FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

For the month of October 2019

 

Commission File Number: 001-11960

 

AstraZeneca PLC

 

1 Francis Crick Avenue

Cambridge Biomedical Campus

Cambridge CB2 0AA

United Kingdom

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F X Form 40-F __

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ______

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes __ No X

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-_____________

 

 

 

 

 

AstraZeneca PLC

 

INDEX TO EXHIBITS

 

AstraZeneca year-to-date and Q3 2019 results 

 

AstraZeneca PLC

24 October 2019 07:00 BST

 

Year-to-date and Q3 2019 results

 

Patients to benefit from further pipeline progress; sales-growth momentum driving operating leverage

 

Year-to-date Product Sales growth of 13% (17% at CER1) to $17,315m included third-quarter Product Sales of $6,132m (+16%, +18% at CER). The third quarter again saw all three therapy areas and every sales region produce encouraging performances, including:

 

-    The continued performance of new medicines2, with sales growth in the quarter of 62% (+64% at CER) to $2,707m, including new-medicine growth in Emerging Markets of 85% (90% at CER) to $539m

 

-    Sales growth by therapy area in the quarter: Oncology +46% (+48% at CER) to $2,334m, New CVRM3 +8% (+11% at CER) to $1,113m and Respiratory +15% (+18% at CER) to $1,319m

 

-    Sales growth by region in the quarter: total Emerging Markets sales grew by 25% (29% at CER) to $2,123m, with China sales growth of 35% (40% at CER) to $1,283m, ahead of longer-term trends. US sales increased by 17% to $2,025m; Europe sales continued their return to growth, increasing by 1% (4% at CER) to $1,139m; Japan sales increased by 31% (27% at CER) to $657m

 

The Company today upgrades its Product Sales guidance at CER for the year.

 

	YTD 2019				Q3 2019
	$m	% change			$m	% change
		Actual	CER			Actual	CER
Product Sales	17,315	13		17	6,132	16		18
Collaboration Revenue	405	3		6	274	n/m		n/m
Total Revenue	17,720	13		17	6,406	20		22
Reported4 Operating Profit	2,347	2		3	757	(11)		(13)
Core5 Operating Profit	4,891	41		42	1,880	43		41
Reported EPS6	$0.79	(11)		(15)	$0.23	(33)		(38)
Core EPS	$2.61	39		38	$0.99	40		36

 

Pascal Soriot, Chief Executive Officer, commenting on the results said:

"With AstraZeneca growing at pace, our sales guidance has been upgraded for the second consecutive quarter. Another strong performance from our new medicines accompanied impressive results in our key markets, most notably in China, the US and Japan. The performance reinforces our confidence in delivering sustainable earnings growth.

 

We delivered further positive news for patients. Lynparza demonstrated its potential as a treatment for prostate cancer and as an expanded treatment for ovarian cancer. Tagrisso, Imfinzi and PT010 also had positive data, and we delivered breakthrough data in heart failure for Farxiga.

 

We are continuing to ensure that we capture the benefits of our growth by balancing reinvesting in our business, delivering on our sustainability commitments, continuing to improve our operating leverage and cash generation."

 

Financial summary

 

-    Product Sales increased by 13% in the year to date (17% at CER) to $17,315m. The performance in the quarter was supported by favourable inventory and gross-to-net movements which are not expected in the final quarter of the year

 

-    The Reported Gross Profit Margin increased by one percentage point in the year to date to 80%, partly reflecting the mix of sales; the Core Gross Profit Margin increased by one percentage point in the year to date to 81%

 

-    Reported Operating Expense increased by 11% in the year to date (15% at CER) to $12,871m and represented 73% of Total Revenue (YTD 2018: 74%). Core Operating Expense increased by 3% (6% at CER) to $10,537m and represented 59% of Total Revenue (YTD 2018: 65%), demonstrating a significant improvement in operating leverage

 

-    Reported R&D Expense increased by 1% in the year to date (5% at CER) to $3,968m. Core R&D Expense increased by 1% (4% at CER) to $3,826m, partly a result of investment in the development of the potential new oncology medicine, trastuzumab deruxtecan

 

-    Reported SG&A Expense increased by 16% (20% at CER) in the year to date to $8,656m, due to an increase in legal provisions and revaluation movements on acquisition-related liabilities in the year to date; Core SG&A Expense increased by 4% (8% at CER) to $6,464m, primarily reflecting growth in China, as well as ongoing additional support for new medicines. An update on legal matters and subsequent events is disclosed in Note 5 and Note 6

 

-    Reported Other Operating Income and Expense declined by 32% in the year to date (31% at CER) to $1,041m; Core Other Operating Income and Expense declined by 7% (6% at CER) to $1,060m

 

-    The Reported Operating Profit Margin declined in the year to date by one percentage point (two at CER) to 13%; the Core Operating Profit Margin increased by five percentage points to 28%

 

-    The Reported Tax Rate in the year to date was 27% (YTD 2018: 18%); the Core Tax Rate was 22% (YTD 2018: 19%). The tax rates in the year to date reflected the geographical mix of profits and the impact of collaboration and divestment activity

 

-    Reported EPS of $0.79 in the year to date, based on a weighted-average number of shares of 1,297m, represented a decline of 11% (15% at CER); Core EPS increased by 39% (38% at CER) to $2.61. In April 2019, the Company completed an issue of 44,386,214 new ordinary shares of $0.25 each at a price of £60.50 per share, resulting in an increase in share capital of $11m and an increase in share premium of $3,479m, net of transaction costs of $22m

 

-    The difference between the Reported and Core EPS year-on-year performance partly reflected the impact of a favourable $346m legal settlement in YTD 2018 that was recognised as income in Reported Other Operating Income and Expense. It was also a result of the aforementioned increase in legal provisions and revaluation movements on acquisition-related liabilities in 2019

 

-    The Company today upgrades its Product Sales guidance at CER for the year. Product Sales are now expected to increase by a low to mid-teens percentage; the prior guidance was for a low double-digit percentage increase

 

Commercial summary

 

Oncology

Sales growth of 50% in the year to date (54% at CER) to $6,393m, including:

 

-    Tagrisso sales of $2,305m, representing growth of 82% in the year to date (86% at CER). The performance included growth in Emerging Markets of 108% (120% at CER) to $553m that partly reflected the early-2019 inclusion of Tagrisso as a 2nd-line treatment for EGFR7-mutated (EGFRm) NSCLC8 on the China National Reimbursement List (NRDL). Tagrisso is now approved as a 1st-line treatment in most major markets

 

-    Imfinzi sales of $1,045m, representing growth of 182% (184% at CER). Commercial execution and favourable reimbursement decisions supported sales growth outside of the US. Europe sales increased significantly to $115m (YTD 2018: $9m), accompanying encouraging Japan sales of $149m (YTD 2018: $9m)

 

-    Lynparza sales of $847m, representing growth of 93% (98% at CER). The performance included growth in the US of 86% to $432m and Emerging Markets of 205% (227% at CER) to $101m as the medicine consolidated its leadership position in the poly ADP ribose polymerase (PARP)-inhibitor class    

 

-    The performance from more-mature Oncology medicines in the year to date included a decline in Faslodex sales of 4% (1% at CER) to $726m and a 16% decline in Iressa sales (11% at CER) to $343m. The Company anticipates continued declines for both medicines, partly reflecting generic Faslodex competition in the US and the pricing impact on Iressa from centralised procurement in China and the success of Tagrisso; both medicines saw significant declines in the third quarter

 

-    Oncology sales growth in Emerging Markets of 42% (51% at CER) to $1,665m

 

