4th Quarter & Final Results - Part 1

AstraZeneca PLC 24 February 2000 PART 1 AstraZeneca PLC Full Year Results 1999 'Profit growth and market share gains follow successful merger' Full Year Financial Highlights --------------------------------------------------------------------------- Operations before Exceptional Items ------------------------------------ Actual Pro Forma* Constant 1999 1998 Currency USDm USDm % ------------------------------------ Sales: Continuing (excl. Specialties) 17,791 15,823 + 13 Group 18,445 17,117 + 9 Operating Profit: Continuing (excl. Specialties) 3,837 3,361 + 15 Group 3,908 3,507 + 12 Earnings per Share: Continuing (excl. Specialties) USD1.51 USD1.30 + 17 Group USD1.54 USD1.36 + 14 Group (Statutory FRS3) USD0.64 USD1.47 ------------------------------------- Following the announcement on 2 December 1999 of the proposed spin-off and merger of Agrochemicals with the agrochemicals and seeds activities of Novartis to form Syngenta AG, the results for AstraZeneca on an 'ongoing' basis, ie excluding the results of Agrochemicals and Specialties, are shown and described below: Ongoing Operations before Exceptional Items ------------------------------------ Actual Pro Forma* Constant 1999 1998 Currency USDm USDm % ------------------------------------ Sales 15,134 13,033 + 17 Operating Profit 3,570 3,002 + 20 Earnings per Share USD1.41 USD1.17 + 22 ------------------------------------ * Pro forma Basis: see basis of calculation description on page 19. All narrative in this section refers to pro forma growth rates for ongoing operations at constant exchange rates. Tom McKillop, Chief Executive, said: 'These results are testimony to the success of the AstraZeneca merger which has delivered profit and market share gains. Decisive actions have been taken to focus on our Healthcare operations ensuring AstraZeneca's position as a leading, global Pharmaceuticals company. All key development projects are on track and continued investment in our strong portfolio will deliver excellent returns for shareholders.' - Sales up 17 per cent; Pharmaceuticals sales up 18 per cent - US Pharmaceuticals sales up 23 per cent - Operating profit up 20 per cent; Pharmaceuticals operating profit up 19 per cent to USD3,603 million - Operating margin increased to 23.6 per cent; Pharmaceuticals operating margin increased to 24.3 per cent London, 24 February 2000 AstraZeneca PLC Fourth Quarter Results 1999 Fourth Quarter Financial Highlights --------------------------------------------------------------------------- Operations before Exceptional Items ----------------------------------------- Actual Pro Forma* 4th Quarter 4th Quarter Constant 1999 1998 Currency USDm USDm % ----------------------------------------- Sales: Ongoing 3,916 3,692 + 9 Group 4,493 4,544 + 1 Operating Profit: Ongoing 796 794 + 1 Group 789 829 - 3 Earnings per Share: Ongoing USD0.32 USD0.31 + 5 Group USD0.32 USD0.32 + 2 ----------------------------------------- Ongoing operations excludes the results of Agrochemicals (to be discontinued) and Specialties (discontinued). The following narrative refers to the growth rates for ongoing operations at constant exchange rates. - Ongoing sales up 9 per cent; Pharmaceuticals sales up 10 per cent - Stocking patterns, particularly by US wholesalers, strongly influenced the third and fourth quarter Pharmaceuticals sales: 3rd Quarter, up 31 per cent; 4th Quarter, up 10 per cent; 2nd Half, up 19 per cent - Prescription demand in the USA remained strong throughout the fourth quarter - Operating profit up 1 per cent; Pharmaceuticals operating profit was influenced by third and fourth quarter sales trends; 3rd Quarter, up 58 per cent; 4th Quarter, flat; 2nd Half up 25 per cent Group Statutory Basis (including Discontinued Operations and Exceptional Items) ------------------------- 4th Quarter 4th Quarter 1999 1998 ------------------------- Earnings per Share (FRS3) USD(0.10) USD0.40 ------------------------ * Pro forma Basis: see basis of calculation description on page 19. London, 24 February 2000 Media Enquiries: Steve Brown/Lucy Williams (London) (020)7304 5033/5034 Mikael Widell (London) (020)7304 5030 Staffan Ternby (Sodertalje) (8) 553 26107 Rachel Bloom (Wilmington) (302) 886 7858 Analyst/Investor Enquiries: Elizabeth Sutton/ Michael Olsson (London) (020)7304 5101/5087 Staffan Ternby (Sodertalje) (8) 553 26107 Ed Seage (Wilmington) (302) 886 4065 Jorgen Winroth (Wayne) (609) 896 4148 Chief Executive Officer's Review of Operations ---------------------------------------------------------------------------- All narrative in this section refers to pro forma growth rates at constant exchange rates (CER). 