Astrazeneca Regulatory News (AZN)

AstraZeneca PLC

10 February 2022 07:00 GMT

Full year and Q4 2021 results

Total Revenue increased by 41% and Core EPS by 32% in a year of exceptional pipeline and commercial delivery, coupled with accelerated strategic transformation through the acquisition of Alexion

· Total Revenue increased 41% (38% at CER1) to $37,417m including COVID-19 vaccine revenues. Total Revenue excluding vaccine increased 26% (23% at CER) to $33,436m. In Q4 2021, Total Revenue increased 62% (63% CER) to $12,011m

· Reported2 EPS3 of $0.08 (FY 2020: $2.44) and Core4 EPS of $5.29 (FY 2020: $4.02)

· 14 positive Phase III readouts across nine medicines in 2021, and 22 regulatory approvals and authorisations in major markets including five NMEs5

· FY 2022 guidance at CER of a high-teens percentage increase in Total Revenue and a mid-to-high twenties percentage increase in Core EPS

· Reflecting increased confidence in future growth and cash generation, the Board intends to increase the annualised dividend by $0.10 to $2.90, and has approved a second interim dividend for FY 2021 of $1.97, payable in March 2022. This results in a total dividend declared for FY 2021 of $2.87

Pascal Soriot, Chief Executive Officer, AstraZeneca, said: "AstraZeneca continued on its strong growth trajectory in 2021, with industry-leading R&D productivity, five of our medicines crossing new blockbuster thresholds, and the acquisition and integration of Alexion. We also delivered on our promise of broad and equitable access to our COVID-19 vaccine with 2.5 billion doses released for supply around the world, and we made good progress on reducing our greenhouse gas emissions.

Growth was well balanced across our strategic areas of focus, and we saw double-digit growth in all major regions, including Emerging Markets despite some headwinds in China.

The positive news from our pipeline, including approvals for Evusheld and Tezspire, supports the outlook for 2022. This, along with the transformative acquisition of Alexion, means that we are confident in our long term growth and profitability. After a landmark year in 2021, we are increasing the dividend for our shareholders."

Table 1: Revenue and EPS summary

The differences between Reported and Core measures are primarily due to items related to the acquisition of Alexion, amortisation of intangibles, as well as impairments and restructuring charges, of which $1,030m in the year related to the Group Review detailed below. A full reconciliation between Reported EPS and Core EPS is provided in Tables 17 and 18 in the Financial performance section of this document. The differences between Actual Change and CER Change are due to foreign exchange movements between corresponding periods in 2021 vs 2020.

Key elements of Total Revenue performance in FY 2021

- An increase in Product Sales of 41% (38% at CER) to $36,541m

- Among AstraZeneca's thirteen7 blockbuster medicines in 2021, five medicines crossed new thresholds: Tagrisso ($5bn+), Farxiga ($3bn+), Lynparza ($2bn+), Calquence ($1bn+) and Fasenra ($1bn+)

- Following completion of the Alexion acquisition on 21 July 2021, Rare Disease medicines generated 8% of AstraZeneca's FY 2021 Total Revenue, growing 8% (9% CER) on a pro-rata basis to $3,071m

- Growth of 19% (17% at CER) in Oncology to $13,663m, 13% (9% at CER) in CVRM8 to $8,034m, and 13% (9% at CER) in R&I9 to $6,049m

- In the US, Total Revenue increased by 38% to $12,228m. In Europe, Total Revenue increased by 45% (40% at CER) to $8,050m including Vaxzevria10 revenue of $1,035m

- An increase in Emerging Markets revenue of 41% (36% at CER) to $12,281m, including Vaxzevria revenue of $2,304m. In China, Total Revenue increased by 12% (4% CER) in the year to $6,011m. Pricing pressure associated with NRDL11 and VBP12 programmes led to a decline in growth in the second half of the year, and in Q4 2021 China Total Revenue was 4% lower (8% at CER) than in Q4 2020

- Excluding vaccine revenue, Total Revenue in ex-China Emerging Markets increased by 19% in the year (21% at CER) to $3,977m and by 36% (38% at CER) in the quarter to $1,197m, driven by Oncology medicines and Farxiga

Post Alexion Acquisition Group Review

In conjunction with the acquisition of Alexion, the enlarged Group initiated a comprehensive review across the organisation, aimed at integrating systems, structure and processes, optimising the global footprint and prioritising resource allocations and investments. These activities are expected to be substantially complete by the end of 2025, with a number of planned activities having commenced in late 2021.

The identified activities, including those previously announced regarding the integration of Alexion, are anticipated to incur one-time restructuring costs of approximately $2.1bn, of which approximately $1.4bn are cash costs and $0.7bn are non-cash costs, and capital investments of approximately $0.2bn. The activities are anticipated to realise run-rate pre-tax benefits, before reinvestment, of approximately $1.2bn, including previously-announced Alexion synergies, by the end of 2025. In line with established practice, restructuring costs will be excluded from our Core (non-GAAP) financial measures.

Guidance

The Company provides FY 2022 guidance at CER.

- The CER growth rates include the full-year contribution of Vaxzevria in both FY 2021 and FY 2022

- Total Revenue from COVID-19 medicines is anticipated to decline by a low-to-mid twenties percentage, with an expected decline in sales of Vaxzevria being partially offset by growth in Evusheld sales. The majority of vaccine revenue in 2022 is expected to come from initial contracts. The Gross Profit Margin from the COVID‑19 medicines is expected to be lower than the Company average

- Core Operating Expenses are expected to increase by a low-to-mid teens percentage, driven in substantial part by the full year integration of Alexion expenses

- Emerging Markets Total Revenue, including China, is expected to grow mid-single-digits in FY 2022. China Total Revenue is expected to decline by a mid-single-digit percentage in FY 2022, primarily due to continued NRDL and VBP programme impacting various medicines. The Company remains confident in the longer term outlook for Emerging Markets, driven by a large market opportunity, broader patient access and an increased mix of new medicines

- A Core Tax Rate between 18-22%

AstraZeneca continues to recognise the heightened risks and uncertainties from the effects of COVID-19. Variations in performance between quarters can be expected to continue.