New CVRM

Sales growth of 11% in the year to date (14% at CER) to $3,207m, including:

 

-    Brilinta sales of $1,153m, representing growth of 22% (26% at CER). The performance was bolstered by results in Emerging Markets, where sales grew by 50% in the year to date (59% at CER) to $348m. Patient uptake continued in the treatment of acute coronary syndrome and high-risk post-myocardial infarction

 

-    Farxiga sales of $1,124m, with growth of 13% (17% at CER), ahead of the impact of label updates to reflect results from the DECLARE CV outcomes trial (CVOT). The level of sales growth in the US was adversely impacted by gross-to-net adjustments; underlying demand remained strong

 

-    Bydureon sales of $410m, a decline of 8% (7% at CER), partly driven by the impact of production constraints in the first half for the new Bydureon BCise device and declining volumes for the dual-chamber pen

 

-    New CVRM sales growth in Emerging Markets of 37% (46% at CER) to $835m

 

Respiratory

Sales growth of 9% in the year to date (13% at CER) to $3,854m, including:

 

-    A Symbicort sales decline of 7% (4% at CER) to $1,783m, reflecting continued pricing pressure and the impact of managed-market rebates in the US. This was partially offset by Emerging Markets growth of 10% (18% at CER) to $401m

 

-    Pulmicort sales growth of 17% (23% at CER) to $1,053m; the majority of Pulmicort sales were in Emerging Markets. Q3 2019 global sales increased by 28% (31% at CER) to $337m

 

-    Fasenra sales of $498m, representing growth of 189% (193% at CER). Fasenra leads the medicine class for the treatment of severe eosinophilic asthma by new patient share in a number of key markets

 

-    Respiratory sales growth in Emerging Markets of 24% (31% at CER) to $1,419m

 

Emerging Markets

As the Company's largest region, at 35% of total Product Sales, Emerging Markets sales increased by 19% in the year to date (26% at CER) to $6,074m, including:

 

-    A China sales increase of 30% (37% at CER) to $3,691m. Highlights included: 

-     Oncology sales growth of 58% (67% at CER) to $1,023m

-     New CVRM growth of 78% (88% at CER) to $359m

 

-    An ex-China sales increase of 5% (12% at CER) to $2,382m (Q3 2019: $839m, +12%, +15% at CER). All regions were in CER sales growth in the year to date, including: (ex-China) Asia-Pacific, Middle East and Africa, Brazil and Russia

 

Sustainability summary

In the year to date, AstraZeneca was recognised as a global sustainability leader:

 

-    The Company achieved fourth position overall in the pharmaceutical industry in the 2019 Dow Jones Sustainability Indices (DJSI). AstraZeneca maintained its 2018 overall score and achieved a perfect score of 100 in the areas of environmental reporting, labour-practice indicators, social reporting and health-outcome contribution. This marked the 18th time that AstraZeneca was included in the indices

 

-    The Company was again named as a member of the FTSE4Good Index Series, ranking in the 94th percentile of the healthcare industry, with perfect scores in climate change, anti-corruption, corporate governance and customer responsibility

 

Recent developments and progress against the Company's sustainability priorities are reported below:

 

-    Access to healthcare: the Company celebrated the fifth anniversary of its Healthy Heart Africa (HHA) programme, conducting over 12 million blood-pressure screenings and identifying over two million elevated readings since its launch in 2014, working with collaborators across Kenya, Ethiopia, Tanzania and Ghana

 

-    Environmental protection: AstraZeneca participated in Climate Week, taking part in events such as The Climate Group's 'Step Up: The Business Case for Greater Government Ambition' panel, as the first pharmaceutical-company member of the global EV100 initiative

 

-    Ethics and transparency: the Company launched an employee campaign, 'Speak Up - Your Voice Matters' using internal social-media channels. The campaign encouraged honest and open dialogue in support of a healthy business culture, where people feel able to make their voices heard

 

A more extensive Sustainability update is provided later in this announcement.

 

Pipeline highlights

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

 

Regulatory approvals	-     Tagrisso - NSCLC (1st line, EGFRm): regulatory approval (CN) -     Farxiga/Forxiga - T2D10 CVOT: regulatory approval (US, EU) -     roxadustat - anaemia of CKD11, NDD12: regulatory approval (CN) -     Fasenra Pen - severe eosinophilic asthma; auto-injector and self-administration: regulatory approval (US)
Regulatory submissions and/or acceptances	-     Lynparza - pancreatic cancer (1st line, BRCAm): regulatory submission acceptance (US, EU) -     Calquence - CLL13: regulatory submission under review (US) -     trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER214-positive): regulatory submission acceptance (US, JP); Priority Review designation (US) -     Brilinta/Brilique - CAD15/T2D CVOT: regulatory submission acceptance (US, EU)
Major Phase III data readouts or other significant developments	-     Tagrisso - NSCLC (1st line, EGFRm): met Phase III key secondary endpoint (OS16) -     Imfinzi + treme - NSCLC (1st line) (NEPTUNE): did not meet Phase III primary endpoint -     Lynparza - ovarian cancer (1st line) (PAOLA-1): met Phase III primary endpoint -     Lynparza - prostate cancer (2nd line, castration-resistant): met Phase III primary endpoint -     Calquence - CLL: Breakthrough Therapy Designation (US) -     Farxiga - HF17 CVOT: met Phase III primary endpoint; Fast Track designation (US) -     Farxiga - CKD: Fast Track designation (US) -     Qtrilmet - T2D: positive opinion (EU) -     PT010 - COPD18 (ETHOS): met Phase III primary endpoint -     PT010 - COPD: complete response letter (US) -     Fasenra - eosinophilic oesophagitis: Orphan Drug Designation (US) -     anifrolumab - lupus (SLE19) (TULIP 2): met Phase III primary endpoint

 

Guidance and financial priorities

All measures in this section are at CER and Company guidance is on Product Sales and Core EPS only.

 

All guidance and indications provided assume that the UK's anticipated exit from the EU, even in the event of a no-deal exit, proceeds in an orderly manner such that the impact is within the range expected, following the Company's extensive preparations for such an eventuality.

 

AstraZeneca anticipates strong and sustainable long-term Product Sales growth to be accompanied by operating leverage, leading to an improvement in profitability and cash generation.

 

Guidance: Product Sales

Reflecting the performance over the year to date, guidance for Product Sales in FY 2019 has been upgraded. Product Sales are now expected to increase by a low to mid-teens percentage; the prior guidance was for a low double-digit percentage increase.

 

Guidance: Core EPS

As a key part of its long-term growth strategy, the Company is committed to focusing on appropriate cash-generating and value-accretive collaboration activities that reflect the ongoing productivity of the pipeline. Separately, AstraZeneca will, from time to time, also focus its medicine portfolio through divestments.

 

AstraZeneca reiterates its Core EPS guidance of $3.50 to $3.70 over the full year. This guidance includes the anticipation of a significantly lower sum of Collaboration Revenue and Core Other Operating Income and Expense versus the prior year. It also reflects the opportunities being taken to reinvest in the business, particularly in China and in the Company's new medicines, in order to strengthen AstraZeneca's long-term growth profile.

 

Variations in performance between quarters can be expected to continue. The Company is unable to provide guidance and indications on a Reported basis because the Company cannot reliably forecast material elements of the Reported result, including the fair-value adjustments arising on acquisition-related liabilities, intangible-asset impairment charges and legal-settlement provisions. Please refer to the section Cautionary Statements Regarding Forward-Looking Statements at the end of this announcement.