1999 has been an exciting year. AstraZeneca was formed on 6 April and since then we have restructured the group. The sale of Specialties in June was followed by the announcement in December of the intent to create the first dedicated, global agribusiness, Syngenta, by spinning off and merging our agrochemicals business with the agrochemicals and seeds interests of Novartis. Thus AstraZeneca is now a leading, global healthcare company focused on Pharmaceuticals. Close attention to running the business, even during the intense merger activity, has delivered an increased market share for ethical pharmaceuticals. To the best of our knowledge, this is the first time that a major pharmaceutical company merger has produced an increase in market share. As a result, AstraZeneca has consolidated its position as the largest ethical pharmaceutical company in the world in terms of sales with a global market share of 4.3 per cent. (Source IMS Health: MIDAS MAT Q3 99 - includes pharmacy and hospital sales as audited by IMS Health, excludes US mail order). The core pharmaceutical business delivered full year sales and profits growth of 18 per cent and 19 per cent respectively. A particularly strong performance was registered in the USA with growth of 23 per cent. Importantly this growth has not only come from the continued success of Losec/Prilosec and Zestril but also by excellent performances from a range of newer products including Casodex (USD340 million), Seroquel (USD232 million) and Atacand (USD171 million). Integration has proceeded quickly and well with the 1999 synergy benefits of USD130 million being slightly ahead of forecast. Further details on this programme are provided on page eight of this report. Earnings per Share for AstraZeneca's core ongoing business focused on Healthcare (mainly Pharmaceuticals) was USD1.41, a growth of 22 per cent, which provides further evidence of the achievements and focus of 1999. In accordance with the new dividend policy, as described in the Interim Report in August, the Board has recommended a second interim dividend of USD0.47 (29.1 pence, SEK4.01) which will be paid on 17 April 2000. Together with the first interim dividend this gives a total dividend for the year of USD0.70 (43.3 pence, SEK5.90) per share. Our cash position is strong and in December we commenced the share re- purchase programme announced in August. By the end of the year we had purchased for cancellation 4,338,444 of the Ordinary Shares (nominal value USD0.25 each) for an aggregate sum of USD183 million. This represents 0.24 per cent of the total issued share capital of AstraZeneca. Turning to some of the highlights and issues of the fourth quarter . . . Wholesaler buying patterns in the USA significantly distorted the balance of third and fourth quarter results, particularly for Prilosec, Seloken, Pulmicort and Rhinocort which all experienced higher than normal levels of buying during the third quarter. The underlying performance in the fourth quarter was strong with continued prescription volume growth across the product range. Some Year 2000 advance buying was experienced principally in some European and Asian markets, estimated at around USD70 million. We continue to make good progress in the defence of Losec/Prilosec patents. In particular, we welcome the decision by the German Supreme Court to refer the Losec Supplementary Protection Certificate (SPC) case to the European Court of Justice. The referral means that the German interpretation of the applicability of SPCs will be judged in the context of the EU as a whole which should better reflect the original intention of SPCs as a mechanism for patent term restoration. At the R & D presentations in London and New York in December, we presented information on our exciting pipeline; Nexium - our next generation Proton Pump Inhibitor (PPI), ZD4522 - the super-statin, H376/95 - our oral thrombin inhibitor, the respiratory drug Viozan and fast-tracking of the novel anti- cancer agent Iressa were all highlighted. All are progressing well through development towards the market. Good progress is being made in Europe and the USA with the regulatory review of Nexium. The European filing was completed for Symbicort, which is expected to be a significant addition to our respiratory portfolio. Healthcare --------------------------------------------------------------------------- Except where stated, all narrative in this section refers to the fourth quarter. Growth rates are on a pro forma basis at constant exchange rates. ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Sales 3,894 3,662 + 9 15,042 12,938 + 17 Sales (ex Losec /Prilosec) 2,372 2,296 + 6 9,133 8,139 + 13 Operating Profit 803 803 + 1 3,595 3,029 + 19 ROS 20.6% 21.9% n/m 23.9% 23.4% n/m ----------------------------------------------------- Gastrointestinal ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Losec/ Prilosec 1,522 1,366 + 14 5,909 4,799 + 24 Total 1,534 1,379 + 14 5,957 4,845 + 24 ----------------------------------------------------- - Prilosec US prescription market share for December increased to 32.6 per cent (total) and 30.1 per cent (new); a good performance against a background of new product launches - Proton Pump Inhibitors continued to expand their share of the US anti- secretory market; total prescription share was 62 per cent in December versus 54 per cent in December 1998 - Strong sales of Losec in France, up 51 per cent, mainly due to co- prescribing with NSAIDs, more than offset the decline in Germany, down 27 per cent, due to generic competition - During 