The Company is unable to provide guidance on a Reported basis because AstraZeneca cannot reliably forecast material elements of the Reported result, including any fair value adjustments arising on acquisition-related liabilities, intangible asset impairment charges and legal-settlement provisions. Please refer to the cautionary statements section regarding forward-looking statements at the end of this announcement.

Currency impact

If average foreign-exchange rates for January 2022 were seen over the full year, it is anticipated that there would be a low single-digit adverse impact on actual Total Revenue and Core EPS versus the financials at CER. The Company's foreign-exchange rate sensitivity analysis is shown in the Operating and financial review.

Table 2: Key elements of financial performance

Table 3: Select medicines Total Revenue performance

Further details of the individual medicine performances are provided in the Total Revenue section.

Table 4: Regional Total Revenue performance

Further details of the regional performances are provided in the Regional Total Revenue section.

Total Revenue from Emerging Markets increased in the year by 41% (36% CER) to $12,281m, of which $2,304m came from Vaxzevria. Excluding Vaxzevria, Total Revenue from Emerging Markets increased by 15% (10% at CER) in the year to $9,977m.

Corporate and business development

In November 2021, AstraZeneca and Amgen Inc (Amgen) agreed to include AZD8630 in the existing collaboration agreement between the parties. AZD8630 is a human anti-TSLP Fab17 for inhaled delivery and entered Phase I in Q1 2022. AZD8630 becomes part of the collaboration with the companies sharing both costs and income, with no inventor royalty. AstraZeneca will be the development/regulatory lead, manufacturing lead, and commercial lead. AstraZeneca and Amgen will jointly commercialise AZD8630 in North America, and AstraZeneca will distribute the product and book sales globally, including from the US. For commercialisation in the US, Amgen will be responsible for commercial negotiations and contracting (including to payer, pharmacy, pharmacy support services), rebate processing and US government price reporting.

In December 2021, AstraZeneca entered into a new global development and commercialisation agreement with Ionis Pharmaceuticals, Inc. (Ionis) for eplontersen, a ligand-conjugated antisense potential new medicine currently in Phase III clinical trials for amyloid transthyretin cardiomyopathy (ATTR-CM) and hereditary amyloid transthyretin polyneuropathy (hATTR-PN). AstraZeneca paid Ionis an upfront payment of $200m and will pay additional conditional payments of up to $485m following regulatory approvals. The Company will also pay up to $2.9bn of sales-related milestones based on sales thresholds between $500m and $6bn, plus royalties in the range of low double-digit to mid-twenties percentage depending on the region.

In January 2022, AstraZeneca entered into an exclusive global collaboration and licence agreement with Neurimmune AG for NI006, an investigational human monoclonal antibody currently in Phase Ib development for the treatment of ATTR-CM. Under the agreement, Alexion will be granted an exclusive worldwide licence to develop, manufacture and commercialise NI006. Alexion will pay Neurimmune an upfront payment of $30m with the potential for additional contingent milestone payments of up to $730m upon achievement of certain development, regulatory and commercial milestones, as well as low-to-mid teen royalties on net sales of any approved medicine resulting from the collaboration.

In January 2022, AstraZeneca completed the sale of the global rights to Eklira (known as Tudorza in the US) and Duaklir to Covis Pharma GmbH for an upfront payment of $270m, which will be recorded within Other Operating Income and Expense. The intangible assets of $368m were held as Assets held for sale as at 31 December 2021. In 2020, Eklira and Duaklir generated AstraZeneca revenue of $143m in the countries covered by this agreement.

Sustainability summary

In line with our commitment to access to healthcare, in the fourth quarter of 2021 the Company delivered approximately 102 million doses of its COVID‑19 vaccine through COVAX18. As at the end of December 2021, the Company and its sublicensee Serum Institute of India Pvt. Ltd. (SII) had delivered more than 247 million doses with COVAX to 130 countries. AstraZeneca and SII remain the largest contributor to COVAX. As of February 2022, AstraZeneca and its sub-licensing partners have released more than 2.6 billion vaccine doses for supply in over 180 countries, of which approximately two thirds have gone to low and middle-income countries.

The Company made good progress in reducing its Scope 1 and 2 greenhouse gas emissions. All imported electricity is now from renewable sources. As at the end of December 2021, the Company had achieved 59% reduction compared with its 2015 baseline. This includes the full integration of Alexion's carbon footprint and rebasing 2015. For further details, see the Sustainability section

Notes

The following notes refer to pages one to five.

1. Constant exchange rates. These are financial measures that are not accounted for according to generally accepted accounting principles (GAAP) because they remove the effects of currency movements from Reported results.

2. Reported financial measures are the financial results presented in accordance with UK-adopted International Accounting Standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) and International Accounting Standards as adopted by the European Union

3. Earnings per share.

4. Core financial measures. These are non-GAAP financial measures because, unlike Reported performance, they cannot be derived directly from the information in the Group's Financial Statements. See the Operating and financial review for a definition of Core financial measures and a reconciliation of Core to Reported financial measures.

5. New molecular entities. In FY 2021, first major approvals were granted for Vaxzevria, Orpathys, Saphnelo, Evusheld and Tezspire.

6. Not meaningful.

7. The thirteen medicines that generated over a billion dollars of sales in calendar 2021 are Tagrisso, Vaxzevria, Farxiga, Symbicort, Imfinzi, Lynparza, Soliris, Brilinta, Nexium, Fasenra, Calquence, Crestor and Ultomiris. This is based on Soliris and Ultomiris sales from 1 January 2021 to 31 December 2021.

8. Cardiovascular, Renal & Metabolism.

9. Respiratory & Immunology.

10. Vaxzevria is AstraZeneca's trademark for the Company's supply of the AstraZeneca COVID-19 Vaccine. In the financial tables in this report, 'Vaxzevria Product Sales' shows revenue recorded on the Company's direct sales, and 'Vaxzevria Total Revenue' also includes Collaboration Revenue from sub-licensees that produce and supply the AstraZeneca COVID-19 Vaccine under their own trademarks.

