Press Release: AstraZeneca's Fourth Quarter Results 2006 [Excerpt]

Fourth Quarter

Sales in the fourth quarter were $7,154 million, up 11 percent at CER, or 14 percent on an as reported basis (including an exchange benefit of 3 percent). Sales in the US were up 17 percent; sales in other markets were up 6 percent. Combined sales for five key growth products increased 23 percent to $3,702 million: NexiumTM (up 13 percent), SeroquelTM (up 19 percent), CrestorTM (up 73 percent), ArimidexTM (up 24 percent) and SymbicortTM (up 15 percent).

Operating profit increased by 24 percent in the quarter at CER (22 percent as reported, including a 2 percent adverse impact from currency movements). Earnings per share in the fourth quarter were $0.93 compared with $0.77 in 2005. AstraZeneca PLC

Externalisation update

Strengthening the pipeline, by enhancing the productivity of our internal discovery and development and continued pursuit of external opportunities, remains the number one priority for the Company. In the past year, the Company has significantly expanded its business development capability, increasing its capacity to pursue promising external opportunities to strengthen the pipeline. Since December 2005, AstraZeneca has entered into twelve significant business development transactions (including three company acquisitions) and nine significant research collaborations. Including the recently announced collaboration with Bristol-Myers Squibb to develop two compounds to treat diabetes, these initiatives have added five Phase II and two Phase III molecules to our late-stage development pipeline.

Enhancing Productivity

The strong financial performance delivered over the past three years has stemmed from good top-line growth and disciplined management of costs. Going forward, management remains committed to maintaining a competitive financial performance during a period when the Company, as well as the industry, faces the challenges posed by patent expirations and pricing pressures from government and private sector payers. Consistent with this, the Company has taken a further step in its drive to improve productivity, announcing a programme to improve asset utilisation within its global supply chain. Over the next three years, the Company plans to rationalise production assets, anticipating accounting charges of approximately $500 million (of which approximately $300 million will be cash) and the proposed reduction of approximately 3,000 positions, subject to
consultations with works councils, trade unions and other employee representatives, and in accordance with local labour laws.

Future Prospects

As previously indicated, the 2007 financial contribution from the US Toprol-XLTM franchise is difficult to forecast with any degree of certainty. In addition to its reported results, the Company has also reported its revenue and earnings performance in 2006, and set its targets for 2007, assuming no financial contribution from Toprol-XLTM in the US. When the sales and profit contribution from US sales of Toprol-XLTM are excluded from 2006 reported results, adjusted sales were $25,093 million and earnings per share were $3.36. For 2007, the Company anticipates that continued sales momentum from its key product franchises should result in sales growth in the high single digits. Tight management of costs should allow for significant growth in R&D investment while producing double-digit EPS growth, within the range of $3.80 to $4.05 per share. This range excludes any contribution from US sales of Toprol-XLTM and any one-off costs associated with productivity initiatives, and includes the additional R&D costs arising from the diabetes product collaboration with Bristol- Myers Squibb. Our determination to increase cash returns to shareholders is evidenced by the target of $4 billion in share repurchases (net of shares issued) for 2007. Under current market conditions (that is, Toprol-XLTM brand maintaining market exclusivity on the 50/100/200mg dosage strengths and Sandoz and Par distributing generic versions of the 25mg dosage strength), profit contribution from US sales of the Toprol-XLTM product range, which includes sales to Par, is running at around $100 million per month. The Company will update this estimate as market conditions change.

Editor's Note: Shortened from original.Full
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