ASTRAZENECA ANNUAL REPORT AND FORM 20-F

REGISTERED OFFICE AND

CORPORATE HEADQUARTERS

AstraZeneca PLC

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INVESTOR RELATIONS

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US:

Investor Relations

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Tel (outside the US):

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E-mail: jpmorgan.adr@wellsfargo.com

ASTRAZENECA.COM

This Annual Report and Form 20-F Information

is also available online at astrazeneca.com/

annualreport2008

CONTACT INFORMATION

ASTRAZENECA ANNUAL REPORT AND FORM 20-F INFORMATION 2008

ASTRAZENECA ANNUAL REPORT

AND FORM 20-F INFORMATION 2008

Cautionary statement regarding forward-looking

statements

The purpose of this Annual Report and Form 20-F

Information is to provide information to the members

of the Company. In order, among other things, to

utilise the ‘safe harbour’ provisions of the US Private

Securities Litigation Reform Act 1995 and the UK

Companies Act 2006, we are providing the following

cautionary statement: This Annual Report and Form

20-F Information contains certain forward-looking

statements with respect to the operations,

performance and ﬁnancial condition of the Group.

Although we believe our expectations are based on

reasonable assumptions, any forward-looking

statements, by their nature, involve risks and

uncertainties and may be inﬂuenced by factors

that could cause actual outcomes and results to

IMPORTANT INFORMATION

FOR READERS OF THIS REPORT

be materially different from those predicted. The

forward-looking statements reﬂect knowledge and

information available at the date of the preparation

of this Annual Report and Form 20-F Information

and the Company undertakes no obligation to

update these forward-looking statements. We

identify the forward-looking statements by using the

words ‘anticipates’, ‘believes’, ‘expects’, ‘intends’

and similar expressions in such statements.

Important factors that could cause actual results to

differ materially from those contained in forward-

looking statements, certain of which are beyond our

control, include, among other things, those factors

identiﬁed in the Principal Risks and Uncertainties

section on pages 74 to 82 of this document.

Nothing in this Annual Report and Form 20-F

Information should be construed as a proﬁt

forecast.

Inclusion of reported, constant exchange rate

and core ﬁnancial measures

Throughout the Directors’ Report and in the Financial

Highlights section on page 2 and 3 the following

measures are referred to:

Reported performance. Reported performance >

takes into account all the factors (including those

which we cannot inﬂuence, principally currency

exchange rates) that have affected the results of our

business as reﬂected in our Group Financial

Statements prepared in accordance with

International Financial Reporting Standards as

adopted by the European Union and as issued by

the International Accounting Standards Board.

Core ﬁnancial measures. This is a non-GAAP measure >

because unlike reported performance it cannot be

derived directly from the information in the Group’s

Financial Statements. This measure is adjusted to

exclude certain signiﬁcant items, such as charges

INTRODUCTION 2

AstraZeneca and our year in brief 2

Financial highlights 2

Chairman’s statement 4

Chief Executive Ofﬁcer’s review 5

DIRECTORS’ REPORT 8

Introduction 8

Business environment 9

Strategy, goals and

performance measurement 12

Measuring our performance 1 > 4

Reporting our performance – >

Financial and Non-ﬁnancial 15

Resources, skills and capabilities 16

Medicines 1 > 6

Research and development 1 > 7

Development pipeline >

at 29 January 2009 22

Sales and marketing 2 > 5

Intellectual property 2 > 6

Supply and manufacturing 2 > 7

People 2 > 8

Financial review 31

Measuring performance 3 > 1

Business background and >

major events affecting 2008 32

Results of operations – >

summary analysis of year

to 31 December 2008 33

Financial position, including >

cash ﬂow and liquidity – 2008 34

Restructuring and synergy costs > 36

Capitalisation and shareholder return > 37

Future prospects 3 > 7

Results of operations – >

summary analysis of year to

31 December 2007 38

Financial position, including >

cash ﬂow and liquidity – 2007 40

Financial risk management 4 > 1

Critical accounting policies >

and estimates 43

Other accounting information 4 > 7

DIRECTORS’ REPORT 8

FINANCIAL STATEMENTS 98

REMUNERATION REPORT 174

ADDITIONAL INFORMATION 190

TRADE MARkS

Trade marks of the AstraZeneca group of companies

appear throughout this document in italics. AstraZeneca,

the AstraZeneca logotype and the AstraZeneca

symbol are all trade marks of the AstraZeneca group

of companies. Trade marks of companies other than

AstraZeneca appear with a

™

sign and include:

Abraxane

, a registered trade mark of Abraxis

BioScience, LLC.; Advair Diskus

™

, a trade mark

of GlaxoSmithKline group of companies; Aspirin

™

a trade mark of Bayer AG; Avastin

™

, a trade mark of

Genentech, Inc.; BiTE

™

, a trade mark of Micromet AG;

Cubicin

™

, a trade mark of Cubist Pharmaceuticals, Inc.;

Captisol

™

, a trade mark of CyDex Pharmaceuticals Inc.;

CytoFab

™

, a trade mark of Protherics, Inc.; Enbrel

™

a trade mark of Amgen group of companies;

EvaluatePharma

, a trade mark of Evaluate PLC;

Herceptin

™

, a trade mark of Genentech, Inc.; Humira

™

a trade mark of Abbott Biotechnology Ltd; Lean Sigma

™

a trade mark of Smallpiece Enterprises Limited;

Lipitor

™

, a trade mark of Pﬁzer Ireland Pharmaceuticals;

Onglyza

™

, a trade mark of the Bristol-Myers Squibb

Company; Prinivil

™

, a trade mark of Merck & Co., Inc.;

Remicade

™

, a trade mark of Centocor, Inc.; Seretide

™

a trade mark of GlaxoSmithKline group of companies;

Taxotere

™

, a trade mark of Aventis Pharma SA; TriCor

™

a trade mark of Fournier Industrie et Santé; Trilipix

™

a trade mark of Abbott Laboratories; Zocor

™

, a trade

mark of Merck & Co., Inc.; and Zyprexa

™

, a trade mark

of Eli Lilly and Company.

USE OF TERMS

In this Annual Report and Form 20-F Information,

unless the context otherwise requires, ‘AstraZeneca’,

‘the Group’, ‘we’, ‘us’ and ‘our’ refer to AstraZeneca

PLC and its consolidated entities.

STATEMENTS OF DATES

Except as otherwise stated, references to days

and/or months in this Annual Report and Form 20-F

Information are references to days and/or months

in 2008.