 

Operating leverage

The Company expects to deliver significant operating leverage over the long term; encouraging progress was made in the year to date. The Reported Operating Profit Margin declined in the year to date by one percentage point (two at CER) to 13%; the Core Operating Profit Margin, however, increased by five percentage points to 28%. Core Operating Profit in FY 2019 is anticipated to increase ahead of Product Sales.

 

Cash generation

In FY 2019, the cash performance is expected to include a number of payments relating to prior business-development transactions; the majority of the value of these payments in the year was settled in the first half. AstraZeneca generated a Net Cash Inflow from Operating Activities of $1,594m in the year to date, compared to an inflow of $394m in YTD 2018.

 

Other indications

The Company also provides other indications for FY 2019:

 

-    Capital expenditure is expected to be broadly stable and restructuring expenses are targeted to reduce versus the prior year

 

-    The Core Tax Rate range has been narrowed to 20-22% for FY 2019 from the previously anticipated range of 18-22% (FY 2018: 11%). Variations in the Core Tax Rate between quarters can be expected to continue

 

Currency impact

If foreign-exchange rates were to remain at the average of rates seen in the nine months to 30 September 2019, it is anticipated that there would be a low single-digit percentage adverse impact on Product Sales and Core EPS. In addition, the Company's foreign-exchange rate sensitivity analysis is contained within the operating and financial review.

 

Footnotes

The following notes refer to pages 1-6:

 

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.   Tagrisso, Imfinzi, Lynparza, Calquence, Farxiga, Brilinta, Lokelma, roxadustat, Fasenra, Bevespi and Breztri. These new medicines are pillars in the main therapy areas and are important platforms for future growth.

 

3.   New Cardiovascular (CV), Renal and Metabolism, incorporating Diabetes medicines, Brilinta, Lokelma and roxadustat.

 

4.   Reported financial measures are the financial results presented in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board and adopted by the EU.

 

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

 

6.   Earnings per share.

 

7.   Epidermal growth factor receptor.

 

8.   Non-small cell lung cancer.

 

9.   Breast cancer susceptibility genes 1/2.

 

10.  Type-2 diabetes.

 

11.  Chronic kidney disease.

 

12.  Non-dialysis dependent.

 

13.  Chronic lymphocytic leukaemia.

 

14.  Human epidermal growth factor receptor 2.

 

15.  Coronary artery disease.

 

16.  Overall survival.

 

17.  Heart failure.

 

18.  Chronic obstructive pulmonary disease.

 

19.  Systemic lupus erythematosus.

 

Pipeline: anticipated major news flow

Innovation is critical to addressing unmet patient needs and is at the heart of the Company's growth strategy. The focus on research and development is designed to yield strong and sustainable results from the pipeline.

 

Timing	News flow
Q4 2019	-      Imfinzi - unresectable, Stage III NSCLC (PACIFIC): regulatory decision (CN) -      Imfinzi +/- treme - NSCLC (1st line) (POSEIDON): data readout, regulatory submission -      Imfinzi +/- treme - SCLC[20]: regulatory submission -      Lynparza - ovarian cancer (1st line, BRCAm) (SOLO-1): regulatory decision (CN) -      Lynparza - pancreatic cancer (1st line, BRCAm): regulatory decision (US) -      selumetinib - NF1[21]: regulatory submission (US)   -      roxadustat - anaemia of CKD: regulatory submission (US)   -      Symbicort - mild asthma: regulatory submission (CN) -      PT010 - COPD: regulatory decision (CN)
H1 2020	-      Imfinzi +/- treme - head & neck cancer (1st line): data readout, regulatory submission -      Imfinzi +/- treme - bladder cancer (1st line) (DANUBE): data readout, regulatory submission -      Lynparza - breast cancer (BRCAm): regulatory decision (CN) -      Lynparza - ovarian cancer (1st line) (PAOLA-1): regulatory submission -      Lynparza - prostate cancer (2nd line, castration-resistant): regulatory submission -      Lynparza + cediranib - ovarian cancer (2nd line): data readout -      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive): regulatory decision (US, JP) -      trastuzumab deruxtecan - advanced/refractory, metastatic gastric cancer (HER2-positive): data readout, regulatory submission (JP) -      Calquence - CLL: regulatory decision (US) -      Calquence - CLL: regulatory submission (EU, JP) -      selumetinib - NF1: regulatory submission (EU)   -      Forxiga - T2D CVOT: regulatory decision (CN) -      Farxiga - HF CVOT: regulatory submission -      Brilinta - stroke (THALES): data readout -      Lokelma - hyperkalaemia: regulatory decision (JP, CN)   -      Symbicort - mild asthma: regulatory submission (EU) -      Bevespi - COPD: regulatory decision (CN) -      PT010 - COPD: regulatory decision (US, EU)
H2 2020	-      Imfinzi - neo-adjuvant NSCLC: data readout -      Imfinzi - unresectable, Stage III NSCLC (PACIFIC-2): data readout -      Imfinzi +/- treme - liver cancer (1st line): data readout -      Lynparza - ovarian cancer (3rd line, BRCAm): regulatory submission (US) -      Lynparza - pancreatic cancer (1st line, BRCAm): regulatory decision (EU)   -      Brilinta - stroke (THALES): regulatory submission -      Epanova - hypertriglyceridaemia CVOT: data readout -      roxadustat - anaemia of myelodysplastic syndrome: data readout   -      Fasenra - nasal polyposis: data readout -      PT027 - asthma: data readout -      tezepelumab - severe asthma: data readout -      anifrolumab - lupus (SLE): regulatory submission
2021	-      Imfinzi - neo-adjuvant NSCLC: regulatory submission -      Imfinzi - adjuvant NSCLC: data readout, regulatory submission -      Imfinzi - unresectable, Stage III NSCLC (PACIFIC-2): regulatory submission -      Imfinzi - unresectable, Stage III NSCLC (PACIFIC-5): data readout -      Imfinzi - NSCLC (1st line) (PEARL): data readout, regulatory submission -      Imfinzi +/- treme - limited-disease stage SCLC: data readout -      Imfinzi +/- treme - bladder cancer (1st line) (NILE): data readout, regulatory submission -      Imfinzi +/- treme - liver cancer (1st line): regulatory submission -      Imfinzi - liver cancer (locoregional): data readout, regulatory submission -      Imfinzi - biliary tract cancer: data readout -      Lynparza - adjuvant breast cancer: data readout, regulatory submission -      Lynparza - prostate cancer (1st line, castration-resistant): data readout, regulatory submission -      Lynparza + cediranib - ovarian cancer (2nd line): regulatory submission -      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive, 3rd line+): data readout, regulatory submission -      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-positive, 2nd line): data readout -      trastuzumab deruxtecan - advanced/refractory, metastatic breast cancer (HER2-low): data readout   -      Farxiga - chronic kidney disease: data readout, regulatory submission -      Epanova - hypertriglyceridaemia CVOT: regulatory submission -      roxadustat - anaemia of myelodysplastic syndrome: regulatory submission   -      Fasenra - nasal polyposis: regulatory submission -      PT027 - asthma: regulatory submission -      tezepelumab - severe asthma: regulatory submission

 

Conference call

A conference call and webcast for investors and analysts will begin at 12pm UK time today. Details can be accessed via astrazeneca.com.

 

Reporting calendar

The Company intends to publish its full year and fourth quarter financial results on 14 February 2020.

 

About AstraZeneca

AstraZeneca is a global, science-led biopharmaceutical company that focuses on the discovery, development and commercialisation of prescription medicines, primarily for the treatment of diseases in three therapy areas - Oncology, CVRM and Respiratory. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information, please visit astrazeneca.com and follow the Company on Twitter @AstraZeneca.

