Final Results Part 1 of 2
AstraZeneca PLC
8 February 2001
Part 1 of 2
AstraZeneca PLC
Full Year Results 2000
'Profit before tax up 16 per cent; EPS up 18 per cent'
Financial Highlights (before Exceptional Items)
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---------------------------------------------
Group Full Year Full Year Constant
(Continuing operations*) 2000 1999 Currency
USDm USDm %
---------------------------------------------
Sales 15,804 15,134 +8
Operating Profit 3,984 3,570 +14
Profit before Tax 4,110 3,556 +16
Earnings per Share
Group USD1.64 USD1.41 +18
Group (Statutory FRS3) USD1.44 USD0.64
---------------------------------------------
* Excluding Specialties and Agrochemicals from both periods
All narrative in this section refers to growth rates at constant exchange
rates (CER)
- Sales up 8 per cent; US Pharmaceuticals up 12 per cent
- Operating profit up 14 per cent; EPS up 18 per cent
- Strength of US Dollar reduced reported sales by 4 per cent and operating
profit by 2 per cent
- Important growth products up 50 per cent; Life cycle initiatives fuel
growth of Atacand, Casodex, Arimidex, Zomig, and Seroquel
- Continued good progress with the new product pipeline, with fourteen high
quality candidate drugs nominated for development, ahead of target
- The statutory accounts for the Group include the results of Specialties
through 30 June 1999, and for Agrochemicals through 13 November 2000.
Including the results of these discontinued operations the Group had
reported sales of USD18,103 million (USD18,445 million in 1999), operating
profit (pre exceptional items) of USD4,330 million (USD3,908 million in
1999), and EPS of USD1.44 (USD0.64 in 1999)
Tom McKillop, Chief Executive Officer, said: 'Significant progress was made
last year. Following the demerger of Agrochemicals, we became one of the
most focused pharmaceutical companies in the industry; AstraZeneca is
operating successfully as a single unified global organisation, and our
exciting R&D pipeline made strong progress. These are important
achievements which give us confidence that we will deliver sustained growth
in shareholder value.'
AstraZeneca PLC
Fourth Quarter Results 2000
Financial Highlights (before Exceptional Items)
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---------------------------------------------
Group 4th Quarter 4th Quarter Constant
(Continuing operations*) 2000 1999 Currency
USDm USDm %
---------------------------------------------
Sales 4,144 3,916 +13
Operating Profit 971 796 +22
Profit before Tax 1,034 802 +23
Earnings per Share
Group USD0.42 USD0.32 +25
Group (Statutory FRS3) USD0.19 USD(0.10)
---------------------------------------------
* Excluding Specialties and Agrochemicals from both periods
All narrative in this section refers to growth rates at constant exchange
rates (CER)
- Sales up 13 per cent; US Pharmaceuticals up 22 per cent
- Operating profit up 22 per cent
- EPS up 25 per cent
- Strength of US Dollar reduced reported sales by 7 per cent and operating
profit by 1 per cent
- The statutory accounts for the Group include the results of Agrochemicals
through 13 November 2000. Including the results of these discontinued
operations the Group had reported sales of USD4,265 million (USD4,493
million in 1999), operating profit (pre exceptional items) of USD965
million (USD789 million in 1999), and EPS of USD0.19 (USD(0.10) in
1999).
London, 8 February 2001
Media Enquiries: Steve Brown/Lucy Williams
(London) +44 20 7304 5033/5034
Staffan Ternby (Sodertalje) +46 8 553 26107
Rachel Bloom (Wilmington) +1 302 886 7858
Analyst/Investor Enquiries: Michael Olsson (London) +44 20 7304 5087
Staffan Ternby (Sodertalje) +46 8 553 26107
Ed Seage (Wilmington) +1 302 886 4065
Jorgen Winroth (Wayne) +1 609 896 4148
Photographs of the AstraZeneca annual results conference are available
from newscast at www.newscast.co.uk from 1pm (UK time) today.