1999 Losec MUPS, the new tablet formulation, has been successfully launched in eleven countries Cardiovascular ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Zestril 297 347 - 12 1,221 1,126 + 9 Atacand 55 19 + 215 171 43 + 312 Seloken 122 122 + 3 531 450 + 19 Plendil 124 99 + 28 452 367 + 24 ----------------------------------------------------- Total 870 872 + 3 3,416 3,017 + 14 ----------------------------------------------------- - Strong market share growth continued in cardiovascular; Zestril, Atacand, Seloken and Plendil all outpaced their respective classes mainly due to new indications and the publication of new clinical data - Zestril fourth quarter sales declined against an extremely strong comparative quarter in 1998 - US prescription growth for Zestril remains strong with total prescription share standing at 24.6 per cent at the end of December; annualised total prescription volume growth for Zestril at 16.3 per cent to end December continues to outstrip the ACEi class (5.3 per cent for the same period) - Atacand sales grew strongly in all markets with US prescription share standing at 6.2 per cent (total) and 7 per cent (new) at the end of December - A price increase in November for Seloken in the USA resulted in high wholesaler stock levels from the third quarter being carried through into the fourth quarter with a consequent lower level of sales being achieved - Seloken US prescription growth continues to be strong with a total market share of 13.2 per cent at the end of December - Plendil sales were strong due to the securing of new guaranteed volume contracts with US healthcare providers Respiratory ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Pulmicort 191 197 + 4 730 691 + 9 Accolate 47 28 + 72 156 152 + 4 Rhinocort 30 39 - 18 167 158 + 8 Oxis 24 16 + 69 87 44 + 107 ----------------------------------------------------- Total 347 338 + 10 1,339 1,256 + 10 ----------------------------------------------------- - Prescription demand for Pulmicort in the USA, the fastest growing market for the product, remains strong and supply constraints as previously indicated (which are now easing) adversely affected the quarter - The launch of Accolate for paediatric indications in the USA resulted in higher fourth quarter sales - Accolate US total prescription market share stood at 6.8 per cent at the end of December with new prescription share at 5.1 per cent - The launch of Rhinocort Aqua in the USA early in 2000 will stimulate further sales growth - A new indication for Oxis Turbuhaler, for 'as needed' treatment of asthma symptoms, was approved by the European regulators in December and will stimulate further growth - The first European filing for Symbicort was made in December; Symbicort combines the proven benefits of Pulmicort with those of Oxis in a single inhaler to provide compliance and convenience benefits to patients Oncology ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Casodex 95 74 + 31 340 245 + 41 Arimidex 40 35 + 20 140 121 + 19 Nolvadex 144 136 + 4 573 526 + 7 Zoladex 194 168 + 14 686 626 + 9 ----------------------------------------------------- Total 480 421 + 14 1,764 1,538 + 15 ----------------------------------------------------- - Demand for Casodex remains strong in all markets with leadership consolidated; first approvals were received for monotherapy which should continue to promote future sales growth - Arimidex continues to grow strongly maintaining its number one position; impressive clinical results in first line breast cancer were announced late in the year and will provide a strong basis for future growth - The growth of Nolvadex sales represents increased prescribing in the USA following the publication of positive data across a range of indications, including reduction of risk of developing breast cancer - Zoladex continues to grow well despite a highly competitive pricing environment, particularly in the USA - Significant new survival data in both early breast and prostate cancer for Zoladex was published during the year Specialist/Hospital ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Seroquel 71 22 + 223 232 66 + 254 Zomig 54 40 + 40 189 102 + 88 Merrem 39 32 + 31 153 128 + 29 Diprivan 144 196 - 25 608 653 - 6 Xylocaine 65 66 - 4 249 240 + 2 Marcaine 25 21 + 24 88 80 + 11 Astra Tech 29 28 + 15 111 100 + 15 ----------------------------------------------------- Total 619 597 + 6 2,358 2,074 + 15 ----------------------------------------------------- - Seroquel continues to gain market share in the USA as a result of increasing acceptance of the benefits of the product; total prescription market share was 7.4 per cent at the end of December with new prescription share increasing to 8.5 per cent - Seroquel was the leading brand in the USA in gaining 'switch' business within the atypical class of antipsychotics - Following the approval of Seroquel through the European mutual recognition process in December, the launch of Seroquel in Germany and Italy is scheduled for the first quarter of 2000; further global roll-out is expected during the rest of the year - Zomig continues to capitalise on