha severe sepsis >2009 >2009
COMMERCIALISE CUBICIN polyclonal antibody
WITH CUBIST PHARMACEUTICALS, AZD5099 infection g >2009 >2009
INC. IN CHINA AND CERTAIN
OTHER COUNTRIES. Abbreviations in this pipeline table are explained in the Glossary on pages 179 and 180.
PIPELINE In December we entered into a licence PERFORMANCE 2006

Continued progress has been made in the agreement with Cubist Pharmaceuticals, Inc. Reported performance
discovery work at our R&D facility in Boston, for the development and commercialisation Infection sales rose by 12% from $607 million
US. Focused on anti-bacterial agents with of the antibiotic Cubicin (daptomycin for in 2005 to $677 million in 2006, as sales of
a novel mechanism of action, the programme injection) in China and certain other countries Merrem grew by 20%.
is now delivering clinical candidates for initial in Asia, the Middle East and Africa not covered
human phase testing. by existing Cubicin international partnering Underlying performance
agreements. The agreement does not include Excluding effects of exchange, underlying
As announced by us in November, the Japan, which is yet to be partnered. Cubicin sales in Infection increased by11%. Merrem
development programme for CytoFab, is the first antibiotic in a new class of anti- sales grew by 19% to reach $604 million,
our treatment for severe sepsis licensed from infectives called lipopeptides. primarily driven by increased performance
Protherics Inc., will be expanded with the in the US and Europe.
addition of a 480-patient Phase II study On 31 January 2007 we announced our
programme. This will be used to estimate acquisition of Arrow Therapeutics Ltd., PERFORMANCE 2005
more accurately both the required number a biotechnology company focused on the Reported performance
of patients and the appropriate dose(s) for discovery and development of anti-viral Infection sales grew by 13% to $607 million
the subsequent pivotal Phase III study. therapies. This transaction is an important from $539 million in 2004, with Merrem sales
Sepsis is a life-threatening condition resulting strategic step in strengthening our portfolio increasing by 19%.
from uncontrolled severe infections, which of anti-infective treatments and complements
affects an estimated three million people a our internal capabilities in anti-bacterials. Underlying performance
year worldwide. It also fits with our decision to re-focus our After excluding the effects of exchange,
disease area research, with infection and infection sales grew by 9%. Underlying
Work dedicated to finding a new treatment anti-bacterials now one of our key therapy growth of 15% from Merrem, with sales
for tuberculosis continues at our R&D facility areas. The acquisition augments our portfolio of $505 million, was the principal driver of
in Bangalore, India. Tuberculosis remains with clinical and pre-clinical compounds this growth.
a worldwide threat and is newly diagnosed and programmes. These include two anti-
in approximately two million people every Hepatitis C Virus (HCV) compounds that target
year in India and over eight million people the novel NS5a protein: A-831 in Phase I and
worldwide. For more information see the A-689 in pre-clinical development. Arrows
separate Corporate Responsibility Summary most advanced compound is RSV604,
Report 2006. currently in Phase II clinical development and
partnered with Novartis. RSV604 is a first-in-
class, small molecule, oral anti-Respiratory
Syncytial Virus (RSV) compound.
DIRECTORS REPORT 33
Business Review
GEOGRAPHIC REVIEW

> THE US DELIVERED AN EXCELLENT 2006 2005 2004 2005 2004
YEAR, DRIVEN NOTABLY BY NEXIUM, Growth

due to
Growth
due to
SEROQUEL, CRESTOR AND ARIMIDEX. Growth exchange Growth exchange Growth Growth Growth Growth
> ASTRAZENECA MAINTAINED ITS $m $m $m $m $m $m $m % % % %
MARKET POSITION AS THE SECOND US 12,449 1,678 10,771 1,140 9,631 16 16 12 12
LARGEST PHARMACEUTICAL Europe 8,903 519 (79) 8,463 598 216 7,649 6 5 8 11
COMPANY IN CANADA. Japan 1,503 73 (97) 1,527 114 (17) 1,430 5 (2) 8 7
RoW 3,620 343 88 3,189 290 183 2,716 11 14 15 21
> THE REST OF THE WORLD DELIVERED Total 26,475 2,613 (88) 23,950 2,142 382 21,426 11 11 10 12
A STRONG YEAR, DRIVEN BY KEY
GROWTH PRODUCTS (NEXIUM,
CRESTOR, SYMBICORT, SEROQUEL NORTH AMERICA Seroquel is now the first and only single
AND ARIMIDEX ) AND EXPANSION US medication approved by the FDA to treat both
INTO EMERGING MARKETS.
Product Performance, Clinical Trial Data depressive and manic episodes associated
> EUROPE ACHIEVED GOOD GROWTH IN and Regulatory Submissions with bipolar disorder. Clinical trials intended
2006 AHEAD OF KEY COMPETITORS, Reflecting our continued commitment to to support indications for Seroquel in both
DESPITE SIGNIFICANT GOVERNMENT attaining market leadership in a highly major depressive disorder and general
COST-CONTAINMENT INTERVENTIONS, competitive and challenging environment, sales anxiety disorder were recruiting in 2006.
ESPECIALLY IN GERMANY. in the US rose by 16% from $10,771 million in
2005 to $12,449 million in 2006. The combined Crestor was the fastest-growing branded
> IN ASIA PACIFIC,ASTRAZENECA
sales of Nexium, Seroquel, Crestor and single-agent statin in terms of share of new
REMAINS ONE OF THE FASTEST-
Arimidex were $7,775 million in 2006, which prescriptions in the US in 2006, with sales of
GROWING COMPANIES, INCLUDING
represented over 62% of our total US sales. $1,148 million. This performance was despite
CHINA WHERE HKAPI RANKED US
AstraZeneca is currently the fifth largest the market entry of generic statins, confirming
THE NUMBER ONE MULTINATIONAL
pharmaceutical company in the US, with that Crestor remains a clinically important
PHARMACEUTICAL COMPANY IN THE
our sales representing a 5% share of US option for many patients, especially the
PRESCRIPTION MARKET.
prescription pharmaceutical sales. Sales for broad range of higher-risk patients. There
> JAPAN CONTINUED TO GROW AHEAD Aptium Oncology (previously Salick Health were also three large-scale studies in several
OF THE MARKET, DRIVEN BY THE Care) and Astra Tech rose by 12% and 41% ethnic populations that are historically under-
PERFORMANCE OF CASODEX, LOSEC, to $374 million and $41 million, respectively. represented in clinical trials. We continued to
ARIMIDEX AND IRESSA. improve formulary access for Crestor among
Nexium continues to lead the proton pump managed care organisations in 2006.
> SALES IN THE LATIN AMERICA REGION
inhibitor (PPI) market for new prescriptions, total
INCREASED BY 22%, DRIVEN BY
prescriptions and total capsules dispensed. Atacand continued to perform well in 2006,
MEXICO,VENEZUELA, CENTRAL
The new Medicare prescription benefit helped with sales totalling $260 million (up 12%, +12%
AMERICA AND THE CARIBBEAN. to fuel overall PPI market growth of 10% in reported). In March, the results of the TROPHY
2006. Nexium posted growth rates ahead study were presented, which evaluated the
of the PPI market. The Medicare programme, effects of early pharmacological treatment with
along with the overall competitive market, Atacand in patients with pre-hypertension and
did result in some net price erosion for Nexium showed potential for delaying the development
in 2006. There were several positive regulatory of hypertension.
milestones, as approvals were granted for
Nexium for Zollinger Ellison Syndrome and Toprol-XL sales continued to grow in 2006,
for paediatric patients aged 12-17 years old. by 7%, with net sales of $1,382 million
A new Nexium formulation of delayed-release representing a $91 million increase compared
granules for oral suspension was also approved to 2005. As reported last year, on 17 January
STATEMENTS OF COMPETITIVE POSITION, and will be introduced in 2007. 2006 summary judgment was entered
GROWTH RATES AND SALES against AstraZeneca in the ongoing patent
As in the rest of this Annual Report and Form 20-F
Information, except as otherwise stated, market
In 2006, Seroquel enhanced its leading position litigation in the US involving three companies
information in this Geographic Review regarding as the number one prescribed atypical challenging AstraZenecas patents and
the position of our business or products relative to anti-psychotic on the market, with sales of seeking FDA approval to sell metoprolol
its or their competition is based upon published $2,486 million (up 24%, +24% reported). succinate (the generic name for Toprol-XL).
statistical sales data for the 12 months ended 30
September 2006 obtained from IMS Health, a
Seroquel posted prescription growth of 12% The Court found that the patents-in-suit are
leading supplier of statistical data to the with an increase of 1.6 million prescriptions. invalid and unenforceable. We disagree with
pharmaceutical industry. For the US, dispensed In July a New Drug Application (NDA) was and are disappointed by these conclusions
New or Total prescription data are taken from the submitted to the Food and Drug Administration and have appealed to the US Court of Appeals
IMS Health National Prescription Audit for the
12 months ended 31 December 2006. Except
(FDA) seeking approval for a sustained-release for the Federal Circuit. The appeal has been
as otherwise stated, these market share and formulation for Seroquel for the treatment of fully briefed and argued and a decision of the
industry data from IMS Health have been derived schizophrenia. In October, we received FDA Federal Circuit is expected in 2007. Further
by comparing our sales revenue to competitors approval for a new indication for Seroquel for information about this litigation is set out on
and total market sales revenues for that period.
Except as otherwise stated, growth rates and the treatment of patients with depressive page 142.
sales are given at constant exchange rates. episodes associated with bipolar disorder.
GEOGRAPHIC REVIEW CONTINUED
In November, Sandoz (formerly Eon Labs Medicare Part D Prescription Drug Benefit has, on balance, realised a positive financial
Manufacturing, Inc., one of the parties to the Implementation of the Medicare Part D impact as a result of Medicare Part D. Over
above litigation), launched a 25mg dosage prescription drug benefit began in January time, however, the success of the
strength of generic metoprolol succinate 2006. A new, robust market segment formed programme will depend, in large measure, on
extended-release tablets. Subsequently, this year, as a greater than anticipated number beneficiary satisfaction (including access to
we announced that we had entered into of elderly and disabled Medicare beneficiaries medicines), the effect of the coverage gap (a
a supply and distribution agreement with signed up for this voluntary programme. period of no insurance coverage in which
Par Pharmaceutical, and Par began Of the 43 million eligible beneficiaries, more beneficiaries must pay the full amount out of
distribution of an authorised generic version than 50% 22.5 million people are now pocket), whether employers shift retirees to
of the 25mg dosage strength of metoprolol enrolled in the programme, including six million Part D and whether there will be attempts to
succinate extended-release tablets in the who, prior to 2006, were covered by Medicaid. modify or amend the programme.
US. The signing of this agreement does not Another 40% of beneficiaries receive
affect the availability of AstraZenecas branded prescription benefits through other sources Canada
Toprol-XL. AstraZeneca will continue to judged to be equivalent to or better value than During 2006, four products contributed
manufacture and make Toprol-XL available Part D, such as employment-based retiree combined sales of over $600 million (Crestor
in the US in all dosage strengths. coverage or the Veterans Administration. $185 million, Losec $152 million, Nexium
Less than 10% of the eligible population $149 million and Seroquel $122 million), with
Arimidex continued to perform well with sales remains without coverage. Crestor, Losec and Nexium among the top
up 29% (+29% reported) to $614 million for the 20 prescription products in Canada by sales.
full year. In the second half of the year, Arimidex Enrolment data from the Centers for Medicare Total sales for the year were $1,031 million,
became the market leader in total and new and Medicaid Services (CMS) show that two down on an underlying basis by 1% (reported
prescriptions for hormonal treatments for providers enrolled 44% of the Part D enrolees up 6%).
breast cancer in the US market, surpassing into their plans. Three-quarters of the Part D
tamoxifen for the first time. enrolees are enrolled in plans offered by 12 We maintained our market position as the
providers. According to CMS, competition second largest pharmaceutical company in
Pulmicort Respules, the only inhaled among private plans reduced beneficiary Canada. Crestor maintained its number two
corticosteroid for the treatment of asthma and government costs by 35% in 2006, with market ranking and was the fastest-growing
approved in the US for children as young similar savings expected in 2007. CMS has statin in both new and total prescriptions
as 12 months, has experienced strong sales found that, on average, Medicare beneficiaries (41% and 33% respectively), supported by the
growth of 24% over the previous year. In June, in the plans with the lowest prices could save Crestor Healthy Changes Support Program,
we filed a Citizens Petition with the FDA raising up to 23% off the prices they would have which helps patients to understand better and
our concern regarding the bioequivalence paid without coverage, and some could save improve the management of their cholesterol
testing, product quality and labelling up to 56%. As part of our commitment to and to develop a healthier lifestyle.
changes that would be, in its view, necessary helping patients get the medicines they need,
for approval of any follow-on budesonide including those who are enrolled in, or who Seroquel remains the leader in new and total
inhalation suspension, such as that filed by are eligible for, a Medicare Part D prescription prescriptions within the atypical anti-psychotics
IVAX Pharmaceuticals Inc. in September 2005. drug plan, the Company gave a significant market. Atacand continues to outperform the
grant of $10 million that helped produce the anti-hypertensive market, with new prescription
An NDA was filed in September 2005 for My Medicare Matters outreach and education growth of over 21%, compared with market
Symbicort pMDI for the long-term maintenance initiative. Thanks to this support, during the first growth of only 10%.
treatment of asthma in patients aged 12 years open enrolment period, My Medicare Matters
and above for two strengths (80/4.5 and educators worked side-by-side with thousands Several of our marketed products received
160/4.5 micrograms). This application was of community-based groups to provide one- regulatory approval for new indications or
approved in 10 months (July 2006) within the on-one help sessions to more than 210,000 label changes: Nexium to heal and reduce the
Prescription Drug User Fee Act (PDUFA) individuals in 44 regions within the US, helping risk of gastric ulcers associated with NSAID
timeline, only the third inhalation product to make My Medicare Matters the most therapy (non-steroidal anti-inflammatory
within the pulmonary division to achieve recognised Part D outreach initiative among drugs); and Faslodex, whose Product
approval within a 10-month period. Since the these community groups. Monograph was updated with clinical trial
FDA approval, we have been preparing for findings regarding use in patients with mild
US launch and the first pivotal trial data were Our brands currently have extensive access to moderate hepatic impairment. However,
unveiled in an abstract at the American on Medicare Part D formularies and are widely the Product Monograph for Zomig tablets,
College of Asthma, Allergy and Immunology available to Medicare beneficiaries. Whilst Zomig Nasal Spray and Zomig Rapimelt
in November. We continue to plan for a US payer mix varies by brand, between 20% and underwent class-labelling changes clarifying
launch around the middle of 2007, although 30% of total prescriptions for our major in-line the use of Zomig for acute migraine therapy.
achieving this launch timeline is dependent brands are currently paid for by Part D plans.
upon successful transfer of technology from Driven primarily by both the success of our
development to manufacturing and completion contracting strategy and prescription volume
of validation batches. growth in the Medicare segment, AstraZeneca
DIRECTORS REPORT 35
Business Review
In November, the Supreme Court of Canada In Germany sales of $1,165 million were Casodex (+10%, +3% reported) and Iressa
(SCC) reversed an earlier Federal Court of down 4% (down 5% reported) compared (+6%, flat reported), together with Losec
Appeal decision that had quashed the with 2005. This was a result of a combination (+7%, flat reported) and Seroquel (+4%,
marketing approval for the generic omeprazole of price reductions and increased pressure down 2% reported).
capsule product of Apotex Inc. (Apotex). on physicians to write generic prescriptions in
The SCC had permitted Apotex to sell its place of branded or newer patented products, The planned interim analysis for the Crestor
product pending the resolution of the appeal. which particularly affected sales of Nexium. Post-Marketing Surveillance (PMS) study
As a result of the November decision, Apotex Our specialty care drugs, Arimidex and was submitted to the regulatory authorities
can now continue to sell its omeprazole Seroquel, however, showed good growth. in September and, based on its findings, and
capsules in Canada. For more details of this together with Shionogi & Co. Ltd., we started
and other litigation in Canada, see page 138. In the UK, sales were $850 million, driven the full-scale launch of Crestor ahead of
by Arimidex (+78%, +77% reported), which schedule on 25 September.
REST OF THE WORLD benefited from approval for use with switch
Sales in the rest of the world performed patients previously receiving tamoxifen. Asia Pacific (excluding Japan)
strongly, up 8% to $12,995 million (+6% Symbicort (+41%, +41% reported) and Asia Pacific (excluding Japan) sales were up
reported). Key growth products (Nexium, Seroquel (+34%, +34% reported) also 10% (+10% reported) to $1,528 million in 2006,
Crestor, Symbicort, Seroquel and Arimidex) performed strongly. with contributions from some of the fastest-
were up 24% against 2005 (+23% reported). growing and important emerging markets in
Sales in emerging markets were up a strong In Italy, sales were up $113 million to the world. Sales growth for these emerging
22% (+23% reported). This increase was $1,265 million, which represents growth of markets (all Asia Pacific markets excluding
underpinned by continued investments in 11% (+10% reported). The performance of Australia and New Zealand) was up 17%
sales and marketing initiatives. Crestor continued the momentum gained in (+20% reported) with sales of $974 million.
2005 (+58%, +58% reported) and Arimidex
Europe (+29%, +29% reported) remains the market South Korea growth (+29%, +38% reported)
We performed well in Europe, ranking third leader in the aromatase inhibitor market by was driven by the successful launch of Crestor
in terms of sales growth rate, achieving an sales. Nexium sales were up 31% (reported and continued development of Atacand
overall market share of 5% and maintaining +28%) and the approval for risk reduction of and Iressa.
our position as the fifth largest prescription NSAID-associated stomach ulcers in 2005
drug company. At $8,903 million, sales were continued to drive sales. In China, the growth and expansion strategy
up 6% (+5% reported) with strong underlying of the past four years has continued to provide
demand in Spain, Italy, Greece and many of In Spain, sales of $745 million were driven by strong returns. AstraZeneca is the largest
the countries in Central and Eastern Europe. Nexium (+67%, +67% reported), Symbicort multinational pharmaceutical company in
Excluding sales of patent-expired products (+19%, +18% reported) and Seroquel (+20%, the prescription market in China, as surveyed
($839 million, down 20% and 21% on a +20% reported). by the Hong Kong Association of the
reported basis), sales in Europe were up Pharmaceutical Industry, with one of the
10% (+9% reported). Strong sales were recorded in Central and highest growth rates. Investments in a large
Eastern Europe, particularly in Russia, field force covering extensive areas of China
The good sales performance was underpinned where the pharmaceutical market continued allow AstraZeneca to ensure our products
by strong underlying volume growth for our to benefit from the introduction of a federal reach Chinese patients. In 2006, AstraZeneca
key brands, partly offset by the impact of reimbursement list for pharmaceuticals in 2005. also announced the establishment of the
government interventions, with Crestor (+56%, Innovation Centre, China (ICC). This investment
+56% reported), Arimidex (+30%, +29% See page 50 (Industry Regulation) for a in Chinese research and discovery science is
reported), Seroquel (+25%, +24% reported), discussion of government cost-containment aimed at creating new opportunities in the
Symbicort (+18%, +17% reported) and measures in Europe and their impact on area of lung cancer, hepatocellular carcinoma
Nexium (+6%, +5% reported) all increasing our business. cancer (HCC), gastric/oesophageal cancer
their market shares in most countries. and pre-menopausal breast cancer. The ICC
Japan will also establish collaborations with major
Overall our sales in France ($1,642 million) In Japan, we were the second fastest-growing medical centres in China.
were maintained at the same level as 2005 company amongst the top 15 pharmaceutical
(reported down 1%), maintaining our sales companies, and increased our ranking from Strong gains were also seen in India and
ranking of fourth. We saw good sales growth fourteenth in 2005 to thirteenth this year. Thailand, where market dynamics are
for our key growth products (+19%, +18% Strong volume growth from key products continuing to be positive.
reported), especially Crestor and Nexium, offset the biennial government review of drug
both of which gained significant market share prices to deliver sales of $1,503 million,
from competitors, although this was partially growth of 5% (down 2% reported). The key
offset by the continuing decline of patent- drivers of this were the oncology portfolio,
expired products. particularly Arimidex (+19%, +12% reported),
GEOGRAPHIC REVIEW CONTINUED
In Australia, we are ranked third in the market In Brazil, sales were $247 million with an
in terms of sales, with high volume growth of underlying growth of 17% (+30% reported).
key brands such as Arimidex, Seroquel, The best-selling brand was Zoladex with sales
Atacand and Nexium. Crestor was launched of $37 million.
successfully in December.
The performance of other markets in the
Latin America region was strong, particularly for Venezuela,
Latin America enjoyed strong sales Central America and the Caribbean.
performance of $732 million, up 23%
(+26% reported), mainly driven by Mexico, Middle East and Africa
Venezuela, Central America and the Caribbean. Middle East and Africa showed good growth
As a result, our market share grew to 2% in the of +25% (+21% reported), driven by Nexium,
prescription market, taking us to tenth position Symbicort and Crestor. We outperformed the
in the rankings of the prescription market. pharmaceutical market in terms of underlying
growth rate in our key markets: Egypt, Saudi
The Latin America region has experienced Arabia, the Gulf States and South Africa.
improved political and economic stability.
This has led to us investing significantly in Our new manufacturing site in Egypt was
further development of our key growth inaugurated in December. It is AstraZenecas
products and in the fast-growing markets. first manufacturing facility in the Middle East
As a result, they showed strong performance and demonstrates our commitment to invest
with sales of $219 million, which is up 53% in the region and our confidence in Egypt.
versus last year (+58% reported). Nexium took The plant will have a capacity of 250 million
over the number one position for Latin America tablets and represent a $32 million investment.
with sales of $94 million (up 48%, +51%
reported). Crestor enjoyed a strong year with
sales of $57 million (up 82%, +88% reported).
Mexico continued to be our largest market in

the region, with sales of $286 million (up 23%,
+23% reported). Our share in the prescription
market moved up to 3% and we moved up
to eleventh position in the rankings. Crestor
is the market leader in terms of volume and
second in terms of value. The over-the-
counter (OTC) business increased $7 million
to $30 million (up 32%, +31% reported),
with particularly strong sales of Losec OTC
($21 million).
DIRECTORS REPORT 37
Business Review
RESEARCH AND DEVELOPMENT
We must also have an organisation that is fit In the mid term we look to drive our Phase I,
for purpose and capable of discovering and Phase II and pre-clinical projects towards
developing better medicines with a very strong proof of concept and proof of principle as
emphasis on quality both the properties of rapidly as possible whilst recognising that
the molecules and the characteristics of the we need to continue to externalise, both
organisation and its decision-making. tactically to fill potential gaps and
strategically, to access the enormous world
In our competitive world, speed is also vital. of external science. Weve already shown
Were now focusing on increasing the what we can do through both licensing and
productivity and speed of our development acquisition and our organisational focus and
process from beginning to end. We are asking mindset have moved to a point where
My number one priority is to deliver a stream the right questions and delivering data on discovery has become a process that is
of medicines that meet unmet patient needs. time even though the outcomes may not much wider than our own laboratories.
A successful pharmaceutical company always be what we would wish.
needs to have a continuous flow of exciting In the long term, in addition to our current
and differentiated medicines capable of Patient benefit underpins all our work and we capabilities, were also seeking to
sustaining global growth in the short, medium continue to develop our capability to measure transform AstraZeneca through the use
and long term. Bearing in mind the very long efficacy alongside a deep commitment to the of novel biomarkers and imaging as well
time needed to deliver a new medicine, safest possible usage of our products. as a strategic move into biologicals to build
we are actively managing each of these a major presence in the fast-growing
time periods. In the short term, our business needs will be biopharmaceuticals sector.
met through life-cycle management and
delivery of our Phase III programmes. JOHN PATTERSON FRCP
Executive Director, Development
WE HAVE A GLOBAL RESEARCH AND DEVELOPMENT In the mid term we will drive our pre-clinical
and clinical Phase I and II projects towards
ORGANISATION, WITH AROUND 12,000 PEOPLE AT 16 MAJOR proof of concept as rapidly as possible whilst
CENTRES IN EIGHT COUNTRIES DEDICATED TO TRANSLATING recognising that we will need to continue our
emphasis on externalisation to complement
LEADING-EDGE SCIENCE INTO INNOVATIVE, NEW MEDICINES our internal R&D efforts. Our drug discovery
THAT MAKE A DIFFERENCE IN THE LIVES OF PATIENTS. effort is now a process that is much wider
than our own laboratories, as we actively
seek to make alliances and acquisitions with
In 2006, we spent $3.9 billion on research PIPELINE STRATEGY external partners to gain access to leading
and development (2005 $3.38 billion, 2004 Our R&D strategy is geared to maintaining a drug projects or technology platforms.
$3.47 billion) and approved $300 million flow of new products that will deliver sustained
of R&D capital investments including business growth in the short, medium and The progress we are making in our drive
announcements of major new facilities in long term. to increase productivity is reflected in the
Sweden (safety pharmacology), the US growth of our early development portfolio:
(cancer and infection) and China (cancer). In the short term, our business needs will during 2006 21 CDs were selected (compared
be met through successful delivery of the with 25 in 2005 and 18 in 2004), and we
We want to be among the best in the industry Phase III programmes and optimised life- have 92 development projects in the proof
in terms of the quality of our work and the cycle management for our key products. of principle phase (before Phase III, late-
speed with which we get new medicines to stage development).
market. During 2006 we continued our drive In 2006, we experienced some setbacks with
to improve the efficiency of our processes and our Phase III portfolio with the termination of During 2006 we progressed 12 compounds
the effectiveness of our decision-making, so the programmes for Galida and NXY-059, as into man.
that we can quickly eliminate weaker candidate described in more detail on pages 18 and 25
drugs (CDs) and concentrate on the robust, respectively. Despite these setbacks, as at In the long term, in addition to our current
rapid progress of the ones most likely to 1 February 2007 we still have 28 Phase III capabilities, we are also seeking to transform
succeed as significant advances in healthcare. programmes compared with 29 at the end the AstraZeneca pipeline through a strategic
of January 2006. move into biopharmaceuticals and by using
In line with our strategy, we also continued to biomarkers to help identify winning projects
focus on accessing external innovation that Notable successes in the life-cycle much earlier.
complements our in-house capabilities, and management of our key marketed brands
on page 39 you can read more about our during the year included nine submissions
externalisation activities during the year. and nine approvals in the US or EU and are
described in the Therapy Area Review
(pages 16 to 32).
RESEARCH AND DEVELOPMENT CONTINUED
Disease area focus DISEASE AREA FOCUS

During 2006, we reviewed our disease target
areas and re-focused our efforts to ensure
GROW MAINTAIN EXIT
our scientific resources are best positioned Diabetes/Obesity Alzheimers Disease Hypertension
to enhance our contribution to healthcare Infection Arrhythmia Inflammatory Bowel Diseases
and long-term competitiveness. We remain
Analgesia Asthma Functional GI Disorders
in the same therapy areas, but within these
areas we have prioritised the diseases where Inhalation Atherosclerosis Parkinsons Disease
we believe our skills can make the most Translational Science Bipolar Disorder Multiple Sclerosis
difference, and have withdrawn from those through the Innovation
Centre China (ICC) Chronic Obstructive Addiction
where we believe we have less chance of Pulmonary Disease
success. We also established a New Insomnia
Depression/Anxiety
Opportunities Team, which is dedicated to Neuroprotection in Stroke
reviewing and evaluating appropriate new Oncology
opportunities beyond our current therapy Osteoarthritis
areas. The table opposite shows the areas on
Schizophrenia
which we are focusing mid to long term and
those from which we have withdrawn. Thrombosis
Certain Gastro-oesophageal
Biopharmaceuticals Reflux Disease including
Nexium life-cycle management
During the last few years, biological molecules
have been the fastest-growing segment of Monoclonal antibody approaches
the pharmaceutical market. As part of a to Rheumatoid Arthritis
comprehensive biopharmaceutical strategy,
we are determined to secure a significant Whilst we build our biological capabilities, both Improving productivity and quality remains
share of this market. By playing an active role internally and through collaborations and a core priority, underpinned by three major
in the utilisation and development of these acquisitions, we will continue to apply our initiatives: Lead Generation, Discovery
technologies, we aim to bring new medicines long-standing in-house skills and experience Medicine and Safety Assessment.
based on them to patients as early as possible in small-molecule R&D and aim to maintain
as well as attacking diseases that were not a complementary flow of new products Lead Generation
amenable to small-molecule approaches. from both areas of science over time. We Our strategic initiatives are directly aligned to
anticipate that from 2010 onwards, one improving the quality of chemical leads and
With our acquisition of Cambridge Antibody in four AstraZeneca candidate drugs eligible biological targets, so that we can eliminate,
Technology Group plc (CAT) in mid-2006, for full development will be biologicals. at an earlier stage, those compounds that are
we took a major step towards our goal of unlikely to make it through clinical development.
establishing a significant biopharmaceuticals Investing in China Strategic alliances with WuXi Pharmatech
capability. This acquisition was built upon During 2006, we announced a $100 million Co. Ltd (China) and ChemBridge (US) were
the strong foundation laid by our existing investment over the next three years in the signed in 2006 in order to collaborate on
collaboration with CAT to discover new establishment of the AstraZeneca Innovation the identification, selection and supply of
antibody-based medicines for respiratory Centre, China. The Centre will focus on proprietary compounds to significantly
and inflammatory diseases. It allows translational science by developing knowledge enhance our existing compound collection.
AstraZeneca to apply CATs world-leading about Chinese patients, biomarkers and Also in 2006, a collaboration with the Effector
technology platform for the discovery of genetics. The initial therapeutic area for the Cell Institute (ECI) (Japan) was initiated to
novel human monoclonal antibodies to all of Innovation Centre will be cancer. In addition, further develop and apply ECIs proprietary
our disease research areas. The acquisition we are also expanding our research capabilities chemotaxis monitoring technology for use in
also enables CAT to secure consistent in China by increasing further the number of high-content screening.
strategic investment to broaden the range of scientific collaborations with local Chinese
targets and disease mechanisms to which its organisations and through our plan to establish Discovery Medicine
technology can be applied, as well as the a China Clinical Pharmacology Unit. We continue to focus on the collaboration
opportunity to develop the technology between clinical medicine and basic science
beyond its current capabilities. DISCOVERY RESEARCH (Discovery Medicine), which is increasingly
In Discovery, our scientists work together important in helping us gain a better
In addition to the antibody projects being across national boundaries to exchange ideas, understanding of human diseases and the
pursued by CAT, the first anti-cancer antibody to promote best practice and to maximise suitability of future medicines to treat those
to come from our collaboration with Abgenix the scientific potential offered by our size and diseases, as well as identify and deploy
further strengthened our biopharmaceutical global reach. biomarkers for enhanced decision-making
development portfolio during the year. during clinical development.
DIRECTORS REPORT 39
Business Review
Safety Assessment Biopharmaceuticals Infection

Alongside continued investment in early The acquisition of CAT, which has been the A licence agreement with Cubist
understanding of the profiles of new molecules, cornerstone for building the biologicals pipeline Pharmaceuticals, Inc. for the development
we continue to implement high-throughput in the Respiratory and Inflammatory area and commercialisation of the antibiotic
testing of safety and drug metabolism and (Osteoarthritis, Rheumatoid Arthritis, Asthma Cubicin (daptomycin for injection) in
pharmacokinetics early in the research process, and COPD) and will now be extended to our China and certain other countries in Asia,
so that CDs chosen for development are more other research areas. the Middle East and Africa not covered by
likely to succeed. existing Cubicin international partnering
Cardiovascular agreements. The agreement does not include
DEVELOPMENT A partnership with Abbott Laboratories to Japan, which is yet to be partnered. Cubicin
People in our Development organisation co-develop and market a Crestor/fenofibrate is the first antibiotic in a new class of anti-
specialise in taking a newly discovered fixed-dose combination product. This infectives called lipopeptides.
compound from the laboratories, through collaboration has the potential to provide
clinical research, regulatory submissions, physicians and patients with the first statin and Our acquisition of Arrow Therapeutics Ltd.,
ongoing pharmaceutical development and fibrate combination in a single pill to simplify the a privately owned UK biotechnology company,
life-cycle management. Project teams bring treatment of patients with mixed dyslipidaemia. focused on the discovery and development
together all the relevant skills and experience of anti-viral therapies.
needed for the rapid progress of new medicines A partnership with the Australian company
and the management of development risks. Cerylid, to acquire kinase inhibitors that have Neuroscience
the potential to deliver a very effective anti- A collaboration agreement with the Karolinska
The change programme initiated during 2005 platelet therapy with minimal risk for bleeding Institutet, Sweden on the expansion of one
to enhance project delivery and improve complications. The aim is to start a lead- of the worlds pre-eminent PET (Positron
R&D interfaces has been further developed. optimisation pre-clinical project in early 2007. Emission Tomography) centres.
Improvement objectives focused on speeding
up the progression of early Phase projects A worldwide (apart from Japan) collaboration An exclusive global agreement with Pozen, Inc.
along the pipeline and to market, and on with Bristol-Myers Squibb Company (BMS) to co-develop fixed-dose combinations of
increased quality, are being actively tracked to develop and commercialise two naproxen and Nexium for chronic pain.
and implemented in line with our aim to investigational compounds (both discovered The fixed-dose combinations will have the
become one of the best companies in the by BMS) being studied for the treatment of potential to provide chronic pain sufferers
industry. Type 2 diabetes. Saxagliptin, a dipeptidyl with a new treatment with reduced upper
peptidase-4 (DPP-4) inhibitor, is currently GI side effects.
In clinical development, eClinical components in Phase III development. Dapagliflozin
are now fully implemented in our working (previously referred to as BMS-512148), A partnership with Axon Biochemicals on
routines. These include the use of web-based a sodium-glucose cotransporter-2 (SGLT2) Dopamine Partial Agonists for the treatment
data capture for all new Phase II to strategic inhibitor, is currently in Phase IIb development. of diseases of the nervous system, including
Phase IV studies and the recruitment of psychotic and mood disorders.
healthy volunteers, patients and clinical An exclusive global licensing and research
investigators via the internet. The sharing collaboration agreement with Palatin CANDIDATE DRUGS NOMINATED
of information via eEnablement for all clinical Technologies, Inc. The collaboration is
study teams and clinical investigators will aimed at discovering, developing and 2006 21
further enhance our clinical productivity and commercialising small molecule compounds
quality and reduce costs. that target melanocortin receptors and have
2005 25
potential in treating obesity, diabetes and
EXTERNALISATION metabolic syndrome.
In line with our increased drive to pursue 2004 18
external acquisitions, licensing and Respiratory and Inflammation
partnership opportunities that will strengthen A partnership with Dynavax Technologies
our research pipeline and help us to deliver Corporation to develop a TLR-9 agonist for
the next generation of medicines, between asthma and COPD. DEVELOPMENT PROJECTS*
the beginning of December 2005 and the PRE-CLINICAL PHASE I PHASE II PHASE III
end of January 2007, the Company has A discovery alliance with Argenta Discovery *includes NCEs and Line Extensions (see pages 40 to 42)
completed 12 significant licensing and Limited aimed at identifying improved 2006
acquisition projects and nine significant bronchodilators to treat COPD. 49 23 20 28 120
research collaborations. These initiatives
2005
have added five Phase II and two Phase III Cancer
45 17 15 29 106
projects to our late-stage development A partnership with Schering AG to co-develop
pipeline. We also entered into more than 300 and jointly commercialise a novel selective 2004
other new collaborations (compared with oestrogen receptor down-regulator (SERD) 31 17 17 26 91
more than 200 in 2005), bringing our total for the treatment of breast cancer.
number of active R&D collaborations and
agreements to over 1,850. Examples of some
of these transactions are as follows:
ASTRAZENECA DEVELOPMENT PIPELINE 1 FEBRUARY 2007
Estimated filing date

Therapy area Compound Mechanism Areas under investigation Europe US
PRE-CLINICAL: NCEs
AZD6370 diabetes >2009 >2009
AZD8593 haemostasis >2009 >2009
AZD4121 cholesterol absorption inhibitor dyslipidaemia >2009 >2009
Cardiovascular AZD1283 thrombosis >2009 >2009
AZD5861 dyslipidaemia >2009 >2009
AZD2066 GERD >2009 >2009
Gastrointestinal
AZD5329 functional GI disease >2009 >2009
AZD3102 Alzheimers disease >2009 >2009
AZD6538 neuropathic pain >2009 >2009
AZD8797 multiple sclerosis >2009 >2009
AZD1940 nociceptive and neuropathic pain >2009 >2009
AZD3241 Parkinsons disease >2009 >2009
Neuroscience
AZD6280 anxiety >2009 >2009
AZD2624 schizophrenia >2009 >2009
AZD3043 GABA-A receptor modulator short-acting anaesthetic >2009 >2009
AZD9935 VEGF signalling inhibitor (VEGFR-TKI) solid tumours >2009 >2009
AZD0424 SRC kinase inhibitor solid tumours >2009 >2009
AZD5180 anti-angiogenic solid tumours >2009 >2009
AZD1845 solid tumours >2009 >2009
AZD3646 solid tumours and haematological malignancies >2009 >2009
Oncology
AZD4992 >2009 >2009
CAT-8015 recombinant immunotoxin haematological malignancies >2009 >2009
CAT-5001 recombinant immunotoxin solid tumours >2009 >2009
AZD6067 protease inhibitor COPD >2009 >2009
AZD7928 COPD >2009 >2009
AZD2392 asthma >2009 >2009
AZD3825 asthma >2009 >2009
AZD1236 COPD >2009 >2009
AZD5069 COPD >2009 >2009
Respiratory and
Inflammation AZD9668 COPD >2009 >2009
AZD9215 asthma >2009 >2009
AZD1678 asthma >2009 >2009
AZD8848 asthma >2009 >2009
AZD8075 asthma >2009 >2009
CAM-3001 rheumatoid arthritis >2009 >2009
AZD3199 asthma/COPD >2009 >2009
Infection AZD5099 infection >2009 >2009
Abbreviations used in the above table are explained in the Glossary on pages 179 and 180.
DIRECTORS REPORT 41
Business Review

PHASE I: NCEs
AZD2479 reverse cholesterol transport enhancer dyslipidaemia >2009 >2009
Cardiovascular
AZD1305 antiarrhythmic arrhythmias >2009 >2009
AZD9272 glutamate receptor modulator neuropathic pain >2009 >2009
AZD2327 enkephalinergic receptor modulator anxiety and depression >2009 >2009
Neuroscience AZD5904 enzyme inhibitor multiple sclerosis >2009 >2009
AZD3783 anxiety and depression >2009 >2009
AZD0530 SRC kinase inhibitor solid tumours and haematological malignancies >2009 >2009
AZD1152 aurora kinase inhibitor solid tumours and haematological malignancies >2009 >2009
AZD2281 PARP inhibitor breast cancer >2009 >2009
Oncology
AZD1689 hypoxia activated cytotoxic solid tumours >2009 >2009
Respiratory and AZD4818 COPD >2009 >2009
Inflammation CAT-354 anti-IL-13 antibody asthma >2009 >2009
AZD5904 COPD >2009 >2009
AZD1744 asthma >2009 >2009
PHASE II: NCEs

Crestor/ABT-335 (Abbott) statin + fibrate fixed combination dyslipidaemia 2009
AZD9684 CPU inhibitor thrombosis >2009 >2009
Cardiovascular AZD0837 thrombin inhibitor thrombosis >2009 >2009
AZD6610 PPAR alpha with partial gamma dyslipidaemia >2009 >2009
dapagliflozin (BMS) sodium-glucose cotransporter-2 (SGLT2) inhibitor diabetes >2009 >2009
AZD9056 ion channel blocker (P2X7) inflammatory bowel disease >2009 >2009
Gastrointestinal AZD3355 inhibitor of transient lower oesophageal GERD >2009 >2009
sphincter relaxations (TLESR)
PN-400 (Pozen) naproxen + esomeprazole signs and symptoms of OA and RA >2009 2009
Neuroscience AZD3480 neuronal nicotinic receptor agonist cognitive disorders in schizophrenia >2009 >2009
AZD3480 neuronal nicotinic receptor agonist Alzheimers disease >2009 >2009
Zactima VEGF/EGF TKI inhibitor with RET kinase activity medullary thyroid cancer 2H 2008 2H 2008
ZD4054 endothelin A receptor antagonist prostate cancer >2009 >2009
Oncology AZD5896 AGT inhibitor solid tumours >2009 >2009
AZD6244 (ARRY-142886) MEK inhibitor solid tumours >2009 >2009
CAT-3888 recombinant immunotoxin hairy cell hairy cell leukaemia >2009 >2009
Respiratory and AZD9056 ion channel blocker (P2X7) rheumatoid arthritis >2009 >2009
Inflammation AZD1981 asthma >2009 >2009
Infection CytoFab anti-TNF-alpha polyclonal antibody severe sepsis >2009 >2009
PHASE II: LINE EXTENSIONS

Gastrointestinal Nexium proton pump inhibitor extra-oesophageal reflux disease >20091 >2009
Oncology Iressa EGFR-TK inhibitor breast cancer >2009 >2009
1
Project Extraesophageal reflux disease (reflux asthma) will be completed but will not result in a regulatory filing.
ASTRAZENECA DEVELOPMENT PIPELINE 1 FEBRUARY 2007 CONTINUED

PHASE III: NCEs

AGI-1067 anti-atherogenic atherosclerosis 4Q 2007 2Q/3Q 2007
Cardiovascular AZD6140 ADP receptor antagonist arterial thrombosis >2009 >2009
saxagliptin (BMS) dipeptidyl peptidase-4 (DPP-4) inhibitor diabetes >2009 1H 2008
Zactima VEGF/EGF TKI inhibitor with RET kinase activity NSCLC 2H 2008 2H 2008
Oncology
Recentin (AZD2171)2 VEGF signalling inhibitor (VEGFR-TKI) NSCLC and CRC >2009 >2009
PHASE III: LINE EXTENSIONS

Atacand angiotensin II antagonist diabetic retinopathy 2009 2009
Atacand Plus angiotensin II antagonist/thiazide diuretic 32/12.5 mg, 32/25 mg for hypertension 2H 2008
Crestor statin atherosclerosis Filed Filed
Cardiovascular
Crestor statin outcomes CHF 2H 2008 2H 2008
Crestor statin outcomes End Stage Renal Disease 2009 2009
Seloken/Toprol-XL beta-blocker HCTZ combination Approved
Nexium proton pump inhibitor NSAID GI side effects symptom resolution Promotable3 Filed
Nexium proton pump inhibitor NSAID GI side effects ulcer healing Launched Filed
Nexium proton pump inhibitor peptic ulcer bleeding 1H 2008 1H 2008
Gastrointestinal
Nexium sachet formulation proton pump inhibitor GERD Filed Approved
Nexium low dose proton pump inhibitor low dose aspirin associated peptic ulcer >2009 >2009
aspirin combination
Seroquel SR D2/5HT2 antagonist schizophrenia Filed Filed

Seroquel D2/5HT2 antagonist bipolar maintenance 4Q 2007 2Q 2007
Seroquel D2/5HT2 antagonist bipolar depression 4Q 2007 Approved
Neuroscience Seroquel SR D2/5HT2 antagonist generalised anxiety disorder 2H 2008 1H 2008
Seroquel SR D2/5HT2 antagonist major depressive disorder 2H 2008 1H 2008
Seroquel SR D2/5HT2 antagonist bipolar mania 1H 2008 1H 2008
Seroquel SR D2/5HT2 antagonist bipolar depression 1H 2008 1H 2008
Faslodex oestrogen receptor antagonist first-line advanced breast cancer >2009 >2009
Oncology
Faslodex oestrogen receptor antagonist adjuvant >2009 >2009
Symbicort Turbuhaler inhaled steroid/fast onset, long-acting 2 agonist Symbicort Maintenance and Reliever Approved
Therapy for asthma (SMART)
Respiratory and
Inflammation Symbicort pMDI inhaled steroid/fast onset, long-acting 2 agonist asthma Filed4 Approved5
Symbicort pMDI inhaled steroid/fast onset, long-acting 2 agonist COPD Filed4 1H 2008
2
This compound is in Phase II/III development. 3 Authorities stated these symptoms were already captured within the GERD label. Text stating No clinical interaction with
naproxen or rofecoxib was approved. 4 To be supplemented in 2008 with data supporting two additional strengths. 5 US approval based on 12 years and above.
Therapy area Compound Areas under investigation Therapy area Compound Areas under investigation
DISCONTINUED NCEs DISCONTINUED LINE EXTENSIONS

Galida diabetes/metabolic syndrome Cardiovascular Exanta prevention of stroke in AF
AZD1092 diabetes Faslodex second-line after aromatase inhibitor failure
Oncology
Cardiovascular AZD8677 dyslipidaemia/diabetes Iressa head and neck
AZD7009 atrial fibrillation conversion
AZD8450 dyslipidaemia Comments
AZD9343 GERD Exanta was withdrawn from the market in February 2006. All other
AZD6538 GERD project discontinuations were as a result of their failure to meet their
Gastrointestinal AZD8081 functional GI disease target product profiles.
AZD9272 GERD
AZD9335 GERD
As disclosure of compound information is balanced by the business
NXY-059 stroke
need to maintain confidentiality, information in relation to some
AZD9272 anxiety
compounds listed here has not been disclosed at this time.
Neuroscience
AZD9335 neuropathic pain
AZD7512 depression and anxiety
AZD3778 indication rhinitis
AZD2914 COPD
AZD8955 OA
Respiratory and
AZD9056 COPD
Inflammation
AZD8309 RA
AZD8309 COPD
AZD3342 COPD
DIRECTORS REPORT 43
Business Review
PORTFOLIO MANAGEMENT AND COMMERCIALISATION
ONE OF THE GREATEST CHALLENGES FACING ANY When a candidate drug enters development,
from our internal pipeline or through
PHARMACEUTICAL COMPANY IS MAINTAINING THE externalisation, a more specific TPP is
QUALITY OF ITS PORTFOLIO. developed based on medical and patient
need, the products features and benefits,
medical and health outcomes information,
At AstraZeneca, we have always worked The PST establishes the overall licensing market positioning, demonstration of value
across functional boundaries to ensure that strategy by reviewing the licensing and and the competitive environment. This profile
we effectively identify and (consistent with any acquisition proposals prepared by all our is used throughout the development
contractual obligations) prioritise emerging TAPTs in their efforts to build their portfolios. programme to prioritise further investment.
research opportunities (whether from our own This ensures appropriate risk mitigation
discovery activities or from external sources), through augmentation of opportunities All these activities are driven by the insight
develop them to meet market needs and generated in-house with those developed into our core customers that GM is responsible
maximise the potential of our marketed brands. outside AstraZeneca. for identifying and developing. Increasingly,
our customer base and their respective
During 2006, to further strengthen our effort in Once in development, the management of needs have become much more complex.
these areas, we reviewed and refined the way individual projects, including continued risk The attitudes and needs of regulators and
the relevant teams across our business work assessment and mitigation, is done by Global payer groups, as well as physicians, patients
together. The refinements aim to improve the Product Teams and reviewed by the Product and other healthcare professionals are key
connectivity, co-ordination and focus of all Review Board, which is led by our Executive drivers of both our product development and
the various activities that go into maintaining Director of Development. marketing activities.
a high quality range of differentiated products
that meet patient needs and add value for Strategic Planning and GM is also responsible for developing the
our stakeholders. Business Development global strategic communications for each
Our new Strategic Planning and Business brand, working closely with the major marketing
Portfolio Strategy Team Development organisation (SPBD), which companies. With the development of new
Good portfolio management starts with reports directly to the Chief Financial Officer, is communication channels and an increasing
selecting the best, and the right balance of, designed to improve the focus, co-ordination appetite for healthcare information among
new product projects, followed by effective and execution of our externalisation activity, patients and physicians, it is increasingly
decision-making along their critical paths to specifically the accessing of external research important to develop clear, consistent global
ensure we continue to invest only in the and development technologies, products communication programmes for our brands
medicines with the highest potential. and collaborations. that are integrated across the communication
channels. As part of the recent reorganisation,
Our Portfolio Strategy Team (PST), which SPBD will work closely with our TAPTs, each a greater focus has been put on developing
was established in 2005, determines the of which now has a dedicated SPBD member. our strategic communication capabilities.
appropriate balance of internal and external This enables greater co-ordination in the
investment to maintain a high quality identification, review and pursuit of appropriate Portfolio Governance
product portfolio. Chaired by the Executive external investment opportunities, in line with Rigorous portfolio governance is applied
Vice-President of Global Marketing, the team our strategy and aligned with the individual across our range of portfolio management
comprises the heads of our Discovery, therapy area strategies. activities, from setting disease area strategies
Development, Strategic Planning and in Discovery through to the life-cycle
Business Development (SPBD), Finance Global Marketing management of launched brands.
and Commercial teams. Working closely with all these teams, Global
Marketing (GM, formerly Global Marketing The drug development process is divided
The PST also sets the strategic direction for and Business Development) is responsible into a series of research stages, separated
our product portfolio, working closely with for ensuring strong commercial direction in by performance milestones and tollgates that
our Discovery organisation and Therapy Area the management of our research activities determine transition of a project to the next
Portfolio Teams (TAPTs) to determine the areas and developing brands portfolio, both for stage. Four key bodies, consisting of leaders
of disease on which we will focus, both now our marketed and pre-launch brands, of the functions relevant to the respective
and in the future. including optimising their life-cycles, and stage of development, assess information,
leading portfolio and brand development review options and recommend a course of
The role of the TAPTs is to create a portfolio decisions of marketed products. action to our Senior Executive Team. If the
of potential new medicines from any source, project is to continue, the relevant body sets
in line with the therapeutic area strategy, Disease target product profiles (TPPs) are a baseline and tolerances, which provide
and to manage these projects through defined at an early stage in the drug discovery a framework within which the projects and
development from pre-clinical to late Phase II. process, based on the insight GM provides programmes can operate.
into medical and patient needs and the
drivers behind recommending, prescribing,
paying for and taking the medication. These
TPPs guide our R&D activity and help shape
the therapy area and marketing strategies.
SUPPLY
UNINTERRUPTED SUPPLY OF OUR PRODUCTS TO CUSTOMERS is to ensure that our views are heard, and that
harmonisation of regulation, its interpretation
IS CRITICAL TO ASTRAZENECAS SUCCESS. WE MEASURE OUR and its implementation becomes embedded
PERFORMANCE USING FOUR KEY METRICS: CUSTOMER SERVICE, in the majority of the countries in which
we operate.
SUPPLY CAPABILITY, COST EFFICIENCY AND LICENCE TO OPERATE.
Safety, health and environment (SHE) operating
CUSTOMER SERVICE using lean principles, focusing on what standards are increasingly stringent, with
A core priority is to provide first-class adds value for our customers and patients regulators placing particular emphasis on
customer service for all products and in all whilst simultaneously eliminating waste. environmental issues and the safety of
markets, thereby ensuring we can support Leveraging the improvements of the new chemicals. Our manufacturing sites operate
the continued growth of our business. Our supply system also enabled us to focus on a under various regulatory and licensing regimes
supply chains are designed to maximise wide-ranging cost and efficiency programme. and internal management systems, and we are
flexibility and the application of the supply This also delivered significant benefits in the focused on meeting all applicable requirements.
system that we introduced in 2004 continues year, and we are expecting further progress There are currently no SHE issues that constrain
to improve supply chain performance. in 2007 and beyond. us from fully utilising any facilities. We continue
to track, actively participate in, and pursue
SUPPLY CAPABILITY Cost efficiencies are also driven by continuous internal initiatives relating to international
Process improvements, continual asset review of our manufacturing assets to make research and policy developments associated
review and the effective use of external sure that they are being used most effectively, with emerging SHE policy and legislative
partners ensure the secure and effective whilst preserving the flexibility we need to matters. Examples include pharmaceuticals in
supply of our products. As part of our overall respond to fluctuations in demand. During the environment, chemical control regulations
risk management, we carefully consider the 2006 we announced that we would be and climate change. It is possible that we
timing of investment to ensure that secure closing our facility in Indonesia in 2007 and could incur capital or operational costs in
supply chains are in place for our products. that we would commence supply from a new connection with future voluntary activities or
We have a programme in place to provide manufacturing facility in Egypt in 2007. regulatory developments relating to these
appropriate supply capabilities for our new issues including, for example, process or
products, including an assessment of On 1 February 2007, we announced our equipment changes associated with
needs for new technologies (such as biologics). intention to reduce our Operations workforce wastewater quality, raw material substitutions,
Capital expenditure on supply and by 3,000 jobs over the next three years to green chemistry initiatives or energy
manufacturing facilities totalled approximately address over-capacity in the supply chain. efficiency. We are addressing these matters
$201 million ($206 million in 2005, $352 million These reductions will be the subject of a full proactively. For example, our preparatory
in 2004) across a range of projects. consultation process with staff representatives work is progressing for the formal
AstraZenecas global purchasing policies to ensure that the process is fair and transparent. implementation of the EU REACH regulation
and processes, together with our Integrated in 2007, which aims to protect the environment
Risk Management process, are aimed at Our Category Management process and human health whilst enhancing the
ensuring uninterrupted supply of raw continues to drive cost efficiencies in competitiveness of EU industry.
materials and other key supplies, all of which our external expenditure.
are purchased from a range of suppliers. Our Our aim for continuous improvement includes
process systematically examines a range of LICENCE TO OPERATE learning from incidences of non-compliance
risks to global supply, such as disasters that We are committed to delivering a secure basis and sharing good practice to further promote
remove supply capability or the unavailability for assured product quality that underpins high standards.
of key raw materials. It ensures that these both the safety and efficacy of our medicines.
risks are mitigated by the implementation of As part of this, the outcomes of routine internal Further information and statistics about our
contingency plans, including the appropriate inspections as well as those by regulatory SHE performance can be found in the separate
use of dual or multiple suppliers and authorities are rigorously reviewed and, Corporate Responsibility Summary Report
maintenance of appropriate stock levels. if required, actions are taken to further 2006 or on our website, astrazeneca.com.
Although the price of raw materials may enhance compliance consistently across
fluctuate from time to time, our global the organisation. The results of all external FORWARD PLANNING
purchasing policies seek to avoid such inspections carried out during 2006 were fully Our commitment to improving productivity
fluctuations becoming material in our satisfactory and resulted in the approval of a in Operations is a continuous process and
business. During 2006 we have felt the effect number of new medicines of particular a core part of our strategy. In 2007, we shall
of increased oil prices, although the impact note, the manufacturing site in Dunkirk, be focusing on six streams of activity that
on our business has not been material. France was approved to supply Symbicort offer the greatest potential benefit: continuing
pMDI to the US market. All regulatory to review asset utilisation and potential
COST EFFICIENCY compliance issues at our sites or those of our outsourcing opportunities; driving the Lean
2006 saw the continued focus on our new partners were resolved satisfactorily. programme and other aspects of operational
supply system, which has demonstrated excellence; further integrating all elements of
progressive benefits, with higher customer Throughout the year, we have been actively the supply chain to drive competitive
service levels, reduced manufacturing lead involved through our membership in industry advantage; integrating assets and service in
times and consequently lower stock levels. associations in influencing new regulation distribution; developing a global IS strategy for
The system has now been substantially relating to the control of manufacture, both at Operations; and re-aligning key elements of
implemented throughout the supply network, national and international levels in countries the support organisation.
and we are now driving further improvements such as Europe, the US and Japan. Our goal
DIRECTORS REPORT 45
Business Review
MANAGING RISK
CORE TO OUR CONTINUED SUCCESS IS OUR ABILITY TO IDENTIFY group to identify the major portfolio risks and
reviewed by the Product Review Board twice
AND EFFECTIVELY MANAGE THE RISKS TO OUR BUSINESS, BE a year. This continuing focus is aimed at
THEY STRATEGIC, OPERATIONAL, COMPLIANCE, REPUTATIONAL, ensuring we deliver as quickly as possible
high-quality, safe and effective new medicines
FINANCIAL OR ENVIRONMENTAL. that meet regulatory requirements, are
launched successfully, and make a difference
Backed by our Group Risk & Control Policy, BRINGING A NEW MEDICINE TO MARKET for patients worldwide. The changes we made
we continue to integrate risk management The path to a new medicine is a long, complex, to our operating model to simplify our project
across all business functions, to ensure expensive and risky process. processes in 2005 should continue to
managers understand the importance of strengthen governance and risk management.
identifying business risks and how they Research and development Strategic investment continues to be focused
should be managed. Appropriate tools Every new medicine is the result of an intensive on areas directly linked to increased quality
include a risk management framework that all discovery and development process, taking and number of new products. In Discovery,
managers can use to recognise, assess and between eight and 12 years and typically we continue to aim to increase the output of
actively manage the challenges in their areas. costing over $800 million per product. high-quality candidate drugs with a lower risk
Thousands of compounds are investigated of failure in development.
Risk identification, evaluation and mitigation are for their potential to become a new medicine;
facilitated by the Integrated Risk Management however, only a small number succeed PERFORMANCE OF A NEW MEDICINE
(IRM) team of risk management professionals. because of the demanding criteria of the AstraZenecas financial performance can be
The IRM team supports the Risk Advisory ongoing selection process, which centres impacted if a new product does not succeed
Group (RAG), which is led by the Chief on safety and efficacy in patients. Our as anticipated, or its sales growth is slower
Financial Officer and consists of representatives externalisation and biologics strategies than predicted. The commercial success of
from each business function. The role of the described in more detail elsewhere in this our new medicines is of particular importance
RAG continues to be advisory and is to report are part of our approach to managing to us in order to replace sales lost as and
assist senior management in identifying this risk by supplementing and enhancing our when patent protection expires in major
and assessing our main business risks in a internal organic, small-molecule discovery markets for established marketed products.
co-ordinated manner. It focuses in particular and development efforts. However, it should
on cross-functional risks, agreeing what are be recognised that both are relatively new Competition and price pressure
the most significant risks affecting the capabilities for AstraZeneca. In all our markets, we compete against major
organisation and the industry, linking risk prescription pharmaceutical companies that
management to business performance Regulatory approval in many cases are able to match or exceed
reporting and sharing best practice across Before a new medicine can be launched the resources we have available to us,
the organisation to drive continuous on the market, we are required to obtain particularly in the areas of research and
improvement in this area. The RAG reports regulatory approval, based on its safety, marketing investment. Some of our key
twice a year to the Senior Executive Team, efficacy and quality. The submission of an growth products, such as Crestor, compete
and its reports on the Companys risk profile application to regulatory authorities (which directly with similar products marketed by
are reviewed annually by both the Audit are different, with different requirements, in some of these companies. We also compete
Committee and the Board. Members of the each country) does not guarantee approval with biotechnology companies and companies
IRM team are deployed, where appropriate, to market. Regulators can refuse to grant who manufacture generic versions of our
to assist senior managers in identifying, approval or may require additional data before products following patent expiry. In most of
assessing and developing strategies for approval is given, even though the medicine our markets, there is continued economic,
managing risk in their respective areas of may already be launched in other countries. regulatory and political pressure to limit the
responsibility. The team also carries out a cost of pharmaceuticals. For more information,
rolling programme of training staff in effective Launch see page 50 (Industry Regulation) and
integrated risk management and develops The anticipated launch dates of major new page 174 (Risk Factors).
networks for the sharing and embedding of medicines have a significant impact on a
best practice. number of areas of our business, including We continue to focus on developing
investment in large clinical trials, the differentiated products that offer improved
The main areas of risk that AstraZeneca faces manufacture of pre-launch stocks, investment treatment options to meet patient needs and
are discussed below. Many of these areas in marketing materials ahead of a product bring economic benefit to healthcare systems.
of risk are also discussed elsewhere in this launch, sales force training and the timing of When setting the price of a medicine, we aim
report. See also the description of Risk Factors anticipated revenue from commercial sales of to reflect its full value to customers, patients
on pages 172 to 176 and the discussion of new products. Any significant delay to launch and society in general. Our pricing will also
internal controls and management of risk could therefore have an adverse effect on our take account of the fact that, as a publicly-
on page 75 (Governance). financial performance. owned company, we have a duty to ensure
that we continue to deliver value for our
As discussed in more detail elsewhere in this shareholders. We balance many different
report, we continue to focus on improving the factors, including ensuring appropriate patient
productivity of our discovery and development access, in our global pricing policy, which
processes. For example, each individual provides the framework for optimising the
project maintains a risk log together with risk profitability of our products in a sustainable way.
mitigation plans. These individual project risks
are aggregated by the portfolio management
MANAGING RISK CONTINUED
Intellectual property Drug safety managers in each of our national products as a result of counterfeiting could
It is our policy to apply for intellectual property companies have local responsibility for product have an adverse impact on AstraZenecas
protection for all inventions and innovations safety within their respective countries. reputation and financial performance.
created as a result of the investments in
R&D throughout the AstraZeneca Product liability claims AstraZeneca uses a range of measures to
organisation. We vigorously defend our Given the widespread impact that medicines protect against counterfeit medicines, and
intellectual property rights, including taking may have on the health of large patient continues to develop its capability in this area:
appropriate infringement action in various populations, pharmaceutical companies
courts throughout the world. Obtaining have historically been subject to large product > We are introducing technologies that
adequate protection for the intellectual liability damages claims, settlements and make copying our products more difficult
property associated with our significant awards for injuries allegedly caused by the use for counterfeiters.
investment in R&D activities continues to of their products. Adverse publicity relating to
be a key business imperative. The range of the safety of a product or of other competing > We conduct market surveillance and
protection includes patents, trade marks, products may increase the risk of product monitor the supply chain to identify
design registrations, copyright and internet liability claims. See further discussion on potential counterfeiting operations.
domain name registrations. page 175 (Risk Factors) and an update on
ongoing product liability claims in Note 26 > We respond rapidly to any reports of
There are many different types of challenges (Commitments and Contingent Liabilities). counterfeit AstraZeneca medicines,
to our intellectual property rights. Generic working with regulators, healthcare
companies continue to seek early market SUPPLY professionals, distributors, law enforcement
access for their own generic competing As part of our overall risk management, we agencies and other organisations to
products. Increasingly, research-based carefully consider the timing of investment to ensure patient interests are protected.
companies are challenging each others ensure that secure supply chains are in place
intellectual property rights. See further for our products (see page 44). > We participate in a variety of anti-
discussion on page 172 (Risk Factors). counterfeiting forums in the public and
In addition, we may be impacted by SUPPLIERS private sector, including the World Health
government actions, particularly in developing In common with most, if not all, pharmaceutical Organizations International Medical
countries, aimed at limiting the value of companies, in some of our areas of activity Products Anti-Counterfeiting Task Force
intellectual property rights in the interests we increasingly rely on third parties, such as (IMPACT) Working Group.
of public health. for the supply of raw materials, equipment,
manufacturing, formulation or packaging ENVIRONMENTAL LIABILITIES
Product safety and efficacy services and maintenance services. We actively Our internal programmes and management
Although we carry out extensive clinical trials manage our relationships with our suppliers to systems help to ensure that we operate our
before a new product is launched, these trials ensure they deliver on time and to our required business in compliance with applicable
cannot replicate the complete range of patient specifications. However, some events beyond environmental laws, regulations, licences and
circumstances that exist among much larger our control could result in an interruption to permits. A significant environmental, health
patient populations. It takes time in broader supply that could affect business continuity or safety event associated with our own or
clinical use following launch of a new medicine and impact our financial performance. a key suppliers operations could have an
to be able to establish a more complete adverse effect on our financial performance,
assessment of its eventual efficacy and/or COUNTERFEITING and we strive to operate our business
safety and likely future commercial Counterfeit medicines are a danger to patients continuously in a manner that mitigates
performance. We have comprehensive and all over the world, as they may contain harmful this risk. AstraZeneca has environmental
rigorous systems in place for detecting and excipients or the wrong dose of the active contamination-related liabilities at some
rapidly evaluating adverse events, and for ingredient or none at all. The most recent formerly owned sites in the US and elsewhere
taking any action that may be required, authoritative surveys have estimated that relating to historic operations (see pages 135
including communicating with the relevant approximately 10% of medicines in emerging and 136), but these are carefully managed by
regulatory authorities. We also strive to identify economies are counterfeit, and this rises designated technical, legal and business
whether particular types of patients may be to over 20% in many of the former Soviet personnel, and we believe they are unlikely to
more susceptible to the risks associated with republics and as high as 30% in parts of have a material adverse effect on our financial
a particular drug, and what the early indicators Latin America, Asia and Africa. By contrast, position and results of operations.
of this might be, so that side effects can be in developed countries with effective regulatory
avoided or minimised in these patients. systems, counterfeits represent less than 1% CURRENCY FLUCTUATIONS
of the market. As a global business, currency fluctuations can
We have an experienced, in-house team of significantly affect our results. Our functional
over 500 clinical drug safety professionals It is in the public interest that patients are made and reporting currency is US dollars as this is
working across AstraZeneca and dedicated properly aware of the risks of counterfeit our most significant currency, but we have
to the task of ensuring that we meet our medicines and of the industrys determination substantial exposures to other currencies, in
commitment to drug safety throughout the to work closely with national and international particular, significant euro- and Japanese yen-
processes described above. Each of our authorities to combat the problem. Undue or denominated income and sterling- and Swedish
products (whether in development or on the misplaced fear or anxiety about the issue krona-denominated costs (see page 60 for
market) has an assigned global drug safety might induce some patients to stop taking more information). For information on how we
physician who, supported by a team of drug their medicines, with consequential risks to manage these risks, see Notes 14 and 15 to
safety scientists, is responsible for that their health. In addition, public loss of the Financial Statements on pages 114
products continuous safety surveillance. confidence in the integrity of pharmaceutical and 115.
DIRECTORS REPORT 47
Business Review
CORPORATE RESPONSIBILITY (CR)
BUSINESS CONTINUITY AND WE BELIEVE WHAT WE DO IS IMPORTANT. WE ALSO BELIEVE HOW