Business Highlights 2000
All narrative in this section refers to growth
rates at constant exchange rates (CER) unless otherwise indicated.
Healthcare sales in the fourth quarter returned to double digit growth
(up 13 per cent) bringing sales for the year in line with our revised
projection of 8 per cent. Group operating profits increased by 22 per cent
for the quarter, and 14 per cent for the full year. The strength of the
dollar reduced reported operating profits by 1 per cent for the quarter and
by 2 per cent for the full year. Earnings per share (before exceptional
items) grew by 25 per cent in the quarter and by 18 per cent for the year.
The Board has recommended a second interim dividend of USD0.47
(32.1 pence, SEK 4.49) which will be paid on 9 April 2001.
The key growth products grew by 50 per cent in aggregate, fuelled by
important life cycle initiatives. These included launches of Atacand
Plus/Atacand HCT, Casodex for monotherapy of advanced prostate cancer,
Arimidex for first line treatment of advanced breast cancer, Zomig
Rapimelt tablets, and a further twenty country launches for Seroquel.
For Losec/Prilosec it was another year of good growth. Reported sales
for Prilosec in the USA finished somewhat ahead of prescription growth
in a highly competitive PPI market that grew by 21 per cent.
The rollout of Nexium is underway, with launches in nine European markets
to date. We are still planning for a first quarter launch in the USA
and are moving to closure on the last few significant issues with the
FDA.
It was another productive year for the R&D organisation. The Discovery group
delivered fourteen new high quality candidate drugs into development,
exceeding their target. The strength of our research programmes, the
calibre of the scientists, the depth of the enabling technologies, and the
world class laboratory facilities that support their efforts were the focus
of the 12 December 2000 R&D presentation at Molndal.
Throughout the year, the progressive unveiling of major clinical data for
Nexium, Viozan, the Oral Direct Thrombin Inhibitor, Iressa and
Crestor has reinforced the promising product profiles which underpin
our commercial ambitions. As the year ended, this promise was beginning to
be translated into performance in the market, with the first launches of
Nexium and Symbicort. The early information emerging from tracking
the progress of these launches is very encouraging, and we look forward to
continued progress in the coming year.
Future Prospects
All narrative in this section refers to growth rates at
constant exchange rates (CER) unless otherwise indicated.
The next two years will be challenging as we shift our reliance on hugely
successful, yet maturing products, like Losec and Zestril, to the
equally exciting new generation of medicines with high potential that will
form the basis for future growth. In the short-term, the aim is to balance
investment in new product launches to fuel our future growth, whilst
delivering acceptable returns to shareholders.
We have clearly signalled our intention to realise the full potential of
the strong pipeline, including further investment in sales and marketing as
the new products roll out, and also in research and development,
particularly in post launch studies. The realisation of the full
synergy benefits, efficient deployment of resources and firm
prioritisation of the portfolio will be essential in achieving this.
Delivery of our current plans for 2001 would result in mid single digit
sales growth and earnings per share growth slightly ahead of this.
Disclosure Notice: The preceding forward looking statements relating to
expectations for earnings and business prospects for the Company 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 timing of the launch of generic
omeprazole in the USA, the successful registration and launch of new
products (in particular Nexium and Crestor), continued growth of
currently marketed products, the growth in costs and expenses, the amount
of net interest income earned on the Group's cash balances, exchange rate
fluctuations, and further improvements in the tax rate. For further details
on these and other risks and uncertainties, see the Company's Securities and
Exchange commission filings, including the 1999 annual report on Form 20-F.
Healthcare
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All narrative in this section refers to the fourth quarter unless otherwise
indicated. Growth rates are at constant currency.
Sales grew by 13 per cent; operating profits were up 22 per cent.
