SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AstraZeneca PLC
Date: May 19, 2004 By: /s/ A C N Kemp
Name: A C N Kemp
Title: Assistant Secretary
Item 1
Results of operations - summary analysis of period to 31 March 2004
Growth rates in sales and operating profit, both in US dollar and percentage
terms, are not referred to specifically in financial statements but are
discussed extensively elsewhere in this prospectus supplement. We measure, in
part, our performance using financial growth rates and, accordingly, include
them in our discussions here. External stakeholders, such as business analysts,
also use these measures. In particular, to monitor performance internally, we
use constant exchange rate or underlying growth, a non-GAAP measure which,
unlike actual growth, cannot be derived directly from the information in the
financial statements. This measure removes the effects of currency movements to
focus on the changes in product sales and expenses driven by volume, prices and
cost levels relative to the prior period. We believe that these measures provide
one of the most important insights into how our business is performing and our
discussions in the underlying performance sections of this prospectus supplement
use them. However, we recognize that these measures should not be used in
isolation and, accordingly, we also discuss the comparable GAAP actual growth
measures which reflect all the factors that affect our business in the reported
performance sections of this prospectus supplement. Underlying growth is
calculated by retranslating the current year performance at the previous year's
exchange rates and adjusting for other exchange effects, including hedging.
Financial highlights
1st Quarter 1stQuarter Growth Growth
2004 2003 underlying reported
$m $m % %
Sales 5,074 4,735 (1) 7
Operating Profit 1,079 1,272 (20) (15)
Profit before Tax 1,108 1,293 (20) (14)
Earnings per Share $0.47 $0.54 (19) (13)
Reported performance
Our reported sales for the first quarter 2004 increased by 7% (including a
positive exchange benefit of 8%) compared to the same quarter in 2003, rising
from $4,735 million to $5,074 million. Reported operating profit fell by 15%
from $1,272 million to $1,079 million.
Underlying performance
Sales
Excluding the effects of currency exchange rates our underlying sales fell by
1%. Sales outside the US were up 6%. In the US sales were down 8% against the
first quarter 2003 which had included $400 million of speculative purchases by
wholesalers as discussed below. Excluding inventory movements, total demand in
the US was estimated to increase by 6%, and global sales of key growth products
(Nexium, Crestor, Iressa, Atacand, Casodex,Arimidex, Zomig, Seroquel, Symbicort
and Faslodex) by around 34%.
Nexium sales were $935 million in the first quarter, up 7%. Sales outside the US
increased by 36%. Total prescriptions in the US increased by 19% in the quarter,
well ahead of the proton pump inhibitor (PPI) market growth.
Crestor sales were $129 million in the first quarter, including $72 million in
the US. In the week ending 16 April Crestor share of new prescriptions in the US
statin market was 6.2 %. Recent Crestor launches include France on 8 March and
Italy on 5 April.
Sales of oncology products increased 19% in the first quarter to $762 million.
Arimidex sales were up 62% on continuing growth in the treatment of early breast
cancer. Iressa sales were $93 million, with sales in Japan up 50% over the first
quarter 2003.
Respiratory product sales were $648 million. Symbicort sales were up 31%.
Prescriptions for Pulmicort Respules in the US increased by 22%.
Seroquel sales were $448 million, down 2% in the quarter affected by wholesaler
stock movements in the US in the first quarter 2003. Prescriptions in the US
grew by 36% in the quarter. Seroquel now ranks second in the US antipsychotic
market in new prescription share, having recently overtaken olanzapine. Seroquel
sales outside the US increased by 14%.
In December 2003, regulatory submissions were made for Exanta in Europe and the
US for the first key chronic indications, including the prevention of stroke
associated with atrial fibrillation, and are now being reviewed by regulatory
authorities.
Sales in the US during the first quarter 2003 included significant speculative
purchases by wholesalers, which lifted trade inventories to some $400 million
higher than normal. During the first quarter 2004 the company began implementing
inventory management agreements with three large wholesalers in the US who
account for around three quarters of our US sales. Since the agreements were not
in place for the entire period, some purchases above current demand did occur in
the first quarter 2004, estimated to be around $100 million. At the end of the
first quarter the Company estimates that, in aggregate, approximately $200
million of inventory above target levels is in the distribution chain, chiefly
in Nexium, Toprol-XL and Atacand. This inventory should be worked down over the
second and third quarters of 2004.