CRISIS MANAGEMENT
Our approach to risk management includes
WE DO IT IS JUST AS IMPORTANT TO OUR STAKEHOLDERS AND
the development of robust Business Continuity WIDER SOCIETY.
Plans, where specific risks have the potential
to have a severe impact on the business.
During 2006, our Business Continuity Planning Only by working responsibly can we earn the responsibilities associated with our expansion
activities centred on a pandemic flu scenario, trust and confidence that make such a vital through acquisition, we also added a particular
and plans are being developed to support contribution to our corporate reputation and reference to the Plan, under Governance
business continuity for all regions and key our licence to do business. and Compliance, to ensure that our CR
business processes. Further work is planned expectations are understood by new members
for 2007 to ensure general continuity and OVERVIEW of the AstraZeneca Group. Other areas in
crisis management plans are in place for all A member of the Board is responsible the Plan include Patient Safety, Access to
functions and levels in the organisation. for overseeing CR within the Company, Medicines, including diseases of the developing
supported by a cross-functional, global world, Clinical Trials, Animal Research, Sales
COMPLIANCE Corporate Responsibility Committee that and Marketing, Human Rights and Diversity.
For many years, we have had internal leads development of AstraZenecas CR Whilst other areas of CR remain firmly on our
groups who have overseen our compliance framework. Dame Bridget Ogilvie, Non- agenda, we believe that for the Plan to be
with the internationally accepted standards Executive Director, performed this role until meaningful, it should contain only those
of Good Laboratory Practice covering she stepped down from the Board at the issues that our assessment processes have
Toxicology, Process Development and part 2006 Annual General Meeting, and the role identified as having the highest priority.
of Pharmaceutical Development, Good has now been assumed by Professor Dame
Manufacturing Practice for Operations, and Nancy Rothwell. AUDITING COMPLIANCE
Good Clinical Practice for all clinical trials An essential part of our CR is to continue
and safety monitoring. We also have Backed by our core values, we have a range to operate to high standards of corporate
an extensive global network of compliance of policies and standards relating to CR that governance. Auditing compliance is a
professionals addressing sales and are widely communicated within the fundamental part of this. All our managers
marketing compliance issues. organisation, and the Company continues to have individual responsibility for ensuring that
develop its established systems for their teams comply with the Code of Conduct
To further strengthen our strategic approach monitoring performance. We are working and with all other AstraZeneca policies, codes
to compliance and align tactical delivery, hard to ensure that our high-level values are and standards that are relevant to their roles.
during 2006 we established the new translated into consistent and appropriate We also have a range of functions and roles
position of Global Compliance Officer (GCO). actions and behaviour worldwide. Backed by dedicated to ensuring appropriate compliance
Appointed in October, the new GCO reports our global Corporate Responsibility Policy processes are in place throughout the business.
to our Chief Executive Officer and is aligned and performance measures, we continue to
with the network of regional and local drive the integration of CR considerations into During 2006, we completed the independent
compliance personnel across the Company everyday business thinking throughout the review of our marketing companies that
who are charged with the implementation of Company. This includes providing managers began in 2005. This programme
AstraZenecas Global Compliance Programme with guidance on putting the global standards concentrated on AstraZenecas governance
within their geography or functional area. into practice at a local level, as well as controls, particularly in the areas of sales and
These compliance personnel work with the communicating with our employees to ensure marketing practice, finance, IT and human
business to seek to ensure AstraZenecas their understanding of our commitment and resources. The findings of the review
compliance with our policies and standards how everyone has a part to play in making informed the development of improvement
through effective training, monitoring, auditing sure AstraZeneca continues to be welcomed plans within each marketing company, with
and enforcement processes. We also have as a valued member of the global community. defined targets for completion of all actions.
established local compliance committees in
individual markets, which focus on compliance CR PRIORITY ACTION PLANNING CR SUMMARY REPORT 2006
with local external and internal codes, and We use formal internal risk assessment, The Company publishes a separate
we have a nominated signatory network together with external benchmarking and Corporate Responsibility Summary Report.
to manage the review and approval of stakeholder dialogue, to help us identify More information about our commitment to
promotional materials. the opportunities and challenges associated CR, our priority action areas and our 2006
with our CR. performance in these areas is available in the
separate CR Summary Report 2006 and on
ASTRAZENECA CORE VALUES Our CR Priority Action Plan provides our website, astrazeneca.com/responsibility.
a framework for managing these issues in
> Integrity and high ethical standards
line with our core values, including defined For the third year running, we have sought
> Respect for the individual and diversity objectives and, where possible, appropriate independent assurance of the information
key performance indicators (KPIs). This Plan contained in the CR Summary Report by an
> Openness, honesty, trust and support
is reviewed annually to ensure that it independent, third-party organisation.
for each other
continues to address the issues relating to
> Leadership by example at all levels our business that affect or concern society
today. In 2006, we introduced a new KPI
for climate change, reflecting our continued
commitment in this area. Recognising the
PEOPLE
PEOPLE ARE ASTRAZENECAS MOST IMPORTANT ASSET. We use a biennial, global, web-based survey
to track levels of employee engagement and
OUR FUTURE SUCCESS WILL BE BUILT ON THEIR EFFORTS. identify areas that may require improvement.
In 2006, we conducted our fourth such survey.
Within our demanding business, we know We also have a range of global training The scores, which were widely communicated
that if we are to maintain peoples energy programmes designed to strengthen to employees, improved across all categories
and commitment to delivering their best in leadership capabilities, enhance core compared with the last survey in 2004 and
the pursuit of AstraZenecas objectives, we management skills and help our leaders to exceeded the pharmaceutical industry
must provide the right environment for that strengthen good working relationships benchmark in most categories. Areas of
to happen. This means providing inspiring across the organisation. These programmes positive feedback included employee health,
and effective leadership, open lines of are complemented by local initiatives, which safety, information sharing and communication
communication, excellent learning and include functional or country-specific aspects (in particular, the survey suggested that line
development opportunities, appropriate of leadership development. managers were more receptive to feedback
reward and benefits, and an inclusive culture from their direct reports as compared with
in which individual success depends solely DIVERSITY the 2004 survey). Overall, engagement levels
on personal merit and performance. We believe that every employee should be are strong, although the survey highlighted
treated with the same respect and dignity. the need for further improvement in some
LEADERSHIP It is Company policy that there should be no aspects of leadership and performance
Good leadership is critical to stimulating the discrimination against any person for any management. Initiatives focused on these
high level of performance that is essential to reason. All judgements about people for the areas have already begun, including seeking to
our continued success in a changing and purposes of recruitment, development and integrate increased clarity on accountabilities
increasingly challenging environment. promotion are made solely on the basis of into management frameworks.
their ability and potential in relation to the
We know that simply setting high-level needs of the job. Every manager is responsible PROMOTING A SAFE, HEALTHY WORKPLACE
performance targets is not enough. Actions for implementing this policy. Providing a safe workplace and promoting
must be identified, and accountability must the health and wellbeing of all our people has
be assigned at the right levels to ensure that Our goal continues to be to ensure that diversity always been a core priority for AstraZeneca.
these actions are implemented. The roles and is appropriately supported in our workforce As we continue to expand and change our
responsibilities of the AstraZeneca Board and and reflected in our leadership. Diversity and activities, we are strengthening and adjusting
Senior Executive Team (SET) in this regard talent management are included in our SET this commitment to safety, health and welfare,
and also more generally are described on objectives and we have a set of minimum by building on our traditional programmes,
pages 71 and 77. standards that support global alignment in which focus on workplace behaviours and
the integration of diversity and inclusion into attitudes, and developing new approaches
Optimising performance is a priority, and our Human Resources processes. During to managing stress and helping employees
managers are responsible for working with 2006, our focus continued to be on ensuring understand their personal health risks.
their teams to develop performance targets that diversity was appropriately reflected in
against which individual and team contributions our senior management teams. As an At the start of 2006, we introduced new
are measured and rewarded. All of our indicator, 33% of the 79 senior managers Group-wide objectives and associated
employees have clear performance targets. reporting to the SET are women (compared targets for 2010 for safety, health and wellbeing
These targets are developed (with input with 22% of 88 senior managers in 2005). that aim to drive continuous improvement in
from the employee to whom they relate) so our performance. Our new key performance
as to ensure that they are appropriate for the COMMUNICATION indicator (KPI) for safety, health and wellbeing
particular work environment of the employee We know that the sharing of information combines the frequency rates for accidents
and to support the overall objectives of the is essential to maintaining our peoples resulting in fatal and serious injuries and new
business. This focus on clarity of business confidence in AstraZeneca and their cases of occupational illness into one KPI,
objectives is reinforced by performance-related commitment to its objectives. We encourage with an overall target of a 50% reduction in
bonus and incentive plans. The Company an open and participative management style the combined rates by 2010, compared with
also encourages employee share ownership at every level. As well as face-to-face meetings, a 2001/2002 reference point.
by offering employees the opportunity to we use a wide range of communications media
participate in various employee share plans, to ensure that our people are kept up to date PEOPLE STRATEGY
which are described in Note 25 to the with business developments and are clear Over the last two years, we have been
Financial Statements on page 128. about the impact that these developments identifying and addressing which people-
may have on them in their personal and related processes needed to be improved in
STRENGTHENING CAPABILITIES professional lives. order to prepare AstraZeneca for the
We encourage and support all our people in challenges facing it and the pharmaceutical
fully developing their capabilities with a range AstraZeneca has constructive relationships industry as a whole. The objective has been,
of high-quality learning and development with trade unions and arrangements exist for and continues to be, to implement changes
opportunities. Backed by a set of core formal consultation at the operational site and in the way people are managed and
principles and common processes that ensure national level in some countries; this includes developed within the organisation in order to
a consistent approach to the management of a forum in Europe where the Chief Executive encourage them to contribute their best
talent across the organisation, our managers Officer meets employee representatives from efforts towards AstraZenecas continued
are responsible for talent management within 19 countries. success, and to create a competitive
their teams. advantage for the Group.
DIRECTORS REPORT 49
Business Review
MAIN FACILITIES OTHER BUSINESSES
We own and operate numerous manufacturing, APTIUM ONCOLOGY ASTRA TECH

marketing and R&D facilities worldwide. Our Over the past 20 years, Aptium Oncology, Astra Tech is engaged in the research,
corporate headquarters are in London, UK formerly Salick Health Care, has evolved from development, manufacture and marketing
and we have a significant presence in Sweden a general healthcare company offering a broad of medical devices and implants for use in
and the US. range of services, to an oncology company healthcare, primarily in urology, surgery
that focuses on developing and managing and odontology. It has a leading position in
Our principal R&D facilities are in the UK out-patient cancer centres, primarily in the US. several countries in Europe and is expanding
(Alderley Park/Macclesfield and Charnwood); its operations in key markets, particularly in
Sweden (Lund, MIndal and Sdertlje); the Ownership of Aptium Oncology provides the US.
US (Boston, Massachusetts and Wilmington, AstraZeneca with a unique window to the
Delaware); Canada (Montreal, Quebec); and provider sector of the US oncology market All product lines showed continued good
India (Bangalore). and access to many opinion leaders in the sales growth in 2006. The Company has
field of oncology who can help shape early been pursuing its growth strategy for Astra
In January 2007, we announced a $100 million phase drug development decisions. Tech Dental, by further expanding its sales
research investment to strategically boost and marketing organisation for dental implants.
work in the infectious disease area and to In 2006, Aptium Oncology continued to Strong sales growth was achieved in major
continue our incremental growth in cancer perform well in its cancer centre management European markets, North America and Japan,
research at our R&D centre near Boston. business with positive profit and cash flow and during the year Astra Tech strengthened
This expansion will accommodate up to 100 contributions. Focused on growth, Aptium its position, with increased market shares in
additional researchers. Construction of the Oncology increased its investment in sales all these major markets. In April, the
132,000 square foot expansion will begin and marketing with an emphasis on reaching Company successfully held its first Astra
during the first quarter of 2007 with scheduled senior level hospital executives at target Tech World Congress for dental implants in
completion by mid-2009. Upon completion, institutions. The resulting expansion of New York City, with delegates and lecturers
the total size of this research facility will be its consultancy business is creating new from 35 countries attending. A new product
382,000 square feet. opportunities for management relationships line to further simplify procedures and new
in new markets in the US. Aptium Oncology components to further enhance the aesthetic
Other R&D activity is carried out at Cambridge, is also exploring opportunities to bring its result of implant treatment were successfully
Avlon and KuDOSs Horsham site in the UK, unique model of cancer care to the UK launched at the Congress. The Cresco
Reims in France, Shanghai in China, Osaka/ and Ireland. business, acquired in 2005, has further
Tokyo in Japan and at Cambridge Antibody strengthened Astra Tech Dentals position in
Technologys facility in San Francisco, US. Aptium Oncology has continued development the prosthetic field during the year. The wholly-
of its innovative clinical research network to owned subsidiaries in Australia, Poland and
Out of a total of 27 manufacturing sites in improve patient care and cancer treatment Switzerland, which were established last year,
19 countries our principal manufacturing with the Aptium Oncology Research Network have continued to develop according to plan.
facilities are in the UK (Avlon and Macclesfield); conducting a growing number of centrally Further investments have been made in R&D,
Sweden (Snckviken and Gartuna, Sdertlje); co-ordinated trials. clinical research and new production facilities
the US (Newark, Delaware and Westborough, to strengthen the product portfolio. To support
Massachusetts); Australia (North Ryde, New and service its growing marketing activities,
South Wales); France (Dunkirk, Monts and Astra Tech is expanding the premises in
Reims); Germany (Plankstadt and Wedel); Mlndal, Sweden, by building a state-of-the-
Italy (Caponago); Japan (Maihara) and Puerto art Training and Education Centre, new
Rico (Canovanas and Carolina). Bulk drug R&D facilities and offices, all of which will be
production is concentrated in the UK, Sweden completed during the second quarter of 2007.
and France.
On 1 February 2007 we announced an

initiative to address over-capacity in the
supply chain (see page 44).
Substantially all of our properties are held

freehold, free of material encumbrances
and we believe such properties are fit for
their purposes.
INDUSTRY REGULATION
As explained on page 10, industry regulation Health authorities worldwide are collaborating PRICE REGULATION
is an important feature of the business more in the delivery of common approaches Prescription medicines are subject
environment in which we operate. and increasing communication. For example, to government controls on price and
the guidelines of the International Conference reimbursement, which operate in most
Concerns surrounding the safety of medicines on Harmonisation (ICH), intra-agency scientific countries in which we sell our products.
are having an effect across the industry. This agreements and intra-agency confidentiality This often presents a complex matrix of
includes increased industry regulation, as agreements are influencing new and revised different prices across countries, the impact
evidenced by regulators increased emphasis legislation and regulations around the world. of which may be further complicated by
on safety and patient risk management currency fluctuations. As a consequence,
through all stages of drug development and PRODUCT REGULATION as downward pressure on pricing increases,
post-marketing surveillance. Drug review and Before a pharmaceutical product is approved the risk of cross-border movement of products
approval become subject to more conditions for marketing, it must undergo extensive clinical is also rising.
including patient risk management plans, development programmes. The process of
patient registries, post-marketing requirements, developing a new pharmaceutical product, US
and conditional and limited approvals. from discovery to marketing approval, can Currently, there is no direct government control
typically take between eight and 12 years, of prices for non-government drug sales in the
AstraZeneca participates in various industry but this period varies considerably in different US. However, Federal legislation mandates
associations and other external organisations, cases and countries. The time taken from that US government agencies should receive
which, among other things, seek to ensure submission of an application for marketing the best price when purchasing drugs for
that legislators and regulators fully appreciate approval to launch of the product is typically the active military, military veterans and other
their impact on the pharmaceutical industrys a minimum of one to two years. selected populations. Providing the best
ability to introduce and deliver innovative price to the US government is also a condition
new drugs to patients worldwide, not just in After a product has been approved and for the manufacturers drugs to be reimbursed
Europe, Japan and the US, but also in China launched, it is a condition of the product by state Medicaid programmes. In addition,
and India and other developing markets. licence that all aspects relating to its safety, a large number of US states have taken
efficacy and quality must continue to meet action to require additional manufacturer
AstraZeneca also engages directly with health regulatory requirements. During the marketing supplemental rebates on Medicaid drug
authorities at all levels. There is a continuing of a product, strict procedures must be in place supplies for the indigent population.
dialogue between regulatory authorities and to monitor, evaluate and report any potential
industry aimed at striking an appropriate adverse reactions. Where drug-related adverse The implementation in 2006 of Part D of the
balance between new regulation and not reactions occur or it is judged that they may Medicare Prescription Drug, Improvement,
impeding the availability of new drugs for occur, changes may be required to prescribing and Modernization Act 2003 has increased
patients with unmet medical needs. Regulators advice and to product licences. Depending the volume of pharmaceuticals dispensed
are willing to engage in discussions earlier in on the country, fines and other penalties in 2006 and also brought additional price
development, as evidenced by the US Food may be imposed for failure to adhere to the pressure from third-party payers, which is
and Drug Administrations (FDA) Critical Path conditions of product licences. This may likely to continue. With many variables and
and the EUs European Medicines Agency include product recalls or a requirement that unknowns in the Medicare Part D market
(EMEA) Pipeline initiatives. Openness and letters be sent to prescribers and other medical formation, it is difficult to predict fully the
transparency are cornerstones for effective practitioners. In extreme cases, the product longer-term effects on our business. Political
communication among AstraZeneca, regulators licence may be revoked, resulting in withdrawal and legislative pressures to revise Medicare
and the industrys numerous stakeholders. of the product from sale. Promotional and Part D could lead to negotiations between
marketing activities are also tightly controlled the US government and the pharmaceutical
The exploration of technology and drug by regulations and self-regulating codes of industry for further discounts. In fact, the
development in many new areas, such as ethical marketing practices. success of the Democratic Party in the US
targeted therapies, biomarkers, modelling, mid-term elections in November has placed
biologics, personalised medicine and Manufacturing plants and processes are the price of products and the volume of
pharmacogenomics, are testing the subject to periodic external inspection by brands prescribed under Medicare Part D
framework of current regulations and these regulators as part of their monitoring back into the spotlight. For further discussion
new developments may need new or revised procedures to ensure that manufacturers of Medicare Part D, see page 34 (Geographic
legislation, regulations and guidelines. are complying with prescribed standards of Review, US).
AstraZeneca is committed to a dialogue with operation. In extreme cases, regulators have
regulatory authorities to develop appropriate the power to halt production and impose Other potential changes in legislation,
standards and processes to address these conditions that must be satisfied before regulation and policy are increasing the
new developments. production can resume. focus on generic versions of branded drugs.
Under a new policy, the FDA has started
offering accelerated approval to selected
generic drugs with a high value to public
health. In addition to the change in policy,
the FDA Office of Generic Drugs has
introduced improvements to the review of
Abbreviated New Drug Applications. These
changes directly impact FDA review time and
the availability of generic drug products.
DIRECTORS REPORT 51
Business Review
Europe should look at the overall costs of health PRODUCT REGULATION: APTIUM ONCOLOGY
Most governments in Europe control the when considering setting drug prices, by Aptium Oncology provides administrative,
price and reimbursement of medicines after taking into account the wider benefits of management and consulting services to
taking into account the clinical, economic pharmaceuticals to health budgets and to hospitals for the development and operation
and social impact of a product. This budget- patients and society in an integrated way. of outpatient department comprehensive
based approach reflects increasing constraints cancer programmes. The healthcare industry
in overall healthcare spending. Governments These interventions do not take into account in the US is subject to extensive and complex
increasingly require more assurance of the consequential delays in patient access federal, state and local legislation and
the value of medicines as well as some (and market access) for new and/or innovative regulations. Regulations relating to the
assurance on predicted volume. products, which average five or six months reimbursement and control of healthcare
and in some countries extend to over one year. costs, particularly those designed to prevent
In several European countries, the pricing fraudulent billing to the government or abuse
and reimbursement systems are continually Japan of government resources, are expansive in
reviewed, with the aim of controlling and There is formal central government control of nature, and reimbursement rates for healthcare
limiting drug budgets. This is an ongoing cost- prices by the Ministry of Health, Labour and services are highly variable and are generally
containment process that puts a downward Welfare in Japan. New product prices are set or regulated by federal or state authorities.
pressure on pricing and reimbursement of determined primarily by comparison with
medicines in Europe. One example of this is existing product classes. PRODUCT REGULATION: ASTRA TECH
the increasing focus on using generic versions Certified quality management systems form
of branded drugs, as seen in a number of Regulations include an overseas price the basis of the regulatory environment relating
countries such as France and Spain. referencing system, under which prices can to medical devices. In Europe, compliance
This impacts the volume uptake of branded be adjusted according to the average price of with regulatory requirements involves the
medicines, which in many therapy areas are four major countries (the US, the UK, Germany implementation and maintenance of a quality
now positioned as second-line agents for and France). The price system was reviewed management system and, for certain products,
smaller patient populations. Recent changes in April 2006, when measures were put in a design dossier review. Medical devices in
in legislation have also accelerated regulatory place that will reduce the occurrence of the US are regulated through a quality system
approval for generic medicines. upward price adjustment. To qualify, the and a requirement that the product be
product must now be available in at least registered. Astra Tech continues to maintain
In Germany, so-called jumbo reference two of the above markets. a European and US compliant quality
price groups were introduced in support of management system.
a general aim to reduce spending on drugs, On a more positive side, premium prices will be
by calculating new and lower reimbursement more readily available for innovative products
price levels. These groups are formed around and are newly established for products
broad drug classes such as statins and registered for children under the age of 15.
proton pump inhibitors, which include This is dependent on satisfying all three defined
branded as well as generic products, which criteria for innovativeness:
drives significant price reductions for some a) useful new mechanism of action;
patented drugs. b) efficacy or safety superior to similar drugs;
and
Overall, the introduction of new cost- c) improvement in therapeutic methods.
containment measures in Europe is increasing
in frequency and intensity. Conservative All existing products are subject to a price
industry estimates suggest that the impact review based on the market price at least every
of cost-containment plans in the seven major two years. In addition, products with generic
markets (UK, Germany, France, Italy, Spain, competition are forced to reduce prices by
Belgium and the Netherlands), representing a further amount. In 2006, there was a price
nearly 88% of the EU 15 (the 15 EU Member cut averaging 6.7% on all listed drugs and an
States prior to the EUs enlargement in 2004) additional 8% cut on branded drugs where
pharmacy and hospital sales budget, had generic substitutes became available after
risen to 6.4% of total market value in 2005 the 2004 revision. A further price review is
(from 4.5% in 2003, according to EFPIA expected in April 2008, with the likelihood
estimates on an annual basis). that annual price decreases will follow.
This escalating pressure on prices is In addition, a change to the prescription

increasingly targeted on recently introduced form in 2006 now gives an opportunity for
innovative medicines, for example by imposing generic substitution at the prescribers
higher price cuts on faster-growing products discretion. Further changes in drug pricing
or by jumbo reference pricing (see above). and reimbursement are anticipated in the
Some countries have sought to recover near future. The possible changes include:
budget overruns from industry by imposing implementation of reference pricing; setting
claw-backs or price cuts to cover budget differential drug reimbursement rates; more
shortfalls at the year-end (eg Italy and frequent generic approval and more frequent
Belgium). We believe that governments drug price revision.
REPORTING PERFORMANCE
SALES GROWTH BY KEY GROWTH, PATENT EXPIRY AND BASE PRODUCTS $M

2006
13,318 (+23%) 2,042 (-16%) 11,115 (+5%) 26,475
2005
10,849 (+27%) 2,458 (-20%) 10,643 (+4%) 23,950
2004
8,426 (+36%) 2,976 (-26%) 10,024 (+5%) 21,426
2003
5,986 (+53%) 3,761 (-46%) 9,102 (+12%) 18,849
2002
3,753 (+144%) 6,469 (-17%) 7,619 (+9%) 17,841
KEY GROWTH PRODUCTS (ARIMIDEX, CRESTOR, NEXIUM, SEROQUEL AND SYMBICORT)

EXPIRY PRODUCTS (LOSEC, NOLVADEX, PLENDIL AND ZESTRIL)
BASE PRODUCTS
KEY GROWTH PRODUCT SALES GROSS MARGIN $M

AND US PRESCRIPTION SHARE TRENDS* % OF SALES
NEXIUM 06 20,916 79.0%

Sales $m US TRx Share
06 5,182 29.4% 05 18,594 77.6%
05 4,633 30.3%
04 3,883 26.9%
04 16,233 75.8%
SEROQUEL
06 3,416 30.2%
05 2,761 28.5% R&D AND SG&A COSTS $M
% OF SALES
04 2,027 25.7%
06 12,998 49.1%
CRESTOR
05 12,074 50.4%
06 2,028 8.7%
05 1,268 6.3%
04 908 5.9% 04 11,735 54.8%
ARIMIDEX
06 1,508 37.5% OPERATING PROFIT MARGIN $M
% OF SALES
05 1,181 34.8%
04 811 26.9% 06 8,216 31.0%
SYMBICORT
05 6,502 27.2%
06 1,184 n/a
05 1,006 n/a 04 4,547 21.2%
04 797 n/a
* TRx share represents total prescription share in the

US in December (IMS data). Symbicort has not been
launched in the US.
The performance data shown in the therapy area reviews on pages 16, 20, 23, 26, 29 and 32
and the geographic sales performance in the geographic review on page 33 are shown in both
reported and underlying performance. Reported performance takes into account all the
factors (including those which we cannot influence, principally currency exchange rates) that
have affected the results of our business. Underlying performance shows sales growth at
constant exchange rates (CER) to reflect the volume and price changes of the geographic and
therapy areas and individual products by excluding the effects of exchange rate movements.
Underlying CER growth is calculated by retranslating the current year performance at the
previous years exchange rates and adjusting for other exchange effects, including hedging.
DIRECTORS REPORT 53
Business Review
FINANCIAL REVIEW
to the market from within our research > Effective life-cycle management and
pipeline or from external sources. commercial excellence in support of
our five key growth products, to drive
Over the five years to the end of 2006, we our top line.
have achieved a compound annual growth
in sales of just over 10% and EPS growth > Along with good top-line growth, to exercise
of over 17%. We accomplished this whilst continued discipline in resource allocation
facing patent expirations on products whose and more aggressive cost management,
sales were nearly half the Company sales at aimed at further margin expansion, whilst
that time. accommodating an increased investment
in research and development.
We believe that the momentum in sales and We know what it will take to continue to
profit growth established over the last two deliver a strong performance. New products > To put our strong cash flow to work
years, can be maintained through life-cycle are critical, but in the short term many of the for selective geographical expansion
opportunities described elsewhere in this ingredients for continuing our momentum and strengthening the pipeline, whilst
report and continued improvement in can be found in our current product range also generating competitive cash returns
productivity. Long term, performance will and plans: to shareholders.
be driven by the delivery of new medicines
JONATHAN SYMONDS CBE
Chief Financial Officer
The purpose of this section of the MEASURING PERFORMANCE > Sales and cost growth expressed in CER
Business Review is to provide a balanced As described on page 15, we use specific allows management to understand the
and comprehensive analysis, including the measures when assessing our performance in true local movement in sales and costs,
key business factors and trends, of the key areas and include them in our discussion in order to compare recent trends and
financial performance of the business during throughout the Business Review. relative return on investment. CER growth
2006, the financial position as at the end of rates can be used to analyse sales in
the year and the main business factors and Some of the financial measures use a number of ways but, most often, we
trends which could affect the future financial information derived at constant exchange consider underlying growth by products
performance of the business. rates (CER), in particular, growth rates in and groups of products, and by countries
sales and costs, operating profit and, as a and regions. Underlying sales growth can
The key sections of this Financial Review are: consequence, earnings per share. be further analysed into the impact of sales
volumes and selling price. Similarly, CER
> Measuring performance. > Underlying growth using constant exchange cost growth helps us to focus on the real
> Business background and major events rates is defined as a non-GAAP measure local change in costs so that we can
affecting 2006. because, unlike actual growth, it cannot manage the cost base effectively.
> Results of operations summary analysis be derived directly from the information
of year to 31 December 2006. in the Financial Statements. This measure > Earnings per share growth in CER
> Financial position, including cash flow removes the effects of currency demonstrates not only the profitability
and liquidity. movements, which allows us to focus on of the business (based on profit after tax)
> Capitalisation and shareholder return. the changes in sales and expenses driven but also the management of our capital
> Future prospects. by volume, prices and cost levels relative structure (particularly through the share
> Financial risk management policies. to the prior period. However, we recognise re-purchase programme).
> Critical accounting policies and estimates. that CER growth should not be used in
> Off-balance sheet transactions, isolation and, accordingly, we also discuss Other measures used are not influenced
contingent liabilities and commitments. the comparable GAAP actual growth so directly, or indeed at all, by the effects of
> Post-employment benefits. measures, which reflect all the factors exchange rates:
> International Accounting transition. that affect our business in the reported
> New accounting standards. performance sections of this Annual > Gross margin and operating profit
> Sarbanes-Oxley Act section 404. Report. Underlying CER growth is margin percentages, which set out the
Additionally, in accordance with calculated by re-translating the current progression of key performance margins
US requirements: year performance at the previous years and demonstrate the overall quality of
> Results of operations summary analysis exchange rates and adjusting for other the business.
of year to 31 December 2005. exchange effects, including hedging.
> US GAAP information 2004-2006.
FINANCIAL REVIEW CONTINUED
> Prescription volumes and trends for key Our operating results in both the short and The most significant features of our financial
growth products, which can represent long term can be affected by a number of results in 2006 are as follows:
the underlying business growth and the factors other than normal competition:
progress of individual products better and > Sales growth on an underlying basis of
more immediately than invoiced sales. > The risk of generic competition following 11% (11% reported) to $26,475 million.
loss of patent exclusivity or patent expiry,
> The performance of the business excluding with the potential adverse effects on > Sustained strong sales performances
the contribution of Toprol-XL in the US, sales volumes and prices, for example, from our five key growth products (which
where sales are increasingly difficult to the launch of generic competition to now account for just over 50% of sales)
predict given uncertainties as to the timing Toprol-XL 25mg in November 2006. of $13,318 million, an increase of 23%
of generic approval and launch. (23% reported).
> The timings of new product launches,
> Free cash flow, which represents net which can be influenced by national > Operating profit of $8,216 million, an
cash flows before financing activities, regulators and the risk that such new underlying increase of 28% (26% reported)
and is calculated as: net cash inflow products do not succeed as anticipated. with an operating margin improvement of
before financing activities, adjusted for 3.8 percentage points to 31.0%.
acquisitions of businesses, movements in > The rate of sales growth and costs
short term investments and fixed deposits, following new product launches. > 11 products in the portfolio with annual
and disposal of intangible assets. sales in excess of $1 billion compared to
> The adverse impact on pharmaceutical two products five years ago.
> Net funds, representing our cash and prices as a result of the regulatory
cash equivalents, less interest bearing environment. For instance, although there > Free cash flow of $6,788 million, up by
loans and borrowings. is no direct governmental control on prices $736 million.
in the US, pressures from individual state
> Total shareholder return measures the programmes and health insurance bodies > Earnings per share growth of 34%
returns we provide to our shareholders are leading to downward forces on realised (33% reported) to $3.86.
and reflects share price movements prices. In other parts of the world, there
assuming reinvestment of dividends and are a variety of price and volume control > Strengthening of the R&D portfolio
is used in comparison to the performance mechanisms and retrospective rebates through 12 significant licensing and
of peer group companies. based on sales levels that are imposed acquisition projects and nine significant
by governments. research collaborations between
December 2005 and January 2007.
BUSINESS BACKGROUND AND MAJOR EVENTS > Currency fluctuations. Our functional and
AFFECTING 2006 reporting currency is the US dollar, but we > Investment in R&D has increased by
The business background is covered in have substantial exposures to other an underlying 16% (16% reported) to
the Business Environment section of this currencies, in particular the euro, Japanese $3,902 million. This rise reflects both an
Business Review and describes in detail yen, sterling and Swedish krona. increase in underlying activity and the
the developments in both our products and effects of acquisitions and in-licensing.
geographical regions. The following comments Over the longer term, the success of our
highlight how these and other factors affect research and development is crucial, and > The introduction of a generic competitor
our financial performance. we devote substantial resources to this area. to Toprol-XL following an adverse
The benefits of this investment emerge judgment in January 2006, which
Our operations are focused on prescription over the long term and inherently there is affected our sales in the final quarter.
pharmaceuticals, and over 97% of our sales are considerable uncertainty as to whether it We are appealing the decision. Excluding
made in that sector. Sales of pharmaceutical will generate future products. US contribution of Toprol-XL (sales of
products tend to be relatively insensitive to $1,382 million in 2006 and $1,291 million
general economic circumstances in the short in 2005, earnings per share of $0.50 in
term. They are more directly influenced by 2006 and $0.41 in 2005), our sales growth
medical needs and are generally financed was 11% (11% reported) and earnings per
by health insurance schemes or national share growth was 36% (35% reported).
healthcare budgets.
DIRECTORS REPORT 55
Business Review
SALES BY THERAPY AREA (2006 AND 2005)

2006 2005 2006 compared to 2005
Growth Growth due to Growth Growth
underlying exchange effects underlying reported
$m $m $m $m % %
Cardiovascular 6,118 780 6 5,332 15 15
Gastrointestinal 6,631 297 (21) 6,355 4 4
Infection 677 67 3 607 11 12
Neuroscience 4,704 656 (11) 4,059 16 16
Oncology 4,262 470 (53) 3,845 12 11
Respiratory and Inflammation 3,151 284 (6) 2,873 10 10
Other pharma 198 (30) (4) 232 (13) (15)
Others 734 89 (2) 647 13 13
Total 26,475 2,613 (88) 23,950 11 11
SALES BY KEY GROWTH, PATENT EXPIRY AND BASE PRODUCTS (2006 AND 2005)
2006 2005 2006 compared to 2005
$m $m $m $m % %
Key growth1 13,318 2,475 (6) 10,849 23 23
Patent expiry2 2,042 (397) (19) 2,458 (16) (17)
Base3 11,115 535 (63) 10,643 5 4
Total 26,475 2,613 (88) 23,950 11 11
1
Arimidex, Crestor, Nexium, Seroquel, Symbicort
2
Losec, Nolvadex, Plendil, Zestril
3
Includes Toprol-XL
OPERATING PROFIT (2006 AND 2005)

2006 2005 Percentage of sales 2006 compared to 2005
underlying exchange effects 2006 2005 underlying reported
$m $m $m $m % % % %
Sales 26,475 2,613 (88) 23,950 11 11
Cost of sales (5,559) (188) (15) (5,356) (21.0) (22.4) 4 4
Gross margin 20,916 2,425 (103) 18,594 79.0 77.6 13 13
Distribution costs (226) (15) - (211) (0.9) (0.8) 7 7
Research and development (3,902) (532) 9 (3,379) (14.7) (14.1) 16 16
Selling, general
and administrative (9,096) (410) 9 (8,695) (34.4) (36.3) 5 5
Other operating income
and expense 524 326 5 193 2.0 0.8 169 172
Operating profit 8,216 1,794 (80) 6,502 31.0 27.2 28 26
RESULTS OF OPERATIONS SUMMARY the US sales growth would have been 11% Our portfolio now has11 brands with annual
ANALYSIS OF YEAR TO 31 DECEMBER 2006 and earnings per share would have been $3.36, sales of greater than $1 billion. The combined
The tables on this page show our sales up 35% over 2005. sales of five key growth products (Arimidex,
analysed both by therapy area and by key Crestor, Nexium, Seroquel and Symbicort)
growth/patent expiry/base products and Underlying performance grew by 23% to $13,318 million and now
operating profit for 2006 compared to 2005. Sales account for just over 50% of our total sales
Sales for the full year increased 11% at CER (up from 45% in 2005). Patent expiry products
Reported performance with good sales growth in all regions (US up now represent around 8% of sales, down from
Our sales grew by 11% from $23,950 million to 16%; Europe up 6%; Japan up 5%; Rest of 10% in 2005. Base products saw growth of
$26,475 million, an increase of $2,525 million. World up11%). This growth was driven by 5% in 2006 over 2005 although the relative
Operating profit increased by 26% from volume improvements that were offset by percentage of sales fell.
$6,502 million to $8,216 million. Earnings per price reductions (particularly in the US and
share for the year were $3.86, a rise of 33% parts of Europe). Excluding Toprol-XL sales
from $2.91 in 2005. We estimate that without from both 2006 and 2005, growth was 11%.
the sales and contribution from Toprol-XL in
The Gastrointestinal portfolio grew for the Neuroscience sales grew by 16% to $4,704 of Toprol-XL, NXY-059 and manufacturing
second year in a row, up 4% as Nexium growth million. Seroquel sales exceeded $3 billion efficiencies (in total $215 million), underlying
more than offset the continuing decline in to reach $3,416 million (up 24%). In the US, margin improved by 1.5 percentage points.
Losec/Prilosec. Nexium sales increased by Seroquel share of new prescriptions in the
12% to $5,182 million. Sales in the US were anti-psychotic market increased to over 30% Research and development expenditure
up 13% to $3,527 million on continued in December. Sales in other markets increased was up 16% to $3,902 million (14% excluding
strong volume growth offset by lower price by 23%. the Cambridge Antibody Technology
realisation. Nexium sales in other markets investment) and increased by 0.6 percentage
increased 10%, as good volume growth in We discuss the performances of the therapy points to 14.7% of sales. Selling, general
France and Italy helped mitigate the significant areas and the individual products in those and administrative cost increases were
price erosion in Germany. Losec/Prilosec areas in more detail in the relevant sections of restricted to 5% over the last year, reaching
sales were down 16% to $1,371 million with the Business Review. $9,096 million and adding 2.0 percentage
declines of 12% in the US and 17% elsewhere. points to operating margin.
Geographical Analysis
In Cardiovascular, sales grew by 15% to In the US, sales were up 16%. Sales growth Higher net other income and expense
$6,118 million. Crestor sales exceeded for Nexium, Seroquel, Arimidex and Crestor increased operating margin by 1.1 percentage
$2 billion, reaching $2,028 million, up 59%. amounted to $1,441 million, whilst there were points due principally to higher royalties, plus
Sales in the US were up 57% to $1,148 million. declines in products such as Prilosec. Toprol- the $109 million gain recognised in the first
Crestor share of new prescriptions in the US XL grew in the year although it faced generic half of the year from the divestment of the
statin market was 9.6% in December 2006 competition from November. Adjusting sales US anaesthetics and analgesic products to
(compared with 6.9% at the beginning of 2006). to exclude Toprol-XL sales from both 2006 Abraxis BioSciences Inc., and the disposal of
Sales in other markets increased by 61% on and 2005, growth was 11%. non-core products in Scandinavia ($32 million)
good growth in Europe and the second half in the final quarter.
launch in Japan. Seloken/Toprol-XL sales Revenue from outside the US now
increased by 3% to $1,795 million. US sales accounts for 53% of our sales. In Europe, Included within cost of sales is the movement
growth was restricted to 7% by the launch sales increased by 6% for the full year, with in fair value of financial instruments used to
in November of generic Toprol-XL 25mg by good volume growth partially offset by lower manage our transactional currency exposures;
Sandoz (formerly Eon Labs) and our move realised prices. Sales for the five key growth the loss for the year, net of an exchange gain
to recognising revenue conservatively as products combined grew by 21%. However, on the underlying exposures, was $11 million.
prescriptions are written (as opposed to performance was hindered by declines Other fair value movements of $5 million are
on shipment). Sales were $1,382 million in in Germany, where doctors have been charged elsewhere in operating profit.
the US. The performances of Crestor and encouraged to prescribe generics.
Seloken/Toprol-XL more than offset declines Net interest and dividend income for the
in Zestril and Plendil, down by 7% and Sales in Japan increased by 5% as a result year was $327 million (2005 $165 million).
24%, respectively. of good growth for Casodex and Arimidex The increase over 2005 is primarily attributable
together with the launch of Crestor. Sales to higher average investment balances
Respiratory and Inflammation sales increased in China were up 19% to $328 million on and yields. The reported amounts include
by 10% to $3,151 million. Symbicort sales were the back of strong growth in all the major $43 million (2005 $15 million) arising from
the main driver of this growth and increased therapeutic areas, particularly Oncology. employee benefit fund assets and liabilities
18% to $1,184 million. Sales of Symbicort arise reported under IAS 19, Employee Benefits.
principally in Europe the Company continues We discuss the geographic performances in
to plan for a US launch around the middle of more detail in the appropriate sections of the The effective tax rate for the twelve months
2007, although achieving this launch timeline Business Review on pages 33 to 36. was 29.0% (2005 29.1%). The decrease
is dependent upon successful transfer of compared to 2005 is the net effect of tax
technology and completion of the required Operating Margin and Retained Profit benefits arising from a different geographical
validation batches. Elsewhere in the therapy Operating margin increased by 3.8 percentage mix of profits, tax deductions relating to
area, Pulmicort sales rose by 11% with annual points from 27.2% to 31.0 %. Excluding share-based payments and the recognition
sales of $1,292 million, whilst Rhinocort sales the effects of currency and other income, of deferred tax assets in respect of tax credit
declined to $360 million, down by 7%. underlying margin increased 2.9 percentage carry forwards, offset by an increase in tax
points for the full year. provisions principally in relation to global
Sales in the Oncology portfolio grew by 12% transfer pricing issues.
to $4,262 million. Arimidex sales increased Gross margin increased by 1.4 percentage
29% to $1,508 million, with growth rates in points to 79.0% of sales. Slightly lower Earnings per share increased by 34% from
the US (up to $614 million) and other markets payments to Merck (4.7% of sales) benefited $2.91 in 2005 to $3.86 for the current year.
the same. Casodex sales grew by 9% to gross margin by 0.1 percentage points whilst We estimate that the share re-purchase
$1,206 million on strong performances currency and royalties reduced gross margin scheme has added 6 cents to earnings
outside the US and Zoladex sales exceeded by 0.1 percentage points and 0.2 percentage per share (after taking account of interest
$1 billion for the second year in a row, again points, respectively. Excluding the prior year income foregone).
on good performance outside the US. Iressa costs for the early termination of the MedPointe
sales fell by 11% to $237 million, a slower Zomig US distribution agreement and In 2006, Toprol-XL contributed US sales of
decline than in 2005, as growth in Asia Pacific manufacturing provisons (in total $137 million) $1,382 million and earnings per share of 50
went some way to offset declines in the US. and the 2006 provisions made in respect cents. Since the timing of approval and launch
DIRECTORS REPORT 57
Business Review
of other proposed generic products (in addition described in more detail below) also were an outflow of $1,392 million in 2006
to the 25mg launched by Sandoz) is difficult contributed to the increase, which was offset compared with $691 million in 2005. During
to predict, we believe that future performance by reductions in insurance balances. the year, cash of $1,148 million was paid
can be best judged by excluding Toprol-XL for the acquisition of Cambridge Antibody
from current performance. Consequently, if There was an underlying increase in payables Technology and KuDOS Pharmaceuticals.
Toprol-XL were excluded from the current and provisions of $499 million arising principally There was a $388 million increase in
and prior years, sales growth would be 11% from higher payables in the US (due to expenditure on intangible assets as a result
and earnings per share growth would be 36%. increased volumes of purchases from Merck) of the new collaboration deals (as described
and the deferred income from the disposal in the section immediately below). Proceeds
FINANCIAL POSITION, INCLUDING CASH FLOW of the anaesthetics business. There were of $661 million were received on disposal of
AND LIQUIDITY also increases from insurance payables the Humira royalty stream, an asset acquired
All data in this section are on an actual basis and Toprol-XL related severance provisions, as part of the acquisition of Cambridge
(unless noted otherwise). which were reduced by the settlement of the Antibody Technology.
defined benefit pension scheme in Japan.
Property, plant and equipment In addition, exchange effects accounted for Investments, divestments and
The increase in the value of property, plant just over $400 million. capital expenditure
and equipment was due primarily to The commitment to strengthening our
additions of $822 million and exchange of Cash flow product pipeline through pursuing external
$689 million offset by depreciation and We continue to be a highly cash-generative opportunities (in addition to the sustained
impairments of $1,003 million. Additions business. Although future operating cash flows investment in internal discovery and
were mainly driven by investment in building may be affected by a number of factors as development) bore fruit in 2006 with two major
upgrades in the UK, Sweden and the US as outlined in the business background section acquisitions and several other significant
well as a vehicle programme in the US. on page 54, we believe our cash resources licensing agreements and collaborations.
will be sufficient for our present requirements In January 2006, we acquired the entire
Goodwill and intangible assets and include sufficient cash for our existing share capital of KuDOS Pharmaceuticals for
The significant increase in the value of capital programme, share re-purchases and $206 million to access DNA repair technology
goodwill and intangibles was primarily due any costs of launching new products, as well as well as several products, including the
to the expansion of our externalisation as the potential partial buy-out of Mercks poly-ARP-ribose polymarese inhibitor in
programme (as described in more detail interests in 2008. Oncology. We followed this by acquiring the
below). The additions of $1,360 million arising total share capital of Cambridge Antibody
from the acquisition of Cambridge Antibody Free cash flow for the year was $6,788 million Technology (adding to the 19.9% we have
Technology were partly offset by the disposal compared to $6,052 million in 2005. held since December 2004) to provide a
of the Humira royalty stream intangible foundation for establishing a significant
acquired with the company ($661 million). After shareholder returns of $5,382 million biopharmaceuticals capability. The total cost
The other major additions were from the (comprising net share re-purchases of of this acquisition of $1,116 million was reduced
acquisition of KuDOS Pharmaceuticals $3,162 million and $2,220 million dividend by disposing of the non-core intangible asset
($297 million), the co-promotion agreement payments), and a net $1,148 million cash arising from the Humira royalty stream for
in respect of Abraxane ($200 million) and outflow from acquisitions (net of cash $661 million in October 2006.
software ($121 million). acquired), there was an overall increase
in net funds of $1,135 million. These acquisitions were complemented
Inventories by significant licensing and collaboration
After excluding the effects of exchange of Cash generated from operating activities agreements. These were led by four significant
$203 million, the value of inventories fell by in the year was $7,693 million, $950 million agreements with AtheroGenics, Inc.,
$159 million to $2,250 million, a reduction of higher than in 2005. The improvement Protherics PLC, Targacept Inc., and Pozen,
just over 7%. This reflected a continuation of was due principally to an increase in profit Inc., with combined payments (capitalised
the work to reduce our inventory levels, with before tax of $1,876 million offset by a as intangible assets) in 2006 of $151 million.
reductions seen primarily in the US (including $224 million increase in working capital With AtheroGenics we entered into a
declines in the levels of Merck related inventory) requirements and a $563 million increase development and commercialisation
and in the UK. in tax paid. Tax paid for the year was agreement for AGI-1067, a novel anti-
$2,169 million compared to $1,606 million atherosclerotic agent being studied for the
Receivables and payables in 2005. This increase in 2006 compared to treatment of patients with coronary disease,
Receivables grew from $4,778 million at the 2005 was due to increased profits in 2006. paying an upfront fee of $50 million in January
end of 2005 to $5,561 million at the close of 2006. Our agreement with Protherics is in
2006. $270 million of this increase was due Net cash outflows from investing activities respect of the anti-sepsis product CytoFab
to exchange. The underlying rise of $513 were $272 million compared to $1,182 million and involved both a 4.3% equity investment
million was driven by increases in trade in 2005. Net cash from investing activities in Protherics of $13 million and an intangible
debtors in the US (through higher sales in the was affected by the management of Group asset of $31 million. In the case of Targacept,
last months of the year), the UK (primarily from funds, with funds being transferred between we have capitalised as an intangible asset
higher export sales) and across several long-term deposits and liquid cash. After payments totalling $30 million in respect of a
European markets. The second instalment excluding these inflows of $1,120 million neuronal nicotinic partial agonist focused on
of income due from the disposal of the (outflows of $491 million in 2005), underlying cognitive disorders. The payments comprised
anaesthetics business in the US (as cash flows associated with investing activities a $10 million upfront fee on signing and a
$20 million milestone payment when proof of These amounts will be capitalised as Dividend and share re-purchases
concept studies commenced. The agreement intangible assets in 2007. The collaboration In line with its stated policy, the Board intends
with Pozen is for the co-development of a with BMS is to develop and commercialise to continue its practice of growing dividends
combination product comprising esomeprazole two investigational compounds being in line with earnings (maintaining dividend
and naproxen with an upfront fee of $40 million. studied for the treatment of Type 2 diabetes. cover in the two to three times range) whilst
In addition to these, we have entered into The collaboration with Palatin is aimed at substantially distributing the balance of cash
agreements with Schering AG, Array, Kinacia, discovering, developing and commercialising flow via share re-purchases. During 2006,
Dynavax, Cubist and Argenta, capitalising compounds to treat obesity, diabetes and we returned $6,367 million out of free cash of
around $70 million in intangible assets. All of metabolic syndrome. We also entered into $6,788 million to shareholders through a mix
these agreements include provisions for an agreement to purchase the total share of share buy-backs and dividends. In 2007,
further payments over and above the initial capital of Arrow Therapeutics Ltd. for the Board intends to re-purchase shares at
signing or upfront fees, depending on $150 million. Arrow Therapeutics is a a cost of $4 billion; this may be increased if
certain development and sales milestones. privately owned UK biotechnology company there are substantial cash inflows from new
The second payment to Targacept is an focused on the discovery and development share issues to meet employee share option
example of such milestones. of anti-viral therapies. exercises. The Board firmly believes that the
first call on free cash flow is business need and,
Complementing these agreements, in Our recent focus on in-licensing having fulfilled that, will return surplus cash
June 2006 we entered into a co-promotion opportunities with third parties will result in flow to shareholders. The primary business
agreement with Abraxis BioScience, Inc. additional intangible asset investment on the need is to build the product pipeline by
in respect of Abraxane in the US. An upfront balance sheet. Should any of these products supporting internal and external opportunities.
signing fee of $200 million was paid and to fail in development, the associated
date we have earned $18 million in alliance intangibles will need to be written off. We have re-purchased and cancelled 72.2
revenue from the arrangement. We have million shares in 2006 at a cost of $4,147 million.
also entered into an agreement with Abbott CAPITALISATION AND SHAREHOLDER RETURN As a result, the total number of shares re-
Laboratories to co-develop and co-promote All data in this section are on an actual basis purchased to date under the share re-purchase
a single pill, fixed dose combination of Crestor (unless noted otherwise). programmes begun in 1999 is 282.8 million
and an Abbott fenofibrate. Abbott has paid (15.9% of our initial share capital post merger)
$50 million upfront, recognition of which has Capitalisation at a cumulative cost of $13,319 million.
been deferred and will be credited to income At 31 December 2006, the number of shares
should we elect to launch the product. Lastly, in issue was 1,532 million. During the year, We paid the second interim dividend of $0.92
we disposed of our Diprivan and local 23.5 million shares were issued in consideration in respect of 2005 on 20 March 2006 and a
anaesthetics business in the US to Abraxis of share option plans and employee share first interim dividend for 2006 on 18 September
for a total price of $340 million, comprising an plans for a total of $985 million. Other reserves 2006 of $0.49 per Ordinary Share. A second
upfront payment of $265 million and $75 million increased by $927 million due to the effect interim dividend for 2006 of $1.23 per Ordinary
to be paid in 2007. A gain of $109 million was of exchange rate and tax movements offset Share has been declared, which the Annual
recognised immediately with the balance to by actuarial losses and holding losses on General Meeting will be asked to confirm as
be recognised over the accompanying five available for sale investments. the final dividend.
year manufacturing arrangement.
Shareholders equity increased by a net
Subsequent to the year end, we entered into $1,707 million to $15,304 million at year end.
two collaboration agreements with Bristol- Minority interests increased from $94 million
Myers Squibb Company (BMS) and Palatin at 31 December 2005 to $112 million at
Technologies Inc. for initial consideration of 31 December 2006.
$100 million and $10 million, respectively.
SUMMARY OF SHAREHOLDER RETURNS

Total Total
Shares Dividend dividend shareholder
re-purchased Cost per share cost returns
(million) $m $ $m $m
1999 4.4 183 0.700 1,242 1,425
2000 9.4 352 0.700 1,236 1,588
2001 23.5 1,080 0.700 1,225 2,305
2002 28.3 1,190 0.700 1,206 2,396
2003 27.2 1,154 0.795 1,350 2,504
2004 50.1 2,212 0.940 1,555 3,767
2005 67.7 3,001 1.300 2,068 5,069
2006 72.2 4,147 1.720 2,649* 6,796*
Total 282.8 13,319 7.555 12,531 25,850
* Total dividend cost estimated based upon number of shares in issue at 31 December 2006.
DIRECTORS REPORT 59
Business Review
FUTURE PROSPECTS elements of our business, so as to free up the Subject to the factors identified in the
The strong financial performance delivered resources necessary to continue to build a business background section, we anticipate
over the past three years has stemmed new product pipeline capable of sustaining that continued sales momentum from our key
from good top-line growth and disciplined growth over the long term. product franchises should result in sales
management of costs. Going forward, we growth in the high single digits at CER in
remain committed to maintaining a Consistent with this, we have taken a further 2007. Tight management of costs should
competitive financial performance during this step in our drive to improve productivity, allow for significant growth in R&D investment
period when, as well as the industry, we face announcing a programme to improve asset whilst producing double-digit earnings per
the challenges posed by patent expirations utilisation in our global supply chain. Over share growth. The effects of US Toprol-XL
and pricing pressures from government and the next three years we plan to rationalise sales and contribution are excluded from
private sector payers. Strengthening the production assets, anticipating accounting these anticipated prospects.
pipeline, by enhancing the productivity of our charges of approximately $500 million
internal discovery and development and (of which approximately $300 million will be
continued pursuit of external opportunities, cash) and the reduction of approximately
remains our number one priority. Alongside 3,000 positions, subject to consultations
this, we will continue to challenge all with works councils and local labour laws.
RATIOS
As at and for the year ended 31 December 2006 2005 2004
Return on shareholders equity (%) 41.8 33.6 26.7
Equity/assets ratio (%) 51.1 54.7 56.2
Average number of employees 66,600 64,900 64,200
SENSITIVITY ANALYSIS 31 DECEMBER 2006

Market value change favourable/(unfavourable)
Market value Interest rate Exchange rate
31 December 2006 movement movement
+1% -1% +10% -10%
$m $m $m $m $m
Cash and short term investments 7,662 (81) 81
Long term debt, net of interest and currency swaps (1,060)
Foreign exchange forwards 45 (97) 97
Foreign exchange options
(178) 178
SENSITIVITY ANALYSIS 31 DECEMBER 2005

+1% -1% +10% -10%
$m $m $m $m $m
Cash and short term investments 6,528 (46) 46
Long term debt, net of interest and currency swaps (1,062)
(91) 91
FINANCIAL RISK MANAGEMENT POLICIES Foreign exchange Interest rate risk

Insurance The Group results are reported in US dollars, The Groups policy is to match the interest
Our risk management processes are described our most significant currency. In addition, rate exposure on our gross debt balance
in the Governance section under the heading surplus cash generated by the business is with that arising on our surplus cash position
Internal controls and management of risk converted to and held centrally in US dollars. using interest rate swaps. The net effect of
on page 75. An outcome of these processes We therefore manage our currency exposures this is to exchange the fixed rate interest paid
is that they enable us to identify risks that can against the US dollar. on our two outstanding bonds (fair value of
be partly or entirely mitigated through use $1,087 million at 31 December 2006) into
of insurance or through self-insurance. About 53% of our external sales in 2006 floating rate interest referenced to six month
We negotiate best available premium rates were denominated in currencies other than US dollar LIBOR. The majority of our cash
with insurance providers on the basis of our the US dollar, with the euro being the main balance is held with third party fund managers
extensive risk management procedures. contributor and a significant proportion of who return a target yield referenced to seven
In the current insurance market, level of cover our manufacturing and R&D costs were day US dollar LIBID. In addition to interest rate
is decreasing whilst premium rates are denominated in sterling or Swedish krona. swaps, we also use forward rate agreements
increasing. Rather than simply paying higher Accordingly, the impact on reported earnings to manage any short term timing difference
premiums for lower cover, we focus our from a weakening in the US dollar would be between the swapped debt interest expense
insurance resources on the most critical to increase both sales and costs, with the net and cash interest income.
areas, or where there is a legal requirement, result on earnings dependent on the relative
and where we can get best value for money. size of the exchange rate movements against Credit exposure
Risks to which we pay particular attention the US dollar. Exposure to financial counterparty credit risk
include business interruption, directors and is controlled by the treasury team centrally
officers liability and property damage. We manage our currency exposures centrally, in establishing and monitoring counterparty
based on forecast future cash flows of our limits. Centrally managed funds are invested
Taxation major currencies. The major currencies to almost entirely with counterparties whose
Tax risk management forms an integrated part which we are exposed (Swedish krona, euro credit rating is A or better. External fund
of the Group risk management processes. and sterling) tend to move in a similar direction managers who manage $5,033 million of
Our tax strategy is to manage tax risks and against the US dollar, mitigating significantly the Groups cash are rated AAA by Standard
tax costs in a manner consistent with the impact of exchange rate movements. & Poors. There were no other significant
shareholders best long-term interests, taking Accordingly, we monitor this relationship concentrations of credit risk at the balance
into account both economic and reputational closely and we will only hedge if we anticipate sheet date. All financial instruments are
factors. We draw a distinction between or experience a significant breakdown in transacted with commercial banks, in line
tax planning using artificial structures and this relationship. Any such hedging activity is with standard market practice and are not
optimising tax treatment of business subject to strict internal approval procedures. backed with cash collateral. Trade receivable
transactions, and we only engage in the latter. We do not, as a matter of policy, engage in exposures are managed locally in the operating
speculative transactions, nor do we hedge units where they arise. The Group is exposed
Treasury currency translation exposures arising from to customers ranging from government-
Our financial policies covering the management our accounting for non-dollar subsidiaries in backed agencies and large private wholesalers
of cash, borrowings and foreign exchange the Group books. to privately owned pharmacies, and the
are intended to support our objective of underlying local economic and sovereign risks
maintaining shareholder value by managing Transaction exposures arising where local vary throughout the world. Where appropriate,
and controlling our financial risks. Our treasury subsidiaries make sales or purchases in the Group endeavours to minimise risks by
operations are conducted in accordance non-local currencies are, where practicable, the use of trade finance instruments such as
with policies and procedures approved by fully hedged using forward foreign letters of credit and insurance.
the Board. The treasury activities are managed exchange contracts.
centrally from London. Significantly all of our Sensitivity analysis
cash and short term investments are managed Funding risk The sensitivity analysis, set out in this review
directly from London where possible and The management of our liquid assets and debt on page 59, summarises the sensitivity of the
practicable. With only limited and specifically balances are co-ordinated and controlled market value of our financial instruments to
approved exceptions, all currency and interest centrally by our treasury operations. We have hypothetical changes in market rates and
rate hedging is conducted from London. significant positive cash flows and the liquidity prices. Changes to the value of the financial
Operating units benefit from local currency of major subsidiaries is co-ordinated in cash instruments are normally offset by our
billing, which has the effect of consolidating their pools and concentrated daily in London. underlying transactions or assets and
foreign exchange exposures to central treasury. The cash balances and unutilised debt liabilities. The range of variables chosen
programme are available to finance the for the sensitivity analysis reflects our view
ongoing working capital and capital investment of changes that are reasonably possible over
requirements of our operations. a one year period. Market values are the
DIRECTORS REPORT 61
Business Review
present value of future cash flows based disclosure of contingent assets and liabilities. Chargebacks, where we enter into
on market rates and prices at the valuation The actual outcome could differ from those arrangements under which certain
date. Market values for interest rate risk are estimates. Some of these policies require a parties, typically hospitals, the
calculated using third party systems that high level of judgement, either because the Department of Veterans Affairs and the
model the present value of the instruments areas are especially subjective or complex. Department of Defense, are able to buy
based on the market conditions at the We believe that the most critical accounting products from wholesalers at the lower
valuation date. For long term debt, an policies and significant areas of judgement prices we have contracted with them.
increase in interest rates results in a decline and estimation are in revenue recognition, The chargeback is the difference
in the fair value of debt. research and development, goodwill and between the price we invoice to the
intangible assets, provisions for contingent wholesaler and the contracted price
The sensitivity analysis on page 59 assumes liabilities, post-retirement benefits, taxation charged by the wholesaler. Chargebacks
an instantaneous 100 basis point change in and share-based compensation. are paid directly to the wholesalers.
interest rates in all currencies from their levels
at 31 December 2006, with all other variables Revenue recognition Regulatory, including Medicaid and
held constant. Because all our debt was Revenue represents sales of products other federal and state programmes,
hedged effectively to floating rate in 2006, to external third parties and excludes where we pay rebates based on
changes in interest rates will not change the inter-company income and value added the specific terms of agreements in
carrying value of debt after interest rate and taxes. We also receive income from royalties individual states which include product
currency swaps. Based on the composition of and from disposals of intellectual property, usage and information on best prices
our long term debt portfolio as at 31 December brands and product lines which are included and average market prices.
2006 (which is predominantly floating rate), in other operating income.
a 1% increase in interest rates would result Contractual, under which entities
in an additional $10 million in interest being > Sales of products to third parties: Sales such as third party managed care
incurred per year. The exchange rate sensitivity revenue is recorded at the invoiced amount organisations, long-term care facilities
analysis on page 59 assumes an (excluding sales and value added taxes) and group purchasing organisations
instantaneous 10% change in foreign currency less estimated accruals for product returns are entitled to rebates depending on
exchange rates from their levels at 31 and rebates given to managed care and specified performance provisions,
December 2006, with all other variables held other customers a particular feature in the which vary from contract to contract.
constant. The +10% case assumes a 10% US. Cash discounts for prompt payment
strengthening of the US dollar against all are also deducted from sales. Revenue is Accrual assumptions are built up on a
other currencies and the -10% case assumes recognised when title passes to the product-by-product and customer-by-
a 10% weakening of the US dollar. customer, which is usually either on customer basis taking into account specific
shipment or on receipt of goods by the contract provisions coupled with expected
CRITICAL ACCOUNTING POLICIES customer depending on local trading terms. performance and are then aggregated into
AND ESTIMATES a weighted average rebate accrual rate for
Our Financial Statements are prepared in At the time of invoicing sales in the US, each of our products. Accrual rates are
accordance with International Accounting rebates and deductions that we expect to reviewed and adjusted on a monthly basis.
Standards and International Financial Reporting pay, generally over the following six to nine There may be further adjustments when
Standards (collectively IFRS) as adopted months, are estimated. These rebates actual rebates are paid after the initial sale
by the European Union (adopted IFRS) typically arise from sales contracts with based on utilisation information submitted
and the accounting policies employed are set third party managed care organisations, to us (in the case of contractual rebates)
out under the heading Financial Statements hospitals, long-term care facilities, group and claims/invoices (in the case of regulatory
Accounting Policies on pages101 to 103. purchasing organisations and various rebates and chargebacks). We believe
In applying these policies, we make State programmes (Medicaid best price that we have been reasonable in our
estimates and assumptions that affect the contracts, supplemental rebates etc) and estimates for future rebates using a similar
reported amounts of assets and liabilities and can be classified as follows: methodology to that of previous years.
Inevitably, however, such estimates involve
judgements on aggregate future sales
levels, segment mix and the respective
customer contractual performance.
Cash discounts are offered to customers to be returned. Our returns accruals are based on factors such as the type of product and
encourage prompt payment. Accruals are on actual experience over the preceding the inventory levels at wholesalers. In the
calculated based on historical experience 12 months for established products latter case, we give particular attention to
and are adjusted to reflect actual experience. together with market related information the possible level of returns and may only
such as estimated stock levels at recognise revenue on ultimate prescribing
Industry practice in the US allows wholesalers and competitor activity. of the product to patients. Overall, we
wholesalers and pharmacies to return For newly launched products, we use believe that our estimates are reasonable.
unused stocks within six months of, and rates based on our experience with similar
up to twelve months after, shelf-life expiry. products or a pre-determined percentage The effects of these deductions on our
At point of sale, we estimate the quantity and for products facing generic competition US pharmaceuticals turnover, and the
and value of goods which may ultimately (such as Toprol-XL in the US) rates based movements on accruals, are set out below:
2006 2005 2004

$m $m $m
Gross sales 16,577 14,013 12,552
Chargebacks (975) (905) (754)
Regulatory US government and state programmes (532) (873) (659)
Contractual Managed care and group purchasing organisation rebates (2,413) (1,201) (949)
Cash and other discounts (329) (405) (578)
Customer returns (46) 14 (64)
Other (256) (244) (248)
Net sales 12,026 10,399 9,300
Adjustment Carried forward

Brought forward Provision for in respect Returns at 31 December
1 January 2004 current year of prior years and payments 2004
$m $m $m $m $m
Chargebacks 127 745 9 (763) 118
Regulatory US government and state programmes 386 724 (65) (552) 493
Contractual Managed care and group purchasing organisation rebates 572 1,034 (85) (1,031) 490
Cash and other discounts 20 578 - (575) 23
Customer returns 316 64 - (98) 282
Other 44 248 - (212) 80
1,465 3,393 (141) (3,231) 1,486

$m $m $m $m $m
Chargebacks 118 927 (22) (838) 185
Contractual Managed care and group purchasing organisation rebates 490 1,284 (83) (1,271) 420
Customer returns 282 (14) - (101) 167
Other 80 244 - (270) 54
1,486 3,816 (202) (3,646) 1,454

$m $m $m $m $m
Chargebacks 185 1,001 (26) (1,068) 92
Contractual Managed care and group purchasing organisation rebates 420 2,367 46 (2,198) 635
Customer returns 167 46 - (53) 160
Other 54 256 - (263) 47
1,454 4,596 (45) (4,728) 1,277
DIRECTORS REPORT 63
Business Review
The adjustments in respect of prior years > Royalty income: Royalty income is recorded upfront amount as being attributable to the
benefited reported US pharmaceuticals under other operating income in the delivered intangible assets and recognise
turnover by 1.5%, 1.9% and 0.4% in 2004, Financial Statements. Royalties tend to the revenue upon delivery.
2005 and 2006, respectively. However, be linked to levels of sales or production
taking account of the following years by a third party. At the time of preparing Research and development
reversal the net impact on 2005 and 2006 the Financial Statements, we may have to Our business is underpinned by our marketed
was a 0.6% understatement and a 1.3% estimate the third partys sales or production products and development portfolio. The R&D
overstatement of US pharmaceuticals when arriving at the royalty income to be expenditure on internal activities to generate
turnover, respectively. included. These estimates, which may these products is generally charged to the
differ from actual sales or production, do income statement in the year that it is incurred.
Regulatory rebates decreased by not result in a material impact on reported Purchases of intellectual property and product
$341 million in 2006 compared to 2005, other operating income. rights to supplement our R&D portfolio are
as a result of the automatic switch of those capitalised as intangible assets. Such intangible
patients in state Medicaid programs into > Sales of intangible assets (such as assets are amortised from the launch of
Medicare Part D, classified as a contractual intellectual property, brands and product the underlying products and are tested for
rebate. Contractual rebates increased lines): A consequence of charging all impairment both before and after launch.
$1,212 million compared to 2005, partly internal R&D expenditure to the income This policy is in line with practice adopted by
as a result of this switch, and also due to statement in the year that it is incurred major pharmaceutical companies.
volume growth. (which is normal practice in the
pharmaceutical industry) is that we own Goodwill and intangible assets
A further factor that significantly influenced valuable intangible assets which are not We have significant investments in goodwill
our sales in the US market prior to 2004 was recorded on the balance sheet. We also and intangible assets as a result of acquisitions
wholesaler buying patterns. Wholesalers own acquired intangible assets which of businesses and purchases of such assets
could place orders that were significantly are included on the balance sheet. as product development and marketing rights.
larger than their normal levels of demand As a consequence of regular reviews of Under adopted IFRS, goodwill is held at cost
ahead of anticipated price increases or product strategy, from time to time we sell and tested annually for impairment, whilst
would seek to build up or run down their such assets and generate income. Sales intangibles are amortised over their estimated
stock levels for other reasons. Such of product lines are often accompanied useful lives. Changes in these lives would
speculative purchases made forecasting by an agreement on our part to continue result in different effects on the income
sales patterns more difficult and could drive manufacturing the relevant product for a statement. We estimate that a one year
variances between reported and underlying reasonable period (often about two years) reduction in the estimated useful lives of
demand at quarter end. In December 2003 whilst the purchaser constructs its own intangible assets would increase the annual
we entered into Inventory Management manufacturing facilities. The contracts amortisation charge by $33 million. A substantial
Agreements to reduce the opportunity typically involve the receipt of an upfront part of our investments in intangible assets
for such speculative purchases. In 2005 payment, which the contract attributes and goodwill relates to the restructuring of
we replaced the Inventory Management to the sale of the intangible assets, and the Astra-Merck joint venture in 1998, and
Agreements with Distribution Service ongoing receipts, which the contract we are satisfied that the carrying values are
Agreements, which served to reduce even attributes to the sale of the product we fully justified by estimated future earnings.
further the speculative purchasing manufacture. In cases where the transaction Intangible assets are reviewed for impairment
behaviour of the wholesalers. As a result, has two or more components, we account where there are indications that their carrying
we believe inventory movements have for the delivered item (for example, the values may not be recoverable, and any
been neutral across the year. We continue transfer of title to the intangible asset) as impairments are charged to the income
to track wholesaler stock levels by product, a separate unit of accounting and record statement. Tests for impairment are based
using our own, third party and wholesaler revenue on delivery of that component on discounted cash flow projections, which
data and, where we believe such distortions provided that we can make a reasonable require us to estimate both future cash
occur, we disclose in the Annual Report estimate of the fair value of the undelivered flows and an appropriate discount rate.
for each product and in aggregate where component. Where the fair market value Such estimates are inherently subjective.
shipments may be out of line with underlying of the undelivered component (for example Impairments to intangible assets totalling
prescription trends. We do not offer any a manufacturing agreement) exceeds $17m were recognised in 2006 (2005 $nil,
incentives to encourage wholesaler the contracted price for that component 2004 $10 million). Under adopted IFRS, the
speculative buying and attempt, where we defer an appropriate element of the merger of Astra and Zeneca in 1999 was
possible, to restrict shipments to underlying upfront consideration and amortise this recorded as a merger of equals (pooling of
demand when such speculation occurs. over the performance period. However, interests). Under US GAAP, the merger has
where the contracted price for the been accounted for as a purchase acquisition
undelivered component is equal to or of Astra by Zeneca as discussed in more
greater than the fair market value of that detail on page 149.
component we treat the whole of the
Contingent liabilities and commitments Taxation Arrangements with Merck