INTRODUCTION DIReCTORs’ RepORT ReMUNeRATION RepORTFINANCIAL sTATeMeNTs ADDITIONAL INFORMATION

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

and provisions related to restructuring and synergy

programmes, amortisation and the impairment of

the signiﬁcant intangibles arising from corporate

acquisitions and those related to our current and

future exit arrangements with Merck in the US,

and other speciﬁed items. A reconciliation between

reported performance and core performance is

provided on page 34.

Constant exchange rate (CER) growth rates. This is >

also a non-GAAP measure. This measure removes

the effects of currency movements (by retranslating

the current year’s performance at previous years’

exchange rates and adjusting for other exchange

effects, including hedging). A reconciliation of reported

results adjusted for the impact of currency movements

is provided on page 33.

Throughout this Annual Report and Form 20-F

Information, growth rates are expressed at CER

unless otherwise stated.

Statements of competitive position,

growth rates and sales

In this Annual Report and Form 20-F Information, except

as otherwise stated, market information regarding the

position of our business or products relative to its or

their competition is based upon published statistical

sales data for the 12 months ended 30 September 2008

obtained from IMS Health, a leading supplier of statistical

data to the pharmaceutical industry. For the US,

dispensed new or total prescription data are taken from

the IMS Health National Prescription Audit for the 12

months ended 31 December 2008. Except as otherwise

stated, these market share and industry data from IMS

Health have been derived by comparing our sales

revenue to competitors’ and total market sales revenues

for that period. Except as otherwise stated, growth rates

and sales are given at constant exchange rates. For the

purposes of this Annual Report and Form 20-F

Information, unless otherwise stated references to the

world pharmaceutical market or similar phrases are to

52 countries contained in IMS Health MIDAS Quantum

database, which amounted to approximately 95% (in

value) of the countries audited by IMS.

AstraZeneca websites

Information on or accessible through our websites,

including astrazeneca.com, astrazenecaclinicaltrials.com,

medimmune.com and cambridgeantibody.com, does

not form part of this document.

External/third party websites

Information on or accessible through any third party or

external website does not form part of this document.

Geographical review 48

North America 48 >

Rest of World 50 >

Therapy area review 53

Cardiovascular 5 > 4

Gastrointestinal 5 > 7

Infection 5 > 9

Neuroscience 6 > 1

Oncology 6 > 4

Respiratory and Inﬂammation 6 > 7

Other businesses 70

Environmental sustainability 71

In the global community 72

Risk 74

Managing risk, principal risks >

and uncertainties 74

Principal risks and uncertainties 7 > 6

Business organisation and

Corporate governance 83

Business organisation 8 > 3

Board of Directors at >

31 December 2008 84

Chief Executive Ofﬁcer, >

delegation of authority

and Senior Executive Team 86

FINANCIAl STATEmENTS 98

Preparation of the

Financial Statements and

Directors’ responsibilities 98

Directors’ responsibility >

statement pursuant to DTR 4 98

Directors’ responsibilities for,

and report on, internal control

over ﬁnancial reporting 98

Auditor’s reports on the

Financial Statements and on internal

control over ﬁnancial reporting

(Sarbanes‑Oxley Act section 404) 99

Independent auditor’s

report to the members of

AstraZeneca PLC (Group) 99

Consolidated income statement

for the year ended 31 December 100

Consolidated statement of

recognised income and expense

for the year ended 31 December 100

Consolidated balance sheet

at 31 December 101

Consolidated cash ﬂow statement

for the year ended 31 December 102

Accounting policies 103

Basis of accounting and preparation >

of ﬁnancial information 103

Notes to the Financial Statements

(Group) 108

1 Operating proﬁt 108

2 Finance income and expense 108

3 Taxation 109

4 Earnings per $0.25

Ordinary Share 111

5 Segment information 111

6 Product revenue information 113

7 Property, plant and equipment 114

8 Goodwill 115

9 Intangible assets 116

10 Other investments 118

11 Inventories 118

12 Trade and other receivables 119

13 Cash and cash equivalents 119

14 Interest bearing loans

and borrowings 119

15 Financial risk management

objectives and policies 120

16 Financial instruments 122

17 Trade and other payables 127

18 Provisions for liabilities

and charges 127

19 Capital and reserves 128

20 Share capital of parent company 129

21 Dividends to shareholders 129

22 Acquisitions of

business operations 130

23 Post-retirement beneﬁts 133

24 Employee costs and share

option plans for employees 138

25 Commitments and

contingent liabilities 144

26 Leases 163

27 Statutory and other information 163

Principal subsidiaries 164

Independent auditor’s report to

the members of AstraZeneca PLC 165

Company balance sheet 166

Accounting policies (Company) 167

Notes to the Financial Statements

(Company) 168

1 Fixed asset investments 168

2 Non-trade creditors 168

3 Loans 168

4 Reserves 169

5 Reconciliation of movement

in shareholders’ funds 169

6 Share capital 170

7 Litigation and

environmental liabilities 170

8 Statutory and other information 171

Group ﬁnancial record 172

dIRECToRS’ REmuNERATIoN REpoRT 174

AddITIoNAl INFoRmATIoN 190

Shareholder information 190

Corporate information 197

Cross‑reference to Form 20‑F 198

Glossary 199

31,601

29,559

26,475

SALES $M

+3%

+7%

+11%

GROWTH

Core 08

Reported 08

Reported 07

10,958

9,144

8,094

Reported 06 8,216

OPERATING PROFIT $M

+9%

+4%

-4%

+28%

GROWTH

5,200

5,216

5,182

NEXIUM -2%

4,452

4,027

3,416

SEROQUEL +9%

807

1,438

1,795

SELOKEN/TOPROL-XL -46%

1,055

1,143

1,371

LOSEC/PRILOSEC -14%

3,597

2,796

2,028

CRESTOR +26%

5.10

4.38

3.92

CORE EARNINGS

PER ORDINARY SHARE $

+8%

+10%

+33%

GROWTH

2,739 610

2,641 4,170

2,220 4,147

DISTRIBUTIONS TO SHAREHOLDERS:

DIVIDENDS AND SHARE RE-PURCHASES $M

DIVIDENDS SHARE RE-PURCHASES

1,495

1,454

1,292

PULMICORT +0%

1,258

1,335

1,206

CASODEX -12%

1,471

1,287

1,110

ATACAND +10%

897

773

604

MERREM +13%

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

AsTRAZeNeCA Is ONe OF THe WORLD’s

LeADING pHARMACeUTICAL COMpANIes WITH

A BROAD RANGe OF MeDICINes DesIGNeD

TO FIGHT DIseAse IN IMpORTANT AReAs OF

HeALTHCARe. BACkeD By sTRONG sCIeNCe

AND WIDe‑RANGING COMMeRCIAL skILLs,

We ARe COMMITTeD TO THe sUsTAINABLe

DeveLOpMeNT OF OUR BUsINess AND THe

DeLIveRy OF A FLOW OF NeW MeDICINes

THAT BRING BeNeFIT FOR pATIeNTs

AND CReATe eNDURING vALUe FOR OUR

sHAReHOLDeRs AND sOCIeTy.