Gastrointestinal
----------------------------------------------------
Fourth Quarter CER % Full Year CER %
----------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------
Losec/Prilosec 1,728 1,522 +19 6,260 5,909 +9
Nexium 13 - - 17 - -
----------------------------------------------------
Total 1,752 1,534 +20 6,322 5,957 +9
----------------------------------------------------
- Prilosec sales in the USA for the quarter were 26 per cent ahead
of last year indicating some inventory building in the distribution
channels. For the full year, this amounts to around 2 of the 10
percentage points of growth. Market share in the antisecretory market
held steady at around 31 per cent, but continued to come under some
pressure from new entrants within the PPI segment which showed
continued strong growth (up 21 per cent).
- The paediatric clinical trial programme for Prilosec was completed in
the fourth quarter, and the data were submitted to FDA for review.
- Pre-trial proceedings are essentially complete for the first four
defendants in the US patent litigation for Prilosec in the USA. The
parties await rulings on summary judgement motions and further
scheduling decisions as to the timing and venue for trial proceedings.
- Outside of the USA, Losec sales increased by 7 per cent in the quarter,
with strong performances in France and Italy more than offsetting sales
declines elsewhere in some other European markets.
- With launches in nine European markets, Nexium is off to an excellent
start. Early market tracking from the UK and Germany indicate market
acceptance rivalling the best launches ever seen in these markets.
- The broad GP launch of Nexium in Sweden, as well as a further 20
launches, is anticipated this year, including the USA.
Cardiovascular
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Fourth Quarter CER % Full Year CER %
----------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------
Zestril 228 297 -17 1,188 1,221 +1
Atacand 97 55 +92 293 171 +82
Seloken/
Toprol-XL 172 122 +50 577 531 +13
Plendil 127 124 +10 480 452 +11
----------------------------------------------------
Total 842 870 +5 3,477 3,416 +6
----------------------------------------------------
- As expected, sales of Zestril were down in the quarter. Continued
inventory de-stocking in the USA led to a 30 per cent decline in
reported sales vs the fourth quarter 1999; coupled with rebate-related
price variances on performance contracts recorded earlier in the year,
this resulted in a 2 per cent growth in the USA for the year. This
masks good underlying prescription growth of nearly 10 per cent, and
sales are anticipated to be more in line with prescription trends this
year.
- A strong fourth quarter, particularly in the USA, brought Seloken/
Toprol-XL full year growth rate more in line with the growing
demand for the product.
- Atacand showed continued strong growth for the quarter and the year,
supported by the roll outs of Atacand Plus in many major markets.
Atacand HCT was launched in the USA in the fourth quarter.
Respiratory
----------------------------------------------------
Fourth Quarter CER % Full Year CER %
----------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------
Pulmicort 193 191 +13 705 730 +5
Accolate 21 47 -55 152 156 -2
Rhinocort 56 30 +97 221 167 +37
Oxis 32 24 +58 116 87 +48
----------------------------------------------------
Total 348 347 +11 1,372 1,339 +10
----------------------------------------------------
- In the USA sales of Pulmicort increased by 168 per cent in the
quarter and by 76 per cent for the year. The successful launch of
Pulmicort Respules as well as a nearly 40 per cent increase in
prescriptions for the Turbuhaler drove this performance. Competitor
inroads in the mature markets resulted in a more modest worldwide sales
increase.
- Rhinocort performance benefited from the successful US launch of
Rhinocort Aqua.
- Continued wholesaler de-stocking and a declining prescription trend
resulted in a weak quarter for Accolate in the USA, which more than
offset the modest growth seen in other markets.
- Symbicort received its first approval in Sweden. Since its launch
in late August market response has been encouraging, with an 8.2
per cent share of the inhaled steroid and fixed combination market
achieved in four months. Further European launches in the first half
of this year will follow the December approval through the EU Mutual
Recognition Procedure.