In the normal course of business, contingent Accruals for tax contingencies require Introduction
liabilities may arise from product-specific and management to make judgements and In 1982, Astra AB set up a joint venture with
general legal proceedings, from guarantees estimates in relation to tax audit issues and Merck & Co., Inc. for the purposes of selling,
or from environmental liabilities connected exposures. Amounts accrued are based marketing and distributing certain Astra
with our current or former sites. Where we on managements interpretation of country- products in the US. In 1998, this joint venture
believe that potential liabilities have a low specific tax law and the likelihood of settlement. was restructured (the Restructuring). Under
probability of crystallising or are very difficult to Tax benefits are not recognised unless the tax the agreements relating to the Restructuring
quantify reliably, we treat them as contingent positions are probable of being sustained. (the Agreements), a US limited partnership
liabilities. These are not provided for but are Once considered to be probable, management was formed, in which Merck is the limited
disclosed in the notes. Further details of reviews each material tax benefit to assess partner and we are the general partner, and
these contingent liabilities are set out in Note whether a provision should be taken against we obtained control of the joint ventures
26 to the Financial Statements. Although there full recognition of the benefit on the basis of business subject to certain limited partner and
can be no assurance regarding the outcome potential settlement through negotiation and/or other rights held by Merck and its affiliates.
of legal proceedings, we do not expect them litigation. All such provisions are included in These rights provide Merck with safeguards
to have a materially adverse effect on our creditors due within one year. Any recorded over the activities of the partnership and
financial position or profitability. We also have exposure to interest on tax liabilities is place limitations on our commercial freedom
significant commitments that are not currently provided for in the tax charge. to operate. The Agreements provide for:
recognised in the balance sheet arising
from our relationship with Merck. These are Share-based compensation > Annual contingent payments.
described more fully in Off-balance sheet Through the Remuneration Committee
transactions, contingent liabilities and we offer share and share option plans > A payment to Merck in the event of a
commitments below. to certain employees as part of their business combination between Astra
compensation and benefits packages, and a third party in order for Merck to
Post-employment benefits designed to improve alignment of the relinquish certain claims to that third
We account for the pension costs relating to interests of employees with shareholders. partys products.
the retirement plans under IAS19 Employee Details of these are given in Note 25 to the
Benefits. In applying IAS19, we have adopted Financial Statements. The charges have > Termination arrangements which, if and
the option of recognising gains and losses in been calculated principally using the Black- when triggered, cause Merck to relinquish
full through reserves. In all cases, the pension Scholes model as a valuation basis. its interests in our products and activities.
costs are assessed in accordance with the
advice of independent qualified actuaries but OFF-BALANCE SHEET TRANSACTIONS, These elements are discussed in further
require the exercise of significant judgement CONTINGENT LIABILITIES AND COMMITMENTS detail below together with a summary of their
in relation to assumptions for future salary and Details of our contingent liabilities and accounting treatments.
pension increases, long term price inflation commitments are set out in Note 26 to the
and investment returns. Financial Statements. We have no off-balance
sheet arrangements and our hedging activities
are non-speculative. The table below sets out
our minimum contractual obligations at the
year end.
CONTRACTUAL OBLIGATIONS
Less than 1 year 1-3 years 3-5 years Over 5 years Total
Payments due by period $m $m $m $m $m
Bank loans and other borrowings 136 1,087 1,223
Operating leases 211 99 53 88 451
Merck arrangements 225 4,677 4,902
Other 643 643
Total 1,215 4,776 53 1,175 7,219
DIRECTORS REPORT 65
Business Review
Annual contingent payments Partial Retirement Should Merck exercise the First Option in
We make ongoing payments to Merck based In 2008, there will be a partial retirement 2008, we will make payments in respect of
on sales of certain of our products in the US of Mercks limited partnership interest by the Partial Retirement, the First Option and
(the contingent payments on the agreement payment to Merck of an amount calculated the true-up totalling a minimum of $4.7 billion.
products). As a result of the merger of as a multiple of the average annual contingent If we exercise the First Option in 2010, the
Astra and Zeneca in 1999, these contingent payments from 2005 to 2007 on the relevant combined effect of the amounts paid to Merck
payments (excluding those in respect of products, plus $750 million. in 2008 and 2010 will total the same amount.
Prilosec and Nexium) cannot be less than
annual minimum sums between 2002 and Upon the Partial Retirement, Mercks rights in Loan Note Receivable
2007 ranging from $125 million to $225 million. respect of certain of the agreement products Included in the assets and liabilities covered by
Our payments have exceeded the minimum will end. The products covered by the Partial the Restructuring is a loan note receivable by
levels in 2002 to 2006 and, notwithstanding Retirement include Toprol-XL, Pulmicort, us from Merck with a face value of $1.4 billion.
the entry of a generic competitor to Toprol-XL Rhinocort and Symbicort, the last of which is In 2008, at the same time as the settlement of
in November 2006, we have no reason to planned to be launched in the middle of the Partial Retirement and the true-up, Merck
believe that the annual payment in 2007, the 2007, although this timeline is dependent will settle the loan note receivable by paying
final year in which the minimum levels apply, upon successful transfer of technology from us $1.4 billion.
will fall below the minimum obligations. development to manufacturing and
completion of validation batches. Second Option
Payment in the event of a A Second Option exists whereby we have
business combination First Option and True-Up the option to re-purchase Mercks interests in
On the merger of Astra and Zeneca, a one- In 2008, a calculation will be made of the Prilosec and Nexium in the US. This option is
time Lump Sum Payment of $809 million was Appraised Value, being the net present value exercisable by us two years after the exercise
triggered. As a result of this payment, Merck of the future contingent payments in respect of the First Option, whether the First Option
relinquished any claims it may have had to of all agreement products not covered by the is exercised in either 2008 or 2010. Exercise
Zeneca products. Partial Retirement, other than Prilosec and of the Second Option by us at a later date is
Nexium. Payment of the Appraised Value to also provided for in 2017 or if combined annual
Termination arrangements Merck in 2008 will take place only if Merck sales of the two products fall below a minimum
The Agreements provided for arrangements exercises the First Option. Should Merck not amount provided, in each case, that the First
and payments under which, subject to the exercise this option in 2008, we may exercise Option has been exercised. The exercise
exercise of certain options, the rights and it in 2010 for a sum equal to the 2008 Appraised price for the Second Option is the net present
interests in our activities and products held Value. Contingent payments will continue value of the future annual contingent payments
by Merck immediately prior to the merger from 2008 to 2010 if we exercise in 2010. on Prilosec and Nexium as determined at the
would be terminated, including details of: time of exercise.
Upon exercise of the First Option, Merck
> The Advance Payment will relinquish its rights over the agreement If the Second Option is exercised, Merck will
> The Partial Retirement products not covered by the Partial Retirement, then have relinquished all its interests in the
> The First Option and True-Up other than Nexium and Prilosec. If neither partnership and the agreement products
> The Loan Note Receivable Merck nor we exercise the option, the including rights to contingent payments.
> The Second Option contingent payment arrangements in respect
of these agreement products will continue General
Advance Payment (as will our other obligations and restrictions The precise amount and timing of settlements
The merger between Astra and Zeneca in respect of these products) and the with Merck under the Partial Retirement,
triggered the first step in the termination Appraised Value will not be paid. the First Option and the true-up cannot be
arrangements. Merck relinquished all rights, determined at this time. Various components
including contingent payments on future Products covered by the First Option include of the calculations are based, in part, on
sales, to potential Astra products with no Atacand, Plendil and certain compounds still net sales between 2005 and 2007 and on
existing or pending US patents at the time in development. forecasted performance beyond 2007, and
of the merger. As a result, we now have rights payment of the First Option is contingent upon
to such products and are relieved of potential In addition, in 2008 there will be a true-up of the Merck (or us) exercising the First Option.
obligations to Merck and restrictions in respect Advance Payment. The true-up amount will Similarly, the timing and amount of the Second
of those products (including annual contingent be based on a multiple of the average annual Option cannot be determined at this time.
payments), affording us substantial freedom contingent payments from 2005 to 2007 in
to exploit the products as we see fit. respect of all the agreement products with the With the exception of the interests in Nexium
exception of Prilosec and Nexium (subject to and Prilosec, the total of the payments yet to
At the time of the merger, the Advance a minimum of $6.6 billion), plus other defined be made under the termination arrangements
Payment was paid. It was calculated as the amounts (totalling $912 million). It is then is based, in part, on the contingent payments
then net present value of $2.8 billion discounted reduced by the Appraised Value (whether paid made in 2005 to 2007 (subject to the minimum
from 2008 to the date of merger at a rate of or not), the Partial Retirement and the Advance amount) and is likely to be substantially driven
13% per annum and amounted to $967 million. Payment (at its undiscounted amount of by the sales of Toprol-XL, Pulmicort, Rhinocort
It is subject to a true-up in 2008, as discussed $2.8 billion) to determine the true-up amount. and Atacand. However, we anticipate that
under First Option and True-Up below. The true-up will be settled in 2008 irrespective the benefits that accrue to us under all the
of whether the First Option is exercised, and termination arrangements arise:
this could result in a further payment by us to
Merck or a payment by Merck to us.
> Currently, from the substantial freedom The payments under the Partial Retirement, POST-EMPLOYMENT BENEFITS
over products acquired or discovered the First Option and true-up and the Second We offer post-retirement benefit plans which
post-merger. Option will be accounted for under the extant cover many of our employees around the
guidance when they are paid, with allocations world. In keeping with local terms and
> On occurrence of each stage of such to intangibles and goodwill, as appropriate. conditions, most of these plans are defined
arrangements, from enhanced contributions If Merck exercises the First Option in 2008, contribution in nature where the resulting
from, and substantial freedom over, those the net minimum payment to be made to income statement charge is fixed at a set
products that have already been launched Merck, being the combined payments of level or is a set percentage of employees
(for example, Rhinocort and Atacand), $4.7 billion less the repayment of the loan pay. However, several plans, mainly in the
those that are due to be launched in the note of $1.4 billion, would be $3.3 billion. UK, which has by far the largest single
US (in particular, Symbicort) and those In accounting for the Restructuring in 1998, scheme, the US and Sweden, are defined
that are in development. the loan note was included in the determination benefit plans where benefits are based on
of the fair values of the assets and liabilities to employees length of service and final salary
Economic benefits include relief from be acquired. At that time, the loan note was (typically averaged over one, three or five
contingent payments, anticipated cost ascribed a fair value of zero on acquisition and years). The UK and US defined benefit
savings from cessation of manufacturing on the balance sheet because we estimated schemes were closed to new entrants in
arrangements and other cost efficiencies that the net minimum payment of $3.3 billion 2000. All new employees in these countries
together with the strategic advantages of equated to the fair value of the rights to be are offered defined contribution schemes.
increased freedom to operate. acquired under the Partial Retirement, true-
up and First Option. In applying IAS19 Employee Benefits,
Accounting treatments we recognise all actuarial gains and losses
Annual contingent payments: The annual Our ongoing monitoring of the projected immediately through reserves. This
contingent payments on agreement products payments to Merck and the value to us of the methodology results in a less volatile income
are expensed as incurred. related rights takes full account of changing statement charge than under the alternative
business circumstances and the range approach of recognising actuarial gains and
Payment in the event of a business of possible outcomes to ensure that the losses over time. Investment decisions in
combination: The Lump Sum Payment was payments to be made to Merck are covered respect of defined benefit schemes are
expensed at the point of merger since it caused by the economic benefits expected to be based on underlying actuarial and economic
no incremental benefits over the prior years realised by us. Should our monitoring reveal circumstances with the intention of ensuring
aggregate Astra and Zeneca performance to that these payments exceed the economic that the schemes have sufficient assets to
accrue to the merged AstraZeneca entity. benefits expected to be realised, we would meet liabilities as they fall due, rather than
recognise a provision for an onerous contract. meeting accounting requirements. The
Termination arrangements: We consider trustees follow a strategy of awarding
that the termination arrangements described Taxation mandates to specialist, active investment
above represent the acquisition, in stages, We face a number of transfer pricing audits managers which results in a broad
of Mercks interests in the partnership and in jurisdictions around the world. The issues diversification of investment styles and asset
agreement products (including their rights under audit are often complex and can classes. The investment approach is
to contingent payments) and depend, in require many years to resolve. Accruals for intended to produce less volatility in the plan
part, on the exercise of the First and Second tax contingencies require us to make estimates asset returns.
Options. The effects will only be reflected in and judgements with respect to the ultimate
the Financial Statements as these stages are outcome of a tax audit and actual results Despite increases in the discount rates, the
reached. If and when all such payments are could vary from these estimates. The total overall deficit in the Groups defined benefit
made, we will have unencumbered discretion accrual included in the Financial Statements schemes increased from $1,706 million at 31
in our operations in the US market. to cover the worldwide exposure to transfer December 2005 to $1,842 million at 31
pricing audits is $995 million. For certain of December 2006. This was principally due to
The Advance Payment has been accounted for the audits we estimate that additional losses underlying decreases in fund assets and the
as an intangible asset and is being amortised above and beyond the amount provided to rate of increase in salaries. In assessing the
over 20 years. This approach reflects the fact be up to $445 million. However, we believe that discount rate applied to the obligations, we
that, under the Agreements, we have acquired it is unlikely that these additional losses will have used rates on AA corporate bonds with
rights relieving us of potential obligations and arise. It is not possible to estimate the timing durations corresponding to the maturities of
restrictions in respect of Astra products with of tax cash flows in relation to each outcome. those obligations. At the last interim actuarial
no existing or pending patents at the time valuation at 31 March 2006, the market value
of merger. Although these rights apply in of the UK funds assets was 3,070 million,
perpetuity, the period of amortisation of 20 representing a solvency ratio of 83% on the
years has been chosen to reflect the typical funds liabilities.
timescale of development and marketing of
a product.
DIRECTORS REPORT 67
Business Review
INTERNATIONAL ACCOUNTING TRANSITION > Share-based payments we have applied The project to comply was centrally directed
On transition to using adopted IFRS in the the provisions of IFRS 2 Share-based and has been reviewed regularly by the Senior
year ended 31 December 2005, we took Payments fully retrospectively, an option Executive Team and by the Audit Committee.
advantage of several optional exemptions available to use because we have previously Our external auditors, KPMG Audit Plc, have
available in IFRS 1 First-time Adoption of disclosed the fair value of applicable been involved although the Audit Committee
International Financial Reporting Standards equity instruments granted as opposed has monitored their involvement to ensure
and we discuss the major effects below. to in respect of options granted after their independence is not impaired.
7 November 2002. As a result, all years
> Business combinations IFRS 3 Business presented have a full charge in respect of Our approach to the project has been to
Combinations has been applied from share-based payments. select key transaction and financial reporting
1 January 2003, the date of transition, rather processes in our largest operating units and
than being applied fully retrospectively. > Financial instruments although not a number of specialist areas such as financial
As a result, the combination of Astra and required to, we have applied the provisions consolidation and reporting, treasury
Zeneca is still accounted for as a merger, of IAS 39 Financial Instruments: operations and taxation so that, in aggregate,
rather than through purchase accounting. Recognition and Measurement for 2004 we have covered a significant proportion of
If purchase accounting had been adopted, as well as 2005 and 2006. each of the key line items in our Financial
Zeneca would have been deemed to have Statements. Each of these operating units and
acquired Astra. Under this scenario the > Cumulative exchange differences we have specialist areas has ensured that its relevant
purchase costs of Astra would have been chosen to set the cumulative exchange processes and controls are documented to
$34 billion. Intangible assets amounting difference reserve at 1 January 2003 to zero. appropriate standards, taking into account,
to approximately $12 billion would have in particular, the guidance provided by the
been recognised and property, plant and NEW ACCOUNTING STANDARDS US Public Company Accounting Oversight
equipment would have been fair valued New International or US applicable accounting Boards Auditing Standard No. 2. We have
upwards by about $288 million offset by standards which have been issued (both also reviewed the structure and operation
deferred tax amounting to $4 billion. adopted and not yet adopted) are discussed of our entity level control environment.
Goodwill of $15 billion would have arisen. on pages 103 and 150 respectively. This refers to the overarching control
The recognition of intangible assets and environment, including structure of reviews,
higher property, plant and equipment would SARBANES-OXLEY ACT SECTION 404 checks and balances that are essential to the
have resulted in increased amortisation As a consequence of our listing on the management of a well controlled business.
and depreciation charges to income, net New York Stock Exchange, AstraZeneca is
of tax, of approximately $1 billion in 2006. required to comply with those provisions of The Directors have concluded that our
the US Sarbanes-Oxley Act applicable to internal control over financial reporting is
> Employee benefits the provisions of foreign issuers. Section 404 of this legislation effective as at 31 December 2006 and the
IAS 19 have been applied from the date requires companies annually to assess and assessment is set out on page 96. KPMG
of transition when the full actuarial deficit make public statements about the quality Audit Plc have audited this assessment as
was recognised as opposed to being and effectiveness of their internal control over well as the effectiveness of internal control
applied retrospectively. Since we have financial reporting. As a non-US company, over financial reporting and as noted on page
adopted the amendment to IAS 19 allowing AstraZeneca is first required to report formally 97, their report is unqualified.
actuarial gains and losses to be recognised on its compliance with section 404 in respect
immediately directly in equity, the adoption of its financial year ending 31 December 2006. RESULTS OF OPERATIONS SUMMARY
of this exemption makes no difference to ANALYSIS OF YEAR TO 31 DECEMBER 2005
our reported results or net assets. The tables on pages 67 and 68 show our
sales by therapy area and by key
growth/patent expiry/base products and
operating profit for 2005 compared to 2004.
SALES BY THERAPY AREA (2005 AND 2004)

2005 2004 2005 compared to 2004
$m $m $m $m % %
Cardiovascular 5,332 459 96 4,777 10 12
Gastrointestinal 6,355 344 93 5,918 5 7
Infection 607 51 17 539 9 13
Neuroscience 4,059 513 50 3,496 15 16
Oncology 3,845 411 58 3,376 12 14
Respiratory and Inflammation 2,873 230 60 2,583 9 11
Other pharma 232 54 1 177 31 31
Others 647 80 7 560 14 16
Total 23,950 2,142 382 21,426 10 12
SALES BY KEY GROWTH, PATENT EXPIRY AND BASE PRODUCTS (2005 AND 2004)
2005 2004 2005 compared to 2004
$m $m $m $m % %
Key growth 1
10,849 2,283 140 8,426 27 29
Patent expiry2 2,458 (581) 63 2,976 (20) (17)
Base3 10,643 440 179 10,024 4 6
Total 23,950 2,142 382 21,426 10 12
1
Arimidex, Crestor, Nexium, Seroquel, Symbicort
2
Losec, Nolvadex, Plendil, Zestril
3
Includes Toprol-XL
OPERATING PROFIT (2005 AND 2004)

2005 2004 Percentage of sales 2005 compared to 2004
underlying exchange effects 2005 2004 underlying reported
$m $m $m $m % % % %
Sales 23,950 2,142 382 21,426 10 12
Cost of sales (5,356) (110) (53) (5,193) (22.4) (24.2) (2) (3)
Gross margin 18,594 2,032 329 16,233 77.6 75.8 13 15
Distribution costs (211) (30) (4) (177) (0.8) (0.9) (17) (19)
Research and
development (3,379) 135 (47) (3,467) (14.1) (16.2) 4 3
Selling, general
and administrative (8,695) (325) (102) (8,268) (36.3) (38.6) (4) (5)
Other operating income
and expense 193 (40) 7 226 0.8 1.1 (18) (15)
Operating profit 6,502 1,772 183 4,547 27.2 21.2 39 43
Reported performance 34% to $730 million. Sales in other markets Sales in Europe were up 8%, with increased
Our sales increased by 12% compared to increased by 41%. Seloken sales increased volume partially offset by declining realised
2004, representing a rise of $2,524 million by 24% to $1,733 million, and together with prices. The launch roll out for Crestor and
from $21,246 million to $23,950 million. Crestor, offset declines in Zestril and Plendil. good growth for Nexium (up 24%), Symbicort
Operating profit increased by 43% from (up 21%), Arimidex (up 35%) and Seroquel
$4,547 million to $6,502 million. Oncology sales grew by 12% to $3,845 million (up 48%) more than offset declines in Losec
driven by a 44% increase in Arimidex. Casodex (down 24%) and other mature products.
Underlying performance grew by 10% to $1,123 million whilst Zoladex
Sales sales exceeded $1 billion for the first time. Sales in Japan were up 8% on strong
After excluding the effects of exchange, Iressa sales fell by 31% to $273 million. performance in Oncology products (up 8%)
underlying sales increased by 10%. Global and for Losec (up 25%).
sales of growth products reached $10,849 Neuroscience also saw significant growth
million (up 27%) and comprised 45% of total driven by Seroquel sales which increased by Operating margin and retained profit
sales (compared to 39% in 2004). Patent 15% to $2,761 million (up 35%). Gross margin increased by 1.8 percentage
expiry products declined by 20%, recording points to 77.6% of sales. Lower payments to
sales in aggregate of $2,458 million in 2005, Respiratory and Inflammation sales increased Merck (4.8% of sales) and positive currency
10% of our total sales (compared to 14% in by 9% to $2,873 million with Symbicort (up each benefited gross margin by 0.1 percentage
2004). Sales of base products increased by 22% to $1,006 million) the principal driver. points. Excluding prior year Exanta and Iressa
4%, although the relative percentage of total provisions totalling $236 million, the costs
sales fell. Geographic analysis associated with the termination of the
Underlying sales growth in the US was 12%. MedPointe Zomig US distribution agreement
In the Gastrointestinal therapy area, Nexium However, growth was estimated to be 10% in the first quarter of 2005, and the site
sales reached $4,633 million, up 18%. Sales in when adjusted for net wholesaler inventory rationalisation provisions of $105 million
the US reached $3,125 million on strong movements in 2003 and 2004. Increased sales charged in the final quarter, underlying
volume growth partially offset by lower price of Crestor, Seroquel, Nexium and Arimidex margin improved by 1.2 percentage points.
realisation. Sales outside the US increased more than offset a further $102 million decline This was due mostly to favourable product
29% to $1,167 million. in sales of Prilosec. Inventory movements were mix and continued operational efficiencies.
neutral following the successful introduction of
Sales of Cardiovascular products grew by Distribution Service Agreements. Adjustments R&D and SG&A combined grew by 2%,
10% to $5,332 million. Crestor sales were up to prior year managed care accruals benefited with R&D declining by 4% and SG&A
38% to $1,268 million with sales in the US up US sales growth by 2%. growing by 4%. Before exchange effects,
DIRECTORS REPORT 69
Business Review
the combined effect of these movements Property, plant and equipment quarter 2004. In 2004, the disposal proceeds
added 4.1 percentage points to operating The net book value of property, plant and of $355 million were primarily in respect of the
margin. Excluding the omeprazole EU fine equipment fell from $8,097 million to $6,985 disposal of Advanta; there were no such
($75 million) and the investments made million. Exchange effects and depreciation (in disposals in 2005.
on the Medicare Outreach programme in total $1,768 million) together with site
the fourth quarter of 2005, SG&A growth rationalisations of around $100 million and Free cash flow for the year was $6,052 million
was 2%. The decline in R&D was partly disposals more than offset capital (compared to $3,932 million in 2004). After
a consequence of our productivity focus expenditure of $832 million. accounting for net share re-purchases of
and partly due to the relatively early stage $2,858 million, the $1,717 million dividend
of compounds in development. Goodwill and intangible assets payment to shareholders and foreign
Investment in intangible assets amounted to exchange effects, there was a $968 million
Lower other income reduced margin by $176 million in 2005. Development acquisitions increase in cash and cash equivalents.
0.3 percentage points due principally to the amounted to $100 million and software
gain on the disposal of the Durascan business development costs totalled $76 million. Investments, divestments and
in 2004. After exchange effects ($242 million) and capital expenditure
amortisation ($272 million), the net book New collaboration agreements signed during
Operating margin increased by 6.0 percentage value of intangible assets and goodwill fell 2005 with Avanir and Astex created intangible
points from 21.2% to 27.2%. Currency by $338 million. assets worth $20 million. Further payments
benefited margin by 0.4 percentage points were made in respect of existing in-licensed
resulting in an underlying margin improvement Inventories products amounting to $44 million.
of 5.6 percentage points. The value of inventory at the year end fell from
$3,020 million to $2,206 million reflecting a In December 2005, new collaboration
Net interest and dividend income was drive to reduce levels together with the effect agreements with Protherics PLC, Targacept
$165 million (2004 $78 million) and included net of exchange. This drive took place primarily Inc. and AtheroGenics, Inc. were announced.
income of $15 million arising from employee in the US although there were successful We have invested $41 million in the global
benefit fund assets and liabilities. inventory reduction initiatives group-wide. development and commercialisation
agreement with Protherics, being a 4.3%
The fair value adjustments relating to financial Receivables and payables investment in equity and an intangible
instruments amounted to a $23 million Receivables increased from $4,620 million asset. The licensing and commercialisation
charge (compared to $111 million in 2004); to $4,778 million. This reflected increased agreement with AtheroGenics initially required
$32 million charge in cost of sales, $17 million trade receivables in several markets resulting a $50 million payment by us and the licensing
benefit to R&D and $8 million charge to interest. from a mixture of increased sales in the fourth and research collaboration agreement
quarter and timing of US receipts. This increase with Targacept initially required a $10 million
The effective tax rate was 29.1% (2004 rate was offset by exchange effects. payment by us. Both of these payments were
excluding exceptional items 26.6%). The recorded as intangible assets.
increase over 2004 was due to the release of Trade and other payables remained unchanged
provisions following a settlement of prior year from 2004. Trade payable increases in the US After the year end, we also acquired the total
issues in 2004 and no relief in respect of the and Sweden were offset by exchange effects. share capital of KuDOS Pharmaceuticals
omeprazole fine. Taxation in 2004 also Limited for $210 million, subject to cash and
benefited from a one-off reduction in the Cash flow working capital adjustments. Most of the
deferred tax liability in relation to rolled over Cash generated from operating activities cost of the investment reflects an intangible
gains following agreements with the relevant in 2005 was $6,743 million compared asset representing the oncology technology
tax authorities. with $4,817 million in 2004. This increase platform of KuDOS.
was principally a result of a $1,823 million
Earnings per share before exceptional items increase in profit before tax and the effects of US GAAP INFORMATION 2004-2006
grew by 41% from $2.01 in 2004 to $2.91 in a net $332 million cash inflow from Our Financial Statements have been prepared
2005. We estimate that the share re- favourable movements in working capital, in accordance with IFRS which differ in
purchase programme added 8 cents to particularly inventory, offset by a $360 million certain significant respects from US GAAP.
earnings in 2005. increase in tax paid. In particular, under US GAAP:
FINANCIAL POSITION, INCLUDING CASH FLOW Cash outflows from investing activities of > The AstraZeneca merger has been
AND LIQUIDITY $1,182 million in the year compared with accounted for as a purchase accounting
All data in this section are on an actual basis $970 million inflows in 2004. The inflows in acquisition of Astra AB (Astra) by Zeneca
(unless otherwise stated). 2004 were mainly a result of a change in Group PLC (Zeneca).
investment strategy that led to the bulk of
The net book value of our assets fell by group cash being transferred to more liquid > Variations from the regular costs of pension
$806 million from $14,497 million to funds these require classification as cash and other post-retirement benefits are
$13,691 million. The net profit was distributed equivalents under IFRS rather than short spread on a systematic basis over the
through share re-purchases of $3,001 million term investments. Capital expenditure fell by estimated average remaining service lives
and dividends of $1,676 million leaving $253 million to $810 million whilst expenditure of current employees in the plan.
negative exchange effects of $1,052 million on non-current asset investments was
to reduce net assets. $105 million lower in 2005 as a result of the > In-process research and development
$110 million investment in Cambridge Antibody costs on acquisitions of companies
Technology Group plc made in the fourth and costs of in-licensed development
intangibles are expensed.
Although there are several differences between in 2004 to $3,884 million in 2005. Earnings over 2003. This improvement was a reflection
our net income and assets under IFRS and per share rose from $1.76 in 2004 to $2.40 of improved profitability and working capital
US GAAP, these differences in accounting in 2005. SFAS No. 132 (R) on share-based management countered by higher tax
represent substantially all of the adjustments. payments was adopted in the year, and has payments. The cash was utilised in increasing
Further details of the impact of the differences been applied retrospectively. investing activities in short term investments
between IFRS and US GAAP are set out in and fixed deposits ($862 million) together
the Additional Information for US Investors Taxation with capital expenditure and acquisition
on page 149. Taxation in 2006 amounted to $2,298 million, and disposals (net $910 million, after receipts
an effective rate of 34.3% compared to 29.1% of $355 million on Advanta and Durascan).
INCOME, SHAREHOLDERS EQUITY AND in 2005. The increase was due principally to Financing outflows remained at similar levels to
CASH FLOW UNDER US GAAP the non-deductibility of in-process research 2003, but this was the net effect of new loan
Results of continuing operations and development charges. proceeds of $725 million and increased returns
(US GAAP) to shareholders through share re-purchases
2006 compared with 2005 Cash flow and dividends totalling $3,488 million.
Sales grew from $23,950 million in 2005 to Cash flow from operating activities
$26,475 million in 2006, driven in the main improved by $954 million compared to Net assets (US GAAP)
by the strong performance of our five key 2005 to $7,873 million. Improved operating Under US GAAP, net assets are significantly
growth products which now account for more performance was partially offset by higher tax higher than under IFRS because the merger
than 50% of our revenues. Operating income payments. Acquisitions (including in-process between Astra and Zeneca has been regarded
increased by $1,067 million to $6,422 million; research and development) and increased in- as a purchase of Astra by Zeneca. Goodwill
the sales growth was complemented by licensing activity resulted in higher outflows, on the acquisition of Astra amounted to
cost-containment in selling, general and offset by movements in short term investments $14.4 billion (up from the 2005 balance
administrative expenses and higher other and fixed deposits. After dividends and share of $13.1 billion due to exchange) whilst
income but offset by increased research and re-purchases totalling $6,367 million, offset adjustments to fixed assets (both tangible
development (up to $4,042 million) and one- in part by share issues ($985 million), net funds and intangible) fell through depreciation
off in-process research and development improved from $5,420 million to $5,537 million. and amortisation (offset by exchange) from
charges of $502 million. Basic earnings per $5.2 billion to $4.7 billion. Under US GAAP, our
share increased from $2.40 in 2005 to $2.81 Operating activities performance drove an net assets totalled $32.5 billion at 31 December
in 2006. increase in cash flow from $4,842 million in 2006 and were comprised of $7.9 billion
2004 to $6,919 million in 2005. Increased property, plant and equipment, $22.5 billion
The annual impairment tests on our US GAAP sales were the principal driver behind this goodwill and intangible assets and $18.2 billion
goodwill balances resulted in no impairments improvement, combined with continued other assets, whilst total liabilities amounted
at 31 December 2006. working capital management. Continued to $16.1 billion. The adoption of SFAS No.158
decreases in capital expenditure (down from Employers Accounting for Defined Benefit
2005 compared with 2004 $1,183 million in 2004 to $942 million in 2005) Pension and Other Postretirement Plans
Sales increased by $2,524 million resulting meant that the primary use of the surplus an amendment of FASB Statements No.87,
in $23,950 million in 2005 compared to cash was in returns to shareholders through 88, 106 and 132(R) has reduced net assets
$21,426 million in 2004. Strong performances share re-purchases ($2,858 million after by $1.6 billion.
from the five key growth products drove the share issues) and dividends ($1,717 million).
underlying 10% increase. Together with cost-
containment measures, this resulted in a rise in Operating activities contributed $4,842 million
net income of $933 million from $2,951 million cash in 2004, an increase of $1,426 million
US GAAP
2006 2005 2004
$m $m $m
Operating income 6,422 5,355 3,775
Net income for the year 4,392 3,884 2,951
Shareholders equity 32,467 31,894 35,477
DIRECTORS REPORT 71
Governance
GOVERNANCE
TABLE OF CONTENTS BOARD OF DIRECTORS The Board sets the Companys strategy and
Board of Directors Details of members of the Board at policies and monitors progress towards
> Board composition, processes, 31 December 2006 are set out on pages 80 meeting its objectives. To this end, it conducts
responsibilities and appointments and 81. a formal strategy review annually. The Board
also assesses whether its obligations to the
> Board meetings
Board composition, processes, Companys shareholders and others are
> Board changes responsibilities and appointments understood and met. This includes regular
> Election and re-election of Directors The Board comprises Executive and Non- reviews of the Companys financial
> Board committees Executive Directors. In the view of the Board, performance and critical business issues.
the majority of Board members are for the
> Audit Committee
purposes of the UK Combined Code on At its meeting in December 2006, the Board
> Remuneration Committee Corporate Governance and the corporate conducted its annual review and assessment
> Nomination Committee governance standards of the New York of how it operates. This was done without
> Science Committee Stock Exchange, independent Non-Executive external facilitation and included consideration
Directors. The roles of Executive Directors and discussion of the nature and level of its
Corporate Governance
are clearly delineated in their service interaction with the Companys management;
> UK Combined Code on contracts. All Directors are collectively the quality, quantity and scope of information
Corporate Governance responsible for the success of the Company. which flows to the Board from management,
> Internal controls and management However, Executive Directors have direct and the way in which it flows; the content of
of risk responsibility for business operations, Board meetings and presentations to Board
> Turnbull Report guidance whereas the Non-Executive Directors have a meetings; the composition of the Board;
responsibility to bring independent, objective the practical arrangements for the work of
> Group Risk & Control Policy/
judgement to bear on Board decisions. This the Board; and the work and operation of
Risk Advisory Group
includes constructively challenging the Boards committees. Overall, Board
> The US Sarbanes-Oxley Act of 2002 management and helping to develop the members concluded that the Board and its
> The New York Stock Exchange Companys strategy. The Non-Executive committees were operating in an effective
> Independence of Directors under the Directors scrutinise the performance of and constructive manner.
UK Combined Code management and have various responsibilities
concerning the integrity of financial At the same meeting, the Chairman also
> Code of Conduct
information, internal controls and risk reported to the Board on his conversations
> Group Internal Audit management. To help maintain a strong with each Non-Executive Director about his
Chief Executive Officer, the Senior executive presence on the Board, in addition or her individual performance and that of the
Executive Team and delegation of authority to the Executive Directors attending, members Board as a whole, which took place during
> Business objectives and performance of the Senior Executive Team (SET) routinely the fourth quarter of 2006. The Non-Executive
attend Board meetings on a rotational basis. Directors reviewed the performance of the
> Policy and Disclosure Committee
At the end of every Board meeting the Chief Executive Officer and other Executive
> Disclosure of information to auditors Companys Non-Executive Directors meet Directors in their absence. In addition,
Other matters without the Executive Directors present. the Board under the chairmanship of the
> Subsidiaries and principal activities Senior Independent Director reviewed the
There is an established procedure operated performance of the Chairman in his absence,
> Branches
by the Nomination Committee for the during that same December Board meeting.
> Dividend appointment of new directors to the Board.
> Going concern accounting basis Appointments are based on the merits of The Company maintained directors
> Changes in share capital the candidates, who are measured against and officers liability insurance cover
objective criteria. All of the Directors retire at throughout 2006.
> Mandatory shareholding for Directors
each Annual General Meeting (AGM) and
> Shareholder communications may offer themselves for re-election by In early 2006 the Company entered into
> Returns to shareholders shareholders. The Board reviews annually the a deed of indemnity in favour of each Board
> Political donations status of succession to senior positions, member. Under Article 134 of the Companys
including those at Board level, and ensures it Articles of Association the current Directors
> Use of financial instruments
has regular contact with, and access to, and officers were already indemnified in
> Creditor payment policy succession candidates. accordance with the Companies Act 1985.
> Annual General Meeting
> External auditor
GOVERNANCE CONTINUED
However, consistent with recent changes to The Board is currently scheduled to meet six The core remit of the Audit Committee includes
the Companies Act 1985, and in the interests times in 2007. reviewing and reporting to the Board on:
of retaining high-quality, skilled individuals,
current market practice is for companies Board changes > Matters relating to the audit plans of
to enter into a separate deed of indemnity in David Brennan became Chief Executive the external auditor and the internal
favour of each director. As at the date of this Officer with effect from 1 January 2006. audit function.
report, these deeds of indemnity are still in force
and provide that the Company shall indemnify At the AGM on 27 April 2006, Dame Bridget > The Companys overall framework for
the Directors, to the extent permitted by law Ogilvie, a Non-Executive Director, stepped internal control over financial reporting and
and the Companys Articles of Association, down from the Board. Dame Bridget served for other internal controls and processes.
in respect of all losses arising out of, or in the Company as a Non-Executive Director for
connection with, the execution of their powers, nine years and worked as a member of > The Companys overall framework for risk
duties and responsibilities, as directors of the various Board committees including, most management with particular emphasis on
Company or any of its subsidiaries. recently, the Audit Committee and the financial risks.
Science Committee.
Board meetings > The accounting policies and practices of
The Board held six scheduled meetings and Professor Dame Nancy Rothwell was the Company.
one other meeting in 2006. Five of the appointed as Non-Executive Director
Board meetings were held in London, one with effect from 27 April 2006. > The annual and quarterly financial reporting
in Sdertlje and one by teleconference. carried out by the Company.
All Directors participated in all meetings, save John Varley was appointed as Non-Executive
as set out in the following table: Director with effect from 26 July 2006. The Audit Committee is charged with promptly
bringing to the attention of the Board any
Name Number of meetings attended Election and re-election of Directors significant concerns of the external auditor or
Sir Peter Bonfield 5 4 All of the Directors will retire under Article 65 the Chief Internal Auditor about the conduct,
of the Companys Articles of Association at results or overall outcome of their audit work,
David Brennan 7
the AGM in April 2007. The Notice of AGM any matters which may significantly affect or
John Buchanan 55 will give details of those Directors presenting impair the independence of the external
Jane Henney 56 themselves for election or re-election at the auditor, any significant deficiencies or material
Michele Hooper 68 AGM. Sir Peter Bonfield and Erna Mller intend weaknesses in the design or operation of the
to step down as Directors of the Company at Companys internal control over financial
Joe Jimenez 7
the 2007 AGM. reporting or other internal controls and any
Hkan Mogren 7 serious issues of non-compliance.
Erna Mller 7 Board committees
Dame Bridget Ogilvie1 2 Audit Committee The Audit Committee oversees the
The current members of the Audit establishment, implementation and
John Patterson 7
Committee are John Buchanan (Chairman of maintenance of the Companys Code of
Louis Schweitzer 7 the Committee), Jane Henney and Michele Conduct. It establishes procedures for the
Jonathan Symonds 7 Hooper. They are all Non-Executive Directors. receipt and handling of complaints concerning
Marcus Wallenberg 7 The Board considers each member to be accounting or audit matters. It recommends
independent under the UK Combined Code to the Board the appointment of the external
John Varley2 27
and under the general guidance and specific auditor, subject to the approval of the
Dame Nancy Rothwell3 4 criteria of the New York Stock Exchanges Companys shareholders at a general
1
Resigned 27 April 2006. corporate governance listing standards meeting. Shareholders in a general meeting
2
Appointed 26 July 2006. concerning the composition of audit authorise the Directors to fix the
3
Appointed 27 April 2006. committees applicable to non-US companies. remuneration of the external auditors. The
4
Unable to attend the meetings on 30 March due to a In August 2006, the Company submitted Audit Committee reviews and approves the
commitment abroad and on 25 July due to illness. the required annual written affirmation to the appointment and any dismissal of the Chief
5
Unable to attend the meeting on 1 February because NYSE confirming its full compliance with Internal Auditor.
he was in Australia. He was also unable to attend the those standards. Dame Bridget Ogilvie was
meeting on 26 April because of a conflicting meeting.
a valued member of the Audit Committee for The Audit Committee maintains policies and
6
Unable to attend the meeting on 30 March because of
part of 2006, stepping down with effect from procedures for the pre-approval of all audit
a conflict with another meeting. She was also unable to
attend the meeting on 25 October because of a 27 April 2006 at the same time she resigned services and permitted non-audit services
commitment in the US. as a Director. The Board remains satisfied undertaken by the external auditor. The principal
7
Unable to attend the meeting on 13 September due that at least one member of the Audit purpose of these policies and procedures
to other commitments already scheduled prior to Committee has recent and relevant financial is to ensure that the independence of the
his appointment.
experience. At its meeting in December external auditor is not impaired. The policies
8
Unable to attend the meeting on 30 March because of a 2006, the Board determined that Dr and procedures cover three categories of
conflict with another meeting.
Buchanan and Ms Hooper are Audit work audit services, audit-related services
Committee financial experts for the purposes and tax services. The policies define the type of
of the US Sarbanes-Oxley Act of 2002. work that falls within each of these categories,
as well as those non-audit services that the
external auditor is prohibited from performing
under the rules of the US Securities and
DIRECTORS REPORT 73
Governance
Exchange Commission and other relevant Committee members and those individuals, of audit and non-audit fees of the external
UK professional and regulatory requirements. separately from the main sessions of the auditor throughout 2006. The Audit
The pre-approval procedures permit certain Audit Committee, which were attended by Committee was satisfied throughout the
audit, audit-related and tax services to be the Chief Financial Officer and the Group year that the objectivity and independence
performed by the external auditor during the Financial Controller. of the external auditor were not in any way
year, subject to fee limits agreed with the Audit impaired by either the nature of the non-
Committee in advance. The Group Financial During 2006 and January 2007, the business audit work undertaken by the external
Controller and the Director of Group Tax monitor considered and discussed by the Audit auditor during the year, the level of non-
the status of all services being provided by the Committee included the matters referred audit fees charged for such work or any
external auditor. The procedures also deal with to below: other facts or circumstances. Further
the placing of non-audit work out for tender, details of the audit and non-audit fees for
where appropriate. Authority to approve work > The Companys financial disclosures the year are disclosed in Note 28 to the
in excess of the pre-agreed fee limits is were reviewed and various accounting Financial Statements on page 146.
delegated to the Chairman of the Audit matters considered.
Committee in the first instance. Regular > The Audit Committee reviewed the
reports to the full Audit Committee are also > Reports were received from the external Companys continuing work to comply
provided for and, in practice, a standing agenda auditor concerning its audit of the financial with the applicable provisions of the US
item at Audit Committee meetings covers the statements of the Company and from Sarbanes-Oxley Act of 2002 (the Act).
operation of the pre-approval procedures. management, the internal audit function and In particular, it regularly reviewed progress
the external auditor on the effectiveness of against the implementation in 2006 of
The full remit of the Audit Committee is the Companys system of internal controls section 404 of the Act concerning internal
available on the Companys website1. and, in particular, its internal control over control over financial reporting. The Audit
financial reporting. This included review and Committee also periodically reviewed the
The Audit Committee held six scheduled discussion of the results of the Companys role of the external auditor in the section 404
meetings during 2006. All of these meetings continuous assurance and annual letter related work to ensure its independence
were held in London, UK (including one by of assurance processes. These processes was not impaired and would not be
telephone). All Audit Committee members are described on page 75. The Audit impaired at such time as they were
participated in all meetings, save as set out Committee also reviewed quarterly activity required to make an attestation opinion.
in the following table: reports of audit work carried out by the More details about the implementation of
internal audit function and the status of section 404 of the Act are set out in the
Name Number of meetings attended follow-up actions with management. Financial Review on page 67.
John Buchanan 6
> The Audit Committee reviewed data about > A review and assessment of the Audit
Jane Henney 4
calls made by employees to the Companys Committees performance was carried out.
Michele Hooper 6 Code of Conduct helpline either seeking
Dame Bridget Ogilvie* 3 guidance on issues, or raising concerns, > The Audit Committee reviewed aspects
* Resigned as a director and stepped down from the
together with the results of enquiries into of the Companys Risk Management
Audit Committee with effect from 27 April 2006. these matters. No material issues were processes as well as the Group Risk
reported through this route during the year. profile and risk management plans ahead
Following each Audit Committee meeting, of scrutiny by the Board.
the Chairman of the Committee reported to > The Audit Committee reviewed accounting
the Board on the principal matters covered matters relating to the Companys Following discussions at a meeting in
at the meeting. The minutes of Audit arrangements with Merck & Co., Inc. January 2007, the Audit Committee
Committee meetings were also circulated resulting from the restructuring in 1998 unanimously recommended to the Board
to all Board members. of the joint venture between Astra AB that a resolution for the re-appointment of
and Merck & Co., Inc. KPMG Audit Plc as the Companys external
In addition to attendance at Audit Committee auditor be proposed to shareholders at the
meetings, members of the Audit Committee > The Audit Committee reviewed reports AGM in April 2007.
met individual managers or groups of managers relating to certain taxation matters.
from the Company on a number of occasions At the same meeting, the Chief Executive
during 2006. This direct contact with other > The Audit Committee continued to review Officer and the Chief Financial Officer presented
managers helped the Directors gain a deeper the Companys US sales and marketing to the Audit Committee their conclusions
insight into areas relevant to the Audit compliance programme as well as initiatives following the evaluation of the effectiveness
Committees work and provided an opportunity being taken in the International Sales of the Companys disclosure controls and
to discuss specific areas of interest. and Marketing Organisation in respect procedures required by Item 15(a) of Form 20-F
of internal control, governance and as at 31 December 2006. Based on their
During the year, in line with its normal practice, compliance matters. evaluation, the Chief Executive Officer and the
the Audit Committee also held a number Chief Financial Officer concluded that, as at
of private meetings, without management > The Audit Committee reviewed matters that date, the Company maintains an effective
present, with both the Companys Chief concerning the internal audit and global system of disclosure controls and procedures.
Internal Auditor and the lead partners from the finance functions, including the GIA
Companys external audit firm. The purpose internal audit and the KPMG audit plan.
of these meetings was to facilitate free
and open discussions between the Audit > The Audit Committee reviewed the amount 1
www.astrazeneca.com/article/11156.aspx
There was no change in the Companys (iii) At all times to ensure that the Company Science Committee
internal control over financial reporting that complies to the fullest extent appropriate The members of the Science Committee
occurred during the period covered by this and practicable with the Combined Code are Jane Henney, Erna Mller, Dame Bridget
Annual Report and Form 20-F Information setting out Principles of Good Governance Ogilvie (until 27 April 2006) and Dame Nancy
that has materially affected, or is reasonably and the Code of Best Practice annexed Rothwell (who became Chairman of the
likely to materially affect, the Companys to the Listing Rules of the Financial Committee when she joined the Committee
internal control over financial reporting. Services Authority. in July 2006), Jan Lundberg, John Patterson
and Christopher Reilly. They are all Non-
The Audit Committee is currently scheduled A copy of the Remuneration Committees Executive Directors, except Jan Lundberg,
to meet seven times in 2007. remit is available on the Companys website1. John Patterson and Christopher Reilly. Erna
Mller will step down at the 2007 AGM.
Remuneration Committee The Remuneration Committee met four times
The members of the Remuneration Committee in 2006. Each meeting was attended by all of The remit of the Science Committee is:
are Sir Peter Bonfield (Chairman of the its members, except that other commitments
Committee), John Buchanan, Joe Jimenez, prevented John Buchanan from attending (i) To provide assurance to the Board
Erna Mller and (since 26 July 2006) the meetings on 1 February and 6 December. regarding the quality, integrity and
John Varley. They are all Non-Executive John Varley joined the Committee on 26 July competitiveness of AstraZenecas
Directors. The Board considers them all to and only attended meetings after that date. science-based research and development
be independent. (Independence of Non- activities. The Committee will aim to
Executive Directors is discussed in more Further information about the Companys assure itself that the approaches and
detail on page 76.) remuneration policy and practice is set out in targets adopted throughout the R&D
the Directors Remuneration Report on organisation are competitive and an
Sir Peter Bonfield and Erna Mller will step pages 82 to 94. appropriate use of shareholder funds, but
down at the AGM in 2007, and Sir Peters it will not be expected to review individual
role as Chairman of the Committee will be Nomination Committee research or licensing projects.
assumed by John Varley. The members of the Nomination Committee
during 2006 were Louis Schweitzer (Chairman (ii) To consider reports from or join any
The remit of the Remuneration Committee is of the Committee), Hkan Mogren, Sir Peter meeting with any relevant external
as follows: Bonfield, Jane Henney and Joe Jimenez. advisory board when AstraZeneca is
All the current members of the Nomination considering entry into new areas of
(i) After appropriate consultation with the Committee are Non-Executive Directors. science or medicine.
Chairman and Chief Executive Officer, With the exception of the Chairman and
to make recommendations to the Board Dr Mogren (for the reasons explained below), (iii) To review, from time to time, together with
on the Companys policy for executive the Board considers them all to be independent other external experts important bioethical
remuneration and to determine, on for the purposes of the UK Combined Code issues faced by AstraZeneca and to assist
behalf of the Board, the entire individual on Corporate Governance and applicable in the formulation of, and to agree on
remuneration package, including the corporate governance standards of the NYSE. behalf of the Board, appropriate policies
terms and conditions of employment and in relation to such issues.
the retirement/severance provisions in The Nomination Committee met twice in 2006.
relation to the Chairman, the Deputy The remit of the Nomination Committee is to (iv) To consider with external experts, from
Chairman, the Chief Executive Officer, make proposals to the Board for any new time to time, future trends in medical
Executive Directors, the Secretary and appointments as Directors of the Company. science and technology.
such other senior managers as may be Any decisions relating to the appointment of
determined by the Chief Executive Officer. a director are made by the entire Board and A copy of the Science Committees remit is
not the Nominations Committee. The principal available on the Companys website1.
In formulating its proposals, the Committee tasks in relation to nomination matters in 2006
is required to give such persons every related to the appointment of John Varley in The Science Committee met twice in 2006,
encouragement to enhance the Companys anticipation of Sir Peter Bonfield stepping when it reviewed and discussed its remit
performance and to ensure that they are down at the next AGM and the appointment and modus operandi, the Companys
fairly, but responsibly, rewarded for their of Dame Nancy Rothwell as successor to cardiovascular research and development
individual contributions. Dame Bridget Ogilvie. and science policy. All members participated
in both meetings, one of which was held by
(ii) To make recommendations to the Board The Nomination Committee also reviewed the teleconference.
for the Companys Executive Share Option balance of the Board and the requirements
Scheme and Employee and Executive for future Non-Executive Directors.
Performance Bonus Schemes (and any
other similar schemes) and to exercise the A copy of the Nomination Committees remit
powers of the Directors under the rules of is available on the Companys website1.
such schemes.
1
DIRECTORS REPORT 75
Governance
CORPORATE GOVERNANCE requirements), and confirm they have reported The Company has complied with those
UK Combined Code on any control weaknesses through the provisions of the Act applicable to foreign
Corporate Governance Companys continuous assurance process. issuers. The Board believes that, prior to the
The Board has prepared this report with Act coming into force, the Company already
reference to the UK Combined Code on The Directors believe that the Company had a sound corporate governance
Corporate Governance published in July 2003 maintains an effective, embedded system framework, good processes for the accurate
by the Financial Reporting Council, as of internal controls and complies with the and timely reporting of its financial position
amended in June 2006, and related guidance. Turnbull Report guidance. and results of operations and an effective
and robust system of internal controls.
The Company is applying all the main and Group Risk & Control Policy/ Consequently, the Companys approach to
supporting principles of good governance in Risk Advisory Group compliance with the Act has principally involved
the Combined Code. The way in which these The Company views the careful management the development and adjustment of its existing
principles are being applied is described below. of risk as a key management activity. Through corporate governance framework and
the adoption by the Board of a Group Risk & associated processes concerning reporting,
The Company is complying with all of the Control Policy and supporting standards, the internal controls and other relevant matters.
provisions of the Combined Code. Company has sought to confirm and formalise
the drive to manage business risks as a key For information about the work undertaken
Internal controls and management of risk element of all activities. during 2006 to enable the Company to
The Board has overall responsibility for the comply with the SEC rules that implement
Companys system of internal controls, which Supporting line management activities is section 404 see the Financial Review on
aims to safeguard shareholders investments a dedicated risk management team who page 67. The Directors assessment of the
and the Companys assets, and to ensure that help to ensure key risks are identified and effectiveness of the internal control over
proper accounting records are maintained communicated appropriately. The outputs of financial reporting is set out on page 96
and that the financial information used within this team are reviewed by the Risk Advisory (Directors Responsibilities).
the business and for publication is accurate, Group (RAG), which comprises senior
reliable and fairly presents the financial position representatives from each business function. The New York Stock Exchange
of the Company and the results of its business The RAG considers new and emerging risks The Company, as a foreign issuer with
operations. The Board is also responsible for as well as risks across different parts of the American Depositary Shares listed on the
reviewing the effectiveness of the system of organisation. It also plays an important role in NYSE, must disclose any significant ways
internal controls. The system is designed to promoting continuous improvement in the in which its corporate governance practices
provide reasonable (not necessarily absolute) management of risk by sharing best practice differ from those followed by US companies
assurance of effective operations and throughout the organisation. It is chaired by under the NYSEs corporate governance
compliance with laws and regulations. For more the Chief Financial Officer and reports twice a listing standards. In addition, the Company
information, refer to the paragraphs relating year to the Senior Executive Team. The must comply fully with the provisions of the
to the Audit Committee and the US Sarbanes- RAGs reports on the Companys risk profile listing standards that relate to the composition,
Oxley Act of 2002 on pages 72 and 75. are reviewed by both the Audit Committee responsibilities and operation of audit
and the Board. committees. These provisions incorporate
Turnbull Report guidance the rules concerning audit committees
Since the publication in September 1999 The US Sarbanes-Oxley Act of 2002 implemented by the SEC under the Act.
by the Institute of Chartered Accountants AstraZeneca PLC American Depositary Shares
in England and Wales of the Turnbull Report, are traded on the New York Stock Exchange The Company has reviewed the corporate
Internal Control: Guidance for Directors on (NYSE) and, accordingly, the Company is governance practices required to be followed
the Combined Code, the Directors have subject to the reporting and other requirements by US companies under the NYSEs listing
continued to review the effectiveness of the of the US Securities and Exchange Commission standards and its corporate governance
Groups system of controls, risk management (SEC) applicable to foreign issuers. The US practices are generally consistent with those
and the Companys high-level internal control Sarbanes-Oxley Act (the Act) came into force standards. However, not all members of
arrangements. These reviews have included at the end of July 2002. As a result of its NYSE the Nomination Committee are considered
an assessment of internal controls, and in listing, the Company is subject to those independent for these purposes (see
particular internal financial controls, supported provisions of the Act applicable to foreign explanation below).
by management assurance of the maintenance issuers. Section 404 of this legislation requires
of control, reports from the Group Internal companies to include in their annual report The Companys Audit Committee complies
Audit function, as well as the external auditor filed with the SEC a report by management with the provisions of the listing standards
on matters identified in the course of its stating its responsibility for establishing that relate to the composition, responsibilities
statutory audit work. internal control over financial reporting and and operation of audit committees. In August
to assess annually the effectiveness of such 2006, the Company submitted the required
Underpinning these reviews is an annual internal control. In addition, the external annual written affirmation to the NYSE
letter of assurance process by which auditor is required to attest to and report on confirming its full compliance with those and
responsible managers confirm the adequacy managements assessment. As a foreign other applicable provisions. More detailed
of their systems of internal financial and issuer that qualifies as a large accelerated information about the Audit Committee and
non-financial controls, their compliance with filer, AstraZeneca is first required to comply its work during 2006 is set out in the Audit
Company policies and relevant laws and with section 404 in respect of its financial Committees Report above.
regulations (including the industrys regulatory year ended 31 December 2006.
Independence of Directors under the Sir Peter is a Non-Executive Director of Code of Conduct
UK Combined Code Telefonaktiebolaget LM Ericsson. Marcus The policy of the Company is to require all
During 2006, the Board considered the Wallenberg is also a Non-Executive Director of of its subsidiaries, and their employees, to
independence of each Non-Executive Director, Ericsson. Investor AB, of which Mr Wallenberg observe high ethical standards of integrity
including Dame Nancy Rothwell and John was Chief Executive Officer until 1 September and honesty and to act with due skill, care,
Varley. With the exception of two of them 2005, held approximately 5% of Ericssons diligence and fairness in the conduct of
(as set out below) and the Chairman, the shares (representing approximately 19% of the business. The Companys management
Board considers that all of the Non-Executive voting rights) at 31 December 2006. The Board seeks to reinforce the standards outlined
Directors are independent in character and is satisfied that Sir Peters presence on the in the Code of Conduct throughout the
judgement and that there are no relationships Ericsson Board results from his broad business. In particular, all employees are
or circumstances that are likely to affect their experience of the global telecommunications required to comply with the letter and spirit
independent judgement. The Board also industry and not from any connection with of the AstraZeneca Code of Conduct and
considers that Louis Schweitzer, who was Investor AB or the Wallenberg family. The Board with the standards detailed by the Company
appointed Non-Executive Chairman with also had regard to the length of time that Sir in support of it.
effect from 1 January 2005, was independent Peter has served as a Non-Executive Director
on appointment. In accordance with the of the Company (he was first appointed to The AstraZeneca Code of Conduct is
Combined Code, the Board has not the Zeneca Group PLC board in 1995). available on the Companys website1. It is an
subsequently considered the independence important demonstration of the Companys
of the Chairman. The position of Senior Non-Executive Director uncompromising commitment to honesty and
of the Company was established in 2002, integrity. The Company maintains
For the reasons explained below, the Board and the Chairman and Chief Executive Officer procedures for raising integrity concerns,
does not believe that Hkan Mogren, Non- have only been in their roles since January which include a confidential helpline for
Executive Deputy Chairman, or Marcus 2005 and 2006 respectively. The Board employees worldwide. During 2006, 106
Wallenberg can be determined independent therefore asked Sir Peter to continue in the employees used the confidential helpline and
under the revised Combined Code. However, role for one more year to provide valuable other routes to seek guidance on corporate
the Board believes that both Dr Mogren and further continuity, and he was re-elected at responsibility issues or to raise concerns,
Mr Wallenberg have brought, and continue to the AGM in 2006. Sir Peter intends to step all of which were reviewed by Group Internal
bring, considerable business experience and down as a Director of the Company at the Audit and reported on, as appropriate, to the
to make valuable contributions to the work of AGM in 2007, after which Michele Hooper will Audit Committee. To date, no material issues
the Board. become the Senior Non-Executive Director. have been identified through this route.
Dr Mogren was previously the Chief Executive Professor Mller is the Chief Executive Officer The Company also has a Finance Code
Officer of Astra AB and Executive Deputy of the Board of the Knut and Alice Wallenberg of Conduct that complements the main
Chairman of the Company and is now a Foundation, a charitable foundation in AstraZeneca Code of Conduct and applies
member of the Board of Directors of Investor Sweden that supports scientific research to the Chief Executive Officer, the Chief
AB, a company that, as at 31 December 2006, and educational programmes by awarding Financial Officer and the Companys principal
held approximately 3.37% of the Ordinary financial grants to individuals or institutions. accounting officers (including key Finance staff
Shares of the Company. This holding Although one of the Foundations principal in major overseas subsidiaries). The Finance
represents a significant proportion of Investor investments is in Investor AB, all investment Code of Conduct also applies to all Finance
ABs overall investment portfolio. decisions of the Foundation are made by function employees and reinforces the
its investment committee, of which Professor importance of the integrity of the Companys
Mr Wallenberg was a member of the Board Mller is not a member. Her role, as Financial Statements, of the reliability of the
of Directors and Chief Executive Officer of Chief Executive Officer of the Board of the accounting records on which they are based
Investor AB until 1 September 2005, when Foundation, is principally to lead the scrutiny and of the robustness of the relevant controls
he stepped down. of applications for grants and maintain close and processes.
contacts with scientific and educational
The Board also considered, in particular, institutions in Sweden to develop the work The Group policies are available on a dedicated
the positions of Sir Peter Bonfield, Senior of the Foundation. intranet site, the availability and purpose of
Non-Executive Director, Erna Mller and which has been communicated throughout
Jane Henney. For the reasons explained Jane Henney is a Non-Executive Director of the organisation.
below, it is the Boards view that they are AmerisourceBergen Corporation and CIGNA
independent. Each discharges his or her Corporation, both of which are customers of Group Internal Audit
duties in a properly independent manner and the Company in the US. The Board considered Group Internal Audit (GIA) is an independent
constructively and appropriately challenges these relationships and concluded that they appraisal function that derives its authority
the Executive Directors and the Board. did not compromise her independence. from the Board through the Audit Committee.
Its primary role is to provide reasonable and
objective assurance about the adequacy and
effectiveness of the Companys financial control
framework, compliance with laws, regulations
and policies and risk management processes.
1
DIRECTORS REPORT 77
Governance
GIA seeks to discharge the responsibilities the Chief Executive Officer and the SET are reviews. During 2006, the Board and SET
set down in its charter by reviewing: documented, as are the Companys undertook a review of the business performance
delegated authorities and reserved powers, management report process and the measures
> The processes for ensuring that business the means of operation of the business and used therein. A new form of report will be
risks are effectively managed. the roles of corporate functions. used from 2007 onwards. For more details
see Measuring Performance on page 15.
> The financial and operational controls that The Chief Executive Officer has established
help to ensure that the Companys assets and chairs the SET. Whilst the Chief Disclosure Policy and
are properly safeguarded from losses, Executive Officer retains full responsibility for Disclosure Committee
including fraud. the authority delegated to him by the Board, The Companys Disclosure Policy provides
the SET is the vehicle through which he a framework for the handling and disclosure
> The controls that help to ensure the exercises that authority in respect of the of inside information and other information of
reliability and integrity of management Companys business (including Aptium interest to shareholders and the investment
information systems. Oncology and Astra Tech). community. It also defines the role of the
Disclosure Committee. The Chief Financial
> The processes for ensuring compliance The members of the SET are David Brennan, Officer, the Executive Director, Development,
with policies and procedures and Chief Executive Officer; Jonathan Symonds, the Group Secretary and Solicitor, the Vice-
external legislation and regulation (other Chief Financial Officer; John Patterson, President, Corporate Affairs and the Global
than those relating to safety, health and Executive Director, Development; Bruno Head of Investor Relations were the members
the environment and product regulatory Angelici, Executive Vice-President, Europe, of the Disclosure Committee during 2006.
compliance, which are the responsibility Japan, Asia Pacific and rest of world; Tony The Disclosure Committee meets regularly
of other audit functions). Zook, Executive Vice-President, North to assist and inform the decisions of the Chief
America; Jan Lundberg, Executive Vice- Executive Officer concerning inside information
> On an ad hoc basis, whether value for President, Discovery Research; Martin and its disclosure. Periodically, it reviews the
money is obtained (in terms of efficient Nicklasson, Executive Vice-President, Global Companys disclosure controls and procedures
use of the Companys resources). Marketing (formerly Global Marketing and and its own operation as part of work carried
Business Development); David Smith, out to enable management and the Board to
GIA also reviews other functions and risk Executive Vice-President, Operations; and assure themselves that appropriate processes
areas, at the request of the Audit Committee Tony Bloxham, Executive Vice-President, are operating for the Companys planned
and senior management and acts as a source Human Resources. disclosures, such as its quarterly results
of constructive advice and best practice, announcements and scheduled investor
assisting senior management with its The SET normally meets once a month to relations events. In addition, the Disclosure
responsibility to improve governance, consider and decide major business issues. Committee members are members of the
control, compliance and risk management. It also usually reviews those matters that are steering group that reviews the drafts of, and
of a size or importance to require the attention the process for preparing, this Annual Report
CHIEF EXECUTIVE OFFICER, of, or that are reserved to, the Board before and Form 20-F Information.
THE SENIOR EXECUTIVE TEAM AND such matters are submitted to the Board for
DELEGATION OF AUTHORITY review and decision. Recognising the importance to shareholders
The Chief Executive Officer has been and the investment community of news about
delegated authority from, and is responsible Business objectives and performance certain of the Companys key development and
to, the Board for directing and promoting the Each business function (eg R&D, Operations) marketed products, much of the Disclosure
profitable operation and development of the is subject to an annual budget and target- Committees work in 2006 focused on
Company, consistent with the primary aim of setting process, including forecasts for the ensuring that accurate, complete and timely
enhancing long-term shareholder value in following two years together with a sensitivity disclosures were made concerning Exanta,
relation to all matters save those which have and risk analysis, quarterly updates of the Crestor, Nexium, Seroquel, Symbicort,
been specifically reserved for the Board. forecast for the current year and regular NXY-059, Galida, Toprol-XL and Iressa. Another
reporting. Performance reviews are important area of focus was transactions such
The Chief Executive Officer is responsible to the undertaken regularly in each part of the as the agreement with Abraxis BioScience
Board for the management and performance business. The Companys quarterly business Inc. to co-promote Abraxane and the
of the Companys businesses within the performance management report process acquisition of Cambridge Antibody Technology
framework of Company policies, reserved uses a broad range of measures that link Group plc. Throughout 2006, the Disclosure
powers and routine reporting requirements. directly to the achievement of key business Committee met monthly to review a rolling
He is obliged to refer certain major matters priorities linked to the overall business strategy. schedule of key news concerning the Company
(defined in the formal delegation of the Boards Treasury operations are centralised, operate and its products and activities. The schedule
authority) back to the Board. The roles of the within defined limits and are subject to regular was subsequently reviewed on a monthly basis
Board, the Boards committees, the Chairman, reporting requirements and Audit Committee by the SET. In addition, the Disclosure
Committee held frequent ad hoc meetings to share plans, are given in Note 29 to the provides a flexible means of returning value to
review specific disclosure issues. Financial Statements. shareholders, while allowing the Company to
manage its capital structure more efficiently
Disclosure of information to auditors Mandatory shareholding for Directors over time.
The Directors who held office at the date of The Companys Articles of Association require
approval of this Directors Report confirm each Director to be the beneficial owner of Shareholders have different preferences,
that, so far as they are each aware, there is Ordinary Shares in the Company with an and the Board believes the combination of
no relevant audit information of which the aggregate nominal value of $125 (500 shares). regular cash dividends and share buyback
Companys auditors are unaware; and each Such holding must be obtained within programmes enables it to balance the interests
Director has taken all the steps that he/she two months of the date of the Directors of all shareholder groups.
ought to have taken as a Director to make appointment. At 31 December 2006, all of
himself/herself aware of any relevant audit the Directors complied with this requirement The Board continually reviews its shareholders
information and to establish that the Companys and full details of each Directors interests return strategy, and in 2006 re-stated its
auditors are aware of that information. in shares of the Company are set out in the intention to grow dividends in line with earnings
Directors Remuneration Report on pages 91 growth, whilst ensuring the dividend remains
OTHER MATTERS to 94. covered by at least two times earnings.
Subsidiaries and principal activities
AstraZeneca PLC is the holding company Shareholder communications The Board also firmly believes the first call on
for a group of subsidiaries whose principal In its financial reporting to shareholders and free cash flow is investment in the business,
activities are described in the Business Review other interested parties by means of annual after which surplus cash should be returned
on pages 8 to 70. Principal subsidiaries and and quarterly reports, the Board aims to to the shareholders. Accordingly, in 2007
their locations are given on page 148. present a balanced and understandable the Board intends to return $4 billion of funds
assessment of the Companys financial to shareholders via a share re-purchase
Branches position and prospects. programme. Should there be additional cash
The following members of the AstraZeneca inflow during 2007 from the issue of shares
Group have representative or scientific The Company maintains a corporate website in respect of employees exercising share
offices outside the UK: containing a wide range of information of options, the Board will consider extending
interest to institutional and private investors: the re-purchase programme to include this
AstraZeneca UK Limited: Bulgaria, Chile, astrazeneca.com. additional amount.
Croatia, Costa Rica, Cuba, Ghana (scientific
office), Romania, Russia, Serbia & Montenegro, The Company has frequent discussions with During 2006, the Company purchased
Slovenia and Ukraine. institutional shareholders on a range of issues 72.2 million of its own Ordinary Shares with a
affecting its performance. These include nominal value of $0.25 each for cancellation,
AstraZeneca AB: Egypt (scientific office), meetings following the announcement of the at an aggregate cost of $4.1 billion. Also
Latvia, Saudi Arabia (scientific office) annual results with the Companys largest during 2006, 23.5 million shares were issued
and Slovakia. institutional shareholders on an individual in respect of employee share plans for a
basis. In addition, the Company responds total consideration of $1.0 billion. The net
AstraZeneca Export and Trading AB: Estonia, to individual ad hoc requests for discussions number of shares re-purchased in 2006 was
Lithuania and United Arab Emirates. from institutional shareholders. The Senior therefore 48.7 million, which represents 3.1%
Non-Executive Director is available to of the Companys issued share capital at
Dividend shareholders if they have concerns that 1 January 2006.
The Companys dividends for 2006 of $1.72 contact through the normal channels of
(89.6 pence, SEK 12.20) per Ordinary Share Chairman, Chief Executive Officer or Chief Since the Company began its share
amount to, in aggregate, a total dividend Financial Officer has failed to resolve, or for re-purchase programmes in 1999, a total
payment to shareholders of $2,649 million. which such contact is inappropriate. of 282.8 million Ordinary Shares have been
purchased for cancellation at an aggregate
Going concern accounting basis All shareholders, including private investors, cost of $13.3 billion. This represents
In view of the Companys resources, results of have an opportunity at the AGM to put approximately 15.9% of the Companys total
operations and overall financial condition, the questions to members of the Board on issued share capital at the time the re-purchase
Directors continue to adopt the going concern matters relating to the Companys operation programme commenced in 1999.
basis in preparing the Financial Statements. and performance.
The Company continues to maintain robust
Changes in share capital Returns to Shareholders controls in respect of all aspects of the share
Changes in the Companys Ordinary Share The Companys stated distribution policy re-purchase programme to ensure compliance
capital during 2006, including details of the comprises both a regular cash dividend
allotment of new shares under the Companys and a share re-purchase component, which
DIRECTORS REPORT 79
Governance
with English law and the FSAs Listing Rules, Use of financial instruments
Disclosure Rules and Prospectus Rules. For information on the Companys use of
In particular, the Companys Disclosure financial instruments, see Notes 14 and 15
Committee meets to ensure that the Company to the Financial Statements (pages 114
does not purchase its own shares during and 115).
prohibited periods. At the AGM on 26 April
2007, the Company will seek a renewal of Creditor payment policy
its current permission from shareholders to It is not Company policy formally to comply
purchase its own shares. with the Confederation of British Industrys
code of practice on the prompt payment of
Political donations suppliers. It is, however, Company policy to
Under the UKs Political Parties, Elections agree to appropriate payment terms with all
and Referendums Act 2000 (the Act), suppliers when agreeing to the terms of each
shareholder authority is required for political transaction, to ensure that those suppliers
donations to be made or political expenditure are made aware of the terms of payment and,
to be incurred by the Company or its subject to their compliance, abide by the terms
subsidiaries in the EU. Neither the Company of payment. The total amount of money owed
nor its subsidiaries made any donations by AstraZeneca PLCs subsidiaries to trade
or incurred any expenditure in 2006 in the EU creditors at the balance sheet date was
in respect of which shareholder authority or equivalent to 74 days average purchases.
disclosure in this Directors Report is required No equivalent disclosure is provided in
under the Act. Neither the Company nor its respect of AstraZeneca PLC, as it has no
subsidiaries intend to make any such external creditors.
donations or incur any such expenditure in
the EU in the foreseeable future. However, Annual General Meeting
the Act defines political organisation broadly The Companys AGM will be held on Thursday
and, for example, interest groups or lobbying 26 April 2007. The principal meeting place
organisations concerned with the review of will be in London. There will be a simultaneous
government policy or law reform may be satellite meeting in Stockholm.
caught by the definition.
External auditor
To enable the Company to continue to support A resolution will be proposed at the AGM on
such organisations without inadvertently 26 April 2007 for the re-appointment of KPMG
breaching the Act, a resolution will, as in Audit Plc, London as auditor of the Company.
previous years, be proposed at the AGM
on 26 April 2007 to authorise the Company The external auditor has undertaken various
to make donations or incur expenditure in pieces of non-audit work for the Company
the European Union up to an aggregate limit during 2006. More information about this
of $150,000. work and the audit and non-audit fees paid
by the Company are set out in Note 28 to the
In 2006, AstraZenecas US legal entities Financial Statements on page 146. The
made contributions amounting in aggregate external auditor is not engaged by the
to $416,675 (2005 $255,470) to state political Company to carry out any non-audit work
party committees and to campaign committees on which it might, in the future, be required to
of various state candidates affiliated with express an audit opinion. As explained more
the major parties in accordance with pre- fully in the Audit Committees Report on
established guidelines. All contributions were pages 72 to 74, the Audit Committee
made only where allowed by US federal and has established pre-approval policies and
state law. American nationals (those with valid procedures for audit and non-audit work
green cards) exercised decision-making permitted to be carried out by the external
over the contributions and the funds were not auditor and has carefully monitored the
provided or reimbursed by any non-US legal objectivity and independence of the external
entity. Such contributions do not constitute auditor throughout 2006.
political donations or political expenditure for
the purposes of the UKs Political Parties, On behalf of the Board
Elections and Referendums Act 2000 and G H R MUSKER
were made without any involvement of Group Secretary and Solicitor
persons or entities outside the US. 1 February 2007
BOARD OF DIRECTORS AT 31 DECEMBER 2006
LOUIS SCHWEITZER (64) DAVID R BRENNAN (53) JONATHAN SYMONDS CBE (47)
Non-Executive Chairman Executive Director and Chief Executive Officer Executive Director and Chief Financial Officer
Chairman of the Nomination Committee Appointed as a Director 14 March 2005. Appointed Appointed as a Director 1 October 1997. Also has
Appointed as a Director 11 March 2004. Non- Chief Executive Officer with effect from 1 January overall responsibility for Strategic Planning & Business
Executive Chairman of Renault SA since April 2005. 2006. Member of the Executive Board of the Development, Information Services and Global
Chairman and Chief Executive Officer of Renault SA Pharmaceutical Research and Manufacturers of Purchasing. Non-Executive Director of Diageo plc.
1992-2005. President of the Management Board America (PhRMA). Board member of the European Former member of the UK Accounting Standards
of Renault-Nissan BV 2002-2005. Chief Financial Federation for Pharmaceutical Industries and Board (August 2003 August 2006). Joint Chairman
Officer and Executive Vice-President 1988-1992 and Associations (EFPIA). Executive Vice-President, of the Business Tax Forum. Member of the Advisory
President and Chief Operating Officer 1990-1992, North America, AstraZeneca PLC 2001-2005. Board of Oxford University Centre for Business
Renault SA. Non-Executive Director of BNP-Paribas, Chairman of the Board of the Southeastern Chapter of Taxation.
Electricit de France, Veolia Environnement, Volvo the American Heart Association 2004-2006.
AB and LOral. Vice-Chairman of the Supervisory
Board of Philips Electronics NV.
MARCUS WALLENBERG (50) ERNA MLLER (66) JOHN VARLEY (50)