AsTRAZeNeCA AND OUR yeAR IN BRIeF

FINANCIAL HIGHLIGHTs

pRoduCT pERFoRmANCE SummARy $m

dIVIdENd FoR 2008

$ Pence SEK Payment date

First interim dividend 0.55 27.8 3.34 15 September 2008

Second interim dividend 1.50 104.8 12.02 16 March 2009

Total 2.05 132.6 15.36

INTRODUCTION

8,742

7,510

7,693

NET CASH FLOW

FROM OPERATING ACTIVITIES $M

4.20

3.74

3.86

REPORTED BASIC EARNINGS

PER ORDINARY SHARE $

+2%

-5%

+34%

GROWTH

1,857

1,730

1,508

ARIMIDEX +4%

1,138

1,104

1,008

ZOLADEX -3%

1,230

618

SYNAGIS

n/m

104

FLUMIST

n/m

2,004

1,575

1,184

SYMBICORT +22%

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

2008 IN bRIEF

Sales up 3% to $31,601 million. >

Crestor > sales up 26% to $3,597 million; Symbicort

up 22% to $2,004 million; Seroquel up 9% to

$4,452 million; and Arimidex up 4% to $1,857

million. Nexium sales down 2% to $5,200 million.

Our product portfolio now includes 11 medicines >

with annual sales of more than $1 billion each.

Sales in Emerging Markets reached $4,273 million >

for the full year, up 16%.

Investment in R&D in line with 2007 at $5.2 billion. >

Core operating proﬁt up 9% to $10,958 million. >

Core operating margin improved to 34.7% >

of sales on operational efﬁciencies in all

functional areas.

Core EPS for the full year increased by 8% to $5.10. >

Reported EPS for the full year increased by 2%, >

reﬂecting higher intangible asset impairments

and a full year of MedImmune amortisation

compared with 2007.

Dividend up 10% to $2.05 for the full year. >

Cash distributions to shareholders totalled >

$3,349 million (dividends $2,739 million;

share re‑purchases $610 million).

Net debt reduced by $1.9 billion on strong cash >

performance and investment discipline.

Eight signiﬁcant regulatory life‑cycle >

management submissions; two product

submissions. Phase III pipeline volume remains

constant. Phase II pipeline increased by over

50%. Nominated 32 FGLPs and exceeded our

target for progressing these into man.

New initiatives extend the scope of restructuring >

programme to sustain long‑term competitiveness.

35 signiﬁcant business development transactions >

including extensions of existing agreements.

Summary Judgment Motion granted to >

AstraZeneca in the patent infringement actions

commenced against two generic drug

manufacturers in the US following abbreviated

new drug applications relating to Seroquel.

Settlement of US > Nexium patent litigation with

enforceability of disputed Nexium patents

conceded. Other patent litigation continuing

in the US against generic manufacturers

following abbreviated new drug applications

relating to Nexium.

New Code of Conduct launched in over >

40 languages and all employees trained.

Growth rates expressed above are CER growth rates.

Acquired in June 2007.

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

During 2008, AstraZeneca maintained its

strong focus on delivering beneﬁt to patients

and value to shareholders and society through

industry-leading R&D productivity, commercial

excellence and operational efﬁciency.

Group sales increased by 3% in 2008 to

a total of $31.6 billion. Operating proﬁt was

$9.1 billion, up 4%. Reported earnings per

share for the full year were $4.20 ($3.74 in

2007). The Board has recommended an 11%

increase in the second interim dividend to

$1.50 (104.8 pence, SEK 12.02) per Ordinary

Share. This brings the dividend for the full year

to $2.05 (132.6 pence, SEK 15.36), an increase

of 10%. In 2008, cash distributions to

shareholders, through a combination of

dividends and share re-purchases totalled

$3,349 million. Share re-purchases for the full

year amounted to $610 million. Shareholders

also beneﬁted in 2008 from an improvement

in the Company share price. The London-

listed share price increased by 30% during

the course of 2008, as compared to a

decline of 31% for the FTSE 100 index.

During the year, we continued to invest in

enhancing our R&D capabilities alongside

accessing high quality opportunities externally.

This investment is guided by our disease

area strategy, which reﬂects both our inherent

strengths and the areas of greatest unmet

medical need. We now have a strong

development portfolio of small molecule and

biological products targeted at bringing new

therapeutic approaches to important areas of

healthcare as quickly and safely as possible.

In particular, the improvements we have made

to our cycle times mean that we should

deliver new medicines to patients even faster.

We continued to drive sales growth despite

continuing pricing and intellectual property

challenges in our Established Markets.

Managing the impact of challenges from

generic manufacturers is now a key feature

of our business. The Board was pleased to

support the Senior Executive Team strategy

of settling legal challenges concerning

Nexium and Pulmicort Respules, rather than

managing the continued cost and uncertainty

associated with a sustained legal defence.

Protecting our intellectual property ensures

that we can re-invest in the discovery and

development of the medicines of the future

and we must manage this important asset

actively and effectively over the long term.

We continued our investment in fast-growing

economies to strengthen our platform

for growth in key Emerging Markets, and,

alongside the rest of the pharmaceutical

industry, we continued to drive efﬁciencies

across our organisation to support sustained

shareholder returns.

In conjunction with the Senior Executive

Team, during 2008 the Board reviewed

the Group’s strategy. This review reinforced

our commitment to delivering differentiated

medicines that make a meaningful difference

to patients’ lives and to doing so in an efﬁcient,

focused, cost-effective and responsible

manner. More information about the work and

operation of the Board and its Committees

is set out in the Business Organisation and

Corporate Governance section of this Report.

In February and September 2008 we

announced the appointments of Jean-Philippe

Courtois and Rudy Markham respectively.

Jean-Philippe’s considerable experience

with Microsoft in global sales and marketing,

including Emerging Markets, will be of great

beneﬁt to the work of the Board. Rudy’s

considerable experience of over 35 years

at Unilever, latterly in ﬁnance, will also be

invaluable to the work of the Board and to

the Audit Committee.

In November 2008, we announced the

retirement of John Patterson who will leave

the Company after 34 years of service and

will retire from the Board on 31 March 2009.

John has made an important and highly valued

contribution to the business over the course

of his career with AstraZeneca and over the

last ﬁve years as a member of the Board.

At the end of 2008, Graeme Musker stepped

down from his position as Group Secretary

and Solicitor, and will retire in early 2009.

The Board appointed Adrian Kemp to the

position of Company Secretary with effect

from 1 January 2009. On behalf of the Board,

I would like to thank Graeme for his 30 years’

of invaluable service, advice and guidance to

the Board and the Company.

