Examining And Analyzing Astrazeneca In The Pharmaceutical Industry - Free Essay Example

The UK leads Europe in Biotechnology and is second in the world in terms of capitalisation, beaten only by the US. 46% of Europes 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 (theÂÂ  venture capital industry has invested some 344ÂÂ  million in biotechnology over the last tenÂÂ  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 worlds 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 AstraZenecas 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 worlds 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 Companys 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 RD organisation and they have 17 principal RD 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. 4. Financial Highlights 32.8bn Sales up 7% to $32,804 million ($31,601 million in 2008) 23% Core operating profit up 23% to $13,621 million ($10,958 million in 2008) 7.7bn Strong cash flows reduced net debt by $7,709 million resulting in net funds of $535 million Sales $m (+7%) Net cash flow from operating activities $m Sales growth 7% 2009 3% 2008 7% 2007 Core operating profit $m (+23%) Reported operating profit $m (+24%) Core gross margin $m (+10%) Reported gross margin $m (+11%) Core earnings per Ordinary Share $ (+23%) Reported basic earnings per Ordinary Share $ (+22%) Operational overview Distributions to shareholders $m 2009 2008 2007 Dividends 2,977 2,739 2,641 Share re-purchases 610 4,170 29% Crestor up 29% to $4,502 million 23% Symbicort up 23% to $2,294 million 4 Four major regulatory submissions 4 In-licensing/acquisition of four late-stage projects $1.6bn Annualised savings of $1.6 billion from restructuring 6% Top 6% in the sector in the Dow Jones Indexes In brief Sales Crestor sales were up 29% to $4,502 million; Symbicort up 23% to $2,294 million; Seroquel up 12% to $4,866 million; and Arimidex up 7% to $1,921 million. Nexium sales fell by 1% to $4,959 million and Synagis sales fell by 12% to $1,082 million Sales of Toprol-XL and H1N1 influenza (swine flu) vaccine in the US accounted for 3 percentage points of the global revenue growth Emerging Markets growth was 12%, accounting for 13% of total revenue Pipeline developments include Four major regulatory submissions made Complete Response Letter submitted for fifth regulatory submission In-licensing/acquisition of four late-stage projects 89 projects in clinical development Restructuring programme delivered annualised savings of $1.6 billion in 2009 and expanded to deliver further savings Positioned in the top 6% in the sector in the Dow Jones World and STOXX (European) Indexes Up to $1 billion in Ordinary Shares will be re-purchased by the Company during 2010 Note: All growth rates are at CER. Despite the difficult world economic conditions, 2009 was a successful year for AstraZeneca. Our strong performance and considerable achievement in making a real difference to patient health around the world meant that our shareholders were also able to benefit. Group sales increased by 7% in 2009 to a total of $32,804 million. Reported operating profit was $11,543 million, up 24%. Reported earnings per share for the full year were $5.19 (2008: $4.20). The Board has recommended a second interim dividend of $1.71, a 14% increase over the second interim dividend awarded in 2008. This brings the dividend for the full year to $2.30 (141.4 pence, SEK 16.84), an increase of 12% from 2008. In 2009, cash distributions to shareholders through dividends totalled $2,977 millions. Inventories 2009 $m 2008 $m 2007 $m Raw materials and consumables 445 409 579 Inventories in process 726 631 806 Finished goods and goods for re-sale 579 596 734 1,750 1,636 2,119 Inventory write-offs in the year amounted to $83m (2008: $51m; 2007: $95m). The inventory table above shows the write offs of 2009 and compare them to the previous years. 2007. The Company used double entry method in evaluating the stock and perform inventory as seen in the financial reports by using the trial balance and balance sheet. The method used here for depreciation is a straight line method. The earnings per share for the shareholders are as follow. Dividend for 2009 ÂÂ   $ Pence SEK Payment date First interim dividend 0.59 36.0 4.41 14 September 2009 Second interim dividend 1.71 105.4 12.43 15 March 2010 Total 2.30 141.4 16.84 ÂÂ   $2.30 Dividend per Ordinary Share 2009.However the reported basic earning per share in 2009 was $6.32 while it was $5.10 in 2008 and $4.38 accordingly. Conclusion AstraZeneca is a global company with a great and every expanding profit and looking at the previous annual reports I have observed that its business is expanding day by day and so is the value of its shares as we have seen above a gradual rise in the eps every year therefore I would recommend and would love to buy its shares as there is minimum risk and huge profit.