Non-Executive Director Non-Executive Director Non-Executive Director
Appointed as a Director 6 April 1999. Formerly Member of the Remuneration Committee and the Member of the Remuneration Committee
a Director of Astra AB (appointed 18 May 1989). Science Committee Appointed as a Director 26 July 2006. Executive
Stepped down from the Audit Committee on Appointed as a Director 6 April 1999. Formerly Director of Barclays Bank plc and Barclays plc since
31 December 2005. Chairman of Skandinaviska a Director of Astra AB (appointed 15 May 1995). 1998 and Group Chief Executive since 2004.
Enskilda Banken AB. Chairman of Saab AB. Vice- Executive Director of the Knut and Alice Wallenberg Director of Ascot Authority Holdings since 2001.
Chairman Telefonaktiebolaget LM Ericsson. Non- Foundation. Professor of Clinical Immunology and President of the Employers Forum on Disability and
Executive Director of Electrolux AB, Stora Enso Oyj and Vice-Chairman of the Nobel Assembly, Karolinska member of the International Advisory Panel of the
the Knut and Alice Wallenberg Foundation. Chairman Institutet. Member of the Royal Swedish Academy of Monetary Authority of Singapore. Treasurer and
of International Chamber of Commerce (ICC). Engineering Sciences and the Royal Swedish Trustee of St. Dunstans, Trustee of Thornton Smith
Academy of Science. Plevins Young Peoples Trust and Chairman of
Business Action on Homelessness.
JOHN BUCHANAN (63) JOE JIMENEZ (47)

Non-Executive Director Non-Executive Director
Chairman of the Audit Committee and Member of Member of the Remuneration Committee and the
the Remuneration Committee Nomination Committee
Appointed as a Director 25 April 2002. Executive Appointed as a Director 1 July 2003. Executive Vice-
Director and Group Chief Financial Officer of BP p.l.c. President of H J Heinz Company and President and
1996-2002. Member of the UK Accounting Standards Chief Executive Officer of Heinz Europe 2002-2006.
Board 1997-2001. Senior Independent Director of Corporate Vice-President then Senior Vice-President
BHP Billiton Plc. Deputy Chairman of Vodafone and President of Heinz North America 1998-2002.
Group Plc. Chairman of Smith & Nephew plc. Non-Executive Director of Blue Nile, Inc.
DIRECTORS REPORT 81
Board of Directors
JOHN PATTERSON FRCP (58) HKAN MOGREN KBE (62) MICHELE HOOPER (55)
Executive Director, Development Non-Executive Deputy Chairman Non-Executive Director
Appointed as a Director 1 January 2005. Fellow Member of the Nomination Committee Member of the Audit Committee
of the Royal College of Physicians. Director of the Appointed as a Director 6 April 1999. Formerly Chief Appointed as a Director 1 July 2003. President and
British Pharma Group. Non-Executive Director of Executive Officer and a Director of Astra AB Chief Executive Officer of Stadtlander Drug Company
Cobham plc. Non-Executive Director of Amersham (appointed 18 May 1988). Member of the Board 1998-1999. Corporate Vice-President and President,
plc 2001-2004. President of the Association of the of Directors of Investor AB, Rmy Cointreau SA, International Businesses of Caremark International
British Pharmaceutical Industry 2002-2004. Member Groupe Danone and Norsk Hydro ASA. Director of Inc. 1992-1998. Non-Executive Director of PPG
of the Supervisory Board of the UK Medicines Control the Marianne and Marcus Wallenberg Foundation. Industries, Inc. Non-Executive Director of Warner
Agency 1990-1994. Executive Vice-President, Member of the Royal Swedish Academy of Music Group, Inc.
Product Strategy & Licensing and Business Engineering Sciences.
Development, AstraZeneca PLC 1999-2004.
PROFESSOR DAME NANCY ROTHWELL (51) JANE HENNEY (59) SIR PETER BONFIELD CBE, FRENG (62)
Non-Executive Director Non-Executive Director Senior Non-Executive Director
Chairman of the Science Committee Member of the Audit Committee, the Nomination Chairman of the Remuneration Committee and
Appointed as a Director 27 April 2006. Also has Committee and the Science Committee Member of the Nomination Committee
responsibility for overseeing Corporate Responsibility. Appointed as a Director 24 September 2001. Appointed as a Director 1 January 1995. Fellow of
MRC Research Professor and Vice-President for Currently Senior Vice-President and Provost for the Royal Academy of Engineering. Non-Executive
Research at the University of Manchester. Trustee of Health Affairs, University of Cincinnati Medical Director of Telefonaktiebolaget LM Ericsson, Mentor
Cancer Research UK and the Campaign for Medical Academic Health Center, appointed April 2003. Prior Graphics Corporation, Taiwan Semiconductor
Progress, Chair of the Research Defence Society, appointments include: Deputy Director, US National Manufacturing Company, Ltd., Sony Corporation,
Chair of the Wellcome Trust Public Engagement Cancer Institute; Vice-Chancellor of Health, Japan and Actis Capital LLP. Vice-President of The
Strategy Panel. Council member of the Biotechnology University of Kansas Medical Center; Deputy British Quality Foundation. Member of the Citigroup
and Biological Sciences Research Council. Prior Commissioner for Operations, US Food and Drug International Advisory Board. Member of the Sony
appointments include: President of the British Administration; and Commissioner of Food and Corporation Advisory Board. Chairman of NXP
Neuroscience Association and Council member Drugs, US Food and Drug Administration. Non- Supervisory Board. Non-Executive Director, Corporate
of the Medical Research Council. Executive Director of AmerisourceBergen Board of the Department for Constitutional Affairs.
Corporation and CIGNA Corporation. Other board
appointments include The Commonwealth Fund,
China Medical Board, OMERIS and BIO/START.
Other officers of the Company at 31 December 2006

included members of the Senior Executive Team, as
set out on page 77, and:
GRAEME MUSKER
Group Secretary and Solicitor
Appointed as Company Secretary 6 June 1993.
DIRECTORS REMUNERATION REPORT
This Directors Remuneration Report has REMUNERATION COMMITTEE MEMBERSHIP REMUNERATION COMMITTEE REMIT
been prepared in accordance with the AND MEETINGS The remit of the Remuneration Committee is
Directors Remuneration Report Regulations The members of the Remuneration Committee as follows:
2002 and meets the relevant requirements of are Sir Peter Bonfield (Chairman of the
the Listing Rules of the Financial Services Committee), John Buchanan, Joe Jimenez, (i) After appropriate consultation with the
Authority. As required by the Regulations, a Erna Mller and (since 26 July 2006) Chairman and Chief Executive Officer,
resolution to approve the report will be John Varley. They are all Non-Executive to make recommendations to the Board
proposed at the Annual General Meeting Directors. The Board considers them all to on the Companys policy for executive
(AGM) on Thursday 26 April 2007. be independent. (Independence of Non- remuneration and to determine, on behalf
Executive Directors is discussed in more of the Board, the entire individual
TABLE OF CONTENTS detail in the Directors Report on page 76.) remuneration package, including the
Remuneration Committee terms and conditions of employment
membership and meetings Sir Peter Bonfield and Erna Mller do not and the retirement/severance provisions
Remuneration Committee remit intend to submit themselves for re-election in relation to the Chairman, the Deputy
at the AGM in 2007, and Sir Peters role as Chairman, the Chief Executive Officer,
Overall remuneration policy and purpose
Chairman of the Committee will be assumed Executive Directors, the Secretary and
Principal components of by John Varley. such other senior managers as may be
employee remuneration determined by the Chief Executive Officer.
Executive Directors remuneration The Remuneration Committee met four times
Pension arrangements in 2006. Each meeting was attended by all of In formulating its proposals, the Committee
its members, except that other commitments is required to give such persons every
Performance targets and measurement
prevented John Buchanan from attending encouragement to enhance the Companys
AstraZeneca Share Option Plan the meetings on 1 February and 6 December. performance and to ensure that they are
AstraZeneca Performance Share Plan John Varley joined the Committee on 26 July fairly, but responsibly, rewarded for their
> Grant and vesting of Awards and only attended meetings after that date. individual contributions.
At the request of the Remuneration Committee,
> Basis of participation
David Brennan (Chief Executive Officer), (ii) To make recommendations to the Board
> Performance period Tony Bloxham (Executive Vice-President, for the Companys Executive Share Option
> Performance targets Human Resources), Peter Brown (Vice- Scheme and Employee and Executive
> Individual limit President, Global Compensation and Benefits) Performance Bonus Schemes (and any
and Louis Schweitzer (Chairman), as well as other similar schemes) and to exercise the
> Performance under the AstraZeneca
the Secretary of the Remuneration Committee, powers of the Directors under the rules of
Performance Share Plan in 2006
Graeme Musker, attended all of its meetings such schemes.
Executive Directors service contracts in 2006, except when their own remuneration
Position of the Non-Executive Directors was being discussed. They provided advice (iii) At all times to ensure that the Company
External appointments and retention of fees and services that materially assisted the complies to the fullest extent appropriate
Remuneration Committee during the year. and practicable with the Combined Code
Directors emoluments in 2006
In doing so, Mr Brown drew on various setting out Principles of Good Governance
Directors interests in shares sources of data concerning directors and and the Code of Best Practice annexed
Audit executives salaries, bonus levels and other to the Listing Rules of the Financial
Pensions incentives including general pharmaceutical Services Authority.
industry reports and surveys, as well as surveys
Transactions with Directors
specifically carried out for the Company. A copy of the Remuneration Committees
Total Shareholder Return graphs These included certain surveys prepared for remit is available on the Companys website1.
Unitised stock plans the Company by Towers Perrin.
Share options
During 2006, Ms Carol Arrowsmith of Deloitte
Gains by Directors on exercise
again provided the Remuneration Committee
of share options
with independent advice on all matters being
considered by it. During 2006, Deloitte also
provided taxation advice and other non-audit
services to the Company.
1
DIRECTORS REMUNERATION REPORT 83
OVERALL REMUNERATION POLICY AND PURPOSE The cost and value of the components of EXECUTIVE DIRECTORS REMUNERATION
the remuneration package are considered In 2006, for each Executive Director, the
In determining the level of Directors as a whole and are designed to: individual components were:
remuneration, the Remuneration Committee
considers the policies, practices and other > Ensure a proper balance of fixed and > Annual salary the actual salary for each
factors that relate to all employees, as set variable performance-related components, Executive Director determined by the
out below. linked to short- and longer-term objectives. Remuneration Committee on behalf of
the Board and established in sterling.
In general, the Company is committed to > Reflect market competitiveness. These salaries reflect the experience and
maintaining a dynamic performance culture, sustained performance of the individuals
in which every employee is clear about the PRINCIPAL COMPONENTS OF to whom they apply, as judged annually
Companys objectives, and knows how their EMPLOYEE REMUNERATION by the Remuneration Committee, taking
work impacts on those objectives and that Throughout 2006, as in 2005, the principal account also of market competitiveness
they will benefit from achieving high levels components of the total remuneration and the level of increases applicable to all
of performance. It is against this background package, for employees as a whole, were: other employees. The Company seeks to
that the specific remuneration of the position salaries at or slightly above the
Executive Directors and other members > Annual salary based on conditions in the median of the market, benchmarked
of the Senior Executive Team (SET) is relevant geographic market, with provision against comparable jobs in the countries
considered in the deliberations of the Board to recognise, in addition, the value of an in which officers normally work, primarily
and the Remuneration Committee. individuals sustained personal performance, in pharmaceutical companies or companies
resulting from their ability and experience. with levels of global operation similar
Consistent with its approach during the year, to those of AstraZeneca. All Executive
the Board has confirmed that the Companys > Annual bonus a lump-sum payment Directors terms and conditions are
overall remuneration policy and purpose related to the targeted achievement of UK-based, apart from David Brennans
going forward will continue to be: corporate, functional and individual goals, pension (including health insurance)
measured over a year and contained arrangements, which are described below.
> Attract and retain people of the quality within a specific plan. The corporate goals
necessary to sustain the Company as one are derived from the annual financial targets For 2007, the Executive Directors revised
of the best pharmaceutical companies in set by the Board and take into account annual salaries are as follows:
the world. external expectations of performance.
The functional goals are agreed by the David Brennan 940,000 (this
> Motivate them to achieve the level of Remuneration Committee at the start of, represents an increase of 8.05%
performance necessary to create and are monitored throughout, the year. over his 2006 salary);
sustained growth in shareholder value. Bonuses are not pensionable.
John Patterson 504,692 (this
In order to achieve this, remuneration policy > Longer-term incentives for selected represents an increase of 3.50%
and practice are designed to: groups, targeted at the achievement of over his 2006 salary); and
strategic objectives closely aligned with
> Closely align individual and team reward the interests of shareholders, namely the Jonathan Symonds 600,000 (this
with business performance at each level. AstraZeneca Share Option Plan described represents an increase of 8.15% over
on pages 85 and 86 and, for some his 2006 salary).
> Encourage employees to perform to their individuals potentially, the AstraZeneca
fullest capacity. Performance Share Plan described on > Short-term bonus:
pages 86 and 87.
> Encourage employees to align their The Chief Executive Officer was
interests with those of shareholders. > Pension arrangements appropriate to the eligible for an annual bonus related to
relevant national market. performance against the criteria
> Support managers responsibility to described below. The bonus payable
achieve business performance through > Other benefits, such as holidays and was on a scale of 0-180% of salary,
people and to recognise superior sickness benefit, which are cost-effective with 90% of salary payable for the
performance, in the short and longer term. and compatible with relevant national achievement of target performance.
welfare arrangements. The bonus was not pensionable.
> Be as locally focused and flexible as is David Brennans bonus for 2006
practicable and beneficial. > Share participation various plans amounts to 1,049,220 (120.6% of
provide the opportunity for employees salary). For 2007, the bonus range will
> Be as internally consistent as is practicable to take a personal stake in the Companys be the same.
and beneficial, taking due account of wealth creation as shareholders. These
market need. plans are described in Note 25 to the
Financial Statements.
> Be competitive and cost-effective in each
of the relevant employment markets. The way in which these elements are combined
and applied varies depending, for example, on
market need and practice in various countries.
DIRECTORS REMUNERATION REPORT CONTINUED
The Chief Financial Officer was > Longer-term incentives: > at 1 July 1996, combined age and service
eligible for an annual bonus related was equal to or exceeded 60; and
to performance against the criteria Executive Directors are also rewarded
described below. The bonus payable for improvement in the share price > the member was categorised as a non-
was on a scale of 0-150% of salary, performance of the Company over highly-compensated employee.
with 75% of salary payable for the a period of years by the grant of share
achievement of target performance. options under the AstraZeneca Share Similar early retirement terms apply to the
The bonus was not pensionable. Option Plan. The grant of such options supplementary, non-qualified plan, as it
Jonathan Symonds bonus for 2006 is determined by the Remuneration relates to highly-compensated employees.
amounted to 566,936 (102.2% of Committee, as are the performance
salary). For 2007, the bonus range will targets that apply and whether they The US Defined Benefit Pension Plan and the
be the same. apply to the grant and/or exercise of supplementary, non-qualified pension plan
options this is described in more have a service cap at 35 years service, after
The Executive Director, Development detail below. which no further service accrual is earned.
was eligible for an annual bonus related
to performance against the criteria In 2006, Executive Directors (and other On death in retirement, there is a pension
described below. The bonus payable members of the SET) were also eligible payable to the surviving spouse or other
was on a scale of 0-150% of salary, to participate in the AstraZeneca dependant if the member so elects prior
with 75% of salary payable for the Performance Share Plan described to retirement. The pension plan provides for
achievement of target performance. below. continuation of service credit in the event of
The bonus was not pensionable. disability until age 65, death or commencement
John Pattersons bonus for 2006 > An expectation to hold shares equivalent of benefit. In the event of death prior to
amounted to 489,124 (100.3% of to one-times annual salary, and to retain retirement, pre-survivor retirement benefits
salary). For 2007, the bonus range will the net number of shares acquired under are payable under the pension plan and
be the same. the AstraZeneca Share Option Plan for at under the insurance plans available to all
least six months after the option is US employees.
Since the 2004 consultation with exercised.
shareholders, the performance criteria for Members and surviving spouses/dependants
determining the annual bonus for Executive > Other customary benefits (such as a car can elect to take pensions in lump-sum form
Directors (and other SET members) have and health benefits) are also made available based on actuarial valuation.
been as follows: through participation in the Companys
flexible benefits arrangements, which UK Executive Directors
50% by reference to earnings per share. extend to the vast majority of the Companys pension arrangements
UK, Swedish and US employees. Certain changes to the tax treatment of
25% by measures relating to pensions in the UK took effect from 6 April 2006.
the individuals particular area of > Pension arrangements, as described below. The Remuneration Committee considered
responsibility (or, in the case of the the impact those changes may have on UK
Chief Executive Officer, the average PENSION ARRANGEMENTS Executive Directors pension arrangements.
of these individual outcomes for the The table on page 89 gives details of the The Remuneration Committee endorsed the
other members of the SET). changes in the value of the Executive offer of a cash allowance in lieu of future
Directors accrued pensions during 2006. pension, offered annually and payable at the
25% by a balance of qualitative and election of each individual Executive Director.
quantitative measures that address US Executive Directors The cash allowance is consistent with the
the quality of business performance pension arrangements cost of the alternative gross pension benefit.
(discussed below under Performance David Brennan (the Chief Executive Officer) is
targets and measurement). a member of the AstraZeneca US Defined This approach was considered in the
Benefit Pension Plan, under a schedule context of:
There is a requirement for SET members applicable to legacy Astra Merck employees.
to defer a portion of their bonus earned Benefits for members of this plan are > The Companys desire to offer
into shares for a period of three years. delivered on a tax-qualified basis, with employees flexibility and choice in their
The portion currently deferred into shares accrued benefits that exceed specific limits reward packages.
is one third of the pre-tax bonus for under the plans formula and the US Tax
Executive Directors and one sixth for Code being delivered through a > The Companys policies of funded,
all other SET members. On leaving, supplementary, non-qualified pension plan defined contribution pension provision.
participants would normally have to wait (accruals in respect of the UK service being
for the shares to be released at the end of booked in the UK accounts). The normal > The Companys desire to ensure it does
the three-year period. The Remuneration pension age under both plans is 65. The tax- not respond to tax changes in a way that
Committee reserves the right to modify qualified plan has unreduced, early would effectively deliver a guaranteed
the bonus outcome if it believes it does retirement benefits payable at age 62, or net pension promise.
not reflect the underlying performance earlier if:
of the business. > The requirement that any alternative
> combined age and service at retirement to pension should be cost-neutral to
equals or exceeds 85; and the Company.
The Executive Director, Development has > To the extent this payment does not During 2006, the BPM framework was
elected to remain a member of the Companys provide equivalence to the UK defined reviewed, with a view to further enhancing
main UK defined benefit pension plan for the benefit pension plan, the Company makes our focus on our strategic objectives. Bonus
option year 2006/7 rather than take the cash up the difference. The benefits derived outcomes for 2007 will reflect overall corporate
allowance. The normal pension age under from equivalence are shown in the table and relevant functional performance against
this plan is 62. However, a members accrued on page 89 as if the scheme were a clear objectives in relation to:
pension is available from age 60 without any defined benefit arrangement.
actuarial reduction. In addition, the accrued > patients;
pension is available, unreduced, from age 57 Performance targets and measurement > products;
if the Company consents to a request for Each year, as referred to above, both short- > people; and
early retirement and from age 50 if the term and longer-term objectives are agreed > performance.
retirement is at the Companys request. with the Board and regularly monitored, in
respect of both individual business functions More information about these objectives is
On death in retirement, the accrued pension and integrated corporate strategy, in the set out on pages11 and 15 of the Business
is guaranteed payable for the first five years Business Performance Management (BPM) Review.
of retirement and then reduces to two-thirds report. Performance against these objectives
of this amount should there be a surviving determines functional bonuses and, separately, ASTRAZENECA SHARE OPTION PLAN
spouse or other dependant. Any member whether or not share options will be granted. The AstraZeneca Share Option Plan, as
may choose higher or lower levels of approved at the AGM in 2000 and operated
survivors pensions at retirement, subject In respect of bonuses for 2006, relevant subsequently, requires that the Remuneration
to HM Revenue & Customs limits, in return factors included strong financial results ahead Committee must, before agreeing the grant
for an adjustment to their own pension of of expectations and excellent progress in key of options to Executive Directors and others,
equivalent actuarial value. Pensions are also areas. Earnings per share increased by 34% be satisfied that both the most recent and the
payable to dependent children. compared to 2005; global sales increased underlying performance of the Company
by 11% overall and by 23% for key growth justify each grant; and that each individual to
In the event of a senior employee becoming products; operating profit increased by 28% whom options are proposed to be granted
incapacitated, then a pension is payable and R&D investment by 16% (all at constant has achieved the necessary performance.
immediately as if such person had reached exchange rates). The development pipeline
normal retirement age (subject to a maximum was strengthened and now comprises 120 In agreeing grants of options during 2006,
of 10 years additional service), based on projects (compared with 106 a year earlier), the Remuneration Committee took into
current pensionable salary. In the event of including 95 new chemical entities and 25 account that, the AstraZeneca share price
a members death prior to retirement, life-cycle management projects. Significant increased by 53.5% between January 2005
dependants are entitled to a pension of two- externalisation activity included six significant and January 2006, outperforming that of
thirds of the pension that would have been licence and acquisition transactions signed every major US, European Union and Swiss
earned had the deceased remained in service during the calendar year, among them the pharmaceutical company; dividends increased
to age 62, plus a capital sum of four times acquisition of Cambridge Antibody Technology by 38% to $1.30 for the full year; earnings per
pensionable pay. Group plc. Good progress was made in life- share for 2005, at $2.91, were ahead of
cycle management, with nine submissions market expectations and up 41% on the
Pensions in payment are increased annually and nine approvals in the US or EU, including previous year and profits increased by 39%,
in line with inflation, as measured by the UK the submissions for Crestor (atherosclerosis) to $6.5 billion in 2005. In addition, costs
Retail Prices Index, up to a maximum of 5%. and Seroquel SR (schizophrenia) in both remained strictly controlled throughout the
the EU and US. These achievements were value chain, with significant productivity
The Chief Financial Officer benefits from a underpinned by a continuing emphasis on gains achieved and people costs as a
pension promise equivalent to membership cost discipline, improved productivity and percentage of operating costs remained
of the defined benefit pension plan that applies performance management. Bonus outcomes flat at 33% whereas operating profit per
to the Executive Director, Development. The for 2006 reflected overall corporate and employee increased by 41.5% to $100,200.
composition of the promise originates from relevant functional performance in 2006 Group sales increased in 2005 by 10% to
the application of the statutory earnings cap, against clear objectives in relation to: $23.95 billion. In relation to research and
which has now been removed following the development, expenditure totalled $3.4 billion
April 2006 tax changes to the treatment of > financial performance; in 2005, including new investment in laboratory
pensions in the UK. The equivalent pension > progress in R&D; facilities. Productivity increased in 2005,
promise remains unchanged. It is delivered > risk management; with 25 candidate drugs selected for the
through a combination of: > executive development and succession; early development portfolio (compared
> corporate governance and social with 18 in 2004 and 15 in 2003); four new
> Annual payment by the Company of 26% responsibility; and chemical entities were entered into Phase III
of base salary. (The Company payment is > reputation. development. There were 45 projects in the
calculated as 30% of base salary less the
required member contribution of 4%.)
The Company contribution in 2006 for
Jonathan Symonds in respect of the
pension element was 172,000. This
payment represents three months at the
pre-April rate of 50% and nine months at
the new rate.
pre-clinical phase and 17, 15 and 29 The Company has a policy prohibiting Details of these grants are shown in the table
projects in Phases I, II and III respectively. the backdating of share options and no on page 92. The majority of Awards are likely
The Companys outward focus has increased backdating of the grant of share options has to be made at or around the same time
considerably, with three licensing transactions taken place on any occasion. The exercise each year as options are granted under the
completed in 2005. These will have the effect price is fixed by reference to the market AstraZeneca Share Option Plan. No payment
of augmenting the development pipeline price of AstraZeneca shares over the three- is required for the grant of Awards.
with two Phase II compounds and one day period preceding the date of grant.
Phase III compound. In addition, the The Remuneration Committee approves all Performance period and vesting dates
acquisition of KuDOS Pharmaceuticals grants of options shortly before the grant date. In the case of the 2005 Award, the
Limited was announced in December 2005. performance target relates to the three-year
ASTRAZENECA PERFORMANCE SHARE PLAN period commencing on 1 January 2005 and
As well as taking into account these One of the changes announced by the the vesting date is 29 June 2008. For the
performance considerations at the point Company following the 2004 review of 2006 Award, the performance target relates
of granting options, the Remuneration executive remuneration was the introduction to the three-year period commencing on 1
Committee imposed testing performance of a new AstraZeneca Performance Share January 2006 and the vesting date is the third
conditions in respect of the exercise of such Plan (the Plan). In last years report, we anniversary of the date of grant.
granted options for members of the SET. described the first year of operation of the
In order for the options to vest, EPS must new Plan. Performance targets
increase by the UK retail price index plus For both Awards, the performance targets
5% per annum on average, for three years Grant and vesting of Awards are the Companys Total Shareholder Return
following grant, with no re-test. The Plan provides for the grant of performance (TSR) over the relevant three-year period
share awards (Awards) in respect of Ordinary compared to the TSR of a selected peer
The Remuneration Committee also sought Shares in AstraZeneca PLC (Shares) group of 12 other pharmaceutical companies
and received assurances that all individuals (which may be delivered in the form of for the same period. These companies are:
proposed for a grant of options had been American Depositary Shares in the US). Abbott Laboratories, Bristol-Myers Squibb,
performing in a manner that justified a grant Save in exceptional circumstances, which Eli Lilly, GlaxoSmithKline, Johnson & Johnson,
to them. It was noted that there was some are prescribed in the Plan rules or at the Merck, Novartis, Pfizer, Roche, Sanofi-Aventis,
variation in the level of grants being proposed discretion of the Remuneration Committee, Schering-Plough and Wyeth.
between individuals, to reflect differing levels vesting of Awards is contingent on the
of performance. satisfaction of specified performance TSR looks at share price increase and
targets and continued employment with dividends re-invested in respect of a notional
The dilutive effect of the proposed grants the AstraZeneca Group. Awards are not number of shares, from the beginning of the
of options on the Companys issued share pensionable and may not be assigned or relevant performance period to the end of it,
capital was also considered by the transferred (except on a participants death, and ranks the companies in the selected
Remuneration Committee, in accordance when they may be assigned to the participants comparator group by reference to the TSR
with its commitment that the percentage of personal representatives). achieved over that period. The rank which
the issued share capital that could be allocated the Companys TSR achieves over the
under all of the Companys employee share Basis of participation performance period will determine how
plans over a period of 10 years should be The Remuneration Committee is responsible many Shares will vest under the relevant
under 10%. This commitment is applied by for agreeing any Awards under the Plan and Award, as per the vesting schedule shown
the Remuneration Committee in practice as for setting the policy for the way in which the in the table below:
a limit, on average, of under 1% per annum. Plan should be operated, including agreeing
The Remuneration Committee concluded that performance targets and which employees Vesting percentage of
a grant of options to those plan participants should be invited to participate in the Plan. TSR ranking of the Company Shares under Award
and individual Executive Directors proposed All employees of the Company and its Below median 0%
for a grant was appropriate given the level of subsidiaries, including Executive Directors, are Median 30%
performance achieved. eligible to participate. In practice, participation
Upper quartile 100%
is highly selective and performance-driven.
For the grants of options to members Between median and upper quartile Pro rata
of the SET, since the review of executive Generally, Awards can be granted at any time,
remuneration in 2004, the Remuneration but not during a close period of the Company. To alleviate any short-term volatility, the return
Committee has included a condition to the As reported last year, the first grant of Awards index is averaged in the TSR calculations
effect that, if an event occurs which causes was made on 29 June 2005 (the 2005 Award). for each company over the three months
material reputational damage to the In 2006, grants of Awards were made on prior to the start and end of the relevant
Company, such that it is not appropriate for 24 March and 19 May (the 2006 Award). performance period.
the options to vest and become exercisable,
the Remuneration Committee can make a
determination to that effect.
In addition to the TSR performance target Details of Executive Directors service contracts at 31 December 2006
being met for each Award as set out above, the Date of Unexpired term at
Remuneration Committee also has to satisfy Executive Director service contract 31 December 2006 Notice period
itself that achievement of the TSR performance David R Brennan 1 January 2006 One year One year
target is a genuine reflection of the Companys Jonathan Symonds 20 May 1998 One year One year
underlying financial performance.
John Patterson 1 January 2005 One year One year
The Remuneration Committee has the
discretion to award Shares up to a further EXECUTIVE DIRECTORS SERVICE CONTRACTS EXTERNAL APPOINTMENTS AND
25% over and above the Shares subject to The service contracts of the current Executive RETENTION OF FEES
the Award, if the Companys TSR performance Directors provide for a notice period of one With the specific approval of the Board in
is substantially better than that of the upper year. For new Executive Directors, the Board each case, Executive Directors may accept
quartile of the comparator group. would aim to negotiate a one-year notice external appointments as non-executive
period. In exceptional circumstances, the directors of other companies and retain any
The Remuneration Committee may vary or initial notice period may be longer than one related fees paid to them.
waive these performance target(s) to take year. In those circumstances, the Board would
account of events that lead the Remuneration explain to shareholders the reasons why it John Patterson is a Non-Executive Director
Committee, acting fairly and reasonably, believed a longer notice period was necessary of Cobham plc. In respect of such position,
to believe the performance target(s) to be and it would be the Boards intention that it he retained the fees paid to him for his
no longer appropriate. Any variation to should be reduced to one year subsequently. services. In 2006, the total amount of such
the performance target(s) made by the At the time of the AGM on 26 April 2007, fees paid to him in respect of these services
Remuneration Committee will not result in the unexpired term of Executive Directors was 51,500.
the revised performance target(s) being, in service contracts will be a maximum of one
the opinion of the Remuneration Committee, year. The details of the Executive Directors Jonathan Symonds is a Non-Executive
more difficult or easier to satisfy than the individual service contracts are set out in the Director and Chairman of the Audit Committee
initial performance target(s). table above. If an Executive Directors service of Diageo plc. In respect of such position, he
contract is terminated, the Company may, retained the fees paid to him for his services.
Individual limit depending upon the circumstances, be liable In 2006, the total amount of such fees paid to
In respect of any financial year, the maximum to provide compensation to the Executive him in respect of these services was 80,000.
market value of Shares that may be put under Director equivalent to the salary and benefits Mr Symonds also received 3,750 for his
Award in respect of an employee is 500% of which he or she would have received during position as a member of the UK Accounting
that employees basic salary. This limit excludes the contractual notice period plus, in the case Standards Board until August 2006.
the above 25% maximum additional Shares of the Executive Director, Development, the
that may vest, at the sole discretion of the unreduced pension entitlement described DIRECTORS EMOLUMENTS IN 2006
Remuneration Committee, if the Companys on page 85. For current Executive Directors, The Directors emoluments in 2006 are
TSR performance is substantially above that it is the Companys expectation that any such disclosed on page 88.
of the upper quartile of the comparator group. liability would be calculated on the basis of one
years base salary, target bonus and other DIRECTORS INTERESTS IN SHARES
The actual individual limits that apply under benefits. The Companys policy in the event Details of the Directors interests in the
the Plan are set by the Remuneration of the termination of an Executive Directors Companys Ordinary Shares are disclosed
Committee from time to time. service contract is to avoid any liability to the on pages 91 to 94.
Executive Director in excess of his or her
Performance under the AstraZeneca contractual entitlement and to aim to ensure AUDIT
Performance Share Plan in 2006 that any liability is mitigated to the fullest The Directors emoluments in 2006 and
The Peer Group Graphs on page 90 show, extent possible. the details of the Directors interests in the
for each Award, how the Companys TSR Companys Ordinary Shares disclosed on
performance has compared with the TSR POSITION OF THE NON-EXECUTIVE DIRECTORS pages 88 to 94 have been audited by the
for the companies in the comparator group None of the Non-Executive Directors has Companys external auditor.
from the first day of the relevant performance a service contract. They are not eligible for
period to 31 December 2006 and how the performance-related bonuses or the grant of
Company ranks against those other companies share options. No pension contributions are
on this basis. We will continue to report on made on their behalf. The fees payable to
the performance of each Award against the the Non-Executive Directors are set by a
relevant performance target during the committee of the Board comprising the
relevant vesting period. Executive Directors.
DIRECTORS EMOLUMENTS IN 2006

The aggregate remuneration, excluding pension contributions and the value of share options and performance share plan awards, paid to or
accrued for all Directors and officers of the Company for services in all capacities during the year ended 31 December 2006 was 12 million ($21
million). Remuneration of individual Directors is set out below in sterling and US dollars. All salaries, fees, bonuses and other benefits for
Directors are established in sterling.
Salary Bonuses Taxable Total Total Total
and fees Cash Shares1 benefits Other 2006 2005 2004
000 000 000 000 000 000 000 000
Louis Schweitzer 260 260 260 312
David R Brennan 942 699 350 1 671 2,663 819 3
N/A
John Patterson 483 326 163 14 21 1,007 1,049 N/A
Jonathan Symonds 598 378 189 6 5 1,176 1,269 970
Sir Peter Bonfield 82 82 82 76
John Buchanan 69 69 69 61
Jane Henney 57 57 57 54
Michele Hooper 49 49 49 43
Joe Jimenez 49 49 49 43
Hkan Mogren 100 100 100 4794
Erna Mller 57 57 57 54
Dame Bridget Ogilvie5 18 18 57 54
Dame Nancy Rothwell 6
30 30
John Varley7 21 21
Marcus Wallenberg 40 40 49 46
Former Directors
Others8 2,289 2,115
Total 2,855 1,403 702 21 697 5,678 6,255 4,026
Salary Bonuses Taxable Total Total Total

and fees Cash Shares1 benefits Other 2006 2005 2004
$000 $000 $000 $000 $000 $000 $000 $000
Louis Schweitzer 475 475 476 562
David R Brennan 1,720 1,278 639 2 1,226 4,865 1,4993 N/A
John Patterson 883 596 298 25 37 1,839 1,918 N/A
Jonathan Symonds 1,093 691 345 11 9 2,149 2,321 1,764
Sir Peter Bonfield 150 150 150 138
John Buchanan 126 126 126 111
Jane Henney 104 104 104 98
Michele Hooper 89 89 90 78
Joe Jimenez 89 89 90 78
Hkan Mogren 183 183 183 8714
Erna Mller 104 104 104 98
Dame Bridget Ogilvie 5
34 34 104 98
Dame Nancy Rothwell6 56 56
John Varley 7
39 39
Marcus Wallenberg 73 73 90 84
Former Directors
Others8 4,191 3,847
Total 5,218 2,565 1,282 38 1,272 10,375 11,446 7,321
1
These figures represent that portion of the 2006 bonus required to be deferred into shares to be held for a three-year period as explained on page 84.
2
Part year only.
3
Part year only as only appointed as a Director on 14 March 2005.
4
Comprises compensation payment of 450,000 ($818,000) and part year Non-Executive Directors fee of 29,000 ($53,000).
5
Part year only as ceased to be a Director on 27 April 2006.
6
Part year only as appointed as a Director on 27 April 2006.
7
Part year only as appointed as a Director on 26 July 2006.
8
This comprises Sir Tom McKillops 2005 total of 2,253,000 ($4,125,000) plus ke Stavlings final payment of 36,000 ($66,000).
In the tables on page 88, salaries have been converted between sterling and US dollars at the average exchange rate for the year in question.
These rates were:
GBP/USD
2004 0.555
2005 0.546
2006 0.547
Some Directors and officers were also granted options to subscribe for Ordinary Shares under the Companys share option plans and awards
under the AstraZeneca Performance Share Plan (or, in the case of David Brennan, the AstraZeneca US Executive Performance Share Plan).
Details of share options granted to, and exercised by, Directors and the aggregate of gains realised on exercised options, and of awards under
the above performance share plans, in the year are given on pages 93 and 94.
No Director or officer has a family relationship with any other Director or officer.
PENSIONS
Pensions are payable to Directors in sterling, with the exception of David Brennans, which is payable in US dollars. For ease of understanding,
the table below has been presented in both sterling and US dollars using the exchange rates for 2006 set out above.
David R John Jonathan David R John Jonathan

Brennan Patterson Symonds Brennan Patterson Symonds
000 000 000 $000 $000 $000
Defined Benefit Arrangements
1. Accrued pension
at 1 January 2006 442 291 256 808 532 468
2. Increase in accrued pension
during year as a result of inflation 11 9 20 16
3. Adjustment to accrued pension
as a result of salary increase
relative to inflation 80 146
4. Increase in accrued pension
as a result of additional service 8 11 13 15 20 24
5. Accrued pension at
31 December 2006 530 313 278 969 572 508
6. Employee contributions
during year 22 40
7. Transfer value of
accrued pension
at 31 December 2005 3,708 5,449 2,593 6,773 9,953 4,736
8. Transfer value of
accrued pension
at 31 December 2006 4,356 6,129 3,020 7,956 11,195 5,516
9. Change in transfer value during
the period less employee contributions 648 680 405 1,183 1,242 740
10. Age at 31 December 2006 53 12
3
58 12
11
47 1210
53 12
3
58 12
11
471012
11. Pensionable service (years) 31 31 12
7
26 12
4
31 31 12
7
26412
TRANSACTIONS WITH DIRECTORS

There were no material recorded transactions between the Company and the Directors during 2006 or 2005.
TOTAL SHAREHOLDER RETURN GRAPHS

The UK Directors Remuneration Report Regulations 2002 require the inclusion in the Directors Remuneration Report of a graph showing total
shareholder return (TSR) over a five year period in respect of a holding of the Companys shares, plotted against TSR in respect of a hypothetical
holding of shares of a similar kind and number by reference to which a broad equity market index is calculated. The Company is a member of the
FTSE 100 Index and consequently, for the purposes of this graph which is set out below, we have selected the FTSE 100 Index as the appropriate
index. This graph is re-based to 100 at the start of the rolling five-year period. We have also included a Pharma Peers Average, which reflects
the TSR of the same comparator group used for the Performance Share Plan graphs below.
TSR ASTRAZENECA COMPARED WITH FTSE 100 OVER FIVE YEARS*
150
100
50
0
JAN 02 JAN 03 JAN 04 JAN 05 JAN 06 JAN 07
ASTRAZENECA FTSE 100 PHARMA PEERS AVERAGE
* Source: Thomson Financial Datastream
The AstraZeneca Performance Share Plan (the Plan) referred to on pages 86 and 87 requires that the TSR in respect of a holding of the Companys
shares over the relevant performance period be compared with the TSR of a peer group of 12 other pharmaceutical companies. The first graph
below shows how the Companys TSR performance has compared with the TSR for the companies in the comparator group from 1 January 2005
(the first day of the current three-year performance period for the 2005 Award) to 31 December 2006 and how the Company ranks against those
other companies on this basis. The second graph below shows how the Companys TSR performance has compared with the TSR for the
companies in the comparator group from 1 January 2006 (the first day of the current three-year performance period for the 2006 Award) to
31 December 2006 and how the Company ranks against those other companies on this basis.
TSR ASTRAZENECA COMPARED WITH PEER GROUP 1 JAN 2005 TO 31 DEC 2006 (FOR THE 2005 AWARD)*
80
70
3rd
60
50
40
30
20
10
0
RCH
GSK
AZ
SA
NOV
WYE
SP
J&J
MRK
ABT
LLY
BMS
PFI
-10
TSR ASTRAZENECA COMPARED WITH PEER GROUP 1 JAN 2006 TO 31 DEC 2006 (FOR THE 2006 AWARD)*
80
70
60
50
40
4th
30
20
GSK
10
0
MRK
ABT
BMS
WYE
RCH
J&J
LLY
NOV
PFI
SA
AZ
SP
-10
To alleviate any short-term volatility, the return index is averaged in the TSR calculations for each company over the three months prior to
the start of the relevant performance period (as stipulated in the Plan) and, for the purposes of the above interim snapshots, over the last
three months of 2006.
DIRECTORS INTERESTS IN SHARES

The table below shows the interests at 31 December 2006 or on the date of resignation (if earlier) of the persons who on that date were Directors
(including the interests of their families) in shares and debentures of AstraZeneca PLC. All such interests were beneficial except as otherwise stated.
However, interests in Ordinary Shares or American Depositary Shares (ADSs) that are the subject of awards under the AstraZeneca Performance
Share Plan, the AstraZeneca Deferred Bonus Plan or the AstraZeneca US Executive Performance Share Plan discussed elsewhere, are not
included in the table below but are shown on page 92. None of the Directors has a beneficial interest in the shares of any of the Companys
subsidiaries. Between 31 December 2006 and 31 January 2007 there was no change in the interests in shares and debentures shown in the
table below.
Interest in Ordinary Shares Net shares Interest in Ordinary Shares

Director at 1 Jan 2006 or appointment date acquired/(disposed) at 31 Dec 2006 or resignation date
Louis Schweitzer 4,000 4,000
David R Brennan 1, 2
80,612 3
31,176 3
111,7883
John Patterson 2
503 7,512 8,015
Jonathan Symonds 2
11,527 11,527
Sir Peter Bonfield 500 500
John Buchanan 2,500 2,500
Jane Henney 500 500
Michele Hooper 500 500
Joe Jimenez 500 500
Hkan Mogren 62,164 62,164
Erna Mller 2,718 2,718
Dame Bridget Ogilvie 500 5004
Marcus Wallenberg 67,264 67,264
Dame Nancy Rothwell 5005 500
John Varley 5 500 500
1
Shareholding includes ADSs held in the AstraZeneca Executive Deferral Plan, the AstraZeneca Deferred Compensation Plan and the AstraZeneca Savings and Security Plan
(see table below). Does not include interests in ADSs that are the subject of awards under the AstraZeneca US Executive Performance Share Plan (see page 92).
2
Does not include interests in Ordinary Shares that are the subject of Awards under the AstraZeneca Performance Share Plan or of awards under the AstraZeneca Deferred Bonus Plan.
3
Numbers of ADSs. One ADS represents one Ordinary Share.
4
Shareholding at date of resignation (27 April 2006).
5
Shareholding at date of appointment.
Unitised stock plans

David Brennan, in common with other participating executives in the US, has interests in the following: the AstraZeneca Executive Deferral Plan,
the AstraZeneca Executive Deferred Compensation Plan and the AstraZeneca Savings and Security Plan. These are unitised stock plans and
participants hold units in each plan. A unit comprises part cash and part ADSs. The overall unit price is determined daily by taking the market
value of the underlying ADSs and adding the cash position. The ADSs held within these units carry both voting and dividend rights. Mr Brennan
is deemed to have a notional interest in these ADSs, calculated by reference to the fund value and the closing price of ADSs. As the value of the
unit varies, the number of ADSs attached to each unit varies. Therefore, the number of ADSs held within each unit varies daily.
ADSs held at Net ADSs ADSs held

Unitised stock plan 1 Jan 2006 acquired/(disposed) during 2006 at 31 Dec 2006
AstraZeneca Executive Deferral Plan 74,453 1,618 76,071
AstraZeneca Executive Deferred Compensation Plan 29,103 29,103
AstraZeneca Savings and Security Plan 6,001 455 6,456
No Director or senior executive beneficially owns, or has options over, 1% or more of the outstanding shares of the Company, nor do they have
different voting rights to other shareholders.
The interests of Directors and former Directors at 31 December 2006, or on the date of resignation (if earlier), in Shares that are the subject
of Awards under the AstraZeneca Performance Share Plan are not included in the table on the previous page but are shown below:
Awards held (target number of Shares) Monetary value

At 1 Jan 2006 or At 31 Dec 2006 or Target number of Shares of Awards Date Vesting
Award and performance period appointment date resignation date the subject of Awards ()1 of grant date
David R Brennan
2006 Award: 1 Jan 06 1 Jan 09 73,109 73,1092 2,174,993 24.03.06 24.03.09
2006 Award: 1 Jan 06 1 Jan 09 19,092 19,0923 543,740 19.05.06 19.05.09
Total 92,201 92,201 2,718,733
John Patterson
2005 Award: 1 Jan 05 1 Jan 08 41,945 41,945 41,9454 939,987 29.06.05 29.06.08
2006 Award: 1 Jan 06 1 Jan 09 32,319 32,3192 961,490 24.03.06 24.03.09
Total 41,945 74,264 74,264 1,901,477
Jonathan Symonds
2005 Award: 1 Jan 05 1 Jan 08 47,723 47,723 47,7234 1,069,472 29.06.05 29.06.08
2006 Award: 1 Jan 06 1 Jan 09 41,646 41,6462 1,238,968 24.03.06 24.03.09
Total 47,723 89,369 89,369 2,308,440
Sir Tom McKillop5
2005 Award: 1 Jan 05 1 Jan 08 104,417 104,417 104,4174 2,339,985 29.06.05 29.06.08
Total 104,4176 104,4176 104,417 2,339,985
1
The relevant target percentage of the Directors salary was divided by the price per share at date of grant to calculate the target number of Shares.
2
Share price at date of grant was 2975p.
3
4
5
Ceased to be a Director on 31 December 2005.
6
To be pro-rated as described on page 74 of the 2005 Directors Remuneration Report.
References to target number of Shares are to the maximum number of Shares that would vest if the vesting percentage were 100%.
There is a requirement for SET members to defer a portion of their bonus earned into Ordinary Shares for a period of three years. The portion
currently deferred into Ordinary Shares is one third of the pre-tax bonus for Executive Directors and one sixth for all other SET members.
The interests of Directors and former Directors at 31 December 2006, or on the date of resignation (if earlier), in Ordinary Shares that are the
subject of awards under the AstraZeneca Deferred Bonus Plan are not included in the table on the previous page but are shown below:
Number of
Awards held Ordinary Shares Monetary value
At 1 Jan 2006 or At 31 Dec 2006 or the subject of awards Date Vesting
appointment date resignation date of awards ()1 of grant date
David R Brennan 6,352 6,3522 167,629 24.02.06 24.02.09
John Patterson 6,623 6,623 2
174,781 24.02.06 24.02.09
Jonathan Symonds 7,534 7,5342 198,822 24.02.06 24.02.09
1
The relevant portion of the bonus earned was divided by the price per share at the date of grant to calculate the number of shares.
2
Share price at the date of grant was 2639p.
The interests of David Brennan at 31 December 2006 in ADSs of AstraZeneca PLC that are the subject of awards under the AstraZeneca US
Executive Performance Share Plan (established in 2000) are not included in the above tables but are shown below. One ADS equals one Ordinary
Share. The number of ADSs to which Mr Brennan may become unconditionally entitled on the vesting date will be determined by reference to
AstraZenecas total shareholder return compared to that of other companies in the US Pharmaceutical Human Resources Association over the
three-year performance period.
Monetary
David R Brennan Initial monetary Awards vested value of
Awards made value of during 2006 awards vested Awards Date on
Awards held (target number of ADSs) (target number awards made (number during 2006 expired Date which award
At 1 Jan 2006 At 31 Dec 2006 of ADSs) ($) of ADSs) ($) during 2006 of award may vest
33,104 33,104 1,163,9371 31,780 1,643,9792 1,324 25.03.03 25.03.06
28,826 28,826 28,826 1,344,156 3
26.03.04 26.03.07
27,877 27,877 27,877 1,124,8374 24.03.05 24.03.08
Total 89,807 56,703 89,807 3,632,930 31,780 1,643,979 1,324
1
The award price was $35.16.
2
The closing price of ADSs on 25 March 2006 (the date of vesting) was $51.73.
3
4
References to target number of ADSs are to the maximum number of ADSs that would vest if the vesting percentage were 100%.
SHARE OPTIONS
The interests of Directors, and of former Directors who served during 2006, in options to subscribe for Ordinary Shares, which include options
granted under the AstraZeneca Share Option Plan, the AstraZeneca Savings-Related Share Option Scheme and the 1994 Executive Share
Option Scheme, together with options granted and exercised during the year, are included in the following table. All grants in 2006 were made
under the AstraZeneca Share Option Plan.
Number of Exercise
Ordinary Shares price per Market price at First day Last day
under option Ordinary Share1 date of exercise exercisable2 exercisable2
Hkan Mogren At 1 Jan 2006 244,896 2848p 13.12.02 24.03.13
market price above option price 139,530 2499p 13.12.02 24.03.13
market price below option price 105,366 3309p 23.08.03 27.03.12
At 31 Dec 2006 244,896 2848p 13.12.02 24.03.13
David R Brennan At 1 Jan 2006 440,643 $43.27 16.03.03 23.03.15
market price above option price 364,948 $41.96 16.03.03 23.03.15
market price below option price 75,695 $49.59 28.03.05 27.03.12
Granted 24 March 2006 87,731 2975p 24.03.09 23.03.16
Granted 19 May 2006 22,910 2848p 19.05.09 18.05.16
Exercised 8 August 2006 85,397 $35.16 $61.073 25.03.06 24.03.13
At 31 Dec 2006
options over ADSs 355,246 $45.22 16.03.03 23.03.15
options over Ordinary Shares 110,641 2949p 24.03.09 18.05.16
market price above option price 355,246 $45.22 16.03.03 23.03.15
John Patterson At 1 Jan 2006 196,635 2579p 26.03.01 23.03.15
Granted 24 March 2006 41,552 2975p 24.03.09 23.03.16
Exercised 4 August 2006 10,944 2448p 3185p4 26.03.01 25.03.08
Exercised 4 August 2006 34,669 2231p 3182p 5
25.03.06 24.03.13
At 31 Dec 2006 192,574 2735p 25.03.02 23.03.16
Jonathan Symonds At 1 Jan 2006 312,558 2560p 01.10.00 23.03.15
Granted 24 March 2006 50,862 2975p 24.03.09 23.03.16
At 31 Dec 2006 363,420 2618p 01.10.00 23.03.16
1
Exercise prices at 1 January and 31 December are weighted averages.
2
First and last exercise dates of groups of options, within which periods there are shorter exercise periods.
3
Price at which he sold all of the shares (85,397) he acquired from the exercise that same day.
4
Price at which he sold 9,486 shares of the shares he acquired from the exercise that same day to meet exercise cost and tax liability.
5
Price at which he sold 28,615 shares of the shares he acquired from the exercise that same day to meet exercise cost and tax liability.
In addition to the above, the following Director held options under the Astra Shareholder Value Incentive Plan, which were converted into
options over AstraZeneca shares on completion of the merger based on an exchange ratio of 0.5045 AstraZeneca options for each Astra
option held. No further options have been or will be granted under the scheme:
Astra SVIP Options

Number of shares Exercise price Market price at First day Last day
under option per share (SEK)1 date of exercise exercisable2 exercisable2
Hkan Mogren At 1 Jan 2006 9,826 441.78 06.04.99 23.01.06
market price above option price
market price below option price 9,826 441.78 06.04.99 23.01.06
Expired 9,826 441.78 06.04.99 23.01.06
At 31 Dec 2006
1
Exercise prices are weighted averages.
2
First and last exercise dates of groups of options, within which periods there are shorter exercise periods.
Gains by Directors on exercise of share options

The aggregate amount of gains made by Directors on the exercise of share options during the year amounted to $2,962,173.19 (2005 $577,795.42,
2004 $nil) and the gains made by the highest paid Director were $2,212,636.27 (2005 $577,407.91, 2004 $nil). The market price of shares
trading on the London Stock Exchange at 31 December 2006 was 2744 pence and the range during 2006 was 2574 pence to 3529 pence.
The market price of shares trading on the Stockholm Stock Exchange at 31 December 2006 was 367.5 SEK and the range during 2006 was
352.5 SEK to 484.0 SEK. The market price of shares trading on the New York Stock Exchange was $53.55 at 31 December 2006 and the
range during 2006 was $45.12 to $66.37. The Register of Directors Interests (which is open to inspection) contains full details of Directors
shareholdings and options to subscribe for Ordinary Shares.
On behalf of the Board

G H R MUSKER
Group Secretary and Solicitor
1 February 2007
FINANCIAL
STATEMENTS
PREPARATION OF THE FINANCIAL STATEMENTS AND DIRECTORS RESPONSIBILITIES
The Directors are responsible for preparing In preparing each of the Group and Company The Directors are responsible for keeping
the Annual Report and Form 20-F Information Financial Statements, the Directors are proper accounting records that disclose with
and the Group and Company Financial required to: reasonable accuracy at any time the financial
Statements, in accordance with applicable position of the Company and enable them to
law and regulations. > Select suitable accounting policies and ensure that its financial statements comply with
then apply them consistently. the Companies Act 1985. They have general
UK company law requires the Directors to responsibility for taking such steps as are
prepare Group and Company Financial > Make judgements and estimates that are reasonably open to them to safeguard the
Statements for each financial year. Under that reasonable and prudent. assets of the Group and the Company and to
law the Directors are required to prepare the prevent and detect fraud and other irregularities.
Group Financial Statements in accordance > For the Group Financial Statements,
with IFRS as adopted by the European Union state whether they have been prepared Under applicable law and regulations, the
(EU) and applicable law and have elected to in accordance with IFRS as adopted by Directors are also responsible for preparing
prepare the Company Financial Statements in the EU. a Directors Report, Directors Remuneration
accordance with UK Accounting Standards Report and Corporate Governance Statement
and applicable law. The Directors have also > For the Company Financial Statements, that comply with that law and those regulations.
presented additional information under US state whether applicable UK Accounting
requirements. Standards have been followed, subject
to any material departures disclosed
The Group Financial Statements are required and explained in the Company
by law and IFRS as adopted by the EU to Financial Statements.
present fairly the financial position and
performance of the Group; the Companies > Prepare the financial statements on the
Act 1985 provides in relation to such financial going concern basis unless it is inappropriate
statements that references in the relevant part to presume that the Group and the Company
of that Act to financial statements giving a true will continue in business.
and fair view are references to their achieving
a fair presentation.
The Company Financial Statements are

required by law to give a true and fair view
of the state of affairs of the Company.
DIRECTORS RESPONSIBILITIES FOR, AND REPORT

ON, INTERNAL CONTROL OVER FINANCIAL REPORTING
The Directors are responsible for establishing are subject to the risks that controls may KPMG Audit Plc, an independent registered
and maintaining adequate internal control become inadequate because of changes in public accounting firm, has audited the
over financial reporting. AstraZenecas conditions or that the degree of compliance Directors assessment of the internal control
internal control over financial reporting is with the policies or procedures may deteriorate. over financial reporting and, as explained
designed to provide reasonable assurance on page 97, has issued an unqualified
over the reliability of financial reporting and The Directors assessed the effectiveness of report thereon.
the preparation of consolidated financial AstraZenecas internal control over financial
statements in accordance with International reporting as at 31 December 2006 based on
Financial Reporting Standards as adopted by the criteria set forth by the Committee of
the EU and generally accepted accounting Sponsoring Organizations of the Treadway
principles in the United States. Commission in Internal Control-Integrated
Framework. Based on this assessment, the
Due to its inherent limitations, internal control Directors believe that, as at 31 December
over financial reporting may not prevent or 2006, the internal control over financial
detect misstatements. Projections of any reporting is effective based on those criteria.
evaluation of effectiveness to future periods
FINANCIAL STATEMENTS 97
AUDITORS REPORTS ON THE FINANCIAL STATEMENTS AND ON INTERNAL CONTROL

OVER FINANCIAL REPORTING (SARBANES-OXLEY ACT SECTION 404)
The report set out below is provided in compliance with International Standards on Auditing (UK and Ireland). KPMG Audit Plc has also issued
reports in accordance with auditing standards of the Public Company Accounting Oversight Board in the US, which will be included in the Annual
Report on Form 20-F to be filed with the US Securities and Exchange Commission. Those reports are unqualified and include opinions on the
financial statements and on the effectiveness of internal control over financial reporting and managements assessment of the effectiveness of
internal control over financial reporting as at 31 December 2006 (Sarbanes-Oxley Act Section 404). The Directors statement on internal control
over financial reporting is set out on page 96.
KPMG Audit Plc has also reported separately on the Company Financial Statements and on the information in the Directors Remuneration
Report that is described as having been audited. This report is set out on page 157.
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF ASTRAZENECA PLC
We have audited the Group Financial We report to you our opinion as to whether Directors in the preparation of the Group
Statements of AstraZeneca PLC for the year the Group Financial Statements give a true Financial Statements, and of whether the
ended 31 December 2006 which comprise and fair view and whether the Group Financial accounting policies are appropriate to the
the Consolidated Income Statement, the Statements have been properly prepared in Groups circumstances, consistently applied
Consolidated Balance Sheet, the Consolidated accordance with the Companies Act 1985 and adequately disclosed.
Cash Flow Statement, the Consolidated and Article 4 of the IAS Regulation. We also
Statement of Recognised Income and Expense report to you if, in our opinion, the Directors We planned and performed our audit so as
and the related notes on pages 98 to 156. Report is not consistent with the Group to obtain all the information and explanations
These Group Financial Statements have Financial Statements. which we considered necessary in order to
been prepared under the accounting policies provide us with sufficient evidence to give
set out therein. In addition we report to you if, in our opinion, reasonable assurance that the Group Financial
we have not received all the information Statements are free from material misstatement,
We have reported separately on the Company and explanations we require for our audit, whether caused by fraud or other irregularity
Financial Statements of AstraZeneca PLC for or if information specified by law regarding or error. In forming our opinion we also evaluated
the year ended 31 December 2006 and on Directors remuneration and other transactions the overall adequacy of the presentation of
the information in the Directors Remuneration is not disclosed. information in the Group Financial Statements.
Report that is described as having been audited.
We review whether the Corporate Governance OPINION
This report is made solely to the Companys Statement reflects the Companys compliance In our opinion:
members, as a body, in accordance with with the nine provisions of the 2006 Combined
section 235 of the Companies Act 1985. Code specified for our review by the Listing > The Group Financial Statements give a true
Our audit work has been undertaken so that Rules of the Financial Services Authority, and and fair view, in accordance with IFRSs
we might state to the Companys members we report if it does not. We are not required to as adopted by the EU, of the state of the
those matters we are required to state to them consider whether the Boards statements on Groups affairs as at 31 December 2006
in an auditors report and for no other purpose. internal control cover all risks and controls, or and of its profit for the year then ended.
To the fullest extent permitted by law, we do form an opinion on the effectiveness of the > The Group Financial Statements have
not accept or assume responsibility to anyone Groups corporate governance procedures been properly prepared in accordance
other than the Company and the Companys or its risk and control procedures. with the Companies Act 1985 and Article
members as a body, for our audit work, for 4 of the IAS Regulation.
this report, or for the opinions we have formed. We read other information contained in the > The information given in the Directors
Annual Report and Form 20-F Information Report is consistent with the Group
RESPECTIVE RESPONSIBILITIES OF DIRECTORS and consider whether it is consistent with Financial Statements.
AND AUDITORS the audited Group Financial Statements.
The Directors responsibilities for preparing the We consider the implications for our report if we 1 February 2007
Annual Report and Form 20-F Information and become aware of any apparent misstatements
the Group Financial Statements in accordance or material inconsistencies with the Group KPMG Audit Plc
with applicable law and International Financial Financial Statements. Our responsibilities do Chartered Accountants
Reporting Standards (IFRSs as adopted by not extend to any other information. Registered Auditor
the EU) are set out in the Statement of 8 Salisbury Square
Directors Responsibilities on page 96. BASIS OF AUDIT OPINION London EC4Y 8BB
We conducted our audit in accordance with
Our responsibility is to audit the Group International Standards on Auditing (UK and Accounting principles generally accepted under
Financial Statements in accordance with Ireland) issued by the Auditing Practices Board. IFRS as adopted by the EU vary in certain
relevant legal and regulatory requirements An audit includes examination, on a test basis, significant respects from accounting principles
and International Standards on Auditing of evidence relevant to the amounts and generally accepted in the US. Information
(UK and Ireland). disclosures in the Group Financial Statements. relating to the nature and effect of such
It also includes an assessment of the significant differences is presented on pages 149 to 156.
estimates and judgements made by the
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER
2006 2005 2004

Notes $m $m $m
Sales 26,475 23,950 21,426
Cost of sales (5,559) (5,356) (5,193)
Distribution costs (226) (211) (177)
Research and development (3,902) (3,379) (3,467)
Selling, general and administrative costs (9,096) (8,695) (8,268)
Other operating income and expense 1 524 193 226
Operating profit 1 8,216 6,502 4,547
Profit on sale of interest in joint venture 2 219
Finance income 3 888 665 532
Finance expense 3 (561) (500) (454)
Profit before tax 8,543 6,667 4,844
Taxation 4 (2,480) (1,943) (1,161)
Profit for the period 6,063 4,724 3,683
Attributable to:
Equity holders of the Company 6,043 4,706 3,664
Minority interests 20 20 18 19
Basic earnings per $0.25 Ordinary Share 5 $3.86 $2.91 $2.18
Diluted earnings per $0.25 Ordinary Share 5 $3.85 $2.91 $2.18
Weighted average number of Ordinary Shares in issue (millions) 5 1,564 1,617 1,673
Diluted weighted average number of Ordinary Shares in issue (millions) 5 1,570 1,618 1,675
Dividends declared and paid in the period 21 2,217 1,676 1,408
All activities were in respect of continuing operations.
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

FOR THE YEAR ENDED 31 DECEMBER
2006 2005 2004

Notes $m $m $m
Profit for the period 6,063 4,724 3,683
Foreign exchange and other adjustments on consolidation 18 922 (1,052) 744
Available for sale (losses)/gains taken to equity 18 (20) (10) 31
Actuarial loss for the period 18 (108) (35) (179)
Tax on items taken directly to reserves 4, 18 137 (25) 416
931 (1,122) 1,012
Total recognised income and expense for the period 6,994 3,602 4,695
Attributable to:
Equity holders of the Company 6,970 3,595 4,690
Minority interests 24 7 5
Tax on items taken directly to reserves in 2004 includes a credit of $357m in respect of foreign exchange losses in 2000 (Note 4).
$m means millions of US dollars.