The Board continues to be conﬁdent in the

strong leadership of David Brennan and his

Senior Executive Team and would like to

thank them and all AstraZeneca’s employees

for their hard work and dedication, which

underpins the Company’s success.

The fundamentals of the world pharmaceutical

market remain robust. Although industry

growth is slowing, mainly due to ever-greater

pressure on costs and increased generic

competition, the continued demand for

healthcare that underpins the industry’s

future growth prospects remains strong.

The pharmaceutical industry is also arguably

less exposed than other sectors to the current

global economic downturn, although some

impact may result from increased constraints

on payers, suppliers and distributors.

Nevertheless, our rapidly changing business

environment will continue to be a challenging

one. The companies that will be most

successful will be those that are able to manage

the risks and maximise the opportunities

effectively, through timely and efﬁcient

investment, appropriate use of intellectual

property and constructive stakeholder

engagement. I am conﬁdent that AstraZeneca

is such a company and that, with our clear

strategy, strong leadership and intense focus

on execution, we will continue to deliver

sustainable success, to the beneﬁt of

patients, shareholders and society.

louIS SCHWEITZER

Chairman

CHAIRMAN’s sTATeMeNT

INTRODUCTION

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

CHIeF eXeCUTIve OFFICeR’s RevIeW

We are committed to delivering on our

strategy and to changing the way we work

so we are prepared for the future. 2008 was

a year of both opportunity and challenge for

the Company. I am proud to report that we

delivered some signiﬁcant successes against

a tough background of slowing growth rates

in Established Markets, ever-greater pressure

on costs and increasing challenge from

generic manufacturers.

Our strategy is clear. At its simplest, it is to

create enduring value for shareholders by

delivering medicines that make a meaningful

difference to patient health.

Our vision is to be an innovation-driven,

research-based pharmaceutical company

focused on human health and capable of

delivering a consistent ﬂow of innovative and

differentiated products to patients in markets

around the world. To achieve this we will make

sustained investment in an industry-leading,

externally networked R&D organisation with

expertise in both small molecule and large

molecule technologies. We will commercialise

our products rapidly and globally at affordable

prices through a world class sales and

marketing organisation operating in both

primary and specialty care markets.

Underpinning our research and commercial

operations will be a supply chain and

operating infrastructure, through which we are

aiming to achieve industry-leading efﬁciency.

Above all, we will seek to apply an investment

discipline to all of our activities that attaches

equal weight to delivering patient health and

creating shareholder wealth. We will only

invest shareholders’ funds where we see

attractive returns and the opportunity to

create enduring shareholder value.

To help the organisation maintain our focus

on execution, our strategy targets four

main priorities:

STRENGTHENING ouR pIpElINE

We are discovering and developing effective

medicines faster than ever before and the

considerable progress we have made in

reducing development cycle times and costs

has been achieved without compromising on

safety and quality.

During 2008, we made eight signiﬁcant

regulatory submissions across several

jurisdictions to broaden the use of our

marketed products Seroquel, Symbicort,

Iressa and FluMist, as well as two new product

submissions for motavizumab, an improved

anti-respiratory syncytial virus monoclonal

antibody, and Onglyza

™

, for treating Type 2

diabetes. We have strengthened our mid-stage

pipeline and now have 10 projects in Phase

III development. 32 projects entered the

pipeline during the year and 44 projects were

progressed to their next phase of development.

We now have a total of 144 projects within

a balanced pipeline of small molecule and

biological products. This compares with 137

projects in 2007.

We also continue to pursue high quality

external opportunities to enhance further our

in-house capabilities and have completed

over 40 major deals in the last two years.

These deals have increased the quality and

size of our pipeline and improved the prospects

of consistently launching more new medicines

each year as the pipeline matures.

GRoWING THE buSINESS

Backed by our 70 year track record of

innovation, we have a range of medicines

on the market that continue to make a

difference in important areas of healthcare –

and our commitment to delivering the full

beneﬁt of these medicines to patients and

maximising their commercial potential

remains undiminished.

Highlights of the year included the conclusion

of a major study of our statin, Crestor, in the

primary prevention area, which demonstrated

signiﬁcant reduction in major cardiovascular

events – 44% compared to placebo in men

and women with elevated hsCRP and other

risk factors but low/normal cholesterol levels,

a level of cardiovascular risk reduction not

previously seen in a large placebo controlled

statin outcome trial.

Seroquel XR has had approvals for acute

bipolar depression, acute bipolar mania and

as an adjunct therapy to lithium or divalproex

for bipolar maintenance treatment in a number

of major jurisdictions. These approvals for

new indications put Seroquel XR on track

to deliver its full therapeutic potential.

In addition, our expertise in regulatory, sales

and marketing is also helping to bring to

markets outside the US the biological products

that MedImmune brought to our range,

speciﬁcally motavizumab and FluMist.

Despite the challenging market conditions,

we have continued to drive high performance

and market share gains in our Established

Markets and increased sales across North

America, Europe and Japan. I believe our sales

forces are among the best and we continue

to evolve our commercial model to ensure

that we stay at the forefront of best practice

in meeting the needs of our customers.

We continue to deliver strong, proﬁtable growth

in our Emerging Markets, while continuing

our strategic investment in these markets

aimed at ensuring that we are appropriately

resourced to deliver the full potential of the

business opportunities in these developing

economies. One in seven dollars of our sales

now comes from Emerging Markets and as

our presence in these countries matures, and

as their economies strengthen, I am conﬁdent

that we will be able to increase further

business efﬁciency and deliver improved

proﬁtability in the future.

We received further challenges to some of our

patents during the year, the details of which

are set out elsewhere in this Report. We will

continue to vigorously defend our patents

to protect the many years of research and

the considerable investment which have

delivered the medicines to which those

patents relate.

bEComING lEAN ANd AGIlE

We have to be relentless in our pursuit of

opportunities to drive further efﬁciencies

across the value chain. As well as the progress

delivered in R&D, we have reshaped our

manufacturing and packing activities to

improve productivity whilst maintaining high

standards of quality and security; we have

established agreements with third parties

who offer specialist outsourced expertise

in areas ranging from data management

to catering; and put even greater focus

on leveraging efﬁciencies within our global

procurement activity.

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

SENIoR EXECuTIVE TEAm (SET) CHANGES

I am delighted that we have further

strengthened the SET through the

appointments of Anders Ekblom and Jeff

Pott. Anders was appointed to the role of

Executive Vice-President, Development with

effect from 1 January 2009. Jeff has already

taken up his new role as the Group’s General

Counsel, having spent a number of years as

legal counsel within AstraZeneca’s US

business, most recently with responsibility

for managing intellectual property litigation

within the US.