the steady move to triptan therapy in the USA and France and will benefit from the launch of new formulations - Demand for Merrem remained strong in all markets; supply constraints in the USA due to manufacturing difficulties earlier in the year have adversely affected sales growth and, while the situation is now improving, may continue to do so during the first quarter of 2000 - The decline in Diprivan sales is due to the increased penetration of a generic formulation in the US market compounded by a strong comparative period when there was a high level of wholesaler speculative stocking - Diprivan sales growth in Europe continues in double digits, even in Germany where generics have been on the market since 1997; sales in Japan grew by 75 per cent benefiting from the launch of new indications and the ongoing expansion and acceptance of intravenous anaesthesia Salick Health Care ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Sales 44 55 - 20 208 208 - ----------------------------------------------------- - An exceptional charge of USD145 million was made against operating profit following the decision to refocus the business on a smaller base of profitable centres and to recognise the impairment of certain asset carrying values. Cash costs included in the provision amounted to approximately USD50 million All narrative in the remainder of this section refers to Pharmaceuticals only. Geographic Sales ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- USA 1,749 1,666 + 5 7,156 5,834 + 23 Europe 1,421 1,333 + 17 5,310 4,793 + 15 Japan 242 181 + 13 710 568 + 8 RoW 438 427 + 5 1,658 1,535 + 13 ----------------------------------------------------- - As already highlighted, sales growth in the USA was affected by wholesaler stocking patterns for a number of products and generic competition for Diprivan - Continued strong sales growth in most European markets was led by France where sales were up 31 per cent - Sales growth in Japan continued to outperform market growth driven by new indications for key products Research and Development Total Pharmaceutical R & D expenditure in 1999 was USD2,454 million, up 13 per cent, representing 16.5 per cent of sales. Through the consolidation of the two R & D functions, synergy benefits of USD20 million have been realised in 1999 and further benefits should accrue in the next two years. A thorough review has been completed of all R & D activities leading to a more focused development portfolio which comprised 57 new chemical entities and 159 projects described at the time of the R & D presentations in December. Since then licensing agreements on MUSE, mosapride and seratrodast have been terminated. All major projects continue to make good progress towards their defined profiles and against clear milestones. Operating Margin - Pharmaceuticals' operating margin, before exceptional items, for 1999 increased to 24.3 per cent. The benefits from the synergy programme are beginning to flow through but the full benefit was offset by an increased proportion of contingent payments to Merck and the cost of terminating license agreements - In the fourth quarter, the margin of 20.9 per cent was affected by the phasing of sales and license agreement terminations - In 2000 further benefits are anticipated from the synergy programmes. At least a further one per cent will fall through to improved margins in 2000 with further improvement dependant on the scale of resources required to maximise the full potential of Nexium and the other late- stage projects nearing the market Exceptional Items Exceptional charges against 1999 operating profits totalled USD892 million, comprising: - USD864 million for the AstraZeneca integration and synergy programme - USD28 million to complete the work commenced in 1998 to rationalise Astra's US operations following the Astra Merck restructuring In addition, charges against profit before tax comprised: - Merger costs of USD1,013 million, including the USD809 million R & D related payment to Merck. The latter amount reflects the recent outcome of the arbitration hearing and includes interest and legal fees Synergies - The programme is being fully implemented and detailed plans are in place throughout the organisation - On track to deliver synergy benefits of USD500 million in 2000 and USD1.1 billion in 2002 - USD130 million of synergy benefits were delivered in 1999; USD100 million through S,G&A, USD20 million through R & D and USD10 million through production and distribution - Job reductions in excess of 2,800 were made in 1999 and detailed plans are in place to deliver the overall target of 6,000 - Approximately half of the target savings are expected to be realised in Europe, around 30 per cent in North America and the balance in Rest of World. For 1999 the split was: 50 per cent Europe, 25 per cent North America and 25 per cent Rest of World - As highlighted at the nine months, approximately two thirds of the total benefits are expected to be realised from S,G&A, around 25 per cent from R & D and the balance from production and distribution - A restructuring charge of USD864 million was taken