CONSOLIDATED BALANCE SHEET AT 31 DECEMBER
2006 2005 2004

Notes $m $m $m
Assets
Non-current assets
Property, plant and equipment 7 7,453 6,985 8,097
Intangible assets 8 4,204 2,712 3,050
Other investments 9 119 256 262
Deferred tax assets 4 1,220 1,117 1,218
12,996 11,070 12,627
Current assets
Inventories 10 2,250 2,206 3,020
Trade and other receivables 11 5,561 4,778 4,620
Other investments 9 657 1,624 1,198
Income tax receivable 1,365 183 120
Cash and cash equivalents 12 7,103 4,979 4,067
16,936 13,770 13,025
Total assets 29,932 24,840 25,652
Liabilities
Current liabilities
Interest bearing loans and borrowings 13 (136) (90) (142)
Trade and other payables 16 (6,334) (5,466) (5,478)
Income tax payable (2,977) (1,283) (967)
(9,447) (6,839) (6,587)
Non-current liabilities
Interest bearing loans and borrowings 13 (1,087) (1,111) (1,127)
Deferred tax liabilities 4 (1,559) (1,112) (1,328)
Retirement benefit obligations 24 (1,842) (1,706) (1,761)
Provisions 17 (327) (309) (266)
Other payables 16 (254) (72) (86)
(5,069) (4,310) (4,568)
Total liabilities (14,516) (11,149) (11,155)
Net assets 15,416 13,691 14,497
Equity
Capital and reserves attributable to equity holders of the Company
Share capital 29 383 395 411
Share premium account 19 1,671 692 550
Capital redemption reserve 19 71 53 36
Merger reserve 19 433 433 433
Other reserves 19 1,398 1,345 1,384
Retained earnings 19 11,348 10,679 11,590
15,304 13,597 14,404
Minority equity interests 20 112 94 93
Total equity 18 15,416 13,691 14,497
The Financial Statements on pages 98 to 156 were approved by the Board of Directors on 1 February 2007 and were signed on its behalf by:
DAVID R BRENNAN JONATHAN SYMONDS

Director Director
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER
2006 2005 2004

Notes $m $m $m
Cash flows from operating activities
Finance income and expense 3 (327) (165) (78)
Profit on sale of interest in joint venture 2 (219)
Depreciation, amortisation and impairment 1 1,345 1,327 1,268
Increase in trade and other receivables (470) (502) (207)
Decrease in inventories 158 596 129
Increase in trade and other payables 420 238 11
Other non-cash movements 263 220 384
Cash generated from operations 9,932 8,381 6,132
Interest paid (70) (32) (69)
Tax paid (2,169) (1,606) (1,246)
Net cash inflow from operating activities 7,693 6,743 4,817
Cash flows from investing activities
Acquisitions of business operations 22 (1,148)
Disposal of business operations 23 355
Movement in short term investments and fixed deposits 1,120 (491) 1,855
Purchase of property, plant and equipment (794) (810) (1,063)
Disposal of property, plant and equipment 35 87 35
Purchase of intangible assets (545) (157) (215)
Disposal of intangible assets 661
Purchase of non-current asset investments (17) (12) (117)
Disposal of non-current asset investments 68
Interest received 352 206 119
Payments made by subsidiaries to minority interests (4) (5) (5)
Dividends received 6
Net cash (outflow)/inflow from investing activities (272) (1,182) 970
Net cash inflow before financing activities 7,421 5,561 5,787
Cash flows from financing activities
Proceeds from issue of share capital 985 143 102
Re-purchase of shares (4,147) (3,001) (2,212)
Loans received 746
Loan repayment (21)
Dividends paid (2,220) (1,717) (1,378)
Movement in short term borrowings 16 3 2
Net cash outflow from financing activities (5,366) (4,572) (2,761)
Net increase in cash and cash equivalents in the period 2,055 989 3,026
Cash and cash equivalents at beginning of the period 4,895 3,927 872
Exchange rate effects 39 (21) 29
Cash and cash equivalents at the end of the period 12 6,989 4,895 3,927
ACCOUNTING POLICIES
BASIS OF ACCOUNTING AND PREPARATION Revenue Prior to 1 January 2003, goodwill was
OF FINANCIAL INFORMATION Sales exclude inter-company sales and amortised over its estimated useful life; such
The consolidated financial statements have value-added taxes and represent net invoice amortisation ceased on 31 December 2002.
been prepared under the historical cost value less estimated rebates, returns and
convention, modified to include revaluation settlement discounts. Sales are recognised The Groups policy up to and including 1997
to fair value of certain financial instruments when the significant risks and rewards of was to eliminate goodwill arising upon
as described below, in accordance with ownership have been transferred to a third acquisitions against reserves. Under IFRS 1
the Companies Act 1985 and International party. No revenue is recognised when there First-time Adoption of International Financial
Financial Reporting Standards (IFRSs) as are significant uncertainties regarding the Reporting Standards and IFRS 3 Business
adopted by the European Union (adopted consideration to be received or the costs Combinations, such goodwill will remain
IFRS) in response to the IAS regulation associated with the transaction. eliminated against reserves.
(EC 1606/2002).
Research and development Employee benefits
Where there are significant differences to Research expenditure is recognised in The Group accounts for pensions and other
US GAAP these have been described in the the income statement in the year in which it employee benefits (principally healthcare) under
US GAAP section on pages149 to156. is incurred. IAS 19 Employee Benefits. In respect of
defined benefit plans, obligations are measured
The Company has elected to prepare the Internal development expenditure is recognised at discounted present value whilst plan assets
Company Financial Statements in accordance in the income statement in the year in which are measured at fair value. The operating and
with UK Accounting Standards. These are it is incurred unless it meets the recognition financing costs of such plans are recognised
presented on pages158 to 162 and the criteria of IAS 38 Intangible Assets. Regulatory separately in the income statement; current
accounting policies in respect of Company and other uncertainties generally mean that service costs are spread systematically over
information are set out on page159. such criteria are not met. Where, however, the lives of employees and financing costs
the recognition criteria are met, intangible are recognised in full in the periods in which
In preparing their individual financial statements, assets are capitalised and amortised on a they arise. Actuarial gains and losses are
the accounting policies of some overseas straight-line basis over their useful economic recognised immediately in the statement of
subsidiaries and associated undertakings do lives from product launch. Payments to recognised income and expense.
not conform with adopted IFRSs. Therefore, in-licence products and compounds from
where appropriate, adjustments are made external third parties, generally taking the Where the calculation results in a benefit to
in order to present the Group Financial form of up-front payments and milestones, the Group, the recognised asset is limited to
Statements on a consistent basis. are capitalised and amortised, generally the present value of any future refunds from
on a straight-line basis, over their useful the plan or reductions in future contributions
The preparation of the Financial Statements in economic lives from product launch. Under to the plan.
conformity with generally accepted accounting this policy, it is not possible to determine
principles requires management to make precise economic lives for individual classes Payments to defined contribution schemes
estimates and assumptions that affect the of intangible. However, lives range from are recognised in the income statement as
reported amounts of assets and liabilities at three years to twenty years. they fall due.
the date of the Financial Statements and the
reported amounts of revenues and expenses Intangible assets relating to products in Taxation
during the reporting period. Actual results development (both internally generated The current tax payable is based on taxable
could differ from those estimates. and externally acquired) are subject to profit for the year. Taxable profit differs from
impairment testing at each balance sheet profit as reported in the income statement
AstraZenecas management considers the date. All intangible assets are tested for because it excludes items that are never
following to be the most important accounting impairment when there are indications that taxable or deductible. The Groups liability for
policies in the context of the Groups operations. the carrying value may not be recoverable. current tax is calculated using tax rates that
Any impairment losses are recognised have been enacted or substantively enacted
In applying these accounting policies immediately in the income statement. by the balance sheet date.
management makes certain judgements and
estimations. Judgements include classification Business combinations and goodwill Deferred tax is provided using the balance
of transactions between the income statement On the acquisition of a business, fair values sheet liability method, providing for temporary
and balance sheet, whilst estimations focus are attributed to the identifiable assets and differences between the carrying amounts of
on areas such as carrying values and liabilities and contingent liabilities unless the assets and liabilities for financial reporting
estimated lives. fair value cannot be measured reliably in which purposes and the amounts used for taxation
case the value is subsumed into goodwill. purposes. Deferred tax assets are recognised
The accounting policy descriptions set out Where fair values of acquired contingent to the extent that it is probable that taxable
the areas where judgement needs exercising, liabilities cannot be measured reliably, the profit will be available against which the asset
the most significant of which are revenue assumed contingent liability is not recognised can be utilised. This requires judgements to
recognition, research and development, but is disclosed in the same manner as other be made in respect of the availability of future
goodwill and intangible assets, provisions for contingent liabilities. taxable income.
contingent liabilities, post-retirement benefits,
taxation and share-based compensation. Goodwill arising on acquisitions is capitalised No deferred tax asset or liability is recognised
and subject to an impairment review, both in respect of temporary differences associated
annually and when there is an indication that with investments in subsidiaries, branches
the carrying value may not be recoverable. and joint ventures where the Group is able to
ACCOUNTING POLICIES CONTINUED
control the timing of reversal of the temporary Borrowing costs Inventories

differences and it is probable that the Borrowing costs are recognised in the Inventories are stated at the lower of cost
temporary differences will not reverse in the income statement as incurred. or net realisable value. The first in, first out
foreseeable future. or an average method of valuation is used.
Leases For finished goods and work in progress,
Accruals for tax contingencies require Assets held under finance leases are capitalised cost includes directly attributable costs
management to make judgements and and included in property, plant and equipment and certain overhead expenses (including
estimates of ultimate exposures in relation to at fair value. Each asset is depreciated over depreciation). Selling expenses and certain
tax audit issues. Tax benefits are not recognised the shorter of the lease term or its useful life. other overhead expenses (principally
unless the tax positions will probably be The obligations related to finance leases, net central administration costs) are excluded.
sustained. Once considered to be probable, of finance charges in respect of future periods, Net realisable value is determined as estimated
management reviews each material tax are included, as appropriate, under current selling price less all estimated costs of
benefit to assess whether a provision should liabilities or non-current liabilities. completion and costs to be incurred in
be taken against full recognition of that benefit selling and distribution.
on the basis of potential settlement through The interest element of the rental obligation
negotiation and/or litigation. All provisions are is allocated to accounting periods during the Write downs of inventory occur regularly in the
included in creditors due within one year. Any lease term to reflect a constant rate of interest general course of business and are included
recorded exposure to interest on tax liabilities on the remaining balance of the obligation for in cost of sales in the income statement.
is provided for in the tax charge. each accounting period.
Financial instruments
Share-based payments Rentals under operating leases are charged Financial instruments are recorded initially at
All plans are classified as equity settled. to the income statement on a straight-line basis. fair value. Subsequent measurement depends
The grant date fair value of employee share on the designation of the instrument, as follows:
option plans is generally calculated using the Subsidiaries, associates and joint ventures
Black-Scholes model. In accordance with IFRS A subsidiary is an entity controlled, directly or > Investments (other than interests in joint
2 Share-based Payments, the resulting cost indirectly, by AstraZeneca. Control is regarded ventures, associates and fixed deposits)
is recognised in the income statement over as the power to govern the financial and and short term investments (other than
the vesting period of the options, being operating policies of the entity so as to obtain fixed deposits) are normally designated
the period in which the services are received. benefits from its activities. as available for sale. Where the exposure
The value of the charge is adjusted to reflect to a change in fair value of such an asset
expected and actual levels of options vesting, The financial results of subsidiaries are is substantially offset by the exposure to
except where the failure to vest is as a result consolidated from the date control is a change in the fair value of derivatives,
of not meeting a market condition. obtained until the date that control ceases. the asset is generally classified as fair
value through profit or loss.
Property, plant and equipment An associate is an undertaking, not being
The Groups policy is to write off the difference a subsidiary or joint venture, over whose > Fixed deposits, comprising principally
between the cost of each item of property, commercial and financial policy decisions funds held with banks and other financial
plant and equipment and its residual value AstraZeneca has significant influence. institutions, classified as loans and
systematically over its estimated useful life. receivables, and short term borrowings
Assets under construction are not depreciated. A joint venture is an entity which is jointly and overdrafts, classified as other
controlled by AstraZeneca and one or more liabilities, are held at amortised cost.
Reviews are made annually of the estimated other venturers under a contractual arrangement.
remaining lives and residual values of > Derivatives, comprising interest rate
individual productive assets, taking account AstraZenecas share of the profits less losses swaps, foreign exchange contracts and
of commercial and technological obsolescence of joint ventures and associates is included options and embedded derivatives, are
as well as normal wear and tear. Under this in the Group income statement on the equity classified as held for trading.
policy it becomes impractical to calculate accounting basis. The holding value of
average asset lives exactly. However, the associates and joint ventures in the Group > Long term loans, where the change in fair
total lives range from approximately thirteen balance sheet is calculated by reference to value is substantially offset by the exposure
to fifty years for buildings, and three to fifteen AstraZenecas equity in the net assets of such to a change in the fair value of derivatives,
years for plant and equipment. All items of associates and joint ventures, as shown by are classified as fair value through profit or
property, plant and equipment are tested for the most recent accounts available, adjusted loss when certain criteria are met.
impairment when there are indications that where appropriate and including goodwill on
the carrying value may not be recoverable. acquisitions made since 1 January 1998.
Any impairment losses are recognised
immediately in the income statement.
Changes in the fair value of financial Accounting standards issued but

instruments are dealt with as follows: not adopted
IFRS 7 Financial Instruments: Disclosures
> For available for sale assets, exchange gains was issued in August 2005. It revises and
and losses and impairments are taken to enhances previous disclosures required by
the income statement. All other changes in IAS 32 Financial Instruments: Disclosure and
fair value are taken to reserves. On disposal Presentation and IAS 30 Disclosures in the
of the related asset, the accumulated Financial Statements of Banks and similar
changes in fair value recorded in reserves Financial Institutions. It is effective for annual
are included in the gain or loss recorded in periods beginning on or after 1 January 2007.
the income statement. The adoption of IFRS 7 will have no impact
upon the results or net assets of AstraZeneca.
> For assets and long term loans classified as
fair value through profit or loss and assets IFRS 8 Operating Segments was issued in
held for trading, all changes in fair value November 2006. It requires the identification
are recognised in the income statement. of operating segments based on internal
reporting to the chief operating decision
Contingent liabilities maker and extends the scope and disclosure
Through the normal course of business, requirements of IAS 14 Segmental Reporting.
AstraZeneca is involved in legal disputes, It is effective for annual periods beginning on
the settlement of which may involve cost or after 1 January 2009. The adoption of
to the Group. Provision is made where an IFRS 8 will have no impact upon the net
adverse outcome is probable and associated results or net assets of AstraZeneca.
costs can be estimated reliably. In other
cases, appropriate descriptions are included.
AstraZeneca is exposed to environmental

liabilities relating to its past operations,
principally in respect of soil and groundwater
remediation costs. Provisions for these costs
are made when there is a present obligation
and where it is probable that expenditure on
remedial work will be required and a reliable
estimate can be made of the cost. Provisions
are discounted where the effect is material.
Foreign currencies
Income statement items in foreign currencies
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 exchange rates prevailing at the date of the
Group balance sheet.
Exchange gains and losses on short term

foreign currency borrowings and deposits are
included within finance income and finance
expense. Exchange differences on all other
transactions, except relevant foreign currency
loans, are taken to operating profit.
In the consolidated financial statements

exchange differences arising on consolidation
of the net investments in subsidiaries, joint
ventures and associates together with those
on foreign currency loans which hedge these
net investments are taken directly to equity
via the statement of recognised income and
expense.
NOTES TO THE FINANCIAL STATEMENTS
1 OPERATING PROFIT
2006 2005 2004
$m $m $m
Group operating profit 8,216 6,502 4,547
Charges included above
for depreciation (950) (965) (921)
for amortisation (325) (272) (306)
for impairment (70) (90) (41)
Gross profit 20,916 18,594 16,233
Impairment charges in 2006 relate to the write-down of assets in respect of Toprol-XL, NXY-059 and a collaboration agreement.
Impairment charges in 2005 relate to the write-down of assets associated with capacity reviews at manufacturing sites, primarily in the UK and France.
Cost of sales in 2004 includes charges against inventories and prepayments in respect of Exanta and Iressa totalling $195m. In addition, the charge
for impairment in 2004 arose from writing off property, plant and equipment and goodwill associated with Exanta and Iressa.
2006 2005 2004

$m $m $m
Other operating income and expense
Royalties 327 165 95
Other income and expense 197 28 131
524 193 226
Other income and expense includes gains and losses arising from disposals under ongoing product and investment rationalisation programmes.
2 PROFIT ON SALE OF INTEREST IN JOINT VENTURE

2006 2005 2004
$m $m $m
Profit on sale of interest in joint venture 219
Net taxation credit 9
Total profit on sale of interest in joint venture after taxation 228
The profit on sale of interest in joint venture in 2004 relates to the disposal of the Groups interest in the Ordinary Share capital of Advanta BV.
There is a tax credit of $9m arising on costs associated with the disposal.
3 FINANCE INCOME AND EXPENSE

2006 2005 2004
$m $m $m
Finance income
Securities 29 15 10
Short term deposits 330 197 81
Expected return on post-employment defined benefit plan assets 518 448 390
Gain on disposal of interest rate swap 30
Dividend income 6
Fair value gains on interest rate swaps and investments 11
Net exchange gains 5 15
888 665 532
Finance expense
Loan interest (59) (42) (29)
Interest on short term borrowings and other financing costs (13) (19) (17)
Interest on post-employment defined benefit plan liabilities (475) (433) (398)
Fair value losses on interest rate swaps (6) (10)
Net exchange losses (14)
(561) (500) (454)
Net finance income 327 165 78
The amount of exchange losses recognised in profit or loss, other than those arising on financial instruments measured at fair value through profit
or loss in accordance with IAS 39 (see Note 15), is $14m (2005 $5m gains, 2004 $15m gains).
4 TAXATION
Taxation recognised in the income statement is as follows:
2006 2005 2004
$m $m $m
Current tax expense
Current year 2,431 1,747 1,349
Adjustment for prior years 270 112 (171)
2,701 1,859 1,178
Deferred tax expense
Origination and reversal of temporary differences (81) 165 18
Adjustment to prior years (140) (81) (35)
Total taxation expense in the income statement 2,480 1,943 1,161
Taxation has been provided at current rates on the profits earned for the periods covered by the Group Financial Statements. The 2006 and 2005
prior period adjustments relate mainly to an increase in provisions in respect of a number of transfer pricing audits and double tax relief. The 2004
prior period adjustment relates to the settlement of a number of tax issues covering several accounting periods including merger costs, divestment
provisions and fixed asset valuations. Deferred tax income statement amounts arise principally in respect of the origination and reversal of temporary
differences. The 2006 prior year deferred tax credit relates to provision to return adjustments and the recognition of previously unrecognised
deferred tax assets. 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. No deferred tax has been provided for unremitted earnings of Group companies
overseas as these are considered permanently employed in the businesses of these companies and, in the case of joint ventures and
associates, the taxes would not be material. Unremitted earnings may be liable to overseas taxes and/or UK taxation (after allowing for double
taxation relief) if they were to be distributed as dividends. The aggregate amount of temporary differences associated with investments in
subsidiaries, branches and associates, and interests in joint ventures for which deferred tax liabilities have not been recognised totalled
approximately $13,291m at 31 December 2006 (2005 $13,649m, 2004 $10,923m).
Exceptional items included in taxation:

2006 2005 2004
$m $m $m
Zoladex settlement (58)
Disposal of interest in joint venture (9)
Total tax credit on exceptional items (67)
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
4 TAXATION CONTINUED
The tax credit on exceptional items in 2004 includes an amount of $58m arising from an agreement with the US tax authority to allow $170m
of the Zoladex settlement (originally accrued in 2002 and paid in 2003) to be a deductible item for tax purposes. There is also a tax credit of
$9m arising on costs associated with the disposal of Advanta BV.
Consolidated statement of recognised income and expense

The current tax credit on consolidation exchange adjustments taken to reserves amounted to $62m in 2006 (2005 charge of $46m, 2004 credit
of $22m). The current tax credit on share-based payments amounted to $36m (2005 $nil, 2004 $nil). The deferred tax credit taken to reserves
amounted to $39m in 2006 (2005 $21m, 2004 $37m).
The consolidated statement of recognised income and expense also includes a tax credit of $357m in 2004, arising from agreement with the
tax authorities to allow a proportion of certain foreign exchange losses arising on intra-group balances in 2000.
Factors affecting future tax charges

As a group involved in 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 and tax rates imposed. A number of material items currently under
audit and negotiation are set out in detail in Note 26.
Tax reconciliation to UK statutory rate

The table shown below reconciles the UK statutory tax charge to the Groups total tax charge.
2006 2005 2004
$m $m $m
Notional taxation charge at UK corporation tax rate of 30% (30% for 2005, 30% for 2004) 2,563 2,000 1,453
Differences in effective overseas tax rates (156) (128) 20
Unrecognised deferred tax asset (6) 25 25
Items not deductible for tax purposes 58 117 73
Items not chargeable for tax purposes (109) (102) (71)
Adjustments in respect of prior periods 130 31 (206)
Exceptional items (133)
Total tax charge for the year 2,480 1,943 1,161
Deferred taxation
2006 2005 2004
$m $m $m
Deferred taxation asset/(liability) movement
At beginning of year 5 (110) (230)
Income statement 221 (84) 17
Statement of recognised income and expense 39 21 37
Acquisition of subsidiary undertakings* (454)
Disposal of subsidiary undertakings 4
Exchange (150) 178 62
At end of year (339) 5 (110)
Asset 1,220 1,117 1,218
Liability (1,559) (1,112) (1,328)
* The deferred tax liability of $454m relates to the acquisitions of KuDOS Pharmaceuticals Limited and Cambridge Antibody Technology Group plc (Note 22). During the course of
the year the HumiraTM royalty stream was sold resulting in a release of the deferred tax liability of $198m recognised on acquisition.
4 TAXATION CONTINUED
The amounts of deferred taxation accounted for in the Group balance sheet, before netting off of balances within countries, comprised the
following deferred tax liabilities and assets:
2006 2005 2004
$m $m $m
Deferred tax liabilities
Property, plant and equipment and intangible assets 1,321 1,042 1,383
Deferred capital gains 99 94 106
Interest accruals 10 28
Untaxed reserves* 881 492 360
Other 55 52 94
2,356 1,690 1,971
Deferred tax assets
Inter-company inventory transfers 853 821 875
Property, plant and equipment and intangible assets 39 119 44
Accrued expenses 323 200 384
Pension and post-retirement benefits 604 461 475
Share schemes 113 82 42
Other 85 12 41
2,017 1,695 1,861
Net deferred tax asset/(liability) (339) 5 (110)
* Untaxed reserves relate to taxable profits where the tax liability is deferred to later periods.
Unrecognised deferred tax assets

Deferred tax assets of $103m have not been recognised in respect of deductible temporary differences (2005 $87m, 2004 $62m) because it is
not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom.
5 EARNINGS PER $0.25 ORDINARY SHARE

2006 2005 2004
Profit for the financial year before exceptional items ($m) 6,043 4,706 3,378
Exceptional items after tax ($m) 286
Profit for the financial year ($m) 6,043 4,706 3,664
Earnings per Ordinary Share before exceptional items $3.86 $2.91 $2.01
Earnings per Ordinary Share on exceptional items $0.17
Earnings per Ordinary Share $3.86 $2.91 $2.18
Diluted earnings per Ordinary Share before exceptional items $3.85 $2.91 $2.01
Diluted earnings per Ordinary Share on exceptional items $0.17
Diluted earnings per Ordinary Share $3.85 $2.91 $2.18
Weighted average number of Ordinary Shares in issue for basic earnings (millions) 1,564 1,617 1,673
Dilutive impact of share options outstanding (millions) 6 1 2
Diluted weighted average number of Ordinary Shares in issue (millions) 1,570 1,618 1,675
There are no options, warrants or rights outstanding in respect of unissued shares except for employee share option schemes. The number of
options outstanding and the weighted average exercise price of these options is shown in Note 25. The earnings figures used in the calculations
above are unchanged for diluted earnings per Ordinary Share. Earnings per Ordinary Share before exceptional items in 2004 exclude the effect
of two items the profit after tax on the sale of an interest in a joint venture of $228m (see Note 2) and tax relief of $58m in respect of an agreement
with the US tax authority to allow a part of the Zoladex settlement recognised in 2002 as deductible (see Note 4).
6 SEGMENT INFORMATION
The Groups activities are in one business segment, pharmaceuticals. There are no other significant classes of business, either singularly or
in aggregate.
Geographic areas
The tables below show information by geographic area and, for sales and property, plant and equipment, material countries. The figures show
the sales, operating profit and profit before tax made by companies located in that area/country, together with segment assets, segment assets
acquired, net operating assets and property, plant and equipment owned by the same companies; export sales and the related profit are included
in the area/country from which those sales were made.
Sales
2006 2005 2004
$m $m $m
UK
External 1,686 1,388 1,108
Intra-Group 6,123 5,037 4,927
7,809 6,425 6,035
Continental Europe
Belgium 344 360 325
France 1,641 1,630 1,569
Germany 1,113 1,180 961
Italy 1,075 986 922
Spain 723 713 709
Sweden 843 767 723
Others 1,929 1,779 1,624
Intra-Group 4,314 3,852 3,545
11,982 11,267 10,378
The Americas
Canada 1,031 976 876
US 12,381 10,735 9,604
North America 13,412 11,711 10,480
Others 673 523 420
Intra-Group 351 413 484
14,436 12,647 11,384
Asia, Africa & Australasia
Australia 481 502 451
Japan 1,433 1,453 1,364
China 224 198 157
Others 898 760 613
Intra-Group 49 41 39
3,085 2,954 2,624
Continuing operations 37,312 33,293 30,421
Intra-Group eliminations (10,837) (9,343) (8,995)
26,475 23,950 21,426
Export sales from the UK totalled $7,012m for the year ended 31 December 2006 (2005 $5,716m, 2004 $5,489m). In the US, sales to three
wholesalers accounted for approximately 80% of US sales (2005 three wholesalers accounted for approximately 80%, 2004 three wholesalers
for 80%).
Intra-Group pricing is determined on an arms length basis.

6 SEGMENT INFORMATION CONTINUED

Operating profit Profit before tax
2006 2005 2004 2006 2005 2004
Profit from $m $m $m $m $m $m
UK 1,852 1,526 920 1,936 1,560 1,000
Continental Europe 3,648 3,073 2,244 3,700 3,095 2,481
The Americas 2,437 1,628 1,103 2,627 1,743 1,086
Asia, Africa & Australasia 279 275 280 280 269 277
Continuing operations 8,216 6,502 4,547 8,543 6,667 4,844
Total assets
2006 2005 2004
$m $m $m
UK 13,346 10,694 9,517
Continental Europe 6,937 6,525 8,303
The Americas 6,334 5,686 6,045
Asia, Africa & Australasia 1,950 1,752 1,667
Income tax receivable 1,365 183 120
Assets acquired* Net operating assets**

2006 2005 2004 2006 2005 2004
$m $m $m $m $m $m
UK 2,282 366 437 4,977 3,761 4,222
Continental Europe 440 380 453 4,820 4,703 6,046
The Americas 292 224 347 2,081 1,930 2,234
Asia, Africa & Australasia 50 38 51 1,270 1,228 1,293
Continuing operations 3,064 1,008 1,288 13,148 11,622 13,795
* Included in assets acquired are those assets that are expected to be used during more than one period (property, plant and equipment and intangible assets).
**Net operating assets exclude short term investments, cash, short term borrowings, loans, retirement benefit obligations and non-operating receivables and payables. Net
operating assets for prior years have been adjusted to exclude retirement benefit obligations and taxation.
Property, plant and equipment

2006 2005 2004
$m $m $m
UK 2,508 2,276 2,655
Sweden 2,104 1,897 2,359
US 1,172 1,176 1,152
Rest of World 1,669 1,636 1,931
Geographic markets
The table below shows turnover in each geographic market in which customers are located.
2006 2005 2004

$m $m $m
UK 850 757 590
The Americas 14,213 12,327 10,971
7 PROPERTY, PLANT AND EQUIPMENT

Land and Plant and Assets in course Total property, plant
buildings equipment of construction and equipment
$m $m $m $m
Cost
At 1 January 2004 4,128 7,981 948 13,057
Capital expenditure 17 205 851 1,073
Transfer of assets into use 430 641 (1,071)
Disposals and other movements (55) (335) (6) (396)
Exchange adjustments 281 590 45 916
At 31 December 2004 4,801 9,082 767 14,650
Capital expenditure 13 150 669 832
Transfer of assets into use 257 594 (851)
Exchange adjustments (482) (971) (91) (1,544)
At 31 December 2005 4,490 8,035 480 13,005
Capital expenditure 23 196 577 796
Additions through business combinations 26 26
Transfer of assets into use 154 494 (648)
Exchange adjustments 450 912 57 1,419
At 31 December 2006 5,082 9,363 463 14,908
Depreciation
At 1 January 2004 1,139 4,371 5,510
Charge for year 172 749 921
Impairment 31 31
Disposals and other movements (37) (302) (339)
Exchange adjustments 86 344 430
At 31 December 2004 1,360 5,193 6,553
Impairment 90 90
Exchange adjustments (153) (588) (741)
At 31 December 2005 1,320 4,700 6,020
Impairment 6 47 53
Exchange adjustments 148 582 730
At 31 December 2006 1,656 5,799 7,455
Net book value
At 31 December 2004 3,441 3,889 767 8,097
At 31 December 2005 3,170 3,335 480 6,985
At 31 December 2006 3,426 3,564 463 7,453
Impairment charges in 2006 are attributable to the write-down of assets in relation to the termination of NXY-059 and the write-down of assets
in association with Toprol-XL, resulting from the introduction of generic competition in the US. The charges were recognised in cost of sales in
the income statement.
Impairment charges in 2005 relate to the write-down of assets associated with capacity reviews at manufacturing sites, primarily in the UK and
France. These were recognised in cost of sales in the income statement.
The impairment charge in 2004 was made to write-off assets associated with Iressa. This was recognised in cost of sales in the income statement.
7 PROPERTY, PLANT AND EQUIPMENT CONTINUED

2006 2005 2004
$m $m $m
The net book value of land and buildings comprised
Freeholds 3,421 3,164 3,434
Short leases 5 6 7
3,426 3,170 3,441
8 INTANGIBLE ASSETS
Product,
marketing and Software
distribution Other development
Goodwill rights intangibles costs Total
$m $m $m $m $m
Cost
At 1 January 2004 1,307 2,957 435 462 5,161
Additions separately acquired 42 40 74 156
Additions internally developed 59 59
Exchange and other movements 18 203 2 1 224
At 31 December 2004 1,325 3,202 477 596 5,600
Additions internally developed
Exchange adjustments (45) (442) (31) (23) (541)
At 31 December 2005 1,280 2,803 503 649 5,235
Additions through business combinations 116 1,260 281 1,657
Additions internally developed
Disposals (675) (4) (679)
Exchange adjustments 34 372 79 16 501
At 31 December 2006 1,430 4,173 910 786 7,299
Amortisation and impairment losses
At 1 January 2004 324 1,186 318 306 2,134
Amortisation for year 220 25 61 306
Impairment 10 10
Exchange adjustments 2 101 (8) 5 100
At 31 December 2004 336 1,507 335 372 2,550
Exchange adjustments (9) (288) 3 (5) (299)
At 31 December 2005 327 1,433 357 406 2,523
Disposals (14) (4) (18)
Impairment 17 17
Exchange adjustments 6 190 48 4 248
At 31 December 2006 333 1,859 443 460 3,095
Net book value
At 31 December 2004 989 1,695 142 224 3,050
At 31 December 2005 953 1,370 146 243 2,712
At 31 December 2006 1,097 2,314 467 326 4,204
8 INTANGIBLE ASSETS CONTINUED

Amortisation and impairment charges
Amortisation charges are recorded in selling, general and administrative costs in the income statement.
The impairment in 2006 was in relation to the termination of NXY-059 and a collaboration agreement. These costs were included in research and
development in the income statement.
The impairment in 2004 was in relation to the write-off of goodwill associated with Exanta. This cost was included in selling, general and
administrative costs in the income statement.
For the purposes of impairment testing of goodwill, the Group is regarded as a single, cash-generating unit. The cash-generating units recoverable
amount is based on value in use using projections of the Groups performance over ten years, a period reflecting the patent-protected lives of
our current products. The projections include assumptions about product launches, competition from rival products, pricing policy as well as
the possibility of generics entering the market. The ten year period is covered by internal budgets and forecasts. A risk-adjusted discount rate
of 12% has been applied to the projections. Tests on a similar basis are also conducted at geographic specific levels using proportionate
allocations of cross-functional assets.
Significant assets
Carrying Remaining
value amortisation
Description $m period
Goodwill in the US Goodwill 707 Not amortised
Intangible assets arising from joint venture with Merck* Product, marketing and distribution rights 330 7 and 11 years
Advance payment* Product, marketing and distribution rights 715 12 years
Intangible assets arising from the acquisition of CAT Product, marketing and distribution rights 603 9 and 14 years**
Intangible assets arising from the acquisition of KuDOS Product, marketing and distribution rights 285 Not amortised**
* These assets are associated with the restructuring of the joint venture with Merck & Co., Inc. Refer to Note 26.
** Assets in development are not amortised.
9 OTHER INVESTMENTS
2006 2005 2004
$m $m $m
Non-current investments
Loans and receivables at fair value through profit or loss 37 100 76
Equity securities available-for-sale 82 156 186
119 256 262
Current investments
Assets held for trading:
Equity securities 22 12 14
Fixed deposits 559 1,549 1,065
Derivative financial instruments 76 63 119
657 1,624 1,198
An impairment of $nil in respect of an available-for-sale security (2005 $16m, 2004 $nil) is included in research and development in the
income statement.
In 2006, the Company completed the acquisition of Cambridge Antibody Technology Group plc, which was previously held as an available-for-sale
investment.
10 INVENTORIES
2006 2005 2004
$m $m $m
Raw materials and consumables 541 491 646
Inventories in process 778 957 970
Finished goods and goods for re-sale 931 758 1,404
2,250 2,206 3,020
11 TRADE AND OTHER RECEIVABLES

2006 2005 2004
$m $m $m
Amounts due within one year
Trade receivables 4,340 3,809 3,636
Less: Amounts provided for doubtful debts (52) (45) (46)
4,288 3,764 3,590
Other receivables 462 312 340
Prepayments and accrued income 578 417 390
5,328 4,493 4,320
Amounts due after more than one year
Other receivables 44 58 78
Prepayments and accrued income 189 227 222
233 285 300
5,561 4,778 4,620
2006 2005 2004

$m $m $m
Provisions for doubtful debts
Balance at beginning of year 45 46 57
Income statement charge 4 3
Amounts utilised including exchange and other movements 3 (4) (11)
Balance at end of year 52 45 46
12 CASH AND CASH EQUIVALENTS

2006 2005 2004
$m $m $m
Cash at bank and in hand 684 545 1,055
Short term deposits 6,419 4,434 3,012
Cash and cash equivalents 7,103 4,979 4,067
Unsecured bank overdrafts (114) (84) (140)
Cash and cash equivalents in the cash flow statement 6,989 4,895 3,927
The Groups insurance subsidiaries hold cash and short term investments totalling $320m (2005 $300m, 2004 $326m), of which $220m
(2005 $176m, 2004 $207m) is required to meet insurance solvency requirements and which, as a result, is not readily available for the general
purposes of the Group.
13 INTEREST BEARING LOANS AND BORROWINGS

Repayment 2006 2005 2004
dates $m $m $m
Current liabilities
Bank overdrafts on demand 114 84 140
Other loans on demand 22 6 2
136 90 142
7% Guaranteed debentures 2023 331 341 338
5.4% Callable bond 2014 756 770 789
1,087 1,111 1,127
All loans and borrowings above are unsecured.

14 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Groups principal financial instruments, other than derivatives, comprise bank overdrafts, short term borrowings, loans, current and non-current
investments, cash and short term deposits. The main purpose of these financial instruments is to manage the Groups funding and liquidity
requirements. The Group has other financial instruments 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 interest rate, liquidity, foreign currency and credit. Each of these are
managed in accordance with Board-approved policies. These policies are set out below.
The Group uses foreign currency forwards and options, interest rate swaps and forward rate agreements for the purpose of hedging its foreign
currency and interest rate risks. All hedging referred to is operational hedging and not hedging from an accounting perspective; hedge accounting
as defined in IAS 39 has not been adopted. 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.
Interest rate risk

The Groups policy is to match the interest rate exposure on the Groups gross debt balance with that arising on the surplus cash position using
interest rate swaps. The net effect of this is to exchange the fixed rate interest paid on the two outstanding bonds (fair value of $1,087m) into
floating rate interest referenced to six month US dollar LIBOR. The majority of the Groups cash balance is invested in short dated commercial
paper or held with third party fund managers who return a target yield referenced to seven day US dollar LIBID. In addition to interest rate swaps,
the Group uses forward rate agreements to manage any short term timing difference between the swapped debt interest expense and cash
interest income.
Liquidity risk
In addition to cash balances (comprising fixed deposits, cash and cash equivalents less overdrafts and short term borrowings) of $7,526m,
the Group has an SEC-registered shelf debt programme of $4bn, of which $750m has been utilised through a loan note maturing in 2014.
The Board reviews the Groups ongoing liquidity risks annually as part of the strategic planning process.
Foreign currency risk

Translational exposure
The US dollar is the Groups most significant currency. As a consequence, the Group results are presented in US dollars and exposures are
managed against US dollars accordingly. Approximately 53% of Group external sales in 2006 were denominated in currencies other than the
US dollar, while a significant proportion of manufacturing and R&D costs were denominated in sterling and Swedish krona. In addition, surplus
cash generated by business units is 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 for the currencies of Swedish krona, sterling, euro, Australian dollar,
Canadian dollar and Japanese yen. 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, and accordingly we will hedge only if there is a significant change or
anticipated change in our risk position. Strict monitoring of currency exposures and correlations is undertaken on a regular basis and hedging
is subject to pre-execution approval.
Transactional exposure
The transaction exposures that arise from non-local currency sales and purchases by subsidiaries are, where practicable, fully hedged using
forward foreign exchange contracts.
It is our policy not to engage in any speculative transactions nor to hedge currency translation exposures arising from the consolidation of non-
US dollar subsidiaries.
Credit risk
Exposure to financial counterparty credit risk is controlled by the treasury team centrally in establishing and monitoring counterparty limits.
Centrally managed funds are invested entirely with counterparties whose credit rating is A or better. External fund managers who manage
$5,033m of the Groups cash are rated AAA by Standard & Poors. There were no other significant concentrations of credit risk at the balance
sheet date. All financial instruments are transacted with commercial banks, in line with standard market practice and are not backed with cash
collateral. Trade receivable exposures are managed locally in the operating units where they arise. 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 maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial instruments
recorded in the balance sheet.
15 FINANCIAL INSTRUMENTS
Interest rate risk
The interest-earning assets and interest-bearing liabilities of the Group, along with their effective interest rates and periods in which they reprice,
as at 31 December 2006 and at 31 December 2005 are set out below. In the case of non-current financial liabilities, the classification includes
the impact of interest rate swaps which convert the debt to floating rate.
2006 2005
Effective Less than Effective Less than
interest rate Total one year interest rate Total one year
% $m $m % $m $m
Financial liabilities
Interest bearing loans and borrowings
Current (see below) 136 136 (see below) 90 90
Non-current 5.69% 1,087 1,087 4.91% 1,111 1,111
1,223 1,223 1,201 1,201
Financial assets
Fixed deposits 5.20% 559 559 4.46% 1,549 1,549
Cash and cash equivalents 4.92% 7,103 7,103 3.92% 4,979 4,979
7,662 7,662 6,528 6,528
The current interest bearing loans and borrowings comprise short term bank borrowings and overdrafts, bearing interest at rates set by reference
to applicable local rates.
The financial assets principally comprise cash on overnight deposit or held directly with third party fund managers and short term investments
with an average maturity of 30 days. The main benchmark rates for US dollar financial assets are the relevant LIBID rates. In addition to the
financial assets above, there are $217m of other current and non-current asset investments on which no interest is received.
After taking into account the effect of the interest rate swaps, the financial assets and liabilities above all reprice or mature within one year and
as such are exposed to changes in floating rates of interest.
Foreign currency risk

Transactional exposure
100% of the Groups major transactional currency exposures on working capital balances, which typically extend for up to three months, are
hedged, where practicable, using forward foreign exchange contracts. As a result, as at 31 December 2006 and 31 December 2005, there
were no material monetary assets or liabilities in currencies other than the functional currencies of the Group companies concerned, having
taken into account the effect of forward exchange currency contracts that have been used to match foreign currency exposures.
Translational exposure
During the year there was no significant change in our risk position in relation to the cash flows of the Groups principal six currency exposures
(sterling, Swedish kroner, euros, Australian dollar, Japanese yen and Canadian dollar). As such, no hedges were transacted during the year,
and no hedges were outstanding at 31 December 2006.
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. Changes to the value of the financial instruments are normally offset by our underlying transactions or assets and liabilities.
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 2006,
with all other variables held constant. Because all our debt was hedged effectively to floating rates in 2006, changes in interest rates will not
change the carrying value of debt after interest rate swaps. Based on the composition of our long term debt portfolio as at 31 December 2006,
a 1% increase in interest rates would result in an additional $10m in interest expense being incurred per year. The exchange rate sensitivity
analysis assumes an instantaneous 10% change in foreign currency exchange rates from their levels at 31 December 2006, 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.
15 FINANCIAL INSTRUMENTS CONTINUED

31 December 2006
+1% -1% +10% -10%
$m $m $m $m $m
Cash and fixed deposits 7,662 (81) 81
Long term debt, net of interest rate swaps (1,060)
(178) 178
31 December 2005
+1% -1% +10% -10%
$m $m $m $m $m
(91) 91
31 December 2004
+1% -1% +10% -10%
$m $m $m $m $m
Foreign exchange options 32 (24) 185
(137) 298

Fair values of financial assets and financial liabilities
Set out below is a comparison by category of carrying values and fair values of all the Groups financial assets and financial liabilities as at 31
December 2006, 31 December 2005 and 31 December 2004. None of the financial assets or financial liabilities have been reclassified during
the year. Carrying values are equivalent to fair values for all years presented.
Carrying value and fair value

2006 2005 2004
$m $m $m
Financial assets at fair value through profit or loss
Loans and receivables
Abgenix loan notes 37 100 76
Classified as held for trading
Equity securities and fixed deposits (current) 581 1,561 1,079
Cash and cash equivalents 7,103 4,979 4,067
7,721 6,640 5,222
Available-for-sale financial assets
Other investments (non-current) 82 156 186
Financial liabilities at fair value through profit or loss
Designated under the fair value option
7% Unsecured guaranteed debentures (331) (341) (338)
5.4% Unsecured callable bond (756) (770) (789)
Classified as held for trading
Bank overdrafts (114) (84) (140)
Other loans (22) (6) (2)
(1,223) (1,201) (1,269)
Derivative financial instruments held to manage the interest rate and currency profile
Cross-currency swaps and interest rate swaps 27 49 71
Derivative financial instruments held or issued to hedge
the currency exposure on existing transactions
Forward foreign exchange contracts 45 10 10
Derivative financial instruments held or issued to hedge
the currency exposure on expected future transactions
Forward foreign exchange contracts
Foreign currency option contracts 32
Other derivatives 4 4 6
2006 2005 2004

$m $m $m
Total fair value gains/(losses)
Recognised in the income statement (5) (23) (6)
Recognised in equity (20) (5) 48
One available-for-sale investment was deemed to be impaired during 2005. Consequently, an impairment loss of $16m was recognised in the
income statement during 2005. No similar impairments have occurred in 2006.
Credit risk reduces the fair value of the 5.4% callable bond by $1m and the 7% guaranteed debenture by $2m. Changes in credit risk had no
material effect on the fair value of any other financial liabilities. The change in fair value attributable to changes in credit risk is calculated as the
change in fair value not attributable to market risk.
With respect to the repayment amounts at maturity of the financial liabilities at fair value through profit or loss, the 7% guaranteed debenture was
$287m (2005 $287m), the 5.4% callable bond was $750m (2005 $750m), the bank overdrafts were $114m (2005 $84m) and the other loans
were $22m (2005 $6m).

The methods and assumptions used to estimate the fair values of financial instruments are as follows:
> Current investments the fair value of listed investments is based on year end quoted market prices. For unlisted investments, carrying values
approximate fair value.
> Non-current investments (excluding equity investments in joint ventures and associates) the fair value of listed investments is based on year
end quoted market prices. For unlisted investments, carrying values approximate fair value.
> Loans the fair value of 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 frequency of resets; the fair value of remaining debt is estimated using appropriate
zero coupon valuation techniques based on rates current at year end.
> Forward foreign exchange contracts the Group has forward foreign exchange contracts to sell currency for the purpose of hedging non-dollar
commercial transaction exposures which existed at the date of the balance sheet. The majority of the contracts for existing transactions had
a maturity of six months or less from year end. The fair value of forward foreign exchange contracts is based on market forward foreign exchange
rates at year end.
> Foreign currency option contracts the Group may use foreign currency option contracts to hedge anticipated, but not firmly committed,
non-dollar commercial transactions. The fair value of option contracts is estimated using Black-Scholes valuation techniques.
> Interest rate swaps the Group uses interest rate swaps to hedge the Groups exposure to fluctuations in interest rates, in accordance with
a formal risk management strategy. The fair value is estimated using appropriate zero coupon curve valuation techniques based on rates
current at year end.
16 TRADE AND OTHER PAYABLES

2006 2005 2004
$m $m $m
Current liabilities
Trade payables 3,482 3,161 3,125
Value added and payroll taxes and social security 280 263 282
Other payables 1,367 1,143 1,172
Accruals 1,205 899 899
6,334 5,466 5,478
Other payables 254 72 86
Included in other payables are amounts totalling $241m (2005 $180m, 2004 $138m) to meet insurance obligations of the Groups
insurance subsidiaries.
17 PROVISIONS FOR LIABILITIES AND CHARGES

Total
$m
At 1 January 2004 395
Income statement 15
Net amounts paid or becoming current (123)
Other movements, including exchange (21)
At 31 December 2004 266
Income statement 102
Other movements, including exchange (20)
Income statement 87
Other movements, including exchange 28
Provisions comprise environmental, litigation and other provisions. Further details of environmental provisions are given in Note 26.
No provision has been released or applied for any purpose other than that for which it was established.
18 STATEMENT OF CHANGES IN EQUITY

2006 2005 2004
$m $m $m
Total equity at 1 January 13,691 14,497 13,175
Net profit for the period 6,063 4,724 3,683
Dividends (Note 21) (2,217) (1,676) (1,408)
Transfers from minority interests to payables (6) (6) (1)
Issues of AstraZeneca PLC Ordinary Shares 985 143 102
Repurchase of AstraZeneca PLC Ordinary Shares (4,147) (3,001) (2,212)
Share based payments 129 143 163
Treasury shares (13) (11) (17)
Foreign exchange and other adjustments on consolidation 922 (1,052) 744
Available for sale (losses)/gains (20) (10) 31
Actuarial loss (108) (35) (179)
Tax on items taken directly to reserves 137 (25) 416
Net movement in equity 1,725 (806) 1,322
Total equity at 31 December 15,416 13,691 14,497
Included in foreign exchange adjustments on consolidation, is a tax credit in 2004 of $357m in respect of foreign exchange loss deductions
arising in 2000 (see Note 4).
19 RESERVES
Share Capital
premium redemption Merger Other Retained
account reserve reserve reserves earnings Total
$m $m $m $m $m $m
At 1 January 2004 449 23 433 1,403 10,355 12,663
Profit retained for the year 3,664 3,664
Dividends (1,408) (1,408)
Share premiums 101 101
Repurchase of shares 13 (2,212) (2,199)
Share based payments 163 163
Treasury shares (17) (17)
Actuarial loss (177) (177)
Fair value adjustments 31 31
Exchange adjustments:
Goodwill (19) 19
Foreign exchange and other adjustments on consolidation 757 757
Tax on items taken directly to reserves 415 415
Net movements 101 13 (19) 1,235 1,330
At 31 December 2004 550 36 433 1,384 11,590 13,993
Dividends (1,676) (1,676)
Fair value adjustments (10) (10)
Goodwill (39) 39
Foreign exchange and other adjustments on consolidation (1,038) (1,038)
Tax on items taken directly to reserves (23) (23)
Net movements 142 17 (39) (911) (791)
At 31 December 2005 692 53 433 1,345 10,679 13,202
Dividends (2,217) (2,217)
Fair value adjustments (20) (20)
Goodwill 53 (53)
Foreign exchange and other adjustments on consolidation 918 918
Tax on items taken directly to reserves 137 137
Net movements 979 18 53 669 1,719
At 31 December 2006 1,671 71 433 1,398 11,348 14,921
The cumulative translation differences at 31 December 2006 were $1,945m (2005 $1,080m, 2004 $2,079m).
19 RESERVES CONTINUED
Nature and purpose of other reserves
The other reserves arose from the cancellation of 1,255m of share premium account by the parent company in 1993 and the redenomination
of share capital ($157m) in 1999. The reserves are available for writing off goodwill arising on consolidation and, subject to guarantees given to
preserve the rights of creditors as at the date of the court order, are available for distribution.
The cumulative amount of goodwill written off directly to reserves resulting from acquisitions, net of disposals, amounted to $661m (2005 $714m,
2004 $675m) using year end rates of exchange. At 31 December 2006, 1,112,223 shares, at a cost of $40m, have been deducted from retained
earnings (2005 1,132,144 shares, at a cost of $42m, 2004 1,137,335 shares, cost $45m).
There are no significant statutory or contractual restrictions on the distribution of current profits of subsidiaries, joint ventures or associates;
undistributed profits of prior years are, in the main, permanently employed in the businesses of these companies. The undistributed income of
AstraZeneca companies overseas may 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).
20 MINORITY INTERESTS
2006 2005 2004
$m $m $m
At beginning of year 94 93 89
Minority interest share of profit 20 18 19
Actuarial gain/(losses), net of tax 3 (1)
Transfers from minority interests to payables (6) (6) (1)
Other movements including exchange 4 (14) (13)
At end of year 112 94 93
21 DIVIDENDS TO SHAREHOLDERS
2006 2005 2004
Per Per Per 2006 2005 2004
share share share $m $m $m
Final, paid March 2006 $0.920 $0.645 $0.540 1,453 1,061 914
Interim, paid September 2006 $0.490 $0.380 $0.295 764 615 494
$1.410 $1.025 $0.835 2,217 1,676 1,408
The second interim dividend, to be confirmed as final, is $1.23 per share and $1,885m in total. This will be payable on 19 March 2007.
On payment of the dividends, exchange losses of $3m (2005 losses of $41m, 2004 gains of $30m) arose. These exchange gains and losses
are included in finance income and expense.
22 ACQUISITIONS OF BUSINESS OPERATIONS

Acquisitions made during the year ended 31 December 2006 were as follows:
Cambridge Antibody Technology Group plc

On 22 August 2006, AstraZeneca completed the acquisition of 100% of the issued share capital of Cambridge Antibody Technology Group plc,
a biopharmaceutical company with a leading position in the discovery and development of human therapeutic antibodies. On 22 June 2006,
the offer to acquire the entire share capital of Cambridge Antibody Technology Group plc was declared unconditional and the financial results
of Cambridge Antibody Technology Group plc were consolidated into the Companys results from this date. Cash consideration of $1,074 million
was paid during the year. Prior to the acquisition, AstraZeneca had been engaged in a collaboration and licensing agreement with Cambridge
Antibody Technology Group plc. At 31 December 2005, AstraZeneca held a 19.2% interest in the issued share capital of Cambridge Antibody
Technology Group plc, which was recorded on the balance sheet within non-current asset investments as Equity securities available for sale.
The goodwill arising on the acquisition results from assets which cannot be recognised separately and measured reliably including early stage
pipeline products and a highly skilled workforce.
Cambridge Antibody Technology Group plc had a turnover of $nil and a loss of $58m for the year, of which $nil of turnover and $38m loss
relates to the period since acquisition.
22 ACQUISITIONS OF BUSINESS OPERATIONS CONTINUED

Subsequent to the acquisition of Cambridge Antibody Technology Group plc, the HumiraTM royalty stream acquired with the company was sold
for $661 million (see Note 8).
Fair value
Book value adjustment Fair value
$m $m $m
Non-current assets
Intangible assets HumiraTM royalty stream 675 675
Intangible assets other 21 560 581
Property, plant and equipment 24 24
Other 20 20
65 1,235 1,300
Current assets 336 336
Current liabilities (72) (72)
Deferred taxation (5) (364) (369)
Other (20) (20)
(5) (384) (389)
Total assets acquired 324 851 1,175
Goodwill 104 104
Less:
Existing non-current asset investment (163) (163)
Total consideration 324 792 1,116
Exchange (24) (24)
Settled in loan notes (18) (18)
Cash paid 324 750 1,074
The total consideration includes $15m of directly attributable costs.
KuDOS Pharmaceuticals Limited

On 31 January 2006, the Company acquired 100% of the issued share capital of KuDOS Pharmaceuticals Limited for a cash consideration
of $206 million. KuDOS Pharmaceuticals Limited is a UK biotechnology company focused on the discovery and development of oncology
therapies based on inhibition of DNA repair. The acquisition provides the Company with a widely recognised expert group and technology
platform that complements the existing capabilities of the oncology franchise, one of the Companys key therapy areas. The goodwill arising on
the acquisition results from assets which cannot be recognised separately and measured reliably and includes early stage pipeline products.
KuDOS Pharmaceuticals Limited had a turnover of $nil and a loss of $15m for the year, of which $nil of turnover and $14m of loss relates to the
period since acquisition.
Fair value
Book value adjustment Fair value
$m $m $m
Non-current assets
Intangible assets other 285 285
Property, plant and equipment 2 2
2 285 287
Current assets 3 3
Current liabilities (11) (11)
Deferred taxation (85) (85)
Total assets acquired (6) 200 194
Goodwill 12 12
Total consideration (6) 212 206
The total consideration includes $2m of directly attributable costs.

22 ACQUISITIONS OF BUSINESS OPERATIONS CONTINUED

Cash flows
Cambridge
Antibody KuDOS
Technology Pharmaceuticals
Group plc Limited Total
Total consideration 1,074 206 1,280
Cash and cash equivalents included in undertaking acquired (129) (3) (132)
Net cash consideration 945 203 1,148
23 DISPOSAL OF BUSINESS OPERATIONS

2006 2005 2004
$m $m $m
Non-current assets 2
Current assets 17
Current liabilities (7)
Book value of net assets disposed 12
Disposal costs 72
Profit on disposals 274
Less:
Cash and cash equivalents included in undertakings disposed (3)
Consideration received 355
The cash consideration in 2004 is in relation to the sale of the Groups share of the joint venture Advanta BV, which was completed on 1 September
2004 ($284m) and the disposal of the Durascan business in the first half of 2004 ($71m). The profit on disposal is stated after transaction costs
and warranty provisions.
24 POST-RETIREMENT BENEFITS
Pensions
Background
The Company and most of its subsidiaries offer retirement plans which cover the majority of employees in the Group. Many of these plans are
defined contribution, where the company contribution and resulting income statement charge is fixed at a set level or is a set percentage of
employees pay. However, several plans, mainly in the UK, the US and Sweden, are defined benefit, where benefits are based on employees
length of service and average final salary (typically averaged over 1, 3 or 5 years). The major defined benefit plans, apart from the collectively
bargained Swedish plan, have been closed to new entrants since 2000.
The UK plan, which is the single largest plan, has specific restrictions imposed on one section of the membership preventing amendments that
will prejudice the rights or interest of that section of the membership.
The major defined benefit plans are funded through legally separate fiduciary administered funds. The cash funding of the plans, which may
from time to time involve special payments, is designed, in consultation with independent qualified actuaries, to ensure that the assets together
with future contributions should be sufficient to meet future obligations. The funding is monitored rigorously by the Company and appropriate
fiduciaries specifically with reference to the Companys credit rating, market capitalisation and cash flows.
24 POST-RETIREMENT BENEFITS CONTINUED

Post-retirement scheme deficit
The assets and obligations of the defined benefit schemes operated by the Group at 31 December 2006 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
thus inherently uncertain.
Value at 31 December 2006 Value at 31 December 2005

Rest of Rest of
UK Group Total UK Group Total
$m $m $m $m $m $m
Scheme assets
Equities 2,669 1,497 4,166 2,194 1,354 3,548
Bonds 2,154 735 2,889 1,999 847 2,846
Others 1,255 261 1,516 1,121 83 1,204
Total fair value of assets 6,078 2,493 8,571 5,314 2,284 7,598
Present value of scheme obligations (7,352) (3,109) (10,461) (6,309) (2,995) (9,304)
Past service cost not yet recognised 48 48
Deficit in the scheme as recognised in the balance sheet (1,274) (568) (1,842) (995) (711) (1,706)
96.4% of the Groups defined benefit obligations at 31 December 2006 are in schemes within the UK, the US, Sweden or Germany. In these
countries the pension obligations are funded with reference to the following financing principles:
Financing Principles
> The Group has a fundamental belief in funding the benefits it promises to employees.
> The Group considers its pension arrangements in the context of its broader capital structure. In general it does not believe in committing
excessive capital for funding whilst it has better uses of capital within the business nor does it wish to generate surpluses.
> The pension funds are not part of the Groups core business. Pension funds may take rewarded risks with the investments underlying the
funding, subject to adequate controls and the expected rewards outweighing the risks.
> The Group recognises that deciding to hold certain investments may cause volatility in the funding position. The Group would not wish to
amend its contribution level for relatively small deviations from its preferred funding level, because it is expected that there will be short term
volatility, but it is prepared to react appropriately to more significant deviations.
> In the event that local regulations require an additional level of financing, the Group would consider the use of alternative methods of providing
this that do not require immediate cash funding but help mitigate exposure of the pension arrangement to the credit risk of the Group.
These principles are appropriate to AstraZenecas business at the present date; should circumstances change they may require review.
The Company has developed a funding framework to implement these principles. This determines the cash contributions payable to the pension
funds, but does not affect the IAS 19 liabilities. To reduce the risk of committing excess capital to pension funds, liabilities are based on the expected
return on the actual pension assets, rather than a corporate bond yield. At present this puts a lower value on the liabilities than IAS 19 and so
the Companys expectation is to continue to run an IAS 19 pension deficit for the foreseeable future.
UK
With regard to the Groups UK defined benefit fund, the above principles are modified in light of the new UK regulatory requirements and resulting
discussions with the pension fund Trustee. The most recent full actuarial valuation was carried out at 31 March 2006 and results have not been
formally adopted at the time of this report. However, following discussions the Company and Trustee have agreed in substance the funding
principles, underlying assumptions and resulting recovery plan, subject to finalisation of documentation.
Under the proposed approach, cash contributions will be paid to the fund to target a level of assets in excess of the current expected cost of
providing benefits. The Company will make additional contributions to an escrow account which will be held outside of the pension fund.
The escrow account assets will be payable to the fund in agreed circumstances, for example in the event of the Company and Trustee agreeing
a change to the current long term investment strategy.
The market value of the funds assets at the valuation date was 3,070m ($5,363m equivalent), representing 95% of the funds actuarially assessed
liabilities on the proposed basis. The shortfall will be funded over nine years through payments of about 72m pa which include the regular
contributions required to meet the benefits accruing of about 53m. In addition to this, contributions of around 17m pa will be payable to the
escrow account which is outside of the pension fund.

Under the proposal, the key assumptions as at 31 March 2006 for contributions to both the fund and escrow account would be as follows:
Long-term UK price inflation set at 2.8% pa, salary increases at 4.1% pa, pension increases at 2.8% pa and investment returns at 6.8% pa
(pre-retirement) and 5.1% pa (post-retirement).
Rest of Group
The IAS 19 positions as at 31 December 2006 are shown below for each of the other countries with large defined benefit plans. These plans
account for 88.7% of the Groups defined benefit obligations outside of the UK. In practice, these plans are funded in line with the financing
principles and contributions paid as prescribed by the funding framework.
> The US defined benefits programme was actuarially revalued at 31 December 2006, when plan obligations were $1,629m and plan assets
were $1,496m. This includes obligations in respect of the non-qualified plan which is largely unfunded.
> The Swedish defined benefits programme was actuarially revalued at 31 December 2006, when plan obligations were estimated to amount
to $880m and plan assets were $682m.
> The German defined benefits programme was actuarially revalued at 31 December 2006, when plan obligations amounted to $223m and
plan assets were $31m.The plan is largely unfunded but work is currently underway to put in place a funding strategy during 2007.
> The Japanese defined benefits programme was actuarially revalued at 31 March 2006, when plan obligations amounted to $278m and plan
assets were $175m. At that point, the majority of the Japanese plan obligations were converted to defined contribution assets following
employee agreement to revise the Japanese benefits programmes. Defined benefit liabilities remain for a closed pensioner population and
amounted to $26m at 31 December 2006 backed by plan assets of $26m.
Post-retirement benefits other than pensions

In the US, and to a lesser extent in certain other countries, AstraZenecas employment practices include the provision of healthcare and life
insurance benefits for retired employees. As at 31 December 2006, some 3,659 retired employees and covered dependants currently benefit
from those provisions and some 13,794 current employees will be eligible on their retirement. AstraZeneca 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.
The cost of post-retirement benefits other than pensions for the Group in 2006 was $12m (2005 $12m, 2004 $11m). Plan assets were $260m and
plan obligations were $335m at 31 December 2006. These benefit plans have been included in the disclosure of post-retirement benefits under IAS 19.
Financial assumptions
Qualified independent actuaries have updated the actuarial valuations of the major defined benefit schemes operated by the Group to 31 December
2006. The assumptions used by the actuaries are chosen from a range of possible actuarial assumptions which, due to the long-term nature of
the scheme, may not necessarily be borne out in practice. These assumptions were as follows:
2006 2005
Rest of Rest of
UK Group UK Group
Inflation assumption 3.0% 2.2% 2.7% 2.1%
Rate of increase in salaries 4.3% 3.8% 3.9% 3.5%
Rate of increase in pensions in payment 3.0% 0.7% 2.7% 0.7%
Discount rate 5.1% 5.2% 4.9% 4.6%
Long term rate of return expected at 31 December
Equities 8.2% 8.3% 8.3% 7.9%
Bonds 5.1% 6.1% 5.1% 5.6%
Others 6.2% 4.6% 5.6% 4.4%
Rate of increase in medical costs 10.0% 10.0% 9.0% 10.0%
The expected return on assets is determined with reference to the expected long term level of dividends, interest and other returns derived
from the plan assets, together with realised and unrealised gains or losses on the plan assets, less any costs of administering the plan, less any
tax payable by the plan. The expected returns are based on long term market expectations and analysed on a regular basis to ensure any
sustained movements in underlying markets are reflected.
Demographic assumptions
The mortality assumptions are based on country specific mortality tables. These are compared to actual AstraZeneca experience and adjusted
where sufficient data is available. Additional allowance for future improvements in life expectancy is included for all major schemes where there
is credible data to support this continuing trend.