During 2008 we announced that, after a long

and distinguished career within the Company,

John Patterson, Executive Director,

Development, will retire at the end of March

2009. John has made an important and

lasting contribution to the business over the

course of his career with AstraZeneca. Under

his leadership, the productivity and efﬁciency

of our product development has improved

signiﬁcantly, and we now have the largest

pipeline in our history. Also in 2008, David

Mott, formerly President of MedImmune left

the Company to pursue other opportunities.

The role of President of MedImmune has

been taken on by Tony Zook, who has also

retained his responsibilities as Chief Executive

Ofﬁcer, North America and Executive

Vice-President, Global Marketing.

looKING AHEAd

Despite the very signiﬁcant and economic

challenges being experienced around the

world, I am conﬁdent the progress that we

continue to make in our four priority areas

means AstraZeneca is well placed to manage

the challenges and opportunities of a rapidly

changing business environment. I believe that

we have the strategy, the engines for growth

and the levels of commitment it takes to

continue making a meaningful difference in

patient health through great medicines, and

creating enduring value for our shareholders

and society.

dAVId R bRENNAN

Chief Executive Ofﬁcer

Our continuing drive to improve efﬁciency

and effectiveness resulted in further planned

reductions of our workforce in some areas

of our business during 2008 and our work

on these initiatives continues. My

management teams and I, take these

changes very seriously and remain

committed to ensuring that we manage these

changes in line with our core values.

Throughout, we have consulted with staff

representatives and acted in line with local

labour laws. We have also provided

appropriate support to help individuals

pursue their careers beyond AstraZeneca

and have engaged with communities around

the affected sites to mitigate the local impact.

doING buSINESS THE RIGHT WAy

I want AstraZeneca to be valued as a source

of great medicines, but also to be trusted for

the way in which we do business. Therefore,

our strategic focus includes a fourth priority,

which underpins and supports achievement

of the ﬁrst three. We must continue to nurture

a culture of responsibility and accountability

across all aspects of our business activity to

ensure that AstraZeneca continues to be

welcomed as a trusted member of society.

Our core values are the cornerstone of this

culture and in 2007, we reviewed and

expanded our Code of Conduct to provide

clear direction as to how these high level

values are to be translated into consistent

actions across all areas of our business.

The new Code went into effect in 2008, and

it was followed by mandatory training during

the year for everyone in the Company.

During the year, 86% of our employees

participated in our global employee opinion

survey. Results showed that employee

engagement scores – deﬁned as the extent

to which people are committed to the future

success of the Company – were very strong,

and we continue to outperform other

pharmaceutical companies in this area.

The results also indicated that people were

seeing increased levels of co-operation

between senior leaders, leading to more

effective global and cross-functional working.

The survey also identiﬁed some key areas

that continue to require attention, including

change management, personal development

and leadership communication. I take this

feedback very seriously and new targets that

address these issues have been included in

the Senior Executive Team’s performance

goals for 2009.

DIRECTORS’ REPORT

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

ASTRAZENECA IN BRIEF

Focused on the discovery, development, >

manufacturing and marketing of prescription

pharmaceuticals and biological products for

important areas of healthcare: Cardiovascular,

Gastrointestinal, Infection, Neuroscience,

Oncology, and Respiratory and Inﬂammation.

Broad product range, including many world >

leaders and a number of key products: Arimidex,

Crestor, Nexium, Seroquel and Symbicort.

Active in over 100 countries with a growing >

presence in important emerging markets

including China; corporate ofﬁce in London, UK;

major R&D sites in Sweden, the UK and the US.

Over 65,000 employees (51% in Europe, >

32% in the Americas and 17% in Asia, Africa

and Australasia).

Around 12,000 people in our R&D organisation >

and 17 principal R&D centres in eight countries.

26 manufacturing sites in 18 countries. >

Committed to a responsible approach >

to business across all activities.

In this Directors’ Report, we have applied the

best practice principles of an Operating and

Financial Review and, to demonstrate how

we have performed our duty to promote the

success of the Company, we discuss the main

trends and factors underlying the development,

performance and position of AstraZeneca

in 2008.

We summarise the opportunities and

challenges of our business environment,

including the world market for pharmaceuticals

and biological products; the competitive and

regulatory environment; and the principal

risks and uncertainties we face, as well as

the importance of intellectual property rights.

We describe our strategy for creating

enduring value for shareholders, patients

and other stakeholders and explain how

our progress towards achieving our strategic

goals is measured.

We provide an overview of the resources,

skills and capabilities that we have in place

and how they are aligned to the achievement

of our goals. This includes information

about the ways in which our medicines are

differentiated and effective, as well as details

of our research and development, sales and

marketing, and supply and manufacturing

activities worldwide. We also describe our

commitment to ensuring that our global

workforce continues to be motivated and

clear about what is required of them as we

drive the continued success of our business.

In the Financial Review, we report our global

ﬁnancial results for 2008 with our comparative

2007 results and we highlight our key

accounting policies and our approach to

ﬁnancial risk management.

In the Geographical Review, we report on

our global ﬁnancial performance at a product

level and in different geographical areas, with

our comparative 2007 performance.

The Therapy Area Review provides additional

information about our areas of interest,

including why we are focused on particular

diseases, our goals and our progress towards

achieving them. As part of this, we report in

detail on our pipeline of potential new

products and life-cycle developments of our

marketed medicines.

We highlight the importance of leadership,

effective decision-making and risk

management, and include a summary of

our business organisation and the various

responsibilities and processes in place for

ensuring the integrity of ﬁnancial information,

internal controls and risk management.

As a global, research-based pharmaceutical

company, we face a diverse range of risks and

uncertainties that may affect our business.

We work continuously to ensure that we have

appropriate and effective processes in place

for identifying, assessing and managing these

risks, in line with our strategic objectives, the

material needs of our stakeholders and our

core values. In the Risk section, we describe

our key risk management and assurance

mechanisms, together with the principal

areas of risks and uncertainties that we

currently consider to be material to our

business. Where relevant, speciﬁc risks and

uncertainties are also discussed at various

points throughout this Directors’ Report.

Stakeholder expectations of the industry

regarding corporate responsibility continue

to vary from country to country. Nevertheless,

a global business means global visibility and

there are a number of issues relating to our

business that have the potential to impact

our reputation anywhere in the world. These

include patient safety, access to medicines,

sales and marketing practices, research ethics,

employment practices and the environment.

We provide information throughout this

Directors’ Report about our position on key

issues, and about our approach to managing

the challenges and opportunities associated

with our corporate responsibility to ensure

that we continue to be led by our core values

to achieve sustainable success. Further

information about our commitment to

responsible business, our position on the

issues and our performance is available on

our website, astrazeneca.com/responsibility.