in 1999. Detailed plans now indicate that the total programme cost is expected to be USD1.3 billion. Of the total 1999 charge, USD316 million relates to integration activities and USD548 million to synergy plans Agrochemicals --------------------------------------------------------------------------- All growth rates in this section are at constant exchange rates. Strong sales performances in Europe and Asia Pacific during the fourth quarter more than offset the impact of continuing adverse trading conditions in the Americas, highlighted in earlier results reports for 1999. For the full year, however, sales decreased by five per cent; operating profit decreased by 21 per cent, and excluding the ISK integration costs charged in 1998, by 29 per cent. Products ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- Non Selective Herbicides 138 120 + 13 671 670 - Selective Herbicides 163 139 + 21 753 874 - 13 Total Herbicides 301 259 + 17 1,424 1,544 - 8 Insecticides 76 121 - 35 406 504 - 19 Fungicides 154 129 + 24 744 651 + 14 ----------------------------------------------------- Total 553 532 + 6 2,657 2,790 - 5 ----------------------------------------------------- - Increasing demand for Touchdown and advanced stocking of Surpass associated with Year 2000 in North America were the major contributors to fourth quarter sales growth in herbicides; Touchdown sustained volume growth of over 20 per cent for the full year; selective herbicide sales were affected by further penetration of genetically modified crops in addition to generally adverse conditions - The impact in the Americas of low farm incomes and low insect infestation in many crops depressed insecticide sales; Karate sales were down 13 per cent for the full year - Amistar, with 1999 sales of USD415 million three years following launch, is now the world's leading proprietary fungicide; sales grew by over 40 per cent in 1999 with growth continuing in all markets Geographic ----------------------------------------------------- Fourth Quarter Full Year ----------------------------------------------------- 1999 1998 CER% 1999 1998 CER% ----------------------------------------------------- North America 95 108 - 10 822 933 - 12 Europe 174 154 + 25 929 899 + 5 Latin America 151 154 - 5 453 550 - 18 RoW 133 116 + 12 453 408 + 8 ----------------------------------------------------- Total 553 532 + 6 2,657 2,790 - 5 ----------------------------------------------------- - Adverse trading conditions, already highlighted earlier in 1999, continued to depress overall demand in both North and Latin America; tight credit policies were maintained in Argentina and Brazil in difficult economic conditions - Growth in Europe for the full year, driven largely by Amistar, resulted in share gains in a contracting market with little recovery in Eastern Europe - The business took advantage of a steady recovery in the markets of Asia Pacific to achieve full year sales growth of 12 per cent Research and Development Significant progress was made during 1999 in R & D; investments in new manufacturing plants were approved for two late stage development compounds, the corn herbicide 1296 and the second generation strobilurin fungicide 1963. R & D expenditure increased to USD297 million (1998: USD286 million); the increase is largely associated with new collaborations in biotechnology research. Operating Margin (Pre Exceptional Items) The 1999 operating margin reduced from 12.9 per cent to 10.0 per cent; in addition to the impact of lower sales, research costs increased as a result of the expanding biotechnology programme and there were additional fixed manufacturing costs following Amistar and Touchdown plant capacity increases. Advanta Contribution for the full year from Advanta was reduced due to poor trading conditions in the seeds sector. Exceptional Items During 1999 Zeneca Agrochemicals undertook a number of restructuring projects designed to improve profitability. These measures resulted in a charge of USD125 million in the fourth quarter including some 600 job reductions, equivalent to eight per cent of total employees, yielding annual savings of approximately USD50 million per annum from 2000. Syngenta --------------------------------------------------------------------------- - The implementation of the spin-off and merger of the Agrochemicals business with the agrochemicals and seeds activities of Novartis to form Syngenta AG, announced on 2 December 1999, is progressing well - Detailed work on the formation of Syngenta is proceeding to plan. The Agrochemicals teams from AstraZeneca and Novartis are working effectively in planning for Syngenta in relevant permitted areas - Both companies are working together with relevant competition authorities particularly in the EU and US. As previously announced, in the EU the notification for regulatory approval has been filed and the regulatory review commenced on 21 February 2000. In the US the Federal Trade Commission has requested certain additional information on the proposed transaction which the parties are working actively to provide - Completion of the transaction is