The table below illustrates life expectancy assumptions at age 65 for male members retiring in 2006 and members expected to retire in 2026.
Life expectancy assumption for a male member retiring at age 65

Country 2006 2026
UK 20.6 22.0
US 19.6 21.1
Sweden 19.2 20.0
Germany 17.7 20.5
Sensitivity of medical cost assumption

Effect of change in medical cost assumption increase/(decrease)
2006 2005
+1% 1% +1% 1%
Current service and interest cost of net periodic post-employment medical costs ($m) 3 (2) 2 (1)
Accumulated post-employment benefit obligation for medical costs ($m) 26 (24) 19 (15)
2006 2005 2004

UK
Present value of defined benefit obligations ($m) (7,352) (6,309) (6,147)
Fair value of plan assets ($m) 6,078 5,314 5,007
Deficit in the scheme ($m) (1,274) (995) (1,140)
Experience adjustments on:
Scheme assets
Amount ($m) (259) 636 138
Percentage of scheme assets 4.3 12.0 2.8
Scheme obligations
Amount ($m) 71 (539) (220)
Percentage of scheme obligations 1.0 8.5 3.6
Rest of Group
Deficit in the scheme ($m) (616) (711) (621)
Scheme assets
Amount ($m) 55 63 14
Scheme obligations
Amount ($m) 25 (195) (111)
Total
Deficit in the scheme ($m) (1,890) (1,706) (1,761)
Scheme assets
Amount ($m) (204) 699 152
Scheme obligations
Amount ($m) 96 (734) (331)

The defined benefit obligation arises from the following plans:
2006 2005
UK Rest of Group UK Rest of Group
$m $m $m $m
Funded (7,321) (2,650) (6,282) (2,624)
Unfunded (31) (459) (27) (371)
Total (7,352) (3,109) (6,309) (2,995)
Income statement disclosures

The amounts that have been charged to the consolidated income statement and consolidated statement of recognised income and expense,
in respect of defined benefit schemes for the year ended 31 December 2006 are set out below:
2006 2005
UK Rest of Group Total UK Rest of Group Total
$m $m $m $m $m $m
Operating profit
Current service cost (153) (139) (292) (148) (120) (268)
Past service cost (18) (10) (28)
Finance expense
Expected return on post-retirement scheme assets 364 154 518 296 152 448
Interest on post-retirement scheme obligations (330) (145) (475) (301) (132) (433)
Net return 34 9 43 (5) 20 15
Charge before taxation (137) (140) (277) (153) (100) (253)
Consolidated statement of
recognised income and expense
Difference between the actual return and the expected
return on the post-retirement schemes assets (259) 55 (204) 636 63 699
Experience losses arising on
the post-retirement schemes obligations 55 (9) 46 (26) 47 21
Changes in assumptions underlying the present
value of the post-retirement schemes obligations 16 34 50 (513) (242) (755)
Actuarial gain/(loss) recognised (188) 80 (108) 97 (132) (35)
The Japanese defined benefits programme was settled on 31 March 2006. Upon settlement the deficit in the scheme of $92m was transferred
to current liabilities. The gain arising on settlement, of $12m, has been included in other income.
Movement in post-retirement scheme obligations
2006 2005
$m $m $m $m $m $m
Present value of obligation in schemes
at beginning of year (6,309) (2,995) (9,304) (6,147) (2,811) (8,958)
Current service cost (153) (139) (292) (148) (120) (268)
Past service cost (18) (10) (28)
Participant contributions (27) (6) (33) (26) (6) (32)
Benefits paid 296 97 393 228 92 320
Other finance expense (330) (145) (475) (301) (132) (433)
Expenses 9 9
Actuarial gain/(loss) 71 25 96 (539) (195) (734)
Amendments (48) (48)
Settlements 290 290
Exchange (891) (178) (1,069) 624 177 801
Present value of obligations in schemes at end of year (7,352) (3,109) (10,461) (6,309) (2,995) (9,304)
It is expected that the contributions to the schemes during the year ended 31 December 2007 will be $266m.

Fair value of scheme assets
2006 2005
$m $m $m $m $m $m
At beginning of year 5,314 2,284 7,598 5,007 2,190 7,197
Expected return on plan assets 364 154 518 296 152 448
Expenses (9) (9)
Actuarial (loss)/gain (259) 55 (204) 636 63 699
Exchange 760 126 886 (523) (113) (636)
Contributions 204 157 361 126 84 210
Benefits paid (296) (97) (393) (228) (92) (320)
Settlements (186) (186)
At end of year 6,078 2,493 8,571 5,314 2,284 7,598
The cumulative amount of actuarial losses before deferred tax recognised in the statement of recognised income and expense is $522m (2005 $414m).
Costs in respect of defined contribution schemes during the year were $62m (2005 $71m, 2004 $106m).
Reserves
Included within the retained earnings reserve is the actuarial reserve. Movements on this reserve are as follows:
2006 2005 2004
$m $m $m
At 1 January (328) (303) (167)
Actuarial losses (108) (35) (179)
Deferred tax 35 10 43
At 31 December (401) (328) (303)
25 EMPLOYEE COSTS AND SHARE OPTION PLANS FOR EMPLOYEES

Employee costs
The average number of people employed by the Group is set out in the table below. In accordance with the Companies Act 1985, this includes
part-time employees:
Employees 2006 2005 2004

Average number of people employed by the Group in:
UK 11,800 11,600 11,500
The Americas 18,200 17,900 18,500
The number of people employed by the Group at the end of 2006 was 66,800 (2005 65,300, 2004 64,200).
The costs incurred during the year in respect of these employees were:
2006 2005 2004
$m $m $m
Salaries 4,580 4,270 4,078
Social security costs 832 670 644
Pension costs 390 339 360
Other employment costs 553 482 370
6,355 5,761 5,452
Severance costs of $66m are not included above (2005 $29m, 2004 $nil).
The Directors believe that, together with the basic salary system, the Groups 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 Groups current UK, Swedish and US schemes are described below; other arrangements apply elsewhere.
25 EMPLOYEE COSTS AND SHARE OPTION PLANS FOR EMPLOYEES CONTINUED

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 partly in the form of Ordinary Shares in the Company (under the Inland Revenue-approved AstraZeneca All-Employee Share
Plan and up to a maximum annual value of 3,000) and partly in cash. A tax-efficient share retention scheme, under which employees leave their
bonus shares in trust for three to five years, forms part of the All-Employee Share Plan. The Company also offers UK employees the opportunity
to buy Partnership Shares (Ordinary Shares) under the All-Employee Share Plan. Employees may invest up to 1,500 over a 12 month accumulation
period and purchase Partnership Shares in the Company with the total proceeds at the end of the period. The purchase price for the shares is the
lower of the price at the beginning or the end of the 12 month period. A tax-efficient share retention scheme is also available in respect of Partnership
Shares. At the Companys AGM in 2002, shareholders approved the issue of new shares for the purposes of the All-Employee Share Plan.
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 Senior Executive Team (SET). The first award of shares under this plan was made in February 2006.
The AstraZeneca Savings-Related Share Option Scheme and the AstraZeneca Savings-Related Share Option Plan
UK employees may make regular monthly savings contributions over a three or five year period and may apply for options to acquire AstraZeneca
Ordinary Shares. Further details are set out below.
The AstraZeneca Share Option Plan

This is a share option plan for employees of participating AstraZeneca Group companies which was approved by shareholders at the Companys
AGM in 2000. The first grant of options occurred in August 2000. The main grant of options in 2006 under the plan was in March, with a further
smaller grant in August. The Remuneration Committee sets the policy for the Companys operation of the plan and, in accordance with the rules
of the plan, conducted a review of the plan in 2004. Further details are set out below.
The AstraZeneca Performance Share Plan

This plan was approved by shareholders in 2005 for a period of 10 years. Generally, awards can be granted at any time, but not during a close
period of the Company. The first grant of awards was made in June 2005. The main grant of awards in 2006 under the plan was in March, at the
same time as options were granted under the AstraZeneca Share Option Plan. Awards granted under the plan vest after three years depending
on the performance of the Company compared with that of a selected peer group of other pharmaceutical companies. The Remuneration
Committee has responsibility for agreeing any awards under the plan and for setting the policy for the way in which the plan should be operated,
including agreeing performance targets and which employees should be invited to participate. A fuller description of this plan can be found on
page 86 in the Directors Remuneration Report.
Sweden
In Sweden an all-employee performance bonus plan is in operation, which rewards strong individual performance. Bonuses are paid partly in
the form of Ordinary Shares in the Company and partly in cash. Existing Ordinary Shares purchased in the market are used to pay bonuses
awarded under the plan. The AstraZeneca Executive Annual Bonus Scheme and the AstraZeneca Share Option Plan both operate in respect
of relevant AstraZeneca employees in Sweden.
US
In the US, there are two all-employee performance bonus plans in operation, which reward strong individual performance. Bonuses are paid in
cash. There are also two senior staff incentive schemes, under which approximately 140 participants are awarded either AstraZeneca ADSs or
stock appreciation rights related to AstraZeneca ADSs. AstraZeneca ADSs necessary to satisfy the awards are purchased in the market. The
AstraZeneca Share Option Plan operates in respect of relevant AstraZeneca employees in the US.
Share option plans

At 31 December 2006, there were options outstanding under the Zeneca 1994 Executive Share Option Scheme, the AstraZeneca Savings-
Related Share Option Scheme, the AstraZeneca Savings-Related Share Option Plan and the AstraZeneca Share Option Plan.
(1) Summary of the AstraZeneca Share Option Plan

Eligibility
Any AstraZeneca employee may be recommended from time to time for the grant of an option. The Remuneration Committee sets the policy
for the Companys operation of the plan including as regards which employees will be eligible to participate.

Grant of options
Options may be granted at any time other than during a close period. The grant of options is supervised by the Remuneration Committee,
which is comprised wholly of Non-Executive Directors. No payment is required for the grant of an option. Options are not transferable. Options
may be granted over AstraZeneca Ordinary Shares or ADSs.
Acquisition price
The price per Ordinary Share payable upon the exercise of an option will not be less than an amount equal to the average of the middle-market
closing price for an Ordinary Share or ADS of the Company on the London or New York Stock Exchange on the three consecutive dealing days
immediately before the date of grant (or as otherwise agreed with HM Revenue & Customs). Where the option is an option to subscribe, the
price payable upon exercise cannot be less than the nominal value of an Ordinary Share of the Company.
Exercise of options
An option will normally be exercisable between three and 10 years following its grant provided any relevant performance condition has been
satisfied. Options may be satisfied by the issue of new Ordinary Shares or by existing Ordinary Shares purchased in the market. The Remuneration
Committee sets the policy for the Companys operation of the plan including as regards whether any performance target(s) will apply to the
grant and/or exercise of each eligible employees option. Options normally lapse on cessation of employment. Exercise is, however, permitted
for a limited period following cessation of employment either for reasons of injury or disability, redundancy or retirement, or at the discretion of
the Remuneration Committee, or on an amalgamation, take-over or winding-up of the Company.
(2) Summary of the AstraZeneca Savings-Related Share Option Scheme and the AstraZeneca Savings-Related Share Option Plan
The AstraZeneca Savings-Related Share Option Scheme was approved by shareholders in 1994 for a period of 10 years. The last grant of
options under this scheme was made in September 2002. In 2003, shareholders approved the AstraZeneca Savings-Related Share Option
Plan for a period of 10 years. The first grant of options under this plan was made in September 2003. The following sections apply to both the
AstraZeneca Savings-Related Share Option Scheme and the AstraZeneca Savings-Related Share Option Plan, which have broadly similar
rules.
Eligibility
UK-resident employees of participating AstraZeneca companies are automatically eligible to participate.
Grant of options
Invitations to apply for options may be issued within six weeks after the announcement by the Company of its results for any period and at other
times in circumstances considered to be exceptional by the Directors. No invitations may be issued later than 10 years after the approval of the
scheme by shareholders. Options may only be granted to employees who enter into HM Revenue & Customs-approved savings contracts with
the savings body nominated by the Company, under which monthly savings of a fixed amount (currently not less than 5 nor more than 250)
are made over a period of three or five years. The number of Ordinary Shares over which an option is granted will be such that the total amount
payable on its exercise will be the proceeds on maturity of the related savings contract. No payment will be required for the grant of an option.
Options are not transferable.
Individual participation
Monthly savings by an employee under all savings contracts linked to options granted under any Save As You Earn scheme may not exceed
250 or such lower amounts as may be determined by the Directors.
Acquisition price
The price per Ordinary Share payable upon the exercise of an option will not normally be less than the higher of:
(a) 90% of the arithmetical average of the middle-market quotations for an Ordinary Share on the London Stock Exchange on three
consecutive dealing days shortly before the date on which invitations to apply for options are issued (provided that no such day may fall before
the Company last announced its results for any period) or such other dealing day or days falling within the six week period for the issue of
invitations, as the Directors may decide; and
(b) the nominal value of an Ordinary Share (unless the option is expressed to relate only to existing Ordinary Shares).
Exercise of options
An option will normally be exercisable only for six months commencing on the third or fifth anniversary of the commencement of the related
savings contract. Options are satisfied by the issue of new Ordinary Shares. Options normally lapse on cessation of employment. Exercise is,
however, permitted for a limited period (irrespective of the period during which the option has been held) following cessation of employment in
certain compassionate circumstances or where an option has been held for more than three years (except on dismissal for misconduct) or on
an amalgamation, take-over or winding-up of the Company.

(3) Summary of the Zeneca 1994 Executive Share Option Scheme
The Zeneca 1994 Executive Share Option Scheme was introduced in 1994. The last date for the grant of options was 16 March 2000 and the
scheme has been replaced by the AstraZeneca Share Option Plan. Options granted under the 1994 scheme are normally exercisable between
three and 10 years following grant, provided the relevant performance condition has been satisfied. Options are satisfied by the issue of new
Ordinary Shares. The performance condition applicable to the 1994 scheme was that earnings per share must have grown by at least the increase
in the UK Retail Price Index over three years plus 3% per annum. Satisfaction of this condition was tested annually by reference to the audited
financial statements. All options granted under the 1994 scheme have become exercisable, the performance conditions having been satisfied.
(4) Summary of the Astra Shareholder Value Incentive Plan

In 1996, Astra established a stock option plan for some 100 Astra employees in key senior positions. The plan is no longer used for the grant of
options and has been superseded by the AstraZeneca Share Option Plan. On completion of Astras merger with Zeneca, options in Astra
shares granted under the plan were replaced by options to acquire a number of AstraZeneca Ordinary Shares based on the exchange ratio
used in the exchange offers used to effect the AstraZeneca merger. The ratio of AstraZeneca options granted in respect of former Astra options
was 0.5045 AstraZeneca options for each Astra option held. At 31 December 2006, there were no options outstanding under this scheme.
AstraZeneca
Share Option Plan 1994 Scheme SAYE Schemes ASVIP
Shares
Options WAEP* Options WAEP* Options WAEP* under option WAEP*
000 pence 000 pence 000 pence 000 SEK
At 1 January 2004
Options outstanding 35,688 2874 8,360 2654 3,952 1988 607 411
Movements during 2004
Options granted 10,741 2529 550 2262
Options exercised (329) 2787 (586) 2704 (113) 2184 (114) 321
Options forfeited (1,964) 2886 (285) 2660 (276) 2199 (10) 474
Options lapsed
Weighted average fair value of
options granted during the year 650 632
At 31 December 2004
Options granted 9,621 2133 606 2257
Options exercised (1,053) 2486 (1,259) 2601 (689) 1782 (6) 442
Options lapsed
At 31 December 2005
Options granted 9,266 2977 280 3001
Options exercised (18,543) 2708 (4,038) 2665 (289) 2278
Options lapsed
At 31 December 2006
Options outstanding 39,724 2428 1,906 2371 3,211 2087
Range of exercise prices 1913p to 1740p to 1756p to n/a
3487p 2749p 3001p
Weighted average remaining
contractual life 2,638 days 1,051 days 847 days n/a
Options exercisable 13,624 3051 1,906 2641 60 2661 n/a
* Weighted average exercise price


Options Outstanding
Share option schemes shares Share option schemes ADSs Savings related share option schemes
Weighted Latest Weighted Latest Weighted Latest
Year of Number exercise exercise Number exercise exercise Number exercise exercise
Grant 000 price date 000 price date 000 price date
1997 90 18.91 30/9/07
1998 111 24.31 19/8/08
1999 275 25.90 12/12/09
2000 651 28.94 22/8/10 1,113 $44.03 22/8/10
2001 903 32.45 30/8/11 3,219 $47.15 30/8/11 36 29.71 31/5/07
2002 1,041 34.37 29/8/12 4,227 $49.58 29/8/12 1,533 17.56 31/5/08
2003 1,139 22.34 28/8/13 2,113 $35.16 28/8/13 318 22.11 31/5/09
2004 1,576 25.29 26/8/14 7,314 $46.62 26/8/14 473 22.62 31/5/10
2005 2,072 21.36 25/8/15 6,718 $40.36 25/8/15 572 22.57 31/5/11
2006 1,901 29.76 24/8/16 7,167 $51.81 24/8/16 279 30.01 31/5/12
Total 9,759 26.81 31,871 $46.07 3,211 20.87
Options exercisable
Share option Share option Savings related share
schemes shares schemes ADSs option schemes ASVIP
Weighted Weighted Weighted Weighted
Number exercise Number exercise Number exercise Number exercise
000 price 000 price 000 price 000 price
At 31 December 2004 3,179 27.94 15,016 $45.69 390 23.73 483 SEK 431.00
At 31 December 2005 4,065 29.71 20,862 $47.06 191 24.56 309 SEK 442.00
At 31 December 2006 4,592 28.31 10,938 $45.43 60 26.61
Share options were exercised on a regular basis throughout the period.
The fair value of the options is estimated at the date of grant using the Black-Scholes option pricing model. The following table gives the
assumptions applied to the options granted in the respective periods shown. Expectations of early exercise are incorporated into the model.
2006 2005 2004

Average share price (pence) 3020 2384 2439
Weighted average exercise price (pence)
AstraZeneca Share Option Plan 2977 2133 2529
SAYE schemes 3001 2257 2262
Weighted average fair value of options granted in the period (pence)
AstraZeneca Share Option Plan 857 619 650
SAYE schemes 943 700 632
Expected volatility (%) 30.0 30.0 25.0
Dividend yield (%) 2.3 2.3 2.3
Risk-free interest rate (%) 4.3 4.3 3.5
Expected lives: AstraZeneca Share Option Plan (years) 6.0 6.0 6.0
Expected lives: SAYE schemes (years) 4.1 3.9 3.8
The expected volatility is based on the historic volatility (calculated based on the weighted average remaining life of the share options) adjusted
for any expected changes to future volatility due to publicly available information.
No other features of options granted were incorporated into the measurement of fair value.
The charge for share-based payments in respect of share options is $125m (2005 $128m, 2004 $147m) which is comprised entirely of equity-
settled transactions.

AstraZeneca Performance Share Plan
Shares WAFV*
000 pence
Shares awarded in June 2005 312 1121
Shares awarded in March 2006 280 1486
Shares awarded in May 2006 19 1424
The fair value was determined using a modified version of the binomial model.This method incorporated expected dividends but no other
features into the measurements of fair value.
US incentive share schemes

Shares WAFV*
000 $
864 46.16
* Weighted average fair value
The charge for share-based payments in respect of the AstraZeneca Performance Share Plan and the US incentive share schemes is $14m
(2005 $15m, 2004 $16m). The plans are equity-settled.
26 COMMITMENTS AND CONTINGENT LIABILITIES

2006 2005 2004
$m $m $m
Commitments
Contracts placed for future capital expenditure not provided for in these accounts 383 220 298
Included in the above total are contracts related to certain product purchase and licence agreements with deferred consideration obligations,
the amounts of which are variable depending upon particular milestone achievements. Sales of the products to which these milestones relate
could give rise to additional payments, contingent upon the sales levels achieved. 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.
During January 2007, AstraZeneca entered into two collaboration agreements with Bristol-Myers Squibb Company and Palatin Technologies Inc.
for initial consideration of $100m and $10m respectively. Both collaboration agreements have deferred consideration obligations, dependent
upon particular milestone events. AstraZeneca also entered into an agreement in January 2007 to acquire the total share capital of
Arrow Therapeutics Ltd for $150m.
Arrangements with Merck

Introduction
In 1982, Astra AB set up a joint venture with Merck & Co., Inc. for the purposes of selling, marketing and distributing certain Astra products in the US.
In 1998, this joint venture was restructured (the Restructuring). Under the agreements relating to the Restructuring (the Agreements), a US limited
partnership was formed, in which Merck is the limited partner and AstraZeneca is the general partner, and AstraZeneca obtained control of the
joint ventures business subject to certain limited partner and other rights held by Merck and its affiliates. These rights provide Merck with safeguards
over the activities of the partnership and place limitations on AstraZenecas commercial freedom to operate. The Agreements provide for:
> Annual contingent payments.

> A payment to Merck in the event of a business combination between Astra and a third party in order for Merck to relinquish certain claims to
that third partys products.
> Termination arrangements which, if and when triggered, cause Merck to relinquish its interests in AstraZenecas products and activities.
These elements are discussed in further detail below together with a summary of their accounting treatments.
Annual contingent payments

AstraZeneca makes ongoing payments to Merck based on sales of certain of its products in the US (the contingent payments on the agreement
products). As a result of the merger of Astra and Zeneca in 1999, these contingent payments (excluding those in respect of Prilosec and Nexium)
cannot be less than annual minimum sums between 2002 and 2007 ranging from $125m to $225m. AstraZenecas payments have exceeded
the minimum level in 2002 to 2006 and, notwithstanding the entry of a generic competitor to Toprol-XL in November 2006, AstraZeneca has no
reason to believe that the annual payment in 2007, the final year in which minimum levels apply, will fall below the minimum obligations.
26 COMMITMENTS AND CONTINGENT LIABILITIES CONTINUED

Payment in the event of a business combination
On the merger of Astra and Zeneca, a one-time Lump Sum Payment of $809m was triggered. As a result of this payment, Merck relinquished
any claims it may have had to Zeneca products.
Termination arrangements
The Agreements provided for arrangements and payments under which, subject to the exercise of certain options, the rights and interests in
AstraZenecas activities and products held by Merck immediately prior to the merger would be terminated, including details of:
> The Advance Payment

> The Partial Retirement
> The First Option and True-Up
> The Loan Note Receivable
> The Second Option
Advance Payment
The merger between Astra and Zeneca triggered the first step in the termination arrangements. Merck relinquished all rights, including
contingent payments on future sales, to potential Astra products with no existing or pending US patents at the time of the merger. As a result,
AstraZeneca now has rights to such products and is relieved of potential obligations to Merck and restrictions in respect of those products
(including annual contingent payments), affording AstraZeneca substantial freedom to exploit the products as it sees fit.
At the time of the merger, the Advance Payment was paid. It was calculated as the then net present value of $2.8bn discounted from 2008 to
the date of merger at a rate of 13% per annum and amounted to $967m. It is subject to a true-up in 2008, as discussed under First Option and
True-Up below.
Partial Retirement
In 2008, there will be a partial retirement of Mercks limited partnership interest by payment to Merck of an amount calculated as a multiple of
the average annual contingent payments from 2005 to 2007 on the relevant products, plus $750m. Upon the Partial Retirement, Mercks rights
in respect of certain of the agreement products will end. The products covered by the Partial Retirement include Toprol-XL, Pulmicort, Rhinocort
and Symbicort, the last of which is planned to be launched in the US in the middle of 2007, although this timeline is dependent upon successful
transfer of technology from development to manufacturing and completion of validation batches.
First Option and True-Up

In 2008, a calculation will be made of the Appraised Value, being the net present value of the future contingent payments in respect of all
agreement products not covered by the Partial Retirement, other than Prilosec and Nexium. Payment of the Appraised Value to Merck in 2008
will take place only if Merck exercises the First Option. Should Merck not exercise this option in 2008, AstraZeneca may exercise it in 2010 for a
sum equal to the 2008 Appraised Value. Contingent payments will continue from 2008 to 2010 if AstraZeneca exercises in 2010. Upon exercise
of the First Option Merck will relinquish its rights over the agreement products not covered by the Partial Retirement, other than Nexium and
Prilosec. If neither Merck nor AstraZeneca exercises the option, the contingent payment arrangements in respect of these agreement products
will continue (as will AstraZenecas other obligations and restrictions in respect of these products) and the Appraised Value will not be paid.
Products covered by the First Option include Atacand, Plendil and certain compounds still in development. In addition, in 2008 there will be a
true-up of the Advance Payment. The true-up amount will be based on a multiple of the average annual contingent payments from 2005 to
2007 in respect of all the agreement products with the exception of Prilosec and Nexium (subject to a minimum of $6.6bn), plus other defined
amounts (totalling $912m). It is then reduced by the Appraised Value (whether paid or not), the Partial Retirement and the Advance Payment (at
its undiscounted amount of $2.8bn) to determine the true-up amount. The true-up will be settled in 2008 irrespective of whether the First
Option is exercised, and this could result in a further payment by AstraZeneca to Merck or a payment by Merck to AstraZeneca.
Should Merck exercise the First Option in 2008, AstraZeneca will make payments in respect of the Partial Retirement, the First Option and the
true-up totalling a minimum of $4.7bn. If AstraZeneca exercises the First Option in 2010, the combined effect of the amounts paid to Merck in
2008 and 2010 will total the same amount.
Loan Note Receivable

Included in the assets and liabilities covered by the Restructuring is a loan note receivable by AstraZeneca from Merck with a face value of
$1.4bn. In 2008, at the same time as the settlement of the Partial Retirement and the true-up, Merck will settle the loan note receivable by
paying AstraZeneca $1.4bn.
Second Option
A Second Option exists whereby AstraZeneca has the option to re-purchase Mercks interests in Prilosec and Nexium in the US. This option is
exercisable by AstraZeneca two years after the exercise of the First Option, whether the First Option is exercised in either 2008 or 2010. Exercise
of the Second Option by AstraZeneca at a later date is also provided for in 2017 or if combined annual sales of the two products fall below a
minimum amount provided, in each case, that the First Option has been exercised. The exercise price for the Second Option is the net present
value of the future annual contingent payments on Prilosec and Nexium as determined at the time of exercise. If the Second Option is exercised,
Merck will then have relinquished all its interests in the partnership and the agreement products including rights to contingent payments.

General
The precise amount and timing of settlements with Merck under the Partial Retirement, the First Option and the true-up cannot be determined
at this time. Various components of the calculations are based, in part, on net sales between 2005 and 2007 and on forecasted performance
beyond 2007, and payment of the First Option is contingent upon Merck (or AstraZeneca) exercising the First Option. Similarly, the timing and
amount of the Second Option cannot be determined at this time.
With the exception of the interests in Nexium and Prilosec, the total of the payments yet to be made under the termination arrangements is
based, in part, on the contingent payments made in 2005 to 2007 (subject to the minimum amount) and is likely to be substantially driven by
the sales of Toprol-XL, Pulmicort, Rhinocort and Atacand. However, AstraZeneca anticipates that the benefits that accrue under all the
termination arrangements arise:
> Currently, from the substantial freedom over products acquired or discovered post-merger.
> On occurrence of each stage of such arrangements, from enhanced contributions from, and substantial freedom over, those products that
have already been launched (for example, Rhinocort and Atacand), those that are due to be launched in the US (in particular, Symbicort) and
those that are in development. Benefits include relief from contingent payments, anticipated cost savings from cessation of manufacturing
arrangements and other cost efficiencies together with the strategic advantages of increased freedom to operate.
Accounting treatments
Annual contingent payments: The annual contingent payments on agreement products are expensed as incurred.
Payment in the event of a business combination: The Lump Sum Payment was expensed at the point of merger since it caused no incremental
benefits over the prior years aggregate Astra and Zeneca performance to accrue to the merged AstraZeneca entity.
Termination arrangements: AstraZeneca considers that the termination arrangements described above represent the acquisition, in stages, of
Mercks interests in the partnership and agreement products (including Mercks rights to contingent payments) and depend, in part, on the exercise
of the First and Second Options. The effects will only be reflected in the Financial Statements as these stages are reached. If and when all such
payments are made, AstraZeneca will have unencumbered discretion in its operations in the US market.
The Advance Payment has been accounted for as an intangible asset and is being amortised over 20 years. This approach reflects the fact that,
under the Agreements, AstraZeneca has acquired rights relieving it of potential obligations and restrictions in respect of Astra products with no
existing or pending patents at the time of merger. Although these rights apply in perpetuity, the period of amortisation of 20 years has been chosen
to reflect the typical timescale of development and marketing of a product.
The payments under the Partial Retirement, the First Option and true-up and the Second Option will be accounted for under the extant guidance
when they are paid, with allocations to intangibles and goodwill, as appropriate. If Merck exercises the First Option in 2008, the net minimum
payment to be made to Merck, being the combined payments of $4.7bn less the repayment of the loan note of $1.4bn, would be $3.3bn. In
accounting for the Restructuring in 1998, the loan note was included in the determination of the fair values of the assets and liabilities to be
acquired. At that time, the loan note was ascribed a fair value of zero on acquisition and on the balance sheet because it was estimated that the
net minimum payment of $3.3bn equated to the fair value of the rights to be acquired under the Partial Retirement, true-up and First Option.
Ongoing monitoring of the projected payments to Merck and the value to AstraZeneca of the related rights takes full account of changing
business circumstances and the range of possible outcomes to ensure that the payments to be made to Merck are covered by the economic
benefits expected to be realised, including those attributable to the strategic benefits of being relieved from some or all of the restrictions of the
partnership with Merck. Should the monitoring reveal that these payments exceed the economic benefits expected to be realised, a provision
for an onerous contract would be recognised.
Environmental costs and liabilities

The Groups expenditure on environmental protection, including both capital and revenue items, relates to costs which are necessary for
implementing internal systems and programmes and meeting legal and regulatory requirements for processes and products.
They are an integral part of normal ongoing expenditure for carrying out the Groups 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 2004, 2005 or 2006.
In addition to expenditure for meeting current and foreseen environmental protection requirements, the Group incurs costs in investigating and
cleaning up land and groundwater contamination. In particular, AstraZeneca and/or its affiliates have environmental liabilities at some currently
or formerly owned, leased and third party sites.

In the US, the AstraZeneca affiliate, Zeneca Inc., and/or its indemnitees, have been named as potentially responsible parties (PRPs) or defendants
at approximately 18 sites where Zeneca Inc. is likely to incur future investigation, remediation or operation and maintenance costs under federal
or state, statutory or common law environmental liability allocations schemes. Similarly, the AstraZeneca affiliate, 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 approximately 31 sites where SMC is likely to incur future investigation, remediation or operation
and maintenance costs under federal or state, statutory or common law environmental liability allocations schemes. In Europe and other parts
of the world outside the US, AstraZeneca is likely to incur costs at one currently owned site and has given indemnities to third parties in respect of
approximately 45 other sites. These environmental liabilities arise from legacy operations that are not part of our current pharmaceuticals
business and, at most of these sites, remediation, where required, is either completed or nearing completion.
AstraZeneca has made provisions for the estimated costs of future environmental investigation, remediation and operation and maintenance
activity beyond normal ongoing expenditure for maintaining the Groups 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 2006 in the aggregate of approximately $107m, of which approximately $96m relates to the US. These
provisions do not include possible additional costs that are not currently probable. Where we are jointly (but not jointly and severally) liable 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 arrangments for
reimbursement, an asset is recognised to the extent that this recovery is virtually certain.
It is possible that the Company, or its affiliates, 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, but not limited to: (1) the nature and extent
of claims that may be asserted in the future; (2) whether the Company or any of its affiliates 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. Notwithstanding and subject to the foregoing, it is estimated that potential additional loss for future
environmental investigation, remediation and remedial operation and maintenance activity above and beyond our provisions could be, in the
aggregate, in the order of $15-30 million.
Legal proceedings
AstraZeneca is involved in various legal proceedings considered typical to its businesses, including litigation relating to employment, product
liability, commercial disputes, infringement of intellectual property rights, the validity of certain patents, antitrust and securities law. The more
significant matters are discussed below. No provisions have been established for any of the claims discussed below (other than the European
Union fine which has been paid).
Abraxane (paclitaxel protein-bound particles for injectable suspension) (albumin-bound)

In July 2006, Elan Pharmaceutical filed a lawsuit in the US District Court for the District of Delaware against Abraxis Bioscience, Inc. Elan
essentially alleges that Abraxis infringes two US patents in connection with the marketing, use and sale of Abraxane. AstraZeneca is not
named as a party in the lawsuit. AstraZeneca is party to an agreement with Abraxis to co-promote Abraxane.
Crestor (rosuvastatin)
AstraZeneca Pharmaceuticals LP and/or AstraZeneca LP in the US were served with seven individual lawsuits in 2004 and 2005 involving
alleged injury in association with the use of Crestor. Four of these lawsuits have now been dismissed. In addition, a motion for authorisation
to institute a class action and to be a representative was filed in Quebec, Canada against AstraZeneca PLC and AstraZeneca Canada Inc.
The petitioner claims alleged injury as a result of the use of Crestor. During 2006, AstraZeneca was served with six additional individual lawsuits
in the US, all six of which have since been dismissed. AstraZeneca is vigorously defending all the remaining actions.
Diprivan (propofol)
In August 2002, AstraZeneca LP received a letter from ESI Lederle, a division of Wyeth, informing AstraZeneca of Wyeths intention to market
a generic version of Diprivan prior to the expiration of AstraZenecas patents covering the current formulation. AstraZeneca filed a patent
infringement action against Wyeth in the US District Court for the Southern District of New York. Through a series of transactions, the holder
of the relevant Abbreviated New Drug Application and now defendant in AstraZenecas suit is Mayne Pharma (USA) Inc. (formerly called
Faulding Pharmaceutical Co.). Mayne responded to AstraZenecas complaint and filed counterclaims alleging non-infringement, invalidity and
unenforceability. After a trial in 2005, the court issued its decision finding the AstraZeneca patents to be valid and enforceable and infringed
by Maynes propofol product. The court has issued an injunction preventing the manufacture, use, sale and offering for sale in the US of Maynes
propofol product. Mayne filed an appeal against this and in November 2006, the US Court of Appeals for the Federal Circuit affirmed the
decision of the District Court. In June 2006, the Diprivan New Drug Application was sold to Abraxis BioScience Inc. as part of an Asset
Purchase Agreement.

Exanta (ximelagatran)
Four putative and essentially similar securities class actions were filed in the US against AstraZeneca PLC, Hkan Mogren, Sir Tom McKillop,
Jonathan Symonds and Percy Barnevik between January and March 2005. These actions were subsequently consolidated into a single
action pending in the US District Court for the Southern District of New York. The Consolidated Amended Complaint alleges that the defendants
made materially false and misleading statements regarding Exanta clinical trials and the status of the Exanta New Drug Application in the US.
The plaintiffs purport to assert claims on behalf of purchasers of AstraZeneca publicly traded securities during the period 2 April 2003 to
10 September 2004 under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
The defendants deny the allegations made in the lawsuit and will vigorously defend the action. They have filed a motion to dismiss the action,
and that motion is pending before the Court.
Iressa (gefitinib)
During 2004, 2005 and 2006, six claims were filed against AstraZeneca KK in Japan, in the Osaka and Tokyo District Courts. In five of the
claims, it is alleged that Iressa caused a fatal incidence of interstitial lung disease (ILD) in a Japanese patient. In the sixth claim, it is alleged that
Iressa caused a non-fatal incidence of ILD. AstraZeneca KK, following consultation with external legal advisers, believes the claims are without
merit and is defending all the cases. ILD is a known complication of lung disease, including advanced lung cancer, regardless of treatment.
Losec/Prilosec (omeprazole)
In 2001, AstraZeneca filed a suit in the US against Andrx Pharmaceuticals, Inc. for infringement of a patent directed to a process for making an
omeprazole formulation (the 281 patent). Andrx filed counterclaims of non-infringement, invalidity and unenforceability for inequitable conduct
during prosecution of the 281 patent. Andrx also asserted that in addition to the 281 patent, two other formulation patents, the 505 and 230
patents, were unenforceable for alleged litigation misconduct by AstraZeneca. Both parties sought attorneys fees. In May 2004, the US District
Court for the Southern District of New York ruled that the 281 patent was infringed, but also ruled that the 281 patent was invalid.
The court dismissed Andrxs litigation misconduct and other counterclaims and affirmative defences, leaving intact the courts October 2002
decision finding the 230 and 505 patents not invalid and infringed by Andrx. The October 2002 decision was affirmed in all respects on appeal
in December 2003. The court entered final judgment regarding the 281 patent in July 2004, after determining to stay the attorneys fees claims
pending any appeals. Andrx has appealed the judgment and AstraZeneca has cross-appealed. The appeal was argued to the US Court of
Appeals for the Federal Circuit in August 2006, and the Court of Appeals reserved decision.
During 2000 and 2001, AstraZeneca had filed suits against Lek Pharmaceutical and Chemical Company d.d. and Lek Services USA, Inc.,
Impax Laboratories Inc., Eon Labs Manufacturing Inc., Mylan Pharmaceuticals Inc., Apotex Corp, Apotex, Inc., Torpharm, Inc. and Zenith
Goldline Pharmaceuticals, Inc. (now known as IVAX Pharmaceuticals, Inc.). These suits followed the filing of Abbreviated New Drug Applications
by these companies with the FDA concerning the companies intention to market generic omeprazole products in the US. The basis for the
proceedings is that the actions of all the companies infringe the505 and230 formulation patents relating to omeprazole. The cases are
proceeding under the US Hatch-Waxman legislation. The case against IVAX was dismissed without prejudice shortly after it was filed, after IVAX
withdrew its application to market generic omeprazole. During 2003, after Mylan commenced commercial sale of its product, AstraZeneca
filed suit against Laboratorios Esteve, SA and Esteve Quimica, SA, manufacturers of the omeprazole product to be distributed in the US by
Mylan. In 2003 and 2004, Lek, Apotex and Impax all began commercial sales of their generic omeprazole products. In July 2004, Lek filed
a motion for summary judgment of non-infringement. In January 2005, AstraZeneca filed suit against Teva Pharmaceutical Industries Ltd. and
Teva Pharmaceuticals USA, Inc., which are marketing and selling Impaxs omeprazole products. The Teva case was stayed in June 2005 until
liability issues in the Impax action are resolved. AstraZeneca made claims for damages against each of the selling defendants. Anti-trust and
non-infringement counterclaims were filed by Andrx, Apotex/Torpharm, Impax, Eon and Lek. All defendants except Lek have also raised
invalidity and unenforceability counterclaims. The anti-trust counterclaims, as well as AstraZenecas claims for damages, have been stayed
pending resolution of the patent liability issues.
The cases were consolidated for discovery before, or are directly assigned to, Judge Jones in the US District Court for the Southern District of
New York. All discovery in these cases was completed in February 2005. Briefing on the summary judgment motion filed by Lek and 14 additional
motions for summary judgment was completed in July 2005. All of the defendants motions for summary judgment were denied in January 2006.
In February 2006, the Eon suit was dismissed after it announced it would not commence sales until after the505 and230 patents expired.
In July 2005, AstraZeneca filed suit against Ranbaxy Laboratories Ltd., Ranbaxy Inc. and Ranbaxy Pharmaceuticals, Inc. for infringement of
the 505 and 230 formulation patents. The Ranbaxy case was consolidated with the other omeprazole patent cases for pre-trial purposes.
In March 2006, the Ranbaxy case was dismissed when it announced it would not commence sales until after the505 and230 patents expired.
In January 2006, AstraZeneca dismissed its claims for damages against Impax, and as a result the Court struck Impaxs jury demand. Impax
appealed this decision on an interlocutory basis to the US Court of Appeals for the Federal Circuit, which denied the appeal, and then to the
United States Supreme Court, which also denied the appeal. From April to June 2006, Judge Jones conducted a consolidated bench trial on
patent liability issues involving the remaining defendants, Mylan/Esteve, Lek, Apotex and Impax. Post-trial briefing was completed in July 2006.
No decision has yet been rendered.

In April 2006, AstraZeneca received a notice from Dexcel Pharma Technologies (Dexcel) that Dexcel had submitted a New Drug Application
seeking FDA approval to market a 20mg omeprazole tablet for the over-the-counter (OTC) market. Dexcel seeks approval to market a generic
omeprazole OTC product before the expiration of the patents listed in the FDA Orange Book in reference to AstraZenecas Prilosec product
and the Prilosec OTC that is marketed by Procter & Gamble. In May, AstraZeneca filed suit in the US District Courts for the District of Delaware
and the Eastern District of Virginia charging Dexcel with infringement of the505 and230 patents and US Patent No. 6,150,380 which expires
in 2019. The Virginia case is stayed pending resolution of Dexcels objection to jurisdiction in Delaware. Discovery is ongoing, and no trial date
has yet been set.
In June and July 2004, AstraZeneca applied in France for injunctions based on its omeprazole formulation patent against six companies for
marketing generic omeprazole. In August 2004, the applications were rejected at first instance. AstraZeneca appealed this decision and in
March 2005 the applications were rejected on appeal. In May 2004, AstraZeneca also started legal proceedings against the same companies
for infringement of its omeprazole formulation patent in France. These proceedings have been consolidated with a case challenging the validity
of the patent, brought by one of the companies against AstraZeneca. No date has yet been set for a hearing.
During 2000, AstraZeneca was granted interlocutory injunctions based on certain of AstraZenecas omeprazole patents against the generic
companies, Generics (UK) Ltd. and Scandinavian Pharmaceuticals-Generics AB (Scand Pharm), in Denmark and Scand Pharm in Norway.
In October 2001, Oslo City Court in Norway confirmed that Scand Pharm had infringed AstraZenecas formulation patent for omeprazole.
At the same time, the court declared AstraZenecas formulation patent valid. In November 2004, these findings were upheld by the Appeal Court.
As a result of the Norwegian case, Scand Pharm cannot sell its omeprazole product in Norway. Furthermore, it has also been prevented from
selling its omeprazole product in Denmark pending the outcome of the main action in the Danish case. The parties have settled these cases.
In addition, in 2001 AstraZeneca was granted an interlocutory injunction based on AstraZenecas omeprazole formulation patents against the
generic company A/S Gea Farmaceutiske Fabrik (now Hexal A/S), which is still prevented from selling the omeprazole product in Denmark
pending the outcome of the main action.
An interlocutory injunction against Biochemie Novartis Healthcare A/S was granted in Denmark during 2003, based on AstraZenecas omeprazole
formulation patent and the main action is still pending.
In December 2004, an interlocutory injunction against Nomeco A/S, a Danish distributor of a generic omeprazole product from ratiopharm,
was granted in Denmark based on AstraZenecas omeprazole formulation patent. The case was heard on appeal in November and December
2005 and, in February 2006, the High Court repealed the interlocutory injunction. The main action on the merits is still pending.
During 2003 and 2004, AstraZeneca was denied interlocutory injunctions based on certain of its omeprazole patents against Novartis Sverige AB
and ratiopharm AB in Sweden and Novartis Finland Oy and ratiopharm Oy in Finland. In 2002 and 2003, Novartis Sverige AB, ratiopharm AB
and Arrow Lkemedel AB initiated cases to invalidate AstraZenecas omeprazole formulation patent. These cases have been consolidated and
are currently pending before the Stockholm District Court AstraZeneca-initiated infringement cases against Novartis Sverige AB and ratiopharm
AB in Sweden, in 2003. These infringement cases have been stayed pending the outcome of the invalidity cases.
In Finland, the separate infringement proceedings against ratiopharm Oy and Novartis Finland Oy based on infringement of AstraZenecas
omeprazole formulation patent had been stayed in 2005, as Novartis Finland Oy had initiated an invalidation action against the formulation
patent. In May 2006, AstraZeneca and Novartis Finland Oy settled their disputes, as a result of which the invalidation action against the
formulation patent and the infringement action against Novartis Finland Oy were withdrawn. During the autumn of 2006, the infringement
action against ratiopharm Oy, which had been stayed pending the outcome of the invalidation action by Novartis Finland Oy, was resumed
and is currently pending.
Also during 2003, the District Court in Norway found that the generic omeprazole product marketed by ratiopharm AB did not infringe
AstraZenecas omeprazole formulation patent. This judgment was confirmed by the Norwegian Appeal Court in October 2005. In January
2006, the Supreme Court in Norway denied AstraZeneca leave to appeal.
AstraZeneca continues to be involved in numerous proceedings in Canada involving various generics and patents, including under the Patented
Medicines (Notice of Compliance) Regulations, relating to omeprazole capsules or omeprazole magnesium tablets. Apotex Inc. launched
a generic omeprazole capsule product in Canada in January 2004. Following this launch, AstraZeneca commenced judicial review proceedings
seeking to quash Apotexs notice of compliance (marketing approval) and AstraZeneca sued Apotex in July 2004 alleging infringement of its
formulation patents by Apotexs omeprazole capsules. In May 2005, the Canadian Federal Court of Appeal quashed Apotexs notice of compliance
(marketing approval), overruling the first instance decision in September 2004, which went against AstraZeneca. In June 2005, the Canadian
Federal Court of Appeal granted Apotexs motion for a stay of the Courts decision to quash the notice of compliance, pending an application
by Apotex for leave to appeal to the Supreme Court of Canada. The Supreme Court of Canada granted Apotex leave to appeal and also
continued the stay granted by the Federal Court of Appeal, thereby allowing Apotex to continue selling its omeprazole capsules pending
a decision by the Supreme Court on Apotexs appeal. The appeal was heard in May 2006 and allowed in November 2006, with the result that
Apotex can continue to sell omeprazole capsules pending the outcome of the patent infringement action.

In February 2006, the Federal Court of Appeal upheld a lower court decision which prohibited Apotex from obtaining a notice of compliance
(marketing approval) for omeprazole magnesium tablets until the expiry of a relevant formulation patent in December 2008.
In January 2006, AstraZeneca Canada Inc. was served with a claim in the Federal Court of Canada for payment of an undetermined sum based
on damages allegedly suffered by Apotex due to the delay from January 2002 to January 2004 in the issuance to Apotex of a notice of compliance
(marketing approval) in Canada for its 20mg omeprazole capsule product. The claim was held in abeyance pending Apotexs appeal to the Supreme
Court of Canada, and following the November 2006 allowance of that appeal Apotex has indicated it will be advancing the damages claim.
AstraZeneca believes the claim is without merit and intends to defend it and to pursue its already pending patent infringement actions against
Apotex vigorously.
AstraZeneca Canada initiated proceedings in the Federal Court of Canada against Novopharm Limited in connection with certain patents
related to omeprazole magnesium tablets, on the basis that Novopharm was seeking a notice of compliance (marketing approval) in Canada
based on a comparison with AstraZenecas Losec tablets. While several proceedings remain pending, Novopharm has not made an allegation
in respect of the omeprazole salt patent and has indicated that it will await expiry of the patent on 23 January 2007.
AstraZeneca Canada initiated proceedings in the Federal Court of Canada against Sandoz Canada Inc. in connection with certain patents
related to omeprazole capsules, on the basis that Sandoz was seeking a notice of compliance (marketing approval) in Canada based on a
comparison with AstraZenecas Losec capsules.
In January 2007, AstraZeneca Canada Inc. discontinued long pending proceedings against Reddy-Cheminor Inc. in respect of patents relating
to omeprazole capsules, following Reddy-Cheminors withdrawal of its allegations.
In February 2000, the European Commission commenced an investigation relating to certain omeprazole intellectual property rights, and associated
regulatory and patent infringement litigation. The investigation is pursuant to Article 82 of the EC Treaty, which prohibits an abuse of a dominant
position. The investigation was precipitated by a complaint by a party to a number of patent and other proceedings involving AstraZeneca.
AstraZeneca has, in accordance with its corporate policy, co-operated with the Commission. In July 2003, the Commission served a Statement
of Objections on AstraZeneca, referring to alleged infringements regarding the obtaining of supplementary protection certificates for omeprazole
in certain European countries; and regarding AstraZenecas replacement of omeprazole capsules by omeprazole MUPS (tablets) and withdrawal
of capsule marketing authorisations in three European countries. AstraZeneca replied fully to the Commission, explaining why its actions were,
in AstraZenecas view, lawful. An oral hearing took place in February 2004. In June 2005, the European Commission notified AstraZeneca PLC
and AstraZeneca AB of its Decision to impose fines totalling 60m on the companies for infringement of European competition law (Article 82
of the EC Treaty and Article 54 of the EEA Agreement). The Commission alleges that the companies abused their dominant positions in the periods
between 1993 and 2000 by making a pattern of misleading representations before the patent offices and/or courts in Belgium, Denmark, Germany,
the Netherlands, Norway and the UK in regard to obtaining supplementary protection certificates for omeprazole; and by requesting the surrender
of market authorisations for omeprazole capsules in Denmark, Norway and Sweden, combined with withdrawal from these countries of omeprazole
capsules and the launch of omeprazole MUPS (tablets). AstraZeneca does not accept the Commissions Decision and has appealed it to the
Court of First Instance. AstraZeneca denies that it had a dominant position or that it was engaged in the behaviours as characterised by the
Commission. In the meantime, the fine was fully provided for in the half year results in 2005 through a charge to operating profit of $75m. It is
alleged by the Commission that these activities had the effect of hindering the entry of the generic version of Losec and parallel trade. It is possible
that third parties could seek damages for alleged losses arising from this matter. Any such claims would be vigorously resisted.
Nexium (esomeprazole)
AstraZeneca entities have been sued in various state and federal courts in the US in purported representative and class actions involving the marketing
of Nexium (esomeprazole magnesium). These actions generally allege that AstraZenecas promotion and advertising of Nexium to physicians
and consumers is unfair, unlawful and deceptive conduct, particularly as the promotion relates to comparisons of Nexium with Prilosec. They
also allege that AstraZenecas conduct relating to the pricing of Nexium was unfair, unlawful and deceptive. The plaintiffs allege claims under
various state consumer protection, unfair practices and false advertising laws. The plaintiffs in these cases seek remedies that include restitution,
disgorgement of profits, damages, punitive damages, injunctive relief, attorneys fees and costs of suit.
The first action was brought in 2004 in the Superior Court of the State of California for the County of Los Angeles by the AFL-CIO, two unincorporated
associations and an individual on behalf of themselves, the general public and a class of California consumers, third party payers, cash payers
and those making a co-payment. A second action was filed in the same court on behalf of a similar putative class of consumers. Actions making
substantially similar allegations were filed in 2004 and 2005 on behalf of putative classes of consumers, third party payers, purchasers and
labour management trust funds in the Circuit Court of Searcy County, Arkansas; in the Superior Court of the State of Delaware in and for New
Castle County; in the Superior Court of Massachusetts in Boston; in the US District Court for the District of Delaware (three consolidated cases);
and in the Circuit Court of the 11th Judicial Court in and for Miami-Dade County, Florida.
In September 2005, the court in California issued a ruling on AstraZenecas demurrer and motion to strike in the two California actions. The court
granted AstraZenecas motion with respect to the associational plaintiffs and denied the motion with respect to the individual plaintiffs, allowing
the cases of the individuals to proceed. In October 2005, the court in Massachusetts denied AstraZenecas motion to dismiss. Discovery in the
California and Massachusetts cases is proceeding, and plaintiffs motions for class certification are expected to be filed in mid-2007.

In November 2005, the US District Court for the District of Delaware granted AstraZenecas motion to dismiss the consolidated class action
complaint. The plaintiffs appealed the dismissal to the US Court of Appeals for the Third Circuit. The Delaware state case has been stayed
pending the outcome of the Delaware federal cases.
In May 2006, the Arkansas state court granted AstraZenecas motion to dismiss the plaintiffs complaint. The plaintiffs filed additional motions
and pleadings, including an amended complaint. AstraZeneca filed a motion to dismiss the amended complaint.
In October 2006, the Florida court dismissed the plaintiffs complaint with prejudice and without leave to amend. The plaintiff has appealed
the dismissal, and the opening appeal brief is due in February 2007.
In December 2006 and January 2007, several lawsuits against AstraZeneca entities, including putative class actions, were filed in US District
Court for the District of Columbia alleging claims of unlawful monopolisation relating to Prilosec and Nexium. Individual actions were filed on
7 December 2006 by Walgreen Co., Eckerd Corporation. Maxi Drug, Inc. d/b/a Brooks Pharmacy, The Kroger Co., New Albertsons Inc.,
Safeway, Inc., Hy-Vee, Inc., and American Sales Company, Inc. and on 8 December 2006 by Rite Aid Corporation, and Rite Aid Headquarters
Corp. Putative class actions brought on behalf of direct purchasers were filed on 18 December 2006 by Meijer, Inc. and Meijer Distribution, Inc.,
on 19 December 2006 by Louisiana Wholesale Drug Co., Inc., and on 8 January 2007 by Burlington Drug Co., Inc., Dik Drug Co., Inc, and King
Drug Co. of Florence, Inc. The plaintiffs seek treble damages, injunctive relief, and attorney fees. AstraZeneca denies the allegations and intends
to vigourously defend each of the actions.
In November 2003, the European Patent Office (EPO) ruled that the European substance patent covering magnesium esomeprazole, the
active pharmaceutical ingredient in Nexium, was valid. The patent, which expires in May 2014, was challenged by the generic manufacturer
ratiopharm. The EPO ruling was appealed by ratiopharm. In December 2006, the Board of Appeals of the EPO ruled that the patent is invalid.
While disappointed with the EPO decision, AstraZeneca has confidence in the intellectual property portfolio protecting Nexium. This portfolio
includes process, method of use and additional substance patents with expiration dates ranging from 2009 through to 2019. The process
patent is under opposition with the EPO and an Opposition Division oral hearing is scheduled for October 2007 (postponed from the original
hearing date in March 2007). In addition to these patents, Nexium has data exclusivity valid to 2010 in major European markets.
The revocation of the AstraZeneca European substance patent relating to Nexium should not have any substantive impact on AstraZenecas
ability to uphold and enforce its Nexium patents in the United States. AstraZeneca has several US patents covering Nexium, all of which can
be differentiated from the European patent found to be invalid.
In October 2004, AstraZeneca LP filed suit in the US District Court for the District of Delaware seeking declaratory judgment that its Better is Better
campaign for Nexium was not false or misleading advertising in violation of section 43(a) of the Lanham Act, a federal statute governing false
advertising claims. The action was taken in response to a letter from TAP Pharmaceuticals, Inc. demanding that AstraZeneca immediately
withdraw the television commercial and other components of the direct-to-consumer advertising campaign for Nexium on the basis that they
allegedly violated the statute. In November 2004, TAP requested expedited consideration of the case by filing a motion for a preliminary injunction,
which the court denied in December 2004. In May and June 2006, the court dismissed all of the claims for damages asserted by TAP in its
counterclaims and dismissed most of TAPs claims for injunctive relief. In August 2006, the parties entered into a settlement agreement, and
the case has been dismissed in its entirety.
In October 2005, AstraZeneca received a notice from Ranbaxy Pharmaceuticals, Inc. that Ranbaxy Laboratories Limited had submitted an Abbreviated
New Drug Application (ANDA) to the US FDA for esomeprazole magnesium delayed-release capsules, 20mg and 40mg. The ANDA contained
paragraph IV certifications of invalidity and/or non-infringement in respect of certain AstraZeneca US patents listed in the FDAs Orange Book
with reference to Nexium. In November 2005, AstraZeneca commenced wilful infringement patent litigation in the US District Court for the District
of New Jersey against Ranbaxy Pharmaceuticals, Inc. and its affiliates in response to Ranbaxys paragraph IV certifications regarding Nexium.
In January 2006, AstraZeneca received a notice from IVAX Pharmaceuticals Inc. that IVAX Corporation had submitted an ANDA to the US FDA
for esomeprazole magnesium delayed-release capsules, 20mg and 40mg. The ANDA contained paragraph IV certifications of invalidity and/or
non-infringement in respect of certain AstraZeneca US patents listed in the FDAs Orange Book with reference to Nexium. IVAX also certified in
respect of certain other AstraZeneca US patents listed in the Orange Book with reference to Nexium that IVAX will not launch its product prior
to the expiry of those patents, the latter of which expires in October 2007. In March 2006, AstraZeneca commenced wilful patent infringement
litigation in the US District Court for the District of New Jersey against IVAX, its parent Teva Pharmaceuticals, and their affiliates. The Ranbaxy
and Teva/IVAX matters have been consolidated.
In August 2006, AstraZeneca received a notice from Dr. Reddys Laboratories, Ltd. and Dr. Reddys Laboratories, Inc. (Dr. Reddys) that
Dr. Reddys had submitted an ANDA to the US FDA for esomeprazole magnesium delayed-release capsules, 20mg and 40mg. Dr. Reddys
was seeking FDA approval to market a generic esomeprazole magnesium product prior to the expiration of some but not all of the patents
listed in the FDA Orange Book with reference to Nexium.

Dr. Reddys notice did not challenge three Orange Book-listed patents claiming esomeprazole magnesium (US Patent Nos. 5,714,504, 5,877,192
and 6,875,872). AstraZenecas exclusivity relating to these three patents expires on 3 August 2015, 27 November 2014 and 27 November 2014,
respectively. Because AstraZeneca has not received notice from Dr. Reddys as to these three US patents, Dr. Reddys cannot market generic
esomeprazole magnesium until the end of the exclusivity afforded by these patents. As a result, AstraZeneca did not bring a lawsuit at this time.
AstraZeneca reserves the right to enforce all patents related to Nexium, including those listed in the FDA Orange Book.
AstraZeneca continues to have full confidence in and will vigorously defend and enforce its intellectual property protecting Nexium.
Nolvadex (tamoxifen)
AstraZeneca is a co-defendant with Barr Laboratories, Inc. in numerous purported class actions filed in federal and state courts throughout the
US. All of the state court actions were removed to federal court and have been consolidated, along with all of the cases originally filed in the federal
courts, in a federal multi-district litigation proceeding pending in the US District Court for the Eastern District of New York. Some of the cases were
filed by plaintiffs representing a putative class of consumers who purchased tamoxifen. The other cases were filed on behalf of a putative class of
third party payers (including health maintenance organisations, insurers and other managed care providers and health plans) that have reimbursed
or otherwise paid for prescriptions of tamoxifen. The plaintiffs allege that they paid supra-competitive and monopolistic prices for tamoxifen as
a result of the settlement of patent litigation between Zeneca and Barr in 1993. The plaintiffs seek injunctive relief, treble damages under the anti-
trust laws, disgorgement and restitution. In April 2002, AstraZeneca filed a motion to dismiss the cases for failure to state a cause of action. In May
2003, the US District Court for the Eastern District of New York granted AstraZenecas motion to dismiss. The plaintiffs appealed the decision.
In November 2005, the US Court of Appeals for the Second Circuit affirmed the District Courts decision. The plaintiffs thereafter moved for re-hearing
by the original panel of judges in the case and re-hearing by a panel of all of the judges on the US Court of Appeals for the Second Circuit. The plaintiffs
requests for re-hearing were denied in September 2006. In December 2006, the plaintiffs filed a petition for a writ of certiorari to the US Supreme
Court seeking to have the Court hear an appeal of the Second Circuits decision.
Pulmicort Respules (budesonide inhalation suspension)

In September 2005, AstraZeneca received a notice from IVAX Pharmaceuticals Inc. that IVAX had submitted an Abbreviated New Drug Application
(ANDA) to the US FDA for a budesonide inhalation suspension containing a paragraph IV certification and alleging invalidity and non-infringement in
respect of certain of AstraZenecas patents relating to budesonide inhalation suspension. In October 2005, AstraZeneca filed a patent
infringement action against IVAX in the US District Court for the District of New Jersey. In December 2005, IVAX responded and filed
counterclaims alleging non-infringement and invalidity. In January 2006, AstraZeneca filed an amended complaint, withdrawing averments as
to the infringement of one of the patents-in-suit. Discovery in the litigation is ongoing.
AstraZeneca continues to have full confidence in and will vigorously defend and enforce its intellectual property protecting Pulmicort Respules.
Seroquel (quetiapine fumarate)

In August 2003, Susan Zehel-Miller filed a putative class action against AstraZeneca PLC and AstraZeneca Pharmaceuticals LP on behalf
of all persons in the US who purchased and/or used Seroquel. Among other things, the class action alleged that AstraZeneca failed to provide
adequate warnings in connection with an alleged association between Seroquel and the onset of diabetes. In 2004, the US District Court for
the Middle District of Florida denied class certification and the case was ultimately dismissed. Two additional putative class actions raising similar
allegations have likewise been dismissed. There are no other US class actions relating to Seroquel; however, four putative class actions raising
substantially similar allegations have been filed in Canada.
Additionally, AstraZeneca Pharmaceuticals LP, either alone or in conjunction with one or more affiliates, has been sued in numerous individual personal
injury actions involving Seroquel. In the overwhelming majority of these cases, the nature of the plaintiffs alleged injuries is not clear. Although some
plaintiffs contend that they developed diabetes or other related injuries as a result of taking Seroquel and/or other atypical anti-psychotic medications,
in most instances, little or no factual information regarding the alleged injury has been provided. As of 24 January 2007, AstraZeneca was defending
604 served or answered lawsuits involving approximately 7,450 plaintiff groups. These include a number of recently filed cases that include close to
1,000 plaintiff groups per case. The majority of the Seroquel cases are pending in federal court with clusters of state court activity in Delaware, New
Jersey, New York and Missouri. AstraZeneca is also aware of over 600 additional cases that have been filed but not yet served and has not
determined how many additional cases, if any, may have been filed. Some of the cases also include claims against other pharmaceutical
manufacturers such as Eli Lilly, Janssen Pharmaceutica and/or Bristol-Myers Squibb. AstraZeneca intends to vigorously defend all of the
Seroquel cases.
In September 2005, AstraZeneca received a notice from Teva Pharmaceuticals USA that Teva had submitted an Abbreviated New Drug
Application (ANDA) for quetiapine fumarate 25mg tablets containing a paragraph IV certification alleging invalidity, unenforceability, or non-
infringement respecting AstraZenecas US patent listed in the FDAs Orange Book with reference to Seroquel. In November 2005, AstraZeneca
filed a lawsuit directed to Tevas 25mg tablets ANDA in the US District Court for the District of New Jersey for wilful patent infringement.
In February 2006, AstraZeneca received another notice from Teva Pharmaceuticals USA that Teva had amended its previously submitted ANDA
for quetiapine fumarate 25mg tablets and added 100, 200 and 300mg tablets to its application to the US FDA. The amended ANDA
submission contained a similar paragraph IV certification alleging invalidity, unenforceability, or non-infringement in respect of AstraZenecas
US patent listed in the FDAs Orange Book with reference to Seroquel. In March 2006, in response to Tevas amended ANDA and Tevas intent
to market additional strengths of a generic version of Seroquel in the US prior to the expiration of AstraZenecas patent, AstraZeneca filed an
additional lawsuit against Teva in the US District Court for the District of New Jersey for patent infringement.

The two lawsuits were consolidated in April 2006. However in March 2006, the US District Court had granted Tevas motion to strike AstraZenecas
added allegation of wilfullness in its patent infringement claim in the first complaint directed to Tevas 25mg tablets. Therefore, in the consolidated
action, in response to AstraZenecas now-combined allegations of patent infringement directed to Tevas 25, 100, 200 and 300mg ANDA tablets,
Teva alleges non-infringement and patent invalidity. In January 2007, Teva filed a motion seeking leave to amend its pleadings in the consolidated
action to add allegations, defences, and counter-claims directed to alleged inequitable conduct in the procurement of AstraZenecas patent.
Discovery in the consolidated case is proceeding.
AstraZeneca continues to have full confidence in and will vigorously defend and enforce its intellectual property protecting Seroquel.
Symbicort (budesonide/formoterol)
In March 2005, the European Patent Office ruled that the European patent covering the combination of formoterol and budesonide in Symbicort
is valid. The patent, which expires in 2012 (Supplementary Patent Certificate expires 2015), was challenged by the generic manufacturers
Yamanouchi Europe BV, Miat SpA, Liconsa, Chiesi Farmaceutici SpA, Zambon Group SpA, Generics (UK) Limited and Norton Healthcare Ltd.
In May 2005, the European Patent Office ruled that the European patent for Symbicort in the treatment of chronic obstructive pulmonary disease
(COPD) is valid. The patent, which expires in 2018, was challenged by the generic manufacturers Chiesi Farmaceutici SpA, Norton Healthcare Ltd
and Generics (UK) Limited.
The European Patent Office rulings relating to both the combination and the COPD European patents for Symbicort have been appealed by
certain of the opponents in the proceedings. It is not anticipated that the appeals will be heard before the latter part of 2007.
In February 2004, IVAX Pharmaceuticals (UK) Limited initiated proceedings against AstraZeneca AB claiming that the UK parts of the two
European patents related to Symbicort were invalid. In May 2004, the court granted AstraZenecas application for a stay of the proceedings
pending the determination of the parallel opposition proceedings before the European Patent Office, described above. In April 2004, IVAX
initiated proceedings against AstraZeneca AB in relation to the Republic of Ireland claiming that the Irish parts of the two European patents
related to Symbicort were invalid. In October 2004, the court granted AstraZenecas application for a stay of proceedings pending the final
decision of the European Patent Office and its Boards of Appeal in the opposition proceedings.
Toprol-XL (metoprolol succinate)

In May 2003, AstraZeneca filed a patent infringement action against KV Pharmaceutical Company in the US District Court for the Eastern District
of Missouri in response to KVs notification of its intention to market a generic version of Toprol-XL tablets in the 200mg dose prior to the expiration
of AstraZenecas patents covering the substance and its formulation. In response to later similar notices from KV related to the 25, 50 and 100mg
doses, AstraZeneca filed further actions. KV responded in each instance and filed counterclaims alleging non-infringement, invalidity and
unenforceability of the listed patents.
In February 2004, AstraZeneca filed a patent infringement action against Andrx Pharmaceuticals LLC in the US District Court for the District of
Delaware in response to Andrxs notification of its intention to market a generic version of Toprol-XL tablets in the 50mg dose prior to the expiration
of AstraZenecas patents. In response to two later similar notices from Andrx related to the 25,100 and 200mg doses, AstraZeneca filed two
additional patent infringement actions in the same court. In each instance, Andrx claimed that each of the listed patents is invalid, not infringed
and unenforceable.
In April 2004, AstraZeneca filed a patent infringement action against Eon Labs Manufacturing Inc. in the US District Court for the District of Delaware
in response to Eons notification of its intention to market generic versions of Toprol-XL tablets in the 25, 50, 100 and 200mg doses prior to the
expiration of AstraZenecas patents. In its response, Eon alleged that each of the listed patents is invalid, not infringed and unenforceable.
Eon also alleged that the filing of the infringement complaints, as well as other actions by AstraZeneca, constitutes anti-competitive conduct in
violation of US anti-trust laws. Pursuant to a joint motion of AstraZeneca and Eon these anti-trust counts were severed from the case and stayed,
for possible consideration depending on the outcome of the trial of the patent claims.
All of the patent litigation relating to Toprol-XL against KV, Andrx and Eon was consolidated for pre-trial discovery purposes and motion practice
in the US District Court for the Eastern District of Missouri. The defendants filed a motion for summary judgment in December 2004 alleging that
the Toprol-XL patents are invalid due to double patenting. A summary judgment motion of unenforceability was filed by the defendants in 2005
and AstraZeneca filed summary judgment motions on infringement and validity in 2005. In January 2006, the US District Court for the Eastern
District of Missouri issued a ruling finding that the two patents-in-suit are unenforceable (based on the Companys inequitable conduct in the
prosecution of these patents in the US Patent and Trademark Office) and invalid. AstraZeneca appealed the District Court decision to the US
Court of Appeals for the Federal Circuit. The appeal was fully briefed in 2006 and was argued on 8 December 2006. We await the decision of
the Court of Appeals.
In August 2006, Sandoz (formerly Eon) received final approval from the US Food and Drug Administration (FDA) on the 25mg dose of metoprolol
succinate and tentative approval on the 50, 100 and 200mg doses. On 21 November 2006, Sandoz launched its 25mg metoprolol succinate
product, which was followed by Par Pharmaceuticals launch of a 25mg generic metoprolol succinate under a distribution agreement by
AstraZeneca. There is no longer a stay in effect on the approval of the ANDAs filed by KV and Andrx but neither has received FDA approval.