11. China's National Reimbursement Drug List.

12. Volume-based procurement.

13. The plus/minus signs in Table 2 align with the increase/decrease of each metric, e.g. a comment about R&D Expenses which is preceded by a plus sign discusses an item that increased the R&D Expense compared to the previous year

14. Gross Profit is defined as Total Revenue minus Cost of Sales. The calculation of Reported and Core Gross Profit Margin excludes the impact of Collaboration Revenue and any associated costs, thereby reflecting the underlying performance of Product Sales.

15. Where AstraZeneca does not retain a significant ongoing interest in medicines or potential new medicines, income from divestments is reported within Reported and Core Other Operating Income and Expense in the Company's financial statements.

16. Year to date growth rates on Rare Disease medicines have been calculated on a pro rata basis by comparing post-acquisition revenues from 21 July 2021 to 31 December 2021 with the corresponding period in the prior year, pre-acquisition as previously published by Alexion. Q4 growth rates on Rare Disease medicines have been calculated on a pro rata basis comparing to the corresponding period in the prior year, pre-acquisition as previously published by Alexion. Pro rata Total Revenue growth rates have been presented for FY 2021 and Q4 2021 Rare Disease area and constituent medicines, and do not impact Group totals.

17. Thymic stromal lymphopoietin fragment antigen-binding.

18. COVID-19 Vaccines Global Access (COVAX) is a coalition co-led by CEPI, the Coalition for Epidemic Preparedness Innovations, Gavi, the Vaccine Alliance (Gavi), and the World Health Organisation (WHO). It is the only global initiative bringing governments and manufacturers together to ensure that safe and effective COVID-19 vaccines are available worldwide to both higher-income and lower-income countries.

Upcoming pipeline news

The following table highlights developments in the late-stage pipeline since the prior results announcement.

Table 5: Pipeline highlights

Table 6: Pipeline anticipated major news flow

Conference call

A conference call and webcast for investors and analysts will begin at 11:45 GMT. Details can be accessed via astrazeneca.com.

Reporting calendar

The Company intends to publish its first quarter results on 29 April 2022.

Reporting changes in FY 2022

From Q1 2022, AstraZeneca's Total Revenue and Product Sales tables will include a new disease area: BioPharmaceuticals: Vaccines & Immune Therapies (V&I). This will incorporate revenues from Vaxzevria, Evusheld, FluMist, Synagis and nirsevimab. In the FY 2021 tables, Vaxzevria and Evusheld are shown under COVID-19, and FluMist, Synagis and nirsevimab are shown under Other medicines.

In addition, from Q1 2022 Koselugo will move from Oncology to Rare Disease, and Andexxa will move from Rare Disease to BioPharmaceuticals: CVRM.

AstraZeneca

AstraZeneca (LSE/STO/Nasdaq: AZN) is a global, science-led biopharmaceutical company that focuses on the discovery, development, and commercialisation of prescription medicines in Oncology, Rare Disease, and BioPharmaceuticals, including Cardiovascular, Renal & Metabolism, and Respiratory & Immunology. Based in Cambridge, UK, AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. Please visit astrazeneca.com and follow the Company on Twitter @AstraZeneca.

Contacts

For details on how to contact the Investor Relations Team, please click here. For Media contacts, click here

All narrative on growth and results in this section is based on actual exchange rates, and financial figures are in US$ millions ($m), unless stated otherwise. The performance shown in this announcement covers the twelve month period to 31 December 2021 ('the year' or 'FY 2021') and the three month period to 31 December 2021 ('the quarter', 'the fourth quarter' or 'Q4 2021') compared to the twelve month period to 31 December 2020 (FY 2020) and the three month period to 31 December 2020 (Q4 2020) respectively, unless stated otherwise.

Following the acquisition of Alexion, the Group has made a number of changes to presented performance:

- A new disease area, Rare Disease, presents the performance of medicines acquired with Alexion

- The Group has ceased reporting New Medicines as a performance metric (Tagrisso, Imfinzi, Lynparza, Calquence, Enhertu, Koselugo, Farxiga, Brilinta, Lokelma, roxadustat, Fasenra, Bevespi and Breztri). In line with practice these medicines will be reported within their respective disease areas

- The Group has ceased reporting New CVRM as a performance metric (Brilinta, Renal and Diabetes medicines). In line with practice these medicines will be reported within the CVRM disease area

Comparative performance relating to previous reporting periods will be presented in line with the new presentation. This approach is representative of the strategic priorities of the enlarged Group.

Core financial measures, EBITDA, Net Debt, Initial Collaboration Revenue and Ongoing Collaboration Revenue are non-GAAP financial measures because they cannot be derived directly from the Group's Condensed Consolidated Financial Statements. Management believes that these non-GAAP financial measures, when provided in combination with Reported results, provide investors and analysts with helpful supplementary information to understand better the financial performance and position of the Group on a comparable basis from period to period. These non-GAAP financial measures are not a substitute for, or superior to, financial measures prepared in accordance with GAAP.

Core financial measures are adjusted to exclude certain significant items, such as:

- Amortisation and impairment of intangible assets, including impairment reversals but excluding any charges relating to IT assets

- Charges and provisions related to restructuring programmes, which includes charges that relate to the impact of restructuring programmes on capitalised IT assets

- Other specified items, principally acquisition-related costs, which include fair-value adjustments and the imputed finance charge relating to contingent consideration on business combinations and legal settlements

Details on the nature of Core financial measures are provided on page 84 of the Annual Report and Form 20-F Information 2020. Following the Alexion acquisition and in line with its policies, the Group will exclude the following acquisition-related items in the current and future periods from its Core results:

- The Group recognised significant additional intangible assets reflecting the fair value of acquired launched medicines and medicines in development. Future amortisation charges on these assets will be excluded from the Group's Core results, similar to the treatment of other intangible assets

- The fair value of inventory acquired on completion was significantly higher than historical cost. The adjustment to increase the inventory to fair value is held in inventory until the product is sold, at which time it is released to the Income Statement in Cost of Sales. This results in a lower gross margin in the first turn of inventory and this temporary effect, which is expected over approximately 18 months post acquisition in line with revenues, will be excluded from the Group's Core results

- The fair value of replacement employee share awards is higher than both the value of the Alexion awards the employees were originally granted and the expected value of future awards to those employees. As a result, the Group will recognise an inflated expense during the remaining vesting period of these awards. This temporary increase in operating expenses, when compared with the expected expense based on the grant-date value, will be excluded from the Group's Core results

- Other acquisition-related items to be excluded from the Group's Core results include professional fees, retention bonuses included in the acquisition agreement and the effect of unwinding other acquisition-related fair value adjustments over time

Further details of these costs are included in Note 5, Acquisition of Alexion. All the amounts above are presented in the 'Acquisition of Alexion' column on the Reconciliation of Core to Reported Financial Measures, except for intangible asset amortisation, which is presented in the 'Intangible Asset Amortisation & Impairments' column.