expected in the second half of 2000 Currency --------------------------------------------------------------------------- - Sales were reduced by three per cent and profits by one per cent due to currency movements in the fourth quarter - In the fourth quarter the dollar strengthened against the Euro by 12 per cent, sterling by two per cent and the krona by four per cent but weakened against the Yen by 16 per cent - The impact on profits was partially mitigated by the offsetting effect of the UK and Swedish cost bases against the European profit contribution Business Disposals --------------------------------------------------------------------------- The sale of Specialties was completed on 30 June 1999 for USD2 billion. The exceptional gain on the disposal of Specialties was USD237 million and generated net cash of USD1.6 billion after related separation costs. Year 2000 --------------------------------------------------------------------------- - As anticipated, the sales patterns at the end of 1999 were not significantly affected by Year 2000 - AstraZeneca's operations were largely unaffected by date-related problems at the Millennium roll over - There were only a small number of instances where contingency plans were invoked to resolve problems - Total spend on Year 2000 was USD170 million over more than three years which ensured that material issues were avoided and business continuity was maintained - The programme included provision to test for date-related risks associated with 29 February 2000 and therefore little impact is expected on the occurrence of this date Taxation --------------------------------------------------------------------------- - The effective tax rate for 1999 for ongoing operations before exceptional items was 29.5 per cent - Tax relief on exceptional items within continuing operations was limited to an effective rate of 20 per cent due to the element of asset write-offs and disallowable costs within the provisions - The tax charge for the year attributed to the 'to be discontinued' Agrochemicals business was USD93 million (an effective rate of 34.6 per cent) Cash Flow --------------------------------------------------------------------------- - For the full year USD4.7 billion of net cash was generated from operations, before exceptional items - Capital expenditure for the fourth quarter totalled USD0.6 billion - USD183 million was spent on the share repurchase programme in the fourth quarter included as Financing on the Cash Flow Statement - USD1.5 billion of net cash was generated from operations, before exceptional items, in the fourth quarter - The outlays on exceptional items were USD1.6 billion for the year - The cash outflow for the year was USD0.3 billion - At year end, cash and short-term investments exceeded borrowings by USD2.2 billion Company Advisors --------------------------------------------------------------------------- - Auditors: the Board will recommend to shareholders at the Annual General Meeting in May that KPMG Audit Plc be appointed Auditors for the company's 2000 Financial Statements. This supersedes the arrangement for 1999 when Deloitte & Touche and KPMG Audit Plc were joint auditors - Stockbrokers: in addition to Credit Suisse First Boston the Board has appointed Merrill Lynch International to act as Brokers to the company Future Prospects --------------------------------------------------------------------------- AstraZeneca's strategy is focused on Pharmaceuticals. We aim to create enduring shareholder value growth matching the peer group of leading pharmaceutical companies. Aspirational targets have been set for each therapeutic area. Clear business priorities have been coupled with the implementation of performance management throughout the company to drive value creation. We enter 2000 with a strengthened business and a growing confidence in the potential of the products nearing launch. Over the remainder of the integration period, delivery of synergy benefits and reduction of tax rates will enable us to make the major investments necessary to realise their full sales potential, whilst at the same time improving ongoing business margins to a targeted 27 per cent and a three per cent reduction in the tax rate. No significant improvements are expected in the trading conditions for Agrochemicals although the self-help initiatives undertaken in the second half of last year should underpin its financial performance. Good progress is being made with the formation of Syngenta and we are looking forward to the launch of an industry leader in the second half of the year. Based on current market assumptions and exchange rates we expect to see further strengthening of the business with double digit growth in sales of the ongoing business in 2000, although the flow through of Year 2000 advance purchases will dampen first quarter growth in some markets. This sales growth, together with the improvement in margin, should translate into good double digit growth in earnings per share. Tom McKillop Chief Executive Officer MORE TO FOLLOW QRRIFFFFFFIVFII

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