In the first quarter of 2006, AstraZeneca was served with 14 complaints filed in the US District Courts in Delaware, Massachusetts, and Florida
against AstraZeneca Pharmaceuticals LP, AstraZeneca LP, AstraZeneca AB and Aktiebolaget Hssle. The complaints were putative class
actions filed on behalf of both direct purchasers and indirect purchasers that allege that the AstraZeneca defendants attempted to illegally
maintain monopoly power in the US over Toprol-XL in violation of the Sherman Act through the listing of invalid and unenforceable patents in
the FDAs Orange Book and the enforcement of such patents through litigation against generic manufacturers seeking to market metoprolol
succinate. The complaints seek treble damages based on alleged overcharges to the putative classes of plaintiffs. The lawsuit is based upon
the finding described above by the US District Court for the Eastern District of Missouri in the consolidated litigation against KV, Andrx and Eon
that the AstraZeneca patents relating to Toprol-XL are invalid and unenforceable. As noted above, AstraZeneca is appealing the ruling in the
patent litigation. These 14 complaints were consolidated into two amended complaints, one on behalf of direct purchasers, and one on behalf
of indirect purchasers. AstraZeneca has filed a motion seeking to dismiss or in the alternative stay the consolidated complaint in both cases.
AstraZeneca denies the allegations of the anti-trust complaints and will vigorously defend the lawsuits.
AstraZeneca continues to maintain that its patents for Toprol-XL are valid, enforceable and infringed by the actual and proposed generic
products of KV, Andrx and Eon and that its enforcement of its patents did not violate anti-trust laws.
Zestril (lisinopril)
In 1996, two of AstraZenecas predecessor companies, Zeneca Limited and Zeneca Pharma Inc. (as licensees), Merck & Co., Inc. and Merck
Frosst Canada Inc. commenced a patent infringement action in the Federal Court of Canada against Apotex Inc., alleging infringement of Mercks
lisinopril patent. Apotex sold a generic version of AstraZenecas Zestril and Mercks Prinivil tablets. Apotex admitted infringement but has
raised positive defences to infringement, including that it acquired certain quantities of lisinopril prior to issuance of the patent and that certain
quantities were licensed under a compulsory licence. Apotex also alleged invalidity of the patent. Following a trial in early 2006, in April 2006
the Federal Court of Canada ruled in favour of AstraZeneca and Merck on the key issues and Apotex stopped selling lisinopril in May 2006.
In October 2006, the Federal Court of Appeal in Canada upheld the lower courts decision and dismissed Apotexs appeal. In December 2006
Apotex sought leave to appeal to the Supreme Court of Canada and the application remains pending.
AstraZeneca (as licensee) also had a case pending in the Federal Court of Canada against Cobalt Pharmaceuticals Inc., pertaining to the same
Merck lisinopril patent, on the basis that Cobalt was seeking a notice of compliance (marketing approval) in Canada based on a comparison with
AstraZenecas Zestril.
However, in 2006, Cobalt withdrew its notice of allegation relating to lisinopril and AstraZeneca discontinued its case against Cobalt.
Zestoretic (lisinopril/hydrochlorothiazide)
AstraZeneca (as licensee) had a case pending in the Federal Court of Canada against Apotex Inc., pertaining to Mercks lisinopril/hydrochlorothiazide
combination patent, on the basis that Apotex was seeking a notice of compliance (marketing approval) in Canada based on a comparison with
AstraZenecas Zestoretic. AstraZeneca is potentially liable for damages in the event that Apotexs market entry is held to have been improperly delayed.
The case against Apotex was discontinued by AstraZeneca in August 2006. Apotexs combination product will likely remain off the market until
the expiry of a relevant patent in October 2007.
Average wholesale price class action litigation

In January 2002, AstraZeneca was named as a defendant along with 24 other pharmaceutical manufacturers in a class action suit, in Massachusetts,
brought on behalf of a putative class of plaintiffs alleged to have overpaid for prescription drugs as a result of inflated wholesale list prices.
Following the Massachusetts complaint, nearly identical class action suits were filed against AstraZeneca and various other pharmaceutical
manufacturers in four other states. AstraZeneca and other manufacturers have since been sued in similar lawsuits filed by the state Attorneys
General of Pennsylvania, Nevada, Montana, Wisconsin, Illinois, Alabama, Kentucky, Arizona, Mississippi, Hawaii, and Alaska, as well as by
multiple individual counties in the State of New York. The Attorney General lawsuits seek to recover alleged overpayments under Medicaid
and other state-funded healthcare programmes. In several cases, the states are also suing to recover alleged overpayments by state residents.
Several of these suits have been consolidated with the Massachusetts action for pre-trial purposes, pursuant to federal multi-district litigation
(MDL) procedures.
In January 2006, the District Court in Boston certified three classes of plaintiffs against the Track 1 manufacturer defendants, AstraZeneca,
GlaxoSmithKline, Bristol-Myers Squibb, Schering-Plough, and Johnson & Johnson. The three certified classes are: (Class1) a nationwide class
of consumers who made co-payments for certain physician-administered drugs reimbursed under the Medicare Part B programme (Part B drugs);
(Class 2) a Massachusetts-only class of third-party payers, including insurance companies, union health and welfare benefit plans, and self-
insured employers, who covered consumer co-payments for Part B drugs; and (Class 3) a Massachusetts-only class of third-party payers
and consumers who paid for Part B drugs outside of the Medicare programme. For all classes, the only AstraZeneca drug at issue is Zoladex
(goserelin acetate implant).

A bench trial against four of the Track 1 defendants, including AstraZeneca, by Classes 2 and 3 began on 6 November 2006 and concluded on
26 January 2007. The Court has yet to render its decision. A separate jury trial against AstraZeneca only, by Class 1, is scheduled for 30 April 2007.
The multiple Attorney General lawsuits filed in state courts are proceeding independently of the Boston MDL proceeding. The first trials that
potentially involve AstraZeneca are scheduled for November 2007 in the Alabama and Mississippi Attorney General cases.
AstraZeneca denies the allegations made in all of the average wholesale price lawsuits and will vigorously defend the actions.
340B Class Action Litigation

In August 2004, AstraZeneca was named as a defendant along with multiple other pharmaceutical manufacturers in a class action suit filed
in Alabama Federal Court on behalf of all so-called disproportionate share entities. These are the hospitals and clinics that treat a substantial
portion of uninsured patients and thus qualify for preferential pricing under the Public Health Service Act drug discount programme (the 340B
Program). According to the complaint, the genesis of the suit was an audit report by the Department of Health and Human Services Office of
Inspector General (OIG) in June 2004. The OIG later withdrew the audit report and in 2006, re-issued a revised audit report that substantially
modified the previous audit findings. After the issuance of the revised OIG audit report, the named plaintiffs voluntarily dismissed their lawsuit
against the defendants.
A similar class action suit was filed in August 2005 by the County of Santa Clara in California state court. The County of Santa Clara sued as
a representative of a class of similarly situated counties and cities in California alleged to have overpaid for 340B-covered drugs. The case was
removed to the US District Court for the Northern District of California. In 2006, the US District Court dismissed each of the allegations in the
Countys complaint. The County appealed the dismissal to the US Court of Appeals for the North Circuit. AstraZeneca denies the allegations
in the Countys complaint and intends to continue to defend them vigorously.
Additional government investigations into drug marketing practices

As is true for most, if not all, major prescription pharmaceutical companies operating in the US, AstraZeneca is currently involved in multiple US
federal and state criminal and civil investigations into drug marketing and pricing practices. Two of the active investigations are being handled
by the US Attorneys Office in Boston. The first involves a subpoena for documents and information relating to sales and marketing interactions
with a leading provider of pharmacy services to long-term care facilities. The second involves an investigation relating to the sale and marketing
of products to an individual physician in Worcester, Massachusetts and certain physicians and entities affiliated with that physician. These
investigations may be the subject of sealed qui tam lawsuits filed under the False Claims Act.
The US Attorneys Office in Philadelphia is directing three additional, active investigations. The first two involve requests for documents and
information relating to contracting and disease management programmes with two of the leading national Pharmacy Benefits Managers.
The third involves a review of sales and marketing practices relating to Seroquel, including allegations that the Company promoted Seroquel for
non-indicated (off-label) uses. AstraZeneca understands that all of these investigations may be the subjects of sealed qui tam lawsuits filed
under the False Claims Act.
There are a number of additional active investigations led by state Attorneys General. These include subpoenas received in September 2006
from the Alaska and California Attorney Generals Offices seeking information relating to Seroquel sales and marketing practices. In addition,
the Nevada and Delaware Attorney Generals Offices have requested documents and information relating to the development of patient
education and practice management materials for physicians.
It is not possible to predict the outcome of any of these investigations, which could include the payment of damages and the imposition of
fines, penalties and administrative remedies.
Informal SEC inquiry

In October 2006, AstraZeneca received from the US Securities and Exchange Commission (SEC) a letter requesting documents related
to its business activities in Italy, Croatia, Russia and Slovakia for the period 1 October 2003 to the present. The SECs request generally seeks
documents concerning any payments to doctors or government officials and related internal accounting controls. The request also seeks
policies, correspondence, audits and other documents concerning compliance with the Foreign Corrupt Practices Act, as well as any allegations
or communications with prosecutors offices relating to corruption or bribery of doctors or government officials. AstraZeneca is in the process
of responding to the SECs request. It is not currently possible to predict the outcome of this inquiry.
Drug importation anti-trust litigation

In May 2004, plaintiffs in a purported class action filed complaints in the US District Court for Minnesota and for New Jersey, alleging that
AstraZeneca Pharmaceuticals LP and eight other pharmaceutical manufacturer defendants conspired to prevent American consumers from
purchasing prescription drugs from Canada, depriving consumers of the ability to purchase drugs at competitive prices. The New Jersey case
was voluntarily dismissed in July 2004. In August 2005, the Minnesota District Court dismissed with prejudice the plaintiffs federal anti-trust
claims and declined to exercise supplemental jurisdiction in relation to the state statutory and common law claims, which claims were dismissed
without prejudice. The plaintiffs appealed the District Courts decision to the US Court of Appeals for the Eighth Circuit. In November 2006,
the US Court of Appeals for the Eighth Circuit affirmed the District Courts decision.

In August 2004, Californian retail pharmacy plaintiffs filed an action in the Superior Court of California making similar allegations to the Minnesota
action and also alleging a conspiracy by approximately 15 pharmaceutical manufacturer defendants to set the price of drugs sold in California
at or above the Canadian sales price for those same drugs. In July 2005, the court overruled in part and sustained in part, without leave to
amend, the defendants motion to dismiss the plaintiffs third amended complaint in these proceedings. The Court overruled the defendants
motion in respect of conspiracy claims but sustained the motion in respect of the California Unfair Competition Law claims. On 15 December
2006, the court granted the defendants motion for summary judgment and the case will be dismissed. In January 2007, plaintiffs filed a Notice
of Appeal with the Court of Appeal of the State of California.
AstraZeneca denies the material allegations of both the Minnesota and California actions and is vigorously defending these matters.
Anti-trust
In July 2006, AstraZeneca Pharmaceuticals LP was named as a defendant, along with a number of other pharmaceutical manufacturers and
wholesalers, in a complaint filed by RxUSA Wholesale, Inc. in the US District Court for the Eastern District of New York. The complaint alleges
that the defendants violated federal and state anti-trust laws by, among other things, allegedly refusing to deal with RxUSA and other secondary
wholesalers in the wholesale pharmaceutical industry. The plaintiff alleges a conspiracy among the manufacturers and seeks an injunction and
treble damages. AstraZeneca vigorously denies the allegations and in November 2006 filed a motion to dismiss the complaint.
For a description of other anti-trust-related litigation involving AstraZeneca, see the subsections entitled Losec/Prilosec (omeprazole),
Nolvadex (tamoxifen) and Toprol-XL (metoprolol succinate) in this Note 26 to the Financial Statements.
StarLink
AstraZeneca Insurance Company Limited (AZIC) commenced arbitration proceedings in the UK against insurers in respect of amounts paid
by Garst Seed Company of the US in settlement of claims arising in the US from Garsts sale of StarLink, a genetically engineered corn seed.
The English High Court ruled, on appeal by reinsurers from a preliminary finding in AZICs favour by the arbitration panel, that English law applies
to recovery under the reinsurance arrangements. This is contrary to AZICs view, which is that recovery should be assessed under Iowa law,
and AZIC sought leave to appeal this finding to the Court of Appeal. Leave to appeal was refused and in the circumstances AZIC decided not
to proceed further with the case. Taking into account recoveries and a central provision, taken in 2004, this will have no impact on 2006 profits.
AstraZenecas interest in Garst was through AstraZenecas 50% ownership of Advanta BV, the sale of which to Syngenta AG was announced
in May 2004 and completed in September 2004.
General
With respect to each of the legal proceedings described above, other than those which have been disposed of, we are unable to make estimates
of the possible loss or range of possible losses at this stage, other than where noted in the case of the European Commission fine. We also do
not believe that disclosure of the amount sought by plaintiffs, if that is known, would be meaningful with respect to those legal proceedings.
This is due to a number of factors including: the stage of the proceedings (in many cases trial dates have not been set) and overall length and
extent of legal discovery; the entitlement of the parties to an action to appeal a decision; clarity as to theories of liability; damages and governing
law; uncertainties in timing of litigation; and the possible need for further legal proceedings to establish the appropriate amount of damages,
if any. However, although there can be no assurance regarding the outcome of any of the legal proceedings or investigations referred to in this
Note 26 to the Financial Statements, we do not expect them to have a materially adverse effect on our financial position or profitability.
Taxation
Where tax exposures can be quantified, a provision is made based on best estimates and managements judgement. Details of the movements
in relation to material tax exposures are discussed below.
AstraZeneca faces a number of transfer pricing audits in jurisdictions around the world. The issues under audit are often complex and can
require many years to resolve. Accruals for tax contingencies require management to make estimates and judgements with respect to the
ultimate outcome of a tax audit, and actual results could vary from these estimates. The total net accrual included in the Financial Statements
to cover the worldwide exposure to transfer pricing audits is $995m, an increase of $452m due to a number of new audits, revisions of estimates
relating to existing audits, offset by a number of negotiated settlements. For certain of the audits, AstraZeneca estimates the potential for additional
losses above and beyond the amount provided to be up to $445m; however, management believes that it is unlikely that these additional losses
will arise. Of the remaining tax exposures, the Company does not expect material additional losses. It is not possible to estimate the timing of
tax cash flows in relation to each outcome. Included in the provision is an amount of interest of $265m. Interest is accrued as a tax expense.
27 LEASES
Total rentals under operating leases charged to the income statement were as follows:
2006 2005 2004
$m $m $m
197 155 127
The future minimum lease payments under operating leases that have initial or remaining terms in excess of one year at 31 December 2006 were
as follows:
Operating leases
2006 2005 2004
$m $m $m
Obligations under leases comprise
Rentals due within one year 211 83 112
Rentals due after more than one year:
After five years 88 90 69
From four to five years 22 18 28
From three to four years 31 26 35
From two to three years 43 41 45
From one to two years 56 52 63
240 227 240
451 310 352
28 STATUTORY AND OTHER INFORMATION

2006 2005 2004
$m $m $m
Fees payable to KPMG Audit Plc and its associates:
Group audit fee 3.1 2.5 1.7
Fees payable to KPMG Audit Plc and its associates for other services:
The audit of subsidiaries pursuant to legislation 5.4 5.0 4.4
Other services pursuant to legislation 4.1 0.8 1.4
Taxation 1.2 1.0 2.0
All other services 1.0 2.2 1.8
Fees payable to KPMG Audit Plc in respect of the Companys pension schemes:
The audit of subsidiaries pension schemes 0.5 0.5 0.5
15.3 12.0 11.8
Other services pursuant to legislation includes fees of $3.2m (2005 $nil, 2004 $nil) in respect of Sarbanes-Oxley s404. All other services include
$nil (2005 $1.8m, 2004 $1.1m) in respect of Sarbanes-Oxley s404.
Taxation services consist of tax compliance services and tax advice.
Related party transactions

The Group had no material related party transactions which might reasonably be expected to influence decisions made by the users of these
Financial Statements.
Key management personnel compensation

2006 2005 2004
$000 $000 $000
Short-term employee benefits 21,321 19,334 17,382
Post-employment benefits 3,191 1,731 1,595
Share-based payments 8,417 5,663 6,086
32,929 26,728 25,063
Total remuneration is included within employee costs (Note 25). The prior periods have been restated.
Subsequent events
Other than the completion of the two collaboration agreements and the acquisition agreement signed in January 2007 (as set out in Note 26)
there were no material subsequent events.
29 SHARE CAPITAL OF PARENT COMPANY

Authorised Allotted, called-up and fully paid
2006 2006 2005 2004
$m $m $m $m
Issued Ordinary Shares ($0.25 each) 383 383 395 411
Unissued Ordinary Shares ($0.25 each) 217
Redeemable Preference Shares (1 each 50,000)
600 383 395 411
The total authorised number of Ordinary Shares at 31 December 2006 was 2,400,000,000, of which 1,532,245,608 Ordinary Shares were in issue.
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 movements in share capital during the year can be summarised as follows:
No. of shares
(million) $m
At 1 January 2006 1,581 395
Issues of shares 23 6
Re-purchase of shares (72) (18)
At 31 December 2006 1,532 383
Share re-purchase
During the year the Company re-purchased, and subsequently cancelled, 72,205,192 Ordinary Shares at an average price of 3059 pence per
share. The total consideration, including expenses, was $4,147m. The excess of the consideration over the nominal value has been charged
against retained earnings.
Share schemes
A total of 23,548,800 Ordinary Shares were issued during the year in respect of share schemes. Details of movements in the number of
Ordinary Shares under option are shown in Note 25; details of options granted to Directors are shown in the Directors Remuneration Report.
Shares held by subsidiaries

No shares in the Company are held by subsidiaries in any year.
PRINCIPAL SUBSIDIARIES
Percentage of voting
At 31 December 2006 Country share capital held Principal activity
UK
AstraZeneca UK Limited England 1001 Research and development,
manufacturing, marketing
AstraZeneca Reinsurance Limited England 100 Insurance and reinsurance underwriting
AstraZeneca Treasury Limited England 100 Treasury
Continental Europe
NV AstraZeneca SA Belgium 100 Manufacturing, marketing
AstraZeneca Dunkerque Production SCS France 100 Manufacturing
AstraZeneca SAS France 100 Research, manufacturing, marketing
AstraZeneca GmbH Germany 100 Development, manufacturing, marketing
AstraZeneca Holding GmbH Germany 100 Manufacturing, marketing
AstraZeneca SpA Italy 100 Manufacturing, marketing
AstraZeneca Farmaceutica Spain SA Spain 100 Manufacturing, marketing
AstraZeneca AB Sweden 100 Research and development,
AstraZeneca BV The Netherlands 100 Marketing
The Americas
AstraZeneca Canada Inc. Canada 100 Research, manufacturing, marketing
IPR Pharmaceuticals Inc. Puerto Rico 100 Development, manufacturing, marketing
AstraZeneca LP US 99 Research and development,
AstraZeneca Pharmaceuticals LP US 100 Research and development,
Zeneca Holdings Inc. US 100 Manufacturing, marketing
Asia, Africa & Australasia

AstraZeneca Pty Limited Australia 100 Development, manufacturing, marketing
AstraZeneca KK Japan 80 Manufacturing, marketing
1
Shares held directly
The companies and other entities listed above are those whose results or financial position principally affected the figures shown in the Group
Financial Statements. A full list of subsidiaries, joint ventures and associates will be annexed to the Companys next annual return filed with the
Registrar of Companies. The country of registration or incorporation is stated alongside each company. The accounting year ends of subsidiaries
and associates are 31 December, except for Aptium Oncology, Inc. which, owing to local conditions and to avoid undue delay in the preparation
of the Financial Statements, is 30 November. AstraZeneca operates through 240 subsidiaries worldwide. The Group Financial Statements
consolidate the Financial Statements of AstraZeneca PLC and its subsidiaries at 31 December 2006. Products are manufactured in 19 countries
worldwide and are sold in over 100 countries.
ADDITIONAL INFORMATION FOR US INVESTORS 149
ADDITIONAL INFORMATION FOR US INVESTORS
INTRODUCTION DIFFERENCES BETWEEN INTERNATIONAL AND Pension and post-retirement benefits

The accompanying consolidated Financial US ACCOUNTING PRINCIPLES Adopted IFRS requires that in respect of
Statements included in this Annual Report Purchase accounting adjustments defined benefit plans, obligations are measured
are prepared in accordance with adopted Under adopted IFRS, the merger of Astra and at discounted fair value whilst plan assets are
IFRSs. There are certain significant differences Zeneca is accounted for as a merger of equals recorded at fair value. The operating and
between adopted IFRS and US GAAP (pooling-of-interests) as a result of the business financing costs of such plans are recognised
which affect AstraZenecas net income and combinations exemption permitted by IFRS 1 separately in the income statement; service
shareholders equity and, on pages 149 to First-time Adoption of International Financial costs are spread systematically over the
156, additional information under US GAAP is Reporting Standards. Under US GAAP, the lives of employees and financing costs are
set out as follows: merger was accounted for as the acquisition of recognised in the periods in which they arise.
Astra by Zeneca using purchase accounting. US GAAP adopts a similar approach. Under
> Summary of differences between adopted Under purchase accounting, the assets and adopted IFRS, actuarial gains and losses are
IFRS and US GAAP accounting principles; liabilities of the acquired entity are recorded at permitted to be recognised immediately in
pages 149 to 150. fair value. As a result of the fair value exercise, the statement of recognised income and
increases in the values of Astras property, plant expense. Under US GAAP, such actuarial
> Net income; page151. and equipment and inventory were recognised gains and losses are permitted to be amortised
and values attributed to its in-process research on a straight-line basis over the average
> US GAAP condensed consolidated and development and existing products, remaining service period of employees.
statement of operations; page151. together with appropriate deferred taxation
effects. The difference between the cost of The funded status of all post-retirement
> US GAAP statement of comprehensive investment and the fair value of the assets and benefit plans, being the difference between
income; page152. liabilities of Astra was recorded as goodwill. the fair value of the plan assets and its benefit
The amount allocated to in-process research obligation, is now recognised on the Group
> Stock-based compensation; page152. and development was, as required by US GAAP, balance sheet under US GAAP.
expensed immediately in the first reporting
> Pension and post-retirement benefits; period after the business combination. Fair Intangible assets
pages152 to 154. value adjustments to the recorded amount Under adopted IFRS, certain payments to third
of inventory were expensed in the period the parties for rights to compounds in development
> Taxation; page 155. inventory was utilised. Additional amortisation are capitalised and amortised over their
and depreciation have also been recorded in economic lives from launch. Under US GAAP,
> Shareholders equity; page155. respect of the fair value adjustments to tangible these payments are generally expensed.
and intangible assets.
> Acquired intangible assets and goodwill; In-process research & development (IPR&D)
page156. Under adopted IFRS, up until 31 December Under adopted IFRS, IPR&D compounds
2002, goodwill was required to be capitalised acquired in a business combination are
and amortised. From 1 January 2003, capitalised as intangible assets and
goodwill is tested annually for impairment but amortised, generally on a straight line basis,
not amortised. Under US GAAP, there is an over their economic lives from launch. Such
equivalent requirement, but the effective date intangible assets are subject to impairment
was 1 January 2002. testing at each balance sheet date. Deferred
tax is provided for IPR&D assets acquired in
Capitalisation of interest a business combination. Under US GAAP,
AstraZeneca does not capitalise interest under such assets are expensed immediately in
adopted IFRS. US GAAP requires interest the first reporting period after the business
incurred as part of the cost of constructing combination. Consequently no deferred
property, plant and equipment to be capitalised tax is provided, resulting in a reconciling
and amortised over the life of the asset. adjustment to deferred tax and goodwill.
Deferred taxation Financial instruments and hedging activities

Under adopted IFRS, full provision for deferred Under adopted IFRS, certain financial assets and
taxation is made although there are a number certain financial liabilities (including derivatives)
of different bases from US GAAP on which this are recognised at fair value; movements in the
calculation is made; for example, the elimination fair value may be recorded in equity or through
of intra-group profit on inventories and share- income, depending upon their designation.
based payment transactions. Deferred taxation Under US GAAP, marketable securities are
is provided on a full liability basis under US recognised at fair value, with movements in
GAAP, which requires deferred tax assets to fair value taken to a separate component of
be recognised without a valuation allowance equity. Derivatives are also measured at fair
if their realisation is considered to be more value with movements taken through income.
likely than not. However, financial liabilities are recorded at
amortised cost.
ADDITIONAL INFORMATION FOR US INVESTORS CONTINUED
New accounting standards adopted In March 2006, the FASB issued SFAS No. 156
In May 2005, the FASB issued SFAS No. 154 Accounting for Servicing of Financial Assets
Accounting Changes and Error Corrections requiring an entity to separately recognise
a replacement of APB Opinion No. 20 and a servicing asset or liability when it undertakes
FASB Statement No. 3. SFAS No. 154 requires an obligation to service a financial asset in
retrospective application of prior periods certain conditions. Such assets or liabilities
financial statements for changes in accounting must be initially measured at fair value and
principle. SFAS No. 154 applies to accounting can be subsequently measured using the
periods beginning after 15 December 2005 amortisation or fair value measurement
and has been adopted in the year. There has methods. SFAS No. 156 is effective for fiscal
been no impact upon the results or net assets years beginning after 15 September 2006.
of AstraZeneca following adoption. The adoption of SFAS No. 156 is not expected
to have a material effect on the results or net
AstraZeneca has adopted the provisions assets of AstraZeneca.
of SFAS No. 158 Employers Accounting
for Defined Benefit Pension and Other In February 2006, the FASB issued SFAS
Postretirement Plans an amendment of No. 155 Accounting for Certain Hybrid
FASB Statements No. 87, 88, 106, and 132(R) Financial Instruments to allow an entity
in 2006. SFAS No. 158 requires a company to make an irrevocable election, on an
that sponsors a post-retirement defined benefit instrument-by-instrument basis, to fair value
plan to fully recognise, as an asset or liability, in its entirety a hybrid financial instrument
the overfunded or underfunded status of its containing an embedded derivative, rather
benefit plans on its year end balance sheet. than bifurcate the embedded derivative from
The funded status is measured as the its host contract and fair value each component
difference between the fair value of the separately in accordance with SFAS No. 133
plans assets and its projected benefit Accounting for Derivative Instruments and
obligation for pension plans and accumulated Hedging Activities. SFAS No. 155 is effective
post-retirement obligation for other retirement for fiscal years beginning after 15 September
benefit plans. The initial impact of the standard 2006. The adoption of SFAS No. 155 is not
due to unrecognised prior service costs or expected to have a material effect on the
credit and net actuarial gains or losses as well results or net assets of AstraZeneca.
as subsequent changes in the funded status
is recognised as a component of accumulated In June 2006, the FASB issued FASB
other comprehensive income. The statement Interpretation No. 48 Accounting for
requires application as of the end of fiscal Uncertainty in Income Taxes an interpretation
years ending after 15 December 2006 for of FASB Statement No. 109 (FIN 48).
recognition of the asset or liability related to The Interpretation establishes a two-step
the funded status of plans. Adoption of SFAS approach for recognising and measuring
No. 158 has led to the recognition of a liability tax benefits, with tax positions only to be
of $1,890m as at 31 December 2006 in respect recognised when considered to be more
of pension and post-retirement plans and a likely than not sustained upon examination
decrease to our accumulated OCI of $1,624m. by the taxing authority. Explicit disclosures
Statement No. 158 does not change the are required at the end of each reporting
computation of benefit expense recognised period about uncertainties in the entitys tax
in the income statement, consequently there position. The Company is currently in the
has been no amendment to this computation process of quantifying the effect of adoption
in the current year. of FIN 48 on the results and net assets of
AstraZeneca.
New accounting standards not adopted
In September 2006, the FASB issued SFAS
No. 157 Fair Value Measurements to provide
a single definition of fair value, being a market-
based measurement, and set out a fair value
hierarchy. SFAS No. 157 is effective for fiscal
years beginning after 15 November 2007.
The adoption of SFAS No. 157 is not expected
to have a material effect on the results or net
assets of AstraZeneca.
NET INCOME
As a result of the significant difference between the adopted IFRS and US GAAP treatment of the combination of Astra and Zeneca in the year of
acquisition, and in the results of preceding periods, condensed statements of operations under US GAAP have been prepared for the benefit of
US investors.
The following is a summary of the adjustments to net income and shareholders equity which would have been required if US GAAP had been
applied instead of adopted IFRS.
2006 2005 2004

For the years ended 31 December $m $m $m
Net income for the period under adopted IFRS 6,043 4,706 3,664
Adjustments to conform to US GAAP

Purchase accounting adjustments (including goodwill and intangibles)
Deemed acquisition of Astra
Amortisation and other acquisition adjustments (1,017) (1,019) (1,014)
In-process research and development (502)
Capitalisation, less disposals and amortisation of interest (21) (13) (1)
Deferred taxation
On fair values of Astra 283 283 283
Others (101) 65 55
Pension and other post-retirement benefits expense (128) (74) (52)
Financial instruments 7 (35) 61
In-licensed development intangibles (193) (29) (46)
Other 21 1
Net income in accordance with US GAAP 4,392 3,884 2,951
US GAAP CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

2006 2005 2004
Sales 26,475 23,950 21,426
Cost of sales (5,562) (5,356) (5,152)
Distribution costs (226) (211) (177)
Research and development (4,042) (3,429) (3,900)
Selling, general and administrative expenses (9,238) (8,783) (8,003)
Amortisation of intangibles (1,007) (1,009) (953)
Other income and expense 524 193 534
Operating income 6,422 5,355 3,775
Net interest income/(expense) 268 123 (1)
Income from continuing operations before taxation 6,690 5,478 3,774
Taxes on income from continuing operations (2,298) (1,594) (823)
Net income from continuing operations 4,392 3,884 2,951
Weighted average number of $0.25 Ordinary Shares in issue (millions) 1,564 1,617 1,673
Dilutive impact of share options outstanding (millions) 6 1 2
Diluted weighted average number of $0.25 Ordinary Shares (millions) 1,570 1,618 1,675
Net income per $0.25 Ordinary Share and ADS in accordance with US GAAP basic $2.81 $2.40 $1.76
Net income per $0.25 Ordinary Share and ADS in accordance with US GAAP diluted $2.80 $2.40 $1.76
US GAAP STATEMENT OF COMPREHENSIVE INCOME

2006 2005 2004
Exchange gains/(losses) net of tax 2,628 (3,279) 2,106
Transitional obligation upon adoption of SFAS No. 158 (17)
Prior service cost, upon adoption of SFAS No.158 (89)
Net loss, upon adoption of SFAS No.158 (1,358)
Recognition of minimum liability (160) 181
Tax effect of adoption of SFAS No. 158 452
Other movements, net of tax (14) 37 20
Total comprehensive income 5,834 823 5,077
Tax effects on exchange gains/(losses) were $(77)m and on other movements $44m. The cumulative exchange gains and losses (net of tax) on
the translation of foreign currency financial statements under US GAAP are set out in the following note:
2006 2005 2004
Balance at 1 January 1,063 4,342 2,236
Movement in year 2,628 (3,279) 2,106
Balance at 31 December 3,691 1,063 4,342
The cumulative total of other movements (net of tax) at 31 December 2006 was a charge of $1,102m (2005 credit of $84m, 2004 charge of $134m).
STOCK-BASED COMPENSATION
The Group adopted SFAS No. 123(R) Share-Based Payments in the prior year in respect of share options granted and applied its provisions
retrospectively. The total compensation cost for non-vested awards not yet recognised at 31 December 2006 was approximately $166m and
is expected to be recognised over a weighted average period of 21 months. $985m was received during 2006 from the exercise of share options
and similar instruments granted under share-based payment arrangements and $51m tax benefit was realised from share options exercised
during the year.
PENSION AND POST-RETIREMENT BENEFITS

For the purposes of US GAAP, the pension in respect of the UK retirement plans and of the retirement plans of the major non-UK subsidiaries has
been restated in the following tables in accordance with the requirements of SFAS No. 158 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106 and 132(R). These plans comprise substantially all of
the actuarial liabilities of all AstraZeneca retirement plans. The changes in projected benefit obligations, plan assets and details of the funded
status of these retirement plans, together with the changes in the accumulated other post-retirement benefit obligations, under SFAS No. 158 are as
follows:
Pension benefits Other post-retirement benefits

2006 2005 2004 2006 2005 2004
Change in projected benefit obligation $m $m $m $m $m $m
Benefit obligation at beginning of year 9,047 8,707 7,416 257 249 242
Service cost 280 256 229 12 12 11
Interest cost 462 419 385 13 14 14
Participant contributions 33 31 30 1 1
Actuarial loss/(gain) (104) 764 328 8 (1) (3)
Amendments 20 56
Settlement and curtailment (290) 10
Benefits paid (375) (305) (281) (18) (15) (18)
Expenses (10) 1
Exchange 1,063 (825) 590 6 (3) 2
Benefit obligation at end of year 10,126 9,047 8,707 335 257 249
PENSION AND POST-RETIREMENT BENEFITS CONTINUED

2006 2005 2004 2006 2005 2004
Change in plan assets $m $m $m $m $m $m
Fair value at beginning of year 7,368 6,972 5,905 230 217 195
Actual return on plan assets 284 1,134 565 30 13 22
Group contribution 310 165 280 18 13 17
Participant contributions 33 31 30 1
Settlements (186)
Benefits paid (375) (305) (281) (18) (15) (17)
Exchange 887 (629) 473 (1) 1
Expenses (10) 1
Fair value of plan assets at end of year 8,311 7,368 6,972 260 230 217
Funded status of plans (1,815) (1,679) (1,735) (75) (27) (32)
Unrecognised net loss 1,420 1,644 32 29
Prior service cost not recognised 25 15 (8) (11)
Unrecognised net obligation on implementation (1) 19 25
(1,815) (234) (77) (75) 16 11
Adjustments to recognise minimum liability:
Intangible assets (36)
Accumulated other comprehensive income (36) (217)
Accrued benefit (liability)/asset (1,815) (270) (330) (75) 16 11
2006 before
adoption of
SFAS No. 158 2005
Reconciliation of funded status $m $m
Funded status (1,890) (1,706)
Unrecognised net loss 1,554 1,452
Unrecognised prior service cost 89 17
Unrecognised transition obligation 17 19
Adjustment to recognise minimum liability (196) (36)
Net amount recognised (426) (254)
2006
Funded status $m
Projected benefit obligation (10,461)
Fair value of plan assets 8,571
Funded status (1,890)
Current liability
Non-current liabilities (1,890)
At 31 December 2006, the projected benefit obligation, accumulated benefit obligation and fair value of the plan assets in respect of the pension
plans above with accumulated benefit obligations in excess of plan assets were $8,087m, $7,088m and $6,352m (2005 $6,984m, $5,990m and
$5,566m), respectively. The total of accumulated benefit obligations for the pension plans was $9,043m (2005 $7,965m). The measurement
date for the plan assets and benefit obligations set out above was 31 December 2006. Contributions to the plans in 2007 are estimated to
be $266m.
PENSION AND POST-RETIREMENT BENEFITS CONTINUED

Assumed discount rates and rates of increase in remuneration used in calculating the projected benefit obligations together with long term rates
of return on plan assets vary according to the economic conditions of the country in which the retirement plans are situated. The weighted
average rates used for calculation of year end benefit obligations and forecast benefit cost in the retirement plans and other benefit obligations
were as follows:

2006 2005 2004 2006 2005 2004
% % % % % %
Discount rate 5.1 4.8 5.2 5.7 5.4 5.7
Long term rate of increase in remuneration 4.1 3.8 3.9 n/a n/a n/a
Expected long term return on assets 6.7 6.4 6.8 7.5 6.5 7.8
The Group has assumed a long term rate of increase in healthcare costs of 10%, reducing to 4.9%.

2006 2005 2004 2006 2005 2004
$m $m $m $m $m $m
Net periodic cost
Service cost present value of benefits
accruing during the year 280 256 229 12 12 11
Interest cost on projected benefit obligations 462 419 385 13 14 14
Expected return on assets (501) (431) (406) (17) (17) (15)
Settlements and curtailments 32
Net amortisation and deferral 118 111 76 6 3 3
Net periodic cost for the year 391 355 284 14 12 13
The weighted average allocation of pension and other post-retirement plan assets was as follows:
2006 2005 2004

% % %
Equities 48.6 46.6 48.2
Bonds 33.7 37.5 35.6
Other 17.7 15.9 16.2
The benefits expected to be paid in the future are as follows:
$m
2007 370
2008 384
2009 400
2010 414
2011 430
2012-2016 2,431
Estimated amount to be amortised from accumulated other comprehensive income into net periodic benefit cost during 2007 are as follows:
$m
Transition obligation 1
Prior service cost 7
Net loss 120
TAXATION
2006 2005 2004
Taxes on income from continuing operations
Current tax expense
Current year 2,438 1,747 1,349
Adjustment for prior years 270 112 (171)
Deferred tax expense
Origination and reversal of temporary differences (410) (265) (355)
Total taxation expense in the income statement 2,298 1,594 823
The table below reconciles the UK statutory tax charge with the Groups actual charge on income from continuing operations.
2006 2005 2004

Income from continuing operations 6,690 5,478 3,774
Taxation charge at UK corporation tax rate of 30% for 2006 (30% for 2005, 30% for 2004) 2,007 1,644 1,132
Differences in effective overseas tax rates (37) (147) 2
Unrecognised deferred tax asset (6) 25 25
Items not deductible for tax purposes 313 136 30
Items not chargeable for tax purposes (109) (95) (71)
Adjustments in respect of prior periods 130 31 (171)
Exceptional items (124)
Tax on income from continuing operations 2,298 1,594 823
SHAREHOLDERS EQUITY
2006 2005 2004
$m $m $m
Total shareholders equity under adopted IFRS 15,304 13,597 14,404
Adjustments to conform to US GAAP

Purchase accounting adjustments (including goodwill and intangibles)
Deemed acquisition of Astra
Goodwill 14,765 13,504 15,130
Property, plant and equipment and intangible assets 4,656 5,229 6,988
Others
Goodwill (53) 58 99
Property, plant and equipment (1)
Capitalisation, less disposals and amortisation of interest 220 241 254
Deferred taxation
On fair value of Astra (1,485) (1,629) (2,134)
On other purchase accounting adjustments 163
Others (153) (492) (618)
In-licensed development intangibles (309) (112) (83)
Pension and other post-retirement benefits (48) 1,483 1,418
Financial instruments 18 22
Others 13 (3) (3)
Shareholders equity in accordance with US GAAP 32,467 31,894 35,477
ACQUIRED INTANGIBLE ASSETS AND GOODWILL

Details of the carrying amounts of intangible assets and past and projected amortisation expenses are set out below.
2006 2005 2004

Gross carrying Accumulated Gross carrying Accumulated Gross carrying Accumulated
amount amortisation amount amortisation amount amortisation
$m $m $m $m $m $m
Product rights 14,314 (8,846) 12,961 (7,011) 14,590 (6,744)
Marketing and distribution rights 1,699 (1,183) 1,494 (1,043) 1,729 (1,043)
Software 785 (460) 652 (396) 589 (367)
Others 968 (513) 437 (310) 460 (360)
Total 17,766 (11,002) 15,544 (8,760) 17,368 (8,514)
Aggregate amortisation expense

$m
For year ended 31 December 2006 1,333
Estimated amortisation expense

$m
The weighted average amortisation period in respect of each class of intangible asset is as follows:
Product rights 13 years

Marketing and distribution rights 12 years
Software 4 years
Other 8 years
Goodwill
The changes in the carrying amount of goodwill for the three years ended 31 December 2006 were as follows:
$m
Balance as at 1 January 2004 15,306
Exchange movements 837
Balance as at 31 December 2004 16,143
Exchange movements (1,737)
Exchange movements 1,281
US GAAP CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

There are no significant differences between cash flows under adopted IFRS and US GAAP.
INDEPENDENT AUDITORS REPORT (COMPANY) 157
INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF ASTRAZENECA PLC
We have audited the Company Financial We report to you our opinion as to whether the We planned and performed our audit so as
Statements of AstraZeneca PLC for the year Company Financial Statements give a true to obtain all the information and explanations
ended 31 December 2006 which comprise and fair view and whether the Company which we considered necessary in order to
the Balance Sheet and the related notes on Financial Statements and the part of the provide us with sufficient evidence to give
pages 158 to162. These Company Financial Directors Remuneration Report to be audited reasonable assurance that the Company
Statements have been prepared under the have been properly prepared in accordance Financial Statements and the part of the
accounting policies set out therein. We have with the Companies Act 1985. We also report Directors Remuneration Report to be audited
also audited the information in the Directors to you if, in our opinion, the Directors Report are free from material misstatement, whether
Remuneration Report that is described as is not consistent with the Company Financial caused by fraud or other irregularity or error.
having been audited. Statements, if the Company has not kept proper In forming our opinion we also evaluated
accounting records, if we have not received the overall adequacy of the presentation
We have reported separately on the Group all the information and explanations we require of information in the Company Financial
Financial Statements of AstraZeneca PLC for our audit, or if information specified by law Statements and the part of the Directors
for the year ended 31 December 2006. regarding Directors remuneration and other Remuneration Report to be audited.
transactions is not disclosed.
This report is made solely to the Companys OPINION
members, as a body, in accordance with We read other information contained in the In our opinion:
section 235 of the Companies Act 1985. Annual Report and Form 20-F Information
Our audit work has been undertaken so that and consider whether it is consistent with the > The Company Financial Statements give
we might state to the Companys members audited Company Financial Statements. We a true and fair view, in accordance with UK
those matters we are required to state to consider the implications for our report if we Generally Accepted Accounting Practice,
them in an auditors report and for no other become aware of any apparent misstatements of the state of the Companys affairs as at
purpose. To the fullest extent permitted by or material inconsistencies with the Company 31 December 2006.
law, we do not accept or assume responsibility Financial Statements. Our responsibilities do
to anyone other than the Company and the not extend to any other information. > The Company Financial Statements and
Companys members as a body, for our audit the part of the Directors Remuneration
work, for this report, or for the opinions we BASIS OF AUDIT OPINION Report to be audited have been properly
have formed. We conducted our audit in accordance with prepared in accordance with the
International Standards on Auditing (UK and Companies Act 1985.
RESPECTIVE RESPONSIBILITIES Ireland) issued by the Auditing Practices Board.
OF DIRECTORS AND AUDITORS An audit includes examination, on a test 1 February 2007
The Directors responsibilities for preparing basis, of evidence relevant to the amounts
the Annual Report and Form 20-F Information, and disclosures in the Company Financial KPMG Audit Plc
the Directors Remuneration Report and the Statements and the part of the Directors Chartered Accountants
Company Financial Statements in accordance Remuneration Report to be audited. It also Registered Auditor
with applicable law and UK Accounting includes an assessment of the significant 8 Salisbury Square
Standards (UK Generally Accepted Accounting estimates and judgements made by the London EC4Y 8BB
Practice) are set out in the Statement of Directors in the preparation of the Company
Directors Responsibilities on page 96. Financial Statements, and of whether the
accounting policies are appropriate to the
Our responsibility is to audit the Company Companys circumstances, consistently
Financial Statements and the part of the applied and adequately disclosed.
Directors Remuneration Report to be audited
in accordance with relevant legal and regulatory
requirements and International Standards on
Auditing (UK and Ireland).
ASTRAZENECA PLC
BALANCE SHEET
2006 2005
At 31 December Notes $m $m
Fixed assets
Fixed asset investments 1 19,118 24,856
Current assets
Debtors other 2 9 27
Debtors amounts owed by subsidiaries 1,382 340
1,391 367
Total assets 20,509 25,223
Creditors due within one year
Non-trade creditors 3 (33) (20)
Net current assets 1,358 347
Total assets less current liabilities 20,476 25,203
Creditors due after more than one year

Loans owed to subsidiaries 4 (283) (283)
Loans external 4 (747) (747)
(1,030) (1,030)
Net assets 19,446 24,173
Capital and reserves
Called-up share capital 7 383 395
Share premium account 5 1,671 692
Capital redemption reserve 5 71 53
Other reserves 5 1,841 1,841
Profit and loss account 5 15,480 21,192
Shareholders funds 19,446 24,173
$m means millions of US dollars.
The Financial Statements on pages158 to162 were approved by the Board of Directors on 1 February 2007 and were signed on its behalf by:
DAVID R BRENNAN JONATHAN SYMONDS

Director Director
ACCOUNTING POLICIES (COMPANY) 159
ACCOUNTING POLICIES
Basis of accounting
The Company Financial Statements are prepared under the historical cost convention, modified to include revaluation to fair value of certain
financial instruments as described below, in accordance with the Companies Act 1985 and UK Generally Accepted Accounting Principles
(UK GAAP). The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards as adopted
by the European Union and are presented on pages 98 to 156.
The following paragraphs describe the main accounting policies under UK GAAP, which have been applied consistently.
Foreign currencies
Profit and loss account items in foreign currencies are translated into US dollars at average rates for the relevant accounting periods. Assets
and liabilities are translated at exchange rates prevailing at the date of the Company balance sheet. Exchange gains and losses on short term
foreign currency borrowings and deposits are included within net interest payable. Exchange differences on all other transactions, except
relevant foreign currency loans, are taken to operating profit.
Taxation
The charge for taxation is based on the result for the year and takes into account taxation deferred because of timing differences between the
treatment of certain items for taxation and for accounting purposes. Full provision is made for the effects of these differences. Deferred tax
asset valuation allowances are made where it is more likely than not that the asset will not be realised in the future. These valuations require
judgements to be made including the forecast of future taxable income. Deferred tax balances are not discounted.
Accruals for tax contingencies require management to make judgements and estimates in relation to tax audit issues. Tax benefits are not
recognised unless the tax positions will probably be sustained. Once considered to be probable, management reviews each material tax
benefit to assess whether a provision should be taken against full recognition of that benefit on the basis of potential settlement through
negotiation and/or litigation.
Any recorded exposure to interest on tax liabilities is provided for in the tax charge. All provisions are included in creditors due within one year.
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.
Financial instruments
Loans and other receivables are held at amortised cost. Long term loans payable are held at amortised cost. Other financial instruments,
including derivatives, are held at fair value; changes in fair value are reflected in the income statement.
Contingent liabilities
Through the normal course of business, AstraZeneca is involved in legal disputes, the settlement of which may involve cost to the Company.
Provision is made where an adverse outcome is probable and associated costs can be estimated reliably. In other cases, appropriate
descriptions are included.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 FIXED ASSET INVESTMENTS

Investments in subsidiaries
Shares Loans Total
$m $m $m
Cost and net book value at 1 January 2006 6,715 18,141 24,856
Repayment of loan (5,738) (5,738)
Cost and net book value at 31 December 2006 6,715 12,403 19,118
2 OTHER DEBTORS
2006 2005
$m $m
Other debtors 1 10
Deferred tax asset 8 17
9 27
3 NON-TRADE CREDITORS
2006 2005
$m $m
Amounts due within one year
Short term borrowings (unsecured) 7 5
Other creditors 12 5
Amounts owed to subsidiaries 14 10
33 20
4 LOANS
Repayment 2006 2005
dates $m $m
Loans owed to subsidiaries (unsecured)
US dollars
7.2% loan 2023 283 283
Loans external (unsecured)

US dollars
5.4% callable bond 2014 747 747
1,030 1,030
Loans or instalments thereof are repayable:

After five years from balance sheet date 1,030 1,030
From two to five years
From one to two years
Total unsecured 1,030 1,030
Total due within one year
1,030 1,030
The fair values of the external loans and the loans owed to subsidiaries are as follows:
2006 2005
$m $m
7.2% loan 331 341
5.4% callable bond 756 770
1,087 1,111
Both loans are at fixed interest rates. Accordingly the fair values of the loans will change as market rates change. However, since the loans are
held at amortised cost, changes in interest rates and the credit rating of the Company will not have an effect on the Companys net assets.
NOTES TO THE FINANCIAL STATEMENTS (COMPANY) 161
5 RESERVES
Share Capital Profit
premium redemption Other and loss 2006 2005
account reserve reserves account Total Total
$m $m $m $m $m $m
At beginning of year 692 53 1,841 21,192 23,778 27,028
Profit for the year 652 652 1,268
Dividends (2,217) (2,217) (1,676)
Share re-purchases 18 (4,147) (4,129) (2,984)
Share premiums 979 979 142
At end of year 1,671 71 1,841 15,480 19,063 23,778
Distributable reserves at end of year 1,712 4,351 6,063 5,058
As permitted by section 230 of the Companies Act 1985, the Company has not presented its profit and loss account.
At 31 December 2006 $11,129m (31 December 2005 $16,867m) of the profit and loss account reserve was not available for distribution. The
majority of this non-distributable amount relates to profit arising on the sale of Astra AB to a subsidiary in 1999, which becomes distributable as
the underlying receivable is settled. During 2006, $5,738m of the profit was realised by repayment. Subsequent to the year end, a further
$1,965m was repaid on 26 January 2007, resulting in additional distributable reserves not included in the figures above. Included in other
reserves is a special reserve of $157m, arising on the redenomination of share capital in 1999.
6 RECONCILIATION OF MOVEMENT IN SHAREHOLDERS FUNDS

2006 2005
$m $m
Shareholders funds at beginning of year 24,173 27,439
Net profit for the financial year 652 1,268
Dividends (2,217) (1,676)
Issues of AstraZeneca PLC Ordinary Shares 985 143
Re-purchase of AstraZeneca PLC Ordinary Shares (4,147) (3,001)
Net reduction in shareholders funds (4,727) (3,266)
Shareholders funds at end of year 19,446 24,173
7 SHARE CAPITAL
Allotted, called-up
Authorised and fully paid
2006 2006 2005
$m $m $m
Issued Ordinary Shares ($0.25 each) 383 383 395
Unissued Ordinary Shares ($0.25 each) 217
Redeemable Preference Shares (1 each 50,000)
600 383 395
The total authorised number of Ordinary Shares at 31 December 2006 was 2,400,000,000, of which 1,532,245,608 Ordinary Shares were
in issue.
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 movements in share capital during the year can be summarised as follows:
No. of shares
(million) $m
At 1 January 2006 1,581 395
Issues of shares 23 6
Re-purchase of shares (72) (18)
At 31 December 2006 1,532 383
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
7 SHARE CAPITAL CONTINUED

Share re-purchases
During the year the Company re-purchased, and subsequently cancelled, 72,205,192 Ordinary Shares at an average price of 3059 pence per
share. The total consideration, including expenses, was $4,147m. The excess of the consideration over the nominal value has been charged
against the profit and loss account reserve.
Share schemes
A total of 23,548,800 Ordinary Shares were issued during the year in respect of share schemes. Details of movements in the number of
Ordinary Shares under option are shown in Note 25 to the Group Financial Statements; details of options granted to Directors are shown in the
Directors Remuneration Report.
Shares held by subsidiaries

No shares in the Company are held by subsidiaries.
8 COMMITMENTS AND CONTINGENT LIABILITIES

Crestor (rosuvastatin)
AstraZeneca Pharmaceuticals LP and/or AstraZeneca LP in the US were served with seven individual lawsuits in 2004 and 2005 involving
alleged injury in association with the use of Crestor. Four of these lawsuits have now been dismissed. In addition, a motion for authorisation to
institute a class action and to be a representative was filed in Quebec, Canada against AstraZeneca PLC and AstraZeneca Canada Inc. The
petitioner claims alleged injury as a result of the use of Crestor. During 2006, AstraZeneca was served with six additional individual lawsuits in
the US, five of which have since been dismissed. AstraZeneca is vigorously defending all the remaining actions.
Exanta (ximelagatran)
Four putative and essentially similar securities class actions were filed in the US against AstraZeneca PLC, Hkan Mogren, Sir Tom McKillop,
Jonathan Symonds and Percy Barnevik between January and March 2005. These actions were subsequently consolidated into a single action
pending in the US District Court for the Southern District of New York. The Consolidated Amended Complaint alleges that the defendants
made materially false and misleading statements regarding Exanta clinical trials and the status of the Exanta New Drug Application in the US.
The plaintiffs purport to assert claims on behalf of purchasers of AstraZeneca publicly traded securities during the period 2 April 2003 to 10
September 2004 under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
The defendants deny the allegations made in the lawsuit and will vigorously defend the action. They have filed a motion to dismiss the action,
and that motion is pending before the Court.
Other
The Company has guaranteed the external borrowing of a subsidiary, in the amount of $288m.
9 STATUTORY AND OTHER INFORMATION

There are no employees of the Company (2005 nil). The directors of the Company were paid by another Group company in 2006 and 2005.
GROUP FINANCIAL RECORD 163
GROUP FINANCIAL RECORD IFRS
2003 2004 2005 2006

For the year ended 31 December $m $m $m $m
Turnover and profits
Sales 18,849 21,426 23,950 26,475
Cost of sales (4,463) (5,193) (5,356) (5,559)
Distribution costs (162) (177) (211) (226)
Research and development (3,012) (3,467) (3,379) (3,902)
Selling, general and administrative costs (7,393) (8,268) (8,695) (9,096)
Other operating income and expense 188 226 193 524
Operating profit 4,007 4,547 6,502 8,216
Profit on sale of interest in joint venture 219
Finance income 381 532 665 888
Finance expense (311) (454) (500) (561)
Profit before tax 4,077 4,844 6,667 8,543
Taxation (1,033) (1,161) (1,943) (2,480)
Profit for the period 3,044 3,683 4,724 6,063
Attributable to:
Equity holders of the Company 3,022 3,664 4,706 6,043
Minority interests 22 19 18 20
Earnings per share
Earnings per $0.25 Ordinary Share before exceptional items $1.77 $2.01 $2.91 $3.86
Earnings per $0.25 Ordinary Share (basic) $1.77 $2.18 $2.91 $3.86
Earnings per $0.25 Ordinary Share (diluted) $1.77 $2.18 $2.91 $3.85
Dividends $0.725 $0.835 $1.025 $1.410
Return on sales
Operating profit as a percentage of sales 21.3% 21.2% 27.2% 31.0%
Ratio of earnings to fixed charges (IFRS) 100.4 93.6 85.6 92.7
2003 2004 2005 2006

At 31 December $m $m $m $m
Balance sheet
Property, plant and equipment and intangible assets 10,574 11,147 9,697 11,657
Other investments 133 262 256 119
Deferred tax assets 1,261 1,218 1,117 1,220
Current assets 11,593 13,025 13,770 16,936
Total assets 23,561 25,652 24,840 29,932
Current liabilities (6,558) (6,587) (6,839) (9,447)
Non-current liabilities (3,828) (4,568) (4,310) (5,069)
Net assets 13,175 14,497 13,691 15,416
Capital and reserves attributable to equity holders 13,086 14,404 13,597 15,304
Minority equity interests 89 93 94 112
Total equity and reserves 13,175 14,497 13,691 15,416
2003 2004 2005 2006

For the year ended 31 December $m $m $m $m
Cash flows
Net cash inflow/(outflow) from:
Operating activities 3,368 4,817 6,743 7,693
Investing activities (852) 970 (1,182) (272)
Financing activities (2,674) (2,761) (4,572) (5,366)
(158) 3,026 989 2,055
GROUP FINANCIAL RECORD US GAAP
GROUP FINANCIAL RECORD US GAAP

The selected financial data set out below, for each of the years in the five year period ended 31 December 2006, have been extracted
or derived from the audited Financial Statements.
The selected financial data should be read in conjunction with, and are qualified in their entirety by reference to, the Financial Statements
of AstraZeneca and the notes thereto, which are included elsewhere in this document.
Consolidated income statement data

For the years ended 31 December 2002 2003 2004 2005 2006
Net income from operations ($m) 2,307 2,149 2,951 3,884 4,392
Net income from operations per $0.25 Ordinary Share $1.33 $1.26 $1.76 $2.40 $2.81
Diluted income from operations per $0.25 Ordinary Share $1.33 $1.26 $1.76 $2.40 $2.80
Ratio of earnings to fixed charges

For the Group, with adjustments to accord with US GAAP 36.7 77.0 73.5 70.7 73.0
Consolidated balance sheet data

2002 2003 2004 2005 2006
At 31 December $m $m $m $m $m
Total assets 42,660 45,483 47,690 43,757 48,600
Shareholders equity 30,265 33,759 35,477 31,894 32,467
Merger accounting
For the purpose of US GAAP, the merger has been regarded as a purchase accounting acquisition of Astra by Zeneca.
Ratio of earnings to fixed charges (IFRS and US GAAP)

For the purpose of computing these ratios, earnings consist of the income from continuing ordinary activities before taxation of Group companies
and income received from companies owned 50% or less, plus fixed charges (excluding capitalised interest). Fixed charges consist of interest
(including capitalised interest) on all indebtedness, amortisation of debt discount and expense and that portion of rental expense representative
of the interest factor.
SHAREHOLDER INFORMATION 165
SHAREHOLDER INFORMATION
AstraZeneca 2002 2003 2004 2005 2006

Ordinary Shares in issue millions
At year end 1,719 1,693 1,645 1,581 1,532
Weighted average for year 1,733 1,709 1,673 1,617 1,564
Stock market price per $0.25 Ordinary Share
Highest (pence) 3625 2868 2749 2837 3529
Lowest (pence) 1799 1820 1863 1861 2574
At year end (pence) 2220 2680 1889 2829 2744
Percentage analysis at 31 December 2006 of issued share capital

By size of account 2006
No. of shares %
1 250 0.5
251 500 0.7
501 1,000 0.9
1,001 5,000 1.3
5,001 10,000 0.2
10,001 50,000 1.0
50,001 1,000,000 12.3
over 1,000,000 83.1
Issued share capital 100.0
Includes VPC and ADR holdings
At 31 December 2006, AstraZeneca PLC had 137,137 registered holders of 1,532,245,608 Ordinary Shares of $0.25 each. At 31 December 2006,
there were approximately 100,000 holders of American Depositary Receipts (ADRs) representing 10.48% of the issued share capital and
157,000 holders of shares held under the VPC Services Agreement representing 23.32% of the issued share capital. The ADRs, each of which
is equivalent to one Ordinary Share, are issued by JPMorgan Chase Bank.
ASTRAZENECA PLC
Since April 1999, following the AstraZeneca merger, the principal markets for trading in the shares of AstraZeneca PLC are the London,
Stockholm and New York Stock Exchanges. The table below sets out, for the four quarters of 2005 and for the first two quarters and last six
months of 2006 the reported high and low share prices of AstraZeneca PLC, on the following bases:
> For shares listed on the London Stock Exchange (LSE) the reported high and low middle market closing quotations are derived from The
Daily Official List.
> For shares listed on the Stockholm Stock Exchange (SSE) the high and low closing sales prices are as stated in the Official List.
> For American Depositary Shares (ADS) listed on the New York Stock Exchange the reported high and low sales prices are as reported by
Dow Jones (ADR quotations).
Ordinary LSE ADS Ordinary SSE*
High Low High Low High Low
(pence) (pence) (US$) (US$) (SEK) (SEK)
2005 Quarter 1 2201 1861 42.12 34.72 288.5 243.0
Quarter 2 2363 2081 45.06 39.29 324.5 279.5
Quarter 3 2668 2311 49.10 40.68 370.5 319.0
Quarter 4 2837 2485 49.50 44.43 392.0 349.0
2006 Quarter 1 2975 2574 51.73 45.12 403.5 352.5
Quarter 2 3264 2757 59.82 50.54 434.5 376.5
July 3320 3101 62.00 56.60 450.5 414.5
August 3404 3183 65.14 60.13 467.5 432.0
September 3435 3292 65.43 61.35 477.0 447.5
October 3529 3098 66.37 58.70 484.0 428.0
November 3226 2919 61.40 56.24 441.5 388.5
December 2925 2728 57.78 53.55 394.0 365.5
* Principally held in bearer form
SHAREHOLDER INFORMATION CONTINUED
During 2006, AstraZenecas share re-purchase programme, which was introduced in 1999, continued with the re-purchase and subsequent
cancellation of 72.2 million shares at a total cost of $4,147m, representing 4.7% of the total issued share capital of the Company. The average price
paid per share in 2006 was 3059 pence. Between 1999 and 2005, a total of 210.6 million Ordinary Shares were re-purchased, and subsequently
cancelled, at an average price of 2568 pence per share for a consideration, including expenses, of $9,172m. The excess of the consideration
over the nominal value was charged against the profit and loss account reserve. Shares issued in respect of share schemes totalled 23.5 million.
In 1999, in connection with the merger, AstraZenecas share capital was redenominated in US dollars. On 6 April 1999, Zeneca shares were
cancelled and US dollar shares issued, credited as fully paid on the basis of one dollar share for each Zeneca share then held. This was achieved
by a reduction of capital under section 135 of the Companies Act 1985. Upon the reduction of capital becoming effective, all issued and unissued
Zeneca shares were cancelled and the sum arising as a result thereof credited to a special reserve, which was converted into US dollars at the
rate of exchange prevailing on the record date. This US dollar reserve was then applied in paying up, at par, newly created US dollar shares.
At the same time as the US dollar shares were issued, the Company issued 50,000 Redeemable Preference Shares with a nominal value of
1.00 each for cash at par. The Redeemable Preference Shares carry limited class voting rights and no dividend rights. This class of shares is
also 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.
A total of 826 million AstraZeneca shares were issued to Astra shareholders who accepted the merger offer before the final closing date,
21 May 1999. AstraZeneca received acceptances from Astra shareholders representing 99.6% of Astras shares and the remaining 0.4%
was acquired in 2000 for cash.
MAJOR SHAREHOLDINGS
At 31 January 2007, the following had disclosed an interest in the issued Ordinary Share capital of the Company in accordance with the requirements
of sections 198-208 of the Companies Act 1985:
Date of Percentage
disclosure of issued
Shareholder Number of shares to Company* share capital
The Capital Group Companies, Inc. 179,266,829 15 Dec 2006 11.70%
Investor AB 63,465,810 11 Feb 2004 4.14%
Barclays PLC 61,721,820 18 Dec 2006 4.03%
Wellington Management Co., LLP 60,565,299 30 Oct 2006 3.95%
Legal & General Investment Management Limited 52,518,020 13 Jun 2002 3.43%
* Since the date of disclosure to the Company, the interest of any person listed above in the Ordinary Shares of the Company may have increased or decreased. No requirement to notify
the Company of any increase or decrease would have arisen unless the holding moved up or down through a whole number percentage level. The percentage level may increase (on the
cancellation of shares following a re-purchase of shares under the Companys share re-purchase programme) or decrease (on the issue of new shares under any of the Companys share plans).
No other person held a notifiable interest in shares, comprising 3% or more of the issued Ordinary Share capital of the Company, appearing
in the register of interests in shares maintained under the provisions of section 211 of the Companies Act 1985.
Changes in the percentage ownership held by major shareholders during the past three years are set out below. Major shareholders do not
have different voting rights.
Percentage of issued share capital
Shareholder 31 Jan 2007 31 Jan 2006 26 Jan 2005 28 Jan 2004
The Capital Group Companies, Inc. 11.70% 12.57% 13.39% 15.01%
Investor AB 4.14% 4.01% 3.86% 5.41%
Barclays PLC 4.03% 3.20% 3.08% <3.00%
Wellington Management Co., LLP 3.95% 4.97% 3.25% <3.00%
Legal & General Investment Management Limited 3.43% 3.32% 3.19% 3.10%
AstraZeneca PLC American Depositary Shares (each representing one Ordinary Share) evidenced by American Depositary Receipts issued
by JPMorgan Chase Bank, as depositary, are listed on the New York Stock Exchange. At 31 January 2007, the proportion of Ordinary Shares
represented by American Depositary Shares was 10.34% of the Ordinary Shares outstanding.
Number of registered holders of Ordinary Shares at 31 January 2007:

> In the US 816
> Total 136,672
Number of record holders of American Depositary Receipts at 31 January 2007:

> In the US 2,533
> Total 2,571
So far as the Company is aware, it is neither directly nor indirectly owned nor controlled by one or more corporations or by any government.
At 31 January 2007, the total amount of the Companys voting securities owned by Directors and Officers of the Company was:
Title of class Amount owned Percentage of class

Ordinary Shares 322,601 0.02%
The Company does not know of any arrangements, the operation of which might result in a change in the control of the Company.
RELATED PARTY TRANSACTIONS

During the period 1 January 2007 to 31 January 2007, 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 28).
OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES

(a) At 31 January 2007, options outstanding to subscribe for Ordinary Shares of $0.25 of the Company were:
Number of shares Subscription price Normal expiry date

44,547,783 1740p-3487p 2007-2016
The weighted average subscription price of options outstanding at 31 January 2007 was 2675p. All options were granted under Company
employee share schemes.
(b) Included in paragraph (a) are options granted to Directors and Officers of AstraZeneca as follows:
Number of shares Subscription price Normal expiry date

2,265,118 1740p-3487p 2007-2016
(c) Included in paragraph (b) are options granted to individually named Directors. Details of these option holdings at 31 December 2006 are shown
in the Directors Remuneration Report.
During the period 1 January 2007 to 31 January 2007, no Director exercised any options.
DIVIDEND PAYMENTS
The record date for the second interim dividend for 2006, payable on 19 March 2007 (in the UK, the US and Sweden), is 9 February 2007. Shares
trade ex-dividend on the London and Stockholm Stock Exchanges from 7 February 2007 and ADRs trade ex-dividend on the New York Stock
Exchange from the same date. Dividends will normally be paid as follows:
First interim: Announced in July and paid in September.