 

Investor Relations
Thomas Kudsk Larsen			+44 203 749 5712
Henry Wheeler	Oncology		+44 203 749 5797
Christer Gruvris	BioPharmaceuticals (CV, Metabolism)		+44 203 749 5711
Nick Stone	BioPharmaceuticals (Renal), ESG		+44 203 749 5716
Josie Afolabi	BioPharmaceuticals (Respiratory), other medicines		+44 203 749 5631
Craig Marks	Finance, fixed income		+44 7881 615 764
Jennifer Kretzmann	Corporate access, retail investors		+44 203 749 5824
US toll-free			+1 866 381 7277
Media Relations
Gonzalo Viña			+44 203 749 5916
Rob Skelding	Oncology		+44 203 749 5821
Rebecca Einhorn	Oncology		+1 301 518 4122
Matt Kent	BioPharmaceuticals		+44 203 749 5906
Jennifer Hursit	Other		+44 7384 799 726
Christina Malmberg Hägerstrand	Sweden		+46 8 552 53 106
Michele Meixell	US		+1 302 885 2677

 

Operating and financial review

 

All narrative on growth and results in this section is based on actual exchange rates, unless stated otherwise. Financial figures are in US$ millions ($m), unless stated otherwise. The performance shown in this announcement covers the nine-month period to 30 September 2019 (the year to date or YTD 2019) and three-month period to 30 September 2019 (the quarter or Q3 2019) compared to the nine-month period to 30 September 2018 (YTD 2018) and three-month period to 30 September 2018 (Q3 2018) respectively, unless stated otherwise.

 

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 Company Condensed Consolidated Financial Statements. Management believes that these non-GAAP financial measures, when provided in combination with Reported results, will provide investors and analysts with helpful supplementary information to understand better the financial performance and position of the Company 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 comprising 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 76 of the Annual Report and Form 20-F Information 2018. Reference should be made to the reconciliation of Core to Reported financial information and the Reconciliation of Reported to Core financial measures table included in the financial performance section of 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 of 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 Interim Financial Statements section of 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.

 

Table 1: Total Revenue

 

	YTD 2019			Q3 2019
	$m	% change		$m	% change
		Actual	CER		Actual	CER
Product Sales	17,315	13	17	6,132	16		18
Collaboration Revenue	405	3	6	274	n/m		n/m
Total Revenue	17,720	13	17	6,406	20		22

 

Table 2: Product Sales

 

	YTD 2019					Q3 2019
	$m	% of total	% change			$m	% of total	% change
			Actual	CER				Actual		CER
Oncology	6,393	37	50		54	2,334	38	46	48
BioPharmaceuticals	7,061	41	9		13	2,432	40	12	14
New CVRM	3,207	19	11		14	1,113	18	8	11
Respiratory	3,854	22	9		13	1,319	22	15	18
Other medicines	3,861	22	(16)		(12)	1,366	22	(9)	(7)
Total	17,315	100	13		17	6,132	100	16	18

 

Specialty-care medicines comprise all Oncology medicines, Brilinta and Fasenra. At 46% of Product Sales (YTD 2018: 35%), specialty-care medicine sales increased by 50% in the year to date (54% at CER) to $8,054m.

 

Table 3: Top-ten medicines by Product Sales

Medicine	Therapy area	YTD 2019				Q3 2019
		$m	% of total	% change		$m	% of total	% change
				Actual	CER			Actual	CER
Tagrisso	Oncology	2,305	13	82	86	891	15	76	78
Symbicort	Respiratory	1,783	10	(7)	(4)	613	10	(1)	1
Brilinta	CVRM	1,153	7	22	26	416	7	24	27
Nexium	Other medicines	1,130	7	(14)	(11)	374	6	(11)	(10)
Farxiga	CVRM	1,124	6	13	17	398	6	12	14
Pulmicort	Respiratory	1,053	6	17	23	337	6	28	31
Imfinzi	Oncology	1,045	6	n/m	n/m	412	7	n/m	n/m
Crestor	CVRM	982	6	(9)	(5)	337	6	(4)	(2)
Lynparza	Oncology	847	5	93	98	327	5	94	96
Faslodex	Oncology	726	4	(4)	(1)	205	3	(20)	(19)
Total		12,149	70	22	26	4,311	70	24	26

 

Table 4: Collaboration Revenue

	YTD 2019					Q3 2019
			% change					% change
	$m	% of total	Actual	CER		$m	% of total	Actual		CER
Initial Collaboration Revenue	-	-	-		-	-	-	-	-
Ongoing Collaboration Revenue	405	100	45		49	274	100	n/m	n/m
Royalties	45	11	17		23	13	5	(27)	(25)
Milestones/other	360	89	49		53	261	95	n/m	n/m
Total	405	100	3		6	274	100	n/m	n/m

 

YTD 2019 Ongoing Collaboration Revenue included $260m of Lynparza milestone receipts as part of a collaboration with MSD[22]. Of this, $200m was received in the quarter.

 

Product Sales

 

The performance of new and legacy medicines is shown below, with a geographical split shown in Notes 7 & 8.

 

Table 5: YTD 2019 therapy area and medicine performance

Therapy area	Medicine	YTD 2019
		$m	% of total	% change
				Actual	CER
Oncology	Tagrisso	2,305	13	82	86
	Imfinzi	1,045	6	n/m	n/m
	Lynparza	847	5	93	98
	Iressa	343	2	(16)	(11)
	Calquence	108	1	n/m	n/m
	Legacy:
	Faslodex	726	4	(4)	(1)
	Zoladex	617	4	8	15
	Arimidex	174	1	5	10
	Casodex	157	1	2	6
	Others	68	-	(26)	(24)
	Total Oncology	6,393	37	50	54
BioPharmaceuticals: CVRM	Farxiga	1,124	6	13	17
	Brilinta	1,153	7	22	26
	Bydureon	410	2	(8)	(7)
	Onglyza	396	2	-	4
	Byetta	83	-	(12)	(10)
	Other diabetes	36	-	33	35
	Lokelma	6	-	n/m	n/m
	Legacy:
	Crestor	982	6	(9)	(5)
	Seloken/Toprol-XL	570	3	3	10
	Atacand	161	1	(20)	(16)
	Others	199	1	(13)	(9)
	BioPharmaceuticals: total CVRM	5,121	30	3	7
BioPharmaceuticals: Respiratory	Symbicort	1,783	10	(7)	(4)
	Pulmicort	1,053	6	17	23
	Fasenra	498	3	n/m	n/m
	Daliresp/Daxas	157	1	16	17
	Duaklir	55	-	(24)	(20)
	Tudorza/Eklira	50	-	(45)	(42)
	Bevespi	30	-	32	32
	Breztri	1	-	n/m	n/m
	Others	226	1	(3)	2
	BioPharmaceuticals: total Respiratory	3,854	22	9	13
Other medicines	Nexium	1,130	7	(14)	(11)
	Synagis	295	2	(29)	(29)
	Losec/Prilosec	217	1	3	8
	Seroquel XR/IR	151	1	(51)	(49)
	Movantik/Moventig	72	-	(15)	(15)
	Others	83	-	(54)	(48)
	Total other medicines	1,948	11	(22)	(20)
	Total Product Sales	17,315	100	13	17

 

 