Oncology
----------------------------------------------------
Fourth Quarter CER % Full Year CER %
----------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------
Casodex 119 95 +33 433 340 +31
Arimidex 39 40 +10 156 140 +19
Nolvadex 171 144 +21 576 573 +1
Zoladex 181 194 +1 734 686 +10
----------------------------------------------------
Total 518 480 +15 1,929 1,764 +12
----------------------------------------------------
- Good growth continued for Casodex, with a particularly strong
performance in Japan. The monotherapy claim for locally advanced
prostate cancer has now been launched in 9 markets, with notable
uptake seen in the UK and Sweden. We plan to submit registrations for
the treatment of early prostate cancer later this year. The submission
for the 150 mg tablet for use in advanced disease was withdrawn in the
USA; this dosage form will now be submitted in conjunction with the
early prostate filing.
- US sales of Arimidex for the year were slightly behind the 14 per
cent increase in prescriptions; inventory building seen in the fourth
quarter last year makes for a difficult comparison. Whilst competition
is intensifying in the aromatase inhibitor market, the year-end
approval in Japan, and the continued global roll-out of the first-line
indication underpin our near-term aspirations, ahead of the eagerly
awaited reports from the adjuvant trial program in early disease.
- Nolvadex sales in the USA in the fourth quarter rebounded from the
de-stocking that marked the first nine month's results. The year-end
growth rate still trails the 7 per cent growth in prescriptions.
- Regulatory filings for Faslodex will commence in the first quarter of
2001, with the submission in the USA for second-line treatment of
advanced breast cancer. European and Japanese registrations will await
the first line data, with filings anticipated in the first quarter 2002.
Specialist/Hospital
----------------------------------------------------
Fourth Quarter CER % Full Year CER %
----------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------
Seroquel 131 71 +89 424 232 +85
Zomig 59 54 +18 237 189 +31
Merrem 48 39 +33 170 153 +18
Diprivan 114 144 -15 507 608 -14
Xylocaine 63 65 +3 238 249 -3
Marcaine 25 25 +4 92 88 +8
Astra Tech 29 29 +17 114 111 +13
Salick Health Care 41 44 -7 176 208 -15
----------------------------------------------------
Total 658 663 +5 2,598 2,566 +5
----------------------------------------------------
- Seroquel had an excellent year, with prescription growth of around
75 per cent in the USA, and its share of new prescriptions exceeded 12
per cent in December. We are also beginning to see some contribution
from the 20 new launches in 2000, including encouraging uptake in
Germany and Italy. Registration was achieved in Japan in December.
- Zomig sales advanced on continued market share gains, helped by
the launch of Zomig Rapimelt tablets in 14 markets. This
formulation was filed for US approval in June. Zomig sales increased
33 per cent for the year in the USA where it gained nearly 3 percentage
points in market share in an otherwise sluggish triptan market.
- Diprivan sales exceeded a half billion dollars for the year despite
the availability of generic propofol in the US market, helped by
continued strong growth in Japan (up 28 per cent).
Geographic (Pharmaceuticals)
----------------------------------------------------
Fourth Quarter CER % Full Year CER %
----------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------
USA 2,136 1,749 +22 7,977 7,156 +12
Europe 1,267 1,421 +6 5,064 5,310 +6
Japan 244 242 +3 825 710 +8
RoW 430 438 +6 1,656 1,658 +2
----------------------------------------------------
- In the USA the growth rate in the fourth quarter rebounded sharply
from the depressed third quarter levels. Prilosec increased 26
per cent for the quarter, and the rest of the portfolio also turned in
solid growth of 17 per cent (28 per cent if the abnormally weak
Zestril sales are excluded).
- In Europe, sales in Germany (generics) and the UK (price reductions)
were down, while strong demand was seen in France and Italy.
- Sales growth in Japan for the full year was again ahead of the market.
Growth was driven by Casodex, Zoladex, and Diprivan.
Expansion of the Losec label and launches of the recently approved
Arimidex, Accolate and Seroquel feature prominently in this
year's outlook.
Operating Profit
Healthcare operating profit before exceptional items grew by 22 per cent
to USD978 million for the quarter; and for the year reached USD4,011
million, up 14 per cent.