The Shareholder Information and Corporate

Information sections starting on pages 190

and 197 respectively, are incorporated into

this Directors’ Report.

The Glossary and the Market Deﬁnition Table

(from page 199) provide a useful guide to

terms, as well as acronyms and abbreviations,

used in this Directors’ Report.

INTRODUCTION

DIRECTORS’ REPORT

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

BUSINESS ENVIRONMENT

AstraZeneca operates in a dynamic and

rapidly changing business environment that

presents both opportunities and challenges

for our industry. The most successful

pharmaceutical companies will be those that

are able to manage effectively the risks and

maximise the opportunities through timely

and efﬁcient investment, full use of intellectual

property and constructive engagement

with stakeholders.

The fundamentals of the world pharmaceutical

market remain robust. Although industry

revenue growth is slowing, mainly due to

ever-greater pressure on healthcare costs,

pricing and increased generic competition,

the demand for healthcare that underpins

the industry’s future growth remains strong.

The pharmaceutical industry is arguably less

exposed than other sectors to the current

global economic downturn, although some

impact may result from increased constraints

on payers, suppliers and distributors. At the

same time, there may also be opportunities,

such as strategic partnerships with smaller

companies seeking funding.

WoRld mARkETS

The world pharmaceutical market in 2008

was valued at $689 billion – an increase of

5% at CER (2007: 7%). Overall growth was

constrained by a signiﬁcant slow-down in the

US even though growth in other Established

ROW was maintained and growth in Emerging

ROW, in particular Emerging Asia Paciﬁc,

was strong.

Despite its slower growth, the US remains the

largest pharmaceutical market in the world,

representing 42% of the global sales total

(2007: 46%). The order of the top ten

countries ranked by market size did not

change in 2008 but, Poland, Australia and

Turkey moved up the overall top 20 rankings.

WoRld RANkINgS By CouNTRy

Growth Growth Market Share Sales

Rank Rank MAT/Q3/08 MAT/Q3/07 MAT/Q3/08 MAT/Q3/08

MAT/Q3/08 MAT/Q3/07 % % % $bn

US 1 1 1 7 42 291

Japan 2 2 4 2 9 65

France 3 3 4 5 6 43

Germany 4 4 6 3 6 42

Italy 5 6 4 – 4 26

UK 6 5 2 5 3 23

Spain 7 7 8 8 3 23

Canada 8 8 6 7 3 19

China

9 9 27 21 3 18

Brazil

10 10 12 10 2 13

Turkey

11 13 9 18 2 10

South Korea 12 11 11 10 1 10

Australia 13 14 11 8 1 9

Mexico

14 12 4 8 1 9

India

15 15 13 13 1 7

Poland 16 17 9 8 1 7

Netherlands 17 16 5 8 1 7

Belgium 18 18 8 4 1 6

Greece

19 19 12 18 1 6

Sweden 20 20 6 6 1 4

Data based on world retail and hospital pharmacy sales except:

Hospital pharmacy only

Retail pharmacy only

MAT = Moving Annual Total

Source: IMS Health 2008 MIDAS Quantum

WoRld phARmACEuTICAl mARkETS

Sales Growth Market value

$bn % %

Emerging ROW

2008 108 14 16

2007 87 13 14

2006 74 12 13

Established ROW

2008 271 5 39

2007 232 4 37

2006 211 4 37

North America

2008 310 2 45

2007 304 7 49

2006 284 7 50

Data based on world market sales using AstraZeneca market deﬁnitions as set out in the Glossary on page 199.

dEvElopEd mARkETS

Population: 893 million

GDP growth

: 2.5%

GDP/CAP

: $38,376

Pharma Market: $562 billion

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

processes involved in the initiation and

progression of disease. Together with advances

in the technologies for the design and testing

of novel compounds, this is enabling new

opportunities for the delivery of innovative

small molecules as therapeutic agents.

It has been predicted that within the world’s

top 100 products, 44% of sales will come

from products produced using biotechnology,

based on forecasts for 2012. This compares

to only 25% in 2007 and 11% in 2000.

The rate of growth for biologics has been

faster than the small molecule segment in

recent years and this trend is forecast to

continue in the immediate future.

Biotechnology techniques are used to modify

an organism’s genetic material at the cellular

or molecular level to produce biotechnology-

derived products, which include monoclonal

antibodies and vaccines, and are often

referred to as large molecules in comparison

to chemical compounds that are referenced

as small molecules. Biologics are often more

complex to manufacture than small molecule

therapies because they are made by generating

biological material from cells. The regulatory

regimes for ‘biosimilars’ (similar versions of

existing biological products or vaccines) are

less well established than those for generic

pharmaceuticals, although regulatory authorities

in Europe and the US are currently reviewing

approval processes. Difﬁculties producing an

identical copy of a biological drug mean that,

for biologics, generic competition has been

less prevalent. These factors can help to deliver

longer product life-cycles for biologics

compared to traditional pharmaceuticals.

techniques are leading to an increased

incidence and diagnosis of chronic diseases,

such as cancer and diabetes, which require

long-term management. Chronic disease is

on the increase in middle-income countries

too, and is also beginning to have an impact

in the least developed countries.

Many diseases remain under-diagnosed,

sub-optimally treated or do not have effective

therapies. Projections indicate that global

mortality and the burden of disease will

continue to increase over the next 20 years,

mainly in non-communicable disease areas

The leading causes of death globally in 2030

are predicted to include ischaemic heart

disease, cerebrovascular disease, chronic

obstructive pulmonary disease (COPD), lower

respiratory infections, lung cancer and diabetes.

At AstraZeneca, we are focused on six therapy

areas: Cardiovascular, Gastrointestinal,

Infection, Neuroscience, Oncology, and

Respiratory and Inﬂammation, which together

represent a signiﬁcant proportion of the

worldwide burden of disease. Details about

the therapy environment in each of our areas

of interest are provided in the Therapy Area

Review (page 53).

SCIENCE ANd TEChNology AdvANCES

The demand for healthcare will be met

not only by existing therapies, but also by

innovation resulting from advances in both

the understanding of disease and the

application of new technologies. Small

molecule R&D remains a signiﬁcant aspect

of the pharmaceutical business, although the

importance of large molecules or biologics

is increasing. Advances in science are paying

back in increased understanding of the key

ThE gRoWTh dRIvERS

Increasing and ageing populations >

in established markets.

Emergence of expanded patient >

populations in new markets.

Continued unmet medical need. >

Continued scientiﬁc and >

technological advance.

EXpANdINg pATIENT populATIoNS

The world population has doubled in the last

50 years from three billion to over six billion

and is expected to reach nine billion by 2050.

