Examining and Analyzing Astrazeneca in the Pharmaceutical Industry

The UK leads Europe in Biotechnology and is second in the world in terms of capitalisation, beaten only by the US. 46% of Europe's biotech companies are British. More than 50% of European drugs in clinical trials are British. This is partly due to the consolidation of maturing companies and in the continuing investment by venture capital groups and institutional investors (theA venture capital industry has invested some £344A million in biotechnology over the last tenA years).

There are three distinct types of pharmaceutical companies in the UK:

Research and Development (An Integrated Company)

Research Only - i.e. Biotechnology

Contract Pharmaceutical Organization (CPO)

The Pharmaceutical Industry is the second largest contributor to Gross Domestic Product behind Financial Services. There are several very big players in the UK with GlaxoWelcome, SmithKline Beecham and AstraZeneca being the three largest UK based companies. In America the largest organization (in capital terms) is Merck Sharp and Dohme (MSD), and until recently this was the world's largest company. In recent years with the merger of Glaxo Welcome and Smith Kline Beecham to form GSK, Merck Sharp & Dohme have been relegated to second position. Here in this report we will have a detailed look on AstraZeneca's business.

ASTRAZENECA

AstraZeneca is a global, innovation-driven, integrated biopharmaceutical company. They discover, develop, manufacture and market prescription medicines for six important areas of healthcare, which include some of the world's most serious illnesses: cancer, cardiovascular, gastrointestinal, infection, neuroscience, and respiratory and inflammation. The company has a senior executive team and highly experienced Board and Senior Executive Team.

The Board sets the Company's strategy and policies, and monitors progress towards meeting their objectives. This includes regular reviews of financial performance and critical business issues. The Senior Executive Team, led by Chief Executive Officer David Brennan, focuses on the day-to-day running of our business operations and our Company development, regularly reviewing and deciding all major business issues.

They have a global reach but local knowledge, being active in over

100 countries, with a growing presence in emerging markets such as China, Brazil, India and Russia. In 2009 they had sales of $15,981 million in North America,

$12,471 million in Other Established Markets and $4,352 million in Emerging Markets. Combining the disease area expertise with country-specific knowledge helps us to market and sell medicines that best meet local needs.

Of the 62,700 employees worldwide, 47% are in Europe, 31% in the Americas and 22% in Asia, Africa and Australasia around 11,600 people work in our R&D organisation and they have 17 principal R&D centres in eight countries, including Sweden, the US and the UK. They have 9,500 employees at 20 manufacturing sites in 16 countries.

AstraZeneca sells to over 100 countries mostly through their own local marketing companies and has 10 medicines with sales of over $1Billion each in 2009 and their products are marketed mainly to physicians and other healthcare specialists. AstraZeneca uses the internet to strengthen relationships with their customers, stakeholders and suppliers and to improve their speed and efficiency.

AstraZeneca has a major manufacturing presence in Macclesfield, Cheshire and another at Avon, near Bristol, and also Luton is their base for sales and marketing. Astra Zeneca was formed on 6 April 1999 through the merger of Astra AB of Sweden and Zeneca Group PLC of the UK - two companies with similar science-based cultures and a shared vision of the pharmaceutical industry. The merger gave the company global power and it is now a leader in a number of specialist markets, including oncology and anaesthesia.

Strategy

The executive team, with the endorsement of the Board, believes that the most value-creating strategy for AstraZeneca is to remain a focused, integrated, innovation-driven, global, prescription-based biopharmaceutical business:

Focused in that they will continue to be selective about those areas of the industry in which we choose to compete, targeting those product categories where medical innovation or brand equity continues to enable them to make acceptable levels of returns on their investments

Integrated in that they believe the best way to capture value within this industry is to span the full value chain of discovery, development and commercialisation

Innovation-driven in that they believe our technology base will continue to deliver innovative products that patients will want and for which payers will pay

Global in that they believe we have the ability efficiently and effectively to meet healthcare needs in both Established and Emerging Markets.

AstraZeneca believe that there are continued opportunities to create value for those who invest in pharmaceutical innovation and that AstraZeneca has the skills and capabilities to turn these opportunities into long-term value.

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