Table 6: Q3 2019 therapy area and medicine performance

Therapy area	Medicine	Q3 2019
		$m	% of total	% change
				Actual	CER
Oncology	Tagrisso	891	15	76	78
	Imfinzi	412	7	n/m	n/m
	Lynparza	327	5	94	96
	Iressa	91	1	(31)	(29)
	Calquence	44	1	n/m	n/m
	Legacy:
	Faslodex	205	3	(20)	(19)
	Zoladex	226	4	17	21
	Arimidex	63	1	15	17
	Casodex	52	1	3	5
	Others	20	-	(27)	(26)
	Total Oncology	2,334	38	46	48
BioPharmaceuticals: CVRM	Farxiga	398	6	12	14
	Brilinta	416	7	24	27
	Onglyza	127	2	(9)	(7)
	Bydureon	127	2	(16)	(16)
	Byetta	28	-	(19)	(18)
	Other diabetes	14	-	38	44
	Lokelma	4	-	n/m	n/m
	Legacy:
	Crestor	337	6	(4)	(2)
	Seloken/Toprol-XL	177	3	(1)	3
	Atacand	55	1	(15)	(11)
	Others	65	1	(8)	(6)
	BioPharmaceuticals: total CVRM	1,749	29	3	6
BioPharmaceuticals: Respiratory	Symbicort	613	10	(1)	1
	Pulmicort	337	6	28	31
	Fasenra	202	3	n/m	n/m
	Daliresp/Daxas	53	1	2	3
	Duaklir	18	-	(21)	(19)
	Tudorza/Eklira	17	-	(4)	-
	Bevespi	10	-	4	4
	Breztri	1	-	n/m	n/m
	Others	67	1	(5)	-
	BioPharmaceuticals: total Respiratory	1,319	22	15	18
Other medicines	Nexium	374	6	(11)	(10)
	Synagis	146	2	(11)	(11)
	Losec/Prilosec	73	1	10	13
	Seroquel XR/IR	82	1	5	6
	Movantik/Moventig	25	-	(22)	(23)
	Others	31	1	(55)	(59)
	Total other medicines	731	12	(12)	(11)
	Total Product Sales	6,132	100	16	18

 

Product Sales summary

 

Oncology

Product Sales of $6,393m in the year to date; an increase of 50% (54% at CER). Oncology Product Sales represented 37% of total Product Sales, up from 28% in the first nine months of 2018.

 

Oncology: lung cancer

 

Tagrisso

Tagrisso has been approved and launched in 87 countries, including the US, China, in Europe and Japan for the 2nd-line treatment of patients with Stage IV EGFR T790M[23]-mutated NSCLC. Tagrisso has also been approved in 78 countries, including the US, China, in Europe and Japan for the 1st-line treatment of patients with EGFRm NSCLC; a number of additional regulatory reviews are underway.

 

Product Sales in the year to date of $2,305m represented growth of 82% (86% at CER), partly driven by regulatory approvals and reimbursements in the 1st-line setting. Continued growth was also delivered in the 2nd-line indication in other countries, including in Europe and Emerging Markets.

 

Sales in the US increased by 57% in the year to date to $909m. With a high penetration rate, Tagrisso is now established as the standard of care (SoC) in the 1st-line setting, following regulatory approval in 2018. There was a 17% sequential quarterly increase in US sales of Tagrisso in Q3 2019, reflecting continued underlying demand growth; sales were, however, flattered in the quarter by the impact of gross-to-net and stocking adjustments.

 

In Emerging Markets, Tagrisso sales increased by 108% in the year to date (120% at CER) to $553m, with notable growth in China, after the medicine was added to the NRDL with effect from January 2019 in the 2nd-line setting; it also received 1st-line regulatory approval in China during the period.

 

Sales of Tagrisso in Japan increased by 145% in the year to date to $468m, reflecting the increasing use of Tagrissoas a 1st-line treatment; the medicine has reached a very high penetration rate in Japan. The Asia-Pacific region has a relatively high prevalence of lung-cancer patients with an EGFR mutation; at c.30-40% of the total, this contrasts with c.10-15% in the Western Hemisphere.

 

In Europe, sales of $337m in the year to date represented an increase of 52% (61% at CER), driven by emerging use in the 1st-line setting as more countries granted reimbursement, as well as continued strong levels of demand in the 2nd-line setting.

 

Imfinzi

Imfinzi is approved in 53 countries, including the US, in Europe and Japan for the treatment of patients with unresectable, Stage III NSCLC whose disease has not progressed following platinum-based chemoradiation therapy (CRT). It is also approved for the 2nd-line treatment of patients with locally-advanced or metastatic urothelial carcinoma (bladder cancer) in 11 countries, including the US.

 

Global Product Sales of Imfinzi increased by 182% in the year to date (184% at CER) to $1,045m, of which $759m were in the US, almost entirely for the treatment of unresectable, Stage III NSCLC; sales in the US increased by 118% in the year to date.

 

In Japan, sales of $149m (YTD 2018: $9m) reflected encouraging levels of demand, supported by higher CRT and treatment rates. Sales in Europe of $115m (YTD 2018: $9m) followed recent regulatory approvals and launches; additional regulatory and reimbursement decisions are expected in due course.

 

Iressa

Product Sales in the year to date of $343m; a decline of 16% (11% at CER).

 

Emerging Markets sales were stable in the year to date (up by 6% at CER) to $227m; Iressa entered the NRDL in China in 2017 and remains within the China centralised-procurement programme. Given the growing use of Tagrisso, sales of Iressa declined by 31% to $14m in the US and by 29% (24% at CER) to $61m in Europe. Japan sales amounted to $37m, reflecting a decline of 45%.

 

Oncology: Lynparza

By the end of the period, Lynparza was approved in 65 countries for the treatment of ovarian cancer. Launches for the treatment of metastatic breast cancer took place in the US and Japan in 2018 and regulatory approval was granted in the EU in April 2019. Lynparza has now been approved in 44 countries for the treatment of metastatic breast cancer.

 

Product Sales of Lynparza amounted to $847m in the year to date, an increase of 93% (98% at CER). The strong performance was geographically spread, with launches continuing in Emerging Markets and the Established Rest of World region (RoW). Ongoing MSD co-promotion efforts also contributed to sales.

 

US sales increased by 86% to $432m, driven by the launch in the 1st-line BRCAm ovarian cancer indication at the end of 2018 and increased demand that reflected continued growth in the treatment with Lynparza of patients suffering from ovarian or breast cancer. Lynparza remained the leading medicine in the US in the PARP-inhibitor class, as measured by total prescription volumes in both ovarian and breast cancer.

 

Sales in Europe increased by 52% (61% at CER) to $208m, driven by increasing levels of reimbursement and BRCA-testing rates, as well as the recent 1st-line ovarian- and breast-indication launches. The Company continues to implement a number of launches in the broad, 2nd-line, maintenance ovarian-cancer indication, regardless of BRCAm status.

 

Following the initial launch in April 2018, and the subsequent breast- and 1st-line ovarian-cancer launches in 2019, Japan sales of Lynparza amounted to $91m in the year to date, representing growth of 262% (263% at CER). Emerging Markets sales of $101m, up by 205% (227% at CER), reflected the regulatory approval of Lynparza as a 2nd-line maintenance treatment of patients with ovarian cancer by the China National Medical Products Administration (NMPA), resulting in the subsequent launch of Lynparza in China, the first PARP inhibitor to be approved in the country.

 

Oncology: haematology and other medicines

 

Calquence

Product Sales in the year to date of $108m; an increase of 185%. The overwhelming majority of sales were in the US.

 

Calquence was approved and launched in the US in October 2017. The medicine delivered a promising performance in the year to date, with an increasing number of CLL patients now treated, following compendia inclusion in the National Comprehensive Cancer Network guidelines as Category 1 for relapsed/refractory CLL.