Reference should be made to the Reconciliation of Reported to Core financial measures table included in the financial performance section in this announcement.

EBITDA is defined as Reported Profit Before Tax after adding back Net Finance Expense, results from Joint Ventures and Associates and charges for Depreciation, Amortisation and Impairment. Reference should be made to the Reconciliation of Reported Profit Before Tax to EBITDA included in the financial performance section in this announcement.

Net Debt is defined as Interest-bearing loans and borrowings and Lease liabilities, net of Cash and cash equivalents, Other investments, and net derivative financial instruments. Reference should be made to Note 3 'Net Debt' included in the Notes to the Condensed Financial Statements in this announcement.

Ongoing Collaboration Revenue is defined as Collaboration Revenue excluding Initial Collaboration Revenue (which is defined as Collaboration Revenue that is recognised at the date of completion of an agreement or transaction, in respect of upfront consideration). Ongoing Collaboration Revenue comprises, among other items, royalties, milestone revenue and profit-sharing income. Reference should be made to the Collaboration Revenue table in this Operating and financial review.

The Company strongly encourages investors and analysts not to rely on any single financial measure, but to review AstraZeneca's financial statements, including the Notes thereto, and other available Company reports, carefully and in their entirety.

Due to rounding, the sum of a number of dollar values and percentages may not agree to totals.

The performance of the Company's medicines is shown below, with more details available from Note 8 to the Condensed Financial Statements.

Table 7: Total Revenue by disease area

Table 8: Disease area and medicine performance

Table 9: Collaboration Revenue

Other Collaboration Revenue included contributions from Movantik, Zoladex, Eklira, Duaklir, Forxiga, Nexium OTC[46] and other royalties, and a $100m receivable from SII.

Oncology

Total Revenue increased by 19% (17% at CER) in the year to $13,663m and represented 37% of overall Total Revenue (FY 2020: 43%).

Tagrisso

Tagrisso has received regulatory approval in 70 countries, including the US, China, and in the EU, for use as an adjuvant treatment of EGFRm NSCLC patients, with 19 reimbursements granted so far. This expands upon the patient benefit from use in the 1st-line treatment of patients with EGFRm NSCLC with regulatory approval in 94 countries, including the US, China, in the EU and Japan. To date, 52 reimbursements have been granted in this setting, with further decisions anticipated. These developments followed Tagrisso's regulatory approval in 94 countries, including the US, China, in the EU and Japan, to treat patients with EGFR T790M[47] NSCLC, an indication in which 68 reimbursements have been granted.

Total Revenue, entirely comprising Product Sales, amounted to $5,015m in the year and represented growth of 16% (13% at CER).

Sales in the US increased by 14% in the year to $1,780m and increased by 15% to $486m in Q4. Performance benefited from greater 1st-line and adjuvant use, with longer duration of treatment, partially offset by lower 2nd-line use and a continued negative impact on diagnosis, testing and treatment from the pandemic. After a recovery during the second and third quarters of 2021, rates of diagnosis and testing in lung and other cancers have declined as a result of the latest wave of COVID-19 cases, and remained below pre-pandemic levels at the end of the year.

Tagrisso sales in Emerging Markets increased by 11% in the year (6% at CER) to $1,336m; the performance was impacted by the admission of the medicine to the China NRDL in March 2021 for the 1st-line setting and the renewal in the 2nd-line setting. During the year, rising demand from increased patient access in China almost completely offset the NRDL price reduction. Emerging Markets sales in Q4 increased by 26% (23% at CER) to $325m, driven by growth in both China and other Emerging Markets.

Sales in Japan increased by 6% (8% at CER) to $775m in the year. In Europe, sales of $986m in the year represented an increase of 32% (25% at CER), driven by greater adoption in the 1st-line and adjuvant settings, as more reimbursements were granted.

Imfinzi

Imfinzi has received regulatory approval in 75 countries, including the US, China, in the EU, and Japan, with 35 reimbursements granted, to treat patients with unresectable Stage III NSCLC, whose disease has not progressed following platinum-based CRT[48]. Imfinzi has also been approved to treat ES-SCLC[49] patients in 67 countries, with nine reimbursements granted.

Total Revenue, entirely comprising Product Sales, amounted to $2,412m in the year and represented growth of 18% (16% at CER); the performance reflected the increased use of Imfinzi to treat patients with ES‑SCLC. US sales in the year increased by 5% to $1,245m, despite the continued COVID-19-related decrease in lung cancer diagnoses. In Q4 2021, US sales grew by 10% to $330m. In Japan, sales of $345m represented growth of 28% (30% at CER), where market share in ES-SCLC increased. Europe sales increased by 31% (25% at CER) to $485m, reflecting an increase in ES-SCLC market penetration and an increase in the number of reimbursed markets. Sales in Emerging Markets in the year increased to $277m, representing growth of 76% (68% at CER). As a result of recent launches, Q4 2021 Emerging Market sales grew by 47% (44% at CER) to $65m.

Lynparza

Lynparza has received regulatory approvals in 89 countries for the treatment of ovarian cancer; it has also been approved in 86 countries for the treatment of metastatic breast cancer, and in 73 countries for the treatment of pancreatic cancer. Lynparza has received regulatory approval in 74 countries for the 2nd-line treatment of certain prostate-cancer patients.

Total Revenue amounted to $2,748m in the year representing growth of 23% (21% at CER); this included Collaboration Revenue of $400m comprising a sales milestone received in Q4 2021.