Second interim: Announced in January/February and paid in March.
The record date for the first interim dividend for 2007, payable on 17 September 2007 (in the UK, the US and Sweden), is 10 August 2007.
SHAREVIEW
AstraZenecas shareholders with internet access may visit shareview.co.uk and register their details to create a portfolio. Shareview is a free and
secure on-line service from the Companys registrars, Lloyds TSB Registrars,which gives access to shareholdings including balance
movements, indicative share prices and information about recent dividends.
SHAREGIFT
AstraZeneca welcomes and values all of its shareholders, no matter how many or how few shares they own. However, shareholders who have
only a small number of shares whose value makes it uneconomic to sell them, either now or at some stage in the future, may wish to consider
donating them to charity through ShareGift, an independent charity share donation scheme. One feature of the scheme is that there is no gain
or loss for UK capital gains tax purposes on gifts of shares through ShareGift, and it may now also be possible to obtain UK income tax relief on
the donation. Further information about ShareGift can be found on its website, sharegift.org, or by contacting ShareGift on 020 7337 0501 or
at 46 Grosvenor Street, London W1K 3HN. More information about the UK tax position on gifts of shares to ShareGift can be obtained from
HM Revenue & Customs, whose website address is hmrc.gov.uk. The share transfer form needed to make a donation may be obtained from
the Companys registrars, Lloyds TSB Registrars, whose address can be found on the back cover of this document. ShareGift is administered
by The Orr Mackintosh Foundation, registered charity number 1052686.
THE UNCLAIMED ASSETS REGISTER

AstraZeneca supplies unclaimed dividend data to the Unclaimed Assets Register (UAR), which provides investors who have lost track of shareholdings
with an opportunity to search the UARs database of unclaimed financial assets on payment of a small, fixed fee. The UAR donates part of the search
fee to charity. The UAR can be contacted on 0870 2411713 or at 6th Floor, Cardinal Place, 80 Victoria Street, Victoria, London SW1E 5JL.
RESULTS
Unaudited trading results of AstraZeneca in respect of the first three months of 2007 will be published on 26 April 2007 and results in respect of
the first six months of 2007 will be published on 26 July 2007.
DOCUMENTS ON DISPLAY
The Memorandum and Articles of Association of the Company and other documents concerning the Company which are referred to in this document
may be inspected at the Companys registered office at 15 Stanhope Gate, London W1K 1LN.
TAXATION FOR US RESIDENTS

The following summary of the material UK and US federal income tax consequences of ownership of Ordinary Shares or ADRs held as capital
assets by US resident shareholders is based on current UK and US federal income tax law, including the US/UK double taxation convention
relating to income and capital gains, which entered into force on 31 March 2003 (the Convention) and practice. This discussion is also based
in part on representations of JPMorgan Chase Bank as Depositary for ADRs and assumes that each obligation in the deposit agreement among
the Company, the Depositary and the holders from time to time of ADRs and any related agreements will be performed in accordance with its
terms. The US Treasury has expressed concerns that parties to whom ADRs are pre-released may be taking actions that are inconsistent with
the claiming, by US holders of ADRs, of foreign tax credits for US federal income tax purposes. Such actions would also be inconsistent with
the claiming of the reduced tax rate, described below, applicable to dividends received by certain non-corporate US resident shareholders.
Accordingly, the availability of the reduced tax rate for dividends received by certain non-corporate US resident shareholders could be affected
by actions that may be taken by parties to whom ADRs are pre-released.
This discussion assumes that we are not, and will not become, a passive foreign investment company (PFIC), as discussed below.
UK AND US INCOME TAXATION OF DIVIDENDS

The UK does not currently impose a withholding tax on dividends paid by a UK company, such as the Company.
For US federal income tax purposes, distributions paid by the Company to a US resident shareholder are includible in gross income as foreign
source ordinary dividend income to the extent of the Companys current or accumulated earnings and profits, calculated in accordance with
US federal income tax principles. The amount of the dividend will be the US dollar value of the pounds sterling received on the date the dividend
is received by the Depositary for US resident holders of ADRs (or in the case of Ordinary Shares, received by the US resident shareholders)
regardless of whether the dividend is converted into US dollars. If the dividend is converted into US dollars on the date of receipt, US resident
shareholders generally should not be required to recognise foreign currency gain or loss in respect of the dividend income. They may have
foreign currency gain or loss if the amount of such dividend is not converted into US dollars on the date of its receipt.
Subject to applicable limitations and the discussion above regarding concerns expressed by the US Treasury, dividends received by certain
non-corporate US resident holders of Ordinary Shares or ADRs in taxable years beginning before 1 January 2011 may be subject to US federal
income tax at a maximum rate of 15%. US resident shareholders should consult their own tax advisers to determine whether they are subject to
any special rules which may limit their ability to be taxed at this favourable rate.
TAXATION ON CAPITAL GAINS

Under the Convention, each contracting state may in general tax capital gains in accordance with the provisions of its domestic law. Under
present UK law, individuals who are neither resident nor ordinarily resident in the UK, and companies which are not resident in the UK, will not
be liable to UK tax on capital gains made on the disposal of their Ordinary Shares or ADRs, unless such Ordinary Shares or ADRs are held in
connection with a trade, profession or vocation carried on in the UK through a branch or agency.
A US resident shareholder will generally recognise US source capital gain or loss for US federal income tax purposes on the sale or exchange
of Ordinary Shares or ADRs in an amount equal to the difference between the US dollar amount realised and such holders US dollar adjusted
tax basis in the Ordinary Shares or ADRs. US resident shareholders should consult their own tax advisers about the treatment of capital gains,
which may be taxed at lower rates than ordinary income for non-corporate US resident shareholders and capital losses, the deductibility of which
may be limited.
PASSIVE FOREIGN INVESTMENT COMPANY RULES

We believe that we were not a passive foreign investment company (PFIC) for US federal income tax purposes for the year ended 31 December
2006, and do not expect to be a PFIC in the foreseeable future. However, since PFIC status depends on the composition of our income and
assets and the market value of our assets (including, among others, less than 25%-owned equity investments) from time to time, there can be
no assurance that we will not be considered a PFIC for any taxable year. If we were treated as a PFIC for any taxable year during which you held
Ordinary Shares or ADRs, certain adverse tax consequences could apply to US resident shareholders.
UK INHERITANCE TAX
Under the current Double Taxation (Estates) Convention (the Estate Tax Convention) between the US and the UK, Ordinary Shares or ADRs
held by an individual shareholder who is domiciled for the purposes of the Estate Tax Convention in the US, and is not for the purposes of the
Estate Tax Convention a national of the UK, will generally not be subject to UK inheritance tax on the individuals death or on a chargeable gift
of the Ordinary Shares or ADRs during the individuals lifetime, provided that any applicable US federal gift or estate tax liability is paid, unless
the Ordinary Shares or ADRs are part of the business property of a permanent establishment of the individual in the UK or, in the case of a shareholder
who performs independent personal services, pertain to a fixed base situated in the UK. Where the Ordinary Shares or ADRs have been placed
in trust by a settlor who, at the time of settlement, was a US resident shareholder, the Ordinary Shares or ADRs will generally not be subject to
UK inheritance tax unless the settlor, at the time of settlement, was not domiciled in the US and was a UK national. In the exceptional case where
the Ordinary Shares or ADRs are subject to both UK inheritance tax and US federal gift or estate tax, the Estate Tax Convention generally provides
for double taxation to be relieved by means of credit relief.
UK STAMP DUTY RESERVE TAX AND STAMP DUTY

A 1.5% stamp duty reserve tax is payable upon the deposit of Ordinary Shares in connection with the creation of, but not subsequent dealing in,
ADRs. A 0.5% stamp duty is payable on all purchases of Ordinary Shares.
EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

There are no governmental laws, decrees or regulations in the UK restricting the import or export of capital or affecting the remittance of dividends,
interest or other payments to non-resident holders of Ordinary Shares or ADRs.
There are no limitations under English law or the Companys Memorandum and Articles of Association on the right of non-resident or foreign
owners to be the registered holders of and to vote Ordinary Shares or ADRs or to be registered holders of notes or debentures of Zeneca
Wilmington Inc. or AstraZeneca PLC.
EXCHANGE RATES
For the periods up to April 1999, Astra accounted for and reported its results in Swedish kronor, whereas Zeneca accounted for and reported
its results in sterling. Consistent with AstraZenecas decision to publish its Financial Statements in US dollars, the financial information in this
document has been translated from kronor and sterling into US dollars at the following applicable exchange rates:
SEK/USD USD/GBP
Average rates (profit and loss account, cash flow)
1995 7.1100 1.5796
1996 6.7000 1.5525
1997 7.6225 1.6386
1998 7.9384 1.6603
1999 8.2189 1.6247
End of year spot rates (balance sheet)

1995 6.6500 1.5500
1996 6.8400 1.6900
1997 7.8500 1.6600
1998 8.0400 1.6600
1999 8.5130 1.6185
The following information relating to average and spot exchange rates used by AstraZeneca is provided for convenience:
SEK/USD USD/GBP
Average rates (income statement, cash flow)
2004 7.4613 1.8031
2005 7.3878 1.8306
2006 7.4472 1.8265
End of year spot rates (balance sheet)

2004 6.6144 1.9264
2005 7.9464 1.7239
2006 6.8824 1.9626
DEFINITIONS AND INTERPRETATION

Figures in parentheses in tables and in the Financial Statements are used to represent negative numbers.
Except where otherwise indicated, figures included in this report relating to pharmaceutical product market sizes and market shares are
obtained from syndicated industry sources, primarily IMS Health (IMS), a market research firm internationally recognised by the pharmaceutical
industry. The 2006 market share figures included in this report are based primarily on data obtained from an online IMS database.
IMS data may differ from that compiled by the Group with respect to its own products. Of particular significance in this regard are the following:
(1) AstraZeneca publishes its financial results on a financial year and quarterly interim basis, whereas IMS issues its data on a monthly and quarterly
basis; (2) the online IMS database is updated quarterly and uses the average exchange rates for the relevant quarter; (3) IMS data from the US
is not adjusted for Medicaid and similar state rebates; and (4) IMS sales data are compiled using actual wholesaler data and data from
statistically representative panels of retail and hospital pharmacies, which data are then projected by IMS to give figures for national markets.
References to prevalence of disease have been derived from a variety of sources and are not intended to be indicative of the current market or
any potential market for AstraZenecas pharmaceutical products since, among other things, there may be no correlation between the
prevalence of a disease and the number of individuals who are treated for such a disease.
Terms used in the Annual Report

and Form 20-F Information US equivalent or brief description
Accruals Accrued expenses
Allotted Issued
Bank borrowings Payable to banks
Called-up share capital Issued share capital
Creditors Liabilities/payables
Current instalments of loans Long term debt due within one year
Debtors Receivables and prepaid expenses
Earnings Net income
Finance lease Capital lease
Fixed asset investments Non-current investments
Freehold Ownership with absolute rights in perpetuity
Interest receivable Interest income
Interest payable Interest expense
Loans Long term debt
Prepayments Prepaid expenses
Profit Income
Profit and loss account Income statement/consolidated statement of income
Reserves Retained earnings
Short term investments Redeemable securities and short term deposits
Share premium account Premiums paid in excess of par value of Ordinary Shares
Statement of recognised
income and expense Statement of comprehensive income
RISK FACTORS
RISKS ASSOCIATED WITH For example, during 2004 compared to 2003 course of our activities, we may become
FORWARD-LOOKING STATEMENTS and, to a lesser extent, during 2005 compared aware of broad patents owned by others
This report contains certain forward-looking to 2004, sales in the US of Losec/Prilosec, relating to some of our intellectual property,
statements about AstraZeneca. Although Plendil, Zestril and Nolvadex fell significantly and in some instances we may receive notices
we believe our expectations are based on following anticipated patent expiries or the from the owners of patents claiming that their
reasonable assumptions, any forward-looking end of marketing exclusivity. patents may be infringed by the development,
statements may be influenced by factors that manufacture or sale of some of our products
could cause actual outcomes and results to We believe that we have robust patent and candidate drugs. In response, we may
be materially different from those predicted. protection for many of our most obtain licences, determine that our products
Forward-looking statements are identified in important products. do not infringe the patents or that the
this report by using the words anticipates, patents are not valid, or we may make
believes, expects, intends and similar Trade mark protection for our products various modifications that we believe should
expressions. These forward-looking is also an important element of our overall not infringe the patents and that should
statements are subject to numerous risks product marketing programmes. Combined permit commercialisation of our products.
and uncertainties. Important factors that with patent protection or other types of
could cause actual results to differ materially marketing exclusivity, products protected There can be no assurance that any of our
from those in forward-looking statements, by a valid trade mark usually generate higher currently patented products will not be the
certain of which are beyond our control, revenues than those not protected by a trade subject of intellectual property litigation in the
include, among other things: the loss or mark. We believe that we have trade mark future, despite our efforts to establish and
expiration of patents, marketing exclusivity protection for many of our most important defend the most robust patent protection.
or trade marks; the risk of substantial adverse products. However, trade mark protection There can be no assurance that we would
litigation/government investigation claims may be challenged by third parties. prevail in a patent infringement action;
and insufficient insurance coverage; exchange will be able to obtain a licence to any third
rate fluctuations; the risk that R&D will not RISK OF PATENT LITIGATION AND EARLY party patent on commercially reasonable
yield new products that achieve commercial LOSS OF PATENTS, MARKETING EXCLUSIVITY terms; successfully develop non-infringing
success; the risk that strategic alliances will OR TRADE MARKS alternatives on a timely basis; license
be unsuccessful; the impact of competition, Over the last few years there has been alternative non-infringing technology, if any
price controls and price reductions; taxation a marked increase in intellectual property exists, on commercially reasonable terms;
risks; the risk of substantial product liability litigation. Increasingly, manufacturers of generic or whether patent protection is available at all.
claims; the impact of any failure by third parties pharmaceutical products, whether based in If we are not successful during the patent
to supply materials or services; the risk of developing countries, such as those in Asia, protection or data exclusivity periods in
failure to manage a crisis; the risk of delay or elsewhere in the world, seek to challenge our maintaining exclusive rights to market one
to new product launches; the difficulties of patents or other types of marketing exclusivity or more of our major products, particularly in
obtaining and maintaining regulatory approvals in order to gain access to the market for their the US where we have our highest revenue
for products; the risk of failure to observe own generic products. Furthermore, in addition and margins, our revenue and margins would
ongoing regulatory oversight; the risk that to generic manufacturers, the research-based be adversely affected.
new products do not perform as we expect; industry has become more aggressive in
the risk of environmental liabilities; the risks recent years in using intellectual property For example, we were involved in litigation in
associated with conducting business in rights offensively as an additional basis for the US and elsewhere during 2005 relating to
emerging markets; the risk of reputational commercial competition between patented omeprazole, the active ingredient in Losec/
damage; and the risk of product counterfeiting. products. This has included the use of patent Prilosec, and in the US, relating to metoprolol
litigation directed at relatively young products succinate, the active ingredient in ToprolXL,
RISK OF EXPIRATION OF PATENTS, MARKETING and in the case of litigation both by generic concerning the infringement of certain patents,
EXCLUSIVITY OR TRADE MARKS manufacturers and other research-based including formulation patents, by generic
Scientific development and technological companies, it is to be expected that the manufacturers. In January 2006, the US District
innovation are crucial if AstraZeneca is to greatest challenges will be focused on the Court for the Eastern District of Missouri issued
deliver long-term market success. In the most valuable products. a decision holding that certain of our US
pharmaceutical market, a drug, diagnostic compound and composition patents relating
or medical device is normally only subject Parts of our technology, techniques and to metoprolol succinate are unenforceable
to competition from alternative products, proprietary compounds and potential and invalid. We appealed the District Court
for the same use, during the period of patent candidate drugs, including those which are decision to the US Court of Appeals for the
protection or other types of marketing in-licensed, may be found to infringe patents Federal Circuit. Also, during 2005, certain
exclusivity. Once patent protection or other owned by or granted to others. This risk may generic manufacturers filed Abbreviated
types of marketing exclusivity have expired increase as our focus on biopharmaceuticals New Drug Applications (ANDAs) with the US
the product is generally open to competition increases, as intellectual property questions Food and Drug Administration containing
from generic copy products. Products under related to biological medicines can be paragraph IV certifications alleging invalidity
patent protection or other types of marketing extremely complex. If we cannot resolve any and non-infringement in respect of certain
exclusivity usually generate significantly higher intellectual property disputes, we may be of our patents relating to Nexium, Pulmicort
revenues than those not protected by patents liable for damages, be required to obtain costly Respules and Seroquel. Following filing of the
or other types of marketing exclusivity. licences or be stopped from manufacturing, ANDAs, we commenced patent infringement
using or selling our products. During the proceedings against such manufacturers.
RISK FACTORS 173
The more significant patent litigation relating IMPACT OF FLUCTUATIONS IN EXCHANGE RATES > Difficulty enrolling patients in clinical trials.
to our products is described in Note 26 to the The results of AstraZenecas operations are
Financial Statements. accounted for in US dollars. Approximately > Our failure to obtain the required regulatory
51% of our 2006 sales were in North America approvals for the product candidate or the
In addition to challenges to our patented (comprised of the US and Canada) with a facilities in which it is manufactured.
products from manufacturers of generic significant proportion of that figure being in
or other patented pharmaceutical products, respect of US sales. The US is, and is expected > Adverse reactions to the product candidate
there is a risk that some countries, particularly to remain, our largest market. Sales in certain or indications of other safety concerns.
those in the developing world, may seek to other countries are also in US dollars, or in
impose limitations on the availability of patent currencies whose exchange rates are linked > Our inability to manufacture sufficient
protection for pharmaceutical products, or to the US dollar. Major components of our quantities of the product candidate for
on the extent to which such protection may cost base are, however, located in Europe, development or commercialisation activities
be obtained, within their jurisdictions. where an aggregate of approximately 58% of in a timely and cost-efficient manner.
our employees are based. Movements in the
Limitations on the availability of patent exchange rates used to translate foreign > Strategic collaborations that we have
protection in developing countries or the currencies into US dollars may therefore have entered into may not be successful.
expiration or loss of certain patents, marketing a material adverse effect on AstraZenecas
exclusivity or trade marks would have an financial condition and results of operations. As a result of these complexities and
adverse effect on pricing and sales with uncertainties associated with pharmaceutical
respect to these products and, consequently, Certain subsidiaries of AstraZeneca import research, it cannot be ensured that compounds
could result in a material adverse effect on our and export goods and services in currencies currently under development will achieve
financial condition and results of operations. other than their own functional currency. success. For example, in 2006, late-stage
The results of such subsidiaries could, development of Galida (a potential diabetes
RISK OF SUBSTANTIAL ADVERSE OUTCOMES OF therefore, be affected by currency fluctuations therapy) and NXY-059 (a potential treatment
LITIGATION AND GOVERNMENT INVESTIGATIONS arising between the transaction dates and for stroke) were discontinued due to failure
AND INSUFFICIENT INSURANCE COVERAGE the settlement dates for those transactions. to meet their target product profiles.
See Note 26 of the Financial Statements We hedge these exposures through financial
for a discussion of proceedings in which the instruments. The fair value of financial STRATEGIC ALLIANCES FORMED AS PART
Group is currently involved. Unfavourable instruments used to hedge these exposures, OF OUR EXTERNALISATION STRATEGY MAY
resolution of these and similar future principally forward foreign exchange BE UNSUCCESSFUL
proceedings, including government contracts and purchased currency options, We may pursue acquisitions of complementary
investigations and securities class action at 31 December 2006 was $45m. We have businesses, technology licensing arrangements
law suits, may have a material adverse effect policies that seek to mitigate the effect of and strategic alliances to expand our product
on the Groups financial results, not least exchange rate fluctuations on the value of portfolio and geographic presence as part of
because the Group may be required to make foreign currency cash flows and in turn their our business strategy. Examples of recent
significant provisions in its accounts related effects on the results of the various subsidiaries, such strategic alliances include:
to legal proceedings and/or governmental but we do not seek to remove all such risks.
investigations, which would reduce earnings. See Financial Review Financial Risk > Collaboration with Bristol-Myers Squibb
In many cases, the practice of the plaintiff Management Policies Foreign exchange on Company to develop and commercialise
bar is to claim damages compensatory, page 60. In general, a unilateral strengthening two investigational compounds being
punitive and statutory in amounts that may of the US dollar adversely affects our reported studied for the treatment of Type 2 diabetes.
not bear any relation to the underlying harm. results whereas a weakening of the US dollar
Accordingly, it is difficult to quantify the is generally favourable. We cannot ensure > Collaboration with Pozen Inc. to co-develop
potential exposure to claims in proceedings that exchange rate fluctuations will not have fixed dose combinations of naproxen and
of the type referred to in Note 26. Recent a material adverse effect on AstraZenecas esomeprazole for chronic pain, utilising
insurance loss experience, including financial condition and results of operations Pozens proprietary formulation technology.
pharmaceutical product liability exposures, in the future.
has increased the cost of, and narrowed > Agreement with AtheroGenics, Inc.
the coverage afforded by, pharmaceutical RISK THAT R&D WILL NOT YIELD NEW PRODUCTS to develop and commercialise their
companies insurance generally. In order to THAT ACHIEVE COMMERCIAL SUCCESS anti-inflammatory cardiovascular
contain insurance costs in recent years, the The development of new products involves product candidate for the treatment
Group has continued to adjust its coverage the commitment of substantial effort, of atherosclerosis.
profile, accepting a greater degree of uninsured funds and other resources to research and
exposure. In addition, where claims are made development activities, and also involves > Acquisition of Cambridge Antibody
under insurance policies, insurers may reserve a high degree of risk and can take many Technology Group plc and KuDOS
the right to deny coverage on various grounds. years. Our product development efforts with Pharmaceuticals Limited.
If denial of coverage is ultimately upheld on respect to any product candidate may fail,
these claims, this could result in material and we may ultimately be unable to achieve We may not complete these types of
additional charges to the Groups earnings. commercial success for any number of transactions in a timely manner, on a cost-
reasons, including: effective basis, or at all, and may not realise
the expected benefits of any acquisition,
licensing arrangement or strategic alliance.
RISK FACTORS CONTINUED
Other companies may also compete with products for future growth, such as Crestor, either to reduce prices or be excluded from
us for these strategic opportunities. When Seroquel and Symbicort, compete directly with the list, thereby losing all the sales revenue
we are able to complete these transactions, similar products marketed by some of these from patients covered by that formulary.
the success of these types of arrangements companies. Increasingly, we also compete In addition, private health insurance
(whether already existing or to be entered directly with biotechnology companies and companies and employers that self-insure
into in the future) is largely dependent on the companies that manufacture generic versions have been raising co-payments required
technology and other intellectual property of our products following the expiry or loss from beneficiaries, particularly for branded
acquired from a business or contributed from of patent protection or other marketing pharmaceuticals and biotechnology products,
our strategic partners and the resources, exclusivity. In addition, some of our patented among other reasons, to encourage
efforts and skills of our partners. Disputes and products, including Nexium, are subject to beneficiaries to utilise generic products.
difficulties in such relationships are common, pricing pressure from competition from The increased use of strict formularies by
often due to conflicting priorities or conflicts generic products in the same class. institutional customers in response to the
of interest. The benefits of these alliances current cost-containment environment and
would be reduced or eliminated should In most of the principal markets in which we increasingly restrictive reimbursement policies
strategic partners: terminate the agreements; sell our products, there is continued economic, could negatively impact our net revenue.
fail to devote sufficient financial or other regulatory and political pressure to limit the
resources to the alliances; or suffer negative cost of pharmaceutical products. Certain Some governments in Europe, such as Italy
outcomes in intellectual property disputes. groups have been involved in exerting price and Spain, set price controls having regard
pressure on pharmaceutical companies to to the medical, economic and social impact
If these types of transactions are unsuccessful, ensure medicines are affordable to those of the product. In other European countries,
our operating results will be negatively who need them. primarily Germany, the UK, the Netherlands
impacted. In addition, integration of an and, more recently, France, governments
acquired business could result in the Currently, there is no direct government control have exerted a strong downward pressure
incurrence of significant debt and unknown of prices for non-government sales in the US. on prices by incentives and sanctions to
or contingent liabilities, as well as the negative In 1990, however, federal legislation was encourage doctors to prescribe cost-
effects on our reported results of operations enacted which required drug manufacturers effectively. For example, in Germany, jumbo
from acquisition-related charges, amortisation to agree to substantial rebates in order for reference price groups are formed around
of expenses related to intangibles and charges the manufacturers drugs to be reimbursed broad drug classes, such as statins and proton
for impairment of long-term assets. These by state Medicaid programmes, and an pump inhibitors, which include branded
effects, individually or in combination, could additional rebate if manufacturer price as well as generic products, resulting in
cause a deterioration of our credit rating increases after 1990 exceed the increase significant decreases in reimbursed prices
and result in increased borrowing costs and in inflation. In addition, certain states have for some patented drugs. In other countries,
interest expense. We could also experience taken action to require further manufacturer such as Italy and Belgium, clawbacks or
difficulties in integrating geographically rebates on Medicaid drug utilisation and price cuts have been imposed to recover
separated organisations, systems and facilities, for other state pharmaceutical assistance budget overruns from the industry and this
and personnel with diverse backgrounds. programmes. For example, some states is a trend that is likely to continue. Efforts by
Integration of an acquired business may permit or require the dispensing pharmacist the European Commission to harmonise the
also require management resources that to substitute a less expensive generic drug disparate national systems have met with little
would otherwise be available for ongoing instead of an original branded drug. Congress immediate success. The industry is, therefore,
development of our existing business. has also enacted statutes that place a ceiling exposed to ad hoc national cost-containment
on the price manufacturers may charge US measures on prices and the consequent
Under many of our strategic alliances we government agencies, thereby causing cross-border movement of products from
make milestone payments well in advance a substantial discount, as well as establishing markets with prices depressed by
of commercialisation of products, with no a minimum discount (comparable to the governments into those where higher prices
assurance that we will ever recoup those Medicaid rebate) on manufacturers sales prevail. See also page 51 for further
payments, in which case our operating to certain clinics and hospitals that serve discussion of price regulation in Europe.
results may be negatively affected. the poor and other populations with special
needs. These government initiatives, together The importation of pharmaceutical products
COMPETITION, PRICE CONTROLS with competitive market pressures, have from countries where prices are low due to
AND PRICE REDUCTIONS contributed to restraints on realised prices government price controls or other market
The principal markets for our pharmaceutical in the US. dynamics (including production of counterfeit
products are the Americas, the countries of products), to countries where prices for
the European Union (EU), Asia Pacific and See also pages 33 (Geographic Review) and those products are higher may increase.
Japan. These markets are highly competitive. 50 (Industry Regulation) for a discussion of The accession of additional countries from
We compete in all of them, and elsewhere the impact of Medicare Part D. Central and Eastern Europe to the EU could
in the world, against major prescription result in significant increases in the parallel
pharmaceutical companies which, in many In addition, realised prices are being depressed trading of pharmaceutical products.
cases, are able to match or exceed the by pressure from managed care organisations Movements of pharmaceutical products into
resources that we have available to us, and institutional purchasers, who use cost the US, in particular from Canada into the
particularly in the areas of R&D and marketing considerations to restrict the sale of preferred US, may increase despite the need to meet
spend. Industry consolidation has resulted in drugs that their physicians may prescribe, as current or future safety requirements imposed
the formation of a small number of very large well as other competitive activity. Such limited by regulatory authorities. The effects of any
companies. Some of our most important lists or formularies may force manufacturers increase in the volume of this cross-border
RISK FACTORS 175
movement of products could result in a affect our reputation and demand for our as a result of adverse findings in pre-clinical
material adverse effect on AstraZenecas products. In addition, substantial product or clinical studies, regulatory demands,
financial condition and results of operations. liability claims that are not covered by competitor activity and technology transfer.
insurance could have a material adverse Any delay to the anticipated launch dates
There is formal central government control effect on AstraZenecas financial condition may therefore impact AstraZenecas business
of prices in Japan. New product prices are and results of operations. We are currently and operations in a number of ways. In 2004 for
determined primarily by comparison with subject to extensive product liability litigation, example, we made provisions of $236 million
existing products for the same medical particularly in relation to Seroquel. See Note following setbacks suffered by Exanta and
condition. All existing products are subject 26 of the Financial Statements. Iressa. Significant delay to the anticipated
to a price review at least every two years. launch dates of new products could have
Regulations introduced in 2000 included RISK OF RELIANCE ON THIRD PARTIES FOR a material adverse effect on AstraZenecas
provisions allowing a drugs price to be set SUPPLIES OF MATERIALS AND SERVICES financial condition and results of operations.
according to the average price of the product Like most, if not all, major prescription
in four major countries (the US, the UK, pharmaceutical companies, in some of DIFFICULTIES OF OBTAINING AND MAINTAINING
Germany and France). its key business operations, such as the REGULATORY APPROVALS FOR NEW PRODUCTS
manufacture, formulation and packaging AstraZeneca is subject to strict controls on
We expect that pressures on pricing will of products, AstraZeneca relies on third the manufacture, labelling, distribution and
continue and may increase. Because of parties for the timely supply of specified raw marketing of pharmaceutical products.
these pressures, there can be no certainty materials, equipment, contract manufacturing, The requirement to obtain regulatory approval
that in every instance we will be able to formulation or packaging services and based on safety, efficacy and quality,
charge prices for a product that, in a maintenance services. Although we actively before such products may be marketed in
particular country or in the aggregate, manage these third party relationships to a particular country, and to maintain and to
enable us to earn an adequate return on ensure continuity of supplies on time and comply with licences and other regulations
our investment in that product. to our required specifications, some events relating to their manufacture, are particularly
beyond our control could result in the complete important. The submission of an application
TAXATION or partial failure of supplies or in supplies not to a regulatory authority does not guarantee
The integrated nature of AstraZenecas being delivered on time. Any such failure could that approval to market the products will
worldwide operations can produce conflicting have a material adverse effect on AstraZenecas be granted. The countries that constitute
claims from revenue authorities as to the financial condition and results of operations. material markets for our pharmaceutical
profits to be taxed in individual territories. products include the US, the countries of the
The resolution of these disputes can result in RISK OF FAILURE TO MANAGE A CRISIS EU and Japan. Approval of such products is
a reallocation of profits between jurisdictions AstraZeneca handles toxic materials, runs required by the relevant regulatory authority
and an increase or decrease in related tax costs. manufacturing plants and distributes products in each country, although a single pan-EU,
This is a continuing risk for AstraZeneca which worldwide. Major disruption to business and marketing authorisation approval can be
is unlikely to change in the foreseeable future. damage to reputation may be triggered by an obtained through a centralised mutual
operational incident or actions by third parties. recognition procedure. In addition, each
AstraZeneca operates in many jurisdictions, In these circumstances, a well-tried and jurisdiction has very high standards of
the majority of which have double tax treaties tested plan for addressing operational and regulatory approval and, consequently,
with other foreign jurisdictions, which enable other issues should ensure a timely response in most cases, a lengthy approval process.
AstraZenecas revenues and capital gains to and the ability to resume business as usual. In recent years, the public and various
escape a double tax charge. If any of these Failure to institute proper communication governments appear to apply more
double tax treaties should be withdrawn or to internal and external stakeholders and conservative benefit/risk criteria in relation
amended, in a territory where a member of the mobilise a rapid operational response to pharmaceutical products of the type sold
AstraZeneca Group is involved in a taxation could have a material adverse effect on by companies such as ours than in the past.
dispute with a tax authority in relation to AstraZenecas financial condition and results This apparent trend could in the future result
cross-border transactions, such withdrawal, of operations. in even more stringent requirements,
amendment or a negative outcome of such including more difficult approval processes
disputes could have a material adverse effect RISK OF DELAY TO NEW PRODUCT LAUNCHES for our products. Furthermore, each
on AstraZenecas financial condition and AstraZenecas continued success depends regulatory authority may impose its own
results of operations. on the development and successful launch of requirements and may refuse to grant, or
innovative new drugs. The anticipated launch may require additional data before granting
RISK OF SUBSTANTIAL PRODUCT dates of major new products have a significant or as a condition to granting, an approval,
LIABILITY CLAIMS impact on a number of areas of our business, even though the relevant product has been
Given the widespread impact prescription including investment in large clinical trials, approved in another country. Post-marketing
drugs may have on the health of large patient the manufacture of pre-launch stocks of the studies involving our marketed products
populations, pharmaceutical and medical products and the timing of anticipated future (whether conducted by us or by others,
device companies have, historically, been revenue streams from commercial sales of and whether or not mandated by regulatory
subject to large product liability damages the products. These launch dates are primarily agencies), as well as other emerging data
claims, settlements and awards for injuries driven by the development programmes that about marketed products such as adverse
allegedly caused by the use of their products. we run and the demands of the regulatory event reports, could lead to a loss of approval,
Product liability claims, regardless of their authorities in the approvals process, as well changes in product labelling or concerns
merits or their outcome, are costly, divert as pricing negotiation in some countries. about the side effects or efficacy of a product
management attention, and may adversely Delays in anticipated launch dates can arise wherever it is marketed. For example, in
RISK FACTORS CONTINUED
February 2006 we decided to withdraw has been tested and the relatively small number EMERGING MARKETS
Exanta from the market and terminate its of patients who have taken the product, the Growing our business in emerging markets
development as a result of new patient safety available data may be immature. Simple may be a critical factor in determining our
data from a clinical trial, which involved the extrapolation of the data may not be accurate future ability to sustain or increase the level
use of Exanta for a longer duration of therapy and could lead to a misleading interpretation of our global product revenues. Challenges
than was then approved for marketing. of a new products likely future commercial that arise in relation to the development of
In addition although the Japanese regulatory performance. See further discussion of the business in emerging markets include,
authority granted approval for Crestor, product safety and efficacy in the Managing but are not limited to, competition from
this was conditional on a post-marketing Risk section of this report. companies that are already present in the
surveillance programme being carried out. market, the need to correctly identify and
New data about our products, or products The successful launch of a new pharmaceutical leverage appropriate opportunities for sales
similar to our products, could negatively product involves a substantial investment in and marketing, poor protection over intellectual
impact demand for our products and our sales and marketing costs, launch stocks and property, inadequate protection against crime
net profit due to real or perceived safety or other items. If a new product does not succeed (including counterfeiting, corruption and fraud),
efficacy concerns. as anticipated or its rate of sales growth is inadvertent breaches of local law/regulation
slower than anticipated, there is a risk that and not being able to recruit sufficient
RISK OF FAILURE TO OBSERVE ONGOING the costs incurred in launching it could have personnel with appropriate skills and
REGULATORY OVERSIGHT a material adverse effect on AstraZenecas experience. The failure to exploit potential
AstraZenecas products are only licensed financial condition and results of operations. opportunities appropriately in emerging
following exhaustive regulatory approval markets may have a material adverse effect
processes and only for a specified therapeutic ENVIRONMENTAL/OCCUPATIONAL HEALTH & on AstraZenecas financial condition and
indication or indications. Once a product is SAFETY LIABILITIES results of operations.
licensed, it is subject to ongoing control AstraZeneca has environmental liabilities at
and regulation, such as the manner of its some currently or formerly owned, leased REPUTATION STRATEGY
manufacture, distribution, marketing and and third party sites in the US, as described There is considerable public sentiment against
safety surveillance. In addition, facilities in in more detail on pages 135 and 136. There is the pharmaceuticals industry, and the industry
which products are produced are subject no reason for us to believe that associated is under the close scrutiny of the public,
to ongoing inspections, and minor changes current and expected expenditure and risks the media and other stakeholders. Rising
in manufacturing processes may require are likely to have a material adverse effect on expectations are especially noteworthy in
additional regulatory approvals, either of AstraZenecas financial condition and results the areas of improving access to medicines
which could cause us to incur significant of operations as a general matter, although for the underprivileged, both in our established
additional costs and lose revenue. Regulatory they could, to the extent that they exceed markets and in less-developed nations;
authorities have wide-ranging administrative applicable provisions, have a material adverse business conduct in our supply chain; fair
powers to deal with any failure to comply with effect on AstraZenecas financial condition marketing practices; bio-ethical challenges;
their ongoing regulatory oversight (whether and results of operations for the relevant working conditions; human rights; and animal
such failure is by us or third parties with which period. In addition, a change in circumstances rights. Whilst we seek to manage these risks
we have relationships). These powers include (including a change in applicable laws or through various pro-active measures, there
withdrawal of a licence approval previously regulations) may result in such a material can be no assurance that in the future such
granted, product recalls, seizure of products adverse effect. Although we take great care risks will not cause our financial condition or
and other sanctions for non-compliance. to ensure that we maintain compliance with results of operations to be materially affected.
Regulatory sanction, following a failure to all applicable environmental, health and safety
comply with such ongoing regulatory oversight, laws, regulations, licences and permits at PRODUCT COUNTERFEITING
could have a material adverse effect on each of our operating facilities, a significant See Managing Risk section on page 46.
AstraZenecas financial condition and results non-compliance or incident for which we were
of operations. In addition, because our responsible could result in AstraZeneca
products are intended to promote the health being liable to pay compensation, fines or
of patients, any supply interruption could lead remediation costs. In some circumstances,
to allegations that the public health has been such liability could have a material adverse
endangered, and could subject us to lawsuits. effect on AstraZenecas financial condition
and results of operations. In addition, our
PERFORMANCE OF NEW PRODUCTS financial provisions for any obligations that
Although we carry out numerous and extensive we may have relating to environmental
clinical trials on all our products before they liabilities may be insufficient if the assumptions
are launched, for a new product it can be underlying the provisions including our
difficult, for a period following its launch, assumptions regarding the portion of waste
to establish from available data a complete at a site for which we are responsible prove
assessment of its eventual efficacy and/or incorrect, or if we are held responsible for
safety in broader clinical use on the market. additional contamination.
Due to the relatively short time that a product
ADDITIONAL INFORMATION 177
ADDITIONAL INFORMATION
HISTORY AND DEVELOPMENT OF THE COMPANY The Board of Directors may exercise all the Annual general meetings and
AstraZeneca PLC was incorporated in England powers of the Company to borrow money. extraordinary general meetings
and Wales on 17 June 1992 under the Variation of these borrowing powers would Annual general meetings and extraordinary
Companies Act 1985. It is a public limited require the passing of a special resolution of general meetings where a special resolution
company domiciled in the UK. The Companys the Companys shareholders. is to be passed or a Director is to be appointed
registered number is 2723534 and its require 21 clear days notice to shareholders.
registered office is at 15 Stanhope Gate, Directors are not required to retire at a All other extraordinary general meetings
London W1K 1LN (telephone + 44 (0)20 particular age. require 14 clear days notice.
7304 5000). From February 1993 until April
1999, the Company was called Zeneca Directors are required to beneficially own For all general meetings, a quorum of two
Group PLC. On 6 April 1999, the Company Ordinary Shares in the Company of an shareholders present in person or by proxy
changed its name to AstraZeneca PLC. aggregate nominal amount of $125. At present, is required.
this means they must own at least 500 shares.
The Company was formed when the Shareholders and their duly appointed
pharmaceutical, agrochemical and specialty Rights, preferences and restrictions proxies and corporate representatives are
chemical businesses of Imperial Chemical attaching to shares entitled to be admitted to general meetings.
Industries PLC were demerged in 1993. The share capital of the Company is divided
In 1999, the Company sold the specialty into 2,400,000,000 Ordinary Shares with Limitations on the rights to own shares
chemical business. Also in 1999, the Company a nominal value of $0.25 each and 50,000 There are no limitations on the rights to
merged with Astra AB of Sweden. In 2000, Redeemable Preference Shares with a nominal own shares.
it demerged the agrochemical business and value of 1.00 each. The rights and restrictions
merged it with the similar agribusiness of attaching to the Redeemable Preference
Novartis AG to form a new company called Shares differ from those attaching to Ordinary
Syngenta AG. Shares as follows:
The Company owns and operates numerous > The Redeemable Preference Shares carry
R&D, production and marketing facilities no rights to receive dividends.
worldwide. Its corporate headquarters are
at 15 Stanhope Gate, London W1K 1LN. > The holders of Redeemable Preference
Shares have no rights to receive notices
MEMORANDUM AND ARTICLES OF ASSOCIATION of, attend or vote at general meetings
Objects except in certain limited circumstances.
As is typical of companies registered in They have one vote for every 50,000
England and Wales, the Companys objects, Redeemable Preference Shares held.
which are detailed in the Memorandum of
Association, are broad and wide-ranging and > On a distribution of assets of the Company,
include manufacturing, distributing and on a winding-up or other return of capital
trading pharmaceutical products. (subject to certain exceptions), the holders
of Redeemable Preference Shares have
Directors priority over the holders of Ordinary
Subject to certain exceptions, Directors do Shares to receive the capital paid up on
not have power to vote at Board meetings on those shares.
matters in which they have a material interest.
> Subject to the provisions of the Companies
The quorum for meetings of the Board of Act 1985, the Company has the right to
Directors is a majority of the full Board, of redeem the Redeemable Preference
whom at least four must be Non-Executive Shares at any time on giving not less than
Directors. In the absence of a quorum, the seven days written notice.
Directors do not have power to determine
compensation arrangements for themselves Action necessary to change the rights
or any member of the Board. 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 an
extraordinary resolution passed at a general
meeting of such holders is required.
CROSS-REFERENCE TO FORM 20-F
The information in this document that is referenced on this page is included in AstraZenecas Form 20-F for 2006 (2006 Form 20-F) and is filed
with the Securities and Exchange Commission (SEC). The 2006 Form 20-F is the only document intended to be incorporated by reference into
any filings by AstraZeneca under the Securities Act of 1933, as amended. References to major headings include all information under such major
headings, including subheadings. References to subheadings include only the information contained under such subheadings. Graphs are not
included unless specifically identified. The 2006 Form 20-F has not been approved or disapproved by the SEC, nor has the SEC passed comment
upon the accuracy or adequacy of the 2006 Form 20-F. The 2006 Form 20-F filed with the SEC may contain modified information and may be
updated from time to time.
Item Page Item Page

3 Key Information 8 Financial Information
A. Selected financial data A. Consolidated statements and other
Financial Highlights 6 financial information
Group Financial Record IFRS 163 Financial Statements (excluding Directors
Shareholder Information 165 responsibilities on page 96 and Auditors
D. Risk factors 172 opinion on page 97) 98
B. Significant changes
4 Information on the Company
Note 28 Statutory and other information 146
A. History and development of the Company 177
Financial Review Investments, divestments 9 The Offer and Listing
and capital expenditure 57, 69 A4. Price history of listed stock
Note 7 Property, plant and equipment 110 Shareholder Information 165
Note 22 Acquisitions of business operations 121 C. Markets
Note 23 Disposal of business operations 123 Shareholder Information 165
B. Business overview
10 Additional Information
Business Review 8
C. Organisational structure B. Memorandum and Articles of Association 177
Directors Report Governance 71 C. Material contracts n/a
Principal Subsidiaries 148 D. Exchange controls and other limitations
D. Property, plant and equipment affecting security holders 169
Business Review Main Facilities 49 E. Taxation 168
H. Documents on display 168
5 Operating and Financial Review and Prospects I. Subsidiary information
A-F. Business Review 8 Principal Subsidiaries 148
A-F. Financial Review 53
11 Quantitative and Qualitative Disclosures about Market Risk
Note 15 Financial instruments 115
Financial Review Financial Risk Management
6 Directors, Senior Management and Employees Policies Treasury 60
A. Directors and senior management
12 Description of Securities other than Equity Securities n/a
Board of Directors 80
B. Compensation 13 Defaults, Dividend Arrearages and Delinquencies n/a
Directors Remuneration Report 82
14 Material Modifications to the Rights of Security
Note 24 Post-retirement benefits 123
Holders and Use of Proceeds n/a
C. Board practices 15 Controls and Procedures
Board of Directors 80 Directors Report Internal controls and
Directors Remuneration Report 82 management of risk 75
Directors Report Governance 71
Audit Committee 72 16 [Reserved]
D. Employees A. Audit Committee financial expert
Note 25 Employee costs and share option Audit Committee 72
plans for employees 128 B. Code of ethics
Directors Report People 48 Directors Report Code of Conduct 76
E. Share ownership C. Principal accountant fees and services
Directors Remuneration Report Note 28 Statutory and other information 146
Directors Interests in Shares 91 D. Exemptions from the listing standards
Note 25 Employee costs and for audit committees n/a
share option plans for employees 128 E. Purchases of equity securities by the issuer
and affiliated purchasers
7 Major Shareholders and Related Party Transactions
Note 29 Share capital of parent company 147
A. Major shareholders
Shareholder Information Major shareholdings 166 18 Financial Statements
B. Related party transactions Financial Statements (excluding Directors responsibilities
Shareholder Information Related party on page 96 and Auditors opinion on page 97) 98
transactions 167
179
GLOSSARY
The following abbreviations and expressions have Cognitive disorders The class of disorders High-throughput screening The process of
the following meanings when used in this report: consisting of significant impairment of cognition using automated tests to search quickly through
ACE (Inhibitor) Angiotensin-converting enzyme or memory that represents a marked deterioration large numbers of substances for desired binding
blocks the production of a hormone called from a previous level of functioning. or activity characteristics.
angiotensin II. Angiotensin II narrows blood vessels CR Corporate Responsibility. Hormone A chemical signal carried in the blood.
and thereby raises blood pressure. Corticosteroid Any of the steroid hormones made HKAPI Hong Kong Association of the
ACS Acute Coronary Syndrome, an umbrella by the cortex (outer layer) of the adrenal gland. Pharmaceutical Industry.
term used to cover any group of clinical symptoms CRC Colo-rectal cancer. Hypertension High blood pressure.
compatible with acute myocardial ischemia. Crohns disease A chronic inflammatory disorder IMS Health Inc. Provider of pharmaceutical
Adjuvant Assisting in the prevention, improvement of the bowels. market data globally.
or cure of disease. Directors The Directors of the Company. IR Immediate release.
ADP Adenosine diphosphate attaches to receptors Diabetes A metabolic disorder characterised by Ischaemic heart disease A chronic disease
on the surface of platelets to form blood clots. hyperglycaemia (high glucose blood sugar), among caused by insufficient blood supply to the heart.
Adverse reaction An unwanted, negative other signs, or a variable disorder of carbohydrate Leukotriene receptor antagonist New type of
consequence associated with the use of a medicine. metabolism usually characterised by inadequate asthma medication. They are non-steroidal
Agonist A substance capable of binding to secretion or utilisation of insulin. medications, which are taken long term and have been
a molecular target to initiate or enhance Diuretic A drug that causes the increased passing shown to reduce reliever use and may also allow the
a physiological reaction. of urine. asthmatic to reduce high doses of inhaled steroids.
Anaesthesia The total or partial loss of sensation, Dopamine partial agonists Mimic the effects Line extension A new formulation, indication or
especially in relation to pain. of dopamine in the brain by stimulating dopamine presentation of a product that is already approved.
Analgesia The inability to feel pain. receptors. Lipid Another word for fat. Lipids are one of the
Abbreviated New Drug Application (ANDA) Double-blind study A clinical study in which neither main constituents of plant and animal cells.
A marketing approval application for a generic drug the subject, nor the investigator nor the research Low-density lipoprotein cholesterol (LDL-C)
submitted to the US Food and Drug Administration. team interacting with the subject or data during the LDL is the major carrier of cholesterol in the blood,
Antagonist A substance capable of binding to trial knows what treatment a subject is receiving. sometimes referred to as bad cholesterol.
a molecular target to neutralise or counteract a Drug metabolism The biochemical modification Luteinising hormone-releasing hormone (LHRH)
physiological reaction. or degradation of drugs, usually through specialised A naturally occurring hormone that controls sex
Anti-androgen A drug that blocks the cellular enzymatic systems. hormones in both men and women.
uptake of testosterone by the prostate gland and Dyslipidaemia A condition marked by abnormal LHRH agonist A compound that is similar to LHRH
used in the treatment of prostate cancer. concentrations of lipids or lipoproteins in the blood. in structure and is able to act like it.
Anti-psychotic drug For the treatment of EEA European Economic Area. Marketing Authorisation Application (MAA)
the unrealistic ideas, delusions (false beliefs) and Efficacy The outcomes measured in Phase III An application for authorisation to place medicinal
hallucinations (false perceptions) that can appear clinical trials that indicate that the test drug has products on the market. This is a specific term for
during depression or mania. the intended benefit. the EU/EEA markets.
Aromatase inhibitor A drug that inhibits the enzyme Epidermal Growth Factor (EGF) receptor A protein Medicaid A US health insurance programme
aromatase, which is involved in the production of the found on the surface of some cells and to which for individuals and families with low incomes and
female sex hormone, oestrogen. epidermal growth factor binds, causing the cells resources. It is jointly funded by the states and
AstraZeneca or AstraZeneca Group AstraZeneca to divide. It is found at abnormally high levels on the federal government, and is managed by the states.
PLC and its subsidiaries. surface of many types of cancer cells, so these cells Medicare A US health insurance programme for
Atherosclerosis Disease of the arteries linked may divide excessively in the presence of epidermal US citizens aged 65 or older, US citizens under age
to the build-up of lipids (fats) in the walls and the growth factor. 65 with certain disabilities, and US citizens of all
formation of atheromatous plaque, which contracts EFPIA European Federation for Pharmaceutical ages with permanent kidney failure requiring dialysis
the lumen of these vessels. Industries and Associations. or a kidney transplant. Recently, Medicare began
Atrial fibrillation (AF) Abnormal irregular heart EMEA The European Medicines Agency. offering prescription drug coverage under Part D
rhythm with chaotic generation of electrical signals Excipient An inactive substance that serves as the of the Medicare Prescription Drug Benefit.
in the atria of the heart. vehicle or medium for a drug or other active substance. Metabolic syndrome A combination of medical
Atypical anti-psychotic drugs Second generation Food and Drug Administration (FDA) Part of the disorders that increase ones risk for cardiovascular
drugs to treat psychosis with reduced likelihood to US Department of Health and Human Services Agency disease and diabetes.
cause movement disorders. responsible for development, approval, manufacture, MHLW Japanese Ministry of Health, Labour
Biomarker A characteristic that is objectively sale and use of all drugs, biologics, vaccines and and Welfare.
measured and evaluated as an indicator of medical devices in the US. Monoclonal antibody An antibody derived from
normal biological processes, pathogenic First-line therapy Treatment given to a newly a single clone of cells; all antibodies derived from such
processes, or pharmacological responses to diagnosed patient, who has therefore not yet a group of cells have the same sequence of DNA.
a therapeutic intervention. been treated. Monotherapy Treatment where only one agent is
Biopharmaceuticals/Biologics A new class First time in man The first time that an experimental given.
of systemic therapies that contain proteins (usually compound is administered to a human. It implies that Myocardial infarction (MI) A heart attack.
produced naturally by living organisms in response the compound has passed ethical review bodies New Chemical Entity (NCE) A new,
to disease, for example antibodies), as opposed to and passed formal regulatory toxicology studies. pharmacologically-active chemical substance.
traditional pharmaceutical drugs that are made up Gastrointestinal (GI) Relating to the stomach The term is used to differentiate from line extensions
of non-living chemicals. and intestines. and existing drug products.
Bipolar disorder Any of several mood disorders Generic Drugs that are copies of brand-name NCI US National Cancer Institute.
characterised usually by alternating episodes of drugs and have regulatory approval. New Drug Application (NDA) An application to
depression and mania or by episodes of depression Gastro-oesophageal reflux disease (GERD) the FDA for approval to market a drug product
alternating with mild non-psychotic excitement. A recurrent condition where gastric juices, containing in the US.
Bronchodilator A drug that causes the widening acid, travel back from the stomach into the oesophagus. Neuroscience Sciences that deal with the structure
of the bronchi (major air passages of the lungs). Group The Company and its subsidiaries. or function of the nervous system and brain.
Cardiovascular (CV) Relating to the heart and Head-to-head study A clinical trial in which two Normotensive Indicating a normal arterial blood
blood vessels. different medicines are directly compared with each pressure.
CAT Cambridge Antibody Technology Group plc. other with respect to their effect on a marker of the NSAID Non-steroidal anti-inflammatory drug.
Candidate Drug (CD) A drug to be taken into clinical disease or a specific event associated with the NSCLC Non-small cell lung cancer.
concept testing phase. disease. (For drugs under development, this is often OA Osteoarthritis.
CEE Central and Eastern Europe. a comparison with a marketed drug that is seen to Oncology The study of diseases that cause cancer.
CHF Congestive Heart Failure. A condition in be the gold standard.) Odontology A science dealing with the teeth, their
which the hearts function as a pump (to circulate Hydrofluoroalkanes (HFAs) A new propellant for structure and development, and their diseases.
blood throughout the body) is inadequate to meet metered-dose inhalers that are more environmentally Outcomes study A large clinical trial in which the
the bodys needs and leads to a poor blood supply, friendly than the current CFC-based inhalers. effect of a drug in preventing or delaying a specific
which may cause the bodys organ systems to fail. High-density lipoprotein cholesterol (HDL-C) and important medical event related to that disease
Chronic Obstructive Pulmonary Disease (COPD) HDL carries cholesterol in the blood, sometimes area (eg the occurrence of a heart attack) is
Any disorder that persistently obstructs bronchial referred to as good cholesterol. measured, rather than the effect on a marker of the
airflow, eg bronchitis. disease (eg blood levels of certain enzymes).
GLOSSARY CONTINUED
Over the counter (OTC) A term used for medicines Primary care The medical care the patient receives FINANCIAL TERMS
that can be purchased without a prescription. upon first contact with the healthcare system, before
Palliative Treatment that has no curative intent referral elsewhere within the system. ADR American Depositary Receipt evidencing title
but is given to maintain quality of life and to relieve Prolactin The hormone that stimulates milk to an ADS.
suffering in a terminally-ill patient. production after childbirth. ADS American Depositary Share representing one
Parenteral Administered by any way other than Proof of concept Proof of concept provides underlying Ordinary Share.
through the mouth. clinical confirmation that an investigational product CER Constant Exchange Rates.
Phage The abbreviation for bacteriophage, a virus possesses a desired pharmacological effect in patients Cost growth rates Percentage growth of a particular
that infects bacteria. with the disease of interest. This can be achieved cost category over the comparable cost category for
Pharmacology The study of how drugs affect after a positive placebo-controlled study or dose- the previous year.
a living organism. response study using a validated surrogate variable Depositary JPMorgan Chase Bank, as depositary
Pharmacogenomics A biotechnological science or the final clinical outcome variable. Proof of concept under the deposit agreement pursuant to which the
that combines the techniques of medicine, also includes establishing a limited dose range to be ADRs are issued.
pharmacology and genomics and is concerned used in the subsequent confirmatory studies. Earnings per Share (EPS) Profit for the year after
with developing drug therapies to compensate for Proof of principle Proof of principle is achieved tax and minority interests, divided by the weighted
genetic differences in patients which cause varied when an intended pharmacological effect results average number of Ordinary Shares in issue during
responses to a single therapeutic regimen. in an expected change in a relevant biomarker in the year.
Pharmacokinetics The study of what the body a dose range, which does not cause any major Exceptional items Significantly large items that
does to a drug. unwanted effects. Proof of principle therefore provides are distinct in nature from items normally occurring
Phase I The phase of clinical study where the first measurable evidence that an investigational during ordinary business activities.
researchers test a new drug or treatment in a product might work in humans. Proof of principle is Finance income and expense Includes interest
small group (20-80) of people for the first time to normally demonstrated in a limited number of subjects earned and payable, and similar items.
evaluate its safety, determine a safe dosage range, with the disease of interest or in healthy volunteers Free cash flow Represents net cash flows before
and identify side effects. when a relevant model exists. financing activities, and is calculated as: net cash
Phase II This phase of clinical study includes the Prophylaxis or Prophylactic therapy A therapy inflow before financing activities, adjusted for
controlled clinical activities conducted to evaluate the or measure used to prevent disease. acquisitions of businesses, movements in short term
effectiveness of the drug for a particular indication or RA Rheumatoid arthritis. investments and fixed deposits and disposal of
indications in patients with the disease or condition RAG Risk Advisory Group. intangible assets.
under study and to determine the common short-term R&D Research and Development. Gross margin The margin as a percentage by which
side effects and risks associated with the drug. Phase II Respiratory Relating to or affecting breathing or sales exceed cost of sales, calculated by dividing the
studies are typically conducted in a relatively small the organs used to breathe. difference between the two by the sales figure.
number of patients (usually no more than several RET-kinase A receptor-tyrosine kinase which IAS International Accounting Standards.
hundred). is normally involved in maturation of a variety of IFRS International Financial Reporting Standards.
Phase III This phase of clinical study is performed tissues, including the nervous system and kidney. LSE London Stock Exchange.
after preliminary evidence suggesting effectiveness It is sometimes mutated and has an abnormal Minority interests Share of profits that belong
of the drug has been obtained and is intended to function in certain types of thyroid cancer. to non-AstraZeneca shareholders in partially-
gather additional information about effectiveness Ribosome A large complex molecule that owned subsidiaries.
and safety that is needed to evaluate the overall synthesises protein. NYSE New York Stock Exchange.
benefit/risk profile of the drug and to provide an RoW Rest of world. Operating costs Distribution costs; Research
adequate basis for physician labelling. Phase III studies Qui tam action (in the US) An action brought and Development (R&D) costs; and Selling, General
usually include between several hundred and several under a statute that allows a private person to sue for and Administrative (SG&A) costs.
thousand subjects. a penalty, part of which the government or some Operating profit Sales, less cost of sales, less
Phase IV Post-marketing studies to delineate specified public institution will receive. operating costs, plus operating income.
additional information about the drugs risks, Second-line therapy Treatment administered after Ordinary Shares Ordinary Shares of $0.25 each
benefits and optimal use, including those that may the failure of, or in addition to, first-line therapy. in the capital of the Company.
be requested by regulatory authorities in conjunction SEK, kronor, krona References to Swedish currency. Profit before tax Operating profit, plus
with marketing approval. Sepsis A life-threatening condition resulting from finance income, less finance expense.
PhRMA Pharmaceutical Research and uncontrolled severe infections. SSE Stockholm Stock Exchange.
Manufacturers of America, the US pharmaceutical Senior Executive Team (SET) a cross-functional, TSR Total Shareholder Returns.
industry association. cross-territorial group, established and led by the
Placebo In clinical trials, an inert substance identical Chief Executive Officer.
in appearance to the substance being tested, also SHE Safety, Health and the Environment.
known as a sugar pill. SCLC Small cell lung cancer.
Pharmaceutical and Medical Devices Agency Specialist care The medical care the patient
(PMDA) Japanese regulatory authority, part of receives after being referred within the system.
the MHLW. SR Sustained-release.
pMDI Pressurised metered-dose inhaler. Statin A class of drugs that alter cholesterol levels
Post-marketing surveillance (PMS) The systematic in the blood.
detection and evaluation of adverse reactions occurring Sterling, , GBP, pence or p References to
in association with pharmaceutical products under UK currency.
customary conditions of use in ordinary clinical practice. Thrombosis The formation of blood clots at sites
Poly-ADP-ribose polymerase (PARP) An enzyme where they are not required to prevent blood loss.
critical to the repair of damaged cells and maintenance Target Product Profile (TPP) Statement of the
of cellular energy. essential attributes of a clinically and commercially
Positron Emission Tomography (PET) A highly successful product, which can form the basis for
specialised imaging technique that uses short-lived commercial evaluation and guide Discovery and
radioactive substances to produce three-dimensional Development activities.
coloured images of those substances functioning Triglycerides The major form of fat that comes
within the body. These images are called PET scans. from the food we eat as well as from being produced
Proton Pump Inhibitor (PPI) A medicine that by the body.
reduces the production of acid in the stomach. UK United Kingdom of Great Britain and
Pre-clinical (PC) studies Studies conducted Northern Ireland.
before a drug is tested in human subjects, and which US dollar, US$, USD or $ References to
support and help establish boundaries for safe use of US currency.
the drug in subsequent Phase I studies. US United States of America.
World Health Organization (WHO) The United
Nations specialised agency for health.
Zollinger Ellison Syndrome A rare gastric
acid disorder.
Trade marks Statements of competitive position Statements of growth rates, sales and market data
Trade marks of the AstraZeneca group of Except as otherwise stated, market information in Except as otherwise stated, growth rates and sales
companies appear throughout this document in italics. this Annual Report and Form 20-F Information in this Annual Report and Form 20-F Information are
AstraZeneca, the AstraZeneca logotype and the regarding the position of our business or products given at constant exchange rates (CER) to show
AstraZeneca symbol are all trade marks of the relative to its or their competition is based upon underlying performance by excluding the effects of
AstraZeneca group of companies. Trade marks of published statistical data for the 12 months ended exchange rate movements. Market data are given in
companies other than AstraZeneca appear with a 30 September 2006, obtained from IMS Health, actual US dollars.
or sign and include: Abraxane, a registered trade a leading supplier of statistical data to the
mark of Abraxis BioScience, Inc.; Avastin, a trade pharmaceutical industry. Except as otherwise Statements of dates
mark of Genentech, Inc.; Cubicin, a trade mark of stated, these market share and industry data from Except as otherwise stated, references to days
Cubist Pharmaceuticals, Inc.; CytoFab, a trade IMS Health have been derived by comparing our and/or months in this Annual Report and Form 20-F
mark of Protherics, Inc.; Herceptin, a trade mark sales revenue to competitors and total market sales Information are references to days and/or months
of Genentech, Inc.; Humira, a trade mark of Abbott revenues for that period. For the purposes of this in 2006.
Laboratories, Inc.; Prinivil, a trade mark of Merck & Annual Report and Form 20-F Information,
Co., Inc.; Taxotere, a trade mark of Aventis Pharma references to the world pharmaceutical market or AstraZeneca websites
S.A.; TriCor, a trade mark of Fournier Industrie et similar phrases are to 52 countries contained in IMS Information on or accessible through our
Sant and Zocor, a trade mark of Merck & Co., Inc. Healths MIDAS Quantum database, which amount websites, including astrazeneca.com,
to approximately 95% (in value) of the countries astrazenecaclinicaltrials.com,
Use of terms audited by IMS Health. rosuvastatininformation.com and
In this Annual Report and Form 20-F Information, cambridgeantibody.com, does not form part
unless the context otherwise requires, AstraZeneca, of this document.
the Group, the Company, we, us and our refer
to AstraZeneca PLC and its consolidated entities.
CONTACT INFORMATION
REGISTERED OFFICE
AND CORPORATE HEADQUARTERS ADDRESS
AstraZeneca PLC
15 Stanhope Gate
London W1K 1LN
UK
Tel: +44 (0)20 7304 5000
Fax: +44 (0)20 7304 5151
INVESTOR RELATIONS CONTACTS

UK: as above or e-mail
[email protected]
Sweden:
AstraZeneca AB
SE-151 85 Sdertlje
Sweden
Tel: +46 (0)8 553 260 00
Fax: +46 (0)8 553 290 00
or e-mail
[email protected]
US:
Investor Relations
AstraZeneca Pharmaceuticals LP
1800 Concord Pike
PO Box 15438
Wilmington
DE 19850-5438
US
Tel: +1 (302) 886 3000
Fax: +1 (302) 886 2972
REGISTRAR AND TRANSFER OFFICE

Lloyds TSB Registrars
The Causeway
Worthing
West Sussex
BN99 6DA
UK
Tel (freephone in the UK): 0800 389 1580
Tel (outside the UK): +44 121 415 7033
SWEDISH SECURITIES REGISTRATION CENTRE

VPC AB
PO Box 7822
SE-103 97 Stockholm
Sweden
Tel: +46 (0)8 402 9000
US DEPOSITARY
JPMorgan Chase Bank
JPMorgan Service Center
PO Box 3408
South Hackensack
NJ 07606-3408
The paper used in this report is made using pulp from US
sawmill residues, forest thinnings and wood from PEFC Tel (toll free in the US): 888 697 8018
certified sustainable forests. All mill broke is recycled and
accounts for up to 25% of the total fibre content. Pulps Tel (outside the US): +1 (201) 680 6630
are Elemental Chlorine Free (ECF) and the manufacturing
mill holds ISO 14001 and EMAS environmental
management accreditations.
Designed by Addison Corporate Marketing Ltd. ASTRAZENECA.COM

AZN-GLOBAL-Annual Report - FullYear 2006 PDF

Uploaded by

Copyright:

Available Formats

AZN-GLOBAL-Annual Report - FullYear 2006 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

AZN-GLOBAL-Annual Report - FullYear 2006 PDF

Uploaded by

Copyright:

Available Formats

ANNUAL AND FORM 20-F

2006 IN BRIEF 1 FINANCIAL STATEMENTS 19. Reserves 120

ASTRAZENECA IS ONE OF THE WORLDS LEADING PHARMACEUTICAL COMPANIES, WITH A BROAD

DESPITE A CHALLENGING ENVIRONMENT, STRONG SALES GROWTH OF OUR MAJOR PRODUCTS,

CHIEF EXECUTIVE OFFICERS REVIEW

AFTER MY FIRST YEAR AS CHIEF EXECUTIVE OFFICER, I AM DELIGHTED TO INTRODUCE AN ANNUAL

CHIEF EXECUTIVE OFFICERS REVIEW CONTINUED

SALES $M PRODUCT PERFORMANCE HIGHLIGHTS $M

04 21,426 +9% 06 3,416 06 1,206

05 3,379 -4% 05 8,695 +4%

ASTRAZENECA IN BRIEF INTRODUCTION CONTENTS

BUSINESS ENVIRONMENT CONTINUED

Cancer GROWING CHALLENGES FOR INDUSTRY Drug safety

OUR STRATEGY OUR OBJECTIVES Building on our leadership positions in

Making a strategic move into biologicals

OUR RESOURCES, SKILLS AND CAPABILITIES

towards meeting objectives. It conducts an REPUTATION AND RESPONSIBILITY

RISK MANAGEMENT During 2006, we undertook a comprehensive

CARDIOVASCULAR (CV) MEDICINES

2006 IN BRIEF PERFORMANCE

$2 BILLION,WITH OVER 9 MILLION Growth

> SELOKEN/TOPROL-XL SALES Seloken/Toprol-XL 1,795 62 (2) 1,735 333 15 1,387 3 3 24 25

EXCEEDED $1.7 BILLION, BUT Atacand 1,110 133 3 974 68 27 879 14 14 8 11

Licensed from Merck & Co., Inc.

CARDIOVASCULAR (CV) MEDICINES CONTINUED

GASTROINTESTINAL (GI) MEDICINES

2006 IN BRIEF PERFORMANCE

$5 BILLION FOR THE FIRST TIME. Growth

TREATMENT OF PATIENTS WITH Other 78 8 - 70 (19) 1 88 11 11 (21) (20)

> NEXIUM SACHET 20MG AND 40MG

GASTROINTESTINAL (GI) MEDICINES CONTINUED

PIPELINE Sales of Nexium in other markets reached

Details of all compounds in the GI pipeline are Underlying performance

2006 IN BRIEF PERFORMANCE

GREW 24% TO $3.4 BILLION. Growth

LAUNCHED IN THE US. Seroquel 3,416 655 - 2,761 710 24 2,027 24 24 35 36

SEROQUEL SR FORMULATION Total 4,704 656 (11) 4,059 513 50 3,496 16 16 15 16

SUBMITTED IN THE US, EUROPE

NEUROSCIENCE MEDICINES CONTINUED

WE AIM TO STRENGTHEN OUR POSITION IN THE NEUROSCIENCE PIPELINE

Neurology Anaesthesia PERFORMANCE 2005

2006 IN BRIEF PERFORMANCE

$1.5 BILLION NOW THE LEADING Growth

PROSTATE CANCER. Zoladex 1,008 17 (13) 1,004 65 22 917 1 - 7 9

Nolvadex (tamoxifen citrate) remains a

ONCOLOGY MEDICINES CONTINUED

RESPIRATORY AND INFLAMMATION (R&I) MEDICINES

2006 IN BRIEF PERFORMANCE

OF $1.2 BILLION (UP 18%). Growth

WITH STEADY GROWTH. Pulmicort 1,292 132 (2) 1,162 96 16 1,050 11 11 9 11

RESPIRATORY AND INFLAMMATION (R&I) MEDICINES CONTINUED

The development of Symbicort for COPD Sales of Symbicort increased by 18% to

2006 IN BRIEF PERFORMANCE

(20%), DESPITE THE NEED TO Merrem 604 96 3 505 67 15 423 19 20 15 19

MANUFACTURING DISRUPTIONS. Total 677 67 3 607 51 17 539 11 12 9 13

> WORK DEDICATED TO FINDING

PIPELINE In December we entered into a licence PERFORMANCE 2006

2006 IN BRIEF PERFORMANCE

YEAR, DRIVEN NOTABLY BY NEXIUM, Growth