 

Legacy: Faslodex

Product Sales in the year to date of $726m; a decline of 4% (1% at CER).

 

Emerging Markets sales of Faslodex increased by 31% in the year to date (41% at CER) to $145m. US sales declined by 21% to $311m, reflecting the recent launch of multiple generic Faslodex medicines; in Q3 2019, Faslodex sales in the US declined by 55% to $60m. In Europe, where generic competitor medicines are also available, sales in the year to date declined by 2% (up by 4% at CER) to $168m, while in Japan, sales increased by 24% to $97m.

 

Legacy: Zoladex

Product Sales in the year to date of $617m; an increase of 8% (15% at CER).

 

Emerging Markets sales of Zoladex increased by 21% (30% at CER) year to date to $380m. Sales in Europe increased by 1% (7% at CER) to $100m. In the Established RoW region, sales declined by 13% (11% at CER) to $133m, driven by the effects of increased competition.

 

BioPharmaceuticals: CVRM

Total CVRM sales, which include Crestor and other legacy medicines, increased by 3% in the year to date (7% at CER) to $5,121m and represented 30% of total Product Sales (YTD 2018: 32%).

 

New CVRM sales increased by 11% in the year to date (14% at CER) to $3,207m, reflecting strong performances from Farxiga and Brilinta. New CVRM sales represented 19% of Product Sales in the year to date (YTD 2018: 19%).

 

 

CVRM: Diabetes

 

Farxiga

Product Sales of $1,124m in the year to date; an increase of 13% (17% at CER).

 

Emerging Markets sales increased by 40% (50% at CER) to $339m, fuelled by growth in ex-China Emerging Markets. US sales declined by 6% to $396m, impacted by changes in formulary access for competitor medicines. AstraZeneca was granted a label update in the US in Q4 2019 to reflect results from the DECLARE CVOT. The level of sales growth in the US in the year to date was, however, adversely impacted by gross-to-net adjustments; underlying demand remained strong.

 

Sales in Europe increased by 18% (26% at CER) to $273m. In Japan, sales to the collaborator, Ono Pharmaceutical Co., Ltd, which records in-market sales, increased by 32% (31% at CER) to $61m.

 

Onglyza

Product Sales of $396m in the year to date; a stable performance (growth of 4% at CER).

 

Sales in Emerging Markets increased by 8% (17% at CER) to $131m, driven by the performance in China. The performance was also supported in the US by favourable prior-year gross-to-net adjustments and improved realised price across the business mix; US sales of Onglyza increased by 7% in the year to date to $174m.

 

Europe sales declined by 22% (17% at CER) to $53m, highlighting the broader trend of a shift away from the dipeptidyl peptidase-4 inhibitor class. Given the significant future potential of Farxiga, the Company continues to prioritise commercial support over Onglyza.

 

Bydureon

Product Sales of $410m in the year to date; a decline of 8% (7% at CER).

 

Sales were partly driven by the impact of production constraints in the first half for the new Bydureon BCise device and declining volumes for the dual-chamber pen. US sales of $340m declined by 5% in the year to date, while Bydureonsales in Europe declined by 19% (14% at CER) to $50m.

 

CVRM: other medicines

 

Brilinta

Product Sales of $1,153m in the year to date; an increase of 22% (26% at CER).

 

Patient uptake continued in the treatment of acute coronary syndrome and high-risk post-myocardial infarction. Emerging Markets sales of Brilinta increased by 50% (59% at CER) to $348m. US sales of Brilinta, at $500m, represented an increase of 22%, driven primarily by increasing levels of demand in both hospital and retail settings, as well as a lengthening in the average-weighted duration of treatment, reflecting the growing impact of 90-day prescriptions. Sales of Brilique in Europe increased by 2% in the year to date (9% at CER) to $262m.

 

Lokelma

Product Sales of $6m in the year to date, predominantly in the US, where Lokelma was recently launched.

 

Lokelma is approved in the US and in the EU for the treatment of hyperkalaemia, a serious condition characterised by elevated potassium levels in the blood associated with CV, renal and metabolic diseases. Launches in a number of other markets are expected soon.

 

Legacy: Crestor

Product Sales of $982m in the year to date; a decline of 9% (5% at CER).

 

Sales in Emerging Markets declined by 2% (up by 4% at CER) to $621m; the CER growth came despite the impact from the aforementioned '4+7' pilot tender scheme in China. US sales declined by 31% to $88m, underlining the ongoing effect of generic Crestor medicines. In Europe, sales declined by 30% (25% at CER) to $112m, reflecting a similar impact that began in Europe in 2017.

 

In Japan, where AstraZeneca collaborates with Shionogi Co. Ltd, sales increased by 3% to $126m. This followed a period of decline resulting from the entry of multiple generic Crestor medicines in the Japan market at the end of 2017.

 

BioPharmaceuticals: Respiratory

Product Sales of $3,854m in the year to date; an increase of 9% (13% at CER). Respiratory represented 22% of total Product Sales (YTD 2018: 23%).

 

Symbicort

Product Sales in the year to date of $1,783m; a decline of 7% (4% at CER).

 

Symbicort continued to lead the global market by volume within the inhaled corticosteroid (ICS) / long-acting beta agonist (LABA) class. Emerging Markets sales of Symbicort increased by 10% (18% at CER) to $401m in the year to date. In contrast, US sales declined by 11% to $585m, reflecting continued pricing pressure and the impact of managed-market rebates. This was partially offset by positive volumes from government-buying patterns.

 

In Europe, sales declined by 14% in the year to date (8% at CER) to $508m, reflecting price competition from other branded and Symbicort-analogue medicines, plus government pricing interventions. Symbicort, however, continued to retain its class-leadership position, with volume growth achieved in a number of markets.

 

In Japan, sales declined by 13% in the year to date (14% at CER) to $131m (Q3 2019: $64m, +26%, +22% at CER); partly reflecting the destocking by Astellas Pharma Co. Ltd (Astellas) following the termination of the co-promotion agreement earlier in the year. In January 2019, AstraZeneca and Astellas announced that the sale and distribution of Symbicort, conducted by Astellas in Japan, was to be transferred back to AstraZeneca and that the co-promotion conducted by Astellas and AstraZeneca was to be terminated on 30 July 2019. Since the termination, the Company has solely distributed and promoted the medicine in Japan.

 

Pulmicort

Product Sales in the year to date of $1,053m; an increase of 17% (23% at CER).

 

Emerging Markets, where sales increased by 23% in the year to date (29% at CER) to $845m, represented 80% of global sales of Pulmicort. China, comprising the overwhelming majority of Pulmicort sales in Emerging Markets, delivered a particularly strong double-digit performance, strengthened by higher levels of demand and underpinned by the impact of AstraZeneca's support in China for over 17,000 nebulisation centres.

 

Sales in the US increased by 10% to $89m due to favourable managed-market rebates and sales in Europe declined by 12% (6% at CER) to $60m reflecting the legacy status of the medicine.

 

Fasenra

Fasenra has been approved in 50 countries, including the US, in the EU and Japan as an add-on maintenance treatment for patients with severe asthma and with an eosinophilic phenotype. The medicine is currently reimbursed in 32 countries, with early-access programmes in an additional 11 countries. At the end of the period, Fasenra led the medicine class for the treatment of severe eosinophilic asthma by new-patient share in a number of key markets. Product Sales of $498m in the year to date represented an increase of 189% (193% at CER).

 

Sales in the US increased by 166% in the year to date to $343m. In Europe and Japan, AstraZeneca was granted regulatory approval in 2018 on a similar basis to that in the US. In Europe, sales of $81m in the year to date represented an increase of 378% (406% at CER). Sales in Japan increased by 138% to $62m in the year to date, following the medicine's launch in 2018.