Product Sales in the year amounted to $2,348m, reflecting growth of 32% (30% at CER) and benefiting from further launches across multiple cancer types globally. US Product Sales increased by 24% to $1,087m in the year, due to growth in use in ovarian, breast and prostate cancers. Lynparza remains the leading medicine in the PARP[50] inhibitor class globally across four tumour types, as measured by total prescription volumes. Product Sales in Europe increased by 42% (35% at CER) to $618m, reflecting additional reimbursements and increasing BRCAm-testing rates, as well as successful 1st-line BRCAm ovarian, 2nd-line HRRm[51] prostate and germline BRCAm HER2-negative advanced breast cancer launches.

Sales in Japan amounted to $199m, representing growth of 19% (21% at CER). Emerging Markets Product Sales were $384m, up by 45% (41% at CER), benefiting from increased patient access to Lynparza following admission to the NRDL as a 1st-line treatment for BRCAm ovarian cancer patients with effect from March 2021.

Enhertu

Total Revenue, predominately comprising Collaboration Revenue, increased by 123% in the year to $214m.

Global in-market sales, excluding Japan, amounted to $426m in the year (FY 2020: $202m). In Japan, AstraZeneca receives a mid-single-digit percentage royalty on sales made by Daiichi Sankyo Company Limited (Daiichi Sankyo). US in-market sales, recorded by Daiichi Sankyo, amounted to $357m in the year (FY 2020: $200m) and $105m in the quarter (Q4 2020: $64m).

Calquence

Calquence has received regulatory approvals for the treatment of patients with CLL in 76 countries and in 37 countries for the treatment of patients with R/R mantle cell lymphoma with reimbursement obtained in 25 and 13 countries, respectively.

Total Revenue, entirely comprising Product Sales, amounted to $1,238m in the year and represented growth of 137% (136% at CER). US sales increased by 113% in the year to $1,089m, representing the majority of sales; a strong performance despite COVID-19 impacts on CLL diagnosis rates, benefitting from increased new patient market share. In Europe, sales amounted to $111m (FY 2020: $2m) through increased market share in new patient starts after launches in the region.

Koselugo

Total Revenue, comprising Product Sales predominately in the US, amounted to $108m (FY 2020: $38m) in the year, following its launch in the second quarter of 2020. Koselugo treats the rare disease NF1 in paediatric patients aged two years and older who have symptomatic, inoperable plexiform neurofibromas.

Orpathys

In June 2021, AstraZeneca and HUTCHMED's Orpathys was granted conditional approval in China to treat patients with NSCLC with MET exon 14 skipping[52] alterations that have progressed following prior systemic therapy or are unable to receive chemotherapy. Total Revenue entirely comprising Product Sales was $16m (FY 2020: $nil).

Zoladex

Total Revenue, predominantly comprising Product Sales, amounted to $966m in the year and represented an increase of 3% (a decline of 1% at CER).

Emerging Markets sales of Zoladex increased by 10% (5% at CER) to $619m driven by ex-China markets. In the US, revenue declined by 42% to $32m; while in Europe, sales increased by 5% (a decline of 1% at CER) to $147m. In Japan, sales increased by 7% (9% at CER) to $139m.

Faslodex

Total Revenue, entirely comprising Product Sales, amounted to $431m in the year and represented a decline of 26% (27% at CER) due to increasing competition from several generic versions of the medicine.

Emerging Markets sales decreased by 8% (10% at CER) to $167m, while US sales declined by 46% to $30m, and in Europe, sales fell by 49% (52% at CER) to $113m. In Japan, sales increased 1% (3% at CER) to $118m.

Iressa

Total Revenue, entirely comprising Product Sales, amounted to $183m in the year and represented a decline of 32% (35% at CER). Emerging Markets sales fell by 31% (35% at CER) to $151m reflecting generic competition and increasing patient access to Tagrisso for 1st-line treatment in China, as a result of NRDL changes.

BioPharmaceuticals: CVRM

Total Revenue increased by 13% (9% at CER) in the year, driven by strong Farxiga performance, to $8,034m and represented 21% of overall Total Revenue (FY 2020: 27%).

Farxiga

Total Revenue, predominantly comprising Product Sales, amounted to $3,005m in the year and represented growth of 53% (49% at CER). The performance of Farxiga continued to benefit from growth in the SGLT2[53] inhibitor class in many regions, with Farxiga volume growing faster than the overall SGLT2 market in most major regions.

Emerging Markets sales increased by 74% (70% at CER) to $1,195m in the year, still benefitting from the addition of Forxiga to the China NRDL in 2020. The initial price impact has been more than offset by increased access for patients. The NRDL status of Forxiga was renewed in the fourth quarter of 2021.

In the US, sales increased by 29% in the year to $732m, reflecting the benefit of the regulatory approval in May 2020 for HFrEF and the May 2021 approval for the treatment of CKD. Both approvals include patients with and without T2D[54].

Sales in Europe increased by 60% (52% at CER) to $810m in the year. The performance reflected SGLT2 inhibitor class growth, the beneficial addition of CV outcomes trial data to the label, the HFrEF regulatory approval in November 2020, and CKD regulatory approval in August 2021. In Japan, sales to collaborator Ono Pharmaceutical Co., Ltd, which records in-market sales, increased by 33% (36% at CER) to $156m.

Brilinta

Total Revenue, entirely comprising Product Sales, amounted to $1,472m in the year, representing a decrease of 8% (10% at CER). Emerging Markets sales declined by 29% (31% at CER) to $328m, reflecting the implementation of China's VBP programme in November 2020, resulting in significantly lower market access for the medicine, and a mandatory price cut. In the US, sales increased by 1% to $735m partly reflecting the recent launch of Brilinta as a treatment to reduce the risk of stroke in patients following an acute ischaemic stroke or high-risk transient ischaemic attack. However, US sales in the fourth quarter declined by 9%, driven by managed markets in addition to the impact from a new COVID-19 wave. Sales of Brilique in Europe increased by 1% in the year (declined by 4% at CER) to $346m. The overall performance in the year was adversely impacted by fewer elective procedures due to the effects of the pandemic.