Geographic analysis
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
US 2,279 (191) - 2,470 (8) (8)
Canada 218 30 32 156 19 40
2,497 (161) 32 2,626 (6) (5)
France 442 37 76 329 11 34
UK 132 (25) 13 144 (17) (8)
Germany 226 4 39 183 2 23
Italy 255 3 44 208 2 23
Sweden 79 (14) 14 79 (18) -
Europe others 741 23 106 612 4 21
Total Europe 1,875 28 292 1,555 2 21
Japan 290 15 32 243 6 19
RoW 412 66 35 311 21 32
Total 5,074 (52) 391 4,735 (1) 7
In the US reported sales were down 8% due to wholesaler stocking in the first
quarter 2003. Excluding inventory movements, underlying demand grew by an
estimated 6% overall, and by 27% excluding the three products affected by
generic competition (Prilosec, Nolvadex and Zestril).
Sales in Europe were up 2%, with growth in Nexium (up 34%), Symbicort (up 25%),
Arimidex (up 49%) and Crestor offsetting declining prices throughout the region.
Sales in Japan were up 6% on good growth in oncology products (up 26%) and Losec
(up 18%).
Operating margin and retained profit
Underlying operating profit fell by 20% from $1,272 million to $1,079 million.
The weakness of the US dollar continues to benefit our results. In comparison
with the first quarter of 2003 the US dollar weakened against the euro (14%),
benefiting sales, and also against the Swedish krona (14%) and sterling (13%),
increasing costs. Overall, currency benefited EPS by around 3 cents in
comparison with the first quarter of 2003. Should the exchange rates stay at
current levels for the remainder of the year no further exchange benefits are
expected to accrue.
Gross margin increased by 1.4% to 77.4% of sales in the quarter, as payments to
Merck declined to 5.6% of sales (a reduction of 1.4% of sales), attributable to
differences in product mix between the periods. A small adverse exchange impact
(-0.3%) was offset by a slight improvement in underlying cost of sales of a
similar magnitude.
Operating margin comparisons are coloured by the marked difference in quarterly
phasing of sales. Operating margin in the first quarter 2003 was 26.9% of sales
(the highest quarter last year) as the benefits of wholesaler stocking fell
straight through to operating profit. Operating margin in the first quarter 2004
was 21.3%. Underlying increases in research and development (R&D) and selling,
general and administrative (SG&A) expenditures are estimated to have contributed
around half of the margin difference between the periods, with the balance
attributable to the sales phasing in 2003.
In aggregate R&D and SG&A expenses were $2,849 million, as spending in support
of product launches and the additional recruitment in Discovery and Development
were broadly maintained at the levels reached in the second half of last year.
The increase over the first quarter of 2003 was 13% in CER terms, but 23% on a
reported basis, including 10% of exchange rate impact.
Net interest and dividend income in the quarter was $29 million, compared with
$21 million for the same period last year. The improvement is due mainly to
lower interest payments in the first quarter 2004 following the repayment of
$319 million of debt in mid-2003.
The effective tax rate at 27.5% for the first quarter was at the same level as
for the first quarter of 2003.
Share repurchases
The Board has approved a new programme of share repurchases of $4 billion to be
completed by the end of 2005, assuming continued market access and the absence
of strategic uses for cash.
During the quarter 12.5 million shares were repurchased for cancellation at a
total cost of $608 million.
The total number of shares that remain in issue at 31 March 2004 was 1,681
million.
Liquidity and capital resources
Cash inflow from operating activities before exceptional items was $1,276
million, $102 million better than in the first quarter of 2003 despite the lower
operating profit. This is due to the lower working capital outflows this year as
the trade debtor movement in 2003 was particularly high following the wholesaler
inventory movements. Tax payments were broadly similar in both periods whilst
capital expenditure in the current quarter is $37 million lower than that in the
first quarter of 2003. Before financing and the management of liquid resources,
net cash inflow of $720 million was $149 million ahead of the same period last
year.
Sales by therapeutic area
The table below shows our sales by therapy area for the first quarter of 2004
compared to the first quarter of 2003.
Growth
Q1 due to
2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Gastrointestinal 1,496 (159) 110 1,545 (10) (3)
Cardiovascular 1,055 4 82 969 1 9
Respiratory and 648 25 60 563 4 15
inflammation
Oncology 762 112 69 581 19 31
Neuroscience 812 (41) 46 807 (5) 1
Infection and other 169 24 15 130 18 30
products
Others 132 (17) 9 140 (12) (6)
Total Sales 5,074 (52) 391 4,735 (1) 7
Gastrointestinal
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Nexium 935 61 39 835 7 12
Losec / Prilosec 540 (220) 68 692 (32) (22)
Other Gastrointestinal 21 - 3 18 - 17
Total Gastrointestinal 1,496 (159) 110 1,545 (10) (3)
Reported performance
Gastrointestinal sales in the first quarter 2004 fell by 3%, declining by $49
million from $1,545 million to $1,496 million.
Underlying performance
Excluding exchange effects, the underlying decline in gastrointestinal sales was
10%.