 

Daliresp/Daxas

Product Sales in the year to date of $157m; an increase of 16% (17% at CER).

 

US sales, representing 85% of the global total, increased by 21% to $134m in the year to date, driven by favourable affordability-programme changes and inventory movements. It is the only oral, selective, long-acting inhibitor of phosphodiesterase-4, an inflammatory enzyme associated with COPD.

 

Duaklir

Product Sales in the year to date of $55m; a decline of 24% (20% at CER).

 

In the first nine months of the year, the overwhelming majority of sales were in Europe, where sales declined by 24% (20% at CER) to $53m; the decline was predominately a result of an adverse performance in Germany. In Q1 2019, the medicine received US regulatory approval. As part of the collaboration agreement announced in March 2017, Circassia Pharmaceuticals plc (Circassia) became responsible for the commercialisation of Duaklir in the US, with AstraZeneca continuing to manufacture and supply the medicine. Circassia communicated making the medicine available to patients in the US in due course.

 

Bevespi

Product Sales in the year to date of $30m; an increase of 32%.

 

Bevespi saw prescriptions in the period track in line with other long-acting muscarinic antagonists / LABA launches; the class in the US, however, continued to grow more slowly than anticipated. Bevespi was the first medicine launched using the Company's proprietary Aerosphere delivery technology.

 

In June 2019, Bevespi received the first approval by the Japanese Ministry of Health, Labour and Welfare as a fixed-dose, long-acting dual bronchodilator in a pressurised metered-dose inhaler (pMDI) to relieve symptoms in patients with COPD.

 

Breztri

Product Sales in the year to date of $1m.

 

In June 2019, Breztri, formerly PT010, was approved in Japan as a triple-combination therapy to relieve symptoms of COPD. This was the first global regulatory approval for Breztri and was the first approval by the Japanese Ministry of Health, Labour and Welfare of a triple-combination therapy in a pressurised metered-dose inhaler (pMDI).

 

Other medicines (outside the main therapy areas)

 

Product Sales of $1,948m in the year to date; a decline of 22% (20% at CER), partly reflecting the H1 2019 divestment of US rights to Synagis and the H2 2018 divestment of the prescription medicine rights to Nexium in Europe.

 

Other Product Sales represented 11% of total Product Sales, down from 16% in the first nine months of 2018.

 

Nexium

Product Sales in the year to date of $1,130m; a decline of 14% (11% at CER).

 

Emerging Markets sales of Nexium increased by 10% (16% at CER) to $574m. In Europe, sales declined by 73% (71% at CER) to $49m, reflecting the aforementioned divestment. Sales in the US declined by 30% to $175m, reflecting its 2015 loss of exclusivity and, in Japan, where AstraZeneca collaborates with Daiichi Sankyo Company, Limited (Daiichi Sankyo), sales declined by 6% (5% at CER) to $291m.

 

Regional Product Sales

 

Table 7: Regional Product Sales

 

Global Sales	YTD 2019				Q3 2019
	$m	% of total	% change		$m	% of total	% change
			Actual	CER			Actual	CER
Emerging Markets	6,074	35	19	26	2,123	35	25	29
China	3,691	21	30	37	1,283	21	35	40
Ex-China	2,382	14	5	12	839	14	12	15
US	5,688	33	18	18	2,025	33	17	17
Europe	3,168	18	(4)	2	1,139	19	1	4
Established RoW	2,385	14	17	19	845	14	21	19
Japan	1,830	11	29	29	657	11	31	27
Canada	345	2	(4)	(1)	120	2	5	5
Other Established RoW	211	1	(18)	(12)	69	1	(16)	(11)
Total	17,315	100	13	17	6,132	100	16	18

 

Table 8: Regional Product Sales, Emerging Markets

Product Sales of $6,074m in the year to date; an increase of 19% (26% at CER).

 

Emerging Markets	YTD 2019				Q3 2019
	$m	% of total	% change		$m	% of total	% change
			Actual	CER			Actual	CER
Oncology	1,665	27	42	51	617	29	45	49
BioPharmaceuticals	3,644	60	16	23	1,240	58	20	24
CVRM	2,225	37	11	18	777	37	16	19
Respiratory	1,419	23	24	31	463	22	28	32
Other medicines	765	13	(4)	1	266	13	10	19
Total Emerging Markets	6,074	100	19	26	2,123	100	25	29

 

New medicines represented 22% of Emerging Markets sales (YTD 2018: 15%). Notable performances included:

 

-    Tagrisso ($553m, +108%, +120% at CER)

-    Lynparza ($101m, +205%, +227% at CER)

-    Brilinta ($348m, +50%, +59% at CER)

-    Farxiga ($339m, +40%, +50% at CER)

 

The performance was also underpinned by the strong sales of a number of other medicines, including:

 

-    Zoladex ($380m, +21%, +30% at CER)

-    Pulmicort ($845m, +23%, +29% at CER)

-    Symbicort ($401m, +10%, +18% at CER)

 

Ex-China Emerging Markets sales increased by 5% in the year to date (12% at CER) to $2,382m and new medicines represented 28% of sales (YTD 2018: 21%). In Q3 2019, ex-China Emerging Markets sales delivered impressive growth, increasing by 12% (15% at CER) to $839m, with new medicines representing 31% of sales (Q3 2018: 22%). The performance was supported by encouraging levels of growth in (ex-China) Asia Pacific, Middle East and Africa, Brazil and Russia.

 

China sales comprised 61% of Emerging Markets sales, increasing by 30% in the year to date (37% at CER) to $3,691m. New medicines, primarily driven by Tagrisso and Lynparza in Oncology and Brilinta and Farxiga in New CVRM, delivered particularly encouraging sales growth. New medicines represented 19% of China sales (YTD 2018: 9%). This performance was augmented by strong sales from Pulmicort, Nexium and Symbicort.

 

During the period, the Chinese National Healthcare Security Administration published the preliminary 2019 NRDL update. The list included one additional AstraZeneca medicine, namely Kombiglyze for Diabetes. As a further result of the update, respiratory medicines, including Symbicort for asthma and COPD and Nexium for acid reflux, had reimbursement restrictions removed. The updated final list is anticipated to be published in Q4 2019, after the conclusion of reimbursement discussions. Since the year 2000, AstraZeneca has had more than 40 medicines added to the NRDL and, from 2012, 15 of the Company's medicines have been admitted to the National Essential Drug List.

 

Table 9: Regional Product Sales, US

Product Sales of $5,688m; an increase of 18% in the year to date.

 

US	YTD 2019			Q3 2019
	$m	% of total	% change	$m	% of total	% change
Oncology	2,538	45	57	917	45	40
BioPharmaceuticals	2,805	49	7	964	48	4
CVRM	1,622	29	1	537	27	(6)
Respiratory	1,183	21	15	427	21	20
Other medicines	345	6	(41)	144	7	(6)
Total US	5,688	100	18	2,025	100	17

 

New medicines represented 61% of US Product Sales (YTD 2018: 45%). The performance reflected, in particular, the success of the new Oncology medicines ($2,208m, +84%), including Tagrisso, Imfinzi and Lynparza in Oncology, Brilinta in New CVRM, plus the compelling performance of Fasenra in Respiratory.

 

Table 10: Regional Product Sales, Europe

Product Sales in the year to date of $3,168m; a decline of 4% (up by 2% at CER).