Onglyza

Total Revenue, entirely comprising Product Sales, amounted to $360m in the year and represented a decline of 23% (26% at CER). Sales in Emerging Markets decreased by 11% (14% at CER) to $179m. US sales of Onglyza fell by 47% in the year to $88m as the DPP-4[55] inhibitor class continues to decline, whereas in Europe sales increased by 5% (1% decrease at CER) to $61m.

Bydureon

Total Revenue, entirely comprising Product Sales, amounted to $385m in the year, representing a decline of 14% (15% at CER). US sales decreased by 16% in the year to $321m following the withdrawal of the dual-chamber pen and lower demand for the Bydureon BCise auto-injector device. Sales in Europe increased by 5% (stable at CER) to $55m.

Lokelma

Total Revenue, entirely comprising Product Sales, amounted to $175m in the year, representing an increase of 130%. Sales in the US increased by 102% to $115m, reflecting the growth in the potassium binder class. Lokelma continued to be the branded market share leader.

In December 2021, the annual NRDL update was announced in China. Lokelma was included on the NRDL from 1 January 2022. Sales in Japan increased to $43m in the year (FY 2020: $10m) despite Ryotanki, a regulation that restricts prescriptions to two weeks' supply in the first year of launch. The restriction was lifted in June 2021 and no longer applies. During the period, expansion in Europe continued with launches in several new markets; sales in the region amounted to $13m (FY 2020: $4m).

Roxadustat

Total Revenue in China, predominantly comprising Product Sales, amounted to $180m in the year (FY 2020: $30m). Sales in the fourth quarter were adversely impacted by stock compensation relating to NRDL renewal. From January 2021, AstraZeneca started recognising the overwhelming majority of China revenue as Product Sales following an amendment in July 2020 to the existing licence agreement with FibroGen, Inc.

Crestor

Total Revenue, primarily comprising Product Sales, amounted to $1,098m in the year and represented a decline of 7% (10% at CER). In Emerging Markets, sales increased by 4% (stable at CER) to $775m, despite the adverse impact of China's VBP programme. US sales declined by 13% to $80m, whereas in Europe, revenue decreased by 59% (61% at CER) in the year to $54m following the February 2021 divestment of European rights in more than 30 countries to Grünenthal GmbH (Grünenthal). In Japan, where AstraZeneca collaborates with Shionogi Co., Ltd, sales declined by 8% (7% at CER) to $151m.

BioPharmaceuticals: Respiratory & Immunology

Total Revenue, which included Ongoing Collaboration Revenue of $15m from Duaklir, Eklira and other medicines, increased by 13% in the year (9% at CER) to $6,049m and represented 16% of overall Total Revenue (FY 2020: 20%). In January 2022, AstraZeneca completed the transfer of global rights of Eklira and Duaklir to Covis Pharma GmbH.

Symbicort

Total Revenue, entirely comprising Product Sales, was stable at $2,728m in the year (a decline of 2% at CER). Symbicort remains the global market-volume and value leader within the ICS[56]/LABA[57] class, with market share performance driven by resilience in the US and Europe, and growth in anti-inflammatory reliever launch markets. The global ICS/LABA market was stable in the year, due to COVID-19 impacting diagnosis and treatment rates, while the market remained resilient and showed signs of recovery in second half of 2021.

In the US, sales increased by 4% in the year to $1,065m. Symbicort maintained total prescription market share in a declining ICS/LABA market as fixed-dose triple therapy (LAMA/LABA/ICS) launches continue.

Emerging Markets sales increased by 7% (4% at CER) to $609m, driven by growth in markets outside China. In Europe, sales decreased by 3% (8% at CER) in the year to $670m, Symbicort maintained its share in a market that declined year-on-year due to the favourable COVID-19 impact on FY 2020. Sales in Japan declined by 34% (33% at CER) to $124m in the year due to continued generic competition.

Fasenra

Total Revenue, entirely comprising Product Sales, increased by 33% (31% at CER) in the year to $1,258m as Fasenra expanded its leadership in eosinophilic asthma. COVID-19 continues to impact total severe asthma market growth with most regions experiencing a slowing in growth seen in 2020.

Sales in the US increased by 31% to $790m and in Europe by 41% (34% at CER) to $286m for the year, both regions benefiting from growth in new patient starts. Sales in Emerging Markets increased 67% to $20m.

Pulmicort

Total Revenue, entirely comprising Product Sales, amounted to $962m in the year and represented a decrease of 3% (8% at CER). In the fourth quarter, sales were $248m representing a decrease of 33% (34% at CER), largely as a result of the inclusion of Pulmicort Respules in the latest round of VBP in China, implemented in October 2021.

Emerging Markets, where Pulmicort sales decreased by 3% (9% at CER) in the year to $770m, represented 80% of the global total. The aforementioned VBP implementation in China resulted in significantly lower market access for the medicine and a mandatory price reduction. This impact was partially offset by growth in Emerging Markets ex-China.

Sales in the US increased by 1% in the year to $72m. Europe sales were stable year-on-year (a decline of 5% at CER) to $73m. In Japan, sales decreased by 24% (22% at CER) in the year to $23m following increasing generic competition.

Breztri

Breztri has received regulatory approval in 39 countries, including the US, in the EU, China, and Japan, to treat patients with COPD[58]; further regulatory reviews are ongoing. Breztri has achieved reimbursement in 24 countries.

Total Revenue, entirely comprising Product Sales, amounted to $203m in the year (FY 2020: $28m). Sales in the US amounted to $115m (FY 2020: $5m), following market share growth in the fixed-dose triple market. Emerging Markets sales amounted to $55m in the year (FY 2020: $14m). In China, Breztri is the market share leader within the fixed-dose triple market, which continues to gain share from the ICS/LABA class. Sales in Japan amounted to $25m (FY 2020: $9m). In Europe, under the name Trixeo, sales amounted to $7m in the year (FY 2020: $nil).

Saphnelo

Saphnelo has received regulatory approval in the US and Japan to treat SLE. In December 2021, Saphnelo received positive recommendation in the EU from the CHMP; other regulatory reviews are ongoing.

Total Revenue, entirely comprising Product Sales in the US, amounted to $8m in the year, following launch in at the end of Q3 2021. 