There are an increasing number of people who

can access the highest standards of healthcare,

especially among the elderly, who represent

a rising proportion of developed nations’

populations. In addition, the fast-developing

economies, such as China and Brazil, continue

to offer new opportunities for the industry

to gain access to an expanding number of

patients who can beneﬁt from medicines.

Emerging markets currently represent 85%

of the world population and 20% of the total

pharmaceutical market. Fuelled by faster

GDP growth than in developed nations,

pharmaceutical industry growth in emerging

markets was in 2008 double the rate of that

in established markets (World Pharmaceutical

Market Values table on page 9).

uNmET mEdICAl NEEd

In most established markets, ageing

populations, more sedentary lifestyles

and the availability of improved detection

EXpANdINg pATIENT populATIoNS

dEvElopEd mARkETS

Population: 893 million

GDP growth

: 2.5%

GDP/CAP

: $38,376

Pharma Market: $562 billion

EmERgINg mARkETS

Population: 5,638 million

GDP growth

: 6.8%

GDP/CAP

: $2,564

Pharma Market: $153 billion

Real compound annual growth rate for years

2002-2007

2007 data

GDP: Gross Domestic Product

CAP: Per Capita

Source: IHS Global Insight

Source: WHO statistics 2008.

2000

2005

2006

2007

2008 (f)

2009 (f)

42% 31% 7% 20%

30% 15% 10%21% 24%

48%(1)% 13% 17% 23%

25% 16% 23% 35%1%

12% 17% 32% 36%3%

9% 14% 9%34% 34%

US TOP 5 EUROPE “PHARMERGING” JAPAN ROW

DIRECTORS’ REPORT

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

CompETITIoN

Our main competitors are other international,

research-based pharmaceutical companies

that sell innovative, patent-protected,

prescription medicines. Following patent

expiry, our products also compete with

generic pharmaceuticals. Since generic

manufacturers do not bear the same high

costs of R&D, nor do they typically invest

as signiﬁcantly in safety monitoring or

marketing, they typically adopt lower prices

for their products.

The generic industry is increasingly challenging

innovators’ patents and in the US, the world’s

largest pharmaceutical market, many leading

medicines have faced or are facing patent

challenges from generic manufacturers. The

research-based industry is also experiencing

increased challenges elsewhere in the world,

for example in Europe, Canada, Asia and

Latin America. It is increasingly complex to

enforce patent rights and other intellectual

property in certain markets, especially those

where practices are in place to encourage

broad access to medicines. While there are

few established regulatory systems for

biosimilars of biological products, several

markets, including the US, are considering

regulatory structures that might allow for an

abbreviated marketing approval mechanism

akin to that for generic pharmaceuticals.

Further information about the risk of the early

loss and expiry of patents is explained in the

Intellectual Property section on page 26.

Competition also comes from collaborations

and partnerships between traditional

pharmaceutical companies and smaller

biotechnology and vaccine companies.

Increasingly, as pharmaceutical companies

seek to expand their pipeline, they are able

to gain access to promising new product

candidates by partnering with these smaller

companies that may lack some of the

infrastructure for growth that a larger company

can provide. Competition for high quality

collaborations is increasingly ﬁerce as the

major pharmaceutical companies frequently

focus on the same opportunities to enhance

their in-house capabilities.

Further information about the principal risks

and uncertainties we face can be found in

the Risk section from page 74.

Payers also increasingly require demonstration

of the economic as well as therapeutic value

of medicines. Meeting these needs across

a diverse range of national and local

reimbursement systems requires signiﬁcant

additional resources.

REgulAToRy REQuIREmENTS

The pharmaceutical industry is one of the

most regulated of all industries and, whilst

efforts to harmonise regulations globally are

increasing, the number and impact of these

regulations continue to grow. Regulatory drug

review and approval is a complex and time

consuming process, typically taking between

six months and two years. In recent years,

regulatory processes have become subject

to more conditions including patient risk

management plans, patient registries,

post-marketing requirements, and conditional

and limited approvals.

Traditional clinical trials designed to establish

safety and efﬁcacy remain a core component

of drug development programmes but

regulators are increasingly requiring that

programmes also clearly demonstrate the

beneﬁts and risks of new medicine in the

context of other available therapies, as well

as demonstrating long-term medical outcomes,

such as survival and quality of life improvements.

In addition to safety and efﬁcacy, pre-approval

regulation covers every aspect of the product

including the chemical composition,

manufacturing, quality controls, handling,

packaging, labelling, distribution, promotion

and marketing. Post approval and launch,

all aspects relating to a product’s safety,

efﬁcacy and quality must continue to meet

regulatory requirements. See also Ensuring

Product Quality (page 27).

ThE ChAllENgES

Continued pressure on the price >

of medicines.

Higher regulatory hurdles for new >

medicines and new indications.

Competition from research-based >

and, increasingly, generic

pharmaceutical companies.

pRICINg pRESSuRE

The growing demand for healthcare means

ever-increasing pressure on healthcare budgets

and, whilst payers recognise the need to

reward innovation, they have a duty to

spend their limited ﬁnancial resources wisely.

Cost-containment, including pharmaceutical

spending, therefore continues to be a

fundamental consideration. The current global

economic downturn is likely to further constrain

healthcare providers and those patients who

pay directly for their medicines, and additional

challenges may arise if suppliers and

distributors face credit-related difﬁculties.

The research-based pharmaceutical industry’s

challenge is to manage the associated

downward pressure on the price of its

products, whilst continuing to invest in the

discovery, development, manufacturing and

marketing of new medicines.

Most of our sales are generated in highly

regulated markets where governments exert

various levels of control on price and

reimbursement. The network of pricing

systems creates a complex matrix that

must be managed to optimise revenues.

This may be further complicated by currency

ﬂuctuations within regions. The principal

aspects of price regulation in the major markets

are described more in the Geographical

Review from page 48.

CoNTRIBuTIoN To gloBAl gRoWTh By kEy REgIoNS

“Pharmerging” markets include: China, Brazil, India, South Korea, Mexico, Turkey and Russia.

(f) = forecast – complete 2008 data unavailable at the date of publication of this Report.

Source: IMS Health, Market Prognosis, September 2008.

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

ASTRAZENECA IS AN INNOVATION-DRIVEN,

INTEgRATED, glOBAl PhARMACEUTICAl

COMPANy. OUR MISSION IS TO MAkE ThE

MOST MEANINgfUl DIffERENCE TO PATIENT

hEAlTh ThROUgh gREAT MEDICINES, AND

TO CREATE ENDURINg VAlUE fOR OUR

ShAREhOlDERS AND SOCIETy ThROUgh

INDUSTRy-lEADINg R&D PRODUCTIVITy,

COMMERCIAl ExCEllENCE AND

OPERATIONAl EffICIENCy.