The operating margin increased from 20.6 per cent in the fourth quarter
of 1999 to 23.7 per cent, partly due to synergy benefits and a gain of
USD56 million on the disposal of the antiseptics product range. For the
full year the operating margin was 25.6 per cent, ahead of the target of
25 per cent set for the year.
Synergy benefits of USD225 million were recorded in the fourth quarter
bringing the total benefits to date to USD650 million, which is USD150
million ahead of the original target. Approximately USD500 million of the
benefits are in the Selling, General and Administrative area. Exceptional
items of USD100 million related to the ongoing integration and synergy
programmes were charged in the quarter, bringing the total programme to
USD1,186 million. The balance of approximately USD150 million will be
charged in 2001.
The fourth quarter was influenced by currency volatility, particularly
through the weakened Euro. Healthcare sales and profits were reduced in
the quarter by 7 per cent and 1 per cent respectively. For the full year,
exchange rate movements reduced sales by 4 per cent (approximately USD600
million) and operating profits by 2 per cent (approximately USD75 million).
For 2001, if current spot rates stay constant for the remainder of the
year, we would estimate a further adverse impact of around 2 per cent on
sales and profits, or 2 cents on earnings per share.
Agrochemicals
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The demerger of the Agrochemicals business and the creation of Syngenta
were completed on 13 November and shares in the new company were distributed
to shareholders on the basis of one Syngenta share for every 40.237651 of
AstraZeneca shares held. The amount of this dividend in specie is recorded
in the Group accounts at the book value of the net assets which were
deconsolidated, USD2,059 million, together with USD813 million of related
goodwill which had previously been written off to reserves, less debt and
liabilities assumed by Zeneca Agrochemicals, USD1,203 million. Following a
refinancing, Syngenta repaid USD909 million of debt in cash.
The costs related to the demerger, which have been booked as an exceptional
charge, amounted to USD150 million, together with a net tax cost of USD50
million. The Group has also taken an exceptional charge of USD88 million
to provide for the impairment of its 50% interest in the seed company
Advanta, and to write off USD49 million of related goodwill which had
previously been taken to reserves.
Interest
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The Group net interest income of USD135 million (1999 net cost of USD4
million) includes one-time exchange gains of USD46 million, equivalent to
2 cents per share. The improvement in the Group's net interest
position reflects its strong positive cash flow and the cash received from
Syngenta.
Taxation
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The effective tax rate for the full year was 33.8 per cent compared to 41.6
per cent last year. Excluding exceptional items, the effective rate for
the full year for the Group is 29.8 per cent (29.9 per cent last year),
and for continuing operations 29.0 per cent (29.5 per cent last year).
Cash Flow
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Cash generated from operating activities before exceptional items amounted
to USD5.0 billion for the full year. This was used to pay dividends to
shareholders (USD1.2 billion), to fund capital expenditures and acquisition
of minority interests of USD1.6 billion, exceptional items costs of USD0.8
billion and to pay taxes of USD0.6 billion. Net cash inflow for the year
before financing transactions and the share repurchase programme was USD1.6
billion, including USD0.9 billion net debt repayment from Syngenta. At 31
December 2000 the Group had net funds of USD3.6 billion.
Share Repurchase Programme
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No further share repurchases were made during the fourth quarter of
2000: 9.4 million shares were repurchased during the year at a cost of
USD353 million. We expect the programme of share buybacks to continue as
part of a structured process of balance sheet management and shareholder
return.
The total number of shares repurchased for cancellation since the start of
the programme in December 1999 stands at 13.7 million at an aggregate cost
of USD536 million. The total number of shares in issue (as at 31 December
2000) was 1,766 million.
Upcoming Milestones and Key Dates
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18-21 March American College of Cardiology, Orlando, Florida:
Crestor Phase III data
First Quarter Faslodex NDA submission for second line advanced
breast cancer
26 April First Quarter Results and Annual General Meeting
Second Quarter Crestor NDA/MAA submissions
26 July Half Year Results
Tom McKillop
Chief Executive Officer
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