Rare Disease

Total Revenue recorded post-acquisition from 21 July 2021, amounted to $3,071m representing a pro rata increase of 8% (9% at CER) in the period. Pro rata growth rates on Rare Disease medicines for the year have been calculated by comparing post-acquisition revenues from 21 July 2021 with the corresponding prior year pre-acquisition revenues previously published by Alexion, adjusted pro rata to match the post-acquisition period.

Soliris

Total Revenue in the year amounted to $1,874m, representing a pro rata increase of 1% (2% at CER).

In the US, Total Revenue in the year amounted to $1,068m, representing a pro rata increase of 4%. Sales benefitted from growing use in neurology indications, gMG and NMOSD, offset by the successful conversion to Ultomiris in haematological indications PNH and aHUS. Ultomiris offers patients a lower average annual treatment cost, and a more convenient dosing schedule with every eight week dosing versus the every two week regimen for Soliris.

Outside of the US, Total Revenue amounted to $806m. Performance during the period was driven by new country launches and benefitted from order timing in the fourth quarter.

Ultomiris

Total Revenue in the year amounted to $688m, representing a pro rata increase of 27% (29% at CER). Quarter on quarter variability can be expected due to the every eight-week dosing schedule.

In the US, Total Revenue in the year amounted to $381m, representing a pro rata increase of 20%. Sales benefitted from successful conversion from Soliris in PNH and aHUS.

Outside of the US, Total Revenue in the year amounted to $307m. Performance was driven by new country launches in the quarter.

Strensiq

Total Revenue in the year amounted to $378m, representing a pro rata increase of 13%.

In the US, Total Revenue in the year amounted to $297m, representing pro rata growth of 13%. Performance benefitted increased demand over the course of the year as well as channel inventory movements in the fourth quarter.

Other medicines (outside the main disease areas)

Total Revenue, primarily comprising Product Sales, amounted to $2,484m in the year, a decrease of 6% (7% at CER). This does not include revenue from Vaxzevria, which is covered in the COVID‑19 commentary below. Other medicines Total Revenue represented 7% of overall Total Revenue (FY 2020: 10%).

Nexium

Total Revenue, predominantly comprising Product Sales, declined by 7% (8% at CER) in the year to $1,424m. Revenue in Emerging Markets decreased by 7% (9% at CER) in the year to $705m, reflecting the impact of the inclusion of Nexium (oral) in China's VBP programme in February 2021 resulting in significantly lower market access and a mandatory price reduction. Nexium (i.v.) was included in the fifth round of VBP with implementation in Q4 2021.

In Japan, where AstraZeneca collaborated with Daiichi Sankyo until September 2021, Product Sales declined by 13% (11% at CER) in the year to $369m. The quarterly phasing of sales in 2021 was impacted by the phasing of orders from Daiichi Sankyo ahead of the conclusion of the joint sales promotion by the two companies in September 2021.

Total Revenue in the US declined by 20% to $150m, and in Europe, it decreased by 17% (22% at CER) to $62m.

Synagis

Total Revenue, entirely comprising Product Sales, increased by 10% in the year (13% at CER) to $410m. Sales in Q4 2021 increased by 207% (217% at CER) to $239m, following an increase in demand in the northern hemisphere due to the earlier-than-usual RSV[59] season in 2021.

Sales in Europe declined by 38% (37% at CER) in the year to $203m. This performance reflected the expiry of the ex-US commercial rights agreement between AstraZeneca and AbbVie on 30 June 2021 and changes as a result of the reversion of ex-US rights to AstraZeneca thereafter. Prior to the expiry of the agreement, AstraZeneca's sales to AbbVie were reported in Europe. In Q4 2021, AstraZeneca recorded revenues in regions that, in the prior year, had been covered by the aforementioned agreement, including sales in Established Rest of World of $97m (Q4 2020: $nil) and sales in Emerging Markets of $20m (Q4 2020: $nil).

FluMist

Total Revenue, entirely comprising of Product Sales, declined by 14% (17% at CER) to $253m in the year due to a one-off supplemental order in the US in 2020 causing an unfavourable comparison to the prior year. Sales in the US declined by 62% to $27m as a result. Sales in Europe in the year increased 1% (declined 2% at CER) to $222m.

COVID-19

Total Revenue of $4,116m included Collaboration Revenue of $114m, of which $50m was recognised in Q4 2021 for an option agreement to out-license commercial rights in certain limited geographies for Evusheld, and $10m related to Collaboration Revenue from a vaccine manufacturer in China.

Vaxzevria

Product Sales amounted to $3,917m in the year, with 963 million doses of Vaxzevria invoiced worldwide by AstraZeneca. Over half of sales, $2,240m, came from ex-China Emerging Markets. In Q4 2021, Product Sales of $1,781m came from a blend of early pandemic contracts and recent orders, and included $64m recognised as US revenue for vaccine doses that were donated by the US Government to other nations. In the year, the majority of doses delivered related to pandemic contracts.

Evusheld

Product Sales contributed $85m, of which $66m came from Europe and $19m from Emerging Markets. There were no Evusheld sales recorded in the US or Established Rest of World.

A geographical split of Product Sales is shown in Note 8 to the Condensed Financial Statements.

Table 10: Regional Total Revenue

Table 11: Emerging Markets Total Revenue disease area performance

Table 12: Ex-China Emerging Markets Total Revenue

China Total Revenue comprised 49% of Emerging Markets Total Revenue (FY 2020: 62%) and increased by 12% (4% at CER) in the year to $6,011m.

Excluding Vaxzevria, Ex-China Emerging Markets Total Revenue increased by 19% in the year (21% at CER) to $3,977m.

Table 13: Reported Profit and Loss - FY 2021

Table 14: Reported Profit and Loss - Q4 2021

Table 15: Reconciliation of Reported (Loss)/Profit Before Tax to EBITDA - FY 2021

EBITDA of $7,586m in the year (FY 2020: $8,311m) has been negatively impacted by the $2,198m (FY 2020: $nil) unwind of inventory fair value uplift recognised on acquisition of Alexion, as well as increased restructuring charges arising from the Post Alexion Acquisition Group Review. The unwind of inventory fair value is expected to depress EBITDA over approximately 18 months post-acquisition in line with revenues.