Nexium sales in markets outside the US in the first quarter were up 36%. Sales
in Europe were up 34%, particularly in France (up 50%).
Total prescriptions for Nexium in the US increased by 19% in the first quarter,
well above the 10% growth in the non-generic segment of the PPI market. Market
share of total prescriptions reached a new high in March, at 25.6%. There was a
small amount of wholesaler stocking that occurred this quarter, but well below
the levels in the first quarter 2003. As a result, sales of Nexium in the US on
a reported basis were virtually unchanged.
Prilosec sales in the US declined by 68% on continued loss of market share to
generic omeprazole products together with the decline in omeprazole
prescriptions resulting from the growth in Prilosec OTC.
Sales of Losec outside the US were down 6%, as declines in Europe were partially
offset by growth in Asia Pacific.
Cardiovascular
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Seloken / Toprol-XL 333 (46) 11 368 (13) (10)
Atacand 209 (18) 21 206 (9) 1
Plendil 111 (7) 8 110 (6) 1
Zestril 105 (17) 14 108 (16) (3)
Crestor 129 119 7 3 n/m n/m
Other Cardiovascular 168 (27) 21 174 (15) (3)
Total Cardiovascular 1,055 4 82 969 1 9
n/m not
meaningful
Reported performance
Cardiovascular reported sales growth was 9%, as revenues grew by $86 million
from $969 million to $1,055 million.
Underlying performance
After excluding exchange effects of $82 million, cardiovascular sales grew by
1%.
Sales of Seloken/Toprol-XL declined by 13% in the first quarter, as US sales
comparisons for Toprol-XL (down 17%) reflected significant wholesaler stocking
in the first quarter 2003. In the first quarter prescriptions for Toprol-XL in
the US grew by 21% versus last year, well ahead of the 10% growth in the
beta-blocker market.
Atacand sales were up 15% outside the US. Atacand prescriptions in the highly
competitive US market for angiotensin receptor blockers were broadly unchanged.
The reported sales decline of 33% in the US represents wholesaler stock
movements in the first quarter 2003 partially offset by some stocking in the
first quarter this year.
Sales of Crestor reached $129 million in the first quarter. Sales in the US grew
to $72 million as ex-factory sales begin to track prescription demand, which
grew to over 1 million prescriptions dispensed in the first quarter 2004.
In the US market for statin products, Crestor market share of new prescriptions
was 6.2% in the week ending 16 April. Share of new and switched patients
("dynamic share") was even higher, at 16.3 %.
Crestor market share of total prescriptions has increased to 8.9% in Canada,
8.8% in the Netherlands, and 3.0% in the UK. Crestor was recently launched in
France on 8 March and in Italy on 5 April.
Since launch the Company estimates that 4 million prescriptions have been
dispensed for Crestor. An extensive clinical trials database and detailed
post-marketing surveillance confirms Crestor has a safety profile comparable to
other marketed statins.
Respiratory and Inflammation
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Symbicort 188 38 28 122 31 54
Pulmicort 282 13 18 251 5 12
Rhinocort 81 (12) 3 90 (13) (10)
Accolate 30 (2) 1 31 (6) (3)
Oxis 25 (10) 4 31 (32) (19)
Other Respiratory 42 (2) 6 38 (5) 11
Total Respiratory 648 25 60 563 4 15
Reported performance
Reported growth for respiratory and inflammation was 15%. Sales from Symbicort
and Pulmicort were the two drivers of this growth.
Underlying performance
Underlying sales growth in respiratory and inflammation was 4%.
Symbicort sales in the first quarter increased by 31%. Continued expansion of
the market for fixed combination products in general, as well as the launch of
new dosage strengths and the chronic obstructive pulmonary disease (COPD)
indication for Symbicort, are factors driving the good sales performance.
Worldwide sales of Pulmicort were up 5%, chiefly on the growth of Pulmicort
Respules in the US market. In the US, total prescriptions for Pulmicort Respules
were up 22% versus the first quarter 2003.
Rhinocort Aqua prescriptions in the US increased by 9% in the first quarter,
with market share of total prescriptions slightly ahead of first quarter 2003.
Some destocking in 2004 compared with stock building in the first quarter 2003
contributed to the 18% decline in reported sales in the US.
Oncology
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Casodex 229 17 23 189 9 21
Zoladex 213 (2) 22 193 (1) 10
Arimidex 166 58 15 93 62 78
Iressa 93 70 4 19 n/m n/m
Faslodex 26 4 - 22 18 18
Nolvadex 31 (34) 4 61 (56) (49)
Other Oncology 4 (1) 1 4 (25) -
Total Oncology 762 112 69 581 19 31
Reported performance
Oncology's reported sales grew by $181 million from $581 million to $762
million, an increase of 31% with strong performances from Arimidex and Iressa.