Our strategy centres on four main priorities:

strengthen the pipeline, grow the business,

re-shape the business and promote a culture

of responsibility and accountability. These

priorities are described in this table, together

with details of our objectives; the measures

we use to assess our progress; the initiatives

in place to drive achievement of our objectives;

and a summary of our 2008 performance.

STRATEgy, gOAlS AND PERfORMANCE MEASUREMENT

STRATEgIC pRIoRITy oBJECTIvES mEASuRES INITIATIvES 2008 pERFoRmANCE SummARy

STRENgThEN ThE pIpElINE

To be one of the fastest and

most productive companies

in the industry through

continuous improvement in

our research and

development (R&D), coupled

with externalisation to

broaden our research base

and further strengthen our

pipeline of new products.

Achieve a median composite

eight-year product

development cycle by 2010.

Deliver two new molecular

entity (NME) launches on

average per year from 2010.

In order to achieve the above

objective, ensure that we have

10 or more NMEs in Phase III

development by 2010.

Development cycle times and

quality for small molecules

and biologics.

Number of NME launches

per year.

Attrition rates.

Number of development

projects by phase.

Number of in-licensing deals,

alliances and acquisitions.

R&D investment levels.

Improving R&D quality and speed through

leading-edge science, effective risk

management and decision-making,

and overall business efﬁciency.

Maximising the value of our biologics

business and continuing to build a major

presence in this fast-growing sector.

Investing in external opportunities to enhance

our internal innovation through in-licensing,

alliances and acquisitions.

2008 target exceeded for small molecule development cycle times. See page 19.

NME and life-cycle management progressions delivered. See page 19.

Industry top quartile for speed and cost efﬁciencies achieved in Discovery. See page 18.

Eight signiﬁcant regulatory packages delivered, broadening the use of Seroquel, Iressa,

Symbicort and FluMist across several jurisdictions. Two new product submissions delivered.

Overall pipeline volume increased by 5% and in-phase distribution of our projects has improved:

FGLP (32); Phase I (34); Phase II (31); Phase III (10); Life-cycle management (23). See pages 22 to 24.

Over 300 Discovery collaborations/partnerships to access new science and technology platforms.

21 in-licensing deals, alliances and collaborations successfully concluded. See page 19.

R&D investment $5.2 billion.

gRoW ThE BuSINESS

To maintain our position

among the industry world

leaders through a continued

focus on driving commercial

excellence.

Deliver overall sales growth

in line with market growth.

Deliver target sales growth

in key markets.

Ensure proﬁtable launch

of our own and our

in-licensed products.

Sales value growth at CER.

Global sales and prescription

share trends for key products

and key markets.

Number of life-cycle

projects delivered.

Number of successful

launches of new products.

Number of commercial

collaborations secured.

Active and rigorous development of our

brands to maximise patient beneﬁt and

commercial potential.

Driving high standards of sales force

effectiveness, marketing excellence and

customer support.

Building on our leadership positions in

existing markets and expanding our

presence in important emerging ones.

Securing new external commercial

collaborations that further strengthen our

platform for future business growth.

Global sales +3% at CER.

Sales by region at CER: North America +2%; US +1%; Established ROW +2%;

Emerging ROW +16%. See page 48.

Sales by key product at CER: Arimidex +4%; Crestor +26%; Nexium -2%; Seroquel +9%;

Symbicort +22%. See page 2.

Two US co-promotion agreements secured and 12 disposal transactions to extract value from

deprioritised and non-core assets. See page 19.

RE-ShApE ThE BuSINESS

To create an organisation with

the ﬂexibility and ﬁnancial

strength to adapt quickly and

effectively within a challenging

and rapidly changing

business environment.

Maintain gross proﬁt margin.

Efﬁciently deliver on

R&D investment.

Achieve upper quartile

industry performance in

relation to selling, general and

administrative (SG&A) costs.

Deliver procurement

savings targets.

Gross margin and operating

margin.

R&D unit cost reduction.

SG&A cost growth rates.

Progress of

productivity initiatives.

Procurement savings.

Continued implementation and expansion of

our restructuring programme, including:

Reviewing supply and >

manufacturing assets.

Driving R&D efﬁciency. >

Driving sales and marketing resource >

optimisation and customer focus.

Implementing restructuring and efﬁciency >

programmes in corporate functions.

Core gross margin: 80.4%

Core operating margin: 34.7%

On track to deliver R&D unit cost reduction target of 15% over three years.

Core SG&A cost growth rate: 3%

Restructuring programme continues with beneﬁts now estimated to reach $2.5 billion per annum

(up from $1.4 billion); with $2.1 billion in savings expected before 2010, and the balance to be

realised by 2013.

Procurement savings on track to achieve target.

pRomoTE A CulTuRE oF RESpoNSIBIlITy ANd ACCouNTABIlITy

To create an organisation that

is recognised not only for the

skills, experience and quality

of its people, but also for the

integrity with which it

conducts its business.

Achieve upper quartile

industry ranking for

employee engagement.

Ensure that a culture of

responsible business,

including compliance, is

embedded across all of

our activities.

Ensure that our reputation is

favourable and supports our

continued success.

Employee engagement levels.

Number of conﬁrmed breaches

of external sales and marketing

regulations or codes.

Ranking in Dow Jones World

and STOXX (European)

Sustainability Indexes.

Number of animals used

in research.

Greenhouse gas and

Ozone Depletion Potential

(ODP) emissions.

Accidents with serious

injury and cases of

occupational illness.

Strengthening the effectiveness of leaders

and our performance management.

Maintaining/improving levels of

employee engagement.

Investing in leadership development to

improve accountability and collaboration.

Integrating responsible business

considerations into everyday business

thinking and decision-making.

Global employee survey shows employee engagement is strong, outperforming many other

pharmaceutical companies. See page 28.

15 conﬁrmed breaches of external sales and marketing regulations or codes. See page 15.

Positioned amongst the top 6% of companies in the sector in the Dow Jones World and STOXX

(European) Sustainability Indexes.

376,000 animals used in research (preliminary ﬁgures). See page 15.

1.22 million tonnes CO

equivalents (39 tonnes/$million sales). See page 15.

22 tonnes ODP emissions (0.71kg/$million sales). See page 15.

2.28 accidents with serious injury per million hours worked. See page 15.

1.04 cases of occupational illness per million hours worked. See page 15.

Directors’ report

ASTRAZENECA ANNuAl REpoRT ANd FoRm 20-F INFoRmATIoN 2008

STRATEGIC pRIoRITY oBJECTIVES mEASuRES INITIATIVES 2008 pERFoRmANCE SummARY

STRENGTHEN THE pIpElINE