Table 16: Reconciliation of Reported (Loss)/Profit Before Tax to EBITDA - Q4 2021

EBITDA of $1,900m in the quarter (Q4 2020: $2,284m) has been negatively impacted by the $1,154m (QTD 2020: $nil) unwind of inventory fair value uplift recognised on acquisition of Alexion, as well as increased restructuring charges arising from the Post Alexion Acquisition Group Review. The unwind of inventory fair value is expected to depress EBITDA over approximately 18 months post-acquisition in line with revenues.

Table 17: Reconciliation of Reported to Core financial measures - FY 2021

Table 18: Reconciliation of Reported to Core financial measures - Q4 2021

a) Gross Profit

Reported Gross Profit Margin in the year declined 14 (13 at CER) percentage points to 66%; Core Gross Profit Margin declined six (five at CER) percentage points in the year to 74.2% predominantly reflecting the equitable supply, at no profit to AstraZeneca, of the pandemic COVID-19 vaccine, together with an increasing impact from profit-sharing arrangements (primarily Lynparza and roxadustat). These effects were partially offset by the contribution from Alexion from 21 July 2021 and a larger proportion of Oncology sales. Reported Gross Profit Margin has also been impacted by restructuring charges and the unwind of the fair value adjustment to Alexion inventories at the date of acquisition. The fair value uplift is expected to unwind through Reported Cost of Sales over the 18 months post-acquisition, and in Q4 2021, the impact of the fair value uplift unwind on Cost of Sales was $1,154m. Variations in gross margin performance between periods can be expected to continue.

b) Total Operating Expense

Reported Total Operating Expense increased in the year by 44% (40% at CER) to $25,416m. Core Total Operating Expense increased by 25% (22% at CER) to $19,537m and represented 52% of Total Revenue (FY 2020: 59%).

Reported R&D Expense increased in the year by 62% (59% at CER) to $9,736m including intangible asset impairment charges recognised in the year of $1,464m of which $1,172m relates to the impairment recorded in the third quarter on an intangible asset related to the acquisition of Ardea Biosciences, Inc. in 2012, following the decision to discontinue the development of verinurad.

Core R&D Expense increased in the year by 36% (33% at CER) to $7,987m with increases in both Reported and Core R&D Expense reflecting the Company's continued investment in Vaxzevria and Evusheld, and other costs related to COVID-19, such as personal protective equipment and colleague COVID-19 testing across the Company. The increases also reflected the investment in several late-stage Oncology trials and the advancement of a number of Phase II clinical development programmes in BioPharmaceuticals, mainly in CVRM. In the year, grant income of $533m has been recognised, of which $309m has been offset against the US clinical trial costs for Vaxzevria and $224m offset against costs for Evusheld.

Reported SG&A Expense increased in the year by 35% (32% at CER) to $15,234m including the increased amortisation of intangible assets related to the Alexion acquisition, increased restructuring charges of $338m primarily comprise supply chain restructuring, exit costs for de-prioritised R&D projects, and severance payments. Intangible asset impairment charges of $603m have been recorded in SG&A, of which $469m relates to the impairment of Bydureon.

Core SG&A Expense increased by 19% (15% at CER) to $11,104m, reflecting the investment in Oncology-medicine launches, the launch of several new BioPharmaceuticals medicines, particularly in the US, and AstraZeneca's further expansion in Emerging Markets.

c) Other Operating Income and Expense

Reported and Core Other Operating Income and Expense decreased in the year to $1,492m, by 2% (4% at CER) and by 3% (4% at CER) respectively, and included:

- Income from the divestment of AstraZeneca's 26.7% share of Viela as part of the acquisition by Horizon Therapeutics plc. AstraZeneca received cash proceeds and profit of $776m upon closing with the profit being recorded as Other Operating Income

- $317m of income from an agreement with Grünenthal to divest commercial rights to Crestor in over 30 countries in Europe, except in the UK and Spain

In FY 2020, Other Operating Income included divestment gains for the commercial rights to Atacand and a number of legacy hypertension medicines.

d) Net Finance Expense

Reported Net Finance Expense increased in the year by 3% (2% at CER) to $1,257m, principally reflecting lower interest income on securities and short-term deposits driven by lower interest rates, financing costs related to the facilities and debt for the Alexion transaction, partly offset by lower discount unwind costs on acquisition-related liabilities, including the Diabetes Alliance. Core Net Finance Expense increased in the year by 10% (11% at CER) to $862m and was principally driven by the aforementioned lower interest income and Alexion-related financing costs.

e) Taxation

The Reported Tax Rate for the year was 143% (2020: 20%), being a tax benefit on the Reported Loss Before Tax, and the Core Tax Rate was 17% (2020: 20%). The Reported and Core tax rates benefitted from the following one-off favourable impacts:

- A non-taxable gain on the divestment of the investment in Viela; and

- A reduction of tax liabilities arising from updates to estimates of prior period tax liabilities following settlements with tax authorities and on expiry of statute of limitations, partially offset by a tax charge on recalculation of deferred tax balances following substantive enactment of Dutch and UK Corporation Tax rate increases.

Excluding these net benefits, the Core Tax Rate would have been c.21%.

The net cash tax paid for the year was $1,743m (FY 2020: $1,562m).

f) EPS

Reported EPS in the year declined 97% (84% at CER) to $0.08 (FY 2020: $2.44). Core EPS increased by 32% (37% at CER) to $5.29.

g) Dividend per share

The Board reaffirms its commitment to the progressive dividend policy. A second interim dividend of $1.97 per share (145.3 pence, 18.00 SEK) has been declared, meaning a full-year dividend per share of $2.87 (210.1 pence, 25.77 SEK). Dividend payments are normally paid as follows:

- First interim dividend - announced with half-year and second-quarter results and paid in September

- Second interim dividend - announced with full-year and fourth-quarter results and paid in March

The record date for the second interim dividend for 2021, payable on 28 March 2022, will be 25 February 2022. The ex-dividend date will be 24 February 2022. The record date for the first interim dividend for 2022, payable on 12 September 2022, will be 12 August 2022. The ex-dividend date will be 11 August 2022.

Table 19: Cash Flow Summary