Underlying performance
The underlying sales growth for oncology was 19%, after excluding exchange
effects of $69 million.
Casodex prescriptions in the US were broadly unchanged, however reported sales
were down 7% on wholesaler stocking in the first quarter 2003. Outside the US
sales were up 16%, including a 30% increase in Japan.
Arimidex sales were up 62% in the first quarter on increasing usage in early
breast cancer. Sales in the US increased 88% versus the first quarter 2003,
which was depressed by wholesaler destocking. Arimidex prescriptions in the US
grew 45%, and Arimidex market share for hormonal treatments for breast cancer
was 21.3% in March 2004, an increase of 4.8 percentage points since March 2003.
Arimidex sales in Europe were up 49%, and in Japan were 46% ahead of the first
quarter 2003.
Iressa sales in Japan were $27 million in the quarter, up 50% versus the first
quarter 2003. US sales of $51 million included some wholesaler stocking. Retail
prescriptions for Iressa in the first quarter were just over twenty-two
thousand, some 8% higher than the fourth quarter 2003.
Faslodex sales increased by 9% in the US. On 12 March the Company announced that
Faslodex received European marketing approval for the treatment of advanced
breast cancer.
Neuroscience
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Seroquel 448 (11) 15 444 (2) 1
Zomig 95 (20) 7 108 (18) (12)
Diprivan 122 (21) 7 136 (15) (10)
Local Anaesthetics 130 14 15 101 14 29
Other Neuroscience 17 (3) 2 18 (17) (6)
Total Neuroscience 812 (41) 46 807 (5) 1
Reported performance
Neuroscience reported sales were broadly unchanged in the first quarter 2004
compared to the same quarter in 2003.
Underlying performance
Neroscience sales declined by 5% on an underlying basis.
Prescription growth for Seroquel in the US market remains strong, up a further
36% versus the first quarter 2003. Seroquel is the fastest growing product among
the three leading brands in the atypical antipsychotic market, and during the
first quarter Seroquel overtook olanzapine to become the number two product in
the market based on monthly new prescriptions, with a 24.5% market share.
Reported sales in the US for Seroquel were down 6%, a function of significant
wholesaler stocking in the first quarter 2003.
Seroquel sales outside the US were up 14%, with 50% growth reported in Canada
and in Germany. Sales in Italy were up 25%.
Zomig sales in Europe increased by 25%. US sales were down 33%, reflecting the
change in distribution for the US market, where the product is now sold to
Medpointe (the distributor responsible for sales and marketing for the US
market) at contract prices below the AstraZeneca ex-factory price 2003.
Infection
Growth
due to
Q1 2004 Growth exchange Q1 2003 Growth Growth
sales underlying effects sales underlying reported
$m $m $m $m % %
Merrem 97 14 9 74 19 31
Other Products 72 10 6 56 18 29
Total Infection and 169 24 15 130 18 30
other Pharma
Reported performance
Infection reported sales rose by 30% in the first quarter 2004 compared to the
same quarter in 2003, increasing from $130 million to $169 million.
Underlying performance
Underlying sales in infection grew by 18%.
Forward Looking Statements
The preceding forward-looking statements relating to expectations for earnings
and business prospects for AstraZeneca PLC are subject to risks and
uncertainties, which may cause results to differ materially from those set forth
in the forward-looking statements. These include, but are not limited to: the
rate of growth in sales of generic omeprazole in the US, continued growth in
currently marketed products (in particular Crestor, Nexium, Seroquel, Symbicort,
Arimidex and Iressa), the successful registration and launch of Exanta, the
growth in costs and expenses, interest rate movements, wholesaler stocking and
de-stocking, exchange rate fluctuations and the tax rate. For further details on
these and other risks and uncertainties, see AstraZeneca PLC's Securities and
Exchange Commission filings, including the 2003 Annual Report on Form 20-F.
Consolidated Profit & Loss Account (Unaudited)
2004 2003
For the quarter ended 31 March $m $m
Sales 5,074 4,735
Cost of sales (1,145) (1,135)
Distribution costs (42) (35)
Research and development (943) (782)
Selling, general and administrative expenses (1,906) (1,526)
Other operating income 41 15
Operating profit 1,079 1,272
Net interest and dividend income 29 21
Profit on ordinary activities before taxation 1,108 1,293
Taxation (305) (356)
Profit on ordinary activities after taxation 803 937
Attributable to minorities (2) (5)
Net profit for the period 801 932
Earnings per Ordinary Share before exceptional items $0.47 $0.54
Earnings per Ordinary Share $0.47 $0.54
Diluted earnings per Ordinary Share $0.47 $0.54
Weighted average number of Ordinary Shares in issue (millions) 1,688 1,717
Diluted average number of Ordinary Shares in issue (millions) 1,690 1,718