 

Europe	YTD 2019				Q3 2019
	$m	% of total	% change		$m	% of total	% change
			Actual	CER			Actual	CER
Oncology	1,027	32	34	42	377	33	44	51
BioPharmaceuticals	1,677	53	(10)	(4)	550	49	(6)	(0)
CVRM	858	27	(8)	(3)	292	26	(3)	2
Respiratory	819	26	(11)	(6)	258	23	(8)	(3)
Other medicines	465	15	(30)	(28)	213	19	(26)	(29)
Total Europe	3,168	100	(4)	2	1,139	100	1	4

 

The performance in Europe partly reflected adverse continued pricing pressures, the impact of the aforementioned divestment of the prescription medicine rights to Nexium in H2 2018 and declining sales of Crestor. New medicines, however, represented 40% of Product Sales (YTD 2018: 27%) and the Europe sales performance continued to improve through 2019. Oncology delivered particularly compelling growth in the year to date, with the following medicines representing 64% of Oncology sales in Europe:

 

-    Tagrisso ($337m, +52% +61% at CER)

-    Lynparza ($208m, +52%, +61% at CER)

-    Imfinzi ($115m, YTD 2018: $9m)

 

This strong performance was also supported by the successes of Brilinta and Forxiga in New CVRM and Fasenra in Respiratory.

 

Table 11: Regional Product Sales, Established RoW

Product Sales in the year to date of $2,385m; an increase of 17% (19% at CER).

 

Established RoW	YTD 2019				Q3 2019
	$m	% of total	% change		$m	% of total	% change
			Actual	CER			Actual	CER
Oncology	1,163	49	66	67	423	50	67	63
BioPharmaceuticals	849	36	(3)	(1)	314	37	6	6
CVRM	416	17	(2)	1	143	17	(4)	(3)
Respiratory	433	18	(4)	(2)	171	20	17	16
Other medicines	373	16	(19)	(16)	108	13	(27)	(31)
Total Established RoW	2,385	100	17	19	845	100	21	19

 

New medicines represented 42% of Established RoW sales (YTD 2018: 20%). The performance during the year to date reflected, in particular, the successes of Tagrisso and Imfinzi in Oncology, Forxiga in New CVRM and Fasenra in Respiratory.

 

Japan sales, comprising 77% of total Established RoW sales, increased by 29% in the year to date to $1,830m. New medicines represented 45% of Japan sales (YTD 2018: 21%), particularly reflecting the strong performance of Tagrisso as a 1st-line treatment for patients with EGFRm NSCLC, following regulatory approval in this setting in the third quarter of 2018. Overall, in the year to date, Oncology sales in Japan increased by 69% to $1,057m and represented 58% of Japan sales. This performance was also supported a number of other ongoing successes, including:

 

-    Farxiga ($61m, +32%, +31% at CER)

-    Fasenra ($62m, +138%, +138% at CER)

 

Financial performance

 

Table 12: YTD 2019 Reported Profit and Loss

 

	Reported
	YTD 2019	YTD 2018	% change
	$m	$m	Actual	CER
Product Sales	17,315	15,281	13	17
Collaboration Revenue	405	392	3	6
Total Revenue	17,720	15,673	13	17
Cost of Sales	(3,543)	(3,299)	7	12
Gross Profit	14,177	12,374	15	18
Gross Profit Margin[24]	79.5%	78.4%	+1	+1
Distribution Expense	(247)	(238)	4	10
% Total Revenue	1.4%	1.5%	-	-
R&D Expense	(3,968)	(3,920)	1	5
% Total Revenue	22.4%	25.0%	+3	+3
SG&A Expense	(8,656)	(7,431)	16	20
% Total Revenue	48.9%	47.4%	-1	-1
Other Operating Income & Expense	1,041	1,525	(32)	(31)
% Total Revenue	5.9%	9.7%	-4	-4
Operating Profit	2,347	2,310	2	3
Operating Profit Margin	13.2%	14.7%	-1	-2
Net Finance Expense	(948)	(970)	(2)	6
Joint Ventures and Associates	(91)	(77)	18	21
Profit Before Tax	1,308	1,263	4	(1)
Taxation	(358)	(222)	61	54
Tax Rate	27%	18%
Profit After Tax	950	1,041	(9)	(13)
EPS	$0.79	$0.88	(11)	(15)

 

Table 13: Q3 2019 Reported Profit and Loss

 

	Reported
	Q3 2019	Q3 2018	% change
	$m	$m	Actual	CER
Product Sales	6,132	5,266	16	18
Collaboration Revenue	274	74	n/m	n/m
Total Revenue	6,406	5,340	20	22
Cost of Sales	(1,351)	(1,153)	17	23
Gross Profit	5,055	4,187	21	22
Gross Profit Margin	78.0%	78.1%	-	-1
Distribution Expense	(88)	(73)	20	25
% Total Revenue	1.4%	1.4%	-	-
R&D Expense	(1,346)	(1,279)	5	8
% Total Revenue	21.0%	24.0%	+3	+3
SG&A Expense	(3,199)	(2,423)	32	34
% Total Revenue	49.9%	45.4%	-5	-4
Other Operating Income & Expense	335	439	(24)	(23)
% Total Revenue	5.2%	8.2%	-3	-3
Operating Profit	757	851	(11)	(13)
Operating Profit Margin	11.8%	15.9%	-4	-5
Net Finance Expense	(316)	(330)	(4)	2
Joint Ventures and Associates	(32)	(44)	(27)	(21)
Profit Before Tax	409	477	(14)	(21)
Taxation	(129)	(71)	81	65
Tax Rate	32%	15%
Profit After Tax	280	406	(31)	(36)
EPS	$0.23	$0.34	(33)	(38)

 

Table 14: YTD 2019 reconciliation of Reported Profit Before Tax to EBITDA[25]

 

	YTD 2019	YTD 2018	% change
	$m	$m	Actual	CER
Reported Profit Before Tax	1,308	1,263	4	(1)
Net Finance Expense	948	970	(2)	6
Joint Ventures and Associates	91	77	18	21
Depreciation, Amortisation and Impairment	2,119	2,091	1	5
EBITDA	4,466	4,401	1	4

 

Table 15: Q3 2019 reconciliation of Reported Profit Before Tax to EBITDA

 

	Q3 2019	Q3 2018	% change
	$m	$m	Actual	CER
Reported Profit Before Tax	409	477	(14)	(21)
Net Finance Expense	316	330	(4)	2
Joint Ventures and Associates	32	44	(27)	(21)
Depreciation, Amortisation and Impairment	716	698	2	5
EBITDA	1,473	1,549	(5)	(5)

 

Table 16: YTD 2019 reconciliation of Reported to Core financial measures

 

	Reported	Restructuring	Intangible Asset Amortisation & Impairments	Diabetes Alliance	Other[26]	Core[27]	Core % change
	$m	$m	$m	$m	$m	$m	Actual	CER
Gross Profit	14,177	122	69	-	-	14,368	14	18
Gross Profit Margin[28]	79.5%					80.6%	+1	+1
Distribution Expense	(247)	-	-	-	-	(247)	4	10
R&D Expense	(3,968)	82	60	-	-	(3,826)	1	4
SG&A Expense	(8,656)	147	1,009	294	742	(6,464)	4	8
Other Operating Income & Expense	1,041	-	3	-	16	1,060	(7)	(6)
Operating Profit	2,347	351	1,141	294	758	4,891	41	42
Operating Profit Margin	13.2%					27.6%	+5	+5
Net Finance Expense	(948)	-	-	216	153	(579)	3	13
Taxation	(358)	(74)	(240)	(106)	(136)	(914)	68	68
EPS	$0.79	$0.22	$0.69	$0.31	$0.60	$2.61	39	38